What’s a dairy worth nowadays?
I’m often asked by city living friends and an occasional farm friend what the value of a mega dairy might be? My response is that I have no idea as most family dairies that have been expanded have done so over a long period of time with a lot of different circumstances involved.
Yes, there have been large dairies built from the ground up but again each was constructed under a varying set of costs and arrangements. And, to my knowledge, there have been few if any private sales of large dairy operations, so it is difficult to fathom any values.
Until just a week or so ago when the Lakeview Dairy at Fox Lake was sold at an online auction. I wrote about this event a few weeks ago. Here is a brief review.
The decades long forecasts of doom and gloom facing expanded dairies began anew when the first large dairy operations were created by dairy families in Wisconsin 30 years or so ago. This movement was a copy of California’s “big dairy” system that I had first seen in the mid-70’s.
“You just can’t milk that many cows” many of Wisconsin’s small dairy farmers said. They were seconded by a host of environmentally oriented groups and surely by city folks who were farm raised and would-be farmers who weren’t.
The movement to bigger herds continued but the failures didn’t happen as predicted. Family farmers had learned that you didn’t have to milk the cows yourself – that employees could do the job is well with the proper training and supervision. Another factor was that the herds didn’t grow from 50 cows to a 1000 in one movement, they grow over a period of years in increments, maybe from a 100 to 400 to 600 and up. As a dairy farmer friend once told me “we learned as we grew, each jump helped us improve our management and people skills.
RELATED: From mega dairy to mega auction
The years have gone by and there are now near 300 CAFO (700 cows or more) dairies, most still under family ownership in Wisconsin. And to my knowledge the “they will never make it” predictions have not come true. Until now.
A week or two ago, I saw this notice in a newsletter published by Fargo, North Dakota-based Steffes Auctions announcing a Dairy Cattle - Court Ordered Auction at Lakeview Dairy of Fox Lake, Wis., to run from November 9 until November 19th with some 1800 milk cows averaging over 80 lbs. milk per day, two dairy facilities and several houses and an assortment of farm equipment to be sold via an online auction.
I’ve been waiting for the results of this auction and now have some in a recent news release from Steffes Auction that reads:
“All eyes were on the Steffes Group’s auction of a major dairy operation in Fox Lake, Wisconsin, including 1,800 cows, two modern turnkey dairy operations and 396 acres. Steffes Representative Randy Kath called it a test of the market — one of the biggest dairy auctions in recent memory — and it passed with flying colors. The real estate auction was first to close, selling in tracts to five different buyers — one from Ireland. The auction drew bidders from eight states.
“The real estate really captured a lot of people’s attention, selling for a total of $8.5 million. I think that reflects a remarkable strength and depth in the market for dairy properties,” said Kath.
Two days later the livestock were sold...with bidders from 11 different states competing for the cattle.
“The geographic reach was encouraging, and a second major factor was the participation of large bidders — one purchasing 600 head,” said Kath. Overall, the cattle auction achieved expectations, averaging approximately $1,250 per head, he said.
I recently talked with the Steffes group who gave me some prices. Of special interest to me were the two dairy operations: the Lakeview Dairy that has been in continual operation and the White Diamond Dairy in Racine county that has sat empty. Sale results from Steffes Auctions:
- Tract 1: The large Lakeview Dairy facility at Fox Lake with a D-32 parlor, three adjoining free stall barns, a commodity shed, 13.56 million gal. concrete lagoon, bunker and flat feed storage and a house sold for $5,505,000.00.
- Tract 2: The White Diamond Dairy Operation, Racine County, with 191 acres, an 800-cow free stall dairy operation with a home brought $2,002,500.00.
Max Steffes of the Steffes Group summarized by saying: “This timed online auction form can achieve excellent results for virtually any type of assets.”
It’s a lot, but...
Yes, five and a half million dollars is a lot of money, but could one build and equip an 1800 cow dairy and move in tomorrow for that price today? I have my doubts. Same for the Racine county dairy. For the right people with the right business plans, they now have ready-to-go dairy operations.
The dairy cow price averaging $1250 seems logical especially with their high milk production. My thought is the the buyer of the Lakeview property might also have bought the 600 cows. It seems logical because an empty barn does nothing for the bottom line. Note: I do not know the names of the buyers as the Steffes group said they are not available until the transactions are legally completed. Fair enough!
As to the original question about the price of a Wisconsin dairy, it is still unanswered but always centers on what a buyer will pay at a given time. I guess you might say the prices for the two dairy facilities were current only on November 17th.
Time will tell who the buyers of the sold dairies are and more time will tell if their decisions were the right ones.
John F. Oncken, owner of Oncken Communications can be reached at 608-837-7406 or e-mail him at firstname.lastname@example.org.