Investigation of the Economic Feasibility of Pasture-based Dairy Operations in Northwest Iowa

Recent dairy growth in northwest Iowa has been in the form of large farm relocations, start-ups, or expansion of existing farms. Despite the increase in larger farms, the majority of dairy farms in northwest Iowa remain in the small or medium herd size range. There is impetus within this dairy community to identify strategies for maintaining competitive, profitable dairy operations by means other than large-scale expansion. With reports from northeast Iowa about the success of pasture-based systems for smaller farms, this project aimed to investigate the feasibility of the pasture-based system as an option for northwest Iowa dairies.

We analyzed two pasture-based/mixed feed dairy farms currently operating in northwest Iowa to understand how and why they were operationally and economically viable. After learning what key factors determined their feasibility, we applied these factors to hypothetical scenarios of establishing pasture-based system on typical existing northwest Iowa dairies to determine if transition of northwest confinement management system to a pasture-based/mixed feed system could be a workable model for beginning or transitioning farmers. We concluded that pasture-based/mixed feed dairy management systems are economically feasible in northwest Iowa for smaller sized herds if family resources/financial resources are available to offset high capital investment start-up costs, if debt per cow is kept low through combination of low interest loans and low cost leases of facilities and land, if building/equipment costs are kept low, if growth is phased in gradually, and if herd size is maintained at a level to match family labor resources.

Contacts:
Chris Mondak, ISU Extension Dairy Field Specialist
ISU Extension - Sioux County Office
400 Central Ave NW Suite 700
Orange City, IA 51041
cmondak@iastate.edu
712-737-4230.

Tom Olsen, ISU Extension Farm Management Specialist
ISU Extension – Buena Vista County Office
824 Flint Suite 101
Storm Lake, IA 50588
tolsen@iastate.edu
712-732-5056