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Getting a good start

Matt Hartwig didn’t inherit
a chance to start dairying. But that proved no hindrance. He used resolution, a
readiness for opportunity, and creative business arrangements. Today the
29-year-old Hartwig and his wife, Tabitha, own 150 dairy cows and a 160-acre
farm near Athens, Wisconsin.

“I grew up on a 50-acre
hobby farm in Minnesota, and I always enjoyed being around animals,” he says.
“I started working for a dairy farmer while I was in high school. I never
really wanted to do anything else but be a dairy farmer.”

Yet because the notion of
dairying seemed distant, he aimed for a career in veterinary medicine. To
start, he got a degree in dairy science management, interning briefly on a
500-cow dairy in Oregon.

After college, he returned
home to work for his former employer. He also worked in construction for a
while.

Then, uncertainty about
making either of these jobs long-term careers sent him back to undergraduate
school to prepare for a career in veterinary medicine. But his dairying
ambitions would not rest. “The only thing I thought of was how I could get into
dairying on my own,” he says.

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The seed for a start came
from attending a grazing conference. There he met the owners of a grass-based dairy
in Wisconsin. “They were looking for an intern for the summer, so I left home
to learn something about grazing cows,” says Hartwig.

He worked through the summer
and into winter, when his employers traveled to Australia. In their absence, a
surprising turn of events placed the herd of 150 cows in his ownership. The
couple had decided to buy a second farm in Australia and offered to sell
Hartwig their cows and machinery as part of the financial arrangements needed
to secure their second farm.

Though the chance to buy
cows came out of the blue, Hartwig had prepared. He’d already saved a nest egg
of $60,000, and the money made a down payment on the cattle and equipment.

He serviced the remaining
debt with a staged financing plan. The first year the owners carried the debt,
with Hartwig’s monthly payments to them coming to a little more than $3,000 a
month. “After that first year, I got a beginning farmer’s loan from the Farm
Service Agency and was able to pay off the debt on the contract,” he says.

While the farm owners
remained in Australia, Hartwig continued managing the farm and using the
facilities. He compensated the owners for the use of these resources through a
share-milking arrangement.

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“We decided to split the
profit based on our respective percentages of contribution to fixed inputs,” he
says.

Engaging the help of a
financial consultant, they determined the value of the fixed inputs each
contributed to the operation. “Our percentages came to 50/50, and that became
our guide for splitting the profit,” he says. “I paid all the variable costs
relating to running the dairy, and whatever profit was left over, we split
50/50.”

As Hartwig increased the
milking herd to 200 cows, the partners reassessed and adjusted the shares to
reflect his added inputs.

“The share-milking
arrangement worked well because the farm was profitable,” he says. “It was a
good system to use to get started because I didn’t have the huge up-front cost
of buying my own place, and yet I was able to build equity. That put me in a
position to save money so I could buy a farm of my own.”

Marriage and the hope of
building a family turned Hartwig’s ambition resolutely to finding his own farm.
The dairy where he was share-milking was beyond his financial reach because it
was located in an area where land commanded a particularly high price.

For a year and a half he
studied real estate ads, watching for the right place. Then a friend told him
about a dairy farm 100 miles away near Athens, Wisconsin.

When the Hartwigs visited
the farm, they liked the operation, which offered 160 tillable acres producing
forage for grazing and haying. More importantly, the owners, Lyle and Pearl
Guralski, hoped to sell to a beginning farmer who would take their place on the
farm. (See sidebar.)

The Hartwigs bought their
new farm in December 2008, and once again they depended upon creativity to
manage financing. They drew up a contract for deed with the Guralskis in order
to purchase 60 acres of the total acreage, using a low-interest start-up loan from
the Farm Service Agency (FSA) to finance the rest of the farm. At the end of
two years they’ll use borrowed money to pay out the contract for deed.

Despite working in a time
period marked by low milk prices, the Hartwigs have operated in the black. A critical
factor helping them, says Hartwig, has been the good fortune to operate on
previously profitable farms where land and facilities had been well maintained
by the owners.

Also contributing to
profitability are low FSA interest rates ranging from 1.5% to 3%.

Labor efficiency helps, too,
in reducing costs. Working together, the Hartwigs milk 150 cows with help from
one employee working a 40-hour week. Tabitha also cares for their infant son,
Benjamin.

“We like the culture here,”
says Hartwig. “Our neighborhood is really supportive, and there are a lot of
cows around us on a lot of individual farms.”

Learn More

Matt Hartwig

920/359-0418

greenacresdairy@airrun.net

Lyle Guralski

715/257-7976

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