There is plenty to consider when looking to add new livestock enterprises to your operation. No matter the species selected, it might offer a way to keep the family farming together longer.
Justin Quandt, one of the farmer-owners of KU Quandt Brothers, said adding pigs to their row crop and cow-calf operation has brought opportunity in the past five years.
“Mostly, we were looking for the manure,” Quandt said. “Most of what we farm is sandy ground, so we were looking for the organic matter and a way to expand the farm without fighting for land.”
Quandt farms alongside his uncle, cousin and two brothers near Oakes, N.D. He explained that the addition of two hog barns five years ago gave other cousins the chance to join the farm in the future.
“The barns are helping us go through these low commodity prices,” he said. “Yes, it’s paying for the barn, and right now it’s creating equity, but the banker isn’t knocking near as hard knowing we have a steady check to pay for things, and the fertility alone is worth that much more with how high commercial fertilizer prices are.”
Cash flow is king
The biggest piece to diversification is there has to be cash flow as part of the operation, said Steve Martin, executive director of Alliance for the Future of Ag in Nebraska. “Whether that’s direct sales or custom feeding or contract-grow operations, there are opportunities in every species for somebody to work in," he said.
By introducing more livestock onto the farm or expanding, farmers are not only diversifying their operations; they’re also helping the community, some by directly marketing their animal products to the local area.
Getting started with livestock on your farm can be a long process. The Quandt family first had conversations about adding pigs five years before the finished barns.
“We talked with an integrator, and we weren’t looking at it too seriously until the Bank of North Dakota funding and interest buydown really changed the game for us,” Quandt explained. “It [means] buying something that you can pay off in 10 to 15 years versus 20. There’s a lot of integrators looking for bio-secure facilities so you can build it and make money right now.”
The family worked closely with the North Dakota Livestock Alliance, an organization that helps farmers expand or start livestock operations. “We worked with them a lot for this,” Quandt said. “Instead of trying to jump off a cliff trying to figure out the permitting and opportunities, they helped us take the stairway down.”
New opportunities
Based on the Quandts’ track record over the past five years, hog integrators look for anyone who is willing to consider their options.
“Basically, we’re a big hotel,” Quandt said. “We’re not owning any part of the pigs, so we don’t have a real risky position in these barns, and the bankers like that a lot.”
Pigs come into the barn at between 35 and 50 pounds and leave at market rate between 280 and 300 pounds. The Quandts’ two barns are large enough to hold 4,800 head of finisher pigs. The animals consume about 220,000 bushels of corn per year, alongside 1,600 tons of soymeal and 1,600 tons of distillers grains.
The next generation of farmers coming back to the farm or starting their own operations are being shaped by several challenges, including high land costs, decreasing farm profits and the ever-present market volatility.
“The reasons that most people are going to diversify or pursue diversification in the beginning are different market opportunities and margin opportunities,” said Kate Lambert, senior vice president of marketing for Farm Credit Services Financial. “If we’re leaving the commodity space, we’re doing something different and opening ourselves up to very different market opportunities.”
The different markets and margins still come with constraints, but moving away from the commodity space has now blown up the marketing opportunities available.
An added benefit of the hogs? “We’re trying to get more guys talked into it, even with the day-to-day chores,” Quandt said. “Because you have to remember, when it’s 15 below out trying to do cattle chores, it’s 80 degrees inside the barns.”
Find out more about the Quandt family operation here. Learn about integrating livestock into your operation here.