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| If you do it, make darn sure you have enough capitol for a long downturn in price. I mean longer than you would ever expect. I speak from experience! I was a passive investor in a dairy that was launched with supposedly adequate capital reserves. But when the milk price got down to $9.11, it was like 9/11 at the dairy {or 911} , they could not pay for feed or make loan payments, as the downturn lasted longer than anyone expected. Management had not alleviated risk by forward contracting enough milk at a price that would make the loan payments even though they could have. Then new investors had to be brought in to get more capitol, and of course shortly after that the price went up and the dairy was highly profitable. But the original owners were pretty much pushed out.
So you will need to be a sharp manager to make it work, think of every possible bad scenario that could possibly occur before you jump in and take steps to prepare for them. Good luck! | |
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Dairying in 2017
