A company known for its stake in a large network of hog barns and feed mills in Manitoba may help build what could be the largest dairy barn in the province.
The Puratone Corporation of Niverville, Man., is working with a group of at least six dairy farmers who are considering merging their quota and working together on a corporate-managed farm.
John Kroeker, chief executive officer of Puratone, confirmed last week the group is pondering a 500-cow dairy, with construction starting as early as next spring.
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The company is working on feasibility studies for the project. “At this stage, it’s really too early to tell if it’s going to go anywhere,” said Kroeker.
Puratone has had preliminary discussions about the project with Manitoba Milk Producers, the provincial marketing board. Kroeker said producers plan to work within the supply management system.
He declined to name farmers involved with the idea. They are “people that are getting tired of farming but don’t necessarily want to exit the industry,” he said.
“They would still continue to farm their own land and provide silage and haylage to this unit and raise heifers that would eventually move in as production animals in this unit.”
Kroeker said the producers were inspired by a group of egg farmers who consolidated their quota to recently open Canada’s largest egg barn at Dufrost, Man.
Puratone and the dairy farmers would form a new corporation for the project, Kroeker said. The corporation would buy the farmers’ quota in exchange for shares.
Puratone would manage the overall project and the barn, he said.
This is similar to the company’s hog barn joint ventures, where it often takes equity positions in the barns, and sells the corporations management services and feed.
The dairy barn would be competitive with large American operations, Kroeker noted. This is attractive, given that supply management is expected to come under pressure in world trade discussions starting next year.
“There’s always some apprehension that they’ll be losing their supply-managed industry eventually, so this is partly planning for the future as well,” Kroeker said.
The general manager of Manitoba Milk Producers said producers can merge under the marketing board’s rules, and size is unlimited.
Jim Wade said the Puratone proposal is part of a provincial trend towards larger dairy herds.
“The 200-cow herd is going to be very common in Manitoba in the next 10 years,” said Wade.
Today, more than 65 percent of dairy farmers in the province milk 50 cows or fewer.
Many of these farms popped up during a boom around 1970, when a federal-provincial agreement encouraged farmers to diversify and expand into livestock.
In the dairy industry, Wade said there’s usually a flurry of change every 25 years as the older generation transfers farms to younger family members and equipment reaches the end of its lifespan.
“We’re in the middle of that right now,” he said.
Farmers considering new equipment have to look critically at the size of their operation, he said.
“If you’re going to put, say, $200,000 in a milking parlor, then you have to look at a larger herd than what’s there today to kind of keep it busy and make it pay for itself,” he said.
A larger herd often means a new barn and milkhouse, hired labor and of course more quota. It can cost $1.5 to $2 million for a farm to double from 50 to 100 cows, he said.
But he noted large operations don’t necessarily lead to lower production costs. While feeder hog and poultry barns can be largely managed through computers, dairy cattle need more hands-on management.
And a large, new operation would have a higher debt load, he noted.
But the concept of working collectively “makes a lot of sense,” said Wade.
