It is a cloudless early morning and Scott Foerg, Logansport, IN, has yet another farm reporter tagging along as he heads out to work.
“I'll just pull a poly,” he explains as he walks across the pasture to wind up a strand of fencing separating hungry heifers from a fresh break of alfalfa-orchardgrass.
“I'm not very photogenic, but the cows are,” he adds, grinning shyly at the reporter's camera as those heifers run wildly behind him toward the new section. “They're as happy as they can be.”
Foerg seems pretty happy himself. He's 36 years old and partners in a successful dairy with none other than grazing guru and media favorite Dave Forgey.
If it weren't for Forgey, Foerg doubts he'd be half-owner of a 300-head dairy like River-View Farm, Inc.
“It's a father-son operation in most aspects; it's just that I'm not related. Our names are real close, but I'm not related,” Foerg says. “He wanted to stay in the industry and the business and I was trying to get into the business, so it was kind of the best of both worlds.”
The road to their partnership, expansion and gradual transition of ownership, however, is a winding trail that has been years in the making.
“Scott came to work for me in 1991, just before I started grazing,” says Forgey, pictured below.
“I started as a laborer,” Foerg remembers. Although only 18 at the time, he wanted to build his own herd and some equity and began buying heifers from Forgey.
When Forgey was on the shy side of 60, with about 40 years of milking under his belt, he had an epiphany.
“In 1999, I said, ‘Scott, I've milked cows long enough. If I'm going to stay in this business, someone else is going to have to take over the management.’ ” That's when the two agreed to a share-milking system similar to those in New Zealand. Foerg managed and milked the cows, paid some of the expenses and got a percent of the milk check.
“That took him from being an employee to being a subcontractor. I could avoid employee taxes and put him in control of the cows.”
Although Forgey still did most of the fieldwork and harvesting, it gave him freedom to go to more industry meetings. He continues to be a grazing spokesperson, speaking at meetings and dealing with reporters, but with less stress.
A few years later, in 2003, a neighbor asked Forgey if he wanted to buy a 30-acre tract of land that adjoins his farm. “I said, ‘We don't want to buy it, but I want Scott to buy it.’ So Scott and his wife, Darla, bought the 30 acres,” Forgey says.
In January of 2005, they set up a landlord-tenant operation. “We sold him the balance of the cows to make half the herd. He took over management of the entire operation. I still help at no cost to him. I'm the gopher, the fixer, the helper with hay and all those kinds of things. He had a contract to pay me off monthly.”
But in July of that year, a 120-acre farm just four miles north of their place came up for sale. Within 24 hours, Foerg had bought the farm but didn't have the equity to afford it. That's when the two families again reworked their agreement.
“I said, ‘Tell you what we'll do. I'll give you the cows, but you bring that farm into the partnership for 15 years. I'll get my payment for the cows out of the use of your land, and you'll have half the cows debt-free,’ ” Forgey says. That had to be a handshake agreement or there would have been tax implications, he adds.
Because the Forgeys hadn't yet filed taxes on the original agreement, they restructured it. “I loaned him back the $30,000 he had already paid on the contract to use as a down payment on the 120 acres. He then had the equity in cows to help the bank finance the farm. He has since paid off the $30,000 I loaned him.
“If I had sold that to my son, the tax people would have said, ‘You have to sell at the going rate.’ For an unrelated individual, I could sell cows at any price I chose. I didn't get caught in capital gains taxes and it gave them the cows debt-free. They've got 150 acres; I've got 350. There is still a slight imbalance, but that doesn't really matter,” Forgey says.
Within a few years, they'd also decided to build a New Zealand swing parlor that was completed the spring of 2008. The parlor milks 300 cows in an hour and a half and allows for further herd expansion.
“It's a swingover 36; we have 36 cows on each side and have the capacity to milk 500-600 cows without too many problems. Now we've got the land base for about 300 cows, and that's what we're milking.” But they hope to lease additional land and add to the milking herd.
It takes Foerg and a fulltime employee to milk the New Zealand Holstein herd, ushered in with a motorized swing gate to an area that can hold 300 cows at a time. But, in the last year, with the herd expanding, Foerg hired a second fulltime person to rotate in to the 4:30-a.m. and 2:30-p.m. milkings. A parttime milker handles some shifts, too.
Then milk prices plummeted. “It was really, really bad timing,” Foerg says.
“Right now we're break-even,” Forgey admits. “We call that really good right now.”
As a hedge on his investment in his young partner's future, the grazing expert took out life insurance on Foerg and put the farm into a trust with the goal that the Foergs will take it over.
“I also have a couple of grandsons who think they might want to milk cows. So Scott, in our trust agreement, has to give those kids at least an opportunity to be good business people. If they can achieve that, that's his decision. I'm out of the picture and not trying to operate from the grave.”
Forgey's literally banking on the next generations; he and his wife, Helen, went back into debt to build the new parlor. “Still, I can't think of a better place to be at retirement age — being involved in what I enjoy and allowing the next generation to take over the business,” says the 66-year-old. “If you're not growing and expanding, you're standing still. Standing still isn't the answer for Scott.”