Selling livestock doesn't hurt as much the 2nd time round
Jan Jelsma sold his 600 dairy cows in the United States at peak prices and now carefully starts with one hundred heifers. In a year’s time, he wants to fully be in production again with his own young cattle.
Jan Jelsma emigrated in 1998 from the town Haulerwijk (Friesland, the Netherlands) to Michigan in the United States. In 2008, he sold this company after – in his own words- "crap with the bank". Afterwards, he bought a neglected company in Denver, Iowa, in a region with few dairy cattle.
A strange decision, selling everything and slowly restarting. What are your reasons?
"A combination of circumstances. The dollar is relatively expensive compared to the euro. The milk and cattle were also more expensive than in Europe. We made good money in 2014: US$800,000 before taxes. That cannot remain the same, so I started calculating when someone offered a great price for my dairy cows. Because I had no emotional ties to the cattle – this is the second time I sold my livestock – it does not hurt anymore."
Name: Jan Jelsma (49).
Town: Denver, Iowa, United States.
Company: 100 dairy cows, 450 young cattle. Barn capacity is 600 dairy cows and accompanying young cattle.
How much did the cows yield?
$2,500 each, $1.5 million in total. I put the money on an escrow to prevent having to directly pay taxes over the book profit.
What is your next step?
I started out with 5 employees, 2 remain. The 24-stands inside milker has been renovated and I want to improve the outside of the company again. I bought 100 heifers 2 months ago for $1,500 each. I am in the pit again myself. Milking for an hour is ok, but 6 hours at a time is not my thing. With the money I earn from milking, I can pay for raising the young cattle and all day-to-day expenses, including the annual lease on the 120 hectares that come with this company.
Are you buying more cattle?
"I don't know yet. The low milk price, around $30 per 100 kilograms right now, could remain low until the end of next year. This may result in heavy blows. Cattle prices were high because many farmers expanded without having enough young cattle. As far as that goes, I might have started too soon myself. Also, I had a heart attack recently and my wife would like to return to the Netherlands. I bought a house there. Selling this company is an option. I have that balance on the escrow, I have not spent the 2014 proceeds and there is less than the $200,000 mortgage on this company. On top of that, I have an option to buy the land I lease. The lease price is fixed until 2019, as is the purchase price. This may result in a profit of $1 million. Everything is possible."
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