HARRISBURG, Pa. — The next generation of a dairy farm doesn’t have to be all in the family.

In a panel discussion at the Center for Dairy Excellence’s recent Dairy Financial and Risk Management Conference, three dairy producers shared how partnerships outside their families provided ways to combine land, cows, labor, equipment, capital, and management, and for one, entry into dairy farming without a family dairy to come home to.

Moderating the panel was Dr. Brian Reed, a retired veterinarian and independent business consultant assisting farm families going through transition planning. He said nontraditional concepts could be especially timely as Pennsylvania considers how to grow its dairy industry and milk supply.

“There might not be a next generation plan” on many existing farms, Reed said, while they still have “very functional facilities” that could remain in dairy with upgrades and creative arrangements.

Pieces that fit

Lisa Graybeal, a Pennsylvania deputy agriculture secretary and dairy farmer from Peach Bottom, described how two sizeable established dairies came together, having each reached limits they could not easily overcome on their own.

Her family’s Graywood Farms had large, contiguous tracts of productive southern Lancaster County farmland, along with manure storage, composting and bunker capacity. But the dairy itself had reached a difficult point. Graybeal’s uncle had retired, she had taken a position with the Pennsylvania Department of Agriculture, labor was a challenge, and the farm’s facilities were maxed out, milking 900 cows.

Ben Flahart with Kilby Farm in Rising Sun, Maryland was also milking about 900 cows with maxed out facilities, nearby housing restricting their expansion, and a land base that was constrained. Graybeal said Flahart brought a strong labor force and cropping capabilities along with milk hauling, a manure digester and experience with sand bedding.

“Nine hundred cows is in that sort of weird area. You’re not really small, but you’re not big. So how do you fit in? What do you do?” Graybeal shared. “We decided to pull the trigger. We decided, let’s try it.” The result is PennMar Dairy, established in 2024.

The farms aligned milk marketing to Flahart’s cooperative Land O’Lakes. The former Graywood expanded its parlor capacity, added employees, transitioned to kosher milk production, switched from mattresses and sawdust to sand bedding, and moved their youngstock operations to Maryland. Then another opportunity surfaced — a Baltimore County dairy milking about 150 cows became available for lease. PennMar expanded that location to 750 cows.

Today, PennMar Dairy milks about 3500 cows at three Pennsylvania and Maryland locations.

Rapid growth has brought another challenge: making sure everyone knows who is responsible for what. They’ve worked to define roles among owners and managers, identify employees’ strengths, and build a management structure around a business that is no longer several farms operating independently.

An entry without a family farm

As a first-generation dairy producer, Austin Copenhaver took another route. Growing up near Annville, Pennsylvania, he had uncles in dairy, but his father had a landscaping business. He wanted to dairy but didn’t have a family dairy to return to.

While attending Cornell University, Copenhaver and friends Garrett Eiholzer and Clayton Wood talked about someday dairying together.

“We were 21 and a little wild, and we all kind of had the same vision… to be profitable, to make our own way, and to prove that we can do it,” he reflected on the process of visiting New York dairies and seeing younger farmers entering through succession arrangements that weren’t necessarily within a family.

In 2013, a consultant connected the three Cornell classmates with the Hathorn family in Stanley, New York, which was beginning to transition out of dairying.

Rather than buying the farm, the young partners entered through a lease-share arrangement. Their LLC received 25% to 30% of the milk check while paying certain herd expenses they controlled, and they began acquiring cattle of their own.

Copenhaver estimated the three started with combined funds of under $100,000 and about 25 cows. The arrangement with Hathorns overcame their lack of capital, and it gave both sides a way to test the business relationship before making a permanent commitment.

When they needed a 200-cow dry cow barn, the Hathorn family helped make financing possible by cross-collateralizing land, something the young partners could not have done themselves on property they didn’t own.

Their Ivy Lakes Dairy has since grown from 400 to 1100 cows and they’ve bought out the remaining assets from the Hathorns. Copenhaver later partnered with crop farmer Jeff Dann to establish neighboring Gorham Dairy, now milking about 600 cows.

Today, Copenhaver is involved in six partnerships, mostly related to the dairy business, including one that facilitated growth in the heifer-raising part of the operations.

His advice to others trying to enter dairy is to be creative and willing to pursue opportunities while recognizing many will go nowhere. His wife calls those meetings, ideas, and possibilities “nothing sandwiches.”

Finding the few that work may require going through plenty that don’t.

A partnership vs. an exit

Lyndon Miller shared that he was thinking about leaving dairy. By 2016, the Smithsburg, Maryland dairyman was dealing with aging facilities, heat stress, increasing land rents, and the loss of rented acreage. His children weren’t showing interest in taking over the dairy at the time.

Miller began considering whether he should quit milking and work as a herdsman for someone else.

His eventual partner, Joel Strite, faced different limitations. Strite’s family milked about 140 cows in older facilities, while he had developed a custom harvesting and manure business.

The two already knew how they worked together because Strite did Miller’s custom work. In 2017, Miller asked Strite if he had a job for him. Strite asked Miller if he would milk his cows. That conversation eventually became Skyline Dairy LLC.

After several years of cash-flow analysis, consulting, permitting, financing, and legal work, they built a new robotic dairy. Cows moved into the facility in April 2022, with Skyline now milking about 350 cows.

The partnership makes use of assets from both operations. The new robotic barn is jointly owned by Miller and Strite but sits on Strite’s land. The Strite home farm, where Miller now lives, houses dry cows and calves, while Miller’s original farm about five miles away is used for heifers.

Miller handles day-to-day dairy management and genetics. Strite’s strengths are cropping, equipment, repairs and projects.

The arrangement illustrates a theme common to all three panelists’ stories about nonfamily, nontraditional partnerships: partners don’t necessarily bring the same assets or skills.

But as Miller emphasized, complementary assets aren’t enough. “Trust is absolutely paramount.”

Trust didn’t replace paperwork. Miller and Strite hired a business attorney and worked with their accountant and consultant to develop a roughly 30-page partnership agreement addressing ownership, death, buyouts and exits. Leaving the partnership during its first five years carries a 25% reduction in value, providing protection against an early departure while the new business is carrying startup debt and risk.

Miller distilled his advice to this: “Hitch your trailer to somebody that’s honest.”

Same destination, different path

The panelists also made clear that a good partnership doesn’t mean partners always agree.

“You can have the same vision and goals but might see a different path to getting to that goal,” Copenhaver said.

In his partnerships, one person may be ready to run with an idea while another questions it or slows down the decision. That can strengthen rather than weaken the business if partners trust each other’s motives.

“If everybody has the right amount of respect for each other and knows we have that shared vision, it all works,” he said.

Communication is essential

Graybeal said one early challenge at PennMar was moving beyond each farm continuing to do things its own way. Partners and senior managers now communicate regularly about what happened the previous week, what’s coming next, problems that need attention and who is responsible for handling them.

Financial planning has become more structured. PennMar hired an in-house accountant and holds regular meetings to review projections, costs and goals. Skyline reviews cost of production in financial meetings during the year, while Copenhaver’s partnerships use budgets developed with managers and Farm Credit, and the partners talk about the business several times a week.

For farmers considering an unconventional transition, the three operations gave a glimpse of distinctly different models: combining established dairies whose strengths and limitations complemented each other; giving young farmers a gradual entry into an existing or exiting operation; and combining two farms and two skill sets to build something neither could easily have built alone.

The common thread was not a particular ownership formula. It was finding people with a shared destination, determining what each could bring to the business, putting the financial and legal structure around it, and building trust to make it work.

As Reed suggested as he moderated the panel, models like this could become increasingly important when the land, facilities, and desire to dairy are still there, but the next owner isn’t necessarily waiting in the family tree.