The Impact of Skyrocketing Lumber Prices on U.S. Dairy Farms

Many dairy farmers have pushed pause on expansion projects due to the rising cost of lumber, while others are stuck in limbo not knowing whether to move forward or wait till prices decline.

Some producers, however, were fortunate enough to move forward with building plans ahead of the price surge of material, including lumber. Don Mayer, district manager for the upper Midwest with DeLaval, says that construction costs are part of every project conversation they are having today, both with green sites and retrofits.

Muy Bonita Guernsey's & Jerseys in Freedom, Wis., started building their on-the-farm creamery last November. "The building quote from August to November increased by $7,000," owner Tammy Fritsch says. "Really for us, it's not the cost, it's getting all the equipment delivered."

Fritsch is watching firsthand the struggle of the supply chain, while also witnessing the shocking increase of freight. While the Fritsch family is moving forward with building, their grand opening has been pushed back a month due to the slowdown of getting materials.

In addition, the Fritsch's own a concrete business and their suppliers are struggling to get rebar and any plastic due to the winter storm in Texas. Consequently, their concrete price went up $2.50/yard from last year to cover costs.

Further west in Elkton, S.D., Crosswind Jerseys signed a contract and put down a payment to add another 350-cow freestall barn. The dairy is an LLC partnership between Stefan Temperli and his parents, Ernst and Ursula, and Stefan's brother, Martin, who also is part of the dairy's management team. Located off the I-29 corridor, the family currently milks 1,850 cows.

Temperli says they decided last year they were going to add another barn on to finish out their expansion plans for the dairy and were thankful to lock prices in, pre-ordering the building and supplies in December. "It is an all-steel building, so we didn't have to worry about lumber," Temperli reports. Their builder informed them regardless of material, the same building would cost 35-40% more if they were ordering it today. Crosswind Jerseys were thankful that the building and materials were pre-ordered and were delivered to the farm, as they have become well aware of the rising costs and difficulty of locating supplies, such as insulation.

With a year of so many variables, Crosswind Jerseys are glad they don't have to worry about material prices varying while simultaneously putting up another barn. "We feel very fortunate that we locked in things when we did," Temperli adds.

Mayer says that he has had contractors say the price quoted is good for today only and you have to decide when it's presented if you are going to move forward or not. "Some contractors will give you a quoted price, good for a week, but it is rare to see something longer than that," Mayer says.

Temperali strongly encourages other producers that are wanting to build now to push pause unless it's an absolute must. Mayer reports that he has had several families that are waiting out material shortages and huge price increases, hoping that there is some return to normal in 2022. "We are doing a number of really nice projects, however, I do think that some people have pulled back due to construction cost," Mayer adds.