Dutch Dairies

From Marketplace:

The Reulings built a new house and a state-of-the-art milking parlor. But the project also required a minimum of 300 cows. That's about average for Iowa, but it was four times more than what the farmers had milked back home in the Netherlands. Reuling found that many animals to be a burden, especially as he realized business plans that had gotten the blessing of Iowa State were overly optimistic and didn't match what was happening in the marketplace.

Reuling: Cows were more expensive, feed was more expensive. We couldn't make any profit at that time.

Two of the five families who relocated to Iowa have filed for bankruptcy, including Peter Poelma and his wife. The timing of their arrival in 2007 could not have been worse: corn prices for cattle feed hit record highs and milk prices plunged to levels of the 1970s.

Peter Poelma: We had to stop farming. We turned the farm over to the bank because we were not able to pay the bills.

Poelma has returned to the Netherlands after losing his life savings. Eduard Reuling says they were reassured they would have plenty of support both on and off the farm. But that help never came.

I never understood why these guys wanted to take a couple of million dollars (euros), move to the U.S., borrow even more, and start milking 600 to 2400 cows.  If I was sitting on several million dollars and really felt the urge to milk, I think I'd buy a quarter section dairy farm and milk somewhere between 50 and 80 cows.  That would be plenty of cows, I could have my milking fun and instead of losing tons of money, I'd lose much less.  Besides, then I could also raise my own feed.  I just never understood how these 1,200 cow dairies could be situated on 60 acres, with the dairyman buying all of his feed from neighbors.  I guess it is just my penchant for vertical integration, but I can't imagine being dependent on others for so many necessary inputs. 

I can't decide if these guys just got taken for a ride, or if they were crooks.  My guess is that the Vreba-Hoffs of the world really pulled the wool over the eyes of a bunch of hicks from the Netherlands, and the ag industry folks were happy to see some major livestock investments, and went along for the ride.  Regardless, I can't imagine a worse way to "invest" millions of dollars, except with Bernie Madoff.