—Lancaster Farming, Saturday, February 27,1971 12 Cattle Shelter, Fences, Corrals, Silo Costs Reviewed Here (Continued from Page 11) Hushes, and he wondeied how ;ome 200 head cattle lots with h'gh capital investments can pay loi themselves in light of the i datively small profit maigms m this type of feeding. Farmei s who have the capi tal to afford what Hughes re feued to as a “Cadillac style opeiation” still should consider the fact that they ought to get a letuin on their investment at least equal to what they could get for leaving the money m the bank to draw interest and, m addition, they should get a return for their labor Farmers who do not have the capital for “Cadillac style” farming, but who borrow the money, should take into account the high cost of borrowing money. Some farmers pay as much as 15 to 18 per cent in terest to buy machinery and equipment, it was noted. Hughes cited examples of two farmers that he knows about One farmer with a 50 to 60 cow dairy herd has outstand ing debts totaling about $250.- 000 and has recently realized that he’s not making out very well; Hughes indicated he’s not sure if there is a solution for this type situation In getting into this situation, Hughes said, the farmer kept buying all the latest type of expensive equip ment without legard to whether it would pay for itself and how it would benefit his operation The other farmer with about a 100 head dauy held has in expensive type machinery and equipment and maintains a re latively small overall invest B REAKTHROU6H in alfalfa . . . HIGHEST YIELDING ALFALFA IN PA. Yielded 7.14 Tons of Forage—-12% Moisture 1970 from Four Cuttings WL WL WL Now Available through your local dealer! # Resistant to Bacterial Wilt • Tolerant to Anthracnose • Rapid growing Stand persistant Dark green color Fine stems • Excellent seedling vigor and stand establishment • Developed by Watermau-Loomis Co., Specialized Alfalfa Breeders BEACHLEY-HARDY | Field and Grass Seeds Shiremanstown, Pa. 17091 ment, but this farmer reported a $47,000 net profit last year, Hughes said Hughes also said that farm ers cannot expect to get much of their investment in buildings and machinery back when they sell a farm The important fac tor m determining price in this area is the land itself, he said. In speaking specifically on silos, Hughes said the silo must fit into the overall farming system and it is only part of the system The farmer must think in terms of how the silo will fit into the system and help make profits, he said. While corn silage is the cheapest source of feed, the faimer must analyze his future building plans in relation to what he now has. When going into a new sys tem or an addition to the sys tem, Hughes said the farmer must be sure that added costs will not exceed added returns. There is a trend in farming toward substitution of capitol for labor and building a silo is one way of doing this. But the farmer must be sure that the silo actually will reduce labor requirements In deciding if he wants a new silo, the farmer should also con sider alternative uses for his money. Referring to Burdette’s comments earlier in the even ing, Hughes noted that $1,500 spent on a corral, with all the management benefits that a good corral can provide, could turn out to give a bigger return than a new $lO,OOO silo & MD. • • • 305 303 210 In anlayzing the cost of a new item, including a silo, the farm er must evaluate it on the basis of its yearly cost. For a silo, this should include annually five per cent for depreciation, three to nine per cent for in terest, one to two per cent for repairs and about one per cent each for taxes and insurance This indicates 11 to 18 per cent of the initial cost as the annual cost of ownership and this an nual cost goes up to about 18 to 25 per cent when additional necessary equipment is added, according to Hughes, He noted that conditions change faster today than be fore and the five per cent de preciation figure representing 20 years, may actually be too low. A 10 to 15 year deprecia tion schedule may be better, he said. Noting that costs for an 800 ton silage storage can range from just over one dollar a ton to over five dollars a ton, Hughes said each steer con sumes three to five tons duung a feeding cycle. This can result in a cost per animal of $l5 or over for silage storage alone And the difference between this cost and the lower cost storage facility can mean the difference of large sums of money annually when figured over the number of head the farmer feeds each year, Hughes explained. Some farmers may want to spend some of their profits for “some of the Cadillacs of opera tion” This is all right if the farmer has an a4®