DlB—Lancaster Farming, Saturday, September 19,1981
IF YOU ARE PLANNING
TO EXPAND
Readers of “Hoard’s Dairyman”
will recall a recent article with the
same title as this piece. The rest of
the title was “Look Before You
Leap”. Before anyone accuses me
of plagerizing the above article,
my intentions are to call your
attention to the piece and try to
focus attention on its message. The
message is that any notions of
expansion in the dairy business
should be studied carefully and
seriously—more so now than ever
before.
The idea of doing a partial
budget analysis to evaluate the
effects of a change in your farm
system is not new. We’ve been
stressing the importance of this
kind of exercise in our farm
management classes for several
HAVINI
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Be si
The new highi
more lime ea\
soil that tests
LliJ
LI
Blue Ball. Pa. (7!
Gap, Pa. (717)
PAUL B.
SnSESSFBU'DfIi
USED
STEEL TANKS
OVER 150 IN STOCK
275 Gal. to 12,000 Gal.
Can Be Used For -
• Feed and grain bins
• Livestock water tanks
• Feeding troughs
• Tolls & Bridges
• Manure Storage
• Fertilizer Storage
PAUL B. ZIMMERMAN, Inc.
Hardware • Farm Supplies
Custom Manufacturing • Crane Service
Box 128, R.D. #4, Lititz, PA 17543
Wood Corner Rd., 1 Mile West of Ephrata
Phone: 717-738-1121
Tl>e
Dairy
Business
By
Newton Bair
years. The trouble is, very few
people like to work their way
through the tedious calculations
that are necessary.
The Hoard’s article (found on
page 1021, August 10, 1981) com
putes the cash flow effect of adding
10 cows to a 130-cow herd. It
assumes no additional investment
in housing or equipment only
cows. The dairyman plans to buy
10 cows at $1,500 each, borrowing
money at 15 percent interest. The
budget analysis lists all credits
from the expansion move on the
side of “positive” effects, and
likewise lists all debts on the
“negative” side.
While the financial analysis does
show an after tax cash balance of
$371 per cow, $283 of this is
calculated as depreciation, and
therefore does not contribute to
actual cash flow. Even at his 16,000
pound production level, there is
only $BB per cow generated as
actual cash flow—not enough to
meet the short term debt
repayment.
Now, if this doesn’t cause you to
scratch your head, consider
another angle. Suppose the ad
dition of more cows also will
require extra investment in more
housing, stalls and equipment. For
10 cows, the cost is a minimum of
$15,000, which amortized over 20
years at 15 percent interest will
cost $2396 per year, or $239.60 per
cow per year for 20 years.
Of course, the cost of the building
and equipment will be regained in
depreciation, but meanwhile, the
loan must be repaid, with interest,
out of the cash flow generated by
the expansion move.
Now, let’s mull over some of the
risks involved. Due to the narrow
profit margin and weak cash flow
position, they are considerable. I
realize that it’s tough to predict
some of the key variables like milk
price, feed price and productivity
of individual cows. But considering
the present mood of the economy,
and the 9 percent annual increase
in milk production with no market
expansion, the future is a little
fuzzy.
Maybe I’m getting too con
servative in my later years, but I
would sure hate to see any of our
good, young dairy producers bite
off more than they can chew by
assuming more debt and more
work to service the debt. It will pay
to take a sharp look at the risks of
expansion in the dairy business at
this time.
NEW FROM KUBOTA
MANUAL
SHUTTLE SHIFT
MANURE STORAGE
A PROBLEM?
LEXUS
HELP YOU!
• Open Waste Pits
• Slat Pits
• Solid Concrete
Basement Walls
• Flat Concrete Work
Penna: York, Adams, and Franklin Counties
Maryland: Carroll County and surrounding areas
WE WORK WITH THE SOIL CONSERVATION SERVICE
Bollingers’ dairy farm
hosts Lebanon
conservation ‘open house’
LEBANON An earthen type
animal waste holding pond will be
one of the conservation practices
shown at the conservation open
house to be held Tuesday af
ternoon, at 1 p.m. on the Harold
and Donald Bollinger Farm.
Highlights of the day will be the
demonstration of a vertical shaft
pump. This equipment pumps
manure from holding tank to an
earthen holding pond. This
recently installed facility, provides
a means of manure management
for the Bollingers 95-head dairy
herd. The holding pond has been
fenced with high tensile wire fence
to prevent cattle and people from
entering the area.
Other conservation practices on
the farm are diversions to control
X IT’S MAGIC / —n.\ PHONE
How quickly v / 717-394-3047
I You Get Results \ or 717-626-1164
V From Our J r. ,
IF" II
KELLER BROS. TRACTOR CO.
RD 7 Lebanon. PA 17042 717-949-6501
Rt. 419 -1 mile West of Schaefferstown (Buffalo Springs)
runoff from buildings, subsurface
drainage to eliminate excess
ground water, contour strips used
to dispose of excess runoff and
methods to prevent stream bank
erosion.
The Bollingers have been
carrying out conservation
program, with the assistance of the
Lebanon County Conservation
District, since December 1950,
according to Tom Thomas, Con
servation Technician with the Soil
Conservation Service.
Thomas and other personnel
from the - Lebanon Soil Con
servation Service, will be available
to answer questions during the
open house.
The Bollingers’ farm is located
one-half mile northeast of Klein-|
feltersville on Millbach Road.
FRANK GEBHART
RD No. 1 BOX 41A'
ABBOTTSTOWN, PA 17331
717-624-4324
Now you can change from for
ward to reverse without touching
the gearshift. Simply disengage the
clutch, stop the tractor, and pull the
shuttle lever down in one straight
non-stop motion.
The two new shuttle shift mod
els are ideal for loader operation, as
well as grounds maintenance and
general farm chores.
The L 235 has 23.5 gross engine
h.p. and two-speed rear PTO, while
the L 275 produces 27.5 h.p. and
features live PTO.
Both are available in 2 or 4
wheel drive, with turf or ag tires
Come in for a look at these new
3 cylinder diesel powered tractors.
You will be amazed at the standard
features built-in by Kubota.
DKUBOTH
We’re looking for work.