Lycoming Co. DHIA
(Continued from Page C 8)
867
Regina
R 35
Gs'
Marvin L Waltz
Fancy
Evalme
Maxine
Boots
Burton Y. Staman
95
Jack L. Hippie
113
Dennis W. Eckert
Wilann
Merrill Holdren
47
Richard J. Daly
Harold & Anna Mae Bower
Cutie
Schon-Crest Farms
Honey
Virginia
Alice
Lizzie
Dale F. Cooley
Michele
Richard Schon
Jan
Fred W. Lovell
Rosy
Lost Brook Farm
41
63
71
79 .
Kreidell Farms
93-
Aaron Ritter
Etfie
Jitty
Edward C. Ulrich
3Freda
Franklin J. Fmck
Irma
Patsy
Rose
Peggy _
SEPTEMBER 1981
Herds averaging over 1.35 lbs. buttertat.
Richard Barto R&GrH 42 6 87.8
Eugene W. Hall - R&GrH 67.6 93.8
Samuel & Larry Fry - RH 119.6 88.8
Robert L. Tome R&GrH 51.4 88.3
John Snyder R&GrH 39'2 92.7
Marshall Bros.*l RH 1000 85.6
H& A Bower R&GrH 23 3 83.6
Lost Brook Farm R&GrH 651 82.4
Franklin J. Fmck RH 78 6 94.6
. Harold R. Dnck GrH 210 96.3
Merrill Holdren GrH 310 89.8
M. FuossJr. R&GrMix ‘39 0 96.3
Willard Brelsford R&GrH 40.2 85.1
Edward C. Ulrich R&GrH 35.9 96.7
John C. Bower Jr R&GrH 86.1 89.0
J. David Jarrett R&GrH 118.5 81.9
Schon-Crest Farms R&GrH 42 0 87.8
Mary Katzmamer R&GrH 49.0 93.1
Jesse Snyder . RH 33 6 99.8
Youngsway Farms Inc. RH 80.1 94.9
L. Paulhamus R&GrMix 15.4 98.1
Steppe Brothers RH 85.9 83.7
Benjamin McCarty R&GrH 28.1 86.1
Mont-Will Farms R&GrH 38.0 74.3
Dale F. Cooley R&GrH 31.0 75.3
Eldon L: Metzger GrH 40.9 81.8
David L.C. Albert GrH -21.3 87.1
Earl L. Hensler R&GrH 40.7 84.4
Thomas Dunlap GrH 28.0 80.5
Don & Scott Lepley GrH 32.8 73 8
Cows Producing Over 650 Lbs. Buttertat:
Harold R. Dnck
Flo
Cora
Samuel & Larry Fry
Nipper
Iney
Earl L. Hensler
Ivy
Roy Schultz
Den ice
Lida
Peggy
Jesse Snyder
Fancy
Glady
■ Bettie
Carrie
Candy
J. David Jarrett
Maid 12
197
15
154
Robert Voneida
Cheryl
Lester M. Poust
Melodee
Mystic
Kathy
JohnC. Bower Jr
Dot
Willard M. Brelstord
Donna
Prem
Peachy
Mont-Will Farms
Patsy
Linda
Eve
Norwood Meisel
Mae
Richard Barto
Lucy
Cheryl
19.221
16,280
17,392
12,444
4-2
3-3
3-4
2-8
17,442
23,186
19,253
17,178
6-10
5-10
4>U
1-11
19,742
19,179
7-1-1
20,000
20,153
15,357
18,096
18,786
17,410
23,900
16,617
17,932
16,929
7-5
6-2
3-7
2-2
16,254
18,599
16,890
20,623
19,785
18,533
23,337
9-6
5-7
4-3
4-3
15,885
17,560
25,839
19,625
24,186
18,227
19,974
17,714
7-10
15,893
18,056
9-0
6-0
17,400
19,035
15.293
18,775
18,834
17,854
20,935
16,761
18,488
17,869
18,125
8-2
7-3
3-4
2-8
2-7
17,208
14,828
13,574
18,075
7-0
4-10
19,513
6-4
4-4
4-2
24,460
22,954
24,026
948
1026
1037
4-U
20,890
898
671
678
661
20,401
20,047 -
16,526
820.
19,917
20,735
20,195
753
760
16,826
681
22,435
18,864
760
741
30b
271
281
246
678
'682
856
653
30b
30b
305
305
767
909
709
686
305
656
305
681
30b
709
30b
760
305
305
305
673
650
689
30b
809
30b
30b
30b
305
793
726
774
695
Cash flow or the lack o£ it is
a problem that is becoming all too
familiar to many farm families.
When you are in this predictament,
the big question is, how do you
improve the situation?
Well, don’t expect any magical
solutions, simply from reading this
article. It isn’t that easy. Better
market prices and lower
production costs would help, but
these are things over which you
have little immediate control. So,
let’s focus on a few things you can
control.
30b
704
30b
729
30b
682
30b
305
305
305
815
759
688
769
305
663
First, let’s look at debt load, a
figure that can be very
astronomical on a dairy farm. A lot
is said about interest rates, and
they are a major problem. For
.example, if you took out a $lOO,OOO
loan for 15 years at 8 percent in
terest and the rate jumped to 13
percent, the increase in interest
payments might amount to an
additional $3,800 per year. It’s hard
to take that big a cut in profit when
inflation is going the opposite
direction at 10 percent or more per
year. .
305
305
731
977
30b
848
30b
305
305
305
865
769
678
677
But, let’s not use interest rates
as an .excuse to.overshadow other
major concerns such as debt load
per cow and type cf financing.
Let’s look at how much additional
milk is needed per cow per year to
service an additional $l,OOO of debt
per cow, and compare this to the
impact of interest rates.
Remember, the cows have to carry
Steppe Brothers
Ida
Jean
Juicy
tugene W. Hall
Lady
Marshall Bros Inc. Hi
Susie
8107
R 42
Rai
30b
30b
713
680
Marshall Bros Inc H 2
196 M
744
678
30b
30b
& Reanck
103
61
21
726
27b
30b
305
305
658
707
753
892
795
769
692
744
305
305
305
305
305
Schon-Crest Farms
Candy
Jill
297
30b
30b
305
656
662
708
664
Warren Fenstermacher
86
Fred W. Lovell
Ann
Valerie
30b
758
30b
30b
30b
Lost Brook harm
83
32
Mary Katzmaier
R 37
R 59
305
299
305
305
fcldonL Metzger
4
2
Benjamin E McCarty
39
20
296
297
248
EranhlmJ Finck
Irene '
Shirley
Barbara
Bell
305
305
305
Dairy
1 Pipeline
By
•A: }' ; jjL Glenn A. Shirk
• Extension
- ’ Dairy
Agent
Easing the Financial Crunch
StreaKr
Elite
Don & David Bogart
89
Merrill Holdren
34
Richard J. Daly
16
15
Dale F. Cooley
15
NtcKy
the debt load and meet the
payments.
So, let’s look at their carrying
capacity before we get ourselves
over-committed. And let’s see how
vulnerable we are to production
changes.
To make this comparison, I’ll
make several assumptions. First,
let’s work with a net milk price of
$13.40 per cwt. (This price is not
intended to be a prediction; it is
being used only to serve as an
example).
To increase average production
per cow above your present level of
production, about 40 percent of the
income from the additional milk
will be gobbled up by the additional
costs associated with producing
that extra milk. The remaining 60
percent will be profit, profit that is
available for servicing additional
debt loads, etc. In other words,
only $8.04 of the $13.40 price for the
additional milk is profit. These
figures will vary greatly from
farm to farm, and the profit ratio
will be much smaller, and in some
cases non-existant, at lower levels
of production.
How many pounds of milk, at
$8.04 profit per cwt., is required to
carry a $l,OOO debt per cow and a 1
percent increase in interest rates?
Study the following figures. They
can be quite revealing.
17,110
21,377
18,634
10-4
6-6
5-4
23,028
20.341
22.656
6-8
6-8
4-1
17,288
21,031
17,203
18,333
10-7
4-5
4-2
3-6
17.232
18,831
19,328
17,344
17,956
16,605
3-6
3-10
25,090
16,155
20,473
.21,339
18,968
20,754
19,255
18,327
18,862
3-11
2-3
20,002
15,165
19,654
16,455
10-8
7-7
18,12/
15,739
4-11
1-11
19,409
18,213
7-3
5-2
3-10
20,058
15,882
17,090
17,243
Lancaster Farming, Saturday, October 31,1981—1
305
305
303
709
796
673
305
305
305
995
834
841
305
305
305
305
681
892
762
745
305
702
305
305
305
834
907
676
305
689
305
753
305
30b
926
827
874
820
300
305
305
279
745
706
305
806
277
30b
686
687
303
305
721
564
30b
299
788
652
305
305
690
662
294
305
660
678
305
305
305
30b
762
705
756
719
Extra
Length of Interest Annual Milk
Loan Rate Payment Needed
Syr $320 3977
17/0 313 3868
$163 2025
ibs 1925
IS yr
in the above example, your herd
average would have to increase by
about 4,000 pounds to support an
additional $l,OOO debt load on a 5
year loan. With a 15 year loan, and
lower interest rates, you can
support the same debt load with
about one half as much as milk.
Note too, that a mere 100 pounds of
milk will carry an increase in
interest rates of 1 percentage unit
for each $l,OOO debt load per cow.
Now, you tell me, which is more
crucial—interest rates or debt load
per cow and type of financing?
Hopefully, this comparison puts
things in a truer and clearer
perspective, and emphasizes the
importance of getting the right
kind of financing (length of loan
and interest rates) and of watching
your debt load.
This example shows how much
milk you need to carry the ad
ditional debt load. The converse is
also true. For example, if you’ve
borrowed to your limit, and sud
denly production drops by several
thousand pounds, look what this
does to your debt carrying
capacity. In other words, be sure to
keep a margin of safety.
What To Do
So, you are over-committeed.
What can you do?
Look at your debt structure to
see if refinancing will help. Would
it be helpful to convert some high
mterest short-term loans and notes
to long term loans? What items can
you return or sell in an effort to
stop present payment obligations
or to convert them into badly
needed cash?
A word of caution at this point. In
a desparation move to raise cash,
be careful you do not sell away
your income producing base. For
example, you might sell two non
profitable cows for cash and use
that cash, not to make a debt
payment, but to re-invest in one
profitable cow, and use the profit
from her to pay on the debt. Her
profit is ongoing. The cash from
the cull cows is useful once and
done!
Another move might be to
reduce your machinery and
equipment line, and hire a custom
operator to perform the work done
by this equipment. This may have
an added advantage of freeing you
to spend more time with the herd—
where your time can really pay big
dividends.
Remember, increased
production makes it much easier to
meet debt obligations. Pay at
tention to those details that get
cows bred, that keep them milking,
that reduce mastitis and keep
calves alive and growing
vigorously
Another word of caution. Be slow
to give up equipment and
machinery which are crucial to
field operations that must be
performed on a timely basis, such
as harvesting haylage. True,
forage harvesters are expensive to
own and to operate, but it might be
far more expensive to end up with
a silo full of mediocre feed and a
herd that does not produce as it
should just because the custom
operator was not there when he
should have been. It’s hard to
make milk or a good profit on poor
quality feed.
Also pay attention to those little
things that cut production costs
and improve efficiency, such as
feeding more frequently, weighing
feeds and testing them for
moisture to determine actual in
take, balancing rations, least-cost
formulation, good bam ventilation,
preventative herd health
programs, etc.
A common temptation is to get
bigger in an effort to produce more
(Turn to Page CIO)
•C!
Pounds of