A number of factors can affect farm profits, some of which arc
- Farming methods
- Size of business
- Management practices
- Income and expenses
This article will focus on farming methods. Other factors will be discussed in upcoming articles There
aic many diflcicnt ways to farm How much capital you will need and what you will need it lot. will lie
determined in part by the style of farming you choose
The dany industry is changing, and these changes may dictate a need for farmers to reexamine the way
they do business The traditional methods of the past may not be appropriate for .the present or the future
So, explore the options, push the pencil, consider the pros and cons of the various options, and choose a
style that Tits you.
Rent vs Buy If capital is tight, it will probably be more economical to rent rather than taking on a lot of
debt to purchase your own farm Rental payments generally are less than real-estate taxes and mortgage
payments Rent also is a tax deductible expense, principal payments on land are not
Custom Hire vs. Owning. Operating and Maintaining Your Own Equipment Similarly, it will probably
be cheaper to hire a custom operator to do some farm jobs rather than owning, housing, operating and
maintaining your own machinery - that is, if good operators are available when you need them When
you hire a custom operator, you are also hiring some part time help and some extra machinery, such as
tractors, wagons, etc
ind Sharing vs Purchai
merit Another option is to lease
some ot your equipment when you need it, rather than to buy it and have it sit idle for long periods of
time You can also share machinery with the neighbors in order to reduce capital expenditures
You also have the option of buying all your feed, of glowing foiagcs
only and buying all your giam, or buying all your feed The option you choose may depend on the
amount of acreage you have, the amount of limp you have foi fieldwork, the amount ol equipment you
own or afford to own and maintain, or your costs of producing feed vs the cost of buying it Gcneially,
you can buy gram almost as cheap as you can grow it, especially if you buy feed at harvest lime when
puces arc generally more favorable Having enough land to grow most of your feed is advantageous, but
it may not always be available or affordable Even if you have a lot of land, the time you spend in the bai n
with the cows may be more valuable than the time you spend in the fields In that ease you may want to
hire crop labor, hire custom operators, or rent your land out and let someone else produce the teed
Feeds vs Giowi
Dliviii;
..it’s no puzzle to us.
No matter what you do for a
living on your farm, you’ll find
that ENB knows your business
across and down and backwards
and forwards. If you need an ag
loan for any sound business
reason, give me a call.
For more ag lending information call 717-733-2911
Ifte T>pfiraUi{SotiaTuiC
MEMBER FDIC
DAIRY FARM
MANAGEMENT
BASICS
A Farm Management Course by
Glenn A. Shirk
Penn State Extension Agent
Lancaster County, Pennsylvania
Farm Pn
>rs Affcclu
me Your O'
iing and Mi
tide 4
Bob Zook, VP
Ag Lending
Serving
farmers
since
1881
Feed
You could own your (arm and dairy herd, but have someone else
crop the land, store the feed, purchase the necessary feed ingredients, mix up the feed ration, and dchxei it
as a TMR to your farm daily Through your TMR provider, you may have access to a grcalci variety ol
feeds, and at bulk discount rates This eliminates your need for feed storage facilities and field machinery
plus it could provide you the opportunity to earn additional income from other employment and ventures
Gracing vs. Cropping If capital is short, you may want to consider grazing vs cropping as a way to
reduce capital requirements Chances are, this may not make your life any simpler You need to look al
pasture as a crop, the goal of which is to get high yields of good quality feed al reasonable cost This
requires a lot of management skills You always need to be monitoring pasture growth and gia/mg
patterns m order to match pasture production with the herd’s daily needs while also reducing pasture
losses You need to be continually asking yourself, where is the feed coming from tomorrow ’ next week ’
two months horn now l when the pastures dry up 9 and next winter 9 What pasture species do I plant that
will be high yielding throughout the year while being palatable to the herd 9 How do I maintain a thick
pioductivc stand > What si/c plot do I need today or how long should I leave cows in a gtxen plot ’ \\ li n
do Ido with the small plots of excess growth that arc a nuisance to bale 9 How can I manage pasture plots
to reduce selective grazing and pasture wastage without depressing dry matter intakes and milk
ptoduclion 9 How do I get rid of manure 9 How do I gel water to the pastures, and how do I maintain di x
matter intakes in the heat of summer 9 How do I feed and manage the herd in a pasture system ' How
heavily do I rely on pastures foi feed, and how much supplemental feeding do I do m the bam ’ How
much production can I afford to give up, if any, relative to the costs I save '
ilaccmi
;nls or Contiaclim
II you aic short on acreage on bain
space or laboi, you may want to purchase your replacements, or contract your heifers out for someone else
to I disc Idthci Ilian laismg them yourself Mayhc you don't like raising hcilcis and perhaps someone else
could do a belter job than you This might cost you more than raising them youiscll. but it also allow s
you to devote moic of your land, labor and facilities to support a larger milking herd and pci haps cam
moic piofit Puichasing some replacements also is a way of impiovmg or divcisilymg the genetics ol youi
herd You need to consider the cost of doing this plus you also need to be concerned about the c|iialilv ol
the job done by the heifer raiser, and about the risk of introducing new diseases to youi laim
J.Qim Venturer Would it be beneficial to unite with other dairy farmers in a |oml vcnluie o( some soil lo
foim a laiger, moic efficient, |omtly-owned dairy business that consists of a herd and lacilitics > You
could still own your farm but rent it lo the business while working for the business and (hawing a sal.in
and then splitting the herd profits and losses at the end of the ycai Rather than spend the same dollais
icmodelmg your present facilities and possibly still not have a desirable setup, or building a new, small
sized facility that matches the size of your farm, would it be more economical lo |om forces with olhci
similar fanners to build a larger, more efficient operation 9 This also has the potential of letting the
participating farmers specialize so they could do the things they arc good at and enjoy doing (01 the
overall good of the whole team The faimers would have lo be able lo work together as a team, and il
sometime in the future you want out of the business, you could sell youi shaie m the dairy business and
still retain ownership of your farm
F. 0.4 July Milk $l4
ALEXANDRIA, Va. Acting
Market Administrator David Z.
Walker recently announced for
July 1998 a Class I pnce of
$14.11 per hundredweight and a
Class II pnce of $ll.lB per hun
dredweight.
The Class I price could be
affected by judicial action.
The July Class I price
includes the 20-cent assessment
for fluid milk promotion and
consumer education. The Class I
price and the Class II price are
down $1.13 from June but are 18
cents higher when compared to
year earlier levels
Mr. Walker announced a
Class 111 milk price of $10.78 per
hundredweight for May 1998
and a Class 111-A price of $13.86
per hundredweight for the
wll
for Super Cows
W-L Research’s hfgh quality (HQ) alfalfa varieties
deliver high forage yield, superior feed value and
outstanding persistence. Top-rated in university
trials, WL325 HQ is the leader in quality and milk
production potential. WL324 is very winterhardy
and is the high yield champion.
Contact your local distributor:
Ag-Chem, Inc. at (800) 441-0093 or
Agchem Service at (315) 986-2226
87308-LF
Lancaster Farming, Saturday, June 27, 1998-A2l
month. The Class 111 price was
down $1.16 from the previous
month, while Class 111-A price
increased $1.05.
The July 1998 Class I and
Class II prices and the May 1998
Class 111 price are based on the
May 1998 basic formula milk
price of $lO 88 per hundred
weight at a 3.5 percent butterfat
content. The May 1998 butterfat
price was $1 7966 per pound, up
30.69 cents from April. The May
skim milk price per hundred
weight was $4.66.
The USDA reported that the
wholesale price of Grade A but
ter at Chicago for May was
$1.4945 per pound on the mer
cantile exchange and the
Central States nonfat dry milk
price was $1 0348 per pound.
High
Quality
Alfalfa