Economics Drive Franklin County Farmer To Expand
cows.
The McCullohs’ herd average
As Greg takes over more management responsibilities j s about 25,222 pounds of milk
on the farm, Doug Is looking forward to getting more in- with 967 pounds of fat and 818
volved in his church. Right now Doug handles crop man- pounds of protein,
agement and machinery maintenance on the farm. 21-year-old Greg returned
Expansion Dollar And Sense
It’s difficult to put an exact
value on expansion because
every farm is different. The
success of an expansion de
pends on many variables, in
cluding your management
style, the amount of planning
invested in the expansion, and
your current situation.
According to Harold Moyer,
Dairy Business Specialist for
the Dairy Business Services de
partment of Land O’Lakes feed
division, you have to look at
your unit costs.
“Before a fanner considers
expanding, he should make
sure he is less than SO percent
in debt,” said Moyer. “Costs
also need to be controlled.”
Moyer gives the following
bench marks for controlling
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costs. Feed costs shouldn’t be
more than $1,200 per cow per
year. Vet bills should be less
than $75, and foot trimming
bills should be under $l2. BST
costs should be below $9O per
cow per year.
“Your debt service should be
$6OO or less per cow per year,”
said Moyer. “If it gets higher
than $7OO, you’re working
more for the financial institu
tion than you are for yourself.”
Another thing to consider
before expanding is the atti
tude of all parties involved
with the operation. “You can’t
have partners who aren’t total
ly behind the expansion,” said
Mbyer. “Eveiybody has got to
be supportive. If not, you’re
just asking for trouble and
making a costly mistake.”
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Editor’s Note: This is the
fourth article in a special June
Dairy Month series on “Dairy
Profit Possibilities. ”
MERCERSBURG (Franklin
Co.) When Greg McCulloh
joined his father Doug on the
farm several years ago, Doug
knew they had to expand to pro*
vide enough income for both.
“The economics today push
you to expand,” said Doug. “If
you’re running the same type of
milking equipment or machin
ery for a 220-cow dairy that you
were for a 120-cow dairy, you’re
getting more income by spread
ing out your costs.”
The McCullohs milk 220 cows
and farm about 450 acres in
Franklin County. Up until last
summer, they were milking 120
Once you do expand, the
most significant benefits are
found in labor needs, cash
flow, and cow comfort.
“You get to realize the bene
fits of economies of scale,” said
Moyer. “Your labor needs and
unit costs per cow reduce. And
you have the ability to hire out
side labor.”
Another benefit that Moyer
sees in expanding is the ability
to specialize. “You can rely
more on custom work and pur
chased feed while concentrat
ing on the dairy,” he said.
“You may even want to have
someone custom raise your
heifers.”
“Expansion gives you the
ability to give up some of your
other responsibilities and con
centrate more on the dairy.”
from college to the farm in 1997
when Doug was laid up in the
hospital recovering from sur
gery. When Doug recovered,
Greg decided to keep working
on the farm.
“We needed to build a new
parlor and, with Greg coming
into the operation, we needed
more income,” said Doug. “So
we decided to expand.”
Another reason the McCul
lohs decided to expand was be
cause they wanted to use all of
their ground to feed the herd.
“We were selling 80 to 100 acres
of corn each year,” said Doug.
“And we were taking a chance
on the price.”
The McCullohs relied on
plans from Hoards Dairyman
and Penn State to design the
new 100-cow freestall bam.
Along with the builder, the vet
erinarian and their cooperative’s
field representative offered a lot
of advice on what worked at
other dairy farms.
The McCullohs designed the
para-bone double-nine parlor on
21-year-old Greg is responsible for the 220-cow milk
ing herd on the McCulloh dairy operation. Greg returned
to the farm after spending a year at Penn State Mount
Alto campus.
Lancaster Farming, Saturday, June 24, 2000-A27
their own. They purchased a
used double six parlor and
added three stalls on each side
The parlor was made by Ger
mania.
“The parlor is still angled like
a herringbone parlor, but we can
milk between the back legs,’
said Greg. “We have the same
visibility of a herringbone with
the convenience of being able tc
milk from the back.”
Fortunately the McCullohs
were able to expand while keep
ing costs low. “We kept it sim
ple,” said Doug. “We bough)
cows from a local cattle dealer
and purchased used equipment
We also recycled some of oui
existing equipment.”
Now the McCullohs have im
proved profitability and cash
flow because of their expansion
which they hope to pay off in
five years.
Although the McCullohs did
try to keep costs down, they still
went over budget in the expan
(Turn to Page A 29)