March 15, 1998
Volume 1, Issue 5
Inside this Issue
A Buckeye Dairyman Wins!
Constructing New Buildings On the Farm
15-Measures of Dairy Farm Competitiveness
Milk Price Outlook
Hay Auction Prices
Calendar of Events
Make Plans to Attend!
A Buckeye Dairyman Wins!
Wayne County dairy farmer Keith Snoddy placed first in the Forage Spokesperson contest held recently at the National Meeting of the American Forage and Grassland Council in Indianapolis, Indiana. Snoddy was selected by the Ohio Forage and Grassland Council to represent Ohio at the National meeting and competed against representatives from 7 states.
Snoddy's theme was the importance of custom forage harvesting and selling to his dairy producer customers. Snoddy started his custom forage business in 1982 with custom forage bagging. In 1990, he expanded his business into selling corn silage and haylage. Today he sells corn silage and haylage, along with contract harvesting, utilizing two self-propelled forage harvesters, trucks, wagons and two bagging machines. He can fill bags, tower silos and bunkers. He knows the importance of good quality forage for he also operates a 200 cow dairy on the home farm in Shreve, Ohio.
Snoddy is a graduate of Youngstown State with a degree in Business Administration. He returned to the home farm in 1982 and took over complete management in 1990. Congratulations Keith, you make us in Ohio's Dairy Industry proud of your achievements and foresight as you lead us into the next Millennium.
Normand St-Pierre
Dairy Extension Specialist, Editor
Constructing New Buildings On the Farm
Joe Beiler
Extension Agent, Mercer Co.
There are three basic methods for construction on farms:
(1) Perform all construction with farm labor,
(2) Act as a general contractor and hire sub-contractors, or
(3) Hire a general contractor to construct the building.
Good planning helps in choosing a construction method. The following are reasons for considering different options in choosing a building method:
There are several questions that you must consider before choosing a
construction method. If you consider building by yourself, do you
have the necessary time? Who will manage current operations? Will
there be losses in production during construction? Where will the additional
labor come from (farm labor vs. hired labor)? Will the labor be proficient
at construction work?
Do you have access to all the equipment required for construction?
Do you have sufficient expertise in building construction and layout?
If you consider acting as a general contractor, are your plans specific
enough to tell sub-contractors what is needed? Are the interior details
already decided on? Are the sub-contractors all bidding on the same
things? Will contracts be used, and if so, who will write the contracts?
How will the sub-contractors be chosen (lowest bid, qualifications, reputation,
friends)? Who will do the scheduling and coordination of the sub-contractors?
Who will settle arguments for the sub-contractors?
Are all sub-contractors insured and what are they insured for? Are
you responsible for workers on your property?
If you are thinking of hiring a general contractor, how will you choose
the contractor (bids, qualifications, reputation or ability to get the
job
done)? Does he have the equipment required to do the construction?
Do all general contractors have appropriate insurance coverage for buildings
and workers? Who will write up the contracts for the construction
project? Planning the building must be done before construction begins.
Remember, additional planning is required to bring the building into production: buying additional animals, additional management concerns of new animals and possibly other construction or expansion required in other buildings on the farm.
Benefits
Building With Farm Labor
This month: Scheduled Debt Payment
Competitive Level: < or = to 20% of gross farm receipts
Calculation:
Example: (Total annual scheduled principal $ 83,100 principal
+ total annual scheduled interest +
37,300 interest + total scheduled capital lease payments) + 0 capital
lease payments / gross farm receipts =$120,800 total debt payments
x 100/ 775,000 gross farm income = 0.156 x 100 =
15.6% of gross receipts
Why should scheduled debt be less than 20% of gross receipts? If the operating expense ratio should be 70% or less, and debt less than 20%, what needs to be covered with the remaining 10%+ of gross farm income? Several important things including family living, retirement, taxes, and investment both on and off the farm.
Factors affecting annual debt payment include:
-total farm debt
-how debt is structured, short, intermediate or long-term
-interest rates on your debt
-gross farm receipts
If scheduled debt is too high, begin by evaluating the situation.
Is it causing cash flow problems? If so, options include:
-restructure debt over a longer term appropriate to the asset
(don't try to pay for a new parlor in three years!)
-refinance debt if better interest rates are available
-reduce debt (are there unnecessary assets that could be sold with
proceeds used to reduce debt?)
-increase gross farm income without additional debt
Remember, alternatives will only be successful if the business is profitable!
Milk Price Outlook
Gary Schnitkey
Dairy Farm Management Specialist
Location:
First
Second
Third Large Round/bale
Damascus (/bale)
$1.10 - 3.14
$1.35 - 4.50 $1.35 - 4.50
Ashland County (/ton)
No Price Reported
Farmerstown (/ton) $65 - 122.50
$115 - 165
$115 - 165 $12.50 - 37.50
Mt. Hope (/ton)
$55 - 140
$87.50 - 182.50 $110 - 190
$18.00 - 32.50
Kidron (/ton)
$20 - 125
$55 - 165
$30 - 180 $15.00 - 50.00
Calendar of Events
3/18/98
10A.M.-1P.M., Morrow County Extension Office, Mt. Gilead
Bedding Materials, Environmental Mastitis, and Storing and Handling
Sand-Laden Dairy Manure
For more information call Steve Ruhl 419-947-1070.
3/18/98
10A.M.-3P.M., Lorain County
Discovering Our Future In The Dairy Industry
For more information call Jim Skeeles 216-322-0127.
3/19/98
10A.M.-3P.M., Columbiana/Mahoning
Discovering Our Future In The Dairy Industry
For more information call Dianne Shoemaker 330-424-7291.
3/24-26/98
ATI, Wooster
Dairy Farm Employee Short Course
For more information call Tom Noyes 330-264-8722.
4/15&16/98
Hyatt Regency, Columbus
Dairy and Food Industry Conference
For more information call Terry Sullivan 614-292-8897.
4/21&22/98
Fort Wayne, IN
Tri-State Dairy Nutrition Conference
For more information call 614-688-3143.
Make Plans to Attend!
The TRI-STATE DAIRY NUTRITION CONFERENCE
on April 21-22, 1998 in Ft. Wayne, IN. The objective of the Conference
is to disseminate current information on the feeding of dairy cattle primarily
to individuals who provide nutritional advice to dairy farmers, including
feed industry personnel, nutrition consultants, Extension personnel, and
veterinarians. The Conference has been held since 1992 and is sponsored
by The Ohio State University, Purdue University, Michigan State University,
and allied industries. The Conference begins at 12:50 pm EST, but a pre-conference
dairy management program begins at 8:00 am by Monsanto with the theme of
"Seize the Opportunities". The themes for the Nutrition Conference are
carbohydrate nutrition, nutrient metabolism, feeding management, and current
issues in feeding dairy cattle. The registration fee of $100 is due by
April 3 (after this date a $25 late registration fee will be assessed),
and it includes a copy of the Conference proceedings, one breakfast, one
lunch, and refreshments at breaks. Feed industry exhibits will
be on display. For more information, contact Ms. Cheryl Hall, Department
of Animal Sciences, 221 Animal Science Building, 2029 Fyffe Road, Columbus,
OH 43210-1095, (614) 688-3143, (614) 292-1515 FAX, hall.403@osu.edu.