Gain expansion experience
PLANNING TO expand?
Then take advantage of one milk producer”s open day to discover the true cost and pitfalls of adding a 450-cubicle shed, 50:100 parlour and 35,000-litre milk silo.
Richard Tomlinson aims to produce an average 6500 litres from 700 cows on 324ha (800 acres) at Lower Park Farm, Wrexham – and to do it organically. Not only that, expanding his 350-cow unit is being funded purely by bank loan. Owning just 48ha (118 acres), livestock and machinery he has sweated his assets.
“There is no rollover money from selling buildings or conversions. I did my budget on a prudent milk price of 19p a litre and I”m expecting a minimum 10% return on capital, otherwise I wouldn”t be investing money in the farm,” says Mr Tomlinson.
But he has discovered that putting great plans into action doesn”t always go as expected and wants to highlight potential problems to visitors on Apr 22.
“The biggest cost in expanding is concrete. Yet it”s easy to get simple estimates for milking equipment and steelwork from manufacturers then find water heaters, volume washers and electrics are added on top,” he says.
“Pricing up a parlour you need to add on another 50% for buildings and 20% for incidentals. My 50:100 swing-over will milk 300 cows an hour and it makes up just one-third of the total parlour and buildings cost.”
As a rule of thumb, 1000/cow place is quoted for housing, excluding slurry storage. However, by project managing the whole job himself, Mr Tomlinson has cut this to under 500.
“I”ve sourced everything, getting 2-3 quotes for individual items instead of 2-3 quotes for the total job,” he says, adding that on the day he is happy to tell producers all his expansion costs.
He will also make available full plans for the building he designed, although even this self-confessed perfectionist says he made mistakes.
“I designed the shed around my diet feeder, a single axle 14cu m vertical auger model, so gave it an 18ft exit from the central feed passage.
“But I”ve changed to a double axle, 23cu m wagon and now have to expand the concrete apron over the lagoon. You can never think big enough. Allow for cow numbers doubling and machinery to increase in size.”
He thinks producers planning to expand need to look back at how herd sizes have grown and project ahead in future targets. His current parlour, built 10 years ago for 250 cows, was outgrown within four years.
Similarly, the 8000-litre tank for alternate day collection is now filled daily. “I thought then I was planning plenty big enough. Three years ago, 350 cows was a large herd. Today it”s 500, and in two years could be 1000. I have a five-year plan, but have gone 50% over that in numbers.”
Mr Tomlinson is expanding to secure a profitable business that takes advantage of economies of scale. “We went organic five years ago to get off the commodity treadmill and into a niche market. Now the premium has dropped, I need to get bigger.”