Professional Dairy Managers of PA Annual Members Meeting

1. Professional Dairy Managers of PA Annual Members Meeting

2. Kurtland Farms“Our Top 10 Milestones” Tim KurtzKurtland Farms

3. 2006 – Profit Team Start • CDE Initiative • 125 Cows • Prompted by Frustration • Need for Outside Resources and Guidance • Quality of Life Important!

4. 2007 – Developed 3-Year Strategy • Dairy Alliance Initiative • Five-week Hands-on Workshop • SWOT Analysis • Need for Business Plan • Benchmarking • Cost of Production

5. Needed Answers • What is the long-termviability of dairying in this community? • What is the long-term profitability of current facilities? • What are the bottlenecks & limiting factors? • Is there enough land? • What are other options for the farm?

6. Immediate Action Steps • Short Term: • Ventilation, Sexed Semen, 3X milking, Written SOPs, Amino Acid ration balancing, Shot program • Long Term: • Becoming involved in dairy industry organizations • Vital to gain additional perspective

7. 2009 – Began Expansion Exploration • Involved Lending Institution,Engineering Consultant, & Construction Company • Environmental grant availability??? • Building site was obvious • Extremely tight budget • Grants seemed only hope • Had to be permitted but not guaranteed

8. 2010 – Denied Waiver • Required Land Development Plan • Added Considerable Cost • Lesson learned: Need highestlevel of experience on team • Jeff Ainslie consulted • Started 2-year process of designing economically viable facility • Numerous trade shows, workshops, phone calls, emails and consultations

9. 2011 – Transformation Team Start • Focused on challenges • Assisted with engineering & permitting costs • Penn State Extension Feasibility &Cash Flow Analysis • Brought clarity and credibility • Brought new level of energy

10. 2011 – Operation of Satellite • Adjoining Dairy • Opportunity for additional cows and feed availability • Employees stayed with operation • Allowed for more specialized employee responsibilities Allowed Us to Keep Replacements & Streamline Labor Force Within 3 Months of 3X Milking, Added 15 # Per Cow Per Day

11. 2011: Began Relationship With Different Construction Company

12. May 2012: Manure Storage & Processing Grant Approved!

13. June 2012 – Began RelationshipWith New Bank • Financing MostChallenging Part of Project • Always Kept Open Lines of Communication • Explored All Options

14. September 2012: Began Construction

15. Best possible environment

16. Is It Worth the Investment?

17. 220 Cow Robotic Free Stall Barn, Manure Storage & Processing -- Start Up: 3/18/13 Goal: 7.8 million lbs. of milk per yr Does Not Include Cattle Or Start-Up Costs

18. Robotic Milking: A Natural Fit • Voluntary milking gives cow more flexibility and lowers stress • Labor skills even more important • Enhances positive consumer attitudes

19. Composted Manure Solids • Manure recycled via press separator and compost drum • Clean, comfortable stalls are deep bedded • Environmentally responsible • Additional revenue stream

20. Precision Advantages • Accuracy of information • Detection of abnormalities • Analyzable data • Production Efficiencies

21. Too Much Information? • Need to decide what information is needed, when it is needed and where to find it • Monitor on a broader level • Investigate attentions in more detail Cows have averaged 85 pounds per day for past six months in robotic barn.

22. Healthy Cows=Profit Teamwork=Success • Many skill sets needed. • Appeals to next generation • Mission statement values: Profitability, Quality of life, Stewardship, Having Fun, Honor God

23. Future? • 100% robotic • Transition to next generation of ownership

24. PATIENCE, PERSERVERENCE, PERSISTENCE!

25. Jeff AinslieTransformation Team MemberSite Planning / Permitting / Engineering

26. Kurtland Farms - Take Homes • Lenders talk about the 3 (or now more) C’s of credit • In the quest to construct a new dairy facility, we should be talking about the Four P’s: • Planning • Patience • Perseverance • Permitting

27. PLANNING No offense to the builders -- but the details of the barn can wait until a landowner knows what he or she can do where on their property.

28. PATIENCE • 7/15/10 Timeline Discussed @ Kurtland

29. PERSEVERANCE • PENNVEST: 4th try was a charm! • Caernarvon Sewer Authority / Lancaster CD / others…. • Berks Conservations District came through

30. PERMITTING • It is involved…and likely to get more so… • It is complicated…and likely to get more so… • It is different for every project at every location... • It is costly in more ways than one….

31. Kurtland Farms - Take Homes • PLANNING • Headlock dimensions can wait – confirm what you can do on your property, and what regulations will apply to you • PATIENCE • “My excavator is ready….we’re starting in a month” – unfortunately, you are probably not… • PERSEVERANCE • Stick with it and work with people that will help you get there • PERMITTING • It’s a reality – but take the time early on to learn what rules and regulations actually impact you and your project

32. Fulton Bank PerspectiveFrom Lamar King

33. Agricultural Lending in 2013 • Communicate with Your Lender • Prepare/Budget/Understand Your Financials • 5 Cs of Credit • Capacity (Cash Flow) • Capital • Character • Conditions • Collateral