Field Notes Blog > Investing in Planning Before Techonology

  • Investing in Planning Before Techonology

    June 14, 2019

    Featured Guest Writer: Carrie Bomgardner, AgChoice Marketing Manager

    “We toured our first DeLaval robotic dairy in 2006, in Lancaster,” said Lowell Peachey. “Since that day, I was fascinated that cows could learn to be milked with robots.”

    “The milking process seemed natural, with content cows,” he continued. Lowell’s wife, Savilla, added that “It was a different environment. The cows just did their thing.”

    Nine years later, Lowell and Savilla realized their dream with a new free stall barn and two DeLaval robots on their Huntingdon county Standpoint Farm.

    Their story began with Lowell’s parents buying a 68-acre dairy farm in the Big Valley, outside of Mill Creek, in 1966. There were 24 stalls in the dairy barn. In 1972, Lowell’s parents purchased a neighboring 225-acre farm and added another 26 stalls. Lowell and Savilla married in 1986. They purchased the cows and ten years later, bought the business from Lowell’s father. The couple milked 50 cows until 2004 when they converted a manure storage area to hold an additional 20 cows. They milked one group of cows and then switched to the next group.

    The Peacheys were hopeful that at least one of their four children would want to dairy. “We wanted to incorporate the next generation,” Lowell said, “but we knew 50 stalls wasn’t going to cut it. There wasn’t business enough for one family, much less two.”

    As the Peacheys contemplated their future, the old dairy barn was becoming obsolete. “The stalls were falling apart and the mattresses were worn out,” Lowell explained. “We needed to invest money if we kept the barn or built a new facility. We were maxed out and milk production had leveled out.”

    The Peachey family first considered a step up parlor, but met with DeLaval representatives and decided to visit more robotic dairies. “We must have toured a dozen facilities in Pennsylvania and neighboring states,” remembered Lowell. “We went to the World Dairy Expo in Madison with DeLaval and also visited a farm in Iowa.”

    In Iowa, Lowell and Savilla gained more ideas for their dream facility. “They were doing things in Iowa not being done in Pennsylvania,” noted Lowell.

    When it was time to move forward with their project, “Our ideas were dismissed by the local bank,” said Lowell. “The bank’s idea was to have cows in every corner.”

    “We knew we needed a feasibility study for financing and the local bank didn’t have the expertise,” explained Lowell. The Peacheys decided to contact Kristina McAllister, AgChoice loan officer. Kristina offered to bring AgChoice business consultant Gary Anderson into the family’s Center for Dairy Excellence (CDE) dairy decision team. “It was great that someone realized we couldn’t keep doing the same thing,” noted Lowell.

    We spent much of 2014 working through our financials. We never once felt like AgChoice judged us,” said Savilla. “We went back five years into our QuickBooks account for Gary and he developed three options for the study.”

    Gary reviewed three scenarios and associated cash flows with the Peacheys.

    Milking 50 cows in a renovated dairy barn.

    Milking 150 cows in a free stall barn with a step up parlor.

    Milking 150 cows in a free stall barn with robots.

     “Milking 50 cows didn’t appeal to us,” Lowell noted. “The step up parlor was the best cash flow for two families but it was labor intensive. The robotic option was feasible.”

    “Gary and Kristina helped us answer the ‘what is our motivation’ question,” said Savilla. “And how did that work with the financials? It helped us see the big picture.” Lowell continued, “For us, it came down to labor.”

    To develop barn blueprints, the Peacheys contracted with Franklin Builders. “We had all our ideas on paper,” Lowell said. One unique idea was to include a pen on either side of the robots for sick or lame cows. “It was invaluable when starting up because one person can move cows into those pens,” explained Lowell.

    They also wanted shower heads over the robot arms, an idea the Peacheys saw in Iowa.

    After purchasing the blueprints, the Peacheys sent the prints to three contractors, ensuring that all were bidding on the same specifications. A local contractor won the bid, subcontracting out to other local businesses.

    The Peacheys broke ground on their new AgChoice-financed free stall facility in May 2015. “We came in close to budget, with no real issues,” said Lowell.

    On September 15, 2015, Lowell and son, Micah, milked cows in the old barn in the morning and moved to the new barn for the evening milking. While it was difficult moving cows into the new barn, a DeLaval milking crew helped with the transition period. The first milking was manual, with most cows adjusting to the guided flow feeding system and robots by the second and third weeks.

    “I think one of the biggest challenges for us was that time was really different with the robots,” said Savilla. “We always had to stop to milk.” Lowell added, “The DeLaval folks told us the animals will adjust in a few weeks; the people will adjust in a year. They were right.”

    “If any cows were behind milking, I would be chasing cows to get them milked,” Savilla recalled. “I soon learned that those cows were waiting for us to move them instead of going to the robots.”

    While Lowell and Micah were spending all day at the barn the first few months, “We now feel like we can leave the barn, even if there are a few cows to be milked,” said Micah. The few remaining problem cows are “mostly older cows that still don’t have the mentality of moving to be milked,” Lowell explained.

    “We’re still learning and the cows are still learning,” Lowell said. “The personality of the cows is huge. The right personality and udder conformation are the two driving factors in the robotic environment.”

    While the labor savings have been “tremendous,” according to Lowell, he also is grateful for the flexibility that a robotic system affords his family. “Last fall, I could watch my daughter’s, Grace’s, field hockey game at 4:00 p.m. The quality of life is incredible,” he said.

    At 120 cows, the Peachey herd today is averaging 80 pounds of milk per cow with a goal of reaching 90 pounds. They continue to tweak and balance the bunk with the pellets in the robot feeding system, with help from their dairy decision team.

    “At our team meetings, all eyes are reviewing our numbers,” Lowell explained. “Some of what they say is hard to hear but it needs to be said.” Savilla continued, “They are very encouraging to us but also are very honest.”

    The next generation at Stand Point Farm is excited to continue his education through AgChoice’s AgBiz Masters program. After completing year one, Micah said, “It gives a good perspective on what is needed for business planning. I really didn’t have any idea.”

    “We learned through the school of hard knocks,” Savilla joked. “Micah is learning through AgBiz Masters.”

    Lowell and Savilla hope to begin work on a transition plan for Micah to buy into the business in the next few years.

    “We’re excited that we made this investment and that we can walk away leaving something for the next generation,” Savilla said.

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