Ron Holter is a fifth-generation farmer in Jefferson Maryland (in the Middletown Valley). He has learned...
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Ron Holter is a fifth-generation farmer in Jefferson Maryland (in the Middletown Valley). He has learned to innovate the management of his farm to create a desirable quality of life for his family, while keeping profits and cash coming in. Holterholm Farms was purchased by William Holter in 1889. and it has been a dairy farm ever since. Having grown up on this small family farm. Ron saw firsthand the challenges and opportunities inherent in running it. After returning home to the farm to work full time in 1981. Ron realized that the prevalent industrial system of agriculture demanded an incredible amount of labor on his part, for few tangible results. He was not going to be able to spend time with his children as they were growing up. By the 1990s. Ron saw that he would need to make changes for the farm to remain viable. But small producers were barely able to eke out a living. He knew there had to be a way to keep the farm successful and maintain a reliable cash flow. In 1995, Ron planted the farm's entire 207 acres in permanent vegetative cover (grass) and put the whole herd of cows out to pasture the following year. This grazing system not only provided the animals with a grass-based diet, it also allowed Ron to work fewer hours at a lower intensity to take care of the same acreage and the same number of cows, while simultaneously improving his profitability. Because of the switch to a grazing system. Ron saw a precipitous drop in expenses. Veterinary bills were almost nonexistent, because the grazing animals were healthier on a grass diet than a confinement herd could ever be. Seed purchases ended, because the entire farm was planted in permanent grasses. Due to the cows all-grass diet. Holterholm produced nearly a third less milk. But because of minimized costs, it became one of the most profitable farms in Maryland, netting $1.199.90 per cow in 1996, in comparison to the state average for confinement farms of $471.00 per cow. Ron took this low-input system of agriculture on Holterholm one step further by making the decision to operate as a seasonal enterprise. This switch to seasonal production meant a further decline in milk totals. Despite that. Holterholm Farm's profitability stayed roughly the same, and the seasonal system meant less year-round labor to support new calves. The new system meant that all cows born in a given year were about two months apart in age and thus could be fed and cared for together: labor and feeding costs fell even lower. Holterholm Farms is a member of the Organic Valley Cooperative. (ZUMA Press Inc/Alamy Stock Photo) Starting in 2000, Ron began to operate the farm organically. He did not use drugs or artificial hormones on the cows, nor did he treat the soil with artificial fertilizers or pesticides. When both Horizon and Organic Valley Cooperatives moved into Maryland in 2005, looking for organic producers, Holterholm Farms was able immediately to certify its acreage as "organic"; it took only three months to certify the cows. In the short term, securing a contract with Organic Valley meant that Ron was paid roughly twice as much for his milk than what he was getting previously. It also meant that Ron had to switch to feeding his cows organic grain, to supplement the grass cover. With organic grain prices as high as they were, he soon realized it was not profitable to feed the cows grain. His cash flow was being adversely impacted. He was losing money, despite producing more milk. So, in October 2007, Ron fed the last of the grain to his herd. Milk production dropped, as expected, but the financial results were astounding. In 2008, the farm made $858 per cow-this with no grain feed and less milk production. In 2009, the farm returned to the $1,000 mark, netting $1,004 per cow-again, with no grain-feed expenses. Makris Fotolia Holterholm Farms began producing less milk than ever, compared with its days as a confinement operation. In 2009, two years into the no-grain-feed policy, the farm was producing only 22 pounds of milk per cow per day yet earned as much as it had in 1996. This was significantly more than could ever have been earned prior to grazing. Having adapted the dairy portion of Holterholm Farms to become more profitable with fewer inputs, Ron explored and adopted additional sources of revenue. He added beef, eggs, and produce to the mix. These were relatively small revenue generators but required comparatively few cash outlays and added reliably positive cash flows. Ron's son, Adam, is making his imprint on the farm's operations by creating a Community Supported Agriculture (CSA) venture that requires an up-front investment in used equipment and marketing that can be recouped quickly. The CSA has the benefit of collecting "shares" in advance, to the maximum available, while incurring only the costs of growing and distributing produce from the fertile Holterholm Farms land. Customers buy shares of the season's produce based on a weekly allocation of the total production. Adam might sell 50 shares in total to collect $25,000 at the beginning of the year and then provide each shareholder with 2 percent of the production each week. The payments are up front, with the expenditures at the back end. The Holter family is managing the land to sustain it for generations to come. Case Study Analysis 9-14. 1. Why did switching the cows feed entirely to grass improve Holterholm Farms' cash flow? 9-15. 2. How could adding beef, eggs, and produce be beneficial from a cash flow perspective? 9-16. 3. Search for Community Supported Agriculture (CSA) on the Internet. Why might it be good for Holterholm Farms to have a CSA? What are the risks involved? Why would consumers be willing to pay for their produce up front? 9-17. 4. What would you ask the Holter family about the cash management of Holterholm Farms? Ron Holter is a fifth-generation farmer in Jefferson Maryland (in the Middletown Valley). He has learned to innovate the management of his farm to create a desirable quality of life for his family, while keeping profits and cash coming in. Holterholm Farms was purchased by William Holter in 1889. and it has been a dairy farm ever since. Having grown up on this small family farm. Ron saw firsthand the challenges and opportunities inherent in running it. After returning home to the farm to work full time in 1981. Ron realized that the prevalent industrial system of agriculture demanded an incredible amount of labor on his part, for few tangible results. He was not going to be able to spend time with his children as they were growing up. By the 1990s. Ron saw that he would need to make changes for the farm to remain viable. But small producers were barely able to eke out a living. He knew there had to be a way to keep the farm successful and maintain a reliable cash flow. In 1995, Ron planted the farm's entire 207 acres in permanent vegetative cover (grass) and put the whole herd of cows out to pasture the following year. This grazing system not only provided the animals with a grass-based diet, it also allowed Ron to work fewer hours at a lower intensity to take care of the same acreage and the same number of cows, while simultaneously improving his profitability. Because of the switch to a grazing system. Ron saw a precipitous drop in expenses. Veterinary bills were almost nonexistent, because the grazing animals were healthier on a grass diet than a confinement herd could ever be. Seed purchases ended, because the entire farm was planted in permanent grasses. Due to the cows all-grass diet. Holterholm produced nearly a third less milk. But because of minimized costs, it became one of the most profitable farms in Maryland, netting $1.199.90 per cow in 1996, in comparison to the state average for confinement farms of $471.00 per cow. Ron took this low-input system of agriculture on Holterholm one step further by making the decision to operate as a seasonal enterprise. This switch to seasonal production meant a further decline in milk totals. Despite that. Holterholm Farm's profitability stayed roughly the same, and the seasonal system meant less year-round labor to support new calves. The new system meant that all cows born in a given year were about two months apart in age and thus could be fed and cared for together: labor and feeding costs fell even lower. Holterholm Farms is a member of the Organic Valley Cooperative. (ZUMA Press Inc/Alamy Stock Photo) Starting in 2000, Ron began to operate the farm organically. He did not use drugs or artificial hormones on the cows, nor did he treat the soil with artificial fertilizers or pesticides. When both Horizon and Organic Valley Cooperatives moved into Maryland in 2005, looking for organic producers, Holterholm Farms was able immediately to certify its acreage as "organic"; it took only three months to certify the cows. In the short term, securing a contract with Organic Valley meant that Ron was paid roughly twice as much for his milk than what he was getting previously. It also meant that Ron had to switch to feeding his cows organic grain, to supplement the grass cover. With organic grain prices as high as they were, he soon realized it was not profitable to feed the cows grain. His cash flow was being adversely impacted. He was losing money, despite producing more milk. So, in October 2007, Ron fed the last of the grain to his herd. Milk production dropped, as expected, but the financial results were astounding. In 2008, the farm made $858 per cow-this with no grain feed and less milk production. In 2009, the farm returned to the $1,000 mark, netting $1,004 per cow-again, with no grain-feed expenses. Makris Fotolia Holterholm Farms began producing less milk than ever, compared with its days as a confinement operation. In 2009, two years into the no-grain-feed policy, the farm was producing only 22 pounds of milk per cow per day yet earned as much as it had in 1996. This was significantly more than could ever have been earned prior to grazing. Having adapted the dairy portion of Holterholm Farms to become more profitable with fewer inputs, Ron explored and adopted additional sources of revenue. He added beef, eggs, and produce to the mix. These were relatively small revenue generators but required comparatively few cash outlays and added reliably positive cash flows. Ron's son, Adam, is making his imprint on the farm's operations by creating a Community Supported Agriculture (CSA) venture that requires an up-front investment in used equipment and marketing that can be recouped quickly. The CSA has the benefit of collecting "shares" in advance, to the maximum available, while incurring only the costs of growing and distributing produce from the fertile Holterholm Farms land. Customers buy shares of the season's produce based on a weekly allocation of the total production. Adam might sell 50 shares in total to collect $25,000 at the beginning of the year and then provide each shareholder with 2 percent of the production each week. The payments are up front, with the expenditures at the back end. The Holter family is managing the land to sustain it for generations to come. Case Study Analysis 9-14. 1. Why did switching the cows feed entirely to grass improve Holterholm Farms' cash flow? 9-15. 2. How could adding beef, eggs, and produce be beneficial from a cash flow perspective? 9-16. 3. Search for Community Supported Agriculture (CSA) on the Internet. Why might it be good for Holterholm Farms to have a CSA? What are the risks involved? Why would consumers be willing to pay for their produce up front? 9-17. 4. What would you ask the Holter family about the cash management of Holterholm Farms?
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914 Switching the cows feed entirely to grass improved Holterholm Farms cash flow for several reasons a Reduced expenses Grazing systems significantly reduced the farms expenses By eliminating the nee... View the full answer
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Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts
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