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Large Dairy Development in the Midwest Vreba-Hoff Dairy Development, LLC Cecilia C.M. Conway

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Title: Large Dairy Development in the Midwest Vreba-Hoff Dairy Development, LLC Cecilia C.M. Conway


1
Large Dairy Development in the MidwestVreba-Hoff
Dairy Development, LLCCecilia C.M. Conway
  • 2006 National Association of County Agricultural
    Agents Annual Meeting Professional Improvement
    Conference
  • July 24, 2006

2
Agenda
  • Introduction to the Vreba-Hoff Companies
  • Market Trends European US Dairy Industries
  • The Vreba-Hoff Project Model
  • Siting\Permitting\Licensing Requirements
  • Farm Innovations
  • Dairy Development Positives Challenges
  • Working with State Extension Agencies
  • Questions

3
IntroductionVreba-Hoff Dairies
  • In 1997, the Van Bakel and Vander Hoff families
    partnered to build a 3,000 cow dairy facility in
    Hudson, Michigan
  • In 2000 the second 3,000 cow facility began
    operation
  • Interest from Uncle opened development
    opportunities for other farm families

4
Introduction
  • Vreba-Hoff Dairy Development LLC
  • Established in 1998
  • Private, family-owned Firm
  • Located in Wauseon, Ohio
  • Assist European American families relocate or
    expand their dairy businesses

5
Introduction
  • Vreba-Hoff Dairy Development assists with
  • Sale of Real Estate Overseas (through sister
    company)
  • Identification of Possible Project Sites
  • Recruitment of Project Financing
  • Application of Necessary Permits
  • Coordination of Project Construction
  • Coordination of Family Re-settlement

6
Introduction
  • Since 1998 Vreba-Hoff has developed
  • 2 Vreba-Hoff Owned facilities in Michigan
  • 7 Other facilities in Michigan
  • 12 facilities in Indiana
  • 25 facilities in Ohio
  • 23 facilities under construction or development
  • Total 62 new dairy projects
  • Equals over 70,000 cows

7
Michigan One New Project Under Development in
Thumb Area
8
Indiana
  • Blue 13 Dairies Under Development
  • Green 12 Dairies Operating

9
Ohio
  • Blue 9 Dairies Under Development
  • Green 25 Dairies Operating

10
Introduction
  • Why Focus on the Midwest
  • Temperate Climate
  • Large grain production provides a consistent
    supply of forages and opportunities to partner
    with growers
  • Good Infrastructure to move crops and milk

DFA re-opens Adrian, Mich. dairy processing plant
March 2006
11
Introduction
  • Why Focus on the Midwest
  • Good access to medical, educational and social
    centers for the dairy producers and their
    families
  • Over 70 of population within 24 hours transport
    providing a strong and accessible market for milk
    sales

12
Market Trends - European Dairy Industry
  • Why Are Dutch/
  • European Farmers Desiring to Relocate their
    Dairy Businesses?

13
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14
Dairy Farming in The Netherlands
  • Country
  • Small Land Area
  • Ohio is 2.5 times larger than NL
  • High Population
  • Population is 16 million
  • Ohios population is approximately 70 of NL

15
Dairy Farming in The Netherlands
  • Market Conditions
  • Constant pressure to take agricultural land out
    of production for housing or industry
  • Price of Land in 2004 was 16,000/acre
  • Milk Production Limited by Quota System
  • Value of Milk Production Rights continues to
    increase
  • Current Milk Quota cost is 25,527 per cow

16
Dairy Farmingin The Netherlands
  • Future Outlook
  • Expansion is cost prohibitive
  • The cost to add one cow to an operation is about
    41,000
  • Number of Farms to Decline
  • Currently there remain 22,000 dairies left with
    about 4,500 evaluating the relocation of their
    business

17
Market Trends -United States Dairy Industry
18
There are 66,830 U.S. dairy farms. -Hoards March
2005
19
  • - 90 of farms are less than 200 cows
  • Average age of a farmer is approx. 58 years old
  • No successor available

20
  • The only dairy farm size growing is 500 cows
  • 60 of the cows are on farms with 200 cows

21
Dairy Industry Trends
Dairy Expansion Areas
(source Monsanto)
22
Market Trends
Livestock Population by County Milk Cows,
Heifers Cattle Source Ohio Dept. of
Agriculture
  • New Dairies are bringing cattle back to areas
    which previously held much larger livestock
    numbers

23
Market Trends - Ohio
  • Market Conditions - Ohio
  • Milk deficit state and imports milk from other
    states
  • Significant decrease in Ohio cows numbers
    892,000 cows in 1956266,000 cows in 2005
  • Dairy receipts represents 1/3 of the total value
    of animal agriculture in Ohio
  • Ohio boasts 94 processing and receiving plants

24
Market Trends - Indiana
  • Market Conditions
  • Significant decrease in Indiana cows numbers
  • 140,488 cows in 1978
  • 136,000 cows in 1999150,000 cows in 2004
  • State Dairy receipts equal 230 million dollars
  • Indiana Ranks 2nd nationally in ice cream
    production

25
Market Trends United States Dairy Industry
  • Market Conditions
  • Overall number of dairies decreasing
  • Trend toward larger dairies provide owner more
    labor flexibility and economies of scale
  • Increasing milk production per cow due to
    breeding methods such as artificial insemination
    and improved feed rations

26
Market Trends
  • Market Conditions
  • Production in volume helps maintain profitability
    during peaks and valleys of milk market price

27
The Vreba-Hoff Model
28
The Vreba-Hoff Model
  • Farm Designed to Promote Milk Production Cow
    Comfort
  • Focus Farm Management
  • Minimize Real Estate Investment
  • Partner with Local Crop Growers

29
Farm Design
30
Farm Design the complex
  • Parlor and Freestalls in H design to move cows
    efficiently
  • Side Settling Basins to collect Sand
  • Concrete or earthen Lagoon structures to hold 12
    months storage
  • Bunker area arranged to efficiently handle feed
    storage

31
Farm Design Milk Production
  • Parlor Designed for Efficiency
  • Natural lighting benefits staff and animal herd
  • State of the art technology for monitoring dairy
    herd production
  • Each cow is milked 3 times per day

32
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33
Farm Design -Freestall Barn
  • Barn Design promotes cow comfort
  • Feed can be accessed at all times
  • Adjustable side curtains to promote ventilation
  • Fans are utilized to cool in summer
  • Sand bedding keeps cows cleaner drier
  • Easy monitoring of cattle

34
Farm Management
- Focus on herd health, cow comfort resulting in
improved production - Cost management advantages
through economies of scale - Increased attention
placed on environmental management - Good Cow
Management directly correlates to a successful
dairy operation
35
Minimize Purchase of Real Estate
  • Real Estate is minimized to reserve capital for
    herd investment and cow friendly facilities
  • Approximately 80 acres is required to construct a
    2200 cow dairy facility

36
Partnership with Local Farmers
Dairy Farmers partner with local crop farmers to
produce quality feed for cattle
37
Partnership with Local Farmers
Manure is a natural fertilizer
Local Crop Growers reduce reliance on commercial
fertilizers by using dairy manure
38
Partnership with Local Farmers
  • Reduction in Costs for Crop Farmers
  • Growers can sell directly to their local end
    user keep more marketing dollars in their
    pocket
  • Growers can eliminate costs for drying, shelling
    and transporting crops
  • Growers can gain 120 - 160 per acre growing
    corn silage
  • Growers can reduce costs of chemical Fertilizer
    use and gain organic fertilizer

39
Funding of Dairies
  • Typical Investment Amount for 2,200-cow Dairy
  • Equipment 440,000.00
  • Cows _at_ 2,250/cow 4,950,000.00
  • Dairy Bldg. Land 9,000,000.00
  • Operating Capital 1,100,000.00
  • Total Investment 15,490,000.00
  • Investment per cow 7,040.00

40
New Project Siting Permitting
41
New Project Siting Criteria
  • 80 acres relatively flat land
  • Well production of 35 gallons/minute quality
    water
  • Proximity to residences
  • Proximity to Three-Phase Power
  • Proximity to class A roads
  • Land for crop production and manure disposal
    adjacent/close proximity to proposed dairy site
  • Contracts established with local crop growers
  • Setback required from Neighboring homes
  • Clay soils for Lagoon construction

42
Siting Criteria
Sample 1500 Cow Dairy Feed Production Manure
Disposal Land Requirements
Manure Production, Waste Water, and bedding 30 gallons/cow/ day 1.0 2.0 acres/cow 1500 3000 acres required
Forage Requirements (Corn Silage Alfalfa) 1.0 2.0 acres/cow 1500 3000 acres required
43
Site Evaluation
  • Once possible site is identified
  • Professional Engineering Firms evaluate integrity
    of Site
  • Identify if Adequate Resources and isolation is
    available
  • Initial ground water and geological testing is
    initiated

44
Dairy Farm Permitting
  • State Permits
  • Cow number triggers requirement for permit
  • Permit Application Includes
  • Engineered Plans by a Professional Engineer
  • Verification of manure disposal fields (Nutrient
    Management Plans)
  • Emergency Spill Response Plan
  • Notification to adjoining landowners local
    officials of application submittal

45
Dairy Farm Permitting
  • State Permits (Ohio)
  • Siting Setback Requirements
  • 1000 ft. from residence to manure storage
  • 300 ft. from well to manure storage
  • 100 ft. from property lines to manure storage
  • 15 feet of low permeable soils from bottom of
    lagoon to aquifer

46
Dairy Farm Permitting
  • State Permits
  • Dairy Farm Siting requires special requirements
    in areas of
  • Public Water Source Wellhead protection area
  • Floodplains Floodways
  • Wetlands
  • Cold water Habitats
  • Underground mines

47
Dairy Farm Permitting
  • State Permits
  • Require regular inspections
  • Operator must maintain operational records and
    inspection logs
  • State permitting entity inspects adherence to
    permit requirements
  • Licensing
  • Farms are required to be state licensed to ship
    Grade A Milk
  • State Licensing entity inspects farm to monitor
    on-farm practices

48
Dairy Farm Regulation
  • Federal Law
  • US Clean Water Act
  • Containment of contaminated Storm Water
  • Containment of Silage Leachate
  • Containment of Processed Water
  • Required Operational Storm Water Pollution
    Prevention Plan
  • Required Farm Inspections and Record Keeping

49
Dairy Farm Regulation
  • Local Permitting
  • Indiana allows zoning of agriculture at a local
    level
  • Ohio and Michigan have right-to-farm legislation
    (Ohio law is currently being challenged)

50
Farm Design Innovation
51
Farm Innovation
  • Current Design Standard Sufficient Containment
  • 12 month Manure storage capacity (including 100
    year storm event)
  • Silage Leachate containment
  • Contaminated Storm Water Containment
  • Operational Storm Water Pollution Prevention Plan
  • Clean storm water retention and discharge
    planning
  • Comprehensive Nutrient Management Plans

52
Farm Innovation
  • Complex Efficiency
  • Move toward Carousel Parlor for Higher number of
    cows
  • Arrange Freestalls in T design to Parlor to
    minimize cow travel

53
Farm Innovation
  • Improved Manure Management
  • Attempts to reduce volumes
  • Trend Towards Manure Treatment
  • Multiple Lagoons
  • Solids-Liquids Separation
  • Encourage recycling of bedding material
  • Composting/Drying

54
Farm Innovation
  • Reduce Manure Volume
  • Cousins firm developed improved manure vacuum
  • Turns on its own axles
  • Allows more flexibility in farm Design/lagoon
    placement

55
Farm Innovation
  • Getting the manure out of the barns
  • efficiently and
    economically.

56
Farm Innovation
  • Reduce Manure Volumes
  • The Ohio State University Extension supported
    dairy water use study
  • Water meters were installed throughout dairy
    facility
  • Determined average cow water use was 31.9 gallons
    per day (includes wash water)
  • Leading to better evaluation of facility wide
    water usage
  • Trend toward Direct Loading of Milk

57
Farm Innovation
  • Manure Treatment
  • Recycling Bedding Components
  • Sand
  • Mechanical
  • Non Mechanical

Sand Recycling Lane
58
Farm Innovation
  • Separation of Manure Solids
  • Vreba-Hoff implemented system in early 06
  • Rotary Drum Thickener
  • 16 inch screw press
  • Alum Polymers added flocculate suspended solids
  • Liquid run through Air flotation tank
  • Compost solids for bedding
  • Irrigate liquids at high speed on growing crops

59
Farm Innovation
  • Manure Treatment
  • Earthmentor System (patent pending system
    developed by Ag Consultant Tom Menke)
  • Mechanical Solid Separation (sand manure)
  • Multi-lagoon system for waste treatment

60
Earthmentor System Example Layout
61
Earthmentor System
  • Summary Advantage to Dairy
  • 2.5 ? reduction in annual application acres
  • Positive economics manure handling costs reduced
    by gt50
  • All manure is treated and precisely applied
  • Minimizes environmental risks and farm nuisance
    potential
  • Window of application opportunity for manure
    applications extended

62
Farm Innovation
  • Manure Treatment
  • Methane Digesters
  • Cost of systems still significant
  • Does not eliminate by-product to haul
  • Energy suppliers not reimbursing fair rate for
    energy (dependent on state)

63
Farm Innovation
  • Manure Treatment What We Know
  • Complete Treatment is too expensive
  • Partial Treatment stabilizes manure to reduce
    odor, solids and nutrient content
  • Most systems are high in management, labor, and
    cost with little economic return

64
Farm Innovation
  • Manure Treatment What We Need to Keep
    Researching
  • How to economically remove and concentrate
    nutrients from manure for use as soil amendments

65
Dairy Development Positives Challenges
66
Dairy Development Positives
  • Farm Land Preservation
  • New Farm development keeps local land in crop
    production
  • 2000 cow dairy keeps 2000 acres of land as green
    space

67
Positives of Partnering with Livestock
  • Economic Benefits
  • Dairy Farms create demand for local production
    crops which yields higher profits per acre
    locally
  • Each 600 cow farm contributes approximately 3
    million dollars annually to the local economy
  • Each job created at the dairy creates 2.25 jobs
    in other sectors of the industry
  • A dollar increase in livestock and poultry
    production creates 1.32 to 1.64 in economic
    activity
  • One farm supports approximately 100 Ohio
    businesses
  • (Source The
    Ohio State University Extension Ohio Livestock
    Coalition)

68
Dairy Development Positives
  • New Business Opportunities
  • Heifer Raising
  • Feed Production
  • Calf Raising
  • Custom Manure Applicators
  • New Career Opportunities
  • Farm middle management

69
Dairy Development Positives
  • Addition of new dairy producers helps maintain
    infrastructure for dairy producers of all sizes
  • Dairy Processors
  • Veterinarians
  • Milk Equipment Suppliers
  • Ag Equipment Dealers

70
Dairy Development Challenges
  • Farmers vs. Residential Growth
  • Family Farms versus Factory Farms
  • Media attention is unbalanced
  • More housing in agricultural areas
  • Increased Environmental Regulation
  • Air Emissions
  • Need for Public Education
  • Length of Permit Issuance

71
Working With OSU County Extension Agents
  • Earlier and more contact with local Extension
    Offices by VH and new farmer
  • We welcome any comment and suggestions
  • Site Selection we welcome assistance/suggestions
  • Encourage questions or voicing concerns

72
  • Questions?

73
  • Thank you
  • for the opportunity
  • to speak with you.
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