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FINANCIAL IMPLICATIONS OF FACILITY DESIGN
Published by the American Society of Agricultural and Biological Engineers, St. Joseph, Michigan www.asabe.orgCitation: Pp. 412-419 in Fifth International Dairy Housing Proceedings of the 29-31 January 2003 Conference (Fort Worth, Texas USA) 701P0203.(doi:10.13031/2013.11652)
Authors: M. J. Hoekema, D. E. Dill, and J. G. Martin
Keywords: Facility design, capital efficiency, operating efficiency, sustainable growth, economic analysis, financial risk
Sizing, staging, and timing construction of dairy facilities and improvements have significant financial implications. This is true whether planning an incremental, step-wise expansion, or a large multi-barn new dairy complex. Long-term site planning is an obvious first-step that if not completed will likely result in needless demolition, redesign, or similar avoidable expenses. Expansion capacity and flexibility is a key trait of profitable facility designs. The effective design requires considerable analysis and planning to properly stage and size the design while integrating with the investment plan in order to capture maximum capital and operating efficiencies while meeting cash flow requirements in a volatile marketing environment. Issues include sizing manure storage versus permitted animal units for the entire site, planning housing to have modest expansion capacity, parlor footprint versus initial number of stalls, locating and sizing fresh cow pens for initial startup versus steady state needs, planning feed storage and procuring feed inventories prior to animal arrival, timing animal freshening with completion of the parlor. The financial consequences these issues present include additional capital expenditures, increased interest expense, higher cull rates, larger operating line of credit, lowered productivity, and reduced parlor efficiency. If not properly managed, these can place an excessive constraint on long-term business performance.(Download PDF) (Export to EndNotes)