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August 6, 2013 <br /> Page 5 of 7 <br /> Table 3:Yearly margins by herd size based on four different costs scenarios <br /> 300 2008 2009 2010 2011 2012 <br /> Single liner $ (141.32) $ (942.70) $ 0.52 $ 344.72 $(372.71) <br /> Single, wet clean up $ (151.92) $ (953.30) $ (10.08) $ 334.11 $(383.31) <br /> Double liner $ (161.95) $ (963.33) $ (20.11) $ 324.08 $(393.34) <br /> Double, wet clean up $ (172.55) $ (973.94) $ (30.71) $ 313.48 $(403.94) <br /> 750 2008 2009 2010 2011 2012 <br /> Single liner $ (64.79) $ (777.21) $ 143.83 $ 332.72 $(340.91) <br /> Single, wet clean up $ (73.73) $ (786.16) $ 134.89 $ 323.78 $(349.85) <br /> Double liner $ (79.00) $ (791.43) $ 129.62 $ 318.51 $(355.13) <br /> Double, wet clean up $ (87.94) $ (800.37) $ 120.68 $ 309.57 $(364.07) <br /> 1500 2008 2009 2010 2011 2012 <br /> Single liner $ 70.96 $ (868.22) $ 167.75 $ 594.72 $(145.51) <br /> Single, wet clean up $ 61.16 $ (878.02) $ 157.95 $ 584.92 $(155.31) <br /> Double liner $ 57.67 $ (881.52) $ 154.45 $ 581.42 $(158.81) <br /> Double, wet clean up $ 47.87 $ (891.32) $ 144.65 $ 571.62 $(168.61) <br /> 3000 2008 2009 2010 2011 2012 <br /> Single liner $ (76.60) $ (772.84) $ 240.29 $ 720.91 $(165.39) <br /> Single, wet clean up $ (86.83) $ (783.07) $ 230.06 $ 710.68 $(175.62) <br /> Double liner $ (89.04) $ (785.27) $ 227.86 $ 708.47 $(177.82) <br /> Double, wet clean up $ (99.27) $ (795.51) $ 217.63 $ 698.24 $(188.06) <br /> 2) Availability of credit <br /> In conversations with lenders,the financing of the retrofitting projects would be difficult for most operations.To <br /> qualify for a real estate secured term loan covering the capital expenses amortized over 20 years,the loan <br /> would need to be secured by a 1st priority lien with a maximum debt against the appraised value of the real <br /> estate of 65%;this may cover 100%of the expenses or only a portion depending on the available lendable <br /> equity of the property.The borrower would need to have a debt-service coverage ratio (for all debt) of 1.25x. <br /> If the dairy lagoon is retrofitted,the value of the dairy would most likely not change, i.e.the dairy's value would <br /> not increase because the retrofit was performed. Further,to obtain credit, the dairy likely needs to be free and <br /> clear of liens to have equity available. Due to the low profitability in the dairy industry over the past 5 years (as <br /> outlined in the previous section),facility values have been discounted heavily. One positive that the <br /> aforementioned analysis does not take into account is that farm-land values have appreciated greatly. However, <br /> this appreciation may not be sustainable and that appreciation is typically for a highest and best use of <br /> something other than growing forage crops to feed cows. It is generally tied to permanent plantings with most <br /> of the influence coming from nuts such as almonds, walnuts and pistachios. <br />