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MEETING THE HIGHER RISKS FOR A YOUNG AND BEGINNING FARMER

LEBANON COUNTY, PA, Nov 10, 2010 - Joel Krall understands there are extra risks to consider when you are just starting out in the dairy farming business.

Krall, 25, is into his second year of a six-year agreement with his father, Tom, to rent dairy facilities and buy feed, and a four-year partnership agreement with his college roommate that he hopes will lead to enough equity to carve out a future as a dairy farmer. He also understands that the volatile price of feed is the dairy’s most serious risk factor.

“Back in June and July, corn hit $8 a bushel,” Krall said. “And since we buy all our shelled corn, it made me realize how vulnerable we are in this area. If there is anything that might put us out of business it would be our feed cost. We knew we needed to manage that risk.”

Krall and his partner Tim Crouse, 24, milk 140 Holsteins three times a day at Furnace Hill Holsteins in Lebanon County, PA. The farm produces 80 acres of corn silage and 25 acres of soybeans and double crop with rye, which they use for forage in the spring.

Krall and Crouse decided to try the new Livestock Gross Margin (LGM) Dairy insurance program, which protects their margin, but still allows the dairy to benefit from an increase in milk price.

“I am not sure this is for everyone because it is expensive up-front, but it has a place. It probably works best for new and beginning farmers who buy all their own feed like Tim and me,” Krall said. “I would say we are cautiously optimistic about LGM Dairy insurance. At times it is another tool that can be used to manage risk.”

Krall bought the 100-cow milking herd in 2007 and expanded to 140 cows when the Furnace Hill partnership was created with Crouse in 2008. The dairy farm transition has not always been easy.

“Working with family can sometimes be challenging, but I give my parents a lot of credit for letting Tim and me take over the reins,” Krall said. “I am learning if we all work together we can propel the dairy ahead much faster than working individually.”

When asked why he wanted to get into the dairy business and take on so much risk, Krall doesn’t hesitate.

“My parents raised us to be enthused about the prospects in dairying and they gave us an example of how a well-run dairy is managed.”