Expansion Challenges Lead to Innovation

September 4, 2013 09:56 PM
Expansion Challenges Lead to Innovation

Expansion challenges lead to innovation

Many look at Pennsylvania dairy farmer Luke Brubaker and ask, "How did you do it?" How did you survive the high feed costs when others were looking to exit? How did you bring your sons back to the farm? How did you make green energy profitable? How did you manage the permitting in such an urban area?

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His answer: "I’ve just been blessed with opportunities," says Brubaker of Mount Joy, Pa., and the 2013 Top Producer of the Year. "My father helped me get started; I’ve helped my boys, Mike and Tony; and now we are focused on the grandkids."

His success is not completely built off of good fortune. With the help and support of county educators, the conservation district, his township and the department of agriculture, Brubaker has excelled in turning challenges into opportunities.

In the 1970s, Luke and his brother, Jim, bought the family farm and 18 cows from their father. For the next 20 years, the brothers paid off debt and added cows. In the early '90s, the Brubakers were expanding, but without a strategic plan. They had dairy cows, a 1,200-head hog unit, chickens and crops.

"I was adding lean-tos onto the side of my barns and making additions here and there to different structures," Brubaker says. "I didn’t realize it at the time, but I was actually becoming more inefficient. Our farm and dairy equipment were becoming obsolete. We were at a point where we couldn’t keep doing what we were doing; we needed to stop or grow and modernize."

"We don’t need to be the largest operation, by any means. We want to be known as good farmers willing to help others."

Building With Family. When his son, Mike, graduated in 1990 from Pennsylvania State University with an agribusiness degree, he wanted to return home and work the Lancaster County farm. At the same time, Jim was looking to exit the business.

Brubaker purchased his brother’s shares and brought his son in as a partner. In 1993, they went from 200 cows to 400 cows with the construction of a freestall, double-10 parallel parlor, manure pit and bunker silos. Three years later, Brubaker’s other son, Tony, graduated from college in business management and also wanted to farm. He, too, was brought in as a partner.

"When the boys came home, it was critical for me to give them a stake in the farm," Brubaker explains. "They did not come back to the farm to be hired men."

Looking for ways to bring more value to the farm, Mike asked his father if he could build a chicken barn. "This gave him the ability to own and be responsible for something—a specific project that had a good return when it was paid off. He did so well, I built my own for my retirement project, which I later sold to Tony when he came home."

Then in 1999 on a cold October day, Brubaker Farms suffered a major setback when a fire completely destroyed their 1,200-head hog unit.

Setbacks Can Be Comebacks. This setback forced Brubaker and his sons to focus on the dairy and make it a profit center. They expanded the dairy herd to 500 cows with the addition of a second freestall barn and the renovation of their heifer facilities. Two additional bunker silos were built to meet their forage needs.

Brubaker’s business philosophy is to evaluate each project on an individual basis and look at the potential profitability and benefits—whether it’s benefits to the farm, the environment or the community. "Before we build or buy anything, we always make sure it cash flows," he notes.

"The Brubakers have always been very open to reviewing the various strategies for the farm’s future growth," says Ken Darlington, PNC Bank vice president of ag banking. "Like other farms in Lancaster County, the Brubakers have many hard decisions related to agricultural farmland purchases based on the extremely high cost of farmland in their area. They have done an exceptional job of managing their costs and reviewing possible future farmland acquisitions to ensure it makes "economic sense" to the business.

This is one of the reasons why Brubaker was selected as the 2013 Top Producer of the Year.

Then in the mid 2000s, milk prices forced Brubaker and his sons to look for other profit centers. "We had an interest in exploring energy," notes Brubaker. They researched methane digesters, high-efficiency lighting and high-efficiency motors.

In 2006, USDA awarded Brubaker Farms one of three renewable energy grants. The farm also received a Pennsylvania Energy Harvest grant. These grants, in addition to a loan of $1.25 million, provided them with the money to construct a methane digester and solids separation system for the dairy. Construction began in 2006, and the system was fired up Dec. 20, 2007.

Amped Up. The family was successfully capturing energy from the manure. One of the unintended benefits is that after 21 days in the digester, the waste is 99.9% pathogen free, which almost eliminates odors. The waste moves through a separator, and the dry matter is used as bedding for the cows, with the remaining liquid used as fertilizer. The digester provides enough energy to power 150 to 200 homes.

By 2008, the farm was ready for another expansion. They added to the freestall barn for a total of 900 to 1,000 cows. They also increased their land base and practiced no-till on 98% of the acres.

Then in 2010, Brubaker turned to the sun for added energy. Working with the local utility company, the farm began adding solar panels to barn roofs. Every 1,000 kilowatts of energy is called an SREX and sells for about $20 in Pennsylvania. Brubaker also works with a broker to sell clean energy credits—those go for $200 to $300 an SREX.

Brubaker says the farm should recoup its investment in three to five years. While he likes putting energy on the grid, Brubaker loves that the farm is energy independent.

"We don’t need to be the largest operation by any means," Brubaker says. "We want to be known as good farmers willing to help others."

Throughout the years, Brubaker has relied on his family, community and faith in God to promote good agribusiness. Education and community involvement remain a priority. The Brubakers share their farm with about 1,000 visitors every year, including students, neighbors, church groups and anyone interested in learning about dairies and agriculture.

With so much going on, when does Brubaker sit down to figure it all out? "Between 10 p.m. and midnight—that’s when I do my work," he says. "I enjoy the challenge of tough decisions and trying to do what’s best for all parties involved."

If Brubaker wasn’t good at making tough decisions, his farm wouldn’t be where it is today. "Luke’s personal foresight, coupled with an ability to embrace the resources around him, has enabled him to maintain balance in the evolution of his business," says Don Hoover, president of Binkley & Hurst LP, an ag equipment outfitter.

If Brubaker is not manicuring the farm, in a meeting or at his desk, you might find him playing golf, but he’s still promoting agriculture and the dairy industry.

Life Around Lancaster

Farming in Lancaster County is no easy task. It’s essentially farming in the middle of an urban area of about half a million people. Brubakers must maintain neighborly relations, so the family keeps their farm perfectly manicured, which is no small task. They’ve done such a good job that when selling their houses, neighbors use the farm as a selling point—next to preserved farmland.

Learn more about the history and innovation that makes Brubaker Farms unique at www.TopProducer-Online.com/MeetLukeBrubaker.

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