Kilbys choose to complicate lives to try to control risks

Bill and Phyllis Kilby are taking risks and complicating their lives in order to better control their risks.
Every aspect of risk management is on their agenda; from estate planning, to environmental risks, to adding value to their milk, to gaining control over the price of milk, to direct marketing, and even to increasing profitability by reducing herd size rather than increasing it.
“We have been farming in this area for over 100 years,” says Bill, adding, “My father was the youngest of 14 and he had six children so we created a family corporation so we wouldn’t have succession problems again.”
Production Risks
The Kilbys farm 1,000 acres in Cecil County (700 in corn and the rest in alfalfa and wheat).
The crops are covered with crop insurance at the 70-percent level.
With the help of a crop advisor, they use drought resistant genetics and carefully time their plantings so they can get two crops per acre per year. They use their cover crops in the dairy side of the business and they get the most from their manure.
“It helps that our crop insurance agent used to be a dairy farmer.
Also, the government co-pay has worked well to encourage us to continue to use it even though we have only collected once in 30 years.”
The Kilbys milk 590 cows. It is here that they are going into uncharted territory.
Environmental Risks
Since their dairy herd is defined as a Concentrated Animal Feeding Operation, they have to meet strict EPA standards. To get ahead, they installed a methane digester.
“It not only helps us deal with current EPA requirements, but it gets us out in front of the move to curb air emissions as well as cleaning up any water that leaves our farm. Besides, now we produce electricity and hot water for our operation.”
Marketing Risks
They have just opened their own bottling plant and they have an ice cream business.
“We are taking a chance here, but we hope to get more control over the price of our milk. It is the fluctuations in milk prices that represent the greatest business risk to dairy farmers.”
As they ramp up their own bottling plant, they will be reducing the size of their herd.
“We will reduce herd size so we can manage the bottling and ice cream parts of our business.”
Kilby notes that the farm is 50 miles each from Philadelphia and Baltimore.
He said he thinks this is an excellent location for direct sales.
“People are really interested in food security,” he said. “We hope our customers will be encouraged to buy our milk because of the responsible and friendly way it is produced. I want them to understand that the product they are buying is made under the best conditions.”
The Kilbys are constantly researching and evaluating their risk management options and figuring out how best to grow the business to accommodate the next generation.