xt79kd1qh148 https://exploreuk.uky.edu/dips/xt79kd1qh148/data/mets.xml   Agricultural Experiment Station, Department of Agricultural Economics, University of Kentucky 1976 journals kaes_research_rprts_27 English University of Kentucky Contact the Special Collections Research Center for information regarding rights and use of this collection. Kentucky Agricultural Experiment Station Research Report 27 : September 1976 text Research Report 27 : September 1976 1976 2014 true xt79kd1qh148 section xt79kd1qh148 MINIMUM RESOURCE REQUIREMENTS
AND OPTIMUM ENTERPRISE COMBINATIONS
TO ATTAIN $7,000 NET FARM INCOME
IN TWO AREAS OF KENTUCKY
` ` {A Study of the Competitiveness of Beef Enterprises)
By
Alfred B. Kelly and Fred E. Justus
O
RESEARCH REPORT 27: September 1976
University of Kentucky 2: College of Agriculture
Agricultural Experiment Station :2 Department of Agricultural Economics
Lexington

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i· .

 MINIMUM RESOURCE REQUIREMENTS AND OPTIMUM ENTERPRISE
COMBINATIONS TO ATTAIN $7,000 NET FARM INCOME IN TWO
AREAS OF KENTUCKY
(A Study of the Competitiveness of Beef Enterprises)
By ‘
· Alfred B. Kelly and Fred E. Justus
I
I RESEARCH REPORT 27: September 1976
i University of Kentucky :2 College of Agriculture
Agricultural Experiment Station :: Department of Agricultural Economics
_ Lexington

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 LIST OF TABLES
721ble Page
1 Representative Land Resource Mixes Assumed, and Associated Land Values ......... 12
2 Hours of Labor Available for Direct Crop and Livestock Labor Needs ............ 14
3 Crop Yields Assumed, By Area of State and Land Use Capability Class ............ 16
_ 4 Commodity Prices Assumed in Minimization Programming .................. 20
5 Farm Plans that Achieve $7,000 Retum to Opcrator’s Equity, Labor and Management at Lowest
Total Capital Investment for Different Equity Levels: Farms in the Bluegrass Area of Kentucky,
All Enterprises Permitted to Compete ............................. 22
6 Farm Plans that Achieve $7,000 Return to Opcrator’s Equity, Labor and Management at Lowest
Total Capital Investment for Different Equity Levels: Farms in the Bluegrass Area of Kentucky, .
only Tobacco, Beef-Feed Enterprises Considered ....................... 24
7 Farm Plans that Achieve $7,000 Return to Opcrator’s Equity, Labor and Management at Lowest _
Total Capital Investment for Different Equity Levels: Farms in the Pennyroyal-Ohio Valley Area
of Kentucky, All Enterprises Permitted to Compete ..................... 26
_ 8 ·Farm Plans that Achieve $7,000 Return to Opcrator’s Equity, Labor and Management at Lowest
Total Capital Investment for Different Equity Levels: Farms in the Pennyroyal—Ohio Valley Area
of Kentucky, only Tobacco, Beef and Beef-Feed Enterprises Considered ........... 27
9 Optimum Farm Plans and Resources Needed to Achieve $7,000 Return to Opcrator’s Labor and
Management Using Different Minimization Criteria: Farms in Bluegrass Area, Zero Equity and All
Enterprises Considered .................................... 29
10 Optimum Farm Plans and Resources Needed to Achieve $7,000 Return to Operator’s Labor and
Management Using Different Minimization Criteria: Farms in Bluegrass Area, Zero Equity and
only Tobacco, Beef and Beef—Feed Enterprises Considered .................. 31
ll Optimum Farm Plans and Resources Needed to Achieve $7,000 Return to Operator’s Labor and
Management Using Different Minimization Criteria: Farms in Pennyroyal-Ohio Valley Area, Zero
Equity and All Enterprises Considered ............................ 33
12 Optimum Farm Plans and Resources Needed to Achieve $7,000 Return to Operator’s Labor and
Management Using Different Minimization Criteria: Farms in Pennyroyal—Ohio Valley Area, Zero
Equity and Only Tobacco, Beef and Beef—Feed Enterprises Considered ............ 34

 D · it s _ _ coNTENTs
{ l i !’¤.¤:¤
¥ i ‘ , List of Tables ........................................... 4
‘ _ A ? Introduction ............................................ 7
I ~ " g ; Purpose and Objectives ....................................... 8 __F_
I ' i 2 Study Areas ............................................ 8 Sl;
I * Procedures and Assumptions .................................... 10 Dk
i · Y I s Income Target ........................................ 10
- p Decision Criteria ....................................... 10 Chu
r l ; t Time Period of Analysis ................................... 10 att']
A i Level of Management and Technology ............................ 10 CCU
_ 1 Resources Used in Study ...................................... 11 selt
- 1 _ Land ............................................. 1 1 cor
* ` i : Tobacco Allotment ................. . .................... 13 ¤$5*
_ I   I Labor ............................................. 13
r I Capital ........................ _ .................... 13
~ i Enterprises Permitted and Operational Assumptions ........................ 13
I A Crop Enterprises ....................................... 13
1 Livestock Enterprises ..................................... 15
A I Limitations on Livestock, and Enterprises Omitted ...................... 18
· ° A Prices and Other Assumptions ................................... 19
1 Physical Production Assumptions ............................... 19
_ Budget Review ........................................ 19
A · Results of Analysis ......................................... 21
I   y Minimum Resources to Achieve $7,000 Income ....................... 21
I i Bluegrass Area ...................................... 21
i p All Enterprises Permitted in Analysis ....................... 21
p Competition Limited to Burley Tobacco, Beef and Feed Enterprises ....... 23
is Pennyroyal-Ohio Valley Area .............................. 25
All Enterprises Permitted in Analysis ....................... 25
Competition Limited to Burley Tobacco, Beef and Feed Enterprises ....... 25
Effects of Decision Criteria on Optimum Solutions ................... 28
i Bluegrass Area ................................... 28
Pennyroyal—Ohio Valley Area ........................... 30
Summary and Conclusions ............. , ........................ 35 I
la  
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 5
pagu ACKN OW LEDGMEN T
. 4
` 3; This report is based in part on research developed from regional research project S-67,
’ "Evaluation of the Beef Production lndustry in the South." This project is a cooperative effort of
` 8 State Agricultural Experiment Stations in 12 Southern states, the Farm Production Economics
· 10 Division of the Economic Research Service, and the Tennessee Valley Authority.
· 10 The overall objectives of the regional project were (1) to determine various resource
· 10 Characteristics and combinations employed in beef production in the South, evaluate selected operator
. 10 attributes and appraise adjustment trends that have occurred, (2) to evaluate the micro and macro
. 10 economic effects of selected aspects of altemative beef production systems, and (3) to estimate for
. 11 selected alternative systems of beef production the relative effects on firm survival and/or growth of A
_ jj constraints such as forage production risks, price risks, institutional restrictions and changes in value of
_ jg assets.
. 13
. 13
. 13
. 13
. 15
. 18
. 19
. 19
. 19
. 21
. 21
. 21
. 21
. 23
. 25
. 25
. 25
. 28
. 28
. 30 _
. 35

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 . 7 “
MINIMUM RESOURCE REQUIREMENTS AND OPTIMUM ENTERPRISE
COMBINATIONS TO ATTAIN $7,000 NET FARM INCOME IN TWO
AREAS OF KENTUCKY .
(A Study of the Competitiveness of Beef Enterprises)
bv
Alfred B. Kelly and Fred E.]ustus*
A fundamental premise upon which the do I need to make a "decent" living for my
science of economics is constructed is that family from farming?, (2) What kind of fann
individuals and/or groups behave in an business and what combination of enterprises
economically rational manner in utilizing scarce will provide a designated net income at least
resources created by nature and man in cost?, and (3) How much land and how large a
attempting to satisfy their unlimited desires for beef cow herd must I have to make a given level
goods and services. An individual decision-maker of net incomes?
trying to act in an economically rational manner Researchers working on Southern Regional i
must operate within a framework of constraints Project S-67, officially entitled "Evaluation of
which has technological, institutional (including the Beef Production Industry in the South,"
legal), knowledge and personal dimensions. To recognized the importance of minimization-type
accomplish the theoretical goal, individuals try questions to beef cattle producers. Thus, as part
either to maximize some output function (i.e., of the regional analysis each state was
income, utility, goods, etc.) or to minimize the committed to analyze a core of 10 situations in
use of some inputs (i.e., land, labor, capital), each delineated geographic area using a
while being constantly given new and changing minimization linear programming model.
information in a world of uncertain outcomes. Descriptions of these situations and analysis
Farm management specialists in their results for two Kentucky areas are a major part
research (and teaching and extension) efforts of this report.
usually translate this premise to mean In any research some conceptual questidns
maximizing profit from the farm business. On are critical to the quality of the endeavor and
the farm business planning level the goal the usefulness of results. For minimization
typically is to determine the kinds and sizes of analyses perhaps the most critical decision to be
crop and livestock enterprises, and the amount made is in regard to the minimization criteria;
of labor and capital needed to maximize profit i.e., what factor or factors of production should
fora given size farm. In application, constraints be minimized? It is possible to delineate a
differ, alternatives permitted in the analysis number of minimization criteria for analyses on
differ, and even the definition of profit varies the farm organization planning level. This leads
I somewhat to fit individual circumstances, but to two questions: (1) Will different
the predominant goal is profit maximization. minimization criteria yield appreciably different
Farm management specialists, however, are results?, and (2) If analysis results are different,
frequently asked questions for which a which criterion should be used? The S-67
minimization goal is more relevant. In farm committee decided that for the core
business planning, this goal is particularly programming all researchers should minimize
relevant for persons who for some reason have average capital investment. In Kentucky this
identified a certain income level from the effort was expanded for the two key situations
business as being "acceptable." Examples of in each area. Optimum farm organizations to ·
questions for which minimization analysis is achieve the designated net income were obtained
appropriate are: (l) Ilow much land and capital using four additional minimization criteria, to
 
*I·`ormer Research Assistant and Professor of Agricultural _
Economies.

 2 i   —
Q i   ·     determine if and how the selection of 1. To determine the minimum resources
T ’ j A g .— minimization criteria affects results to needed and the optimal farm
Z   A   2 minimization linear programming analysis. organization to attain $$7,000 retum
i     I A. Results are presented as a second major part of to operator`s labor, equity anti
Q A   i   I this report. management from farm businesses in
A T V   t ; . r — · —.
_ · r A V PURPOSE AND osjizcrrvas WO ""S " ‘l‘“ S‘*"°
f 1f .i J . (ll` i ‘ ‘ ·fl`··‘ 4
g iQ i I The overall purpose of the S—67 research 2 T.O. C Lmiliu {lic ,° LLP [hu
. — V ; ; V . . different decision criteria which may
V V ·   . efforts was to evaluate the competitiveness of bt Cm lo Ld b fu tm I 1-1
1* = _ . . ‘ " ‘; ·z¤"‘\’>
e 1 y different beef enterprises and beef-feed systems P 1 1   m IM 5 `° U (
. —. ; I g . . . . have on the minimum resources
V- ~ on farms with representative resource (mcludmg . .
- . A . . . . needed and the optimal farm
V ~ V A the human resource) situations in delineated . . .
; 1 A . . organizations to achieve $7,000
· · , 2 V areas of the South. Linear programming was the , .
A 5 · I r . returns to operator s labor, equitv and
V i · A analytical tool used. . . . C .
A V _ V . . , . . . management. "Ihe decision criteria
. A > V I While a considerable amount of profit
· . . . . . . analyzed were: (I) total annual
V ; . _ A_ maximizing programming was done, it was . 9 .
_ » A ( ( 2 variable cost, (-) total cost, (3)
I · I conceptualized that for some beef producers and . _ _
A . _ . . average ll1\ estment, (4) ac1es ol
; potential beef producers in the South the r .
A ; . . . . . openland, and (J) total hours ol labor
‘ ( , ( relevant decision goal 1S determining the use
_ X g optimum enterprise combination and the `
V 1 I i minimum amount of resources needed to obtain For both objectives, the two competitive
L ° a specified level of net income. It was recognized situations described above were analyzed. In
i Q A A that the amount of resources needed and the Ob`ective I, solutions were obtained lor all live
A j optimum kind of enterprise combination could equity levels, but in Objective 2 the analysis was
‘ A vary with the kinds of enterprises permitted in limited to the basic 0 equity level (i.e., all costs
·Y I V the analysis (i.e., considered by the farmer as of capital were charged).
_ A   A possible alternatives). Moreover, it was STUDY ARFAS
( A   ‘ recognized that the amount of resources needed, J
~     A at least, would vary with the amount ofequity a Characteristics of the two study areas
l ; l farmer has in the ca ital resources em lo ed in shown in Fi ire I are as follows:
A f P P Y gl
` ‘ I · th b ` . , .
VV V C arm lismcss . . . .. Bluegrass Area (S-67 Area l:>)—Th1s area
I A core of 10 situations was 1dent1f1ed for . .
A . . . . . . . . corresponds roughly to what geologists and soil
, minimization linear programming analysis. Two . . f { · l_ _ _ e _* _) _   I
. A different Competitive Situations were dc1inCatCd_ scientists re er to as t.c Inner Bluegrass Area. t
. . ° ntains 12 counties. The topography is gently
(1) beef enterprises permitted to compete CO . . * ‘ L ‘
. . . . rolling to steep, with burley tobacco and
· against all other feasible enterprises in that area, mu ha C Hsu in liwsm I   in thc mlm
. . . . . - Y I ` ` V C ST ` Z
I and (2) compet1t1on limited to alternative beef f g g CO _ m BP _1 _ lu H" A
z and feed Supply enterprises (and Cmerpdscs such arm enterprises. i ui cy to.>acco a otmtnts are
V . . . . large compared with those in other parts ol the
as burley tobacco, which for institutional ....
I state. As the fertile land is conducive to high
reasons would be produced on nearly all farms). . . * _
A . .... roughage yields, beef cattle production has
· V For each of these competitive situations it was . , . .
V increased considerably in the past decade. A
assumed that tl1e operator had 0, 25, 50, 75 and . ‘ . _
V - - V substantial number of cattle are led to stocker
. . A 100% equity in the total farm capital. 1 I tc . l t
# . . . . . ' Y` Y _
V ( In Kentucky, minimization programming Or S dugi r limi`] S
· · i . was carried out for two areas, designated: (1) Pennyroyal-O/uio l’ul[t·y rlrcu (S-67 Area
1 the Bluegrass Area (S-67 Area 15), and (2) the 17)——This 13-county area includes Pennyroyal
- Pennyroyal—Ohio Valley Area (S-67 Area 17). Plains counties along the southern border of the
A r A The specific objectives of the research presented state and the Lower Ohio Valley region on the
Q I in this report are: North, joined by a portion of the Western Coal
I 1 A (
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67 :\l`Cil _
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2m Coal •·

 V ( E   in
f ;         Fields. This is the major row-crop producing investment was defined as the sum of investment Pr
1 2   ¤   { region of the state, with large commercial farms capital—land, buildings, facilities, machinery and
1 l » V   i that are very similar to farms found in the Com breeding animals~and prorated operating
i t   . j   Belt. Corn and soybeans are the primary cash capital. Operating capital used-for such things as _
i * ( V   V crops. Livestock enterprises are typically those fertilizer, seed, chemicals, feed and purchasetl uf
l ‘   .   » associated with corn production (hogs) and feeder animals was prorated based on the fc:
V   V . ‘ g supplemental roughage production (beef cattle). proportion of a year that the capital is tied up in fc:
  l a l   g In the Western Coal Field part of this area, the business. As stated earlier, four additional fl
§ f ’ Q however, farms are relatively small and the land criteria were used for key situations in Kentucky 0
t i§   Q is unproductive. Much of the acreage is in to study the impact on results. La
V . Q   ( pasture' Time Period of Analysis
· 1 z 1 . PROCEDURES AND ASSUMPTIONS _ 1   . . ._ _ . ,1
y · ; ;, The conceptuahzation of this pait of the S‘
      Y · The analytical tool used in this study was S-67 effort was completed and many of the QL
· if Q j linear programming, involving basic basic decisions made in 1969. Because ofthe lm
1 1 1 - g if minimization models. As literature is expected length of time to complete this study uS‘
’ V   A   voluminous on the specific techniques and the and the difficulties of "predicting" many of the ASS
2   V mathematical bases of linear programming, relevant variables too far in the future, it nas béif
_ i   . descriptions of» these are omitted from this decided to make 1975 as the target date fVor the CO
.     V publication. ln any study, however, a number of analysis. In other words, technology, physical if-$5
° 1 . basic decisions such as the following must be production, prices and costs were estimated on PC]
  made to provide the basic framework of the the basis of expectations fVor 1975. Cul
V {   spcclflc study Level of Management and Technology AS1
_ i _ · , . Income T3‘g€* The level of management assumed was mu
Y   V The S-67 committee selected $7,000 retum defined as "advanced management in 1969." usf
·   ( to operator’s labor, equity and management as which in effect was that expected to he esl
1   1 the level of income to be achieved in the generally found on farms in 1975. This level of Cla
?   f minimization analysis. This income level was management exerts its influence on the level of CQ]
_ ( f selected to represent approximately the average technology employed, physical production SOI
A   . V gross earnings of skilled laborers in the region. responses, and on input and output prices. lt is pm
_ , . The income goal remains the same for all further assumed that the individual farm [hl)
. ` equity levels analyzed. Therefore, it should be operator will make the adjustments that appear {Off
noted that in one sense the results are not to be most profitable from his individual ma
V commensurate. At the zero equity level, the standpoint under the assumed conditions.
V returns reward the operator for his labor and The basic level of technology assumed in
1 V management. At other equity levels part of the the analyses was defined   that which was
V V A $7,000 rewards the operator’s equity in the known and commercially available in 1969 and .
_. V business, and this proportion grows with the expected to be widely adopted in 1975.
_ equity assumed. Therefore, at the 100% equity Specifying the level of technology does not
f < · level the operator’s own "wages" is much less mean exactly the same practices, equipment,
V f than at the zero equity level. etc. on all farms, even in the same area.
  ‘ ( Decision Criteria Technology. applieableuon large farms may not
‘ . be economically _]1lSl.ll1Cd on small farms., and
‘ Q V 1 The decision criterion (i.e., what resource topography may affect what crop technology is
V 1 should be minimized) selected by the committee applicable, Thus, technology in this effort is that
t for the core minimization programming was applicable for the specific area and the
  1 — ( average capital investment. Average capital anticipated farm size range (preliminary
  7 ‘ V
 It  
i   Q ‘
l P i

 ]_]_ I. .
Stmcm programming was helpful in tl1is determination), was assumed that 20% Of Class VI
ny and RESOURCES USED IN STUDY wud can h be harvested as rod “
_ I . I cover-grass ay.
Emlmh Within the general study framework agreed · . . l
ungsas   . . .. 5- Except for the hay harvestmg lust
` upon for the mxmmization analyses, decisions on . .
chasm csources were left u J to the `ud ent of mcnUOnCd’ pasture has exclusive usc
,u the r . r , . . J   Of Class VI land. Pasture can also be
. researchers in each state. Specific decisions and . .
;l up in I. _ I. [hc K _ I k _ r . gfOWI1 on all Other land, 1f lt competes
litional ?Sil‘0";l’ ""“ °' °“ uc l P "*>'“‘"‘m'“g economically.
. . o · . . .
Wiuilv 6. If no—t1Jl product1on practices are
Land followed, the maximum intensitives
Amounts of land used in the optimum Change to: (A) row croP$ can bc
Ol nm solutions were determined by the programming. grown on 611 of Class I and H» 2/3 Or
Ol thc Quality of land, however, was assumed prior to Crass UI ono 1/3 of €1¤$SiV1¤¤d2(B) ’
of [nc programming, and served as a constraint in land Srnan grams Cajn bc grown on all Class
ismdl. use and crop yields. The land resource mixes r'rr> the romrnndor or Class IH (loft
Ul Inn assumed as representative of the two areas were after row CroPS)» and 1/3 of Class IV
n Ng based on data in the Kentuc/cy Soi! and Water land'
lor the C°"—“"'”"’rO" N“"r’ r'“’°"}’°’T*’» 1970- The The programming model was set up so that
llysicnl B.SSI.IIT]Cd l21Il(l l`CS()l.II`CC ·I'T`IIXCS, (`XpI`CSS€d 21S each Class Of   was a resource in proportion
lcd on percentages of openland in destgnated land ttse [O the percentages ShO\~vn in Table ]__ Crops
capability classes are presented in Table I- competed for each class of land independently,
ASShIInCd ZiSS()CILlllC(I llilld \`ZIlIlCS ·LlI`C LIlS() SIl()§‘VI`l. [O the extent Permitted   the   use  
To maintain adequate soil conservation, maXnnums_ Each Class Of land had aland charge
d “_,1S maximum pI'()l)OI`IlUllS Ull [llc llllld tlllll. CAD be (interest arld Property   based On the
  ·· used [OI- I‘O\\' CI·Ul)S LlI`l(,l SITIZIII SYZTIIIS were assurned land Value, that was Charged against the
to   €Sl£1l)llSllr;(l fO1` lllC \`L`tl`lO\.lS lillld USC Ciipllblllty Cygpg COmp€[ing for its u5€_
ZW} Ul classes. These were based on publishedlsoil Only Openland Suitable for Crops and/or
_\_C1Ot~ COIlS€I`\`l1ll()D I`CCl)HlfI]C_llCl1lIlOlTS but IT10d1T·ICCI Pasture enters the Programnljng directly, but
llcmm somewhat to account for improved pr0duct1on every {ann has Some land in made, fan-nSteads’
S It iS practices which hold down so1l erosion and, Wnnds, e[e_ AS the amount (and proportion) gf
`nlrm thus, increase-"aeceptable intenslty of use.’l The nOnprOduC[i\ve land Varies gmeatly from farrn to
lm)L_,u_ followtng guides were used tn determimng farm, it was deejded to assume Only 3 "uOmi¤g]
ividun maximum intensity ofland use. PI·OpOf[lOn” gf this type land in the
l. All Class I tuud ll land can be used for rcprcscntaflllcllagd mlx if; CFaIg€blnr;;:SsSt(;I;i
ned in mvcm )S_ taxes on tus an agams e arm us1
n was l I _ dl _ the crops). It was assumed that for every 100
S9 and 2i $(2; ilgirfilfilbr Enf`; mgngi r   acres of openland in the Bluegrass farrn 7.5 acres
1975. lindo hb `m / O ass of nonproductive land is also brought into the
rs not ' _ solution; and in the Pennyroyal-Ohio Valley
>m€¤i» 3‘ Small grain °"°;_l’S um bg uglmgl farm 5 acres of nonproductive land is added.
;u·c;r, gngnnlijlon —llIlI and IV hind` mmlmrlmsi ` f r/du tive land than
v_ _ greatet prop0rt1on 0 unp 0 c
»f’**l,‘i 4- my evi bs s¤>-·¤ On HU wss MV assumed, an anna innnnnnnr ana nnnannna —
is tm. land' 10 mk? mln accmlm thc costs will be higher than those obtained in the
l [ln common practice ol hawestmg one YO Mmmm Solutions
mnrnl cutting of hay from pasture land, it P g g `

 1 1   12
f   . { 161
I j was
i — — j TABLE 1 ull;
V 1 V ' Representative Land Resource Mixes Assumed, and bil,
` _ { Associated Land Values Pm
. , ‘ · j l)£lS*
— .  _____  acr<
A   » I   11101
1 dm
. A Bluegrass Area Pennyroyal —Ohi0 Val ley IC"?
Area TPL
·   )C
I i Land Use dm
1   Capability ‘% of Value ‘% 0f Value ia H
? Class Openland Per Acre Openland Per Acre  
N : 1 - II ‘ 32.2 $600 45.9 $400 xg
` this
  III 20.8 450 24.6 350
I I Lab
h IV 14.9 350 13.3 250
I VI 32.1 275 16.2 200 ;?"
1 _—_—— T __; ;— O]
$   TOTAL 100.0 $427 100.0 $555 ¥lb‘
ic
seas
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V OPC
1hc
assu
  mar
hire
‘ avai
l`C(1l
I labn
_1 the
Coul
I l but
amu
i YOU}
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_ lol);
rela;
nl   _ [
1 i h `

 Tobacco Alletmerrt that operators would somehow get the labor to .
The size of the boricy tobacco allotment get tlaese jabs el¤¤e· Perrarttiag hearly seasaaal
was determined by the programming. The illgcd labor but not permitting fullstimethired s
allotment waS Put in the model as so much as? made hired labar glnctly fi variable revue ;
teeaesa aereaee Per l00 asres at arealaaa tvi,ponl;1Se(i:danBirrigiitthl0 laliiofmgfimcliisdiigcggigf
brought into the solution. Even though the use are Shoilvn in Tablgas pp
present burley tobacco price support program is _
based on poundage rather than acreage, using Calairai
acreage in the programming simplified the It was assumed in this Study that the
lllodci· Acrcagc a$$‘~imPrioii$» boWc"cr· arc operator could obtain all the capital needed for
rlireetly asseelateel with preyalliag peaaelage investment and operational purposes. rbos, as
levels. lt was assumed that for each 100 acres of long as it was Profitable to employ capital, there
0Pciiiaiici» rbc briricY tobacco aiioimcrir Woiiid was no maximum constraint. It was assumed A
be 205 aeres ia the Bluegrass Area aael l-26 that tbc operator had to pay 6% annual interest
aeres la the Peaayreyal-Ohio Valley Area- oo booowco investment capital aaa 7% interest
la tlre l’e¤¤yr¤yal-0lti<> Valley Area same oo borrowed opcratrog capitai. The interest
llirmers have small allotments of dark tobacco. Charge on Operating capital was prorated, LC-,
As the number of farmers raising dark tobacco the Chaxgc was Ohh, for the Proportion Ofa yeas.
and the size of allotments are small, dark that the Capital was actuahv used by ah
tobacco was not considered as an enterprise in chtsrphsa I
liiis aiiaiY$i$· No charge was made against the business
Labor for- the operator's own capital used in the
business (equity). Thus, in the zero equity level
Labor rcrluircmcriis at riic Various analyses interest was charged for all capital; and,
enterprises and the labor constraints in the Oh the other hand, ih the 100% Equity analyses
pl`Ogl-Zirnnllng Were   terms of hours of direct no intcrcst was ChaI·g€d_
labor needed and supplied in bimonthly periods.
There is sufficient "time flexibility” in the ENTERPRISES PERMITTED AND
seasonal production jobs to make the bimonthly ` OPERATIONAL ASSULPTIONS
time l)CI'l0(l 3 I`€lCV3.l`l[ CODS{I`2‘1ll`lf. In [hg })f()grgmming, [\y() different
iii iiiis Programmmga el illiielimc iillrm competitive situations were delineated. In the
operator was assumed. Of the 2,500 hours time {hst situation, beef enterprises were competing
the operator supplies to the farm annually, it \Vi1S with iii] Oiliei- feasible enterprises in the ;;_;ea_ In
iissilmcd lilili 30% is used i`0r 0Vcrilcad laber amd the second situation, competition was limited to
maaageareat tasks. iaelurliag the superyislea el burlev tobacco aaa alternative beef and feed
hired labor. The remainder of his time is supplaring enterprises
a*‘allat>le ror ciirccr croP and llvesteele labor Enterprises listed below were considered in
requirements. In this analysis, no other family the KgntuCk5V analyse; Limitatigng On these
iiibor was lllci¤dc€i· enterprises are also noted.
Full-time hired labor was not included in _
the assumed labor supply. Hourly seasonal labor Cmp Enterprises
Could be hired at a wage rate of $1.75 per hour, Cas}; and Grain Cmp;
but maximum bimonthly limits were put on the L Bllrlcy tObaCCO_
ilm0uuts. The maximum amounts c0rreSpOI1d€d _ _ _ , _
roughly to that of a full—time hired man, except 2- Corri (comicmiooai miriirriurri ri—iiagc)·
in periods of peak labor needs for such chores as 3. Com (no-till practices).
l0bzieco housing and stripping. The limits w€r€ 4. Wheat.
relaxed in these periods based on the premise 5. Barley.
( t

 . 1 V i { 14
  V E V   TABLE 2
» E   g Hours of Labor Available for Direct Crop and
    » t Livestock Labor Needs
EV `V V Hourly
1 J l . Operator's Seasonal
1 jp _ 1 ( Labprj__ Qired Labor
y 1 V i Jan. - Feb. 258 332 Ak¢
I V' A i Mar. · Apr. g 305 1000
e T May - June 305 500
A ‘“‘ ` V July — Aug. 272 350
” I Sept. — Oct. 305 500
i i Nov. — Dec. 305 1200
l · ~ TOTAL 1750 3882 Hui
alt was assumed that the operator would take weekly vacations in
A _ August and in January — February.
  V Con
V inch
A crop
spec
Agrc
crop
Q 0wn
y cust
assu
Tab]
1 .
· utilize
L Cstimz
_ V thc fr
i ¥ Agmr
; » 2 Dirccl
l l · ` ofthe

 15 . "
6. Soybeans (Pennyroyal-Ohio Valley included as alternatives in the analyses. As
Area only). considerable. variation is possible in production
7_ Whcagsoybcans doublcmmppcd practices, timing and physical efficiency of .
(Pcnnymya1_OhiO Vaucy Area Only). livestock enterprises, a brief description of each
8 B I b d bl d enterprise is also presented. Decisions about ·
‘ ar °Y'S°Y céns Ou °`°f°pP° enterprises to be included, as well as physical
(P°nnyr°y°‘1`Oh1° Valley Area °n1Y)‘ production relationships, were made in
9. Corn-soybeans-barley (3 crops in 2 consultation with specialists in the University of
years, Pennyroyal-Ohio Valley Area Kentucky Department of Animal Sciences.1 (
Oniy) ' Beef Cow Herd Enterprises
Mechamcally Harvested Forage Crops 1. Beef COW Herd, Fccdcr Calves Sold _
1. Com silage (no-till). Calves are born in the spring
2. Corn silagbbarlcy silage (March—early April) and sold about
dOublc_CmppCd· December lst. Sale weight averages
500 pounds. Calvmg rate is 92%, with
3· A1fa1f“·'gms$ haY· 5% death loss. Calves are creep fed for
4. Red elover—grass hay. 150 days. No specialized builllings are
5- Annual lcspcdcza hay. required for this enterprise. Cattle can
use tobacco barns during severe
Pasture alternatives weather.
1. Improved grass pasture (regular 2. Beef Cow Herd, Calves Sold as 650
nitrogen applications). pound Feeders — Calves are born in
` ( h-earl, A ril) weaned in
2. Grass-legume pasture. Spring (Marc 5 P ’ .
the fall and kept on the farm instead
Combination (pasture·mecl1an1`cally of being sold. They are carried over
harvested) alternatives the winter on hay, grazed for 60 days
V , _ v_ in the spring, and sold in june as 650
l' Improved grdés ini Pasture. (rcglilar pound vearling feeders. Creep feeding
nitrogen applications) — primarily a ‘ . . .
. . of nonweaned calves is limited.
pasture crop, with surplus spring
growth harvested as hay. 3. Beef Cow Herd, Calves Fed to
2. Grass-legume hay-pasture - primarily gillblgltgc\;;1§§ti!S;r;iI§1gS;;;;2%r1;;
a pasture crop, with surplus spring fall Wimcrcd On ha ’
1 , y, grazed for 60
growth harvested as hay. da .
ys, and then fed grain and
Decisions regarding crop enterprises for supplement on pasture until finished.
inclusion in the study, production practices and Slaughter cattle are sold at 1,045
crop yields were made in consultation with crop pounds in November.
specialists in the University of Kentucky ) . ) .
Agronomy Department. Because anticipated Cattle Feeding Entcrpnscs
crop acreages were too small to justify the 1. Winter Feeding Steer Calves on Silage
Ownership of specialized harvesting equipment, — High Good steer calves weighing
custom harvesting of grain and silage crops was 400 po