xt7mcv4bqj5g https://exploreuk.uky.edu/dips/xt7mcv4bqj5g/data/mets.xml   Kentucky Agricultural Experiment Station. 1958 journals 072 English Lexington : Agricultural Experiment Station, University of Kentucky Contact the Special Collections Research Center for information regarding rights and use of this collection. Kentucky Agricultural Experiment Station Progress report (Kentucky Agricultural Experiment Station) n.72 text Progress report (Kentucky Agricultural Experiment Station) n.72 1958 2014 true xt7mcv4bqj5g section xt7mcv4bqj5g ` Progress Report 72 November 1958
HIGHEST PROFIT PLANS FOR BEGINNING FARMERS
ON PEMBROKE, DECATUR, BAXTER, AND DIXON SOILS .
IN' SOUTHERN CHRISTIAN, TODD, AND LOGAN COUNTIES
BV
Darrel I-1,, Plaunt, James Thompson,
Harald Ro Jensen, and George D,, Corder
I UNIVERSITY OF KENTUCKY I
AGRICULTURAL EXPERIMENT STATION
LEXINGTON

 ~ HIGHEST PROFIT PLANS FOR BEGINNING FARMERS
ON PEMBROKE, DECATUR, BAXTER, AND DIXON SOILS
IN SOUTHERN CHRISTIAN, TODD, AND LOGAN COUNTIES
By Darrel H, Plaunt, James Thompson,
_ Harald R. Jensen, and George D. Corder
Present farming with high costs relative to product prices places a premium
on efficient farm planning. Efficient planning is of particular importance to the
beginning farmer. Capital shortages often limit his volume of business. In con-
trast, the established farmer with more funds often can expand his volume of
` business and so lower his unit costs of production. This opportunity may not be
open to the beginning farmer with limited capital. His opportunities for increasing
his income may be limited to more efficient use of his existing resources T- land,
labor, machinery, buildings, and other capital. Therefore he must plan carefully
to obtain these efficiencies if he is to compete with farmers who have more capital.
This study is designed to outline alternative plans that can be expected to
yield more profits from the resources available to beginning farmers. The plan
for a particular farm, however, must fit the resources peculiar to that farm, if
profits are to be maximized. Even though two farmers may be farming on the
. same types of soil, their farm plans will differ if they have different quantities of
labor, capital, or managerial skill.
This study has been made to help beginning farm families improve their farm
planning by outlining plans for beginning farmers with different amounts of land,
labor, and capital. While the plans outlined are not likely to fit a particular farm,
I they can serve as useful guides to beginning farmers with different quantities of
' resources.
OBJECTIVES OF THE STUDY V
The broad objective is to determine farm plans that maximize profits for
· » different farm situations on Pembroke, Decatur, Baxter, and Dickson silt loams
of southern Christian, Todd, and Logan counties. The farm plans are made par-
ticularly for beginning farmers (or other farmers with similar resources) and for
use in the Farm and Home Development program of the Agricultural Extension
Service.
The more specific objectives are to (1) determine profit maximizing plans
_ for farmers with different amounts of land, labor, and capital, (Z) show how
the maximum profit plan for a farrn depends on the relative amounts of land,
labor, and capital available, and (3) show how maximum profit farm plans differ
from plans now in operation and how current plans need to be reorganized to
maximize profits.

 .-3- _
YVIETHOD OF ANALYSIS AND TECHNIQUES OF
LINEAR PROGRAMMING
Every farmer has the opportunity of selecting a production plan from a large
.-dumber of alternative plans, Crop and livestock enterprises along with the land,
labs: , capital, and management used in production can be combined in thousands
of diff·erent ways., Consider a farmer who has $3, 000 to use for wheat and/or
hay., ]_,et°s say he can use this money to grow l0 different kinds of hay and 6 different
l-cmtls of wheat, that he can buy 6 different kinds of fertilizer which he can apply at
5 different levels, and that he has 2 methods (irrigation or dry-farming) which he
can use ir., growing the crops, Already this gives him 3, 600 different ways of using
his $3, 000 (l0 x 6 x 6 x 5 x Z, I 3, 600). Now if we add the thousands of ways in
which he can use 52 weeks of labor and 200 acres of land for these and other crops r `
along with livestock, the number of alternative plans becomes almost countless.
in actuality, of course, no one considers these thousands of different alternatives _
when deciding on a particular farm plan, However every farmer knows that he
has the opportunity of producing many different combinations of crops and live-
stock, and he has the opportunity of producing these in many different ways, More-
over, if a farmer wants to get highest profits, he must choose the plan that will .
¤tc·cc»mplis\i this, considering the amounts of land, labor, management, equipment,
buildirgs and other capital items available to him.,
A procedure or method of analysis which allows consideration of the many _
>¤.lt»—rna.tives open to a farmer is the technique of linear programming. By using
this technique, the plan which yields highest profits can be determined, given
five ’r·¢:s2cn.·,¤ce liimitations of a. particular farm situation, the prices, and the pro-
dwcmon i`:·om a given input., y
l`~I—‘.zith¢>r time nor funds permit plans to be worked out for a large number of
l:.‘.li»oui ?~, BOC bushels of grain would be sold. The
fetuccns to labor, `f1'1E‘.}T}.£tg·.?‘fT\€2l,, abil fix;-ec. capital from this program would be about
$7 IOC or about $l, ZOO loss t`Zi2.1l <.m~iei: the cash grain program. On the other hand, 4
the income from cash g;rei;i·, ‘i>E;v>&;i;co, and dairying combined would be less likely ;
to v my as rnuch from year to year   would the incense from cash grain and tobacco.
if some hogs were kept, s<;»rn·;: cf the e ;p·ense money would. be needed for hog _
ore ·;Q._n;tj.o1·., and it would he necessary to c»'*=ta:?n this rnoney by reducing the acreage
rl  wrt. Again, the   fi: yan hogs wwuld not be large enough to restore the
ncome lost by rsduzizug grnéyr.   In this ;3I`.:1»Q; to‘oac·i;<·,, Six sows would be kept to farrow
 co ;— year, and el~ox·t 4*-0 t`ee»;le‘<* pigs 12vo¤_;.}.d be p‘u1t#chased each year and fed to
tn = r kat weights ,
Qt` more ‘.h.¢.i $Z, N3 in <·~xp·;».rn.=s=, rrric-::ie.j_r were available, how could it best be
.·t—·_ rl *-Yyth the other roso ,1r=;`t=;> cre the e *21.2.].}. fG~.1i"rn? Since all the land was used
»l; »=’· ¤ ··¤ evt;] y $2, lll} we s ia, .r¤.j..it:, ls. Ln ·.=;~:.p·=·n.:-so ·   Luey, additional capital would not
rw; ;‘·~¤·t €XP$"\Sl.`t1'.· of flwi; C"£\st·   £.i,"¤ —‘?.Ci;a ..’. Ft.: pI‘j1g1”3.‘n’1, unless l'l’lOl'€ l3.D.d was bought.
  csi the act;»==· ysqcfitav   ·;>r~ the sam·e acreage, it would be necessary
to (`l1iY;Tg*` thc ("JTY1iZ`lIl'1f,’.C‘·; cf <·‘i"c "jozié  s.,
At lt- ` se cvu- dew exit:   se *;*;.*.1**.   »·&:— ‘s       ·rT.o1.d. a gsoss income of $l4, 686. After
pw nw: ~* is one >rQ1»_gj vote ·— t-2. $T   E6? w·>1;l‘? taernain as returns to labor, manage-·
··1 ·`*,   tfxo  e `g#ii¤l. ;\&;   Tea   of 1d·;i;ir‘·g $2, l3C expense nuoney and adding
H leo; =·.t·~:{···’}sc, ;;_1C":» iv? virui ‘ ¢·’·»;l·;< be increased by slightly over $4, OOO,
T v *· vg L`1`·i"..Q`l`*'~'i*  we- Y U c * skit of ii;4 saws, each farrowing twice yearly.
j i *   »L> ·.·.* ’C €.:·r· "   Vrfwzl-5 be cw ’: and fed to market weight aloz;-gg I
v·   tl- Brine -pv ,=·_In c   2 gs. g tl   ;:;¢cg¤<;.tr1,, slightly over 4, BOO bushels on ’
vs  \‘»"il—§§ be solo for    ;·»;`    wneizje 5 fed to hogs,

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 . -]2_-
Plans for Medium-Sized Farms, The medium-sized farm used in the analysis had
only slightly more labor than the small farm, However, it had 50 acres more crop-
land and almost twice as much expense money as did the small farm.
Again land and expense money limited the size of business which was possible,
Both of these items were used up in the most profitable program., Some labor was
unused in each month except for June and October,
The cropping system in the most profitable program consisted of 3 acres of
7 tobacco, 97 acres of the all-grain rotation, and 37 acres of the rotation which in--
cludes grain, hay, and pasture, Total feed production consisted of 8, 942 bushels
of grain (corn equivalent), and 46 tons of hay,
Since expense money was relatively scarce, the livestock program was again
eliminated in favor of crops since the expense money can be turned over faster in
crop production, Since money was not available with which to operate a livestock
program, it was again necessary to sell the feed produced. The total grain pro-
duction of 8,942 bushels would be sold as would the total production of 46 tons of
hay.
Selling large amounts of hay is not generally considered a profitable practice
in many or most years, In this case, profits were highest by taking some capital
from the all-grain rotation so tha.t all of the land could be used, This resulted in
some hay being available which, for lack of money, could not be fed to livestock and
so it was sold.
_ This system would be expected to produce $11, 950 income above variable costs,
This would be the return to labor, management, and fixed assets such as real estate
and machinery.
There is an alternative program which is better in some respects than the one
just discussed., The cropping system would be more balanced, It would include,
besides the tobacco, about 40 acres in each of the rotations and 45 acres of per-
` manent pasture. This means that roughly half of the cropland would be in hay and
pasture at all times,
The livestock program would consist of 20 beef cows with calves dropped in
late winter and 6 sows, each farrowing 2 litters per year., The calves would be
pastured the first summer, wintered, pastured again through the surplus grass
season, and then placed in dry lot., They would be ready for market in early fall
at a weight of about 1, 050 pounds and would grade choice to prime, All hogs pro-
duced would be fed to market weights of about 225 pounds.,
This system would not involve selling hay but would call for sales of 3, 200
bushels of corn. Its main disadvantage is that the same resources would yield
‘ about $1, 250 less income, Its ndain advantages are that erosion could be controlled
more easily and it might yield a steadier income than the maximum income program,

 -l3· ' i
If twice as much capital were available for operating expenses, the most
profitable program would be quite differentl, Livestock would play a much more
important part, and the c:*opp.*.ng system would be much less intensive than that
of the highest income plan with less capital,
Tobacco would remain in the program at the maximum level. permitted by the
control program. Other crops would include 55 acres in the fall-grain rotation,
40 acres in the grain-forage ifctatioiv, and 40 acres in perrnanent pasturel
The livestock program would include all head of feeder cattle and 10 sows,
each farrowing two litters per yearv However, since expense money still im-
poses a limit on size of business, all the feed produced could not be fed and 3, 700
bushels of corn and ll tons of surplus hay would be for sale.
ln the low capital situation on this farm, only land and operating capital were _
completely utilized in the most profitable program. It is likely that if slightly
less capital had been available some land would have gone unused. ln addition, the _
need to use the money intensively placed a heavy burden on the land, requiring
mc st of the acres to be cropped he-avilyc, in such a system the labor supply was
not at all well utilized and would have been used even less efficiently except for ·
the tobacco. The additional capital was riot only productive itself but it also al-
lowed the land to be used less intensivel.y with reduced erosion hazards and ferti·
l1t··.· and soil structure problerns, P?‘o‘cably more irnportant is the fact that it allowed
the available labor to be mucl·;. more fully ernployedo
As a result of the add;Zt:1o:=,>i.l capita.], gross income increased by $6, 100 over -
the highest profit plan with less capital., lx/[cre capital would be profitable as is
1z*d··c ltecl by the fact that if cme delle. :· less had been available, gross income would
have decreased by 1. 69 dcllarsi, However, there is no indication as to how much
more money could be used at tliis highljr profitable rate,
if one less acre of land had been available, gross income would have de-
creased by $·l0(.
Plans for Large Farms., The le t   farrn used in the analysis had 3l& acres of
4 *cplay¤d.. To be applied to the l2:c.·;i were a labor fcrce of two men a.nd $7, 000 in
cperativig rnoneyl Thrs, eact nian tad 156 acres and $3, 500 with which to worlc
4c·mp:;red with Tl autres are $2, 0*0   the small. farm, and l00 acres and $2, 59E
on ttc mcdii.;m-sized fa 
Tlve situation has cl~ar·geo ficm cnc in which labor did not have enough other
resources to wcrk with to one ;:i whfrblv the other resources do not have enough labor
to work with, at least in scnie s~-ascnsl However, the capital per acre of land is
lcss cr. the large féirn   tw; *<¤‘c suialler cries,
Tl·c· most profitable cr. cppjzpg yvcgram ;s more diversified than those for the- f
smaller farms and th·s is nisitclr one tc a shortage of labor in the month of June
evo also of capital fo. cperarirrg ·¤-xp=z·:ses., The crops consist of 6,3 acres in
t<;bac< c, T05 acres ir thc all grain rctatfor and 1'Z9 acres in the gr:¤in~fora‘g<=
 orxitzor, Sevexvtv-eight acres all the rernaznizig cropland would not be used,

   -14-
The livestock program consists of 2.6 head of choice calves, bought in September
at 350-400 pounds, wintered, pastured through the surplus grass season, pastured
with full grain, and sold in late fall