xt7jdf6k2679 https://exploreuk.uky.edu/dips/xt7jdf6k2679/data/mets.xml   Kentucky Agricultural Experiment Station. 1966 journals 165 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.165 text Progress report (Kentucky Agricultural Experiment Station) n.165 1966 2014 true xt7jdf6k2679 section xt7jdf6k2679 >l<>I<=l<>I<>|<>I<>I<>I<>I<>I<>|<>I<>I<>I<>I=>I<>I<>I<>I<>I<>I<>I<.>I<>I<>I<
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* CHANGING BURLEY TOBACCO ALLOTMENTS *
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* AND OPTIMUM RESOURCE USE *
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By Irvin Overall cmd James F. Thompson
Progress Report I65
UNIVERSITY OF KENTUCKY
AGRICULTURAL EXPERIMENT STATION
Department of Agricultural Economics
Lexington

 
 ..3..
CHANGING BURLEY TOBACCO ALLOTMENTS AND OPTIMUM RESOURCE USE
ON KENTUCKY INNER BLUEGRASS FARMS
by
Irvin Overall
and
James F. Thompson
The profitability of tobacco production in the Inner Bluegrass area of Kentucky
_ has led many farmers in this area to specialize in tobacco production. The selection of
farm enterprises, landlord-tenant contractual arrangements, farmland values, and
many other aspects of Inner Bluegrass agriculture are affected by the tobacco enterprise.
A "typical" Inner Bluegrass tobacco—livestock farm in 1964, as defined by the U. S.
Department of Agriculture. had cash receipts of $14, 078, of which $8, 693 came from
- tobacco.l/
In such a farmingvsituation. it is reasonable to expect any changes in the demand
and price structure for tobacco to have substantial effects on the most profitable systems
of farming. Changes in tobacco acreage allotments have occurred often. and many of
the changes have been substantial. When allotments are decreased. farmers face the
problem of making changes in enterprise combinations to offset the loss in income from
tobacco. When allotments are increased. they must decide which enterprises can be best
reduced to provide the resources necessary for increasing tobacco production. There is
always the possibility that large changes, upward or downward, will need to be made in
tobacco production. This raises questions as to how Inner Bluegrass farmers could best
— adjust to such changes.
l The purpose of this study was to provide information useful in answering questions
such as those just raised. In particular. the information provided by this study consists
of most—profitable farming systems for important resource situations in the Inner-Blue-
grass based on the assumption that large upward and downward changes a.re to be made
in tobacco production. These programs are also compared with "most·profitable"
programs, with tobacco production at about current levels.
Area of Study
I ln this study. the Inner Bluegrass was defined as that area of north central Kentucky
surrounding Lexington and extending out to the Eden Shale soil types tFig. 1)
The soils within this area range from Maury and Lauridale through Mercer and
Salvisa. Most of them are moderately acid very high in phosphorus. and are from low
to-medium in potash. Those soils in the outer ring generally bordering on the Eden
‘ Shale show a topography somewhat like the inner part. but are more acid and less fertile.
They are gently undulating. with a maximum slope in most places of approximately 12
percent. Most ofthe area. except stream escarpments and areas immediately adjacent
to the Eden Shale. has slopes of less than 8 percent
L/U. S. Department of Agriculture. Economic Research Service. Costs and _
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Procedure
Synthetic Farms
Synthetic farrrys representative of others in important respects were created as
units for this study. 2 The term "synthetic farms" as used in this study means farms
that have been created as models on the basis of usual resource levels found on actual
Inner Bluegrass farms. They are not actual farms but hypothetical farms having the
essential characteristics of the actual farms they represent. To determine the resource
situations which are most typical, a personal interview survey of a sample of Inner
Bluegrass farms was carried out. The "sample" farms were selectfd by random
methods from selected areas in Jessamine and Woodford counties. 2 Data concerning
resources and enterprises were obtained from 101 farms.
Choice of Size of Farms
The characteristics of the sample farms were the basis for the selection of the
resource situations to be analyzed.
U ( The average size of the sample farms is somewhat larger than the census
average of farms for the counties in the sample. This is due, in part, to the fact that
only farms of 20 acres or larger were included. This study was concerned with
commercial farms and the utilization of resources on them.é/ The smaller farms in
this area of the state are predominantly nonfarm residences and have only nominal
_ agricultural activity.
Elimination of extreme cases and the selection of levels that would be typical of
the.bulk.of.the commercial farms in.the.area.resulted in a choiceof the following farm
sizes for analysis; 75 acres, 150 acres, 250 acres, and 400 acres.
I Table 1. - Sample Farms by Size with Number of Farms, Total Land and Average Size
for Each Group, 101 Inner Bluegrass Farms, 1963.
Size Number Land Average Size
(Acres) of Farms (Acres) (Acres)
20-99 37 2,195 59. 32
100-199 26 3,718 143.00
200-299 14 3, 470 247.86
, 300-399 16 5, 473 342. 06
400-499 4 1, 817 454. 25
500-599 1 550 550.00
600-699 1 636 636.00
700-799 2 1,505 752.50
Total 101 19,364 191.72
27 The selection of actual farms as typical of the area and the development of
programs based on these were considered. However, the study of actual cases. while
giving more realistic answers, for those specific cases, has less possibilities for
application to farms in the area generally.
3/Relatively few variations from soil types and farm operations typical of the area _
are to be found there.
2/Farms specializing in the production of horses were also excluded from the
sample.

 ..6- ·
Thirteen farms in 1963 were between 20 and 50 acres in size and four were larger
than 500 acres.
Table 2. - Sample Farms by Size with Total Land, Average Size and Relative Importance
of Groups when Extremes are Eliminated from Inner Bluegrass Sample, 1963
 
Total Percent of Acres
Size Range Number Land for All Farms Average Size
(Acres) of Farms (Acres) in Sample (Acres)
 
50-99 24 1,758 9.08 73.3
100-199 26 3,708 19.15 142.6
200-299 14 3, 470 17. 92 247. 9
300-499 20 7, 286 37.63 364.3
Total 84 16, 223 82. 98 193. 1
 
Although the 75-acre "synthetic" farm represents only about 9 percent of the total I
land resources, it represents about 24 percent of the number of farms. At the other
extreme, less than 20 percent of the farms are in the 400-acre group; 38 percent of the
acreage is in this group. ‘
Resources and Their Present Use on Inner Bluegrass Farms `
Table 3 shows the average amounts of resources and the uses being made of them .
in four different farm size groups. These figures are those reported by the farm operators.
The acres in farm, number of head of livestock, or the acres of tobacco are well known by =
the farmers. The acres of cropland, open land, acres in pasture, and in many cases,
gross income, are probably less accurate but are the best estimates which the respondents
could make. `
The Land Resource and Its Use I
Pasture land is land that was being used for pasture only; land in small grains and
hay was often used for pasture as well. Some farms carried no livestock or did not have
either crops or livestock on parts of the farms. For this reason, the total land used is
less than either the total farmland or the open land. The acreage of pasture land reported »
and that available for pasture. though not reported as such, is very high in proportion to
the livestock numbers.
The average farm sizes approximate very closely those in the synthetic farms.
In all groups land resources are employed at less-than-maximum intensity. I
The full allotment of tobacco was grown on the sample farms. For Groups I, Il
and Ill. allotments are slightly higher than average; and for Group IV, slightly lower.?] -
Livestock Enter rises and Facilities M
Beef production was the livestock enterprise most frequently found in all farm size V
groups. with beef cows producing feeder calves as the main type of enterprise.
Q/Op cit.. p. 5.

 -7-
Table 3. - Characteristics of Farms in Four Size Groups, Inner Bluegrass, 1963
 
I II III IV
I (50-99 (100-199 (200-299 (300-499
acres) acres) acres) acres)
 
Average farm size (acres) 73. 25 142. 62 247. 86 364. 50
Open land (acres) 69. 50 135. 38 224.43 314. 25
Cropland (acres) 61.33 117.69 194.07 273.15
Crop acreages
Tobacco 3.46 6.50 9.76 13.58
Corn 2.54 5.27 13.90 7.95
Silage . 0 1.00 2.28 1.75
Small grain 1.63 3.73 5.57 5.85
. Hay (all kinds) 19. 40 31. 80 53. 50 66. 20
Pasture 32.00 62.58 111.36 179.40
Total land used . 59. 03 110. 88 196. 37 274. 73
Livestock
Beef cows and calves 5. 00 15. 66 13.64 33. 45
Beef feeders 0.24 8. 46 15. 07 20. 30
Sheep 2.10 8.73 21.43 35.15
Sows 0.96 2.73 2.64 3.80
Feeder pigs produced 6.16 20.35 4. 36 37. 40
Fat hogs produced 1. 30 10. 96 7.00 4- OO
_ Dairy cows 2.00 4.10 4.10 2.80
Gross income, 1962 $ 5,683 $12, 987 $17,936 $26,368
Labor supply (months) 9. 54 15.40 24. 80 27.60
 
There were only seven Grade C dairies on the 84 farms. One Grade A dairy of
30 cows, since it would affect only one group, was not included in the tabulations.
Fifteen unused milking parlors found on 101 farms indicated that many farmers had
recently left the dairy business.
Buildings
Corn and hay storage facilities were available on practically all farms and
generally were under-utilized. Only 4 farms lacked corn cribs; yet 44 of the 84 farms
grew no corn. This again indicates changes that have occurred on farms in the area and
shows facilities are present for enterprises not now being used.
A comparison of tobacco housing capacity (Table 4) with present acreage (Table 3)
indicates that because of existing facilities, some expansion in production could be
handled.§/ A 25 percent increase in tobacco for all farm sizes could be housed. A 50
percent increase could be housed on the 75-acre farm and nearly so on the 150- and
250-acre farms but would require added facilities for the 400-acre farm.
wThe fact that excess tobacco housing capacity exists does not necessarily
indicate that the facilities would provide optimum conditions for curing tobacco.

 -8...
Table 4. - Facilities Available on Farms in Four Different Size Groups, Inner Bluegrass,
1963
 
I II III IV
(50-99 (100-199 (200-299 (300-499
acres) acres) acres) acres)
  V
Number of farms in group 24 26 14 20
Tobacco housing capacity i
(acres at current yields) 4. 79 7. 40 13. 96 17. 45
Hay storage capacity (tons) 37.79 85.08 127.50 156. 85
Corn storage capacity
(bushels) 407 1,006 1,059 1,751
Number of livestock barns 0.67 0.73 1. 29 1.80
 
Land. Labor and Capital Relationships
The land resource on the farms included in the sample could be used much more l
intensively. Not only was there land unused on these farms, but additional land was
underused. Less than 1 acre in 10 of cropland (as defined by the farmer) was in row
crops and there was less than one unit of pasture-consuming livestock for 5 acres of ,_
potential pasture.
Labor and capital supplies would probably need to be increased to bring the land .
into full use. The labor supplies shown in Table 3 were those resident on the farms.
Additional labor was hired during critical periods, and the use of capital to further expand
labor supplies might be profitable on these farms. Row crop acreages and livestock
numbers could be increased only if more capital were invested in the farm operations.
To determine whether an expanded use of capital and a more intensive use of land would
be profitable and to what extent it could be profitably carried out was a purpose of this
study.
Assumptions
Labor
Since seasonal hiring of labor is often done in the area, the farms analyzed were (
assumed to be able to hire all the labor which would be profitable at a wage of $1. 00 per
hour during most of the year. with a $1. 50 per hour rate during the tobacco harvesting
season. The labor resource was measured in hours, as were enterprise labor require-
ments. It was classified by the period of the year in which it was available. Labor
availability varied from season to season. principally because of changing length of day _,
and cliffereiices in availability of school children for farm work. The main seasonal labor
needs in this area are for the following uses:
January-April 15 - Livestock feeding
April 15-June 30 - Spring planting and hay harvesting
July I-August 15 - Hay harvesting
August l5—September 30 - Tobacco and hay harvesting
October 1-31 - Corn harvesting and fall planting
November I-December 31 - Tobacco stripping and marketing

 -9..
Excluded Enterprises
Because of the limited market for the products, some enterprises, such as
· production of rye straw and hay for sale, were excluded, although both the "know-how"
and the facilities are available. A few individuals might do well if engaged in such
specialized production. However, a mass entrance into enterprises whose products
have such a limited market that additional supplies from the Inner Bluegrass area could
cause significant price reductions would not provide a solution to the need of the area
as a whole. Horse breeding, boarding and training were excluded from consideration
for this reason, as was the production of Grade A milk. In the latter case, a large
increase in production would have to be diverted from fluid consumption to manufactur-
ing uses with a consequent fall in the average price received by producers. It is possible
that Inner Bluegrass farmers could profitably export milk to other areas; however, this
is not now being done even through production of Grade A milk under the Louisville-
Lexington marketing order is well above the amounts that consumers will buy as fluid
` milk at current prices. The national and international demand for products of the enter-
prises considered is such that a large change in the output from an area such as the
Inner Bluegrass would have little or no effect on the price structure for these products.
Pasture Periods
The pasture supply was divided into periods based on the seasonal pattern of
pasture production. May through July is the time when most of the output from pastures
is forthcoming. August and September in the late summer, October and November in
the fall and March through April in the spring, are periods in which some grazing is
available. Hay was allowed to substitute for pasture during these periods, as farmers
_ often feed hay when expansion of livestock enterprises is limited by pasture supplies.
Tobacco Allotments
Tobacco acreage allotments for farms were established in the early 1930's on
the basis of cropping history. They are controlled and restricted by a government
price—support and production-control program which provides considerable price
stability.Z./ It is assumed that price stabilization will continue through changes in acres
produced, that is, in acreage allotments. In this study, optimum programs were derived
for five levels of tobacco acreage allotments. These were:
50 percent of the 1963 allotment
75 H Il H H IY
  H II H Il II
1   Il H H H II
  VI H YI II H
A price of $64.00 per hundredweight for tobacco was used in this study. This is
an average for the Lexington market over the 5-year period, 1957 through 1961 
· Prices during this period ranged from $61.03 to $67.47, with a low in 1957 and a high
in 1958. Changes in acres required to maintain the price at this given level will depend
on changes in demand and in production per acre.
Z/Glenn L. Johnson, Burley Tobacco Control Programs. Ky. Agr. Exp. Sta.
Bul. 580, 1952, p. 80.
yU.S. Department of Agriculture, Agricultural Marketing Service, Annual
Report on Tobacco Statistics. 1962. Washington, D. C., Statistical Bulletin 330, April
1963, p. 36.

 ...10...
Wheat Prices
Wheat prices for this study presented a difficult problem. A change in the federal
wheat program took place while the budgets for this study were being prepared and before
a new price level could be established. A price of $1. 25 per bushel for wheat was
assumed since this is approximately the world price (less transportation costs).
Feed Grains and Hay A
It was assumed that feed grains and hay were produced on the farm for farm use.
Purchase or sale of these feeds was not considered as an alternative.
MAXIMUM INCOME PROGRAMS ON TYPICAL
INNER BLUEGRASS FARMS
The best uses of resources on farms in the Inner Bluegrass area of Kentucky are
presented here for the situations described earlier. The optimum programs with un-
limited capital are presented first and those for the restricted capital situations second.
All resource situations were analyzed with 1963 tobacco allotments, and with increases
and decreases of both 25 and 50 percent from 1963 allotments. The presentation is in
the order of the size of farms studied. beginning with the 75—acre farm. -
Programs with Unlimited Capital?] -
75—Acre Farm; One—Half Man—Eguivalent
The programs for this situation differ considerably from those actually found on .
similar farms in the sample. All of the land resource would be used and land—use
intensity extended to the limits set by the conservation restrictions. All row—crop land t
not planted in tobacco would be devoted to corn. Some small grain would be produced ·
for feed: however. small grain acreages would be less than conservation considerations »
would have permitted. The remainder of the land, with the exception of a small amount
of wasteland. would be devoted to hay and pasture production. Beef enterprises that
utilize relatively large amounts of grain and good quality hay were found to be most
profitable in this situation,
The amount of capital which could be profitably used was slightly over $200 per
acre for this farm. This was the largest capital use per acre of any situation analyzed.
Changes in tobacco allotments have little effect on the best pattern of resource
use. This is due to; (1) the relatively insignificant land requirement of the tobacco
enterprise. (2) the assumption that (in this study) capital supplies were unlimited at
current interest rates. and (3) the fact that no restriction was placed on the hiring of
labor. Thus. when the acreage allotment is increased, the necessary amounts of capital
and labor need not be diverted from other enterprises on the farm. Under all allotment
situations. the land would be fully used. Labor also would be fully used except in the
2/In all situations. the capital shown is that required for the operation of the
enterprises in the optimum program except for investments in land which was assumed “
to be in fixed supply.

 ..11-
winter and early spring. Capital requirements would increase gradually as allotments
increased. Enterprise levels would vary only slightly in response to changes in tobacco
allotments. A slight shift to barley when increases in tobacco acreage removed row-
crop land from corn would keep livestock numbers at approximately the same level.
' A significant change in net returns would occur when tobacco acreages were
changed. On the average, net income would decrease by about $735 for every acre by
) which tobacco allotments were decreased.
Table 5. - Optimum Resource Use and Enterprise Levels, Five Levels of Tobacco
Allotments, 75—Acre Farm, Unlimited Capital and One-Half Man-Equivalent
Labor Supply
Tobacco Allotments (Percent of 1963)
50 _ 75 100 125 150 ‘
Land use (acres)
Tobacco 1.33 1.91 2.62 3.32 3.93
Corn 21.17 20.58 19.87 19.16 18.56
Barley 3.92 4.52 5.25 5.96 6.59
Alfalfa 23.04 22. 73 22.36 21.99 21. 67
Renovated pasture 19.66 19.39 19.07 18.75 18.47
Permanent pasture 2.11 2.09 2. 06 2.03 2.00
Total 71.23 71.22 71.23 71.21 71.22
Livestock enterprises (head)
Beef cows producing
choice steers and heifers 7 7 7 6 6
Steers (choice)
Wintered and fed 43 42 41 41 40
l Labor hired (days)
Jan. —April 15 0 0 0 0 0
April 15~June 3 6 9 12 14
July—Aug. 15 4 6 7 8 10
Aug. 15—Sept. 23 28 35 41 45
Oct. 4 7 10 14 17
Nov. and Dec. 0 6 15 23 30
Capital requirements $15. 202 $15, 640 $16,173 $16. 698 $17.156
Net returns $ 3,558 $ 3.991 $ 4,509 $ 5.020 $ 5.465
75—Acre__1jg_1;_nl;_ One lVlan—Eguivalent
Here again an optimum operation involves full use of land resources. In com-
Darison with the one-half man—equivalent situation. a slight substitution of labor for
capital would take place: thus about $760 less capital would be required in the optimum
programs

 -12...
The big difference between the two situations is in the pattern of resource
utilization. For all allotment levels except for the 50 percent increase, the maximum
permissible acreage would be devoted to small grain. A 50 percent increase over the
1963 tobacco allotments would lead to an enterprise combination much like that for the
farm with a one—half man-equivalent labor supply. For all others, however, beef
enterprises requiring less grain would become profitable. The extra grain produced, ·
as well as that saved by changing the system of beef production, would be utilized in
feeder pig production.
Making appropriate adjustments in resource use would not restore all of the V
income lost from allotment reductions. A change of $880 in net returns was observed
when the allotment was changed by one acre. This is even more severe than for the
same farm with half as much labor.
Capital use on this farm would be approximately the same for both labor levels
analyzed. For the one-man level, allotment reductions led to feeder pig production _
and, consequently, higher capital requirements. This was the only situation analyzed
in which capital would increase as tobacco production decreased.
Table 6. — Optimum Resource Use and Enterprise Levels, Five Levels of Tobacco
Allotments, 75-Acre Farm, Unlimited Capital and One Man-Equivalent
Labor Supply
 
Tobacco Allotments (Percent of 1963)
50 75 100 125 150 - '
 
Land use (acres) V
Tobacco 1.33 1.92 2.63 3.33 3.94
Corn 21.17 20.58 19.87 19.17 18.56
Barley 15.00 15.00 14.99 15.00 6.94
Alfalfa 13.22 13.31 15.77 15.84 21. 43 .
Renovated pasture 14. 27 14. 25 14. 98 14. 94 18. 32
Permanent pasture 6. 24 6.18 2. 99 2. 95 2.04
Total 71.23 71.24 71.23 71.23 71.23 ·
Livestock enterprises (head)
Sows
Producing feeder
pigs 23 22 13 12 0 ~
Beef cows
Producing heavy
feeders 7 7 0 0 0
Producing choice
steers and heifers 0 0 5 5 6
Steers (choice)
Wintered and fed 17 17 28 28 40 _
Labor hired (days)
Jan. —April 15 0 0 0 0 0
April 15—June 0 0 0 0 0
July—Aug. 15 O 0 0 0 0
Aug. 15—Sept. 0 5 12 18 25 `
Oct. 0 0 1 4 2
Nov. and Dec. 0 0 0 0 0 .
Capital required $15, 679 $16, 025 $15, 460 $15. 913 $16. 348
Net returns $ 3, 987 $ 4,526 $ 5,154 $ 5, 763 $ 6. 279

 ..13-
150—Acre Farm-, One Man—Eguivalent
The optimum program for the 150—acre synthetic farm with a one man—equivalent
_ labor supply might be expected to be simply twice as large in all respects as the
optimum program for the 75—acre farm with one—half man-equivalent. This would not
be the case though because the larger farm provides a better opportunity to spread
fixed costs over more units of output. Thus, the increase in farm size would tend to
V favor the enterprises having relatively high fixed costs. Feeder pigs would be in the
optimum program for the larger farm at all allotment levels. The pigs, steers and a
few beef cows would constitute the livestock enterprises for this farm.
Table 7. — Optimum Resource Use and Enterprise Levels, Five Levels of Tobacco
Allotments, 150—Acre Farm, Unlimited Capital and One Man—Equivalent
Labor Supply
Tobacco Allotments (Percent of 1963)
50 75 100 125 150
Land use (acres)
Tobacco 2.63 3.94 5.25 6.58 7.88
Corn , 42.37 41.06 39.75 38.42 37.12
Barley 29.79 29.77 29.75 29.73 28.19
Alfalfa 32.68 32. 87 33. 06 33. 25 34. 43
Renovated pasture 35.01 34. 84 34. 67 34. 50 34. 86
Total 142. 48 142. 48 142. 48 142. 48 142. 48
Livestock enterprises (head)
Sows
Producing feeder
pigs 30 29 27 25 21
l Beef cows
` Producing choice
steers and heifers 10 10 10 10 11
Steers (choice)
Wintered and fed 56 56 57 57 60
Labor hired (days)
Jan. —April 15 0 0 0 0 0
April 15-June 18 21 26 31 36
July—Aug 15 5 8 11 14 18
Aug. 15—Sept. 43 55 68 80 93
. Oct. 28 33 39 44 49
Nov. and Dec. 9 23 38 53 67
Capital required $29. 931 $30, 831 $31, 719 $32. 645 $33. 580
Net returns $ 8.933 $ 9.910 $10. 886 $11, 878 $1 2. 844

 -14-
The stability of the optimum enterprise combination as allotment levels were
changed on the 150-acre farm indicates that adjustments in use of resources would not
nearly offset losses from tobacco income. Net returns would drop by about $750 should
the tobacco allotment be reduced by one acre.
A 150-acre farm with a two man—equivalent labor supply was also analyzed,
but the results were about the same as those for the same acreage with a one-man
labor supply. The enterprise combination would remain essentially the same. Capital
~ use would be reduced to the extent that hired labor could be replaced by resident labor.
A tvvo-man labor supply would result in slightly increased returns, but these would be
divided between two operators instead of one.
250-Acre Farm; Two and Three Man-Equivalents
With the 250-acre synthetic farm, relative stability of the enterprise combination
with regard to changes in allotments was again observed. However, slight adjustments
of resources and enterprises were observed on this farm when the three man—equivalents
labor supply was compared with the two—man level.
A comparison of Tables 8 and 9 shows the small variation that would occur. The
most significant effect of the increase in resident labor would be a slight decrease in
capital requirements and a corresponding increase in net returns. From $1,300 to
$1, 600 of additional income would be available to pay for the added resident labor. The
difference in amount of hired labor accounts for the differences in capital used and net
returns. The two—man labor level would be sufficient to meet the needs of the farm for
many periods of the year without any hired labor.
Once again. for all tobacco acreages and for both levels of labor, the entire land
resource would be used quite intensively.
Reductions in allotments would reduce net returns on the two—man farm by $774
for each acre of allotment subtracted and additions to present allotments would increase
net returns by $740 for each additional acre of allotment. For the three—man farm,
the impact of allotment changes would be more severe-about $900 per acre for re-
ductions and $830 for additions to 1963 allotments. Although there would be a difference
in net returns between the two labor levels, the difference would not seem to warrant
the employment of the extra man.
400—Acre Farm: Four l\/Ian—Eguivalents .
The last resource situation considered was the 400-acre, four—man synthetic
farm. In general. the results were about the same as for the smaller farms. All land _
resources would be used in the most—profitable programs and full row—crop and small-
grain potentials employed. Livestock enterprises would be such as to make efficient use
ol` the grain produced. Land released from tobacco when allotments are reduced would
be planted in corn.
Livestock enterprises in the program for the 400—acre farm would be the same as ‘
those for the l50— and 250—acre farms. The sow and feeder pig operation for the 250-
and 400—acre farms would be at approximately the same level. The additional resources _
available on the 400—acre farm would be best used in an expanded beef—feeding operation.

 -15-
— Table 8. - Optimum Resource Use and Enterprise Levels, Five Levels of Tobacco
Allotments ,1 250—Acre Farm, Unlimited Capital and Two Man-Equivalents
Labor Supply
Tobacco Allotments (Percent of 1963)
. 50 75 100 125 150
Land use (acres) l
Tobacco. 4.38 6.56 8.75 10.94 13.13
Corn 70.62 68.43 66.25 64.06 61.87
Barley 49.75 49.69 49.63 49.57 50.00
Alfalfa 54.73 55.06 55.38 55.70 49.07
Renovated pasture 58.01 57.74 57.48 57.21 55. 59_
Renovated pasture
cut for hay 0 O 0 0 7. 83
Total 237.49 237.49 237.49 237.49 237. 49
Livestock enterprises (head)
Sows
Producing feeder pigs 49 46 43 40 39
Beef cows
Producing choice
steers and heifers 17 17 17 17 17
Steers (choice)
Wintered and fed 93 94 95 96 93
» Labor hired (days)
Jan. —April 15 0 0 0 0 O
April 15—June 0 8 16 25 33
July-Aug. 15 0 0 0 0 ~ 0
Aug. 15—Sept. 49_ 70 92 113 134
Oct. 20 30 39 49 59
Nov. and Dec. 0 17 41 65 90
I Capital required $46, 525 $47, 989 $49, 528 $51, 067 $52,117
Net returns $15, 871 $17, 609 $19, 286 $20, 964 $22, 530
Summary of Programs with Unlimited Capital
For all farm sizes with the 1963 tobacco allotment, the optimum farm programs
would use non-real estate capital at the rate of approximately $200 per acre. The
figure is slightly larger for the smaller farm than for the larger but is essentially the
same for all farm sizes. With unlimited capital, all land resources would be used to
the limit of the conservation restrictions.
The assumption that labor could be hired as long as it was profitable meant that
capital could be substituted for resident labor as long as this was profitable. This
would occur in all of the programs devised for the unlimited capital situations.

 -16-
Table 9. - Optimum Resource Use and Enterprise Levels, Three Levels of Tobacco
Allotments, 250—Acre Farm, Unlimited Capital and Three Man—Equivalentsy
Labor Supply
Tobacco Allotments (Percent of 1963) _
50 100 150
 
Land use (acres)
Tobacco 4.38 8.75 13.13
` Corn 70.62 66.25 61.87
Barley 49.75 49. 63 49.51
Alfalfa 54.73 55.38 56.03 `
Renovated pasture 58.01 57. 48 56. 95
Total 237. 49 237. 49 237.49
Livestock enterprises (head)
Sows
Producing feeder pigs 49 43 36
Beef cows
Producing choice steers
and heifers 17 17 17
Steers (choice)
Wintered and fed 93 95 97
Labor Hired (days)
Jan. —April 15 0 0 0
April 15—June 0 0 0 _
July—Aug. 15 0 0 0
Aug. 15—Sept. 5 48 90
Oct. 0 10 29 ..
Nov. and Dec. 0 0 30
Capital required $45, 839 $48, 311 $51.102
Net returns $16, 557 $20, 503 $24,144
Q/Farm enterprises are the same as for the two man-equivalent farm except when
allotments are increased by 50 percent. Some changes in capital use and net returns
occur. but differences are so minor that only the extremes are presented in this table.
Because tobacco production requires large amounts of labor, the hiring of labor would
increase rapidly as tobacco allotments were increased. Therefore, one of the first steps -
in adjusting to decreases in tobacco allotments is reducing the amount of labor hired.
Since the next best use of resources is grain and livestock production, which have low
labor requirements relative to tobacco, the reduction in labor used on the farm might
be rather severe. inasmuch as the land resource used by tobacco is relatively small in
comparison with the labor required. only small changes in corn and livestock production _
can occur when tobacco allotments are altered. Therefore, an optimum program of farm
mtcrprises is little affected by changes in tobacco allotments when capital is not restricted.

 ..]-7..
t Table 10. — Optimum Resource Use and Enterprise Levels, Five Levels of Tobacco
l Allotments, 400—Acre Farm, Unlimited Capital and Four Man—Equiva1ents
Labor Supply
.  
c Tobacco Allotments (Percent of 1963)
50 75 100 125 150
Land use (acres)
Tobacco 7.00 10.50 14.00 17.50 21.00
Corn 113.00 109.50 106.00 102.50 99.00
Barley 80100 80.00 80.00 80.00 80.00
Alfalfa 131.44 123.27 115.10 109.33 109.95
Renovated pasture 48. 59 56.77 64.95 70.73 70.12
Total 380.03 380.04 380.05 380.06 380.07
Livestock enterprises (head)
Sows
Producing feeder
pigs 48 50 51 50 45
Beef cows
Producing choice
steers and heifers 11 19 28 34 34
Steers (choice) `
Wintered and fed 241 220 200 185 186
‘ Labor hired (days)
‘ Jan. -April 15 0 0 0 0 0
· April 15—June 0 0 0 5 19
July-Aug. 15 0 0 0 2 . 12
Aug. 15—Sept. 89 117 145 174 209
Oct. 30 46 61 77 91
Nov. and Dec. 0 0 17 60 99
. Capital required $72, 502 $76,007 $79,648 $83,165 $85, 724
Net returns $27, 792 $30, 896 $33, 865 $36, 566 $39,187
A Programs with Limited Capital
The same land and labor situations described above were next analyzed under the
assumption that t