xt7qz60bxc42 https://exploreuk.uky.edu/dips/xt7qz60bxc42/data/mets.xml   Kentucky Agricultural Experiment Station. 1952 journals 004 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.4 text Progress report (Kentucky Agricultural Experiment Station) n.4 1952 2014 true xt7qz60bxc42 section xt7qz60bxc42 y UPLA/W7 OALLOWAY COUNTY FA/?/W5 /.95/
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A E AND LIVESTOCK   g · H · pOpCORN
M;  < T V
_ DARK TOBACCO
i
I
Glenn L. Johnson
Progress Report No. 4
R & MA 60
- Kentucky Agricultural Experiment Station
` University of Kentucky with
Tennessee Valley Authority Cooperating
November 30, 1952

 CONTENTS 1
Page `
KINDS OF FARMS STUDIED .......,..· . ...... 1 I
THE EARNING POWER OF LAND .............. 3
THE EARNING POWER OF FORAGE—LIVESTO.CK INVESTF _ »
MENTS ..,......................... 4 }
THE EARNING POWER OF LABOR ...... . ...... 5 _
THE EARNING POWER OF MACHINERY INVESTMENTS . . 7 ` ·
THE EARNING POWER OF OTHER EXPENDITURES ..., EI
CALLOWAY'S SMALL FARMS ARE DROPPING OUT OR
BECOMING LARGER .............. ‘ ....... I 78
THE RELATIONSHIP BETWEEN SIZE AND EFFICIENCY . .-9
CONCLUSIONS CONCERNING THE EARNING POWER OF · I
INPUTS AND INVESTMENTS ON UPLAND CALLOWAY -
COUNTY FARMS ..°.................... ;9
PROBABLE DESIRABLE READJUSTMENTS ON CALLOWAY ‘ '
COUNTY FARMS ¤........,........... . . I0
CALLOWAY COUNTY FARMS HAD HIGH EARNING POWER
IN 1951 .,.......................... LI
I

 THE EARNING POWER
HOF INPUTS AND INVESTMENTS ON ·
UPLAND CALLOWAY COUNTY FARMS, 1951
I Glenn·-L. Johnson
_ In the summer of 1952, farm management research workers from
the University of Kentucky collected financial records from a group of
. upland Calloway county farms. These records were gathered in order
to secure data and information for use in determining the earning power
 ·—‘·* *-**3***
of inputs and investments such as:
‘ land I
' labor _
“} _ forage investments »
livestock investments `
machinery investments, and ‘
_ I current expenditures
Farmers, bankers, agricultural leaders, extension men, T.V.A.
specialists, soil conservation men and many others are interested in the
earning power of these investments and inputs. Such information is directly
useful to:
(1) farmers, in considering long·run farm reorganizations,
(2) leaders, in formulating local programs to promote agriculture,
(3) extension personnel and members of governmental "service
agenc ie¤" in formulating their programs, and
(4) money lenders in appraising purposes for which loans are re-
quested. The new developments in farming and the industrialization
_ F occurring in nearby areas serve to heighthn this interest in the earning
, _ power of inputs and investments on upland Calloway county farms.
KHNDS OF FARMS STUDIED
The thirtysfour farm records collected and studied were from upland
Calloway county farms located mainly on mixed Grenada and Calloway soils.
Gross income (excluding rental value of the farm home) on these thirty•four
farms in 1951 varied from a. low of $594 to a high of $17, 871. Acreages
involved varied from 30 to 212, labor used varied from 1 to 24 months
while the forage and livestock investment varied from a low of $744 to a
high of $7, 104 and the machinery investments varied from $25 to $4, 960.
Current expenditures on one farm were as low as $178 while running as ·
high as $5, 973 on another.

 Farm-to-farm differences in investments and inputs present among the
farms studied would ordinarily permit researchers to secure a rather clear-cut
picture of their different earning powers. This, however, did not prove true in
this instance. 1/ Apparently, the upland Calloway county farms studied had
about three maglor production patterns involving (1) dark tobacco, (2) popcorn
and (3) forage-livestock production. Thus, the results obtained appear to apply
to a mixture of these three production patterns and are far from clear-cut for _
any of the three patterns.
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LAND USES IN UPLAND CALLOWAY COUNTY
Marshall county livestock farms located mainly on Grenada and Loring
silt loams, somewhat similar to the eastern Calloway county livestock farms
on Grenada and Calloway soils, showed very low earning power for land. Thus,
it is probable that the earning power of land in eastern Calloway county adapted
mainly to livestock production is relatively low.
3.

 Calloway county farms producing more dark tobacco and popcorn
probably received moderately high returns from investments inn land ·=·¤ say
5 to $15 an ac re, after a very rough allowance is made for the earning
power of labor inputs and forageslivestock investments probably reflected
in the estimated earning power of lands This moderately high rate of return
was due, in part at least, to the favorable popcorn and tobacco prices and A ·
yields which prevailed in l95l., Similar studies of Calloway bottom land
farms growing considerable amounts of popcorn showed land to have an »
earning power of over $13 an acre under the favorable yield and price
conditions of l95l. ` ‘
THE EARNING POWER QF FORAGE·LIVESTOCK
INVESTMENTS ` · I
Forage ·=livestock investments include the replacement value of
hay and pasture stands plus the livestock valued at whatever value the farmers [
placed on them. The investment in breeding and feeder cattle purchased i
or sold during the year was counted for the period of time these cattle spent ,
on the farm in figuring the livestock investmento As, by and large, forage T
investments do not pay off unless live stock are on hand to utilize the forage
produced, no attempt was made to estimate their separate earning powers;
instead, theywere added together and treated as one, much as farmers do
l in considering forage·=livestock problems., -
The mixed nature of the farms studied also made it very difficult
to secure a reliable estimate of the separate earning power of the forage =·live=·
J stock inve strnent., _
‘ Though the statistical analysis of the data indicated that the earn=·
ing power of forageslivestock investments was extremely low, several A,
"judgment reasons““ exist for suspecting that the actual earning power of the
foragealivestock investments was relatively high.,
Livestock farms ln eastern Calloway county should be expected to
show earnings to forageslive stock investments somewhat comparable to the [
high earnings made by Marshall county live stock farms from forage =·l:ive stock
investments., The more fertile upland farms in central and western Calloway ¤· _
county, however, should not be expected to earn as high returns on investments
in forage (including fertilizer) and livestock; a reason for expecting this result
is found in the high natural earning power of the more fertile soils of the cen·=·
tral and western Calloway upland areas. This earning power probably sub·=·
stitutes for the high earning power of initial fertilizer and grass seed invest-
ments in less fertile areas., Also it should be noted that the Loring soils
of Marshall county are somewhat better adapted to forage production than the
Calloway soils of Calloway county. ·
Another reason for believing that the actual earning power of forage·=
livestock lnve stments was higher than estimated statistically is found in the
direct relationships between forageslivestock investments, on one hand, and
4t

 land, machinery and other expenditures used, on the other. These close re-
lationships, it was previously noted, probably caused part of the earning power
of forage-livestock investments to be reflected in the estimated earning power
of land. The same is likely true with respect to the earning powers of both
machinery and other expenditures.
Thus, the actual earning power of the forage- livestock investment was ;
probably higher in 1951 in Calloway county than the statistical estimates in-
dicate, this being especially true on farms adapted to livestock production. .
ON POORER SOILS, FORAGE—L|VESTOGK ——
A isi:   2 7  £   I
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—-INVESTMENTS MAKE A BIG DIFFERENCE
I
W It is judged that moderate forage-livestock investments may pay between
30 and 50 percent annually on livestock farms located on the poorer soils, the
amount decreasing as forage-livestock investments are increased. On more
productive soils, representing in themselves fairly important investments in
forage production, returns to forage-livestock investments may be somewhat
lower -- say 10 to 25 percent.
THE EARNING POWER OF LABOR
The usual amount of labor used on the farms surveyed was slightly
over twelve months in 1951. This amount of labor, accord·ing to the raw
statistical estimates was earning very little. Though the earning power of
5.

 labor is typically low in western Kentucky until associated with more inputs and
investment than typical among the farms studied, some reasons explain why
the estimate was probably lower than actual earnings.
The amount of labor used on the 34 farms studied was directly associated
with both the amounts of land and machinery used. This situation made it .
difficult statistically to determine the separate earning powers of land, labor
and machinery. And, as the estimated earning powers of both land and machin-
ery appear unduly high, the earning power of labor is probably underestimated.
In 1951, upland livestock farms in Marshall county were earning about
$45 per month when l2 months of labor were used. Calloway bottom farms
were earning about $48 per month when 18 months of labor were used. It
seems reasonable to guess that the earning power of labor on livestock farms A
on the less productive soils was around $40 to $50 a month for the usual amount
of labor used. On the more productive soils of eastern and central Calloway '
county, labor probably had a higher earning power. __
MONTHLY EARNINGS OF DIFFERENT AMOUNTS OF LABOR, AS A
AFFECTED BY FORAGE—LIVESTOCK AND MACHINERY INVESTMENTS, ,
MARSHALL COUNTY UPLAND FARMS, |95I -4
200
With Usuul
Inveshncnts und Inputs
.. X {
E |5O mbz, With S 3,000 w\  
g   More in IQ}.,
_   Fo ruqe und  7€`,i•:9I
3   Livestock _ 
:·.j..,,:•: Wnth S 5,000 _
U i ' "°‘ More In
Q . ~•°•Y
c 100. Q. _=•Q · .
S     Mochnnery
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O r `.-· *:3:   nie! ¤?f":Z•Z# .’-.·r·Z•Z -2·f»tZf
3rd Sth glh Izlh |5fh A
Months of Lobor Used
ln this connection it should be pointed out that the usual farm studied was
a relatively small one producing about $4200 worth of products for sale and i
home consumption, the rental value of the farm dwelling being excluded. Larger
farms based on more productive soils and larger forage—livestock investments,
6.

 or both, probably earned much higher returns from labor. In this connection,
it was estimated that a tripling of the forage-live stock investment on upland
Marshall county live stock farms would have increased the earning power of
IZ months of labor from 45 to $75 a month.
THE EARNING POWER OF MACHINERY INVESTMENTS
Here again, the mixed types of farming included among the thirty-four
farms studied made it difficult to estimate the earning power of a particular
investment -- in this case —— machinery. The raw, uninterpreted estimate of
machinery earning power was very high -- in the neighborhood of   65 annually
er dollar invested. Pro erl inter reted this estimate is meanin ful -- unin-
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terpreted it is probably misleading as it is doubtful whether actual returns
were this high.
As previously noted, the amount of machinery used on the farms studied
_ was related to (1) the amount of labor used and (2) the investment in forage and
livestock production. This condition has probably biased upward the estimated
earning power of machinery, this upward bias being offset as previously noted by
' downward biases in the estimated earning powers of labor used and forage—live-
stock investments.
When the production patterns for dark tobacco, popcorn and livestock are
considered separately and in relation to soil differences, further insights use-
ful in interpreting the estimate of machinery earning power are gained. The
study of Marshall county livestock farms on soils somewhat comparable to
those in east Callowa count indicated ver low earnin ower for machiner
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in 1951 unless the machiner was used in connection with lar e investments
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in land development and live stock. There are many reasons to believe that
this situation would prevail for livestock farms on the Calloway county soils.
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‘  i»w;i..·" Q};   *?»T,,."  ".  _   ,gj,..;i  , .,,_,,**l.i~,1¤»,.,.§.7;**=* ..'f,$·.%   _’_ ”T tgsé yé-"$$·°i@?r§ ‘*?"`*·*e.-&wy ·.»~   @5-?%·‘1·2`¤»t>*e.:   ··· ···¤·¥ -
7.

 On the other hand, tobacco and popcorn producing hnrrns located on the more
productive of the Calloway county soils should be expected to earn relatively
high returns to machinery. This would be especially true in a year, such
as 1951, when the yields and prices of both dark tobacco and popcorn were
favorable. It can be concluded, with some confidence, therefore: _ V
I 1. that the returns to machinery investments were probably low on
live stock farms situated on poor undeveloped soils,
Z. that returns to machinery investments were probably moderate
on livestock farms situated on productive soils or on well
developed poorer soils, and
3. that returns to machinery on farms producing dark tobacco ‘
and popcorn on the better soils were high in 1951, a year of
favorable prices and yields. l
THE EARBHNG POWER OF OTHER EXPENDITURES ·
` Besides the investments and inputs considered above, a year°s farm l
business involves expenditures for gas, oil, annual seeds, breeding fees,
custom work, fertilizers Qwhose values are consumed tn one year), etc.
The raw uninterpreted estimates indicate that Calloway county upland
farms were receiving around $1. 60 for each dollar spent on such items
in 1951. V
This estimate is probably somewhat higher than what actually existed
for the following reason. Other expenditures and the forage =1ive stock
investment were directly related among the farms studied, a situation which r
probably caused the earning power of the foragedivestock investment (as _
previously noted) to be somewhat under·e stimated and the earning power of ‘
other expenditures to be over=estimated. The favorable prices and yields
for dark tobacco and popcorn, in 1951, however, probably caused the earning
power of other expenditures to be somewhat higher than ordinary. Hence,
despite probable biases in the estimate, it appears that returns to other 1
expenditures probably were greater than dollar for dollar but lower than
$1. 60 on the dollar. This conclusion is substantiated by the study of ._
Calloway bottom land farms where returns to other expenditures were
estimated at $1. 07 per dollar spent.
CALLOV‘JAY`S SMALL FARMS
ARE DROPPING OUT OR BECOMING LARGER
Between the 1940 and 1950 cénsuses, it is estimated that Calloway
county lost 552 farms producing more than $250 (at 1950 prices) worth
of products for sale. Though 286 farms were eliminated by the creation
of Kentucky Dam, the loss of farms between 1940 and 1950 was made up
8.

 primarily of farms producing between $250 and $4, 999 worth of products
for sale. Actually 578 such farms moved out of this category, 552 be-
coming rural residences, being abandoned, or being consolidated, while
_ 26 moved up to gross incomes above $5,000. Despite the loss of several
large bottom·=land farms in creating Kentucky Lake, there were 26 more
farms producing over $5, 000 in 1950 than in 1940. Of the 1480 farms
producing products worth between $250 and $2, 499 in 1950, a large
number have likely beenconverted to rural residences, abandoned, or 9
consolidated since then. More farms producing over $5, 000 -·- fewer
- producing between $250 and ($2, 500 —-· these are the trends.
THE RELATIONSHHP BETWEEN
SIZE AND EFFHCIENCY
_ A _ The usual size among the farms studied, it will be recalled, was
’ _ 86 acres involving associated investments and inputs capable of producing
a gross incorne of $4, 200.: The associated inputs, included 12 months
of labor, about $2,7500 in forage¤1ivestock investments, $1, 500 in machin-
_ · ery and around $1, 100 in other expenditures. Such a farm organization
l couldabsorb an investment of $5, 000 in forage and livestock with up to
$1, 800; in other expenditures. With land valued at $150 an acre, this
would bring the total investment to around $19, 500. This figure begins
to approach that required to produce a reasonable standard of living, J
h wherever reasonable living standardsare obtained from farming in the
_ United States. Reaching such a level of investment would not involve
inefficiencies due to size of operation; actually the land resource could
probably be expanded much beyond this level if associated with appro-
priate expansions in other investments and inputs without incurring
‘ serious inefficiencies due to scale of operations.
When records from all of the thi.rty·=four farms were analyzed, the
larger farms appeared to be more efficient that the smaller ones. But,
the increases in efficiency due to increases in size of business probably
V occurred primarily among the smallest farms. It is probable that in- _
creases in efficiency do not continue to occur as farms increase in size
i indefinitely. ‘
I A . These findings make the trends noted in the last section appear proper
and sensible =~ the findings indicate that small farms shoufdbe expected
to drop out of farming or get larger.
CONCLUSION CONCERNBNG THE EARNING POWER
OF INPUTS AND INVESTMENTS ON UPLAND
CALLOWAY COUNTY FARMS
Previous pages of this report have indicated that serious difficulties
exist in using the raw estimates derived from analyzing the thirty·four
farm business records statistically. However, when the estimates were
9.

 rather carefully interpreted in·view of other studies made in the Purchase
Area and in view of what is generally known about Calloway county farms,
considerable information was gained concerning the earning power of V `
various investments and inputs on Calloway county farms. Though this
process of evaluating the raw estimates in terms of other information
reflects the judgment of the researcher and those consulted in the pro-
cess, the results are useful in describing the general picture for Calloway
county upland farms. ~ ` I
When these judgments about the earning power of investments and
inputs are refined further and expressed in specific ternrs, they provide
considerable basis for envisioning profitable readjustments for upland V
Calloway farms. Thus, on this basis, it is concluded that the usual _
quantities of each input and investment had about the following earning
powers on livestock farms situated on eastern Calloway county upland A
soils in 1951; . ·' ·
Land, 86 acres --~»=-¤=--- · - -=·= Z=·$5 per acre • _
Labor, 12 months =—=¤=»-~ · =»=~-= 40=·$50 per month
Forage =·Live stock Investments, $2500 ==== 30 to 50 percent
Machinery Investments, $1500 --=»==== 5 to 15 percent
Other Expenditures, $1100 ¤ =~-====== 90 to 110 % on the $
The gross income resulting from these assets was probably somewhat
less in 1951 than the $4200 averaged from these assets by the 34 farms
studied.
These same assets used in the production of popcorn and dark
tobacco, as well as livestock, on the more productive central and western ,
Calloway county upland soils probably eared returns about as follbws .
l?{`f"<§"ST"""`“`":”
Land, 86 acres - - =·¤~==--=-== ·· -· ·=· 8¤$15 per acre
Labor, 12 months =—=—¤-¤-- ·= ·· ·= ·=» - =·45=·.$65 per month ‘
Forage =Livestock Investments, $2500 —=== 10 to 2.5 percent ,
Machinery Investment, $1500 - ~====·= » 15 to Z5 percent
Other Expenditures, $1100 = =· - - ·= ·= Something over 100% on the $ ,
The gross income earned by these assets in 1951 was probably sorne=-
what higher than the $42.00 earned by this combination of assets on the
typical farm studied, the difference being due prirnarily to the higher
fertility of the soilg
PROBABLE DESIRABLE READJUSTMENTS
ON CALLOWAY COUNTY FARMS
The above "conc1usions" indicate very roughly, the patterns of
readjustment needed for Calloway county farms.
10.

 — First and foremost, the over·=·all earning capacityof many Calloway
county farms needs to be increased, This necessarily involves the use
of more inputs and larger investrnents. ·_
On farms limited prirnarily to livestock, the indications are that the
key investments to be mad . are in forage and livestock production. While
good data are not available, it can be surmised that fe rtilization rates, _
pasture seeding and live stock quality can all be profitably increased.
Data for 1951 from similar farms in Marshall county indicate that ex- J
pansions in the key forage=·livestock investment are also important in
increasing the earning power of associated labor inputs and machinery
investments. Once present acreages are developed, acreage expansions
logically follow.
- For the we st and central Calloway county farms, which are better
l adapted to dark tobacco and popcorn production, the indications are that
these two enterprises should not be seriously curtailed so long as prices
and yields somewhat similar to those received in 1951. can be anticipated.
This suggests that the expansion in investments required to raise central and
west Calloway county farm incomes should be largely in the intensification
of these enterprises and forageslive stock production plus expansion of
’ acreage. Observations in the area indicate that the forage enterprise can
— be intensified through the use of fertilizers and better pasture mixtures.
It is also quite likely, that daek tobacco and popcorn yields can be increased
through more intensive use of fertilizers and cover crops. In this con-
nection it should be noted that popcorn prices are relatively unstable and
that dark tobacco, of course, has faced and continues to face a weak long·»
run demand picture. It appears that important inefficiencies are not likely
to be encountered as farm sizes are expanded up to 200 acres, at least.
` - GALLOWAY COUNTY FARMS
, " HAD HUGH IEARNUNG POWER
_ _ _ IN 1951
Despite the difficulties experienced in isolating the earning powers
of individual investments and inputs such as machinery, labor, land,
forage =livestock investments, etc. , some Calloway farms were earning
6  high oversall rates of return in investments and inputs and high incomes.
One farm had 212 acres, used 23 months of labor, had $5, 261 tn its
` forage =·livestock investment, had $4, 960 worth of machinery and had
other expenses amounting to $5, 973. From these investments and
inputs $17, 871 was grossed above the value of feeder cattle purchased.
Anotherlfarm had 155 acres, used 25 months of labor, had $6, 302
in its forageelivestock investment, had $3, 214 worth of machinery and
had other expenses of $1, 928. This farm grossed $11, 688 from these
inputs and investments.
Good farm incomes can be secured from developing Calloway county
upland farms under 1951 conditions. "The benefits to. be reaped from de-
veloping a substantial farm business are great. Ownership of an improved
productive farm is a source of community respect, security, family
stability and a good standard of living., Only a small proportion of urban
laborers are ever able to command the irnportant things in life to the ex··
tent they are commanded by persons owning good productive farms. "

  
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