Alternative 1 — Recommended Combination of Self-owned Equipment 



Although this one-man farm has a small workload for machines, it has 

 essentially the same jobs to be done as do the larger dairy farms in the area 

 (Table 12), The operator of farm A is faced with the problem of getting all 

 these jobs done properly and on time without incurring larger fixed costs 

 than can be met from his small volume of business. To handle the workload 

 with his own equipment means that he must have a substantial inventory of 

 tillage, planting, and harvesting equipment, as well as power units and mis- 

 cellaneous items. The list of machines in Table 12 represents the optimum 

 combination of mechanical powered machinery that would meet the function- 

 al requirements of the cropping program with the available labor supply. 

 Direct operating costs of this combination of machinery with no charge for 

 labor would amount roughly to $179 a year and total machinery costs would 

 amount to $950 a year. 



Alternative 2 — Joint Ownership 



Joint ownership, as an alternative machinery ownership pattern, might 

 not influence operating costs but it would materially reduce the fixed-owner- 

 ship charges that must be carried by each farm operator. For example, 

 assuming that the machinery investment, except that for the farm truck and 

 hay-unloading equipment, can be carried equally by two farms, annual 

 ownership and operating charges exclusive of labor would be reduced from 

 $950 to about $593. 



This example indicates the type of adjustment in costs that would re- 

 sult from joint ownership of cropping equipment. But not enough farmers 

 have shared ownership of machines to provide data on cost characteristics 

 for an evaluation of this alternative ownership pattern. Operating costs 

 might be increased by additional travel for the equipment, by less complete 

 control over maintenance by either operator, by depreciation because of wear, 

 and similar disadvantages. The quality of the product might also be in- 

 fluenced adversely by these factors. An evaluation of this alternative, as an 

 opportunity to reduce production costs, must be related to the particular 

 circumstances that accompany each situation. 



Alternative 3 — Substitution of Custom-hired for Self-owned Machinery 



The organization of machinery on farm A was analyzed to determine the 

 economies that might be brought about by substituting custom-hired for 

 self-owned equipment in all field operations. It did not appear feasible to in- 

 clude general power and transportation work. The costs for custom-hired 

 services shown in Table 13 are based on the workload for farm A shown in 

 Table 11 and the prices charged by custom operators as shown in Table 7. 

 The total cost of hiring the cropping operations would be $1,480, which 

 would be $530 more than the ownership and operating costs for owned ma- 

 chinery if no charge is made for labor of the farm operator (Table 16). But 

 if his labor were valued at $1.00 an hour and freed hired labor were not re- 

 leased, it would cost only $4 more to custom-hire all crop work than to do 

 it with owned machinery. This small change in total cost would affect unit 

 production costs very little and net farm income would be reduced by $4 



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