This substitution would cost Sl,848 more than the ownership and operating 

 costs for owned machinery if no value is placed on the labor of the farm 

 operator, but only Sl,009 more if this labor is valued at $1.00 an hour and 

 freed hired labor is not released. ^^ In both cases the substitution of custom 

 services would relieve the operator of a capital investment of $7,925 at new 

 machinery prices in 1949. 



Alternative 4 — Partly Owned and Partly Hired 



If the farm labor freed by custom work is assumed to have no value, 

 it would be profitable to custom hire the same operations as were suggested 

 for the small dairy farm — planting and harvesting corn, and seeding grass. 

 Total machinery costs for the cropping program would be $1,253 a year — 

 a saving of $95 when compared with all self-owned equipment. Capital in- 

 vestment in cropping machinery would be reduced by $1,990, or about 25 

 percent. 



If the labor on farm B had a value of $1.00 an hour and the hired labor 

 freed by the hiring of custom services could not be released, the same three 

 jobs mentioned above and plowing could be custom hired profitably. Total 

 cash costs for cropping machinery would be $2,032 a year compared with 

 $2,187 if all the machines were owned. ^^ The investment in cropping equip- 

 ment would be $2,150 below that for complete ownership, or about 27 percent. 



Alternative 5 — Partly Owned, Partly Custom Hired, and Custom Work Off the Farm 



Several arrangements are possible in combining self-ownership, hiring 

 custom work, and providing custom services. But only two possibilities are 

 discussed. 



In the analysis of Alternative 4 when labor has a value, hiring four 

 cropping operations — plowing, planting corn, seeding grass, and harvesting 

 corn • — would free a total of 115 hours. But 26 hours of hired seasonal 

 labor in this total cannot be used for doing custom work off the farm be- 

 cause the farm tractor and farm operator would be helping the custom operator 

 to fill the silo. This leaves a total of 89 hours free at a time when some custom 

 work could be performed off the farm. Arbitrarily dividing this custom among 

 corn cultivating, harrowing, and mowing would result in an increase of $140 

 in income, after deducting labor and operating costs. Total ownership and 

 operating costs would be reduced $103 compared with self-ownership of 

 equipment. Assuming that the 26 hours of freed hired labor is not released 

 but is used productively on the farm, the complete adjustment involving both 

 hiring and doing custom work would increase net farm income by $295 

 compared with entire ownership. ^^ 



13 If hired labor freed by the hiring of custom services could be released, it would 

 cost $889 more to custom-hire all crop work than to do it with owned machinery. The 

 cost of producing 100 pounds of milk would be increased by $0.38 and net farm income 

 would remain the same whether or not the labor was used on the farm or released. 



14 If hired labor freed by the hiring of custom services could be released, cash costs 

 would be $2,006 a year compared with $2,187 if all the machines were owned. The 

 cost of producing 100 pounds of milk would be reduced by $0.08 and net farm income 

 would be increased by $155. 



15 If hired labor freed by the hiring of custom services was released, total farm 

 costs would be reduced $129 and net farm income would be increased $295 compared 

 with owning all farm machines and doing no custom work. The cost of producing 100 

 pounds of milk would be reduced by |0.06. 



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