This is perhaps the most concise means of expressing the relation between 

 size of farm and the operator's net capital accumulation potential. It can 

 be seen that with $5.00 milk the smallest herd sizes in each man size group 

 has a negative figure; they cannot quite maintain their capital, let alone 

 acquire equity. It can also be seen that, with S5.00 milk, only the largest 

 herd sizes ( and with investment in depreciables at one-half new price I 

 have a residual equal to conventional interest rates. With 10 percent high 

 prices, the largest herds of each man-size group have residuals at least 

 equal to conventional interest with depreciables at new price. When de- 

 preciables are at half new price the two and three man middle-size herds 

 are also included. Note that the smallest farms have a slight negative 

 figure; that the largest farms have left more than a conventional interest 

 rate, that is, they have some margin for accumulation; and that there is 

 a greater gain from having a large size herd per man than from increas- 

 ing the "man size". 



With 100 Percent Debt Amortized 



It is necessary to determine what these figures mean in terms of ability 

 to amortize credit. Assuming that all capital is borrowed, could the debt 

 be amortized and how long would repayment take? With a 3 percent aver- 

 age interest cost in the amortization, $5.00 milk, and depreciables at new 

 price, Table 8 indicates that more than a lifetime would be needed on the 

 largest farms of each man size group, while the others have no repay- 

 ment potential at all. With $5.00 milk and depreciables at one-half new 

 price, the largest farms of each man size can about pay off in a working 

 life. With $5.50 milk and depreciables at new price, the largest farms of 

 each man size group can accumulate full equity in a working life; with 

 depreciables at one-half new price, the middle sizes of two and three-man 

 farms can also pay off in a working life; while the largest farms of each 

 man size group can accumulate full equity in less than 20 years. 



17 



