Within each milk price and milk response combination, the 

 more intensive farms have higher net incomes. Extensive farms are 

 disadvantaged in all price and response combinations, but are more 

 disadvantaged by low milk prices and low milk response. 



Changes in the ratio of the price of cows to the price of cropland 

 alter the optimum ratio of cows to cropland; however, at high milk 

 prices, considerable changes in the price ratio would be required to 

 make extensive farms optimal. 



The results of this analysis provide guidehnes in planning short- 

 and long-run farm adjustments. In the short run the farmer is not 

 able to make large changes in the resources he controls; but he can 

 change the way his present resources are organized. Therefore, in 

 the short run, the optimum organizations and break-even prices are 

 most relevant to his problem. An optimal, short-run plan for a farm 

 can be found by selecting the appropriate ratio of cows to cropland, 

 milk response, and milk price for the farm. The break-even prices for 

 this plan can be calculated by applying the methods developed in 

 this study. 



In a longer planning period the farmer has the opportunity to 

 alter the resources he controls quite substantially as well as seek 

 the most advantageous resource combination. Using optimum ratio 

 of cows to cropland can help the farmer develop a long-run plan. The 

 organization and resource valuation information of a long-term plan 

 can suggest the better alternatives and his probable income position 

 after reaching his optimum resource combination. 



42 



