30 University of New Hampshire [Sta. Bull. 322 



ton than that fruni the preceding acres. There is a balance on the 

 one hand in number of cows which the available labor can conven- 

 iently handle and on the other hand of the hay, roughage, and pas- 

 turage produced. Beyond this point hay can be utilized only in ways 

 where returns mav be less per ton. An individual farmer may sell 

 hay to a neighbor who is short of feed, but for the area as a whole 

 under present price relationships, local utilization of hay is the only 

 practical alternative. 



A similar situation involving diniiniihing returns from additional 

 applications of labor and capital applies to the other possible activi- 

 ties on the farm, such as raising of replacements, potato production, 

 lumber operations, and milk production. To simplify the problem, 

 dairying and potatoes can be considered alone. 



Under conditions of production in this area, including the handi- 

 caps of a very short season for field work, of small irregular fields, 

 and of a sloping and rocky soil, the expansion of potato production 

 beyond four or five acres will often require large readjustments of 

 labor and the building of additional storage so that the net returns 

 resulting from the last acre will be lower than from the preceding 

 acres. 



Similarly, as the operator adds cows to his organization, a ])oint 

 is reached where the net return resulting from the addition of each 

 successive cow is less than for preceding cows. This may result 

 from neglect of cows due to lack of available time or from hiring 

 of additional labor made necessary _ by the increase in the herd. 



By the very nature of the two enterprises, wholesale dairying 

 and potatoes, the operator cannot use all his available resources ex- 

 clusively on either one. In the process of expanding his available 

 labor and capital on both enterprises the operator's i)rijl)k'm is to 

 distribute them so that the total net returns are maximized. 



In figure 17 curves are drawn to illustrate the returns for succes- 

 sive applications of resources on milk and potato production. These 

 curves are drawn freehand and without a definite statistical basis. 

 In a generalized way. they represent the relative net income from 

 successive additional applications of labor and capital on potatoes 

 and dairying. It will be noted that when over half of the available 

 resources have been used for dairy production, the returns from the 

 last unit of resources spent on cows are less than from some units 

 directed toward potato production. The line .\F drawn horizon- 

 tally across the diagram has been fitted so that the sum of the re- 

 sources used in dairying C.\B) and potato production (AC) does not 

 exceed the total availalile resources (AF). At this level returns 

 from the last unit of resources applied to dairying and from tlic 

 last unit applied to potato production tend to be cfjual. 



Combination of Four Enterprises 



'i'o simplify the discussion as much as possible, the emjihasis so 

 far has been on the combination of dairy anfl potatoes, Init of ci>urse 

 the real jiroblcm is the combination of dairy. ])otatoes. replacements 

 and woodland jjroducts. In figure IS. curves have been drawn rep- 

 resenting the Jiet returns from the use of additional units of avail- 



