As shown in Table 18, situation I represents the prices received and 

 paid by dairymen for several major items from 1951 to 1952. During this 

 period, the parity ratio of prices received to prices paid was about 105. 

 As shown in Figure 6, the prices for fluid milk, dairy replacements, and 

 beef were high relative to prices paid for all farm-consumed goods and 

 services when compared with the period 1949-50. During the 1949-50 period, 

 the parity relationship of prices received to prices paid by farmers was 

 equal to 100. 



Situation II, shown in Table 18, represents the prices received and 

 paid by dairymen from 1954 to 1955. During this period, the parity ratio 

 of prices received to prices paid was about 88. As shown in Figure 7, the 

 prices for fluid milk, dairy replacements, and beef were low compared with 

 the general level of prices paid relative to 1949-50. 



Table 18. Prices Received and Prices Paid for Major Items on Dairy Farms That 

 Influence the Decision of Raising Versus Buying Replacements 



^ See Appendix Table 11 for a complete listing of milk prices as they relate to distance from 

 market for a typical month. 



Economic Analysis 



The purpose of this section is to outline how a typical farm may be or- 

 ganized to obtain optimum net income from land, buildings, labor, and 

 working capital, or credit now controlled by the operator. For the present 

 analysis of a method of obtaining dairy herd replacements, the specific 

 question is, should a farmer specialize more in production of milk by 

 raising fewer or no replacements, or should he raise more replacements 

 and thereby produce less milk with his present resources in the form of 

 forage, labor, and building space? That is, what is the most economic 

 combination of cows and young stock for a typical farm situation? 



37 



