farm income. Therefore, alternative 4 was developed to show a better com- 

 parison between the alternative methods of providing replacements. It 

 shows the changes in income associated with shifting to 35 cows and all 

 home-raised replacements. To carry the herd of 35 cows and raise all 

 the replacements, some additional building space for raising young stock 

 was needed. Considerable hay had to be bought, the quantities depending 

 on the price situation as shown in Tables 22 and 23. By adding building 

 space and livestock, considerable additional capital investment would be 

 required under both price situations. Under price situation I, alternative 

 4 would not be as profitable as alternative 3, but it would be more profit- 

 able than alternatives 1 and 2 (Table 24) . With price situation II, how- 

 ever, alternative 4 would not be as profitable as alternatives 2 and 3, but 

 it would be more profitable than alternative 1 and the original farm or- 



ganization. 



To summarize briefly, the typical dairy farm has building space and 

 labor that is not fully utilized. Alternative 1, which was a shift from 25 

 cows and raised replacements to 29 cows and purchased replacements, re- 

 quired no additional capital investment. About the same number of hours 

 of labor per year was required to operate the crop and livestock enterprise. 

 Yet, with no basic changes in the farm structure other than the shift in 

 the source of replacements, net farm income would be increased considerably. 

 Alternatives 2, 3, and 4 involved varying amounts of additional forage, 

 capital investment, and work on livestock. In general, these alternative 

 methods of operation produced greater increases in net income than altern- 

 ative 1. But it should be observed that on a typical dairy farm under some 

 price relationships, it may be as profitable to leave some farm resources 

 idle as to invest additional capital so that all of some specialized resources 

 can be used. 



Long-Run Adjustments on a Typical Farm 



On a short-run basis, many farm resources are inflexible in their use. 

 Over longer periods of time, however, barn space is remodeled, new barns 

 are built, land holdings are changed, and land use is varied. In view of 

 this, a series of farm budgets was developed, based on the assumption of 

 long-run flexibility in the resources on the typical farm. When resources 

 are flexible and can be used to carry either young stock or cows, many 

 problems encountered in developing alternative farm plans for the typical 

 dairy farm are eliminated. 



It was also assumed that in the long run there were no unused or idle 

 resources in the typical farm situation. Thus in Table 25 with a 35-cow 

 herd that raised 10 replacements annually, there were no unused man hours 

 of labor, forage, or barn space. 3 5 Based on the rates of substitution of 

 these resources from young stock to cows, 40 cows could be carried if 

 12 replacements were bought each year. As labor was substituted at the 

 highest rate, shifting from 35 to 40 cows would leave 2 stanchions idle 

 and an annual surplus of 20 tons of hay equivalent in the 0-to 40-mile 

 zone (Table 25). As the distance from market increased, the quantity of 

 unused forage would decrease. The unused barn space was left idle and 

 the forage was sold. 



35 The herd size, herd composition, and resources for a dairy farm with flexible 

 farm resources under price situation I are shown in Appendix Table 13. 



46 



