in 1954-55 than under price situation I, which represents prices in 1951-52. 

 In general, it pays to carry as many cows as possible regardless of 

 the effect on numbers of replacements raised. Individual farm situations 

 determined whether or not the residual inflexible resources should be used 

 to raise replacements. In most instances, they should be. The problem of 

 inflexibility in resources is important in the short run. The physical pro- 

 duction relationships provided in this bulletin may be used by individual 

 farmers to determine whether it will be profitable to use these resources. 



Long-Run Adjustments on Dairy Farms 



Over longer periods of time, old barns are remodeled, new barns are 

 built, and size of farms, labor force, and land use are changed. In the 

 long run, most of the resources on New England farms are flexible as to 

 use with the price levels and price relationships that have prevailed for 

 milk, cull cows, and replacements. A series of farm budgets were developed 

 for a typical farm on the assumption of resource flexibility. Also, to pro- 

 vide a more general application of the physical production relationships 

 developed in the study, farms ranging in size from milking herds of 11 to 

 52 cows were grouped into six equal size classifications. An analysis of 

 costs and returns was made for each group. The separate effects on net 

 farm income of changes in the price of milk, the price of cull cows and 

 veal calves, and the price of replacements were computed for the two general 

 price situations. Break-even prices of milk, cull cows, and replacements — 

 the prices at which it would be a matter of indifference to the farmer 

 whether he would raise or buy his replacements — were identified. For 

 more generalized application of the production data, the effect on net farm 

 income of varying prices of replacements, cull cows, and milk for each of 

 the six farm size groups was computed at three levels of milk production 

 per cow. In general, the additional net farm income obtainable by shifting 

 from raising to buying replacements was largest with the combinations of 

 low prices for replacements, high prices for beef, high prices for milk, 

 and a high level of milk production per cow. 



In the long run. New England dairymen would find it economically ad- 

 vantageous to shift from raising to buying replacements within the frame- 

 work of current prices and technology. A major change in the relationship 

 of prices for replacements and milk would probably resuh, however, if a 

 large number of dairymen stopped raising replacements. It may be that 

 the price of replacements in New England has been low historically be- 

 cause many farmers believed that raised replacements were cheaper and 

 better. 



