The additional net farm income made possible by shifting from 35 

 cows and raised replacements to 40 cov/s and purchased replacements under 

 price situation II is shown in Table 26. •^''' This comparison also answers two 

 additional questions associated with shifting from raising to buying re- 

 placements. First, the adjustment can be made without the use of credit. 

 Second, the adjustment from raising to buying replacements can be profit- 

 able at the several milk price relationships under price situation II, either 

 by selling young stock under 18 months of age at the beginning of the 

 first year of adjustment or by raising all the young stock on hand at the 

 end of the base year.^' The additional net farm income represents income 

 above the additional cost of purchased replacements. Thus with alternative 

 A and a milk price of $5.30 per hundredweight, the accumulated additional 

 net farm income would be $6,410 in the first 4 years of adjustment. The 

 additional net farm income with alternative A was greater than with alter- 

 native B. In other words, a rapid shift would result in a greater increase 

 in net income. 



Effects of Various Price Relationships and Levels of 

 Milk Production on Income from Six Sizes of Herds 



To further test the opportunities for profitable adjustments, budgets 

 were developed for farms ranging from milking herds of 11 to 52 cows 

 grouped in 6 size classifications. In the basic budget with which alternatives 

 were compared, price situations I and II v/ere used and production per 

 cow as assumed to be 8,500 pounds of milk. 



In the first phase of this part of the analysis, the break-even prices for 

 milk, replacements, and cull cows and calves were computed separately. 



Table 26. Additional Net Farm Income Possible on Dairy Farms with Flexible Farm 



Resources by Shifting from 35 Cows and Raised Replacements to 40 Cows 



and Purchased Replacements, Price Situation II 



Additional Nst Farm Income by Years After Adjustment 



Total 

 5 or for Years 



12 3 4 more 1 - 4 



Dollars Dollars Dollars Dollars Dollars Dollars Dollars Dollars 



Alternative A — Sell young stock under 18 months of age at beginning of year 



36 The income possibilities with price situation I are shown in Appendix Table 14. 

 It IS also profitable to shift from raising to buying replacements under price 

 situation I, Appendix Table 14. ^ o i- k 



48 



