ECONOMIC USE OF FORAGES IN LIVESTOCK PRODUCTION 33 
uncertainty may be increased. As the time is increased between the 
date plans are made and the time the product is sold the chance 
increases that actual prices and costs will deviate from those on 
which the plans were kased. 
MEASUREMENT OF MARKET UNCERTAINTY 
It is apparent that the degree of risk and uncertainty associated 
with different feeding systems must be compared in the final deter- 
mination of the best system. Under conditions of true uncertainty 
no objective measure is possible; the outcome is one of the future. 
How then can uncertainty be measured? One possible indicator is 
the historic variability in returns from each feeding system. If the 
returns from a particular feeding system have shown a great deal of 
fluctuation in the past, it appears likely that they will also vary a 
great deal in the future. (This procedure supposes the future to be 
some rough counterpart of the past.) 
Using this method of measurement, some idea of the effect of sub- 
stituting forage for grain in livestock rations on risk or uncertainty 
can be gained from the information in tables 15, 16, and 17, which 
show the variation in returns from each of several livestock-feeding 
systems for dairy cows, feeder cattle, and hogs for the years 1917 
through 1948. The returns in table 15 refer to returns per $100 
of all cost. Returns in table 16 are per $100 of costs for feed and 
labor only. Table 17 shows returns per $100 of feed costs only. 
These estimates of returns were made on the basis of actual prices 
for each of the years applied to the product produced under each 
system. Costs were estimated by applying annual prices to the quan- 
tities of the various resources used. Inputs of resources for each 
system were estimated, assuming present techniques. Thus the data 
show only the variations in returns that were due to changes in costs 
of factors and prices of products. They do not reflect the variations 
due to fluctuations in production. 
Two aspects of the variation in returns that is associated with al- 
ternative feeding systems are (1) the amount of variation and (2) 
the way in which returns are distributed above and below the average. 
Two feeding systems that give the same average returns during a 
period of years and for which returns vary similarly about the aver- 
age may involve quite different degrees of uncertainty. Returns 
under one system may. fluctuate between 70 percent below average and 
30 percent above average, whereas the other system may provide re- 
turns that vary between 380 percent below average and 70 percent 
above average. Clearly the chances of big losses are much greater 
with the first system. Also, the chances of big gains are much less. 
VARIABILITY OF RETURNS IN RELATION TO LIVESTOCK RATIONS 
The degree of variation in returns shown in tables 15, 16, and 17 
for the different feeding systems for each class of livestock are ex- 
amined first. 
Each table shows two things: (1) The returns from each feeding 
system for each class of livestock are distributed in a remarkably even 
pattern above and below the average returns for the respective feed- 
ing system; and (2) the degree of variation is not greatly affected 
