ECONOMIC USE OF FORAGES IN LIVESTOCK PRODUCTION 3 
CAPITAL REQUIREMENTS IN RELATION TO FEEDING SYSTEM 
An increase in acreage of forage beyond the point at which total 
production of grain is maximized is not profitable unless the additional 
forage is worth as much in terms of feed as the grain which it replaces. 
If the competitive forage is to have a value it must be sold or utilized 
through livestock. Use as feed involves establishing a livestock system 
large enough to consume all the forage. The size of the investment 
required to feed a given quantity of forage depends upon the kind of 
livestock to which it is fed and the preportion of forage in the ration. 
Kstimates of investment in livestock and necessary buildings and 
equipment required to utilize 100 tons of forage for the several types 
of livestock and feed-utilization methods are shown in table 10. The 
number of head of livestock needed to consume 100 tons of forage is 
based on estimated feed requirements for each of the feeding systems 
shown. The investment requirements are based on average Lowa prices 
for three different time periods. The years 1931 to 1935 were used to 
show investment requirements in a period of low price level. The 
period 1937 to 1941 was taken to represent a moderate price level. The 
years 1944 to 1948 were used as representative of a relativety high price 
level. Estimates of investments for buildings and equipment are 
based on minimum requirements for conditions in the Corn Belt. In- 
vestment requirements were calculated on the basis of 100 tons of forage 
to be consumed. Any farmer can easily convert these figures to cor- 
respond to his own situation. 
It is apparent from table 10 that alternative systems of feed utiliza- 
tion differ greatly in respect to the total capital required to buy (1) the 
livestock and (2) the buildings and equipment necessary to handle 
them. 
In addition to these investments, “working capital” is often needed 
during the production period to pay for feed bought, labor hired, and 
such miscellaneous items as veterinary costs, taxes, supplies, and inter- 
est on borrowed capital. Estimates of the costs for production of live- 
stock are given in table 11. As some of the costs are incurred on many 
farms well in advance of any returns, they are investments similar to 
those in livestock. 
Cost values imputed to labor and feed resources used in livestock 
production (table 11), however, may exceed the actual amount of work- 
ing capital required on some farms. In the case of dairy cows, for 
example, hired labor, commercial feeds, and miscellaneous supplies 
may be paid for from the monthly milk checks and the costs thus in- 
volve no working capital. Farm-grown feeds may not involve much 
outlay of funds, but holding them for feed ties up capital until the 
livestock is sold. Similarly, family labor used in production of live- 
stock may not involve a direct outlay of funds, but, if alternative op- 
°It should be recognized that often investments in buildings are not required 
in order to establish a livestock system. On most farms some buildings can be 
adapted for use for the particular kind of livestock system to be followed. In 
such cases investment requirements for buildings and equipment would be lower. 
