22 CIRCULAR 905, U. S. DEPARTMENT OF AGRICULTURE 
necessarily follow that it would be most profitable to apply all the 
available labor on hogs. 
Many other considerations, including the interrelationships among 
livestock enterprises, must be taken into account. What table 9 does 
suggest, however, is that with only a small amount of labor available 
it is profitable to apply a large portion of it to hogs before consider- 
ing alternative systems.” With only a small amount of labor avail- 
able for production of livestock, the most profitable use of that labor 
would involve little or no utilization of forage. 
CapPITAL REQUIREMENTS 
Time ordinarily elapses between the date that plans are made or 
production is initiated and the time when returns are realized. Asa 
result, problems relating to capital investment arise in connection with 
farm production. As with any scarce resource, farmers have the prob- 
lem of distributing their capital in a way that will maximize their net 
incomes. They may accomplish this by investing in each enterprise 
up to the point at which the returns from the last dollar of investment 
in each enterprise is equal to its cost. For farmers with adequate sav- 
ings or unlimited borrowing power, this cost is represented by the re- 
turns obtainable on alternative investments off the farm or the interest 
charges that must be paid on borrowed capital. If available capital 
is limited, however, the investment in various enterprises is usually 
distributed in such a way that returns on the last dollar of investment 
in each enterprise are equal for all enterprises (although higher than 
the interest charge), if net income is to be a maximum. 
As indicated in previous sections, it is profitable during a period of 
years to grow at least enough forage to bring total production of grain 
to its maximum. Production of complementary forage is profitable 
even though no return is realized on the forage asa feed. However, 
within a single year forage and grain are always competitive; in- 
creased acreage and production of forage can come only at the expense 
of grain (4). A shift of acreage from grain to grasses and legumes 
ordinarily means lower returns from grain in the few years that are 
required for the new rotation to influence yields of grain. If the addi- 
tional forage is not utilized for feed, gross income to the farm is re- 
duced to the extent of the reduction in returns from grain.* Thus some 
investment (postponement of income) is involved in extending the 
acreage of forage within the complementary range. 
7It should be kept in mind that, in computing the net income for each feed- 
utilization system, forage was charged at its market value. So long as the 
number of livestock on a farm is not adequate to consume all of the comple- 
mentary forage this may represent too high a cost for forage: it may be more 
correct to consider forage as a free good in such a case. It is free in the sense 
that it would be wasted if not fed to livestock (cost of harvesting would need 
to be considered). Under such circumstances costs of feed for livestock that 
consume large quantities of forage would be substantially reduced. A beef 
herd. which can be maintained on practically an all-forage ration, might be quite 
profitable in such cases. 
Net returns may not be reduced by nearly so much, however, as the cost of 
harvesting the forage is avoided. 
