Nature of Farming and Production Efficiency in Irrigated Area of Malheur County

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2 ature f Farming and Prductin Efficiency in Irrigated Area f Malheur Cunty W. B. Back and G. W. Kuhlman 1/ Summary Alfalfa, irrigated pasture, small grain, and sugar beets ccupy abut 85 per cent f ttal crpland in the irrigated area f Malheur Cunty, acrding t a survey f 66 farms in Alfalfa is the leading individual crp. On the basis f tpgraphy and prductivity f the sil, irrigated land is classed as suitable r nt suitable fr grwing rw crps such as beets and ptates. In general, farmers with a significant amunt f rw crp land use it t the maximum extent pssible in prducing rw crps. Frages and grains ccupy nearly all the nn-rw crp land. Mst types f livestck are fund in the area, but dairy and feeder cattle are the mst imprtant. Seven types f farming were defined frm infrmatin btained in the survey. These seven types, with average farm inmes in 1952 fr each, were: Dairy $ 5,54 Dairy crp 4,994 General livestck 2,886 Field crp 8,55 Intensive crp 28,662 General crp 7,99 General 3,647 These farm inme differences were due mainly t differences in degree f specializatin in prductin, sil prductivity, size f farm business, and relative prfit f enterprises in Intensive crp farms had advantages in all these factrs. The lw inmes f general livestck farms came abut frm unprfitable cattle feeding peratins in The return n livestck investments fr the 66 farms in 1952 was nly.3%. Unprfitable cattle feeding brught abut this lw rate f return n mney invested in livestck. Dairy cattle investments earned much mre--an average f abut 3%. 1/ Assistant agricultural enmist and late agricultural enmist, respectively. ACKOWLEDGMET: This study was initiated by and data were llected under the supervisin f the late Dr. G. W. Kuhlman. Hward Osbrne, frmerly research assistant in agricultural enmics and nw agricultural statistician with USDA in Prtland, did much f the field wrk n the study and made suggestins n interpretatin f the data. Paul Mhn, research assistant in agricultural enmics, ntributed in tabulating and summarizing the infrmatin btained in the survey.

3 The main pprtunities t increase prductin efficiency in the area are: (1) increase degree f specializatin, (2) increase size f business, (3) increase use f mmercial fertilizer, and (4) increase milk prductin per dairy w. Thirty years ag the Snake River Valley prtin f Malheur Cunty was a ranching and winter feeding area fr range livestck. Sn thereafter intensive farming became predminate thrugh the advent f irrigatin. Cngress apprpriated funds fr the Vale and Owyhee Prjects in 1924 and The first delivery f water t farmers frm thse prjects was iv. A93. By 195 abut 196, acres f land in Malheur Cunty were under irrigatin. --1 This included nearly all the bench and bttm land in the area adjacent t Ontari, yssa, and Vale. This study dealt with farms in the Owyhee Prject which included Advancement, Bench, Crystal, Ontari-yssa, Owyhee, Payette-Oregn Slpe, Slide, and Ridgeview Prjects. It did nt include the Vale, Owyhee Ditch, and Warm Springs Prjects. Althugh the majr adjustments t new types f farm prductin have been made, farmers still experience prblems in adjusting their prductin t meet changing enmic nditins and t maintain a high level f efficiency. Prductin alternatives vary within the area because f differences in sil. Many f the enterprises adaptable t the area are risky frm the standpint f prviding a steady year-t-year inme t farm families. High capital requirements assciated with intensive farming limit the attainment r maintenance f prductin efficiency. These and ther enmic prblems f the farmers in the area indicate a need fr research t assist farmers in their prductin decisins. This study was explratry in nature. The main purpses were t determine the nature f the farming and farmer prductin prblems in the area. A further aim was t prvide farmers with sme guides fr increasing prductin efficiency. Since the study was explratry, specific slutins t many f the prblems experienced by the farmers uld nt be wrked ut. Results f the study, hwever, did shed sme light n the nature f adjustments in farm prductin which shw prmise f increasing prductin efficiency. Prcedure Infrmatin n farm prductin, st, and inme was btained frm 66 farmers in the fall f The survey was nfined t the Owyhee Prject area. Farms with less than 4 acres f land were excluded. Randm sampling methds were used t select farms t be included in the study. Farm inmes were mputed fr each farm in the study frm infrmatin btained frm the farmers. Prices fr input and utput factrs were thse prevailing in the area in Values fr land, machinery, livestck, and ther capital assets were 1/ Agricultural census, 195.

4 farmer estimates. The values f farm prducts nt sld r thse n hand pending sale were determined by use f market prices. Actual farmer payments fr labr, custm wrk, and prductin supplies were used in the inme mputatins. Farms were gruped by surces f inme in determining farm types. In general, farms with tw-thirds r mre f their receipts frm a single enterprise r categry f enterprises were classed as specialized farms in that particular enterprise r enterprises. Sme deviatins frm this nditin were necessary in determining farm types. Crp Prductin and Land Resurce Relatinships Prductin decisins by individual farmers are based mainly n prductin pssibilities with the resurces at hand, market price relatinships, and the degree f risk assciated with each enterprise. The discussin in this sectin relates t crps grwn in the area and hw the land resurce affects crp prductin systems. Crps Grwn Crps grwn in the area were classed as frage, grain, and intensive rw crps. Frage crps included irrigated pasture, alfalfa harvested fr hay r seed, and clvers harvested fr hay r seed. Grain crps included wheat, ats, barley, mixed small grain, and rn fr grain r silage. Intensive rw crps prduced were sugar beets, ptates, nins, carrt seed, sweet rn, etc. Frm the standpint f crpland acres devted t the prductin f varius crps, frage crps ranked first, grain crps send, and intensive rw crps third in the area (Table 1). early half the crpland in the sample was used in prductin f frage crps. Abut ne-third f the crpland was used in prductin f grains. Intensive rw crps ccupied abut ne-sixth f the crpland in the sample. The leading individual crps ranked acrding t acreages were alfalfa, irrigated pasture, wheat, small grains grwn fr feed, and beets. These crps ccupied nearly 85 per cent f ttal crpland in the sample. Mst f the farms sampled grew alfalfa fr harvest and irrigated pasture. Abut tw-thirds f the farms grew wheat and small grains. Less than half the farms in the sample (44 per cent) prduced intensive rw crps. Thirty per cent f the farms grew beets, 12 per cent grew ptates, and 18 per cent grew ne r mre f the ther intensive rw crps. An average f 53 per cent f farm receipts fr the farms in the sample was frm sale f crps. All intensive rw crps were cash crps. Clver seed and wheat were the main cash crps amng the frages and grains. Abut ne-third f the farms in the sample marketed hay, primarily alfalfa, and several sld feed grains. The area prduces a surplus f frage--that is, mre than needed fr the livestck in the area. Land Resurces in Relatin t Crps Grwn nirrigated land in the Snake River Valley prtin f Malheur Cunty has little prductive value. It is range r waste land. Abut ne-furth f the ttal land included in the sample was nnirrigated. Our primary ncern is with the irrigated land, which averaged 88 acres per farm in the sample.

5 Adaptability f irrigated land fr different crps depends n sil prductivity and tpgraphy. In general, the bttm land in the area is the mst prductive, the bench land next, and the rlling t hilly land the least prductive. Frage and small grain crps can be grwn successfully n all the irrigated land. t all the irrigated land, hwever, is adaptable t the grwing f rw crps. Rw crps cannt be grwn successfully n land with sufficient slpe t permit a significant amunt f ersin with the irrigatin prcess. Thus, n the basis f tpgraphy, irrigated land can be classed as adaptable fr rw crps r nt adaptable fr rw crps. Varius degrees f sil prductivity exist within each f the tw land classes. The mst prductive f the rwcrp land receives the mst intensive use in rw crps. Frages and grains are prduced n the nn rw-crp land. The acreage devted t grain is highest n the mst prductive f the nn rw-crp land. Twenty-eight f the farms in the sample had primarily nn rw-crp land. Twenty-tw f the farms had primarily rw-crp land. The remaining 16 farms had significant quantities f bth rw-crp and nn rw-crp land. In general, farms with a significant amunt f rw-crp land utilized it t the maximum extent pssible in prductin f rw crps. This was because f the prfitability f rw crps as mpared with the frage and grain crps. On the rw-crp land, frages and grains were grwn in rtatin with rw crps t the extent necessary t maintain the yields f the rw crps. There were a few exceptins t this rule n use f rw-crp land. A few farmers in the sample emphasized prductin f frage and grain crps. These were livestck farmers, r farmers with limited capital fr the develpment f intensive rw-crp enterprises. ature f Livestck Prductin Dairying was the main livestck enterprise in the area. Cattle feeding ranked next t dairying in imprtance. Other livestck, primarily hgs and beef cattle, were significant surces f inme n sme farms. Abut three-furths f the farms in the sample had dairy cattle (Table 2). Tw-thirds f these had a dairy enterprise f mre than 5 ws. The farms with a dairy enterprise averaged 11.1 ws per farm. Sixty-five per cent f the farms had dairy heifers, with an average f 11.4 head per farm. early half the farmers in the sample fed cattle during Thse farmers wh fed cattle averaged 22.7 head per farm. Hg prductin was a significant enterprise n abut ne-furth f the farms. The 16 farms with a hg enterprise had an average f nearly 3 head per farm. This included hgs f all ages. Only 1 per cent f the farms had a beef w enterprise. Pultry prductin als was f minr significance in the area. Less than half the farms in the sample had hens and/r pullets. Mst dairy farms were n nn rw-crp land, r farms with a limited amunt f rw-crp land. The dairy enterprise fits well with frage and grain prductin prgrams n these farms. On the ther hand, several feeder cattle enterprises were n the farms prducing rw crps. Feeder cattle units n rw-crp farms were supplementary enterprises. That is, cattle were fed as a means f utilizing frage and grain crps prduced in rtatin with rw crps, and beet pulp available t beet prducers. The feeder cattle enterprise prvided manure needed fr the maintenance f sil prductivity fr rw crps.

6 5 Capital Requirements in Farm Prductin Capital investments in farm prductin varied with the type f prductin and size f peratin. Individual categries f capital assets were land, machinery and equipment, livestck, and buildings. Land was the mst imprtant, representing 62 per cent f the average ttal capital investment fr farms in the sample. Land investment averaged $24,826 per farm, machinery investment $7,353, livestck $4,397, and farm buildings $3,531 (Table 3). Cnsiderable variatin in ttal capital managed and amng individual asset categries existed as may be nted by the ranges presented in Table 3. Ttal capital investment varied frm $11,582 t $115,694--a ttal range f abut 1 thusand dllars. The farm with the lwest capital investment was n nn rw-crp land, and ntained 43 acres f irrigated land. The farm with the highest capital investment was an intensive rw-crp farm ntaining 154 acres f irrigated land. Prductin emphasis was in beets and ptates n the farm with the highest ttal capital investment and in frages and small grain n the farm with the smallest capital investment. Between these tw extremes, a variety f prductin systems and sizes f peratins existed. Land adaptability exerts much influence n prductin systems, as mentined previusly, and, therefre, influences the size f capital investment. Hwever, the amunt f capital a farmer has t invest als influences the prductin system. Intensive rw-crp prductin requires mre capital than any ther type f farming in the area, because f (1) high land values assciated with rw-crp land and (2) high capital investments per acre required fr machinery and equipment fr rw crp prductin. Irrigated land values averaged abut $2 per acre fr nn rw-crp land and $4 per acre fr rw-crp land. Farmers with any f the prductin systems have sme latitude as t size f capital investment in the different asset categries, particularly machinery, buildings, and livestck. Hiring f custm wrk, a general practice in the area, cuts dwn the machinery investment needed. Buildings t serve essentially the same functins can vary nsiderably in riginal st. Cntrl ver livestck investment can be exercised by chice f size f enterprise and quality f animals. A farmer als can change the value f land he perates thrugh the additin f irrigated acres r thrugh practices which change prductivity f the sil. Althugh farmers d have sme latitude in the size f investments in different asset categries fr a given type f farming, the fact remains that a sizeable capital investment is needed fr farming in the irrigated area f Malheur Cunty. The capital investment figures presented d nt include perating capital, supplies, and the value f the dwelling huse. Many farmers in the sample reprted having insufficient capital fr expansin r fr the develpment f mre efficient prductin rganizatins. These were mainly the farmers with the smaller ttal capital investments.

7 6 Market Prices and Price Risks Thus far the nature f farm prductin in Malheur Cunty as influenced by land adaptability and capital t invest has been discussed. Anther factr in farmer prductin decisins is market prices. Year-t-year changes in market prices bring abut price risks. A limited amunt f this study was devted t an analysis f prices and price risks. Three crps were chsen fr illustrating differences in degree f price risk. These were beets, ptates, and nins, the three leading intensive rw crps prduced in Malheur Cunty. Variability in beet, ptat, and nin prices fr Oregn in the perid is illustrated in Figure 1. During these years prices fr beets were mst stable, with prices f nins mst variable. Ptat prices varied nearly as much as nin prices. Less price risk is assciated with prducts having the mre stable year-t-year prices. Fr these three crps, ne uld nclude that beets were the safest enterprise and nins the mst risky. Beet prices were relatively stable because f gvernment supprt prices. The relatively high price risk assciated with nin and ptat enterprises may acunt fr the small number f farmers in the area prducing these crps. Either can be a very prfitable enterprise with average r abve average prices. Under the situatin f price uncertainty (nt knwing at planting time what the price is likely t be at harvest), it is impssible fr a farmer t perate at maximum efficiency. Fr thse years when the price f a prduct is lw he has used t many resurces in its prductin. Cnversely, when the price f the prduct turns ut t be relatively high, he has nt devted enugh f his prductive resurces t its prductin. Anther feature f the price data presented in Figure 1 wrth nting is the relatively high prices fr all three prducts in These high prices affect the inmes f farms prducing rw crps relative t the inmes fr thse withut rw crps.

8 Farm Prductin and Inme by Farm Types Seven types f farming were defined by use f the infrmatin in the 66 survey rerds. They were dairy, dairy crp, general livestck, field crp, intensive crp, general crp, and genera1.1 /. Frages and grains were classed as field crps in defining the types f farming. Land Usek Farm Types A summary f land use fr the 66 farms by farm types is shwn in Table 4. Land use is presented in percentages f ttal crpland. Mre than half f the crpland was used in prductin f frage crps by the dairy, dairy crp, general livestck, and field crp farm types. Intensive crp farms had the smallest percentage f crpland in frage crps. This als was true f grain crps. Grain crp prductin was highest fr field crp and general farm types. Rw crps were prduced within all farm types, indicating sme rw-crp land was within all the farm types. Prductin f rw crps, hwever, was ncentrated in the intensive crp and general crp farms. Livestck umbers.2y 1 Farm Types A livestck summary by farm types is presented in Table 5. Livestck numbers are averages per farm fr each kind f livestck. Heifer numbers (dairy and beef) are heifers f all ages. Hg numbers include hgs f all ages. As uld be expected, dairy ws and heifers were ncentrated n farms classed as dairy r dairy crp types. early all beef ws and beef heifers were n farms classed as general livestck. General livestck farms als had the larger feeder cattle enterprises per farm. Other types with significant feeder cattle enterprises were field crp and intensive crp farms. Mst f the hgs were n farms classed as general, dairy, and dairy crp. 1/ Classificatin f the 66 farms int types was perfrmed in acrdance with the fllwing definitins f the different types: Dairy: Farms with mre than tw-thirds f farm receipts frm the dairy enterprise. Dairy Crp: Farms with frm ne-half t tw-thirds f the farm receipts frm the dairy interprise. General Livestck: Farms with mre than half f the farm receipts frm the sale f livestck. Field Crp: Farms with mre than tw-thirds f farm receipts frm frage and/r grain crps. Intensive Crp: Farms with mre than tw-thirds f farm receipts frm sale f intensive rw crps. General Crp: Farms with mre than tw-thirds f farm receipts frm sale f crps, but receipts frm either intensive r field crps less than tw-thirds f ttal. General: Farms which did nt fit int the abve six types.

9 8 Land, Labr, and Capital by Farm Types Inputs f land, labr, and capital by farm types are shwn in Table 6. Percentages f ttal capital in each asset categry als are presented in the table. Crpland varied frm an average f 73 acres fr dairy crp farms t 126 acres fr field crp farms. Acres f nn-crpland averaged the highest fr general farms-- an average f 64 acres per farm. Ttal man mnths f labr used per farm ranged frm an average f abut 17 fr general farms t 35 fr intensive crp farms. Little difference in ttal labr per farm existed fr the dairy, dairy crp, general livestck, field crp, and general farm types. Labr requirements increased sharply fr farms prducing intensive rw crps. Evidence f this can be nted by examining the labr per crpland acre. Intensive crp and general crp farms used an average f.32 man mnths f labr per crpland acre. Field crp farms used the least amunt f labr per crpland acre (.15 man mnths). Average capital investment per farm varied frm $28, 57 fr dairy crp farms t $75,755 fr intensive crp farms. The prprtin f ttal investment represented by land varied frm an average f 56 per cent fr dairy farms t 66 per cent fr general crp and general farm types. This means that investment in machinery, livestck, and buildings mbined varied frm 34 per cent t 44 per cent f the ttal. In general, the dairy, dairy crp, and livestck crp farms had a high prprtin f ttal investment in livestck, and crp farms had a high prprtin f ttal investment in machinery. The capital investment per man year labr shwn in Table 6 prvides an indicatin f hw labr and capital mbinatins vary amng farm types. Farms with $24, r mre capital investment per man year labr use a lw amunt f capital emplyed. Generally, farms with $22, r less capital investment per man year labr use a high amunt f labr relative t the amunt f capital emplyed. Thus, the dairy, dairy crp, and general crp farms used a high amunt f labr relative t capital, and the field crp, intensive crp, and general farms used a lw amunt f labr relative t amunt f capital investment. Intensive crp farms emplyed the highest amunt f labr per crpland acre. When taking int acunt the very high capital investment n these farms, hwever, labr inputs per dllar capital investment were lw. Receipts, Expenses, and Farm Inme by Farm Types Receipts, expenses, and farm inme by farm types are summarized in Table 7. These were mputed fr each farm and averaged fr each farm type. The main features f the receipt, expense, and inme data were: (1) the high receipts, lw expenses relative t receipts, and high farm inmes f intensive crp farms; (2) the lw receipts and farm inme, per farm and per acre crpland, fr general crp farms when taking int acunt the fact that these farms had 3 per cent f their crpland in intensive rw crps; (3) the high expenses relative t receipts and lw farm inmes fr general livestck farms; and (4) the relatively lw receipts, expenses, and farm inme per acre f crpland fr general farms.

10 Specializatin in the prductin f beets, ptates, and ther intensive rw crps paid in 1952, as indicated by the receipt, expense, and inme figures fr intensive crp farms. On the basis f the success f intensive crp farms, ne uld expect general crp farms t rank send in farm receipts and farm inmes. This did nt materialize. The farms specializing in prductin f field crps ranked next t the intensive crp farms in farm receipts and farm inme. General crp farms did utrank field crp farms in farm receipts and inme per acre crpland. Hwever, this difference was small. Apparently the ver-all prductin efficiency f general crp farms was lwer than fr farms specializing in prductin f field crps r intensive crps. The high expenses relative t receipts and lw farm inmes fr general livestck farms came abut frm tw reasns: (1) the high turnver f perating capital in cattle feeding enterprises, and (2) the unfavrable perating margin f feeder cattle in Cattle prices were falling in 1952, bringing abut the unfavrable narrw perating margin (difference between price paid fr cattle and price received per hundred weight fr finished animals). General farms were the least specialized in prductin f any f the farm types. With the exceptin f general livestck farms; general farms had the lwest average farm inme. Lwer prductin efficiency, due t diversificatin in prductin n the general farms, was ne reasn fr the relatively lw average inme fr these farms. Reasns fr Inme Differences The majr reasns fr the inme differences shwn in Table 7 are differences in (1) degree f specializatin, (2) sil prductivity, (3) relative prfitability f enterprises in 1952, (4) size f peratins, and (5) efficiency in the use f capital and labr. These five factrs are assciated. Fr example, intensive crp farms had the highest degree f specializatin, the mst prductive sil, the mst prfitable enterprises in the area in 1952, and the larger size f peratins as mpared with ther farm types. Als, efficiency in the use f capital and labr is assciated with the ther fur factrs, particularly with the degree f specializatin and the relative prfitability f the enterprises. This means the effect f any ne factr cannt be islated and presented exactly in terms f dllars and cents with the data at hand. Degree f Specializatin The pssibility f inefficiencies in prductin due t diversificatin n general crp and general farms already has been mentined. Higher average inme fr dairy mpared with dairy crp farms als suggests the pssibility f greater efficiency fr farms mre specialized. A high degree f specializatin in prductin permits the develpment f larger enterprises than can be attained when farm resurces are spread ver many enterprises. Many farm enterprises in the area are t small t justify the machinery and prductin facilities which make efficient prductin pssible. This is particularly true f general

11 1 farms and t a lesser extent the ther farm types. It is knwn that, in agriculture, unit sts f prductin decrease with increase in the size f the enterprise until a pint is reached when the enterprise is t large t be managed efficiently. There is little evidence t indicate that any f the farmers in this study had individual enterprises t large t be managed well. Sme diversificatin in prductin usually is desirable in rder t mre fully utilize farm resurces and t maintain yields f the principal crps. early all farms in the sample had sme degree f diversificatin. Perhaps the general and general crp farms had a higher degree f diversificatin than nsistent with maximum prductin efficiency. Sil Prductivity Sil prductivity was ne f the factrs determining the farm types. Thus, sme f the inme differences amng farm types must be due t differences in sil prductivity. A crp yield index was mputed fr each farm in the sample in rder t btain sme infrmatin n hw sil prductivity varies amng the farms. The crp yield indexes mputed were averaged by farm types in rder t get sil prductivity mparisns amng the farm types. The results were as fllws: Type f farming Crp yield index Receipts per crpland acre Intensive crp 12 $ 424 General crp General livestck Field crp Dairy Dairy crp General An index f 1 represents average crp yields. An index f 12 means yields are 2 per cent abve average. Indexes belw 1 represent crp yields belw average in the area. With the exceptin f farms with significant prtin f receipts frm livestck r dairy enterprises, ranking f the farm types frm the standpint f crp yield index is nsistent with the ranks in acrdance with receipts per acre crpland. One f the causes fr the difference in receipts per crpland acre was variatin in sil prductivity. Relative Prfitability f Enterprises The relative prfitability f farm enterprises in an area in any ne year depends mainly n the relative prices f farm prducts. Infrmatin n prices received fr the different prducts prduced by the individual farmers surveyed was insufficient fr wrking ut price indexes fr mparisn amng farm types. It was indicated previusly, hwever, that prices f intensive crps were higher in 1952 than the average (Figure 1), and that cattle prices were lwer than in the years immediately befre Prices f clver seed and hay were a little lwer in 1952 than in 195 r 1951 fr Oregn. Grain prices held firm thrugh 1952.

12 Rarely can the prices r price relatinships amng farm prducts in ne year be nsidered typical f a series f years. In 1952, the intensive rw crp farmers in Malheur Cunty faired better price-wise than uld be expected ver a number f years. If 195 prices had been received fr the 1952 prductin f nins, beets, and ptates, average farm inme fr intensive crp farms wuld have been abut $9,. This is nearly $2, less than the farm inme indicated in Table 7 fr these farms. Prices fr nins and ptates were lw in 195 (Figure 1). Average farm inme fr intensive crp farms figured n the basis f average prices fr ptates, beets, and nins wuld be abut $1, less than that received by these farms in The field crp farms uld nt be given a significant advantage r disadvantage n prices. General livestck farms were at a disadvantage n prices because f the unfavrable perating margin in It is nt knwn whether prices received fr milk by the dairy farmers in the survey were lw, high, r average relative t previus years. Fr the state, milk fr manufacturing was a little higher in 1952 than the three preceding years)! Size f Operatin Size f peratin is measured by the ttal inputs f land, labr, and capital per farm. These inputs varied amng farm types (Table 6). Ttal land, labr, and capital inputs were highest fr intensive crp farms. This is anther reasn why farm inmes fr intensive crp farms were relatively high. Dairy, dairy crp, and general type farms were smallest in size. These farms averaged the lwest in farm receipts per farm. Bfficiency iii thp U_Qp f Capital and Labr Efficient use f capital means investing wisely in prductive assets. It means investing mre in thse assets which will yield high returns than in assets which have a lw prductive value. A high prductin efficiency als includes a balance in the amunt f labr used relative t land, machinery, and ther capital items. Returns per dllar investment in land, machinery, livestck, and peratin were derived fr the sample farms. Investment in peratin was cash perating expenses, including expenditures fr such items as irrigatin water, fertilizer, seeds, custm wrk, and supplies. Estimated returns n these classes f capital investments (land, machinery, etc.) were as fllws: Item Returns Per cent Land 6.2 Machinery 17.3 Livestck.4 Operatin 4. Returns n cash perating expenses f 4 per cent represent an amunt abve the riginal investment. This means, n the average, each dllar invested by the farmers in peratin returned $1.4. 1/ B. W. Cyle and R. K. Ganger. Oregn's Dairy Industry Oregn State Cllege, Extensin Bulletin 741, p

13 The per cent return figures indicate that the earning pwer f cash perating expenses and machinery was high in 1952 in the area. On the ther hand, the earning pwer f a livestck investment was almst nthing. The lw return n livestck was due t the unprfitability f beef cattle. Returns t labr were estimated jintly with returns t different classes f capital. Labr returns averaged $181 per man mnth fr the 66 farms in Operatr, family, and hired labr were mbined fr the determinatin f labr returns. Labr was wrth mre than $181 per mnth n farms with higher than average inmes, and less than $181 per mnth n farms with less than average farm inmes. Prductin efficiency indexes fr the different farm types were mputed n the basis f the estimated returns t different kinds f capital investments and t labr. The mputed prductin efficiency indexes were as fllws: Farm type Efficiency index Dairy 11 Dairy crp 16 General livestck 88 Field crp 14 Intensive crp 114 General crp 94 General 9 Average, all farms 1 An index f 1 means average efficiency in the use f labr and capital. An index f mre than 1 indicates better than average efficiency, and an index f less than 1 indicates less than average efficiency. 1/ The dairy, dairy crp, field crp, and intensive crp farms were better than average in prductin efficiency. General livestck, general crp, and general farms were belw average in prductin efficiency. The lw efficiency index fr general livestck farms reflects the effect f falling cattle prices in The unfavrable perating margin between the price f feeder cattle and price f slaughter animals caused feeder cattle enterprises t be unprfitable that year. General and general crp farms had lw efficiency indexes, prbably because f t much diversificatin. Disadvantages f the diversificatin exhibited n these farms were (1) insufficient size f individual farm enterprises and (2) lack f balance in the mbinatin f prductive assets. Mre specializatin (fewer and larger enterprises) wuld ntribute t a better balance in mbinatin f resurces. 12 1/ Indexes were mputed by btaining the rati f expected farm receipts and actual farm receipts. The expected farm receipts fr each farm type were btained by use f the fllwing estimatin equatin: Y=1. 868X , X2 X x4 x 5, where Y=farm receipts, X.---land 1 capital, X2= 2 machinery capital, X3=livestck capital, X4=man mnths labr, and X5= cash perating expenses.

14 The highest prductin efficiency was attained by intensive crp farms. As indicated earlier, intensive crp farms had sme advantages in specializatin, size f peratin, and in prices in Dairy and dairy crp farms ranked next t intensive crp farms in prductin efficiency. One reasn fr the high ranking f dairy farms was higher returns n dairy cattle investments than indicated previusly fr livestck. A separate analysis f the dairy farms indicated returns n the dairy cattle investment t be abut 3 per cent, as mpared with almst nthing fr livestck n all farms. This high return n dairy cattle was partly ffset by lw returns t labr n dairy and dairy crp farms. The estimated returns t labr n dairy and dairy crp farms were $9 per man mnth. Opprtunities t Increase Prductin Efficiency 13 Opprtunities t increase prductin efficiency differ amng farm types and amng individual farms within each f the types. On the basis f data in this study, the fllwing shw prmise f increasing prductin efficiency: (1) increase in degree f specializatin, (2) increase in size f peratins, (3) increase in the use f mmercial fertilizer, and (4) increase in milk prductin per w. Mre specializatin in prductin is a pssibility fr increasing prductin efficiency, particularly fr the general farms. Increase in size f peratins (ttal inputs f land, labr, and capital) usually will acmpany an increase in degree f specializatin because mre capital is needed t increase specializatin. Shrtage f capital fr farm develpment is a limitatin t increases in size and specializatin. atural variatins in sil prductivity limit the pssibilities f btaining crp yields n nn-rw crpland equal t yields n rw crpland. Increased use f mmercial fertilizers, hwever, des have pssibilities. early all farmers in the sample grwing rw crps did use mmercial fertilizer (ne did nt). Of the remaining farmers (thse wh did nt grw rw crps), nly half used mmercial fertilizer. This means abut ne-third f the farmers in the sample did nt use mmercial fertilizer. Yields f frage and grain crps uld be increased prfitably by the applicatin f fertilizer, particularly nitrgen. Milk prductin per w n dairy and dairy crp farms averages 6,6 punds f 4.5 per cent milk. Althugh this prductin differs but little frm the state average, there is nsiderable pprtunity t :raise the prductin level thrugh upgrading f dairy herds. Anther way is t increase size f dairy herds. It was pinted ut in the previus sectin that returns n the dairy investment were high while returns t labr n dairy farms were relatively lw. Increase in the size f dairy herds and prductin per w n these farms wuld ntribute t higher returns t labr. Other specific ways t increase prductin efficiency uld nt be determined frm the data at hand. Hwever, ne general remmendatin n capital investment can be made. Prductin efficiency is higher when farmers invest mre n thse capital assets which will yield high rates f return than n assets with lw earning pwer. Pssible returns n varius investment alternatives differ amng individual farms. Sme figuring by individual farmers n the mst effective use f capital they have t invest wuld pay.

15 Table 1. Average Acres and Per Cent f Ttal Crpland Used in Prductin f Different Crps Kind f crps Per farm, 66 sample farms Per cent ttal Acres crpland Farms grwing crp Acres per Per cent farm Frage Crps Alfalfa, fr harvest Pasture (irrigated) Other frage crpsil Ttal frage crps Grain Crps Wheat Small grains / Crn (grain and silage) Ttal grain crps Intensive Crps Sugar beets Ptates Other intensive crps / Ttal intensive crps Garden and idle 2. 2 TOTAL CROPLAD /1 Includes red clver, Ladin, white clver, sweet clver; hay r seed. /2 Includes ats and barley, and mbinatins f ats and barley with wheat. /3 Includes nins, sweet rn, carrts, rutabagas, strawberries, and lettuce.

16 Kind f livestck Table 2. umbers f Different Kinds f Livestck Per Farm Average number per farm in sample Farms with specified kind f livestck umber Per cent per farm Dairy ws Dairy heifers Beef ws Beef heifers Feeder cattle Hgs Hens and pullets Table 3. Capital Investment in Farm Prductin Item Average, 66 farms Range High farm Percentage f ttal and percentage range Lw Average, Range farm 66 farms High farm Lw farm Per cent Per cent Per cent Ttal $4,14 $115,964 $11, Land 24,826 61,6 4, Machinery and equipment... 7,353 33, Livestck 4,397 21, Buildings/1... 3,531 3, Building investment des nt include dwelling huse.

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18 Table 5. Livestck Summary by Types f Farms (Per Farm) Kind f livestck Dairy Dairycrp General livestck Field crp Intensive crp General crp General Dairy ws Dairy heifers Beef ws Beef heifers Feeder cattlell HgsZ Z1 Feeder cattle refers t ttal number fed per farm during the year. L2 Includes sws and ther hgs.

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