Minimum capital requirements for specified income levels in the delta and brown soil areas of Tennessee

The purpose of this study was to determine minimum capital requirements necessary for a specified income level on a representative farm in West Tennessee. A representative farm was assumed to have soil capabilities and yields consistent with the Delta and Brown soil areas. To determine their effects on capital requirements, allowances were made for varying equity levels, wage rates, government programs, labor supplies, land values, income levels, enterprise combinations, and livestock prices. Enterprises considered were those crop and livestock activities assumed to be predominant in the area. Highly specialized activities such as poultry, dairy, hog finishing, vegetable crops, and orchards were not considered. Emphasis was placed on beef production and feeding systems. Crop and livestock production coefficients used in the study were developed for Regional Project S-67. The linear programming technique was used to minimize capital and to determine the optimum farm organization and farm size necessary for the specified return. Capital requirements ranged from $24,671 to $352,544 for the situations analyzed. Farm size ranged from 40 acres to over 971 acres. The optimum farm organization generally included feeder pig production, cotton, and corn on relatively small farms. When beef production was forced into the solution, minimum capital requirements and farm size increased significantly. The other variations had assorted effects on minimum capital requirements. The change to lower livestock prices had a pronounced effect on optimum organization. Land and capital requirements were much higher and income resulted mainly from cotton production. The situation with a higher income target, $10,000, required considerably more capital and land. A situation was also considered with a two man labor supply. Results indicated that it would be preferred to use only seasonal labor when minimizing capital under the assumed conditions. Various results may be viewed as possible avenues toward improving income while minimizing capital. However, beef production appears to be a poor choice. Beef's necessity for large acreages of forage production make abundant capital a requirement. Production of feeder pigs would be the first choice from among livestock alternatives. When considering cash crops, cotton production was preferred under the conditions specified for the study.