Masters Theses

Date of Award

3-1979

Degree Type

Thesis

Degree Name

Master of Science

Major

Agricultural Economics

Major Professor

Billy Trevena

Abstract

The overall objective of this study was to explore the possibilities for improving the net farm income positions of full-time limited resource farm operators in Upper East Tennessee. The improvement in income was based on the optimal employment of available resources to produce a unique enterprise mix which maximized income.

Forty full-time farmers with gross earnings of less than $10,000 in 1976 were interviewed. Five decision variables were used to group the survey farms into homogeneous limited resource farm groups. These variables were land-labor index, tobacco space index, dairy enterprise potential, net income observed for each farm, and potential net income. Resources of a farm were used in a linear program to maximize the incomes of each farm and the results averaged within the appropriate limited resource farm group.

Seven situations were analyzed which varied the assumptions and constraints. The analyses were divided into two categories: (a) those limiting enterprise alternatives to those that existed on a farm when surveyed, and (b) those allowing varying degrees of enterprise mobility. Each analysis incorporated either variable expenses into the objective function which represented a short-run solution, or variable and fixed expenses which represented a long-run solution. The results of these situations represented the income potential of limited resource farmers ranging from incorporation of static to dynamic conditions into the model.

The resource advantages of the different levels of resource base farmers tended to decline in relative importance as income generating labor available was fully utilized for all limited resource farm groups. The most limited resource group of farmers was observed to have a net income of $1,319 while the relatively least limited resource group of farmers had an income of $15,533. When feeder pigs were allowed to enter, incomes were allowed to be maximized the most to $7,208 and $22,846 for farms in Group 1 and Group 4, respectively. The major enterprises generating this income were feeder pigs, corn, pasture, and tobacco. Disallowing feeder pig production and allowing the substitution of hay and tobacco capacity was the next best alternative for the limited resource farm groups. This situation had the effect of doubling tobacco production over observed bench mark levels while leaving the other enterprise levels unaffected. The least dynamic program restricted enterprises allowed to those observed on a farm, allowed for no vegetable or feeder pig production on farms where these enterprises were not observed, allowed for no substitution of hay space for tobacco space, and limited the amount of tobacco quota leased-in to 1,575 pounds per farm. This program allowed the farm to increase their incomes by an average of 27% in the short- run to an average of $6,908 per farm.

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