Masters Theses

Date of Award

3-1973

Degree Type

Thesis

Degree Name

Master of Science

Major

Agricultural Economics

Major Professor

Raymond Daniel

Committee Members

Bill Hicks, Ben McManus, Bill Trevena

Abstract

The objectives of this study were to determine all costs associated with the operation of organized feeder pig sales in Tennessee and to determine the influence of volume, ownership of sale facilities, and other factors on these costs.

The 1971 accounting data from 20 of the 21 organized feeder pig sales were used in this study. The 20 sales were placed in three size categories according to the total number of pigs handled in 1971. The sales handling 0-20,000 feeder pigs were classified as small; 20,000- 40,000 as medium; and 40,000 or more as large. Within each size category sales were divided on the basis of who owned the sale facility-privately owned, publicly owned, or association owned.

The initial costs of the sale facilities varied from $17,500 to $61,000 with information not available from the owners of the large private facilities. The total initial costs of the feeder pig sale facilities and equipment varied from $25,950 to $75,025.

Building investment per head of capacity ranged from $7.71 to $20,47 per head. Investment in office and barn equipment per head varied from $0,70 to $1,99 per head. The estimated average value of sale facilities per head of capacity ranged from $11.96 to $28.94 per head.

Total fixed costs ranged from $286.35 to $6,556,50 annually.

Labor and advertising were the largest and second largest operating expenses, respectively, of the organized feeder pig sales. Total average variable or operating costs ranged from $4,501.68 to $40,136022 annually with increased size of the sale generally indicating increased total variable costs.

The average commission received per head for all sales was $0.64. The average total costs ranged from $0.35 to $0o68 per head. All sales operating with a positive net revenue had total costs of $0o56 per head or less.

All sales operating in public facilities and medium sized sales operating in private facilities were found to be operating unprofitably on the average. Small sales operating in private facilities would have been unprofitable if they were forced to pay for all donated labor. Large sales operating in private facilities showed the greatest return on investment followed by large sales operating in association owned facilities.

Budgets were developed for hypothetical sales of two sizes– 3,000 and 5,000 head capacity. The amount of initial investment required, variable and fixed costs, and total and net revenue was projected for these sales. It was projected that the selling of all feeder pigs through the 3,000 head capacity sales would return an additional $190,000 annually to farmers in Tennessee because of the lowering of the average marketing charge by $0.30 per head. Savings possible from the selling of all feeder pigs through the 5,000 head capacity sales were projected to be more than $155,000 annually.

"Lack of volume" was cited as the greatest cause of problems in the attracting of buyers to the sales and in the management and operation of the sales.

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