Masters Theses

Date of Award

12-1972

Degree Type

Thesis

Degree Name

Master of Science

Major

Agricultural Economics

Major Professor

Luther H. Keller

Committee Members

Charles M. Cuskaden, Frank O. Leuthold

Abstract

The purpose of this study was to determine net returns that could be earned by labor and management on part-time farms in West Tennessee. Alternative part-time farm situations used in the study were chosen as representative of the Brown Soil and Delta Areas of Tennessee. Representative farms of 70, 150, and 225 acres each with labor supplies of 1030, 1446 and 1755 hours per year were used in the analysis. In addition to these base situations, two interest rate levels were used and options were considered for acquiring of additional acreage and/or disposing of part or all of the current acreage. No restriction was placed on the amount of capital available. No hired labor was permissable.

Crop and livestock production coefficients used in the study were developed for use in Regional Project S-67. The linear programming technique was used to estimate the combinations and quantities of enterprises, the resource needs, and the net returns on land, labor, and management in each representative farm situation. Returns on labor and management were then estimated by deducting charges for land and overhead.

For the situations considered, returns to labor and management ranged from $2,610 to $17,672. Income increased with increases in the size of the farm and amount of labor available and with the inclusion of the option to acquire additional land.

The production of feeder pigs seemed to fit the labor situation on part-time farms and was included in most of the optimum systems derived. The feeding of heifers and/or steers was included in some systems especially on the larger farms and in the situation with the largest labor supply. Under current farm programs cotton is a relatively profitable crop and in most cases the optimum system included cotton acreage to the limit of the base acreage. Corn, soybeans, and in some cases, wheat were also commonly included in the optimum enterprise combination. The production of hay for sale was a profitable alternative in some cases.

Increasing the interest charge from 6 percent on investment capital and 7 percent on operating capital to 10 percent on investment capital and 18 percent on operating capital had only minor effects on the optimum enterprise combination, but did reduce considerably the returns to labor and management in each case. Despite the labor restrictions, when the option to acquire additional land through purchase or lease was included considerable additional acreage was acquired in each case. With the lower interest rates land was acquired through purchase, while with the higher interest rate land was leased.

Net incomes resulting from the part-time farm situations studied were in many cases larger than incomes likely to be earned by the operators from off-farm sources. Under the conditions specified in this study it would appear that income potential from farming compares very favorably with most off-farm work alternatives. With the estimated magnitudes of part-time farm incomes, the incomes from off-farm work could be viewed as a supplement to the farm incomes, instead of vice versa, as is commonly assumed.

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