• TABLE OF CONTENTS
HIDE
 Copyright
 Title Page
 Table of Contents
 Introduction
 Organization of farms
 Receipts, expenses and net returns...
 Factors affecting costs and returns...






Group Title: Agricultural economics mimeo report - Department of Agricultural Economics, University of Florida - EC64-6
Title: Analysis of factors affecting costs and returns in producing milk by size of farm in three areas of Florida
CITATION PAGE IMAGE ZOOMABLE
Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00071978/00001
 Material Information
Title: Analysis of factors affecting costs and returns in producing milk by size of farm in three areas of Florida
Physical Description: 58 l. : illus., map. ; 28 cm.
Language: English
Creator: Greene, R. E. L ( Robert Edward Lee ), 1910-
Bennett, Bobby Ray ( joint author )
Publisher: Dept. of Agricultural Economics, Florida Agricultural Experiment Stations
Place of Publication: Gainesville, Fla.
Publication Date: 1963
 Subjects
Subject: Dairy farming -- Economic aspects -- Florida   ( lcsh )
Genre: non-fiction   ( marcgt )
 Notes
General Note: Cover title.
General Note: "Much of the data in this manuscript was originally in a master's thesis presented by Bobby Ray Bennett to the ... University of Florida."
Funding: Agricultural economics mimeo report - Department of Agricultural Economics, University of Florida - EC64-6
Statement of Responsibility: by R.E.L. Green sic and Bobby Ray Bennett.
 Record Information
Bibliographic ID: UF00071978
Volume ID: VID00001
Source Institution: Marston Science Library, George A. Smathers Libraries, University of Florida
Holding Location: Florida Agricultural Experiment Station, Florida Cooperative Extension Service, Florida Department of Agriculture and Consumer Services, and the Engineering and Industrial Experiment Station; Institute for Food and Agricultural Services (IFAS), University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: oclc - 00455097
lccn - 68065943

Table of Contents
    Copyright
        Copyright
    Title Page
        Title Page
    Table of Contents
        Table of Contents
    Introduction
        Page 1
        Purpose of study
            Page 1
            Page 2
        Method of study
            Page 3
            Page 4
    Organization of farms
        Page 5
        Acres operated and land use
            Page 5
        Distribution of operators' capital
            Page 6
        Number and value of livestock
            Page 7
            Page 8
        Amount of milk sold
            Page 9
            Page 10
        Man equivalent of labor and labor efficiency
            Page 11
            Page 12
    Receipts, expenses and net returns in producing milk
        Page 13
        Receipts
            Page 13
            Page 14
        Expenses
            Page 15
            Page 16
            Page 17
            Page 18
            Page 19
            Page 20
        Returns
            Page 21
            Page 22
    Factors affecting costs and returns in producing milk
        Page 23
        Net cost per gallon of milk sold
            Page 23
            Page 24
Full Text





HISTORIC NOTE


The publications in this collection do
not reflect current scientific knowledge
or recommendations. These texts
represent the historic publishing
record of the Institute for Food and
Agricultural Sciences and should be
used only to trace the historic work of
the Institute and its staff. Current IFAS
research may be found on the
Electronic Data Information Source
(EDIS)

site maintained by the Florida
Cooperative Extension Service.






Copyright 2005, Board of Trustees, University
of Florida




SNovember, 1963


Agricultural Economics
Mimeo Report EC 64-6


Analysis Of Factors Affecting Costs Ahd returns

I Producing jMilk ey Size Of 7arm

J Chree Areas Of Rlorida j


R. E. L. Green and Bobby Ray Bennett
Agricultural Economist and
Former Graduate Assistant


Department of Agricultural Economics
Florida Agricultural Experiment Stations
Gainesville, Florida















TABLE OF CONTENTS


Page


INTRODUCTION. *. . .. . . .

Purpose of Study . . . ....
Method of Study, . . . . .

ORGANIZATION OF FARMS ,. ., . . ...

Acres Operated and Land Use . . .
Distribution of Operators' Capital. . ....
Number and Value of Livestock,. .. . .
Amount of Milk Sold, . . . .
Man Equivalent of Labor and Labor Efficiency . ...

RECEIPTS, EXPENSES AND NET RETURNS IN PRODUCING MILK. . .


Receipts .
Expenses . .
Returns. . #


0 0 0 0


FACTORS AFFECTING COSTS AND RETURNS IN PRODUCING MILK . .


Net Cost per Gallon of
Milk Sold per Cow, .
Labor Efficiency .
Capital Efficiency .
Feeding Efficiency .
Herd Efficiency. .


ACKNOWLEDGEMENTS. .


Milk Sold


4. . 0 0 0


S S S S S S
. S S S S S *
. S S S
S S S S S S S S
. S S S S S 5 5


S 0 0 0 S # 0 a 0 0 .


*. # 0 *


The first running of this report was in November 1963.
It has been discovered that an error was made in calculating
the amounts in the per cwt. column in tables 11, 12, 13, 14
and 15 in the original report. The data in the above
tables have been changed to show the correct figures in
this report.


SUMMARY . . . . . . .


APPENDIX, . . .. . .. .












INTRODUCTION


In 1959 and 1960 studies were made of costs and returns on whole-
sale dairy farms in three areas of Florida (Fig. 1). Two studies were
made in 1959 which covered farms in Northeast Florida and Central Flor-
ida. The data were for the 1958 calendar year. The study in 1960 in-
cluded dairy farms in the Tampa Bay area and covered operations during
the 1959 calendar year. Each study was made by members of the Depart-
ment of Agricultural Economics in cooperation with the Florida Milk
Commission.


Purpose of Study

The original studies were summarized to show costs and returns for
wholesale dairy farms in each area by size of farm and for all farms.1,2,3
No attempt was made to combine records for all areas or to study factors
affecting costs and returns. The purpose of this study was to combine
records for each of the size groups to show averages for small, medium
and large farms for the three areas. The data were also analyzed to show
factors affecting costs and returns. In the study of relationships,
separate analyses were made for farms in each size group rather than
grouping all farms together. Because of the wide variation in size of
dairy farms in Florida, it was felt that a more accurate study of relation-
ships would be possible if part of the effects of variation in size were
eliminated.

Although the studies in Northeast and Central Florida covered the 1958
calendar year and the Tampa Bay area study 1959, it was felt the records
could be combined since there was little or no variation in the price of


R. E. L. Greene, John Warrington and D. L. Brooke, Summary of
Costs and Returns for Wholesale Dairy Farms, Northeast Florida, 1958
(Gainesville, Florida: Florida Agricultural Experiment Stations,
Agricultural Economics Mimeo. Report 60-5, October 1959).

2R. E. L. Greene, John Warrington and D. L. Brooke, Summary of
Costs and Returns for Wholesale Dairy Farms, Central Florida, 1958
(Gainesville, Florida: Florida Agricultural Experiment Stations,
Agricultural Economics Mimeo. Report 60-2, October 1959).

R. E. L. Greene, R. H. Walker and D. L. Brooke, Summary of Costs
and Returns for Wholesale Dairy Farms, Tampa Bay Milk Marketing Area,
1959 (Gainesville, Florida: Florida Agricultural Experiment Stations,
Agricultural Economics Mimeo. Report 61-5, November 1960).












INTRODUCTION


In 1959 and 1960 studies were made of costs and returns on whole-
sale dairy farms in three areas of Florida (Fig. 1). Two studies were
made in 1959 which covered farms in Northeast Florida and Central Flor-
ida. The data were for the 1958 calendar year. The study in 1960 in-
cluded dairy farms in the Tampa Bay area and covered operations during
the 1959 calendar year. Each study was made by members of the Depart-
ment of Agricultural Economics in cooperation with the Florida Milk
Commission.


Purpose of Study

The original studies were summarized to show costs and returns for
wholesale dairy farms in each area by size of farm and for all farms.1,2,3
No attempt was made to combine records for all areas or to study factors
affecting costs and returns. The purpose of this study was to combine
records for each of the size groups to show averages for small, medium
and large farms for the three areas. The data were also analyzed to show
factors affecting costs and returns. In the study of relationships,
separate analyses were made for farms in each size group rather than
grouping all farms together. Because of the wide variation in size of
dairy farms in Florida, it was felt that a more accurate study of relation-
ships would be possible if part of the effects of variation in size were
eliminated.

Although the studies in Northeast and Central Florida covered the 1958
calendar year and the Tampa Bay area study 1959, it was felt the records
could be combined since there was little or no variation in the price of


R. E. L. Greene, John Warrington and D. L. Brooke, Summary of
Costs and Returns for Wholesale Dairy Farms, Northeast Florida, 1958
(Gainesville, Florida: Florida Agricultural Experiment Stations,
Agricultural Economics Mimeo. Report 60-5, October 1959).

2R. E. L. Greene, John Warrington and D. L. Brooke, Summary of
Costs and Returns for Wholesale Dairy Farms, Central Florida, 1958
(Gainesville, Florida: Florida Agricultural Experiment Stations,
Agricultural Economics Mimeo. Report 60-2, October 1959).

R. E. L. Greene, R. H. Walker and D. L. Brooke, Summary of Costs
and Returns for Wholesale Dairy Farms, Tampa Bay Milk Marketing Area,
1959 (Gainesville, Florida: Florida Agricultural Experiment Stations,
Agricultural Economics Mimeo. Report 61-5, November 1960).











Northeast
_Florida


Central
Florida


Tampa Bay
Area


Fig. l.--Location of dairy areas studied.











milk or in items of cost in the two years. The price of Class I milk was
the same in both years. Data on wage rates for Florida showed no change
between 1958 and 1959 (Table 1). Prices of 20 percent mixed dairy feed
and hay were 0.5 and 1.9 percent, respectively, lower in 1959 than in 1958.
The cost of motor supplies and farm machinery increased slightly. The
change in the level of costs did not appear to be enough to change the
relative profitableness of the farms in the two years.


Method of Study

Selection of dairies to be studied.--As an aid in selecting samples
for the original studies, the Florida Milk Commission furnished the names
of the milk producers in each of the three areas and their base gallons per
day as earned during the 1959 base setting period. These data were used
to divide farms into three size groups -- small, less than 225 base gallons
per day; medium, 225-449 gallons; and large 450 gallons or more per day.
Producer-distributors were eliminated from the list of producers except
those whose dairy farms were completely separate from the distribution
portion of the businesses. Because of the extreme variation in size of
dairy farms, a disproportionate, stratified random sample was taken which
took into consideration both number and variation in size of farms in
each group. Data were obtained for 31 of 106 wholesale dairies in North-
east Florida, 34 of 118 in Central Florida and 50 of 214 dairies in-the
Tampa Bay area (Table 2). From a total of 438 dairies in the three areas,
115 or 26 percent were surveyed. Records were obtained for 21 percent of
the small and medium size farms, respectively. In the large dairy group
41 percent of the farms were surveyed.

TABLE l.--Average Farm Wage Rates and Prices of Selected Feeds, Florida,
1958 and 1959a

Item : Unit : 1958 95:Chane 195 to 1959
: : : ; Amount: Percent

Wage rate:
Without board or room Per day $ 6.10 $ 6.10 $ 0 0
Price paid for feed:
Mixed dairy feed--20
percent protein cwt. 4.13 4.11 .02 0.5
Alfalfa hay ton 66.83 66.17 .66 1.0
All other hay ton 64.25 63.00 -1.25 1.9
Dried citrus pulp cwt. 2.87 2.34 .53 -18.6

Aage rates from Farm Labor Report, USDA. Feed prices from Farm
Price Reports issued by Florida Crop and Livestock.Reporting Service.
The annual figure for each feed is a simple average of the price reported
each month. Price of citrus pulp is the price delivered to farms in
truck lots in the Miami area.








TABLE 2.--Number
and Number and


of Wholesale Dairy Farms in Three Areas of Florida
Percent of Farms for Which Records Were Obtained,
Florida, 1958 and 1959


Area : Base gallons per day All farms
: Less than 225 : 225 to 449 : 450 or more :

Number of Wholesale Dairy Farms

Northeast 32 44 30 106
Central 53 41 24 118
Tampa Bay 91 66 57 214
Total 176 151 111 438

Number of Dairy Farms for Which
Records Were Obtained

Northeast 8 10 13 31
Central 13 9 12 34
Tampa Bay 16 13 21 50
Total 37 32 46 115

Percent Surveyed 21 21 41 26


Summarizing and presenting data,--Data on income and expenses were
taken from certified accountants' records, or from copies of the operator's
income tax return for the year in question. Information on gallons of milk
sold, prices received and percent butterfat was taken from statements re-
ceived by the farmers for each pay period. If these statements were not
available, the data were obtained directly from dairy plants that purchased
the milk of cooperating farmers. In all cases except three, receipts from
the dairy enterprise were the only source of income on the farms surveyed.
In these cases, necessary information was obtained to separate all data
relating to the dairy enterprise from the rest of the farm business. The
data presented in this report relates only to the dairy part of the farm
business.

In calculating the cost of producing milk, all expenses were charged
directly to the dairy enterprise. No attempt was made to separate the cost
of replacements being raised from that of the milking herd. However, the
increase in value of young stock was considered as a credit to the dairy
enterprise and thus tended to reduce the amount of net depreciation on
livestock. Expenses for labor, seed, fertilizer and other costs for pro-
ducing harvested feeds or pastures were charged directly to the dairy
enterprise. This method tended to charge these items at their costs of
production.

The production of milk on each farm was adjusted to a 4 percent fat
corrected (F.C.M.) basis to correct production on individual farms for




-5-


variations in percent butterfat of milk produced.4 No credit was allowed
for milk used on the farm or in the home.

In calculating averages for all farms in each of the original studies,
the data in the three size groups were weighted based on the proportion
that the number of farms surveyed in a size group was of all farms in that
group. This was necessary because a disproportionate rate of sampling was
used. In calculating averages for all small, medium and large farms in
this study, weighting was not necessary since the proportion of farms
surveyed in a given size group was about the same in each area. Averages
were calculated based on the number of records in a size group. In the
study of relationships, weighting was not necessary since small, medium
and large farms were not grouped together.

Tabular analysis was used as the method of studying relationships. In
each case where costs or returns are shown per unit of milk sold, the data
are per unit of 4 percent F.C.M. milk. In the first part of this report,
averages are presented for small, medium and large farms on acres operated,
land use, capital invested, income, expenses, returns, etc. Data relating
to factors normally expected to be associated with costs and returns are
presented in the second part of the report.


ORGANIZATION OF FARMS


Acres Operated and Land Use

On the 37 small dairy farms the average producer operated 169 acres
of which 30, or 18 percent were rented. The 32 operators of medium size
farms operated 340 acres, but rented 93 acres, or 27 percent of the total
land operated. This was a significantly larger percentage of land rented
than for operators of either small or large farms. Acres operated on large
dairy farms averaged 646 with 107 rented (Table 3).

On small and medium size farms permanent pasture accounted for about
50 percent of the total acres operated. Sixty percent of the land on
large farms was in permanent pasture. Permanent pasture averaged 1.13,
.99 and 1.08 acres per cow in the three size groups, respectively.
Operators of small farms used an additional .33 acre of temporary pasture
per cow in contrast to .07 on medium and .08 on large farms. Forage
crops harvested as hay, silage or cut green averaged about .3 acres per
cow and varied very little between size groups. Acres operated per
cow decreased as the size of the dairy enterprises increased. Averages
were 2.13 acres on small farms, 1.94 on medium farms and 1.74 on large
farms.


Four percent fat corrected milk was calculated as follows: (.4 x
pounds of milk) plus (15 x pounds of butterfat). If on Farms A and B,
the average production per cow was 800 gallons per year and the average
butterfat tests4.3 and 3.9 percent, respectively, the production per cow
in terms of 4 percent F.C.M. milk would be 836 gallons on Farm A and 788
gallons on Farm B.




-5-


variations in percent butterfat of milk produced.4 No credit was allowed
for milk used on the farm or in the home.

In calculating averages for all farms in each of the original studies,
the data in the three size groups were weighted based on the proportion
that the number of farms surveyed in a size group was of all farms in that
group. This was necessary because a disproportionate rate of sampling was
used. In calculating averages for all small, medium and large farms in
this study, weighting was not necessary since the proportion of farms
surveyed in a given size group was about the same in each area. Averages
were calculated based on the number of records in a size group. In the
study of relationships, weighting was not necessary since small, medium
and large farms were not grouped together.

Tabular analysis was used as the method of studying relationships. In
each case where costs or returns are shown per unit of milk sold, the data
are per unit of 4 percent F.C.M. milk. In the first part of this report,
averages are presented for small, medium and large farms on acres operated,
land use, capital invested, income, expenses, returns, etc. Data relating
to factors normally expected to be associated with costs and returns are
presented in the second part of the report.


ORGANIZATION OF FARMS


Acres Operated and Land Use

On the 37 small dairy farms the average producer operated 169 acres
of which 30, or 18 percent were rented. The 32 operators of medium size
farms operated 340 acres, but rented 93 acres, or 27 percent of the total
land operated. This was a significantly larger percentage of land rented
than for operators of either small or large farms. Acres operated on large
dairy farms averaged 646 with 107 rented (Table 3).

On small and medium size farms permanent pasture accounted for about
50 percent of the total acres operated. Sixty percent of the land on
large farms was in permanent pasture. Permanent pasture averaged 1.13,
.99 and 1.08 acres per cow in the three size groups, respectively.
Operators of small farms used an additional .33 acre of temporary pasture
per cow in contrast to .07 on medium and .08 on large farms. Forage
crops harvested as hay, silage or cut green averaged about .3 acres per
cow and varied very little between size groups. Acres operated per
cow decreased as the size of the dairy enterprises increased. Averages
were 2.13 acres on small farms, 1.94 on medium farms and 1.74 on large
farms.


Four percent fat corrected milk was calculated as follows: (.4 x
pounds of milk) plus (15 x pounds of butterfat). If on Farms A and B,
the average production per cow was 800 gallons per year and the average
butterfat tests4.3 and 3.9 percent, respectively, the production per cow
in terms of 4 percent F.C.M. milk would be 836 gallons on Farm A and 788
gallons on Farm B.








TABLE 3.--Acres Operated and Use of Land, Small, Medium and Large Whole-
sale Dairy Farms in Three Areas of Florida

: Acres per farm Acres per cow
Item : Small: Medium: Large: Small :Medium :Large
: farms: faims : farms: farms :farms :farms

Acres operated:
Owned 139 247 539 1.75 1.41 1.45
Rented 30 93 107 .38 .53 .29
Total 169 340 646 2.13 1.94 1.74

Use of land:
Cropland and open pasture:
Forage crops harvested as:
Hay 7 23 38 .09 .13 .10
Silage 8 18 43 .10 .10 .12
Cut green 3 9 24 .04 .05 .07
Other harvested crops 6 -- -- .07 -
Temporary pasture 26 13 31 .33 .07 .08
Permanent pasture:
Improved 86 154 338 1.08 .88 .91
Other 4 18 62 .05 .11 .17
Total 140 235 536 1.76 1.34 1.45
Less acres doubled-cropped 24 60 96 .30 .34 .26
Total land used for crops
and open pasture 116 175 440 1.46 1.00 1.19
Woodland pastured 33 151 125 .41 .86 .33
Other land 20 14 81 .26 .08 .22
Total operated i-169 340 646 2.13 1.94 1.74


Distribution of Operators' Capital


Operators fiSm which records were obtained were
estimates of the value of capital used in the dairy
was valued at what the dairy considered it to be wol
purposes. Other assets were valued at their market
depreciation. The value of capital shown is that fi
An estimate was not obtained of the value of rented
was included in rent paid.


asked to give their
business. Real estate
rth for agricultural
value or at cost less
furnished by the operator.
capital since its cost


The average capital investment amounted to $69,881 on small farms,
$133,025 on medium farmsand $316,174 on large farms (Table 4). Investment
per cow ranged from $759 on medium farms to $881 on small farms. On small
farms $39,512 was invested in land and buildings or 56.5 percent of total
capital. Operators of medium size dairy farms had an average investment of
$67,788 in land and buildings. This was $387 per cow or 50.9 percent of
total capital. On large dairy farms the average investment was $173,765
in land and buildings or $469 per cow. Only $28 per cow was invested in
dairy equipment on large size farms compared to $44 on small farms and
$30 on medium farms.








TABLE 4.--Distribution of Operators' Capital, Small, Medium and Large Wholesale
Dairy Farms in Three Areas of Florida

: Average per farm : Average per cow : Percent of total
Item : Small : Medium : Large : Small:Medium:Large:Small:Medium:Large
: farms : farms : farms : farms: farms:farms:farms: farms:farms

Land and improve-
ments $31,829 $ 57,144 $144,401 $401 $327 $390 45.5 42.9 45.7
Dairy buildings 5,870 7,237 17,862 74 41 48 8.4 5.4 5.7
Other buildings 18133 3,407 11,502 23 19 31 2.6 2.6 3.6
Total real
estate $39,512 $ 67,738 $173,765 498 $387 $469 56.5 50.9 55.0
Livestock 23,322 53,131 117,654 294 303 317 33.4 39.9 37.2
Dairy equipment 3,461 5,279 10,194 44 30 28 5.0 4.0 3.2
Trucks and auto-
mobiles 1,055 2,812 5,829 13 16 16 1.5 2.1 1.9
Other machinery
and equipment 2,271 3,548 7,970 29 20 21 3.2 2.7 2.5
Feed and supplies 260 467 762 3 3 2 .4 .4 .2
Total $69,881 $133,025 $316,174 $881 ;$759 $853 100.0 100.0 100.0


Land and buildings owned by the operator were valued at $285 per acre
on small farms, $274 on medium farms and $322 per acre on large farms. The
value of land and improvements were $229 per acre on small farms, $231 on
medium farms and $268 on large farms.


Number and Value of Livestock

In obtaining information relating to the number of cows in the dairy
herd, data were obtained on the number of cows at the beginning and end of
the year and also the number added to and removed from the herd. Only in
the Tampa Area were the number of cows added and removed obtained by months
to make is possible to calculate an average number for the year based on a
13-month inventory. In this report annual averages for all livestock were
based on an average of the number on hand at the beginning and end of the
year.

Average number, value, purchase and sale price per head.--On small
dairy farms there was an average of 79 cows in the herds valued at an
average of $250 per head (Table 5). Herds on medium size dairies averaged
175 cows value at $268 per cow. There were 371 cows on the average large
dairy farm that were valued at $284 per head. Herd bulls ranged in value
from $246 on large farms to $326 on small farms. Small farms had 1.6 herd
bulls per farm, medium farms 3.3 and large farms 6.7. Many of the cows
were bred artificially. The average number of bulls per farm was less than
would have been needed if all of the cows had been bred naturally.








TABLE 5.--Average Number and Value per Head for Various Classes of Live-
stock, Small, Medium and Large Wholesale Dairy Farms
in Three Areas of Florida

: Number of head :Value or amount per head
Item : Small : Medium : Large: Small : Medium : Large
: farms : farms : farms: farms : farms : farms

Average for beginning
and end of year:
Cows 79.4 175.3 370.7 $250 $268 $284
Herd bulls 1.6 3.3 6.7 326 292 246
Bulls to be raised .5 .2 .6 86 147 117
Heifers:
Over 1 year 13.2 21.8 41.3 142 152 170
Under 1 year 13.6 23.0 43.1 68 70 78

Replacements raised 8.2 14.5 27.2 216 235 240

Purchases:
Cows and springersa 20.0 34.2 106.4 $269 $229 $259
Herd bulls .3 .7 2.2 234 213 172
Bulls to be raised .1 -- .1 52 -- 92
Heifers:
Over 1 year .4 .2 2.1 112 62 189
Under 1 year 1.1 .6 1.7 44 50 73

Sales:
Cows 17.8 39.7 88.5 $143 $160 $156
Herd bulls .5 1.1 2.0 206 205 189
Bulls to be raised .1 b .1 56 c 42
Heifers:
Over 1 year .2 .2 1.7 71 96 200
Under I year b .6 .3 c 66 68

Springers are bred heifers about ready tofreshen.
b
Less than .05.
cToo few for an average.


Twenty cows and springers were purchased on small farms at an average
price of $269 each. Producers on medium size farms purchased 34 cows and
springers at a cost of $229 each, while on large farms 106 head were pur-
chased at $259 each. The average sale price of cows removed from the herds
was $143 on small farms, $160 on medium and $156 on large farms. Heifers
that freshened and were added to the herds were valued at $216 each on small
farms, $235 on medium farms and $240 on large farms.





-9-


Number of ears in herd.--For herds on small farms the average cow
stayed in the herd 4.1 years (Table 6). This was a 24.5 percent turnover.
In herds on medium size farms the rate of turnover was 25.8 percent or
3.9 years in the herd. The herds on large farms had the highest rate of
turnover -- 26.5 percent or 3.8 years.


TABLE 6.--Average Number of Years in Milking Herd and Related Factors,
Small, Medium and Large Wholesale Dairy Farms in Three
Areas of Florida

Item : Small : Medium : Large
: farms : farms farms

Number Number Number

On hand at the beginning of the year 75.0 173.6 352.7

Additions:
Purchased 20.0 34.2 106.9
Replacements raised 8.2 14.5 27.2
Total 28.2 48.7 134.1

Subtractions:
Sold 17.8 39.7 88.5
Died 1.7 5.6 9.6
Total 19.5 45.3 98.1

On hand at the end of the year 83.7 177.0 388.7

Average size of herd 79.4 175.3 370.7

Percent turnover 24.5 25.8 26.5

Average years in herd 4.1 3.9 3.8


For each size of farm, the average number of cows in the herds in-
creased between the beginning and ending inventory. The increase was 11.6
percent on small farms, 2.0 percent on medium farms and 10.2 percent on
large farms. Twenty-nine percent of the herd replacements on small farms
were raised, 30 percent on medium size farms and 20 percent on large farms.
Stated another way, 80 percent of the herd replacements on large farms
were purchased compared to 70 and 71 percent, respectively, for medium and
small dairies.


Amount of Milk Sold

Table 7 shows the total number of gallons of milk sold and the amount
sold daily on farms in each size group. Sales averaged 147 gallons per day
on small farms, 343 gallons on medium and 787 gallons on large farms.





-10-


Butterfat content ranged from a low of 4.14 percent on large farms to a
high of 4.22 on medium farms. On a 4 percent F.C.M. milk basis, 693
gallons or 5,961 pounds of milk were sold per cow annually on small farms,
738 gallons or 6,346 pounds on medium farms and 791 gallons or 6,806 pounds
per cow on large farms.

The amount and proportion of milk sold in various classes is shown
in Table 8. Very little difference existed between size groups as to the
percent of milk sold as Class I. However, on medium and large dairies a
slightly higher percentage of total production was in Class III and "other"
than was true for small farms.


TABLE 7.--Milk Sold per Farm, and Related Factors, Small, Medium and
Large Wholesale Dairy Farms in Three Areas of Florida

tem : Small : Medium : Large
: farms : farms : farms

Amount of milk sold per farm:
Annually:
Gallons 53,716 125,170 287,317
Pounds 461,957 1,076,466 2,470,923

Daily:
Gallons 147 343 787
Pounds 1,265 2,949 6,770

Average percent butterfat 4.16 4.22 4.14

Amount of 4 percent F.C.M. milk sold:
Per farm annually:
Gallons 55,038 129,344 293,365
Pounds 473,326 1,112,363 2,522,936

Pound cow annually:
Gallons 693 738 791
Pounds 5,961 6,346 6,806


Seasonal distribution of milk sales.--One problem of dairies pro-
ducing milk mainly for fluid consumption is that of maintaining produc-
tion in line with Class I needs. Records were obtainedof milk sales by
months. These data showed the seasonal distribution of milk sales. In
each size group gallons of milk sold daily were at the highest level during
October, November and December (Table 9). During this period, sales on
small farms averaged 165 gallons daily, as compared to the annual dairy
average of 147 gallons. Medium size farms sold an average of 360 gallons
daily as compared to an annual daily average of 343 gallons. Sales on
large farms averaged 846 gallons of milk daily in contrast to an annual
daily average of 787 gallons. The lowest period of sales for all three
groups was the summer months of July, August and September. There were





-11-


TABLE 8.--Amount and Percent of Milk in Various Classes, Small, Medium
and Large Wholesale Dairy Farms in Three Areas of Florida

Class : Small farms Medium farms : Large farms

Gallons of Milk Sold

Class I 47,431 109,493 254,348
Class II 4,673 8,822 17,803
Class III 1,397 5,947 11,512
Other 215 908 3,653
Total 53,716 125,170 287,316

Percent of Total

Class I 88.3 87.5 88.5
Class II 8.7 7.0 6.2
Class III 2.6 4.8 4.0
Other .4 .7 1.3
Total 100.0 100.0 100.0


several factors which contributed to the seasonal pattern of milk sales.
The milk base setting period was during the fall months and this stimu-
lated production as a result of an effort of producers to qualify for
higher bases. The demand for milk in the state is less during the summer
months. Producers decreased the number of cows milked in order to hold
production more in line with the amount needed for fluid sales.

In the discussion above, it was pointed out that the lowest quantity
of milk sold by all three groups was during July, August and September.
The percentage of the total quantity of milk sold in Class I was higher
for this same period of time. The lowest percentage of total milk sold
in Class I was during April, May and June for all three groups.


Man Equivalent of Labor and Labor Efficiency

To compare the amounts of labor used on farms, man equivalents were
calculated. This figure was obtained by dividing the total weeks of
family, hired and operator's labor by 52. The resulting figure repre-
sented the average number of full time men working for the year. There
were 2.44 man equivalents of labor used on the average small farm, 4.86
on medium and 8.99 on large farms (Table 10).

One measure of labor efficiency is the number of cows cared for by
one man. Cows per manwere caluclated by dividing the average number of
cows in a herd for the year by the number of man equivalents of labor
used. There was an average of 32.5 cows per man on small farms, 36.1
on medium farms and 41.2 cows per man on large farms. Another measure




-12-


TABLE 9.--Seasonal Distribution of Milk Sales and Variation in Percent of


Total Sales as


Class I Milk, Small, Medium and
in Three Areas of Florida


Large Wholesale Dairy Farms


: Gallons of milk :Percent of total sales
Month : sold per day : as Class I milk
Small : Medium : Large : Small : Medium : Large
farms : farfarm: farms : farms : farms : farms

January 140 358 803 86 89 91
February 144 363 818 87 88 91
March 142 360 825 86 85 88

Average 142 360 815 86 87 90

April 150 349 816 80 84 84
May 149 339 792 82 87 84
June 141 326 741 78 83 83

Average 147 338 783 80 85 84

July 130 304 689 83 86 87
August 132 305 691 89 89 90
September 142 335 734 95 95 94

Average 134 314 705 89 90 90

October 165 351 807 90 91 93
November 165 363 851 85 85 90
December 165 364 880 88 88 88

Average 165 360 846 88 88 90
Annual average 147 343 787 86 88 88


TABLE 10.--Man Equivalents of Labor and Selected Measures of Labor
Efficiency, Small, Medium and Large Wholesale Dairy Farms in Three
Areas of Florida

Item Small : Medium : Large
: farms : farms : farms

Man equivalent of labor 2.44 4.86 8.99

Cows per man 32.5 36.1 41.2

Gallons of 4 percent F.C.M. milk
sold per man 22,519 26,626 32,617

Acres operated per man 69.3 70.1 71.8





-13-


of labor efficiency is in terms of milk sold annually per man. On small
farms 22,519 gallons of 4 percent F.C.M. milk were sold per year per man
compared to 26,626 gallons on medium size farms and 32,617 gallons on
large dairy farms. Gallons of milk sold per man wesel8 percent more on
medium farms than on small farms and 23 percent more on large farms than
on medium farms.

Total acres operated were divided by the number of man equivalents
to get acres operated per man. There was very little difference in acres
operated per man between the various size groups.


RECEIPTS, EXPENSES AND NET RETURNS IN PRODUCING MILK


The data on receipts, expenses and net returns are presented as
averages per farm and per cow and per gallon and per hundredweight of
4 percent F.C.M. milk sold. All operators did not have the same classi-
fication of items of receipts and expenses. What was charged to dairy
supplies on one dairy, for example, may have been included in another
classification of expenses on another dairy. In taking the original
record a special effort was made to get the data in as uniform classifi-
cation as possible. A difference in classification affected only averages
for individual items but totals for receipts, expenses and net returns
remained the same. A brief explanation and discussion is given of
various items included in receipts and expenses.


Receipts

Milk sales.--The value of the milk sold annually per cow was $395
on small farms, $425 on medium farms and $460 on large farms (Table 11).
The price received per gallon of 4 percent F.C.M. milk sold varied
slightly by size of farm. Operators received 56.99 cents per gallon on
small farms, 57.56 cents on medium farms and 58.15 cents on the large
farms.

Other income.--Other income included receipts from the sale of veal
calves, bags, manure, appreciation in the dairy herd and certain miscella-
neous income such as soil conservation payments, gas tax refunds, etc.
In this study, no credit was given for manure that was not sold or for
milk used by the operator, hired labor or for milk fed calves on the
farm.

Receipts from bags and manure sold averaged about $2 per cow in
each size group and receipts from veal calves about $2 to $3 per cow.
The total for non-milk receipts was $10 per cow on small farms, $6 on
medium farms and $5 on large farms. On the average there was a slight
appreciation in the dairy herd on small and medium farms.





-13-


of labor efficiency is in terms of milk sold annually per man. On small
farms 22,519 gallons of 4 percent F.C.M. milk were sold per year per man
compared to 26,626 gallons on medium size farms and 32,617 gallons on
large dairy farms. Gallons of milk sold per man wesel8 percent more on
medium farms than on small farms and 23 percent more on large farms than
on medium farms.

Total acres operated were divided by the number of man equivalents
to get acres operated per man. There was very little difference in acres
operated per man between the various size groups.


RECEIPTS, EXPENSES AND NET RETURNS IN PRODUCING MILK


The data on receipts, expenses and net returns are presented as
averages per farm and per cow and per gallon and per hundredweight of
4 percent F.C.M. milk sold. All operators did not have the same classi-
fication of items of receipts and expenses. What was charged to dairy
supplies on one dairy, for example, may have been included in another
classification of expenses on another dairy. In taking the original
record a special effort was made to get the data in as uniform classifi-
cation as possible. A difference in classification affected only averages
for individual items but totals for receipts, expenses and net returns
remained the same. A brief explanation and discussion is given of
various items included in receipts and expenses.


Receipts

Milk sales.--The value of the milk sold annually per cow was $395
on small farms, $425 on medium farms and $460 on large farms (Table 11).
The price received per gallon of 4 percent F.C.M. milk sold varied
slightly by size of farm. Operators received 56.99 cents per gallon on
small farms, 57.56 cents on medium farms and 58.15 cents on the large
farms.

Other income.--Other income included receipts from the sale of veal
calves, bags, manure, appreciation in the dairy herd and certain miscella-
neous income such as soil conservation payments, gas tax refunds, etc.
In this study, no credit was given for manure that was not sold or for
milk used by the operator, hired labor or for milk fed calves on the
farm.

Receipts from bags and manure sold averaged about $2 per cow in
each size group and receipts from veal calves about $2 to $3 per cow.
The total for non-milk receipts was $10 per cow on small farms, $6 on
medium farms and $5 on large farms. On the average there was a slight
appreciation in the dairy herd on small and medium farms.










-14-


TABLE ll.--Summary of Receipts, Small, Medium and Large Wholesale Dairy
Farms in Three Areas of Florida

: Total amount : Percent : Amount per unit of 4
Item : Per : Per : of : pet. F.C.M. milk sold
: Farm : Cow : Total : per gallon : per cwt.
Cents


Milk sold
Other income:
Bags and manure
Calves sold
Net appreciation
on livestocka
Miscellaneous
Total


Total receipts


Milk sold
Other income:
Bags and manure
Calves sold
Net appreciation
on livestocka
Miscellaneous
Total
Total receipts


Milk sold
Other income:
Bags and manure
Calves sold
Net appreciation
on livestocka
Miscellaneous
Total
Total receipts


Small Farms
$ 31,368 $395 97.5 56.99

126 2 .4 .23
204 3 .6 .37

351 4 1.1 .64
123 1 .4 .22
804 10 2.5 1.46


$ 32,172 $405 100.0


58.45


Medium Earms
$ 74,458 $425 98.7 57.57


306
439

177
101
1,023


2
2

1
1
6


.4
.6

.2
.1
1.3


$ 75,481 $431 100.0


Large Farms
$170,601 $460 98.8 58.15


.4
.6


.2
1.2


.23
.34

.14
.08
.79
58.36


736
922


390
2,048


2
2


1
5


.25
.32


.13
.70
58.85


$172.649 $465 100.0


$6.63


.07
.03
.17
$6.80


$6.69


.01
.01
.09
$6.78


$6.76


.01
.08
$6.84


SThe net increase in value of any asset was considered an income.
Only in the case of livestock was the amount of the net increase a
positive figure.




-15-


Expenses

The annual cost of producing milk depends on many factors. Cost
per unit varies depending on the amount and value of various items used
in production and the volume of production obtained. A summary of expenses
is shown in Table 12 for small farms, Table 13 for medium farms and Table
14 for large farms.

Hired labor.--The cost of hired labor represented the amount of cash
payments to dairy help. Allowances for privileges such as a house, milk
consumed by hired laborers and their families or other non-cash benefits
enjoyed by the hired laborers and their families were in addition to the
cash costs. Less hired labor was used on small farms as its cost averaged
only 6.18 cents per gallon of milk sold. Expenditures for hired labor
amounted to 8.39 cents per gallon of milk sold on medium farms and 8.97
cents on large farms.

Unpaid family labor.--Unpaid family labor was charged at prevailing
wage rates for the time unpaid members of the operator's family spent
working in the dairy. More unpaid family labor was used on small than on
medium and large farms. The charge averaged 1.23 cents per gallon of
milk sold on small farms, .63 cent on medium farms but only .21 cent per
gallon on large farms.

Feed.--This item included only the cost of purchased feeds fed the
various classes of livestock during the year including calves, heifers,
bulls and cows in the milking herd. The amount of the actual expenditures
for feed purchased was adjusted for any changes in the value of inventories
between the beginning and end of the year. The cost of pasture and
harvested feeds grown on the farm was included indirectly in expenditure
for such items as labor, fertilizer, seed, machinery expense, etc. The
cost of purchased feed was $188 per cow on small farms, $203 on medium
farms and $219 on large farms. On a per gallon basis purchased feeds
amounted to about 27.5 cents on farms in each of the three size groups.
As a percent of total expenses, expenditures for feed were 42.1 percent
for small farms, 46.1 percent on medium farms and 47.6 percent on large
farms.

Fertilizer, lime, seed, etc.--This item included only the cash costs
of fertilizer, lime and seed. The amount did not include a cost for labor
and equipment used in spreading or seeding if it was done by the farm
workers with farm equipment. These costs were included in such items
as labor, fuel and equipment repairs items. Expenditures for fertilizer,
lime and seed were 1.78 cents per gallon of milk sold on small farms,
109 cents on medium farms and 1.59 cents on large farms.

Breeding fees.--Breeding fees included only the cash cost of arti-
ficial breeding. Some operators did not use this service or artificially











-16-


TABLE 12.--Summary of Expenses, Small Wholesale Dairy Farms in Three Areas
of Florida

: Total amount : Percent : Amount per unit of 4
Item : Per : Per : of : pct. FC.M, milk sold
: Farm : Cow : Total : Per gallon : Per cwt.


Labor:
Hired $ 3,402
Unpaid family 676
Feed purchased 14,947
Fertilizer, lime,
seed, etc. 980
Breeding fees 153
Vetinary and medicines 241
Dairy supplies 660
Transporting milk 1,144
Gas, oil, fuel 599
Electricity 714
Telephone, office
expenses and dues 176
Taxes and licenses 372
Insurance 218
Legal and auditing 51
Machine hire 53
Rent of farm or pasturage 209
Repairs--buildings and
equipment 761
Miscellaneous cash expenses 143
Total expenses before
depreciation, interest
and operator's labor $25,499
Depreciation:
Livestock (net)
Buildings and fences 664
Machines and equipment 1,344
Total depreciation $ 2,008
Interest on capital at
5 percent 3,494
Operator's labor and
supervision 4,483
Total gross costs $35,484
Less value of minor
products 804


$ 43
8
188

12
2
3
8
14
8
9

2
5
3
1
1
3

10
2


916
1.9
42.1

2.8
.4
.7
1.9
3.2
1.7
2.0

.5
1.1
.6
.1
.2
.6

2.1
.4


$322 71.9


17
$ 25


1.9
3.8
5.7


44 9.8


56
$447


12.6
100.0


10 2.5


Net cost of milk
sold


$34,680 $437 97.5 63.02 $7.33


Cents


$ .72
.14
3.16


6.18
1.23
27.16

1.78
.28
.44
1.20
2.08
1.09
1.30


.21
.03
.05
,14
.24
.13
.15


1.38
.26


46.34


1.21
2.44
3.65

6.35

8.14
64.48

1.46


.16
.03


$5.39


.14
.28
$ .42

.74

.95
$7.50

.17


$34,680 $437 97.5


63.02 $7.33










-17-


TABLE 13.--Summary of Expenses, Medium Wholesale Dairy Farms in Three
Areas of Florida

: Total amount : Percent : Amount per unit of 4
Item : Per : Per : of : pet. FC.M, milk sold
: Farm : Cow : Total : Per gallon ; Per cwt.
Cents


Labor:
Hired $10,852
Unpaid family 810
Feed purchased 35,597
Fertilizer, lime, seed,
etc. 1,409
Breeding fees 297
Veterinary and medicines 572
Dairy supplies 1,612
Transporting milk 1,904
Gas, oil, fuel 1,238
Electricity 1,199
Telephone, office expenses
and dues 540
Taxes and licenses 919
Insurance 528
Legal and auditing 235
Machine hire 101
Rent of-farm or pasturage 327
Repairs--buildings and
equipment 2,089
Miscellaneous cash expenses 676
Total expenses before
depreciation, interest
and operator's labor $60,905
Depreciation:
Livestock (net)
Buildings and fences: 1,072
Machines and equipment 2,800
Total depreciation $ 3,872
Interest on capital at
5 percent 6,651
Operator's labor and
supervision 5,806
Total gross costs $77,234
Less value of minor --
products 1,023
Net cost of milk sold S76.211


$ 62
5
203

8
2
3
9
11
7
7

3
5
3
1
1
2

12
4


$348


6
16
$ 22


14.1
1.0
46.1

1.8
.4
.7
2.1
2.5
1;6
1.6

;7
1.2
.7
.3
.1
.4

2.7
.9


78.9

-- -
1.4
3.6
5.0


38 8.6

33 7.5
$441 100.0

6 1.3
$435 98.7


8.39
.63
27.52

1.09
.23
.44
1.25
1.47
.96
.93

.42
.71
.41
.13
.08
.25

1.61
.52


47.09


.83
2.16
2.99

5.14

4.49
59.71

,79
58.92


$ .97
.07
3.20

.13
.03
.05
.14
.17
.11
.11

;05
.08
.05
.02
.01
.03

.19
.06


$5.47


.10
.25
$ .35

.60

.52
$6.94

.09
$6.85


-~-~ -~--










-18-


TABLE 14.--Summary of Expenses, Large Wholesale Dairy
of Florida


Farms in Three Areas


: Total amount : Percent ; Amount per unit of 4
Item : Per : Per : of : pct. F.C.M. milk sold
: Farm : Cow : Total : Per gallon : Per cwt.


Labor:
Hired $ 26,310
Unpaid family 622
Feed purchased 81,085
Fertilizer, lime, seed,
etc. 4,676
Breeding fees 615
Veterinary and medicines 1,250
Dairy supplies 3,368
Transporting milk 2,593
Gas, oil, fuel 2,779
Electricity 2,189
Telephone, office expenses
and dues 1,182
Taxes and licenses 1,920
Insurance 1,136
Legal and auditing 517
Machine hire 372
Rent of farm or pasturage 688
Repairs--buildings and
equipment 4,731
Miscellaneous cash expenses 1,631
Total expenses before
depreciation, interest
and operator's labor $137,664
Depreciation:
Livestock (net) 702
Buildings and fences 2,498
Machines and equipment 6,075
Total depreciation $ 9,275
Interest on capital at
5 percent 15,810


Operator's labor and
supervision
Total gross costs
Less value of minor
products
Net cost of milk sold


7.646
$170,395

2,048
$168.347


$ 71
2
219

13
2
3
9
7
8
6

3
5
3
1
1
2

13
4


15.4
.4
47.6

2.7
.4
.7
2.0
1.5
1.6
1.3

.7
1.1
.7
.3
.2
.4

2.8
.9


$372 80.7


2
7
16
$ 25


.4
1.5
3.6
5.5


42 9.3

20 4.5
$459 100.0

5 1.2
$454 98.8


Cents
8.97
.21
27.64

1.59
.21
.43
1.15
.88
.95
.75

.40
.65
.39
.18
.13
.23

1.61
.55


46.92

.24
.85
2.07
3.16

5.39

2.61
58.U8

70
57.33S


$1.04
.02
3.21

.19
.02
.05
.13
.10
.11
.09

.05
.08
.05
.02
.01
.03

.19
.06


$5.45

.03
.10
.24
$ .37

.63

.30
$6.75

.08
S6.67


Net cst o mil sol


.


. = =,T .. = m == I





-19-


bred only a part of their herd. Breeding fees averaged about $2 per cow
on farms in each size group.

Veterinary and medicines.--The cash costs of drugs and veterinary
services were about $3 per cow on farms in each size group, or about .44
cent per gallon of milk sold.

Dairy supplies.--Dairy supplies included such items as soap, washing
soda, disinfectants, sprays and similar small replacement items. Dairy
supplies cost $8 per cow on small farms and $9 per cow on medium and large
farms.

Hauling milk.--Hauling milk included the cash cost incurred by those
producers who hired their milk hauled. Cost of hauling for those pro-
ducers who hauled their own milk was included in the costs of operating
farm equipment. The cost of hauling was 2.08 cents per gallon of milk
sold on small farms, 1.47 cents on medium farms and .88 cent on large
farms.

Gas, oil, fuel.--Expenditures for gasoline and oil to operate farm
trucks, tractors and other motorized equipmentwere included under this
heading. This item also included cost of fuel oil to fire dairy boilers.
The cost of these items was about 1 cent per gallon of milk sold on farms
in each size group.

Electricity.--This item included charges for electricity to operate
milking machines, other dairy equipment and lighting the dairy. Also
included was cost of electricity used in tenant houses when paid for
by the dairy operator. The cost of electricity was 1.30 cents per gallon
of milk sold on small farms, .93 cent on medium farms and .75 cent per
gallon on large farms.

Telephone, office expenses and dues.--Such items as the farm share
of cost of telephone and office expenses, Florida Milk Commission de-
ductions and dues to local producer organizations and other farm organiza-
tions were included under this heading. Payments for DHIA testing were
also included. Cost of these items was .32 cent per gallon of milk sold
on small farms, .42 cent on medium farms and .40 cent on large farms.

Taxes and licenses,--Taxes and licenses included taxes on real estate,
livestock and equipment. Also included were the cost of state licenses
for farm vehicles. These items averaged about $5 per cow on each size of
farm.

Insurance.--Insurance included the amount paid for building, livestock,
liability and other insurance related to the operation of the dairy and
averaged about $3 per cow on farms in each size group.

Legal and auditing.--Legal and auditing fees were costs for account-
ants, attorneys and other legal expenses. They averaged about $1 per
cow on farms in each size group.




-20-


Machine hire.--The amount spent for equipment hired on a custom
or cash basis was included under machine hire. The cost averaged approxi-
mately $1 per cow on farms in each size group.

Rent of farm or pasturage.--This item included the amount of cash
paid-as rent. In a few cases, an entire farm was rented; in other in-
stances only additional pasture. Amount paid as rent averaged about
$3 per cow on small farms and $2 on both medium and large farms.

Repairs--buildings and equipment.--This was the amount spent for
the repairs of dairy buildings and all equipment, trucks and tractors.
On a per cow basis, cost of repairs averaged $10 on small farms, $12 on
medium and $13 on large farms. The cost per gallon of milk sold was
1.38 cents on small farms and 1.61 cents on both medium and large farms.

Miscellaneous cash expenses.--This item included a number of small
items such as freight, travel in connection with the purchase of live-
stock, and miscellaneous items that were grouped as such in the records
of farmers. Miscellaneous expenses averaged approximately $2 per cow on
small farms and $4 per cow on both medium and large farms.

Depreciation.--Depreciation was charged to cover the annual cost of
capital items used in the dairy business. Depreciation on livestock was
calculated as the net change in the value of the herd (including the
milking herd, bulls and young stock) between the beginning and end of the
year. The formula used was : (value of all livestock at the beginning
of the year plus cost of livestock purchased) minus (value of livestock
at the end of the year plus amount received from all sales) equaled net
change in value for the year. This formula took into consideration both
appreciation and depreciation in the value of all the dairy stock includ-
ing young stock throughout the year. For the small and medium size dairies
there was a net appreciation rather than a net depreciation. The amount
of net depreciation was $702 per farm on large farms or .24 cent per gallon
of milk sold.

Depreciation on buildings and equipment was based on the original
cost of the items and the operator's estimate of their useful life.
Automobiles used both personally and in the dairy business were charged
based on the proportion used in the dairy business. Depreciation on
buildings and fences averaged 1.21 cents per gallon of milk sold on
small farms, .83 cent on medium farms and .85 cent on large farms. The
charge for depreciation on machinery and equipment was 2.44 cents per
gallon of milk sold on small farms, 2.16 on medium farms and 2.07 cents
on large farms.

Interest on investment.--Interest was charged to cover the cost of
capital used in the dairy enterprise. Interest actually paid on borrowed
capital was not included as an expense but instead an interest charge
was made based on 5 percent for all capital used, both borrowed and owned.
No interest was charged on working capital or cash required to operate the
business. The interest chargeanountedto 6.35 cents per gallon of milk
sold on small farms, 5.14 cents on medium farms and 5.39 cents on large
farms.




-21-


Operator's labor.--The operator's labor charge was for the value of
the time spent by the operator working with the dairy enterprise and for
the management of the operation. Each operator was asked to estimate the
value of his services and that estimate was entered as the labor cost.
Operators were generally guided in their estimates by the wages the high-
est paid worker received plus an additional amount for management. Opera-
tors of small dairies estimated the value of their labor at $4,483, medium
farms $5,806 and the large farms $7,646. On small farms the operator's
labor charge was 12.6 percent of the total expenses, 7.5 percent on
medium farms and 4.5 percent on large farms. The cost was 8.14 cents per
gallon of milk sold on the small farms, 4.49 cents on medium farms and
2.61 cents on large farms.

Gross cost was the sum of all items of expenses. The average gross
cost was $447 per cow on small farms,$441 on medium farms, and $459 per
cow on large farms. Gross cost per gallon of milk sold was 64.48 cents,
59.71 and 58.08 cents in the three groups of farms, respectively.

The net cost of milk sold was obtained by subtracting the value of
the minor products (Table 11) from the gross cost. The net cost of pro-
ducing milk per gallon sold was 63.02 cents on small farms, 58.92 cents
on medium farms and 57.38 on large farms.


Returns

Various measures of returns are shown in Table 15. Receipts are
the total of all receipts shown in Table 11. Expenses are the amount
shown as total gross cost in Tables 12, 13 andl4 minus charges for in-
terest on investment and for operator's labor and supervision.

Farm income.--Farm income was the return to the operator for all
capital owned and for labor and supervision. Farm income was calculated
by subtracting expenses as indicated above from receipts. The average
farm income was $4,664 on small farms, $10,704 on medium farms and $25,710
on large farms.

Net returns.--Net returns are the returns above all costs. Net re-
turns were obtained by subtracting from farm income the charges for in-
terest and operator's labor and management. On these farms when all costs
were considered as explained above, the returns from the dairy enterprise
on a per cow basis failed by $40 to cover all costs on small farms and by
$10 on medium farms. There was a positive net return of $6 per cow on
large farms.

Returns to operator for labor and supervision.--This is the amount
available to the operator for his labor and supervision and conduct of
the dairy enterprise after covering all expenses including a charge of
5 percent on the value of capital supplied by the operator for use in the
business. This figure was obtained by subtracting the interest charge
from farm income. The average labor income was $1,170 on small farms,
$4,053 on medium farms and $9,900 on large farms.









-22-


TABLE 15,--Summary of Returns, Small, Medium and Large Wholesale Dairy
Farms in Three Areas of Florida


: :Amt. per unit of 4
Item : Total amount :pct. F.C.M. milk sold
: Per farm: Per cow :Per gallon :Per cwt.


Receipts $ 32,172
Expenses 27,508
Farm income $ 4,664
Interest on capital at 5 percent 3,494
Charge for operator's labor
and supervision -4,483
Net returns $ -3,313
Returns to operator for:
Labor and supervision 1,170
Average capital invested 181
Percent return on investment .2


Cents
Small Farms
$405 58.45
347 49.99
$ 58 8.46
44 6.35


-56
$-42

16
4


-8.14
-6.03

2.11
.32


Receipts
Expenses
Farm income
Interest on capital at 5 percent
Charge for operator's labor
and supervision
Net returns
Returns to operator for:
Labor and supervision
Average capital invested
Percent return on investment


Receipts
Expenses
Farm income
Interest on capitalat5percent
Charge for operator's labor
and supervision
Net returns
Returns to operator for:
Labor and supervision
Average capital invested
Percent return on investment


$ 75,481
64,777
$ 10,704
6,651

-5,806
$ -1,753

4,053
4,898
3.7


$172,649
146,939
$ 25,710
15,810

76 466
$ 2,254

9,900
18,064
5-7


Medium Farms
$431 58.36
370 50.03
$ 61 8.28
38 5.14


-33
$-10

23
28


$465
397
$ 68
42

20
$ 6

26
48


-4.49
-1.35

3.14
3.79


Large Farms
58.85
50.08
8.77
5.39

2.61
.77

3.38
6.16


$6.80
5.81
$ .99
.74

-.95
$-.70

.25
.04


$6.78
5.82
$ .96
.60

--.52
$-.16

.36
.44


$6.84
5.82
$1.02
.63

.30
.09

.39
.72




-23-


There was a wide variation in amount of labor income on farms in each
size group (Fig. 2). On small farms, labor income of individual operators
varied from -$7,393 to $14,115. Forty percent of the operators had negative
labor incomes and only 22 percent made labor incomes of $5,000 or more.
Labor income on medium farms varied from -$10,086 to $25,348. One-fourth
of the operators had negative labor incomes and 22 percent had labor in-
comes of $10,000 or more. Labor incomes on large farms varied from -$25,506
to $59,006. Twenty-two percent of the farmers received minus labor incomes
and 26 percent had labor incomes of $20,C00 or more.

Return on investment.--This was the return to the operators for capital
invested in the business after paying all expenses, including an allowance
for labor, supervision and management. Return on average investment was
obtained by subtracting the charge for operator's labor and supervision
from farm income. The amount was not a return in addition to the return
to the operator for labor and supervision but is a different way of express-
ing returns.

The average return to operator's capital was $181 on small farms,
$4,898 on medium farms and $18,064 on large farms. When expressed on a
percentage basis, the percent return on capital was .2 percent on small
farms, 3.7 percent on medium farms and 5.7 percent on large farms.


FACTORS AFFECTING COSTS AND RETURNS IN PRODUCING MILK

Factors that normally affect costs and returns realized by dairy
farmers were studied. Amount of milk sold per cow, labor and capital
efficiency, feeding and herd management were among those considered. The
tabular method was used in studying relationships. As indicated on page
3, records for all farms were not grouped together but a separate analysis
was made for farms in each size group.

For each relationship, the records were arrayed (usually from low
to high) on the basis of the factor being studied. The farms were then
divided into subgroups of about equal size with class intervals coming
as near as possible at natural breaks in the data. Averages were cal-
culated for the factors being studied. Where possible the same size class
intervals were used for small, medium and large farms. In many cases
different class intervals had to be used to get a desirable distribution
of farms among subgroups for various size farms.

The emphasis in this analysis was not on a comparison of averages for
different size of farms. Attention was given to studying the relation-
ship, if any, of selected factors to costs and returns within a size group
and also to see if relationships among size groups were similar.


Net Cost Per Gallon of Milk Sold

There was a wide variation in net cost per gallon of milk sold.5
On small farms net cost per gallon varied from 49.3 cents to 86.5 cents.

5All costs per gallon of milk sold in this section refer to 4 percent
F.C.M. milk.




-23-


There was a wide variation in amount of labor income on farms in each
size group (Fig. 2). On small farms, labor income of individual operators
varied from -$7,393 to $14,115. Forty percent of the operators had negative
labor incomes and only 22 percent made labor incomes of $5,000 or more.
Labor income on medium farms varied from -$10,086 to $25,348. One-fourth
of the operators had negative labor incomes and 22 percent had labor in-
comes of $10,000 or more. Labor incomes on large farms varied from -$25,506
to $59,006. Twenty-two percent of the farmers received minus labor incomes
and 26 percent had labor incomes of $20,C00 or more.

Return on investment.--This was the return to the operators for capital
invested in the business after paying all expenses, including an allowance
for labor, supervision and management. Return on average investment was
obtained by subtracting the charge for operator's labor and supervision
from farm income. The amount was not a return in addition to the return
to the operator for labor and supervision but is a different way of express-
ing returns.

The average return to operator's capital was $181 on small farms,
$4,898 on medium farms and $18,064 on large farms. When expressed on a
percentage basis, the percent return on capital was .2 percent on small
farms, 3.7 percent on medium farms and 5.7 percent on large farms.


FACTORS AFFECTING COSTS AND RETURNS IN PRODUCING MILK

Factors that normally affect costs and returns realized by dairy
farmers were studied. Amount of milk sold per cow, labor and capital
efficiency, feeding and herd management were among those considered. The
tabular method was used in studying relationships. As indicated on page
3, records for all farms were not grouped together but a separate analysis
was made for farms in each size group.

For each relationship, the records were arrayed (usually from low
to high) on the basis of the factor being studied. The farms were then
divided into subgroups of about equal size with class intervals coming
as near as possible at natural breaks in the data. Averages were cal-
culated for the factors being studied. Where possible the same size class
intervals were used for small, medium and large farms. In many cases
different class intervals had to be used to get a desirable distribution
of farms among subgroups for various size farms.

The emphasis in this analysis was not on a comparison of averages for
different size of farms. Attention was given to studying the relation-
ship, if any, of selected factors to costs and returns within a size group
and also to see if relationships among size groups were similar.


Net Cost Per Gallon of Milk Sold

There was a wide variation in net cost per gallon of milk sold.5
On small farms net cost per gallon varied from 49.3 cents to 86.5 cents.

5All costs per gallon of milk sold in this section refer to 4 percent
F.C.M. milk.





Pages
24 -end
Missing
From
Original




University of Florida Home Page
© 2004 - 2010 University of Florida George A. Smathers Libraries.
All rights reserved.

Acceptable Use, Copyright, and Disclaimer Statement
Last updated October 10, 2010 - - mvs