Title: Enterprise selection on the small farm
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Title: Enterprise selection on the small farm
Physical Description: Book
Language: English
Creator: Cooperative Extension Service, Michigan State University
Publisher: Cooperative Extension Service, Michigan State University
Place of Publication: East Lansing, Mich.
Publication Date: January, 1979
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General Note: Michigan State University extension bulletin E-1258
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Bibliographic ID: UF00086756
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FARMING KNOW-HOW

Guidelines to Better Family Farming



Enterprise Selection On



the Small Farm



COOPERATIVE EXTENSION SERVICE
IL Michigan State University


EXTENSION BULLETIN E-1258


JANUARY 1979


By Ralph E. Hepp and Victoria C. Shade*
*Extension Specialist and Graduate Student, Department of
Agricultural Economics, Michigan State University.
Many different crop and livestock enterprises can
be produced on a small Michigan farm. Each enter-
prise uses resources differently-land, labor, build-
ings, machinery, operating capital and management
-and gives a different return. As a farm manager,
one of the most important decisions is to determine
what combination of crops and livestock should be
raised on the farm.
This publication provides information about typical
enterprise possibilities in Michigan agriculture, in-
cluding lists of resource requirements for the enter-
prises. It should assist you in deciding what enter-
prises to select. So, check the following steps to
decide what to produce on the farm and answer the
questions as you go along.

DETERMINE THE OBJECTIVES) FOR YOUR FARM

Farms can be organized in many ways to fit your
desired goals and lifestyles. As a starting point, con-
sider the following questions to determine which ob-
jectives fit your situation. Then list your objectives
and select enterprises that can help you achieve
them. If you have a family, let them help make the
decisions.
Is the farm expected to furnish one or more fam-
ily members with full-time or part-time employment?
Or is the farm a place in the country where the
activities are more recreational?
How much family income is expected from the
farm? A majority of the family income? A supplemen-
tal source of family income? Would a "break even"
operation be satisfactory? Would an operating loss for
a few years be acceptable? The income desired must
be compatible with the amount of family labor avail-
able for farm activities.


Is capital accumulation and business growth an
important reason for owning a farm?
Does the family prefer certain types of crops or
livestock?
Is the family willing to use borrowed money if
needed? Can the family withstand financial risk and
possible losses from the farm? Because agricultural
enterprises depend upon biological and economic
processes, financial returns can vary greatly.
Is the family willing to spend the time to acquire
the knowledge and experience needed for operating a
successful enterprise?
Is the family willing to follow a prescribed work
schedule? For example, some livestock enterprises re-
quire daily care and attention.
Are there any family or personal health problems
or physical limitations which would affect the selec-
tion of enterprises?
Are farm enterprises expected to provide the
family with food products? Which ones? How much?
What other personal or family objectives limit
your enterprise selection?


IDENTIFY YOUR RESOURCES

If you've defined your goals and objectives, it's
time to look at the resources your family has available
for production. List those resources and match them
with the resource requirements of the various crop
and livestock enterprises.

Land
Land quantity and quality are critical factors in
choosing crop enterprises. How many acres of land do
you have? Is it suited for row crops, small grains,







forage or forest? Land and soil have a number of dif-
ferent characteristics you need to know. Consider
how steep the land is, the erosion hazard, drainage-
natural or tile-soil texture (clay, loam, sand, etc.).
For crop production, know the fertility and acidity
level of the soil. The answers to these questions will
determine what you can do with your land.
Land that is almost level, has no erosion problems,
is well drained, has a medium texture, has good fertil-
ity and a soil acidity level of pH 6.4-6.8, might be
good for almost any crop. Exceptions exist for some
crops that have special requirements, such as blue-
berries, which require an acid soil.
Land that has gentle slopes or suffers from some
erosion problems may need cover crops such as oats,
wheat, alfalfa, clover or other grass crops in rotation
with the row crops. Land with steep slopes and severe
erosion hazards may need permanent vegetative
cover such as pasture, or may not be usable for agri-
culture. Light sandy soil which is too well drained will
need irrigation for crop usage, while land that is poor-
ly drained will need tile drainage.
Solutions to naturally existing problems may re-
quire a large capital investment and a careful assess-
ment of enterprise selection to determine whether the
extra outlay of money is justified.
Also consider climate. The amount of rainfall,
growing degree days, first and last frost dates and
amount of sunshine all directly influence which crops
can be grown.
Land capability has been classified by the Soil Con-
servation Service of the United States Department of
Agriculture. Soils are grouped into eight land cap-
ability classes to show the suitability of soils for
general farm crops, grazing, forestry and wildlife. This
land capability classification system is based on the
needs and limitations of soils, on risks of damage
when they are used and their responses to manage-
ment. Refer to Extension Bulletin E-326, "A Guide for
Land Judging in Michigan," for more detailed in-
formation on land capability classes and how they in-
fluence crop production.
The yield potential of your land depends upon the
soil properties, location in the state and how it is
managed. Soils with similar properties and yield
potentials form soil management groups (clays, clay
loams, loams, sandy loams over clay or loam, sandy
loams, loamy sands over clay or loam, loamy sands,
and sands). Soil sampling and testing should be com-
pleted on your farm to determine the soil manage-
ment groups, yield potential and fertilizer recommen-
dations for different crops. For assistance in soil
sampling and testing, contact your county Coopera-
tive Extension office and obtain Extension Bulletin
E-550, "Fertilizer Recommendations for Vegetables
and Field Crops," and Extension Bulletin E-498,
"Sampling Soils for Fertilizer and Lime Recommenda-
tions."


Water
An adequate supply of good quality water is need-
ed for any livestock. Providing a continuous supply of
fresh water for animals can be a problem in the winter
unless heated water sources are available.
For most Michigan soils and farm locations, natural
rainfall is adequate for crop production. However, for
sandy soils and for high value crops such as fruits,
vegetables or specialty crops, irrigation may be need-
ed during dry spells or for frost protection to prevent
losses and to increase crop quality.

Labor
The quantity and quality of the family labor supply
may limit the type or size of enterprise selected. How
many hours of labor are available? Is it available on a
daily, weekly or seasonal basis? When are vacations
taken? Can at least one family member handle the
heavy physical work? Is labor available to handle the
peak seasonal requirements? Will labor be hired? Is it
available in your community?

Experience, Skills, and Management Ability
While some operations are relatively simple to
learn, others are complex and require detailed
knowledge from experience and study for success. It
usually isn't enough just to work hard to succeed. A
good manager will try to figure out how to do some-
thing in a shorter period of time with less work need-
ed. Managing your business well means collecting in-
formation, analyzing it and using that information to
make good decisions. Mechanical ability is useful,
too, for handling farm equipment. What strengths and
weaknesses in this area do you possess?

Capital
All farm enterprises need capital. The amount
needed varies with the operation. Capital required for
livestock includes purchasing the animals, the equip-
ment to care for them, plus housing and/or fencing
and feed. Field crops, fruits and vegetables need
equipment for soil preparation, planting, pest control
and harvesting. Operating capital is needed for ferti-
lizer, seed or plants, spray materials and other inputs.
Credit is one way to increase available capital if
used wisely. Decide how much you need for a par-
ticular job, what it will do for you, where you'll get
the credit, and what credit will cost and when and
how itwill be paid back.
Frequently a farmer will need to purchase supplies,
plants or animals that won't give an immediate return.
Take into account when choosing an enterprise how
long can you afford to have money "invested" before
it yields a return. How much capital is available? How
much credit can be borrowed?








Markets
A viable market is as important as implementing
good production practices. Determine whether the
product will be sold to a wholesaler, retailer or direct-
ly to consumers. Limitations include the number of
potential buyers in the area, local demand and
perishability. Some products, like field corn, can be
sold in a number of markets-local, regional, or farm
use. Others, like strawberries, are limited to local
markets.
If a local market selling direct to consumers
already exists or can be developed, it may be prac-
tical to produce specialized crops that larger farmers
do not produce. You may be able to offer a special-
ized product or service not available in your area. A
few examples are goat's milk, rabbit meat, cut-your-
own Christmas trees and pick-your-own fruits or
vegetables. Consumers may pay premium prices for
common products having high quality, unique
packaging or other special characteristics.

Buildings
Some enterprises can be adjusted to nearly any
existing structure, but others require costly, special-
ized structures. What buildings are presently on your
farm? Can these buildings be renovated for your
enterprises? Don't automatically let existing buildings
determine the enterprise.

Machinery and Equipment
What machinery and equipment are presently
available? Consider carefully machinery use and
other ways to obtain machinery services before pur-
chase. If labor-saving machinery doesn't pay for
itself, maybe your business isn't large enough to sup-
port such equipment. If you don't have enough time
for the labor required without that piece of equip-
ment, produce something else with a lower labor re-
quirement. Another alternative is to make use of
custom work available, for example, harvesting. This
could be more economical than owning machinery.

INVESTIGATE ENTERPRISE ALTERNATIVES

After evaluating your resources, obtain information
about different enterprise possibilities. The following
sections briefly describe livestock and crop alter-
natives. If one seems interesting, seek additional in-
formation about that enterprise since the descriptions
given here do not provide enough data for a final
decision.

Livestock Enterprises
Livestock are generally kept to make use of
resources not otherwise being used efficiently. These


might include (1) labor from underemployed family
members; (2) forage and grain crops raised on the
farm for which there is no good local market; (3)
otherwise unused buildings; (4) special experience or
skills of the farmer, and (5) special markets in the
area.
Livestock may increase net farm income, provide
food for the family and help maintain soil fertility and
tilth. A livestock enterprise may also provide a more
even distribution of income. Crops would be har-
vested and sold over a shorter time period, while
livestock products can be managed to be salable at
various times. This lengthens the period when you can
receive an income. Raising livestock decreases the
price risk involved with crops but adds the price and
yield risk of enterprises. While livestock operations
have potential for greater earnings than crops, they
also have potential for greater losses.
There are four problems common to most livestock
operations: (1) disposal of animal wastes (manure,
bedding, etc.) with its sanitation problems, odor and
possible water and soil pollution; (2) good fencing
with some livestock; (3) daily labor, and (4) manage-
ment decisions.
When looking at an individual livestock enterprise,
keep the resource base in mind. What do you have
that can be used by such an enterprise?
Dairy Cows. A dairy herd is not likely to be the best
enterprise for a small farm operator unless full-time
employment is wanted. It is becoming very difficult
for a small herd to be competitive because of the ini-
tial investment and the high per cow costs of opera-
tion. Dairy cows have a high labor requirement with a
set daily routine, require careful management and
have a high per cow capital requirement. Also, herd
facilities and production methods must meet strin-
gent health standards, as milk and milk products are
highly regulated.
One alternative to dairy cows is raising dairy heifers
from calves for other dairy farmers. This operation
takes less labor than a dairy herd but has a relatively
long period of time after purchase of calves before
you can sell them. There also is a higher management
requirement for dairy heifers than for beef cattle.
Another alternative is the purchase of dairy calves to
feed to 200-300 pounds for the veal market. The dairy
calves could also be finished to 1000-1100 pounds for
beef.
Some families keep a dairy cow for family milk.
Because savings in milk bills may be small due to feed
and other product costs and daily family labor, many
families become discouraged with this alternative.
Beef Cattle. There are several beef enterprises to
choose from. Maintain a breeding herd of cows and
raise their calves to different weights or purchase your
calves at the size desired. The following are examples







of purchase and selling weights for different beef
feeding enterprises:
1. 600-800 pound yearling fed to 1100-1200 pound
finished animal;
2. 400-500 pound feeder calf fed to 1000-1100
pound finished animal;
or
3. 400-500 pound feeder calf fed to 600-800 pound
yearling.
Labor needs are low and a flexible daily schedule
can be followed. This is a good place to make use of
available family labor. Home-produced forages can
also be utilized if available. However, beef enter-
prises frequently return to the farmer a small amount
of money per head. Success in the feeding of beef
steers or heifers requires experience. Try out your skill
firstwith just few animals.
Swine. Like beef cattle, several options are open in
raising swine. A breeding herd of sows can be kept,
and up to two litters of pigs can be produced per sow
per year and sold as 40-60 pound feeders or fed to
market hog weight at 210-225 pounds. Feeder pigs can
also be purchased and fed to market weights. For a
low capital, low labor enterprise, pigs can be raised or
fed only during summer months, thereby avoiding the
need for winterized facilities. However, this also
lowers potential income. With proper breeding man-
agement, the farrowing house or finishing facilities
could be in use almost continuously and thus income
could be more regular than with some other enter-
prises. One possible disadvantage: swine cannot use
large amounts of pasture and forages, but need feed
grains for the main part of their diet.
Sheep. Sheep need minimum housing, except in
cold and wet weather during lambing, but do require
an investment in fencing. Labor needs are low except
at lambing time when many ewes need help giving
birth. Sheep provide two income sources-wool and
lambs. Sheep shearers and lamb and/or wool markets
may be difficult to find in some areas. Since the main
feed for sheep is roughage, with some grain, good
pasture and forages are needed. Sheep also need to
be protected from harassment by dogs and other
predators.
Poultry. A small flock of chickens is frequently
found on farms for a home supply of eggs and meat.
Developing local customers for retailing eggs or
broilers may be successful. Raising game birds and
raising pullets up to egg laying age are other alter-
natives. The poultry flock requires a large labor input
because it must be cared for daily.

Crop Enterprises
Crops are grown to provide food for the family, for
cash sale, as feed for livestock and as green manure
(soil builder).


Field Crops. Typical field crops are corn grain and
silage; grass and alfalfa hay; small grains such as
wheat, barley, rye and oats; soybeans and other edi-
ble beans. Potential income from field crops is less
than from more intensive crops. However, since there
is a lower labor requirement, less need for irrigation
and lower starting capital, a farmer may be able to
manage more acres of field crops. The field crop
farmer must be sensitive to market price fluctuations
and the need to store crops that are not sold at
harvest time. Many crops can be fed to livestock or
sold in local markets.
Tree Fruits. Tree fruits such as apple, peach, plum
and cherry need good management, high labor inputs
during harvest and a long-term capital investment
before trees come into production. But they offer a
higher potential return than field crops if the crop is
of high quality and a good market is available.
Small trees are planted 100-200 to the acre and
must be cared for (pruned, fertilized, mulched and
sprayed) until they reach bearing age. This time
period varies from three to five years for the smaller
trees-plums, peaches and semi-dwarf apples-to as
much as ten years for the larger trees-standard
apples, pears and cherries. On a few acres, a family
could probably handle this work by hand. When the
trees are ready to bear fruit, basic equipment in
sprayers, tractors and containers will be necessary.
Caring for a large number of mature trees by hand
could be an enormous task.
A farmer might plant several different kinds of tree
fruits since they mature at different times, spreading
out the work load and income. Tree fruits have vary-
ing cold sensitivity and thus have stiffer requirements
for site and location than some other crops. A good
orchard site can make the difference between saving
or losing a crop if an unexpected cold spell hits.
Small Fruits. With a little land and a lot of manual
labor, small fruit crops have just about the highest in-
come potential per acre. The amount of labor can be
reduced by selling on a "you pick" basis. This requires
that the farm have easy access from nearby towns, a
parking area and careful management of the pickers
to prevent damage to your plants from carelessness or
inexperience.
Capital requirements per acre can be high because
of the irrigation system and land preparation ma-
chinery needed. Small fruits vary in the amount of
time necessary for the plants to mature to bearing
age. Strawberries and brambles mature the fastest;
grapes and blueberries take several more years.
Strawberries take the most labor and require good
management, but local demand can be high. Black-
berries, raspberries, etc. take less work but also have
a lower yield and, therefore, give lower cash returns.
Blueberries have special soil and site requirements,
but can be as profitable as strawberries because there
is a strong market demand.









Grapes also require less labor than strawberries, but
need careful management to get good crops every
year. Here, there are not only vineyard site limita-
tions, but possible market problems, if you plan to
sell table grapes.
Vegetables. Vegetables are very similar to small
fruits. They take a lot of labor and have a potentially
high cash return. They can be sold for fresh consump-
tion or to a processor for canning or freezing. There is
less chance that the market will be glutted by local
supply if you sell to a processor, but the return will be
somewhat lower than for fresh consumption. Also,
processor crops are almost always grown under con-
tract.
Crops with the highest consumer demand are sweet
corn, tomatoes, potatoes and green beans. Potatoes
can be stored for several months. Other vegetables,
such as sweet corn and beans, can be planted over a
period of time to give a longer harvest.
If you think you might select a vegetable crop, or
crops, where you might want to extend the harvest
season, or have a variety for a roadside stand or on a
"you pick" basis, then check out the specific produc-
tion requirements before finalizing your decisions.


Miscellaneous. There are a number of specialized
crops that can be produced. If one of them sounds in-
teresting, be sure to check it out more thoroughly.
Remember that regardless of how well a particular
crop may be suited to you, it won't do you any good if
you don't have a buyer for your product.
Some of the many possibilities are: greenhouse
crops such as flowers, houseplants, winter fruit and
vegetables; mushrooms; dairy goats, rabbits, turkeys,
ducks, geese; cut-your-own Christmas trees; maple
syrup; bees; and herbs, teas, and spices.

DETERMINE ENTERPRISE RESOURCE
REQUIREMENTS

Tables 1-4 contain a summary of the resource re-
quirements, potential costs and returns and minimum
size required for common livestock and crop enter-
prises. The information has been adapted from
special Circular 203, Farm Management for Part-Time
Farmers, The Pennsylvania State University, Univers-
ity Park, Pennsylvania.
Additional information about small farm enter-
prises can be obtained from the following Extension


Table 1. A Comparison of the Requirements for Beef and Dairy Enterprises


Finishing
Yearling
Steer


1 steer 1 steer 1 calf
(700-1200#) (400-1100#) (400-700#)


little
slight
purchase
3-5/period
low
confined
20 gal/day


important
some
purchase
5-7/period
average
confined
15 gal/day


important
some
purchase
2-4/period
average
1 A/hd
10 gal/day


1 cow


essential
usually
usually
64-81/yr
intense
2-4 A/cow
50 gal/day


1 steer
(100-1000#)

some
slight
none
10-12/yr
low
1-2 A/hd
10 gal/day


1 heifer


some
some
young
12-15/yr
intermit
1-2 A/hd
10 gal/day


not now not now not now not now none not now some
multiple multiple multiple regional regional multiple local


6-9 mo
0-100
100-300
250-4007
150-225
400-650
5-10 steers


8-12 mo
0-50
100-300
150-2507
200-300
350-600
5-10 steers


6-8 mo
0-200
50-200
150-2507
50-75
200-400
10-20 animals


1-2 yr
300-1000
200-600
500-800
550-700
800-1100
25 cows


16-18 mo
20-200
20-100
45-607
310-450
350-550
5 animals


18-30 mo
20-250
20-100
80-2007
250-450
450-700
5 animals


'How important is timeliness and how important is keeping a rigid daily chore schedule to the success of the enterprise?
2How important is it for labor to be able to make some daily decisions and accept some management responsibility?
'Peak season usually requires more labor and more intense management. When does it occur, if ever?
'Each enterprise requires a different minimum level of managerial attention with intense as highest followed by intermittent, average, and low.
sMarket limitations may affect the supply-demand ratio which in turn would mean a less than economical price or a limited amount of saleable units at any price.
*Amount of time from purchase to sale of item or amount of time for breeding animal to pay for itself thru sale of product.
'Included as part of cash expense.


Factor


1 cow


Finishing Backgrounding Dairy Cow
Feeder Steer Feeder


Dairy Beef Dairy
Heifer


some
little
calving
6-12/yr
low
2-4 A/cow
18 gal/day


Labor
Daily Sch.'
Dec. & Resp.2
Peak Season3
Hrs./Unit
Management4
Land Area
Water/Unit
Market
Limitations'
Type
Capital
Turnover'
Bldg. Inv. $
Equip. Inv. $
Animal Cost $
Cash Exp. $
Cash Return $
Minimum Size


12-14 mo
0-100
50-400
225-500
100-350
150-300
10 cows


Heavy
Veal
1 calf
(100-300#)

essential
usually
usually
4-5/period
intense

4 gal/day

possible
contract

12-14 wk
55-100
65-200
45-60'
150-160
170-190
10-20 vealers









Table 2. A Comparison of the Requirements for Swine, Sheep, and Poultry Enterprises


Factor


Labor
Daily Sch.'
Dec. & Resp.2
Peak Season3
Hrs./Unit
Management4
Land Area
Water/Day
Markets
Limitations5
Type
Capital
Turnover'
Bldg. Inv. ($)
Equip. Inv. ($)
Animal Cost ($)
Cash Expense ($)
Cash Return ($)
Minimum Size


Sow-Feeder Feeder
pigs sold Pig


1 sow


important
important
farrowing
20-40/yr
average
0.2A
5-8 gal

none
multiple

6-9 mo
0-150
0-60
100-150
300-600
350-800
4-6 sows


1 pig
(40-220 Ib)

some
little
purchase
1/period
low
confined
4-5 gal

none
local

4-5 mo
10-80
10-50
15-707
45-75
50-100
5-20 pigs


Sheep Game Birds Layers


1 ewe


100 birds


100 birds


Broilers
100 birds


important important essential important
slight some slight slight
lambing young usually usually
2-5/yr 4-5/period 80-120/yr 3/period


average
0.2A
2-3 gal

some
regional


intermit
0.1A
3-4 gal

yes
regional


10-12 mo 4-5 mo
10-100 50-200
0-40 25-100
25-80 35-457
25-80 300-350


50-80
10 ewes


300-500
1 unit


intense
0.1A
10 gal


intermit
0.1A
5 gal


some-yes possible
local ret. contract


14 mo
0-100
20-200
160-2007
800-1000


8wk
50-200
12-80
15-20
50-657


1000-1400 60-75


2 units


50 units


Pullets
100 birds


important
slight
usually
4-5/period
intermit
0.1A
5 gal

possible
contract

20 wk
50-200
12-80
35-457
160-180
200-250
50 units


'How important is timeliness and how important is keeping a rigid daily chore schedule to the success of the enterprise?
'How important is it for labor to be able to make some daily decisions and accept some management responsibility?
'Peak season usually requires more labor and more intense management When does it occur, if ever?
4Each enterprise requires a different minimum level of managerial attention with intense as highest followed by intermittent, average, and low.
'Market limitations may affect the supply-demand ratio which in turn would mean a less than economical price or a limited amount of saleable units at any price.
'Amount of time from purchase to sale of item or amount of time for breeding animal to pay for itself thru sale of product.
included as part of cash expense.





Table 3. A Comparison of the Requirements for Some Crop Alternatives


Factor


Labor
Timeliness some some
Dec. & Resp.' slight little
Peak Season2 July-Aug Aug.
Man Hr./Unit3 300-600 8-120
% Manual 70-80 20-80


Soybeans Alfalfa Hay Other Hay


important some little little some important important
little slight slight slight slight little little
July-Sept. May,0-N July& S Apr&Jy May,O-N May-June May-June
100-150 5-10 4-6 4-6 4-6 10-12 8-10
30-40 5-10 5-10 5-10 5-10 20-30 20-30


Measurement4 low


Land
Quality
Drainage
Topography
Irrigation
Market
Limitations'
Type


good
well
level


average intermit average low low average intermit average

variable variable variable variable variable variable fair variable
variable variable variable variable variable variable well variable
rolling rolling rolling rolling rolling rolling rolling rolling


desirable maybe none


none


none


none


yes some possible none none none
multiple multiple multiple multiple multiple local


none


none


none


none possible some
multiple local local


Capital
Turnover6 2 mo 2 mo 4-5 mo 5 mo 10 mo 3 mo 5 mo 1 yr 1 yr
Equip. Inv. ($) 10-3000 10-3000 5000+ 2500+ 2000+ 2000+ 2500+ 4000+ 4000+
Cash Expense ($) 100-400 150-250 240-300 75-150 40-100 35-80 40-100 50-100 40-80
Cash Return ($) 700-2000 300-1000 550-650 80-300 60-225 40-150 80-300 50-200 30-100
Minimum Size 1/4 A 0.1 to50A 50-100A 10A 10A 10A 10A 10A 10A

'How important is it for labor to be able to make some daily decisions and accept some management responsibility?
'Over 60% of labor and the most intensive management required for time listed.
3For annual crops, man hours would be for growth period for perennial crops such as hay, man hours are those per year.
'The amount of management attention required by a crop to be successful varies from intense to intermittent (some periods of intense and some of low management attention) to average to
low.
'Market limitations can be due to limited demand or perishability of product ("yes" indicates a rather severe limitation; "some" means the limitation will occur during certain times and for
certain uses; "possible" means the limitation is there but is not very strict).
'Turnover time from planting until the harvest of the first saleable crop.


Cucumbers Green Beans Potatoes Field Corn Wheat Oats








bulletins which are available from your County
Cooperative Extension office.


E-773, The Small Poultry Flock
E-843, Ewe Flock: Opportunity for Supplemental
Income
E-885, Swine Production on Small Farms
E-990, Management Systems for Small Beef Herds
of 10 Cows or Less

E-1038, Guidelines for Producing Beef from Dairy
Calves
E-1050, Anyone for a Few Geese?
E-1120, Finishing Feeder Pigs
E-1153, Producing Feeder Pigs
E-856, Growing Currants and Gooseberries

E-1049, Winter Wheat Production
E-941, Pick-Your-Own Operations
E-1145, Roadside Marketing for Beginners
E-1246, Pick Your Own
E-1257, Anyone For A Few Broilers
E-1259, Want to Raise A Few Turkeys
E-1260, Raising A Few Ducks


CHOOSE YOUR ENTERPRISES)
The analysis to this point has taken you part way
through the decision making process. You have: (1)
defined your enterprise objective, (2) identified your
resources, (3) considered enterprise alternatives, and
(4) obtained information about enterprise resource re-
quirements, and possible costs and returns.
This process should have helped to eliminate some
enterprises and list some preferences. Take those
enterprise preferences and recheck them against the
lists you made on your enterprise objectives,
resources you have available and the enterprise
resource requirements. Do these match? Do you have
enterprises that are compatible? For example, if you
own land that requires pasture or forages, does your
plan include dairy, beef or sheep enterprises that can
utilize forages? Or will you lease out your pasture
land to neighboring farmers? Or will you sell hay as a
cash crop? Is there a local market for cash crop hay?
Do the enterprise preferences satisfy your income ob-
jectives? Do you have labor and capital available to
produce those products?
In most cases your farm will have more than one
enterprise. Diversification helps to better use


Table 4. A Comparison of the Requirements for Some Crop Alternatives


Factor
Unit
Labor
Timeliness
Dec. & Resp.'
Peak Season2
Man hrs/Unit'
% Manual10
Management4
Land
Quality7
Drainage
Topography
Irrigation
Market
Limitations'
Type
Capital
Turnover'
Equip. Inv. ($)
Plant Cost/A ($)
Cash Expense ($)
Cash Return ($)
Minimum Size
Number'


Peach Apple Strawberry Raspberry Grape Cherry Tree Sweet Corn


Acre

important
some
Apr.,Jy-S
65-80
30-50
intermit

special
well
variable
desirable


Acre

important
some
Mar.,Jy-O
80-100
30-50
intermit

special
well
variable
desirable


Acre

important
little
May-June
600-2400
60-90
intermit

fair
well
level
essential


Acre

some
little
Mar.July
200-800
60-100
low

variable
variable
level
desirable


Acre

important
some
Apr.Aug
80-100
60-80
intermit

good
well
variable
desirable


Acre

important
some
May,Jn,Jy
35-150
30-90
intermit

special
well
variable
desirable


Acre

important
slight
July-Sept
50-120
30-60
low

variable
variable
variable
possible


Tomato Cantaloupe
Acre Acre


some
little
July-Aug
20-320
50-70
average

fair
well
level
desirable


some
slight
June,Aug
200-400
70-80
average

fair
well
level
essential


some possible possible yes some possible possible some some
multiple multiple local ret. local ret. special multiple multiple multiple local ret.


4-7 yr
2000-4000
800-2000'
200-400
200-1200
5A
109-194


4-9 yr
2000-4000
250-6008
300-400
500-1000
5A
109-194


1 yr
200-1000
200-300'
1200-2400
3000-8000
1/4 A
3000-5000


3 yr
300-1500
200-300
500-1000
1500-2500
1/8 A
800-900


4yr
200-1000
350-400'
200-400
500-1000
1/4 A
500-800


6-9 yr
200-2000
400-600'
300-1200
1000-2000
1A
108


3 mo
10-3000

150-180
400-800
2A
10-15 Ib


2-3 mo
10-3000

350-600
500-1200
1/4 A
5000-6000


3 mo
200-3000

400-700
1500-3000
1/4 A
1/2-11 b


'How important is it for labor to be able to make some daily decisions and accept some management responsibility?
'Over 60% labor and the most intensive management required for time listed.
'For annual crops, man hours would be for growth period-for perennial crops such as hay, man hours are those per year.
'The amount of management attention required by a crop to be successful varies from intense to intermittent (some periods of intense and some of low management attention) to average to
low.
WMarket limitations can be due to limited demand or perishability of product ("yes" indicates a rather severe limitation; "some" means the limitation will occur during certain times and for
certain uses; "possible" means the limitation is there but is not very strict).
'Turnover is time from planting until the harvestof the first saleable crop.
'"Special" means that some special quality is necessary in the soil or location that is not necessarily related to the productive capacity of the soil
sTotal cost involved from planting until first harvest season.
'Number of plants or trees per acre for crops started from seedlings or pounds of seed for those started from seed.
'"Lower figure represents the percent of work that must be done manually and higher figure represents the percent that could be done manually.









available resources, labor and capital over a longer
time period and increase income stability, etc.
However, too many enterprises can dilute your man-
agement effectiveness, cause labor and capital ineffi-
ciency and reduce the volume of production avail-
able for some markets. Many factors are important in
deciding how much to diversify or specialize on your
small farm. Knowing your objectives and resource
situation can help in making these decisions.
Development of a detailed budget for each enter-
prise preference can assist further in evaluating the in-
come potential from the enterprise, capital needs,
resource needs and whether the enterprise fits your
situation. Select the size of enterprise you are think-
ing about and develop a budget for it. First, write
down all the income obtained from selling what is
raised. Then write down all the costs involved in rais-
ing that product. The difference between the total in-
come and the costs is how much money is made (or
lost) on that particular enterprise with those partic-
ular management methods. Remember, this is a pro-
jection into the future. You will rarely know exactly
what all the prices or costs will be. Part of being a
good manager is to learn how to make estimates and
take into account all those potential ups and downs in
the markets, weather, etc.
Tables 5 and 6 show crop and livestock budgets
that can be used as examples to guide you. Because

Table 5. Example Crop Budget. Receipts and Non-Land
Production Costs for 50 Acres of Corn


Item

A. Receipts
1. Corn (70 bu/A x 50A x $2.30/bu)
B. Direct costs
1. Fertilizer'
2. Seed
3. Pesticides
4. Machinery operation'
5. Drying and marketing
6. Storage3
7. Operating interest4
8. Total direct costs
9. Receipts over direct costs
(A.1 B.8)
C. Overhead costs'
1. Labor'
2. Machinery7
3. Miscellaneous"
4. Total overhead
D. Netmargin (B.9-C.4)9


Case Example


$8,050

865
450
550
763
630
315
303
$3,876

$4,174

$1,375
1,675
220
$3,270
$ 904


*85-25-40 for N-P,Os-K,0 for 70 bushel yield @12, 14 and 9 cents per lb.
'Fuel and repairs.
'Assumes part of crop sold at harvest and part stored; average 3 months storage at 3 cents
per bushel per month on all production
'Interest on direct costs for 6 months and crop storage for 3 months at $2 corn price per
bushel and 9% interest rate.
'Overhead costs may be lower if land is added to an existing unit.
'5.5 hours per acre @$5 per hour.
'Machinery depreciation, lease, insurance and 9% interest on investment.
"Record keeping, utilities, supplies, etc
'Net margin is the capital return to land for land overhead costs and management.


your resources and management plans for the enter-
prises may be different, you really need to do your
own budgets.
Now that you have analyzed each enterprise prefer-
ence, you are at the point in the decision making pro-
cess where a final selection of an enterprise should be
made and responsibility taken for your choices. After
operating your enterprises, evaluate whether your
enterprise selection was correct and make changes if
needed in future years.

Table 6. Example Livestock Budget. Receipts and
Costs for Feeding 50 Purchased Pigs


Case Example
48 Head'
Sold


A. Receipts
1. Market hogs
(48 hd x 220 Ibs x $.40/Ib)
B. Direct costs
1. Feeder pigs (50 hd x $32/hd)2
2. Feed
a. Corn (442 bu x $2.50/bu)
b. Supplement (6144 Ibs x $.10/Ib)
3. Marketing and hauling ($1.50/hd)
4. Veterinary and medicine ($.50/hd)
5. Utilities ($.30/hd)
6. Interest on feeders and feed
($3320 x 10% x 4 mo)
7. Grinding and mixing feed
($.25/cwt x 309 cwtfeed)
8. Miscellaneous (bedding, supplies)
9. Total direct cost
10. Receipts over direct costs (A.1 B.9)
C. Overhead costs
1. Labor (72 hr x $5/hr)
2. Building depreciation
3. Equipment depreciation
4. Miscellaneous (insurance, property taxes
and repairs)
5. Total overhead costs
D. Netmargin (B.10-C.5)3


$4,224

1,600

1,105
614
72
24
14
110

77

24
$3,640
$ 583

360
50
12

50
$ 472
$ 111


'50 feeder pigs were purchased, but a 4% death loss resulted in 48 head sold.
'Feeder pigs were purchased weighing 40 pounds.
'Net margin is the capital return to buildings and equipment and management.

SUMMARY

Enterprise selection on the small farm is a critical
decision for you and your family. Although informa-
tion is available from many sources to help with your
decision, careful evaluation of your own objectives
and resources is of greatest importance. A good man-
ager will gather as much information about a prob-
lem as possible-before making a decision. You should
go through the whole decision making process, hope-
fully make a good decision and then evaluate for any
further changes. You should now know how to make
an enterprise selection decision, so go forth-and
have a good time being the kind of farmer that is right
for you.


This information is for educational purposes only. Reference to commercial products or trade names does not imply discrimination or endorsement by the
Cooperative Extension Service. Cooperative Extension Service Programs are open to all without regard to race, color, or national origin. Issued in furtherance of
cooperative extension work in agriculture and home economics, acts of May 8, and June 30, 7914, in cooperation with the U.S. Department of Agriculture. Gordon E.
Guyer, Director, Cooperative Extension Service, Michigan State University, E. Lansing, Ml 48824.
1P-10M-1:79-UP, Price 15 cents. Single copy free to Michigan residents.
0-11157 Michigan State University Printing




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