Citation
Optimum farm plans to meet changing conditions in north and west Florida crop farms

Material Information

Title:
Optimum farm plans to meet changing conditions in north and west Florida crop farms
Creator:
Soliz-Valarezo, Romulo, 1946-
Place of Publication:
Gainesville FL
Publisher:
University of Florida
Publication Date:
Language:
English
Physical Description:
xii, 161 leaves : ill. ; 28 cm.

Subjects

Subjects / Keywords:
Agricultural resources ( jstor )
Cash ( jstor )
Crops ( jstor )
Farmlands ( jstor )
Farms ( jstor )
Operating capital ( jstor )
Peanuts ( jstor )
Soybeans ( jstor )
Tobacco ( jstor )
Tractors ( jstor )
Dissertations, Academic -- Food and Resource Economics -- UF
Farm management -- Florida ( lcsh )
Field crops -- Florida ( lcsh )
Food and Resource Economics thesis M.S
City of Gainesville ( local )
Genre:
bibliography ( marcgt )
non-fiction ( marcgt )

Notes

Thesis:
Thesis (M.S.)--University of Florida.
Bibliography:
Bibliography: leaves 158-160.
General Note:
Typescript.
General Note:
Vita.
Funding:
Florida Historical Agriculture and Rural Life
Statement of Responsibility:
by Romulo Soliz-Valarezo.

Record Information

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:
Copyright Romulo Soliz-Valarezo. Permission granted to the University of Florida to digitize, archive and distribute this item for non-profit research and educational purposes. Any reuse of this item in excess of fair use or other copyright exemptions requires permission of the copyright holder.
Resource Identifier:
020401227 ( ALEPH )
02172916 ( OCLC )
AAA9891 ( NOTIS )

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OPTIMUM FARM PLANS TO MEET CHANGING CONDITIONS
ON NORTH AND WEST FLORIDA CROP FARMS












By
Romulo Soliz-Valarezo


A THESIS PRESENTED TO THE GRADUATE COUNCIL OF
THE UNIVERSITY OF FLORIDA
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE
DEGREE OF MASTER OF SCIENCE










UNIVERSITY OF FLORIDA


1976

..






ACKNOWLEDGMENTS


The author wishes to express his deep gratitude and appreciation to Drs. John E. Reynolds and John Holt, Co-chairmen of his Supervisory Committee, for their generous and unending assistance throughout this research. The author would also like to extend his gratitude to Mr. George Westberry for his important contribution to this research and for serving as a memU er of the Supervisory Committee.


The author is sincerely thankful to Mr. E. H. Finlayson, Jr.,

who was constant in his indispensable cooperation to this research, and to Dr. Glenn Zepp for his valuable suggestions and encouragement.


A special word of thanks goes to Drs. Kenneth Tefertiller and

Leo Polopolous who made possible his appointment as Graduate Assistant to undertake this study. The author would also like to thank the Instituto Nacional de Investigaciones Agropecuarias (INIAP) of Ecuador for sponsoring his graduate work.

His special appreciation goes to Ms. Debbie Bucci and Ms. Millie Pfeifler for typing the drafts of the thesis, and to Miss Sofia Kohli for her excellent work in typing the final draft.

To his mother and father and brother, Marcelo, the author extends his deepest gratitude for their faith and encouragement throughout the time of his graduate studies.

Finally, but not least, special thanks and sincere gratitude goes to his older brother, Rogelio Sgnchez-Valarezo, who oriented the author on the path of Agricultural Economics.

..












TABLE OF CONTENTS


ACKNOWLEDGMENTS . .


LIST OF TABLES .


LIST OF FIGURES LIST OF APPENDIX TABLES .

ABSTRACT . CHAPTER I:

INTRODUCTION .

Statement of the Problem Objectives CHAPTER II:

DESCRIPTION OF THE AREA

Selection of the Area

Physical Factors .

Soils and Topography Drainage. .

Climate and Weather


Irrigation .


Social and Economic Conditions

Population .

Labor Force .


-iii


Page

ii


. . . . .vi


vii viii

xi


0

Q

..










Income . . . .

Transportation

Agricultural Trends .

Number and Size of Farms

Value of Farm Products Sold .

Changing Capital Requirements . Crops Situation .

Crop Program Review. .

Production Trends (By Commodities) Prices . . . . . . .


Page
. . 18

19

. . . . . 19

. . 19 . . . .22

. . . . 23

. . . . . 23

. . 23

27

31


CHAPTER III:

DESIGN OF STUDY .

Source of Data--The Budgets

Theoretical Concepts .


* 34

35

* 41


Mathematical Assumptions of Linear Programming The Model .

Planning Situations and Process Restrictions .
The Initial Tableau--Procedure of Analysis CHAPTER IV:

OPTIMUM PLANS FOR ALTERNATIVE CROPLAND AND OPERATING
CAPITAL SITUATIONS .

Hand-Harvest System vs. Machine-Harvest System in
Flue-Cured Tobacco .

Optimum Plans Including All Enterprises . .

Optimum Plans Excluding Tobacco Enterprises .

Optimum Plans Excluding Peanuts Enterprises . .

..








Optimum Plans Excluding Tobacco and Peanut Enterprises. . . . . .

Optimum Plans Including Irrigated Corn Enterprise .


CHAPTER V:

OPTIMUM PLANS FOR PEANUT FARMS AND THEIR ACREAGE RESPONSE FUNCTIONS TO PRICE CHANGES: THE PEANUT
PROGRAM ABOLISHED.

Optimum Plans for a Representative Farm (400 Acres
and $100,000 of Operating Capital): Effects of
Programming with Variable Prices . . .

Plans Including All Enterprises. . .

Plans Excluding Maryland Tobacco Enterprise Plans Excluding Both Flue-Cured Tobacco and
Maryland Tobacco Enterprises .
Stepped Acreage Functions for Peanuts . CHAPTER VI:

SUMMARY AND CONCLUSIONS. . . .

On Optimum Plans for Alternative.Cropland'and
Operating Capital Situations .
On the Effects of Variations in Peanut Prices .

Implication of Results APPENDIX OF TABLES .

BIBLIOGRAPHY .

BIOGRAPHICAL SKETCH. . . . . .


Page


96


97 . 97

102 104 108



115


117

122 125 128 158 1 61

..












LIST OF TABLES


Table


Page


1. Social and economic trends, Planning Districts
I, II and III, North and West Florida, 19601970 17

2. Some agricultural trends; Planning Districts I,
II and III in North and West Florida, 1968-1973 . 20

3. Data on peanut allotment and marketing quota
program and flue-cured tobacco acreage poundage
program, North and West Florida, 1973 and 1974 .26

4. Production trends for selected crops, Planning
Districts I, II and III, North and West Florida,
1968-1973 . 28

5. Product yields and prices used in preparing
budgets for North and West Florida, 1975, 36

6. Input prices used-in preparing budgets for crop
farms in North and West Florida, 1975 37

7. Basic form of the simplex tableau used to compute
optimum plans for crop farms in North and West
Florida 56


8. Optimum plans for alternative levels of cropland
and operating capital on North and West Florida
farms: Plans including all enterprises .

9. Optimum plans for alternative levels of cropland
and operating capital on North and West Florida farms: Plans excluding tobacco .

10. Optimum plans for alternative levels of cropland
and operating capital on North and West Florida"
farms: Plans excluding peanuts


11. Optimum plans for alternative levels of cropland
and operating capital on North and West Florida
farms: Plans excluding tobacco and Peanuts .


. . 82

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Table Page

12. Optimum plans for selected levels of cropland
and operating capital on North and West Florida
farms: Irrigated corn included and tobacco
excluded . . . . . .90

13. Optimum plans for selected levels of cropland
and operating capital on North and West Florida
farms: Irrigated corn included, tobacco and
peanut enterprises excluded 93

14. Effects of pe anut price variations on optimum
plans for 400 acres of cropland and $100,000 of
operating capital in North and West Florida:
Plans including all enterprises . . .99

15. Effects of peanut price variations on optimum
plans for 400 acres of cropland and $100,000 of
operating capital in North and West Florida:
Plans excluding Maryland tobacco enterprise. . .103

16. Effects of peanut price variations on optimum
plans for 400 acres of cropland and $100,000 of
operating capital in North and West Florida:.
Plans excluding flue-cured tobacco and Maryland
tobacco. . . .105






LIST OF FIGURES

Figure Page

1. The Study Area: Planning Districts I, II
and-III, North and West Florida.13

2. Firm Level Stepped Acreage Functions for Peanuts 110

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LIST OF APPENDIX TABLES

Table Page

1. Peanuts: estimated costs and returns per
acre, North and West Florida, 1975. . . .129
2., Peanuts: morithly labor and tractor requirements per acre, North and West Florida, 1975. .130

3. Flue-cured tobacco: estimated costs and
returns per acre, North and West Florida . .131
4a. Flue-cured tobacco plant bed: monthly labor
and tractor-requirements per plant bed (75
sq. yd./acre), North and West Florida, 1975 . .133

4b. Flue-cured tobacco field-operations: monthly
labor and tractor requirements per acre,
North and West Florida, 1975.,. . . .134

4c. Flue-cured tobacco harvest: monthly labor,
tractor and mechanical harvester requirements
per acre, North and West Florida, 1975 . . .135

5. Maryland tobacco: estim ated costs and returns
per acre, North and West Florida, -1975 . . .136

6. Maryland tobacco: monthly labor and tractor
requirements per acre, North and West Florida.
1975. . . . . . .137

7. 1Irrigated corn: estimated costs and returns
per acre, North and West Florida, 1975. . .138

8. Irrigated corn: monthly labor, tractor and
combine requirements per acre, North and West
Florida, 1975. .139

9.1 Non-irrigated corn: estimated costs and returns
per acre, North and West Florida, 1975 . . .140

10. Non-irrigated corn: monthly labor, tractor and
combine requirements per acre, North and West
Florida 95 7. . . . .141


viii

..








Table e

11. Wheat; estimated costs and returns per acre, North and West Florida,,1975 .

12. Wheat: monthly labor, tractor and combine requirements per acre, North and West Florida,
1975 .

13. Single-cropped grain sorghum: estimated costs and returns per acre, North and West
Florida, 1975 . . . . . . . .

14. Sorghum: monthly labor, tractor and combine requirements per acre, North and West Florida,
1975 .

15. Double-cropped grain sorghum: estimated costs and returns .per acre, North and West Florida,
1975 . . . .

16. Double-cropped sorghum: monthly labor, tractor and combine-requirements per acre, North and
West Florida, 1975 .

17. Single-cropped soybeans: estimated costs and returns per acre, North and West Florida, 1975

18. Soybeans: monthly labor, tractor and combine requirements per acre, North and West Florida,
1975 .

19. Double-cropped soybeans: estimated costs and returns per acre, North and West Florida, 1975

20. Double-cropped soybeans: monthly labor, tractor and combine requirements per acre, North and
West Florida, 1975. .

21. Watermelons: estimated costs and returns per acre, North and West Florida, 1975 .

22. Watermelons: monthly labor and tractor requirements per acre, North and West Florida, 1975

23. Costs of operating machinery: annual fixed costs per unit, 1975 .


Page


. . 142


143 . . 144



145



. . 146 . . 147


148


. . 149 . . 150 . . 151 . . 152 . . 153


154

..










Table Page

24. Man-equivalent hours of operator labor.
available by months, 1975 . . 155

25. Machinery and equipment utilized by enter-, prises in optimal plans . . . . . . . 156

26. Returns adjusted for fixed costs involved in each optimal plan . . . . . . . . 157

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Abstract of Thesis Presented to the Graduate Council
of the University of Florida in Partial Fulfillment of the Requirements for the Degree of Master of Science OPTIMUM FARM PLANS TO MEET CHANGING CONDITIONS IN NORTH AND WEST FLORIDA CROP FARMS

by

R6mulo Soliz-Valarezo

March, 1976

Chairman: Dr. John E. Reynolds
Co-Chairman: Dr. John Holt
Major Department: Food and Resource Economics

The major objective of this study was to develop optimum (profit maximizing) farm organizations as a general model to evaluate incomeraising adjustment opportunities in crop production for the area comprised of Planning Districts I, II, and III in North and West Florida. The analysis can be classified under two headings: 1) Determination of effects on optimum combination of enterprises and income levels of changes in alternative levels of cropland and operating capital, and 2) Impact on peanut enterprises if the governmental price support and acreage allotment programs were abolished. This section included the development of acreage response functions to alternative levels of peanut prices.

A "synthetic" firm approach was adopted to analyze typical oneman crop farm operations. Linear programming techniques and parametric procedures were usedto test the optimum solutions. Results depended on the underlying assumptions, the input-output data and the price information used in this study.

Eighteen production activities were'considered as enterprises.

Under the model's assumptions, both single and double-cropped grain sorghum did not enter any of the optimum solutions. For flue-cured tobacco, hand

..










harvest methods should be used for acreages up to 74.acres, at which point it becomes feasible to use mechanical harvest. Optimum solutions were obtained for several alternative resource situations and product combinations. Overall, government-supported crops appeared to be the best capital investment plan. Tobacco and peanuts combined well, and the exclusion of peanuts did not increase returns. As more cropland and operating capital was made available, extensive-type crops entered the optimum plans in larger acreages. In farms specializing in extensive crops, corn and soybeans appeared to have the best adjustment opportunities. Corn substituted for soybeans as operating capital increased. Higher requirements of operator labor at harvest time made custom harvest a profitable alternative.

As peanut prices decreased and peanut acreage allotment was

eliminated, other crops were substituted for peanuts and the resulting income disadvantages were small under current relationships with competing crops.





Chairman



SCo-Chairnfan

..












CHAPTER I

INTRODUCTION


Crop farming is the predominant type of agricultural production in North and West Florida,1' and, as in the whole agricultural sector of the United States, farming in this area is becoming increasingly complex. Rapid and expanded technological developments coupled with inflated production costs, as well as current and potential changes in national agricultural policies accelerate this trend.

Farmers continue adopting labor-saving techniques as well as increasing the use of purchased inputs. The inflationary syndrome increases the already high capital requirements. Rising wages heighten the potential benefits of harvest mechanization and speed up its adoption. Events associated-with production control programs, price support regulations and related policy implications create questions regarding production decisions for the next cropping year.


The above situation may well continue to result in low incomes for farmers if, as is consistently,observed inNorth Florida [23], a lack of opportune adjustments in resource use prevails in the area. Therefore, a need exists for economic adjustments at the farm level in the combination



/North and West Florida, as used in this study, refers to those counties included in Planning Districts I, II and III (see Chapter II).

..







of enterprises, level of investment and in the size and type of farm operations in order for farmers to achieve the desired efficiency in their enterprises. Therefore this study focused on the economics of the optimal enterprise combinations for future production planning for crop farms in North Florida.


The premise underlying this study is that it is possible,

through evaluating the economic opportunities for adjustments in resource use and by analyzing the decision-making components of production, to suggest a plan or course of action that will result in economic growth-2/ of crop farms in North and West Florida.


The information in this study should be helpful in evaluating alternative crop enterprises and alternative farm organizations in North and West Florida. The estimates presented are not necessarily applicable to an individual farm or an individual year. Results are presented in such a manner that the estimates can be adjusted to a particular or specific set of circumstances.

The results should provide information to producers, extension agents and agricultural professionals so that crop farmers in North and West Florida may improve their production decisions. And the linear programming model developed for this study will serve as a nucleus for later intensive farm planning efforts for that area.



2-/Economic growth is measured in this study by farm income and
its relation to the factors causing changes in the distribution of limited resources and their productivity,

..








Statement of the Problem


The North and West Florida area is an important commercial

crop farming area. Some sections within the area have specialized in the production of certain crops. Suwannee, Hamilton and Madison counties are largely dependent on flue-cured tobacco as a source of cash income. Jackson County, which'harvested 27,240 acres in peanuts in 1974 [13], had around half of the total peanut acreage in the study area. Soybeans are grown mainly in those counties in the extreme western part of the area. Supplementary enterprises are, of course, carried out in conjunction with those high-profit crops. Even so, the income of crop farmers in this area is comparatively low when compared to the remainder of the state. For quite a number of years most of the counties lying immediately south of Georgia and Alabama have been classified as lowincome farming areas [9]. Census statistics [24] show a high concentration of farms in the low gross income levels as compared to the relatively small number of farms with high gross income levels.

As briefly mentioned in the introduction, the problem addressed in this study relates to the increased complexity involving the process of production decisions as well as the adjustments implied in the adoption of new technologies, farm size adjustments and agricultural policy changes. These "economic and technological changes" are continuously occurring and are influencing adjustments within farming systems. In general, farmers have been slow to respond to these changes [23].

Although all crops are affected by this "farming complexity,"

they are not all affected to the same degree. Among the enterprises that

..






are important to production planning in the study area are the following: flue-cured tobacco, Maryland tobacco, peanuts, corn (irrigated and nonirrigated), soybeans, grain sorghum, wheat and double cropping activities such as wheat-soybeans and wheat-grain sorghum. From these enterprises, peanuts and flue-cured tobacco have higher potential incomes and thus are the most attractive to farming. However, these two crops face a series of economic, technological and institutional uncertainties which complicate production planning and create a need for farmers to periodically re-evaluate their farm organizations.


As for tobacco, mechanical harvesters are now available for harvesting flue-cured tobacco with the potential for substantially reducing the labor input1/ and the per unit production cost. Tobacco's high seasonal demand for labor together with a sharp upward trend in wage rates4/ constitute a mounting problem in the hand harvest system. Thus, the adoption of the mechanized system may increase tobacco profitability by substituting capital for labor. Yet mechanization is a costly endeavor. The cost of tobacco harvesters ranges from $20,000 to about $24,000 and bulk barns cost about $6,500 each. At present the mechanization question hinges on the size of the operation. The rigid restraints in allotment leasing plus the small size of poundage allotment (4,399.6 lbs. in 1974) make it difficult for most farmers to accumulate tobacco acreage into operating units large enough to justify the purchase of mechanical harvesters.

3/1'Mechanization of its (flue-cured tobacco) harvest will about half the average crew size of the current harvest systems in use" [27].
4/"A major contribution to rising costs to flue-cured tobacco
production is farm wage rates which rose 46 percent in the South Atlantic states from 1967 to 1972" [3].

..






As for peanuts, the most limiting component governing their

production is the peanut allotment program. In 1974 the average allotment for the area was 13.9 acres.


However, despite production control regulation and increasing demand for edible-grade peanuts, production from the national minimum allotment resulted in supplies greater than commercial requirements. Due to this production surplus, prices received by farmers were near the support price and the C.C.C. (Credit Commodity Corporation) acquired the peanuts in surplus. The CC.C. then distributed the peanuts at prices below acquisition cost into crushing channels and into exports. Consequently, the C.C.C. loses money on peanut price support operations. In recent years the C.C.C.'s losses have averaged 6 cents per pound for all peanuts acquired under the price support program. Moreover, due to the uptrend in parity prices and with strong indications that peanut production may continue to outrun commercial edible requirements, the C.C.C. costs in supporting peanut prices will most likely continue to increase. While the annual peanut program cost approximated 66 million dollars in 1970, the estimate for 1980 is over 100 million dollars, assuming continuation of the current program, Thus, this high level of government expenditure in the peanut program creates pressure for program modifications.


In 1973 a bill was introduced to Congress in an attempt to

extend the target price concept to peanuts. This bill basically implied a lifting of the price support policy and a change to a market-oriented price. A 10 cents per pound target price was suggested, along with a

..






12 percent increase in the allotment acreage, The 1972 price averaged 14.25 cents per pound [25, p. 17]. This bill did not pass.


J. P. Marshall, et al. [19] presented some alternative modifications to the peanut program. They suggested market-oriented peanut price incorporating acreage allotments. The peanut programs Marshall suggested were aimed at reducing or eliminating government expenditures for peanut price support, yet at the same time, increasing grower's incomes and insuring an adequate supply of peanuts.


In summary, a peanut program modification seems imminent. In the event that the government program is lifted or altered, changes in the peanut industry are likely to occur. Price is likely to drop. If so, will peanuts still be a competitive crop, or will peanuts go out of the area's product mix? This study will attempt to provide insight on this issue.


The facts surrounding the other crops in the area also merit attention. The 1975 fled grain and wheat programs had no set-aside requirements and they provide farmers freedom concerning what to produce for the market place. No land will be removed from agricultural production under these programs. Soybeans will compete for acreage on an economic basis with feed grains and other crops.

The main question concerns the product cost-returns relationship and its implications on the farm enterprise organization and farmers' incomes, "Costs for growing wheat, corn and soybeans were up 12-13 percent over 1974, while at the same time, farmers were selling for less

..







than a year ago. Net farm income is decreasing" [17], Thus, the need exists for a better pattern in allocative resource efficiency oriented to raise the crop farmers' incomes,


In brief, several instances reflect the need for more information on production planning and economic adjustments in crop farming in North and West Florida: (a) The existence of recent technological, developments, specifically those implementing the transition from conventional to mechanical harvesting systems; (b) potential changes in policy programs in farming may transform the crop production structure of North and West Florida; (c) many crop farms with adequate resources are not achieving acceptable income levels perhaps due to non-optimal organization of enterprises; (d) the inflationary trend contorts the cost-returns relationship which might result in changes in the relative competitive situation among crops; (e) some farms, even though managed efficiently, are not able to satisfy desired levels of income due to limited unit size (size as defined by both operating capital requirements and cropland area).


As the complexity of crop farming increases, the need for careful production planning also increases. This study was intended to analyze this general problem. Its overall purpose was to evaluate the adjustment opportunities in crop production in order to organize productive factors for higher returns. These enterprise organizations must be within the constraints placed by resource availability and institutional framework in the study area.

..





Objectives


The major purpose of this study was to develop optimal crop farm organizations as a general model to meet changing conditions in the crop agriculture of North and West Florida, The achievement of thIs purpose lead to the evaluation of adjustment opportunities in crop production in order to organize productive resources for higher returns. These resources and enterprise organizations were within the constraints placed by resource availability and within the framework defined by technical, economic, and crop policy conditions.


This major purpose was based on the hypothesis that the conditions in crop farming are changing and consequently crop farm managers find it necessary to re-evaluate their farm organizations in light of those changes.


The major purpose consisted of the following specific objectives:

(1) To determine the effects on optimal enterprise organizations and on income levels of alternative farm

resource and enterprise situations defined as:

(a) Differences in size of crop farms as expressed by alternative levels of cropland availability.

(b) Differences in farmers' levels of operating capital.

(c) Alternative types of crop harvesting as determined

by harvesting with owned machi nery and custom harvesting5/5-All enterprises except tobacco and watermelons included the custom harvesting alternative. This difference in type of harvesting reflected the economics of combine purchase when size of-cropping warranted it,

..










(d) Alternative harvesting systems in flue-cured

tobacco, where mechanical harvesting and hand

or conventional harvesting were considered.

(e) Changes in the product mix involving four.

situations: a). all enterprises included, b)

excluding flue-cured tobacco and allowing

peanuts as the allotment crop, c) peanuts excluded and allowing flue-cured tobacco as the allotment crop, and d) excluding both peanuts

and tobacco enterprises.

(2) ,To describe and evaluate the different farm plans

obtained under the above farm situations. This analysis focused on:

(a) Optimum enterprise organizations.

(b) Optimum income levels.

(c) Limiting resources, with emphasis on cropland
and operating capital./.

(3) To determine optimum plans for peanut farms under the

following alternatives:
(a) Price variations considered.

(b) Flue-cured tobacco included and Maryland tobacco excluded.

6/For this evaluation, marginal value products (MVP) of restrictive resources under those alternative farm situations were determined.

..







(c) Not including either flue-cured tobacco or Maryland tobacco.

Objective three implied two parts in the analysis: (a) an evaluation of the competitive position of peanuts relative to the other crops as its price decreased and as the enterprise composition changed, and (b) an estimation of acreage response functions for peanuts.


The achievement of the above specified objectives make it possible to:
(1) Explore the possibilities of improving farm profitability and efficiency by either adjusting farm size

or by reorganizing the farm enterprise mix.

(2) Provide guides to farmers choosing among income

alternatives and combinations of products, when

those opportunities are affected by degree of harvest

mechanization and resource availabilities.
(3) Provide information needed by farmers, extension

workers, reserachers and public agencies engaged with the development of the crop sector in North and West

Florida, in developing farm plans that can increase

the income level of the farm families concerned.

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CHAPTER II

DESCRIPTION OF THE AREA



The area selected for study is a 27 county area of North and West Florida composed of Planning Districts I, II and III. Figure 1 shows the geographic location, and counties included in the study area.


Selection of the Area

This area was selected.because:

(1) Planning Districts I, II and III comprise an area

which needs economic and agricultural development

opportunities. This is clearly identified in

Tyner's report: "As a group, the counties in North

and West Florida comprise an area that is considerably

less well developed than the remainder of the .state.

Employment is limited and incomes are very low in this

area" [23, p. 3].
(2) North and West Florida is an area where crop production is highly concentrated in the product mix.

"General farm crops tend to be grown in northern

and northwestern Florida where conditions are not

favorable for the production of citrus and early

vegetables" [5, p. 7].

..







(3) The area has a fairly uniform climate such that

the results of the study will be applicable over

a wide area.



Physical Factors

Physical factors, in combination with economic, social and

biological factors, determine the type of agriculture and combination of enterprises selected by farmers in any area. Physical factors are perhaps the most limiting and thus they will be described first. Soils and Topography


The soils in the area are predominantly fine sand and are deficient in lime [5, p. 5]. A generalized soil map of Florida [5, p. 5] shows that the study area has mostly "well to moderately well drained" and "well to somewhat excessively drained" sands and loamy sands. The soils are thick to thin acid sands and sandyloams, some of which overlie finer-textured subsoils [16, p. 4].


The topographyis defined by a rather flat land with no large

differences in elevations. There are some rolling hills that sometimes create a minor water erosion problem. :Drainage

In some cases there is a problem of drainage associated with the flatness of the area. Much of the land is subject to flooding in periods of heavy rainfall [5, Figure 4]; "Heavy rainfall and warm

..

















PENSACOLA


jr,s .,


Figure l*--The Study Area: Planning Districts I, II and III, North
and West Florida



*Multi-county Planning Districts Boundaries. Established by State Secretary in January 1973.

..






climate have furthered the processes of leaching and oxidation on ridge soils. Imperfect drainage on flatwood lands has tended to retard these processes" [5, p. 5]. In the poorly drained areas, removing excess water can be a problem at certain times of the year.


Climate and Weather

The climate in the study area is classified as subtropical, with lower average temperatures than the remainder of the state.


The growing season/ in North and West Florida ranges from 240 to 310 days, with a killing frost likely to occur annually. Cold waves are of short duration, rarely lasting more than three days, but reaching minimum temperatures of 150 to 20' F [5, p. 6].

Differences in temperature are particularly important because they reflect the potentials for crops, The study area is located primarily north of a line that marks a normal annual temperature of 69' [5, Figure 2]. Major vegetable and citrus producing areas are located south of this line.

The study area receives abundant rainfall with average annual
totals that range from 52 to 64 inches. Planning District III receives about 52 inches per year. Average rainfall increases as you move westward with the western counties in Planning District I averaging between 60 and 64 inches [5, Figure 3].



1-"Number of days between average date of last killing frost in spring and average date of first killing frost in the fall" [5- p. 6].

..







Rainfall distribution throughout the year is very uneven. The rainy season in the summer, from June to September or early October, accounts for 45 to 55 percent of the annual average rainfall in the area. However, rainfall distribution differs from season to season during fall, winter and spring. The months of April and May have relatively low precipitation and are the critical growing months for tobacco, the major cash crop in Planning District III.


Irrigation


Irrigation in the area is very important because of the sandy character of the soil, irregularity of rainfall, increased intensity of farming and the high price of farm products. At present, irrigation is mainly confined to those counties that produce tobacco. Many of the irrigation operations are single farm installations which draw water from wells, lakes, springs and streams. The sprinkler system is the most commonly used [5, p. 10]. The area has high potential for increasing irrigated crops and irrigation is expected to play an important role in the future.


Social and Economic Conditions

Among the economic and social forces that help to explain the level of development found in the study area are the trends and current status os such variables as population and its distribution, labor force, income levels, transportation facilities and nearness to markets.

..







Population


From 1960 to 1970, the population of the study area increased by almost 20 percent, while the population of the rest of the state increased by 37 percent (Table 1).


Urban population showed a 45 percent increase, while rural

population decreased '5.4 percent during the same 1960-1970 period. The state percentage changes are 49.4 and 2.3 percent increases for urban and rural populations respectively.


As for farm populations in the area, all three planning districts lost population, with an aggregate change of-1.8 percent for the total area, while the state's farm population has remarkably increased by 44 percent during the same period of 1960-1970. In 1970 farm population counted for 5.7 percent of the total area population while rural population represented 40 percent.


Labor Force

Typically, the area under study has excess labor resources.

Table 1 shows the labor force by major sectors of the economy. Agriculture, unlike most sectors in the economy, has had a decline in its labor force. While the study area showed a notable decrease of 26.5 percent, the corresponding decrease for the state was only 4.6 percent during the 1960-1970 period. The state's percent is negative due to the decreasing effect of the study area, The rest of the state increased its labor force by 1 percent during this period.

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Table 7.--Socuil and economic trends, Plannin ,ist+ ts !" and 1L; io .-rlh and West Floridi 1560-1970

a V1orida :'istrict I 01str;ct 11 Cstrirt III Sttd,/ Area
S oc:al and con nic Var~ables r--ne__na, -e nat- -h,:e -h-r
r.t,;nge Cna~ige --~ge ChC~ ha ngC
.60-70 1973 1960-70 197 1960-70 1970 1963-70 1970 19I0-70 1970

percent number percent nu bv percent num ner percent num-ber percent number

Ponulaticm
T,:, 37.2 6,7A),443 25.2 331,262 11.5 333.4 3 24.5 215,142 19.5 379,862
Urban 43.4 5,463,117 46.0 240,273 33.7 176.955 59.3 109,65 45.0 526,39
(30.51 (73.5) (93.i) (51.0) (63.0)
RPral 2.3 1,321,32r -11.1 90.c 6.2 156,503 1.4 1u5,4j6 5.4 352,973
(19.5) (27.5) (46.) (49.0) (43.1)
Farm 43.9 143,667 18.5 7,-13 8 2 20.939 0.9 21,561 1.8 49,-13
(11.3) (3.1) (13.4) (20.4) (5.7)
:;n-farm- 1.3 1,172,669 -14.9 83.3,71 5.8 135,564 2.0 13,925 6.0
(8S.7) (91.5) (86.5C (75.6) (34.4,

L~r Force. by Major Sectors
A~r:,re 4.6 110,99,4 -11.2. 1,313 -26.3 9,349 -30.4 5.950 -26.5 17,112
(4.6) (1.9) (7.9) (7.7) (5.9)
Construcion 31.2 205,265 16.7 7,4CS "3.9 9.193 27.6 5,'64 17.9 22,465
(8.51 (p.2) (7.8) (7.0) (7.7)
ianu acturing 52.0 341,336 4.0 15,625 7.8 12,035 25.9 10,367 10.5 39,C78
(14.1) (15.1) (11.1) (13.4) (13.4)
Tr2de 52.0 571,051 42.3 20,11 34.3 23.297 37.4 14.439 37.9 58.337
(23.5) (21.4) 119.5) (13.7) (22.0)
Service ard Misc. 73.3 725,082 59.0 23,-3j 56.9 26.115 74.9 17,451 62.1 66,05
(29.9) (23.;) (:2.1) (22.5) (22.9)
Gover-menz & Education 81.9 316,641 51.4 21,j2i 71.5 2?,76) 87.9 1R, 413 68.5 68,755
(13.1) (27.7) (24.4) (23.3) (23.5,
-37.6 ;54,399 -31.6 6,i I -32.1 8,2;4 -33.0 5,1m9 -33.7 19,599
(6.4) 5.:) (5.2) (6.7) (23.5,
otal Iepioyed 41.1 2,4:6,263 27.3 97.O3E 23.2 117,912 29.4 77.173 26.1 292,151


Percent Uollars Percent DolIars Percent dollars Percent Oolirs Pe-cent DoIars

Irc*,.e
Perscna! inc7.e per capital 39.7 3.659 84.2 321i) 11.4 2.cz 118.8 2,956 104.8 3.053
Sedien family income 75.12 3,267 41.7 7,94, a,. 6,2E9 38.0 5,97 52.4

Fami1 ies by income level Percent Nu.-bers Percent Pe'-'r cent Njbcrs Percent Nv'-:n! Percent 2urber
Urcer $2,000 -39.3 1-7,445 -23.5 6,542 .-47.1 9,3613 -45,0 5,925 .410 2i,6

Under S3,00 -40.7 217,292 -30.0 13,6l -45.0 15,232 -43.4 9,173 -40.6 35,276
(14.6',! )( }18 1
,.- $4,999 -30.3 3 5,750 -35.3 14.7 5 -27.4 19,132 -30.6 11,019 -31.1 44.533
(18.7) (13.1, (23.6) (21.8)
S5,00 $9,929 35.S 6-5,551 25.4 32.3 ; 49.4 23,728 61.7 17,623 40.7 78,745
(3 .:,) (39.) (35.4) (34.9)
$10,000 and over 314.z 693,651 334.7 29,G:7 349.8 23,63 334.7 16.23d 359.4 69.208
39.0; .r Pl(nnlng32t2)

Source: Social ard Economic Trends; 1953 -11970; Stat'g of Florida Planning Districts.

..






Agriculture's labor force is the smallest among major sectors

of the economy. In 1970, area employment was 292,151 but agriculture's share was only 6 percent of this labor force. Income


Limited statistics on income are presented in Table 1. Personal income per capita figures and the data on family incomes indicate the disparity between economic opportunity in North and West.Florida as compared to the remainder of the state.


In 1970 the average personal income in all 27 counties in the study area was about $600 below-the state average ($3,659). However, per capita income increased by 104.8 percent in the study area, compared to 89.7 percent for the state during the 1960-1970 period.


Median family income was $6,472 in 1970, which was well below the state average of $8,267 for the same year. The percent change in family income during the period 1960-1970 was 52.4 for the study area and a higher 75 percent for the state.


The number.'of families with incomes under $5,000 has decreased considerably in the area under study. However, at incomes higher than $5,000, this number has increased. Family incomes ranging from five to ten thousand dollars have increased 40.7 percent, while family incomes $10,000 and over have risen 359,4 percent during the analysis period.


These trends in family income in the study area are similar to those at the state level,

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Transportation


The study area enjoys good transportation facilities. Federal

and state highways extend to all sections in the area. Since most farms are located on or are near all-weather roads thus small and large cities are readily accessible to farmers for trading purposes. The railroad lines running in and through the area connect the study area with the rest of the state as well as with the north-bordering states. Like the road system, the railway system can also be classified as adequate.


The study area is served by two important ports: Pensacola on the west side of the study area, and Jacksonville on the east. While a large volume of the area's agricultural production is not shipped out of the area by water, many agricultural supplies are shipped into the state by this means.



Agricultural Trends

The trends of several agricultural variables provide some insight on the adjustments that farmers have made over time.


Number and Size of Farms

By 1969 there were 11,139 farms that averaged 285.5 acres in the 27 county study area (Table 2). The number of farms decreased by 51.4 percent during the 15 years from 1954 to 1969 and from 1959 to 1969 the number of farms with sales over $2,499 decreased only 6,8 percent. The number of farms in the rest of the state decreased by 29 percent.

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Table 2--Some agricultural trends; Planning Districts 1, II and Ill in North and West Florida. 1954-1969

District LiI District III Study Area Rest of State
Agricultural Variables Change Change Change Change Change
I954-5g 1959 JB54-U. 190 1954-1969 1969 1954-69 1969 1954-69 1969
% nun .'r ner % number % number number
.uber of Farms -54.4 1,549 -52.5 5,226 -48.9 4,364 -51.4 11,139 -29.3 24,447

Number with sales over
$2,499 -26.8-1 540 0.4y- 2,274 -6.8y 2,976 6.811 5,790 6.81/ 14,306

acres % acre; acres acres % acres

Average size, all farnis 68.7 184.9 60.8 273.7 41.1 393.4 52.6 285.5 1.0 443.9
Average size, farms with
sales over $2,499 -16.P 308.9 -14.5y 513.8/ -23.62J 736.8 -19.4?/ 519.8 -12.8-/ 678.5
Dollars Dollars Dollars Dollars Dollars
I (thousands) % thousandd) (thousands) % (thousands) (thousands)

markett value agricultural
products sold, major catecories
All agricultural products 143.2 14,626 114.4 67,G47 181.7 77,746 145.7 159.41.9 155.1 972,655
Crops (incl. nursery products & hay) 201.4 8,940 83.4 35,066 36.5 24.278 71.4 69,284 130.6 662,444
(61.1) (53.8) (31.2) (43.5) (68.1)
Fcrcstry products 0.7 292 -30.5 1,139 42.3 1,170 6.0 2,601 -91.2 2,498
(2.0) (1.7) (1.5) (1.6) (.25)
Livestock, poultry and
their products 95.8 5,395 168.0 29,90Z 481.4 52,299 282.4 87,596 264.2 307.646
(36.8) (44.6) (67.3) (54.9) (31.6)


1/= Percentage chane from 1959 to 1969 only.

Percentage change from 1964 to 1969 only.


Data not available for 1954. Data not available ior 1954 and 1959.


Source: Social and Economic Trends, 1950-1970, State of Florida.

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This overall trend in the number of farms is an indication of the consolidation of farms which has occurred as a response to a need for larger acreages to adjust to more efficient sized units. Consolidation has occurred as farms with sales less than $2,499 have been combined with other farms. Small farms involved in consolidation either consolidate with each other or are bought by larger farms. Consolidation has been, as seen above, much more evident in the area under study than in the rest of the state.


Average farm size in the study area was about 160 acres smaller than the corresponding figures for the rest of the state. In 1969, the average size for all farms in the study area was 285,5 acres as compared to 443.9 acres for the rest of the state. For those farms with sales over $2,499, the corresponding study area farm size was 519.8 acres as contrasted to 678.5 acres for the rest of the state. It is interesting to notice, however, that the percent change in average size of farms in the study area is by far higher than the analogous figure for the rest of the state for the period 1954-1969. The study area's changewas an increase of 52.6 percent while the rest of the state's figure was only one percent. One other meaningful point is that, during the 1964-1969 period, the average size of farms with incomes over $2,499 decreased notably at both study area and rest of state level. This decrease seems to reflect the adoption of technological improvements so that now smaller farm sizes can obtain given levels of income,

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Value of Farm Products Sold


Supplementary relevant information is provided by changes in the market value of agricultural products sold. Table 2 shows the levels of sales for all farm products as well as for crops and other major categories., During the period 1954-1969, sales of all agricultural products increased 145.7 percent, similar to the trend for the rest of the state.


In 1969, the value of total crop sales in the area accounted for 43.5 percent of the total sales of all agricultural products. District III (31,2 percent) is way below Districts I and II (61.1 and 53.8 percent respectively) which pulled down the study area percentage. The corresponding percent for the crops' share at the rest of the state level was 68.1 This higher crop participation in the total value of sales at the rest of the state level seems to be associated with the large volumes of citrus, sugar cane, and nursery products in the rest of the state.


A leading district in sales of crop products in 1969 was District II with $36,066,000 which represented 53.8 percent of the market value of all agricultural products in that area. District I, on the other hand, had a comparatively low volume of crop sales ($8,940,000), but it represented 61 percent of the total volume of sales of agricultural products in that region. As for the whole study area, the value of crop sales increased by 71.4 percent.

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Changing Capital Requirements


The increasing requirements for capital is another important aspect of the changing conditions of agriculture in the study area.


Farm expenses associated with technology improvements (such as

mechanization, higher levels of fertilization and better disease control) as well as purchase of land for expansion are decreasing the attractiveness of farming relative to less risky non-farm investments. ". total capital requirements for Florida's-farm economy increased by one-half from 1959 to 1964. The most significant increase in the study area (North and West Florida) was in the substantially enlarged total capital values for land and buildings on farms ." [23, p. 38]. Between 1959 and 1964, the average value of land and buildings per farm increased by 54.5 percent in North and West Florida, 12.3 percent higher than the rate of increase for the rest of the state [23, Table 16].


In 1969, the average value of land and buildings per acre in
-the area under study was considerably lower than the corresponding figure for the rest'of the state ($178.1 as compared to $406,30) [24].


Crops Situation


Crop.Program Review


Government agricultural production regulations, price supports and loans for farm products are based on the Agriculture and Consumer Protection Act of 1973, Increased production costs in 1973 and 1974,

..







combined with declining commodity prices, stimulated interest in raising the target prices and loan rates stipulated in the 1973 Act.

Provisions of the 1975 feed grain program were virtually unchanged from 1974. Most often, farmers have a wide choice of which products to produce and how much. Producer flexibility continues in substituting feed grains, wheat, and other commodities for allotted crops. Thus allotments for wheat, corn, and grain sorghum do not limit the acreage of these crops that farmers can plant. Allotments for the abovementioned grains are used in calculating deficiency payments to producers if market prices fall below target price levels or if growers qualify for disaster payments. The average loan rates for these products in 1975 continued at the same levels as for the 1974 crops. These loan rates were $1.10 per bushel for corn, $1.05 per bushel for grain sorghum, and $1.37 per bushel for wheat. The target price levels (guaranteed price) for 1975 were also at the same level as in 1974. These target prices were $1.38 per bushel for corn, $1.31 per bushel for grain sorghum, and $2.05 per bushel for wheat [31].


The loan rate for soybeans was discontinued for 1975 because market prices in 1974 ran strong relative to the loan rates, However, due to declining 1975 soybean prices, Congress passed an emergency oneyear bill that would have raised the loan rate for soybeans. This bill was vetoed and consequently there was no program supporting soybean prices for 1975.

Although changes were proposed, the programs for peanuts and

tobacco (including marketing quotas and price support) were extended over

..







1975. Transfer of allotments by lease or sale within counties was provided for in the 1975 programs, which allows for size consolidation of those otherwise small peanut-and tobacco operating units. Table 3 shows the figures corresponding to peanuts and tobacco allotment programs. In peanuts, under the 1974 program, there were 3,983 allotment farms in the study area, as compared to 4,099 in 1973. The average farm allotment was 13.9 acres. In flue-cured tobacco, the number of allotment farms was 7,001 in 1974, only 1.2 percent higher than in 1973. The average tobacco allotment was 4,400 pounds.


The prices of peanuts and tobacco-were supported by loans and

direct purchases under the price support program. The objective of this program was to stabilize prices at announced levels to protect farm income. The price support level for flue-cured tobacco in 1975 was up 12 percent over'1974 as required by law. This meant a 93.2 cents per pound support price [31, Table 4], which reflected higher prices for goods and services bought by farmers. For the 1975 crop year, tobacco production costs again increased: ". tobacco crop will probably cost a minimum of 5 to 6 cents per pound more to produce than in 1974" [32, p. 16]. As for peanuts, the 1975 crop was supported at a minimum average price support of $393.10 per ton (19.64 cents per pound). This level was 7.4 percent above the previous year's rate (18.3 cents per pound) and reflected a rising minimum support level resulting from an up-trend in peanut parity price, At this level the price of peanuts was above the world market price. Even so, the CC,Cs minimum sales policy for diversion sales was 100 percent of the loan level,

..








Table 3.--Data on peanut allotment and marketing quota progam and flue-cured tobacco acreage poundage program, North and West Florida
1973 and 1974.

Item Unit 1973 1974


PEANUTS:
Number uf Allotment Farms Allotted Acreage Average Farm AllotmentHdrvested Acres1/

Productioii Actual Yield Average Price TOBACCO:
Number of Allotment Farms
Allotted Acreage-/
Total Poundage Quota 2 Average Farm Allotment
Harvested Acreage
Total Mdrketings
Yield per Acre-based on
marketings
Average Price


No. acres acres acres 1 bs.
Ibs. Dol ./Ton


No.
acres
lbs.
lbs.
acres
lbs.

lbs.
Dol .icwt.


4,088
55,350.6
13.5
53,665.8 147,623,230
2,751
328.5


6,918
14,019.4 25,713,718 3,716.9 11,605.4 20,966.,558

1,807
88.3


3,983
55,340.5
13.9
53,775.7 167,380,126
3,113
374.8


7,001
16,915.6 30,801,942
4,399.0 11,679.6 25,052,331

2,145
100.9


-/Excludes acreages of peanuts
includes non-allotment farms


harvested green for boiling purposes but of one acre or less.


2-/Total effective allotments and poundage quota after adjustments for
undermarketings and overmarketings in 1972 and 1973 respectively.

Source: U.S. Agriculture Stabilization and Conservation Services,
Florida Annual Report, 1973 and 1974.

..







Credit needs of farmers increased substantially in 1975 as prices of production inputs continued to rise, while the own-capital availability of farmers was reduced in real terms due to the relative decline in incomes. "In general, the financial condition of farmers is less favorable than in 1974" [30, p. 11]. The Production Credit Association (P,C.A.) provides for most of the operating capital available to growers. There was no specific limit on the size of loans. Production Trends

Through the years, economic prosperity of North and West Florida has been closely tied to the production of such field crops as corn, small grains, tobacco and peanuts. The major sources of cash income have come from tobacco and peanuts. Soybeans and grain sorghum are more recent crops in the state's farming system. Production of all these crops can increase substantially in the years ahead, especially corn and soybeans. In addition, double-cropping activities are becoming increasingly important, particularly those built around wheat, such as wheat-soybeans and wheat-sorghum. It is believed that double-cropping activities together with better crop practices will lead to substantial growth in field crops output,

Table 4 shows the production trends for peanuts, flue-cured

tobacco, corn, soybeans and wheat, during the five-year period from 1968 to 1973.


Peanut production has grown mainly due to yield increases and is expected to expand by more than 40 percent in the next decade with

..
















trends for selected crops, P1.nning Districts I, il and !I!, North end West Florida. 1963-1973


District I District IAcres harvested i- per con
Change Change Chance Change Change Change
Crop 196S-73 1973 1968-73 1973 1963-73 3973 1965-73 1973 1968-73 1973 1938-73 1973

acres pounds 2 1ounds 2 acres 2 pounds 2 pounds
Peanuts 3.9 6,433 22.6 2.860 34.6 19,030,000 7.5 38,270 42.7 2.442 eO.0 93,840,003

Flue-cured tobacco 15.3 657 -Il 1,246 10.7 925,200
(Type 14)acres 2 bushels 2 bushels 2 acres 2 bushels 2 bushels
Corn 3.4 17,90C 29.4 65 35.6 1,233.000 -24.2 122,500 11.2 44 -10.9 5,2r3,000

Soybeans 36.7 108,000 6.6 26 46.7 2.876,000 120.2 131,000 20.47 26 7.1 2,8;6,030

eat -83.3 11,40 -16.1 23 -111.4 264.600' -34.4 15,100 -30.7 20 -61.7 313'.300


Table 4.--Continued

District III Study Area
A-cres harvested Yie~o per acre Production Acres harvested Yield per acre Production
Change Change Change C'iange. Charge Change
Crop 1968-73 1973 1968-73 1972 1963-73 173 1963-73 1973 19634-73 1973 1963-73 1973

acres pounds 2 pounds acres % pounds % pounds
Peanuts 5.7 4,820 44.6 2,514 72.3 13,8r7.000 6.8 49,470 60.0 2,664 71.0 131,777,000

Flue-cured tobacco 1.2 10.732 1.2 1,796 2.8 19,344,400 1.9 11.389 1.2 1,823 3,1 20,770,500
(Type 14)
I acres % bushels bushel acres bushels % bushels
Corn -9.9 179,100 -9.5 40 -17.3 7,238,700 -12.2 322,100 3.6 43 -9.0 13,900,900
Soybeans 733.3 5,000 10.0 22 816.7 110,000 75.4 244.000 12.2 25 74.3 5,842,000

Wheat 241.7 2,900 -19.1 21 103.0 60,900 -44.2 29,400 -21.5 21 -71.5 643,800

Source: Florida Agricultural Statistics. Field Crops Sumary, 1973.


Table 4.--Production

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further development in yields, From 1968 to 1973 production of peanuts in the study area increased 71 percent; acreage went up only 6.8 percent, while the yield per acre substantially increased by 60 percent. Total production increased by 25 percent between 1973 and 1974 because a record yield of 3,000 pounds per acre was realized [30]. Notice that, in 1973, District II was responsible for 75 percent of that year's total production.

Flue-cured tobacco production (type 14) increased by only 3.1 percent from 1968-1973. Its average yield per acre increased slightly (1.2 percent) and the acreage harvested moved up very little (1.9 percent) since allotment regulations have been restricting any potential expansion. Flue-cured tobacco production is higly concentrated over most areas in Planning District III, where 96 percent of a total of 20,770,500 pounds were produced in 1973. Growers planned to harvest 12,900 acres in 1975 [12], which is up 10 percent from 1974 and 11 percent above 1973. On the horizon are innovations in harvesting and curing methods which could revolutionize the flue-cured tobacco business in the future.


Maryland-type tobacco is a new crop in Florida with a promising future if markets and marketing systems are developed. Although it does not receive government price support, its production in 1974 was larger than in the past years. For the 1974-1975 season the supplies were about 4,000,000 pounds abouve 1973-1974 [32, Table 17]. The production prospects indicated that its acreage last year was down 4 percent from 1974 [32].

Corn, from the standpoint of acreage harvested, is the most important field crop grown in Florida. Corn planted for all purposes

..







totaled 464,000 acres in Florida in 1975, up nearly 3 percent from the previous year and 16 percent above 1973. Yield outlook was favorable because of the 1975 crop. Thus, a large 1975 output that could lead to price easing for the season was expected, In contrast with these production prospects, the trends observed in the study area during the five-year period of 1968 to 1973 show that corn production declined 9.0 percent due to an acreage reduction of 12.2 percent (from 366,800 acres to 322,100 acres). Yields had an increase of 3.6 percent during the same period and were 43 bushels per acre in 1973. Corn production was highly concentrated over most areas of Planning Districts II and III, which accounted for 90 percent of total production in 1973.


Soybeans are produced under two distinct systems in the study, as a full-season crop and as a second crop after wheat. During the period between 1968 and 1973, soybean production increased 74.3 percent, reaching 5,842,000 bushels in 1973. These soybeans were grown mainly in the extreme western counties located in Planning Districts I and II, which accounted for 98 percent of total production in 1973. This notable growth in production resulted mainly from a substantial 75.4 percent increase in the acreage harvested. As of 1975, planting of soybeans continued its upward surge with a record 305,000 acres planted.


Wheat production in Florida is highly concentrated in Planning Districts I and II, accounting for 582,900 bushels, or 90 percent, of the total production of 643,800 bushels in 1973. The trend in production is downward and for the five-year period under consideration the decrease was 71.5 percent. This decline was due to reductions in both acreage

..







harvested (-44.2 percent) and yield per acre (-21.5 percent). The 1975 crop continued to reflect declining production prospects, Acres harvested for grain in the spring of 1975 totaled 20,000 acres, down 33 percent from the two previous years [12].


Prices


Prices received and their prospects are of major interest to

farmers and varying them in the analysis will help establish the impact of changing prices.


The price situation for field crops during the last season

appeared rather unfavorable for farmers. All products in this study, except tobacco, experienced declining prices. This downward movement in farm prices reflected a nationwide condition. Farm product prices averaged 10 percent lower for the first five months of 1975 than in the same period in 1974. On the other hand, the index of prices paid for production items, interest and farm wages was 11 percent higher than during January-May of 1974 [28].


Feed grains prices in the 1974-1975 season were a record high. During the present season, however, market prices have declined mainly due to the sharp reduction in the domestic use of feed grain (costs of feed grain have been high in relation to market prices of livestock and poultry) [31]. Good weather for crops will continue to support easing of prices during the re;t of the season, The most likely situation for corn production is a large output that could lead'to corn prices well below the 1974-1975 season, However, corn producers in the study

..







area harvest their crop before the market opens for the rest of the nation. This early harvesting might partially offset those declines. In the 1974-1975 season the national average price was $2.95 per bushel [29]. As for grain sorghum, nationwide supplies this year were the smallest in 18 years, and its price dropped due to the weak domestic feed demand,

Most signs indicated a big wheat crop in 1975, at levels higher than 1974. Supplies of that size would likely soften wheat prices, perhaps down from the 1974-1975 season average farm price of $4.04 per bushel, which was 9 cents above the 1973-1974 price and the highest on record for the United States [33]. "Forces seem to be building which could push prices downhill towards $3 per bushel at harvest time" [33, p. 7].

Soybean prices decreased below 1974 levels due to reductions

in its usage, largely due to a lagging demand for soybean oil and meal. However, its price behaved less erratically than in previous years when it rose to a record $10 per bushel in June of 1973. "Mid-month soybean prices received by farmers declined from $8.17 per bushel last October to $5.31 in March, a drop of nearly $3. So far this season they are averaging around $6.15, about $1 above a year ago" [30, p. 8].

Peanut prices fell last marketing season mainly due to record large supplies in 1974 crops and also because the economic forces of recession curtailed its demand, In fact, peanut market prices fell

1.6 cents below CC,C.'s minimum 1975 support price and averaged 18 cents per pound [30, Table 12],

..







In 1974 the flue-cured tobacco prices received by farmers in the study area averaged 100.9 cents per pound (Table 3). These prices constituted a record high and were 17.6 cents higher than the price support level. In 1975, however, due to higher production expectations and a shortfall in cigarette production [32], prices received by growers were expected to stabilize near 1974's record or about 7 cents above 1975's support price of 93.2 cents per pound. As for Maryland-type tobacco, in the 1973 crop (marketed mostly in 1974), growers received a season average price of 62.5 cents per pound in other states than Maryland-i' [32, Table 17].




























2-90.5 cents per pound in Maryland State (highest on record) [23].

..












CHAPTER III

DESIGN OF STUDY



This study was designed to evaluate possibilities for improving crop farm profitability and efficiency under the changing conditions affecting crop agriculture in the study area.


Selection of optimal enterprise combinations and evaluation of the potential economic adjustments feasible in the study area were made on the basis of efficiency defined in terms of maximum net revenue-1/ The application of this optimization criteria to obtain the net returns estimates was made under a set of simplifying assumptions and constraints so that interrelations among the studied variables could be traced.


This study was oriented toward a short-run planning situation. Most crops are capable of maturing once per year, thus the length of the planning period was one year. In the short-run many productive resources must be considered as fixed with no opportunity to dispose of or acquire resources. For this planning period, the relevant costs were those that vary with the output for that production year.


The approach adopted in this study was a firm level approach

where "typical crop farms" for the study area were determined by defining

1/In this analysis, net revenue was defined as gross farm income less variable costs of inputs and crop operations (fixed costs, operator labor and management were excluded).


34

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several alternative farm planning situations which were largely defined by area economists, top farmers, Extension specialists and Experiment Station recommendations.

A linear programming model was designed to fit as realistically and accurately as possible those situations faced by crop farmers in the area under study. All major crops suitable to the soil-weather conditions were included. As provided for in this model, the selection of an alternative crop was determined by the enterprise possibilities of the farm and the realtive profitability of alternative enterprises, all these being within the-constraints imposed.


Source of Data--The Budgets

The major source of data for this work was the enterprise budgets for the study area prepared by Mr. George Westberry, Extension economist in the Food and Resource Economics Department, University of Florida. These budgets have been modified to make them adaptable to all specific objectives of this study. In addition, Florida Crop and Livestock Reporting Service data [10, 11, 12], Agricultural Stabilization and Conservation Service (A.S.C.S.) data [25], Census data, information from personal interviews and data from other miscellaneous publications for North and West Florida have been used in this study,

The estimates of prices paid and received by farmers are presented in Tables 5 and 6 and they are not to be interpreted as predictions of prospective prices in any future year. The custom work rates for harvesting operations were taken from EconomicInformation Report 34

..











Table 5.--Product yields and prices used in preparing budgets
for North and West Florida, 1975

Item Un'it Yield Price
--dollars-Peanuts cwt. 30 18.00

Flue-cured tobacco lb. 2,100 1.10

Maryland Tobacco lb. 1,500 .95

Corn:
Irrigated bu. 115 2.50
Non-irrigated bu. 65 2.50

Wheat bu. 25 3.50

Grain sorghum:
Single-cropped cwt. 36 4.00
Double-cropped cwt. 29 4.00

Soybeans:
Single-cropped bu. 30 5.50
Double-cropped bu. 25 5.50

Watermelon lb. 18,000 .03

..










Table 6 .--Input prices used in preparing budgets for crop farms
in North and Wrst Floridal 1975

Item Unit Price
--dollars--


Seeds:
Peanuts
Flue-cured tobacco
Maryland tobacco
Corn
Wheat
Grain sorghum
Soybeans
Watermelons


Fertilizers:
Lime, spread
0-14-14, spread
Nitrogen
4-12-12 5-10-15
6-9-3
Nitrate of Soda
4-8-12
Potassium nitrate (13-0-44)
10-10-10, spread
15-0-15 (bag)

Chemicals:
Soybean innoculant
Syte,.ic (sucker control
chemical)
Contact (sucker control
chemical )
Lasso (herbicide)
Sutan-AItrez (herbicide)
Balan (herbicide)
Sevin (insecticide)
Dasanit (insecticide)
Bravo (fungicide)
Fumazone (insecticide) Dysiston (insecticide) Lannate (insecticide)
Toxaphene (insecticide) Parathion (insecticide)
Custom work;


lb.
OZ. OZ. lb.
bu. lb.
bu. lb.


ton cwt. lb.
cwt, cwt.
cwt.
cwt. cwt. cwt. cwt. cwt.


pkg.

gal.

gal. lb. lb. lb.
lb. lb.
gal. gal. lb. lb. lb. lb.


Peanuts: Spray (air) acre
Custom harvest' acre
Tobacco:
Plnt bed: Fumigation (with
methyl bromide) and
plastic cover 100 sq. yd.
Herbicides acre
Insecticides acre
Insurance acre
Corn: Harvest and haul bu.
Wheat: Harvest and haul acre
Grain sorghum: Spraying
(custom air) acre
Harvest and haul acre Soybeans: Spraying customm air) acre
Harvest and haul acre


.425 20.00 20.00
.70
7.50
.65
12.00 4.00


11.00 5.30 .23 5.90 5.30 5.90 9.50
6.00 10.00
5.85 8.25


.9c

14.00

7.25 3.71
2.24 4.60 1.00
5.10
2,.75
14.00 3.08 9.00
1.00 .29


1.75 28.00


21.00 16.00 52.18
42.50
.25 10.00

1.50 10.00 1.50 10.00
9%


Operator capital


dol .

..







[7]. There is a fear that under current conditions of inflation, energy shortage and devaluation, the price expectations are highly uncertain.

The input-output relationships reflected the 1975 situation and assumed a level of technology defined as "recommended practices." These coefficients were considered to be appropriate for the North and West Florida area.


Eight enterprises (which made up to 18 crop activities when most crops were considered under two harvesting conditions regarding machinery ownership and when flue-cured tobacco included two harvest systems) were considered as alternatives to which the resources for a given farm situation may be allocated. A sufficient market was assumed to be available to permit the enterprise to be considered for all farmers as an adjustment opportunity. These cash crop enterprises were peanuts, flue-cured tobacco, Maryland tobacco, corn, wheat, grain sorghum, soybeans and watermelons.?! The exclusion of any enterprise means only that it was not considered widely adaptable within the study area.


Data were assembled on the following aspects of farm enterprises (Appendix Tables 1-23):

(1) Costs and returns using advanced management practices

and recommended levels of technology.

(2) Monthly distribution of farm operations and labor and

machinery requirements.

2/The tobacco and peanut enterprises were classified as intensivetype crops while the other crops were classified as extensive-type crops.

..







(3) Annual fixed costs of machinery.

The structure of the budgets used in this study was designed primarily for use in linear programming and this structure differed somewhat from those of conventional budgets used for other purposes.


In each of the main-crop enterprises, two levels of returns were calculated. In the first level, harvesting costs were based on owned harvesting machinery and equipment. In the second level, the harvesting costs were based on present custom hiring rates in North and West Florida. In the flue-cured tobacco enterprise, returns were calculated for both conventional1' (hand) and mechanical harvesting systems.


For all enterprises, returns were defined as yield times the product market price. Annual operating expenses (variable costs) included costs such as seed, fertilizer, hired labor, custom operations (when applicable), operating costs-of tractor and equipment plus an operating capital cost. The budgets did not-include charges for inputs that were drawn from the quantity-in the constraints column or that were debited through a system of purchasing or renting activity and appropriate transfer rows in the model (for example, combine purchase was'not included in the budgets). Machinery operating costs were included in the budgets on the basis of-assumed performance rates and an hourly charge for necessary machines.,.



2-A tractor drawn priming aid with field racking and bulk curing.

..






Consequently, for all crop enterprises, net returns were

calculated over variable costs, that is, net returns were allocated to land, operator labor and management, tractor and machinery investment and overhead costs. In the flue-cured tobacco and peanut budgets net returns also included returns to the allotment quota since no charge was included for leased quota. Due to the fact that the amounts of non-charged items were different for some crop enterprises (i.e., barns needed in tobacco production were not necessary in the production of other crops), the returns per acre should be compared accordingly.

In calculating costs of growing and harvesting a farm enterprise, a level of equipment and a set of production practices must be assumed. Crops in this area were primarily produced with four-row equipment with appropriate tractor power and small grain equipment (Appendix Table 23). Other assumptions were: normal weather conditions prevailed, soil quality was fairly uniform for given enterprise situations, all labor other than operator labor was-hired and enough of this labor was available in peak seasons. Perhaps, the most basic assumption was that of the level of technology. Since the concern was planning the income growth of crop farms, the level of efficiency was one of the potential adjustments pertaining to this work. This study assumed a "recommended practices" technology that was suitable for crop farming within practical limits in the study area. Since all these assumptions on the budgets existed for the duration of the planning period, the maximization of returns in this study was relative rather than absolute.

..








Theoretical Concepts


To accomplish the objectives, linear programming techniques were used along with the utilization of budgets as main sources of data. The conditions for the model structure were dictated by the potential changes and economic opportunities facing crop farms in the study area.

Linear programming is a technique Which may be used to determine the equilibrium position4/ of a firm that operates under factor restrictions and usually, as used in this study, under constant returns to scale over some specified range of production. The technique can be used to maximize (or minimize) an objective function defined by a specific objective and-subject to a given set of constraints. The objective, which is quantifiable, can be attained by means of alternative activities which operate under restrictions given by resource limitations and specific farm situations. Many of the questions arising from the objectives required different set-ups of the basic model. Mathematical Assumptions of Linear Programming


The use of linear programming involved the following critical
-assumptions [14, pp. 97-100] which must be considered in order to construct the simplex tableau and to interpret the results. These assumptions are:

4A firm may be considered in equilibrium when there is no economic incentive to change the combination of inputs and products, nor to change the level of production of any of the products.

..







(1) Linearity--The ratio of one resource to another and

of each resource to the quantity of product is

constant and independent of the level at which a

particular process is used. The mathematical model

for this relationship is homogeneous in the first

degree and yields a geometrically straight line

relationship. This assumption rules out the possibility

of increasing or decreasing returns to scale by fixing

the input-output coefficients.5/

(2) Additivity--The resources required and the products

produced by a combination of enterprises must be equal to the sum of resources used and products produced by

each individual enterprise. No interaction is possible.

(3) Divisibility--It is assumed that the resources used and

the products produced are divisible at infinitely small levels. However, the practical aspects of farming lead

to discreteness rather than continuity in the input-output

relationship. This, however, is not usually a serious

limitation.

(4) Finiteness--It is assumed that the number of activities

available is finite. An exact optimum combination of

enterprises cannot be obtained unless all possible

enterprises are considered. In agriculture, therefore, since the possible number of activities is infinite, no

5/Diminishing returns can be analyzed by establishing several processes with varying levels of inputs for an individual enterprise.

..







claim can be made that the best combination of enterprises is obtained.

(5) Single-value Expectations--The input-output coefficients

and prices for each productive process are considered

as single-valued, that is, they are assumed to be known

with certainty. This assumption also implies that,

given a productive situation, the output can be predicted with certainty.


The Model

The model pertinent to this study was an economic firm operating under conditions of pure competition,q/ in the short-run, with the objective of profit maximazation./ The firms were the typical farms selected to represent the designated crop farm situations in the area of study.

Considering the foregoing basic assumptions involved in any

linear programming model, this study's maximum net returns model can be

6/For pure competition to exist, the following conditions must be evident. First, a large number of buyers and sellers of homogeneous products must be involved. Second, the buyers and sellers must be well informed concerning market conditions affecting the goods in question. Third, collusion in any form must not exist. Fourth, government interference must not forestall the determination of the price of products by the forces of supply and demand. This condition is not entirely met by the farm. Acreage allotments and price supports are in effect on peanuts and tobacco. Although the conditions of pure competition are not completely fulfilled by the farms and the economic environment in which they operate, they are sufficiently satisfied to warrant use of the economic firm operating under pure competition in the short run.
-_Here the implicit assumption exists that farmers are profit maximizers, not just profit satisfiers,

..







expressed in equation form as follows:

n
Maximize Zo = E (P X. C.X.) (1)
j=l


where Zo is the net return for all activities when the price, per unit cost (here per unit cost refers to Gosts per acre), and level of the jth activity are P.,C and X. respectively. The number of activities

is n.

Subject to the linear restriction

n
a ij Xj* Bi i =,., m (2)
j=l 3 1
where a. is the amount of the ith constraint required to produce a unit
13
of the jth activity. The utilization of resource or constraint i cannot exceed the total amount of restraint B.

n
E a X> (3)
j=l kj j

where akj is the amount of. machinery required to produce a unit of the jth activity. No direct restriction was placed on machinery.


x. > o (4)


where this inequality states that no enterprise (or any other activity) may be produced at a negative level.

..








Planning Situations and Process Restrictions


The main criteria used in the identification of the different farm situations and restrictions was that they should realistically: reflect the conditions faced by crop farmers in the study area.


The key advantage of these situations was that they allow for asking "what if" questions concerning the potential changes and adjustment opportunities. Further analysis shed light on the required ordesirable production adjustments to be suggested in the area planning for the crop farming sector.


The possibility for larger incomes lies largely in the efficienthandling of the land and other resources. However, combinations of cropenterprises under various land, capital and othe constrai-nt situations, offered widely varying income opportunities. Several alternative planning situations were determined so that a close tailoring of alternativeplans was possible to simulate the crop farmer's particular situationInitially, two types of farm situations were developed, one being, alternative levels in the resource situations and the other being alternative considerations in the product-mix situation.

As for the farm resources, two basic situations were identifiedafter several preliminary runs of an initial model. One situationrelated to cropland availability and considered three levels of cropland: 250 acres, 400 acres, and an "unconstrained" level. The other situation related to operating capital requirements and provided for a

..







parametric variation of capital at $20,000 intervals, starting from the basic constraint of $20,000 and increasing up to an "unconstrained" level.

The above resource situations were to determine the effects of alternative cropland and capital restrictions on the income and enterprise organization of crop farms. Also, they allowed for some inquiry on the economic potential of land equity as well as some insight on the credit requirements of crop farmers,


Two other important resource restrictions, on which no alternative levels were placed, were those related to labor and machinery.

-Intuitively, one looks upon man hours as the most likely restraint. In this study, operator labor was established as a limiting factor on a monthly basis. The labor restraint formed for every month of the year implied a rigidity in the timing of farming operations and consequently of labor use. This may be unrealistic. This model, however, did allow for operator labor to be transferred across months, even though this might have overstated labor flexibility for some crops in some months. In forming the labor restraints, it was considered that the farm operator was willing to work more hours during those critical months of the year (see Appendix Table 24).


As for machinery and accompanying equipment, rather than forming a separate set of constraints for each machine, the most limiting ones were determined. "Large tractor" and "combine" were identified as the most limiting because more hours of these machines were required than

..








any other type of equipment involved in the cropping operations. In

the model, these constraints were treated by linking them to the operator labor constraint.


Ultimate adjustment in each farm was limited by the abovementioned resource constraints in critical time periods when performing field operations. However, the adjustment potentials were also determined by some external and subjective restrictions.W/


One very important external restriction on the crop enterprise

organization was the government allotment program on peanuts and fluecured tobacco. In 1975, the average allotment for peanuts was 13.9 acres and for flue-cured tobacco was 4,399 pounds. The model provided for allotment rental with upper bounds-of 80 acres for peanuts and 42 acres (90,000 pounds) for flue-cured tobacco.

An alternative farm situation was defined when no peanut allotment Was considered. This alternative of "unrestricted production" allowed for the evaluation of no government intervention in peanut

production. Since the allotment provision is linked to the price support policy, in the event the allotment is lifted, the price support policy most likely is going-to be lifted too and the peanut price is likely

to drop. Consequently, optimal enterprise organizations were evaluated when no peanut allotment or price support were considered. Peanut price decreases were parametrically programmed and acreage response functions

81External restrictions, as implied in this study, are those limiting conditions not determined at the farm level, such as acreage allotments., Subjective restrictions, on the other hand, consider those restrictions imposed by the operator himself. Their limits are usually hard to determine, but they are real and significant-:to farm planning.

..






for peanuts were estimated. Significant changes in production decisions in the peanut industry may occur as a result of changes in peanut prices.

Regarding the enterprise composition, the area under study had four categories: (1) All enterprises included; (2) peanuts as the allotment crop and excluding flue-cured tobacco; (3) flue-cured tobacco as the allotment crop and excluding peanuts; and (4) both peanuts and tobacco enterprises excluded. These categories were not well defined geographically but it is common for farms to produce either peanuts or tobacco, but not both. For instance, Suwannee, Hamilton and Madison counties are largely dependent on flue-cured tobacco as a source of cash income. Jackson County has developed peanuts as its specialty crop. Thus, these alternatives in the product mix were aimed at those farms where either of these situations prevails.

In all crop enterprises except tobacco and watermelons, two

considerations regarding harvesting were defined. One considered custom harvest and the other harvest with owned machinery. These two situations provided for additional realism. Some farmers do not buy combines. Others do in order to better realize economies of scale. Consequently, these considerations in the type of harvesting provided for alternative plans for both farmers with small scale crop operations and farmers with large enough operations to afford the purchase of a combine.

In the flue-cured tobacco enterprise, two harvesting systems were considered: hand or conventional harvesting, and mechanical harvesting. These alternatives were designed to evaluate the economics of mechanical harvester purchase when size of cropping warrants it.

..







Finally, two subjective restrictions were included: (a) Maryland type tobacco is a new crop in the area and as such it affects the area's enterprise mix in two ways. Farmers either do not include this crop among their production possibilities or they are just not willing to plant in large acreages with this crop due to the risk associated with any new crop. Because of this situation, two alternative plans were developed, one not including Maryland tobacco and another including Maryland tobacco. (b) Watermelon acreage is restricted due to two conditions. Disease build-up prevents planting watermelons on the same plot two years in a-row. Also, severe price fluctuations at harvest can introduce high risk. Thus a maximum of 25 acres was allowed for watermelons.

Restrictions arising--from ins-titutional, ni.iditi.es.and imperfect factor markets tend to misallocate resources, and the scope of this study did not include these aspects.

The purpose of the foregoing farm situation analysis was to determine differences in the results obtained with respect to income levels, enterprise organizations and total resource requirements. The information obtained out of these alternatives might well reflect the different and relevant economic opportunities that crop farmers are to face since these combinations of farm situations result-in substantial changes in income and enterprise organizations.

..







The Initial Tableau --Procedure of Analysis

As indicated earlier in this chapter, the maximization of net

revenue was determined by linear programming techniques. After describ-ing the components of the initial tableau, a brief recount of the different programs designed to achieve the objectives of this work is presented.

The initial tableau for the simplex method of solution, Table

7, contains all basic input-output coefficients which were organized in 32 columns and 42 rows. These coefficients reflect the resources required by each activity represented by each column, All negative coefficients in the matrix, except for those in row 01, indicate additions to the system, and all positive coefficients indicate requirements. By means of an iterative.procedurej different- combinations o.f enter prises were systematically evaluated until an optimum organization of enterprises, with the number of units of each enterprise, was obtainedwhich produced the greatest profit for a crop farm while optimizing theuse of resources.

In the tableau, columns 01 through 20 are crop growing and. harvesting activities. The return coefficients (row 01) for these columns are negative because they represent the cash expenses related. to these producing activities. The output from these activities was, placed in transfer rows (rows 50 to 57).

The model permitted two alternatives in the production of most

enterprises. These alternatives were those ones related to harvest with

..







owned machinery and customharvest. These enterprises were peanuts (colums 01 and 02), corn, irrigated and non-irrigated (columns 06 through 09), wheat (columns 10 and 11), grain sorghum (columns 12 and 13), double crop wheat-sorchum (columns 14 and 15), soybeans (columns 16 and 17), and double crop wheat-soybeans (columns 18 and 19). Regarding systems of harvesting, flue-cured tobacco (columns 03 and 04) also had two alternatives. These alternatives consisted of mechanical harvesting and conventional or hand harvesting. Only one production alternative for the other crop activities, Maryland tobacco and watermelons (columns 05 and 20, respectively) were included.

Columns 21 through 28 are crop selling activities. The return

coefficients represent the price per unit received by farmers, therefore, these coefficinets are positive. The selling procedure was performed by using the product transfer rows.


Columns 29 and 30 permit the purchase of a tobacco harvester and a combine respectively. These activities are bounded alternatively at zero and one units, providing the information to evaluate custom-harvest versus owned machinery harvest. The return coefficients for these activities are negative since they represent the annual cost of this machinery. The field-work time purchased with each tobacco harvester is 357 hours, and for each combine this time is 500 hours. These fieldwork times are used by the producing acitivies through the appropriate transfer rows 46 and 47.


Columns 31 and 32 provide for leasing of allotments for peanuts and flue-cured tobacco respectively. The return coefficients of these

..








activities are negative and represent the cost of leasing one unit of allotment. The -l coefficients in these columns, lined to the allotment constraints (rows 44 and 45), indicate additions of units of allotments to the current constraint. The leasing of peanut allotment is upperbounded at 80 acres, and the leasing of flue-cured tobacco allotment is upper-bounded at 42 acres or approximately 90,000 pounds.


As for the rows in the matrix, row 01 represents the objective function of this study, which is the profit equation to be maximized. As stated earlier, this equation calculates the maximum net revenue for each program. According to the adopted definition of net revenue, no provisions were made to meet fixed costs in the model itself, therefore, the fixed cost component must be subtracted from the value of the program before any estimate of net income is imputed to land and operator labor and management.9/


Rows 02 through 13 represent the availability of operator labor on a monthly basis (see Appendix Table 24). These equations restrict the production activities to the amount of labor specified as constraints. The coefficients in the tableau indicate the amount of operator labor required to produce one acre of the different enterprises. Whenever needed and whenever possible, transfer of labor between two consecutive months is considered. This procedure implies additional column activities in the matrix but this is not shown in-the initial tableau.


!/See Appendix Table 26 for returns adjusted for fixed costs involved in each optimal plan.

..







Rows 14 through 25 and rows 30, 34, and 36 are related to machinery requirements. Coefficients for large tractor and combine requirements are in the tableau. The level of constraint for these rows is zero (unconstrained) so that the solution provides for the'level of machindery required on a monthly basis. As provided for in this model, no time requirement of machinery can exceed the operator labor available.

As seen earlier in this chapter, the cropland requirement was

set at three different levels (250 acres, 400 acres, and unconstrained). In row 38 of the initial tableau, the cropland constraint is set at zero, or unconstrained, which assures that this equation calculates the amount of cropland required to optimize returns given all other restrictions. The other two alternatives in this resource availability were handled simultaneously in the model by using the "multiple right hand side" procedure [I, pp. 71-73].

As for the operating capital, row 40 in the initial matrix shows the capital constraint at the starting level of $20,000. Through the use of the "parametric routine" [1, pp. 124-129] capital increases were considered at intervals of $20,000 and up to an "unconstrained" level. The coefficients of operating capital requirements were determined by the annual variable costs per acre for each activity.

Rows 44 and 45 are for complying with the government provisions on peanuts and flue-cured tobacco allotments. Constraints of 13.9 acres for peanuts and 4,399 pounds for flue-cured tobacco are placed, However, as pointed out earlier when describing the column activities, these limits in production can be expanded by the leasing of allotments.

..







Rows 46 and 47 relate to the activities of purchase of tobacco harvester and combine machinery, These rows facilitate the transfer of field-work time purchased to be used in the producing activities so that no more than what is purchased can be used.


Rows 50 to 57 are crop transfer equations permitting the amount produced in the crop producing activities to be sold through the selling activities.


The programs designed to achieve the objectives of this analysis were classified into two sets of plans. The first set was comprised of those plans associated with the different farm resource levels and the product mix alternatives. The second set of plans considered the situation regarding the peanut program as expressed by the allotment provisions and price support policy.


The first set of plans was basically designed to comply with the overall purpose of comparing results when three criteria of farm size were optimized while maximizing returns. In order to make these comparisons, all those plans formed by the combinations of the different resource alternatives were analyzed simultaneously. Then later the product mix alternatives were introduced by appropriate changes in the basic intitial model. In other words, a first computer run was made including in the model all the enterprises.and considering all those stated situations in cropland and operating capital availability, as well as the alternatives in types of harvesting. Then further, similar computer runs were made, first, excluding flue-cured tobacco and allowing

..







peanuts as the allotment crop, and second, excluding peanuts and allowing flue-cured tobacco as the allotment crop, and third, excluding both peanuts and tobacco enterprises,


In the second set of programs, the possibility of "unrestricted" peanut production was analyzed and the potential effects of abolishing the peanut program on the area's product mix and the acreage response to declines in peanut prices were determined. This task was attained by first selecting one representative farm resource situation for the peanut industry, and second, by running a computer program that included parametric procedures to obtain solutions for declines in peanut prices from 22 cents down.(zero cents per pound. The enterprise compositions evaluated were, first, all enterprises included, second, Maryland tobacco excluded, and third, both Maryland tobacco and flue-cured tobacco excluded.

As can be seen, a study of this nature, with many alternative; plans in the solutions, can provide a great variety of information. However, the main criteria in deciding the type and amount of information used in the presentation and analysis of the results was whether the variations in the alternative crop farm situations resulted in substantial changes in the optimum enterprise organizations and associated income levels.

..




Table 7--Basic form of the simplex tableau used to compute
for crop farms in North and West Florida


optimum plans


Row No. Description Row Type Unit Constraints


01 02 Labor:
03 04 05 06 07 08 09
10 11
12 13 14 Large Tr
15 16
17 18 19
20


21 22 23 24 25 30 34 36 38 40 44 45
46

47

50
51

52

53 54 55

56
57


Returns January February
March April
May .June July
August
September
October
November December actor:January
February
March April
May June July


August N
September N
October N
November N
December N
Combine: May N
September N
November N
Cropland unconstrained N
Operating Capital L Peanut allotment L Tobacco allotment L
Tobacco harvester
row L
Combine purchase
row L
Peanuts transfer L
Flue-cured tobacco
transfer L Maryland tobacco
transfer L Corn transfer(grain)L Wheat transfer L
Grain sorghum
transfer L Soybeans transfer L Watermelons transferL


Dollar Hour
Hour Hour Hour Hour Hour
Hour Hour Hour Hour
Hour Hour Hour Hour Hour Hour Hour Hour Hour
Hour Hour Hour Hour Hour Hour Hour Hour Acre Dollar Acre Pound

Hour

Hour cwt

Pound

Pound Bushel Bushel

cwt Bushel Bushel


208
192 208 234
234 260
260 260 260 234 234 208
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 20,000
13.9 4399

..





Table 7--(continued)


Peanuts
Own Custom Harvest Harvest
01 02


Flue-Cured Tobacco,
Mechanized Conventional Harvest Harvest
03 04


-269.56 -274-92


.85 .60
.86 .72 1 .29

2.99

.60



.74 .52 .33 .62


.52



1
269.56
1


-30


.85 .60 .86 .72 1 .29

2.99

.60



.74 .52 .33 .62


.52 274.92



-30


Row No.


-810.37
3.34 1.54 5.37 .74 1.38


.89 1.0


1
810.37

2100
6

-2100


-870.91
3.34 1.54 5.37
.74
1.38


.89
1.0


1.0
1.50 .50


1
870.91 2100


-2100

..






Table 7--(continued)


Maryland Irrigated Corn Non-Irrigated Corn
Row No. Toband Own Custom Own Custom
Harvest Harvest Harvest Harvest
05 06 07 08 09


-737.98
1.18

1. 38
.70
1 .40
.63'
4.50 5.30


1.02 .52


1
737.98


-1500


-176.82
.55

.60
.38 .72


.30
.48 .52 .33 .31





.26

.50

1
176.82


-200.15
.55


-114


-124.83
.55


.30
.48

.52 .33 .31





.26


1
200.15


1
124.83


-115


-115

..





Table 7--(continued)

Wheat Grain Sorghum Wheat-Sorghum
Row No. Own Custom Own Custom Own Custom
Harvest Harvest Harvest Harvest Harvest Harvest
10 11 12 13 14 15


-73.35 -79.24


-102.99 -108.72
.55 .55


.85
.46


.26 .33 .62


.30 .48

.26
.33
.62





.26


-172.57 -183.98


.55 .98 .36

.85 1.10





.85
.31


.74 .40


.98 .36


.85
.46





.85 .31


.74 .40


1 1
73.35 79.24


-25


-25


1 1
102.99 108.72


-36


1
172.57


1
183.98


-25
-29


-25
-29

..





Table 7--(continued)


Soybeans Wheat-Soybeans
Row No. Own Custom Own ustom Watermelons
Harvest Harvest Harvest Harvest
16 17 18 19 20


-94.28
.55


-158.32 -170.08


.55 .98
.72


.85
1.01


-88.50
.55


.60
.38 .72




.58 .30 .48


.52 .33
.62





.26


1 1
88.50 94.28


.98
.72


.85 .46






.85
.62


.74 .40


.40

.40
1 1
158.32 170.08


.85 .62


.74 .40


-237.11
.55
1.05
.69
1.15
5.46


.26



1
237.11


-18000

..





Table 7--(continued)


Peanut Flue-Cured Maryland Corn Wheat Grain
Row No. Sale Tobacco Sale Tobacco Sale Sale Sale Sorghum
Sale
21 22 23 24, 25 26


1.10


2.50


3.50 4.0

..





Table 7-- (continued)


Soybean Sale 27


'Watermelon
Sale
28


Tobacco Harvester
Purchase
29


Rent Peanut Allotment
31


Rent Tobacco Allotment
32


Row No.


5.50


-4487


-60


Combine Purchase
30


01
02 03 04 05 06 07 08 09 10 11
12
13 14 15
16 17 18 19 20 21 22 23 24 25
30 34
36 38
40 44
45 46 47 50 51 52
53
54 55 56
57


-4097


























1500


3450

-357


-500


Table 7-- (continued)

..












CHAPTER IV

OPTIMUM ENTERPRISE ORGANIZATIONS FOR
ALTERNATIVE CROPLAND AND OPERATING CAPITAL SITUATIONS


This chapter deals with an evaluation and comparison of effects on optimal enterpise organizations and on income levels of alternative farm resource and enterprise situations. Overall, the analysis is aimed at the evaluation of Crop production alternatives in order to maximize returns in specified resource situations.


Although the analysis was performed for all the alternative farm situations originally considered, this discussion of results is limited to the cases where variations in the alternative crop farm situations resulted in substantial changes in the optimum plans and resulting income levels.


As for the harvest systems included, results relate to ownmachine harvest. The possibility of having only custom harvest was discarded, and the discussion of custom harvest was restricted to those instances where it was necessary to supplement own-machine harvest whenever operator labor at harvest time was too limiting.

Custom harvest was not discussed separately because the optimal enterprise organizations obtained were very similar to those .of ownmachine harvest. The pattern of changes in the product combinations and in the levels at which each enterprise came in the plans, followed the

..








same trend as resource levels were increased. Furthermore, the gap in the value of the programs between both systems was small and became smaller at higher levels of operating capital. In other words, for both systems, at a given resource situation, the optimal combination of enterprises as well as the levels at which each enterprise came in the plans, were the same or very similar, If opeating capital and/or farm size were increased, the resulting changes in the mix of enterprises and their levels, were quite similar in direction and magnitude. Finally, own-machine harvest, and not custom harvest, was chosen due to the fact that for the study area as a whole, own machine harvest is the most common case among crop farmers.


Because of the high profitability of watermelons under the

assumed price conditions, the preliminary analysis indicated watermelons usually entered the optimal solutions at the upper limit allowed in the model. Since this was generally the case at alternative resource levels, watermelons were not included in the final analysis. Watermelons are not an alternative that is considered by a majority of farmers in the study area due to disease build-up and severe price fluctuations at harvest. Nevertheless, watermelons may be recommended in optimum plans wherever the above restrictions are not present.


Irrigated corn was excluded from basic analysis due to difficulties arising from the integer nature of center-pivot irrigation systems. However, this enterprise was evaluated for selected farm situations by forcing this activity into units determined by the size of the irriga-

..







tion system. Results on this regard are presented in a later section of this chapter.

In the farm resource situations considered, the basic level of operating capital was $20,000. However, results were tabulated starting at $40,000 due to the fact that optimal plans at the basic $20,000 level were severely constrained'by operating capital, and thus results were limited to a few acres of the most profitable crop, usually flue-cured tobacco, depending on the mix of enterprises being considered. Operator labor was restricted to one man-equivalent on a monthly basis.

Before presenting the analysis of optimal crop plans, discussion of the harvest systems in flue-cured tobacco situation is in order.



Hand-Harvest System vs. Machine Harvest System in Flue-Cured Tobacco

.In the flue-cured tobacco enterprise, a break-even analysis in a partial budgeting context was performed to evaluate the purchase of a mechanical harvester. The basic approach used was to replace the hand-harvest system if its annual net revenue per acre falls below the annual net revenue per acre from the machine harvest system. The break-even analysis indicated that only at flue-cured acreages higher than 74 acres, is it advisable to shift from hand to machine harvest. However, preliminary solutions including machine harvest alternatives showed that flue-cured tobacco never reached acreages high enough to justify mechanization. Therefore, the machine-harvest system was

..







dropped from the crop activities in the analysis, and only hand-harvest was left as an alternative.


Although in general, machine harvest systems are justified only in large acreages, some flue-cured tobacco growers do go into mechanized harvest at acreages much lower than the estimated break point. This situation is understandable since although the decision to mechanize is primarily based on the economics of costs and returns, other factors like the producer's desire, or the extent to which adequate sized units can be aggregated to economically adopt mechanical harvesters, influence the final decision. The present use of mechanical harvesters may be explained by risk considerations in procuring harvest labor at peak seasons as well as prospects for modifications in the tobacco legislation regarding the allotment system.


The results of this study showed that hand harvest was the best alternative and no harvest mechanization should be considered-unless flue-cured acreage exceeded 74 acres. This statement assumes that labor was available for hiring during peak seasons. If farmers are not able to stand the risk arising from the uncertainty in labor supply at harvest time, or if they have the desire to use mechanical harvester, then they may use the machine-harvest system.


Although consolidation of flue-cured tobacco allotments has occurred through leasing, more flexibility is needed if growers are to optimize the returns from mechanical harvest. The present tobacco allotment and quota system, insofar as it inhibits the formation of

..







larger producing units, is a barrier to adoption and optimal use of machine-harvest systems.



Optimum Plans Including All Enterprises"


Eight crops represented in eighteen growing and harvesting

activities were considered as profitable alternatives for those areas where flue-cured tobacco as well as peanuts are suitable enterprises. Grain sorghum and wheat-grain sorghum did-not enter the optimum solutions in any of the resource situations considered. Therefore, these enterprises are not emphasized in the discussion subsequent to this point. While solutions were obtained for 12 cropland-operating capital situations, only seven different plans resulted since operating capital was limiting at its lower levels. For example, situations for 250 acres-$40,000, and for 400 acres--$40,O00 resulted in the same plan because capital was-limiting before land or any other resource became limiting. Table 8 shows optimum enterprise organizations, limiting resources, marginal value products (MVP),.2/ and returns!/ for each of the final cropland and' operating capital situations.

I/Irrigated corn was not included here. As indicated earlier it is evaluated in a later section in this chapter.
2/The MVP of a resource represents the amount that returns could be increased by utilizing one more unit of the restrictive resource. Stated negatively, it is the cost of letting one unit of that resource remain idle. Stated positively, it is the price that can be paid for an additional unit of that resource.
3/As stated earlier, this value represents returns over variable costs or cash expenses, and therefore it does not give an accurate estimate of the profitability of the resources utilized. In Appendix Table 26, a summary of the returns adjusted for fixed costs involved in each plan is presented,

..











Table 8.--0ptirum plans for alternative levels of c'opland and ope,atr.9 capital on. North and West Florida farms: Plans including all enterprises


Iter Unit 250 acres 400 acres- Unconstrained acreage__/
$40,030 $6-0" S30,CO0 $100,000 1000 S120,000


CRPS
Peanuts


Acres


Flue-cured tobacco Maryland tobacco Corn (non-irrigated) Wheat


.eat-soybeans LI1MT!::G RESC ES 3/ Lab3r: Jantar.y

March


r'a/ June Oct.

Nov.
Al1lo.0 tent: tcbacco


1S4.2


13.9 30. 1 25.0




131.0


13.9 30.1

25.0




236.2 16.6


203 (71.3) 208 (47.6) 201 '210.7) 208 (94.7)

234 (0)


Pounds (.23)6 ,9


peanuts Acres

Cropland Acres

Operating capital Dollars

R-TURNIS Dollars


35.4

40,000 (1.1)

41,724


(.20) -4s (. 11 ) !-;
76,942 5 a3
(9.4C}

222.9 2M (76.5)

60,000 (.86) 72.482

59870 6at:4


I PA I;8P0


(69.2)

321.9

80.000 (.42)

71,779


13.9 30.1 25.0


29.3

233.2

65.5


13.9 30.1

25.0


155.7

129.2-47.1* 25.8-39.6*


203 (43.2) 208 (44) 208 (195.5) 208 (105) 234 (0) 224 (l0.a)

234 (10.3)

260 (43.7) 260 (43.7)


(45.2) 400 (14.2)

89,9
75,.451


234 (11.4)

"'58,830

(42.7)

526.4

100,003 (.04)

76,473


*The asterisk indicates the acreage to be custwi harvested. Otherwise harvesting is performed using cen harvesting machinery.
-At this farm size, solutions for $42O.0Oand $60,000 are the same as those at 250 acres of size.
-/At this farm size, solutions for $40.000, $S6,030 and S30.GC ie the same as those at 400 acres of size. !/Figures within parenthesis represent the 1VP of limiting resources.


13.9 30.1

25.0


181.5.-28.3* 170.7-65.5*

65.4*


208 (46) 208 (192)

234 (10.7) 234 (10.7) 263 (47.6)

234 (3.8)

234 (11)
(11)Leuse ( '830 (45.3)
500.6

104,572 76,651

..







250-Acre Crop Farm


For this farm size, operating capital was varied up to $80,000. As a result, three different farm organizations were obtained.


At $40,000 of operating capital level, the production of 35.4 acres of flue-cured tobacco was the only activity included. This activity provided substantially greater returns than the next most profitable crop and used all the available operating capital., This high profit crop is an intensive user of capital. The potential benefit from expanding this crop-by using additional operating capital was high at this point. This can be seen by looking at the MVP of operating capital and tobacco allotment. At the solution, an additional dollar would have a 110 percent rate of return, which is by far higher than the

9.5 percent market rate of return for capital assumed in this study. An additional pound of tobacco allotment would generate 23 cents, as compared to 11 cents per pound assumed as the cost of this allotment.


The value of the program was $41,724, which revealed a high returns situation for this resource alternative.


At $60,000 of operating capital, flue-cured tobacco and soybeans were in the optimum organization of enterprises. Additional operating capital allowed for a higher acreage in tobacco, but its expansion was restricted by March labor. Soybeans did not compete with tobacco for March labor and 184 acres were included in the optimum solution,

..







Operating capital was again the limiting factor in the solution and its marginal rate of return at this point was a high 86 percent. Also, an additional hour of operator labor in March would generate $47.60 extra as it was restricting a high profit enterprise like tobacco.


Returns for this solution amounted to $59,870. The availability of an additional $20,000 in operating capital increased returns by $18,146.


At $80,000 of operating capital, two additional enterprises came into the optimum plan, peanuts in the amount of its allotment and Maryland tobacco at its upper limit. It is interesting that fluecured tobacco acreage went downlb 30.1 acres, a level that seems to be its equilibrium point of production since the MVP of its allotment equaled the marginal cost of an additional unit of allotment. The joint profitability of peanuts and Maryland tobacco seemed to be high enough for them to stubstitute for flue-cured tobacco.


The additional cropland used for this situation was-relatively small. With land reaching the limit, soybeans acreage was reduced by three acres to allow for the acreage of peanuts and Maryland tobacco. Low MVP and upper limits in the intensive-type crops, prevented a higher substitution for soybeans.

When operating capital and cropland go up, an increase in returns should be expected. In this resource situation, an additional 27 acres and $12,480 of operating capital allowed the returns to increase to $66,445, an increase of $6,576 or 11 percent.

..







In brief, in this farm-size intensive-type crops dominated the enterprise organizations for the specified resource situations. The returns situation revealed high profitability of the resources utilized.


400-Acre Crop Farm


For this fari size, the solutions at $40,000 and $60,000 were the same as those in the 250 acre farm size. This was due to the fact that at those levels operating capital became limiting before cropland did. The use of operating capital was increased to the $100,000 level for the 400-acre farm. Any addition to this resource would not help the returns situation because cropland and operator labor prevented further expansion of the total output of the farm. Therefore, the discussion below focuses only on those plans resulting from $80,000 and $100,000 of operating capital.


At $80,000 of operating capital, as in the former farm size, peanuts and Maryland tobacco entered the solution at the amount of the allotment and upper limit, respectively. Flue-cured tobacco remained the same because it is restricted by January, March, and April labor required for the plant bed and field work operations. The additional cropland allowed for. the extensive-type crops. Singlecropped soybeans increased substantially and the double-crop enterprise wheat-soybeans came in as a new activity filling up the last. 16.6 acres of cropland,

..







As expected, more of the availableresources were used. Operating capital and operating labor during January, March and April became limiting.

An increase in operating capital from $60,000 to $80,000 for the 400-acre farm increased returns by $11,900,,or about 20 percent. An increase of 71.9 acres in cropland increased returns by $5,334.


At the $100,000 level of operating capital, the intensive-type crops, peanuts, fl'ue-cured tobacco, and Maryland tobacco, remained at the same level. That is, peanuts were at the allotmentlimit, and because MVP of its allotment was lower than its leasing cost, no expansion of peanuts acreage was feasible. Maryland tobacco was at its upper limit and flue-cured tobacco was at its equilibrium point of production.


The other enterprises in this plan were extensive-type crops. Soybeans were the-dominant crop with respect to acreage and its level did not change from the former resource situation, perhaps due to the fact that its expansion was restricted by limiting operator labor for field work in January, April and June. Wheat and soybeans in doublecropping activity came into this plan at an incereased level, and wheat as a single enterprise was a new enterprise. This result was consistent with what was expected since at higher levels of cropland, extensive-type crops should be anticipated in the solutions, provided that no other resource limited their expansion.

This plan with increased extensive-type crops augmented the returns by $3,672, or 5 percent above the former capital level.

..







In sUmmay, the plans obtained for this farm size seem to be

reliable. It was expected that crops supported by governmental programs would appear in the optimum solutions, and this was the case. Flue-cured tobacco, the cash crop with greater returns per acre than any other corp, came up in all resource situations. Its complete allotment was utilized and it was profitable to lease about 58,000 pounds. The second and third mosf profitable crops, Maryland tobacco and peanuts, started appearing in the optimum plans at the $80,000 level., This occurred because these capital-intensive enterprises were competing for

operating capital with flue-cured tobacco. When capital was available, peanuts and tobacco combined very well since they did not compete for operator labor during peak months.


Extensive-type crops entered the optimum solutions at the

higher operating capital levels. At higher resource levels, emphasis on these crops should occur. Single-cropped soybeans was a profitable enterprise, and since its operator labor requirements did not compete

strongly with the labor requirements of peanuts and flue-cured tobacco during the peak months, this enterprise entered the solutions in large acreages when land and operating capital were available. Soybeans also came into the plan as a second crop. Although its. yield as a second crop was lower, its operator labor requirements came during months that are less limiting. This allowed for double-cropped wheat to come into the solutions. Wheat as a single crop proved to be profitable in the last optimum plan, Although its returns per acre were low, it came to the plan due to the fact that its labor requirements came at a time

..







when there was less competition for labor, Its largest operator labor requirement was in October, when no other crop was using operator labor. Grain sorghum, even with higher returns per acre than wheat, did not come into the optimal solutions simply because its labor requirements made it competitive with higher profit crops such as soybeans.


The rates of return to resource use at $80,000 seem to reflect the best farm adjustment since higher resource levels implied declining rates of return to resource use. This statement is corroborated with the observations made in the next farm size situation. Plans for the Unconstrained-Acreage Situation


For the unconstrained-acreage situation, solutions up to $80,000 of operating capital were the same as the 400-acre farm. This was due to the fact that it was capital that first became limiting. The $120,000 level of operating was the highest level of capital considered.


At the $100,000 level of operating capital, the enterprises

included in the optimal plan were the same as those in the 400-acre farm size. Although the intensive-type crops remained unchanged, some differences arising from the inclusion of custom harvest in the extensivetype crops were relevant to this solution.


Soybeans remained at 236 acres, but 47 acres were custom

harvested. The resulting reduction in operator labor during harvest time was transferred to wheat, which increased to 156 acres. Soybeans also were produced as a second crop after wheat, and 40 acres out of 65 acres were custom' harvested,

..







Operator labor was a most prominent factor in this plan since it was the limiting resource during six critical months. Operating capital was also limiting; however., its low MVP (.04) suggested that any increase in this resource was not advisable simply because its opportunity cost, as given by the market interest rate (9.5 percent), was

much higher than its present marginal contribution to returns.

When comparing this solution with the corresponding one at 400acre size, it could be seen that the relatively small increase in returns ($1,000) did not justify the associated increases in resource use. This situation of low returns to additional resources arose from operator labor being limited in critical months to most enterprises.

At the $120,000 level of operating capital, the solution was

very similar to that at the $100,000 level, -More acreage in extensive,type crops was transferred to custom harvest operations, a larger

acreage of wheat was produced, more cropland was used and operator labor became limiting during a seventh month. The rate of return on additional resources was extremely low since the returns were increased by only $178.

The fact that operator labor was limiting for seven months,

even though total operator labor was not exhausted, reflects what seems to be the'limits for a one-man farm operation in handling resources other than labor, under the conditions specified in the model.


In summary, the additional use of resources implied in the unconstrained solutions seems not to be profitable in view of the small increase in returns to additional cropland and operating capital.

..







Optimum Plans Excluding Tobacco Enterprises


The enterprise combination in this section of the analysis included peanuts as the allotment crop and excluded both flue-cured tobacco and Maryland tobacco. A total of six crops were considered as enterprises. The optimum plans here were designed for those areas where tobacco is not suitable for cropping, or for areas like District II where the production of peanuts accounted for 75 percent of the area's crop production in 1973. Table 9 shows the optimum programs obtained for each of the cropland and operating capital situations included in the analysis.

250-Acre Crop Farm


At the $40,000 and $60,000 levels of operating capital the only enterprises included in the optimum solutions were peanuts and soybeans. They exhausted the cropland and operating capital available.


At the level of $40,000, operating capital restricted peanut acreage to 69.8 acres and soybeans exhausted the remaining cropland. About 56 acres of peanut allotment were leased. The MVP for peanut allotment at this point suggests that an expansion in peanut production could be profitable if more operating capital were availabe. In fact, that was also the case when an additional $20,000 of operating capital was available. Peanuts went up to its upper limit allowed in the model. This result was expected due to the higher profitability of peanuts over soybeans. These two enterprises seem to combine very well as they ef-

..













Table 9.--Optimum plans for alternative levels of cropland and nperatlng ca:;itul on North -and Wcst Florida farms:


253 acre' _40 acres t 40OO0 $O,, 0 S 0 00 i 60 000 180,000


Plans excludina tobacco


Unconstrained acred;:
$80,000 $100,000


CROPS
Peanuts Corn {noi-irriga:ed) Wna.aat

Soybeans

Wheat-soybeans

LI'TI!'S RESOURCES 2/

Lator: Jar;ary

March April

May

June

October

S ovember Al lotmcirt: Peanut tropland Operating Capital


RETURNS


Acres


180.2


'4.


331.2


93.9 37.2


267.2


93.9

38.9 267.2


Hours


2 -4 3 )


234O (


234(0)


26c(42.1) 2.50(54) 260(.1.9)


Acres


lease lease
(91) 55.9 (186.6) 80.0


250(30.3) 250(76.5) Dollars 43,CO0C.52) 45,930


Dollars


27,439


31,533


!3 se


361.1

4 ,n 52


lose se



6),000(.43) 60,197


40,835


40,919


93,9

128.1
37.9*

193.9 53.9*


93.9 213.6

150. 9* 8-9.9"
124.4*


234(37.5)

234(37.5)

260(41 .7)


260(7.0)
. lease (1,58.6% c80s

557.6

800,00%.05)


208(13.8)

234 (36.6)

234(3G.C)

260(47.6) 23;(3.8)

260(l.0)
,Cleas 6 .C. 7

98,.310


*The asterisk indicates the acreage to be custom harvested, Otherwise rarvesting is perfor d using own harvesting machinery.
1'At this farm. size, solutions for $40,003 and S60,000 are the same as those 0t 400 acres of size. 2i
1ires within parenthesis represent the MVP of limiting resources.


43,320


I


- I -- --.-

..


78


ficiently share the use of operator labor, a resource that did not become limiting,


The value of the program at the $40,000 level was $27,439 indicating the high profitability of this plan. The optimum solution for $60,000 of operating capital (although only $45,930 was used) increased returns to $30,533, an increase of 11 percent. This solution resulted in an increase of $3,094 in returns as a result of an increase of $5,930 in operating capital.

In brief, when tobacco was excluded, peanuts took its place and

came in strong in both solutions. It competed successfully with soybeans in the use of resources, especially operating capital. In this farm situation, expansion in size seems highly profitable.

400-Acre Crop Farm

In this farm size, the usage of operating capital varied from

$40,000 to $80,000 and, consequently, three different optimum plans are presented.

At the $40,000 level of operating capital the optimal combination of enterprises was the same as in the 250-acre farm size. However, since more cropland was available and peanuts used more operating capital per acre, soybeans came in stronger and dominated the solution with 331 acres.


If these results are compared to the corresponding ones in the preceding farm size, this implied a strong substitution of peanuts for

..







soybeans that resulted in the usage of an additional 11 acres of cropland and a 12 percent increase in returns. Therefore, an expansion of the 250-acre crop farms is quite profitable.


At the $60,000 level of operating capital, corn entered the

optimum plan as a new crop. The additional $20,000 in operating capital

allowed the more capital-intensive peanut enterprise to substitute for soybeans. Peanut acreage reached the upper limit of 93.9 acres allowed

in the model. The high MVP of an additional acre of peanut allotment showed that if additional leasing were possible, peanut acreage would increase further. Even though corn is less profitable than soybeans, corn came in the optimal solution at 37 acres because operator labor limited soybeans field operations during April and June.


In this solution, operating capital was a critical resource and the returns of this program increased to $40,835, or 32.5 percent higher than the $40,000 operating capital level.

At the $80,000 level of operating capital, the optimal solution remained practically the same as at $60,000. This happened because only

3.7 additional acres of cropland could be brought into production, and peanuts and soybeans had reached their maximum because of peanut allotment and labor restrictions. Consequently, since there were no significant changes in either the level of resource or optimum organization of enterprises, this solution is of little relevance to the analysis.


In general, as more cropland and operating capital were made available on the 400-acre crop farm, emphasis on extensive-type crops

..







was observed. The levels of soybeans were much higher than for the 250-acre farm. Corn came in as a new enterprise, and peanuts competed successfully for operating capital, reaching its upper limit at the $60.000 level. The availability of additional cropland was a prominent factor in improving the returns situations, and the best resource adjustment should be toward the 400-acre crop farm with $60,000 of operating capital.


Plans for the Unconstrained-Acreage Situation


In this resource situation, and up through $60,000 of operating capital the same solutions were obtained as-those in the 400-acre farm size. This resulted because operating capital became limiting at levels of cropland usage lower than 400 acres. Consequently, discussion of results will be limited to the optimal plans for $80,000 and $100,000 of operating capital.

At the $80,000 level of operating capital, the optimum combination of enterprises included peanuts, corn, soybeans, wheat and the double-cropping activity wheat-soybeans. Since peanuts, the most profitable and only intensive-type crop, remained at its upper limit, the changes resulting from the additional resources available occurred among the extensive-type crops.


Single- and double-cropped wheat as well as soybeans as a second crop were new in the plan and included custom harvest in the solution. Custom harvest was necessary because operator labor in May and November was limiting theharvest operations.

..


81


As it happened in the "all enterprises" case, as larger amounts of cropland were made available, operator labor became a most restricting factor. It became limiting during six critical months, The increase in operating capital from $60,000 to $80,000 increased returns by $2,845 or 6 percent, while the additional resources used were $20,000 of operating capital and 159 acres of cropland, plus the implied additional usage of operator labor.


At the $100,000 level of operating capital, although the additional capital allowed a substantial increase in the level of extensive-type crops; the resulting profitability from this-addition in the use of resources turned out to be rather low (2.6 percent increase in the returns situation). Therefore, the optimum plan for this farm situation should lead to similar observations as those stated in the "all enterprises" case in the former section.


Optimum Plans Excluding Peanuts Enterprise


In this.section, enterprise combinations included tobacco as an allotment crop and excluded peanuts from the enterprises. Thus, a total of seven crops were included in the development of optimal plans designed for those areas where peanuts are not suitable for cropping, or aress like District III where 96 percent of the flue-cured tobacco was produced in 1973. The optimum programs for these enterprises are shown in Table 10.

..














Table lO.--Optimun plans for alternative levels of cropland and operating capital on Nortn and West Florida farms; Plans ex'ludinq peanuts


Iteo Unit 250 acres 400 acres i Unconstralned acreage e 2/
4 100 so o0 $O.o o, $1D000,oo 20,00

CROPS

Flue-cured tobacco Acres 35.4 38.7 32.3 32.3 32.3 32.3 32.3

laryland tobacco 25.0 25.0 25.0 25.0 25.0

Corn (non-irricated)

Wheat 34.3 150.2 189.8

Soybeans 104.2 192.7 222.9 222.9 138.9-84.1* 144.5-78*

Wheat-soybeans U 32.9 85.5 82-3.5" 42.4-43.1*

LIMlITINGqE SOJRCES-/

Labor: January Hours 208(71.3) 208(43.2) 208(55.9) 202(58.7)

S20=,47.6) 2J8(210.7) 203(94.2) 203(195.5) 208(179.2) 208(186)

,%y k 234(10.8) 234(10.4)
260(53.6) 26C(43.7) 260(47.4)

October 234(4)
Novez-.er 234,11.4) 234(11)
release escee casee seae (.,,lease lease
Allotment: Tobacco Pounds '376942 45 63450 (.11163450 (""6350 (.l)63,450

Cropland Acres 15.4 ??7.n 250(76.5) 313.1 400k14.21 5.15.9 555.5

Operating capital Dollars 40,0001.09) 60,000(.86) 72.120 00,000(.42) 90.861 l00,000(.04) 103.348
RETURNS Dollars 41,724 59,870 66,313 70,816 74,809 75,871 76,005


*'The asterisk indicates the acreage to be custom harvested. Otherwise harvesting is performed using own harvesting mach.inery.

this farm size, solutions for S40,000 and $60,000 are the same as those at 250 acres of size
At this farm size, solutions for $40,000, S60,000 and $80,000 are the same as those at 400 acres of size.
-/Figures within Parenthesis represent the MVP of limiting resources.


00

..






The exclusion of peanuts, an intensive user of labor and operating capital, was expected to cause substantial changes among less profit. able crops, that is, among the extensive type crops.

In this enterprise-mix the optimum plans for $40,000 and $60,000 of operating capital were the same as those where all enterprises were included (Table 8), which did not include peanuts either. For the plans at higher levels of operating capital the exclusion of peanuts did cause different plans than those in Table 8, but with no substantial changes in returns. Therefore, the elimination of peanuts from the enterprises. resulted in changes on acreage levels of the other~crops as well as changes in levels of resource use.

The intensive-type crops (flue-cured tobacco and Maryland tobacco) entered each optimum plan at about the same acreages. Flue-cured tobacco entered the solution at 32.3 acres or 2.2 acres higher in those plans where peanuts were excluded.

In the extensive-type crops changes occurred mostly because of labor being limiting during critical months. Soybeans came into the plans at 184.2 (solution for 250 acres and $60,000), increased to 222.9 acres (400 acres and $80,000), and stayed at that level because operator labor in January limited its further expansion. This allowed wheatsoybeans to enter that solution at 32.9 acres (400 acres and $80,000). An additional $20,000 of operating capital permitted the increase of wheat-soybeans to 85.5 acres, at which point June labor became limiting and allowed single-cropped wheat to enter the solutions at 34.3 acres (400 acres and $100,000). Wheat-soybeans stayed at 85,5 acres and single-

..







cropped wheat continued to increase as additional cropland and operating capital were available.


Although soybeans being more profitable were expected to enter athigher levels, this was not so due to the fact that January labor was limiting this crop. Therefore, it was wheat-soybeans and sinblecropped wheat that reched higher acreage levels than those:obtained in Table 8. The reallocation of the resources freed by peanuts was also reflected in somewhat lower total acreage for the plans,, In general, the use of resources was lower and the exclusion of peanuts did not materially affect the returns situation.


Optimum Plans Excluding Tobacco and Peanut Enterprises


The development of optimum programs in this section included only the extensive-type crops; consequently, these results should be useful to those farmers who do not produce peanuts and flue-cured or Maryland tobacco. Table 11 presents the optimum plans for these alternative resource situations.


250-Acre Crop Farm

Only soybeans entered the optimum plan for this farm size as it was the most profitable enterprise among those evaluated. If an additional acre of land were available, returns would be increased by $76.5. No other resource was limiting and any size expansion would be highly profitable.

..










Table ll.-ptimum plans for alternative levels of
Plans excluding tobacco and peanuts.


cropland and operating capital on North and West Florida farms:


Unconstrained Acreage
$40,000 1 $60,000 1$80,000 $ $100,000


CROPS
Corn (non-irrigated) Wheat Soybeans Wheat-Scybeans
LIMITING RESOURCES Y
Labor: January
March April
May Ju ne Oct.
Nov.
Cropland Operating Capital RETURNS


Acres


if 250.0


38.9 361.1


55.8

354.7 4.7


160.7
72.6* 288.2 16-37.6*


254.9 142.6* 191.5 124.6*


346.7 75*
88.4 200.3*


Hours


234(0)


260(38.9)


Acres Dollars Dollars


250(76.5)
23,625 17,625


400(48.5) 37,892 23,011


234(56.8) 260(29.9)


234(51.6) 234(51.6) 260(38)


234(.002)
415.2 575.1
40,000(.24) 60,000(.10)
28,654 32,071


234(37.5) 234(37.5) 260(41.7)


208(1.9) 234(43) 234(43) 260(47.6)


234(7) 234(9.7)
713.6 710.4
80,000(.06) 88,859
33,532 33,700


Iteni


Unit


250 Acres
$40,000


400 Acres
$40Sooo


*The asterisk indicates the acreage to be custom harvested. Otherwise harvesting is performed using own harvesting machinery.
!-/Figures within parenthesis represent the MVP of limiting resources.


i
f

..


86


400-Acre Crop Farm


Soybeans and non-irrigated corn entered the optimum plan for the 400-acre farm with soybeans being strongly dominant at 361 acres. Operator labor limited soybeans during field operations in April and June, allowing for corn to use the remaining 39 acres, Cropland was still limiting and its point MVP was $48.5. Operating capital requirements were $37,892 and the resulting returns were $28,011, or 59 percent higher than in the former farm size.

Plans for the Unconstrained Acreage Situation


In this resource situation cropland was available to optimize use of operator labor and capital. Optimum plans here were designed to give some insight on profitable farm size adjustments as operating capital was increased.


The results showed that as operating capital increased, there

were changes in the levels at which the enterprises entered the solutions. After wheat entered the solution at the $60,000 level of operating capital, no new activities came in the optimum combination of enterprises. Solutions included non-irrigated corn, wheat, soybeans, and the doublecropping activity wheat~soybeans. Corn and soybeans appeared in solutions at higher acreages than any other crop. Corn steadily substituted for soybeans at higher resource levels because April and June labor restricted the expansion of soybeans. Wheat and wheat-soybeans were supplementary in the programs, with increasing dominance of wheat-soybeans at higher levels of operating capital.

..







As expected, high requirements of operator labor at harvest time made custom harvest appear in the programs. As operator. labor in May limited harvest and haul operations in wheat, this enterprise always entered custom harvest in the programs. Similar situations were observed in the double-crop activity wheat-soybeans.

April, May and June were the most limiting-months in most

solutions and had marginal contributions to returns which could be of

substantial benefit had additional labor been made available during these months.


The amount of cropland required to optimize the use of the other resources in each plan was notably higher than the levels observed in previous enterprise-mix situations. This was expected since extensive-type crops use larger quantities of land relative to the amount of capital and labor used.


Operating capital stopped being a constraint at the $100,000 level, where only $88,859 were utilized. Operator labor was at the limit for March, April, May, June and November and restricted the further expansion in cropland or capital use.

Returns at the $40,000 level were $28,654. The MVP for capital

at that point was 24 percent, which implied that an increase in operating capital would be highly profitable, This was verified at $60,000 of operating capital where the MVP was 10 percent, and the new returns were $32,071, or 11 percent higher than in the former solution. At the $80,000 level, the MVP for capital dropped to 6 percent, and returns

..






increased to only $33,532, or 4 percent higher. At this level of operating capital, the rate of returns was too low to cover the cost of borrowing, The solution for the $100,000 level of operating was not relevant since returns increased by only .5 percent,


In summary, for farms specializing in extensive-type crops,

large cropland acreages are needed. For the 250-acre and 400-acre farms, procurement of additional cropland would be profitable since the MVP for cropland indicated high potential benefits from additional acreage. This was corroborated by the substantial increases observed in the returns situation as farm size went up,

The enterprise combination determined by $60,000 of operating capital and 575 acres seems to be the optimum resource adjustment for crop farms. A higher level of operating capital would not be advisable since the MVP of this resource would drop to levels lower than its market rate of return.

Optimum Plans Including Irrigated Corn Enterprises

This section analyzes the effects of irrigated corn in selected farm situations that included corn as an enterprise.!/ The analysis was performed by forcing irrigated corn into the solutions in 140-acre size units.

The selection of the evaluated farm situations utilized information of preliminary results and included thosefarm situations where

A/Irrigated corn was not included in former programs due to programming difficulties that arose from the integer nature of the centerpivot irrigation units, which cover 140 acres (Appendix Table 7).

..


Full Text
Table
Eiae
24. Man-equivalent hours of operator labor
available by months, 1975 . 155
25. Machinery and equipment utilized by enter
prises in optimal plans . 156
26. Returns adjusted for fixed costs involved
in each optimal plan 157
x


37
Table 6 .--Input prices used in preparing budgets
in North and West Florida, 1975
for crop farms
Item
Unit
Price
dollars
Seeds:
Peanuts
lb.
.425
Flue-cured tobacco
oz.
20.00
Maryland tobacco
oz.
20.00
Corn
lb.
.70
Wheat
bu.
7.50
Groin sorghum
lb.
.65
Soybeans
bu.
12.00
Watermelons
lb.
4.00
Ferti1izers:
Lime, spread
ton
11.00
0-14-14, spread
cwt.
5.30
Nitrogen
1b.
.23
4-12-12
cwt.
5.90
5-10-15
cwt.
5.30
6-9-3
cwt.
5.90
Nitrate of Soda
cwt.
9.50
4-8-12
cwt.
6.00
Potassium nitrate (13-0-44)
cwt.
10.00
10-10-10, spread
. cwt.
5.85
15-0-15 (bag)
cwt.
8.25
Chemicals:
Soybean innoculant
pkg.
.90
Systemic (sucker control
chemical)
gal.
14.00
Contact (sucker control
chemical)
gal.
7.25
Lasso (herbicide)
lb.
3.71
Sutan-W\trez (herbicide)
lb.
2.24
Balan (herbicide)
lb.
4.60
Sevin (insecticide)
lb.
1.00
Dasar.it (insecticide)
lb.
5.10
Bravo (fungicide)
gal.
28.75
Fumazone (insecticide)
gal.
14.00
Dysiston (insecticide)
lb.
3.08
Lannate (insecticide)
lb.
9.00
Toxaphene (insecticide)
lb.
1.00
Parathion (insecticide)
lb.
.29
Custom work:
Peanuts: Spray (air)
acre
1.75
Custom harvest'
acre
28.00
Tobact j:
Plant bed: Fumigation (with
methyl bromide) and
plastic cover
100 sq. yd.
21.00
Herbicides
acre
16.00
Insecticides
acre
52.78
Insurance
acre
42.50
Corn: Harvest and haul
bu.
.25
Wheat: Harvest and haul
acre
10.00
Grain sorghum: Spraying
(custom air)
acre
1.50
Harvest and haul
acre
10.00
Soybeans: Spraying (custom air)
acre
1.50
Harvest and haul
acre
10.00
Operator capital
dol.
9*


66
dropped from the crop activities in the analysis, and only hand-harvest
was left as an alternative.
Although in general, machine harvest systems are justified only
in large acreages, some flue-cured tobacco growers do go into mechanized
harvest at acreages much lower than the estimated break point. This
situation is understandable since although the decision to mechanize
is primarily based on the economics of costs and returns, other factors
like the producer's desire, or the extent to which adequate sized units
can be aggregated to economically adopt mechanical harvesters, influence
the final decision. The present use of mechanical harvesters may be
explained by risk considerations in procuring harvest labor at peak
seasons as well as prospects for modifications in the tobacco legisla
tion regarding the allotment system.
The results of this study showed that hand harvest was the best
alternative and no harvest mechanization should be considered unless
flue-cured acreage exceeded 74 acres. This statement assumes that labor
was available for hiring during peak seasons. If farmers are not able
to stand the risk arising from the uncertainty in labor supply at
harvest time, or if they have the desire to use mechanical harvester,
then they may use the machine-harvest system.
Although consolidation of flue-cured tobacco allotments has
occurred through leasing, more flexibility is needed if growers are
to optimize the returns from mechanical harvest. The present tobacco
allotment and quota system, insofar as it inhibits the formation of


Appendix Table 4b--Flue-cured tobacco field operations^: monthly labor and tractor requirements
per acre!/, North and West Florida, 1975
Labor
Large Tractor
Small Tractor
Operations
Times
month
month
month
Jan. Mar.
Apr. May Total
Jan. Mar. Total
Mar. Apr. May Total
-Hours
Hours>
-Hours
Di sc
2
.60
.60
.52 .52
Plow
1
.55
.55
.48 .48
Disc
1
.30
.30
.26 .26
Apply nematicide and
herbicide and disc
1
.30
.30
.26 .26
Apply fertilizer and bed
1
.78
.78
.68 .68
Pull plants !/
1
8.00 8.00
Transplant!/
1
1.84 1.84
1.60 1.60
Cultivate
2
.69 .69 1.38
.60 .60 1.20
Side dress
1
.69 .69
.60 .60
Total
1.15 1.38
10.53 1.3814.44
1.00 .52 1.52
.68 2.20 1.20 4.08
^Not including harvest operations.
l/l 1/4 acres of land for 1 acre of tobacco.
-/Hired labor for these operations.


74
when there was less competition for labor, Its largest operator labor
requirement was in October, when no other crop was using operator labor.
Grain sorghum, even with higher returns per acre than wheat, did not
come into the optimal solutions simply because its labor requirements
made it competitive with higher profit crops such as soybeans.
The rates of return to resource use at $80,000 seem to reflect
the best farm adjustment since higher resource levels implied declining
rates of return to resource use. This statement is corroborated with
the observations made in the next farm size situation.
Plans for the Unconstrained-Acreage Situation
For the unconstrained-acreage situation, solutions up to $80,000
of operating capital were the same as the 400-acre farm. This was due
to the fact that it was capital that first became 1imiting. The
$120,000 level of operating was the highest level of capital considered.
At the $100,000 level of operating capital, the enterprises
included in the optimal plan were the same as those in the 400-acre farm
size. Although the intensive-type crops remained unchanged, some dif
ferences arising from the inclusion of custom harvest in the extensive-
type crops were relevant to this solution.
Soybeans remaind at 236 acres, but 47 acres were custom
harvested. The resulting reduction in operator labor during harvest
time was transferred to wheat, which increased to 156 acres. Soybeans
also were produced as a second crop after wheat, and 40 acres out of
65 acres were custom' harvested.


Appendix Table 23.--Costs of operating machinery: annual fixed costs per unit, 1975
Item
New.
Cost
Average
Cost
Years
of
Useful
Life
Depreciation
/¡lew Cost-10%
Annual Fixed Cost
1 Interest I Repairs (
\ average cost
Taxes j Insurance
Total
(New Cost^
.0085
\Yrs. of Life
J .095
.01
.02
\ 2 J
- - -Dollars- - -
-Yrs.-
------
- -
- -Dollars
Tractor, lge.
12,750
6,375
7
1.639
606
64
128
54.2
2,491
Tractor, sml.
6,000
3,000
7
771
285
30
. 60
25.5
1,172
Disc, harrow,
12'
1,500
750
8
169
71
8
15
6.4
269
Bottom plow,
5-15" .
1 ,550
775
10
140
74
8
16
6.6
245
Planter, 4-row
hi speed
3.300
1,650
8
371
157
17
33
14.0
592
Cultivator, 4
row rolling
1,650
825
10
149
78
8
17
7.0
259
Disc harrow, 3
850
425
8
96
40
4
9
3.6
153
Bottom plow,
2-16"
500
250
10
45
24
3
5
2.1
79
Cultivator, 2-
row
650
325
15
39
31
3
7
2.8
83
Transplanter,
2-row
1,000
500
12
75
48
5
10
4.3
142
Grain drill
1,300
650
10
117
62
7
13
5.5
205
Sprayer
400
200
5
72
19
2
4
1.7
99
Spreader
690
345
8
78
33
3
7
2.9
124
Peanut inverter,
2- row.
1 ,500
750
8
169
71
8
15
6.4
269
Peanut combine
7,500
3,750
5
1,350
356
38
75
31.9
1,851
Peanut wagon
1 ,350
67 5
15
81
64
7
14
5.7
172
Combine -
16,600
8,300
5
2,988
789
83
166
70.6
4,097
Corn head, 2-row
3,000
1,500
5
540
143
15
30
12.0
741
Small grain head,
13'
1,600
800
5
283
75
8
16
6.8
395
Tobacco priming
aide
800
4C0
20
36
38
4
8
3.4
39
Tobacco combir
e
20,700
10,350
6
3,105
983
104
207
'88.0
4,407
Tobacco trailers
(3 each)
600
300
20
27
29
3
6
2.6
68
Bulk barn (7
acre capacity)
6,500
3,250
20
293
309
33
65
27.6
728
Truck, pick up
4,000
2,000
5
720
190
20
40
17.0
987
Truck, 2 ton
6,200
3,100
5
116
295
31
62
26.4
1,530
Total
102,490
14,474
4,871
516
1,028
435.8
21,327


Appendix Table 2--Peahuts: monthly laborand tractor requirements per acre, .'torth and West Florida. 1975
tabor
Large Tractor
Small Tractor
month
month
month
Operations
Times
3ct:-
Nov.*
Har.
Apr.
Apr.- May June
May*
June Sept
July*
Total
Oct.-
hov.*
Har. Apr.
Apr.-
May*
Juns
1 Total
May June Sept.
July*
Total
Disc (disc in lime)
2
.60
.60
.52
.52
Disc (disc in fertilizer)
1
.30
.30
,26
> .26
Plow
1
.55
.55
.48
.48
Disc (disc in herbicide)
2
.60
.60
.52
.52
Plant
1
.38 .
.38
.33
.33
Apply herbicide (cracking stage)
1
.48
.43
.42
.42
Cultivate
2
.72
.72
.62
.62
Apply landplaster
1
.37
.37
.32
.32
Spray fungicide-insecticide
4
.92
.92
.80
.80
Invert (dig)
1
1.15
1.15
Harvest
1
1.15
1.15
1.00 1.00
1.00
1.00
Haul (to dryer)
1
.69
.69
Total'
.60
.85
.60
.38 .48
.72
i .29 2.99.
7.91
.52
.74
.52
.33
.62
1.00 3^73
.42 1.12 1.00
2.54
*The asterisk indicates the month to which the operator labor was allocated in the model.


76
Optimum Plans Excluding Tobacco Enterprises
The enterprise combination in this section of the analysis in
cluded peanuts as the allotment crop and excluded both flue-cured tobacco
and Maryland tobacco. A total of six crops were considered as enter
prises. The optimum plans here were designed for those areas where
tobacco is not suitable for cropping, or for areas like District II
where the production of peanuts accounted for 75 percent of the area's
crop production in 1973. Table 9 shows the optimum programs obtained
for each of the cropland and operating capital situations included in
the analysis.
250-Acre Crop Farm
At the $40,000 and $60,000 levels of operating capital the only
enterprises included in the optimum solutions were peanuts and soybeans.
They exhausted the cropland and operating capital available.
At the level of $40,000, operating capital restricted peanut
acreage to 69.8 acres and soybeans exhausted the remaining cropland.
About 56 acres of peanut allotment were leased. The MVP for peanut allot
ment at this point suggests that an expansion in peanut production could
be profitable if more operating capital were availabe. In fact, that
was also the case when an additional $20,000 of operating capital was
available. Peanuts went up to its upper limit allowed in the model.
This result was expected due to the higher profitability of peanuts over
soybeans. These two enterprises sean to combine very well as they ef-


TOO
remained the same except for the level of returns that increased by 71
percent as a result of this much higher price,
A very small decline in the panut price to 14.653 cents per
pound resulted in a decrease of 52 acres down to 149.6 acres. Re
sources released by peanuts were allocated to flue-cured tobacco and
soybeans. Maryland tobacco entered the optimum plan by substituting
for wheat, own-machine harvested. The pressure in the use of operator
labor was similar except that the higher level of tobacco acreage stressed
this pressure on March and April labor. Returns for this solution were
$82,573, down 4 percent from the former solution.
For prices of peanuts below 14.653 cents another optimum plan
resulted with the corner solution at 13.659 cents, or approximately
one cent reduction in price. Peanuts entered this program at 113.6
acres. Further reductions in acreage of peanuts were observed as its
price moved downwards slightly. It took an additional price reduction
of only .265 cents for peanuts to shrink its acreage from 113.6 acres
to 65 acres in a succession of three small price variations. The com
puted optimum plans introduced increased acreages of the flue-cured
tobacco, Maryland tobacco (at its maximum possible level), and soybeans,
as the major substitutes for peanuts, with wheat being reduced by 6.7
acres and shifted from custom to own-machine harvest. The pressure on
operator labor was somewhat reduced, with July labor ceasing to be
limiting. The usage of operating capital was rather stable, ranging
from $88,259 down to $87,148. Returns also reflected similar patterns,
ranging from $78,057 down to $77,139, or only a 1.2 percent reduction.


51
owned machinery and custom harvest. These enterprises were peanuts
(colurns 01 and 02), corn, irrigated and non-irrigated (columns 06
through 09), wheat (columns 10 and 11), grain sorghum (columns 12 and
13), double crop wheat-sorchum (columns 14 and 15), soybeans (columns
16 and 17), and double crop wheat-soybeans (columns 18 and 19). Regard
ing systems of harvesting, flue-cured tobacco (columns 03 and 04) also
had two alternatives. These alternatives consisted of mechanical harvest
ing and conventional or hand harvesting. Only one production alternative
for the other crop activities, Maryland tobacco and watermelons (columns
05 and 20, respectively) were included.
Columns 21 through 28 are crop selling activities. The return
coefficients represent the price per unit received by farmers, therefore,
these coefficinets are positive. The selling procedure was performed
by using the product transfer rows.
Columns 29 and 30 permit the purchase of a tobacco harvester and
a combine respectively. These activities are bounded alternatively at
zero and one units, providing the information to evaluate custom harvest
versus owned machinery harvest. The return coefficients for these
activities are negative since they represent the annual cost of this
machinery. The field-work time purchased with each tobacco harvester
is 357 hours, and for each combine this time is 500 hours. These field
work times are used by the producing acitivies through the appropriate
transfer rows 46 and 47.
Columns 31 and 32 provide for leasing of allotments for peanuts
and flue-cured tobacco respectively. The return coefficients of these


52
activities are negative and represent the cost of leasing one unit of
allotment. The -1 coefficients in these columns, lined to the allotment
constraints (rows 44 and 45), indicate additions of units of allotments
to the current constraint. The leasing of peanut allotment is upper-
bounded at 80 acres, and the leasing of flue-cured tobacco allotment
is upper-bounded at 42 acres or approximately 90,000 pounds.
As for the rows in the matrix, row 01 represents the objective
function of this study, which is the profit equation to be maximized.
As stated earlier, this equation calculates the maximum net revenue for
each program. According to the adopted definition of net revenue, no
provisions were made to meet fixed costs in the model itself, therefore,
the fixed cost component must be subtracted from the value of the program
before any estimate of net income is imputed to land and operator labor
and management.^
Rows 02 through 13 represent the availability of operator labor
on a monthly basis (see Appendix Table 24). These equations restrict
the production activities to the amount of labor specified as constraints.
The coefficients in the tableau indicate the amount of operator labor
required to produce one acre of the different enterprises. Whenever
needed and whenever possible, transfer of labor between two consecutive
months is considered. This procedure implies additional column activities
in the matrix but this is not shown in the initial tableau.
9/
See Appendix Table 26 for returns adjusted for fixed costs
involved in each optimal plan.


Table 5.--Product yields and prices used in preparing budgets
for North and West;Florida, 1975
Item
Unit
Yield
Price
Peanuts
cwt.
30
dollars
18.00
Flue-cured tobacco
lb.
2,100
1.10
Maryland Tobacco
lb.
1,500
.95
Corn:
Irrigated
bu.
115
2.50
Non-irrigated
bu.
65
2.50
Wheat
bu.
25
3.50
Grain sorghum:
Single-cropped
cwt.
36
4.00
Double-cropped
cwt.
29
4.00
Soybeans:
Single-cropped
bu.
30
5.50
Double-cropped
bu.
25
5.50
Watermelon
lb.
18,000
.03


84
cropped wheat continued to increase as additional cropland and operat
ing capital were available.
Although soybeans being more profitable were expected to enter
at higher levels, this was not so due to the fact that January labor
was limiting this crop. Therefore, it was wheat-soybeans and sinble-
cropped wheat that reached higher acreage levels than those obtained
in Table 8. The reallocation of the resources freed by peanuts was
also reflected in somewhat lower total acreage for the plans, In general,
the use of resources was lower and the exclusion of peanuts did not
materially affect the returns situation.
Optimum Plans Excluding Tobacco and Peanut Enterprises
The development of optimum programs in this section included
only the extensive-type crops; consequently, these results should be
useful to those farmers who do not produce peanuts and flue-cured or
Maryland tobacco. Table 11 presents the optimum plans for these alterna
tive resource situations.
250-Acre Crop Farm
Only soybeans entered the optimum plan for this farm size as
it was the most profitable enterprise among those evaluated. If an
additional acre of land were available, returns would be increased by
$76.5. No other resource was limiting and any size expansion would be
highly profitable.


Appendix Table 6--Maryland tobacco: monthly labor and tractor requirements per acre, North and West Florida, 1975
Labor
Large
Tractor
Small
Tractor
Operations
times
month
month
month
dan. Mar.
Apr. May June July Augf Jan.
Sept.
Mar. T ,
Total
Mer.
Apr. May July Total
hours
hours
-hours
Disc
2
.60
.60
.52
.52
Plow
1
.58
.58
.50
.50
Disc
1
.30
.30
.25
.26
Disc, apply herbicide
1
.30
.30
.26
.26*
Apply Fert. & bed
1
.78
.78
.68
.68
Plant Pulling-^
1
8.0
8.00
-Transplanting/
1
8.2
8.24
1.60
1.60
Cultivate
2
.70
.70
1.40
.60
,60
1.20
Sidedress
i
.70
.70
.60
. .60
T V
Topping-7
i
10.0
10.00
Harvest'
i
45.71
45.71
5.00
5.CD
Curing
i
2.0
2.00
Stripping/ /
i
85.0
85.00
Supervise Operations
.63
2.5 5.3
8.3
Total
1.18 1.38
16.72
1.40 10.63
51.21 90.3
172.C4
1 .02 .52
1.54 .63
2.20
1.20 5.00
9.08
*The asterisk indicates
the month to
which
the operat
or labor was
allocated in the model.
/Hired labor for these operations.
2/
Stripping can be scheduled in August or half in August and half in SeDtember.


12
(3) The area has a fairly uniform climate such that
the results of the study will be applicable over
a wide area.
Physical Factors
Physical factors, in combination with economic, social and
biological factors, determine the type of agriculture and combination
of enterprises selected by farmers in any area. Physical factors are
perhaps the most limiting and thus they will be described first.
Soils and Topography
The soils in the area are predominantly fine sand and are
deficient in lime [5, p. 5]. A generalized soil map of Florida [5,
p. 5] shows that the study area has mostly "well to moderately well
drained" and "well to somewhat excessively drained" sands and loamy
sands. The soils are thick to thin acid sands and sandy loams, some
of which overlie finer-textured subsoils [16, p. 4].
The topography is defined by a rather flat land with no large
differences in elevations. There are some rolling hills that sometimes
create a minor water erosion problem.
Drainage
In some cases there is a problem of drainage associated with
the flatness of the area. Much of the land is subject to flooding in
periods of heavy rainfall [5, Figure 4]; "Heavy rainfall and warm


104
Results in this section were similar to those where all enter
prises were included. Similarities were evident in optimal combination
of enterprises. However, some differences were detected in some other
aspects of the solutions and they are the basis for the brief discussion
which follows.
Peanuts, at the prices considered, were the most profitable
crop after the tobacco enterprises, arid therefore was expected, together
with flue-cured tobacco, to utilize those resources freed by Maryland
tobacco. But this was not so for peanuts, apparently due to the fact
that peanut acreages were limited by the constraints in the model.
As the price of peanuts decreased, flue-cured tobacco and soy
beans continued substituting for peanuts. For this enterprise composi
tion the range of peanut price variations was narrower than in the
former case (Table 14), suggesting that in this case the acreage re-+
sponse of peanuts to price decreases was stronger. The price at which
peanuts entered the maximum allowable was 13.572 cents per pound, or
24.6 percent below its support price, and 1.136; cents lower thari in
the former case. Thus, the absence of Maryland tobacco allowed peanuts
to start being competititve at even lower prices.
Plans Excluding Both Flue-Cured Tobacco and Maryland Tobacco Enterprises
The exclusion of tobacco enterprises from the product composition
of the programs allowed peanuts to become the most profitable enterprise;
consequently its competitive potential increased greatly.. Table 16 shows
the optimum plans obtained as the price of peanuts decreased,


101
After the solution for the peanut price of 13.394 cents was
obtained, a price decrease of approximately one cent was required be
fore a new shift in the acreage response of peanuts occurred. The new
optimum plan at the price of 12.346 cents entered peanuts at 55.5
acres. The resources freed by peanuts were allocated to flue-cured
tobacco and soybeans, with no change in the combination of enterprises.
However, these adjustments in enterprise acreages brought about some
changes in the use of operator labor. May labor stopped being limitirig
and January labor was exhausted. Although operating capital usage re
mained practically at the same level, returns were reduced by $2,328,
or 3 percent lower.
The solutions were very sensitive to prices around 12.346 cents
For instance, it required a price decline of only .001 cents to obtain
a new solution. In this solution, although the level of peanut price
and the returns remained practically the same, the enterprise levels
in the optimum plan did differ substantially. Peanuts dropped to ,8
acres, or 54.7 acres less than the former solution. Flue-cured tobacco
wheat, wheat-soybeans substituted for peanuts, with the double-cropping
activity also substituting for 52 acres of soybeans. These adjustments
in enterprise levels were rather complex and took place after a real-
location of cropland and operator labor, a process that despite re
quiring $3,793 of additional operating capital, yielded an almost iden
tical level of returns, $74,809 or $2 less than the former optimal
solution.


18
Agricultures labor force is the smallest among major sectors
of the economy. In 1970, area employment was 292,151 but agriculture's
share was only 6 percent of this labor force.
Income
Limited statistics on income are presented in Table 1. Personal
income per capita figures and the data on family incomes indicate the
disparity between economic opportunity in North and West Florida as
compared to the remainder of the state.
In 1970 the average personal income in all 27 counties in the
study area was about $600 below the state average ($3,659). However,
per capita income increased by 104.8 percent in the study area, compared
to 89.7 percent for the state during the 1960-1970 period.
Median family income was $6,472 in 1970, which was well below
the state average of $8,267 for the same year. The percent change in
family income during the period 1960-1970 was 52.4 for the study area
and a higher 75 percent for the state.
The numbers of families with incomes under $5,000 has decreased
considerably in the area under study. However, at incomes higher than
$5,000, this number has increased. Family incomes ranging from five
to ten thousand dollars have increased 40.7 percent, while family incomes
$10,000 and over have risen 359,4 percent during the analysis period.
These trends in family income in the study area are similar to
those at the state level,


CHAPTER V
OPTIMUM PLANS FOR PEANUT FARMS AND THEIR ACREAGE
RESPONSE FUNCTIONS TO PRICE CHANGES: THE PEANUT PROGRAM ABOLISHED
Changes in tHe peanut allotment and price support policies are
imminent. Due to this, policy makers and farmers in the study area
need to have some insight into the effects of different levels of
peanut prices on the acreage of this crop and on the cropfarm organiza
tion in general.
Objective three of this study dealt with changing peanut prices
and the corresponding results are presented below.l/ Overall, the
analysis attempted to develop some notions of the characteristics of
the optimum enterprise combinations and of the peanut supply for the
short run without acreage allotments, as continuous downward changes
in the price of peanuts occur. Firm level functions for the acreage
response of peanuts to price variations were developed. The relevant
additional assumption was that the government program for peanuts was
discontinued.
1/L inear programming is suitable for studying the effect of
changes in government farm programs on agricultural output. These
estimates should not be used for prediction purposes due to the fact
that they were derived from assumptions at "synthetic" firm level, and
also because they are normative and indicative of what should be if
the set of assumptions in this study hold true,
96


159
[11] Florida Crop and Livestock Reporting Service. Florida Agricul
tural Statistics, Field Crops Summary, 1973. Orlando:
August 1974.
[12] Florida Crop and Livestock Reporting Service. Florida Field Crops,
June Acreage--1975. Orlando: July 1975.
[13] Florida Statistical Abstract, 1974. Bureau of Economic and Business
Research, College of Business Administration. Gainesville:
University of Florida Press, Eighth Annual Edition.
[14] Heady, E. 0. and W. Candler. Linear Programming Methods. Ames:
The Iowa State College Press, 1958.
[15] Huddleston, J. S. and R. G. Kline. Minimum Resource Requirements
and Related Optimum Enterprise Combinations for Specific
Income Levels for the Cash Grain Area of Northeastern
Virginia. Virginia Polytechnic Institute, Research Division,
Bulletin 24. Blackburg: July 1969.
[16] Jhunjhunwala, Bharat. Minimum Cropland Requirements for Specified
Income Levels in Selected Counties of North and West Flor
ida. Unpublished master's thesis. Gainesville: 1971.
[17] The Kiplinger Agricultural Letter. The Kiplinger Washington Editors.
vol. 46, nos. 1, 2, 3, 4. Washington, D. C.: January,
February 1975.
[18] Knudtson, Arvid and Willard Cochrane. "A Supply Function for Flax
at the Firm Level," Journal of Farm Economics, vol. 40,
February 1958, pp. 117-123.
[19] Marshall, J. R., T. W. Little and G. Klinger. The Peanut Program:
Some Issues, Some Choices. Blackburg: December 1973,
pp. 1-21.
[20] Moxley, C. C., M. E. Konyha and D. E. Long. Social and Economic
Trends, 1950-1970 State of Florida Planning Districts I,
II and III. Department of Food and Resource Economics,
IFAS. Gainesville: 1970.
[21] Nerlove, Mark and Kenneth Bachman. "The Analysis of Changes in
Agricultural Supply: Problems and Approaches," Journal
of Farm Economics, vol. 42, August 1960, pp. 531-554.
[22] Sutherland, J. G. Minimum Land Requirements to Produce $5,000
Net Farm Income, Eastern Piedmont and Upper Coastal Plain
(Economic Areas Six and E), North Carolina. North Carolina
State University, Economic Information Report No. 8.
Raleigh: April 1968.


T*5lg l^Sgcij] and economic trend;, Planning t.-fcts i. : and 11; 1.1 S;r-h and ¡test Florida. 1960-1970
Social and Economic Variables
Florida
.district
1
O'.stri
it 11
District
III
StLdv
Area
"r.unge
560-7ff
1970
Cnange
1960-70
1970
Lficr.90
1960-70
- 370
Change
1960-70
1970
Change
1960-70
1570
percent
rubber
percent
numbf
percent
fiunser
percent
number
percent
number
. mr
Hi
Hi.
Hi.
HI
Poouiaticn
Tota.
37.2
6,733,443
25.2
331,262
11.5
333.453
24.5 .
215,14?
19.5
375,852
Urban
45. 4
5,463,117
48.0
240,273
33.7
176,955
59.3
105,656
45.0
526,329
(30.sj
(72.5)
(55.1)
(51.0)
(63.0)
Sural
2.3
1,321,32c
-11.1
90.901
- 6.2
155,503
1.4
105,435
- 5.4
352,973
(19.5)
(27.5)
(45.9)
(49.0)
(40.1)
Farm
43.9
143,657
18.5
7,413
- 8 2
20.939
- 0.9
21,561
- 1.8
49,513
(11.3)
(3.1)
(13.4)
(20.4)
(5.7)
.'.on-farm
- 1.3
1 ,172,669
-14.9
83.3." 1
- 5.0
135.564
2.0
33,925
- 6.0
(83.7)
(51.0)
(86.6)
(75.6)
(34.4,
Labor Force: by Major Sectors
*
Agriculture
- 4.6
110,994
-11.2
1 ,313
-26.3
9,349
-30.4
5,950
-26.5
17,112
U.c)
(1.9)
(7.9)
(7.7)
(5.9)
Cons tree c.on
31.2
205,2c5
16.7
13.9
9,193
27.6
5,564
17.5
22,465
(3.5)
(8.2)
(7.6)
(7.0)
(7.7)
Manufacturing
52.0
341 .336
4.0
15,625
7.8
\2 ,035
25.9
10,567
10.5
33,073
(14.1)
(16.1)
(n.i)
03.4)
03-4)
Trade
52.0
571,051
42.3
20,751
34.3
23.107
37.4
14.439
37.9
53.337
(23.5)
(21.4)
(19.6)
(13.7)
(20.0)
Service and Mise.
70.3
725.062
9.0
22,22 j
56.9
26,115
74.9
17.451
62.1
66,305
(29.9)
(25.5)
(22.1)
(22.5)
(22.5)
Gaver-mer.t & Education
81.9
316,541
51.4
21, j7 i
71.5
22,769
37.9
18.413
68.5
63,755
(13.1)
(27.2)
(24.4)
(23.9)
(23.5,
C trier
-37.6
154,399
-31.
6n >
-32.1
-33.0
5. ICS
-33.7
19,599
(6.4)
(?.:)
(5.2)
(6.7)
(23.5)
roral cir.pio>ed
41.1
2,426,263
27.3
S7.063
23.2
117,912
25.4
77.173
26.1
292,151
Percent
Dollars
Percent
Dollars
Percent
Dollars
Percent
Ool Urs
Percent
dollars
I r,came
Perseas! income per capita
39.7
3.659
£4.2
3 rOd
113.4
2.856
118.3
2,956
104.3
3.053
Median family income
75.1
3,267
41.7
7,949
S '3.
6,260
33.0
5,15 7
52.4 .
6.472
Families by income level
Percent
Numbers
Percent
Numbers
Percent
' Numbers
Percent
Nu r::?rs
Percent
Numbers
Creer $2,000
-39.3
127,445
-23.5
S.ij'iC
-47.1
9,363
-45,0
5,626
-41.0
21,535
(7.1)
(S.O)
(11.5)
(11.1)
35,276
Under $3,C00
-40.7
217,892
-30.0
10,31'
-45.0
15,292
-43.4
9,173
-40. C
(14.5)
(V> M
(13 6)
(18.1)
52,COO 54.999
-30.3
335,750
-35.3
i** ,T5v:
-27.4
19,132
-30.6
11,019
-31.1
44.939
(13.7)
(13.0)
(23.6)
(21.8)
40.7
73.745
55,000 $9,929
35.3
625,551
25.4
32,384
49.4
23,723
61.7
17.633
(24.5)
(39.4!
(25.4)
(34.9)
510,000 and over
334.4
695,651
334.7
29,027
349.8
23.-363
334.7
16,23d
359.4
69.203
(39.1?
(35.4)
(29.4)
(32.2)
Source: Social and Economic Trends; 1953 1570; State of florida Planning Districts.


46
parametric variation of capital at $20,000 intervals, starting from the
basic constraint of $20,000 and increasing up to an "unconstrained"
level.
The above resource situations were to determine the effects of
alternative cropland and capital restrictions on the income and enter
prise organization of crop farms. Also, they allowed for some inquiry
on the economic potential of land equity as well as some insight on the
credit requirements of crop farmers.
Two other important resource restrictions, on which no alterna
tive levels were placed, were those related to labor and machinery.
Intuitively, one looks upon man hours as the most likely restraint.
In this study, operator labor was established as a limiting factor on
a monthly basis. The labor restraint formed for every month of the
year implied a rigidity in the timing of farming operations and con
sequently of labor use. This may be unrealistic. This model, however,
did allow for operator labor to be transferred across months, even
though this might have overstated labor flexibility for some crops in
some months. In forming the labor restraints, it was considered that
the farm operator was willing to work more hours during those critical
months of the year (see Appendix Table 24).
As for machinery and accompanying equipment, rather than forming
a separate set of constraints for each machine, the most limiting ones
were determined. "Large tractor" and "combine" were identified as the
most limiting because more hours of these machines were required than


Appendix Table 21Watermelons: estimated costs and returns per acre,
North and West Florida, 1975
Item
Unit
Quantity
Price
Value

dollars
I. Revenue
lbs.
18,000.0
.03
540.00
II. Cash Expenses
Seed
lb.
2.00
4.00
8.00
Fertilizer:
10-10-10, spread
cwt.
15.00
5.85
87.75
15-0-15, (bag)
cwt.
2.00
8.25
16.50
Lime .
cwt.
3.30
.60
1.98
Fungicide (Bravo)
gal.
.80
28.75
23.00
Tractor: Large
hr.
1.00
3.27
3.27
Small
hr.
2.65
1.66
4.40
Hired Labor
hr.
4.20
2.50
10.50
Field Labor
hr.
14.00
2.25
31.50
Harvest Labor
acre
1.00
40.00
40.00
Interest on cash expenses
(9% for 6 months)
Total Cash Expenses
dol.
. 226.00
.045
10.21
237.11
III. Returns Over Cash Expenses 302.89


108
part of the range of price variations and with soybeans as the major
substitute for peanuts over the lower part of this range of price
variations. Another point is that the ratios of required operating
capital to returns were high, specifically for those solutions where
peanuts entered the plans. This was due to the nature of peanuts as
an intensive capital user.
Stepped Acreage Functions for Peanuts
This section focuses on the estimated acreage response functions
of peanut prices at the firm level and in the short-run context. Each
of the estimated stepped supply functions applies only to the conditions
assumed in the foregoing analysis for the representative one-man peanut
farm. The major objective was to ascertain from limited evidence what
changes should be undertaken in response to declines in peanut prices
when no governmental program for peanuts exists.
Figure 2 shows the stepped acreage functions for peanuts under
the evaluated enterprise compositions. These functions sloped downward
to the left as one would expect a supply curve to do. As the price of
peanuts gradually declined, peanut production declined. The implied
flat slope suggests a high response of peanut poutput to price de
creases.^/ In the graph, vertical lines indicate ranges of indifference
i/The 1 inear programming function is a discontinuous stepped func
tion and does not lend itself to estimating point elasticities. Elastic
ities derived from linear programming results are based on an average
supply response over a range of prices and outputs. The explanation of
the discontinuous function is found in the mechanics of the linear pro
gramming model. Within each activity the ratio of inputs to outputs
is constant, and activity will be operated to the limit of some availabl
resource or constraint.


Table 12.--Optimum plans
for selected levels of cropland and operating ca
pital on North and West Florida farms:
Irriaated corn included and
tobacco excluded
Item
Unit
250 acre
400
acre
Ur,const
rained acreaqe
. $60,000
iso.000
IW,$T0
SlO.C
0
CHIPS
Peanuts
Acres
93.9
93.9 '
47.1
93.9
93.9
47.1
Irrigated corn
It
140.0
140.0
230.0
140.0
140.0
200.0
Mor,-irrigated corn

43.6
vine at
H
120.7*
Soybeans
>
16.1
166.1
72.9
180.5
131.5
93.2
Wheat-soybeans
H
42.1*
99.7*
151.8*
LIMITING RESOURCES -f
Labor: March
Hours (Dol.)
202(15!)
203(30)
April
H
234(0)
234(0)
234(49)
234(33)
234(49)
May

234(49)
234(33)
234(49)
"
260(42)
October
.
November
n
234(7)
Peanut Allotment
(Col.) Acres
(128)J?*e
oJ
orair
.please
ltJ33.2
(')£
lease
{79)33?2e
Cropland
Acres (Dol.)
250(77)
403(76.5)
400(77)
456.3
U.J *T
572.0
Operating canital
Collars .
5fi,2dc,
71,75''
7?,39?
S0,n00(.32)
100,000(.06)
100,000(.32)
RETURNS
Dollars
35,313
46,793
45,555
50,206
52,735
55,439
The asterisk ir.c-.cates the acreage to be custom harvested. Otherwise harvesting Is performed using om harvesting machinery.
Irrigated corn could or.'.y enter the solution in 140-acre units
-^Figures within parenthesis represent the MVP of limiting resources.


122
was stronger for the case where only extensive-type crops were allowed
in the solutions, However, due to the fact that irrigated corn had to
be forced in the solutions at fixed levels, these returns were somewhat
lower than those that could be obtained if this activity did not have
any restrictions in its acreage level. Overall, irrigated corn was a
good investment alternative, especially when only extensive-type crops
were evaluated. At lower acreages irrigated corn substituted for soy
beans, however, at larger acreages other crops were also replaced.
When only extensive-type crops were evaluated, irrigated corn substituted
for non-irrigated corn, wheat, and the double-cropping activity wheat-
soybeans, respectively; but single-cropped soybeans always entered
stronger.
On the Effects of Variations in Peanut Prices
The evaluation of variations in peanut prices and its effects
on the optimum plans was dealt with in Chapter V. The analysis attempted
to develop some notions of the characteristics of the optimum plans and
of the peanut acreage response to downward changes in the price of
peanuts. These changes were evaluated without acreage allotments to
simulate the removal of government acreage allotment and price support
programs,.
The model used for this analysis considered a representative
farm situation given by 400 acres of cropland and $100,000 of operating
capital. The enterprise compositions evaluated were; all enterprises
included, Maryland tobacco excluded, and both Maryland tobacco and flue-


The exclusion of peanuts, an intensive user of labor and operat
ing capital, was expected to cause substantial changes among less profit
able crops, that is, among the extensive-type crops.
In this enterprise-mix the optimum plans for $40,000 and $60,000
of operating capital were the same as those where all enterprises were
included (Table 8), which did not include peanuts either. For the plans
at higher levels of operating capital the exclusion of peanuts did cause
different plans than those in Table 8, but with no substantial changes
in returns. Therefore, the elimination of peanuts from the enterprises,
resulted in changes on acreage levels of the other-crops as well as
changes in levels of resource use.
The intensive-type crops (flue-cured tobacco and Maryland tobacco)
entered each optimum plan at about the same acreages. Flue-cured tobacco
entered the solution at 32.3 acres or 2.2 acres higher in those plans
where peanuts were excluded.
In the extensive-type crops changes occurred mostly because of
labor being limiting during critical months. Soybeans came into the
plans at 184.2 (solution for 250 acres and $60,000), increased to 222.9
acres (400 acres and $80,000), and stayed at that level because operator
labor in January limited its further expansion. This allowed wheat-
soybeans to enter that solution at 32.9 acres (400 acres and $80,000).
An additional $20,000 of operating capital permitted the increase of
wheat-soybeans to 85,5 acres, at which point June labor became limiting
and allowed single-cropped wheat to enter the solutions at 34,3 acres
(400 acres and $100,000). Wheat-soybeans stayed at 85,5 acres and single-


3
Statement of the Problem
The North and West Florida area is an important commercial
crop farming area. Some sections within the area have specialized in
the production of certain crops. Suwannee, Hamilton and Madison counties
are largely dependent on flue-cured tobacco as a source of cash income.
Jackson County, which "'harvested 27,240 acres in peanuts in 1974 [13],
had around half of the total peanut acreage in the study area. Soy
beans are grown mainly in those counties in the extreme western part of
the area. Supplementary enterprises are, of course, carried out in
conjunction with those high-profit crops. Even so, the income of crop
farmers in this area is comparatively low when compared to the remainder
of the state. For quite a number of years most of the counties lying
immediately south of Georgia and Alabama have been classified as low-
income farming areas [9]. Census statistics [24] show a high concentra
tion of farms in the low gross income levels as compared to the relatively
small number of farms with high gross income levels.
As briefly mentioned in the introduction, the problem addressed
in this study relates to the increased complexity involving the process
of production decisions as well as the adjustments implied in the adoption
of new technologies, farm size adjustments and agricultural policy changes
These "economic and technological changes" are continuously occurring and
are influencing adjustments within farming systems. In general, farmers
have been slow to respond to these changes [23].
Although all crops are affected by this "farming complexity,"
they are not all affected to the same degree. Among the enterprises that


sidered for all farmers as an adjustment possibility. These crops
were peanuts, flue-cured tobacco, Maryland tobacco, corn, wheat, grain
sorghum, soybeans and Watermelons. Four different enterprise composi
tions were evaluated by including and excluding the tobacco enterprises
and peanuts. The alternatives in operating capital were given by a
parametric variation of capital at $20,000 intervals, starting from
$20,000 and increasing up to an "unconstrained" level. The alternative
levels of cropland were: 250 acres, 400 acres, and an "unconstrained"
level. The key advantage of these situations was that they allowed for
asking "what if" questions concerning the potential adjustments to meet
changing conditions.
Firm level operations were the approach used for the analysis
of typical one-man crop farms, thus, the availability of operator labor
was assumed to be that of a full-time worker who supplied 2,792 hours
distributed on a monthly basis (Appendix Table 24). The span of time
considered for planning purposes was one year. Linear programming
techniques and parametric procedures were used to determine the optimum
plans that would provide for the best income flow to cover operating
expenses. This approach determined the farm plans which maximized re
turns. The selection of an alternative crop would be influenced by
three factors: the enterprise possibilities of the crop farm, the
relative profitability of the enterprises, and the resource restraints
as assumed in the model. The main data utilized were resource and prod
uct prices, and enterprise input-output coefficients for a "recommended
practices" level of technology. Budgets were structured as required by


Appendix Table 20Double-cropped soybeans: monthly labor., tractor and.combine requirements
per acre, North and West Florida, .1975
Labor
Tractor
Combine
month
month
month
Operations
Times
May .
June*
June July
z. o
o o
Total
May
June4
i
June July Total
Oct.
.. + Total
Novt
Disc, apply herbicide 2
.60
-Hours-
.60 .
.52
Hours
.52
Hours
Plant
1
.38
.38
.33 .33
Cultivate
2
.72
.72
.62 .62
Harvest
1
.46
.46
.40 .40
Haul
1
.09
.09
Total
.60
.38 .72
.55
2.25
.52
.33 .62 1.47
O
o
*The asterisk indicates the month to which the operator labor was allocated in the model


73
In smmay, the plans obtained for this farm size seem to be
reliable. It was expected that crops supported by governmental programs
would appear in the optimum solutions, and this was the case. Flue-cured
tobacco, the cash crop with greater returns per acre than any other
corp, came up in all resource situations. Its complete allotment
was utilized and it was profitable to lease about 58,000 pounds. The
second and third most profitable crops, Maryland tobacco and peanuts,
started appearing in the optimum plans at the $80,000 level. This
occurred because these capital-intensive enterprises were competing for
operating capital with flue-cured tobacco. When capital was available,
peanuts and tobacco combined very well since they did not compete for
operator labor during peak months.
Extensive-type crops entered the optimum solutions at the
higher operating capital levels. At higher resource levels, emphasis
on these crops should occur. Single-cropped soybeans was a profitable
enterprise, and since its operator labor requirements did not compete
strongly with the labor requirements of peanuts and flue-cured tobacco
during the peak months, this enterprise entered the solutions in large
acreages when land and operating capital were available. Soybeans also
came into the plan as a second crop. Although its^yield as a second
crop was lower, its operator labor requirements came during months that
are less limiting. This allowed for double-cropped wheat to come into
the solutions. Wheat as a single crop proved to be profitable in the
last optimum plan, Although its returns per acre were low, it came to
the plan due to the fact that its labor requirements came at a time


27
Credit needs of farmers increased substantially in 1975 as
prices of production inputs continued to rise, while the own-capital
availability of farmers was reduced in real terms due to the relative
decline in incomes, "In general, the financial condition of farmers
is less favorable than in 1974" [30, p. 11], The Production Credit
Association (P,C.A.) provides for most of the operating capital available
to growers. There was no specific limit on the size of loans.
Production Trends
Through the years, economic prosperity of North and West Florida
has been closely tied to the production of such field crops as corn,
small grains, tobacco and peanuts. The major sources of cash income
have come from tobacco and peanuts. Soybeans and grain sorghum are more
recent crops in the state's farming system. Production of all these
crops can increase substantially in the years ahead, especially corn
and soybeans. In addition, double-cropping activities are becoming
increasingly important, particularly those built around wheat, such as
wheat-soybeans and wheat-sorghum. It is believed that double-cropping
activities together with better crop practices will lead to substantial
growth in field crops output,
Table 4 shows the production trends for peanuts, flue-cured
tobacco, corn, soybeans and wheat, during the five-year period from 1968
to 1973.
Peanut production has grown mainly due to yield increases and
is expected to expand by more than 40 percent in the next decade with


Appendix Table 4aFlue-cured tobacco plant bed; monthly labor and tractor requirements per plant bed
(75 sq. yd./acre), North and West Florida, 1975
Operations
Times
Labor
Smal 1
Tractor
month
month
Dec. Jan.
Feb. Mar. Apr.
Total
Dec.
Jan. Feb.
Mar. Total
Hours
Hours-
Plant bed:
Disc
2
.24
.24 1
.20
.20
Plow
1
.35
.35
.30
.'30
Disc
1
.12
.12
.10
.10
Fertilizer, spread
1
.06
.06
.05
.05
Disc
1
.12
.12
.10
.10
Fumigate (custom)
1




Remove plastic^
1
.50
.50
Sow beds
1
2.00
2.00
Replace plastic^
1
1 .00
1.00
Daily care
-
1.40 1.55
2.95
Pull weeds
1
2.00
2.00
Top dress
1
.25
.25
Irrigate
6
.10
.05 .10 .05
.30
Spray (fungicide and insecticide)
6
.09
.09 .09
.27
.02 .02
.02 .06
Total
.89 3.69
1.54 3.99 .05
io:i6
.75
.02 .02
.02 .81
^Hired labor for these operations.


107
capital to returns was still high at 2,34, and returns continued to
decrease, this time by 7,9 percent.
At peanut prices lower than 8,785 cents per pound, the net
return on peanuts became lower than the net reutrn on soybeans. Peanuts,
then, were completely substituted for by soybeans, which increased to
261 acres, or 69.9 percent higher than in the former solution. Soybeans
did reach a limiting factor which allowed non-irrigated corn to remain
in the program. The absence of peanuts from the plan resulted in a much
lower requirement of operating capital, which lowered the operating
capital-returns ratio to 1.25. In terms of the whole farm operation,
this new solution meant a readjustment in resource use with an identical
level of returns ($28,011).
Overall, the exclusion of tobacco enterprises had notable effects
on both the most profitable crop programs at each new relative price of
peanuts and on the peanut price levels at which changes occurred in the
solutions. Leading characteristics here were that peanuts became profit
able at much lower prices than in former product-mix situations where
tobacco enterprises were included. Starting at a price 48 percent
lower than the 1975 price support, peanut prices decreased over a narrow
range of only .55 cents, but the corresponding output response was
comparatively strong reductions in acreage. No major negative effects
occurred on return levels which in total decreased only 11 percent with
respect to the returns at the starting price of 9.3398 cents per pound.
Changes in acreage and rates of substitution took place among competing
crops, with non-irrigated corn substituting for peanuts at the higher


OPTIMUM FARM PLANS TO MEET CHANGING CONDITIONS
ON NORTH AND WEST FLORIDA CROP FARMS
By
Romulo Soliz-Valarezo
A THESIS PRESENTED TO THE GRADUATE COUNCIL OF
THE UNIVERSITY OF FLORIDA
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE
DEGREE OF MASTER OF SCIENCE
UNIVERSITY OF FLORIDA
1976


Table 11 .Optimum plans for alternative levels of cropland and operating capital on North and West Florida farms
Plans excluding tobacco and peanuts. .
250 Acres
400 Acres
l
nconstrained Acreage
Item
Unit
$40,000
$40,000
$40,000 .
$60,000 j $80,000
$100,000
CROPS
Corn(non-irriqated)
Acres
38.9
55.8
160.7 254.9
346.7
Wheat
ft
4 72.6* 142.6*
75*
Soybeans
W
250.0
361.1
354.7
288.2 191.5
88.4
Wheat-Soybeans
r
4.7
16-37.6* 124.6*
200.3*
LIMITING RESOURCES 1/
Labor: January
Hours
March
i;
208(1.9)
April
M
234(0)
234(56.8)
234(51.6) 234(37.5)
234(43)
May
it
234(51.6) 234(37.5)
234(43)
June
1
260(38.9)
260(29.9)
260(38) 260(41.7)
260(47.6)
Oct.
li
Nov.
It
234(.002) 234(7)
234(9.7)
Cropland
Acres
250(76.5)
400(48.5)-
415.2
575.1 713.6
710.4
Operating Capital
Dollars
23,625
37,892
40,000(.24) 60,000(.10) 80,000(.06) 88,859
RETURNS
Dollars
17,625
23,011
28,654
32,071 33,532
33,700
*The asterisk indicates the acreage to be custom narvested. Otherwise harvesting is performed using own
harvesting machinery.
^Figures within parenthesis represent the MVP of limiting resources.


102
At peanut prices lower than 12.345 cents, peanuts were eliminated
from the cropping pattern, However, that absence practically did not
affect the former optimum plan. The level of returns was the same at
$74,809.
In sum, as the price of peanuts was reduced with the prices of
competing crops remaining constant, peanut acreages declined. In all
solutions, peanuts entered the plans at prices much lower than the
18 cents per pound price support of 1975. The highest and lowest
peanut prices for which solutions were obtained were 14.708 cents and
12.345 cents per pound, prices that were 18.3 percent and 31.4 percent
lower than the support price, respectively. Flue-cured tobacco,
Maryland tobacco, soybeans and wheat-soybeans in double cropping proved
to be the major substitutes for peanuts with Maryland tobacco most
often entereing at its upper limit. While peanuts acreage decreased
from 201 to zero acres, flue-cured tobacco increased from 6.8 acres
to 32.3 acres, Maryland tobacco from zero to 25 acres, soybeans from
159.6 acres to 222.9 acres, and wheat-soybeans from zero to 85.5 acres.
Single-cropped wheat also decreased from 32 acres down to 14.2 acres,
with custom harvest being gradually eliminated from the solutions.
Plans Excluding Maryland Tobacco Enterprise
The exclusion of Maryland tobacco, a new enterprise in the
study area, permitted the development of optimum plans for those farms
where this crop is not an alternative. As shown in Table 15, five out
of eight enterprises entered the optimum solutions.


II/'
linear programming and a simplex tableau was designed to simulate the
alternative production situations as faced by farmers in the study
area.
The results obtained should be useful in evaluating alternative
crop enterprises and alternative farm organizations so that potential
adjustments may readily be made for individual farms to improve their
production decisions in the next cropping year.
On Optimum Plans for AlternativeCropland and Operating Capital Situations
The evaluation of the effects of alternative levels of cropland
and operating capital was described relative to the own-machine harvest
system. Custom harvest was not discussed as an alternative alone and
its discussion was restricted to instances where it was necessary to
supplement own-machine harvest whenever operator labor at harvest time
was too limiting.
The evaluation of harvest systems in flue-cured tobacco was
complemented with a break-even analysis, Results indicated that hand
harvest was usually the best alternative. Only at flue-cured tobacco
acreages higher than 74, is it advisable to shift from hand to machine
harvest. However, preliminary solutions indicted that this crop never
reached acreages high enough to justify mechanization.
When the evaluation included all enterprises for a 250-acre
farm, the potential benefits from expanding operating capital at levels
higher than $40,000 were slight. Leasing of tobacco allotment was the
best capital investment. However, this crop's expansion was strongly


APPENDIX OF TABLES
SELECTED ENTERPRISE BUDGETS AND LABOR AND POWER REQUIREMENTS PER ACRE FOR
SELECTED CROPS IN NORTH AND WEST FLORIDA, 1975
1 The structure of the budgets was designed primarily for use in the
linear programming model.
2 Input-output relationships reflect a level of technology defined as
"recommended practices." The level of equipment assumed corresponds
to four-row equipment with appropriate tractor power and small grain
equipment.
3 The budgets included two situations in harvest and haul operations.
One considered the use of own machinery and the other the use of custom
service. Cash expenses and returns were calculated accordingly.
4 The labor requirements were determined by machinery requirements plus
15 percent. This extra 15 percent accounts for machinery down time,
i.e., minor repairs, adjustments, lubrication, fueling, etc.
128


Appendix Table 16Double-cropped sorghum: monthly labor, tractor and combine requirements
per acre, North and West Florida, 1975
Labor
Tractor
Combine
month
month
month
Operations
Times june* ^une July Nov Total
June* June July Total
Nov. Total
Disc
2
.60
-Hours
1
1
1
1
1
t
I
O 1
I
1
l
1 CM
i in
i
-Hours--
.52
Hours
Plant
1
.33
.38
.33
.33
Cultivate
1
.36
.36
.31 .31
Harvest
1
.46 .46
.40 .40
Haul
1
.18 .18
Total
.60
.38
.36
.64 1.98
.52
.33
.31 1.16
O
o
<3-
*The asterisk indicates the month to which the operator labor was allocated in the model


21
This overall trend in the number of farms is an indication of the con
solidation of farms which has occurred as a response to a need for
larger acreages to adjust to more efficient sized units. Consolidation
has occurred as farms with sales less than $2,499 have been combined
with other farms. Small farms involved in consolidation either consoli
date with each other or are bought by larger farms. Consolidation has
been, as seen above, much more evident in the area under study than in
the rest of the state.
Average farm size in the study area was about 160 acres smaller
than the corresponding figures for the rest of the state. In 1969, the
average size for all farms in the study area was 285,5 acres as compared
to 443.9 acres for the rest of the state. For those farms with sales
over $2,499, the corresponding study area farm size was 519.8 acres as
contrasted to 678.5 acres for the rest of the state. It is interesting
to notice, however, that the percent change in average size of farms in
the study area is by far higher than the analogous figure for the rest
of the state for the period 1954-1969. The study area's change was an
increase of 52.6 percent while the rest of the state's figure was only
one percent. One other meaningful point is that, during the 1964-1969
period, the average size of farms with incomes over $2,499 decreased
notably at both study area and rest of state level. This decrease seems
to reflect the adoption of technological improvements so that now smaller
farm sizes,can obtain given levels of income,


41
Theoretical Concepts
To accomplish the objectives, linear programming techniques
were used along with the utilization of budgets as main sources of
data. The conditions for the model structure were dictated by the
potential changes and economic opportunities facing crop farms in the
study area.
Linear programming is a technique which may be used to deter
mine the equilibrium position^/ of a firm that operates under factor
restrictions and usually, as used in this study, under constant returns
to scale over some specified range of production. The technique can
be used to maximize (or minimize) an objective function defined by a
specific objective and-subject to a given set of cGHStraints. The
objective, which is quantifiable, can be attained by means of alternative
activities which operate under restrictions given by resource limitations
and specific farm situations. Many of the questions arising from the
objectives required different set-ups of the basic model.
Mathematical Assumptions of Linear Programming
The use of linear programming involved the following critical
assumptions [14, pp. 97-100] which must be considered in order to
construct the simplex tableau and to interpret the results. These as
sumptions are:
firm may be considered in equilibrium when there is no economic
incentive to change the combination of inputs and products, nor to change
the level of production of any of the products.
4


125
Implication of Results
The broad purpose of this study was to develop optimum plans
for given resource situations to be used as general guides for adjust
ments in one-man crop farms of North and West Florida, Planning Districts
I, II, and III. The results depended on the underlying assumptions and
data used in the analysis. The farm resource alternatives evaluated
were expected to be reasonably typical of specific farm resource situa
tions found on many crop farms in the study area. The objective was
to approach broad types of adjustments and to determine basic relation
ships that may be adapted to specific resource situations.
There is evidence of needed adjustments. For instance, re
organizations of crop farms in the study area into the efficiency
patterns evaluated in this study would result in larger farm operations.
Programmed land requirements per farm for the best size adjustments
are above the average farm size in the area. The average sizes for
all farms in Planning Districts I, II, and III were 184.9 acres, 273.7
acres, and 393.4 acres, respectively (Table 2, 1969 data). Evidently,
on the average, major size adjustments are required in Planning Districts
I and II.
Throughout this study, it was evident that farm planning must
be somewhat different for each specific farm resource situation. The
best combination and level of enterprises depended on the supply of
cropland, operating capital and labor, There was not an optimum set
a
of crop enterprises for all farms, but several optimum plans into which
farms should orient their adjustments, all considering the available


24
combined with declining commodity prices, stimulated interest in raising
the target prices and loan rates stipulated in the 1973 Act.
Provisions of the 1975 feed grain program were virtually un
changed from 1974, Most often, farmers have a wide choice of which prod
ucts to produce and how much. Producer flexibility continues in substi
tuting feed grains, wheat, and other commodities for allotted crops.
Thus allotments for wheat, corn, and grain sorghum do not limit the
acreage of these crops that farmers can plant. Allotments for the above-
mentioned grains are used in calculating deficiency payments to producers
if market prices fall below target price levels or if growers qualify
for disaster payments. The average loan rates for these products in
1975 continued at the same levels as for the 1974 crops. These loan rates
were $1.10 per bushel for corn, $1.05 per bushel for grain sorghum, and
$1.37 per bushel for wheat. The target price levels (guaranteed price)
for 1975 were also at the same level as in 1974. These target prices
were $1.38 per bushel for corn, $1.31 per bushel for grain sorghum, and
$2.05 per bushel for wheat [31],
The loan rate for soybeans was discontinued for 1975 because
market prices in 1974 ran strong relative to the loan rates, However,
due to declining 1975 soybean prices, Congress passed an emergency one-
year bill that would have raised the loan rate for soybeans. This bill
was vetoed and consequently there was no program supporting soybean
prices for 1975,
Although changes were proposed, the programs for peanuts and
tobacco (including marketing quotas and price support) were extended over


94
non-irrigated corn, wheat and the double-cropping activity. Wheat-
soybeans, having lower profitability than soybeans, were the enterprises
replaced by irrigated corn. In most cases single-cropped soybeans
entered the new solutions at higher levels. As expected, the inclusion
of irrigated corn did benefit the returns situation, a benefit which was
much higher when two units of irrigation were considered. Results in
the resource situation of unconstrained acreage and $80,000 of operating
capital clearly illustrate this observation. When one irrigation unit
was forced into the solutions, returns increase by $8,147, or 24 percent.
When two irrigation units were forced, returns were augmented by $13,144,
or 39 percent.
When these results (Table 13) are compared to preliminary optimum
solutions where irrigated corn entered solutions without acreage restric
tions, the shifting of optimal levels of irrigated corn to fixed amounts
by either increasing or decreasing its level brought about changes in
the solutions which were quite similar ro those observed in Table 12.
In summary, the incorporation of irrigated corn into the crop
organizations allowed the following observations: irrigated corn did
not combine well with tobacco during critical months. Overall, the
inclusion of irrigated corn increased the returns in the optimal plans.
This effect was stronger in the case where only extensive-type crops
were allowed in the solutions. However, the fact that irrigated corn
had to be forced in solutions at fixed levels caused somewhat lower
returns than those that could be obtained if this activity could be
varied,


49
Finally, two subjective restrictions were included: (a) Maryland
type tobacco is a new crop in the area and as such it affects the area's
enterprise mix in two ways. Farmers either do not include this crop
among their production possibilities or they are just not willing to
plant in large acreages with this crop due to the risk associated with
any new crop. Because of this situation, two alternative plans were
developed, one not including Maryland tobacco and another including
Maryland tobacco, (b) Watermelon acreage is restricted due to two con
ditions. Disease build-up prevents planting watermelons on the same
plot two years in a row. Also, severe price fluctuations at harvest
can introduce high risk. Thus a maximum of 25 acres was allowed for
watermelons.
Restrictions arising- from- j-nstitajtionalr.-ni#i factor markets tend to misallocate resources, and the scope of this
study did not include these aspects.
The purpose of the foregoing farm situation analysis was to
determine differences in the results obtained with respect to income
levels, enterprise organizations and total resource requirements. The
information obtained out of these alternatives might well reflect the
different and relevant economic opportunities that crop farmers are to
face since these combinations of farm situations result in substantial
changes in income and enterprise organizations.


TI 9
do not seem to be profitable. It was at this farm size that custom
harvest was included to complement own-machine harvest due to operator
labor restrictions during seven critical months, Amounts rather than
kinds of crops tended to vary in these solutions with respect to the
former farm size. Operating capital was also limiting but its low MVP
(.04) suggested that additional investment was not advisable because
its opportunity cost, as given by the market rate of interest (9.5
percent), was much higher than its present marginal contribution to
returns. The fact that operator labor was limiting seven months re
flects what seems to be the limits for a one-man farm operation.
In general, considerable stability was evidenced in the
intensive-type crops. Peanuts entered consistently at the level of
its allotment, Maryland tobacco at its upper limit allowed in the model,
and flue-cured tobacco at a level much higher than its allotment but
with an MVP for this allotment equal to its marginal cost, which suggests
an equilibrium point of production for this enterprise. Increasing
resources were a profitable strategy up to the 400-acre and $100,000
farm situation; beyond this point the profitability of additional re
sources showed a declining trend.
The enterprise composition excluding the tobacco enterprises
was designed for those areas where tobacco is not a suitable alternative.
Results showed that peanuts, a crop that became the enterprise with the
highest profit, replaced tobacco in the use of resources and entered
most solutions at its upper limit of 93.9 acres allowed, in the model.


75
Operator labor was a most prominent factor in this plan since
it was the limiting resource during six critical months. Operating
capital was also limiting; however, its low MVP (.04) suggested that
any increase in this resource was not advisable simply because its op
portunity cost, as given by the market interest rate (9.5 percent), was
much higher than its present marginal contribution to returns.
When comparing this solution with the corresponding one at 400-
acre size, it could be seen that the relatively small increase in re
turns ($1,000) did not justify the associated increases in resource use.
This situation of Tow returns to additional resources arose from
operator labor being limited in critical months to most enterprises.
At the $120,000 level of operating capital, the solution was
very similar to that at the $100,000 level. More acreage in extensive-
type crops was transferred to custom harvest operations, a larger
acreage of wheat was produced, more cropland was used and operator labor
became limiting during a seventh month. The rate of return on additional
resources was extremely low since the returns were increased by only
$178.
The fact that operator labor was limiting for seven months,
even though total operator labor was not exhausted, reflects what seems
to be the limits for a one-man farm operation in handling resources other
than labor, under the conditions specified in the model.
In summary, the additional use of resources implied in the uncon
strained solutions seems not to be profitable in view of the small in
crease in returns to additional cropland and operating capital.


ACKNOWLEDGMENTS
The author wishes to express his deep gratitude and appreciation
to Drs. John E, Reynolds and John Holt, Co-chairmen of his Supervisory
Committee, for their generous and unending assistance throughout this
research. The author would also like to extend his gratitude to
Mr. George Westberry for his important contribution to this research and
for serving as a member of the Supervisory Committee.
The author is sincerely thankful to Mr. E, H. Finlayson, Jr.,
who was constant in his indispensable cooperation to this research, and
to Dr. Glenn Zepp for his valuable suggestions and encouragement.
A special word of thanks goes to Drs. Kenneth Tefertiller and
Leo Polopolous who made possible his appointment as Graduate Assistant to
undertake this study. The author would also like to thank the Instituto
Nacional de Investigaciones Agropecuarias (INIAP) of Ecuador for sponsor
ing his graduate work.
His special appreciation goes to Ms. Debbie Bucci and Ms. Millie
Pfeifler for typing the drafts of the thesis, and to Miss Sofia Kohli
for her excellent work in typing the final draft.
To his mother and father and brother, Marcelo, the author extends
his deepest gratitude for their faith and encouragement throughout the
time of his graduate studies.
Finally, but not least, special thanks and sincere gratitude
goes to his older brother, Rogelio Snchez-Valarezo, who oriented the
author on the path of Agricultural Economics.
i i


Appendix Table 25Machinery and equipment utilized by enterprises in optImal plans.
Peanuts
Flue-Cured
Machine Harvest
Tobacco
Hand Harvest
Mary land A'
Tobacco
Corn
Wheat
Soybeans
Tractor, lge.
X
X
X
X
X
X
X
Tractor, sml.
X
X
X
X
Disc, harrow, 12'
X
X
X
X
X
X
X
Bottom plow, 5-16"
X
x
X
X
X
X
X
Planter, 4-row hi speed
X
X
X
Cultivator, 4 row rolling
X
\
X
X
Disc harrow, 8'
Bottom plow, 2-16"
Cultivator, 2-row
X
X
X
Transplanter, 2-row
X
X
X
Grain drill
X
Sprayer
X
X
X
X
X
X
Spreader
X
X
X
X
Peanut inverter, 2-row
X
Peanut combine
X
Peanut wagon
X
Combine
X
X
:i
Corn head, 2-row
X
Small grain head, 13'
X
X
Tobacco priming aide
X
Tobacco combine
X
Tobacco trailers (3 each)
X
X
Bulk barn (7 acre capacity)
X
X
Truck, pick up
X
X
X
X
X
X
X
Truck, 2 ton
X
X
X
X
X
X
X
^Maryland tobacco requires a barn £or air-cure which is not included in this table.


Appendix Table 15-^Double-cropped grain sorghum: estimated costs and
returns per acre, North and .West Florida, 1975
Item
Unit
Quantity Price Value
--dollars--
Revenue
cwt.
29
4.00
116.00
Cash Expenses
Seed *
lb.
10.00
.65
6.50
Fertilizer, applied
cwt.
6.00
5.30
31.80
Lime, applied
ton
.33
11.00
3.67
Nitrogen
lb.
100.00
.28
28.00
Insecticide (Dasanit)
lb.
1.50
5.10
7.65
Insecticide (Sevin)
' lb
. 5.00
1.00
5.00
Spraying (Custom Air)
appl./ac.
2.00
1.50
3.00
Machinery (before harvest)
5.04
Interest on cash expenses
(9% for 6 months)
dol.
90.66
.045
4.08
Harvest and Haul (own
machinery and labor)
1
4.48
Harvest and Haul (custom)
acre
10.00
10.00
Total Cash Expenses
99.22
Total Cash Expenses
(custom harvest)
104.74
Returns Over Cash Expenses
16.78
Returns Over Cash Expenses
(custom harvest)
11.26


OPTIMUM FARM PLANS TO MEET CHANGING CONDITIONS
ON NORTH AND WEST FLORIDA CROP FARMS
By
Romulo Soliz-Valarezo
A THESIS PRESENTED TO THE GRADUATE COUNCIL OF
THE UNIVERSITY OF FLORIDA
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE
DEGREE OF MASTER OF SCIENCE
UNIVERSITY OF FLORIDA
1976

ACKNOWLEDGMENTS
The author wishes to express his deep gratitude and appreciation
to Drs. John E, Reynolds and John Holt, Co-chairmen of his Supervisory
Committee, for their generous and unending assistance throughout this
research. The author would also like to extend his gratitude to
Mr. George Westberry for his important contribution to this research and
for serving as a member of the Supervisory Committee.
The author is sincerely thankful to Mr. E, H. Finlayson, Jr.,
who was constant in his indispensable cooperation to this research, and
to Dr. Glenn Zepp for his valuable suggestions and encouragement.
A special word of thanks goes to Drs. Kenneth Tefertiller and
Leo Polopolous who made possible his appointment as Graduate Assistant to
undertake this study. The author would also like to thank the Instituto
Nacional de Investigaciones Agropecuarias (INIAP) of Ecuador for sponsor
ing his graduate work.
His special appreciation goes to Ms. Debbie Bucci and Ms. Millie
Pfeifler for typing the drafts of the thesis, and to Miss Sofia Kohli
for her excellent work in typing the final draft.
To his mother and father and brother, Marcelo, the author extends
his deepest gratitude for their faith and encouragement throughout the
time of his graduate studies.
Finally, but not least, special thanks and sincere gratitude
goes to his older brother, Rogelio Snchez-Valarezo, who oriented the
author on the path of Agricultural Economics.
i i

TABLE OF CONTENTS
Page
ACKNOWLEDGMENTS .. . ii
LIST OF TABLES ....... ............. vi
LIST OF FIGURES vi i
LIST OF APPENDIX TABLES viii
ABSTRACT .............. xi
CHAPTER I:
INTRODUCTION . 1
Statement of the Problem 3
Objectives 8
CHAPTER II:
DESCRIPTION OF THE AREA . 11
Selection of the Area 11
Physical Factors 12
Soils and Topography 12
Drainage .............. ... 12
Climate and Weather 14
Irrigation 15
Social and Economic Conditions 15
Population 16
Labor Force 16

Page
Income 18
Transportation 19
Agricultural Trends ... 19
Number and Size of Farms 19
Value of Farm Products Sold 22
Changing Capital Requirements .... 23
Crops Situation ..... 23
Crop Program Review ..... 23
Production Trends (By Commodities) ......... 27
Prices 31
CHAPTER III:
DESIGN OF STUDY 34
Source of Data--The Budgets ...... ... 35
Theoretical Concepts ....... 41
Mathematical Assumptions of Linear Programming . 41
The Model 43
Planning Situations and Process Restrictions 45
The Initial Tableau-Procedure of Analysis ....... 50
CHAPTER IV:
OPTIMUM PLANS FOR ALTERNATIVE CROPLAND AND OPERATING
CAPITAL SITUATIONS 63
Hand-Harvest System vs. Machine-Harvest System in
Flue-Cured Tobacco 65
Optimum Plans Including All Enterprises .... 67
Optimum Plans Excluding Tobacco Enterprises ....... 76
Optimum Plans Excluding Peanuts Enterprises 81
iv

Page
Optimum Plans Excluding Tobacco and Peanut
Enterprises 84
Optimum Plans Including Irrigated Corn Enterprise ... 88
CHAPTER V:
OPTIMUM PLANS FOR PEANUT FARMS AND THEIR ACREAGE
RESPONSE FUNCTIONS TO PRICE CHANGES: THE PEANUT
PROGRAM ABOLISHED ...... 96
Optimum Plans for a Representative Farm (400 Acres
and $100,000 of Operating Capital): Effects of
Programming with Variable Prices . . 97
Plans Including All Enterprises 97
Plans Excluding Maryland Tobacco Enterprise 102
Plans Excluding Both Flue-Cured Tobacco and
Maryland Tobacco Enterprises 104
Stepped Acreage Functions for Peanuts .......... 108
CHAPTER VI:
SUMMARY AND CONCLUSIONS ................... 115
On Optimum Plans for Alternative Cropland and
Operating Capital Situations 117
On the Effects of Variations in Peanut Prices ...... 122
Implication of Results ........... 125
APPENDIX OF TABLES ....................... 128
BIBLIOGRAPHY 158
BIOGRAPHICAL SKETCH . . 161
v

LIST OF TABLES
Table Page
1. Social and economic trends, Planning Districts
I, II and III, North and West Florida, 1960-
1970 ............... 17
2. Some agricultural trends; Planning Districts I,
II and III in North and West Florida, 1968-1973 . . 20
3. Data on peanut allotment and marketing quota
program and flue-cured tobacco acreage poundage
program, North and West Florida, 1973 and 1974 .... 26
4. Production trends for selected crops, Planning
Districts I, II and III, North and West Florida,
1968-1973 28
5. Product yields and prices used in preparing
budgets for North and West Florida, 1975 36
6. Input prices used in preparing budgets for crop
farms in North and West Florida, 1975 37
7. Basic form of the simplex tableau used to compute
optimum plans for crop farms in North and West
Florida . 56
8. Optimum plans for alternative levels of cropland
and operating capital on North and West Florida
farms: Plans including all enterprises 68
9.Optimum plans for alternative levels of cropland
and operating capital on North and West Florida
farms: Plans excluding tobacco . 77
10.Optimum plans for alternative levels of cropland
and operating Capital on North and West Florida
farms: Plans excluding peanuts ............ 82
11.Optimum plans for alternative levels of cropland
and operating capital on North and West Florida
farms: Plans excluding tobacco and Peanuts 85
vi

Table Page
12.Optimum plans for selected levels of cropland
and operating capital on North and West Florida
farms: Irrigated corn included and tobacco
excluded 90
13.Optimum plans for selected levels of cropland
and operating capital on North and West Florida
farms: Irrigated corn included, tobacco and
peanut enterprises excluded ... 93
14.Effects of peanut price variations on optimum
plans for 400 acres of cropland and $100,000 of
operating capital in North and West Florida:
Plans including all enterprises 99
15.Effects of peanut price variations on optimum
plans for 400 acres of cropland and $100,000 of
operating capital in North and West Florida:
Plans excluding Maryland tobacco enterprise ...... 103
16.Effects of peanut price variations on optimum
plans for 400 acres of cropland and $100,000 of
operating capital in North and West Florida:
Plans excluding flue-cured tobacco and Maryland
tobacco 105
LIST OF FIGURES
Figure Page
1. The Study Area: Planning Districts I, II
and III, North and West Florida ............ 13
2. Firm Level Stepped Acreage Functions for Peanuts .... 110
vii

LIST OF APPENDIX TABLES
Table Page
1. Peanuts: estimated costs and returns per
acre, North and West Florida, 1975 129
2. Peanuts: monthly labor and tractor require
ments per acre, North and West Florida, 1975 130
3. Flue-cured tobacco: estimated costs and
returns per acre, North and West Florida ... 131
4a. Flue-cured tobacco plant bed: monthly labor
and tractor requirements per plant bed (75
sq. yd./acre), North and West Florida, 1975 ...... 133
4b. Flue-cured tobacco field operations: monthly
labor and tractor requirements per acre,
North and West Florida, 1975 134
4c. Flue-cured tobacco harvest: monthly labor,
tractor and mechanical harvester requirements
per acre, North and West Florida, 1975 . .... . 135
5. Maryland tobacco: estimated costs and returns
per acre, North and West Florida, 1975 . 136
6. Maryland tobacco: monthly labor and tractor
requirements per acre, North and West Florida,
1975 137
7. Irrigated corn: estimated costs and returns
per acre, North and West Florida, 1975 138
8. Irrigated corn: monthly labor, tractor and
combine requirements per acre, North and West
Florida, 1975 139
9.- Non-irrigated corn: estimated costs and returns
per acre, North and West Florida, 1975 140
TO. Non-irrigated corn: monthly labor, tractor and
combine requirements per acre, North and West
Florida, 1975 141
viii

11. Wheat; estimated costs and returns per acre,
North and West Florida,.1975 .............. 142
12. Wheat: monthly labor, tractor and combine re
quirements per acre, North and West Florida,
1975 . . ... ... . ... . . 143
13. Single-cropped grain sorghum: estimated
costs and returns per acre, North and West
Florida, 1975 ..... 144
14. Sorghum: monthly labor, tractor and combine
requirements per acre, North and West Florida,
1975 145
15. Double-cropped grain sorghum: estimated costs
and returns per acre, North and West Florida,
1975 146
16. Double-cropped sorghum: monthly labor, tractor
and combine requirements per acre, North and
West Florida, 1975 147
17. Single-cropped soybeans: estimated costs and
returns per acre, North and West Florida, 1975 . 148
18. Soybeans: monthly labor, tractor and combine
requirements per acre, North and West Florida,
1975 149
19. Double-cropped soybeans: estimated costs and
returns per acre, North and West Florida, 1975 150
20. Double-cropped soybeans: monthly labor, tractor
and combine requirements per acre, North and
West Florida, 1975 151
21. Watermelons: estimated costs and returns per
acre, North and West Florida, 1975 ..... 152
22. Watermelons: monthly labor and tractor require
ments per acre, North and West Florida, 1975 . . . 153
23. Costs of operating machinery: annual fixed
costs per unit, 1975 . ... . 154
ix

Table
Eiae
24. Man-equivalent hours of operator labor
available by months, 1975 . 155
25. Machinery and equipment utilized by enter
prises in optimal plans . 156
26. Returns adjusted for fixed costs involved
in each optimal plan 157
x

Abstract of Thesis Presented to the Graduate Council
of the University of Florida in Partial Fulfillment of the Requirements
for the Degree of Master of Science
OPTIMUM FARM PLANS TO MEET CHANGING CONDITIONS
IN NORTH AND WEST FLORIDA CROP FARMS
by
Rdmulo Soliz-Valarezo
March, 1976
Chairman: Dr. John EV Reynolds
Co-Chairman: Dr. John Holt
Major Department: Food and Resource Economics
The major objective of this study was to develop optimum (profit
maximizing) farm organizations as a general model to evaluate income-
raising adjustment opportunities in crop production for the area comprised
of Planning Districts I, II, and III in North and West Florida. The analy
sis can be classified under two headings: 1) Determination of effects on
optimum combination of enterprises and income levels of changes in alterna
tive levels of cropland and operating capital, and 2) Impact on peanut
enterprises if the governmental price support and acreage allotment pro
grams were abolished. This section included the development of acreage
response functions to alternative levels of peanut prices.
A "synthetic" firm approach was adopted to analyze typical one-
man crop farm operations. Linear programming techniques and parametric
procedures were used to test the optimum solutions. Results depended on
the underlying assumptions, the input-output data and the price informa
tion used in this study.
Eighteen production activities were considered as enterprises.
Under the model's assumptions, both single and double-cropped grain sorghum
did not enter any of the optimum solutions. For flue-cured tobacco, hand
xi

harvest methods should be used for acreages up to74.'.acres, at which
point it becomes feasible to use mechanical harvest. Optimum solutions
were obtained for several alternative resource situations and product
combinations. Overall, government-supported crops appeared to be the
best capital investment plan. Tobacco and peanuts combined well, and
the exclusion of peanuts did not increase returns. As more cropland
and operating capital was made available, extensive-type crops entered
the optimum plans in larger acreages. In farms specializing in extensive
crops, corn and soybeans appeared to have the best adjustment opportuni
ties, Corn substituted for soybeans as operating capital increased.
Higher requirements of operator labor at harvest time made custom
harvest a profitable alternative.
As peanut prices decreased and peanut acreage allotment was
eliminated, other crops were substituted for peanuts and the resulting
income disadvantages were small under current relationships with com
peting crops.
Chairman
xii

CHAPTER I
INTRODUCTION
Crop farming is the predominant type of agricultural production
in North and West Florida,!/ and, as in the whole agricultural sector
of the United States, farming in this area is becoming increasingly
complex. Rapid and expanded technological developments coupled with
inflated production costs, as well as current and potential changes in
national agricultural policies accelerate this trend.
Farmers continue adopting labor-saving techniques as well as
increasing the use of purchased inputs. The inflationary syndrome in
creases the already high capital requirements. Rising wages heighten
the potential benefits of harvest mechanization and speed up its adoption.
Events associated with production control programs, price support
regulations and related policy implications create questions regarding
production decisions for the next cropping year.
The above situation may well continue to result in low incomes
for farmers if, as is consistently observed in North Florida [23], a lack
of opportune adjustments in resource use prevails in the area. Therefore,
a need exists for economic adjustments at the farm level in the combination
l^North and West Florida, as used in this study, refers to those
counties included in Planning Districts I, II and III (see Chapter II).
1

2
of enterprises, level of investment and in the size and type of farm
operations in order for farmers to achieve the desired efficiency in
their enterprises. Therefore this study focused on the economics of
the optimal enterprise combinations for future production planning for
crop farms in North Florida.
The premise underlying this study is that it is possible,
through evaluating the economic opportunities for adjustments in re
source use and by analyzing the decision-making components of production,
to suggest a plan or course of action that will result in economic
growth^/ of crop farms in North and West Florida.
The information in this study should be helpful in evaluating
alternative crop enterprises and alternative farm organizations in North
and West Florida. The estimates presented are not necessarily applicable
to an individual farm or an individual year. Results are presented in
such a manner that the estimates can be adjusted to a particular or
specific set of circumstances.
The results should provide information to producers, extension
agents and agricultural professionals so that crop farmers in North and
West Florida may improve their production decisions. And the linear
programming model developed for this study will serve as a nucleus for
later intensive farm planning efforts for that area.
^./Economic growth is measured in this study by farm income and
its relation to the factors causing changes in the distribution of limited
resources and their productivity,

3
Statement of the Problem
The North and West Florida area is an important commercial
crop farming area. Some sections within the area have specialized in
the production of certain crops. Suwannee, Hamilton and Madison counties
are largely dependent on flue-cured tobacco as a source of cash income.
Jackson County, which "'harvested 27,240 acres in peanuts in 1974 [13],
had around half of the total peanut acreage in the study area. Soy
beans are grown mainly in those counties in the extreme western part of
the area. Supplementary enterprises are, of course, carried out in
conjunction with those high-profit crops. Even so, the income of crop
farmers in this area is comparatively low when compared to the remainder
of the state. For quite a number of years most of the counties lying
immediately south of Georgia and Alabama have been classified as low-
income farming areas [9]. Census statistics [24] show a high concentra
tion of farms in the low gross income levels as compared to the relatively
small number of farms with high gross income levels.
As briefly mentioned in the introduction, the problem addressed
in this study relates to the increased complexity involving the process
of production decisions as well as the adjustments implied in the adoption
of new technologies, farm size adjustments and agricultural policy changes
These "economic and technological changes" are continuously occurring and
are influencing adjustments within farming systems. In general, farmers
have been slow to respond to these changes [23].
Although all crops are affected by this "farming complexity,"
they are not all affected to the same degree. Among the enterprises that

4
are important to production planning in the study area are the following:
flue-cured tobacco, Maryland tobacco, peanuts, corn (irrigated and non-
irrigated), soybeans, grain sorghum, wheat and double cropping activities
such as wheat-soybeans and wheat-grain sorghum. From these enterprises,
peanuts and flue-cured tobacco have higher potential incomes and thus
are the most attractive to farming. However, these two crops face a
series of economic, technological and institutional uncertainties which
complicate production planning and create a need for farmers to periodi
cally re-evaluate their farm organizations.
As for tobacco, mechanical harvesters are now available for
harvesting flue-cured tobacco with the potential for substantially re
ducing the labor input!/ and the per unit production cost. Tobacco's
high seasonal demand for labor together with a sharp upward trend in
wage ratesA/ constitute a mounting problem in the hand harvest system.
Thus, the adoption of the mechanized system may increase tobacco
profitability by substituting capital for labor. Yet mechanization
is a costly endeavor. The cost of tobacco harvesters ranges from
$20,000 to about $24,000 and bulk barns cost about $6,500 each. At pres
ent the mechanization question hinges on the size of the operation. The
rigid restraints in allotment leasing plus the small size of poundage
allotment (4,399.6 lbs. in 1974) make it difficult for most farmers
to accumulate tobacco acreage into operating units large enough to
justify the purchase of mechanical harvesters.
/"Mechanization of its (flue-cured tobacco) harvest will about
half the average crew size of the current harvest systems in use" [27],
2j"h major contribution to rising costs to flue-cured tobacco
production is farm wage rates which rose 46 percent in the South Atlantic
states from 1967 to 1972" [3].

5
As for peanuts, the most limiting component governing their
production is the peanut allotment program. In 1974 the average allot
ment for the area was 13.9 acres.
However, despite production control regulation and increasing
demand for edible^-grade peanuts, production from the national minimum
allotment resulted in supplies greater than commercial requirements.
Due to this production surplus, prices received by farmers were near
the support price and the C.C.C. (Credit Commodity Corporation) acquired
the peanuts in surplus. The C.C.C. then distributed the peanuts at
prices below acquisition cost into crushing channels and into exports.
Consequently, the C.C.C. loses money on peanut price support operations.
In recent years the C.C.C.'s losses have averaged 6 cents per pound for
all peanuts acquired under the price support program. Moreover, due
to the uptrend in parity prices and with strong indications that peanut
production may continue to outrun commercial edible requirements, the
C.C.C. costs in supporting peanut prices will most likely continue to
increase. While the annual peanut program cost approximated 66 million
dollars in 1970, the estimate for 1980 is over 100 million dollars, as
suming continuation of the current program, Thus, this high level of
government expenditure in the peanut program creates pressure for program
modifications.
In 1973 a bill was introduced to Congress in an attempt to
extend the target price concept to peanuts. This bill basically implied
a lifting of the price support policy and a change to a market-oriented
price. A 10 cents per pound target price was suggested, along with a

6
12 percent increase in the allotment acreage, The 1972 price averaged
14.25 cents per pound [25, p. 17], This bill did not pass.
J. P. Marshall, et al. [19] presented some alternative modifica
tions to the peanut program. They suggested market-oriented peanut price
incorporating acreage allotments. The peanut programs Marshall suggested
were aimed at reducing or eliminating government expenditures for peanut
price support, yet at the same time, increasing grower's incomes and
insuring an adequate supply of peanuts.
In summary, a peanut program modification seems imminent. In the
event that the government program is lifted or altered, changes in the
peanut industry are likely to occur. Price is likely to drop. If so,
will peanuts still be a competitive crop, or will peanuts go out of the
area's product mix? This study will attempt to provide insight on this
issue.
The facts surrounding the other crops in the area also merit
attention. The 1975 feed grain and wheat programs had no set-aside
requirements and they provide farmers freedom concerning what to produce
for the market place. No land will be removed from agricultural produc
tion under these programs. Soybeans will compete for acreage on an
economic basis with feed grains and other crops.
The main question concerns the product Cost-returns relationship
and its implications on the farm enterprise organization and farmers'
incomes, "Costs for growing wheat, corn and soybeans were up 12-13
percent over 1974, while at the same time, farmers were selling for less

7
than a year ago. Net farm income is decreasing" [17], Thus, the need
exists for a better pattern in allocative resource efficiency oriented
to raise the crop farmers' incomes.
In brief, several instances reflect the need for more information
on production planning and economic adjustments in crop farming in North
and West Florida: (a) The existence of recent technological, developments,
specifically those implementing the transition from conventional to
mechanical harvesting systems; (b) potential changes in policy programs
in farming may transform the crop production structure of North and West
Florida; (c) many crop farms with adequate resources are not achieving
acceptable income levels perhaps due to non-optimal organization of
enterprises; (d) the inflationary trend contorts the cost-returns rela
tionship which might result in changes in the relative competitive
situation among crops; (e) some farms, even though managed efficiently,
are not able to satisfy desired levels of income due to limited unit
size (size as defined by both operating capital requirements and cropland
area).
As the complexity of crop farming increases, the need for careful
production planning also increases. This study was intended to analyze
this general problem. Its overall purpose was to evaluate the adjustment
opportunities in crop production in order to organize productive factors
for higher returns. These enterprise organizations must be within the
constraints placed by resource availability and institutional framework
in the study area.

8
Objectives
The major purpose of this study was to develop optimal crop
farm organizations as a general model to meet changing conditions in
the crop agriculture of North and West Florida, The achievement of
this purpose lead to the evaluation of adjustment opportunities in crop
production in order to organize productive resources for higher returns.
These resources and enterprise organizations were within the constraints
placed by resource availability and within the framework defined by
technical, economic, and crop policy conditions.
This major purpose was based on the hypothesis that the conditions in
crop farming are changing and consequently crop farm managers find it neces
sary to re-evaluate their farm organizations in light of those changes.
The major purpose consisted of the following specific objectives:
(1) To determine the effects on optimal enterprise organi
zations and on income levels of alternative farm
resource and enterprise situations defined as:
(a) Differences in size of crop farms as expressed
by alternative levels of cropland availability.
(b) Differences in farmers' levels of operating
capital.
(c) Alternative types of crop harvesting as determined
by harvesting with owned machinery and custom harvesting^/*
/All enterprises except tobacco and watermelons included the
custom harvesting alternative. This difference in type of harvesting
reflected the economics of combine purchase when size of cropping war
ranted it,

9
(d) Alternative harvesting systems in flue-cured
tobacco, where mechanical harvesting and hand
or conventional harvesting were considered.
(e) Changes in the product mix involving four
situations: a), all enterprises included, b)
excluding flue-cured tobacco and allowing
peanuts as the allotment crop, c) peanuts ex
cluded and allowing flue-cured tobacco as the
allotment crop, and d) excluding both peanuts
and tobacco enterprises.
(2) To describe and evaluate the different farm plans
obtained under the above farm situations. This analy
sis focused on:
(a) Optimum enterprise organizations.
(b) Optimum income levels.
(c) Limiting resources, with emphasis on cropland
and operating capital/.
(3) To determine optimum plans for peanut farms under the
following alternatives:
(a) Price variations considered.
(b) Flue-cured tobacco included and Maryland tobacco
excluded.
/for this evaluation, marginal value products (MVP) of restric
five resources under those alternative farm situations were determined.

10
(c) Not including either flue-cured tobacco or
Maryland tobacco.
Objective three implied two parts in the analysis: (a) an evaluation
of the competitive position of peanuts relative to the other crops as
its price decreased and as the enterprise composition changed, and (b)
an estimation of acreage response functions for peanuts.
The achievement of the above specified objectives make it pos
sible to:
(1) Explore the possibilities of improving farm profit
ability and efficiency by either adjusting farm size
or by reorganizing the farm enterprise mix.
(2) Provide guides to farmers choosing among income
alternatives and combinations of products, when
those opportunities are affected by degree of harvest
mechanization and resource availabilities.
(3) Provide information needed by farmers, extension
workers, reserachers and public agencies engaged with
the development of the crop sector in North and West
Florida, in developing farm plans that can increase
the income level of the farm families concerned.

CHAPTER II
DESCRIPTION OF THE AREA
The area selected for study is a 27 county area of North and
West Florida composed of Planning Districts I, II and III. Figure 1
shows the geographic location, and counties included in the study area
Selection of the Area
This area was selected because:
(1) Planning Districts I, II and III comprise an area
which needs economic and agricultural development
opportunities. This is clearly identified in
Tyner's report: "As a group, the counties in North
and West Florida comprise an area that is considerably
less well developed than the remainder of the state.
Employment is limited and incomes are very low in this
area" [23, p. 3].
(2) North and West Florida is an area where crop produc
tion is highly concentrated in the product mix.
"General farm crops tend to be grown in northern
and northwestern Florida where conditions are not
favorable for the production of citrus and early
vegetables" [5, p. 7], -
11

12
(3) The area has a fairly uniform climate such that
the results of the study will be applicable over
a wide area.
Physical Factors
Physical factors, in combination with economic, social and
biological factors, determine the type of agriculture and combination
of enterprises selected by farmers in any area. Physical factors are
perhaps the most limiting and thus they will be described first.
Soils and Topography
The soils in the area are predominantly fine sand and are
deficient in lime [5, p. 5]. A generalized soil map of Florida [5,
p. 5] shows that the study area has mostly "well to moderately well
drained" and "well to somewhat excessively drained" sands and loamy
sands. The soils are thick to thin acid sands and sandy loams, some
of which overlie finer-textured subsoils [16, p. 4].
The topography is defined by a rather flat land with no large
differences in elevations. There are some rolling hills that sometimes
create a minor water erosion problem.
Drainage
In some cases there is a problem of drainage associated with
the flatness of the area. Much of the land is subject to flooding in
periods of heavy rainfall [5, Figure 4]; "Heavy rainfall and warm

Figure 1*The Study Area: Planning Districts I, II and III, North
and West Florida
*Multi-county Planning Districts Boundaries. Established by State
Secretary in January 1973.
r.svm.F.

14
climate have furthered the processes of leaching and oxidation on ridge
soils. Imperfect drainage on flatwood lands has tended to retard these
processes" [5, p. 5], In the poorly drained areas, removing excess
water can be a problem at certain times of the year.
Climate and Weather
The climate in the study area is classified as subtropical, with
lower average temperatures than the remainder of the state.
The growing season!/ in North and West Florida ranges from 240
to 310 days, with a killing frost likely to occur annually. Cold waves
are of short duration, rarely lasting more than three days, but reaching
minimum temperatures of 15 to 20 F [5, p, 6].
Differences in temperature are particularly important because
they reflect the potentials for crops, The study area is located pri
marily north of a line that marks a normal annual temperature of 69
[5, Figure 2]. Major vegetable and citrus producing areas are located
south of this line.
The study area receives abundant rainfall with average annual
totals that range from 52 to 64 inches. Planning District III receives
about 52 inches per year. Average rainfall increases as you move
westward with the western counties in Planning District I averaging
between 60 and 64 inches [5, Figure 3].
!/"Number of days between average date of last killing frost in
spring and average date of first killing frost in the fall" [5- p. 6].

15
Rainfall distribution throughout the year is very uneven. The
rainy season in the summer, from June to September or early October,
accounts for 45 to 55 percent of the annual average rainfall in the
area. However, rainfall distribution differs from season to season
during fall, winter and spring. The months of April and May have
relatively low precipitation and are the critical growing months for
tobacco, the major cash crop in Planning District III.
Irrigation
Irrigation in the area is very important because of the sandy
character of the soil, irregularity of rainfall, increased intensity
of farming and the high price of farm products. At present, irrigation
is mainly confined to those counties that produce tobacco. Many of the
irrigation operations are single farm installations which draw water
from wells, lakes, springs and streams. The sprinkler system is the
most commonly used [5, p. 10]. The area has high potential for in
creasing irrigated crops and irrigation is expected to play an important
role in the future.
Social and Economic Conditions
Among the economic and social forces that help to explain the
level of development found in the study area are the trends and current
status os such variables as population and its distribution, labor
force, income levels, transportation facilities and nearness to mar
kets.

16
Population
From-I960 to 1970, the population of the study area increased
by almost 20 percent, while the population of the rest of the state
increased by 37 percent (Table 1).
Urban population showed a 45 percent increase, while rural
population decreased "5.4 percent during the same 1960-1970 period. The
state percentage changes are 49.4 and 2.3 percent increases for urban
and rural populations respectively.
As for farm populations in the area, all three planning districts
lost population, with an aggregate change of -1.8 percent for the total
area, while the state's farm population has remarkably increased by
44 percent during the same period of 1960-1970. In 1970 farm population
counted for 5.7 percent of the total area population while rural popula
tion represented 40 percent.
Labor Force
Typically, the area under study has excess labor resources.
Table 1 shows the labor force by major sectors of the economy. Agri
culture, unlike most sectors in the economy, has had a decline in its
labor force. While the study area showed a notable decrease of 26.5
percent, the corresponding decrease for the state was only 4.6 percent
during the 1960-1970 period. The state's percent is negative due to
the decreasing effect of the study area. The rest of the state increased
its labor force by 1 percent during this period.

T*5lg l^Sgcij] and economic trend;, Planning t.-fcts i. : and 11; 1.1 S;r-h and ¡test Florida. 1960-1970
Social and Economic Variables
Florida
.district
1
O'.stri
it 11
District
III
StLdv
Area
"r.unge
560-7ff
1970
Cnange
1960-70
1970
Lficr.90
1960-70
- 370
Change
1960-70
1970
Change
1960-70
1570
percent
rubber
percent
numbf
percent
fiunser
percent
number
percent
number
. mr
Hi
Hi.
Hi.
HI
Poouiaticn
Tota.
37.2
6,733,443
25.2
331,262
11.5
333.453
24.5 .
215,14?
19.5
375,852
Urban
45. 4
5,463,117
48.0
240,273
33.7
176,955
59.3
105,656
45.0
526,329
(30.sj
(72.5)
(55.1)
(51.0)
(63.0)
Sural
2.3
1,321,32c
-11.1
90.901
- 6.2
155,503
1.4
105,435
- 5.4
352,973
(19.5)
(27.5)
(45.9)
(49.0)
(40.1)
Farm
43.9
143,657
18.5
7,413
- 8 2
20.939
- 0.9
21,561
- 1.8
49,513
(11.3)
(3.1)
(13.4)
(20.4)
(5.7)
.'.on-farm
- 1.3
1 ,172,669
-14.9
83.3." 1
- 5.0
135.564
2.0
33,925
- 6.0
(83.7)
(51.0)
(86.6)
(75.6)
(34.4,
Labor Force: by Major Sectors
*
Agriculture
- 4.6
110,994
-11.2
1 ,313
-26.3
9,349
-30.4
5,950
-26.5
17,112
U.c)
(1.9)
(7.9)
(7.7)
(5.9)
Cons tree c.on
31.2
205,2c5
16.7
13.9
9,193
27.6
5,564
17.5
22,465
(3.5)
(8.2)
(7.6)
(7.0)
(7.7)
Manufacturing
52.0
341 .336
4.0
15,625
7.8
\2 ,035
25.9
10,567
10.5
33,073
(14.1)
(16.1)
(n.i)
03.4)
03-4)
Trade
52.0
571,051
42.3
20,751
34.3
23.107
37.4
14.439
37.9
53.337
(23.5)
(21.4)
(19.6)
(13.7)
(20.0)
Service and Mise.
70.3
725.062
9.0
22,22 j
56.9
26,115
74.9
17.451
62.1
66,305
(29.9)
(25.5)
(22.1)
(22.5)
(22.5)
Gaver-mer.t & Education
81.9
316,541
51.4
21, j7 i
71.5
22,769
37.9
18.413
68.5
63,755
(13.1)
(27.2)
(24.4)
(23.9)
(23.5,
C trier
-37.6
154,399
-31.
6n >
-32.1
-33.0
5. ICS
-33.7
19,599
(6.4)
(?.:)
(5.2)
(6.7)
(23.5)
roral cir.pio>ed
41.1
2,426,263
27.3
S7.063
23.2
117,912
25.4
77.173
26.1
292,151
Percent
Dollars
Percent
Dollars
Percent
Dollars
Percent
Ool Urs
Percent
dollars
I r,came
Perseas! income per capita
39.7
3.659
£4.2
3 rOd
113.4
2.856
118.3
2,956
104.3
3.053
Median family income
75.1
3,267
41.7
7,949
S '3.
6,260
33.0
5,15 7
52.4 .
6.472
Families by income level
Percent
Numbers
Percent
Numbers
Percent
' Numbers
Percent
Nu r::?rs
Percent
Numbers
Creer $2,000
-39.3
127,445
-23.5
S.ij'iC
-47.1
9,363
-45,0
5,626
-41.0
21,535
(7.1)
(S.O)
(11.5)
(11.1)
35,276
Under $3,C00
-40.7
217,892
-30.0
10,31'
-45.0
15,292
-43.4
9,173
-40. C
(14.5)
(V> M
(13 6)
(18.1)
52,COO 54.999
-30.3
335,750
-35.3
i** ,T5v:
-27.4
19,132
-30.6
11,019
-31.1
44.939
(13.7)
(13.0)
(23.6)
(21.8)
40.7
73.745
55,000 $9,929
35.3
625,551
25.4
32,384
49.4
23,723
61.7
17.633
(24.5)
(39.4!
(25.4)
(34.9)
510,000 and over
334.4
695,651
334.7
29,027
349.8
23.-363
334.7
16,23d
359.4
69.203
(39.1?
(35.4)
(29.4)
(32.2)
Source: Social and Economic Trends; 1953 1570; State of florida Planning Districts.

18
Agricultures labor force is the smallest among major sectors
of the economy. In 1970, area employment was 292,151 but agriculture's
share was only 6 percent of this labor force.
Income
Limited statistics on income are presented in Table 1. Personal
income per capita figures and the data on family incomes indicate the
disparity between economic opportunity in North and West Florida as
compared to the remainder of the state.
In 1970 the average personal income in all 27 counties in the
study area was about $600 below the state average ($3,659). However,
per capita income increased by 104.8 percent in the study area, compared
to 89.7 percent for the state during the 1960-1970 period.
Median family income was $6,472 in 1970, which was well below
the state average of $8,267 for the same year. The percent change in
family income during the period 1960-1970 was 52.4 for the study area
and a higher 75 percent for the state.
The numbers of families with incomes under $5,000 has decreased
considerably in the area under study. However, at incomes higher than
$5,000, this number has increased. Family incomes ranging from five
to ten thousand dollars have increased 40.7 percent, while family incomes
$10,000 and over have risen 359,4 percent during the analysis period.
These trends in family income in the study area are similar to
those at the state level,

19
Transportation
The study area enjoys good transportation facilities. Federal
and state highways extend to all sections in the area. Since most farms
are located on or are near all-weather roads thus small and large
cities are readily accessible to farmers for trading purposes. The
railroad lines running in and through the area connect the study area
with the rest of the state as well as with the north-bordering states.
Like the road system, the railway system can also be classified as ade
quate.
The study area is served by two important ports: Pensacola on
the west side of the study area, and Jacksonville on the east. While
a large volume of the area's agricultural production is not shipped out
of the area by water, many agricultural supplies are shipped into the
state by this means.
Agricultural Trends
The trends of several agricultural variables provide some in
sight on the adjustments that farmers have made over time.
Number and Size of Farms
By 1969 there were 11,139 farms that averaged 285.5 acres in
the 27 county study area (Table 2). The number of farms decreased by
51.4 percent during the 15 years from 1954 to 1969 and from 1959 to 1969
the number of farms with sales over $2,499 decreased only 6,8 percent.
The number of farms in the rest of the state decreased by 29 percent.

Table 2Some agricultural trends; Planning Districts I, II and III in North and West Florida, 1954-1969
District L
Di strict JJ,
District 1
Study
Area
Rest
of State
Agricultural Variables
Change
Change
1954-65
Change
Change
Change
1569
1954-69
1969
1969
. 1954-1969
1959
1954-69
1969
1554-69
%
nurr.cer
X
nutter
X
number
O'
A
number
%
number
Number of Farms
-54.4
1,549
-52.5
5.226
-48.9
4,364
-51.4
11,139
-29.3
24,447
Number with sales over
$2,499
-26.S-7
540
- 0.4?/
2,274
-6.8?/
2,976
- 5.8V
5,790
6.8V
14,306
X
acres
X
acres
tf
acres
h
acres
A
acres
Average sire, all farms
68.7
184.9
60.8
273.7
41.1
393.4
52.6
285.5
1.0
443.9
Average size, farms with
sales over $2,499
-16.3?/
308.9
-14.5?/
513.6?/
-23.6?/
736.8
-19.4?/
519.3
-12.8?/
678.5
Dollars
Dollars
Dollars
Dollars
Dollars
X
(thousands)
X
(thousands)
1
A
(thousands)
X '
(thousands)
X
(thousands)
Market value agricultural
products sold, major cat-
ecories
All agricultural products
Croos (incl. nursery pro-
143.2
14,626
114.4
67.C47
181.7
77,746
145.7
155.415
155.1
972,655
ducts l hay)
201.4
8,940
83.4
35,066
36.5
24.278
71.4
69,284
130.6
662,444
(61.1)
(53.8)
(31.2)
(43.5)
(63.1)
Forestry products
- 0.7
292
-30.5 .
1,135
42.3
1,170
- 6.0
2,601
-91.2
2,493
(2.0)
0.7)
0-5)
0.6)
. (.25)
Livestock, poultry and
their products
95.8
5,395
168.0
29,902
481.4
52,299
282.4
87,596
264.2
307.646
(36.8)
(44.6)
(67.3)
(54.9)
(31.6)
- = Percentage change from 19oS to 1259 only. Data not available ror 1954,
2/
Percentage change from 1964 to 1969 only. Data not available 'or 1954 and 1959.
Source: Social and Economic Trends, 1950-1970, State of Florida.

21
This overall trend in the number of farms is an indication of the con
solidation of farms which has occurred as a response to a need for
larger acreages to adjust to more efficient sized units. Consolidation
has occurred as farms with sales less than $2,499 have been combined
with other farms. Small farms involved in consolidation either consoli
date with each other or are bought by larger farms. Consolidation has
been, as seen above, much more evident in the area under study than in
the rest of the state.
Average farm size in the study area was about 160 acres smaller
than the corresponding figures for the rest of the state. In 1969, the
average size for all farms in the study area was 285,5 acres as compared
to 443.9 acres for the rest of the state. For those farms with sales
over $2,499, the corresponding study area farm size was 519.8 acres as
contrasted to 678.5 acres for the rest of the state. It is interesting
to notice, however, that the percent change in average size of farms in
the study area is by far higher than the analogous figure for the rest
of the state for the period 1954-1969. The study area's change was an
increase of 52.6 percent while the rest of the state's figure was only
one percent. One other meaningful point is that, during the 1964-1969
period, the average size of farms with incomes over $2,499 decreased
notably at both study area and rest of state level. This decrease seems
to reflect the adoption of technological improvements so that now smaller
farm sizes,can obtain given levels of income,

22
Value of Farm Products Sold
Supplementary relevant information is provided by changes in
the market value of agricultural products sold. Table 2 shows the
levels of sales for all farm products as well as for crops and other
major categories, During the period 1954-1969, sales of all agricultural
products increased 145.7 percent, similar to the trend for the rest of
the state.
In 1969, the value of total crop sales in the area accounted
for 43.5 percent of the total sales of all agricultural products.
District III (31,2 percent) is way below Districts I and II (61.1 and
53.8 percent respectively) which pulled down the study area percentage.
The corresponding percent for the crops' share at the rest of the state
level was 68.1 This higher crop participation in the total value of
sales at the rest of the state level seems to be associated with the
large volumes of citrus, sugar cane, and nursery products in the rest
of the state.
A leading district in sales of crop products in 1969 was District
II with $36,066,000 which represented 53.8 percent of the market value
of all agricultural products in that area. District I, on the other
hand, had a comparatively low volume of crop sales ($8,940,000), but it
represented 61 percent of the total volume of sales of agricultural
products in that region. As for the whole study area, the value of crop
sales increased by 71,4 percent.

23
Changing Capital Requirements
The increasing requirements for capital is another important
aspect of the changing conditions of agriculture in the study area.
Farm expenses associated with technology improvements (such as
mechanization, higher levels of fertilization and better disease control)
as well as purchase of land for expansion are decreasing the attractive
ness of farming relative to less risky non-farm investments. "... total
capital requirements for Florida's farm economy increased by one-half
from 1959 to 1964. The most significant increase in the study area
(North and West Florida) was in the substantially enlarged total capital
values for land and buildings on farms ..." [23, p. 38]. Between 1959
and 1964, the average value of land and buildings per farm increased
by 54.5 percent in North and West Florida, 12.3 percent higher than the
rate of increase for the rest of the state [23, Table 16].
In 1969, the average value of land and buildings per acre in
the area under study was considerably lower than the corresponding figure
for the restof the state ($178.1 as compared to $406,30) [24],
Crops Situation
Crop Program Review
Government agricultural production regulations, price supports
and loans for farm products are based on the Agriculture and Consumer
Protection Act of 1973, Increased production costs in 1973 and 1974,

24
combined with declining commodity prices, stimulated interest in raising
the target prices and loan rates stipulated in the 1973 Act.
Provisions of the 1975 feed grain program were virtually un
changed from 1974, Most often, farmers have a wide choice of which prod
ucts to produce and how much. Producer flexibility continues in substi
tuting feed grains, wheat, and other commodities for allotted crops.
Thus allotments for wheat, corn, and grain sorghum do not limit the
acreage of these crops that farmers can plant. Allotments for the above-
mentioned grains are used in calculating deficiency payments to producers
if market prices fall below target price levels or if growers qualify
for disaster payments. The average loan rates for these products in
1975 continued at the same levels as for the 1974 crops. These loan rates
were $1.10 per bushel for corn, $1.05 per bushel for grain sorghum, and
$1.37 per bushel for wheat. The target price levels (guaranteed price)
for 1975 were also at the same level as in 1974. These target prices
were $1.38 per bushel for corn, $1.31 per bushel for grain sorghum, and
$2.05 per bushel for wheat [31],
The loan rate for soybeans was discontinued for 1975 because
market prices in 1974 ran strong relative to the loan rates, However,
due to declining 1975 soybean prices, Congress passed an emergency one-
year bill that would have raised the loan rate for soybeans. This bill
was vetoed and consequently there was no program supporting soybean
prices for 1975,
Although changes were proposed, the programs for peanuts and
tobacco (including marketing quotas and price support) were extended over

25
1975. Transfer of allotments by lease or sale within counties was
provided for in the 1975 programs, which allows for size consolidation
of those otherwise small peanut.and tobacco operating units. Table 3
shows the figures corresponding to peanuts and tobacco allotment
programs. In peanuts, under the 1974 program, there were 3,983 allot
ment farms in the study area, as compared to 4,099 in 1973. The average
farm allotment was 13.9 acres. In flue-cured tobacco, the number of
allotment farms was 7,001 in 1974, only 1.2 percent higher than in 1973.
The average tobacco allotment was 4,400 pounds.
The prices of peanuts and tobacco were supported by loans and
direct purchases under the price support program. The objective of this
program was to stabilize prices at announced levels to protect farm
income. The price support level for flue-cured tobacco in 1975 was up
12 percent over 1974 as required by law. This meant a 93.2 cents per
pound support price [31, Table 4], which reflected higher prices for
goods and services bought by farmers. For the 1975 crop year, tobacco
production costs again increased: "... tobacco crop will probably cost
a minimum of 5 to 6 cents per pound more to produce than in 1974" [32,
p. 16]. As for peanuts, the 1975 crop was supported at a minimum average
price support of $393.10 per ton (19.64 cents per pound). This level
was 7.4 percent above the previous year's rate (18.3 cents per pound)
and reflected a rising minimum support level resulting from an up-trend
in peanut parity price. At this level the price of peanuts was above
the world market price. Even so, the C,C,C,V minimum sales policy for
diversion sales was 100 percent of the loan level,

26
Table 3.Data on peanut allotment arid marketing quota progam and flue-
cured tobacco acreage poundage program, North and West Florida
1973 and 1974.

Item
Unit
1973
1974
PEANUTS:
Number of Allotment Farms
No.
4,088
3,983
Allotted Acreage
acres
55,350.6
55,340.5
Average Farm Allotment'
acres
13.5
13.9
Harvested Acres^
acres
53,665.8
53,775.7
Production
lbs.
147,623,230
167,380,126
Actual Yield
lbs.
2,751
3,113
Average Price
Do! ./Ton
328.5
374.8
TOBACCO:
Number of Allotment Farms
No.
6,918
7,001
Allotted Acreage-^
acres
14,019.4
16,915.6
2 !
Total Poundage Quota
lbs.
25,713,718
30,801,942
Average Farm Allotment
lbs.
3,716.9
4,399.0
Harvested Acreage
acres
11 ,605.4
11,679.6
Total Marketings
lbs.
20,966,558
25,052,331
Yield per Acre based on
marketings
lbs.
1,807
2,145
Average Price
Dol ./cwt.
88.3
100.9
^Excludes acreages of peanuts harvested green for boiling purposes but
includes non-allotment farms of one acre or less.
2/
Total effective allotments and poundage quota after adjustments for
undermarketings and overmarketings in 1972 and 1973 respectively.
Source: U.S. Agriculture Stabilization and Conservation Services,
Florida Annual Report, 1973 and 1974.

27
Credit needs of farmers increased substantially in 1975 as
prices of production inputs continued to rise, while the own-capital
availability of farmers was reduced in real terms due to the relative
decline in incomes, "In general, the financial condition of farmers
is less favorable than in 1974" [30, p. 11], The Production Credit
Association (P,C.A.) provides for most of the operating capital available
to growers. There was no specific limit on the size of loans.
Production Trends
Through the years, economic prosperity of North and West Florida
has been closely tied to the production of such field crops as corn,
small grains, tobacco and peanuts. The major sources of cash income
have come from tobacco and peanuts. Soybeans and grain sorghum are more
recent crops in the state's farming system. Production of all these
crops can increase substantially in the years ahead, especially corn
and soybeans. In addition, double-cropping activities are becoming
increasingly important, particularly those built around wheat, such as
wheat-soybeans and wheat-sorghum. It is believed that double-cropping
activities together with better crop practices will lead to substantial
growth in field crops output,
Table 4 shows the production trends for peanuts, flue-cured
tobacco, corn, soybeans and wheat, during the five-year period from 1968
to 1973.
Peanut production has grown mainly due to yield increases and
is expected to expand by more than 40 percent in the next decade with

Table 4.--Production trends for selected crops, Planning Districts I, ¡I and ill, North and West Florida, 1963-1973
district
I
.
District
I!
Acres harvested
Yield per
acre
Production
Acres narvested
TiT3 per
acre
Production
Change
Change
Chance
Change
Change
1973
Change
1973
Crop
196S-73
1973
1968-73
1973
1963-73
.1973
1963-73
1973
1968-73
1958-73
%
acres
*
pounds
or
b
pounds.
%
acres
1
pounds
* .
pounds
Peanuts
3.9
6,433
22.6
2.860
34.6
19,030,000
7.5
33,270
42.7
2.442
do.a
93,340,000
Flue-cured tobacco
15.3
657
-11 ?!
1,246
10.7
925,200
(Type 14)-
JO
acres
' 1
. bushels

bushels
acres
t
A
bushels
V
Jo
bushels
Corn
3.4
17.9CC
29.4
65
35.6
1,233.000
-24.2
122,500
11.2
44
-10.9
5,253,000
Soybeans
36.7
103,000
6.6
26
46.7
2,376,000
120.2
131,000
20.4 7
26
7.1
2,856,000
Wheat
-83.3
11,400
-16.1 .
23
-111.4
264.600'
-34.4
15,100
-30.7
20
-61.7
318,300
ro
GO
Table 4.Continued
Oistrict
III
Study *rea
Acres harvested
Yielo per acre
Production
Acres harvested
Yield per
acre
Production
Change
Change
Change
Change
Change
Change
Crop
1968-73
1973
1963-73
' 1973
1968-73
1573
1963-73
1973
. 1963-73
1973
1963-73
1973
i.'
acres
?'
pounds
pounds
%
acres
1
pounas
l
pounds
Peanuts
5.7
4,820
44.6
2,514
72.3
13,857.000
6.8
49,470
60.0
2,664
71.0
131 ,777,000
Flue-cured tobacco
(Type 14)
1.2
10.732
1.2
1,796
2.8
i9,844,400
1.9
11.389
1.2
1,323
3.1
20,770,500
%
acres
l
bushels
%
bushel;
acres
%
bushels
%
bushels
Corn
-9.9
179,100
-9.5
40
-17.3
7,238,700
-12.2
322,100
3.6
43
-9.0
13,900,500
Soybeans
733.3
5,000
10.0
22
815.7
110.000
75.4
244,000
12.2
25
' 74.3
.5,842,000
Wheat
241.7
2,900
-19.1
21
103.0
60,900
-44.2
29,400
-21.5
21
-71.5
643,300
Source: Florida Agricultural Statistics. Field Crops Suirmary, 1973.

29
further development in yields, From 1968 to 1973 production of peanuts
in the study area increased 71 percent; acreage went up only 6.8 percent,
while the ytld per acre substantially increased by 60 percent. Total
production increased by 25 percent between 1973 and 1974 because a record
yield of 3,000 pounds per acre was realized [30]. Notice that, in 1973,
District II was responsible for 75 percent of that year's total production.
Flue-cured tobacco production (type 14) increased by only 3.1
percent from 1968-1973, Its average yield per acre increased slightly
(1.2 percent) and the acreage harvested moved up very little (1.9 percent)
since allotment regulations have been restricting any potential expansion.
Flue-cured tobacco production is higly concentrated over most areas in
Planning District III, where 96 percent of a total of 20,770,500 pounds
were produced in 1973. Growers planned to harvest 12,900 acres in 1975
[12], which is up 10 percent from 1974 and 11 percent above 1973. On
the horizon are innovations in harvesting and curing methods which could
revolutionize the flue-cured tobacco business in the future.
Mary!and-type tobacco is a new crop in Florida with a promising
future if markets and marketing systems are developed. Although it does
not receive government price support, its production in 1974 was larger
than in the past years. For the 1974-1975 season the supplies were about
4,000,000 pounds abouve 1973-1974 [32, Table 17]. The production pros
pects indicated that its acreage last year was down 4 percent from 1974
[32].
Corn, from the standpoint of acreage harvested, is the most
important field crop grown in Florida. Corn planted for all purposes

30
totaled 464,000 acres in Florida in 1975, up nearly 3 percent from the
previous year and 16 percent above 1973. Yield outlook was favorable
because of the 1975 crop. Thus, a large 1975 output that could lead
to price easing for the season was expected, In contrast with these
production prospects, the trends observed in the study area during the
five-year period of 1968 to 1973 show that corn production declined 9.0
percent due to an acreage reduction of 12.2 percent (from 366,800 acres
to 322,100 acres). Yields had an increase of 3.6 percent during the
same period and were 43 bushels per acre in 1973. Corn production was
highly concentrated over most areas of Planning Districts II and III,
which accounted for 90 percent of total production in 1973.
Soybeans are produced under two distinct systems in the study,
as a full-season crop and as a second crop after wheat. During the
period between 1968 and 1973, soybean production increased 74.3 percent,
reaching 5,842,000 bushels in 1973. These soybeans were grown mainly
in the extreme western counties located in Planning Districts I and II,
which accounted for 98 percent of total production in 1973. This
notable growth in production resulted mainly from a substantial 75.4
percent increase in the acreage harvested. As of 1975, planting of
soybeans continued its upward surge with a record 305,000 acres planted.
Wheat production in Florida is highly concentrated in Planning
Districts I and II, accounting for 582,900 bushels, or 90 percent, of
the total production of 643,800 bushels in 1973. The trend in production
is downward and for the five-year period under consideration the decrease
was 71.5 percent. This decline was due to reductions in both acreage

31
harvested (-44.2 percent) and yield per acre (-21.5 percent), The
1975 crop continued to reflect declining production prospects, Acres
harvested for grain in the spring of 1975 totaled 20,000 acres, down
33 percent from the two previous years [12],
Prices
Prices received and their prospects are of major interest to
farmers and varying them in the analysis will help establish the impact
of changing prices.
The price situation for field crops during the last season
appeared rather unfavorable for farmers. All products in this study,
except tobacco, experienced declining prices. This downward'movement
in farm prices reflected a nationwide condition. Farm product prices
averaged 10 percent lower for the first five months of 1975 than in the
same period in 1974. On the other hand, the index of prices paid for
production items, interest and farm wages was 11 percent higher than
during January-May of 1974 [28].
Feed grains prices in the 1974-1975 season were a record high.
During the present season, however, market prices have declined mainly
due to the sharp reduction in the domestic use of feed grain (costs of
feed grain have been high in relation to market prices of livestock and
poultry) [31]. Good weather for crops will continue to support easing
of prices during the rest of the season, The most likely situation
for corn production is a large output that could lead to corn prices
well below the 1974~1975 season, However, corn producers in the study

32
area harvest their crop before the market opens for the rest of the
nation. This early harvesting might partially offset those declines.
In the 1974-1975 season the national average price was $2,95 per bushel
[29]. As for grain sorghum, nationwide supplies this year were the
smallest in 18 years, and its price dropped due to the weak domestic
feed demand.
Most signs indicated a big wheat crop in 1975, at levels higher
than 1974. Supplies of that size would likely soften wheat prices,
perhaps down from the 1974-1975 season average farm price of $4.04
per bushel, which was 9 cents above the 1973-1974 price and the highest
on record for the United States [33]. "Forces seem to be building which
could push prices downhill towards $3 per bushel at harvest time" [33,
P. 7].
Soybean prices decreased below 1974 levels due to reductions .
in its usage, largely due to a lagging demand for soybean oil and meal.
However, its price behaved less erratically than in previous years when
it rose to a record $10 per bushel in June of 1973. "Mid-month soybean
prices received by farmers declined from $8.17 per bushel last October
to $5.31 in March, a drop of nearly $3. So far this season they are
averaging around $6.15, about $1 above a year ago" [30, p. 8].
Peanut prices fell last marketing season mainly due to record
large supplies in 1974 crops and also because the economic forces of
recession curtailed its demand, In fact, peanut market prices fell
1,6 cents below C,C,C.s minimum 1975 support price and averaged 18 cents
per pound [30, Table 12],

33
In 1974 the flue-cured tobacco prices received by farmers in
the study area averaged 100.9 cents per pound (Table 3). These prices
constituted a record high and were 17.6 cents higher than the price
support level. In 1975, however, due to higher production expectations
and a shortfall in cigarette production [32], prices received by growers
were expected to stabilize near 19741s record or about 7 cents above
1975's support price of 93.2 cents per pound. As for Maryland-type
tobacco, in the 1973 crop (marketed mostly in 1974), growers received
a season average price of 62.5 cents per pound in other states than
Maryland^ [32, Table 17].
/90.5 cents per pound in Maryland State (highest on record)
[23].

CHAPTER III
DESIGN OF STUDY
This study was designed to evaluate possibilities for improving
crop farm profitability and efficiency under the changing conditions
affecting crop agriculture in the study area.
Selection of optimal enterprise combinations and evaluation of
the potential economic adjustments feasible in the study area were made
on the basis of efficiency defined in terms of maximum net revenue;!/
The application of this optimization criteria to obtain the net returns
estimates was made under a set of simplifying assumptions and constraints
so that interrelations among the studied variables could be traced.
This study was oriented toward a short-run planning situation.
Most crops are capable of maturing once per year, thus the length of
the planning period was one year. In the short-run many productive
resources must be considered as fixed with no opportunity to dispose
of or acquire resources. For this planning period, the relevant costs
were those that vary with the output for that production year.
The approach adopted in this study was a firm level approach
where "typical crop farms" for the study area were determined by defining
!/ln this analysis, net revenue was defined as gross farm income
less variable costs of inputs and crop Operations (fixed costs, operator
labor and management were excluded). .
34

35
several alternative farm planning situations which were largely defined
by area economists, top farmers, Extension specialists and Experiment
Station recommendations.
A linear programming model was designed to fit as realistically
and accurately as possible those situations faced by crop farmers in
the area under study. All major crops suitable to the soil-weather
conditions were included. As provided for in this model, the selection
of an alternative crop was determined by the enterprise possibilities
of the farm and the realtive profitability of alternative enterprises,
all these being within the constraints imposed.
Source of DataThe Budgets
The major source of data for this work was the enterprise budgets
for the study area prepared by Mr. George Westberry, Extension economist
in the .Food and Resource Economics Department, University of Florida.
These budgets have been modified to make them adaptable to all specific
objectives of this study. In addition, Florida Crop and Livestock
Reporting Service data [10, 11, 12], Agricultural Stabilization and
Conservation Service (A.S.C.S.) data [25], Census data, information from
personal interviews and data from other miscellaneous publications for
North and West Florida have been used in this study.
The estimates of prices paid and received by farmers are present
ed in Tables 5 and 6 and they are not to be interpreted as predictions
of prospective prices in any future year. The custom work rates for
harvesting operations were taken from Economic Information Report 34
\

Table 5.--Product yields and prices used in preparing budgets
for North and West;Florida, 1975
Item
Unit
Yield
Price
Peanuts
cwt.
30
dollars
18.00
Flue-cured tobacco
lb.
2,100
1.10
Maryland Tobacco
lb.
1,500
.95
Corn:
Irrigated
bu.
115
2.50
Non-irrigated
bu.
65
2.50
Wheat
bu.
25
3.50
Grain sorghum:
Single-cropped
cwt.
36
4.00
Double-cropped
cwt.
29
4.00
Soybeans:
Single-cropped
bu.
30
5.50
Double-cropped
bu.
25
5.50
Watermelon
lb.
18,000
.03

37
Table 6 .--Input prices used in preparing budgets
in North and West Florida, 1975
for crop farms
Item
Unit
Price
dollars
Seeds:
Peanuts
lb.
.425
Flue-cured tobacco
oz.
20.00
Maryland tobacco
oz.
20.00
Corn
lb.
.70
Wheat
bu.
7.50
Groin sorghum
lb.
.65
Soybeans
bu.
12.00
Watermelons
lb.
4.00
Ferti1izers:
Lime, spread
ton
11.00
0-14-14, spread
cwt.
5.30
Nitrogen
1b.
.23
4-12-12
cwt.
5.90
5-10-15
cwt.
5.30
6-9-3
cwt.
5.90
Nitrate of Soda
cwt.
9.50
4-8-12
cwt.
6.00
Potassium nitrate (13-0-44)
cwt.
10.00
10-10-10, spread
. cwt.
5.85
15-0-15 (bag)
cwt.
8.25
Chemicals:
Soybean innoculant
pkg.
.90
Systemic (sucker control
chemical)
gal.
14.00
Contact (sucker control
chemical)
gal.
7.25
Lasso (herbicide)
lb.
3.71
Sutan-W\trez (herbicide)
lb.
2.24
Balan (herbicide)
lb.
4.60
Sevin (insecticide)
lb.
1.00
Dasar.it (insecticide)
lb.
5.10
Bravo (fungicide)
gal.
28.75
Fumazone (insecticide)
gal.
14.00
Dysiston (insecticide)
lb.
3.08
Lannate (insecticide)
lb.
9.00
Toxaphene (insecticide)
lb.
1.00
Parathion (insecticide)
lb.
.29
Custom work:
Peanuts: Spray (air)
acre
1.75
Custom harvest'
acre
28.00
Tobact j:
Plant bed: Fumigation (with
methyl bromide) and
plastic cover
100 sq. yd.
21.00
Herbicides
acre
16.00
Insecticides
acre
52.78
Insurance
acre
42.50
Corn: Harvest and haul
bu.
.25
Wheat: Harvest and haul
acre
10.00
Grain sorghum: Spraying
(custom air)
acre
1.50
Harvest and haul
acre
10.00
Soybeans: Spraying (custom air)
acre
1.50
Harvest and haul
acre
10.00
Operator capital
dol.
9*

38
[7]. There is a fear that under current conditions of inflation, energy
shortage and devaluation, the price expectations are highly uncertain.
The input-output relationships reflected the 1975 situation and
assumed a level of technology defined as "recommended practices." These
coefficients were considered to be appropriate for the North and West
Florida area.
Eight enterprises (which made up to 18 crop activities when most
crops were considered under two harvesting conditions regarding machinery
ownership and when flue-cured tobacco included two harvest systems) were
considered as alternatives to which the resources for a given farm
situation may be allocated. A sufficient market was assumed to be
available to permit the enterprise to be considered for all farmers as
an adjustment opportunity. These cash crop enterprises were peanuts,
flue-cured tobacco, Maryland tobacco, corn, wheat, grain sorghum, soy
beans and watermelons.^ The exclusion of any enterprise means only
that it was not considered widely adaptable within the study area.
Data were assembled on the following aspects of farm enter
prises (Appendix Tables 1-23):
(1) Costs and returns using advanced management practices
and recommended levels of technology.
(2) Monthly distribution of farm operations and labor and
machinery requirements.
?/
The tobacco and peanut enterprises were classified as intensive-
type crops while the other crops were classified as extensive-type crops.

39
(3) Annual fixed costs of machinery. "
The structure of the budgets used in this study was designed
primarily for use in linear programming and this structure differed
somewhat from those of conventional budgets used for other purposes.
In each of the main-crop enterprises, two levels of returns
were calculated. In the first level, harvesting costs were based on
owned harvesting machinery and equipment. In the second level, the
hair-vesting costs were based on present custom hiring rates in North and
West Florida. In the flue-cured tobacco enterprise, returns were
calculated for both conventional!/ (hand) and mechanical harvesting
systems.
For all enterprises, returns.were defined as yield times the
product market price. Annual operating expenses (variable costs)
included costs such as seed, fertilizer, hired labor, custom operations
(when applicable), operating costs of tractor and equipment plus an
operating capital cost. The budgets did not include charges for inputs
that were drawn from the quantity in the constraints column or that
were debited through a system of purchasing or renting activity and
appropriate transfer rows in the model (for example, combine purchase
was not included in the budgets). Machinery operating costs were
included in the budgets on the basis of assumed performance rates and
an hourly charge for necessary machines.
1/A tractor drawn priming aid with field racking and bulk
curing.
%

4U
Consequently, for all crop enterprises, net returns were
calculated over variable costs, that is, net returns were allocated
to land, operator labor and management, tractor and machinery invest
ment and overhead costs. In the flue-cured tobacco and peanut budgets
net returns also included returns to the allotment quota since no
charge was included for leased quota. Due to the fact that the amounts
of non-charged items were different for some crop enterprises (i.e.,
barns needed in tobacco production were not necessary in the production
of other crops), the returns per acre should be compared accordingly.
In calculating costs of growing and harvesting a farm enter
prise, a level of equipment and a set of production practices must
be assumed. Crops in this area were primarily produced with four-row
equipment with appropriate tractor power and small grain equipment
(Appendix Table 23). Other assumptions were: normal weather conditions
prevailed, soil quality was fairly uniform for given enterprise situa
tions, all labor other than operator labor was hired and enough of this
labor was available in peak seasons. Perhaps, the most basic assumption
was that of the level of technology. Since the concern was planning
the income growth of crop farms, the level of efficiency was one of the
potential adjustments pertaining to this work. This study assumed a
"recommended practices" tec-hnology that was suitable for crop farming
within practical limits in the study area. Since all these assumptions
on the budgets existed for the duration of the planning period, the
maximization of returns in this study was relative rather than absolute.

41
Theoretical Concepts
To accomplish the objectives, linear programming techniques
were used along with the utilization of budgets as main sources of
data. The conditions for the model structure were dictated by the
potential changes and economic opportunities facing crop farms in the
study area.
Linear programming is a technique which may be used to deter
mine the equilibrium position^/ of a firm that operates under factor
restrictions and usually, as used in this study, under constant returns
to scale over some specified range of production. The technique can
be used to maximize (or minimize) an objective function defined by a
specific objective and-subject to a given set of cGHStraints. The
objective, which is quantifiable, can be attained by means of alternative
activities which operate under restrictions given by resource limitations
and specific farm situations. Many of the questions arising from the
objectives required different set-ups of the basic model.
Mathematical Assumptions of Linear Programming
The use of linear programming involved the following critical
assumptions [14, pp. 97-100] which must be considered in order to
construct the simplex tableau and to interpret the results. These as
sumptions are:
firm may be considered in equilibrium when there is no economic
incentive to change the combination of inputs and products, nor to change
the level of production of any of the products.
4

42
(1) LinearityThe ratio of one resource to another and
of each resource to the quantity of product is
constant and independent of the level at which a
particular process is used. The mathematical model
for this relationship is homogeneous in the first
degree and yields a geometrically straight line
relationship. This assumption rules out the possibility
of increasing or decreasing returns to scale by fixing
the input-output coefficients./
(2) AdditivityThe resources required and the products
produced by a combination of enterprises must be equal
to the sum of resources.used and products produced by
each individual enterprise. No interaction is possible.
(3) DivisibilityIt is assumed that the resources used and
the products produced are divisible at infinitely small
levels. However, the practical aspects of farming lead
to discreteness rather than continuity in the input-output
relationship. This, however, is not usually a serious
limitation.
(4) FinitenessIt is assumed that the number of activities
available is finite. An exact optimum combination of
enterprises cannot be obtained unless all possible
enterprises are considered. In agriculture, therefore,
since the possible number of activities is infinite, no
^/Diminishing returns can be analyzed by establishing several
processes with varying levels of inputs for an individual enterprise.

43
claim can be made that the best combination of enter
prises is obtained.
(5) Single-value ExpectationsThe input-output coefficients
and prices for each productive process are considered
as single-valued, that is, they are assumed to be known
with certainty. This assumption also implies that,
given a productive situation, the output can be pre
dicted with certainty.
The Model
The model pertinent to this study was an economic firm operating
under conditions of pure competition,^ in the short-run, with the ob
jective of profit maximazation.Z/ The firms were the typical farms
selected to represent the designated crop farm situations in the area
of study.
Considering the foregoing basic assumptions involved in any
linear programming model, this study's maximum net returns model can be
/ For pure competition to exist, the following conditions must be
evident. First, a large number of buyers and sellers of homogeneous
products must be involved. Second, the buyers and sellers must be well
informed concerning market conditions affecting the goods in question.
Third, collusion in any form must not exist. Fourth, government inter
ference must not forestall the determination of the price of products by
the forces of supply and donand. This condition is not entirely met by
the farm. Acreage allotments and price supports are in effect on peanuts
and tobacco. Although the conditions of pure competition are not com
pletely fulfilled by the farms and the economic environment in which they
operate, they are sufficiently satisfied to warrant use of the economic
firm operating under pure competition in the short run.
Z/Here the implicit assumption exists that farmers are profit
maximizers, not just profit satisfiers.

44
expressed in equation form as follows:
n
Maximize Zo = Z (P.X- C,X.)
* i J J J J
(1)
where Zo is the net return for all activities when the price, per unit
cost (here per unit cost refers to costs per acre), and level of the
activity are P.,'C. and X. respectively. The number of activities
J J v
is n.
Subject to the linear restriction
n
Z a^- X{ < Bi i = 1, ..., m
j=l J
(2)
where a.. is the amount of the i^*1 constraint required to produce a unit
of the jt*1 activity. The utilization of resource or constraint i cannot
exceed the total amount of restraint B.
n
Z a. X. > 0
j=l kJ J-
(3)
where a^ is the amount of. machinery required to produce a unit of the
jt*1 activity. No direct restriction was placed on machinery.
X. > 0 (4)
3 ~ .
where this inequality states that no enterprise (or any other activity)
may be produced at a negative level.

45
Planning Situations and Process Restrictions
The main criteria used in the identification of the different
farm situations and restrictions was that they should realistically
reflect the conditions faced by crop farmers in the study area.
The key advantage of these situations was that they allow for
asking "what if" questions concerning the potential changes and adjust
ment opportunities. Further analysis shed light on the required or
desirable production adjustments to be suggested in the area planning
for the crop farming sector.
The possibility for larger incomes lies largely in the efficient
handling of the land and other resources. However, combinations of crop-
enterprises under various land, capital and othe constraint situations*
offered widely varying income opportunities. Several alternative plan
ning situations were determined so that a close tailoring of alternative-
plans was possible to simulate the crop farmer's particular situation..
Initially, two types of farm situations were developed, one being
alternative levels in the resource situations and the other being
alternative considerations in the product-mix situation.
As for the farm resources, two basic situations were identified
after several preliminary runs of an initial model. One situation^
related to cropland availability and considered three levels of crop
land: 250 acres, 400 acres, and an "unconstrained" level. The other
situation related to operating capital requirements and provided fora
\

46
parametric variation of capital at $20,000 intervals, starting from the
basic constraint of $20,000 and increasing up to an "unconstrained"
level.
The above resource situations were to determine the effects of
alternative cropland and capital restrictions on the income and enter
prise organization of crop farms. Also, they allowed for some inquiry
on the economic potential of land equity as well as some insight on the
credit requirements of crop farmers.
Two other important resource restrictions, on which no alterna
tive levels were placed, were those related to labor and machinery.
Intuitively, one looks upon man hours as the most likely restraint.
In this study, operator labor was established as a limiting factor on
a monthly basis. The labor restraint formed for every month of the
year implied a rigidity in the timing of farming operations and con
sequently of labor use. This may be unrealistic. This model, however,
did allow for operator labor to be transferred across months, even
though this might have overstated labor flexibility for some crops in
some months. In forming the labor restraints, it was considered that
the farm operator was willing to work more hours during those critical
months of the year (see Appendix Table 24).
As for machinery and accompanying equipment, rather than forming
a separate set of constraints for each machine, the most limiting ones
were determined. "Large tractor" and "combine" were identified as the
most limiting because more hours of these machines were required than

47
any other type of equipment involved in the cropping operations. In
the model, these constraints were treated by linking them to the operator
labor constraint.
Ultimate adjustment in each farm was limited by the above-
mentioned resource constraints in critical time periods when performing
field operations. However, the adjustment potentials were also deter
mined by some external and subjective restrictions.^/
One very important external restriction on the crop enterprise
organization was the government allotment program on peanuts and flue-
cured tobacco. In 1975, the average allotment for peanuts was 13.9
acres and for flue-cured tobacco was 4,399 pounds. The model provided
for allotment rental with upper bounds of 80 acres for peanuts and 42
acres (90,000 pounds) for flue-cured tobacco.
An alternative farm situation was defined when no peanut allot
ment was considered. This alternative of "unrestricted production"
allowed for the evaluation of no government intervention in peanut
production. Since the allotment provision is linked to the price support
policy, in the event the allotment is lifted, the price support policy
most likely is going to be lifted too and the peanut price is likely
to drop. Consequently, optimal enterprise organizations were evaluated
when no peanut allotment or price support were considered. Peanut price
decreases were parametrically programmed and acreage response functions
0/External restrictions, as implied in this study, are those limit
ing conditions not determined at the farm level, such as acreage allot
ments. Subjective restrictions, on the other hand, consider those re
strictions imposed by the operator himself. Their limits are usually
! hard to determine, but they are real and significant/to farm planning.

48
for peanuts were estimated. Significant changes in production decisions
in the peanut industry may occur as a result of changes in peanut prices.
Regarding the enterprise composition, the area under study had
four categories: (1) All enterprises included; (2) peanuts as the
allotment crop and excluding flue-cured tobacco; (3) flue-cured tobacco
as the allotment crop and excluding peanuts; and (4) both peanuts and
tobacco enterprises excluded. These categories were not well defined
geographically but it is common for farms to produce either peanuts
or tobacco, but not both. For instance, Suwannee, Hamilton and Madison
counties are largely dependent on flue-cured tobacco as a source of cash
income. Jackson County has developed peanuts as its specialty crop.
Thus, these alternatives in the product mix were aimed at those: farms
where either of these situations prevails.
In all crop enterprises except tobacco and watermelons, two
considerations regarding harvesting were defined. One considered custom
harvest and the other harvest with owned machinery. These two situations
provided for additional realism. Some farmers do not buy combines.
Others do in order to better realize economies of scale. Consequently,
these considerations in the type of harvesting provided for alternative
plans for both farmers with small scale crop operations and farmers with
large enough operations to afford the purchase of a combine.
In the flue-cured tobacco enterprise, two harvesting systems
were considered: hand or conventional harvesting, and mechanical
harvesting. These alternatives were designed to evaluate the economics
of mechanical harvester purchase when size of cropping warrants it.

49
Finally, two subjective restrictions were included: (a) Maryland
type tobacco is a new crop in the area and as such it affects the area's
enterprise mix in two ways. Farmers either do not include this crop
among their production possibilities or they are just not willing to
plant in large acreages with this crop due to the risk associated with
any new crop. Because of this situation, two alternative plans were
developed, one not including Maryland tobacco and another including
Maryland tobacco, (b) Watermelon acreage is restricted due to two con
ditions. Disease build-up prevents planting watermelons on the same
plot two years in a row. Also, severe price fluctuations at harvest
can introduce high risk. Thus a maximum of 25 acres was allowed for
watermelons.
Restrictions arising- from- j-nstitajtionalr.-ni#i factor markets tend to misallocate resources, and the scope of this
study did not include these aspects.
The purpose of the foregoing farm situation analysis was to
determine differences in the results obtained with respect to income
levels, enterprise organizations and total resource requirements. The
information obtained out of these alternatives might well reflect the
different and relevant economic opportunities that crop farmers are to
face since these combinations of farm situations result in substantial
changes in income and enterprise organizations.

50
The Initial Tableau--Procedure of Analysis
As indicated earlier in this chapter, the maximization of net
revenue was determined by linear programming techniques. After describ
ing the components of the initial tableau, a brief recount of the dif
ferent programs designed to achieve the objectives of this work is
presented.
The initial tableau for the simplex method of solution, Table
7, contains all basic input-output coefficients which were organized in
32 columns and 42 rows. These coefficients reflect the resources re
quired by each activity represented by each column. All negative
coefficients in the matrix, except for those in row 01, indicate addi
tions to the system, and all positive coefficients indicate requirements.
By-means of an iterative- procedure* different--combinations- of enter
prises were systematically evaluated until an optimum organization of
enterprises, with the number of units of each enterprise, was obtained :
which produced the greatest profit for a crop farm while optimizing the
use of resources.
In the tableau, columns 01 through 20 are crop growing and
harvesting activities. The return coefficients (row 01) for these
columns are negative because they represent the cash expenses related;
to these producing activities. The output from these activities was
placed in transfer rows (rows 50 to 57).
The model permitted two alternatives in the production of most
enterprises. These alternatives were those ones related to harvest with

51
owned machinery and custom harvest. These enterprises were peanuts
(colurns 01 and 02), corn, irrigated and non-irrigated (columns 06
through 09), wheat (columns 10 and 11), grain sorghum (columns 12 and
13), double crop wheat-sorchum (columns 14 and 15), soybeans (columns
16 and 17), and double crop wheat-soybeans (columns 18 and 19). Regard
ing systems of harvesting, flue-cured tobacco (columns 03 and 04) also
had two alternatives. These alternatives consisted of mechanical harvest
ing and conventional or hand harvesting. Only one production alternative
for the other crop activities, Maryland tobacco and watermelons (columns
05 and 20, respectively) were included.
Columns 21 through 28 are crop selling activities. The return
coefficients represent the price per unit received by farmers, therefore,
these coefficinets are positive. The selling procedure was performed
by using the product transfer rows.
Columns 29 and 30 permit the purchase of a tobacco harvester and
a combine respectively. These activities are bounded alternatively at
zero and one units, providing the information to evaluate custom harvest
versus owned machinery harvest. The return coefficients for these
activities are negative since they represent the annual cost of this
machinery. The field-work time purchased with each tobacco harvester
is 357 hours, and for each combine this time is 500 hours. These field
work times are used by the producing acitivies through the appropriate
transfer rows 46 and 47.
Columns 31 and 32 provide for leasing of allotments for peanuts
and flue-cured tobacco respectively. The return coefficients of these

52
activities are negative and represent the cost of leasing one unit of
allotment. The -1 coefficients in these columns, lined to the allotment
constraints (rows 44 and 45), indicate additions of units of allotments
to the current constraint. The leasing of peanut allotment is upper-
bounded at 80 acres, and the leasing of flue-cured tobacco allotment
is upper-bounded at 42 acres or approximately 90,000 pounds.
As for the rows in the matrix, row 01 represents the objective
function of this study, which is the profit equation to be maximized.
As stated earlier, this equation calculates the maximum net revenue for
each program. According to the adopted definition of net revenue, no
provisions were made to meet fixed costs in the model itself, therefore,
the fixed cost component must be subtracted from the value of the program
before any estimate of net income is imputed to land and operator labor
and management.^
Rows 02 through 13 represent the availability of operator labor
on a monthly basis (see Appendix Table 24). These equations restrict
the production activities to the amount of labor specified as constraints.
The coefficients in the tableau indicate the amount of operator labor
required to produce one acre of the different enterprises. Whenever
needed and whenever possible, transfer of labor between two consecutive
months is considered. This procedure implies additional column activities
in the matrix but this is not shown in the initial tableau.
9/
See Appendix Table 26 for returns adjusted for fixed costs
involved in each optimal plan.

53
Rows 14 through 25 and rows 30, 34, and 36 are related to machin
ery requirements. Coefficients for large tractor and combine require
ments are in the tableau. The level of constraint for these rows is
zero (unconstrained) so that the solution provides for the level of
machindery required on a monthly basis. As provided for in this model,
no time requirement of machinery can exceed the operator labor available.
As seen earlier,in this chapter, the cropland requirement was
set at three different levels (250 acres, 400 acres, and unconstrained).
In row 38 of the initial tableau, the cropland constraint is set at
zero, or unconstrained, which assures that this equation calculates the
amount of cropland required to optimize returns given all other restric
tions. The other two alternatives in this resource availability were
handled simultaneously in the model by using the "multiple right hand
side" procedure [1, pp. 71-73].
As for the operating capital, row 40 in the initial matrix shows
the capital constraint at the starting level of $20,000. Through the
use of the "parametric routine" [1, pp. 124-129] capital increases were
considered at intervals of $20,000 and up to an "unconstrained" level.
The coefficients of operating capital requirements were determined by
the annual variable costs per acre for each activity.
Rows 44 and 45 are for complying with the government provisions
on peanuts and flue-cured tobacco allotments. Constraints of 13.9 acres
for peanuts and 4,399 pounds for flue-cured tobacco are placed, However,
as pointed out earlier when describing the column activities, these limits
in production can be expanded by the leasing of allotments.

54
Rows 46 and 47 relate to the activities of purchase of tobacco
harvester and combine machinery. These rows facilitate the transfer of
field-work time purchased to be used in the producing activities so that
no more than what is purchased can be used.
Rows 50 to 57 are crop transfer equations permitting the amount
produced in the crop producing activities to be sold through the selling
activities.
The programs designed to achieve the objectives of this analysis
were classified into two sets of plans. The first set was comprised of
those plans associated with the different farm resource levels and the
product mix alternatives. The second set of plans considered the situa
tion regarding the peanut program as expressed by the allotment provisions
and price support policy.
The first set of plans was basically designed to comply with
the overall purpose of comparing results when three criteria of farm
size were optimized while maximizing returns. In order to make these
comparisons, all those plans formed by the combinations of the different
resource alternatives were analyzed simultaneously. Then later the
product mix alternatives were introduced by appropriate changes in the
basic intitial model. In other words, a first computer run was made
including in the model all the enterprises.and considering all those
stated situations in cropland and operating capital availability, as
well as the alternatives in types of harvesting. Then further, similar
computer runs were made, first, excluding flue-cured tobacco and allowing

55
peanuts as the allotment crop, and second, excluding peanuts and allowing
flue-cured tobacco as the allotment crop, and third, excluding both
peanuts and tobacco enterprises.
In the second set of programs, the possibility of "unrestricted"
peanut production was analyzed and the potential effects of abolishing
the peanut program on the area's product mix and the acreage response
to declines in peanut prices were determined. This task was attained
by first selecting one representative farm resource situation for the
peanut industry, and second, by running a computer program that included
parametric procedures to obtain solutions for declines in peanut prices
from 22 cents down. evaluated were, first, all enterprises included, second, Maryland to
bacco excluded, and third, both Maryland tobacco and flue-cured tobacco
excluded.
As can be seen, a study of this nature, with many alternative,
plans in the solutions, can provide a great variety of information.
However, the main criteria in deciding the type and amount of informa
tion used in the presentation and analysis of the results was whether
the variations in the alternative crop farm situations resulted in
substantial changes in the optimum enterprise organizations and associ
ated income levels.

Table 7Basic form of the simplex tableau used to compute optimum plans
for crop farms in North and West Florida
Row No,
Rescript ion Row Type
Unit
Constraints
01
Returns
N
Dollar
02 Labor:
January
L
Hour
208
03
February
L
Hour
192
04
March
L
Hour
208
05
April
L
Hour
234
06
May
L
Hour
234
07
June
L
Hour
260
08
July
L
Hour
260 .
09
Aug.u st
L
Hour
260
10
September
L
Hour
260
11
October
L
Hour
234
12
November
L
Hour
234
13
December
L
Hour
208
14 Large Tractor:January
N
Hour
0
15
February
N
Hour
0
16
March
N
Hour
0
17
April
N
Hour
0
18
May
N
Hour
0
19
June
N
Hour
0
20
July
N
Hour
0
21
August
N
Hour
0
22
September
N
Hour
0
23
October
N
Hour
0
24
November
N
Hour
0
25
December
N
Hour
0
30 Combine:
May
N
Hour
0
34
September
N
Hour
0
36
November
N
Hour
0
38 Cropland unconstrained
N
Acre
0
40
Operating Capital
L
Dollar
20,000
44
Peanut allotment
L
Acre
13.9
v 45
Tobacco allotment
L
Pound
4399
46
Tobacco harvester
row
L
Hour
0
47
Combine purchase
row
L
Hour
0
50
Peanuts transfer
L .
cwt
0
51
Flue-cured tobacco
transfer
L
Pound
0
52
Maryland tobacco
transfer
L
Pound
0
53
Corn transfer(grain)L
Bushel
0
54
Wheat transfer
L
Bushel
0
55
Grain sorghum
transfer
L
cwt
0
56
Soybeans transfer
L
Bushel
0
57
Watermelons transferL
Bushel
0

57
Table 1(continued)
Peanuts Flue-Cured Tobacco
Row No.
Own
Harvest
01
Custom
Harvest
02
Mechanized
Harvest
03
Conventional
Harvest
04
01
-269.56
-274.92
-810.37
-870.91
02
3.34
3.34
03
1.54
1.54
04
.85
.85
5.37
5.37
05
. .60
.60
.74
.74
06
.86
.86
1.38
1.38
07
- .72
.72
08
1.29
1.29
09
10
2.99
2.99
. 11
12
.60
.60
13
.89
.89
14
1.0
1.0
. 15
16
.74
.74
.52
.52
17
.52
.52
18
.33
.33
19
.62
.62
1.0
20
1.50
21
.50
22
1.0
23
24
.52
.52
25
30
34
36
38
1
1
1
1
40
269.56
274.92
810.37
870.91
44
1
1
45
2100
2100
46
6
47
50
-30
-30
51
-2100
-2100
52
53
54
55
56

58
Table 7(continued)
Row No.
Maryland
Tobacco
Irrigated Corn
Own Custom
Non-Irrigated Corn
Own Custom
Harvest
Harvest
Harvest
Harvest
05
06
07
08
09
01
-737.98
-176.82
-200.15
-114
-124.83
02
1.18
.55
.55
.55
.55
03
04
1.38
.60
.60
.60
.60
05
.70
.38
.38
.38
.38
06
1.40
.72
.72
.72
72
07
.63'
08
4.50
09
5.30
.69
10
.81
11
12
13
.30
.30
.30
.30
14
1.02
.48
.48
.48
.48
15
16
.52
.52
.52
.52
.52
17
.33
.33
.33
.33
18

.31
.31
.62
.62
19
20
21
22
23
24
25
.26
.26
.26
.26
30
34
.50
.40
36
38
1
1
1
1
1
40
737.98
176.82
200.15
114
124.83
44
45
46
47 .50 .40
50
51
52 -1500
53
54
55
56
57
115 -115
-65 -65

59
Ja ble 7 (continued)
Wheat
Grain Sorqhum
Wheat-Sorghum
Row No.
Own
Custom
Own
Custom
Own
Custom
Harvest
Harvest
Harvest
Harvest
Harvest
Harvest
10
11
12
13
14
15
01
-73.35
-79.24
-102.99
-108.72
-172.57
-183.98
02
.55
.55
03
04
.30
.30
05
.38
.38
06
.55
.72
.72
.55
07
-
.98
.98
08
.36
.36
09
10
.69
n
.85
.85
.85
.85
12
.46
.46
1.10
.46
13
.30
.30
14
.48
.48
15
16
.26
.26
17
.33
.33
18
.62
.62
19
.85
.85
20
.31
.31
21
22
23
.74
.74
.74
.74
24
.40
.40
.40
.40
25
.26
.26
30
.40
.40
34
.40
36
.40
38
1
1
1
1
1
1
40
73.35
79.24
102.99
108.72
172.57
183.98
44
45
46
47
.40
.40
.80
50
51
52
53
54
-25
-25
-25
-25
55
-36
-36
-29
-29
56
57

U
Table 7 (continued)
Row No.
Soybeans
Own Custom
Harvest Harvest
16 17
Wheat-Soybeans
Own Custom
Harvest Harvest
18 19
Watermelons
20
01
-88.50
-94.28
-158.32
-170.08
-237.11
02
.55
.55
.55
03
1.05
04
.69
05
.60
.60
1.15
06
.38
.38
.55
5.46
07
.72
.72
.98
.98
08
.72
.72
09
10
11
.85
.85
12
.58
1.01
.46
13
.30
.30
.30
14
.48
.48
.48
15
.26
16
17
.52
.52
18
.33'
.33
19 .
.62
.62
.85
.85
20
.62
.62
21
22
23
.74
.74
24
.40
.40
25
.26
.26
.26
30
.40
34
36
.40
.40
38
1
1
1
1
1
40
88.50
94.28
158.32
170.08
237.11
44
45
46
47
.40
.80
50
51
52
53
54
-25
K
ro
tT\
55
56
-30
-30
-25
-25

61
Table 7 (continued)
Row No.
Peanut
Sale
Flue-Cured
Tobacco Sale
Maryland
Tobacco Sale
Corn
Sale
Wheat
Sale
Grain
Sorghum
Sale
21
22
23
24
25
26
01
18
1.10
.95
2.50
3.50
4.0
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
30
34
36
38
40
44
45
46
47
50
51
52
53
54
55
56
57

62
Table 7(continued)
Row No.
Soybean
Sale
27
Watermelon
Sale
28
Tobacco
Harvester
Purchase
29
Combine
Purchase
30
Rent
Peanut
Allotment
31
Rent
Tobacco
Allotment
32
01
5.50
.03
-4487
-4097
t
cn
o
-.11
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
30
34
36
38
40
44
45
46
47
50
51
52
53
54
55
56
57
3450
-357
1500
-500 .
60
-1
.11
-1

CHAPTER IV
OPTIMUM ENTERPRISE ORGANIZATIONS FOR
ALTERNATIVE CROPLAND AND OPERATING CAPITAL SITUATIONS
This chapter .deals with an evaluation and comparison of effects
on optimal enterpise organizations and on income levels of alternative
farm resource and enterprise situations. Overall, the analysis is aimed
at the evaluation of crop production alternatives in order to maximize
returns in specified resource situations.
Although the analysis was performed for all the alternative
farm situations originally considered, this discussion of results is
limited to the cases where variations in the alternative crop farm
situations resulted in substantial changes in the optimum plans and
resulting income levels.
As for the harvest systems included, results relate to own-
machine harvest. The possibility of having only custom harvest was
discarded, and the discussion of custom harvest was restricted to
those instances where it was necessary to supplement own-machine harvest
whenever operator labor at harvest time was too limiting.
Custom harvest was not discussed separately because the optimal
enterprise organizations obtained were very similar to those of own-
machine harvest. The pattern of changes in the product combinations
and in the levels at which each enterprise came in the plans, followedthe
63

64
same trend as resource levels were increased. Furthermore, the gap
in the value of the programs between both systems was small and became
smaller at higher levels of operating capital. In other words, for
both systems, at a given resource situation, the optimal combination
of enterprises as well as the levels at which each enterprise came in
the plans, were the same or very similar. If opeating capital and/or
farm size were increased, the resulting changes in the mix of enterprises
and their levels, were quite similar in direction and magnitude. Finally,
own-machine harvest, and not custom harvest, was chosen due to the fact
that for the study area as a whole, own machine harvest is the most
common case among crop farmers.
Because of the high profitability of watermelons under the
assumed price conditions, the preliminary analysis indicated watermelons
usually entered the optimal solutions at the upper limit allowed in
the model. Since this was generally the case at alternative resource
levels, watermelons were not included in the final analysis. Water
melons are not an alternative that is considered by a majority of
farmers in the study area due to disease build-up and severe price
fluctuations at harvest. Nevertheless, watermelons may be recommended
in optimum plans wherever the above restrictions are not present.
Irrigated corn was excluded from basic analysis due to difficul
ties arising from the integer nature of center-pivot irrigation systems.
However, this enterprise was evaluated for selected farm situations by
forcing this activity into units determined by the size of the irriga-

65
ti on system. Results on this regard are presented in a later section
of this chapter.
In the farm resource situations considered, the basic level
of operating capital was $20,000. However, results were tabulated
starting at $40,000 due to the fact that optimal plans at the basic
$20,000 level were severely constrained by operating capital, and
thus results were limited to a few acres of the most profitable crop,
usually flue-cured tobacco, depending on the mix of enterprises being
considered. Operator labor was restricted to one man-equivalent on
a monthly basis.
Before presenting the analysis of optimal crop plans, discussion
of the harvest systems in flue-cured tobacco situation is in order.
Hand-Harvest System vs. Machine Harvest System
in Flue-Cured Tobacco
In the flue-cured tobacco enterprise, a break-even analysis in
a partial budgeting context was performed to evaluate the purchase of
a mechanical harvester. The basic approach used was to replace the
hand-harvest system if its annual net revenue per acre falls below
the annual net revenue per acre from the machine harvest system. The
break-even analysis indicated that only at flue-cured acreages higher
than 74 acres, is it advisable to shift from hand to machine harvest.
However, preliminary solutions including machine harvest alternatives
showed that flue-cured tobacco never reached acreages high enough to
justify mechanization. Therefore, the machine-harvest system was

66
dropped from the crop activities in the analysis, and only hand-harvest
was left as an alternative.
Although in general, machine harvest systems are justified only
in large acreages, some flue-cured tobacco growers do go into mechanized
harvest at acreages much lower than the estimated break point. This
situation is understandable since although the decision to mechanize
is primarily based on the economics of costs and returns, other factors
like the producer's desire, or the extent to which adequate sized units
can be aggregated to economically adopt mechanical harvesters, influence
the final decision. The present use of mechanical harvesters may be
explained by risk considerations in procuring harvest labor at peak
seasons as well as prospects for modifications in the tobacco legisla
tion regarding the allotment system.
The results of this study showed that hand harvest was the best
alternative and no harvest mechanization should be considered unless
flue-cured acreage exceeded 74 acres. This statement assumes that labor
was available for hiring during peak seasons. If farmers are not able
to stand the risk arising from the uncertainty in labor supply at
harvest time, or if they have the desire to use mechanical harvester,
then they may use the machine-harvest system.
Although consolidation of flue-cured tobacco allotments has
occurred through leasing, more flexibility is needed if growers are
to optimize the returns from mechanical harvest. The present tobacco
allotment and quota system, insofar as it inhibits the formation of

67
larger producing units, is a barrier to adoption and optimal use of
machine-harvest systems.
Optimum Plans Including All Enterprises
1/
Eight crops represented in eighteen growing and harvesting
activities were considered as profitable alternatives for those areas
where flue-cured tobacco as well as peanuts are suitable enterprises.
Grain sorghum and wheat-grain sorghum did not enter the optimum solutions
in any of the resource situations considered. Therefore, these enter
prises are not emphasized in the discussion subsequent to this point.
While solutions were obtained for 12 cropland-operating capital situa
tions, only seven different plans resulted since operating capital was
limiting at its lower levels. For example, situations for 250 acres
$40,000, and for 400 acres$40,000 resulted in the same plan because
capital was.limiting before land or any other resource became limiting.
Table 8 shows optimum enterprise organizations, limiting resources,
marginal value products (MVP),^ and returns^./ for each of the final
cropland and operating capital situations.
^Irrigated corn was not included here. As indicated earlier
it is evaluated in a later section in this chapter.
2/The MVP of a resource represents the amount that returns could
be increased by utilizing one more unit of the restrictive resource.
Stated negatively, it is the cost of letting one unit of that resource
remain idle. Stated positively, it is the price that can be paid for an
additional unit of that resource.
3/As stated earlier, this value represents returns over variable
costs or cash expenses, and therefore it does not give an accurate
estimate of the profitability of the resources utilized. In Appendix
Table 26, a summary of the returns adjusted for fixed costs involved in
each plan is presented.

Table 3.Optimum plans for alternative levels of cropland and ope*at*r.g capital on. North and West Florida farms; Plans including all enterprises
Iter.
l!ni t
250 acres
. -
1
400 acres^
Unconstrained
?/
acreage-'
$40,000
$60,000
iiO.t'OO 1
$30,000
$100,000
$100,000
$120,000
CROPS
Peanuts
Acres
13.9
13.9
13.9
13.9
13.9
Flue-cured tobacco

3E.4
38.7
30.1
30.1
30.1
30.1
30.1
Maryland tobacco
1*
25.0
25.0
25.0
25.0
25.0
Corn (non-irrigated)
Wheat

29.3
155.7
. 131.5-28.3*
Soytoar.s

1S4.2
131.0
236.2
235.2
139.2-47.1*
170.7-65.5*
Wheat-soybeans

16.6
65.5
25.3-35.6*
65.4*
rescues 1!
Labor: January
Hours.
203 (71.3)
203 (43.2)
208 (44)
208 (46) .
March

203 (47.6)
2Cf. (210.7)
203 (94.7)
208 (195.5) 208 (105) .
208 (192)
Ro.-n
"
234 (G)
234 (0)
224 (10.8)
234 (10.7)
Ka/
"
234 (10.3)
234 (10.7)
June

260 (43.7)
260 (43.7)
260 (47.6)
Oct.
u
234 (3.S)
Nov.
H
234 (11.4)
234 (11)
Allofrent: tobacco
Pounds
1,j,69.c96
( 2ofi>,s*>
1 u'76,942
. -p*sp
(,1u/$8,820
, ,rlMSe
''u58,830
, ...Lease
v 58,330
, ...Lease
'58,830
peanuts
Acres
(9.46)
(69.2)
(45.2)
(42.7)
(45.3)
Cropland
Acres
35.4
222.9
2SO (76.5)
321.9
400 (14.2)
526.4
500.6
Operating capital
Dollars
40,000 (1.1)
60,000 (.86)
72,432
30,000 (.42)
89.69 5
100,CO0 (.04)
104,572
RETURNS
. Dollars
41,724
59,870
66, r;5
71,779
75,451
76,473
76,651
"The asterisk indicates the aerease to be custom harvested. Otherwise harvesting Is performed usina own harvesting machinery,
this farm size, solutions for $40,000 and $60,000 are the same as those at 250 acres of size.
2/
At this farm size, solutions for $40,000, $50,000 and $30,000 are the same as those at 400 acres of size.
^Figures within parenthesis represent the MVP of limiting resources.

69
250-Acre Crop Farm
For this farm size, operating capital was varied up to $80,000.
As a result, three different farm organizations were obtained.
At $40,000 of operating capital level, the production of 35.4
acres of flue-cured tobacco was the only activity included. This
activity provided substantially greater returns than the next most
profitable crop and used all the available operating capital. This high
profit crop is an intensive user of capital. The potential benefit from
expanding this crop by using additional operating capital was high at
this point. This can be seen by looking at the MVP of operating capital
and tobacco allotment. At the solution, an additional dollar would
have a 110 percent rate of return, which is by far higher than the
9.5 percent market rate of return for capital assumed in this study.
An additional pound of tobacco allotment would generate 23 cents, as
compared to 11 cents per pound assumed as the cost of this allotment.
The value of the program was $41,724, which revealed a high
returns situation for this resource alternative.
At $60,000 of operating capital, flue-cured tobacco and soy
beans were in the optimum organization of enterprises. Additional
operating capital allowed for a higher acreage in tobacco, but its
expansion was restricted by March labor. Soybeans did not compete
with tobacco for March labor and 184 acres were included in the optimum
solution,

70
Operating capital was again the limiting factor in the solution
and its marginal rate of return at this point was a high 86 percent.
Also, an additional hour of operator labor in March would generate
$47.60 extra as it was restricting a high profit enterprise like tobacco.
Returns for this solution amounted to $59,870. The availability
of an additional $20,000 in operating capital increased returns by
$18,146.
At $80,000 of operating capital, two additional enterprises
came into the optimum plan, peanuts in the amount of its allotment
and Maryland tobacco at its upper limit. It is interesting that flue-
cured tobacco acreage went down to 30.1 acres, a level that seems to
be its equilibrium point of production since the MVP of its allotment
equaled the marginal cost of an additional unit of allotment. The
joint profitability of peanuts and Maryland tobacco seemed to be high
enough for them to stubstitute for flue-cured tobacco.
The additional cropland used for this situation was relatively
small. With land reaching the limit, soybeans acreage was reduced by
three acres to allow for the acreage of peanuts and Maryland tobacco.
Low MVP and upper limits nn the intensive-type crops, prevented a
higher substitution for soybeans.
When operating capital and cropland go up, an increase in re
turns should be expected. In this resource situation, an additional
27 acres and $12,480 of operating capital allowed the returns to increase
to $66,445, an increase of $6,576 or 11 percent.

71
In brief, in this farm size intensive-type crops dominated
the enterprise organizations for the specified resource situations.
The returns situation revealed high profitability of the resources
utilized.
400-Acre Crop Farm
For this farm' size, the solutions at $40,000 and $60,000 were
the same as those in the 250 acre farm size. This was due to the fact
that at those levels operating capital became limiting before cropland
did. The use of operating capital was increased to the $100,000.level
for the 400-acre farm. Any addition to this resource would not help
the returns situation because cropland and operator labor prevented
further expansion of the total output of the farm. Therefore, the
discussion below focuses only on those plans resulting from $80,000
and $100,000 of operating capital.
At $80,000 of operating capital, as in the former farm size,
peanuts and Maryland tobacco entered the solution at the amount of
the allotment and upper limit, respectively. Flue-cured tobacco
remained the same because it is restricted by January, March, and
April labor required for the plant bed and field work operations. The
additional cropland allowed for the extensive-type crops. Single-
cropped soybeans increased substantially and the double-crop enterprise
wheat-soybeans came in as a new activity filling up the last. 16.6 acres
of cropland,

72
As expected, more of the available.resources were used. Oper
ating capital and operating labor during January, March and April became
limiting.
An increase in operating capital from $60,000 to $80,000 for
the 400-acre farm increased returns by $11,900,,or about 20 percent.
An increase of 71.9 acres in cropland increased returns by $5,334.
At the $100,000 level of operating capital, the intensive-type
crops, peanuts, fue-cured tobacco, and Maryland tobacco, remained at
the same level. That is, peanuts were at the allotment limit, and be
cause MVP of its allotment was lower than its leasing cost, no expansion
of peanuts acreage was feasible. Maryland tobacco was at its upper
limit and flue-cured tobacco was at its equilibrium point of production.
The other enterprises in this plan were extensive-type crops.
Soybeans were the dominant crop with respect to acreage and its level
did not change from the former resource situation, perhaps due to the
fact that its expansion was restricted by limiting operator labor for
field work in January, April and June. Wheat and soybeans in double
cropping activity came into this plan at an incereased level, and
wheat as a single enterprise was a new enterprise. This result was
consistent with what was expected since at higher levels of cropland,
extensive-type crops should be anticipated in the solutions, provided
that no other resource limited their expansion.
This plan with increased extensive-type crops augmented the
returns by $3,672, or 5 percent above the former capital level.

73
In smmay, the plans obtained for this farm size seem to be
reliable. It was expected that crops supported by governmental programs
would appear in the optimum solutions, and this was the case. Flue-cured
tobacco, the cash crop with greater returns per acre than any other
corp, came up in all resource situations. Its complete allotment
was utilized and it was profitable to lease about 58,000 pounds. The
second and third most profitable crops, Maryland tobacco and peanuts,
started appearing in the optimum plans at the $80,000 level. This
occurred because these capital-intensive enterprises were competing for
operating capital with flue-cured tobacco. When capital was available,
peanuts and tobacco combined very well since they did not compete for
operator labor during peak months.
Extensive-type crops entered the optimum solutions at the
higher operating capital levels. At higher resource levels, emphasis
on these crops should occur. Single-cropped soybeans was a profitable
enterprise, and since its operator labor requirements did not compete
strongly with the labor requirements of peanuts and flue-cured tobacco
during the peak months, this enterprise entered the solutions in large
acreages when land and operating capital were available. Soybeans also
came into the plan as a second crop. Although its^yield as a second
crop was lower, its operator labor requirements came during months that
are less limiting. This allowed for double-cropped wheat to come into
the solutions. Wheat as a single crop proved to be profitable in the
last optimum plan, Although its returns per acre were low, it came to
the plan due to the fact that its labor requirements came at a time

74
when there was less competition for labor, Its largest operator labor
requirement was in October, when no other crop was using operator labor.
Grain sorghum, even with higher returns per acre than wheat, did not
come into the optimal solutions simply because its labor requirements
made it competitive with higher profit crops such as soybeans.
The rates of return to resource use at $80,000 seem to reflect
the best farm adjustment since higher resource levels implied declining
rates of return to resource use. This statement is corroborated with
the observations made in the next farm size situation.
Plans for the Unconstrained-Acreage Situation
For the unconstrained-acreage situation, solutions up to $80,000
of operating capital were the same as the 400-acre farm. This was due
to the fact that it was capital that first became 1imiting. The
$120,000 level of operating was the highest level of capital considered.
At the $100,000 level of operating capital, the enterprises
included in the optimal plan were the same as those in the 400-acre farm
size. Although the intensive-type crops remained unchanged, some dif
ferences arising from the inclusion of custom harvest in the extensive-
type crops were relevant to this solution.
Soybeans remaind at 236 acres, but 47 acres were custom
harvested. The resulting reduction in operator labor during harvest
time was transferred to wheat, which increased to 156 acres. Soybeans
also were produced as a second crop after wheat, and 40 acres out of
65 acres were custom' harvested.

75
Operator labor was a most prominent factor in this plan since
it was the limiting resource during six critical months. Operating
capital was also limiting; however, its low MVP (.04) suggested that
any increase in this resource was not advisable simply because its op
portunity cost, as given by the market interest rate (9.5 percent), was
much higher than its present marginal contribution to returns.
When comparing this solution with the corresponding one at 400-
acre size, it could be seen that the relatively small increase in re
turns ($1,000) did not justify the associated increases in resource use.
This situation of Tow returns to additional resources arose from
operator labor being limited in critical months to most enterprises.
At the $120,000 level of operating capital, the solution was
very similar to that at the $100,000 level. More acreage in extensive-
type crops was transferred to custom harvest operations, a larger
acreage of wheat was produced, more cropland was used and operator labor
became limiting during a seventh month. The rate of return on additional
resources was extremely low since the returns were increased by only
$178.
The fact that operator labor was limiting for seven months,
even though total operator labor was not exhausted, reflects what seems
to be the limits for a one-man farm operation in handling resources other
than labor, under the conditions specified in the model.
In summary, the additional use of resources implied in the uncon
strained solutions seems not to be profitable in view of the small in
crease in returns to additional cropland and operating capital.

76
Optimum Plans Excluding Tobacco Enterprises
The enterprise combination in this section of the analysis in
cluded peanuts as the allotment crop and excluded both flue-cured tobacco
and Maryland tobacco. A total of six crops were considered as enter
prises. The optimum plans here were designed for those areas where
tobacco is not suitable for cropping, or for areas like District II
where the production of peanuts accounted for 75 percent of the area's
crop production in 1973. Table 9 shows the optimum programs obtained
for each of the cropland and operating capital situations included in
the analysis.
250-Acre Crop Farm
At the $40,000 and $60,000 levels of operating capital the only
enterprises included in the optimum solutions were peanuts and soybeans.
They exhausted the cropland and operating capital available.
At the level of $40,000, operating capital restricted peanut
acreage to 69.8 acres and soybeans exhausted the remaining cropland.
About 56 acres of peanut allotment were leased. The MVP for peanut allot
ment at this point suggests that an expansion in peanut production could
be profitable if more operating capital were availabe. In fact, that
was also the case when an additional $20,000 of operating capital was
available. Peanuts went up to its upper limit allowed in the model.
This result was expected due to the higher profitability of peanuts over
soybeans. These two enterprises sean to combine very well as they ef-

Table 9. Opttaur. plans for alternative levels of cropland and operating capital on North and West Florida farms: Plans excluding tobacco
Unit
250 acres
i '00 acres
Unconstrained acreage^
Iter:
$40,030 {60,000
j 540.000 $60,000
i
. $30,000
$30,000 $100,000
CROPS
Peanuts
Acres
65. A
53.9 25.5
93.9
93.9
93.5
93.9
Corn (non-irrigated)
-
37.2
38.9
128.1
213.6
Wheat
H
37.9*
150.9*
Soybeans
**
180.2
156.1 331.2
267.2
267.2
193.9
86-9.3*
Wheat-soybeans

53.5*
124.4*
LIMITING RESOURCES -
later: January
Hours
March
208(13.8)
April
234(0)
234(0)
234(0)
234(37.5}
234(26.6)
May
-
2.34(37.5)
234(36.6)
june

266(42.1 )
250(54)
260(33.9)
260(41.7)
260(47.6)
October
234(3.3)
November
Allotment: Peanut
Acres
lease
(91) 55.9
lease ,
(186.5) 80.0 (9 ¡(1
lease
(109)50
mco c \ *v-ase
l 1 O o ,,
' C.J
260(7.0)
(158/6;^
260(11.0)
053)^s
cropland

250(30.3)
250(76.5) 361.1
55S.3
400(43.5)
557.6
6SC.7
Operating Capital
Dollars
4D,C00(.S2)
45,930 4 l,.0h( .52)
60,000{.43)
£0,197
GO,C00(.0-5)
53,310
RETURNS
Dollars
27,43y
30,533 30,808
40,335
40,915
43,320
44,455
*The asterisk indicates the acreage to be custom harvested. Otherwise harvesting is performed usi
-At this farra size, solutions for $40,000 and 560,000 are the same as those at 400 acres of size.
O/
-Figures within parenthesis represent the MVP of limiting resources.
big own harvest
ir.3 machinery.

78
ficiently share the use of. operator labor, a resource that did not
become limiting,
The value of the program at the $40,000 level was $27,439 in
dicating the high profitability of this plan. The optimum solution for
$60,000 of operating capital (although only $45,930 was used) increased
returns to $30,533, an increase of 11 percent. This solution resulted
in an increase of $3,094 in returns as a result of an increase of $5,930
in operating capital.
In brief, when tobacco was excluded, peanuts took its place and
came in strong in both solutions. It competed successfully with soybeans
in the use of resources, especially operating capital. In this farm
situation, expansion in size seems highly profitable.
400-Acre Crop Farm
In this farm size, the usage of operating capital varied from
$40,000 to $80,000 and, consequently, three different optimum plans are
presented.
At the $40,000 level of operating capital the optimal combination
of enterprises was the same as in the 250-acre farm size. However, since
more cropland was available and peanuts used more operating capital per
acre, soybeans came in stronger and dominated the solution with 331 acres.
If these results are compared to the corresponding ones in the
preceding farm size, this implied a strong substitution of peanuts for

79
soybeans that resulted in the usage of an additional 111 acres of crop
land and a 12 percent increase in returns. Therefore, an expansion of
the 250-acre crop farms is quite profitable.
At the $60,000 level of operating capital, corn entered the
optimum plan as a new crop. The additional $20,000 in operating capital
allowed the more capital-intensive peanut enterprise to substitute for
soybeans. Peanut acreage reached the upper limit of 93.9 acres allowed
in the model. The high MVP of an additional acre of peanut allotment
showed that if additional leasing were possible, peanut acreage would
*
increase further. Even though corn is less profitable than soybeans,
corn came in the optimal solution at 37 acres because operator labor
limited soybeans field operations during April and June.
In this solution, operating capital was a critical resource and
the returns of this program increased to $40,835, or 32.5 percent
higher than the $40,000 operating capital level.
At the $80,000 level of operating capital, the optimal solution
remained practically the same as at $60,000. This happened because only
3.7 additional acres of cropland could be brought into production, and
peanuts and soybeans had reached their maximum because of peanut allot
ment and labor restrictions. Consequently, since there were no signifi
cant changes in either the level of resource or optimum organization of
enterprises, this solution is of little relevance to the analysis.
In general, as more cropland and operating capital were made
available on the 400-acre crop farm, emphasis on extensive-type crops

80
was observed. The levels of soybeans were much higher than for the
250-acre farm. Corn came in as a new enterprise, and peanuts competed
successfully for operating capital, reaching its upper limit at the
$60,000 level. The availability of additional cropland was a prominent
factor in improving the returns situations, and the best resource adjust
ment should be toward the 400-acre crop farm with $60,000 of operating
capital.
Plans for the Unconstrained-Acreage Situation
In this resource situation, and up through $60,000 of operating
capital the same solutions were obtained as those in the 400-acre farm
size. This resulted because operating capital became limiting at levels
of cropland usage lower than 400 acres. Consequently, discussion of
results will be limited to the optimal plans for $80,000 and $100,000
of operating capital.
At the $80,000 level of operating capital, the optimum combina
tion of enterprises included peanuts, corn, soybeans, wheat and the
double-cropping activity wheat-soybeans. Since peanuts, the most profit
able and only intensive-type crop, remained at its upper 1imit, the changes
resulting from the additional resources available occurred among the
extensive-type crops.
Single- and double-cropped wheat as well as soybeans as a second
crop were new in the plan and included custom harvest in the solution.
Custom harvest was necessary because operator labor in May and November
was limiting the.harvest operations.

81
As it happened in the "all enterprises" case,, as larger amounts
of cropland were made available, operator labor became a most restricting
factor. It became limiting during six critical months. The increase in
operating capital from $60,000 to $80,000 increased returns by $2,845
or 6 percent, while the additional resources used were $20,000 of
operating capital and 159 acres of cropland, plus the implied additional
usage of operator labor.
At the $100,000 level of operating capital, although the addition
al capital allowed a substantial increase in the level of extensive-type
crops, the resulting profitability from this addition in the use of
resources turned out to be rather low (2.6 percent increase in the re
turns situation). Therefore, the optimum plan for this farm situation
should lead to similar observations as those stated in the "all enter
prises" case in the former section.
Optimum Plans Excluding Peanuts Enterprise
In this section, enterprise combinations included tobacco as an
allotment crop and excluded peanuts from the enterprises. Thus, a total
of seven crops were included in the development of optimal plans designed
for thoseareas where peanuts are not suitable for cropping, or aress
like District III where 96 percent of the flue-cured tobacco was produced
in 1973. The optimum programs for these enterprises are shown in Table
10.

Table 10.Optimum plans for alternative levels cf cropland and operating capital on iiortn and West Florida tarir.s; Plans excluding peanuts
Item
Unit
250 acres
400 acres
1/
Unconstrained
2/
acreage
S40.000
$60.030
Seo.ooc
$80,000
$100,000
TTooTcoo
$120,000
CROPS
Flue-cured tobacco
Acres
35.4
38.7
. 32.3
32,3
32.3
32.3
32.3
Maryland tobacco
M
25.0
25.0
25.0
\
25.0
25.0
Corn (non-irrioated)
M
Wheat
N
34.3
150.2
189.S
Soybeans

134.2
192.7 .
222.9
222.9
138,9-84.1*
144.5-73*
Wheat-soybeans

32.9
35.5
82-3.5*
42.4-43.1 *
LWITIS5 RESOURCES %
Labor: January
Hours
208(71.3)
203(43.2)
208(55.5)
208(58.7)
March

200(47.6)
203(210.7)
203(94.2)
203(195.5)
208(179.2)
208(136)
May
"
234(10.3)
234(10.4)
Jure

263(53.6)
260(43.7)
260(47.4)
October
H
234(4)
f%over.oer
1
234(11.4)
234(11)
Allotment: Tobacco
Pounds
, ,,.lease
v 1 '0
_iJ'76,942
/ incase
''''63,450
, ir,lease
(-16j63,450
( ll)1ease
' "'63,450.
, .-..lease
' "'63,450
^ 11 ;63,4£0
Cropland
Acres
35.4
2??.^
250(70.5)
313.1
400(14.2)
5.15.9
555.5
Operating capital
Dollars
40,000 0 09)
60,000{.36)
72.120
30,000(.42)
90,861
T DO .000(.04)
103,348
RETURNS
Dollars
41,724
59,870
60,313
70,816
74,e09
75.87T
76,005
The asterisk indi
cates the acreage to be custom
harvested.
Otherwise harvesting is performed
using own harvesting machinery.
At this farm size, solutions for $40,000 and $60,000 are the same as those at 250 acres of size
-'At this farm size, solutions for $40,000, $60,000 and $80,000 are the same as those at 400 acres of size.
^Figures within parenthesis represent the MVP of limiting resources.

The exclusion of peanuts, an intensive user of labor and operat
ing capital, was expected to cause substantial changes among less profit
able crops, that is, among the extensive-type crops.
In this enterprise-mix the optimum plans for $40,000 and $60,000
of operating capital were the same as those where all enterprises were
included (Table 8), which did not include peanuts either. For the plans
at higher levels of operating capital the exclusion of peanuts did cause
different plans than those in Table 8, but with no substantial changes
in returns. Therefore, the elimination of peanuts from the enterprises,
resulted in changes on acreage levels of the other-crops as well as
changes in levels of resource use.
The intensive-type crops (flue-cured tobacco and Maryland tobacco)
entered each optimum plan at about the same acreages. Flue-cured tobacco
entered the solution at 32.3 acres or 2.2 acres higher in those plans
where peanuts were excluded.
In the extensive-type crops changes occurred mostly because of
labor being limiting during critical months. Soybeans came into the
plans at 184.2 (solution for 250 acres and $60,000), increased to 222.9
acres (400 acres and $80,000), and stayed at that level because operator
labor in January limited its further expansion. This allowed wheat-
soybeans to enter that solution at 32.9 acres (400 acres and $80,000).
An additional $20,000 of operating capital permitted the increase of
wheat-soybeans to 85,5 acres, at which point June labor became limiting
and allowed single-cropped wheat to enter the solutions at 34,3 acres
(400 acres and $100,000). Wheat-soybeans stayed at 85,5 acres and single-

84
cropped wheat continued to increase as additional cropland and operat
ing capital were available.
Although soybeans being more profitable were expected to enter
at higher levels, this was not so due to the fact that January labor
was limiting this crop. Therefore, it was wheat-soybeans and sinble-
cropped wheat that reached higher acreage levels than those obtained
in Table 8. The reallocation of the resources freed by peanuts was
also reflected in somewhat lower total acreage for the plans, In general,
the use of resources was lower and the exclusion of peanuts did not
materially affect the returns situation.
Optimum Plans Excluding Tobacco and Peanut Enterprises
The development of optimum programs in this section included
only the extensive-type crops; consequently, these results should be
useful to those farmers who do not produce peanuts and flue-cured or
Maryland tobacco. Table 11 presents the optimum plans for these alterna
tive resource situations.
250-Acre Crop Farm
Only soybeans entered the optimum plan for this farm size as
it was the most profitable enterprise among those evaluated. If an
additional acre of land were available, returns would be increased by
$76.5. No other resource was limiting and any size expansion would be
highly profitable.

Table 11 .Optimum plans for alternative levels of cropland and operating capital on North and West Florida farms
Plans excluding tobacco and peanuts. .
250 Acres
400 Acres
l
nconstrained Acreage
Item
Unit
$40,000
$40,000
$40,000 .
$60,000 j $80,000
$100,000
CROPS
Corn(non-irriqated)
Acres
38.9
55.8
160.7 254.9
346.7
Wheat
ft
4 72.6* 142.6*
75*
Soybeans
W
250.0
361.1
354.7
288.2 191.5
88.4
Wheat-Soybeans
r
4.7
16-37.6* 124.6*
200.3*
LIMITING RESOURCES 1/
Labor: January
Hours
March
i;
208(1.9)
April
M
234(0)
234(56.8)
234(51.6) 234(37.5)
234(43)
May
it
234(51.6) 234(37.5)
234(43)
June
1
260(38.9)
260(29.9)
260(38) 260(41.7)
260(47.6)
Oct.
li
Nov.
It
234(.002) 234(7)
234(9.7)
Cropland
Acres
250(76.5)
400(48.5)-
415.2
575.1 713.6
710.4
Operating Capital
Dollars
23,625
37,892
40,000(.24) 60,000(.10) 80,000(.06) 88,859
RETURNS
Dollars
17,625
23,011
28,654
32,071 33,532
33,700
*The asterisk indicates the acreage to be custom narvested. Otherwise harvesting is performed using own
harvesting machinery.
^Figures within parenthesis represent the MVP of limiting resources.

. 86
400-Acre Crop Farm
Soybeans and non-irrigated corn entered the optimum plan for the
400-acre farm with soybeans being strongly dominant at 361 acres. Opera
tor labor limited soybeans during field operations in April and June,
allowing for corn to use the remaining 39 acres. Cropland was still
limiting and its point MVP was $48.5. Operating capital requirements
were $37,892 and the resulting returns were $28,011, or 59 percent higher
than in the former farm size.
Plans for the Unconstrained Acreage Situation
In this resource situation cropland was available to optimize
use of operator labor and capital. Optimum plans here were designed
to give some insight on profitable farm size adjustments as operating
capital was increased.
The results showed that as operating capital increased, there
were changes in the levels at which the enterprises entered the solutions.
After wheat entered the solution at the $60,000 level of operating capi
tal, no new activities came in the optimum combination of enterprises.
Solutions included non-irrigated corn, wheat, soybeans, and the double
cropping activity wheat-soybeans. Corn and soybeans appeared in solu
tions at higher acreages than any other crop. Corn steadily substituted
for soybeans at higher resource levels because April and June labor
restricted the expansion of soybeans. Wheat and wheat-soybeans were
supplementary in the programs, with increasing dominance of wheat-soybeans
at higher levels of operating capital.

87
As expected, high requirements of operator labor at harvest time
made custom harvest appear in the programs. As operator labor in May
limited harvest and haul operations in wheat, this enterprise always
entered custom harvest in the programs. Similar situations were ob
served in the double-crop activity wheat-soybeans.
April, May and June were the most limiting months in most
solutions and had marginal contributions to returns which could be of
substantial benefit had additional labor been made available during these
months.
The amount of cropland required to optimize the use of the
other resources in each plan was notably higher than the levels ob
served in previous enterprise-mix situations. This was expected since
extensive-type crops use larger quantities of land relative to the
amount of capital and labor used.
Operating capital stopped being a constraint at the $100,000
level, where only $88,859 were utilized. Operator labor was at the
limit for March, April, May, June and November and restricted the
further expansion in cropland or capital use.
Returns at the $40,000 level were $28,654. The MVP for capital
at that point was 24 percent, which implied that an increase in operating
capital would be highly profitable, This was verified at $60,000 of
operating capital where the MVP was IQ percent, and the new returns
were $32,071, or 11 percent higher than in the former solution. At the
$80,000 level, the MVP for capital dropped to 6 percent, and returns

88
increased to only $33,532, or 4 percent higher. At this level of
operating capital, the rate of returns was too low to cover the cost
of borrowing. The solution for the $100,000 level of operating was not
relevant since returns increased by only .5 percent, .
In summary, for farms specializing in extensive-type crops,
large cropland acreages are needed. For the 250-acre and 400-acre farms,
procurement of additional cropland would be profitable since the MVP for
cropland indicated high potential benefits from additional acreage. This
was corroborated by the substantial increases observed in the returns
situation as farm size went up.
The enterprise combination determined by $60,000 of operating
capital and 575 acres seems to be the optimum resource adjustment for
crop farms. A higher level of operating capital would not be advisable
since the MVP of this resource would drop to levels lower than its market
rate of return.
Optimum Plans Including Irrigated Corn Enterprises
This section analyzes the effects of irrigated corn in selected
farm situations that included corn as an enterprise.^ The analysis was
performed by forcing irrigated corn into the solutions in 140-acre size
units.
The selection of the evaluated farm situations utilized informa
tion of preliminary results and included those farm situations where
^./irrigated corn was not included in former programs due to pro
gramming difficulties that arose from the integer nature of the center-
pivot irrigation units, which cover 140 acres (Appendix Table 7).

89
irrigated corn entered the optimum solutions. In all cases, these
solutions comprised situations that did not include tobacco as an enter
prise. The acreages at which this crop came into these solutions
determined the number of 140^acre units at which irrigated corn was
evaluated. These acreages approached either one or two 140-acre units.
Tables 12 and 13 show the optimum crop programs when the irrigated corn
enterprise is incorporated on the farm for two enterprise situations:
tobacco enterprise excluded and both tobacco and peanut enterprises
excluded.
Irrigated corn was absent from solutions that included tobacco
apparently because these two enterprises competed for available labor
during five critical months, especially during January and March when
tobacco is an intensive user of labor in plant-bed operations. Being
far more profitable, tobacco competed successfully for the operator
labor available.
Plans Including Irrigated Corn and Excluding Tobacco
In discussing the effects of the presence of irrigated corn in
the optimum plans, one should consider whether one or two units of
irrigation were used. Results in Table 9 carrbe used as a basis for
discussing most of these effects.
As observed in Table 12, the inclusion of irrigated corn re
sulted in higher returns for the optimum solutions as compared to those
comparable programs where irrigated corn was excluded (Table 9),

Table 12.--Optimum plans
for selected levels of cropland and operating ca
pital on North and West Florida farms:
Irriaated corn included and
tobacco excluded
Item
Unit
250 acre
400
acre
Ur,const
rained acreaqe
. $60,000
iso.000
IW,$T0
SlO.C
0
CHIPS
Peanuts
Acres
93.9
93.9 '
47.1
93.9
93.9
47.1
Irrigated corn
It
140.0
140.0
230.0
140.0
140.0
200.0
Mor,-irrigated corn

43.6
vine at
H
120.7*
Soybeans
>
16.1
166.1
72.9
180.5
131.5
93.2
Wheat-soybeans
H
42.1*
99.7*
151.8*
LIMITING RESOURCES -f
Labor: March
Hours (Dol.)
202(15!)
203(30)
April
H
234(0)
234(0)
234(49)
234(33)
234(49)
May

234(49)
234(33)
234(49)
"
260(42)
October
.
November
n
234(7)
Peanut Allotment
(Col.) Acres
(128)J?*e
oJ
orair
.please
ltJ33.2
(')£
lease
{79)33?2e
Cropland
Acres (Dol.)
250(77)
403(76.5)
400(77)
456.3
U.J *T
572.0
Operating canital
Collars .
5fi,2dc,
71,75''
7?,39?
S0,n00(.32)
100,000(.06)
100,000(.32)
RETURNS
Dollars
35,313
46,793
45,555
50,206
52,735
55,439
The asterisk ir.c-.cates the acreage to be custom harvested. Otherwise harvesting Is performed using om harvesting machinery.
Irrigated corn could or.'.y enter the solution in 140-acre units
-^Figures within parenthesis represent the MVP of limiting resources.

91
In the first case, when 140 acres of irrigated corn were forced
in the optimum plans, it primarily affected the levels at which the
enterprises came into the optimum plans, except for the case of peanuts
which remained the same, Soybeans was the enterprise which was substi
tuted most as the operating capital restrictions were relaxed. In the
enterprise mix non-irrigated corn entered the optimum plan only in one
case. When 280 acresof irrigated corn were forced in the same plans,
neither non-irrigated corn nor wheat entered the solutions. Peanut
acreage decreased from its upper limit of 93.9 acres to 47,1 acres, and
soybeans also entered at reduced acreages. Thus, the extensive-type
crops acquired a significant dominancy in the solutions but at the
expense of some reductions in the levels of returns.
When comparing results in Table 12 with preliminary solutions
where irrigated corn was not forced at fixed levels, the value of the
programs in all cases was somewhat lower. These differences in returns
were brought about by the adjustments that took place in the acreage
of irrigated corn by forcing in this enterprise at 140 and 280 acres
respectively. Soybeans was the enterprise that responded in most cases
to these acreage adjustments by either increasing or decreasing its level.
For instance, in the farm situation of 250 acres and $60,000, the original
level of irrigated corn was 156,1 acres, and when this crop was forced
in at 140 acres, the remaining 16.1 acres were diverted to soybeans, an
enterprise that went up from zero to 16,1 acres. This adjustment in
acreage caused a reduction of $550 in returns,

y
In the two cases where 280 acres of irrigated corn were forced
in the solutions (two irrigation units), this crop was increased from
213.6 acres and some allocation and changes in the use of limiting
resources took place. In the farm situation of 400 acres and $80,000,
peanuts decreased from its upper limit of 93.9 acres to 47.1 acres, and
soybeans from 92.4 acres to 72.9 acres. The decrease in peanuts, an
intensive user of capital, allowed for a release of $5,680 of operating
capital. The value of the program decreased to $45,555, or 8 percent
less than the original solution. In the situation of unconstrained
acreage, peanuts again decreased slightly, while the same enterprises
in double cropping increased by 27.4 acres. Apparently, these changes
in the levels of the enterprise were brought about by a major realloca
tion of operator labor to the irrigated corn because March and April
labor was limiting
Plans Including Irrigated Corn and Excluding Peanuts and Tobacco
Table 13 shows the selected plans including irrigated corn when
only extensive-type crops were considered in the analysis. Thus, some
of the observations made from results in Table 11 still hold true,
but the presence of irrigated corn did cause these two sets of solutions
to differ substantially.
In the former case, at the 250-acre level of cropland, soybeans
strongly dominated solutions but inclusion of 140 acres of irrigated
corn forced its substitution. At higher levels of cropland (situation
of unconstrained acreage) the earlier optimum solutions also included

Table 13.Optimum plans for selected levels of cropland and operating capital on North and West Florida farms: Irrigated corn included, tobacco
an.1 ncar'it enteexcluded.
Iter.
Unit
250 acre
430 acre
Unconstrained acreage
So.liiJ
' 550,000
Sou, COT)
5S57S55 >1007K'C
Jlifl.iS
CROPS
. . V
Im gatea corn
Acres
140.0
140.0 280.0
140.0
140.0
280.0 280.0
280.0
ticn-irrigated corn
U
71.3
48.1
Wheat
It
.1-
116.9*
1 123.2*
90.3*
Soybeans
"
110.0
260.0 101.6
301.3
240.0
163.3 163.3
109.3
Wheat-soybeans
H
34-9.9*
83.7*
85.5* 145.5*
185.0*
LIMITING RESOURCES
Labor: April
Hours(Dol.)
234(0)
234(52)
234(38)
234(49) 234(41)
234(43)
May
234(24)
234(33)
234(49) 234(41)
234(43)
June
*.
260(33)
260(42)
- 260(33)
260(48)
October
H
260(2)
Soveir.se r.-
*
234(7)
234(10)
Cropland
Acres(2cl.)
250(76)
400(77) 381.6
435.3
657.2
523.8 712.5
712.7
Operating capital
Dollars
35,590
42,264 6C.G03(.S6)
60.300.10)
80,000(.05)
GO ,000(.32) 100,C00(.1C)
104,787
RETURNS
Dollars
22.410
33,885 3?.262
39,860
41,679
46,676 £0.987
51,050
*The asterisk ind
-^Irrigated corn
icates the acreage to be custom
could only enter the solution i
harvested. Otherwise harvesting is performed using own
n 140-acre units.
harvesting machinery.
^Figures within parenthesis represent the MVP of limiting resources.

94
non-irrigated corn, wheat and the double-cropping activity. Wheat-
soybeans, having lower profitability than soybeans, were the enterprises
replaced by irrigated corn. In most cases single-cropped soybeans
entered the new solutions at higher levels. As expected, the inclusion
of irrigated corn did benefit the returns situation, a benefit which was
much higher when two units of irrigation were considered. Results in
the resource situation of unconstrained acreage and $80,000 of operating
capital clearly illustrate this observation. When one irrigation unit
was forced into the solutions, returns increase by $8,147, or 24 percent.
When two irrigation units were forced, returns were augmented by $13,144,
or 39 percent.
When these results (Table 13) are compared to preliminary optimum
solutions where irrigated corn entered solutions without acreage restric
tions, the shifting of optimal levels of irrigated corn to fixed amounts
by either increasing or decreasing its level brought about changes in
the solutions which were quite similar ro those observed in Table 12.
In summary, the incorporation of irrigated corn into the crop
organizations allowed the following observations: irrigated corn did
not combine well with tobacco during critical months. Overall, the
inclusion of irrigated corn increased the returns in the optimal plans.
This effect was stronger in the case where only extensive-type crops
were allowed in the solutions. However, the fact that irrigated corn
had to be forced in solutions at fixed levels caused somewhat lower
returns than those that could be obtained if this activity could be
varied,

95
Irrigated corn combined well with peanuts when entered at 140
acres. However, when 280 acres of irrigated corn were included in the
plan peanut acreage was reduced by 46 acres.
In general, irrigated corn was a. good investment alternative,
especially for farms where only extensive-type crops were included.
With the exception of peanuts, irrigated corn always substituted for
crops with lower profitability, and in the case of two irrigation
units, this substitution was even larger. At lower acreages irrigated
corn was substituted for soybeans, however, at larger acreages other
enterprises were also substituted. When only extensive-type crops were
considered, irrigated corn substituted for non-irrigated corn, wheat
and the double-cropping activity wheat-soybeans, respectively, but
single-cropped soybeans generally entered solutions stronger.

CHAPTER V
OPTIMUM PLANS FOR PEANUT FARMS AND THEIR ACREAGE
RESPONSE FUNCTIONS TO PRICE CHANGES: THE PEANUT PROGRAM ABOLISHED
Changes in tHe peanut allotment and price support policies are
imminent. Due to this, policy makers and farmers in the study area
need to have some insight into the effects of different levels of
peanut prices on the acreage of this crop and on the cropfarm organiza
tion in general.
Objective three of this study dealt with changing peanut prices
and the corresponding results are presented below.l/ Overall, the
analysis attempted to develop some notions of the characteristics of
the optimum enterprise combinations and of the peanut supply for the
short run without acreage allotments, as continuous downward changes
in the price of peanuts occur. Firm level functions for the acreage
response of peanuts to price variations were developed. The relevant
additional assumption was that the government program for peanuts was
discontinued.
1/L inear programming is suitable for studying the effect of
changes in government farm programs on agricultural output. These
estimates should not be used for prediction purposes due to the fact
that they were derived from assumptions at "synthetic" firm level, and
also because they are normative and indicative of what should be if
the set of assumptions in this study hold true,
96

Optimum Plans for a Representative Farm
(400 Acres and $100,000 of Operating Capital);
Effects of Programming with Variable Prices
The model used in this section differs from the general model
constructed for the earlier analysis in that here a representative farm
size was selected, the procedure of programming with variable prices
was incorporated, and a higher yield of peanuts (4,000 pounds per acre)
was used. The size of the representative farm was defined as 400 acres
of cropland and $100,000 of operating capital.-?/ For this farm, three
enterprise compositions were evaluated: all enterprises included, Maryland
tobacco excluded, and both Maryland and flue-cured tobacco excluded. The
analysis was restricted to changes in prices of peanuts only and therefore
the assumption of constant prices for competing crops was implied. In this
way, acreage changes were calculated with peanuts and alternative crops be
ing substituted for one another in response to the peanut price variation.
Tables 14, 15 and 16 show the optimum enterprise combinations,
limiting resources, marginal value products (MVP) and returns for each
of the solutions obtained when the price changed downwards from 22 cents
to zero cents per pound.
Plans Including All Enterprises
Nine activities were considered as enterprises but a maximum of
six entered the optimum solutions. These activities were peanuts, flue-
-?/Initially, an additional farm situation where operating capital
and cropland resources were left unconstrained was also evaluated. These
results turned out to be similar to those obtained for the selected
representative farm.

cured tobacco, Maryland tobacco, wheat, soybeans and the double-cropping
activity wheat-soybeans. The continuous downward changes in the price
of peanuts originated a set of nine optimum solutions presented in
Table 14.
In all cases, peanuts entered the optimum plans at prices much
lower than the current price support of 18 cents per pound. The range
of prices over which the peanut response took place under the indicated
resource restraints started at 14.708 cents and went down to 12.345 cents
per pound.
Peanuts entered the solution at the maximum allowable (201.6
acres) at a minimum price of 14.708 cents per pound. The acreage levels
at which other crops entered this solution were 6.8 acres of flue-cured
tobacco, 32 acres of wheat (of this acreage, 26.8 acres were to be custom
harvested), and 159.6 acres of soybeans. Returns amounted to $82,903 of
which $63,181, or 76 percent was income from peanuts, a commodity that
in this solution accounted for 50.4 percent of the total cropland
available. Given the restrictions in the model, peanuts could not have
increased beyond 201.6 acres regardless of its price./ Thts was be
cause cropland, together with operator labor, was most restrictive,
the latter being limited in six critical months, especially in March
and June. For instance, at 22 cents per pound, the optimum solution
^/Higher peanut prices in the absence of allotments, probably
would cause farmers to try and procure more resources; rent or buy
more land, perhaps, or hire more labor. These situations could have
been reflected with a different set of resource assumptions, but this
analysis concentrated on the short-run effect of price changes on an
optimum one-man representative farm.

Tabla 14.--Effects of peanut price variations
on optimum plans for
400 acres of cropland and $100,000 of operating
capital in North
and West Florida
: Plans
including all enterprises^
Price of peanuts
I ten
Unit
Cents per pound -
Z2.000
14.703
14-653
13.659
13.572
13.479
13.394
12.346
12.345
0.00
Cr.5-5
rcarats
Acres
201.6
201.6
149.5
113.6
. 100.8
93.5 .
03,0
55.5
.8
0.0
rUs-cured tobacco^-
Acres
6.S
6-8
11.2
14.3
16.4
17.5
22.0
23.5
32.2
32.3
itaryla-.d tobacco
Acres
14.9
25.0
25.0
25.0
25.0
25.0
25.0
25.0
isr.-at
Acres
5.2-25.3*
5.2-26.8*
25.8*
21.9*
19.4*
1.9-16.3*
1=6.2
14.2
34.0
34.3
Soybeans
Acres
153.6
159.6
193.5
223.3
238.5
245.7
268.7
276.3
223.7
222.3
*nsdt-sc>c&ns
Acres
1.4*
4.0
5.4
84.3
35.5
i::'T!,;5 PES'UPCES
Operating labor: Oar..
Hours
208(43)
203(43)
208(43)
3r.
Hours
203(219)
208(219)
208(204)
208(210)
208(215;
203(215)
203(217)
203(155)
208(195)
203(135}
Apr.
Hours
234(11)
234(11)
234(50)
234(35)
234(11)
234(43)
234(40)
234(0)
234(0).
!'.ay
Hours
234(11)
234(11)
234(50)
234(35)
234(11)
234(11)
234(0)
uun.
Hours
260(30)
260(30)
260(26)
260(43)
260(80)
.250(54)
260(54)
260(54)
260(54)
260654)
Jjl.
Hours
260(261)
269(35)
260(29)
259(0)
Fue-cured tobacco
a . t t'.-er.t
Pounds (.
n)Jef?:
5,7**o
( ll)lease
'9,946
, lease
u M9.172
, ,,.lease
' *J25.7C0
, ,..lease
1-1 '29,957
/ lease
J32.375
( l!)leiSe r
' '4i,846 '
,,.lease
"'44,986
( ll)1eese
'"'63,180
Oj,Hvd
Creplane
Acres
400(3)
400(8)
400(8)
400(8)
400(8)
400(8)
403(14)
400(14)
400(14)
400(14)
Operating capital
.Dollars
30.537
80,587
85,113
S8.259
87.837
87,648
07,143
87,012
90,805
SO .861
?ITi;NS '
Dollars
141,692
82,903
82,573
78,057
77,703
77,359
77,139
74,811
74.803
74.809
'The asterisk indicati
^Prices of competing
es the aerea
crops were
i-a to be custom harvested. Otherwise harvesting is perforase using own harvesting machinery.
neld at current levels.
7f
The flue-cured tobacco enterprise included was that of hand or conventional harvest only.

TOO
remained the same except for the level of returns that increased by 71
percent as a result of this much higher price,
A very small decline in the panut price to 14.653 cents per
pound resulted in a decrease of 52 acres down to 149.6 acres. Re
sources released by peanuts were allocated to flue-cured tobacco and
soybeans. Maryland tobacco entered the optimum plan by substituting
for wheat, own-machine harvested. The pressure in the use of operator
labor was similar except that the higher level of tobacco acreage stressed
this pressure on March and April labor. Returns for this solution were
$82,573, down 4 percent from the former solution.
For prices of peanuts below 14.653 cents another optimum plan
resulted with the corner solution at 13.659 cents, or approximately
one cent reduction in price. Peanuts entered this program at 113.6
acres. Further reductions in acreage of peanuts were observed as its
price moved downwards slightly. It took an additional price reduction
of only .265 cents for peanuts to shrink its acreage from 113.6 acres
to 65 acres in a succession of three small price variations. The com
puted optimum plans introduced increased acreages of the flue-cured
tobacco, Maryland tobacco (at its maximum possible level), and soybeans,
as the major substitutes for peanuts, with wheat being reduced by 6.7
acres and shifted from custom to own-machine harvest. The pressure on
operator labor was somewhat reduced, with July labor ceasing to be
limiting. The usage of operating capital was rather stable, ranging
from $88,259 down to $87,148. Returns also reflected similar patterns,
ranging from $78,057 down to $77,139, or only a 1.2 percent reduction.

101
After the solution for the peanut price of 13.394 cents was
obtained, a price decrease of approximately one cent was required be
fore a new shift in the acreage response of peanuts occurred. The new
optimum plan at the price of 12.346 cents entered peanuts at 55.5
acres. The resources freed by peanuts were allocated to flue-cured
tobacco and soybeans, with no change in the combination of enterprises.
However, these adjustments in enterprise acreages brought about some
changes in the use of operator labor. May labor stopped being limitirig
and January labor was exhausted. Although operating capital usage re
mained practically at the same level, returns were reduced by $2,328,
or 3 percent lower.
The solutions were very sensitive to prices around 12.346 cents
For instance, it required a price decline of only .001 cents to obtain
a new solution. In this solution, although the level of peanut price
and the returns remained practically the same, the enterprise levels
in the optimum plan did differ substantially. Peanuts dropped to ,8
acres, or 54.7 acres less than the former solution. Flue-cured tobacco
wheat, wheat-soybeans substituted for peanuts, with the double-cropping
activity also substituting for 52 acres of soybeans. These adjustments
in enterprise levels were rather complex and took place after a real-
location of cropland and operator labor, a process that despite re
quiring $3,793 of additional operating capital, yielded an almost iden
tical level of returns, $74,809 or $2 less than the former optimal
solution.

102
At peanut prices lower than 12.345 cents, peanuts were eliminated
from the cropping pattern, However, that absence practically did not
affect the former optimum plan. The level of returns was the same at
$74,809.
In sum, as the price of peanuts was reduced with the prices of
competing crops remaining constant, peanut acreages declined. In all
solutions, peanuts entered the plans at prices much lower than the
18 cents per pound price support of 1975. The highest and lowest
peanut prices for which solutions were obtained were 14.708 cents and
12.345 cents per pound, prices that were 18.3 percent and 31.4 percent
lower than the support price, respectively. Flue-cured tobacco,
Maryland tobacco, soybeans and wheat-soybeans in double cropping proved
to be the major substitutes for peanuts with Maryland tobacco most
often entereing at its upper limit. While peanuts acreage decreased
from 201 to zero acres, flue-cured tobacco increased from 6.8 acres
to 32.3 acres, Maryland tobacco from zero to 25 acres, soybeans from
159.6 acres to 222.9 acres, and wheat-soybeans from zero to 85.5 acres.
Single-cropped wheat also decreased from 32 acres down to 14.2 acres,
with custom harvest being gradually eliminated from the solutions.
Plans Excluding Maryland Tobacco Enterprise
The exclusion of Maryland tobacco, a new enterprise in the
study area, permitted the development of optimum plans for those farms
where this crop is not an alternative. As shown in Table 15, five out
of eight enterprises entered the optimum solutions.

Tibie 15effects of peanut price variations cn_optimum plans for 400 acres of cropland and $100,000 of operating capital in North and West Florida: Plans
excluding Marvlana tobacco enterprise!/ .
Price of Peanuts
Item
Unit
f. ,
22.000
. 13.572
13.510
13.509
13.394
12.345
12.218
12.217
0.00
CROPS
Peanuts
Acres
20i.e
201.6
137.8
*24.0
36.7
59.3
22.9
4.6
0.0
Flue-cure tobacco^
Acres
6.8
6.8
16.9
15.1
23.4
29.3
35.1
33.0
38.7
Wheat
Acres
5.2-26.8*
5.2-26.8*
22.0
19.8
.15.5
11.5
24.7
31.3
32.9
Soybeans
Acres
159.6
159.6
223.3
£37.1
264.4
294.5
259.5
227.2-14.7*
219.2-18.3*
Wheat-soybeans
Acres
'
5.4
57.8
84.2
90.8
ii!':-:ss rscsces
Operator Labor: January
Hours
208(43)
203(49)
208(49)
203(49)
March .
Hours
203(219)
208 ( 21 9)
208(222)
208(222)
208(217)
1 203(195)
203(193)
233(49) /
2C31S3)
April
Hours
234(11)
234(11 )
234(0)
234(40)
234(0)
234(0)
234(0)
Bay
Hours
234(11)
234(11)
234(0) '
234(0)
June
Hours
25C(80)
260(80)
260(87)
260(87)
260(54)'
260(54)
260(47)
250(47)
260(47)
July
Hours
260(0)
260(0)
,
Kovetber
Hours
234(11 )
234(11)
234(11)
Hue-cured tobacco
allotment
Cropland
' Pounds
Dollars
<> 400(3)
, lease
v '9,946
400(8)
, .. .lease
'31,121
400(15)
, .lease
. t-1*>35,714
400114)
mlease
*'44,790
400(14)
ll)1ease
1 11'57,321
400(14)
( llllease
'* '69.333
490(5)
( mlf,ase
1 '76,426
400(9)
/ ,, .lease
''76,542
4C0(5)
Operating capital
Dollars
80,507
80,587
78,933
78,605.
77,959
*7,418
79,941
81,305
81,644
RFTJPhS
Dollars
141,692
73,747
73,405
73,405
72,956
70,469
70.352
70,352
70,352
7V: LStgr*3/. ir.d:cut's th acreage to fee custom harvested. Otherwise harvesting is performed using all harvest machinery.
^Prices cf competing cross were held at current levels,
2/ -
-The flue-cured tobacco enterprise includes was that of hand or conventional harvest only..
o

104
Results in this section were similar to those where all enter
prises were included. Similarities were evident in optimal combination
of enterprises. However, some differences were detected in some other
aspects of the solutions and they are the basis for the brief discussion
which follows.
Peanuts, at the prices considered, were the most profitable
crop after the tobacco enterprises, arid therefore was expected, together
with flue-cured tobacco, to utilize those resources freed by Maryland
tobacco. But this was not so for peanuts, apparently due to the fact
that peanut acreages were limited by the constraints in the model.
As the price of peanuts decreased, flue-cured tobacco and soy
beans continued substituting for peanuts. For this enterprise composi
tion the range of peanut price variations was narrower than in the
former case (Table 14), suggesting that in this case the acreage re-+
sponse of peanuts to price decreases was stronger. The price at which
peanuts entered the maximum allowable was 13.572 cents per pound, or
24.6 percent below its support price, and 1.136; cents lower thari in
the former case. Thus, the absence of Maryland tobacco allowed peanuts
to start being competititve at even lower prices.
Plans Excluding Both Flue-Cured Tobacco and Maryland Tobacco Enterprises
The exclusion of tobacco enterprises from the product composition
of the programs allowed peanuts to become the most profitable enterprise;
consequently its competitive potential increased greatly.. Table 16 shows
the optimum plans obtained as the price of peanuts decreased,

Table 16Effects of peanut price variations on optimum plans for 400 acres of cropland and $100,000 of
operating capital in North and West Florida: Plans excluding flue-cured tobacco and Maryland
tobacco]/
Price of Peanuts
Iter,
Unit
22.000
9.3398
9.1915
8.735
0.000
CROP
Peanuts.
Acres
201.6
201.5
189.8
148.6
Corn (non-irriga ted)
Acres
15.8
15.8
45.5
38.9
38.9
Wheat
Acres
23.1*
23.1*
Soybeans
Acres
159.6
159.6
142.6
212.5
361.1
Wheat-scybeans
Acres
21.1*
LATINS RESOURCES
Operator Labor: April
Hours
234(37)
234(37)
234(34)
234(0)
234(0)
May
Hours
234(37)
234(37)
234(34)
234(0)
June
Hours
260(45)
260(45)
260(45)
260(39)
260(39)
July
Hours
260(369)
260 (4)
260(0)
Cropland
Acres
400(8)
400(8)
400(11)
400(49)
400(49)
Operating capital
Dollars
74,662
74,662
75,185
65,596
.37,892
RETURNS
Dollars
133,617
31,550
30,425
28,011
28,011
*The asterisk indicates the acreage to be custom harvested. Otherwise harvesting is performed using own
harvesting machinery.
Prices of competing crops were held at current levels.
O
CD

106
The price required for peanuts to be brought into the solution
at its maximum allowable acreage was 9.3398 cents per pound, or 48
percent lower than the price support of 1975. At this price the crop
organization was the most profitable with $31,550 of returns, of which
$19,892, or 63 percent corresponded to peanuts. Other enterprises in
the plan were non-irrigated corn, wheat and soybeans, the latter with
159.6 acres, and wheat with 23.1 acres to be custom harvested. Operator
labor was critical to field operations in all crops except wheat, which
was limited by labor at harvest time. The ratio of operating capital
to returns was high and equal to 2.36.
At peanut prices lower than 9.3398 cents and down to 9.1915
cents, peanuts were brought into the optimum plan at 189.8 acres, or
5.8 percent less. Non-irrigated corn increased at the expense of peanuts
and single-cropped wheat was substituted by wheat-soybeans in double
cropping. The pressure on operator labor remained similar and the
ratio of operating capital to returns was still high and equal to
2.47.
As peanut price moved down, a new optimum plan was obtained
with its solution at 8.785 cents. Peanut acreage response to this
lower price resulted in an acreage of 148.6 acres or 21.7 percent less.
As July labor ceased being limiting, the double-cropping activity
wheat-soybeans went out of the program. With less pressure on available
resources and higher relative price ratios soybeans substantially in
creased its acreage up to 212.5 acres, or 49 percent higher, at the
expense of all other enterprises in the program. The ratio of operating

107
capital to returns was still high at 2,34, and returns continued to
decrease, this time by 7,9 percent.
At peanut prices lower than 8,785 cents per pound, the net
return on peanuts became lower than the net reutrn on soybeans. Peanuts,
then, were completely substituted for by soybeans, which increased to
261 acres, or 69.9 percent higher than in the former solution. Soybeans
did reach a limiting factor which allowed non-irrigated corn to remain
in the program. The absence of peanuts from the plan resulted in a much
lower requirement of operating capital, which lowered the operating
capital-returns ratio to 1.25. In terms of the whole farm operation,
this new solution meant a readjustment in resource use with an identical
level of returns ($28,011).
Overall, the exclusion of tobacco enterprises had notable effects
on both the most profitable crop programs at each new relative price of
peanuts and on the peanut price levels at which changes occurred in the
solutions. Leading characteristics here were that peanuts became profit
able at much lower prices than in former product-mix situations where
tobacco enterprises were included. Starting at a price 48 percent
lower than the 1975 price support, peanut prices decreased over a narrow
range of only .55 cents, but the corresponding output response was
comparatively strong reductions in acreage. No major negative effects
occurred on return levels which in total decreased only 11 percent with
respect to the returns at the starting price of 9.3398 cents per pound.
Changes in acreage and rates of substitution took place among competing
crops, with non-irrigated corn substituting for peanuts at the higher

108
part of the range of price variations and with soybeans as the major
substitute for peanuts over the lower part of this range of price
variations. Another point is that the ratios of required operating
capital to returns were high, specifically for those solutions where
peanuts entered the plans. This was due to the nature of peanuts as
an intensive capital user.
Stepped Acreage Functions for Peanuts
This section focuses on the estimated acreage response functions
of peanut prices at the firm level and in the short-run context. Each
of the estimated stepped supply functions applies only to the conditions
assumed in the foregoing analysis for the representative one-man peanut
farm. The major objective was to ascertain from limited evidence what
changes should be undertaken in response to declines in peanut prices
when no governmental program for peanuts exists.
Figure 2 shows the stepped acreage functions for peanuts under
the evaluated enterprise compositions. These functions sloped downward
to the left as one would expect a supply curve to do. As the price of
peanuts gradually declined, peanut production declined. The implied
flat slope suggests a high response of peanut poutput to price de
creases.^/ In the graph, vertical lines indicate ranges of indifference
i/The 1 inear programming function is a discontinuous stepped func
tion and does not lend itself to estimating point elasticities. Elastic
ities derived from linear programming results are based on an average
supply response over a range of prices and outputs. The explanation of
the discontinuous function is found in the mechanics of the linear pro
gramming model. Within each activity the ratio of inputs to outputs
is constant, and activity will be operated to the limit of some availabl
resource or constraint.

109
within which the optimum enterprise organization may not respond to a
price variation.
In the model, peanut prices were set at an arbitrary high price
of 22 cents per pound, although it is unlikely that such prices would
occur. The program gradually decreased this price to determine the
price response of peanut production. Figure 2 shows the computed
acreage at different reductions in price.
When the estimation included all enterprises (continued-line
supply curve), the maximum price for which an output response was
obtained was 14.709 cents. At higher prices the supply was completely
unresponsive since peanuts operated to the limit of operator labor in
critical months. As prices declined, supply became very responsive
over a relatively narrow range of prices, except for those prices be
tween 14.653 cents and 13.659 cents, and between 13.394 cents and
13.346 cents, over which supply became completely unresponsive. The
declines in peanut prices at levels above 14 cents per pound caused
sharp reductions in peanut acreages. These effects were a major result
of the substitution of peanuts for Maryland tobacco, a crop that being
highly competitive relative to peanuts, pushed up the price at which
peanuts were profitable enough to come into the solutions, At peanut
prices around 13 cents and 12 cents per pound, the Maryland tobacco
acreage was at its upper limit, therefore other enterprises were
substituted for peanuts whose relative profitability was increased as
peanut prices declined, The minimum price to induce peanuts production
was 12.345 cents since the curve intercepts the vertical axis at this

Figure 2--Firm Level Stepped Acreage Functions for Peanuts
A Representative Farm Approach in North and West
Florida, with Prices of Competing Crops at Current
Levels, 1975,
CENTS PER POUND
OF PEANUTS
22-
Z
15i
14'
13'
121
All Enterprises
Included
i
-22
/
Maryland Tobacco
Excluded
1*15
14
13
12
IT
io-
9-
Both Maryland Tobacco and
Flue-Cured Tobacco
Excluded
*11
*10
-9
8-
8
i
__i i_
40 60
1 1 1 I 1 1 _L_
80 100 120 .140 160 180 200
ACRES OF PEANUTS

Ill
price. At lower prices peanuts were not profitable enough to enter the
optimum plans.
The exclusion from the enterprises of a highly competitive
crop such as Maryland tobacco allowed peanuts to start their production
response at the lower price of 13.572 cents (dashed-line supply curve)
instead of 14.708 cents in the former enterprise composition. The sharp
declines in peanuts acreage at the 13-cent levels of prices were a
result of strong substitutions of flue-cured tobacco and soybeans for
peanuts. Further replacement of peanuts required sharp price declines
to 12-cent levels. At these new low prices the total gross margin for
the wheat-soybeans activity made this enterprise profitable and entered
the solutions as an additional substitute for peanuts.
As can be seen in the graph, the estimated peanut supply re
sponse that was obtained after excluding both tobacco enterprises from
the programs (dash-dotted-line supply curve) was completely different
than the former ones. First of all, the levels of peanut price at
which this enterprise remained profitable were much lower, around 9 cents
per pound. This peanut response reflected a highly improved competitive
potential for this crop, and was a direct result of the exclusion from
the program of the only two enterprises with higher net returns than
peanuts. At the price of only 8.785 cents per pound, it was profitable
for peanuts to be cropped to any acreage up to 148.6 acres. Second,
the responsiveness of peanuts to price declines was on the average
higher than the earlier cases. Within a .55 cent range of price varia
tions, small declines in price made peanut acreages decrease greatly.

Any price lower than 8.785 cents per pound would decrease peanut acreage'
from 148.6 acres to zero acres.
In summary, the foregoing analysis in this chapter, appears to
illustrate the notion that the impact of lifting the government peanut
programs of acreage allotment and price support would be higher crop
acreages at the firm level and lower product prices. This situation
should be expected for two reasons: first, peanuts quota system limits,
farmers' desire to crop more. Second, with the yields and prices as
sumed here for the other crops peanuts are relatively more profitable
than most other.crops, even with peanut prices lower than present
support levels.
The income disadvantage of price declines for peanuts seems
small under current price relationships with competing crops and under
the assumptions imposed in the model of analysis. The substitution
ratio between peanuts and major alternative crops seems such that only
small changes would have to occur in price rations and/or substitution
ratios to make the alternative crops attractive from an income stand
point. This can be illustrated by referring back to Table 14. At
the price of 14,708 cents, 76 percent of the net returns and 50 percent
of the total cropland in the solution were attributable to peanuts,
while at 12.345 cents peanuts virtually disappeard (.8 acres) from the
solutions. Despite this fact, the values of net returns for these
programs differed by only $8,094, the second value being 9.7 percent
lower,

113
The stepped supply functions estimated for price declines in
peanuts reflected, on the average, a strong acreage response of this
crop. If growers oriented their decisions under optimization criteria,
the decreases in peanut acreages would be sharp relative to small
decreases in price. The level of prices at which peanuts became
profitable varied depending on the enterprise composition, but were
always much lower than the current price support. For those programs
including tobacco enterprises, these prices ranged from 14.7 cents down
to 12.2 cents per pound. However, for those programs excluding the
tobacco enterprises, these prices ranged only from 9.3 cents down to
8.8 cents per pound, because peanuts' relative profitability increased
from excluding the two most profitable crops.
Under the assumptions and crop farm conditions imposed in the
model, declines in the peanut prices resulted in tobacco and soybean
enterprises being replaced for peanuts. Flue-cured tobacco entered
the programs at successively increased acreages. All of these acreages
were greater than the allotment level. When tobacco enterprises were
excluded form the plans, single-cropped soybeans were a strong substitute,
accompanied by non-irrigated corn.
The effects of discontinuing the peanut program on the levels
of returns did not follow a single pattern. When the tobacco enter
prises were included, the returns for most of the plans for declining
peanut prices and no allotment were higher than the returns for the plan
considering the peanut program, However, when the tobacco enterprises
were not included, the level of returns obtained with declining peanut

114
prices and no allotment was lower than that obtained in the plan in
cluding the peanut program. Apparently, this difference in effects
is due to the different levels at which peanuts entered both solutions
when the peanut program was considered. In the first case, peanuts
entered the plan at only the level of its allotment (13.9 acres), while
in the second case peanuts entered the plan.iat the maximum acreage
allowed in the model ("93.9 acres).

CHAPTER VI
SUMMARY AND CONCLUSIONS
Crop farmers in North and West Florida are confronted with
adjustment decisions to meet changing conditions in their production
patterns. Many of these changes are concerned with adjustments at the
farm level in terms of the magnitude of resource requirements, combina
tion of crop enterptises, and modification of the government program
for peanuts. In this study, the research focused on the economics of
the optimal enterprise organizations for alternative resource situations
as a means to provide information on what the future enterprise makeup
for production planning in the study area should be.
The analysis can be classified under two major purposes: first,
to determine and analyze the effects on optimal enterprise organizations
and on income levels of alternative levels of cropland and operating
capital for different enterprise compositions; and second, to determine
the effects of changes in peanut prices on the optimum crop plans, and
to develop firm level functions for the acreage response of peanuts to
these price changes.
Eight crops which made up 18 production activities were included
as enterprises in the analysis presented in Chapter IV. A sufficient
market was assumed to be available to permit each enterprise to be con-
115

sidered for all farmers as an adjustment possibility. These crops
were peanuts, flue-cured tobacco, Maryland tobacco, corn, wheat, grain
sorghum, soybeans and Watermelons. Four different enterprise composi
tions were evaluated by including and excluding the tobacco enterprises
and peanuts. The alternatives in operating capital were given by a
parametric variation of capital at $20,000 intervals, starting from
$20,000 and increasing up to an "unconstrained" level. The alternative
levels of cropland were: 250 acres, 400 acres, and an "unconstrained"
level. The key advantage of these situations was that they allowed for
asking "what if" questions concerning the potential adjustments to meet
changing conditions.
Firm level operations were the approach used for the analysis
of typical one-man crop farms, thus, the availability of operator labor
was assumed to be that of a full-time worker who supplied 2,792 hours
distributed on a monthly basis (Appendix Table 24). The span of time
considered for planning purposes was one year. Linear programming
techniques and parametric procedures were used to determine the optimum
plans that would provide for the best income flow to cover operating
expenses. This approach determined the farm plans which maximized re
turns. The selection of an alternative crop would be influenced by
three factors: the enterprise possibilities of the crop farm, the
relative profitability of the enterprises, and the resource restraints
as assumed in the model. The main data utilized were resource and prod
uct prices, and enterprise input-output coefficients for a "recommended
practices" level of technology. Budgets were structured as required by

II/'
linear programming and a simplex tableau was designed to simulate the
alternative production situations as faced by farmers in the study
area.
The results obtained should be useful in evaluating alternative
crop enterprises and alternative farm organizations so that potential
adjustments may readily be made for individual farms to improve their
production decisions in the next cropping year.
On Optimum Plans for AlternativeCropland and Operating Capital Situations
The evaluation of the effects of alternative levels of cropland
and operating capital was described relative to the own-machine harvest
system. Custom harvest was not discussed as an alternative alone and
its discussion was restricted to instances where it was necessary to
supplement own-machine harvest whenever operator labor at harvest time
was too limiting.
The evaluation of harvest systems in flue-cured tobacco was
complemented with a break-even analysis, Results indicated that hand
harvest was usually the best alternative. Only at flue-cured tobacco
acreages higher than 74, is it advisable to shift from hand to machine
harvest. However, preliminary solutions indicted that this crop never
reached acreages high enough to justify mechanization.
When the evaluation included all enterprises for a 250-acre
farm, the potential benefits from expanding operating capital at levels
higher than $40,000 were slight. Leasing of tobacco allotment was the
best capital investment. However, this crop's expansion was strongly

118
restricted by March labor. Operating capital increases at levels
higher than $80,000 were not profitable since cropland was limiting
output expansion. At this level of capital, peanuts and Maryland
tobacco entered the solutions at the maximum acreages permitted in the
model. Flue-cured tobacco entered at 30.1 acres, a level that seems
to be its equilibrium point of production since the MVP of its allotment
equaled the marginal cost of an additional unit of allotment. The
situation observed in flue-cured tobacco remained the same in the larger
farm sizes. In brief, in the 250-acre farm, a rather intensive cropping
system was most profitable with high returns to the resources used.
At the 400-acre farm size, no increase in operating capital
beyond $100,000 was indicated because cropland and operator labor
prevented further expansion of output. The level of returns at this
point seems to reflect the best farm adjustment since higher resource
levels implied declining rates of returns to resource use (Table 8). As
expected, solutions at this farm size continued to show those crops
supported by government programs. Peanuts and tobacco combined well
since they did not compete for operator labor during peak months.
Entensive-type crops entered the optimum solutions at the higher operat
ing capital levels and soybeans were the most important crop considering
the high acreages at which this crop entered the solutions,
The optimum plans for the unconstrained-acreage situations
reflected low rates of returns to additional cropland and operating
capital. Consequently, the resource adjustments implied in these plans

TI 9
do not seem to be profitable. It was at this farm size that custom
harvest was included to complement own-machine harvest due to operator
labor restrictions during seven critical months, Amounts rather than
kinds of crops tended to vary in these solutions with respect to the
former farm size. Operating capital was also limiting but its low MVP
(.04) suggested that additional investment was not advisable because
its opportunity cost, as given by the market rate of interest (9.5
percent), was much higher than its present marginal contribution to
returns. The fact that operator labor was limiting seven months re
flects what seems to be the limits for a one-man farm operation.
In general, considerable stability was evidenced in the
intensive-type crops. Peanuts entered consistently at the level of
its allotment, Maryland tobacco at its upper limit allowed in the model,
and flue-cured tobacco at a level much higher than its allotment but
with an MVP for this allotment equal to its marginal cost, which suggests
an equilibrium point of production for this enterprise. Increasing
resources were a profitable strategy up to the 400-acre and $100,000
farm situation; beyond this point the profitability of additional re
sources showed a declining trend.
The enterprise composition excluding the tobacco enterprises
was designed for those areas where tobacco is not a suitable alternative.
Results showed that peanuts, a crop that became the enterprise with the
highest profit, replaced tobacco in the use of resources and entered
most solutions at its upper limit of 93.9 acres allowed, in the model.

12U
In.the 250-acre farm size, peanuts and soybeans combined well
as they efficiently shared operator labor, a resource that did not
become limiting, The rates of returns to resource use were high and
an expansion in both cropland and operating capital seems a profitable
adjustment. In the 400-acre farm size, as more cropland and operating
capital were made available, the extensive-type crops were stressed.
The levels of soybean's were much higher than in the 250-acre farm.
Corn came in as a new enterprise, and peanuts competed successfully for
operating capital, reaching its upper limit of 93.9 acres at $60,000 of
operating capital. The additional cropland was a prominent factor in
improving the returns situation, and the best resource adjustment should
be toward the 400-acre farm size with $60,000 of operating capital. In
the unconstrained-acreage situation, custom harvest entered the solutions,
extensive-type crops were emphasized, and operator labor became a most
restricting factor Similar to the "all enterprises" case. Also, the
implied rates of returns to additional resources were low and con
sequently the resource adjustments seem to be unprofitable in the
unconstrained-acreage situation.
When peanuts were excluded from the enterprises, the optimum
plans were expected to reflect substantial changes among less profitable
crops, that is, among extensive-type crops. This was true regarding
the levels of acreage at which the enterprises entered the solutions.
However, stability was evidenced in the combination of enterprises in
all solutions. Overall, the elimination of peanuts from the enterprises
resulted in lower levels of resource use but only slightly affected the
profit levels.

The exclusion of both peanuts and tobacco enterprises was
designed to develop optimum plans for farms specializing in extensive-
type crops. For the 250-acre and 400-acre farms, the solutions were
strongly restricted by cropland, and the associated rates of return
to resource use were high. Procurement of additional cropland for these
farm sizes would be profitable as reflected in the MVP for this resource.
This was corroboratecf by the substantial increases observed in the
returns as farm size went up. At higher farm sizes custom harvest
became prominent because operator labor was critical at harvest time.
In general, for this enterprise composition, larger acreages were
needed, and the enterprise combination determined by $60,000 of operating
capital and 575 acres seems to be the optimum resource adjustment (Table
11). A higher level of operating capital would not be advisable since
the MVP of this resource would drop to levels lower than its.opportunity
cost.
Irrigated corn enterprises were evaluated in a separate section
due to difficulties arising from the integer nature of center-pivot
irrigation systems. The analysis was performed by forcing irrigated
corn into the solutions in 140-acre units. Irrigated corn did not
combine well with tobacco, apparently because these two enterprises
competed for operator labor during critical months, especially during
January and March when tobacco uses labor intensively in plant-bed opera
tions. With peanuts, on the other hand, irrigated corn combined well
when entered at 140 acres. When entered at 280 acres, however, peanut
acreage was reduced considerably, In general, the inclusion of irrigated
corn increased the level of returns in the optimal plans. This effect

122
was stronger for the case where only extensive-type crops were allowed
in the solutions, However, due to the fact that irrigated corn had to
be forced in the solutions at fixed levels, these returns were somewhat
lower than those that could be obtained if this activity did not have
any restrictions in its acreage level. Overall, irrigated corn was a
good investment alternative, especially when only extensive-type crops
were evaluated. At lower acreages irrigated corn substituted for soy
beans, however, at larger acreages other crops were also replaced.
When only extensive-type crops were evaluated, irrigated corn substituted
for non-irrigated corn, wheat, and the double-cropping activity wheat-
soybeans, respectively; but single-cropped soybeans always entered
stronger.
On the Effects of Variations in Peanut Prices
The evaluation of variations in peanut prices and its effects
on the optimum plans was dealt with in Chapter V. The analysis attempted
to develop some notions of the characteristics of the optimum plans and
of the peanut acreage response to downward changes in the price of
peanuts. These changes were evaluated without acreage allotments to
simulate the removal of government acreage allotment and price support
programs,.
The model used for this analysis considered a representative
farm situation given by 400 acres of cropland and $100,000 of operating
capital. The enterprise compositions evaluated were; all enterprises
included, Maryland tobacco excluded, and both Maryland tobacco and flue-

123
cured tobacco excluded, The price changes were restricted to peanuts
only; therefore prices of competing crops were held constant.
The analysis appears to illustrate the notion that the impact
of lifting the government programs of acreage allotment and price
support for peanuts would be higher crop acreages at the firm level and
lower product prices... If growers oriented their decisions under the
criteria of returns optimization, the decrease in peanut acreage would
be sharp relative to small decreases in price. The level of prices at
which peanuts entered the solutions varied depending oh the enterprise
composition, but were always much lower than the current price support.
When both tobacco enterprises were included as competing enter
prises for peanuts, the highest and lowest peanut prices for which
solutions were obtained were 14.708 cents and 12.345 cents per pound,
prices that were 18.3 percent and 31.4 percent lower respectively than
the support price. Flue-cured tobacco, Maryland tobacco, soybeans and
wheat-soybeans in double cropping proved to be major substitutes for
peanuts with,Maryland tobacco most often entering at its upper limit of
25 acres. When a highly competing corp such as Maryland tobacco was
excluded from the enterprises, peanuts became competitive at even lower
prices. The highest price at which peanuts entered the solutions was
24.6 percent lower than the price support, A narrower range of price
variations suggested that in this case the acreage response of peanuts
to price decreases was stronger. The combination of enterprises indicated
stability with respect to the former case, and the effect of excluding
Maryland tobacco was reflected in the acreage levels at which the other

enterprises entered the plans. The exclusion of both tobacco enterprises
greatly improved the competitive potential of peanuts. The price at
which this crop started being profitable was 48 percent lower than its
current price support. Also, the responsiveness of peanuts to price
declines was, on the average, stronger than in the earlier cases. Changes
in acreage and rates of substitution took place among competing crops,
with non-irrigated corn substituting for peanuts at the upper range of
price variations, and with soybeans as the major substitute of peanuts
over the lower part of this range of price variation.
The price declines of peanuts produced only minor income de
clines under current price relationships with competing crops and under
the conditions imposed in the model of analysis. The substitution ratio
between peanuts and major competing crops seems such that only small
changes would have to occur in the price ratios and/or substitution
ratios to make the alternative crops attractive from an income stand
point.
Discontinuing the peanut program had varying effects on the
levels of returns. When the tobacco enterprises were included, these
effects were higher levels of returns for most of the plans. However,
when the tobacco enterprises were not included, these effects were
lower levels of returns. Apparently, this difference in effects is
due to the different levels at which peanuts entered the plans when the
peanut program was considered,

125
Implication of Results
The broad purpose of this study was to develop optimum plans
for given resource situations to be used as general guides for adjust
ments in one-man crop farms of North and West Florida, Planning Districts
I, II, and III. The results depended on the underlying assumptions and
data used in the analysis. The farm resource alternatives evaluated
were expected to be reasonably typical of specific farm resource situa
tions found on many crop farms in the study area. The objective was
to approach broad types of adjustments and to determine basic relation
ships that may be adapted to specific resource situations.
There is evidence of needed adjustments. For instance, re
organizations of crop farms in the study area into the efficiency
patterns evaluated in this study would result in larger farm operations.
Programmed land requirements per farm for the best size adjustments
are above the average farm size in the area. The average sizes for
all farms in Planning Districts I, II, and III were 184.9 acres, 273.7
acres, and 393.4 acres, respectively (Table 2, 1969 data). Evidently,
on the average, major size adjustments are required in Planning Districts
I and II.
Throughout this study, it was evident that farm planning must
be somewhat different for each specific farm resource situation. The
best combination and level of enterprises depended on the supply of
cropland, operating capital and labor, There was not an optimum set
a
of crop enterprises for all farms, but several optimum plans into which
farms should orient their adjustments, all considering the available

I o
resources. Farmers who haye resource situations similar to those
presented here should be able to adopt one of the many plans presented
in this thesis. For instance, the optimum plan for a farm with 425
acres of cropland, one-man operator labor supply, and $45,000 of
operating capital should not differ greatly from the optimum plan
presented here for the farm situation with 400 acres of cropland and
$40,000 of operating 'capital. Furthermoe, that particular farm would
be close to the best resource adjustment suggested, in that part of
the analysis which did not include tobacco crops, where 400 acres of
cropland and $60,000 of operating capital were best.
While analyzing the adjustment potentials for crop farmers in
the study area a level of technology defined as "recommended practices"
was assumed. Also, assumptions were made regarding certainty in prices
and yields, and market availability for the products involved. No
attempt was made to determine the present resource use in the area nor
the magnitude of adjustments required to meet the technology assumption.
However, in Chapter II, a review of programs and trends in production
and prices was included to check the other assumptions and accordingly
evaluate the results obtained in this study.
Many farmers do not approximate the results obtained in this
study. Resource limitations, management ability, risk aversion, and
farmers' perception of long-run price and production relationships
different than those assumed in this short-run planning model, could all
play a part in explaining this difference, For farmers to attain a high
degree of resource efficiency in the production of an individual enter-

127
prise is a difficult and somewhat uncertain task. Likewise, determining
the optimum plan for the farm as a whole is a complicated process even
after an approximation of the optimum level of resource use has been
established for the various enterprises. Results of this study should
be used together with some non-profit considerations such as to account
for yield and price uncertainty, and to observe the general crop situation
(information in this regard was anticipated in Chapter II). In other
words, use of the results should be accompanied by further judgment as
to differentiate between the most profitable (as presented here) and the
most likely or feasible farm organization.
Finally, the results presented in this study do not predict the
actual adjustments that crop farmers in North and West Florida will
adopt in the next cropping year. The optimum plans were derived based
on profitability criteria and, as such, they are normative and indicative
of what should be if the assumed conditions existed.

APPENDIX OF TABLES
SELECTED ENTERPRISE BUDGETS AND LABOR AND POWER REQUIREMENTS PER ACRE FOR
SELECTED CROPS IN NORTH AND WEST FLORIDA, 1975
1 The structure of the budgets was designed primarily for use in the
linear programming model.
2 Input-output relationships reflect a level of technology defined as
"recommended practices." The level of equipment assumed corresponds
to four-row equipment with appropriate tractor power and small grain
equipment.
3 The budgets included two situations in harvest and haul operations.
One considered the use of own machinery and the other the use of custom
service. Cash expenses and returns were calculated accordingly.
4 The labor requirements were determined by machinery requirements plus
15 percent. This extra 15 percent accounts for machinery down time,
i.e., minor repairs, adjustments, lubrication, fueling, etc.
128

Appendix -Table 1Peanuts: estimated costs
and returns
per acre, North
and West Florida, 1975
Item
Unit
Quantity
Price
Value
--dollars
I.
Revenue
cwt.
30.00
18.00
540.00
II.
Cash Expenses
Seed
lb.
90.0
0.425
38.25
Fertilizer (4-12-12)
cwt.
5.0
5.90
29.50
Lime
ton.
1.0
11.75
11.75
Land plaster
Herbicide
cwt.
6.0
1.50
9.00
Preplant (Balan)-
lb.
1.5
4.60
6.90
Cracking-stage
Insecticide-nematicide
qt.
6.0
1.93
11.58
Fumazo.ne
gal.
2.0
14.00
28.00
Dysiston
lb.
1.5
3.08
4.62
Lannate
lb.
1.0
9.00
9.00
Sevin
lb.
1.25
1.52
1.90
Toxaphene
lb.
2.0
1.00
2.00
Parathion
Fungicide
lb.
20.0
.29
5.80
Bravo (6 applications)
gal.
1.125
28.75
32.34
Spray (air)
Tractor (before harvest)
acre
1.0
1.75
1.75
Large
hr.
2.71
3.27
8.86
Small
hr.
1.54
1.66
2.56
Equipment (before harvest)
Interest on cash expenses
hr.
4.25
3.59
(9% for 6 months)
Harvest (own machinery and
dol.
207.40
.045
9.33
labor)
Large tractor
hr.
1.0
3.27
3.27
Small tractor
hr.
1.0
1.66
1.66
Equipment
hr.
2.0

3.47
Hauling to dryer (commerci
al)acre
1.0
6.74
6.74
Labor
hr.
3.0
2.50
7.50
22.64
Harvest (custom service)
Invert (dig)
acre
1.0
10.00
10.00
Trashing
acre
1.0
18.00
18.00
28.00
Drying and cleaning
ton.
1.5
19.13
28.69
Peanut commission
ton.
1.5
1.00
1.50
Total Cash Expenses
Total Cash Expenses
269.56
(custom harvest)
27492
III.
Returns Over Cash Expenses
270.44
Returns Over Cash Expenses
(custom harvest) 265.08

Appendix Table 2--Peahuts: monthly laborand tractor requirements per acre, .'torth and West Florida. 1975
tabor
Large Tractor
Small Tractor
month
month
month
Operations
Times
3ct:-
Nov.*
Har.
Apr.
Apr.- May June
May*
June Sept
July*
Total
Oct.-
hov.*
Har. Apr.
Apr.-
May*
Juns
1 Total
May June Sept.
July*
Total
Disc (disc in lime)
2
.60
.60
.52
.52
Disc (disc in fertilizer)
1
.30
.30
,26
> .26
Plow
1
.55
.55
.48
.48
Disc (disc in herbicide)
2
.60
.60
.52
.52
Plant
1
.38 .
.38
.33
.33
Apply herbicide (cracking stage)
1
.48
.43
.42
.42
Cultivate
2
.72
.72
.62
.62
Apply landplaster
1
.37
.37
.32
.32
Spray fungicide-insecticide
4
.92
.92
.80
.80
Invert (dig)
1
1.15
1.15
Harvest
1
1.15
1.15
1.00 1.00
1.00
1.00
Haul (to dryer)
1
.69
.69
Total'
.60
.85
.60
.38 .48
.72
i .29 2.99.
7.91
.52
.74
.52
.33
.62
1.00 3^73
.42 1.12 1.00
2.54
*The asterisk indicates the month to which the operator labor was allocated in the model.

Appendix Table 3Flue-cured tobacco: estimated costs and returns per
acre, North and West Florida, 1975
Item
Unit
Quantity Price Value
--dollars
I. Revenue
lb.
2,100
1.10
2,310.00
II. Cash Expenses
Plant bed:
Custom fumigate sq
. yd.
75.00
.21
15.75
Fertilizer
cwt.
.75
5.90
4.43
Seed
on.
,11
20.00
2.20
Nitrate of Soda" (16-0-0)
cwt.
.04
9.50
.38
Fungicide
each
__

6.44
Insecticide
each
--

.40
Tractor (small)
hr.
1.05
1.66
1.74
Equipment
hr.
1.05
.65
.68
Irrigation
hr.
.30
1.25
.38
Labor hired
Total Plant Bed Expenses
hr.
1.50
2 ; 50
3.75
36.15
Field Operations:
Nematicide
lb.
10.00
.59
5.90
Fertilizer (4-8-12)
cwt.
18.00
6.00
108.00
Potassium Nitrate (13-0-44)
cwt.
1.50
10.00
15.00
Lime
cwt.
4.00
.60
2.40
Herbicide
acre
1.00
16.00
16.00
insecticides
acre
1.00
52.78
52.78
Sucker Control:
Systemic
gal.
1.0
14.00
14.00
contact
gal.
3.5
7.25
25.38
Fuel, curing (LP gas)
gal.
375
.32
120.00
Electricity
acre
1.0
20.00
20.00
Insurance of crop
acre
1.0
42.50
42.50
Irrigation
hr.
7.8
3.25
25.35
Large tractor ,
hr.
1.9
3.27
6.21
Small tractor
hr.
6.12
1.66
10.16
Equipment
hr.
8.02
.68
5.47
Labor, hired:
Plant pulling
hr.
8.00
2.25
18.00
Transplanting
hr.
6.40
2.25
14.40
Topping
hr.
10.00
2.25
22.50
Sheeting
hr.
10.40
2.25
23.40
Sheets
ea.
3.25
2.40
7.80
Marketing charge
Interest on cash expenses
dol.
2,310
.03
69.30
(9% for 6 months)
dol.
660.90
.045
29.74
Subtotal cash expenses,
excluding harvest
690.64
--Continued--

132
Appendix Table 3Continued.
Item
Unit
Quantity Price Value
dollars--
Harvest (Conventional)
Tractor, large
hr.
3.0
3.27
9.81
Tractor, small
hr.
9.0
1.66
14.94
Trailers
hr.
18.0
.T7
3.06
Priming aide
hr.
9.0
.27
2.43
Labor, hired:
Tractor operator
hr.
10.35
2.50
25.87
Priming and racking
hr.
54.00
2.25
121.50
Interest on cash expenses
(9% for 2 months)
dol.
177.61
.015
2.66
Conventional harvesting
cost
dol.
180.27
Total cash expenses
dol.
870.91
Returns over cash expenses
(conventional harvesting)
1
,439.10
Harvest (Mechanical)
Combine
hr.
6.0
2.74
16.44
Tractor, small
hr.
6.0
1.66
9.96
Trailers
hr.
18.0
.17
3.06
Labor:
Combine operator
hr.
6.9
2.50
17.25
Tractor driver
hr.
6.9
2.50
17.25
Barn labor
hr.
24.0
2.25
54.00
Interest on cash expenses
(9% for 2 months)
dol.
117.96
.015
1.77
Mechanical harvesting cost
dol.
119.73
Total cash expenses
dol.
810.37
Returns over cash expenses
(mechanical harvesting)
1
,499.63

Appendix Table 4aFlue-cured tobacco plant bed; monthly labor and tractor requirements per plant bed
(75 sq. yd./acre), North and West Florida, 1975
Operations
Times
Labor
Smal 1
Tractor
month
month
Dec. Jan.
Feb. Mar. Apr.
Total
Dec.
Jan. Feb.
Mar. Total
Hours
Hours-
Plant bed:
Disc
2
.24
.24 1
.20
.20
Plow
1
.35
.35
.30
.'30
Disc
1
.12
.12
.10
.10
Fertilizer, spread
1
.06
.06
.05
.05
Disc
1
.12
.12
.10
.10
Fumigate (custom)
1




Remove plastic^
1
.50
.50
Sow beds
1
2.00
2.00
Replace plastic^
1
1 .00
1.00
Daily care
-
1.40 1.55
2.95
Pull weeds
1
2.00
2.00
Top dress
1
.25
.25
Irrigate
6
.10
.05 .10 .05
.30
Spray (fungicide and insecticide)
6
.09
.09 .09
.27
.02 .02
.02 .06
Total
.89 3.69
1.54 3.99 .05
io:i6
.75
.02 .02
.02 .81
^Hired labor for these operations.

Appendix Table 4b--Flue-cured tobacco field operations^: monthly labor and tractor requirements
per acre!/, North and West Florida, 1975
Labor
Large Tractor
Small Tractor
Operations
Times
month
month
month
Jan. Mar.
Apr. May Total
Jan. Mar. Total
Mar. Apr. May Total
-Hours
Hours>
-Hours
Di sc
2
.60
.60
.52 .52
Plow
1
.55
.55
.48 .48
Disc
1
.30
.30
.26 .26
Apply nematicide and
herbicide and disc
1
.30
.30
.26 .26
Apply fertilizer and bed
1
.78
.78
.68 .68
Pull plants !/
1
8.00 8.00
Transplant!/
1
1.84 1.84
1.60 1.60
Cultivate
2
.69 .69 1.38
.60 .60 1.20
Side dress
1
.69 .69
.60 .60
Total
1.15 1.38
10.53 1.3814.44
1.00 .52 1.52
.68 2.20 1.20 4.08
^Not including harvest operations.
l/l 1/4 acres of land for 1 acre of tobacco.
-/Hired labor for these operations.

Appendix Table 4c--Flue-cured tobacco harvest: monthly labor, tractor and mechanical harvester requirements per
acre, North and West Florida, 1975 "J
Operations
Times
Labor
Larqe
Tractor
Small Tractor
Mechanical Harvester
month
month
month
month
June
July
Aug.
Total June July Auq.
Total
June July Aug.
Total June July Auq.
Total
-hours-
hours---
hours*
--hours
Conventional Harvest!/
Pick and rack
6
20.45
30.68
10.23
61.36
3.00 4.50 1.50
9,00
Haul to barn
6
1.15
1.73
.58
3.46 1.00 1
.50 .50
3.00
Total
21.60
32.41
10.81
64.82 1.00 1
.50 .50
3.00
3.00 4.50 1.50
9.00
1 /
Mechanical Harvest
Combining
2.30
3.45
1.15
6.90 .
2.00 3.00 1.00
6.00
Hauling to barn
2.30
3.45
1.15
6.90
2.00 3.00 1.00
6.00
Racking and loading
barn
8.00
12.00
4.00
24.00
Total
12.60
18.90
6.30
37.80
2.00 3.00 1.00
6.00 2.00 3.00 1.0C
6.CO
i/Harvest operations use hired labor.

Appendix Table 5-'-Maryland tobacco: estimated costs and returns per acre,
North and West Florida, 1975
Item.
Unit
Quantity
Price
Value
doll
ars
I. Revenue
lb.
1,500
.85
1,275.00
II. Cash Expenses
Plant bed!/
acre
1.00
57.62
57.62
Nematicide
lb.
10.00
.59
5.90
Fertilizer (4-8-12)
cwt.
12.00
6.00
72.00
Potassium Nitrate (13-0-44)
cwt.
1.50
10.00
15.00
Lime
acre
4.00
.60
2.40
Herbicide
acre
1.00
16.00
16.00
Insecticide
acre
1.00
26.39
26.39
Insurance
acre
1.00
42.50
42.50
Irrigation
hr.
7.80
3.25
25.35
Large Tractor
hr.
1.54
3.27
5.04
Small Tractor
hr.
9.08
1,66
15.07
Equipment
hr.
10.62
.68
7.22
Labor, hired:
Plant Pulling
hr.
8.00
2.25
18.00
Transplanting
hr.
6.40
2.25
14.40
Tractor Operator
hr.
12.21
2.50
30.52
Topping
hr.
10.00
2.25
22.50
Harvest
hr.
40.00
2.25
90.00
Stripping
hr.
85.00
2.25
191.25
Marketing
dol.
1 ,425.00
.04
57.00
Interest on cash expenses
(9% for 6 months)
dol.
714.16
.045
32.14
Total Cash Expenses
746.30
Returns Over Cash Expenses
528.70
1/Same expenses as in Flue-cured tobacco plant bed.

Appendix Table 6--Maryland tobacco: monthly labor and tractor requirements per acre, North and West Florida, 1975
Labor
Large
Tractor
Small
Tractor
Operations
times
month
month
month
dan. Mar.
Apr. May June July Augf Jan.
Sept.
Mar. T ,
Total
Mer.
Apr. May July Total
hours
hours
-hours
Disc
2
.60
.60
.52
.52
Plow
1
.58
.58
.50
.50
Disc
1
.30
.30
.25
.26
Disc, apply herbicide
1
.30
.30
.26
.26*
Apply Fert. & bed
1
.78
.78
.68
.68
Plant Pulling-^
1
8.0
8.00
-Transplanting/
1
8.2
8.24
1.60
1.60
Cultivate
2
.70
.70
1.40
.60
,60
1.20
Sidedress
i
.70
.70
.60
. .60
T V
Topping-7
i
10.0
10.00
Harvest'
i
45.71
45.71
5.00
5.CD
Curing
i
2.0
2.00
Stripping/ /
i
85.0
85.00
Supervise Operations
.63
2.5 5.3
8.3
Total
1.18 1.38
16.72
1.40 10.63
51.21 90.3
172.C4
1 .02 .52
1.54 .63
2.20
1.20 5.00
9.08
*The asterisk indicates
the month to
which
the operat
or labor was
allocated in the model.
/Hired labor for these operations.
2/
Stripping can be scheduled in August or half in August and half in SeDtember.

Appendix Table 7Irrigated corn; estimated costs and returns per acre,
North and West Florida, 1975
Item
Unit
Quantity Price Value
bu.
dollars
115 2.50 287.50
I.Revenue
II.Cash Expenses
Seed
Fertilizer (5-10-15)
Lime
Nitrogen, liquid spread
Insecticide (Dasanit)
Herbicide (Sutan-AAtrez
Machinery (before.harvest)
Irrigation cost -
Interest on cash expenses
(9% for 8 months)
Harvest and Haul (own
machinery and labor)
Harvest and Haul (custom
service)
Total Cash Expenses
Total Cash Expenses
(custom harvest)
III.Returns Over Cash Expenses
Returns Over Cash Expenses
(custom harvest)
lb.
15.0
.70
10.50
cwt.
8.0
5.30
42.40
ton
.33
11.00
3.63
lb.
150.0
.28
42.00
lb.
1.5
5.10
7.65
lb.
4.0
2.24
8.96
9.60
36.94
dol.
161.98
.06
9.72
5.42
acre
1.0
28.75
28.75
176.82
200.15
1.10.68
87.35
1/
Based on a 140 acres irrigation system.

Appendix Table 8Irrigated corn: monthly labor, tractor and combine requirements per acre, North and West
Florida, 1975
Labor
Tractor
Combine
month
month
month
Operations
Nov. Dec. Mar. Mar.Apr. Aug. T Nov. Dec. Mar /Mar. Apr.T alAug. r t
Times Dec.* Jan.* Apr*May* Sept*Total Dec.* Jan.* Apr* May*TotalSept.Jotal
A~4-
UC K, ,
A 4-
wLa,
Disc old stalks 1 .30
Plow 1
Disc, apply .herbicide, disc 1
Plant 1
Cultivate 2
Harvest 1
Haul 1
Total
.55
-Hours-
.30 .26
.55
.48
.60
.38
.72
.60
.38 .
.72
.58 .58
.23 .23
.30 .55 .60 .38 .72 .81 3.36 .26 .48 .52 .33 .31 2.21 .50 ^50
-Hours --Hours---
.26
.48
.52 -52
.33 .33
..62 .62
.50 .50
*The asterisk indicates the month to which the operator labor was allocated in the model.

Appendix Table 9--Non-irrigated corn: estimated costs and returns per acre
North and West Florida, 1975
Item Unit Quantity Price Value
~ ~ --dollars
bu. 65 2.50 162.50
I.Revenue
II.Cash Expenses
Seed
Fertilizer, (5-10-15)
Lime
Nitrogen, liguid spread
Insecticide (Dasanit)
Herbicide (SutainAAtrez)
Machinery (before harvest)
Interest on cash expenses
(9% for 8 months)
Harvest and Haul (own
machinery and labor)
Harvest and Haul (custom)
Total Cash Expenses
Total Cash Expenses
(custom harvest)
III.Returns Over Cash Expenses
Returns Over Cash Expenses
(custom harvest)
lb.
12
.70
8.40
cwt.
5.50
5.30
29.15
ton
.33
11.00
3.67
lb.-
125
.28
35.00
lb.
1.50
5.10
7.65
lb.
4.00
2.24
8.96
9.60
dol.
102.43
.06
6.15
5.42
acres
1
16.25
16.25
114.00
124.83
48.50
37.67

Appendix Table 10-
-Non-
West
irrigated corn:
Florida, 1975
monthly labor, tractor
and combine
requirements
per
acre, North and
Labor
Tractor
Combine
Operations
Times
month
month
month
Nov. Dec.
Dec.*Jan.*Mar-
Mar. Apr. Aug.,,
Apr.*May* Sept!*
Oct.
Nov. Dec.
Dec.*Jan.*
Mar.
Mar. Apr.
Apr.*May*
Total
Aug.
Sept.* Total
Oct.
-hours
-hours
Disc old stalks
1
.30
.30 .
,26
.26
Plow
1
.55
.55
.48
.48
Disc, apply herbi
cide, disc (apply
herbicide ahead of
first disc)
1
.60
.60
.52
.52
Plant
1
.38
.38
.33
.33
Cultivate
2
.72 .72
.62
.62
Harvest
1
.46 .46
.40 .40
Haul
1
.23 .23
Total
.30 .55 .60
.38
.72 .69 3.24
.26
.48
.52
.33 .62
2.21
.40 .40
*The asterisk indicates the month to which the operator labor was allocated in the model.

Appendix Table 11 Wheat: estimated costs and returns per acre, North
and West Florida, 1975 .
Item Unit Quantity Price Value
--dollars
bu. 25 3.50 87.50
I.Revenue
II.Cash Expenses
Seed
Fertilizer, (4-12-12)
Lime
Nitrogen
Machinery (before harvest)
Interest on cash expenses
(9% for 7 months)
Harvest and Haul (own
machinery and labor)
Harvest and Haul (custom)
Total Cash Expenses
Total Cash Expenses
(custom harvest)
III.Returns Over Cash Expenses
Returns Over Cash Expenses
(custom harvest)
bu.
1.50
7.50
11.25
cwt.
6.00
5.30
31.80
ton
.33
11.00
3.67
lb. N
50
.28
14.00
5.07
dol.
65.79
.0525
3.45
4.11
acre
1
10.00
10.00
73.35
.79.24
14.15
8.26

Appendix Table 12-
-Wheat: monthly labor, tractor and
West Florida, 1975
combine requirements per
acre, North
and
Labor
Tractor
Combine
Times
month
Total
month T ,
month
Total
UjJcr a l i uiib
Oct. Nov.
TT
Oct. Nov.
Jf^e
; Hours--
Hours
Hours
Disc
1
.30 -
.30
.26 .26
Plow
1
.55
.55
.48 .48
Plant
1
.46
.46
.40 .40
Harvest
1
.46
.46
.40
.40
Haul
1
.09
.09
Total
.85 .46
.55
1.86
.74 .40 1.14
.40
.40
*The asterisk indicates the month to which the operator labor was allocated in the model.

i Hh
Appendix Table 13Single-cropped grain sorghum: estimated costs and re
turns per acre, North and West Florida, 1975
Item
Unit
Quantity
Price
Value
I. Revenue
cwt.
36.00
--dollars
4.00 144.00
II. Cash Expenses
. Seed
lb.
10.00
.65
6.50
Fertilizer, applied
cwt.
6.00
5.30
31.80
Lime, applied
ton
.33
11.00
3.67
Nitrogen
lb.
100.00
.28
28.00
Insecticide (Dasanit)
lb.
1.50
5.10
7.65
Insecticide (Sevin)
lb.
5.00
1.00
5.00
Spraying (Custom Air)
appl./ac.
2.00
1.50
3.00
Machinery (before harvest)
8.44
Interest on cash expenses
(9% for 6 months)
dol.
94.47
.045
4.25
Harvest and Haul
(machinery and labor)
Harvest and Haul (custom)
acre
1.00
10.00
4.27
10.00
Total Cash Expenses
102.99
Total Cash Expenses
(custom harvest)
III. Returns Over Cash Expenses
108.72
41.01
Returns Over Cash Expenses
(custom harvest)
35.28

Appendix Table 14Sorghum: monthly labor, tractor and combine requirements per acre, North and West
Florida, 1975
Labor
Tractor
Combine
month
month
month
Operations
Times
Nov.
Dec.*
Dec.
Jan.*
Mar.*
Apr.
Apr.
May* Aug.
Jun. Sept?
Total
Nov.
Dec?
Dec.
dan?
Mar Anr MayA
Apr. Mpr* June.
Total
5ug;* Total
Sept.
Disc
1
.30
-Hours
.30
.26
--Hours
.26
Hours
Plow
1
.55
.55
.48
.43
Disc
1
.30
.30
.26
.26
Plant
1
.38
.38
.33
.33
Cultivate
2
.72
.72
.62
.62
Harvest
1
.46
.46
.40 .40
Haul
1
.23
.23
Total
.30
.55
.30
.38
.72 .69
2.94
.26
.48
.26 .33 .62
1.95
.40 .40
*The asterisk indicates the month to which the operator labor was allocated in the model.

Appendix Table 15-^Double-cropped grain sorghum: estimated costs and
returns per acre, North and .West Florida, 1975
Item
Unit
Quantity Price Value
--dollars--
Revenue
cwt.
29
4.00
116.00
Cash Expenses
Seed *
lb.
10.00
.65
6.50
Fertilizer, applied
cwt.
6.00
5.30
31.80
Lime, applied
ton
.33
11.00
3.67
Nitrogen
lb.
100.00
.28
28.00
Insecticide (Dasanit)
lb.
1.50
5.10
7.65
Insecticide (Sevin)
' lb
. 5.00
1.00
5.00
Spraying (Custom Air)
appl./ac.
2.00
1.50
3.00
Machinery (before harvest)
5.04
Interest on cash expenses
(9% for 6 months)
dol.
90.66
.045
4.08
Harvest and Haul (own
machinery and labor)
1
4.48
Harvest and Haul (custom)
acre
10.00
10.00
Total Cash Expenses
99.22
Total Cash Expenses
(custom harvest)
104.74
Returns Over Cash Expenses
16.78
Returns Over Cash Expenses
(custom harvest)
11.26

Appendix Table 16Double-cropped sorghum: monthly labor, tractor and combine requirements
per acre, North and West Florida, 1975
Labor
Tractor
Combine
month
month
month
Operations
Times june* ^une July Nov Total
June* June July Total
Nov. Total
Disc
2
.60
-Hours
1
1
1
1
1
t
I
O 1
I
1
l
1 CM
i in
i
-Hours--
.52
Hours
Plant
1
.33
.38
.33
.33
Cultivate
1
.36
.36
.31 .31
Harvest
1
.46 .46
.40 .40
Haul
1
.18 .18
Total
.60
.38
.36
.64 1.98
.52
.33
.31 1.16
O
o
<3-
*The asterisk indicates the month to which the operator labor was allocated in the model

148
Appendix Table 17Single-cropped soybeans; estimated.costs and returns
per acre, North and West Florida, 1975 .
Item
Unit
Quantity Price Value
dollars
bu. 30.00 5.50 165.00
I.Revenue
II.Cash Expenses
Seed
Innoculant
Lime, spread
Fertilizer, spread
Herbicide (Lasso)
Insecticide (Sevin)
Spraying (Custom Air)
Machinery (before harvest)
Interest on cash expenses
(9% for 6 months)
Harvest and Haul (own
machinery and labor)
Harvest and Haul (custom)
Total Cash Expenses
Total Cash Expenses
(custom harvest)
III.Returns Over Cash Expenses
Returns Over Cash Expenses
(custom harvest)
bu.
1.00
12.00
12.00
pkg.
1.00
.90
.90
ton
.33
11.00
3.67
cwt.
7.00
5.30
37.10
lb.
3.00
3.71
11.13
lb.
2.50
1.00
2.50
appl./ac.
2.50
1.50
3.75
,
9.60
dol.
3.63
4.22
acre
1
10.00
10.00
88.. 50
M-^22
76.50
70.72

Appendix Table 18Soybeans: monthly labor, tractor and combine requirements per acre, North and West Florida,
1975
Labor
Tractor
Combine
month
month
month
Operations
tNov.
Times n *
Dec.*
Dec.
Jan?
Feb.
Apr. May June* Oct. T ,
July Novi Tota1
Nov. Dec.
Dec? Jari?
Feb.
Apr. May June* Oct.
July Nov*
Hours --Hours Hours
Disc old stalks
1
.30
.30
.26
.26
Plow
1
.55
.55
.48
.48
Disc, apply herbicide,
disc 1
.60
.60
.52
.52
Plant
1
.38
.38
.33
.33
Cultivate
2
.72
.72
.62 -62
Harvest
1
.46
.46
.40
.40
Haul
1
.12
.12
Total
.30
.55
.60
.38
.72
.58
3.13
.26
.48
.52
.33
.62 2.21
.40
.40'
*The asterisk indicates the month to which the operator labor was allocated in the model.

t sjKt
Appendix Table 19Double-cropped soybeans; estimated costs and re-
' turns per acre, North and West Florida, 1975
Item Unit Quantity Price Value
--dollars
I.
Revenue
bu.
25
5.50
137.50
II.
Cash Expenses
Seed
bu.
1.00
12.00
12.00
Innoculant
Pkg.
1.00
.90
.90
Lime, applied
ton
.33
11.00
3.67
Fertilizer, (0-14-14
spread)
cwt.
7.00
5.30
37.10
Herbicide (Lasso)
lb.
3.00
3.71
11.13
Insecticide (Sevin)
'lb.
2.50
1.00
2.50
Spraying (Custom Air)
appl./ac.
2.50
1.50
3.75
Machinery (before harvest)
6.31
Interest on Cash Expenses
(9% for 6 months)
dol.
77.36
.045
3.48
Harvest and Haul (own
machinery and labor)
4.13
Harvest and Haul (custom)
acre
1
10.00
10.00
Total Cash Expenses
84.97
Total Cash Expenses
(custom harvest)
90.84
III.
Returns Over Cash Expenses
52.53
Returns Over Cash Expenses
(custom harvest)
46.66

Appendix Table 20Double-cropped soybeans: monthly labor., tractor and.combine requirements
per acre, North and West Florida, .1975
Labor
Tractor
Combine
month
month
month
Operations
Times
May .
June*
June July
z. o
o o
Total
May
June4
i
June July Total
Oct.
.. + Total
Novt
Disc, apply herbicide 2
.60
-Hours-
.60 .
.52
Hours
.52
Hours
Plant
1
.38
.38
.33 .33
Cultivate
2
.72
.72
.62 .62
Harvest
1
.46
.46
.40 .40
Haul
1
.09
.09
Total
.60
.38 .72
.55
2.25
.52
.33 .62 1.47
O
o
*The asterisk indicates the month to which the operator labor was allocated in the model

Appendix Table 21Watermelons: estimated costs and returns per acre,
North and West Florida, 1975
Item
Unit
Quantity
Price
Value

dollars
I. Revenue
lbs.
18,000.0
.03
540.00
II. Cash Expenses
Seed
lb.
2.00
4.00
8.00
Fertilizer:
10-10-10, spread
cwt.
15.00
5.85
87.75
15-0-15, (bag)
cwt.
2.00
8.25
16.50
Lime .
cwt.
3.30
.60
1.98
Fungicide (Bravo)
gal.
.80
28.75
23.00
Tractor: Large
hr.
1.00
3.27
3.27
Small
hr.
2.65
1.66
4.40
Hired Labor
hr.
4.20
2.50
10.50
Field Labor
hr.
14.00
2.25
31.50
Harvest Labor
acre
1.00
40.00
40.00
Interest on cash expenses
(9% for 6 months)
Total Cash Expenses
dol.
. 226.00
.045
10.21
237.11
III. Returns Over Cash Expenses 302.89

Appendix Table 22Watermelons; monthly labor and tractor requirements per acre, North and West Florida, 1975
Operations
Times
Labor
Large Tractor
Small
Tractor
month
month
month
Dec. .
Jan.
Feb.
Mar.
Apr.
May
Total
Dec.
Jan. Feb.
Total
Feb.
Mar.
Apr.
May
Total
hours-
-hours
hours-
Disc
1
.30
.30
.26
.26
Plow
1
.55
.55
.48
.48
Disc
1
.30
.30
.26
.26
Plant
1
.75
.75
.65
.65
Cultivate and sidedress
2
.69
.69
1.33
.60
.60
1.20
Hoe
1
9.00
9.00
Spray
4
.46
.46
.92
.40
.40
.80
Move vines
1
5.00
5.00
2 /
Harvest
1
Total
.30
.55
1.05
.69
10.15
5.46
18.20
.26
.48 .26
1.00
.65
.60
1.00
.40
2.65
^Seasonal labor is hired for this operation.
'Seasonal labor is hired on per acre basis. See budget.

Appendix Table 23.--Costs of operating machinery: annual fixed costs per unit, 1975
Item
New.
Cost
Average
Cost
Years
of
Useful
Life
Depreciation
/¡lew Cost-10%
Annual Fixed Cost
1 Interest I Repairs (
\ average cost
Taxes j Insurance
Total
(New Cost^
.0085
\Yrs. of Life
J .095
.01
.02
\ 2 J
- - -Dollars- - -
-Yrs.-
------
- -
- -Dollars
Tractor, lge.
12,750
6,375
7
1.639
606
64
128
54.2
2,491
Tractor, sml.
6,000
3,000
7
771
285
30
. 60
25.5
1,172
Disc, harrow,
12'
1,500
750
8
169
71
8
15
6.4
269
Bottom plow,
5-15" .
1 ,550
775
10
140
74
8
16
6.6
245
Planter, 4-row
hi speed
3.300
1,650
8
371
157
17
33
14.0
592
Cultivator, 4
row rolling
1,650
825
10
149
78
8
17
7.0
259
Disc harrow, 3
850
425
8
96
40
4
9
3.6
153
Bottom plow,
2-16"
500
250
10
45
24
3
5
2.1
79
Cultivator, 2-
row
650
325
15
39
31
3
7
2.8
83
Transplanter,
2-row
1,000
500
12
75
48
5
10
4.3
142
Grain drill
1,300
650
10
117
62
7
13
5.5
205
Sprayer
400
200
5
72
19
2
4
1.7
99
Spreader
690
345
8
78
33
3
7
2.9
124
Peanut inverter,
2- row.
1 ,500
750
8
169
71
8
15
6.4
269
Peanut combine
7,500
3,750
5
1,350
356
38
75
31.9
1,851
Peanut wagon
1 ,350
67 5
15
81
64
7
14
5.7
172
Combine -
16,600
8,300
5
2,988
789
83
166
70.6
4,097
Corn head, 2-row
3,000
1,500
5
540
143
15
30
12.0
741
Small grain head,
13'
1,600
800
5
283
75
8
16
6.8
395
Tobacco priming
aide
800
4C0
20
36
38
4
8
3.4
39
Tobacco combir
e
20,700
10,350
6
3,105
983
104
207
'88.0
4,407
Tobacco trailers
(3 each)
600
300
20
27
29
3
6
2.6
68
Bulk barn (7
acre capacity)
6,500
3,250
20
293
309
33
65
27.6
728
Truck, pick up
4,000
2,000
5
720
190
20
40
17.0
987
Truck, 2 ton
6,200
3,100
5
116
295
31
62
26.4
1,530
Total
102,490
14,474
4,871
516
1,028
435.8
21,327

Appendix Table 24.--Man-equivalent hours of operator labor available
by months, 1975
Month
Number of
work days
Full-time
Number of hours
per day
farm operatori/
Total hours
per month
January
. 26
8
208
February
24
8
192
March
26
8
208
Apri 1
26
9
234
May
26
9
234
June
26
10
260
July
26
10
260
August
26
10
260
September
26
10
260
October
26
9
234
November
26
9
234
December
26
.8
208
Total
310
2,792
-^The man-equivalent hours of operator labor available were esti
mated by the Piedmont and Coastal Plain Sub-committee of the Technical
Committee fqr Regional Project S-42. Adapted from [15].

Appendix Table 25Machinery and equipment utilized by enterprises in optImal plans.
Peanuts
Flue-Cured
Machine Harvest
Tobacco
Hand Harvest
Mary land A'
Tobacco
Corn
Wheat
Soybeans
Tractor, lge.
X
X
X
X
X
X
X
Tractor, sml.
X
X
X
X
Disc, harrow, 12'
X
X
X
X
X
X
X
Bottom plow, 5-16"
X
x
X
X
X
X
X
Planter, 4-row hi speed
X
X
X
Cultivator, 4 row rolling
X
\
X
X
Disc harrow, 8'
Bottom plow, 2-16"
Cultivator, 2-row
X
X
X
Transplanter, 2-row
X
X
X
Grain drill
X
Sprayer
X
X
X
X
X
X
Spreader
X
X
X
X
Peanut inverter, 2-row
X
Peanut combine
X
Peanut wagon
X
Combine
X
X
:i
Corn head, 2-row
X
Small grain head, 13'
X
X
Tobacco priming aide
X
Tobacco combine
X
Tobacco trailers (3 each)
X
X
Bulk barn (7 acre capacity)
X
X
Truck, pick up
X
X
X
X
X
X
X
Truck, 2 ton
X
X
X
X
X
X
X
^Maryland tobacco requires a barn £or air-cure which is not included in this table.

Appendix-Table 26Returns adjusted for f ixed costs involved in each optimal plan--7
250 Acres
2-C0 Acres
Unconstrained
Acreage
Enterprise Situation
$40,009
$60,000
$80,000
$40,000
$60,000
$80,000
$100,000
$40,000
$60,000
$80,000
$100,000
$120,000
Plans Including All
Enterprises
41,724
33,39
(957)
59,870
46,568
(209)
66,445
50,851
(203)
s
s
71,779
55,980
(174)
75,451
59,652
(149)
s 1
s
3
76,473
60,674
(115)
76,651
60,852
(105)
Plans Excluding To
bacco Enterprise
27,439
12,887
(52)
30,533
15,981
(64)
-
30,808
16,256
(45)
40,835
25,542
(64)
40,919
25,626
(64)
s
8
43,320
27,822
(50)
44,455
28,957
(43)
Plans Excluding
Peanut Enterprise
41,724
33,889
(957)
59,870
46,568
(209)
66,313
53,011
(212)
s
s
70,816
57,309
(183)
74,809
61,302
(153)
s
S
s
75,871
62,364
(121)
76,005
62,498
(113)
Plans Excluding
Tobacco and Pea
nut Enterprises
17,625
6,537
(26)
28,011
16,182
(40)
28,654
16,620
(40)
32,071
20,037
(35)
33,532
21,498
(30)
33,700
21,666
(30)
are the adjusted returns, and figures in the bottom row (within parenthesis) are the adjusted returns per acre.
b) The letter "s" indicates that figures in that cell are the same as those in the previous farm size and capital situation.
c) Blank cells indicate that the solution for these cells are the same as the lower level of capital for that farm size.

BIBLIOGRAPHY
[1] Beneke, Raymond R. and Ronald Winterboer. Linear Programming
Application to Agriculture. Ames: The Iowa State
University Press, 1973.
[2] Boles, et al. "Use of Linear Programming to Estimate Popula
tion Parameters," Journal of Farm Economics (November
1969), p. 814.
[3] Braden, Johnny D. Analysis of Tobacco Quota Transfers, Economic
Research Service, Outlook 1973, U. S. Department of
Agriculture. Washington; February 1973.
[4] Bradford, G. L. "Mechanical Tobacco Harvesting, What's Ahead,"
Tar Heel Farm Economist, North Carolina State University,
Agricultural Extension Service. Raleigh: January 1968.
[5] Brooke, D. L., R. E. Green and G. N. Rose. Location of Agricul
tural Production. University of Florida Agricultural
Experiment Station Bulletin 733. Gainesville, November
1969.
[6] Brooke, D. L., R. E. L. Greene, and R. P. Muraro. Custom Rates
for Farm Operations in Florida, 1974-75. University of
Florida, Food and Economics Department, Economic Informa
tion Report 34. Gainesville: July 1975.
[7] Collins, W. K., et al. 1975 Tobacco Information. The North
Carolina Agricultural Extension Service, Mis. Extension
Publication No. 126. December 1974.
[8] Eddleman, B. R. and N. L. Meyer. Minimum Land Requirements for
Specified Income Levels, Lower Sinu Valley of Colombia.
Department of Agricultural Economics, Agricultural Re
port 30. University of Florida. Gainesville: September
1971.
[9] Ellis, T. H. Optimum Farm Programs in Columbia and Suwannee
Counties, Florida (An application linear programming).
Dissertation. University of Florida. Gainesville:
August 1957. ;
[10]Florida Crop and Livestock Reporting Service. Florida Agricul
tural Prices, June 1975. Orlando: July 1975.
158

159
[11] Florida Crop and Livestock Reporting Service. Florida Agricul
tural Statistics, Field Crops Summary, 1973. Orlando:
August 1974.
[12] Florida Crop and Livestock Reporting Service. Florida Field Crops,
June Acreage--1975. Orlando: July 1975.
[13] Florida Statistical Abstract, 1974. Bureau of Economic and Business
Research, College of Business Administration. Gainesville:
University of Florida Press, Eighth Annual Edition.
[14] Heady, E. 0. and W. Candler. Linear Programming Methods. Ames:
The Iowa State College Press, 1958.
[15] Huddleston, J. S. and R. G. Kline. Minimum Resource Requirements
and Related Optimum Enterprise Combinations for Specific
Income Levels for the Cash Grain Area of Northeastern
Virginia. Virginia Polytechnic Institute, Research Division,
Bulletin 24. Blackburg: July 1969.
[16] Jhunjhunwala, Bharat. Minimum Cropland Requirements for Specified
Income Levels in Selected Counties of North and West Flor
ida. Unpublished master's thesis. Gainesville: 1971.
[17] The Kiplinger Agricultural Letter. The Kiplinger Washington Editors.
vol. 46, nos. 1, 2, 3, 4. Washington, D. C.: January,
February 1975.
[18] Knudtson, Arvid and Willard Cochrane. "A Supply Function for Flax
at the Firm Level," Journal of Farm Economics, vol. 40,
February 1958, pp. 117-123.
[19] Marshall, J. R., T. W. Little and G. Klinger. The Peanut Program:
Some Issues, Some Choices. Blackburg: December 1973,
pp. 1-21.
[20] Moxley, C. C., M. E. Konyha and D. E. Long. Social and Economic
Trends, 1950-1970 State of Florida Planning Districts I,
II and III. Department of Food and Resource Economics,
IFAS. Gainesville: 1970.
[21] Nerlove, Mark and Kenneth Bachman. "The Analysis of Changes in
Agricultural Supply: Problems and Approaches," Journal
of Farm Economics, vol. 42, August 1960, pp. 531-554.
[22] Sutherland, J. G. Minimum Land Requirements to Produce $5,000
Net Farm Income, Eastern Piedmont and Upper Coastal Plain
(Economic Areas Six and E), North Carolina. North Carolina
State University, Economic Information Report No. 8.
Raleigh: April 1968.

160
[23] Tyner, F. H, The Changing Economic Structure of North and West
Florida, Department of Agricultural Economics, Agricul
tural Economic Report No. 17. Gainesville: March 1971.
[24] U. S. Bureau of Census. Census of Agriculture, Florida, 1969.
Washington, D. C.: Government Printing Office, June 1972.
[25] U. S. Agricultural Stabilization and Conservation Service. FI orida
Annual Report 1973 and 1974. Gainesville: 1975.
[26] U. S. Department of Agriculture. "Peanuts11: Task Force on Pea
nuts. "Washington, D. C,: September 1971.
[27] Structural Characteristics of Flue-Cured Tobacco Farms
and Prospects for Harvest Mechanization. Agricultural
Economic Report (Review Draft). Washington, D. C.: 1974.
[28] _. Agricultural Outlook. Washington, D. C.: U. S. Govern
ment Printing Office, June 1975.
[29] Demand and Price Situation. Washington, D. C.: U. S.
Government Printing Office, May 1975.
[30] U. S. Economic Research Service. Fats and Oils Situation.
Washington, D. C.: U. S. Government Printing Office,
April 1975.
[31] _. Feed Situation. Washington, D. C.: U. S. Government
Printing Office, Fevruery and May 1975.
[32] Tobacco Situation. Washington, D. C.: U. S. Govern
ment Printing Office, March 1975.
[33] Wheat Situation. Washington, D. C.: U. S. Govern-
: ment Printing Office, May 1975.
[34] Westberry, George 0. Optimum Farm Organization for Various Sizes
of Farms in Economic Area Eight, Georgia. Unpublished
master's thesis, University of Georgia,. Athens: 1973.

BIOGRAPHICAL SKETCH
Rmulo Soliz-Valarezo was born October 19, 1946, at Pinas, El
Oro, Ecuador. In October, 1959, he moved to Quito, where he graduated
from "Colegio Normal 'Juan Montalvo" in June, 1965.
He entered the "Universidad Central del Ecuador," Quito, in
October, 1966, finished his course work in February, 1972, with the
Best Student award, and received the degree of Ingeniero Agrnomo in
November, 1972. His thesis title was: "El Problema Agroeconmico del
Trigo en el Ecuador y su Gestin ms Viable."
In December, 1972, he was appointed as Researcher, Agricultural
Economics, at th "Instituto Nacional de Investigaciones Agropecuarias"
(INIAP), Ecuador, position that is being held until the present time.
In March, 1973, he enrolled in the Graduate School of the
University of Florida. He has been working as a Graduate Research
Assistant in the Department of Food and Resource Economics, and is now
to receive the degree of Master of Science in Agricultural Economics.
He is a founding member of the "Asociacin Ecuatoriana de
Economa Agrcola," and member of the Florida Chapter of Gamma Sigma
Delta, the Honor Society of Agriculture.
161

I certify, that I have read this study and that in my opinion it
conforms to acceptable standards of scholarly presentation and is fully
adequate, in scope and quality, as a thesis for the degree of Master of
Science.
J(ohn E. Reynolds, Chairman
Associate Professor of Food and
Resource Economics
I certify that I-have read this study and that in my opinion it
conforms to acceptable standards of scholarly presentation and is fully
adequate, in scope and quality, as a thesis for the degree of Master of
Science.
/ohn Holt, Co-chairman
Associate Professor of Food and
Resource Economics
This thesis was submitted to the Dean of the College of Agriculture and
to the Graduate Council, and was accepted as partial fulfillment of the
requirements for the degree of Master of Science in Agriculture.
March, 1976
Dean, Graduate School



Page
Income 18
Transportation 19
Agricultural Trends ... 19
Number and Size of Farms 19
Value of Farm Products Sold 22
Changing Capital Requirements .... 23
Crops Situation ..... 23
Crop Program Review ..... 23
Production Trends (By Commodities) ......... 27
Prices 31
CHAPTER III:
DESIGN OF STUDY 34
Source of Data--The Budgets ...... ... 35
Theoretical Concepts ....... 41
Mathematical Assumptions of Linear Programming . 41
The Model 43
Planning Situations and Process Restrictions 45
The Initial Tableau-Procedure of Analysis ....... 50
CHAPTER IV:
OPTIMUM PLANS FOR ALTERNATIVE CROPLAND AND OPERATING
CAPITAL SITUATIONS 63
Hand-Harvest System vs. Machine-Harvest System in
Flue-Cured Tobacco 65
Optimum Plans Including All Enterprises .... 67
Optimum Plans Excluding Tobacco Enterprises ....... 76
Optimum Plans Excluding Peanuts Enterprises 81
iv


35
several alternative farm planning situations which were largely defined
by area economists, top farmers, Extension specialists and Experiment
Station recommendations.
A linear programming model was designed to fit as realistically
and accurately as possible those situations faced by crop farmers in
the area under study. All major crops suitable to the soil-weather
conditions were included. As provided for in this model, the selection
of an alternative crop was determined by the enterprise possibilities
of the farm and the realtive profitability of alternative enterprises,
all these being within the constraints imposed.
Source of DataThe Budgets
The major source of data for this work was the enterprise budgets
for the study area prepared by Mr. George Westberry, Extension economist
in the .Food and Resource Economics Department, University of Florida.
These budgets have been modified to make them adaptable to all specific
objectives of this study. In addition, Florida Crop and Livestock
Reporting Service data [10, 11, 12], Agricultural Stabilization and
Conservation Service (A.S.C.S.) data [25], Census data, information from
personal interviews and data from other miscellaneous publications for
North and West Florida have been used in this study.
The estimates of prices paid and received by farmers are present
ed in Tables 5 and 6 and they are not to be interpreted as predictions
of prospective prices in any future year. The custom work rates for
harvesting operations were taken from Economic Information Report 34
\


BIBLIOGRAPHY
[1] Beneke, Raymond R. and Ronald Winterboer. Linear Programming
Application to Agriculture. Ames: The Iowa State
University Press, 1973.
[2] Boles, et al. "Use of Linear Programming to Estimate Popula
tion Parameters," Journal of Farm Economics (November
1969), p. 814.
[3] Braden, Johnny D. Analysis of Tobacco Quota Transfers, Economic
Research Service, Outlook 1973, U. S. Department of
Agriculture. Washington; February 1973.
[4] Bradford, G. L. "Mechanical Tobacco Harvesting, What's Ahead,"
Tar Heel Farm Economist, North Carolina State University,
Agricultural Extension Service. Raleigh: January 1968.
[5] Brooke, D. L., R. E. Green and G. N. Rose. Location of Agricul
tural Production. University of Florida Agricultural
Experiment Station Bulletin 733. Gainesville, November
1969.
[6] Brooke, D. L., R. E. L. Greene, and R. P. Muraro. Custom Rates
for Farm Operations in Florida, 1974-75. University of
Florida, Food and Economics Department, Economic Informa
tion Report 34. Gainesville: July 1975.
[7] Collins, W. K., et al. 1975 Tobacco Information. The North
Carolina Agricultural Extension Service, Mis. Extension
Publication No. 126. December 1974.
[8] Eddleman, B. R. and N. L. Meyer. Minimum Land Requirements for
Specified Income Levels, Lower Sinu Valley of Colombia.
Department of Agricultural Economics, Agricultural Re
port 30. University of Florida. Gainesville: September
1971.
[9] Ellis, T. H. Optimum Farm Programs in Columbia and Suwannee
Counties, Florida (An application linear programming).
Dissertation. University of Florida. Gainesville:
August 1957. ;
[10]Florida Crop and Livestock Reporting Service. Florida Agricul
tural Prices, June 1975. Orlando: July 1975.
158


23
Changing Capital Requirements
The increasing requirements for capital is another important
aspect of the changing conditions of agriculture in the study area.
Farm expenses associated with technology improvements (such as
mechanization, higher levels of fertilization and better disease control)
as well as purchase of land for expansion are decreasing the attractive
ness of farming relative to less risky non-farm investments. "... total
capital requirements for Florida's farm economy increased by one-half
from 1959 to 1964. The most significant increase in the study area
(North and West Florida) was in the substantially enlarged total capital
values for land and buildings on farms ..." [23, p. 38]. Between 1959
and 1964, the average value of land and buildings per farm increased
by 54.5 percent in North and West Florida, 12.3 percent higher than the
rate of increase for the rest of the state [23, Table 16].
In 1969, the average value of land and buildings per acre in
the area under study was considerably lower than the corresponding figure
for the restof the state ($178.1 as compared to $406,30) [24],
Crops Situation
Crop Program Review
Government agricultural production regulations, price supports
and loans for farm products are based on the Agriculture and Consumer
Protection Act of 1973, Increased production costs in 1973 and 1974,


79
soybeans that resulted in the usage of an additional 111 acres of crop
land and a 12 percent increase in returns. Therefore, an expansion of
the 250-acre crop farms is quite profitable.
At the $60,000 level of operating capital, corn entered the
optimum plan as a new crop. The additional $20,000 in operating capital
allowed the more capital-intensive peanut enterprise to substitute for
soybeans. Peanut acreage reached the upper limit of 93.9 acres allowed
in the model. The high MVP of an additional acre of peanut allotment
showed that if additional leasing were possible, peanut acreage would
*
increase further. Even though corn is less profitable than soybeans,
corn came in the optimal solution at 37 acres because operator labor
limited soybeans field operations during April and June.
In this solution, operating capital was a critical resource and
the returns of this program increased to $40,835, or 32.5 percent
higher than the $40,000 operating capital level.
At the $80,000 level of operating capital, the optimal solution
remained practically the same as at $60,000. This happened because only
3.7 additional acres of cropland could be brought into production, and
peanuts and soybeans had reached their maximum because of peanut allot
ment and labor restrictions. Consequently, since there were no signifi
cant changes in either the level of resource or optimum organization of
enterprises, this solution is of little relevance to the analysis.
In general, as more cropland and operating capital were made
available on the 400-acre crop farm, emphasis on extensive-type crops


59
Ja ble 7 (continued)
Wheat
Grain Sorqhum
Wheat-Sorghum
Row No.
Own
Custom
Own
Custom
Own
Custom
Harvest
Harvest
Harvest
Harvest
Harvest
Harvest
10
11
12
13
14
15
01
-73.35
-79.24
-102.99
-108.72
-172.57
-183.98
02
.55
.55
03
04
.30
.30
05
.38
.38
06
.55
.72
.72
.55
07
-
.98
.98
08
.36
.36
09
10
.69
n
.85
.85
.85
.85
12
.46
.46
1.10
.46
13
.30
.30
14
.48
.48
15
16
.26
.26
17
.33
.33
18
.62
.62
19
.85
.85
20
.31
.31
21
22
23
.74
.74
.74
.74
24
.40
.40
.40
.40
25
.26
.26
30
.40
.40
34
.40
36
.40
38
1
1
1
1
1
1
40
73.35
79.24
102.99
108.72
172.57
183.98
44
45
46
47
.40
.40
.80
50
51
52
53
54
-25
-25
-25
-25
55
-36
-36
-29
-29
56
57


65
ti on system. Results on this regard are presented in a later section
of this chapter.
In the farm resource situations considered, the basic level
of operating capital was $20,000. However, results were tabulated
starting at $40,000 due to the fact that optimal plans at the basic
$20,000 level were severely constrained by operating capital, and
thus results were limited to a few acres of the most profitable crop,
usually flue-cured tobacco, depending on the mix of enterprises being
considered. Operator labor was restricted to one man-equivalent on
a monthly basis.
Before presenting the analysis of optimal crop plans, discussion
of the harvest systems in flue-cured tobacco situation is in order.
Hand-Harvest System vs. Machine Harvest System
in Flue-Cured Tobacco
In the flue-cured tobacco enterprise, a break-even analysis in
a partial budgeting context was performed to evaluate the purchase of
a mechanical harvester. The basic approach used was to replace the
hand-harvest system if its annual net revenue per acre falls below
the annual net revenue per acre from the machine harvest system. The
break-even analysis indicated that only at flue-cured acreages higher
than 74 acres, is it advisable to shift from hand to machine harvest.
However, preliminary solutions including machine harvest alternatives
showed that flue-cured tobacco never reached acreages high enough to
justify mechanization. Therefore, the machine-harvest system was


Any price lower than 8.785 cents per pound would decrease peanut acreage'
from 148.6 acres to zero acres.
In summary, the foregoing analysis in this chapter, appears to
illustrate the notion that the impact of lifting the government peanut
programs of acreage allotment and price support would be higher crop
acreages at the firm level and lower product prices. This situation
should be expected for two reasons: first, peanuts quota system limits,
farmers' desire to crop more. Second, with the yields and prices as
sumed here for the other crops peanuts are relatively more profitable
than most other.crops, even with peanut prices lower than present
support levels.
The income disadvantage of price declines for peanuts seems
small under current price relationships with competing crops and under
the assumptions imposed in the model of analysis. The substitution
ratio between peanuts and major alternative crops seems such that only
small changes would have to occur in price rations and/or substitution
ratios to make the alternative crops attractive from an income stand
point. This can be illustrated by referring back to Table 14. At
the price of 14,708 cents, 76 percent of the net returns and 50 percent
of the total cropland in the solution were attributable to peanuts,
while at 12.345 cents peanuts virtually disappeard (.8 acres) from the
solutions. Despite this fact, the values of net returns for these
programs differed by only $8,094, the second value being 9.7 percent
lower,


160
[23] Tyner, F. H, The Changing Economic Structure of North and West
Florida, Department of Agricultural Economics, Agricul
tural Economic Report No. 17. Gainesville: March 1971.
[24] U. S. Bureau of Census. Census of Agriculture, Florida, 1969.
Washington, D. C.: Government Printing Office, June 1972.
[25] U. S. Agricultural Stabilization and Conservation Service. FI orida
Annual Report 1973 and 1974. Gainesville: 1975.
[26] U. S. Department of Agriculture. "Peanuts11: Task Force on Pea
nuts. "Washington, D. C,: September 1971.
[27] Structural Characteristics of Flue-Cured Tobacco Farms
and Prospects for Harvest Mechanization. Agricultural
Economic Report (Review Draft). Washington, D. C.: 1974.
[28] _. Agricultural Outlook. Washington, D. C.: U. S. Govern
ment Printing Office, June 1975.
[29] Demand and Price Situation. Washington, D. C.: U. S.
Government Printing Office, May 1975.
[30] U. S. Economic Research Service. Fats and Oils Situation.
Washington, D. C.: U. S. Government Printing Office,
April 1975.
[31] _. Feed Situation. Washington, D. C.: U. S. Government
Printing Office, Fevruery and May 1975.
[32] Tobacco Situation. Washington, D. C.: U. S. Govern
ment Printing Office, March 1975.
[33] Wheat Situation. Washington, D. C.: U. S. Govern-
: ment Printing Office, May 1975.
[34] Westberry, George 0. Optimum Farm Organization for Various Sizes
of Farms in Economic Area Eight, Georgia. Unpublished
master's thesis, University of Georgia,. Athens: 1973.


Table 2Some agricultural trends; Planning Districts I, II and III in North and West Florida, 1954-1969
District L
Di strict JJ,
District 1
Study
Area
Rest
of State
Agricultural Variables
Change
Change
1954-65
Change
Change
Change
1569
1954-69
1969
1969
. 1954-1969
1959
1954-69
1969
1554-69
%
nurr.cer
X
nutter
X
number
O'
A
number
%
number
Number of Farms
-54.4
1,549
-52.5
5.226
-48.9
4,364
-51.4
11,139
-29.3
24,447
Number with sales over
$2,499
-26.S-7
540
- 0.4?/
2,274
-6.8?/
2,976
- 5.8V
5,790
6.8V
14,306
X
acres
X
acres
tf
acres
h
acres
A
acres
Average sire, all farms
68.7
184.9
60.8
273.7
41.1
393.4
52.6
285.5
1.0
443.9
Average size, farms with
sales over $2,499
-16.3?/
308.9
-14.5?/
513.6?/
-23.6?/
736.8
-19.4?/
519.3
-12.8?/
678.5
Dollars
Dollars
Dollars
Dollars
Dollars
X
(thousands)
X
(thousands)
1
A
(thousands)
X '
(thousands)
X
(thousands)
Market value agricultural
products sold, major cat-
ecories
All agricultural products
Croos (incl. nursery pro-
143.2
14,626
114.4
67.C47
181.7
77,746
145.7
155.415
155.1
972,655
ducts l hay)
201.4
8,940
83.4
35,066
36.5
24.278
71.4
69,284
130.6
662,444
(61.1)
(53.8)
(31.2)
(43.5)
(63.1)
Forestry products
- 0.7
292
-30.5 .
1,135
42.3
1,170
- 6.0
2,601
-91.2
2,493
(2.0)
0.7)
0-5)
0.6)
. (.25)
Livestock, poultry and
their products
95.8
5,395
168.0
29,902
481.4
52,299
282.4
87,596
264.2
307.646
(36.8)
(44.6)
(67.3)
(54.9)
(31.6)
- = Percentage change from 19oS to 1259 only. Data not available ror 1954,
2/
Percentage change from 1964 to 1969 only. Data not available 'or 1954 and 1959.
Source: Social and Economic Trends, 1950-1970, State of Florida.


53
Rows 14 through 25 and rows 30, 34, and 36 are related to machin
ery requirements. Coefficients for large tractor and combine require
ments are in the tableau. The level of constraint for these rows is
zero (unconstrained) so that the solution provides for the level of
machindery required on a monthly basis. As provided for in this model,
no time requirement of machinery can exceed the operator labor available.
As seen earlier,in this chapter, the cropland requirement was
set at three different levels (250 acres, 400 acres, and unconstrained).
In row 38 of the initial tableau, the cropland constraint is set at
zero, or unconstrained, which assures that this equation calculates the
amount of cropland required to optimize returns given all other restric
tions. The other two alternatives in this resource availability were
handled simultaneously in the model by using the "multiple right hand
side" procedure [1, pp. 71-73].
As for the operating capital, row 40 in the initial matrix shows
the capital constraint at the starting level of $20,000. Through the
use of the "parametric routine" [1, pp. 124-129] capital increases were
considered at intervals of $20,000 and up to an "unconstrained" level.
The coefficients of operating capital requirements were determined by
the annual variable costs per acre for each activity.
Rows 44 and 45 are for complying with the government provisions
on peanuts and flue-cured tobacco allotments. Constraints of 13.9 acres
for peanuts and 4,399 pounds for flue-cured tobacco are placed, However,
as pointed out earlier when describing the column activities, these limits
in production can be expanded by the leasing of allotments.


48
for peanuts were estimated. Significant changes in production decisions
in the peanut industry may occur as a result of changes in peanut prices.
Regarding the enterprise composition, the area under study had
four categories: (1) All enterprises included; (2) peanuts as the
allotment crop and excluding flue-cured tobacco; (3) flue-cured tobacco
as the allotment crop and excluding peanuts; and (4) both peanuts and
tobacco enterprises excluded. These categories were not well defined
geographically but it is common for farms to produce either peanuts
or tobacco, but not both. For instance, Suwannee, Hamilton and Madison
counties are largely dependent on flue-cured tobacco as a source of cash
income. Jackson County has developed peanuts as its specialty crop.
Thus, these alternatives in the product mix were aimed at those: farms
where either of these situations prevails.
In all crop enterprises except tobacco and watermelons, two
considerations regarding harvesting were defined. One considered custom
harvest and the other harvest with owned machinery. These two situations
provided for additional realism. Some farmers do not buy combines.
Others do in order to better realize economies of scale. Consequently,
these considerations in the type of harvesting provided for alternative
plans for both farmers with small scale crop operations and farmers with
large enough operations to afford the purchase of a combine.
In the flue-cured tobacco enterprise, two harvesting systems
were considered: hand or conventional harvesting, and mechanical
harvesting. These alternatives were designed to evaluate the economics
of mechanical harvester purchase when size of cropping warrants it.


148
Appendix Table 17Single-cropped soybeans; estimated.costs and returns
per acre, North and West Florida, 1975 .
Item
Unit
Quantity Price Value
dollars
bu. 30.00 5.50 165.00
I.Revenue
II.Cash Expenses
Seed
Innoculant
Lime, spread
Fertilizer, spread
Herbicide (Lasso)
Insecticide (Sevin)
Spraying (Custom Air)
Machinery (before harvest)
Interest on cash expenses
(9% for 6 months)
Harvest and Haul (own
machinery and labor)
Harvest and Haul (custom)
Total Cash Expenses
Total Cash Expenses
(custom harvest)
III.Returns Over Cash Expenses
Returns Over Cash Expenses
(custom harvest)
bu.
1.00
12.00
12.00
pkg.
1.00
.90
.90
ton
.33
11.00
3.67
cwt.
7.00
5.30
37.10
lb.
3.00
3.71
11.13
lb.
2.50
1.00
2.50
appl./ac.
2.50
1.50
3.75
,
9.60
dol.
3.63
4.22
acre
1
10.00
10.00
88.. 50
M-^22
76.50
70.72


42
(1) LinearityThe ratio of one resource to another and
of each resource to the quantity of product is
constant and independent of the level at which a
particular process is used. The mathematical model
for this relationship is homogeneous in the first
degree and yields a geometrically straight line
relationship. This assumption rules out the possibility
of increasing or decreasing returns to scale by fixing
the input-output coefficients./
(2) AdditivityThe resources required and the products
produced by a combination of enterprises must be equal
to the sum of resources.used and products produced by
each individual enterprise. No interaction is possible.
(3) DivisibilityIt is assumed that the resources used and
the products produced are divisible at infinitely small
levels. However, the practical aspects of farming lead
to discreteness rather than continuity in the input-output
relationship. This, however, is not usually a serious
limitation.
(4) FinitenessIt is assumed that the number of activities
available is finite. An exact optimum combination of
enterprises cannot be obtained unless all possible
enterprises are considered. In agriculture, therefore,
since the possible number of activities is infinite, no
^/Diminishing returns can be analyzed by establishing several
processes with varying levels of inputs for an individual enterprise.


. 86
400-Acre Crop Farm
Soybeans and non-irrigated corn entered the optimum plan for the
400-acre farm with soybeans being strongly dominant at 361 acres. Opera
tor labor limited soybeans during field operations in April and June,
allowing for corn to use the remaining 39 acres. Cropland was still
limiting and its point MVP was $48.5. Operating capital requirements
were $37,892 and the resulting returns were $28,011, or 59 percent higher
than in the former farm size.
Plans for the Unconstrained Acreage Situation
In this resource situation cropland was available to optimize
use of operator labor and capital. Optimum plans here were designed
to give some insight on profitable farm size adjustments as operating
capital was increased.
The results showed that as operating capital increased, there
were changes in the levels at which the enterprises entered the solutions.
After wheat entered the solution at the $60,000 level of operating capi
tal, no new activities came in the optimum combination of enterprises.
Solutions included non-irrigated corn, wheat, soybeans, and the double
cropping activity wheat-soybeans. Corn and soybeans appeared in solu
tions at higher acreages than any other crop. Corn steadily substituted
for soybeans at higher resource levels because April and June labor
restricted the expansion of soybeans. Wheat and wheat-soybeans were
supplementary in the programs, with increasing dominance of wheat-soybeans
at higher levels of operating capital.


71
In brief, in this farm size intensive-type crops dominated
the enterprise organizations for the specified resource situations.
The returns situation revealed high profitability of the resources
utilized.
400-Acre Crop Farm
For this farm' size, the solutions at $40,000 and $60,000 were
the same as those in the 250 acre farm size. This was due to the fact
that at those levels operating capital became limiting before cropland
did. The use of operating capital was increased to the $100,000.level
for the 400-acre farm. Any addition to this resource would not help
the returns situation because cropland and operator labor prevented
further expansion of the total output of the farm. Therefore, the
discussion below focuses only on those plans resulting from $80,000
and $100,000 of operating capital.
At $80,000 of operating capital, as in the former farm size,
peanuts and Maryland tobacco entered the solution at the amount of
the allotment and upper limit, respectively. Flue-cured tobacco
remained the same because it is restricted by January, March, and
April labor required for the plant bed and field work operations. The
additional cropland allowed for the extensive-type crops. Single-
cropped soybeans increased substantially and the double-crop enterprise
wheat-soybeans came in as a new activity filling up the last. 16.6 acres
of cropland,


Appendix Table 12-
-Wheat: monthly labor, tractor and
West Florida, 1975
combine requirements per
acre, North
and
Labor
Tractor
Combine
Times
month
Total
month T ,
month
Total
UjJcr a l i uiib
Oct. Nov.
TT
Oct. Nov.
Jf^e
; Hours--
Hours
Hours
Disc
1
.30 -
.30
.26 .26
Plow
1
.55
.55
.48 .48
Plant
1
.46
.46
.40 .40
Harvest
1
.46
.46
.40
.40
Haul
1
.09
.09
Total
.85 .46
.55
1.86
.74 .40 1.14
.40
.40
*The asterisk indicates the month to which the operator labor was allocated in the model.


55
peanuts as the allotment crop, and second, excluding peanuts and allowing
flue-cured tobacco as the allotment crop, and third, excluding both
peanuts and tobacco enterprises.
In the second set of programs, the possibility of "unrestricted"
peanut production was analyzed and the potential effects of abolishing
the peanut program on the area's product mix and the acreage response
to declines in peanut prices were determined. This task was attained
by first selecting one representative farm resource situation for the
peanut industry, and second, by running a computer program that included
parametric procedures to obtain solutions for declines in peanut prices
from 22 cents down. evaluated were, first, all enterprises included, second, Maryland to
bacco excluded, and third, both Maryland tobacco and flue-cured tobacco
excluded.
As can be seen, a study of this nature, with many alternative,
plans in the solutions, can provide a great variety of information.
However, the main criteria in deciding the type and amount of informa
tion used in the presentation and analysis of the results was whether
the variations in the alternative crop farm situations resulted in
substantial changes in the optimum enterprise organizations and associ
ated income levels.


i Hh
Appendix Table 13Single-cropped grain sorghum: estimated costs and re
turns per acre, North and West Florida, 1975
Item
Unit
Quantity
Price
Value
I. Revenue
cwt.
36.00
--dollars
4.00 144.00
II. Cash Expenses
. Seed
lb.
10.00
.65
6.50
Fertilizer, applied
cwt.
6.00
5.30
31.80
Lime, applied
ton
.33
11.00
3.67
Nitrogen
lb.
100.00
.28
28.00
Insecticide (Dasanit)
lb.
1.50
5.10
7.65
Insecticide (Sevin)
lb.
5.00
1.00
5.00
Spraying (Custom Air)
appl./ac.
2.00
1.50
3.00
Machinery (before harvest)
8.44
Interest on cash expenses
(9% for 6 months)
dol.
94.47
.045
4.25
Harvest and Haul
(machinery and labor)
Harvest and Haul (custom)
acre
1.00
10.00
4.27
10.00
Total Cash Expenses
102.99
Total Cash Expenses
(custom harvest)
III. Returns Over Cash Expenses
108.72
41.01
Returns Over Cash Expenses
(custom harvest)
35.28


Appendix Table 9--Non-irrigated corn: estimated costs and returns per acre
North and West Florida, 1975
Item Unit Quantity Price Value
~ ~ --dollars
bu. 65 2.50 162.50
I.Revenue
II.Cash Expenses
Seed
Fertilizer, (5-10-15)
Lime
Nitrogen, liguid spread
Insecticide (Dasanit)
Herbicide (SutainAAtrez)
Machinery (before harvest)
Interest on cash expenses
(9% for 8 months)
Harvest and Haul (own
machinery and labor)
Harvest and Haul (custom)
Total Cash Expenses
Total Cash Expenses
(custom harvest)
III.Returns Over Cash Expenses
Returns Over Cash Expenses
(custom harvest)
lb.
12
.70
8.40
cwt.
5.50
5.30
29.15
ton
.33
11.00
3.67
lb.-
125
.28
35.00
lb.
1.50
5.10
7.65
lb.
4.00
2.24
8.96
9.60
dol.
102.43
.06
6.15
5.42
acres
1
16.25
16.25
114.00
124.83
48.50
37.67


81
As it happened in the "all enterprises" case,, as larger amounts
of cropland were made available, operator labor became a most restricting
factor. It became limiting during six critical months. The increase in
operating capital from $60,000 to $80,000 increased returns by $2,845
or 6 percent, while the additional resources used were $20,000 of
operating capital and 159 acres of cropland, plus the implied additional
usage of operator labor.
At the $100,000 level of operating capital, although the addition
al capital allowed a substantial increase in the level of extensive-type
crops, the resulting profitability from this addition in the use of
resources turned out to be rather low (2.6 percent increase in the re
turns situation). Therefore, the optimum plan for this farm situation
should lead to similar observations as those stated in the "all enter
prises" case in the former section.
Optimum Plans Excluding Peanuts Enterprise
In this section, enterprise combinations included tobacco as an
allotment crop and excluded peanuts from the enterprises. Thus, a total
of seven crops were included in the development of optimal plans designed
for thoseareas where peanuts are not suitable for cropping, or aress
like District III where 96 percent of the flue-cured tobacco was produced
in 1973. The optimum programs for these enterprises are shown in Table
10.


Appendix-Table 26Returns adjusted for f ixed costs involved in each optimal plan--7
250 Acres
2-C0 Acres
Unconstrained
Acreage
Enterprise Situation
$40,009
$60,000
$80,000
$40,000
$60,000
$80,000
$100,000
$40,000
$60,000
$80,000
$100,000
$120,000
Plans Including All
Enterprises
41,724
33,39
(957)
59,870
46,568
(209)
66,445
50,851
(203)
s
s
71,779
55,980
(174)
75,451
59,652
(149)
s 1
s
3
76,473
60,674
(115)
76,651
60,852
(105)
Plans Excluding To
bacco Enterprise
27,439
12,887
(52)
30,533
15,981
(64)
-
30,808
16,256
(45)
40,835
25,542
(64)
40,919
25,626
(64)
s
8
43,320
27,822
(50)
44,455
28,957
(43)
Plans Excluding
Peanut Enterprise
41,724
33,889
(957)
59,870
46,568
(209)
66,313
53,011
(212)
s
s
70,816
57,309
(183)
74,809
61,302
(153)
s
S
s
75,871
62,364
(121)
76,005
62,498
(113)
Plans Excluding
Tobacco and Pea
nut Enterprises
17,625
6,537
(26)
28,011
16,182
(40)
28,654
16,620
(40)
32,071
20,037
(35)
33,532
21,498
(30)
33,700
21,666
(30)
are the adjusted returns, and figures in the bottom row (within parenthesis) are the adjusted returns per acre.
b) The letter "s" indicates that figures in that cell are the same as those in the previous farm size and capital situation.
c) Blank cells indicate that the solution for these cells are the same as the lower level of capital for that farm size.


8
Objectives
The major purpose of this study was to develop optimal crop
farm organizations as a general model to meet changing conditions in
the crop agriculture of North and West Florida, The achievement of
this purpose lead to the evaluation of adjustment opportunities in crop
production in order to organize productive resources for higher returns.
These resources and enterprise organizations were within the constraints
placed by resource availability and within the framework defined by
technical, economic, and crop policy conditions.
This major purpose was based on the hypothesis that the conditions in
crop farming are changing and consequently crop farm managers find it neces
sary to re-evaluate their farm organizations in light of those changes.
The major purpose consisted of the following specific objectives:
(1) To determine the effects on optimal enterprise organi
zations and on income levels of alternative farm
resource and enterprise situations defined as:
(a) Differences in size of crop farms as expressed
by alternative levels of cropland availability.
(b) Differences in farmers' levels of operating
capital.
(c) Alternative types of crop harvesting as determined
by harvesting with owned machinery and custom harvesting^/*
/All enterprises except tobacco and watermelons included the
custom harvesting alternative. This difference in type of harvesting
reflected the economics of combine purchase when size of cropping war
ranted it,


50
The Initial Tableau--Procedure of Analysis
As indicated earlier in this chapter, the maximization of net
revenue was determined by linear programming techniques. After describ
ing the components of the initial tableau, a brief recount of the dif
ferent programs designed to achieve the objectives of this work is
presented.
The initial tableau for the simplex method of solution, Table
7, contains all basic input-output coefficients which were organized in
32 columns and 42 rows. These coefficients reflect the resources re
quired by each activity represented by each column. All negative
coefficients in the matrix, except for those in row 01, indicate addi
tions to the system, and all positive coefficients indicate requirements.
By-means of an iterative- procedure* different--combinations- of enter
prises were systematically evaluated until an optimum organization of
enterprises, with the number of units of each enterprise, was obtained :
which produced the greatest profit for a crop farm while optimizing the
use of resources.
In the tableau, columns 01 through 20 are crop growing and
harvesting activities. The return coefficients (row 01) for these
columns are negative because they represent the cash expenses related;
to these producing activities. The output from these activities was
placed in transfer rows (rows 50 to 57).
The model permitted two alternatives in the production of most
enterprises. These alternatives were those ones related to harvest with


CHAPTER II
DESCRIPTION OF THE AREA
The area selected for study is a 27 county area of North and
West Florida composed of Planning Districts I, II and III. Figure 1
shows the geographic location, and counties included in the study area
Selection of the Area
This area was selected because:
(1) Planning Districts I, II and III comprise an area
which needs economic and agricultural development
opportunities. This is clearly identified in
Tyner's report: "As a group, the counties in North
and West Florida comprise an area that is considerably
less well developed than the remainder of the state.
Employment is limited and incomes are very low in this
area" [23, p. 3].
(2) North and West Florida is an area where crop produc
tion is highly concentrated in the product mix.
"General farm crops tend to be grown in northern
and northwestern Florida where conditions are not
favorable for the production of citrus and early
vegetables" [5, p. 7], -
11


Appendix Table 11 Wheat: estimated costs and returns per acre, North
and West Florida, 1975 .
Item Unit Quantity Price Value
--dollars
bu. 25 3.50 87.50
I.Revenue
II.Cash Expenses
Seed
Fertilizer, (4-12-12)
Lime
Nitrogen
Machinery (before harvest)
Interest on cash expenses
(9% for 7 months)
Harvest and Haul (own
machinery and labor)
Harvest and Haul (custom)
Total Cash Expenses
Total Cash Expenses
(custom harvest)
III.Returns Over Cash Expenses
Returns Over Cash Expenses
(custom harvest)
bu.
1.50
7.50
11.25
cwt.
6.00
5.30
31.80
ton
.33
11.00
3.67
lb. N
50
.28
14.00
5.07
dol.
65.79
.0525
3.45
4.11
acre
1
10.00
10.00
73.35
.79.24
14.15
8.26


88
increased to only $33,532, or 4 percent higher. At this level of
operating capital, the rate of returns was too low to cover the cost
of borrowing. The solution for the $100,000 level of operating was not
relevant since returns increased by only .5 percent, .
In summary, for farms specializing in extensive-type crops,
large cropland acreages are needed. For the 250-acre and 400-acre farms,
procurement of additional cropland would be profitable since the MVP for
cropland indicated high potential benefits from additional acreage. This
was corroborated by the substantial increases observed in the returns
situation as farm size went up.
The enterprise combination determined by $60,000 of operating
capital and 575 acres seems to be the optimum resource adjustment for
crop farms. A higher level of operating capital would not be advisable
since the MVP of this resource would drop to levels lower than its market
rate of return.
Optimum Plans Including Irrigated Corn Enterprises
This section analyzes the effects of irrigated corn in selected
farm situations that included corn as an enterprise.^ The analysis was
performed by forcing irrigated corn into the solutions in 140-acre size
units.
The selection of the evaluated farm situations utilized informa
tion of preliminary results and included those farm situations where
^./irrigated corn was not included in former programs due to pro
gramming difficulties that arose from the integer nature of the center-
pivot irrigation units, which cover 140 acres (Appendix Table 7).


10
(c) Not including either flue-cured tobacco or
Maryland tobacco.
Objective three implied two parts in the analysis: (a) an evaluation
of the competitive position of peanuts relative to the other crops as
its price decreased and as the enterprise composition changed, and (b)
an estimation of acreage response functions for peanuts.
The achievement of the above specified objectives make it pos
sible to:
(1) Explore the possibilities of improving farm profit
ability and efficiency by either adjusting farm size
or by reorganizing the farm enterprise mix.
(2) Provide guides to farmers choosing among income
alternatives and combinations of products, when
those opportunities are affected by degree of harvest
mechanization and resource availabilities.
(3) Provide information needed by farmers, extension
workers, reserachers and public agencies engaged with
the development of the crop sector in North and West
Florida, in developing farm plans that can increase
the income level of the farm families concerned.


70
Operating capital was again the limiting factor in the solution
and its marginal rate of return at this point was a high 86 percent.
Also, an additional hour of operator labor in March would generate
$47.60 extra as it was restricting a high profit enterprise like tobacco.
Returns for this solution amounted to $59,870. The availability
of an additional $20,000 in operating capital increased returns by
$18,146.
At $80,000 of operating capital, two additional enterprises
came into the optimum plan, peanuts in the amount of its allotment
and Maryland tobacco at its upper limit. It is interesting that flue-
cured tobacco acreage went down to 30.1 acres, a level that seems to
be its equilibrium point of production since the MVP of its allotment
equaled the marginal cost of an additional unit of allotment. The
joint profitability of peanuts and Maryland tobacco seemed to be high
enough for them to stubstitute for flue-cured tobacco.
The additional cropland used for this situation was relatively
small. With land reaching the limit, soybeans acreage was reduced by
three acres to allow for the acreage of peanuts and Maryland tobacco.
Low MVP and upper limits nn the intensive-type crops, prevented a
higher substitution for soybeans.
When operating capital and cropland go up, an increase in re
turns should be expected. In this resource situation, an additional
27 acres and $12,480 of operating capital allowed the returns to increase
to $66,445, an increase of $6,576 or 11 percent.


11. Wheat; estimated costs and returns per acre,
North and West Florida,.1975 .............. 142
12. Wheat: monthly labor, tractor and combine re
quirements per acre, North and West Florida,
1975 . . ... ... . ... . . 143
13. Single-cropped grain sorghum: estimated
costs and returns per acre, North and West
Florida, 1975 ..... 144
14. Sorghum: monthly labor, tractor and combine
requirements per acre, North and West Florida,
1975 145
15. Double-cropped grain sorghum: estimated costs
and returns per acre, North and West Florida,
1975 146
16. Double-cropped sorghum: monthly labor, tractor
and combine requirements per acre, North and
West Florida, 1975 147
17. Single-cropped soybeans: estimated costs and
returns per acre, North and West Florida, 1975 . 148
18. Soybeans: monthly labor, tractor and combine
requirements per acre, North and West Florida,
1975 149
19. Double-cropped soybeans: estimated costs and
returns per acre, North and West Florida, 1975 150
20. Double-cropped soybeans: monthly labor, tractor
and combine requirements per acre, North and
West Florida, 1975 151
21. Watermelons: estimated costs and returns per
acre, North and West Florida, 1975 ..... 152
22. Watermelons: monthly labor and tractor require
ments per acre, North and West Florida, 1975 . . . 153
23. Costs of operating machinery: annual fixed
costs per unit, 1975 . ... . 154
ix


72
As expected, more of the available.resources were used. Oper
ating capital and operating labor during January, March and April became
limiting.
An increase in operating capital from $60,000 to $80,000 for
the 400-acre farm increased returns by $11,900,,or about 20 percent.
An increase of 71.9 acres in cropland increased returns by $5,334.
At the $100,000 level of operating capital, the intensive-type
crops, peanuts, fue-cured tobacco, and Maryland tobacco, remained at
the same level. That is, peanuts were at the allotment limit, and be
cause MVP of its allotment was lower than its leasing cost, no expansion
of peanuts acreage was feasible. Maryland tobacco was at its upper
limit and flue-cured tobacco was at its equilibrium point of production.
The other enterprises in this plan were extensive-type crops.
Soybeans were the dominant crop with respect to acreage and its level
did not change from the former resource situation, perhaps due to the
fact that its expansion was restricted by limiting operator labor for
field work in January, April and June. Wheat and soybeans in double
cropping activity came into this plan at an incereased level, and
wheat as a single enterprise was a new enterprise. This result was
consistent with what was expected since at higher levels of cropland,
extensive-type crops should be anticipated in the solutions, provided
that no other resource limited their expansion.
This plan with increased extensive-type crops augmented the
returns by $3,672, or 5 percent above the former capital level.


Table Page
12.Optimum plans for selected levels of cropland
and operating capital on North and West Florida
farms: Irrigated corn included and tobacco
excluded 90
13.Optimum plans for selected levels of cropland
and operating capital on North and West Florida
farms: Irrigated corn included, tobacco and
peanut enterprises excluded ... 93
14.Effects of peanut price variations on optimum
plans for 400 acres of cropland and $100,000 of
operating capital in North and West Florida:
Plans including all enterprises 99
15.Effects of peanut price variations on optimum
plans for 400 acres of cropland and $100,000 of
operating capital in North and West Florida:
Plans excluding Maryland tobacco enterprise ...... 103
16.Effects of peanut price variations on optimum
plans for 400 acres of cropland and $100,000 of
operating capital in North and West Florida:
Plans excluding flue-cured tobacco and Maryland
tobacco 105
LIST OF FIGURES
Figure Page
1. The Study Area: Planning Districts I, II
and III, North and West Florida ............ 13
2. Firm Level Stepped Acreage Functions for Peanuts .... 110
vii


Appendix Table 14Sorghum: monthly labor, tractor and combine requirements per acre, North and West
Florida, 1975
Labor
Tractor
Combine
month
month
month
Operations
Times
Nov.
Dec.*
Dec.
Jan.*
Mar.*
Apr.
Apr.
May* Aug.
Jun. Sept?
Total
Nov.
Dec?
Dec.
dan?
Mar Anr MayA
Apr. Mpr* June.
Total
5ug;* Total
Sept.
Disc
1
.30
-Hours
.30
.26
--Hours
.26
Hours
Plow
1
.55
.55
.48
.43
Disc
1
.30
.30
.26
.26
Plant
1
.38
.38
.33
.33
Cultivate
2
.72
.72
.62
.62
Harvest
1
.46
.46
.40 .40
Haul
1
.23
.23
Total
.30
.55
.30
.38
.72 .69
2.94
.26
.48
.26 .33 .62
1.95
.40 .40
*The asterisk indicates the month to which the operator labor was allocated in the model.


Appendix Table 22Watermelons; monthly labor and tractor requirements per acre, North and West Florida, 1975
Operations
Times
Labor
Large Tractor
Small
Tractor
month
month
month
Dec. .
Jan.
Feb.
Mar.
Apr.
May
Total
Dec.
Jan. Feb.
Total
Feb.
Mar.
Apr.
May
Total
hours-
-hours
hours-
Disc
1
.30
.30
.26
.26
Plow
1
.55
.55
.48
.48
Disc
1
.30
.30
.26
.26
Plant
1
.75
.75
.65
.65
Cultivate and sidedress
2
.69
.69
1.33
.60
.60
1.20
Hoe
1
9.00
9.00
Spray
4
.46
.46
.92
.40
.40
.80
Move vines
1
5.00
5.00
2 /
Harvest
1
Total
.30
.55
1.05
.69
10.15
5.46
18.20
.26
.48 .26
1.00
.65
.60
1.00
.40
2.65
^Seasonal labor is hired for this operation.
'Seasonal labor is hired on per acre basis. See budget.


Table 4.--Production trends for selected crops, Planning Districts I, ¡I and ill, North and West Florida, 1963-1973
district
I
.
District
I!
Acres harvested
Yield per
acre
Production
Acres narvested
TiT3 per
acre
Production
Change
Change
Chance
Change
Change
1973
Change
1973
Crop
196S-73
1973
1968-73
1973
1963-73
.1973
1963-73
1973
1968-73
1958-73
%
acres
*
pounds
or
b
pounds.
%
acres
1
pounds
* .
pounds
Peanuts
3.9
6,433
22.6
2.860
34.6
19,030,000
7.5
33,270
42.7
2.442
do.a
93,340,000
Flue-cured tobacco
15.3
657
-11 ?!
1,246
10.7
925,200
(Type 14)-
JO
acres
' 1
. bushels

bushels
acres
t
A
bushels
V
Jo
bushels
Corn
3.4
17.9CC
29.4
65
35.6
1,233.000
-24.2
122,500
11.2
44
-10.9
5,253,000
Soybeans
36.7
103,000
6.6
26
46.7
2,376,000
120.2
131,000
20.4 7
26
7.1
2,856,000
Wheat
-83.3
11,400
-16.1 .
23
-111.4
264.600'
-34.4
15,100
-30.7
20
-61.7
318,300
ro
GO
Table 4.Continued
Oistrict
III
Study *rea
Acres harvested
Yielo per acre
Production
Acres harvested
Yield per
acre
Production
Change
Change
Change
Change
Change
Change
Crop
1968-73
1973
1963-73
' 1973
1968-73
1573
1963-73
1973
. 1963-73
1973
1963-73
1973
i.'
acres
?'
pounds
pounds
%
acres
1
pounas
l
pounds
Peanuts
5.7
4,820
44.6
2,514
72.3
13,857.000
6.8
49,470
60.0
2,664
71.0
131 ,777,000
Flue-cured tobacco
(Type 14)
1.2
10.732
1.2
1,796
2.8
i9,844,400
1.9
11.389
1.2
1,323
3.1
20,770,500
%
acres
l
bushels
%
bushel;
acres
%
bushels
%
bushels
Corn
-9.9
179,100
-9.5
40
-17.3
7,238,700
-12.2
322,100
3.6
43
-9.0
13,900,500
Soybeans
733.3
5,000
10.0
22
815.7
110.000
75.4
244,000
12.2
25
' 74.3
.5,842,000
Wheat
241.7
2,900
-19.1
21
103.0
60,900
-44.2
29,400
-21.5
21
-71.5
643,300
Source: Florida Agricultural Statistics. Field Crops Suirmary, 1973.


38
[7]. There is a fear that under current conditions of inflation, energy
shortage and devaluation, the price expectations are highly uncertain.
The input-output relationships reflected the 1975 situation and
assumed a level of technology defined as "recommended practices." These
coefficients were considered to be appropriate for the North and West
Florida area.
Eight enterprises (which made up to 18 crop activities when most
crops were considered under two harvesting conditions regarding machinery
ownership and when flue-cured tobacco included two harvest systems) were
considered as alternatives to which the resources for a given farm
situation may be allocated. A sufficient market was assumed to be
available to permit the enterprise to be considered for all farmers as
an adjustment opportunity. These cash crop enterprises were peanuts,
flue-cured tobacco, Maryland tobacco, corn, wheat, grain sorghum, soy
beans and watermelons.^ The exclusion of any enterprise means only
that it was not considered widely adaptable within the study area.
Data were assembled on the following aspects of farm enter
prises (Appendix Tables 1-23):
(1) Costs and returns using advanced management practices
and recommended levels of technology.
(2) Monthly distribution of farm operations and labor and
machinery requirements.
?/
The tobacco and peanut enterprises were classified as intensive-
type crops while the other crops were classified as extensive-type crops.


2
of enterprises, level of investment and in the size and type of farm
operations in order for farmers to achieve the desired efficiency in
their enterprises. Therefore this study focused on the economics of
the optimal enterprise combinations for future production planning for
crop farms in North Florida.
The premise underlying this study is that it is possible,
through evaluating the economic opportunities for adjustments in re
source use and by analyzing the decision-making components of production,
to suggest a plan or course of action that will result in economic
growth^/ of crop farms in North and West Florida.
The information in this study should be helpful in evaluating
alternative crop enterprises and alternative farm organizations in North
and West Florida. The estimates presented are not necessarily applicable
to an individual farm or an individual year. Results are presented in
such a manner that the estimates can be adjusted to a particular or
specific set of circumstances.
The results should provide information to producers, extension
agents and agricultural professionals so that crop farmers in North and
West Florida may improve their production decisions. And the linear
programming model developed for this study will serve as a nucleus for
later intensive farm planning efforts for that area.
^./Economic growth is measured in this study by farm income and
its relation to the factors causing changes in the distribution of limited
resources and their productivity,


14
climate have furthered the processes of leaching and oxidation on ridge
soils. Imperfect drainage on flatwood lands has tended to retard these
processes" [5, p. 5], In the poorly drained areas, removing excess
water can be a problem at certain times of the year.
Climate and Weather
The climate in the study area is classified as subtropical, with
lower average temperatures than the remainder of the state.
The growing season!/ in North and West Florida ranges from 240
to 310 days, with a killing frost likely to occur annually. Cold waves
are of short duration, rarely lasting more than three days, but reaching
minimum temperatures of 15 to 20 F [5, p, 6].
Differences in temperature are particularly important because
they reflect the potentials for crops, The study area is located pri
marily north of a line that marks a normal annual temperature of 69
[5, Figure 2]. Major vegetable and citrus producing areas are located
south of this line.
The study area receives abundant rainfall with average annual
totals that range from 52 to 64 inches. Planning District III receives
about 52 inches per year. Average rainfall increases as you move
westward with the western counties in Planning District I averaging
between 60 and 64 inches [5, Figure 3].
!/"Number of days between average date of last killing frost in
spring and average date of first killing frost in the fall" [5- p. 6].


7
than a year ago. Net farm income is decreasing" [17], Thus, the need
exists for a better pattern in allocative resource efficiency oriented
to raise the crop farmers' incomes.
In brief, several instances reflect the need for more information
on production planning and economic adjustments in crop farming in North
and West Florida: (a) The existence of recent technological, developments,
specifically those implementing the transition from conventional to
mechanical harvesting systems; (b) potential changes in policy programs
in farming may transform the crop production structure of North and West
Florida; (c) many crop farms with adequate resources are not achieving
acceptable income levels perhaps due to non-optimal organization of
enterprises; (d) the inflationary trend contorts the cost-returns rela
tionship which might result in changes in the relative competitive
situation among crops; (e) some farms, even though managed efficiently,
are not able to satisfy desired levels of income due to limited unit
size (size as defined by both operating capital requirements and cropland
area).
As the complexity of crop farming increases, the need for careful
production planning also increases. This study was intended to analyze
this general problem. Its overall purpose was to evaluate the adjustment
opportunities in crop production in order to organize productive factors
for higher returns. These enterprise organizations must be within the
constraints placed by resource availability and institutional framework
in the study area.


123
cured tobacco excluded, The price changes were restricted to peanuts
only; therefore prices of competing crops were held constant.
The analysis appears to illustrate the notion that the impact
of lifting the government programs of acreage allotment and price
support for peanuts would be higher crop acreages at the firm level and
lower product prices... If growers oriented their decisions under the
criteria of returns optimization, the decrease in peanut acreage would
be sharp relative to small decreases in price. The level of prices at
which peanuts entered the solutions varied depending oh the enterprise
composition, but were always much lower than the current price support.
When both tobacco enterprises were included as competing enter
prises for peanuts, the highest and lowest peanut prices for which
solutions were obtained were 14.708 cents and 12.345 cents per pound,
prices that were 18.3 percent and 31.4 percent lower respectively than
the support price. Flue-cured tobacco, Maryland tobacco, soybeans and
wheat-soybeans in double cropping proved to be major substitutes for
peanuts with,Maryland tobacco most often entering at its upper limit of
25 acres. When a highly competing corp such as Maryland tobacco was
excluded from the enterprises, peanuts became competitive at even lower
prices. The highest price at which peanuts entered the solutions was
24.6 percent lower than the price support, A narrower range of price
variations suggested that in this case the acreage response of peanuts
to price decreases was stronger. The combination of enterprises indicated
stability with respect to the former case, and the effect of excluding
Maryland tobacco was reflected in the acreage levels at which the other


43
claim can be made that the best combination of enter
prises is obtained.
(5) Single-value ExpectationsThe input-output coefficients
and prices for each productive process are considered
as single-valued, that is, they are assumed to be known
with certainty. This assumption also implies that,
given a productive situation, the output can be pre
dicted with certainty.
The Model
The model pertinent to this study was an economic firm operating
under conditions of pure competition,^ in the short-run, with the ob
jective of profit maximazation.Z/ The firms were the typical farms
selected to represent the designated crop farm situations in the area
of study.
Considering the foregoing basic assumptions involved in any
linear programming model, this study's maximum net returns model can be
/ For pure competition to exist, the following conditions must be
evident. First, a large number of buyers and sellers of homogeneous
products must be involved. Second, the buyers and sellers must be well
informed concerning market conditions affecting the goods in question.
Third, collusion in any form must not exist. Fourth, government inter
ference must not forestall the determination of the price of products by
the forces of supply and donand. This condition is not entirely met by
the farm. Acreage allotments and price supports are in effect on peanuts
and tobacco. Although the conditions of pure competition are not com
pletely fulfilled by the farms and the economic environment in which they
operate, they are sufficiently satisfied to warrant use of the economic
firm operating under pure competition in the short run.
Z/Here the implicit assumption exists that farmers are profit
maximizers, not just profit satisfiers.


Table 9. Opttaur. plans for alternative levels of cropland and operating capital on North and West Florida farms: Plans excluding tobacco
Unit
250 acres
i '00 acres
Unconstrained acreage^
Iter:
$40,030 {60,000
j 540.000 $60,000
i
. $30,000
$30,000 $100,000
CROPS
Peanuts
Acres
65. A
53.9 25.5
93.9
93.9
93.5
93.9
Corn (non-irrigated)
-
37.2
38.9
128.1
213.6
Wheat
H
37.9*
150.9*
Soybeans
**
180.2
156.1 331.2
267.2
267.2
193.9
86-9.3*
Wheat-soybeans

53.5*
124.4*
LIMITING RESOURCES -
later: January
Hours
March
208(13.8)
April
234(0)
234(0)
234(0)
234(37.5}
234(26.6)
May
-
2.34(37.5)
234(36.6)
june

266(42.1 )
250(54)
260(33.9)
260(41.7)
260(47.6)
October
234(3.3)
November
Allotment: Peanut
Acres
lease
(91) 55.9
lease ,
(186.5) 80.0 (9 ¡(1
lease
(109)50
mco c \ *v-ase
l 1 O o ,,
' C.J
260(7.0)
(158/6;^
260(11.0)
053)^s
cropland

250(30.3)
250(76.5) 361.1
55S.3
400(43.5)
557.6
6SC.7
Operating Capital
Dollars
4D,C00(.S2)
45,930 4 l,.0h( .52)
60,000{.43)
£0,197
GO,C00(.0-5)
53,310
RETURNS
Dollars
27,43y
30,533 30,808
40,335
40,915
43,320
44,455
*The asterisk indicates the acreage to be custom harvested. Otherwise harvesting is performed usi
-At this farra size, solutions for $40,000 and 560,000 are the same as those at 400 acres of size.
O/
-Figures within parenthesis represent the MVP of limiting resources.
big own harvest
ir.3 machinery.


Table 7Basic form of the simplex tableau used to compute optimum plans
for crop farms in North and West Florida
Row No,
Rescript ion Row Type
Unit
Constraints
01
Returns
N
Dollar
02 Labor:
January
L
Hour
208
03
February
L
Hour
192
04
March
L
Hour
208
05
April
L
Hour
234
06
May
L
Hour
234
07
June
L
Hour
260
08
July
L
Hour
260 .
09
Aug.u st
L
Hour
260
10
September
L
Hour
260
11
October
L
Hour
234
12
November
L
Hour
234
13
December
L
Hour
208
14 Large Tractor:January
N
Hour
0
15
February
N
Hour
0
16
March
N
Hour
0
17
April
N
Hour
0
18
May
N
Hour
0
19
June
N
Hour
0
20
July
N
Hour
0
21
August
N
Hour
0
22
September
N
Hour
0
23
October
N
Hour
0
24
November
N
Hour
0
25
December
N
Hour
0
30 Combine:
May
N
Hour
0
34
September
N
Hour
0
36
November
N
Hour
0
38 Cropland unconstrained
N
Acre
0
40
Operating Capital
L
Dollar
20,000
44
Peanut allotment
L
Acre
13.9
v 45
Tobacco allotment
L
Pound
4399
46
Tobacco harvester
row
L
Hour
0
47
Combine purchase
row
L
Hour
0
50
Peanuts transfer
L .
cwt
0
51
Flue-cured tobacco
transfer
L
Pound
0
52
Maryland tobacco
transfer
L
Pound
0
53
Corn transfer(grain)L
Bushel
0
54
Wheat transfer
L
Bushel
0
55
Grain sorghum
transfer
L
cwt
0
56
Soybeans transfer
L
Bushel
0
57
Watermelons transferL
Bushel
0


Optimum Plans for a Representative Farm
(400 Acres and $100,000 of Operating Capital);
Effects of Programming with Variable Prices
The model used in this section differs from the general model
constructed for the earlier analysis in that here a representative farm
size was selected, the procedure of programming with variable prices
was incorporated, and a higher yield of peanuts (4,000 pounds per acre)
was used. The size of the representative farm was defined as 400 acres
of cropland and $100,000 of operating capital.-?/ For this farm, three
enterprise compositions were evaluated: all enterprises included, Maryland
tobacco excluded, and both Maryland and flue-cured tobacco excluded. The
analysis was restricted to changes in prices of peanuts only and therefore
the assumption of constant prices for competing crops was implied. In this
way, acreage changes were calculated with peanuts and alternative crops be
ing substituted for one another in response to the peanut price variation.
Tables 14, 15 and 16 show the optimum enterprise combinations,
limiting resources, marginal value products (MVP) and returns for each
of the solutions obtained when the price changed downwards from 22 cents
to zero cents per pound.
Plans Including All Enterprises
Nine activities were considered as enterprises but a maximum of
six entered the optimum solutions. These activities were peanuts, flue-
-?/Initially, an additional farm situation where operating capital
and cropland resources were left unconstrained was also evaluated. These
results turned out to be similar to those obtained for the selected
representative farm.


CHAPTER I
INTRODUCTION
Crop farming is the predominant type of agricultural production
in North and West Florida,!/ and, as in the whole agricultural sector
of the United States, farming in this area is becoming increasingly
complex. Rapid and expanded technological developments coupled with
inflated production costs, as well as current and potential changes in
national agricultural policies accelerate this trend.
Farmers continue adopting labor-saving techniques as well as
increasing the use of purchased inputs. The inflationary syndrome in
creases the already high capital requirements. Rising wages heighten
the potential benefits of harvest mechanization and speed up its adoption.
Events associated with production control programs, price support
regulations and related policy implications create questions regarding
production decisions for the next cropping year.
The above situation may well continue to result in low incomes
for farmers if, as is consistently observed in North Florida [23], a lack
of opportune adjustments in resource use prevails in the area. Therefore,
a need exists for economic adjustments at the farm level in the combination
l^North and West Florida, as used in this study, refers to those
counties included in Planning Districts I, II and III (see Chapter II).
1


Appendix -Table 1Peanuts: estimated costs
and returns
per acre, North
and West Florida, 1975
Item
Unit
Quantity
Price
Value
--dollars
I.
Revenue
cwt.
30.00
18.00
540.00
II.
Cash Expenses
Seed
lb.
90.0
0.425
38.25
Fertilizer (4-12-12)
cwt.
5.0
5.90
29.50
Lime
ton.
1.0
11.75
11.75
Land plaster
Herbicide
cwt.
6.0
1.50
9.00
Preplant (Balan)-
lb.
1.5
4.60
6.90
Cracking-stage
Insecticide-nematicide
qt.
6.0
1.93
11.58
Fumazo.ne
gal.
2.0
14.00
28.00
Dysiston
lb.
1.5
3.08
4.62
Lannate
lb.
1.0
9.00
9.00
Sevin
lb.
1.25
1.52
1.90
Toxaphene
lb.
2.0
1.00
2.00
Parathion
Fungicide
lb.
20.0
.29
5.80
Bravo (6 applications)
gal.
1.125
28.75
32.34
Spray (air)
Tractor (before harvest)
acre
1.0
1.75
1.75
Large
hr.
2.71
3.27
8.86
Small
hr.
1.54
1.66
2.56
Equipment (before harvest)
Interest on cash expenses
hr.
4.25
3.59
(9% for 6 months)
Harvest (own machinery and
dol.
207.40
.045
9.33
labor)
Large tractor
hr.
1.0
3.27
3.27
Small tractor
hr.
1.0
1.66
1.66
Equipment
hr.
2.0

3.47
Hauling to dryer (commerci
al)acre
1.0
6.74
6.74
Labor
hr.
3.0
2.50
7.50
22.64
Harvest (custom service)
Invert (dig)
acre
1.0
10.00
10.00
Trashing
acre
1.0
18.00
18.00
28.00
Drying and cleaning
ton.
1.5
19.13
28.69
Peanut commission
ton.
1.5
1.00
1.50
Total Cash Expenses
Total Cash Expenses
269.56
(custom harvest)
27492
III.
Returns Over Cash Expenses
270.44
Returns Over Cash Expenses
(custom harvest) 265.08


16
Population
From-I960 to 1970, the population of the study area increased
by almost 20 percent, while the population of the rest of the state
increased by 37 percent (Table 1).
Urban population showed a 45 percent increase, while rural
population decreased "5.4 percent during the same 1960-1970 period. The
state percentage changes are 49.4 and 2.3 percent increases for urban
and rural populations respectively.
As for farm populations in the area, all three planning districts
lost population, with an aggregate change of -1.8 percent for the total
area, while the state's farm population has remarkably increased by
44 percent during the same period of 1960-1970. In 1970 farm population
counted for 5.7 percent of the total area population while rural popula
tion represented 40 percent.
Labor Force
Typically, the area under study has excess labor resources.
Table 1 shows the labor force by major sectors of the economy. Agri
culture, unlike most sectors in the economy, has had a decline in its
labor force. While the study area showed a notable decrease of 26.5
percent, the corresponding decrease for the state was only 4.6 percent
during the 1960-1970 period. The state's percent is negative due to
the decreasing effect of the study area. The rest of the state increased
its labor force by 1 percent during this period.


6
12 percent increase in the allotment acreage, The 1972 price averaged
14.25 cents per pound [25, p. 17], This bill did not pass.
J. P. Marshall, et al. [19] presented some alternative modifica
tions to the peanut program. They suggested market-oriented peanut price
incorporating acreage allotments. The peanut programs Marshall suggested
were aimed at reducing or eliminating government expenditures for peanut
price support, yet at the same time, increasing grower's incomes and
insuring an adequate supply of peanuts.
In summary, a peanut program modification seems imminent. In the
event that the government program is lifted or altered, changes in the
peanut industry are likely to occur. Price is likely to drop. If so,
will peanuts still be a competitive crop, or will peanuts go out of the
area's product mix? This study will attempt to provide insight on this
issue.
The facts surrounding the other crops in the area also merit
attention. The 1975 feed grain and wheat programs had no set-aside
requirements and they provide farmers freedom concerning what to produce
for the market place. No land will be removed from agricultural produc
tion under these programs. Soybeans will compete for acreage on an
economic basis with feed grains and other crops.
The main question concerns the product Cost-returns relationship
and its implications on the farm enterprise organization and farmers'
incomes, "Costs for growing wheat, corn and soybeans were up 12-13
percent over 1974, while at the same time, farmers were selling for less


Table 3.Optimum plans for alternative levels of cropland and ope*at*r.g capital on. North and West Florida farms; Plans including all enterprises
Iter.
l!ni t
250 acres
. -
1
400 acres^
Unconstrained
?/
acreage-'
$40,000
$60,000
iiO.t'OO 1
$30,000
$100,000
$100,000
$120,000
CROPS
Peanuts
Acres
13.9
13.9
13.9
13.9
13.9
Flue-cured tobacco

3E.4
38.7
30.1
30.1
30.1
30.1
30.1
Maryland tobacco
1*
25.0
25.0
25.0
25.0
25.0
Corn (non-irrigated)
Wheat

29.3
155.7
. 131.5-28.3*
Soytoar.s

1S4.2
131.0
236.2
235.2
139.2-47.1*
170.7-65.5*
Wheat-soybeans

16.6
65.5
25.3-35.6*
65.4*
rescues 1!
Labor: January
Hours.
203 (71.3)
203 (43.2)
208 (44)
208 (46) .
March

203 (47.6)
2Cf. (210.7)
203 (94.7)
208 (195.5) 208 (105) .
208 (192)
Ro.-n
"
234 (G)
234 (0)
224 (10.8)
234 (10.7)
Ka/
"
234 (10.3)
234 (10.7)
June

260 (43.7)
260 (43.7)
260 (47.6)
Oct.
u
234 (3.S)
Nov.
H
234 (11.4)
234 (11)
Allofrent: tobacco
Pounds
1,j,69.c96
( 2ofi>,s*>
1 u'76,942
. -p*sp
(,1u/$8,820
, ,rlMSe
''u58,830
, ...Lease
v 58,330
, ...Lease
'58,830
peanuts
Acres
(9.46)
(69.2)
(45.2)
(42.7)
(45.3)
Cropland
Acres
35.4
222.9
2SO (76.5)
321.9
400 (14.2)
526.4
500.6
Operating capital
Dollars
40,000 (1.1)
60,000 (.86)
72,432
30,000 (.42)
89.69 5
100,CO0 (.04)
104,572
RETURNS
. Dollars
41,724
59,870
66, r;5
71,779
75,451
76,473
76,651
"The asterisk indicates the aerease to be custom harvested. Otherwise harvesting Is performed usina own harvesting machinery,
this farm size, solutions for $40,000 and $60,000 are the same as those at 250 acres of size.
2/
At this farm size, solutions for $40,000, $50,000 and $30,000 are the same as those at 400 acres of size.
^Figures within parenthesis represent the MVP of limiting resources.


30
totaled 464,000 acres in Florida in 1975, up nearly 3 percent from the
previous year and 16 percent above 1973. Yield outlook was favorable
because of the 1975 crop. Thus, a large 1975 output that could lead
to price easing for the season was expected, In contrast with these
production prospects, the trends observed in the study area during the
five-year period of 1968 to 1973 show that corn production declined 9.0
percent due to an acreage reduction of 12.2 percent (from 366,800 acres
to 322,100 acres). Yields had an increase of 3.6 percent during the
same period and were 43 bushels per acre in 1973. Corn production was
highly concentrated over most areas of Planning Districts II and III,
which accounted for 90 percent of total production in 1973.
Soybeans are produced under two distinct systems in the study,
as a full-season crop and as a second crop after wheat. During the
period between 1968 and 1973, soybean production increased 74.3 percent,
reaching 5,842,000 bushels in 1973. These soybeans were grown mainly
in the extreme western counties located in Planning Districts I and II,
which accounted for 98 percent of total production in 1973. This
notable growth in production resulted mainly from a substantial 75.4
percent increase in the acreage harvested. As of 1975, planting of
soybeans continued its upward surge with a record 305,000 acres planted.
Wheat production in Florida is highly concentrated in Planning
Districts I and II, accounting for 582,900 bushels, or 90 percent, of
the total production of 643,800 bushels in 1973. The trend in production
is downward and for the five-year period under consideration the decrease
was 71.5 percent. This decline was due to reductions in both acreage


Table 13.Optimum plans for selected levels of cropland and operating capital on North and West Florida farms: Irrigated corn included, tobacco
an.1 ncar'it enteexcluded.
Iter.
Unit
250 acre
430 acre
Unconstrained acreage
So.liiJ
' 550,000
Sou, COT)
5S57S55 >1007K'C
Jlifl.iS
CROPS
. . V
Im gatea corn
Acres
140.0
140.0 280.0
140.0
140.0
280.0 280.0
280.0
ticn-irrigated corn
U
71.3
48.1
Wheat
It
.1-
116.9*
1 123.2*
90.3*
Soybeans
"
110.0
260.0 101.6
301.3
240.0
163.3 163.3
109.3
Wheat-soybeans
H
34-9.9*
83.7*
85.5* 145.5*
185.0*
LIMITING RESOURCES
Labor: April
Hours(Dol.)
234(0)
234(52)
234(38)
234(49) 234(41)
234(43)
May
234(24)
234(33)
234(49) 234(41)
234(43)
June
*.
260(33)
260(42)
- 260(33)
260(48)
October
H
260(2)
Soveir.se r.-
*
234(7)
234(10)
Cropland
Acres(2cl.)
250(76)
400(77) 381.6
435.3
657.2
523.8 712.5
712.7
Operating capital
Dollars
35,590
42,264 6C.G03(.S6)
60.300.10)
80,000(.05)
GO ,000(.32) 100,C00(.1C)
104,787
RETURNS
Dollars
22.410
33,885 3?.262
39,860
41,679
46,676 £0.987
51,050
*The asterisk ind
-^Irrigated corn
icates the acreage to be custom
could only enter the solution i
harvested. Otherwise harvesting is performed using own
n 140-acre units.
harvesting machinery.
^Figures within parenthesis represent the MVP of limiting resources.


I o
resources. Farmers who haye resource situations similar to those
presented here should be able to adopt one of the many plans presented
in this thesis. For instance, the optimum plan for a farm with 425
acres of cropland, one-man operator labor supply, and $45,000 of
operating capital should not differ greatly from the optimum plan
presented here for the farm situation with 400 acres of cropland and
$40,000 of operating 'capital. Furthermoe, that particular farm would
be close to the best resource adjustment suggested, in that part of
the analysis which did not include tobacco crops, where 400 acres of
cropland and $60,000 of operating capital were best.
While analyzing the adjustment potentials for crop farmers in
the study area a level of technology defined as "recommended practices"
was assumed. Also, assumptions were made regarding certainty in prices
and yields, and market availability for the products involved. No
attempt was made to determine the present resource use in the area nor
the magnitude of adjustments required to meet the technology assumption.
However, in Chapter II, a review of programs and trends in production
and prices was included to check the other assumptions and accordingly
evaluate the results obtained in this study.
Many farmers do not approximate the results obtained in this
study. Resource limitations, management ability, risk aversion, and
farmers' perception of long-run price and production relationships
different than those assumed in this short-run planning model, could all
play a part in explaining this difference, For farmers to attain a high
degree of resource efficiency in the production of an individual enter-


Appendix Table 3Flue-cured tobacco: estimated costs and returns per
acre, North and West Florida, 1975
Item
Unit
Quantity Price Value
--dollars
I. Revenue
lb.
2,100
1.10
2,310.00
II. Cash Expenses
Plant bed:
Custom fumigate sq
. yd.
75.00
.21
15.75
Fertilizer
cwt.
.75
5.90
4.43
Seed
on.
,11
20.00
2.20
Nitrate of Soda" (16-0-0)
cwt.
.04
9.50
.38
Fungicide
each
__

6.44
Insecticide
each
--

.40
Tractor (small)
hr.
1.05
1.66
1.74
Equipment
hr.
1.05
.65
.68
Irrigation
hr.
.30
1.25
.38
Labor hired
Total Plant Bed Expenses
hr.
1.50
2 ; 50
3.75
36.15
Field Operations:
Nematicide
lb.
10.00
.59
5.90
Fertilizer (4-8-12)
cwt.
18.00
6.00
108.00
Potassium Nitrate (13-0-44)
cwt.
1.50
10.00
15.00
Lime
cwt.
4.00
.60
2.40
Herbicide
acre
1.00
16.00
16.00
insecticides
acre
1.00
52.78
52.78
Sucker Control:
Systemic
gal.
1.0
14.00
14.00
contact
gal.
3.5
7.25
25.38
Fuel, curing (LP gas)
gal.
375
.32
120.00
Electricity
acre
1.0
20.00
20.00
Insurance of crop
acre
1.0
42.50
42.50
Irrigation
hr.
7.8
3.25
25.35
Large tractor ,
hr.
1.9
3.27
6.21
Small tractor
hr.
6.12
1.66
10.16
Equipment
hr.
8.02
.68
5.47
Labor, hired:
Plant pulling
hr.
8.00
2.25
18.00
Transplanting
hr.
6.40
2.25
14.40
Topping
hr.
10.00
2.25
22.50
Sheeting
hr.
10.40
2.25
23.40
Sheets
ea.
3.25
2.40
7.80
Marketing charge
Interest on cash expenses
dol.
2,310
.03
69.30
(9% for 6 months)
dol.
660.90
.045
29.74
Subtotal cash expenses,
excluding harvest
690.64
--Continued--


91
In the first case, when 140 acres of irrigated corn were forced
in the optimum plans, it primarily affected the levels at which the
enterprises came into the optimum plans, except for the case of peanuts
which remained the same, Soybeans was the enterprise which was substi
tuted most as the operating capital restrictions were relaxed. In the
enterprise mix non-irrigated corn entered the optimum plan only in one
case. When 280 acresof irrigated corn were forced in the same plans,
neither non-irrigated corn nor wheat entered the solutions. Peanut
acreage decreased from its upper limit of 93.9 acres to 47,1 acres, and
soybeans also entered at reduced acreages. Thus, the extensive-type
crops acquired a significant dominancy in the solutions but at the
expense of some reductions in the levels of returns.
When comparing results in Table 12 with preliminary solutions
where irrigated corn was not forced at fixed levels, the value of the
programs in all cases was somewhat lower. These differences in returns
were brought about by the adjustments that took place in the acreage
of irrigated corn by forcing in this enterprise at 140 and 280 acres
respectively. Soybeans was the enterprise that responded in most cases
to these acreage adjustments by either increasing or decreasing its level.
For instance, in the farm situation of 250 acres and $60,000, the original
level of irrigated corn was 156,1 acres, and when this crop was forced
in at 140 acres, the remaining 16.1 acres were diverted to soybeans, an
enterprise that went up from zero to 16,1 acres. This adjustment in
acreage caused a reduction of $550 in returns,


4
are important to production planning in the study area are the following:
flue-cured tobacco, Maryland tobacco, peanuts, corn (irrigated and non-
irrigated), soybeans, grain sorghum, wheat and double cropping activities
such as wheat-soybeans and wheat-grain sorghum. From these enterprises,
peanuts and flue-cured tobacco have higher potential incomes and thus
are the most attractive to farming. However, these two crops face a
series of economic, technological and institutional uncertainties which
complicate production planning and create a need for farmers to periodi
cally re-evaluate their farm organizations.
As for tobacco, mechanical harvesters are now available for
harvesting flue-cured tobacco with the potential for substantially re
ducing the labor input!/ and the per unit production cost. Tobacco's
high seasonal demand for labor together with a sharp upward trend in
wage ratesA/ constitute a mounting problem in the hand harvest system.
Thus, the adoption of the mechanized system may increase tobacco
profitability by substituting capital for labor. Yet mechanization
is a costly endeavor. The cost of tobacco harvesters ranges from
$20,000 to about $24,000 and bulk barns cost about $6,500 each. At pres
ent the mechanization question hinges on the size of the operation. The
rigid restraints in allotment leasing plus the small size of poundage
allotment (4,399.6 lbs. in 1974) make it difficult for most farmers
to accumulate tobacco acreage into operating units large enough to
justify the purchase of mechanical harvesters.
/"Mechanization of its (flue-cured tobacco) harvest will about
half the average crew size of the current harvest systems in use" [27],
2j"h major contribution to rising costs to flue-cured tobacco
production is farm wage rates which rose 46 percent in the South Atlantic
states from 1967 to 1972" [3].


69
250-Acre Crop Farm
For this farm size, operating capital was varied up to $80,000.
As a result, three different farm organizations were obtained.
At $40,000 of operating capital level, the production of 35.4
acres of flue-cured tobacco was the only activity included. This
activity provided substantially greater returns than the next most
profitable crop and used all the available operating capital. This high
profit crop is an intensive user of capital. The potential benefit from
expanding this crop by using additional operating capital was high at
this point. This can be seen by looking at the MVP of operating capital
and tobacco allotment. At the solution, an additional dollar would
have a 110 percent rate of return, which is by far higher than the
9.5 percent market rate of return for capital assumed in this study.
An additional pound of tobacco allotment would generate 23 cents, as
compared to 11 cents per pound assumed as the cost of this allotment.
The value of the program was $41,724, which revealed a high
returns situation for this resource alternative.
At $60,000 of operating capital, flue-cured tobacco and soy
beans were in the optimum organization of enterprises. Additional
operating capital allowed for a higher acreage in tobacco, but its
expansion was restricted by March labor. Soybeans did not compete
with tobacco for March labor and 184 acres were included in the optimum
solution,


Figure 1*The Study Area: Planning Districts I, II and III, North
and West Florida
*Multi-county Planning Districts Boundaries. Established by State
Secretary in January 1973.
r.svm.F.


29
further development in yields, From 1968 to 1973 production of peanuts
in the study area increased 71 percent; acreage went up only 6.8 percent,
while the ytld per acre substantially increased by 60 percent. Total
production increased by 25 percent between 1973 and 1974 because a record
yield of 3,000 pounds per acre was realized [30]. Notice that, in 1973,
District II was responsible for 75 percent of that year's total production.
Flue-cured tobacco production (type 14) increased by only 3.1
percent from 1968-1973, Its average yield per acre increased slightly
(1.2 percent) and the acreage harvested moved up very little (1.9 percent)
since allotment regulations have been restricting any potential expansion.
Flue-cured tobacco production is higly concentrated over most areas in
Planning District III, where 96 percent of a total of 20,770,500 pounds
were produced in 1973. Growers planned to harvest 12,900 acres in 1975
[12], which is up 10 percent from 1974 and 11 percent above 1973. On
the horizon are innovations in harvesting and curing methods which could
revolutionize the flue-cured tobacco business in the future.
Mary!and-type tobacco is a new crop in Florida with a promising
future if markets and marketing systems are developed. Although it does
not receive government price support, its production in 1974 was larger
than in the past years. For the 1974-1975 season the supplies were about
4,000,000 pounds abouve 1973-1974 [32, Table 17]. The production pros
pects indicated that its acreage last year was down 4 percent from 1974
[32].
Corn, from the standpoint of acreage harvested, is the most
important field crop grown in Florida. Corn planted for all purposes


y
In the two cases where 280 acres of irrigated corn were forced
in the solutions (two irrigation units), this crop was increased from
213.6 acres and some allocation and changes in the use of limiting
resources took place. In the farm situation of 400 acres and $80,000,
peanuts decreased from its upper limit of 93.9 acres to 47.1 acres, and
soybeans from 92.4 acres to 72.9 acres. The decrease in peanuts, an
intensive user of capital, allowed for a release of $5,680 of operating
capital. The value of the program decreased to $45,555, or 8 percent
less than the original solution. In the situation of unconstrained
acreage, peanuts again decreased slightly, while the same enterprises
in double cropping increased by 27.4 acres. Apparently, these changes
in the levels of the enterprise were brought about by a major realloca
tion of operator labor to the irrigated corn because March and April
labor was limiting
Plans Including Irrigated Corn and Excluding Peanuts and Tobacco
Table 13 shows the selected plans including irrigated corn when
only extensive-type crops were considered in the analysis. Thus, some
of the observations made from results in Table 11 still hold true,
but the presence of irrigated corn did cause these two sets of solutions
to differ substantially.
In the former case, at the 250-acre level of cropland, soybeans
strongly dominated solutions but inclusion of 140 acres of irrigated
corn forced its substitution. At higher levels of cropland (situation
of unconstrained acreage) the earlier optimum solutions also included


Page
Optimum Plans Excluding Tobacco and Peanut
Enterprises 84
Optimum Plans Including Irrigated Corn Enterprise ... 88
CHAPTER V:
OPTIMUM PLANS FOR PEANUT FARMS AND THEIR ACREAGE
RESPONSE FUNCTIONS TO PRICE CHANGES: THE PEANUT
PROGRAM ABOLISHED ...... 96
Optimum Plans for a Representative Farm (400 Acres
and $100,000 of Operating Capital): Effects of
Programming with Variable Prices . . 97
Plans Including All Enterprises 97
Plans Excluding Maryland Tobacco Enterprise 102
Plans Excluding Both Flue-Cured Tobacco and
Maryland Tobacco Enterprises 104
Stepped Acreage Functions for Peanuts .......... 108
CHAPTER VI:
SUMMARY AND CONCLUSIONS ................... 115
On Optimum Plans for Alternative Cropland and
Operating Capital Situations 117
On the Effects of Variations in Peanut Prices ...... 122
Implication of Results ........... 125
APPENDIX OF TABLES ....................... 128
BIBLIOGRAPHY 158
BIOGRAPHICAL SKETCH . . 161
v


32
area harvest their crop before the market opens for the rest of the
nation. This early harvesting might partially offset those declines.
In the 1974-1975 season the national average price was $2,95 per bushel
[29]. As for grain sorghum, nationwide supplies this year were the
smallest in 18 years, and its price dropped due to the weak domestic
feed demand.
Most signs indicated a big wheat crop in 1975, at levels higher
than 1974. Supplies of that size would likely soften wheat prices,
perhaps down from the 1974-1975 season average farm price of $4.04
per bushel, which was 9 cents above the 1973-1974 price and the highest
on record for the United States [33]. "Forces seem to be building which
could push prices downhill towards $3 per bushel at harvest time" [33,
P. 7].
Soybean prices decreased below 1974 levels due to reductions .
in its usage, largely due to a lagging demand for soybean oil and meal.
However, its price behaved less erratically than in previous years when
it rose to a record $10 per bushel in June of 1973. "Mid-month soybean
prices received by farmers declined from $8.17 per bushel last October
to $5.31 in March, a drop of nearly $3. So far this season they are
averaging around $6.15, about $1 above a year ago" [30, p. 8].
Peanut prices fell last marketing season mainly due to record
large supplies in 1974 crops and also because the economic forces of
recession curtailed its demand, In fact, peanut market prices fell
1,6 cents below C,C,C.s minimum 1975 support price and averaged 18 cents
per pound [30, Table 12],


TABLE OF CONTENTS
Page
ACKNOWLEDGMENTS .. . ii
LIST OF TABLES ....... ............. vi
LIST OF FIGURES vi i
LIST OF APPENDIX TABLES viii
ABSTRACT .............. xi
CHAPTER I:
INTRODUCTION . 1
Statement of the Problem 3
Objectives 8
CHAPTER II:
DESCRIPTION OF THE AREA . 11
Selection of the Area 11
Physical Factors 12
Soils and Topography 12
Drainage .............. ... 12
Climate and Weather 14
Irrigation 15
Social and Economic Conditions 15
Population 16
Labor Force 16


Appendix Table 8Irrigated corn: monthly labor, tractor and combine requirements per acre, North and West
Florida, 1975
Labor
Tractor
Combine
month
month
month
Operations
Nov. Dec. Mar. Mar.Apr. Aug. T Nov. Dec. Mar /Mar. Apr.T alAug. r t
Times Dec.* Jan.* Apr*May* Sept*Total Dec.* Jan.* Apr* May*TotalSept.Jotal
A~4-
UC K, ,
A 4-
wLa,
Disc old stalks 1 .30
Plow 1
Disc, apply .herbicide, disc 1
Plant 1
Cultivate 2
Harvest 1
Haul 1
Total
.55
-Hours-
.30 .26
.55
.48
.60
.38
.72
.60
.38 .
.72
.58 .58
.23 .23
.30 .55 .60 .38 .72 .81 3.36 .26 .48 .52 .33 .31 2.21 .50 ^50
-Hours --Hours---
.26
.48
.52 -52
.33 .33
..62 .62
.50 .50
*The asterisk indicates the month to which the operator labor was allocated in the model.


BIOGRAPHICAL SKETCH
Rmulo Soliz-Valarezo was born October 19, 1946, at Pinas, El
Oro, Ecuador. In October, 1959, he moved to Quito, where he graduated
from "Colegio Normal 'Juan Montalvo" in June, 1965.
He entered the "Universidad Central del Ecuador," Quito, in
October, 1966, finished his course work in February, 1972, with the
Best Student award, and received the degree of Ingeniero Agrnomo in
November, 1972. His thesis title was: "El Problema Agroeconmico del
Trigo en el Ecuador y su Gestin ms Viable."
In December, 1972, he was appointed as Researcher, Agricultural
Economics, at th "Instituto Nacional de Investigaciones Agropecuarias"
(INIAP), Ecuador, position that is being held until the present time.
In March, 1973, he enrolled in the Graduate School of the
University of Florida. He has been working as a Graduate Research
Assistant in the Department of Food and Resource Economics, and is now
to receive the degree of Master of Science in Agricultural Economics.
He is a founding member of the "Asociacin Ecuatoriana de
Economa Agrcola," and member of the Florida Chapter of Gamma Sigma
Delta, the Honor Society of Agriculture.
161


Appendix Table 5-'-Maryland tobacco: estimated costs and returns per acre,
North and West Florida, 1975
Item.
Unit
Quantity
Price
Value
doll
ars
I. Revenue
lb.
1,500
.85
1,275.00
II. Cash Expenses
Plant bed!/
acre
1.00
57.62
57.62
Nematicide
lb.
10.00
.59
5.90
Fertilizer (4-8-12)
cwt.
12.00
6.00
72.00
Potassium Nitrate (13-0-44)
cwt.
1.50
10.00
15.00
Lime
acre
4.00
.60
2.40
Herbicide
acre
1.00
16.00
16.00
Insecticide
acre
1.00
26.39
26.39
Insurance
acre
1.00
42.50
42.50
Irrigation
hr.
7.80
3.25
25.35
Large Tractor
hr.
1.54
3.27
5.04
Small Tractor
hr.
9.08
1,66
15.07
Equipment
hr.
10.62
.68
7.22
Labor, hired:
Plant Pulling
hr.
8.00
2.25
18.00
Transplanting
hr.
6.40
2.25
14.40
Tractor Operator
hr.
12.21
2.50
30.52
Topping
hr.
10.00
2.25
22.50
Harvest
hr.
40.00
2.25
90.00
Stripping
hr.
85.00
2.25
191.25
Marketing
dol.
1 ,425.00
.04
57.00
Interest on cash expenses
(9% for 6 months)
dol.
714.16
.045
32.14
Total Cash Expenses
746.30
Returns Over Cash Expenses
528.70
1/Same expenses as in Flue-cured tobacco plant bed.


cured tobacco, Maryland tobacco, wheat, soybeans and the double-cropping
activity wheat-soybeans. The continuous downward changes in the price
of peanuts originated a set of nine optimum solutions presented in
Table 14.
In all cases, peanuts entered the optimum plans at prices much
lower than the current price support of 18 cents per pound. The range
of prices over which the peanut response took place under the indicated
resource restraints started at 14.708 cents and went down to 12.345 cents
per pound.
Peanuts entered the solution at the maximum allowable (201.6
acres) at a minimum price of 14.708 cents per pound. The acreage levels
at which other crops entered this solution were 6.8 acres of flue-cured
tobacco, 32 acres of wheat (of this acreage, 26.8 acres were to be custom
harvested), and 159.6 acres of soybeans. Returns amounted to $82,903 of
which $63,181, or 76 percent was income from peanuts, a commodity that
in this solution accounted for 50.4 percent of the total cropland
available. Given the restrictions in the model, peanuts could not have
increased beyond 201.6 acres regardless of its price./ Thts was be
cause cropland, together with operator labor, was most restrictive,
the latter being limited in six critical months, especially in March
and June. For instance, at 22 cents per pound, the optimum solution
^/Higher peanut prices in the absence of allotments, probably
would cause farmers to try and procure more resources; rent or buy
more land, perhaps, or hire more labor. These situations could have
been reflected with a different set of resource assumptions, but this
analysis concentrated on the short-run effect of price changes on an
optimum one-man representative farm.


4U
Consequently, for all crop enterprises, net returns were
calculated over variable costs, that is, net returns were allocated
to land, operator labor and management, tractor and machinery invest
ment and overhead costs. In the flue-cured tobacco and peanut budgets
net returns also included returns to the allotment quota since no
charge was included for leased quota. Due to the fact that the amounts
of non-charged items were different for some crop enterprises (i.e.,
barns needed in tobacco production were not necessary in the production
of other crops), the returns per acre should be compared accordingly.
In calculating costs of growing and harvesting a farm enter
prise, a level of equipment and a set of production practices must
be assumed. Crops in this area were primarily produced with four-row
equipment with appropriate tractor power and small grain equipment
(Appendix Table 23). Other assumptions were: normal weather conditions
prevailed, soil quality was fairly uniform for given enterprise situa
tions, all labor other than operator labor was hired and enough of this
labor was available in peak seasons. Perhaps, the most basic assumption
was that of the level of technology. Since the concern was planning
the income growth of crop farms, the level of efficiency was one of the
potential adjustments pertaining to this work. This study assumed a
"recommended practices" tec-hnology that was suitable for crop farming
within practical limits in the study area. Since all these assumptions
on the budgets existed for the duration of the planning period, the
maximization of returns in this study was relative rather than absolute.


LIST OF TABLES
Table Page
1. Social and economic trends, Planning Districts
I, II and III, North and West Florida, 1960-
1970 ............... 17
2. Some agricultural trends; Planning Districts I,
II and III in North and West Florida, 1968-1973 . . 20
3. Data on peanut allotment and marketing quota
program and flue-cured tobacco acreage poundage
program, North and West Florida, 1973 and 1974 .... 26
4. Production trends for selected crops, Planning
Districts I, II and III, North and West Florida,
1968-1973 28
5. Product yields and prices used in preparing
budgets for North and West Florida, 1975 36
6. Input prices used in preparing budgets for crop
farms in North and West Florida, 1975 37
7. Basic form of the simplex tableau used to compute
optimum plans for crop farms in North and West
Florida . 56
8. Optimum plans for alternative levels of cropland
and operating capital on North and West Florida
farms: Plans including all enterprises 68
9.Optimum plans for alternative levels of cropland
and operating capital on North and West Florida
farms: Plans excluding tobacco . 77
10.Optimum plans for alternative levels of cropland
and operating Capital on North and West Florida
farms: Plans excluding peanuts ............ 82
11.Optimum plans for alternative levels of cropland
and operating capital on North and West Florida
farms: Plans excluding tobacco and Peanuts 85
vi


Abstract of Thesis Presented to the Graduate Council
of the University of Florida in Partial Fulfillment of the Requirements
for the Degree of Master of Science
OPTIMUM FARM PLANS TO MEET CHANGING CONDITIONS
IN NORTH AND WEST FLORIDA CROP FARMS
by
Rdmulo Soliz-Valarezo
March, 1976
Chairman: Dr. John EV Reynolds
Co-Chairman: Dr. John Holt
Major Department: Food and Resource Economics
The major objective of this study was to develop optimum (profit
maximizing) farm organizations as a general model to evaluate income-
raising adjustment opportunities in crop production for the area comprised
of Planning Districts I, II, and III in North and West Florida. The analy
sis can be classified under two headings: 1) Determination of effects on
optimum combination of enterprises and income levels of changes in alterna
tive levels of cropland and operating capital, and 2) Impact on peanut
enterprises if the governmental price support and acreage allotment pro
grams were abolished. This section included the development of acreage
response functions to alternative levels of peanut prices.
A "synthetic" firm approach was adopted to analyze typical one-
man crop farm operations. Linear programming techniques and parametric
procedures were used to test the optimum solutions. Results depended on
the underlying assumptions, the input-output data and the price informa
tion used in this study.
Eighteen production activities were considered as enterprises.
Under the model's assumptions, both single and double-cropped grain sorghum
did not enter any of the optimum solutions. For flue-cured tobacco, hand
xi


54
Rows 46 and 47 relate to the activities of purchase of tobacco
harvester and combine machinery. These rows facilitate the transfer of
field-work time purchased to be used in the producing activities so that
no more than what is purchased can be used.
Rows 50 to 57 are crop transfer equations permitting the amount
produced in the crop producing activities to be sold through the selling
activities.
The programs designed to achieve the objectives of this analysis
were classified into two sets of plans. The first set was comprised of
those plans associated with the different farm resource levels and the
product mix alternatives. The second set of plans considered the situa
tion regarding the peanut program as expressed by the allotment provisions
and price support policy.
The first set of plans was basically designed to comply with
the overall purpose of comparing results when three criteria of farm
size were optimized while maximizing returns. In order to make these
comparisons, all those plans formed by the combinations of the different
resource alternatives were analyzed simultaneously. Then later the
product mix alternatives were introduced by appropriate changes in the
basic intitial model. In other words, a first computer run was made
including in the model all the enterprises.and considering all those
stated situations in cropland and operating capital availability, as
well as the alternatives in types of harvesting. Then further, similar
computer runs were made, first, excluding flue-cured tobacco and allowing


LIST OF APPENDIX TABLES
Table Page
1. Peanuts: estimated costs and returns per
acre, North and West Florida, 1975 129
2. Peanuts: monthly labor and tractor require
ments per acre, North and West Florida, 1975 130
3. Flue-cured tobacco: estimated costs and
returns per acre, North and West Florida ... 131
4a. Flue-cured tobacco plant bed: monthly labor
and tractor requirements per plant bed (75
sq. yd./acre), North and West Florida, 1975 ...... 133
4b. Flue-cured tobacco field operations: monthly
labor and tractor requirements per acre,
North and West Florida, 1975 134
4c. Flue-cured tobacco harvest: monthly labor,
tractor and mechanical harvester requirements
per acre, North and West Florida, 1975 . .... . 135
5. Maryland tobacco: estimated costs and returns
per acre, North and West Florida, 1975 . 136
6. Maryland tobacco: monthly labor and tractor
requirements per acre, North and West Florida,
1975 137
7. Irrigated corn: estimated costs and returns
per acre, North and West Florida, 1975 138
8. Irrigated corn: monthly labor, tractor and
combine requirements per acre, North and West
Florida, 1975 139
9.- Non-irrigated corn: estimated costs and returns
per acre, North and West Florida, 1975 140
TO. Non-irrigated corn: monthly labor, tractor and
combine requirements per acre, North and West
Florida, 1975 141
viii


Appendix Table 24.--Man-equivalent hours of operator labor available
by months, 1975
Month
Number of
work days
Full-time
Number of hours
per day
farm operatori/
Total hours
per month
January
. 26
8
208
February
24
8
192
March
26
8
208
Apri 1
26
9
234
May
26
9
234
June
26
10
260
July
26
10
260
August
26
10
260
September
26
10
260
October
26
9
234
November
26
9
234
December
26
.8
208
Total
310
2,792
-^The man-equivalent hours of operator labor available were esti
mated by the Piedmont and Coastal Plain Sub-committee of the Technical
Committee fqr Regional Project S-42. Adapted from [15].


9
(d) Alternative harvesting systems in flue-cured
tobacco, where mechanical harvesting and hand
or conventional harvesting were considered.
(e) Changes in the product mix involving four
situations: a), all enterprises included, b)
excluding flue-cured tobacco and allowing
peanuts as the allotment crop, c) peanuts ex
cluded and allowing flue-cured tobacco as the
allotment crop, and d) excluding both peanuts
and tobacco enterprises.
(2) To describe and evaluate the different farm plans
obtained under the above farm situations. This analy
sis focused on:
(a) Optimum enterprise organizations.
(b) Optimum income levels.
(c) Limiting resources, with emphasis on cropland
and operating capital/.
(3) To determine optimum plans for peanut farms under the
following alternatives:
(a) Price variations considered.
(b) Flue-cured tobacco included and Maryland tobacco
excluded.
/for this evaluation, marginal value products (MVP) of restric
five resources under those alternative farm situations were determined.


The exclusion of both peanuts and tobacco enterprises was
designed to develop optimum plans for farms specializing in extensive-
type crops. For the 250-acre and 400-acre farms, the solutions were
strongly restricted by cropland, and the associated rates of return
to resource use were high. Procurement of additional cropland for these
farm sizes would be profitable as reflected in the MVP for this resource.
This was corroboratecf by the substantial increases observed in the
returns as farm size went up. At higher farm sizes custom harvest
became prominent because operator labor was critical at harvest time.
In general, for this enterprise composition, larger acreages were
needed, and the enterprise combination determined by $60,000 of operating
capital and 575 acres seems to be the optimum resource adjustment (Table
11). A higher level of operating capital would not be advisable since
the MVP of this resource would drop to levels lower than its.opportunity
cost.
Irrigated corn enterprises were evaluated in a separate section
due to difficulties arising from the integer nature of center-pivot
irrigation systems. The analysis was performed by forcing irrigated
corn into the solutions in 140-acre units. Irrigated corn did not
combine well with tobacco, apparently because these two enterprises
competed for operator labor during critical months, especially during
January and March when tobacco uses labor intensively in plant-bed opera
tions. With peanuts, on the other hand, irrigated corn combined well
when entered at 140 acres. When entered at 280 acres, however, peanut
acreage was reduced considerably, In general, the inclusion of irrigated
corn increased the level of returns in the optimal plans. This effect


58
Table 7(continued)
Row No.
Maryland
Tobacco
Irrigated Corn
Own Custom
Non-Irrigated Corn
Own Custom
Harvest
Harvest
Harvest
Harvest
05
06
07
08
09
01
-737.98
-176.82
-200.15
-114
-124.83
02
1.18
.55
.55
.55
.55
03
04
1.38
.60
.60
.60
.60
05
.70
.38
.38
.38
.38
06
1.40
.72
.72
.72
72
07
.63'
08
4.50
09
5.30
.69
10
.81
11
12
13
.30
.30
.30
.30
14
1.02
.48
.48
.48
.48
15
16
.52
.52
.52
.52
.52
17
.33
.33
.33
.33
18

.31
.31
.62
.62
19
20
21
22
23
24
25
.26
.26
.26
.26
30
34
.50
.40
36
38
1
1
1
1
1
40
737.98
176.82
200.15
114
124.83
44
45
46
47 .50 .40
50
51
52 -1500
53
54
55
56
57
115 -115
-65 -65


61
Table 7 (continued)
Row No.
Peanut
Sale
Flue-Cured
Tobacco Sale
Maryland
Tobacco Sale
Corn
Sale
Wheat
Sale
Grain
Sorghum
Sale
21
22
23
24
25
26
01
18
1.10
.95
2.50
3.50
4.0
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
30
34
36
38
40
44
45
46
47
50
51
52
53
54
55
56
57


114
prices and no allotment was lower than that obtained in the plan in
cluding the peanut program. Apparently, this difference in effects
is due to the different levels at which peanuts entered both solutions
when the peanut program was considered. In the first case, peanuts
entered the plan at only the level of its allotment (13.9 acres), while
in the second case peanuts entered the plan.iat the maximum acreage
allowed in the model ("93.9 acres).


CHAPTER IV
OPTIMUM ENTERPRISE ORGANIZATIONS FOR
ALTERNATIVE CROPLAND AND OPERATING CAPITAL SITUATIONS
This chapter .deals with an evaluation and comparison of effects
on optimal enterpise organizations and on income levels of alternative
farm resource and enterprise situations. Overall, the analysis is aimed
at the evaluation of crop production alternatives in order to maximize
returns in specified resource situations.
Although the analysis was performed for all the alternative
farm situations originally considered, this discussion of results is
limited to the cases where variations in the alternative crop farm
situations resulted in substantial changes in the optimum plans and
resulting income levels.
As for the harvest systems included, results relate to own-
machine harvest. The possibility of having only custom harvest was
discarded, and the discussion of custom harvest was restricted to
those instances where it was necessary to supplement own-machine harvest
whenever operator labor at harvest time was too limiting.
Custom harvest was not discussed separately because the optimal
enterprise organizations obtained were very similar to those of own-
machine harvest. The pattern of changes in the product combinations
and in the levels at which each enterprise came in the plans, followedthe
63


CHAPTER III
DESIGN OF STUDY
This study was designed to evaluate possibilities for improving
crop farm profitability and efficiency under the changing conditions
affecting crop agriculture in the study area.
Selection of optimal enterprise combinations and evaluation of
the potential economic adjustments feasible in the study area were made
on the basis of efficiency defined in terms of maximum net revenue;!/
The application of this optimization criteria to obtain the net returns
estimates was made under a set of simplifying assumptions and constraints
so that interrelations among the studied variables could be traced.
This study was oriented toward a short-run planning situation.
Most crops are capable of maturing once per year, thus the length of
the planning period was one year. In the short-run many productive
resources must be considered as fixed with no opportunity to dispose
of or acquire resources. For this planning period, the relevant costs
were those that vary with the output for that production year.
The approach adopted in this study was a firm level approach
where "typical crop farms" for the study area were determined by defining
!/ln this analysis, net revenue was defined as gross farm income
less variable costs of inputs and crop Operations (fixed costs, operator
labor and management were excluded). .
34


31
harvested (-44.2 percent) and yield per acre (-21.5 percent), The
1975 crop continued to reflect declining production prospects, Acres
harvested for grain in the spring of 1975 totaled 20,000 acres, down
33 percent from the two previous years [12],
Prices
Prices received and their prospects are of major interest to
farmers and varying them in the analysis will help establish the impact
of changing prices.
The price situation for field crops during the last season
appeared rather unfavorable for farmers. All products in this study,
except tobacco, experienced declining prices. This downward'movement
in farm prices reflected a nationwide condition. Farm product prices
averaged 10 percent lower for the first five months of 1975 than in the
same period in 1974. On the other hand, the index of prices paid for
production items, interest and farm wages was 11 percent higher than
during January-May of 1974 [28].
Feed grains prices in the 1974-1975 season were a record high.
During the present season, however, market prices have declined mainly
due to the sharp reduction in the domestic use of feed grain (costs of
feed grain have been high in relation to market prices of livestock and
poultry) [31]. Good weather for crops will continue to support easing
of prices during the rest of the season, The most likely situation
for corn production is a large output that could lead to corn prices
well below the 1974~1975 season, However, corn producers in the study


19
Transportation
The study area enjoys good transportation facilities. Federal
and state highways extend to all sections in the area. Since most farms
are located on or are near all-weather roads thus small and large
cities are readily accessible to farmers for trading purposes. The
railroad lines running in and through the area connect the study area
with the rest of the state as well as with the north-bordering states.
Like the road system, the railway system can also be classified as ade
quate.
The study area is served by two important ports: Pensacola on
the west side of the study area, and Jacksonville on the east. While
a large volume of the area's agricultural production is not shipped out
of the area by water, many agricultural supplies are shipped into the
state by this means.
Agricultural Trends
The trends of several agricultural variables provide some in
sight on the adjustments that farmers have made over time.
Number and Size of Farms
By 1969 there were 11,139 farms that averaged 285.5 acres in
the 27 county study area (Table 2). The number of farms decreased by
51.4 percent during the 15 years from 1954 to 1969 and from 1959 to 1969
the number of farms with sales over $2,499 decreased only 6,8 percent.
The number of farms in the rest of the state decreased by 29 percent.


80
was observed. The levels of soybeans were much higher than for the
250-acre farm. Corn came in as a new enterprise, and peanuts competed
successfully for operating capital, reaching its upper limit at the
$60,000 level. The availability of additional cropland was a prominent
factor in improving the returns situations, and the best resource adjust
ment should be toward the 400-acre crop farm with $60,000 of operating
capital.
Plans for the Unconstrained-Acreage Situation
In this resource situation, and up through $60,000 of operating
capital the same solutions were obtained as those in the 400-acre farm
size. This resulted because operating capital became limiting at levels
of cropland usage lower than 400 acres. Consequently, discussion of
results will be limited to the optimal plans for $80,000 and $100,000
of operating capital.
At the $80,000 level of operating capital, the optimum combina
tion of enterprises included peanuts, corn, soybeans, wheat and the
double-cropping activity wheat-soybeans. Since peanuts, the most profit
able and only intensive-type crop, remained at its upper 1imit, the changes
resulting from the additional resources available occurred among the
extensive-type crops.
Single- and double-cropped wheat as well as soybeans as a second
crop were new in the plan and included custom harvest in the solution.
Custom harvest was necessary because operator labor in May and November
was limiting the.harvest operations.


12U
In.the 250-acre farm size, peanuts and soybeans combined well
as they efficiently shared operator labor, a resource that did not
become limiting, The rates of returns to resource use were high and
an expansion in both cropland and operating capital seems a profitable
adjustment. In the 400-acre farm size, as more cropland and operating
capital were made available, the extensive-type crops were stressed.
The levels of soybean's were much higher than in the 250-acre farm.
Corn came in as a new enterprise, and peanuts competed successfully for
operating capital, reaching its upper limit of 93.9 acres at $60,000 of
operating capital. The additional cropland was a prominent factor in
improving the returns situation, and the best resource adjustment should
be toward the 400-acre farm size with $60,000 of operating capital. In
the unconstrained-acreage situation, custom harvest entered the solutions,
extensive-type crops were emphasized, and operator labor became a most
restricting factor Similar to the "all enterprises" case. Also, the
implied rates of returns to additional resources were low and con
sequently the resource adjustments seem to be unprofitable in the
unconstrained-acreage situation.
When peanuts were excluded from the enterprises, the optimum
plans were expected to reflect substantial changes among less profitable
crops, that is, among extensive-type crops. This was true regarding
the levels of acreage at which the enterprises entered the solutions.
However, stability was evidenced in the combination of enterprises in
all solutions. Overall, the elimination of peanuts from the enterprises
resulted in lower levels of resource use but only slightly affected the
profit levels.


harvest methods should be used for acreages up to74.'.acres, at which
point it becomes feasible to use mechanical harvest. Optimum solutions
were obtained for several alternative resource situations and product
combinations. Overall, government-supported crops appeared to be the
best capital investment plan. Tobacco and peanuts combined well, and
the exclusion of peanuts did not increase returns. As more cropland
and operating capital was made available, extensive-type crops entered
the optimum plans in larger acreages. In farms specializing in extensive
crops, corn and soybeans appeared to have the best adjustment opportuni
ties, Corn substituted for soybeans as operating capital increased.
Higher requirements of operator labor at harvest time made custom
harvest a profitable alternative.
As peanut prices decreased and peanut acreage allotment was
eliminated, other crops were substituted for peanuts and the resulting
income disadvantages were small under current relationships with com
peting crops.
Chairman
xii


5
As for peanuts, the most limiting component governing their
production is the peanut allotment program. In 1974 the average allot
ment for the area was 13.9 acres.
However, despite production control regulation and increasing
demand for edible^-grade peanuts, production from the national minimum
allotment resulted in supplies greater than commercial requirements.
Due to this production surplus, prices received by farmers were near
the support price and the C.C.C. (Credit Commodity Corporation) acquired
the peanuts in surplus. The C.C.C. then distributed the peanuts at
prices below acquisition cost into crushing channels and into exports.
Consequently, the C.C.C. loses money on peanut price support operations.
In recent years the C.C.C.'s losses have averaged 6 cents per pound for
all peanuts acquired under the price support program. Moreover, due
to the uptrend in parity prices and with strong indications that peanut
production may continue to outrun commercial edible requirements, the
C.C.C. costs in supporting peanut prices will most likely continue to
increase. While the annual peanut program cost approximated 66 million
dollars in 1970, the estimate for 1980 is over 100 million dollars, as
suming continuation of the current program, Thus, this high level of
government expenditure in the peanut program creates pressure for program
modifications.
In 1973 a bill was introduced to Congress in an attempt to
extend the target price concept to peanuts. This bill basically implied
a lifting of the price support policy and a change to a market-oriented
price. A 10 cents per pound target price was suggested, along with a


64
same trend as resource levels were increased. Furthermore, the gap
in the value of the programs between both systems was small and became
smaller at higher levels of operating capital. In other words, for
both systems, at a given resource situation, the optimal combination
of enterprises as well as the levels at which each enterprise came in
the plans, were the same or very similar. If opeating capital and/or
farm size were increased, the resulting changes in the mix of enterprises
and their levels, were quite similar in direction and magnitude. Finally,
own-machine harvest, and not custom harvest, was chosen due to the fact
that for the study area as a whole, own machine harvest is the most
common case among crop farmers.
Because of the high profitability of watermelons under the
assumed price conditions, the preliminary analysis indicated watermelons
usually entered the optimal solutions at the upper limit allowed in
the model. Since this was generally the case at alternative resource
levels, watermelons were not included in the final analysis. Water
melons are not an alternative that is considered by a majority of
farmers in the study area due to disease build-up and severe price
fluctuations at harvest. Nevertheless, watermelons may be recommended
in optimum plans wherever the above restrictions are not present.
Irrigated corn was excluded from basic analysis due to difficul
ties arising from the integer nature of center-pivot irrigation systems.
However, this enterprise was evaluated for selected farm situations by
forcing this activity into units determined by the size of the irriga-


109
within which the optimum enterprise organization may not respond to a
price variation.
In the model, peanut prices were set at an arbitrary high price
of 22 cents per pound, although it is unlikely that such prices would
occur. The program gradually decreased this price to determine the
price response of peanut production. Figure 2 shows the computed
acreage at different reductions in price.
When the estimation included all enterprises (continued-line
supply curve), the maximum price for which an output response was
obtained was 14.709 cents. At higher prices the supply was completely
unresponsive since peanuts operated to the limit of operator labor in
critical months. As prices declined, supply became very responsive
over a relatively narrow range of prices, except for those prices be
tween 14.653 cents and 13.659 cents, and between 13.394 cents and
13.346 cents, over which supply became completely unresponsive. The
declines in peanut prices at levels above 14 cents per pound caused
sharp reductions in peanut acreages. These effects were a major result
of the substitution of peanuts for Maryland tobacco, a crop that being
highly competitive relative to peanuts, pushed up the price at which
peanuts were profitable enough to come into the solutions, At peanut
prices around 13 cents and 12 cents per pound, the Maryland tobacco
acreage was at its upper limit, therefore other enterprises were
substituted for peanuts whose relative profitability was increased as
peanut prices declined, The minimum price to induce peanuts production
was 12.345 cents since the curve intercepts the vertical axis at this


87
As expected, high requirements of operator labor at harvest time
made custom harvest appear in the programs. As operator labor in May
limited harvest and haul operations in wheat, this enterprise always
entered custom harvest in the programs. Similar situations were ob
served in the double-crop activity wheat-soybeans.
April, May and June were the most limiting months in most
solutions and had marginal contributions to returns which could be of
substantial benefit had additional labor been made available during these
months.
The amount of cropland required to optimize the use of the
other resources in each plan was notably higher than the levels ob
served in previous enterprise-mix situations. This was expected since
extensive-type crops use larger quantities of land relative to the
amount of capital and labor used.
Operating capital stopped being a constraint at the $100,000
level, where only $88,859 were utilized. Operator labor was at the
limit for March, April, May, June and November and restricted the
further expansion in cropland or capital use.
Returns at the $40,000 level were $28,654. The MVP for capital
at that point was 24 percent, which implied that an increase in operating
capital would be highly profitable, This was verified at $60,000 of
operating capital where the MVP was IQ percent, and the new returns
were $32,071, or 11 percent higher than in the former solution. At the
$80,000 level, the MVP for capital dropped to 6 percent, and returns


Table 16Effects of peanut price variations on optimum plans for 400 acres of cropland and $100,000 of
operating capital in North and West Florida: Plans excluding flue-cured tobacco and Maryland
tobacco]/
Price of Peanuts
Iter,
Unit
22.000
9.3398
9.1915
8.735
0.000
CROP
Peanuts.
Acres
201.6
201.5
189.8
148.6
Corn (non-irriga ted)
Acres
15.8
15.8
45.5
38.9
38.9
Wheat
Acres
23.1*
23.1*
Soybeans
Acres
159.6
159.6
142.6
212.5
361.1
Wheat-scybeans
Acres
21.1*
LATINS RESOURCES
Operator Labor: April
Hours
234(37)
234(37)
234(34)
234(0)
234(0)
May
Hours
234(37)
234(37)
234(34)
234(0)
June
Hours
260(45)
260(45)
260(45)
260(39)
260(39)
July
Hours
260(369)
260 (4)
260(0)
Cropland
Acres
400(8)
400(8)
400(11)
400(49)
400(49)
Operating capital
Dollars
74,662
74,662
75,185
65,596
.37,892
RETURNS
Dollars
133,617
31,550
30,425
28,011
28,011
*The asterisk indicates the acreage to be custom harvested. Otherwise harvesting is performed using own
harvesting machinery.
Prices of competing crops were held at current levels.
O
CD


89
irrigated corn entered the optimum solutions. In all cases, these
solutions comprised situations that did not include tobacco as an enter
prise. The acreages at which this crop came into these solutions
determined the number of 140^acre units at which irrigated corn was
evaluated. These acreages approached either one or two 140-acre units.
Tables 12 and 13 show the optimum crop programs when the irrigated corn
enterprise is incorporated on the farm for two enterprise situations:
tobacco enterprise excluded and both tobacco and peanut enterprises
excluded.
Irrigated corn was absent from solutions that included tobacco
apparently because these two enterprises competed for available labor
during five critical months, especially during January and March when
tobacco is an intensive user of labor in plant-bed operations. Being
far more profitable, tobacco competed successfully for the operator
labor available.
Plans Including Irrigated Corn and Excluding Tobacco
In discussing the effects of the presence of irrigated corn in
the optimum plans, one should consider whether one or two units of
irrigation were used. Results in Table 9 carrbe used as a basis for
discussing most of these effects.
As observed in Table 12, the inclusion of irrigated corn re
sulted in higher returns for the optimum solutions as compared to those
comparable programs where irrigated corn was excluded (Table 9),


127
prise is a difficult and somewhat uncertain task. Likewise, determining
the optimum plan for the farm as a whole is a complicated process even
after an approximation of the optimum level of resource use has been
established for the various enterprises. Results of this study should
be used together with some non-profit considerations such as to account
for yield and price uncertainty, and to observe the general crop situation
(information in this regard was anticipated in Chapter II). In other
words, use of the results should be accompanied by further judgment as
to differentiate between the most profitable (as presented here) and the
most likely or feasible farm organization.
Finally, the results presented in this study do not predict the
actual adjustments that crop farmers in North and West Florida will
adopt in the next cropping year. The optimum plans were derived based
on profitability criteria and, as such, they are normative and indicative
of what should be if the assumed conditions existed.


I certify, that I have read this study and that in my opinion it
conforms to acceptable standards of scholarly presentation and is fully
adequate, in scope and quality, as a thesis for the degree of Master of
Science.
J(ohn E. Reynolds, Chairman
Associate Professor of Food and
Resource Economics
I certify that I-have read this study and that in my opinion it
conforms to acceptable standards of scholarly presentation and is fully
adequate, in scope and quality, as a thesis for the degree of Master of
Science.
/ohn Holt, Co-chairman
Associate Professor of Food and
Resource Economics
This thesis was submitted to the Dean of the College of Agriculture and
to the Graduate Council, and was accepted as partial fulfillment of the
requirements for the degree of Master of Science in Agriculture.
March, 1976
Dean, Graduate School


Figure 2--Firm Level Stepped Acreage Functions for Peanuts
A Representative Farm Approach in North and West
Florida, with Prices of Competing Crops at Current
Levels, 1975,
CENTS PER POUND
OF PEANUTS
22-
Z
15i
14'
13'
121
All Enterprises
Included
i
-22
/
Maryland Tobacco
Excluded
1*15
14
13
12
IT
io-
9-
Both Maryland Tobacco and
Flue-Cured Tobacco
Excluded
*11
*10
-9
8-
8
i
__i i_
40 60
1 1 1 I 1 1 _L_
80 100 120 .140 160 180 200
ACRES OF PEANUTS


enterprises entered the plans. The exclusion of both tobacco enterprises
greatly improved the competitive potential of peanuts. The price at
which this crop started being profitable was 48 percent lower than its
current price support. Also, the responsiveness of peanuts to price
declines was, on the average, stronger than in the earlier cases. Changes
in acreage and rates of substitution took place among competing crops,
with non-irrigated corn substituting for peanuts at the upper range of
price variations, and with soybeans as the major substitute of peanuts
over the lower part of this range of price variation.
The price declines of peanuts produced only minor income de
clines under current price relationships with competing crops and under
the conditions imposed in the model of analysis. The substitution ratio
between peanuts and major competing crops seems such that only small
changes would have to occur in the price ratios and/or substitution
ratios to make the alternative crops attractive from an income stand
point.
Discontinuing the peanut program had varying effects on the
levels of returns. When the tobacco enterprises were included, these
effects were higher levels of returns for most of the plans. However,
when the tobacco enterprises were not included, these effects were
lower levels of returns. Apparently, this difference in effects is
due to the different levels at which peanuts entered the plans when the
peanut program was considered,


Appendix Table 10-
-Non-
West
irrigated corn:
Florida, 1975
monthly labor, tractor
and combine
requirements
per
acre, North and
Labor
Tractor
Combine
Operations
Times
month
month
month
Nov. Dec.
Dec.*Jan.*Mar-
Mar. Apr. Aug.,,
Apr.*May* Sept!*
Oct.
Nov. Dec.
Dec.*Jan.*
Mar.
Mar. Apr.
Apr.*May*
Total
Aug.
Sept.* Total
Oct.
-hours
-hours
Disc old stalks
1
.30
.30 .
,26
.26
Plow
1
.55
.55
.48
.48
Disc, apply herbi
cide, disc (apply
herbicide ahead of
first disc)
1
.60
.60
.52
.52
Plant
1
.38
.38
.33
.33
Cultivate
2
.72 .72
.62
.62
Harvest
1
.46 .46
.40 .40
Haul
1
.23 .23
Total
.30 .55 .60
.38
.72 .69 3.24
.26
.48
.52
.33 .62
2.21
.40 .40
*The asterisk indicates the month to which the operator labor was allocated in the model.


47
any other type of equipment involved in the cropping operations. In
the model, these constraints were treated by linking them to the operator
labor constraint.
Ultimate adjustment in each farm was limited by the above-
mentioned resource constraints in critical time periods when performing
field operations. However, the adjustment potentials were also deter
mined by some external and subjective restrictions.^/
One very important external restriction on the crop enterprise
organization was the government allotment program on peanuts and flue-
cured tobacco. In 1975, the average allotment for peanuts was 13.9
acres and for flue-cured tobacco was 4,399 pounds. The model provided
for allotment rental with upper bounds of 80 acres for peanuts and 42
acres (90,000 pounds) for flue-cured tobacco.
An alternative farm situation was defined when no peanut allot
ment was considered. This alternative of "unrestricted production"
allowed for the evaluation of no government intervention in peanut
production. Since the allotment provision is linked to the price support
policy, in the event the allotment is lifted, the price support policy
most likely is going to be lifted too and the peanut price is likely
to drop. Consequently, optimal enterprise organizations were evaluated
when no peanut allotment or price support were considered. Peanut price
decreases were parametrically programmed and acreage response functions
0/External restrictions, as implied in this study, are those limit
ing conditions not determined at the farm level, such as acreage allot
ments. Subjective restrictions, on the other hand, consider those re
strictions imposed by the operator himself. Their limits are usually
! hard to determine, but they are real and significant/to farm planning.


33
In 1974 the flue-cured tobacco prices received by farmers in
the study area averaged 100.9 cents per pound (Table 3). These prices
constituted a record high and were 17.6 cents higher than the price
support level. In 1975, however, due to higher production expectations
and a shortfall in cigarette production [32], prices received by growers
were expected to stabilize near 19741s record or about 7 cents above
1975's support price of 93.2 cents per pound. As for Maryland-type
tobacco, in the 1973 crop (marketed mostly in 1974), growers received
a season average price of 62.5 cents per pound in other states than
Maryland^ [32, Table 17].
/90.5 cents per pound in Maryland State (highest on record)
[23].


26
Table 3.Data on peanut allotment arid marketing quota progam and flue-
cured tobacco acreage poundage program, North and West Florida
1973 and 1974.

Item
Unit
1973
1974
PEANUTS:
Number of Allotment Farms
No.
4,088
3,983
Allotted Acreage
acres
55,350.6
55,340.5
Average Farm Allotment'
acres
13.5
13.9
Harvested Acres^
acres
53,665.8
53,775.7
Production
lbs.
147,623,230
167,380,126
Actual Yield
lbs.
2,751
3,113
Average Price
Do! ./Ton
328.5
374.8
TOBACCO:
Number of Allotment Farms
No.
6,918
7,001
Allotted Acreage-^
acres
14,019.4
16,915.6
2 !
Total Poundage Quota
lbs.
25,713,718
30,801,942
Average Farm Allotment
lbs.
3,716.9
4,399.0
Harvested Acreage
acres
11 ,605.4
11,679.6
Total Marketings
lbs.
20,966,558
25,052,331
Yield per Acre based on
marketings
lbs.
1,807
2,145
Average Price
Dol ./cwt.
88.3
100.9
^Excludes acreages of peanuts harvested green for boiling purposes but
includes non-allotment farms of one acre or less.
2/
Total effective allotments and poundage quota after adjustments for
undermarketings and overmarketings in 1972 and 1973 respectively.
Source: U.S. Agriculture Stabilization and Conservation Services,
Florida Annual Report, 1973 and 1974.


Tabla 14.--Effects of peanut price variations
on optimum plans for
400 acres of cropland and $100,000 of operating
capital in North
and West Florida
: Plans
including all enterprises^
Price of peanuts
I ten
Unit
Cents per pound -
Z2.000
14.703
14-653
13.659
13.572
13.479
13.394
12.346
12.345
0.00
Cr.5-5
rcarats
Acres
201.6
201.6
149.5
113.6
. 100.8
93.5 .
03,0
55.5
.8
0.0
rUs-cured tobacco^-
Acres
6.S
6-8
11.2
14.3
16.4
17.5
22.0
23.5
32.2
32.3
itaryla-.d tobacco
Acres
14.9
25.0
25.0
25.0
25.0
25.0
25.0
25.0
isr.-at
Acres
5.2-25.3*
5.2-26.8*
25.8*
21.9*
19.4*
1.9-16.3*
1=6.2
14.2
34.0
34.3
Soybeans
Acres
153.6
159.6
193.5
223.3
238.5
245.7
268.7
276.3
223.7
222.3
*nsdt-sc>c&ns
Acres
1.4*
4.0
5.4
84.3
35.5
i::'T!,;5 PES'UPCES
Operating labor: Oar..
Hours
208(43)
203(43)
208(43)
3r.
Hours
203(219)
208(219)
208(204)
208(210)
208(215;
203(215)
203(217)
203(155)
208(195)
203(135}
Apr.
Hours
234(11)
234(11)
234(50)
234(35)
234(11)
234(43)
234(40)
234(0)
234(0).
!'.ay
Hours
234(11)
234(11)
234(50)
234(35)
234(11)
234(11)
234(0)
uun.
Hours
260(30)
260(30)
260(26)
260(43)
260(80)
.250(54)
260(54)
260(54)
260(54)
260654)
Jjl.
Hours
260(261)
269(35)
260(29)
259(0)
Fue-cured tobacco
a . t t'.-er.t
Pounds (.
n)Jef?:
5,7**o
( ll)lease
'9,946
, lease
u M9.172
, ,,.lease
' *J25.7C0
, ,..lease
1-1 '29,957
/ lease
J32.375
( l!)leiSe r
' '4i,846 '
,,.lease
"'44,986
( ll)1eese
'"'63,180
Oj,Hvd
Creplane
Acres
400(3)
400(8)
400(8)
400(8)
400(8)
400(8)
403(14)
400(14)
400(14)
400(14)
Operating capital
.Dollars
30.537
80,587
85,113
S8.259
87.837
87,648
07,143
87,012
90,805
SO .861
?ITi;NS '
Dollars
141,692
82,903
82,573
78,057
77,703
77,359
77,139
74,811
74.803
74.809
'The asterisk indicati
^Prices of competing
es the aerea
crops were
i-a to be custom harvested. Otherwise harvesting is perforase using own harvesting machinery.
neld at current levels.
7f
The flue-cured tobacco enterprise included was that of hand or conventional harvest only.


118
restricted by March labor. Operating capital increases at levels
higher than $80,000 were not profitable since cropland was limiting
output expansion. At this level of capital, peanuts and Maryland
tobacco entered the solutions at the maximum acreages permitted in the
model. Flue-cured tobacco entered at 30.1 acres, a level that seems
to be its equilibrium point of production since the MVP of its allotment
equaled the marginal cost of an additional unit of allotment. The
situation observed in flue-cured tobacco remained the same in the larger
farm sizes. In brief, in the 250-acre farm, a rather intensive cropping
system was most profitable with high returns to the resources used.
At the 400-acre farm size, no increase in operating capital
beyond $100,000 was indicated because cropland and operator labor
prevented further expansion of output. The level of returns at this
point seems to reflect the best farm adjustment since higher resource
levels implied declining rates of returns to resource use (Table 8). As
expected, solutions at this farm size continued to show those crops
supported by government programs. Peanuts and tobacco combined well
since they did not compete for operator labor during peak months.
Entensive-type crops entered the optimum solutions at the higher operat
ing capital levels and soybeans were the most important crop considering
the high acreages at which this crop entered the solutions,
The optimum plans for the unconstrained-acreage situations
reflected low rates of returns to additional cropland and operating
capital. Consequently, the resource adjustments implied in these plans


Table 10.Optimum plans for alternative levels cf cropland and operating capital on iiortn and West Florida tarir.s; Plans excluding peanuts
Item
Unit
250 acres
400 acres
1/
Unconstrained
2/
acreage
S40.000
$60.030
Seo.ooc
$80,000
$100,000
TTooTcoo
$120,000
CROPS
Flue-cured tobacco
Acres
35.4
38.7
. 32.3
32,3
32.3
32.3
32.3
Maryland tobacco
M
25.0
25.0
25.0
\
25.0
25.0
Corn (non-irrioated)
M
Wheat
N
34.3
150.2
189.S
Soybeans

134.2
192.7 .
222.9
222.9
138,9-84.1*
144.5-73*
Wheat-soybeans

32.9
35.5
82-3.5*
42.4-43.1 *
LWITIS5 RESOURCES %
Labor: January
Hours
208(71.3)
203(43.2)
208(55.5)
208(58.7)
March

200(47.6)
203(210.7)
203(94.2)
203(195.5)
208(179.2)
208(136)
May
"
234(10.3)
234(10.4)
Jure

263(53.6)
260(43.7)
260(47.4)
October
H
234(4)
f%over.oer
1
234(11.4)
234(11)
Allotment: Tobacco
Pounds
, ,,.lease
v 1 '0
_iJ'76,942
/ incase
''''63,450
, ir,lease
(-16j63,450
( ll)1ease
' "'63,450.
, .-..lease
' "'63,450
^ 11 ;63,4£0
Cropland
Acres
35.4
2??.^
250(70.5)
313.1
400(14.2)
5.15.9
555.5
Operating capital
Dollars
40,000 0 09)
60,000{.36)
72.120
30,000(.42)
90,861
T DO .000(.04)
103,348
RETURNS
Dollars
41,724
59,870
60,313
70,816
74,e09
75.87T
76,005
The asterisk indi
cates the acreage to be custom
harvested.
Otherwise harvesting is performed
using own harvesting machinery.
At this farm size, solutions for $40,000 and $60,000 are the same as those at 250 acres of size
-'At this farm size, solutions for $40,000, $60,000 and $80,000 are the same as those at 400 acres of size.
^Figures within parenthesis represent the MVP of limiting resources.


45
Planning Situations and Process Restrictions
The main criteria used in the identification of the different
farm situations and restrictions was that they should realistically
reflect the conditions faced by crop farmers in the study area.
The key advantage of these situations was that they allow for
asking "what if" questions concerning the potential changes and adjust
ment opportunities. Further analysis shed light on the required or
desirable production adjustments to be suggested in the area planning
for the crop farming sector.
The possibility for larger incomes lies largely in the efficient
handling of the land and other resources. However, combinations of crop-
enterprises under various land, capital and othe constraint situations*
offered widely varying income opportunities. Several alternative plan
ning situations were determined so that a close tailoring of alternative-
plans was possible to simulate the crop farmer's particular situation..
Initially, two types of farm situations were developed, one being
alternative levels in the resource situations and the other being
alternative considerations in the product-mix situation.
As for the farm resources, two basic situations were identified
after several preliminary runs of an initial model. One situation^
related to cropland availability and considered three levels of crop
land: 250 acres, 400 acres, and an "unconstrained" level. The other
situation related to operating capital requirements and provided fora
\


62
Table 7(continued)
Row No.
Soybean
Sale
27
Watermelon
Sale
28
Tobacco
Harvester
Purchase
29
Combine
Purchase
30
Rent
Peanut
Allotment
31
Rent
Tobacco
Allotment
32
01
5.50
.03
-4487
-4097
t
cn
o
-.11
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
30
34
36
38
40
44
45
46
47
50
51
52
53
54
55
56
57
3450
-357
1500
-500 .
60
-1
.11
-1


44
expressed in equation form as follows:
n
Maximize Zo = Z (P.X- C,X.)
* i J J J J
(1)
where Zo is the net return for all activities when the price, per unit
cost (here per unit cost refers to costs per acre), and level of the
activity are P.,'C. and X. respectively. The number of activities
J J v
is n.
Subject to the linear restriction
n
Z a^- X{ < Bi i = 1, ..., m
j=l J
(2)
where a.. is the amount of the i^*1 constraint required to produce a unit
of the jt*1 activity. The utilization of resource or constraint i cannot
exceed the total amount of restraint B.
n
Z a. X. > 0
j=l kJ J-
(3)
where a^ is the amount of. machinery required to produce a unit of the
jt*1 activity. No direct restriction was placed on machinery.
X. > 0 (4)
3 ~ .
where this inequality states that no enterprise (or any other activity)
may be produced at a negative level.


CHAPTER VI
SUMMARY AND CONCLUSIONS
Crop farmers in North and West Florida are confronted with
adjustment decisions to meet changing conditions in their production
patterns. Many of these changes are concerned with adjustments at the
farm level in terms of the magnitude of resource requirements, combina
tion of crop enterptises, and modification of the government program
for peanuts. In this study, the research focused on the economics of
the optimal enterprise organizations for alternative resource situations
as a means to provide information on what the future enterprise makeup
for production planning in the study area should be.
The analysis can be classified under two major purposes: first,
to determine and analyze the effects on optimal enterprise organizations
and on income levels of alternative levels of cropland and operating
capital for different enterprise compositions; and second, to determine
the effects of changes in peanut prices on the optimum crop plans, and
to develop firm level functions for the acreage response of peanuts to
these price changes.
Eight crops which made up 18 production activities were included
as enterprises in the analysis presented in Chapter IV. A sufficient
market was assumed to be available to permit each enterprise to be con-
115


78
ficiently share the use of. operator labor, a resource that did not
become limiting,
The value of the program at the $40,000 level was $27,439 in
dicating the high profitability of this plan. The optimum solution for
$60,000 of operating capital (although only $45,930 was used) increased
returns to $30,533, an increase of 11 percent. This solution resulted
in an increase of $3,094 in returns as a result of an increase of $5,930
in operating capital.
In brief, when tobacco was excluded, peanuts took its place and
came in strong in both solutions. It competed successfully with soybeans
in the use of resources, especially operating capital. In this farm
situation, expansion in size seems highly profitable.
400-Acre Crop Farm
In this farm size, the usage of operating capital varied from
$40,000 to $80,000 and, consequently, three different optimum plans are
presented.
At the $40,000 level of operating capital the optimal combination
of enterprises was the same as in the 250-acre farm size. However, since
more cropland was available and peanuts used more operating capital per
acre, soybeans came in stronger and dominated the solution with 331 acres.
If these results are compared to the corresponding ones in the
preceding farm size, this implied a strong substitution of peanuts for


Appendix Table 4c--Flue-cured tobacco harvest: monthly labor, tractor and mechanical harvester requirements per
acre, North and West Florida, 1975 "J
Operations
Times
Labor
Larqe
Tractor
Small Tractor
Mechanical Harvester
month
month
month
month
June
July
Aug.
Total June July Auq.
Total
June July Aug.
Total June July Auq.
Total
-hours-
hours---
hours*
--hours
Conventional Harvest!/
Pick and rack
6
20.45
30.68
10.23
61.36
3.00 4.50 1.50
9,00
Haul to barn
6
1.15
1.73
.58
3.46 1.00 1
.50 .50
3.00
Total
21.60
32.41
10.81
64.82 1.00 1
.50 .50
3.00
3.00 4.50 1.50
9.00
1 /
Mechanical Harvest
Combining
2.30
3.45
1.15
6.90 .
2.00 3.00 1.00
6.00
Hauling to barn
2.30
3.45
1.15
6.90
2.00 3.00 1.00
6.00
Racking and loading
barn
8.00
12.00
4.00
24.00
Total
12.60
18.90
6.30
37.80
2.00 3.00 1.00
6.00 2.00 3.00 1.0C
6.CO
i/Harvest operations use hired labor.


57
Table 1(continued)
Peanuts Flue-Cured Tobacco
Row No.
Own
Harvest
01
Custom
Harvest
02
Mechanized
Harvest
03
Conventional
Harvest
04
01
-269.56
-274.92
-810.37
-870.91
02
3.34
3.34
03
1.54
1.54
04
.85
.85
5.37
5.37
05
. .60
.60
.74
.74
06
.86
.86
1.38
1.38
07
- .72
.72
08
1.29
1.29
09
10
2.99
2.99
. 11
12
.60
.60
13
.89
.89
14
1.0
1.0
. 15
16
.74
.74
.52
.52
17
.52
.52
18
.33
.33
19
.62
.62
1.0
20
1.50
21
.50
22
1.0
23
24
.52
.52
25
30
34
36
38
1
1
1
1
40
269.56
274.92
810.37
870.91
44
1
1
45
2100
2100
46
6
47
50
-30
-30
51
-2100
-2100
52
53
54
55
56


132
Appendix Table 3Continued.
Item
Unit
Quantity Price Value
dollars--
Harvest (Conventional)
Tractor, large
hr.
3.0
3.27
9.81
Tractor, small
hr.
9.0
1.66
14.94
Trailers
hr.
18.0
.T7
3.06
Priming aide
hr.
9.0
.27
2.43
Labor, hired:
Tractor operator
hr.
10.35
2.50
25.87
Priming and racking
hr.
54.00
2.25
121.50
Interest on cash expenses
(9% for 2 months)
dol.
177.61
.015
2.66
Conventional harvesting
cost
dol.
180.27
Total cash expenses
dol.
870.91
Returns over cash expenses
(conventional harvesting)
1
,439.10
Harvest (Mechanical)
Combine
hr.
6.0
2.74
16.44
Tractor, small
hr.
6.0
1.66
9.96
Trailers
hr.
18.0
.17
3.06
Labor:
Combine operator
hr.
6.9
2.50
17.25
Tractor driver
hr.
6.9
2.50
17.25
Barn labor
hr.
24.0
2.25
54.00
Interest on cash expenses
(9% for 2 months)
dol.
117.96
.015
1.77
Mechanical harvesting cost
dol.
119.73
Total cash expenses
dol.
810.37
Returns over cash expenses
(mechanical harvesting)
1
,499.63


25
1975. Transfer of allotments by lease or sale within counties was
provided for in the 1975 programs, which allows for size consolidation
of those otherwise small peanut.and tobacco operating units. Table 3
shows the figures corresponding to peanuts and tobacco allotment
programs. In peanuts, under the 1974 program, there were 3,983 allot
ment farms in the study area, as compared to 4,099 in 1973. The average
farm allotment was 13.9 acres. In flue-cured tobacco, the number of
allotment farms was 7,001 in 1974, only 1.2 percent higher than in 1973.
The average tobacco allotment was 4,400 pounds.
The prices of peanuts and tobacco were supported by loans and
direct purchases under the price support program. The objective of this
program was to stabilize prices at announced levels to protect farm
income. The price support level for flue-cured tobacco in 1975 was up
12 percent over 1974 as required by law. This meant a 93.2 cents per
pound support price [31, Table 4], which reflected higher prices for
goods and services bought by farmers. For the 1975 crop year, tobacco
production costs again increased: "... tobacco crop will probably cost
a minimum of 5 to 6 cents per pound more to produce than in 1974" [32,
p. 16]. As for peanuts, the 1975 crop was supported at a minimum average
price support of $393.10 per ton (19.64 cents per pound). This level
was 7.4 percent above the previous year's rate (18.3 cents per pound)
and reflected a rising minimum support level resulting from an up-trend
in peanut parity price. At this level the price of peanuts was above
the world market price. Even so, the C,C,C,V minimum sales policy for
diversion sales was 100 percent of the loan level,


Appendix Table 18Soybeans: monthly labor, tractor and combine requirements per acre, North and West Florida,
1975
Labor
Tractor
Combine
month
month
month
Operations
tNov.
Times n *
Dec.*
Dec.
Jan?
Feb.
Apr. May June* Oct. T ,
July Novi Tota1
Nov. Dec.
Dec? Jari?
Feb.
Apr. May June* Oct.
July Nov*
Hours --Hours Hours
Disc old stalks
1
.30
.30
.26
.26
Plow
1
.55
.55
.48
.48
Disc, apply herbicide,
disc 1
.60
.60
.52
.52
Plant
1
.38
.38
.33
.33
Cultivate
2
.72
.72
.62 -62
Harvest
1
.46
.46
.40
.40
Haul
1
.12
.12
Total
.30
.55
.60
.38
.72
.58
3.13
.26
.48
.52
.33
.62 2.21
.40
.40'
*The asterisk indicates the month to which the operator labor was allocated in the model.


22
Value of Farm Products Sold
Supplementary relevant information is provided by changes in
the market value of agricultural products sold. Table 2 shows the
levels of sales for all farm products as well as for crops and other
major categories, During the period 1954-1969, sales of all agricultural
products increased 145.7 percent, similar to the trend for the rest of
the state.
In 1969, the value of total crop sales in the area accounted
for 43.5 percent of the total sales of all agricultural products.
District III (31,2 percent) is way below Districts I and II (61.1 and
53.8 percent respectively) which pulled down the study area percentage.
The corresponding percent for the crops' share at the rest of the state
level was 68.1 This higher crop participation in the total value of
sales at the rest of the state level seems to be associated with the
large volumes of citrus, sugar cane, and nursery products in the rest
of the state.
A leading district in sales of crop products in 1969 was District
II with $36,066,000 which represented 53.8 percent of the market value
of all agricultural products in that area. District I, on the other
hand, had a comparatively low volume of crop sales ($8,940,000), but it
represented 61 percent of the total volume of sales of agricultural
products in that region. As for the whole study area, the value of crop
sales increased by 71,4 percent.


Tibie 15effects of peanut price variations cn_optimum plans for 400 acres of cropland and $100,000 of operating capital in North and West Florida: Plans
excluding Marvlana tobacco enterprise!/ .
Price of Peanuts
Item
Unit
f. ,
22.000
. 13.572
13.510
13.509
13.394
12.345
12.218
12.217
0.00
CROPS
Peanuts
Acres
20i.e
201.6
137.8
*24.0
36.7
59.3
22.9
4.6
0.0
Flue-cure tobacco^
Acres
6.8
6.8
16.9
15.1
23.4
29.3
35.1
33.0
38.7
Wheat
Acres
5.2-26.8*
5.2-26.8*
22.0
19.8
.15.5
11.5
24.7
31.3
32.9
Soybeans
Acres
159.6
159.6
223.3
£37.1
264.4
294.5
259.5
227.2-14.7*
219.2-18.3*
Wheat-soybeans
Acres
'
5.4
57.8
84.2
90.8
ii!':-:ss rscsces
Operator Labor: January
Hours
208(43)
203(49)
208(49)
203(49)
March .
Hours
203(219)
208 ( 21 9)
208(222)
208(222)
208(217)
1 203(195)
203(193)
233(49) /
2C31S3)
April
Hours
234(11)
234(11 )
234(0)
234(40)
234(0)
234(0)
234(0)
Bay
Hours
234(11)
234(11)
234(0) '
234(0)
June
Hours
25C(80)
260(80)
260(87)
260(87)
260(54)'
260(54)
260(47)
250(47)
260(47)
July
Hours
260(0)
260(0)
,
Kovetber
Hours
234(11 )
234(11)
234(11)
Hue-cured tobacco
allotment
Cropland
' Pounds
Dollars
<> 400(3)
, lease
v '9,946
400(8)
, .. .lease
'31,121
400(15)
, .lease
. t-1*>35,714
400114)
mlease
*'44,790
400(14)
ll)1ease
1 11'57,321
400(14)
( llllease
'* '69.333
490(5)
( mlf,ase
1 '76,426
400(9)
/ ,, .lease
''76,542
4C0(5)
Operating capital
Dollars
80,507
80,587
78,933
78,605.
77,959
*7,418
79,941
81,305
81,644
RFTJPhS
Dollars
141,692
73,747
73,405
73,405
72,956
70,469
70.352
70,352
70,352
7V: LStgr*3/. ir.d:cut's th acreage to fee custom harvested. Otherwise harvesting is performed using all harvest machinery.
^Prices cf competing cross were held at current levels,
2/ -
-The flue-cured tobacco enterprise includes was that of hand or conventional harvest only..
o


106
The price required for peanuts to be brought into the solution
at its maximum allowable acreage was 9.3398 cents per pound, or 48
percent lower than the price support of 1975. At this price the crop
organization was the most profitable with $31,550 of returns, of which
$19,892, or 63 percent corresponded to peanuts. Other enterprises in
the plan were non-irrigated corn, wheat and soybeans, the latter with
159.6 acres, and wheat with 23.1 acres to be custom harvested. Operator
labor was critical to field operations in all crops except wheat, which
was limited by labor at harvest time. The ratio of operating capital
to returns was high and equal to 2.36.
At peanut prices lower than 9.3398 cents and down to 9.1915
cents, peanuts were brought into the optimum plan at 189.8 acres, or
5.8 percent less. Non-irrigated corn increased at the expense of peanuts
and single-cropped wheat was substituted by wheat-soybeans in double
cropping. The pressure on operator labor remained similar and the
ratio of operating capital to returns was still high and equal to
2.47.
As peanut price moved down, a new optimum plan was obtained
with its solution at 8.785 cents. Peanut acreage response to this
lower price resulted in an acreage of 148.6 acres or 21.7 percent less.
As July labor ceased being limiting, the double-cropping activity
wheat-soybeans went out of the program. With less pressure on available
resources and higher relative price ratios soybeans substantially in
creased its acreage up to 212.5 acres, or 49 percent higher, at the
expense of all other enterprises in the program. The ratio of operating


95
Irrigated corn combined well with peanuts when entered at 140
acres. However, when 280 acres of irrigated corn were included in the
plan peanut acreage was reduced by 46 acres.
In general, irrigated corn was a. good investment alternative,
especially for farms where only extensive-type crops were included.
With the exception of peanuts, irrigated corn always substituted for
crops with lower profitability, and in the case of two irrigation
units, this substitution was even larger. At lower acreages irrigated
corn was substituted for soybeans, however, at larger acreages other
enterprises were also substituted. When only extensive-type crops were
considered, irrigated corn substituted for non-irrigated corn, wheat
and the double-cropping activity wheat-soybeans, respectively, but
single-cropped soybeans generally entered solutions stronger.


113
The stepped supply functions estimated for price declines in
peanuts reflected, on the average, a strong acreage response of this
crop. If growers oriented their decisions under optimization criteria,
the decreases in peanut acreages would be sharp relative to small
decreases in price. The level of prices at which peanuts became
profitable varied depending on the enterprise composition, but were
always much lower than the current price support. For those programs
including tobacco enterprises, these prices ranged from 14.7 cents down
to 12.2 cents per pound. However, for those programs excluding the
tobacco enterprises, these prices ranged only from 9.3 cents down to
8.8 cents per pound, because peanuts' relative profitability increased
from excluding the two most profitable crops.
Under the assumptions and crop farm conditions imposed in the
model, declines in the peanut prices resulted in tobacco and soybean
enterprises being replaced for peanuts. Flue-cured tobacco entered
the programs at successively increased acreages. All of these acreages
were greater than the allotment level. When tobacco enterprises were
excluded form the plans, single-cropped soybeans were a strong substitute,
accompanied by non-irrigated corn.
The effects of discontinuing the peanut program on the levels
of returns did not follow a single pattern. When the tobacco enter
prises were included, the returns for most of the plans for declining
peanut prices and no allotment were higher than the returns for the plan
considering the peanut program, However, when the tobacco enterprises
were not included, the level of returns obtained with declining peanut


t sjKt
Appendix Table 19Double-cropped soybeans; estimated costs and re-
' turns per acre, North and West Florida, 1975
Item Unit Quantity Price Value
--dollars
I.
Revenue
bu.
25
5.50
137.50
II.
Cash Expenses
Seed
bu.
1.00
12.00
12.00
Innoculant
Pkg.
1.00
.90
.90
Lime, applied
ton
.33
11.00
3.67
Fertilizer, (0-14-14
spread)
cwt.
7.00
5.30
37.10
Herbicide (Lasso)
lb.
3.00
3.71
11.13
Insecticide (Sevin)
'lb.
2.50
1.00
2.50
Spraying (Custom Air)
appl./ac.
2.50
1.50
3.75
Machinery (before harvest)
6.31
Interest on Cash Expenses
(9% for 6 months)
dol.
77.36
.045
3.48
Harvest and Haul (own
machinery and labor)
4.13
Harvest and Haul (custom)
acre
1
10.00
10.00
Total Cash Expenses
84.97
Total Cash Expenses
(custom harvest)
90.84
III.
Returns Over Cash Expenses
52.53
Returns Over Cash Expenses
(custom harvest)
46.66


Ill
price. At lower prices peanuts were not profitable enough to enter the
optimum plans.
The exclusion from the enterprises of a highly competitive
crop such as Maryland tobacco allowed peanuts to start their production
response at the lower price of 13.572 cents (dashed-line supply curve)
instead of 14.708 cents in the former enterprise composition. The sharp
declines in peanuts acreage at the 13-cent levels of prices were a
result of strong substitutions of flue-cured tobacco and soybeans for
peanuts. Further replacement of peanuts required sharp price declines
to 12-cent levels. At these new low prices the total gross margin for
the wheat-soybeans activity made this enterprise profitable and entered
the solutions as an additional substitute for peanuts.
As can be seen in the graph, the estimated peanut supply re
sponse that was obtained after excluding both tobacco enterprises from
the programs (dash-dotted-line supply curve) was completely different
than the former ones. First of all, the levels of peanut price at
which this enterprise remained profitable were much lower, around 9 cents
per pound. This peanut response reflected a highly improved competitive
potential for this crop, and was a direct result of the exclusion from
the program of the only two enterprises with higher net returns than
peanuts. At the price of only 8.785 cents per pound, it was profitable
for peanuts to be cropped to any acreage up to 148.6 acres. Second,
the responsiveness of peanuts to price declines was on the average
higher than the earlier cases. Within a .55 cent range of price varia
tions, small declines in price made peanut acreages decrease greatly.


U
Table 7 (continued)
Row No.
Soybeans
Own Custom
Harvest Harvest
16 17
Wheat-Soybeans
Own Custom
Harvest Harvest
18 19
Watermelons
20
01
-88.50
-94.28
-158.32
-170.08
-237.11
02
.55
.55
.55
03
1.05
04
.69
05
.60
.60
1.15
06
.38
.38
.55
5.46
07
.72
.72
.98
.98
08
.72
.72
09
10
11
.85
.85
12
.58
1.01
.46
13
.30
.30
.30
14
.48
.48
.48
15
.26
16
17
.52
.52
18
.33'
.33
19 .
.62
.62
.85
.85
20
.62
.62
21
22
23
.74
.74
24
.40
.40
25
.26
.26
.26
30
.40
34
36
.40
.40
38
1
1
1
1
1
40
88.50
94.28
158.32
170.08
237.11
44
45
46
47
.40
.80
50
51
52
53
54
-25
K
ro
tT\
55
56
-30
-30
-25
-25


39
(3) Annual fixed costs of machinery. "
The structure of the budgets used in this study was designed
primarily for use in linear programming and this structure differed
somewhat from those of conventional budgets used for other purposes.
In each of the main-crop enterprises, two levels of returns
were calculated. In the first level, harvesting costs were based on
owned harvesting machinery and equipment. In the second level, the
hair-vesting costs were based on present custom hiring rates in North and
West Florida. In the flue-cured tobacco enterprise, returns were
calculated for both conventional!/ (hand) and mechanical harvesting
systems.
For all enterprises, returns.were defined as yield times the
product market price. Annual operating expenses (variable costs)
included costs such as seed, fertilizer, hired labor, custom operations
(when applicable), operating costs of tractor and equipment plus an
operating capital cost. The budgets did not include charges for inputs
that were drawn from the quantity in the constraints column or that
were debited through a system of purchasing or renting activity and
appropriate transfer rows in the model (for example, combine purchase
was not included in the budgets). Machinery operating costs were
included in the budgets on the basis of assumed performance rates and
an hourly charge for necessary machines.
1/A tractor drawn priming aid with field racking and bulk
curing.
%


67
larger producing units, is a barrier to adoption and optimal use of
machine-harvest systems.
Optimum Plans Including All Enterprises
1/
Eight crops represented in eighteen growing and harvesting
activities were considered as profitable alternatives for those areas
where flue-cured tobacco as well as peanuts are suitable enterprises.
Grain sorghum and wheat-grain sorghum did not enter the optimum solutions
in any of the resource situations considered. Therefore, these enter
prises are not emphasized in the discussion subsequent to this point.
While solutions were obtained for 12 cropland-operating capital situa
tions, only seven different plans resulted since operating capital was
limiting at its lower levels. For example, situations for 250 acres
$40,000, and for 400 acres$40,000 resulted in the same plan because
capital was.limiting before land or any other resource became limiting.
Table 8 shows optimum enterprise organizations, limiting resources,
marginal value products (MVP),^ and returns^./ for each of the final
cropland and operating capital situations.
^Irrigated corn was not included here. As indicated earlier
it is evaluated in a later section in this chapter.
2/The MVP of a resource represents the amount that returns could
be increased by utilizing one more unit of the restrictive resource.
Stated negatively, it is the cost of letting one unit of that resource
remain idle. Stated positively, it is the price that can be paid for an
additional unit of that resource.
3/As stated earlier, this value represents returns over variable
costs or cash expenses, and therefore it does not give an accurate
estimate of the profitability of the resources utilized. In Appendix
Table 26, a summary of the returns adjusted for fixed costs involved in
each plan is presented.


15
Rainfall distribution throughout the year is very uneven. The
rainy season in the summer, from June to September or early October,
accounts for 45 to 55 percent of the annual average rainfall in the
area. However, rainfall distribution differs from season to season
during fall, winter and spring. The months of April and May have
relatively low precipitation and are the critical growing months for
tobacco, the major cash crop in Planning District III.
Irrigation
Irrigation in the area is very important because of the sandy
character of the soil, irregularity of rainfall, increased intensity
of farming and the high price of farm products. At present, irrigation
is mainly confined to those counties that produce tobacco. Many of the
irrigation operations are single farm installations which draw water
from wells, lakes, springs and streams. The sprinkler system is the
most commonly used [5, p. 10]. The area has high potential for in
creasing irrigated crops and irrigation is expected to play an important
role in the future.
Social and Economic Conditions
Among the economic and social forces that help to explain the
level of development found in the study area are the trends and current
status os such variables as population and its distribution, labor
force, income levels, transportation facilities and nearness to mar
kets.


Appendix Table 7Irrigated corn; estimated costs and returns per acre,
North and West Florida, 1975
Item
Unit
Quantity Price Value
bu.
dollars
115 2.50 287.50
I.Revenue
II.Cash Expenses
Seed
Fertilizer (5-10-15)
Lime
Nitrogen, liquid spread
Insecticide (Dasanit)
Herbicide (Sutan-AAtrez
Machinery (before.harvest)
Irrigation cost -
Interest on cash expenses
(9% for 8 months)
Harvest and Haul (own
machinery and labor)
Harvest and Haul (custom
service)
Total Cash Expenses
Total Cash Expenses
(custom harvest)
III.Returns Over Cash Expenses
Returns Over Cash Expenses
(custom harvest)
lb.
15.0
.70
10.50
cwt.
8.0
5.30
42.40
ton
.33
11.00
3.63
lb.
150.0
.28
42.00
lb.
1.5
5.10
7.65
lb.
4.0
2.24
8.96
9.60
36.94
dol.
161.98
.06
9.72
5.42
acre
1.0
28.75
28.75
176.82
200.15
1.10.68
87.35
1/
Based on a 140 acres irrigation system.