Agricultural
Experiment Station
•
OREGON STATE COLLEGE
Corvallis
Ecogosteed
„
SUPPLEififilTill
44 pea edgef4
ei/t4ft4
H. W. Caldwell and E. N. Castle
•
MISCELLANEOUS PAPER 39
April 1957
ECONOMICS OF SUPPLEMENTAL IRRIGATION ON POLK COUNTY FARMS
by
H. W. Caldwell and E. N. Castlea
SUMMARY
If the proposed Dallas-Monmouth irrigated project becomes fact, there
will be many farming changes in the area, according to the findings of
this study.
It appears that supplemental irrigation will be profitable in the
area. To be profitable, however, the enterprises will have to be selected
with care, and more capital, more labor, and a different type of management
will be required,
The larger farms that adopt irrigation probably will turn to livestock
to increase total production. This will require more capital and labor,
and will call for a change in management practices. Although dairy farming
and beef-cattle feeding appear to be the most profitable enterprises, many
problems will be associated with their successful management. Obtaining
adequate markets for increased milk production will be a real problem for
those planning to enter dairy production. Feeding beef cattle requires
lots of capital and watching the market, and is a risky enterprise. Plenty
of production problems will crop up also, such as controlling parasites on
irrigated pasture. For those who wish to add irrigation to their 103 to
280-acre dryland farms, however, some type of livestock enterprise appears
necessary. Beef cow herds do not provide a sufficient volume of business to
justify the high capital investment required by irrigation.
On the smaller part-time farms, intensive vegetable enterprises are
required to justify irrigation development. Crops such as pole beans,
strawberries, and canning corn are of the type required. Here, too, more
labor, capital, and management are required than with dryland agriculture.
Markets may also be a problem for these crops. Net farm income, however,probak
can be increased by the adoption of irrigation. Income might not be increased
for those who have off-farm jobs, if irrigation resulted in their giving up
employment elsewhere. This, of course, depends on the farm, the job, and
the interests of the individual.
A
Formerly Research Assistant and Assistant Agricultural Economist, Oregon
Agricultural Experiment Station.
2
INTRODUCTION
Additional irrigation in the Willamette Valley would increase agricultural production. Irrigation, however, poses many unanswered questions.
Would additional irrigation pay? What crops can be irrigated to the best
advantage? What are the capital, labor, and management requirements of this
new type of farming?
To help answer these questions, this study was undertaken. The area
studied is one for which the Bureau of Reclamation, United States Department
of Interior, has developed a prospective plan. This project is known as the
Monmouth-Dallas Project. It will consist of a pumping station situated at
Buena Vista on the Willamette River. This station will supply through a
main ditch, water to about 35,600 acres, of which 33,000 are suitable for
irrigation. The outlet for the main ditch will be Rickreall Creek. A canvass
of potential water users in the area indicated approximately 10,000 acres
would be irrigated within 3 years after completion of the project.
At present, irrigation is limited chiefly to the flood plain of the
Willamette River and its tributaries where hay and pasture crops are irrigated in addition to the principal crops of hops and snap beans. Dryland
farming predominates in most of the area. On this land, grains and grass
seed are grown. Relatively few livestock are raised in the area.
Climate and Soils
Polk County has a moderate climate with a rainy winter season, a dry
summer, and a long growing season. The wet season is usually 7 or 8 months
long. Normal annual precipitation is about 40 inches, almost 70 per cent of
which falls during the period from November 1 to March 31. The summers are
very dry--July and August having approximately 0.5 inches of rainfall. It
is well known that irrigation will increase the production of many crops.
Farmers have expressed an interest in obtaining an adequate supply of water
for this purpose.
Soils in
environmental
a large block
in production
fully on this
the area are about the same, having developed under similar
conditions. The main soil type is Amity Silt Loam located in
north of Monmouth and Independence. Amity soils are limited
capacity by compacted subsoils, but many crops grow successsoil type.
The topography of the area varies considerably from farm to farm, ranging from almost level to gently rolling. Since most of the land will be
irrigated by sprinkler systems, this is the only type of irrigation considered
in this study.
Problems Facing Farmers
The immediate problem facing individual farmers in the area is whether
or not to irrigate. They know that irrigation will boost yields, permit
diversification, and reduce uncertainty. They also know that irrigation
will require changes in their farming systems, and that it will increase
labor and capital requirements. They feel the need for information on how
much adjustment is necessary, and on the relative merits of different
-3enterprises possible with irrigation. The problem facing those who intend to
irrigate is one of choosing among different enterprises that can be produced
with irrigation.
Most farmers will not irrigate their entire acreage, at least not the
first few years. Some farmers may eventually irrigate all their land, but
this is expected to be gradual. The big impact of irrigation, however, will
be felt during the first year of its introduction and in the immediate
transition years.
As a result, many questions are being asked about irrigation. Most
farmers realize that their decisions will have far-reaching consequences.
Once made, it would be unprofitable to reverse these decisions. Some of the
specific questions being asked are:
What crops and enterprises can be introduced with irrigation?
Can these new crops and enterprises be combined with other enterprises
and crops on nonirrigated land?
What change in investment will occur with varying amounts of irrigation?
What change in labor requirements will result with higher production
and more intensive crops?
What change may be expected in farm income when irrigation is adopted?
How This Study Was Made
A detailed description of the method of study is available to the
reader upon request. A brief description of the procedure followed is given
here.
To answer the questions mentioned above, it was necessary to obtain
information from a wide variety of sources. A survey of farmers planning
irrigation was made to obtain information about their present farms. On the
basis of this information, the farms were classified into three sizes--140,
103, and 280 acres. The effect irrigation would have on each size of organization was studied intensively.
In constructing different farm plans that might be followed under
irrigation, it is necessary to use certain yields and prices. These figures
are in the Appendix Table. The results obtained depend, of course, on these
data. Anyone who believes the yields and prices are inadequate is encouraged
to substitute his own data and work through the budgets on that basis. Yield
data are based on previous studies made at Oregon State College as well as
the survey made in the area. Current (1955) prices and costs were used.
Farmer Interest in the Project
As a part of its planning program, the Bureau of Reclamation collected
information on acreage farmed and interest in the proposed irrigation project.
Table 1 summarizes this information. Approximately 34 per cent of the total
number of farmers in the area indicated an interest in the project. However,
the larger farmers tended to have more interest in irrigation. This is to be
expected since many of the smaller farmers have outside employment and may not
consider farming to be a major source of income.
Table 1.
Farmers Interested in Irrigation, by Acres in Farm
Acres in farm
Number of farms
5 or less 175
125
122
5-20 21-50 51-100 84
101-200 201-300 301-400 401-500 Over 500 91
37
Total Per cent of farms in
size group interested
12
27
40
45
46
43
16
88
8
6
88
83
66)4
34
A sample was drawn of both interested and noninterested farmers, and
both groups were surveyed. The survey of interested farmers was to obtain
information to be used in the planning reported later in the study. The
survey of noninterested individuals was to determine more specifically the
reasons for their lack of interest.
Table 2 summarizes the replies of the survey of noninterested farmers.
Most of the reasons listed are self-explanatory. No one reason stood out as
being most important. Only two indicated they were opposed to the project.
Lack of interest on the part of the others was caused by circumstances
associated with individual situations. It will be noted the "other" category has the largest number. Many of these have other water available
either from wells, private lakes, or creeks. Some specified poor health.
Seven stated they were definitely in favor of the project from 4 community
or social point of view even though they had no plans for utilizing the
water.
Table 2.
Reasons for Lack of Interest in the Project
------------Reason
No. of farmers
Age of operator Unadapted land Labor not available Does not fit organization Lack of markets Lack of capital Lower expected income Lack of information Other 7
5
3
2
1
1
1
0
21
Farmer Plans
Farmer plans and expectations were obtained from the survey of those
interested. Table 3 summarizes this information. Most of these farmers
expect to get all their planned irrigated acreage under water within three
years. Five years is expected to be long enough for all to get their land
under water. Those farmers who operate 40 acres or lees do not plan to hire
additional labor; however, since many are part-time farmers, some plan to
spend more time at home once irrigation has been adopted. Additional labor
will be required by some operators in each of the other size groupings.
Crops and livestock planned are also given in the table. Smaller
farmers tend to favor the more intensive enterprises while larger farmers
are interested in enterprises that can be integrated into their existing
organizations. Many believe irrigation will make possible livestock production through irrigated pastures and feed grains. All farmers realize
more investment will be required, and many plan to buy additional machinery
in addition to the necessary irrigation equipment.
Acquiring the necessary capital to make the transition to the new type
of farming appears to trouble more farmers than does any other single item.
Lack of information appears to be more of a problem to those planning intensive crops than to those who intend to use irrigation for the more extensive
enterprises.
Table 3. Summary of Information from Survey
of Those Interested in Monmouth-Dallas Project
•■••••■•■
1'f
i
f
Acres
i
li
1
Number
of yrs.
until
irrig.
all intended
q
!j
i
No. of 4 Averfarmeri4 age
Farm
inter- I opera- Irrig.
size Iviewed
ted
intended
11
Acres
4
ii
Up to and! ;,
i4
7 ,1
19
12
including ii
413 acres ft
41
- 60
37
19
7 '4 103
62
22
li
4
■
Irrig.
,
1st yr. 11;165
Number --."
,
3 2 2 8
50
il7
it
75-125
2
5
It
126-300
Labor
......________________.
9
q 189
53
1
20
1 15
1
Present
Expected
------
6
work out
(part-time
farmers)
More time
at home
No hired
5 fulltime - - 2
part-time
1 operator
expects to
hire add!).
3
full-time
part-time
1 retired
5 expect
3
to hire
8 full-time
1 part-time
5 expect
—
to hire
expect
to hire
(4 of them
1 addl.
man)
6
li
over 3 00,10
386
96
52
'
2
7 1
1
10 full time
ilI
(continued on following page)
-6
Table 3. Summary of Information from Survey
of Those Interested in Monmouth-Dallas Project
(continued from preceding page)
Livestock
Crops planned
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41-60
Difficulties
Investment
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Average Machinery
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Number
4 1 412 1
6
1
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5 3 2 1
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12,680
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18,860
1,470
3,520
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75-125
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126-300
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6,400
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59,500
9,500
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Over 300
1
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414,000 18,300
..
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'i 3
The 40-Acre Farm
About 25 per cent of the interested farmers have acreages of 40 acres
or less. Many of these farmers work away from home part of the time. Irrigation will require more of the operator's time than does his present farming system. Consequently, enterprises will need to be selected that make
an economical use of the operator's time if he gives up off-farm employment.
In table
4
one budget for the 40-acre farm considers three intensive
crops--strawberries, pole beans, and canning corn. Thee are the crops in
which o p erators of this sf.ze of farm are most interested. Another budget
was prepared with pole beans as the only crop. Although the pole bean
organization Was the most profitable, it would not be satisfactory for most
farmers. It would require high capital outlays, and would be subject to both
price and production risk. On the other hand, the strawberry-pole bean-canning
corn combination would have a certain amount of diversity and would return
approximately $3,300 annual labor income (table 5). No budget was prepared
for a dryland 40-acre farm, but, knowledge of the area indicates irrigation
would provide a substantial increase in income. However, if an individual
needed to give up off-farm employment to operate the irrigated farm, irrigation might not be profitable. This, of course, is an individual decision
involving the type of employment and its rate of pay as well as an individual t s work preferences.
Table
4.
Land Use and Production for 40-Acre Farm
Acres
Strawberries! Pole beans Canning corn
Idle Organization II
Organization I
Crop
4
Production
Acres
Production
Tons
Tons
16
9.0
128
22.7
18 1.6
15
61.5
GM, OM
•Mlb
••••■■
12.3
•••
MP MD
It should be mentioned there are certain soil management problems to
which the small farmer should direct particular attention. Some type of
rotation should be followed on farms devoted to row crop production. Rotation permits maintenance of organic matter and easier control of pests.
This may be a possible criticism of Organization I in table 4. The 15 acres
of canning corn could possibly be replaced by grass for seed production or
pasture. The 12 idle acres in Organization II could also be used for this
purpose.
103-Acre Farm
•1••■•••■•■ ONT./MM. 4•011.41.111•M
The 103-acre farm (sixty acres irrigated) is the basic size used for
the second group of farms. Budgets were constructed for this farm as:
A 40-cow dairy farm with replacements being raised on the farm.
A 60-cow dairy farm with replacements purchased.
A beef-grain farm with a 60-cow herd with beef calves and grain sold.
A
75-cow beef herd, selling fall calves.
A farm producing grain and grass to finish feeder calves purchased
about October 1.
An alfalfa and hay producing farm, with alfalfa on the irrigated acres.
For comparative purposes this 103-acre farm was budgeted as a grain farm with
no irrigation.
The 60-cow dairy herd (replacements bought) returns the highest labor
income--$5,818. The 40-cow dairy herd (replacements raised) does not appear
nearly as profitable, returning a labor income of $3,504. This is partially
due to the cost of raising heifers. It appears that raising replacements
must be just about equal to the cost of buying them at the prices used.
Farm and labor incomes are in approximately the same proportion on the two
sizes of farms as the number of milking cows. No doubt some of the difference in returns is due to scale. The increase in costs on the large cow herd
is small in relation to the increase in receipts. In both herds, replacements are at the rate of 20 per cent per year. No doubt a purebred herd,
where calves and 2-year-old heifers command a considerable premium, would
place the raising replacements program in a more favorable light. However,
because managerial ability is so important where purebred cattle is concerned,
this study considers only the possibilities with a commercial herd. Where
managerial ability is high, raising replacements may be the more desirable
system. In the program where replacements are bought, it is necessary to
assume that such replacements are available.
Table 5.
Receipts, Expenses and Income for 40-Acre Irrigated Farm
Item
Organization I
Organization II
Receipts
Strawberries Sweet corn Pole beans $2,880.00
Gross farm income Expenses
Tractor and auto Electricity* and telephone Insurance and taxes Crop expense Strawberries Sweet corn Pole beans Hired labor Water and irrigation** Building depreciation Machinery depreciation $22,700.00
$
$
350.00
100.00
1,676.00
596.00
Farm income Interest on investment Return for labor and management $20,110.00
--
Total expense I
--22,700.00
360.00
------
$
1,230.00
16,000.00
350.00
100.00
360.00
--
---
9,822.00
1,500.00
13,872.00
40.00
1400.00
40.00
1400.00
750.00
986.00
637.00
$15,830.00
$16,509.00
$ 14,280.00
1,018.00
$ 6,191.00
$
$ 5,173.00
3,262.00
__–
10018.00
Electricity other than irrigation.
Includes charge for water, power for irrigating, and depreciation and
repair for irrigation system.
The 40-cow herd organization employed a full-time man in addition to the
operator. Furthermore, spraying of the grain for weeds, harvesting the first
cutting of irrigated hay as grass silage, and combining grain were hired at
custom rates. The 60-cow milking herd organization employed a full-time man
and a man for the 6 summer months in addition to the operator.
Turning to the beef enterprises, it does not seem that a beef cow-calf
operation will be feasible on a farm of this size, assuming a calf crop of
85 per cent reaching 400 pounds weight by fall. This type of farm will not
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produce an adequate income to cover the fixed costs and leave any margin.
It might be noted that total expenses are lower on the 60-cow beef farm than
on any other farm. But the receipts are not high enough to return a positive
labor income. The larger herd was even more unprofitable, suggesting that
the production of grain is subsidizing beef production.
Where feeder cattle are bought to finish for slaughter, the organization
appears quite profitable for a one-man operation, returning $4,241 to labor
and management. Although only 10 days' labor is hired as such, making grass
silage, crop spraying, and combining are hired at custom rates. Death loss
of two steers is allowed although feed requirements are for the number purchased. Purchase price of feeder steer calves averaged from 16 to 19 centsper hundredweight during the first week of October 1954 for choice grade. In
the budgets, purchase price of 19 cents is used. Selling prices averaged 23
to 26 cents for the same period for the same grade. In the budgets, 24.5
cents is used.
Beef-feeding organizations contain an element of uncertainty not found
in other organizations. This is of less importance in the short run where
home-grown feed is fed, but fluctuations in prices at purchase and sale time
can make a considerable difference in returns. The prices used in the budgets
bear the same relationship to each other as usually exists, 1954 being neither
a particularly favorable or unfavorable year for feeding operations. But
feeder cattle prices are subject to abrupt changes. A further discussion of
this variation is discussed later. Also, internal parasites may be a problem
on irrigated pastures. The ability of the manager to maintain gains throughout the summer is very important for the success of such a program.
Steers are purchased at 400 pounds and fed to gain 200 pounds during the
first 6 months. Three pounds of barley and oats are fed daily throughout
this 6-month period. No grain is fed the first 3 months on pasture, during
which a gain of 1.7 pounds per day is made. Beginning with the 4th month on
pasture, 5 pounds of ration per day is fed. This ration comprises 11 parts
barley and oats to 1 part cottonseed meal. Feeding at this rate on irrigated
pasture for 3 months should increase the weight of the animals by 2 pounds
per day. Thus during the whole period, the increase in weight is estimated
conservatively at 520 pounds.
Irrigated alfalfa yielding 6 tons per acre plus 40 acres of nonirrigated
hay appear more profitable than the dryland organization. It may not be
possible, however, to get a 6 - tons per acre yield. If the yield were 4 tons
per acre, the return to labor and management would disappear. Of course, a
price higher than $24 per ton would also change the picture. It should be
pointed out that alfalfa generally is not a satisfactory cash crop in the
Willamette Valley. Rainy weather frequently makes it impossible to harvest
a high quality crop for the first cutting. If the farm has a livestock enterprise, it is usually possible to make ensilage from the first crop. Unless
such an outlet exists it is a questionable enterprise.
Attention is directed to the fact that on both the 103-acre farm budgets
and the 280-acre farm budgets (described in the next section), only a portion
of the land is irrigated. This is in line with the thinking of the farmers
in the area and with the known fact that many crops will not greatly respond
to irrigation. The grass seed crops as well as the fall-planted grains fall
into this category. This emphasizes the need to integrate irrigated crops
into existing farm systems rather than to drastically change the organization.
- 12 -
On these larger farms, fall grains and grass seed crops will undoubtedly
continue to be important crops. There is no evidence to indicate they should
be completely replaced by crops that respond more dramatically to irrigation.
It is interesting to compare the dryland organization with the irrigated farms.
If irrigation is not handled properly or if the proper enterprises are not
selected, a lower net income could result with irrigation. However, this is
a rather small dryland farm if the farm family is dependent solely upon it for
income.
280-Acre Farm
The labor incomes on the 280-acre farm with 80 acres irrigated show somewhat the same relationship as in the 103-acre group. Budgets for three organizations with irrigation have been prepared--a 60-cow dairy operation, a 1 50feeder-steer operation, and a 100-cow beef herd producing calves to be sold
at /too pounds in the fall. The dairy herd is limited to 60 milking cows. Rates
of production and sale prices of milk are the same as for the previous budgets,
as are feed requirements for livestock throughout, rates of gain for beef
cattle, and all other physical data. The beef-feeder operation shows the most
profit, returning $7,232, with the dairy enterprise following closely with
$6,905. Even at this scale of operations it would not be practical to carry
a beef cow-calf enterprise, as this organization shows a negative return of
$5,903. Dryland farming will produce a better return, $2,895, with much less
labor and less capital investment required than the cow-calf organization.
There would also be less risk of large losses from unfavorable price fluctuations with the dryland farm.
Table 6.
and Production for 260-Acre Farm,
r
beef
beef
Dairy
Dryland
60 Cows
100 Cows
150 Feeders
140
100
70
75
Land Use, Livestock
Land Use (acres)
Barley Oats (and .peis) 100
60
Ryegrass seed --
--
Hay
irrigated Hay - nonirrigated Pasture (irrigated). 30
--
-70
50
60
75
70
--
70
--
--
SO
80
80
---
100
-20
--153
---
85
3
---
-—
87.5
58.5
93.75
Livestock (numbers)
Cows Two -year-olds Yearlings Calves Bulls --50
1
--
Production (tons)
Barley Oats Ryegrass Hay Silage 125
97.5
119
180
-200
--
73.125
-160
--
175
68.75
28
---
- 13 -
There is little difference in capital requirements for any of the three
organizations with irrigation, each requiring over $100,000. This figure,
although large, is only approximately $25,000 more than is required under the
present dryland system. The increase in labor income for the dairy and beef
feeder organizations would more than justify the extra investment involved.
On the basis of these figures, the increase in investment would pay for itself
in about six years. Labor requirements would increase, requiring one fulltime hired man in addition to the operator, on the beef enterprises and two
on the dairy farm.
Table 9. Receipts, Expenses, and Income for 280-Acre Farm
----,-Beef
Beef
Dairy
100 Cows 150 Feeders
60 Cows
Item
Receipts
--ffETIFF Oats Ryegrass seed Hay Livestock Livestock products Gross farm income
Expenses
1=r ggiock purchased Feed purchased and grinding Milk hauling and trucking Electricity* and telephone Tractor and auto 33, 810.00
$ 7,098.00
30156.00
5,040.00
---
$37,850.00
$15,294.00
$ 3,528.00 $ 2,268.00
1,632.00
2,688.00
3,336.00
$ 3,990.00
--
--
1,440.00
-7,052.00
1,650.00
-24,30 5.00
$34,721.00 $13,268.00
Dryland.
--
140.00
__
400.00 $11,628.00
__
$ 21 460.00
1,243.00
1,677.00
130.00
400.00
1,300.00
4,226.00
362.00
$
6,000.00
2,217.00
280.00
1,450.00
$21,895.00
3,000.00
2,217.00
280.00
1, 450.00
$13,043.00
$24,820.00
100.00
1,450.00
$ 81068.00
Farm income Interest on investment $12,826.00
5,921.00
$
225.00
$13,030.00
$ 7,226.00
6,128.00
5,798.00
4,331.00
Return for labor and management $ 6,905.00 $-5,903. 00
$ 7,232.00
$ 2,895.00
Insurance and taxes Crop expense Livestock expense** Fences, building and repairs
Hired labor Water and irrigation' Building depreciation Machinery depreciation Total expense 150.00
--90.00
350.00
1,300.00
3,530.00
276.00
150.00
300.00
300.00
40.00
100.00
1,300.00
3,530.00
525.00
150.00
3,000.00
2,217.00
280.00
1, 450_.00
$
--
--50.00
350.00
1,000.00
3,568.00
-50.00
1,500.00
--
Electricity other than for irrigation.
** Veterinary fees and miscellaneous livestock expense.
*** Includes charge for water, power for irrigation, depreciation and repairs
for irrigation system.
It is not expected that every farmer in the area will produce fluid milk
even though the budgets show it to be a fairly profitable enterprise. There
are some who are not in a position to produce milk because of small acreage,
lack of market, no experience with dairy cattle, or some other reason. But
-
14
for those who are in a position to produce milk, or who are already producing
for a fluid market, it should point the way for possible expansion. Population growth on the west coast should gradually expand the market for milk.
It should be mentioned again that beef production may not be a satisfactory enterprise for everyone in the area. It requires considerable capital
and it is more "risky" than many other enterprises.
It is possible that water cost to the farmer may be considerably less
than the $15 per acre here used. This would increase the labor incomes of
all operators. A summary of the budget for the various organizations is given
in table 9.
Comparison of Farming Systems
Comparison of farming systems is difficult. The classification in
table 10 has grouped them according to acres farmed. This is not entirely
satisfactory as different types of crops and livestock have varying requirements for land just as they have different requirements for capital and labor.
Capital investment might be a better measure of size of business except that
farms of different types vary in their capital requirements relative to cash
operating expenses
Various---Farm Organizations
Table 10. Ca pital Requirements
_______
. _ for
__„-----.--.-----—
Additional
Required
Present
Number
Type of organization
of acres investment investment capital required
Vegetable farm Dryland Alfalfa and hay Feeder steers ,, Beef herd (60) Beef herd (75) Dairy cows (4o) Dairy cows (60) Dryland Feeder steers Dairy cows (60) Beef herd (100) 40
$13,495
103
103
103
36,40o
103
103
103
103
280
280
280
280
If
$18,360
-41,480
48,420
$ 4,865
-5,080
ft
t8,720
12,020
12,320
11
50,860
54,180
55,480
14,460
17,780
19,080
ft
If
fl
79,300
It
-104,390
-25,090
If
106,140
26,84o
It
109,040
29,740
A measure frequently used to compare different organizations is the labor
requirements of the farm specified in productive-man-work units. One unit, a
PMWU, is the amount of productive work that one man could accomplish in a
10-hour day, working under average conditions. But farms of different types
have different combinations of labor and equipment.
To avoid some of the problems such a choice of measure involves, farms
were classed according to total annual input. This may be done by combining
total farm expenses and interest on capital investY l.ant. Table 11 permits
comparison of the various farming systems on the basis of total annual inputs.
Of the four smallest farms, measured in this way, only the alfalfa and hay
farm returns more than $1 income for $1 annual input. On this basis, the
40-acre vegetable farm is comparable in size to the 280-acre dryland farm
and to the 40-cow dairy on 103 acres, as well as the feeder-steer program on
the 103-acre farm. The 150 head of feeder steers on the 280-acre farm is the
-15-
largest organization on this basis. Farms in the last category not only call
for considerable capital, but also require high managerial ability.
Table 11. Comparison of Farm Organizations on the Basis of Total Annual Inputs
Total annual
Type of organization
Return per $100
input**
Acres
inputs*
Dryland Alfalfa and hay Beef herd (60)..., Beef herd (75) 103
103
103
103
$ 5,172
8,271
8,740
9,162
$ 93
1214
Dryland Dairy (140) .
Feeder steers(92) Vegetable 280
103
103
12,399
14,799
140
16,848
123
1214
126
119
Beef herd Dairy cows (60) Dairy cows (60) Feeder steers (150) 280
19,172
l6,045
68
59
103
20,377
69
129
280
280
27,816
30,618
125
1214
* Total annual inputs are total farm expenses plus interest on investment.
** Return per $100 input is calculated by dividing gross farm income by total
annual inputs.
Transition Problems
One of the major problems in the area will be that of making adjustments
for the planned enterprise. This is true where livestock are concerned,
especially with dairy cattle if production of milk is not part of the present
organization. A specific type of building is necessary for the cattle and
special equipment such as milking machine, milk cooler, milk room, washing
facilities, and utensils must be on hand before any milk is shipped. These
preparations will involve some time, especially where buildings have to be
built or remodeled. Bindings for other livestock are necessary also, and
some remodeling will improve present facilities. Most farms have some type
of buildings which can be used for most kinds of livestock if changes are made.
Where livestock is not now part of the farm system, a pasture will have
to be established. This requires time, although adequate advance planning may
prevent the loss of a crop year.
Where livestock is a part of the present farming system, expansion of the
farm business will require less time. This is especially true if additional
cattle are purchased. Little planning in advance will be necessary unless the
farm is at present carrying the maximum number for which housing is available.
Pastures and meadows are already established on these farms, and the necessary
equipment is in use. If expansion is desired by raising heifers, planning for
2 or 3 years is required before any additional milk is produced. The increase
in feed requirements before the heifers come into production may lower the
output during this transition period, especially if the farm is at capacity.
The increase in production of forage expected when water is applied should,
however, increase the carrying capacity so that present output can be maintained even though no additional milking cows are purchased. This type of
expansion has some merit in that it permits gradual development in experience
and knowledge. It provides experience in meeting the managerial problems
-16involved with the new and larger organization.
On the vegetable farms where such crops as strawberries or other small
fruits are planned, almost a year is required for the stand establishment. As
most of the farmers who are planning this type of crop have off-the-farm
employment at present, the transition period will not cause great hardship.
Another factor that should not be overlooked is the capital required for
the transition from the present organization to the planned one. Table 10
shows the capital requirements for various systems.
The capital required is compared with the capital requirement for the
dryland operation. This may be somewhat misleading because most of those
considering livestock have some livestock at present. If adjustment is made
for present investment in livestock, the largest part of the increase in
capital required is due to the irrigation equipment. The same machinery or
a similar amount of capital invested in machinery should be adequate for the
organizations, with the exception of dairying where milking equipment would
have to be purchased. A manure spreader on farms where livestock is introduced
for the first time would also be a necessary addition to the machinery inventory. Table 12 shows a classification of the total amount of capital considered necessary to set up the organizations for which budgets are prepared.
The machinery investment shows little variation on farms of the same acreage.
Irrigation equipment and increase in investment in livestock account for the
greater part of the additional capital required.
Table 12. Classification of Capital Requirements for Various Farm Organizations
Number
acres
Type of organization
Vegetable farm Alfalfa and hay Feeder steers Beef herd (60) Beef herd (75) Dairy cows (40) Dairy cows
40
103
103
103
103
103
103
28o
4
WO .
(60) Feeder steers (ISO) Dairy cows (6o) Beef Herd 0001-
280
Total
capital
required
Investment in
Irrigation
equipment
Machinery
$ 18,360
41,480
48,420
48,720
50,860
54,180
55,480
104,390
$3,360
$ 9,000
_ in g _nlin
Jihr)
106,140
4,080
4,080
4,080
4,080
4,080
4,080
5,440
5,440
6,400
6,400
6,400
6,1oo
7,000
7,000
14,500
14,500
ihAnn
Livestock
$
-6,990
7,400
9,250
11,860
12,400
11,650
12,400
15. 500 -
Risk and Uncertainty
Where only one enterprise comprises the farm organization, the risk and
uncertainty involved may be a serious limitation. Measures to protect against
risk may be considered a cost of production. If there were no uncertainty
regarding future events, adjustments could be made far enough in advance to
prevent extreme losses. But farming involves much uncertainty and farmers may
sacrifice some future benefit in order to gain some greater degree of certainty
about future income.
Table 13 shows the estimated incomes for a number of years for the various
organizations on the 103-acre farm using the same yields of crops and production of animals as in the budgets. Income variation is caused by price
fluctuation.
-
Table 13 17 -
Estimated Income From Various Farm Organizations, 1 935 to 1953
Farm organizations
Years
1935 1936.
1937 1938 1939.
1940 1941 1942 1943 19144 1945 1946 1947 1948 1949 1950 1951 Dry1and
$2,187
3,132
2,607
2,256
2,288
2,288
3,135
3r379
11,727
4,817
4,878
6,091
1953 7,497
57849
5,272
5,737
6,558
4,814
5,586
Coefficient
of variation
38.1
1952 Alfalfa and hay
$ 4,840
4,580
5,324
7,436
9,944
10,296
9,504
10,692
10,824
11,880
11,440
11,000
12,496
12,276
8,800
Feeder steers
Dairy caws
$ 4,848
4,287
6,149
4,877
4,788
5,382
5,490
6,945
7,231
7,385
7,778
9,046
11 7232
$ 5,151
5,692
5,762
4,679
4,627
5,325
6,705
8,119
9,708
9,813
9,987
12,589
13,811
11,817
13,689
15,173
12,624
12,6111
17,026
15,561
14,806
15,435
13,221
11,466
14,1o8
43.6
39.4
27.11
The beef feeder operation, which appears quite favorable when judged on
the basis of net income, has a greater yearly variation than any of the other
organizations. Alfalfa and hay production show the least variation, with
dairy farming in an intermediate position.
The introduction of irrigation does not appear to reduce the variation in
income except when alfalfa and hay are produced. This is expected in this
particular case as the comparison is made among different enterprises. No
doubt a dairy farm operation would show less variation in income under a system
of irrigation than the same dairy farm without irrigation. The dryland farming
organization has a much higher coefficient of variation than the irrigated
alfalfa and hay organization which it most closely resembles.
I
There are other elements of risk and uncertainty in production in addition
to price. Losses from disease, insects, and unfavorable weather are only a
few examples of factors that can cause variations in production. These variations cannot be predicted accurately. But assuming these factors to be
fairly constant for each type of farming under the same management, those
farmers who cannot absorb a loss from price variation and remain in business
a sufficient time to realize gains from more favorable prices, should consider
enterprises with the least variation in income.
Application of This Study
Study to Other Areas
■■■■■••■••■•
••••■• •■•■■•••
..••••■•■•
Irrigation in the Willamette Valley has been practiced for years. Small
fruits, vegetables, and berries on the better river soils have responded
profitably to supplemental water during the dry summer months. Its adoption
-18has been considerably slower, however, on the poorer soils and on less
intensive crops.
The project in Polk County may be a rather good test of irrigation
possibilities in other similar areas in the Willamette Valley. The results
of this study probably can be applied to other areas in the Valley with similar
soils and comparable farm organizations. Such areas can definitely increase
agricultural production by using irrigation. This study indicates that this
can be done profitably. As time passes and milk, beef, and vegetable markets
expand, irrigation may prove even more profitable.
Irrigation development is not expected to be rapid in the Valley, however.
The chief reason for this is that a successful agriculture can be carried on
without irrigation. Some people will always have legitimate reasons for not
wanting to change their present farming system. Under these circumstances, it
may be difficult to get the necessary group action to supplement the water
supply.
Appendix Table. Yields and Prices of Crops and Livestock
as Used in the Study
Barley Oats Pasture Silage Hay (nonirrigated) Hay (irrigated) Alfalfa (nonirrigated) Alfalfa (irrigated) Strawberries Sweet corn Pole beans 2,500 lbs.
1,950 lbs.
4,750 lbs. TDN
6 tons
Dairy cows
9,000 lbs. milk (4%)
Beef feeder steers Prices
Yield
Item
2
$ 42 per ton
$ 48 per ton
$ 20 per ton
$ 20 per ton
$ 24 per ton
It
4.75 tons
4 tons
6 11
2.25 tons
4.10 ft
8 tons
520 lbs. gain
$ 214 per ton
$320 per ton
$ 20 per ton
$125 per ton
( 50% a) 5.2 per cwt.
( 50% @ $4.o4 per cwt.
( Purchase @ $19 per cwt.
Sale
@ $24.50 per cwt.