T h ree yea r S u m m a ry. ofin vestm en t, C o s t. & I n c o m e f o r. Alaska

Pa l m e r, A laska May 1960 Un i v e r s i t y of A laska ALASKA AGRICULTURAL EXPERIMENT STATION T h ree yea r S u m m a ry ofin vestm en t, C o s t & I n c o m e f o r D a i r y F a r m s i n Alaska A. Dale Saunders H. P. Gazaway C. F. Marsh A Farm Man agem en t Progress Report

A THREE YEAR SUMMARY OF INVESTMENTS, COSTS AND INCOME FOR ALASKA DAIRY FARMS T h i s s t u d y is based on 15 d a ir y farms in t h e Ma t a n u s k a Va l l e y DURING THE THREE YEARS OF 1957 THROUGH 1959. THESE FARMS RANGED IN SIZE FROM 10 TO 50 COWS AND INCLUDED NEITHER THE LARGEST NOR THE SMALL EST. Wh i l e th e r e is c o n s id e r a b l e v a r i a t i o n betw een i n d i v i d u a l fa r m s, AS a group t h e y are b e l i e v e d to be r e p r e s e n t a t i v e of d a i r y in g in th e area. Records from th e same 15 farms were o b t a in e d in 1957 and 1958. By 1959 ho w e v er, one farm was co m bin ed w ith a n o t h e r, and a n o th er of THE ORIGINAL 15 FARMS SOLD. THESE TWO WERE REPLACED WITH DAIRIES AS NEARLY SIMILAR IN SIZE AND CHARACTER AS POSSIBLE. SIMILAR MANAGE MENT DATA WAS PROVIDED BY ONE COOPERATING DAIRYMAN IN THE TANANA VALLEY IN 1957, ANOTHER WAS ADDED IN 1957 AND 1958. FOUR ARE GOING TO PRO VIDE INFORMATION ON THEIR 1960 0 PERAT I 0NS. AS NEW FARMS ARE STARTED IN THIS AND OTHER AREAS, MORE FARM BUSINESS COOPERATORS ARE TO BE ADDED TO t h i s s t u d y. Annual r e p o r ts will- th en be prepared for each area and in - D I V I DUAL. T he co st of most item s of p r o d u c t io n are h ig h e r in th e T anana Va l l e y a r e a. T hey are per haps 10 per cent more than for comparable farms in t h e Ma t a n u s k a Va l l e y. At th e p r e s en t t i m e and s t a g e of d e v e l o p m e n t, c a p i t a l r e q u ir e m e n t s appear to be eq ual or g r e a t e r. Ad e q u a te d a ir y h o u s in g is more of a p r o b l e m. How ev er, once a d a ir y or o th e r farm becom es e s t a b l i s h e d h e r e, some of t h e s e d if f e r e n c e s t h a t, add to pro du c t i o n c o s ts may l e s s e n. Crop land is a v a i l a b l e in larger blo ck s and c l e a r in g c o s ts are l e s s in many i n s t a n c e s. T he a l t e r n a t i v e uses of crop lands are fe w e r, t a x e s are now l e s s, and so may be p r i v a t e land p r ic e s and r e n t. SUMMARY OF 1959 RESULTS GOALS: VOLUME' WITH LOW COSTS - As in th e two p r e v io u s years $ f th e s t u d y, t h e r e a p p e a r s to be s i x key fa c to r s which sta n d out b etw een t h e low and h ig h income f a r m s. T hey a r e : o Number of cows m il k e d o Y ears on farm and d a i r y i n g o Production per cow o Cost of m ilk produced o Amount of in d e b t e d n e s s o Acres of land farmed Of t h e s e s i x key f a c t o r s, volume of p r o d u c t io n, cost of prod u c t io n and number of yea r s of o p e r a t io n seenj most im p o r t a n t. Good cows, and m anagem ent are n e c e s s a r y in a s u c c e s s f u l d a ir y o p e r a t i o n ';,, anyw here and p a r t i c u l a r l y w ith h ig h co s ts under A laskan c o n d i t i o n s. T he number of years in o p e r a t io n is im p o r ta n t pr i mar i ly.-b e c a u s e. most s t a r t i n g d a ir y farms are s m a l l, carry an e x c e s s iv e amount of d e b t w ith s i z a b l e p a y m e n t s. Pe r io d of t i m e is r e q u ir e d for most o p e r a to r s to become a d j u s t e d to d a i r y i n g and a new l o c a l i t y, farm or h e r d. S ev e r a l years e x p e r ie n c e is o f te n n e c e s s a r y b efo r e h ig h p r o d u c t io n and low c o s ts are p o s s i b l e..

LARGEST HERD DOES NOT MAKE THE HIGHEST INCOME - T he herd s i z e of THE THREE HIGHEST INCOME FARMS WAS LARGER THAN FOR EITHER THE THREE LOW ONES OR THE AVERAGE OF ALL 15, ALTHOUGH THE TWO FARMS WITH THE LARGEST NUMBER OF COWS WERE NOT AMONG THE HIGHEST INCOME FARMS. A COMBINATION OF BELOW AVERAGE PRODUCTION AND RESULTING HIGHER COSTS PER HUNDRED HELD THESE TO ONLY AVERAGE INCOMES. THE THREE HIGH IN COME FARMS WERE AMONG THE TOP FOUR IN PRODUCTION PER COW, WHILE LOW INCOME FARMS WERE ONLY AVERAGE OR BELOW. E q u a lly important and c lo s e ly re la te d to production per cow was cost of p ro duction. In 1959, the average p rice th is group received FOR M ilx was $10,25 a hundredweight. At th is price it would have taken 6,584 pounds of m ilk to pay the $721 cost of keeping a cow for one y e a r > T h is means th a t a cow g iv in g 12,000 pounds of m ilk a year should re tu rn a net cash income of $500 to $600 or double that fo r a cow with 9,000 pounds, WIDE VARIATION IN COSTS BETWEEN DAIRIES - The cost of m ilk productio n on the low-income farms was $1,50 per hundredweight h igh er than on the high income farms. This v a r ia tio n was less than in p rio r years, Trtis d iffe re n c e was comprised of 99^ feed costs and 51^ for non-feed e x p o s e s. The purchased feed costs were 17^ per hundredweight MORE CN THE. HIGH INCOME FARMS, BUT THE COST OF THE HOME-GROWN FEED WAS $1.16 LESS. T he LOWER COST of p r o d u cin g m il k ON the HIGHER income farms r e f l e c t s TWO FACTORS; (1) Ti-iE COSTS PER COW WERE $80 LESS AND (2) THE COST C r PRODUCT'ON IS SPREAD OUT OVER 2,000 POUNDS MORE MILK PER COW. These are o p erating or cash costs. They t e l l only part of the s to ry. TO GET THE COMPLETE PICTURE REQUIRES RECORDS AS TO INVENTORY VALUES AND DEPRECIATION ON MACHINERY, BUILDINGS AND LIVESTOCK ALONG WITH INTEREST ON INVESTMENT IN LAND AND PETURNS FOR OPERATORS1 AND UNPAID FAMILY LABOR, The AMOUNT OF i NDEBTEDNE.'S, TWICE AS MUCH ON THE LOW ' NCOME FARMS, CONTRIBUTED SUBSTANTIALLY TO INCREASED COSTS OF PRODUCTION. THE HIGHER INCOME FARMS PA ID AN AVERAGE OF 28^ PER HUNDREDWEIGHT FOR INTEREST ON DEBTS Ac COMPARED WITH $1.05 ON THE LOW-lNCOME FARMS. LESS CROP ACRES FARMED PER COWON HIGHER INCOME DAIRIES - The h ig h - ncoi^t group farmed over 50 acres more in crops but averaged 2.4 ACRL :. KSS PER COW THAN THE LOW-INCOME FARMS. THE HIGH-INCOME FARMS OW-'ED SLIGHTLY N':ORE LA * D THAN THEY RENTED WHILE THE LOW-lNCOME FARMS RENT T.D.6 PER CENT MOR" CROP LAND THAN THEY OWNED. IN SOME CASES RENTED '..A Nl) WAS LOCATED SEVERAL MILES FROM THE FARM HEADQUARTERS. Not a i.i. of,h feet crops raised were consumed on the home f arm. Two of TK:. higher and one of the lower income farms had sales of gra in vino hay in excess of $ 2, 0 0 0 as r u l -: of thumb it cost.- a minimum of a b o u t $75 an acre to produce feed in t h i s area. Th is s u g g e s t s that where more than 5 to 6 ACRES PER COW IS REQUIRED'TO GROW ENOUGH,FEED AND BEDDING, A DAIRY MAN MAY BE ABLE TO BUY ALL FEED FOR LESS THAN IT COSTS TO RA'ISE IT AND WITH CONSIDERABLY LESS INVESTMENT, RISK OR EFFORT, F IVE ACRES OF 2

AVERAGE OR BETTER QUALITY CROPLAND SHOULD PROVIDE ALL THE ROUGHAGE, BEDDING AND PART OF THE GRAIN NECESSARY TO KEEP A COW IN TOP PRO DUCT ION. AN IMPORTANT FACTOR CONTRIBUTING TO THE PRODUCTION;, COSTS AND MANAGEMENT OF ALL THE DAIRY FARMS STUDIED WAS THE LENGTH OF TIME THESE FARMS HAD BEEN UNDER THEIR PRESENT OWNERSHIP. EACH HIGH IN COME FARMER HAD BEEN ON HIS PRESENT FARM FOR A PERIOD OF TEN OR MORE YEARS. ON THE LOWER-INCOME FARMS, TWO OF THE THREE FARMERS HAD OPER ATED THEIR PRESENT FARM FOR A PERIOD OF FIVE YEARS OR LESS. THIS FACTOR, OF TENURE IS HARD TO EVALUATE IN TERMS OF DOLLARS AND CENTS OR POUNDS OF MILK BUT IT UNDOUBTEDLY CONTRIBUTES TO THE HIGHER COSTS, SMALLER HERDS AND LOWER PRODUCTION OF THE COWS. HIGHER INVESTMENT PER COW ON LOWER-INCOME FARMS - It is not s u r p r i s i n g TO FIND THAT NEWER LOW-INCOME FARMERS HAVE OVER $1,000 MORE INVESTMENT PER COW AND A 40 PER CENT SMALLER EQUITY IN THEIR FARMS. When a h ig h rate of in v e s tm e n t and in d e b t e d n e s s is c o m bin ed w ith a SMALL HERD AND LOW PRODUCTION PER COW IT BECOMES ALMOST IMPOSSIBLE TO DEVELOP A DAIRY WITHOUT OFF-FARM INCOME. WHERE IS YOUR BREAK-EVEN POINT? Other management s t u d ie s show t h a t FEW FARMERS KEEP OR USE THEIR ANNUAL INVENTORY RECORDS THOUGH MOST OF THE DATA NECESSARY TO DO SO ARE REQUIRED TO PREPARE A FARM IN COME TAX RETURN, AN ANNUAL REVIEW OF NET WORTH STATEMENTs 0VER A PERIOD OF YEARS IS THE MOST SIMPLE AND PERHAPS MOST REVEALING ANAL YSIS THAT CAN BE MADE TO DETERMINE FINANCIAL PROGRESS. T he DAIRYMAN WHO KEEPS A COMPLETE INVENTORY, CASH COST, AND SUPPLEMENTARY RECORDS CAN TELL WHAT HAY OR SILAGE COSTS PER TON, WHICH COWS ARE MAKING THE MOST MONEY AND DETERMINE HIS FINANCIAL STATUS AT, ANY TIME OR' PROGRESS FROM YEAR TO YEAR. MOST FARMERS COULD SIGNIFICANTLY IMPROVE THE MANAGEMENT OF THEIR FARM BUSINESS WITH A FEW HOURS INSTRUCTION ON HOW TO KEEP AND USE RECORDS AND BY SYSTEMATICALLY WORKING ON THEM ONE OR TWO HOURS A WEEK. ADEQUATE RECORDS WILL ALSO POINT OUT LEAKS, GIVE ADVANCE NOTICE AS TO PRO BLEMS AS WELL AS FACILITATE BORROWING OR THE SALE OF GOOD STOCK OR A SUCCESSFUL FARM. Y our D i s t r i c t Ex t e n s io n Ag en t w il l arrange a short course in FARM RECORD KEEPING ANS BUSINESS ANALYSIS WHEN THERE IS SUFFICIENT i n t e r e s t. Pu b l i c a t i o n s on farm b u s in e s s m anagement are a v a i l a b l e THROUGH THE SAME SOURCE. 3

FARM BUSINESS FACTS ON FIFTEEN MATANUSKA VALLEY DAIRY FARMS FOR 1959 THREE THREE HIGHEST AVERAGE LOWEST PRODUCTION INCOME ALL FARMS 1NCOME Per Farm... Pounds 328,644 228,318 149,567 Cows (2 YEARS OLD & OVER 1n h e r d ). Number 29 25 16 Per Cow... Pounds 11,441 9,159 9,413 Av erag e C ows M ilked Dur i ng 'Year.. Number 26 21 14 Per C ow., Pounds 12,533 11,009 10,760 CROP LAND T o t a l F armed... 189 149 142 Ow n ed... 96 88 60 Re n t e d... 93 61 82 Per C ow i n. Herd 6.5. 6.0 8.9 FARM.INVESTMENT T o t a l... Do lla r s 80,1 58 66,303 57,088 O w n e r ' s Eq u i t y... Do lla r s 63,118. 38,793 21,303 I n d e b t e d n e s s... Do lla r s 17,040 27,510 35,785 Ra t i o In d e b t e d n e s s t o Eq u i t y... Per C ent 23.3 43.7 63.8 I n t e r e s t Pa id on In d e b t e d n e s s.. Dolla r s 916. 1,334 1,572 Ma c h in e r y....,... Do l la r s 12,576 10,649 7,097.... 62 Per C rop A cre... Do lla r s 68 71 Per C ow: (2 years old & o v e r ).. Do lla r s 2,807 2,815 3,627 (A verage Number M i l k e d ). Do lla r s 3,070 3,430 '4,178 GROSS CASH INCOME T o t a l M ilk Sa l e s... Do llar s 35,116 24,508 15,971 Oth e r Farm In c o m e... Dolla r s 3,003 1,984 770 T o t a l Farm In c o m e... Dolla r s 38,119 26,492 16,741 A verage Pr ic e for M ilk Sold ( c w t.) Do l la r s 10.80 10.95 11.15 CASH COSTS OF MILK PRODUCED T o t a l per c w t...... Do l la r s 6.32 7.67 7.82 Non-Feed Cost per c w t... Do l la r s 2.39 2.91 2.90 F eed C ost per c w t... Do lla r s. 3.93 4.76 4.92 For F eed Purchased per c w t.. Dollar s 2.37 ' 2.19 2.20 Fof? F eed Ra i s e d per c w t... Do l la r s 1.56 2.57 2.72 Per Cow in H e r d... Do lla r s 726 721 806 Per Cow in Prod. (Ave. No. M ilked) Do lla r s 799 867 911.NET CASH INCOME Per Farm... Do lla r s 14,367 7,523 3,681 Per C ow (2 years old & o v e r ) Dollars; 532 321 252 Per Cow (A v e. No. M i l k e d )... Dolla r s 579 389 302 4

THREE YEAR SUMMARY Based on th e in f o r m a t io n c o l l e c t e d from t h e s e 15 farms d u r in g THE PERIOD OF 1957 THROUGH 1959, THE FOLLOWING CHANGES AND TRENDS WERE NOTED: PRODUCTION - The average production per d a iry increased between 1957 and 1959 by 58,000 pounds. T h is was la r g e ly the re s u lt of an INCREASE IN THE NUMBER of COWS BEING MILKED. THE AVERAGE NUMBER ON THESE FARMS INCREASED BY FOUR, BUT MORE IMPORTANT THE AVERAGE NUMBER BEING MILKED INCREASED BY SIX. THIS MEANS THERE WERE FEWER "FREE BOARDERS" BEING KEPT AND THE RESULTING EFFICIENCY IS REFLECTED NOT ONLY IN' HIGHER PRODUCTION, BUT IN REDUCED COSTS PER HUNDRED AND HIGHER INCOMES AS WELL. ACRES IN CROPS - T here was a s l i g h t in c r e a s e in acres of owned LAND BEING FARMED; HOWEVER, THE ACREAGES OF RENTED CROP LAND IN CREASED NEARLY THREE TIMES. SEVERAL OPERATORS CEASED DAIRYING AND THOSE REMAIN!.NG HAVE EITHER BOUGHT OR RENTED ADD I T I 0 N A L C RO P LAND. T h i s r e s u l t e d in b e t t e r u t i l i z a t i o n of m a c h in e r y and some r e d u c t io n IN COSTS OF FARM-RAISED FEEDS. THE TREND TOWARD FARMING MORE CROP LAND HAS CONTINUED. A GREATER PROPORTION OF DAIRYMEN NOW HAVE ENOUGH ACREAGE FOR THEIR PRESENT SIZED HERDS. INVESTMENT - T o t a l in v e s tm e n t per farm h a s. i n cr e a sed $11,294, or ALMOST $3800 A YEAR. CHANGES IN LAND VALUES, A RESULT OF CLEARING AND BRINGING MORE ACRES UNDER CULTIVATION, ACCOUNTED FOR PART OF THIS INCREASE. HOWEVER, MOST OF THE INCREASE IS DUE TO ADDITIONAL INVESTMENT IN COWS, MACHINERY, EQUIPMENT AND BUILDINGS. THIS AD DITIONAL INVESTMENT OF $11,294 WAS ACCOMPANIED BY AN INCREASE IN THE OWNER'S EQUITY OF $3,351 AND AN INCREASE IN INDEBTEDNESS OF $7,943. T h is p la in ly indicates most of the increase in investment MANAGED WAS ACHIEVED BY THE FARMER GO ING' FURTHER IN DEBT. THE DE CREASE IN MACHINERY INVESTMENT PER ACRE OF CROP LAND IS LARGELY ATTRIBUTABLE TO AN INCREASE IN RENTED ACRES OF CROP LAND. Dur in g t h e s e y e a r s, a t y p i c a l d a i r y m a n ' s e q u i t y in h i s c o o p e r a t i v e ASSOCIATION HAS INCREASED $4,000 TO $6,000 A YEAR. THIS IN VESTMENT OF THE PRODUCER SHOULD NOT BE IGNORED THOUGH IT IS IN THE FORM OF NON-INTEREST BEARING, DEFERRED PATRONAGE REFUNDS OR PRODUCT r e t a in s. These assets are not included in the farm investment shown in- t h is re p o rt. For the dairyman to finance his share of the in v e s t ment necessary for a coo perative to provide farm s jp p lie s, processing, AND TO DISTRIBUTE HIS PRODUCTS REQUIRES THE EQUIVALENT OF $30,000 TO $50,000 PER FARM. GROSS CASH INCOME - The sale of m ilk has c o n s is ta n tly accounted for 90 per cent or more of the gross cash income of these farms. Sale OF POTATOES, FEED AND DAIRY 3EEF PLUS CUSTOM AND OFF-FARM WORK AC COUNT FOR MOST OF THE REMAINING 10 PER CENT. WHILE THERE HAS BEEN SOME FLUCTUATION IN THE AVERAGE PRICE RECEIVED FOR MILK SOLD, THE GROSS INCOME HAS SHOWN A STEADY INCREASE DUE TO MORE COWS BEING MILKED AND HIGHER PRODUCTION PER COW. GROSS CASH INCOME INCREASED ABOUT $6,700 FOR TYPICAL FARMERS WHILE NET INCOME INCREASED ONLY $1,700- BETWEEN 1957 AND 1959. 5

COST OF PRODUCTION - T he cost of p r o d u c in g a hundred pounds of m il k DROPPED BY $1=00 FROM 1957 TO 1958, BUT THEN ROSE 41^ IN 1959. THIS NET REDUCTION OF 59^ IS A RESULT OF LOWER FEED COSTS DURING THE PERIOD. T here was r e d u c t io n in co sts of both purch ased and hom e- grown fe e d s w ith THE LARGEST REDUCTION BEING IN THE LATTER. OFF-SETTING THE REDUCTION IN FEED COSTS WAS A NET INCREASE OF 20<f ON NON-FEED COSTS, ONE OF THE MAJOR ITEMS OF THE NON-FEED COSTS WAS HIRED LABOR. IN 1957 HIRED LABOR COSTS WERE $1.41 PER HUNDREDWEIGHT, DROPPING TO 92^ IN 1958 AND THEN r i s i n g to $1.34 in 1959. T he r i s e betw een 1958 and 1959 was caused IN PART BY ADDITIONAL HIRED LABOR ON FOUR FARMS WHICH HAD EXPANDED BE YOND A ONE-MAN OPERATION BUT HAD NOT GROWN SUFFICIENTLY TO FULLY SUP PORT A YEAR-ROUND HIRED MAN. CASH COSTS DO NOT INCLUDE ANY PAYMENT TO THE OPERATOR FOR HIS AND HIS FAMILY'S LABOR OR ANY RETURN ON HIS EQUITY IN THE FARM, NET CASH INCOME - T he $1,700 a year in c r e a s e in n et cash income d u r in g THE THREE YEAR PERIOD IS A RESULT OF BOTH INCREASED VOLUME PER FARM AND LOWER COST PER POUND OF MILK. NET FARM INCOME IS WHAT A FARMER. HAS LEFT FOR FAMILY LIVING EXPENSE, DEBT PAYMENT AND REINVESTMENT. it IS INTERESTING TO NOTE THERE HAS BEEN LITTLE VARIATION IN THE NET IN COME PER COW BASED ON THE AVERAGE NUMBER OF COWS MILKED BUT BECAUSE THE FARMERS HAVE BEEN ABLE TO MILK A HIGHER PERCENTAGE OF THE COWS IN THE HERD, THE INCOME PER COW HAS INCREASED BY $44, DEBT REPAYMENT - T he q u e s t io n as to how much d e b t a d a ir y farm can CARRY JS OFTEN POSED. A RULE OF THUMB USED BY LENDING AGENCIES IS THAT A FARM OF ADEQUATE SIZE TO SUPPORT AN OPERATOR AND HIS FAMILY CAN USUALLY SAFELY CARRY A DEBT LOAD OF BETWEEN ONE-THIRD AND ONE- HALF OF THE VALUE OF THE TOTAL INVESTMENT, LARGER WELL-MANAGED FARMS ON BETTER SOILS CAN OFTEN SAFELY CARRY AN EVEN LARGER INDEBTEDNESS. S eldom w ill any c r e d it a g en cy lend as much as t h r e e - fo u r th s of th e ASSESSED MARKET.VALUE OF A FARM. Based on in f o r m a t io n in t h i s s t u d y here are two ex am ples of WHAT A DAIRY FARMER MIGHT REASONABLY BE EXPECTED TO CARRY IN THE WAY OF A DEBT LOAD DEPENDING ON THE SIZE OF HIS OPERATION: Farm S ize 20 cows 40 cows Net Cash Income at $300 per c o w...$6,000 $12,000 L ess Fa m il y L iv in g Ex p e n s e s...... 4,000 4,000 De p r e c i a t i o n (B u i l d i n g, Ma c h i n e r y, Eq u ip m e n t and Cow s). 1,500 2,500 Money l e f t t h a t could be a p p l i e d An n u a l l y a g a in s t d e b t....,..,... 500 5,500 Pay m en ts per Cow........... 25 138 T h is in d i c a t e s t h a t in 20 years a 20 cow d a ir y m ig h t be a b l e to pay o f f a $10,000'd e b t. In t h e same p e r io d a 40 cow d a ir y m ig h t pay o ff $40,000 to $60,000. A 50i a hundred drop in farm m ilk p rices could MORE THAN OFF-SET THE DEBT PAYING A B ILITY OF THE FARMER WITH A HERD of 20 cows. Debt re p a ym e n t a b i l i t y also depen d s upon per son al income TAXES AND OTHER FACTORS THAT MUST BE CONSIDERED BUT ARE ALMOST IM POSSIBLE TO FIGURE EXCEPT ON AN INDIVIDUAL BASIS: 6

FARM BUSINESS ANALYSIS WILL PAY - A t y p i c a l d a ir ym a n works long hours AND OFTEN IS BEHIND IN HIS SCHEDULE OF FIELD AND FARM WORK. NORMALLY HE HAS N.EVER RECEIVED ANY SPECIAL TRAINING IN HOW TO KEEP, ANALYZE AND USE FARM BUSINESS RECORDS TO AN ADVANTAGE. OFTEN HE MAY NOT CARE FOR RECORD KEEPING OR THINKS IT NOT IMPORTANT ENOUGH TO DO MORE THAN THE MINIMUM RECORD KEEPING REQUIRED FOR INCOME TAX PURPOSES. USUALLY HE IS SO CLOSE TO MANY OF HIS MANAGEMENT PROBLEMS THAT HE CANNOT BACK AWAY AND TAKE A GOOD l.ook AT THEM. In MOST STATES SPECIAL ASSISTANCE WITH THIS TYPE OF PROBLEM IS AVAILABLE FROM AGRICULTURAL ECONOMISTS WITH THE STATE EXPERIMENT STATIONS AND EXTENSION SERVICES. IT IS THE MAJOR OBJECTIVE OF THE RESEARCH UNDER WHICH THIS REPORT WAS DONE TO PROVIDE THE TECHNICAL EXPERIENCE AND LOCAL FARM DATA NECESSARY TO PROVIDE ALASKA FARMERS WITH A FARM ADVISORY SERVICE IN FARM BUSINESS ANALYSIS AND MANAGE MENT. The need for g re a te r emphasis in th is area of assistan ce to Alaskan farmers is also cle a rly, indicated in "Progress Report for A la s k a 's Dairymen" S p e c ia l Report Number 9,- February 1960 by W illia m J. Sweetman. IN SUMMARY - To cut th e co s ts t h a t reduce th e fa r m e r ' s d a ir y prof i t s he m u s t : G et more m i l k per crop a c r e, per cow and per m a n. A d a i r y farmer can e a s i l y pay more for th e feed he r a i s e s than it c o sts to b u y. It should co st le ss to r a i s e if he has r e a s o n a b ly good s o i l and if he uses good c r o p p in g and f e e d in g p r a c t ic e s Co s t s of feed p r o d u c t io n and p r o f i t s per COw can o n ly be d e t e r m in e d by k e e p in g a c o m p l e te s e t of a c c o u n t s, in v e n t o r y as w ell as income and e x pen se r e c o r d s. T w e n t y- f i v e or more cows on t h e - p r o d u c t ;on l i n e p r o d u c in g over 10,000 pounds a year are r e q u ir e d to carry a s i z e a b l e d eb t load and to p r o v id e t h e farm f a m il y w.i th a.r e a s o n a b l e in c o m e.

THREE YEAR FARM BUSINESS SUMMARY ON FIFTEEN MATANUSKA VALLEY DAIRY FARMS 1957-1959 A verage of A ll Farms PRODUCTION 1957 1 958 1959 Per Farm... Pounds 1 70,119 211,126 228,318 Cows (2 YEARS OLD &. over in He r d). Number 21 24 25 Per Cow... Pounds 8,469 8,550 9,159 A verage Cows M ilk e d Dur in g Y e a r.. Number 1 5 19 21 Per Cow...,. Pounds 10,901 11,170 11,009 FARM INVESTMENT T o t a l....... Do lla r s 55,009 58,735 66,303 Ow n e r ' s Eq u i t y... Do lla r s 35,442 37,155 38,793 In d e b t e d n e s s... Do l la r s 19,567 21,580 27,510 Ra t i o In d e b t e d n e s s to Eq u i t y... Per C ent 38.0 36.7 43.7 In t e r e s t Pa i d..,... Do l la r s 1,004 1,182 1,334 Ma c h i n e r y :... Do lla r s 9,861 10,378 10,649 Per C rop A cre......... Do lla r s 118 124 71 Per Cow: (2 yea r s & Over in He r d). Do lla r s 2,855 2,468 2,815 (A verage Number M i l k e d ). Do lla r s 3,811 3,108 3,430 GROSS CASH INCOME T o t a l M ilk S a l e s... Do l la r s 17,799 20)562 24,508 Oth e r Farm In c o m e... Do l la r s 1,970 1,394 1,984 T o t a l Farm Income........ Dollar s 19,770 21,956 26,492 A verage Pr ic e for M ilk Sold ( c w t.) Do l la r s 10.79 10.25 10.95 CASH COSTS QF MILK PRODUCED T o t a l Per C v/t.... Do l la r s 8.26 7.26 7.67 Non- F eed Co st Per C w t,.... Do l la r s 2.71 2.44 2.91 F eed Co s t Per C w t... Do lla r s 5.55 4.82 4.76 For F eed Pu rch ased Per C w t.. Do lla r s 2.55 2.29 2.19 For F eed Ra i s e d Per C w t... Do lla r s 3.00 2.53 2.57 Per C ow in H e r d... Do lla r s 750 661 721 Per Cow in Pr o d. (A v e. No. M i l k e d ) Do lla r s 1,015 809 867 NET CASH INCOME Per Farm... Do llar s 5,819 7,444 7,523 Per C ow (2 yea r s old &. o v e r ).. Do lla r s 277 313 321 Per Cow (A v e. No. M i l k e d )... Do lla r s 388 394 389 Ag r i c u l t u r a l Pr o j e c t 78 Eco n o m ics