A Linear Programming Analysis of Several Determinants of Profit on a Simulated Northern Utah Dairy Farm

• Main Author: Atwood, Jay Dee
• Format: Others
• Published: DigitalCommons@USU 1983
• Subjects: linear; programming; analysis; several; determinants; profit; simulated; northern; utah; dairy; farm; Agricultural Economics
• Online Access: https://digitalcommons.usu.edu/etd/4170; https://digitalcommons.usu.edu/cgi/viewcontent.cgi?article=5189&context=etd

The purpose of the study was to analyze several determinants of profit on a simulated northern Utah dairy farm. A linear programming model was developed to accomplish this. Optimal conditions on the farm were estimated and then other model applications were made to evaluate the importance of milk price, cropland ownership, and corn silage production and feeding. The significance of cow quality also was estimated. Optimal conditions on the farm gave rates of return to capital between savings rates and loan rates obtainable at a financial institution. Marginal values derived for land did not support the current asking price of land. The marginal values derived for cows would support higher levels of investment in the cows than current prices of the cows. Optimal crop mixes and rations also were derived. Milk price had a direct effect on financial measures of the farm's well-being. Increasing herd size was found to be a logical response to a decrease in milk price. Cropland ownership had an inverse effect on returns but a direct effect on annual income. Corn silage production was found to be more important for a poorer herd than a better herd. However, corn silage production and feeding had a near neutral effect on measures of financial well-being.