Document Type

Thesis - Open Access

Award Date

1978

Degree Name

Master of Science (MS)

Department

Economics

First Advisor

Herbert R. Allen

Abstract

This study used three polyperiod linear programming models to analyze the effects of several management strategies on the organization of a hypothetical 2,560 acre ranch in North Central South Dakota. Two models including three-year drought periods and one model with no drought were constructed. In building the two drought models, several assumptions concerning drought assistance to cattle producers were made and incorporated into the models. The major findings of the study were as follows: 1. A land use program using 620 acres of cropland and 1,800 acres of pasture land resulted in greater total profit than a land use program with 2,420 acres of pasture land. This was true in all models. 2. The beef cow herd exhibited much greater variability during ten-year periods including drought than with a ten-year period with no drought. 3. Supplementary hog activities were selected at their maximum allowable scale with every strategy which included them over a ten-year period with only two exceptions. Those exceptions were both with a strategy which attempted to maximize profits in the worst year of a drought. In both instances 115 pigs were farrowed and sold in the first year of a three-year drought period. 4. The strategy with no supplementary hog and sheep activities and the strategy with no cropland required the greatest amounts of capital borrowing with every model. The same two strategies also provided the least total profit over a ten-year period with every model. 5. The strategy with supplementary hog and sheep activities, 1, 800 acres of pasture land and 620 acres of cropland produced the greatest total profit over a ten-year period with every model. 6. Annual forage costs per cow unit equal to or less than $103.60 were required to maintain a beef cow herd during drought when the drought occurred in the first three years of a ten-year period. Annual forage costs per cow unit equal to or less than $106.90 were required when a drought occurred [sic] in the fourth, fifth, and sixth years of a ten-year period. 7. Annual forage costs per cow unit greater than $121.60 resulted in the elimination of the beef cow herd during drought with a model having drought in the first three years. Annual forage costs per cow unit greater than $154.90 resulted in the elimination of the beef cow herd during a drought in the fourth, fifth and sixth years. 8. Following a period of drought it took two to three years to recover an annual cash balance which was greater than zero in dollar value. 9. A drought of the severity assumed in this study cost the ranch operator employing a diversified crop and livestock program at least $67,345.15. Four major conclusions were drawn from the findings of this study. These conclusions were subject to the restrictions and assumptions imposed on the models. The conclusions were as follows: 1. A ranch operator should plan his operation with the expectation of drought. The ranch organization should be planned to include activities which provide income regardless of weather conditions . Although a ranch operator cannot know when a drought will occur, planning the organization with the expectation of drought and building up reserves of capital to provide additional cash flow when needed is important for the survival of the ranch firm. 2. A land use program which includes cropland is preferable to a program which consists of all pasture land. 3. A diversified livestock program helped maintain cash flow, lowered capital borrowing and increased annual profits during a drought. 4. Two or three years will be required to recover an annual cash balance greater than zero in dollar value if price conditions are favorable.

Library of Congress Subject Headings

Farm management -- South Dakota
Linear programming
Agriculture -- Economic aspects
Droughts

Format

application/pdf

Publisher

South Dakota State University

Included in

Economics Commons

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