An Economic Analysis of Selected Beef Enterprise Systems for Southeast South Dakota

The objectives of this study were: 1. To compare returns to labor and management from various farm organizations, when these organization s include beef cow systems, and cattle feeding operations under two price levels as well as cash grain enterprises. 2. To establish general and basic guidelines to assist farm operators in the study area in making decisions concerning changes in enterprise combination in attempting to maximize returns to labor and management. The procedure used to accomplish the objectives of this study was the application of linear programming analysis to a farm firm that was representative of the study area. The representative farm firm was determined from information supplied by the South Dakota Crop and Lives tock Reporting Service and in consultation with Dr. Wallace G. Aanderud, extension economist in farm management at South Dakota State University. The use of representative farm firms for analysis has historical basis. Alfred Marshall refers to the analysis of expenses of a representative firm to determine the factors governing the supply prices of commodities. Budgets for representative farms began appearing in the 1920’s. Agricultural economists of the period of the period felt that more specific recommendations could be made if farms were separated into groups by type, size, or area. It was also felt that this separation would facilitate application of recommendations by farm operators. The particular combination of resources available to an individual farm firm is unique but the analysis of a representative farm firm can be a very useful management tool. Individual farm operators can organize their sets of resources in order to maximize returns basing their decisions up on results gene rated by the analysis of the representative farm firm. Linear programming is a method of determining how to us limited resources to obtain a particular objective, such as least cost or maximum returns, when those resources have alternative uses. Linear programming con siders the resources available, there restrictions present and enterprises that are to be considered. It then derives the combinations of enterprises which will yield the optimum solution with the resources available. This provides information for making more effective management decisions about usage of resources available to the farm firm