Progress Report Series No. 74
AGRICULTURAL 
EXPERIM
of The Alabama Polytechnic 
institute,
E. V. SMITI-H, Director
OPPORTUNITIES 
PROFIT
on YOUR FARM
JOHN E. LEE, JR., Assistant in Agricultural 
Economics
E. D. CHASTAIN, Associate Agricultural Economist
ANALYSES OF FARM business summaries of
252 farms included in a recent Alabama farm
management study revealed that volume of busi-
ness, labor efficiency, anf rates of production
were "factors affecting profits" that needed 
more
attention on many farms.
MEASURING VOLUME of BUSINESS
Volume of business on diversified 
farms can
be measured by calculating the 
man days of work
required for all crop and livestock 
enterprises on
an individual farm under typical 
or specified con-
ditions. These man days 
of work are referred
to as productive man work units 
(PMWUs). The
productive man work unit 
thus represents the
work done in I day by 1 
man. Total work units
for various productive crop and livestock enter-
prises on a farm are an indicator 
of volume of
business or number of productive 
days of work
in a year.
VOLUME IMPORTANT
Data from the study show 
that as volume of
business increased, operator's 
labor income in-
*This report is based on results from 
Hatch project 115,
"An Economic Analysis of Farm 
and Home Managerial
Opportunities and Adjustments in 
Alabama Agriculture."
creased, Table 1. Operator's labor income meas-
ures return to the farm operator for his labor and
management after subtracting 
cash expenses,
value of unpaid family labor, and interest on
capital, and after adjusting for 
inventory changes.
TABLE 1. VOLUME OOF BusssIN RELATION TO
OPERATOR'S LABOR INCOME
Volume of business Operator's 
labor income
PMWUs per farm Dollars
Less than 2.00 
--1,788
200 to399--------------------------268
400 to 599 ------------------------- 
136
600 to 799 ------------ 900
800 and over -..- -
---- +1,545
MEASURING LABOR EFFICIENCY
Labor efficiency can be measured 
by dividing
the total number of productive 
man work units
on a farm by the man equivalents 
on that farm.
One man working full time or 2 hired 
men work-
ing 6 months each during the busy 
season may be
considered to be 1 man equivalent. 
The greater
the number of productive work 
units per man
equivalent, the greater the 
labor efficiency.
(Continued on back page)
June, 1959
TION
n, Ala.
II II I I I I I I I I II L1 I ' L/ ' r\n
FARM BUSINESS COMPARISON
Many factors affect farm profits. Some of the
more important ones are volume of business, labor
efficiency, production rates, and selection and
combination of enterprises.
Given in the farm business comparison work-
sheet below are the range of production rates,
labor efficiency, volume of business, and income
experienced by a sample of Alabama farmers co-
operating in intensive Farm and Home Develop-
ment activities.
The top figure of each column is the average
for the best 10 per cent of farms in that factor.
For example, the figure 850 at the top of the
column headed "pounds lint cotton per acre" is
the average of the 10 per cent of farms with the
highest yield of cotton. Each figure below in
that column is the average for the next lower 10
per cent. The figure 277 at the bottom of the
column is the average of the 10 per cent of farms
with the lowest yield of cotton.
Each column is independent of the others.
HOW to USE the WORK SHEET
To see how your farm compares with the farms
in the worksheet, draw a horizontal line in each
column where your farm ranks. For example,
if your farm produced 500 pounds of lint cotton
per acre draw a heavy line in the "cotton" column
between 496 and 511. Repeat for all columns
that apply to your farm.
If you are in the lower end of some of the
columns, you can see opportunities for improve-
ments. The comparison will show which of the
"factors affecting profits" is weakest on your farm.
Using the guide on page 3 you can calculate
volume of business and labor efficiency on your
farm.
FARM BUSINESS COMPARISON WORKSHEET
Rates of production Labor efficiency
Lint cotton corn Alfalfa Other hay Productive work
yield per yield yield yield Milk sold Eggs Pigs weaned Beef cow units per man
acre per acre per acre peracre per acre per cow per hen per litter calf crop equivalent
Pounds Bushels Tons Tons Pounds Number Number Per cent Number
850 71 3.5 2.9 8,704 235 9 100 524
741 54 2.8 1.7 7,159 216 8 100 375
650 50 2.5 1.5 6,472 198 8 100 323
601 45 2.0 1.4 5,837 191 8 100 286
557 40 2.0 1.2 5,464 176 7 99 251
511 40 2.0 1.0 5,230 167 7 95 228
496 35 1.8 1.0 5,086 155 7 91 203
444 31 1.5 1.0 4,553 133 6 88 170
378 28 1.5 .9 3,792 120 6 81 131
277 20 1.0 .5 2,532 97 4 62 83
Volume of business Income
Total Map Cotton Dairy cows Beef Cows Operator's Return on
work units equivalents acreage milked in herd Gross labor income investment
Number Number Acres Number Number Dollars Dollars Per cent
1,332 6.9 71 74 140 29,999 6,324 +15.7
818 3.4 38 47 53 16,181 3,187 ? 7.6
641 2.5 25 36 30 12,111 1,678 + 3.5
550 2.1 20 27 22 10,325 919 + 1.0
461 1.9 16 23 16 8,312 312 - .5
395 1.6 13 20 12 6,427 - 401 - 3.5
325 1.4 11 12 8 4,965 - 882 - 6.8
268 1.2 9 8 6 3,727 -1,585 -10.4
217 1.1 6 5 3 2,816 -2,984 -14.7
148 .8 4 3 1 1,509 -5,753 -20.5
BUSINESS VOLUME and LABOR EFFICIENCY
Crops
Cotton, hand picked
550 lb. lint/acre
450 lb. lint/acre
350 lb. lint/acre
Corn, grain- --
Hogging off
Silage- --------
Peanuts, combined
Stacked------
Sorghum, silage
Grain
Garden
Irish potatoes,
commercial
Peaches, non-bearing
Bearing-- --
Crops for small seed or
small grain
Alfalfa for hay,
Establishment ------
Other years.......-----
Coastal Bermuda for hay,
Establishment ------
Other years --------
Winter legume, green
manure -----------
Temporary grazing,
annual..--------------
Other- hay crops' --
Improved pastures
Mowed only -------
Mowed and fertilized
TOTAL --------------
Acres on PMWUs Total
this farm per acre PMWUs
x
-----x
-------x
--------x
---x
t-x
--------x
------x
-------x
-------x
-------x
-------x
-------x
-------x
-------x
-------x
-------x
-------x
-------x
-------x
-------x
-------x
-------x
11.0
10.0
8.5
1.5
1.2
3.0
1.8
5.7
3.1
1.8
15.0
7.6
3.1
15.8
.7
.8 = ------------
.6/cutting---------
1.1 = .------------
.6/cutting-------
.3 ------------
*5 - -----
1.0 -- --------
.2 - -
.4 = -
xx -------
1Includes oats, Johnsongrass, clover, and lespedeza.
MA NEQUIVALENTS
Workers Months of Farm Work
Operator -.--------------
Fam ily -------------- w------
H ired labor --------------------
O ther -------------------- -
Total months 
---------------------
Man equivalents (months -- 12) ---------- -- --------
PMWUs Total
per unit PMWUs
8.0------------
-- 
---------------------------------
-------------
LAou EFFICIENCY
Total crop PMWUs
Total livestock PMWUs
Misellaneous off-farm work
Total PMWUs
Total Man
PMWUs equivalents
Work units per
man equivalent
COMPUTING VOLUME and LABOR EFFICIENCY
1. Using the worksheet above, get total labor
requirements for each crop and livestock enter-
prise on your farm. Multiply number of acres or
animals in each farm enterprise by the number
of work units (PMWUs). Simply fill in blanks
under the "acres on farm" or "livestock on farm"
and multiply by the PMWU figure given. For
enterprises not listed, estimate the man days of
work required.
2. Calculate volume of business on your farm
by adding the total number of work units needed
for all crops, all livestock enterprises, and days of
miscellaneous off-farm employment. Compute this
in the space provided.
3. Compute the labor force or man equivalents
used on your farm by dividing 12 into the number
of months worked by all workers.
4. Divide total number of work units by the
number of man equivalents to get work units per
man or labor efficiency.
___________ ___
III I IIIIIIII I
No. on
Livestock this farm
Dairy cow, bulk
. tank and pipeline ---- X
Dairy cow, machine-no
bulk tank and pipeline--------- X
Dairy cow, hand milking --------- X
Beef cow ----------------------------- X
Young cattle ---------------- ----- X
Calves ------------------------------- X
Feeder cattle on dry lot--------- X
on pasture --------------------- X
Dairy bull-------------------X
Beef bull --------------------- ----
Ewes and rams ------ - ----- X
Lambs ------------------------------- X
Feeder lambs --- ---------------- X
Sow, 2 litters --------------- ----- X
Boar ---------------------------------- X
Market hogs, from
weaning to market------ --- X
Laying hens, per 100
floor flock ----------------- ------ X
cage ------------------------------- x
Replacement chicks raised,
per 100 -----------
Broilers, per 1,000
produced ---------------- ------
Turkeys, per bird 71,12,mo.---------- X
TOTAL ----------------------------- X
5 ---------
12.0 =-----
15.0 =---
4.0 ------ -
4.8 -=-=-----
.1 -=------
~er 
laxx=-
rr~ur~u~ v r-------------,r-r---r ~V C/vr rvv ~-----
12.0
15.0
1.5-2.0
1.8
"5
.3/mo.
.2/mo.
5.0
4.0
05
.2
.1
2.6
3.0
- ----- ------ ----- -----
-
- - - - - - - - - -
--- -- -- -- --
(Continued from front page)
LABOR EFFICIENCY AFFECTS PROFITS
It was found that as labor efficiency increased,
operator's labor income increased. The chart sug-
gests that opportunities for greater income exist
by increasing labor efficiency.
Operator'sLobor Income (dol
2500
200 0
5oo00 In the "block"
1000
500
, .................
. :.. r v v v...... - . ... ..... ...
5 -200 ::::
0- 100- 200- 300- 400 B
100 200 300 400 OVER
Labor efficiency
(productive man work units per man equivalent)
As shown in the chart, operator's labor incomes were higher on
farms with the greatest labor efficiency.
Increased labor efficiency may also mean more
productive work done with less effort. For ex-
ample, an improved milking arrangement that
saves a dairyman 100 yards walking per milking
means walking 1,695 miles less over 40 years.
LOW RATES of PRODUCTION
Many farmers can increase income by increas-
ing yields. For example, for the farms included
in the study, it was found that as yield of corn
per acre increased, operator's labor income in-
creased, Table 2.
TABLE 2. CORN YIELDS IN RELATION TO OPERATOR'S
LABOR INCOME
Corn yield per acre Operator's labor income
Bushels Dollars
Less than 30 ----------------------- 623
30 to 40 -------------------------- 257
40 to 50 -------------------------+297
50 and over -- +356
Similar relationships exist for other crops, since
machinery and labor costs are not much greater
for producing high yields of crops than for low
yields. It costs no more to cultivate a high-yield-
ing variety of cotton properly spaced than to
cultivate a low-yielding variety improperly spaced.
Costs in terms of time and labor are no greater
for preparing a high-producing milk cow for milk-
ing than for a low producer. Resources in the
form of fertilizer, feed, or better milk cows should
be added as long as returns from the last unit
added exceed costs of that unit. Until resource
commitments reach such a point, opportunities
for greater profits exist.
YOUR FARM?
Volume of business, labor efficiency, and
rates of production are three important factors
affecting success in farming. The guides on
pages 2 and 3 show how your farm ranks with
respect to these factors. Opportunities for great-
er profit may exist on your farm!