Station Bulletin 407 May 1954
Production Efficiency
on New England
Dairy Farms
IV. Adjustments in the Organization of Machinery
and Equipment
by
G. E. Frick, S. B. Weeks,
and I. F. Fellows
AGRICULTURAL EXPERIMENT STATION
UNIVERSITY OF NEW HAMPSHIRE
DURHAM, N. H.
in cooperation with
Storrs Agricultural Experiment Station, Storrs, Conn.
and
Production Economics Research Branch, Agricultural Research Service,
U. S. Department of Agriculture
Contents
INTRODUCTION 3
Objectives 3
Source of Data 4
CUSTOM SERVICES 4
Types of Custom Operators 4
Custom Services Available 5
Custom Services Hired 5
Custom Work Performed 7
Rates of Performance 8
Price Charged per Acre or per Hour 8
Methods Used in Establishing Charges 8
METHOD OF DETERMINING AN ECONOMIC ORGANIZATION OF MA-
CHINERY AND EQUIPMENT 11
Machinery and Labor Costs 11
Machinery Ownership Patterns 14
Problems of Comparison of Costs for Owned and Custom-hired Machines 14
Problems in Computing Costs of Providing Custom Equipment for Hire 16
INTEGRATED MACHINERY AND OTHER RESOURCES ON TYPICAL DAIRY
FARMS 17
Farm A — A Small Dairy Farm 17
Farm B — -A Medium-sized Dairy Farm 27
Farm C — A Large Dairy Farm 32
SUMMARY AND CONCLUSIONS 38
Preface and Acknowledgement
This bulletin is the fourth in a series concerned with production
efficiency on New England dairy farms. In the first bulletin a prelimi-
nary appraisal was made of the significant opportunities for reducing
costs in dairying. In the second and third bulletins the economies of
scale of operations and of the barn-finishing method of harvesting
hay, respectively, were analyzed in greater detail. This bulletin deals
with the efficient use of machinery and equipment on dairy farms.
It emphasizes the economic principles and procedures involved in
choosing between alternative methods of doing field work.
The authors are indebted to many farmers and equipment oper-
ators in New England who helped to supply the basic information
used in the study.
They wish particularly to acknowledge the assistance and critical
appraisal received from Paul Putnam, Acting Head, Department of
Agricultural Economics, University of Connecticut, Storrs, Conn.,
William F. Henry, Chairman, Department of Agricultural Economics,
University of New Hampshire, Durham, N. H.; and C. W. Crickman
and M. S. Parsons, Production Economics Research Branch, Agri-
cultural Research Service, U. S. Department of Agriculture, Wash-
ington, D. C.
Adjustments in the Organization of
Machinery and Equipment
G. E. Frick, S. B. Weeks, and I. F. Fellows*
Introduction
The trend toward greater substitution of machines for labor to increase
output per man and decrease costs of operation has proceeded rapidly on
New England dairy farms since the end of World War II. The increase in
mechanization raises several problems on these farms. The increasingly largej
investment in machinery and equipment means correspondingly high annual
costs of ownership of the machinery and equipment for established dairymen.
The large capital outlay necessary for the purchase of farm machines is
often an important barrier to young people who are interested in starting
dairy farming.
Both the increase in numbers of machines and the general rise in prices
have increased the value of the machinery on farms. If the equipment on 28
Connecticut farms which were a part of the sample for this study had been
bought new at 1949 prices, the investment would have averaged S10,600 per
farm, or about $380 per cow. Investment in machinery would equal invest-
ment in livestock and it would be about half the investment in land and
buildings.
One aspect of the mechanization of dairy farms is the duplication of
machines from farm to farm and the small annual use of each machine.
Many specialized machines are used for only a few hours in a year.
A tractor-drawn corn planter, for example, costing about $225 with
an annual ownership cost of $35 per year, may be used only three or four
hours in a year. A baler involves a capital outlay of as much as $2,400 and
has an annual ownership cost of about $580, yet it may be used no more
than 50 hours in any one year.
Objectives
This study has three objectives:
1. To learn the amount of work done on New England dairy farms
with machines in performing field operations, the custom services that are
available to farmers for hire, the performance rates of both owned and hired
machines, and the charges for different types of custom work.
2. To outline a method of deciding upon the optimum economic or-
ganization of machinery for a dairy farm.
*Mr. Frick is Agricultural Economist, Production Economics Research Branch,
Agricultural Research Service, U.S.D.A., stationed at the University of New Hampshire;
Mr. Weeks was formerly Agricultural Economist, Bureau of Agricultural Economics,
U.S.D.A., stationed at the University of Connecticut; Mr. Fellows is Associate Pro-
fessor of Agricultural Econoiaics, University of Connecticut.
3. To test the opportunities for reducing costs of dairy production and
for increasing farm income on a typical small, medium-sized, and large dairy
farm by reorganization of owner-operated equipment, by joint ownership
patterns, and by more extensive use of custom-operated equipment.
Source of Data
Three farming communities — one each in New Hampshire, Connecti-
cut, and Massachusetts — were selected as representative of New England
dairying. Types of farm organizations, size of farm units, and intensity of
operations were the criteria used in selecting the areas. Specialized dairy
farms predominate in the Lebanon area of Connecticut, less intensive dairy
farms in the Ashfield area of Massachusetts, and moderately extensive dairy-
ing in the Belmont area of New Hampshire. Records of the farming oper-
ations in 1949 were obtained through interviews with all dairy farm operators
in each area. In addition, operators of custom farm machinery who did work
in these areas were interviewed to obtain information on their operations.
These records include the basic data on which the study was developed.
Custom Services
Many custom services are available to most New England farmers. Among
the reasons for the increase in availability and variety of these services are:
(1) the equipment shortage during World War H, including the practice
of issuing purchase certificates only to those operators who would agree to
make machines available for neighborhood use; (2) technological improve-
ments, especially the rubber tire and hydraulic lift, which have adapted ma-
chinery to rapid and easy movement over the highways; and (3) the intro-
duction of specialized, costly machines, such as the pickup baler, field-forage
harvester and bulldozer, which are new to many farmers and which require
specialized operating and servicing skills.
Types of Custom Operators
Custom work is now done by two major groups of operators. The first
group consists of those farmers who want to supplement their income by off-
farm work or those who buy a more expensive machine than they feel they
can afford for their individual use. The second group is composed of oper-
ators who specialize in custom work and do little or no farming. The first
group is the most numerous. County agents, machinery dealers, and farmers
supplied names of 104 individuals in Connecticut and 46 in New Hampshire
who did custom work in 1949, but they indicated that their lists were incom-
plete. Generally, these farmer operators perform a number of services al-
though they do not supply the highly specialized types of services. The second
group is small; only 12 men were listed who could be classified as specialized
custom operators and some of them did some farming or were engaged in
other business activities such as selling machinery and equipment or operat-
ing school-bus routes. But individual operators frequently perform many
services or a single service on a large scale.
Specialized custom operators generally indicated that there had beeji
some drop in volume of work since 1946. They attributed this to the wider
availability of machinery and the improved financial position of farmers.
They indicated that they were planning to adjust to this situation by dropping
certain services which they considered unprofitable. They would either special-
ize in specific lines or expand into fields in which no services are now avail-
able or in which new machinery has recently been introduced.
Custom Services Available
The 60 farmers and 12 specialized custom operators who were inter-
viewed were equipped to perform the 43 different services listed in Table 1.
Table 1. — Types of Custom Services Available in New England in 1949
Land Preparation
Plowing
Harrowing
Steam sterilization
Fertilizer spreading
Lime spreading
Manure spreading
Bog harrowing
Crop Planting
Tobacco planting
Potato planting
Corn planting
Bean planting
Grass seeding
Crop Cultivation and
Protection
Weed spraying
Corn dusting
Potato dusting
Potato spraying
Orchard spraying
Cultivating
Crop Harvesting
Mowing hay
Raking hay
Baling hay
Threshing grain
Corn binding
Field-chopping hay
Stationary chopping
Potato digging
Combining grain
Corn picking
Long-hay loading
Baled-hay loading
Land Improvement
Land clearance
Wall removal
Stone picking
Drainage work
Brush plowing
Pond digging
Miscellaneous
Barn spraying
Pumping
Buzz sawing
Chain sawing
Snow removal
Trucking
Manure loading
Preparing the land and harvesting the crops were services offered by
the greatest number of operators. Field-forage harvesting and weed spraying
were undergoing the greatest expansion in 1949. The total quantity of hay
baled is steadily increasing. Volume of hay baling per operator appeared to
be declining but this probably was due to the increasing number of custom
balers available.
The greatest amount of custom work performed in terms of dollar volume
was land clearing (bulldozing), which is a very specialized type of work par-
ticularly suited to custom operation. Compared to most other jobs, hourly
rates are high. Farmers now are especially interested in land-improvement
work, partly because of the recent establishment of Soil Conservation Service
districts throughout most of New England.
Custom Services Hired
Information obtained in three dairy areas studied indicates the custom
services hired by dairy farmers. In Lebanon, Conn., 28 specialized dairy
farmers whose milking herds averaged 28 cows paid a total of $9,757 for
custom work on 10 operations in 1949 (Table 2). Custom work was done on
683 acres, or about 7 percent of the total acreage on which crop- and land-
improvement work in the area was done. Job or equipment hours totaled 912
and total man-hours of labor were 1,112, or slightly less than 7 percent of all
man-hours used for crop- and land-improvement work on these farms.
Table 2. — Custom Work Hired for Operations on Crops and Land Improvement
by 28 Dairy Farmers in Lebanon, Connecticut, 1949
Work Performed
of
Total
Total
Total
Total
Job
Farms
Acres
Hours
M
an-hours
Charge
Dollars
Plow
1
7
15
15
45
Plant corn
9
54
37
37
121
Spray weeds
11
98
39
39
446
Cultivate corn
5
66
52
52
176
Field-forage harvesting
8
45
76
173
1,084
Bale hay
14
308
101
123
2,250
Harvest corn
1
8
8
8
32
Spread lime
3
27
*
58
Spread manure
1
10
10
31
120
Land improvingf
20
60
574
-
634
5,425
Total
683
912
1,112
9,757
*By commercial lime company — no time data available.
flncludes 12 jobs of pond building and wall removal where acreage could not
be recorded or estimated.
In the less intensive dairy community of Ashfield, Mass., a total of
$2,688 was paid in 1949 for custom services on 9 operations on 23 com-
mercial dairy farms (Table 3). Custom operations were done on 256 acres,
Table 3. — Custom Work Hired for Operations on Crops and Land Improvement
by 23 Dairy Farmers in Ashfield, Massachusetts, 1949
IVumlipr
Work Performed
of
Total
Total
Total
Total
Job
Farms
Acres
Hours
M
an-hours
Charge
Dollars
Plow and harrow
7
41
124
124
367
Bale hay
10
106
53
88
1,462
FiU silo
3
30
42
104
Spread manure
2
17
22
30
66
Mow hay
5
34
27
27
76
Land improving
2
9
33
43
183
Spray orchard
2
44
101
247
346
Haul tobacco
1
3
30
30
60
Set tobacco
1
2
8
-
8
24
Total
256
428
639
2,688
or 5 percent of the total acreage on which crop- and land-improvement work
was performed. The custom work involved 428 job-hours and 639 man-hours
of work, which represented about 6 percent of the total man-hours of crop-
and land-improvement work performed on these 23 farms.
In the moderately extensive dairy community of Belmont, N. H., a total
of $1,203 was spent on custom services for 9 operations during 1949 on 19
commercial dairy farms (Table 4). Work was performed by custom oper-
ators on 172 acres, or about 3 percent of the total acreage on which crop-
6
Table 4. — Custom Work Hired for Operations on Crops and Land Improvement
by 19 Dairy Farmers in Belmont, New Hampshire, 1949
Work Performed
of
Total
Total
Total
Total
Job
Farms
Acres
Hours
Man-hours
Charge
Dollars
Plow and harrow
3
10
36
36
90
Mow hay
2
45
37
37
111
Rake hay
1
15
5
5
15
Bale hay
3
36
18
23
217
Harvest long hay
1
15
33
72
132
Fill silo
3
15
40
87
240
Spray orchard
1
16
34
68
53
Spread manure
2
12
40
40
120
Land improving
4
8
30
30
225
Total
172
273
398
1,203
and land-improvement work was done. Custom operations required 273 job-
hours and 398 man-hours, which was about 4 percent of the total number
of hours required for crop- and land-improvement work on the 19 farms.
If these three groups of farms are an adequate sample of the amount
of custom work hired in 1949 for crop- and land-improvement work on
New England dairy farms which have herds of more than 10 milking cows,
then approximately 560,000 hours of job time and 675,000 man-hours were
procured from off the farm by New England commercial dairy farmers. ^
The sample farms hired about $195 worth of custom work per farm in 1949.
If this figure is reduced to $150 per dairy farm to offset some of the heavy
expense for land-improvement work done on the larger farms in the Lebanon
group, it indicates that New England commercial dairy farmers probably
hired between 3 and 3.5 million dollars worth of custom work in 1949. The
expenditures for custom work by the 37,063 farms of all types which hired
some machine work done amounted to 5.6 million dollars in 1949, according
to the United States Census of Agriculture, 1950.
Custom Work Performed
Specialized custom operators did a much larger volume of work per
operator than individual farmers who performed similar services. Average
gross dollar volume in 1949 was about $8,500 for the 12 operators inter-
viewed. Job time per operator was about 1,200 hours annually (Table 5).
Income from work done on land clearing and land improvement amounted
to about a third of the total gross income. Other jobs performed by this
group of operators were not restricted to work on dairy farms. However,
a breakdown of jobs performed, acreage of work, and receipts indicates that
a major part of the work was done on dairy farms. Harvesting crops and
preparation of land were the two leading types of work next to land clearing
and improvement work. Only about 7 percent of the receipts of these oper-
ators came from miscellaneous sources, such as snow removal or wood saw-
1 The United States Census of Agriculture, 1945, reported 22,454 New England
dairy farms on which there were more than 10 milking cows.
18
27
10,650
ll,601t
888
967t
8,215
14,651
685
1,221
12,188
18,624
1,016
1,552
$ 58,694
$102,817
$ 4,891
$ 8,568
Table 5. Volume of Work Performed by 12 Specialized Custom Operators, 1949
Total Work Average Work
Performed per Operator
Crop Work* All Work Crop Work All Work
Number of difierent kinds of jobs
Total acres of work
Total job hours of work
Total man hours of work
Total receipts from work
* Includes no land-clearing or land-improvement work.
fAcres of work was not reported for 3,049 job hours and $18,549 of receipts. This
work included silo filling, a third o! ine bulldozer work, sawing, trucking, etc.
ing, the kinds of jobs specialized operators like to have to fill in slack time
between cropping periods.
Custom services provided by the nonspecialized operators included use
of the more common types of farm machinery and the hay baler. Plowing,
harrowing, mowing, and baling hay made up the bulk of the work.
Rates of Performance
Rates of performance differ widely among jobs of the same type that
are performed under differing field conditions and with diff.rpnt combina-
tions of equipment. The greatest variation in job-performance rates because
of equipment combinations was for manure spreading and field-forage har-
vesting. The number of spreaders used to haul manure from the loader on
custom jobs varied from 2 to 5, and the number of trucks used in hauling
field-chopper roughage varied from 2 to 4. The greatest variation in job-per-
formance rates because of field conditions was for plowing.
Performance rates of specialized custom operators and farmer custom
operators did not differ significantly on those jobs which both performed
frequently or on a large scale, such as harrowing, fertilizing, raking, and
mowing (Table 6). The widest differences reported was on job hours of
time per acre for manure spreading. This was because farmers rarely used
more than one spreader at one time on this job.
Price Charged per Acre or per Hour
Prices for custom work are usually quoted on an hourly basis. Jobs
customarily quoted otherwise are weed spraying (per acre), baling (per
bale), and sawing wood (per cord). The rates usually quoted include the
services of the operator, the equipment, and all operating materials such as
gasoline, twine, and spray (Table 7). Extra charges are made for additional
labor and for supplementary pieces of equipment such as an additional truck
in field-forage harvesting or an extra spreader for spreading manure.
Methods Used in Establishing Charges
A few operators were questioned as to their methods of setting rates.
Most of them indicated that they tried to establish their prices in line with
the usual or competitive price that prevailed in their community. A few said
8
Table 6. — Typical Rates of Work Performance for Specified Jobs as Reported by
Specialized and Farmer Custom Operators, and by
Dairy Farmers for Work on Their Own Farms, 1949
Job
Tractor Equipment Furnished
by Custom Operator or
Used by Farmers
Job Time per Acre
Special- Farm- Farm-
All ized er ers
Custom Custom Custom on
Kind
Size
opera-
tors
L^pera-
tors
vjpera-
tors
Farm
Hours
Hours
Hours
Hours
I'Ilw old ground
1-bottom plow
16-inch
2.0
1.9
2.0
2.4
2-bottom plow
14-inch
1.0
.9
1.0
1.3
2-bottom plow
16-inch
.8
.8
.8
1.0
Plow sod ground
1-bottom plow
16-inch
3.0
2.9
3.0
3.0
2-bottom plow
14-inch
1.5
1.5
1.5
2-bottom plow
16-inch
1.2
1.1
1.2
1.3
Spread fertilizer
1 spreader
8-foot
1.0
.7
1.0
1.0
Spread manure
1 spreader
70-bushel
1.6*
1.6*
1.6*
3.3
2 spreaders
701bushel
.9*
.8*
.9*
Harrow
Disk harrow
7-foot
i.ot
i.ot
I.ot
L2t
Seed grass
Broadcast
8-foot
.2
.1
.3
.4
Seed small grain
Single disk
8-foot, 16-6
.6
.6
.6
.8
Plant corn
Corn planter
2-row
.8
.7
.8
1.0
Cultivate corn
Cultivator
2-row
.8
.7
.8
.8
Spray weeds
Sprayer
18-foot boom
.3
.3
.4
Mow hay
Mower
7-foot bar
.6
.6
.7
.7
Rake hay
Side delivery rake
9-foot
.6
.5
.6
.6
Bale hay
1-man pickup baler
Medium
.4
.4
.4
.6
Field chop hay
Chopper, blower
Large chopper
.9
.8
.9
1.2
or grass silage
and 1 truck
Chopper, blower
1%-ton truck
and 2 trucks
1%-ton truck
.7
.6
.7
.9
Chopper, blower
and 3 trucks
l^/^-ton truck
.5
.4
.5
Field forage har-
Harvester, blower
Large harvester
vest corn silage
and 2 trucks
lV2-ton truck
1.3
1.3
Harvest corn silage
! Binder, ensilage
cutter, 2 wagons
1-row
13.5
Harvest grain
Combine harvester
6-foot
1.3
1.3
1.3
Harvest corn
Corn picker
1-row
1.2
1.2
1.2
Land improving
Crawler tractor
and dozer
Large
5.0
5.0
*Based on 8-10 loads per acre with the farmer helping with the loading.
fOnce over with one-half lap.
9
Table 7. — Typical Prices Charged for Specified Jobs as Reported by All Custom Operators, 1949
Tractor Equipment
Furnished
Job
by Custom Operator
Price Charged*
Kind
Size
Per Hour
Per Acre
Dollars
Dollars
Plow old ground
1-bottom plow
16-inch
3.00
6.00
2-bottom plow
14-inch
3.50
3.50
2-bottom plow
16-inch
4.50
3.60
Plow sod ground
1-bottom plow
16-inch
3.00
9.00
2-bottom plow
14-inch
3..50
5.25
2-bottom plow
16-inch
4.50
5.40
Spread fertilizer
1 spreader
8-foot
3.25
3.25
Spread manure
1 spreader
70-bushel
4.00
6.40
2 spreaders
70-bushel
10.00
9.00
Harrow
Disk harrow
7-foot
3.00
3.00
Seed grass
Broadcast
8-foot
4.00
0.80
Seed small grain
Single disk
8-foot, 16-6
3.25
1.95
Plant corn
Corn planter
2-row
3.50
2.80
Cultivate corn
Cultivator
2-row
3.00
2.40
Spray weeds
Sprayer
18-foot boom
16.00t
4.80t
Mow hay
Mower
7-foot bar
3.50
2.10
Rake hay
Side delivery rake
9-foot
3.25
1.95
Bale hay
1-man pickup baler
Medium
19.50$
7.80$
Field crop hay
Chopper and blower
Large chopper
10.00
or grass silage
Chopper, blower
and 1 truck
1%-ton truck
13.00§
11.70§
Chopper, blower
and 2 trucks
1%-ton truck
16.00§
11.20§
Chopper, blower
and 3 trucks
1%-ton truck
19.00§
9.50§
Field forage har-
Harvester, blower
Large harvester
vest corn silage
and 2 trucks
1%-ton truck
19.00§
24.70§
Harvest grain
Combine harvester
6-foot
7.0011
9.10|
Harvest corn
Corn picker
1-row
4.75
5.70
Land improving
Crawler tractor
and dozer
Large
8.50
42.50
*Includes medium-sized tractor, specified tractor equipment, fuel, and operator of
tractor, except as otherwise indicated.
flncludes spray material.
$Based on a yield of P/2 tons and a charge of 10.14 per bale. At a yield of 2 tons
per acre, the price charged per hour was $26.25 and the price charged per acre was
$10.50.
§Farmer furnishing 1 tractor and 1 man.
11 Includes 2 men.
10
they set their prices on the basis of what they would be willing to pay for
the same services. Detailed cost analyses apparently had little part in estab-
lishing the rates charged. As would be expected from these types of rate-
setting principles, the prices charged by custom operators varied considerably.
The distance to and the size of the job were factors in the price charged.
Most operators made no charge for travel time within their immediate neigh-
borhood. Some, however, charged for the total time going from and return-
ing to their headquarters; others charged for travel time only one way.
Some raised their hourly rates for the more distant jobs to compensate for
the greater travel time. Jobs requiring less than a half day are frequently