~~~~~ Memorial Book Collection rvrsron of Agricultural Economics Economic Research NO. 472. MAY 1965 INSTITUTE OF AGRICULTURE, UNIVERSITY OF MINNESOTA on Pesticide Use W. B. Sundquist*

Because chemicals generally are more effective and economical than other con­ trol methods, farmers make widespread use of them for controlling insects, plant diseases, nematodes, weeds, and other pests. Discontinued use of pesti­ cides could result in about a 25-percent reduction in livestock production and about a 30-percent reduction in crop production in the 1st year. Unless effec­ Specialization In Dairy farming tive alternative pest control methods were employed, these losses would in­ Boyd M. Buxton* tion of total farm output generated by crease in succeeding years as the pest the dairy enterprise. A current trend in Minnesota dairy­ population multiplied. The farm also was equipped with Despite an extensive pest control pro­ ing is towards fewer and larger herds. adequate field equipment for producing gram, current production losses remain On farms where herd size is expanding, corn silage, corn grain, oats, alfalfa hay, high. For example, livestock losses the dairy enterprise often requires an and soybeans. Alternative enterprises (evaluated at current prices) directly increased proportion of productive re­ available to the farm, from which attributable to insects and ticks are esti­ sources used on the farm. products could be sold directly for cash, mated to exceed $300 million annually. New technology and methods have included dairy, corn, soybeans, and Physical crop losses due to weeds, in­ encouraged larger dairy herds by re­ hogs.' sects, and diseases are even more exten­ ducing labor requirements and allowing sive but their value is difficult to de­ expansion and specialization. Changes L::tbor termine because of current surpluses of from stanchion arrangements to parlor Adjustments were made in the some crops. systems are frequently accompanied by amount of labor which the single opera­ Use of chemical pesticides is also es­ additional cows in the dairy herd; tor could contribute directly to crop sential to maintenance of high quality smaller herds utilize new housing and and livestock enterprises. His duties production, particularly of fruits and feeding and milking facilities less ef­ also included miscellaneous jobs of buy­ vegetables. Production costs are re­ ficiently than do larger herds. ing and selling, building and equipment duced by eliminating tillage operations Most Minnesota dairy farms produce maintenance, etc. The operator could in weed control and by using cost­ crops for sale as well as the bulk of work up to 300 hours in any 1 month lowering technologies such as chemical the feed requirements for the dairy but not over 2,500 hours in 1 year. defoliation of crops before harvest. The herd. Therefore, most dairies are equip­ Up to 1,250 hours of seasonal labor latter procedure, particularly with cot­ ped with the necessary field equip­ also could be hired as needed. Family ton, also permits mechanization of har­ ment for producing a variety of field labor was treated as hired labor and vesting. crops. was valued the same as nonfamily sea­ Therefore, although expenditures for This study's objective was to esti­ sonal labor. chemical pesticides are not a major part mate effects of specializing in dairy of total production costs, they do play production on "one-man" farms. Results an increasingly important role in agri­ indicate that this specialization can re­ Land, Buildings, and Capital duce the maximum level of gross in­ cultural production. The study allowed most longrun farm come potential as well as returns to the operator's labor and management. adjustments. Cropland acreages, hous­ RAPID GROWTH IN USE ing, and feeding facilities were pro­ vided to fit the exact needs of the farm Development and use of chemical and dairy herd. This method insured pesticides have increased dramatically PROCEDURES that costs were calculated on the basis since the selective herbicidal action of This study's concern was the effects oi full capacity utilization of these re­ phenoxyacetic acids (e.g., 2-4D) was of different size dairy herds relative to sources. Three resources-labor, the discovered in 1944. The development of other enterprises within the farm or­ double-4 herringbone parlor, and field DDT followed in 1945. Research con­ ganization. Therefore, a representative equipment-were fixed in amount and tinues to produce new and effective one-man dairy farm using a double-4 size and could be underutilized on rela­ chemicals. Over 57,000 different formu­ herringbone milking parlor and loose tively small farms. lations are now registered by the U. S. housing was assembled into a com­ Department of Agriculture under the plete unit from its component parts. In­ Production Federal Insecticide, Fungicide, and Ro­ creased specialization in dairying was denticide Act. approximated by increasing the propor- Because several possible enterprises About 90 percent of farm use of were considered, farm output was (Continued on page 3) (Continued on page 2) • Agric~ltura! . economist, Farm Production Econo~lCs DlVlSlon, ERS, USDA, stationed at ~Agricultural economist Farm Production the Umvers1ty of Minnesota, St. Paul. •.conomics J?ivision, ERS,' USDA, stationed at For a rn,ore detaile.d description of this study ' The hog enterprise . was never profitable lhc Dmvers1ty of Minnesota, St. Paul. Credit and bas1c assumptions, see Boyd M. Buxton enough at assumed pr1ces to be included in 8 1 0 tl cue Velmar Davis, Paul Andri!enas and "Economies of Size in Dairy Farming," Farm the farm o~ganization even though it was 1crs for information used. ' Busmess Notes, November 1964. always cons1dered an alternative. PAGE 2 FARM BUSINESS NOTES MAY 1965

Dairy Farming ... Summary of farm organizations when dairy produces 60 and 85 percent of total gross income (Continued from page 1) measured in terms of a common de­ land used for Labor used Cost per nominator, gross income. Costs, in turn, Gross Dairy Cash Operator Hired Variable Fixed Net $1 gross were computed per $1 of gross income. income Cows feed crops labor labor cost cost returns income The major product prices listed be­ (dollars) (head) (acres) (acres) (hours} (hours} (dollars) (dollars} (dollars} (dollars) low were used in this study. Results of 60 percent of the follow;ng levels of gross income generated by the dairy enterprises: the analysis reflect these price rela­ 14,000 20 45 62 1,877 187 8,578 5,858 -437 1.031 tionships: 18,000 26 59 79 2,220 241 11,029 5,858 1,112 0.938 22,000 31 72 97 2,500* 372 13,576 5,858 2,564 0.883 Product Unit Price 26,000 37 85 114 2,500* 854 16,562 5,858 3,578 0.862 30,000 43 97 144 2,500* 1,250t 19,615 5,858 4,526 0.849 Milk 3.44 Cwt. $ 85 percent of the following levels of gross income generated by the dairy enterprise: Corn G1·ain ... Bu. 1.01 14,000 28 65 23 2,138 226 8,951 5,858 -811 1.058 Soybeans ... Bu. 2.19 18,000 36 83 30 2,500* 360 11,595 5,858 545 0.970 Hogs .. Cwt. 15.10 22,000 44 107 36 2,500* 946 14,804 5,858 1,336 0.939 • Operator's labor fully utilized. Minimum cost farm organizations t Hired or family labor fully utilized. were determined with the dairy enter­ prise producing both 60 and 85 percent When the dairy enterprise generates labor is exhausted at lower levels of 2 of several levels of total gross income. 60 percent of the gross income, the op­ gross income. Fixed costs spread over Increasing the proportion of gross in­ erator's labor is fully utilized at about a smaller output tend to make higher come produced by dairy from 60 to 85 $22,000 gross income. By increasing the unit costs. percent also increased the dairy herd p1·oportion of gross income from dairy Because more hired labor is required size relative to the total farm organ­ to 85 percent, the operator's labor is to achieve specified levels of gross in­ ization. Costs and returns were then come, costs per $1 of gross income compared under both situations. fully utilized at only $18,000 gross in­ come. tend to be higher and returns to the By changing from 60 to 85 percent operator lower on the more specialized dairy farm than on the less specialized RESULTS and using about the same total labor, the number of cows increases from 31 farm. A summary of results is shown in to 36 while acres of cash crops decline • On more specialized dairy farms, the table. Under this study's frame­ from 97 to 30. Returns to the operator's field equipment and tractors are used work, two important points are ap­ labor and management fall from about fewer hours. This fact results in poorer parent: $2,500 to $550; cost per $1 of gross in­ utilization of this equipment and tends • Costs per $1 of gross income are come increases from $0.88 to $0.97. to offset the better utilization of dairy higher for all levels of gross income on An important effect of dairy speciali­ facilities. Moreover, per unit returns to the more specialized dairy farm than zation is that total crop acres must de­ a limited labor supply are larger in crop on the less specialized dairy farm. crease when labor is diverted to the than in dairy production. o With a limited labor supply, the dairy enterprise. With fixed amounts of e Some laborsaving alternatives, total level of gross income that can be labor, larger herds better utilize im­ such as purchasing part of the concen­ generated is lower on the more special­ proved dairy facilities but field equip­ trate feed requirement, have little to ized dairy farm than on the less spe­ ment is then often operated at a less offer since the amount of additional cialized dairy farm. efficient level. Because total output is labor made available allows only small limited by specializing in dairy, fixed additions to the dairy herd. Effects of These results are due primarily to the costs are still a large proportion of total buying all feed and eliminating the high labor requirements in dairying. costs and unit costs are higher. costs of maintaining this field equip­ For example, about three times as much ment are not consiccred in this article. labor is required to generate $1 of gross Minnesota farmers have shown little income with the dairy enterprise as with IMPLICATIONS interest in this type of one-man dairy corn.' Therefore, when dairy represents This study has greater application for farm organization, at least in part be· a relatively large proportion of the total organizing and building dairy farms cause of the lack of well established farm organization, available labor is ex­ from scratch than for analyzing effects and reliable supplies of good quality hausted at lower levels of gross income. of expanding an existing farm organ­ forage. • Because more hired labor is required to ization which is, in part, already fixed. produce each level of gross income, cost Critical assumptions are that the farm's per unit tends to increase on the more labor supply is quite limited and that specialized dairy farms. cropland acreage can be varied accord­ ing to needs. Important implications of the study are: ' Some studies showed that more specialized dairy farms received 85 percent or more of their income from darry; 60 percent was • Labor plays an increasingly criti­ selected to represent less specrahzed darry cal role as the dairy enterprise becomes fn.rrns. a larger part of total farm organization. Prepared by the Department of Agricultural "Be sed on assumed prices, approximate labor Total farm labor requirements are Economics and the Agricultural Extension requii ements in the loose housing double-4 Service. herrin.o-hone are 55 hours per cow per year much higher when the dairy enter­ for a 43 cow herd of 0.129 hours per $1 gross Published by the University of Minnesota, income. For corn. labor requirements are prise is large relative to other enter­ Agricultural Extension Service, lnst;tute about 4.3 hours per acre or 0.047 hours per prises. Furthermore, the operator's Sl gcoss income. of Agriculture, St. Paul, Minnesota 55101. MAY 1965 FARM BUSINESS NOTES PAGE 3

Economic Research ricultural Appropriations Act for 1965 both for the individual farm and for provided funds and directives for re­ agriculture as a whole. (Continued from page 1) search on several important aspects of chemical pesticides is on planted crops; pesticide use. livestock applications and other agricul­ Nationwide Survey tural uses are relatively small. Farm­ NEW RESEARCH The first biennial nationwide pesti­ ers spent an estimated $436 million for pesticides in 1963, compared to $310 Congress made appropriations speci­ cide survey was recently completed. million in 1961. These figures are for fically for the following five categories About 15,000 farmers were interviewed pesticide materials only and do not in­ of research: nationally; about 850 of these were in clude application costs. 1. Increased studies on control of 18 randomly selected Minnesota coun­ When the economic consequences of plant diseases and pests and animal ties. Data from this survey will provide pesticides are considered along with the parasites by biological and sterility the first benchmark inventory of chemi­ many groups affected, the economic im­ methods, by attractants or repellants, cal pesticide use in U. S. agriculture. portance of agricultural pesticides in and by development of resistant varie­ Data currently available on a nation­ Minnesota and the United States ap­ ties through plant genetic and breed­ wide basis are acreages of crops treated pears substantial. Some of these affected ing research. by general types of pesticides. Esti­ groups are: (1) farmers, via increased 2. Basic research on biology, ecology, mates of manufactured quantities of crop yields and/or reduced per unit physiology, pathology, metabolism, and pesticides are published annually. How­ production costs, (2) consumers, via nutrition of insects, plants, and animals. ever, gross assumptions must be made cheaper foods, (3) chemical manufac­ The ultimate objective of such research about how much and where these turers, (4) pesticide application equip­ is improved pest control methods. chemicals are actually used in agricul­ ment manufacturers, and (5) retailers 3. Research on more specific and less tural production. of these chemicals and equipment. persistent conventional pesticides and The survey should provide data re­ improved methods of application. Sim­ lated to key management and policy RESEARCH NEEDS ultaneous work was proposed for de­ questions. Estimates will be made of the termining residues in processing and total volume of chemicals used in agri­ The current need for extensive re­ marketing agricultural commodities in culture and expenditures made for each search on pesticides, particularly on the order to alleviate any potential prob­ crop and kind of livestock. Identity of economics of their use, arises largely lems of food contamination. types of chemicals used will be pre­ because: 4. Research on toxicological and served but not of brand names. Inven­ • Chemical pesticides represent a pathological effects of pesticides and tories will be made of equipment pur­ other chemicals in livestock, effects of rapidly growing resource input in chased by farmers for pesticides and of residues in soils and in crop and farm­ commercial agriculture and their the extent to which farmers rely on stead water supplies, and effects of use affects many people. purchased services to apply pesticides. trace levels of pesticides currently oc­ • Important questions are being raised curring in food and feed supplies. that require comprehensive factual 5. Economic research on uses of pesti­ information on potential benefits and Other Economic Studies consequences of using chemical pest­ cides. The Congress and research admin­ icides on a mass scale. To date, alter­ Other economic studies will concen­ istrators hope that these five areas of native nonchemical pest control trate specifically on detailed costs and research can be so integrated as to pro­ measures, when they exist, have returns and evaluation of effectiveness vide policymakers with critical infor­ often not been fully appraised. of alternative pest controls on individ­ mation for developing recommenda­ ual crop and livestock enterprises. In Methods of pest control employed by tions concerning safe and economic these investigations, close control and/ farmers, and policies affecting their em­ control of agricultural pests. The re­ or observation are required. Most in­ ployment, are important to all of the mainder of this article is concerned vestigations will be conducted in co­ groups mentioned, particularly to in­ with the fifth category, economic re­ operation with State Agricultural Ex­ dividual farm producers. Of signifi­ search. periment Stations. cance to farmers are answers to the Within the North Central Region (in­ following questions: ECONOMIC STUDY cluding Minnesota), this analysis will How would new or different methods center on (1) weed and insect control and policies of pest control affect in­ Economic studies planned by the Eco­ in crop production on Corn-Belt type nomic Research Service fall into a gen­ dividual farmers? farms and (2) assessment of pest control eral three-phase program: Wauld changed pest control methods alternatives on farms producing dairy mean that growing certain crops would 1. A biennial nationwide survey of a products. no longer be possible or profitable? sample of farms. Data obtained would This coordinated program of research Would the effect be the same in all pro­ concern: practices of farmers to control on pesticides will provide needed in­ duction regions? plant and animal pests by using toxic formation. Moreover, it should point up What are the costs and returns to chemicals and the cost of these prac­ some critical areas of additional re­ farmers who adopt new or different tices. search needs. It will permit the con­ methods of pest control? 2. Analysis of selected alternative ducting of economic analysis which What adjustments to these changing methods of pest control with emphasis recognizes the interests of farmers, con­ conditions would help farmers main­ on comparative costs and returns in sumers, industry, and business alike in tain or increase their income? selected areas. resolving many important questions re­ Recognizing these informational 3. Analysis of economic implications lating to safe and economical control needs, the Federal Congress in the Ag- of alternative methods of pest control, of agricultural pests. • PAGE 4 FARM BUSINESS NOTES MAY 1965

The price ratio of a given year is al­ most always accompanied by a corres­ ponding change in the acreage ratio of the following year. For example, when the price ratio increased 8 points be­ tween 1955 and 1956, the acreage ratio increased about 2 points between 195G J. C. Chai and Harold C. Pederson down 6 percent from 1964 for the and 1957. Early March planting intentions in­ United States and 2 percent for Min­ Not all variations in acreage ratios can dicate a record acreage of soybeans this nesota. About 865 million bushels of be explained by variations in price year. For feed grains, planting estimates oats are predicted in the United States ratios of the previous year. Other in­ are down from a year ago. These pre­ this year. The 1964 production was esti­ fluences previously indicated may affect dictions are based on a sample survey mated at 882 million bushels. planted acreage. On the basis of this released by the Crop and Livestock Re­ The intended barley acreage is ex­ study, nearly 87 percent of the variation porting Service. pected to be down 12 percent for the in the soybean-corn acreage ratio ap­ The intended soybean acreage for United States but actually up 4 per­ parently was associated with the varia­ the United States is 8 percent above cent for Minnesota. The 1965 produc­ tion in the soybean-price ratio of the the acreage planted in 1964. This 1965 tion of barley for the United States is previous year. amount is a record. Soybeans lead all estimated at 339 million bushels. Such Favorable prices for soybeans prob­ major crops in expected total acreage a crop would be 16 percent below last ably would further stimulate the total expansion (see table 1). year's production (403 million bushels). expansion of soybean acres. However, For Minnesota, the intended soybean The intended sorghum acreage in the soybeans are a cash crop, while much acreage is 12 percent above 1964. Soy­ United States is up 4 percent (0.6 mil­ of the corn crop is fed to livestock on bean acreage has increased markedly lion acres) from last year. Little sor­ the farm. Many farmers decide on their in Minnesota in recent years but at a ghum is grown in Minnesota. U. S. sor­ corn acreage on the basis of their pro­ rate somewhat less than for the United ghum production this year is estimated spective needs for feed. Therefore, feed States as a whole. at 580 million bushels. This amount is grains are less responsive to price than Based on average yields per har­ an 18-percent increase from last year's are soybeans; a point may be reached vested acre, the intended acreage would production of 490 million bushels. where feed grain acreage becomes rela­ produce 829 million bushels, a record Actual planted acreages may vary tively stable. • high. The U. S. production in 1964 was substantially from the intentions re­ ported due to weather conditions, gov­ Table 2. Soybean-corn price ratio and soy· estimated at 700 million bushels. bean-corn acreage ratio, United States and Total feed grain acreages for the ernment programs (production pay­ Minnesota, 1955-64 United States and Minnesota have ments under the feed grain program, trended downward between 1955 and etc.), and unexpected developments. Acreage ratio Price ratio (soybeans-corn) 1965. In 1965 they should decline from However, the most important factors (soybeans-corn) 1964 amounts by 2 percent for the affecting plant acreages of soybeans Year u.s. Minn. u.s. Minn. and feed grains are the prices received United States and 1 percent for Minne­ 1955...... 0.24 0.39 1.61 1.64 sota. by the farmer. 1956 ...... 0.28 0.35 1.69 1.14 Both expected U. S. and Minnesota In table 2 the relationship of soy­ 1957...... 0.30 0.45 1.86 2.20 corn acreages are down by 1 percent bean prices to corn prices and the re­ 1958...... 0.34 0.54 1.79 1.96 lationship of soybean acreage to corn 1959...... 0.28 0.32 1.88 2.05 from last year. Minnesota corn acreages 1960...... 0.30 0.31 2.13 2.44 stabilized at 6 to 7 million acres during acreage are shown. The average price 1961 ...... 0.42 0.41 2.11 2.21 the last 10 years, compared with a of soybeans in the United States was 1962...... 0.43 0.40 2.13 2.25 downward trend for the United States. 1.61 times the corn price in 1955 and 1963 ...... 0.42 0.40 2.30 2.36 2.41 The expected U. S. production of increased to 2.36 by 1964. Over the same 1964...... 0.47 0.49 2.36 period the soybean-corn acreage ratio Source: Derived from: Minn. A gr. Stat., corn, based on average yields, should March 1964; FdS-206, Nov. 1964; FOS-226, be 4 billion bushels. The !-percent de­ nearly doubled. Jan. 1965. crease in intended acreage would still result in a 15-percent increase from the 1964 production of 3.5 billion bushels. Agricultural Extension Service PENALTY FOR PRIVATE Acreages of oats are expected to be Institute of Agriculture USE TO AVOID PAY­ University of Minnesota MENT OF POSTAGE, $300 St. Paul, Minnesota 55101 fable 1. Soybeans and feed grains: indicated acreages, Minnesota and United States, 1965 Luther J. Pickrel, Director Cooperative Agricultural Extension Work Acts of May 8 and June 30, 1914 Actual Indicated 1965 acreage, acreage, acreage OFFICIAL BUSINESS 1964 1965 as percent 4-65 2,635 of 1964 Crop Minn. U. S. Minn. U. S. Minn. U. S.

million acres percent Soybeans, all 2.88 31.7 3.22 34.3 112 108 Corn, all ...... 5.84 67.4 5.79 66.9 99 99 Oats 3.30 26.6 3.24 25.1 98 94 Barley ...... 0.62 12.2 0.65 10.8 104 88 Sorghum, all 16.9 ...... 17.5 104 Source: Crop Production, CRB, SRS. USDA, March 19, 1965.