Optimum allocation of resources between pasture improvement and other opportunities on southern Iowa farms
Iowa Agriculture and Home Economics Experiment Station Research Bulletin: Volume 32, Issue 435
Pasture land represents an important portion of the total land in southern Iowa. One opportunity for increasing resource productivity and farm incomes in this part of the state is to invest capital in pasture improvement. Experiments show that capital invested in pasture improvement and renovation, and the livestock to utilize the increased forage production, can greatly increase the value of products produced on land unadapted to continuous cropping; yields of forage and livestock products can be increased as much as threefold.
However, the practices of improving and renovating pastures are proceeding at a slow rate. One reason suggested is capital limitations. Most farmers operate with limited funds. Accordingly, if they are to make greatest profits, they must use each dollar, acre and labor hour where it will bring the greatest return. The question is not so much whether pasture improvement and renovation is profitable; but whether it is more profitable than alternative uses of scarce capital and labor. For example, pasture improvement may cost $5 per year and return $8 In the same period. It is profitable in this sense: Each $1 In costs returns $1.60 in sales. However, if the same $1 invested in fertilizer for crops or in hogs returns $1.80, pasture improvement should not be included in the farming plan until these more profitable opportunities have been fully exploited. It should, of course, be included before other investments which return less than $1.60.