The number of farms with dairy herds in north-central Iowa has decreased sharply over the last decade. Whereas the majority of farms previously had dairy herds, many fewer now have them. This report is concerned with the competitive position of dairying on farms which now have small herds of 8-14 cows. It explores adjustment opportunities and appraises the possibilities of improving net incomes on north-central Iowa farms where dairying is an enterprise but not the basis of farm organization and where milk is sold on a grade B basis. Alternative adjustments considered are: (1) transfer of resources now used in dairying to other enterprises, including the use of more fertilizer; (2) improvement of the production practices used in the dairy enterprise; and (3) a combination of the two types of adjustments. The analysis is applied to owner-operated and tenant- operated 160-acre and 240-acre farms with current and additional amounts of operating capital and labor. The income changes reflected by these transfers refer to prices listed in table 3.

The transfer of resources now used for small grade B dairy herds to crop production, fertilization and hog production would increase net incomes significantly. This increase could be realized with the operating capital and labor already on these farms. The acreages of corn and soybeans and the use of fertilizer would be increased. The production of hogs would be increased from about 15 to 40 litters of spring and fall pigs. Where buildings and other facilities restrict hogs to 20 litters, however, the optimum farm plan is close to the present organization, except for the substitution of soybeans for part of the present acreage of oats and the use of higher rates of fertilizer on all crops. The dairy herd would be reduced to eight cows. Net income would be increased about 10 percent.