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Farm size and cost relationships in relation to recent machine technology Iowa Agriculture and Home Economics Experiment Station Research Bulletin: Volume 34, Issue 504

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Farm size and cost relationships in relation to recent machine technology: An analysis of potential farm change by static and game theoretic methods
( 2017-06-19) Heady, Earl ; Krenz, Ronald ; Extension and Experiment Station Publications

This study includes estimates of the relation of more recent machine technology to per-unit costs of crop production for farms of different sizes. The types of new machine technology of particular interest include large-capacity equipment such as 4- and 6-row corn planting and cultivating equipment and picker-sheller harvesting machines. A hypothesis generally held by persons concerned with agriculture is that these large-capacity machines, with high fixed costs which must be spread over more acres, stand to cause an important increase in farm size.

This study is based on data for the Carrington-Clyde soils in northeast Iowa and the Ida-Monona soils in western Iowa. Cost functions are estimated for farms of different sizes or acreages by budgeting procedures. More specifically, cost curves are derived as a function of acreage per farm. Losses in crop production resulting from untimely field operations are considered as costs for different acreages and are related to particular machine combinations. Parametric linear programming is used to permit analyses of livestock optimum enterprises and to consider the effect of subjective discounting of returns on size considerations. For decision making under risk and uncertainty, game theory models were employed to incorporate consideration of weather variations on optimal machinery-land or farm-size relationships.

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