Resource productivity on test demonstration farms in Southwest Virginia

This study presents estimates of the marginal productivity of the different classes of resources on Extension T. V. A. test demonstration farms in Southwest Virginia. The data were taken from 106 farm records kept by Unit Test Demonstrators in Southwest Virginia during 1951. The records were divided into four type-of-farm groups. These groups were beef brood farm with and without tobacco, and general farms with and without tobacco. The data were aggregated into independent variables of land, labor, machinery and power, livestock and feed crops, and tobacco. Gross income was taken as the dependent variable and production functions of the Cobb-Douglas type were fitted to the different farm types, and marginal value productivities were derived from the coefficients,

The marginal value product of each dollar invested in livestock and feed crops was high on each type farm studied. Marginal values were highest ($2.05) for beef brood farms with tobacco and lowest ($1.45) for general farms without tobacco, Furthermore, the coefficients related to livestock and feed crops were significant in all cases.

The marginal value product of land was relatively high ($12.75 per acre) on beef brood farms with tobacco and ($16.36 per acre) on beef brood forms without tobacco.

The marginal value product of machinery and power was $4.15 on general forms without tobacco and the coefficient was statistically significant in this case. However, estimates were extremely low for other type farms.

The marginal productivity of labor on beef brood farms without tobacco seems reasonable, but it was not statistically significant. The same is true of tobacco on general farms.

Generally the analysis indicated that:

(1) The typical Southwest Virginia former could apparently not profitably expand acreage until present acres used are more fully developed and stocked.

(2} The productivity of labor, and thus its earning power, can be increased on most Southwest Virginia forms by additional investments in high producing livestock and feed crops.

(3) Investments in livestock and feed crops were paying high returns on most Southwest Virginia forms in 1951 and could be profitably increased.

(4) Machinery and power were earning low returns on most Southwest Virginia forms in 1951.