Computerized cost and loan payment analysis model for dairy farm feed production

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Virginia Polytechnic Institute and State University

Efficient economic production dictates that the dairyman minimize feed costs subject to the level of milk output if he desires to maximize profits. The purpose of the present research was to develop a working model to help dairymen estimate crop production costs so that livestock ration costs may be minimized. Even though a particular feed production system may seem economically efficient from a production cost standpoint, loan payments may endanger a dairyman's cash position; therefore, the maximum annual loan payment on investments associated with crop production are also calculated by the model.

The working model has an advantage over previous cost analysis models in that the calculated production costs account for the total annual use by all farm produced crops of investments in land, buildings, machinery and equipment. In addition, maximum annual loan payments for a feed production system may be estimated under different debt and loan term assumptions.

Special emphasis was placed on dairy farm feed production in the development and illustration of the computer model; however, the use of the model can be easily expanded to any crop producing operations.