Table Of ContentPURDUE UNIVERSITY
THIS IS TO CERTIFY THAT THE THESIS PREPARED UNDER MY SUPERVISION
by Merton Bierman Badenhop
ENTTTLED SEA ROM AT. COSTS OF PRODUCTMO AMD KAT?TCF,TTMa___________
_________FLUID MILK IN THE KNOXVILLE.TENNESSEE MILKSHED,
AUGUST 1948-JULY 1949
COMPUTES WITH THE UNIVERSITY REGULATIONS ON GRADUATION THESES
AND IS APPROVED BY ME AS FULFILLING THIS PART OF THE REQUIREMENTS
FOR THE DEGREE OF DqCTOR OF PHILOSOPHY
Professor in Charge of Thesis
H ead of School or Department
V 0 -
X»
TO THE LIBRARIAN:----
-----IS"
THIS THESIS IS NOT TO BE REGARDED AS CONFIDENTIAL.
PROFESSOR Dr CHARGE
GRAD. SCHOOL FORM 8—3.49—1M
SEASONAL COSTS OF PRODUCING- AND MARKETING FLUID MILK IN THE
KNOXVILLE, TENNESSEE MILKSHED, AUGUST 1948 - JULY 1949
A Thesis
Submitted to the Faculty
of
Purdue University
by
Merton Bierman Badenhop
In Partial Fulfillment of the
Requirements for the Degree
of
Doctor of Philosophy
February, 1951
ProQuest Number: 27714186
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ACKNOWLEDGEMENT
Appreciation is expressed to the University of Tennessee Agricul
tural Experiment Station for making this study possible and for providing
facilities for the statistical work. I am especially grateful to my
colleague, M. L. Dcrwnen, for his helpful suggestions and assistance. I
also express my appreciation to A. M. Glover of the Knoxville Milk Pro
ducers' Association for providing much of the basic data; to the dealers
and farmers who cooperated in making information available; also to
Mrs. June Bundrant and Mss Sarah Woodward who did much of the statistical
and clerical work and to Mrs. Odessa Roberts for typing the manuscript.
At Purdue University, Dr. G. B. Wood, chairman of my doctoral
thesis committee, is the one to whom I am most indebted for his efforts
as teacher, adviser, and friend since the beginning of my graduate work
in agricultural economics at Purdue. I am likewise grateful for the
guidance given me by the members of ny graduate committee.
VITA
Merton Bierman Badenhop. Born July 18, 1919, near Kensington,
Smith County, Kansas. Lived there on his father's farm until he gradu
ated from Kensington High School in May 1936. Entered Kansas State
College in September 1937, from which he graduated with the degree of
Bachelor of Science in agricultural administration in May 1941. Gradu
ated from Louisiana State University in May 1942 with a Master of
Science degree in agricultural economics. Served in the armed forces
of the United States from July 1942 to March 1946. Joined the faculty
of the University of Tennessee in April 1946 of which he is still a
member. Entered the graduate school of Purdue University in the Depart
ment of Agricultural Economics in September 1948 and is now a candidate
for the degree of Doctor of Philosophy.
TABLE OF CONTENTS
Chapter Page
ABSTRACT.............................................. xi
I. INTRODUCTION........................................... 1
Objectives of the Study. . . . . . . . . ............. U
Research Procedure................................. 5>
II. PRODUCTION............................................ 8
The Knoxville Milkshed . . . . . ..................... 8
Production Per Cow................................. 9
Milk Cows on Farms ............................ 11
Seasonality of Milk Productiona nd Sales.............. 13
III. COSTS OF PRODUCING AND MARKETINGF LUID MILK.............. 18
General.......................................... . 18
Feed Cost.......................................... 22
Labor.............................................. 34
Cow Charge.................. .................... . 36
Building and Equipment Costs....................... 37
Hauling Milk....................................... 40
Miscellaneous Costs.................... 40
Summary of Costs................................... 4l
RECEIPTS.............................................. 43
General............................................ 43
Receipts Per Farm........................... 47
NET RETURNS.......................................... 47
General............................................ 47
V
Chapter Page
III. (Continued)
Net Returns and Production Per Cow.............. 49
Net Returns and Size of Herd... ............. 51
Net Returns and Seasonality ........ 52
Various Measures of Return...... 54
COMPARISON of costs and returns from high and low
PRODUCTION HERDS..... 56
COMPUTING CURRENT MILK COSTS......................... 56
LIMITATIONS OF PRESENT DATA AND FURTHER ANALYSIS THAT
MIGHT BE MADE............................ 62
IV. PRICING MILK. TO PRODUCERS IN THE KNOXVILLE MARKET. ...... 65
Pricing Milk in the Knoxville Market. .............. 65
Seasonal Price Adjustment................... 69
Use of Seasonal Production Cost Data. ....... 74
Alternative Seasonal Pricing.Plans................. 77
Fall Season Production Incentive Plan 77
Base Rating Plans................... 82
APPENDIX A. PRICES AND METHODS USED IN COMPUTING COSTS AND
RETURNS............ 87
appendix e. basic data of the knoxvilee fluid milk market.... 92
APPENDIX C. DEFINITION AND METHOD OF PRICE DETERMINATION FOR
CLASS I AND CLASS 11 MILK AND THE DETERMINATION OF THE
HuTTERFaT DIFFERENTIAL TO HANDLERS IN THE KNOXVILLE,
TENNESSEE MILK MARKET............................. 101
APPENDIX D. FIELD SURVEY FORM...................... 106
SELECTED BIBLIOGRAPHY.............................. 113
LIST OF TABLES AND FIGURES
List of Tables
Table Page
1. Gross Cost of Producing and Marketing 100 Pounds of 4.0
Percent Fluid Milk by 135 Producers, Knoxville, Tennessee
Milkshed, August 1948 - July 1949 ...................... 20
2. Gross Cost Per Cow of Producing and Marketing 4*0 Percent
Fluid Milk by 135 Producers, Knoxville, Tennessee Milk
shed, August 1948 - July 1949 ........................ 21
3. Production of 4*0 Percent Milk Per Cow on 135 Farms Producing
Fluid Milk for the Knoxville, Tennessee Market, August
1948 - July 1949..................................... 22
4. Quantity of the Various Concentrates Fed Per Cow by 135 Fluid
Milk Producers in the Knoxville, Tennessee Milkshed,
August 1948 - July 1949 ................ 25
5. Quantity of the Various Concentrates Fed Per Cow Per Month
by 135 Fluid Milk Producers in the Knoxville, Tennessee
Milkshed, August 1948 - July1 949 ..................... 28
6. Quantity of the Various Concentrates and Roughages Fed Per
100 Pounds of 4*0 Percent Milk Produced and Marketed by
135 Farmers in the Knoxville, Tennessee Milkshed, August
1948 - July 1949..................................... 29
7. Relation of Pounds of Concentrates Fed Per Cow to Selected
Factors on 135 Farms Producing and Marketing Fluid Milk
in the Knoxville, Tennessee Milkshed, August 1948 -
July 1949 ........................................... 30
8. Some Comparisons of Herds Fed Silage With Those Not Fed
Silage on 135 Farms Producing and Marketing Fluid Milk
in the Knoxville, Tennessee Milkshed, August 1948 -
July 1949 .......................................... 31
9. Gross Cost, Receipts, and Net Returns, Per 100 Pounds of
4*0 Percent Milk, and Per Cow on Herds Fed Silage Compared
With Those Not Fed Silage on 135 Farms Producing and
Marketing Fluid Milk in the Knoxville, Tennessee Milk
shed, August 1948 - July1 949 ......................... 32
10. Relation of Feed Cost Per Cow to Selected Factors on 135
Farms Producing and Marketing Fluid Milk in the Knoxville,
Tennessee Milkshed, August 1948 - July 1949 ............ 33
vii
Table Page
11. Relation of Labor Cost Per Cow to Selected Factors on 135
Farms Producing and Marketing Fluid Milk in the Knoxville,
Tennessee Milkshed, August 19U8 - July 19U9............. 36
12. Source of Replacements on 135 Farms Producing and Marketing
Fluid Milk in the Knoxville, Tennessee Milkshed, August
19U8 - July 19U9...................................... 37
13. Average Value of Buildings and Equipment Per Farm and Per Cow
on 135 Farms Producing and Marketing Fluid Milk in the
Knoxville, Tennessee Milkshed, August 19^8 - July 19^9. • 38
lit. Kind, and Value Per Farm of Dairy Equipment Used on 135
Farms Producing and Marketing Fluid Milk in the Knoxville,
Tennessee Milkshed, August 19U8 - July 19U 9 ............. 39
15. Age, Estimated Total Life, and Percent That Repair Cost Was
of Replacement Cost on Major Items of Dairy Equipment Used
on 135 Farms Producing and Marketing Fluid Milk in the
Knoxville, Tennessee Milkshed, August 19U8 - July1 9lt9. . liO
16. Cost of Producing and Marketing 100 Pounds of U.O Percent
Fluid Milk on 135 Farms in the Knoxville, Tennessee Milk
shed, August 19U8 - July 19i*9................... ... . 1|3
17. Gross Receipts Per 100 Pounds of Fluid Milk Produced and
Marketed on 135 Farms in the Knoxville, Tennessee Milkshed,
August 191*8 - July 19U9............................... 1*1*
18. Gross Receipts Per Cow on 135 Farms Producing and Marketing
Fluid Mille in the Knoxville, Tennessee Milkshed, August
191*8 - July 191*9.................................... 1*5
19. Class I Prices Paid to Producers for 100 Pounds of U.O
Percent Fluid Milk and the Butterfat Differential in the
Knoxville, Tennessee Market, August 19U8 - July 19U9. • . U6
20. Average Receipts Per Farm From the Dairy Enterprise on 135
Farms Producing and Marketing Fluid Milk in the Knoxville,
Tennessee Milkshed, August 19U8 - July 19U9 . ....... U7
21. Net Returns Per 100 Pounds of Fluid Milk Produced and
Marketed on 135 Farms in the Knoxville, Tennessee Milk
shed, August 19U8 - July 19U9 .............................. 50
22. Net Returns Per Cow on 135 Farms Producing and Marketing
Milk in the Knoxville, Tennessee Milkshed, August 19U8 -
July 19U9......................................... 50
