n . ~"" “ 5"” ““" L‘|' ?" 'v'h‘s‘Tfl-n mud” I n-g-Iu'nw'lh' ' """.‘ ' """.Z 2".“ r-'--" "‘22'1. ‘3’1. " . ,. '. WW; -< Tqu- . A. 'I § r“3%.“?flr’fiffigéwgfifig“3331‘???“.‘1‘5.’.‘.4t“.".‘.'.’33.?‘u'.‘.'.'.‘s“."I .'.'.‘,‘-K'.'|'.‘.A'fi‘U-W' '- V ‘9: Jr." : .n :: :~":r'- ‘lm 3“ '2'”, : "' .“"" Hr... '._. . ' ,q' H. -‘ - .1 .y‘ ‘E‘Vf; .’ . "I .l‘:_ "‘ ‘ , .‘ . ‘ .. a _ v v‘ .. ,1 . “. ‘....“. n "‘\‘? ‘ ' "“ - " ,.. ‘ " ' . I . . . . ~ - ' - , .. .. I A [IN ECONOMIC ANALYSIS OF RANGE IMPROVEMENT IN THE CATTLE BREEDING AREA OF BUENOS AIRES PROVINCE Thesis for the Degree of Ph. D. MICHIGAN STATE UNIVERSITY JORGE JOAQUIN GIMENEZ DIXON 1959 W m LIBRARY Michigan Stats ‘1 University I'HESIG This is to certify that the thesis entitled An Economic AnaIysis of Range Improvement In the Cattie Breeding Area of Buenos Aires Province presented by Jorge Joaquin Gimenez Dixon has been accepted towards fulfillment of the requirements for Ph.D. degree in Agricultural Economics 9%,}, 2—6 (2&1, 1/71 )6) I? ( “a .f‘ Major professor Date W 0-169 ABSTRACT AN ECONOMIC ANALYSIS OF RANGE IMPROVEMENT IN THE CATTLE BREEDING AREA OF ' BUENOS AIREs PROVINCE By Jorge Joaquin Giminez Dixon Beef production has long been a keystone of the Argentine economy. At present it is the single most important activity of her agricultural sector. However, during recent years, the growth in cattle numbers has been rather slow. Research is needed to find ways to increase the productivity of the cattle industry. One possible means of increasing the growth rate in the cattle industry is the establishment of improved permanent pastures. The objectives of this research were (1) to present an analysis of the conditions under which the installation of improved permanent pastures can be profitable on individual ranches of the cattle breeding area of Buenos Aires province, and (2) to show what technical and economic information is relevant and necessary for an economic evaluation of such investments. Surveys were obtained from 30 ranches in Ayacucho and Rauch counties of Buenos Aires province. From these data and other published and unpublished sources, two basic systems of beef production were analyzed. The ”traditional system" utilized no improved pastures. The Jorge Joaquin Giminez Dixon "modern system" utilized various proportions of improved permanent pastures ranging from 5 per cent to A0 per cent. The analysis examined the profitability of im- proved permanent pastures with and without the addition of fertilizers and with and without owned equipment. Returns to investments in improved permanent pastures ranged from 5.37 per cent to 7 per cent without the addition of fertilizers and when hiring the work on a custom basis. When owned equipment was used rather than hired contractor services, the internal rate of return ranged from 9.83 per cent to 11.80 per cent without the addition of fertilizers. Under the assumption of fer- tilization of improved pastures, internal rate of return ranged from 7.23 per cent to 9.8 per cent utilizing custom operators and 8.67 per cent to ll.u8 per cent when using fertilizer and owned equipment. Whether the im- proved pasture was a good investment depended upon the rate of interest charged. If the opportunity cost of money were 12 per cent, none of the investments in improved pasture programs would be profitable. At 8 per cent a number of programs would be profitable. Several other conclusions were reached. One difficulty with showing a good rate of return for improved permanent pastures is that all cattle sales are made by the head rather than on the basis of weight. While cattle might achieve higher weights on improved Jorge Joaquin Giminez Dixon permanent pastures, this could not be taken into account because of the traditional manner in which cattle are sold. Second, the study uncovered a high proportion of ranchers who are absentee owners. The high degree of absentee ownerships suggests that the adoption of new technology may be rather slow. Third, there are other innovations relating to livestock such as improved breeding, fertility tests, sanitation practices, and pro- vision of minerals through which ranch output might be increased with less additional capital outlay than that required for the installation and management of new mixtures of grasses and legumes. Educational efforts on these subjects could be highly productive. AN ECONOMIC ANALYSIS OF RANGE IMPROVEMENT IN THE CATTLE BREEDING AREA OF BUENOS AIRES PROVINCE By Jorge Joaquin Gimenez Dixon A THESIS Submitted to Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Department of Agricultural Economics 1969 ACKNOWLEDGMENTS I wish to convey special thanks to Dr. Harold M. Riley who was willing to serve as my advisor during the entire graduate program. I have also a special debt of gratitude with Dr. John Brake for his helpful guidance and encouragement throughout this study. Dr. Riley and Dr. Brake have given freely of their time and advice whenever it was requested and accepted the imposition of a visit to Argentina to provide valu- able assistance at the beginning and at the end of my research work. I am also indebted to Dr. Garland Wood and Dr. John Hunter, members of the committee, for their construc- tive criticisms and suggestions during the composition of this thesis. My deep appreciation is extended to Dr. Darrell Fienup and Dr. Selmer Engene of the University of Minnesota for the help and encouragement they have given me. I gratefully acknowledge the cooperation received from personnel of the National Institute of Agricultural Technology; of the Agricultural Experiment Station of ii Balcarce; and of the County Agents of Ayacucho and Rauch counties. I am especially indebted to the Ford Foundation for its support of my work during the study and throughout my graduate program. The leaves of absence granted by the Facultad de Agronomia y Veterinaria de Corrientes and the Banco de la Nacion Argentina alSOvmade it possible for me to continue my graduate work. 111 TABLE OF CONTENTS ACKNOWLEDGMENTS. . . . . LIST OF TABLES LIST OF FIGURES. . . . . . . . Chapter I. II. III. INTRODUCTION The Problem and Its Setting . . Lack of Output Expansion and Levels of Productivity Unchanged . . . . The Economic Feasibility of Range Improvements . . . . . . Livestock and Pasture Management Objectives of Study. . . . . . Method of Study . . . . . . . . Chapter Organization . . . ~. . . THE AREA SELECTED FOR STUDY Geographic Zones of Production Area Selected for Study . Statistical Information Related to. the Area Selected for Study. . . . THE TRADITIONAL SYSTEM OF BEEF PRODUCTION Ranch Organization . . . . Herd Management . . . . . . . . Marketing of Cattle. . . . . . . Rate of Production . Pasture Program Production of Forage for Grazing Reaction of Ranchers Regarding New Pasture Developments. . . Income Potential of the Cow-Calf Enter- prise under the Traditional System of Production . . . . . Income under Present Conditions. iv Page ii vi xi Chapter IV. THE MODERN SYSTEM OF BEEF PRODUCTION Ranch Organization Herd Management . . Marketing of Cattle. Calf Crop . . . Pasture Programs. Pasture Improvement. Pasture Production . Estimated Costs and Returns for. the Cow- Calf Operation when Improved Management and Pasture Programs are Adopted. . . Income Expected from Improved Management and Pasture Programs. V. COSTS ASSOCIATED WITH PASTURE IMPROVEMENT Initial Costs. . Maintenance Costs . . . Operational Costs . . . . . VI. THE PROFITABILITY OF RANGE IMPROVEMENT The Planning Periods and Salvage Values Calculation of Prospective Rates of Return . . Internal Rates of Returns as a Basis for. Decision Making . The Maximization of "Present Worth" VII. SUMMARY AND CONCLUSIONS The Evaluation of Alternative Pasture Improvement Programs. . . . . BIBLIOGRAPHY. APPENDICES . . . . . . . . . . . . . I. Ranch Schedule . II. Present Value of Expected Changes in Net Worth for Alternative Pasture Programs III. Health Practice and Price Per Unit of Veterinary Medicine. . . . Page 77 79 8O 83 8A 86 89 91 9A 100 111 III 126 130 135 1A0 1A3 1A6 150 155 165 I76 179 180 200 225 Table 10. 11. LIST OF TABLES Argentina: Value of exports 1961-65 Cattle population--number of head . Rank of regions in number of cattle, on farms and ranches, June 30, 1967 . . . . . Basic characteristics of Ayacucho and Rauch counties as compared with 19 other counties of the cattle breeding area of Buenos Aires province, 1966 . . . . . . . . . Percentage of farms reporting livestock by counties and species, 1960 . . . . . Classification of farms according to land areas——2l counties of Buenos Aires province, 1960 . . . . . . . . . . . . Classification according to head of cattle on farms-—21 counties of Buenos Aires province, 1960 . . . . . . . . . . . . . Land use and livestock inventory-—21 counties of Buenos Aires province, October, 1966 Annual yields of forage, k. of T.D.N., in cattle breeding region of Buenos Aires province . . . . . . . . . . . Adjustments made by 11 ranchers to seasonal variations in pasture production, Ayacucho and Rauch counties of Buenos Aires province, 1968 . . . . . . . . . Reason why ranchers had to avoid new pasture developments; 11 ranchers of Ayacucho and Rauch counties, 1968. . . . . . . . vi Page 22 3O 32 33 3A 36 53 56 62 Table l2. 13. IA. 15. l6. 17. 18. 19. 20. Estimated annual cost per hectare of establishing temporary pasture by hiring contractor services, Ayacucho and Rauch counties, 1967-1968 Physical inputs and outputs associated with the traditional system of beef production, Ayacucho and Rauch counties, 1968 . The traditional system of production. Budgeted investment, expenses and income, 200 hectares beef cattle enterprise on a pasture program without improved permanent pastures with a stocking rate of .775 animal units per hectares in livestock. Ayacucho and Rauch counties, 1968 . . . . . . Yields from improved mixtures of grasses and legumes in one cutting . . . Physical inputs and outputs associated with the establishment of improved permanent pastures without fertilization—-Ayacucho and Rauch counties, 1968 . . . . . . Physical inputs and outputs associated with the establishment of improved permanent pastures with fertilization-—Ayacucho and Rauch counties, 1968. . . . . . . Budgeted investment, expenses and income, per ranch unit with 5 per cent of the area in livestock seeded to improved permanent pastures, without fertilization, with a stocking rate of .81 animal units per hectare of6§astureland. Ayacucho and Rauch Counties, l9 . . . . . . . . . . . Budgeted investment, expenses and income, per ranch unit with 10 per cent of the area in livestock seeded to improved permanent pastures, without fertilization, with a stocking rate of .85 animal unit per hectare of pastureland. Ayacucho and Rauch Counties, 1968 Budgeted investment, expenses and income, per ranch unit with 20 per cent of the area in livestock seeded to improved permanent pastures, without fertilization, with a vii Page 67 73 7A 93 96 97 101 102 Table Page stocking rate of .925 animal units per hectare of pastureland. Ayacucho and Rauch Counties, 1968. . . . . . . . . 103 21. Budgeted investment, expenses and income, per ranch unit with 30 per cent of the area in livestock seeded to improved permanent pastures, without fertilization, with a stocking rate of 1 animal unit per hectare of pastureland. Ayacucho and Rauch Counties, 1968 . . . . . . . . . . . . . . 10A 22. Budgeted investment, expenses and income, per ranch unit with A0 per cent of the area in livestock seeded to improved permanent pastures, without fertilization, with a stocking rate of 1,075 animal units per hectare of pastureland. Ayacucho and Rauch Counties, 1968. . . . . . . . . 105 23. Budgeted investment, expenses and income per ranch unit with 5 per cent of the area in livestock seeded to improved permanent pastures, with fertilization, with a stocking rate of .88 animal units per hectare of pastureland. Ayacucho and Rauch Counties, 1968 . . . . . . . . . . . . . . 106 2A. Budgeted investment, expenses and income, per ranch unit with 10 per cent of the area in livestock seeded to improved permanent pastures, with fertilization, with a stocking rate of 1. animal units per hectare of pastureland. Ayacucho and Rauch Counties, 1968 . . . . . . . . . . . . . . 107 25. Budgeted investment, expenses and income, per ranch unit with 20 per cent of the area in livestock seeded to improved permanent pastures, with fertilization, with a stock— ing rate of 1.225 animal units per hectare of pastureland. Ayacucho and Rauch Counties, 1968 . . . . . . . . . . . . . . 108 26. Budgeted investment, expenses and income, per ranch unit with 30 per cent of the area in livestock seeded to improved permanent pastures, with fertilization, with a stock- ing rate of l.A5 animal units per hectare of pastureland. Ayacucho and Rauch Counties, 1968 . . . . . . . . . . . . . . 109 viii Table 27. 28. 29. 30. 31. 32. 33. 3A. 35. 36. Budgeted investment, eXpenses and income, per ranch unit with 40 per cent of the area in livestock seeded to improved permanent pastures, with fertilization, with a stock- ing rate of 1.67 animal units, per hectare of pastureland. Ayacucho and Rauch counties, 1968 . . . . . . Initial costs of establishing improved permanent pastures . . . . . Estimated per hectare costs of establishing improved permanent pastures without fertiliz- ing and hiring contractor services, Ayacucho and Ranch counties of Buenos Aires province, 1967-1968 . . . . . . . . . . . Estimated per hectare costs of establishing improved permanent pastures without fertiliz- ing and using owned equipment, Ayacucho and Rauch counties of Buenos Aires province, 1967-1968 . . . Estimated per hectare costs of establishing improved permanent pastures with the addition of fertilizer and hiring contractor services, Ayacucho and Rauch counties, 1967-1968 . . . . . . . . . Estimated per hectare costs of establishing improved permanent pastures with the addition of fertilizer and using owned equipment, Ayacucho and Rauch counties of Buenos Aires province, 1967-1968 Estimated cost per kilometer of wire fence, Ayacucho and Rauch counties of Buenos Aires province, 1967-1968. Estimated cost per stock well, Ayacucho and Ranch counties of Buenos Aires province, 1967-1968 a o o o o o o o o 0 Change in livestock numbers and inventory values from the adoption of alternative pasture programs without fertilization, Ayacucho and Rauch counties of Buenos Aires province, 1967—1968. . . . . . . Change in livestock numbers and inventory values from the adoption of alternative ix Page 110 116 117 118 119 120 122 125 127 Table 37. 38. 39. 40. Al. A2. 43. AA. pasture programs with the addition of fertilizer, Ayacucho and Rauch counties of Buenos Aires province, 1967-1968 Change in annual expenses resulting from the adoption of alternative pasture programs without fertilization, Ayacucho and Rauch counties, 1967-1968. . . . . . . . Change in annual expenses resulting from the adoption of alternative pasture programs with the addition of fertilizer, Ayacucho and Rauch counties, 1967-1968 . . . Initial investment associated with the adoption of alternative pasture programs, without fertilizing, Ayacucho and Rauch counties, 1967-1968. . . . . . Initial investment associated with the adoption of alternative pasture programs, with fertilization, Ayacucho and Rauch counties, 1967-1968. . . . . . Added receipts from adopting alternative pasture programs, Ayacucho and Rauch counties, 1967-1968. Salvage values associated with alternative pasture programs, Ayacucho and Rauch counties of Buenos Aires province, 1967-1968 Internal rates of return associated with the investment on alternative pasture programs, Ayacucho and Rauch, 1967—1968 . Present value of expected changes in net worth for alternative pasture programs, Ayacucho and Rauch counties, 1967-1968 Page 128 131 132 133 134 139 1AA 1A5 153 LIST OF FIGURES Figure Page 1. Beef Production Areas in the Argentine Republic . . . . . .7 . . . . . . 20 2. Beef Production Areas in the Pampa Region. . 25 xi CHAPTER I INTRODUCTION The Pampean region and other fertile lands give Argentina an important position in the world production of beef. Argentina ranks fifth among the countries of the world in existing cattle inventories behind the United States, Russia, Brazil and China. Argentina is the only country in the world where cattle outnumber people two to one. Beef production has long been a ekystone in the Argentine economy, and at present it is the single most important activity of her agricultural sector, contributing nearly one third of the total value of her agricultural output.1 The importance of beef cattle production in Argentina stems not only from its size but also from its ability to earn foreign exchange. Argentina continues to be the leading exporter of beef and veal. During the period 1961-1965 the exportation of livestock products amounted to AA.6 per cent of the total value of exports. Beef and veal represent A5.6 per cent of total livestock lDarrell F. Fienup, Russell H. Brannon, and Frank Fender, Argentina the Sleeping Giant, A Study of the Problems and Opportunities of its Agriculture (Buenos Aires: 1967). products exported (see Table 1). It is then clear to what extent the beef industry contributes to Argentina's economic growth through the earning of hard currency. TABLE l.--Argentina: Value of exports, 1961—65. Commodity 1961 1962 1963 196A 1965 Million Million Million Million Million dollars dollars dollars dollars dollars Beef and veal 183 211 285 29A 282 Pork 3 2 6 A 2 Mutton and lamb 12 1A 15 9 13 Wool 1A2 1A5 161 129 112 Hides and skins 79 92 78 58 50 Dairy products 32 28 32 31 29 Other livestock products 65 50 88 65 75 Total livestock 516 5A2 665 590 563 products Grains 217 370 307 526 602 Other crOps 171 237 219 169 219 Other exports _§g 67 17A 125 109 Total exports 96A 1,216 1,365 1,A10 1,A93 Source: Argentina's Livestock and Meat Industry. FAS-M-188. U. S. Department of Agriculture- Foreign Agricultural Service, June, 1967. Lack of Output Expansion and Levels 0 Productivity Unchanged Whereas a critical aspect of Argentina's economic development are her prospects for sales of beef abroad, cattle numbers have failed to achieve any significant rate of growth. Over a period of 20 years-—between 19A6 and l966——cattle numbers increased merely 13 per cent. That Argentina has lagged behind many other countries as far as the increase in cattle population is concerned is shown in Table 2. TABLE 2.——Catt1e population—-number of head. Percentage Country 19A6 1965 increase Argentina Al,300,000 A3,000,000 A.l Brazil A5,600,000 81,500,000 78.7 Uruguay 6,800,000 8,500,000 25.0 Colombia 13,200,000 16,000,000 21.2 United Kingdom 9,600,000 11,679,000 21.6 France 15,100,000 20,155,000 33.5 Italy 6,900,000 8,970,000 30.0 Australia 13,900,000 19,500,000 A0.2 New Zealand A,700,000 6,810,000 AA.9 Mexico 12,900,000 28,A00,000 120.2 Canada 9,700,000 11,900,000 22.7 United States 82,235,000 107,152,000 30.3 Humberto Volando, "Cattle and Meats in a Crossroad,” 1965. Source: An extensive system of production characterizes the cattle industry in Argentina. Grasses furnish virtually the entire feed supply since under normal conditions no grain or supplements are fed. The Agricultural Census of 1960 indicates that there were 175 million hectares in farms and ranches of which 2A million were devoted to livestock production. Almost 90 per cent of the area in livestock was covered by unimproved natural pastures. Fienup g§_al.2 noted that an insignificant increase in carrying capacity of A per cent took place in the total pasture area of the Pampean region between 1935-1939 and 1960-1963. Furthermore, they observed that the con- stancy of carrying capacity in spite of substantial in- crease in the seeding of improved pastures over the, period points to the fact that the productivity of the natural pastures may actually be decreasing due to over- grazing, especially during dry periods, and the result- 3 in turn found ing erosion and invasion of weeds. Reca an absence of technical change in the productivity of pasture in the Pampean region from 19A5-1965. Presently the possibility of incorporating addi- tional land in livestock production in the Pampean region has been exhuasted. As long as cattle and sheep are- raised almost exclusively on pasture, an increase in cattle numbers without an improvement in the pre- ductivity of the grazing areas can only be attained at the expense of the area planted to crops or by reducing sheep numbers. 0n the other hand, it has been estimated that through the establishment of improved permanent pastures,. 2Ibid. 3Lucio Reca, "The Price and Production Duality Within Argentine Agriculture" (unpublished Ph.D. dis- sertation, University of Chicago, 1967). carrying capacity in some large sections of the Pampean region probably could be doubled or even tripled if certain practices were adopted. Thus for example, according to Morgan,“ in the Pampas the carrying capacity of cattle on natural pastures is 0.6 to 1 animal unit per hectare; on temporary pasture (annual or perennial) 1.2 to 1.8 units; on seeded perennials (including alfalfa) 1.8 to 2.2 units. The latter could reach 2.A to 3 units with rotational grazing and 3.3 to 3.7 units with the use of supplementary rations of silage, hay or grains. In an attempt to increase the cattle population and beef production, public encouragement is being offered to producers to improve the productivity of their range- lands through the seeding of artificial pastures. Two Government programs are now under way. The "Program for the Establishment of Mixed Permanent Pastures, the Improvement of Existing Ones, and the Preservation of Forage" was initiated in 1965, under the National Com— mission for the Promotion of Agriculture (PROAGRO) in cooperation with the National Institute of Agricultural Technology (INTA) and the Bank of the Argentine Nation. The principal aim of this program is to stimulate beef “Q. Martin Morgan, "Argentina's Livestock and Meat Industry" (Washington, D.C.: U. S. Department of Agriculture, Foreign Agricultural Service, June, 1967). production by means of a pasture program embodying three main lines of action: (a) the establishment of permanent mixed pastures on an area now covered by natural pas— tures, (b) the improvement of existing pure alfalfa permanent pastures by converting them into perennial legumes and grasses, and (c) forage preservation either as hay or silage, against normal seasonal periods of scarcity, and fundamentally against the intense droughts which occur rather regularly in certain production areas. In accordance with the estimations made the proposed \ program would increase the carrying capacity of ranges in the Pampean region from 0.89 to 1.07 animal units per livestock hectare, through the establishment of new permanent mixed pastures on 5,385,000 hectares. These hectares are at present covered by natural pastures. About 6,957,800 hectares presently in pure alfalfa would be improved by conversion into perennial legume and grass mixtures. This represents a real in- crease of 5,0A3,3A0 animal units, which would mean, more specifically, that present cattle numbers would increase by 5,715,785 head and present sheep numbers by A,728,131.5 This program will be carried on over a period of five years. The National Commission for the Promotion of 5National Development Council (PROAGRO), Program for the Establishment of Mixed Permanent Pastures, The Improvement of Existing Ones, and the Preservation of Forage, Mimeograph, 1963. Agriculture in close c00peration with the Bank of the Nation has been extending credits for the seeding of im- proved pastures. In 1965, loans were given to 5,900 producers for a total value of 1,770 million pesos for seeding of 800,000 hectares to pastures; in the first 8 months of 1966, the loans benefited 7,700 producers and had a value of 3,A01 million pesos for the planting of 907,000 hectares.6 The ”Balcarce Livestock Development Project" pre- pared by the National Institute of Agricultural Tech- nology (INTA) in cooperation with the National Develop- ment Council is designed to be carried out on the cattle breeding area of Buenos Aires Province, integrated by 36 countries. The objective of this program is to increase the cattle population for breeding purposes and their beef production through the establishment of 191,500 hectares of improved mixtures of grasses and legumes and the introduction of new techniques. The program will include a total of 750 ranches where carry- ing capacity is expected to increase from 0.86 to 1.65 animal units per average improved hectare. The calcula- tions made also anticipate increases in calving rates, which would rise from 75 to 90 per cent (difference between the present and final situation) as regards 6Morgan, op. cit. cows, and from 65 to 80 per cent for heifers calving for the first time. Increased calving rates would be forthcoming as a consequence of more adequate feeding of breeding cows resulting from the new pastures as well as from the adoption of improved health practices for the total cattle population of the ranches included in the pro- ject. Finally, it has been estimated that liveweight per head of cattle would increase from 170 to 220 kilo- grams for weaning calves and from A00 to AAO kilograms for culled cows.7 At the completion of the program (after a period of five years) beef production on the 750 ranches should increase by 32,A85 liveweight tons, which means a 55.7 per cent increase over their present beef production. This program was initiated in 1968. The Economic Feasibility of Range Improvements It is indeed possible for Argentine ranchers to increase beef production by way of adding improvements to their rangelands when these result in greater pro- duction efficiency. Nevertheless, it is not enough to know that ranges can be improved successfully. A wide 7National Institute of Agricultural Technology, The Balcarce Livestock Development Project, Mimeograph, 1965. gap between the physically possible and the economically feasible may well exist. There are a number of ways whereby ranges can be improved and carrying capacity increased. The replace- ment of native grasses by seeding improved permanent pastures, better fencing, the development of watering facilities, weed control and the fertilization of native and artificial pastures are all practices which have been recommended to Argentine cattlemen to increase the carrying capacity of their rangelands. In investigating the relative profitability of range improvements, those factors affecting the returns from and the costs of each alternative must be carefully evaluated. Although this is evident, research on range improvement has largely been done on a piecemeal basis in Argentina. The emphasis has been placed in the seed— ing of mixtures of permanent grasses and legumes in order to increase carrying capacity. Little attention has beeh given to the physical and economic benefits which may result from the adoption of alternative prac- tices to improve ranges. Moreover, costs and returns associated with different levels of intensity have been disregarded. However, studies on range improvement have been undertaken only very recently. Consequently, definitive 10 data on rangeland production are very often sketchy, difficult to obtain, or non—existent. Nevertheless, the nature of the improvements which can be adopted, the size of the project, the different levels of intensity to apply, the responses which may be expected, and how the improved ranges are to be managed are major factors to consider in evaluat- ing the relative profitability of alternative long—term investments on range improvement. Accurate estimates of the change in total income ‘eXpected from range improvements and the change in total ' costs associated with them are necessary but are not sufficient to insure an Optimum investment decision. The time aspects of investments must also be taken into account. I On the one hand, if a cattleman does not invest in range improvements, he could invest his funds in other lines. Consequently, the returns foregone elsewhere must be considered when a certain investment is evalu- ated. On the other hand, the time between incurring cost and realizing benefits may have substantial indirect cost in terms of deferred income or adjustments in ranch Operations. When a range is removed from use due to seeding, the rancher whose stock normally graze it must make some adjustment in his operations. Most ranchers will adjust 11 by (a) reducing the size of their ranch business so that just enough livestock are kept on the ranch to match the decline in pasture output, (b) leasing additional range— lands, or (c) paying grazing fees to other ranchers. Operators of small ranches who cannot stand the additional expense of feeding animals displaced by non- use of the seeded area, nor to afford a reduced income while waiting for the seeded range to be ready for use, may find it impossible to improve their rangelands through the replacement of native grasses with new species. Whether the adoption of any specific practice will be profitable to an individual rancher depends upon: (1) the output forthcoming with and without the use of the practice, (2) product and factor prices involved, (3) the length of the planning period, and (A) the interest to charge on the money invested. But even though the analysis indicates that a particular practice may be profitable, we cannot say that a rancher should invest in it as long as there exist alternative ways by which he can increase his profit still further. In other words, a given practice may be a "more” but not the "most" profitable way of improving livestock production. 12 Only through a comparison of the earning abilities of the various range improvement alternatives can the most profitable course of action be decided upon. Livestock and Pasture Management Three main factors determine the nature of the response resulting from the utilization of a pasture: (l) the characteristics of the stand which constitutes the pasture, (2) the kind of livestock or even the class of animals that graze the pasture, and (3) the manage- ment of both pasture and animals by an operator. A range of unimproved native grasses may be highly productive in terms of kilos of livestock or livestock products produced per hectare when managed by an effi- cient operator whereas the best of artificial pastures may produce little in the hands of a poor operator. In other words, high yields per animal unit grazed or per hectare devoted to livestock production may re- sult from efficient management of pastures and livestock rather than from the adoption of any particular tech- nology to improve the existing range. An optimal result cannot be expected through good pasture management if the herd is poorly managed or vice-versa. In the light of the above mentioned an adequate evaluation of the benefits from range improvement can be made only in the context of the total ranch operation. 13 Furthermore, the use of new technologies by a ranch operator may demand from him a greater management effort than before their adoption. The old saying ”the eye of the master fattens the cattle" implies that efficient range and herd management is an art. The increase in the management effort demanded by the introduction of new practices should not be disregarded. It is indeed possible that an investment in range improvement may not appear advantageous to a landlord if as a result of it he must readjust the ranch business that he used to conduct in a completely routinized fashion with much delegation of decisions. The most relevant relationships which are associated with range improvement have been indicated in order to call attention to the sc0pe and character of the task of a complete economic analysis. Certainly such an analysis is a formidable but not hopeless task. It can be accomplished as long as suffi- cient data concerning essential physical and economic relationships are available to permit full application of the principles. Meanwhile, and in the absence of com- plete information, the principles outlined can be applied to data now existing and to additional data as they are developed. 1A Objectives of Study The objectives of this study were: 1. To present an analysis of the conditions under which the installation of improved permanent pastures can be profitable on individual ranches of the cattle breeding area of Buenos Aires province. 2. To show what technical and economic informa- tion is relevant and necessary for an economic evaluation of such an investment. Method of Study Two basic systems of beef production were analyzed. One is identified as the ”traditional system" carried on with no improved permanent pastures. The other is called the "modern system," where cattle are also grazed on improved permanent pastures. A ranching system may be defined as an overall plan by which the range and cattle of a particular type are managed for the entire period during which the animals are raised and/or fattened. Only systems which produce feeder calves (weaning calves) were considered. The study of the cow- calf operations was applied specifically to the condi- tions of the cattle breeding area of the Pampean region. Primary data for this study were obtained from a sample of 30 ranchers suggested by county extension 15 agents of the National Agricultural Technological Insti- tute (INTA), professional agricultural workers and other ranchers. The 30 ranches in the survey were located in the Ayacucho and Rauch counties of Buenos Aires province. Their operators were interviewed by the author in the winter of 1968, when data were obtained for the period from July 1, 1967 to June 30, 1968. All data came directly from the ranchers, their records, or their respective foremen. With the aid of experienced persons closely acquainted with the beef enterprises of the area the 30 ranches were selected so that: (1) only strictly beef cattle ranches with little or no income from cash crops were included in the sample, (2) one third of the ranches had no improved permanent pastures and two thirds used improved mixtures of permanent grasses and legumes, and (3) the sample included a large prOportion of medium- sized ranches of about 2,000 hectares. A non—probability sampling method was used in selecting the sample. The judgment of experienced per— sons familiar with beef production in the breeding area of Buenos Aires province was used to choose what was believed to be the best sample for this particular study, given the resources and the time available to conduct the survey. 16 During the personal interviews held by the author with the operators of the ranches, data were secured relative to the organizational and operating charac— teristics of the enterprises including: ranch inven- tories, breeding practices, pasture management and feed- ing methods, health practices, labor utilization and cattle marketing. Records were also obtained on pro— duction data (inputs and outputs) and regarding the cattlemen's attitudes toward the establishment of improved permanent pastures. The primary data thus obtained were used in establishing the organizational characteristics of ranches, the management systems followed, input-output relationships and most of the values for a budget analy- sis of a typical ranch unit representing the traditional system of beef production as well as of ranch units under a modern system of production. Data were also gathered from both published and unpublished sources to determine production relationships and to secure relevant cost and price data. Emphasis was placed on collecting both published and unpublished reports of experiments on the effects of range improvement prac- tices conducted by range specialists. These primary and secondary data were used as a basis for sythesizing model cattle breeding operations. This implies that the conclusions of the analyses l7 conducted are not for actual operations but result from synthesizing model operations. They represent "poten- tials" under certain management and other conditions specified for each system. Standard techniques of partial budgeting were utilized in developing investment and operating capital requirements for the various systems of cattle breeding based on the utilization of different types of pastures. The empirical data collected provide the basis to analyze and compare the relative profitability of the alternative pasture systems through the evaluation of several hypothetical situations. Chapter Organization This study consists of seven parts. In Chapter 11 basic background information is given about the geo— graphic organization of the cattle industry indicating the location of production in relation to markets. The area selected for study is identified as a part of the entire system, and its fundamental characteristics are determined through different ratios. The organizational structure of ranches within the selected area, size of farms, land use and specialization of enterprises are described. Chapter 111 contains a description of the "traditional system" of production. Detailed informa- tion is given with relation to the organization of l8 ranches, herd management, pasture management, input data and rates of production. Chapter IV provides similar information regarding the "modern system" of production. In Chapter V, initial costs, yearly maintenance costs, and operating costs associated with pasture improvement are described and analyzed. An evaluation of the pro- fitability of range improvement is given in Chapter V1 with the description of the procedure followed for such an analysis. The economic results to be expected with and without the adoption of improved permanent pastures are contrasted. Finally, Chapter VII contains a summary of the findings and the conclusions. CHAPTER II THE AREA SELECTED FOR STUDY Geographic Zones of Production Argentina stretches 2,150 miles in length from north to south and is, in places, 980 miles wide. Pas- ture and grazing lands are found in almost all areas of the nation; however, in studying the geography of beef production five main regions can be identified: (1) Northeast, (2) NorthweSt, (3) East Central, (A) West Central, and (5) South (see Figure 1). The Northeast. This includes the Argentine Chaco to the west of the Rio Parana and the provinces of Corrientes and Misiones to the east. The Argentine Chaco is a huge area of lowlands covered with scrub, forest and grassy savannas, the trees sometimes impenetrable and sometimes set widely apart on grassland. A vertical line drawn down the center of the Chaco will roughly delimit an eastern area of sufficient rainfall from a western area of deficient rainfall. This is a land of large ranches basically interested in the grazing of cattle but grow- ing crops as a sideline. l9 20 AMP I "" ”'NORI'III.\ 0‘- n I 0“ " |LAST \ I .‘ | " v \ . - ' . a ‘fi. \ ‘0‘ . '\ o " \. 's Q - \ CENTRAL,“ ‘1’ _Am”{ " 1 y l‘ / x! \ ‘i r' 1': a". ‘ . 3 EAST . CENTRAL i '-------~-----o-.-.-u- SOWBI 32.39 v fie --Beef Production Areas in the Figure 1. Argentine Republic 21 Between the Rivers Parana and Uruguay lie the pro- vinces of Corrientes and Misiones. The normal rainfall is 78 inches a year, but the rains are not spread uni- formly and drain off so quickly into the swamps that a rainfall of 50 inches, which is not unusual, may be insufficient to prevent drought. Corrientes sometimes suffers from summer drought. The rough pastures are burnt off in spring to rid them of unpalatable grasses. This is also a land of large ranches raising 3.3 million cattle mostly of unimproved breeding in the north por- tion, but in the south where the grass is better there are improved cattle and over 3 million sheep. The Northeast region ranks second in cattle numbers, contributing 12.1 per cent to the nation's total (see Table 3). The Northwest Included in this zone are a high dry land prolonga— tion into Argentina of the Bolivian Altiplano; broad valleys, forested mountains and, in its eastern boundary, the scrub forest of the Chaco. The provinces of Salta, Jujuy and Tucuman embraced within their limits contained 756 thousand cattle, June 30, 1967. The East Central Zone This includes the plains known as the Pampean prairies that stretch over almost the entire province of 22 TABLE 3.--Rank of regions in number of cattle, on farms and ranches, June 30, 1967. A Region and Province Number of Head Per cent Country's Total 51,227,06A 100.0 East Central A2,037,298 82.1 Buenos Aires 20,2A7,6A0 39.5 Cordoba 8,288,9A6 16.2 Santa Fe 6,833,1A3 13.A Entre RIOS “$550,569 8.9 La Pampa 2,117,000 A.l Northeast 6,171,866 12.1 Corrientes 3,338,566 6.5 Chaco 1,16A,000 2.3 Formosa 8A7,300 1.7 Sgo. del Estero 686,100 1.3 Misiones 135,900 -3 West Central 1,869,200 3.6 San Luis 1,151,900 2.2 Mendoza 306,100 .6 La Rioja 221,100 .A Catamarca 155,500 .3 San Juan 3A,600 .1 Northwest 756,800 1.A Salta A32,900 .8 Tucuman 258,200 .5 Jujuy 65,700 .1 South 391,900 .8 Neuguén 193,300 .A Rio Negro 121,000 .2 Chubut, Santa Crus, ’ Tierra del Fuegg, Antartida e Islas del Atlantico Sur 77,600 .2 Source: National Meat Board, Resefia Anual (Buenos Aires, 1967). 23 Buenos Aires, the southern halves of Entre Rios and Santa Fe, the eastern half of COrdoba, and the northeastern part of La Pampa. Very likely no other country in the world possesses such an area of rich black soils where the climate is moderate and the rainfall generally ade- quate in a continuous chunk of land. The Pampean region is almost as big as Texas and larger than France. The outer limits of the Pampas are no more than A00 miles from the port of Buenos Aires as the crow flies. The eastern part of this region is usually called the Humid Pampa, and the western part the Dry Pampa. Rainfall averages 36 to 39 inches at the eastern edge of the Pampean region, decreasing to 20 inches at the western boundary. Rainfall in the Humid Pampa is ade- quate most of the years for the growing of grain crops and the best kinds of forage crops. As a general rule, drought does not constitute a serious probelm even though critical conditions do occur at times in the summer months and affect creps requiring abundant water, such as corn. Wind erosion and aridity are limits to the potential of the Dry Pampa. The excellence of the breeding cattle in the Pampas is general. The upgrading of the herds began many years ago with the importation of pedigree bulls from England—~the first shorthorn was imported in 1827 and the first Aberdeen Angus in 1876. Cattle breeding 2A operations are concentrated mostly in the eastern part of Buenos Aires province, south of the capital city. Fattening Operations predominate in the western portion of the region. Cattle production is most heavily concentrated in this zone and Buenos Aires, unquestionably, is the center of this concentration. With 82.1 per cent of the cattle and farms and ranches, June 30, 1967, the East Central Zone is by far the major area of beef production in the country (see Table 3). Buenos Aires is thelead-' ing province with 39.5 per cent of the total cattle numbers. Different cattle raising areas within the Pampa region have been identified by grouping the various counties according to their characteristics as favoring (1) breeding, (2) breeding and fattening, and (3) fatten- ing Operations, as can be seen in Figure 2, prepared by the National Commission for the Promotion of Agriculture (PROAGRO), which followed the method outlined in CAFADE's Statistical Publication No. l.8 The ratio "young steers plus steers divided by cows" was used as an indicator for the final grouping into production areas. Under the hypothesis that all calves born in a given county were 8Comisi6n Administradora del Fondo de Ayuda Econ6mica (CAFADE), "Beef Production Areas in the Pampean Region - Criteria for Determining Them," Qperacién Carnes (Buenos Aires: 1959). 25 ........... Figure 2 BEEF PRODUCT/04’ 0175/75 //V THE Pfi/‘lP/i’ REG/0” “ BIEé'D/NG 5555?? ”an M I; ran/Icy rm narrows é“ ”Ma: y. n rtwpe'flcy 1w- ”flaw/vs - rlrravmo Easiest: OVEN): lifts Jlldflfl‘fifl an" 26 sold to be fattened outside the area the ratio would be zero.. Hence, when the ratio approximated zero the county was looked upon as a breeding zone, serving as a source of feeder cattle for the fattening area. As the ratio increased it indicated that some animals were being re- tained for fattening and the county was identified as a mixed—-breeding and fattening-~area. A further increase of the ratio showed that steers and young steers were being brought in from other areas and the county was classed as a fattening area. The study made by PROAGRO did not attempt to establish boundary lines for these areas with mathe- matical precision, which would be practically impossible. However, the following values were set as general limits for each type of operation: 0 to 20%, breeding operation (cow-calf operations); 20 to A0%, mixed activity with a tendency towards breeding; A0 to 60%, mixed activity with a tendency towards fattening; and over 60%, fattening Operations. The West Central Zone The fourth division south of Tucumén and west of COrdoba includes the Cuyo region and the provinces of Catamarca and La Rioja with their areas of parched desert. The semi-arid and arid areas offer very special problems for livestock production, as they are 27 characterized by drought and propensity to erosion, but, at the same time have certain ecologic conditions which are suitable for breeding. Within its limits, 1,869,000 cattle were on farms, June 30, 1967. The South South of the Rio Colorado is the vast plateau known as Patagonia. Most of the land is devoted to sheep raising. There were more than 16 million sheep in the area in 1963. Because of the high winds and insuffi- cient rainfall there is little or no agriculture except in the north, in the valley of the Colorado and Negro rivers. Some cattle are raised in both valleys where irrigation permits the growing of alfalfa; 392 thousand head of cattle were on farms in Patagonia in 1967. Area Selected for Study The selection of the area studied was made taking into account the main objective, namely, to analyze under what conditions the installation of improved permanent pastures can be profitable on individual ranches. This implies a comparison of the physical and economic results to be expected from alternative pastures systems--i.e. with and without the use of improved permanent pastures. Outside the Pampean region the establishment of improved permanent pastures has been recent and very limited in scope. Hence, the necessary data for an 28 economic evaluation of the new practice is most dif- ficult, if not impossible, to obtain. In the Pampean beef fattening area, ranch Operations are usually carried on with the use of improved permanent pastures. There- fore, the installation of improved species of permanent grasses and legumes may be regarded as a common practice, rather than as the adoption of a new technology. Consequently, the cattle breeding area of the Buenos Aires Province was selected for study. Here the adoption of improved permanent pastures has increased substantially in the last years—~from 101 thousand hectares to 271 thousand hectares between 1960 and 1966--but nevertheless a large proportion of ranching operations is still conducted on unimproved native grasses. As pointed out earlier Buenos Aires is the leading province in regard to cattle production with 39.5 per cent of the total cattle numbers. The area under consideration has a flat topography which encompasses low lands with poor surface and internal drainage. Heavy soils with a high percentage of clay and inadequate drainage are easily flooded, offering few if any possibilities for cash crops. These soils characteristics, most common in the area, limit its usefulness for livestock grazing. Accordingly cow- calf operations and sheep herds are the main productive activities to be found. 29 The climate of the area is mild though frosts are frequent during winter. Annual rainfall averaged 37 inches in a period of 10 years (from 1957 to 1966). Because of the climatic conditions which prevail there is a shortage of forage in late winter and native grasses have peaks of production in spring and fall so that the number of animals carried in spring would overgraze the same pasture in the summer and winter periods of low production. However this effect can be lessened through the establishment of improved pastures and better management. The area studied is located in the eastern part of the Buenos Aires province and includes 21 counties. These counties are: Ayacucho, Castelli, Chascomus, Dolores, General Alvear, General Belgrano, General Guido, General Lavalle, General Madariaga, General Paz, Las Flores, Magdalena, Maipu, Mar Chiquita, Monte, Pila, Rauch, Roque Pérez, Saladillo, Tapalque and Tordillo. Each county was selected on the basis of similarity within the area of native vegetation, climate and system of range cattle production. Although the survey of cattlemen was conducted in Ayacucho and Rauch counties, the ranches of this area are representative of range and ranching conditions extending over all of the counties above mentioned. This can be seen in Table A where the main characteristics 30 .Nmma .mhumosfihe occsmcm .mcsfi¢ mocosm co mfiocfl>0hm ma mp coapmwpmpmm swamaom "cossom mm ow. m.mm >.m m.m w.mm m.m mmfipcsoo ma segue Hm mm. m.mw m.m m.m m.mw :.s modem a osozom>< maco some Recumc>fia Op Ofipmm pmpmnmdo Umpmncdo Op macmpm swowwmmwwq moss Havoc moan Hench wcsow woo wpacm c>fiumz anaccmpmm Hanged Op mops ou moan mos< mafia mpmwum ms m. D xoopmo>HH mono ammo mo oapmm H H a mmpdpwmo meaumsw mo owpmm no OHpmm .mmma acost/ope wosfi< mocosm mo mops mcfiomonn mappmo on» wo moapczoo ponpo ma spas commasoo mm mOfipcsoo nosmm pom onosomm< mo mORpmHnouompmco afimmmll.: mqmoaQ mcpHH mocosm go nmfipczoo Hmilmmosw pemfi ow MCmeooom magma mo cowamommwmmmwmlu.w mgmqs 3A .ome .msmcoo HNHSHHSOHHw< HOQOHpmz ”condom OOH Hms.m OmOiOH HOOOO O.N HO H. O OOO.OH peso O.H Om I a OOO.OHHOO.O m.H OO I O OOO.OIHOO.O N.H m: I O OOO.OIHOO.H O.H mO H. OH OOO.HIHOO.O O.H NH H. OH OOO.OIHOO.O O.m ONH N. ON OOO.OIHOO.O O.O ONN O. HO OOO.OIHOO.m H.HH OH: N.H OOH OOO.mIHOO.N H.HH HOO m.m NH: OOO.NIHOO.H N.O OOH O.H OHN OOO.HIHOO H.O NON O.N OOm OOO IHOO 0.0 Omm 0.0 ONH OOO IHOO H.HH H3O m.mH NmO.H OOH IHON m.OH HOO m.NH OHO.OH OON IO H mpcmmsone H wcoprHomo Odom Ottawamwmm WMOWWIMWEEO. amawwmmamonmwm wmewemmawawmammwaa emmmemm Immam.mMMMa Oprmo mo pmom mo oHpmm MO .HmflESZ .MO Oflpmm .ommH amocH>onm OOHH< moccsm NIIOOOOO OO OHOOOO HO OOOO OO OOHOOOOOO OOHOOOHOHOOOHO-I.H OOOHO 35 WEISS the class interval that included the largest aggregate area. In regard to cattle numbers it can be seen that ranches which had more than 1,000 and up to 2,000 head of <3att1e were contained in the size class interval with tile: highest percentage of the total cattle inventory. M01? eover, in 1960 ranches with over one thousand head of caitztle represented only 5.5 per cent of all of the cattle erii:erprises but accounted for almost one half of the t3CItal number of cattle in the area. This indicates that tDeef production was concentrated to a considerable ex- tieent among producers who Operated ranches of more than C>r1e thousand head. I Table 8 contains statistical data on each of the C=c>unties constituting the area with relation to: total Elxeea of farmland, cropland acreage; area devoted to :LfiLvestock production (divided into improved annual or E>€ermanent pastures and native pastures); livestock jdriventory broken down into cattle, sheep and horses Eirld type of livestock operations expressed in terms of Ilfle ratio of steers plus young steers to cows and the ESI‘leep-cattle ratio. It will be seen from this table that all of the c(bunties selected are fit primarily for livestock pro- dLlction and devoted mostly to cattle breeding operations. 36 .HomH .HOHLOOG ccoowm .OocH>OLQ mmLH< mocozm Ho CHHOHHsm HNOHpmHumum ”mogsom NN.H ON OOH OHH.: ON0.0 OOO.: OHH.: HHN OOO NO: OO0.0 HNOOe OO. 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In analyzing the relative profitability of any pasture program all of the associated elements of costs must be considered. Range improvement costs may be divided into three major classes: (1) initial cost, (2) yearly maintenance costs, and (3) operating costs. Initial costs include items that are expended within a finite time period. Maintenance and operational costs are those that must be incurred during the life of the improvement program. Initial Costs Initial costs include the expenses that must be incurred in seeding native ranges with improved species of grasses and legumes as well as other costs associated with the adoption of the new practice. Thus, for example, fencing may be required to control the grazing on the 111 112 improved areas. Water facilities may have to be developed on the seeded area before it can be utilized by live- Stock. Acquisition of additional livestock often is required to utilize all of the new forage produced. Pur- chases of additional machinery may be needed if the im- provement work is to be carried out with owned equipment. Range seeding and pasture management may thus include some or all of the following initial costs: 1. Seedbed preparation 2. Planting Application of fertilizer a. Seed 5. Fertilizers 6. Deferred grazing (Nonuse until the new grass is established) 7. Pest control (Measures to protect seeding against hares) 8. New fencing 9. New water development 10. New agricultural machinery and equipment 11. New cattle chutes and pens 12. Additional cattle numbers Costs of Seeding The cost of seeding native ranges with improved permanent pastures depends on specific site characteris- tics which determine the species to be used in the 113 mixtures and the mechanical operations to be performed in preparing the seedbed and sowing the new grasses and legumes. Costs will also vary whether or not the improved mixtures are to be established with the addition of fertilizers. Finally different cost will result if the tasks pertaining to soil preparation and seeding are undertaken using owned equipment or through hiring con— tractor services. In order to estimate seeding costs, budgets were constructed with itemsselected on the basis of the frequency with which different practices and materials were used by the ranchers Surveyed, and taking into account the information provided by the Agricultural Experiment Station of Balcarce of the National Institute of Agricultural Technology.20 The following assumptions were made in estimating the respective inputs: 1. Mixtures used for seeding purposes. Two mix- tures were considered. One with plant species best suited for "intermediate lands" (soils type solonetz solodizado) included a mixture of 12 kilograms of perennial rye grass, 3 kilograms of orchard grass, 5 kilograms of fescue, 5 kilograms of tall wheatgrass, 20Balcarce Agricultural Experiment Station, "Costs of Production" (mimeograph, 1967). 114 3 kilograms of yellow sweet clover and 2 kilograms of white clover. The other mixture recommended to be seeded in "low lands" (soils type solonetz and clay alkaline) comprised 8 kilograms of fescue, 8 kilograms of tall wheatgrass, 3 kilograms of yellow sweet clover and l kilogram of hybrid clover or strawberry clover. It was assumed that 50% of the improved pastures would be established in the intermediate lands and 50% in the low parts, so as to include in this analysis the two main types of soils to be found in the cattle breeding area. 2. The improved mixtures of grasses and legumes were to be established with and without the addition of fertilizers. 3. The installation of the different mixtures involved in each case the performance of these Opera— tions: 1 plowing, 3 disk harrowings, 2 spike harrow- ings, l seeding and l herbicide spraying. The applica- tion of fertilizer was also considered under the assumption that the fertilization of the mixtures would take place. A. The different tasks were performed by hiring contractors services by those ranchers who did not own cropping equipment. Custom hiring did not take place when the machinery needed for the establishment of the improved pastures was already available on the ranch. 115 The costs of the different tasks involving the use of owned machinery were operating costs only. They do not include the fixed costs of depreciation, interest, hous- ing, insurance, or taxes, as these costs were to be incurred regardless of the installation of improved pastures. 5. Finally "nonuse cost”——i.e. the additional expense of feeding animals displaced by nonuse of a seeded area——was estimated under the assumptions (a) that the range was made unavailable during one year, until the new grasses and legumes were ready for use and (b) that the carrying capacity, before seeding, averaged .75 animal units per hectare per month. The initial costs of installation associated with the various alternatives are summarized in Table 28. The estimated per hectare costs of establishing improved permanent mixtures of grasses and legumes are described in Tables 29 to 32. Fence Cost Fencing requirements are closely related to pas— ture management. Thus, for example, rotation grazing whereby a pasture is fenced into a number of separate enclosures of equal size to be grazed alternately, has been devised to reduce uneven grazing. If there are enough of these enclosures, the grass can be pastured 116 00m.m:0.0H 0m.mH0.:H 00m.msm.mH 0m.m0m.0H 005 > sapwosm onspnom mmH.smo.s 0m.mH0.:H mm0.00:.0H 0m.mom.0H osm >H soswosm onsunom 0ms.:mm.m 0m.mH0.sH 0ms.om0.0 0m.mom.0H 00m HHH sapwono ossonom msm.m00.m 0m.mH0.:H ms0.m0:.m 0m.m0m.0H 0oH HH sonwonm osspnos 50H.Hmm.H 0m.mH0.:H smo.:ms.H 0m.mom.0H mm H eosmono onsonom ooHooNHHHnsom non 00m.mms.0 0m.m00.0 00m.mH0.o 0m.mH0.mH 00s > sonmosm ossonom mmo.Hm0.m 0m.m00.0 mmH.00m.s 0m.mHo.mH 0mm >H soswoso ossnoom 0ms.som.m 0m.m00.0 0ms.000.: 0m.mHo.mH 00m HHH soswonm onsonom ms0.m00.H 0m.m00.0 msm.mms.m 0m.mHm.mH 00H HH anemone osspnom sm0.H:0 0m.m00.0 s00.0mm.H 0m.mH0.mH mm H sonwosm ossnnom .emE .eaE .ewE .efis eoaprHHthmm usoepfiz kuOB .wm pom proe .wm hom .mwm Ewpwoem othmwm psosoHsom oocso nnHz werHm Eoumso .moLSpmwe nemewEth U®>09QEH meflemwaewpmo mo mpwoo HprHeHII.mm mqm<9 117 TABLE 29.-—Estimated per hectare costs of establishing improved permanent pastures without fertilizing and hiring contractor services, counties of Buenos Aires province, Ayacucho and Rauch 1967-1968. Operation Times Cost per Total Cost over Operation per Ha. Mixture for "intermediate lands“ Seedbed preparation Plowing 1 1,300 1,300 Disking '3 750 2,250 Harrowing 2 275 550 Sowing l 500 800 herbicide spraying l USO U50 Seed: Rye grass 12 kgs. at m3n. 250 per kg. 3,000 Orchard grass 3 kgs. at m$n. 18 per kg. SUO Fescue 5 kgs. at m$n. 125 per kg. 625 Tall wheatgrass 5 kgs. at m$n. 110 per kg. 550 Yellow sweet clover 3 153. at mfn. lbO per kg. 5A0 White clover 2 Lg.. at nth. MOO per kg. 800 Herbidide: M.C.P.A. 1.5 lts. at m3n. 250 per It. 375 Nonuse for 1 year (1) 2,259 Total Cost 14,030 Mixture for “low lands" Seedbed preparation Plowing 1 1,300 1,300 Disking 3 ?50 2,250 Harrowing 3 275 550 Sowing I :00 8‘0 Herticide spraying l 550 “50 Seed: Fescue 9 kgs. a n3n. 125 per kg. l,OOO Tall wheatgrass 5 kgs. at K$n. llu per kg. 580 Yellow sweet clover 3 kgs. at m$n. 130 per kg. SUO Strawberry clover l kgs. at n$n. l,AOO per kg. 1,AOO Herbicide: M.C.F.A. 1.5 Its. at m3n. ‘SO per It. 375 Nonuse for 1 year (1) 2,250 Total Cost 11,795 Average Cost per hectare o1 Permanent Pasture (2) Improved 12,912.50 (1) It is assumed that at the rate of m$n. grazing fees 250 per ani are paid to other ranchers mal unit per month. (2) Under the assumption that 50% of the improved pastures are established in the intermediate low lands. land: and 50% in the 118 TABLE 30.--Estimated per hectare costs of establishing improved permanent pastures without fertilizing and using owned equipment, Ayacucho and Rauch counties of Buenos Aires province, 1967—1968. Total . Equipment Times Total Cost Operation . Hours/ Tractor A5 hP over hectare per Ha. Mixture for m$n. "intermediate lands" Seedbed preparation Plowing A — IA HP 1 1.50 Disking uo — 20 HP 3 2.00 Harrowing 6 — Tandem 2 0.67 Sowing 28 — Discs 1 0.50 Spraying - Sprayer l 0.33 Total .00 Labor: 5 hours per ha, at m$n. 135.A0 per hour 677 Fuel and lubrication: Gas-oil: 27.30 liters at m$n. 16 per liter: U37 Oil: 0.85M liters at m$n. 185 per liter: l58 Grease: 0.230 kilograms at m$n. 123 per kilo: 28 1,300 Seed (1) 6,055 Herbicide (2) 375 lonuse for 1 year (3) 2,250 Total COSt 5,9u0 Mixture for "low lands” Plowing, disk and spike harrowing, sowing and spraying 1,300 Seed (1) 3,820 Herbicide (2) 375 Nonuse for 1 year (3) 2 250 Total Cost 7,755 Average Cost per Hectare of Improved Permanent Pasture (A) 8,862.50 (1) Seed, (2) herbicide and (3) nonuse for 1 year the same amounts shown in Table 29. (A) Under the assumption that 50% of the improved pastures are established in the intermediate lands and 50% in the low lands. 119 TABLE 31.—-Estimated per hectare costs of establishing improved permanent pastures with the addition of fertilizer and hiring contractor services, Ayacucho and Rauch counties, 1967—1968. Times Cost per Total Cost Operation over operation per Ha. Mixture for "intermediate lands" m$n. m$n. Seedbed preparation Plowing 1 1,300 1,300 Disking 3 750 2,250 Harrowing 2 275 550 Fertilizing 1 A00 A00 Sowing l 800 800 Herbicide spraying 1 A50 A50 Seed (1) 6,055 Herbicide (2) 375 Nonuse for 1 year (3) 2,250 Fertilizer: Ammonium Phosphate (l8—A7—0) 150 kilograms at m$n. 33 000 per ton . A 050 ’ . Total Cost 19,380 Mixture for ”low lands" Seedbed preparation Plowing 1 1,300 1,300 Disking 3 750 2,250 Harrowing 2 375 550 Fertilizing 1 A00 A00 Sowing l 800 800 herbicide spraying 1 A50 A50 Seed (1) 3,820 herbicide (2) 375 Nonuse for 1 year (3) 2,250 Fertilizer: Ammonium Phosphate (lS-A7-O) 150 kilograms at mén. 33,000 per ton A 950 Total Cost 17,1A5 Average Cost per hectare of Improved Permanent Pasture (A) 18,26250 (1) Seed, (2) herticide and (3) nonuse for 1 year the same amounts shown in Table 29. (A) Under the assumption that 50% 0f the improved pastures are established in the intermediate lands and 50? in the low lands. 120 TABLE 32.--Estimated per hectare costs of establishing improved permanent pastures with the addition of fertilizer and using owned equipment, Ayacucho and Rauch counties of Buenos Aires province, 1967-1968. . . Total Equipment Times Total Cost Operation Tractor A5 HP over gours/ per Ha. ectare Mixture for m$n. "intermediate lands" Seedbed preparation Plowing A - lA HP 1 1.50 Disking A0 — 20 HP 3 2.00 Harrowing 6 — Tandem 2 0.67 Fertilizing F - Spreader l 0.67 Sowing 28 - Drill 1 0.50 Spraying - Sprayer 1 0.33 Total 5.67 Labor: 5.67 hours per ha. at m$n. 135.A0 per hour 767.70 Fuel and lubrication: Gas—oil: 32.50 liters at m$n. 16 per liter: 520.00 011: 0.980 liters at m$n. 185 per liter: 181.30 Grease: 0.252 kilograms at m$n. 123 per kilo: 31.00 1,500.00 Seed (1) 6,055 Herbicide (2) ' 375 Nonuse for 1 year (3) 2,250 Fertilizer (A) A,950 Total Cost 15,130 Plowing, disk and spike harrowing,sowing, fertilizing and spraying 1,500 Seed (1) 3,820 Herbicide (2) 375 Nonuse for 1 year (3) 2,250 Fertilizer (A) “2950 Total Cost 12,095 Average Cost per Hectare of Improved Permanent Pasture (5) lA,0l2.50 (1) Seed, (2) herbicide and (3) nonuse for 1 year, the same amounts shown in Table 29. (A) Fertilizer: the same amounts shown in Table. (5) Under the assumption that 50% of the improVed pastures are established in the intermediate lands and 50% in the low lands. 121 down quickly to the desired level as soon as it has grown to a height suitable for grazing. Pastured areas con- tinuously grazed, on the other hand, demand less fencing than rotationally grazed pastures. In any case, rational pasture management calls for adequately sized paddocks, which in turn may imply an extra cost of fencing, depend- ing upon the size and shape of the fields that already exist on the ranch. Fence costs per kilometer vary according to the kind and spacing of posts, the number of rods between successive posts and the kind and number of strands used in constructing the fence. In establishing fencing requirements for calcula- tion purposes the following assumptions were made: 1. The average-size field of improved pasture was 95 hectares. 2. The number of paddocks set up and the amount of meters of new fences constructed were: 2 paddocks and 1,000 meters in Pasture Pro- grams I and II; A paddocks and 2,000 meters in Pasture Program III; 6 paddocks and 3,000 meters in Pasture Program IV and 8 paddocks and A,000 meters in Pasture Program V. 3. Wire fences were constructed using red quebracho wood pests set at 12 meters from each other, 122 7 lapacho wood rods per intervals, 5 smooth and 2 barbewire strands. The estimated cost per kilometer of wire fence is presented in Table 33. TABLE 33.-—Estimated cost per kilometer of wire fence, Ayacucho and Rauch counties of Buenos Aires province, 1967—1968. Type of Cost Unit Quantity Price Cost per km. Wire m$n. m$n. Smooth No. 17—15 Roll 5 6,500 32,500 Barbed Wire Roll 6 5,000 30,000 Quebracho Number 8A 1,000 8A,000 Lapacho rods Number 585 60 35,100 Labor Meter 1,000 A5 A5,000 Other costs: Hauling, stays, staples, gates 23,A00 Total Cost 250,000 In accordance with the assumptions and estimations made the construction of new fences amounted to: m$n. 250,000 for Pasture Programs I and II, m$n. 500,000 for Pasture Program III, m$n. 750,000 for Pasture Program IV and m$n. 1,000,000 for Pasture Program V. 123 Water Development Cost Stock wells were considered to be the most reliable source of stock water by the ranchers interviewed. The windmill was the common source of power for lifting water from wells. Only in a few instances had it been replaced by gasoline motors and pumps. Galvanized steel storage tanks (the so-called Australian tanks) were most fre- quently used on the ranches surveyed to store moderate supplies of water to be furnished to livestock through pipes and troughs. The major costs demanded to install this kind of water development are the drilling, the casing, pipes and rods, the windmill and tower and the storage tank. Costs per well vary according to variations in depth to water, strata to be drilled through, requirements for casing and pipe, windmill sizes and tower heights, and storage tank capacities. New water-facility requirements were calculated taking into account the number of paddocks to be set up when improved permanent pastures are installed, the number of wells already in existence on the ranches visited and increases in the carrying capacity of the range. They implied the construction of two addi— tional wells for either pasture program IV and V and of one extra water point for either pasture program III or II, when pasture improvement took place without the 12A addition of fertilizers. When more cattle may be added to the ranching enterprise, as the result of the fertili- zation of the improved pastures, new water facilities implied the construction of one extra water point for pasture program I, two additional wells when pasture programs II or III are adapted and three additional wells for either pasture program IV or V. The estimated cost per stock well including storage tank is given in Table 3A. New water facilities represented these additional investments: m$n. 360,000 for Pasture Programs II and III, and m$n. 720,000 for Pasture Programs IV and V, to be carried out without fertilization. When the addition of fertilizer was contemplated, new water developments amounted to: m$n. 360,000 for Pasture Program I, m$n. 720,000 for either Pasture Program II or III, and m$n. 1,080,000 for either Pasture Program IV or V. Investment on Livestock It has been assumed that cattle numbers would be adjusted so as to take advantage of the added carrying capacity of the areas devoted to livestock resulting from the installation of improved permanent pastures. In order to build up herds, heifer calves may be retained from the weaned annual production. Otherwise, pregnant cows may be purchased to be incorporated as 125 TABLE 3A.--Estimated cost per stock well, Ayacucho and Rauch counties of Buenos Aires province, 1967-1968. Type of Cost Unit Quantity Price Coaglper m$n. m$n. Drilling cost Meter 12 7,000 8A,000 Casing, pipe and rod Meter 30 500 15,000 Windmill and tower Number 1 125,000 125,000 Troughs Number 2 6,000 12,000 Galvanized steel storage Tanks Number 1 70,000 70,000 Labor Well 1 A5,000 A5,000 Other costs: cylinder, transportation charges, etc. 9,000 Total Cost 360,000 soon as the newly established pastures are in condition to be grazed. In one case or the other increased live- stock inventories will represent additional investments. The investment that each extra head of livestock represents was estimated according to the following market prices for the period June, 1967-July, 1968: Brood cows m$n. 23,000, replacement heifers over two years m$n. lA,000, replacement heifers over one year m$n. 11,000, bulls m$n. 55,000 and horses m$n. 25,000. 126 The increase in livestock numbers corresponding to the adoption of the various pasture programs, with and without the application of fertilizer, and the additional investment that they represent are shown in Tables 35 and 36. Maintenance Costs Various annual costs related to the maintenance of a good stand of new grasses and legumes but which are not associated with initial investment may be incurred. Thus, an intensive program of pasture production should give particular attention to such cultural practices as fertilization, weed control and mowing of the established pastures to remove mature herbage, in order to insure maximum production of high quality pasturage. Moreover, the maintenance of a balance of legumes and grasses in a mixture is also influenced to a con- siderable extent by grazing management. In most cases the legumes dictate the grazing management since they must be favored to persist in mixed seedings. In general, the competitive ability of a plant in mixtures depends upon its height and density. No two speices of plants are equal in their competitive abilities at all times of the year. Hence, grazing must be managed to favor the least aggressive species in pasture mixtures. 0n the other hand, if the more aggressive species cannot 127 pews upmw>eH 000.emm.0 000.000.0 000.H00.0 000.H0m.m 000.0Hm.H 00000 000.00H 0 000.00H 0 000.00 0 000.00 H :1 : 0000om 000.000 0H 000.000 HH 000.000 0 000.000 0 000.0HH m nHst .H» H 000.000 00 000.000 0: 000.Hem Hm 000.00H 0H 000.00 0 0000H00 .mp0 m 000.000 H0 000.0H0 00 000.000 om 000.0Hm 0H 000.0HH 0 0000H00 wSOo 000.0H0.e 000 000.00H.0 mmm 000.000.m 00H 000.H00.H 00 000.000 00 0ooam .CfiE Ummm .CwE Ummm .CfiE Ummm .CwE Ummm .CwE wam XOOpw 0sH0> 00000 00H0> 00000 0sHo> 00000 00H0> 00000 00H0> 00000 I0>HH .HO mmwdo moHSHmwQ nemewEeoQ on omoomm wohw xoOpmo>HH mew mo owwueooeom .wmmHlmmmH .ooeH>opa moHH< woeosm mo mofipesoo eoswm new oeoSow>< .eOHuwNHHHuHmM usoepfis newswoea weepmwa o>wpweeopr mo eOHonow wen Eoem moSHw> 0H0peo>efi new mponese xooumo>HH e0 mmeweoln.mm mqmdB 128 pews upww>eH 000.000.00 000.H00.00 000.000.0H 000.H00.0 000.0H0.0 00000 000.000 0H 000.000 0H 000.000 0 000.00H 0 000.00 0 0000o0 000.000.0 0e 000.000.H 00 000.000.H 00 000.000 0H 000.000 0 nHHsm .mm H 000.000.0 000 000.000.H 00H 000.HHH.H H0H 000.000 00 000.000 00 0000H0m .mp0 m 000.000.0 00H 000.000.0 00H 000.000.H 00 000.000 00 000.000 00 0000000 9500 000.000.00 000 000.H00.0H 000 000.000.HH 000 000.000.0 000 000.000.0 00H 0ooem .e0e 000m .e0e 000w .e0s 000m .e0e 000m .e0s 000m 00 0 00H0> 00000 00H0> 00000 00H0> 00000 0sH0> 00000 00H0> 00000 M0>NH O o: om om OH m mmmao wweepmwe pewewEer ou nwnwwm wwew xooumw>00 wee go wwwpewoewm .000H10000 .moe0>oee mwe00 moewem mo mwfipeeoo eoswm new oeoeow0< .ewNHHHHewm mo eOHpfinnw wen e003 newemoem weepnwa 0>preewpaw mo eo0peonw wen Eoem mweHw> meouew>e0 new meweeee xooumw>0H e0 mmeweoll.mm mqmee 129 be subdued by grazing, clipping at the time of their strongest growth becomes necessary if the desired plant competition is to be insured. For instance, it has been pointed out that if the perennial ryegrass of a white clover—perennial ryegrass mixture were allowed to reach full height particularly in the spring, the clover that normally comes on later would be weakened and eventually suppressed. Nevertheless, it should be emphasized that mowing of the improved permanent pastures to control weeds or to remove surplus growth was a practice not undertaken by the ranchers surveyed who conducted extensive types of pasture operations. Neither were fertilizers used on new seedings of grasses and legumes. Therefore, the costs of fertilizing were computed on the basis of the experiments and recommendations made by the Agricultural Experiment Station of Balcarce. The other items classed as maintenance costs in this study were the annual costs of keeping fences and water facili— ties Operating and in good repair. The annual cost of repairing fences including materials was estimated to amount to 5 hours of labor (half a wage) per kilometer of fences. The amount spent on repairing water facilities was estimated to amount to 6 days of work per stock well, annually. 130 Operational Costs Operational costs are defined as the additional expenses required annually because of the adoption of new pasture programs which affect the organization and management of the cattle business. These additional costs result primarily from the change in the carrying capacity of the ranch unit -I associated with the installation of improved permanent pastures which in turn leads to an increase in cattle t numbers. i- Thus, it was assumed that the addition of more cattle to a ranch herd would increase the following cost items: hired labor, salt and minerals, veterinary and medicines, bull services, hauling and marketing and taxes. The added expenses associated with each pasture program were estimated under the assumptions made in Chapter III related to the physical inputs used in the modern system of beef production. The increases in annual expenses, including maintenance costs, that correspond to each pasture pro- gram are shown in Tables 37 and 38. Finally, the initial costs associated with the different pasture programs previously described in this Chapter are summarized in Tables 39 and A0. 131 000.H00 000.000 000.000 000.0H0 000.0HH 00000000 00000 Hweoe 0HH.0 000.0 0H0.0 000.H 000 00H0000 000E0>onoeH 000.H0 000.00 000.00 000.00 000.HH 00000 000.00H 000.00H 00H.00 H00.00 000.00 00H000000 0:0 meHHonm 000.00 000.00 000.00 000.00 000.0H coHowHo0sd00 HHsm 000.0H 000.0 000.0 0H0.0 000.H 0H0000He 000 0H00 00H.H0 00H.00 00H.00 000.0H 000.0 00000H00e 0000H0000> 00H.000 0H0.000 000.00H 000.00 000.00 000H0 soowq .e0E .ewe .e0E .eme .ewe wwwewqu nwnn< 000 000 000 00H 00 wweepmwe peweweewa ou nwnwwm wwew xoopmw>00 wen 0o wwwpewoewm .. -1- is- .000HI000H .mepeeoo eoewm new oeoeowm< .eOHuwNHHflpewe peoeHHZ II I. .II pii'llllv. O. mwmewmxw mo wake mewemoea weepmwa w>0pweeprw mo eoflpaonw wee Eoem wefipaemwe wwwewexw Hweeew e0 omeweoll.0m mqm00000000 .> 050 >H .HHH .HH .H 0500w000 0000000 000 000.000.0 .000 000 000.000.0 .000 .000.000.m .000 .000.000 .000 .Hmm.m>0 .505 00 0:5050 0H503 0HH05CQ0 00000 mmmcmmxm H0000 .0000H00000 000 00000 00 0005 0003 050500500 00530 0H .0000H00000 00 50000000000 0:0 wcfipfic 500050H 132 000.000.0 000.000.0 000.000.0 000.000.H 000.000 00000000 00000 00000 000.000.0 000.000.H 000.000 000.000 000.000 00000000000000 000000 000.0 000.0 000.0. 000.0 000.0 0000000 00000>o0000 000.000 000.000 000.000 000.00 000.00 00000 000.000 000.000 000.000 000.000 000.00 000000000 000 0000000 000.000 000.000 000.000 000.00 000.00 000000000000 0000 000.00 000.00 000.00 000.0 000.0 00000000 000 0000 000.000 000.000 000.000 000.00 000.00 000000000 000000000> 000.000.H 000.000.0 000.000 000.000 000.000 00000 00000 .005 .005 .505 .505 .505 mmmcqum 0000< 000 mom 00m 000 00 00050000 050505000 00 000000 0000 000000>HH 0:0 00 0000000000 wmmcmaxm 00 0009 ma . 00000-00 00000500 £050m 050 00050000 0000 000 00 00000000 000 0003 05000000 0050000 0>H00c000a0 00 50000000 000 5000 w000a5000 00000000 005000 :0 mwc0noll.mm mqmopmefi go wcflwmmm 000.000 000.000 000n00m 000000m I- 00000H0000 00003 0000000«H 000.000 0000000 000.000 0000000 000000 000.0mm.0 000.000.0 000.H00.0 000QH0m“m 00000Hmna 000000>Hq x903 mwmfiaflp msp Epompma on psmEQflsvm ©0230 wcflma 00m.000.fim mmfi.mmw.ma 0mm.0m0.0a mpm.0m:.m 000.000nm H0000 0000m00.0 mman00m.0 000000000 mwmammq.m 000.0mmhfl 00000000 U®>09QEH %o wcfiwmmm 000.000 000.000 000.00m 000.00m .. 0000HHH000 00003 000.000nH 0000000 000.000 000.000 000.000 000:00 000awmmam 000.000.0 000.H00a: 000AH0mam 000nmflm“fi x00000>flq .CmE .Cae .cae .CwE .CeE meEumm>QH HmHuHCH mmLSpme Um>opmefi mcfipcwam pom x903 mmmaaflp mzp mcflpflc Ecumso 00: Rom Rom 00H &m pcmEpmm>cH wo mame mwpzuwwa pcmcmEme 0p wmummm mmpm XOOpwm>fiH 03p mo mwmpcmopmm | II 'I n .' villi l..lul.|l-,..’ «IIIII "Il n.'|t. \!l\||‘ll.| .wmmalwoma «mmfipcsoo Losmm wcm onosomm< awcflmfiafippm% usozpflz .mEmLmOhQ mpzpmma m>flumCmeHm mo COfipqowm msp cpflz Umpmfloommm pC0Epmm>Cfl HmeHQHII.mm mqm00QE0 00 w00©00m 000.000.0 000.000.0 000.000 000.000 000000m 0000000000 00003 000.000.0 000.000 000.000 000.000 000.000 000000 000.0m0nom 000.0m0.mm 000.mmm.m0 0000000.0 000.000.m 000000000 0003 0&00000 000 5000000 00 000800300 00030 w000: 000.000000 0000000.0m 000.00m.mm 000.000000 000.000.0 00000 000.000.m0 000.000.00 000.0m0.0‘ m00.000.m 0m0.0m0.0 00000000 ©0>00QEH 00 w00000m 000.000.0 000.000.0 000.000 0000000 000.000 0000000000 00003 000.000.0 000.000 000.000 000.000 0000000 , 000000 000.0m0.0m 000.0m0.mm 000.mmm.00 0000000.0 000.000.m 000000000 .C0E .008 .008 .008 .008, 000E000>00 000000H 00050000 U0>00QE0 w000c000 000 0003 0000000 000 000000 500050 000 00m 00m 000 00 0005000>QH 00 0009 00030000 000008000 00 000000 0000 000000>0H 0:0 00 0000000000 .mmm0nwmm0 .0000ssoo nos0m 000 00030000 .CO000N0000000 0003 008000000 0000000 0>000c00000 00 00000000 000 :00: 0000000000 0008000>00 00000001:.o: M0000 CHAPTER VI THE PROFITABILITY OF RANGE IMPROVEMENT The central purpose of this study was to determine to what extent the extra investment associated with the installation of improved permanent pastures would prove to be profitable to individual ranchers of the cattle breeding area of Buenos Aires province. The possible adoption of alternative pasture pro- grams, with and without fertilization, was analyzed. Each of these plans was given detailed study with com- plete designs, and with careful estimates of investment costs and Operation and maintenance costs, as well as of the returns to be expected from the various alternatives. It was assumed that the adoption of any of the improved pasture programs would imply the simultaneous construction of new fences and water facilities and the parallel increase of cattle numbers. Therefore, with relation to each pasture program, the additional cost of fencing, developing new water facilities, and holding increased cattle numbers, together with the initial costs of seeding the improved mixtures of grasses and legumes, are to be regarded as single packages of in- vestment funds. 135 13.6 Accurate estimates of the additional costs associated with each pasture program are necessary but are not sufficient to insure optimal investment deci- sions. Investment funds may be allocated to pasture improvement with the expectation of an increased flow of income over some future period of time. Likewise, the costs associated with such an investment are distributed over time. Because costs and returns accrue at different dates, a straightforward comparison between alternatives, based on the respective sums of all receipts minus the sum of all disbursements can be grossly misleading. Different significance must be attached to the same amounts if they occur at different times. Otherwise, one would be disregarding the basic fact that a peso return at some future date is not equal to a one peso cost today. Hence, in order to make optimal investment decisions, all of the added returns and costs that are expected to be associated with the investment over the entire life of the project, are to be compared at the same point in time. In this chapter two procedures are used to compare the alternative series of costs and receipts involved in each pasture program. The results that are achieved without the use of improved permanent pasture (i.e. the 137 ”traditional system”) were taken as a basis for compari- son. The procedures followed are: l. The determination of the prospective internal rate of return which corresponds to the investment in each pasture program, i.e. of the discount rate that makes the present value of the program's receipt stream equal to the present value of its cost stream, or in other words, the rate of discount which makes the present value of the expected change in net worth associated with a given pasture program equal to zero. The cal— culated returns are then compared with a minimum rate of return that is attractive in the particular circum— stances. 2. The maximization of "present worth," i.e. the present value of receipts minus the present value of costs, using a stipulated minimum attractive rate of return as an interest rate. As a first step common to both procedures, for each pasture program estimates were made of (a) the amounts of prospective money receipts, (b) the amounts of prospective money disbursements, and (c) salvage values, given the time span over which the improved permanent pastures can be utilized. The annual expected returns from the adoption of the various pasture programs were estimated under the assumption of constant production rates. Yearly cash 138 expenses were also assumed to be constant throughout the life of each program. The initial costs associated with the different pasture programs and the uniform series of the respective additional annual costs were described in Chapter V and summarized in Tables 37 to H0. The additional income flows derived from the in- vestments on the various pasture programs may be obtained by comparing the budgets incorporated in Chapters III and IV. A more detailed description is given in Table 41. The economic evaluation of range improvement would be relatively simple if it were not for the presence of uncertainty in determining expected values-~yield, price and life of the stand. There is always a possibility that all or part of a seeding may fail. To the uncer- tainty of forage stand must be added the uncertainty of livestock prices and production. Because of possibility of failure to get a stand of grass (partial or total) and price risk with respect to the products produced and factors purchased, ranchers may discount expected returns. As a matter of fact, the more cautious the ranchers are, the more they will dis- count returns in order to acquire safety margins. To the extent that uncertainty is involved in range improvement, discounting may be applied not only because of time but also because of "risk" itself. Thus 139 00030000 000005000 00 000000 0000 000000>00 000 00 0000000000 000.000.0 00m.000.0 000.000.0 000.000.0 000.000.0 00000 0000000000 00 03H0> 00008 000.0m 00 000.00 00 000.00 00 000.0 00 000.0 0 00000 000.000.: m0: mm0.000.m 00m mmm.mm:.m 000 00m.000.0 000 mm0.m00 00 000000 00000 000.000.0 0mm 000.000.0 000 000.000.0 000 m00.0mm m0 0m0.000 0m 00>000 0000000 000.000.0 000 000.000.0 000 00m.000 mm 000.000 0 000.000 00 0300 0000 00030000 000005000 00>00050 000 0500000000. 0m0.0m0.m 000.000.m 000.000.0 m0m.000 00m.000 00000 0000000000 00 0300> 00009 000.m0 mm 000.0 mm 000.0 00 000.m 0 000.0 0 00000 mmm.000.0 000 000.000.0 000 000.000.0 000 000.000 mm om0.000 00 000000 00000 000.000.0 0m0 0m0.000.0 000 000.000 00 00m.m0m 0m 0m0.000 00 00>000 000000: 000.000 mm m00.000 0m 000.000 00 000.000 00 mmm.0m 0 0200 0000 00030000 00>0005H 0:0 00 00000000000 00 50000000000 0:0 030£003 .005 0003 .005 0003 .005 000: .005 0002 .005 000m 0300> 00 0 0300> 00 0 0300> 0o 0 0300> 00 0 0300> 00 0 0000m I, 0000000000 003200 000 000 000 000 00 0 0 .wmmHIMme 000005300 0030m 0:0 0003000< 005000000 0030000 0>000500000 m5000000 5000 00000000 0000<|I.0: m0mfiq A00 mpmms 0H 00 0:0 000 pa 000.5m0.HH 000.N0H.0 000.Hm:.m 000.0H0.m 000.m::.H 00009 000.000 000.000 000.00m 000.00m I: mmflpfififiomm papa: 000.000 000.000 000.000 000.000 000.000 000cmm 000.0mm.0 000.000.0 000.000.: 000.00m.m 000.0Hm.a xoopmm>fiq AHV mummz m no one on» u< .cme .cwE .CwE .cwE .CwE R0: 00m 000 “0H 00 mmzfim> mwm>amm mmLSpmma unmcmEme o» Umommm mono xOOpmm>HH mcp mo mmmpsmopmm .momalwwma .mocfi>OLQ mmpfi< mocmsm mo mmfipcsoo nosmm paw onosomm< .wempmopa pudenda m>0pmcpmpam spa: Umpmfioomwm mmzam> mmm>ammll.m: mqmo Amv .UOHme mcflzsmam Lao» m m pm>o AHV 000.0mm.a msm.sae.m Hms.mfi0 000.000- Hm0.mssu s00 A00 soapssfiaaesme seas 00m.ma . ms0.H00 000.00: m0s.m0 000.0H . e0a AHV soapssaflaessm assess: acmEQflsvm Umczo mcflmb 000.00e.m 0e0.00~.m HH0.ssm.H 000.0Hm- 000.000- 00 Amv soaessaaaesse seas 000.0m0.au mas.0mmu 00s.0mss 00m.mmmu mam.smmu 00 A00 soarseflaaesma escapes moOfi>me QOpQMhpcoo mcfihfim Roz Rom sow sea &m unscemfim o m m Empmopm mo maze oLSpmmm Um>OLQEH spa: mops XOOQmm>HH mnp mo owwpcmopmm m p m .mmmalwmma ammflucsoo nozwm paw ocosomh< .mEmhmopd thpme o>HpmcnopHm pom Lagos pm: :0 mmmcmno pmpomdxo mo mSHw> pammmpmll.:: mqm ummer Pastures yvnw> ' I N T A Type of Pasture Pure Seeding Seed used per Ha. '.' ' ' Species and Stand Associated Pure Associated* 2;;X§§:t:§p:g:rs Varieties lbs. witfi} Has. Stand seeding Cooperative Winter Pastures Import FITmS Home grown Neighbors Other 21. Spring: E Summer: Fall: E Winter --...... h -- —“— "'""‘r I -_-'-E“-E---E--E T- Ir-nmovnn PER‘IANENI‘ ( 1) E I E E— E E I E . , , ¥ . 1 E E E ' | E E i E E E . ' f ' 3 . 1 ' E..- -__._.L...1. E f. ,.--_L ...-._..~...-.- E E 1 Spring: E Summer: E Fall: E h‘inter __._-__ -1--..1.__--11___1. .1-. .--_.E.--_T. ------- i--- ..--..l_ TE‘JPORAI'Y WINTER (2) , E E z E ~ E E I E i . E E E e E - : : ; ,2 : 2 ' 1 z 1 I I ! 2 E | : : 1 1 E E I E E E i F ' ___-l..-__-. .__-.--_-- -mL..---s-s..L-c.,E._--J .E_1__1w ME _E_-__1L.--1E-.,¢E..lg 1‘" 1 . . * TEMPORARY SU‘IEJIIR (2) E E E l E E E E 1 E ' 3 E i I . i 2 s E 1 l 1 I ' ' E E ' E i z z . . - E 1 z 1 z : -.__...__.--I -_L_-_.-E--__.._- I---___---_- __’___- I - (1) Code in blanks of question 19 (Z) (ode in blanks of question 20. 22. NQNUSE UNTIL A NEW PASTURE_I§ ESTABLISHED -ready for normal use- Type—(13m' Date 1st. Grazingng}iod 2nd.Grazing POEiOd 3rd. Grazing Period_‘~_ of of Class of (Iattle. .... Class of Cattle..... Class of Cattle.......m Pasture Has.J Seeding From '10 NC of Head From To N° of Head From To N° of Head “ ”a... ...D- —— 189 Ranch NC Page NC 9. How many head of cattle (mature cows) do you estimate that can be grazed per hectare each month (or else each season) on the different pastures of your ranch? r Kind of I_Pasture NATURAL' PASTURE c—g... E-S cpt. Oct. Nov.I E -- Grazing Periods Dec. Jan. FebE * War.E v .—- AprEEI—I‘ay A Jun . E 1 I E ' I JulE .Qc—c -- . u- -- —--——u——”¢~.-1 -m— Code in blanks of question 1Q. 33. ENSIHRE ——..-o_—~.-.——_——.—-_’-—._— --—..——— ...-..- -- "_1 Type of Pasture -v—————.~.-———- Ppmnncn-t "BEEF-IBE- Alfalfa Other WT .. ...... _ -..... -._.— PirectE Hav Production Cr razinE“ Has. E .——-— ”.- ...—......- 190 PRODUCTION A\D UTIEIZ \TION Page No 10. 3C Ranch \ Seed Production --- Silage Production Con51 Harvested Sold Harvested Sold Harvested KIlos Ha. 'E'Ions. Has. Ha. TonsE Has kilos Has. Tons. Ha. Sold Tons. 1med on ranch_ Prod uct Tons‘ kns. p... Temporarv winter Hats T’””‘ E E E ! E 1 E ' 1 ' -mmmnnnmmauumgmw ta-we t mmwuw ~ : Harley E 1 E E E E E E ,__ _ 1 _ E ....E... yo I E. E E E I J l a I ...-___._. -_,-E~u a”- --L.T-..__-s.,---_-w -.- E‘fllefll’ E E E E 1 -*—~~~~~m*+wwEw~~~~au~w~ w~¢~ Other 1' 1 E E 1 E -- .---.. -..- - --.-..E_ ..-E------ -- -- .1....e....--....-E - '1 ..-1 '1'e111porarx summer E 1 E M., ,-_. __._--_- 1 Corn E E -- -- - --——-—----»-~--—-—--»-~ -.....E- --.. -— - ---r—EEv~-~--~E--—--—---+ ---~- --~-~—1-—-w-- E—----~—-~-1E—--—~-1 Sorghum WE E E E .. -----_-.-------_- -------_- ---“:N»-”----.__E_-_.--,_,-..E._..;...--1..--.ME... (lther E E E E r E _-._,-- - - --—— —--—-«-—~-- -....-_....l..-_..- ...- - ---———-EE--~-«—-—----4 - - - - ——|----- ~-JE--—-—--— +4 who—man E”..- - --,.....-._._4,.__..._. ...“... -———--- DE. EWIR(EE\SIEE II] D . ---...- u —.— -:.—--—--»—~-- ..-..-—-.---.. Item ”...-.-- ..-- .n. —-—-o . ..-- ...—g— (oncentrates CBFE"”"" Oats Barley Rye Cottonseed meal Other |~‘011ghapes lbfifiéhfillfal fa h Legume hay and gr Crass hay Silage 921.191.... Salt ..- - .4 -..—.~ “0-- m-rmv-u- Winerals —-——- .— ..- Vitamines ---- m-~-—.o Other ,w- .- ----——. - - ..-.-. ...-..---. —-.—.._E_ .. ..---....._...--4.. -... . «‘ol EHnit .4L ‘u-a. --+ o. ”YE «18:5 .- -. - ..- ... E -...-...+,..--- -- .4 E I -----. E--.._- .4 ~a ~--—.---~oo-——. ..—--——-.—--—-—.—.---¢-—.o__-n.-- QuantityE Class of livestock fedE 1101afl1t ..-... .__._---.. EE—-»—- - --.... ..-—.--.EE— .. -... ....-. 4L-.. -..- -... - .. ......EL..._.-....._......._-..._.. - ...»..- ...—JE... L. .- m--.fi-..‘ ...- H ...~ .. --..-.E --u‘..-_m 1... -——-— -— -.---—. "4 ...- an- ...... --~ M““.“~u ...-“b- __..._._.EL._-. No of -’*~4 -~ . —-O>.-o -... —— uLOm-M“—_———. —--..-»—.-.-‘h.—-_.-.o-O——N> --.. EE-.. ...-...... Ebfl-monE -- ...“ “-..-.... [cu ..-- ...: —--—-.. Ranch N“ ...... 191 Pope N" 11. 1111/10 11:12 s ro1101111=._,11 139111111.1131:~ 511111111011 11511) 11111 11113 ESTABLISH‘flfl -.——-—.-r—.- .... --.--- QED_§AINTENANCE 0F IMPROVED PERMANENT PASTURES I'J Ln .b ..- —.——-cr<...—. - ... — m -..V-- _. --. -.-..___fi 5 Kind of Pasture Established: (I) ............................Hectares............. ' O p e r a t i o n ~Possih1e methods used-i Times§__ Equipment Labor Over jl’ower \lachine 11sec Size Hours per Hz 1....-- “.-..--“ -- --o —. --_.-—~ ..---- o- _—.--‘m om -~ 0"- -...”- - —'_,l I --..ooo-.~~op-.n-m--n-— —. .- u . '0-wfi.’-- -.----{L .. Seedbed Pr_p§ration i l.Fllow1ng 1 2. Disking I 3. Harrowing . : I i 3 1 -- .— —--‘ -..q 4. Rolling S. Fertilizing Planting (1. Inoculation, legume seed 7. Drilling 8. Broadcasting 0 Hz1rrowing- to cover seed- . Rolling -to compact soil- ... mo- - v- --< --- 1n g1ltivating- during first year- w. —._...»-- - .,‘_-- ll. Weed cutting 13.1eed spraying ...—..-. gnu”..— .. - --‘-m ”c.-- ----~..a—-.-—‘-—-- o“.— i I 1 i | I :11eed control ', I i?- IIS. Wowinp -to cut down overgrowth- l 1Pest (ontrol ' “...—C.” ..- .— 314. 'lreatinp against use of rodents ‘15. Treating against use of insects lfencing 'lo. To protect seeding against the use of livestock. ““0 ..g ... Yearlx I11nten1nce OLgrations hood contro l_ -~- .~ ..-—. 1‘. h'eed cutting 13. Need spraying .. C. -- u a.- ‘ 0“. h---“ u. 9 ..»~a—.-.oc....~'—...~ dergrowth Control I”. flowing of the pasture Pest Control Co. ”-... ~-_ ' -0. Treating against insects I'e rti l izat_i_<_1_n —- 2|. Annual use of fertilizer Maintenance of fences 22. Around seedings. , .“ Code in blanks of question 19. --. 4; - 11121111 11111111115113: 192 Page 110 12 26. NUMBERS OF BEEF ANINmLS AND OTHER LIVESTOCK. 196761968. Class Of liVCStOCk Ogrzgggtat Died cggggged Bought 80 $2a¥aggoa wiggfi Beef C3ttl£_ Number of Head kilo Cows Heifers 2 years old and over Heifers 1 to 2 years old Steers 2 years old and over Steers l to 2 years old Heifers from weaning to 1 year Steers from weaning to 1 year Calves from birth to weaning "* 3 Young hulls ‘—- Mature bulls ‘ Total beef cattle Milk cows ‘ Saddle horses Draft horses Colts Total horses Ewes Bucks Whethers Borregos Borregas Lambs Total sheep Total swine Total Poultry Ranch N° ...... 193 Page N° 13. 27. PERCENT CALF CROP Number of Head Group Exposed to Calves Calves Calves breeding Barren born died weaned Cows First calf heifers Tota 1 28. BREEDS OF CATTLE AND QUALITY OF THE STCIIK ON RANCH. Purebred Unregistered ( 1) Commercial Brood Brood Brood Cows Bulls Cows Bulls Cows Bulls Number of Head Angus Shorthorn Hereford Other (1) Unregistered cattle of registered parentage (Pure per cruza) 29. BREEDING PRACTICES rPange breeding ?. . . . Corral breeding? . . . . Artificial? . . .Year round? ..... . Seasonal? From. . . To. . . Pregnancy Fertility _ . diagnosis Test Cow Bull Ratio Breeding age “ W Cows and Heifers Mature Cows Heifers Bulls exposed breeding Bulls First Last First Last Nunber of Head 'Vlonths Yearsi Month Years [I IV‘ ...... 19“ Page N° 14. 30. ANNUAL REPLACEMENT 0F COWS Average age at which cows are culled (years)... .......... N° of For each Item Source of re lacement of cows p Head 100 cows Ranch raised heifers kept annually to replace cows Cows purchased annually for replacement Item Replacements Ratios 01d cows culled and sold annually Barren cows sold annually Cows died replaced annually Total Number of Cows replaced annually 31. ANNUAL REPLACEMENT 0F HEIEERS 0F BREEDING AGE _ N° f F Item Replacement ratlos “€33 1000;8::::5 Barren heifers replaced annually Heifers died from weaning to breeding Weaned heifers kept annually for replacement-Tota1~ 32. REPLACEMENT OF BULLS Number of years the average hull is kept in service ............ . Item Replacement ratios No Of For each Head 100 bulls Old bulls sold annually Barren bulls sold annually Bulls died replaced annually Total Number of bulls replaced annually 195 Ranch N° ..... 33. CALVING AND WEANING Page N° 15. Calving and weaning times Practices Septcvoct- NW- Dec- Jan- Feb. Mar. Apr. May Jun. iJu1.]Aug. Number of Head ' Calving: Calves born Spring Percentage % Summer Percentage % Fall Percentage % Winter Percentage, weaning: Ives weaned Spring Percentage % Summer Percentage Fall Percentage 'Winter Percentage % i % Average Age at which Average Age at which Sale weights WQaning calves are weaned calves are sold Steers Heifers MOUthS Months kilos kilos 34. HEALTH AND SANITATION PRACTICES veterinary Medicine Product Number of veterina - ? vaccines on Control Brand Dosis ry Serv1ces Number of Feet and mouth Assistance during calving Carbunclo bact. Vaccinating Mancha-Neumoenteritis Testing for Bangs Gangrena gaseosa Testing fer T.B. Bangs Other . i’nteque jipocalcemia Mastitis Poisoning InternggrflgraSItes External.parasites ~11ce, t1CkS, sarna- Flies worms (bichera) Other hdJlUl 3‘ ..... 196 o 1. 121111101 OPERATING (30515 Page N 16. LABOR UTILIZATION liIRED LABOR - 1967-1968 'Pernanent labor: -i.e. working full time on the ranch year round 1 f' Type of labor N° of men Monthlyi Tbtal Annfa Bene Its Tbtal Annual employed wage annual laws Food House Other benefits salaries m$n. m$n. m$n. m$n. m$n. m$n. m$n. «m$n. . Mayordomo 1 2. Encargado 3. Capataz 4 . Peones (caballo) S. Peones(de a pie) 6. Tractorista 7. Mbcanicos 8. Cocinero 9- Beanies 10. Puestero 11. Other I i. SEASONAL LABOR -i.e. seasonal help used for branding, dehorning, castrating, and other.- I T k f dN° of men- d wage Total. Annual Benefits Total as per owed ays emp ore er Social Total ' a gay annual laws Food House Other benefits ggérly m3n. 1mflfi7"‘ bMN-i i7. OPERATOR.AND FAMILY LABOR Family Live on the Ranch ‘ Residence E1 d'of work Members Year round Temporarily Ranch Town City supegvision Bysical Producer ife ildren 18 years old 55 than 18 years Ranch N° ..... l o 38. CUSTOM HIRE 97 Page N 17- Task work (2 Amount Paid Non-cash Tbtal N° of N° of Man year Performed (1) Unit Per Unit ETotaI Payments Paid days men Equivalent m$n. m$n. m$n. m$n. 39. 40. (1) Land preparation, mowing, silage cutting, harvesting, fencing, other. (2) Hectare, Tbn., Meter, kilometer, other. GRAZING FEE§ PAID AND COLLECTED Type of pasture Class of livestock N° of Head N° of Months Season Fees:paid Head/ Month Collected Head/Month Natural pastures Improved permanent pastures Temporary winter pastures Temporary summer pastures INSURANCES Type of insurance Tbtfilnpaid Ranch service buildings Vehicles Tractors Breeding stock Other 41. REPAIRS Annual Repairs Expenses Tetagnpaid Ranch buildings Fences Water facilities Power and machinery Other MARKETING OF LIVESTOCK AND RANCH PRODUCTS 198 (Zlass of livestock Market where sold Transpor- Marketing Nhrketing . I f ' . :(ldegfii‘lanIOduCts Unit Type Distance lethod o tation (3) Charges Costs y from ranch Delivery costs Total per Tetal per (1) kilometers (2) per unit unit mSn. unit m$n. (1) 1. Auction (Remate Feria) (2) 1. On foot (3) 1. Comnission for selling 2. Dealer 2. Railroad 2. Yardage 3. Other ranchers 3. Owned truck 3. Feed (if the animals 4. Local butcher who slaughters 4. Hired truck are fed) 5. Terminal market 5. Other 4. Other 6. Packer 7. Packer buyer 8. Other 45. TAXES Type of Tax Land Livestock Vehicles and other mSn. per Hectare m$n. per head mSn. per unlt Federal Provincial Mbnicipal (local) 199 44- MATERIALS USED IN PASTURE IMPWVEMENT Page N° 19." Crop Treated (1): Materials used to install artificial pastures Materials used annually Item Product Brand Unit Quantity per Ha. Total Has. Product Brand Unit Quantity per Ha. Total Has. Inoculating material 1 Herbicide Insecticide Poison Fertilizer New fences (1) Code in blanks of questions 20 and 21. 45. FUEL AND LUBRICANTS USED IN OPERATING THE RANCH Item Unit Quantity used per Year ~ Gasoline Gas-oil Kerosene Oil Grease Other 46. MISCELLANEOUS ITEMS Item Totalsfipent Telephone and electricity (chargeable) Association fees and journals containers (envases) Blacksmith ' 5 shop tools carpenter's workshop tools legal and beekeeping fees Other 47. LIVESTOCK PmDUCI‘S SOLD Item ~Unit QUEBIIP’ wool Hides Pelts Other APPENDIX II PRESENT VALUE OF EXPECTED CHANGES IN NET WORTH FOR ALTERNATIVE PASTURE PROGRAMS 200 -rwew 201 APPENDIX TABLE l.--Present value of expected changes in Net North for alternative pasture programs, without fertilization and Program I Item Program II Program III xvi Program IV \ custom hiring the tillage work, assuming an interest rate of oi and a 5 year planning period. Program V 95 Has. 190 Has.‘ 380 Has. 570 Has. 760 Has. m$n. m$n. m$n. min. m$n. I. Returns Expected additional ‘, ‘ returns per year “80,399 996,303 2,009,20A 3,097,7A9 3,786,937 Estimated salvage value l,AU3,000 2,915,000 5,fl21,000 8,197,000 11,037,000 II. Costs Initial cost of installation 3,09A,087 3,Aou,375 10,A37,750 15,752,125 21,070,500 Expected cost ‘ increases per year 110,904 316,213 426,0A3 682,A37 851,6HU III. Present value summary a. Present value of additional returns 1,312,040 3,973,179 8,022,1A9 12,368,382 15,120,103 b. Present value of salvage value 302,091 Total present value of added returns 2,32h,l?; Initial cost of installation 2,09%,037 Present value of 1 additional costs U;5,7:3 Total present value of added costs ?,lci,L¥0 Difference (c—f) PRESENT VALUE OF TEE EXPECTED CHANGE IN NET NORTJ —237,313 1,99u,500 3,639,u78 ’: = 5 "7 7r '7 1’, 1 :I'LJ‘J>_LIIJ+} lislllav '17 \j'] -529,713 22,631,775 21,070,500 3,U00,359 2U,A70,852 -I,839,oau 202 ~APPENDIX TABLE 2.-—Present value of expected changes in Net Worth for alternative pasture programs, with fertilization and custom hiring the tillage work, assuming an interest rate of 8% and a 10 year planning period. Program I Program II Program III Program IV Program V Item -————————- —--——-——-— --————————— 95 Has. 190 Has. 380 Has. 570 Has. 760 Has. m$n. m$n. m$n. m$n. m$n. I. Returns Expected additional returns per year 1,087,969 2,222,951 9,699,072 7,265,337 9,315,970 Estimated salvage value 9,356,000 8,991,000 16,233,000 29,051,000 32,150,000 11. Costs Initial cost of ‘ ‘ installation 0,260,937 12,200,875 23,512,750 39,970,625 96,589,500 Expected cost _ increases per year 998,651 1,033,979 2,080,012 3,199,079 9,179,831 III. Present value summary a. Present value of additional returns 1,296,970 19,912,829 31,195,695 98,750,992 62,510,909 b. Present value of salvage value 2,017,656 3,909,787 7,518,963 11,190,183 19,891,559 0. Total present value , of added returns 9,319,6’6 18,822,611 38,719,608 52,891,172 11,902,963 d. Initial cost of . 7 installation 0,260,937 12,200,875 23,512,750 39,970,625 96,589,500 e. Present value of additional costs 3,395,988 6, 39,727 13,957,097 21,130,572 28,097,000 f. Total present value of added costs 2,606,922 19,135,392 31,969,191 56,101,197 19,636,500 g. Difference (c-f) PRESENT VALUE OF THE EXPECTED CHANGE IN . NET WORTH -292,299 1,299,811 3,789,978 2,765,963 2(13 APPENDIX TABLE 3.--Present value of expected changes in Net Worth for alternative pasture programs, without fertilization and using owned equipment, assuming an interest rate of 10% and a 5 year planning period. Program I Program II Program III Program IV Program V Item 95 Has. 190 Has: 380 Has. 570 Has. 760 Has. mSn. m$n. m$n. m$n. m$n. I. Returns Expected additional . returns per year 986,399 996,363 2,009,209 2,097,799 3,786,937 Estimated salvage value 1,993,000 2,916,000 5,921,000 8,197,000 11,037,000 II. Costs ’Initial cost of installation 2,309,937 9,689,875 8,898,750 13,993,625 17,992,500 Expected cost , ‘ ‘ increases per year 116,909 216,298 926,995 682,937 851,699 III Present value summary a. Present value of ' additional returns 1,893,832 3,776,993 7,616,950 11,792,885 19,355,995 6. Present value of salvage value 875,988 1,810,603 3,366,007 5,089,681 6,853,099 0. Total present value of added returns 2,731,523 5,557,,9t 13 182 95 16,832,566 21,208,532 d. Initial cost of installation 2,309,937 9,c:9,875 8,898,753 13,993,625 17,992,500 e. Present value of , - additional costs 993,157 819,938 1,618,955 2,586,969 3,228,395 f. Total present value of added costs 2,733,099 5,509,01 10 51 :0r 16,030,509 21,220,823 g. Difference (c-f) PRESENT VALUE OF THE EXPECTED CHANGE IN NET NORTH —l3,279 82.783 965,252 801,972 ‘123356 209 APPENDIX TABLE 9.—-Present value of expected changes in Net North for alternative pasture programs, with fertilization and using owned equipment, assuming an interest rate of 10% and a 10 year planning period. Program I Program 11 Program 111 Program IV Program V Item 95 Has. 190 Has. - 380 Has. 570 Has. 760 Has. 13n. min. m$n. m$n. m$n. I. Returns rns per year 1,057,929 2,222,991 9,693,372 7,265,337 9,315,970 Estimated salvage value 4, im 000 3,991,000 15,235,000 29,c51,000 32,150,000 EA) I V ( 11. Costs Initial cost of installation 5,:3’,id; t.) P w \ l L kl- v KAJ “J \ Q ' ..‘ F.) U U \‘3 \J v «1 0 35,593,135 93,359,500 Expected co _ increases pe- year 9?},‘51 w9f,473 2,339,012 3,035,079 9,027,831 III. Present value summary 0 a. Present value 01 1,: ,1. . . .- ..L‘ '4; ' if, '* "a '11: r.” ;.‘W “ "f" '1..-“ "' additional returns 6,1u1,¢-1 l5,n;,,;09 2H,);u,312 99,692,299 57,)43,;37 0. Present value of A” ., - ,p~. ; .w, :1: ~ .xw .y: ; »r2 17w ~ 373 .a« 13 «Ar salJage .ilde 1,,,,,‘-_ ;,.,9,,.3 a,., ,oVI a,.. ,- 3 1-, 4 ,111 n rTV'Nt' 1 r. 3 ‘» '\t 1", ‘1 », x... Lu, ~14 p.bot’.; yuitl'- _ ,. " ‘ .‘ ‘ .3 3,‘ ‘ ‘..,- 1' 7x1 ”, ‘3 “'1' ‘31: I.‘ " ‘ '7 2, r ' a h r‘ N, w ’ p ‘ a /: 11 Of dxl‘lel Ilezlil‘11a) ;__1_;_:_.C-J.‘_'-_I__‘i 1', AL‘ - y. 1; J 1“ I ‘, , : ‘J '—, . J , O H ;! ‘__ i 3 " ‘.7 Lu; '. l 0" d. In-t111 c -t - I - v 1 1 1 —\ 1 v-w 1* I ‘. 1‘ v— ~ u m- » I. ~ . 1 11 ~ r I . tan .L Jul—L“~_‘ AA ’ ,J. l il,J‘_’_/ ‘ L*’- ,1 u ,JL4‘J,17/ “j,3blj”) U e. Present value of . ...,‘.,‘_‘._\1 . ‘ ‘ ~1., ,1: , —. ‘ ,fi Gag ,; I'.A 9», ..y r, -1 additional costs -,;~1,.99 ,ilc, . 1- 3-, . 1,,091,..5 .~,,",392 w "1 ““1 7“)“ .— r vvr ‘ 3 o LOu-,1 PEEK-“3214.. v'disttv of added costs ;,:JU,931 I J;30,1j§ 39,2 } LID 51,1?7,350 iw,130,,9 r.\1A _' '\ g. UIIICPEHCE (c-i) onrc.vm "r'"u an ”w: rnEsEn1 VALsL or .La ,..,- "‘ 1"‘1"" \: - -~N'—‘ *- Ll‘si L9; 154‘») uiif‘AV‘J; i4; wrist" *‘. ':"'1‘ i' '2‘ 251‘ 9' w 1 Ir 1 '7 1'" Q ’ c ~ NEI wvniH -$~3,.31 -394,-2s :15,9,1 2,,17,,(2 1,5 ,,:g4 2205 APPENDIX TABLE 5.-—Present value calculations for trial-andoerror determination of the internal rate of return on the investment in Pasture Program I carried out without fertilization and hiring contractor services. Present Value m$n. m$n. Amount m$n. Pvf.(l) Item Present Value of the expected change in Net Worth over 5 years at 5% I. Returns Expected additional returns per year 986,309 9.32998 2,105,855 Estimated salvage value 1,993,000 .78353 1,130,639 Total present value of expected additional returns 3,236,989 II. Costs Reduction in cash balance ,9 (initial cost) 2,699,007 2,990,587 Expected (operating) cost . increases per year 116,139 9.32998 506,133 Total present value of expected additional costs 3 200 820 _4___a___ Present Value of expected ‘ .. ‘ 13-. ., .1 cnange in Jet noxtn 35,669 Present Value of the expected cnanre in Net North over 5 years at 5.5% 1. Returns Expected additional returns er year 906 3‘) 9.279 3 .11 C 2,‘77,06O Estimated salvage value 1,993,90d .70513 1,109,083 Total present value of expected additional returns 3,181,193 II. Costs Reduction in cash balance (initial cost) 2," C\ \C J: 2 O'\ O: \1 2,699,687 Expected (operating) cost increases per year 116,909 9.27028 999,213 Total present value of expected additional costs Present Value of expected change in Net Worth -12,757 ’3‘ F INTERNAL RATE OF RETURN 5% + W (5.5% - 5%) = 5.37% ’ an. (1) Present Value Factor APPENDIX TAELE of the 2063 ”.—-Iiwa;ent value calculations internal rate of return on the investment in Pasture Program II carried for trial—and—error determination out without fertilization and hiring contractor services. Amount Itenl o. {7:011 . Value m$n. Present Pvf.(1) ._ nth. Present Value of the expected CHEN”: Net Worth ver 5 at 63 g years I. Returns Expected additional returns per year 991,323 9.21“3o 9,197,090 Estimated salvage value j,;1t,u)0 .79736 3,179,010 Total present value of expected additional returns 6,376,050 II. Costs Reduction in cash talavse (initial cost) ,,4[P,;7- 5,519,375 Expected (operating) cost increases per year 31;,Qé, 9.21235 ”11,12 ‘ .31 v costs Total present value expected additional of exphcted VT _ wort/{l Present Value change in Net Present Value of tn (D (D x. '11 (D ('J ('Y‘ (I , I , i Y 1 W t—J ‘1'. ‘ ../‘_y ?‘\ r,‘y a, ._ . "1" Axet o’~'~.l-.bo'£ V581 ) “Iret'iz s) INTERNAL RATE Returns "v..- a ,. t ',.,.,.i , “a, . LAyCCted 11.191614.de -‘L turn... 7* -.r 37:. hp 'r t h’e P J L “I" 4' ,1 A. , j _ Yr .2 ., 1. , . . ,. . .. ' o . o, ’\ 33111171313811 sillV‘as’e Villa? 9 ) 1115', 4'51} Total present value ...... 6" .,‘°..!/,.,,, — ..Aa. expected additional return“ xpected (operating) cost ncreases per year of Total present value e costs xpected additional sent Value of expected in Net Worth 0P RETURN a: + ,_, x or“. a. P... - w ,- 4.) .;~-~ ' .wl ;j.11 .,1,._ -,1.,,-l 1 '7' 3 , 3 I“ I 1:; 2’72: ), 8A,‘4’J( ./ l '_ ' ”7 3'; »’ 4.13525 uu2,-93 (l) 207 "\""" """ " " ‘r‘ H‘s ... .. "' .. ..»‘ A.» ;« :,—,7,-. q ' I <' :‘.PP:;..UI.& law“; (.-—-;~1~:.~.ern_ Weill“? 1,;zlx. .1l:t-.Jno I nation or trial—and—error dete‘mi of tne internal rate of return on tne inwestme t in Pasture Program III crrried out withoit fertilization and hiring contractor services. gwgung , fl .7. {resent Value vi. ) ‘ gym. ,‘_I ,"r ‘A. IIJI. acn. min. l' . L. . ., A a £1}: U -.4.I':l.'.) .~ 7 , 9 . , » ‘ LukLkulr l J. Illa»- Il.l . MI in! . I - m H" ' , r—v ' e ..' ‘- ' v . -'. 1 ‘L4 \ “4T; ifft,it.~’ll «ll. .’ :,“_ ‘JLL LME. 1,! l ,L'o u . ; e 93 J31‘J‘ [. ,’} l'i .. v -L:‘T 3.1.1 L i" ‘J'LC ‘ L, « ‘ a}? .,, ,_ .. ,, :L: .. ... , . 1, ‘ 7, ')09 9243ch g, :51 .; 1 1‘.» l ‘lYlAii I‘fi‘l. 4-’.’.:: r. , jDC ,1; nut.) IT 3‘, _‘ . -l. ‘ct . tn heino‘ w' ‘u :1: Lt‘l ' x . w | -r- ( if .. ’ ‘ .— i. l‘ l 1 A . KLlllL- 11 k.“ ,r’ «L 5’ y, *4 , 471i ,f, — f- ‘ Y . I A ._J. .49 V .l; . H I. f f Y I“ *4 F" :7 ,3. 1: "I . .rrsent xiii, c: ’irc‘il: g . 'r ,., rh ")Fw CH‘L'“ :I. ..“I 4‘. ” l ".J‘i,c 'l ' '+;~‘_.r1‘! ‘ ll‘r—k ?' ‘ H H v.- -” 1‘ . ".I ‘.‘ 1'" :0“ " "T ‘r‘ '1' .2“ v 4791’“ ft l..,.- ‘A\1 .(1 _\- J. cf; ..* - .. A \JA.-.~ln, 4.. a- ‘- Ivy; .A ‘- v A ,' t1 4 n.) ’j [‘3' v ‘ l. . .T. 1’ A It ..; '. ' , ‘ I, . KLV‘ “ L ( x,, i ll 4, .\ _ J ,, "...: . r, v i 1' y . i .' I < ‘ s L v i. 3 , ' ‘oé . .1. 3 J 31% . . ‘ 7 ,1. I ._7 . P , - , 1,1 L I- . k, , ) 1' u , l» I /‘ ,,l l ) l ‘ . J ‘V _ . ‘ A ‘ _ . g l‘ . c v i ‘ n A ‘i.’ ,‘ ‘i 1).} A 1 li.‘l‘.xi.l .9 , l..l.u l.,L,_},.luJ . ‘ ‘ ll. ‘_‘ _ “_ F’ ’ .1 ’ ‘ . L li‘ - . ll. ‘ . L i it I \ ‘ l 1" Fr ‘ m. H w. 1' .< _ lww ' - .L .—_~—- ’ J. ,} A .1, _," ,l .. .7 w ; . .tzei*~1 surerwt- r‘ on 1 ' — "' ‘ , .f "7" ‘ r ‘ _ J- bl I._. i ' l} .4: ' A . L‘ l y | t f I i‘ '1 v ‘ -I ‘) ~b ~ ’ a A I \/ " , ‘J I , ‘l l l(l l fa” .* [:7 "Clue Jl ' . . - an -. , _' 1 v—- r ‘ IA” ’1, I“: '— 2 .111] 1.1... , 1e 2“) iii-V , X. . —¢‘ — , k {2" l'i'lT \ -14.?» ' . ' ‘tl‘: .K" -1 , . _ - a ll) Ereeent Value :actor 2053 APPENDIX TABLE 8.--Present value calculations for trial—and-error determination of the internal rate of return on the investment in Pasture Program IV carried out without fertilization and hiring contractor services. Present Value m$n. m$n. Amount m$n. Pvf.(l) Item Present Value of the expected change in Net Worth over 5 years at 6.5% 1. Returns Expected additional returns per year 3,097,789 9.15568 12,873,358 Estimated salvage value 8,197,000 .72988 5,982,826 Total present value of expected additional returns 18,856,080 II. Costs Reduction in cash balance (initial cost) 15,752,12 15,752,125 \J'V Expected (operating) cost increases per year £82,837 9.15568 2,835,990 Total present value of expected additional costs 18,588,115 Present Value of expected change in Net worth 267,965 Present Value of the expected change in Net Worth over 5 years at 7% I. Returns Expected additional returns per year 3,0;7,7u9 H.10020 12,701,390 Estimated salvage value 8,1‘7,J03 .71298 5,83u,297 Total present value of expected additional returns 18,5U5,687 II. Costs Reduction in cash balance (initial cost) 15,752, 25 15,752,125 Expected (operating) cost increases per year 682,437_ 4.10020 2,798,128 Total present value of expected additional costs 18,550,253 Present value of expected change in Net Worth —u,566 5g + m$n. 267,965 INTERNAL RATE OF RETURN 6. m$n. 272,531 (7% - 6.5%) = 6.99% (1) Present Value Factor 209 APPENDIX TABLE 9.——Present value calculations of the internal rate of return on the investment in Pasture Program V carried out without fertilization and hiring contractor services. Item Amount m$n. for trial-and-error determination Pvf.(1) Present Value m$n, m$n. Present Value of the expected change in Net Worth over 5 years at 5‘5. I. Returns Expected additional returns . ‘ per year 3,78o,937 4.32998 16,395,968 Estimated salvage value 11,0 7,030 .78353 8,6U7,821 Total present value of expected additional returns 25,0U3,289 II. Costs Reduction in cash balance (initial cost) 21 U7J,500 21,070,500 Expected (operating) cost increases per year 3s1,tuu 4.373H8 3,687,176 Total present value of expected additional costs 2U,757,676 Present Value of expected change in Net Worth 285,613 Present Value of the expitte: chli;; in Iet North over 5 years at 5.5% I. Returns Expected additional returns per year 3,7:t,337 %.:7358 1t,l71,2ol Estimated salvage value 11 037,303 .7eil3 8,A&U,740 Total present value of . expected additional returns 23,616,021 II. Costs Reduction in cash balance (initi'l “ost) 21,070,500 21,070,500 Expected (operating) cost increases per "ear 851,5uu H.27025 3,636,758 Total present value of expected additional costs 29,707,258 Present Value of expected change in Net Worth -91,237 A. er: '.'~ ‘ WV“ .\. ,' fin '1 "‘1' ' V71 v-‘r-,' mC‘Il. ,3 DJ. ,— —,74 Iblfl LI‘JAL RATE. CF RLFJIU-l ‘3}: x :38)nr3 5.37: '- [QT/a) : 5.38% mtn. (0,050 (1) Present Value Factor 210 APPENDIX TABLE 10.——Present value calculations for trial—and-error determination of the internal rate of return on the investment in Pasture Program I carried out with fertilization and hiring contractor services. Present Value m$n. m$n. Amount min. Pvf.(l) Present Value of the expected change in Net Worth over 10 years at 7% Expected additional returns per year 1,057,utu 7.0335c 7,637,890 Estimated salvage value “,396,000 .50835 2,21D,373 f Total present value of , expected additional returns 9,852,263 i 11. Costs L Reduction in cash taiance (initial cost) 0,210,337 b,2c0,937 Expected {operating} cost ‘ increases per year $98,t11 7.t33;8 3,502.315 Total present value of expected additional costs ' 9,763,252 Present Value of expeciei change in Net Harth 89,011 Present Value of the expected change in let North over 10 years at 7.5% I. neturns prectel additional return; per ,ear l,-,.,$r% s.3 was 7,0uU,QUO Estimate‘ salvage vaiue 4,350,000 .4331} 2,113,858 Total present value of expected additional returns 5,577,928 II. Costs Reduction in cash balance (initial cost) 5,200,937 0,230,937 Expected (operating) cost increases per year U98,t51 6.85008 3,422,780 Total present value of expected additional costs 9,683,717 Present Value of expected change in Net Worth —105,789 \r x _? , a,i”i\ "q m$n. 8; cg _ q _ IdPERNAL RATL OF R lend (N mEn. 199,800 (7.;N 7a) - 7.23% (1) Present Value Factor APPENDIX TABLE of the internal out rate ‘fi'i til 11.--Present value of return on 211 calculations the for trial-and-error determination investment in Pasture Program II carried fertilization and hiring contractor services. Amount m3n. Pvf.(l) Present rn$r1. Value m$n . Value of tne expect ctmnige irlliet ngrth over 10 years at 7.5% .dditional returns m x U m 1‘ (3 ft Cf (I is Estimated salvage value of 1‘8 turns Total present value expected additional 11. in cash 0051/) (operating) C X U 1: I: F—J v L. L‘ C) I: k L K ! H W 19,350,570 . . ..-“ 1*\\ Ir: ‘, rQ ., , g‘Q—x hereasts per year l,o;',~7) t. dado (,‘J3,dc3 lotai present value of expected additional costs .._ ,1“ ‘1, .- ,1 '\ ,.. ,. _. I"! stilt Value 01 expected change in Jet north ixwesern. Ekiide =3? t:na e-Jwecte.: c. r.rrz in .nEt .fiartix o.e" l;:,/ea1u3 1t 3? I. Petd“ns Expected additional turns per vear L \r " iv.’ ‘ A‘ .... vdiUU c: .... ‘¢,3"..‘,1 expected a.dltionai Costs irl twist. Ltilarrge cost) Reductign (initial (operating) cost per year Expectec increases Total expe‘ted present value of additional costs Present Value of expected crunige ill Net lkirth INTEhNAL RATE OF 3" (51' 1!l (DI ' >\ I\..44. \JJ‘.. l'tj L lll‘ll .3 Lu U k \ \O .5 ‘ f Q — 7 I “.1 {rig/I1 . [/I F) ) X) i 2 o _} {J Ix, ‘ q r 3 w I men. 3t1,:oet:91 au1121on11 soot; 21 £62 557 ‘ _ __;___1___ Present Vuiue of expected change in Net Worth 289,179 ' ‘p‘ 1 ‘7' I“ )1 up -- 'r\ Y‘ y!‘ ~ ~ ‘ " IFCon. .111e 11 -1: e-re_v-1 1 1n,~ 1“ ,, no. ' >.er ezr at 13 iv n 31‘“ 1 Lo 11:11.41111) hxpecte1 311111rn11 return P1v1 n 1 7 7 D ‘1'); ‘ r'— '1 1 v1.1: ,,’ur\,,4' J-l V114 *dgjkz/gl‘q) ' ‘ . \ 1 1 ’ \ 4' x if ’\ ' .aJJ—L;1l 4:1 ~._Lv’_l_ i-A- 11,1: ’1'-v . 11'1‘._ L,q;:,,“u .A‘xjkuii P1“ J. 9'1: 1.. A: ‘1. '3)Z§.-‘S\J‘I_.':pl '1 A 111, 1111.711 1.11191“ :1 ,2'30 ,qu 11. Lost; 9 ' 1 r .1 ‘ . 1r 7.7 “ejuov11n 1n 311L L111mgt - ... r / » n ‘ 7* .‘i‘fl '7 ~- A (In1ti11 CQ¢t) 11,;y1,,1u 11,y32,500 hxp=cte1 {operatirg1 uogt ' s. 1. _, :31: ." '1 M.,.” ' :15: 1 v” ' 1 '{J '3 3’33 (" {-1 1no1equev pr» ‘111r v,1,u44 3.7,J7o 5,1LU,3jJ 10:31 pr;1ent M11: of exnecteu 111111 1 31 co to 91 290 9?“ v . t‘ ~ . Change in Net Ntrtn "12,386 —7: (10: - 9.5%) = 9.98% 22%) APPENDIX TABLE 20.--Present value calculations for trial-and-error determination of the internal rate of return on the investment in Pasture Program I carried out with fertilization and using owned equipment. d Present Value m$n. m$n. Amount m$n. Pvf.(l) Item Present Value of the expected change in Net Worth over 5 years at 8.5% I. Returns Expected additional returns per year 1,087,M6U 6.5613U 7,13 q f\) R.) H )9 Estimated salvage value M,356,0DO .UHEBQ 1,926,615 Total present value of expected additional returns 9,061,836 11. Costs deduction in cash balance (initial cost) 5,857,187 5,857,187 Expected (operating) cost increases per year U7fl,t§l 6.5613U 3,137,153 Total present value of expected additional coota _ 9 Don 3uo Present Value of expected cnange in Net Worth 57,U96 zange in Set Worth over 10 years at 9% (a (:3 Present Value of the expecte* 1. Returns Expected additional returns per year 1,097,u5u C.U17L" 6,178,j63 Estimated salvage value 4,536,035 .41331 1,8L;,'18 Total present value of expected additional return; 8,818,981 11. Costs Reduction in cash balance +.‘. a 'r. 0 (initial c0st) 5,857,1c7 5,857,187 Expected (operating) cost increases per year “79,651 6.Ul765 3,078,232 Total present value of expected additional costs 8,935,419 Present Value of Expected Change in Net Worth -ll6,u38 ‘_ 7. _ t f '06 IVTEP‘ ' T“ “‘”'r* .F% + m:”' )7’4’ % - t = 1 thL BA E OF nbldxd 8 ) mwn. 173,93E (9, 8.5,) 8.67% (1) Present Value Factor APPENDIX TABLE of the internal rate of return on the inves 'lization and using owned £1.—-Presen o u t i L I“. “r. itii‘ t value 0 o l calculations Atariurzt . , ‘. “will . 22]. for trial—and-error determination tment in Pasture Program 11 carried equipment . Present Value m3n. m$n. the expcctcd cha ' v- 1.698 LxPLCted alezlenll returns . u‘ l ‘ ’\’ H" 1'7 “’ ' “‘ per year _,e_x,~‘l r.Ul;oi 1H,.oz,913 2‘»:.V., - A A , H L n»‘. ' 1: Ml ’ for‘ t" LUU‘A‘ont:j - xii» 1L? v :-L(!:‘ ,‘,>“?L,‘wagl . igt.“ j,J~/_/,JC3 A ,. , - ‘ . .—‘. ,1 A ‘ lOLJl (I'Cug’fl , "feline ‘.'1 t . . ., . \ n.3,“ / CXpected additionil retd“ni 17,ocd,u70 .\ , El. uUcto :edlction in ca:; Lil; :e I .‘ fl'“ ‘V V. ‘ ‘fi 17 ’\ ”\r—v. le.LtLJi LC’JL) il,;,';,:. ll,j,‘j,;/_) Expected )pE-rltlzg' cool 1 ,, ,,.,‘ . 1'. ‘ M "I; 1 :Q i": 1:1:I'eJLC‘v I‘C.I JP. :1 " ’,'/J 'JI‘ill‘I/‘ L",3\.)J"J.jt‘) iotal pretext 2; dc Y - 3 4»- . r3 PVC" n. expectel a::-tior;l colts 1;,{oglo11 , .' V ‘ .. .s ireaent value at CA}3\tUJ cwange in net worth Mo,uot Zre_e : fiiue f t «r; tr: 9 xxx- 1: . L Lori} G??? 1“ ”cars at Q.r' l. lotur: Expected 41d;t1onal return; :31 3";111‘ _,... ,H_i .i.» ' lf,;,‘,‘l,iu'j : ~ :v , x u. 1. . ‘ ‘ - ,- l j r f 1 kau‘QLJ’piLC‘Vl .1,1i'.:".v1;4:‘ ‘ 1L\(’J . ,H“‘L, It 1‘ o"- _.""u' ,i‘LP l,tii present value w: .. A. v . . 9, t x , ‘ .7 “'7 " ' , GAH’?\:L/T:"J 51-121L2lgtril I'G: Al’tiu 17,JLLJ,U1S . , _ l». v('OL:J fi‘»_":‘,-io;-37_.l-’.J.’. if; ‘1 . I, :iill ‘2‘ ' r 'r‘ a ’1'7 ”a , (initial K'J L) ll,,,-’_‘, 7> 11,3;43,7,,» prectc‘ (on rating) Jfgt ~' ,-,. . . 'r r-rj ; " e I increa.ec per Gear ‘1 ,~:‘ “-’:vt‘ \,333,“U4 \ v .r ‘ ,. V. ‘ -Utal 3,1“) cm. Vila" oi “w . > ' 1 . , . 7. ,' expected aziitioril c at» 17 643 77G ___2_____L__' Ireaent Xalue of Expected V‘r « fl . ~_‘_ v_v_ v_ «(3 / change in .aet worth 't'53,3'-)u "m“.wn- ,q. q .umna“ w fi‘h. “' '“8 I v a ~' .. m: .. "n .. .7.‘ V " t "C‘ “1‘3 _ , 1141...:‘lnhu “H1“ L); £1.41 our} l’J/p + 7‘? ‘ 3 1 g—V'Inkn K “1.3 - "’ ‘14) " 9.073) rl‘orlo 'JL-/’,:\'£_;’ (l) Present Value factor 222 APPENDlX TABLE 22.-~Present value calculations for trial—and error determination of the internal rate of return on the investment in Pasture Program 111 carried out with ferti 1i zatior and using owned equipment. ...—... === Amount 1 Present Value e r I._ }‘Jf‘ o (1 ) A It r1 man. . man. m$n. ll. {resent Value of the expected change in Net Worth over 10 years at 10% heturns Expected additional returns 9. ‘ ;, ,. ,- ' I .- («I ,. / ‘- . per year H,tafi,s{3 0.14930 28,550,502 Estimated salvaye value c,333,000 .3855“ 6,258,971 Total pre esent value of expecteda additional returns 34,829,973 Costs heduction in cash balance (Initial cost) 31,397,790 ;1,8)7, 750 Expected (oreratinxl cast increises ger 'ear 2,u09,jl; c.19ait 12,313,772 . ,-- . 1., A‘ t Value oi expected add-tional costs 3U,211,522 Present Value of expected change in Het Worth 613,951 'resen V: ut of “no expecttu cttnxc ’n 1e. Wor'n aer L "ears t a P t 11 3 t e , 3* a 1 ‘ t t or 17 J at 117 1. Eettuu1s E)tecte1 aJILtiouil retlrm per dear h,oi,,u72 .‘“)35 57,57:,3a“ Estimated salvage value 16,233,J00 .35218 5,716,938 Total present value of expected additional returns 33,096,392 11. Costs Reduction in cash balance (Initial cost) 21,697,750 21,897,750 Ex ”p M3t d (o oper.ating) cost a in nci eas es per Jear 3,009,012 5.8L923 11,802,088 Tota 1 present value of expected additional costs 33,699,838 Present Value of Expec tel Change in Net Worth ~603,996 INTERNAL RATE OF BET UEN 10% + m$n. ‘1 fién. 1,21 (11% - 10%) = 10.50% (1) Present Value Factor 2233 APPENDIX TABLE 23.--Present value calculations for trial—and-error determination of the internal rate of return on the investment in Pasture Program IV carried out with fertilization and using owned equipment. Amount m$n. Pvf.(l) Item m$n Present Value m$n. Present Value of the expected change in Net Worth over 10 years at 11% I. Returns Expected additional returns per year 7,265,337 5.88923 42,787,2A1 Estimated Salvage Value 2A,051,000 .35218 8,A70,281 Total present value of expected additional returns II. Costs Reduction in cash balance (Initial cost) 32,598,125 32,598,125 Expecting (operating) cost increases per year 3,035,079 \_,"| C1 “ CC “923 17,87u,278 Total present value of expected additional costs Present Value of expected 51,257,522 50,922,903 change in Net Worth 835,119 Present Value of the expected change in Iet Worth over 10 years at 12% I. Returns Expected additional returns per year 7,265,337 5.65022 91,050,752 Estimated salvage value 29,051,000 .32197 7,7A3,7oo Total present value of expected additional returns 98,799,952 II. Costs heduction in cash balance (Initial cost) 32,598,125 32,598,125 Expected (operating) cost increases per year 3,035,079 5.65022 17,1A8,86A Total present value of expected additional costs 99,696,989 Present Value of expected change in Net Worth -902,537 rflfi Y v- ,- ['V‘V\ /—\ r.——