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jQ.630.7 
I  I£6c 
j no. 970 
I  cop. 5 


"NlVBiSlTY  of 


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in  2011  with  funding  from 

University  of  Illinois  Urbana-Champaign 


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42nd  annual 


AfiRir.ill  TURF  LIBRARY 


SUMMARY  OF  ILLINOIS  FARM  BUSINESS  RECORDS 


PRODUCTION 
COSTS 
INCOME 
INVESTMENTS 


UNIVERSITY  OF  ILLINOIS     COLLEGE  OF  AGRICULTURE 
COOPERATIVE  EXTENSION  SERVICE 
CIRCULAR  970 


Source  of  Data 

This  report  is  based  on  data  obtained  from  farm  The  segment  of   Illinois  agriculture  that  includes 

business  records  on  6,500  Illinois  farms.   It  is  the  42nd  Economic  Class  I,  II,  and  III  farms  is  often  referred 

in  a  series  of  annual  summaries  of  such  records  ob-  to    as    "commercial    farming."     In    1964,    there    were 

tained  from  farmers  cooperating  with  the  University  68,322   farms  in  Illinois  with  more  than  $10,000  of 

of  Illinois  Cooperative  Extension  Service,  the  Depart-  product  sales.    These  farms  represented  52  percent  of 

ment  of  Agricultural  Economics,  and  the  Illinois  Farm  the  total  number  of  farms  and  produced  nearly  90  per- 

Bureau  Farm  Management  Service.  cent  of  the  products  sold  from  Illinois  farms. 

At  present  about  1  out  of  every  10  full-time  com-  Although  the  record-keeping  farms  in  this  report 

mercial   farmers    (farmers  with  $10,000  or  more  of  are  largely  within  the  first  three  economic  classes,  they 

gross  sales)  in  Illinois  is  enrolled  in  this  service.    The  are  not  proportionately  distributed  among  the  groups, 

service  has  grown  steadily,  and  in  1967  there  were  10  In   1964,  the  Census  of  Agriculture  identified  3,832 

associations  in  102  counties  served  by  42  full-time  field-  Illinois  farms  with  more  than  $60,000  in  sales.    Over 

men.     Participation    in    this    farm    business    analysis  one-third  (34  percent)  of  these  farms  were  enrolled  in 

service  is  voluntary,  and  cooperating  farmers  pay  a  fee  the  Illinois  Farm  Bureau  Farm  Management  Service, 

for  the  services  received.  Of  the  6,152  farms  that  sold  from  $40,000  to  $59,000 

The  development  since  1940  is  shown  by  the  follow-  of  products,  24  percent  participated  in  the  farm  record 

ing  figures:                                    .  program.  There  were  32,881  Economic  Class  III  farms 

Couftttcs 

Associa-      partici-       Fieldmen       Farmers  in  the  1964  Census  of  Agriculture   (farms  with  sales 

Year                             lions          pating        employed       enrolled  ranging  from  $10,000  to  $19,999).    Only  730,  or  2.2 

1945"                             8               54                9             1  830  percent,  of  these  farms  were  enrolled  in  the  record- 

195o!'.'.'.!'. '. !'. ......      8              59              15             2*760  keeping  program. 

1960"                           10             100               3$             5 '494  The  data  presented  in  this  report  are  group  aver- 

1965 10             102              39            6,366  ages  identified  by  size  of  business,  type  of  farm,  and 

1967 10               102                 42               6,635  ...        ,       -\  t        a         «-u     e             Axnf                       *       r 

'  quality  of  sou  found  on  the  farm.   Where  segments  of 

Over  98  percent  of  the  6,500  farms  in  this  report  Illinois  agriculture  are  identified  by  these  criteria,  the 

fall  within  the  size  of  business  of  Economic  Class  I,  II,  data   from  record-keeping   farms  may  be  used  with 

and  III  as  defined  in  the  1964  Census  of  Agriculture.  reasonable  confidence,  even  though  the  record-keeping 

These  three  classes  include  farms  selling  $10,000  or  farms  as  a  group  do  not  represent  a  cross-section  of  all 

more  of  farm  products  a  year.  commercial  farms  in  the  state. 


Uses  for  This  Report 


The  management  of  a  modern  commercial  farm  in- 
volves decision  making  in  the  application  of  technology, 
the  choice  of  a  proper  combination  of  crop  and  live- 
stock enterprises,  and  effective  business  administration 
of  the  farming  operations.  A  basic  farm  business 
analysis  involves  a  careful  study  of  past  performance 
to  detect  problem  areas  and  strengths  in  the  farming 
operation.  Also  involved  is  the  process  of  planning 
and  developing  future  operations  to  attain  the  full 
potential  of  the  land,  labor,  and  capital  resources  avail- 
able and  to  improve  economic  efficiency  of  the  farm 
business.  The  farm  business  summaries  contained  in 
this  report  are  used  by  individual  farmers  to  analyze 
their  business  operations  and  as  a  basis  on  which  to 
develop  plans  for  future  farming  operations.  This  re- 
port summarizes  the  information  so  that  specialists 
working  in  agricultural  extension,  research,  teaching, 
and  agribusiness  activities  may  use  the  data  to  assist 
them  in  the  effective  performance  of  their  duties. 

The  data  are  presented  in  three  sections.    In  the 


first  part  of  the  report  (Tables  1  to  3),  farm  business 
trends  and  recent  changes  in  farm  income  on  Illinois 
farms  are  summarized.  Economic  forces  and  factors 
that  contribute  to  these  changing  trends  are  identified. 
In  the  second  section,  detailed  livestock  enterprise  data 
are  presented.  These  data  (Tables  4  to  11)  provide 
comprehensive  and  detailed  information  for  use  as  re- 
source data  by  all  who  are  interested  in  livestock  pro- 
duction. Because  a  large  proportion  of  the  feed  grains 
and  roughage  produced  on  Illinois  farms  is  marketed 
through  livestock,  the  margins  of  income  from  live- 
stock enterprises  are  important  in  interpreting  the  eco- 
nomic results  of  farming  operations. 

The  third  section  (Tables  12  to  16)  reports  costs, 
returns,  financial  summaries,  investments,  land  use,  and 
crop  yields  for  different  sizes  and  types  of  farms  in 
northern  and  southern  Illinois.  The  definitions  of  terms 
and  accounting  measures  that  precede  these  tables  will 
aid  in  using  the  data. 


X?6c 


M»X 


SUMMARY  OF  ILLINOIS  FARM  BUSINESS  RECORDS,  1966 


Farm  business  trends  in  1966 

Illinois  agriculture  is  based  largely  on  crop  produc- 
tion, especially  the  corn  and  soybean  crops.  Year-to- 
year  variations  in  net  farm  income  are  related  to  vari- 
able climatic  conditions  and  their  effect  on  crop  yields. 
In  1966,  a  high  level  of  crop  production  was  attained 
in  spite  of  adverse  weather  conditions  during  the  grow- 
ing season.  Adverse  weather  was  especially  severe  in 
the  southern  half  of  Illinois,  with  high  temperatures 
and  drouth  in  July.  By  the  first  week  in  August,  51 
counties  in  central  and  southern  Illinois  were  declared 
drouth  disaster  areas.  In  1966,  average  corn  yields 
for  the  state  as  reported  by  the  Illinois  Crop  Reporting 
Service  were  80  bushels  per  acre,  14  bushels  below  the 
revised  estimate  of  94  bushels  in  1965  but  slightly 
above  the  5-year  average  yield.  Soybean  yields  in  1966 
were  27  bushels  per  acre,  2.5  bushels  below  the  1965 
yield  and  .5  bushel  below  the  5-year  average.  Winter 
wheat  yields  were  41  bushels  an  acre,  a  record  high  for 
the  state,  and  6.3  bushels  above  the  5-year  average. 

Crop  and  livestock  prices.  A  second  major  de- 
terminant of  change  in  farm  income  is  the  price  farm- 
ers receive  for  crop  and  livestock  products.  In  1966, 
market  prices  received  by  farm  account  cooperators 
for  grain  crops  were  above  the  1965  prices  for  all 
major  grain  products.  Market  prices  for  livestock 
and  livestock  products  were  generally  higher  in  1966 


than  in  1965.  Market  prices  for  hogs  averaged  $23.09, 
up  from  the  $20.68  received  in  1965.  Milk  prices  aver- 
aged $4.43  per  100  pounds  in  1966,  up  66  cents  from  a 
year  earlier.  Prices  for  eggs  were  38  cents  a  dozen, 
an  increase  of  7  cents  from  1965.  Little  change  was 
recorded  in  the  average  price  level  for  slaughter  steers 
and  heifers. 

Farm  costs  and  farm  income.  According  to  the 
Census  of  Agriculture,  the  average  Illinois  farm  in 
1964  contained  226  acres  compared  with  196  acres  per 
farm  in  1959.  The  incentive  to  operate  a  larger-sized 
farm  to  obtain  lower  costs  and  higher  earnings  is 
illustrated  in  Figure  1.  Savings  in  labor  and  machinery 
costs  amount  to  about  $10  per  acre  as  farm  size  in- 
creases from  100  to  200  acres  (Figure  1,  left  side),  $5 
from  200  to  300  acres,  and  average  $2  to  $1  per  acre 
lower  for  each  100  acres  as  farm  size  increases  beyond 
300  acres.  Most  economies  in  labor  and  machinery 
costs  per  acre  can  be  realized  when  size  of  farm 
reaches  about  400  acres. 

Figure  1  (right  side)  shows  earnings  per  acre  to 
capital  and  management  on  the  same  farms  shown  in 
the  left  side  of  the  figure.  Grain  farms,  which  rely  on 
land  resources  for  the  efficient  utilization  of  fixed  in- 
puts, approach  an  optimum  size  with  land  areas  of 
over  300  acres.  The  higher  earnings  per  acre  on  the 
smaller  hog  farms  illustrate  higher  levels  of  intensity 


DOLLARS  PER  ACRE 
1*70 


60 


50 


40 


30 


20 


LABOR    AND  MACHINERY 
COST  PER   ACRE 


CAPITAL  AND  MANAGEMENT 
EARNINGS  PER  ACRE 


HOG  FARMS 


GRAIN  FARMS 


1 


100  200  300  400  500  100  200 

ACRES  PER  FARM 


300 


400 


500 


600 


Labor  and  machinery  cost  (left)  and  capital  management  earnings  (right)  by  size  of  farm,  grain  and  hog  farms  in 
northern  Illinois,  1964-1966.  (Fig.  1) 


in  the  use  of  capital  and  labor  in  the  business  on  the 
smaller  hog  farms.  The  productivity  of  the  added 
labor  and  capital  associated  with  land  on  hog  farms 
tends  to  offset  the  diseconomies  that  are  related  to  size 
of  business  measured  in  acres.  The  160-  and  220-acre 
hog  farms  had  $45  more  capital  invested  per  acre  and 
fed  about  $85  more  feed  per  acre  than  the  grain  farms. 
The  higher  rate  of  earnings  on  300-acre  hog  farms 
as  compared  with  220-acre  farms  is  a  consistent  phe- 
nomenon that  has  been  observed  for  many  years  and 
has  never  been  clearly  explained.  It  is  believed  that 
there  are  more  above-average  hog  producers  in  the  300- 
acre  size  than  in  the  220-acre  size,  and  more  of  these 
farms  may  be  committed  to  a  hog  program  with  two 
men  rather  than  stretching  the  labor  available  from  one 
man.  These  facts,  when  combined  with  the  size  effi- 
ciencies in  crop  production,  are  likely  to  result  in  a 
farm  business  operated  at  a  higher  level  of  efficiency. 

Income  changes  on  Illinois  farms 

Comparative  costs  and  returns  between  years  and 
among  major  types  of  farming  in  northern  and  south- 
ern Illinois  are  reported  in  Tables  1  to  3.   The  separa- 


tion of  farms  into  northern  and  southern  Illinois  is 
based  on  soil-type  regions,  and  divides  the  state  ap- 
proximately on  an  east-west  line  from  Mattoon  to 
Jacksonville.  The  sample  of  farms  ranged  between  260 
and  339  acres  in  size,  and  averaged  about  300  acres. 
Labor  used  on  farms  of  this  size  averaged  15  months 
on  grain  farms,  17  months  on  hog  and  beef  farms,  and 
22  months  on  dairy  farms.  The  data  in  these  tables 
are  presented  as  if  the  farms  were  all  owner-operated. 
Landlord  and  tenant  shares  of  the  business  were  com- 
bined where  farms  were  leased. 

Size  of  farm,  type  of  farm,  quality  of  soil,  and 
managerial  inputs  were  held  reasonably  constant  over 
time  by  the  sampling  procedure  used  in  selecting  farms 
within  each  type  of  farm.  Variations  between  1965, 
1966,  and  the  10-year  average  are  due  to  changes  in 
farm  prices  and  costs,  weather,  and  internal  farming 
adjustments  made  within  each  system  of  farming.  The 
data  in  these  tables  are  particularly  helpful  for  evalu- 
ating changes  in  farm  costs  and  returns  within  a 
particular  size  and  type  of  farm,  and  in  making  com- 
parisons between  types  of  farming.  The  data  do  not 
reflect  over-all  farming  adjustments  resulting  from 
farm  enlargement  or  major  changes  in  resource  use. 


Table  1.  —  Average  Selected  Total  Farm  Items  on  260-339  Acre  Northern  Illinois  Grain,  Hog,  and  Dairy  Farms 


Grain  farms 

Items  1Q 57-66 

1966  1965  iy5/  00 
average 

Number  of  farms 119  166  151 

Total  acres 304  305  302 

Soil-productivity  rating 78  81  80 

Total  cash  sales £34,513  £34,303  £28,446 

Less  purchased  feed  and  livestock ..  .       4,578  4,347  4,008 

Net  cash  sales 29,935  29,956  24,438 

Inventory  change 3,610  2,660  1,299 

Farm  products  consumed 116  114  138 

Value  of  farm  production 33,661  32,730  25,875 

Cash  operating  expenses £12,401  £11,900  £9,698 

Annual  depreciation 3,834  3,882  3,364 

Farm  and  family  earnings 17,426  16,948  12,813 

Unpaid  labor  charge 3,797  3,117  2,864 

Returns  to  capital  and  management ..  .      13,629  13,831  9,949 

Interest  charge  on  capital 8,925  8,184  7,185 

Management  returns 4,704  5,647  2,764 

Total  cash  income* £34,690  £34,517  £28,659 

Total  cash  expenditures" 21,882  20,981  17,352 

Cash  balance 12,808  13,536  11,307 

FARM  INVESTMENT 

Livestock  inventory 5,070  4,894  4,746 

Grain  inventory 15,808  14,863  13,067 

Remaining  capital  cost  in: 

Machinery 9,348  8,682  7,160 

Buildings  and  fence 12,107  14,270  13,039 

Soil  fertility 92  124  347 

Auto 854  791  805 

Value  of  land  (current  basis) 158,209  150,080  129,578 

Total  farm  investment 201,488  193,704  168,742 

a  Includes  sales  or  purchases  of  capital  items. 


Hog  farms 


1966 


1965 


1957-66 
average 


78 


94 


96 


300 

74 

£62,164 
19,048 

43,116 

1,259 

211 

44,586 

£16,237 

5,724 

22,625 

4,183 

18,442 

9,830 

8,612 

£62,478 
45,026 


11,198 

20,216 

57 

832 

141,126 


299 

75 

£56,175 
17,211 

38,964 

7,898 

229 

47,091 

£14,681 

4,992 

27,418 

3,382 
24,036 

8,161 
15,875 

£56,447 
39,536 


298 

75 

£44,817 
15,879 

28,938 

1,673 

253 

30,864 

£11,944 

4,201 

14,719 

3,103 

11,616 

7,221 

4,395 

£45,007 
33,211 


17,452   16,911   11,796 

21,632   16,363   16,064 
15,811   14,204   12,520 


9,592 

19,704 

68 

794 

128,128 


8,200 

15,879 

352 

767 

111,553 


210,872  188,853  165,335 


Dairy  farms 

1966 

1965 

1957-66 
average 

15 

20 

22 

297 
69 

£46,603 
8,732 

37,871 

4,175 

307 

42,353 

£16,115 
6,302 

19,936 

4,530 
15,406 
10,095 

5,311 

£46,608 
32,657 


291 
70 

£39,426 
5,910 

33,516 

2,589 

319 

36,424 

£16,235 

5,845 

14,344 

4,019 

10,325 

8,100 

2,225 

£39,696 
29,348 


293 
71 

£34,366 
6,138 

28,228 
936 
337 

29,501 

£12,737 

5,066 

11,698 

3,733 

7,965 

7,289 

676 

£34,672 
21,358 


13,951   10,348   13,314 

18,419   18,088   15,402 
13,014   11,054   10,068 


13,399 

35,187 

4 

706 

131,288 


12,608 

26,226 

12 

781 

116,533 


10,800 

24,615 

234 

869 

102,733 


212,017  185,302  164,721 


The  farm  and  family  earnings  measure  includes  re- 
turns to  the  farm  family  for  all  unpaid  labor,  interest 
on  invested  capital,  and  managerial  inputs  used  in 
farming.  Changes  in  value  of  farm  inventories  and 
value  of  farm  products  consumed  are  included  as  in- 
come. Farm  and  family  earnings  are  calculated  by 
accounting  methods  that  are  generally  comparable  to 
the  accrual  method  of  calculating  taxable  farm  income 
for  the  federal  income  tax.  Important  differences  in 
accrual  income  tax  accounting  methods  are  the  pro- 
vision for  capital  gains  on  livestock  sales,  and  the  in- 
clusion of  interest  paid  as  a  farm  expense. 

The  cash  balance  figure  is  the  amount  taken  out  of 
the  farm  business  to  pay  for  living  costs,  income  and 
social  security  taxes,  interest,  and  debt  repayment,  and 
to  add  to  savings.  Purchases  of  new  capital  invest- 
ments for  the  farm  business  have  been  included  with 
total  cash  expenditures.  Although  the  cash  balance 
figure  reflects  the  cash  position  of  the  farm  business,  it 
is  influenced  by  purchase  and  sale  transactions  of  feed 
and  livestock,  and  changes  in  liabilities  and  borrowed 
funds. 

The  investment  per  farm  is  for  January  1  of  each 
year.  Physical  quantities  of  grain  and  livestock  are 
valued  at  farm  market  prices.  Machinery,  buildings, 
soil  fertility,  and  auto  are  valued  at  remaining  capital 
cost;  that  is,  original  cost  less  depreciation  charged  to 
date.  Land  is  priced  at  current  values.  A  basic  value 
is  established  for  each  farm,  based  on  a  soil  produc- 
tivity rating,  and  is  adjusted  to  a  current  value  each 
year  by  using  an  index  of  land  prices  in  Illinois. 

Northern  Illinois  Farms 

Grain  farms.  Farm  and  family  earnings  on  north- 
ern Illinois  300-acre  grain  farms  in  1966  were  $17,426 
compared  with  $16,948  in  1965.  Most  of  the  increase 
in  net  income  on  grain  farms  was  reflected  in  a  greater 
quantity  of  farm  grains  on  inventory  at  the  end  of  the 
year.  This  is  the  second  consecutive  year  of  increase 
in  inventory  values.  While  crop  yields  were  down  15 
percent,  this  was  offset  by  higher  inventory  prices  for 
corn  and  soybeans  and  a  4-percent  increase  in  acreage 
of  row  crops  grown.  Cash  operating  expenses  in- 
creased by  $501  per  farm.  Investment  in  new  capital 
items  exceeded  the  depreciation  charged  against  capital 
investment  by  more  than  $1,000  per  farm  in  1966.  With 
favorable  net  farm  incomes  in  1966,  farmers  added  to 
their  investment  in  machinery  and  received  above- 
average  returns  on  their  investments. 

Hog  farms.  Even  though  farm  and  family  earn- 
ings on  300-acre  northern  Illinois  hog  farms  dropped 
nearly  $5,000  in  1966  from  1965rthey  were  still  the 
second  highest  on  record.    In  1966,  the  earnings  were 


$22,625,  compared  with  $27,418  in  1965  and  with  a 
ten-year  average   (1957-1966)   of  $14,719. 

Lower  livestock  inventory  values  at  the  end  of  the 
year  and  higher  cash  operating  expenses  and  annual 
depreciation  in  1966  more  than  offset  the  higher  cash 
sales  from  livestock  and  grain. 

The  total  weight  of  pork  produced  per  farm  in  1966 
was  up  10,350  pounds  or  6.3  percent  (about  6  litters) 
above  the  1965  weight.  Hog  farms  have  become  more 
specialized  in  recent  years.  The  increase  in  total  pounds 
of  pork  produced  contributed  to  larger  market  supplies 
and  lower  hog  prices  near  the  end  of  1966. 

Dairy  farms.  Farm  and  family  earnings  on  300- 
acre  northern  Illinois  dairy  farms  in  1966  were  $19,936, 
or  $5,592  above  net  earnings  in  1965.  Most  of  this  in- 
crease resulted  from  a  660  per  cwt.  higher  average 
milk  price  for  the  year.  The  ten-year  average  manage- 
ment return  for  dairy  farms  has  consistently  been 
below  other  types  of  farms.  In  1966,  the  return  of 
$5,311  was  double  of  that  in  1965  and  is  more  compa- 
rable to  returns  from  other  types  of  farms  in  northern 
Illinois. 


Table  2.  —  Average  Selected  Total  Farm  Items 
on  260-339  Acre  Northern  Illinois  Beef  Farms 


Items 


1966 


1965 


1957-66 
average 


Number  of  farms 43                 52 

Total  acres... 301               301 

Soil-productivity  rating 76                 76 

Total  cash  sales #80,022       #70,914 

Less  purchased  feed  and 

livestock 42,733         34,223 

Net  cash  sales #37,289       #36,691 

Inventory  change 3,683           6,158 

Farm  products  consumed 437               263 

Value  of  farm  production 41,409         43,112 

Cash  operating  expenses 16,515         15,550 

Annual  depreciation 5,934           5,837 

Farm  and  family  earnings 18,960         21,725 

Unpaid  labor  charge 4,162           3,447 

Returns  to  capital  and 

management 14,798         18,278 

Interest  charge  on  capital 11,519           9,318 

Management  returns 3,279           8,960 

Total  cash  income0 #80,275       #71,151 

Total  cash  expenditures8 67,080         59,694 

Cash  balance 13,195         11,457 

FARM  INVESTMENT 

Livestock  inventory #33,481 

Grain  inventory 17,694 

Remaining  capital  cost  in: 

Machinery 13,521 

Buildings  and  fence 26,455 

Soil  fertility 131 

Auto 726 

Value  of  land  (current  basis) .  .  .  149,967 

Total  farm  investment 241,975       213,015 

a  Includes  sales  or  purchases  of  capital  items.  • 


59 


300 

78 

#64,680 

35,991 

#28,689 

2,108 

310 

31,107 

12,413 
4,977 

13,716 
3,104 

10,613 
8,902 
1,711 

#64,860 
54,002 
10,858 


#28,814 

#30 

,993 

16 

,141 

15 

,249 

10 

,192 

9 

,545 

23 

,543 

22 

,317 

179 

388 

788 

846 

133: 

,358 

121 

,070 

200,408 


The  number  of  dairy  farms  has  been  declining 
rapidly  in  Illinois,  but  the  average  number  of  dairy 
cows  per  farm  in  this  sample  was  50.7  in  1966  com- 
pared with  50.8  in  1965. 

Beef  farms.  Farm  and  family  earnings  on  300- 
acre  northern  Illinois  beef  farms  in  1966  averaged 
$18,960,  a  drop  of  $2,765  from  1965.  Livestock  and 
grain  sales  increased  $598  in  1966  over  1965,  but  cash 
operating  expenses  increased  $965.  This,  combined 
with  a  $2,475  decrease  in  inventory  values  of  grain 
and  livestock  during  1966,  resulted  in  the  lower  net 
farm  income. 

Beef  farms  had  substantial  increases  in  building 
and  machinery  investments  in  1965  and  again  in  1966. 
Labor  and  interest  costs  also  increased  $1,458  in  1966 
over  1965.  This  combination  of  higher  costs  and  5- 
percent-lower  crop  yields  and  lower  end-of-year  live- 
stock prices  contributed  to  the  lower  net  earnings  on 
these  farms.  If  it  were  not  for  the  very  high  hog  prices 
to  offset  some  of  these  factors,  earnings  on  beef  farms 
would  have  been  even  lower  in  1966. 


Southern  Illinois  Farms 

Grain  farms.  Farm  and  family  earnings  on  south- 
ern Illinois  300-acre  grain  farms  averaged  $12,651  in 
1966,  which  was  about  the  same  as  the  1965  earnings. 
This  is  the  highest  net  income  for  grain  farms  on 
record.  It  takes  a  higher  income  today  to  provide 
interest  returns  on  larger  investments.  Grain  sales 
were  up  enough  to  cover  the  increase  in  cash  operating 
expenses  and  lower  inventories  at  the  end  of  the  year. 
Corn  yields  were  down  10  to  15  bushels  per  acre  but 
this  was  offset  by  more  acres  of  row  crops  and  higher 
grain  prices. 

Hog  farms.  Farm  and  family  earnings  on  south- 
ern Illinois  300-acre  hog  farms  averaged  $17,208,  the 
second  highest  hog  farm  income  on  record  and  nearly 
two  and  a  half  times  the  1964  earnings  of  $7,182,  and 
$7,165  above  the  1957-1966  average  of  $10,043.  As  in 
northern  Illinois,  higher  grain  and  hog  prices  and  more 
hogs  and  more  acres  of  row  crops  offset  most  of  the 
higher  costs  and  lower  corn  yields.    The  lower  hog 


Table  3.  —  Average  Selected  Total  Farm  Items  on  260-339  Acre  Southern  Illinois  Grain,  Hog,  and  Dairy  Farms 


Grain  farms 

Items  10S7-(Sfi 

1966  1965  iyi/  00 
average 

Number  of  farms 41  57  48 

Total  acres 304  300  300 

Soil-productivity  rating 36  35  34 

Total  cash  sales £27,920  £25,495  £21,144 

Less  purchased  feed  and  livestock.  .  .       3,337  3,065  3,052 

Net  cash  sales £24,583  £22,430  £18,092 

Inventory  change 1,305  2,700  810 

Farm  products  consumed 122  153  168 

Value  of  farm  production 26,010  25,283  19,070 

Cash  operating  expenses 9,872  9,376  7,510 

Annual  depreciation 3,487  3,405  2,973 

Farm  and  family  earnings 12,651  12,502  8,587 

Unpaid  labor  charge 3,626  3,042  2,775 

Returns  to  capital  and  management ..  .       9,025  9,460  5,812 

Interest  charge  on  capital 4,475  3,581  3,208 

Management  returns 4,550  5,879  2,604 

Total  cash  income* £28,312  £25,672  £21,304 

Total  cash  expenditures" 17,592  17,182  14,212 

Cash  balance 10,720  8,490  7,092 

FARM  INVESTMENT 

Livestock  inventory 5,074  3,922  3,848 

Grain  inventory 8,417  7,093  6,426 

Remaining  capital  cost  in: 

Machinery 10,466  9,031  7,210 

Buildings  and  fence 6,591  5,726  5,904 

Soil  fertility 186  227  534 

Auto 715  658  608 

Value  of  land  (current  basis) 64,703  56,205  48, 740 

Total  farm  investment 96,152  82,862  73,270 

a  Includes  sales  or  purchases  of  capital  items. 


Hog  farms 


1966 


1965 


1957-66 
average 


31 


47 


38 


293 
32 

£46,639 
17,272 

£29,367 

3,994 

216 

33,577 

11,912 

4,457 

17,208 

3,694 

13,514 

4,665 

8,849 

£46,669 
36,590 


14,322 
9,502 

9,040 

9,112 

121 

894 

52,138 


295 
31 

£40,342 
13,807 

£26,535 

6,943 

201 

33,679 

10,974 

3,534 

19,171 

3,215 
15,956 

3,590 
12,366 

£40,410 
30,499 


296 
33 

£32,357 
11,875 

£20,482 

1,662 

257 

22,401 

9,196 

3,162 

10,043 

2,954 
7,089 
3,429 
3,660 

£32,466 
25,545 


10,079    9,911    6,921 


9,977   10,182 
7,007    7,138 


7,916 

8,004 

262 

602 

47,532 


6,754 

7,366 

479 

674 

43,920 


95,129   81,300   76,513 


Dairy  farms 

1966 

1965 

1957-66 
average 

23 

23 

27 

311 
30 

£36,378 
6,418 

£29,960 

3,287 

297 

33,544 

14,253 

5,123 

14,168 

4,418 
9,750 
5,103 
4,647 

£36,610 
29,169 


12,781 

13,651 

246 

776 

56,340 


297 
26 

£29,420 
6,119 

£23,301 

2,744 

375 

26,420 

11,454 

3,995 

10,971 

3,576 
7,395 
3,740 
3,655 

£29,444 
24,140 


297 
29 

£26,244 
4,934 

£21,310 

1,170 

350 

22,830 

9,785 
3,870 
9,175 

3,442 
5,733 
3,559 
2,174 

£26,339 
19,820 


7,441        5,304        6,519 


12,192   11,014 
7,837    5,601 


9,913 
11,296 

253 

847 

44,845 


9,533 
6,133 

9,372 

10,761 

474 

711 

41,546 


103,823   83,769   78,530 


prices  anticipated  in  1967  due  to  increased  supplies 
were  reflected  in  lower  inventory  prices  at  the  end  of 
the  year.  With  favorable  net  farm  incomes  in  1966, 
farmers  added  an  additional  $3,872  to  investments  in 
capital  items  above  the  annual  depreciation  charges. 

Dairy  farms.  Farm  and  family  earnings  on  300- 
acre  southern  Illinois  dairy  farms  in  1966  were  $14,168, 
an  increase  of  $3,197  over  1965.  The  1957-1966  aver- 
age earnings  on  southern  Illinois  dairy  farms  were 
$9,175  compared  with  the  $14,168  in  1966.  Total  value 


of  grain  and  livestock  inventories  continued  to  in- 
crease on  dairy  farms.  These  increases  resulted  from 
an  increase  in  average  number  of  cows  from  40.7  to 
42.8,  increased  prices  of  grain,  and  more  acres  of  row 
crops  which  offset  the  effect  of  15-percent-lower  corn 
yields. 

Over  the  ten-year  period  (1957-1966)  livestock 
systems  of  farming  in  southern  Illinois  have  averaged 
greater  net  farm  incomes  than  grain  farms.  Hog  and 
dairy  farms  have  had  similar  income  levels  of  $10,043 
to  $9,175  per  farm  for  the  ten-year  period. 


LIVESTOCK  ENTERPRISES 


Table  4  shows  the  returns  per  $100  feed  fed  to 
various  livestock  enterprises,  and  the  price  of  corn 
during  each  of  the  past  15  years.  Fifteen-year  (1952- 
1966)  averages  are  also  shown.  The  difference  between 
the  average  return  figure  and  $100  feed  cost  represents 
the  margin  available  to  pay  cash  expenses  other  than 
feed,  labor,  depreciation  on  equipment,  and  interest  on 
investment,  and  also  to  provide  for  profit. 

The  margin  needed  to  cover  non-feed  costs  varies 
with  the  kind  of  livestock  and  depends  on  the  propor- 
tion of  total  production  costs  represented  by  feed.  The 
15-year  averages  represent  the  approximate  level  of 
returns  at  which  farmers  have  been  willing  to  maintain 
livestock  production.  This  average  may  not  represent 
break-even  returns  on  all  farms  because  some  farmers 
may  discount  market  prices  for  some  resources  used  in 
producing  livestock.  If  a  farmer  already  has  facilities 
for  livestock,  he  need  only  cover  operating  costs  to 
continue  production.    However,  when  he  views  live- 


Table  4.  —  Returns  per  $100  Feed  Fed 
to  Different  Classes  of  Livestock 


Beef    Dairy    Feeder  Native  F    d  p     •    Yearly 

Year       cow      cow      cattle     sheep         .  Hogs  price 

herds  herds    bought   raised      ^^s  r^     of  corn 


1952 

99 

175 

86 

67 

116 

116 

51.65 

1953 

64 

147 

81 

84 

178 

148 

1.44 

1954 

95 

141 

126 

97 

154 

104 

1.46 

1955 

94 

168 

106 

103 

95 

109 

142 

1.28 

1956 

103 

177 

117 

137 

129 

142 

133 

1.30 

1957 

134 

189 

143 

138 

149 

172 

136 

1.15 

1958 

162 

199 

144 

98 

144 

180 

142 

1.10 

1959 

147 

191 

112 

102 

92 

114 

123 

1.10 

1960 

129 

200 

117 

108 

143 

164 

157 

1.03 

1961 

139 

196 

116 

110 

132 

164 

150 

1.01 

1962 

149 

190 

148 

126 

129 

159 

144 

.98 

1963 

117 

171 

88 

126 

108 

131 

141 

1.11 

1964 

107 

174 

112 

124 

122 

142 

141 

1.12 

1965 

127 

174 

151 

143 

176 

210 

143 

1.15 

1966 

132 

190 

117 

129 

140 

178 

168 

1.23 

1952-66 

aver. 

120 

179 

118 

113 

130a 

154 

139 

1.21 

0  Twelve-year  average. 


stock  production  as  a  new  or  long-run  enterprise,  he 
hopes  to  cover  all  costs  —  fixed  and  variable  —  or  he 
may  not  undertake  the  enterprise. 

As  individual  farmers  try  to  increase  profits,  they 
tend  to  curtail  livestock  production  when  returns  per 
$100  of  feed  fed  are  below  the  15-year  average,  and  to 
increase  production  when  returns  are  above  average. 
This  tendency  on  the  part  of  producers  causes  supplies 
of  livestock  products  to  fluctuate. 

The  hog  enterprise  is  the  best  illustration.  Since 
1953  the  pattern  of  hog  returns  has  been  to  exceed  the 
15-year  average  for  two  to  three  years,  and  then  to  fall 
below  for  one  to  two  years.  This  pattern  is  referred  to 
as  the  hog  cycle  and  is  related  to  the  supply  and 
demand  for  pork.  Higher  feed  prices  and  lower  selling 
prices  for  hogs  indicate  that  returns  for  1967  may  be 
near  the  long-run  average. 

Feeder  cattle  returns  were  below  the  15-year  aver- 
age in  six  of  the  past  eight  years.  Except  for  1962  and 
1965,  the  average  cattle  feeder  has  had  to  justify  any 
profits  on  the  basis  that  some  of  his  feed,  buildings,  or 
labor  had  no  alternative  uses. 

Feeder  cattle  returns  vary  greatly  from  year  to 
year.  Long-run  average  returns  shown  here  indicate 
the  cattle  feeding  business  is  very  competitive.  Above- 
average  skills  are  needed  in  buying,  selling,  and  feed- 
ing to  meet  competition  of  other  uses  for  time  and 
money  on  farms  feeding  cattle.  It  is  more  difficult  to 
identify  cyclic  income  movements  over  a  15-year  period 
in  the  beef  cattle  industry  because  it  is  more  complex 
and  adjusts  more  slowly  than  other  livestock  enter- 
prises. 

Dairy  and  poultry  returns  fluctuate  less  than  beef 
cattle  returns  from  year  to  year.  In  both  enterprises, 
15-year  average  returns  are  below  the  margin  needed 
to  cover  all  fixed  and  variable  costs.  The  implication  is 
that  these  enterprises  compete  most  favorably  on  farms 
with  plentiful  labor,  capital,  and  management  resources 
that  have  few  alternative  uses. 

The  business  of  raising  livestock  is  very  competi- 


tive.  Average  profit  margins  are  very  narrow.  Large 
numbers  of  farmers  are  willing  to  stay  in  business  as 
long  as  their  returns  cover  only  operating  costs.  Ex- 
pansion plans  involving  large  investments  for  new  fa- 
cilities should  be  based  on  estimated  returns  that  are 
high  enough  to  cover  all  costs.  Fluctuations  in  live- 
stock returns  also  involve  a  risk  in  years  when  returns 
are  low. 

Hog  enterprises 

The  information  in  Table  5  is  based  on  a  sample  of 
702  farms  farrowing  ten  or  more  litters  per  year. 
Farms  were  omitted  from  the  sample  if  the  number  of 
hogs  purchased  exceeded  10  percent  of  pigs  weaned. 
This  eliminated  from  the  sample  those  farms  with 
combined  farrowing  and  feeder-pig  operations.  Feeder- 
pig  enterprise  information  is  included  in  Table  6. 

Returns  per  $100  feed  fed  to  hogs  were  $178  in 
1966.  This  was  a  $32  decrease  from  1965  but  the  third 
highest  return  since  1951.  These  returns  were  $27 
above  the  1951-65  average.  The  fluctuation  in  returns 
above  and  below  the  15-year  average  is  related  to 
changes  in  supplies  of  and  demand  for  pork  and  to  the 
price  of  corn.  In  1966,  the  average  price  received  per 
100  pounds  of  pork  sold  was  up  12  percent,  and  the 

Table  5.  —  Hog  Enterprises,  1966 


Items 


All  farms 


High- 
return 
farms 


Low- 
return 
farms 


Number  of  farms 702  123  108 

Average  per  farm 

Pounds  of  pork  produced.  ..  .  127,323  152,234  130,904 

Total  returns 327,368  333,344  327,269 

Value  of  feed  fed 315,397  316,936  318,015 

Returns  per  3 100  feed  fed...  3       178  3       197  3       151 
Returns  above  feed  per 

litter 3       162  3       193  3       117 

Number  of  litters  farrowed. .  74  85  79 

Pigs  farrowed  per  litter 9.2  9.2  8.9 

Pigs  weaned  per  litter 7.5  7.6  7.3 

Number  of  pigs  weaned 553  645  578 

Number  that  died  after 

weaning 18  20  21 

Death  loss,  percent  of  pounds 

produced 1.3  1.2  1.5 

Weight  per  hog  sold 237  238  240 

Price  received  per  100 

pounds 3  23.09       3  23.28       3  22.70 

Feed  cost  per  100  pounds 

produced 3  12.09       3  11.12       3  13.76 

Feed  per  100  pounds 
produced 

Farm  grains,  lb 343  320  373 

Commercial  feeds,  lb 71  65  87 

Total  concentrates,  lb. .  414  385  460 

Pasture  (pasture  days) ....  .7  .8  .8 

Cost  per  100  pounds  of 

commercial  feeds 3     6.23       3     6.15       3     6.31 

Cost  per  100  pounds  of 

concentrates 3     2.89       3     2.86       3     2.97 


average  price  per  bushel  of  corn  fed  (see  Table  4)  was 
up  7  percent. 

In  1966,  returns  above  feed  per  litter  decreased  $42 
from  $204  in  1965  to  $162.  While  returns  above  feed 
per  litter  of  $162  in  1966  were  $39  above  the  last  six- 
year  average  of  $123,  four  out  of  the  past  six  years 
were  below  this  average. 

Until  1966,  feed  cost  per  100  pounds  produced  has 
never  varied  more  than  a  range  of  65  cents  in  the  past 
six  years,  but  pounds  of  concentrates  per  100  pounds 
produced  have  been  dropping  at  the  rate  of  about  1 
percent  every  three  years.  In  1966,  feed  cost  per  100 
pounds  produced  increased  $1.11,  primarily  due  to  the 
higher  price  of  corn.  The  average  size  of  the  hog 
enterprise  on  all  record-keeping  farms  has  been  in- 
creasing at  the  rate  of  about  3  litters  per  year,  from  41 
litters  (299  pigs  weaned)  per  farm  in  1956  to  74  litters 
(553  pigs  weaned)  in  1966. 

The  high-return  group  of  farms  had  returns  per 
$100  feed  fed  that  ranged  from  $190  to  $209,  and  re- 
turns for  the  low-return  group  ranged  from  $140  to 
$159.  Most  of  the  differences  between  high-  and  low- 
return  groups  were  caused  by  differences  in  feed  con- 
versions and  in  feed  costs  per  100  pounds  produced. 

The  high-return  farms  used  53  pounds  less  farm 
grains  and  22  pounds  less  commercial  feeds  to  produce 
100  pounds  pork  than  the  low-return  farms.  This  sav- 
ing in  feed  was  equivalent  to  about  1,325  bushels  of 
corn  and  15.4  tons  of  protein  per  farm,  or  about  $3,550. 
Other  differences  show  0.3  more  pigs  weaned  per  litter, 
0.3  percent  lower  death  loss,  and  58  cents  per  100 
pounds  higher  selling  price  for  pork  sold  for  the  high- 
return  farms.  There  are  wide  variations  in  profits 
from  swine  enterprises  on  individual  farms  since  these 
same  differences  between  high-  and  low-return  farms 
occur  each  year. 

The  hog  enterprise  has  been  a  very  profitable  busi- 
ness for  the  farmers  in  the  high-return  group  and  a 
moderately  profitable  business  for  the  average  hog 
producer.  If  nonfeed  costs  are  estimated  from  detailed 
cost  studies  at  $5  per  100  pounds  over  the  past  ten 
years,  the  high-return  farmer  sold  his  hogs  at  $3.21 
more  per  hundred  pounds  than  his  total  cost.  The 
average  producer  received  $1.76  more  per  hundred 
pounds  than  his  total  cost.  Assuming  the  low-return 
group  would  have  had  the  same  $5  per  100  pounds  non- 
feed  cost,  it  would  have  received  13  cents  more  than 
its  total  cost  of  production. 

The  relationship  of  average  returns  per  $100  feed 
fed  to  hogs  to  the  estimated  breakeven  returns  neces- 
sary to  cover  all  nonfeed  costs  is  shown  in  Figure  2. 
The  estimate  of  breakeven  returns  assumes  feed  to 
represent  70  percent  of  the  total  cost  of  producing  hogs 
.while,  labor  and  capital  repxesent  30  percent.   The  dif- 


$205 


190 


175 


Q 
LU 

u. 
o 

Ll) 
LlI 
U. 

8 


en 

UJ 
Q. 

CO 

2 

cr 

»- 
UJ 

cr 


160 


145 


130 


115     - 


100 


BREAK-EVEN  RETURNS 


/ 


AVERAGE  RETURNS 


AVERAGE  RETURNS 


BREAK- EVEN  RETURNS 


BREAK-EVEN  RETURNS 


AVERAGE  RETURNS 


1 


1 


1 


-DAIRY  CATTLE 


-HOGS 


-FEEDER  CATTLE 


1955-58      56-59        57-60       58-61         59-62        60-63       61-64       62-65      63-66 
(FOUR- YEAR  MOVING  AVERAGE) 
Returns  per  $100  feed  fed  to  dairy,  hogs,  and  feeder  cattle,  and  estimated  break-even  returns,  1955-1966. 


(Fig.  2) 


ference  between  the  average  return  figure  and  $100- 
feed  cost  represents  the  margin  available  to  pay  for 
cash  expenses,  labor,  depreciation,  and  interest  on  in- 
vestment, and  to  provide  for  profit. 

The  data  in  Figure  2  indicate  there  is  a  reservation 
profit  that  exists  after  all  costs  of  production  are  paid 
before  managers  are  willing  to  enter  or  continue  hog 
production.  Evidently,  there  is  a  human  preference 
factor  that  causes  hog  production  to  expand  less  than 
economic  conditions  warrant,  creating  a  continual  mar- 
gin of  profit  above  feed  and  other  costs. 

If  the  relationship  between  hog  prices  and  produc- 
tion costs  continues  to  be  favorable  enough  in  the  years 
ahead  to  compete  with  returns  from  selling  cash  grain, 
it  should  encourage  increased  hog  production  on  many 
Illinois  farms. 

Feeder-cattle  and  feeder-pig  enterprises 

Calendar-year  operations  for  feeder-cattle  and 
feeder-pig  enterprises  are  presented  in  Table  6.  These 
involved  weights  and  values  on  partly  finished  animals 
purchased  in  prior  years  as  well  as  on  animals  pur- 
chased in  the  current  year. 

Pork  produced  per  farm  from  feeder-pig  enter- 
prises was  70,709  pounds  in  1966  (see  Table  6),  more 
than  two  times  the  35,041  pounds  produced  per  farm 
in  1956.  Farmers  were  not  only  buying  more  feeder 
pigs;  they  were  also  buying  healthier  pigs.    Death  loss 


has  dropped  steadily  the  past  six  years  from  2.7  percent 
of  weight  produced  in  1960  to  1.6  percent  in  1966.  Re- 
turns follow  the  cyclical  pattern  of  the  sow  and  litter 
enterprise.  Returns  per  $100  feed  fed  averaged  $140 
in  1966. 

The  81,129  pounds  of  beef  produced  per  farm  in 
1966  (Table  6)  is  84  percent  greater  than  the  average 
production  per  farm  for  1956-1958.  Returns  per  $100 
feed  fed  for  feeder-cattle  enterprises  were  $117  in 
1966,  down  $34  from  1965.  The  six-year  average  re- 
Table  6.  —  Feeder-Cattle  and  Feeder-Pig 
Enterprises,  1966 

Items  Fe^d.er  Fe-der 

cattle  pigs 

Number  of  farms 384  112 

Average  per  farm 

Total  pounds  produced 81,129  70,709 

Total  returns #18,900         $11,655 

Value  of  feed  fed £16,204         $  8,343 

Returns  per  $  100  feed  fed $       117         $       140 

Death  loss,  percent  of  pounds  produced  1.7  1.6 

Average  weight  purchased 549  53 

Price  paid  per  100  pounds $  26.88         $  40.51 

Price  received  per  100  pounds $  24.  78         $  23  .55 

Feed  cost  per  100  pounds  produced....  £19.97  £11.80 
Feed  per  100  pounds  produced 

Grain,  lb 573  327 

Protein  and  mineral  feeds,  lb 59  81 

Total  concentrates,  lb 632  408 

Hay,  lb 109 

Silage,  lb 635 

Pasture  (pasture  days) 3 


turns  per  $100  feed  fed  of  $122  are  still  below  the 
return  needed  to  pay  all  nonfeed  costs. 

The  relationship  of  average  returns  per  $100  feed 
fed  to  the  estimated  breakeven  returns  necessary  to 
cover  all  nonfeed  costs  is  shown  in  Figure  2  for  feeder 
cattle.  The  estimated  breakeven  return  assumes  feed 
to  represent  75  percent  of  the  total  cost  of  feeder  cattle 
production,  while  labor  and  capital  represent  25  percent. 

For  the  years  covered  by  Figure  2,  the  average  re- 
turns are  below  the  breakeven  returns  but  above  the 
cost  of  feed  or  $100.  This  relationship  means  that  the 
margin  available  was  not  large  enough  to  pay  cash  ex- 
penses and  market  prices  for  all  feeds,  labor,  depreci- 
ation, and  interest  on  investment. 

The  low  returns  shown  in  Figure  2  for  feeder  cattle 
indicate  that  many  farmers  have  been  willing  to  dis- 
count the  returns  for  labor,  buildings,  or  nonmarket- 
able  feeds,  especially  if  these  resources  have  few  or 
no  alternative  uses.  Evidently  Illinois  farmers  have 
strong  personal  preferences  for  feeding  cattle  during  a 
period  when  economic  conditions  were  not  favorable 
for  this  enterprise.  This  observation  has  important 
implications  when  considering  expansion  of  the  feeder 
cattle  enterprise  on  farms  where  there  are  no  non- 
marketable  feed  resources,  underemployed  labor,  or 
fixed  capital  investments. 

Prices  paid  for  feeders  bought  were  $2.72  per  100 
pounds  higher  during  1966  than  in  1965,  while  prices 
received  for  cattle  sold  in  1966  were  only  5  cents 
higher.  Average  weight  purchased  was  down  5  pounds 
per  steer.  Pounds  of  beef  produced  per  farm  in  1966 
was  4  percent  higher  than  in  1965.  Beef  produced  per 
farm  has  followed  an  upward  trend  since  1956  of  about 
3,000  pounds  a  year  with  more  than  this  in  years  of 
favorable  outlook  and  less  in  years  of  unfavorable 
outlook. 

Pounds  of  grain  and  pounds  of  hay  used  per  100 
pounds  of  beef  produced  has  trended  downward  from 
1960  to  1966,  while  the  pounds  of  silage  used  has  in- 
creased during  the  same  period.  Feed  costs  per  100 
pounds  produced  were  $19.97  in  1966,  an  increase  of 
$1.48  from  1965.  The  increase  was  caused  primarily 
by  the  higher  price  of  corn.  The  shift  to  the  use  of 
more  corn  silage  in  the  ration  reflects  attempts  by 
feeders  to  increase  production  from  existing  land 
by  intensifying  the  crop  system  and  to  reduce  labor  by 
mechanizing  the  feeding  operation. 

These  data  do  not  show  the  wide  variation  in  profits 
that  exists  among  cattle  feeding  programs  and  indi- 
vidual feeders.  Since  1961  prices  paid  for  feeders  have 
varied  as  much  as  $3.79  per  100  pounds  from  the  past 
six-year  average  while  prices  received  have  varied  by 
as  much  as  $2.17  per  100  pounds  sold  from  the  past 
six-year  average.  Many  farmers  are  now  feeding  more 


than  one  drove  of  cattle  each  year  to  provide  a  better 
utilization  of  fixed  investments  in  mechanized  feedlots. 
The  increase  in  investments  and  complexity  of  the 
cattle  feeding  operation  makes  good  records  more  im- 
portant than  ever  to  evaluate  returns  to  resources  used 
in  cattle  feeding. 

Dairy  enterprises 

The  minimum  size  of  herd  included  in  this  analysis 
was  10  milk  cows.  The  average  size  of  dairy  herd  was 
36.1  cows  in  1966,  compared  with  23.5  cows  per  farm 
on  record-keeping  farms  in  1956. 

The  rate  of  increase  in  the  size  of  dairy  herds  since 
1956  has  been  a  little  more  than  one  cow  per  year. 

Table  7.  —  Dairy  Cattle  Enterprises,  1966 

Pasture  days  per  animal  unit 

Items  AH  farms      

0  1-119  120  + 

Number  of  farms 253  61  120  72 

Average  per  farm 
Number  of  cows  in 

herd 36.1  42.0  38.3  27.2 

Number  of  milk  cows.  .  36.0  42.0  38.3  27.0 

Percent  of  milk  cows 

dry 15  15  15  16 

Animal  units  in  herd.  .  61.8  77.0  64.9  43.6 

Pounds  of  beef 

produced 18,771  20,268        20,169         15,172 

Totalreturns 322,210         $25,576       #24,143       $16,135 

Value  of  feed  fed #11,690         #14,001       #12,603       #8,212 

Returns  per  #100  feed 

fed #       190         #       183       #       192       #       196 

Returns  above  feed 

per  milk  cow #       292         #       276       #       301       #       293 

Total  pounds  of  milk 

produced 421,700         486,725       456,135       309,219 

Pounds  of  milk  per 

milk  cow 11,714  11,589         11,910         11,453 

Pounds  of  butterfat 

per  milk  cow 434  434  439  426 

Pounds  of  beef  per 

cow  in  herd 520  483  527  558 

Death  loss,  percent  of 

pounds  produced. ..  7.5  7.9  7.3  7.3 

Feed  cost  per  unit"....         #  19.18        #  20.31       #  19.16      #  17.82 
Price  received  for: 

100  1b.  milk #    4.43        #     4.46      #     4.46      $    4.32 

lOOlb.beef #19.21         #18.77       #19.50       #19.12 

Feed  per  unit  of  milk 
and  beef: 

Grain,  lb 283  296  284  267 

Protein  and  miner- 
als, lb 62  61  63  61 

Total  concen- 
trates, lb 345  357  347  328 

Hay  and  dry 

roughage,  lb 344  319  335  396 

Hay  silage  and 

soilage,  lb 331  624  288  63 

Corn  and  other 

silage,  lb 768  964  808  427 

Pasture  (pasture 

days) 6  ...  5  15 

Pasture  days  per 

animal  unit 60  ...  56  160 

a  1,000  pounds  of  milk  or  100  pounds  of  beef. 


10 


Total  number  of  milk  cows  in  Illinois  has  been  declin- 
ing steadily  at  the  rate  of  about  4  percent  a  year  in 
this  same  period,  but  total  pounds  of  milk  produced  in 
the  state  has  been  declining  only  about  2  percent  a 
year.  While  there  are  42  percent  fewer  milk  cows  in 
the  state  than  10  years  ago,  the  remaining  cows  are  in 
herds  that  are  56  percent  larger  and  that  produce  26 
percent  more  milk  per  cow. 

Returns  per  $100  feed  fed  to  dairy  enterprises  in 
1966  were  $190,  up  $16  from  1965.  Higher  milk  prices 
(66  cents  per  cwt.)  and  higher  beef  prices  ($3.70  per 
cwt.)  were  partially  offset  by  $1.77  higher  feed  costs 
per  1,000  pounds  of  milk  or  100  pounds  of  beef  pro- 
duced (Table  7). 

Dairy  farmers  have  reduced  the  amount  of  pasture 
and  increased  the  amounts  of  grain  and  silage  fed. 
Pasture  days  per  unit  (1,000  pounds  of  milk  or  100 
pounds  of  beef)  remained  at  15  days  prior  to  1959, 
but  since  1960  have  declined  steadily  to  6  days  in  1966. 

The  dairy  herds  in  Table  7  were  divided  into  three 
groups:  herds  with  no  pasture  days  per  animal  unit, 
those  with  1  to  119  days,  and  those  with  120  days  or 
more.  Each  year  a  few  more  farmers  have  been  adopt- 
ing the  practice  of  feeding  cows  in  drylot.  Dairy  herds 
averaged  42.0  cows  on  farms  with  no  direct  grazing 
compared  with  27.2  cows  on  farms  using  a  full  pasture 
season. 

The  main  difference  among  these  three  groups  of 
dairy  herds  is  the  amount  of  land  required  per  cow  to 
produce  roughage.  When  pasture  and  hay  yields  are 
figured  at  150  pasture  days  and  3  tons  per  acre  respec- 
tively, the  farms  with  drylot  feeding  required  only  1.7 
acres  per  cow  to  produce  grass-legume  forages,  while 
the  farms  with  over  120  pasture  days  per  animal  unit 
used  2.9  acres.  Additional  roughage  was  obtained 
through  corn  silage  on  the  no-grazing  farms.  Milk  pro- 
duction per  cow  did  not  vary  greatly  between  the 
groups  of  farms.  Part  of  the  additional  cost  of  har- 
vesting roughage  to  be  fed  in  drylot  is  included  in  the 
cost  of  feed.  Farmers  using  the  drylot  system  must 
relate  the  higher  cost  of  feed  to  the  increased  returns 
that  may  result  either  from  shifting  land  from  pasture 
to  grain  crops,  from  an  increase  in  size  of  dairy  herd 
on  fixed  acres  of  hay  and  pasture,  or  from  higher  pro- 
duction per  cow. 

The  relationship  of  average  returns  per  $100  feed 
fed  to  the  estimated  breakeven  returns  necessary  to 
cover  all  nonfeed  costs  is  shown  in  Figure  2  for  dairy 
cattle.  The  estimated  breakeven  return  assumes  feed  to 
represent  50  percent  of  the  total  cost  of  the  dairy  enter- 
prise while  labor  and  capital  make  up  the  other  50 
percent. 

For  the  years  covered  by  Figure  2,  the  average  re- 
turns are  below  the  breakeven  returns  but  above  the 
cost  of  feed  or  $100.   This  relationship  means  that  the 


margin  available  was  not  large  enough  to  pay  cash 
expenses  and  market  prices  for  all  feed,  labor,  depre- 
ciation, and  interest  on  investment. 

The  low  returns  shown  in  Figure  2  for  dairy  cattle 
indicate  the  reason  for  many  farmers  discontinuing  the 
dairy  operation.  Some  farmers  have  been  willing  to  dis- 
count the  returns  for  labor,  buildings,  or  nonmarketable 
feeds,  especially  if  these  resources  have  few  or  no 
alternative  uses,  or  if  they  have  strong  personal  prefer- 
ences for  dairy  cattle  during  a  period  when  economic 
conditions  were  not  favorable  for  this  enterprise.  This 
observation  has  important  implications  when  consider- 
ing expansion  of  the  dairy  enterprise  on  farms  where 
there  are  no  nonmarketable  feed  resources,  under- 
employed labor,  or  fixed  capital  investments. 

Beef-cow  herds 

The  minimum  size  of  a  beef-cow  herd  included  in 
Table  8  was  10  or  more  cows.  Farms  with  combina- 
tions of  cow  herds  and  purchased  feeder  cattle  were 
not  included.  In  addition  to  an  analysis  of  all  farms, 
Table  8  shows  an  analysis  of  farmers  with  cow  herds 
who  sold  calves  at  weaning  time,  comparing  them  with 
those  who  finished  their  calves  to  slaughter  weights. 
The  average  size  of  cow  herd  on  all  farms  has  changed 
little  since  1956,  ranging  from  25  to  28  cows.  This 
reflects  the  decision  of  the  majority  of  Illinois  farmers 
to  maintain  a  beef-cow  herd  as  a  supplemental  enter- 
prise to  market  nonsalable  feeds  and  labor. 


Table  8.  —  Beef  Cow  Enterprises,  1966 

Items  All  farms       C^[jJS 

Number  of  farms 231  90 

Average  per  farm 

Number  of  cows  in  herd 28.2  28.5 

Animal  units  in  herd 43.3  38.2 

Total  pounds  produced 20,423  14,294 

Total  returns $4,617  $3,303  j 

Value  of  feed  fed $3,511  $2,371  J 

Returns  per  $100  feed  fed..  .    $       132  $       139  I 

Pounds  of  beef  per  cow  in 

herd 724  502 

Average  weight  per  head  sold  761  574 

Pounds  of  death  loss 779  651 

Percent  of  pounds 

produced 3.8  4.6 

Feed  cost^ per  unit* $17.19  $16.59 

Price  received  per  100  pounds  $  23.57  $  23.63 

Feed  per  unit  of  milk  and  beef 

Grain,  lb . 214  78 

Protein  and  mineral  feeds, 

lb 28  18 

Total  concentrates,  lb.. .  242  96 

Hay  and  dry  roughage,  lb.  508  596 

Hay  silage,  lb 15 

Corn  and  other  silage,  lb. .  .  219  274 

Pasture  (pasture  days). . . .  188  202 

a  1,000  pounds  of  milk  or  100  pounds  of  beef. 


Calves 
fed  out 


115 


27. 

1 

45. 

3 

24,729 

5,419 

:  4,329 

125 

912 

919 

893 

3. 

6 

$  17. 

51 

$  23. 

16 

278 

32 

310 

451 

25 

240 

180 

11 


Table  9.  —  Poultry  Enterprises,  1966 

Items 

.  „  ,                                                               Number  of  hens  per  farm 

100-299                    300-999               1,000-1,999 

Over  2,000 

Number  of  farms 

127                                 69                             32                             16 

10 

Average  per  farm 

Pounds  of  poultry  produced 1 ,874 

Total  returns $  5 ,088 

Value  of  feed  fed $  3,034 

Returns  per  #100  feed  fed $       168 

Returns  above  feed  cost  per  hen $2.37 

Average  number  of  hens 866 

Eggs  produced  per  hen 216 

Percent  production 59 

Feed  requirement  units* 16,803 

Feed  cost  per  unit $     .18 

Pounds  of  concentrates  per  unit 5.4 

Cost  per  100  pounds  of  concentrates $  3 .  32 

Price  per  pound  sold $     .09 

Price  per  dozen  eggs  sold $     .38 

Pounds  of  death  loss 572 

a  One  dozen  eggs  or  1.5  pounds  of  weight  produced. 


747 

1,411 

2,428 

10,248 

896 

$  3,198 

$  7,476 

$  36,244 

775 

$  2,141 

$  4,591 

$  18,986 

116 

$       149 

$       163 

$         191 

$     .65 

$  1.94 

$  2.11 

$  2.99 

187 

544 

1,370 

5,773 

180 

204 

204 

228 

49 

56 

56 

62 

,326 

10,109 

24,627 

118,697 

$     .23 

$     .21 

$     .19 

$     .16 

7.0 

6.4 

5.4 

4.9 

$  3.35 

$  3.30 

$  3.42 

#3.28 

$     .09 

$     .09 

$     .08 

$     .09 

$     .34 

$     .37 

$     .41 

$     .38 

176 

476 

949 

3,007 

Returns  per  $100  feed  fed  to  beef-cow  herds  in 
1966  averaged  $132.  Increased  beef  prices  during  1966 
and  higher  feeder  calf  prices  continued  to  raise  cow- 
herd returns  upward  from  the  low  level  of  1964. 

In  1966,  farms  that  sold  calves  received  $33  per 
cow  above  value  of  feed  fed,  and  farms  that  sold  cattle 
at  slaughter  weights  received  $40  per  cow  above  value 
of  feed  fed.  This  is  the  second  year  since  1962  that 
those  who  sold  slaughter  cattle  received  higher  returns 
to  apply  against  the  added  costs  for  labor,  buildings, 
and  capital  required  to  feed  them  out. 

Poultry  enterprises 

The  minimum  size  of  flock  included  in  Table  9  is 
100  hens.  The  average  size  of  flock,  omitting  farms 
with  less  than  100  hens  has  increased  from  304  hens  in 
1956  to  866  in  1966.  In  the  same  period,  pounds  of 
concentrates  per  dozen  eggs  or  I1/2  pounds  of  weight 
produced  have  declined  steadily  each  year  from  7.0  in 
1956  to  5.4  pounds  in  1966. 

In  1966,  the  feed  cost  of  18  cents  per  dozen  eggs  or 
I1/2  pounds  of  weight  produced  remained  the  same  as 
in  1965.  Improved  feed  conversion  was  offset  by  the 
higher  price  of  concentrates. 

Eggs  per  hen  increased  from  197  to  210  during  the 
1956-1959  period  but  since  1960  have  varied  over  a 
range  from  208  to  216  eggs  per  hen. 

The  price  per  dozen  eggs  sold  in  1966  was  38  cents, 
an  increase  of  7  cents  from  1965.  Returns  above  feed 
cost  per  hen  of  $2.37,  on  all  farms,  were  the  highest 
since  1950. 

Larger  flocks  received  more  returns  above  feed  cost 
per  hen  than  the  smaller  flocks  (Table  9).  Farms  with 
over  2,000  hens  had  returns  above  feed  cost  per  hen  of 
$2.99,  compared  with  only  65  cents  on  farms  with  100- 
299  hens.    This  difference  may  not  reflect  the  actual 


contribution  of  poultry  laying  flocks  to  farm  income, 
since  small  flocks  may  utilize  inputs  of  labor,  equip- 
ment, and  buildings  that  have  limited  alternative  uses. 
However,  the  higher  production  per  hen  on  the  farms 
with  larger  flocks  indicates  better  management  and  a 
potentially  higher  return  for  labor  and  capital. 

Sheep  enterprises 

Sheep  production  is  a  minor  enterprise  on  record- 
keeping farms.  The  minimum  size  of  enterprise  in 
Table  10  was  set  at  3  animal  units.  One  animal  unit 
of  sheep  is  defined  as  750  pounds  of  liveweight.  Re- 
turns per  $100  feed  fed  in  1966  were  $129  for  native 
flocks.  Pounds  of  wool  and  mutton  produced  per  farm 
have  remained  fairly  constant  for  the  past  ten  years. 
The  majority  of  Illinois  farmers  who  keep  sheep  do  so 
as  a  supplemental  enterprise  to  market  nonsalable  feeds 
and  labor. 


Table  10. 

—  Sheep  Enterprises,  1966 

Items 

Native 
flocks 

Number  of  farms 

112 

Average  per  farm 

Pounds  of  wool  and  mutton  produced 3,729 

Total  returns $  898 

Value  of  feed  fed $  697 

Returns  per  #100  feed  fed $  129 

Percent  lamb  crop 115 

Pounds  of  death  loss 536 

Death  loss,  percent  of  pounds  produced 14.4 

Feed  cost  per  100  pounds  produced $  18 .  69 

Price  received  per  100  pounds $  26.02 

Price  paid  for  sheep  bought $  21 .53 

Feed  per  100  pounds  produced 

Concentrates,  lb 286 

Hay,  lb 562 

Silage,  lb 7 

Pasture  (pasture  days) 42 


12 


DEFINITION  OF  TERMS  AND  ACCOUNTING  MEASURES 


Soil-productivity  rating 

An  average  index  representing  the  inherent  pro- 
ductivity (low  level  of  management)  of  all  tillable 
land  in  the  farm.  Individual  soil  types  on  each  farm 
are  assigned  an  index  ranging  downward  from  100. 

Type  of  farm 

Sampling  technique.  The  records  in  each  size  group 
for  northern  Illinois  were  sampled  to  provide  a  pro- 
portional representation  of  all  farms  of  that  size  range 
according  to  the  1964  census. 

Grain  farms.  Farms  where  the  value  of  feed  fed 
was  less  than  one-half  of  the  feed  and  grain  returns 
and  value  of  feed  to  dairy  or  poultry  was  not  more 
than  one-sixth  of  the  feed  and  grain  returns. 

Hog  or  beef  farms.  Farms  where  the  value  of  feed 
fed  was  more  than  one-half  of  the  feed  and  grain  re- 
turns and  either  hog  or  beef-cattle  enterprises  received 
,  more  than  one-half  of  the  value  of  feed  fed. 

Dairy  or  poultry  farms.  Farms  where  the  value 
of  feed  fed  was  more  than  one-half  of  feed  and  grain 
returns  and  either  dairy  or  poultry  enterprises  received 
more  than  one-third  of  the  value  of  feed  fed. 

Cost  items 

Value  of  feed  fed.  Includes  grains  priced  per  bu- 
shel at  the  farm  average  as  follows:  corn  —  $1.23; 
oats — 69  cents;  barley  —  88  cents;  soybeans  —  $2.97; 
rye  —  $1.06;  wheat  —  $1.66.  Commercial  feeds  were 
priced  at  actual  cost,  hay  and  silage  at  farm  values, 
and  pasture  at  13  cents  per  animal  unit  pasture  day. 
A  pasture  day  represents  an  intake  of  approximately 
20  to  25  pounds  of  dry  matter.   It  has  been  defined  as 


Table  11.  —  Average  Prices  Received  and  Paid 
by  Farm  Record  Keepers 

1966  1965 

Northern  Southern  Northern  Southern 

Illinois       Illinois  Illinois       Illinois 

Grain  prices 

Corn  sold $1.19         $1.24  $1.13         $1.15 

Soybeans  sold 2.83           2.77  2.59           2.46 

Wheatsold 1.81           1.67  1.40           1.32 

Oats  sold 71             .74  .68 

Corn  purchased 1.25           1.25  1.19           1.18 

Oats  purchased 74           ....  .69            .... 

Livestock  prices 

Hogs,  all  weights $23.09  #20.68 

Fat  cattle,  all  weights .  .             24 .  78  24 .  73 
Feeder  cattle,  all 

weights,   prices   paid             26.88  24.16 

Dairy  cattle,  all  weights             19.21  15.51 

Sheep,  all  weights 26.02  25.11 

Poultry .09  .07 

Milk 4.43  3.77 

Eggs .38  .31 


16  pounds  of  total  digestible  nutrients  (TDN)  from 
pasture. 

Cash  operating  expenses.  Includes  annual  cash  out- 
lays for  non-depreciable  items  of  fertilizer,  machinery 
repairs,  machine  hire,  gas  and  oil,  electricity  and  tele- 
phone, farm  share  of  auto,  hired  labor,  seed  and  crop 
expense,  taxes,  building  repairs,  livestock,  and  miscel- 
laneous expense.  It  does  not  include  purchased  feed  and 
livestock  since  these  have  been  deducted  from  gross 
receipts  in  computing  the  value  of  farm  production. 

Machinery  and  equipment.  Includes  depreciation, 
repairs,  machine  hire,  gas  and  oil,  electricity  and  tele- 
phone, and  farm  share  of  auto. 

Labor.  Includes  hired  labor  plus  family  and  oper- 
ator's labor  charged  in  1966  at  $300  and  $280  a  month 
respectively  for  northern  and  southern  Illinois. 

Interest  charge  on  capital.  Interest  charged  at  6 
percent  on  January  1  inventory  of  remaining  capital 
investment  in  grain,  livestock,  machinery,  buildings, 
soil  fertility,  and  farm  share  of  auto,  plus  4  percent 
interest  on  bare  land  priced  at  current  land  values. 

Total  nonfeed  costs.  Includes  cash  operating  ex- 
penses, depreciation,  and  charges  for  unpaid  labor  and 
interest.    Purchased  feeds  and  livestock  are  omitted. 

Value  of  land  (current  basis).  A  basic  value  on 
bare  land  is  established  for  each  farm  according  to  the 
soil-productivity  rating.  This  basic  value  is  adjusted 
each  year  according  to  the  index  of  land  prices  in 
Illinois  as  reported  by  the  USDA. 

Return  items 

Feed  and  grain  returns.  The  sum  of  grain  and 
feed  sales,  value  of  all  feeds  fed  (except  milk),  and 
change  in  value  of  feed  and  grain  inventories  less  the 
value  of  feed  purchased. 

Value  of  farm  production.  Total  cash  sales  of 
products  and  services,  less  purchased  feed  and  live- 
stock, plus  change  in  inventory  values  of  grain  and 
livestock,  plus  value  of  farm  products  consumed. 

Farm  and  family  earnings.  Value  of  farm  produc- 
tion less  cash  operating  expenses  and  depreciation. 
This  figure  includes  the  return  to  the  farm  and  family 
for  unpaid  labor,  interest  on  invested  capital,  and  re- 
turns to  management. 

Labor  and  management  earnings.  Farm  and  family 
earnings  less  the  value  of  family  labor  and  interest 
charge  on  capital  invested.  It  is  the  residual  return 
to  operator's  labor  and  management  efforts. 

Capital  and  management  earnings.  Farm  and  fam- 
ily earnings  less  a  charge  for  all  unpaid  labor. 

Management  returns.  The  residual  surplus  left 
after  a  charge  for  unpaid  labor  and  interest  charge  on 
capital  are  deducted  from  farm  and  family  earnings. 


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This  report  results  from  the  cooperation  of  state  and  local  Farm  Bureau  Farm  Management  Asso- 
ciations and  staff  members  of  the  Department  of  Agricultural  Economics  and  the  Cooperative  Extension 
Service  at  the  University  of  Illinois.  The  information  is  for  farmers  and  workers  in  farm  management 
extension,  teaching,  and  research  and  for  others  assisting  Illinois  farmers  in  business  analysis.  The  re- 
port supplements  work  of  FBFM  fieldmen  by  providing  comparative  standards  for  farmers  enrolled  in 
the  service. 

The  cooperative  effort  of  the  university  staff  working  with  42  fieldmen  who  are  supported  largely 
by  fees  paid  by  farmers  makes  this  educational  and  service  program  possible.  By  participating  in  this 
program  each  farmer-cooperator  (6,635  reporting  this  year)  increases  his  chances  for  successful  farm 
operation  and  contributes  to  the  improvement  of  Illinois  agriculture. 

Each  year  more  farmers  are  adopting  improved  production  techniques  based  on  studies  of  their 
farm  records.  Specialized  crop  and  livestock  farms  are  becoming  more  common.  The  Illinois  Farm 
Business  Record  is  now  being  revised  to  facilitate  allocating  nonfeed  costs  to  the  individual  farm  enter- 
prises. This  revision  is  also  being  adapted  to  electronic  data  processing  methods  as  records  become  more 
important  for  the  individual  farmer  in  order  to  evaluate  his  competitive  position  in  the  farming  business. 

We  hope  that  this  42nd  Annual  Report  will  be  used  to  contribute  to  more  profitable  farm  operation 
and  a  more  desirable  level  of  family  living. 

Harold  G.  Halcrow,  Head 
Department  of  Agricultural  Economics 


ASSOCIATIONS,  FIELDMEN,  AND  COOPERATORS  ENROLLED 


BLACKHAWK  — 

C.  M.  Roodhouse  " 

G.  W.  Bevington 
Howard  Peverly 


WESTERN 

T.  H.  Jennings 
A.  G.  Pille 
Byron  Wright 
R.  W.  Baalman 
R.  R.  Tracy  \ 


SANGAMON  VALLEY 

C.  E.  Botterbusch 
G.  W.  Shafer 

D.  B.  Brucker 
C.  E.  Cagley 


LINCOLN- 

W.  W.  Marquart 
C.  B.  Roodhouse 
E.  A.  Thurn 
R.  E.  Rogers 
W.  R.  Cole 
K.  D.  Brazle 
H.  P.  Harrington 


•  NORTHEASTERN 
N.  C.  Specht 

D.  R.  Muehling 
W.  D.  McMurtry 

•  ILLINOIS  VALLEY 
S.  R.  Kingry 

G.  E.  Hulslander 
J.  C.  Burns 

D.  C.  Smith 

G.  W.  McGill,  Jr. 

E.  A.  Loving 

PIONEER 
K.  W.  Amstutz 
E.  A.  Schairer 
T.  E.  Swigart 
R.  L.  Ewalt 
H.  E.  Short 
L.  D.  Schroll 

EASTERN 
H.  E.  White 
B.  A.  Henry 
G.  E.  Perkins 

EAST  CENTRAL 
R.  D.  Gustafson 
W.  E.  Berner 
H.  J.  Bourn 
J.  H.  Conerty 


-    SHAWNEE 
F.  B.  Lemmon 


Prepared  by  A.  G.  Mueller,  D.  F.  Wilken,  and  R.  P.  Kesler  of  the  Department  of  Agricultural  Economics 


Urbana,  Illinois  August,  1967 

Cooperative  Extension  Work,  University  of  Illinois,  College  of  Agriculture,  and  the  U.S.  Department  of  Agriculture  cooperating. 

JOHN  B.  CLAAR,  Director.    Acts  approved  by  Congress  May  8  and  June  30,  1914. 

14M— 8-67— 93885 


C005 
970  1967 


§^112  019542114 


I