M.S.

Dairy farming in Virginia could be more profitable if price and yield risks affecting the cost and availability of feed inputs such as corngrain, corn silage, alfalfa and ryelage are reduced. Price and yield risk facing dairy farmers in Virginia can be reduced through a marketing strategy like hedging and government commodity program participation. The overall objective of this study is to evaluate how the variability of price and yields of particular feed crops affect the variability of expected returns in dairy farming. Specific objectives include: 1) to evaluate the relationship between feed production risk and the level and variability of net returns for a representative dairy farm in Virginia; 2) to evaluate the relationship between price risks of purchased feed inputs and the variability of net returns; 3) to draw implications from the results that can be used to help dairy farmers better manage feed production risk. To accomplish these objectives, the target MOTAD risk analysis technique is used. The empirical model is developed in four steps. First, the model activities such as milking and feeding of cows, heifer and calf activities, crop production, harvesting, labor, and buying and selling activities were created. Second, variable yields based on probability elicitation from dairy farmers were generated. Third, variable prices based on commodity options were generated; and fourth a target income constraint was derived. Results from the analysis indicated that the target income constraint was exceeded in every state of nature for the representative farm resulting in an efficiency frontier of a single point. Increasing the assumed debt-asset ratio and annual debt service requirement, resulted in a risk-return tradeoff with lower levels of risk (measured as mean deviation below target or MDBT) being obtained at the expense of lower levels of expected returns. At a higher debt asset-ratio, when the mean deviation below target (MDBT) was varied over a range of values, the quantity of crops harvested also varied. The average harvested acres of alfalfa and corn silage increased as the MDBT increased while the harvested acres of corn grain and ryelage decreased. Alfalfa harvest is increased because less forage in terms of ryelage is harvested and the average quantity of corn grain decreases as the MDBT increases because more com silage is grown in place of the costlier but less risky ryelage. The results show that hedging and participation in the government feed grain program could lead to effective risk reduction and increases in expected returns for the dairy farmer. Government program participation increased expected returns at all debt-asset ratios. Both government programs and hedging reduced risks at higher debt-asset ratios. Government program participation led to larger gains in expected returns as the availability of land increased. / Master of Science

1. Seventy-five samples of soils were taken in Washington County, Virginia. These samples were taken while the soil survey was in progress. In this group thirty-one different soil types were included. The samples were taken from all parts of the county. Notes were made of the soil type, slope of the land, drainage conditions, erosion, and land utilization. When samples were taken from cultivated fields, the yield of the crop was estimated. When samples were taken from pasture, notes were made of the type and condition of the vegetation. 2. The following properties were determined and studied in relation to soil type and plant growth: pH, available phosphate, available potash, percent organic matter, percent colloids, base exchange capacity, exchangeable hydrogen and present base saturation. The results of these determinations were used in conjunction with the physical properties, which had been determined by the soil survey, in studying the various relationships. 3. The laboratory methods of determination were devised by soil investigators. The reliability of these methods was discussed by means of reference to literature. 4. Soils of the same textural class varied widely in percentage colloids. 5. Soils that are relatively high in available potash varied widely in base exchange capacity, pH, percent base saturation, and available phosphate. 6. Soils at like pH values showed no relationship of percent organic matter to percent base saturation. 7. Soils above pH 6.0 contained 125 pounds per acre or more available potash; they were above 65 percent base saturation and were widely variable in available phosphate and organic matter. Soils at similar pH values showed wide variations in available phosphate. 8. Within the same textural class, and under similar conditions of land utilization, soils varied widely in percent organic matter. 9. There was some variation in pH values of residual soils of limestone origin. However, the average values of five samples of each were very close together. The average for Dunmore was 5.4, Hagerstown 5.5, and Clarkesville 5.6. 10. Available phosphate and potash, as well as pH, were closely related to yield of corn and tobacco. 11. Available phosphate and closely related to quality of meadow. In soils where available phosphate was above 50 pounds per acre quality of meadow was good. Potash was present in sufficient quantity not to be a limiting factor. 12. A close relationship was found between some of the soil properties studied. The coefficient of correlation between base exchange capacity and percent organic matter was .7191 ± .0376; between pH and exchangeable hydrogen -.6500 ± .0450; between pH and percent base saturation .9008 ± .0147. This high degree of correlation of pH and percent base saturation, it appears, would hold only for a large number of soils. Within this group, soils at like pH values vary considerably in percent base saturation. There was little relationship between percent colloids and base exchange capacity. 13. In all cases, in pasture soils, where available phosphate was below nine pounds per acre, pastures were of poor quality. There was a gradual decline in the minimum range of available phosphate and potash in the soils from the good, medium and poor quality pastures. There is also a gradual decline in the average pH values as quality of pasture declines. 14. Evidence is shown that, within a soil type, the properties of the soil, under varying conditions of soil management vary widely. The soil type name gives no indication of the fertility of the soil at the present time. However, associated with the type name are certain physical properties which determine, largely, the possibilities or limitations of that soil type, or the degree of productivity that the type may be built up to under ideal conditions of soil management. / Master of Science