Influence of Specified Farm Management Factors on Dairy Farm Net Income

Abstract

The association between specified management factors and net income was investigated to determine the amount of variation in net income that could be explained by these factors and their relative importance in explaining this variation. The source of information was 340 Michigan dairy farms, utilizing both D.H.I.A. and mail-in farm account records from 1958 through 1962. A multiple regression analysis was used to study the relationship between 38 management factors and net income.Fourteen factors were significant (P < .05) in explaining variations in net income. The coefficient of determination, R2, was .75. Factors related to size, cropping practices, and dairy herd operation accounted for 28, 25, and 29% of the explained variation, respectively. Machinery expense, organization and intensity factors accounted for the remaining 18%. Livestock income per $100 feed expense and crop value per tillable acre accounted for 87% of the variation in net income attributed to all livestock and crop factors. Efforts to determine sources of variation in livestock income per $100 feed expense and crop value per tillable acre resulted in coefficients of determination of .87 and .93, respectively.