The importance of capital and labour in animal production

Authors

• N. Westermarck University of Helsinki, Department of Agricultural Economics

DOI: https://doi.org/10.23986/afsci.71794

Abstract

Technical development in animal production, as in agricultural production in general has a twofold function. The first is to substitute capital for human labour, and the second is to gain a higher yield per animal unit. Especially in animal production carried on with hired labour, the production factor capital is substituting the production factor labour at an accelerated rate. In animal husbandry the capital investment in relation to the labour input on modern family farms is, on an average, less than the capital investment in crop husbandry. At the same time it appears also that on the smaller farms the compared values lie closer to each other, while increasing size of farms leads to a much greater increase of capital investment in crop husbandry than in animal husbandry. The need of capital occurs for two different purposes: for investments and circulating capital. The need of circulating capital in relation to the amount of sales (gross return) is 21/2 times greater in milk and beef production than in pork or egg production. In relation to the need of investment capital the demand for circulating capital is particularly great in beef and pork production. The high demand for circulating capital in pork production in relation to the labour input is connected with, among others, the continuous need of large replacements. At a given labour input the capital investment in relation to sales is considerably higher in milk production than in pork production, while egg production occupies an intermediate position.