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Abstract

As far as farming strategy is concerned, two alternatives are possible, either: a) improve and increase the means of production aiming for a larger size of production without expanding land, or b) expand production by acquisition of new land. The option for either of the two alternatives depends on the farmer's own management and expectations. Assuming that farmers are seeking profit maximization, the question is: Which investment strategy is better? In other words, is it better to expand production by (a) increasing herd sizes providing external feed purchases or (b) increasing land holdings? Our interest is to empirically analyze the soundness of these managerial strategies; that is, look into the real world and appraise the performance of each strategy. Therefore, analyzing the relationship between farmers gross income and the density of cows per tillable acre will allow for a verification of the above mentioned hypotheses.

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