Large hog operations achieve economies of size over small hog operations through more intensive use of facilities, somewhat better feed conversion, lower feed costs, and lower unit labor use. Economies of size are large enough that in a year of low returns, some small enterprises may fail to cover cash costs, while larg9 enterprises cover all costs, including capital replacement. Large producers' advantage is less when only shortrun cash costs are considered; as the planning period increases, so does the large producers' advantage. This report discusses economies of size in numerous aspects of hog production: inputs and costs, investment3 in depreciable assets, returns, income taxes, and physical, price, and economic performance measures in the North Central and Southeast regions, the major U.S. hog-producing areas.


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