An Arizona Farmer operates an 1100 acre irrigated farm in the Red River Valley of Arizona. His principal activities are raising wheat, alfalfa, and beef. The Red River Valley Water Authority has just given its water allotments for next year (the farmer was allotted 1500 acre-feet), and the famer is busy preparing his production plan for next year. He figures that beef prices will hold at around $980 per ton and that wheat will sell at $8 per bushel. Best guesses are that he will be able to sell alfalfa at $120 per ton, but if he needs more alfalfa to feed his beef than he can raise, he will have to pay $150 per ton to get the alfalfa to his feedlot.
Some technological features of the famer's operation are wheat yield, 70 bushels per acre; alfalfa yield, 4 tons per acre. Other features are given in the following table:
Activity Labor, Machine Cost ($) Water Requirements (Acre-Ft) Land Requirements (Acres) Alfalfa Requirements (Tons)
1 acre of wheat $80.00 2 1
1 acre of alfalfa $100.00 3 1
1 ton of beef $200.00 0.1 0.1 5
Help the farmer to come up with a good production for the coming year.