| Abstract: | Measures undertaken in the Federal Republic of Germany to rationalize agricultural production, viz. a reduction of intensive farming, simplification of farm production methods, and the introduction of specialization and mechanization, have been carried to their near completion in modern agricultural holdings. It is now necessary to introduce a new overriding economic principle if we are to successfully meet further wage increases and price reductions and improve the income level of the agricultural population. A new farm management concept based on the idea of a radical increase in specific intensive production methods is now being developed. In view of the high fixed costs in West German agriculture, the degression of fixed costs per production unit outweights the progression of variable costs when output is increased. In other words, higher yields per hectare and animal effect a decrease in unit costs. Nitrogen fertilizer being the most important factor in output increase, its profitable level is examined by means of six marginal value analyses. The fertilizer optimum is reached when marginal costs and marginal yields balance each other out. In all six examples this optimum coincides almost exactly with the point of maximum yield per hectare. This simplifies the problem considerably, at least under the conditions established for six examples. The optimal input level of nitrogen fertilizer does not have to be determined by means of a complicated marginal value analysis. It lies just under the maximum yield per hectare. We cannot expect that price-cost alterations will push this fertilizer optimum up within the near future. However, we may assume that new possibilities will open up for nitrogen fertilizer. In the first place, the majority of the agricultural holdings are still a long way from having reached the fertilizer optimum now economically feasible. Secondly, the present level of fertilizer optimum is constantly being raised as the result of technological advances. It is the task of economic counselling to achieve the fullexploitation of available earning power resources and the task of scientific research todevelop new earning power resources. The exploitation and the development of earning power resources can have very positive results in the case of inorganic fertilizer, since through its application it is possible to even out income disparities in agriculture —help small holdings in particular, mineral fertilizer being a divisible input factor —come closer to a solution of the central probrem of the agriculture of the Federal —Republic of germany, that of combining high labour productivity with high soil productivity. |
