Any major new capital investment, such as the purchase of land, machinery, buildings or animals, can have a
large effect on cash flows, particulary if additonal capital is borrrowed to finance the purchase. Borrowed
capital requires principial and interest payments. The questions to answer before making the new investment
is: Will the investment generate enough additional cash income to meet its additional cash requirments? In
other words, is the investment financially feasible, as oposed to economically profitable?
Farms with high production efficiency are more successful due to three factors. High levels of production
result: (1) low cost per unit of output, (2) with an increase in the effective size of the farm business, and (3)
with an increased effectiveness of labor and machinery (Ronald D, Kay, farm management 1994).
The high level of production provides a simple and effective method of increasing farm size. Farms
with high agricultural productivity and high levels of productivity per head resulting in a large volume of
business compared with farms with the same size but with lower production levels. This additional business
volume is the result of working more effectively, without increasing the surface of the land or the size of the
activities.
The main methods of raising the level of productivity of livestock production are: i) selection and
improvement of breed; ii) choice of a balanced food ration in relation to the level of production, iii)
sheltering conditions and health care, iv) appropriate and timely nutrition and; v) a good combination
between use of pasture and concentrated food
