16 CALIFORNIA AGRICULTURAL EXTENSION SERVICE [Cire. 18 
cows for replacement purposes costing $2,500,000. Two-thirds of this 
number, costing upwards of $1,500,000 were purchased outside the 
state. There seems to be, therefore, a definite need for the production 
of high producing, disease-free dairy cattle in the sections of the state 
which have an abundance of feed. 
On the other hand, there is one unfavorable factor which should 
he mentioned ; namely the increasing competition of foreign countries. 
Production and prices of dairy products in foreign countries tend to 
affect the price level to which our domestic prices can rise. Now 
foreign dairy production has recovered from the effects of the war 
and continues to increase. It is not likely that foreign markets can 
absorb any greatly increased supply over what they received in 1927. 
With a large surplus production in countries such as Denmark, New 
Zealand and Australia, foreign market prices have been lowered and 
shipments have increased to this country. 
Tt should be recognized, of course, that a too rapid increase in dairy 
herds in this country will result in over-production and depressed 
prices. Sinee the trade of the United States in dairy products is some- 
what delicately balanced as between imports and exports, expansion 
of production should take place only at about the rate of increase in 
‘he demand for dairy products in the United States. 
Beef Cattle—Beef cattle are also in a strong position at the pres- 
ent time. Figure 6 shows the purchasing power of beef cattle in the 
United States and California for the past 58 years. During this 
period the beef industry has experienced three distinet price cycles. 
At the present time we appear to be on the up-grade of a fourth cycle. 
The number of cattle other than dairy cattle in the United States the 
first of this year was the smallest since 1912 and the second smallest 
since 1898; both of these years representing low points in the cattle 
production cycle. Conditions are similar in many respects to those 
existing at the beginning of 1913. It is expected therefore that from 
now on the trend of production will be gradually upward for several 
years to come. The relatively small numbers of cattle in the country 
at present together with the relatively high prices which have pre- 
vailed for several months past, are expected to provide a strong incen- 
tive for cattlemen to re-stock farms and ranges and increase their 
herds. In order to take advantage of fairly high levels of prices, plans 
should be made to market contemplated increases within the next 
three years. However, do not expect that present prices will continue 
indefinitely. A radical increase would undoubtedly bring prices again 
to the unprofitable levels prevailing between 1920 and 1926. With