IH,D 19275 |U52 . 77 LIBRARY ANNEX 2 ALBERT R. MANN LIBRARY New York State Colleges OF Agriculture and Home Economics AT Cornell University Cornell University Library HD 9275.U52N77 A farm management demonstration on 161 C 3 1924 013 945 971 Bulletin No. 1 . // 7 1 K^: January, 1916. Chautauqua County Farm Improvement and <:>jl-' Information Bureau ^^ A Farm Management Demonstration on 161 Chau- tauqua County Farms for the year 1914 By H. B. ROGERS Manager of the Farm Bureau CO-OPERATING ORGANIZATIONS New York State College of Agriculture. State Department of Agriculture. Erie Railroad Company. Bureau of Plant Industry, U, S. Dept. of Agriculture. Chautauqua Institution. Chautauqua County Board of Supervisors. New York Central Railroad Company. Chautauqua County Pomona Grange and Subordinate Granges NOTE Of the 161 records, Harry C. Morse took 1 06, H. B. Rogers 45, C. E. Peirce 7, and 3 were made out by owners. The work of calculating and tabul- ating was done at Ithaca, N. Y., by the Department of Farm Management of the New York 'State Col- lege of Agriculure. G. P Scoville and C. P. Clark, Farm Management Demonstrators, were assisted in this work by Harry C. Morse, Assistant Manager of the Chautauqua County Farm Bureau. A Farm Management Demonstration on 161 Chautau- qua County Farms for the Year 1914 In order to get first hand information on Chautauqua County dairy farms, the Farm Bureau has for two years been securing actual yearly records of farms. These records show the profit or loss in conducting the business on each farm studied. For the year 1913, ninety-one farm records were secured, while for the year 1914, one hundred and sixty-one records were taken, and sixty of these were from the same farms giving 1913 records. About sixty of the farms giving 1913 records were situated around the village of Sherman, in the towns of Chautauqua, Harmony, Sherman, Ripley, Mina, and Westfield. This year, the farms giving records lie in three sections, namely, the Chautauqua Lake area, the Ellington area, and the Sherman area. As far as pos- sible, the records will be taken year after year on the same farms. The object of taking the records is to secure information on how to run a farm for profit in this region, and by studying the records conclusions may be reached as to how the type of farming of the region may be improved. The attempt is made simply to find out actual conditions, and in this bulletin, eflfort is made only to present facts as they are brought out from the survey. In drawing conclusions, groups of farms are used rather than indi- vidual farms. An individual success may be due to conditions which cannot be duplicated, but we are surely safe in accepting a fair number of the best farms in a region as a guide. In figuring a yearly record, the farm is regarded as a busi- ness enterprise, separate from the household. A statement of such a record appears in Table I, which shows the averages for the farms giving records for 1914. First, there is a statement of the farm receipts, which include the income from all sales of farm products, and also the actual increase in the value of livestock, due to growth and not' to fluctuation in prices. Altogether, these receipts come to $1,776. Then there is a statement of the farm expenses. This includes every item which should be charged against the farm business. Labor charges include the wages of hired labor, the board of hired labor, and also the cash value of work done for the farm by members of the family besides the operator. This accounts for all labor except that of the man \vho runs the farm. All cash expenses are charged, such as grain, seeds, fertilizers, taxes, milk hauling, horseshoeing, etc., etc.; also, a charge is made for depreciation of buildings and farm ma- chinery. The amount of this charge is determined by the op- erator's estimate of the yearly depreciation on both buildings and equipment. The same charge is made, whether any money was spent for repairs or not. When expenses for repairs are large, only the proportionate amount for the year is charged. It would not be fair to charge up a new shingle roof, for example, asrainst one year's business. Only the year's share of this expense should 4 A Farm Management Dcmotistration be charged. To offset this, the average yearly depreciation is also charged against each other year's business. It will be seen that the total expenses amount to $994. By subtracting the expenses from the receipts, we get $782, which represents what the operator of the farm has left after paying all cash expenses, and allowing for family labor and de- preciation of buildings and machinery. Now this income of $782 is due to two things. It is due to the labor of the operator, and also to the capital invested in the farm business. It is only fair TABLE I AVERAGE OF 161 CHAUTAUQUA COUNTY FARMS FOR THE YEAR 1914 I. Receipts. Crop sales $128.00 Milk sales 9SS-00 *Net cattle increase 334-00 Egg sales 1 12.00 Other stock receipts 1 18.00 Outside work, etc 129.00 $1,776.00 II. Expenses. Hired labor $103.00 Board of hired labor 40.00 Value of family labor 1 18.00 Grain, feed 368.QO Seeds 34.00 Fertilizer 48.00 Taxes 46.00 Decrease feed inventory 36.00 All else 201.00 994.00 III. Income from capital and operator's labor $ 782 00 IV. Capital. Real estate $5,591.00 Livestock 1,875.00 Machinery 506.00 Feed and supplies 226.00 ^^™ 42.00 ,, ., Total $8,240.00 V. Interest at 5 per cent on $8,240 412.00 VI. Labor income , $ 370.00 *Value of cattle at end of year+cattle sold— cattle purcha=;ed + value at begmnmg of year = net cattle increase. on i6i Chautauqua County Farms ^2 * • • s^ « < r that capital should pay interest when invested in any business and the operator of a farm may well expect his business to pay interest on the capital invested. Looking at the table, we see that the aver- age total capital is $8,240, made up of $5)591 for real estate, $1,875 for stock, $506 for machinery and equipment, $226 for feed and sup- plies, and $42 for cash to run the farm. Since 5 per cent is a com- mon rate of interest, we use this rate in figuring interest on the capital of $8,240, which amounts to $412. Subtracting this from $782 we have $370, which is left to pay for the operator's labor. This we call his labor income. It may be fairly compared to the wages which a hired man receives by the year, when his house rent, milk, vegetables, etc., are furnished him. The average labor income for these 161 farms giving records is $370. It will be interesting to see the range of these incomes above and below the average, that is how many incomes are below the aver- age and how far, and also how many incomes are above the aver- age and how far. Table II shows how the incomes are distributed. It will be noted at once that most of the farm incomes are located around the average, more being below than above. A few farms show very large losses, while quite a number of farms show very good returns. If we take the farms having highest incomes to the num- ber of one-fifth of the total, the average labor income is found to be $1,070, or just $700 higher than the average of all. 6 A Farm Management Demonstration We will now endeavor to find out what factors made some farms pay better than others. In doing this, a very good method is to consider certain factors one at a time, and see how labor in- come is affected by each factor. In Bulletins 295 and 349 of Cor- nell University Agricultural Experiment Station, G. F. Warren demonstrates the importance of four factors which influence profits in farming more than any others. These are size of busi- ness, diversity, quality of cows, and crop yields. We will pro- ceed to study separately the effect of each factor, and then the effect of all four together. SIZE OF BUSINESS Size is of fundamental importance. As in other lines of in- dustry, the larger the business, the larger is the opportunity of making money. There are several ways in which the size of a farm business may be measured, as by the amount of capital in- vested, the number of acres, and the number of cattle kept. Table III shows how amount of capital invested affects labor in- come on the 157 farms tabulated. The farms are divided into four groups according to amount of capital invested, and average capital, labor income and other factors worked out for each group. The farms having the smallest average capital have the smallest labor income, and so on up to the group having the highest investment of capital, where labor income is also highest. This is particularly significant when we remember that interest is deducted and that interest is most of course where capital is highest. TABLE III HOW AMOUNT OF CAPITAL AFFECTS PROFITS Average No. of No. of Labor No. of Capital Total Acres Cows Income Farms $ 3,359-00 80 6 $100.00 16 5,522.00 96 10 311.00 57 8,790.00 134 14 410.00 66 19,526.00 243 26 517.00 18 Table IV shows the eifect on labor income of the number of cows kept. In a dairy region such as this, the number of cows kept furnishes a good measure of size. The group of farms hav- ing the largest number of cows, averaging 28, is shown to have a much higher average labor income than the groups having fewer cows. It must be kept in mind while studying these tables ^J?,^* ^'o ™^'^°f 's to compare average figures for groups of farms Ihe 18 farms having an average of 28 cows doubtless have some poorly paying farms among them, but on the average the farms in on i6i Chautauqua County Farms 7 that group pay out better than the farms in the lower groups. Table Y shows some reasons why farms having large dairies pay better. The number of cows per man is higher on the large farms, and the investment in barns per cow is smaller on the larger farms. Both these factors mean greater efficiency, and on the average, larger returns. TABLE IV HOW THE SIZE OF THE DAIRY AFFECTS PROFITS Size of Dairy Under 6 cows 6 to 12 cows 13 to 20 cows Over 20 cows Average No. Labor of Cows Income 4 $ 88.00 9 282.00 16 383-00 28 732.00 TABLE V Total No. of Acres Farms 67 10 104 77 130 52 256 18 WHY THE LARGE DAIRIES PAY BEST Average Ni of Cows 4 9 16 28 D. Investments in Barns per Cow $131.00 113.00 85.00 76.00 Number of Cows per Man 3 7 10 10 Table VI gives a similar tabulation showing the effect of size of farm on labor income. As the average number of crop acres and also the average number of total acres increases, the labor income also increases. In the second group, the labor income is slightly higher than in the third, but taking the table as a whole, it is clearly seen that labor income is higher, on the average, on the larger farms. Table VII shows some reasons why the larger farms pay better. The chief reason is because greater efficiency is secured in the use of man and horse labor and in the use of machinery. The number of crop acres which one man takes care of is larger on the large farms. More acres of crops are handled by one man on the large farms, and more acres of crops are cared for by each horse. One hundred dollars' worth of machinery takes care of more acres of crops on a large farm than on a small farm. We often hear the remark that some man is farming too much land and that he would be better off to farm less land and farm it better. Probably this is true of individuals who are not capable of running a large business, but there is no doubt but that on the average the large farms make more money than the small 8 A Farm Management Demonstration farms. On the small farm there is a chance to make or lose but little ; on the large farm more may be either gained or lost. Hence the farms shown in Table II as either very profitable or very un- profitable are very likely to be large farms, while the majority of the farms having small gains or small losses are probably small farms. (See Fig. 102 p. 665, Bulletin 349.) TABLE VI HOW SIZE OF FARM AFFECTS PROFITS Farms Sorted by Number of Crop Acres Average No. Total Acres No. of Labor No. of Crop Acres Cows Income Farms 16 56 6 $110.00 12 25 80 10 360.00 41 39 121 13 312.00 64 62 183 17 426.00 34 125 364 34 TABLE VII 847.00 6 WHY THE LARGE FARMS PAY BETTER Efficiency in Use of Labor on Farms of Different Size Size Farm No. Crop No. Cows No. Crop No. Crop Acres No. Crop Acres per per Man Acres per per $100 Invested Acres Man Horse in Machinery 16 13 5 9 7 25 20 7 IQ 6 39 26 9 13 9 62 33 9 16 9 125 34 9 21 DIVERSITY 10 Generally speaking, southern Chautauqua County is a dairy region, and the chief income of the farms is from stock. If we distinguish more closely, however, it is readily seen that dairy products Constitute a distinct source of income, while the sale of cattle constitutes another source. Many farms keep poultry or some livestock other than cattle, while quite a number grow crops for sale. The records show, however, that cash crops are of minor importance in this region. Table VIII shows the effect of diversity on labor income in the form of a comparison of the per- centage of farm income derived from milk. The farms are arranged in five groups, according to the per cent of total receipts derived from milk. Average labor income is shown for each on i6i Chautauqua County Farms 9 group, and also the average amount of each chief source of in- come, namely, milk, cattle, crop sales, and poultry. It will be noted that the best labor incomes, on the average, were made neither by the men having relatively small milk sales or relatively "high milk sales, but by the farms located in the middle groups. TABLE VIII THE EFFECT ON LABOR INCOME OF THE PER CENT OF THE FARM INCOME DERIVED FROM MILK Percent Total Receipts Number Labor Milk Cattle Crop Poultry from Milk Farms Income Receipts Increase Sales Receipts 17 10 $ 58 $214 $212 $414 $101 35- 24 633 916 750 170 272 . 50 57 493 893 348 143 146 69 42 256 1 143 240 71 75 83 24 44 1 184 106 35 74 The farms having froih 25 per cent to 60 per cent of their income derived from milk, comprising the two groups with average per- centages of 35 and 50, have quite decidedly better labor incomes than the lower and higher groups. Some reasons why this is true are that a moderate diversity of farm enterprises gives a better distribution of labor, and also is an insurance against the partial or complete failure of any enterprise. Several enterprises give ^ opportunity for more constant employment of labor, both as re- gards the day's work and the year's work, than do most businesses lacking in diversity. While some special conditions may necessi- tate close limitation to one or two enterprises, it appears quite cer- tain that the average dairy farm of southern Chautauqua County may well have three or four important sources of income, prob- ably maintaining livestock as the chief enterprise, but deriving 40 to 60 per cent of the income from sources other than milk. The sale of dairy cattle, poultry, hay, potatoes, and buckwheat consti- tute the most common sources of income besides milk in this region. QUALITY OF COWS ' It is a well known fact that milk is produced on a close mar- gin of profit. Taking this into consideration, it follows that the men in the dairy business will study the cost of production, so that this cost may be lowered and the margin of profit increased. An important consideration in the cost of production is the total amount which is produced yearly by a single cow. In our figures, production oer cow is figured for each dairy on the average amount of dairy products sold per cow. Most of the farms are lo A Farm Management Demonstration selling whole milk, so this is quite a fair comparison. Table IX shows a classification of the farms according to receipts per cow and labor income. The farms having low producing cows ap- pear to be fairly numerous and on a poorly paying basis. As the receipts per cow increase, the labor income increases also, until we come to the group having highest receipts, where the labor income falls off slightly. It will be seen, however, that the num- ber of cows per farm in this group and the average capital per farm are much lower than in the previous group. The indication is that the farms having $85 cows, on the average had more cows and larger farms and that the larger size combined with very good quality to give a higher return than the higher quality of cows with fewer numbers. It is interesting, however, to compare the group having highest production with the group having the lowest production, the number of cows being the same in each case, but the labor income being very different. TABLE IX HOW THE AVERAGE PRODUCTION PER COW AFFECTS PROFITS 147 Chautauqua County Farms for 1914 Keeping Six or More Cows Milk and Its Products Sold Number Number Cows Average Labor per Cow Farms per Farm Capital Income $45.00 39 12 $ 7397.00 $ 48.00 64-00 26 14 7945-00 157.00 74.00 28 15 9568.00 543.00 85-00 23 17 10767.00 663.00 108.00 31 12 5698.00 593.00 CROP YIELDS In Bulletin 349 of the Cornell University Agricultural Ex- periment Station, Prof. G. F. Warren explains how to figure crop mdex, a term used to indicate the yield of all crops on one farm as compared to the average yield of all crops on a number of farms, (p 679, Bui. 349.) "If a farmer gets a small yield of hay and a large yield of oats. It is difficult to say whether his crops are good or poor In order to make a comparison all yields must be charged to a per- centage basis. The method of figuring the percentage yield is illustrated as follows : Suppose that a farmer has 20 acres of wheat yielding 15 bushels, 30 acres of oats yielding 40 bushels and 50 acres of hay yielding 1.7 tons. Each of these vields is on i6i Chautauqua County Farms 1 1 compared with the average of the region as given on page 699. The wheat yield is 81 per cent of the average. The oat yield is 97 per cent. We then have : Percentage Acres Per cent times acres 20 81 1,620 35 97 3.395 50 120 6,000 105 11,015 Dividing 11,015 by 105, we find that this farmer's yields are 105 per cent. This we call the crop index." TABLE X HOW CROP YIELDS AFFECT PROFITS Farms Sorted by Percentage of Crop Yields No. Crop Acres Crop No. Crop Receipts from Labor No. per Animal Index Acres Crop Sales Income Farms Unit 52 50 $ 28.00 — $326 8 2.9 81 47 86.00 218 38 2.2 100 46 102.00 432 64 1.8 120 33 276.00 464 30 1.5 144 28 114.00 494 17 1.3 Table X shows how crop yields affected labor income on these 161 Chautauqua County farms. The showing is positive in all cases, but a much larger difference is seen between the lowest yields and the average than between the average and the highest. By comparing number of crop acres with crop acres per animal unit, it is shown that the farms with largest yield, al- though smaller farms, were keeping more animal units than the larger farms with lower crop yields. Speaking of the importance of crop yields as affecting labor income, Prof. G. F. Warren, in Bulletin 349, says : "Good crops are one of the primary factors affecting profits, but phenomenal crops are not necessary. Few farmers raise crops more than a third better than the average. Good crops pay, but it is not necessary to raise 'two spears of grass where one grew before.' Those who raise one and a fifth are doing very well. In fact, it is not probable that it would often pay to raise twice as much as the neighbors raise on the same soil. Farmers keep a fairly close adjustment of crop yields to prices, but, being conservative, they do not always change quite as promptly as con- ditions would justify them in doing. They are not so foolish as 12 A Farm Management Demonstration to be lOO per cent out of adjustment to conditions, as is assumed when they are advised to double their crop yields. Of course, individual instances can be cited in which such a change has paid, l)ut instances prove nothing." Speaking of the method of reasoning from groups of farms, rather than from individual farms, Prof. Warren says: "There are plenty of individuals who are doing better with poor crops 1:han someone else is doing with good crops. Such cases are be- cause of some other difference that is great enough to more than offset the result that comes from the crop yields." COMBINED EFFECT OF THE FOUR FACTORS While a farm may be made profitable by developing One or two of the factors we have been considering to a high degree of excellence, the conclusion from such studies is that it pays best to develop a well balanced business. Often there is a tendency to develop high producing cows, or larger yields of crops, where in- creasing the size of the business would, pay better. This is a mat- ter that will repay considerable study and thought. TABLE XI COMBINED EFFECT OF THE FOUR FACTORS ON LABOR INCOME Average of Each Factor (i) Size, 13 cows. (2) Receipts per cow, $74. (3) Diversity from 25 to 60 per cent of total receipts derived from milk. (4) Crop yields, 100 per cent. NTo. of Four Factors as Good or Better Average Labor Number of Than Average Income Farms — ^$103.00 ir 1 64.00 45 2 342.00 57 3 639.00 34 4 1272.00 10 Table XI gives a sorting by all four of the factors. The first group contains farms having no factor up to average. The next group includes farms having any one factor up to the aver- age or better. The third group includes farms having any two factors up to the average or better and so on. The advantage of those_ farms m the upper groups is very striking. A pertinent question for the mdividual to solve is where to put his energy and attention for making his farm more profitable. Can profits be in- -creased more readily by giving practically all the attention to one on i6i Chautauqua County Farms I3- or two factors, or will it pay better to spread out more, bringing each of three or four farm enterprises up to a standard as good or better than the average ? If the returns on any individual farm are unsatisfactory, the following questions may serve to aid in finding out the reasons- why : , 1. Is the size of your dairy above the average of the farms studied? 2. Do you have sufficient pasture and crop land to maintain a dairy of over 13 cows? 3. Do your cows turn over $74 on the average from milk and its products sold? 4. Were your crop yields as good as the average of the farms- surveyed for 1914? If not, why? — Hay 1.78 Oats 28 \ Silage 8.3 Potatoes 157 5. Do you depend largely upon milk alone for your income?" If so, how can you best diversify? 14 A Farm Management Demonstration A COMPARISON OF YOUR FARM WITH THE AVERAGE i6i Chautauqua Your Co. Farms 19 14 Farm Labor Income ., $ 370.00 Size — ■ Total Capital $8240.00 Total acres 126 Acres in crops 42 Acres in pasture 36 Average number of cows 13 Number of men on year basis .... 1.6 Average number work horses .... 3 Labor Efficiency and Expense — Number of crop acres per man ... 26 Number of cows per man 8 Number of crop acres per horse. . 14 Number of crop acres per $100 worth of machinery 8 Total labor charge not including operator's time $261.00 Total cost of purchased feed . . .. $368.00 Value of farm per acre $ 44.00 Animal Production — Milk and butter sold per cow .... $ 74.00 Crop Yields — Hay, acres per farm 23 Tons per acre 1.8 Oats, acres per farm 7 Bushels per acre 28 Corn silage, acres per farm 4^/^ Tons per acre 8.3 Buckwheat, acres per farm .... 1.6 Bushels per acre 28 Crop Index 100% Diversity — Per cent of total receipts derived from milk 53%