543 H4I ALBERT R. MANN LIBRARY New York State Colleges OF Agriculture and Home Economics AT Cornell University Cornell University Library S 563.H41 Size of Farms; its relation to profit. 3 1924 003 375 171 Cornell University Library The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924003375171 Ill, SIZE OF FAEI'IS. ITS EEMTIOIJ HO PROFIT. MuGlx difference of oidnion exists regarding tlxe most profitable size of farm. Prof. Hmit (How to GiLOOse a Farm, p. 16) has well expressed a popular notion 'by q.uot- ing the old verse "A little farm well tilled A little ham well filled A little v/ife well v/illed." The opinions more often receive oral than va-itten expression hut the following from the Rural Uew Yorker (Yol. 25, page 316) is a ciliaracteristio answer to the question of size of farm. Large vs. Small Farms. " A correspondent, with an inquiring turn of mind asks us if we are an advocate of large or small farms. To be specific, we may say that we do not advocate either. We do not care whether a farm, is large or small so long as it is made' as productiv© as possible. V^e do not knov; any reason why a man with sufficient brains, capital and energy, should not cultivate well 1000 acres as well as another man with less capital and equal brains and energy can o^iltivate ten acres; nor do we see any harm grovi^lng out of it. V/e §re oi--'posed however to a man ovming or .controling large tracts of uncultivated land and calling it a "large farm" and himsel'^ "a large farmer." He may be a sttujililiiig block in the w§y of every progres- sive farmer in bis neighborhood and profit by their thrift and industry which enhances the value of his land without any effort of his own." The writer was lead to take up the study from a desire to determine, if possible, whether the size of farms is a factor in fixing the profit of the owner and, if so, why. Opinions differ very radically and, excluding highly specialized farming nome of them seem to be based upon def- inite statistics. The question at issue is whether in gen- eral and dairy farming, the size of farm is a factor in itself. There are two points of view; — that of the owner and that of the political economist. Prom the ovmer's view point a large income regardless of the extent of land is profit, while the economist considers a high production per acre of maximum importance. The two are oiPten con- fused. J^ the replj- of the Rural ITew Yorker the individ- ual, his neighbors and the country at large are mentioned without clear distinction. The latter point of view is considered but chiefly to throw light upon the problem of individual farn management and not as an economic problem. Maay say tliat farm management depends entirely upon the man, and that Ms chances are as good on a small farm as a large farm. If we Isolate what the editor of the Hew Yorker says regarding the individual ovrner and the size of farm he states that the man and his capital are the important factors. Since capital is worth ah out hio all above that would seem to depend upon the man. DATA. The question of data from which to determine the actual parofits of a sufficicr.tly large number of farms is important. The census statistics are not full enough. The only sources v/hich the writer is ahlfe to fijid are the agri- cultural survey statistics of Brotcn and Caroline town- ships in Tompkins County, H. Y. , made \i'j the Kew York State College of Agriculture, and the statistics gathered by Mr. M. G. Burritt during 19C'7-1908 for his thesis on fann man- agement. In all there are 521 farms v/ith a total acreage of 36,382 acres. This data Is sufficient in extent and quality to indicate certain tenC.encles very consistently. METHOD OF GOlIILIIia MTS. In conpiliii^i' data, that from different sections has ¥een kept se:^xi,rate to I'errait its further use should any one desire to recojisider the problem after r.ore data has teen aoctimulated. Statistics taken fr,6i-i the orp:inal < are in ta"bulated form in the av-pendis arrajaged in groups accorclinp- to total area. The nxmher of farm refers to the nni/)bcr given the farm in the original data. They have been divided into minor divisions for the assistance of any who may have sufficient data to make such division representative. These groups are as small as practicahle. In Grot on township they are of farms varying generally not more than 10 acres. In Oaroline tovraship the groups vary 20 acres. Burritt's farms were not divided except into five major groxzps at 60 acres, 100 acres, 160 acres, and 200 acres. The smaller groups of Caroline and ffrot on are comhined into major grou-ps as in Burritt's and in a third tahle all major groups of different sections are combined. DEFIHITIOIS OF TEELIS. As there is some variation in the use of certain terms the following are defined as used in this thesis. 1. Expenses include fl) all expenditure, not made for iraprovements, and (2) all deterioration in value of livestock. 2. Cash expense is expense less the deterioration in value of livestock. 3. Labor expanse includes the wages and board of hired labor- 4. Eeoelpts Includes all cash received -f- all increase in value of livestock. 5. Farm inoxeS!se is the difference "between the receipts and e:cpenses. 6. Lahor income is the laLor income per man or the farm ircome less 5>i^ interest on the total capital, divided by the numher of unpaid men conducting the farm. A hoy is usuall7 considered as a portion of a nan accord- ing to his age. 7. Interest on investment is the rate of interest on thsB total capital which the farm income would pay after deducting ySOO.OO for the lahof of the ovmer. 8. Tillalile area is the area under the plow. 9- Farm area is tlB tillable area plus pasture land. TABLE I. AVREAGE PER FARM. Correlations of various factors with the sise of farm. TABIE I. ATERAGE PER FAH^. Correlations of various factors with tlie size of farm. Size of Famis. ETo. of Fax'ms . Total Fann Area. Area. Tilla.ble Area. % on Invest Grroup I. Acres. 1-59. 58 39.2 35.66 31.67 1.2 Group II. 60*99 84 83 67.41 62.47 4.36 Group Ill . 100-159 119 ISO 95.93 89.3 6.57 Group IV. 160-199 24 176 140.47 131.12 3:.45 Group Y. 200- 33 261.7 207.16 176.8 8.17 Table I Continued. Labor Income Farm Inc orae Expense Cash. Receipts Exxjense Group I. #229.89 ^;386,98 ^270. 59 #181, .80 $657.47 Group II. 276,15 550.62 452.55 290, .01 1003.17 Group Ill . 430.21 796.63 614.01 431. .66 1410.22 Group IV. 536.71 980.04 697.66 549, .41 1677.89 Group V. 676.75 1428.97 1373. 469, .70 2797.54 Table I Continued. Group I. Total Capital #2786.31 Beal Bstate $2001. Lab r App end ix Expense Reference 64 ^'48. 89 p. 21 Group II. 4542.24 3349. 76 125.97 21 Group III. , 6042.93 4435. 02 245.60 22 Group IV. 7541.79 4079. 24 S60.33 22 Group V. 11609.65 38609.' 91 585.69 22 lARGE FAPJ:3 YIELD A LARGER Li\BOR r.TGOllE. nothing points nore directly to the sticcess 03* failure of a farmer than his own income ahove expenses and interest on hie investment. IIo indication from this arrangement of farms is more clear than that the farmer's income for his time is greater on large farms. The aver- age lahor income per farm of 33 farms of over EOO acres is $675.73 while that of 58 farms of less than 50 acres is f 229. 89. The large farms in these cases offer three times as large a salary as the snail farms. LARG.E FAFi:3 AVERAGE A IIIGIiT]^ rnRGEiIT..G.; OE IlIVESEJEiiT. \7hile the total income for his lahor is of great- est concern to the farmer, the interest on investment is a very common method of estimating profit. It is not, hov;ever, a safe indicator for the farmer. A high rate of interest on a small capital may not be a living income. However, in Table I the largest farms offer the highest rate of interest. On farmscof less than 60 acres the interest on the investment is l.S'p. IThere is a gradual rise with the increase in area, the largest farms givir^ 8.17^. Missing Page RECEIPTS P?]r. ACEE DEGEBASE :u"i]:iDIY u'lTH IirGRi]AS2 III SIZ3 OF WaIK. She receipts per acre oLecrease from iii,16,79 on the groups of smallest farms to ^9.52 on tlie fourth, group (160 acres-200 acres) and then rises with the largest farms to .j;l0.59. T^e cause of this irregularity is not clear unless it be due to the less number of farms in the fourth group. However, there is a distinct de- crease cf nearly 40^ in the receipts per 8.cre of the large farms over the small farms. EJIPSHrjES PER ACRE. Unfortunately the irregularity of the fourth aad fifth groups makes any conclusions regarding the expenses per acre rather uncertain. Ihe decrease is consistent from $6.86 in the 'group of smallest farms to 'i:3.95 in the fourth grotip. But it rises to -■■'5.25 in the largest farms. An average between the last two groups, ^4.60, would indicate that the expenses de- crease about oSfj with increase in area of farms. This is seven ;j less than the decrease in receipts. LARGE FARI,IS ILIVE A PIIGHER PERCEITTAGE OP T]i.:bee ahd ,;a3te laui}. The farm area of sr-all farms is 91.04^ of the total area (Table II) while that of the Icrger fo^rras de- Greases to 77.58^'^ iii the largest. This neans tliat 9','b of the area of small farms is timber wMle 225^ of the large farms is timber and ?/aste. PASTURES . The land used exclusively for pasture does not show an;?- marked correlation v;ith the total area of the farm. T^e following from table II shows the 'yj of total area in pasture. llo. of Group. I II III IV Y % of pasture 10.1 6.8. 6.9 6.3 10 Considering the large variation in total area the ^ of ijasture seems ver^ uniform. LABOR EZPEITSE PrcP. IGTO^ IITCP^^ASES V/ITil THE SIZE OF FARM. Except for groiip 4 the labor expense per acre rises gradually fron $1.24 to '^Z.ZZ. TOTAI LABOR EXPSIISS PEE ACRE DECREASES A3 THE SIZE OF F/iP:: I1ICR]i;A3SS. If, however, the farmer's salary $300.00 be added to the labor eicpense the order is reversed. G?he labor expense of the smallest farms T/ould then be $6.86 per acre and that of the largest ;i);3.39 per acre. 10 SliiLL FAKl.i ABE CilPITALIZED HIGHER. Table II shows that the capital per acre of tte smallest farns is ;i;'75.54 while that of the largest is ^;44.S6 per acre. ilvIAII FAFi:S HAY3 LIORE FLOATIIICt CAIITAI.. By subtracting the real estate value from the total capitalization in table' II it is fo-ond that the floating capital of the small farms Is ^'i;£4.43 and that of the largest farms vll'46. This indicates one of two things--that the snail fanis fto not utilize their ma- ohinerj and other personal property to the best advan- tage or that the large farms will bear more stock. SThis question is left for further study. LARGE FARlvIS OFFER THE BEST OPPQRTUITITIES. From table I it is evident that a 250 acre farm, in general, offers a ligher salary than a 40 acre fan:i. While Table H shows conelusively that the profits per acre are less on the large farm "it also shows some causes for that condition. If it be possible to iOBrease the production per acre of the large farm its profit will be greatly increased. Three factors influence faorra profits, — receipts, expenses and interest on capital. While the receipts and expenditures per acre decrease about piropor- 11 tionally as the size of the farm increases the differonce between them decreases ver^r rapidly. In table II the expenses and receipts of the small farms are respectively 46.86 and iD6.79 per acre and their difference, the farm income, is $9.93. T^^e expenses and receipts of the larg- est fanns decrease about proportionally and are respect- ively $5.25 and :if;10.69 while their difference is $5.47 as compared with v9.93 pe^: acre on the small farms. The interest on the capital per acre is less on the large farms since they are capitalized less per acre. If, by increasing the expenditures for labor and machinery, the receipts can be proportionately ijicreased the net income will be increased. And siii.ce the capital will not be materially increased the opportunities of increasing thee profits of large farms seem dependent on increase of ex- penditures which will increase production. Missing Page Missing Page