As previously stated, advantages, if known, must usually be paid for. It comes about, therefore, that if a region or a farm is adapted to the raising of a certain crop which is more profitable than the average, such as maize, tobacco, alfalfa, celery, apples or peaches, this land will, other things being equal, command a higher price than land which does not possess this characteristic.
There is an underlying economic principle which the man who goes out to choose a farm should clearly understand. The principle has been stated by Fairchild as follows: The normal value of products capable of indefinite multiplication tends always toward the value of least costly. On the other hand, if any production cannot be largely extended, so that the supply barely meets the requirements of the purchasers, the tendency of normal values is toward the cost of the most costly part of the product required to meet wants.
This principle explains why land especially adapted to raising maize is higher priced than land primarily adapted to raising wheat. Maize which enters into commerce is raised almost exclusively in ten states of the United States. Wheat is harvested practically every month of every year in different parts of the world. The young farmer should consider, therefore, whether he is undertaking to raise crops in which there is unlimited competition, or whether soil or other conditions cause the output to be relatively limited.
CHAPTER VI
SIZE OF FARM
The size of the farm is another of those questions on which there is endless debate and to which no general answer can be given. There are, however, certain rather definite principles which may help in settling an individual problem.
The size of the farm is related to the income per acre. If ones ideal or purpose is a gross income of $1,000 or $3,000 or $5,000 a year, he must consider how large a farm will be necessary to bring this return.
Assume, for the sake of discussion, it is desired to obtain a gross income of $4,000. In the eastern United States 200 acres of tillable land devoted to general farming may bring this amount. If the land is especially adapted to potatoes, and this crop takes a prominent place in the rotation, 100 acres might be sufficient to return the income named. Likewise a 100-acre retail milk dairy farm may produce a similar result. Forty acres devoted to truck farming or market gardening may be sufficient.
There is another way that the size of the farm needed may be estimated. There is a general relation between the gross income and the amount invested. In 1900 the gross income of the farms of the United States was 18 per cent of the total investment, which includes land, buildings, tools, and live stock. The average gross income varied for the different types of farming common to the northern United States from 16 to 19 per cent. This represents, of course, a great deal of very poor farming. The income of prosperous farmers must be somewhat better than this. If we assume that by careful methods the gross income is 25% of the total investment, then an investment of $16,000 will be required to bring a gross income of $4,000. While it is true that the gross income has no necessary relation to net income or profit, yet it is well to remember that a gross income is a necessary antecedent of a net income. The net profit from the production of a bushel of wheat, a dozen of eggs, or a pound of butter is of comparatively small consequence unless a sufficient quantity is produced.