The Young Farmer: Some Things He Should Know

by Thomas Forsyth Hunt

The young farmer who wishes to know whether the operation of a given tract of land in a certain manner offers him a worthy opportunity will not find the interest on the investment method the best suited for his purpose. This is especially true when applied to a single product. For example, it may be shown that 50 hens will, when properly managed, in connection with other farm enterprises, return a remarkable interest on the capital employed. It does not follow, however, that a man can make a living with fifty hens or even 500 hens. If a man has an investment of $5,000, on which he obtains 10 per cent, his income would be $500. If, on the other hand, he has an investment of $25,000 and obtains a return of only 6%, his income is $1,500, or three times the former amount. In neither case, however, does this form of statement tell a man how much of his income is due to his brain and brawn and how much to the capital invested.

What the young farmer wishes to know is how much will he receive for his own time, energy and skill, after deducting all expenses and a reasonable interest charge on his investment—such a rate of interest as he could get by placing his money in good securities or what he would be required to pay for his capital if he borrowed it. This is best obtained by the labor income method. With this method all expenses are subtracted from all sales and to the cash balance thus obtained is added or subtracted the increase or decrease in the inventory. This balance may be called the farm income. Thus far the procedure is just the same as the interest on the investment method. From the farm income is now subtracted a reasonable interest on the investment, the balance remaining is called the labor income. This is the return which the farmer has obtained by and for his own efforts. If this balance is zero, then he should change his methods or get into some other business.

This statement of his income, whatever it may be, enables him to compare his prosperity with that of the man who is employed upon a salary. Here, again, however, it is difficult to make comparisons because of the differences in expenses of living. The chief difference, however, in the expense of the wage earner in the city and the farmer is in the matter of house rent. For example, if the wage earner pays $300 a year house rent that must be deducted from his income in comparing it with the labor income of the farmer. It is often stated that the farmer also has his living from the farm. This was much more true formerly than it is at present. Under present methods of distributing food products and with modern types of farming, the amount of food supplied the table from the farm is comparatively small. The rancher in Montana eats foods canned in Maine or Delaware, while the New Hampshire farmer buys his vegetables from Boston commission merchants. The Minnesota farmer cannot supply his breakfast table with oranges, grapefruit or oatmeal. Many of them buy, if not their bread, at least their flour, and also their butter. The fact that the city man indulges in high living is no argument in favor of the country man expecting less wages. Some of those things which are necessary to make the country an ideal place to live are expensive. Some of them are more expensive to obtain in the country than in the city, as, for example, educational facilities. In justifying his purchase of an automobile, a young farmer recently stated that his wife had certain cares, responsibilities and even privations which her city friends did not have. He thought that the automobile would help to offset them.

To my mind there is no more ideal place to live and rear a family than in the open country when the conditions are what they should be and may be. I believe, however, it is well to insist that it costs something to live in the country as well as in the city if one lives as well as every farmer has a right to expect to live.

Let us now consider the steps necessary in order to arrive at a fair estimate of the labor income. To make the matter concrete, we will assume a farm of 200 acres worth $60 an acre located in central Pennsylvania on a limestone clay loam soil over 1,000 feet above sea level. This farm is to contain 20 acres of timber, a 30-acre apple orchard two years old, 40 acres of pasture, 96 acres of cultivated land divided into six 16-acre fields. The rest of the 200 acres consists of small yards, roadways and waste land. One-half of each of the six 16-acre fields is to consist of a rotation of maize, oats and wheat, each one year, and hay three years, the latter clover and timothy followed by timothy. The other half is to consist of maize, barley, followed by alfalfa four years. In the young orchard there will be grown for a few years potatoes, tomatoes, cabbages and garden peas. After the orchard attains a size which forbids these intertilled crops, a portion of the pasture may be broken up so that these market garden crops may be raised. There will be kept six horses, 20 milch cows, 20 ewes of some mutton breed of sheep, five brood sows and 50 hens.

First of all, let attention be called to the broad knowledge of farming required to operate this moderate-sized and comparatively simple farm. The crops to be raised are maize, oats, wheat, clover, alfalfa, timothy, potatoes, tomatoes, cabbages, garden peas and apples. The animal products sold will be chiefly butter fat, wool, mutton, veal, pork and eggs. This is neither a long nor complex list of products. They are all adapted to the farm which the writer has in mind. Yet the man who operates this farm to the highest success will need to have a knowledge of agronomy, or the raising of field crops, of horticulture, animal husbandry, including poultry husbandry and dairying. He needs to have a good understanding of the principles of agricultural chemistry, to have a knowledge of how to prevent and combat fungous diseases and insect enemies. To get the most out of his timber land he should know at least some of the first principles of forestry, and if he has gained some instruction in the study of landscape gardening, his home will be more attractive, and his farm a source of greater pleasure to him.

To proceed with the estimate, the first thing to be done is to make a record of the cropping system, giving the areas and the estimated production of each crop. How is the yield per acre to be determined? Clearly, one cannot afford to estimate his profits on the basis of some unusual yields. If one could be assured of 40 bushels of wheat, 60 bushels of oats, five tons of hay, 300 bushels of potatoes, or 200 bushels of apples per acre, or 500 pounds of butter fat per cow, or 150 eggs per hen per year, there would be no difficulty about obtaining a snug labor income. Such results are possible and are appropriate ideals for which to strive, but are not safe as estimates on which to do business.

The year books of the United States Department of Agriculture contain the annual estimate of the yields, and the average December farm price of staple crops by states. These figures may serve as a basis for making estimates. If the natural conditions are about the average stated, one may properly assume that he can obtain an increase of 50%. He may even hope to double the yield, although it is not safe to assume such an increase in making an estimate of profits. If the natural conditions are more favorable or less favorable than the average, he must take the fact into consideration in his estimates. In the same way he may consider whether the average December farm price represents fairly his expectation of the price, or whether because of favorable location or superior quality of the article purchased he can expect higher remuneration.

It is here assumed that the young farmer is himself going to be more than an average farmer. If he is not he will only get average results, in which case his labor income will be only that of the ordinary day laborer.

To repeat the idea in concrete terms. If the young farmer is located in central Pennsylvania and finds that the average yield of wheat for the state is 17 bushels an acre, he may safely estimate that his improved methods will bring him 25 bushels of wheat to the acre. He may even hope for 34 bushels per acre. At the Pennsylvania station several varieties of wheat have, during the past 18 years, averaged over 30 bushels per acre. One year one variety produced 43 bushels. It would not be safe, however, to use such figures in estimating profits.