T5 BULLETIN OF THE No. 41 Contribution from the Bureau of Plant Industry, Wm. A. Taylor, Chief, January 14, 1914. A FARM-MANAGEMENT SURVEY OF THREE REP- RESENTATIVE AREAS IN INDIANA, ILLINOIS, AND lOWA.^ By E. H. Thomson. Agriculturist, and H. M. Dixon. Scientific Assistant, Office of Fitrm Management. INTRODUCTION. • Farm management treats of the business of farming. A farm- management survey has for its purpose a study of the profits of the individual farmer to determine the factors that control his income. Agriculture to be progressive must be profitable. As farming is a business involving both capital and labor, the farmer should receive a fair income on his investment as well as wages for his labor. Many farmers receive no wages for their work, due largely to poor farm organization or from following types of agriculture unsuited to their particular region. Successful farming is an individual, economic problem. The farm is a combination of enterprises, and their individual organization will determine in a large measure its profitableness. The corn-belt States excel almost all other regions in wealth of farm products. On rich soil with ample rainfall a system of agri- culture is found that is unequaled as an example of the expansive type of farming. This type is developed on the basis of the farm work horse as the means of motive power. To attain its highest efficiency, this type calls for expansion in farming area. Such a type is in direct contrast to the agriculture of the countries of southern Europe or of Belgium, where man and not the horse furnishes the labor. The American type is based on the product per man, the European on the product per acre of land. In the summer of 1911 the Office of Farm Management of the Bureau of Plant Industry, United States Department of Agriculture, made a farm-management survey of certain districts in Indiana, Illi- nois, and Iowa. The results of this survey, which are outlined in this Acknowledgment is due to Meysrs. H. F. Williams, B. L. Currier, B. M. McGrew, O. S. Rayner, and C. Wensel, who assisted in collecting the data presented in this bul- letin. Thanks are also extended to the many farmers in the regions studied through whose courtesy this work was made possible. 13131°— 14 1 J. . , . \ 2 BULLETIN 41, U. S. DEPAETMENT OF AGRICULTUEE. bulletin, include data from about 700 farms. It is fuU}^ realized that further studies, embracing larger areas in each State, are necessary before definite statements can be made regarding certain points. However, the information gathered furnishes almost conclusive proof with respect to many phases of farm organization. The results pertaining to the size of the farm in its relation to operating costs and the profits received are particularly valuable. It would be highlj'^ desirable to make a survey of the same regions for several successive years. If such data were obtained, however, it is believed that the conclusions would be the same as those from the one year's study. A possible exception might be the conclusions rela- tive to the best paying type of farming. Extreme fluctuation in prices may make some crops unprofitable at certain times. Potatoes and peaches are two excellent illustrations of this. Checking the results of any one year with the average prices for a period of years permits fairly accurate conclusions. Investigations made in different years and in widely separated States all point to the same general principles that apparently control a successfid farm. METHOD OF WORK. The data presented were obtained by having trained investigators who were thoroughly familiar with the agriculture in each district personally visit the farmers. Every farmer in the area selected for study was interviewed and a record of the year's business obtained. In this way, by including all the farms in a certain area, average results were secured. Experience has proved that one can not select farms which repre- sent the average of a community. Good farm buildings and neatly kept fences are not always sure signs of profitable farming. Certain questions are difficult for the farmer to answer and in a few instances his answer may be considerably in error. This trouble is eliminated by the fact that some men will underestimate, while others will overestimate the facts. The average is approximately correct. Only those results are included where there is a sufficient number of instances to insure reasonable accuracy. The farmer knows more about his business than most people give him credit for. Even though he keeps no records he is capable of giving a very close estimate on all those things with which he is familiar. Farm data gathered by the survey method of study ^ are unques- tionably as accurate as need be for all practical purposes. 1 Warren, G. F., Livcrmore, K. C, and others. An agricultural surve.y — townships of Ithaca, Dryden, Danby. and Lansing, Tompkins County, New York. New York Cornell Agricultural Experiment Station, Bulletin 205, pp. 375-569, figs. 147-201, 1911. Thomson, E. H. Agricultural survey of four townships in southern New Hampshire. U. S. Department of Agriculture, Bureau of Plant Industry, Circular 75, 19 pp., 3 tigs., 1911. 0. OF D. FEB 4 r?u <0^ ^X.<^ FARM-MANAGEMENT SURVEY OF REPRESENTATIVE AREAS. 3 LOCATION AND DESCRIPTION OF THE AREAS STUDIED. Three districts, one each in Indiana, Illinois, and Iowa, were se- lected for the farm-management study, the approximate location of each being shown in figure 1. In choosing these areas an effort was made to have as uniform farm conditions as possible in each region. The soil and type of farming have a decided bearing on the profit- ableness of agriculture in a region. These factors were carefully con- sidered. Owing to differences in land values and to the general sys- tem of farming it was not possible to secure three areas in separate States that would be similar in all respects. The aim was to have each district representative of the agricultural conditions prevail- ing over a large area. MINNESOTA Vui. 1. — Map of Iowa, IlUnoiis, nnd Indiana, showinq: the location of the areas studied. Corn, oats, wheat, and hay were the crops universally grown in the districts studied, corn being the predominating crop in all of the districts. Hogs and cattle, Avith a few sheep, constituted the produc- tive live stock. DESCRIPTION OF THE INDIANA AREA. In Indiana three adjoining townships — Forest, Johnson, and Prairie — were selected. This region is in Clinton and Tipton coun- ties, about 40 miles north of Indianapolis. The nearest city of con- siderable size is Frankfort. Practically all of the farm produce sold 4 BULLETIN 41, U. S. DEPARTMENT OF AGEICULTURE. was shipped out of the counties, there being no local market of any consequence. This area is one of the oldest settled regions in the central part of the State. The land was originally covered with heavy hardwood timber, except for a few" strips locally known as prairie soil. The land is level to slightly rolling, being cut up in some places by sluggish streams. The soil is a dark, rich loam and under good management is very productive. After the land was cleared large areas were too wet to cultivate well, but extensive systems of tile drainage have overcome this difficulty. Many farms have miles of tile drains running through them. General farming is followed in almost all cases. In a few sections canning factories have developed, and this encourages some truck growing. This type is usually confined to small farms near towns cr cities. The average size of the 277 farms studied was 112.8 acres. Of this area 86 per cent was tillable, 9.2 per cent was in woods, and 4.5 per cent in waste land. Roads, streams, swamps^ etc., are included in the waste area. The important crops are corn, oats, wheat, hay, and clover seed. Of the rented farms 38 per cent of the tillable area and 36 per cent of that on the farms managed by the owners were in corn. Oats occupied 19 per cent, Avheat 11 per cent, first and second year clover and tim- othy mixed, each 8 per cent, and pasture, not permanent, 13 per cent. The prevailing rotation was corn two or three years, oats, wheat, clover and timothy mixed, and pasture. Few men follow a definite rotation on their entire farm, certain fields often being kept in corn for several years. Generally the corn and hay were fed, oats, wheat, an.d clover seed being the crops sold. On the farms studied practically no beef cattle were raised and only a few were purchased and fed. Hogs were the most important of the productive live stock. Farm buildings, as a rule, were well built and neatly kept. The fences were unusually good, the farmers seeming to take a pride in this method of farm improvement. Practically all the roads in this region were graveled, there being only a few of the original dirt roads, which are almost impassable in the early spring. The building of the graveled roads has been a heavy expense to these farming districts and has been one of the causes of high taxes. The region as a w^hole is more prosperous and enterprising than some other sections of the State. DESCRIPTION OF THE ILLINOIS AREA. In Illinois the district selected comprised an area of approxi- mately 110 square miles in the southern part of Cass and Menard FARM-MANAGEMENT SURVEY OF REPRESENTATIVE AREAS. Counties. Among others it included the townships of Virginia, Ashland, and Tallula. By railroad the area is about 200 miles from Chicago and 100 miles from St. Louis. All of the produce sold is shipped out of the district. The land, except along the streams, is prairie soil. It is a sticky black loam, common to large areas in the central part of the State. Figure 2 shows the general character of the country. It lies \ery level in places and is likely to be wet unless tile-drained. Xearl}' all farms have excellent systems of tile drainage, which have rendered the soil one of the most productive in America. The continuous cropping of corn for over 50 years, although having its effect, is almost unnoticeable. With any reasonable regard to the conservation of fertility, this soil would seem almost inexhaustible. Corn, oats, Fig. 2. — A typical harvest scene in central Illinois. and wheat are the important crops. Very little hay is grow^n, and this is largely clover. The second crop of clover is cut for seed. The average size of the 100 farms studied was 240 acres. Of this 95 per cent is tillable, 3 per cent is in woods, and 2 per cent in waste land. The area in corn per farm was 97 acres, the proportion on the tenant farms being about 10 per cent greater than on the farms operated by owners. Oats occupied 34 acres and wheat the same. The area in ha}^ was small, being only 13 acres on the owners' farms and 7 acres on those rented. The area in permanent pasture was greater than that in wheat, except on the tenant farms, where it con- stituted one-half as much. 6 BULLETIN 41, U. S. DEPARTMENT OF AGRICULTURE. The rotation followed by a few men was corn three years, oats, and wheat. Clover seed was sown in the wheat. This generally makes a good growth the same year, after the Avheat is cut. It was usually plowed under the same fall or the following spring on these farms and was not allowed to grow a crop of hay. Several farms had fields where corn had been grown almost continuously for a number of years. The plan generally followed was to plant as much corn as could be taken care of during the rush season. Other crops, such as wheat and oats, were used to fill in. Oats are generally recognized as being an unprofitable crop on such high-priced land. A large number of live stock was kept on some farms. The feeding of cattle, hogs, mules, and horses gave an important source of income. Still other farmers were strictly grain growers, keeping no stock except the necessary work animals. The farm buildings were ample and well kept.. The fields were unusually large, with hedge fences bordering them. Considering the high price of land in that district, not as much care as one might expect is exercised in utilizing it. there being con- siderable waste areas along the fences and other places. The roads are not graveled, except in a feAV instances. In wet weather they are very bad, ownng to the thick, tenacious, claylike soil. The farmers in the area studied are thrifty and are hard workers. They know how to utilize machinery effectively so as to handle large areas, one man and team being expected to take care of 00 acres of corn. DESCRIPTION OF THE IOWA AREA. In Iowa the toAvnships of Willow, Greenbrier, and Highland, in the counties of Guthrie and Greene, were selected. This area is about 50 miles northwest of Des Moines and on the Chicago and Omaha line of the Chicago, IMilwaukee, & St. Paul Railroad. The region has not been settled as lung as either the one in Illinois or that in Indiana. Being prairie land with timber growth only along the streams, it is a fertile and productive agricultural district. In some places it is very rolling, steep hills being not uncommon. The rough areas are confined to the southern part, particularly to Guthrie County. The soil is a dark, rich loam and is very poorly drained in the more leA^el areas. Tile-drainage projects have opened up thousands of acres in that vicinity within the last few years. Corn, oats, and hay are the main crops. Wheat is sown, but not extensively. FARM-MANAGEMENT SURVEY OF REPRESENTATIVE AREAS. 7 The average size of the 227 farms studied Avas 186 acres. Of this area 01 per cent was tillable. Approximately one-half of the crop land was in corn, the other half being in oats and hay. Nearly 30 per cent of the tillable area was used for pasture. The rotation that was often followed was corn (two to three years), oats, clover and timothy hay. Beef cattle and hogs constitute the most important part of the farm business. Large numbers of western steers are purchased and fed, while in the hilly sections, distant from a railroad, a few cattle are raised. The selling of corn is generally confined to the farms on the level lowlands and near the stations. Many of the farms are far from market and, although the roads are fairly good, transportation is an important factor. DEFINITIONS OF TERMS USED IN THIS SURVEY REPORT. In order to present the data clearly, certain terms which will be used throughout the discussion are defined below. It is important that the reader thoroughly understand these, as they will materially assist in the interpretation of the results. Farm capital. — The farm capital is the average at the beginning and at the end of the j^ear of the value of all real estate, improve- ments, machinery, live stock, feed and supplies, and ca^sh necessary to carry on the farm business. It includes the value of the farm- house, but not the household furnishings. Receipfs. — The farm receipts include the amount received from the sale of all farm products and also the receipts from outside labor, rent of buildings, etc. If the value of buildings, stock, produce, or equipment is greater at the end of the year than at the beginning, the difference is considered a receipt. Expenses. — The farm expenses represent the amount of money paid out during the year to carry on the farm business. If the value of buildings, stock, produce, or equipment at the end of the year is less than at the beginning, this loss is considered an expense. Household or personal expenses are not included, except the value of board furnished to hired help. Fann income. — The farm income is the difference betAveen the re- ceipts and expenses. It represents the amount of money available for the farmer's living, provided he has no interest to pay on mort- gages or other debts. Labor income. — The labor income is the amount that the farm oper- ator has left for his labor after 5 per cent interest on the average capi- tal is deducted from the farm income. It represents what he earned • as a result of his year's labor after the earning power of his capital 8 BULLETIN 41, U. S. DEPARTMENT OF AGRICULTUEE. has been deducted. In addition to the labor income the operator received a house to live in, fuel (when cut from the farm), garden products, milk, butter, eggs, etc. The labor income corresponds to what a hired man receives when he is given so much cash wages, together with beard and room. Farm owner. — The term '' farm owner " is applied to the man who works or manages the farm he owns. Owiwr add'dionaJ. — The term '' owner additional " is used to desig- nate the man who owns a farm and rents additional land. Landlord. — The landlord is the owner of a farm which is rented to a tenant. Tenant. — The tenant is the person operating a farm rented from one landlord. Tenant additional. — The term '' tenant additional ■" applies to the person operating land rented from more than one landlord. Number and Idnds of farms studied. — In the total area studied in the three States TOO complete farm records were secured. These were divided into four classes, according to the method of manage- ment. The farms operated by oAvners numbered 273. Xone of these men rented additional land, but worked only the farms they owned. The farms operated by tenants numbered 247, each farm being owned by one landlord, whose income from that farm was determined. The third class comprised a group of farmers, 12G in all, who owned one farm and rented additional land. They took this means of having the use of more land than they actually OAvned. The fourth class, 51 in number, is made up of a few tenants who rented land from two or more landlords. These were not included in the tabulations with the other tenant farmers who operated only one farm. Of the 700 farms studied, 57 per cent were operated by owners and 43 per cent by tenants. Table I gives the number and classifica- tion of the records taken in each of the States. Table I. — ISiumhrr and chtasipcdtion of funiis studied in Indiana, lUinoifi, and Iowa. Classification of farms. Indiana. Ulino*. Iowa. Farms operated by- 123 83 56 15 73 71 36 16 77 93 37 20 Total 277 196 227 INFLUENCE OF CLIMATE ON RESULTS. In studying the profits of a region certain factors which may exert a marked influence must be noted. It has been conclusively demon- FAEM-MANAGEMENT SURVEY OF REPRESENTATIVE AREAS. 9 strated that the rainfall during the months of July and August de- termines to a large extent the yield of corn. Figure 3 shows ^ Qj 5: rv 1 !ii V ^ i*j fe - ^ << ^ ^ the average monthly rainfall for 10 years, as well as for the year 1910. In Illinois and Indiana the year may be said to be normal in almost all climatic respects. In Iowa a drought in early summer caused a shortage in the returns of pos- sibly 20 per cent be- low normal. The effects of this drought were most noticeable on the corn crop. The prices of live stock and grain are dis- cussed on page 31. These had a marked effect on the profits K ^ <3 5^ S S C> < Q /Oi/VA. . -0' ■N^ /\ . — - — • ;^ ^^ '. \ ^^ s • *"• > / / X -"" LA r/^y^ElTTE-, /A/O/AA/A. SPf?//VGnELD^ /LL/NO/S. — — — /i^'E/?AGE MO/Vmir P/?£C/P/TAr/0/i/, /90/-/3/0 //VCWS/i^£. -, MO/VTHtr Pf?£C/P/TAr/OA/, /s/o. 'iG. 3. — Chart showing a comparison of the rainfaU in 1910 with the 10-year average for each district surveyed. ^, \ \ / ^ ->i. / \ "-- / / r S "^ "-*- derived from the two types of farming. FARM PROFITS. INCOMES RECEIVED BY FARM OWNERS. The average capital, receipts, expenditures, and labor incomes for the 273 farms operated by owners are given in Table II. Table II. — Average area, capital, receipts, expenses, and profits on 273 farms operated by owners in Indiana, Illinois, and lotra. Total number of farms Average area acres . Average capital Average receipts Average expenses i , Average farm income Average interest at 5 per cent Average owner's labor income Indiana. 123 105 $17,535 1,876 689 1,187 877 310 Illinois. 73 253 Iowa. 77 176 $23, 193 2,308 858 1,450 1,159 291 Grand total or general average. 273 178 $30, 606 3,076 1,138 1,938 1,530 408 1 The value of unpaid family labor, except the operator's, has been added in with the other farm ex- penses. It is equivalent to the amount that would have been paid to hired help had not the family done the work. The average amount per farm was $86 in Indiana, $127 in Illiaois, and $101 in Iowa, 13131°— 14 3 10 BULLETIN 41, U, S. DEPARTMENT OF AGRICULTURE. The average capital per farm is $17,535 in Indiana and nearly three times that amonnt in Illinois. This ditferenee is due to much larger farms and higher value of land per acre in the latter State. The receipts per farm in all three regions approximate one-tenth of the capital invested. The farm income, which represents the income earned by the com- bined forces of labor and capital, is the auiount available to the farmer for his living and savings, provided he had no interest to pay on any mortgage or other debt. Deducting 5 per cent interest on the average capital leaves an average labor income of $408 for the 273 farm owners. This income, in addition to the food products furnished by the farm, represents the farmer's salary as manager of the business. It is evident that these men are receiving only a moderate sum for their year's work. If they sold their farms at inventory value and invested the money in good securities at 5 per cent the interest alone on a capital of $30,G00 would return them $1,530. In addition to this, they would have the amount they were able to earn at other work. The assertion that farmers are making large profits is erroneous. They are living on the earnings of their investment and not on the real profits of the farm. A farmer having an investment of $"20,000, with no mortgage, may receive a minus labor income, yet have nearly $1,000 as interest on Avhich to live. It is assumed in this discussion that capital should return 5 per cent before allowing the farmer any- thing for his labor. VARIATION IN THE LABOR INCOMES OF OWNERS. In Table III the farms are divided according to the labor income received. Each group gives the number of men who made labor incomes ranging from minus $500 and more to over $5,000. Table III. — Variation in. hihor incomes on 273 farms operated hij oioners in Indiana, Illinois, and Iowa. Labor income roceived. —.$500 and more . —$499 to -$200.. -$199 to $0 $1 to $200 .$201 to $400 ,$401 to $600 $601 to $800 Number of farms. Percent- age of total number. 9.9 8.4 14.7 19.4 12.4 8.4 7.3 Labor income received. .?.SOUo $1,000. .. $1,001 to$l,.500.. $1,501 to $2 ,000. $2,001 to $.3,000. $3,001 to $5,000.. $5,000 and over. Number of farms. Percent- age of total number. 4.7 6.9 3.6 1.8 1.1 1.4 One farmer out of every 22 received a labor income of over $2,000 a year. One farmer out of every three paid for the privilege of working his farm, that is, after deducting 5 per cent interest on his investment he failed to make a plus labor income. FARM-MANAGEMENT SURVEY OP REPRESENTATIVE AREAS. 11 INCOMES RECEIVED BY FARM TENANTS. There are few reo^ions in the TTnited States where tenant farming has been developed so extensively and where it plays such an impor- tant part in agricuhnral prodnction as in the corn belt. The per- centage of farms worked by tenants is second only to those operated by owners, and the areas farmed and the prodncts grown compare very favorably with those of the farm ow^ners. In the region covered by this survey, records were secured from 247 tenant farmers. These men rented one farm, or land owned by one person. There Avere 51 other tenants who rented farms from two different parties. Their records show the same results, which have not been included in Table IV. Table IV. — Aiwrage capital, receipts, expenses, and profits of tenants on farms operated hy tenants in Indiana. Illinois, and Iowa. Indiana (83 farms). Illinois (71 farms). Iowa (93 farms). Average (247 farms). Average area acres. . Average capital Average receipts Average expenses Average farm income Average interest at 5 per cent Average tenant's labor income 128 202 187 172 .$1, 758 1,335 492 843 8S 755 $2,867 2,257 975 1,282 143 1,139 $2, 667 1,605 755 850 134 716 |;2, 431 1,732 740 992 122 870 Most tenants hope to become fann owners as soon as they have sufficient capital. The income they receive while leasing a farm is a measure of the period they will have to work before making the. change. The average tenant in Indiana, with an investment of $1,758, received $755 for his year's work. In Illinois, with an invest- ment of $2,8G7, he received $1,139 as a labor income. In Iowa, Avith an average capital of $2,6(')7, his labor income was $716. OAving to drought in early summer, the income of the tenant in loAva was prob- ably 20 per cent less than it Avould haA^e been in a normal crop year. The 247 tenant farmers made an average labor income of $870 from an investment of less than $2,500. When it is remembered that the farm OAvners with over 12 times this investment made less than half the labor income of the tenants, the evidence is unmistakable that the man with small capital should rent rather than buy a farm. For the amount iuA^ested, the tenant's income is very much greater than that of the farm oAvner. The sum available for the family liv- ing, however, is smaller in the case of the tenant, for the farm oAvner, with an average capital of $30,606 (see Table II), has $1,530 interest to use, as Avell as the $408 labor income. Thus, if the farm OAvner is free of debt, as one-half of them are, he has $1,938 available for a living, as compared Avith the tenant's $992. 12 BULLETIN 41, U. S. DEPARTMENT OF AGRICULTUEE. In addition to this sum available for a living, each has what the farm furnishes in the shape of produce. After the tenant pays his living and personal expenses -out of this amount his savings can not be large. If we allow the owners 3.5 per cent on their investment instead of 5 per cent they would then receive approximately the same labor income as the tenants ($870). This percentage is the same as that received by the landlords from the rented farms. Tak- ing into consideration the results from all the farms managed by owners and by tenants, they show that a return can be expected of 3.5 per cent on the investment and a labor income of $870. Seasonal variation and fluctuating prices have a marked influence on the jjrofits from farming in the districts studied. The average price received for corn sold by the landlords of the 247 tenant farms was 41 cents, and a drop of 5 cents alone would have reduced the income G per cent. INCOMES RECEIVED BY LANDLORDS. The farm, in the case of the landlord, is a business investment. He furnishes the capital, largely in the form of land, and the tenant furnishes the necessary labor and other means for its operation. The average investment of the 247 landlords for the three States studied was $25,210. The average net income on the capital invested was 3.5 per cent. All items of expense, including repairs, seeds, taxes, and insurance, were deducted before figuring the net returns. Table V gives the average capital, receipts, expenses, and returns for the landlords in each State. Table V. -Average capital, receipts, expenses, and profits of landlords for 2^7 farms operated by tenants, as shown in Table IV. Indiana (83 farms). Illinois (71 farms). Iowa (93 farms). (247 farms). Average area acres. Average capital Average receipts Average expenses Average farm income 128 202 187 172 « 18, 423 1,002 351 651 36, 479 1,538 213 1,325 $20, 728 1,014 354 660 $25,210 1,185 306 879 Average profit on investment i per cent . 3.53 3.64 3.19 3.5 Obtained by dividing the farm income by the average capital. The average return on investment from the farms in Illinois was 3.6 per cent, in Iowa 3.2 per cent, and in Indiana 3.5 per cent. The income is a moderate return on the large capital, considering the enormous rise in land values during the past 10 years. In computing this income no credit has been allowed for the rise in value of real estate, except in case of actual improvements. FARM-MANAGEMENT SURVEY OF REPRESENTATIVE AREAS. 13 There has been a marked tendency throughout the entire country to consider the farm more and more as a business proposition. The landlord who is receiving 3.5 per cent net from his farm, with the bare land figured at $150 or more an acre, has a good, safe invest- ment. It would seem from the results that if the year studied was a normal one, land in the corn belt is not overvalued. Changes in the price of the staple products, such "as corn or oats, or material changes in the cost of production of these crops would be reflected in the price of farm land. Unless the price of corn becomes much higher for the next period of years, a pronounced increase in the value of land in this region can not be expected. The advisabilit}^ of buying a farm as an investment Avith the intention of not living on it is often a perplexing question. VARIATION IN THE PROFITS OF LANDLORDS. Table VI gives the A-ariation in the landlords' returns in the three States studied. Table VI. — Vfiriatinn in profils of landlords on 2'/?' tenant farms in Indiana, Illinois, and lotva. I>andlord's profit on invest- ment (percent). Number of land- lords. Percent- age of total number. I-andlord's profit on invest- ment (percent). Number of land- lords. Percent- age of total number. Less than 1 6 20 75 78 2.4 j 8.1 1 30.4 t 31.6 4.1 to 5 42 13 7 6 17.0 1.1 to2 5.1 to 6 5.3 2.1 to 3. 6.1 to 7 2.8 3.1 to 4 7.1 to 8 2.4 Out of 247 men 6 received less than 1 per cent on their invest- ments. The same number received between 7 and 8 per cent ; none received over 8 per cent. It is clear that no phenomenal returns can be expected from capital put in farm land in those States at the present time. It is believed that the data in Table VI are a very good indication of the returns one may expect from a farm investment in those districts. The chances of making more than 5 per cent are about 1 in 10. BANKERS' ESTIMATES OF FARM PROFITS. In the corn-belt States one is nearly always referred to the local banker for information concerning the farmers of the region. The banker is considered good authority on all questions relating to the farmer's business, his income, investment, etc. Inquiry relative to the incomes of the farmers was made of the cashiers of 90 banks in 14 BULLETIN 41, U. S, DEPA.RTMENT OF AGRICULTUEE. the regions studied. Fifty-three replies were received and the results are given in Table VII. Table VII. — Bacre farms. SO-ac-e 160-acre farms. farms. 20 S70 26 1 $266 25 5 $364 1 $264 28 $440 37 Number of farms witn incomes of $1,000 or 13 $904 Of all the farms operated ,by owners there were 20 of just 40 acres in area, the average labor income of which was $70. None made a labor income of $1,000. There were 26 men on 80-acre farms and only one of them made a labor income of $1,000. Of the 25 men on IGO-acre farms one in five made $1,000 or more. Only one tenant rented a 40-acre farm, and he had less than $300 for his year's living. jSIost tenants know better than to rent such a small farm, fully realizing the improbability of a good income. The average income of the 37 tenants on 160-acre farms was $904. More than one in every three made a labor income of $1,000. If the man on the 40-acre farm in Illinois or in any of the North Central States expects to have as good a living as his neighbor on 160 acres he must produce four times as much per acre with no increase in expenses. In Table XVIII the farms are arranged according to their size to show the relation existing between the area of the farm and the income received. PARM-MANAGEMENT SURVEY OF REPRESENTATIVE AREAS. 25 Table XVIII.- -Rclation of the size of farm to the income on, 27,'J faiiiis opcnitcd hy oicners in Indiana, Illinois, and Iowa. Farms. Distril)iition per acre. Money available Area. Number. Average size (acres). Receipts. Expenses. Interest. for farm- er's living if free of debt. 40 acres and less 32 51 4S '14 31 36 19 12 37.4 72.9 106.9 149. 4 179.1 239.8 321.8 623.8 .?18. 10 17.09 16.22 15.62 18.04 18.12 13.89 16.19 $6; 98 5.46 6.88 5.80 7.12 6.70 5.07 6.28 $9.03 8.45 8.22 8.30 8.58 8.42 8.32 7.90 8416 4 1 to 80 acres 848 81 to 120 acres 998 121 to 160 acres 1,467 161 to 200 acres 201 to 280 acres 281 to 400 acres 401 to 1,250 acres 1,956 2,738 2,838 6,182 273 178.3 17.25 6.38 8.58 1,938 The receipts per acre are practically the same on the small and large farms. The expenses are also the same. If greater intensity were practiced on the small areas, larger receipts to the acre would be the result. If the farmer is free of debt he has available for his living the amount shown in the right-hand column of Table XVIII. This amount represents the combined income from ca])ital and labor. The results of the 1910 census shoAV that nearly one-half of the farm owners in the counties from which the survey records were taken have mortgages on their farms. The amount of 'the mortgage is aj)proxiinately one-fourth of the total farm investment. It is not hard to understand why the small farmer is less efficient. Just as long as he continues to grow such crops as corn, oats, wheat, and hay his income will be meager. The only possible remedy is more land. He may either rent or buy, according to his available funds. On the other hand, if the man on the small place should change his type of farming so that he could grow crops returning a high income per acre, he would then have possibilities of a much greater income. A farm is a place to work, and unless it is so organized to permit the full use of labor small wages must result. There are a few highly specialized farms which return a high rate of income per hour of labor. However, these farms are not found where corn and oats are the leading crops. The introduction of good live stock in a measure helps toward utilizing more labor, but even this step will seldom suffice to give the small farmer an income comparable with that of the man on 160 acres or more. Thus, the decrease in the number of farms in the North Central States is no cause for alarm. It is rather a sign that land is being utilized more efficiently and that the same products are being pro- duced at less cost. 26 BULLETIN 41, U. S. DEPARTMENT OF AGEICULTUEE. RELATION OF THE SIZE OF THE FARM TO THE EFFICIENCY OF OPERATION. The size of a farm is the controlling factor in the efficient use of farm labor and machinery. The old hand-labor methods prac- ticed by our forefathers, which are still common in Europe, were suited to a small area. Under those conditions a man needed only as much land as he could properly cultivate alone. A family was able to raise only a small amount above that needed for their own living. If these methods still prevailed in this country, the present number of farmers would be entirely inadequate to support our urban population. The adoption of modern machinery has enormously increased the efficiency of the farm worker. Fewer men are now needed in the farming districts, and those not needed are able to devote themselves to useful work in the cities and towns. As a result of this condition more of the benefits of civilization are available to the farmer. Although the farmers are fewer in number, the production per man is increasing. If hand labor could compete Avith machine work, farm wages w^ould be much les.s and the product per man proportionately smaller. Our agricultural civilization would then gravitate toward the peasant conditions existing in some parts of Europe, where the agriculture is develo])ed on the basis of the maximum product per acre of land instead of the maximum product per man. RELATION OF THE SIZE OF THE FARM TO THE USE OF MAN LABOR. ^ In Table XIX the farms are classified according to their total area. The cost of labor includes all paid labor, board of workmen, family labor, and the estimated value of the operator's labor. The value of the family, or unpaid, labor is explained on page 9. The tenants estimated their work as Avorth $307. and the oAvners estimated theirs at $363, or an average of $305 for all the farmers. The term " crop area," as used in the folloAving tables, includes all tillable area except permanent pasture. Table XIX. — Relation of the size of the farm to the cost of man labor per acre on 700 fantiK in Indiana, Illinois, and Iowa. Area. Num- ber of farms. Total labor (includ- ing estimate of farmer's own la- bor). Area. Num- ber of farms. Total labor ( includ- ing estimate of farmer's own la- bor). Per till- able acre. Per crop acre. Per till- able acre. Per crop acre. 40 acres and less 41 to 80 acres 81 to 120 acres 121 to 160 acres 161 to 200 acres 201 to 240 acres 241 to 280 acres 281 to 320 acres 45 114 120 130 93 75 35 37 $8.18 6.54 4.98 4.37 4.21 4.20 3.94 3.41 SIO. 08 7.28 5.57 4.89 4.74 4.69 4.40 3.98 321 to 400 acres 401 to 560 acres 561 to 720 acres 721 to 1,250 acres Total or average. . 30 12 5 4 700 $3. 36 3.12 3.80 3.50 $3.88 3.88 4.41 5.29 3.74 4.63 PARM-MANAGEMENT SURVEY OF REPRESENTATIVE AREAS. 27 On farms of 40 acres and less the cost of labor is over $10 per crop acre. On all farms above 120 acres the cost is less than $6 per crop acre. This increased efficiency of man labor on the larger farms constitutes an important factor in the cost of crop production. RELATION OF THE SIZE OF THE FARM TO THE EFFICIENCY OF WORK HORSES. With the iDrevailinii- type of agriculture as found in the corn belt, both man and horse need more land to work. Farms with less than 100 acres in crops are not utilizing horse labor nearly as efficiently as the larger places. On farms of 40 acres one horse works less than 10 crop acres, while on farms of 240 acres or more one horse works two and one-half times as much land. One of the difficulties with a farm of less than 40 acres in the corn belt is that it requires the same number of horses for certain farm operations as the larger place. The area in crops is so limited that only a small part of the available horse labor can be utilized. The labor demand of such crops as corn and oats is not evenly dis- tributed through the growing season ; hence, horses remain idle for a large part of the time. If men on the small farms were following a ditferent type of agriculture, it Avould be possible to utilize tlie horses more efficiently by growing crops which recjuire a large amount of horse labor per acre. By means of diversification of crops so as to better distribute their labor these men may succeed in competing with those on the large places. The relation of the size of the farm to the number of crop acres on which a horse can be utilized is shown in Table XX. Table XX. — Relation of flic .size of the fan)i to tlie iiuiither of croi) (teres on irJiicli (I lior.se emi he Kfilized on 700 farms in Indiana. Jllinoix. and Irnca. Farms. Area. Number. Average size (acres). Average crop area (acres). Average number of work horses. Crop area per horse (acres). 45 114 120 130 93 75 35 37 30 12 5 4 36.6 71.4 107.2 149.3 183.6 227.4 262.5 305.6 364.1 474.8 652.6 991.2 26.4 56.7 86.0 122.4 143.4 184.9 211.2 233.8 298.0 368.6 555.4 612.0 2.8 3.6 4.5 5.8 6.6 7.8 8.4 9.5 10.8 13.1 19.4 19.0 9.4 15.7 19.1 121 to 160 acres 21.1 Ibl to ''00 acres 21.7 ''01 1 240 acres 23.7 241 to 280 acres 25.1 281 to 3''0 acres 24.6 S"?! to 400 acres.- . 27.6 401 to 560 acres 28.1 561 to 720 acres 28.6 721 to 1 250 acres 32.2 To judge from the data given in Table XX. there is no marked in- crease in the efficiency of horse labor on the very large farms over the medium-sized ones. 28 BULLETIN 41, tJ. S. DEPAETMENT OF AGRICULTURE. RELATION OF THE SIZE OF THE FARM TO THE EFFICIENCY OF MACHINERY. In the regions studied, small farms do not permit as efficient use of machinery as those of medium size. The same laws which govern the use of farm labor apply to machinery. Land enough to allow the maximum use of machiner}^ is the keynote to the whole situation. A certain equipment is needed and this is much the same on a GO- acre as on a 160-acre farm. A farm may be of such size as to re- quire two sets of certain implements, yet not large enough to permit the maximum use of each. Figure 5 illustrates the use of modern machinery and large teams for farm work. These are typical of the expansive type of farming- found on the broad, level areas in the North Central States. Fig. 5. — A sulky sranff plow drawn by four horses. Modern machines with large teams, such as this, are used throughout these re.!?ions and utilize labor eflBciently. In Table XXI is given the machinery investment per crop acre on the different-sized farms. Table XXI. — Relation of the nize of the farm to the efflcieneii of in a eh in cry on 700 farms in Indiana, Illinois, and loira. Farms. Value of machinery. Size of farm. Number. -\verage size (acres). Average crop area (acres). Total per farm. Per crop acre. 1 to 40 acres 45 114 120 130 93 75 35 37 30 12 5 4 36.6 71.4 107.2 149.3 183.6 227.4 262.6 305.6 364.1 474.8 652.6 991.25 26.4 56.7 86.0 122.4 143. 4 184.9 211.2 233. 8 298.0 368. 6 555. 4 612. $133 241 279 345 413 452 718 561 747 690 790 1,313 So 04 41 to 80 acres 4 25 81 to 120 acres 3 24 121 to 160 acres 2 82 161 to 200 acres 2 88 201 to 240 acres... 2 44 241 to 280 acres 3 40 281 to 320 acres ■5 40 321 to 400 acres 2 5) 401 to 560 acres 1 87 561 to 720 acres 1 42 721 to 1,250 acres 2. 15 700 179.6 142 8 -^s-* "> 69 FARM-MANAGEMENT SURVEY OF REPRESENTATIVE AREAS. 29 The results are the same for eacli district studied. The machinery cost on the small farm of 40 acres or less is double that on those over 200. As the area increase's up to 100 acres there is a marked decrease in the machinery cost, but above this area the o-ain in effi- ciencv is small or entirelv lackino-. RELATION OF THE SIZE OF THE FARM TO THE CROP YIELDS. Climatic conditions have ^uch marked influence on crop yields that records for one year are of little value as a measure of the yields in a given region. However, such records do permit a comparison of yields on farms of different sizes when conducted under the same system of management. It is generally believed that the small farm is more efficient owing to better crops. This apjiears to be a mistaken theory. The figures given in Table XXIT show the average yields of corn, oats, and wdieat on the large and small farms. Tablk XXII. — Relation of the size of the furm to the i/iclil of rarroiis crops. Indiana. Illinois. Iowa. I Size of farms. 1 3 Yield per acre (bushels). o s 1 Yield per acre (bushels). e a o 1 "A Yield per acre (bushels). d o 03 O 'S ^ ^ c o C3 O o o 1 "5 80 acres and les^.. SI to 160 acres- 161 to 320 acres - 92 75 39 50. 2 52.9 52.8 41. -1 47.5 47.0 19.0 19. 2 19.1 12 42 70 20 60.4 52.3 52.4 55.6 43.0 37. 5 39.7 40.5 16.0 15. 2 15.8 17.8 2Ci 73 71 33.2 36.3 37.9 32.0 33.0 33.9 1 Total or average 206 52.1 46.6 19.3 144 53.3 39. 3 16. 5 170 37. 33. 5 1 The yield of com in Iowa in 1910 was much below normal, owini,' to droujiht in early summer. In Indiana higher yields of both corn and oats were obtained on the larger farms. The difference is slight, yet 2.G bushels of corn is w^orth considering. In Illinois the highest yields of corn were secured on the smaller farms. On the other hand, the yields on larger farms, those ex- ceeding 320 acres in size, excelled both groups, ranging in size from 81 to 320 acres. There were only 12 farms under 80 acres, too few from which to draw definite conclusions. In Iowa the larger farms consistently had the better yields. RELATION OF THE TYPE OF FARMING TO THE INCOME. All the farmers in the regions studied are following the same gen- eral expansive system of agriculture, developed on the basis of maximum product per man. Within this system two important 30 BULLETIN 41, U. S. DEPARTMENT OF AGRICULTURE. types are found. One is the crop farm, where 50 per cent or over of the total fann receipts are derived from the sale of i^rain. The other type is the live-stock farm, where the farmer markets his crops largely through hogs, horses, and beef cattle (fig. 6). The number of men following each type will vary greatly in diflferent years, ac- cording to the relative price of cattle and hogs (figs. 7, 8, and 9). One year's results are altogether too few to form any substantial basis of comparison. The data are presented only to shoAV the im- portance of the type of farming in relation to income. It is fully i-ecognized that further studies in another year under different con- ditions might easily show results just the reverse of these in regard to the best paying type of farming. Pig. 6. — The type of hogs which are au importaut source of income ou Iowa farms. Of the 273 farm owners 194 Avere classed as live-stock farmers and 79 as crop farmers. The average capital and income of each are given in Table XXTTI. Table XXIII. — Rchttixm of tin' tiipc of furmhuj to the inco)iic on farms oi)cratcd by owners in Indiana. Illi)ioi.-;. and Iowa. Live-stock farms. Crop farms. Farms. 2 3 Farms. 1 53 E t Q. • State. • ^ a i 2 1^ c3 O o o a te ^ a £ o 1 ■ D t !n > 03 a 3 03 > c3 :z; < Ph < 1-5 Z •< Ph < iJ Indiana 95 32 103.2 284.2 5.6 66.3 $17, 405 58, 487 $348 1.588 28 41 113.0 229.4 2.0 24.4 $17,981 45,319 S182 Illinois -131 Iowa 67 181.2 40.1 23, 775 329 10 140. 9 17.1 19, 296 34 Total or average 194 189.5 37.3 33,222 755 79 161.1 14.5 27,532 28 FARM-MANAGEMENT SURVEY OF REPRESENTATIVE AREAS. 31 The live-stock men had a larger area and more capital and were receiving a much higher labor income. The average income of the H/(SH/*A/o LOW p/?/c£S or c/is/y Oyi^rs. sv/^OA/r^s, ^r r//e cwc/iso AM/?/csr, /903 rO/3/2, /^CZ-C/S/i^S . /303 1 /sof r 1 /SCr7 I /308 T /305 ' /soe SI 70 \34 /Y/G»>iAfO LCnV/'/f/CSS O^Cj^S^ CO/PA/, S>^y^OA/7T¥S,^T rjVSCM/C^OO /*5W/?/rZ"7r /903 ro /9/2, //^ClC/S/i^£. /903 ' /SG'f I /SOS I ' /306 ' /907 ' /90ff ' /309 I /5/ i "^^ ■^-■''9Saf*''''^^*'*9mSttM /r 1 % Fig. 10. — Farm work horsos and mules in pasture during the month of August, illustrating a practice which is common in many sections. of his crops. If he is so unfortunate as to have a combination of crops every one of which is low in price in some particular year, severe losses will be the result. Potatoes, apples, peaches, onions, and cabbage are good illustrations of the crops that fluctuate widely in price from year to year. The essential characteristics of the more successful farms are a sufficient are^a and a proper organization of well-selected farm enter- prises to permit the maximum use of men, horses, and machinery. SUMMARY. The aim of the farm-management survey is to determine the fac- tors governing the profitableness of farming as a business. The results from the three districts selected in Indiana, Illinois. and Iowa indicate what may be expected from the utilization of 42 BULLETIN 41, U. S, DEPARTMENT OF AGRICULTUEE. high-priced hind under an expansive system of agriculture. In Uie region studied the owners made good profits. The average hibor in- come of the farm owners was $408 and of the tenants $870. In addi- tion, the operators had a house to live in and those products which the farm furnished toward their living. The landlords, on the average, received 3.5 per cent on their in- vestments. The size of their investments had no appreciable bearing on the rate of income. Assuming that the year in >vhich this study was made Avas a nor- mal one, a labor income of $870 to the operator, whether owner or tenant, and a return of 3.5 ]Der cent on the capital invested may be expected. The tenant's income is in direct proportion to his capital and the size of the farm he operates. Men owning small farms often materi- ally increase their incomes by renting additional land. This aifords a better utilization of their equipment without much increase in capital. The tenant's income is in proportion to the risk he assumes. On the cash-rent basis his income is greater in a good year and less in a poor year than when he rents on the share basis. The farmers making the lowest labor incomes are on big farms, but fail through inefficient management. Poor crops, low prices for products sold, poor stock, failure to work, and unused capital are the main causes contributing to their failure. Modern machinery, with the use of more horses and fewer men, has made the farm of less than 100 acres an inefficient unit. Further re- adjustments in area will occur, which will tend to lessen the number of persons needed and at the same time increase the net production of the farm. The system of agriculture found m the corn-growing States is an excellent examjDle of the expansive type of farming developed on the basis of the farm work horse as the motive power. This system is in direct contrast to the intensive type found in some of the countries of southern Europe, where the man and not the horse furnishes the labor. The American type needs large areas and is based on the maximum product per man. The European type requires a small area and is based on the maximum product per acre of land. In the corn-belt States the family-size farm is the most desirable. It provides work for the farmer and his sons and permits the best use of men, horses, and machinery. If the small farm has a place it must be near a city and should be highly diversified in its organi- zation. WASHINGTOX : GOVERNMENT PRINTING OFFICE : 19U ADDITIONAL COPIES of this publication -Tl. may be procured from the Superintend- ent OF DocuiiENTS, Government Printing Ofl.ce, Washinirton D. C, at 10 cents per copy *» LIBRARY OF CONGRESS II 002 779 644 8