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nhittfifillpiJii

THE UNIVERSITY

OF ILLINOIS

LIBRARY

(b3>0. I I-fG

uiiiuuiiiiiMuyHiiHiiimiiffl

'■JJijgjvBiiffir

Summary of Annual Farm Business Reports

on One Thousand Five Hundred

Forty-Eight Farms

For the Year 1934

2. MIXED LIVESTOCK

I I' I. DAIRY I >C*ND TRUCK

3, LIVESTOCK AND GRAIN^

S.GENERAL FARMING

6. WHEAT. AND POULTRY"

e. GRAIN AND ■ LIVESTOCK

9 FRUIT AND VEGETABLE'

The Nine Major Type-of-Farming Areas in Illinois

Department of Agricultural Economics

College of Agriculture and Agricultural Extension Service

University of Illinois, Urbana

July, 1935

Digitized by the Internet Archive

in 2011 with funding from

University of Illinois Urbana-Champaign

http://www.archive.org/details/farmfinancialrec1934univ

^3^. /

SUMvIARY OF TIEM BUSINESS REPORTS ON ONE THOUSAND FIVE HUWEEED FORTY -EIGHT FARMS IN ILLINOIS

FOR 193^4-

P. E, Johnston and J. B. Andrews

Net cash farm incomesi' were higher in Illinois in I93U than in 1933- This was the second year of improvement, since the low of 1932, for all type-of-farming areas of the state except the Chicago dairy area. The cash farm incomes increased to the 193^ level for six of nine of these areas (Figure l).

Farm earnings increased most in the grain- siarplus area of east central Illinois and least in the Chicago dairy area. Area VIII, the Wahash valley area, had the greatest percentage increase in income for the year as the result of very favorable crop yields, while yields were low for most other sections of the corn helt.

The above comparisons are based upon cash incomes less cash ex- penses aiid unpaid family labor, which leave out of consideration changes in inventory. Inventory increases were found in all reports, except those for Will, Adams, Pike, Brown, Morgan, Scott, Greene and Jersey counties. These counties represent areas where crop yields were extremely low due to drouth and chinch bug damage. The largest inventory loss was $307 per farm in Pike and Brown counties. The largest inventory increases v/ero found in DeWitt, Piatt, Logan, Edgar, Douglas, Clark, Coles, Shelby and Moultrie counties and on the higher valued land in the southern Illinois report. The largest increase was $l,6g6 per farm for the farms in Shelby and Moultrie coi.mties (Table A).

The increase in net cash farm, incomes of the last tv/o years, followed three years of declining incomes from the level which was obtained for the period I925 to 1929 . Several years of better earnings will bo nec- essary to compensate for the excessive losses sustained during the three years of 1930, 1931, and 1932.

In reading the following tables it should be kept in mind that these data represent only those farms whose operators are progressive and business-like enough to keep axcounts and submit them for analysis. Repeated studies have shown that the average farm operator enrolled in this accounting service earns a higher rate of interest on his invested capital than that of the average of the rank and file of all farmers. The difference previous to 1931 ^^^ averaged abou.t 2 percent on the entire investment. With these facts in mind, the reader is cautioned against using these data to represent the average Illinois farm.

Farm earnings in 193'''" varied widely from farm to farm, and from one section of the state to another. This wide variation in earnings was due to: (1) great differences in crop yields as the result of drouth and chinch b-ug damage; (2) to the wide deviation from normal in the prices of feeds and grain as compared with the prices of livestock and livestock products (see page 9).

l/ Calculated by deducting cash expenses and value of operator and family labor from total cash incomes.

912901

?,^or

'5 3 ".

- 2 -

FIG. 1.— AVERAGE NET CASK INCOME PER FARM FOR THE FARM-ACCOUNT KEEPEHS Four type-of-farming areas in the west half of Illinois, 1925-193^

''n25 iS)<i£ ^^1027 " I3?F. '^ |3,:i i'^.?-. iS3i ii-2 |5;33 I 3 3-9

Four type-of-farming areas in the east half of Illinois, 1925-193^

13^5- |!)?6 19^7 1528 /923 1930 /93/ 'S^-^ I33J, 1934

-3-

Deviation in 193^ Crop Yields from the 10-Year Averaisce

Since farm earnings were so intimately connected with crop j-'lelds in 193^ ^^^ since the deviation from normal was so extreme maps are included in this report which show, for each coiinty, the 193^ yields for corn, oats, winte;.- wheat, soyteans and tame hay as a percentage of the county 10-year average (l92U-1933)l/ (See pages k to S)

Corn yields. Corn yields were extremely low in west central Illinois where there were nine counties that had less than one-fourth of a normal yield. Brown and Adams coujities had only 10 percent of a normal yield of corn. Corn yields were also quite low in the section of the state comprised of Kendall, Grundy, and Will counties (Figure 2),

The best corn yields were found in the southeastern part of the state where there were 10 coiuities having yields higher than normal. The extreme northwestern part of the state was favored with yields ranging from I'o to 9° percent of normal .

Oat Yields. There were 18 counties in western and north central Illinois which had, in 193''^j oats that made less than one fourth of a normal yield (Figure 3)- The most favored section of the state with respect to oat yields was the southern part, although but few counties had over four fifths of a normal jdeld.

Winter Wheat Yields. Winter wheat yields were above normal in about one-third of the counties in 193*^1 ^H of which were locatod in the southern half of the state (Figure h) . Less than one fourth of a normal yield was harvested in Livingston, LaSalle, Will, Kane, and DuPage cou-nties, where dry weather and chinch bugs did much damage.

Soybean Yields. Soybean yields in 193^^ were above average for over half of the counties in the state and were particularly high in those coun- ties that grow the most beans (Figure 5) • Soybeans were a high income crop in 193^ since the larger production sold at a good price. Even in the primary drouth area the soybeans produced much better than the corn and oats.

Tame Hay Yields. Hay yields were below average in four fifths of the counties of the state. The better than normal yields were all in the central and southern areas. In central Illinois, the high hay production was due largely to the large percentage of total acreage which was soybean hay. The drouth area of western Illinois had about a 60 percent hay crop (Figure 6) ,

1_/ Analysis made from data collected by Illinois Cooperative Crop Reporting Service.

rig.

- 4 -

2. 193U Corn Yields (expressed as a percentage of the 10-yoar average

for each county)

Per cent I93U yields were 9f 10-year siverage 0 to 25.9/0

?b to 50.9^

51 to 75.9?^ 76 to 100.9^5 101 + ^

.1)

_ K _

—193'^ Oats Yields C^lxpressed as a percenta^-e of average yield for each cov-nty)

10-ycai

Per cer. vrere of

0 26

76

aoi

it 1934- yields 10 -year avei-age

to 25.9^

to 50.9/0

to 75.9fo to 100,

to fo

Pig. I|,__i93U Winter Wheat Yields (Expressed as a percentage of the 10-year average yield for each coimty)

'^•«^^.V^

Per cent 193^ yields were of 10-year average no report

0 to 25.5^ '^'''^^;^^f^ut^y^'^f^^

2S to

101+ ^

51 to 75.9^ iSfei !?S^^

75 to 100.95^ fffis-^^

- 7 -

yig. 5. — 193^ Tame Hay Yields (Expressed as a percentage of the 10-year average yield for each comity)

fix

■''.■■';,vv|j%i*^^

7r«)!^'| I, i<E.;.rtA\

1;

Per c were

^

ent 193^ yields of 10-year avera.?;e

0 to 25.9-^

26 to 50.9^

51 to 75.9/=

76 to 100. 9fo

101 + f,

Ik

>4i

J.iW-'.Jci^w

'*? ."V^vr** " * ^

-^

.wci?*;^

f

f

Is

1*

f

.1 , : ,

,.-,J.V<E-?--

Q^

;V':3#i

- 8 -

Mg.

G.~

-I93U Soybean Yields (Expressed as a nercentage of the 10-year average yield for each coionty)

Ci^=.=

Vi

■^Itsson* ; lyiSij T__L J--— -lu',' ^-St^f^r-^A*

llj-'i.; "ill j,<l<rA*J>^« _ii:*/' - >v

(•

'j,t',-i(;fj villi

/^ t- I-. v''!^ V-::i

t

il'C*J.'i'^'*^^t**" ii

c

t -

// ^t I,, ; ;

//

;^ll

t

1

*-—_, _ij

^ 1

II .. . n

; II

-■fl

Wi

\

iB*jf>5p*

1

l-'i

f<'

4l'

>-'

J I

T7i},;.'-«"

I L^ ^1

li ri:-5S--ii

■ !^<.S./»/3w:

■* -k ^

^^-

Per cent I93U yields

were of 10-year average

WM.

■*rr-

0 to 25.9^ 26 to 50.9fo

51 to 75.9^

76 to 100, 9fo

"1 ■'■'■;

101+

^ /"

. 1 ;■.''-:((

Since the price of some faim prodTicts advanced much more rapidly during 193^ than other products, it is evident that some farms would benefit more than others, depending upon the kind and quantity of products sold. G-rain prices advanced much more rapidly than livestock prices; which resiilted in a very had price ratio for farmers who buy large qua.ntities of feed. The average Illinois fp.mi price of com was Ul cents a oushel in January, 193^5 i't advanced steadily until the end of the year when it was So cents a bushel. Other grains raa,do marked advance although not so great an advance as com. Tlie price of hogs fluctuated from a low of $3.20 a hundred in May to a high of $6«30 in September. The low point in the fall cpjne in November when the average price v/as $5.10. The price has advnjiced quite ra.pidly since November, the average price being $7»50 for February, 1935* Beef cattle were worth $U.10 a hundred in January, 193^ and advanced each month -uiitil September, when the price was $5.90. They dropped to $5.20 in December but' increased again to $7.^0 for February, 1935 •

The year 193^^- set a record for the reduction in the numbers of livestock. Tlic percentage decreases by species were as follows: horses, 1.1 percent; mules, 2.6 percent; all cattle, 11.2 percent; sheep, U.7 percent; hogs, 35»3 percent. Wlien all species are combined on the basis of their capacity to consTime feed, the reduction was I3 percent. This reduction will greatly reduce the demand for feeds produced in 1935*

The relative cl-iange in prices of important commodities may be noted in the following graph, which shows the average Illinois fanii prices by months as a percentage of the average prices for the period 1921-1929 «

Percent 120

110

100

90

go

70

60 50

Uo

30

Price Indices, 193^

(1921-1929 = 100)

Jill comiaoditic

^^

liry P::odiJCtg

-H — *^

•Sogs

/

G-rain

/

/

/

/

Jan. Feb. Mar. Apr. Ifeiy June July Aug. Sept. Oct. Nov. Dec,

All commodities index represents the wholesale price of a large number of commodities for the United States, as computed by Bureau of Labor Statistics,

G-rain and livestock indices represent average monthly farra prices in Illinois.

-10-

It is quite evidont that the price situation favored those areas that had large quantities of grain to sell and worked a hai'dship on areas such as the Chicago dairy area where larger than normal feed purchases were necessary because of low yields, and where the price of the chief livestock products (dairy) advanced but little. This combination of circiansttinces explains the low net cash income for Area I as compared with the other areas of the state. The beef cattle feeders fared better than the dairy men, since beef cattle prices advanced enough during the year to give many feeders a large price spread.

Net Income ver Acre by Counties

The combined infl-uence of all factors on farm earnings can be most readily measured by a comparison of the average net income per acre.!/

Net earnings were lowest in the Adams, Brown, Pike area and highest in the central part of the state (Figure 7)- The area most favored however, as compared with the average for the last 10 years was the Cliristian, Shelby, Clark area and the Wabash Valley area, where there was a combination of good to fair crop yields for corn, wheat and soybeans. In these areas there was also a high percentage of these crops sold for cash. The area showing the lowest net income as compared with normal was Area I, the Chicago dairy sec- tion.

Variations in Cash Farm Expenditures

As farm incomes declined since 1929, farmers have reduced their cash expenditures. A part of this reduction has been due to the declining price level, but in part at least farmers have done without things which they needed, both for the farm and for the family. In Area IV for instance farmers spent only U5 percent as much to run their business in 1S33 a-s they spent in I929, while in 193^ they spent 55 percent as much.

Table 1. — Cash farm expenditures per 100 acres of land in farms for account kee-pers in type-oi-farming area IV, 1929. 1933 and 193^

1933 ■■■_193^~T7

fo of fJ of

Cash Farm Sxriendit-ares 1929 1929 1929

Improvements $1^3 $ 38 26.6 $ 52 36.4

Machinery 353 1^9 k?..2 19U 55. 0

Labor 210 S3 39-5 SS U1.9

Livestock -ourchases 297 H^ 37-3 1^ ^7-1

Feeds 1S2 79 ^3.4 ikk 79. 1

Taxes 120 I3S 76.6 117 65. 0 Miscellaneous (crou exuense, livestock

expense", etc.) 1^3 7^ SI. 7 9^ 65. 7

Total $1 TO8,. $672 kh.S $829 55.0

1/ The net income per acre figures used in this comparison include inventory changes.

- 11 -

Fig. 7- — Average Net income per acre for management, the use of capital and risk for accorjit keepers - 193^^

The wide range in farm incomes V7as due to abnormal crop yields and to the xmusual price relationships which existed during the latter half of the year between .grain and. livestock products.

II^i-'x^jm: ■ » tigj*^-^ -^ -'■■■I'' :

'l -

1 I

-I

II

''^a^~^■.\^^^H. . . . . . {^N\ \yx»> . : I '?&??< ^(.

let Income per acre <='i^e'-<^<^

(IS s^ N^>!-

N»^<;-x;>i

.!/-.V.-A<

:_;.v^-.-.M

B^w.i..-;

:;IZ5Wi'«««?,j

»vy:.

ia-< — rf

s

r

V'l i

no report to !+

5 7

9

to	6
to	g
to	10

^ 11+

_!._ '•••■•I //■==

V. \ >5y- ^. CN «

^

-12-

This increase in expend! t\ares, particularly for improvements and machinery, may be expected to continue if cash incomes improve, since farmers have not been maintaining the condition of either buildings or machinery during the low income period.

MA BEl-IEFIT PABCENTS RECEIVED BY ILLDIOIS ACCOUNT KEEPERS DUEIKG

193^ Table 2.

Corn

l^jjaber of farms with payments 1 ,423

Total amount received $153,195

Amount received per farm $ 108

Total number of records 1,5^7

Total benefit payments $^29,925

Total per farm $ 271

T/heat

565 $75,323

$ 133

Hogs

1,372 $201,1+07 $ 1U7

Benefit payments averaged $271 for each of the 1,5^7 farms having a summarized account book for 193^' -A-H of these farms did not receive benefit payments. Some did not have AAA contracts. Others with contracts had not received pajTiients because of delay for corrections. The payments entered in the book were only those received up to the time the book was closed and in most cases included one payment on corn and hogs and two or three payments on wheat.

Corn Inventories

January 1, I93U 2,058 bushels

December 3I , I93U 1,027 bushels

The above figiiros represent the average per farm for all accounting farms.

Since the inventory price of corn at the end of the year was about twice what it wag at the beginning, the total value of corn was practically the same at the beginning and end of the year. The low yield counties in the west central part of the state not only raised less corn and other crops, but fed what surplus they had carried into the year to livestock which was relatively low in price as compared v/ith grain.

Table A. — Summary, by Areas, of Business Records From 1,548 Illinois Farms, 1934

Accounting items

Kendall,

DuPage.

Lake,

Cook. Kane

Capital investment, total

Land -

Farm improvements

Machinery and equipment

Feed and grain

Livestock, total

Horses

Cattle

Hogs

Sheep

Poultry

Income, net increases, total

Feed and grain

Corn and wheat, AAA payments. . .

Labor and miscellaneous

Livestock, total

Horses

Cattle

Hogs

Hogs, AAA payments

Sheep

Poultry and eggs

Dairy sales

Expenses, net decreases, total

Farm improvements

Machinery and equipment

Feed and grain

Crop expense

Hired labor

Taxes

Horses

Livestock and miscellaneous

Income less expense

Total unpaid labor

Net farm income

Rate earned on investment

Labor and management wage

Size of farm, acres

Tillable land

Gross income an acre

Total expense an acre

Net income an acre

Acres in — Corn

Oats

Wheat

Barley

Soybeans

Bushels an acre — Corn

Oats

Wheat

Barley

Soybeans

Returns for JlOO of feed

Returns for X 100 of poultry

Dairy sales from each cow

Returns for each litter

Investment an acre in livestock

Income an acre from livestock

Power and machinery cost a crop acre

Labor cost for SlOO gross income

Labor cost an acre

Expense for ?100 gross income

Excess of sales over expenses

Increase in inventory

Value of land an acre

Total investment an acre

Number of farms included

$i3 619

22 090

5 821

1 818

1 524

2 365 455

1 414 289 104 104

? 3

383

i3i

111

70

2 869

"457

736

103

91

226

1 256

1 407 261

415

156

167

313

9

85

i 1 976

784

$ 1 192

Boone,

Winnebago,

McHenry

J27 243

15 088

6 430

1 555

1 538

2 632 397

1

797 273 71 94

$ 3 535

'"76 72

3 387 12 561 563 132 173 220

1 726

$ 1 550 265 393 130 155 294 231

82

1 985 648

$ 1 337

JoDaviess. Stephenson

J22 819 13 287

$ 2

067 379 085 001 317 317 221 56 90

904 278

49 114 453 3 486 743 117

64 212 838

852 169 266

97 106

146

2 052 799

$ 1 253

DeKalb

$31 093

19 401

5 S27

1 510

1 920

2 435 449

1 298 3,S6 182 120

$ 3 678 194 112 111

3 261

942 1 052 145 133 279 710

1 338 295 366

$ 2

172 157

255 12 80

340 692

i 1 548

Lee,

Whiteside,

Ogle

);30 452

20 014

4 837

1 555

1 809

2 237 400

1 362 330

60 85

$ 3 907

707

113

88

2 999

23 1 152 920 123 102 187 492

$ 1 159 230 342

119 181 228

$ 2 748 659

$ 2 089

Carroll

524 577

16 183

4 168

1 079

1 377

1 770

349

902

383

42

94

$ 3

350 170 100

50 030

38 831 110 158

52 251 580

854 200 228

131 85 154

2 505 765

$ 1 740

Rock Island

$27 848

18 151

4 552

1 561

1 660

1 924

380

849

478

127

90

$ 3

408 488 112

76 732

28 570 337 181

94 196 326

968 161 302

101 107 231

« 2 440 729

$ 1 711

Henry, Stark, Bureau

$33 950

23 676

4 730

1 457

S 4

$ 1

998 080 395 024 498 99 54

194

884 138

96 076

44 870 403 178 147 170 264

138 195 340

122 184 238

3 056

683

$ 2 373

3.54% $ 44

205.6

85.9%

$ 16.37 10.60

5.77

40.0 36.6

4.7

18.2

12.2

3.4

J139

217

95

88

9.63

13.89

$ 4.53 27

6.16 65

$1 638 338

«107 163

42

4.91% $ 484

211.0

79.8%

$ 16.39 10.05 6.34

28.6

21.0

2.9

14.6

28.1 15.2

J!138

220

100

85

11.02 16.00

$ 4.94 26

5.49% $ 646

191.9 69.1%

$ 15.13 8.60 6.53

25.0 21.7

39.6 13.2

JI29

226

63

87

9

12

5.30% $ 610

188.7 91.3%

$ 19.49 10.75 8.73

60.5 29.2

'sis

5.3

27.1 14.5

?1I9

229

74

104

10.88

17.28

.43

Jl

6 61

613

372

$ 72 129 54

93

$1

4. 29

8.48 57

603 449

$ 69 119 43

4 22

S. 55

$2 010 330

X103

165

35

39

6.86% $ 1 084

205.0

85.3%

$ 19.06 8.87 10.19

49.1 32.2

39.6 10.3

10.1

X129

213

59

103

9.64

14.52

$ 3.95 21

S.76 47

7.08% $ 1 050

177.9 84.4%

$ 18.89 9.11 9.78

35.3

28.0

1.3

39.3 14.9 24.2

X137

249

64

69

9.04

16.82

.76

$2 055 592

$ 98 149 68

24

7.1 48

$i 825 681

$ 91 138 30

6,14% $ 855

187.4 83.7%

$ 18.19 9.06 9.13

53.5

21.0

3.8

35.8 4.6

?121

315

44

93

9

25 14.43

4.33 23

6.81 50

$1 833 607

$ 97 149 35

6.99% $ ) 207

211.7 90.2%

$ 19.81 8.60 11.21

54.0

36.5

.9

31.3 4.3

15.5

X130

236

43

111

8.84

14.32

$ 3.44 20

5.54 43

$2 354 702

?112 160 60

(Table is continued on next page)

Table A. — Summary, by Areas, of Business Records From 1,548 Illinois Farms, 1934 — Continued

Accounting items

Capital investment, total

Land

Farm improvements

Machiner>' and e<]uipmeDt.

Feed and grain

Livestock, total

Horses

Cattle

Hogs

Sheep

Poultry

Income, net increases, total

Feed and grain

Com and wheat, AAA payments.

Labor and miscellaneous

Livestock, total

Horses

Cattle

Hogs

Hogs, AAA pa3rments

Sheep

Poultr>* and eggs

Dairy sales

Expenses, net decreases, total..

Farm improvements

Machinery' and equipment. .

Feed and grain

Crop expense

Hired labor

Taxes

Horses

Livestock and miscellaneous.

Income less expense . . Total unpaid labor.

Net farm income.

Mercer

J32 948

22 801

4 38S

1 322

1 852

2 588 419

1 395

615

92

67

J 4 600

128

101

4 371

40

1 396

2 115 258

67 195 300

1 497 263 368 201 122 224 24S

74

; 3 103

632

J 2 471

Warren,

Knox

{34 554

25 026

4 224

370 053 881 457 865 4«2 35 62

; 4 386

1 218 182

71

2 915

31 917 1 323 188 74 125 257

i 1 175 178 326

122 235 226

$ 3 211

685

$ 2 526

Hender- son

J21 277

14 599

3 022

931

1 219

1 506

322

654

384

92

54

$ 3

168 925 123

72 2 048

42

442

1 049

164

61 111 179

$ 856

139 234

"iw

100 218

''S6

$ 2 312 673

$ 1 639

Peoria,

Schuyler,

Fulton

J22 960

15 630

3 415

$ 2

215 113 587 413 630 425 46 73

638

433

105

97

2 003

34

309

1 044

163

66

195

192

925 189 294

"ib'i

108 182

$ 1 713 745

McDonough
$32	758
23	501
3	758
1	503
1	969
2	027
	348
1	025
	542
	34
	78
$ 3	821
	93
	172
	56
3	500
	44
	999
1	734
	268
	42
	188
	225
i I	293
	232
	367
	165
	221
	207
	ioi
$ 2	528
	649
$ 1	879

Hancock

J29 557

21 313

3 758

1 301

1 538

1 647

394

720

415

54

64

f 3

188 350 126

71 2 641

15

503

1 386

207

82 161 287

; 1 133 183 305

138 211 208

$ 2 055 690

$ 1 365

WiU

J28 926

19 362

4 924

1 579

1 396

1 665

370

1 065

138

8

84

$ 2

640 401 185

61 1 993

16 328 302

48

33

192

1 074

$ 1 198 232 400

149 159 195

S 1 442 690

$ 752

Rate earned on investment ... Labor and management wage .

Size of farm, acres. Tillable land

Gross income an acre. . Total ex[>ense an acre. Net income an acre

Acres in — Com

Oats

Wheat....

Barley

Soybeans.

Bushels an acre — Com

OaU

Wheal. . . Barley . . . Soybeans.

Returns for JlOO of feed

Returns for 5100 of poultry. . . .

Dair>' sales from each cow

Returns for each litter

Investment an acre in livestock. Income an acre from livestock . .

Power and machinery cost a crop acre .

Labor cost for 5100 gross income

Labor cost an acre

Expense for £100 gross income

Excess of sales over expenses . Increase in inventory

\'alue of land an acre

Total investment an acre. . Number of farms included .

7.50% ; 1 348

221.5 76.8%

; 20.19 9.03 11.16

53.3 22.2

1.5

36.1 4.8

{132

232

43

104

10.86

19.55

i 4.55 18

6.79 45

12 246 857

J 103 149 43

7.31% $ 1 327

235.8 85.1%

; 18.60

7.89

10.71

66.5

26.0

4.5

i8!4

28.7 2.6 4.0

20^5

il41

198

47

110

7.03

12.23

$ 3.19 20

5.56 42

$2 499 712

tl06 147 38

$ 1

■70% 115

205.3 IS. 2%

? 15.43 7.45 7.98

55.3

29.4

3.6

27.8 5.7

17.1

J127

191

37

93

6.08

9.77

i 3.04 24

5.92 48

!i 683 629

t 71

104

40

4.22% J 360

200.8 71.3%

t 13.13 8.31 4.82

37.7 22.6 15.1

23.4 8.9 11.5

21^6

;i4i

264

43

92 6.03 9.81

J 4.00 31

6.84 63

;i 415

298

$ 78

114

39

5.73% $ 758

237.3 85.7%

$ 16.10 8.18 7.92

63.5 23.2 16.8

14.9 8.7 15.5

19^9

$125

244

45

108

7.19

14.56

i 3.51 21

5.31 51

J2 307 221

i 99

138 36

4.61% $ 400

216.8 87.6%

$ 14.70 8.40 6.30

44.7

28.4

8.7

10.6 10.0 20.2

JI30

237

42

93

6.10

12.11

i 3.67 27 5.81

57

713 342

$1

t 98 136

33

2.60% t -181

195.1 87.0%

$ 13.53 9.68 3.85

51.1

36.1

5.6

"6.'i

12.7 15.1

19.2

S140

234

99

85

6.60

10.13

i 4.18 28 5.37 66

SI 563 -121

t 99

148 35

{Tabu is continued on next page)

Table A. — Summary, by Areas, of Business Records From 1,548 Illinois Farms, 1934 — Continued

Accounting items

Capital investment, total

Land

Farm improvements

Machinery and equipment

Feed and grain

Livestock, total

Horses

Cattle

Hogs

Sheep

Poultry

Income, net increases, total

Feed and grain

Corn and wheat, AAA payments. . .

Labor and miscellaneous

Livestock, total

Horses

Cattle

Hogs

Hogs. AAA payments

Sheep

Poultry and eggs

Dairy sales

Expenses, net decreases, total

Farm improvements

Machinery and equipment

Feed and grain

Crop expense

Hired labor

Taxes

Horses

Livestock and miscellaneous

Income less expense

Total unpaid labor

Net farm income

Rate earned on investment

Labor and management wage

Size of farm, acres

Tillable land

Gross income an acre

Total expense an acre

Net income an acre

Acres in — Corn

Oats

Wheat

Barley

Soybeans

Bushels an acre — Corn

Oats

Wheat

Barley

Soybeans

Returns for JlOO of feed

Returns for $\00 of poultry

Dairy sales from each cow

Returns for each litter

Investment an acre in livestock

Income an acre from livestock

Power and machinery cost a crop acre

Ivabor cost for ilOO gross income

Labor cost an acre

Expense for 3100 gross income

Excess of sales over expenses

Increase in inventor^'

Value of land an acre

Total investment an acre

Number of farms included

Iroquois

J37 675

27 435

4 695

1 540

2 124 1 881

676 736 223 155 91

$ 3 787

1 474 121 113

2 079

58 550 557 107

89 234 484

I 1 246 240 299

131 189 311

; 2 541

788

i 1 753

Ford

144 037 i3 790

494 525 614 614 606 694 188 28 98

686 806 172

no

598

71

340

507

84

43

248

305

$ 1 315 277 346

134 189 306

63

$ 3 371

753

i 2 618

Champaign

J38 748

30 298

3 490

1 445

2 243

1

272 408 563 205 18 78

4 443

2 699

156

97

1 491

8

297

598

79

48

156

305

1 163 181 336

136 171 290

i 3 280 620

I 2 660

DeWitl,

Piatt. Logan

$43 033

32 860

4 323

1 567

2 540

1

743 629 718 282 48 66

5 817

3 603

225

90

1 899

61

640

622

125

65

151

235

1 603 238

437

200 277 360

4 214 680

$ 3 534

Mason.

Cass.

Menard

X29 048

21 855

3 071

1 OSS

1 727

1 340

494

529

235

18

64

J 3 369

1 536

276

81

1 476

41

232

661

133

20

166

223

t 1 171 166 302

154 191

292

$ 2 198 672

$ 1 526

;4I 229

31 223

4 950

1 510

1 942

1 604

352

965

173

23

91

$

4 995

3 120

188

104

1 583

11

482

504

68

26

197

295

$ 1

480 209 371

200 264 386

$ 3 515 638

$ 2 877

Edgar,

Douglas.

Clark.

Coles

$33 985

25 369

3 837

1 449

1 775

1 555

382

775

283

33

82

$

766 258 160

90 258

37 748 832 124

23 207 287

$ 1 316 210 303

211 271 256

$ 3

450 634

$ 2 816

Sangamon

?40 973

31 607

4 073

1 434

1 578

2 281 510

1 166

465

SO

60

$ 4 253

897

263

76

3 017

56 954 1 394 179 112 138 184

$ 1 568 297 373

178 354 290

$ 2 685 617

$ 2 068

4.65% $ 386

254.9 91.4%

; 14.86 7.98 6.88

76.4

56.4

1.2

22.9 15.0

18

$133

244

65

114

5,

7

2.65 26 5.04

54

$2 407 134

;i08

148

31

5.94% $ 952

270.8 94.2%

? 17.30 7.64 9.66

91.8

71.0

3.3

29.4 13.0

2142

230

51

94

3.

5.

$ 2. 19

4. 44

$2 988 383

JI25 163 39

27

6.86% $ 1 245

231.9 95.5%

$ 19.16

7.69

11.47

74.3 41.6 11.8

25.3 12.9 20.6

?128

191

49

91

4.1

6.

$ 2.

17

4.

40

$2 723 557

X131

167

38

8.21% ; 1 893

296.9

94.7%

$ 19.59

7.69

11.90

86.6 37.9 24.6

33.1 14.2 23.1

i!121

222

38

74

4.

6.

.13

3. 15

4.05 39

$2 896 1 318

Jill

145

32

5.25% $ 610

262.8 86.3%

t 12.82 7.01 5.81

63.1 24.1 46.0

21.2 9.9 17.1

XI09

259

43

93

3.25

5.46

$ 2.75 24

4.46 55

$2 099 99

$ 83 111 51

6.98% $ 1 323

248.7 90.9%

$ 20.08 8.51 11.57

71.7 24.1 26.4

29.1 13.5 27.2

$127

221

56

93

5

6.

2.98 17

4.48 42

$2 814 701

;i26 166 36

8.3% $ 1 593

247.6 88.0%

$ 19.53

7.88

11.37

61.1

24.8 28.4

2i!6

33.0 19.3 22.0

28.0

$132

236

42

98

4.92

8.97

$ 2.68 18 5.00 41

$2 539 911

?102 137

57

5.05% $ 508

275.5 92.4%

$ 15.44 7.93 7.51

72.6 29.7 28.5

12.4 10.9 25.9

is.'i

$136

223

43

74

6. 64

10.75

$ 3.27 22

4.86 51

$2 299 386

$114 149 31

(Table is continued on next page)

Table A. — Summary, by Areas, of Business Records From 1,548 Illinois Farms, 1934 — Continued

AccouDting items

Capital investment, total

Land

Farm improvements

Machinery and equipment.

Feed and grain

Livestock, total

Horses

Cattle

Hogs

Sheep

Poultry

Income, net increases, total

Feed and grain

Corn and wheat, AAA payments.

Labor and miscellaneous

Livestock, total

Horses

Cattle

Hogs

Hogs, AAA payments

Sheep

Poultry and eggs

Dairy sales

Expenses, net decreases, total. .

Farm improvements

Machinery and equipment. .

Feed and grain

Crop expense

Hired labor

Taxes

Horses

Livestock and miscellaneous.

Income less expense. . Total unpaid labor.

Net farm income.

Shelby, Moultrie

J31 787

23 753

3 293

1 265

1 922

1 554 375 817 218

62 82

$ 5 0«9

2 913 173

95 1 888

29 301 669 135

76 199 479

$ 1 317 217 335

194 248 264

59

$ 3 752 745

J 3 007

Christian

{32 885

24 896

3 328

1 644

1 911

1 106 327 394 291

31 63

$ 4 735

2 820 129

92 1 694

24 237 881 132

48 132 240

$ 1 283 137 414

168 216 297

$ 3 452 704

; 2 748

Adams

«26 702

19 081

3 710

1 018

1 231

1 662

409

739

410

45

59

$ 2 701

107 148

2 446

39

592

1 254

183

47

130

201

1 309 178 298 265 128 135 221

$ 1 392 767

Pike, Brown

S25 515

17 604

3 434

979

1 431

2 067 348

1 144

461

69

45

« 3 055

106

63

2 886

36

849 1 501

237 90 77 96

1 603 199 246 608 130 151 194

75

i I 452 683

Morgan. Scott, Greene

$33 138

24 736

3 602

1 306

1 697

1 797

440

85S

390

38

71

$ 3

586 772 272

70 2 472

30

696

1 149

186

54 118 239

$ 1 343 184 374

183 259 284

2 243 692

$ 1 551

Macoupin

J19 281

12 544

2 996

1 100

1 111

1 530

392

777

219

55

87

$ 2

429 356 135

74 1 864

17 371 555 105

75 204 537

1 000 138 314

134 170 187

57

$ I 429 771

J 658

Jersey

J20 176

13 192

2 900

1 336

1 291

1 457

414

659

281

37

66

J 2 434

430

149

89

1 766

4

225

707

134

40

142

514

? 979 224 279

129 108 187

52

$ 1 455 785

$ 670

Rate earned on investment. . . Labor and management wage.

Size of farm, acres. Tillable land

Gross income an acre. . Total expense an acre. Net income an acre

Acres in — Corn

Oats

Wheat

Barley.. . . Soybeans .

Bushels an acre

-Corn

Oats

Wheat. . . Barley . . . Soybeans .

Returns for $100 of feed

Returns for $1C0 of poultry. . . .

Dairy sales from each cow

Returns for each litter

Investment an acre in livestock. Income an acre from livestock. .

Power and machinery cost a crop acre .

Labor cost for $100 gross income

Labor cost an acre

Expense for $100 gross income

Excess of sales over expenses . Increase in inventory

Value of land an acre

Total investment an acre. . Number of farms included.

9.5% $ 1 950

271.3 89.0%

t 18.68

7.60

It. 08

64.5 20.7 20.0

30.4 10.9 22.1

iKi

$131

237

51

93

4.92 6.85

$ 2 19

5.1 41

$2 066 1 686

$ 88

117 31

60

8.36% $ 1 628

237.0 93.2%

$ 19.98 8.39 11.59

59.0 15.0 25.9

21.5 11.3 26.2

26^2

$126

194

44

90

3.73

7.05

$

2.99 18

4.58 42

$2 764 688

$105 139 36

2.34% $ -170

242.7 82.8%

$ 10.69 8.11 2. 58

50.2 19.9 17.3

5.6 4.0 14.8

$133

209

38

99

5.06

9.92

$ 3.51 32

6.06 76

$1 634 -242

$ 79 110 31

3.01% $ 8

249.7 75.5%

$ 11.81 8.73 3.08

48.6 17.3 13.3

5.9 6.9 17.6

$120 175 26 91

7.11 11.41

$ 3.22 26 6.34

74

$1 759 -307

$ 71

102

32

4.68% $ 406

275.7 81.0%

$ 13.01 7.38 5.63

68.1 19.7 42.8

11.7 18.7 25.0

$107

171

50

79

4.94

8.86

$ 3.44 26

5.21 57

$2 296 -53

$ 90 120

57

3.41% $ 221

227.5 82.6%

$ 10.68 7.79 2.89

44.8 14.2 27.2

8.1

8.5

21.6

isis

$127

234

65

78

S.ll

8.12

$ 3.50 37 6.21 73

$1 343 86

$ 55 85 45

3.32% $ 170

202.0 81.0%

$ 12.07 8.75 3.32

44.6 13.7 32.5

8.5 13.8 20.9

iiis

$112

209

60

78

5.01

8.74

$ 3.82 35 6.67 72

$1 508 -53

$ 65 100 32

(Tabu is concluded on next page)

Table A. — Summary, by Areas, of Business Records From 1,548 Illinois Farms, 1934 — Concluded

Accounting items

Capital investment, total

Land

Farm improvements

Machinery* and equipment

Feed and grain

Livestock, total

Horses

Cattle

Hogs

Sheep

Poultry

Income, net increases, total

Feed and grain

Corn and wheat. AAA payments. . .

Labor and miscellaneous

Livestock, total

Horses

Cattle

Hogs

Hogs, AAA payments

Sheep

Poultry and eggs

Dairy sales

Expenses, net decreases, total

Farm improvements

Macliinery and equipment

Feed and grain

Crop expense

Hired labor

Taxes

Horses

Livestock and miscellaneous

Income less expense

Total unpaid labor

Net farm income

Rate earned on investment

Labor and management wage

Size of farm, acres

Tillable land

Gross income an acre

Total expense an acre

Net income an acre

Acres in — Corn

Oats

Wheat

Barley

Soybeans

Bushels an acre — Corn

Oats

Wheat

Barley

Soybeans

Returns for $100 of feed

Returns for £100 of poultry

Dairy sales from each cow

Returns for each litter

Investment an acre in Uvestock

Income an acre from livestock

Power and machinery cost a crop acre

Labor cost for $100 gross income

Labor cost an acre

Expense for $100 gross income

Excess of sales over expenses

Increase in inventory

Value of land an acre

Total investment an acre

Number of farms included

Clinton, Bond,

Monroe, Montgomery

General farms

$16 969

11 272

2 483

1 057

1 066

1 091

357

424

161

29

120

i 2 571

1 270

153

58

1 090

167 342 59 48 278 196

897 130 234

162

163

149

17

42

$ 1 674 612

t 1 062

Dairy farms

?16 413

9 901

2 804

I 160

1 002

1 546

412

831

144

19

140

i 2

540

773

146

60

1 561

27

84

281

50

32

254

833

i 863 165 227

"is5

143 133

'46

$ 1 677 654

X 1 023

JIS 772 9 374

759

1 305

1 035

1 299

320

735

132

14

98

$ 2

400 671 147

80 502

19 127 255

54

21 261 765

937 171 242

152 155 165

52

1 463 669

$ 794

St. Clair

$18 374

11 824

2 895

I 174

1 117

1 364

396

622

171

49

126

$ 2

551 699 169

65 1 618

22 163 355

61

54 373 590

$ 919 163 227

' 186 129 152

$ 1 632 680

$ 952

Randolph

$13 281

723 399

I 126

! 003

1 030

304

519

95

14

98

$ 2 143 831 151

56 1 105

15 168 181

25

29 207 480

$ 665 107 210

133 57 119

$ 1 478 661

$ 817

Jefferson, Edwards, Wabash,

Jackson, Marion, White,

Saline, Crawford. Richland,

Clay, Wasliington, Wayne. Johnson

Lower-valued land

$9 783

5 970

1 538

631

743

901

313

340

110

41

97

J 1 852

831

63

64

894

32

121

255

55

41

258

132

$ 516 82 131

110 68 95

30

$1 336 546

$ 790

Higher-valued land

$18 826

13 024

2 491

885

1 323

1 103

396

336

254

34

83

079 444 192

63 380

26 154 642 100

52 243 163

$ 1 039 144 207

184 278 184

3 040

564

$ 2 476

Dairy farms

513 508

7 834

2 377

996

982

1 319

290

796

134

1

98

$ 2

629 654

81

118

1 776

70 195 .397

66

2

258

788

744 111 205

' 'i24 137 117

885 608

$ 1 277

6.26% $ 646

195.9

83.7%

$ 13.39 7.71 5.41

33.7 20.0 43.2

IS. 5 21.0 26.4

6.23% $ 589

205.2 83.96%

$ 12.38

$114

232

45

75

3,

5.

8.4 22.3

$118

184

64

88

5. 7.

3.57 28

5.43 58

3.72 28

5.68 60

$1 145 529

$ 58

87 38

$1 291 386

$ 48 80 35

$1

5.03% $ 416

162.6

84.5%

$ 14.76 9.88 4.88

29.7 11.2 35.7

12.7 11.8 24.1

$121

249

67

77

5.90

9.12

$ 4.00 33

7.32 67

188 275

5.18% $ 443

164.8 84.8%

$ 15.48 9.70 5.78

29.5 20.0 35.3

9.3 29.7 24.3

$120

296

74

76

5.72 9.68

$ 4.19 30

7.01 63

6.15% $ 562

188.5 83.4%

$ 11.36 7.03 4.33

8.08%, S 687

184.0 85.3%

S 10.07 5.78 4.29

26. 14.

44.

$ 58

97 49

$1 380

252

$ 72

111

32

16.5 25.8 18.9

$102

213

51

74

3.84

5.78

$ 3 . 50 31

5.91 62

$1 111 367

13.15% $ 1 939

234.2 85.7%

$ 17.42 6.85 10.57

55.4 18.6 47.0

36.2 33.0 26.0

11.9

$116

248

25

89 3.36 4.68

$114

276

32

76

3,

5.

.27

$ 41 70 33

$ 2. 30 5.19

57

$831 505

$ 32 53 56

2.75 13

3.30 39

9.45% $ 983

233.3 87.2%

$ 11.27

26.5 14.9 18.9

$121 250

55 93

4

7

2.30 26

4.96 51

$1 650 1 390

$ 56 80 17

$1 430

455

$ 34

58 10

Printed in furtherance of the Agricultural Extension Act approved by Congress May 8, 1914. H. W. Mumford, Director, Agricultural Extension Service, University of Illinois.

AKIKJAL PAEl.! BUSIlvESS EEPOETS PEEPA2ED FROll HECOEDS KEPT IN THE ILLINOIS FARM FINANCIAL HECOBD BOOK ?0R 37 AREAS FOR 103I1

Prepared by the Department of A^icultural Econonics of the University of Illinois

COUITTIES PA&S

DeKal"b K-U36 1

Will M-U37 13

Boone, Winneha^o, McEenry I.I-U3S 25

Kendall, DuPa^e, Lake, Cook, Kane U-U-3S 37

Carroll U-Ul+O 1+9

Hock Island I.I-UU1 6I

Jo Daviess, Stephenson M-lA-2 73

Lee, Whiteside, Ogle M-Ui+3 S5

Mercer M-UUl; 97

Henderson M-UU5 IO9

KcDono-u^h M-U1|6 121

Adams M-Ui|-7 I33

Hancock M-Ui+S 1^5

Henry, Stark, Bureau M-UH9 157

Warren, Knox M-U50 I69

Peoria, Schxiyler, Folton M-I15I Igl

Macon M-H52 193

Ford M-l+53 205

Iroquois U-h^k 217

Champaign M-U55 229

DeWitt, Piatt, Logan M-U56 2^1

maammmmst

COUITTIES PASS

Ksjakakree, Vermilion M-U57 253

Christian U-h3S 265

Shelty, Moultrie M-H59 277

Edgar, Douglas, Clark, Coles M-U60 2S9

Macoupin U-kSl 3OI

Jersey M-U62 313

Sangamon M-U63 325

Morgan, Scott, G-reene M-^6U 337

Mason, Cass, Menard M-U65 3^9

Pike, Brown M-U66 36I

l/-adison M-U67 373

Randolph M-U62 3S5

St. Clair M-U69 397

Clinton, Bond, Monroe, Montgomery M-U70 U09

Effinghan M-U7I U26

Jefferson, Edwards, Wabash, liarion. White, Jackson, Saline, Crawford,

Richland, Clay, Wayne, Washington M-U72 U3S

A.F1TUAL FAEI.l EUSINZSS ESFORZ Oil TdlEIY-'FlYS FABlvIS DT DMAIB COlTiTTY, ILLECIS, I93U

P. E. Johnston, J. E. 7/ills, and J. 5. Andrews*

The farm earnings of 35 accoimt-keeping farmers in De'Kc.TD Covrnty showed an increase in 193^ over those of 1933* Tl'.is is the second con- secutive year of improvement in the lousiness of these fams. The three years previous to 1933 showed very low ret\".ms.

These 35 accoijnts show for 193^ ^'J^- average net income of .*l,6Ug per farm, as compared with an average of $1,563 ir^ 1933 ^^^ a-^- average net loss of $^73 i^ 1932- The average cp.sh income in 193^ ™a-s $^.933 P®^ farr.i, the cash business expenditures $2,923 per farm, leaving a cash "balance of $2,010 to meet interest payments and fa:aily living expenses. (Those -.vho keep home account books use the latter figure to represent the cash contri- bution of the farm to the "realized fa:nily income".) Besides the Cr_sh in- come there was an inventory increase of $33^ per farm due to the rise in the prices of farni products. This increase, added to the cash balance, re- sulted in an average excess of receipts over expenses of $2,3^ per farm. The inventory increase was a smaller part of the total farm income in 193^^ than in 1933-

These data must not be considered representative of average farm conditions, for they were secured from farras which are larger than average and were managed by farmers who are more efficient than the average of all farmers in the county.

For the state as a whole, farm earnings were better in 193^^ than in 1933 in. spite of the fact tlaat com and oat yields were very low due to the drouth and to chinch bijg damage. In the western and southwestern parts of the state the drouth caused an aPonost total failure of both corn and oats, which accounts for fo.rm earnings being lower there than in other parts of the state .

The com crop was best in the southeastern Dart of the state and was fair in the northwestern section, "laea-t yields were parti ci."'J.arly good in the south and central portions of the state. Soybean yields were very good throughout the state and there was a. larger tlian normal acreage in Illinois in 193^- This state produced over half of the nation's 193^^ crop of soybeans.

Chinch bug dama.ge extended over m.ost of the state last year but was much more severe in some sections than in others and was much worse on some farms than on other farms in the srme community. Conditions af- fecting crop yields were very spotted; which accounts in part for the wide variation in farm earnings from one section of the state to another and the wider variations than usual from one fcarm to another.

* H. IT. Basmusen, farm adviser in DeKalb County, cooperated in supervising and collecting the records on which this re^nort is based.

-2-

Industries other than agriculture again showed improved earnings over the previous year. A group of SUO industri^-l corporations reported "by a nr.tionally kno\7n hanlc showed average earnings of 5-0 Tsercent on their invested capitn.1 in 193^» "-s compared \7ith 3-'+ percent for the s'^iue cori)- ora.tions in 1933- -^ similar group liad a loss of one-tenth of one p'jrccnt in 1932 G.nd average earnings of 3-3 percent in 1931-

In co:apa.ring the average earnings of corporations -jith the rate e?med on investment on accorjating farms it is v;ell to keep in .aind that in corporation accounting, charges are raade for management, while in the farm accounts no comparahle deduction has heen made. On the other hand the farmer anc!. his family receive food, fuel, and other items of living from the fai-m for which the farm has received no credit in the records used in ■ this report. ?or the average central Illinois farm family, consisting of five persons, the value of the food and fuel fv-mished "by the farm was aoout $230 in 193"^' "v^hen estima.ted on the "basis of the wholesale price for farm products.

Variations in ?ar-i Incomes

There was a m.uch wider range in farm earnings on the accconting farms in 193^ than in 1933' 'Ihis was true for the farms included in this report and was also true when the average earnings of farns in one section of the state were compared v;ith the earnings of farms in other areas.

The extremely wide range in earnings was du-e to a comhination of physical and economic factors. Tlie average yields of wheat and soybeans were much "better, compared with the five-year avera.ge, than the average yields of corn and oats. This variation favored those sections which had larger acre,ages of the higher ^.-ielding crops in 193'''' There was also a wide range in aver-ago corn yields from one section of the state to another as well as "betv/een individual farms in the same area. The price of grains was high in 193^ --^ compared with prices of livestock and livestock products. Taims where grain sales constitute a large part of the fa.rm income ■c'r.us liad an advantage. The ra'pid increase in the prices of farm, products, particularly grains, favored those fa.rms which had large stocks of salahle products on hand at the beginning of the year. i.Iany farmers who inventoried the corn on hand at the beginning of 193^ ^-^ ^0 cents a bushel, later sold this corn for SO cents.

In this group of 35 ;icconnting farms the most successf-'il third shows an a.verage net income of ^2,£hb while the a\'-err.ge net income of the least successful third of the farms was only $500. In 1933 "^^^s compe.rable net incomes for the two groups was $2,522 and ^^OS respectively.

Investr.ents, Receipts, S::.penses, and Earnings on 3!J DeKalb County Paitas in I93U

Items

CAPITAL IKTESTLSITTS

Land '

Farm ir.provements- ------

Livestock total- -------

Eorses -------- ---

Cattle -----------

Hogs ------------

Shoep- -----------

Po-oltry- ----_----_

Machinery and equipment- - - -

Feed ?,nd grain

Total capital investnent -

?:-CEIP?S AJJ) 1ST ITTCREASES

Livestock total- -------

Horses -----------

Cattle -_--

Hogs (including AAA payraonts) Sheep- -----------

Poultry- ----------

Egg sales- ---------

Dairy sales- --------

Peed and grain (incluiiing j^AA pa^^ruents)- ---------

Lator off fam --------

Miscellaneous receipts - - - -

Total receipts & net increases

EXFEl'JSSS Mm IlET DECF.EASZC

Ear:n improvements- ------

Horses ------------

Miscellaneous livestock

de c re ase s

Machinery and equipment- - - -

Feed and grain --------

Livestock e::pense- ---___

Crop expense ---------

Hired la"bor- ---------

Taxes- ------------

Miscellaneous exDenses - - - _

Total expenses & net decreases

HECEIPTS LESS EXPENSES-

Total -Linpaid labor- --------

Operator's labor -------

Family labor ---------

Net income from investment and management- -----------

RATE SARIGD Oil IirVESTLiEI^TT

Return to capital and operator's labor and management- ------

5^ of capital invested- ------

LABOR Aim ::aitageiisijt mc-e

Your farm

Average of 35 faims

19 Uoi

5	S27
2	U3S
	kko
1	29S
	386
	182
	120
1	510

1 920

$31 093

1? most profitable

. ams

17 737 5 4I19

2 523

Ucc 1 067

331

20 105

1 UU6

2 U7I

S2'

o2o

12 least

profitable

fr.r.Tis

17 9?6 5 23U 2 U'Sl

1 3I47 UUk

51

139

1 U'53

1 513

$39 257

3 261

9U2

1 197

133

Gs

211

710

3^'6

110

1

67?

3 702

1 U92

1 120

26

70

206

g2g

gg5

172

1

$ k 76n

? R

570

6

706

978

3S

SI

22s 533

ko

$ 2 610

296 12

366

57 172

157 255

$133!

25?

1

290

60 20U lUi

257

22

$ 1 233

305

3gS

166

52 139

1I17 235

$_i_iM

$ 2 3'C

692 517 175

1 648 ^jOj

2 165

1 55^^ $ 61c

im

631

^Uo iUi

8l+6

$ 1 152

652

518

13U

9.b

1^!

500

l.7li

3 3Sb 1 U^l 1 90*^

1 018

1 U63

^ -4)15

-l4-

The follov;ing tatle shows the ntmher of farms iiaving certain net incomes per acre. There was a marked difference "between the most siiccessf-ul and the least sxiccessful farms.

Average net in- IJ\m"ber of Average net in- g-umher of

cone per acre farms come per acre faims

$19 and over 2 $7 5

17 2 5 7

15 3 3 2

13 2 1 3

11 2 -1 1

9 6

A further study of the farm husinesses made "by comparing the in- vestments, receipts, and expenses of the group of farms with the highest net incomes with those having the lowest should throw some light on the question of why some farmers are raore successful than others. This comparison is shown in the tahle on page 3-

The most successful farms averaged 132.2 acres each, the least successful 169-8 acres. This difference in size accounts in part for the variation in the receipts, and expenses in the two groups. Difference in receipts from the sales of grains and livestock accounts for much of the difference in income between the two groups. Tlae total e::pense per acre, including the charge for family lahoir, on the least prof itahle farms was $12.^3 as compared with $10.51 on the most profitable farr-is.

Changes in Inventories and Inventory Values

The year 193^ ^''a-s similar to 1933 i^ that the prices of farm pro- ducts continued to advance, causing further increases in inventory va.lues. 0\7ing to the poor crop yields in 193^ there were fewer bushels of grain on hand to inventory at the end of the year than at the beginning. The value of the smaller amount of grain, however, was greater than for the l3.rger amount on hand at the beginning of the year.

Bushels of Corn Inventoried

Jan. 1, I93U Dec. ^1, 193^

Average of all farms

Average of I3 most successfiol farms Average of I3 least successful farms Your farm

2 216	1 100
3 27U	1 SGG
1 1+53	631

The most profitable farms had a much larger inventoiy of corn both at the beginning and end of the year. Thas larger inventory of com, with the rise in grain prices, was one of the importajit factors accoujating for the difference in farm earnings.

-5-

The average inventory increase for the accounting larras in Dellalb Cotmtv was $330 in 193^ as compared with $UU3 in 1933 ^'^^ ^^ inventory loss of $1,06'4 a farm in 1932. There were increases of SllU in total livestock, $317 i^ feed and grain, and $71 in machinery, while improvementa shovred a decrease of $172. SiJch an increase in inventory as that for rnachiuery re- sults from the value of nev; replacenents during the year being in e-cer.s of depreciation costs. This increase is of consideraole interest for it is the first time that such an increase in machinery inventories has occtxrred since farm earnings began to decline so drastically with the general depression.

Inventory Chojiges for 193^

Items

Beginning Closing Inventory Ixiventory inventory inventory changes changes 1„1-3U I2-3I-3U I93U your farm

Total livestock

Peed and grains

I.fe.chinery

Improvements (except residence) Total

2 435	2,540	llU
1 920	2.237	317
1 ^10	1 581	71
S "27	5 655	-172

.1 0^2

12 022

33CL

Some Ad.mstments on DeZalh 3o\'city Pi.r.as Since 1929

Fa,rmers have heen forced to malce adjustments in their cash ex- penditures as the result of changes in their cash incomes. Prom 1929 through 1933 farm operating costs declined each year. Total operating expenses were hS cents an acre lower in 193'-l- than in 1933. ^"hile cash operating ex- penses were $2,923 a farm in I93U as compared with $2,020 in 1933- The largest increase in exxienditures over the previous year was for feed, grain, macliinery and supplies for machinery. Indications point to P-n even greater expansion of spending for machinery in 1935 since farmers have postponed maciiinery replacements dx^jring the lofjr-year ;oeriod since 1929 •

Cash Income and Expenses on Accounting Farms in DeKalh Comity

1929 and 193^4

Items

To ur Ax'e rage c a sh. farm expense per farm 193^ 193^ 1929

Your Averr.ge cash income farm per fr:.rm 193^4 193'4 1929

Livestock .... Peed and grains . Machinery .... Improvements. . .

Lahor

Miscellaneous . . Livestock expense Crop expense . . , Taxes

9O0

677 950 I2U 137 23 57 172 23F;

2 923

3.061 760 £^6 3U9

505

39

81

256

^ 381

6 278

h 0U3 666 113

110

'4^6

980 lis

57

8

'^ 933

9 b:;^

Excess of cash sales over expenses

Increase in inventory .

Income to lahor and capital (Receipts less expenses) . ,

010 330

3 3.^^i 566

3 9^7

-6-

The c^uniilative effect of several years of low agricultural prices on the deniand for manufactured goods can readily be ascertained ty a com- parison of cash farm expenditures in 1S3^ with those in 192S ■ Although the average cash income in 193^ '"S-s 51»1 percent of that in 1929. cash expend- itures vrere only U6.o percent as large. In 193^+ livestock purchases were 29»7 percent and feed and grain purchases SS.l percent as large as in 1929- In 193^ these farms paid out 65*0 percent as much for machinery and 67-2 per- cent as much for crop expense as in 1929. while taxes were reduced to only 66.9 percent of the 1929 level.

Comparison of Farms TJith High and Low Sarninpis

The most profitable farms in this study had net receipts per acre of $15.62 as compared with $2.9^ for the least profit?,hle group. The reasons for this difference may "be obtained from a study of the data on pages 3 s-^d S.

The most profitable farms were larger and carried larger inventories of grain and livestock on which to make a profit when prices advanced. The inventory increase was $1,117 on the most profitable farms as compared with an inventory loss of $6 11 on the least profitable fairns.

Tiie most profitable farms had an investment per acre in livestock of $12.7^ as compared with $10.31 for the least profitable group. The in- come per acre was $20.32 and $15.10 respectively. On the basis of $100 of feed fed to productive livestock the income for the most profitable fa,rms was $130 as compared with $92.

Tlae total operating costs on the acre basis were slightly higher on the least profitable farms. The poorer and machinery cost was an important factor in accounting for this difference.

-7- Iniluence of AM Pror-:rrur.s on Crop^irii'?: Syste.as and Fair' I-iicomes

The farra-accoimt recoi"ds in Illinois were infliienced "both directly nnd indirectly by the ccm-hog and wheat adjustment programG. A lar-;e per- centage of accounting farms were rnider one or hoth contracts in 193^> The acreages of corn and wheat on. these farms were therefore less than normal. Uiis sho\ild kave resulted in lovrer operatin;^ costs. Corn-hoc; henefit pay- ments for the entire 133^ program will total ^ahout Uo million dollars for the state, while wheat benefit payments will he ahout 2.U million dollars.

The benefit riajiients for accorinting farms are indicated in the following table, v/nich shoves the average pa\Tnent for those farms receiving payments and includes only those pajnuents received by the cooperator before the 193^ books were closed. In some cases only the first corn-hog check in included, while in other cases the second check had been received- The second payments not received and the third "Payments will be entered in the 1935 book. -

AAA Benefit Paj/ments Received in 193^-

Corn ".Tieat 'logs Average

number Amiount iromber Araount IJumber I-jnovnt Qf q^ii

of per of per of per pajmientsi/ farms far:":: f^rms farm farms farm '

1/3 most profitable fams 10 I3S 1 I39 11 I25 2hl

1/3 least profitable farms 11 99 3 35 11 ikk 23I

All accountiiig farms 29 I25 U 7? 32 I59 259

1/ Total benefit payments reported by accounting farms under ' contract for 193'"^- divided by total nnmber of accounting farms.

On many farms the cash received from benefit payments will more than pay the year's taxes. As an average of all accounting farn;s, the pay- ments actually received v;ere sirfficient to pay all of the 193^ taxes.

It is interesting to note the use made of the co:v'cracted acres en the accounting farms. The average farm liad 22.1 contracted rcres which were used as follows: .k idle; 6.3 red clover; I.5 sweet clover; 10.1 soybeans; •U alfalfa and 3*^ acres were in other crops. These data indicate that most farmers made good use 01 their contrected acres from the standpoint of soil improvement, as most of them, were in legumes. Yflien the government re- strictions on the use of crops grown on contracted acres were removed, they were on many farms the most profitable crops as they fiij^nished hay and pas- ture where badly needed in drouth areas. The legumes had the further ad- vantage of being imm.-une to attack from chinch bugs.

Farm earnings were influenced indirectly by the AAA programs in that the reduction in production increased the price of the commodities in- volved. The drouth was a more important factor in reducing production than the adjustment programs, yet if it had not been for the corn-sealing program there wouJd have been but little corn in the hands of farmers at the time the major price advance became effective.

-S-

Pactors Helping to Analyze the Farri Btisiness on 35 DeKalt County Farms in 193^'-

Items	Ycui' fa.rm	Average of 35 fams	12 most profitable farms	12 least profitable farms
Size of farms — acres ------		1SS.7 91. 3^0 35-3 19. U9 10.76 S.73 103 165	182. 2 35-5fo U0.2 26.13 10.51 15.62 97 163	16s. s
Percent of land area tillable - -		91.9$^
Percent of tillable land in hn,y and		30.6
Gross receipts per acre _ - _ _ -		15.37
Total c:c"-'cnGes -oev acre -----		12. U3
Net receipts per acre- _-_-__		2.9U
Value of land loer acre __--_-		106
Total investment xier acre- - - - -		172
Acres in Com- __-__-..---		60.5 29.2 6.5 5-3 32.3 2S.5 c I . 1 11;. 5 IC.l	5s. 0 23.3 8.6 39.5 30.5 27.9 11.5 lu.l	5U.9
Oats- __-__		32.3
Barley- ---------		5-5
Soybeans- ---------		5
Hay		2U.5
Tillable pasture- - - - -		23-3 ■
Crop yields — Corn, bu. per acre- -		26. U 17.2 10. 0
Oats, bu. per acre- -
Barley, bu. tier acre-
Value of feed fed to rroductive L.S.		2 7U1 119 122 229 6 loU 7^ less 17.2s	2 £51 130 128 251 5.5 103 12. 7U 20.32	2 620 9S 105
Returns Tier $10C of feed fed to prodv-ctive livestock- ------
aoturns per $100 invested in: Cattle
Pou-ltry		227
Pigs weaned per litter ------		6.U
Income per litter farrowed - - - -		92
Dairy sales per dairy cow- - - - -		57
Investment in productive L.S. "oer A.		10.31
Receipts from isrodiictive L.S. -^er A-		15.10
Man labor cost per crotj acre - - -		5.63 2. '=^5 U.3S m 253 22 55 1-57 2 010 330 5.30<. 3 67s	5. Us 2.02 3.7U- 67f. 2U6 16 Uo l.i|2 2 UlO 1 117 9.6ifo U 760	5.72
Machinery cost per crop acre - - -		2.92
Power and mach. cost -ner crop A. -		U.65
Farms with tractor ____		755^
Value of feed fed to horses- - - -		235
Man labor cost per $1CC gross		29
Expenses ner $100 ^ross income - -		SI
Farm improvements cost ner acre- -		l.SO
Excess of sales over cash expenses		1 763
Increase in inventory- ------		-611
PATE EARIED OIT Iir/ESTi.ENT		1.71^-
Gross receipts ner farm- -----		2 610

_9-

Chart for Studying the hjificiency of Various Parts of Your' Business,

DeKalb County, I93U

'he nuinters atove the lines across the middle of the page are the averages for the

farms included in this report for the factors named at the top of the nag':'. :' dravdng a line across each colimn at the mmber measuring the efficiency of your f-n: in that factor, you can compare your efficiency with tha.t of other fai-mers in

.'our 1	Dcalit	,y-													' — ^
	Bu si u 0 0	she Is r acre w 0	CD U	r 0 0 fn S 0 i~l -P 4^ ■H .. ,--1 fi a) trl P	w 0 (D R p.	1 a 1 a; 1 S --d c 0 0 +^ •H CD 1 ^.H 1 4^ pi 0 1	u CO <D CD S <D 0 Ch 0 •rl 0 • 0 CO 0	Cost per 1 crop acre |	0 0 i-H -Kh (D4J 1 — ^K- •rl 4J CD CO 0 ocu uu OC/J au	•H CD P' w 0 nj 4J 0 S fn CD 0 >	Ui CD CO u a -J a-> > p. 0 i-\ CD r-H CO '.r; C^ CO a	Gross receipts	i i
0 0 -p C' 0) 4- > ■:' ^		Pi !h C\j OJ a & 0 0 CTj	0 u	'h 0
'; .30	•32	Uo	20	180	I2U	380	270	3.10	1.90		2330	6 000	39	8200	3UC
^ . 70	^+7	33	IS	163	llU	3'70	2UC	3.60	2.U0	2	1930	3200	33	7300	310
'- . 30	h2	30	16	1^0	loU	320	210	U.IO	2.90	7	1330	UUoo	31	6UOO	2 SO
7.30	V	25	Ik	13^	91,	290	igo	U.60	3.U0	12	1130	3600	27	3300	230
6.30	32	20	12	120	sU	260	130	f^.-lO	3.90	17	730	2S00	23	U6OO	220
5.30	27.1	lU.f5	10.1	lOU	7^^	229	119	3.63	U.39	22	^30	2010	19	3b78	1S9
, H.30	22	10		90	GU	200	! 90 1 (5.10	U.90	27	-130	1200	13	2800	160
'3.30	17	3	6	7^	34	170	60	6.60	3.U0	32	-330	Uoo	11	1900	130
2.20	12		14		i:U	1)40	30	7.10	3 . 90	^7	-930	-UcC)	-7 1	IC'OO	100
1.20	7			Un	3'4	110	0	7.60	6. Ho	U2	-1330	-1200	3	100	70
.20	I2			30	2l|	■60	1	8.10	6.90	^^7	-1730	-20C'0			Uo

10

-10-

Influence of Price Chanfiies on Farm 3aminp;s

Parra prices in 195'^ advanced more rapidly than did the prices of commodities which farmers oought. Farr.iers of the United States as a ^roup could exchange their farm products in 193^ for T'^ percent as many goods as for the period 1905-191^1 while in 1933 they received only 6U percent, and 1932 only 61 percent as rsach in exchange for v;liat they lip.d to sell a.s in the prewar period. In the month of February, 1935 » this index of purchasing povrar had increased to ^7 percent of prev/ar, the index of farm prices having risen to 111 as compared with an index of I27 for coirtaodities \7hich farmers huy. ilTIien the line representing farm prices drops "below the line represent- ing prices paid "by farmers, fa.rm. earnings are very low, "but when these lines come close together fain earnings increase. (See follovdng gra-ph. )

Index of Prices

Rate Sa.rned

200 175 150 125

100

75 50

25

0

^,

^ TT

r.

An

1 or

n

T-nlrr

1

Olli

_ 1 rr-

= Prices paid 'oy fanners. Aug. 1909-tJ'uly V^lh = IOC

r = Rate earned en investment, accounting farms, central Illinois

/'^

-

r~

//• ,

\\

/ t

/

>:i ;'

— ■

""""""""■"■ ""^^

\ ^

^

f"^"^"--^^'^^-. ft

1

\X

M

/ 1 ^ 1

':<■ ■■■ it

—

—

\

^'?

/

p

V.

^

L

-J

1 1 1 ! 1 ! 1 1 1 1 1 1 1 X _.L 1 1

12fo

ICfc

8i

lU

2fo

-<<'.

-2^

-H

1917 '13 'I9 '20 '21

23 '2U '25 '26 '27 '2« '29 '30 '31 '32 '33 '3lf

-11-

Sincp the price of some farm products advanced m-uch. more rapidly during 193^ than other products, it is evident that some farms v?ould "benefit more than others, depending upon the kind and quaiitity of products sold. Grain prices advanced much more rapidly than livestock prices; v/hich result- ed in a very had nrice ratio for farr.iers who "buy large qxiantities of feed. The average Illinois farm price of corn v/as Ul cents a bushel in January, 193^; it advanced steadily until the end of the year when it i7as S£ cents a "bushel. Other grains made marked adva,nce although not so great an advtmce fis corn. Tlie price of hogs flTi.ctuated from a lov/ of $3*20 a hundred in Maj"' to a high of $0.30 in 3eptem"ber. The low point in the fall came in i-Iovem"ber when the average price was $5'1^' Tl"^ price lias advanced quite rapidly since L"ovember, the average price being $7*50 ^o^ Jebrar.ry, 1935- Beef cattle were v/orth $U.10 a h'ondred in January, 193^ ^^^ advanced 'each month until September, when the price was $5.9C. They dropped to $5'.2G in December but increased again to $7.U0 for Pebniary, 1935-

The year 193*+ set a record for the reduction in t'ne numbers of livestock. The percentage decreas'^s by species were as fellows: horses, 1.1 percent; raulps, ?.6 percent; all cattle, 11.2 percent; shef^p, U.7 percent; hogs, 35*3 percent. IThen all species are combined on the basis of their capacity to consume feed, the reduction was I3 percent. This reduction will greatly reduce the de^nand for feeds produced in 1935*

The relative change in prices of important conanodities may be noted in the following graph, which shov/s the average Illinois farm prices by months as a percentage of the average prices for the period 1921-1929-

Percent 120

110 100

Price Indices, 193^+

(1921-1929 rr 100)

Grain

/ -

/

Cq,ttle ^

^^iry P^-o^uetf

Oct,

I'JOV.

Dec ,

Jnn. Feb. Mar. Apr. IJay June July Aug. Sspt .

All commodities index represents the wholesale price of a large n-umber of conmodities for the United States, as computed by Bureau of Labor Statistics.

Grain and livestock indices represent average monthly farm prices in Illinois.

12

-12-

Variation in 5arninis:s Over ?ive-Year Period

A comparison of prodiiction, income, and expenditures on the accounting farms in DeKal"b Comity for the last five years is very inter- esting because of the violent changes in price level. 193'-'- was the second year of very low crop yields, yet total receipts per farm vvere higher than in any other year in the last fo-or and were 59 percent of the 1929 gross receipts. Operating costs per acre were lower than in any year of the five Thus profits were the "best the county had erperienced since 192S.

Earnings in 1935 ^^ ustial will depend upon individiial efi'iciencjs weather, and prices. A normal year will mean larger yields of grain and probably lower prices.

Comparison of Earnings and InvestitBnts on Accounting Farms in DeKalb Cotmt:' for I93O-I93U

Ite

1930

1931

19

^P

1933

I93U

Number of farms ---------

Average size of fa.rms, acres- - -

Average rate earned, to pay for

management, ris:: and capital - - Average labor and management wage

Gross income per acre ----- -

Operating cost per acre - - - - -

Average value of land per acre- - Total investment per acre _ - - -

Investment per fai-m in:

Total livestock- _-__--

Cattle --

Hogs ------------

Poultry- ----------

G-ross income -oer farm ------

Income per farm from:

Crops- -----------

Miscellaneous income - - - -

Total livestocic- ------

Cattle

Dairy sales- --------

Hogs

Po^xLtry

Average yield of corn in bu.- - - Average yield of oats in bu.- - -

226

2.Sfa

$-3Ul

20.77 ii+.Ss

131 217

5 395

3

1

C7b 263

127

k 562

Ui

57 k kSk

1 132 963

2 023 293

kk 56

50 202

-1.3-;. $-1 S91

12. U9 1U.99

119 195

h loU 2 109

1 172 isi

2 522

I46 H76 1+61

S9S

253

^7

50

$-1

50 199

-1.3J5 761

10.6s 13.05

ilU 1S2

3 06s

1 796

603

139

Lcf

39

OSS

561

662 630

171 60

56

36

177

5.2f. 06O6

20.09 11. 2U

105 170

606

Uso

ksh

93

5 1+7

1 216

35

2 296

711 53I1 S05 167

50 U3

3.5 189

5.35J

$610

19.^9

10.76

103 165

2 U35 1 2SS

3S6

1S2

3 67s

306 1

3 261

9^42 710

1 197 oS

27

14

I

llftTTJlL PAR'.I BUSIJESS EEPOHT Oil THIR'TY-?I7Z PARMS III WILL COUITTY, ILLIITOIS, I93U

?. E. Johnston, I. H. Hedges, and J. 3. Andrews*

The fam earnings of 35 account-keeping farmers in Ylill Gouaty showed an increase in I93U over those of 1933- This is the second con- secutive year of improvement in the husiness of these farms. The three years previous to 1933 shovred very low retvjms.

These 33 accounts show for 193^ an average net income of $75^ per farm, as compared with an average of $692 in 1953. ^^^i ^^ average net loss of $22^ in 1932. The average cash income in 193^ v/as $3 2d1 per farm, the cash business erpenditirres $1 SSS per farm, leaving a cash halance of $1 563 to meet interest payments and far-dly living expenses. (Those who keep home accotmt hooks use tlie latter figure to represent the cash contri- bution of the farm to the "realised faaily income".) A:i inventory decrease of $121 per farm occarred in 193^+ when, chiefly because of reduced yields resulting from the drouth, the increase in the feed and grain inventory- was not sufficient to offset the decreases in the farm improvements and machinery Eiis decrease, subtra.cted from the cash "balance, resulted in an average ex- cess of receipts over expenses of $l,U^:-2 ner fan^a.

These data must not be considered representative of average fa.rm conditions, for they were secujred from farms which are larger than average and. were managed by farmers who are more efficient than the avez-a.ge of all farmers in the counter.

For the state as a whole, faim earnings were better in 193^ than in 1933) i^ spite of the fact that corn and oat yields were very low due to the drouth and to chinch ''o-ag damage. In the western and southwestern parts of the state the drou.th caused an almost total failure of both corn and oats, which acco'onts for farm earnings being lower there tlian in other parts of the state.

The corn crop was best in the southeastern part of the state, and was fair in the northwestern section. TTheat yields were partic"i;J.arly good in the south and central portions of the state. Soybean yields were very good throughout the state, and there was a larger than normal acreage in Illinois in 193^* This state produced over "naif of the nation's 193^ crop of soybeans.

Crj.nch bijg damiage extended over most of the state last year, but was much more severe in some sections than in others, and was much worse on some fe.rms than on other farms in the same comm^onit^''. Conditions affecting crop yields were very spotted; which accounts in part for the wide variation in farm earnings from one section of the state to another, and the wider variations than usual from one farm to another.

* L. 77. Braham, farm adviser in "ill Coimty, cooperated in supervising and collecting the records on which this report is based.

ll+

-2-

Industries other than aitricultiire again shov/ed improved earnings over the previous year. A group of Ste industrial corporations reported "by a nationally laio\7n hani:; showed average earnings of 5*0 percent on their in- vested capital in 193^i f'-s compared with 3-^^ percent for tl:e sa.ne corporations in 1933- -^ similar group had a loss of one -tenth of one percent in 1932 and average earnings of 3 '3 percent in 1931*

In comparing the average earnings of corporations with the rate earned on investment on acco'onting farms, it is well to keep in mind tliat in corporation accoimting, charges are made for management, while in tlic farm accoimts no comparable deduction lias heen :Tiade. On the other hand the farmer and his family receive food, ftiel, and other items of living from the farm for which the farm has received no credit in the records used in this report. Tor the average central Illinois farm family, consisting of five persons, the value of the food and fuel furnished "by the farm was ahout $2^0 in 193^» when estimated on the "basis of the wholesale price for farm products.

Yariations in Farm Incomes

There was a mioch wider ran{;e in farm earnings on the accounting farms in 193^ tlian in 1933- This was trus for the farms incl'uded in this report, and was also true when the average earnings of farms in one section of the state are compared with the earnings of farms in other areas.

The extremely wide range in earnings was dtie to a comhination of physical and economic factors. The average yields of wheat and soybeans- were much better, compared with the five-year average, than the average yields of corn and oats. This variation favored those sections which had larger acreages of the higher yielding; crops in 193^- 'There was also a wide range in average com yields from one section of the state to another, as well as between individual farns in tlie same area. Tlie price of grains was liigh in 193^+ as compared with prices of livestock and livestock products. Farms wiiere grain sales constitute a large pa.rt of the fann income thus had an advantage. Tne rapid increase in the prices of farm prod'ucts, particularly grains, favored those farms which had large stocks of salable products on hand at the beginning of thn year. Many farmers who inventoried the corn on hand at the beginning of 193^ at Uo cents a bushel, later sold this com for SO cents.

In this group of 35 accounting farms, the most successful third shows an average net income of $l,6lS, while the average net loss of the least successful third of the farms VTas $207- In 1933 "tl^e comparable net incomes for the two groupsnere $1,UdS, and S-^T respectively. Fig^ored on a, cash basis the most successful farms ha.d on an average $1,0^6 more cash income left with which to meet interest payments and family living expenses, than did the least s-occessfiil farms.

Investments, "aeceipts, Expenses and Earnings on 35 rail Co-ujity Farms in 193U

Items

CAPITAL IMVSSTivIEWTS

Land -------------

Faim improvements- ------

Livestock total- -------

Horses -----------

Cattle

Hogs --------- ---

Sheejj- -----------

Poultry

Machixiery and equipraent- - - - Feed and grains- -------

Total capital investment

tRECSIFTS MP NET IWCHEASES

Livestock total- -------

Horses -----------

Cattle -

Hogs (including AAA payments) Sheep- -----------

Poultry- ----------

Egg sales- ---------

Daily sales- --------

Peed and grains (including AAA payments) ----------

Lator off farm --------

Miscellaneous receipts - - - -

Total receipts & net increases

EXPENSES Aim IJET DECPJSASES

Farm improvements- ------

Horses ------------

Miscellaneous livestock

decreases

Machinery and. equipment- - - -

Feed and grains- -------

Livestock expense- ------

Crop expense ---------

Hired labor- ---------

Taxes- ------------

Miscellaneous expenses - - - -

Total expenses & net decreases SCEIPTS LESS EXPENSES

Your fan'a

Average of 35 farms

12 most profitable farms

19 362

1 665

370

1 065

13s

g

sk

1 579 1 396

$2g 926

17 kkl k 062 1 606

1 oiU 159

14

75 1 SbU 1 620

$26 'sqi

12 least profitable

farms

21 U55

5 30s 1 U6g

9ig

118

91

1 003 1 kgl

nl 316

1 993

16 32s

350 33 59

133 1 07U

586

5h

7

$ 2 6U0

2 217

■13

515

U57 SS

63

130 951

1 103 73 13

$_j_Ui6

1 591

29 297 33s

iio 125 762

359

27

2

$ 1 979

23^

1|00

31

1U9

159

195

32

$ 1 19g

182

I|21

2S

171 1S2

30

1 Ik

326

500 15

I5g

16^

233

33

$ 1 U29

$ 1 kk2

690 513 177

tft

752

2.60^

$ 2 270

652 5UO 112

1 61;

5^0

.08'^

757

5^0

217

-207

-.66'^

1 265 1 hkG

2 15s 1 330

333

1 566

16

The following table sho?/s the number of farms having certain net incomes per acre. There was a marked difference between the most successful and the least successful fanns.

Average net in- Uu-jber of Average net in- Ilumber of

come -per acre farms come per acre farms

$13 1 $3 6

-.11 1 1 3

9 7 -1 ^

7 7 -3 a^J^d. unde r . . . h

5 2

A further study of the farm businesses, made bv comparing the in- vestments, receipts, and e:-rpenses of the group of farms with the higliest net incomes with those having the lowest, should throw some light on the question of wliy some farmers are more successful than others. This comparison is shown in the table on page 3-

The most si\ccessftil farms averaged 188 acres each, tlie least successful 219. Chiefly because of their smaller investments in land and improvements, the most successf'^il group liad smaller total investments tlian either the least successf^-il group, or the average of all acco"Jiiting farms. However, in spite of their smaller size, the most s^accessf'ol group received over three times as much income from feed and grain as t'le least successfvJ. group. This difference wa.s one of the two chief fr.ctors accounting for the difference in total income between the two groups, the other factor being the higher income from livestock and livestock products. The most successful group also had less total expense per farm, and per acre, including the charge for family labor, tlian either the least successfiil or the average of all accounting farms .

Changes in Inventories and Inventory Val-ijes

The year 193^ ^^-s similar to 1933 i^ that the prices of farm Products continued to advance, ca.using further increases in inventory values. Owing to the poor crop yields in 193"+' there were fewer bushels of grain on ha.nd to inventor;'- at the end of the year than at the beginning. The value of the smaller amount of grain, however, was greater than for the larger amount on hand at the beginning of the year.

Eushels of Com Inventoried

Jan. 1, 195^ Dec. 31. 193^

Average of all farms 1 3IO U25

Average of 12 most successful farms . . 1 U2U 3^1

Average of 12 least successf-al farms. . 1 U75 620

Your farm

The least profitable farr.is liad more bushels of com inventoried at the beginning and at the end of the year, however, the total value of all feed and grain on the most profitable farms was inventoried at $139 more at the beginning of the year, and S279 more at the end of the year, than on the least profitable farms. These larger inventories of feeds and grains other than corn may be explained by the larger acreage of liay and feed crops on the most profitable farms.

-5-

For the accoijntir.j fams in TTill Cotinty there was an average in- ventorj'- decrease of $121 per farm in 193^, as compared with average inventorj^ decreases of $59 per farm in I933 and $895 Per farm in 1932- The inventor;^ of total livestock shovred an increase of $9, while feed and grains increased $£1. The macMnery inventory decreased $92, and farrn improvements decreased $119. Maiiy individ-ual farms showed an increase in the machine rj'- inventory due to the val-ue of new replacements during the year exceeding depreciation costs.

Inventory Changes for 193^

	Pe ginning	Closing	Inventory	Inventory
Items	inventory	invent or:/'	changes	change s
	1-1-3H	12-31-3^	19^H	your fam

Total livestock $1 665 $1 Sfk $ 9 $

Teed and grains 1 39b 1 U77 SI

Liachinery 1 579 1 ^Sy -92

Improvements (except residence}. U '^2'r h 505 -119

Total ^ $9 ?64 $9 UU3 $-121 $

Some Adjustments on 7/ill Co'anty ?arrns Since 1929

Maimers have "been forced to mal:e adjustments in their cash ex- penditures as the result of c'ap.nges in their cash incomes. From I929 through 1933 i"arm operating costs declined each year, out the year 193^^ Drought a reversal of this trend. Total operating expenses were 9 cents an acre higher in 193^ than in 1933> while cash operating expenses were $l,59o a farm in 193^. as compared with $1,327 in 1933' Tliis increase in cash operating ex- pense of $371 in 193^"'' ^^^ ^6 attributed very l-^rgely to the increase in cash expendit-ores for feed a^nd grain, and for machinery and supplies for machinery. The increase in exnense for feed and grain may be attributed to the drouth, hut, because of postponement of needed macliinery replacements d^Jxing the four years beginning with 1929» an even greater expansion of spending for machinery,' may be expected as soon as incomes will permit.

Cash Income and Exnenses on Accoujnting Farms in 77111 Co'jnty

1929 and I93U

Your Average cash Your

Items farei e-pense per farm farm

193^ 193^4 1929~ 193^

Livestock $ $ 266 $ S2k $

Feed and grains 369 ^Wb

Machinery 383 72s

Improvements llU 37S

Labor I59 1+19

Miscellaneous 32 40

Livestock expense 3I 5U

Crop expense 1% 203

T.ax;es 195 32O

Ave re	.ge cash
income	■per farm
I93U	1929
$2 250	$^ 577
S7U	1 3S7
75	«3
1	2
5U	38
7	9

Total $ $1 69s $3 372

>?

Excess of cash sales over expenses $

Increase in inventory

Income to labor and capitcl (Receipts less expenses)

$5	261	$6	590
$1	5^3	$3	22i|
	-121	-	-log
1	l'-U2	3	036

13

-5-

Tlie CTjnulative effect of several years of low agricviltural prices on the demand for nanufactured goods can "be readily ascertained "by a compari- son of cash expenditures in 193^ with those in 1929- The average accoimting laiTP. in Till County spent 5I percent of the cash income as operating expenses in 1929, while in 193^ "tiie average accounting farm spent 32 percent. The relationship, therefore, between cash income and expenses for the t?/o years is the same, hut the 193^ cash income and expenses are only 30 percent as large as 1929- There was, however, considerahle difference in the distribution of the expense items. In 193^ 'tiie livestock purchases were 32 percent, and feed and grain purchases 9I percent as large as in 1929- In 193^ these farms paid 53 percent as much for machinery, and 73 percent as much for crop expense as in I929. wliile taxes were reduced to only 6I percent of the 1929 level.

Comparison of Farms Y7ith High and Lovif Earnings

The most profitable farms in this study had net receipts per a.cre of $S.59» e^s compared v;ith $--95 ^""oi" "^lie lea.st profitable group. The reasons for this difference may be obtained from a study of the data on pages 3 3-j^cL S.

Although smaller and liaving less total investments, the most profitable farms iia.d larger investments in both livestock and feed and grains on which to make a profit when prices a,dvanced. The higher yields of the principal grains more than offset the smaller acreages of tliese crops on the most profitable farms, while the larger acreage of ISi'jumes and other feed crops, the yields of which were not so severely affected by the drouth, was a significant factor in accounting for much larger increases in feeds other than grains on the r.iost profitable farms.

The most profitable group had more livestock and fed more feed, both per acre and total, than the least profitable group. The returns per acre from productive livestock were $11.7- for the most profitable group and $7-1'+ for the least profitable group. Income per litter was $27 higher, and dairy sales per cow $l4 higlier, on the most profitable farms. Returns for each $100 of feed fed to livestock were $135 ^^ compared with $11S for the least profitable group.

An interesting and unusual situation is presented by tlie fact that returns for each $100 of feed fed were SlUO for the average of all accounting farms. This is $5 higher tiian for the most -orofitable third. The mdddle group, data for which are not shTwn in the table, averaged $l6o returns from cattle receipts and increases, and $1,55^ returns from dair;^ sales, while the averages for these two items for the most profitable group v/ere $515 and $951 respectively. Tlie $172 ret-am to farms in the middle group for each $100 of feed fed was s-officient to raise the average of all accounting farms for this factor to JlUo, or $5 more tlian the most profitable group. However, ret-oms for each $100 invested in cattle, including both cattle re- ceipts and increases and dairy sales v/ere $15^ for the most profitable group as compared with $136 for the middle group. The comparable figure for the average of all accounting farms was $136.

'Tlie larger income on the most profitable farms was secured with a total operating cost of $9*5^ P^r acre, as compared with $10,00 per acre for the least profitable faKus. . The man labor costs per $100 gross income were $22 on the most profitable farms, as compared with $U0 on the least ■orofitable farms.

Influence of MA PrOiqrans on Cro"D-Ding Systems a.nd. Farm Incomes

She farm-acco'ont records in Illinois were infl-uenced "both directly a,nd indirectly "by the corn-hog and v;heat adj'ostment prograias. A large per- centage of accotmting farms v/ere ^jnder one or "both contracts in 193^- The acreages of com and vihea-t on these farms were therefore less than normal. Tliis should have resulted in lower operating costs. Com-ho;;: henefit pay- ments for the entire 193^ pro^ra.:! will total ahout Uo million dollars for the state, while wheat benefit payments will he ahout 2.h million dollars.

T'ne "benefit paj-ments for acco^onting farms are indicated in the following table, which shows the average payment for those farms receiving pajinents, and includes onl;- those p?.yments received "by the cooperator "before the 193^ "books were closed. In some cases only the first corn-hog check is incl-'oded, while in other cases the second check had "been received. The S3Cond payments not i-eceived, and the third payments will be entered in the 1935 book.

AAA Benefit ?a;,Tnents Heceived in 193^

om Tfneat Ho.~s ,

^ Average

j-Iuraber Amoimt Lumber Amount :Tumber j^.ount „ ,,

^ ^ ^ of all ^ ,

of Tjer of oer of "oer , 1/

,- „ „" , ^- payments-^

I arms larm farms farm larms farm

1/3 most profitable farms IE $10o 5 $290 9 $106 $309

1'3 least profitable farms 7 ikj 3 Wi 6 57 226

All accounting farms 29 llU 12 265 20 sU 233

1/ Total benefit payments reported by accounting farms "under contract for 133'+ divided by total number of a.cco'anting fanns.

On most farms the cash received from benefit payments will more tlian pay for the year's ta;:es. As a.n average for all accofnting farras, the payments actually received '•.leve $32 more than sufficient to pay the 193^ taoce s .

It is interesting to note the use made of the contracted acres on the accounting farms. Tlie average farm had 20 contracted acres which were used as follows: U.9 idle; I.9 red clover; S. 7 soybeans; 2.1 alfalfa; and 2.U acres were in other crops. These data indicate that most farmers made good use of their contracted acres from the standpoint of soil improve- ment, for most of them v/ere in leg'omes. IThen the government restrictions on the use of crops grown on contracted acres were removed, they were, on mariy farms, the most profitable crops as they furnished liay and pasture where badly needed in drouth areas. The leg"jmes had the fujrther advantage of being ir'in;:une to attack from chinch bu^s.

7arm earnings were influenced indirectly by the AAA ■orograras in tliat the red''action in prod'oction increased the price of the co;amodities involved. The drouth was a more imijortajnt factor in red^'JCing production than the adjustment prograjns, yet if it h-ad not "oeen for the corn-sealing program there wo-old have been but little corn in the hands of farmers at the time the major price advance became effective.

20

Factors Kelpiiio to Analyze the Fa.na Business on 35 "/ill County Jams in I93U

Items	Your fam	Average of 3') farms	12 most profitable farms	12 least profitable farms
Size of fan.is — acres -------		195-1 S7.O 35.9 13-53 9.68 3.S5 99 lUg	1SS.1+ 90.0 40.5 18. 13 9.5^^ 3.59 93 lUi	21s. 7
Percent of land area tillable- - -		S1+.2
Percent of tillable land in hay and •pasture- ------------		28.1
Gross receipts per acre- -----		9.05
Total e::r)enses per acre- -----		10.00
Uet receipts "oer acre- ------		-•95
Valioe of land ner acre ----- -		98
Total investment ner acre- - - - -		1U3
		■'"ii.i 36.1 5-6 b.U 39.2 21.7 12.7 15.1 19.2	33.3 5.5 s.7 U3.g 25.2 lU.2 21.9 23-7	^•U.6
Oats- _-__		1^5.3
Iheat		9.^
		S-3
TTn^r		]>h.o
Tillable oasture- - - - -		17.8
Cro^ yields — Com-, bu. per acre- -		12.3
Oats, b\i. per acre- -		11.5
Soybeans, bu. per acre		15.8
Value of feed fed to -oroductive L.3.		1 Uio lUo 139 23U 5.6 S5 99 6.60 10.13	1 62s 135 15U 25U 5-0 99 97 7.03 11 . 70	1 32U
Hetorns per $100 of feed fed to productive livestock- ------		lis
Returns per $100 invested in: Cattle		126
Poultry -------		206
Pigs vreaned per litter ------		5-7
Income per litter fa,rrowed - - - -		72
Dairy sales uer dairy cow- - - - -		S3
Investment in productive L.S. per A.		U.76
Receipts from -oroductive L.S. per A.		7.1U
Man labor cost per crop acre - - -		5-37 2.70 h.ig 235 28 66 1.19 1 553 -121 2.605^ 2 6Uc	5-37 2.90 '4.52 92fo 2U7 22 50 •97 2 096 17^ b.OSf. 3 U16 1	5.36
Machinery cost -oer crop acre - - -		3.00
Power and mach. cost per crop A. -		3.92
Parras with tractor --------		33f^
Value of feed fed to horses- - - -		1S3
Man labor cost per $100 gross		Uc
	96 1.U9 1 oUo -U90 -.66fo 1 979
Zxpenses per $100 gross income - -
Paira improvements cost per acre- - "^cess of sales over cash expenses
Increase in inventor^-- ------
Rs.te earned on investment- - - - -
G-rcss receipts per fani- -----	i

_Q_

Chart for Studying the Sificiency of Various Parts of Your Business,

rill County, I93U

The n^umhers above the lines across the middle of the page are the averages for the 35 farms included in this report for the factors named at the top 01 the page. By drawing a line across each coliimn at the nimber measuring the efficiency of your faim in that factor, you can coimare your efficiency v.'ith that of other fanaers in

yoi

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22

-10-

Inflncnce of Price Cl'-gn^s on Parra Ba.rninffs

Farm prices in 193^ cdvanced more rapidly than did the prices of coonodities which faiir.ers oou+^ht. Prri^iers of the United States as a ^roup could e::cir:uig'3 their fann products in 133^ for 7^ percent as many ^oods as for the period 1305-151'+i wMle in 1S33 '^^y received only 'oK percent, ar^d 1932 only 61 percent as rn-och in exchange for what the:/ ^-'^^ to sell as in the prewar period. In the month 01 February, 1935 » this index of purchasing pov/er had increased to S7 percent of prev/ar, the index 01 farm prices having risen to 111 as compared with £n index of 127 f"or co:;modities which fanners "bvy. riien the line representing fami prices drops "below the line repressnt- inf^ prices paid "by fa-nners, fam earnings are very low, "but v/hen these lines cone close together farra earnings increase. (See following grapii. )

Index of Frices

Rate Famed

SCO 175 15c 125

ICC

75 50

'-5

o

^r;n prices in U. S. AiJg- 1909-July 1914 = 100 = Prices paid oy farmers. Av^. 1909- July I91U = lOf

n = Rate eaz-ned en investment, accounting farr.is, central Illinois

K^-\

— ^j rt

\

A

J L.

12^.

10*^

1917

= lo

l9 '20 '21 '22 'C:^ '24 '25 '2c '

'27 '28 '2Q '30 '31 '3^ '33 '3^^

^^

-11-

Sincp. the price of sc^e farm products advanced miich more rapidly during 193^ tlian other products, it is evident t.1i3.t some farms would benefit more than others, depending upon the kind and quantity of "products sold. Grain prices advanced nujch ^aore rapidly than livestock T)rices; which result- ed in a very had price ratio for farmers who "buy large quantities of feed. The average Illinois farm price of corn was Ul cents a hushcl in January, 193^'-; i't advanced steadily until the end of the year when it was SS cents a hushel. Other grains made marked advance although not so great an advance as corn. The price of hogs fl^actuf.ted from a lov; of $3.20 a hundred in May to a high of $6^30 in September. The low point in the fall came in IJcvemher when the average price was $5.1C. The price has advanced quite rapidly since November, the average price being $7*50 ^o^ February, 1935* Beef cattle were worth JH.IO a hundred in January, 193^ ^'^^ advanced each month until September, when the price was $5.90. They dropped to $5.2C in December but increased again to $7.U0 for February, 1935-

The year 193^ ^et a record for the reduction in the numbers of livestock. The percentage decreases by species w^re as follows: horses, 1.1 percent; n.ules, P. 6 percent; all rattle, 11.?. perr.exit; shpep, U.7 pei-cent; hogs, 35*3 percent. vThen all species are combined on the basis of their capacity to consume feed, the reduction was I3 percent. This reduction will greatly reduce the demand for feeds produced in 1935*

The relative change in prices of important conir.odities may be noted in the follov.dng gi'aph, which shows the average Illinois farm prices by months as a percentage of the average prices for the period 1921-1929-

Percent

Price Indices, 193^

Apr

Dec.

jai comrao.nt-es index reTires&rts the v/holesale price of a large number of commodities for th3 Unit-d Stctes, ?s computed by Bureau of Labor Statistics.

Grain and livestock. inaiccs represent average monthly fair: prices in Illinois.

2U

-12-

Variation in 5ai-ninf;s Over Five-Year Period

A co.aparison of production, income, and expenditures on the account- ing farms in Will County for the last five years is very interesting "because of the violent chan{z:es in price level. 193^ ^'s,s the second year of very low crop yields, yet total receipts uer fana were higher thp.n in any other year in the last three, and were 5^ percent of the 1323 gross receipts. Operating costs per acre were lower than in an,y year of the five except 1933* Thus l";rofits were the best the county had experienced since 1929-

Earnings in 1935 ^s usual will depend upon individual efficiency, weather and prices. A normal year will mean larger 5aelds of grain and prohahly lower prices.

Comparison of Earnings and Investments on Accounting Farms in ITill County for I93O-I93U

Items

Huraoer of farms --------

Avera,ge si^e of farms, acres- -

Average rate earned, to pay for management, risk and capital - Average lahor and management wage

Gross incoiiB per acre ----- Operating cost per acre - - - -

Average value of land per acre- Total investment Der acre - - -

Investment per farm in:

Cota-1 livestock- -----

Cattle ____

Hogs

Po-^ltvy

G-ross income per farm -

Income T)er faira from:

Crops- ----------

Miscellaneous income - - - Tota,l livestock- -----

Cattle __-_------

Dairy sales- -------

Hogs -----------

Poultry- ---------

Average yield of corn in "bu. — Average yield of oats in hu. —

1930

1931

1932

1933

I93I+

31 205

l.f^ $-7^7 '

1S.7U 13. hi

ihi 211

2 82k

1 7^2

^73

170

U3c

■■~.6k

25 2 ?;U7

3^0

1 373 329 305

30 U5

30 200

-1-7^^^

$-1 S21

9-57 12.67

119 179

2 g09

1 77^

U7U

1U9

1 913

30

01)

66 J n -:>•-)

^ JC-

346 250

36

29

14

$-1 391

30 191

35 195

9.lg 10.23

101 153

bU9 250 110

96s

^9 1 919 U51 950 320 1S9

U7 50

2M $-206

13.21 9.59

102 151

2.Sf,

72 s

055 1£1

10 b

523

852

59 1 0I2

315 6U7

297

2k 22

$-lSl

13.53 9.bg

99 1U2

S65

065

11^ s

Ik

2 6

^ko

5S6

7

1 993 32g

il (j-fk

350

59

13

25

MFJAL FAS!;! BUSIIESS REPORT Oil FIFTY-POUR FAPJ.IS lUBOOlE, TflFilEIAGO, Al-ID McHENRY COUIJTIES, ILLIJIOIS, IS^k

P. S. Johnston, T. R. Hedges, and J. Ackernan*

The farm earnings of 5^ account-keeping farmers in Boone, Winnebago, and McHenry Coxinties showed an increase in 193^ over those of 1933- This is the second consecutive year of improveuent in the "business of these farms. The three years previous to 1933 showed very low returns.

These 5^ accounts show for 193^^ a-^i average net income of $1,337 per fa,rm, as compared v/ith an average of $937 ^^ 1933 » ^^^'- a-^ average net loss of $213 in ISyd. The average cash income in 193^ was $U,125 per farm, the cash 'business expenditures $2,512 per farm, leaving a cash "balance of $1,613 to meet interest payments and family living expenses. (Those who keep home account "books use the latter figure to represent the cash contri- "bution of the farm to the "realized family income".) Besides the cash in- come there was an inventory increase of $372 per farm due to the rise in the prices of farm products. This increase, added to the cash "balance, result- ed in an average excess of receipts over expenses of $1,985 per farm. The inventory increase was a larger part of the total farm income in 193^+ than in 1933.

These data must not "be considered representative of average farm conditions, for they vrere secured from farms which are larger than average, and which were managed "b;.' farmers who are more efficient than the average of all farmers in the county.

For the state as a v.-hole, fama earnings were "better in 193^ than in 1933 i^ spite of the fact that corn and oat yields were very low due to the drouth and to chinch "bug damage. In the western and southwestern parts of the state the drouth caused an almost total failure of "both com and oats. This accounts for farm earnings "being lower there tiian in other parts of the state.

The corn crop was "best in the southeastern part of the state and was fair in the northv/estern section. Wlieat yields were particxilarly good in the south and central portions of the state. Soy'oean yields were very good throughout the state, and there \vas a larger tlian normal acreage in Illinois in 193^* This state produced over lialf of the na.tion's 193^ crop of soy'beans .

Chinch bug damage extended over most of the state last year but was much more severe in some sections than in others and was much worse on some farms than other farms in the same community. Conditions affectin,^ crop yields were very spotted. This accounts in part for the v;ide vn,riation in farm earnings from one section of the state to another, and the v/ider variations than usual from one farm to another.

* Edward C. Foley, C. H. Keltner, and IV. A. Herrington, farm advisors in Boone, Winnebago, and McHenry Counties, cooperated in supervising and collecting the records on which this report is based.

26

Industries other than agriculture again showed improved earnings over the previous year. A group of SHO industrial corporations reported hy a nationally known "bank showed average earning?, of 5-0 percent on their invested capital in 193^> as compared with } .k percent for the same corporations in 1933' A. similar group had a loss of one-tenth of one percent in 1932 and average earnings of 3*3 percent in 1931*

In comparing the average earnings of corporations with the rate earned on investment on accounting farms it is well to keep in mind that in corporation accounting, charges are made for management, while in the farm accounts no comparable deduction has "been made. On the other liand, the farmer and his family receive food, f\3£l, and other items of living from the farm for which the farm has received no credit in the records used in this report. For the average central Illinois farm fsunily, consisting of five persons, the value of the food and fuel furnished hy the farm was about $250 in 193^1 when estimated on the "basis of the wholesale price for farm products.

"Variations in Farm Incomes

There was a much wider range in farm earnings on the accounting farms in 193^ than in 1933- This was true for the farms inclvidcd in this report and it was also true vvhen the average earnings of farms in one section of the state are compared with the earnings of faiins in other areas.

The extremely wide range in earnings was due to a combination of pliysical and economic factors. The average yields of wheat and soybeans were imich better, compared with the five-year average, than the average yields of corn and oats. This variation favored those sections which had larger acreages of the liigher yielding crops in 193^* There v/as also a wide range in average com yields from one section of the state to another, as well as between individvial fanns in the same area. The price of grains was high in 193^ a-S compared with prices of livestock and livcstoclc products. Farms where grain sales constitute a large part of the farm income thus had an advantage. The rapid increase in the prices of farm products, part- icularly grains, favored those farms which had large stocks of salable pro- ducts on hand at the beginning of the year. Many farmers who inventoried the corn on hand at the beginning of 193^ ^"^ ^ cents a bushel, later sold this corn for 80 cents.

In this group of 5^ accounting fa.rras the most successful third shows an average net income of $2,629, while the average net income of the least successful third 01 the farais was only $17^- In 1933 "the most suc- cessful third shov/ed a net income of $2,1^8, v/hile the least successful third showed a net loss of $2b.

-3- Investments, Heceipts, Expenses and Earnings on Boone, Winnebago and McHenry Co-unty Fanns in 193^+

27

Items

Your

farm

Average of 5U farms

IS most profitable

farms

IS least profitable f a.rras

lAPITAL IIJVESTI/IENTS

Land ---------------

Farm improvements- -------

Livestock total- --------

Horses ------------

Cattle ___-_ __

Hogs -------------

Sheep- ------------

Poultry- -----------

Machinery and equipment- - - - -

Feed and grains- --------

Total capital investment

ECEIPTS AIID I^T INCREASES

Livestocl: total- --------

Horses ------------

Cattle

Hogs (including AAA payments)- Sheep- ------------

Poiiltry- -----------

Egg sales- ----------

Dairy sales- ---------

Feed and grains (including AAA payments) ----__--_--

Labor off farm ---------

Miscellaneous receipts - - - _ -

Total receipts & net increases

XPEI^ISES AI€) NET DECKEASES

Farm improvements- -------

Horses -------------

Miscellaneous livestock

decreases

Macliinery and equipment- - - - -

Feed and grains- --------

Livestock expense- -------

Crop expense ----------

Hired labor- ----------

Taxes- -------------

Miscellaneous expenses - - - - -

Total expenses & net decreases

ECEIPTS LESS EXPEISES '

otal unpaid labor- ---------

Operator's labor --------

Family labor ----------

3t income from investment and nanageraent -------------

ATE E/jn\[ED ON Il'JYESTtffiKT

2tum to capital and operator's labor and management --------

^ of capital invested- -------

.eoR Aim iaahageijeito wage

15 088

6 U30

2 632

397

1 797

273

71

9U

1 555

1 538

$27 ?M

16 666 6 270 2 571

U15 1 6S7

29s

63

108

1 5Si| 1 700

$28 791

13 72U

5 S25

2 ^U5

U29

1 5U9

2UI

Us

7S

1 23s

1 266

$2lj9S

JH

•)

J6l

12 561 69s

173

70

150

726

63 9

t 3 ^59

11 551 855

331 101

is6 1 S32

730

82 18

$ ^ 697

^

25 389 U96

62

3^ 96

533

35 $ 2 670

265

393 5U

U9

155

29U

231

33

% 1 U7U

2U0

369 51

165

321

23U

3U

S 1 UiU

272

3 Us 51U U2 150 2U1 216

2U

$ 1 807

i

$_1_9S|2

6US 509 139

1 337

1 sii6

1 362

6 UsU

$3

Lli

$_

65U

533 121

2 629

3 162 1 ii-Uo

$ 1 722

6S9

U95 19U

17U

_jiio

669

1 220

$ - 351

22

Hie following table shows the number of farnis havinrs certain net incomes per acre. There was a marked difference between the most successful and the least successful farms.

Avera.^aie net income ner acre

Kumber of

faiTns

$23 21

19 17

15 13 11

1 0 0 1 2

3

5

Averai°;e net income "oer acre

IJur.iber of farias

$9 1

7 10

5 10

3 10

1 5

-1 U

-3 1

A further study of the farm businesses made by comparing the in- vestments, receipts, and expenses of the group of farms having the highest net income, with those having the lowest income will throw some light on the question of why some farmers arc more successful than others. This compari- son is shown in the table on page 3*

The most profitable farms averaged 227-0 acres each, the least profitable 133 .5 a-crs. This difference in size accoiuits in pa-rt for the variation in the average investments and receipts in the two groups. Dif- ference in the receipts from the sale of livestock, livestock products, and grains accounts for most of the difference in income between the two groups. The most profitable farms had less total expense per fann and per acre, in- cluding the charge for fa^iily labor, tho.n the least profitable farms.

The year 193*^ was similar to 1933 i^ that the prices of farm pro- ducts continued to advance, causing further increases in inventory values. Owing to the poor crop j^ields in 193^» thei-e were fewer bushels of grain on hand to inventory at the end of the year than at the boginnin:':. Tlie value of the smaller ainount of grain, however, was greater tlxan for the larger amount on liand at the beginning of the year.

Bushels of Corn Inventoried

Jan. 1. I93H

Dec. 31. 193^

Average of all farms 1 IO5

Average of 18 most successful farms . . 1 U06

Average of 18 least successful fanas. . SU5

Your farm

53U 396 220

'The most profitable farms had a larger inventory of com, both at the beginning and at the end of the year ths.n either the average of all farms, or the least profitable farms. This difference, with the rapid rise in corn prices, was aji iraportant factor in accounting for a considerable part of their higher receipts and net increases from feed and grain.

$2 SUl	$209
1 79S	260
1 5S2	27
6 306	-12U

-5-

Tlie average inventory increase for the accounting farms in Boone, Winnebago, and McHenry counties was $372 per farm in 193^' as compared with $135 in 1933, and an inventory loss of $1,305 Per farm in 1932. There were increases of $260 in feed and grains, $209 i^i total livestock, and $27 in machinery, v/hile improvements showed a decrease of $12U per farm. Svich an increase in inventory as tliat for machinery results from the valiie of new re- placements during the year "being in excess of depreciation costs. This in- crease is of considerahle interest, for it is the first time that such an increase in machinery inventories has occurred since fanii earnings hegan to decline so drastically with the general depression.

Inventory Changes for 193^

Beginning Closing Inventory Inventory Items inventory inventory changes changes, l-l--jU 12-31-3'^ 193^ your farm

Total livestock $2 632 $2 SUl $209 $

Feed and grains 1 53^

Machine ly 1 555

Improvements (except residence) 6 U30

Total $12 155 $12 527 $372 $

Some Adjustments on Boone, ffinnehago, and McHenry County Farms Since 1929

Farmers have heen forced to make adjustments in their cash expendi- tures as the result of changes in their cash incomes. Total operating ex- penses were $10.05 P^r acre in 193^> s-s compared with $10.17 per acre in 1933) while cash operating expenses were $2,512 per farm in 193'+i ^^ compared with $2,07^ per farm in 1933- This increase in cash operating expense of $^38 in 193^^ can he attributed very largely to the increase in cash expenditure for feed and grain, due to the low crop yields, and the increase in expendi- tures for machinery, labor and crop expense. The expenditures for livestock and taxes were less in 193^ than 1933* li" farm incomes continue to increase, indications point to an expansion of spending in 1935> particularly for machinery and improvements, since farmers have postponed replacements and repairs of these items during the five-year period since 1929-

Cash Income and Expenses on Accounting Farms in Boone, Winnebago, and McHenry Counties for 1929 and 193^

Your Average cash Your Average cash Items farm expense per farm farm income per faim 19^U I93U 1929" I93H

Livestoclc $ $ U7U $ S70 $

Feed and grains 613 67I

Machine ly 5IS g22

Improvements IU5 267

Labor 29I+ UUo

Miscellaneous 33 }h

Livestock expense U9 92

Crop expense I55 196

Taxes 23I 278

Total $ $2 512 $3 676 $

Excess of cash sales over expenses. ...........$

Increase in inventory

Income to labor and capital (Receipts less expenses). . .

1934	1929
$3 652 299 98	$6 06 s 317 llU 2
63 9	30 26
"*""•"	*^~"~"
$1+" 125	$6 557
$1 613 372 1 9S5	$2 SSI 277 3 15s

30

-6-

The cumulative effect of several yerrs of low a^jri cultural prices on the demand for manufactured goods can readily be ascertained "by a com- parison of cash farm expenditures in 193^+ with iiose in 1929- TTnile the average cash income in 193'+ '^''a^s only 63 percent of that in 1929» cash ex- penditures were 6S percent as large. In 193^+1 livestock purchases were 5^ percent and feed and grain purchases 9I percent as large as in 1929« Ii^t 193^ these farms paid out 63 percent as m\ich for machinery, ^h percent as much for improvements, and 79 percent as much for crop expense as in 1929f while taxes were reduced to 23 percent of the I929 level.

Com-parison of Farms l?ith Higli and Low Earnings

The most profitable farms in this study had net receipts per acre of $11.52 as compared with $0.95 for 'tile least profitable group. The rea- sons for this difference may be obtained from a study of the data on pages 3 and S.

The most profitable farms were more intensive and more efficient in their livestoclr production than the least profitable farms . They had an in- vestment in productive livestock of $10.73 Psr acre, and fed $2,565 of feed per farm, as compared with $10.5'+ invested an acre, and $2,131 of feed fed per fp.rm on the least profitable farms. The returns per $100 of feed fed to productive livestock v/r,s 0I5O on the most profitable f2,rms, as compared with $122 on the ler.st profita.ble f arras. The dairy sales per dairj" cow were $105 on the m.ost profito.ble farins, as compared v/ith $93 on the least profitable farms. The most profitable farms had an i.icome of $S9 per litter farrowed, as compared with an income of $7S per litter farrowed on the least r^rofit- able farms.

Tlie most profitable farms averaged ^3-5 i^cres larger, and had 21,2 acres more com, U.U ecres more oats, 6 acres more liay, and 7 acres more tillable pasture than the least profitable farms . The most profitable farms carried lar,5er inventories of feed and grain on which to make a profit when prices advanced. In addition to the larger acreage of crops, another rea- son for the larger inventories of feed and grain v/as the higher crop yields, the most profitable farms having o.n advantage of 10.6 bushels of com o,nd 1.7 bushels of oats per acre.

Higher total operating expense on the least profitable farms, was an important factor in accounting for the reduced net eamin^-^s of this group. The man labor costs were $6.27 per crop acre on the most profitable farms, as compared with $7-9'+ per crop acre on the least profitable farms, while power and machinery costs oer crop acre amounted to $^.3^+ on the most profit- able farms and $5.0U on the least profitable farms.

^^

-1-

The Influence of AAA Fr0|-;rarns on Cropping- Systeras and Farm Incomes

The farm-account records in Illinois \vere influenced both directly and indirectly hy the corn-hog and wheat adjustment programs. A large per- centage of accounting farms were under one or "both contracts in 193^ • The acreages of com and wheat on these farms were therefore less than normal. This should have resulted in lower operating costs. Corn-hog "benefit pay- ments for the entire 193^ program will total ahout ^0 million dollars for the state, while wheat "benefit payments will be about 2.U million dollars.

The benefit pay::ients for accounting farms are indicated in the following table, which shows the average payment for those farms receiving payments, and includes only those payments received by the cooperator before the 193^+ books were closed. In some cases only the first corn-hog check is included, while in other cases the second check had been received. The second payments not received and the third payments will be entered in the 1935 ^ook.

AAA Benefit Payments Received in 193^

Com VTheat Hogs

!Tumber Amo'ont Number Amount Hiomber Mount ■^■"^sr^SC of per of per of per °^ ^'^^ -^i farms farm farms farm farms fami payments-/

1/3 most profitable farms I3 $llb 2 $36 12 $136 $173

1/3 least profitable fai-ms I5 79 — - — ik II7 I57

All accounting farms kk 90 5 32 Uo I32 I7U

1/ Total benefit pajTients reported by accoujiting farms under contract for 193^ divided by total number of accounting farms.

On many farms the cash received from benefit pay^nents will more tha,n pay for the year's taxes. As a.n average of all a.ccouiiting fam:s, the payiaents actually received were sufficient to pay 75 percent of the 193^ to,xes.

It is interesting to note the tise made of the contracted acres on the a,ccouiting farms. The average farm had 3.S contr.actod acres which v/erc used as follows: 2.7 idle; 0.6 mixed red clover a.nd timothy; 0.2 sweet clover; 2.1 soybeans; 1.0 alfalfa,; and 3-0 acres were in other crops. These data indicate that most f.-^mers made good use of their contracted acres from the standpoint of soil improvement, as a large part of them were in legumes. V/hen the Government restrictions on the use of crops grown on contracted acres -.vere removed, they were on many faircs the most profita.ble crops a.s they furnished hay and pasture Vi/here badly needed in drouth area.s. The legumes ha.d the further advantage of being immune to .attack from chinch bugs.

Farm earnings were influenced indirectly by the AAA programs in that the red''Jjction in production incrua.sed the price of the commodities in- volved. Tlie drouth v;as a. more important factor in reducing production than the adjustment prograjus, yet if it had not been for the corn-seaJing pro- gram there would have been but little corn in the hands of farmers at the time the major price advance bocamc effective.

32

-8-

Factors Helpinjj; to Analyze the Farrr Boone, TJinnebago and McHenry Count	I Business on y Parras in 193^
Items	Your farm	Average of nh farms	IS most profitable farms	IS least profitablt farms
Size of farm-s — acres --------		211.0 79-S k2.k 16.39 10.05 6.3U 72 129	227.0 S3. 3 Ul.o 20.69 9.11 11.5s 73 127	183.5
Percent of land area tillable- - - -		79-5
Percent of tillable land in hay and pasture --------------		UU.2
Gross receipts per acre- ------		1U.55
Total expenses Der acre- ----- -		13.60
Net receipts per acre- -------		.95
Value of land per acre -------		75
Total investment per acre- -----		133
		2S.6 21.0	Uo.U 23.0 1.6 20.6 37.U Uo.o 32.0 15.5 S.3	19.2
Oats -T-		13.6
Faeat -----------		2.9	2.9
Barley- ----------		ik.G 3^.5 36.9 2G.1 15.2 g.S	8.9
TTav _ - - -		31.U
ndjc - - - -
Tillable pasture- -----		33.0
Crop yields — Corn, bu. per acre- - -		21. U
Oats, bu. per acre- - -		13. 8
Barley, bu. per acre- -		S.9
Value of feed fed to -Droductive L.S.		2 kkk 13s 129 220 5.S S5 100 11.02 16.00	2 565 150 lUo 2U7 5.I1 89 105 10.73 16.99	2 131
He turns per $100 of feed fed to productive livestock- -------		122
Returns per $100 invested in: Pa f f 1 p _ _		I2U
Poultry --------		165
Pigs weaned per litter -------		6.2
Income per litter farrowed -----		7S
Dairy sales per dairy cow- -----		93
Investment in productive L.S. per A.		10. 5U
Receipts from productive L.S. ner A.		1U.22
Man labor cost per crop acre - - - -		6.93 3.00 1+.9U Slf, 26s 26	6.27 2. Us U.3U S3fi 288 20 , uu 1.06 1 973 1 310 9.lU^ ^1 697	7.qU
Machinery cost per crop acre - - - -		3.09
?ov/or and mach. cost per crop A. - -		1 5.0U
		ISfb
Value of feed fed to horses- - - - -		2Ub
Ilan labor cost per $100 gross		3^
Expenses per $100 gross income - - -		61	93
Parra improvements cost per acre- - -		1.26 1 613	l.US
Excess of sales over cash expenses -		1 02U
Increase in inventory- -------		372 U.91f? 3 ^59	-161 1 2 670
Hate earned on investment- ----- Gross receipts per farm- ------	1

Chart for Studying the Efficiency of Various Parts of Your Sxisiness, Boone, 'Yinnebago and Mc Henry Counties, 193^^ The numbers above the lines across the middle of the page are the averages for the jh farms included in this report for the factors named at the top of the page. By drawing a line across each column at the number measuring the efficiency of your farm in that factor, you can compare your efficiency with that of other farmers in yo\ar locality.
	Rate earned on investment	Bushels per acre	Hogs: Incomie per litter	Dairy sales per dairy cow	Poultry income per $100 invested	L.S. income per $100 of feed fed	Cost per crop acre	Labor cost per $100 gross receipts	Increase in inventory	Sales over cash expenses	1 Gross receipts	-H to 0 •a;
	o o	CO -P a 0	CD rH	0	Power and machi ne ry	0	1 c' U Ah
	,12. U	'^■^	Uo	19	IS^	200	U20	238				3372	U6OO	36	6Ur9	361
	10.9	Us	35	17	165	150	3 SO	21s	.13	.lU	6	3172	Uooo	32	5S59	331
	9.U	U3	30	15	lU^s	i5o	340	198	1.83	1.3U	11	2U72	3U00	28	5259	301
	7.9	50	2S	13	125	lUo	300	17s	3.53	2 . 5U	16	1772	2800	2U	Ub59	271
	6.U	33	20	11	105	120	260	i 1=^8 5.23	3.7U	:il	1072	2200	i 1 20 IU059	2U1
	!+.91	23.1	15.2	S.S	35	100	220	13.8^	, 6.93	U.9U	26	372	1613	1 1 1 16.39 ,'3^59	211
	1 ^''^	1 i 23 |10	7	65	1 1 SO 180	*-■ 1 i 1 lis ! 8. 63	6.1U	31	-32 8	1000	! t 1 12 i2S'^9	181
	1.9	1 1 IS ' ^	5	U5	60	lUo	98	10.33	7.3U	36	-1028	Uoo	1 ■ 8 2259	151
	1 '^	13	0	3	25	iw	100	7S	12.03	8.5U	1 1 Ul -1728	-200	1 k jl6^9	121
4	1-1.^	0		1	5	20	60	58	13.73	9.7U	U6	-2U2S		1059	91
1	1 ( -3.0	i i 1 3 1-	0		i - 20	38	■ ' 15. U3	10. 9U	1 51 ■ -	__	— 1 — "^ £ - ' _U59	61
:	i

3^

-10-

Infl\3£nce of Price Ch3.ngos on Farm Bankings

Farm prices in 193^ advanced more rapidly than did the prices of connodities which f aimers ooii^t. ?c?riners of the United States as a group could exchange their farm products in 193^ for 7^ percent as many goods as for the period I905-I91U, wlule in 1533 they received only Sh percent, and 1932 only ol percent a,9 much in exchange for what they had to sell as in the prewar period. In the month of February, 1935i this index of purchasing power had increased to 37 percent of prewar, the index of fami prices having risen to 111 as compared vdth an index of I27 for commodities which faimers "buy. TOien the line representing farm prices drops helov/ the line represent- ing prices paid "by faimers, farm earnings are very low, "but v/hen these lines cone close together farm earnings increase. (Sec following graph.)

Index of Prices

Rate Earned

200 175 150

100

75 50

25

n

= Farm prices in U. S. Aug. 1909-July I91U = 100

= Prices paid hy fanners. Av^. 1909-Jvly I91U = IOC

= Ra.te earned on investment, accounting farms, central Illinois

J L.

J L.

-^^

1917 'IS 'I9 '20 '.21 '22 '23 '2U '25 '26 '27 '28 '29 '30 '3I '32 '33 13U

^:?

-11-

Sincp the pricpi oi scne farm product g advanced m^jch more rapidly during 193*^ tlian other prod.i5i;ts, it is evident tmt some lavrris v/oiild benefit more than otiierc, depending upon the kind and quantity cf prodtictc sold. Grain prices advanced much laore rapidly tiian livestock nrices; which result- ed in a very had price ratio for fprners who cv^ lar^e r^uantities of feed. 1'he average Illinois fam price of corn was Ul cents a hushol in Jan\i;irj', 133^^3 i't advanced steadily tmtil the end of the yea.r when it wps SS cents a hushel. Other grains made raar-:ed advance althoiigh not so great an advance as corn. The -orice of hog-s fluctop.ted from a low of $3-20 a hundred in lylay to a high of $6^30 i^ Septeraher. The low point in the fall c^aie in 5c'/"einher when the average price was $5.1C. The price hr:S advanced quite rapidly sines Fovenibor, tiie average price being $7»5^ ^°^ February, 1335' Beef cattle were wortli $H.10 a hundred in January, 193^ ^.nd advanced each month vmtil September, v;hen the price was $_^.90. They dropped to $5.2C in Deceriber but increased again to ^J A\0 for Jebroary, 1935.

Tlie year 193^ ^st a record fcr the redviction in the nuabers of livestock. The percentage decreases by species v^ro as follov,'s: hcrsee, 1.1 ■ percent; n.ulfs, ?.G pferc<^nt; all rattle, 11.5 perceijt: slig'ep, k.7 percent; hogs, 35*3 percent. '(Then all species are combined on the basis of their capacity to constine feed, the reduction was I3 percerJ reduce the demiand for feeds prodijced in l'"!35'

This reduction will greatly

The relative clmnge in prices of important coiMr.oditios may be noted .in the following gi'aph, which .<^hov.'s the average Illinois farm prices by months as a percentage of the average prices for the period 1321-1929-

Percent 120

110

Price Indices, 193^

(1921-1929 - IOC)

All cc'::raoditie

|__ ! C-raln.

90 I

SO

70 60

50

30

Jan. Feb. Mar. Apr. Liay June J'uly Au^

lai commodities index represents the vmclesale i^rice of a large number of coTDiiiodities for the Unitod Strtes, es computed by 3-areau of Labor S-^atistic:; ^

Grain ajid livestock- indices represent average monthly farrr. prices in Iljinci?.

36

-12-

Variation in 5arnin,"s Over Five-Year Period

A comparison of production, income, and expenditiares on the account- in;;; faiTis in Boone, Winnetago, and McEenry Counties for the last five years is very interesting "because of the violent changes in price level. Crop yields in 193^ v/ere low, yet total receipts per farm were higher than in any other year since 1930> ^-^cL were 63 percent of the I929 gross receipts. Opera- ting costs per acre were lower than in any year of the last five. Tlius profits v/ere the hest these counties have experienced since 1929'

Earnings in 1933) ^-s us^'oal, will depend upon individual eff iciency.,- weather, and prices. With nomal weather conditions, prices of grain are likely to go dov.Ti to a. moro nonnal level which will :-;ive individual effi- ciency the responsibility for higher earnings on each farm.

Comparison of Earnings and Investments on Accounting Parms in Boone, "innehago, and McHenrj' Counties for 1930-193^

Items

1930.

1/

I93ii/

1932^/'

1933

2/

I93U

211

16.39 10.05

72

129

2 632

1 797

273

94

3 ^59

9

3 3S7

50I

1 726

695

-"TO- p. ^ t>

2g

1^

Idumher of fai^ras -_--__--- Average size of farms, acres- - -

Average rate earned, to pa.y for management, rislc and capital - - Average lahor and management wr.ge

Gross income per acre ------

Operating cost per acre - - - - -

Average value of land per acre- - Total investment per aero - - - -

Investment per farm in:

Total livestock- ------

Cattle

Hogs ------------

Poultry- ----------

Gross income per farm ------

Income per farm from:

Crops- -----------

Miscellaneous income - - - -

Total livestock- ----- -

Cattle

Dairy sales- ------- -

Hogs

Poultry and eggs ------

Average yield of corn in bu.- - - Average yield of oats in hu.- - -

31 206

$ 571

22.01 lU.oi

99 173

h 583

3 059

727

159

^ 537

5US

U2

3 9^7 313 p 231

'^

96 316

50

30 203

$-1 3^'9

15.16 16. 1+9

S7 161

U 000

2 611 605 13 s

3 07s

23

3 050

2 022 667 295

Ui+ 32

J/ 193

$-1 095

^ci

1U.25 15-35

77 1U3

3 209 2 25s

261 126

2 755

RO 2 705

9

2 0U2

329 236

H3 iiii

37 202

■^.5< $113

1U.6S 10.17

72

129

2 609 1 672

305 101

3 051

60U

35 2 U12

290

1 226

570

222

U5 25

1/ He cords from Boone County only for 1930 and 1931'

2/ Records from Boone and 7/innebago Counties only for 1932 s.iid. 1933'

Jl

ANIWAL FAmi BUSIl'IESS REPORT ON PORTY-OTO FAB^S IIT KENDALL, DUPAGE, LAKE, COOK, A^EI KAIE COmiTIES, ILLINOIS, I93U

P. S. Johnston, A. L. Leonard, and J. Ackerman*

The farm earnings of U2 account-keeping farmers in this area showed an increase in 193^ over those of 1933- This is the second con- secutive year of improvement in the business of these farms. The three years previous to 1933 showed very low returns.

These U2 accounts shovY for 193^^ ^^^ average net income of $1,192 per farm, as compared with an average of $928 in 1933 > s-^d- an average of $3 in 1932- The avei-age cash income in 193^ was $3,935 Per farm, the cash Dusiness expendit-ores $2,297 per farm, leaving a cash balance of $1,63S to meet interest payments and family living expenses. (Those who keep home account books use tlie latter figure to represent the cash contribution of the farm to the "realized family income",) Besides the cash income, there was an inventory increase of $33^ a farm due in large part to the rise in prices of farm products. This increase, added to the cash balance, i-e- sulted in an average excess of receipts over expenses of $1,97^ a farm. The inventory increase v^fas larger in 193^ than in 1933*

These data must not be considered representative of average farm conditions, for they were secured from fai-ms which are larger than average, and which were managed by farmers who are more efficient than the average of all farmers in the county.

For the state as a whole, farm earnings were better in 193^ than in 1933> in spite of the fact that com and oat yields v;ere very low due to the drouth and to cliinch bug damage. In the western and southv/estern parts of the state the drouth caused an almost total failure of both corn and oats. This accounts for farm earnings being lower there than in other pa.rts of the state.

The corn crop wa.s best in the southeastern part of the state, and was fair in the northwestern section. Wheat yields wore particularly good in the south and central portions of the state. Soybean yields wore very good throughout the state, and there was a larger th,an normal acreage in Illinois in 193^- This state produced over half of the nation's 193^^ crop of soybeans .

Chinch bug damage extended over most of the state last year, but was miuch more severe in some sections than in others, and was much worse on some farms than on other farms in the same community. Conditions affecting crop yields were verj.' spotted. This accounts in part for the wide variation in farm earnings from one section of the state to another, and the wider variations than usual from one farm to another.

*W. P. Miller, H. S. Y/right, H. C. Gilkerson, 0. G. Barett and ?I. P. Kelly, farm advisers in the above Counties, cooperated in supervising and collect- ing the records on which this report is based.

3S

-2-

Industries other than agriculture again showed improved earnings over the previous year. A group of SUo industrial corporations reported by a nationally known hanl; showed average earnings of ^.0 nercent on their in- vested capital in 193^. ^-s compared with 3«^ percent for the same corporations in 1933- A similar group had a loss of one-tenth of one percent in 1932, and average earnings of 3*3 percent in 1931-

In comparing the average earnings of corporations with the rate earned on investment on accounting farms, it is well to keep in mind that in corporation accounting, charges are made for management, while in the faim accounts no comparable deduction has been made- On the other hand the farmer and his family receive food, fuel, and other items of living from the farm for v/hich the farm has received no credit in the records used in this report. For the average central Illinois farm family, consisting of five persons, the value of the food and fuel furnished by the farm was about $250 in 193^i when estimated on the basis of the wholesale price for farm products.

Variations in Farm Incomes

There was a much wider range in farm earnings on the accounting farms in 193^ than in 1933- This was true for the fan:;is included in this report, and it was also true when the average earnings of farms in one section of the state are compared with the earnings of farms in other areas.

The extremely wide range in earnings was due to a combination of physical and economic factors. The average yields of wheat and soybeans were much better, compared with the five-year avera,ge, than the average yields of corn and oats. This variation favored those sections which had larger acreages of the higher yielding crops in 193'+- There was also a v/ide range in average com yields from one section of the state to another, as well as between individual fairas in the same area. The arice of grains was high in 193^ 9-s compared with prices of livestock and livestock products. Farms where grain sales constitute a large part of the farm income thus had aji advantage. The rapid increase in the prices of fanvi pi-oducts, particularly grains, favored those farms which had large stocks of salable products on hand at the beginning of the year. Many farmers who inventoried the corn on liand at the beginning; of 193^ at Uo cents a bushel, later sold this corn for 80 cents.

In this group of ^\2 accounting farms, the most successful third shows an average net income of $3,013, while the average net loss of the least successful third of the farms was $255' ^^ ^933 ^^e comparable fignares for the two groups are a net income of $2,OS6, and a net lous of $172, respectively.

^

-3- Investrnents, Receipts, Expenses and Earniucs on HZ Kendall, DuPage, Lake, Cook and Kane Couxity Parms in I93U

39

Items

CAPITAL II'TVES'nCBI\rTS

Land ------_-___

Farm improvements- - - - -

Livestock total- - - - - -

Horses ---__--_-

Cattle

Hogs -----_--__

Sheep- ---------

Poultry- --------

Machinery and equipment- - Peed and grains- -----

Total capital investment

Your farm

Avera,";e of "-2 farms

22 090 5 821 2 366

1 UlU 2S9 lOU 10i|

S12 52U

$33 .619

1 1

lU most

profitable

farms

29 59U

6 220

3 116

563

1 825 klk 210 lOU

2 3it6 2 035

$^3 311

lU least profitable farms

15 S9I1 5 26^ 1 go6

355 9SS

236

89 138

1 621 92U

$25 509

RECEIPTS AIX ICET IHCHEASSS Livestock total- - - -

Horses -----__---_

Cattle --r

Hogs (including AAA payments) Sheep- -----------

Poxiltry- ----------

Ej;g sales-

Dairy sales- --------

Peed and grains (including AAA payments) ----------

Labor off farm --------

Miscellaneous receipts - - - -

Total receipts & net increases

2 869

839 91

50

176

1 256

khk

69 1

$ 3 383

3 935

782

1 335

200

81

197 1 3^^

1 659

128

2

2 055

211 603

55

36

19 s

952

^3 1

^ 2 099

BXPEi;SSS AIID IHT DSCISASES

Farm improvements- - - -

Horses ---------

Miscellaneous livestock decreases

Machinery and eo^ui-oment- - - Feed, and grains- ------

Livestodc expense- - - - - -

Crop expense --------

Hired labor- ---------

Ta>:es- ------------

Miscellaneous expenses - - - -

Total exDenses & not decreases

i

261 9

iii6

55 156

167

313

30

$ 1 U07

283 36

556

75 191 266 1+29

26

$ 1 862

257

9

311

527

37

116

113

196

30

$1596

lECEIPTS LESS EXPEilSES-

^Cotal unpaid labor- --------

Operator's labor -------

FajTiily labor ---------

ilet income from investment a.nd management ------------

jl/lTS E.\H1C:d 01>I IITVESTICEIIT

'tetum to capital and operator 'c labor and management -------

)/■! of capital invested- ------

.A30E Alffl '.iA-TAGEi.IElTT WAGE |$

$ 1 976

533 251

1 192

1 725

1 681

g 1+U

$ 3 S62

8U9 5I40 309

3 013

6.96^

$ 503.

752 520 23 s

-255

-1.00^

3 553 2 166

$J_JSI

265 1 275

$-1212

The following ta"ble chows the nuniber of farms havin,?: certain net incomes per acre. There was a narked difference between the most successful and the least successful farms.

Average net income ITunber of

per acre farms

$13 and over 5

11

q

7

5-

3 5 6

3 2

AvemiEie net income per iicre

$

1 -1 -3 -5 -7

_o

I'ltim'ber of farms 11 2 2 0 2 1

A further sttidy of the farm "businesses, made by comparing the invostm.ent, receipts, and expenses of the group of farms having the highest net income with those having the lowest income, will throw some light on the question of why some farmers are more successful than others. This com- parison is shov/n in the table on page 3.

The most successful farms averaged 299 acres each, the least suc- cessful 137 acres. Tlais difference in size accounts in part for the vari- ation in the average investments, receipts, and expenses in the two groups. Difference in receipts from the sale of feed and grains, hogs, cattle, and dair;/ products accounts for most of the difference in income between the two groups. AlthoUj^h the expenses per farm were higher on the most profit- able farms, the total expense per acre, including the charge for family labor, was less than it was on the least profitable farms.

The year 193^ was eirailar to 1933 i'"- that the prices of farm pro- ducts continued to advarice, causing further increases in inventory values. Owing to the poor crop :,ields in 193^i there were fewer bushels of grain on hand to inventory at the end of the year than at the beginning. The value of the smaller amount of grain, however, was greater than for the larger amount on hand at the beginning of the year.

Bushels of Grain Inventoried

Com

Oats

Jan. 1, '34 Dec. 3I, '3U Jan. 1, '3^+ Dec. 3I, '34

Average of all farms 1 371 837

Average of lU high farms. . . 1 SOS 1 56U

Average of lU lov; farms . . . 36I 211

Your farm

596 S21 392

U03 199

The difference in quantities of grain inventoried was one of the factors influencing the difference in earnings. The most profitable faims had a larger inventory of com and oats, both at the beginning and at the end of the yea,r than did the least profitable farms.

In

For the accoxmting farms in Kendall, D'uPage, Lal-:e, Cook, and Kane Counties there was an average inventory increase of $33^ per farm in 193^4, as compared with $1^7 in 1933. s-^d. a decrease of $1,073 psr fam in 1932. There were increases of $339 in feed and grain and $112 in livestock, and decreases of $137 in improvements, and $26 in machinery. The inventory de- crease in machinery v/as the smallest since 1929 on acco\i:it -keeping famr,, and indicates that needed repairs and replacements are being made, hut atill not enough to offset the current depreciation costs.

Inventory Changes for 193^

Beginning Closing Items inventory inventory I-I-3U I2-3I-3U

Total livestock $2 366 $2 U72

Feed and grains 1 52U 1 913

Machinery 1 glS 1 792

Improvements (except residence). '5 S21 3 60U

Total $11 529 $11 367

Inventory	Inventory
changes	changes,
193^+	your farm
$112	$
3S9 -26
-137
$33S	$

Some Adjustments on Kendall, DuPage , Lalce, Cook and Kane County Farms Since 1929

Farmers have been forced to malce adjustments in their cash expendi- tures as the result of changes in their cash income. From 1929 through 193^ faira operating costs declined each year. The total operating expenses were 75 cents an acre lower in 193^ than in 1933' while ca.sh operating expenses were $2,297 ^ farm in 193^> ^-s compared with $2,065 ^ farm in 1933- Low crop yields, combined with the usual large amount of livestock on the farms in- cluded in this study, necessitated the purchase of considerable more feed in 193^ than in 1933' Indications point to an increase of expenditure for ma- chinery and improvements in 1935> since farmers have postponed repairs and replacements for tiiese items during the four-year period since 1930*

Cash Income and Expenses on Accounting Farms in Kendall, DuPage, Lalce , Cook and Kane Counties for 19?-9 a-nd 193^

Your Average cash Your

Items farm expense per faim farm

I93U I93U 19~ I93H

Livestock $ $ klS $1 I60 $

Feed and grains 572 7^5

Machinery kkS 7S7

Improvements I32 236

Labor 167 517

Miscellaneous 3^ 39

Livestock expense 55 1^0

Crop expense . I56 220

Taxes 313 312

Total $ $2 297 $U 122 $

Excess of cash sales over expenses $

Increa.se in inventory .

Income to labor and capital (Receipts less expenses). . .

Ave rave cash

income	per faira
193^	1929
$3 166	$R S72
633	71s
52	127
g	2
69	52
1	k

$3 935 $6 732

$1 63s $2 666

333 529

1 976 3 195

U2

-D-

The cumulative effect of several years of low rgricultural prices on the demand for namxf actured goods can be readily ascertained "by a conpari- son of cash expenditures in 193'+ -with those in 1929' The average accounting fam in this area spent 6l percent of the cash income as operating expenses in 1929f while in 193^+ the average accounting farm spent 5S percent. Ihe relationship, therefore, betv/een cash income and expenses for the two years is practically the saTie, hut the 193^+ cash income v/as only 58 percent as large as in 1929- Tliere was, however, considerahle difference in the distri- bution of the expense items. In 193^+ the livestock purchases were 36 percent, and feed and grain purcliases "JS percent as large as in 1929 • In 193^ these farms paid 57 percent as much for machinery, 5^ percent as much for improve- ments, and 71 percent as much for crop expense as in 1929. while taxes were 98 percent of the I929 level.

Comparison of Farms With High and Low Eamint^s

The most profitable fair^s in this study hac. net receipts per acre of $10.07, as compared v/ith a net loss of $1.8^ P^i' '"^crc for the least profit- able group. The reasosn for this difference may be obtained from a study of the data on pages 3 -nd S.

The most profitable averaged I6I.9 acres larger, had ^7-7 acres mor.; com, 22. U acres more oats, 18.2 acres more hay and I6.I acres more tillable pasture than the least profitable farms. The most profitable farms carried larger inventories of feed and grain on which to malce a profit when prices advanced. In addition to the larger acreage, another reason for the larger inventories -Tas the higher crop yields, the most profitable farms having an advantage of ^.S bushels of corn, and 6.1 bushels of oats per acre. Crop yields were so low on the least profitable farms that they had an average inventory loss of $UU7 per farm in spite of the price advance.

The most profitable farms had more livestock per farm, and were more efficient in their livestock production than the least profitable farras. They had an investment in productive livestock of $9-51 P®r acre, and fed $2,567 of feed per faim. Eie comparable figures for the least profitable farms v/ere $10.11 invested per acre, and $l,6Uo of feed fed per fairn. Tlic most profitable farms secured a return of $153 for each $100 worth of feed fed, as compr'.red with a return of $125 ^or each $100 worth of feed fed on the least profitable farms. The most profitable farms had an income of $99 per litter farrov/ed, as compared with an income of $81 T)cr litter farrowed on the least profitable farms. Although the most profitable farms liad 15»2 dairy covis per farm, as compared with 8.2 dairy cows on the least profitable farms, the dair;'' sales per dairy cow were only $88 on the most profitable farms, as compared v;ith $103 on the least profitable group.

The larger income on the most profitable farms was secured with a total operating cost of $9-05 per acre, as compared v/ith $17.13 per acre for the least profitable farms. The man labor costs v/ere $U.18 per crop acre loY/er, and power and machinery costs were $1.30 per crop acre lower for the most successful farms.

^3

-7- Influences of AAA. Proi^rams on Croppin^^ Systems and Farm Incomes

The farm-account records in Illinois were influenced "both directly and indirectly "by the corn-hog and wheat adjxistment prosjr.aras . A large per- centage of accounting farms v/ere under one or "both contracts in 193^* The acreages of corn and v;heat on these farms were therefore less than normal. This should have resulted in lower operating costs. Corn-hog "benefit pay- ments for the entire 133^ program will total ahout HO million dollars for the state, ?;hile wheat "benefit pajinents will "be a"bout 2.U million dollarg.

The benefit paj^Tiients for acco'onting farms arc indicated in the following ta"ble, which shows the average payment for those fanns receiving pa^nnents, and includes only those payments received "by the cooperatol* before the 193^ books were closed. In some cases only the first corn-hog check is included, while in other cases the second check liad bejn received. The second payments not received, and the third payments Y/ill be entered in the 1935 'book.

AAA Benefit Paj-ments Received in 193^

Corn yaieat Hogs

Number Amount ITujnbcr Araount Ifcmber Amount -'^"^'^ragc of per of per of per °-'- ^^^ -,/

' farms farm farms fanii farms farm paj^naents-

1/3 most profitable farms 10 $199 1 $5^ 9 $205 $278

1/3 least profitable farms 11 73 3 ^S 9 138 I59

All accounting farr.s 33 13^- ^ 57 23 I55 215

1/ Total benefit payments reported by accounting farms under contract for 193^ divided by total nu-.i"ber of accounting farms .

On many farns the cash received from benefit pajtrients will more than pay for the year's taxes. As an average for all accoimting fanns, the pa^Tiients actually received were sufficient to pay 69 percent of the taxes.

It is interesting to note the use made of the contracted acres on the accounting farms. 'Ihe average fann hadl7-6 contracted acres which wore used as follov;s: J .0 idle; 1.2 mixed red clovor and timothy; 2.3 sweet clover; 2.0 soybeans; 0.2 a.lfalfa; and U.3 acres were in other crops. These data in- dicate that most farmers made good use of their contracted acres from the standpoint of soil improvement as a large part of them were in legumes. "(Then the Govomment restrictions on the use of crops grown on contracted acres vrere removed, they were, on many fanT>s, the most profitable crops as they furnished hay and pasture where badly needed in drouth areas. The legumes had the fur- ther advantage of being immune to attack from chinch bugs.

Farm earnings were influenced indirectly by the AAA progrrjns in that the reduction in production increased the price of the commodities in- volved. The drouth was a more important factor in reducing production than the adjustment progrojns, yet if it had not been for the corn-sealing program there would have been but little com in the hands of farmers at the time the major price advance became effective.

Factors Helping to Analyze the Farm. Buciness on Us Kendall, DuPage, Lnlce, Cook and Kane County Far.r.s in I93U

I tens

Size of farms — acres --------

Percent of land area tillable- - - -

Percent of tillable land in hay and pasture --------------

Gross receipts per acre- ------

Total e3;penses per acre- ------

Net receipts per acre- -------

Value of land per acre -------

Total investment per acre- - - - - -

Acres in Corn- -----------

Oats- -----------

IVheat

Soybeans- ---------

Hay

Tillable pasture- - - - - _

Crop yields — Corn, bu. per acre- - - Oats, bu. per acre- - - Wheat, bu. per acre - -

Your farm

Average of U2 fanns

206.6 85.9

35.5

16.37 10.60

5.77

107 163

lU most

profitable

farms

299.3 S5.8

31-3

13.12

9.05

10.07

99 1U5

lU least

profitable

farms

137. U

SO. 9 Ui.U.

15.2s 17.13 -I.S5

116

186

40.0 36.6

^.7

2.8

3U.I

28. 9

18.2

12.2

3.^

b?.7 U5.2

7-6

6.1

US. 3

3U.0

19.6 15.2

6.3

IS.O 22.8

U.7

1.2

2S.1

17.9

lU.o 9-1 0.6

Value of feed fed to productive L.S. P.etums per $100 of feed foa to productive livestock- -------

Returns per $100 invested in:

Cattle- - ---

Poultry --------

Pigs weaned per litter -------

Income vor litter farrowed - - - - -

Dairy sales per dairy cow- - - - - -

Investment in productive L.S. per A. Receipts from r)roductive L.S. per A.

Man labor cost per crop acre - - - - Machinery cost per crop acre - - - - Power and raach. cost per crop A. - -

2 060

139

121

217

5.7 8S

95

9.63 13. 89

567 153 113

23s

6.2

99 88

9.51 13.15

1 6U0 125

125

is6 5.U

81 108 10.11 IU.96

Fanna with tractor --------

Value of feed fed to horses- - - -

Man labor cost per $100 gross income- -------------

Expenses per $100 gross income - - Farm improvements cost per acre- -

Excess of sales over cash expenses Increase in inventory- ------

Rate earned on investment- - - _ - Gross receipts per farm- -----

b.lo 2.80 U.53

U.70 2.U9 U.06

if

83? 2kS

?1 65

1.26

1 63a

338 3.5U

3 383

33i M2

18

U7 .9U

2 281 1 581

6.96

8.88

3.3'+ 5.36

72U

7ifi 180

39 112 1.87

950 -UU7

-l.OC 2 099

-9-

Chart for Studying the

Efficiency of Various

Parts of Your

Business,

Kendall, DuPage

, Lake, Cook and Kane Counties, I93U

.lie numbers above the lines across the middle of the pa

56 are the averages for the

\2 farms included in this report

for

the factors named c

at the top of

the page .

iy drawing a line across each co

lunn

at the number measi

iiring the efficiency of your

arm in that factor, you can compare

your efficiency va

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•our locality.

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46

-10-

Infl\i£nce of Price Chanffos on Farm Earnings

?am prices in 193^ advanced more rapidly than did the prices of connodities vvhich farmers "boii^.t. Panaers of the United States as a ^roup could e:cchange their fartr. products in 193^ ^'^^ 7^ percent as many goods as for the period 1905-191^. while in 1533 they received only 6!^ percent, and 1932 only 61 percent as nuch in exchange for what they had to sell as in the prewar period. In the aonth of Febx-uary, 1935, this index of purchasing power had increased to Sy percent of prev/ar, the index of fam prices having risen to 111 as compared with an index of 127 for cornnodities v/hich faimers "b-uy. when the line representing fai^i prices drops he low the line represent- ing prices paid "by farmers, farm earnings are very low, "but when these lines come close together faim earnings increase. (See following gro,ph. )

Index of Prices

Rate Earned

D

= Vara prices in U. 3. Au^- 1909-July IJlU = 100

= Prices paid "by farmers. Aug. 1909-J"uly 191^+ = IOC

= Rate earned on investment, acco'onting farms, central Illinois

10^

J i.

I I

I I-

1917 'IS 'I9 '20 '21 '22 '23 '2U '25 '2c '27 '2^ '29 '30 '3I '32 ■'i'^ »3U

^(

Zince the pric^ of sone farm products advanced mtich. more rapidly during 193^ tlian other prodi^jcts, it is evident that some farrno v;ould cenex'"it more than others, depending u;pon the kind and quantity of products sold. Grain prices advanced much uore rapidlj? than livestock prices; v/hich result- ed in a very had price ratio for ferraers who cv^- lar^e i^^viAntitien of feed. The average Illinois farn price of coi-n v/as Ul cents a hurhol in Jamiary, I93H; it advanced steadily "uitil the end of the year when it was S5' cents a hushel. Other grains made narked advance although not so great an advance as corn. Thb price of hogs fluctuated fron a low of $3 '20 a hundred in May to a high of $^.30 in Septeraoer. The lov.' point in the fall came in Yio^reaibeT v/hen the average price was $5-10. The price hc:.s advanced -quite rapidly since November, the a\'erage price being $7*5^ for Pebrua.ry, 1535" Seef cattle V7ere v/orth S^.IC a hundred in Js.n-'uB.rj, 193'-^ and advanced each nonth until Sentember, v;hcn the price was $5.90. They dropped to $3.2C in December but increased again to $7.^ for Pebruary, 1935'

Tiie year 193^ ^'^^ ^ record for the reduction in the nu'Aers of livestock. The percentage decr^asrs by species vr^re as frllovvs: horses, 1.3. P'3rc=nt; n.u>s, ? .G perc^^nt; all rattl'^, 11.1; percent; siie'^r, ^^^.T percent; hogi'> 35 •3 percent. ViTien all species are combined on the basis of their capacity to consu'ne feed, the reduction was I3 percent. This reduction will greatly reduce the demand for feeds produced in 1335 •

The relative change in prices of important connoditios r;ay be not^d in the following graph, v/hich shows the average Illinois farm prices by months as a percentage of the average prices for th.e period 13r-l-13c'^5.

Percent

120

Price Indices, 195^

(1321-1929 = iC'C)

Oct, llov. Dec.

m co-^o.Ut-es index represents the vrholesale pries of a large rrjc:ber of commodities for th^ ISiited Spates, ss computed by Bureau of Lsbor Statistics. Grain and livestock indices represent average monthly fair.-, prices in Illinois,

Us

-12-

Variation in Earnin.'^s Over Five-Year Period

A comparison of production, income, and expenditures on the ac- coimting farms in this area for the last five years is very interesting be- caxise of the violent chan.'^es in price level. 193^ was the second year of very low crop yields, yet total receipts per fann were hi^jher than in any other year in the last five, and were 6U percent of the 1929 f:ross receipts. Operating costs per acre were lower than in any year of the five. Thus profits were the test this area has experienced since 1929-

Saminj^s in 1935) ^^ tisual, will depend upon individus-l efficiency, v/eather and prices. A normal year will mean larger yields of grain and pi-ohahly lower prices.

Comparison of Earnings and Investments on Acco'cmting Farms in Kendall, D'oPage, Lake, Cook and Kane Countirs for 1930-193^

Ite.;is

llurahcr of farms ---------

Average size of fai'ms, acre^- - -

Average rste earned, to pay for

managDment, risk vnd c^.^^itr,! - - Average Ifihor and ..ianagc;;ient vifage

Gross income per aero ------

Operating cost per acre - - - -

Average value of l;md per acre- Total investment ncr acre - - -

Investment per farm in:

Total livestock- -----

Cattle

Hogs -----------

Poultry- ---------

Gross income per farm

Income per farm from:

Crops- -___---- Miscellaneous income - Total livestock- - - -

Cattle

Dairy sales- - - - - -

Hogs ---------

Poultry- -------

Average yieM of corn ia "bu. Average vie Id of oats in hu.

1/ Records from DuPage, Cook, Kendall, and Kane Couiitie 2/ Records from McHenrj-, Kendall, DuPage, Lr±c, Cook 1931 and 1933-

s included for 193*^ •

nd Kane Coujities included for

AlfNUAi YABl.l BUSIliSSS ESPOHT Oil THIRTY FARMS IN CARROLL COUIJTY, ILLINOIS, I93U

p. E. Johnston, J. B. Andrev/s, and J. Ackerman*

The fann earnings of ])0 account-keeping'^ farmers in Carroll Coimty showed an increase in 193'-^ over those of 1933- This is the second con- secutive year of improvement in the husiness of these farms. The three years previous to 1933 shov/ed very lov-i returns.

These 30 accounts show for 193^ an average net income of $1,7^ per farm, as compared with an average of $1,091 in 1933> ^nd an average net loss of $526 in 1932. The average cash income in 193^ was $3,507 per farm, the cash business expendit tires $1,682 per farm, leaving a cash "balance of $1,S25 to meet interest payments and family living expenses. (Those who keep home account books use the latter figure to represent the cash contri- bution of the farm to the "realized family income".) Besides the cash in- come, there was an inventory increase of $6S1 a farm due mostly to the rise in prices of farm products. This increase, added to the cash balance, re- sulted in an average excess of receipts over expenses of $2,506 a farm.

These data must not be considered representative of average farm conditions, for they were secured from farms which are larger than average, and which were managed by fanners who are more efficient than the average of alL- farmers in the county.

Tor the state as a v/holc, farm earnings vvere better in 193^ than in 1933> in spite of the fact that com and oat yields were very low due to the drouth and to chinch bug damage. In the western and southwestern parts of the state the drouth caused an almost total failure of both corn and oats. This accounts for faim earnings being lower there tlian in other pa,rts of the state.

The corn crop was best in the southeastern part of the state, and was fair in the northwestern section. Wheat yields were particularly good in the south and central portions of the state. Soybean yields were very good throughout the state, and there was a larger than normal acreage in Illinois in 193^^ This state produced over half of the nation's I934 crop of soybeans.

Chinch bug damage extended over most of the state last year, but was much more severe in some sections than in others, a-nd was mvch worse- on some farms than on other farms in the same community. Conditions affecting crop yields were very spotted. This accounts in part for the wide variation in farm earnings from one section of the state to another, and the wider variations than usual fi'om one farm to another.

* M. P. Roslce, farm advisor in Carroll County, cooperated in supervising and collecting the records on which this report is based.

50

-2-

Industries other than agriciilt-ure again showed improved enmings over the previous year. A ;'Toup of 8hO industrial corporations re-no rted hy a nationally known harLk: showed average earnings of ^.0 percent on their in- vested capital in 193^, as compared with 3.U percent for the same corporations in 1933. A similar group had a loss of one-tenth of one percent in 1932 and average earnings of 3 •3 percent in 1931-

In comparing the average earnings of corporations v/ith the rate eai'ned on investment on accounting farms, it is well to keep in nind that in corporation accounting, chai-ges are made for management, while in the farm acco"ants no comparahle deduction has been made. On the other liand the farm- er and h-is fainily receive food, fuel, ar^d other items of living from the fam for which the farm has received no credit in the records used in this report. For the average central Illinois farm family, consisting of five persons, the val"ae of the food and fuel furnished hy tlie fam was ahout $250 in 193^» when estimated on the hasis of the wholesale price for farm products.

Variations in pe-rm Incomes

There was a much wider range in farm earnings on the accounting farms in 193^ than in 1933- This was true for the farms included in thJLs report, and it was also true when the average earnings of farms in one section of the state are compared with the earnings of farr.is in other areas.

The extremely wide range in earnings was due to a combination of plij-sical and economic factors. The average yields of wheat and soybeans were much better, compared with the five-year avera.ge, than the average yields of corn and oats. This variation favored those sections which had larger acreages of the higher yielding crops in 193^- There was also a wide range in a.verage cam yields from one section of the state to another, as well as between individual farms in the same area. The price of grains was high in 193^ as compared VTith prices of livestock and livestock products. Farms where grain sales constitiite a. large part of the fana income thus had an advantage. The rapid increase in the prices of farm products, particularly grains, favored those farr.is whih had large stocks of salable products on hand at the beginning of the year. Many farmers who inventoried the corn on hand at the beginning of 193^ at Uo cents a bushel, le.ter sold this com for 30 cents.

In this group of 30 accounting farms the most succGSsf-ol third shows an average net income of $2,9^9> while the avera.ge net income of the least successful third of the farms was only $372. In 1933 ^'■^'^ comparable net incomes for the two groups was $1,977, and $70 respectively.

Investments, Iteceipts, Expenses and Earnings on 3O Carroll Coimty Farms in 193^

Items

Your farm

Average of ^0 farms

10 most

profitable

farms

10 least

prof ita-lile

farms

CAPITAL II~\rE3'rivS!TOS

Land --------------

Farm improvements- -------

Livestock total- --------

Horses ------------

Cattle -_- __

Hogs -------------

Sheep- ------___--_

Poultry- -----------

Machin:-ry and equipment- - - - -

Feed and grains- --------

Total capital investment

JECEIPTS AI'ID IkZT I^ICHEIASES

Livestock total- --------

Horses ------------

Ca.ttle __--_-------

Hogs (including AAA pajmients)- Sheep- ---_--_--_--

Poultry- -----------

Egg sales- __-----_--

Dairy sales- ---------

Feed and grains (including AAA payments) --_-----_-_

Labor off farm ---------

Miscellaneous receipts - - _ - -

Total receipts & net increases

EXPEITSES AND KST DSCPEASZS

Farm improvements- -------

Horses -------------

Miscellaneous livestock

decreases

Machinery and equipment- - - - -

Feed and grains- --------

Livestock expense- -------

Crop expense ----------

Hired labor- ----------

Taxes- -------------

Miscellaneous expenses - - - - -

Total expenses & net decreases

HECEIPTS LESS EXPEl-ISES

Total unpaid labor- ---------

Operator's labor --------

Family labor ----------

-'et income from investment and

management -------------

RATE EARIIED ON INVESTI/ENT ■

Eetum to capital and operator's

labor and management ---------

y,b of capital invested- -------

1.4303 jSIID I'141?AC-EI/ISFr WAGE

$16 1S3 U 16s

1 770 349 902

3S3 U2

9U

1 079

1 377

$2^ 577

$16 632

U 930

1 961

— 3Ta

9^

557

31 92

1 199 1 U95

S26_2r[

$12 632

3 351

1 32U

332

619

23s

35

100 1 023 1 253

$19 083

$ 3 030

3S

831 1 278

52

26

165

5 SO

$^

270

57

3

360

$3^35

38

1 150 1 S29

55

97

185

781+

791

28

1

$ ^ 758

$_

^00

22 s

33 131

85 154

23

8oU

$ 1S£

321

'^5 I8U

116

17U

23

$ 1 051

$ 1 3S2

hn

27

so

126

290

hi 6

$ 1 929

$ 139

157 257

18 81

37

116

2I+

829

$ 2 ^06 766

535 227

1 7U0

L

2 279 1 229

$_i^50

$ 3 707

75s 538 220

$ 1 100

728

188

9U9 11.25-<

372

3 ^87

1 311

2 176

1^32j^

912

979

$ -67

rj-i

The follov<ing table shov/s the nunber of farms having certain net incomes per acre. There was a marked difference "between the most s-uccessful and the least successful farms.

Averat5;e net income per acre

IJ-uraher of farms

$25 1

23 1

21 0

10 3

17 3

15 0

13 2

Average net incouie per acre

U'jmher of farms

$11 3

9 3

7 2

5 ^

3 3

1 3

-1 2

A further study of the farm "businesses made "by comparing the in- vestments, receipts, and expenses of the group of farms having the higjiest net income, with those having the lowest income will throv/ some light on the question of v/hy some fanners are more successful than others. This com- parison is shown in the tahle on page 3«

The most successfiiJ farms a, ve raged 179 acres each, the least suc- cessful 162 acres. TMs difference in size accouiits in part for the vari- a,tion in the average investments, receipts, and expenses in the two groups. Differences in receipts from the sale of cattle, hogs, feed and {grains, and daily sales accounts for most of the difference in income between the two groups. The total expense per faira and per acre, including the charge for family labor, was slightly higlier on the most profitable fariTis than on the least profitable farms.

The year 193^ wss similar to 1933 1^ that the prices of farm pro- ducts continued to advance, cs.using further increases in inventory values. Owing to the poor crop yields in 193^'-' there were fewer bushels of grain on hand to inventory at the end of the year than at the beginning. The value of the smaller amount of fi-rain, however, was greater than for the larger amount on hand at the beginning of the year.

3\ishels of Grain Inventoried

Com

Oats

Jan. 1, '3U Dec. 3I, «3U Jan. 1, 'jU, Dec. 3I, '3U

Average of all farms 1 506

Average of 10 high farms . . Average of 10 low farms. . . Your farm

5^

1 889

1 285

965

779 312

777

7^5 S02

1+76-

649

30s

The difference in quantities of grain inventoried was one of the factors influencing the difference in earnings. The most profitable farms had a larger inventory of corn, both at the beginning and at the end of the year, and a larger inventory of oats at the end of the year than did the least profitable fanns.

The average inventorj increase for the accorntin,-;;; farms in Carroll Coimty was $631 in 193^> s-S compared with $57^ in 1933 » '-'^d 3-^ inventors'" loss of $93^' per fana in 1932. There were increases of $UlU in total livestock, and $372 in feed and grain, while iinprovenients showed a decrea.se of $9b, and mp.chinery a decrease of $9. The decrease in machinery and improvemonts was the smallest it has "been since 1930» indicating that more of the necessary re- pairs and replacements are oeing made, hut still not enough to offset the depreciation costs.

Inventory Claanges for 193^

Beginning Closing Ir.ventory Inventory

Items inventory inventory clianges changes,

l-l-^h 12-7I-3U 191^^ your f".nn

$2 IbU	$Ul'4
1 7^9	372
1 070	-9
U 072	-96

Total livestock $1 770 $2 laU $Ul'4 $

Feed and grains 1 377

Machinery' 1 079

Improvements (exce-nt residence), h l6p ^_

Total $8 39U $9 075 $6S1 $

Some Adjustments on Carroll Covmty Fains Since 1929

Farmers have heen forced to m.ake adjustments in their cash expendi- tures as the result of changes in their cash incomes. Farm opera,ting costs declined each year from 1929 thxou^ 193^- ^^ 193^ total operating expenses were $1.10 an acre lower tlian in 1933f However the cash operating expenses were $1,6S2 a. farm, as compared with $l,V+6 a farm in 1933- There were in- creases in expenditures over thje previous year for feed and grain, livestock, crop expense and improvements, and a slight decrease in expenditures for taxes, lahor and machinery. Secao.se of the postponement of needed machinery replace- ments during the five years since 1929. we raay expect an expansion of spending for these items as soon as incomes will permit.

Cash Income and Expenses on Accounting Farms in Carroll Co^jaity

for 1929 and 1934

Yo'or Average cash Your Average cash Items farm expense per farm farra income per farm I93U I93U 1929 193^ I93U 1929

Livestock $ $ U29 $1 1+25 $ $3 0U5 $d 2S3

Feed and grains hfS 1 I65 37^ 3^2

Machinery 2U5 57I 26 I3I

Improvements lOk 2Ul

Lahor S5 262 57 37

Iv^iscellajiGous 23 35 3 3

Livestock expense 33 ^^

Crop expense I3I 199

Taxes . . . ; I5U 2^5

Total $ $1 dS2 $U 213 $

ficcess of cash sales over expenses $

Increase in inventor;/'

Inco:ae to lahor and capital (Receipts less expenses).

$3	507	^0	SI6
$1	S25 6 SI 506	$2 2	603 32U 927

54

-6-

The ctunulative effect of several years of low agricultural prices on tlie demand for manufa.ctui'ed goods can be readily ascertained "by a compa.rison of cash expenditures in 193^ with those in 1929- The average cash income in 193^1- was 51 percent of that in 1929, while cash expenditures were only Uo oer- cent as large. In 193^ livestock purcliases were 3O percent, and feed and grain purcliases Ul percent as large as in I929. In I93U these faiTas paid out ^3 percent as ir.uch for machinery, 66 percent as much for crop e:rpense, and U3 percent as much for improvements as in 1929. while taxes were redijced to 63 percent of the I929 level.

Comparison 01 Farms .With High and Low Earnin^'s

After deducting total expenses and net decreases, including family labor, from income and net increases, there remained a net increase of $l6.4U per acre for the most profitable farms, as compared with $2.30 per acre for the least profitable farms. This represents a ret'orn on the capital invested in the farm business of 11. 25 percent on the most profitable farms, and 1.9 percent on the least profitable farms. The reasons for the difference may be obtained from a stuxi^-' of the data on pages 3 ^'^d. S.

The most profitable faims were more intensive, and m.ore efficient in their livestock production than the least profitable farms. The most pro- fitable farms had an investment in productive livestock of $10. US per acre, and fed $2,550 of feed per farm, as compared v/ith an investment of $6.S5 in- vested per acre and $1,672 of feed fed per fann, on the least profitable farms. The productive livestock on the most profitable fa.rms returned $153 for each $100 of feed fed, as compared with a return of $110 for the least profitable farms. On the most profitable farms I7 litters were farrowed, while 10 litters v/ere farrowed on the least profitable farms. The return per litter farrowed was $95 0^ the most profitable farms, as compared with $26 on the least profitable farms. Cattle on the most profitable farms re- turned $136 per $100 invested, and $106 on the least profitable farms. Dairy sales per dairy cow were $73 o^ 'tli2 most profitable farms, and $53 on the least profitable farms. /

In Carroll County the most profitable farms were 17-7 ^'•cres larger, and a larger percentage of their land area was tillable than on the least profitable fp.rms. The most profitable farms had 36.^ acres more crops, and 24.3 acres more corn than the least profitable farms. The most profitable farms carried larger inventories of feed and grains on which to make a profit when prices advanced. In addition to the larger acreage of crops, another reason for the larger inventories of feed and grain vvas the higher crop yields. There was an advantage of 15*5 bushels of corn, and 9-^ bushels of oats per acre in favor of the high-profit group.

The larger income on the most profitable farms was secu.red with a total operating cost of only ^5 cents an acre above that on the least pro- fitable farms. The man labor costs were $6-70 per crop acre on the most pro- fitable farms, as compared with $8.05 0^ 'tl'^e least profitable farms, while power and machinery costs per crop a.cre amounted to $3'97 on the most pro- fitable farms, and $3*79 on the least profitable farms.

-I- DD

Influence of MJ- "Pi-offraxas on Croppin:^ Systems and Fanti Incomes

Tlae farm-accoimt records in Illinois were influenced ooth directly and indirectly by the corn-hog and wheat adjustment prograns. A lar~e per- centa;'ce of accounting farms was under one or "both contracts in 193'+* -ii© acreages of corn and v;heat on these fairns were therefore less than normal. This should have resiilted in lower operating costs. Corn-hog benefit pay- raents for the entire 153^ progra^m v/ill total ahout ^40 million dollars for the stat :, Y;hile wheat "benefit payments will be about 2.k million dollars.

Tlie benefit ;myraents for accounting farms are indicated in the following table, which shows the average payment for those farms receiving payments, and includes only those payments received by the coopcrator before the 193'-'- books were closed. In some cases only the first corn-hog check is incliided, Vi'hile in other cases the aecond chock had been received. The s<,:Cond payments not received, and the third payments vdll be entered in the 1935 ""^ook.

AAA. Benefit Payments Received in 193''''

Com Wncat Hogs

iTumber Amount rluitfoer Amount Jrjniber Aaount -<--veragc

of per of per of per '^^ ^^-^ ,

faro fixms farm payment si/

larm.n larm lanms

1/3 most profitable fams 9 $153 — $~ 9 $299 $3^^5

1/3 least profitable farms 9 '7I _- — 9 lUl I90

All accounting farms 25 lOo 1 2k 28 ISO 26S

1/' Total benefit payments reported by accounting farms under contract for 193^ divided by total number of accotuiting farms.

On most farms the cash received from. bv;ncfit payments v/ill more tlia,n pay for the year's taxes. As an average for all accounting farmis, the payments a.ctually received were $llU more than sufficient to pay the 193^ taxes.

It is interesting to note the use made of the contracted acres on the accoimting farms. The average farm had 12. g contracted acres v/hich were used as follov/s: 2.9 idle; 3*6 mixed red clover a.nd timothy; I.5 sweet clo- ver; 3 '7 soybeans; O.U alfalfa; and O.7 a-.cres were in otlier crops. These data., indicate that most fanners ,tiade good use of their contracted acres from the standpoint of soil improvement, as a large part of them were in legtimes. Fnen the Government restrictions on the use of crops grown on contra,cted acres v/ere removed, they wore on raanj' fa,rm£ the most profitable crops as thoy fur- nished hay and pasture v/here badly needed in drouth areas. The legumes had the further advantage of being immune to attack from chinch bugs.

Farm earnings v/ere influenced indirectly by the AAA programs in that the rediiction in production increased the price of tlie commodities involved. The drouth was a more important factor in reducing production t'lan the adjustment program.s, yet if it ha.d not been for the corn-sealing program., there would have been but little corn in the hand of farmers at tlie time the major price advance "oecame effective.

i)b

Factors Kelpin,? to Analyze the Farm Business on 3O Carroll County Farms in I93U
Items	Your farm	Average of 30 farms	10 most profitable farms	10 least profitable farms
Size of farms — acres --_-_-__		177.9 SU.U U3.6 18.89 9.11 9.7s 91 13 s	179. U 88.2 35. 8 26.52 10.08 16. uu 93 1U6	161.7
Percent of land area tillaole- - - -		77-5
Percent of tilla-tile land in hay and		Us. 2
Gross receipts per acre- _--___		11.93
Total expenses per acre- ------		9.63
Net receipts per acre- -------		2.30
Value of land per acre ------ -		7S
Total investment per acre- -----		121
APTPc: T n PnT*n_ _ __		35-3 28.0 1.3 27.9 37-7 39.3 1U.9 2U.2	U7.8 28.6 2.5 2U.6 32.0 Uii.s 19. u 1.9	23.5
Oats		26.7
^Theat -----------		r .0
Hay		25.0
Tillable pasture- -----		35.U
Crop yields — Corn, hu. per acre- - -		29.3
Oats, bu. per acre- - -		10
Wheat, hu. per acre - -		2
Value of feed fed to productive L.S.		2 188 137 lUl 2U9 lU.o 6.0 69 6U 9.0U 16.82	2 550 153 is6 261 17.2 5.9 95 73 10. Us 21. 7U	1 672
Returns per $100 of feed fed to productive livestock- -------		110
Returns per $100 invested in: Cattle-		106
Poultry --------		199
number of litters farrowed -----		10.3
Pigs weaned per litter -------		5.8
Income ner litter farrowed - - - - -		86 '
Dairy sales Dsr dairy cow- -----		5S 6.85 11.37
Investment in productive L.S. per A.
Man labor cost ■per crop, acre - - - -		7.05 2.02 3.76 57^= 23U 2U Us 1.12 1 825 6 81 7.03;^. 3 360	6.70 2.5U 3-97 lOfc 219 18 3S 1.05 2 llU 1 593 11. 25^. u 75s	8.05 1.75 3.79 . 50^ 228 3S 81 .86 1 232 -132 1.905? 1 929
ffechinery cost per crop acre - - - -
Power and mach. cost per crop i.. - -
Value of feed fed to horses- _ - - -
Man labor cost per $100 gross
Expenses per $100 gross income - - -
Farm improvements cost per acre- - -
Excess of sales over cash exnonses -
Increase in inventory- -------
Rate earned on investment- -----
Gross receirits -oer farm- ------

'II

Chart for Studying the Efficiency of Various Parts of Your Business,

Carroll County, 193^

57

The numhers ahove the lines across the middle of the page are the averages for the 30 farms included in this report for the factors named at the top of the page. By drawing a line across each column at the number measuring the efficiency of your farm in that factor, you can compare your efficiency with that of other farmers in your locality.

Bushels

Cost per

Grc

ss

..

per acre

u

crop acre

0 0

recei

pts

0)

i-H

Ti

P,

, 'ci

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E Ti

i — 1

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en

s

rt

u

0

0 (1)

Td

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M

tJ <d

u

0

t/2 0

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■H

p:

CO

d

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a

0 u

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fi w

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•H

u rt

Vt

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0 ^H

nd N,

CO 0

>=

0 0)

U CQ

0

HH +J

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>

0

C U

0 <D

0 S-(

> pJ

?

s

c

d 0

tn

4J

m .H

>. c

C tH

nJ (D

0 fH

CO 0

0 X

u

M

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CD >

u u

■H

d

U -H

■H 0

C

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0

a

g CD tH

e

w

(D 0) ^ -P

•• 1-1 03

^^

-p

.0

0

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fn 0)

CO CD ^

ce

«H

CO

-p

+^

g -M

U2 U

•H ^1

^ 0

W 0

^

& 0

r£2 0

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rH CO

u

^4

f-i

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0

cfi

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c! <D

0 rH

• rH

a

0 a

03 U

Pi fl

n3 c«

P

p

u

0

0

t?5 r-l

W P

R ft

P-, -v>

h:i -tB-

p-^

p. E

h5 W

►H .H

en cj

p^

Ph

<3;

15.1

5U

25

29

luu

139

U99

287

1.55

— —

2200

H3OO

3U

5900

278

13.5

51

23

26

129

12l|

UU9

257

2.65

1900

3800

31

5U00

25s

11.9

Us

21

23

llU

109

399

227

3.75

.76

3

IbOO

3300

2S

U9OO

238

10.3

U5

19

20

99

9U

3U9

197

U.S5

1.76

10

1300

2 SOO

2^

UUoo

218

8.7

U2

17

17

Sk

79

299

167

5.95

2.76

17

1000

2300

22

3900

19s

i 7.03

39.3

1U.9

lU

60

6U

2UI

137

7.05

3.76

2k

6 SI

1S25

IS. 89

3360

177-9

1 5.5

36

13

11

5U

l|-9

199

107

0.15

U.76

31

Uoo

1300

16

2900

15s

1 1 3.9

33

11

S

39

3U

1U9

77

9.25

5.76

3S

100

SOO

13

2U0O

13s

2.3

30

9

5

2U

19

99

^1

10.35

6.76

U5

-200

1 i 300 10

1900

lis

1 i .7

27

7

2

9

li

U9

17

11. U5

7.76

1 ^,2 -500

i 1

lUoo

9S

1 -.9 i

2k

5

12.>55

S.76

1 59 '-SOO

1 ; -: k

900

7S

58

-10-

Inf licence of Price Changs on Fam Saming:s

Farm prices in 193^ advanced more rapidly than did the prices of comnodities which farmers "boii^t. Panaers of the United States as a group could exchange their farm products in 193^ for 7^ percent as many goods as for the period I905-I91U, while in 1933 they received only Sh percent, and 1932 only 61 percent as much in exchange for what they had to sell as in the prewar period. In the month of February, 1935» this index of purchasing power had increased to Sy percent of prewar, the index of fam prices havijig risen to 111 as compared with an index of 127 for commodities which farmers "buy. "JlThen the line representing farm prices drops below the line represent- ing prices paid by farmers, farm earnings are very low, but when these lines cone close together farm earnings increase. (See following graph.)

Index of Prices

Eate Earned

20c

150 125

100

75 50

25

= Farm prices in U. S. Aug. 'l909-July I91U = 100

= Prices paid by farmers. Au^. 1909-July I91U = IOC

n = Rate earned on investment, accounting farms, central IllinoiE

J i.

J L_

12^ 10^

Si

■^0

0%

•^i

M

1917 'IS =19 '20 '21 '22 '23 '2U '25 '26 '27 '2? '29 '30 '31 '3^ '33 '3^

I

j:y

-11-

Sincf> the pricft of scne fam producta advancRd m^och more rapidly during l??'^ tlxan other prodiK;tr^, it is evident tr^tit dome farri^ v;on}ld "oenefit raore than otherc, depending "dpon the kind rvnd qiiantitj- of prodv-Ctc sold. Grain prices axivanced much i.iore rapidly than livestock nrices; v/hich result- ed in a very had price ratio for frrmers who oi:;y lar;~e ravintitier^ of feed. The average Illinois farm price of corn was i+l cents a hushol in Janu:iry, 193^!-; it advanced steadily until the end of the year when it was cS cents a "bushel. Other grains mad.e r.iarked adva,nce although not so grc-at an advance as corn. The pi-ice of hogs fluctup.tcd froin a lo.v of $3-20 a hxu-.dred in Ivlay to a high of $6^.30 in Septerxiher. The low point in the fall car.ie in licve.v.her v/hen the average price was $5'1C' The price has advanced quite rapidly since Fovember, tiie average price being $7»5C' lor Fehruary, 1935' 3eef cattle V7ere worth $^-'r.lO a hundred in January, 1S3'-'- ?'^d. advanced each r.onth until Se-otember, v/hen the price was $3.90- They dropped to $3-20 in Decenber but increased again to ^1 Md for ?ebra?,ry, 1935'

Tlie year 193^ ^s't 3- record for t>:e reduction in the numbers of livestock. The percentage decreases by species r^rc as follows: horses, 1.1 percent: n.ules, ?.6 percp-.ht; all rattle, 11.2 perceipt; ste-^p, \.l percent; hogs, 350 percent, '^vhen all species are combined or\. the basis of theii' capacity to consume feed, the reduction was I3 percent. This reduction will greatly reduce the demand for feeds produced in 1935*

The relative ch-an;^ in prices of important co:3;.odities r.?y be noisd in the follovdng gi'aph, which shows the average Illinois farm prices by months as a percentage of the average prices for th£ period 1921-1929.

Price Indices, 193^+

(1321-192'

- ICC)

_,r. .-ay vune ^ ux^ Ar^.

^ai comoditics index represents the wholesale price of a l?.rge nw-berof ^ cora;aodities for the Unit-d Sirtes, ps computed by ^-orea'a of Labor Statistic::. Grain and livestock, indices rer^'psort average montnly farm prices in Illinois.

60

-12-

Variation in S^.rninfcs Over Five-Year Period

A comparison of production, income, and expenditures on the ac- counting fanns in Carroll County for tioe last five years is very interest- ing because of the violent fluctuations in price level. Althou^^h the 193^ croT) was "below average, tlie increased i:)rices of "both grain and livestock caused the 193'-!- earnings to be the highest for the five-year period 1930-193^'

Earnings in 193^ S-s tisual will depend upon individu^J efficiency, weather, and prices. With norcial werther conditions, prices of grain are likely to zo dovm to a more nornuil level which will give individual effi- ciency the responsioility for higher earnings on each farni.

Comparison of Earnings and Investments on Accounting Fcnns in Carroll County for I93O-I93U

Itomc

i93oi/

193

li/

193

p2./

1933

2/

I93U

ITumher of farms -__----_ Average si^e of farms, acres- -

Average rate earned, to pay for management, risk and capital - Average labor and management wage

Gross income per acre - - _ - - Operating cost per acre - _ - _

Average value of land per aci-e- Total investment per acre - - -

Investment per farm in:

Total livestock- -----

Cattle ----------

Hogs _-___--___- Foultr;/- ---------

Gross income per farm

Income per farm from:

Crops- --------

Miscellaneous income - Total livestock- - - -

Cattle ___-

Dairy sa.les- - - - - _

Hogs ---------

Poultry ______

Average yield of corn in bu.- Average yield of oats in bu.-

59 17s

2.2'fo

$-243

22.19 17.39

120 lOU

h 025

2 067

1 208 209

3 956

42 91U 6^1

167 350

kG U6

177

-3'li

1 KC^

-z.o<

$-2 09U i$-l 29U

11. SO

17.63 117

ISb

3 427

720 005 171

029

60 029 279

Us6 009 237

U5 Ul

10. lU 13.94

107 169

2 290

1 2S0 U33 136

1 568

53

1 515 2SU

U46

5?;7 19U

65 55

3.") 157

$39S

17. lU 10.21

103 1(^6

694

SS3

3 Us

96

30 17s

$1 050

7-1?^

699

IS. 89 9.11

91 132

770 902

3 S3 94

360

703	270
53	3
9U3	3 030
Uio	231
Ui^	520
915	1 272
165	^9
50	39
35	15

/

ll Records from Roc]- Island and Y;hiteside Counties incl.udcd for I93O n-nd 1931* 2/ Records from T-Tniteside Co'onty included for 1932 f-^d 1933'

I

i

AMiUAL FAEI.^ BUSIICESS HSPORT ON THIRTY-ilVE FAffi.IS BI ROCK ISLAIH) COUl\rTY, ILLINOIS, I93U

P. E. Johnston, J. B. Andrews, and T. ?.. Hedges*

The farra earnings of 35 accoijnt-keeping farmers in Rock Island Coui:ty showed an increase in 193^ over those of 1933 • This is the second consecutive year of improvement in the tiisiness of these farms. Tlie three years previous to 1933 showed very low returns.

These 35 accounts show for 193^^ ^-^ avera.ge net income of $1,711 per farm, as compared with an average of $l,UUo in 1933 and an average net loss of $591 in 1932- The average cash income in 193^ was $3>357 pei" farm, tlie cash business expenditures $1,524 per farra, leaving a cash balance of $1,S33 to meet interest payments and family livirig expenses. (Those who keep home account books use the latter figure to represent the cash contribution of the farra to the "realized family income".) Besides the cash income, there was an inventory increase of $607 per farm dxte to the rise in the prices of farm products. This increase, added to the cash balance, resulted in an average excess of receipts over expenses of $2,U4o per farra. The inventory increase was a smaller: part of the total farm income in 193^ than in 1933-

These data must not be considered representative of average farm conditions, for they were secared from farms which are larger than average, and were managed by farmers who are more efficient than the average of all farmers in the county.

For the state as a whole, fama earnings were better in 193^ than in 1933 in spite of the fact that corn and oat yields were very low due to the drouth and to chinch bug dainage . In the western and southvrestern parts of the state the drouth caused an almost total failure of both corn and oats, which accounts for farm earnings being lov;er there than in other parts of the state.

The corn crop was best in the southeastern part of the state, and was fair in the northwestern section, riieat yields were i^articularly good in the soiith and central portions of the state. SoybeaJi yields were very good throughout the state, and there was a larger than normal acreage in Illinois in 193^' This state produced over lialf of the nation's 193^ crop of soybeans.

Chinch bug damage extended over most of the state last year, but was much more severe in some sections than in others, and was much worse on some fa,rms than on other farms in the same conmranity. Conditions affecting crop yields viere very spotted; which accounts in part for the v/ide variation in farm earnings from one section of the state to another, and the wider variations than usual from one fa,rm to another.

*J. R. Spencer, farm adviser in Rock Island County, cooperated in supervising and collecting the records on v/hich this report is based.

Oci

-2~

Industries other tlirji agricultiu-e again showed improved earnings over the previous year. A group of SkO industrial coi-porations reported "by a nationally Imovm hanlc showed average earnings of ^.0 percent on their in- vested capital in 193^> ^-^ compared with 3-^ percent for the same corporations in 1933- -A- similar group liad a loss of one-tenth of one percent in 193^ and average earnings of 3 -3 pei'cont in 1931-

In comparing the avera.ge ea-mings of corporations with the rate earned on investment on accounting farms it is well to keep in mind that in corporation accounting, charges are made for management, while in the fairo accoimts no comparahle ded~action has been made . On the other hand the famer and his family receive food, faJBl, and other ite-Ti.s of living from the farm for which the farm has received no credit in the records used in this report. For the average central Illinois farm family, consisting of five loersons, the value of the food and fuel furnished 'oy the farm was ahout $250 in 193^> when estimated on the basis of the wholesale price for farm products.

V'^riations in Faim Incomes

There was a much wider range in farm earnings on the accoionting farms in 153^ than in 1933- This was true for the farms included in this report, a:id was also true when the avera,ge earnings of farms in one section of the state are compared with the earnings of fari.is in other areas.

The extremely wide range in earnings was d'::ie to a combination of pl'iysical and economic lectors. The r.-.verage ^'ields of v.heat and soybeans were much better, compared with the five-year average, than the average yields of corn and oats. This variation favored those sections which had larger acreages of the higher yielding crops in 193^- There was also a wide raiige in average corn yields from one section of the state to another, as well as between individtial farms in the caane a.rea. The price of grains vvras high in 193^» ^-S compared with prices of livestoclc and livestock products. Faims where grain sales constitiite a. large part of the farm income thus had an advantage. The rapid increase in the prices of farm prodticts, particularly grains, favored those farms which ha.d large stoclcs of salable prodi^-cts on hand at the beginning of the year. Many farmers who inventoried the com on hand at the beginning of 193'^- s.t Uo cents a bushel, later sold this com for KO cents.

In this group of 35 accounting farms the nost successful third shows an average net incoine of $2,7^S, while the average net income of the least successful third of the farms was only $713- In 1933 'tJ^s comparable net income for the two £;roups was $2,760, and $577 respectively.

Investments, Heceix)ts, Expenses and Earnings on 35 Rock Island Coimty Farms in I93U

Items

Your farm

Average of 35 fgrias

12 most profitalDle fa,rms

12 least

proiita'ble

farms

CAPITAL liP/SSTI/LSTTTS

Land -------

Parm improvement s-

Livestock total- -

Horses - - - - -

Cattle - - - - -

Hogs -------- _--

Sheep- _-__--____

Poultry- ---------

Machinery and equipment- - - Peed and grains- ------

IS 151

k 552

1 92 u

3 so

si+9

1+7 s

127

90

1 561

1 660

18 559 U 007 2 0S9 1+26 92 s 492 150

93 1 380

1 752

Total capital investment

$2J_S_l+g

$27 7S7

16 575 5 2C2

1 ncM 362 79s U76 is6

S2 1 670 1 303

S26 65^

RggglPTS MD IHT INCREASES Livestock total- - - -

732

Ulk

Eorses -----------

Cattle ------ --

Hogs (including AAA payments) Sheen- -----------

Poultry- ----------

Egg sales- ---------

Dairy sales- --_-___-

Peed and grains ( including AAA

payments) ----------

Lator off farm -__---__ Miscellaneous receipts - - - -

Total receints & net increases

28

570

1 51s

9U

76

120

326

600

72

k

$ 3 '408

50

931 1 756 133 72 120 352

970

55 7

JJl

13

350

1 207

109

3^

76

350

260 71

$ 2 U70

:expsitses and uet decreases

PaiTO improvements- - - -

Horses ---------

Miscellaneous livestock decreases

Machinery and equipm.ent- - - -

Peed and grains- -------

Livestock expense- ------

Crop expense ---------

Hired lahor- ---------

Taxes- ------------

Miscellaneous expenses - - - -

Total expenses & net decreases

iSl

302

39 101

107 231

27

^05

269

31

101

167

226

27

$ 968

$ 1 02b

160

36U

I42

113 SU

210 29

S 1 008

■ffiCEIPTS LESS EXPEIISES-

kho

iPotal unpaid lahor- -------

Operator's lahor ------

Pamily lahor --------

let income from investment and management- ---_-_-_-.

'lATE SiRlED 01-J INVESTlffiin" - - - -

|leturn to capital and operator's ■ lator and management- - - - - -

I li/o of capital invested- - _ - - . I iJSOH Ai-ID LIALAC-LIvIEITT -.TAG-S

729 536 193

1 711

2 2U7 1 392

$_J_U20

672 529 IU3

7^^

& 1 U62

7^9 5U0 209

^iS2^

^

n3

'Aifo

3 277 1 ys

S 1 C£3

1 253 1 330

f- -so

DH-

The iollov;ing t-^.tle sliov;s the ntanlDer of farms having certain net incomes per acre. There was a mcarked difference between the most srijccessfiil and the least s-uccessf\xl farms.

Ave rage _ ne t, . , j n- corae per acre

$iq

17

15

13

11

-JTir.ibe-r-Qi'- - farms

2 1 k

• ■-Averag;e net in- come r)er acre

$5

7

5

3

1

KuiTiher of farms

6

5 6

3 3

A further study of the farm tusinesses made by comparing the in- vestm.ents, receipts, and e;:penses of the group of farms vdth the highest net incom.es with those having the lowest should throw some light on the q\ifistion of why som^e farmers are more successful than others. This comparison is shown in the tahle on page 3 •

The most successful farms averaged 193 -^ a-cres each, the least successful 17'*^. S acres. This difference in size acco^onts in part for the variation in the average investment, receipts, and expenses in the two groups. Difference in receipts from the sales of grains, cattle, and hogs accounts for most of the difference in income between the two groups. Although the • expenses per farm were slightly higher on the most profitable far:ns, the total expense per acre, including the charge for family labor, was less than it V7as on the least orofitable farms.

Chpnges in Inventories and Inventory Values

The year 193^ ^•'''^-s similar to 1933 i^ that the prices of farm prodticts continued to advance, causing further increases in inventory values. 0\;ing to the poor crop yields in 193^ there were fewer bushels of grain on hand to inventory at the end of the year than at the beginning. The value of the smaller anouoit of grain, however, was greater than for the larger amount on hand at the beginning of the year.

Bushels of Corn Inventoried

Jan. 1. 19^U

Dec. 31, IQ^U

Average of all farms

Avera.ge of 12 most successful farms , Average of 12 least successful farms. Your farm

2 6UI

3 035 2 101

1 391

1 gSfe' 96s

The most profitable farms had a lauch larger inventory of corn, both at the beginning and at the end of the year. This difference acco'nnted for a considerable part of their higher receipts and not increases from feed and grains .

-5-

The average inventory increase for the accoionting farms in Eock Island County was $607 in 193^. as compared with $SUs in 1933> ^-^^ a^ inventory loss of $6s6 per faim in 1932- There were increases of $U03 in total livestock, and $3^*5 i^ feed and grain, v/?iile improvements showed a decrease of $77 and machinery a decrease of $2U. The decrease in machin- ery and improvements was the smallest it has heen since 193'^> indicating that more of the necessary repairs and replacements are hein^f^ made, hut still not enough to offset the depreciation costs.

Inventory Changes for 193^

Beginning Items inventory 1-1-3^

Total livestock $1 92U

Feed and grains 1 60O

Machinery 1 5^1

Improveinents (except residence^. U 532

Total $9 697

Closing

inventor^'

12-31-3)1

$2 327 1 965 1 537 U U75

$10 ^ok

Inventory changes I93U

$'+03 305 -2k

$6u7

Inventory

change s .your farm

$

Some Ad.jtistnents on 3ock Island County Farms Since 1929

Farmers have teen forced to make adjustments in their cash ex- penditures as the result of c"na,nges in their cash incomes. Farm operating costs declined each year from 1929 throiigh 1933- I^ 193^ total operating expenses v/ere only 2 cents an acre ahove those of 1933 > while the ca^sh op- erating expenses v/ere $1,524 a farm, as compared with $1,622 in 1933- There were decreases in expenditures from the previous year for livestock, lahor, and taxes which more than offset the increase in expenditures for feed, crop expense, iraprovenients, and machinery. Indications i30int to an expansion of spending for 1935 » particularly for machine r3'' and improvements, since farmers have Dostponcd ret)lacements and repairs of these items dvjring the four-^ear xieriod since 1929'

Cash Income and Expenses on Acco'tinting Farms in Rock Island Coimty

for lS2q and I93U

Items

Your

farm 1934

Average cash expense per fat

iqiU

1929

Yofjr farm I93U

Average cash i no ome per farm

l''^^k

1929

Livestock $

Feed and grains

Machinery

Improvements

Lahor

Iliscellaneous

Livestock expense

Crop expense

Taxes

Total t

^ 9

271 332 332

107 27 39

101

231

gi 290 S63

283

3U2

36

75 213

J21

$1 52U $U 166

Excess of cash sales over expenses

Increo.se in inventory

Income to lahor and ca"oital (Heceipts less expenses)

■4=

$" $

re

600 $6 12?;

627 665

5U 121

72

J)0

3

$3	357	$6	953
$1	833	$2	727
	607		275
2	i+Uo	3	062

DO

The cumulative eiiect of several years of low agriculttiral prices on the demand for man\tfactured goods can readily "be ascertained "by a con- parison of cash farm expenditui'es in 193^ v/ith those in 1929 • Although the average cash income in 193^ ™3-s I4S.3 percent of that in 1929, cash expenditures were only 36-6 as large. In 193^ livestock ptirchases were 21 percent, and feed and grain ■ourchases 3S«5 percent as large as in 1929- In 193^ these farms paid out Uh.f percent as much for machinery, and Uy.U percent as much for crop expense as in 1929, v/hile taxes were redviced to 72 percent of the I929 level.

Comparison of Farms With High a.nd Low Earnings

The most profitahle farms in this sttidy hrtd net receipts per acre of $lU.22, as compared with $3-92 for the least profitalile group. The reasons for this difference may he ohtained from a stuiiy of the data on pages 3 p-^d 8.

The most ■nrofitaole farms had more livestock, and were more effi- cient in their livestock operations than the least profitable farms. Tlie most profitatle farms had an investment of $10.09 f^^ acre in prod"active live- stock, as compared with an investment of $8.95 3^ acre on the least orofit- ahle fairns. The most profitable farms fed $2,5^7 worth of feed to productive livestock, securing a return of $132 for each $100 worth of feed fed, v,rhile the least profitable farms fed $2,063 worth of feed and secured only $103 for each $100 worth of feed fed.

The most profitable farms carried larger inventories of feed and grain on ?mich to mal:e a profit when prices advanced. Farms in tills group were lU.U a.cres larger than the least successful; they had 20.9 more till- able acres, a larger acreage of com, and a higher percent of their tillable land in hay and pastfjre. Corn yields were U.3 bushels per acre higher on the most profitable farms and while oats yields were 2.8 bushels higher on the least profitable fan'p.s, it must be recalled that this crop was almost a failure in 193'-^ and tliat the early oats suffered the most from the drouth.

Total operating costs were $1.0l| per acre higher on the least profitable farms. Their povrer and m^achinery costs v/ere $5-15 Per crop acre, as compared with $3'S5 on the most profitable farms. This difference in power and machinery costs per crop acre was a major factor in accoimting for the higher total operating expenses on the least profitable farms.

"J

-7- Inf licence of AAJ\. Pro,?;rans on Croriping; Systems and Fanii Incomes

The farm-sccount records in Illinois \7ere influenced both directly and indirectly by the corn-hog and wheat adjustment prograjr-s. A large per- centage of accounting farms v/as under one or both contracts in 193'+. The acreages of corn and wheat on these farms were therefore less than normal. This should laave resulted in lower operating costs. Corn -hog "benefit x^ajy- mcnts for the entire 193^^ program v^ill total about Uo million dollars for the state, while wheat benefit payments v/ill be about 2.U million dollars.

The benefit pa^inents for accounting farms are indicated in the following table, wMch shows the average payment for those farms receiving pa;sTnents, and includes only those payments received by the cooperator before the 193^ books were closed. In some cases only the first corn-hog check is incltided, while in other cases the second checl: had been received. The second payments not received, and the third pajTnents will be entered in the 1935 book.

AM Benefit Pa^-ments Received in 193^

Com "iVheat Hogs

iltcnber Amount Number Am.ount iTxraber Amount _, '."^

of Tjer of per of per °'^ ^ ' 1/

r. y r. J, " _ i- r)a^;Taents— '

farms farm far;r,s fr'rn 1 arras farm - "

1/3 most profitable farms 12 $120 ~ $ 11 $196 03OS

1/3 least profitable fam,s 12 95 1 I7 12 lb3 259

All accounting fams 3[S 111 2 66 3U 15J 296

1_/ Total benefit payments reported by accoujiting farms imder contract for 193^^) divided by total mmber of accoimting farms.

On many fanas the cash received from benefit payraents will more than pay the year's ta:x:es. As an average of all recounting farms, the pa;/- ments actually received ($296), ?/ere more than sufficient to pay all of the 193^ taxes ($231).

It is interesting to note the use m.ade of the contracted acres on the accounting farms. The average farm had 17 •? contracted acres which were used as follows: 3*7 idle; .6 red clover; I.7 sv/eet clover; 3-6 soy- beans and covrpeas; 3*3 alfalfa: and U.S acres were in other crops. Those data indicate that most farmers made good use of their contracted acres from the standpoint of soil im.provement, as a large part of them were in legumes. TJhen the government restrictions on the use of crops grown on contracted acres were removed, they were on many farms the most profitable crops as they furnished hay a.nd pasture v/here badly needed in drouth areas. The legumes had the I'oxther advantage of being immune to attack from chinch bugs.

Farm earnings were influenced indirectly by the AJA programs in that the reduction in production increased the price of the conmodities involved. The drouth ?;as a more important factor in redixcing production than the adjustment programs, yet if it had not been for the corn-sealing prograra, there would liave been but little corn in the hands of farmers at the time the major price advance became effective.

53 -8- Factors Helping to Ana-lyze the Fai-ra Btisinesr. on 35 Rock Island Coimty Faims in I93U	:
Items	Your faiin	Average of 3'i fpnas	12 most profitable farms	12 least profitable fari.is
Size of f arras — acres ___-_--		IS7.I+ 83.7 =43.7 IS. 19 9.06 9-13 •^7 1U9	193.2 86.9 I19.9 23.01 8.79 1I1.22 96 ll|l|	17s. 8 82.2 U1.7 13. 81 9.83 3.98 1U9
Percent of land area tillalDle- - -
Percent of tillable land in hay and pasture- ------------
Gross i-eceipts ner acre- - - - - -
'Total expenses per acre- -----
Ilet receipts per acre- ------
Valine of land per acre ------
Total investment per acre- - - - -
Ap-i-'pc. -1 Yi PrtT^-n		53-5 21 3.8 2.1 26.9 1+1.6 ^,5.8 'U.6	56.8 IS. 3 1-3 30.9 52.8 38.3 3.6	'47.7 16.5 5.8 3.2 26.3 35 i 3U 6.1+
Oats- ----------
\meat ------- -
^r» ^'"Kpa'n c? _
Hay
Tills^tle pasture- - - - -
Cron yields — Corn, "bu. per acre- -
Oats, hu. per acre- -
Valii.8 of feed fed to productive L.S.		2 238 121 99 315 5.6 93 kk 9.25 1I1.U3	2 5I17 132 125 20U 5.S 102 ^3 10.09 17. Ul	2 063 103 s6 138 5.2 80 1+1 2.95 11.89
Retn.rns per $100 of feed fed to prodtictive livestock- ------
Returns per $100 invested in: Cattle
Poultry -------
Pigs ^7eaned per litter ------
Income per litter farrov/ed - - - -
Dairy sales ner dairy cow- - - - -
Investment in productive L.S. rier A.
Receipts from prodtictive L.S. per A-
Man lahor cost per crop acre - - -		6.81 2.62 I4.33 85fo 226 23 50 .86 1 833 607 6.1U 3 I40S	5.9^ 2.33 3.35 83f» 22l| IS 3S 1.06 1 975 1 I1U5 0 r'O T . 0-1 U 1+Ub	7.01+ 3-25 5.15 S3fo 226 32 71 •93 1 1+67 -5 2.67 2 1+70
Machinery cost per crop acre - - -
Pou'er and mach. cost per crop A. -
Farms with tractor ----- -
Value of feed fed to horses- - - -
Man lahor cost per $100 gross
Expenses per $100 gross income - -
Farm improvements cost per acre- - Excess of sales over cash expenses
Increase in inventory- ------
Rate earned on investment- - _ - - G-ross receipts per farm-- -----
				»'

b9

Cliart for Stiidying- the Efficiency of Various Parts of Your Business,

Rock Island County 193!+

The nunhers ahove 35 fams included Ey drawing a line fan.! in that facto yoiir locality

the lines across the raidcle of the page are the avera^eu for the in this report for the factors named at the top of the oage . across each coltmin at the n"i.imber measuring the efficiency of your r, you can comnare your efficiency with that of other fanners in

1 !

Bushels

Cost per

" — ~ "

C-ro s s

per

acre

0)

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0 c i-H

receipts- 1

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r 111

60

15

12 s

170

U.30

1.80

3

2600

10

55

15

121

60

U15

160

U.30

2 . 30

7

2200

3300

30

7UOO

110 .

9

50

11

llU

"^6

390

150

5.30

2.30

11

1300

3300

27

6UOO

230

6

H5

9

107

52

365

lUo

5.30

3.30

15

lUoo

2300

2k

5UCO

250

7

ko

7

100

kg

3U0

130

6.30

3. SO

19

1000

2300

21

4!-:-oo

220

5.1:1

35. S

U.6

93

kk

315

121

6.31

^.33

23

607

1333

IS

3U03

137

5

50

3

36

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290

110

7.30

U.so

27

200

1300

15

2U00

160

k

25

1

I'i

36

265

100

7.1.'^

3.30

31

-200

300

12

lUOO

130

^

2C

72

32

2U0

90

3.30

5 . SO

35

-600

300

(J

Uoo

1 IlO

0

15

6r

2S

215

30

3.30

6.30

39

-1000

6

70

1 1

10

' ^9

2k

190

7^

^^.30

6.30

U3

-lUoo

3

1 i Iho

(0

-10-

Influence of Price Cl'^n^'es on Farrn Sa.raings

Fam prices in 193^'^ advanced ir.ore rapidly thaai did the prices of conmodities v;hich faimers boiit^lit. Frnaers of the United States as a ^roup could exchange their fam; prodtJ.cts in 193^ ^o^ 1^ percent as many goods as for the period 1905-151^1 while in 1933 they received only b^- percent, and 1932 only 61 percent as much in exchange for what they load to sell as in the prewar period. In the laonth of February, 1935 » this index of purchasing power had increased to 37 percent of prewar, the index of farai prices having risen to ill as compared with e-n index of I27 for corninodities which farmers h-uy. ITIien the line representing fami iji-ices drops helov; the line repi"esent- ing prices paid "by farmers, farm earnings are very low, hut when these lines come close together farm earnings increase. (See following graph.)

index of Prices

Rate Zarned

15c ic-5

ICO

75 50

Fsrn pricer. ir. U. S. Av^. 1909-July I91U = 100 Prices paid by farracrs. A^-g. 1909-J'"-ly 191''- = l-'-

Ra.te earned on investment, acco^onting fa.rins, central Illinois

10-^

Si

bjt

4^

P^i

oi

.-2$

-^

1917 'IS 'I9 '20 '21 '22 '23 '2!+ '25 '2c '27 '2g '29 '30 '31 '32 'J,} '3^

71

-11-

Sinco the price of scne fam products a,dvanced much, more rapidly during 193*^ tlian other products, it is evident that sons farrio woi:)ld benefit "lOre than others, depending upon the kind and quantity of "prodiictc sold. Grain prices advanced much aiore rapidly than livestock Drices; which result- ed in a very had price ratio for farmers who 131:^ lar^e quantities of feed. The average Illinois farm price of corn \7as Ul cents a hushcl in January, 193^-+; it advanced steadily ■'intil the end of the year when it was 28 cents a bushel, ether grains made narked advance although not so great an advance as corn. The price of hogs fluctof-ted fron a low of $3*20 a hundred in May to a high of $6^3^ in September. The lov; point in the fall came in November when the average price was $5.1C. The •orice has advanced quite rapidly since ITovcmber, the average price being $7*50 for February, 1535 • Beef cattle were worth $U.10 a hundred in January, 193^ ^'^'^ a,dvanced each month until September, v/lien the price was $5.90. They dropped to $5.20 in December but increased again to $7*^ for Februi^.ry, 1935*

The year 193^ ^s't a- record for the reduction in the numbers of livestock. The percenta(':;e decreases by species v^re as follows: horses, 1.1 percent; mules, ?.6 percent; all cattle, 11.?. perre3;it; sbpep, U.J percent; hogs, 35 '3 percent. Ylhen all species are combined on the basis of their capacity to consume feed, the reduction was I3 percent. This reduction will greatly reduce the demand for feeds prod"'aced in 1135*

The relative change in prices of important commodities nay be noted in the follov/ing gi'aph, which shows the average Illinois farm prices by months as a percentage of the average prices for the period 1921-1929-

Percent

120

Price Indices, 193^

(1921-1929 = 100)

A"ur

Aug.

Kov. Dec.

Jan. Peb. Mar.

All commodities index rerresonts the rholesale price of a large nur.ber_of_ commodities for the United Ststes, as computed by ,)-areau of x.aDor Statistics. Grain and livestock, inaices rep.esont average monthly fair-, prices in Illincif'.

72

-iz-.

Variation in Earnings Over Five-Year Period

A comparison of production, income, and expenditures on the accm-uit- ing fanns in Rock Island Coionty for the last five years is very interesting be- cause of the violent fluctuations in price level. Although the 193^ crop was nearly a failure and follov/ed the smaller than average crop of 1933 > 'tiie in- creased prices of hoth grain and livestock cau.sed the 193^ earnings to he the highest, for the five-year period 1930-193^i--

Earnings in 1935 ^^ usual will depend upon individual efficiency, weather, and prices. With normal weather conditions, prices of grain are likely to go down to a more nomial level which will give individual efficiency the responsihility for higher earnings on each farm.

Comparison of Earnings and Investments on Acco-unting Parrns in Rock Island Coujity for 1930-1934

Items

1930i/

I93ii

1/

1932 1933

193^

Uumher of farms -----_-__ Average size of faims, acres- - -

Average rate earned, to pay for management, risk and capital - - Average lahor a.nd management wage

G-ross income per acre ------

Operating cost per acre - _ _ - _

Average value of land per acre- - Total investment per acre - - - -

Investment per farm in:

Total livestock- ------

Cattle -___

Fogs _

Poultry- ---__---_ -

Gross income "oer farm

Incouie per farm from:

Crops- -------

Miscellaneous income Total livestock- - -

Cattle - -

Dairy sales- - - - -

Eogs

Poultry- ------

Average yield of com in hu. Average yield of oats in hu.

59 172

2.2^^

<^ oil -7

22.19 17.39

120 1914-

h 025

2 067 1 208

209

3 956

1+2

3 91^

691

2 1S7 350

U6 U6

62 177

-3.1?^ $-2 09^1

11. so 17.63

117 is6

3 1+27 1 720

1 005 171

2 0S9

60

2 029 279

Use

1 009

237

30

Igg

30

195

-2.li

$-1 Uss

7.S2 10.96

100

152

162

070

539 121

1 U70

5^ 1 U16

253 2S2

7U1 120

66

$559

16. UU 9.0U

9)4 lUU

2 0U9 1 033

93

3 159

1 097	600
Ug	U
2 05U	2 732
U6I	570
2U0	326
1 lUi	1 5lg
1U6	76
53	36
3^	5

35 1S7

b.lUf. $355

18. 19

9-06

97 1U9

1 92U

3U9

U7g

90

3 Uog

1/ Records from Carroll and YHiiteside Coanties included for I93O and I93I.

IJ

Air.TUAL lAI&il BUS HESS ISPOZT ON FORTY- ZIREZ FA311S i:i JO DAVIESS MB STEPHENSON COUITTIES, ILLINOIS, I93U

P. S. Joliiiston, J. E. TJills, and T. H. Hed-^es

•The farm eamin^?:s of h], a.ccount-lreeping farrriers in Jo Daviess and Steplipnson Cotinties showed an increase in 193^ over those 01 1933 • P"iis is the second consecutive year of improvement in the "business of these farms. The three years previous to 1933 showed very low returns.

These U3 accounts show for 193^ an average net i.icone of $1,253 per farm, as compared with an average of $^li-7 i'^ 1933 > '"^-^cL an. average net loss of $836 in 1932' The average cash income in 193^ was $2,S23 per farn, the cash "business expenditures $1,220 per farm, leaving a ca,sh "balance of $1,603 to meet interest payments and family living expenses. (Those who keep home account "books use the latter figure to represent the cp.sh contri- "bution of the farra to the "realized fainily income".) Besides the ca,sh in- come, there was ezi inventory increase of $UU9 per farm due to the rise in the prices of farm products. This increase, a,ddod to the cash "balance, ro- sulted in an average excess of receipts over expenses of $2,052 per farm. Tlie inventory increase was a larger part of the total fa,rra income in 193^ thpii in 1933.

These data, must not "be considered representative of o.verage farm

conditions, for they were secured from farms which are larger than a.verage,

a.nd which were managed by farmers who are more efficient th:^j.a the a.verage of all farmers in the county,

For the state as a whole, farm earnings were better in 193^ than in 1933 i^ spite of the fact that com and oat yields were very low dus to drouth and to chinch bug damage. In the western and southv/estern parts of the state the drouth caused an almost total failure of both corn and oats. Tliis accovints for farm eariiings being lower there tlian in other parts of the state .

The corn crop '.-/as best in the southeastern part of the state, and was fair in the northwestern section. TJheat yields were particularly good in the south and central portions of the state. Soybean yields were very good throughout the sta.te, and there was a larger than normal acreage in Illinois in 193^* This state produced over haJf of the nation's 193^^ crop of soybeans .

Chinch bug damage extended over most of the state last yeo,r, but was much more severe in some sections than in others, and was much worse on some farms than on other farms in the same community. Conditions affecting crop yields were very spotted. This accoints in part for the wide variation in farra earnings from one section of the state to another, a,nd the wider variations than usual from one faiT^. to another.

* H. S. Brunnemeyer and Y. J. Banter, farm advisers in Jo Daviess and Stephenson Counties, cooperated in supervising and collecting the records on which this report is based.

7^^

-2-

Industries other than agricultiijre again showed im-'iroved earnings over the previous year. A group of SUO industrial corx^orations reoorted "by a nationally known hanic showed average earnings of '^.0 percent on their in- vested capital in 193^> 3-s conpared with 3'^ percent for the same coroorations in 1933- -A- similar group liad a losv; of one-tenth of one percent in 1932 and average earnings of 3-3 percent in 1931'

In comparing the iiverage eamin;';s of corporations with the rate earned on investment on accounting farms, it is v/ell to keep in mind that in coritioration accounting, cliarges are made for management, while in the farm accounts no comparable deduction has "hoan made. On the othjr hand the farmer and his family receive food, fuel, and other items of living from the farm for which the farm has received no credit in the records used in this report. For the average central Illinois farm family, consisting of five persons, the value of the food and fuel furnished hy the farm ?/as ahout $250 in 193^> when estimated on the basis of the wholesale price for farm products.

■ Variations in Farm Incomes

There was a m.uch v/ider r/mge in farm earnings on tho a^ccounting faiins in 193^ tiian in 1933* This was true for the faiTOs included in this report, and it was also truo v/hen the average earnings of farms in one section of the state are compared witli the earnings of farms in other areas.

The extremely wide range in earnings was due to a combination of physical and economic factors. The average yields of wheat and soybeans viere much better, compared with the five-year average, than the average yields of corn and oats. This variation favored those sections ivhich had larger acreages of the higher yielding crops in 193^''-' There was also a v;ide range in average com yields from one section of the state to another, as vrell as bet-,70cn individual farms in the same area. The price of grains was high in 193*^ as compared with prices of livestock and livestock products. Farms where grain sales constitute a large part of the farm income thus had an advantage. The rapid increase in the prices of farm products, particularly grains, favored those farms which had large stocks of salable products on hajid at the beginning of tlie year. Many farraers who inventoried the com on hand at the beginning of 193^ at Uo cents a bushel, later sold this corn for SO cents.

In this group of h'j accounting farms the most successful third shows an average net income of $2,225, while the average net income of the least suGcessftil third of the farms was only folok. In 1933 the net income for the most successful third was ?il,2US, -vvhile the least successful third of the farms had a net loss of -$276.

-J-

Investnients, Receipts, Expenses and learnings on 43 Jo Daviess, Stephenson Cotijity Farms in 193^

Itens

Your

farm

Average of ^3 fanns

CAPITAL II^VESTiSaiTS

Land -------

Jarrn improvements-

Livestock totnl- Korses - - - -

Cattle

Hogs - - - - - Sheep- - - - -

Po-al try-

Machinery and equipment- - Peed and grains- -----

Total capital investraent

13 237

3 067 2 001

317 1 317

221

56

90

1 379

1 025

$22 .qi9

14 nost profite.''ole

far.ns

1

722

5 131

2 001

26U

35s

267

19

93

1I06

16=4

1

$22 U2'+

lU least

prof ital)le

fams

13 736 U 855 2 213

371

1 ko~i

237

109

S9

1 h2^

9S9

$23211

lECEIFTS Airo lET IITCPZASZS

Livestocl: total-

Korses -----------

Cattle

I-!ogs (including AAA pa.;raents) Sheep- -----------

PotiJtry- ----------

3gg sales- ---------

Dariy sales- --------

Peed and grains (including AAA payments) ----------

LaDor off farm --------

Miscellaneous receipts - - - -

Total receirjts & net increases

2 463

121

Use

3 i6 SoO

9\

SI

131

S33

327 107

7

904

5 5143

1 326

IS

&7 1U9

993

562 155

3 &3S

J91

123

:)3 12 h

U76

92

$2005

Z:XE5ITSES A3TD IJZT DLCP-LASSS

Pain improveuents- - - -

. Eorses ---------

Miscellaneous livestock decreases

U

Machinery and eqtdpment- - - -

Feed and grains- -------

Livestock expense- ------

Crop expense ---------

Hired labor- ---------

Taxes- ------------

Miscellaneous e-penses - - - -

Total expenses & net decreases

266

39

97

106

ii|6

29

$ 252

i?Q

245

60 120

27 127

3^^ 862

15:

130 30 75 99

161

23

or;7 -2.12

■ZCLIPTS L3SS ZXPITiTSES-

]otal unpaid lahor- -------

Operator's labor ------

Family labor --------

Fet income from investment and management -----------

IkTS, EARIED OH IF/ESTISITT

tetum to capital aiid operator's labor and management ------

% of capital invested- - - - - -

*ABOIl AIID MAbTASEL^ElIT !7AGE

$ 2 052

799 53U 265

2 976

751 537 21U

1 253

3.U9^

2 225

$ 1 052 536

332

igU

9.92^

^13^

I 51

lUi

2 762 1 121

041

720

1 lol

-1^1

7b

-i4-

•The follov^ing table shows the niainher of farms having certain net incomes per acre. There was a marked difference between the most successf^al and the least successful farms.

Average net in- Humher of

co:ne per acre farins

$19 and over 2

17 3

15 k

13 2

11 3

Average net in- ITumher of

come per acre farms

$7 3

5 6

3 7

1 3

-1 3

-3 1

A further study of the faira businesses made by comparing the in- vestments, receipts, and expenses of the group of farms with the highest net incomes with those having the lowest should throw some light on the question of why some farmers are more successful than others. This comparison is shown in the table on page 3*

The most profitable farms averaged 171'5 acres each, the least pi'ofi table 232.9 acres. Because of their smaller investment in land, the most profitable group ha-d a smaller total investment than cither the least profitable farms, or the average of all accounting farms. The most profit- able farms, in spite of their smaller size had a much largor income from prodvictive livestock, and feed and grains than the least profitable farms. The most profitable group also had less total expense per fann, including the charge for family labor, than the least successful farms.

Changes in Inventories and Inventory Values

The year 193^ was similar to 1933 i^^ that the prices 6f faim products continued to advance, causing further increases in inventory values. Owing to the poor crop yields in 193^ there were fewer bushels of grain on hand to inventory at the end of the year than at the beginning. The value of the smaller amount of grain, however, was greater than for the larger amount on hand at the beginning of the year.

Bushels of Com Inventoried

Jan. 1. 193^

Dec. ^1. I93H

Average of all farms

Average of lU most successful faitas Average of lU least successful farm: Your farm

312 93U 539

5 S3

250

The most profitable fa,niis ha.d a much larger inventory of com both at the beginning and at the end of the year. This difference accounted for a considerable part of their higher receipts and net increases from feed and grains.

-5-

[Hie average inventoiy increase for the accounting" farms in Jo Daviess and Stephenson Covinties was $U49 in 193^» ^-s coiiipared with $27 in 1933, and an inventory loss of $1,021 per farm in 1932- There were increases of $362 in feed and grains, and $233 in total livestock, while machinery showed a decrease of $73 ^'^'^ improvements a decrease of $73* On ma.ny farms the decrease in machinery and improvements was the smallest it has been since 1930, indicating that more of the necessary repairs and replaceuents are heing made, but still not onotigh to offset the depreciation costs.

Inventory Changes for 193'-l-

Items

Beginning

inventoiy

I-I-3U

Closing

inventory

12-31-3^

Inventoiy change s 19 3 U

Inventory

change s ,

your farm

Total livestock $2 001 $2 2'j,k

Feed and grains 1 0&'5 1 kkf

Machinery 1 379 1 306

Improvements (except residence). 5 067 H 99^

Total $9 532 $9 9S1

$233 362

-73

-73

$ 1:49

S

Some Adjustments on Jo Daviess and Stephenson County Faniis Since 1929

Farmers have "been forced to make adjustments in their cash ex- penditures as the result of changes in their cash incomes. From I929 through 1933 » farm operating costs declined each year, hut the year 193^ brought a reversal of this trend. Tiic tota.l operating expenses were 60 cents an» acre higher in 193^ than in 1933 » while the cash operating expenses were $1,220 per farm in 193^> as compared with $1,113 in 1933- There were significant increases in expenditures from the pro\dous year for livestock, feed and grains, improvements and crojD expenses. The expenditures for taxes ajid machinery were considerably less in 193^ than in 1933* If f-rm incomes continue to increase, indications point to an expansion of spending for 1935s particularly for machinery- and improvements, since farmers have postponed replacements and repairs of these items during the five-year period since 1929.

Cash Incom.e and Expenses on Accoijnting Farms in Jo Daviess and Stephenson Counties for 1929 and 193^+

Items

xour farm I93U

Ave rage expense

cash per faim

19^4

1929

Your farrii I93U

Average cash income per fann

193U	1929
S2 kjO 193 U6	$5 155 22U 105
107 7	1 17

Livestock . . . $

Feed and grains

Machinery ,

Improvements

Labor ....

Miscellaneous

Livestock expense

Crop expense

Taxes

total

S 617 626 556 255 2 SI 32

^•3

160

203

$]. 220 $2 773

$ 2k0

22s

239

96

106

29

39

97

1U6

Excess of cash sales over expenses. ...

Increase in inventory ,

Income to labor and capital (Eeceipts less expenses)

$2 S23

$5 5U2

$1 603 $2 769

kks 250

2 052 3 019

(S

-b-

Tine ctnulative effect of several years of I017 agricultural prices on the deniand for nanufaxtured goods car. readily be ascertained "by a con;- parison of ca.sh farn: expenditures in 153^ with those in 1S29- Althougli the average cash incone in 193^ ^s-S '5- percent of that in 1929. cash expenditures were only U^ percent as large. In 193^ livestodi purchases wore 39 percent and feed and grain purchases 36 percent as large as in 1929- I21 193^ these farms paid out U3 percent as much for machinery, 3^ percent as nuch for in- provenents, and 60 percent as inuch for crop expense as in 1929> while taxes were reduced to 72 percent of the 1929 level.

Conriarison of Jsrr.s 77ith High and Low Zamin^s

Ihe r.ost prof itaole fanns in this stud^/' had net receipts per acre of $12.97. a-S compared with $0.79 ^or the least profitahle group. The rea- sons for this difference mx;/ he obtained froni a studj" of the data on pages 3 and S.

The most profitable fams had more livestock, and were more effi- cient in their livestock operations than the least profitable farms. The most profitable lanns had an investment of $11.29 an acre in prod^jctive livestock, as compared with an investment 01 $0.33 an acre on the least profitable farms. Ihe most profitable farms fed $1,9SS worth of feed to productive livestock, and secured a return of $157 ^or each $100 worth of feed fed, while the least profitable faims fed $1,7^ worth of feed, and secured only $103 for each SlOO worth of feed fed. The most profitable farms had an average of 11. 5 litters per fai"", weaned an avera:':e of 6.0 pigs per litter, a.nd had an income of $103 per litter. The comparable figures for the least profitable faims wore 7 '2 litters per farn, b.O pigs weaned per litter, and an income of $6S per litter.

The most profitable farms, altho"ugh cl.^ acres smaller in size, had a mruch larger proportion of their land area tillable thrm the least profitable farms, and had 103.2 acres of crops as compared v/ith S9.O acres of crops on the least profitable farms. The most profitable farms had 7'^ acres more com, and 3-2 acres more oats than the least profitable farms. The most profitable farms carried larger inventories of feed and grain on which to mrke a profit when prices a.dvciiced. In addition to the larger acreage of crops, cjiother rea- son for the larger inventories of feed and grains was the higher crop yields, there being an advantage of 9.2 bushels of com, and 2.3 bushels of oats per ■acre in favor of the hi^ profit group.

TJio larger income on the most profitable farms was secured with ■

a total operating expense of onlj'' $1.59 Q^ acre above that on the least W

profitable farms. 15an labor costs per crop acre was $7«29 on the most profit- able farms, as compared with $10.36 on the least profitable fair.is, while power and machinery cost per crop acre was $^-.10 on the most profitable faims, and $U.S7 on the least profitable group.

-7-

79

Influences of AAA Profcrans on Cropping; Systens and gara Incomes

The farm-account records in Illinois were inflixenced "both directly and indirectly 'oy the corn-hog and wheat adjustment prograjns. A large per- centage of accounting farms v/ere tinder one or "both contracts in 193^- I^^® acreages of corn and wheat on these farms were therefore less than normal. This should have resulted in lo-.ver operating costs. Corn-hog benefit pay- ments for the entire 193^ program 7/ill total ahout Uo million dollars for the state, v/hile v/hoat "benefit payments will "be a"bout 2.U million dollars.

The "benefit payments for accoimting farms are indicated in the following ta"ble, ?;hich shows the avera-ge payment for those farms receiving pa-jmients, and includes only those payments received hy the cooperator "before the 193^ "books were closed. In some cases only the first corn-hog check is included, while in other cases the second check had "been received. The second payments not received, and the third payments will "be entered in the 1535 book.

AAA Benefit Pajiaents Received in 193^

Jorr.

TTncat

Number Amount ITumber Amount iTunber .Araount Average of per of per of ""■'^■^ "-"-^ '^-'-■'■

faims farm farms farm farms

per ^^ ..^^ / fana payment si/

$~

13	$187	$23U
12	1C5	123
3S	132	166

1/3 most profitable farms 11 $77 1/3 least profitable farms 10 kS All accounting farms jh 62

1/ Total benefit payments revjorted 'oy accounting farms under contract for 193^ divided by total nuraber of accouiitir^ lanns.

On most farms the cash received from benefit pajnncnts will more thjan pay for the year's taxes. As r^x. average for all accounting farms, the payments actually received were $20 more than sufficient to pay the 193^ taxes.

It is interesting to note the use made of the contracted acres on the accounting farms. The avera-ge faim had 10. 7 o,ontra.cted acres -.vhich were used as follows: 1.1 idle; 3.3 mixed red clover and timothy; I.3 sv;oet clover; 2.0 soybeans; I.5 alfalfa; and I.5 acres were in other crops. These data indicate tlia-t most farmers m-ade good use of their contracted p.cres from the standpoint of soil improvement as a large part of them were in legumes. When the Government restrictions on the use of crops grovm on contracted acres were removed, they were, on mar^y farms, the most profitable crops as they furnished hc^r and pastiire where badly needed in drouth areas. The iGiguiaes had the further advantage of beir^g immune to attack from chinch bugs .

Pana earnings were influenced indirectly by the AAA progr?jr:S in that the reduction in production increased the price of the commodities involved. The drouth was -a more important factor in reducing production than the adjustment progrojr.s, yet if it had not been for the corn-sealing program there would have been but little corn in the laands of fanners at the time the major price .advance boc.?;ne effective.

6U

Factors Helping to Analyze the Farm Business Jo Daviess and Stephenson County Paras in	on U3 193^	1 ■
Items	Your fairn	Average of U3 farms	lU most profitable farms	Ik least profitable farms
Size of farms — acres -------		191.9 69.1 53.1 15.13 S.60 6.53 69 119	171.5 79.2 51.7 22.33 9.UI 12.97 7U 131	232.9 53.6 » 59.1 S.6I 7.S2 .79 59 100
R;rcent of land area tillalile- - -
Percent of tillable land in hay and
Gross receipts per acre- -----
Total expenses per acre- -----
Net receipts ^er acre- ------
Value of land per acre ------
Total investment per acre- - - - -
Apy-iTio -i VI ^nT*"'^-. —		2n.O 21.7 37.^ 33.0 39.6 13.2	27.2 2k. 8 37.6 32.6 UI.2 IU.2	19.3 19.6 33.0 35. 3 31. u 11.9
Hay -
Tillable -nasture- _ - _ ^
Crop yields — Corn, ou. per acre- -
Oats, bu. per acre- -
Value of feed fed to productive L.3.		1 300 129 9S 226 9.0 6.3 S7 6^ 9.33 12.82	1 9£5 157 103 236 ■ 11.5 6.6 103 72 11.29 13. 17	1 7^0 • 103 ; 70 1 936 : 7-2 , 6.0 '. 63 ; 97 •: S.38 -■ s.og
Returns per $100 of feed fed to productive livestock- ------
Returns per $100 invested in: 'cattle
Poultry - —
T^'iirn'hpT" nt li'htpT'c?— — _ _.
Pigs -.veaned per litter ------
Income per litter farrowed - - - -
Dairy sales per dairy cow- - - - -
Investment in productive L.S. per A.
Receipts from productive L.S. per A.
Man labor cost per crop acre - - -		S.Ug 2.67 U.U3 65f. 17s 29 57 .gs 1 603 iiU9 5.^9^ 2 90U	J.2°, 2.37 4.10 73.6^ 19 I)-2 1.10 2 120 S56 9.92^ 3 S3 3	10.36 3.17 k.zi 6U5^ 160 k6 91 ^ .66 1 010 1+2 .79^ 2 005
Machinery cost per crop acre - - -
Power and mach. cost per crop A- -
Farms with tractor --------
Value of feed fed to horses- - - -
Man labor cost per $100 gross
Expenses per $100 gross income - -
Farm improvements cost per acre- -
Excess of sales over cash expenses
Increase in inventory- ------
Rate earned on investment- - - - -
Gross receipts per farm- - - - - -
	i
				k

Chart fo

r Studying;

the Efficiency

of Vari

ous Pa

rts 0.

f Your

raisiness,

Jo Daviess,

and Stephenson Cotinties

, 193

4

The nwnbers atove the

lines

across tl

le middle of the page are the averages for the

U} farms incliided in this report

for

the factors named

at the top of the page.

By drawing a line across each co

lirnn

at the nwnber me as

uTing

the efficiency of your

farm in that factor, y

ou can cor

pare

your

efficiency wi

th that of other farmers in

your locality.

....

;3ushels

1 —

Cost per

C-ross

per acre

!m

crop acre

0 0

rece

ijjts

a)

r-f

Ph

<n-

0

(D tfH

U w

-p

(D

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B -d

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rt

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o

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rt !-

>

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p1 *e-

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12.5 1

70

23

lU

152

103

U76

^79

.Ug

««>4

««

2UU9

3350

Uo

5900

392

1 Il.l

6^

23

13

139

95

U26

329

2.02

2oU9

3000

35

5300

352

—

9.7

5S

22

12

126

37

^76

279

3.60

.23

5

15U9

2650

30

U700

312

■g.3

52

IQ

11

113

79

326

229

3.23

1.63

13

12 H9

2300

25

UlOO

272

1

6.9

Ub

16

10

IOC

71

276

179

6 . S2

3.03

21

sU9

1950

20

3500

232

v"3

5.^9

39.6 13.2

1 9.0 '

S7

63

226

129

s.Us

U.U3

29

1603

15.13

290U

191.9

^.1

1 ) 1 34 10

1 1 E

7^

55

176

79

10.0s

5. S3

37

U9

1250

10

2300

152

2-7

i 2S 7

7 ,

61

^7

126

29

11.6s

7.23

us

-351

900

5

1700

112

1.3

I 1 22 i U

i 6

Us

39

76

13.23

S.63

53

-751

550

0

1100

72

.11

-.1

1 1 1 IS 1

3

35

31

26 i

lU.33

10.03

61

-1151

200

500

32

1 i t 1

;

r i

-1.5 '

10 1 —

h

22

23 1

— —

16. Us ill. U3 !

69

-1551

— j —

—

—

22

-10-

Inflxience of Price Ghangps on Farm i:am.ings

Pam prices in 193^ advanced more rapidly than did the prices of comodities which farmers boiOt^rit. Pariaers of the United States as a group could e:-;change their farm products in 193^ for 7^ percent as many goods as for the period I905-I91H, wMle in 1933 they received only 6U percent, and 1932 only 61 percent a,s much in exchange for what they had to sell as in the prewar period. In the month of Febrroary, 1935i this index of purchasing pov7er had increased to S7 percent of prewar, the index of fam prices having risen to 111 as compared vzith an index of 127 for conmodities v^hich faimers b-uy. TDien the line representing fara prices drops below the line represent- ing prices paid by famers, farm earnings are very low, but v/hen these lines cone close together fam earnings increase. (See following graph.)

Index of Prices

Eate Earned

200 175 150 125

100

75

50

25

= Para prices in U. 3. Aug. 1909-July 19lU = 100

~ Prices paid by farmers. A^Jg. 1909-July I91U = IOC

n - Rate earned en investment, acco'jnting farms, central Illinois

XC^ JO

10^

H

^i

^^

1917 'IS 'I9 '20 '21 '22 'Z^ '2U '25 '2b '27 '2t '29 '3O '3I '32 '33 »3U

-11-

»^

Sincn the pric^ of scne io.m product :3 advanc.p.d m^ach more racidly during 193^ tliaii other prodiJjct^, it is evident that some farraj T.'onla oenefit ir.ore than otlierc, depending upon the kind and quantity of products sold. Grain prices advanced much :-^iore rapidly than livestock -nrices; which refolt- ed in a ver;'' had rrice ratio for fr-rrners who huy large r^uantitiOK of feed. The average Illinois farra price of corn was Ul cents a hur^hol in JanHvary, 153^; i't advanced steadily •imtil the end of the year when it vjss S? cents a hushel. Other grains nade narked advance although not so groat an advar.ce as corn. Eib price of hogs fluct-a5'.ted fron a low of $3'20 a huiidred in Ivfey to a high of $6^.30 in Septeraoer. The lovr point in the fall came in hove/nher when the average'price was $13.10. Th^e price hr.s advanced :faite rapidly since FoveTT-ber, tm average price being $7«5^' fo^ Pehruar;^, 1533' Beef cj.ttle V7ere worth ^U.IO a hundred in Janr^ri-ry, 193^ and advanced each "onth vntil Ge-otemher, when the price was $5.90.- They dropped to $5*^'^- i^ Decenher hut increased again to $7.'-^0 for Pehrai^ry, 1535'

The year 193^ ^et a record for the red\iction in the nu'iihe r.^ of livestock. The percentage decr=asrs hy species V7<^re as frllcws: horse?:, 1.1 percent; rr.ul'^s, ?.G percent; all rattle, 11.^ percent; siie'^p, ^^^-T percent; hogv 35*3 percent. Y/hen all species are coraoined on the hasis oi their ca,pacity to consu'ne feed, the reduction was I3 percent. This reduction will great reduce the demand for feeds produced in 1^35.

iv

The rela.tive change In prices of irnrfprtart corinoditics

he no tod

in the following gra'nh, whdch shows the average Illinois farri; prices by moni.rj as a percentage of the average prices for th^ period 19-"'1-1929.

Percent 120

110

Price Indices, 193^

(']_op],_iC2Q = 100)

-12-

Variations in EarniniR:s Over ?ive-Year Period

A comparison of production, income, and expenditure on the ac- counting faiTJO in Jo Daviess and Stephenson counties for the last five years is very interesting because of the violent fluct'uations in price level. Although the 193^^ corn crop was alinost average in this area, the small grain crops were almost a failure and follo¥;ed the smaller than average small grain crop of 1933- The increased prices of hoth grain and livestock caused the 193^!- earnings to he the highest for the five year period 193^-193'^«

Earnings in 1935> '-^ usual, will depend upon individ'oal efficiency, weather, and prices. Yath norraal weather conditions, prices of grain are likely to go down to a more normal level which will give individual effi- ciency the responsihility for higher earnings on each farm.

Comparison of Earnings and Investments on Accountin;'-; Farms Jo Daviess and Stephenson Counties for 193'^-193^

Items

HuTxher of farms --_----_-_ Average size of famis, acres- - - -

Average rote earned, to pay for

management, risk and capital - - - Average lahor and management wage -

Gross income per acre -------

Operating cost per acre ------

Avera.ge value of land per acre- - Total investment per acre - - _ -

Investm.ent per farm in: Total livestock- -

Cattle -

Hogs -------

Poultry- - - - - -

Gross income per farm

Income per farm from:

Crops- -------

M i s c e 1 1 ane ous i nc ome Total livestock- - -

Cattle

Dairy sales- - - - -

Hogs ________

Poultry- ------

Average jdeld of com in bu.- - Average yield of oats in hu.- -

I330£l/ 1 1931S;'

50 21^

:.S^^

311

lb . S7 11.23

91

IU3

138 603

203

3 59!)

k2

553 UoS

1S3 563

H7 51

$-

30 217

-2.5^. 1 727

9-25 13. Uo

lk2

2 2U3 702 lUo

2 lUi

S9

2 052 Si

859 797 256

Uo Uo

1932^

22^

-■j-y.

$-1 558

6.22

9.97 67

2 611

1 67s

332

126

1 386

112 1 27U

70

523 433

193

Us

1933

36

216

1.7;'=

s-309

in. GO 7.9U

72 120

2 269

1 U63

303

86

2 IbU

I93U

^3 192

5.55^ $ 6U6

15.13 3.60

59 119

2 001

1 317 221

90

2 90U

21^ 836 3S7	327 7 2 Ub3 Use
&77 625	83 s 860
13^	-«ar
	= 12-
Uo	ko
20	13

2/ Records from Jo Daviess County only for I929-I932.

AlTNUAl FABM BUSIlffiSS HEFOHT OIT SIXTY-EIGHT FABIAS IIT LEE, WHITESIDE, A:MD OGLE COUNTIES, ILLINOIS, 193!+

P. E. Johnston, T. H. Hedges, and A. L. Leonard*

The faiTi earnings of oS accoixnt-keeping farmers in Lee, TThiteside, and Ogle coimties showed an increase in 193^ over those of 1933- This is the second consecutive year of improvement in the "businesses of these farms. Tlie three years previous to 1933 showed very lov; returns.

These 6S accounts show for 193^ 3-^ average net income of $2,089 per farm, as compared with an average of $l,UlO in 1933> a-i^d. an average net loss of $5oS in 1932' The avera.ge cash income in 193^ was $U,3^9 per farm, the cash business expenditures $2,233 P^^ farm, leaving a cash halance of $2,056 to meet interest payments and family living expenses. (Those who keep home account "books use the latter figure to represent the cash contri- bution of the farm to the "realized family income".) Besides the cash in- come, there was an inventory increase of $692 a farm due mostlj^ to the rise in prices of fann products. This increase, added to the cash balance, re- sulted in an average excess of receipts over expenses of $2,7^3 a farm.

These data must not be considered representative of average farm conditions, for they v;ere secured from farms which are larger than average, and which were managed by farmers who are more efficient than the average of all farmers in the county.

For the state as a whole, farm earnings were better in 193^^ than in 1933 » i^ spite of the fact that com and oat yields were very low due to the drouth and to chinch bug carnage. In the western and southwestern parts of the state the drouth caused an almost total failure of both com and oats. This accounts for fain earnings being lower there than in other parts of the state.

The corn crop was best in the SDUtheastern part of the state, and was fair in the northwestern section. TOieat yields were particularly good in the south and central portions of the state. Soybean yields viere very good throughout the state, and there was a larger than normal acreage in Illinois in 193^- This state produced over half of the nation's 193^ crop of soybeans.

Chinch bug d-araage extended over most of the state last year, but was much more severe in some sections than in others, and was much worse on some farms than on other io.ins in the same community. Conditions affecting crop yields were very spotted. This accounts in part for the wide variation in farm earnings from one section of the state to another, and the wider variations than usual fron one farm to another.

*C. E. Yale, F. H. Shtimr,n, and D- E. Worren, farm advisers in the above Counties, cooperated in supervising and collecting the records on which this report is based.

5D

-2-

Industries other than a£.:riciilture again showed improved earnings over the previous year. A group of SHo industrial corporations reported "by a nationally knovTn oanlv showed average earnings of 5-0 percent on their in- vested capital in 193^« ^s compared with 3-^ percent for the same corpor- ations in 1533- A similar group had a loss of one-tenth of one percent in 1532| and average earnings of 3-3 percent in 1931-

In comparing the -average earnings of corporations v;ith the rate earned on investments on accoomting farms, it is well to keep in mind that in corporation accounting, charj^es are made for management, while in the farm accounts no comparable deduction lias been made. On the otlier hand the farmer and his family receive food, fuel, and other items of living from the farm for which the farm has received no credit in the records used in this report. For the average central Illinois farm fajuily, consisting of five persons, the val"ue of the food and fioel furnished by the farm was about $?50 i^ 193^> when esti:.iated on the basis of the wholesale price for farm products.

Variations in Farm Incomes

There was a much wider range in farm earnings on the accoimting farms in 193*^ than in 1933' This was true for the farms included in this report, and it was also true, when the average earnings of farms in one section of the state were compared with the earnings of farms in other areas.

The extremely wide range in earnings was due to a combination of pliysical and economic factors. The average yields of wheat and soybeans was much better compared with the five-year average, than the average yields of com and oats. This variation favored those sections which had larger acreages of the higher yielding crops in 193^- There was also a wide range in average com yields from one section of the state to another, as well as between individioal farms irx the sane area. The price of grains was high in 193^ as compared with prices of livestock and livestock products. Farms where grain sales constitute a large part of the farm income thus liad an advantage. The rapid increase in the prices of farm products, particularly grains, favored those farms which had large stocks of salable products on hand at the beginning of the year. Many farmers who inventoried the com on hand at the beginning of 193'^ ^-'t ^ cents a bushel, later sold this com for ^0 cents.

In this group of 62 accounting farms the most successful third shows an average net income of $3>570. while the average net income on the least successful third of the farms '.vas $865. In 1933> 't^s comparable net income for the two groups was $2,8^3, and $1S6 respectively.

Investments, Receipts, Expenses and Earnings on 6S Lee, Whiteside, and Ogle Co-unty Farms in 193^

Items

Your

farm

Average of 68 farms

23 most profitable

farms

23 least

profitable

farms

CAPITAL lUVESTmNTS

Land ------------

Farm im^provements- -----

Livestock total- ------

Horses ----------

Cattle --- -_-

Hogs -----------

Sheep- ----------

Poultry- ---------

Machinery and equipment- - - Feed and grains- ------

Total capital investment

HECEIPTS iffilT WET INCREASES

Livestock total- ------

Horses ----------

Cattle --- __-

Hogs (including AAA payments] Sheep- ----------

Poultry- ---------

Egg sales- --------

Dairy sales- -------

Feed and grains (including AAA payments) ---------

Lahor off faim -------

Miscellaneous receipts - - -

Total receipts & net increases

5XPEUSES AI'JD l-JET DECREASES

Farm improvements- -----

Horses --__------_

Miscellaneous livestock

decreases

Machinery and eqiiipment- - - Feed and grains- ------

Livestock expense- -----

Crop expense --------

Hired lahor- --------

Taxes- -----------

Miscellaneous expenses - - -

Total expenses & net decreases

BECEIPTS LESS SXPEIJSES

Total unpaid lahor- -------

Operator's lahor ------

Family lahor --------

jHet income from investment and '1 management -----------

RATS EARNED OH Il^rVESTMEl\TT

Return to capital and operator's ; labor and management ------

\5% of capital invested- -----

i LABOR MB MAIIAGEL'iENT Y/AGE

20 OlU

k S37

2 237

Uoo

1 362

330

60

85

1 555

1 S09

$30 U52

19 7^9 k 81k

2 713

387

1 751

379

9H

102

1 658

2 217

$31 1'31

20 902 U 511

477 977

2gg

Uo

75 1 30U

1 539

$30 113

2 999

23

1 152

1 0U3

102

73 llU k32

820

80

8

$ 3 907

k Ikk

5U

1 953

1 3bS

iGk

7^

113

Uis

1 23U

130

17

$ 5 525

1 963

51U

660

37

65 111

576

577

31

k

$ 2 575

$ 1

230

3^2

32 119 181 22s

27

159

$ 1

267

360

32

133 202

239

22

261

175

337

"36 105 165 210 26

$ 1 05^

$ 2 -jks

659

518 lUi

2 0S9

6.06^

2 607 1 523

$ losU

$ U 2bU

69U

5U0 15U

3 570

k 110 1 557

$ 2 553

$ 1 521

656 H93 163

865

2 . S7i

1 358

1 506 -lUfi

-k-

Eie following taole shows the nim"ber of fanns having certain net incomes per acre. There was a marked difference "between the most successful and the least successful farrns.

Average net income IJ\im"Der of Average net income Uunher of

per acre fanns per acre f arras

$21 and over 5 $9 12

19 2 7 9

17 5 5 7

15 7 3 ^

13 3 1 7

11 6 -1 1

A fTirther study of the faim businesses made hy comparing the investments, receipts, and expenses of the group of farms having the highest net income, with those having the lowest income will throw some light on the question of why some farmers are more successful than others. This com- parison is shown in the talile on page 3'

The most successful farms averaged 205 acres each, the least successful 201 acres. The most profitahle farms had a larger investment in total livestock and in feed and grains, and also a larger total farm investment than the least profitable farms. They had higher total re- ceipts and net increases than the least profitable farms, due mostly to larger sales of cattle, hogs, and feed and grains. The total expense per farm and per acre, including the charge for family labor, v/as somewhat higher on the most profitable farms.

The year 193^ ^'^ar similar to 1933 i^ that the prices of farm pro- ducts continued to advance, causing further increases in inventory values. Owing to the poor crop yields in 193^. there were fewer bushels of grain on hand to inventory at the end of the year than at the beginning. The value of the smaller amount of grain, however, was greater tlia^n for the larger amount on hand at the beginning of the year.

Bushels of Com Inventoried

Jan. 1, 193^ Dec. 31, 193^

Average of all farms 2 526 . 1 563

Average of 23 most successful farms . . 3 2S9 2 25I

Average of 23 least successful farms. . 1 S9^ 1 17^

Your farm

The most profitable farms liad a much larger inventory of corn, both at the beginning and at the end of the year. With the rise in com prices, this was one of the important factors accounting for their higher returns from feed and grains.

-5-

The average inverxtory increase for the accounting farms in Lee, Whiteside, and Ogle coionties was $692 in 193^i ^.s compared Vi^ith $ST2 in 1935. and a decrease of $1,0SU in 1932- There were increases of $382 in feed and grain, $2S6 in livestock, and $Sh in improvements, and a decrease of $U0 in machinerj''. The inventory decrease in machinery was the smallest since I929 on accoimt-keeping fanns, and indicates that needed repairs and replacements are "being made, out still not enough to offset the current depreciation costs. The increase in the improvements inventory is of considerahle interest, for it is the first time that such an increase has occurred since farm earnings he- gan to decline so drastically with the general depression.

Inventory Changes for 193^

Beginning Items inventory

I-I-3U

Total livestock $2 237

Feed and grains 1 309

Machinery 1 555

Improvements (except residence). U 837 Total $10 U3S

Closing inventor;

Inventory Inventory

c hange c hange s ,

193^ your farm

$2 523

2 191

1 515

k 901

$11 130

$2S6 3S2

-ko $692

$

Some Adjustments on Lee, TThiteside, and Ogle CouLity Fanns

since 1929

Farmers have heen forced to make adjustments in their cash expenditures as the result of changes in their cash income. From 1930 thi'oiigh 1933i farm operating costs declined each year, hut the year 193^ Drought a reversal of this trend. The total operating expenses were 26 cents an acre higher in 193^ than in 1933> while cash operating expenses were $2,293 a- farm in 193^, as compared with $2,323 in 1933- There were in- creases in expenditures over 1933 for improvements, crop expense, and la- hor, and decreases in expenditures as compared with 1933 ^'^i' livestock, taxes, and feed and grain. Indications point to an increo.se in expendi- tures for repairs and replacement of machinery in 1935» since farmers liave postponed t)urchase of these items during the five-year period since 1929.

Cash Income and Expenses on Accounting Farms in Lee, T.iiteside, and Ogle County for 1929 and 193^

Items

Your farm I93U

Average cash Your expense per farm f aim

Average cash income per farm

1934	1929	193^
$ 651	$1 290	$
367	863
393	7^3
295	283
181	3U2
27	36
32	75
119	213
228	321 $U 166
$2 293	$
;. . . .		.$

193U

1929

Livestock $

Feed and grains

Lfachinery

Improvements

Labor

Miscellaneous

Livestock expense

Crop expense

Taxes

Total $

Excess of cash sales over expenses.

Increase in inventory .

Income to lahor and capital (Receipts less expenses)

$3 36U $6 12s

SO5 665

91 1 80	121
36
8	3

$u 3U9 $6 953

$2 056 $2 787

692 27^^

2 7U8 3 062

yu

-b-

The cumulative effect of several years of lov/ a{irictLLt-ural prices on the demand for man^ufactured goods can be readily ascertained by a comparison of cash expenditures in 193^ with those in 1929- The average cash income in 193^ was 63 percent of that in 1929. while cash expenditures were onlj"- 55 per- cent as large. In 193^*- livestocl: purchases were 5O percent, and feed and grain purchases U3 percent as large as in 1929- In 193^- these farms paid out 53 percent as much for machinery, 56 percent as much for crop expense and 53 percent as much for rired labor as in I929, while taxes vrere reduced to fl percent of the 1929 level.

Compgrison of Farms With High and Low Earnings

The most profitable farms in this study had net receipts per acre of $17.^ as compared with $U.30 for the least profitable group. The reasons for this difference may be obtained from a study of the data on pages 3 a^^d 2.

The most pi'ofitable farms were more intensive and more efficient in their livestock production than the least profitable farms. They had an investm.ent in prod^uctive livestock of $12.11 per acre, and fod $2,93S of feed per farm, as compared with $7 •21 invested per acre, and $1,73'"^ 0^ feed fed per farm, on the least profitable farms. The productive livestock on the most profitable farms ret Limed $139 for each $100 of feed fed, as compared with a return of $113 per $100 of feed fed on the least profitable farms. The most ■nrofitable farms liad an average of 12.2 litters per farm, weaned an average of 6.3 pigs per litter, and load an income of $lll4 per litter. The comparable figures for the least profitable farms were 7*9 litters per farm, 5*7 Pigs weaned per litter, and an income of $SU per litter. The most profitable farms had an average investment in cattle of $1,7S1 per farm, and had returns of $133 ' per $100 invested in cattle, as compared with an average investment in cattle of $1,016 per farm, and returns of $107 per $100 invested in cattle on the least profitable farms.

The most profitable farms, although only ^,U acres larger in size, had a larger proportion of their land area tillable, and liad 12. U acres more com, 5*3 acres more oats, I6.3 acres more soybeans and 5*7 acres more hay than the least profitable farms. The most profitable farms carried larger in- ventories of feed and grain on which to malce a profit when prices advanced. In addition to the larger acreage of crops, another reason for the larger in- ventories of feed and grain was the higher crop yields, there being an advant- age of 12.0 bushels of corn, 2.8 bushels of oats, and 11.6 bushels of soybeans per acre in favor of the high-profit group.

The larger income on the most profitable far^is was secured with a total operating cost of only $1.06 an acre greater than on the least profitable farms. Man labor cost per crop acre was $5.S6 on the most profitable farms as compared with $6.07 on the least profitable group, while power and machinery costs per crop acre was $3.S7 on the most profitable group, and $U.62 per crop acre on the least profitable farms.

1

L

yi

-7-

Influence of AAA. Prorcraras on Cropping: Systems and Fan.i Incomes

The farra-accotint records in Illinois were influenced "both directly and indirectly "by the com-hoG and wheat adjiistraent programs. A large per- centage of acco'onting farms were -under one or "both contracts in 193^- The acreages of corn and wheat on these farms were therefore less than normal. This should have resulted in lower operating costs. Com-hog benefit pay- ments for the entire 193^ program will total about HO million dollars for the state, while wheat benefit payments will be about 2.!-!- million dollars.

The benefit payments for accounting farms are indicated in the following table, which shows the average payment for those fanns receiving payments, and includes only those pajnaents received by the cooperator before the 193^ books were closed. In some cases only the first coiTi-hog check is included, while in other cases the second check had been received. The sec- ond payments not received, and the third payments villi be entered in the 1935 book.

AAA Benefit Payments Received in 193^

Com Vvhaat Hogs

Average

I'Tun^ber Amount ITumber Amoimt Tuaber Amount ^^ ^t^-^ of per of per of per paymentsl/ ^ farms farm farms farm fziras farm

1/3 most profitable farms 23 $136 5 $ 39 22 $178 $325

1/3 least profitable fams IS yg 3 IIS I7 gg lUl

All accounting farms 63 IO9 g 100 60 I39 23I

1/ Total benefit paj^ments reported by accounting faras under contract for 193^ divided by total number of accounting farms.

On many fa,rms the cash received from benefit ■oayments will more than pay for the year's taxes. As an average for all accounting farms, the payments actually received were $3 more than sufficient to pay the 193^ taxes.

It is interesting to note the use made of the contracted acres on the accounting farms. The average farm had I5.g contracted acres v;hich were used as follows: ^.3 idle; ^.h red clover; 1.2 sweet clover; 2.7 soybeans; 1.2 alfalfa; and 2.U acres were in other crops. These data indicate that most farmers made good use of their contracted acres from the standpoint of soil improvement, as a large part of them were in legumes. "When the Govem- r-ient restrictions on the use of crops grown on contracted acres ¥/ere removed, thisy were on many fanns the most profitable crops as tliey furnished hay and pastui'G where badly needed in drouth areas. The legumes had the further ad- vantage 01 being imuune to attack froiji chinch bugs.

Farm aamings were influenced indirectly by the AAA programs in that the reduction in production increased the price of the commodities in- volved. The drouth v-cs a more important factor in reducing production than the adjustment -orograms, yet if it had not been for the corn- sealing program there would have been but little com in the hands of farmers at the time the major price advance becoj^o effective.

92

-g-

Factors Helping to Analyze the Farm Business on Lee, r/hiteside, and Ogle Coimty Farms in 193^

6s

Items	Your farm	Average of 6g fanns	23 most profitable farms	23 least profitable farms
Size of farms — acres --_____		205.0 25.3 3S.0 19.06 g.S7 10.19 92 li+9	20U.7 87-1 39.2 26.99 9.55 17 M 96 152	201.3 go.g 37.0 12.79 S.U9 U.30 loU 150
Percent of land area tillable- - -
Percent of tillable land in hay and pasture -----------
Gross receipts per acre- - - - - -
Total expenses per acre- -----
Net receipts per acre- _--_-_
Value of land per acre ----- -
Total investment per acre- - - - _
Ar**rp«5 in pAT*n —		U9.I 32.2 2.0 30.6 35.9 39-6 10.3 10.1	5U.5 3U.O 19.3 33.2 36.7 k-j.o 11. g 17. U	U2.1 2S.7 3.0 27.5 32.6 35.0 9.0 5.S
Oats- ----------
Soybeans- --------
TTav _ — _
Tillable pasture- - - - -
Crop yields — Corn, bu. per acre- -
Oats, bu. per acre- -
Soybeans, bu. per acre
Value of feed fed to productive L.S.		2 30s 129 116 213 10.2 6.1 103 59 9.6I1 1U.52	2 932 139 133 191 12.2 6.3 llU 57 12.11 19.9s	1 730 113 107 226 7.9 5.7 sU 63 7.21 9.75
Returns per $100 of feed fed to productive livestock- ------
Returns per $100 invested in: Cattle
Poultry -------
Litters per farm ---------
Pigs weaned per litter ------
Income per litter farrowed - - - -
Dairy sales per dairy cow- - - - -
Investment in productive L.S. "per A.
Receipts from productive L.S. ver A.
Man labor cost per crop acre - - -		5.76 2.U6 3.96 231 21 ^7 1.12 2 056 692 6.g6 3 ^07	5.S6 2.5U 3.S7 69.6$^ 2 1+2 15 35 1.30 3 311 953 11 M 5 525	6.07 2.59 U.62 , 26U 31 66 1 359 162 2.S7 2 575
Machinery cost per crop acre - - -
Power and mach. cost per crop A. -
Faims with tractor --------
Value of feed fed to horses- - - -
Man labor cost per $100 gross
Expenses per $100 gross income - -
Farm improvements cost per acre- -
Excess of sales over cash expenses
Increase in inventory- ------
Rate earned on investment- - - - -
Gross receipts per farm- -----

Chart for Studying the Efficiency of Various Parts ii/ Yoiir Business, Lee, THiiteside, and Ogle Counties, 193^!-

93

The numbers above the lines across the middle of the page are the averages for the 68 farms included in this report for the factors named at the top of the page. By drawing a line across each column at the nimiber measuring the efficiency of yo'or farm in tliat factory, you can compare your efficiency -v.'ith that of other farmers in year locality.

Bur

hels

1 Cost per

1

1

Gross

per a

ere

crop acre

0 0 rH

1 1

recei"

pts

ti

o

Pk

Td

■e>

-p

u 0

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1

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0)

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0

0 0

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0

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•• i-H

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0 rt

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^

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(1) -H

g

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• 0

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fn (D

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+3

-IJ

4J ^H

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10 0

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5 0

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fn

fn

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p: !=: '

a d

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0 P

Ph -ee-

i-:i -tfy-

Ph E3

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l-H -H , CO 0

fl,

Ph

«=;

lii.^

60

20

165

133

39

35S

199

.75

.25

«..

U2OO

U05O

29.00

8900

335

13.0

s6

13

136

IU3

23

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185

1.75

1.00

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3650

27.00

7900

325

1 11.0

52

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133

77

31s

171

2.75 1.75

3

2S00

3230

25.00

6900

295

10.0

Us

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^.75

2.50

9

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2S50

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63

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235

6.g6

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116

103

39

213

129

1 1 1 5.76h.9i

21

692

2056

19.06

3907

205

3.5

36

s

106

93

53

17s

11^

1 \ i 1 6.75IU.75

27

0

lc30

17.00

2900 1 173

il.O

32

0

96

S3

^7

IU3

101

1 i i ! i j 1 7.7513.50

33

-700

1250

13.00

IQCO

IU5

2.3

2S

u

86

1 73

Ul

10 s

S7

1 S.75 6.25

39

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900

I 115

1.0

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1 1 1 ! 2

76

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73

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30

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1 53

r^'*

Influence of Price Changs on gam iia.niinffs

FaiTO prices in 193^ o.dvanced more rapidly than d.ld. the prices of coninioditles v/hich fanrisrs hoiXt?;!: t . Fcnaers of the United States as a group could e^rcciiange their farru products in 193^ ^or 7^ percent as many goods as for the period l'309-191^i wMle in 1933 they received only 6^ percent, and 193^^ only 6l percent as imoch in exchange for what they had to cell $.-3 in the prewar period. In the :aonth of lQ\iT-03.Tir , 1933 » this index of purchasing pov/er had increased to Ky percent of prev:ar, the index of fanu prices havin^^ risen to 111 as co.uparcd with an index of 1^7 for cominodities which farmers "buy. Wnsn the line representing iar:u prices drops celow the line represent- inc prices paid "by farrr.ers, farm earnings are very low, hxit when these lines corje close together farm earnings increase. (Seo following graph.)

Index of Prices

Rate Earned

20Q

= Farm prices in U. £. Aug. 19C'9-July 131^ = 100

= Prices paid "by farmers. Au^. 1909-Jul2/ 191^ = IQC

n - Riite earned en iYivestment, accourii:,ing fams, central Illinois

1917

o 'I9 '20 'uil '^2 -ZJ, 'dii '.^5 '2d '27 '2? '29 '30 '3I

'■yj '3^

-11-

Sincp the pricp; of sone fami products advanced mijch. more rapidly during 19"^U tlian other products, it is evident that some farrno vvoi^ld ''Denefit more than others, depending upon the kind and quantity of productc sold. G-rain prices advanced much iiore rapidly than livestock ■orices; which res'olt- ed in a very had price ratio for fan.iers who "buy lar^e qtiantities of feed. '2'n.e average Illinois farni price of corn vras Ul cents a hushel in January, IS3U; it advanced steadily until the end of the year when it v.'as S8 cents a "bushel. Other grains made narred advance although not so great an adva.nce as corn. The price of hogs flucta£',ted fron a lov/ of ^J,.20 a hundred in May to a high of $6.3C in Septeiucer. The low point i?i the fall caivie in Eoveraber v/hen the average price \7p„s a^-lC- The price ha.s advanced quite rapidly since I'over.iber, the average price being $7*5^ -o^ ]?ehruary, 1335* Beef cattle were worth $U.1C a hundred in Ja.nuary, 1S3^ 9-^<i 'Advanced each nonth tmtil SeT)ten:"ber, vmen the price v/as $5.90. They dropped to $5. 20 in DecerAer "but increased again to $7.H0 for Feliroary, 1935-

The year 193^ ^©"t "- record for the reduction in the nu'Aers of livestock. The percentage decrea.SRS "by species w^re e.s fcllov/s: horses, 1.1 percent; n.ulps, ?.G percfnt; all rattle, 11.2 percent; £he'"p, U.7 percent; hogs, 35*3 percent. 'i\"hen all species are com"bined on the "basis of their capacity to consu'ne feed, the red"-K;tion was I3 percent. This reduction will greatly reduce the demand for feeds prod-Jiied in 1,^35 •

The relative chanr;e in prices of imptDrtant cor:::'.odities may "bo noted in the follov.ing -?;ra.rAi, v.hich .-sho'.vs the average Illinois far:;t prices by months as a. percentage of the a,verage r^rices for the period 1921-1929"

-ercent

120' 110

100

50 so

Price Indices, 193^

(1921-1925 - 100:

70 60

50

IiO

;+=^«d!rrt _ Dairy Prpiaet

■ f

Jan.

i'e D .

..'a.r .

ii-pr

All commodities index represents the wholesale price of a large nurfoer of commodities for the United States, as computed oy Buj-eau of Lahor Statistics.

Qrain and livestock indices rep-escnt average nontlily faivr. prices in Illinois,

96

-12-

Variation in Sarnings Over ?ive-Year Period

A comparison of prod"uction, incone, and e:;penditures on the ac- coimtin^ farms in Lee, Wliiteside, and Ogle counties for the last five years is very interesting "because of the violent changes in the price level. 193*+ was a year of low crd yields, yet total receipts per farm were higher than in any other year in the last five, and were SO percent of the 1S29 gross receipts. Operating costs per acre were lower than in any year of the five except 1933- I'hus profits were the "best these counties have experienced since 1929".

Earnings in 1335) 3-s usual, will depend upon individual efficiency, weather, and prices. With normal weather conditions, ]3rices of grain are likely to go down to a more normal level which will give individual effi- ciecny the responsibility for higher earnings on each farm.

Compa.rison of Eaniin.rs and Investments on Accounting Farms in Lee, rrniteside, and Ogle Counties for I93O-I93U

Items

1930!/

193]^

19322./

/

1.933^

193^

I'^xaher of farms -_-----__ Average size of farms, acres- - -

Average rate earned, to pay for management, risk and capital - - Average lahor and management wags

Gross income per acre ------

Operating cost per acre - - - - -

Average value of land rier acre- Total investment per acre - - -

Investment per farm in:

Total livestock- -----

Cattle

Hogs -_----_-_--

Poultry- ---------

Gross income per farm

Income per farm from: Crops- - - - - -

Miscellaneous- - Total livestock- Cattle

Dairy sales- - - Hogs ------

Poultry- - - - -

Average yield of com in bu. A<rerage yield of oats in hu.

55 206

37 232

2.g5^ $-72

IS. 15

12 . 9U

113 1S3

h 293

2 652 SI2 173

3 7^

$-2 Iks

Sk

676 c91 15s

239

Ui

-i.9«!^

2

p

36 225

-1.7:

$-1 7bS

9-13 12.I41

93 172

lis

5S6

SOS

139

2 115

U2

2 073

520

757 207

ks kk

7.S6 10. U7

9S 152

3 010

1 913

^+77

102

1 771

2d 7 Up;

631 370

lUo

5S =49

225

63 205

$297

1U.S7 8.61

9S ii+5

2 U71 1 ssU

329 S7

3 350

1 315

25

2 010 725 Uoo

659 152

52

35

$1 osU

S.Sfo

19.06

8.87

98

1U9

2 237 1 362

330

S5

3 907

820 8

2 999

1 152

1+92

1 0U3

/I7

ko 10

1/' Records from Stephenson county included for 1930-

2/ Records from Ogle and Lee Counties only for I93I, 1932, 1933*

97

MmJAL FAEI.: BUSIJTESS HEPOET ON FORTY- THRES PABl'lS I1\T MERGE?. COUNTY, ILLIIIOIS, I93I;

P. E. Joimstcn, E. L. Saioer, and J. B. Andrews*

The far.n eo,rnin,=;r. of ^3 accotmt-keeping farmers in Mercer CoiiJity showed an increase in 193^ over those of 1933- This is the second con- secxitive year of improvement in the "business of these farms. The three years previous to 1933 showed very low retf.rns.

These kj accovjits show for 193^ 9-^ average net income of $2,^71 per farm, as compared with an average of $1,9'3S in 1933) a--"-'! an p,verage net loss of $Uol in 1932- Tlie average cash income in 193^'" ^^^^ $5 3^3 Per fanr., the cash husiness expenditures $3>057 "P^r far:n, leaving a cash bal- ance of $2,2U6 to meet interest payments and family living expenses. (Those who ]:eer) home accouiit hooks use the latter figure to represent the cash contribution of the farm to the "realised fnrnily income".) Besides the cash incom.e, there was an inventory increase of $857 per farm due to the rise in the prices of farm products. This increase, added to the cash hal- ancG, resulted in an avei-age excess of receipts over expenses of $3,103 per fam. The inventory increase was a larger part of the total farm in- come in 193^ than in 1933 •

These data must not he considered representative of average farm conditions, for they were secured from fairns which are larger than average, and which were managed by farmers vvho are more efficient than the aver;'.ge of all fo.iTiers in the coujity.

For the state as ;i whole, farm earnings were hotter in 193^ tlian in 1933 1^ spite of the fact that corn and oat yields were very low due to drouth and to chinch hug dainagc . In the western and southwestern parts of the state the dro^ith c-aused an almost total failure of both corn a.nd oats. This a.ccoTJUts for farm earnings being lower there than in other pa,rts of the state .

The corn crop was best in the southeastern part of the sta,te, and was fair in the northwestern section. ■^iTheat yields were particularly good In tho south and central ^oortions of the state. Soybea,n yields were very good throu.ghout the state, and there was a larger thx'.n normal acreage in Illinois in 193^!-- This state prodiijced over half of tho nation's 193^ crop of soybeans.

Chinch bug daaaage extended over inost of the state Last year, but 7;as much more severe in some sections tha.n in others, a-id v/as much worse on some farms than on other farms in the same communiby. Conditions affecting crop yields were very spotted- This accoujits in part for the wide variation in farm earnings from one section of the state to another, and the v^rider va,:.-iations than \is-aa.l from, one farm to another.

■ff. F. Purn-ll, fairn adviser in Mercer County, cooperated in supervising and collecting the records or. v/liich this report is based.

i'o

-2-

Industrien other than agriculture again shov/ed improved earnings over the pi-^viotis year. A gi-oup of SUo industrial corporc.tions reported hy a nationally known 'banlc showed avera/je earnings of 5.O pei'cent on their in- vested capital in 193^'+> as compared with 3-^ percent for the sone corporations in 1933' ^ similar group Imd a loss of one-tenth of one percent in 1932 and average earnings of 3.3 percent in 1931-

In cornparinj the average earnings of corporations vdth the rate earned on investment on accounting farms it is well to keep in mind that in corporation accounting, charges are made for management, while in the fairn accounts no comparahle deduction ha,s "been mo.de. On the other liand the fanner and Ms family receive food, fuel, and other items of living from the^ farm for whicli the farm has received no credit in the records used in this report. For the average central Illinois farm family, consisting of five persons, tlie value of the food and fuel ftirnished "by the farm was about $250 in 193^, when estimated on the basis of the wholesj.le price for farm ^^roducts.

Variations in Jarm Incomes

There was a much wider range in farm earnings on the accounting farms in 193^ than in 1933- This v^as true for the farms included in this report, and v;as also trvB when the average earnings 01 farms in one section of the state are compared with the earnings of farms in other areas.

The e"treraely wide range in earnings was due to a comhination of ph;v''sical and economic factors. Eie average j^ields of wheat and soybeans were rn-uch better, compared with the five-year average, than the average yields of corn and oats. This variation favored those sections which had larger a,creages of the hi;glier yielding crops in 193^- There was a.lso a wide range in average corn yields from one section of the state to another, as well as between individuP-1 farms in the same area. The price of grains was high in 193'^» 3-s compared with prices of livestock and livestock prodti^cts. Fa.nas v/here grain sales constitute a large part of the fann income thus had an advantage. The rapid increase in the prices of fann products, particularly grains, favored those fairos whdch h_ad large stocks of salable products on iTiand at thje beginning of the year. Many farmers who inventoried the corn on hand at the beginning of 193^ at Uo cents a busliel, later sold this corn for SO cents.

In this group of hy accounting farms the most siiccessful third shows a,n average net income of $U,123, v;hile the average net income of tlie least successful third of the farms was only $919- I^^ ^933 the comparable net incomes for the tv;o groups was .^)2,SS3> and $1,2^5 respectively.

59

Investments, Receipts, Expenses and Earninj-s on h^ llercer Coinitv Earins in 193'^

I':enis

COITAL IF.^dTI.SITTS

Land ----------

Farm iraprovements- - - -

Livestock total- - - - -

Horses --------

Cattle ___--__. Eogs --._---_-- Sheep- --------

Poultry- -------

Machinery and equipraent- Peed and grains- - - - -

Total capital investnent

ZSCEIPTS Airo 13T IlICEEASES

Livestock total-

Korses ------------

Cattle

Hogs (including AAA payraents)-

Sheep- --------- -

Poultrj'- -----------

Egg sales- ----------

Dairy sales- ---------

Peed and grains (including AAA paxinents) -----------

Later off farm ---------

Miscellaneous receipts - - - - -

Total recei-ots & net increases

I

iOUl'

lair.i

Average of U3 faiTOS

22 SOI

k 3S5

2 '5Sg

U19

1 395

615

02

67 1 322 1 852

$32 9Ug

14 i.ipst prof ita^ble

farms

I

Uo 96

1 2

373 67

95 100

300

7S

23

$ U U72

23 190 h 50s

410

. 2 001

690

131

SO

1 229

2 'S25

ik least

prof itahle

farras

$'1Lj£.

k

Us

2 059

3 159

61

151 1U6 36k

126 65 66

$ 6 2^^

23 639 U Uoo

U6U

1 lis

612

92

66

1 U16

1 3S9

$11

?02

3 IbS

7

93-i-

1 753

:6

76 237

$ 3 i;0

iPCPEHSES AM) I'TZT D3CSZASES

laim iraprovements- - - -

Horses ---------

Miscellaneout" livestock

decreases

Ilachinery and equipment- Peed and grains- - - - -

Livestock expense- - - -

Crop expense ------

Hired la"bor- ----- -

Miscellaneous e:rpenses - - - - _ Total exTJcnses & net decreases

J)00

73

Us

122

22U

2 1+5

26

g 1 369

239

U13 62

170

Ul

27s

29

1 f^02

325

366

3"^3

109 158 225

26

- o

22

RECEIPTS LESS SXPSITSES-

Tc':ai unpaid labor- -------

Operator's lahor ------

Pamily lal)or --------

■t income from investment and management -----------

|EtATE EAPlvTED ON IMESTIIEIJT

?etum to capital and operator's lator and management ------

yo of capital invested- - - - - -

i^^OR A1>ID LwIAG-ZMElTT WAC-E

^ 3 103

632 524 10 S

2 U7I

S20

5U0

so

h65

u 123

"0-.

11. s6^.

6U9

5+92 1^7

919

2 99R 1 6U7

$_i_3Us

4 bo3

1 73s

1 ^_Lf'2^

1 hril

1 660

$ -2U^.

Ti?-e follov/ing tal)le shows the munoer of far.-s having certain net incoraes per acre. There was a marked difference between the raost successful and the least successful fams.

Avera,?:e net in- come per acre

$21 and over . . in

17

1'-

13

11

Iromher of fams

3 2 1

7 6

5

AvcraA'g net in- come per a.cre

$9

7

5

3

i

-1

ITumher of farms

3 2

2

3 1

A further study of the farm businesses made by comparing the in- vestments, receipts, and expenses of the group of far.ns v?ith the highest net incomes, with those having the lowest should throw soiae light on the question of why soine fanners are more successful than others. This comparison is shown in the table on page 3 •

The most s"accessfiil farms averaged 275 acres each, the least suc- cessful 217 acres each. This difference in size accounts in part for the va,riation in the average investment, receipts, and expenses in the two groups. Difference in receipts from the sale of hogs, cattle, and feed and grains accounts for most of the difference in income between the two groups. Tlie most s^iccessful farms Imd less total expense per faim, and per acre, incltiding the charge for faiaily labor, than the least successful farrr,s.

Changes in Inventories and Inventory Values

'Tlie year 193^1- wa^s similar to 1933 i^ tha.t the prices of fa.ira products continued to advance, causing further increases in inventory values. Owing to the poor crop yields in 193^ there were fewer bushels of grain on Iiand to inventory at the end of tlie year than at tho beginning. The value of the smaller amoimt of grain, however, was greater tha,n for the larger amount on band at the beginning of the year.

Bushels of Corn Inventoried

Jan. 1,. 1_".^4

Dec. ^1, I93U

Average of all farms. ...

Average of lU most successful farms . Average of lU least successful farms. Your farm . .

3 261 k 60s 2 353

1 S36 3 03U

The .nost profitable farms liad a much larger inventory of corn

both at the beginning and at the end of the year. This difference accounted

for a considerable part of their higher receipts and net increases from feed and grains.

^he average inventory increase for the accoVaitin:°; farms in Llercer Countj'- was $o57 in 193^» ^-s compared w ith $799 in 1933> ^-^d an inventory loss of $1,222 per farm in 1932- There were increases of $^9o in total livestock, and $319 in feed and grain, and decreases of $20 in machinery and $132 in im- provements. Ihe decrease in machinery was the smallest it has been since I93O1 indicating that i.iore of the necessary repairs and replacements are be- ing made, but still not enough to offset the depreciation costs.

Inventory Changes for 193^

Beginning Items inventory

^ I-I-3U

Total livestock $2 580

Feed and grains 1 S52

Machinery 1 322

Improvements (except residence). . U ^55 Total $1G lil7

Closing

inventory

12--a-^U

$3 03'[

2 371 1 302

$11 004

Inventory change s

— 193lL___

$

4^6

319

-20 -132

Imentor;^^

changes,

yoar farm

$

Some Adjustments on Mercer Covjity Farras Since 1929

Fanners have been forced to make adjustments in their cash expend- itu.res as the result of clianges in their cash incomes. From 1929 through 1933 farm operating costs declined each year, but the year 193'!" bro^aght a reversal of this trend. In 193'^- total operating expenses were 2S cents an acre higher than in 1933> ^"hile cash operating expenses were $3,057 per farm in 193'-t-. ^^ compared with $3»093 per farm in 1933- There were decreases in expenditures from the previous year for livestock, labor, and taxes, v/hich more tham offset the increase in expenditures for feed, crop expense, improvements, and machlii- ery. Indications point to an expansion of spending for 1935> particiilarly for machinery and improvements, since farn^ers liave postponed replacements and re- pairs of these items du-ring the four-year period since 1929*

Cash Income and Expenses on Accoimting Fauns in iviercer County for 1929 and 193^

Items

Your Average cash You.r

faiTO expense per farra farm 19^U 1914 19*29 I93U

Average cash income per farm 193^ 1929

$

Livestock . . ,

Feed and grains

Macliinei-y

Improvements. ...

Labor

Miscellaneous

Livestock ejrpense

Crop expense .........

Taxes

Total . . .$

$ 5SO $2 253

1 255 1 762

133 219

22U 57U

26 3^

kS 82

122 193

_2jJ5. 376

$3 057 $6 329

Sxcess of cash sales over expenses. . ,

Increase in inventory -

Income to labor and capital (p.eceipts less expenses)

$

9

$k IJ55

663

76

g

7S 23

$£

boo

1 075 153

2

3^ 5

$5 303 $9 935

R2 2U6 $3 606

857 6U3

3 lu3 U 2U9

Wd

Tne cu-nulr.tive effect of several years of low agricultural prices on tlie demojid for manufactxijred goods can readily 'be ascertained liy a com- parison of cash farm expenditiires in 193*+ with those in 1529- Althoijgh the average cash income in 193^ ^"'^^ 53 percent of that in 1929, cash ex- penditures were only US percent as large. In 193^ livestock purchases v/ere 25 percent, and feed and grain purcliases Jl percent as large as in 1929 • In 193'"'' these farms paid out 53 percent as much for machinery, and 63 per- cent as much for crop expense as in I929. while taxes were rediiced to 65 per- cent of the 1929 level.

Comt)arison of Farms With Hi'5:h and Low Earnings

The most profitahle farms in this study had net receipts per acre of $15.01, as com.pared with $U.23 for -the least profitable group. The reasons for this difference may be obtained from a study of the data on pages 3 ^J^cL S.

The most profitable farms averaged 57-5 acres lar.::er, and had a larger proportion of their land area tillable than the least profitable farms. They had 17' 7 acres more corn, 2.7 acres more oats, 5*7 acres more iiay, and 26.2 acres more tillable pasture than the least profita.ble farms. The most profitable famis carried larger inventories of feed and grain on -vhich to make a profit when prices advanced. The most profitable farms also produced 10. 9 bushels more corn, and 3*5 bushels more oats than the least profitable farms.

The most profitable fairns had more livestock, and were more effi- cient in their livestock operations than the least profitable farnas. The most profitable farms ha-d an investment of $11.2"^ an acre in prodioctive livestock, as compared with an investment of $9-^3 ^-^ acre on the least profitable farms. The most profitable farms fed $U,1|19 v;orth of feed to productive livestock, securing a return of $13^ for etich $100 v;orth of feed fed, while the least profitable fanns fed $2,5SS worth of feed, and secui-ed $122 for each $100 worth of feed fed.

The larger income on the most profitable farms was scctired with a total operating cost of $7-72 per acre, as compared witn $10.^6 per acre on the least profitable farms. Man labor costs per crop acre were $6.15 on the most profitable farms, as compared with $6.&'7 for the least profit- able farms. Power and machinery costs per crop acre nmoi^ntf^d to $4.29 ^^ the most profitable farms, and tk.SO on the least profitable faims.

103

-7-

Infli'Bnce of A.yi Pro.'crai'.is on Gro'opin^ Systems and Farra Incomes

The faria-account records in Illinois were influenced "both, directly and indirectly "by the corn-hog and wheat adjustment prograins. A large per- centaf;e of accountin,;^ farms was under one or hoth contracts in 193^- The acreages of corn and wheat on these farms v/ere thex-efore less than normal. This should have resulted in lower operating costs. Corn-hog tenefit pay- ments for the entire 193^ program will total ahout ^!-0 million dollars for the state, while whop-t henefit pay.nents will he ahout 2.4 million dollars.

The "benefit payments for accounting farms are indicated in the following tahle, wMch shows the average pa^^:lent for those farms receiving pa-yments, and includes only those payments received "by the cooperator "before the 193'!- hooks were closed. In some causes only the first corn-hog check is included, while in other ca,ses the second check had been received. The second pa;/ments not received, and the third payments -.Yill be entered in the 1935 hook.

ilAA Benefit Payments Received in 193'-*-

Coi-n '>\\h.eat Hogs

Uumter Amount llumber ilnount Huj-aher Amount ""„"' "if

of per of per of per . 1/ r, -, J. r. ^, ^ paiincntsi./ fairns larm l.arr;is ia.rvi larms farm

1/3 most profitable farms ik $l66 2 $kC ik $300 $370

1/3 least profitable farms ik 110 0 — lU 225 35^

All accounting farms U3 125 3 3'3 ^13 258 3S6

1/ Total benefit pa^^nents reported by accounting farms ujider contract for j-53^'" divided by total niTnber of accounting fa.rms.

On ma.ny farms the cash received from benefit payments will more than pay for the ysar's taxes. As p.n average for all accounting farms, the pa;anents actaa,lly received were $1^1 more than sufficient to pay the 193^

It is interesting to note the use m.ade of the contracted acres on the accorinting fai^ns. The average farm ha„d 20-3 contracted acres vrtiich v;ere used as follows. U.2 idle; 2.3 mired clover; 1^6 s"7eet clover; o.'( soybeans; ,J alfalfa; and 2.g acres v/ere in othi^'r crops. These data in- dicate that most farmers made good use of their contractec' acres from "he standpoint of soil imorovement, a,s a large part of them wert in legfmes. When the Governraent restrictions on the use of crops grown on contracted acres were removed, they were on man;'" farms the most profitable crops as they furnished hay and pasture where badly needed in drouth areas. The legumes had the further advantage of being immune to a^utack from, chinch burs.

Farm earnings were influenced indirectly by the A_AA programs in that the reduction in production increa.sed the price of the coLmodities involved. The drouth v/as a more impcrta.nt factor in reducing production than the adjustment prograJiiS, yet if it had not been for the corn-sealing prograjn, there would have been but little corn in tlie ha.nds of farmers at the time the major price adva,nce bocaire effective-

factors "elpir;;-:; to AnalyL;e the PaiTn Business on U3 '..fercer Go'onty Farms in 193^^'-

Items

Size of fairas — acres --------

Percent of land area tillage 1- - - -

Percent of tillal^le land in hay and pastixre --------------

Gross receipts per acre- ------

Total e:rpenses per acre- ------

I^et i-eceipts per a.cre- -------

Value of land per acre ------ -

Total investment per acre- - - - - -

Acres in Corn- -----------

Osits- _______

Soybeans- ---------

Hay

Tillable pasttire- - - - - _

Crop yields — Corn, Tdu. per acre- - - Oats, Du. per acre- - -

Yoiir farin

Valtifi of feed fed to productive L.S. Ee turns per $100 of feed fed to productive livestock- -------

Hetxims per ?^100 invested in:

Cattle- ---- --

Poultry --------

Pigs weaned per litter -------

rnccme per litter farro\7ed - - - - -

Dairy sales per dairy cow- - - - - -

Investment in productive L.S. per A. Receipts from productive L.S. per A.

Average of U3 fairns

221.5

76. S

31.2

20.19

5.03

11.16

103 1U9

53.3 22.2

1.5

35-7 51. U

36.1

14 mo s t

prof itaole

faiTTis

27U.7 76.6

51.7

22.73 7.72

15.01

Sk 127

3 291 132

117

232

6,

loU

^3

10.86

19.55

66.9 2U.6 2.7 1+3.1 65.7

39-3 5-7

.0

4 U19

i3U

115 250

b. 101

hi

11.

21.

87

Tl le

ast

profitable fariiis

217.2 70.0

50.0

1U.69

10. Uo

U.23

109 133

i;9.2 26.9

l.S

37.H

39-5

2S,U 2,2

2 5S5 122 101

99

U6

I/.an labor cost per crop acre - - - Machinery cost per crop ecre - - - Po^•/er and raach. cost per crop A. -

?ams 7;ith tractor --------

Va-ire of feed fed to horses- - - -

Man labor cost per $100 gross income- --..--------_-

Zrrpenses oer $100 gross income - - Parm improvements coot per acre- -

Excess of sales over cash emense: Increase in inventory- ------

Rate earned on investment- - - - -

Gross receipts per farra- _ - _ _ -

b.79 3.10 U.55

53f. 212

IS

145 1.19

2 2^6 S57

7.50f. k ^472

b.15 2.S5

U.2Q

256 lU

3U •S7

2 297

1 oli6

11 . sSfo S 2K3

6.27 3.20

UcSO

57^ ISO

25 71

lonO '

1 -Ms

20

2. Hi

3 -90

105

Chart foi" Stud^-ing tlie Lfficiency ox Various Parts of Your B"JsiiiesG.

Mercer County, 193^

rhe ntmiTDers alDove the lines re 4-3 farms inclucLed in tlds repo By drawing a line across each farm in that factor, you can c ■/our locality.

ross the middle of the pa^e are the averages for the rt for the factors named at the top of the page . colmtm at the nuraher measuring the efficiency of your ompare your efficiency with tliat of other fai-raers in

Bushels

— -II —

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Gross

per acre

fn

crop acre

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•SOO

20

-1.0

11

__

2q

82

11.79

9.^3

-S

1 -2llf3 -

1

1

_ir,_ Influence of ?rice Chanp^s en P^m Spriiin^s

Far^i prices iu 153^ r.dvsnced more rapidly than did the prices of corxiodities v/hich fanners bovi^t. Fr.Hiiers of the United States as a group could eiccliange their fami products in 193'+ ^or l^'r -oercent as many goods as for the -oeriod 1903-151^, wMle in 1533 '^l^^y received only 6m- pei-cent, and 1932 only 61 percent as much in exchange for what they bad to cell a.s in the prewar period. In the :aonth of Fe'bii'-B.ry, 1935» tMs index of purchasing power had increased to SJ percent of prev/ar, the index of farru prices ha.ving risen to 111 as co:::pared with an index of 127 for comniodities which fanners h-uy. Wiien the line representing lami pi-ices drops "oelow the line represent- inc ■"rices ;"_aid hy fa.rme.rs, fami earnings are very low, but when these lines coue close together farru earnings increase. (Sec following graph.)

Index of Prices

Rate S:inied

200 175 150 125

100 25

0

— _ . C"

rm price D in U. Z. A^og- l^O'i-J-oly 131^ = 100 = Prices paid "by farrr.ers. Au?. 1909-JTily 19l'4 = lOf

[j - Rate earned on inrestraent, accouriting fams, central Illinois

1917 'IS 'I9 '20 '21 '22 '23 '2l-r '25 '26 '27 '2K '29 '30 '3I '32 '}3 ijU

107

-11-

Sinco the pric*^ of zone fam producta advanced mtch more raridly during 193'+ tiian other produjcts, it is evident that some farm3 v/onld "benefit iTiore than others, depending upon the kind and quantity of products sold. Grain prices advanced much ;aore rapidly than livestock prices; which result- ed in a very had price ratio for farmers who "buy large nuantities of feed. [The average Illinois farn price of corn was Ul cents a huchol in Je.nu/'.ry, I93U; it advanced steadily mitil the end of the year when it wa-s SS cents a "bushel. Other grains made marked advance although not so great an advance as corn. The price of hogs fluctuated from a low of $3.20 a hiindred in May to a high of $6v?30 in September . The low point in the fall csme in Ilcvemher when the average price was $5.10. The price hr^s advanced quite rapidly since ITovcmber, the a\'erage price "being $7 •5^'^ ^"0^ February, 1535* Beef cattle were worth $H.10 a hundred in January, 193'+ a^d. advanced each month until Seutember, when the price was $5.90. They dropped to ^j.'^C in December but increased again to $7-^ foi' February, 1935'

The year 193^ set a record for the reduction in tiie numbers of livestock. The percentage decr<=asrs by sp>ecies w=!rc as frllows: horse?, 1.1 percent; mulps, ?.G percent; all rattl=', 11.2 perceiit; sl:if p, ^^-7 percent; hogr, 35«3 percent. YiTien all species are combined on the basis of their capacity to consume feed, the reduction was I3 percent. This i"educticn will greatly reduce the demand for feeds produced in 1935*

The relative change in prices of ircpcrtant corm-.odities may be noted in the following graph, which shows the average Illinois farm prices by months as a percentage of the average prices for the period 19-^'1-1929.

Percent 120

Price Indices, 193^

(1521-1929 = 100)

.iav j-une July Aug.

Sent

Oct. Nov. Dec,

Jan. Feb. Mar. Apr.

.411 commodities index r-epreserts the -..'holesale price of a large n-umber of comraodities for the United States, £S computed by Bnj-eau of Labor Statistics. Grain and livestocV. indices rerrescnt average monthly fara: prices in Illinois.

-12-

Variation in Earnings Over Five-Year Period

A comparison of production, income, and expenditf.res on the ac- coitntin^- farms in Mercer County for the last five years is very interesting ■because of the violent fluctuations in price level. Although the 193^ crop was nearly a failure and followed the smaller than avera^-e crop of 1933> ^^ inci'eased prices of ooth ^rain and livestock caused the 193^ earnings to he the hic-rhest for the five-year period 193^-193^'

Earnings in 1935 ^^ usvsl will depend upon individual efficiency, r/eather, and prices. IVith no i-rnal weather conditions, prices of grain are likely to go down to ;\ nore normal level which will give individual effi- ciency the responsihility for higher earnings on each farm.

Comparison of Earnings and Investments on Accou:iting Farr.s in Mercer County for I93O-I93U

Items

ITumoer of fairas ---------

Avernge si:^c of farms, acres- - -

Average rate earned, to pa;'^ for

raa.nagencnt, risk and capital - - Average lahor and managemevit wage

G--OSS income per acre ------

Operating cost per acre - _ - - -

Average value of land per ncre- - Total investment per acre - - - -

Investment per farm in:

Total livestock- ------

Cattle --

I-Iogs

Poultry- ----------

Gross income per farm - -

Inccmc per farrr: from:

Crops- -------

Miscellaneous income Total livestock- - -

Cattle

Dairy sales- - - - -

Hogs

Potiltry- ------

1930

1931

ko

260

'.1':

$-77U

20. 0?

1G.3U

13s

202

5 kl6 2 6U0

1 sGo lUq

37U

Average yield of com in hu. Average yield of oats in hu.

35 5 339 1 1^6

333

3 37 s

238

U9 Ul

2 '40

-2. $-2 969

II.7I+ 17.09

129

1^;0

k 296

bb5

072 130

315

771

U"0 197

S72

17U

Rl 39

1932

1933

2U0

-i.p-'i

$-lU2

10 . '-■,k

12. 5U

111 162

■^ 223

1 61s 9Gg

9S

2 33 U

2 501 SbS 211

1 229 1U9

60 U5

36 2U4

5 $70b

.5^

16.90

S.75

102 1U7

9b7 ^65 7ii6

so

h 125

7!:^

35 31^ okj 231

"31 iiU

53

36

L93H

U3 222

7.5^ 1 3US

20.19 9.03

103 1U9

2 5oS

1 395

615

67

h U72

23 k ^71

1 39S 300

2 373 195

16

109

AIJITUAI FAB,I BUSI^IESS HSPOHT OK FORTY FAK.IS IN HEiroERSON CQTJiJTY, ILLINOIS, I93U

P. E. Johnston, J. B. Andrews, and J. Aclcerman*

The farm earnings of Uo account-keeping famers in Henderson County showed an increase in 193^ over those of 1933- This is the second consecutive year of improvement in the "business of these farms. The three years previous to 1933 showed very low returns.

These UO accounts show for 193^+ ^''^ average net income of $1,639 per farm, as compa.red with an averaj^e of $1,553 i^ ^933 sind an average net loss of $5S6 in 1932 • The average cash income in 193^ was $3,171 per farm, the cash "business expenditures $l,Uo8 per farm, leaving a cash "balance of $1,623 "to meet interest payments and family living expenses. (Those who keep home account "books use the latter figure to represent the cash contri"bution of the farm to the "realized family income".) Besides the cash income, there was an inventory increase of $629 per farm due to the rise in the prices of farm products. This increase, added to the cash "balance, resulted in an average excess of receipts over expenses of $2,312 per farm. The inventory increase was a smaller part of the total farm income in 193^ than in 1933

These data must not "be considered representative of average farm conditions for they were secured from farms which are larger than average, and which were managed "by farmers who are more efficient than the average of all farm.ers in the county.

For the state as a whole, farm earnings were better in 193^ than in 1933 i^ spite of the fact that com and oat yields were very low due to the drouth and to chinch bug damage. In the western and so'athwe stern parts of the state the drouth caused an almost total failure of both corn and oats. This accounts for farm earnings being lower there than in other parts of the state.

The com crop was best in the southeastern part of the state, and was fair in the northwestern section. l/Vheat yields were particularly good in the south and central portions of the state. Soybean yields were very good throughout the state, and there was a larger than normal acreage in Illinois in 193^- This state produced over half of the nation's 193^ crop of soybeans.

Chinch bug damage extended over most of the state last year, btit was much more severe in some sections than in others, and was miich worse on some farms than other farms in the same cominunity. Conditions affecting crop yields were very spotted. This accounts in part for the wide variation in farai earnings from one section of the state to another, and the wider variations than usual from one farm to another.

* G. B. Whitman, farm adviser in Henderson County, cooperated in supervising and collecting the records on which this report is based.

110

Industries other than atTriculture again showed improved earnings over the previous year. A f^roup of 8^K3 industrial corporations reported "by a nationally known harJc showed average earnings of 5'0 percent on their invested capital in 193^> ^^ coFipared with 3«^ percent for the same corporations in 1933- A similar group had a loss of one-tenth of one percent in 1932 and average earnings of 3 '3 percent in 1931*

In comparing the average earnings of corporations v/ith the rate earned on investment on accounting farms it is well to keep in nind that in corporation accounting, charges are made for management, while in the farm accounts no comparahle deduction has heen made. On the other hand, the farmer and his family receive food, fuel, and other items of living from the farm for which the farm has received no credit in the records used in this report. ?6r the average central Illinois farm family, consisting of five persons, the value of the food and fuel furnished hy the farm was about $250 in 193^^. when estimated on the basis of the v/holesalo price for farm products.

Variations in Farm Incomes

There was a much wider range in farm earnings on the accounting farms in 193^ than in 1933- TMs was true for the farms included in this report, and it was also true when the average earnings of farms in one section of the state are compared with the earnings of farms in other areas.

The extremely wide range in earnings w?.s due to a combination of physical and economic factors. The average yields of v;heat and soybeans vrere much better, compared with the five-year average, than the average yields of com and oats. This varia,tion fp.vored those sections which had larger acreages of the higher yielding crops in 193^- There was also a wide range in average corn yields from one section of the state to another, as well as between individual farms in the same area. Tlie price of grains was high in 193^ ^-s compared with prices of livestock a.nd livestock products. Farms \7here grain sales constitute a large part of the farra income thus had an advantage. Tlie rapid increase in the prices of farm products, part- icularly grains, favored those farms which had large stocks of salable pro- ducts on hand at the beginning of the year. Many farmers who inventoried the corn on hand at the beginning of 193^ ^^ ^'^ cents a bushel, later sold this com for SO cents.

In this group of UO accoxmting farms the most successful third shows an average net income of $2,^99. while the avera,ge net income of the least successful third of the farms was only $72^. In 1933 'the comparable net incomes for the two groups was $2,5^9, and $726 respectively.

Investments, Receipts, Expenses and Earnings on kO Henderson Covaity Farms in 193^

llx

Items

Your

fann

Average of kO farms

13 most

profitable

f aiTis

13 least profitable

farms

CAPITAX im^Sg/IEITTS

Land -----------

Farm improvements- - - - -

Livestock total- - - - - _

Horses ---------

Cattle ---------

Hogs ----------

Sheep- ---------

Poultry- --------

Machinery aid equipment- - Feed and grains- -----

Total capital investment

Ik 599

3 022

1 506

322

65U

3Si|

92

54

931 1 219

$21 277

13 253 2 237

1 276

322

53 s

3^2

IS

SO

919

1 351

036

;i;i^-

lU 661

3 556

1 039

35s

5I11

UU7

235

5g

969 1 ikh

$21_

969

ECEIPTS Airo I'lET I^ICBBASES Livestock total- - - -

t

Horses -----------

Cattle

Hogs (including AAA payments) Sheep- -----------

Poultrj''- ----------

Egg sales- ---------

Dairy sales- --------

Peed and grains (including /AA pa^Tnents) ----------

Labor off farm --------

Miscellaneous receipts - - - -

Total receiots & net increa,ses

Okc

U2

kh2

1 213

61

63

kz

179

1 oUg

71

1

3 log

il^

33 U62

1 3Ug

30

70

U6

ig6

1 920 71

.* U 169

1 975

5U

U26

1 096

120

6U

U6

169

10s

i

$ ? 133

SXPEITSES Aim IIET DECREASES

Farm improvements- - - Horses --------

Miscellaneous livestock decreases

Machinery and equipment- - - -

Feed and grains- -------

Livestock expense- ------

Crop expense ---------

Hired labor- ---------

Taxes- ------------

Miscellaneous expenses -----

Total expenses & net decrease:

139

23U

-31 109

100 21g

25

lliR

267

2b

153 12k

267 2k

$ g36

$ 1 006

126

206

71

S3 lg2

25

$ 73J

ECSIPTS LESS EXPEiTSES-

total unpaid labor- ------

Operator's labor - - - - -

Faiiiily labor -------

fet income from investment and

management _____-_-

lATS EARl^TSD 0!T im'ESTI/IElIT

Btum to capital and operator's labor and management ----- % of capital invested- - - - - I^OR AND MAUAGEIEITT WAGE

I,

$ 2 312

673 5U0

133

161

639 7-70'^

$ 1

335.

2 179

1 06U

$ 1 115

sek 5U0 12U

2 U99

3 039 952

087

671 5U0

131

72U

3.^0^

1 26k

1 Of"ig 166

112

The following table sIioy/s the nimher of fai-ras having certain net incomes per acre. There was a ma,rked difference "between the most successfi^J. and the least successful farms.

Avera;^ net in- corae per acre

$19

17

15

13

11

9

I'Tur-her of Averaj^e net in- :Ttim"ber of

faras come per acre farms

1 $7 5

2 r^ S

0 3 1

3 1 2

2 -1 3

13

A further studj/' of the farm "businesses, made "by comparing the in- vestments, receipts, and expenses of the group of farms v/ith the highest net incomes with those having the lowest, should throw some light on the question of why some farmers are more s-'occessful thaji others. Tliis comparison is shown in the ta"ble on page 3*

Tlie most successful farms averp-ged 23O acres each, the least suc- cessfxil 171 acres each. The most profita"ble farms, while having a larger in- vestment in feed and ,';rains, had a smaller total investment than either the least successfTxL group or the average of all accounting farms. Despite their smaller total investment, the most profitable farais had a larger income than the least successful farms, due chiefly to their larger returns from feed and grains and hogs. Althou.gh the total expenses per farm were higher on the most profita'ble farms, the total expense per acre, including the claarge for family la'bor, was less than it eas on the least profita"ble farms.

Changes in Inventories and Inventory "Values

The year 193^ '■'^^^ similar to 1933 1^ that the prices of farm pro- ducts continued to advance, causing further increases in inventory values. Owing to the poor crop yields in i93'^> there were fewer bushels of grain on hand to inventory at the end of the yar than at the beginning. The value of the smaller amount of grain, however, was greater than for the larger amoimt on hand at the beginning of the year.

Bushels of Corn Inventoried

Average of all farms

Average of I3 most successfril farms. Average of I3 least successfiLl fa.rms Your farm

Jan. 1. 19 3 ^^

2 592 2 022

Dec. 31. I93U

1 320

2 155 631

The most profita.ble farms had a much larger inventory of com both at the beginning and and of the year. This difference accoimts for a consider- able part of their higher receipts and net increases from feed and grains.

-5-

Tlie average inventory increase for the accounting farms in Hender- son County was $629 in I93U, as compared with $1,003 in 1933. and an inven- troy loss of $811 a farm in 1932. There were increases of $150 in total livestock, $U99 in feed and grain, and $62 in machinery, v/hile improvements showed a decrease of $22. S"uch an increase in inventor^/ as that for machin- ery results from the value of new replacements during the year "being in ex- cess of depreciation costs. This increase is of considerahle interest for it is the first time tliat such an increase in machinery inventories has occurred since farm earnings "began to decline so drastically with the gen- eral depression.

Inventory Changes for 193^^

Beginning Items inventoiy I-I-3U

Total livestock $1 506

Feed and grains 1 219

Ma.chinery 93^

Improvements (except residence). 3 022

Total $6 '678

Closing inventory

Inventor^''

changes

I93H

Inventory

change s ,

your farm

$1 656	$150
1 71s	H99
993	62
2 9^	-S2
$7 307	$629

$

Some Ad.lustraents on Henderson County Farras Since 1929

Farmers have "been forced to make adjustments in their cash ex- penditures as the result of changes in their cash incomes. From I929 thro"ugh 1933 farm operating costs declined each year, "but the year 193^ "brought a reversal of this trend. Total operating expenses were 36 cents an acre higher in 193'+ than in 1933) while cash operating expenses were $1,US8 a farm in 193^> as compared with $1,538 in 1933" There were significant increases in expendiutres over the previous year for machinery, feed and grain, and crop expenses, and significant decreases in expendiutres for livestock, taxes, and lahor. Indications point to an expansion of spending for repairs and re- placements for machinery and improvements in 1935 > since farmers have post- poned purchase of these items during the four-year period since 1929-

Cash Income and Expenses on Acco\mting Farms in Henderson County for 1929 and 193^'-

Items

Your farm I93U

Ave rage expense I93U

cash per farm

1929

Your farm 193'+

Average cash income per farm

193^	1929
$2 227	$5 ^488
836	1 395
36	135
	5
71	59
1	2

Livestock $

Feed and grains

Machinery

Improvements

La'bor

Miscellaneous

Livestock expense

Crop expense

Taxe :

Total $

$ 329 $1 258

287 SOS

332 739

57 122

100 U72

25 33

31 hh

109 222

218 363

$1 kSS $U 121

$

Excess of cash sales over expenses. .

Increase in inventory .

Income to la"bor and capital (Receipts less expenses)

$

$3 171 $7 0S!4

1 683 $2 963

629 kso

2 312 3 kk3

llU

-S-

The cumulative effect of severr.l years of low af:;ricultural prices on the demand for manufactured goods can readily "be ascertained 'by a com- parison of cash farm expenditures in 193^ with those in 192S. Altho^igh the average cash income in 193^ was !+5 percent of that in I929, cash expendit\u'es were only 36 percent as large. In 193^ livestock purchases wei"e 2o percent, and feed and grain purchases 36 percent as lari-^e as in 1929- In 193^ these farms paid out U5 percent as much for machinery, 3^ percent as much for im- provements, and U9 percent as much for crop expense as in 1929i wMle taxes were reduced to 60 percent of the I929 level.

Comparison of Farms Tfith High and Low Earnings

The most profitable farms in this study had net receipts per acre of $10.39^ as compared with $U.23 for the least profitable group. The reasons for this difference may be obtained from a study of the data on pages 3 s-'^d S.

The most profitable farms were 5S.2 acres larger, and had 23. U acres more corn, J .^j acres more oats, and 6.2 acres more tillable pasture than the least profitable farms. The most profitable farms carried larger inventories of feed and grain on v/hich to make a profit when prices ad- vanced. In addition to the larger acreage of crops, another reason for the larger inventories of feed and grain v;as the higher crop yields, there being an advantage of 8.5 bushels of corn, 2.0 bushels of oa,ts, and 3«6 bu,shels of soybeans per acre in favor of the high-profit group. Because of small acre- ages and low yields, the least profitable farms had an inventory loss of $17^ in the feed and grain account, in spite of the price advance.

The most profitable farms had a smaller total livestock investment, but they were more efficient in their livestock operations tha.n the least profitable farms. They had an investment of $^.7^ s-n acre in productive live- stock, as compared with an investment of $7-59 an acre on the least profit- able farms. The most profitable farms fed $l,5l6 worth of feed to productive livestock, securing a retui-n of $lUl for each $100 worth of feed fed, while the least profitable farms fed $1,713 worth of feed, and secured a ];^tum of $112 for each $100 worth of feed fed.

The larger income on the most profitable farms was secured with a total operating cost of $7«2S per acre, as compared with $S.:23 per acre for the least profitable farms. The man labor costs were $5 '15 P^r crop acre on the most profitable farms, as compared with $6.59 on the least profitable farms, while povrer and machinery costs per crop acre amounted to $2.96 on the most profitable farms, and $3 '28 on the least profitable farms.

-7-

Influences of AAA ProA'rams on Cropping Systems aiid Fann Incomes

Tlie farm-account records in Illinois were influenced toth directly and indirectly "by the corn-ho^'; and wheat adjustment programs. A large per- centage of accounting farms was -onder one or "both contracts in 193^- ^^ acreages of corn and wheat on these farms were therefore less thaja normal. This should have resulted in lower operating costs. Corn-hog henefit pay- ments for the entire 193^ program vdll total ahout hO million dollars for the state, wliile wheat henefit payments will he ahout 2.U million dollars.

The henefit payments for accounting farms are indicated in the following tahle, which shows the average payment for those fa.rms receiving payments, and includes only those payments received "by the cooperator hefore the 193^ hooks were closed. In some cases only the first corn-hog check is included, while in other cases the second check had heen received. The second payments not received, and the third payments will he entered in the 1935 hook.

AAA Benefit Pajnnents Received in 193^

Corn Wlieat Hogs

Numher Arao-unt ITumher Amount ITumher Amount '^'^rage of per of per of per °^ ^-^^ -^1 farms fam faims farm farms farm payments-/

115

1/3 most profitahle farms 1/3 least profitahle faims All accoiinting farms

13	$1^3	1	$25U	13	$1S1	$31+11
13	101	-		13	1U3	2UU
Uo	116	2	176	Uo	16U	289

1/ Total henefit payments reported hy accounting farms under contract for 193^ divided hy total numher of accounting farms.

On most farms the cash received from henefit payments will more than pay for the year's ta.xes. As an average for all accounting farms, the payments actually received were $71 more than sufficient to pay the 193^+ taxe s .

It is interesting to note the use made of the contracted acres on the accoxmting farms. The average farm had IS. 7 contracted acres v/hich were used as follows: 3-9 idle; 1,2 mixed clover and timothy; I.3 sweet clover; 3.3 soyheans; O.9 alfalfa; and 2,1 acres were in other crops. These data indicate that most farmers made good use of their contra.cted acres from the standpoint of soil improvement, as a large part of them were in legumes. When the Government restrictions on the use of crops grown on contracted acres were removed, they were, on many fairos, the most profitahle crops as they furnished hay and pasture where hadly needed in drouth areas. The legumes had the further advantage of heing immune to attack from chinch bugs.

Farm earnings vrere influenced indirectly hy the AAA programs in that the reduction in production increased the price of the commodities in- volved. The drouth was a more important factor in reducing production than tte adjustment programs, yet if it had not heen for the corn-sealing program there would have heen hut little com in the hands of farmers at the time the major price advance became effective.

116

factors Helpir.^- to Analyze the Parr-a Business on ^:0 Henderson Coimty Farms in 193^

r Items	Your farm	Average of UO farms	13 most profitable farms	13 least profitable farms
Size of farms — acres --------		205.3 7S.2 35.1 15. U3 7.>+5 7.98 71 lOU	229.5 79.0 32.3 IS. 17 7.2c 10. S9 58 S3	171.3 1 79.0 37.9 12. U6 8. 23 if.23 86 - 128
Percent of land area tillable- - - -
Percent of tillable land in liay pnd
Gross receipts per acre- ----- -
Total expenses vev acre- ------
!Tet receipts TJer aci-e- -------
Value of land 'oer acre -------
Total investment per acre- -----
		55-3 29.^!-	D s . 3 33-9 5.5 3.9 2U.0 3U.5 30.6 18.9	UU.9 26. )4 .9 U.7 23.0 2S.3 22.1 H.9 15-3
Oats- ------- --
TJheat		3.6
		6.1 22.6 33.7 27. s 5.7 17.1
Hay
Tilla.ble Toasttxre- - - _ _ -
Crop yields — Com, bu. per acre- - -
Oats, bu. per acre- - -
Soybeans, bu. -oer acre-
Yalue of feed f ed t o productive L-S.		1 576 121 oh 191 5-7 93 37	1 516 \\\ 111 207 5-5 96 43 U.7U 9._^3	1 713 112 104 ISO 6.0 95 U2 7.59 11.21
pLeturns per $100 of feed fed to ■productive livestock- -------
Returns per SlOO invested in: Cattle _--_
PoLiltrj'- -------- Pi.^s weaned per litter ------- Income per litter farrowed ----- Dairy sales per dairy cow- ----- Investment in nroductive L.3. Dur A. Receipts from productive L.S. loer A.
	6.0s 9.77
Man labor cost per crop acre - - - -		5.92 1.85 3.0U 52i 193 2U 1 hi,	•5.15 1.32 2.96 b9f. 200 ig 1-10 .63 1 gi9 1 34U I3.i3f^ U 169	6.5^ ' 1.93 1 3.28 31^ 199 33 i 66 •^^ ! 1 537 i -142 3.30^ ■ 2 133 1
Machinery cost loer crop acre - - - -
Povrer ard mach. cost per crop A. - - Farms vdth tractor ---------
Value of feed fed to horses- - - - -
Man labor cost per $100 gross
-Lxpenscs per $100 ;-':ross income - - - Far.a i; iprovements cost per acre- - - Excess of sales over cash expenses - Increa,se in inventory- ------- ?.a.to earned on investment- ----- C-ross receipts per farm- ------
	.6g
	1 683 629 7.70f. 3 168

-9-

Chart for Stuyding tae Efficiency of Various Parts of Your Susiness,

Eenderson County, 193^

117

The nurcliers above the lines across the middle o.

f the

page

are the averages for the

Mo farms incl"dded in

thi s

repoi

t for

■ tlifi factors named at

the top of the page .

By drawing a line across each col-jmn

at the n-umber measuring the efficiency of yoro:

farm in that factor,

you c

,on coi:r3are

yoijx

efficiency with

that 01' other farmers in

your locality.

Bushels

■

Cost

per

Gross

per acre

Lj

crop

acre

0

receipts

<B

■

l-H

P-.

TD

■ifj-

i

U 0)

f-< CO

-p

1

0

&

e t:)

P^

<D -(J

CO

g

c

1

e

0

0 q;

tJ

Ph ."^

<s

ti 0)

0

W CJ

0 -P

(D d)

•H

s

to

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127

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101

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2000

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200

-10-

Infl\xence of Price Clia-ngps on Farm I]ariiin^5

Farm prices in 193^ advanced more rapidly tlv?ji did tlie prices of conmodities which farmers boii^t. ?r?r.ners of the United States as a group could exch-uige their farm products in 193^ for fh percent as many goods as for the period I905-I91U, \7Mle in 1S33 they received only Sh percent, and 1932 only 61 percent as much in exchange for what they had to sell as in the prewar period. In the month of February, 1935. ^'his index of purchasing power had increased to Sy percent of prev/ar, the index of fam prices having risen to 111 as compared vdth an index of 127 for commodities which fanners "truy. Wlien the line representing farm prices drops "below the line represent- ing prices paid "by fanners, farm earnings are very low, but v/hen these lines come close together fam earnings increase. (Sec follovfing graph.)

Index of Prices

Rate Earned

150 125

100

75 50

25

= Farm prices in U. S. Aug. 1909- July I91U = 100

= Prices paid by farmers. Aug. 1909-July I91U = IOC

[j = Rate earned on investment, acco'onting farms, central Illinois

J L.

12^ 10^

6/0

2i

-h^

1917 '13 '19 '20 '21 '22 '23 '2^ '25 '26 '27 '2g '29 '30 '3I '32 ^3^ 13U

11?

-11-

oinco the pric^i of sone fami products advancp-d miuih more rapidly during l^jM tlian other rrcd.u-ctp, it is evident that some faras would benefit .Tiore than otherc, depending upon the kind and quantity of prod'Actc sold. Grain prices ad\o,nced much u'.ore rapidly than livestock ■nrices; which result- ed in a ver^r had price ratio for fanners who 'bi:iy large nuantitien of feed. The average IllinciG farrr. price of corn was ^^1 cents a hur-hel in Jsntvary, 193-)-; i't advanced steadily until the end of the ;/e3r when it was SS cents a. Dushel. Other grains male narked advance although not so groat an adv?.:-.ce as corn. The pi-ice of hogs fluctuated from a low of $3.20 a hujidred in May to a high of $5^.30 in Septenfoer. The lov/ point in the fall came in iToveiXiher v;hen the average price wa.s $5-10. The price has advanced quite rapidly since FoveT.ber, the average price "being $7*5^^' ^o^ j'ehruary, l'-'35" Beef cattle were worth $H.10 a huudrod in January, 193^ s-i^cL advanced each !:nonth i^iitil Se-Dtem"ber, when the price was $3.90. They dropped to $3*'^'- i^ Deceniher hu.t increased again to $7'^ for Fehraa.ry, 1935'

The year 193^ -^'St a record for the reduction in the nu'ahers of livestock. The percentage decr^a.sps "by aj^ecies ^p^re as frllows: horses, 1.1 percpnt; nralf-s, P ,C percent; all ca.ttlp, 11.2 percent; sliippp, '^.7 percent; hogi 35*3 percent. IThen all species are combined on the basis of their capacity to consutie feed, the redujction was I3 percent. This reduction will greatly reduce the demand for feeds produced in 1^33 •

The relative chanj^^-e in prices of ircpprtart conx.odities iray be noted in the following graph, which 3hov/r> the average Illinois farrr. prices by months as a percentage of the avera.ge prices for the period 13";1-1S29.

Percent

Price Indices, 193'^

(1321-1929 = ICO)

une JU-LV

Aug

Jan. Pet. liar. Apr.

All co-xnodities index represents; the wholesale price of a large number of^ cormodities for the United States, ss coiapxited by Buxeau of Labor StalisticSc

Grain and livestock indices represent average monthly fair: prices in Illinois.

-12-

Variation in Earnings Over Five-Year Period

A comparison of production, income, and expendit"U-res on the ac- coimting farms in Henderson County for the last five years is interesting because of the violent changes in price level. 193^ was the second year of very low crop yields, yet tote.l receipts per farm were higher than in any other year in the last three, and were 60 percent of the 1929 gross recetips. Operating costs per acre were lower than in any year of the five except 1933' Thus profits were the hest the coimty had experienced since 1929-

Earnings in 1935» s-s usual, will depend upon individual efficiency, weather, and prices. A normal year will mean larger yields of grain and prohahly lower prices.

Comparison of EamiiTgs and Investments on Accouiiting Fs.nas in Henderson County for I929-I93U

T

Items

1930

1931

1932

1933

193^

llimher of farms -----__-_ Average size of farns, acres- - -

Average rate earned, to nay for

management, risk and capital - - Average lahor and management wage

Gross income per acre ------

Operating cost per acre -----

Average value of land per acre- - Total investment per acre - - - -

Investment per farm in:

Total livestock- ------

Cattle

Hogs ------------

Poijltry- ----------

Gross income per farm ------

Income per farm from:

Crops- -----------

Miscellaneo'os income - - - -

Total livestock- ------

Cattle --------

Dairy sales- --------

Hogs ------------

Poultry- ----------

Average yield of com in bu.- - - Average yield of oats in "b\i.- - -

I2k

2.1fJ $-271

13. U7 10.21

50 202

-2.7^ -2.3f^

$-1 555 $-1 31U

1+1 205

109 153

2 S9S

1 123

1 012 126

3 021

-7 rt-j

08

2 566

270

209

1 9U0

123

37

35

7.02 10.7s

95 137

2 U58

SO6

1 016

9S 1 U21

31

1 390

181 150 92U

U6

5.56

S.l-l-2

86 123

1 919

521

82 1 l!-l0

3^

1 106

200

119

693 67

56 '40

32 21^.9

6.U^

$872

IU.3I 7.09

S3 llU

1 709

830

UlU

62

3 076

1 352

Uo 1 oSU

328

155

1 0U5

«3

h^ ■51

Uo 205

$1 115

7-70?

15. U3 7.^5

71

loU

1 506 6^1+ 3SU

5^ 3 168

1 0U8

1

2 0U8 U^2

179 1 213

28 6

AMUAl I'ASlli BUSINESS HSPOHT ON THIRTY-SIX FAH.'IS II McDOiTOUC-E COUITTY, ILLINOIS, 193^!-

P. E. Jolinston, J. Aclie man , and T. R. Hedges*

Parm earnings on the jS accounting farms in I.'cnonoiigli Coimty av- eraged 5.7 percent for 193^'+- This is the second highest retiu-n during the past five years, while 1933 ^^s.s highest, vi/ith an average retuirn of 6.9 per- cent. The 193*+ return is reiriarkatle, considering the severe droxith and chinch hug damage .

These jS accounts show for 193^ ^-^ avera,ge net mcnme of $1,S79 per fam, as compared with an average of S2,0SU in 1933. ^^d. an average net loss of v$3^7 ill 1932« The average cash income in 193^ was $5'3^'^3 Per farm, the cash "business expenditures $3i036 per farm, leaving a cash halance of $2,307 to meet interest payments and family living expenses. (Those who keep home account hooks use the latter figure to represent the cash contri- hution of the farm to the "realized family income".) Besides the cash in- come, there was an inventory increase of i221 a farm due r.iostly to the rise in prices of farm products. This increase, added to the cf^sh balance, re- sulted in an average excess of receipts over expenses of ^^2,523 a farm.

These data must not he considered representative of average farm conditions, for they v/ere secured from farms which are larger than average, and which v;cre manage:", hy farmers who a.re more efficient than the avera-ge of all fa,rmers in the county.

For the state as a whole, farm earnings were hetter in 193^ than in 1933 J i^ spite of the fact that com and oat yields were very low due to the drouth and to chinch hug damage. In the western and soiithwestem parts of the state the drouth caused an almost total failure of hoth com and oats, which accounts for farm earnings heing lower there than in other parts of the state .

The corn crop was best in the southeastern part of the state, and was fair in the northwestern section. IVheat yields were perticularly good in the south and central "oortions of the state. Soybean yields were very good throughout the state, and there was a larger thaii nomial acreage in Illinois in 193^- This state produced over half of the nation's 193^ crop of soybeans.

Chinch bug damage extended over most of the state last year, but was much more severe in some sections than in others, and was much worse on some farms than on other f arras in the sa;iie community. Conditions affecting crop yields were very spotted, this accounts in part for the wide variation in farm earnings from one section of the state to another, and the wider variations than usual from one farm to another.

^R. G. Donaghue, farm adviser in McDonough County, cooperated in supervising and collecting the records on which this report is based.

122

-2~

Industries other than agriculture again showed improved earnings over the previous year. A group of 2U0 industrial corporations reported "by a nationally known hanlc showed average earnings of 5-0 percent on their in- vested capital in 193^i as compared with 3-^ percent for the same corpor- ations in 1933- A similar group had a loss of one-tenth of one percent in 1932, and average earnings of 3 "3 percent in 1931*

In comparing the average earnings of corporations vdth the rate earned on investments on accounting farms, it is well to keep in mind that in corporation accotmting, charges are made for management, while in the I'arm accounts no comparahle deduction has "been made. On the other liand the fanrier and his family receive food, fuel, and other items of living from the farm for which the farm lia.s received no credit in the records used in this report. For the average central Illinois farm family, consisting of five Dersons, the value of the food and fuel fui-nished "by the farr:i was atout ^^250 in 193'+> when estimated on the basis of the wholesale price for fann products.

Variations in Farm Incomes

There was a much wider range in faim earnings on the accounting laims in 193^ than in 1933- This was trioe for the farms incl'Jded in this report, and it was also true when the a,verage earnings of farms in one section of the state were compared with the earnings of farms in other areas.

The extremely wide range in earnings was due to a com."bination of physical and economic factors. The average yields of wheat and soybeans was much better compared with the five-year average, than the average yields of com and oats. This variation favored those sections which had larger acreages of the higher yielding crops in 193^- There was also a wide range in average corn yields from one section of the state to another, as well as between individtial farms in the same area. The price of grains vras high in 193^5 as compared with prices of livestock a.nd livestock products. Farms where grain sales constitute a large pa.rt of the farin incom.e thus had an advantage. The rapid increase in the prices of farm products, particularly grains, favored those farms wliich had large stocks of salable products on hand at the beginning of the year Many farmers who inventoried the corn on hand at the beginning of 193^'- at ^10 cents a bushel, later sold this com for SO cents.

In this group of 36 accounting farm.s the most successful third shows an average net income of $3,515' w>.ile the average net income on the least successful third of the farms was $353- I^ 1933 ^^e comparable net income for the two grovips was $3>953» and $'-!-95 respectively.

Investments, Receipts, Expenses and Sarnin^s on 36 McDonouf:li Co-onty Panus in 193^

1^3

Items

: API TAX I^TVESTI.GJTS

Land -------------

Fann iraproveinents- ------

Livestock total- -------

Horses -----------

Cattle -- _-___ —

Hogs ------------

Sheep- -----------

Poultry- ----------

Machinery and equipraent- - - -

Peed and grains- -------

Total capital investment -

tSCEIPTS MTD HET liJCRSASES

Livestock total- -------

Horses -----------

Cattle

Hogs (incl-oding AAA payraeats) Sheep- -----------

PoTJltry- ----------

Sgg sales- ---------

Dariy sa,les- --------

Feed and grains (including AAA payments) ----------

Lahor off farm --------

!'Ii seel lane oils receipts - - - -

Total receipts & net increases

i^^PBITSSS Aim ITET DECREASES

Farm improvements- ------

Horses ------------

Iliscellaneous livestock

decreases_

Machinery and equipment- - - -

Feed and grains- -------

Livestock expense- ------

Crop expense ---------

Hired lahor- ---------

Taxes- ------------

Miscellaneous expenses - - - -

Total ejrpenses & net decreases

'^CEIPTS LESS EXPEIJSSS

5tal impaid labor- --------

Operator's lahor -------

Family laoor ---------

|;t income from investment and management- -----------

liES EABIIED OH IF/ESTLEHT

I't-ujrn to capital and operator's ■^lahor and management- ------

^ of capital invested- ------

'30R AIJD I-IA1-TAGE:,IEKT WAGE

Your farm

Average of 16 farms

23

501

7^g 2 027

3US 1 025

5U2

3^

7S 1 503 1 969

$32 7^g

_l

^500

959

2 002 1+2

go log

225 265

5U

2

$ 3 g21

12 mo st prof itahle farms

23 02g k OlU

2 5^3

33S 1 kk6

600

25 96

1 0^6

2 627 $^3 g7g

U 765

63

1 7H5

2 502

35

76

176

log

712 30

1

5 30 s

12 least l^^of itahle farms

23 701

3 315 1 U6U

323' 576 U56

51 3g

1 095 1 3g2

032

36U

1 26s

31

66

U6

257

65

3S

3

$ 2 13s

232

367

72 165 221 207

29

196

3g2

35 igg

2bU

222

2U

^ 1 293

^ 1 371

219 1

303

137

130

17s

2g

5 1 0'+2

$ 2 32g

61+9

517 132

->; li

-11

622

"^06 116

S79

3 515

10.

$1026

3Sfa

7^3

203

353 l.lki

2 396

1 63g

$ 75s

U 021 1 6qU

$ 2 327

S93 1 51+g

-o'^3

12U

The following table sliov/s the n\m'ber of faras liavin,; certain net inco;nes per acre. There wac a marked difference "between the most successful and the least successful fanns.

Avera.^e net income Munhcr of Averr^j'^e net income Humhcr of

per acre fairos "per acre farms

$19 and over 5 $7 1

17 0 5 6

15 2 3 6

13 2 1 2

11 1 -1 1

9 7 -3 and. under. ... 3

A further study of the farm businesses made by comparing the investments, receipts, and expenses of the group of farms liaving the higliest net income, with those having tlie lowest income will throw some light on the question of why some farmers are more siiccessful tlian others. This com- parison is shown in the table on page 3«

The most successful farms averaged 2U5 acres each, the least suc- cessful 209 acres. This difference in size accounts in part for the vari- ation in the average investments, receipts, and expenses in the two groups. Difference in receipts from the sale of cattle, hogs, and ''•rains accounts for most of the difference in income between the two groups. Althoiigh the expenses per farm were higher on the most r^rofi table farms, the total ex- pense per acre, including the charge for family labor, was less than it was on the least profitable farms.

The j-'ear 193^ ^'^^ similar to 1933 i^ that the prices of farm pro- ducts continued to advance, causing further increases in inventory values. Owing to the poor crop yields in 193^9 there were fewer bushels of grain on hand to inventory at the end of the year than at the beginning. The valuB of the smaller amount of grain, however, was greater than for the larger amo^Jiit on hand at the beginning of the year.

Bushels of Corn Inventoried

Jan. 1. I93U Dec. 31. 193^

Average of all farms 3 272 1 229

Average of 12 most successff.l farms . . U 6OI 2 3'+7 Average of 12 least successful farms . 2 3OS 2U2

Your farm

The most profitable farms had a much larger inventory of corn, both

at the beginning and at the end of the year. The rapid rise in corn Brice was an important factor in accounting for the difference in returns from feed and grains .

125

The avera;;e inventory increase for the accounting farras in McDono-ugh Coimty was $221, as compared with $373 in 1933. s-^-d. a decrease of $789 in 1932. There were increases of $211 in feed and -grain, and $86 in livestock, and decreases of $^5 in inprovenents, and $31 in machinery. The inventory decrease in machinery and improvements was the smallest since 1929 on account-keeping farms, and indicates that needed repairs and re- placements are "being made hut still not enough to offset the cuiTent de- preciation costs.

Inventory Changes for 193^

Beginning Items inventory

I-I-3U

Total livestock $2 C27

Feed and grains 1 5^9

Llachinery 1 5^3

Improvements (except residence )3 7^8 Total $y 251

Closing inventory

Inventory change s 19 3^^

Inventory chrnges, your farm

$2 113	$ 86
2 ISO	211
1 h-f2	-31
3 713	-h5
$9 ^7C	$221

$

Some Adjustments on McDonough County Farnis Since 1929

Farmers liave been forced to naiie adjustments in their cash ex- penditures as the result of changes in their cash income. From 193^ tlarough 1933* farm operating costs declined each j'^ear, hut the year 193^ hroxiglit a reversal of this trend. The total operating expenses were 3 cents an acre higher in 193^^ than in 1933> while cash operating expenses v/ere $3>036 a farm in 193^+ as compared with $2,17^ in 1933* I'OW crop yields, combined with the usual large amount of livestock on McDonough County farms, necessitated the purchase of considerably more feed in 193'-'- tlian in 1933* There was also a significant increase in ejrpenditures over 1933 foi" crop expense, machinery, livestock, and improvements. Indications point to an increase of expenditures for machinery and improvements in 1935 » since farmers have postponed repairs and replacements for these items duxing the fo"ar-year period since 1930.

Cash Income and Expenses on Accounting Farms in I.IcDonou<5h County for I929 and I93U

You.r Average ca.sh

Items farm exr)ense per farm

193^ 19^^ 19~

Livestock $ $ 65I $1 5U3 $

Feed and grains 1 O97 1 30 8

Machinery 405 0O6

Improvements IS9 UOI

Labor 221 k],S

Miscellaneous 29 2U

Livestock expense 72 79

Crop expense I65 266

Taxes 207 318

Total $ $3 036 $U 981 $

Excess of cash sales over expenses $

Increase in inventory

Income to labor and capital (Receipts less expenses).

lour farm

19 ^U

Average cash i nc ome per fara

193U	1029
$U c6<^	$6 :37
1 151	1 508
69	S3
2	U
5U	^1^
2	3

$5 3 43 $S 201

$2 -^07 $3 220

221 kSS

2 528 3 6CS

126

-6-

The ctnaulative effect of several years of lov? agricultural prices on the dernand for manuf a.ctiired goods can he readily ascertained "by a comparison of cash expenditures in 193^ with those in 1929' The average cash income in 193^ v.'as 65 peixjent of that in 1929i while cash expenditures were only ol per- cent as large. In 193^ livestock purchases were U2 percent, and feed and grain purcliases Sk percent as large as in 1929- IJ"! 193^ these farr.iS paid out 67 percent as much for machinery, 62 percent as much for crop expense and U7 percent as much for improvements as in 1929( while taxes were reduced to 65 percent of the I929 level.

Comnarison of Farms 7/ith Hi gh and Low Barnini°:s

The most profitable farms in this study had net receipts per acre of $1^.32, as compared with f;l.68 for the least profitahle group. The reasons for this difference may he ohtained from a study of the data on iDages 3 a^-^d S.

The most profitable farms were larger, hs.ving 35 ^^ore crop acres and 21 more acres of corn than the lea,st profitable farms. They also carried larger inventories of both crops and livestock on v/hich to make a profit when prices advanced. In addition to the larger acreage of crops, the most profitable farms liad higher yields, They raised 7-S bushels more corn, and 7.3 bushels more soybeans per acre than the least profitable farms.

The most profitable farms were more intensive, and more efficient in their livestock production fb^ui the least profitable farms. They had an investment in productive livestock of 'iS.^b per acre and fed $3,310 of feed per fami. The comT)ara.ble figures for the least profitable group were $5-^5 per aci-e invested, and $1,652 of feed fed per fari.i. Cattle sales account for 37 percent of the livestock receipts on the most profitable fanns, as compared with IS percent on the least profitable farms. Six of the tvrelve farms in the most profitable group had net increases of over $1,000 from cattle, as compared with one fann in the least profitable group. Fifty per- cent of the $3»^'^10 of feed- fed to . livestock on the most profitable farms v;as purchased during the year, as com-oared v/ith only 21 percent for the least profitable group. The compea-ison between the most profitable group and the least profitable group was, therefore, as far as cattle returns are concei-ned, a comparison between farms s"Qecializing in cattle feeding, and farms on which mixed cattle predominated. These facts, together with the additional point that a cliarge for pasture is not included in feed costs as figured in this report, explain v/liy the advantage of the most pi-ofitable group in returns per $100 of feed fed apiicars so slight.

Dairy and mixed cattle secure a larger proportion of their feed from pasture and are able to utilize it better than beef cattle being fat- tened for market. The higher returns per $100 of feed fed for the average of all farms is due to a concentration of dairy farms in the middle group. Figures for this group are not shov/n in this report. Cattle on the most profitable farms returned $130 per $100 invested, and $101 on the least profitable farms. The most successful farns secured an income of $113 per litter farrowed, as compared to $oS on the least su.ccessful f a,rrns .

The la.rger income on the most profitable farms was secured with a total operating cost of $8.12 per acre, as compared with -^S.j^ per acre for the least profitable farms. Tlie man labor costs were $1.15 "oer crop acre lower, while power and machinery costs were 57 cents per crop acre lower for the most siiccessful farms.

^^l

Influence of A/LA. Pro^raris on CroTipin^ Systems and Para Incomes

The faiin-account records in Illinois vera influenced "both directly and indirectly "by the corn-hog and vjl'ieat adjustment Dro.-^rams. A lar^.'^e per- centage of accounting farms were under one or both contracts in 133^* ^^^^ acreages of corn and wheat on these farms were therefore less than normal. This should have resiilted in lower operatin,.^- costs. Corn-hog benefit pay- ments for the entire 193^ program will total about UC' million dollars for the state, while wheat benefit pajTnents will be about 2.U million dollars.

The benefit payments for acco'UJiting farms are indica,ted in the following table, v/hich shows the avers.ge pa^^ment for those farms receiving pa.^/ments, and includes only those pajnnents received by the coopera.tor before the 193^ books were closed. In some cases only the first corn-hog check is incltided, while in other cases the second check liad been received. The sec- ond payments not received, and the third pajnnents will be entered in the 1935 book.

AAA Benefit Pajmients Received in 193'-''

Corn Wheat Hogs

ilunber Atiount Uunber Anount ITunber Amount -'^"^'^lage

of Toer of per of per °^ ^^- t_

farms farm farms farm farms farm pa^-Tiien s— '

1/3 most profitable farms 1/3 least profitable farms All acco^onting farms

12	$155	2	$176	10	$229	$1125
11	10 s	2	210	11	36I1	it6g
35	136	7	20U	33	292	U39

1/ Total benefit ps,y7nents reported ''oj accounting farms under contract for 193^ divided by total nunber of accounting farms.

On many farms the cash received from benefit j)ajrments will more than pay for the year's ta::es. As an average for all accotinting farms, the payraents actually received were $232 more than sufficient to pay the 193^ taxe s .

It is interesting to note the use made of the contracted acres on the acco-unting farms. The average farm had 21.8 contracted acres which V7ere used as follows: U.5 idle; 5-0 red clover; .5 sweet clover; 5.3 soybeans; 1.9 alfalfa; and U.3 acres were in other crops. These data indicate that most farmers made good use of their contracted acres from the standpoint of soil improvement, as a large part of them were in legpmes. Vtoon the C^overn- ment restrictions on the use of crops grown on contracted acres were removed, they vrere on many farms the most profitable crops as they furnished hay and pasture where badly needed in drouth areas. The legumes had the further ad- vantage of being irumtme to attack from chinch bugs.

Farm earnings were influenced indirectl;." by the AAA programs in that the reduction in production increased the price of the commodities in- volved. The drouth was a more important factor in reducing production than the adjustment programs, yet if it had not been for the corn-sealing program there would have been but little corn in the hands of farraers a.t the time the major price advance became effective.

12g

Factors Helping' to Analyze the i"arm Business on 36 McDonoii^-li Coi.mty Farms in 193^

Items	Your farm	Avera..c;e of 36 farms	12 most profitable farms	12 leas prof i tab 1( farms
Size of farms — acres --------		237.3 85.7 Uo.o 16.10 S.lg 7.92 99 13s	2l|>U 85.1 32.5 22. UU 8.12 1U.32 9U 13s	209.1
Percent of land area tillable- - - -		S6.1
Percent of tillable land in hay and "oasture --------------		37-7
Gross receipts per acre- ----- -1		10.22
Total expenses per acre- ------		S.5U
IJet receipts per acre- -------		1.6s
Value of land per acre ------ -		113
Total investment per acre- -----		lUs
		63.5 23.2 lo.S 11.7 31-7 U9.6 1U.9 3-7 15.5 19.9	78. U 22.7 21.9 13-9 30.2 37.6 19.2 10. s 13.2 23. s	■ 57-0
Oats-		19.0
Wheat - __-_-_		17-5
		10.1
Hay		23.7
Tillable pasture- -----		UU.2
Crop yields — Corn, bu. uer acre- - -		11. U
Oats, bu. per acre- - -		11.3
"Jheat, bu. per acre - -		1H.5
Soybeans, bu. per acre-		16.5
Value of feed fed to prodxictive L.S.		2 757 125 119 6.2 108 U5 •7 1 0 1U.56	3 810 123 130 27^1 6.5 113 36 9.36 19. lo	1 63U
Returns per $100 of feed fed to productive livestock- _---_-_		121
Het->u-ns per $100 invested in: Cattle		101
Poultr:-- _--		196
Pigs weaned per litter -------		5-6
Income per litter farrovyed -----		6s
Dairy sales per dairy cow- ---_-•		51
Investment in productive L.S. per A.		'i.h^j
Receipts from productive L.S. per A.		9.72
Man labor cost per crop acre - - - -		5-31 2.39 3-51 80^ 217 21 51 .98 2 307 221 5-73^ 3 821	5. CO 2.23 3.10 75;1 211 16 36 .SO 2 912 1 225 10.38^^0 5 50s	6.15
I.fechinery cost per crop acre - - - -		2.23
Pov;er and mach. cost per crop A. - -		3.57
		75/^
Value of feed fed to horses- - - - -		195
Man labor cost per $100 gross		39
Expenses per $100 gross income - - -		S3
Parm improvements cost per acre - - E>:cess of sales over cash expenses -		1.05 1 70s
Increase in inventory- ------- Hate earned on investment- ----- Gross receipts per fann- ------		-612
	1.1^^
	2 133

-q-

j.<i3

Chart for StiJd

yins

the

i.i/iciency

of Vo.

rioi\s

Parts

of YovjT 3usi

ness,

I.lcDonough

County, 193^

The n'um'bers atove the lines across

the

■niddle of the pa.-;

e are the avers :2;es for the

36 farms included in this

report f

or th

e factors named at the top of the page.

By drawing a line across

each

colmnn at

the ntmher rueasuring the efficiency of your

farm in that factor, you

can

compa

re your efficiency wit

h that

of other farmers in

Your locality.

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130

-10^

Influence of Price Cl-^^,n^s on Fam Earnings

Farm prices in 193^^ cdvanced more rapidly than did the prices of coaniodities v;hich faiTiers oought. Fanners of the United States as a group could ezccliange their farm products in 193'^ for 7^+ percent as many goods as for the Deriod 1905-191^, whJ.le in 1933 they received only bk percent, and 1932 only 61 percent as much in exchange for what they h^d to sell as in the prewa,r period. In the month of February, 1935j this index of purcha,sing power had increased to Sy percent of pi'ewa.r, the index of farm prices having risen to 111 as compared with en index of I27 for commodities which faimers h-uy. ^aen the line representing i-ami prices drops "below the line represent- ing prices paid ty faimers, farm earnings are very low, hut when these lines come close together farm earnings increase. (See follov/ing graph.)

Index of Prices

Rate Earned

200

15c 125

100

75 50

_ = jarm prices in U. S. Aug. 1909-July I91U = ICO

= Prices paid by farmers. A^-g. 1909-J'U-ly 191^t- = IOC

= Ra,te earned on investment, accounting fa.r;'as, central Illinois

J L

J L

J L

12^

10 <^

■Si

Si

k^-

~2i

M

1917 'IS 'I9 '20 '21 '22 '23 '2U '25 '2c '27 '2S '29 '30 '3I '32 <],], ^^k

-11-

131

oinco the pric^i of scne fam products advanced mticla more rp.pidly durrlng 193^ tiian other prodiict?^, it is evident tha,t -^ome farria v/otild tenefit r.ore than otherc;, depending upon the kind and qiiantity of produotc sold. Grain prices advo.nced much iaore rapidly than livestock rjrices; which rocult- ed in a very had price ratio for faiTaers who huy large (luantities of feed. The average Illinois farm price of corn T;as Ul cents a ha? hoi in January, 153^^; it advanced steadily until the end of the year when it was cS'^ cents a. Dushel. Other grains made narhed advance although not ao great an adva.nce as corn. The price of hogs fluctuated fron a low of $5*20 a hundred in Ma.y to a high of $6^.30 in Septenoer . The lov.' point in the fall carae in hovernher v/hen the average price v/r.s $5.1C. The price has advanced quite rapidly since FoveT.ber, the average price "being $7»5^' for Pehrioary, 1535 • Besf cattle vrero v/orth $^.10 a hundred in January, 1S3^ and advanced each ronth until Seutemher, Tifhen the price was $5. 30. They dropped to $3-^'- i^^ Decemhcr hut increased again to $7.Uo for Pehrorry, 1535-

The year 193^+ ^®t a record for the reduction in the n'orahers of livestock. The percentage decr^a.s^s hy species 7?ere as fcllcv/s: horsef=, 1.1 percent; n.ulff:, ? .G percent; all cattl^-, 11.^' percent; slie'^p, ^.7 P^^rc'^nt; hogi", 35*3 percent. YiTien all species are comhined on the hasis of their ca,pacity to consume feed, the reduction was I3 percent. This redxicticn \':ill greatly reduce the dema.nd for feeds prod^"'ar;ed in I935.

.ative ch.ange In prices of iraptirtart conarodities may he noted graph, which sho"/s the average Illinois farm prices hy m.onths

The re la' in t"re follov.-ing gi....>^-x, ..^.^w.x ^...-.^..^ u..-^ ...-^^^^t^.. ^.■.^^..^^.-, ^,...^.. as a percentage of the avera,ge prices for the period 13--'1-19'"

Price Indices, 193'^

(lSc^l-1929 = 100)

Jan. Fe\j. i-fer

Oct. Nov. Dec,

Ail cominodifcies index xepresontt; the wholesale price of a large nun-her of^ co:niaoditios for the United Spates, ?s co;:iputed hy Bureau of Lsoor Stalisiics.

Grain -^nd livestock in^^iccs represent average monthly faip: prices in Illir^oip.

132

-12-

Variation in Earnings Over Five-Year Period

A comparison of production, income, and expenditures on the ac- covmting farms in McDonougli Coimty for the last five yecrs is very interest- ing "because of the violent fluctuations in price level. Although the 193^ crop was nearly a failtu'e and followed a smaller than p.verage crop of 1933 > the increased prices of "both grain and livestock did have considerable ef- fect in holding earnings in second place for the five-year period 1930-193^*

Earnings in 1935> ^^ usual, v/ill depend upon individual efficiency, weather, and prices. Y/ith noi'mal weather conditions, prices of grain are likely to go down to a more normal level which will give individual effi- ciency the responsibility for higher earnings on each fari.i.

Comparison of Earnings and Investments on Accounting Farms in i'.lcDonough County, I93O-I93U

Items

1930

L93I

1932

1933

193^

Number of farms ---------

Average size of farms, acres- - -

Average rate earned, to pay for

management, risk and capital - - Average laboi* and management wage

36 212

Gross income per acre - Operating cost per acre

Average value of land per cacre- Total investment per acre - - -

Investment per farm in: Total livestock- -

Cattle - - - -

Hogs -------

Poultry-

G-ross income per farm

Income per farm from:

Crops- ---------

Miscellaneous income - - Total livestock- - - - -

Cattle

Dairy sales- ------

Hogs ----------

Poultry- --------

Average yield of corn in bu.- Average yield of oats in bu.- Average yield of wheat in bu.

2.2^ $-1+31

20.31 16.10

133 193

3 57U

1 271

1 570

153

5 303

U 2^9

km 308

3 zik 2U1

35

Uo

39 ?16

-1.7^ -1 979

10.3s 13. UU

127 176

2 skz I 125

1 OSb 137

30 222

-1.1^

:U5

36 209 309 279

39^

220

h^

kl

1 905

61

U03 219 022

190 63 53 17

30 221

$-1 37H

$1 090

S.59 10.16

97

lUo

9S1

795 63 s

57

6.9/0

17.5s S.15

9S

137

2 02k 963 5U3 115

3 SS5

1 329

26

2 530

k-]h

262

1 590

151 50 3^

3b 237

5.7fo $75S

16.10 s.ig

gq 13s

027

025

5^2

72

3 S21

265

2

3 500

999

225

2 002

SO

15

9 16

/?

133

AI>IMJA1 'FAHlfi BUSIKSSS HEPOHT OH THIRTY-OHS FAEI.I3 IN ADAIvIS COmiTY, ILLINOIS, I93U

P. S. Johnston, J. Ackerraan, T. R. Hedges* .

Fann earnings on the 3I accoimting farms in Adams Coirity averaged 2.3 percent for 193^+ which is the second highest rettim during the past five years. 1933 wa-s highest with an s.verage return of '}.'6 percent. The 193^ return is remarkahle considering the severe drouth and chinch hug damage.

These 3I accounts show for 193^ an average net income of $625 per farm, as compared with an average of $867 in 1933 f'-'^ti an average net loss of $612 in 1932- The average cash income in 193^ '"'as $3,87^ per farm, the cash "business expenditures $2,2U0 per farm, leaving a cash halance of $1,63'+ to meet interest payments and family living expenses. (Those \7ho keep home account hooks use the latter figure to represent the cash contri- hution of the farm to the "realized family income".) The low yields were directly responsitle for the decrease in inventory of $2^2 a farm. This de- crease, deducted from the cash halance, resulted in an average excess of receipts over expenses of $1,392 a farm.

These data must not he considered representative of average farm conditions, for they v/ere secured from farms which are larger t]aan average and were managed hy farmers who are more efficient than the average of all farmers in the county.

For the state as a whole, farm earnings vvere hetter in 193'+ than in 1933 i^ spite of the fact tliat corn and oat yields were very low due to the drouth and to chinch hug damage. In the western and southwestern parts of the state the drouth caused an almost total failure of hoth corn and oats, which accounts for farm earnings heing lower there than in other t)arts of the state.

The com crop was hest in the southeastern part of the state and was fair in the no rthv/e stern section. Wheat yields were particularly good in the south and central portions of the state. Soybean yields were very good thro"ughout the state and there v/as a larger than normal acreage in Illinois in 193^' This state produced over lialf of the nation's 193^ crop of soybeans.

Chinch hug damage extended over most of the state last year hut was much more severe in some sections than in others and ?/as much worse on some farms than on other farms in the same community. Conditions affecting crop yields were very spotted; which accounts in part for the wide variation in farm earnings from one section of the state to another and the wider variations than usiml from one farm to another.

*S, ?. Ru.ssell, farm adviser in Adams Co\mty cooperated in supervising and collecting the records on v/hich this report is hased.

-2-

Industries other tli-^ji agriculture again showed improved earnings over the previous year. A group of SUo industrial corporations reported "by a nationally known ha-nk showed average earnings of ^.0 percent on their in- vested capital in 193^» a-s compared with 3«^ percent for the scxne corpor- ations in 1933' ^ similar group has a loss of one-tenth of one ^oercent in 153'^ 3Jid average earnings of 3*3 percent in 1931«

In comparing the average earnings of corporations with the rate earned on investments on accounting fan'as it is well to keep in mind that, in corporation accounting, charges are made for management, while in the larra accowits no comparable ded'oction has been made. On the other hand the fanner and his family receive food, fuel, and other items of living from the farm for which the farm ha-s received no credit in the records used in this report. For the average central Illinois farra family, consisting of five persons, tlie value of the food and fuel furnished, by the farm was about $250 in 193^, when estimated on the basis of the wholesale price for faim, products.

Variations in Farm Incomes

There was a much v/ider range in farm earnings on the r.ccounting fa.nns in 193^ thaJi in 1933- TMs was true for the farms included in this report and was p.Iso true T;hen the average earnings of farms in one section of the state were compa.red with the earnings of farms in other areas.

The extremely wide range in earnings was due to a combination of ph;^'sical and economic factors. The average yields of wheat and soybeans were much better, com^iared with tlie five-year average, than the average yields of corn and oats. This variation favored those sections which liad larger acreages of the higher yielding crops in 193^'^* There was also a wide range in average com yields from one section of tJne state to another as 7/ell as between individual fan:is in the same area. The price of grains was high in 193^^ ^^ compared with prices of livestock and livestock prodticts. Fairas where grain sales constitute a large part of the fana income thus load an advantage. The rapid increase in the prices 01 farm products, particularly grains, favored those farms which had large stocks of salable products on lTa.nd at the beginning of the year. Many farmers who inventoried the com on liand at the begirjiing of 193^ ^"t ^0 cents a bushel, later sold this com for 80 cents.

In this group of 3I accoimting farms the most succesnful third shows rji average net income of $2,056, the average net loss of the least successful third of the farms was $^30. In 1933 "the com.parable net incomes for the tT;o groups v/as $1,876 and $-12 respectively.

Investnents, Receipts, Expenses and Earnings on 31 Adams County Farms in 193^

135

Items

Your fann

Average of 31 farms

10 most prof itatle larms

10 least profitable fanns

CAPITAL IZn^IoTlENTS

Land -------------^

Farm improvements- - ----- -

Livestock total- -------

Horses -----------

Cattle

Hogs __------_---

Sheep- -----------

Poxiltry- ----------

Machinery and equipment- - - -

Peed, grain and supplies - - -

Total capital investment

RECEIPTS Mm IffiT IITCESASES

Livestock total- -------

Horses ----- ------

Cattle

Hogs (incl-oding AAA payments) Sheep- -----------

Poultry- ----------

Egg sales- ---------

Dairy sales- --------

Peed and grains (including AAA payments) ----------

Labor off farm --------

Miscellaneous receipts - - - -

Total receipts & net increases

19 OSl 3 710 1 662

W/^

735 Uio

59 1 oig 1 231

$26 702

29 9U7 3 756

402

1 153

551

28

59

1 216

1 77s

$3iL.?2Q

12 053

3 882

1 159

333

U93

2U1

35

57

SU9

763

2 me

39

592

1 U37

U7

61

201

11^2 6

$ 2 59U

3 882

52

1 291

2 IS5

3S

57

6U

195

26q 93

$iLiii2

1 522

3

139

968

18

69

88 237

98 lU

$ l63it

EXPENSES AKD liET DSCESASES

Farm improvements-- ------

Horses ------------

Miscellaneous livestock

decreases

Machinery and equipment- - - -

Feed, grain and supplies - - - Livestock expense- ------

Crop expense ---------

Hired labor- ---------

Taxes- ------------

Miscellaneous expenses _ - - -

Total expenses & net decreases

SECEIPTS LESS EXPENSES

Total unpaid labor- --------

Operator's labor -------

Family labor ---------

Net income from investment and management- _-------__-

PATE EARNED ON INVESTMENT

Return to capital and operator's labor and management- ------

5ft! of Capital invested- ------

LABOR AND IviANAC-EI-ISNT WAGE

17^

29s

15s

6U

128

135 221

20

203

389

lUo 219 207 256 23

$ 1 202 $ 1 U37

152

233

397

20

S7 5U

237 lU

$ 119U

$ 1 392

767 5te 227

62R

80S

752 5^ 212

056

2.3U^

0 .c6,o .

^Uo 338

-U38

-2.2U^'

1 165

1 335 $ -^3 70

2 596 1 9^5

_1^

4 -

102

975

136

The followinj;; table shov/s the ntim'bcr of farns Imving certain net incones per acre. There was a marlced difierence "betv/een the most siiccessful and the least successful larras.

Average net income per acre

$11

9

7

5

3

ITunher of farms 1 k 0 k k

Average net income •per acre

$ 1

-1

-3

_R

Himher of

famas g

A further st\ixLy of the farm "businesses made "by comparing the investments, receipts, and e:rpenses of tlie ^roup of farms with the highest net incomes with those liaving the lowest should throw some light on the question of wliy some farmers a,re more successful than others. This com- parison is shown in the table on page 3«

The most successful farms averaged 3^1 acres each, the least successful 226 acres. This difierence in size accounts in part for the variation in the average investment, receipts, and expenses in the two groups. Difference in receipts from the sales of hogs, cattle and grains accounts for most of the difference in income "between the two groups. Although the expenses per fa,rm v;ere higher on the most profitable farms, the total expense per acre, including the charge for family labor, was less ths.n it was on the least profitable farms.

The year 193^ was similar to 1933 i^ that the prices of farm products continued to advnnce. Ov7ing to the extremely poor yields in Adams Ccanty, the value of grain at the ond of the year was not as much as at the beginning even though prices of grain had more than doubled. This condition was aggravated by the fact that Adams County has much livestock and with very little feed produced, farmers were comx)elled to b-uy grain at a high price while livestock prices were still relatively low.

Bushels of Corn Inventoried

Jan. 1. 193^ Dec. ^1. 19iU

Average of all farms

Average of 10 most successful farms , Average of 10 least successful farms, Your farm ,

1.797	365
2.723	700
1,096	U9

The most profitable farms had a much larger inventory of com both at the beginning and end of the year; which with the rise ox the grain prices, wa.s one of the important factors accounting for the difference in fam earnings.

137

-5-

The decreose in inventory for the 3I Adams County farms averages $2U2. The 1933 inventory valtuss increased $59d; while in 1932 there v/as a decrease of $80S. The decreases in 193^ were: livestock, $10; feed and grain, $153; improvements, $91» The machinery inventory increased $12. Such an increase in inventory as that for machinery resiilts from the value of new replacements during the year oeing in excess of depreciation costs. This increase is of considerahle interest for it is the first ti.ne that such a,n increase in machinery inventories has occurred since farm earnings hegan to decline so drastically with the general depression.

Inventory Changes for 193^

Items

Beginning Inventory

Closing inventor;,''

Inventory claange s

193^

Inventory

change s

yovx fT.rm

Total livestock

Feed and grains

Machinery

Improvements (except residence) Total

1,662	1,652	-10
1,231	i.oyg	-153
l,01g	1,030	12
3,710	^,619	-91

7.621

7,379

3I2

Some Adjustments on Adams County Farms Since 1929

Fanners have "been forced to make adjustments in their cash expend- itures as the rcsiilt of changes in their cash incomes. Operating costs on the accounting farms in Adams County declined from $12. S2 a.n acre in 1931 to $g.ll an acre in 193^* I^^ this covanty, 193^ operating costs v/ere the lowest since 192g. While in some other areas more favored "by rainfall, the operating costs increased because of "better crops resulting in a larger cash income which in turn permitted the purchase of repair and replacements of machinery and improvements. Adams County farr.iers must wait for more favorahle weather and crop conditions before malcing this expansion.

Cash Income and Expenses on Accoijnting Farms in Adams Coimty for I929 and I93U

Items

Your Average cash Your farm exioense per farm farm 19311 IQ3U 1929 193^

Average cash in-

come per fann 193^ 1929

Livestock. ... Feed and grains. Machinery. . . . Improvements . .

Labor

Miscellaneous. . . Livestock e>rpense Crop expense . .

Taxe s

Total . . . ,

392

822

360

92

135 20

Gk

12? 221

2 0^

1 155

9S7 51s ISO

336

31 61

197 259

3 721

Excess of cp.sh sales over expenses

Increase in inventory

Income to labor and capital (HeceiiDts less ex- pense s )

sUg

SI7

50

11

ll42 6

3 s^9

1 63 U -2U2

1 39^

h U12

61 1

72

13

5 Ul2

1 691 IU5

1 S36

13S

— 1><

Tlie ctmulative effect of several years of low agiri cultural prices on the deraand for na-nufactured goods can readily "be ascertained ty a compari- son of cash farm expenditures in 193^ with those in 1929- Although the av- erage cash income in 193^ ^?-s Jl percent of that in 1929j cash expenditures were only 55 percent as large. In 1^3^ livestock purchases were 3^ percent and feed and grain purchases S3 percent as large as in 1929- In 193^^ these farms paid out 70 percent as raiij^h for machinery and 65 percent as nuch for cron expense as in 1929> while taxes were reduced to only 85 percent of the 1929 level.

Coranarison of ?arnis TTith Kigh and Low Earnings

The most profitable f^m-.s in this study had net receipts per acre of $6.61 as compared with a loss of $1.9U for the least profitable grouo. The rear- sons for this difference raay be obtained from a stndy of the data on pages 3 '"^-nd

The most profitable fai^ns were larger and carried larger inventories on which to make a profit when "orices advanced. All crop yields were nea.r a. complete failure and yet the most profitable farms had 6.5 bushels an acre of corn and 5*^ bushels an acre of oats more than the least profitable. This advantage in crop yields and the larger beginning inventories of grain, combined with more and better livestock, were the principal factors for the Mgher earnings of the most profitable farms.

The total operating costs on the acre basis v/ere $2.12 higher on the least profitable farms. Tliis is accotmted for mostly by a difference of $l.oU in labor cost. Machinery cost was $.1C an acre less on the least profitable farms.

139

-7- Infl"uence of AAA Prograins on CropTJinf; Systems and Farm Incomes

The fann-accotmt records in Illinois were infliienced "both directly and indirectly "by the com-hog and v/heat adjustment programs. A large per- centage of accounting faims were under one or "both contracts in 193^* T^® acreages of corn and wheat on these farms were therefore less than normal. This should l:ia.ve resulted in lower operating costs. Com-hog benefit pay- ments for the entire 153^ program will total ahout UC' million dollars for the state, while wheat benefit payments will he about 2.U million dollars.

The benefit payments for accounting farms are indicated in the following table, which shows the average payment for those farms receiving pa;,Tnents and includes only those payments received by the cooperator before the 193^ books were closed. In some cases only the first corn-hog check is included, while in other cases the second check had been received. The second pajnnents not received and the third payments will be entered in the 1935 book.

AAA Benefit Pa:/ments Received in I'^^U

Com Wheat Hofcs Avera-^^e

Number AT-iount ITumber Amount l^jmber Amount q^ g^]_]_

of per of per of per paj-mentsi/

farms farm farms farm farms farm

9	$iq6	U	$122	g	$263	$355
g	gi	5	66	g	1S3	2U5
26	g5	13	8k	2^	227	29c

1/3 most profitable faims 1/3 least profitable farms

All accounting farms ^ ^ ^ ^

Yj Total benefit payments reported by accounting farms under contract for 193^ divided by total number of accounting farms.

As an average of all accounting farms, the payments actually re- ceived ($290) were more than siifficient to pay all of the 193'"''' tajces, ($221).

It is interesting to note the use made of the contracted acres on the accounting farms. Tlie average fe^im had 20. g contracted acres which v/ere used as follovv's: 5*7 idle; 2.9 red clover; 3*5 sweet clover; 3-'^' soy- beans; 2.7 alfalfa and 3«C' acres were in other crops. These data indicate that most farmers made good use of their contracted acres from the standpoint of soil improvement, as most of them were in legumes. fJhen the Government restrictions on the use of crops gro\ini on contracted acres were removed, they were on ma,ny farms the most profitable crops as they furnished hay and pasture where badly needed in drouth areas. The legumes had the further advantage of being immune to attack from chinch bugs.

Farm earnings v/ere influenced indirectly by the AAA programs in tiiat the reduction in production increased the price of the coninodities in- volved. The drouth was a more important factor in reducing production than the adjustment programs, yet if it had not been for the corn-sealing program there would have been but little com in the hands of farmers at the tine the major price advance became effective.

lUo

Factors Helping to Analyze the Fanr. Business on 31 Adams County Farms in 193^

Tt-r.c	Your farm	Average cf 31 farms	10 most ;orof italic farr-.s	10 least prof ita.ble farms
Size of farms — acres -------		2U2.7 g2.g I45.7 10.69 g.ll 2.52 79 110	311.1 25.0 U3.0 13.65 7.0U 6.51 96 125	226.2
Percent of land area tillable- - - Percent of tillable land in hay and pasture- _-----_--_-- Gross receipts per acre- -----		7^.7 kl.k 7.22
■Total e?:penses per acre- ----- llet i-eceipts per acre- - - - - - - Value of land per acre ------ Total investment per acre- _ _ - -		9.16 -I.9U 57 86
		50.2 19.9 17.3 9.^ 29.2 62.6 5.6 k.O ih.s	20 25. s 23.9 35-9 77-- 7.5 5.S 16.1	U2.6
Oats- ----------		IS. 9
TTneat ----------		17.5
		1.9
Hay		27. u
Tillable pasture- - - - -		1+2.6
Crori yields — Com, bu. Der s.cre- -		1.0
Oats, bu. per acre- -		.8
Wlieat, bu. per acre -		13.7
Value of feed fed to productive L.3.		1 soU 133 111 209 99 3S 5.06 9.92	2 50U 153 13 s 209 7.^ 153 30 5.75 12.31	1 I125
Returns per $100 of feed fed to productive livestock- ------		106
Returns per $100 invested in: Cattle- -------		75
Poultry - ----- - -		2I15
Pigs weaned per litter ------		5-S
Income per litter farrowed - - - -		6s
Dairy sales per dairy cow- - - - -		36
Investment in productive L.S. "oer A.		3.b3
Receirts from productive L.S. per A.		6.72
Man labor cost per crop acre - - -		0.06 2.15 3-51 61.2-:^ 227 32 76 •73 1 63U	5.17 2.0 s 3.21I 267 23 52 .65 2 752 56 R.28 k 245	7.01
Ifechinery cost "oer crop acre - - -		i.sU
Power and mach. cost Der cro'o A. -		3.1U
Farms with tractor --------		50fo
Value of feed fed to horses- - - -		16s
Man Labor cost per $100 gross		^k
	j^
Expenses per $100 gross income - -		127
Farm improvements cost xier acre- -		•67
E:ccess of sales over cash expenses		7U7
Increase in inventory- ------		-2I42 2.3U i2 59^ 1	-307
Hate earned on investment- - - - -		-2.2U
Gross receipts per farm- -----		1 63U

Chart for Stiidying the Efficiency of Various Parts of Your Business,

Adams Cotmty, 193U

lUi

The nixibers above

31 fairas included

By drawing a line

farm in that factor, you can compare your efficiency with that of other farmers in

your locality

the lines across the middle of the t)age are the averages for the in this report for the factors named at the top of the page, across each column at the numher measuring the efficiency of your

1 i

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179

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9

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200

-1.66

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2

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69

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7

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160

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89

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go

-7.66

0

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59

73

12.56

6.00 57

23U

1

ICC

liO

1 — i

lU2

-10-

Inilucnce of Price Cl'^riiSies on Farm 5a,min,e;s

FdiTn prices in 193^- ?-dvanced more rapidly than did tae prices of commodities which, farmers oought. ?a.r..iers of the United States as a .'^roup could e:-:chan^o their farm products in 193^ for 7^+ percent as many goods as for the period 1909-19l'+> vvMle in 1S3^ they received cnly 6U percent, and 1932 only 61 percent as much in exchange for v/hat tliey had to sell as in the prewar period. In the month of February, 1935> this index of purcha,sing pov/er had increased to Sf percent of prewar, the index of farm prices having risen to 111 as compared with an index of I27 for ccminodities vvhich faitners huy. TTiien the line representing farm prices drops "below the line represent- ing prices -oaid "by farmers, farm earnings are very low, but v.'hen these lines cone close together fana earnings increase. (See following -^r; ph. )

Index of Prices

Rate Earned

20c

I5G 123

100

75

50

25

= Farm prices in U. S. Aug. igCS-July igiU = ICC

- Prices paid by farmers. Aug. 19G9-July I91U = 100

n - Rffte earned en investment, accc^onting farr.is, central Illinois

J I u

Jk L

12^

10^

fi^

Sf,

U:':

d.,0

oi

-H

M

1917 '13 'I5 '20 '21 '^2 '23 '2U '25 '2b '27 '2S '29 'jG '3I '32 ^y^ '3I1.

1^3

-11-

Sincp the price of some farm products advanced much more rapidly dxiring 193^ than other products, it is evident that some farms would benefit moi-e than others, depending upon the kind and quantity of prodxtcts sold. Grain prices advanced much nore rapidly than livestock prices; v/hich result- ed in a very had price ratio for far:aers who h-uy large quantities of feed. The average Illinois farm price of corn v;as Ul cents a hushel in Janwiry, 193^; it advanced steadily until the end of the year when it was S? cents a hushel. Other grains made marked advance although not so great an ac'vance as corn. The price of hogs fluctuated from a low of $3*20 a hundred in JAay to a high of $6.30 in September. The lov/ point in the fall came in ITovemlier when the average price was $5.10. The price lis.s advanced quite rapidly since November, the average price being $7*50 for February, 1935 • Seef cattle were worth $U.10 a h'jndred in Jantiary, 193^ and advanced each month imtil September, when the price wss $5.90. They dropped to $5-20 in December but increased again to $7.U0 for February, 1935-

The year 193^^ set a record for the reduction in the n-umbers of livestock. The percentage decreases by species were as follows: horses, 1.1 percent; mulps, ?.6 percent; all cattle, 11.2 percent; she^-p. M.J percent; hogs, 35»3 percent. I'?hen all species are combined on the basis of their capacity to consume feed, the redujctlon was I3 percent. This reduction will greatly reduce the demand for feeds produced in 1935*

The rela.tive change in prices of imptDrtant corunodities may be noted in the follovdng graph, V7hich shows the average Illinois farm prices by months as a percentage of the average prices for the period 19^^1-1929.

Percent

Price Indices, I93U

Jan .

Feb. Mar.

Apr

June July A'ag. Sept. Oct. Ijov. Dec.

All commodities index represents the wholesale price of a. large number of commodities for the United States, as com.puted by Bureau of L^bor Statistics.

Grain and livestock indices represent average monthly fara prices in Illinois,

lUll

-12-

Varip-tion in Earnint°:s Over Five-Year Period

A comparison of prodtiction, income and expenditures on the accormt- farms in Adams County for the last five years is very interesting because of the violent fluctuations in price level. Although the 153^^ crop was nearly a failure and followed a smaller than average crop of 1933' ^^"^^ increased prices of both grain and livestock did have considerable effect in holding earnings in second "ilace for the five-year period 1930-193^-

Earnings in 1935 ^s usual will depend upon individual efficiency weather, and prices. Y/ith normal weather conditions, prices of grain are likely to go down to a more normal level v/hich v;ill give individual effi- ciency the i^esponsibility for higher earnings on each farm.

Comparison of Earnings and Investments on Accounting Farms in Adams County for I93O-I93U

Items

Kijmber of farms ---------

Average size of farms, acres- - -

Average rate earned, to pay for management, risk and ca,pital - - Average labor and management wage

Gross income per acre - - - - - Operating cost vier acre - - - -

Average value of land per acre- Total investment per acre - - -

Investment per farm in:

Total livestock- - - - - -

Cattle — -

Hogs -----------

Poultry

Gross income per farm - -

Income per farm from:

Crops- -------

Miscellaneous income Total livestock- - -

Cattle _ _ -

Dairy sales- - - - -

Hogs --------

Poultry- _-_--_

Averag-e yield of corn in bu.- - Average yield of oa.ts in bu.- - Averar;e yield of whea.t in bu. -

1930

30

I9g

l.3fo $-3S6

lU.2b 12. Ul

1U5

2 517

1 C9U

735

2 S20

92

2 72s

220

U19

1 ?6l

203

29 30 20

1931

31

-3.1^ $-1 323

g.69 12,82

S7 131

1 915

g02

592 115

1 5U3

63

1 Uso

3s

390

Sbl 166

35

2^

1932

30 210

-2.6^ $-1 3C1

1933

5. SI S.72

77 113

1 5pU

393 77

^3

7U 1U9

239 165

597 lib

50 ko 12

30 217

3M $177

12.16 S.16

73 111

1 629

3I+1 s6

2 638

193U

31 2U3

$ -170 ■ 10.1

79 110

1 662

739

Uio

59

2 3Sk

733	-158
52	6
253	2 W>
323	592
261	201
077	1 U37
113	-a-
	/ 30
^5	6
25	\
19	15

145

A^rrTUAL FAEl.l EUSIJESS EEPOHT OIJ THIRTY- THREE FARIAS IN HAircOCX COUNTY, ILLINOIS, 193U

P. E. Johnston, J. S. Andrews, and T. R. Hedges*

The farm earnings of 33 account-keeping farmers in Hancock County- showed an increase in 193^+ over those of 1933* This is the second con- secutive year of improvement in the husiness of these farms. The three years previous to 1933 showed very low returns.

These 33 accounts show for 193^ an average net income of $1,365 per farm, as compared with an average of $923 in 1933> and an average net loss of $3S8 in 1932. The average cash income in 193'-^ was $3,909 per farm, the cash "business expenditures $2,196 per farm, leaving a cash hala.nce of $1,713 to meet interest payments and family living expenses. (Those who keep home account books use the latter figure to represent the cash contri- bution of the farm to the "rea.lized family income".) Besides the cash in- come, there was an inventory increase of $3^'+2 per farm due to the rise in the prices of farm products. This increase, added to the cash balance, re- sulted in an average excess of receipts over expenses of $2,055 P®^ farm. The inventory increase was a smaller part of the total farm income in 193^ tl-ian in 1933.

These data must not be considered representative of average farm conditions, for they were secvij:^d from fams which are larger than average, and which were managed by farmers who are more efficient than the average of all fanners in the county.

For the state as a whole, farm earnings were better in 193^ than in 1933 in. spite of the fact that com and oat yields were very low due to drouth and to chinch bug damage. In the western and southwestern parts of the state the drouth caused an almost total failure of both corn and oats. This accounts for faim earnings being lower there than in other parts of the state .

The com crop was best in the southeastern part of the state, and was fair in the northwestern section. y?heat yields were particularly good in the south and central portions of the state. Soybean yields were very good thoughout the state, and there was a larger than normal acrea/^e in Illinois in 193^- l^is state produced over half of the nation's 193^^ crop of soybeans.

Chinch bug damage extended over most of the state last year, but was much more severe in some sections than in others, and was much worse on some farms tlian on other farms in the same community. Conditions affecting crop yields were very spotted. This acco-unts in part for the wide variation in farm earnings from one section of the state to another, and the wider variations than usual from one farm to another.

T. H. Hafer, farm adviser in Hancock County, cooperated in supervising and collecting the records on v/hich this report is based.

lU6

-2-

Industries other tlian agriculture again showed iraproved earnings over the previous year. A group of 2^0 industrial corporations reported "by a nationally loiown "bani: showed average earnings of ^.0 percent on their in- vested capital in 193^> 3-s compared with 3*^ percent for the same corporations in 1933- A similar group had a loss of one-tenth of one percent in 193- ^-^^ average earnings of 3*3 percent in 1931'

In comparing the average earnings of corporations v.'ith the rate earned on investment on accounting fairos it is well to keep in mind that in corporation accounting, cliarges are made for management, while in the fairo accoiants no comparahle deduction has "been made. On the other hand the farmer and his family receive food, fuel, and. other items of living from the farm for which the farm has received no credit. in the records used in this report. Por the average central Illinois faim-fauily, consisting of five persons, the value of the food and fuel furnished "by the farm was a"bput O25O in 193^> V7hen estimated "on the "basis of the wholesale price for farm products.

""feriations in ?arm Incomes

There was a rauch wider range in farm earnings on the accounting farr.is in 193^^ than in 1933* This was true for the farms included in this report, and v/a.s also true when the average earnings of farms in one section of the state are compared with the earnings of farms in other areas.

The extremely wide range in earnings v/as dui3 to a combination of physical and economic factors. The avore^ge yields of v/"iTcat a.nd soybeans werj much "better, compared with the five-year average, tr^.n the average yields of com and oats. Tliis variation favored those sections which had larger acreages of the higher yielding crops in 193^* There was also a wide range in average corn j-ields from one section of the state to another, as well as "betv/een individual farms in the sane area. The price of grains was high in 193^''- '^-S compared with prices., of livestock and livestock ^oroducts. ?arms v/hcre grain sales constitu.te a largo po.rt of the farm income thus had an advantage. The rapid increase in the prices of farm products, particularly grains, favored those fairns which had large stocks of sala"ble nroducts on hand at the "beginning of the year. Mar^ farmers who inventoried the com on hand at the "beginning of 193*+ at Uo cents a "bushel, later sold this com for SO cents.

In this group of 33 accounting farms the most successful third shows an average net income of $2,181 while the average net income of the least successful third of the farms was only $7^3- I" 1933 "t^'^e compara"ble net incomes for the two groups. was $1,7^9, and $99 respectively.

-3-

Investments, Receipts, Expenses and Earnings on 33

Hancock Coimty Farms in 193^

1U7

Items

CAPITAL IMESTIvtEKTS

Land -----------

Fann improvements- - - - -

Livestock total- - - - - -

Horses ---------

Cattle

Hogs ----------

Sheep- ---------

Poultry- --------

Machinery and equipment- - Feed and grains- -----

Total capital investment

Your farm

Average of 33 faiTOS

21 313

3 75s

1 6U7

39U

720

UI5

5h

6U

1 301

1 53s

$29 557

11 most

profitable

farms

19 799

3 562

1 -329

30U

. . J25'

. . 32. 62 1 1Q2

1 Gki

$27 729

11 least profitable fa.rms

26 105

399 575 3 S3 79 59 9SU

1 3S9 $3^4 pig

ffiCEIPTS AHD WET INGHEASES

Livestock total-

Horses ------------

Cattle _--

Hogs (including AAA payments )- Sheep- ------------

Poultry- -----------

Egg sales- ----------

Dairy sales- ---------

Peed and grains (including AAA payments) -----------

Labor off farm ---------

Miscellaneous receipts - - - - -

Total receipts & net increases

3 6U1

15 503

1 593 82

76 2S7

U76

69

2

$ 3 Igg

2 ^kk

21

531

1 52U

U5

71 SI

271

1 1S7 93

$ 3 S2U

2 7U6

21 667

1 Ug9

115

7S

73

303

33

2

$ 2 7gl

SPEITSES Aim IIET DECREASES

Farm improvements- -------

Horses _---__--_-_-- Miscellaneous livestock

decreases

Machinery and equipment- - - - -

Feed and grains- --------

Livestock expense- -------

Crop expense ----__--_-

Hired labor- ----------

Taxes- -------------

Miscellaneous expenses - - - - -

Total expenses & net decreases

$ 1

1S3

305

"63

13s

211

20s

25

231

130

260

30 132- 2U9 206

21

$ 1 02s

21g

312 120

131 •I3U I5U 230

33

$ 1 332

$- 1 I4U9

706 5U0 166

'ECEIPTS LESS SXPEWSES-

btal unpaid labor- -------

Operator's labor ------

Family labor --------

et income from investment and management -----------

ATE EARUED OIT I¥VEST1AEWT

eturn to capital and operator's labor and management ------

p of capital invested- - _ - - - ABOR A^TD MAKAGEMEITT WAGE

$ 2 055

690 513 177

1 365

k.eifo

$ 2 796

615 503 112

2 181 7 .87^

1 S7g

1 U7S

$ UOQ

2 bSU

1 3S6

$ 1 2qg

7H3

1 283

1 731

$ -Ul|g

Iks

Tiie -following taliT-e shows the nuraoer of farms havin^ certain net incomes per acre. There was a marked difference between the aost successfiil and the least siicce s si iil -farms.

Average net in- r'jmter of Averap:e net in- IT^^m'ber of

come TJer acre farms come per acre farms

$15 1 : $5 7

13 h 3 9

11 k 1 2

9 ; . . 1 -1 1

4

\

I

k

A further stud;)- of the farm businesses made hy comparing^ the in- vestments, receipts, and expenses of the group of farms with the highest net incomes with those having the lowest shox'id, -throw some light on the question of why some farmers are more successful thah others. This comparison is shown in the table on page 3 • '

The most profitable farras had a smaller total capital investment than either the least profitable farms or the average of all accounting farms. Despite the smaller investment, the most profitable farras had high- er total receipts and net increases than either the least profitable faims or the average of all faims. The la.rger receipts and net increases from feed and grain was a major factor .in accounting for this difference. The total operating expenses per acre, including the charge for fffjnily labor, was less on the most; profitable farms thrji on the least profits.ble group..

Changes in Inventories and Inventory Values

The year -1-93'^ '-'s-S similar to 1933 i^ tnat the prices of farm products continued to advance, causing further increases in inventory values. Owing to the poor crop yields in 193^^ there were fewer bi^shels of grain on hand to inventory at the end of the year than at the beginning. The value of the smaller amount of grain, however, was greater than for the larger amount on hr'Jid at the beginning of the year. ■•

Busliels of Com Inventoried

Jan. 1. 193^ Dec. 31, 193^

Average of all farms 2 3^8 SI3

Average of 11 most successful farms ... 2 721 1 32S

Average of 11 least successful farms. . . 2 1S7 ^11

Your farm

The difference in quantities of grain inventoried was one of. the factors influencing the difference in earnings. The most profitable farms had a larger inventor;;- of corn, both at the beginning and. at the end of the year, than did the least profitable farms. This difference accounted for a considerable part of their higher receipts and net increctses from feed and grains.

1

11+9

-0-

The average inventory increase for the accounting farms in Hancock County was $3'-l2 in 193^, as compared with $279 ir. 1933. and ^^ inventory loss of $721 per f aim in 1932. There were increases -of $135 in total livestock, and $253 in feed and grain, while improvements showed a decrease of $29 and machinery, a decrease of $17. The decrease in machinery and improvements was the smallest it has heen since 1930. indicating that more of the nec- essary repairs and replacements are "being made, hut still not enough to off- set the depreciation costs.

Inventory Changes for 193^

Beginning Items inventor^/ I-I-3U

Total livestock $1 6U7

Feed and grains 1 '53§

Machinery 1 3*^1

Improvements (except residence). 3 758

Total $S 2UI1

Closing

inventory

I2-3I-3H

Invent or;^ change s I93U

Inventory

changes,

your farm

$1 722	$135
1 791	253
1 2Sl+	-17
3 729	-29, $3U2
$s 526	V

Some Adjustments on Hancock County Farms Since 1929

Farmers have been forced to make adjustments in their cash expend- itures as the result of changes in their cash incomes. From I929 through 1933 farm operating costs declined each year, but the year 193^ brought a reversal of .this trend. Total operating expenses were $1.06 an acre higher in 193^ than in 1933> while cash operating expenses were $2,196 per faim in 193^> as compared with $1,509 in 1933- This increase in cash operating expenses can be attributed veTj largely to the increase in cash expenditures for feed and grains, and for machinery and supplies for machinery. The in- crease in expenditures for feed and grains may be attributed to the drouth. Indications point to an expansion of spending for 1935» particularly for machinery and improvements, since farmers have .postponed replacements and repairs of these items during the five-year period since 1929-

Cash Income and Expenses on Accounting Farms in Hancock County for I929 and I93U

Items

Your fa,rm I93U

Average cn,sh expenses •per farm

I93U

1929

Your	Average cash
farm	i nc ome	■per f?.rm
I93U	103^	1929
$	$2 7I46	$U 215
	1 021	1 5U2
	71	223
		S
	69	UU
	2	11

Livestock .... Feed and grains . Machinery . . . . Improvements. . .

Labor

Miscellaneous . . Livestock expense Crop expense. . .

Taxes

Total .....

2^0 79s

359 15U

211

25

63 138

20s

$2

5 S29 632 7U6 29'^

1^37

30

^3

251

31^

196 $3 576

$3 909 $6 0U3

Excess of cash sales over e:cpenses $

Increase in inventory

Income to labor and capital (Receipts less expenses). .

ipl 713 "t" 3^42 2 05^^

^2 U76 698

3 165

150

r -o-

The cumtilative effect of several years of low a^icultuxal prices on the denand for manufactured goods can readily be ascertained by a, com- parison of cash, expenditures in 193^ v;ith those in 1925^ The average ac- coiinting farm in Hancock County spent 59 percent of the cash income as op- erating expenses in 1929. while in 193'^'- 't^e average accounting farm spent 5o percent. The relationship, therefore, between cash income and expenses for the tv/o years is practically the same, hut the 193^ cash income and ex- penses are only 6l percent as large as 1929- There was, however, consider- able difference in the distribution otf the expense items. In 193'^ livestock purchases were 29 percont, and feed and grain purchases 126 percent -as ..large as in 1929* In 193^ these farms paid out US percent as much for machinery, ■and 55 percent as much for crop expense as in 1929» while taxes were reduced to 66 percent of the I929 level.

Comparison of Farms With Pligh and Low Earnings

.4fter deducting total expenses and net decreases, including family labor, from receipts and net increases, there remained a net increase of $11. lU per acre for the most profitable farms, as compared with $3-27 per acre for the least profitable farms. Tliis represents a return on capital invested in the farm business of 7«-o7 percent on the most profitable fairas, and 2.15 percent on the least profitable farms. The reasons for this differ-^ ence may be obtained from a st'udy of the data on pages 3 "J^d. 8.

The most profitable farms averaged 31'^'' acres smaller, but they had a larger proportion of their land area tillable, and had lUg.6 crop acres, as compared with I55 crop acres on the least profitable farms. The most profitable farms carried larger inventories of feed .^nd grains on which to malce a profit when prices advanced. One reason for the la.rger inventories was the higher crop yields, there being an advantage of U.7 bushels of com, and 0.7 bushels of oats in favor of the high profit group. The least profit-J able farms had a higher yield of wheat, but the difference in acreage betweei the two groups was very small.

The most profitable farnis liad an investment of $6.U6 per acre in productive livestock, as compared with an investment of $5 .IS per acre on the least profitable farms. The most profitable farms fed $1,370 of feed to productive livestock, securing a return of $135 for each $100 worth of feed fed, while the least profitable farms fed $2,057 of feed, sec-oring a return of $132 for each $100 worth of food fed. The most profitable farms saved 6.U pigs per litter, and secured a return of $112 per litter farrowed, as compared with 5*7 pigs per litter and a rctiu-n of $78 per litter farrowed on the least profitable farms.

Higher total operating expenses on the least profitable farms amounting to 58 cents an acre was an important factor in the redxiced net earnings of this group. Every item of exj^enses and net decreases except Mred labor was higher on the least profitable farrus'. -Man labor costs per crop acre were $5.U2 on the most profitable farms, as compared- with $5.3^ on the least profitable farms, while pov/er and i-nachinery costs- per crop acre amounted to $2.98 on the most iDrofitable farms, ■ and $3.72 on the least profitable farms.

151 i'

-7- Infl-uence of AAA Pro.srams on Croppiriig: Systems and j3.rm Incomes

The farm-account records in Illinois were infl'Ufinced "both directly and indirectly by the corn-hog and wheat adjustment programs. A large per- centage of accounting farms was under one or both contracts in 193^- The acreages of corn and wheat on these farms were therefore less than normal. This should iiave resulted in lower operating costs. Corn-hog oenefit pay- ments for the entire 193^ program will total about Uo million dollars for the state, wMle wheat benefit pa^^ents will be about 2.h million dollars.

The benefit payments for accounting farms are indicated in the following table, which shows the average payment for those farms receiving payments, and includes only those payments received by the cooperator before the 193^'- books were closed. In some cases only tlie first corn-hog check is included, while in other cases the second check had been received. The second pajTnents not received, and the third payments will be entered in the 1935. /book.

AAA Benefit Pa;>Tnents Received in 193^

Corn Tneat Hogs

IJumber Amovmt llumber Amount ITunber A'aoimt Average of per of per of per of all farms farm farms farm farms farm pa.^mlents

1/

1/3 most -profitable farms 11 $133 1 $11 11 $19o $332

1/3 least profitable fams 10 111 1 39 10 2lk 299

All accounting farms 32 122 5 53 32 2I3 33U

1/ Total benefit payments reported by accounting, farms under contract for 193^ divided by total member of accounting farms.

On most farms the cash received from benefit payments will more than pay for the year's taxes. As an a,verage for all accounting farms, the pajrments actually received were $126 more than sufficient to pay the 193^ taxes.

It is interesting to note the use made of the contracted acres on the accounting farms. The average farm had 19-3 contracted acres which were used as. follows: ^.S. idle; 6.U mixed clover and timothy; 1.1 sweet clover; 3*^ soybeans; 2.6 alfalfa; .and 2.2 acres were in other crops. These data indicate that most farmers made good use of their contracted acres from the standpoint of soil improvement, as a large part of them were in legumes. T/hen the Government restrictions on the use of crops grown on contracted acres were removed, they were on m?.ny farms the most profitable crops as they furnished hay and pasture where badly needed in drouth areas. The legumes had the' ftirther advantage of being immixne to attack from chinch bugs.

PaiTO earnings were inflixenced indirectly by the AAA pro.::rains in tliat the reduction in production increased the price of the commodities involved. The drouth was a more important factor in reducing production than the adjustment programs, yet if it had not been for the corn-sealing program, there would have been but little com in the hands of farmers at the time the major price advance became effective.

152

Factors Hel-oin.-^ to Analyi:e. the FaiTn Business on 33 liancocl: County Farms in 193^

Items	Your faroi	Avera-je of 33 farms	11 most profitable farms	11 least profitable farms
		216.S S7.6 39.1 $ IU.70 s.Uo 6.30 9S 136	195. s 92, u 36. u $ 19.53 g.39 11. lU 101 1U2	■'227.2
Percent of land area tillable- - - - -		gU.i
Percent of tillable land in hay and ■pasture ----__----___--		36.1
Gross receii^ts loer acre- -------		$ 12.2i[
Total expenses per acre- -------		g.97
*^Tp "I- TPr'P 1 ttH Q Tif^i -p cipvp		3-27
Value of land ne r acre --------		- 115
Total investnent per acre- - - - - - -		152
		I4U.7 2S.U g.7 19.9 33-2 lil.l 10.6 10.0 20.2	hk.o 32.3 s.g • " 12.9 33.6 32.3 12.7 12.5 IS. 2	kG.J
Oats- ---__-_-----		2^.9
Wheat ___		10.3
"Soybeans- ----^ ■_-_--		'■"a .g
Hay		33.0
Tillable pasture- ------		36.0
Crop yields — Corn, bu. per acre- - - -		g.o
Oats, bu. per acre- - - -		11. S
VvTieat, bu. per acre - - -		20.9
Value of feed fed to productive L.S. -		2 02 U 130 109 237 5.9 93 k2 6.10 12.11	1 S70 135 106 23g G.h 112 39 6.U6 12. gg	2 057
Returns per $100 of feed fed to prodioctive livestock- --------		132
Returns per $100 invested in: Cattle		163
Pmil 1" "y^T		236
Pigs weaned loer litter --------		5-7
Income per litter farrowed ------		■ 7S
Dairy sales per dairj' cow- ------		52
Investment in -oroductive L.S. per A. -		5.18
Receipts from productive L.S. T3er A. -		11-99
Man labor cost per crop acre - - - _ _		5.81 2.05 ■3.67 75. 7f^ 257 27 57 1 713 3U2 3 isg	^.U2 1.75 2.5s 9lfo 20U 21 ^3 .66 1 931 565 7.S7fi 3 82k	5.3H
Machinery'' cost per crop acre -----		2.01
Pov/er and mach. cost per crop A. - - -		3.72
Farms wi tb f T^c^f nir — —		Sk^
		.285
Man labor cost per $100 gross 1 nr'ni'np		30
Expenses per $100 gross income - - - -		73
Faira improvements cost per acre- - - -		.96
Excess of sales over cash expenses - -		1 652
InCTPP'^P i "n T TivPTrhn yiT" —		-203
Pa.te earned on investment- ------		2.15^
C-ross receipts per farm --__-_		2 7SI

-9-

Chart for Studying; the Efficiency of Various Parts of Your Business,

ST.ncock County, 193^

'he ntunhers ahove the lines across the middle of the page are the averages for the

3 farms incliided in this report for the factors naiued at the top of the page.

y drawing a line across each col"uran at the numher measuring the efficiency of your

am in that factor, ,

you can corn-

js.re

your

efficiency with that of

othei

• farmers in

our localil

zy.

Bushels

Cost per

Gross

per acre

u

crop acre

0 0

receipts

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133

66

397

172

1.00

7

1930

3700

27

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17

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.67

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7.61

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1.67

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6.11

13

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2.67

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260

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93

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237

130

5. SI

3.67

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1713

1^.70

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^.11

9

s

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83

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197

lis

7.00

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-30

1200

12

2600

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1.61

7

6

16

73

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137

106

I S.20 3.67

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-U30

700

9

2000

lUo

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U

Ik

63

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117

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77

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154

-10-

Inflnence of ?rlce Clian^s en Farm 'nlorninj^s

Parm prices in 153''+ r.dv-^'.nced rr.ore ra.pidlj thaii '-'.id the prices cf corxioditics r.Oiich f?.ni^;ere bo^J^^rt. JTcnaers of the United States a,s a grov^p could ercoLonge -oneir larru products ia 193^ '^"0^ '/''■'■ percent as many goods as for the r;eriod 1309-l;jl'+i vvMle in 1533 they z-eceived only 6^ percent, and 1932 only 61 percent <as much in ercliax.^ 'for what they had to cell s.s in the prewar period. In the i;ionth cf iebi"oar:'-, 1533» this index of purchasing power ha,d increased to ?;7 pcrccno oi prewar, the ind&x of lairu prices ha.ving risen to 111 as coLroared vdth tai indez of 1.^7 for commodities which fa.nners "b-uy. ?aien the line representing I'ana prices drops below the line represent- in,^ Prices psldby faiTnr;rs, farm earnings a.re very low, but when these linos coue clooc together farr»; earnin/;s inciease. (See following gr^^ph.)

index 01 r rices

Rate Zf?rned

0

= Farm prices in U- S.. Av^. igO^-July i5lU = 100 . = Prices pnia by farmers. Au~. 1309-July 19iU ■= IOC

~ Riite earned en i-nvestment, accoan":ing farr.s, central Illinci;

—T

155

-11-

SincR the pric<=i of sone farm products advancncL miicli more rapidly during 1?3^ tlmn other prodiictK, it is evident that some farms v/otild oenefit iTiOre than others, depending upon the kind and quantity of productc sold. Grain prices advanced much ao re rapidly than livestock prices; which recalt- ed in a very had price ratio for farraers who hiiy lar^e nimntitios of feed. The average Illinois farn: price of corn v/as hi cents a "bushel in January, 153^; it advanced steadily luitil the end of the year when it was S? cents a ■bushel. Other grains made raarked advance although not so great an advance ,';.s corn. The -oricc of hogs fluctoa.tod fro;:i a. low of $3 '20 a hundred in May to a high of $61^.30 in Septenoer. The low point in the fall ca^iie in iloveraher when the average price wp.s $5 •!'"'• I'^^ nrice has advanced quite rapidly since

JJoveir.ber, the average price being $1 >[)C for j<'ebraa.ry, 1535'

cattle

were worth $U.1C a hundi'cd in January, 193^ ^-^^d. advanced each •"onth vntil Se-oteir.her, v.-hen the price was $^,^0. They dropped to $5.2C in Deceniher hut increased again to $7*^ for Fehruary, 1935'

The year 193^ ^^S't a- record for the reduction in the niiahers of livestock. The percentage decreases hy species w^^re as f f- llovvs: horse;^, 1.1 percent; muli^s, ?.G perci^-nt; all ca,ttl?, 11.2 perrent; shef^p, 1^-7 percent; hogi*-, 35*3 percent. 'I'.Tien all species are combined on the basis of their ca.pacity to consuTie feed, the reduction was I3 percent. This reduction will greatly reduce the demand for feeds produced in 1335*

Tiio relative change in prices of irr.ptirtant cor^i^'.odities may be noted in the follo\.-ing gra.ph, which shows the average Illinois fara prices by months as a. percentage of the .average prices for the period 13:'1-1929.

Price Indices, 193'^

(1921-1529 = lOG)

kr-T

Dec ,

Jan. Feb. Liar.

All co:Tmodities index r-spresents the wholesale price, of a Irrge nunber-of co;modities for the United States, ss computed by Bureau of Labor Statistics. Grain and livestock indices represent average montWy fa^r prices in Illinois.

156

-12-

Variation in Earnin^gis Over Five-Year Period

A comparison of prodiiction, income, and expenditures on the ac- counting farms in Hancock Coonty for the last five years is very interesting "because of the violent flujctur-tions in price level. Although the 153'^ crop wa.s nearly a failure, and followed the smaller than average crop of 1933> the increased prices of both grain and livestock caused the 193^!- earnings to oe the highest for the five-j/ear period 193^-193^'''

Earnings in 1935 a-S usual, will depend upon individual efficiency, weather, and prices. With normal weather conditions, prices of grain are likely to go down to a more normal level ?/hich will give individual effi- ciency the responsibility for higher earnings on each farm.

Comparison of Eai-nings and Investments on Accounting Farms in Hancock County for I93O-I93U

i

Items

1930

1931

193^

1933-''

193^

I'Tumber of farms ___----_- Average si5:e of farms, acres- - -

Average rate earned, to pay for

management, risk and capital - - Average labor and management wage

G-ross income per acre - Operating cost per acre

Average valuB of land per acre- - Total investment per acre - - - -

Investment per farm in;

Total livestock- -_-_-_

Cattle

Hogs ---_--__---- ?ou2try- ----------

G-ross income per farm ------

Income per farm from:

Crops- -_--_______

Miscellaneous income - - - _ Total livestock- --_-__

Cattle

Dairy sales- --------

Hogs ------------

Poultry-

Average yield of com in bu.- - - Average yield of oats in bu.- - -

30 20 g

2.1^b $-526

13.95 11.69

202

3 13d

1 UsU

1 00 U

151

3 310

U19

Uo

2 851

233

1 960 190

34 39

30 195

-I'li

$-1 731

7.93 10.93

12 g 175

2 2S1 920 79s 100

1 5U9

23

1 526

129

209

1 0U2

133

29

30 197

-i.3f^

33 206

$-1 351

6.17 E.lk

112 151

1 670 713

Uio 1 216

1 17U

231

Ike

669

91

52 ki

$132

11, 7.

92 126

1 t^^g 671

3gi+ 65

3'Sfo

^y.

755 43

1 9m 276

1 0U9 12 g

3S

2g

6'1 34

33 217

$Uoo

1U.70 g.Uo

9S 136

1 6U7

720

U15

Sk

3 igg

U76

2

2 6U1

503

2g7

1 593 76

11

10

1/ Records from Hancock and Schuyler Counties included for I933

AlTirJAJj fab: business report on sixty FAKiS in KEMY, STAEIC, AIHD BUESAU COUNTIES, ILLINOIS, I93U

P. E. Johnston, E. L. Sauer, and J. Ackerman*

The farm eaminj:;'S of 60 account-keeping f aimers in Henry, Stark, and Bureau Counties shov/ed an increase in 193^^ over those of 1933- This is the second consecutive year of improvement in the business of these fanris. The three years previous to 1933 showed very low returns.

These 60 accounts show for 193^+ ^^^ average net income of $2,373 per farm, as compared with an average of $1,710 in 1933i s-'^-d. an average net loss of $^77 iri 1932- The average cash income in 193^ was $^,563 per farm, the cash business expenditures $2,209 P^r farm, leaving a cash "balance of $2,35^^ to meet interest payments and family living expenses. (Those who keep home accotmt books use the latter figure to represent the cash contri- bution of the farm to the "realized family income".) Besides the cash in- come, there was an inventoiy increase of $702 per farm d'ue to the rise in tlie prices of farm products. This increase, added to the cash balance, re- sulted in an average excess of receipts over expenses of $3,056 per farm. The inventory increase was a smaller part of the total farm income in 193^ than in I933 .

These data must not be considered representative of average farm

conditions, for the;'- wore secured from farms which are larger than average,

and which were managed by farmers who are more efficient than the average of all farmers in the coimty.

For the state as a whole, farm earnings were better in 193^ than in 1933 > 1^ spite of the fact that corn and oat yields were very low d'ue to drouth and to chinch b-u^ damage. In the western and southv/3stern parts of the state the drouth caused an almost total failure of both com and oats. This accounts for farm earnings being lower there than in other parts of the state .

The corn crop was best in the southeastern part of the state, and was fair in the northwestern section. IThoat yields were particularly good in the south and central portions of the state. Soybean yields vrere very good throughotit the state, and there was a larger than normal acreage in Illinois in 193^* This state produced over half of the nation's 193^ crop of soybeans.

Chinch btig daxaage extended over most of the state last year, but was much mora severe in some sections than in others, and v/as much worse on some farms than on other fa.rms in the same community. Conditions affecting crop yields were very spotted. This accounts in part for the wide variation in farm earnings from one section of the state to another, and the v/idcr variations than usual from one farm to another.

*E. K. Danforth, Wayne N. Gilbert, and Paul V. Dean, farm advisers in the above Counties, cooperated in supervising and collecting the records on which this report is based.

JA.

15S

-2-

Industries other than agriculture again showed inproved earnings over the previous year. A group of sUo industrial corporations reported hy a nationally known hank showed average earnings of 5-0 percent on their in- vested capital in 193^> a-s compared with 3-^ percent for the same corporations in 1933- -^ similar group had a loss of one-tenth of one percent in 1932. sxid average earnings of ]>.]) percent in 1931"

In comparing tlie average earnings of corporations with the rate earned on investment on accounting farms, it is well to keep in mind that in CO i"po ration accounting, charges are made for management, while in the farm accounts no comparable deduction has "been made. On the other hand the farmer and his fajnily receive food, fuel, and other items of living from the farm for which the farm has received no credit in the records used in this report. For the average central Illinois farm family, consisting of five persons, the value of the food and fiifil furnished hy the farm was ahout $250 in 193^> when estimated en the "basis of the wholesale price for farm products.

"Variations in Farm Incomes

There was a much wider range in farm earnings on the accounting farms in 193^ than in 1933* This was true for the farms included in this report, and was also trioe when the average earnings of farms in one section of the state are compared with the earnings of farms in other areas.

The extremely wide range in earnings was due to a comhination of physical and economic factors. The average yields of wheat and soybeans were much "better, compared vdth the five-year average, than the average yields of com and oats. This variation favored those sections which had larger acreages of the higher yielding crops in 193^' There was also a wide range in average corn yields from one section of the state to another, as well as "between individtial farms in the same area. The price of grains was high in 193^ ^2 compared with prices of livestock and livestock products. Farms where grain; sales constitute a large part of the farm income thus had an advantage. The rapid increase in the prices of farm products, particularly grains, favored those farms which had large stocks of sala'ole products on hand at the "beginning of the year. Many farmers v;ho inventoried the corn on hand at the "beginning of 193^'- ^^ ^0 cents a "bushel, later sold this com for SO cents.

In this group of 60 a,ccounting farms, the most successful third shows an average net income of $3i699. while the average net income on the least successful third of the farms was $93S. In 1933 "t^^^ compara'ble net income for the groups was $2,679. a'^d. $7^7 respectively. Figured on a cash "basis the most successful farms had on an average, $1,22S more cash income left with v;hich to meet interest paj'-ments and family living expenses in 193^» than did the least successful farms.

-:>-

Investments, Receipts, Expenses and Sarnings on 60 Henry, Stark, and Bureau County Farms in 193*^

Items

IPITAL IITVSST1.1ENTS

Land -------

Farm improvements- Livestock total- - Horses - - - - -

Cattle _ - - - -

Eogs

Sheep- --------

Poultry- -------

liachinery and equipment- Feed and grains- - - - -

Total capital investment

$

Your farm

Average of 60 farms

23 676

U 739

3 080

395 1 02U

U9S

99

&\

1 U'57 1 993

$33 950

20 most

profita,Dle

farms

21 700 k 129

1 751

351 g24 l|g7

37

S2

1 317

2 2U9

$li_Jj6

20 least profitable

farms

23 i|26

5 066

1 98^

U21

gg2

397 22U

60 1 19U

1 603

$13271

ECEIPT3 KJD ilET IITCEEASES Livestock total- - - -

Horses -----------

Cattle ---- __-__

Hogs (including AAA pa;;/ments) Sheep- -----------

Po-jltry- ----------

Egg sales- ---------

Dairy sales- --------

Feed and grains (incliiding AAA payaents) ----------

Lahor off farm --------

Miscellaneous receipts - - - -

Total receipts & net increases

$_

^76

S70 1 581

1U7 91 79

26U

1 022

9U

2

$ U 1-U

3 U^U

905 1 g2U lOU S9 128 3U0

1 773 160

2 2U2 10

1 ISO

iSU

88

U9

187

U93

57

3

$ 2 795

XPMSES Al© NET DECHEASES

Farm improvements- - - -

Horses ---------

Miscellaneous livestock decreases

Ma.chinery and equipment- Peed and grains- - - - -

Livestock expense- - - -

Crop expense ------

Hired lahor- ------

Taxes- ---------

Miscellaneous expenses -

Total exnenses & net decreases S

196

3Uo

"3^ 122

18U

238

2U

$ 1 138

I90

253

33 liU

135 238

193

365 27

128

197 255

23 $ 1 188

5C5IPTS LESS EXPEITSES

otal unpaid lahor- -------

Operator's labor ------

Fapiily lahor --------

et income from investment and ■canagenent -----------

ATE SABlvSD Oil IlTVESEffllJT

2turn to capital and operator's labor and management ------

;i of capital invested- - - - - -

-^OR AlZl ;.IAITAGElvIEHT TAGE

- 5.

$ 3 0!

)t)

dS3

531 152

2 373

6.99^

$ h i+14

715 537 178

3 699

11.86^.

1 0C7

669 535 13c

93s

2.S2fJ

2 qoij-

- L

1 697

1 207

U 236

1 559

2 677

1 I177 1 66U

-IS7

i6o

-4-

The following table shows the n-umher of farms having certain net incomes per acre. There was a marked difference between the most successful and the least successful fairos.

Averai°:e net in- come per acre

Uunber of farms

$23 and over h

21 2

iq 2

17 3

15 s

13 10

Average net in- corae ner acre

$11 9 7

5

• 3 1

IJumber of farms

6

6

5

3

7

and under ..... h

i

A further study of the farm businesses made b;/ comparing the in- vestments, receipts, and expenses of the group of farms with the highest net incomes, with those having the lowest should throw some light on the question of why some farmers are more successftil than others. This comparison is shown in the table on page ],.

The most successfiil farms averaged 2C7 acres each, the least suc- cessful 220 acres. This group, chief Ij/ because of the smaller acreage and the lower value on the land, had a smaller total investment tlian either the least profitable farms or the average of all accountint" farms. However, the most profitable farms had a larger average investment in total livestock and in feed and grains. The difference in receipts from feed and grains, hogs, cattle, and dairy products accounts for most of the difference in income between the tv/o groups. The total expenses per farm and per acre, including the charge for family labor, was less on the most profitable farms than on the least profitable farms.

Changes in Inventories and Inventory Values

The year 193^ was similar to 1933 i^ that the prices of farm products continued to advance, causing fuj-ther increases in inventory values. Owing to the poor crop yields in 193^ there were fevrer bushels of grain on hand to inventory at the end of the year than at the beginning. The value of the smaller aaoung of grain, however, was greater than for the larger nmoujit on hand at the beginning of the year.

Bushels of Corn Inventoried

Jan. 1, 193^

Dec. 31. 13^^

Ave rage

of all farms ,

Average of 20 most successful fairns . Average of 20 least successful farms. Your farm

3 319 3 S73 2 386

1 699

2 6U1 792

The most profitable farms had a much larger inventorj'* of com

both at the beginning and at the end of the year. This difference accounted

for a considerable part of their higher receipts and net increases from feed and grains.

161

^

$IflO 362	$
19 -S9
$702	5

-5-

The average inventory increase for the accounting farms in Eenry, Starl:, and Bureau Counties was $702 in 193^. as compared with $761 in 1933i and an inventory loss of $1,22S per farm in 1932- There were increases of $Ul0 in total livestock, $362 in feed and grains, and $19 in machinery, while improvements showed a decrease of $S9- Such an increase in inventoiy as that for machinery results from the value of new replacements during tbjs year being in excess of depreciation costs. This increase is of considerable interest, for it is the first time tliat such an increase in machinery in- ventories has occurred si-ice farm earnings "began to decline so drastically v/ith the general depression.

Inventor^/ Changes for 193^

Beginning Closing Inventory Invent cr;^

Items inventoiy inventory changes changes,

I-I-3U I2-3I-3U 19 3 H yo-u-r f aim

Total livestock $2 OSO $2 U9C

Feed and grains 1 99S 2 360

Machinery 1 U57 1 U76

Improvements (except residence). U 739 U 6^0

Total ' $10 27U $10 976

Some Adjustments on Henry, Sta.rk, and Bureau County rarms Since 1929

Paimers have "been forced to make adjustments in their cash expen- ditures as the result of changes in their cash incomes. Farm operating costs on Henrj^, Stark, and Bureau County account-keeping faims have declined each year since 1931' Total operating expenses were $1.35 psi" acre lower in 193^ than in 1933» ^'^'^ cash operating expenses were $2,209 PPr ?^-rm in 193^> £S com- pared with $2,132 in 1933- 'l^'^ largest increase in expenditure over the previous year was for machinery and supplies for machinery. Indications point to an even greater expansion of spending for these item.s in 1935 > since farmers have postponed machinei^"- replacements during the five-year period since 1929.

Cash Income and Expenses on Accounting Farms in Henry, Stark, e.nd Bureau Counties for 1S29 s.nd 193^

'lcvx Average cash Yo'or

Items I aim exuense per faim faim

ic.^li 193^ 1929 193^

Livestock $ $ 62g $1 US3 $

Feed and grains U20 S30

Machinery U5I 6U3

Improvements lOS 26l

La.bor ISk U67

Miscellaneous 2U 30

Livestock expense 3^ 5^

Crop expense 122 I96

Taxes 23g 338

Total $ $2 209 $U 30U

Average casn
income	per	farm
193^		1929
?3 29U	$6	56U
1 OSO		919
Q2		113
1
9^		V4
ci		1

lixcess of cash sales over e;oenses ^

Increase in inventory

Income to labor and capital (Heceipts less expenses).

$^ 563	$7	531
$2 35U 702 3 C36	$3 327 159 3 Us6

162

-D-

Tiie c\mulative effect of several years of low ajricultural prices on the denand for manufactured goods can readily "be ascertained "by a com- parison of cash fam expenditures in 193'^ with those in 1929- Although the average cash income in 193^'- ''''a-s oO-O percent of that in 19^9. cash expendi- tures were only 5I percent as large. In 193^ livestock purchases vieve U2 percent, and feed and grain purchases 50 percent as large as in 1S29« In 193^ these fairas paid out 70 percent as much for machinery, hi percent as much for improvements, and 62 percent as much for crop expense as in I929, while taxes were reduced to 70 percent of the 1929 level.

Comparison of Farms with High and Low Earnin-sis

The most profitable farms in this study had net receipts per acre of $17 •S9. as compared with $U.27 for the least profitable group. The reasons for this difference may he obtained from a st-udy of the data on pages 3 a-^d S.

The most profitable farms had more livestock, and were more effi- cient in their livestock operations than the least profitable farms. They had an investment of $0.50 an acre in productive livestock, as compared with an investment of $7.60 an acre on the least profitable farms. The most pro- fitable farms fed $2,315 worth of feed to productive livestock, securing a return of $1^6 for each $100 worth of feed fed, v/hile the least profitable farms fed $1,S98 worth of feed, and secured only $118 for each $100 worth of feed fed. The most profitable farms had a return of $132 for each $100 invested in cattle, while the least profitable farms secured $85 for each $100 invested in cattle.

The most profitable farms, althoiogh having 13-1 fewer tota,l cacres, had 11.5 more crop acres than the least profitable f arras. They lia.d 9*7 acres more corn, and 12. U acres more oats than the least profitable farms. The most profitable farms secured 11.1 bushels more com per acre than the least profitable faims. Because of tl-E larger crop acreage and the higher yields, the most profitable farms had larger inventories of feed o,nd grain on which to mal-ce a profit when prices advanced. Crop yields were so low on the least profitable faims that they had an average inventory loss of $121 per farm in the feed and grain account, in spite of the price advance.

The larger income on the most profitable farms was sectired with a total operating cost of $8.07 per acre, as compared with $S.^ per acre on the least profitable farms. Man labor costs per crop acre vrere S5»06 on the most profitable farms, as compared with $5-69 on the least profitable farms, while power and machinery costs per crop a.cre amoionted to $2.70 on the most profitable farms, and $3-9^ on the least profitable farms.

163

I

Infliience of AAA ?ro:::ra':is on Cropnin^ Systens 3.nd Fai-ia Incomes

The farm-account records in Illinois v;ere influenced totli directly and indirectly by the corn-hog and v/heat adjustment programs. A large per- centage of accounting farms were under one or "both contracts in 193^- The acreages of com and v;heat on these farms were therefore less tlian normal. This should have resulted in lov/er operating costs. Corn-hog benefit pay- ments for the entire 193^ program will total about ^0 million dollars for the state, while wheat benefit payments will be about S.U million dollars.

The benefit pa^yrnents for accounting farms are indicated in the follov/ing table, which shoves the average payxncnt for those farms receiving payments, and includes only those pa;,'Tnents received by the cooperator before the 193^ books were closed. In some cases only the first corn-hog chock is included, while in other casos the second check had been received. The sec- ond payments not received, and the third payments will be entered in the 1935 book.

AAA Benefit Paj^ments Received in 193^

Corn Wheat 7ogs

Number Amount Number Amount Number Amount , \f J? J- J, ol all of per of per of ver ^ 1 / r. ^ J, r,' payments±/ larms lam farms larm faras farm ^ "^

1/3 most profitable farms I9 $137 1 $^3 20 $191 $32U

1/3 least profitable fams I9 126 - — 20 1% 265

All accounting farms 58 ll»2 1 U3 cO I7S 316

!_/ Total benefit payments reported by accounting farms under contract for 193^ divided by total number of a.ccounting fa-iros.

On most farms the cash received from benefit payments ?;ill more than pay for the year's ta:>:es. As an average for all accounting farms, the payments actually received were $7^ more than sufficient to pay the 193^ taxes.

It is interesting to note the use made of the contracted axres on the accounting farms. The average farm had 19 contracted acres which were used as follows: 3-^ idle; U.l mixed clover and timothy; 2.2 sT.-eet clover; U.6 soybeans; 2.5 alfalfa; and 2,2 acres were in other crops. These data indicate that most farmers made good use of their contracted acres from the stnadpoint of soil improvement, as a la,rge part of them -.vere in legumes, ^en the Government restrictions on the use of crops grown on contra.cted acres were removed, they v/ere on many farms the most profitable crops as they furnished hay and pa,sture where badly needed in drouth areas. The leg- umes had tiie further a-dvantage of being imm-one to attack from chinch bugs.

Farm earnings were influenced indirectly by the AAA prograas in that the reduction in production increased the price of the comm.odities in- volved. The drouth was a more important factor in reducing production than the adjustment programs, yet if it had not been for the corn-sealing program thei-e would have been but little com in the hands of farmers at the time the ma.jor price advance became effective.

164

Factors Helping to Analyze the Farm Business on 60 Henry, Stark, and Bureau County Farms in 193^

Items	Your faim	Average of 60 farms	20 most profitable farms	20 least profitable farms
Size of farms — acres -------		211.7 90.2 38.8 19. 81 S.60 11.21 112 160	206. 8 90.2 25.96 8.07 17. S9 105 151	219.9
Percent of land area tillable- - -		87.8
Percent of tillable land in hay and pasture -------------		U2.I
Gross receipts per acre- _ _ - _ -		12.71
Total expenses per acre- -----		8.1+4
Uet receipts per acre- ------		U.27
Value of land per acre ----- -		107
Total investment per acre- - - - -		151
		6U.0 36.5 .9 6.7 31.2 I12.9 31.3 ^.3 15.5	Co . S U2.g 1.0 29.5 32. g 35-9 U.2 lU.g	59.1
Oats ___---_		30. u
Tneat -_--		.2
		10.0
Hay		30. U
Tillable pasture- - - - -		50.8
Crop yields — Com, bu. per acre- -		24. g
Oats, bu. per aci-e- -		3.1
Soybeans, bu. per acre		I7.U
ValuD of feed fed to productive L.S.		2 333 130 111 236 5^7 111 "43 S.gU ii;.32	2 315 1U6 132 252 5.7 113 U7 g.50 16.39	1 893
Returns per $100 of feed fed to productive livestock- ------		118
Returns per $100 invested in: Cattle - - - -		85
Poultry -------		201
Pigs weaned per litter ------		6.1
Income per litter farrowed - - - -		113
Dairy sales per dairy cow- - - - _		35
I:ivestraent in productive L.S. por A.		7.60
Receipts from productive L.S. per A.		10.15
Man labor cost per crop acre - - -		R.5U 2.29 3.kk 72f. 213 20 ^3 •93 2 35I1 702 6.99f. U 19U	5.06 1.65 2.70 75f^ 206 15 31 •75 2 7S6 1 628 11.86^ 5 3bS	5-69
Machinery cost per crop acre - - -		2.57
Power and mach. cost per crop A. -		3^9^
Farms v/ith tractor --------		55fo
Value of feed fed to horses- - - -		205
IJian labor cost per $100 gross i npnmp —		29
E:cpenses per $100 gross income - -		66
Farm improvements cost per acre- -		.88
Excess of sales over cash expenses		1 552
Increase in inventory- ------		U9
Rate earned on investment- _ - - -		2.82$^
G-ross receijjts per farm- - - - _ _		2 795

-9-

165

Chart for St-odying the 3ificiency of Various Parts of Your Bnsiness, Henry, Stark, and Euj-eau Counties, 193^

•I'hx

; nuiibers atove the lines a

cross

the middle

of the pag

e are the averages for

the

bO farms included in thi

s report for the factors named at the top of the

page .

By drawing a

Line across

each

colriinn at the nuiiber measuring; the efficiency of your

farm in that factor, you

can

conp?.re your efficiency Avith that of other farmers in

your locality

■

} Bushels

j Cost per j

1

Gross

1 per acre

j_,

1 crop acre

0

receipts

Ti

o;

1

I— 1

0)

Ph

niJ

-f^J-

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W

0)

QJ tH

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cn 0

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17s

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■ i

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166

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ra

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lis

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26

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91

91

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156

106

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32

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1550

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i 1 3000

130

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116

91+

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Ik

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71

71

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kk

-1500

1 i 350 12

1 i 1 1800

50

1 -.V .

1 1 1 1 i ! i 1 ! 11 1-

61

61

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I 1 1 ^6

70

1 j 1 1 I10.3U 7.23

1 30 1 -

i -I30I 10

1 |l200

166

-10-

Inflixence of Price Chanpa^s on Farn Earningts

Farm prices in 193^ rdvanced more rapidly thszi did the prices of commodities whjch. fairaers boxi^^Jit . Fr.nners of the United States as a group could excliange their fami -Droducts in 193^ ^o^ T'-'- percent as many goods as for the period 1905-191^9 wMle in 1S33 they received only 6^ percent, and 1932 only 61 percent as mtich in excliange for what they had to sell as in the prewar period. In the month of Fehi'wa.ry, 193?. this index of purchasing power had increased to S7 percent of prev,'ar, the index of fami prices hs.vir.t; risen to ill as corrpared v.'ith an index of 127 for ccnunodities which fanners "buy. When the line representing farrn prices drops helow the line represent- inc ■nrices "rvs.id "by farmers, fa.rm earnings are very low, hiit when these lines corae close together fann earnings increase. (See following graphs)

Index of Prices

Sate Snmed

20c

150 125

100

75 50

D

= Farm prices in U. S. A^Jg. igOQ-July I51I4 = 100

= Prices paid 0;/ fartiers. Aug. 1309-JuLy 191^! = IOC

- Hate earned on investraent, acccunt-ing fams, central Illinois

X—^ — L.

-i— A,

.^i"^

X917 'IS 'I9 '20 '21 '22 '23 '2^1 '25 '2b '27 '2g '29 '30

t7T 1

32 'j,;^ »3U

167

-11-

SincR the price of scne fam products advanced much more rapidly during 193^^ tlian other productB, it is evident tliat sorae farmj v/ould "benefit acre than others, depending upon the kind and quantity of prodxicts sold. Grain prices advanced much .uore rapidly than livestock prices; which result- ed in a very had price ratio for farmers who ■bi:iy large (quantities of feed. The average Illinois farm price of corn was Ul cents a hushcl in Janu^ary, 193^'-; i't advanced steadily vrntil the end of the yea.r when it was 28 cents a "bushel. Ot'her grains made marlred advance although not so great an advance as corn. The price of hogs fluctaa.ted from a low of $3.20 a hundred in May to a high of $6^30 i^ 3epten"ber. The low point in the fall came in Hc/emher when the average price was $5.10. The price has advanced quite rapidly since I'ovembor, tr^ average price "being ^f »^0 for Pe"bruary, 1935* Beef cattle were worth $H.10 a hundred in January, 193^ ^'^^ advanced, each month until Sentemher, when the price was $5.90. They dropped to $5.20 in Decem'ber hut increased argain to $7.^ for Fe'brua.ry, 1935*

The ye8.r 193^ f^et a record for the reduction in the numhers of livestock. The percentage decre.ascs hy species T^re as follows: horsep, 1.1 percent; mules, ?.G percent; all c.e.ttle , 11.2 perce^it; shpep, U.J pex-cent; hogs, 35«3 percent. VJlien all species are comhined on the hasis of their capacity to consTjne feed, the reduction was I3 percent. This reduction will greasily reduce the demand for feeds prod'-oced in lf)35«

The relative change in prices of important corair.odities may he noted in the following gi-aph, v/hich shows the average Illinois farm prices hy months as a percentage of the average prices for the period 1921-1929.

Percent 120

Price Indices, I93U

(1921-1929 = 100)

Jan.

jieo.

Apr

Dec.

jai corxiodities index reTiresents the r/holesale price of a large numher of corai;iodities for the U.iit'Dd States, ss computed hy li-areau of Laoor Statistics. Grain and live stoci:_ indices represort average monthly fajr- prices in Illinois.

16S

-12-

Variations in Earnini£:s over Five-Year Period

A comparison of production, income, and expenditvires on the ac- coimting farms in Henry, Stark, and Bureau Counties for the last five years is very interesting because of the violent changes in price level. The crop yields in 193^ were very low, yet total receipts per farm were higher than in any other year in the last five, and were 79 percent of the 1929 gross receipts. Operating costs continued to decline in 193'^- Thus profits were the hest the covmty had experienced since 192 S.

Earnings in 1935> ^s usual, will depend upon individual efficiency, weather and prices. A normal year will mean larger yields of grain and prohahl^ lower prices, which will give individvial efficiency the responsibility for higher earnings on each farm.

Comparison of Earnings a.nd Investments on Accounting Earms in Henry, Stark, and Bureau Counties for 1930-193^

T7T

Items

1930

1931^

1932!/

19332/ J

I93H

ITumher of farms - - - Average size of fanns,

acres- -

Average rate earned, to pay for

management, risk and capital - - Average lahor and management wage

Gross income per acre ------

Operating cost per a,cre - - - - -

Average value of land per acre- - Total investment per acre - - - -

Investment per farm in:

Total livestock- ------

Cattle -----------

■ Hogs ------------

Poultry- ----------

Gross income per farm ------

Income per farm from:

Crops- -----------

Miscellaneous income - - - -

Total livestock- ------

Cattle __

Dairy sales- --------

Hogs ------------

Poultry- -__-_-----

Average yield of corn in bu.- - - Average yield of oats in bu.- - -

^3 212

M

$-72^

16.23

12.90

ii;i 203

3 9^S

1 SSb

1 296

lUb

■5 ^^40

26 3 1S2

557

392

1 999

220

^3 U5

3C 19^

-2.5f. $-2 305

S.52 13.55

139 199

Ui

-1.2'^ $-1 851

7.26 9.21

111 156

s66 2U1

973 151

1 652

3^

bis

225

S27

160

Us U6

2 SUb

1 U71

73 s

1 775

3C

1 7^5

660

1S9

777

95

6U

50

38 190

5-ifo $ 537

ig.95 9-95

124 177

3ID 276

505

S6

3 600

1 U99

30

2 071

617 2U7

1 033 10 K

52

1/ Records from Warren County included for 1930 and 193'^-

2/ Record for Henry and Bureau Counties only for 193^ a-^d. 1933

60 212

7.0^. $1 207

19. SI g.bO

112

i6g

2 1

OSO 02U

Uqg '9\

\ 19U

1 022 2

3 076 S70 26U

1 581

91 31

169

•

AiniUAl I Amu BUSIEESS HEFORT OIT TEIRTY-EIGHT PASI.IS m WABESN Mm KNOX COUNTIES, ILLINOIS, I93U

P. E. Johnston, J. E. Wills, and T. R. Hedges*

The farm earnings of 3S account-keeping farmers in Warren and Knox counties showed an increase in 193^ over those of 1933- This is the second consecutive year of improvement in the businesses of these farms. The three years previous to 1933 showed very low returns.

These 38 accounts show for 193^+ ^n. average net income of $2,526 per farm, as compared v/ith an a,verage of $2,033 in 1933i ^-^d. an average net loss of $^77 in 1932. The average cash income in 193^ was $^,797 per farm, the cash business expenditures $2,29S per farm, leaving a cash balance of $2,^99 to meet interest payments and family living expenses. (Those who keep home account books use the latter figure to represent the cash contri- bution of the farm to the "realized family income".) Besides the cash in- come, there was an inventory increase of $712 a farra due mostly to the rise in prices of farm products. This increase, added to the cash balance, re- sulted in an average excess of receipts over expenses of $3,211 a faim.

These data must not be considered representative of average farm conditions, for they were secured from farms which are larger than average, and which were managed by farmers who are more efficient than the average of all farmers in the county.

For the state as a whole, farm earnings were better in 193^ than in 1933 > in spite of the fact that corn and oat yields were very low due to the drouth and to chinch bug damage. In the western and s o lit hv.'e stern parts of the state the drouth caused an almost total failure of both corn and oats. This accounts for farm earnings being lower there than in other parts of the state .

The corn crop was best in the southeastern part of the state, and was fair in the northvrestern section. Wheat yields v;ere particularly good in the south a,nd central "portions of the state. Soybean yields were very good throughout the sta.te, and there was a larger than normal acrea,,ge in Illinois in 193^- This state produced over half of the nation's 193^- crop of soybeans.

Chinch bug damage extended over most of the state last year, but was much more severe in some sections than in others, and v/as much \TOrse on some farms than on other farms in the same community. Conditions affecting crop yields were very spotted. This accounts in part for the wide variation in farm earnings from one section of the state to another, and the wider variations than usual from one fa.rm to another..

E. H. Walworth and A. R. Kemp, farm advisers in the above Counties, coop- erated in supervising and collecting the records on which this report is based.

170

Industries other than agriculture again showed improved earnings over the previous year. A rroup of S^ industrial corporations reported hy a nationally known bank showed average earnings of ^.0 percent on their in- vested capital in 193^. as compared with 3-'^ percent for the same corpor- ations in 1933" A similar group had a loss of one-tenth of one percent in 1932, and average e?-rnings of 3*3 percent in 13'j)l»

In comparing the s,verage earnings of corporations with the rate earned on investments on accounting farms, it is well to keep in mind that in corporation accounting, cliarges are made for management, while in the farm accoimts no comparable deduction has been made. On the other ha,nd the farmer and his family receive food, fuel, and other items of living from the farm for v/hich the farm has received no credit in the records used in this report. For the average central Illinois farm family, consisting of five persons, the value of the food and fuel furnished by the farm was about $250 in 193^5 when estimated on the basis of the wholesale price for farm •oroducts.

Variations in Farm Incomes

There was a mvch. wider range in farm earnings on the accounting farms in 193^ than in 1933- This was true for the farms incl'Jded in this report, and it was also true when the average earnings of f areas in one section of the state were compared with the earnings of farms in other areas-.-

The extremely wide range in earnings was duo to a combination of physical and economic factors. The average yields of wheat and soybeans was much better compared with the five-year average, than the average yields of com and oats. This variation favored those sections v/hich had larger acreages of the higher yielding crops in 193^- There was also a wide range in average corn yields from one section of the state to another, as well as between individual farms in the same area. The price of grains was high in 193^ as compared with prices of livestock and livestock products. Farms where grain sales constitute a large part of the farm income thus had an advantage. The rapid increase in the prices of farm products, particularly grains, favored those farms which had large stocks of salable products on hand at the beginning of the year. Many farmers who inventoried the com on hand at the beginning of 193^ at Uo cents a b^^shel, later sold this com for SO cents.

In this group of }E accounting farms the most successful third shows an average net income of $4,^52, while the average net income on the least successful third of the farms was .$1,055- I"- 1933. 'the comparable net income for the two groups was $3j60S, and $75^ respectively.

-3-

Investments, Eeceipts, Expenses and Earnings on 3S

Warren and Knox County Eanns in I93U

Items

CAPITA! IFirsSTI.ffllTTS

Land ------------

Farm improvements- -----

Livestock total- ------

Horses ----------

Cattle -__1__

Hogs -----------

Sheep- ----------

Poultry- ---------

lifechinery and equipment- - - Peed and grains- - - - - 1 -

Tota.1 capital investment

^CEIPTS AaID W.1 IHCPEASES

Livestock total- ------

Horses ----------

Cattle ------

Hogs (including AAA payments) Sheep- ----------

Poultry- ---------

Egg sales- --------

Dairy sales- -------

Peed and grains (including AAA payments) _----_--_

Lalior off farm -------

!ili seel lane ous receipts - - - Total receipts & net increases

EXPEIfSES Aim IlET DECREASES

Farm improvements- -----

Horses -----------

Miscellaneous livestock

decreases

Machinery and equipment- - - Peed and grains- ------

Livestock expense- -----

Crop expense --------

Hired labor- --------

Taxes- --__--_----

Miscellaneous expenses - - -

Total expenses & net decreases

HECEIPTS LESS EXPEl'ISES "

Total unpaid lahor- -------

Operator's labor ------

Pamily labor --------

Net income from investment and

management -----------

PATE EAffiED ON IKVESTI-lSl-IT

Hetum to capital and operator's

labor and management ------

5% of capital invested- -----

LABOR ALTD I-IAITAGELffiUT WAGE

Your farm

Average of 3S farms

25 026 U 22U

1 ggl

g65 kSz

35 62

370 053

1 2

13 most

profitable

farms

31 SO9

U36I

2 096

472

92U

5

61

26

59

1 722

2 717

$H2 705

13 le?

profitable

farms

21 531

h 26g

1 g97

3S7

1 0S3

336 29 62

9S7 1 335

$30 oig

2 915

31

917

1 511

'7U

51

7^

257

1 Uoo

70

1

$ k 3S6

k 283

1 Usi

2 2U0

2g U9 62

367 2 271

59

5 65U

2 315

912

1 070

52

33

61

1S7

UlO 68

1

$ 2 79H

$_1

178

326

58 122

235

226

30

225.

172

51 1J42

3)48

272

3S $ 1 ^71

153

252

98

IIU

206

18k 30

$ 1 oU6

$_1

2£1

685

529 156

2 526

TiJlfo

731 5U0

191

U U52

10. U2^

3 055 1 72s

$ 1 327

U 992

2 135 $ 2 857

$ 1 7^g

S93 5U0

153 1 05s

1 595 1 501

$ 2lt

172

The .following taol? s.hov/s the nuriher of fan.is liavini" certain net incomes per acre. There was a marked difference between the most successful and the least successful fa.TiAS'.' ■ . .

Average net income per acre

$21 ,

19

17

15

13

11 ,

Uunber of farms

1 :

3

6

2

5 6

Average net income Nui'aber of

per acre farms

$9 5

7 5

5 7

3 1

1 1

-1 2

A further stTjdy of the farm businesses ma.de by comparing the investments, receipts, and expenses of" the group of farms having the highest net income, with those having the lowest income will throw some light on the question of wliy some faimers are more successful tlian others. This com- parison is shown in the table on page 3*

The most successi'ol farms averaged 299 acres each, the least suc- cessful I9U acres. Tliis difference in size accoimts in part for the vari- ation in the average investments, receipts, and expenses in the tv/o groups. Difference in receipts from the sale of grains, hogs, and cattle accounts for most of the difference in income between the two groups. Although the expenses per farm were higher on the most profitable farms, the total ex- pense per acre, including the charge for family labor, was less than it was on the least profitable fa.nns.

in that the prices of farm pro- increases in inventor-/ values.

The year 193^ was similar to 1933 ducts continued to advance, causing- further- Owing to the poor crop yields in 193^. there were fewer bushels of grain on hand to inventory at the and of tiie year than at the beginning. Th-e value of the smaller aino^ont of grain, however, was greater than for the larger amount on hand at the beginning of the year.

Bush-els of Corn Inventoried

Jan. 1, 193^

Dec. 31. I93U

Average of all farms

Average of I3 most successful farms . Average of I3 least sxoccessful fa,rms. Your farm

3 ^20 k 390 2 269

1 573

2 28k

The most profitable farms had a much larger inventor^/ of com, both at the beginning and at the end of the yea.r. With the rapid rise in com prices, this was one of the important factors accounting for their higher re- turns from feed and grains.

-5-

The average inventory increase for the accouiiting larras in '7arren and Knox co'jjities v/as $712 in 193^+. as compared \vith (}'(0k in 1933> and an inventory loss of $1,22S a farm in 1932- There were increases of $U77 i'^ total livestock, S221 in feed and grain, and $3S in machinery, while improvements showed a decrease of $2U. Such an increase in inven- tory as that for machinery res"alts from the va.lue of repairs and replace- ments during the year "being in excess of depreciation costs. This increase is of considerahle interest, for it is the first time that such a.i increase in machinery inventories has occurred since far.u earnings "began to decline so drastically with the ;general depression.

Inventory Clianges for 193^

Items

Beginning inventory 1-1-3U

Closing inve?itory I2-3I-3U

Inventor;/ changes I93U

Inventory change s , yoiir farrji

Total livestock

Feed and grains

Machinery. . .

Improvements (except residence) Total.

$1 8 SI	$2 35s	$477
2 053	2 27U	221
1 370	1 Uos	32
H 22U	U 200	-zk
$9 52s	$10 2I40	ft712

Some Adjustments on TJarrcn and Knox Co'cjity Fanns Since 1929

Farmers have "been forced to malce adjustments in their cash ex- penditures as the result of changes in their cash income. From 1530 through 1933> farm operating costs declined each year, "but the year 193'-'' "aroi-^ht a reversal of this trend. The total operating expenses were J>h cents £:.n acre higher in 193^ than in 1933> while cash operating ejcpenses were $2,298 a farm in 193^ ^^ compared with $2,029 iii 1933' ^°w crop ^''ields, comhined with the usual large amo^cuit of livestock on TTarren and ICnox County fa,rms, necessitated the purcliase of considera"bly more feed in 193'-^ than in 1933* There was also a significant increase in expenditures over 1933 f'^^ live- stock and machinery, "but a considera"ble decrease in expenditure for ta.xus. Indica.tions point to a,n increase of expenditures for machinery- and improve- ments in 1935» since fa.irncrs ha.ve postponed repairs and repla.eeraents for these items during the four-year period since ISJiQ .

Cash Income and Expenses on Accounting Farms in Warren and Knox Counties for I929 and 193^

Your Average cash Your Average cash

Items farm expense per faim farm ■ income- T)er farm

I93U 193^4 1929 I93U

Livestock $ $ 525 $1 229 $

Feed and grains MSl 721

Llachinery kS^ S92

Improvements .I56 226

La"bor 235 kSO

Miscellaneous 30 27

Livestock expense .... 58 5U

Crop ex"!3ense 122 267

Taxes 226 36'4

Total $ $2 29s $U 260 $

Excess of cash sales over expenses $

Increase in inventory .

Income to la"bor and ca'oital (Receipts less expenses).

1934	1929
$2 963	$5 S5S
1 b'^tO	2 165
121	164
2	IS
70	^2
1	6

$4	797	$S	261
;^2	499	$4	001
	712		1S9
3	211	4	190

171^

The c'u;T:i"alative effect of several years of low a^^ricultioral prices on the demand for manirfactured goods can be readily ascertained by a comparison of cash expenditures in 193^ with those in 1929* Tlie average cash income in 193^ was 5s percent of that in 1929> while cash expenditures were 3^ percent as large. In 193^^ livestock purchases were I+3 percent, and feed and grain purchases 6U percent as large as in 192°. In 193^^ these f arris paid out ^k percent as much for machinery, U6 percent as much for crop expense, and 69 percent as much for improvements as in 1929. while taxes v/ere redviced to 62 percent of the I929 level.

Comparison of Farms With High aad Low Earnings

The m.ost profitabel farms in this study had net receipts per acre of $lU.91 as compared with $5*^3 for the least profitable group. • The reasons for this difference may be obtained from a study of the data on pages 3 ^-^^ S.

The most profitable farms had more ' livestock per farm, and v/ere more efficient in their livestock production' than the least profitable farms. They had an investment in productive livestock' of $7_'09 Pef acre, and fed $2,871 of feed per farra, as compared A^ith an investment of $7'67 per acre, and $1,650 of feed fed per farm, on the least profitable f arins . The productive livestock on the most pi'ofitable farms returnod $1^7 for each $iOO of feed fed, as compared with a return of $lUo for each $100 of feed fed on the least pro- fitable farms. The most profitable farms weaned an average of 6.1 pigs per litter and had an income of $165 per litter farrowed, as compared with 5-3 pigs weaned per litter, and an income of $S6 per litter farro^red on the least profitable group. There were returns of $150 for each $100 invested in cattle on the most profitable farms, as compared v/ith returns of $103 P^r $100 in- vested in cattle on the least profitable farms.

The most profitable farms in this study averaged I0U.3 acres larger, and had a larger proportion of their land area tillable than the least pro- fitable farms. They had 32.0 acres more corn, 13-0 acres more oats, 3^*2 acres ■ more soybeans, and 12.1 acres more hay tlian tlie least profitable farms. Since soybeans and hay were tv/o of the high-profit crops in 193^< their larger acre- age of these crops was an important factor in accounting for the higher returns from feed and grains on the most profitable farms. The most profitable farms also carried larger inventories of feed and grains on which to make a profit when prices advanced. Along with the larger acreage of crops, another reason for the larger inventories of feed and grain was the higher crop yields,' there being an advantage of ^.h bushels of com, '}.! bushels of oats, g.2 bushels of wheat, and U.7 bushels of soybean? per acre in favor of the high-profit group.

The larger income on the most profitable farms was secured with a total operating cost of $7-37 per acre, as compared ivith $>3.95 P®r acre for the least profitable farms. The man labor costs were $3.00 per crop acre lower, while power and machinery costs were 85 cents per crop acre lower for the most successful farms.

I

I

-7-

Influence of AAA Pro-''rams on Cro'pping Systems and Farm Incomes

The farm-account records in Illinois were influenced "both directly and indirectly by the corn-hog and wheat adjustment programs. A large per- centa.ge of accounting farms were under one or "both contracts in 193^- The acreages of com and wheat on these farms were therefore less than normal. ■ This should have resulted in lower operating costs. Corn-hog "benefit pay- ments for the entire 193^ program will total a"bout kO million dollars for - • the state, whJ.le wheat "benefit payments will "be a'bout S.U million dollars.

The benefit payments for accounting fanriS are indicated in the following table, which shows the average payment for those farms receiving payments, and includes only those payments received by the cooperator before the 193^ books were closed. In some cases only the first corn-hog check is included while in other cases the second check had been received. The sec- ond payments not received, and the third pajnnents will be entered in the 1935 book.

AAA Benefit Payments Received in 193^

175

Corn Wieat Ho.'rs

Ave rage

iMumber Ajnount Uuraber Amount ITimber Amount j, t-,

r. - „ of ail

of per 01 per of per j. 1 /

farms farm farms farm farms larm

1/3 most profitable farms I3 $192 3 $189 13 $233 $U6S

1/3 least profitable farms I3 I30 1 2Ug I3 1% 29U

All accounting farms 3g I57 5 I9C 32 log 37O

if Total benefit payments reported by accounting fanas under contract for 193^

divided ^oy total number of a,ccounting farms. ^ ' " " —

On many farms the cash received from benefit payments will more than pay for the year's taxes. As an average for all accounting farms, the payments actually received were $lUU more than sufficient to pay the 193^ taxes. -

It is interesting, to note the use made of the contracted acres on the accounting farms. The average farm liad 22.1 contracted acres which were used as follows: 5-3 idle; 5'3 J^ixed red clover and timothy; l.U sweet clover; 4.2 soybeans; 2.1 alfalfa; and 3-S acres were in other crops. These data in- dicate that most farmers made good use of tlieir contracted acres from the standpoint of "soil improvement, as a large part of them were in legiraes. "When the G-ovemment restrictions on the use of crops grown on contracted acres were removed, they were on many farms the most profitable crops as they furnish- ed hay and pasture where badly needed in drouth areas. The legumes -had the further advantage of being im,n\uie to attack from chinch bugs.

Farm earnings were influenced indirectly by the AAA programs in that the reduction in production increased the price of the commodities in- volved. The drouth .was a more important factpr in reducing production than the adjustment programs, yet if it had not been for the corn-sealing program there would have been but little corn in the hands of farmers at the time the major price advance became effective.

176 Factors Helping to Warren and	-g- Analyze the Farm Business Knox County Farms in 193^+	on 38
Items	Your farm	Average of 38 farms	13 most- profitable farms	13 least profitable farois
Size of farms— acres -------		235.8 g5.1 36.6 IS. 60 7.89 10.71 106 1I+7	29g.6 87.3 32.7 22. 2g 7.37 IU.9I 107 1I+3	I9I+.3 80.8 ^3.9 , ii+.3g s.95 5.1+3 111 15U
Percent of land area tillable- - -
Percent of tillable land in hay and
Gross receipts per acre- -----
Total expenses ner acre- - - - - -
ITet receipts per acre- ------
Valtifi of land per acre ----- -
Total investment per acre- - _ _ -
		66.5 26.0 U.5 18. U 31.0 U2.5 2S.7 2.6 U.o 20.5 .	82.7 30.3 5.0 36.0 30. g 3.8 9.^ 20.1	50.7 17.3 , ..5.2 ■ 6.5 23.9 U5.0 25.1+ : 0.7 1-2 ; 15.1+
Oats- _-----_-_-
Wheat .--
Hay
Tillable pasture- - - _ -
Crop yields — Corn, bu, per acre- -
Oats, bu. per acre- -
Wheat, bu. per acre -
Soybeans, bu. per acre
Value of feed fed to productive L.S;		2 0U3 lUl 120 198 5.6 110 U7 7-03 12.23	2 S71 11+7 150 185 6.1 165 59 7.09 • 1U.16	1 650 ll|0 \ 103 : 157 ! 5.3 \ s6 39 7.67 11.91
Returns per $100 of feed fed to productive livestock- ------
Returns per $100 invested in: Cattle
Poultry -------
Pigs weaned per litter ------
Income per litter farrowed - - - -
Dairy slaes per dairy cow- - _ - - •
Investment in productive L.S. per A.
Receipts from productive L.S. per A.
Man labor cost per crop acre - - -		5.56 2.06 3-19 7lf^ 209 20 U2 .75 2 ^99 712 7.31 k 3S6	^.79,, 2.12- 3.07 S5f^ 258 15 33 .58 3 109 2 07I+ 10.1f2 6 e^,h	7.79 2.25 3.92 5^ 17s 31 62 .79 1 987 -239 3.51 2 79^+
Machinery cost per crop acre - - -
Power and mach. cost per crop A. -
Farms with tractor --------
Value of feed fed to horses- - - -
Man labor cost per $100 gross
Expenses per $100 gross income - -
Farm improvements cost per acre-'-
Excess of sales over cash expenses
Increase in inventory- ------
Rs,te earned on investment- - - - -
Gross receipts per farm- -----

177

_:	Chart for Stuyding the Efficiency of Various Parts of Your Business, Warren and Knox Co^-mties, 193^ The numbers ahove the lines across the middle of the page are the averages for the . 38 farr.s included in this report for the factors named at the top of the page. By drawing a line across each column at the n'omber measioi-ing the efficiency of your farm in that factor, you can compare your efficiency with tliat of other farm.ers in your locality.
	Rate earned on investment	Bushels per acre	G c: o y u Pl CD HH +J -P •H CQ t£ U	Dairy sales per dairy cow	Poultry income per $100 invested	L.S. income per $100 of feed fed	Cost per crop acre	Labor cost ])er $100 gross receipts	Increase in inventory	Sales over cash expenses	C-ross receipts
-	o o	CO -p o	t,2 a o O	0 a ft	Power and machinery	Per acre	Per farm	a ft ■H m U CJ <
	^2.3	U9	13	2C	210	V	398	291	_ _	__	-_	5712	7900	39	12900	936
	11.3 1	U'3	11	2S	19C	27	358	261	.76		k	U212	6^00	39	iiUoo	U76
	10.3	141	9	2b	170	77	313	231	1.96		3	3712	9500	31	9900	Ulb
	i9.3	37	7	2li	1'30	67	27s	201	3.16	.-9	12	2712	U9C0	27	siwc	396
	8.3	33	5		13^'	57	233	171	U.36	1.39	16	1712	3900	23	6900	296
	7.31	23.7	2.6	20.^	11:	U? 193	1 1 lUlj 9_.96	3.19	20	712	2U99	13.60	U336' 23^.3
-	0.3	2o	1	18	9C	37	1 1'3S	111	6.76	U.'49	2h	-2 33	1900	19	1 1 29CO	1 176
	'.3	21		15	70	27	113	31	7.96	5.79	■-^ri	-1233	900	1 i 11 li^CO	116
	h.^	17		Ik	■^ ;	17	7^	1 1 1 91 9.16 7.09	32	-2233		i	56 '
	^ 7	13		12		7	"'3	21	IC.36	S.39	36	-3233		3	! i i j
	2.3	9		10	10		i 1 - 1 -- 11.96	9.69	Uo	-11238		!

17S

-10-

Influence of Price Cric'TiF^s on Fair. Zgrain,^3

Parm prices in I'j'^h advanced r.ore ra.pidly thaix did the prices of conmcdities '-.'hich farriers bo"J^~t. ?r,nners of the United States as a gi'oup CDuli exciiange ■uheir fvirm products iu 193'+ ^o^ T'r percent as many goods as for the period 1909-151'+. while in 1S3J they received only Sh ijeicent, and 1932 only 61 j^ercent as nruch in exchange for what they h^d to 'jell as in the prewar peiiod. In the month of Fehiaiaryj 193? > tlds index of purchasing pov.'er had increased to Sy percent of prev.'ar, the index of farni prices lia.ving risen to 111 as compared with an index of 127 for commodities which fanners huy. Wlaen the line representing iar.ii 'irices drops oelow tne line represent- ing Tirices "aid d;' farmers, farra earnings are very low, but v/hen these lines corae close together farra earnings increase. (See following graph.)

Index of

-rices

Rate Z.'^rned

2CC

150 125

ICO

15 50

= Fc-:rm pricen in U. E. Aug. IQO'l-July I914 = 100

= Prices paid by farcers. Aug. l^C'3-July 191-^ = IOC

[n =: Rate earned en investment, accoanting farr.s, central Illinois

1917 'IS 'I9 '20 '21 '22 '23 -Zk '25 '2d '27 '2C '29 '30 '3I '32 '33 ^}k

179

-11-

Sinco the pricR of sone fami products advancRd mtich. more rapidly during 19?^ tlian other products, it is evident tha.t some farrns Vvoiild benefit more than others, depending upon the kind and quantity of product^- sold. Grain prices advanced reuch aore rapidly than livestock prices; v/hich res'olt- ed in a very had price ratio for faruers vmo ''oix^ large q^jantities of feed. The average Illinois farm price of corn was Ul cents a hushel in January, 153^; it advanced steadily iintil the end of the year when it was SE cents a. "bushel. Other grains made marked advance although not so great an advance as corn. The price of hogs fluctoa.ted from a low 01 $3.20 a hujidred in Ma,y to a high of $5.3G in oeptemoer. The low point in the fall came in Kovember when the average price was $5.10. The price ha.s , advanced quite ra.pidly since Fovember, the average price being $7 •JO ^o^ ?ebrur.ry, 1935- Beef cattle v?erc worth 4U.10 a hundred in January, 1S3^-'- 9-^d. advanced each i/onth imtil SeT)tember, when the price was $5*90. They dropped to $3-20 in December but increased again to $7.U0 for Pebruary, 1935-

The year 193^ set a record for the reduction in the numbers of livestock. The percentage decrea.srs by species w<^re a.s fcllovvs: horses, 1.1 percent; mul^^s, ?.6 percent; all ca.ttl':', 11.2 percent; she«"p, U.7 percent; hogs, 35*3 percent. ",lien all species are combined on the basis of their capacity to consume feed, the reduction was I3 percent. This reduction will great?^y reduce the demand for feeds produjced in 1935*

The rela.tivc change in prices of imptirtant conriodities may be noted in the following gra.rih, v.hich r-hows the average Illinois farm prices by months as a "Dercentage of the average prices for the period 19'1-1929-

^■^ercent

Price Indices, 193^^+

(I92I-I929 ^ 100)

Jan

uec .

All commodities index represents the' wholesale" price -of a large number of CGiiimodities for the United States, as computed by Bureau of Labor Statistics.

Grain and livcstoc: indices represent average montljly faiTn prices in Illinois.

ISO

-12-

Varration in Samingis Over Five-Year Period

A comparison of prodioction, income, and expenditures on the ac- counting farms in TJarren and Knox counties for the last five years is very- interesting Decause of the violent changes in 'orice level. Crop yields were low in 193^ for the second year, yet total receipts per farm were high- er than in any other year in the last five, and were 65 percent of the I929 gross receipts. Operating costs per acre were lower than in any year of the five except 1933- Thus profits were the "best the county has experienced since I929.

Earnings in 1935) s-s usvial, will depend upon individual efficiency, weather, and prices. With normal v/eather conditions, prices of grain are likely to go down to a more normal level which will give individual effi- ciency the responsibility for higher earnings on each fa.rm.

Comparison of Earnings and Investments on Accounting Farms in ^Tarren and Knox Counties for I93O-IS3I1

Items

1930

1/

19312/

o2i/

1933

193^

Numter of farms --------

Average size of farms, acres- -

Average rate earned, to pay for

management, risk and cnpital -

Average lahor and management "i.

Gross income per acre - - - - Operating cost per acre - - -

Average value of land per acre- Total investment per acre - - -

Investment per farm in:

Total livestock- -----

Cattle _-__

Hogs -----------

Pcjltry- ---------

Gross income per farm -----

Income per farm from:

Crops- ----------

Miscellaneous income - - - Total livestock- - - - - -

Cattle ----- __-

Dairy sales- -------

Hogs

Poviltry- ---------

Average yield of corn in tu.- - Average yield of oats in bu.- -

^3 212

1.65J $-722

16.23 12.90

lUi 203

3 9^3

1 ss6

1 296

1U6

3 lAo

232 26

3 1S2

557 392

1 999

30 2I42

-1.1^ $-1 SU5

9.5s 11. UU

115 16U

3 612 1 725

1 206 130

2 322

25 2 297

216

1 352

139

H3 U5

2UI1.5

$-1 S5I

7.26 9.21

111 156

U9 ^7

2 SkG 1 U7I

73s

1 775

30 7U5 660 189 777

95

6U 50

32 26s

$ 557

15.16 7-55

110 150

2 630

1 3S3

617 76

k 061

1 810

2 207

563

2U3

1 211

108

31

3? 236

7.315? $1 327

ig.6o 7.89

106 1U7

881

865

U62

62

U 386

UOG 1 915 917 257 511

.^-

29 3

!_/ Records from Warren, Burea.u and Henry Co^ir.ti:

2/ Records from Warren County only included for 1931-

■-'j^

and 1932.

MIVJAL FAK.'i 3USIAESS REPORT 0:1 THIRTY-ITIIE ?.iRi,IS IN PEORIA, SCHUYLER, AllD FULTOII COUIITIES, ILLIHOIS, 133^1

P. E. Joiinsto.i, J. Ackemian, and T. R. Hedges*

Parra earnings on the 39 accotmting farras in Peoria, Schtiyler, and Fulton Counties avera;^ed U.2 percent for 193^' Ihis is tlie second highest return during the past five years, 1933 having the highest with an average return of 5*^ percent. The 193^ return is verj" good considering the severe drouth and chinch hug dari.age .

These 39 accounts show for 193^ ^.n average net income of !oS68 per farm, as coiapared with o.n average of $1,572 in 1933> ^■'^^ ^^ average net loss of $490 in 193'^' The average cash income in 193^ ^''as $3>05C' per fann, the cash hxxsiness expenditures $1,635 P^r farm, leaving a cash "balance of $l,Ul5 to meet interest payments and faiaily living e::penses. (Those who keep home acco'ont hooks use the latter figui-e to reriresent the cash contri"bu.tion of the farm to the "realized fa;nily income".) Besides the cash income, there was an inventory increase of $25S a farm due mostly to the rise in prices of farm products. This increase, added to the cash halance, resulted in an average excess of receipts over ercpenses of $1,713 '^' farm.

These data must not "be considered representative of average farm

conditions, for they were secured f'l'om farms which are larger than average,

and which were managed oy fariuers who are more officiont than the average of all farmers in the cotmty.

Por the state as a whole, farm earnings were hetter in 193^+ than in 1933> i^ spite of the fact that corn and oat yields were very low due to the drouth and to chinch hug damage. In the western and southwestern parts of the state the drouth caused an almost total failure of hoth corn and oats. This accoujits for fa,rm earnings heing lower there than in other parts of the state.

Tlie corn crop was best in the sotithcastem part of the state, and was fair in the northwestern section. "'Thea.t yields were particularly good in the south and central portions of the state. Soybean yields were very good throughout the state, and there v¥as a, larger tlia.n normal acreage in Illinois in 193^- TMs state produced over half of the nation's 193^ crop of soybeans .

Chinch bug damage extended over most of the state last year, but was much more severe in some sections than in others, e.nd v;as much worse on some farms than on other farms in the same community. Conditions affecting crop yields v?ere vei^^ spotted. This a,cco'cints in part for the wide va.riation in faira earnings from one section of the state to a,nother, and the wider variations than usual from one farm to another.

* J. ?'. V'nisenand, L. E. McKinzie, and J. E. Watt, farm advisers in the above Counties, cooperated in supervising and collecting the records on which this report is based.

182

-2-

Indnstries other than agriculture again shovred iraproved earnings over the previous year. A group of SUO industrial corporations reported ty a nationally kno'.Tn 'oaiLiC showed average earnings of 'j.O nercent on their in- vested capital in 193^i ^-s compared v/ith ^.k percent for the sarue corrjor- ations in 1S33 • ^- sL-ailar group Iiad a loss of one-tenth of one percent in 1932 and averp.ge earnings of 3 "3 percent in 1931'

In comparing the average earnings of corporations viith tlxe rate earned on investments on accounting farms, it is well to l:eep in mind that in corporation accounting, charges e.re made for management, while in th^e farm accounts no conparahle ded^jction lias hec-n made. On tlie other hand the farmer and his fanily receive food, fuel, and other items of living from the farm for which the farm lias received no credit in the records vsec. in this report. For the coverage central Illinois farm family, consisting of five persons, the val-ue of tlie food and fuel furniDhed hy the farm was ahout $250 in 193^» when estimated on the basis of the v/holesale price for farm products.

Variations in ?arn Incomes

There was a much '.vider range in farm earnings on the accounting fa.r..is in 193^ tha.n in 1933* Kiis was trie for the fanr.s included in this report, and was also tru.e when the average earnings of farms in one section of the state were com.pared with the earnings of farms in other areas.

The extremely wide range in earnings v/as due to a comhination of physical and econoaiic factors. The avera-ge yield of whea,t and soybeans was much better compared with the five-year average, tlian the average yields of corn and oats. This va.riation favored those sections which had larger acreages of the hi{!her yielding crops in 193^- There was also a v/ide range in avera;?:e com yields from one section of the sts.te to another, as well as between individual farms in the same area. Tiie price of grains was high in 153^^ s-S compared with prices of livestodc and livestock products. Farms where grain sales constitute a large part of the farm income thus liad an advantage. The rapid increase in the prices of farm -oroducts, particularly grains, favored those farms which had large stocks of salable prodiJCts on "n?.nd at the beginning of the year. Many farmers who inventoried the com on hand at the beginning of 193^ a-t ^W cents a bushel, later sold this corn for SO cents.

In this group of 39 accounting farms the most successful third shows an average net income of $2,3^, while the least successful third of the farms had an average net loss of $299* I^ 1933 ^^i^ ^'•^° groups had net incomes of $2,926, and $313i respectively.

-3-

Investraents, Heceipts, Expenses and Earnings in 39

Peoria, Schiiyler, and Fulton County Farms in 193^

1S3

Items

CAPITAL INVESTI.IEligS

Land ------------

Farm iraproveraents- - - - - -

Livestock total- ------

Horses -_----.----

Cattle -.

Hogs -----------

Sheep- -__-----_-

Poultry- ---------

I.fechinery and equipment- - - Feed and grains- ------

Total capital investment

RECEIPTS Am lET ISTCREASES

Livestock total- --------

Horses ------------

Cattle -------

Hogs (including AAA payments )- Sheep- ------------

Poultry- -----------

Egg sales- ----------

Dairy sales- _-------_

Peed and grains (incliiding AJIA payments) ---__-_----

Lahor off farm -_-_--_-_

Miscellaneous receipts - - - - _ Total receipts & net increases

Your

farm

Average of 39 farms

$15 630

3 i+15

1 5^l

1+13

630

U25

U6

73

1 215

1 113

2 960

<ko

003

3U

369

1 207

66

sU

111

192

532 91

6

$ 2 633

13 most ■Drof itahle

I arms

$17 U3I

3 U6S

1 717

. 3S3

707

U93

68

66

1 237

1 279

$2^ 130

2 IgQ S

1 2U2 108

99 iiH

264

1 7^45

110

10

$ k 0U5

13 least pi'of itahle

farms

$lU OSd

3 ^96

1 S67

473

S13

^Mk

56

81 1 316 1 03U

$22 199

1 962 70

311

1 233

U7

58

108

135

108

$ 2 07s

■-EXPE1TSE3 AIID rlET DECHCASSS

Fam improvements- - - -

Horses ---------

Miscellaneous livestock decrea.ses

Machinery and equipment- Feed and grains- - - - -

Livestock expense- - - -

Crop expense ------

Hired la'ioor- -_--_. Taxes- ---------

Miscellaneous expenses -

Total expenses & net decreases

189

29U

2k

103 108 182

25

156

283

23 108

159

210

21

$ 22^

$ 960

266

358 503

2k 116

93 177

33

$ 1 570

RECEIPTS LESS EXPEI'SES-

md

Total unpaid lahor- - - - - Opera,tor's labor - - - Family lahor ----- jfet income from investment I management ---_-___---

lUTE EABHED ON IIWESTMEIIT

^fetum to capital and operator's I labor and management ------

j)^ of capital invested- - - - - -

i^OR AHD ivIANAG-EI.ffiKT WAGE

$ 1 713

7U5 5I4O 205

4,

968 k.22i

1 5OS

1 IU8

$ 360

3 025

7^5 5U0 205

2 3U0

T.31^0

8S0 256

^

$ 1 d2U

80 7

sUo

267

-299

-1.3^^

2\\

1 110

-S69

1S4

-k-

Tlie follo'.ving table shows the n'um'ber of farms having certain net incomes per acre. There was a marked difference tetween the most successful and the least successful farms.

Ave rage net income per acre

$17

15

13

11

o

y

7

Itoiher of farms

1 2 2 k

5 k

Average net income per acre

$5

3

1

-1

-3

-5

"Jtra"ber of farms

3 2 k s

3 1

A fui'ther study of the farm businesses, made by comparing the investments, receipts and expenses of the grof.p of farms having the highest net income with those liaving the lowest net incomes, will throw some light on the q-uestion of why some farmers are more successful than others. This comparison is shovm in the table on page 3'

Tlie most profitable farms averaged 201 acres each, the least profit- able 221 acres. The most profitable farms had a larger investment in feed ajid grains, and a larger total farm investment than the least "orofitable farms. Differences in receipts and net increases from feed and grains account for much of the difference in income between the two groups of farms. The total operating expenses per acre, including the charge for faiaily Itibor, was less on the most profitable farms than on the least profitable group.

The year 193^ ^''^^ similar to 1933 i^i that the nrices of farm products continued to advance causing firrther increases in inventory values. Owing to the -ooor crop yields in 193^ there were fewer biishels of grain on hand to inventory at the end of the year than at the beginning. The value of the smaller amouiit of grain, however, was greater thaji for tlie larger amount on h^nd at the beginning of the year.

Bushels of Corn Inventoried

Jan. 1. 193^

Dec. 31. I93U

Average of all farms

Average of I3 most successful farms . Average of I3 least successful farms, Your farm

1 333

1 562

93c

690

1 226

3UU

The most profitable farms had a larger inventory of corn, both at the beginning a.nd at the end of the year. VJith the rise in com prices, this was one of the important factors accoimting for their higher ret\irns from feed and grains.

9

-5-

The average ixiveatoiy increase for the accounting fams in Peoria, Schviyler, and Fulton Co'onties v;as $29S in 193''^> "S comared v/itli $637 in 1933, and a decrease of $70U in 1932- There v/ere increases of $8] in livc- stocl:, and $313 i^ feed and s'rain, and decreases of $23 in machinery, and $73 i-'^ improvements. Tlie inventory decrease in machinery was the smallest since 1929 on accoimt-keepin.2; farms, and indicates that needed repairs and replace nents are "being made, out still not enough to offset the current de- preciation costs.

Inventor^/' Changes for 193^-

Beginning Closing Inventor;; Inventory

Items inventory inventor^r changes changes,

\ I-I-3U I2-3I-3U I93U yoxxr fam

Total livestock $1 5S7 $1 67^- $ 87

Feed and grains 1 II3 1 ^2d 3^3

Machinery 1 215 1 I92 -23

Improvements (except residence). 3 ^1^ 3 336 -79

Total $7 330 $7 62S $25S $

Some Ad.justments on Peoria, Schiy/ler, ?nd F-'olton Couiity ?aiT-s Since 1929

Panaers have heen forced to malce adjustments in their cash expend- itures as a result of changes in their cash income. Farm operating costs on accounting farms in this area liave declined each year since 1930- The total operating expenses were 22 cents an acre lower in 193^ tha,n in 1933 » while the cash operating expenses -.vere $1,635 ^ farm in 193^> ^-s compared with $1,5S3 in 1933' ^-^ ^0 the drouth and the consequent reduced feed siipply there was an increase of $317 In cash expenses for feed and grain over the previous year. There were significant decreases in expenses, as compared with the pre- vious year, for taoces, livestock, and labor. If incomes peri'nit, indications point to an increase of spending in 1935 ^"or reparis aiid replacement of machinery a^nd improvements, since farmers have postponed purchase of these items during the five-year period since 1929'

Cash Income and Expenses on Accounting Farms in Peoria, Schuyler, and Fulton Counties for I929 and 193"^

Your Average cash Youj: Average cash

Items farm expense iier farm farm income per farm

I93U I93U 1929 193^

Livestock $ $ 222 $ 5^42 $

Feed and grains

Machinery

Improvements

Lahor ,

Miscellaneous

Livestock expense

Crop expense

Texes

IS5

193U	1929
$ 222	$ 5U2
1+93 36U iiU 108	553 750 37^ 36U
25 2U	28 Gk
103	266
1S2	273

193^1	1929
$2 13b	$ii 162
71s	1 59^
93	169
h	3
91	lis
6	11

Total $ $1 635 $3 21U $ $3 050 $6 057

Excess of cash sales over eiaienscs $ $1 U15 $2 8^3

Increase in inventory 298 UUU

Income to lahor and capital (Peceipts less expenses). 1 713 3 2S7

is6

r

r

-o-

Tlie c'umulative eifect of several years of lo'.v a^'^ricultural prices on the demand for nanvi"actured goods can "be readily ascertained by a com- parison of cash expendit-ures in 153'^ with those in 1929- 'T^e average ac- co"ur.ting farm in this sttidy spent 53 percent of the cash income as operating expenses in 1929, while in 193^ the average accounting farm spent 5^; percent of the cash income as operating expenses. The relationship, therefore, be- tween cash income and expenses for the two years is appro::imately the sa'ne, but the 193^ cash incorae and expenses are only 50-5 percent as large as in 1929- There was, however, considerable difference in the distribtition of the expense items. In 193'-'- the livestock purchases were Ul percent, and feed and grain nurchases 39 percent as large as in 1929- I^ 193^ these fair.is paid out U9 percent as much for nacMnery, 30 percent as ratich for im- provements, and 39 percent as much for crop expense as in 1929i while ta:ces were reduced to 67 percent of the 1929 level.

Comparison of Parms V/ith Hi.'th and Low Earnings

The most profitable farms in this st-'ody hr-.d net receipts per acre of $11.63, as compared with a loss of $1.35 P^r acre for the least profitable group. The reasons for this difference may be obtained from a study of the data on pages 3 a^^d. Z.

The most profitable farms, although liaving 20.1 fewer total acres, had a larger proportion of their land area tillable, and had 5' 5 J^ore crop acres than the least profitable farms. They liad ly.^ acres more corn, and 3.9 acres more soybeans than the least profitable farms. The most profitabTe far-'is carried larger inventories of feed and grain on which to maLie a profit when prices adva:iced. Along with the larger acreage of crops, another reason for the larger inventories wa,s the higher crop yields, there being an ad- vajitage of I9 btishols of corn, 0.3 bushels of oats, 10.2 bushels of wheat, and 11.7 bushels of soyben.ns per acre in favor of the high-profit group.

The most profitable iair:is had a larger average investment in pro- ductive livestock, and vvere more efficient in their livestock feeding operations than the lea.st profitable farms. They had an investment in productive live- stock of $7.27 per acre, and fed $l,2bl of feed per farm, a,G compared with $5.76 invested per acre, and $1,652 of feed fed per farm on the lea-st profit- able farms. The productive livestock on the most profitable farms returned $172 for each $1C0 of feed fed, as compared with returns of $115 for each $100 of feed fed on the least profitable f aims . The most profitable farms had an income of $97 per litter farrowed, as compared with $90 for the low-profit group .

The larger income on the most profitable farms was secured v/ith a total operating cost of $0.^7 r)er acre, as compared with $10. 7^+ on the least profitable farms, i.^an labor costs per crop acre were $b.S9 on the most profit- able farms, as compared with $7 .15 0^ the least profitable far;ns, while power and machinery costs per crop acre vvere $3.5^ O''^ the most profitable fains and $U.S1 on the low-profit group.

1S7

-7- Influence of AAA Pro.^ranis on Cropping Systenis and Farn Incones

The farri-accovjit records in Illinois 77ere iniluBnced "both directly and indirectly ty the corn--ho£ and wheat adjustment prograiTis. A large per- centage of accounting farms '.vere under one or "both contracts in 193^. Th-e acreages of com and wheat on these farms were therefore less than noixaal. TMs should have resulted in lower operating costs. Corn-hog benefit pay- ments for the entire I93U program will total about UO million dollars for the state, while wheat benefit payments will be about 2.U raillion dollars.

The benefit payraents for accounting farms are indicated in the following table, which shows the average payment for those farms receiving payments, and includes only those payments received by the cooperator before the 193^ books were closed. In some cases only the first corn-hog checl: is includ.ed, while in other cases the second checl: had been received. The second payments not received and tlie third payments will be entered in the 193'' book.

^ y ^ ^

AAA Benefit Pay;iients Received in 193^

Com ^eat H^iiS

ITvaiiber Amount ITumber /jnormt lluv.ber A-iornt -"-vera-ge

of "ner of per of per °-^ ^-^^ -, /

farms fr-.rm farms fsrm f.?-rms farm pa;.Tnents_-

1/3 most profitable farms I3 $101 S $31 I3 $170 $321

1/3 least profitable farms 11 3I 6 65 12 ISU 2U3

All accounting- far.ns 37 77 I7 7U 37 I72 262

!_/ Total ben^^fit pa.jTaents reported by accounting farms under contract for 193^ divided by total nuiuber of accounting farms.

On most farms the cash received from benefit pe,yraents will more than pay for the year's taxes. As an average of accounting farms in this study, the payments actually received were $06 more than stuficient to pay the 193^ taxes.

It is interesting to note the use made of the contracted acres on the accounting farms. The average faim had 13 -2 contracted acres which v,'ere used as follows: 2.3 idle; 2.3 mixed clover; .3 sweet clover: 3-5 soybeans; 2.9 alfalfa a-nd 1.9 acres were in other crops. These data indicate that most farm.ers made good use of their contracted acres from the standpoint of soil improvement, as a large part of them were in legumes. T^ien the Government restrictions on the use of crops grown on contracted acres were removed, they were on manj'' farms the most profitable crops as they furnish- ed "'ay and pasture where badly needed in drouth areas. The legumes liad the further advantage of being immune to attack from chinch bugs.

Farm earnings were i:ifluenced indirectly by the AAA pro^cra-'is in that the red'jction in production increased the price of the com.modities in- volved. The droutii was a more important factor in reducing production th-an the adjustment programs, yet if it had not been for the corn-sealing progrsn thciewouid liave been but little com in the hands of farmers at the time the major price advance becaine effective.

ISS

_i^_

Factors Eelping to Analyze the Farm Business Peoria, Scliuyler, and I'ulton County Farms in	on 39 193^	1
Items	Your farm	Average of 39 fams	1^ LlOSt profitable farms	13 least profitable farms
Size of lams — acres --------		200 .8 71.3 37-2 13.13 S.31 i|.g2 7S iiU	201.2 76.5 36.2 20.10 S.U7 11.63 86 125	221.3 65-9 U2.U 9.39 1 10.7^ 1 -1.35 j 100
Percent of land area tillable- - - -
Percent of tillable land in liay and pasture --------------
Gross receipts rier acre- ------
Total expenses per a.cre- - - - - - -
Net receipts per acre- -_--___
Value of land per a,cre -------
Total investnent per acre- -----
Acres in Corn- _------__--		37-7 22.6 15.1 n.7 27. li 25. s 23. U S.9 11.5 21.6	Us.i 23.7 11.9 7.^ 25.7 30.0 31.9 10. H 12.7 25.9	30.7 ' 22.6 19.1 3.5 3U.1 27.5 12.9 • s.5 i 1U.2 '
Oats- -----------
ISieat --__ -__
Soybeans- ---------
Hay ------------
Tillable pasture- -----
Crop yields — Com, bu. per acre- - -	_
Oats, bu. per acre- - -
Fneat, bu. per acre - -
Soybeans, bu. per acre-
Value of feed fed to productive L.S.		1 ^00 lUi so 26U 6.1 92 ^3 6.03 9. SI	1 261 172 23 2SU 6.2 97 39 7.27 10. so	1 652 115 '■ 216 ■ 6.U 90 5-76 S.55
Returns per $100 of feed fed to productive livestock- -------
Ke turns per $100 invested in: Cattle-
Poultry --------
Pigs weaned per litter -------
Income per litter farrowed -----
Dairy sales per dairy cow- _____
Investment in productive L.S. per A.
Receipts from prod'active L.S. per A.
M8J1 labor cost per crop acre - - - -		S.sk 2.50 U.oo S2^ 210 31 63 1 U15 29g U.22^ 2 63s	6. 89 2.2s 3.56 100^ 166' 21 U2 .7S 2 oqU 991 9.31^ 4 0U5	7fi5 3.02 i+.Sl 5Uf. 2 SI hi iiU 1.20 956 -i+l+S -1.3^^ 2 07s
Machinery cost per crop a,cre - - - -
Power and mach. cost per crop A. - -
"P^TTMC i»r"i i'Vi TT'c»r»"hnT* _-
Value of feed fed to horses- - - - -
ifeji labor cost per $100 gross "1 nrTiTTip. -_ _
Expenses per $100 gross income - - -
Farm improvements cost per acre- - -
Excess of sales over cash expenses -
Increase in inventory- -------
Rate earned on investment- -----
Gross receipts per farm- ------

Cliart for Studyii^:; the Efiiciency of Various Parts of loixr Business, Peoria, Schuj-ler, and Fulton Counties, I93U

1S9

The nu-nbers above the lines across the middle of the page are the averages for the 39 far-is included in this report for the factors named at the top of the page. • By drawin,--; a line across each column at tiie niimher measuring the efficiency of youx farm in t;iat factor, you can com-oare yotir efficiency with tlmt of other fan'ners in your locality

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132

63

teU

201

2.0U

n

11

2300

2613

21

3630

360

10.22

35

IS

21+

137

9fe'

331+

I06

3.21+

1.00

16

ISOO

2313

19

1+900

320

;.22

31

1^1

20

122

R3

3UU

171

U.i+l^

2.00

21 ■

1300

2013

17

Uli^O

220

6.22

27

12

16

107

Us

30U

136

3.61+

3.00

26

JOG

1713

13

31-KjO

2 1+0

4.22

i 23. U

B.q

11.5

92

H3

26l!-

ll+l

6.2I+

ij-.oo

31

29s

ll+l 3

13.13

263 s

200.2

H 1 i 1 i 2.22 19

6

77

32

22U

126

S.0I+

3.00

36

-200

1113

11

1900

160

i 1 1 1 .22 1 1-^

3

k

62

33

i isU

111

q.2i+

6.00

1+1

-700

813

q

1130

120

j -1.72

11

0

f

1 =47

0 C' u6

— ■+ 1 lUU

'^6

10.1+1+

7.00

Ub

-1200

-13

7

Uoo

SO

.3.7::

7

1

1

32

! 1 23

lOU

21

11.61+

8.00

31

-1700

213

9

ko

•5.7s -!

3

17

I'c

61+

66

12.SI+

9.00

36

-2200

3

0

190

_ir;_ Influence of ?rice Clian^^s on Farm SarnJn.gs

FaiTu prices in 133^-+ •'^■dv?Miced ir.ore rapidly thsi; did the prices of conciodities r/hich fo.ixt-srs bo'o^^t. Fcniiers of the United Ctates as a gi'oup could exciiange their farm products iu 193'+ i"oi' 7^1- percent as many goods as for the period 1909-151^, wMle in 1933 they received on].y 6^ pei-cent, and 1932 only 61 percent as much in exc'iange for what they had to '.;ell a.s in the prewar period. In the month cf FehiTiary, 1S33> this index of purchasing power had increcsed to 87 percent of pi'evrar, the indez of i'arra prices hs.ving risen to 111 as compared with c-jn index of L^7 i"or commodities which farmers "buy. T/lien the line representing farm prices drops 'belovv the line represent- ing Tirices ;-aid "by farmsrs, farm earnings are very low, hut when these linos corae close together fan.; ea,mi:ags increase- (See following graph.)

Index of Prices

Rate Zarned

20c

175

I5G 1.25

100

75 50

25

= Farm prices in U. S. Aug. igOQ-July I51I+ = IOC "^

= Prices paid "by farmers. A-^xr:.- 1303-July l^lU = 100

-~ Rate earned en investment, accoui-iting farms, centr-al Illinois

1917

'IS 'I5 '20 '-il '22 '23 --ch '25 126 '27 '22 '29 '30 '31

'^c

'■33 '3^

191

-11-

oincn the pric? of sor^e fam product'^ s,dvancp.d miich more raridly during 193^ tlian other prcdiJcts, it is evident that sone farrr.o A/oiiid benefit nioro than otherc, depending upon trie >.:ind and quantity of prodxictc sold. Grain prices advanced much .ao re rapidly than livestock prices; vmich recult-

ed in a very h^d price ratio for larraers who cuy larj^e nuantitien

oed.

The average Illinois farr. price of corn vvas 41 cents a hu^hGl in Js.nuary, ISjh; it advanced steadily until the end of the year when it was c? cents a hushel. Other grains made nar:ed advance although not so gr3at an advance as corn. Tho price of hogs fl-'octaatiid fro:n a low of $3'-0 a huiidred in I-fcy to a high of $6^.30 in Septernoer. The lor point in the fall canie in hovernher when the average price was $3.10. The r^rice h^.s advanced quite rapidly since Foveir.ber, the avera,ge price being $7«5^ i'or Pebruary, 1335* Beef cattle vere v/ortli $i!-.10 a hundred in Janiia-ri', 153'-'' a-nd advanced each ronth rjitil Se-otember, when tJac price V7as $^.30. They dropped to $3.2C in December but increased again to $7'^'-^ ^or Pebroary, 1935.

The yea.r 193'^ •''•®'t ^ record for the redaction in the nuubers of livestock. 'The percentage decr«.a,&ps by spscies iTere as frllcv/R: horsp?, 1.1 perci=^nt; ii:ul<^s, ? .G percr-nt; all ca.ttl*', 11.^ pprcpnt: zr^'-v, U.7 percent; hogt-j 35*3 percent. Y.Tien all species are combined on the basis of their capacity to consume feed, the reduction \7as I3 percent. This reduction vriil greatly reduce the demand for feeds prod'oced in 1335*

The rclp.tive change in prices of imixirtart co.ni'iodities may be notf^d in the follov.-ing gi-a.oh, which shov;s the average Illinois farm prices by m.onths as a percentage of the average prices for the period 13---1-1329.

Percent

120

Price indices, 193^

l.or.

Dec .

o:

Jan. 7<;'b. ;.^ar. Ait. IJsy Juno duly Aug

All commodities index reTirescrti; the v.holesale pri;

commodities for the IMxtad States, ss computed by Bui'eau of Labor StatisticSc

Grain and livcstor-i inaices rerresont average monthly faiT.c prices in Illinois.

192

-12-

Variation in Earnings Over ?ivp-Yea.r Period

A comparison of prodiaction, incoLie, and expenditures on the ac- coimting farms in Peoria, Schuyler, and Pulton Counties for the last five years is veiy interesting because of the violent fluctuations in the price level. Altho'Jgh the 193^ crop was nearly a failure and followed a snialler than average crop of 1933> ^^ increased prices of "both grain and livestock did liave considerable effect in holding earnings in second place for the five-year period I93O-I93U.

E^.mings in 1535. '""-s usual, will depend upon individual efficiency, weather, and prices. With normal weather conditions, prices of grain are likely to go down to a more normal level v/hich will give individual effi- ciency the responsibility for higher earnings on e^ch farm.

Comparison of Earnings and Investments on Accouiiting Parms in Peoria, Schuyler, and Pulton Coimties for 193^-193^

Items

1930

1931

1932

19331/

193 14

'romber of farms -----____ Average size of farr^s, acres- - -

Average rate earned, to pay for

managei".;ent , risk and capital - - Average labor and inanageraent wage

21s

1.

-739

li

Gross income per acre -------

Operating cost per r.cre ------

Average value of land per acre- - - Total investment per acre - _ - - -

Investment per farm in:

Total livestock- -------

Cattle --_

Hogs -------------

Poultry- -----------

Gross inco'-::e per laim - - -

Income per farm from:

Crops- --------

Mir.cellaneo'os income - Total livestock- - - -

Cattle

Dairy sales- - - - - -

Hogs ---------

Po-o2try- -------

Average yield of corn in b\\, Average yield of oatr in bu,

15 13-

113

166

1+55 618

090

123

.61

.83

3 399

82

317 525 U32 160 190

29 31

U6

220

$-1

-2,

;^7

7.5s IC.52

93 136

622 021 932

118

103

565

3^1- 269

092

1U5 ^\

3C

202

-2.1^ ''.-I 131

6.U9 g.91

212

$621

^M

93

75 115

1 737 7^1 ^02

90 1 31U

61

253 72 23I1 dl llU

^5

15 8.53

97 13s

1 SU9

796

501

6U

3 3Sb

1 3U1

120

1 925

171

280

1 260

103

30

39 201

U.2^ $360

13.13 8.31

78

IIU

1 587 63c U25

73

2 638

538 ' 6

2 003 309 192

1 267

23

ril

\] Records from Peoria, Stark, and Fiilton Co-onties for 1533'

AimUAL FABli BUSI1ES3 R3P0HT OK THIETY-SIX FABllS III I.iACOlI GOLITTY, ILLI10I3, I93U

P. E. Jolmston, J. Ackerman, and J. 3. Andrews*

The farm earnings of jb accotmt-kseping farmers in Macon County sliowed an increase in 193'^ over those of 1933' 'This is the second con- secutive year of improvement in the husiness of these farms. The three years previoas to 1933 showed veiy low returas.

These 36 acco^dnts show for 193^ ^^ average net income of $2,377 tier farm, as compared with an average of $1,680 in 1933 ®^d. an average net loss of $609 in 1932- The average cash income in 193^ ^''s.s t^,0J8 per farm, the cash husiness expenditures ;"2,26U per farm, leaving a cash hp.lance of 52,3lU to meet interest paymentr. and family living expenses. (Those who keop home acco"unt hooks use the latter figure to represent the caah contri- hution of the farm to the "realized fc-imily income".) Besides the cash in- come, there was an inventory increase of $701 per farm diJe to the rise in tlifi prices of farm products. This increa.se, added to the cash "balance, re- sulted in an average excess of receipts over expenses of $3,515 P^r f?rn. The inventory increase was a larger part of the total faim income in 193*^ tlian in 1933 •

These data, must not he considered representative of average faim

conditions, for they were secured from farms which are Ir.rger than average,

ar.d v/hich were managed "by farmers who are more efficient than the average of all farmers in the county.

Por the state as a whole, farm earnings were hetter in 193^^ than in 1933 -^ spite of the fact that com and oat yields were very low due to crouth and to cMnch hug damage. In the western and southwestern parts of the sta,te the drouth caused an almost total failure of both com and oa.ts. This accounts for farm earnings heing lov/er there than in other parts of the state .

The com crop was best in the southeastern part of the state, and was fair in the northwestern section, viilieat yields v/ere particularly good in the south and central portions of the state. Soybean yields '.vere very ;::ood throughout the state, and there was a larger tha,n normal acreage in Illinois in 193^- This state produced over lialf of the nation's 193^f- crop of soybeans .

Chinch bug damage extended over most of the state last year, but was much more severe in some sections than in others, and was much worse on some farms than on other farms in the some comm^unity. Conditions affecting crop yields were very spotted. ' This accounts in part for the wide vrriation in farm earnings from one section of the state to another,, and the wider variations than usur~.l from one farm to another.

J. 5. G-illvcy, farm adviser in Haccn Cotmt/ cooperated in supervising and collecting the records on which this report is based.

igU

— 2~

Industries other than agricvilt-uxe again showed improved earnings over the previous year- A group of SUO industrial corporations reported "by a nationally loiown hank showed average earnings of {j.O percent on their in- vested capital in 193^. s-s compared with J).h percent for the same comorations i?-\ 1953- A similar group liad a loss of one-tenth of one percent in 1932. a^id average earnings of 3-3 percent in 1931'

In comparing the average earnings of corporations with the rate earned on investment on accounting far.is, it is well to keep in mind that in corporation accounting, charges are made for management, while in the faim accounts no coraparahle deduction has "been made. On the other hand the farmer and his faiuily receive food, fuel, and other itens of living from the faim for which the farm has received no crc'it in the records used in this report. Por the average central Illinois faiTi family, consisting of five persons, the value of the food and fuel furnished "by the farm- was ahout $250 in 193^> when estimo-ted on the "basis of the v/holesale price for farm products.

Variations in Farm Incomes

There was a much wider range in farm earnings on the accoxmting farms in 193^ tha,n in 1933- This was true for the farms included in this report, and was also true when the average earnings of farms in one section of the state are compared with the earnings of farms in other areas.

The extremely wide range in earnings was due to a comhination of physical and economic factors. The average yields of whea,t and soybeans were much "better, compared with the five-year average, tlian the average yields of com and oats. This variation favored those sections which liad larger acreages of the higher yielding crops in 193^- There v/as also a wide range in average corn yields from one section of the state to another, as well as between individual farms in the same area. The price of grains was high in 193^ 3-s compared with prices of livestock and livestock produets. Farms where grain sales constitute a large part of the farm income thus had an advantage. The rapid increase in the prices of farm iDrodu-cts, particularly grains, favored those farms which had large stocks of salable products on lia-nd at the beginning of the year. Many farraers who inventoried the com on h-and at the beginning of 193^-'' ^^ ^0 cents a bushel, later sold this corn for SO cents.

In this group of 36 acco-onting farms the most successful third shows an average net income of $U, 21S while the average net income of the least sxiccessful third of the farms was only $1,535- I^ -933 the comparable net incomes for the two groups v;as ,1^2,71^, and $U21 respectively.

-3- Investrnents, SeceiT)ts, Expense p and E;-irnings on 36

"iacon Goixity Farms in 193^

195

Items

Your farm

Average of 36 farms

CAPITAL Ti:osP:.Gl^ris

and

Psnn improvements- - - -

Livestock total- - - - -

Horses --------

Cattle --------

Eogs

Sheep- --------

Poiiltry- -------

Machinery and equipment- Feed and grains- - - - -

Total capital investment

BZCEIPTS Aim IIET IKCHEASES

Livestock total-

Horses ------------|

Cattle !

Hogs (including AAA payments)- j Sheep- ------------

Poultry- -----------

Egg sales

Dairy sales- ---------

Feed and grains (including .AAA pajinents) -----------

Labor off farm ---------

Liiscellaneous receipts -----

Total receipts c": net increases

" EXPENSES AIJD i'lET DECHEASSS

Farm improvements- - - -

Ecrses ---------

Miscellaneous livestock decreases

liachinery and equipment- - - - -

Feed and grains- --------

Livestock expense- -------

Crop expense ----------

Plired labor- ----------

Taxes- -------------

Miscellaneous expenses -----

Total expenses & net decreases

"EIPTS

iISS EXPE17SES-

iTtal unpaid labor- -------

Operator's labor ------

Family labor --------

-^et income from investment and

management --__--___--

BATE EARIIED Oil IF/ES'TIffii^T

Return to capital and operator's

labor and management ------

5^ of capital invested- - - - - -

LABOR AIID MAilAGELGiTT WAG-E

31 223

k ^50 1 60U

352 965

173 £3

91 1 510 1 9i;c

$Ui 229

1 5g3 11

US2

572 26

111 295

3 30s

101

3 $ ^ 995

12 most profitable farms

27 ^53

3 S12

1 297

—#

5S2

202

22

137

1 3SU

2 IU3

g3D 069

15g

15 5U1

13

152

19 s 395

3 SSI 121

$ 5 160

209

371

27 200 j 26U I 3g6 i 23 ! i 1 Use

176

30k

ISO

193

370

21

$ 1 23U

fo

$ 3 515

63s 507

133 2 S77

3 y^

2 061

$ 1 323

12 least profitable farms

33 33^ 7 009 2 1U2

376

1 U99

169

42

56

1 g02

I 1 737

$U602S

1 363

22

693 U62

60

Ui|

62

220

2 31U

44 o

$ 3 927

2b9

1193

IS 200 3U1

22 $ 1 7S5

$ 4 S76

-'' "- c

050

5U0 lis

k 21G

11.70^-

4 "38

1 803

$ 2 9nS

T

$_J Ji_42

6(!)7 495 112

1 535

.33%

2 030 2 301

-271

-L

196

The following table sho.Ts the nxralDer of farms havin.5 certain net incomes per acre. There was a marked difference hetv/een the most successful and the least successful farrr.s.

Average net in- come i:er r,c3re

ITunher of farr-is

S25 ^^d. over 3

23 1

21 2

19 2

17 3

15 3

Average net in- come per sere

$13

11

9

7

?

3 and under.

Uiimber of farms

5 3 5 3 1

5

A further stud:" of the farm "businesses, made by comparing the in- vestments, receipts, and e:cpenses of the group of farms with the Mghest net incomes with those having the lowest net incomes,, should throw some light on the question of why some fax^iers are more successful than others. This comparison is shown in the table on page 3-

Tlic most successful farms averaged 223 acres each, the least suc- cessfiil 27s acres. The most successful fairos carried larger inventories of feed and grains, and hence liad a larger investment in this a,ccount than either the least successii"'! farms, or the average of all faxuis . The in- vestment in land, improvements, total livestock, and machiner;/ and equip- ment T/a.s smaller on the most successf-ul farms than for the otlier two groups. Difference in receipts from the sale of grains, hogs, and dairy products accounts for most of tlie difference in income between the most profitable, and the least profitable farms. The total expenses per acre, including the charge for family labor, was -oractically the same for both groups of faiTOs.

Changes in Inventories and Inventory Values

'Tlie vea,r 193^ was similar to 1933 i^^ that the prices of faim products continued to advance, causing further increases in inventory values. Owing to the poor crop yields in 193^ there were fewer bushels of grain on hand to inventory at the end of the year than at the beginning. Tlie value of the smaller amount of grain, however, was greater tlian for the larger amount on hand at the beginning of the year.

Busiiels of Corn Inventoried

Jan. 1. iq-^U

Dec. 31. 193^4

Average of all farms 2 ^0^ 1 S38

Average of 12 most svx:cessful farr.is . 3 55U 2 65O

Average of 12 least su.ccessful farms. 2 I7I 1 26V

Your farm

The most profitable farms liad a much larger inventory of com

both at the beginning and at the end of the year. This difference accounted

for a considerable part of their higher receipts and net increases from feed and grains .

197

The average inventcry increase for the accounting faiTns in Ilacon CoJinty was $7C1, as compared virith an increase of $555 ^^^ 1933- a^iii an in- ventory loss of $1,021 per farm in 1932- There were increases of $7 ^^ total livestock, $670 in feed and grain, and $U9 in machinery. Sf£h an in- crease in inventory as that for machinery results from the value of new re- placeraents during the year heing in excess of depreciation costs. This in- crease is of considerable interest, for it is the first tiiae that siich an increase in nachinery inventories lias occurred since faim earnings "began to decline so drastically with the ganeral depression.

Inventory Changes for 193^^

±ioginning Closing Items inventory inventory ^ I-I-3U l?-31-3li

Total livestock $ 1 bOU $ 1 bll

Feed and grains 1 942 2 6l2

MacMnery 1 5IO 1 559

Irnprovements (except residence). U 9'^0 '4 92 "i

Total ^ $10 OCd $10 707

Inventory chan je s 1Q3^

Inventory

change s ,

yoiii' farm

$ 7

670

U9

=2i

$701

$

Some Adjustments on Ilacon Coxmty Farms Since 1929

Farmers have heen forced to maize adjustments in their cash ex- penditures as the result of changes in their cash incomes. Fro:n 1929 throagh 1933 farm operating costs declined each year, but the year 193^ broi:i^ht a reversal of this trend. Total operating expenses were 77 cents an acre high- er in 193^ thian in 1933 > wliile cash operating expenses vrere $2,26U per farm in 193'-'> as compared with $1,7'+1 in 1933- The largest , increases in expendi- tures over the previous year were for improvements, and machinery and repairs for ma,chinery. Indications point to an even greater expansion of spending for these items in 1935' since farmers have postponed repair and replacements of machineiy and improvements during the five-year period since 1929-

Cash Income and Sx'oenses on Accotmting Farms in Macon County

for 1929 and I93U

Your Average cash Items farm expense ner farm 19^11 1934 1929

Livestock $ $ 2b2 $ 756

Feed and grains 3IS 509

Machinery 598 917

Improvements Igb 3'-^6

Labor 2bU %g

Miscellaneous 23 36

Livestock expense ..... 27 Uo

Crop expense 200 273

Taxes 3g6 U45

Total $ $2 264 $3 S20

Excess of cash sales over erpenses . . . .

Increase in inventory ...

Income to labor and capital (Receipts less expenses).

lour farm 19'^ ^4

Average cash income 73er farm

IC'	3U	1929
$1	S3o	$3 33^
2	9^6	3 5^
	178 0	146
	101	3G
	3	iV

$	$5	072	$7	072
$	$2	sii:- 701	$3	2132 530
	3	515	3	782

19S

-b-

The cumulative effect of severa.1 years of low agriciilt-uxal prices on the demand for manufacttired goods can be readily ascertained "by a com- parison of cash farm expenditures in 193^ with those in 1929- Although the average cash income in 193''' was 72 percent of that in 1929 > cash expend- itures were only 59 percent as large. In 193*+ livestock purchases were 35 percent, and feed and grain purchases 62 percent as large as in 1929- In 193^ these farms paid out 65 percent as much for machinery, and 73 percent as much for crop expense as in 1929. while taxes were reduced to S7 per- cent of the 1929 level.

Comparison of ZTarms With !-Iig;h and Low Earnings

Eie most profitable farms in this study md net receipts per acre of $12.92, as compared with $5-53 per acre for the least profitable farms. The reasons for this difference may be obtained from a study of the data on pages 3 and 2.

The most profitable farms v/ere 55 acres sm.aller in size, but they had only 7.9 fewer crop acres than the least profitable larins. Tliey had about the same acreage of soybeans, ^.h acres more wheat, 9-0 acres more oats and lU.l fewer acres of com than the least profitable farms. Tlie most profitable farms carried larger inventories of feed and grain on which to malre a profit when prices advanced. They had an inventory in- crease in the feed and jrain account of .$1,0S9. as compared with $Ug9 on the least profitable fan:is. Since acreages of crops on the two groups of farms where similar, one reason for the larger inventories was the higLier crop yields, there being an advantage of 11.9 bushels of corn, 10. 7 bushels of oats, 11. U bxishels of wheat, and 9*^ bushels of soybeans in favor of the mosz profitable farms.

The most profitable farms liad an investment in productive live- stock of $5'GS per acre, and fed $1,512 of feed per farm, as compared with $5.66 invested per acre, and $1,^39 of feed fed per farm on the least prof- itable farms. The receipts from livestock on the most profitable farms were $9 '61 per acre, as compared with $5-55 P®^ acre on the least profitable farms The productive livestock on the most profitable farms returned $lU6 for each $100 of feed fed, as compai^cd with a return of $107 for each $100 of feed fed, on the least profitable fan.is. The dairy sales per dairy cow was $60 on the most profitable farms, and $39 on the least profitable farms. 'The return per litter farrowed on the most profitable farms was $1CU as compared with $9^ on the least profitable farms.

The total operating costs per acre were about the same for the two groups of farms. Hie man labor cost per crop acre was $U.!42 on the most profitable farms, and $U.70 on the least profitable farms. 'The cost of power and machinery per crop acre aiTiounted to $2-73 on the most profit- able farms, and $3 '71 on the least profitable fa.nns.

I

-7- Influence of AAA PrO;-:rgns on Cropping Systems a^nd Fari'ii I'acomes

Tiie fam-acco"ur.t records in Illinois v/ere influenced "both directly and indirectly "by tlie corn-hog and v/heat adjustment prograaTis . A large per- cento.ge of accounting fan-is was imder one or both contracts in 193^- The acreages of com and wheat on these farms were therefore less than nonnal. This should ha.ve resulted in lov/er operating costs. Corn-hog :3enefit pay- ments for the entire 193^ prograM will total ahout hO million dollars for the state, while wheat "benefit payments will "be a'bout 2.k million dollars.

The benefit payments for acco'cmting farms are indicated in the following ts-ble, which shows the average pa^ruent for those farms receiving payments, and includes only those payments received "by the cooperator before the 193'^ books were closed. In some cases only the first corn-hog cneck is included, wliile in other ca.scs the second check had been received. The second pajmients not received, and the third payments will oc entered in the 1935 took.

AAA Benefit Payments Received in 193^'

199

Corn Fneat Hogs

Ave I'age

lltunbcr Amopjit K'omber Amount ITumber Amoimt

of per of per of per 0 '^ -. ,

^~ ^ n r, _ _ r. ..._ pa^Tnentsi/

farras farm farms farm farms fann

1/3 most profitable farms 11 $153 9 $1^1 10 $12^ $35S

1/3 least profitable farms 10 II5 k '=j2 S SU 1S2

All accounting farms 32 ll|0 I7 I35 2g 3S 257

1/ Total benefit payments reported by accoimting farms under contract for 193''' divided by total nunber of accoimting farms.

On many farms the cash received from benefit payments will more than pay the year's taxes. As an average for all accounting farrms, the pay- ments a,ctus,lly received V7ero sufficient to pay 67 percent of the 193^ taxes.

It is interesting to note the use made of the contracted acres on the accoimting farms. The average farm had 23.3 contracted acres which were used as follows: 5-3 idle; S.3 mixed clover and timothy; 5'5 soybeans; 1.5 alfalfa; and 2.7 acres were in other crops. These data indicate tliat most farmers made good p.se of their contracted acres from the standpoint of soil improvement, as a large part of them were in legumes. When the Govern- ment restrictions on the use of crops grown on contracted acres were removed, they were on many farms the most profitable crops as they furnished hay and pasture where badly needed in drouth areas. The legpmes had the further advantage of being imjnune to attack from chinch bugs.

Farm earnings v/ere influenced indirectly by the AAA rirograns in that the reduction in produ-ction increased the price of the commodities involved. The drouth W8.s a more important factor in reducing production than the adjustnicnt prograjns, yet if it had not been for the corn-sealing program, there would have been but little corn in the hands of farr..ers at the time the major price advance becaiae effective.

200

factors Helping to Analyze the Farm Business on 30 Hacon County Farms in 193'^

Items

Size 01 I'anns — acres „------

Percent of land area tillalDle- - - ■

Percent of tillable land in loay and

pasture -------------

Gross receipts per acre- -----

Total expenses per acre- -----

ITet receipts Tjer acre- ------.

Value of land per acre ------

Total investment per acre- - - - -

Acres in Com- ----------

Oats- ----------.

mieat -___ _

Soybeans- --------

Hay .

Tillable pasture- - - - - .

Crop yields — Corn, bu. per acre- - Os.ts, bu. per acre- - TiTheat, bu. per acre - Soybeans, bu. per acre

26.8

20. Qg

S.5I

11.57

126 166

12 most i 12 least profitable profitabl faims farms

71-7 2U.1 2b. U 3U.9 25.6 35.0

29.1

13-5 27.2

26.9

222.9 95-6

25.5

27. 6U 0.71

18. 92

123

162

Gk.k 26.1 26.2 36.0 25.6

28-7

36 = 1 17.6 30.2 30. U

277.7

33-3

lU.lH S.bl 5.53

120 166

78.5 16.5 20 . S

36.9 32.2

i+7.7

2U.2

6.9 18. S

21.0

Value of feed fed to productive L.S Returns per $100 of feed fed to productive livestock- -------

Returns per $100 invested in:

Cattle- __-----.

Poultry --------

Pigs weaned per litter -------

Income per litter farrowed - - - - -

Dair;'' sales per dairy cot- - - - - -

Investment in productive L.S. per A P.eceipts from productive L.S. per A

Ivian labor cost per crop acre - - - ■ Machinery cost per crop acre - - - - Povrer and mach. cost per crop A. - ■

Farms with tractor ---------

Value of feed fed to horses- - - - -

Man labor cost per $100 gross income- --------------

Expenses per $100 gross income - - - Farm improvements cost per acre- - -

Excess of sales over cash expenses ■ Increase in in\rentory- ----- - ■

P^te earned on investment- - - - - -

Gross receipts per fei.rm- ------

1 235 127

85 221

'^.8

93 56

5.01 6.32

1 512 ll|2

ikG 2U3

5.8

lOU

60

5.06 9.61

k.ks 1.9U 2.93

k.kz

1.65

2.73

89^ 210

17 k2

: 2 814 701

92f

215

<!t

sk

13 32

■ 79

6.9s ii 905

1 ii39 107

70

6.7 9^ 39

5.66

5-55

h.io

2.57

3.71

75/^ 2U0

23 61

.97

3 319 2 061

1 ^^"^7 81

'ii.70f, i 3-33^

6 160 3 927

201

202

f}

-10-

Inflnence of Price Cl'^n^s on Fai-m Sarningts

Farm prices in 193'+ s.dvanced more rapidly than did the prices of coomodities vjhich faiiners jo'Ut^i'it. Pan.iers of the United States as a group could e:cchange their farm products in 193'+ lor 7^ percent as many goods as for the period 190S-191^» wMle in 1933 they received only bU percent, and 1932 only 61 percent as much in exchange for v/hat they hful to sell as in the prew.ar period. In the month of February, 1935 » this index of purchasing povrer hr.d increased to Sy percent of prev^ar, the index of farm prices having risen to 111 as compared with rn index of 127 for ccminodities which fanners huy. ^len the line representing farm prices drops helow the line represent- ing prices paid "by faiiners, farm, earnings are very low, hut v/hen these lines come close together farm earnings increase. (See following graph.)

Index of Prices

Rate Earned

2C0

150 125

100

75 50

25

D

= j;'arm j^ricos in U. 3. Aug. IJCS-July 1914 = IGC

= Prices paid by farmers. Aug. 1909-July I'jlH = IOC

- Bate earned en investment, accounting farms, central Illinois

J u

J U

12^ I

1>^ '

3fb

-2^

1917 'Id '19 '20 '21 '22 '23 '2U '25 '2t '27 '2.5 '29 '30 '3I '32 '33 '311

'203

-11-

Sinco the pric«^ of sone fam products advanced much more raridly during 193"^ tlian other products, it is evident that some farms v/otild henefit iTiore than others, depending upon the kind and quantity of prodricta sold. G-rain prices advanced much ao re rapidly tlian livestock Drices; which result- ed in a very had price ratio for fanners v«ho "bi:iy large nuantities of feed. The average Illinois farm price of corn was kl cents a hushel in January, IS^h', it advanced steo,dily mitil the end of the year when it vjas S? cents a, hushel. Other grains made marked advance althov^h not so great an advance as corn. The price of hogs fluctua.ted from a lov< of $3 '20 a hundred in May to a high of $6(^.30 in Septemher. The low point in the fall cnaie in Hoveraher when the average price vfas $5.10. The price has advanced quite rapidly since November, the a\'erage price being $7*5'^ for February, 1935- Beef cattle were worth SU.IO a hundred in January, 193'-'- ^^d advanced each rrionth until Se-otember, mien the price was $5.90. They dropped to $3.2C in December but increased again to $7.U0 for Fehrusry, 1935*

The year 193^ set a record for the reduction in the ntimbers of livestock. The percentage decreases by ajvscies w^re as frllovvs: horsps, 1.1 percf^nt; mulp-s, ^ .C perci^nt; all ca,ttle, 11.2 percent; she'^p, U.7 percent; hogE", 35»3 percent. ITlien all species are combined on the basis of their capacity to consume feed, the reduction was I3 percent. This reduction "vvill greatly reduce the demand for feeds produced in 1135*

The relative change in prices of important corrr.odities may be noted in the follov.dng gi-a-Dh, v/hich r,hows the average Illinois farm prices by months as a percentage of the average prices for the period 19!^'^1-1929'

-ercent

Pricp indices, 193'^

(1921-1929

Jan. Feb.

iijr

,Jtme Julj

1-Iov. Dec

All commodities index represents the v.'holesale price of a large n-amber of commodities for the United States, ss computed by Buxeau of Labor Statistics.

Grain nnd livestock, indices represent average montlily fai-m prices in Illinois.

20lf

-12-

Variati 0 n in 5amin;";s Over Five -Year Period

A comparison of production, income, and expendit-ores on the caccoimting farms in Macon County for the last five years is very interest- ing because of the violent changes in price level. 193^ ^^-s the second .year of very low crop yields, yet total receipts per farm were higher than in any other year in the last five, and v,'ere S5 percont of the 1929 gross receipts. Operating costs ncr acre were lOT/er than in any year of the five except 1933- Thus profits were the hest the county had experienced since 192S.

Earnings in 1935 ^.s usual will depend upon individual efficiency, weather, and prices. A normal year will mean larger yields of grain and prohahly lower prices.

Comparison of Ea.rnings and Investments on Accounting Farms in Macon County for 1930-193^

fi!

i

Items

L930

1931

1932

1933

193U

lltaiihcr of farms -------

Average size of farms, acres-

5 b

2US

Average rate earned, to pay for management, risk and capital - - I l.^fj Average lahor and management wa,ge j $-1 29O

Gross income per acre - Operating cost per acre

Average value of land per acre- - Total investment per acre - - _ -

Invc st.vient per far:a in:

Total livestock- ------

Cattle __-_

Hogs

Poultry- ----------

Gross income per farm

Income per faiTO from:

Crops- -----------

Miscellaneous income - - - _ Total livestock- ------

Cattle -----

Dairy sales- --------

Hogs

Poultry- ----------

Average yield of corn in "bu.- - - Average yield of oats in hu.- - - Average yield of wheat in "bu. - -

i 16.26 i 12.92

I

173 22s

2 907

1 !421

62s

131

U oUo

1 79s

72

2 170 US3

354

1 log

220

Ho 3S 2k

32 227

$-2 506

7.66 10.49

163 21U

2 362

1 227

I152

li.(2

1 ikl

355 S3

1 297 U2S

295

362

211 kr,

MS ^1

53 251

-iM $-2 211

6.13 S.56

132

1S9

635 813

292 103

539

510

52

977 25U

22U

2S6

lUi ^6 19

30 2S0

3.7^ $-58

1U.21

7.74

136 173

2U9

7.0^1 $1 323 '

I

20. Og S.5I

)6

166

Gkk 211 111

3 692

395

52

2U5

377 209 U36

209

22 20 2'!

1 5oU

965

173

91

k 995

3 308

3

1 5S3

295 572

29

Ik 27

205

AlOTUAL PABTi BUSINESS HEPORT OF THIRTY-riKE ?AR1.IS III ?OBB COUl'ITY, ILLINOIS, 193^

?. E. Jolinston, R. C. Ross, and 1. R. 3Tedges^*=

The farm earnings of 39 acco'ont-keepin^ fa.r/aers in Ford Coimty show- ed an increase in 193^+ over those of 1933* This is the second consecutive year of improvement in the business of these farms. The three years previous to 1933 showed very low returns.

These 39 accounts show for 193^ a^ a.verage net income of $2,6l8 per farm, as compared with sji avera.^e of $l,b37 ^^ ^933 a^id an avera£;e net loss of $838 ij^ 1932 • The average cash income in 193*^ ^''^^ $^»7^? psr farm, the cash "business expenditures $1,1^1 per lairn, leaving a cash halance of $2,988 to meet interest payments and family living eircpenses. (Those who l:eep home account hooks use the latter fig\ire to represent the cash contribution of the farm to the "realized family income".) Besides the cash income there was an ' inventory" increase of $383 per farm due to the rise in the prices of farm products. Tliis increase, added to the cash balance, resulted in an average excess of receipts over e::penses of $31371 per farm. The inventor^'" increase was a much smaller part of the total far^n income in 193^^ than in 1933-

These data must not be considered representative of average farm conditions, for they ?/ere secured from farms which are larger than average and v;ere managed by farmers who are more efficient than the average of all farmers in the county.

For the sta,te as a whole, farm earnings \7ere better in 193^ than in 1933 ij^ spite of the fact tha.t corn and oat yields were very low due to the drouth and to chinch bUf'?; damage. In the western and southwestern parts of the state the drouth caused an almost total failure of both com and oa.ts, which accounts for farra earnings being lower there than in other parts of the state .

The corn Gro"^ ras best in the southeastern part of the sto.te and was fair in the northwestern section. VTheat yields were particularly good in the south and central portions of the state. Soybean yields vrere .very good throughout the state and there was a larger than normaJ acrea.ge in Illinois in 193'^' This state produced over half of the na.tion's 193^"^ crop of soybeans.

Cliinch bug damage extended over most of the state last year but v;as much more severe in some sections than in others and was much worse on some farr^s than on other famas in the sajne comm"'jnity. Conditions affecting crop yields were very sjjotted; which accoujits in part for the wide variation in farm earnings from one section of the state to another and the wider variations tha^n usual from one fan to another.

Industries other tlip,n agriculture again showed im"Droved earnings over the previous ye.-^r. A group of SUc industrial corporations reported by a nationally laioivn bank showed average earnings of ^j.O parcent on their in- vested capital in 193^> ^^ compared with 3-^ percent for the same corpora-

•"H. D. Tri'plett, farm adviser in Ford County cooperated in supervising and collecting the records on which t"-;5 s report is based.

206

-2-

tions in 1933. -A- similar ^ronp had a loss of one-tentli of one percent in 1332 and average earnings of 3.3 percent in 1931'

In conparinf^ the rverage earnings of corporations with the rate earned on investment on accounting fanriS, it is well to keep in rund that in corporation accoimting, c'nr.rges are made for management, while in the faim accounts no comparable deduction iuis been made. On the other hand the farm- er and his f.amily receive food, f-uel, and otlier items of living from the farm for which the farm has received no credit in the records used in this report*. For the average central Illinois farm frjnily, consisting of five persons, the value of the food and fuel furnished by the farm v/as about $250 in I93U, when estimated on the basis of the wholesale price for farm pro- ducts.

Variations in Farm Incomes

•There was a much wider range in farm earnings on the accoimting farms in I93U thiin in 1933. "^is was true for the farms included in this report and was also true when the average earnings of farms in one section of the sta.te are compa,red with the earnings of farms in other areo.s.

The extremely wide range in earnings was due to a combination of physical and economic factors. The average yields of v;heat and soybeans \Yere much better, compared with the five-year average, tha.n the average yields of com and oats. Tliis variation favored those sections v/hich liad larger acreages of the higlier yielding crops in 153'+' There was also a wide range in average corn yields from one section of the state to another as \vell as between individual farms in the same area. The -orice of grains was high in 193'-1' ^-S compared with prices of livestock and livestock products. Farms where grain sales constitute a large part of the farm income thus had an advantage. The rapid increase in the prices of farm products, parti- cularly grains, favored those farms vhich h^d large stocks of salable pro- ducts on hand at the beginning of the year. Kany farmers v^fho inventoried the corn on hand at the beginning of 193^ at kO cents a bushel, later sold this corn for SO cents.

In this group of 39 accounting farms the most successful third shows an average net income of $U, SyC; the avera,ge net income of tlie least successful third of the farais was only $79^» I^ 1933 ^^^ comparable net incomes for the two groups was $2,569 and $72^ respectively.

The following table shows the number of farms having certain net incomes per acre. There was a marked difference between the most success- ful and the least successful farms.

Average net in- come per acre

$19

17

15

13

11

q

IT-uir.ber of fanas

2

u

2

5

Average net in-s come j)f.r acre

$7. ..... .

5

3

1

-1

number of farms

5 3 6

I

Investments, ?.eceit)ts, Expenses, and Earnings on 39 Ford County Farms

207

Items

Your

faim

Average of

^9 farms

13 rao s t prof ita"ble

farms

13 least profitable fams

CAPITAL II-IVESTIISIJTS

Land ------------

Farm improvements- - - - - -

Livestock tota,lT ------

Horses ----------

Cattle

. Hogs __---_-_-

Sheep- ----------

Poultiy- ------ _

Machinery and equipment- - - Peed, grain and svipplies - -

Total capital investment

33 790 U U9U

1 61U 69U

Igg

28

9S

1 52R

2 614

$UU 037

k2 065

5 U61 1 g2U

713 766

232

12

101

1 U9U 3 513

23 692

3 079

1 3g'5

507

59U

130

107 1 6U7

1 960

$31763

RECEIPTS AND MET IIICHEASES

Livestock total- ------

Horses -------

Cattle

Hogs (inclxides AAA payT'.ients) Sheep- ----------

Poultry -__-_---

Egg sa,les-

Dairy sales- -------

Feed and grain (includes AAA. payments )

Lahor off farm - - - - -

Miscellaneous receipts - - -

Total receipts & net increase j

1 ^9S

71 3U0 591

^3

1C7

lUi 305

2 97s

ics

2

$ h 6s6

ill

105 39U s66

13 13k 196 U63

k 67s 127

$ 6 97<

1 083 52

303 3U0

6g 110 136

1 5lg

50

2

$2653

e:cpe:-tses Aim iet decrease:

Farm improvements- -

Horses _-_---_

Miscellaneous livestock decreases

Machinery and equipment- - - Feed, grain and supplies - - Livestock expense- -----

Crop expense ----- -

Hired lahor-

Taxes- -----------

Miscellaneous expenses - - -

Total expenses & net decreases

^77

3U6

35 13U

ig9

306

2S

$ 1 315

3^3

30U

"U5 166 29I+ 320 29

$ 1 501

193

3g!4-

23 101

69

29g

20

$ 1PS£

RECEIPTS LESS EXPENSES

Total unpaid lahor- - ~

Operator's lahor ------

Family lahor --------

Net income from investment and management- ----------

RATE EARI'IED OUS lUYESTMSiJT

Return to capital and operator's labor and management- - - - - -

5^ of capital invested- - - - - -

LABOR AI\ID i/IAl^GSI,eiTT WA&E

/'

$ 3 371

753 536 217

2 6ig

$ _5j£ZI

g07 5U0 267

k 670

$ 1 565

771 5^0 231

79I+

'Mi

3 154 952

5 210

2 71g

$_2j±22

1 33I1

1 5S0

^ - 2^U

20S

A further study of the farm "businesses made ty comparing the invest- ments, receipts, and expenses of the group of farms with the highest net in- "cones v/ith those having the lowest should throw some light on the q-oestion of why some farmers are more successful than others. This comparison is shown in the tahle on page 3 •

The most successful farms averaged 3CT acres each, the least suc- cessful 2UI acres. This difference in size accounts in part for the varia- tion in the average investment, receipts, and expenses in the t\vo groups. Difference in receipts from the sale of grains accounts for much of the dif- ference in income between the two groups. Although the expenses per farm were higher on the most profitable fa.ms, the total e;cpense per acre, includ- ing the charge for family labor, was less than it was on the least profitable farms .

Changes in Inventories and Inventory Values

The year 193*^ was similar to 1933 ^^ that the prices of farm pro- ducts continued to advance, causing further increases in inventory values. Owing to the poor crop yields in 193^ there were fevi/er bushels of grain on liand to inventory at the end of the year than at the beginning. The valxie of the sma.ller amotint of grain, however, was greater than for the larger amount on hand at the beginning of the year.

Bushels of Corn Inventoried

Jan. 1, 103^ Dec. 31, 193^

Average of all farms. U U99 u^ 320

Average of I3 most successfiil farms . G hj)l 3 390

Average of I3 least successful farms. 3 256 1 06S

Your farm

The most profitable farms had a much larger inventory of com

both at the beginning and end cf the year;- 'frhich accounts in a large measure for the difference in farm earnings.

The average inventory increase for the accounting farms in Ford County was $3S3 in 193^ as compared with $960 in 1933 a-^^id. an inventory loss of $1,0^+5 a farm in 1932. There were increases of $159 in total livestock, $3S9 in feed and grain, and ^I'h in machinery, while improvements showed a decrease of $18'9. Such an increase in inventory a.s that for machinery re- sults from the value of new replacements during the year being in excess of depreciation costs. This increase is of considerable interest for it is the first ti;7ie that such an increase in machinery inventories has occurred since fniT-i earnings began to decline so drastically with the general de- pression.

':J

-^-

Inventory Changes for 193^

209

Beginning Ite..is inventory

1-1-3^

Total livestock $1 61U

Feed and grain 2 61U

Llachiner;^ 1 525

Improvements (except residence) U UqU Total $10 2U7

Closing inventor;y' 12-^ 1-3 U

Inventory changes

Inventory

changes your faim

$1 773	$159
3 003	3S9
1 5U9	2k
h 305	-1S9
ao 630	$3 S3

$

Sorae Adjnstnents on ?ord County Farms Since 1929,

Farmers have heen forced to make adjustments in their cash ex- penditures as the result of clir.nges in their ca.sh incomes. From I929 through 1933 farm operating costs declined each year, hut the year 193^^ hrought a reversal of this trend. Total operating expenses vrere 3S cents an acre higher in 193'+ 'thfm in 1933, v;hile cash 02:)erating expenses were $1,757 a farm in 193^ as compared with $1,^92 in 1933 • ihe largest increase in ex- penditures over the previous year was for ma,chinery and supplies for machin- ery. Indications point to an even greater ercpansion of spending for these items in 1935 since farmers have postponed machinery replacements during the four-year period since 1929«

Cash Income and Expenses on Accounting Farms in Ford Cou:ity

1929 and I93U

Your . Average cash Your Avera

Items fain expense per farm farm income

, 1^!3U I93U 1929 193'+ 193^

Livestock $ $ 32S $ U5I $ $1 767

Feed and grain lUl 363 2 73O

Machinery U93 1 075 I23

Improvements IO3 3,-U I5

Lahor 1^9 55I1 lOg

Miscellaneous 2g 33 2

Livestock expense. ... 35 U7

Crop expense I3U 292

Teztes 306 U66

Total $ $1 757 $5 065 $ $U 7U5

Excess of cash sales over exi:>enses .,,..,... $2 9Sg

Increase in inventoi^"- 3S3

Income to lahor a.nd capital (receipts less expenses) ... 3 37I

ge cash

per farm.

1929

9I-H

3 '457 ite

7?

5

$6 063

$2 99? 1 156

210

-6-

The cunulative effect of several years of low agric\iltural prices on the demand for raanuf act-ored goods can res.dily "be ascertained "by a compar- ison of cash farm expendit'ores in 193^ with those in 1929. Although the a.verage cash income in 193^ was 71 percent of tha.t in 1929. cash e-penditures were only lialf as large. In 193^ livestock purcliases were 73 percent and feed and grain purclis.se s 39 percent as large as in 1929- In 193^ these farms paid out U5 percent as ntich for machinery and H6 percent as much for crop ex- pe -.se as in 1929» while taxes were reduced to onlj-- 66 percent of the I929

level.

Comparison of ?arr.i With High and Low Earnings

The most profitable farms in this stiidy liad net receipts per acre of $15.21 as compared with $3 '30 ^or the least profitahle group. The reasons for this difference may he obtained from a study of the data on pages 3 and S<

The most profitable farms were larger and carried larger inven- tories on which to moJce a profit when prices advanced. One reason for the larger inventories, however, v/as the higher crop yields, there being an ad- vantn.ge of 17.3 bushels of com and 6.G bushels of oats per acre in favor of the high-profit group. Crop yields were so low on the leost profitable fams tliat there was an average inventory loss of $302 per farm in spite of the nrice advance .

Although there was about the same amount of livestock per acre on the farms in the two groups there was a difference in the income of $2.Ul an acre in favor of the most profitable farms. The returns for each $100 of feed fed to livestock was $136 as compared with $120.

The total operating costs on the acre basis were slightly higher on the least profitable faiTOS. The power and machinery cost was an important factor in accounting for this difference.

!

211

-7- Infltusnce of AAA PrOf^i'ains on Cropning Systems and Far.-n Incomes

The farm-account records in Illinois were influenced 'both directly and indirectly "by the corn-hog and wheat adjustmsnt progiTms. A Iprge Tjer- centage of accounting fanis v/ere under one or hoth contracts in 193^' 'T-^® acreages of com and wheat on these fanr.s were therefore less than noi-mal. Iliis should have res\ilted in lower operating costs. Cor?i-hog "benefit pay- ments for tlie entire 193^ pro£rain will total ahout Uo million dollars for the state, while wheat "benefit r)ayments will "be ahotit 2.'4 million dollars.

Ihe "benefit payments for accoxmtinis; farms are indicated in the fol- lowing tahle, v;hich shows the averaf;e payment for those farms receiving pay- ments and includes only those payments received "by the cooperator "before the 193^ books were closed. In some cases only the first corn-hog check is in- cluded, v;hile in other cases the second check had "oeen received. The second payments not received and the t!iird payments v/ill "be entered in the 1533 "book.

AAA Benefit Paji.ients Received in 193''"

Corn TThervt IIo~s _ _ ^erage

ilUJifDer Amoimt Hur.i"ber Ax-iount rTjm"t)er Ai'notmt ^^ ^-^-^

of per of per of per paymentsi;''

farms farr.i farms f-„rm fa.nas farm

1/3 most orofitahle farms I3 $217 3 $133 11 $135 $3^3

1/3 least profitable farms I3 II3 1 22 11 66 I7I

All accounting farms 39 160 5 lOG 35 3k 257

1/ Total benefit payments for acco\-aiting farms under contract for 153^f div- ided 'oy the total nuiiiber of accounting farms.

On man;^ farms the cash received from benefit payments will more than pay the year's taxes. As an average of all accounting farms, the paj-ments actually received were sufficient to -op.y SU percent of the 193^ taxes.

It is interesting to note the use made of the contracted acres on the accounting farms. The average farm had 27.5 contracted acres which were used as follows: h.S idle; U.5 red clover; F.l sweet clover; 5.3 soybeans; 2.9 alfalfa; and I.7 acres v.'ere in other crops. These data indicate th^at most farr-.iers made good use of their contracted acres fro:.i the standpoint of soil improvement, as most of them were in legumes. T/hen the government re- strictions on the use of crops grown on contracted acres were removed, they Were on many farms the most profitable crops as they furnished ha^;- and pas- ture where badly needed in drouth areas. The legumes had the fujrther advan- tage of being irjmune to attack from chinch bugs.

Farm, e^vrnings were influenced indirectly by the AAA programs in that the reduction in production increased the price of the commodities in- volved. Tlie drouth was a more imiportant factor in reducing production than the adjustment progra'as, yet if it l-ad not been for the corn-sealing program there would have been but little corn in the hands of farm.Grs at the time the major price advance becajnc effective.

212 .S_ Factors Helping to Analyze the Farm Business on 39 Ford Coujity Farms in 193^
Items Your	Avera^je of 39 farms	13 raost, profitable farms	13 least profitable farms
Size of f-^.-rms — acres _______		270. S 94.2 26. g 17.30 7.bU 9.65 125 163	3C7 95.^ 27.0 22.73 7.52 1>21 137 177	2I4O.9 Sk.S 26.1 11.01 7.71 3.30 9S 132
Percent of land area tillatle- - - Percent of tillaole land in liay & ■oasture -------------
G-ross receipts per acre- ----- Total expenses per acre- ----- Net receipts per acre- -.----_ Valije of land per acre - - - - - - Total invest'nent per acre- - - - -
		Si.S 71. c 3.3 s.s 21. S U7.O 29. U 13. C	lll.S 63.7 7.7 5.9 2k. k 5k.l 3S.5 I5.U	79.7 72.3 16. U k3.k 19.2 g.g 1
Oats-
^leat
Tillable Pasture- _ _ - _
Crop yields — Com, tu. per acre
Oats, "cu. per acre- -
Value of feed fed to iDroductive L.S.		1 lUi 1U2 30 230 0.0 3h 51 3-35 5.66	1 3?3 136 120 2 SO S.k 100 sg 3.93 S.73	S65 120 1 71 • log ; S.g ' gl 3.92 U.32
Het-'jjrns per $100 of feed fed to productive livestock- ------ .
Het-jjms per $100 invested in: Cattle
Poultry - - -
Figs weaned riP-v litter ------
Income -oer litter farrowed - - - -
Dairy sales per dairy cow- - - - -
Investment in prod'cictive L.S. por A.
P.ecei-ots from productive L.S. ner A.
Lan laLor cost per cro"0 acre - - -		U.27 1.66 2.U2 230 19 1.C2 2 "gS 323	U.3S 1.23 1.33 lOOf. 262 16 33 1.12 k 113 lok S.59 6 97-	k.2S 2.0g 2.90 IH 133 r 30 70 ; .go • 1 gb7 -302 2.U1 2 653 '
LlacMnery cost 73er crop acre - - -
Power and mach. cost per cro-;^ A. -
Fams with tractor
Val-cu3 of feed' fed to horses- - - -
Man labor cost per $100 gross
"1 "nrri'^ip*- ...... ..
Sxroenses per $100 gross incone
Fain inprovencnts cost per acre
Fxcess of sales over cash errpenses
Increase in inventory- - - - -
3a.te earned on investment- - - - -		5.9U U 6g6 1
G-ross receir)ts per farm- - _ _ _ _

-9-

213

Chart for Studying the Efficiency of Various Parts of Your Business,

Pord Co^anty, I93U

The ntu-flhers above the 39 farms inclxided in dra.v;ing a line axross farm in that factor, your locality.

lines a.cross the middle 0 this report for the factor

each coliimn at the nttmher you can com-oare your effic

f the page

s named at

measuring

iency with

a.re the averages for the the top of tlie page . By the efficiency of your that of other farmers in

ti a- U CO .- 0 0 >	Bushels per acre	Hogs: Income per litter	CO 0 CO to .H Co •H U a Q) R Ph	PoixLtry income per $100 invested	L.S. income per $100 of feed fed	Cost per crop acre	Lahor cost per $100 gross receipts	Increase in inventory j	Sales over cash e:':penses	Gross receipts	•H CO u
f5 0 0	CO -p n3 0		0 3	ci 0 sn g 0 0 Co ft p.	0 u ft	6 U ft
11	35	2S		120	75	U^O	190-	l.oG	.Uo		2UOO	SOOO	32	9600	320
10	30	23		113	7^^'	300	igc	2.3c	• O'J	0	200r	700C	2q	s6oo	U7e U20
9	k3	22		110	65	350	170	2.80	1.20		1600	6000	26	7600
s	Uo	19		105	60	310	16c	3.30	1.60	10	1200	5000	23	6600	_372._ 320
7	35	lb		100	55	270	150	3. SO	2.00	15	soo	Uooo	20	5600
5.qu	29. U	13.0		9^	51	230	1I42	U.27	2.U2	13	3S3	2935	17	U6s6	271
5	pi^	10			U5	190	130	U.GO	2. SO	25	0	2000	lU	3600	220
u	20	7		S5	Uo	150	120	5.30	3.20	30	-!-iO0	1000	11	2600	170
3	15	^		SO	35	110	lie	5.20	3.60	35	-800	0	g	1600	120
2	10	1		75	30	70	100	6.30	U.GO	Uo	-1200		5	600	70
1	5		.,	70	25	30	90	6. so	U.Uo	U5	-IbOO		2	0	r'20

2lU

-10-

Influence of Price Chcj.n^s on Farm Eaminig:s

?arm prices in 193^ rdvr.nced more rapidly thaai did the prices of coramodities v/hich farmers oought. Farraers of the United States as a ^roup could exchange their farm products in 193^ for 7^ percent as many goods as for the period 1909-19l'+> while in 1933 they received only Sh percent, and 1932 only 61 percent as mioch in excliange for what they liad to sell as in the prewar period. In the month of February, 1935> this index of purchasing povver had increased to ^1 percent of prewar, the index of farm prices having risen to 111 as compared with an index of I27 for cor.modities which fanners "buy. ^len the line representing farm prices drops oelow the line represent- ing -orices paid hy farmers, farm earnings are very low, out when these lines cone close together far^a earnings increase. (See following graph.)

Index of Prices

Rate Earned

200 150

1P.5 100

75 50

= Paz-Ti prices in U. S, Aug. 1909-July I31U =: ICC

= Prices paid "by farmers. Aug. 1909-July I91U = 100

= Rate earned on investment, accc-onting farms, central Illinois

J L.

_! ' ' ' I

I I t

I2i

iQi

0,0

Si

u^

2!fo

afo

-!-JO

I

1917 'IS 'I9 '20 '21 '22 '23 '2U '25 '26 '27 '28 '29 'jO '3I '32 '33 13U

215

-11-

Sincp the price of some farm products advancRd m^ich more rapidly during 193^ than other products, it is evident that scnie farms would henefit more than others, depending upon the kind and quantity of products sold. Grain prices advanced much laore rapidly than livestock prices; v/hich result- ed in a very had price ratio for famers who tuy large quantities of feed. The average Illinois farm price of corn was hi cents a tushel in January, 193^-l-; i't advanced steadily until the end of the year when it was 2S cents a tushel. Other grains made narked advance although not so great an adva,nce as corn. The price of hogs fluctaa.ted from a low of $5.20 a hixndred in May to a high of $6.30 in Septemher. The low point in the fall came in ilovemher v/hen the average price wa,s $5-10. The price has advanced quite rapidly since November, the average price heing $7*50 for Jehruary, 1535' Beef cattle were worth $U.10 a hundred in January, 193^ ^^'^ advanced each month until Septemher, wlien the price was $5.9C. They dropped to $5.20 in Decenher hut increased again to $7.^ for Pehruary, 1935-

The year 193^ set a record for the redixction in the nruAers of livestock. The percentage decrea.ses hy ppecies were as fellows: horses, 1.1 psrcent; miilps, ? .G percent; all cattle, 11.2 percent; she'~p, U.7 percent; hogs, 35*3 percent. YUnBn all species are comhined on the hasis of their capacity to consume feed, the redtiction was I3 percent. This reduction will greatly reduce the demand for feeds produced in 1935*

The rela-tive change in prices of important conanodities may he noted in the following graph, which shows the average Illinois farm prices hy months as a percentage of the average prices for the period 19?1-1929'

Percent

Price Indices, 193^

(1921-1929 = ICC)

Jan.

IIov. Dec

All commodities index represents the wholesale price of a large numher of commodities for the United States, as computed hy Bureau of Lahor Statistics.

Grain and livestock indices represent average monthly farm prices in Illinois.

216

Variatioii in 5r.min£;E Over ?ive-Year Period

A compo.rison of production income and expenditures on the accoimt- ing farjis in ITord CoTuity for the last five years is very interesting because of the violent changes in price level. 193^ ^''S-s the second j'ear of very low ci'op yields, yet total receipts per farm v/ere higher tlian in any other year in the last five and v/ere fZ percent of the 1929 gross receipts. Operating costs per acre were lower than in any year of the five cxceiDt 1953' Thus profits were the "best the coyjity had experienced since 192S.

Earnings in 1935 ^^ tisual will depend upon individual efficiency, weather, and prices. A nonaal year v/ill mean larger yields of grain and probahly lower prices.

Comparison of Earnings and Investments on AccG~anting Farms in Ford County for 193G-1934

I

I terns

193c

1931

1932

1933

19311

Uuaher of farms -_---_-_ Average size of farms, acres- -

Average rate earned, to pay for mpjiagement, risk and capital - Average la-bor and management

Gross income per acre ----- Operating cost per acre _ - _ -

Average value of land per acre- Total investment ;oer acre - - -

Investment per farm in:

Total livestock- -----

Cattle

Hogs _-_-__- -

Poultr;^- ---------

Total receipts per farm - - - -

Income per faira from:

Crops- ------- -

Miscellcmeous income - - -

Total livestock-

Cattle

Dairy sales- -------

Hogs -----------

Poultry- ---------

Average yield of corn in hu.- - Average yield of oats in hu.- -

32

26U

2. of, $-1 lUl

15.6c 10.90

135 231

2 2i|U 965 372 13 s

U 116

2 237 119

1 710 222

506

741 200

33

275

0.1^,

$-2 269

9.62 9.3s

35 30

171 211

97S 3S7 137

650

1 U62

33

1 155

10 s

U09

1S2

U4 '+7

30 26U

-1.94

$-2 557

0.13

132 171

1 S96

725 2 so 130

1 311

269 Ih 962 119 291 362 169

50

32 282

3-64

$-94

13.06 7.26

129 161

1 660

759 191

115 3 63S

520

15

153

30U 206 U20

166

32 19

39 271

$952

17-

7.

I

125, 163.

1 61I+ 69^

igg 9B

k 6s6

97|

59«

3IK) 305 591

XXJI .

29 r

13

217

liniUAL PAEIvI BUSIlESo HEPOHT Oil THIHTY-OIS FAPJ/iS III IROQUOIS COUiITY, ILLINOIS, I33U

p. E. Johnston, J. 1. Andrews, ind A. L. Leonard*

•The farm earnings of 3I accoiu.t-Leepin^^ I'M-niers in Iroquois Coimty showed an increase in 193^ over those of 1^33* This is the second con- secutive year of improvement in the "business of these fnnns. The three years previous to 1933 s^'howed very low returns.

These 3I accounts show for 193^+ "^ average net income of $1,753 per farm, as compared with an avera,:^e of $l,b37 in 1933 a-^d ^^ avera-^e net loss of $S3S in 193'' • ?he averag-e cash income in 193^+ was $U,2ir5 per farm, the cash "business expenditures !!;i,g3S per farm, leaving a cash ba-lance of $2,U07 to meet interest payments and faxnily living expenses. (Those who keep home account "books use fhe latter figvire to reprer.ent the cash contri- "bution of the faiTi to the "realized family income".) Besides the cash in- come, there was an inventory increase of $13^ per farm due to the rise in the prices of farm productn . This increase, ;id.ded to the cash halance , rer.iilted in an average excess of receipts over e::penses of $2,5'-H per farm. The in- ventory increase was a muc"h siapller part of the total farm income in 193'"^ than in 1933"

These data must not "be considered representa.tive of average farm conditions, for they were secured from fanns which a,re larger than average, and were raa.naged "by fanaers who are more efficient than the average of all farmers in the county.

Por the state as a whole, farm i'arnings were better in 193^ than in 1933 in spite of the fact that corn and C'-t yields were very low due to the drouth and to chinch "bug dapiar:e . In the western and southwestern parts of the state the drouth caused an a.toost total failure of "both corn and oats, which accouiits for farsn earnings "being lower there than in other parts of the state.

The com crop was best in the southeastern part of the state, and was fair in the northwestern section. Tneat yields were particularly good in the south and central portions of the state. Soybean yields were very good throughout the state, and there was a larger tlian normal acreage in Illinois in 193^* This sta.te produced over half of the na.tion's 193^ crop of soybeans .

Chinch bug damage extended over most of the state last year, but v/as nujch more severe in some sections than in others, and was much worse on som.e farms than on other farms in the same comin-unity. Conditions affecting crop yields v/ere very spotted; v/hich accounts in part for the wide variation in farm earnings froia one section of the state to another, and the wider variations than \is\ial from one farm to another.

*C. S. Johnson, farm adviser in Iroqiiois Couiity, cooperated in supervising and collecting the records on which this report is based.

21 S

Indiistries other tlian agricult^ore again showed improved earnings over the previous year. A group of SUO industri.il corporations reported "by a nationally laiown iDaiik' showed average earnings of 5-0 percent on their in- vested capital in I93U, as corajjared with 3.U percent for the saaie corporations in 1933. A si-iilar group had a loss of one-tenth of one percent in 1932 and a.verage earnings of 3 '3 i^ercent in 1931- ||

In comparing the average earnings of corporations v/ith the rate earned on investment on accotmting farms it is well to keep in .nind tha.t in corporation accounting, charges are made for management, while in the farm accouaits no comparahle deduction ha,s heen made. On the other hand the farmer and his family receive food, fuel, and other items of living from the faim for T/hich the fara has received no credit in the records \xsed in this report. For the average central Illinois farru family, consisting of five persons, the val-ue of the food and fuel furnished hy the farm v;as aoout $2^0 in 193^'-i when estim.ated on the basis of the wholesale price for farr:i prodv.cts.

Variations in Fairo Incomes

There was a much wider range in farm earnings on the accounting farms in 193^ than in 1933' -his was true for the farms included in this report, and was also trije when the avera.ge earnings of farms in one section of the state are compared with the earnings of farms in other areas.

Ihe extremely wide range in earnings v/:.,s due to a comoination of physical and economic factors. The average yields of wheat and soybeans were much better, compared with the five-year average, than the average yields of corn and oats. This variation favored those sections v.'hich had larger a.crea.ges of the higher yielding crops in 193'+* There v:as also a wide range in a.verage corn yields from one section of the state to another, as well as between individ'oal farms in the sajne area. The price of grains was high in 193^5 3.S com.pared with prices of livestock and livestodc prodxicts. Farms where grain sales constitute a large part of the farm income thus had an advantage. The rapid increase in the prices of farm products, particularly gra.ins, favored those farms which had large stocks of salable -Droducts on hand at the beginning of the year. Many farmers who inventoried the com on hand a^-t the beginning of 193^ ^^ ^0 cents a bushel, la,ter sold this corn for SC cents.

In this grouT) of 3I accounting farms the most sn.ccessful third shows an avera.ge net inco3:ie of $r?,6S5, v^fhile the average net income of the least successful third of the fa.rms was only $b95* Figured on a ca.sh basis the most successful farms ha.d on an a.verage $1,SS1 more cash income left to meet interest pay:aents and faj::ily living than did the least su.ccessful fa,rms. In 1933 't^G comparable net incomes for the two groups was $2,U23 and $-19 respectively.

Investuents, Beceipts, Expenses ind Earnings on ],1 IrooMois County Fanns in 193^

219

Ite;ns

CAFIIAL IirrESTJ.IS:JTS

Land ------------

Fana improver.ents- -----

Livestock tota,l- ------

Hor?^es ----------

Cattle __-

Hogs

Sheep- ----------

Po-Jltry

Machinery and e equipment- - - Peed and grains- ------

Total capital investment

Your

Ave rage of 31 farns

27 U35

u 695

1 £'51 676

223 155

91

1 5U0

2 124

$37 675

10 most prof it ah le f anr.s

27 021 k 309

o

117

$13.

69c S09 336 19c 90 302 172

s21

10 least profitable

farr.is

25 ^570 ^ ?33 1 JI9

617 511

157

b

SS 1 5U0

1 i;59 53 U ggi

HECEIPTS Am 17ET IHCFSASES

Livestock total-

riorses ----------

Cattle

Rogs (including AAA payments) Sheep- ----------

Poultry

Egg sales- --------

Dairy sales- -------

Feed and grains (ii:cl-ading AAA payments)- --------

Lahor off farm -------

Miscellaneous receipts - - - Total receipts £• net increases

:?ENSS3 Al® IJET DECF3ASZS

Farm improvements- - - -

Horses ---------

!/ii seel lane ous livestock decreases

Machinery and equipment- - - Fe^id and grains- ------

Livestock e::pense- -----

Crop expense --------

Hired labor- --------

Taxes- -----------

Miscellaneotis expenses - - -

Total expenses & net decreases

079 550

66U

S3 105 129

595

111

2

$ 3 7^7

2l|0

299

50

131 189

311

26

1 2k6

2 S2U S5

sUs 730

119

log 737

1 GSh 210

& k 69?

23]

255

Ob

127

28S

3UI+

27

1 356

25I+

572

6

^3 133 310

325

15

3

709

§ 1 3^'-0 $ 1 1U2

26s

271

22 127 113 317

2U

ieCEIPTS LESS E"PE}I3ES-

l^otal unpaid labor- -------

Operator's labor ------

Family labor --------

fet income from investment and I management- ----------

ItATS EAPJED OIJ IITVESTi.CKT

j'etum to capitaJ and operator's labor and raanagement- - _ - - - of capital invested- - - - - -

l^ABOR AMD I.fAITAGZI/IElTT WAGS

5 2 -)kl

7SS 517 271

1 753

673 5U0

133

2 635

^ol

S72

U6S

U,.6

695

0/-^

1.99^

2 270

1 SgU

$ 336

3 2.>5

1 gU6

$J_iI?

I 1 163

-1'-

The follov/ing ta"ble shov/s the n^xnter of fai'rns having; cert.- in net incomes per a.cre. lOaere was a marked difference between the most successftil and the least successful farms.

Average net in- I'Tnm"ber of Average net in- I\rtiin"bcr of

come per acre fri.ms cone per acre fanr.s

$15 3 $5 8

13 0 3 3

11 6 1 2

Q U -1 1

7 h

A fui^ther study of the faiin businesses made "by co.aioarin^ the in- vestments, receipts, and expenses of the group of fanns with tlie highest net i incomes v/ith those having the lowest should throv/ some light on the qxiestion of '.vhy some fanners pre more successful than others. This com.oarison is shovm in the tahle on page 3*

The most Profitable faiiTis averaged 2],2 acres each and h^.d an average capital investment of $365 921 per farm, as compared with .'^^5 acres and $3'+>^Sl for the less profitable farms. The most profitable farms had 15 more acres of tillable land, and I6 more acres of croos per farm than the least profitable farms. Tlie most successful gi'oup of farms sociijred average gross receipts of $U,692> "■''hile the least successful obtained $2,709« A difference of $1,U5S in receipts and net increases from livestoch accoimts for a large part of this difference.

Changes in Inventorie s and Inventoi'y ValiJe s

The year 193'"'' ^"^-s similar to 1933 i^ that the prices of farm pro- 1

ducts continued to advance, causing further increases in inventor-^ values. Owing to tne poor crop yields in 193'-''i there were fev/er bushels of ~rain on hand to inventory at the end of the year than at the beginning. The value of the smaller amount of grain, hov/ever, ^vas exactly equal to that of the larger aMOunt on liand at the beginning of the year.

Burihels of Corn Inventoried

Jan. 1, 1"3U Dec. 31, 1^V4

Average of all farms 3 2^7 1 2f7

Average of 10 most successful famis . . 3 '•■■^2 1 236

Average of 10 least succesr^ful farms. . 2 IU9 9^3

Your farm

The most profitable farms had a larger inventory of corn both at the beginning and at the end of the year. This difference accoujitcd for a considerable part of their higher net increases of feed and grains.

221

The average inventory increase lor the accoirating lamis in Irocx-uois Co-unty v.'as $13^ in 193^ ^-^ compared with S6l7 in 1933» and an inventory loss 01 $5^ a lam in 1932. xhere was an increase of $323 in the inventoiy of total livestock, while machinery showed a decrease of $59 and i;nprovenents a decrease of $130. Many farms show an increase in machinery inventory, which cm "be explained hj'- the value of nev/ replacements during the year "being in ercess of depreciation costs. Indications point to an expansion of spending for macliinery and repairs in 1935> since farmers have postponed machinery replacements duxing the five-yer.r period since 1529'

Inventoiy Changes for 193^

Beginning Closing Inventory I:iventory

Items inventory inventory cha.nges chane'^G

1-1-3^4 12-31-3^ 193^ your farm

Total livestock $1 2S1 $2 20U $323 $

Feed and grains 2 12U 2 12U

Machinery 1 5I4O 1 4g1 -59

Improvements (excex)t residence )U oQS U 565 -130

Total ' $10 2UO $10 37U $13U S

ll

Some Adjustments on Iroquois Coimty Farms Since 1920

Farmers have "been forced to mal.e adjustments in their cash ex- ""rendit'oi'es as the result of changes in their cash incomes. From 1929 through 193^ farm operating costs declined each year. Total operating ex"->enses were 51 cents an acre lower in 193^ than in 1933 > while cash operating expenses were $1,838 a faim in I93U as comp-red with $1,238 in 1933- The largest in- creases in expenditures over the previous year were for livestock and feed and grain.

Cash Income and Expenses on Acccjnting Farms in Iroquois County

1929 and I93U

Your Average cash Your Average cash

Items farm expense per faiT.: farm incor.e per farm

19311 ~3U ' 1929 193^ 193^' 1929

Livestock $ $ 373 $ U5I $

Feed and grains 337 363

Machinery 3II 1 075

Improvements 110 3SU

La'bor 189 55^

Miscellaneous 26 33

Livestock eirpense 50 "47

Crop expense I3I 292

Taxes 3 11 Up 6

Total 5 $1 S3S $3 665 i

Excess of cash sales over expenses $

Increase in inventory

Income to labor and capital (Receipts less expenses

129 932 71	$2 9UI 3 ^97 1U2
111	7S
2	5

$4	2^5	$6	bbj)
$2	i.C7	$2	99s
	I3ii	1	15^+
?	rUl	\	Ih?

222

The c'umulative efrect oi" sever-^.l years oi" low agricultnral prices on the demand for manufactured goods can readily "be ascertained "by a com- parison of cash farm expenditures in 153^ with those in 1929- Although the average cash income in 193^ ^'""S 6^ percent of that in 1929, cash ex- penditures were only ^(jo :is la,rge . In 193'-l- livestock purchases were S3 per- cent, and feed and grain purcha-ses 93 percent n:s large as in 1929 • In 193'-i- these farms paid out 29 percent as much for machinery, and U5 percent as much for crop expense as in I929, ^vhile taxes v;ere reduced to only 67 percent of the 1929 level.

Comparison of Farms With High and Low Earnings

After deducting total expenses and net decreases from income and net increases, there remained a net increase of $11.29 per acre for the most profitable farms as compared with $2.SU per acre for the least profitahle group. For the most profitable g?:oa-^'this v;as a return of 7*27 percent on the capital invested in the fai^p. business; for the least profitable group this was a return of 1.99 percent. The reasons for this difference may be obta.ined from a stiidy of the data on pages 3 "-^'id- <-'•

In Iroquois Co'.mt;,' the i.iost successfiil farms secured higher crop yields; they raised 10. U bioshels more corn, 3 bushels i.iore oats, a-nd 7*3 bushels :.-ior3 soybeans per acre, t>ia,n the least siiccessfvl farns.

The total investment in productive livestock v/as $b.7"t- per acre on the most successful far^ns, as compared v/ith t^j.-jo on the least successfiil fa.rms. The receipts and net increases were $11.51, and $5'^1 per acre, re- spectively. Tliis difference in livestock efficiency is further illustrated by the fact that the returns per ftlOO of feed fed were $133 for the most profitable farms, as coi.riared with $1L'5 for the least successful farms. Dairy sales v/ere $R1 per cow higher, and income per litter farrowed $56 higlier on the most profitable fari~:S, than on the least profitable farms.

Tlie higher yields and greater income secured from livestock on the most successful farms was accomplished with a total operating expense of only 23 cents per acre, a.bove tliat on the least successff.1 farms. The cost of power and machinery was 77 cents jTer crop acre lower, while man la.bor costs were $1.07 pei" crop acre lower for the most siuccessful farras.

223

-7-

Influence of AAA ?ro,:;rams on Croppinf: Systems and Parm Incoines

The farn-nccouiit records in Illinois were influenced toth directly and indirectly by the corn-ho{:;- and v/he:\t adjustment programs. A large pei'centa.ge of accotmting farms were tinder one or "both contro-cts in 193^* T-ie acreages of corn and wheat on these farr.s were therefore lees tlia:i normal. Tliis should have resulted in lower operating costs. Corn-hog oemefit pay- ments for the entire 193^ prograji v/ill total about kO niillior. flollars for the state, wMle v.heat benefit payments will be about 2.k million dollars.

The benefit pa.yients for accounting farms are indic: ted in the following ts.ble, which shows the average nayment for those frrms receiving payments, and includes only those pa^/ments received by the cooperator before the 193^ boolcs were closed. In some cases only the first corn-hog clieck is included, while in other ci-.ses the second check had been received. Tiie second payments not received and the third payments will be entered in the 1335 hook.

AAA Benefit Paj^ments F.eceived in 193^

Com '.The at T'ogs . 1. — j\^verage

liumoer Axioimt xrjmber Amount ^'umour Ai'io^jnt , -.^

„ . ^ 01 ail

01 per of per of per _„.„,^„+„l/

iprms fr.rm: fp.rms farm farms farm

payment si'

1/3 most profitable larras 9 $1^5 — $~ 10 $127 $257

1/3 least profitable farms 10 122 — — 9 I06 217

All accounting farms 29 127 1 70 30 110 22S

1/ Total benefit payments reported by accoimting faunas under contract for 193'-'- divided by total nnmber of accounting f ai'ms .

On some farms the Ccash received from benefit payments will more than pay the year's taxes. As an average of all accoimting farms, the pay- ments actually received veve sufficient to pay 73 percent of the 193^ taxes.

It is interesting to note the use made of the contracted acres on the o.ccoimting farms. Tlie average farm had 21.2 contracted acres v.-hich were used as. follows: S..o idle; J,.h red clover; 2.6 sweet clover; 3*^ soybeans; .9 alfalfa; and I.9 acres were in other crops. These data indicate that most farmers made good use of their contracted acres from the stand- point of soil improvement, as approximately one-half of them were in legiimes. Wien the government restrictions on the use of crops grown on contracted acres were remove d , they were on many farms the most profitable crops as they furnished hay and past-ore where badly needed in drouth areas. The legumes hid the further advantage of being i;.Tmuiie to att-'ick from chinch bugs.

Parra earnings were inf lu.enced indirectly by the A-AA "orograms in tlin.t the reduction in production increased the price of the coraaodities involved. The drouth was a more important factor in reducing production than the adjustment programs, yet if it had not been for the corn-sealing prograin there would have been but little corn in the hands of f.^rmers at the time the major price advance becrme effective.

22U

Factors Helping to Analyze the Farm Business on 3I Iroquois County Purvis in 193^

Items

Size of faras — iLcres -------

Percent of land area tillable- - - Percent of till^-ble land in liay and pasture- ------------

G-ross i-eceints per acre- -----

Total expenses per acre- _____

Net receipts per acre- ______

Value of land per a.c re ----- -

Total investment ner acre- - - - -

Acres in Corn- ----------

Oats- ----------

Fneat

So^'teans- --------

Hay

TillalDle pasture- - - - -

Crop yields — Corn, "bu. per acre- - Oats, tu. per acre- - Soyljeans, b\i. ^^er acre

Value of feed fed to prodxictive L.S. Returns per $100 of feed fed to

productive livestock- _-_--_ Returns per $100 invested in:

Cattle

PoiLltry ____---

Pigs weaned per litter------

Income per litter farrowed - - - -

Dairy sales per dairy cow- - - - _

Investment in productive L.S- per A. Receipts from productive L.S. per A.

Ivlan labor cost per crop acre - - - Machinery cost per crop acre - - - Po'.ver and nach. cost per crop A. -

Farms with tractor --------

Value of feed fed to horses- - - -

Man labor cost per $100 gross

income ___-.--__

Ercpenses per $100 £^ross income - - Farm improvements cost per acre- -

Excess of sales over cash expenses Increr.se in inventory- ------

Rate Ccanied on investment- - - - -

G-ross receiiDts per farm- -----

Your farm

Average of 31 farms

25U.9 91, U

3^1.0

lU.?6 7.9s

log lUs

lO most

profitable

farms

237.9

96. u 33- 5

19.75 S.U6

11.29

llU 155

10 least

profitable

farms

2UIL7 S7.5

35.7

11.07 g.23 2.gU

loU 1^3

76. U

29 k3

.5 .6

15 is.i

76.1 65.2

3.5 29 1+7. 9

27. u.

16

25.6

72.3 U3.2

7.9 27. s Ug.i+

17 13

IS. 3

1 520 133

121

2UU

6

uk

65

5.33 7.93

5.cU

1.63 2.65

711 2U5

26 •9^

2 kcj 13k

3 1^1

064

133

161 223

6.2 1U7

91

6.7U 11. SI

i.Uo 2.19

Gcfo 227

IS

^^3

97

3 211

i^;-7

k 693

7-27:^

1 053 125

97 212

6.1 C11 ho

3.56 5.U1

5.S5 1.6U 2.96

261

36

1.10

1 33c 237

1.99^

2 709

225

Chart for Studying the Efficiency of Various Parts of Yoiir Business,

Ix^oquois Coimty, 193^

The n^umhsrs nhove 31 farms included By drav/ing a line faira in that facto your locality.

the lines across the middle of the page are the averages for the in this report for the factors named at the top of the page, across each colunn at the nLirnher measuring the efficiency of your r, you can comriare yo-or efficiency v."ith tlxit of other farsaers in

-p

ij a

o S

o >

0) 'H

Ci !^

P^ O

°.6'i

•■S.G^

Bushels per acre

o o

o

J5.

31

QJ

O

B o u u

1— I 4J

•H •■ r^

O CD

r-; fx

16U

o o

>=^

M

•H ^ rf ID

u

(D

p,

o o P!

U -H

pi o

O iH 0^ *0-

ICO i 3^^

26

I

IrU I 93

36U

fn ID

(Dt*-! P.

B O OtH

o

•H O

•o

coo

• i-i

^-J')

21-

Cost per crop acre

o

.oU

i.oU

■ri >^,

cS O

G) ^

•3 O

O c3

Ah S

,1^

O

o

Pi W CD += P- fX •H 4-> (D CO O

Pi W

O t'l

rO O

.5 fe

.63 2

o

n5 +=

o >

p; p:

2130

1730

Pi p!

C,i o

> o^

O 'A

a

a) ^

c ■/:

CO O

U9OO

UUoo

C-ro s s recei-ots

(D

p< o

Pi

0 P

30

7L'QQ

7000

P! ■H

ca

d'

Pi U

31c

460

^

33

pl-i

lI^U

'^S I 33U

6.63

31

23.

r.^

/■;i

3CU

193

.04

1 . 13

g 1330

ill

"^.C-L

l.b3

lU

3900

2I+

b20C

Uin

030

jUco

360

3.63

27 .19

U.6^

22.9

20

13

10.1

12U

U}L

llU

2l|U

133

13^.

k.Ok

2.13

20

^30

^900

IS

^.Ok

L^i

26

13U

Ml

14. So

I16OO

^.10

Jisi

^33

3 -bi

19

11

16

loU

21I+

111

6.0U

.13 I 3^

270

1000

12

"^000

210

1^,

IH

OU

31 I loU 93

I I

.Ok 3.63I3?

-b70

lUoo

2200

160

1.63

11

12

Sk

L^3^U-3

Ik

6U

kk 13U

.11

.ok

37

l^k

1 •)

30 I f^U ! V>

o.ok

10. oU

\i,\^\ I4I1 i -1070

900

■63 ! 30 I -1^70

Uoo

,15 ■ 56 : -1570 i -100

lUoo

300

110

bO

226

-10-

Infliicnce of Price Cl'-anggs on Fain la-riiinffs

Fcrm prices in 133'-+ a.dvanced more rapidly thar. did the prices of coranodities v/hich fanners "boti^ht. PrKaers of the United States as a sroiip could ercchange their fanr. products in 193'^ -or 7^ percent as many ^ools as for the -neriod 1'305-lS'l^f wMle in 1333 they received only b-i- percent, and 1932 only 61 percent as much in exchange for what they liad to cell as in the prevva,r period. In the nonth of February, 1935i this index of purcha.sing power had increased to SJ percent of prev/ar, the index of fam prices having risen to 111 as compared with zn index of 127 for conmodities -iThich fo,nners "buy. ITIien the line representing farr.i prices drops helow the line represent- ing jirices naid "by faimers, farm earnings are* very low, hut when these lines come close together farm earnings increase. (Sec following graph.)

1

index of Prices

P^.te Sarned

2C0 175 150 1P.3

100

75 50

D

= Farm prices in u. S. Aug. 13C3-July 1114 = 100

= Prices paid by farrriers. A^^. l^Og-July I'jlk = ICf

-■ Rate earaed on investment, accounting fai^ns, centra,l Illinois

1917 >lo 'I9 '20 '21 '22 '23 '2'+ -25 '2E '27 '28 '29 '30 '3I '32 '33 '3U

227

-11-

Sincp the pricf? of sotie fam products advanced much, more rnoidly during 153^ tlian other products, it is evident that lione fame; v/oi:ld oenefit more than otherc, depending upon the kind and qv^antitj- of products sold. G-rain prices advanced much .aore rapidly than livestock ririces; v;hich result- ed in a very had price ratio for fanaers who huy large q^'oantities of foed. 'i'he average • Illinois farn price of corn v.'as Ul cents a, hushol in January, 193^1-; it advanced steadily until the end of the year when it "<vas SS cents a "bushel. Other grains made nar:ed advance although not so great an advance as corn. The price of hogs fluct'oa.ted from a low of $3.20 a hu:idred in May to a. high of $6-30 in oeptenioer. The low point in the fall c?:i;e in IToveaher when the average price was S^.IC. The price has advanced quite re.pidly since Fovember, the avera.gc price being $7»5^ -O^ Pehruary, 1535- Beef cattle were worth $U.1C a hundred in Januarj", 193'"'' ^^id advanced each r.onth ujitil Se-otemher, v/hen the price vr,s $5''3C). They dropped to $5.20 in Decemter hut increased again to $7»^ for February, 1935-

The year 193^^ ^'^^ 3- record for the reduction in the nunhers of livestocl:. The percentage decre-a.ses hy species were as follov/s: horse?, 1.1 percent; n.ulps, ?.u percent; all rattle, 11.2 percent; shcp, '^■7 percent; hogs, 35*3 percent. Y.lien all species are combined on the basis of their capacity to consume feed, the red'oction was I3 nercent. This reduction will great^.y reduce the den-^and for feeds prod'oced in lf'35«

The relative change in prices of important corar.odities r.ay bo noted in the follov.'ing granh, \7hich shows the average Illinois farra prices by months as a Dercentage of the average prices for the -period 1921-1929.

Percent

Price Indices, 193^

(1921-1929 -- 100)

J,.j.n. ?eb. '.'ar.

Arr

June July Aug .

All conmodities index represents the wholesale pric; of a large number of ccimodities for the United States, as computed by Bin-eau of Labor Statistics.

Grain and livestocl: indices represent average monthly iai:r. prices in Illinois,

228

-12-

Variation in Earnings Over Five-Year Period

A comparison of prodioction, income, and expenditures on the account- ing inrrns in Iroquois County for the last five years is very interesting be- cause of the violent chtmges in price level. 193*+ was the second year of low crop yields, yet total receiuts per farm were higher than in any other year in tlie last five and were 59 percent of the 1929 gross receipts. Operating costs per acre were lower than in any year of the five. Thus profits were the best the coimty had experienced since 1929'

Earnings in 193? ^-s usual will depend upon individual efficiency, weather and prices. A normal year will mean larger yields of grain and probably lower prices.

Comparison of

jio-rnings and Investments on Accounting Farms in

Iroruoic Cc^jnty for I93C-I93'-'-

Itens

1930.

19311^

193c

1933 t.1

193U

Number of farms -------

Average size of far^.s, acres-

1

-i

3S 2I+3

Average rate earned, to pa,y for |

management, risi: and capital - -j .2'^

Average labor and management wage!$-l 723

Gross income per acre ----- Operating cost per acre - - - -

Average value of land per acre- - Total investraent per acre - - -

Investment per farm in:

Total livestock- -----

Cattle

Hogs -----------

Poultry- ---------

Cross income per farm - -

Income per fa.rra from:

Crops- -------

Miscellaneous income Total livestock- - -

Cattle

Dairy sales- - - - -

Hogs --------

Pou.lt ry- ------

Average yield of corn in bu.- Avernge yield of oats in bu.-

Ul 2U2

$-2 I7Z

12.27 11.83

1U7 2GS

3 27U

1 560 526 179

2 986

g9S

53

2 055

301

526 ■sU9

331

33

32

7.93

10.19

13U isU

2 U22 97H

160 1 915

5bS

36

1 311

12 590 I+3U 230

Ui 39

37 23I+

-1.7^^ lUU

5.67 g.59

12b 169

1 822 716 221 133

1 327

25

CIS

138

286

ISO

^9 ^3

3U 231

3. of.

$-208

13.21 S.U9

117 15s

1 7Uc

810 188 123

3 0U8

1 822 32

1 I9U 112 368 U7U 189

29

31 255

H,b5^ 386

1U.86 7.9s

108 1U8

1 881 736 223

91 3 7S7

1 595

2

2 079 550

66U -10-5

23

15

!_/ Record from Kajilcakee County included 1930 and 1931-

2/ Hecord from Kanl'zakee and Vermilion Counties included for 1932 t'-nd 1933-

229

AITITOAl ?AItI:I 3TJSI1I5SS IIIPOP.T ON THIETY-EiaHT FABI/IS IN CHAI-IPAICtIT COUIITY, ILLDIOIS, I93U

P. S. Johnston, R. C 2oss, and T. R. Hedges*

The farm earnings of 32 account-keeping fanners in Champaign Coujity showed vn increase in 193^'' over those of 1933* This is the second consecutive year of iiniorovement in the "btisiness of these farms. The three years previous to 1933 showed very lo?/ retr-ras.

These 33 accouits shov/ for 193^ sn average net income of $2,d60 per farm, as compared with an average of $1,S26 in 1933 » ^^d. an avera;;e net loss of $515 i^- 1932' -he average cs^sh income in 193^ ^^-s $^,^1-01 per farm, the cash "business expendit'ores $1,673 per farm, leaving a cash "balance of $2,723 to raeet interest payments and fardly living expenses. (Those who keep home accoimt books use the latter figure to represent the cash contri- "bution of the farm to the "realized fa-'nil;- income".) Besides the cash in- come, there was an inventory increase of $557 P^r farm dVB to the rise in the prices of farm products. This increase, a,dded to the cash "balance, rc- siiltcd in an average excess of receipts over expenses of $3>-S0 per fan:!. Tlie inventory increase was a m^uch smaller part of the total farm incom.e in I93U than in I933 .

These data must not "be considered representative of average farm conditions, for they were secured from farms which are larger than average, and which v/ere managed "by fa,rmers who are m.ore efficient than the average of all fanners in the county.

Por the state as a whole, farm earnings were better in 193^ tiian in 1933 in spite of the fact that corn and oat yields were very low due to the drouth, and to chinch bug dsinage . In the western and southv'e stern parts of the state the drouth caused an almost tots.l failure of both corn and oa.ts, which accotmts for farm earnings being lower there than in other parts of the state ,

The corn crop was best in the southeastern part of the state, and was fair in the northwestern section, \71ieat yields were particularly good in the south and central portions of the state. Soybean yields were very good throughout the state, and there was a larger than normal a,creage in Illinois in 193^* This state produced over lialf of the nation's 193^'" crop of soybeans .

Chinch bug damage extended over most of the state last year, but was much more severe in some sections tlian in others, and v/as much worse on somiB fan.is than on other farms in the same community. Conditions affecting crop yields were very spotted- This acco'onts in part for the wide variation in farm earnings from one section of the state to another, and the wider variations than usual from one fann to another.

*J. Z. Harris, farci adviser in Chajiipaign County, coopera.ted in supervising a-nd collecting the records on which this report is based.

230

-2-

Industries other than agriculture again showed improved earnings over the previous year. A group of SUO industrial corporations i-^ported by a nationally ioioTm hank showed aversge earnings of ^.0 percent on their in- vested capital in 193^. a-s compared with 3-'+ percent for the same corporations in 1933' ^ similar group had a lo&s of one-tenth of one percent in 1932, and average earnings of 3-3 percent in 1931 •

In comparing the average earnings of corporations with the rate earned on investment on accounting farms it is well to iceep in mind that, in corporation accounting, charges are made for management, v;hile in the farm accounts no comparable deduction has been made. On the other hand the farmer and his family receive food, fuel, a,nd other items of living from the farm for which the farm has received no credit in the records used in this report. For the average central Illinois farm family, consisting of five persons, the value of the food and fuel furnished by the farm was about $250 in 193'^. when estimated on the basis of the wholesale price for farm products.

Variations in Farm Incomes

There v/as a much wider range in farm earnings on the accounting farms in 193^ tlian in 1933- This was true for the farms included in this report and was also true when the average earnings of farms in one section of the state are com.pared with the earnings of farms in other areas.

The extremely wide range in earnings was due to a combination of physical and economic factors. The average yields of wheat and soybeans were much better, compared with the five-year average, than the average yields of corn and oats. This variation favored those sections which had lar':er a.creages of the higher yielding crops in 193^- There was also a wide range in average corn yields from one section of the state to another, as well as between individual farms in the same area. The price of grains was high in 193^9 s-S compared v/ith rrices of livestock and livestock prodt^cts . Farms v/here grain sales constitute a large part of the farm income thus liad an advantage. The rapid increase in the prices of farm prodiijcts, particularly "rains, favored those farms which had large stocks of salable prod^^cts on iiand at the beginning of the year. liany farmers who inventoried the corn on hand at the beginning of 193^+ ^.t kc cents a bushel, later sold this com for SO cents.

In this group of 3^ accounting farms the most successf'ol third shows an average net income of fsU,S25, while the average net income of the least successful third of the fan".is was only $791- I^ 1933 the comparable net incomes for the two groups was $3,2S0 and $^33 respectively. Figured on a cash basis the most successful farms had on an average $2,721 more cash income left to m.eet interest payments and family living than did the less successful farms.

231

Investiiients, F.eceijts, E:;"f">eiiE'es and Earniugs on 3^ Cliampai;'Ti Ccujity Faiins in 193'^

Items

CAPITAL I^riESTMENTS

Land -----------

PaiTA improvements- - - - -

Livestock total- - - - - -

Horses ---------

Cattle ---------

Hogs ----------

Sheep- ---------

Poultry- --------

Machinery and equipment- - Peed and grains- -----

Total capital investment

HECSIPTS MD HET INCREASES Livestock total- - - -

Horses -----------

Cattle -----------

Hogs (including AAA paptients) Sheep- -----------

Poiiltry- ----------

Egg sales- ---------

Dairy sales- --------

Feed and grains (including AAA

payments) ---__--_-_

Lahor off farm --------

Miscellaneous receirits - - - -

Total receipts & net increases

■XPSHSES AlTD ITET DECREASES

Pami improvements- - - - Horses -_----_-. Miscellaneous livestock decreases

Your faim

Machinery and equipment- - - -

Feed and grains- -------

Livestock expense- ------

Crop expense ---------

Hired lahor- --------- j

Taxes- ------- — -_- !

Miscellaneous expenses _ - - -

Total expenses & net decreases $

Average of 3S farms

30 258

3 ^90

1 272

Uos

563

205

IS

72 1 UU5

2 2U3 $38 7^48

1 Uqi

8

297

677

kE

68

SQ

305

2 855

89

$ k UU3

I3 most profitable

I arms

35 7iJ-3

3 593

1 267

U30

5^6

178

13

sU

1 766

3 063

$Ur U32

181

336

21 136

171

290

28

$ 1 163

1 6U3

u

367

767

qS

67

68

27i|

k 928

175

23

$ 6 769

i4s

376

16 178

2U2

33^ 26

$ 1 320

13 least "profitable" farms

25 293

2 666

1 128

U70

U13

IU6

21

7o 1 2^13

1 507

;^3i_13i

1 089

7

170

U08

33 7U

82

315 1 220

^5

$ 2 35^

157

267

22 117

95 2'59

9I1S

.aBCEIPTS LESS EXPEHSES-

Total unpaid lahor- -------

Operator's labor - - - - - -

Family labor --------

l!Iet income from investment and j management- -----_-_-.

'ilATE EARIIZD OH IHVESTHEHT

'.etum to capital and operator's labor and management- - - - - -

;:> of capital invested- - - - - -

■^ABOR Am MAI'IAGSI/IEHT V.'AGS

at

3 280

620

522

98

2 bbO

6.86-^

$ '^ hkq

62U ^523 ■96

325 10.62^1

$ 1 Uii

620 s^i-o

80 791

3 182

1 937 $ 1 245

I

5 353 2 271

$3082

1 331

1 592

-261

232

The following talile shows the n'omhor of lar.us naving certain net incones per pcre. There r/as a ;.iarl:ed difference "between the most sticcessfii]. and the least successful fairas.

Average net in- iT\Ta"ber of Averaig:e net in- ITti'.iher of

come per acre farms come- per acre larins

I

$19 and over k $7

17 H 5

15 1 ^ 0

13 ^ 1 3

11 S -1 1

9 3 -3 1

A further r-tudy of the far/n "businesses mo.de oy coinparinf; the in- vestments, receipts, and ex^ienses of the ^TO-ap of farms having the highest net incomes with those having the lowest should throw soine li^ht on the question of why some farmers a-re more successful than others. This com- parison is shown in the ta"ble on "^af-^e 3-

Tlie most successful farms avera;~ed 273-3 acres each, the least successful 20!^. 5 acres. This difference in size a-ccounts in iiart for the variation in the avc-ra^e invc st:.-icnt , receipts, and c-:pcnse3 in the two groups. Difference in receipts from the sales of ;r:rain3 acco'onts for much of the difference in income "between the two "rour)S . Althou/;^h the expenses per farm v;er3 hi/3;her on the most profitable farms, tho total e::pense per acre, including the charge for fa'nily lahor, was less than it was on the least profita'ble farms.

Changes in Inventories and Inventory Values

The year 193^ ^''^s simila,r to 1933 ^^ that the prices of faim prodn-cts continued to advance, causing fvirther increases in inventor;)' values, Owing to the poor crop yields in 193'^» "there were fewer "bushels of grain on hand to inventory at the end of the year t]ian at the "beginning. The value of the smaller amount of grain, hovrever, was greater tlianfor the larger amount on hand at the oeginning of the year.

Bushels of Corn Inventoried

Jan. 1. 1934 Dec. 31. 193^

Average of all fanns 3 SSS 1 933

Average of I3 most successful faras. ^ ^39 2 SGS

Avera.ge of I3 least s^occcssful farms 2 II6 791

Your farm

The most profita"ble farms had a much larger inventor:^- of corn "both at the "beginning and end of the year. This is an important factor in accotinting for their higher returns from feed and grains.

I

233

-5-

The a.varage inventory increase for the acco-OTitiiag fa.riaS in Ciiainpaign Coimty was $557 ^-^ IS.)'-*-! Q-S compared ^/rith $1,089 ^'■^ ^-933 » ■""-i^c! an inventory loss of $SU7 a farm in 1932- There were increases of $143 i^ total livestock, O^ll i-^- feed and grain, and $S2 in raacriiner;,'', wr_ile im- provements shOT/ed a decrease of $79- Sv-ch an increa.se in inA'eutor;;' as that for niachinery res'olts froir. the valuje of r.eiv replacements dv.ring the year teing in excess of depreciation costs. This increase iti of consider- able interest, for it is the first time that such an increase in .Tiachinery inventories has occurred since farm earnings hega.n to decline so drastically V7ith the general depression.

Inventory Changes for 193^+

iio ginning Items inventory

1--.-- J-^

Total livestock $1 272

Peed 3.nd grains, 2 2U3

Machinery 1 U'45

Improvements (except residence). . 3 ^90

Total $0 U50

Closing inventory 12_31-3U	In vent c chas.gf. 1^'3U
31 Ul^ 2 651+ 1 527 3 Ull	^ 1I.I-3 Ull "' ■ J -7°

$r, oc!7

Inventory

changes,

your farm

Some Adjustments on Chamnaign Coimty ?anns Since 1929

Parmers have been forced to ma>e adjustments in their cash e:c- "oenditures as the resi-ilt of changes in their cash incomes, rroi.i 1929 throv^gi 193^^ farm operating costs declined each year. Total operating ex'oenses v;ere 57 cents an acre lower in -93^ tl^an in 1933> while cash operating expenses V7ere $1,67S a. farm in 193^!- ^^ compared with $1,^92 in 1933' The largest in- crease in expenditures ovor the previous year was for machinery and supplies for machinery. Indications lyoint to an even greater expa.nsion of spending for these items in 1935> since farmers h-ave postDoned machinery re-p?L8.ct,meuts dtir- ing the four-year period since 1929-

Cash Income and Expenses on Acco"iix:ting Farms in Champaig-n County for 1929 and 193^''

Your Avera-ge cash Your

Items fa nil expense per fa.r-i farm

19-slj 193I!- 1929 195'^

Livestock $ $2^5 $ 5S2 $

Feed and grains lUi IU9

Machinery '^hO 775

Improvements lOo 29S

Labor I7I '47I

Miscellaneous 2S 32

Livestock expense 21 39

Crop expense I36 2^3

Taxes 290 Uo3

Total $" $1 67g $3 072 .$

Excess of cash sales over expenses $

Increase in inventory

Income to labor and capital (Eeceipts less exiienses") . .

Average ca,sh income per farm

L93U

1929

$1 593 t2 611

2 5S5 3 5?7

122 137 k

S9 Sb

g b

; ^h	Uoi	So	U30
; $2	723	^^3	35-
	557	1	027
3	2 so	U	3S5

23U

-0-

Tlie cumulative cfi'"ect of soveral years of low agricultin'al prices on the demand for manufactixred soods can readily be ascertained by a com- parison of cash farm expenditures in 193^ with those in 1929- Although the average cash income in 193^ ^'^s 65 percent of that in 1929j cash ex- penditui-es ware only 55 percent as large. In 193^ livestock purchases v/ere '12 percent, and feed and grain purchases 95 percent as large as in 1929- In 193^ these farms paid out 70 percent as much for machinery, and 56 per- cent as much for crop expense as in 1929) while taxes v;ere relvjced to oO nercent of the I929 level.

Comparison of Farms With Tli-X'-i- and Low garnir.fiS

The reasons for the difference in earnings between the most pro- fitable group and the least profitable group incltided in this st\idy may be obtained from a study of the data on pages 3 ^-J^d. S.

The most successful frnns ha.d an average total investment of $145,^32, as compared with a total of $31,337 for 'tlie least successful farms. The most successful fo.ims secured average total receipts of $6,769, v/hile the comparable figiore for the least successful was $2,35'^' l^ie ^^ct receipts, on a per acre ba.sis, were $17.06 for the most profitable group, as compared with $3 ••37 for ^^-Q least profitable group.

The most profitable farms averaged b?.o acres larger, had 3^-2 acres more corn, 11. S acres more oats, and 16.l acres more soybeans than the least profitable farms. They also carried larger inventories on v.'hich to make a profit when prices advanced. One reason for the larger inventories was the ]i.igher crop yields, the most profitable farms having an advantage of 16.9 bushels of corn, lU.l bushels of oats, and 1 •! bushels of soybeans per acre. Crop yields were so low on the least profitable farms that there was on average inventory loss of $l6S per farm in spite of the price advances.

Although there was about the sajne amo\mt of livestock per acre on the farms in the two groups, there was a difference in income of 7I cents per acre in favor of tlie most profitable fai-ms. The returns for each $100 of feed fed to livestock v.-as $lU6, as compared with $123. The income per litter farrowed was $97 on the most profitable farms, as compared v/ith $66 on the lea,st profitrble forms.

The most profitable farms secured their larger income v/ith a total operating cost of $7'11 per acre, as compared with $7.6U per acre on the least profitable farms. On the most successful farms man labor costs were 5? cents per crop acre lov;er, and power and machinery costs were 23 cents per crop acre lower than on the least successfxil fanns.

235

-7-

Influence of AM ProrCrr^r^s an Crop'Din;'^ Systeids and Fain Incomes

Hie far.n-account records in Illinois were influenced 'both directly and indirectly by the corn-hog and wheat adjustinent prograas. A large per- centage of accounting farms ;vere under one or "ooth contra.cts in 193^- The acreages of corn and wheat on these farms ■.-■ere therefore less than normal. This should liave resulted in lo'.ver operating costs. Corn-hog "ocnefit Tisy- ments foi" the entire 193^ i.'rogram will total ahout ^C million dollars for the state, while v;heat oenefit pa^.-ments will he aho^it 2.U million dollars.

The benefit pa^'ments for accoTinting farms are indicated in the follov;in" table, v/hich shov/s the average pajnnent for those farms receiving paiTTients, and includes onlj'' those payments received by the cooperator before the 193^ books iieve closed. In some cases only the first corn-hog check is include-l, \7hile in other cases the second check had been received. The second '^ayaents not received, and tlie third payments will he entered in the 1935 hook.

AAk Benefit Payments deceived in 193^

^om TTheat "Io"s

' ' ^ Average

llurnber iiriount :Tuaoer Amoxmt l^xnoer -jr.oviixt

r. ^ , of all ,

of rier 01 per 01 "■^er ^ i/

farms fana irrms farm farms farm

pa.r.'ments-

1/3 most pi-ofitable farms 12 $lGk k ^IfO 11 $9S $256

1/3 least profitable farms 12 97 2 I3S 10 82 Ijk

All accounting farms 35 I3I g I70 32 9U 226

1/ Total benefit pajy-ments reported "by accounting farms under contract for 193^ divided O'j total number of accounting farms.

On many lanns the cash received from benefit payments will more than pay the year's ta.:cos. As r,n average of all accounting farms, the pay- ments act\3ally received T?ere sufficient to pay JS percent of the 193^ taxes.

It is interesting to note the use made of the contracted acres on the accounting farms. The average farm had 21.7 contracted acres which were used as follows: n.'j idle; 3*5 "^^^ clover; U.l sweet clover; U.3 soy- beans; 1.2 alfalfa; and U.3 acres were in other crops. These data indicate that most farmers made good use of their contra,cted acres from the stand- point of soil improvement, a.s most of them were in legumes, "ilien the govern- ment restrictions on the use of crops grown on contracted acres were removed, they were on many faiTas the most profitable crops, as they furnished liay and "nastiire where badly needed in drouth areas. The legumes had the furtlier advantage of being iv.muae to attack from chinch b-ugs .

Parm earnings -.vere influenced indirectly by the AAA programs in that the reduction in production increased the price of the cominodities involved. The drouth was a more important factor in reducing r^rod"uction than the adjustment programs, yet if it had not been for the corn-sealing program there v;ould liave been but little com in the ha.nds of farmers at the time the ma^jor price advance became effective.

236

factors Helpin;; to Analyze the TPvim Busines; 3S Cliajapai5ia Coimty Faras in 193^

on

Items

Size of farms — acres --------

Percent of land area tillable- - _ - Percent of tillable land in liay and pasture- -------------

Gross receipts per acre- ------

Total expenses per acre- ------

llet receipts ■oer acre- -------

Value of la.nd per acre ------ -

Total investment per acre- - - - - -

Acres in Corn- ------------

Oats- -----------

\7heat -----------

Soybeans- ---------

Hay

Tillable pastuje- - - - - -

Cro"^? yields — Corn, bu. tjer acre- - - Oats, bu. vnr acre- - - TJheat, bu. per acre - -

Soybeans, bu. per acjre-

Value of feed fed to productive L.S. He turns per ?100 of feed fed to productive livestock- -------

Het-oi-n-j Ter $100 invested in:

Cattle -------

Poultry --------

Pigs -.veaned per litter -------

Incorae ver litter farrowed - - - - -

Dairy sales per dairy cow- - - - - -

Investment in productive L.S. per A. Receipts from productive L.S. per A.

Your

farm

Average of 3o farnis

231.9 95-5

2'5.6 19.16

7.3q

11.47

13 .'"lost profitable fai'ms

131 1S7

273-3 9b. 7

21.1

2U.77

7.11

17 .Gb

131

IbC

Man labor cost per crop acre - - - Liacliinery cost per crop acre - - - Pov;er and mach. cost 'oer crop A. -

Farms \7ith tra.ctor --------

Value of feed fed to horses- - - -

Man labor cost per $100 gross incoHie- -------_--_-_

Expenses per $100 gross income - - Farm improvements cost per aero- -

Excess of sales over cash expenses Increase in inventory- ------

Rate earned on investment- - - - _

Gross receipts per farm- ----- -

7^.^ Ul.G 11..:

33-^ iz

23.3

12.9

20.6

2^.u

l-.k

121

103

191
c^	7
91
Us
u.	ok
b.	39
II.	13
1.	sk
2.	g6
79^"^

51.9 13.7

kk.3

lU.S )+i.i

■^2.2 19.3 20.3

1 12^

1U6

106

137

6.1 97 51

3.37

6.00

19U

17

1|0

2 723 557

C .

k kk3

s6

3.6U 1.59 2.71

?U.6^ 232

12 29

•5^

k 300 1 Iks

10. 62 6 769

13 lea! prof i tab; fanas

2CU.3

93. s

2S. 11.5:

7. 61 3.3-,|

12U 1=56

F7.9 '

^0 . 1 ;•

9-i.f

28.1 ;.

21.1 I 33

15-3 5-2 20 21.9

k

SkS 128

107 195

I

5-3

66

U6

3-53: 3.29

1.6s 2.9i|:

207

28

66

.77

1 579 -168

2.1+S

2 3SU

Cliart for St-udyiufc the Efficiency of Various Parts of Yoiii- Br^siness,

CloamTjaif^n Coimty, 193^

237

The nui.i"bers ahove the lines across the middle of the paf;e are the averai-jes for t'le 33 far'Tis incl"aded in this report for the factors n.anied at the top of the page. By dra.wing a line across each coltiran at the nrunher raeasurin," the efficiency of your fann in that factor, you can compare your efficiency with thnt of other farners in your locality.

...

Bushel:

3

^1

Cost per

0 0

Gross

per acre

ft

crop acre

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223

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■Sf-;37

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10500

430

M.se

U5

37

3^

131

£1

390

20s

•1J_

.86

2937

byoo

31

9l-!00

390

2.-^

Uo

31

32

121

73

3^0

ISg

1.13 1.^6

2337

5200

2o

_J200

■^30

:.o6

3^

2^

30

111

63

290

iSs

] 1 2.13 i i.s6

1737

U700

23

6U00

310

.^.s6

30

19

2^

101

^7

2l|0

lUs

3.13

2.36

7

1137

3700

22

U900

270

6.06

25.3

12.9

23. s

91

Uo

191

12 0

U.ri_

2. So

17

337

2723

19.16

UH43

272

1+.S6

20

7

2U

SI

Ul

lUo

10 s

1 3.13 3.36

27

-U3

1700

16

2900

190

■..%

1'5

1

22

71

33

90

ss

6.13

3.S6

37

-6U3

700

13

lUOO

130

.Co

1-')

20

5i

2^

Uo

6.:

_L-13

U.36

^7

-12U^

-300

10

-100

ITQ

l.lil

■3

Ig

31

17

Us

S.13

U.g6

37

-isU^

-1300

7

-1600

70

H 1

IS

Hi

9

0 '-^ c 0

1.13

r- ^ ^ 3- )o

07

-2I+U3

-2300 1 k

-2600

30

23S

Influence of Price cr-an,^s on ?-?-m Za.rnings

Farm prices in 153^'+ advanced rr.ore rapidly than did the prices of connicdities v/hich fanners ooio^ii^ht. Fn.Kiiers of the United States as a ^roup could e;-:change their farr; products in 193'+ ^or fh percent as many goods as for the neriod 1905-151^, wMle in 1933 they received only bU ipercent, and 1932 only 61 percent as rauch in exchange for what they Imd to -jell a.s in the prewar period. In the nonth of Febiniary, 1935 » this index of purchasing pov.'er had increased to Sy percent of prev/ar, the index of farm prices having risen to 111 as compared ^7ith fn index of I27 for commodities which faiiaers "buy. ^len the line representing lami r- rices drops "below the line represent- ing prices paid 'by fanners, farm earnings are very low, but when these lines come clor.e together farm earnings increase. (See following graph.)

Index of Prices

P^.te Sarned

?.C0 175 15c

100

75 50

2^^

0

= PariTi pricds in U. S. Aug. 1309- July 1914 = IGG

= Prices paid by farmers. A'lJg. 1909-July 191^+ = 100

n = Rate earned on investment, accounting farras, central Illinois

J i_

I'^.ct

'4-<

?S

-25S

-H

(

1917 'Id '19 120 '^1 'd.'i '23 '2U '25 '26 '27 '2g '29 '30 '31 '32 '-y^ '3U

239

-11-

Sinco the price of sone farm products advancBd much more rapidly during 193^ tlian other prodi^jcts, it is evident th^t some farms would "benefit more than others, depending upon the kind and quantity of prodxicts sold. Grain prices advanced much ao re rapidly than livestock prices; which resiilt- ed in a very had price ratio for farmers who cn:iy lar^^e camntities of feed, 'i'he average Illinois farm price of corn was Ul cents a oushcl in Jantuiry, 193^'-; i't advanced steadily until the end of the year when it w?s 38 cents a "bushel. Other grains made marked advance although not so great an advance ;is corn. Fne price of hogs fluctoe-ted from a low of $5.20 a huiidred in May to a. high of $6^.30 in Septem"ber. The low point in the fall cnme in lloveraher when the avera.ge price wa,s $5.1C. -The -nrice hr^s advanced quite rapidly since JTovember, tiie average price oeing $7»50 for Pehrruiry, 1535' Seef cattle were worth $H.10 a hundred in Janua,ry, 193^ 3-^d advanced ca,ch month T.intil Septem"ber, v/hen the price was $5.90. They dropped to $3. 20 in Decem"ber hut increased a:gain to $7.^0 for Fehroary, 1935-

The year 193^ set a, record for the reduction in the numhers of livestock. The percentage decrea-srs hy spocies v^re r.s follows: hcrsee, 1.1 percent; mule-s, ?.G percent; all na.ttlft, 11.2 percent; sbpep, U.J percent; hogs, 35"3 percent. V/hen all species are comoined on the basis of their capo.city to consume feed, the reduction was I3 percent. This reduction will grea'f.ly reduce the demand for feeds produced in n35«

The relative ch.ange in prices of important coiTar.odities may he noted in the follov/ing gi'aph, vrhich shov/s the average Illinois farm prices "by months a.s a percentage of the average prices for the period I92I-I929.

Percent

120

Price Indices, 193^

(1321-192« = IOC)

Jan. Feo. Mar.

Ajjt

iw-r.

large num"ber of

All ccnmoditlcs index' reTiresonta the v.-holesale price oi a

commodities for the U.iit-d States, as computed hy bureau of Laoor Statistics.

Grain and livestoac, indices rep-esent average monthly fare: prices in Illinoirt,

2U0

-12-

Variation in Earnin^is Over Five-iear Period

A comparison of prod"-iction, income, and expenditiires on the ac- covjiting farms in Champaign Co-anty for the last five yesrs is very intrrest- ing because of the violent changes in price level. 193^^ ^^''-■^ 't-^^e second year of very low crop yields, yet total receipts per farm were Mr^rier tlian in any other year in the last five, and v/ere 70 percent of the 1529 gross receipts. Operating costs per acre were lower tlian in any year of the five. Thus profits were the best the county had experienced since 1928.

Earnings in 1935 f-s usual will depend upon individTial efficiency, weather, a.nd price?. A normal year will mean larger yields nf grain and probably lower prices.

Comparison of Earnings and Investments on Accoionting parras in Cliampaign County for I93O-I93U

Items

1930

1931

1932

IQ

33

1934

ITumber of farms ---------

Average size of farais, acres- - -

Average rate earned, to pay for

management, risk and capital - - Average labor and management wr.ge

Gross income per a.cre ------

Operating cost per acre _ - _ - _

Average value of land per acre- - Total investment per acre - - _ _

Investment per farm in:

Total livestock— ------

Cattle

J-IOgS ------------

Poultry- ----------

G-roEs income per farm ------

Income per farm from:

Crops- -----------

Miscellaneous income - _ - - Total livestock- ------

Cattle -----------

Dairy sa.les- - - - - - _ _ -

Hogs ------------

Poultry- ----------

Average yield of corn in bu.- - - Average yield of oats in bu.- - - Average yield of soybeans in bu.-

239

3^ 233

iM~

$-1 3UU

15.26 12.05

isi 235

238

003 356 lUo

61+5

2 126

62

1 U57

zkk

353 662

163

35 36 21

$-2 399

170 213

1 735 633 3'i6 loU

1 737

91s U9 770 ?.k 2U6 3^2 15G

U6 U6

2S

31

$-2 G2U

- • ^ J

.^7

9-DJ,

b.54 S.g3

1U3 175

1 U37

573 277

1 ^-82

697

3b

7Uq 138

181+

322 '90

59 '^i 29

^3 231

:;:39i

16.17 g.26

135 16s

1 3I+S 566

81+

3 73^

671 59 00I+ 190 232 U2I+ 112

33 22 20

38 232

6.26^ 1 2U5 ;

19.16 7.69

131 167

1 272

563

205

73

1+ 1+1+3

2 855

1 1+91

297 305

677

7

25 13 26

241

AN1>TUAL PA2I'.l BUSINESS REPORT OH THIRTY-TWO FARI.-IS IN DEWITT, PIATT, HID LOGAN COUNTIES, ILLINOIS, I93U

P. E- Johnston, J. E. ViTills, and A. L. Leonard*

The farm earnings of 32 accoinit-keeping farmers in DeV/itt, Piatt, and Logan Counties showed an increase in 193^-'- over those of 1933' This is the second consecutive year 01 ihiproveuient in the hiisiness of these farms. The three years previous to 1933 showed very low returns.

These 32 accounts shov; for 193^ ^-^ average net income of $3.53'+ per farm, as compared with an average of $1,6^7 in 1933» ^^^ ^'^ average net loss of $609 in 1932- The average cash income in 193^ was $5j256 per farm, the cash "business expenditures $2,360 per faim, leaving a cash "balance of $2,396 to meet interest payments a/nd family living expenses. (Those who keep home accotint "books use the latter figure to represent the cash contri- "bution of the farm to the "realized family income".) Besides the cash in- come there was an inventory increase of $1,318 per farm due to the rise in the prices of farm products. This increase, added to the cash "balance, re- stilted in an average excess of receipts over expenses of $U,2lU per farm. The inventory increase was a larger part of the total farm income in 193^*' than in I933 .

These data must not "be considered representative of average farm

conditions, for they were secured from farms which are larger than average

and which v/ere managed "by farmers who are more efficient than the average of all farmers in the couity.

For the state as a whole, farm earnings were "better in 193^ than in 1933 i^ spite of the fact that com and oat yields were very low due to the drouth and to chinch "biog dajnage . In the western and sovithwestem parts of the state the droxith caused an a-lmost total failure cf both corn and oats. This accounts for la.rrn earnings "being louver there than in other parts of the state.

The com crop was "best in the southeastern part of the state, and was fair in the northwestern section. ITheat yields were particularly good in the south and central portions of the state. Soy"bean yields were very good throughout the state, and there was a larger than normal acreage in Illinois in 193^- This state produced over half of the nation's 193^ crop of soy'beans.

Chinch hug damage extended over most of the state last year, "but was much more severe in some sections than in others, and was much worse 0:1 some farms than other farms in the same community. Conditions affecting crop yields vere very spotted. This accounts in part for the wide variation in faiTO earnings from one section of the state to another, and the wider variations than usual from one farm to another.

* H. N. Meyers, S. S. Davis, and N. H. Anderson, fa^L-m advisers in the ahove Counties, cooperated in super-vising and collecting the records on which this report is "based.

2U2

-2-

Indixstries other than agriculttire again showed improved earnings over the previous year. A group of SHO industrial corporations reported "by a nationally Ijiovm 'bani; shov/ed average earnings of 5*0 percent on their invested c apital in 193'-^ as compared with 3*^ percent for the same corporations in 1933* '^ similar group had a loss of one-tenth of one percent in 1932 and average earnings of 3*3 percent in 1931*

In comparing the average earnings of corporations with the rate earned on investment on accounting farms it is well to keep in mind that in corporation accounting charges are made for management, while in the farm accounts no coraparaole deduction has heen made. On the other hand, the faiTaer and his family receive food, fuel, and other iteras of living from the farm for vifhich the farm 1ms received no credit in the records used in this report. For the average central Illinois farm family, consisting of five persons, the value of the food and fuel furnished by the farm was ahout $250 in 193'+> when estimated on the hasis of the wholesale price for farm products .

Variations in P£i,rm Incomes

There v/as a much wider range in farm earnings on the accounting farms in 193^ than in 1933- This was true for the fanns inclvided in this report and was also true when the average ea,mings of farms in one section of the state are compared with the earnings of farms in other areas.

The extremely vdde range in earnings was due to a corahination of physical and economic factors. The average yields of whea.t and soybeans wei-e much hetter, compared with the five-year average, tlmn the average yields of corn and oats. This variation favored those sections which had la.rger acreages of the higher yieldin-;- crops in 193^' There vras also a vdde range in average corn yields from one section of the state to another, as well as between individijal farras in the saaae area. The price of grains was high in 153^ ^is compared with prices of livestock and livestock products. Farras where grain sales constitute a large part 01 the farm income thus had an advantage. The rariid increase in the prices of lann products, part- icularly grains, favored those farms which had large stocks of salable prod\acts on hand at the beginning of the year. I.Iany farmers who inventoried the com on liand at the beginning of 193^ at kO cents a bushel, later sold this corn for SO cents.

In this group of 32 accountirig farms the most successful third shows an average net income of $4,UU7, while the average net income of the least successful third of the farms v/as only $1,272. In 1933 ^^^ comparable net incomes for the two groups was $3.29^. ^-^d $200 respectively.

Investiiients, Receipts DeWi 1 1 , Pi a.t o , and

licpenses o,nd Earnings on 32 lio^-an Coimty i'arms in 193''-

2U3

Items

CAPITAL Il-nrsS?I;SITTS

Land ----------

Fann improvements- - - -

Livestock total- - - - -

Horses _---,---.- Cattle _--.-.__._. Hogs ------ — -

Sheep- --------

Poultry- -------

Machinery and equipnent- Feed and gra.ins- - - - -

Total capital investment i^EiPTS AKD IIET IKCPiiAEES ~

Livestock total-

Horses ------------

Cattle

Hogs (including ASJl pa^Tnents)- Sheep- ------------

Po'ultry- -----------

Egg sales — _--_---_. Dairy sales- ---------

Feed and ■:;rains (including AAA payments) -----------

lator off fana -------- -

Miscellaneous receiiDts - - - _ -

I our faira

Average of

11 most prof ita''ole

32 farms faria^

Total receipts & net increases

32	s6o
1+	323
1	7U3
	623
	71s
	2g2
	1+g
	66
1	367
2	5U0
$U3	033
1	S99
	61
	6U0
	7^7
	63
	6s
	S3
	235
^	82 S
	S6
	u
$ 3	817

2S 53U U 607

1 UsU 329 3?U 25U

37

so

1 518

2 of^?

$3? 193

1 ^^^7

3 330

678

ks

so

112

235

k 932

10 s

13

$ 6 3U6

11 least

profitalile

farms

;i ko^ 3 66U

00

u

609

631 313

so

51

1 U95 1 790

$Uo 09b

1 skh

7^ '+31 906 111

65

55 202

2 260

I[.Q

$ u 133

"XPSNSES AIJD IIET DECREASES

Farm improvements- - - -

Horses ---------

L'i-Bcellaneous livestock decreases

Machinery and eqiiipment- Feed and grains- - _ - . Livestock expense- - - -

Crop expense ------

Hired lahor- ------

Taxes- ---------

Miscellaneous expenses -

Total exi^enses & net decreases

ECEIPTS LESS EXPENSES-

otal unpaid laoor- ------

Operator's la'oor - - - - -

Family labor -------

3t income from investment and management -------- --

ATE EARHED ON IlIVESTIvIENT

3tum to capital and operator':

labor and manage;nent - - - - -

• of capital invested- - - - -

i3QP AIJD MAIIAG-EMEITT WAGS

23 s

U37

30 260

277

360.

Ul

^ 1 603

$ kzik

:oi

37 190 302 372

29

$ 1 ^7-'

$_J4_

of.-? yC I

€

	680
	311
	169
3	33U
	g.	21^.
1	0U3
CVI	152
1 s^ -1-	893

320

U55

$ 1

2gU

Vo\

53 IU2 25s ^22

'65

521

? I-

,60

U '147

11. 6U^^

628 5U0 1^8

^2

}^:^o

\ 902 1 9:0 ? QQP

2 !|12 2 005

1|07

The followiriij tnlilG shows the nvimher of farms having certain net incomes per acre. There was a marked difference between the most successfiil and the least successful farms.

AveraiS^ net in- Bmher of

coae per acre farms

$23 1

21 2

19 0

17 3

15 7

13 • 2

11 U

Averai^e net in- cone per acre

Uuiiber of farms

$9 ^

7 7

R 1

3 0

1 0

-1 1

A further study of the lann husinesses, made by comparing the in- vestments, receipts, and expenses of the group of farms with the highest net incomes with those having the lowest, should throw some light on the question of why some farmers are more successful than others. This comparison is shown in the table on pa,ge 3-

The most profitable faims averaged 251 o.crss ea.ch, the least prof- itable 256 acres. The most profitable fains carried larger inventories of feed and grains, and hence had a larger investment in this account than the least profitable farms. The most profitable fams had higher total receipts and net increases, due mostly to larger sales of feed and grains. The total faim expense, including the charge for family labor, was lower on the most profitable farsas than on the least profitable fan.is.

Changes in Inventories and Inventory Values

The year 193^ ^"'p-s similar to 1933 ^^ that the prices of farm pro- ducts continued to advance, causing further increases in inventory values. Owing to the poor crop yields in 193^ there were fewer bushels of grain on hand to inventory at the end of the year than at the beginning. The value of the smaller amo'ont of grain, hov/ever, was greater than for the larger amount on hnnd at the beginning of the year.

Bushels of Corn Inventoried

Jan. 1, I93U Dec. 31. 193U

Average of all farms,. h I5S

Average of 11 most successful farms . = . U 32U

Average of 11 least successfiil farms. . . 2 606

Your fann . . ,

2 399

3 327

T IT''''

1 nco

Tlie most profita,ble farms Iiad a larger inventory of corn both at the beginning and end of the year. This difference was an important factor in accounting for their hi.glier receipts and ret increases from feed and grains.

2h3

The average inventory increase for the accoujiting farms in this area v/as $l,31o in 193^. a-s compared v/ith $o95 i^ 1933> s.-'^Q. an inventory loss of $1,021 a farm in 1932. There were increases of $257 i^ total live- stock, $l.llU in feed and ^rain, and $35 iii machinery, while improvements showed a decrease of $S3. Such an increase in inventory as that for machin- ery i"esults from the value of new replacements dtiring the year "being in ex- cess of depreciation costs. This increase is of considerahle interest for it is the first time tliat such an increase in machinery inventories has occurred since farm earnings "began to decline so drastically v;ith the gen- eral depression.

Inventory Changes for 193^

Beginning Closing Inv3ntoiy Inventory

Items inventory inventory chan/;'GS claangcs,

1>.1-3U I2-3I-3U iq^U . youg- farm

Total livestoch $1 7^3 $2 COO $ 257 $

Peed and grains 2 ^Uo 3 6|5^

Maciiinery. , 1 567 1 602

Improvements (except residence), h 323 U 2^-'^

Total $10 173 $11 ^:.l

Some Adjustments on De'.Titt, ?i?vtt, and Lopan Co'^nty Farms Since 1929

T'aiTOers have "been forced to malce p.djustments in their cash ex- penditures as the result of changes in their cash incomes. From 1929 through 1933 farm operating costs declined. ea.ch year, hut the year l^-'3^'^ "brought a reversal of this trend. Total oiDcrating expenses were 4o cents an acre higher in 193^ than in 1933. while cash operating expenses were $2,360 a farra in 193^'-> s-S com"oar3d with $1,5'^5 in 1933' ^^^ largest increase in expenditures over the previous year was for ma,chinGry and repairs for machin- ery. Indications point to an even greater expansion of spending for these items in 1935 > since fairiers have postponed machinery replacements during the four-year period since I929.

Cash Income and Expenses on Accounting Farms in De7itt, Piatt, and Logan Counties for I929 and 193^

Your Average cash Your Average cash- Items farm expense per faim fann income "per fama

lQ"k 1Q3'4 . 1929 193^4

193!-:-	1929
$2 093	$3 33=4
2 901	^ 5U2
ikz	1^6
19
26	-r
k	llL

Livestoch $ $ ^56 $ 756 $

Feed and grains IS7 509

Machinery . 620 917

Improvements. . l59 3^

Lahor , 277 ^9^

liiscellaneous ^ Ul 36

Livestock e:rpense 50 =40

Crop expense 200 273

Taxes "50 kli.5

Total S $2 360 $3 820 S $5 2^6 $7 O72

Excess of cash sales over eirpenses. .... ..,..$ $2 39o $3 ^52

Increas in inventory. .... r ,:,,.,..<..>-. . 1 3IS 53^

Income to la"bor and capital (3ec:?ipts less expenses). .. U 2lU 3 7S2

-6-

Tiie cumulp.tive effect of several years of low agricultural prices on the demand for maniifactured goods can readily be ascertained "by a comparison of cash farni expenditures in I93U with those in I929. Althou<2h the average cash income in 193^ was fk percent of that in I929, cash expenditures were only b2 percent as large. In 193'-r, livestock pur- chases were bO percent, and feed and grain purchases 37 percent as large as in 1929- In 193^'- these farms paid out 6S percent as much for machinery, and 73 percent as much for crop expense as in I929, while taxes were re- duced to ol percent of the I929 levSl.

Comparison of Fams With Hi^h and Low Earnings

Tlie most profitable farms in this stijdy had net receipts per

acre of $15.85, as compared with $7-33 for the least profitable group.

The reasons for this difference m.ay be obtained from a study of the data on pages 3 S'lii 3.

The most profitable farms were larger, having 26.3 more crop acr?s than the least profitable farms. They had lU.2 acres m.ors corn and 19.7 acres more so2^beans, the latter being one of the high yielding crops in 193~'-- The most profitable farms carried larger inventories of feed and grain on which to mal-ie a profit when prices advanced. One reason for the larger inventories, in addition to the larger acreage, was the hi^Jier cron j'ields, thei-e being an advantage of 7-6 bushels of com, 6 bushels of oats, 3 '6 bushels of wheat and j.2 bushels of soybeans per acre in favor of the high profit group.

The most profitable f.arms were not as intensive in their live- stock production, but were more efficient in their livestock feeding opera- tions than the least profita,ble farms. The most profitable farrr^s had an investment in prod^octive livestock of $3-20 per acre, and fed $l,06l of feed per farm, as compared with $^.63 invested per acre, and $1,695 ^'^ feed fed per farm, on the least profitable farms. The productive livestock on the most profitable farms returned $lUO for each $100 of feed fed, as com- pared with returns of $10U for each $100 of feed fed on the least profitable f arras. The most profitable farms had an income of $gS per litter farrowed, as compared T/ith an income of $67 per litter farro\7ed on the least profit- able farms .

The larger income on the most profitable farms was secured with a total operating cost of $1 .kS per acre, as compared with $G.92 per acre on the least profitable farms. l.!an labor costs per crop acre were $3*63 on the most profitable farms, as compared with $U.7S for the least profit- able farms. Power and machinery costs per crop acre amounted to $3-37 on the most profitable farms, and $3 •37 on the least profitable farms.

The Influence of JULA. PrO|q:rams on Cror)pinp: Systems and Farm Incomes

Tlie farm-account records in Illinois were influenced totli directly and indirectly by the corn-hog and wheat adj'ustment pro£;rai'as. A large per- centa^^e of accounting farms were under one or hoth contracts in 193^'-' The acreages of corn and wheat on these farms were therefore less than normal. This should have resulted in lower opera.ting costs. Corn-hog benefit pay- ments for the entire 1SJ)'^'<- program will total about 'lO million dollars for the state, while wheat benefit paj;inents will be about 2.U million dollars.

The benefit payments for accounting farms are indicated in the following table, v/hich shows the average payment for those farms receiving payments and includes only those pa.yraents received "oy the cooperator before the 193'+ books were closed. In some cases only the first corn-hog check is included, w'lile in other cases the second check had been received. The second payments not received and the third payments will be entered in the 1935 hook.

MA Benefit Fayrr.ents Received in I93H

Corn wlieat Hogs

Number Amount Number Aviount Number Amoijnt Average of per of per of per " ■ / ^ fams farra farms farra irn.is farm payment?^

1/3 most profitable farms 11 $151 5 $1^3 10 $136 $3U9

1/3 least .profitable farms 11 I3G 3 2bn 11 lUg 357

All acco-unting farms 32 I6U 12 163 32 I25 35O

1/ Total benefit payments reported by accounting farms under contract for 193^1- divided by total number of accounting farms.

On many fanns the cash received from benefit pajnnents will more than paj' the year's taaes. As an average of all accounting farms, the paiTnonts actually received were sufficient to pay 97 percent of the 193^

It is intei^sting to note the use iaade of the contracted acres on the accounting fan-ns. The average fann had 29.3 contracted acres which were used as follows: 3.9 idle; 6.0 red clover; I.7 sY/eet clover; S.fe soy- • beans; 2.0 alfalfa; and 0.9 acres ?;ere in other crops. These data indicate that most farmers made good use of their contracted acres from the standpoint of soil improvement, as a large part of them, v/ere in leg-umes. W.ien the Government restrictions on the use of crops grown on contracted acres were removed, they were on many farms the most profitable crops as they furnished liay and pasture where badly needed in drouth areas. The legumes had. the further adva.ntage of being irfmurie lo attack from chinch bugs.

Farm earnings were influenced indirectly by the AAA programs in that the reduction in production increased the price of the coiimodi ties in- volved. The drouth was a more important factor in reduicing production than the adjustment programs, yet if it had not ocen for the corn-sealing pro- gram there would have been but little corn in the 1-ands of farmers at the time the major price advance became effecLive.

2l^

j:":.ctors nelpiiit'; <.o A:ialy:,e the x-'a-i.'i .Aisiness .^a 32 DeTTitt, Piatt, njid LO:^an Coi-inty Paiins ir 193''-

Items	■ 1 Your fam	Average of 32 fanas	11 r;i,ost profitable fr,n:is	11 least profitable fam-.s
Siie 01 f arras — acres __----_--		296.9 9U.7 30.0 19.59 7 = 69 11.90 111 1^5	280.6 92.5 26.5 23-33 7.U8 15.85 102 136	255-5 9I1.I 52.9 15.25 8. 92 7.33 123 157
Percent of land area tillable-
Percent of tillable land in iiay and
G-ross receipts per acx'e- -------
Total expenses per acre- -------
Val-JB of land per acre --------
Total investment per acre- ------
Acres in Corn- ------------		86.6 2U.6 i|0.5 25.0 '39.2 l^^.l IU.2 23.1 25.8	55.2 27. U 22.0 U5.S 23.3 I15.5 36.6 18.8 23.1 26.9	72.0 37.1 21.0 26.1 2U.'^ 52.3 29.0 1? . ? 13.5 23.7
Cats 7ftieat ------------ Soybeans- ----------
nct^ - -
Tillable pasture- ------
Crop yields — Corn, bii. ver acre- - - -
Oats, bu. per acre- - - -
Wheat, bu. per acre - - -
Soybeans, bu. -oer acre- -
	...
Val'oe of feed fed to productive L.3. -		1 513 121 110 222 3 1+	1 Ool 1^ S7 223 5.5 88 30 3. SO 5.29	1 695 i:U 92 231 7.0 67 3? U.63 6.93
Het^arns per $1C0 of feed fed to productive livestock- -_-__---
Hetums per $100 invested in:
Pmil "h viT" —	.....
Pigs weaned pei litter --------
Incorre Tjer litter farrowed ------ Dair; sales per da'-ry cov;- ------		7^ 3S U.IO 6.19
Irvestment in productive L.S. per A. -
Man labor cost per crop acre -----		4.05 1-97 3.13 31s 15 39 .80 2 896 1 31s 3.21^ 3 SI J	3.63 2.09 3.37 73^ 277 12 32 .72 3 276 1 5*^1 ii.bU^C 6 5^5	k.]8
Machinery cost per crop acre -----		2.U7
Power and mach. cost per crop A. - - -		3.57 73?^ 281 22 55 1.11 ] 71c S50 k 153
Val-ae of feed fed to horses-
Mar. labor cost; per $100 groso inco*^e - ___ — — _ — _
Expenses per $100 gross income - _ - -
FaiTa improvements cost per acre- - - -
Excess of sales over cash expense .t - - Increase in inventory- --------	1
Rate earned on investment- ------	)
Gross receipts per farm- -_--_-_	■;

-y-- Chart for Stad.ying the Efficiency of '.'arioas parts of foui De'Titt, Piatt, and Logan Go-unties, I934 The nirnhers ahove the lines across the middle of the page g,re the ^2 faiTOS included in this re^iort for the factors named at the toj "; drawing a line across each colunn at the nunher measuring ths far^n in that factor, yov. can compare your efficiency v/ith that oi yovar locality.

«- c Bxisiness averages for the ) of the page . efficiency of your other farmers in

^ CO C^i CD CD >

Bushels per acre

1 1 1

i i !h

L.S. income per $100 of feed fed

Cost per crop acre

Labor cost per $100 gross receipts

Increase in inventory

Sales over cash expenses 1

Gro s s receipts

ii ■ 1

0 0

CO Cj

'J2 a:- >:, C CO

i hogs: Income 1 per litter

Dairy sales per dairy cow

P-, CD E Ti 0 CD CD -P rf C/l ■H 0 > r-= c; f-l -H •P r-| 0 :-! 0 0 .-: P-i -69-

jjaoor

CD ,9 r5 0 0 03 P^ S

CD % U

r'. c' Jh CD Pi

s H •H CO Sj ''A

^-3-7

T^

34

ll.l

lUg

73

322

321

~

—_

6300

d900

Ho

lOSOO

W"

1 ]r:,6 1 11,5

^9

30

32

I3U

bo

^62

2 SI

.03

'1

3^>00

6100

36

OSOO

^"7

Ur

26

35

119

^9

'-1-02

?.hi

1.03

.13

r D

U3OO

3^00

32

■ '] 1 GSOO '4^7

10. )f

Hi

22

T"^

loU

~.U2

1 1 201 2.03

1.13

Q

3300

U3OO

2S

7000

397

't 1 1 8.21

37

IS

29

S9

hR

2S2

161

3.03

2.13

12

2300

3700

2k

6300

3U7

■^3.1

iU.2

23. S

^U

1 1 1 JO cc-.

121

ii.OR

3.13

13

131s

2S96

19. 3 q

3317

2Q7

;■ - 1

29

10

23

ro

V-

1 162

SI

i t ^.03 U.13

13

300

2100

16

Usoc

2U7

6.0

2R

6 20

4U

2k 10^

! kl 6.03

^.13

21

-700

1300

12 ^^SOO 197

!

21

2 1 17

29

17

1^2

7.03

6.1^

2U

-1700

■=^00

0

2S0O

147_

V

3.8

17

1 ^ i i - 1 11:

IL

10

i 1 -is! -

S.03!

7.13

27

-2700

k

1300

1 1 ^7

1

.^■7

13

f 1 11

1 1 . J 1-7- -J

! i 1 0.03 s.i^l

30 -3700

300

47

2U9

250

-10-

Influence of Price Chgiif^s on gam jlgruin^s

Fam prices in IS'3^-'- i'dvanced r.oi-e rapidly than did the prices of cotanodities vmich fartiers bo"agl:t. Paniiers of the United States as a group could exchange their fami products in 193"^ for T'-f percent as nany goods as for the period 1909-191^1 while in 1933 they received only GV percent, and 1932 only 61 percent as mijch in exc^iange for what they had to cell as in the prewar period. In the month of Febi"oar2'', 193? » this index of purchasing pc'.7er h.-^d increased to S'7 percent of prev/ar, the index of farr.i prices having risen to 111 as compared with an index of 127 for commodities which fa.iraers hviy. YHien the line representing fa.rrii prices drops "belov/ the line represent- ine prices T:a.id "by fairr.srs, farm earnings are very low, but when these lines corae close together fana earnings increase. (See following graph.)

Index of Prices

'2CC

150 125

100

75

50

25

0

Hate Earned

r

= Par-Ti prices in 'J. £. Aug. 1909-July 131^ = l'-€

-. Prices paid by farr.ers. Av^. 19C9-July 19"''-^^ = lOr

F] - Rate earned en investment, accounting farms, central Illinois

^1 m \

^::!

I

1/1 ^.

.^ L

-\-^^

',M

1917 'IS "19 '20 '21 '22 -23 '2^ '25 '26 '27 '2.<^; '29 '30 'J,! '32 -33 'jU

-11-

251

Sincp the price of sone farm products advanced m-uch. more rapidly during 193^ tiian other prodiocts, it is evident that some farms wonld benefit more than others, depending upon the kind and quantity of prod'O-Cts sold. G-rain prices advanced ratich more rapidly than livestock prices; which result- ed in a very had price ratio for fanners who hiiy large quantities of feed. The average Illinois farm price of corn was Ul cents a hushel in January, IS3U; it advanced steadily luitil the end of the year when it was g£ cents a "bushel. Other grains made rnarhed advance although not so great an adva-nce as corn. The price of hogs fluctaa,t8d frou a low of $5*20 a hundred in May to a high of $^.3C in September. The low point in the fall came in Hovember when the average price vv'as $5-10. The price has advanced quite rapidly since November, the average price being $7*5^ ^^i" February, 1535' 3eef cattle were worth $U.10 a hundred in January, 193^ ^-^cL advanced each month imtil SeDtember, when the price was $5.90. They dropped to $5-20 in December but increased again to $7«^ f'^r February, 1335-

The year 193^ set a record for the reduction in the numbers of livestock. The percentage decreases by species were as fcllov's: horses, 1.1 percent; niul^s, ?.6 percf.nt; all cattle, 11.2 percent; she'^p, ^-7 percent; hogs, 35*3 percent. IThen all species are combined on the basis of their capacity to consume feed, the reduction was I3 percent. This reduction v/ill greatly reduce the demand for feeds produxied in 1135 •

The relative change in prices of imprjrt&nt co^-r.odities m.ay be noted in the follov.dng granh, which shows the average Illinois farm prices by m.onths as a percentage of the average prices for the period 19'^1-1929-

Percent 120

Price Indices, 193^

(1921-1929 = 100)

Jon.

All coinmodities index reT^resents the wholesale price of s large n-umber of commodities for the ttiited States, 8S computed by Bureau of Labor Statistics.

Grain .and livestock indices represent average montlxly fai^. prices in Illinois,

2^1

-12-

Variation in Zlaniirgs Over Five-Year Period

A comparison of production, income, and expenditixres on the ac- coiinting farms in De'/Jitt, Piatt, and Lo^an Counties for the last five years is very interesting 'becaf-se of the violent changes in price level. 193^ was the second year of very low crop yields, yet total receipts per farm were higher than in any other year in the last five, and '.vere 99 percent of the 1929 gross receipts. Operating costs per acre yere lower than in any year of the five except 1933- Thus profits were the hest the county had experienced since 1928.

I

Earnings in 1935 s-s usual will depend \xpon individua.l efficiency, weather, and prices. A norraal year Y\'ill mean larger yields of grain and probably lower prices.

Comparison of Zarninys and Investments on Accounting Farrrs in DeWitt, Piatt, and Logan Counties for I93O-I33U

I tens

I930I/

V^M

1532!/ 1933

I93U

Nuniber of fams ---------

Average size of faixis, acres- - -

Average rato earned, to pay for management, risk and capital - - Average labor and management wage

Gross incoine per acre ------

Operating cost per acre - - - - -

Average value of land per acre- Total investment per acre - - -

Investment per faim in:

Total livestock- - _ _ - -

Cattle -- _-___.

Hogs -----------

Poultry- ---------

Gross income T3or farra

Income per farm from:

Crops- --------

Miscellaneous income - Total livestock- - - -

Cattle ___-----

Dairy sales- - - - - -

Hogs - -

Poultry- -------

J L .- — —

Average yield of corn in

Average yield of soybeans in bu.-

248

$-1 250

16.26 12.92

173 22 s

2 907

1 U2I

628

131

^ oUo

1 7^8

2 170

I|S3

35^

1 10 s

220

Uo

2U

Us

270

739

6.s6 9.63

1U9 191

177 sUs

597 113

b51 40

1 160

41

395 592 12U

^7 25

Ij Records from Maccn Co-Jiity incl-jded for 193^ ani 1932-

53 251

-i.U^J $-2 211

6.13 8.56

132

169

1 6S5

213

292 103

1 539

151c

'52

977 25^'

2SU 286 I'll

56 2^

31 ^11

$165

13.24

7.29

115

145

70 297

$1 893

1 674 792 263

66-^

2 4q3

35

1 137

2S2 216 hll 125

26 17

19.55 7.69

111 145

1 7^3 71s

282 66

5 S17

3 828

4

1 899

6^^

235 747

33

26

253

AKtTUAL FAPaM BUSIIIESS ESPORT 0¥ THIRTY FARMS IN KAI^OKEE Am VEHi.IILIOK COUITTIES, ILLINOIS, I93U

P. E. Johnston, T. R. Hedges, and A- L. Leonard*

Farm earnings on the 30 accounting farms in Kankakee and Vermilion Counties averaged a return of 2.92 percent on the capital invested in the farm "business in 193'+- This is the second highest return during the past five years. The average return of 3-0 percent on the investment for 1933 was the highest. The 193^ return is remarkable, considering the severe drouth and cliinch bug damage .

These 30 accounts show for 193^1- a^ average net income of $9^ per farm, as compared with an average of $1,0S9 in 1933i ^^^ an average net loss of $6gU in 1932. The average cash income in 193^+ was $3,U27 per farm, the cash business expenditures $2,031 per farm, leaving a cash balance of $1,39^ to meet interest payments and family living expenses. (Those who keep home account books use the latter figure to represent the cash contribution of the farm to the "realized family income".) Besides the cash income, there was an inventory increase of $37^ a farm due mostly to the rise in prices of farm products. This increase, added to the cash balance, resulted in an average excess of receipts over expenses of $1,770 a farm.

These data must not be considered representative of average faim

conditions, for they were secured from farms which are larger than average,

and which were managed by farmers who are more efficient than the average of all farmers in the county.

For the state as a whole, farm earnings were better in 193^ than in 1933) ii^ spite of the fact that corn and oat yields were very low due to the drouth and to chinch bug damage. In the western and southwestern parts of the state the drouth caused an almost total failure of both com and oats. Tliis accounts for farm earnings being lower there than in other parts of the state .

The com crop was best in the southeastern part of the state, and was fair in the northwestern section. Wheat yields were particularly good in the south and central portions of the state. Soybean yields were very good throughout the state, and there was a larger than normal acreage in Illinois in 193^* This state produced over half of the nation's 193^i- crop of soybeans.

Chinch bug damage extended over most of the state last year, but was much more severe in some sections than in others, and v/as much worse on some farms than on other f arras in the same community. Conditions affecting crop yields were very spotted. This accounts in part for the v;ide variation in fana earnings from one section of the state to another, and the v;ider variations than usual from one farm to another.

*G. T. Swaira and Otis Kercher, farm advisers in the above Counties, cooperated in supervising and collecting the records on which this report is based.

25^

Industries other than agriculture again showed improved earnings over the previous year. A r^ouv of 8*40 industrial corporations reported "by a nationally known "bank showed avera-~e earnings of 5-0 percent on their in- vested capital in 193^> ^s compared with 3«^ percent for the same corpor- ations in 1933* -A- similar t'rroup had a loss of one-tenth of one percent in 1932, and average earnings of 3-3 percent in 1931'

In comparing the average earnings of corporations with tlie rate earned on investments on accounting farms, it is well to keep in mind tliat in corporation accounting, charges are made for mar^gement, while in the farm accounts no comparable deduction has been made. On the other hand the farmer and his family receive food, fuel, and other items of living from the farm for which the farm has received no credit in the records used in this report. For the average central Illinois farm family, consisting of five persons, the value of the food and fuel furnished by the farm was about $250 in 193^> when estimated on the basis of the wholesale price for farm products.

Variations in Farm Incomes

There was a much wider range in farm earnings on the accounting farms in 193*^ than in 1933- This was true for the farms included in this report, and it v/as also true when the average earnings of farms in one section of the state were compared with the earnings of farms in other areas.

The extremely wide range in earnings was due to a combination of physical and economic factors. The average yields of wheat and soybeans was much better compared with the five-year average, than the average yields of corn and oats. This variation favored those sections which had larger acreages of the higher yielding crops in 193^- There was also a wide range in average com yields from one section of the state to another, as well as between individual farms in the same area. The price of grains was high in 193^+ as compared with prices of livestock and livestock products. Farms where grain sales constitute a large part of the farm income thus had an advantage. The rapid increase in the prices of farm products, particularly grains, favored those farms which had large stocks of salable products on hand at the beginning of the year. Jfeny farmers who inventoried the corn on hand at the beginning of 193^ ^^ ^ cents a bu.shel, later sold this com for 20 cents.

In this group of 30 accounting farms the most s^iccessful third shows an average net incoine of $2,012, while the average net loss on the least successful third of the fcirms was $62. In 1933 > 'tj-^e comparable net income for the most s\accessful third and net loss for the least successfuJ. third was $2,U2g, and $-19 respectively.

-3-

Investments, Receipts, Expenses and Earnings on 3O KanlcaJcee and Ver.nilion County Farms in 193^

255

Items

I'our

farm

Average of ^0 farms

10 most profitable

farms

10 least profitable farms

CAPITAL IlP/SSTlvISlITS

Land ----------

Farm improvements- - - -

Livestock total- - - - -

Horses --------

Cattle ---____-

Hogs

Sheep- --------

Poultry- -------

Machinery and equipment- Feed and grains- - - - -

Total capital investment

23 208

h 326

1 39^

631

16 g

16

1 U33 1 S6l

222

$3::

20 756

3 611

1 U'52

U70

717 lUg

30

S7

1 Uso

2 20U

$29 ^03

zh 020 U ^0 1 Ugo

^93 656

197 11

$12

3IU

60U

EECEIPTS AIJD KET DICPJSASES

jive stock total -

Horses -----------

Cattle _________

Hogs (including AAA pajmients) Sheep- -----------

Poultry- ----------

Egg sales- ---------

Dairy sales- --------

Feed and grains (including AAA payraents) ----_-----

Lahor off farm --------

Miscellaneous receipts - - - -

Total receipts & net increases

eXPENSES AHD MET DECREASES

Farm improvements- - - -

Horses ---------

Miscellaneous livestock decreases

I

Machinery and equipment- - - -

Feed and grains- -------

Livestock expense- ------

Crop expense ---------

Hired labor- -_-_-----

Taxes- ------------

Miscellaneous expenses - - - -

Total expenses & net decreases

RECEIPTS LESS EXPENSES-

rotal unpaid labor- -------

Operator's labor ------

Family labor --------

Sfet income from investment and

management -----------

RATE FARMED Oil IMESTJ/IEKT

Return to capital and operator's

labor and management ------

5^ of capital invested- - - - - -

LABOR Airo I/iAI'TAG-SLIEIJT WAGE ■

1 nOl

10 3OS 50s

3^

loU

131 U06

1 U65 so

1

& 3 0U7

1 7U9

32 350 57U

91 101

135

use

2 362

9^ 1

* k 206

213

3^7

'36 193 159

255

$1211

s*

20U

U6s

39 215 15s 272

3S 1 391

ei

$ 1 770

230

53s 292

9UO

1 30^

26s U27

13

109

95 393

7gU

26

1

$ 2 116

252 33

322

37 210

1S9 2U1

30

$ 1 31U

2.92

^rt?

1 U7S

1 611

-133

2 gl^

303 53S 267

2 012

6.82'^

2 5^8

1 %5

>* 1073

802

86U 5U0 32U

- 62

U7S

1 643 $-1 16^

256

-U-

The following table shows the nviraber of farms having certain net incomes per acre. There was a marked difference "between the most successful and the least successful farms.

Ave rage ne t i nc ome per acre

$13

11

9

7

5

Number of farms

2

0 k

2 6

Average net income per acre

$3

1

-1

-3

-5

Number of farms

7 2

3 3 1

A further study of the farm businesses made by comparing the investments, receipts, and expenses of the group of farms having the highest net income, with those having; the lowest income will throw some light on the question of why some farmers are more successful than others. Tliis com- parison is shown in the table on page 3-

Although the farms were of uniform size, the most profitable farms had a smaller total capital investment than either the least profitable farms, or the average of all farms. In spite of the smaller total investment, the most profitable farms had higher total receipts and net increases than the least profitable farms. A major part of the difference in income was due to the larger income from feed and f'Tain, and livestock and livestock pro- ducts on the most profitable farms. The total expense per farm and per acre, including the charge for faiiiily labor, was slightly higlier on the most pro- fitable farms.

The year 193^ ^^.s similar to 1933 i^ that the prices of farm pro- ducts continued to advance, causing further increases in inventory values. Owing to the poor crop yields in 193^+1 there were fewer bushels of grain on hand to inventory at the end of the year than at the beginning. The value of the smaller amoimt of grain, however, was greater than for the larger amount on hand at the beginning of the year.

Bushels of Corn Inventoried

Jan. 1. I93U

Dec. 31. I93U

Average of all farms ,

Average of 10 most successful fa,rms , Average of 10 least successful farms. Your farm ,

2 7^7

3 36U 2 392

1 301

2 106 780

The most profitable farms had a much larger inventory of com, both at the beginning and at the end of the year. This difference accounted for a considerable part of their higlier receipts and net increases from feed and grains.

257

_(5-

The average inventory increase for the accoiinting farms in Kanlcakee and Vermilion Counties was $37^ in 193'+. as compared with $6l7 in 1933. s^nd. an inventory loss of $9^ a farm in 1932. There were increases of $163 in total livestock, $217 ^'^ feed and grain, and $51 in machinery, while inprove- ments showed a decrease of $57- Such an increase in inventory as that for machinery results from the value of new replacements during the year "being in excess of depreciation costs. This inci-ease is of considerahle interest, for it is the first time that such an increase in machinery inventories has occurred since farm earnings began to decline so drastically with the general depression.

Inventory Changes for 193^

Beginning Items inventory I-I-3U

Total livestock $1 39I4

Feed and grains 1 86I

Machinery 1 U33

Improvements (except residence). U 326 Total $9 OlU

Closing Inventory Inventory inventory changes changes,

12-31„3l4 I93U your farm

$1 557 2 07g

1 ksk

k 269

$9 38g

$163 217

51 $3F

$

Some Ad,1ustments on Kanlcalcee and Vermilion County Farms Since 1929

Farmers have "been forced to make adjustments in their cash ex- penditures as the result of changes in their cash incomes. From 1929 thro-ugh 1933 farm operating costs declined each year, hut the year 193^ "broright a reversal of this trend. Total operating expenses were 52 cents an acre higher in 193^ than in 1933> while cash operating expenses were $2,031 a farm in 193^> ^^ compared with $1,23S in 1933* The largest increases in i;x- poadit'oavs over the previous year were for feed and grains, and machinery and supplies for machinery. Indications point to an even grea.ter expansion of spending for machinery in 1935> since farmers have postponed machinery re- placements during the four- year period since 1929-

Cash Income and Expenses on Accoxmting Farms in Kankaicee and Vermilion Counties for 1929 f^nd 193^+

Your Average cash Your

Items farm expense per farm farm

I93U ~193'4 1929 193^

Livestock $ $ U29 $ U5I $

Feed and grains 266 363

Machinery 5OI 1 O75

Improvements 158 3gU

Lahor I59 55lj-

Miscellaneous 3I4 33

Livestock expense 36 ^7

Crop expense I93 292

Taxes 255 kS&

Total $ $2 031 $3 665 $

Excess of cash sales over expenses $

Increase in inventory . .

Income to lahor and capital (Receipts less expenses).

Average cash income rer farm

I93U

1929

$1 767 $2 9^1

1 51U 3 1+97

63 ikz

2

SO 78

1 5

pl 39b

37^

1 770

$3 U27 $6 663

$2 998 1 15U

U 1S2

25S

-6-

The cumulative effect of several yea,rs of low agricultural prices on the demand for manufactured goods can readily he ascertained hy a com- parison of cash farm expenditures in 193^ with those in 1923 • Altho'ugh the average cash income in 193^ was only ^1 percent of that in 1929 > cash ex- penditures were 55 percent as large. In 193^ livestock purchases were 95 percent, and feed and grain piirchases 73 percent; as large as in 1929- In 193^ these farms paid ou.t kf percent as much for machinery, kl percent as much for improvements, and 66 percent as much for crop expense as in 1929. while taxes were rediiced to 55 percent of the I929 level.

Comparison of Farms With

'^igh and Low Earnings

The most profitable farms in this study had net receipts per acre of $S.55) as compared v^ith a net loss of 26 cents per acre on the least pro- fitable fanns. The reasons for this difference may he obtained from a study of the data on pages 3 and 8.

The two groups of farms vrere equal in size, hut the most profitable group had a larger propoi'tion of their land area tillable than the least pro- fitable farms. The most profitable faims had 13'1 acres more com, and 9*3 acres more wheat than the least profitable farms. The most profitable farms also carried larger inventories of feed and grain on which to malce a profit when prices advanced. Along with the larger acreage of crops, another reason for the larger inventories of feed and grains was the higher yields, there being an advantage of U.9 bushels of corn, 9*3 bushels of oats, and 5.U bushels of wheat an acre in favor of the high-profit group. Crop yields were so low on the least profitable farms that there was an average inventory loss of $227 in the feed and grain account in spite of the price advances.

The total investment in productive livestock was *U.62 per acre on the most profitable farms, as compared with $U.05 per acre on the least profi- table faiTOS. The most profita.ble farms fed $l,l67 worth of feed, secuiung a return of $1^7 for each $100 of feed fed, as compared with $1,2S2 worth of feed fed per farm, and a retuxn of $102 for each $100 worth of feed fed on the low-profit group. The difference in livestock efficiency is further illustrated by the fact thr^.t the most profitable farms had a rct-om of $97 Pcr litter farrowed, as compared with a return of $63 per litter fa.rrowed on the least profitable farms.

The larger income on the most profitable farms was secxtred vdth a total operating cost of only 6 cents per acre above that on the least profitable farms. The man labor cost per crop acre was $U.70 on the saost profitable fa.rms, as compared with $5 '57 on the least profitable f arr.is , v/hile power and machinery cost per crop acre v/as $3'26 on the most profitable f arras, and $3.13 per crop acre on the least profitable farms.

259

-7-

Infl-uence of AAA PrO:;rajaS on Croppiiiig: Systems and Farm Incomes

Tlie farm-accotuit records in Illinois were influenced "Doth directly and indirectly "by the corn-hog and wheat adjustment programs. A large per- centage of accounting farms were ujider one or "both contracts in l^jh. The acreages of com and wheat on these farms were therefore less than normal. This should have resulted in lower operating costs. Corn-hog oenefit pay- m.ents for the entire 193^ program will total a"bout Uo million dollars for the state, while wheat "benefit payments v/ill "be a"bout 2.U million dollars.

The benefit payments for accoimting farms are indicated in the following ta"ble, which shows the average payment for those farms receiving payments, and includes only those pa.yments received "by the cooperator "before the 193^^ "books were closed. In some cases only the first corn-hog check is included, while in other cases the second check had "been received. The sec- ond payments not received, and the third payments will he entered in the 1935 "book.

AAA Benefit Pajmients Received in 193^+

Corn ;7heat H0t'':;s

IJumber Amotint Nijmher Amovmt Number imount -f^-"^® ^'^-S^ of per of per of per °^ ^'^^ if

farms farm farms farm farms- farm

payme nt s-

1/3 most profitable farms 9 $117 3 $150 9 $ 96 $237

1/3 least profitable farms S 100 3 125 7 100 ISS

All accounting farms 25 I30 12 lUo 23 9S 239

1/ Total benefit payments reported by accounting farms under contract for 193^ divided by total number of accounting farms.

On many farms the cash received from benefit payments will more than pay for the year's taxes. As an aVerage for all accounting farms, the payments actually received were sufficient to pay 9U percent of the I93U taxes.

It is interestin.?: to note the use made of the contracted acres on the accounting farms. The average farm had 21.6 contracted acres which were used as follows: o .k idle; 0.8 red clover; 2.5 sweet clover; 3.3 soybeans; 1.4 alfalfa; and 5*2 acres were in other crops. These data i.idicate tliat most farmers made good use of their contracted acres from the standpoint of soil improvement, as a large part of them were in legumes. Y/hen the Governn«nt restrictions on the use of crops grovm on contracted acres were removed, they vrere on many farms the most profitable crops as they furnished liay and pasture where badly needed in drouth areas. The legumes had the fu.rther ad- vantage of being immune to attack from chinch bugs.

Farm earnings were influenced indirectly by the A;A.A prograi'QS in tliat the reduction in production increased the price of the commodities involved. The drouth was a more important factor in reducing production than the ad- justment programs, yet if it had not been for the corn-sealing program there v/ould have been but little corn in the hands of farmers at the time the major price advance became effective.

2b0 -S- Factors Helping to Analyze the Farm Business on 30 KaJikalcee and Veimilion Cotinty Farms in 193^
Items	Your farm	Average of 30 farms	10 most profitable famis	10 least profitabl farms
Size 01 farms — acres -------		233-9 91.0 27.3 13.03 9.01 U.02 99 138	235.2 93.3 29.6 17. 88 9-33 8.55 88 125	235.0 39. 6 25.5 9.01 9.27 -.26 102 1^0
Percent of land area tillalDle- - -
Percent of tillable land in hay and pasture -------------
Gross receipts per acre- -----
Total expenses per acre- -----
Net receipts per acre- ------
Value of land per acre - - - - - -
Total invest:rent per acre- - _ _ -
Acres in Corn- ----------		66.9 1+9. 3 12. U 8.1 29.1 29.2 18.2 13.8 5.9	72.8 16.9 5.9 30.7 3U.2 21.5 19.6 9.1	59.7 53.0 7.6 11.7 27.7 26.1 16.6 10.3 3.7
Oats- -------
Wheat
^n \r"hp» ^ n Q
Hay
Tillahle pasttire- - - - -
Crop yields — Corn, "bu. per acre- -
Oats, "bu. per acre- -
Wheat, bu. per acre -
Value of feed fed to productive L-S.		1 lU4 130 111 2U0 5.9 81 63 U.I9 6.37	1 167 1^7 117 251 6.3 97 60 U.62 7.30	1 282 > 102 : ( 108 i 2i+9 : 5.9; 63 ■ 59 U.05 5.55
Returns per $100 of feed fed to produjctive livestock- ------
Returns per $100 invested in: Cattle
Poultry -------
Pigs weaned "oer litter ------
Income per litter farrowed - - - -
Dairy sales per dairy cow- - - - -
Investment in productive L.S. per A.
Receipts from productive L.S. per A.
		5.15 2.11 3.U5 665? 257 31 69 .91 1 396 37U 2.92 3 0U7	U.70 2.51 3.86 805$ 2S1 21 52 ' .87 1 532 1 283 6.82 U 206	i.7H 3.1s 6of. i 232 ' i U9 103 , 1.07; 9S3 -181 } -.19 2 116
Machinery cost per crop acre - - -
Power and mach. cost per crop A. -
Farms with tractor --------
Value of feed fed to horses- - - -
Man labor cost per $100 gross
Expenses per $100 gross income - -
Farm improvements cost per acre- -
Excess of sales over cash expenses
Increase in inventory- ------
Rate earned on investment- - - - -
Gross receipts per farra- -----
				1 H

-9-

* <

Chart

for Studying the Effi

ciency of Various Part

s of Your Business,

Kankakee and

Vermilion Counties, 193*+

The

niinhers ahove the lines across

the i.aiddle of the page are the averages for the

30 :

farms

incltded in this report for the factors named at the top of the page,

By

irawing a

Line across

each col"umn at the nunher

measuring the efficiency of your

farm in

that :

factor, you

can compa

re your efficiency with that of other farmers in

your loc

ality

«

Bushel

— •■- s

r~— ■"

1

Cost per

Gross

per acre

Pk

U CD

crop acre

0 0 r— 1 ■iB-

receipts

(i)

Q) Vh

U en

-p

CD

g

S Ti

ft

CD +^

w

E

c

E

o

O OJ

X)

P. Pi

0)

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o

w o

o +J

0) a>

■H

c

CO

d

w E

o ^

Hi

CJ W

S OJ

-P CD

•H

M S

c 5

S (D

<-> >-.

•H <D

0 tn

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W 0

>=

0 (D

U m

h-i -P

cS U

>

0

S !h

0 a

CD S-<

> P^

9

E

S

d G)

-P

m -H

>^ d

c; tH

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0 u

m 0

0 M

u

M

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O >

•H

ri

^ -H

■H 0

S

ci -p

0)

0

cti

S

-p

•• r-^

!>s x)

-P

u

Jh -h

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CD C

tl

a

tM

CD 'H

fi

tn

a

CO

^H

'^R

■ 0

0

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0 w

5h CD

CD ,i:!

CD

-P

C

-p

(D

W) fn

■H U

CO 0

rO

& 0

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y 5

rH t/1

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fn

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rf 0)

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0 eg

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cd Cti

^

r?^

0

« o

o

o

^

ffl p^

Q P

PL, -W-

vA -ee-

hq

^ g

^A bSS

1-1 -H

OQ 0

fM

Ph

*3;

7-^

3S

3U

21

181

113

w>

2 SO

__

__

__

337U

31400

28

5000

53'l

6.9

3U

^8

IS

l6l

103

Uoo

250

.35

277H

5000

25

U60O

1+74

5.9

30

32

15

lUl

93

360

220

1.55

M

" ■■ ■

217U

2600

22

U2OO

UlU

U.9

26

26

12

121

S3

320

190

2.75

i.Us

1

157^

2200

19

3800

35U

3.9

22

20

9

101

7^

2 SO

160

3.95

2.U5

16

97^

ISOO

16

3^00

29U

2.92

18.2

13. S

5.9

SI

63

2'40

130

5.15

3.U^

31

37U

1396

13.03

30I+7

233.9

.1.9

Ik

o

3

61

53

200

100

6.35

U.U5

U6

-226

1000

10

2600

17U

1 ! .9

10

2

0

hi

U3

— - — 1 160

70

7.55

5.U5

61

-826

600

7

2200

llU

-.1

6

■ '

21

35

120

i+0

— 1 i_i 1 3.75 6.U5

76

-IU26

200

k

ISOO

5U

-1.1

2

1

23

SO

10

9.95 i7. ^5

91

-2026

1

].Uoo

-2.1

--

13

ko

11.15

S.I45

106

-2626

1000

261

2b2

-10-

Influence of Price Changes on Fa.iT.i Sanaings

Farni prices in 133'+ advanced more rapidly than did the prices of comodities which farmers ooii^t. Parmers of the United States as a group could exchange their farm products in 193^ ^or 7^ percent as many goods as for the period i505-19lU, wMle in 1933 they received only 6U percent, and 1932 only 61 percent a.s Tr.-ach in exchange for v;hat they had to sell as in the prewar period. In the month of February, 1935» this index of purchasing power had increased to Sf percent of prev/ar, the index of fam prices having risen to 111 as compared with an index of 127 for conmodities which fanners "btiy. THien the line representing fami prices drops "below the line represent- ing prices paid "by faimers, farm earnings are very low, "but v/hen these lines cone close together farm earnings increase. (See follovfing graph.)

Index of Prices

Vjxte Earned

200 150

100

75 50

25

■^1,

.

.

-, TT

o

A IT

T C)r.ri

T,,1,r

1

m li

ir.,-\

■■]

D

= Prices paid oy famers. A^. l^OS^Jvly 191^ = IOC = Rate earned on investment, acco'onting farms, central Illinois

■-

// k

/

L— _

\ \

\ ^

i':--;

r'^^^^-^'^A''^-.

n

^

■%;

•■■>- i

4 •

-^

-

\

/

r

_. ■ ■■ 'CJ- ■ Jx' ' ■■'■ - ...

L^

. i-, ._. ,t_ L J .L L ..I 1 I ; 1 I L K . \ . . .L.. .._._L

1255

10^

H

1917 'IS 'I9 '20 '21 '22 '23 '2l| '25 '26 '27 '2S '29 '50 '31 '32 '33 '3^

-11-

263

Sincn the pric^ of some fam products advancp.d ra-'jch more rapidly during 193^ tlian other products, it is evident that some farms v/otild benefit more than others, depending upon the kind and qiJantity of products sold. Grain prices advanced nuch more rapidly than livestock nrices; which result- ed in a very had price ratio for farmers who tiiiy large quantities of feed. 'The average Illinois farm price of corn v;as Ul cents a hushel in Janup.ry, 193^; it advanced steadily until the end of the year when it was S? cents a bushel. Other grains made narked advance although not so great an advance a.s corn. The price of hogs fluctae.ted from a low of ^'^.?-0 a hujidred in May to a high of $^.30 in September. The low point in the fall came in IJovember v;hen the average price was $5-10. The price ha,s advanced quite rapidly since ITovember, the average price being $7*5^ for February, 1935- Beef cattle were worth $U.10 a h\mdred in January, 193^ S-^d advanced each month -until Sentember, vvhen the price was $5.90. They dropped to $9.2C in December but increased again to $7.^ for February, 1935*

The year 193^ ^^^ ^ record for the reduction in the nu'abers of livestock. The percentage decr=asps by species were as fi-llows: horses, 1.1 percent; mul^s, ?.6 percf-nt; all rattl'=', 11. <? perrpnt; she'=p, 5^. 7 percent; hogf', 35*3 percent. 'iThen all species are combined on the basis of their capacity to consume feed, the red-uction was I3 percent. This reduction will greatly reduce the demand for feeds produced in 1935*

The relative change in prices of important conii-.odities may be noted in the following graph, which shows the average Illinois farm prices by m.onths as a percentage of the avera,ge prices for the period 192-^1-1929-

Percent 120

Price Indices, 1934

(1921-1929 = 100)

June July Aug. Sent. Oct. Nov. Dec

^11 co:Tiraodities index represents the wholesale price of a large n'omber of commodities for the Iliitod States, ss computed by Buj-eau of Labor Statistics. Grain and livestock indices represent average monthly faiT: prices in Iliinoir..

26U

-12-

Varintion in Earnings Over Five-Year Period

A comparison of production, incone, and expenditures on the ac- counting fam:s in Kankakee and Vermilion Coi;inties for the last five years is very interesting "because of the violent fluctuations in price level. Although the 193^ crop was nearly a failure, and followed a smaller than average crop of 1933 1 the increased prices of hoth grain and livestock did have consider- ahle effect in holding; earnings in second place for the five-year Tseriod 1930-193^.

I

Earnings in 1935 ■ as usual, will depend upon individual efficiency, weather, and prices. With normal weather conditions, prices of grain are likely to go down to a more normal level which will give individual efficiency/ the responsihility for higher earnings on each farm.

Comparison of Earnings and Investments on Accounting Farms in Kankakee and Vermilion Co-ontios for 1930-193^

4

Items

1.930!/

193li'

1/

193'

i^

1933

2/

193^

Number of farms ---------

Average size of farms, acres- - -

Average rate earne". , to pay for

management, risk and capital - - Average lahor and management wage

Gross income per acre _-_--_ Operating cost per acre _ - - - _

3S 2U3

0-1 723

Average value of land per acre- - Total investment per acre - - _ _

Investment per farm in:

Total livestock- ------

Cattle

Hogs ------------

Poultry- --_-----__

Gross income per farm ------

Income per fan.i from:

Crops- -----------

Miscellaneous income - - - - Total livestock- ------

Cattle

Dairy sales- --------

Hogs --_-__-__--_ Poultry- ----------

Average yield of corn in hu.- - - Average yield of oats in hu.- - -

.2^

12.27 11. S3

20 s

27U 560 526 179

2 9s6

S9g

53 035 301 f"^2b

sUq 331

33 32

1+1

ZU2

-1.2f. $-2 172

7-93 10.19

13U igU

2 U22 97U

160 1 915

56 s 36 311 12 590 43U 230

Ul 39

37 23U

$-2 lUU

5-67 g.59

126 169

1 822 716 221 138

1 327

2Sl|

25

015 13 s 362 2S6 180

U9

^3

3H

231

3.0/0

$-208

13.21 S.U9

117 158

1 7U0 810 188

3 0U8

1 822

32

1 I9U 112 36s

U7^-^

189

29

18

30

?3U

2.9^ $-133

13.03 9.01

99 138

1 39U

631 16s

9U 3 0^7

L U65 1

L 501 30s IIO6 5O8

18 1\

1/ Records from Iroquois and Kankakee Counties included for 193^ and 1931'

2_/ Records from Iroquois, Kankakee, and Vermilion Cotmtics included for 1932 and 1933*

Al^TOAT. FAHI.I BUSIISSS REPOET ON THIRTY-SIX FIRMS IN CHRISTIAN COIMTY, ILLINOIS, I93U

P. S. Johnston, E. L. Sauer, and J. E. Wills*

Tlie farm earnings of 36 account-keeping farmers in Christian County shovmd an increase in 193^ over those of 1933- This is the second consecutive year of improvement in the "business of these farms. The three ;/ears ni-evious to 1933 showed very low returns.

These 36 accounts show for 153^ ^'^ average net income of $2,7^8 per farm, as compared with an average of $1,U'46 in 1933» sind an average of $162 in 1932. The average cash income in 193^ was $U,8U0 per farr:;, the cash "business expenditu-res $2,076 per farm, leaving a cash balance of $2,764 to meet interest payments and family living expenses. (Tliose who keep home account hooks use the latter figure to represent the cash conti-ihution of the farm to the "realized family income".) Besides the cash income, there was an inventory increase of .$6^8 per farm due to the rise in the prices of farm products. This increase, added to the cash halanco, resulted in an average excess of receipts over expenses of $3>452 per farm.

These data mxist not be considered rer^re Tentative of a-verage faim conditions, for they were secured from farms which are larger than average, and which were managed "by farmers who are more efficient than the average of all farmers in the county.

For the state as a whole, farm earnings were "better in 193^ than in 1533 i^ sr)ite of the fact that corn and oat yields were very low due to the drouth and chinch "bug damage. In the western and sotithwe stern parts of the state the drouth caused an almost total failure of hoth corn and oats. This accounts for farm earnings heing lower there than in other parts of the state.

The corn crop was oest in the southeastern part of the state, and was fair in the northwestern section. Wheat yields were particulp.rly good in the south and central portions of the state. Soy'bean yields were very good throughout the state, and there v/as a larger than normal acreage in Illinois in 1934* This state produced over half of the nation's 193^ crop of soybeans.

Chinch bug dama.ge extended over most of the state last year but T/as much more severe in some sections than in others, and was much worse on some farms than on other far.ns in the sa.me community. Conditions affecting crop yields were very spotted. This accounts in part for the v/ide variation in farm earnings from one section of the state to another, and. the vifider variations than us"i:ial from one farm to another.

* T. H. Broc'JrC, farm advisor in Christian County, cooperated in supei'vising and collecting the records on which this report is based.

-2-

Industries other than agriculture again showed improved earnings over the previous year. A group of £^-40 industrial corporations, reported hy a nationally Icnovm hanl:, shov/ed average earnings of 5-'^ percent on their i-;vested capital in 1S}^< 3S compared with 3-^ percent for the same corpora- tions in 1933- A similar grop-P had a loss of one-tenth of one percent in 1932, and average earnings of 3-3 percent in 1931-

In comparing the average earnings of corporations with the rate earned on investment on accounting fams, it is well to keep in mind that in corporation accounting, charges are made for management, v/hile in the farm accoimts no comparahle deduction has been made. On the other iiand tlie farm- er and his faiaily receive food, fuel, and other items of living from the farm for which the farm lias received no credit in the records used in this report. For the average central Illinois farm family, consisting of five persons, the value of the food and fuel furnished "by the farm was ahout $250 in 193'+> when estimated on the "basis of the wholesale price for fam products.

Vo'.riations in Farm Incomes

There was a much wider range in fai-m earnings on the accovoiting fanas in 193^ tha.n in 1533' This v/as true for the faiTns incl^oded in this report, and it was also true when the avera::e earnings of farms in one section of the state are compared vath the earnings of farms in other areas.

The extremely wide range in earnings v/as d'oe to a comhination of physical and economic factors. The average yields of wheat a,nd soybeans were much better, compared with the five-year average, tiia,n the average yields of corn and oats. This variation favored those sections which had larger acreages of the higher yielding crops in 193'-'-- T'lere was also a wide range in average corn yields from, one section of the state to another, as well as between individ'oal fa.rms in the same area. The nrice of grains was high in 193^> 3-s compared v.-ith prices of livestock and livestock products. ?arras where grain sales constitute a large part of the farm income thus had an advantage. The rapid increase in the prices of faira products, particularly^ /'rains, favored those fa.rms which had large stocks of salable -oroducts on liand at the beginning of the year. Many fa.rmers who inventoried the corn on hand at the beginning of 193^ ^^ ^ cents a bushel, later sold this corn for SO cents.

In this group of J,b accoxmting farms the most stij3Cossful third shows an average net income of o^'v^^j while the average net income of the least sioccessfvil thrid of the fari'ns was only $S9S. In 1933 t^^-c comparable net incomes for the two grotips was $2,856 and $217, respectively.

Invest.aents, Receipts, Expenses and Earnings on 3^ Clirlstir.n County Farms in 19"?^

Items

Your

f p. r^Ti

Average of "^6 fai"-.s

12 most

profitable

farms

12 least profitable

farms

CAPIT.IL IFVESJYENT S Land -----

Farm improvements- - - -

Livestoclr total- - - - -

Horses --------

Cattle - - - - _ -

Hogs _--_-_-_- Sheep- --------

Poult r;y'- -------

Machinery and equipment- Feed and grains- - - - -

Total capital investment

2k 8% 3 32S

1 io6

327 39U

291

31 63

1 6kk 1 911

_^S2

$1^

33 352 3 773

1 lUl 370 337 331

ko

63

2 32I1

3 253

$H3 f?U3

21 3QO 3 Vf

3OT 360

260

1

70

1 uuu 1 130

$2g 701

EEC5IFTS AlTD KST INCHE-ASES Livestock total- - - -

Iiorses ------------

Cattle ----- -_-

Hogs (including AAA payments )- Sheep- -_-_----_--- Poultry- ___-------_

Egg sales- --------

Dairy sales- ---------

Feed and grains (inclining .A-AA pa^nnents) -----------

Laoor off farm ---------

Miscellaneous receipts - - - - -

Total receipts &. net increases

■EXPENSES AKD ITET DECREASES

Eami improvements- - - -

Horses ---------

Lliscellaneous livestock decreases

1 694

237

1 013

Us

65

67

2I40

2 9^9

gg

k

^ ^ 735

Machinery and equipment- Feed and grains- - - - -

Livestock expense- - - -

Crop expense ------

Hired labor- ^- - - - - -

Taxes- ---------

Miscellaneous ex";Denses -

137

hik

16s

216

297

27

Total expenses & net decreases i$

* T OCX

,BECSI?T3 LESS EXPEHSES-

Total impaid lahor- -------

Operator's lahor ------

ppmily lahor --------

Net income from investment and , management ---__---__-

I RATE EAP23D Oil IH^/SSTI-ffilTT

jHeturn to capital and operator's ' lator and mrnagement ------

\% of capital invested- - - - - -

: LABOR Ala M.41^AGEMEHT ;7AGE

3 .U52

70U 52U ISO

2 ihz

•J^lo

3 272

1 6Ui|

Ei; 1 62?

1 go '3

Uo

2^0

1 I'nC

72

U9

66 178

^ 8U2

% 7 7g6

if^6

55^

23

lUs

290

3S2

3U

$-JLls^

$ 6 201 657

TO2

155 12.6U«i

1 op

2S1

132 782

"76

50

2U3

1 '5U5

'6U

7

$ 2 "99

13s

^42 7

23 161 ISl 256

23 220

S 1 679

7^1

529 2R2

6 oifc

2 192 $ 3 55^

ggs

3.134

1 1I27 1 U35

Sob

>1

The followin.'^ taole shows the nijmber of farms having certain net incoiaes per sicre. There was a marlced difference "between the niost successful a,nd the least succeBsful farms.

Average net in- I'T-urJoer of Avera£;e net in- ^iinber_of_

corae per acre farms come per acre farms

$2S and over .... 2 $11 5

23 2 9 5

^1 3 7 ^

19 0 5 ^

17 1 3 ^

1- 1 1 3

13 2

A fiu-ther study of the fann "businesses made "by comparing the in- vestments, receipts, and expenses of the group of farms wit'n the hi^Iiest net incomes, with those having the lowest net inco-.ies should throv; some light on the question of v/hy some fermers are more successfixL than others. This com- parison is shown in the tahle on page 3-

Tlie most successful farms averaged 290.2 acres each, the least successful 2lU.9 acres. This difference in size accoiints in part for the variation in the average invest;ncnt, receipts, and expenses in the two groups. Difference in receipts from the sales of grains accounts for much of the difference in income "between the tvra groups. Altnoii^h the expenses per farm were higher on the most profita"ble farms, the total expense per acre, including the charge for family la"bor, was less than it wa,s on the least profita"ble farms.

Changes in Inventories and Inventory "^alue s

The year 193^ was similar to 1933 i^ that the prices of farm products continued to advance, causing further increases in inventory values. Owing to the poor crop yields in 193^ there ^7ere fewer "bushels of grain on laand to inventory at the end of the year than a t the 'oeginning. The value of the smaller amount of ~rain, however, was greater than for the larger ai.-.ount on hand at the beginning of the year.

Bushels of Corn Inventoried

Jpn. 1, I'^'-A Dec. -,1. 19^H

Average of all farms 2 559 1 OlS

Average of 12 most successx'ul farms . . U 325 1 7^9

Average of 12 least successf-jl fanns. . 1 577 67O

Your farm

The difference in q\mntities of grain inventoried was one 01 the important factors influencing the difference in earnings. The most profit- a"ble farms liad a larger inventory of corn both at the beginning, and at the end of the year tlia.n did the least profitable farms.

-5-

26°

The average inventoiy increase for the accoimting farms in Christian Cotaity was $5ii2 in 193^» ^s compare;^, with $'oMS in 1933> s-nd an inventory loss of $2S3 a farm in 1932. Tiiere were increases of $256 in total livestock, $^33 i^ feed and grain, a.nd $^3 in machinery, while improvements showed a decrease of $U'!-. Such an increase in inventory as that for mach- inery results froiu the val-ae of new replacements during: the -"-ear being in excess of depreciation costs. This increase is of considerahle interest, for it is the first time tiiat such an increase in machinery invuntories has occurred since farm earnings tegan to decline so drastically with the gen- eral depression.

Inventory Changes for 133^

B.~ ginning Items inventory'

I-I-3U

Total livestoci: $1 IO6

peed and grains 1 JH

Machinery 1 bUU

Inprovenents (except residence) 3 32 g Total ^ S7 9S9

Closing

inventory

12-31-3^

$1 362

2 3l!-U 1 687

3 2gU

$s 677

Inventory c;iange s I93U

$23s U33

Inventory

change s ,

yoii-r farm

$

Some Adjustments on Christian County Farms Sinco 1929

farmers have "been forced to mai:e adjustments in their cash ex- penait'ores as the result of changes in their cash incomet;. From 1929 :;hrough 1933> farci operating cogts declined each year. However, the year 193^ "brO'J-glit a reversal of this trend- Total operating expenses v/ere 75 -ents an acre higher in 193^ than in 1933 > while cash operating expenses were $2,076 a farm in 193^j f'S compared with $1,91S in 1933* T'^^ largest increase in ex- penditures over the proviof^ year was for machinery and supplies for machin- ery. Indications point to an even grca,ter expansion of spending for these items in 1935> since f-mors have postponed machinery replaceno.its during the foui'-year period since

1 ope. ,

Cash Income and Zxpenses on Accounting Farms in Christian Co'Jjity

1929 and 193^

Items

farm

Average cash expense per fpmn 19 "^i^ iq29

Your f?.rm

Averp.go casn income ner fann

.15±

1929

Livestock . Feed and grains Machinery . Improvements Lf.hor . . . Miscellaneous Livestock e:-pe Crop e;:pense . Tpjces .... Total . . .

sc

E:-:ccss of cash sales 0 Increase in Inventory Income to lahor and ca

or c

$. 2l|l o99

93 216

27

2U

i6g

2q7

$2 076

x"nenGes.

975 743 15U 322 Uso 3^ 57 351 Ub3

SU ^SU

g

$1 679 $3 627 2 527 3 U53

2U2

267

13

ic?.l (^-.ecei'ots less expense:

$	$J^ sUo	$7 ^52
$	$2 7SU 6sg 5 ^L5?	§2 s6s 7^5 3 6l'4

-6-

The cmauli-tive effect of several years of lev. a-s^ricultural prices in tlie demand for man'ufactiired goods can readily "be ascertained "by a com- parison of cash frrra expenditures in 193^ with those in 1929' Although the average cash inco.-ne in 193'-^ ^'S-S 65 percent of that in 192Sf cash ex- penditures were only hj> percent as large. In 193^ livestock p-orohases r/ere 25 percent, and feed and grain purchases ^12 percent as large as in 1929. In 193^'-'- these lamis paid out 6I percent as much for rac'.chinery, and h'2 percent as much for crop expense as in 1929> while ta-tcs were reduced to only 6U percent of the I929 level.

Cor.iDarison of Zairas with High and Low ;^arnin,-;s

The most proiitahle farms in this study had net receipts per acre of $19-10, as cormared with $U.lg for the least profitchle farms. The reasons for this difference nay he ohtained from a stva;;- of the data on pages 3 and 2.

In Christian County the most profitaole farms o.veraged 75*3 acres larger, had 1U.6 acres more com, and £2.5 acres mora soybeans tiian the least profitable farms. They also carried larger inventories of hoth crops and livestock on v/hich to malce a profit when prices advanced. One reason for the larger inventoriec was the higher crop yields, the niost profitaole farr.i£; having an advantage of 10 bushels of corn, 1.2. bushels of wheat, and 7.3 bu3hels of soybeans per acre.

The most profitable farms had an investment in ^■reductive live- stocl; of $3-20 per acr-^, r.nd fed $1,^US of feed per farn, as compared with ^3'^1 invested per acre and $1,0^7 of feed fed per farm, on the lea.st pro- fitable fanns. The productive livestock, on the m.ost profitable farms, re- turned $131 for each $100 of feed fed, as compared with .•\ return of $123 for $100 of feed fed on the least :^rofi table farms.

The larger incoi..e on the most profita,ble farms was secured with a total operating cost of $7-73 P^r acre, as compare<^ with 09«3^'^6r acre on the least profitable farms. Man labor costs per crop acre were $3 '^5 0^ the m.ost profitable far:..s, as compared with $5 -05 on the least profitable farms, while power and machinery costs per crop acre amooTited to $2.77 on the most -nrofitable fair's, and $3 '76 on the least profitable farms.

271

Influence of MA Proig:rams on Crop'oin.q Systeijs and Farm Incomes

The farm-occount records in Illinois wei-e influenced toth directly and indirectly "bj. the corn-hog a.nd wheat adjustment progrruus. A larger per- centage of a,ccountin3 famis were under one or both contracts in 153^* The acreages of corn and wheat on these faniis were therefore leiis tlie^n norraal. This should have resulted in lower operatin;'^ costs. Gorn-hog benefit pay- ments for the entire 1"3^ program will total about kO million dollars for the state, while wheat benefit pajnjents will be about 2.U laillion dollars.

The benefit pa^Tnents for acco'iinting f arras are indicated in the following table, ymich shows the avera.ge payment for those farms receiving payments, and includes only those payments received by tne cooperator before the 193^'- hooks were closed. In some causes only the first corn-hog check is included, while in other cases the second check had 'oecn received. The second pa^'-ments not received and the third pejnnonts will be entered in the 1935 book.

^\AA Benefit Payments pLOcoived in 193'!-

Corn '.Tneat Hogs

ITunber Amount IJmTibor Amotuit l-,\vibcr Anount Average

of "oer of per of per of all ,

farms farm farms fa.rra far..is farm payments—^

1/3 most -profitable farns 11 $lU2 3 $127 H vl75 $322

1/3 least profitable f ;; rins 11 96 3 107 10 122 2l6

All accounting farms yi lOk 9 125 33 1'+*^- 26

3	$127
3	107
9	125

11	$175
10	122
33	lUU

Dd

1/ Total benefit payr.icnts rcportec' "oy accounting farms imder contra.ct for 193^ dividiod by total number of accounting farms.

On many fa.rms tne cash received from benefit pa^/rnentn will more than pay the year's tares. Ag an average of all accoimting fa,rms, the p.ay- ments actually received were SL^fficicnt to pay 8S percent of the 193^ t:?jces.

It is interesting to note the use made of the contracted acres on the accormting farms. The avera.ge farm ha,d 20 contracted, acres \7hich were used as follo\7s: I.7 id.lc; U.3 red clover; 2.7 sweet clover; 7-7 soy- beans; .h a.lfalfa; and 3*2 acres v/ere in other crops. These dr.ta indicate that most fanners made good use of their contracted a.cres from the standpoint of soil improvement, as most of them were in legumes. Tncn the government restrictions on the use of crops grovm on contracted acres v/ero rcmovecL, they were on many farms the most profitable crops as the 2^ furnished laay and pasture where badly needed in drouth .areas. The legixies hnd the further ad- vantage, of being iiamuiie to ;ittack from chinch bugs.

Farm earnings v/erc influenced indirectly by the AAA programs in that the reduction in prod^^3tion increased the price of the coniraodities involved. The drouth v/as a more important factor in reducing production than the adjustment programs, yot if it had not been for the cora-sealmg nrogram there would have been but little corn in the hand^s of la.rmers a.t the time the ma.jor price .".dvance became effective.

272

Pactorc Kelpinfi to Analyze the jJ'p.nn Business on 36 ChristirJi County Faniis in 193^

Items

oize oi larns — acres --------

Psri-ent of land area tillable- - - -

Percent of tillalile land in ha;/ and pasture --------------

Gross receipts per acre- ------

Total expenses 'oer acre- ------

llet i-eceipts per acre- -------

Va.l'je of land peracre-------

Total investiiient per acre- - - - - -

Acres in Corn- -----------

Oats- ----___----

T?heat -----------

Soybeans- ---------

Hay

Tillable pasture- - - - - -

Crop yields — Corn, bu. per acre- - - Cats, bu. per acre- - - ITheat, bu. ner acre - - So;/beans, bu. per acre-

Your

fam

Value of feed fed to productive L.S. P.etiu-ns per $100 of feed fed to productive livestock- -------

Het-oxns per $100 invested in:

Cattle

Poultry --------

Pigs weaned per litter -------

Income per litter farrowed - - - - -

Dairy sales per dairy cow- - - - - -

Investuent in productive L.S. per A. Receipts from productive L.S. Tier A-

Average of

36 farms

237.0 93.2

23.7

19.93

S.39

11.59

105 139

12 Host

profitable

farms

59.0

15.0 25.9 5U.1 20.7 31.7

21.5 11.3 26.2 26.2

1 3^5 126

106 ISU

c.l

90

3-73 7.05

290.2 3k.b

17.3

26. S3

7-73 19.10

115 151

67-7 17.^

22.0 117.0

22.5 25.0

27.5 11.1 30.il 2S.3

131

100 169 6.1

S7

5k 3.20 6.0s

12 least prof i tab] fam-.s

21U.Q

91. S

27. U

13-

9. k.

100 I3ii

h3 31 1?

53.1 IS. 3

32.5 3U.5

IB.S

35-3

17.5 13.0 23.2 21

1 0U7 123

29

162

6.^

93

37

3.67^ 7

5.9

Man labor cost per crop acre - - - Machinery cost per crop acre - - - Fewer and mach. cost per crop A. -

Farms with tractor --------

Value of feed fed to horses- - - -

Man labor cost per $100 gross income- -------------

Expenses per $100 gross income - - Farm improvements cost per acre- -

Sccess of sales over cash expenses Increase in inventory- ------

P^te earned on investment- - - - -

C-ross receipts -oor farm- - - - - -

U.5g 2.19 2.99

77^

.U5 .21 ■77

175

IS U2

100^ 179

11

29

.5U

2 76U

6ss s.36f. ^ 735

u 99s

1 203

12.bU«b

7 7i?o

5.65 2.63 3.7S

75f^ 172

32

69

.Sk

1 iii3 536

3-i3f»;

2 s99

_o_

273

Chart for Sfidying the 3fficiency of Various Parts of Your Business,

Christian Coimty 193^

The nnrnhers ahove the lines across the middle of the page are the averages for the 36 farms included in this report for the factors named at the top of the -psge. By cir;!.v/ing a line across each coltimn at the num'ber measuring t]ie efficiency of your fann in that factor, yo\i can corap;.ire j^our efficiency with that of other fanners in yoi;,r locality.

^{Eate earned ■~! on investment |

Bushels per acre

Hogs: Income per litter

Dairy sales per dairy cow ii

^1 CD P^ a) s -n 0 a 0 -p C to •H (Ul U -H 1 '^8 0 M 3UI1

0) ^H ^'^ (1) (D S OJ OttH 0 P! ^ •rH 0 • 0 226

r Cost per crop acre

$100

•H Q) !-i en 0 0 r-1 ?-, (11 0 > s n l-H -H

CD CO U fl > p. 0 K CO r-\ CO ej cti CO 0

G-ross receipts

Acres in farrn

1 1 1 0 17--

-p ci

CO Cj <D ,0 >., 0

0

rl ^H g ^ Ah e

U c/) 0 -P ' P^ Pi ■H 4^ (D CO 0 0 Q) 0 U Jh CO 0 CO CTi f-l

CD U 0 U

J4 Ph

3b

36

lUo

69

„^

_«

36SS

776U

U3

IU7OO

Us^

1 16. IJ-

3S

3U

3U

! 130

i 6U

31U

206

303S

67bU

I40

12700

'o7

ik.h '

^4

32

32

i 120

.0

2Sl+

is6

.0?

~

0

2USS

376U

39

10700

3S7

j 1 ? )i

30

30

30

110

f^^:

2-->k

166

1 i 1.5s 1.00

r 0

ISO.:.

U76U

30

S7OO

^37

-0.4

26

2S

2g

100

1|9

22U

1U6

3.0? 2.00

12

12SS

~.76U

6700

2S7

8.3G

21. S

26.2

t- ■ - ■ '■ 26.2

90

Hk

13)4

126

1 U.9o[2^Q

13

60S

276U

19. 3 s

473^^

2-7

b.ll

IS

2I+

2U

so

7,0

I6U

106

1 i 6.0s lU. 00

2U

00

176I;

19

2J00

,.ic7 137

li.ll

lU

22

22

70

-^k

r^U

s6

1 1 1 7.SS 5-00

30

-p;i2

76U

10

700

2,1+

1 10

1 20

1 1 20

60

2^

loU

66

1 9.0s 6.00

1 ^6

-1112

-236

')

'■— {

.k

6

IS

IS

so

9li

7>^-

46

1 10. ^s

7.00

U2

-1712

-12^6

i ^7

i-j — - — 1' j ! ! 2

ii6

! i 1 |16

ko

19

UU

26

12.0s

;S.00

US

-2312

j -2236

rr

J zjn.

2jh

-10-

Inflnonce of Price Cr^njZ^es on Faz-m 5a.riiings

Farm prices in 193^ advanced more rapidly than did the prices of coomodities v;hich fanners ooiitijht. Farriers of the United States as a group could ercchange their fami products in 193"^ ^o^ 7'-l- percent as many goods as for the period 1909-191^> wMle in 1933 they received only oh percent, and 1932 only 61 percent as much in exchctnge for what they liad to sell as in the prewar period. In the :nonth of Febrnary, 1935 » this index of purchasing power had increased to Sy percent of prev/ar, the index of farni prices having risen to 111 as compared v/ith £.n index of 127 for commodities which famers "bijy. riien the line representing fami prices drops "below the line represent- ing prices paid "by far.nei's, fcarm earnings are very low, but v.hen these lines come close together farm earnings increase. (See follov/ing :;5raph. )

Index of Prices

Ha,te Fnrned

200

15c 125

100 75

50

2f^

= Fr-r:n pi-icos in U. 3. Aug. 1905-July I914 = ICC

_ Prices paid by farmers. A''Jg. 1909-July 191'i- = IOC

Q

Rrte earned on investment, accounting far;as, central Illinois

104

pS

J L.

_1 L.

-?.fc

1917 '13 'I9 '20 '21 '22 123 '2li- '25 '26 '27 '2? '^9 '30 '3I '32 '33 '3U

275

-11-

Sinco the pric^ of sore fara product'^ advancRd laiich. raore rp.pidly during 193^ tLian other products, it is evident that some farms would benefit more than otherc, depending upon the kind and quantity of prodx^ctc. sold, u-rain prices advanced much .ao re rapidly than livestock nrices; which re suit- ed in a very had price ratio for faniers who "buy lar:[;e r^uantities of feed. The average Illinoic fsrni price of corn vas Ul cents a huphel in JEntiary, 133-I-; it advanced steadily luitil the end of the year when it wss SS cents a 'bushel. Other grains nade ngrked advance although not so great an adva,nce as corn. The price of hogs fluctua.ted fron a low of ^^.?-0 a hundred in May to a high of $S^.30 in Septenoer. The Io^t point in the fall c^me in hoverriher when the average price v/as $5-10. The price has advanced quite rapidly sines Foverrber, the avei'a,ge price teing $7«5'- i'o^ Pehrua^ry, 1535' Beef cattle were v/ortli ^5^.10 a hundred in January, 153^ 3-^<i advanced each month \mtil 3eT)tem"ber, when the price wa.s $5.90. They dropped to $"i.2C in Decemler hvit increased again to $7*'^ for Fehraary, 1935 •

The year 193^ set a record for the reduction in the mrahers of livestock. The percentage decr^^a-srs hy apocies ^'=^re as fcllov/s: horses, 1.1 percent; kuIps, ? ,G percent; all ca.ttle , 11.2 percent; she«^p, U.7 percent; hogr, 35*3 percent. 'Y'nen all species are combined on the hasis of their capacity to consume feed, the reduction was I3 percent. This reduction will greatly reduce the demand for feeds prodrjced in 1935 •

Tho relative c;hange in prices of imprjrtant cora-:iodities may he noted in the follovring graph, which shows the average Illinois farm prices by months as a percentage of the average prices for the period 19-'1-19-^"'

Percent 120

Price Indices, 193^

(1921-1929 = 100)

Jon. Feb. Ua.r. Apr. Llay June Juiy Aug. otuu. ul ^ . x...v. Dec.

^11 co™odities index represents the wholesale price of a large nmber of corninodities for the ttiited States, as coiaputed by ^^ui-eau of Labor Statistics. Grain a^nd livcstoc^z indices z'eprescnt average monthly fair: prices in Illinois.

27^

-Ld-

Variation in Earnin.^s Over Five-Year Period

A comparison of production, income, and expenditure on the account- ing farms in Christian Coimty for the last five years is very interesting ■becavise of the violent chpjiges in price level. 193^ ^^-^ 'the second year of lev? crop yields, yet total receipts per farm were higher tlian in any other year in the last five. Operating costs per acre continued to "be relatively low. Thus profits were the "best the county had experienced since 132S.

Earnings in 1935s ^^ usiiial, v/ill depend upon individual efficiency, weather, and prices. A normal year will mean larger yields of grains and pro "bah ly lower prices.

Comparison of Earnings and Investments on Accounting Farms in Christian County for I93O-I93U

Items

Nira'Der of farms

Average size of farms, acres.

Average rate earned, to pay for

management, risk and capital . . Average lahor and management wage

Gross income per acre . Operating cost per acre

Average valine of land per acre. Total investment per acre . . .

Investment per farm in: Total livestock. . Cattle

Hogs

Poultry

Gross income per farm . .

Income per farm from:

Crops

Miscellaneous income Total livestock. . .

Ct.ttle

Dairy sales

Hogs

Poultry.

Average yield of com in bu. • . . Average yield of wheat in hu. . . Average yield of soybeans in hu. .

1930^

5U

2.^1

2.1^ $-530

15. 2U 11.65

133

2 kZo 1 IU3

623 123

3 SUU

1 615

2 11+6 162

3^3

1 U76 1U7

32

22 21

1931

260

y Records from I'oultrie Co'imty incl-oded for

$-2 SO7

Q

V '

127 163

1 932

7S1

565

35

1 291

9U

197

89

2U3

761 93

2g

30 13

-3.0^

193^

3C 272

S-i 060

.5^'

97 90

3.63 S.03

95 130

1 501 627

35s 35

2 3U6

93^

25

1 327

205

311

715

23

59 27 29

1933

30 250

$313 13. U3

101 132

1 3S9

555

355

79

3 355

1 352

1 ^1 223 205

39s 93

30

23 21

I93H

36 237

3. 36^ $1 62s

19.9s

3. 39

105 139

1 106 39U 291 ■63

^ 735

2 9U9

U

1 694

237

2U0 1 013 ~^/

22 11

26

1930.

277

Al>niUAL FAEl.i BUSIlffiSS EEPORT ON TKIRTY-01I3 FAPJ-^S ni SHELBY AI© MOlJl^^RIE COUUTIES, ILLINOIS, I93I1

P. E. Joknston, A. L. Leona.rd, and E. L. Sauer*

The farm earnings of ]>! account-keeping farmers in Shelby and Moultrie Counties shov/ed an increase in 193^ over those of I933. This is the second consecutive year of improvement in the business of these farms. The three years previous to 1933 shov/ed very low reti^jms.

These J,! accounts show for 193'+ s-^ average net income of $3,007 per farm, as compared with an average of $1,3^3 in 1933. ^^d. an average net loss of $UU5 in 1932. The average cash income in 193^ was $U,39S per farm, the cash business expenditures $2,332 per farm, lea.ving a cash balance of $2,066 to meet interest pa^nnents and family living expenses, (Those who keep home account books use the latter figure to represent the cash contribution of the farm to the "realized family income".) Besides the cash income, there was an inventory increase of $1, 6s6 per farm due to the rise in the prices of farm products. TMs increase, added to the cash balance, resulted in a.n average excess of receipts over expenses of $3»752 per farm. The inventory increase was a much larger part of the total farm income in 153^+ than in 1933-

These data must not be considered representative of average farm conditions, for they vrere secured from farms which are larger than average and wiiich were managed, "oy farmers who are more efficient tlian the average of all farmers in the county.

For the state as a whole, farm earnings were better in 193^+ than in 1933 in spite of the fact tioat corn and oat yields were very low, due to the drouth and to chinch bug damage. In the western and southwestern parts of the state the drouth caused an almost total failure of both corn and oats. This accounts for farm earnings being lower there than in other parts of the state.

The corn crop vras best in the southeastern part of the state, and was fair in the northv;estern section. ITheat yields v;ere narticularly good in the south and central portions of the state. Soybean yields vrere very good throughout the state, and there was a larger than normal acreage in Illinois in 193U. This state produced over half of the nation's I93U crop of soybeans.

Chinch bug damage extended over most of the state last year, but was much more severe in some sections than in others, and was much worse on some fairas than on other farm.s in the same community. Conditions affecting- crop yields were very spotted. This accounts in part for the wide variation in farm earnings from one section of the state to another, and tlie v/ider variations than usual from one farm to another.

*Y/. S. Batson and J. L. Stormont, farm advisers in Shelby and Moultrie Counties, cooperated in supervising and collecting the records on which tnis report is based.

27S

-2-

Industries other than agriculture again showed improved earnings over the previous year. A group of SkO industrial coi-porations reported hy a nationally knovm hanlc showed average earnings of ^.0 percent on their in- vested capital in 193^) ^^ compared with Ji.h percent for the same corporations in 1933- -^ similar gro\ip had a loss of one-tenth of one percent in 1932, J^nd average earnings of ^.]) percent in 1931'

In comparing the average earnings of corpora-tions with the rate earned on investment on accounting farms, it is well to kocr) in mind that in corporation accounting, charges are made for management, while in the farm accounts no comparahle dedxiction has been made. On the other hand the farmer and his far.iil;'' receive food, fuel, and other items of living from the farm for u'hich the farm has received no credit in the records used in this report. For the average central Illinois fanm family, consisting of five persons, the value of the food and fuel furnished hy the farm^_was ahout $250 in 193^i v/hen estimated on the hasis of the wholesa,le price for farm products.

Variations in Pana Incomes

Tliere was a much wider range in farm earnings on the a.ccounting farms in IS'^h than in 1933' This was true for the farms included in this report, and was also truB when the average ea,rnings of farms in one section of the state are compared with the earnings of farms in other areas.

The extremely wide range in earnings was due to a comhination of physical and economic factors. The average yields of wheat and soybeans were much better, compared with the five-year average, than the avera.ge yields of corn and oats. This variation favored those sections which liad larger acreages of the higher yielding crops in 193'^- There was also a wide range in average com yields from one section of the state to another, as vrell as betv/een individual fa,rms in the same area. The price of grains was high in 193^9 £i-s compared v^ith prices of livestock and livestock products. Farms where grain sales constitute a large part of the farm income thus had an advantage. The rapid increase in the prices of farm products, particularly grains, favored those farms v/hich had large stocks of salable products on liand at the beginning of the year. Many farmers who inventoried the corn on hand at the beginning of 193^ at kO cents a bu.shel, later sold this com for 80 cents.

In this group of 3I accounting farms the most successful third shows an average not income of $^,^52, while the average net income of the least successful third of the farms was only $2,1S7. In I933 the comparable net incomes for the two groups was $2,390, and $Us6, respectively.

The average accounting farm in Shelby and Moultrie Counties had 6U.5 acres of com, 42.3 acres of soybeans and 20.0 acres of v;heat . They had an average yield per acre of 30-^ bushels of corn, 27. 1 btishels of soy- beans and 22.1 bushels of wheat. A combination of the above crop production and high grain prices was one of the major factors in bringing about the exceptionally high returns on these farms. Much of the variation in earn- ings between the most profitable and the least profitable farms was duo to the differences in acreage and yields of crops, particularly soybeans and v/heat .

■m

279

Investments, Receipts, i:,xpenses and Earnings on 3I Shelby and Moultrie Coii-nty Fanns in 193^

Items

CAPITAL ih\^sc:ivIei:ts

Land ----------

Farm improvements- - - -

Livestock total- - - - -

Horses --------

Cattle

Hogs

Sheep- --------

Po"altry- -------

Macliinery and equipment- Feed and grains- - - - -

Total capital investment

Your farm

Average of ■^1 far..is

23 753 3 293

375

S17

21s

62

S2

265 922

$31 7S7

IC most

prof i table

farms

22 730 3 557

373

sso

211| g2

qg

1 107

2 373

$31 '420

10 least profitable farms

26 U69 3 '^67 1 9UI1

^7S

1 0U9

275

3^

log

1 U69

1 875

ft'^f^ 22U

PJCSIPTS AID ITET I1ICH3ASSJ

Livestock total-

Horses ------------

Cattle

Hogs (including AJIA ■oayments)- Sheep- -----_-_---_

Poultry- ---------

Egg sales- ----------

Dairy sales- ---------

Feed and grains (including AJ-_A pajTnents) -----------

Labor off farm ---------

I.Ii seel lane ous receipts - - - - -

Total receix)ts & net increases

.^XPEl'TSFS Aim lET D3CI15ASES

Farm improvements- - - -

Horses ---------

liiscGllaneous livestock decreases

Machinery and equipment- Feed and grains- - - - -

Livestock expense- - - -

Crop expense ------

Hired labor- ------

Taxes- ---------

Miscellaneous ex'oenses -

Total ex'oenses & net decreases

iffiOEIPTS LESS EXFE1ISE3-

$_

1 Sgg

29 301

gcU 76 72

127

^3

3 OSb

95 5 069

217

335

19U 2US

26U 30

$ 1 317

2 QgS

Uo

U53

g7i

U2 106 203 373

h 32h

so

§ 6 1^92

2cc

325

220

262

265

23

$ 1 3Q5

$_

-:^al unpaid labor- -------

Operator's labor ------

Family labor --------

I-

■let income from investment and

I management- ----------

ilATE EARIED OH IHYESTIffiiTT

Return to capital and operator's

I labor and management- - _ - - -

'■i<f

}),» of capital invested- - - - - -

'^ABOH AITl IvIAKAGSi.IElNiT WAGE

3 752

5^^2

213

3 007

q c:

3 539

■oh3 322 123

1 90U

ig

2g5

7U6

66

65

127

597

2 371

125

$j£J400_

102

366

26 171 2g7

290

30

s 1 362

k 452

lU.2<-

1 5S9 $1050

U 974 1 571

g5i 533 31s

2 ig7

2 720

1 761

959

Tlie follov/in~ ta"ble sliows the nionber of farms having certain net inco:aes per acre. Tiiere v/as a marked difference "between the most successful and the least successful farms.

Average net in- r"un"ber of Averai^e net in- I'Turnher of

cone per acre larms come per acre lanas

$23 1 $11 h

21 2 9 7

IS 1 7 S

17 2 ^ 2

15 1 3 0

13 2 1 1

A further study of the fann "businesses made hy co/.marin^; the in- vestments, receipts, and e::penses of the group of fp.nns liaving the highest net incomes, with those having the lowest, should throw so'.ne light on the question of wl:^- some farmers are more successful than others. This com- parison is shown in the ta'ble on page 3-

Tlie most successful farms average 3^*7 acres each, the least successful 275 acres. This difference in size accounts in part for the variation in the average receipts, and expenses in the two grovpis. Differ- once in receipts and not increases from grains accounts for most of the difference in income "between the two groups. Althougii the expenses per farm were liiglaer on the most profitable farms, the total expense per acre, including the charge for family la"bor, was less than it was on the least profita"ble larms.

Glianges in Inventories and Inventor^/- Values

Tlie year 193^^ '''''"-s similar to 1933 i'l that the prices of fam products continued to advance, causing further increases in inventory values. Owing to the poor crop yields in 193^> there were fev;er "bushels of grain on ?aand to inventory at the end of the year than at the "beginning. Tlie value of the sirialler amount of grain, however, was greater than for tl^-e larger amount on hand at the "beginning of the year.

Bushels of Corn Inventoried

Jan. 1, 193^ Dec. 31. 193^"

Average of all farms 2 ^71 2 I56

Average of 10 most successful farms ... 2 S6U 3 2lH

Average of 10 least successful farms. . . 2 US9 1 76^

Your farm

The most profita"ble farms had a much larger inventory of corn both at the "beginning and end of the year than the least profita"ble farms. Tliis is a major factor in accounting for their higher returns from feed and grains.

281

The average in">/entory increase for the accox-uitin;-^ fan.is in Shelby and Moultrie Counties was $l,6o6 in 193^i as compared with $U6?. in 1933, ^^^ an inventory loss of $1,13^4 a farm in 1932. There were increases of $363 in total livestock, $1,2US in feed and Lorain, and $176 in ma.chinerj^, while i:.i- proveraents showed a decrease of $hl. Sixch an increase in inventory as that for machinery results from the valijfi of new replacements diiring the year "being in excess of depreciation costs. This increase is of considera-ble in- tei-est, for it is the first tine tl-^t such an increase in ./.achinery inven- tories has occurred since farm earnings hegan to decline so drastically with the general depression.

Inventory Cha.nges for 193^

Beginning Closing liiventory Inventory

Items . inventory inventory changes cjianges,

I-I-3I1 I2-3I-3U IC13U

your larra

Total livestock $1 554 $1 S57 $ 303

Feed and grains 1 922 3 170 1 2i4S

Machinery 1 265 1 kkl IfG

Improvements (except residence). 3 293 3 2S2 -Ul

Total $8 03^ $9 720 gl bSc

Some Ad.justinents on Shelhy and Ltoultrie County Farms Since 1929

Farmers have "been forced to m<3l-ce adjustments in their cash ex- penditures as the result of chejiges in their cash inco;.ies. From 1929 throii^h 1933 farm operating costs declined each year, tut the year 193^+ hrotight a reversal of this trend. Total operating expenses \7ere 25 cents an acre higher in 193^ than in 1933 > while cash operating expenses were $2,332 a farm in 193^> as com^^ared with $1,908 in 1933- ^^^ largest increase in expendittires over the previous year wa.s for machinery J.nd supplies for machinery. Indications point to aji even greater expa,nsion of spending for these items in 193? » since farmers have postponed machinery replacements d^oring the four-year period since 1929-

Cash Income and E>:penses on Accovinting Farms in Shelby and Mo-Jltrie Counties for 1929 and 193'i-

Yo\ir Average cash Your Average cash

Items farm expense per farm farm income per fairn

193U ~i3ih i^;2q 1Q3U 193^4- 1929"

Livestock $ $ U15 $ 75;? $ $2 000 $3 656

Feed and grains 301 76I 2 I39 1 967

Machinery 075 753 16U 165

Improvements . I76 259

Labor 2h8 363 95 73

Miscellaneous 30 2S lU

Livestock expense 29 ^7

Crop expense 19'-i- 275

Taxes .' zSk 3^7 ^•^-

Total $ $2 332 $3 5S5 $ $'4 39" $5 S75

Excess of cash sales over expenses $ $2 066 $2 29O

Increase in inventory ......... .1 d?6 202

Income to labor and capital (Receipts less expenses), 3 752 2 5"2

2S2

-6-

The curaiilative effect of several years of low agricultioral prices on the demand for raanufact-ored goods can readily he ascertained hy a com- parison of cash farm e:rpenditures in 193^ with those in I929. Although the average cash income in 193^ was 75 percent of that in 1929> cp.sh ex- penditures were only 65 percent as large. In 193^ livestock purchases were 55 percent, and feed and grain p'orchases kO percent as large as in 1929- In 193^ these farms paid out 90 percent as much for machinery, and 11 per- cent as much for crop expense as in 1929. while taxes were redviced to fo percent of the I929 level.

Comparison of Farms VJith High and Low Earnings

The most profitahle farms in this study had net receipts per acre of $lU.Us, as compared with $7*95 for the least profitahle group. The reasons for this difference may be obtained from a study of the data on pages 3 and S.

The most profitahle farms averaged 32 acres larger and had 10 more crop acres than the least profitahle farms. They had a significantly larger acreage of v/heat and soybeans, tlie high yielding crops in 193^- They carried larger inventories of feed and grain on which to raakre a profit when prices advanced. One reason for the larger inventories was the higher crop yields, there being an advantage of lU.b bushels of corn, 15-9 bushels of wheat and 3.2 bushels of soybeans in favor of the high-profit group.

Although the most profitable farms had an investment in productive livestock of $^.U0 per acre, as compared to $5.96 on the least profitable farms, they fed $1,726 worth of feed per farm in contra,st to $1,278 of feed per farm on the least profitable farms. The livestock on the least profit- able farms returned $lUs for each $100 feed fed, as compared to retuiis of $119 per $100 feed fed on the most profitable farms. One reason for the higher returns per $100 of feed fed on the least profitable farms was that the major part of their cattle returns was from dairy sales, while the major part of the cattle income on the most profitable farms was from beef sales. Dairy cattle can malce ver/ economical use of pasture, the value of which is not included in the above feed costs. The most profitable farms were more efficient with their hog enterprise, having an income of $119 Per litter farrowed as contrasted to $S9 on the least profitable farms.

The most profitable farms secured their larger income vdth a total operating cost per acre of $d.6U, as compared with $S.05 on the least profitable farms. Man labor costs were $1.2^+ per crop acre lower, while power and machinery costs were 36 cents per crop acre lower for the most ■orofitable faims.

2S3

Infltience of AAA PrOiTraras on Cropping Systems and Farm Incomes

The farm-accopjit records in Illinois v/ere infln.enced totli directly a:ad indirectly by tlie corn-hog and wheat adjustment programs. A. larger percentage of acco^uiting xrniTiS were "under one or toth contracts in 193^* The acreages of corn and wheat on these fanns were therefore less than normal. Tills should have resulted in lower opei'ating costs. Gorn-hofT henefit pay- ments for the entire 193^ program vdll total ahout UO million dollars for the state, while v/heat "benefit payments will be about 2.k million dollars.

The benefit pa^/ments for accounting farms were indicated in the following table, which shows the average i^aynent for those farms receiving paj-Tnents, and includes only those payments received by the cooperator before the 193'+ books were closed. In some cases only the first corn-hog check is included, while in other cases the second check had been received. The second payments not received and the third payments will be entered in the 1935 book.

AAA jenefit Pa.ments P.eceived in 193^^

A.ve rage

Com TiTIieat Hogs

Ntmiber Amount llnmber Amount Famber Amount ^^ g_]_^'

of per of per of per payments^/

farms farm farms farm farms farm

1/3 most profitable farras 1/3 least profitable farms All accounting farms

10	$152	5	$70	10	$132	$318
10	128	3	9S	10	lUo	237
^1	139	11	95	30	lUo	308

ly' Total benefit payments reported by accounting farnis under contract for 193^ divided by total number of accounting farms.

On many fa,rms the cash received from, benefit payments will more than pay the year's taxes. As an average of all accounting farms, the pay- ments actually received {$J)08) were more than sufficient to pay all of the I93U taxes, ($26!4).

It is interesting to note the use made of the contra.cted acres on the accounting farms. The average farm had 2^.6 contracted seres which were used as follows: S.7 idle; "J .6 red clover; 2.5 sweet clover; 2.S soybeans; .9 alfalfa; and 2.1 acres were in other crops. These data in- dicate that most farmers made good use of their contracted acres from the standpoint of soil improvement, as a large part of them were in legumes, 'fflien the government restrictions on the use of crops grown on contracted acres vrere removed, they v/ere on many farms the most profitable crops as they furnished hay and pasture where badly needed in drouth area,s. The legumes had the further advantage of being imir.une to attack from chinch- bugs .

Farm earnings v/ere influenced indirectly by the AAA programs, in that the reduction in production increased the price of the commodities in- volved. The drouth v;as a more importa.nt factor in reducing production than the adjustment programs, yet if it had not been for the corn-sealing program there would have been but little corn in the hands of farmers at the time the major price advance became effective.

Factors Helping to Analyze the Farm Business Shelby and I'lOiiltrie Coiinty Farms in 193	on 31	t 1 i
Items	Your farra	Average of 31 faiTiis	10 most profitable farms	10 least ^i-ofitable farms
Size 01 farms — acres - - ----- -		271.3 89.0 33-6. IS, 6s 7. 60 11.0s 8S 117	307. I4 86.0 29.7- 21.12 b.6U 7U 102	275.0 92.9
Percent of land area tillable- - - Percent of tillable land in liay and pasttire --------- — --
Gross receipts per acre- - _ - - _ Total ejqjenses per acre- ----- Net receipts per acre- ------ Valiis of land per acre ----- - Total investment per acre- - - - -		16.00 1
	8. 05 1
	7.95 1
	96 1
	128 1
L f* Y'P C "1 in P n TYX —		6I4.5 20.7 20.0	69.5 IS. 6 26.7 53-5 23-7 5^.8 38. U 10.2 28.1 28.5	75.3
Oats- --_-		22.9 13.9 I46.O 27.0 55-9 23. s : 11.3 ■ 12,2 . 25.3 :
TVheat ____- _
		U2.3 27-7
Hay
Tillable nasutre- - - _ -	■	53. U 30. I4 10.9 22. i
Crop yields — Corn, bu. r>er acre- -
Oats, bu. per acre- -
Fneat, bu. per acre -
Soyoeans, ou.. per acre		27.1
Valus of feed fed to productive L.S.		1 U20 131 86 237 6.0 93 51 4.92 6.85	1 726 119 90 312 7.6 119 62 U.Uo 6.66	1 27s lUs 176 ^1 5.3 f 89 ■ ^7 5.96 6.86
Returns per J&IOO of feed fed to productive livestocic- ------ P.e turns ver $100 invested in; Cattle
Poultry - - ----- -
Pigs weaned per litter ------ Income per litter farrowed - - - - Dairy sales per dairy cow- - - - _
Investment in productive L.S. ler A.
Han labor cost per crop acre - - -		5.00 1.7s 2.60 183 19 111 .80 2 066 1 6s6 9-5f^ 5 069	I4.11 1.55 2.3s 90 ff, 21I4 13 31 .87 2 609 2 hoC l'-..2< 6 I492	5.35 1.83 2.7U 80^ 200 2I4 50 .70 1 119 1 119 6.2f. k Ur:0
Machinery cost per crop acre - - -
Power and mach. cost per crop A. -
Farms with tractor --------
Value of feed fed to horses-
Man labor cost per $100 ^ross incoTip — — _ _ _ _
Expenses per $100 gross income - - Farm improvements cost per acre- - Excess of sales over cash expenses
Increase in inventory- ------ Hate earned or. investment- - - - -
Gross receipts ner farm- -----
— . .

II Tiie 31 By far you	Cliart for Studying the Efficiency of Various Parts of Your Shelby and Moultrie Co-onties, 193 1|- nuinbers above the lines across the middle of the pa.'^e are the < farms included in this report for the factors named at the top drawing; a line across each colui.m at the number meas-aring the e m in that factor, you can cc^mpa,i-e ycJi' efficiency with that of r locality.	Easiness, averages for t Df the page . fficiency of y other fa.rmers	he our in
Hate earned on investment	Bushels per acre	1 1 s 0 0 ^^ l-H -P •• 1—1 ■oSJ U	C' m 0 0 TO f-l d •H !h 03 CD	J-1 r^ 0 CD 0 -p •H CD > +:> ■-! 0 0 i-H		Cost per crop acre	0 0 rH •«6- fn en (D 4J P- P-. •H += (D to 0 0 0 0 U U VI n m ^ 0 c3 M		Gross receipts	•H 01 CD !^ 1
0 0	to -p a 0	c 00	U CD ^'^ B CD 0 t,H 0 •H 0 • 0 00 0 • pH h^ -6.9-	u 0	■■'■ -1 ^ y 0 Co	•H >-- (D J-1 K 0 C^ -P M CD U >	w !^ S CD t> > f 0 K G rH tl 03 a OQ u	u	1 t
I2_._5l	55	21	37	12s	75	437	ISO	2. "30	— —	_ —	l:-200	Urog	3U	10100 1 52c
1 17.5	oO	19	35	121	70	3^7	170	3.00	.20	3	3700	4000	31	9100 U7C
1^.5	Us	17	33	iiU	65	357	160	3.50	.SO	■ 7 1 3200	3500	2S	8100	( U2C
13 0	ho	15	31	107	60	317	150	U.oo	i.Uo	1 11 2700	3000	25	7100	37G
11 0	1	13	29	100	55	277	lUo	Il.'^O	2.00	15	2200	2900	2?	6100	320
Q.f;	jp.U	10. q	27.1	93	51	237	131	5.00	2.60	19	i6s6	2066	IS. 68	9069	271
7.^	25	9	25	s6	U9	1-7	120	S.90	3.20	2-,	1200	I'-OO	16	i Umo 220
5.-.	20	7	23	79	iw	157	110	6.00	3. SO	27	700	in 00	13	3100	170
3o	15	■3	21	72	35	117	100	6.90	k.ko	1 1 31 200	900	10	21CO	120
l.-^	10	3	19	65	30	77	QO	7.00	s.oo	35 1 -300	Q	7	1100	7C
-.^	5	1	17	SS	___25__	37	1 20	7.5c	' 5.60	i i 1 ^9 '■ -SOO		^	c	20

285

2S6

Influence of Price C'r^n.^ies on Pam Ss.rainffs

Fam prices in 193'^ advanced ir.ore rapidly than did the prices of coKnoditics v/hich faiincrs ooTOt^ht. ynr.aers of the United States as a group coiild ercciiajige their fami products in 193^ ^o^ 7^ percent as many goods as for tlie neriod 1303-1914, wMle in 1333 they received only bh percent, and 1932 only 61 percent as much in exchange for v;hat they liad to sell as in the prev/ar period. In the month of February, 1335» this index of purchasing power had increased to S7 percent of prewar, the index of fara prices having risen to 111 as compa,red with £ji index of 127 for comiriOdities which f aimers "buy. hlien the line representing fami prices drops he lev; the line represent- ing prices riaid "by fa.nners, fa,rm ea,rnings are very low, but v.hen these lines cone close together fairn earnings increase. (See following ^raph. )

Index of rriccs

Ha.te Sarned

0

= Farm prices in U. S. Axig. ISCy-Jvly 1914 = IGO

Prices paid by farmers. A'lJg. 1909-J'U-ly 191^^ = I'^'f"

D

Hate earned en investment, accounting faunas, central Illinois

_i i_

J !_

-h'p

1317 'lo 'I3 'c

IQ '21 'ci2 '23 ^Z\ '25 '2c '27 '26 '29 '30 '3I '32 '33 '3U

287

Since- the pric^ of 3or:e farr.i prorluct.^ advanced miich more rp.cidly during l?},^ tlian other prod'i:ijctp, it is evident that some far-ns vjonld henefit iTiOre than otherc, depending upon the kind and quantity of prodi^ctL^ sold. G-rain prices advanced much .ao re rapidly than livestock ririces; which refixLt- ed in a very had rrice ratio for farraers who cu^ large ;|Uantities of feed. The average Illinois farm price of corn v;as Ul cents a hur-hol in JsnuD-ry, 133^1-; it advanced steadily rnitil the end cf the yea.r when it vas 28 cents a bushel. Other grn.ins made narked advance although not so grsat an advance as corn. The price of hogs flvictJc=.ted frou a low of $3.20 a huxidred in Ifey to a high of $6^.30 in Septeraoer. The lor point in the fall cnme in Hoveraher v/hen the average price wa.£ $[>.1C. The price has a.dva.nccd ciuite rapidly cince November, the average price being $7*5^^ ^o^ Febniary, 1535 • Beef cattle were worth SH.IO a hundred in January, 193^"'- and advanced each nonth imtil Se-otember, when the price was $5.90. They dropped to $3.20 in December but increased again to $7'^ for February, 1935-

The year 133'+ ^'^^ '3- record for the r5d\iction in the numbers of livestock. 'The percentage decr<=a.sr:s by species w-^re r.s fi'llows: horsey, 1.1 percent; ri:uli^s, ?.G percent; all ra^ttl'^, 11.2 percent; sb^'^p, U.7 percent; hogtk 35 •3 percent. uTien all species are combined on the basis cf their capacity to consume feed, the reduction was I3 percent. This reduction will greatly reduce the demand for feeds produced in 1335*

The- relative change in prices of important coirjirodities r^.ay be noted in the follovdng graoh, which shows the average Illinois farm prices by months as a percentage of the average prices for thje period 13'"'1-13'^3'

Percent 120

Price Indices, 193'+

(l-'''21-ic;29 = 100)

I /

G-rain

Pnef ., ,, , T ,

-I

Dec .

.^31 commodities index reTiresertc the -vholesale price of a large number of commodities for the Uhzted States, ^^ s co.;iputed by Bux-eau of Laoor Statistictic Grain and livestock indices represent average monthly fivrr. prices in Illinois.

HSS

-1?-

Variation i.i Sarninf^s Over Fivc-Year Period

A comparison of rrodiaction, income, and expenditures on the ac- counting fanns in Shelby and lioultrie Counties for tiie last five years is very interesting "because of the violent changes in price level. I93U was the second year of very lov/ crop yields, yet total receipts per fam were higher than in any other year in the last five. Operating costs per acre were lov/er than in any year of the five except 1933- Profits were the best the county had experienced since I92S.

Earnings in 1935 s-s usvial will depend upon individual efficiency, weather and prices. A normal year will mean larger yields of grain and probably lov.-er prices.

t

Comparison of Earnings and Investments on Accounting Farms in Shelby £.nd Moultrie Counties for 193^-193^

\

Items

I930i'^l

1931^'

2/

!Tvmber of fanas ---------

Average size of fanns, acres- - -

Average ra.te earned, to pay for

menagement, risk and capital - - Average labor and management wage

Gross income per acre ------

Operating cost per acre -----

Average value of land per acre- - [Total investm.ent ner acre - - - -

Investment per farm in: Total lives toe]-- - Cattle ------

Eogs - - - - -

Poultry- - - - - -

61 230

2.3^

$-6Us

17.13 12.39

158 210

s6s

702 1U2

G-ro?s income per farm -------p 9^7

i Income per faiin from: |

Crops 1221

5S 2 662

1 "^.26

197

Miscellaneous income Total livestock- - - Cattle -------

Dairy sales- - - - -

Hogs --------

Poultry- ------

Average yield of corn in bu.- - Average yield of oats in b\i.- -

37

32 2U7

-i.5f. $-2 30U

6.80 9.52

lUO ISO

2 129

1 ooU

5^6

gs

1 oSO

191

73

1 U16 106

373 200

133

U2

U2

19321^

3/

34 2S2

$-2 23s

G.ki

7.99

2 1

12 s 165

302 303

Uos 97

1 so 9

1C)2

Us

1 569 57U 2%

0I9 119

53 U5

1933!+/ i 193U

30 269

3.6f,

12. 3U 7.35

110 1^8

1 659

906

310

65

3 320

1 236

66

1 U18

26s

312

716

9^+

25

17

1/ Hecords from Coles, Vemilion, Edg£.r, and Douglas counties for 1930"

2j Records from Coles, Dougle.s, and Moultrie counties for 193^'

3/ Records from Edgar, Do-'jglas, Coles, and Mo'oltrie counties for 1932 •

%' Records from Shelby, Dotiglas, Coles, and Ifoultrie counties for 1933-

31 271

$1 950

•5fo

I0.6S 7.60

82 117

1 55U SI7 213

5 069

3 O06

30

1

289

JU^niUAL PAEM 3TISI1IESS KEP03T OIT FIFTY- S2VE1I FAFilS IN EDG-VR, DOUGLAS, OIASX, MD C0I3S COUNTIES, ILLINOIS, I53U

P. E. Johnston, A. L. Leonard, and R. C Hoss*

Tlae farm earnings of 57 accoiuit-keeping farmers in Edgar, Doii^las, Clark, and Coles Counties showed an increase in 193^ over those of 1933- This is the second consecutive \^ear of ir.iprovement in the Easiness of these farms. The three years ;orevio\"s to 1933 shovred very low returns.

These 57 acco'.mts show for 193^ ^^^ average net incone of S2,Sl6 per farm, as compared with an average of $1,3^+3 ^^ 19331 ^^d. a;i average net loss of $4^5 in 1932. The average cash income in 193^ was $5,096 rier farm, the cash business expenditures $2,557 per farm, leaving a cash balance of $2,539 to meet interest payments and faraily living expenses. (Thor.e who keep home acco\mt books use the latter figure to represent the cash contri- bution of the farm to the "realized family income".) Besides the c?sh in- come, there was an inventoiy increase of $911 P^r farm due to the rise in the prices of farm prod'octs. This increase, added to the cash balance, re- sulted in an average excess of receipts over expenses of $3'^50 per farm.

These datti must not be considered representative of average fann

conditions, for they were secured from farms which arc larger than average,

and which were managed ^cy farmers who are more efficient than the average of all farmers in the covuity.

For the state as a whole, farm earnings were better in 193^ tlian in 1933 > 111 sriite of the fo.ct tlmt corn and oat yields were very low due to the drouth and to chinch bug damage. In the western and southwestern parts of the state the drouth caused an alm.ost total failure of both corn and oats, which accounts for farm earnings being lower there than in other parts of the state.

The corn crop was best in the southeastern part of the stats, and was fair in the northwestern section, ITlieat yields were particxilarly good in the south and central portions of the state. Soybean yields were veiy good throughout the state, and there was a larger than norma,l acreage in Illinois in 193^- This state produced over half of the nation's 193^-+ crop of soybeans .

Chinch bug dajnage extended over most of the state last year, but was mxich more severe in some sections than in others, and was raxich worse on some farms than on other farms in the sajne conimunity. Conditions affecting crop yields were very spotted. This accouiits in part for the wide variation in farm earnings from one section of the state to another, and the wider variations thr.n usual from one far:a to another.

* H. D. Van Matre, Ward C Cannon, H. S. Anple, and S. IT. Rtisk, farm advisers in Edgar, Douglas, Clark, and Coles couiities, cooperated in supervising and collecting the records on v/hich this report is based.

Industries other thari agriculture again showsd improved earnings over the previous year. A group of gUC industrial corr.o rations reported "by a nationally known hank showed average earnings of '^).0 percent on their in- vested capital in 193^'-' ^s comi^ared vdth 3-^ percent for the same corpora- tions in 1933* A similar ii'roup had a loss of one-tenth of one percent in 1932, and average earnin{js of 3 '3 percent in 1931*

In coraparin;'; the average earnings of coi-porations v;ith the rate eai-ned on investment on accounting farms, it is well to keep in mind that in corporation accouiitinf^ cliar^os are made for management, ^yhile in the farm accoiints no comparahle dodix;tion has "been made. On the other hand the farmer and his fa^nily receive food, fxiBl, and other iter.is of living; from the farm for which the farm has received no credit in the recoras used in this report. For the average central Illinois farm family, consisting of five -oersons, the value of the food and fuisl fujrnished hy the farm was ahout S25O in 193^>- when estimated on the hasis of the wholesale -orice for fana products.

Variations in Parm Incomes

There was a much wider range in farm earnings on the accounting farms in 193^+ tl^an in 1933- This was trjc for the farms included in this report, and it was also truje when the average earnings of faiTOS in one sec- tion of the state arc com-iarcd with the earnings of farms in other arers.

The extremely wide ro,ngc in earnings was dxie to a comhination of physical and econom.ic factors. The average yields of v/heat and soyhe-'^ns v/ere much hetter, compared with the five-year average, than the average yields of corn and oats. This variation fo-vored tliose sections which had larger acreages of the hi-^her yielding crops in 193^- There was also a wide r<ange in average com yields from one section of the state to another, p.s well a.s between individua.l fanns in the soxie area. Tiie price, of grains was high in 193^i ^s compared with prices of livestock and livestock pro- ducts. Farms v;here grain sales constitute a large part of the farr.i income thus had an advantage. Tine rapid increase in the prices of farm products, particularlj' grains, favored those farms which had large stocks of salable products on hand at the beginning of the year. Ma.i;/- farmers who inventoried the corn on hand at the beginning of 193^ ^■'^ ^^^ cents a biishel, later sold this com for 20 cents.

In this grouTD of 57 accounting farms the most successf\il third shows an average net income of $U,393> while the average net income of the least successful third of the f arras v;as only $1,111. In 1933 'tiic comparable net incomes for the two groiips v/as $2,390) ^'nd $hzS respectively.

R

Investments, Receipts, Expense Edgar, Douglas, Claik, and Coles

s and Earnings on 57 Coimty ?arras in 193'l-

291

Items

CAPITAL nr/ESWSlJTS

Land ----------

Pr^rm improvements- - - -

Livestock total- - - - -

Horses --------

Cattle ■ - -

Hogs ---------

Sheep- --------

Poultry- -------

Machinery and equipment- Peed and grains- - _ - -

Your

f am

Total capital investment

RECEIPTS AIiD NET IITCPEASES

Livestock total-

Horses ------------

Csttle

Hogs (including AAA Daymcnts)- Sheep- ------------

Poultry-

Egg sales- ----------

Pairy sales- ---------

Feed and grains (including AAA payments) -----------

Lcabor off farm ---------

Liiscellaneous receipts - - - - -

Total recei'ots S-. net increases

Average of 57 farms

25 369 3 S37

1 g|R5

775 283

33

S2 1 U^9 1 115

19 most profitable

farn.s

27 365

3 706 1 76 S

913

j O o

25 7S

1 67?

2 123

$^6 £38

2 2

O'i

37 7Us 956

2^

123

2g7 2 UlS

S9

S h 766

3 1^9

27

337

U29

16

9I1

I'.O

1U6

3 oiU

90

1

6 26U

19 least

profitable

farms

21 76U

3 ^59

1 502

36U

SO7

222

36

73 1 161 1 17b

Jjl

15 U35 622 26 Ui 122 296

1 3SU 32

lEXPEIJSES Km ITET DECBZASES

Farm improvements- - - -

Horses ---------

Miscellaneous livestock decreases

Machinery and equipment- Feed and grains- - _ - Livestock expense- - - -

Crop ex^^ense ------

Plired lator- ------

Taxes- ---------

I'iiscellaneous expenses -

210

303

33 211

271 256

Total expenses & net decreases

32

$ 1 316

195

299

35 233 261 z^

25

.* 1 2Q2

123

30U

~U5 192 221 2I40 27 t 1 212

laSCEIPTS LESS EXFEITSES-

$ ^ U50

h 9

Petal unpaid labor- -------

Operator's labor ------

Family labor --------

-let income from investment and management -----------

^TE EA-EIED OH lilYESTI/iEHT - - - -

Return to capital and operator's labor and management ------

)> of capital invested- - - - - -

--ABOP AlTD ::AjIAGEi.;El\fT WAG^

63 U U76 15s

SI6

3 292 1 699

7-^

''' ,■-

S 1

■193

579 U5S

121

4 ^93

h G51

1 232

JOI9

$ 1 761

650 I165 Ig"^

1 111

3.S^

1 576

1 U^h

122

^92

Tlie following talole s'lov/s the numlDer of farms liaving certain net incomes per acre. There vvas a aarlred difference "between the most successful and the least successful fa.rrns.

Average net in- jIuEoer of Average net in- g-jmbcr of

come per .-'..ere fanr.s co/ne per acre farms

$21 and over -j $9 7

li.

19 3 7

17 U 5

15 ^ 3 5

13 G 1 U

11 S -1 1

A iTorther stxxdy of the farm tusinersec rnr.de hy corr:parin~ t'.e in- vestments, receipts, and expenses of the group of farrus with the hi^^liest net incomes with those havin;_^ tno lowost incnraen, shoP-ld throw some lifht on the question of wiiy some ferm^/rs ari. more successful than others. This compari- son is shown in' the taljle on page 3-

The most successful fp.n.is avera;_^;Gd 2S1 acres each, the least suc- cessfiil 213 acres. This difi'erence in sise accounts in Part for the variation in the avcraf^c investment, receipts, and expenses in tho two 'j-roups. Differ- ence in receipts from the sales of grains, cattle, and hogs accounts for most of the difference in income "oetween the two groups . AlthoUi?:h the expenses per farm were higher on the most profitahle farms, the total expense per acre, includin,'; the cliargc for family lahor, was less thaji it was on the least pro- fitahlc farms.

Chanfi'es in Inventories and Inventory Values

The year 193'!- '"^-S similar to 1933 i''^ that the prices of faim pro- ducts continued to advance, causin;; further increases in inventory values. Owing to the poor crop yields in 193^» there v/ore fewer hiishels of ."rain on hand to inventory n.t the end of the year than at the heginninij. The value of the smaller omount of grain, however, was greater than for the larger amount on hand at the heginning of the year.

Bushels of Corn Inventoried

"Jan. 1, 1S3^ Dec. '31/ 193T

Average of all farms 2 523 1 7S7

Average of I9 most successful fa.rrns . . 3 211 2 U5U

Averarr^e of 19 least sxiccessfvil fai'ms. . 1 5^6 1 093

Your farm

The most profitable frrms 'nad a much larger inventory of corn hoth at the "beginning and end of the year. Tiiis larger inventory of corn, with the rise in com prices, vto.s one of the important factors accomiting for the difference in farm earnings.

293

-J"

The average inventor;; increase for the accotciting fari'.s included in this report was $911 in 133^'> s.s compared v;ith $Ud2 in 1933» ^^^ 3-ii in- ventory loss of $1,13^ per farm in 1932 • There v/ere increases of S13^ in total livestocL, $777 i^ feed a.nd grain, and $72 in machinery, while im- provements shov/ed a decrease of $72. SiTch an increase in inventory, as tliat for machinery, results from the value of new replacements dinging the year "being in excess of depreciation costs. This increase is of consider- ahle interest, for it is the first time tlaat such an increase in machinery inventories has occurred since farm eaiTiings hegan to decline so drastically with the general depression.

Inventory Changes for 193^

	Beginning	Closing	Inventory	Inventory
Items	inventory	inventory	changes	clianges,
	l-l-^U	12-^1_3'4	Io-t}i	yon-r farm

Total liveotocl: $1 5o5 $1 629 $13^ ;?

?eed and grains 1 775 2 552 777

Machinery 1 i+U5 1 521 72

Improvements (except residence) 1 837 3 7o^ -72

Total ^ $6 616 $3 527 $911 $

Some Ad.j'astments on Zd,sar, Doiiglas, Clarh, and Coles Cp-.mty Jarms Since 1929

Parmers have heen forced to mal-re adjustments in their cash ex- penditures a.s the resiilt of changes in their cash incomes. From 1929 through 1933 farm operating costs declined each year, hut the year 193^ hrofght a reversal of this trend. Total operating expenses v;ere ^3 cents an aero higher in 193^^ than in 1333> ^.^^lile cash operating expenses v/ere $2,537 ^ farm in 193'+> ^^ compared with $1,90S in 1933* Low crop yields necessitated the purchase of considerahly more feed and grain in 193^ tlian in 1933- -n~ dications TJoint to an errpansion of spending for machinery, and repairs for machinery and improvements, since farmers have postponed repairs and. replace- ments for these items dtj^ing the four-year neriod since 1930-

Cash Income and Expenses on Accounting Farm in Edgar, Douglas, Clark and Coles Counties, 1929 and 193^

Your Average cash Your Average cash

Items fann expense "oer farm fanii income "oer farm

19^U iqi^l 1929 I93II IQ^U lOPQ

Livestock $ $ Ull $6^9 $ $2 535 $3 797

.?eed and grains 653 50U 2 29U 2 323

Machinery 552 657 177 il6

Improvements 133 212

Lahor 27I 5G8 S9 35

Miscellaneous 32 38 1 9

Livestock expense 33 ^0

Crop expense 211 273

Taxes 256 U30 ,

Total $ . $2 557 $3 321 $ $5 096 $6 3'40

Excess of cash sales over expenses $ $2 539 $3 CI9

Increase in inventory 9II -5?

Income to Inhor and capital (Receipts less expenses). 3 ^^5"' 2 96I

29^

r -o-

The cianulative effect of several years of low rvgricultiJTal prices on the demand for nan"afactured floods can readily te ascei'tained "by a covn- parison of cash farm expenditvu'es in 193^ with those in 1^)25- Although the average cash incorae in 193^+ '^'^■^ -0 percent of that in 1929. cash expenditures were only 77 percent as large. In 193^ livestock piu'chases were 63 percent as lar^e as in 1929, while feed and grain purchases, due to low crop yields, '.vere 3O percent larger tlian in 1929' In 193^ these farms -paid out S^-l- per- cent as much for nachinor;^ , and 77 percent as much for crop ei:penso as in 1929, v;hile taxes were reduced to only 60 percent of the 1929 level.

Comparison of Farms ?ith High and Low Earnings

The most profitable farms in this study Imd net receipts 'oer acre of $17. ^+2, as compared with $5-22 for the least profitable gi'oup. Tlie reasons for this difference may he? ohtaincd from a. study of the data on pages 3 ^-^d- S.

The most profitable farms averaged 3S'7 acres larger, and pro- duced 12. S more acres of com, and 10. 9 more acres of soybeans tlian the least profitable far:ns. In addition to larger acreages of crops, the most profitable farms produced 10. 7 bushels more corn, 7'2 bushels moix3 oats, 10.1 bushels more wheat, and 5 bushels more soybeans per acre thaJi the least profitable farms. The difference in acreages, yields, and inven- tories was an important factor in accounting for the variation in returns from feed and grains bot-.vcen the most profitable, and the least profitable farms .

The most profitable farms had an investment in productive live- stock of $5-S6 per acre, and fed $2,190 of feed per farm, as compared with an investment of $5 -16 per acre, and $l,l6l of feed fed per farm, on the least profitable fai-ms. Tlie productibe livestock on the most profitable farms retnxned $l'-r3 for each $100 of feed fed, as compared with a return of $133 P*^^ $100 of food fed on the least profitable farms. The income per litter farrowed was $121 on the most profitable farm.s, as compa.red with an income of $76 per litter fr.rrowed on the least profitable farois. The most Profitable farms had returns of $lc7 per $100 invested in cattle, while on the least profitable fai-ms cattle returned only $9 3 for each $100 invested.

The larger income on the most profit,able farms was secured with a total operating cost of $7-^5 Per acre, as compared with $0.76 per acre for the least profitable fart..s . On the most profitable f arras the m.an labor costs ■..'eix; $1.6o per crop a.cre lov/er, and power and machinery costs were SU cents per crop acre lower, than on the least profitable farms.

-7- Infl\i.ence of AAA Programs on Cropping Systems and Fana Incoiiies

T^ie farra-^accoimt records in Illinois v;ere infltienced both directly and indirectly by the corn-hog and wheat adjiictinent rjrograj'ns. A lar~e ;oer- centp.c^e of accounting farns were -onder one or hoth contrexts in 193^- l^e acrea.ges of corn and wheat on these far:Tis were thei'efore less than normal. This should hove resvilted in lower operating; costs. Corn-hog "benefit pay- ments for the entire 193*+ prograiTi will total ahout ho million dollars for the state, while wheat benefit pa^nnents v;ill be about 2.U million dollars.

The benefit paryTnents for accoi^nting farms are indicated in the following table, which shows tne average pajTaent for those f arras receiving payments, and includes only those pay:nents received by the cooperator before the 193^ boohs wore closed. In soue cases only the first corn-hog cr.eck is included, while in other cases the second check had been received. The second pa;>Tncnts not received and th.e third payments will be entered- in the 1935 'book.

AAA Benefit ?a;',iaents Iiecoivcd in 193^

295

Corn ""no p.t Hogs ,

I'luraber Amount Ifenbcr Amount ITuabcr ±aoi:uit " ^

r> o r, of all

of -oer 01 per of per t /

o "" x- , „ ,' i3a,vments— '

farms larra t;',rns larm laiTas larra - "^

1/3 most -orofitablc farms IS $127 12 $11^- 1? $167 $3^12

1/3 lerst profitable farms I7 92 6 5o 16 loU ISS

All acco-mting farns 5U II3 29 IO5 51 139 285

!_/ Total benefit payments reported by axco^onting farms tuider contract for 193'+ divided by total nnnbcr of acco'aiiting farms.

C-i many farms the cash received from benefit pa^.cnents Vv'ill more than pp.y for the year's taxes. As an avcra..ge for all accounting farms in this report, the pajTnunts actu-.lly received were $29 more than sufficient to pay the 193^1 taxes.

It is interesting to note the use made of the contracted acres on the accounting farms. The a.verage fr.rm had 23. 1 contracted acres which wei'e used as follows: 6.9 idle; 3-? ^^d clover; 2.1 s-.vcot clover; 3.2 soybeans; 1.9 alfalfa; a.nd ^.1 a.cros v/cre in other crops. Tlacse drta. indicate that m.ost farmers made good use of their contrr.cted acres from, the standpoint of soil improvement, .as a large part of them were in legi'unes. IT^.ien the govern- ment restrictions on the use of crops t"rown on contracted acres v/ere removed, thojr were oh many farms the most -oi'ofitable crops as they furnished hay a.nd pasture -vYherc badly needed in drouth areas. The lfg"jnes ha,d the fnarther ad- vantage of being immu;ie to attack from chinch bugs.

PaiTT: earnings v;erij influenced indirectly b;' the .AAA progr^vms in tha.t the reduction in production increased the price of the comn.oditics in- volved. Tlie drouth -was a more im-oortant facto rin reducing production than the adjustment programs, yet if it had not been for the corn-sc-aling prograjn there would have been but little corn in the hands cf farmers r.t the time the major price a.dvance became effective.

296

Factors Helping-; to Analyze the Yum B-aoir.esr> on p7 Sd'"-;ar, Douglas, Clarh, and Coler Covnty ?ains in 13J)h

I

Items

Your

fann

Size of farms — acres --------

Percent of land area tillable- - - -

Percent of tillable land in hay and pasture __-

G-rcss receipts per acre- ------

Total expenses per acre- ------

Net receipts per acre- - _ _ _ -

ValoB of land per acre -------

Total investment per acre- - - - - -

Acres in Corn- -----------

Oats-

^Vheat

Soyheans- ---------

Hay

Tillatle pastiire- - - - - -

Crop yields — Corn, hu. iier acre- - - Oats, "bu. per acre- - - rjheat, bu. per acre - - Soybeans, bu. -oer acre-

Value of feed fed to productive L.S. Eeturns per $100 of feed fed to productive livestocir- -------

Returns per $100 invented in:

Cattle- --------

Poultry --------

Pigs weaned per litter -------

Income per litter farrowed - - - - -

Dairy sales per dairy cow- - - - - -

Investment in productive L.S. pei- A. Heceipts from productive L.s. per A.

Man labor cost per crop acre - - - Machinery cost per crop acre - - - Power and raach. cost per crop A. -

Farms with tractor --------

Value of feed, fed to horses- - - -

Man labor cost per $100 gross income- -------------

Expenses per $100 gross income - - Farm improvements cost per aero- -

Excess of sales over cash expenses Increa.se iu inventory- - ----- -

Bate earned on investment- - - - -

Gross receipts per farm- -----

Avera/^e of i '37, f'ums I

2U7.5 S8.0

jk.O

13.53 7.G2

11.37 102

61. 1 2k. E 22. U 21.6 26.5 U6.9

33.0

19.3 22.6

2S.0

19 most profitable farms

251.3 91.0

31.0

24.93

7-^5 17. Us

109 1U6

19 least

profitable

farms

212.6 gg.O

37.0

13-93 S.76 5.22

102 133

1 o7G

132

I3U 236

5.S

9S

hz U.92 8.97

5. CO 1.76

2.68

77-^ 1S7

IS

l+l

,S5

2 539

qii

k 766

SUM 22.7 2b. U

25.5 20. R

51.2

3S.7

23-7

27.5 30.3

51.6 22.7

25-3 1U.6 20.7 Us. 9

2S 16.5 17. H

25.3

190

1U3

167 2U0

6.3

121 30 5.S6 12. U6

u.ue 1.6s 2.58

17b

12 30

161 133

9S 213

76

k2 5.16 7.25

6.06 2.20 3.U2

177

2S 63

■li

,s6

3 636 I 1 396 1 336 j 3&5

6 26U i 2 073

I

Chart for St'odjing the Siiiciency of Varioiis Parts of Yo-ar Business; Edgar, Douglas, Clar':, and Coles Cc-mties 193^

297

.■■he nwaocrs above 7 farms included ■ drawing a line ;';.! in that facto ,our localit;

the lines across the middle of the page ai'e the averages for the in this report for the factors named at the top of the page. across each column at the nuiaher meas-oriiig the efficiency of your r, you can compare j"our efficiency with that of other farmers in

Bushels

'

rH

Cost per

0 0

1 1

C-roE

.s

per acre

0 Ph

•ri

crop acre

rH

rc;ceipt3

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fn CO

0

s

e '^

&

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s

p;

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0

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R ;h

en 0 0

0 +=

a 0

+5 ©

•H

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v^.

Bi'

l-H -P

ri h

>

0 Ch 0

03 0 0 0!

.0 0) J-4

0 0 > 6

0

K

c

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^ ^

ca -H

>. 5

rt Vi

ci 0

0 ^1

CO 0

0 X

Sh

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Cu

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fi;

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Q

0

ci

+^

•• 1-4

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?-i

^l -H.

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0 5:^

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£^

Vh

^

fi

CO

C^'

CO

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rH 0

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0 CQ

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0 ^

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q

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T-\ CO CO 0

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o.S

^;3

3U

37

223

72

U36

2o7

—

—

3900

7"00

33

SSOO

U95

I..

U9

31

3U

19s

66

306

232

.2g

^X'O

oSOO

32

?000

Uhg

1

.1. ,s

h^

2g

31

173

60

3S6

207

.30

.SS

0

2700

3S00

29

7200

39s

I,

ki

2^

28

lUS

^U

316

1S2

2.00

l.Us

6

2100

U^oo

26

6UOO

3US

i

22

2^

123

Us

276

137

3.5c

2. OS

12

loOO

3300

23

3600

29s

i 1 ; il ■u!33

13.3

2?

9S

U2

236

132

-.00

2.62

IS

911

23 3 '^^

l<^.-3

U-^66

2U7.6

;.3

i 29

16

IQ

73

196

107

6.50

3.2C

2U

300

1500

17

Uooo

198

1 0

25

13

lb

Us

~sO

v,S

t.OO

3.SS

30

-300

SOO

lU

3200

lUs

- , f-.

21

10

13

23

2U

116

^7

9. so

U.Us

36

-900

11

2UC0

9S

1

17

7 1

10

18

-jG

.2

11. "^0

^,.o&

1 1 k?

-1-CO

ISOO

Us

13

h

7

' , \

12

Yo

7

12.50

') bo

1 i 1 1 1 Us

-2100

\ ^

1000

29S

-10-

Influcnce of Price Cl'^Tit^s on Farm 5arning:s

Farm prices in 193^ o.dvanced more rapidly than did the prices of conjmodities v/hich fanners DO'Ut:^ht. Frnaers of the United States as a sroup could e^ccliange their fam: products in 193^^ -ot lh percent as many goods as for the neriod I'^OS-l'jl^j wliile in 1S33 they received only oh nercent, and 1932 only 61 percent as much in exchange for what they had to sell a.s in the prewar period. In the nonth 01 Fehniary, 1935 1 this index of purchasing pov/er had increased to SJ percent of pi'ev/ar, the index of farm prices having risen to 111 as compared with an index of 127 for comiiiodities which fanners "buy. ^len the line representing fami prices drops "below the line represent- ing prices riaid hy ia.iniers, f.ai"m earnings are very low, but when these lines cone close together farrr. earnings increase. (Sec following .jrs.ph. )

Index of Prices

Rate Earned

2C0 15c

ICO

75

50

= j'arm prices in U. S. Aug. 1909- July 1914 = 100

= Prices paid hy farmers. A^Jg. 1909-July 19lU = 100

n - Rate earned en investment, accounting fa,rras, centra.l Illinois

J L.

10 '^

si

p\1

4--^

.?.i

-H

1917 'IS 'I3 '20 '21 '22 '23 '2U '25 '26 '27 '26 '29 '30 '3I '32 '33 '3U

^

-11-

Sinco the pric^ of some fam proclucts advanced miich. more rp.pidly during 193*+ tlian other prodiicts, it is evident that some farms r/oiTld benefit ;r.ore than others, depending upon the kind and qixantity of products sold. Grain prices advanced much Liore rapidly than, livestock prices; which result- ed in a very had price ratio for farraers who 'bi:!^ lar:5e r^imntities of feed. Ihe a.verage Illinois farm price of corn was Ul cents a hu?hel in Janiyu.ry, 153^'-; i't adv-anced steadily until the end of the year when it v^as S8 cents a "bushel. Other grains made nar::ed advance althoTigh not so great an advance as corn. The price of hogs fluctaa.ted frou a low of $3'-C' a hundred in May to a high of $6^.30 in Septeaoer. The lovf point in the fall came in Ijovernher when the average price T/a.s $5-10. The pi'ice has adva.nccd quite rapidly since Fover.ber, the average price being $7*5^ for Jehru-ary, 1935- Beef cattle were worth ^^KIO a hundred in Jantiary, 193^^ and advanced each month -until Septemter, when the price was $5.90. They dropped to $9.20 in Decemher tv.t increased again to J7«^^ for Pehruary, 1935 •

The year 193^ -st 9- record for the reduction in the nmabers of livestock. The percentage decr'^a.srs hy species Tp<^re as fellows: horsp^i, 1.1 percent; mulps, ?.G percf-nt; all cattl'=, 11.2 percent; shifp, U.7 percent; hogi\ 35*3 percent. Y,lien all species are comhined on the hasis of their capacity to consume feed, the reduction was I3 percent. This reduction will greatly reduce the dema.nd for feeds produced in 1935*

The relative chanr^ In prices of i.mportart cora-:;odities may he noted in the following gra-Toh, which shows the average Illinois farm prices ^y months as a percentage of the average prices for th^ period 1921-1929.

^e re s r

Price Indices, 193"^

(1921-1929 = IOC)

Ja n .

Feb. Ma.r.

■^r

June July Aug. Sept.

Oct

IJov. Dae.

All commodities index represents the wholesale price of a large nmher of^ commodities for the ttiitod States, as computed hy Buj-eau of Lahor Statistics.

Grain and livestock indices rep--escnt avei-age monthly faiT". prices in Illinois.

300

-12-

Variation in Earnings Ovei Five-Yoar Period

A comparison of production, income, and expenditures on the ac- counting farms in this area for the last five years is very interesting "because of the violent changes in price level. 193^ ^^^ the second j'^ear of very loiv crop yields, yet total receipts per farm were hi:?;her than in any other year in the last five and were 95 percent of the 19'?9 cross receipts. Operating costs per acre were lower than in any year of the five except 1933' Thus Tjrofits were the hest the cotmty had experienced since 1928.

Earnings in 1935 i ^^ usual, will depend upon individual efficiency, weather and prices. A nonnal year will mean larger yield? of grain and probably lower prices.

Co '.pari son of Ear'iin^s Edgar, Douglas, Glarh

and Investments on Accoimting Farms in , and Coles Covnties for I93O-I93U

19^0-

1931-^

I95?i^

Items

1933-

193^

Nuraber of farms ---------

Average size of farms, acres- - -

Average rate earned, to pay for

management, risk and acpital - - Average labor and management wage

■Si 230

Gross income per p.cre - Operating cost per acre

Average value of land per acro- Total investment per acre - - -

Investment per farm, in:

Total livestock- - - - - -

Cattle - -----

Hogs -----------

Poultry- ---------

Gross income per farm -----

Income per farm from:

Crops- ----------

i-fiscellaneous income - - - Total livestock- - - - - _

Cattle ----------

Dairy sales- -------

Eogs -----------

Poultry- ---------

Average yield of corn in bu.- - Average yield of oats in bu.- - Average yield of v/heat in bu. -

O

9U7

3S ^^7

2.%

17.13 12.39

15s 210

2 26s

1 h2Z

702

l42

$-2 30U

-1.5%

1 221

2 66s ii6U USi

1 526

197

37 Uo

19

6.80 9.52

lUo ISO

129 ooU 536

1 680

191

73 iii6 106

373

soo

133

U2

Its

29

3^ 282

-l.Of^ $-2 23s

6.UI 7-99

128 165

■^02 303

Hos 97

1 S09

192

Us

1 569

57^

2 1+9

619 119

53

23

30 269

^M

$-U

12. 3U 7.35

110

l^S

659 906

310

65

3 320

1 836

66

1 Ulg

26s

312

716

94

25 17

16

^■7

2U8

1 593 19.53 ;

7.SS . 102

137

1 555

775

283

82

U 76b

2 UlS 1

2 25s 748 287

956 84

33

19

22

J

\i Records from Coles, Vermilion, Edgar, and Douglas counties for 1930"

2/ Hecords from Coles, Douglas, and I.Ioultrie coi;ntieE for 1931'

3./ Records from Edgar, Douglas, Coles, and Moultrie coxinties for 1932.

4/ Records from Dou.glas, Itoultirc, Colec, and Shelby co-Jnties for 1933-

i)

..^iJH..

301

AIWUAL FARii BUSINESS REPORT ON FORTY-FIVE FAEl/IS m MACOUPIN COUNTY, ILLINOIS, I93U

p. E. Johnston, J. E. Wills, and E. L. Sauer*

The farm earnings of U5 accottnt-keeping farmers in Macoupin County showed an increase in I93U over those of 1933- This is the second consecu- tive year of improvement in the "business of these fanns. The three years previous to 1933 showed very low returns.

These ^45 accoimts show for 193^+ a^^ average net income of $652 per fariTi, as compared with an average of $388 in 1933. an<3- an average net loss • of $UlO in 1932. The average cash income in 193^ was $3»121 per farm, the cash business expenditures $1,778 per farm, leaving a cash "balance of $1,3^3 to meet interest paji^inents and family living expenses. (Those wlop keep home account books use the latter figuTe to represent the cash contribution of the farm to the "realized family income".) Besides the cash income, there was an inventory increase of $S6 per fairn due to the rise in the prices of farm products. This increase, added to the cash bcJance, resulted in an average excess of receipts over expenses of P<l,h2') per farm.

These data must not be considered representative of average farm

conditions, for they were sectired from farms which are larger than avera,go,

and which were managed by farmers who are more efficient tlian the average of all farraers in the county.

For the state as a whole, farm earnings were better in 193*+ than in 1933 > in spite of the fact that com and oat yields were very low due to the drouth and to chinch bu,g damage. In the western and southwestern parts of the state the drouth caused an almost total failure of both corn and oats, which accounts for farra earnings being lower there than in other parts of the state .

The corn crop was best in the southeastern part of the state, and was fair in the northwestern section. Wheat yields were particularly good in the south and central portions of the state. Soybean yields were very good throughout the state, and there was a larger than normal acreage in Illinois in 193^' This state produced over half of the nation's 193^! crop of soybeans .

Chinch bug damage extended over most of the state last year, but was much more severe in some sections than in others, and was much worse on some farms than on other farms in the same community. Conditions affectin;f; crop yields were very spotted. This accounts in nart for the wide variation in farm earnings from one section of the state to another and the wider variations than usual from one farm to another.

W. F. Coolidge, farm adviser in Macoupin County, cooperated in supervising and collecting the records on which this report is based.

302

-2-

Industries other than agriciolture again showed improved earnings over the previous year. A growp of gl[Oindac trial corporations reported by a nationall." known hanlc showed average earnings of 5«0 percent on their in- vested Capital in I93U, ;?s compared vrith ], .U percent for the same corpora- tions in 1933- -^ simil. r group had a loss of one-tenth of one percent in 1932, and average earnings of 3.3 percent in I93I.

In comparing the average e.nrnings of corporations; with the rate e-irned on investment on accotuiting farins, it is well to keep in mind that in corooration accounting-, charges are made for m?Ji?gemdnt, rhile in the f.irm accounts no comparable dedaction lias been made. On the other hand the f>.i.rmer and his family receive food, fuel, and other items of living from the f;xrm for which the farm has received no credit in the records used in this report. For the avcrago ccntril Illinois farm family, consisting of five persons, the value of the food and fuel f-urnishod by the farm was about $250 in 193^1 ^hen estiniated on the basir of the wholesale price for frrm pro- duc t s .

Varir:tions in Farm Incomes

There was a much wider range in farm earnings on the accouiiting farmc in I93U than in 1933, This was true for the farms included in this report, and it r,as also time v/hen the average earnings of fai'ms in one sec- tion of the ste.te are compared with the earnings of farms in other areas.

The extremely wide range in earnings v/as due to a combination of physical and economic factors. The average yields of wheat and soybeans were much better, compared with the five-year average, than the average yields of corn and oats. This variation favored those sections which had larger acreages of the higher yielding crops in 193^- There was also a wide range in average corn yields from one section of the state to another, as well as between individuzTl farms in the same area. The price of grains was high in 193^ ^^ compared with prices of livestock and livestock pro- ducts. Fai'TT.s where grain sales constitute a large part of the farm income thus had an advantage. The rapid increase in the prices of farm products, particularly grains, favored those farms rhich had large stocks of salable products on hajid at the beginning of the year. Many farmers who inventoried the corn on hand at the beginning of lo^li at I|o cents a bushel, later sold this corn for go cents.

In this group of 143 accounting fanris the most successfijil third shows an average net income of $1,3^2 as compared with an average net loss of $131 for the least successful third of the farms. In 1933 the most suc- cossful farms had r. net income of .'^1,370, while the loss on the least suc- Ci^ssful farms was ^kos.

Investuents, Receipts, Ernenses and Eaimings on ^.-5 I.^acourin Coimty Farms in 193^

303

Items

Your farm

Ave re je of k^ farms

O

;nost

profitable farms

Profitable

farms

15 least

CAPIT.UL IinmSTI.IElITS

Lana ----------

Farna improvements- - - -

Livestock total- _ - - - Horses --------

Cattle ------

/logs ---------

Slieep- --------

Poiiltry- -------

i'achinery and equiioment- Feed and grains- - - - -

kk

ySb

Total cai^ital investment-

E2CEIPTS AITD FET liTCHEASES

Livestock total-

IP 0

2 9

1 530

392

777 219

55

S7

1 100

1 111

I 11 62U

3 169 1 331

$19 2S1

I'lorses ------------

Cattle __-- _.

Hogs (including AAA pajTnei'its)- Sheep- __-_--------

Poultry- ---__-----.

'Sgf; sales- ----------

Da,iry sa.les- ---------

Feed and grains (includinir: jiAA payments) -- ^--------

LflDor off farm ---------

Miscellaneous receipts - - - - -

Total receiiDts & net increr-^es

1 gpU

17 371

650

75

75

129

537

Uqi

72 2

S 2 U2^

201

209

52

liM 1 061 1 0U7

$18 U32

21s

30

3q£

107

lUi 55£'

713

56

1

12 U39 2 296 1 26s

^35 533 173

83 862

909

$17 77^

1 212

222

U39

70

5U

lll!-

313

379

s6

2

$1 6(9

Z:'PSi-ISSS AKD lET SSCFCASSS

Farm iuproveinents- -------

Horses -------------i

Miscellaneous livestock

dec rease s

I.'acliinery and equipment- - - - -

Feed and grains- - - -

Livestock expense- - - Crop expense -----

Hired laljor- - ~ - - - Taxes- --------

iiiscellaneous expenses

Total e:>rpenses & net decreases

5ECEIFTS LESS E^CFEHSES

Total i.mpaid labor- ---------

Operator's labor --------

Fcmily labor ----------

'.et income from investment and

management -------------

PATE EARIIED Oil IF^ESTIvffil^rT

Hetum to capital and operator's

labor and management --------

'jp of capital invested- -------

LA30H AlID LL^ITAC-EISI'JT 7JAGE

133

31U

29 I3U 170 137

2g

$ 1 000

10^

300

31

1'30

lUe 1U9

28

$ IQc

$_ij£fi

771 527 2V4

65s

J_a2k

d38 501

137

1 3l2

I^IO

2gb

32 IIP^

ho

1S3 26

$ §51

S25

957 5U0

U17

Xv:

-131

.2g

1 18-3

364 £21

^i

-.iH

1 s^3 922

k03 SS9

-U':o

The following table shows the n'um'oer of farms having certain net incomes per acre. There was a marked difference between the most successful and the least successfiil farms.

■'■verage net in- come iper acre

515

13

11

9

7

5

ITiTiiher of farms

1

0 1

2

6 3

Average net in- come per acre

$3

1

-1

-3

-5

Number of farms

15

7 g 1 1

A fiirther stud:/ of the fai-m businesses made by comparing the in- vestments, receipts, and ez-oenses of the group of farms with the higliest net incomes with those having the lowest net incomes should throw some light on the qiisstion of why some farmers are more successfu-1 than others. This coi.i- parison is shown in the tabic on page 3-

The total invGst.:ient on the most profitable farms averaged $12,^32, as compared with a total investment of $17,77^ on the least profitable farmst The two groups had about the same amount invested in land and improvements combined, but the most profitable farms h-ad a larger investment in productive livestocl:, and in feed and grains. Differences in receipts fi-om the sales of livestock, livestock products, and grains accounts for much of the difference in income between the two groups. The total farm expense, including the charge for family labor, was $1,5^7 on the most profitable farms as compared with $1,710 on the least profitable f amis .

Changes in Inventories and Inventory Values

The year 193-'- '■'^^■^ similar to 1933 i"- that the prices of farm products continued to advance, ca'osing further increases in inventory values. Owing to the poor crop yields in 193^^. there were fewer bushels of grain on hand to inventory at the end of the year than at the beginning. The value of the smaller amount of grain, however, was greater than for the larger amount on ha.nd at the beginning of the year.

Bushels of Com Inventoried

Jan. 1. I93U

Dec. 31, 193^

Average of all farms

Average of I5 most successf"al farms . Average of I5 least successful farms. Your farm ,

856

1 Of)6

U93

156 329

23

The most profitable farms iiad a mtich larger inventory of corn, both at the beginning and end of the year. This larger inventory of corn, with the rise in grain prices, v;as one of the important factors accoxijiting for the difference in farrn earnings.

305

The average inventory- increase for the accoiriting far.is in Liacoxxpin County was SSo in 193^> ^^ compared with inventory losses of $33 3- farm in 1933> 3-^cL $^30 a farm in 1932. There were increases of $60 in total live- stock, $^5 in feed and grain, and $12 in machinery, while improvements showed a decrease of $31' Such an increase in inventory as that for machinery re- svilts from the value of new replacements during the year "being in excess of depreciation costs. This increase is of considerahle interest for it is the first time that such an increase in machinery inventories has occurred since farm earnings hegan to decline so drasticallj^ with the general depression.

Inventory Clia.nges for 193^

Beginning Items inventory

I-.I-3U

Total livestock $1 53O

F-eed and grains 1 111

Liachinery 1 100

Improvements (except residence) 2 996 Total ' S6 737

Closing inventory 12-31- 3 U	Inventory change s I93U	Inventory change s your farm
§1 ^90 1 156 1 112 2 965	$60 115 12 -31 $g6	$
So 823	$

Some Adjustments on Macou-pin County Farms Since 1929

palmers have "oeen forced to make adjustments in their cash ex- pendit'ores as the result of changes in their cash incomes. Prom I929 through 1933 farm operating costs declined each year, hut the year 193'"^ "brought a reversal of this trend. Total operating expenses vrere Uo cents an acre higher in 193^ than in 1933 • while cash operating expenses were $1,77^ a farm in 193^> a-s compared with $1,503 in 1933' The largest increase in ex- penditures over the previous year was for machinery and repairs for macMnery. Indications point to an even (greater expansion of spending for these items in 1935» since farmers have postponed machinery replacements dujrin^r the four- year period since 1929-

Cash Income and Expenses on Accounting Farms in Macoupin County

for 1929 and 193^4

Your Average cash

Items farm ex'oense per fann

I93U 193^ 1929

Livestock .$ $ 25I $1 05S

Peed and grains l\k'J 1J^

I'achinery U21 739

Im.provements Ill 32O

Lahor I7O 5I2

Miscellaneous 2S 33

Livestock expense ...... 29 57

Crop expense 13l|- 2I7

Taxes 157 283

Total $ $1 77s $3 99U 9

Excess of cash sales ever expenses $

Increase in inventory

Income to labo]' and capital (P.eceipts less expenses)

lour farm I93U

Average cash income per faim

1934	1929
$2 055	$U 576
S93	1 200
95	151
U	1
72	97
2	37

; ?3 121	$6	062
; $1 3^^3 86 1 U29	$2 2	063 566 634

306

-6-

The c-umulat ive effect of several years of low agricultural prices on the demana for manufactured goods can readily be ascertained "by a com- parison of cash farm expenditures in 193''- with those in 1929- Although the average cash income in 193U was 51 percent of that in I929, cash ex- penditiires were only Ul+f: as large. In 193U livestock purchases wore 2U percent, and feed and grain purchases 58 percent aa large as in 1929- 1" I'j'^h these farms paid out 47 percent as much for machinery, find o2 per- cent as much for crop expense as in I929, while taxes were reduced to 66 percent of the I929 level.

Com-parison of Farms "»7ith Hirh and Lo-? E irnings

The most profitahle farms in this study had net receipts per acre of $D.'^2, as compared with a net loss of 53 cents per acre for the least profitable group. The reasons for this difference may he obtained from a study cf the datf, on pages 3 and g.

The most profitable farms had lai'gor inventories of productive livestock, and feed and grr.ins on which to m.aicc a profit when prices ad- vanced. One reason for the larger inventories, however, was the higher crop yields, there being an advantage of c.g bushels of corn, 5.U bushels of o-ts, 7.1 b-iiRhelc of wheat, and?.! bushels of soybeans per acre in favor of the highest profit group. The higher yields on the most profitable farms more thiui offset the sm-^iler acreiige of wheat and soybeans on tnese JC'arms. Crop yields were so low on the least profita.blc farms that there was .?ii aver- age inventory loss of $9? per farm in spite of the price advcaice.

The most profitable farms v/ere more intensive, and more efficient in their livestock production thnji the least pi-ofitable farms. They had an investment in productive livestock of $6.lU per acre, and fed $1,^79 ol" feed per farm, as compared v/ith $3.6S invested per acre, rnd $1,104 of feed fed per farm, on the least profitable farms. The productive livestock on the most profitable farms returned $139 for each $100 of feed fed, as compared with a return of $110 for e-^.ch $100 of feed fed on the least pro- fitable fannso Difference in livestock efficiency is further illustrated by the fact that on the most profitable farms the dairy sales "were 033 per cow higher, and the income per litter farrowed $25 higher than on the least pro- fitable farms.

The larger incjmo on the most profitable farms was secured with a total opertvting cost of $7.nl per acre, as compared with $7.95 per acre on the least r)rofita.ble farms. Man labor costs per crop acre were $5.5^ on the most profitable farms, as compared with $6.53 per crop acre on the least profitable farms.

i|

-7-

Infl-ufince of AilA. ProATCuns on Crop-pin^ Systems and Farm Incomes

The farm-accovuit records in Illinois were inil~aenced 1)01x1 directly and indirectlj' by the corn-hor:; rnd V'heat adjustraent 'programs. A large per- centage of accounting faiTns v;ere itnder one or "both contracts in 193^f-' T^e acreages of corn and wheat on these farras were therefore less than norraa.1 . This should have resulted in lower operating costs. Corn-hog benefit pay- ments for the entire 193''" program T/ill total about UO million dollars for the state, while wheat benefit pa^anents will be about 2.U million dollars.

The benefit pa^iaents for accoimting farias are indicated in the following table, which shows the average payment for those farms receiving payments, and includes only those payments received by the cooperator before the 193^'+ boohs were closed. In some cases only the first corn-hog check is included, v/hile in other cases the second check had been received. The second payments not received and the third payments will be entered in the 1935 book.

AAA Benefit Payments Peceivcd in 193'-''

307

Corn iThcat ho;^:

I I A ^7"/^ 'K"^ CCi

Kunber A:;Otint "umber Anount InLmber Anount '„ "^^

, „ „ of all

of -per 01 ner of per , ,,

r. y ^ S-' r. r.' paynientsi/

faims farm i?rns farm farms ivnd

1/

1/3 most profitable fairas 1/3 least profitable fanas All accoijnting farms

13	$S5	5	$10 g	13	$133	$225
12	S9	6	lis	13	107	211
Uo	97	23	35	Ul	115	239

1/ Total benefit pa^Tiients reported 'o-j accounting farms under contract for 193^ divided by total nunber of accounting farms.

On many farms the cash I'eceived from benefit pajTaents will more than pay for the year's ta:^:es. As an average for all accoimting farms in this area, the pa.:Tnents actually received were $32 more than sufficient to pay the 193^ taxes.

It is interesting to note the use made of contracted acres on the accounting farms in this area. The average farm had 19-'2 contracted acres which were used as follows: 12.5 idle; .3 red clover; 1.4 sweet clover; U.2 mixed clover; ,3 alfalfa, and .4 acres v/ere in other crops. Fnen the government restrictions on the use of crops grown on contracted acres were removed, the legume crops v;ere the most profitable as they f i-irni slied hay and pasture where badly needed in drouth areas. The legumes ha,d the further advantage of being immuae to p.ttack from chingh bugs.

Farm earnings were inflijenced indirectly by the AAA j^rograms in that the reduction in production increased the price of the commodities in- volved. The drouth was a more important factor in reducing production than the adjustment programs, yet if it had not been for the corn-sealing pro- gram there would have been but little corn in the l:'ands of farmers at the time the major price advance became effective.

■)U&

Factors Ilelping to Analyze the rarra Pusiness on Ujj Macoupin Cormty Farms in 193^1-

Items

Size of farms — acres -_---____i Percent of land area tilla'cile Percent of tillable land in lia/ and pasture -_---_-_-----

G-ross receipts per acre Total expenses per acre llet receipts per acre

Value of land per acre Total investment per acre

15 most

profitable

farms

15 least

profitable

fams

Acres in Com Oats 7/heat Soybean

Hay _ _ _

Tillable pasture

Crop yields — Com, bu

Oat

T^ieat, bu. per a.cre -

Soybeans, bu. per acre

Value of feed fed to productive I Returns per $100 of feed fed to

productive livestock iletumc per $100 invested in:

Cattle

Poultrj' Pigs viee^noi per litter Income per litter farrowed Dairy sales per dairy cow^ Investuent in productive L.3. per A HeceiTDts from productive L.S. oer A

Man labor cost per crop acre - - - Machinery cost per crop acre - - - Power and mach. cost per crop A. -

Farms with tractor --------

Value of feed fed to hornes- - _ -

Man labor cost per $100 gross inco:ne- -------------

Expenses ner $100 gross inco:ae - - Farm inprovemonts cost per acre- -

Excess of sales ovar cash expenses Increase in inventory- ------

Hate earned on investment- - - - -

G-ross rccei-Dts -ner farm- - - - - -

-.r4

309

Ch.irt fcr Studyin',- the Efficiency of Various Pr.i'tc of Yovx Business,

I'acoupin County 193^

Ihe ipjmlDei-s above the lines across tlie middle of the paf^e are the averages for the

1^5 faruis included in this report for the factors named at the top of the page.

By drawinf; a line across each coliimn ot the nvcber meastiring the efficiency of your farm

in th-it frctor, yon can coinparo your efficiency v/ith that of other fprmers in yoi^.r

locality.

Bushel

S

1

1

Cost per

1 1

1

C-ross

per acre

t

crop acre

0

i 1

receipts

... ..._j_

1

(D

1

0 1—1

1

1

P-

;-( <L>

1

!

1 1

1

0

0 =M

u w

■*^.

1 o

»;

E ''Ti

Pi<

CD 4^

M

! - 1

^

s

c

0 0

-d

1 P. Pi

0

n

"^ q

o ,

05 Oi 0 +^

(D m

1 -H

fi:

h-i

r:

S ^-

o u

0 cm

S 0

1 +> (0

■H

^ S

'".-H

f, -1-^

S o

M i-^J th 0

0 Vh

nd >^

1 " 0

0 CD

'r, n

H 4-3

rf u

^ >

0

!^ U

1 0 0

0 u

> P

0

p

fi

Q C

-O

m .ri

>; C

V, Vi

<A 0

1 0 u

<si 0

0 M

u

p

.H 1

o >

•H

.. "5

U -H

.r^ 0

S

-u -4^

0)

0

ri

1

r..

-P

•• 1—1

!^ 'd

-|J

U Sh -H

1 U OT

(D Pi

m

a;

tn

ca :

o •,-,

id

w

Tj

C;

fH

cj c

• 0

0 0) r^!

1 0 C3

^ 0

0 ,c;

0 1

-IJ

o

M U

1 -H U

•^- 0

m 0

^ & 0

1 rt; 0

0 >

rH M

u

fH

"^ 1

^ ^^

1 o

rf

^

! .Q «

d (U

0 r-;

• pH

("J 0 d

ci f-i

S S

ci Cu

CJ

c

0 ;

o

o

W Ph

W P-,

fw -ee-

1-1 -yj-

^ Ph ^

M f>.o

1-H .H

CO 0

ft

ft

■^

n.U 1

IS

2U

37

1 17S

130

H3^

2R2

^. ««»^

, ,

20 3b

3300

21

jUoo

i+30

! i 11. U

i6

21

■^u

13s

133

394

227

1 1 1 1

1

lbS6

2900

19

bUoO

390

C'.4

ii;

IS

31

l^S

lib

--i^U

202

1 .SI —

13

12 gb

2^.00

17

f^Uoo

1 330

1 7.^

12

It

2S

lis

i , 'T' \ 3lU

_.. J.....

i 1 2.61 '46

21

ss5

2100

13

UUoo

31c

1 1 i

10

- — 1 12

2'5

9S

1 i S2 27U

1^2

U.Ui 1.31

29

Us5

1700

13

3U00

?.I0

1

s.l

S.i^

21.0

7S

1 i ' 1 53 i23U

127

1 1 1 6.21|2.l6

37

00

1^U3

10.6s

2U29

227.3

f- i ! 1

b

D

19

■ ■ ■ -1 ';0 j

1 1 i j 4S j IQ4

102

— r 1 i 1 3.0l|^.01

Uir

-^lU

onr,

0

lUoo

I'^O

!i 1 1

i "

i i

-.6 ! U

5

16

1

; i 31 ll^H 1 77

i 9 . SI ! 3 . S6

53

-71U

'-00

7

Uoo

130

1 1

^-1 c

0

1^

IS 1

) 1 j lU iilj

1 ^.2

1 ' 1 1 i 11.61 iu. 71

61

-iilU

If 0

3

1 '.0

1

0

1 i 10

1 1

7Ui

27 !

1 i 1 1 i l3.Ull-.36 j

69

-IfSlU

3

70

( \ i \ 1 ■-:; c 1

1

1 ! i

i

1 ■ 1 1 1 - ^U i 2

1 f i 1 1 l3.2ii6.Ul

1 1 1 77 i

1 -191U1

1

30_.__

-10-

Inflncnce of Price C'r^n^^s on T^.vrn Zaruinisrs

Farm prices in 193^ advanced more rapidl/ than did the prices of corxiodities v7hich fanners bo-ught. Pmiiers of the United States as a groiip could e:ccliange their farm products in 193'^ ^or 7^ percent as many goods as for the period l^OS-lSfl^j v/Mle in 1533 they received only Gk percent, and 1932 only 61 percent as much in exchange for wliat they h^d to sell as in the prewar period. In the :r.onth of Febitisry, 1335 » this index of purchasing pov;er hiad increased to 37 percent of pre?/ar, the index of famr prices l^avin;'; risen to 111 as compared with £.n index of I27 for connaodities which farmers "buy. TTlaen the line representing farni prices drops helov/ the line represent- ing prices paid by fanners, fa.rm earnings are very low, but v.hen these lines come close together faira e-^-rnings increase. (See following jr? ph. )

Index of Prices

Hate Earned

150

125

100

75 50

25

= pann prices in U. 3. Aii-g. 1909-<J'uL3'" 191"+ = j-OC

= Prices paid by farmers. A-'Jg. 1909-Jtily 191^<- = IOC

n = Rrte earned en investment, accounting faras, central Illinois

I25C

10";^

b];o

J I-

-2^

-H

1917 'IS 'I5 '20 >21 '.;2 '23 '2U '25 '2c '27 '2?: '29 '3O '3I '32 '33 '3U

311

-11-

Sincp the pric« of sone farrn products- advancRd miich. nore rapidly during 193^ tlifm other products, it is evident that 'jome farms v/oi:ild henefit more than others, depending upon the kind and quantity' of prodiictc sold. Grain prices advanced much uore rapidly than livestock nrices; which result- ed in a very had price ratio for farmers vfho "biiy larj^^e qtiantities of feed. The average Illinois farra price of corn was Ul cents a, "bushel in January, 193'-l-; it advanced steadily imtil the end of the year v/hen it was gS cents a hus^iel. Other grains made marked advance although not so great an adva.nce as corn. The price of hogs fluctue,ted from a lov/ of $3*20 a hundred in May to a high of $6,,.3C in September. The low point in the fall came in iJovemlDer when the average price was ^^.IC. The price has advanced quite rapidly since Fovember, the average price being $7*5'^ i'oi' Pebruary, 1535* Beef cattle were worth $H.10 a hundred in January, 193^^ and advanced each month i^ntil Sentember, when the price vrtxs $5.90. They dropped to $>20 in December but increased a,gain to $7.U0 for February, 1935 •

The year 193^'- f"'6t a record for the reduction in the numbers of livestoCxC. The percentage decre.a.SRS by species were a.s ffllows: horse?, 1.1

ho;

percent; n.ulps, ? .G percent; all cattle, 11.2 percent; she'-p, U.7 percent; 35*3 percent. ",Tien all species are combined on the basis of their ca;pacity to consume feed, the reduction was I3 percent. This reduction will greatly reduce the demand for feeds prodvjced in n35«

The relative change in prices of important coi.j:iodities may be noted in the follov.'ing gi^arih, v;hich shows the average Illinois farm prices by months as a percentage of the average prices for the period I92I-I929.

Percent

120

Price Indices, 193^+

(I92I-I929 ^ ICO)

ent

Oct

Jan. ?eb. Mar. Apr. I lay .June July Aug.

All commodities index represents the wholesale price of a large number of commodities for the United Status, as ccm.puted by Bureau of Labor Statistics.

Grain and livcstoci: indices represent average monthly faim prices in Illinois,

712

-12-

A comparison of ;;rodf-ction, income, and e::penditures on the ac- coiontin/; farms in Macoupin Co\mty for the last five years is very interest- ing "because of the violent changes in price level. 193^ ^^"^s the second year of veiy low crop yields, yet total receipts per farra were higher than in any other year in the last loui" and were ^U percent of the 1929 gross receipts. O'/ier.-iting costs per acre were lower than in any year of the five e:x:cept 1933- Thus profits were the "best the county had experienced since 1929*

Earnings in 1935 > ^^ us^oal, will depend upon individi:ial efficiency, weather and prices. A normal year will mean larger yields of grain and pro "bah ly lower prices.

Comparison of Earnings and Invest.nents on Accoimting Farms in Macoupin Co-ujity for I93O-I93U

Items

IIi3ra"ber of farms- ---------

Average size of farms, acres - - -

Average rate earned, to pay for

management, risk and capital- - - Average la"bor and management wo.ge-

G-rosE income per acre- --__-_ Operating cost per acre- - - - - -

Average valuB of land per acre - - ■Total investment per acre- - - - -

Investment per farra in :

Total livestock -_--_-_

Cattle

Hogs- ------------

Po-rltry -____

Gross income per farm- -_-_-_

Income per farm from:

Crops ------------

Liiscellaneous income- - - - -

Total livestock -------

Cattle ______ _-

Dairy so.les ---------

Hogs

Poultry -----------

Average yield of com in "bu. - - - Average yield of v,'hea.t in "bu.- - -

1930.

17

2g 207

2.S-? 3

15.00 11.27

89

13U

1931

33 221

-3.2fb $-1 5a'7

7.31

11.12

1932!/' I 193317

2 520

1 211

598

151

3 109

k3k

67

2 cOS

25I1

797

1 290

250

29 17

76

119

! 2 6U0 ' 1 kzs 516 139

1 517

20

1 556 260

U17 601

213

33 26

U2 20 s

-2.1)J $-916

6.02

7-99

Si 95

1 78?

325 115

1 252

52

1 200 127 U05

512 12 o

"SO 15

30

209

2.15^

g-U3

0.25 7.39

56 89

1 799

1 03U

2U0

108 1 930

296

39

1 575

331 593 116

22 15

I93U

k5

228

3.U1/. $221

10.68 7.79

55

1 530

777 219

S7

2 U29

U91 2 1 Sok 371 537 660

75

22

i

1/ Records from Jersey a.nd Macoupin Counties for 193^ s-^^. 1932' 2/ Records from Macoupin and Montgomery Coimties for 1933-

313

AMUAL PARI/I BUSINESS REPORT Oil T3IIRTY-TW0 P.ARi.IS IN JERSEY COOTTY, ILLINOIS, 193U

P. E. Jo}iiistor., J. E. Wills, and E. L. Sauer*

Farni earnint-;s on the 32 accounting farms in Jersey County averaged 3.3 percent for 193^. which is the second higliest retiirn during the past five years. 1933 was highest y/ith an average return of ^.S percent. The 193^+ re- tui-n is remarkahle considering the severe- drouth and chinch bug damage.

These 32 accounts show for 193^'- ^-^ average net inconie of $670 per fam, as compared with an aver8.ge of $g06 in 1933> ^^^ 3-^ average net loss ■ of $UlO in 1932. The average cash incoue in I93U was $2,99S per farai, the cash "business expenditures $1,490 per farm, les.ving a, cash balance of $1,^02 to meet interest payments and fa-nily living expenses. (Those who keep home account books use the latter figure to represent the cash contribution of the farm to the "reelized faiuily incotie".) The low yields 'vvero directly respon- sible for the decrease in inventorj'' of $53 ^ farm. This decrease, dcdiicted from the cash balance, resulted in an average excess of receipts over ex- penses of $1,^-95 2- farm.

These data must not be considered representative of average faim conditions, for they were secured from farms which are lai'ger than average, and which were managed by farmers who are more efficient than the avera.ge of all farmers in the county.

For the state as a whole, farm earnings were better in 193^'- than in 1933 > i^ spite of the fact that corn and oat yields were very low diie to the drouth and to chinch bug damage. In the western and southwostorn parts of the state the drouth caused an almost total failure of both corn and oats, which a.ccounts for farm earnings being loiver there than in other parts of the state.

The com crop wa.s best in the southeastern part of the state, and ?/as fair in the northwestern section. Tinaeat yields were particularly good in the south and central portions of the state. Soybean yields were very good throti-ghout the state, and there was a larger tlian normal acreage in Illinois in 193^"- This state produced over half of the nation's 193^ crop of soybea.ns .

Chinch btig damage extended over most of the sta.te last year, but was much more severe in some sections than in others and was much vrarse on some farms than on other farms in the same co'imunity. Conditions a,ffecting crop yields were very spotted. Tliis accounts in part for the wide variation in farm earnings from one section of the state to another, and the wider variations than usual from one farrr. to another.

*C. T. Kibler, farm adviser in Jersey County, cooperated in supsrvising and collecting the records on which this report is based.

5lU

-2-

Industries other than agriculture again showed improved earnings over the previous year. A ^i;roup of oUo industrial corporations reported "by a nationally known haaik showed average earningr. of 5-0 percent on their in- vested capital in I93U, as corapared with 3.U percent for the same corpor- ations in 1933- A similar group had a loss of one-tenth of one percent in 1932, and average earnings of 3*3 percent in 1931*

In comparing the average earnings of corporations with the rate earned on invei5tnents on accoimting farms, it is well to keep in mind that in corporation accounting, charges are made for management, while in the farm accounts no comnarahle deduction has hoen made . On the other hand the farmer and Ids faiuily receive food, fuel, and other items of livin~ from the farm for which the farm has received no credit in the records vised in this report. For the average central Illinois farm familjr, consisting of five persons, the value of the food and fuel furnished hy the fanri was ahout $230 in 193*^1 when estimated on the "basis of the wholesale price for fann products.

Variations in Farm Incomes

There was a much wider range in farm earnings on the accouiTting farms in 193^ than in 1933- 'Hiis was true for the farms incluiod in this report, and it v/as also true when the average earnings of farms in one section of the state were compared with the earnings of lanns in other areas.

The extremely wide range in earnings was due to a combination of pliysical and economic factors. Tue average yields of wheat and soybeans were ravch "better, compared v/ith the five-year average, than the average yields of corn and oats. This variation favored those sections which had larger acreages of the higher yielding crops in 193^' There v/as also a wide range in average corn yields from one section of the state to anotlier, as well as "between individtial farms in the same area. The price of grains was high in 193'^» s.s compared v:itji i^rices of livestock and livestock products. Tarms where grain sales constitute a large part of the farm income thus liad an advantage. The rapid increase in the prices of farm products, particularly grains, favored those farms which had Ifa-ge stocks of sala"ble products on hand at the "beginning of the year. Many farmers who inventoried the com on h-ind at the "be^cinning of 193^ at ^'0 cents a "bushel, later sold this com for SO cents.

In this group of 32 accovj:ting faimis the most successful third shows an average net income of $1,673. while the least sili3cessfi.iI third liad a net loss of $295' In 1933 "t^'^® ^''^'^ groups had favora"ble net incomes 01 $1,567 and $l'+7 respectively.

Investraents, Receipts, Expenses and Earnings on 32 Jersey Go^mty Fanns in 193^

315

Items

lour

farm

Average of 32 far.r:s

11 most

prof ita.'ble

fa,rnis

11 least profital^le farms

CAPITAL IirvTESTIIEiTTS

Land ----------

parm improvements- - - -

Livestock total- - - - -

Horses --------

Cattle -

Hogs ---------

Sheep- ------- -

Poultry

I.'iacliinery and equipment- Feed and grains- - - - -

Total capital investment-

13 192

?. 900

1 U*^?

mil

659

2gl

37

66 1 336 1 291

$20 176

5ECEIPTS Aim liET lilCBSASES Livestock total- - - -

Horses ------------

Cattle

Hogs (including AAA payments )- oheep- ------------

Poultry- -----------

Egg sales- ----------

Dairy sales- ----- — --

Feed and grains (including AAA xayments) -----------

Labor off farm ---------

Miscellaneous receipts - - _ - - Total receipts & net increases

1 766

k

225

gUl

Uo

55

87

31U

579 S3

r O

$ 2 U3U

16 251

3 6U9

1 580

U62

771

350

2U

73

1 S76

1 657 $25 1^3

2 3og

Ig

27s

1 272

21

51 122

626

1 irU

QO 111

3 6I16

.-13 OU'

959

126

3U9

33

39

5S 35U

252

95

$ 1 306

EXPEZISSS AIID HET DEGPJIA.SES

Farm improvements- - - -

Horses ---------

Miscellaneous livestock decreases

I.'!achinery and eq^Jlpment- Feed and grains- - - - -

Livestock expense- - - -

Crop expense ------

Hired labor- ------

Taxes- ---------

Miscellaneous ex'ienses -

22U

279

21 129

log

1S7

31

Total expenses & net decreases

$ 2ZS

220

3I+U

31 Igc 166 205

$ 1 17s

2l|g 2

235

7

77

37

157

30

221

ffiCEIPTS LESS EXPENSES-

and

•Dotal unpaid labor- - - - - Operator's labor - - - I Family labor ----- Net income from investment ' management -----------

lATE EABI'IED 0i>I IHVESTi.iEl-TT

teturn to capital and operator's labor and management ------

% 1 1|35

7S5

509 276

670

3o2^a

t)^ of capital invested- - - i'^ABOP AI€i I.LWTAGEl.IEiTT WAGE -

1 179 1 009

,. 170

$ 2 If/^S

795 5 1+0

255

1 673

2 21^

^li

1 25s 955

gog

U9I 317

-295 -1.96^

196 752

31b

Tlie Tollowing table shows the nvrriber of fanas having certain net incomes per acre. There was a marked difference between the most sticcessfiil and the least successful far.7\s.

Ave ra^e	net	income	Nunher	of	AveraiT^e m	it	i nc ome	IT-umber of
oer	acre			fan:is		per	acre			farms
$15.				1		$ 1.				1
11.				1		-1.				5
9.				1		_7 ,			.	2
7-				k					•	2
5-				6		-7 -r •			. . . .	1
3-				s

A further study of the farm husinesses, made "by comparing the in- vestments, receipts and expenses of the group of farms having the higliest net income with those having the lovvest net income, should throw some light on the question of why some farmers are more successful than others. This comparison is shown in the table on page 3-

The most su.cccssful fanns averaged 232 acres each, the least suc- cessful loS acres. This difference in size accoimts in part for the vari- ation in the average investment, receipts, and expenses in the two groups. Difference in receipts from the sales of hogs, grains, and dairy sales ac- counts for much of the difference in income betv/een the two groups. Althougli the expenses per farm were higher on the most profitable farms, the total expense per acre, incltiding the charge for family labor, was less the in it was on the le.ast profitable farms.

Changes in Inventories p.nd Inventory Values

The year 193^ "^-s similar to 1933 ^^ that the prices of fann products continued to advpjice, causing fui'ther increases in inventory values. Owing to the poor c rop yields in 193^ there were fev/er bushels of grain on h^nd to inventory at the end of the year than at the beginning. The value of the smaller amount of grain, however, was greater than for the larger amount on hand at the beginning of the year.

Bushels of Corn Inventoried

Jan> 1. IQVT

Dec. 31. 193^

AversLge of all farms

Average of 11 most sujccessful farms . Average of 11 least successful farms. Your farm . . . .

1 ^73 1 9S2

753

2SU

Uo

The most profitable farms iiad a much larger inventory of corn, both at the beginning and end of the year. 'iJith the rapid rise in corn prices, this was an important factor in accounting for the difference in returns from feed and grains.

317

The 32 Jersey County farms show an average inve:itory decrease of $53- The 1953 inventory values increased $117. while in 1932 there was an inventory loss of $^30. In 193^ there were decreases of $97 in improve- ments, $62 in livestock, and $32 in machinery. Feed and grains showed an increase of $138. The inventory decreases in machinery was the smallest since 1929» and indicates that needed repairs and repla,cements are heing made, out still not eno"ugh to offset ciirrent depreciation costs.

Inventory Changes for 193^

Beginning Closing Inventory Inventory

Items inventory inventory changes changes,

I-I-3U I2_3l_-sl+ IQ-.l!- your farm

Total livestock $1 ^57 $1 395 $-62 $

?eed and grains 1 29I 1 ^+29 I3S

Machinery 1 336 1 3o4 -32

Improvements (except residence). 2 900 2 803 zSl

-otai ' $6 9SU $6 931 $-53 $

Some Adjustments on Jersey County ra.rms Since 1929

Farmers have heen forced to make adjustments in their cash ex- penditures as the result of changes in their cash incomes. From 1930 through 1933» ^am operating costs declined each year, hut the year 193^+ Dro'oght a reversal of this trend. The total operating expenses were U5 cents an acre higher in 193^ than in 1933» while cash operating expenses were $l,J+90 a farm in I93U, as compared with $1,383 in 1933 . The largest increa.se in cash expenses over the previous year was for machinery and repairs for machinery/. Low crop jrields necessitated the purchase of con- siderahly more feed and grain in 193^ than in 1933- Indications point to an ercpansion of spending in 1935 ^or machinery and improvements, since fariT.ors have postponed repairs and replacements for these items during the four-year period since 1930-

Cash Income and Expenses on Accoxmting Farras in Jersey Count;/ for 1929 and 193^

Your Average cash Your Average cash

Items farm expense per farm farm income per farm

193ll- 1^3^^ 1929 193U 193U 1929"

Livestock $ $ loo $1 05S $ $1 996 $U 576

Feed and grains 335 775 776 1 200

Machinery 3gl| 739 I37 15I

Improvements I27 32O 1

Lahor 103 512 S3 97

Miscellaneous . 3I 33 o 37

Livestock expense 21 57

Crop expense I29 217

Taxes 1£7 283 _jm

Total $ $1'U90 $3 99U $ " $2 99s $6 062

Excess of cash sales over expenses $ $1 3O8 $2 068

Increase in inventory -[^3 566

Income to Ishor and capital (Receipts less expenses^. .. . 1 '455 2 63U

r -o-

Thc cviTQ-alative effect of several years of low agricultural ■prices on the demand for roanufactured goods can readily "be ascertained "by a compari- son of cash farm expenditures in 193^ with those in 192?. Althotiga the av- erage cash income in 193^ "^-s ^9 pex'cent of that in 19c^9. cash e:!:penditures were only 37 percent as large. In 193^ livestock purchases were lb percent, and feed and grain purchases U3 percent as la-"ge as in 1929- I-i 193^ these farms paid out 52 percent as much for machinery, Uo percent as much for im- provements, and 59 pci'cent as much for crop expense as in 1929» while taxes wer wei^ reduced to 66 percent of the I929 l^vel.

Compprison of Farms With High and Low Earnings

The most profitahle farms in this study had net receipts ^ler acre of $7«22, as compared with a loss of $1.76 for the least profitahle £,'roup. The reasons for this difference may he obtained from a study of the data on pages 3 ^Jtid 2.

The most profitable farr.is were larger and carried larger in- ventories of both crops and livestock on which to make a -orofit when prices advanced. The most successfiil farms had 26.5 more acres of com, I5.S more aci-es of wheat, I3 more acres of soybeans, Z.?. more acres of oats, and 7 more acres of "nay than the least profitable f arras . In addition to the larger acreage of crops, they had higher yields, having l4.U bioshels more oats, 7*2 bushels more whea,t, 1.\ bushels more soybeans and 1.6 bushels more corn per acre than the least profitable. Differences in acreage of wheat and soybeans, the high yielding crops in 193''''> ^f^s an important factor in accounting for the variation in rettirns from feed and grains be- tv/een the most profitable, and the least profitable f axTas .

The most profitable farms v/ere more intensive and more 91: icient in their livestock "oroduction tlian the least profitable farms. They had an investm.ent in productive livestock of $5-21 pf?r acre, pud fed $2,071 of feed per farm, as compared to $U.37 invested per acre, and $S71 of feed fed per farm on tit least profitable farms. The most profitable farms laa,d returns of $llU per $100 of feed fed, while the least profitable farms had reti.ims of $110 per $100 of feed fed. There was an income of $95 per litter fa.rrow- ed- on the most profitable farms, while the least profitable grou.p received only $^5 per litter. The most profitable farms had dairy sales per dairy cow of $gO, as compared with $^-1-1 for the least profitable farms.

The larger income on the most profitable farms was saciired with a total operating cost of $8.32 per acre, as compared with $9*5^ P^i" ^cre for the least profitable farms. Tlae man labor costs were $2.96 per crop acre lower, while power and machinery costs were 4l cents per crop acre lower for the most successful farms.

-7-

Inl'luence of AAA Prograrns on Cropr)in.g: Syaterns and Fan^v Ircomes

The faiTn-accoimt records in Illinois were influenced iDoth directly and indirectly- "by the corn-hos and wlient adj\i£tment prograras. A ?.ar:;e per- centa.ge of accoimting farms were under one or both contracts in 193'+' The acreages of corn and Vvfheat on these farms were therefore less than normal. This should have resulted in lever operatint;^ costs. Corn-hog "benefit pay- ments for the entire 193^ program will total aoout Uo million dollars for the state, while wheat benefit payments will he about 2.U million dollars.

The benefit ■na.yments for accounting farms are indicated in the following table, which shows the average pa;^'raerit for those f arias receiving payiaents, and includes only those payments received by the cooperator before the 193''" books v/ore closed. In some cases only the first corn-hog chech is incltided, while in other cases the second check had been received. The second pajmicnts not received and the third T)ayracnts will be entered in the 1933 book.

AAA. Benefit Pa^/^ents Received in 193^

Coi-Ti \'n.\eat Hogs

Ave rage

iTumbcr Amoimt IJimber Auiount linmoer Amount

j^ J? ^ nf all

of per of per ox per --^ -^j- ,

j:- . J- r. . r- pa-vmentsi'

farms larm farms laiTi lar.ns farm ^ -

1/3 most profitable farms 11 $100 6 $1^0 11

1/3 least profitable farms 10 ^U 5 I36 9

All accounting farms 30 yS I9 I27 29

$17U	$355
103	196
ihE	233

1/ Total benefit riayrnents reported by accounting farms imder contract for 193^ divided by total number of accounting fairas.

On most farms the cash received from benefit payments v/ill more than pay for the year's ta:ces. As an average of all a.ccoujiting farms in Jersey Coimty in 193^> "t^e paj^mients actiixilly received were $96 more than sufficient to vc.y the 193'^ taxes.

It is interesting to note the use ma-de of the contracted acres on the acco'cmting farms. The average faitn had 17 -^ contracted acres which were used as follows: ]>.! idle; I.7 red clover; ]> .0 sv/eet clover, [1 .S soy- beans ajid cowper.s; .U alfalfa a.nd 3«^ acres were in other croBS. These data indicate that most farmers made good use of their contracted acres from the standpoint of soil improvement, as a large part of them were in legumis. Wlien the Government restrictions on the xxse of crops grovm on contr.:xted acres were removed, they w.3re on many farms the most profitable crops, as they furnished liay a.nd pasture where badly needed in drouth areas. The leg- umes h:-d the further ;',dvraitage 'f being imj.iune to attn,ck from chinch bugs.

Farm earnings were influenced indirectly by the AAA programs in tha.t the reduction m production increased the price of the commodities in- volved. The drouth was a more important factor in reducing production than the adjustmert programs, yet if it ha.d not been for the corn-sealing program there would have been but little com in the hands of farmers e.t the time the major price adva^nce beccme effective.

320

Pactors Helpin/^ to Aral^'ze the Ja.m Business on 32 Jersey County Farms in 193^

Items	Your farm	Average of 32 farms	11 most profitable farms	11 least profitable farms
Size 01 farms — acres --------		202.0 81.0 37-0 12.07 8.75 3.32 65 100	232.0 sU.o 30.0 ih.7i+ 3.52 7.22 70 109	16s. 0
Percent of land area tillable- - - -		73.0
percent of tillable land in hay and		U3.O
Gross receipts -oer acre- ------		7.73
Total expenses per acre- ------		9.5^ -1.76 60 90
l\et receipts ner acre- -------
Value of land per aci'e ------ -
Total investment per acre- - - -
	■
Lr'T'PQ "1 Ti r^rwr] _ _ _		13.7 32.5 7.1 2U.7 35-3 8.5 13.8 20.9 13.5	57.5 16.1 142.5 ik.k 29.5 29. 8 6.8 22.1 2U.O 17.1	31.0
Oats- ------------		7.5
^leat		26.7
Soybeans- ---------		l.U
Hay		22.5
Tillable pasture- -----		29.9
Crop yields — Corn, bu. per acre- - -		5.2
Oats, bu. per acre- - -		7-7 ■
Wheat, bu. per acre - - Soybeans, bu. per acre-		16. S 10.0
Value of feed fed to productive I.S.		1 570 112 112 209 6.5	2 071 iiU 117 23U 6.5 95 SO 5.21 10.23	871
Ret-ams per $100 of feed fed to productive livestock- -------		110 •
Returns per $100 invested in: Cattle - -		98
Poultry --------		176
Pi^s weaned per litter -------		r 0
Income per litter farrowed -----		7S	45
Dairy sales per dairy cow- -----		60 5.01 8.7I+	41 ^.37 5.72
Receipts from prodvj:;tive l.S. per A.
rian labor cost per crop acre - - - -		S.67 2.18 3.82 213 35 72 1.11 1 50 8 -53 3.32^^ 2 k^k	■^•57 2.07 3.65 280 23 5U 1 959 509 6.65^; 3 bU6	8.53 2.55 V.06 138 60 123 1.1+8 828 -1.96-;^ 1 306
Machinery cost ner crop acre - - - _
Power and mach. cost -oer crop A. - -
"F^TTi^ v/*! "hVi T T*;^! r* +" n T* — ~. ~~
Yalve of feed fed to horse r.- -
fen lator cost per $100 gross
Expenses per $100 jjross income - - -
PaiTO improvements cost per acre- - -
Excess of sales over cash ex"nenses -
Increase in inventory- ------- Rate earned on investment- -----
Gross receipts -oer fana- ------

-s-

321

Chart for Stiodying the Efficiency of Various Parts of Your Busiaess,

Jersey Coimty, 193^

The ntohers atove the lines across the middle of the pa^e are th<^ averages for the 32 farms included in this report for the factors named at the top of the page. 3y drawing a line across each coltinm at the nuraher measuring the efficiency of your farm in that factor, you can compare your efficiency v/ith that of other farmers in your locality.
4^ 0 > p§ 0 13.3	Bushels per acre	1 Ph	E (D 0 Vh •H 0 • 0 C/3 0 • i-t	Cost per crop acre	0 0 1— 1 -09- U m ft. ft •H -(J 0) w 0 0 CD 0 ^ U W 0 in rO 0 cti U 1^ M	•H CD Jh' W 0 d -p <D B fn q; 0 > fi B	CO <D to CD a > ft 0 X G) rH to CO 0	Gro s s receipts
0 0 23	-(J
0 0 ^i « (U +:> •H •■ rH w W ft	tn 0 r-f >^ CO -H •H U 0 ft	CD 0 a 0 4J ■H Q) > -P ^3 8 0 rH	u 0	U -H Q ^ > 0 0 £S PL, S	0 a u Pi 22	1 1
3^ i31	138	110	U09	237	— — _»,	IUU7I 6900	9'-iO0 400
11.3	20	i 30 29	126	1 100 1 369	212	1.07	i 1 t 1	III+7	^^900	20	U800	360
1 9.3	17	1 i 26 27	iiU	1 90 329	187	2.U7	.22		8U7	U500	1 "	I42OO	320
7-3	Ik	1 22 25	102	i 1 80 1 289	162	3.87	1.1+2	11	5U7	',900	16	3600	2 so
1 ^.3	11	18	23	QO	70	2U9	137	9.27	■ 2.62	23	2U7	2900	Ik	3OCO	2^10
i i 3.32	s.^	13. s	20.9	7S	60	209	112	6.67	3.82	35	-53	1508	12.07	2k^k	202
■I 1.3	5	10	19	66	SO	169	S7	3.07	9.02	^7	-3-~3	500	10	1800	1 160
-^ 1	2	6	17	SU	HO	129	62	3.^7	6.22	99	-653	-900	8	1200	120
1 1 1		0	1 i 1 15 i U2	30 1 89	37	10.8]_	7.U2	71	-953		6	600	SO
I U.7			13	30	i 1 1 , 20 U9	12	12.27	8.62	31	-1293		k		ko
1 1 -6-T 1			1 ! IS	10 9		13.67	9.82	95	-19^3		?

-1..-

Infl-.ience of Price Gh:-'nges on F-irr.i Earnings

Parra prices in li^3'^ rdvanced r.ore rapidl/ thpji did the prices of cpTTiuodities ^;hich famers bo"ii'?;Lt. Fr..imers of the U::ited States as a group could ejcciiange their fam; products in 193^ ^o^^ T'^ percent as many goods as for the period 1903-1;)!'+, wMle in 1933 ^■'^^j' received only ok percent, and 1932 only 5l percent as much in exchange for what they Ijxd. to cell as in the prew-u' period. In the month of '^e'orv&ri^ , 193? 1 tiiis index of puz-ch-asing pov/er had increa.sed to SJ percent of prcv/ar, the index of farra prices having risen to 111 as compared with an index of 1^7 for coniniodities which farners "buy. Taaen the line representing lami 2^rices drops helov/ the line represent- ing nrices paid "by f aimers, farm earnings are very low, but v/hen these lines corae close together farra earnings iiicrease. (See following gr.-^ph. )

Index of Prices

Ea.te Zrrncd

2CC

175 If-O

1^5

ICO

75 50

= Farrr. pricea in U. £. Aug. 1909-July 13l4 = IOC

■ = Prices psia by faraers. Aug. l-3C9-'''"uly 131^ = IOC

= Rate earned on investment, accouriting farns, central Illinois

■i-<-/3

lOi

Bi

070

2^

oi

-^$

J 1 1 1 ! L 1 J 1 ' I I ' t 1,, ., i..

^^M

1917 'IS 'I9 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '3I '32 '33 »3l4

323

-11-

Sinco the price of sor:e fam products advanc<=^d much more rapidly during 193'^- tlian other prodi3x;tR, it is evident ths.t some farms would benefit .:?.ore than others, depending upon the kind and quantity- of prodi^-Cts sold. Grain prices advanced much aore rapidly than livestock prices; which resxilt- ed in a very had price ratio for farmers who "buy large (aiantities of feed. 'I'he average Illinois farm price of corn was Ul cents a hushcl in January-, 193-'-5 i"t advanced steadily imtil the end of the yea.r when it was S2 cents a "bushel. Other grains made narked adva,nce although not so great an advance as corn. The price of hogs flucto^.ted fron a low of $3-20 a hundred in May to a high of $6^.30 i^ September. The low point in the fall cp-me in licvemher when the average price was $5.1C. The price has advanced q-oite rapidly since Fovember, the average price being $7*50 for February, 1535 • Beef cattle were worth $U.10 a hundred in Jamiary, 133^ s-^i ^-dvanced each nonth imtil Set)tember, Vviien the price was $5.90. They dropped to $5.^0 in December but , increased a;gain to $7"^ for Febror.ry, 1S35*

Tlie year 193^ ^st 3- record for the red'action in the numbers of livestock. The percentage decreases by species r^.re as follows: hcrsee, 1.1 percent; mules, ?.(; percent; all rattle, 11.2 percept; shj/g-ep, U.7 percent; hogs, 35 O percent. Wnen all species are combined on the basis of their capacity to consunie feed, the reduction was I3 percent. This reduction will greatly reduce the demand for feeds prod^jced in 1935*

The relative change in prices of important commodities may be noted in the follov.'ing gi'aph, -i/hich shov.'s the average Illinois farm prices by m.oiiths as a percentage of the average prices for the period 1921-1929.

Percent

120

Price Indices, 193^+

(1921-1929 = ICG)

All conmodities inde.T retire sent s the wholesale price of a large nun:ber of^ comiaodities for the Uaitod States, ps computed by :rareau of Labor S-atistics. Grain DJid live stocic. indices represent average monthly farr-. prices in Illinoii'.

■^2h

-12^

Variation in Sarnings Over Five-Year Period

A comparison of production, income, and expenditures on the ac- co'onting; farms in Jersey County for the last five years is very interesting because of the violent fl^ictxiations in price level. Althotigh the 193^ crop was nearly a failure and followed a s.na,ller than averas^c crop of 1933 ■ 't^^e increased prices of "both grain and livestock did have considerahle effect in holding earnings in second place for the five-year period 1930-193^*

Earnings in 1933» 3-s usual, will depend upon individual efficiency, weather, and prices. liTith normal weather conditions, prices of grain are likely to go down to a more normal level v.'hicli v/ill give individual effi- ciency the rcsponsihility for higher earnings on c-ich farm.

Comparison of Earnings and Investments on Accoujiting Farms in Jersey County for I93O-I93U

I tens

Famher of farms ---------

Average size of farms, acres- - -

Avers.ge rate earned, to pa.y for manageracnt, risk and capital - - Average lahor and management wage

G-ross income per acre ------

Operating cost ■oer acre - - - - -

Average v^lue of land per acre- - Total investment por o.cre - - - -

investment per farm in:

Total livestock- ------

Cattle

Hogs

Poultry- __-_---_--

G-rosc income per farm ------

Income per farm from:

Crops- -----------

Miscellaneous income - - - -

Total livestock- ------

Cattle ---------

Dairy sales- --------

Hogs ------------

?o"'-'ltry- ----------

Average yield of corn in hu.- - - Average yield of oats in hu.- - - Average yield of wheat in hu. - -

193'

oU

22 207

2.Sf.? 3

15.00 11.27

sq 13U

2 520 1 211

59S 151

3 109

1|V4

67

2 60s

25U

797

1 290

250

29 32 17

1531

33

20l|

-2.2fo t-l 272

7.35 10.11

s6 126

2 092 921 562 125

1932^/

1 1+99

25

^7

1 U27

727 162

35 ^3 26

U2 20s

$ -916

•if^

6.02 7-95

61 3t

95

1 7SS

850 326 115

1 2h2

52 1 200 127 U05 512 122

50 32 15

19^^

2/

32 207

3M $ I5U

12.20 S.3O

73

108

1 721 87U ^60

'6U

2 525

796

31

1 69s

2^5

U3II

21+6

96

37 22 ]g

1934

32 262

•■^ i7C

3-31^

12.07 S.75

65

100

1 U57 659

221

66

2 U3^

579 6 1 766 225 51U 2U1

s

21

1/ Hecords fro.m Jersey and Llacoupin Coxaties inclixded for I93O and I932, 2/ Records from Jersey and Greene Counbies included for 1933.

MWJAL F./IEM BIJSI1I3SS REPORT ON TJIIRTY-Olffi FASiuS IN SAlTC-iU.IOK COUNTY, ILLINOIS, I93U

P. E. Johnston, T. R. Hedges, and J. E. Wills*

The farm earnings of J,l account-keeping farmers in Sangamon Cotinty shovired an increase in 193^ over those of 1933- This is the second con- secutive year of improvement in the ousiness of these fariS . The three years previous to 1933 showed very low ret'orns.

These 3I accounts show for 193^ an average net income of $2,06g per farm, as compared with an average of $1,393 ^-^ 1933) ^"'^d. an average net loss of $5^5 in 1932. The average cash income in 193^ ^'^-^ $3,332' per fairo, the cash business expenditures $3,039 per farm, leaving a cash "balance of $2,299 to meet interest pa.-'/'ments and family living expenses. (Those who keep home account hooks use the latter figui-e to represent the cash contri- hution of the farm to the "realized family income".) Besides the cash in- come, there was ^m inventor^-' increase of $386 per farm d^xc to the rise in the prices of farm products. This increase, added to the cash "balance, re- sulted in an average excess of receipts over expenses of $2,dS5 per farm. The inventory increase was a much smaller part of the total lanTi income in I93U than in I933 .

These data must not "be considered representative of average farm

conditions, for they were sec\ired from farms which are larger than average,

and which were managed "by farmers ?mo are more efficient than the average of all farmers in the county.

Por the state as a whole, farm earnings were "better in 193^ than in 1933s in spite of the fact that corn and oat yields were very low due to the drouth and to chinch hu^ damage. In the western and southwestern parts of the state the drouth caused an almost total failure of "both corn and oats, which accounts for fam earnings "being lower there than in other parts of the state .

The corn crop was best in the southeastern part of tlie state, and was fair in the northv/estern section. Wheat yields were particularly good in the south a,nd central portions of the state. Soy"'oean yields were very good throughout the state, and there was a larger tlian normal acreage in Illinois in 193^- This state produced over half of the nation's 193^ crop of soy"beans.

Chinch "bug damage extended over most of the sta.te last year, "but was much more severe in some sections than in others, and was much vrorse on some farms than other farms in the sane community. Conditions affecting crop yields were very spotted; which accounts in part for the ¥/ide variation in farm earnings from one section of the state to a.nothar, and the wider variations than usual from one farn to another.

* Edwin Bay, farm adviser in Sangamon County, cooperated in supervising and collecting the records on ivhich thio report is "based.

326

Industries other than agriculture again showed iiTiproved earnings over the previous year. A group of 8'lO industrial corporations reported hy a nationally Icnovm hanl; showed average earnings of '^.O percent on their inve'jted capital in ISJih, as coiapared with 3-^ percent for the same corporations in 15*33' A similar group h-ad a loss of one-tenth of one percent in 1932, and average earnings of 3*3 percent in 1931-

In comparing the average earnings of corporations with the rate earned on investment on accounting fann.s, it is well to keep in mind that in corporation accoimting, charges are made for management, while in the farm accounts no comparahle deduction has heen made. On the oth_r iiand, the farmer a:nd his family receive food, fuel, and other items oi living from the farm for which the farm lias received no credit in the records used in this report. For the avera-^ce central Illinois farm family/, consisting of five persons, the val^JO of the food and fuel furnished "by the farm was about $250 in 193'+» when estimated on the "basis of the wholesale price for farm products.

Variations in Fai-m Incomes

There was a much ^7ider range in farm earnings on the accoimting farms in 193^ than in 1933' This was tme for the farms incl-jded in this report, -ind was also tru.e when the average earnings of far.is in one section of the state are compared with the earnings of farms in other areas.

The extremely wide rcan;3e in earnings was due to a comhination of phj'-sicul and economic factors. The average yields of wheat o,nd soybeans were much hotter, compared with the five-yerr average, than t"ie average yields of corn and oats. This vp.riation favored those sections v/hich had larger acreages of the higher yielding crops in 193^^' There wps also a wide range in average com yields from one section of the state to another, p,s -.7011 as between individ^Vil f anas in the same area. The price of grains was high in 193^ ^^ compared with prices of livestock and livestock products. Farms where grain sales constitute a large part of the fanu income thus had an advantage. The rapid increase in the prices of farm rjroducts, part- icularly grains, favored those farms which had large stocks of salable products on hand at the beginning of the year. I.feiiy farmers who inventoried the corn on hand at the beginning of 193^ s-'t ^+0 cents a bushel, later sold this com for 20 cents.

In this group of yl accounting farms the most successful third shows an average net income of 53,377. while the average net income of the least successful third of the fairns was only $382. _ In I933 the comparable net incom.es for the tvro f;roups was $2,^33, and $1404 respectively.

-3- Investrnents, Eeceipts, Expenses and Earnings on 3I Sanfjamon Coi-mty farms in 193^

327

Items

CAPIT.^ IIJYi:STIdE!TJS

land ----------

Farm improvements- - - -

Livestock total- - - - -

Horses --------

Cattle --------

Hogs ---

Sheep- --------

Foiiltry- -------

Machinery and eq-uipment- Feed and grains- - - - •

Total capital investment

H5C?:iFTo AlID -JET lYlCBEASES livestock total- - - -

Your

farn

TiOrses ------------

Cattle ------------

Hogs (including AAA payirients)- Sheep- ------------

"^oultry- -----------

EgJ^ sales- ----------

Dairy sales- ---------

Feed and grains (including AAA payments) -----------

Labor off farm ---------

I

Miscellaneous receipts ----- _| Total receipts & net increases-:

'EXPSUSES AlTD IIET DECREASI

Average of 31 farms

31 607

k 073

2 2£1

510

1 166

U65

SO

60

1 U3U

1 57s

$no 973

3 017

56

95U

1 573 112

60

7S

ISU

1 160 76

SJL251

10 most

prof italile

farms

29 U9I

k U90

1 SSS

U96

■ ■ S69

1+02

69

■^2

1 27B

1 S99 $39 0^3

Uoi

FaiTO improvements- - - - Horses -_-_--_-- Miscellaneous livestock decreases

^

I.lachinery and equipment- Feed and grains- - - - -

Livestock expense- - - -

Crop expense ------

Hired lahor- ------

Ta::es- ---------

Miscellaneous expenses -

Total expenses a net decroases|$_

. 297

373

"^3 17s 35U 290

33

$ i^6s

32

1 9S2

lul

62

72

155

2 lUO 12g

3 669

$ 1

326

355

59 212

1+20

292

35

S99

10 least

profita"ble

farms

28 3--0

3 301 2 377

m

1 226

56I+

SO

33

1 653

1 U^i

C37 31^

sss

997

i;26 106

75 119

1U5

59

$ 2 9^7

2/0

435 322

4U 160

335 266

31

$ 1 S69

iffiGEIPTS LESS EaPSHSES-

total unpaid laoor- ---------

Operator's labor --------

, Family labor ----------

llet income from investment and

management- -------------

■lATE EA311SD OH IlTVESTI.lEHT j .

return to capital and operator's j

labor and management -------- -i

J of capital invested- ---------

J-30E AHD MlHAGEL'iEIIT WAGS 1$.

$ 2 6S3 617

Uss 129

2 o6j

3 970

593 U39

13U

<i

i25f'

2 556

2 0^[S

303

3 377

S.&31

$ 1 07 g

o"0 513 177

3SS

i.oUfb

3 33d

1 992

$ issU

901 1 365

to -964

32g

Tiie following talkie shows the ni^mher of fanns havin; certain net incones per acre. Tliere was a marked difference hetween the raost sticcessful and the least s\iccessful fa.n7is.

Average^ net in- coiae per acre

$17

15

13

11

9

7

111101136 r of

farms

2

1 2

5

U

Ave rag:e ne t in- come per acre

$5

3

1

-1

-3

-5

I'Tumher of farms

3 k 2 1 1 1

A further study of the farm husinesses made hy coraparing the in- vestments, receipts, and expenses of the group of farms having the highest net incoiues with those Imvin.'^ the lovrest, shoxild throw some light on the question of V7hy some far:ners are more sticcessful tlian others. This com- parison is shown in the tahle on page 3*

The most successful farms averaged 273 acres each, the least suc- cessful 2o7 acres. Tlie most successful farms had total capital investments of $39*0^3' ^-J^d. total receipts and net increases of $5,669 per farm, as compared with total capital investments of $37,312, and. total receipts and net increases of $2, 9^+7 per fa.rm on the least successful famis. Differences in receipts from feed and grains and hogs accounts for most of the difference in income "between the two groups. The most profitable farms secured their larger income with less eirpense, their total farm cjrpense, including the cha.rge for family lahor, heing $2,292 per farm, as compared with total farm expendit-ores of $2,359 pc- farm on the least successful farms.

Chajige s in Inventories and Inventory Values

The yer.r 193'^ was similar to 1933 ^^ tha.t the prices of farm pro- ducts continued to advance, causing further increases in inventory values. Owing to the poor crop yields in 193^ there were fewer hushels of grain on liand to inventory at the end of the year than at the "beginning. The value of the smaller amoi;nt of grain, however, was greater than for the larger amoTint on hand at the "beginning of the year.

Bushels of Corn Inventoried

7an. 1. 193*4

Dec. 31. 13^k

Average of all farms

Average of 10 most successful farms , Average of 10 least successful farrr.s. Your farm

2 279 2 S52 2 00i+

9Sb

1 506

615

The most profita'ble faiins had a much larger inventory of corn "both at the "beginning and end of the year. This was an important factor in accounting fcr their higher returns from feed and grains.

329

Tlie average inventory increase for the acco'miting fam,s in Sangjaraon Ccimty v/as $5S6 in 193'^» ^^ compprec". with $652 in 1933! ^.nd an inventory loss of $1,105 P^i" farm in 1932- "here were increases of $123 iii total livestock, and $^31 i^ feed and grains, while machinery showed a decrease of $23, and irnproveuents, $1^5- l'^'^® inventory decrease in machine r;/ was the smallest since 1929 on account -keeping fanns, and indicates that needed repairs and replacements are being ma,de, "but still not enough to offset the current de- preciation costs.

Inventory Changes for 193^

		Beginning	Closing	Inventoiy	Inventory
	Items	inventory	inventory	chan-'je s	change s ,
		I-I-3U	12-31-3^	19 3^	your farm

Total livestock $2 2S1 $2 kok $123 $

Peed and grains 1 573 2 OO9 U3I

Machinery 1 U^k 1 Ull -23

Improvements (exceut residence). h CJ'^ 3 922 -1^

Total $9 36b $9 752 $3S'5 $

Some Adjustments on Sangamon County Farms Since 1929

Farmers have been forced to make adjustments in their cash ex- penditures as the result of changes in their cash incomes. From 1929 throti^h 193^» farm operating costs declined each year. Total operating expenses v.ere 46 cents an acre lower in 193^i- than in 1933> while cash operating expenses were $3,039 a farm in 193^ as compared with $2,267 in 1933- Tne largest in- creases in expenditures over the previous yep.r were for feed and grain, and for machinery and supplies for ma.chinery. Indications point to an increase of spending in 1935 for repairs and replacement of machinery and improvements, since fanners have postponed purchase of these items during the five-yea,r period since 1929-

Cash Income and Expenses on Accounting Farms in Sangamon County

1929 and I93U

items

lour fain

Average casn expense per farm

193'4 19"^^

Your faiT-i

1Q2Q IC^lj

Average cash income per farr:.

193^

1929

Livestocjc . . . Peed and grains Machinery . . . Improvements. .

Labor

Miscellaneous . Livestock expense Crop expense . .

Taxes

Total

S63 95U U65 159

35^

33

^3

17s

290

$1 161 $ 936 6^7 '?;os 632

kz

6s 312 UUi

■?

$3 039 $5~5ii5

$3 H57

1 683

115

7 76

$i| S93

2 1|30

S3

50 • 7

^5 y>^ $7 513

Srcess of cash sales over expenses $

Increase in inventory ...

Income to labor and capital (F.eceipts less expenses).

$2 290 $2 9b

290 $2 9b S

3S6 919

3 gS7

2 6^5

'""'"""*"—"

-b-

'2he cunulative effect of several years of low agricultural prices on the demand for manufactured goods can readily "be ascertained "oy a com- parison of cash farm expenditures in 193^ with those in 1929- The average cash income in 193^- was Jl percent of tliat in 1929r while the average cash expenditures were 67 percent as large as in 1929- I^ 1929 'the average ac- counting farm in Ssmgamon County spent 61 percent of the cash income for operating expenses; in 193*+ 't^^ey spent ^7 percent. The relationship hetv/een income and expenses is approximately the same for the two years. There, is, however, considerahle difference in the distribution of the expense items. In 193^'-i livestock purchases were US percent, and feed and grain purclaases 102 percent of the I929 expenditures. In 193^ these fams paid 72 percent as much for machinery, and 57 percent as much for crop expense as in 1929 1 while taxes v/ere reduced to 66 percent of the I929 level.

Comparison of Farms Tfith High and Low Earnings

The most profitahle farms in this study had net receipts per acre of $12.35, as compared with $1.^5 per acre for the least profitahle group. The reason for this difference may be obtained from a study of the data on page s 3 and 8 .

The most profitable farms were larger, and carried larger inventories of feed and grain on which to maQce a profit wlien the prices advanced- One reason for the larger inventories, however, v/as the higher crop yields, there being an advantage of 15-7 bushels of corn, 2.7 bushels of oats, 8.3 btishels of wheat, and lU.l bushels of soybeans in favor of the high profit farms. Crop yields were so low on the least profitable farms that, in spite of th^ advance in prices of these items, they had an average inventory decrease in the feed and grain account of S12U per farm, while the most profitable farms had an average inventory increase in feed and grains of $896 per farm.

The most profitable farms liad an investment in productive livestock of $5-82 per acre, and fed $2,212 of feed per farm, as compared with $7.UU invested per acre and fe,308 of feed fed per farm, on tlie least profitable farms. The productive livestoc'': on the most profitable farms returned SI52 for each $100 of feed fed, as compared with a return of $12U for each $100 01 feed fed on the least profitable farms. The income per litter farrowed was $85 on the most profitable farms, as compared v/ith $75 on the least profit?-fcle farms.

The larger income on the most profita.ble farms was secured with a total operating cost of $0.3° per acre, as compared with $9-53 per acre on the least profitable farms. Man labor costs per crop acre were $U.93 on the most profitable farms, as compared with $5-06 on the lersst profitable farms, while pov/er and machinery costs per crop acre amovnted to $3'^!2 on the most profitable farms, and $3 '62 on the least profitable farms.

331

The Infliience of AAA Pro-.;rr:.is on Cropping Systems and Farm Incomes

The farm-accoi.mt recorc.s in Illinois were influenced ooth directly and indirectly "by the corn-hos and wheat adjustment procrams . A large per- centage of accotuiting farms were xiiider one or hoth contracts in 193^'- • The acreages of corn and wheat on tliese farms were therefore less than normal. Tliis should have resulted in lovrer operating costs. Corn-hog "benefit pay- ments for the entire 193^ prograrA will total about Uo million dollars for the state, while wheat benefit payiTients will he ahout 2.U million dollars.

The benefit payments for accoimting farms are indicated in the folloY/ing ta,ble, which shows the average payment for those farms receiving payments and incliides only those payments received by the cooperator before tlie 193^ books were closed. In some cases only the first com-hog check is included, while in other cases the second check ha.d been received. The second payments not received and the third payments will be entercri in the 1935 book.

AA_A. Benefit Payments Heccived in 193^

Corn Yflieat Hogs

Number Amount N'jmber Amojnt llu'nber Anount 'f

- j^ r. of all

01 x>er of "oer of 120 r -1 /

r.' r. jr r. ,, ' pavmentsi-'

laims farm farms farm farms farm ^ "^

1/3 most nrofi table farms 10

1/3 least profitable farms 0

All accounting farms 29

$132	b	$2lU	S	$276	$Ug2
130	7	114	6	1-^0	2g9
11-^5	IS		27	205	Ul|2

1/ Total benefit pajmients reported by accounting farns under contra.ct for 193^ divided hy total nujaber of a-ccounting f aiTis .

On many farms the ca,sh received from benefit payments v/ill more than pay for the year's taxes. As an average for all a,ccoujiting farms, the paj'ments actually received were $152 more than sufficient to -oay the 193^^ taxes.

It is interesting to note the use i.-iade of the contracted teres on the accoimting farms. The average farm ".lad 22. S contracted a.cres which were used as follows: 16.9 idle; 1.2 mixed clover; 3.5 sweet clover; and 1.2 soybeans, '.'/hen the C-overnment restrictions on the use of crops :'-rowTL on contracted acres were removed, they were on many farms the most profitable crops as they furnished hay and pasture where badly needed in the drouth areas. The legimies liad the further advantage of being immune to attack from chinch c-ugs.

Fa.rm earnings were iniluencec" indirectly by the AAA pro-:rans in tliat the reduction in production increased the price of the co.ninodities in- volved. The drouth was a more important factor in reducing production than the adjustment prograiTis, yet if it had not been for the corn- sealing pro- gram there would have "oeca but little corn in the hands of farmers at the time the major ririce advance became effective.

332

Factors Helping; to Analyze the 'Fair.i Business on 3I Si.ngaxnon County Farms in 193^

I tens

Sine of fanns — acres --------

Percent of la.nd area tillable- - - -

Percent of tillable land in hay and pasture - ___________

G-ross receipts per a,cre- ------

Total expenses "oer a,cre- ------

llet receipts per acre- - - - - - - -

Value of land per acre ------ -

Total investment per acre- - - - - -

Acres in Corn- -----------

Oats- -----------

^Theat -__--.

Soybeans- ---------

Hay

Tillable pasture- - _ - - -

Crop yields — Corn, bu. per acre- - - Oats, bu. per acre- - - 7/heat, bu. per acre - - Soybeans, bu. per acre-

Your farm

Averai^e oj 31 farmo

275. '3

92. U

37-1

15 . kk 7.93 7.51

llU

lUq

10 laost

profitable

f ari'ns

72.6

29.7 2S.5

22.6

33-3

61.3

12. U 10.9 25.9

18. 3

273-3 92.5

I42.2

20. 7U

s.-^9

12.35

log 1U3

72.3 2s.g

22.4 13^

.k

60.2

30.2 11.1

29.5 27.2

10 least profitable farras

267.1 92.8

33-7

11.03

1.U5 106

7^-b

29.9 30.3

25. Q 26.6

57-0 1U.3

21.2 13.1

Value of feed fed to productive L.S Returns per $100 of feed fed to productive livestock- -------

Returns per $100 invested in:

Cattle ■

Poulti'y --__----

Pigs wea.ned per litter -------

Income per litter farrowed - - - - -

Dairy sales per dair^/ cow- - - - - -

Investment in productive L.S. per A Recei-nts from "oroductive L.S. per A

2 ISO 136

6g 223

5.5 7^ ^3

10.75

2 212

1R2

122 2U6

6.5 S5

66

5.S2 12.33

2 30s 12l|

91 237

6.

75 2U

7.kk 10.7I+

Man labor cost per crop acre - - - Machinery cost per crop acre - - - Power and raach. cost per crop A. -

Farms with tractor --------

Value of feed fed to horses- - - -

Man labor cost per SlOO gross income- -------------

Expenses per $100 gross income - - Farm improvements cost per acre- -

Sxcess of sales over ca,sh expenses Increase in inventory- ------

Rate earned on investment- - - - -

G-ross receiiots per farm- -----

U.S6 1-93 3.27

61^2 315

22 51

1.08

2 299

3S6 5.05fo k 253

U.93 i.sU 3.U2

335

17 Uc 1.19

2 S50

1 120

069

.65;^

5.06 2.2s 3.62

50 r^ 277

33

S7 1.03

1 37R

-2q7 'i.o'-i^ 9U7

Chart for Stiidyin^ tlie Bff iciency of Various Parts of Your Business,

San/^amon County, 193^

333

The numbers above the lines across the middle of the page are the averages for the 31 fains inclt'ded in this report for the factors named at the top of the page. By drawing a line across each column at the number raeas'oring the efficiency of your faiTi in that factor, you can coapa.re your efficiency v.'ith that of other fariTiers in 70UI' locality.

Bushel

3

!^

Cost per

0 c

Grc

ss

per acre

P

crop acre

r— 1 •to-

receipts

t

1

CD

0) ^

U W

4J

<D

&

S TJ

P,

Q) -P

11

c

n

e

0

0 (D

-d

ft ft

0

M

tj 0 ,

0

w 0

0 4^

<U (D

•iH

r-;

CQ

1

c

0.) F.

0 u

(1)

rt w

G 0)

■*-> QJ

.H

u r;

H-(

« +^

rt w

r-H >j

•H (D

0 Sh

Ti t.

w 0

(D M

0) CD

!-i W

n -P

Ci U

^

0

fi !4

0 (D

> ft

0

c:;

s

rj CJ

+^

xn .H

>j a

rt tH

nj (D

0 M

u 0

0 X

u

c

■H

0) >

.H

ri

fn -H

■H 0

rt

03 4J

0

0

ci

^.

4^

•• rH

>^^

4J

u

5-1 .H

Ih tn

<D d

03

ci

V(

13

0 -H

e

Ul

Cti

VI

u

d 0

• 0

0

0 r<

0 w

f-i G)

0) ^

GJ

4J

4->

CD

t.'. ^1

■,-\ U

P! 0

CO 0

rO

& 0

rQ 0

0 >

rH M

^

f-1

SH

W 0 i

0

ni

5^

0 (D

ci CD

0 rH

• 1— 1

03

0 d

n3 U

C p!

cfl nj

P

P

0 .

f)

0

r-

MH ft

0 p.

Ph -€«

1-4 -f^

H^f

Ph e

1-) M

H .H

to 0

ft

ft

-^

1 12.5

37

31

Ul

iii2_

81

171

216

— ._

.27

, .

1186

pjo^yy

9100

176

11.0

32

27

18

ilU

71

lUi

1 216

.S6

• 37

27S6

1100

11

8100

116

-.5

27

23

l-^

119

o7

111

196

1.86

1.5+7

k

2186

U700

27

7100 U16

g.o

22

19

12

10 U

c.;r,

231

176

2.S6

2.07

10

1186

1900

21

6100

1 196

i 6.0

17

1^

29

S9

11

211

116

1.26

2.67

16

9 06

1100

19

1100

116

1 i i 5.05

12.1+

10. q

2'^. 9

74

'^M

221

116

II.S6

1.27

22

is6

2299

11. UU

U251

271.1

3.5

7

7

21

59

11

191

1 116

5.S6

1.87

28

-211

l^^OO

11

r- ■ ■ "~ HOC

i 216 !

1 2.0

2

3

20

!+l|

27

iSl

ti6

6.86

I:..ii7

111

-811

700

7

2100

■ ■ 1 156

• S

17

29

19

111

76

7.S6

^.07

Uo

-lUii

1

1100

1 96 1

! ■1.0

ih

14

11

ic--^

^6

c .06

1.67

U6

-2011

100

1 1 16 i

1 .J

1 __ 1 — . 1

11

—

~j

■ 71

j 16

q.s6

6.27

1 12

-2611

~

i

-10-

Infliicn.ce of Price cr-an,c::es on Fain Sa-niinffs

Pairn prices in 193^ cdv-'-inced more rapidly than did the prices of conraodities v/hich faiT.iers boui^^.t. Frnaers of the United Sta.tes as a group could e::cliange their fam: products in 193'^ ^or fh percent as many goods as for the -neriod I9OS-I514, wliile in 1933 'th.ey received only Gk percent, and 1932 only 61 percent as much in exchange for what they Md to sell as in the prewar period. In t'le :;:onth of February, 1935 » this index of purchasing power had increased to t'f percent of prewar, the index of farni prices having risen to 111 as compared v/ith en index of I27 for ccniisodities v/hich fanners buy. TJIien the line representing fariu torices drops below the line represent- ing prices paid by fanners, farm earnings are very low, but when these lines come close together fann earnings increase. (See following graph.)

Index of Fi-ices

Rfite Famed

2C0

150 125

100

75 50

25

0

= Frri.-i prr.ces in U. S. Aug. 190S-July 191U = IGO

= Prices paid by farmers. Aug. 1909-July I91U = IOC

- Rate earned on investment, acco'anting farms, central Illinois

J L

J L.

J I ■ I j-

J L.

12^

5?J

2i

~?4

-\$

1917 'IS 'I9 '20 '21 '22 '23 ^Z\ '25 '26 '27 '2? '29 '30 '31 '32 '33 '3U

-11.

335

SincR the prices of some fam products advanced ranch more rp.pidly during 193^^- tlian other prodiicts, it is evident that some farr-is v/ov.ld Denefit ir.ore than others, depending upon the kind and quantity of products sold. Grain prices advanced much ;.iore r?pidly than livestock nrices; which result- ed in a ver;^ "bad price ratio for faiTners who 01:17 large ctiantities of feed. The average Illinois farm price of corn was Ul cents a "bushel in January, 133^'-; it advanced ste.adily until the end of the year when it was 28 cents a hushel. Other grains made narked advance although not so great an adva.nce as corn. The price of hogs fluctop.ted fron a low of $3-20 a hundred in Ma-y to a high of $$^.30 in SepteraDcr. The low point in the fall carae in IJovemher when the average price was $5.10. The price has adv.3.nccd quite ra^pidly since IIove!r.ber, the average price oeing $7»5C for Fehruary, 1535- Beef cattle were worth $U.10 a hundred in January, 193^ and. advanced each nonth -until Se-ntember, when the price was $5.90. Tliey dropped to $3.2C in December but increased again to $7*^ for Pebroary, 1935"

The year 193^ set a record for the red"uction in the nwabers of livestock. The percenta.ge decrfasrs by species 7?^re as fellows: horses, 1.1 percent; k:u1<^s, ? .G percent; all cattle, 11.2 percF.nt; she«=p, i^-7 percent; hogi-j 35*3 percent. ITheu all species are combined on the basis of their capacity to consutie feed, the reduction was I3 percent. This reduction will greatly reduce the demand for feeds produced in 1335*

The relative change in prices of important corar^iodities may be noted in the following graph, which shows the average Illinois farm prices by m.onths as a percentp^ge of the average prices for the period 1921-1929 •

Percent 120

110

Pricp Indices, 193'-'-

(1921-1929 = 100)

at tie _

Grain

/

Feo .

June July

Sept

Oct. l-Iov. Dec

All coiTOOdities index represents the wholesale price of a large n'omber of commodities for the United States, ss computed by Bureau of Labor Statistics.

Grain and livestock, indices represent average monthly fair: prices in Illinois

-12-

Yariation in Earnin-'His Over Five-Year Period

A coinpa.rison of production, income, and expenditiires on the accoTuitinf^ farms in Sanfynaon Co-anty for the last five years is very in- teresting "because of the violent changes in price level. 193^!- "^^-s the second year of very low crop yields, yet total receipts per fai-ra v;ere higher than in any other year since 1930' ^^^ were 69 percent of the 1929 gross receipts. Operating costs per acre were lower than in any year of the five. Thus profits v;ere the hest the county liad e~perienced since 1929-

Earnings in 1935 ^-s usual will deriend upon individual efficiency, weather, and prices. A normal year will mean larger yields of ;i;rain and probahly lower prices.

Comparison oj

E--irning3 and Investments on Accotmting ]?ar;..s in Sangamon Coimty for 1930-193!+

Items

10

930

1931

1932

1933

I93H

IJ-'jmher of fai^.s ---------

Averi'.ge size of farms, acres- - -

Average rate earned, to pay for

management, risk and capital - - Averr.ge lahor and management wa-^

Gross income per acre - Operating cost per acre

Average value of land per acre- Total investment per acre - - -

Investment per farm in:

iOtal livestock- - - - - -

Cattle -

Hogs -----------

Poultry- ---------

Gross income per fann - - - - -

Income per farm from:

Crops- ----------

I.'Iiscellaneous income - - - 'Total livestock- _ - - - -

Cattle - --_-_-.

Dairy sales- -------

Hogs -____.

Poultry- ---------

Avera,ge yield of corn in bu.- - Average yield of wheat in hu. -

3&

$-962

16.^ 12. Us

I5U 203

3 5^2 1 520

1 079 125

k 360

723

95 3 5te

o!+5

365

2 2 So

?-0U

23

3^4

26s

-1.71

§-2 711

7.53 10.71

lUl

±OI_

2 SSU

1 272 SI6

lllr

2 031

1 9U2

357 1 103

127

U3 27

32 253

_l.3f? $-2 OS5

6.5Si

2.7U

127 163

2 Ul3

1 112 632

q2

1 660

U22

335 739 109

20

3C

2^3

3 -7^0 ■ 17

1U.13 S.39

12l|

L36

90!+

500

U19

75

13 U29

1 U33

41

1 9'S5

229

1 093

li'^

32

20

31 276

5.0;o

$50S

7.93

11I+ 1U9

2 281

1 166

USh So

U 253

1 Icf'

3 017

95^ isU

1 573

12 26

AMIIUAL PAai'.i BUSII^SS HEPOHT Oil FI7TY- SEVEN FABI>1S IIT MORGAN, SCOTT, AND GREENE COITNTIES, ILLINOIS, I93I+

P. E. Jolmston, J. E. Wills, and E. L. Saner*

Eann earnings on the. 57 accoimting. farms in Morgan, Scott, and Greene Counties averaged U.63 percent for 193^- This is the second highest retiirn during the past five years, 1933 having the highest \vith an average return of U.9 percent. The 193^ return is remarkahle considering the severe drouth, and cMnch hug damage.

These 57 accounts show for 193^ ^•n average net income of $1551 per faiTO, as compared with an average of $1,39^ in 1933i and an average net loss of $52U in 1932. The average cash income in 193U was $U,S2U per faim, the cash "business expenditures $2,523 per farm, leaving a cash halance of $2,296 to meet interest payments and family living expenses. (Those who keep home account hooks use the latter figure to represent the cash contri- hution of the farm to tlie "realized family income".) The low yields were directly responsible for the decrease in inventory of $53 a fann. Tliis de- crease, deducted from the cash halance, resulted in an average excess of receipts over expenses of $2,2U3 a farm.

These data must not he considered representative of average farm

conditions, for they were secured from farms which are larger than avera.ge,

and which were managed "by farmers who are more efficient than the average of all farmers in the county.

For the state as a whole, farm earnings were better in 193^ than in 1933 > i^ spite of the fact that com and oat yields were very low due to the drouth and to chinch hug damage. In the western and southwestern parts of the state the drouth caused an almost total failiire of hoth corn and oats. This accounts for farm earnings being lower there than in other parts of the state .

The corn crop was best in the southeastern part of the state, and was fair in the northwestern section. Wheat yields were particularly good in the south and central portions of the state. Soybean yields were very good throughout the state, and there was a larger than normal acreage in Illinois in I93U. This state produced over half of the nation's I93U crop of soybeans.

Chinch bug damage extended over most of the state last year, but was much more severe in some sections than in others, and was much worse on some farms than on other farms in the same community. Conditions affecting crop yields were very spotted. This accounts in part for the wide variation in farm earnings from one section of the state to another, and the wider variations than usual from one farm to another.

* I. E. Parett, J. L. Iftner, and G. E. Hunt, farm advisers in the above Counties, cooperated in supervising and collecting the records on which this report is based.

■iiiiiirminyiiMyiiiii[[itrH[iHii'''"'''''"''"'M'™™^"ii^^^^^"^^^^^^^^^^^^^^^""^"™™g"'""">'""""

33S

-2>-

Industries other than agricultiire again shov/ed improved earnings over the previous 5^ear. A group of SUO industrial corporations reported "by a nationally known banl: showed average earnings of 5-0 percent on their in- vested capital in 193'^. ^^ compared with ^.k percent for the same corpor- ations in 1933- A si:-.iilar group had a loss of one-tenth of one percent in 1932> a^d. average earnings of '^.]) percent in 1931»

In comparing the average earnings of corporations v/ith the rate earned on investments on accounting farms, it is well to keep in mird that in corporation accounting charges are made for managem.ent, v/hile in the farm accounts no comt)ara:".le deduction has oeen made. On the other hand the fanner and his family receive food, fuel, and other items of living from the farm for which the farm has received no credit in the records used in this report. Por the average central Illinois farm family, consisting of five persons, the valiie of the food and fuel furnished "by the farm was ahout $2^0 in 193^> when estimated on the "basis of the wholesale price for faiin products.

Variations in Parm Incomes

Tiiere was a much v/ider range in farm earnings on the accoLinting farms in 193^ than in 1933- Tliis was true for the farms incliided in this report, and.it was also true when the average earnings of farms in one section of the state were compared with the earnings of farms in other areas.

The extremely wide range in ea.mings was due to a com"bination of ph;|rsical and economic factors. The average yields of wheat and soy'beans was much "better compared with the five-year average, than the average yields of corn and oats. This variation favored those sections which had larger acreages of the higher ^/ielding crops in 193^- There was also a wide rajige in average com yields from one section of the state to another, as well as "between individual ia.rms in the same area. The price of grains was high in 193^ f^s compared with prices of livestock and livestock products. Fan;is where grain sales constitute a large part of the farm income thus had an advantage. The raioid increase in the prices of farm products, particularly grains, favored those farms which had large stocks of sala"ble products on hand at the "beginning of the year. Many farm.ers who inventoried the corn on hand at the "beginning of 193^ cit Uo cents a "bushel, later sold tliis com for 20 cents.

In this group of 57 accountin": farms the most successful third shows an average net income of $3»^0> v/hile the average net income of the least successful third of the farms wa.s only $^l4. In 1933 "^^"^^6 compara"ble net incomes for the two groups wa.s $2,503 and $S7 respectively.

-3- Investments, Heceipts, Expenses and Earnings on 57

Morgan, Scott, and Greene County Farms in 193^

339

Items

Yoior farm

Average of 57 fai-ms

19 most

profitable

farms

19 least

prof ita,l)le

farms

CAPITAL IIJT/ESTIvIElJTS

Land -.-,..-.---_-----

Farm improvements- --_:._

Livestock total- - - ^ - _ -

Horses -_--^^-^_-

Gattle - - ^ ---

Hogs -~~-^-~~--- Sheep- ----------

Poultry- ---------

Machinery and equipnent- - - Feed and grains- ------

Total capital investment -

FECEIPTS AITD WS IIJCKEASES"

Livestock total- ------

Horses ----------

Cattle ----------

Hogs (including AAA -Dayments) Sheep- ----------

Poiiltry- ---------

Egg sales- --------

Dairy sales- -------

Feed and grains (including AAA payments) ---------

Lahor off farm -------

Miscellaneous receipts - - - Total receipts & net increases

EXPENSES AI'ID ^lET DECBEASBS ~

Farm improvements- -----

Horses -----------

Miscellaneous livestock

de crease s_

Machinery and equipment- - - Feed and grains- ------

Livestock expense- -_---' Crop expense --------

Hired labor- --------

Taxes- -----------

Miscellaneous expenses - - -

Total expenses & net decreases

RECEIPTS LESS EXPENSES

Total unpaid labor- -------

Operator's labor ------

Family labor --------

Set income from investment and

management -----------

i'ATE EAEHED ON II-IVESTIffilW

Return to capital and operator's

labor and management ------

ifo of capital invested- - - - - -

LABOR Airo i/fANAGEIvENT WAGE

2k 736 3 602

^«

S5S

390

38

71

1 -^06

1 697

s^33 138

31 ISU 3 885

574 1'21S

" Ub7

15 61

1 Ugb

2 233

$^1 133

19 039 3 176

3I+7 691 302

59

76

976

1 178

$25 gHU

jlZ2

30 690

1 335 5U

Us

70

239

1 okk 61

n

%J^

^jOD

3 5^2

76 1 Ub7

1 652

3^

65

S7

161

2 269

57 2

% 5 S70

1 7S6

13 311

1 055

56 Ul

53 257

27 3

$ 1 gi6

isU

37H

32 IS3

259

2gU 27

% 1 3U3

207

i+89

"36

289

37s

332

32

$ 1 76^

$_

$ 2 2U5

692 512 ISO

1 551

___Ik6s5

2 063 1 657

% U06

169

268

50

21

10 s

lUs

25s

27

% 1 0U9

$ \ 107

707 511 196

3 Uoo

3 911 2 057

$ 1 85^

723 515 208

559 1 292

3Uo

i

. The followinjj:^ table :Siiows -the number of farms,- having certain net incomes per acre. There was a marked difference between the raost sioccessfol and the least successfixL farms.

Averaj'^ net income ITtsaber of Average net income I'Turnber of iaer acre fa nn s per acre farms

$15 and over 3 $3 11

13 ^ 1 7

11 1 -1 2

9 '4 -3 k

1 6 -5 1

5 Ik

A further study of the farm businesses made "by comparing the investments, receipts and expenses of the group of farms with the highest net income, v/ith those Iisving the lowest net income, should throw some light on the the question of why some farmers are more successful tlian others.' This com- parison is shown in the table on page 3*

The most successful farms averaged 330 acres each, the least suc- cessful 227 acres. This difference in size a,ccounts in part for the varia- tion in the average investment, receipts, and expenses in the two groups. Difference in receipts from the sales of grains, cattle, and hogs accounts for much of the difference in income between the tv/o groups. Althoiigh the expenses per farm were higher on the most profitable farms, the total expense j

per acre, incl'oding the charge for famdly labor, was less tlian it was on the least profitable faras. ]

The year 193^ ^"''^-s similar to 1933 i^ that the prices of farm pro- ducts continued to advance. Ov/ing to the extremely poor yields in Morgan, Scott, and Greene Cotintics, the value of grain at the end of the year was not a^s much as at the beginiiing, eveti though prices of grain had more tlian doubl- ed. This condition was aggravated by the fact that these counties liave con- sidora,blc livestock and, with very little feed produced, farmers ^7ere com- pelled to buy gra-in at a high price while live-stock prices rer.ained still relatively low.

Bushels of Com Inventoried

Jan. 1, 193^^ Dec. 31, 193^

Average of all farms 2 r09 637

Average of I9 most successful farms ... 3 0U9 1 2S7

Average of I9 least sticcessful farms. . . 1 95^ ^36

Your fa.rn

The most profitable farms had a much larger inventory of com both at the beginning and end of the year. This is one of the major factors in accounting for their higher ret^jxns from feed and grains.

-0-

3^+1

Tile decrease in inventory for the 57 accounting farms in Morgan, Scott, and Greene Counties avera,ged $53 in 193'+ • '1^' 1933 inventory values increased $507 per fara, while in 1932 there was an inventory decrease of $302 per farm. The decreases in 193^+ were: feed and grain $U6, machinery .$11, and improvements $50, while livestock showed an increase of $5^. The decrease in machinery was the smallest on account-keeping farms. since 1929? and indicates that needed repairs and replacements are being made, hut still .not enough to offset the cujrrent depreciation costs.

Inventory Changes for 193^!-

Beginning Items inventory

I-I-3U

Total livestock $1 797

Feed and grains 1 697

Machinery 1 306

Improvements- (except residence). 3, 602 Total .$S U02

Closing inventory

Inventory

;hange

19 3^

change s

Inventory

changes,

your farm

$1 851 1 0^1	$ 5^ -he
1 295	-11
3 552 $S 3^9	-RO $-33

$■

$"

Some Adjustmentc on Morgan, Scott, and G-rcenc Couiity Farms Since 1929

FaiTners have heen forced to malce adjustments in tlieir cash expend- itures as the result of changes in their cash incomes. From I929 throtigh 1933 farra operating costs declined each year, hut the year 153^ "brought a risversal of this trend. Total operating expenses were 52 cents an acre higher in I93U than in 1933, while cash operating expenses were $2,52S a farm in I93U, as compared with $1,628 in 1933- Due to the drouth and the resTiltant very low crop yields, it was necessary for the farms in this sti;dy to purcliase ^h^^ more feed than in 1935. There was also a noticeahle in- crease in expenditure over the previous year for livestock, machinery, im- provements, and crop expenses, while a decrease occurred in ejrpenditure for taxes. If this area has more favorable weather and cron co-iditions in 1935> so as to increase their farm income, indications point to an increase of spending for repairs and replacement of machinery and improvements, since farmers have postponed purchase of these items during the 'five-year period since I929,

Cash Income a,nd Expenses on Acco\mting . Farms in Morgaii, Scott, and Greene Counties for 1929 and 193^

Your Average cash Your Average cash Items farm expense per farm farm income -per faim i9^1| 19^I| 1929 193I1 193U 1929

Livestock $ $ U39 $ 619 $ - $2 857 $3 59s

Feed and grains 6S3 663 1 773 1 25O

Machinery ,^73 5^1 HO 52

Im-provements 148 139 14 u.

Lahor ............. 259 453 61 53

Miscellaneous 27 28 9 "-^

Livestock expense 32 35

Crop expense 133 ^95 "

Taxes 284 ^10

Total $ $2 52s $3 033 $ $4 824 $4 9S3

Excess of cash sales over expenses $ $2 296 '1 95^

Increase in inventory "53 ^ 520

Income to labor and ca-oital (p.eceipts less expenses). . 2 243 2 470

-0-.

The cumulative effect of several years of low agricult'ural prices on the demand for raan'ufactured goods can readily he ascertained hy a compari- son of cash farm expenditures in 193^ v/ith those in 1929- Although the av- erage cash income in 193^>' was 97 percent of that in 1929. cash e:cpenditures were only 83 percent as large. In 193^+ livestock purchases were 7I percent, and feed and grain purcliases I03 percent as large as in 1929- In 193^ these farms paid out 37 percent as much for machinery, and 9^ percent as much for crop expense as in 1929i while taxes were reduced to 92 percent of the 1929 level.

Coraparisor. of Farms Tith H'i>':;h and Low Earnings

Tlie most profitahle farms in this study had net receipts per acre of $10.32, as compared with $0.19 for the least profitable group. The reasons for this difference may "be ootained from a study of the data on passes 3 ^•^'i 2.

The most profitahle farms in this study averaged 13^-9 niore tillable acres th-an the least profitable farms. They had 39*^ acres more corn, h.h acres more oats, k'^.k acres more wheat, I5. 9. acres more soybeans, 1 .1 acres more hay than the least profitable farms. The larger acreage of wheat, soy- beans, and hay together with the higher yielding crops in 193^. was an im- portant factor in accaunting for the higher returns from feed and grains on the most profitable f ar!:QS . The most profitable farms carried larger in- ventories of feed and /^-rains, on which to make a profit when prices advanced. The most profitable farr:s obtained higher crop yields, producing 12-7 bushels more com, 9-^ bushels more oats, 11.0 bushels more wheat, and 1.1 bushels more soybeans per acre than the least profitable farms. Crop yields were so low on tlie least profitable farms that there was an average inventory loss of $750 psr farm in spite of the price advance.

The most profitable farms were more intensive, and more efficient in their livestock production than the least profitable farms. They had an investment in proudctive livestock of $5.72 per acre, a.nd fed $3,0UU of feed per farm, as compared with $U.52 invested per a,cre, and $1,75^ of feed fed per farm, on the least profitable farms. The productive livestock on the most profitable farms ret\ijmed $llU for each $100 of feed fed, as compared with a return of $101 for each $100 of feed fed on the least profit- able farm.s. The m.ost profitable farms had an income of $S7 P^r litter farrow-i ed, as comipared with $71 on the least profitable farms. There vrere returns of $13^ for each $100 invested in cattle on the most profitg,blc farms, as compared with returns of $89 per $100 invested in cattle on the low profit group .

The larger income on the most profitable fanns 'was secured with a total operating cost of $7*^9 P^r acre, as compared with $7-81 per acre for the least profitable farms. The man labor cost per crop acre 'on the most profitable farms was tk.ZJ, as compared with $7*1^ per crop acre on the least profitable farms, while the pov/er and machinery co'st per crop acre was $2.99 0^- the most profitable fanns, and $U.Op per crop acre for the low-profit group.

I

3^3

-7- Influence of AAA Pro~rair:s on Croppinjg: Systems and Fann Incones

- ■ - -■ .. .-Tlae farrn-account records in Illinois vre re influenced l)otii" directly • .and indirectly l^y the corn-ho,:-,' end w.ieat adjustment progratis. A l?r.:?:e per- centage' of accounting: far.is v;erc u.ider one or both contracts in 193'"^' -i^e ac.raaggs af com and wheat on these farms were, therefore .1-ess than normal.- ■• This should have resuJ.ted in lower operating costs. Corn-ho" benefit pay- ments for the entire 193'^ riTogvsin will total about Uo million dollars for the state, while wheat benefit payments will be aboixt 2. U' million dollars.

The benefit payments for accountinj'r farms are indicated in tiie following table, which shows the average payment for those farms receiving . Pci,.y';'ients, a,nd includes only those pajinents received by the cooperator before the 193'-!- booics were closed. In some cases only the first corn-hog check is included, while in other cases the second check had been received- The second 'pa.'^mients not received and the third payments will bo entered in the 1935 took.

AAA Benefit ppy.ionts Received in 193^

Corn ITneat VLor:?,

JIumber Amount l?amber Amotmt Itaiber Aiioujit ' ^^ ^ ^ r. of all of T)er 01 per of per , i/ -* r. „ r. y paymentsi' larms farm farms farm fai-ns farm - "^

1/3 most -nrofi table farms 1/3 least profita,ble farms All accounting farms

iq	$167	13	$26U	17	$239	$562
IS	106	6	260	17	166	331
5b	132	-32	253	52	20U	U5S

1/ Total benefit pa.yments reported by acco-onting farms und?r contract for 193^ divided by total number of acco\mting farms.

On most faras the ce.sh secured from^ benefit payments will m.ore than pay for the year's tai:es. As Fcn average of all accoijntin- farms in this study, the payments a.ctually received were $17^ m.ore than sufficient to pay -the 193^ taxes.

It is interesting to note the use made of the contracted acres on the accounting far.is. The average far^) had 26.6 contracted acres which were used as follows: U.5 idle; 3*3 i"Sd. clover; 0.7 sweet clover; 3.7 soy- beans; 0.6 alfalfa and 'j.8 acres were in other crops. These data indicate that most farmers made good use of their contracted acres from the standpoint of soil improvement, as a large part of them were in legumes, \71ien the Government restrictions on the use of crops grovra on contracted acres were removed, they were on many farms the most profitable crops as they furnished liay and pasture where badly needed in droUth areas. The legumes liad the "further advantage of being immune to attack from chinch bugs.

Farm earnings v/ere influenced i'ndiTectly by the AAA prOi^raras in that the reduction in production increased the iirice of the comnioditics involved. The drouth was a more important factor in reducing production tlian the ; adjustment projjrams, yet if it had not been for the corn-sealing program, there would havebecn but little corn In the liands of farmers at the time the major price advance became effective.

3H4

factors Helping to Analyze the Farm Business on 57 Morgan, Scott, and Green Co-unty Farms in I93U

Items

YoTir

Average oi

57 farms

19 n-.ost

proi^itatle

iarn:s

19 least

profitable

f arTiS

Size of fanns — acres -------

Percent of land area tillable- - - Percent of tillable land in hay and pasture -------____--

Gross receipts per acre- - - - - -

'Total exTDenses per acre- -----

Net receipts per acre- ------

Value of land per acre ------

Total investr.ent per acre- _ - - _

Acres in Com- ----------

Oats -__ -_

Wheat ----------

Soybeans- --------

Hay

Tillable pasture— - - - -

Crop yields — Corn, bu. per acre- - Oats, bu. per acre- - Tlaeat, bu. per acre - Soybeans, bu. per s.cre

Va.lue 01 feed fed to productive L.S. Heturns per $100 of feed fed to prodTictive livestock- ------

Returns per $100 invested in:

Cattle- - - _ _ _

Poultry -------

rigs weaned per litter ------

Income per litter farrowed - - - -

Dairy sales per dairy cow- - - - _

Investment in productive L.S. per A. Seceiuts from nrod-octive L.S. iDer A.

275-7 81.0

23-7 13. 01

7.3s 5.63

90

120

329.6 oy.3

22.0

17.&'1

7.U9

10.32

95 125

227.0 70.2

26.7

8.00

7. 81

•19

ilU

6£.l

19-7 U2.8 9.2 26.2 46.1

11.7 18.7 25.0 15-3

88.9 21.0 6U.2 20.6 30.0

53. U

17.7 19.2

29.3

15.8

i+9.5 16.6

18.8 22.9

Ui.i

5.0

9.8 I8.3 1I+.7

2 27^;

107

iiU 171 5.

79

50

s.s6

3 CUii

111+

.7

I3i+
227
•->	6
S7
^5
5	72
10	52
k.	27
2.	03
p.	99

1 751

101

89

138

5-9

71 Us U.52

7. 81

Man labor cost per crop acre - - - Machinery cost per crop acre - - - Power and nach. cost per crop A. -

Farms v/ith tractor --------

Value of feed fed to horses- - - -

i.fen labor cost per $100 gross

income- ----_-_----__ Expenses per $100 gross incor^e - - Farm improvements cost per acre- -

Sxcess of sales over cr.sh expenses Increase in inventory- ------

Bate earned on. investment- - - - -

Gross receipts per farm- -----

5.21 2.11

3

.liU

73.6^

57 .67

296 -53

95f= 306

18 U2

.63

3 151 956 8. 26^ 5 S70

7.1U 2.27 U.05

52. 6f. 22U

U6

98 .7^

1 517 -750 0.17^

Chart for Studyirif^ tiie Efficiency of Various Parts of Yotir Business, Morff^an, Scott, and G-reene Counties, 193^

3I+C

The numbers above the lines ac 57 farms included in this repo By drawing a line across eac>. farm in that factor, you can c

ross the rdddle of the page are the averages for the rt for the factors named at the top of the page, coliaiin at the n-omher measuring the efficiency of your ompare yoiir efficiency with that of other farmers in

V U UI J

-UUctXX

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79

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-93

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13.01

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2.6s

9

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23

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97

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1 1

] 1 1 ( 1^ '

1,

0

37

11.90

s.Uii

Si

-3050

-200

3

100

29

i

3^6

-in_

InfliTcnce of ?i-ice Cteng^s on Farm ijgrnin^s

Parm prices in 133^"^ rdvrr'nced r.orc rapidly tha:i did the prices of commodities vmich farriers 'bou^^it. iTr-r-ners of the United States as a group coTili e:cciiange their farru products in 193^ -o^ 7'!- percsnt as many goods as for the period I'^Oy-lSl^i wM'-e in 1933 they received only 6-+ percent, ai:ui 1932 only 61 percent as imach in exc)vxr.i^ for what they l.vad to sell as in the prewar period. In the month of Ii'ebi.iTar:'', 1533 1 tMs index of purchasing power had increased to Sf percent of jn-ev/ar, the index of lann prices hs.ving risen to 111 as coupared v:ith an index of 127 for commcdities which faimers Iruy. YTnen the line representing farru prices drops belo?/ the line rspresent- inc T)rices paid by famiers, farra earnings are very low, but v/hen txiese lines corae close together fann eaniinrG;s increase. (See following grupii.)

Index of Prices

Eate Earned

20C 175 150 i;^5

100

75

50

= Farm prices in II. S. Au^. l^OQ-July I'jlk ■= 100

= Prices paid by farmers. Av^. 1509-J"'J-ly 19 'J' - IOC

"7

G

Hate earned on investment, accoon'.ing famn, central Illinois

--]-

-.^^

e4

"4

^''

0^

4 ^ V

1317 'IS '15 '20 '21 '22 =23 •2h '25 '2b '27 '2C '29 '30 '3I '32 ^y_, 134

3^7

-11-

Sincp the pric^; of soiue farn products advancnd much mere rp.pidly during 193^ trian other product?, it ie evident that some farms woxild benefit iTiOre than others, depending upon the kind and qr^antity of products sold. G-rain prices advanced much .v.ore rapidly than livestock T^rices; which res'olt- ed in a very had price ratio for farmers who 01:17 lar.[;e r'^J-s^'ti'tie'S of feed. 'fhe average Illinois fF.rm price of corn T;as kl cents a, hushel in Jantiary, 153^f-; it advanced steo.dily •'Uitil the end of the year when it v/as S? cents a. huslr^l. Other grains made narked advance although not so great an advance as corn. The "orico of hogs flue toasted fron a low of $5 '20 a huaidred in ii/Iay to a high of $^.3C in Septeiaber. The low point in the fall cniue in Hoverriher when the average price was $5-lC. The price has advanced quite rapidly since I'overr.ber, the average price being $7*5^ -^^ February, 1535' 3eef cattle were worth $5i.lC a hundred in January, 193^ ^^cL advanced each -'onth until September, when the price v;a3 $5.90. They dropped to $3.2C in December hat increased again to $7.^ for Pebropry, 1935-

The year 193'-*- set a record for the reduction in the numbers of livestock. Tlie percentage decreasps by ap>ecies ■w'^re as fellows: horses, 1.1 percent; mulf^s, ? .G percent; all rattl-^, 11.2 porrent; she^p, U.7 percent; hogt. 35 '3 percent, v.'hen all species are combined on the basis of their capacity to consume feed, the reduction was I3 percent. This reduction will greatly reduce the demand for feeds produced in 1335 •

The relative change in prices of important cor:::i-.odities may be noted in the following graph, which shows the average Illinois farm prices by m.onths as a percentage of the average prices for the period 19-"'1-1929.

Percent 120

110 lO'O

so

'ric- Indices, I93U

(13P'1-1929 - ice)

l- _

50

11 n

All conqcdities

» >!■ 'Jl

_i ■ 1 -^ '_ — ■"

Ifalrv PtrociuetS

Jan .

?el.

:.te.r .

wr.

•June-

July

Aug. Serit.

r:ov.

Dec ,

All cormodities index renrescnts the wholesale price of & 1-irge n-umber of coramioditics for the ttritnd States, es computed by Buj^eaa. of Labor Statistics.

Grain and livestock indices represent average m.onthiy faiTr. prices in Illinois,

3^8

-12-

Variation in Earnings Over Five- Yerr Period

A comparison of production, income, and expenditures on the ac- coimting fanas in Morgan, Scott, and G-reene Counties for the last five years is very interesting "because of the violent fluctiiations in the price level. Although the 193^ crop v?as nearly a failure, and followed a smaller than average crop of 1933> ^^'^'^ increased prices of "both ^-rrain and livestock did have considerahle effect in holding earnings in second place for the five- year period I93O-I93U.

Earnings in 1935 > as usual, will depend upon individual efficiency, weather and prices. A normal year will mean larger yields of grain and prohahly lower prices.

Comparison of Earnings and Investments on Accoujiting Farms in Morg.in, Scott, and C-recne Co^JXities for 193C-193'+

Items

1930

:i/

193 li'

193

2i/

-1 /

1933^^

153H

Inmber of fams ---------

Average size of farms, acres- - -

Average rate earned, to pay for management, risk and capital - - Average labor and management wa.ge

Gross incoiae per R,cre ------

Operating cost per acre -----

Average value of land per acre- - Total investment per acre - - - -

Investment per farni in: Total livestock- -

Cattle

Hogs -------

Poultry- - - - - -

Gross income ncr farm

Income per farm from:

Crops- -------

Miscellaneous income Total livestock- - -

Cattle - - -

Dairy sales- - - - -

Hogs

Poultry- ------

Average yield of corn in "bu.- Avcrage yield of wheat in "du.

30 232

$-70

7ff

lil.91 11.15

100

lUo

2 710 1 172

gR2 I6U

3 U61

311

log 3 0U2

136 2 19s

3-

30 253

-1.3^' $-1 Ul^l

7.25 ?.91

95 12 s

2 305

775 135

1 83 U

33^ Sk

1 !43b 2U0

79 9U7 15 s

50 25

32 277

-2.0'^ $-1 330

3.23 7.17

70

97

1 9U0 So5 522 102

1 1^-60

235

70

1 155

92 693

99 56

18

30 26s

$ ^97

12.06 6.S6

so 106

1 73S

775 U51

27 3 233

1 633 5U

23U

122

022

95

U7 19

57 276

^.7)'J $ U06

13.01 7.3s

90 120

1 797

390 71

3 5S6

1 oUi|

9

2 U72

696 2%

1 335 Ug

12 25

1/ Records from Scott Cojnty only included for I903-I93J, .

3^9

AlTlTOiJL rA?J,: BUSIIHSS H3P0ET OIv FIPTY-Ol^lE ?A3.^'IS lil i.lASOH, CASS, AI'ID I;EE:TAED COimTIES, ILLIiTOIo, I93I1

P. E. Johnston, J. B. Andrews, and A. L. Leonard*

The farm earnin^-s 01 ^jl accoimt-kee;oing fai-niers in I.iasor, Catir, , and Menard Coimties showed an inci-ease in 193^ over those of 1933- 'f hi s is the sec- second consecutive year of imrirover.ent in the "business of these farms. The three years previous to 1933 showed very low returns.

These 5I accounts riiow for 153^ 3-^ average net income of ftl,52b per fana, as compared with an average of $1,37^ i^ 1S33. ^-^d ^''^ average net loss of $5Ul in 1932* The average ca.sh income in 193^^- ^"'^-s $3>7?1 per fairn, the cash hiisiness expenditures $1,652 per farm, leaving a cash "balance of $2,099 to meet interest pa^/ments and family living expenses. (Those who keep home accoujit "books use the latter figure to represent the cash contri'^jution of the farm to the "realized family income".) Besides the c.?sh income there was an inventor:' increase of $99 Pcr farm due to the rise in the iDrices of farm products. This increase, a,dded to the cash balance, resulted in an average excess of receipts over cxv:>enses of $2,198 per faim. The iiiventory increo.se was a much smaller part of the total farm income in 193^'|- "than in 1933"

These data must not be considered representative of average farm conditions, for they were secured from farms which are larger than average, and which V7ere managed by farmers v/ho are more efficient than the average of all farmers in the coujit;/.

For the state as a whole, farm earnings were better in 193''- than in 1933 i^ spite of the fret that corn and oat yields were very low due to the drouth and to chinch oufz damage. In the wustcrn and southwestern parts of the state the drouth caused an almost total failure of 00th corn and oats. Tills accounts for farm earnings being lov/cr there than in other parts of the state .

The corn crop wcs best in the southerstcrn pa.rt of the state and was fair in the north:vestern section, 'ifncat yields v.'ere pa,rticularly good iji the south and central portions of the sta.te. Soybean yields were very good throtighout the state, and there was a larger than normal acreage in Illinois in 193'"^- This st.ate produced over half of the nation's 193^^ crop of soybeans .

Chinch bug damage extended over most of the state last year but was much more severe in some sections than in others, and v/as much worse on some farms than other fs,rns in the same coiTimunity. Conditions affecting crop 2'iclds were very spotted This accounts in part for the \;ide variation in fann ea.rnings from one section of the st,ate to another, and the v.idcr variations than usual from one farm to another.

* C. S. LovG, G. H. Husted, and L. ?/. Chalcraft, farii a.dvieoi-s in above counties, cooperated in suDorvising raid collecting the records on v/hich this report is based.

Mki

350

Industries other t}i3,n agriculture again showed :.mproved earnings over the previous year. A group of S40 industrial corporations reported "by a nationally Icn.own Dan^x showed avero.ge earnings of 5-0 percent on their invested capital in 193^'r, as coTnpared v.-ith 3.U percent for the sar.ie coi-porations; in 1933. A similar group iiad a loss of one-tenth of one percent in I932 aiid average earnings of 3*3 percent in 193-'- •

Ir. comparing the avcrai'^ earnings of corporations with the rate eai-ned on investment on accounting lanns it is well to keep in mind that in corporation accoiuating, charges are made for raanagemeut, while in the farm accounts no comparable deduction has "been made. On the other hand, the farmer and his family receive food, fuel, a^id other items of living from the farra for which the farm lie,s received no credit in the records used in this report. For the average central Illinois farm family, consisting of five persons, the vo.liic of the food and fuel furnished hy the fana was ahout $250 in 193^l-. v/hcn estimated on the basis of the wholesale ;DricG for farm ■nroducts.

Variations in ?arm Incomes

There was a much wider range in farm earnings on the accounting farms in 133^ than in 1933- This v/as trae for the farms included in this report, and was also true v/hen the average earnings of farms in one section of the state a.re compared with the earr.ings of fams in other areas.

The extremely wide range in earnings was due to a coiabination Ox' pl2^''sical and economic factors. The a.verage yields of wheat and soybems were much better, compared v/ith the five-year average, than the average yields of corn and oats. T^iis variation favored those sections y/hich had larger a.creagas of the higher yielding crops in 193^- There v/as also a wide range in average corn yields from one section of the state to another as well as between individual farms in the came area. The price of grains was hJ.gh in 193^ ^-s compared with prices of livestock and livestock products. Farms v/here grain sales constitute a la.rge part of the fanr income thus liad an advanta.ge. The rapid increase in the prices of farm products, part- - icularlj'- grains, favored those fanns v/hich had large stocks of salable pro- d\i-cts on liand at the beginning of the year. Many farmers who inventoried the corn on hand at the beginjiing of 193^ at ko cents a bushel, later sold this corn for SO cents.

In this group of 5I accouiiting fanus the most successfijl one-third shov/s an average net income of $2,569, while the average net income of the least successful one-third of the faims wo,s only i^sUl. In I933 ^'^^ comparable net incomes for the two groups was $2,39S, and $319 respectively.

Investments, Receipts, Expenses and Earnings on

Mason, Cass, and I.ienard County Farms in 153^

351

Items

Your I Average of farm ^1 faras

17 most prof i tat le

irrns

17 lej

profitable

farms

CAPITAL Iin'':SSTlfiIS[TS

Land ----------

Parm improvements- - - -

Livestock total- - - - -

Horses --------

Cattle -_---.

Hogs ---------

Sheep- --------

Poultry- -------

Machinery and equipment- Peed and grains- - - - -

21 8^5

3 071 1 3U0

529

235 12

6^

1 055 1 727

Total capital investment

$29 ohs

23 756

3 2U3

1 7^50

563

SI9

27U

23

71

1 3I17

2 260

R3CSIPTS Am NET INCPJ^SSS Livestock total- - - -

Horses ------------

Cattle

Hogs (including AAA payments )- Sheep- ------------

Poultry- -----------

Egg sales- ----------

Dairy sales- ---------

Feed and grains (including AAA pa;>Tnents) -----------

La'oor off farm ---------

Miscellaneous receipts - - - - -

Tot3.1 receipts & net inci^ases

1 U76

232

79^

20

61

105

223

1 812

7U 7

$ 3 3.6a

1 87^;

330 97^

57 111

335

2 000 lOU

$ h 66^

23 115 3 331 1 Ibg

519

36s

215 10

56

3kE 1 342

9 90^

$2

1 123

34

lUs 592

"12

79

71

1S7

1 569

k2

15

SKPEUSES AITO I^TET DECPlBASES

Farm improvements- - - -

Horses ---------

Miscellaneous livestock decreases

Machinery and equipment- - - - -

Feed and grains- --------

Livestock expense- -------

Crop expense ----------

Hired laoor- ----------

Taxes- ----_---___--

Miscellaneous expenses -----

Total expenses & net decreases

I6S

302

"36 I5U

191

292

30

$ 1 171

171

3

s6

32

203

262

357

37

1 HUs

219

277

51 lUs

196

277

29

$ 1 197

ESCEIPTS LESS EXPEIJSES-

Total unpaid lahor- -------

Operator's lahor ------

Family lahor --------

Net income from investment and management -----------

RATE EAHWED ON IlIVESTtffiilT

Return to ca.pital and operator's lator and mana,gement ------

5% of capital invested- - - - - -

LABOR AI€) MAMGEI/EITT WAGE

2 198

572 536 136

1 '526

Jo

5.2'5^,

2 062 1 U52

$ bio

$ 3 217 121

S69

$ 1 R^2 711

171

7.9^%

sUi

2.gl5'o

3 096

1 620

$ 1 47t

X

1 ^Sl

1 %5 $ -iiU

352

'Hie following tp.ole shows the numher of farms havin:; cortain net incomes per acre. There was a i.iarked difference between the most successful and the least successful larr.is.

Avera.^ net m- coiae nev acre

ITTXiher of farms

Average net in- cone per acre

Nuinher of fp.rras

$11 9 7

11

o 10

$3 1

-1

13 U 1

A fiirther study of the farai "businesses made h/ comparing the in- vestments, receipts, and e.-rpenses of the group of farms with the highest net incomes with those having the lowest should throw some light on the question of wh^ some farmers are more successiiil than others. This com- parison is shown in the tahle on page J,.

The most successful farms averaged 297 acres es,ch, the least suc- cessful 269 acres. This difference in size axccjints in part for the variation in the avera.ge investment, receipts, and expenses in the two :7roups. Differ-- ences in receipts from the sale of grains, hogs, cattle, and daily pi'oducts accoujit for most of the difference in income hstween the two groups. Altho-ogh the expenses per farm were higher on the most profitable farms, the total ex- pense pel* acre, including the charge for family labor, was less than it was on the least profitable f arras.

Cha.nges in Inventories and Inventory Values

The year 193^ ''^^^ similar to 1933 -^ that the prices of farm pro- ducts continued to advance, ca.using further increases in inventory values. Owing to the poor crop yields in 193'^ there were fewer bushels of grain on h^nd to inventory a.t the end of the year than at the beginning. The value of the smaller sraount of grain, however, was ";reater than for the larger amotxnt on hand at the beginning of the yea.r.

Bushels of Corn Inventoried

J-.n. 1. 19^

2 609

Average of all farms

Average of 17 most successful farms Average of I7 least successful farms 1 S30 Your faiTa

3 529

Dec. 31. I'^-.^U

1 095

1 562

S9b

The most profitable farms had a much larger inventory of corn both at the beginning and end of the year. This v/as a major factor in accoun-cing for their higiier returns from feed and grains.

-5-

The average inventory increase for the accoijrttin^ farmc included in this sti-idy v.vis $95 in 193'-'-. ^-^ compared with $7^0 in 1933 > s,nd an in- ventory loss of $77^ ^ fami in 1932- There were increases of $52 in total livestock, $132 in feed and grains, and $12 in machinery, while improve- ments showed a decrease of $97- Such an increase in inventory as tha.t for machinery resxxlts from the value of new replacements during tne year being in excess of depreciation corts. Triis increase is of considerahlc interest for it is the first time that such an increase in machinery inventories has occurred since larra earnings began to decline so drastically with the general depression.

Inventory Changjo for 153^^

Beginning Closing Inventory Inventory

Items inventory inventory changes cliangcs,

1_1_3U 12-31-3^4 I93U yotu^ frrm

Total livestock $1 3^40

Peed and grains. . 1 727

Ma,chinery. 1 O55

Im"nrovements (except residence). 3 u71

Total $7 193 $7 292 $ 99

$1 392	$ 52
1 S59	132
1 067	12
2 97^!-	=21

Some Adjustments on Lfason, Cass, and Llenard County Farms Since 1929

Parmers have heen forced to maize adjustments in their cash ex- penditures as the result of changes in their cash incomes. From 1929 through 1933 farm operating costs declined each year, "out the year 133'-r hrou^ht a reversal of this trend. Total operating erq^enses were 22 cents an acre higher in 193^ than in l'^33, while cash operating expenses v;erc $l,c52 a farm in 193^» ^'^ compared with $1,320 in 1933- Tlie largest incre3.se in expenditures over the previous year was for machinery and repairs for machinery. Indications point to an even greater expansion of spending for these items in 1935> since farmers have postponed machinery replacements diiring the four-year period since 1929-

Cash Income and Expenses on Acco^jnting Farms in Mason, Cass, and Menai'd Couiities for 192';! and 193^

Your Average cash 1 1 cm s fa rm e:oense per fairn 193Lr 10311 fqoq

Livestock $ $ 210 $ 979

Feed and grains 252 S5U

Ma.chincry ^15 706

Improvements ,. , . 72 292

Lahor c . . 191 39^

Miscellaneous 30 29

Livestock expense 36 52

Crop expense I5U 21g

Taxes . 292 393

Total . .i $1 652 $3 923

Excess of cash sales ovei' expenses

Increase in inventory ...... ...

Income to lahor and capital (Receipts less expenses). .

Your	Average cash
farm	income	per far:.!
193^^	I93U	1929
$	$1 e^k 1 932 101	$U 303 2 0I+5 123
	7^ 7	Ul IS

$	$3 751	$6 533
0	$2 09q 99 2 19?	$2 610 711 3 321

-o--

l!Lie cunnxLativa effect of several years of low agricultural prices on the demand for manmactured goods can res.dily "be ascertained "by a coraparison of cash farn expenditures in 193'^ with those in 1929 • Althoxigli the average cash incorae in 133^ was 57 percent of that in 1929, cash ezpendi cures were only ^-2 percent as large. In 193'-'-> livestock pur- chases were 21 percent, and feed and grain purchases 30 percent as large as in 1929- 111 193^!- these faiTns paid out 59 percent as much for machinery-, and 71 percent as much for crop expense as in 1929, while ta:T:es were re- duced to 7U percent of the I929 .level.

Con-narison of Farras With High and Low Earnings

The raost profitable farr.is in this study had net receir)ts per acre of $S.6U, as compared v;ith $3*13 foi" the least profitable farms. The reasons for this difference may he obtained from a study of the data on pages 3 '''■'-'i S.

Tlie most profitable fams in this study avera,gGd 2S.5 acres larger, and h-ad 5 s^cres more corn, 5*2 a.cres more oats, 11.9 acres more wlieat, 16.3 a-cres more soybeans, a.nd 5.1 acres more hay than the least profitable faims. "Slieat and soybca.ns were tlie high-yielding crops in 193^' Tl'ie most profitable faiTis carried larger inventories of feed and grain on which to m.al:e a r>rofit when prices adva,nced. In a.ddition to the larger aci'eage of crops, a reason for the larger inventories wo,s the higher crop yields, there being an advantage of 2.3 bushels of com, 5.5 bushels of oats, U.5 bushels of wheat, a.nd 7*9 bushels of soybeans in favor of the high-profit group.

Tlic most profitable fams were more intensive, '^.nd more efficient in their livestock production than the least profitable farms. The most profitable farms had a.n investment in productive livestock of $3-82 per acre, a.nd fed $1,658 of feed per farm, as compared with $2.50 invested per acre, and $1,098 of feed fed per farm, on the least profitable fams. The productive livestock, on the most profitable farms, returned $110 for each $100 of feed fed, as compared with a return of $100 for each $100 of feed fed on the least profitable far.--.s. The income per litter farrowed was $120 on the most profitable farms, as compared with $7^ en the least profit- able fr.rras.

Tlae larger income on the most profitable farms was sec-ored with a total operating cost of •$7-05 per acre, as compared with $7.10 e^n acre on the least profitable farjTis. Ifen labor costs per crop acre were $3.83 on the most profitable farms, as compared with $^+.75 on the least profit- able farms, while power and machinery costs per crop acre amounted to $2.65 en the most profita.ble f arras, and $2.7^ on the least profitable farms.

-7- Tlie Influence of MA Programs on Cropping Systems and Farm Incomes

The farm-account records in Illinois were influenced "both directly and indirectly;- by the corn-hog pnd v.'heat adju-stment prograjns. A large per- centage of accounting farns v.ere under one or toth contracts in 193^- The acreages of com and whe.at on these farms were therefore less than nonual. This should liave resulted in lov;er operating costs. Corn-hog henefit pay- ments for the entire 193^ program will total ahout Uo million dollars for the state, while wheat henefit pa.^anents will oe ahout 2.U million dollars.

The "benefit ija^mients for accounting f arras are indicated in the following tahle, which shows the average payment for those farms receiving payr-ients, and includes only those paynents received "by the coopcrator "before the 193^ "books were closed. In some cases only the first corn-hog check is included, while in other cases the second check had hecn received. The second payments not received s,nd tlie third pa-^nnents will "bo entered in the 1935 hook.

AiA Bonefit Pajonents F.oceivod in 193^

355

Com Yrncat Hogs

Number Aviount llimi"ber Aiiiount Iteioer Anount -^-''' ^ ^'J-S^ of per of ^ev of per '^'^ ^'^'^ 1 /

farms farm farms fann farms farm

pa^/Tnents--'

1/3 most profitable farms I7 $152 I3 p.k^ If ;fl55 $U9S

1/3 least profita"ble farms lb I23 ik I9I IS 117 377

All accounting farms 50 13^ 37 200 Uq 138 U09

1/ Total henefit pajments reported by accounting farrns under contract for 193^!- divided by total n-La:aber of accounting farms.

On most fanas the Ciish received from benefit payments will more than pay the year's taxes. As an average for all accounting farms, the paj^- ments actually received were $117 more than sufficient to pay the 193^ tazes.

It is interesting to note the iise made of the contra.cted acres on the accounting farms. The average fann had 25.9 contracted acres which were used as follows: 6.6 idle; 2.1 red clover; ^,0 sweet clover; 9'7 soybeans; 0.0 alfalfa; and I.5 a-cres v/ere in other crops. These data, indicate t'nat most farmers made good use of their contracted acres from the standpoint of soil improvement, as a lar;ge part of them wore in legumes. V/hen the Govern- ment restrictions on the use of crops grown on contra.cted acres were rem.oved, they were on many farms the most profitable crops as they furnished ha.y and pasture where badly needed in drouth areas. The legumes had the further ad- vantage of being inmune to attack from chinch bugs.

Parm earnings were influenced indirectly by the AAA i^rograms in that the reduction in production increased the price of t"no commodities in- volved. The drouth was a more imT:iortant factor in reducing production tlian the adjustment programs, yet if it had not been for the corn-scaling pro- gram there would have been but little com in the hands of famiors at the time the major price advance became effective.

"^5b

Factors Helpir.g tc iaialyze the Far.a Biisiness on 5" Mnson, Cass, snd Menard County Farms in 1S3'^

Iteras

I

Your farm

17 most Average of { profitable -1 -' — ,„ f;irms

')]. la.ruis

17 lea^l pi'of ita"ble

far;.!"!

Size of lanas — acres ---------

Percent of land area tilla'ble- - - - -

Percent of tilla'ble land in hay and pasture ---------------

Gross receipts r>er acre- -------

Tot?l expenses per acre- -------

llet receipts per acre- --------

Value of land per acre --------

Total investment per acre- ------

Acrcb ill Corn- ------------

Oats- ------------

7?heat __-

Soyheans- ----------

Hay

Tillahle pasture- ------

Crop yields — Com, "ou. per acre- - - -

Oats, hti. per acie- - - -

Wheat, Du. per acre - - -

Soyheans, hu. per acre- -

Value of feed fed to productive L.S. - Retui'ns per $100 of feed fed to productive livestock- --------

5.etu-ms per $100 invested in:

Cattle

Poultry ---------

"Plo-^s -/.eaned per litter --------

Inco.Tie per litter farrowed ------

Dairy sales per dairy cow- ------

Invost'nent in productive L.S. per A. - Peceipts from productive L.S. per A. -

Man -Labor cost p'jr crop acre - - - - - Machinery cost per crop acre ----- Pov.pr and raach. cost ver crop A. - - -

Far^iis with tra.ctor ----------

Value of feed fed to horsos- -----

Llan lahor cost per $100 gross

income- --_--__-_-_-___ Expenses per $100 gross income - - _ - Farm improvements cost per acre- - - -

E:-:cess of sales over cash expanses - - Increa.se in inventory- --------

Rate earned on investment- ------

G-rosG receipts per faim- -------

S6.3

31.1

12.32 7.01 5.81

23

iii

03.1

24.1 Ub.O Q.O 27.2 h^M

21.2

9.9 17.1 17.2

297-3 90.6

29.2

15.69 7.05

8.6U

so 109

72.? 27.9 57.5

IS.k

33-9 U5.0

12.3

19.7

IS. 6

322

109

s6 259

n.S 93

^3 3.25

5.U6

1.65 2.75

35i

2U3

2U

.63

099

369

C90

110

s6 233

5-9 120

5h

3.

1.16

3. S3 1.72

2.c5

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IS

If5

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3 004 213

2bS.S SU.l .

31.6

10.23 7.10 3.13

Sd 111

67.3 22.7 U5.6 2.1 27.8 111- . 1

^ o - ^j • ^

6.8 15.2 10.7

1 098

100

sU 268

'^3 2.50 U.05

U.75 1.52 2.7U

\^4 255

31 69

.31

U 66=

1 373 17?

2 745

„0_

Chart for St-od^'ing the Efficiency of Various Parts of Your TusinesG, Mason, Cass, and Menard Coxmties, 193'-i-

The nixnhers ahove the lines across the middle of the page are the averages for the 51 faras incli:uied in this report for the factors named at the top of the page. By drawing a line across each colu-in at the niuTiber measuring the efficiency/ of your farri in that factor, you can corapare your efficiency with that of other fanners in "our locality.

Bushels

1 1

1

Cost

pel"

Gross

pe

r acre

1

crop

acre

0

receipts

0)

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0

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21

6200

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g.25

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153

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1900

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300

125

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700

2S00

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300

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93

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109

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3369

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93

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3.35

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11

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29

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700

9

2000

ISO

1 2.25

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63

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7

1300

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53

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50

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lis

-?300

-700

5

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6

0

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60

35

9.25

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-itoo

3

60

353

— JLU-

Inflnence of Pi'ice Changs en Fain JSarain^s

Pairn prices iii 1^^-+ rdv??.nce.d r.ore rapidly thai: did the prices of conmodities v:hjch f?,nriers bo'o^t. Jr.nners of the United States as a groiip couli e::ichange liheir farru r.rodUjCts in I93U for l^'r percent as ina:iy goods as for the period 1905-15l'+i wMle in 1S33 they received only GU percent, and 1952 only 61 percent as miach in excZian^B for what they had to cell as in the prewar period. In the month of Febn^ary, 153?» trdz index of purchasing pov/er had increased to SJ percent of prev.'ar, the index of fami prices having risen to 111 a.s coLipared with an index of L?7 for coraKoditico which fanners buy. When the line representing fara prices drops belov/ the line represent- inc urices paid bv faimers, farm earnings are very low, but when these lines corae close tosether faTTJ earnings increase. (See following graph.)

Index of Prices

Hate Sarned

2CC

1130 123

100

75 50

25

= Farm prices in U. S. Aug. 1909-July I51U = ICC

= Prices paid by farmers. Atj^?. 19C9-JuLy I91H = 100

~r

= Rate earned en investraent, accounting fai'^s, central Illinois

r iH

1 •?-«

i \-

y

J L.

-1 L L

J. L

4i

4:i

10:?;

8%

2^

05^

■H

j-^^

1917 'IS 'I5 '20 '.^1 '22 '23 ••2k '25 '2c '^7 '22' '29 '3O '3I '32 -33 <3U

-11-

359

Zincf the price of scne farm product 3 advancp.d much more rp.cidly during 193'^ tlirJi other produjcts, it is evident that some fairnij v;ould Denei'"it n-.ore than others, depending upon ths kind 3,nd quantity of prodtictc sold. G-rain prices advanced nuch aore rapidly than livestock prices; v/hich rccxilt- ed in a very had price ratio for farmers who huy large q^uantitier^ of fned. The average Illinois farm price of corn v,'as Ul cents a hur-hol in Jantu-.ry, 153^^; it advanced steadily mitil the end of the year wlien it v?s ?8 cents a Dushel. ether grains made narked advance although not so great an advance as corn. The price of hogs fluctuated fron a low of $3'-0 ^ huiidred in Jiay to a high of $6,.30 in Septeniher. The 1oa7 point in the fall cjaie in hovemher v;hen the average price was $5-10. The price has advanced quite rapidly since l^verr-ber, the a\'erage price being $7»5C' for ?e"braary, 1535* Seef cattle v7ero v/orth ^^l.io a huj^dred in January, 193^ and advanced each --onth vjitil Sentemljer, V7hen the "orice was $5.90. They dropped to $5.2C in Decemher hut increased again to $7.U0 for pe'nruary, 1935-

The year 193^ -"^et ^ record for the reduction in the nu'Aers of livestock. The percentage decr^asrs hy species w^r*?: r.s frllcvvn: horsfi?, 1.1 percent; n.ulps, ? .G perc^-nt; all rattl^', 11.2 perr-Priit; sr^e'^r, ^"^.T percent; hogi'> 35'3 percent. ^.Taen all species are comoined on the oasis of their capacity to consu'ne feed, the reduction was I3 percent. This reduction vrill greatly reduce the demand for feeds produced in 1335*

The relative chan,;,'e in prices of iri-prirtart coni:.odities r.ay he noted in the follov.'ing graph, which shows the average Illinois farm prices by months as a percentage of the average prices for th^ period 1921-1929.

Price Indices, 193"^

(1921-1929 = 100)

-^ — ^

I |_ I ^-^j^T-i-'-T^--^:'

j^airy PL-oci'jstS

1 J

Jione July Aug .

sent

Oct

rjov.

Lee ,

Jsn. ?eb. Mar. Apr. i.iay

All coririoditios index represents the vrhclesale price of a large n-jr.:her of co.mnodifcies for th3 Uiiit^d States, i;s coiaputed hy i;-ai-eau of Lshor Statisvicr-c

Grain and livestock indices represent average monthly fan)- prices in Illinois.

-12-

Variation in Ze-rnings Cver Five -Year Period

A comparison of ■"rod'uctior., incone, and ejrD?nditures on the ac- counting larES in this area for the last five years is ver;,- interesting "be- cause of the violent clianves in price level. 193^ '^^^ ^'^^ second year of very Iciv crop yields, ^^^et total receipts per farm vrers higher than in any other year in the last four, and were 66 percent of the 1929 gross receipts. Operating costs per acre were lever than in any year of the five except -933" Thus profits were the oest the cotmty had experienced since 1929-

Earnings in 1935 ^s usi;ial will depend "opon individv'ial efficiency, YTeather, and prices. A ncrnial year will mean larger yields of grain and prohably loirer prices.

Coniparison of Earnings and Investments on Accounting Farms in liason, Cass, and l^enard Co-unties for 1930-193^4-

JT

15331/1 193I.

1531-

i2.' I

TO^P

ITcimcer of farms ---------

Average size of faiins, acres- - -

Average rate earned, to pay for rr^no-gsment , rislc and capital - - Average lahor and management wage

G-ross income per aero ------

Operating cost per acre -----

A.verage value of land per acre- - Tota3. investment per acre - - - —

Investment per fai" in:

Total livestock- ------

Cattle

Jlogs

TivltT:/- ----------

Groso ir.co'ae per fp.nn ------

Incor-e -^.or farm from:

Cro,^-

LliscellaTieous income - _ _ - local livestock- ------

Cattle

Dairy salos- ------__

Hogs

Potiltry- ----____-_

Average yield of com in hu

A.verage yield of wh^eat in lu. - --

$-Uii6

16.21 13.12

105 153

3 snk

1 '^'^2

1 oUii 1=^3

3 S'i?

O-r

SS3

^,02

2 SjU 21S

33

^3 21s

35 236

^7 252

$-1 5^^^

-2.1^1

9.U3 12. 3U

93 137

2 370

1 363 S45 120

2 G^^o

^1

009 UI5

2ii

211

1^2

-2.o-;5

$-1 672

^ ' 'J

99 133

1 7o2 722

393

llU

1 279

f535

.lj5

,2l|

79

51 263

42

53	'- 559
j/^	36
is6	1 ii92
279	2o3
22Z	161
n2Q	902
lUh	29
53	U2
17	17

g2

IDS

1 1;q6

ocf

32s

3 0S7

$610

12. c?. 7. CI

23 111

1 3U0

p;29

235 6U

3 369

1 512

7

1 U76 232 223 794

21 17

/c

1/ Hecoris fro::. Pike, Brov.-n, j'en-ard and Cass Counties included for 1930.

2/ Hecords from Piice, Cass, ar.d Provm Counties included for I93I.

j/ Hecords from Cass, liason, ?il:e, and 3ro7.n Coanties included fcr 1933.

A-FxTUAL FlPil BUSIIISSS HEPORT Oil 2HIHTY-'IW0 PAEiiS III Pllffi MD 'BROTiJi COUIITIES, ILLIIIOIS, IS3U

?. E. Jol?Jiston, J. B. Andrews, and A. L. Leonard*

Farm Gamine's on the 32 acco-onting farns in Pilce and Brown CouTities averaged 3 '01 'oercent for 1S3^« Thin is the aecond aichest ret^orn dui'in~ the past five years, 1933 having the highest v?ith an avera^-e return of ^,.1 per- cent. The 193'-'- return is reraarkahle considering the severe drouth and chinch hug damage .

T?iese 32 accounts show for 193^ ^-^ average net income of $763 per farm, as compared viith. an average of $1,37^+ ii^ 1933> '"^i-d. an average net loss of .$6Ul in 1932- The average cash income in 193^^ ''^a-s $3,676 per farm, the cash "business expenditures $1,917 per farm, leaving a cash balance of $1,759 to meet interest paj'nents and fa;:u.ly living e:>rpenses. (Those who keep home account hooks vise the la.tter figure to represent the cosh contrihution of the farm to the "realized family income".) The low yields were directly resr^onsihle for the decrease in inventory of $307 ^- fann. TMs decrease, deducted from the cash halance, resulted in an average excess of receipts over expenses of $l,ij^2 a faim.

These data must not "be considered represe atative of average farm conditions, for they were secured from farms which a.re larger than average, and which v/ere managed "by farmers who are more efficient than the average of all farmers in the coujity.

For the state as a whole, farm earnings were "better in 193^ than in 1933* 1^ spite of the fact that com and oat yields were very low due to the drouth and to chinch b\Lg damage. In the western and southwestern parts of the state the drouth caused an almost total failure of hoth corn and oats. This accounts for i£.rm earnings heing lower there than in other parts of the state .

The corn crop was host in the southeastern part of the sta.tc, and was fair in the northwestern section. Wheat yields v/ere particularly good in the south and central portions of the state. Soybean yields vrere very good throughout the state, and there was a larger than normal acreage in Illinois in 193^- TMs state produced over half of the nation's 193^+ crop of soy"beans .

Chinch "otig damage extended over most of the state last year, hut was much more severe in some sections than in others, .and was much \TOrse on some farms th?,n on other farms in the same community. Conditions affecting crop yields were very spotted. This accotuits in part for the wide variation in farm earnings from one section of the state to another, and the wider varia.tions than usual from one farm to another.

* TV. B. Bunn and !7. E. Foard, farm advisers in the above Counties, cooperated in supervising and collecting tlie records on which this report is based.

362

-2-

Industries other than agriculture again showed improved earnings over the previous year. A group of SUo industrial coi-porations reported hy a nationally known "banl: showed average earnings of 5'0 percent on their in- vested capital in 193^» ^-s compared with 3*'+ percent for the same corpor- ations in 1933- ^ similar group has a loss of one-tenth of one percent in 1932, and average earnings of 3 •3 percent in 1931*

In comparing the average earnings of coiporations with the rate earned on investments on accounting farms, it is well to keep in mind that in corporation accounting, charges are made for management, wliile in the farm accounts no comparahle deduction has heen made. On the other hand the farmer and his family receive food, fuel, and other items of living from the farm for which th^ farm has received no credit in the records used in this report. For the average central Illinois farm family, consisting of five persons, the value of the food and fuel furnished by the farm was ahout $2|)0 in 193^> when estimated on the "basis of the wholesale price for fann products.

Variations in Faim Incomes

There was a much wider range in farm earnings on the accounting farms in 193^ than in 1933- This was true for the farms included in this report, and it was also true when the average earnings of farms in one section of the state were compared with the ea.rnings of farms in other areas.

The extremely wide range in earnings was due to a comhination of physical and economic factors. The average yields of wheat and soybeans was mvch "better, compared with the five-year average, than the average yields of com and oats. This variation favored those sections which had larger acreages of the higher yielding crops in 193'^- There was also a wide range in average com yields from one section of tiie state to another, as well as betv/een individ'oal farms in the same area. The price of grains was high in 193"^ f^-s conpared with prices of livestock and livestock products. Farms where grain sales constitute a la,rge part of the fam: income thus had an advantage. The rapid increase in the prices of farm products, particii-larly grains, favored those farms which had large stocks of salable products on hand at the beginning of the year. Manj'' farmers who inventoried the com on hand at the beginning of 193^ s-'t ^ cents a bushel, later sold this corn for 80 cents.

In this group of ],2 accounting farms the most successful third shows an average net income of $2,365. while the least successful third had an average net loss of. $5fil9- I^ 1933 "^-^'le most successful third lia.d an average net income of $2,39^, and the least successful third had an average net income of $319-

Investraents, Receipts, Expenses and Earnin^js on 32 Pike and Brown Coimty Farms in 193^

353

Items

CAPITAL im'ESTl.ffilTTS

Land -----------

Farm improvements- - - - -

Livestock total- - - - - -

Horses ---------

Cattle ---------

Eogs ----------

Sheep- ---------

Poultry

liacliinery and equipment- - Feed and grains

Total capital investment

Your fairn

Average of 32 farms

17 60U

3 ^3^ 2 067

3lis

1 lUU

Ii6i

69

979 1 U31

$25 ol^

11 most profitable

farais

25 385

h 601

3 350

l!3^

2 ih-j

650

70

^9

1 333

2 260

11 least prof ita.TDle farras

11 363

2 503

1 390

355

625

276

S6

ks

75U

722

$16 732

55CEIFTS MB i^ Il-ICEEASSS Livestock total- - - -

Horses -----------

Cattle _____ _

Hogs (including AAA payiTients) Sheep- __-_-_-_-__ Poultry- ----------

Egg sales- ---------

Dairy sales- -__-_--_

Feed and grains (including AAA

payments) ----------

Labor off fairo --------

Miscellaneous receipts - - - -

Total receipts & net increases

36

1 73s 90

5 0^3

32 96

5S 5

3hi

b4 SS2

?33 107

13

31 111

so

15

13s

1 36g

23 217

sUs go hi

53 106

22

o

$ 1 392

SXPEITSES AIOD l^JET DECREASES

Farm improvements- - - - Horses ----__--_ lA.iscellaneous livestock decreases

Machinery and eq^pment- - - -

Feed and grains- -------

Livestock expense- __-__- Crop expense ---------

Hired lahor- ---------

Taxes- ------------

Miscellaneous expenses - - - -

Total exmenses & net decreases

199

2U6 502

^5 130 151 191^

30

1 ^97

30 S

337 506

Gs 206 313 303

35

$ 2 126

126

132

507

30

sU

Ui

12 s

25

$ 1 073

HECEIPTS LESS EXPEIJSSS- Potal unToaid labor- - -

Operator's labor

Family labor --------

'fet income from investment and ^nagement ------------

^TE EAEIC3D OH IHVSSBaEHT

fetum to capital and operator's labor and management ------

)fo of capital invested- - - - - -

^OH MD IvLUTAGElGiTT WAGE

cl

$ 1 U'>?

bS3

515 162

$ 3 012

0U7 52U 123

769

•^.01^

$ iia

7

365

__bJ40fJ

1 2gU

1 276

S

2 gg9

1 sU7

$ 1 0U2

00

52s

2^0

-kUs

-2.Szi

79

S3 7

$ -75s

The following table shows the number of farms laaving certain net incomes per acre. There was a marked difference between the most successful and the least successful farms.

Average net income per acre

$13

11

9

7

5

3

Hu-nber of farms

1

2 1

1

6 U

Average net income per acre

$1

-1

-3

-5

-7 and under . . .

number of farms

5 7 3

0

2

A further study of the farm businesses made by comparing the investments, receipts, and expenses of the group of farms with the highest net income, with those having the lowest net income should throw some light on the question of why some farmers are more successful than others. This comparison is shown in the table on page 3-

The most successful farms averaged 339 acres each, the least suc- cessful 20U acres. This difference in size accounts in part for the varia- tion in the average investment, receipts, and expenses in the two groups. Difference in receipts from the sales of hogs and cattle accounts for most of the difference in income betv/een the two groups. Although the expenses per farm were higher on the most profitable farms, the total expense per acre, including the charge for family labor, was less than it was on the least TDrofi table farms.

The year 193^ ^^.s similar to 1933 i^ that the prices of farm products continued to advance. Owing to the extremely poor yields in Pike and Brown Counties the value of grain at the end of the year was not as much as at the beginning, even though prices of grain had more than doubled. This condition was aggravated by the fact that these counties had considerable livestock and, with very little feed produced, farmers were compelled to buy grain at a hi^ price while livestock prices were still relatively low.

Bushels of Corn Inventoried

Jan.

1. I93U

Dec, ^q, I93U

Average of all farms

Average of 11 most successful farms . Average of 11 least successful farms. Your farm

2 250

3 699 1 032

I125

908

106

The most profitable farms had a much larger inventory of com both at the beginning and end of the year. With the rise in corn prices, this was one of the important factors accounting for the difference in farm earnings.

i

I

4

'^

$2 137 1 150 9U6 3 321	$ 120 -2gl -33 -113 $-307	$
$7 6oU	$

_5_

The decrease in inventory for the 32 accotmting farms in Pike and Brown Coimties averaged $3^7 in 193'+' The 1933 inventory valijfis in- creased $7oO per farm, while in 1932 there was an inventory decrease of $776 per farm. The decreases in 193^ were: feed and grain $2S1; im- provements $113, and machinery $33. while livestocJ: showed an increase of $120. The decrease in machinery was tlie smallest since 1929 on accoxmt- keeping farms, and indicates that needed repairs and replacements are heing made, "but still not enough to offset the ciirrent depreciation costs.

Inventory Changes for 193^

Beginning Closing Inventory Inventory Items inventory inventory changes changes,

I-I-3U I2-3I-3U I93U ?^o-u.r farm

Total livestock $2 O67

Feed and grains 1 k^l

Machinery 979

Improvements (except residence) 3 ^^3^ Total " $7 911

Some Ad,1ustriients on Pike and Brown County Farms Since 1929

Farmers have been forced to make adjustments in their cash ex- penditures as the result of claanges in their cash incomes. Prom I929 through 1933 farm operating costs declined each year, hut the year 193^ brought a reversal of this trend. Total operating expenses were $1.9'4- an acre higher in 193^^ than in 1933» while cash operating expenses were $1,917 a farm in 193^» as compared with $1,320 a farm in 1933- Due to the drouth and the re- sultant very low crop yields, it was ncessary for the fai-ms in this sttidy to purchase $55^ more feed than in 1933- There was also a slight increase in expenditures over the previous year for livestock and machinery, while a considerable decrease occurred in expenditures for taxes. If this area has more favorable v/eather and crop conditions in 1935> so ^^ to increase their farm income, indications point to an increase in spending for repairs and replacement of machinery and improvements, since farmers have postponed pur- chase of these items durint the five-year period since 1929«

Cash Income and Expenses on Acco"unting Farms in Pike and Brown Counties for I929 and 193^

Your Average cash Your Average cash

Items farm expense "pGr famt farm income per farm

I91U 19^U 1929 193'-^ 193^ 1929

Livestock $ $2^7 $ 979 $ $3 OI3 $U 303

Feed and grains 7S3 85^ 562 2 0U5

Machinery 25O 70b 37 I23

Improvements 87 292 1 3

Labor I5I 39U 5S Ul

Miscellaneous 30 29 5 IS

f^) 5^

Livestock expense U5

Crop expense I30 21g

Taxes 19i4 393

Total $ $1 917 $3 923 $~

Excess of cash sales over expenses $

Increase in inventory ....

Income to labor '^.nd capital (Receints less expenses). .

$3 676	$6	533
$1 759 -307 1 U52	$2 3	610 711 321

366

-6-

Tlie curaiilative effect of several years of low af^ricultural prices on the demand for manxifactured goods can readily "be ascertained "by a com- parison of cash, farm expenditures in 193^ v/ith those in 1929- Althoiogh the average cash income in 193^ was 56 percent of that in 1929i cash ex- penditures were only ^9 percent as large. In 193^+ livestock purchases were 25 percent, and feed and grain purclmses 92 percent as large as in 1929- In 193^ these farms paid out 35 percent as much for machinery, 3^ percent as much for improvements, 3^ percent as much for lahor, and 59 percent as much for crop expense as in 1929. while taxes were reduced to 50 percent of the 1929 level.

Comparison of Farms With High and Low Earnings

The most profitaljle farms in this st\idy had net receipts per acre of $6.97> as compared with a loss of $2.20 per acre for the least pro- fitable group. The reasons for this difference may he ohtained from a study of the data on pages 3 ^^^ S.

The most profitahle farms were more intensive and more efficient in their livestock production than the least profitable farms. They ha,d an investment in productive livestock of $9-3'^ Per acre, and fed $3,839 of feed per farm, as compared with $U.7S invested per acre, and $1,215 o^ feed fed per farm, on the least profitahle farms. The productive livestock on the most profitable farms returned $130 for each $100 of feed fed, as compared with a retiurn of $111 for each $100 of feed fed on the least pro- fitable faims. The most profitable farnis liad an income of $92 per litter farrowed, as compared with $77 per. litter farrovred on the least .prof itable farms-.. There- -were returns of $S5 for each $100 invested in cattle on the most profitable farms, as compared with returns of $55 per $100 invested in cattle on the low-profit group.

The most profitable farms in this study were I3U.9 acres larger, and had a larger proportion of their land area tillable than the least profitable farms. The;/ had 52-9 acres more corn, lU.O acres more oats, U.3 acres more wheat, 9-3 acres more haj-, and 2h.S acres more tillable pasture than the least profitable farms. The most profitable farms carried much larger inventories of feed and grain on which to make a profit when prices advanced. Besides the larger acreage of crops, another reason for the larger inventories v/as the higher crop yields, there being an advantage of 6.2 bushels of com, 7.7 bushels of oats, ojid 12.4 bushels of wheat per ^

acre in favor of the high-profit group.

The larger income on the m.ost profitable farms was secured with a total operating cost of $8.17 per acre, as compared with $9.01 per acre for the least profitable farms. The man labor cost per crop acre on the most profitable farais was $5.25, as compared with $9 -09 per crop acre on the least profitable farms. The power and machinery cost per crop acre was $3-27 on the most profitable farms, and ^3-37 per crop acre for the low-profit group.

I

-7-

Influence of AAA Programs on Croppin.g: Systems and Farrn Incomes

The larm-acco-unt records in Illinois were influenced both directly and indirectly by the corn-hog and wheat adjustment programs. A large per- centage of accounting farms were under one or both contracts in I93U. The acreages of com and wheat on these farms were therefore less than normal. This should have resulted in lower operating costs. Corn-hog benefit pay- ments for the entire I93U program will total about kO million dollars for the state, while v/heat benefit payments will be about 2.U million dollars.

The benefit payments for accounting farms are indicated in the following table, which shows the average payment for those farms receiving payments, and incl\3des only those payments received by the cooperator before the 193^ books were closed. In some cases only the first corn-hog check is inclioded, while in other cases the second check had been received. The second payments not received and the third payments will be entered in the 1935 book.

AAA Benefit Payments Received in 193^

Com Wheat Hogs

Number Amouiit Number Amount Number Amouiat Average of of per of per of per of all

farms farm fa.rms farm farms farm payments.

1/

1/3 most profitable fams 11 $129 1 $ 66 11 $3^9 , $US3

1/3 least profitable farms 9 67 2 kO 10 l6k 211

All accounting farrns 2° 102 6 jk 3I 2U5 3U3

1/ Total benefit pawnents reported by accounting farms under contract for 193^^ divided by total ntimber of accounting farms.

On most farms the cash received from benefit payments will more than pay for the year's taxes. As an average of all accounting farms in this study, the payments actually received were $1^9 niore than siifficient to pay the 193^+ ta,xes.

It is interesting to note the use made of the contracted acres on the accounting farms. The average farm had IS.S contracted acres vjhich vrere used as follows: 5.U idle; 3.8 mixed clover and timothy; 6.7 sweet clover, 1.3 soybeans; and 1.6 acres alfalfa. These data indicate that most farmers made good use of their contracted acres from the standpoint of soil improvement, as a large part of them were in legumes. T/Then the Govemrnent restrictions on the use of crops grown on contracted acres were removed, they were on many farms the most profitable crops as they furnished hay and pasture where badly needed in drouth areas. The le:5umes liad the further o,d- vantage of being immune to attack from chinch bugs.

?arm earnings were influenced indirectly by the AAA programs in that the reduction in production increased the price of ths comi'nodities in- volved. The drouth v/as a more im.portant factor in redxicing production than the adjustment programs, yet if it had not been for the corn-sealing program there would have been but little com in the hands of farmers at the time the major price advance became effective.

36s

Factors Helping to Analyze the Farm Business on 32 Pike and Brown Coi;nty Farms in 193^

I teas	Your fam	Average of 32 farins	11 most profitable farms	11 least profitab] farms
Size of farms — acres -------		2U9.7 75-5 U9.7 11.21 2.73 3.02 71 102	339-3 7U.2 kk.k 15. lU 8.17 6.97 75 109	20U.i|
Percent of land area tillable- - -		66.5
Percent of tillable land in hay and pasture -------------		57-1
Gross receipts per acre- -----		6.2]
Total expenses per acre- -----		9.01
Fet receipts per acre- ------		-2.2c
Value of land per acre ----- -		56
Total investment per acre- - - - -		22
Ar»T»pe -in PriT'Ti -,		142.6 17-3 13-3 27.6 66.1 5-9 6.9 17.6	77-3 26.1 1^.2 32.7 79.3 9.0 9.5 2U.I	24. U
Oats- -- --_		12.1
I'Th r» a f" — — —		10.5
Wnv - -		22.9
ndy - - -
Tillable pasture- - - - -		5U.7
Crop yields — Corn, bu. per acre- -		2.2
Oats, bu. per acre- -		1..S
Y/heat, bu. per acre -		11.7
Value of feed fed to productive L.S.		2 370 120 30 175 e.h qi 26 7.11 11. Ui	3 S39 130 25 115 6.3 92 23 9.3H 1U.67	1 215
Hetums per $100 of feed fed to pi'oductive livestock- ------		111 '
Returns per $100 invested in: Cattle- _--____		55
Poultry -------		192
Piss v/eaned per litter ------		6.U
Income per litter farrowed - - - -		77
Dairj'' sales per dairy cow- - - - -		2!+
Investment in prodxictive L.S. ^er A.		k.-fs
Receipts from productive L.S. -oor A.		6.52
Han labor cost per crop acre - - -		6.3U 2.01 3.22 69fa igi; 26 7^^ .20 1 759 -307 ^.01^ 2 9^9	5.25 2.2U 3-27 22^ 2U2 12 .91 2 901 111 6.1+0^ 5 13s	9.69
Llachinery cost per crop acre - - -		1.61
Power and mach. cost per crop A. -		3-37
Farms with tractor --------		k3fo
Value of feed fed to horses- - - -		165
Ifen labor cost -oqt $100 gross income - _		57
Expenses per $100 gross income - -		132
Farm im-nrovements cost per acre- -		.62
Excess of sales over cash expenses		■jzk 1
Increase in inventory- ------		-U65 ■
Bate earned on investment- - - _ _		-2.6gjg
Gross receipts per farm- _ - - _ -		1 392

chart for Studying the Efficiency of Various Parts of Your Business,

Pike and Brown Co-onties, 193^

369

The numhers above the lines across the ntiddle of the page are the averages for the 32 farms included in tliis report for the factors named at the top of the pa.ge . By drawing a line across each column at the number measuring the efficiency of your faim in that factor, you can compare yoiir efficiency with that of other farmers in your locality.

	Bushels				I 1		Cost per				C-ro s s
	per acre				^		crop acre	0 0			receij^ts
						Q)				f— 1
						P<				<o-
						0)	0) '-H			U 03
-p				a;	&	E Ti	p			(D -P		m			g
rt				S	0	0 0)	xi			ft ft		<D			M
tj 0)				0	to 0	0 -p	(U G)			•H	ri	M			n3
0 S				0 u	(D	rt w	G Q)			+> (D	■H	!h n			|«
ri 4J				0 <D	tH >,	•H (1)	0 tH		^b	W 0	>a	0 (1)
U CO				1-H 4J	Cti U	>	0		0 CD	Q) J-i	> ft	(D	rl	ri
cS 0				4-^	U) -H	>.C	a V.		ni 0)	0 u	w 0	0 X	^-1	H	■iH
0 >				•H	CC	U-H	■H 0		rt		OJ -P	0	0	Cii
rt			+j	•• r-H	^^	-P		u	^^ -H	U to	(U S	CO	0)	t+H	to
0) -H	s	m	a	w	'3R	• (^	0	0) ^	0 en	f-i 0)	(D ^			?>
+J	u	+>	Q	w u	•H f-l	w 0	,0	& 0	,a 0	0 >	r-H to	u	Th	^1
(S 0	0	a		0 CD	ni 0)	Or-H	• r-H	a	0 d	Oj fH	ri cJ	a a	CD	^ 0 1
0	0	^	te p,	0 Ph	pH-ee^	1-^ -60-	>^	^ e	t-P W	H -H	in 0	Ph	Ph	•<
13.0	16	22	33	lUl	'se	300	170	— -.	— .«	—	1700	^230	27	6700	U5O
11.0	lU	19	30	131	30	27^^	160	.23		0	1300	3730	2U	3930	UlO
9-0	12	16	27	121	uu	2(^0	150	1.73	.22	g	900	1230	21	3200	370
7.0	10	1^	2l|	111	33	225	ll-!0	3.23	1.22	Ik	300	2730	lo	^14^^,0	130
s.o	S	10	21	101	32	200	110	U.73	2.22	20	100	22^50	13	1700	290
3.01	3.9	6.9	17.6	91	26	173	120	6,3^	1.22	2S	-307	1739	11. SI	29U9	2^9.7
1.0	k	U	13	SI	20	130	110	7-7^	U.22	32	-700	12^0	9	2200	210
-1.0	2	1	12	71	Ik	123	100	9.23	3.22	32	-1100	730	6	lUso	170
-3.0	0		9	61	S	100	90	10.73	6.22	kk	-l-^OO	250	3	700	130
-3.0			6	31	2	7^	80	12.2=5	7.22	30	-1900		0		90
-7-0			3	Ul		oO	70	13.7^	g.22	•56	-2-^00				RO

-10-

Inflvtence of Price Changes on Farm Bamings

Farm prices in 193^ advanced no re rapidly than did the prices of connodities which farmers oout^t. ??naers of the United States as a group could eicchange their fanr. products in 193^ for 7^ percent as many goods as for the period I905-I91U, while in 1933 they received only Sk percent, and 1932 only 61 percent as much in exchange for what they had to sell as in the prewar period. In the month of February, 1935» this index of purchasing pov7er hrA increased to S7 percent of prev/ar, the index of farm prices having risen to 111 as compared nith an index of I27 for commodities which f aimers "buy. Yihen the line representing farm prices drops "below the line represent- ing prices paid "by farmers, fp.rm earnings are very low, "but v/hen these lines come close together farm earnings in.crease. (See following graph.)

Index of Prices

Rate Earned

200

150 125 100

75 50

25 0

= Fann prices in U. S. Aug. 1909-July I91U = 100

= Prices paid "by farmers. Aug. 1909-July I91U = IOC

n = Rate earned on investment, accounting farms, central Illinois

-S-^

^H

1917 'IS 'iq '20 '.21 '22 '23 '24 '25 '26 '27 '2f- '29 '30 '3I '32 '33 «3U

12^

10^

Si,

^%

0^

-11-

371

Sincn the pric^ of sone fam products advanced ni\ich more r.ipidly during 193^ tl)&n other products, it is evident that some farms would benefit rTiOre than others, depending upon the kind and qi:j-antity of products sold. G-rain prices advanced much more rapidly than livestock nrices; which reE^olt- ed in a very' had price ratio for fcrrners who 131:17 large q^uantities of feed. The average Illinois farm price of corn v;as Ul cents a hushol in Januarj', 193^'-; it advanced steadily until the end of the year when it was 85' cents a Dushel. Other grains made n-arked advance although not so great an advance as corn. The price of hogs fluctuated frou a. Ioy/ of ^'^.?.0 a hundred in May to a high of $61^.30 in Septeraoer . The low point in the fall csrae in Hovei'nher v;hen the average price wa.s $5-10 . The price hr.s advanced quite rapidly since Foven-.bor, the average price being $7 "5^ '^°'^ Petriio-ry, 1535- Seef cattle were wortli $H.10 a hundred in January, 193'^ 3-^ci. advanced each nonth fntil Se-Dtemter, when the price was $5.90. They dropped to $9.2C in Decemlier "but increased again to $7-^-^ for Felirasry, 1935*

The year 193^ set a record for the reduction in tlie nuxAers of livestock- The percentage decr«=asrs hy species 7r<^rc f.s fcllovvs: horsRP, 1.1 percp>nt; n:ul<^s, ?.b percent; all rattle, 11.2 percent; shje'~p, U.7 percent; hogi'> 35.3 percent. IThen all species are comhined on the "basis of their capacity to consuTte feed, t'ne reduction was I3 percent. This reduction will greatly reduce the dema.nd for feeds produjced in 1935*

The relative change in prices of inpprtant conjn;oditios may he noted in the following graph, wMch shows the average Illinois farm prices "by months as a percentage of the average prices for the period 19i'l-1929.

Percent 120

Price Indices, 193"^

(1321-1929 --- 100)

Jan. PeD. Lfe.r.

Apr. ksy June July Aug. "Seot. Oct. Kov. Dec.

All co:™odities index represents the wholesale price of a large nmber of commodities for the United States, ss computed "by Bureau of Lahor Statistics.

Grain and livestock indices represent average .monthly fanr. prices in Illinois.

372

-1?.'

Variation in Earnings Over Five-Year Period

A conparison of ■orod'uction, income, and expenditiires on the ac- cor-aiting farms in Pihe and Brovm Co'onties for the last five years is very interestini^ because of the violent fluctiiationE in price level. Although the ISI'h crop wa.s nearly a. failure, and folloT-ed a smaller than average crop of 1933« 't^'^® increased prices of "both grain a:id livestocl; did have considerable effect in holding earnings in second place for the five-year period 1930-133^'

Earnings in 1935 > ^^ usiial, will depend upon individvial efficiency, weather, and prices. With normal weather conditions, ■prices of grain are likely to go down to a more noraal level which will give individual effi- ciency the responsibility for higher earnings on each farm.

Comparison of Earnings and Investments on Accounting Farms in Pike and Srown Counties for 193^-193^

Items

I930I/

19312/

1932

I933I/

193^

l^umber of farms ---------

Average size of farms, acres- - -

Average rate ea.rned, to pay for

management, risk and capital - - Average labor and management wage

Gross income per acre ----- -

Operating cost per acre -----

Average valije of land per acre- Total investment per acre - - -

Investment per farm in:

Total livestock- - - - - -

Cattle ----------

Hogs

Poultry- ---------

Gross income per farm

Income per farm from:

Crops- -------

Miscellaneous income Total livestock- - -

Cattle - -

Dairy sales- - - - -

Hogs

Poultry

52 2UU

16.21 13.15

10 f> 153

3 20U

1 9U2

1 oUU

153

3 9^7

Average yield of corn in bu.- - - Average yield of wheat in bu. - -

6U SS3 620 302 65U

218

33

^3

-2. If. I

$-1 ^U^l

30 2 Us

-1.5?^

9.U3 12. 3U

93 137

2 S70

1 363 gU5 120

2 056

^7 009 U15 211 211 152

U2 2U

^7 2f;2

$-1 309

i^.l'l

7.39

q.oq

72

110

2 521 1 '426

SO

1 S3U

$539

12. 2U 6.79

S2 IDS

1 U96

667

32s

SO

3 087

	1 559
52	36
7S2	1 1+92
ho3	263
IfeO	ibl
9S3	902
loU	25
55	h2
3^!-	17

250

3-Of5

11. SI g.73

71 102

067

lUU

li6l

I15

9U9

5

ss6

sU9

96

733

77

6

12

1/ Records from. Pike, Brovm, I.Ienard, and Cass Counties included for 1930'

2/ Records from Pike, Cass, and Brown Co-onties included for 1931-

^ Records from Cass, Mason, Pike, and Brown Coxmties ixicl-oded for 1933*

_A

JCWUAL FAJL'.i BUoIIESS KEPOar OLT I'OHTx-lJl!IE TAHMS HI i:IADISO]>I COUIITY, ILLINOIS, I53U

?. E. Jolinston, T. H. Hedges, and J. E. Wills*

Farm ea.rnings of the ^9 account keer)ing farmers in iIa.dlson Coimty showed an increase in 193'-" over those of 1933- This is the second con- secutive year of inprovenent in the earnings, and the highest year since 1929-

' Tliese l|-9 accoimts shov; for 193^'- ^^ average net income of $79^ per farm, as corapared with an average of -'265 in 1933 ^-^d- an average net loss of $42U in 1932- The average cash incorae in 193^ was $2,7^i-S per farm, the cash "business expenditirres $1,550 per fan, leaving a cash balance of $l,lSo to meet interest payments and family living expenses. (Those who keep home account hooks use the latter figure to represent the cash contrihution of the farm to the "realised family income".) Besides the cash incorae, there was an inventory increase of A275 5i fa.r!ii due mostly to the rise in prices of farm products. This increase added to the cash balance, resiilted in an average excess of receipts over exT^enses of $1,U63 ^- farm. Both the inventory in- crease and the cash balance were Larger in 193^ than in 1933 •

These data must not be considered representative of average farm conditions, for they were secured frim farms which are larger tiism average, and which were managed b^' fa,rmers who are nore efficient tha/n the average of all farmers in the county.

For the state as a whole, f arm a arnings were better in 193^ tlian in 1933 • i^ spite of the fact that com and oat yields wcru vevj low due to the drouth and to chinch bug damage. In the western and southv;estem "narts of the state the drouth caused a.n aL.iost total fa,ilure of both corn and oats, v/hich accounts for fa.r;.i oa.rningG being lower there than in ot::ter parts of the state.

The com crop v;as best in the southeastern part of the state, and was fa.ir in the northwestern section. lYheat yields ^vere particularly good in the south and central portions of the state. Soybean yields were very good througliout the state, and there was a larger than normal acreage in Illinois in 193^- This state produced over kalf of the nation's I93I1 crop of soybeans.

Chinch bug damage extended over ;aost of the state last year but was much more severe in some sections than in others, and wa.s much worse on soi.ie farms tlian on other far..iS in the same coCTnunity. Conditions affecting crop yields were very spotted; which accounts in part for the wide variation in farm, earnings from one section of the state to another, and the wider variations than usual from one farm to ronother.

*T. TY. May, farm adviser in i.fr'dison County, cooperated in suoorvising and collecting the recordr. on which this re-nort is b: sed.

t-l.

Industries otjier than agric^olture a;'-;ain showed improved earnings over tlae previous yep.r. A £1-p'^P of S-IO industrial corj^orations reported "b-j a nationally I-aiovm "banlc showed average earnings of 5-'^ percent on their in- vf;sted capital in 193^> ^s compared v;ith 3»^ percent for the same coipor- ntions in 1933' -^ similar group had a loss of one-tenth of one percent in 1532 ^•"'^cL average earnings of 3*3 percent in 1931'

In comparing the average earnings of corporations with the rate earned on investments on accovuiting fariTis, it is well to keep in mind that in corporation accounting, char-^s are made for management, while in the farm accounts no comparable dedijction has "been made. On the other hand frs farmer and his fai-aily receive food, fuel, and other items of living from the farra for v/hich the farm has received no credit in the records used in this report. For the average central Illinois farm family, consisting of five persons, the value of the food and fuel furnished "by the farm was ahout or^O in 193'+! when estimated on the basis of the wholesale price for farm V^roducts.

Variations in Panr. Incones

There was a much widor ran^n in fairn earnings on the accounting fanas in 193^ tlip.n in 1933- This was true for the fai-ms included in this re'oort, and was also time when the average earnings of farms in one section of tho state were comiDared v;ith the earnings of farms in other areas.

The extremely wide nmc^ in earnings was due to a combina.tion of pliysical and economic factors. The average yield of v/heat and soybeans v/as much better, compared with tlie fi-e-year average, than the averaz-e :-ields of corn and oats. This variation favored tliose sections ./hich had larger acreages of the higher yielding crops in 193'+' There w;^s also a •.vide range in avorire corn yields from one section of the state to another, as well as between individual farms in the so-ne area. The price of grains v.TS high, in 193^^ ^^ coLroared with ^irices of livestoc/: and livestock niroducts. Parms v/hore grain s;iles constitute a large part of the fari incoi.ie t^^us had •an advantage. The rapid increase in tho prices of farm products, particul-rly grains, favored those fams which had large stocks of salable ^jrodv-cts on liand at the beginning of the yec-v. i.iany farmers who inventoried the corn on liand at the beginning of 193^ ^'^ ^+0 cents a bushel, later sold this com for SO cents.

In this group of '19 accounting farras the most successful third shows an average net income of ^1,^35, -r/Mle the average net income on tho least succGssfta third of tlio far..:s was $176. In I933 the comp,\rable not incoiae for the two grouDs was .'"5^3 and $-3'+3 respectively.

Investments, Receipts, Expenses and Earnings on ^9 Madison Co\-mty Fa.rms in 193^

Items

CAPITAL ir/ESTLEITTS

Land ------------

ram improvements- - - - - -

Livestock total- ------

Horses ----------

Cattle _-.--

Hogs -----------

Sheep- ----------

Poultry- ---------

Machinery and equipment- - - Peed and grains

Total capital investment-

Your

fa.rm

Average of U9 farms

lb raost prof ita-tle f arras

9 37^

2 759

1 299

320

735 132

Ik

9S

1 305 1 035

$15 772

9 SS3

2 576

1 Ull

310

gos

165 11

117 1 369 1 122

$16361

16 least profitable farms

S 577

2 75s

1 GO 9

269

51U

112

21

33

1 C63

919

$iU ^26

HECEIPTS AI'ID I'lET INCREASES

Livestock total- --------

Horses ----- - _ _ - -

Cattle ------------

Hogs (including AAA payments )- Sheep- ------------

Poultry- -----------

Egg sales- ----------

Dairy sales- ---------

Peed and grain (including AAA payments) -----------

Labor off faim ---------

Miscellaneous receipts - - _ - -

Total receipts & net increases

1 502 19 127 309 21 120 lUl

75h gig

f o

2

$_2j+00

1 895 IS 15g 371 11 199 21U 927

S77

106

6

$ 2 gg7

1 02-^

16

100

229

33

k2

105

U9g

725 gU

1

$ 1 g33

EXPEIISES AIID lET DEGP.EASES

Paim improvem-ents- - - -

Horses ---------

Miscellaneous livestock

decreases

Machinery and equipment-

Peed and grains- --------

Livestock expense- -------

Crop expense ----------

Plired labor- ----------

Taxes- -------------

Miscellaneous expenses -----

Total expenses & net decreases $

171

2^2

25 152

155

165

27

.931

109

193

Th iiii 160 1U6 26

19Z

2U2

19 155 isU 163

27

$___9g2

ifflCSIPTS LESS EXPEI-TSES-

Potal unpaid labor- -------

Operator's labor ------

Pamily labor --------

let income from investment and I manageraent- ----------

-LATE EAENED 0:-J IirVEST2,GNT

teturn to capital and operator's labor and manageraent- - - - - -

': of capital invested- - - - - -

i30R AlTD I;!Ail'VGEr,IE.lTT WAGE

S 1 U63

669 Ull 258

79^

^.03^

1 205 729

$ 2 07s

6II3

U20 223

1 ^^35

1 g55 gl8

1 C37

$ 851

675 39U 2gl

176

1.23<o

570

716

-IU6

^^

The following table sliov;s the mjiifiber of farms having certai'i net incomes per acre. There was a "nanced difference between the most successfiil and the lenst successful farrns.

A-verasG net income ^er acre Sir,	IJwnber of farus 1
13 11	2 2
9 7	3 11

Averaf;e net income per acre

$5

3

1

-1

-3-

ITunber of lar.ns

6 lU

T 1

2

A further study of the farm businesses, made by comparin,^ the investments, receipts and expenses of the group of farms htiving the highest net income with those ha,ving the lov.'est, vifill throw some light on the question of why some farmers are more successful tha.n others. This com- ;oa risen is shovm in the table on page 3*

The most successful farms average 169 acres each; the least successful IU9 acres. This difference in size accounts in part for the variation in the average investiaent, receipts, a,nd expenses in the tyro groups. Difference in receipts from the sales of livestock and livestock products accounts for much of the difference in income bet^veen the tv/o groups .

The year 193^ ^"^^^ similar to 1933 ^^ that the ;irices of farm products continijed to advance, ca.using further increases in inventory values, Owing to the poor crop yields in 193^^ there vrere fewer bushels of grain on liand to inventor;^ at the end of the year than a.t the beginning. The value of the smaller ai-:iotQit of grain, howevor, was greater than for the larger fijiiot'iit on hand at the beginning of tlie 2>^ear.

Bushels of Corn Inventoried

Jan. 1, 193^

Average of all farms

Average of I6 most successful lan.is • Average of I6 least successful fa^rms. Your f a.rra

577 722

Dec. 31, I93H

192 302 161

'The carry-over of corn on Madison Coujity farms is not a large item, but it v/as significant in 193^ because of the rapid increase of com "orices.

(

The average inventory increase for the accoijnting fams in Madison Coimty was $275, as compared with decreases of $lUc in 1933 and $638 in 1932. There were decreases of $S in livestock and $^!5 in imr>rovements, and increases of $253 in feed and grain, and $70 in machinery. Such an increase in inventory as tliat for machinery results from tlie value of new replacements during the year "being in excess of the depreciation. Tliis increase is of considerable interest, for it is the first time tliat such an increase in machinery has occurred since farm earnings began to decline so drastically with the general depression.

Inventory- Changes for 193^

Beginning Items inventory 1-1- ^U

Total livestock $1 299

Feed and grains 1 035

I'achinery 1 3^5

Iicprovements (except residence). . 2 7*59

Total ?6 39g

Clo sing- inventory 12-31-3lt.

Inventor;;/' Inv ntory

changes

$1 291 1 293

1 375

2 71'^ $3 673

$ -3

25s

70

-U5

$275

cl:.ange s ;;our fann

$

Some Ad,:"ustmer.ts on Hadi son County Farms Since 1929

farmers have been forced to ir.ai:e adjxLstments in their cash ex- penditures as the result of changes in their cash income. From 1930 through 1933i '^s.Tra operating costs declined each year, but the year 193'-'- brought a reversal of this trend. The total operating expenses were 53 cents an acre higher in 193^ tiian in 1933 > while cash operating expenses were $1,560 a farm in 193^+ as compared with $1,0U2 in 1933- '^^ largest increase in cash expenses over the previous year was for machinery and re]pairs for machinery. Indications point to an even greater expansion of spending for these items in 1935» since fanners have postponed machinery replacements during the four- year period, since 1930'

Cash Income and Expenses on Accounting Farms in Madison County for 1929 and 193^

Item.s

.our fann

I93U

Livestock $

Feed and grains

I.iachinery

Improvements

Labor

Miscellaneous

Livestock expense

Crop expense

Tax:es

Total $ ~

Average exoense

cash oer farm

V

1925

1929

iOur

farra

136

319 45 i+ 127 155 27

25 152

165

$

352 53 g

26I+

201

27

25

13 s 169

560 $2 262

Excess of cash sales over expenses

Increase in inventory

Income to labor and capital (Heceipts lass expenses)

193'4

Average cash income 'oer farm 1929

ft3 2i;o 615

51 l|

20 10

$1. Gkb

S79 1U2

1

7S 2

.$■

T -Ij.:--

$^

000

$1 1-33 Si 73s 273 2119

1 U53 1 9&7

-6-

The cash expense in 193U was 6? percent of the I929 figure, and the cash incone in I93U was also 69 percent of the I929 f i{^ure . In other words, the relationship of total cash income to total cash ex;oense was the sai-ne in 193^ as it was in 1929, "but the total amounts were 3I nercent less, However, there v.-as considerable difference in the distrihution of expenses. In I93U, livestock ho-ught was 39 ■Dercent, feed 50 percent, improvements US percent, and lahor 77 percent of the cash expenditures for these items in 1929. Machinery and cron expenses were higher in 193^ than in I929. and miscellaneous expenses, livestoci: expenses, and taxes were practically the saine . Those f injures indicate that the relatively higher cash outlay in 193'-'- was only for items that liad to do directly with the operation of the farm and the repair and replacement of needed m.achinery, v/hile repairs on imnrovements and other expenditures were "oeing held to a ;ainimun.

The cash income from livcstocJc in 193^^ ^'^^s only 5I percent of the 1929 figure, while the cash income from the sale of crops in 193^ ^■'^-^ ^3 percent Mgher than the corresponding figure in 1929* This reflects the relatively high prices of grain as com.pared with the price of livestoci: and livestoci: pi'oducts.

Comparison of Farms Vfith High and Low Earnings

The most profitahle farms in this study had net receipts ner acre of $6.50, as compared with SI. IS for the le?st profitahle group. The reasons for this difference may he ohtj^ined from a study of the data on pages 3 and S.

The most profitahle farms were 19.9 acres larger, and. had 15-3 more crop acres than the least orofitahle farms. They also carried larger inven- tories of hoth crops and livestoci: on which to malce a profit when "orices advanced.

Tlie most profitable farms were more intensive and more efficient in their livestock production than the least profitable farms. They had an investment in productive livestock of $6.^3 per acre, and fed $1,U31 of feed per farm, as compared to $U.6U per acre and $1,00S per farm on the least profitable farms. The livestock on the most profitable farms returned $131 for each $100 of feed fed them, as compared to $100 returns for $100 of feed fed on the least profitable farms.

Crop yields, while important, were not eno'ogh higher on the most profitable farms to account for much of the difference in earnings. This difference in yields was only 2.2 bushels for corn, 2.5 bushels for oats, and .5 bushels for v;heat.

Higher total operating expenses on the least profitable farms, amounting to $2.53 an acre, v/as an important factor in the reduced net earn- ings of this group. Every item of expense except livestock expense was higher on the least profitable farms. Man labor costs per crop acre were $0.76 on the most profitable farms, as compared to $S.Ul on the least pro- fitable farms, while power and machinery costs per crop acre amoujited to $3.20 on the most profitable faro.s, and $h.kS on the least profitable far.is.

-7- Influence of AAA PrOr^raiTtS on Cro'D-pinfe' Systems and Farm Incomes

The farm-accoirat records in Illinois were influenced 'both directly sjad indirectly "by the corn-liog a.nd wheat adj'astment "orograms. A larj^-e per- centage of accoiniting farms vrere under one or 'both contracts in 193'~^« The aci'eages of com and wheat on these famis vrere therefore less than normal. This should have resulted in lower operating costs. Corn-liOg lienefit oay- r.ents for the entire 193'+ prograin will total ahout Uo million dollars for the state, while wheat "benefit payments will he ahout 2.U million dollars.

The "benefit payments for accounting farms are indicn.ted. in the following table, which shows the average 'Tajyinent for those farms receiving payments, and includes only those payments received "by the cooperator oefore the 193^ "boohs were closed. In some cases only the first corn-hog chech is included, while in other cases the second checl:: ha.d "been received. The second payments not received and the third payments will be entered in the 1935 books.

AAA Benefit Pa^.Tjents Received in 193^

379

3orn '..ner.t Hogs

llunber A'lount ITum.ber Ar.ount I'unber Amount , ,,

„ 01 all ,

of per ox per of per. ^,,^^^+^1/

fai-^ns farm farms farm fjirms farm

Average of all payment s-

1/3 most profitable farms ik $55 lU $130 I3 $79 $227

1/3 least profitable farms ih 39 I3 120 11 56 I7C

All accou:iting farms !+l % U2 12 U 38 70 202

1/ Total benefit pajTients reported 'oy accounting farms tuider contract for 193^ divided by total number of accounting farms.

As an average of a,ll accounting farns, the payments acttmlly re- ceived ($202), were more than sufficient to pay all of the I93U taxes, ($165).

It is interesting to note the use made of the contracted acres on the acco-onting farms. The average faim had 1^1.7 contracted acres which were used as follows: k.k idle; l.U red clover; 2.9 sweet clover; 2.C soy- beans and cowpeas; 2.1 alfalfa and 1.9 acres were in other crops. These data indicate that most farmers made good use of their contracted acres from the standpoint of soil improvement, as most of tliem were in legixnes. ¥iien the Govenxment restrictions on the "\se of crops grown on contracted acres were removed, they were on many faris the most profitable crops as they fiirnished hay and pastiine where badly needed in drouth areas. The legumes liad the further advantage of being immune to atta,c> from chinch bugs.

Farm earnings were influenced ind.irectly by tlae AAp. programs in that the reduction in production increased the price of the commodities in- volved. The drouth was a more im.portant factor in reducing production th^an the adjustment prograi-.:s, yet if it had not been for the corn-sealing program there would have been but little corn in the hands of fa^rmers at the tiiiie the major price advance becarae effective.

7 so

Factors Helping to Analyze the Fani^. 3\isiness on kS Mp.dison Count j'- Farms in I93U

Items	Your farm	Average of U9 farms	iG most profitable farms	16 least profitable farms
Size, of farms — acres --------		162.6 gU.5 39-5 ik.-jG 9. eg U.as ■^s 97	log.^ ?2.7 36.6 17.09 S.59 S.50 59 97	IU9
Percent of land area tillable- - - -		S2.g
Percent of tillable land in liay and pasture- -------------		37-6
Gross receipts 'oer acre- ------		12.30
Total expenses "oer acre- ------		11.12
Net receipts per acre- -------		I.IS
Value of land per acre -------		58
Total investment per acre- -----		96
		29.7 11.2 35-7 l.U 25.1 29.2 12.7 11. s 2U.1	33 10.6 39.3 1.6 2U.7 26.5 1U.5 12.5 2U.2	26
Oats- ,-		9-9
Wheat _----__-		32.7
		1 s
Hay		20.9
Tillable pastu.re- -----		25. U
CroTi yields — Com, bu. -per acre- - -		12.3
Oats, bu. per acre- - -		10
IVheat, bu. TDOr acre - -		23-7
Value of feed fed to productive L.S.		1 2214 121 125 2U9 6.7 77 67 5.90 9.12	1 431 131 137 30s 6.3 7^ 72 6.U3 11.13	1 00s
Returns Der $100 of feed fed to productive livestock- -------		100
Returns per $100 invested in:		127
Poultry --------		166
Pigs weaned per litter -------		6.6
Income per litter farrowed -----		73
Dairj'- sales per dairy cow- -----		5k
Investment in productive L.S. ner A.		U.6U
Receipts from productive L.S. oer A.		6.76
Man labor cost per crop acre - - - -		7.32 C.P.k U.oo 210 33 67 1.05 1 igs 275 5.03 2 UOO	6.76 1.70 3.20 Slfo 202 26 50 .65 1 570 503 S.77 2 387 ■ ■ ■ . ■ - -. .	s . 'l-l
Machinery cost per crop acre - - - -		2.U7
Power and mach. cost per crop A. - -		k.kS
Farms with tractor ---------		69"
Value of feed fed to horses- - - - -		211
Man labor cost per $100 gross 1 ncope— —		45
Expenses per $100 gross income - - -		90
Farm improvements cost per acre- - -		1.29
Excess of sales over cash expenses -		676
Increase in inventory- -------		175
Rate earned on investment- -----		1.23
G-rosE receipts per farm- ------ 1		1 833

Chart for Studying]; the Zfficiencv of Various Parts of Your Business, Msdison County, I93U Tlie nuTibers above the lines across the middle of the nage are the averages for the U5 farms incl"aded in this report for the factors named at the top of the page. 3y drawing a line across each column at the number measui'ing the efficiency of your fa,ri.i in that factor, you can compare your efficiency with that of other farmers in your locality.
Rate earned on investment	Bushels per acre	0 0 ^1 fl 0 t-i -p •H •• r— ' a. a	■ 0 m 0	CD p^ CD 0 (D U-P C cfl ■ H CD > f^•r^ -P Oi-H	^1 CD ^^ (D (U B 0 0 V) 0 •H 0 • 0 c/3 0 • 1— 1	Cost per crop acre	0 0 r-i f-l w (D 4J p p •H +3 (D CO 0 0 CD 0 fH 0 CO r^ 0 3 ^I	! 1 i	Gross receipts	cti ■H CO
0 0	■(-> ci 0	-p 0)	0 h1	r-t 'H (D /h C C3 P-i S	CD ^^ L-i 0 0 >	CO CD CD 0 > P 0 X to CD ^-, 1— 1 CO ctf c„ CQ 0	CD u CJ CD	1 1 a
10	25,0	32	3U	127 117	^0	221	1.32			127^	27OU	25	UUoo	263
9	22,^	2g	32	117	107	^-lo	201	2. "^2			1075	2UOO	23	Uooo	2U3
g	2C.0	2U	30	107	97	370	IGl	3.72	1.00	3	S73	2100	21	3bC0	223
7	17-^	20	2?	97	27	~^30	161	U.92	2.00	13	673	ISOO	19	3200	203
	1^.0	16	26	S7	77	r.-.Q	lUl	0.12	3.00	23	^7^^	1500	17	2300	18"^
5. 03	12.7	11. S	2U.I	77	1 i i	121	7-~2	U.oo	33	27^	11 '^S	IU.76	2UCO	162.6
h	10.0	s	22	67	1 1 i 51 '210	101	g.52	0.00	U3	7^>	CQr.	13	2000	IU3
1 1 7 1	To	U	20	^;7	1 , 1 47 -170	c?1	9.72	6.00	^3	-12 s	600	11	1600	123 ■'
1 2 !			1£	^7	37	1^0	61	10 .^2	7.00	63	-323	300	9	1200	103
1	2.^		16	37	27	90	kl	12.12	0 . 00	73	-'3?5	r;	7	800	^3
!o	0		Ik	27	i i t 17 ' ^.0	1 1 1 21 113.62	9.00	S3	-723	-300	3	kcrj	63 !

3S1

-10-

Influence of Fi-ice Clianiges on Farm Saminffs

Farm prices in 193'^ advanced more rapidly than did the prices of conciodities which farmers bought. Fnnners of the United States as a ^roup could e:-:cliange their farm products in 193^ fcr fh percent as raany goods as for the period 1905-151^1 wMle in 1333 they received only b'k percent, and 1932 only 61 percent n,s ranch in exchange for what they liad to sell as in the prewp.r period. In the nonth of February, 1935> this index of purchasing power ha.d increased to 37 percent of preT/a,r, the index of farm prices having risen to 111 as compared with an index of 127 for commodities which farmers buy. Wizen the line representing farm prices drops below the line represent- ing prices paid by fa.nTiers, farm earnings are very low, but v/hen these lines come close together farra earnings increase. (See following graph.)

Index of Prices

Rate Earned

2CG

150 125

100

75 50

25 0

= Farm pi-ices in U. S. Aug. 1905-July I91U = 100

= Prices paid by farmers. Au^. 1909-July 191^+ = 100

= Rate earned en investment, accounting farms, central Illinois

J 1 1 1 ! ' I ■ ^ ■

J L.

2'i

:4

-^

1917 'IS 'I9 '20 '21 '22 '23 '2U 125 '26 '27 '2S '29 '30 '3I '32 '33 ^^k

-5,9-25

SincR the pricf? oi" scne fam products advanced miich. more rapidly during I93U tlian other products, it is evident that some farriij would benefit niore than others, depending upon the kind and quantity of productc sold. Grain prices advanced mu^h uinre rapidly than livestock t)rices; which result- ed in a very had price ratio for farners who "buy lar£;e ;aiantities of feed. The average Illinois farm price of corn was kl ce:xts a hushol in Janirxry, 193^; it advanced steadily until the end of the yea.r when it was SS cents p hushel. Other grains made raar^:ed advance although not so great an advance as corn. The pi-ice of hogs fluctop.tod fro:.i a lov; of $3-20 a huiidred in May to a high of $6^3'^ ^^ September. The low point in the fall cime in hcveiaber when the average price was $3.1C. The -nrice hr.s advanced quite rapidly since Foveiiber, tiie average T>rice being ^1*^0 for Febrio^iry, 1935* Beef cattle were worth ^H.IQ a hundred in January, 133^ a^'i advanced ea,ch "onth vjitil September, when the price was $5.90. They dropped to $3.20 in Decenber btit increased a.^ain to $7.''^ for February, 1935.

TlTfi year 193^^ f^et a record for the reduction in the nux-ibers of livestock. The percentai-;e decreases by species r-ftre as follov>'s: hcrsee, 1.1 percent; n.ules, ? .(> percent; all r.attlR, 11.2 percent; sh^ep, U.7 percent; hogs, 33 "3 percent. vThen all species are combined on the basis of their capacity to consu'ne feed, the red\action was I3 percent. This reduction will greatly reduce the demand for feeds prod"'Jiced in I935.

The relative ch,ange in prices of L"pt)rtar.t cOuL'-oditics r.ay be noted. in the following graph, which shov/s the average Illinois farx prices by months as a percentage of the average prices for the period 1921-1929.

ice Indices, 1934

(1921-1929 --^ IOC)

ov. Dec.

All cornraodities index represents the wholesale price of a large nun-.ber of cornraodities for the United States, as computed by Jroreau of Labor Statistics; .-

Grain aiid livestock, indices represent aversge monthly '^''-■^'^- Prices in Illinois.

3S

,U

Varir.tion in Earnini'^s Over Five-Year Period

A comparison of production, income, and expenditures on tlie ac- cotmtin.^ icras in I.'-.idison Count;- for tiie last five years is vei-;/ interesting; beca'ase of the violent il-oct mtions in price level. 193^ was the second year of lo\.' crop j-ields, yet total receipts ner farm were hi::her tlian any other year since 193*^ ^•^''3. because of relatively lower ex-oenses the rate earned of 5*03 percent is the hi^-hest of any year during the -oast five.

Samings in 1933 ^s usual v/ill deT3end upon individual efficiency, weather, and prices. 'Vith norractl weather conditions, prices of j,'r£dn are lilcel;/ to f;o down to a noi^ normal level vrhich will give individual effi- ciency the responsibility for hi(r;her earnings on each farn.

Comparison of 3ai-ningr, ajia Investments on Accounting Farms in :,:adison County for I93O-I93U

Items

ITunber of farms ---------

Average sise of farms, eicres- - -

Average rate earned, to pa;^ for

mpjiarrement , risk and capital - - Averaj^e labor -'.nd m.anai'^ement v/a.'^e

Gross income per acre ------

0"7erati..ir; cost "oer acre - - _ - -

lQ-^1

-1- , , J,

19:

! 1933

193U

^.-1 154

l.op '

$-50 '

^7 1^6

-p.05-5

3^

-2.0^1

33

I

Avera.£,-e value of land per acre- - Total investment per acre - - - -

Investment per farri in:

Total livestocl:- ------

Cattle

Ho^s

Po^-iltry- ----------

1 15.1

S7 121

03

$-7[

S-323

>j-ross income per ia.rm. - - - _ -

Income -per fan;, from:

Crops- ----------

Miscellaneous income - - - Total livestocl:- - - _ _ _

Cattle

Eairy sales- _--____

HOr-^S -----------

Po-iJ-try- - --------

Average yield of com in bu.- - Average yield of wheat in bu. -

?. 299

1 413 263 23^

2 523

qi

2 5^2

230

1 377 ^^77 ^33

10.36 i

12.66

62 112

2 CI7

1 253

23I1

1S3

1 617

1 331 941

2S9

293

3^ 27

g.30 11.12

3S 16 "5

1 607 993

1 2k3

^9 1 1-^0

045 2'45 231

1^3-3

1 -73^.1 -s9 !

1

11. OS I

^3^ i

-r

■iC

99

i 42 S i

S49, j

..s j

1 701 I

4oO

' C

1 ii'=,

10'^

572

273 170

22

17

^9 163

5.03-;^ kib

9.SS

5S 97

1 2f^9

735 132

93

2 400

gig 2

1 502 127

765 309

13

AirmiAL FAH.I BUSII3ESS FJSPOHT Oil THIHTY-IIIREE FAEI'^S IN RAiroOLPK COUNTY, ILLINOIS, I93U

P. E. Johnston, J. Aclcerman, and J. B. Andrews*

The farm earnings of 33 accovmt-lreeping farmers in Randolph Coimty showed an increase in 193^^ over those of 1933 • This is the second consecutive year of iraprovernent in the business of these farms. The three years previous to 1933 showed very low returns.

These 33 accounts show for 193^ an average net income of ,*ol7 per farm, as compared with an averaj,-^ of $3^^ i^^ 1933, and sji average net loss of $36^+ in 1932- The avera.i'\;e cash income in 193^ was $2,lU2 per fa-rm, the cash business expenditures $1,031 per faiTi, leaving a cash "balance of $1,111 to meet interest payments and family living expenses. (Those v.'ho keep home account "books use the latter figure to represent the cash contribution of the farm to the "realized family income".) Besides the cash income, there was an inventory increase of $3^7 per farm due to the rise in the prices of farm products. This increase, added to the cash bal:;.nce, resulted in an s.verage excess of receipts over expenses of $1,U7S per farm. The in- ventory increase was a larger part of the total farm income in 193'''- than in 1933.

These data must not oe considered representative of a,verage farm conditions, for they were secured from farms which are larger than average, and which were managed by farmers who are more efficient than the average of all farmers in the county.

For the state as a whole, farm earnings were better in 193^ than in 1933 > i^ spite of the fact tliat corn and oat yields were very low due to the drouth and to chinch bug da.iiage . In the western and southv/estem pa.rts of the state the drouth caused an almost total failure of both com and oats, which accounts for faim earnings being lower there than in other parts of the state.

The com crop was best in the southeastern part of the state, and was fair in the northwestern section. 7>Tieat yields were particularly good in the south and central portions of the state. Soybean yields were very good throughout the state, and there wa.s a larger than normal acreage in Illinois in 193^. This state -oroduced over half of the nation's I93U crop of soybeans.

Chinch bug damage extended over most of the state lasc year, but was much more severe in some sections than in others, and was much worse on some farms than on other farms in the same community. Conditions affecting crop yields were very spotted. This accounts in part for the wide variation in farm earnings from one section of the state to another and the wider variations than usiml from one fann to another.

*S. C. Secor, farm adviser in Randolph County, cooperated in supervising and collecting the records on which this report is based.

-2-

Industries other than agriculture again showed improved ear?iings over the previous year. A group of SUo industrial corporations reported "by a nationally icnovm "bank showed average earnings of ^.0 pei'cent on their in- vested capital in 193^, as compared with 3.U percent for the same corporations in 1933. A similar group liad a loss of one-tenth of one percent in 1932| and average earnings of 3-3 percent in 1931'

In comparing the average earnings 01 corporations with the rate earned on investment on accounting farms, it is well to keep in mind that in corporation accounting, char'^es are made for management, while in the farm accountG no comparahle deduction lias "been made. On the other ha,nd the farmer and his family receive food, fuel, and other items of living from the farm for which the farm has received no credit in the records -ased in this report. For the avera;-;e central Illinois farm fa^nily, consisting of five persons, the value of the food and fuel furnished hy the farm was ahout '\2^0 in 193^> when estimated on the basis of the wholesale price for farm products.

Variations in Farm Incomes

There was a mujch wider range in fann earnings on the accounting farms in 193^ than in 1933' ^is was true for the farms included in this report, and it v/aa also true ?/hen the average earnings of farms in one section of the state are compared with the earnings of farms in other areas.

The extremely wide range in earnings was due to a comhination of physical and economic factors. The average yields of wheat and soybeans were much better, compared -with the five-year average, than the average yields of corn and oats. This variation favored those sections which had larger acreages of the higher yielding crops in 193^- There was also a wide range in average com yields from one section of the state to another, as well as between individual farms in the same area. The price of grains was high in 193^ 3-s compared with prices of livestock and livestock Droducts. Faims where grain sales constitute a, large part of the fa,rm income thus hxad an advantage. The rapid increase in the prices of faim products, particularly grains, favored those farms which ha.d large stocks of salable products on hand at the beginning of the year. Many farmers who inventoried the corn on hand at the beginning of 193^^ at UC cents a bushel, later sold this corn for 2C cents.

In this group of 33 accounting farms the most successful one- third shows an average net income of $1,^3^, wliile the avera,ge net income of the least s-uccessful one-third of the farms was only $213. In 1933 't^® comparable net incomes for the two groups was $1,057, and $-31S respectively.

-3-

Investuients, Receipts, Expenses and Earnings on

33 Randolph Coimty Faims in 1^3U

Iteiiis

Your farm

11 most Average of i rirof itable 33 farms | farms

11 least prof italDle fam.s

CAPITAL IM3STI.1E1:TS

Land ----------

Eann improvements- - - -

Livestock total- - - - -

Horses --------

Cattle --------

Hogs ---------

Sheep- --------

Poultry- -------

Machinery and eq"uipment- Peed and grains- - - - -

Total capital investment

7 2 1	723 339 030
	30H 519 95 Ik
1	30 126
1	003
;i3	2 SI
1	105
	15
	168 206
	29 51 156 kzo
	3Z2 53 3
; 2	1U3

7 ^^d9 2 199

950

265

519

9S

1-6

1 161

967

$12_JU6

s 052

2 5^0 96b 32U

teg

99 ig

96

1 053

762

$13 373

RECEIPTS AIJD IIST INGP^ASSS

Livestock total-

Horses -----------

Cattle -----------

Hogs (incloding AAA payments) Sheep- -----------

Poultry- ----------

E.'^g sales- ---------

Dairy sales- --------

Feed and grains (inclu^iing AAA payments) ----------

Labor off fami --------

Miscellaneous receipts - _ - -

Total receipts & net increases

ECPEHSES AllD ^JET DECREASED

Farm improvements- - - -

Horses ---------

Miscellaneous livestock decreases Sheep

Machinery and equipment- - - -

Feed and grains- -------

Livestock expense- ------

Crop expense ---------

Hired labor- ---------

Taxes- ------------

Miscellaneous expenses - - - -

Total expenses & net decreases

107

210

15 133

57 119

2U

$ 565

1 220 IS

1Q9

251

37 107 60s

1 3 so

105

7

$ 2 712

11,

1

ISl 12

100

109

2U

$ 699

S5I

56

162

30

52

163 3SS

6s6

36

1

$1 57U

$_

10 s

197

?J\ iiU

26 117

615

PJ?:CSIPTS LESS EXPENSES- - I S

Total unpaid labor- ------

Operator's labor - - - - -

Family labor -------

Net income from investment and management- ---------

RATE EAHl^IED OH IHVESTIV[EI>IT

Return to capital and operator'

labor and management- - - - -

5^ of capital invested- - - - -

LABOR Al\rD LiAHAGEMENT WAC-E - - -

£^

661 U09 252

SI7

6.15-1

1 226

66)4 $ 562

$ 2 013

579 U20

159

1 I43U

11.25<

1 S5l]- 637

$ 959

7U6 U20 326

213

'17

-m

633

66 s

The following table shoves the n-umher of farms having certain net incomes per acre. There was a ia?.rked difference "between the most successful and the least successful farms.

ITuTiher of Average net in- I-Turaher of

I arras coae per acre fenns

Ave ra^e	net	in-
come	per	acre
$11 . s ■ 7 5 ^
	.	«

o

2 $3 8

1 7

U -1 1

9

A further study of the farm businesses made by comparing; the in- vestments, receipts, and expenses of the group of farms with the hi.ghest net incomes, v/ith those liaving the lov/est incomes, should throw some light on the question of why some farmers are more successful than others. This comparison is shown in the table on page 3*

The most profitable farms had a sm.aller total capital investment than the least profitable lanns, or the average of all the fa.ras. DesT^ite the smaller investment, the most profitable farms had higlier total' receipts and net increases, a ma.jor part of v/hich v/as dioe to larger sf^les of feed and grains and daiirj products. The most rirofitable farms also had higher returns from cattle and hogs.

Changes in Inventories a.nd Inventor;'/' Val'aas

The year 193^ '^^s similar to 1933 ii^ that the prices of farm products continued to advance, causing further increases in inventorj/ values. Owing to the poor crop yields in 193'^ tliere were fewer bushels of grain on hr-nd to inventory at the end of the j'-ear than at the beginning. The value of the smaller amount of grain, however, was greater tl.an for the larger amount on hand at the beginning of the year.

Bushels of G-rain Inventoried

Corn 'iTheat

ran. 1, 3^ Dec. 31. 3^ Jan. 1, 3^ Dec. 31,3^

Average of all farms 55O 25O 3I9 3U7

Average of 11 high farms. . . 563 322 203 3I3

Average of 11 low faiTr.s . . . ydj I3S 221 27U

Your farm;

The difference in quantities of grain inventoried was one of the factors influencing the difference in earnings. The most profitable farms had a larger inventory of com both at the beginning and at the end of the year, and a larger inventory of wheat at the end of t2".e year than did the least profitable fa.rms.

-5-

3S9

The avera^^e inventory increase for the accoimting farms in San- dolpli Cotinty was $367, as compared with $115 iii 1933. ^'-nd a decreace of $526 in 1932. There were increases of $Ul5 in feed and grain, and $2U in live- stock, as compared to decreases of f;3S in improvements, a,nd $3^1- in machinery'-. The inventory decrease in machinery and improvements was the smallest since 1929 on account-keeping farnis, and indicates that needed repairs and re- placoments are being made hut still not enough to offset the cro-rent de- Tjreciation costs.

Inventory Changes for 193^+

Beginning

Items inventory

I-I-3U

Total livestock $1 C3C

^''eed and grains 1 OO3

Machinery 1 126

Improvements (except residejice). . 2 399

Total ' $5 55s

Closing

inventory

I2-3I-3U

$1 05U

1 UlS

1 092

2 361

$5 92^

Inventory cliange s 193 U

2k

Uif^ -34 -3?

3b7

Inventory

cliange s

.your faim

Some Adjustments on Randolph Comity Farms Since 1929

Farmers have heen forced to make aLlJaetments in their cash ex- loenditures as the result of changes in their cash incomes. From I929 through 1933 farm oparating costs declined each year, out the year 193^ hroUtght a. reversal of this trend. Total operating expenses were I3 cents an acre high- er in 193^ than in 1933) while cash operating expenses were $1,031 a farm in 193*'- as compared with $1,026 in 1933- There was a slight increase in ex- penditures over the previouo year for crop expenses and improvements, and a slifght decrease in expenses for taxes, livestock, and labor. Indications point to an increase of spending in 1935 ^oi" repairs and replacement of machinery and improvements, since fars'ners have postponed purcha.se of these items during the five-year period since 1929 •

Cash Income and Expenses on Accoxinting Farms in Randolph County for I929 and 193^

Items

Your faiTn 193^

Avera.ge cash Your

ex'oense per fa.rm farm

1934 1^22 1^3H

Average cash income "oer fa.rm

I'^^^k

1921.

$

Livestock

Feed and grains

Machinery

Improvements

Labor

i.Iiscellaneous

Livestock expense ....

Crop expense

Taxes

Total $

$ 173 196 2U0

7^ 57

2k

15

119 $1 031

$ 165 317 357 20i+ 221

2k

Ik

Ikk

Iks

$1 59U

"Excess of cash sales over expenses

Increase in inventory

Income to labor and capital (Receipts less exrjenses)

ft,

9

$1

25U	$2 Of^O
763	qUs
6k	55
5	2
53	32
3	7

$2 1I+2 03 09^-^

$1 111

367

1 k-[S

$1 900

2P^3

1 753

-b-

The cmnulative effect of several years of low agric'-iltvjral prices on the demand for nanufactured goods can "be readily ascertained "by a compar- ison of cash expenditures in 193^ with those in 1929 • The average total cash income in 193^ was 69 percent of tha.t of 1929- Ti^e total cash expendi- t-ores were 6S percent as large as in 1929- In 1929 'tl^e average accounting farms in Randolph County spent 52 percent of the cash income for operating e-oenses; in 193^ they spent Ug percent. The relationship hetween income and e.-:penses is approximately the same for the two years. There is, hovrever, considerahle difference in the distribution of the expense items. In 193^» machinery was 67 percent, feed 62 percent, improvements 36 percent, hired lahor 26 percent, and taxes SO percent of the cash expenditure for these items in 1929. Crop expenses and livestock purchases were a,lruost the same in 193U as in I929.

Comparison of Farm T^ith High and Low Earnings

After deducting total expenses and net decreases, including family lahor, from income and net increases there remained a net increase of $7-56 per acre for the most profitable farms, as compared with $1.15 per acre for the least profitable farms. This represents a return on the capital in- vested in the farm business of 11. 25 percent on the most profitable farms, and 1.59 percent on the least profitable farms. The reasons for the differ- ence may be obtained from a stnidy of the data on pages 3 and S.

In Randolph Coionty the most profitable farms averaged only 5 acres larger tlian the least profitable farms, but they carried larger in- ventories on both crops and livestock on which to maize a profit when prices advanced. One reason for the larger inventories, hov/ever, v/as the higher crop yields, there being an advantage of 11.7 bushels of corn, h bushels of oats, and 3*3 bushels of vmeat per acre in favor of the high profit group.

The most profitable farms had an investment in produ-ctive livestock of $3-77 per acre, and fed $1,132 of feed per farm, as compared viith $3«'^3 P^r acre, and $951 of feed per farra, on the least profitable farms. The pro- ductive livestock on the most profitable farms retiirned $106 for each $100 of feed fed, as compared with a return of $29 for the least profitable farms. Dairy sales were $19 per cow higher, and income per litter farrowed f)19 higher on the most profitable farms.

The larger income on the most profitable farms v;a,s secured with a total operating cost of $6-73 per acre, as compared v/ith $7-37 per acre for the least profitable farms. The m.an labor costs were 9S cents per crop acre lower, while pov/er and machinery costs were 5 cents ^^er crop acre lower, for the most siiccessfvl f arras.

391

Influence of AAA Profi-rams on Croiroinp: Systems and Farm Incoraos

The f arm-accoimt records in Illinois vere infl^ienced "both directly and indirectly "by the com-hog and wheat adjiistment progrsrac. A lar;;e per- cc'itage of accoimting farms were \mder one or hoth contracts in 153'+- 'J^^^ acreages of corn and wheat on these farms trcre therefore less than noirnal. Tliis should have resulted in lov/er opcratin^^ costs. Corn-hog heiiefit pay- ments for the entire 193^ program v/ill total about ko million dollars for the state, while wheat "benefit payments vxill he about 2.h million dollars.

The benefit payments for accounting farms are indicated in the follo-jing table, which shows the average pa-.Tncnt for those farms receiving payments, and includes only those payments received by the coo'oerator before the 193^ books were closed. In some cases only the first com-ho~ checl: is included, while in other cases the second check had been received. The second payr.ents not received and the third pa;yments will be entered in the 1935 book.

AAA Benefit Payments Received in 193^

Corn vVheat rIo.^;;s

NuTiber Anoiont llximber Amount IJ-umber Amo^ant ■^-'^''^'^^S^

j^ j:- £■ of all

of per of "ner of per

farms farm farms far:; farms farm

payment si/

q >	$50	10	$iU5	7	$52	$205
S	:>i>	10	93	6	hU	132
P^	Us	30	12 s	19	^3	176

1/3 most profitable farms 1/3 least profita,ble fa.rras All accounting farms

!_/ Total benefit payments reported by accounting farms j.nder contract for 193''- divided by total number of accounting far-zis.

On many farms the cash received from benefit payments will r..ore than nay for the year's taxes. As an average for all accounting farriis, the payments actually received were $57 niore than sufficient to pay the 193^ taxes .

It is interesting to note the use made of the contracted acres on the accounting farms. The avera,ge farm had I6.U contracted acres which v/ere used as follows: 5,4 idle; .3 red clover; 9*2 sweet clover; .5 soybeans; .4 alfalfa; and .6 acres were in other crops. These data indicate that raost fari'.iers made good use of their contracted acres from the standpoint of soil improvement, as a large part of them v.-ere in legumes. Taen the goverment restrictions on the use of crops ;5rown on contracted acres v/ere removed, they were on many farms the most profitable crops as they furnished hay and pasttijre whei-e badly needed in drouth areas. The le^amies h^d the further advantage of being immune to attack from chiiich bugs.

Farm earnings were influence:' indirectly by the AAA r)rogra:ns in that the reduction in production increased the price of the commodities involved. The drouth was a more important factor in redxijcing procu:;tion than the adjustment progra,ms, yet if it had not been for the corn-sealing program there would have been but little corn in the ha:-ids of farmers at the time the major price advance became effective.

392

Factors Helping to Analyze the Farm Bu-siness on 33 Handolph County Farms in 193^

Items	Your fam	Average of 33 f arras	! 11 most 1 profitable fai-ms	11 least ^■>rofitablc fr-rms
Size of irras — acres ------- Percent of land area tillaole- - -		lgji.5 33. U Ui.6 11.30 7.03 H.33 Ul 70	[ IS9.S ! S3 -7 lio.7 j 1U.29 6.73 7.56 39, : 67 1	ISU.7 82.8 kl.k 2.52 7.37 1.15 72
Percent of tillable land in hay and •oasture- ------------
Gross receipts per acre- - - - - -
Total expenses per acre- -----
Net receints per acre- ------ Value of land per acre ------ Total investraent -oer acre- - - - -
		26.1 1U.3 UU.7 .6 20.7 kk.-[ 16.5 25. s IS. 9	29. q 15.5 hk.3 .k 2C.9 U3.g 21.6 2S.2 20.5	2U.6 11.9 ^O.S 1-3 20.6 U2.7 9.9 2U.2
Oats raieat
Soybeans- -------- Hay ----------- Tillable pasture- - - - - Crop yields — Corn, bu. -oer acre- - Oats, bu. per acre- - T'neat, bu. per acre -
	17.2 •
Value of feed fed to produj^tive L.S. Heturns per $100 of feed fed to productive livestock- ------ Returns ner $100 invested in: Cattle- - - Poultry Pigs wear.ed per litter ------ Income per litter farrov/ed - - - - Dairy sales ner dairy cow- - - - - Investment in "oroductive L.S. per A. Peceir)ts from rirod'active L.S. v-er A.		1 073 102 126 213 6.6 7^ 51 3.?U 5.7s	1 132 106 1U9 209 6.S 93 62 3.77 6.33	9?l C9 105
	221
	e.k
	ih
	^3
	3.U5
	U.bl
Man labor cost per crop acre - - - Machinery cost per crop acre - - - Power and mach. cost per crou A. -		5.91 I.S7 3.50 63.6^ 199 31 62 .?7 1 111 3^7 6.15 ■1 -i|^7&'	5.69 l.?7 3-37 72.7fi 225 2U ^7 .62 1 221 792 11.25 2 013	6.67
	1-79
	3.te
Farms with tractor -__---_-		^■:^
Value of fesd fed to horses- - - - Man labor cost per $100 gross incone- -----__---___		176 ^1
Expenses per $100 gross incone - -		86
Farm improvements cost per acre- -		• 58
Excess of sales over cash ercpenses		751
Increase in inventory- ------		208
Rate earned on investment- - - ~ ~		1.59
G-ross receipts vev farm- -----		■4kf^Q-
	i

-9-

Clmrt for Stuiying the Efficiency of Various Farts of Yotir Business,

Randolph Coimty, I93U

39]

The mraoers ahove the lines across t'. 33 farins incltided in this report for By drav/ing a line across each coltrnii farm in that factor, you can compare your locality

.le Liidiile of the page rre the averager? for the the factors n.amed at the top of the page, at the nninoer measnrin~: the efficiency of your yoior efficiency with that of other farmers in

!; Sushels

1

Cost per

G-ro s s

1

per

acre

i u

crop acre

0 0 rH

1

receipts

h

Q)

ft

■iB-

1

<U

0 ^

U m

■4^ '

Q)

&

6 tJ

Ps

Q) +5

03

^

C ■

P

0

0 CD

t:!

'P^ P

0

t:! <u 1 1

C

w U

0 +^

<D Q)

■H

s:^

m

a

(u ri '

0 ^H

Q)

rt W

fs «

•<-» <D

•H

fn S

'h

s -y 11

C 0

r-t >-

•H (D

0 liH

^ >=

w 0

>J

0 Q)

U Vi \[

(-1 +^

cj fn

>

0

S fH

0 fl;

(a u

> p^

0

r~

'Z^

Cl^ (D ll

•t'

W -H

^.s

d 'H

Cj Q>

0 u

w 0

0 X

u

fi

•H

« > <

•rH

d

•H 0

c;

d -p

0

0

;.

a

+j

■• rH

t=T,Tj

4J

u

^ -rH

U CO

M CD

CQ

a

tH

Vi

0) -H ■ Ci

W

rf

OQ

^

^R

• 0

0

CD ,C^

0 M

0 ^

CD

-tj

(D 1

b." 'm

•H U

w 0

rQ

& 0

r<^ 0

0 >

rH cn

u

f-i

U

a Pi ' 0

ci

i 1

0 0

a (D

0 i-H

• I-H

n3

0 Cj

cd ^

r; f5

rc c;'

0

r?"

0

rt 0

0

0

W ft

0 fi 101

363

177

1-5 .91

.30

1-:] 0

H -H

CO 0

Ph

Pi

2SS

13.7

36

kS

20

12U

2900

2600

21

U6OO

12.2

32 ,

1+2

27

111+

91

333

162

1.91

1.10

2 1,100

2300

19

4100

2dS

10.7

1 2S

33

25

10 U

SI

303

1^7

2.91

1.70

7

1900

2000

17

3600

2I+S

9.2

1 1 2k

3U

p~

3h

71

573

132

3.91

2.^0

13

lUoo

1700

13

-aoo

22 s

1 -7

( 1 20

30

21

sU

51

2U3

117

U.9I

2.90

23

900

lUoo

13

2600

20s

6.1^

16.^

25. s

IS. 9

7>+

31

213

102

n.91

3.30

"^.1

367

1111

11.36

21U3

ISS

1 i ^.7

12

22

17

6U

ki

1S3

C7

6.Q1

U.IO

^ 39

-100

soo

9

1600

16 s

1 3.2

0

IS

15

^U

31

133

72

7.91

U.70

^7

-600

500

1100

lUS

^•' i

k

lU

13

UU

21

123

37

S.91

3-30

33

-1100

200

3

600

12 s

! j 1 ->

10

11

3U

11

93

42

9.^1

3.90

63

-1200

-100

3

100

1 1 10 s

-1.3

6

9

1 2k

i I 1 '''6,

27

10.91

6.30

71

-1700

-Uoo

]_

ss

Influence of Price Cl-an.ges on Farm 2a.niing:s

Farm prices in 153^ advanced more rapidly than did the prices of coTjEiodities v;hich fanners bovit^ht. Frn.iers of the United States as a "jroup CDuld e-chango their farm products in 193^ -or 7^=- percent as many goods as for the period 1905-191^1 wMle in 1933 they received only bU percent, and 1932 only 61 percent as much in exchange for what they liad to sell a.s in the prewar period. In the month of FebiTiary, 1935 1 this index of purchasing power had increased to SJ percent of prev/ar, the index of farm prices having risen to 111 as compared with an index of 127 for comiTiodities \7hich farJiers buy. TTlien the line representing farra nrices drops below the line represent- ing; prices paid by faimers, farm earnings are very low, but when these lines com.e close together farr.i earnings increase. (Sec following ^raph. )

Inde;: of Prices

Hate Sarned

2C0 15c

100

7h

50 25

D

= Aann pricos in U. S. Aug. I9O9— July I91U = IGO

-- Prices paid cy farmers. Aug;. 1909-July I91U = lOf

-: Rate earned en investment, accounting farms, central Illinois

12^^

i:)'t

2i

4^

^^0

Ofo

-2i

-k4

1917 'lo '19 '20 '21 '22 '23 '2!+ '25 '2c '27 '25 '25 '3C '3I '32 '33 'jU

395

-11-

Sincn the price of scne farm products advanced m^'Jich more rapidly during 193^ tiian other prodiK-ts, it is evident that some farnio would benefit more than others, depending upon the kind and qi:iantity of prodv-Cts sold. C-rain prices advonced n^.uch ^lore rapidly than livestock prices; which result- ed in a very had price ratio for frraers who huy lari^e ;aiantities of feed. I'he average Illinois farra price of corn v/as Ul cents a hushcl in Janu^xry, 193'-'-; i't advanced steadily ■'intil the end of the year when it was SS cents ? hushel. Other grains made narked advance although not so great a.n advance as corn. Ei-a -orice of hogs fluctiip.ted from a low of $3-20 a hundred in May to a high of $6^.30 in Septenher. The low point in the fall ciaie in Kovemher v;hen the average price was $5'1C' The -nrice hr.s advanced quite rapidly since Fovember, tlie average price being $7 'SO i"or Fehrioarj^, 1535' Beef cattle were worth $5;-. 10 a hundred in Janua,ry, 193^^ a-^d advanced each month rjitil Se-nteraher, vvlien the price was $3.90- They dropped to $5-20 in December but increased a:^in to ^y.i^ for 5'ebrurry, 1935 •

Tl:ie year 193'^ ^'^t a record for tlie redtiction in the n'oiubers of livestock. The percentage decreases by spocies rrere as follows: horsee, 1.1 percent; mules, ?.G percent; all cattle, 11.2 percent; slj/g-ep, i^.J percent; hogs, 35*3 percent. V^Tien all species are combined on the basis of their cap.acity to consume feed, the reduction was I3 percent. This reduction will grealily reduce the demajid for feeds prod^Jicei in 1935 •

The relative change in prices of important coramodities may be noted in the follovjing gi'aph, which .'?hov;s the average Illinois farm prices by m.onths as a percentage of the average prices for the period I92I-I929.

Percent

Price Indices, 193"'4-

(l3rU-152'^ = 100)

Jan. ?eb. Mar. Apr. i^^sy

All commodities index re-!roscnts the v;holesale price of a large nw.ber of comjaodibios for the Uaat-d States, as computed by 3-areau of Labor G-i:atlstics ,

Grain and livestock, indices i-eprescni

average montiiiy lair-, prj.ces m i

llinoi:-.

-12-

Variation in Ef-.rnings Over Five-Year Period

A comparison of production, income, and expenditures on the ec- co-onting farms in I^ndolph CoTxaty for the last five years is very interest- ing TDec-iuse of the violent changes in price level. 193^ ^''^•s the second year of very low crop yields, yet total receipts per farm were higher than in any other year in the last five and were 75 percent of the 1929 ^ross receipts. Operating costs per acre were lower than in any year of the five except 1533 • Thus profits were the "best the county had experienced since 192 s.

Earnings in 1935. a-s usiial, v/ill depend upon individ^ual efficiency, weather and prices. A normal year will mean larger yields of grain and prohatly lower prices.

Comparison of Earnings and Investments on Accounting Parr.:s in Rardolph Ooimty for I93O-I93U

Items

1930ii 193li| I932L

1933

I93I4

I\[urrher of farms ----------

Average size of farms, acres- - - -

Average rate es.rned, to paj'' for

management, risk and capital - - - Average laoor and management wage -

Gross income per acre -------

Operating cost per acre --__-_

32

IQO

S-:

Average value of la.nd per acre- -otal investment per acre - - -

Investment per farm in: Total livestock- - Cattle ------

Hogs

Poultry- - - - - -

Gross income "oer farm

Income per farm from:

Crops- -------

Miscellaneous income Total livestock- - -

Cattle

Dairy sales- - - - -

Hogs --------

Poultry- ------

237

10.25 9.96

53

Average yield of corn in hu.- i

Average yield of wheat in tu. - - -!

9^

963 212 220

9U5

259

637 lUo 715

^21

19

20

30 190

5^ ^61

-1.0^

$-521

s.kh

9.28

51 S7

1 550 309

iGk 193

1 5oi

3S2 "^0

1^9 2U0

336

31 27

$-711

5.U6 7.27

76

1 21^6 626 lis

150

1 097

62 26

1 009

556 lUo 2U6

35 17

30 196

2.Y-. 72

S.D5

33 I6S

$ 562

b.15^

•-J/V

^3

70

107

557 129

117 1 699

591	982
^7	3
061	1 105
115	IbS
50S	Uso
250	206
172	^
27	16
16	19

1/ Records from i.Ionroe and "iTashington counties included for I93O-I932

11.36 7.03

kl 70

1 030 519

95 9S

2 1U3

jamUAL PASIvI BUSIw'ESS KSPOHT ON THIRTY-TWO FABI/iS 111 ST. CLAIR COUl^JTY, ILLINOIS, I53I+

P. E. Johnston, J. Ackeiman, and J. B. Andrews^

The farm earnings of 32 account-keeping farmers in St. Clair County showed an increase in 193^ over those of 1933- This is the second consecutive year of improvement in the business of these farms. The three years previous to 1933 showed very low returns.

These 32 accounts show for 193^ an average net income of $952 per farm, as compared vjith an average of $698 in 1933' and an average net loss of $2SU in 1932- The average cash income in 193^ was $3,023 per farm, the cash "business expenditures $1,6^3 per farm, leaving a cash "balance of $1,3S0 to meet interest payments and faiinily living expenses. (Those who keep home accoimt "books use the latter figXLre to represent the cash contri- "btition of the farm to the "realized family income".) Besides the cash in- come, there was an inventory increase of $252 per faitn dxie to the rise in the prices of farm products. This increase, added to the cash "balance, re- sulted in an average excess of receipts over expenses of $1,632 per farm. The inventory increase was a larger part of the total farm income in 193^ than in I933.

These data must not he considered representa,tive of average farm conditions, for they were secured from farms which are larger than average, and which were managed "by farmers who are more efficient than the average of all farmers in the county.

Por tlie state as a whole, farm earnings were "better in 193^ than in 1933 > in spite of the fact that corn and oat yields were very low due to the drouth and to chinch bug damage. In the western and sovithv/estem parts of the state the drouth caused an almost total failure cf "both corn and oats. This accouiits for farm earnings "being lower there than in other parts of the s tate.

The com crop was "best in the southeastern part of the state, and was fair in the northwestern section. Wheat yields were particularly good in the south and central portions of the state. So^^hean yields were vary good throughout the state, and there was a larger than normal acreage in Illinois in 193^* This state produced over half of the nation's 193'-^ crop of sojr'beans.

Chinch hug damage extended over most of tne state last year, hut was much more severe in some sections than in others, a.nd was much, worse on some farms than on other farms in the same commimity. Conditions affecting crop yields were very spotted. This accounts in part for the wide variation in farm earnings from one section of the state to e.nother, and the wider varia-tions than us-jal from one farm to another.

B. "ff. Tillman, farm adviser in St. Clair County, cooperated in supervising and collecting the records on which this report is "based.

mii

-2-

Inductries other th-^ji agriculture again showed improved earnings over the previous year. A group of SUO industrial corporations reported ty a nationally known banl: showed avera{]:e earnings of n .0 percent on their in- vested capital in 133^> s-S compared v/ith 3-^ percent for the same corporations in 1933* A similar croup had a loss of one-tenth of one percent in 1932 t and average earnings of 3-3 percent In 1931-

In comparing the average earnings of corporations with, the rate earned on investment on accounting farms, it is well to keep in mind that in corporation accounting, charges are made for management, while in the faroi accounts no comparahle deduction has heen made. On the other hand the farmer and his faraily receive food, fuel, and other items of living from the fann for which the farm iias received no credit in the records used in this report. ?or the average central Illinois farm fa.nily, consisting of five persons, the value of tlie food and fuel furnished hy the farm: was ahout ^250 in 193^, when estimated on the basis of the wholesale price for fann products.

Variations in Farm Incomes

There was a much wider range in farm earnings on the accounting farms in 193^+ than in 1933- This was truB for the farms included in this report, and it was also true when the average earnings of farms in one section of the state are compared with the earnings of farms in other areas.

The extremely wide range in earnings was dije to a comhination of physical and economic factors. The average yields of wheat and soybeans were much hetter, compared with the five-y; ar average, than the average yields of corn and oats. This variation favored those sections which had larger acreages of the higher yielding crops in 193^- There was also a wide range in average corn yields from one section of the state to another, as well as "between individual farms in the same area. The price of grains -vvas high in 193'-'- ss compared with prices of livestock and livestock products. Farms './here grain sales constitute a large part of the farm income thus had an advantage. The rapid increase in the prices of farni products, particularly grains, favored those farms T/hich had large stocks of salable products on hand at the beginning of the year. Ifciry farmers who inventoried the corn on liand at the beginning of 193^ s-t ^ cents a bushel, later sold this com for SO cents.

In this group of 32 acco^onting farms the most successful one-third shows an average net income of $1,3S0 v;hile the average net income of the least successful one-third of the fo.rms was only $^5^. In 1933 the comparable net incomes for the two groups v/as $1,1^7, and $22S respectively.

-:>-

39

Investments, Receipts, E:-:penses and Earnings on 32 St. Clair Coitnty Paims in I93U

Itens

CAFITiJL II'JVESTl/IETTgS

Land --------------

Farm improvements- -------

Livestock total- --------

■ Horses ------------

Cattle - ------ -

Hogs _----_.------_

Sheep- ------------

Poultry- -_----.-----

Machinery and eqiiipment- - - - -

Feed and grains- --------

Total capital investment

HECEIFTS AIJ) ITBT liiCEEASSS

Livestock total- --------

Horses ------___-_-

Cattle

Hogs (incl-uding AM payments '- Sheep- ------------

Poultry- -----------

Egg sales- ----------

Dairy sales- ---------

Peed and ^^-rains (incliiding AAA payments) -----------

Lator off farm ---------

Miscellaneous receipts - - - _ -

Total receipts & net increar.es

EXPSIJSES im_ IIET DECREASES

Parm improvements- -------

Horses __----_-_----

Miscellaneous livestock

dec rease s

Macliinery and equipment- - - - -

Feed and grains- --------

Livestock expense- -------

Crop expense ---- ------

Plired la"bor- ----------

Taxes- -------------

Miscellaneous expenses - _ - - -

Total expenses & net decreases

RECEIPTS LESS E}[PE1ISES-

Total "onpaid lahor- ---------

Operator's lahor --------

Pam.ily le.hor ----------

llet income from investment and management -------------

RATE E/JtNED OIJ IlfVESTIiElTT

RetujiTL to capital and operator's

lalaor a,nd management- _---___ ^% of capital invested- ------

LA30E AlJD I.iAITAGELISET WAGE

Your farm

Ave ra-ge of 32 farms

11 g2U

2 S95

1 3SU

396

622

171

U9

126

1 17U

1 117

$1S 37'^

11 most

profitable

farms

10 931 2 102

1 loU 2 so

172

IU2

994 1 035

Si6

246

11 least profitable farms

13 7^0

3 oi^l

1 7^9

5S3

7^3 is6 12s 119

1 222

1 Obl

$2iJ+Uq

1 6ig

22

163 U16

118 255 590

S6S

9\ 1

$_L

^51

1 ^4-32

176

Uoo

s

1S5

2l|6

U17

1 22g

101

2

% 2 763

1 690

71 20l| UlS

139 5U

2l5+ 590

U69 20

1

$ 2 ISO

153

227

32

ISb

129 152

30

919

^ 1

'o■^c

13 g

17

ISl

IS 159 132

32

132

bgO UlO 270

95^

% 1 931

351 U20

131

) a XO .0

1 362 919 4U^

:>•■-'

162

239

35 1S3 1U9

157 30

2S^

S 1

cLcL'

c 1 ' Cii'

1 goo

S12

$ ggg

771 391

3 go

U5U

2.12fJ

SU5 1 072

The following table shows the numher of farms liaving certain net incones per acre. There v/as a marked difference "between the most successfvil and the least successftil famis.

Avora/^ net in- corae ver acre

$17. 15- 13. 11.

9.

I\fviin"ber of far.as

2 1 0 1

5

Average net in- come per acre

$7

5

3

1

ITuraber of farms

8

5 7 3

A further study of the farra "businesses made "by compr:ring the in- vestments, receipts, and expenses of the group of farms having the highest net incomes, with those having the lowest, should throw some light on the qi.:u3stion of why some farmers are more successful than others. This com- parison .is shovm in the tahle on page 3»

Tiie most profitable farms had a smaller total capital investment tlian either the least profitable farms, or the average of all the farras. Despite the smaller investment, the most profitable farms had higher total receipts and net increases, due to larger sales of feed and grains. Tliey also had lov;er expenses, as the total farm expense, including the charge for fomily labor, was $1,383 on the most profitable farms as compared with $1,726 on the least profitable farms.

Changes in Inventories and Inventory Values

Tlie yecar 193^ ^"a-s similar to 1933 i^ that the prices of farm products continued to advance, causing further increases in inventory values. Ov/ing to the poor crop yields in 193^ there were fewer bushels of grain on hand to inventory at the end of the year than at the beginning. The value of the smaller amount of grain, however, was greater than for the larger amount on hand at the beginning of the year.

Inventory Changes in Feed and G-rains

Beginning inventory I-I-3U

Closing inventory

Inventory incroasos I93U

Average of all farms $1 II7

Average of 11 high farms 1 O55

Average of 11 low farms 1 061 Your farm

$1 U16 1 50U 1 265

$299 20U

The difference in the values of feed and grains inventoried was one of the factors inf li::encing the difference in earnings. The most pro- fitable farms had an inventor;'' increase in feed and grains of $UU9, as com- pared with an invontory increase of $20U on the least profita,ble farras. The quantity of hay inventoried was a very important factor influencing the in- ventory differences.

The average inventory increase for the accounting farms in St. Clair County was $252 in I93U, as compared with $123 i^^ 1933. '''•nd a decrease of $5S0 in 1932. There was an increase of $299 ij^ feed and grains, and decreases of $33 in total livestock, $0 in machinery, and $2 in improvements. The inventory decrease in machinery and iinprovements was the smallest since I929 on accotmt keeping farms, and it indicates tliat needed repairs and replacements are "being made hut still not enough to offset the current depreciation costs.

Inventory Changes for 193^

Beginning Closing Items inventory inventory I-I-3U 12-31-^U

Total livestock $1 3bU

Feed and grains 1 II7

Machinery 1 17^-

Improvements (except residence) 2 89,5

Total $6 550 $6 S02

Inventory cliange s I93U

Inventory

change s ,

youT faim

$1	331
1	U16
1	IbS
2	gS7

$-33 299

r -O

— 6

$252

Some Adjustments on St- Clair Cconty Farms Since 1929

Farmers have been forced to make adjustments in their cash ex- penditf.res as the reault of changes in their cash incomes. From I929 through 1933i faiTO operation costs declined each year, hut the year 193^ brought a reversal of this trend. Total operating expenses were 99 cents an acre higher. in 193^+ than in 1933* while cash operating expenses were $1,6^3 a farm in 193^ as compared with $1,07^ a farm in 1933- The very low crop yields was a factor causing the large increase in expenditures for feed and grains in 193^^' Indications point to an increase of spending in 1935 for repairs and replacements of machinery and improvements, since farmers ha.ve postponed ptircliase of these items during the five-year period since I929.

Cash Income and Expenses on Accounting Farms in St. Clair County for 1929 and 193^

Items

Your

farm I93U

Average cash expense per farm I93U 1929

Your

fann

I93IL lo^li

Average cash income per fairo l'^12q

Livestock $

Feed and grains

Machinery ...

Im.provements

Labor

Miscellaneous , .

Livestock expense

Crop expense

Taxes

Total $

$ 197 U70 289 158 129

30 32

is6

$1 6%

UU5 268 50s

369

230 2U ^1

206

$2 255 $

Excess of cash sales over expenses. . . ... $

Increase in inventory .

Income to labor and capital (Receipts less expenses). .

$1 8US $2 672

1 039 6S

3

1

Si 380

252

1 632

1 156

32 U

!42 2

$3 023 $3 903

$1 653

357

2 510

-6-

The ctnulative effect of several j.ears of lov: a^ricultxixal prices on the demand for manizfactured goods can be readily ascertained ty a com- parison of cash expend! tiores in 193^ with those in 1929- The avera^re total cash income in 193^+ "^^-s 77 percent of tliat in 1929 1 while cash expenses in 193'-*- v;ere 73 "oercent as large as in 1929- The relationship of total cash income to total cash expenses is approximately the sane in 193^ as it was in 1929. There is, hov/ever, considerable difference in the distribution of the expense items. In 193'+> expense for livestock was ^4 percent, mach- inery 57 percent, improvements U3 percent, labor 56 percent, and taxes 7^ percent of the cash expenditures for these items in 1929* The cash ex- penditures for feed and grains were much higher in 193^ than in 1929» and miscellaneous expense and crop expenses were practically the same.

Comparison of Farms With High and Low Earnings

The most profitable farms in this study had net receipts per acre of $8.69, as compared with $2. 65 for the least profitable group. The reasons for this difference may be obtained from a stuc!.y of the data on pages 3 snd S.

The most siiccessful farms averaged 153.9 acres, the least suc- cessful 171.2 acres. On the most profitable farms S5 percent of the land area was tillable, as compared with 65 percent tillable on the least pro- fitable farms. The cropping system did not vary a great deal between the two groups. The most profitable farm.s did, however, have 6.3 acres more of wheat, which was one of the higher yielding crops in 1S3^''' The most profitable farms had an advantage in crop yields. They secuxed 3 bushels more corn, 2.2 bushels more oats, and 2.U bushels more wheat than the least profitable farms. The most profitable farms had much la.rger sales of hay than the least profitable farms.

The most profitable farms were less intensive, but more efficient in their livestock prod"action than the least profitable farins. They had an investment in productive livestock of $U.97 per acre and fed $1,138 of feed per farm as compared with $6.^5 invested per acre and $1,57^ of feed fed per farm on the least profitable farms. The livestock on the most pro- fitable farms returned $126 for each $100 of feed fed, as com.pared with a return of $103 for $1^0 of feed fed on the least profitable farms.

The larger net income on the most profitable farms was secured with a total operating cost of $8.70 per acre, as compared v/ith $10.03 per acre for the least profitable farms. The higher .operating cost was an important factor in reducing the net earnings of the least profitable farms. Every item of expense and net decrease except the decrease for horses, and m.i seel lane ous expenses v;ere higher on the least profitable farms. Man labor costs 'oer crop acre were $5.91 on the most profitable farms, as compared with $8.0U on the least profitable farms. Power and machinery costs per crop acre amounted to $3 -78 on the most profitahle farms, and $U.26 on the least pro- fitable farms.

k03

-7- Influence of AAA ?r0i;'ra.i5 on Croppiiir'^ Systems and Farra Incomes

The I'arra-accoTJJit records in Illinois were influenced 'both directly and indirectly by the corn-hof; and wheat adjustment progTai.is. A large iser- centage of accountin{;; far;ns were under one or "both contracts in 193^'« The acrea^'es of corn and wheat on these farms were therefore less than norraal. This should haveresulted in lower operating costs. Corn-hog benefit pay- ments for the entire 193^'' program will total about Ho million dollars for the state, while wheat 'benefit payments will be about 2. '4 million dollars.

The benefit payments for accounting farms are indicated in the following table, which shov;s the a.verage pa.yraent for those farms receiving paymonts, and inclp.des only those payments received by the cooperator be- fore the 193^ books v/ere closed. In some cases only the first corn-hog check is included, vvhile in other cases the second check had been received. The second payments not received, and the third payments will be entered in the 1935 book.

AAA Benefit PajTiients Received in 193^

Corn Wheat Hogs Average

N-umber Amount ITunber Anount ITumber Amount of all of per of per of per paj-Tnentei/ fartns farm farms farm farms farm

1/3 most profitable farms 9 $36 10 $190 9 $ 92- $27S

1/3 least profitable farms 6 62 f I5O 5 123 135

All accounting farms 22 I45 26 I70 21 93 23O

TT Total benefit payments reported by account iix; fanns under contract for 193^ divided by total nmiber of accounting farms.

On many famis the cash received from benefit ptxj'T^ents will more than pay for the year's tsjces. As an average for all accounting farms, the pa^Tnents actually received were $78 more than sufficient to pay the I93U taxes.

It is interesting to note the use made of the contracted acres on the accounting farms. The average farm had 11. U contracted acres which were used as follows; S.l idle; 1.0 red clover; U.2 sweet clover; .5 soy- beans; 1.1 alfalfa; and I.5 acres were in other crops. These data indicate the-t most fairners made ^'^ood use of their contracted acres from the stand- point of soil imiorovement, as a large part of them were in legumes. Wiien the Government restrictions on the use of crops grown on contracted acres ¥\rere removed, they were on many farms the most profitable crops as they furnished hay and pasture where badly needed in drouth areas. The legumes had the further advantage of being immune to attack from chinch bugs.

Farm earnings ¥;ere influenced indirectly by the AAA programs in tiiat the reduction in production increased the price of the coinmodities involved. The drouth was a more important factor in reducing production than the adjustment programs, yet if it had not been for the corn-sealing progra:.a there would liave been but little corn in the hands of farmers at the time the major price advance became effective.

OU

Factors Helping to Analyze the Faz-ra Business on 32 St. Clair County Fairos in 193^

Items	Your farm	[■■ ■ Average of ^2 farms	11 most profitable farms	11 least profitable farms
		16U.S Sk.5 35.6 15. Ug 9.70 5.7s 72 111	158.9 SU.9 32.5 17.39 8.70 8.69 69 102	171.2
Percent of land area tillable- - - - -		65.U
Percent of tillable land in imy and nasture ---------------		UU.3
Gross receipts "oer acre- -------		12.73
Total expenses ner acre----- — -		10. OS
		2.65
Value of land per acre - - - - - -		30
Total investment per acre- - - - - - -		125
		29.5 20.0 35-3 .5 20.1 29.6 9.3 29.7 2U.3	26. 8 19.1 38.7 1.1 IS. 3 25-7 11.9 30.9 25-3	32.0
Oats- ------------		21.6
Wlieat ------------		32. 1|
Soybeans- ----------
V^a^r — — —		19.6
Tillable past\i-re- ------		33-3
Cro-p yields — Corn, bu. per acre- - - -		8.9
Oats, bu. per acre- - - -		28.7
TTneat, bu. -oer acre - - -		22.9
Value of feed fed to prod'ictive L.S. -		1 332 120 129 296 6.8 76 7^ 5.72 9.6s	1 133 126 119 308 7-0 75 67 U.97 9.01	1 57s
Retui-ns per $100 of feed fed to		103
Peturns per $100 invested in: Cattle		128
"Dn n1 "f" TTr _		239
Pigs v/eaned per litter --------		6.9
Income -oer litter farrowed ------		62
Dairy sales per dairy co'.v- ------		71
Investment in prodxictive L.S. "oer A. -		6.1^5
Receipts from productive L.S. per A- -		3.hS
Man labor cost ver crop acre -----		7.CI 2.06 U.19 hkfo 256 30 63 .99 1 380 252 5.13^ 2 551	'>91 1.65 3.7s 216 23 50 .87 1 U09 ^22 ' 8.1+9'^. 2 763
Machinery cost ■ner crop acre - - - - -		2.13
Power and mach. cost per crop A. - - -		II.26
F^m<^ wi "Ht i" tt' r* "h a r* — _		5Sfo
Value of feed fed to horses- -----		309
"an labor cost per $100 gross i "HPOTTlfi _ _ _ ^ „		ki
pj-penses ver ^100 gross income - - - -		79
Farm improvements cost per acre- - - -		•95
Excess of sales over cash exnenses - -		1 li+2
		S3
Rate earned on investment- ------		2.12^
Gross receipts per fana- ---__-_		2 ISO
		T

Sliart for Stiidi'lng the ?.fiicienc^.^ of Various parts of Your Business,

St. Clair County, I93U

405

The nunhers nhove the lines across the midale of the page are the averaf-es for the 32 farus included in this report for the factors named at the top of the page. I-y drawing a line across each column at the nomher rneasiu-ing the efficiency of your lana in tliat factor, you can conpare your efficiency v/ith that of other fanners in ^'O'.u' locality.

T ■ ■ ■ Bushe 1 s

Cost per

^ro

■ns

per aero

Pi

1

crop acre

c 0

1

rece

Lpts

-ci

A£r

1

S-l CD

(D

0 Cm

^^ W

1 - 1

^,

-p

(])

s -^

P;

« +-•

Ul

i^ 1

C

0

0 (D 0 -P

0) c

p P

'/~t

w

d

ri n

0 u

(D

si CT

B <i>

-P (D

•H

f-1 p;

n 45

h-i -P

1— 1 >» -H 0) r3 M >

0 tn 0

i3 U

CO 0 0 CI

0) U

(U CD > Ph

0)

B

/-I

-P

t," .H

>o C

a tM

'.Tj C

0 U

in 0

0 Si

0 ^* '

•H

ri

in .H

•H 0

^

■.i -p

0

c_i

ci

P! 1

-P

■• T— 1

>5 't:!

-P

f-*

U -ri

U 'Ji

m rt

ID -H 1

g

w

S^

57

rj 0 P 0

CO 0

0

(D ^ 5 0

0 w ,Q 0

Jh (D 0 >

CO ^ 1-1 w

U

^

c5 c! w 0

i 0

!§ a

0 i-H

h^ -to

^

0 tj P. S

,3 ^

i3 S HH .H

0) rj

P".

a.

<-JI

1^.60'

2U

U3

^9

176

12 U

51I6

170

, ,

1.19

0

2000

2900

H-o

U3OO

2Q0

11. IS

21

U2

^6

136

iiU

1:96

160

.21

1-79

b

1630

2600

^3

U2OO

26^

IS

39

■<3

13-3

lOU

UUb

130

1.91

2.39

12

1300

2100

30

3 SOO 2U0

S.18

IS

36

^0

116

lUo

3.61

2.99

15

q^o

2000

23

ll4'')0

213

6.jg

12

3-^

=^7

''6

SU

^116

1^0

3.31

3. "59

2U

600

1700

20

3000

190

i

9.3

29.7

2k. ^

76

7^

2%

120

1 1 i 7.01 U. 19

30

232

11 SO

13. Hs

2331

164. s

1 i 1 , i T .CO

1 1 , b

27

21

^.6

Sk

2U0

110

1 1 S. 711 ^-.79

36

-100

i 1100 i 10

2200

l^'-O

2.18

2U _j

13

3b

^h

196

100

10. Ul

3.^9

U.2

-1-1 30

300

ia)0

lis

.Ss|

i ^

21

1^

16

1 ! i hh ikS

OQ

12.11

3.99

43

-soo

f^CO

0

iHoo

90

-.32

1

IS

12

3U 1 96

go

i 1 1 13, SI 6.39

SU

-lltSO

t 200

1000

61

1 T 1 1 1 1

13

0

2U

1

70

1^1.31 7.19

60

-1300

600

i:o

-10-

Influence of Price Cl-.anf^s on Farra Zaroings

Tarn prices in 153'-^ advanced more rapidly than did the prices of conmodities which fanners boij^ht. Fariners of the United States as a ^roup could ercclwuge their farm products in 193'^ for 7^ percent as many goods as for the -Deriod 1'305-191^> wliile in 1933 they received only 6^ percent, and 1932 only 61 percent as r^uch in exchange for what they liad to sell as in the prewar period. In the nonth of February, 1935 » this index of purchasing power had increased to 37 percent of prev/ar, the index of fam prices having risen to 111 as compared with an index of 127 ^or cornmodities which fanners b-uiy. THaen the line representing farm prices drops "below the line represent- ing prices paid "by farmers, farm 'earnings are very low, hut v.hen these lines cone close together farra earnings increase. (See follov/ing graph.)

Inder. of Prices

Hate Zarned

200 175 15c 125

100

75

50

25

= jar.r. prices in U. S. Aug. 1309-J^aly I9I4 = ICG

= Prices paid by farmers. A-iJg. 1909-July I91U = IOC

n = Hate earned on investment, accounting farrns, central Illinois

J 1 I i_

12-^

1C4

Zi

2^.

0^

-2^

M

1917 'IS 'I9 <20 '21 '22 '23 '2U '25 '2c '27 '2S '29 '30 '3I '32 'Z^J) '3U

koj

-11-

Sinco the price of some fam products advanced much more rapidly during 193"+ tlifin other prodijcts, it is evident that some farrrio Avotild "benefit nore than others, depending upon the kind and quantity of prodiicts sold. Grain prices advnnced nuch laore rapidly than livestock Drices; which reE\ilt- ed in a very had price ratio for frrners who huy lar^e quantities of feed, i'he average Illinois farm price of corn \"a.s Ul ceiits a hushcl in Januarj', 193^1-; i"t advanced stea,dily until the end of the year when it was oS cents a "bushel. Other grains made narlred advance although not so great an advance as corn. The price of hogs fluctae.ted from a low of $3-20 a hundred in LLay to 3, high of $6,.3C in Septera"ber. The low point in the fall cn.nie in licreraher when the average price was $|;.1C. The price has advanced quite rapidly since Fovember, the average price being $7*50 for Fe"bruary, 1535' Beef cattle were worth ^^i-.lO a hundred in January, 133^ a^ad fidvanced each month until September, v;hen the price was $3.90. They dropped to $5.20 in December but increased again to $7.U0 for February, 1935.

The year 193^+ ^'St a record for the reduction in the n'jjnbers 01 livestock. The percentaj^ie decrea.scs by species v?ere as follows: horses, 1.1 percent; muleR, ?.G percent; all cattle, 11.2 per<"ei?t; sheep, U.7 percent; hogs, 35*3 percent. Vihen all species a,re combined on the basis of their capacity to consume feed, the reduction was I3 percent. This reduction will greatly reduce the demand for feeds pi-oduced in I335.

The relative ch.ange in prices of important corar.oditios ma;/ be noted in the follov.ing gi'aph, \,'hich shows the average Illinois farm prices by m.onths as a percentage of the average prices for the period 1921-1929.

Percent 120

Price Indices, 193^

(1921-1929 - 100)

All commodities index represent;; the wholesale price of a large number oJ coiffiaoditics for the United Spates, ss computed by B'areau of Labor Statistics.

Grain and livestock. indices represent average monthly fair: prices in Illinois.

Og

-12-

Vr'.riatiou in Earnin:';s Over Five-Year Period

A comparison of production, income, and expenditures on the ac- countinr; farms in St. Clair County for the last five years is very inter- estinf^' "because of the violent changes in price level. 133^^ ^'•'^■s the second year of very low crop yields, yet total receipts per fanfl were higlier than in any other year in the last five, and were 70 percent of the 1929 £;ross receipts. O^^erating costs per acre were lower than in any year of the five except 1933* Thus profits were the best the co\int;r had experienced since 1929.

"arnings in 193:3. ^.s usual, will depend upon inc'lvidu?! efficiency, weather and ■orices. A noiTnal yoar will raean larger yields of grain and prohatly lower prices.

Comparison of Earnings and Investments on Accounting: St. Clair Co-unty for I93O-I93U

Fanns in

I terns

Uumher of far^ns ---------

Avera^^e size of fanns, acres- - -

Average rate earned., to pay for

management, ri;iic and capital - - Average lahor and management wage

Gross income per acre ------

Operating cost per acre - - _ - _

Avera.ge value of land per acr<2- - Total investment per aero - - - -

Investment per farm in:

Total livestock- -__-_-

Cattle

Kogs

Poiiltry- ----------

Gross income per farm --__-_

Income per farm from:

Crops- -----------

Miscellaneous iacorao - _ - - Total livestock- ------

Cattle

Dairy sales- __-_--__

Hogs

Poultry

Average yield of com in bu.- - - Average yield of wheat in bu.

1930

3^ 161

$-365

■If^

13.72

s6 139

1 9U9

1 009

305

221

? 359

271

79 009 iiU

kzh 510

25 20

1931

19^2

31

161

-i.o<^ $-77'-^

10.69 11.97

81 123

1 727 S52

277 132

1 ikl

232

36 1 U23

SO 6U5 235

ito6 37

23

30

153,

-l.lffi

$-326

3.37

10. sU

79 121

1 052 717 153 176

1 kok

282

53

1 069

33

2U2 351

20

30

132.5

^d

3.S?

$165

12.53

8. 71

58 102

1 293 533 167 157

2 237

919

37

120 5lt 3^+7 337

2q

20

193^+

32 16U.S

$UU3

15. Us 9.70

72 111

364 622 171 126

? r;

;5l

s6s 1 61s 163 5'"'0 U16 iLg-

o

AHnIUAL FABli BUSIIIESS EEPOItT OH SSV3HTY- THREE mmiS IN CLDTTON, BOllD, MOimOE, Aim MOIITGOlffiHY COIBITIES, ILLIIIOIS, I93U

P. S. Jchnston, S. L. Savjer, and T. £. Hedii^es*

The farm earnings of 73 a-ccoimt-keeping farmers in Clinton, Bond, Monroe, and Montgomery Counties showed an increase in 193^ over those of 1933- This is the second consecutive year of improvement in the "business of these farr.is. The throe years previous to 1933 f'hoved very low returns.

These 73 accounts show for 193^ ^'^ average net income of $1,0^3 per farra, as compared with an average of $259 i". 1933> ^^d. an average net loss of $5^+2 in 1932- The average cash income in 193^ "^-s $2,715 P^r farm, the cash "business expenditures $1,500 per farm, leaving a cash Tsalance of $1,215 to meet interest payments and family living expenses. (Those who keep home account books use the latter figure to represent the cash contri- bution of the farm to the "realized family income".) Besides the cash in- come, there was an inventory increase of $U6l per farm due to the rise in the prices of farm products. This increase, added to the cash balance, re- sulted in an average excess of receipts over expenses of $1,676 per farm. The inventory increase was a larger part of the total farm income in 193^ than in 1933 .

These data must not be considered representative of average farm conditions, for they were secured from farms which are larger than average, and which were managed by farmers who are more efficient than the avera,ge of all farmers in the county.

For the state as a whole, farm earnings v/ere better in 193^ than in 1933» i^ spite of the fact that corn and oat yields were very low dioe to the drouth and to chinch bug damage. In the western and southwestern parts of the state the drouth caused an almost total failure of both com and oats. !Phis accounts for farra earnings being lower there "^han in other parts of the state.

The corn crop was best in the southeastern part of the state, and v;as fair in the northwestern section. Iheat yields Y/cre particularly good in the south and central portions of the state. Soybean yields were very good throughout the state, and there was a larger than normal acreage in Illinois in 193^- This state produced over half of the nation's I93U crop of soybeans .

Chinch bug damage extended over most of the state last year, but was much more severe in some sections than in others, &,nd was much worse on some fa,rras than on other farms in the sarae com:aiXLity. Conditions affecting crop yields were very spotted. This accounts in part for the wide variation in farm earnings from one section of the state to another, and the wider variations than usual from one farra to another.

* Yi. A. Cope, J. H. Brock, C. A.. Hughes, and A. E. Snyder, faira advisers in the above Counties, cooperated in supervisirg and collecting •'he records on which this report is based.

Industries other tlian agricultm'e a^ain showed improved earnings over the previoas year. A group oi" SUo industrial corporations reported ty a nationally known "barili showed average earnings of 5*0 percent on their in- vested capital in 193^i a-s compared with 3*^ percent for the saine corporations in 1933. -^ similar group had a loss of one-tenth of one percent in 1532, aiid average earnings of 3-3 percent in 1931'

In comparing the average earnings of corporations with the rate earned on investment on accounting farns, it is well to keep in mind that in corporation accounting, charges are made for management, while in the faira accounts no comparable deduction has "been made. On the other hand the fanner and his family receive food, fuel, and other items of living from the farm for which the farm received no credit in the records used in this report. Tor the average central Illinois farm ffunily, consisting of five person?, the value of the food and fuel furnished hy the farm was ahout $2^0 in 193^> when estimated on the "basis of the wholesale price for farm products.

Yariat.ions in j'arm Incomes

There wa.s a mtijch wider range in farm earnings on the a.ccoimting farms in 193^^ than in 1933- This vvas true for the farms included in this report, and it was also true when the average earnings of farms in one section of the state are compared with the earnings of farms in other areas.

The extremely wide range in earnings was due to a combination of physical and economic factors. The average yields of v/heat and soybeans v/ere much better, compared v/ith the five-year average, than the average yields of corn and oats. Hiis variation favored those sections which had larger acreages of the higher yielding crops in 193^- There V7as also a wide range in average corn yields from one section of the state to another, as well as betv/een individual farms in the saine area. The price of grains was high in 193^+ as compared v/ith prices of livestock and livestock products. Farms vifhere grain sales constitute a large TDart of the farm income thus had an advantage. The rapid increase in the prices of farm products, particularly gi'ains, favored those far..!S v.'hich lia,d large stocks of salable products on liand at the beginning of the year. Many farmers who inventoried the corn on hand at the beginning cf 193^ a-t Uo cents a bushel, later sold this corn for SO cents.

The 73 account-keeping farms in Clinton, Eond, Monroe, and Mont- gomeiy Counties were divided into tv/o groups, consisting of 3^ general farms and 35 dairy farms. The division wa.s made on the basis of the pro- portion of the groBs income received from dairy sales and the number of dairy cows per farm, the factors which normally indicate the relative im.portance and permanency of the dairy enterprise on the fami.

In tl:ifi group of 3S general fams, the most successful or.e-third shows an average net income of $l,76l while the average net income of the least successfiil one-third was only $373- In the group of 35 dairy farms, the comparable net incomes for the two r^roups were $1,630, and $UlS, respect- ively. In 1933> ■the most successful one-third of tne accounting farms in this area had an average net income of $79^> while the least successful one- third had aji average net loss of $333.

■^-

liwestments, Receipts, Expenses and Earnings on J,S Genera.! Ea:::is in Clinton, Bend, Monroe, and Montgo^'aery Co'u^itieb, 193'-'

Itemj

CA?i :rAL iir/i,STiviE}rTS

Laiid ----------

Farm improvements- - - -

Livestock total- - _ - - Horses --------

Cattle --------

Hogs

Sheep- --------

Poultry- -------

Machinery and equipment- ?eed and grains- - - - -

Total capital investment

Your farm

Average of ■^S fams

13 most :rofita'ble f arias

13 least prof ita'^ole fp.r.ns

12 609 3 ^6

1 ^cU

RECEIPTS ^^ IffiT I:IC?E:ASSS Livestock total- - - -

Horses ------------

Cattle --_-

Hogs (including AAA payments )- Sheep- ------------

Poultry- -----------

Egg sales- ----------

Dairy sales- ---------

Feed and grains (including AAA. payments) -----------

Lahor off farm ---------

Miscellaneous receipts -----

?btal receipts & net increases

KXPE2TSE3 AIID lET DECHEASES

Farm improvements- - - -

Horses ---------

l/'iscellaneous livestock decreases

Machinery and equipment- - - - -

Feed and grains- --------

Livestock expense- -------

Crop expense ----- -____

Eired labor- --------

Taxes- -------------

Miscellaneous expenses - - _ - -

Total expenses & net decreases

PECEIPT3 LESS EXPENSES

Total unpaid lahor- -------

, Operator's lahor ------

I Family labor --------

Eot income from investment and -.'.anagement -----------

EATS SAP2.TED Oil I1TVEST1£E1TT

Return to capital and operator's labor and management ------

3,'o of capital invested- - - - - -

:.-;bor Aim mai^a&ei-'Ieiw wage

1.96^

The following table, "based on all a.ccoimting farms, shows the number of farms having certain net incomes per acre. There was a marked difference between the most s\iccessful and the least successf'^al farms.

Avera^ net in- come TDer acre

I'luuber of farms

Average net in- cone "'oer acre

lluaber of

$15 and over 2

13 3

11 7

5 U

7 12

f^ 20

$3. 1. -1. -3- -5-

farms

15 5

2

A further stiidy of the farm businesses, made by comparing the in- vestnents, receipts, and expenses of the group of far.ns with the highest net incomes, with those Jiavin;:; the lowest, should throw some light on the question of why some farmers are more successful than others. This comparison is shewn in the tables on pages 3 and 5-

In the group of ^S general fanns, the most profitable farms av- eraged 175 acres each, the least profita.ble 203 acres. The most profitable farms had a larger investment in feed and grains, and in machinery and equip- ment than the least profitable farms, but a smaller investment in land, im- provements and total livestock. The most profitable farr.is had higher total receipts due to larger sales of feed and grains. The total ci:pense per acre, inclviiing the charge for family labor, v/as slightly higher on the most profit- able farms.

In the group of 35 dairy farms, the most profitable farms, al- though 23 acres smaller than the least profitable farms, had larger invest- ments in feed and grains, machinery and equipment, and total livestock. They had higher total receipts and net increases, due chiefly to larger sales of livestock and livestock products, and of feed and grains. The total expense per acre, including the charge for family labor, was slightly higher on the most profitable farms.

Investments, Receipts, Er-ipenses and Earnings on 35 5§^E7 Farms in Clinton, Bond, llor^voe , and Montgomery Co-jnties, 193^

Items

Your farm

Average of

35 farms

12 most

profitable

farms

12 least prof i table farms

CAPrrAl INVESTIEIITS

Land ----------

Farm improvements- - - -

Livestock total- - - - -

I'orses --------

Cattle -

Y.ogs ---------

Sheep- --------

Poultry- -------

llachinery and equipment - Feed and grains- - - - -

9 901 2 SOk

1 5^6

Ul2 831

19

140

1 i6o

1 002

Total capital investment

$l6 Ul3

9 517 2 1+32

1 738

912

130

lU

is6 1 363 1 201

$16 251

10 810

3 Uoo

1 711

510

95U

116

17

iiU

1 150

gbU

PECEIFTS MP IvST II-TCEEASES Livestock total- - - -

I-Iorses ------------

Cattle -- -__-_-_-

Hogs (incl-'jding AAA payments )- Sheep- ------------

Poultry- -----------

Egg sales- ----------

Dairy sales- ---------

Feed and grains (including AAA.

payments) ---------

Lahor off farm ---------

Miscellaneous receipts _ - - - -

Total receipts & net increases t

1 ^bl 27

331 32

53 201

S33

919 5

^7

$_2_2ll0

1 9b 1

20

158

U23

?3

03

258

1 016

1 201;. 66

$ 3 231

1 202 3S

221 12

31 l^l-S

752 71U

7

1

$ 1 92U

K'TFEITSES ANT KET DECREASES

Farm improvements- - - -

Horses ---------

Miscellaneous livestock decreases Cattle

Machinery and equipment- - - - -

Feed and grains- ----- _

Livestock expense- -------

Crop expense ----------

Hired later- ----------

Taxes- _-_-------_--

Miscellaneous expenses -----

Total expenses & net decreases

$_

165

227

16 155 IU3

133 2U

863

152

257

16 151 161

lUo

22

399

217

207

15 131 loU

135 23

856

RECEIPTS LESS EXPEIISES-

Total unpaid lahor- -------

Operator's labor ------

Family labor --------

I Net income from investment and mana.gement _-----_-__-

RATE EARIIED ON Il^TYESTMElIT

Return to capital and operator's labor and management ------

;''-■:■ of capital invested- ----- -

LABOR Ai'iD !:a::ac-smeiit 7/AGE

$ 1 677 654

3S7

267

't

023 6.23-^.

$ 2 332 6S2

1 650

10.15fa

s-_

UlO 821

vU

2 055 S13

242

1 OdS

650

379 271

UlS

2.36^

797 887

-90

kka

■""-— "^

lu

-D-

Chan^es in Inventories ard Inventory Valties

The year 1934 v.as similar to 1933 i^i that the prices of fana products continvied to advance, causin;-; further increases in inventory values. Owin.': to the poor crop yields in 193^ there were fev/er hushels of i7:i-'a.in on hnnd to inventorjr at the ond of the year than at the beginning. The value of the smaller ariount of grain, however, was greater than for the larger amoiTJit on Iiand at the he;<5inning of the year.

B^ishels of Grain Inventoried on General Panns

Com

; an .

1, 'V-:- Dae. 31. '3^ JaA. 1. '3^:- Dec 31. '3^^

Average of all far.r.s. ... 66S 333 2^7 313

Average of I3 Mgh farms. . 578 3SU UlO U50

Average of I3 low fairas . . 631 I99 97 1%

Your farm

Tiushels of KrTc.'-y. Inventoried on Dairy Farms

]o".T. TiiGat

oan

. 1. nU Doc. 31. '"^U Jan. 1, '^U Dec. 31, ^'-^

Average of all farms. . . . 3US 217 211 2^3

Average of 12 hi,'5li farms . . 393 2S7 2b9 302

Average of 12 low farras . . 2^.6 IU2 I52 21g

Your farm

The difference in quantities of grain inventoried v?as one of the factors infl-ufincing the difference in earnings. The most proiitahle dairy farras h^d larger inventories of com and wheat, "both at the "beginning and at the end of the yQs.T, while the most profitable j-^eneral farms hp.d larger inventories of wheat, both at the begirjiing and end of th3 year, and a larger inventory of com at the end of ;;he yea,r than did the least profitable farms.

-7-

The average inventory increase for all acco\mting farms in Clinton, Bond, Monroe, and Montgomerj^ cotinties v;as $U6l in 193^-> ^s compared with in- ventory losses of $1 per fain in 1933* a-^^d. $680 per farm in 1932- There were increases of $4 in total livestock, $U3U in feed and grain, and $67 in machin- ery, while improvements showed a decrease of $UU. Such a,n increase in inven- tory as that for machinery resnlts from the value of new replacements and re- pairs during the year being in excess of depreciation costs. This increase is of consideraole interest for it is the first time tliat such an increase in machinery inventories has occurred since farm earnings "began to decline so drastically with the general depression.

Inventory Changes on 73 Clinton, Bond, Monroe, and Montgomery County Farms for 193^'-

U15

Beginning Closing Inventory Inventory

Items inventory inventory changes changes,

I-.I-3U I2-3I-3H 1^3^ your fam

Total livestock $1 3IO $1 31U

Feed and grains 1 035 1 kSS

Machinery 1 I06 1 173

Improvements (except residence). 2 636 2 "^92

Total $6 0S7 $6 5^8

$ u	$
U3U
67
-UU
$U6i	$

Some Adjustments on Clinton, Bond, Monroe, and Montgomery Covmty Farms

Since 1929

Farmers have "been forced to malce adjustments in their cash ex- penditures as the result of changes in their cash incomes. From I929 through 1933 farm operating costs declined each year, hut the year 193^ "brought a reversal of this trend. Total operating expenses were ih cents an acre high- er in 193^^ than in 1933. while cash operating expenses v/ere $1,500 a farm in 193^ as compared with $1,175 i^ 1933' The largest increase in expenditures over the previous year was for machinery and repairs for machinery. There was also a significant increase in expenditures for livestock, feed, and crop expenses while a decrease v/as recorded in expenses for taxes. Indications point to an increase of spending in 1935 ^oi" repairs and replacement of machin- ery and improvements, since farmers have -nostponed purchase of these items during the five-year period since I929.

Cash Income and Expenses on 73 Accoimting Farms in Clinton, Bond, Monroe, and Montgomery Counties for I929 and I93U

Your Average cash Your Average cash

Items farm expense per farm farm income per farm

193U 19^U 1929 193^ 193^ iq29

Livestock $ $ Igl $189 $

Feed and grains 328 U59

liachinerj^ 39O 575

Improvements lOU 281

Labor I5U 180

Miscellaneous 2S 22

Livestock expense ..,.., 18 2b

Crop expense 158 178

$1 U35	$2 9o3
1 075	59U
93	119
2	—
55	85
5	13

?

141

Taxes 141 ikS

Total $ $1 500 $2 058 $

Excess of cash sales over expenses « $

Increase in inventory

Income to labor and capital (Receipts less expenses).

$2 715	$3 77H
$1 215	$1 716
U6I	3hk
1 676	2 060

-8-

The cunulative eiiect of several years of low .'Agricultural prices on the demand for manufactured ,':oods can be readily ascertained by a coraparison of cash expenditures in 193^+ v;ith those in 1929- I^ average total cash in- corae in I93U was 72 percent of that of 1929- ^J^e total cash expenditures were 73 percent as lar;-^ as in I929. In I929 the average accounting farms in Clinton, Bond, Monroe, and I/'ontgoinery Counties spent 55 percent of the cash incone for operating expenses; in 193'-l- 'they spent 35 iDercent. The re- lationship "between income and expenses is approximately the sane for the two years. There is, however, considerable difference in the distribution of the expense items. In 193^!-! laachinery was 6S percent, feed 7I percent, improve- ments 37 percent, hired labor 36 percent, and crop expense S3 percent of the cash expenditure for these items in I929. Taxes and livestock purchases wore almost the same in 193^ ^-s in 1929-

Compa.rison of General Farms With Hi,qh and Lov.- Zarnings

The 13 most profitable general farms in this stu-dy, had net receipts per acre of $10. OS, as compared with SI.SU per acre for the lea.st profitable general farms. The reasons for this difference may be obtained from a study of the data on pages 3 ^^cL 12- . .

The most profitable farms v/ere 2S.3 acres smaller than the lea.st profitable farms. Hov/ever, they had a larger pro;oortion of tillable land, and had 7 '9 acres more crops than the least profitn,ble farms. The most profitable farms had about the same acreage of corn and oats as the least profitable group, .but they had 27-7 acres more wheat, v/hich was also one of the high yielding crops in 193'+- ^e most profitable farms carried larger inventories of feed and grain on which to mriJce a "orofit when prices advanced. One reason for the lax'ger inventories was the higher crop yields, there being an advantag'e of j.O bushels of corn, lU.2 bushels of oats, and 3-7 bushels of wheat per acre in favor of the high profit group.

The most profitable farms were not as intensive in their livestock production, but they showed greater efficiency in their livestock feeding operations than the least profitable farms. The most profitable farms had an investment in productive livestock of $3.10 pc^r acre, and fed $77^+ of feed per farm, as comtjared with $U.gO invested per acre, and $l,lgU of feed fed per farm, on the least profitable farms. The produ-ctive livestock on the most profitable farms returned $120 for each $100 of feed fed, ss compared with: returns of $106 for each $100 of feed fed on the least profit- able farms. Dairy sales "oer dairy cow averaged $59 on the most profitable farms, as compared with $33 on the least profitahle group.

The larger income on the most profitable farms was secured witli a total operating expense of only Uo cents an acre above that on the least nrofitable farms. Man labor costs per crop acre v^as $5.07 on the most prof- itable farKis, as compared with $5.69 on the least profitable farms* while power and machinery cost per crop acre was only $2.82 on the most profitable farras, as compared with $U<&3 on the least profitable group.

Conparison of DaiiT ?arrns With Hiffh and Lov/ Earnings

The 12 most proxitaole dairy famis in this stod^' had net receipts t>er acre of $0.31, as compared with $1.S9 per acre for the 12 least profit- able dairy farms. The reasons for this difference ma;'' be obtained from a sttidy of the data on pa^es 5 ^''^^ 1^-

The most profitable farms were more intensive, and more efficient in their livestock production than the least profitable farms. The most profitable farms had an investment in productive livestock of $6.29 per acre, and fed $l,Ul2 of feed per farm, as compared with $5'13 invested per acre, and $1>20S of feed fed per farm, on the least profitable farms. The pro- dvjctive livestock on the most profitable farms returned $137 for each $100 of feed fed, as compared with returns of $96 for each $100 of feed fed on the least profitable f arras. Each group had an average of I3.0 dairy cows per farm. The most profitable farms had average dairj' sales i^er dairy cow of $75 > a-S compared vvith dair;- sales of $55 per dairy cow on the least prof- itable farr:iS. Tiie most profitable iarr:is had an incom,e of $9'J '^er litter farrowed, as compared v/ith $71 for the least profitable group.

The most profitable faims, although having 22. S fewer total acres, liad 7»'+ more crop acres thaii the least profitable farms. They had 6.1 acres more corn, ^.S acres more oats, and S.J acres more wheat than the least profitable faras. 'tTheat and soybeans were the high yielding crops in 193^- The most pa'ofitable farms had slightly higher crop fields. Secaiise of the larger crop acreage and the higher yields, the m.ost profitable ffirms had larger inventories of feed and r^rain on which to make a profit when prices advanced .

The total operating cost per acre, including the charge for family labor, was somewhat higher on the most profitable farms. Man labor cost was 13 cents per crop acre higher, and power and machinery cost was UH cents per crop acre higher than on the least profitable farms. However, in proportion to income, costs were much lower on the most profitable farms. Their total expenses per $100 gross income was $te as compared with $75 ^'-^ 'the least "Profitable farms.

-!■'■-

Inflnence of Price Cr^-infe-es on Pam Hc^riiin^is

PaiTi prices iii li'3'-l- advanced r-.ore rapidly than did the prices of conicioditics T.'hich fa.iriers boii^It. Fr.iraers of the United States as a group C'juld e;ccliang3 their fain, products in 193^ fo^ T'-i- T:;ercent as many goods as for the period 1309-19l4> wMle in 1533 they i-eceived only oM- percent, and 1932 only 61 7:ercGnt as nroch iza eyc?aan;?e for what they i:^ad to cell as in the prew^.r period. In the nionth of i'e'bi".mr2^ 193?> this index of purchasing pov;er hrd increased to rt'J percent of prcv/ar, the index of fain prices having risen to 111 as co::.pared vdth an index of 127 foi* co::raoditieG v/hich farmers "buy. ^len the line representing farw "'"irices drops oelow tne line represent- ing nrices "-aid b;'- fairr.srs, farm earnings are very low, but v.-hen these lines corae close together fara e-.rnings increase. (See following ..-^rraph. )

Index of Prices

Sate Zarned

= Sar.Ti price:: in U.

Aug

1 z

;05-JuIy 131U = IGC

= Prices psid by farmers. Aug. IJOS-July 191-' = IOC

n = P.ate eara?d on investnient, accooriting fai^.c, central Illinoi;

1917 'IS -19 '':^o 'ai '.-2 '23 '24 '25 126 '27 '2?' '29 '30 '31

i-p I

53 '3^'-

his

-11-

Sinco the pric^ of sone farm products advanced nuicla more rapidly during 193'+ tlicin other products, it is evident that sorae fams v/oiild "benefit more than otherc;, depending upon the kind and quantity of products sold. Grain prices ad\anced much more rapidly than livestock prices; which result- ed in a very had price ratio for farmers vfho ci:iy large quantitiea of foed. I'he average Illinois farm price of corn T;as Ul cents a hur-hol in Ja.Tar^ry, 193^; i't advanced steadily utitil the end cf the year when it wes S? cents a bushel. Other grains nade narked advance althoi::^h not so grsat an adva.r.ce as corn. The price of hogs fluctuated from a low of $3*-^ ^ husidred in M.ay to a high of $6^•30 i^^ Septeiaoer. The low point in the fall came in Hovemher v;hen the average price viAa.s $5-10. The price has advanced quite rapidly since Foverr-ber, the average price oeing ^f ''^0 for February, 1535- Beef cattle vrerc v/ortli ^-klC a hundred in Janua,ry, 193'^ sind. advanced each month imtil SeTDtember, vdien the price v/as $5.90. They dropped to $3''-C in December but increased again to $7'^'^ for February, 1935 •

The year 193'+ s®t '- record for the redxiction in the JiU'abers of livestock. The percentage decr^asrs by species vf^^rc as f'-llovs: horsp;^, 1.1 percent; n.uli^s, P.G percr^nt; all rattl'= , 11.2 percent; siij^p, U.7 percent: hogr^ 35-3 percent, \7hen all species are combined on the basis of their capacity to consume feed, the reduction was I3 percent. This reduction v/ill greatly rediicc the demand for feeds produced in 1035*

The rola.tivo change in pricps of imptDrtant corrriodities may be noted in the follov;ing graph, which shows the average Illinois faimi prices by months as a percentage of the average prices for the period 19.--1-1S29.

Percent

Price Indices, 193'^

(I5?l-I9c

100)

Jan

jec

i.VXT .

Apt

'une July Aug. Sept. Oct. lie v. Dec,

All co^Timoditios index represents the --holesale price of a large n-L2-.ber of commodities for the United otctes, ss cojaputed by T<-uj.-eau cf Labor Statistics,

Gram a

nd livestock indict-s represent average montiily fara- prices in Illinois.

20

Factors Ilelpir.^ to A:;al

-1?- ze the FaiTii Business on ^8 (J^neral Farm? in

Clinton, Bond, Monroe, end Montgomery Counties, l^y^

I tens

Size of lanns — acrer. --------

Percent of land area tillalile- - - -

Percent of tillable land in hay and pasture --------------

Gross receipts per acre- Total expenses i^er acre- Ifet roceipts per acre- -

Val\ifi of land per acre - - Totil investment ner acre-

Acres in Cora- ------

Oats- ------

iTheat ------

Hay -------

Tillable pastiire-

Your farm

Crop j'ields — Corn, bu. per acre- Oats, "bu. per a.cre- Tneat, Idu. r^er acre

Ave rage of 3g farms

195.9 83-7

13-39

7.71

58 S7

33-7

^0.0

U3.2 23.6

31.0

15.5

21.0

Value of feed fed to prod"Jjctive I. S. - Peti^rns per ^100 of feed fed to

productive livestock- ---_-_-_ Returns per $100 invested in:

Cattle- --_- _

Poultry ---------

Pigs v/eaned per litter --------

Incorue per litter farrowed ------

Dairy sales per dairy coy/- ------

Investment in productive L.3. per A. - P.eceipts from productive L.S. -ocr A. -

Man labor cost per crop acre - - - - - ; Machinery cost per crop acre ----- | Pov;er and mach. cost per crop A. - - - '

Farms with tractor - - - - - Value of feed fed to horses-

Lian labor cost per $100 ,^ross incone Expenses per $100 gross incouie - - - Ts/'ra in-nrovements cost per acre- - -

2xc'--t;s of sales over cash expenses - Increase in inventory- -------

H3,te earned on investment- -----

Gross receipts per farm- ------

nil

S3 232

6.0

75

Us

3.87 5.56

1.76 3-j

7

13 laost

profitable

farms

'^ ^

I7U.7 92.6

26.5

18.09

8.01

10.08

50

35.^ 17.7 50. U

17.5 25.3

15. u 31.1

29.0

77^^

120

132 203 6.0 68

59 3.10

5.31

13 least

profitable

farms

203.0 73.9

3S.7

9.M+ 7.61 1.8U

62

XJ ■ I 19. b

28-7

30 3

31-7

12/4 16.9

1 13^

106

65 157 6.2 11

35

k.-iO 6.20

S.07 1.25 2. S3

5,69 2.05 U,03

22U

28 53

.66

1 1U5

529

6.-^-^

0%

2 571

62ft

211' 22

.58

1 5^^+ 772

:.i.97f= ^ 161

231 3S

.sk

bb7 2SS

I.965S

1 917

U21

_17_

Chfirt for Studying the Zxiiciency of Various Parts of Youi Business, Clinton, 3ond, llonroe, and Ilontgomery Coimties, I93U

The iuirahers above 3o ^^ene_i"al farms i Hy drar/ing a line far!u in tliat facto your locality.

the lines across the niddle of the ria.ge are the eivera^es for the ncluded in this i-eport for the factors naned at the top of the -page . acrosc each column at the numher measurin" the efficiency of your r, you can compe.re your efficiency v/ith thr.t of other farmers in

li Bushels ] 1! per acre

i-!of;s: Income per litter [

1

Cost per crop acre

0 r^ 0 ^ P, Pi w u 0 fl 0 C/2 ,Q 0

1

G-ross receipts

c^ t,H PI •H to U 400

,iate earned on investment Com

■p 0

' 0 ! P^ J g . 5 1 S 'o 000 w 0 0 -P 0 : S " rH t>jl -H 0 C^ Ul > m .H\ >^ r. ^^'Cl -P U iH 0 •H ;-i ^ 0 ci CD t 0 rH 0 ^■^a^-eB■

U C K d) 0 1; 0 0 ^ 'H tH 0 • 0 10 0 • 1— 1

u 0

■0% fV, P

1 •H CD U m 0 i.' -p 0 ,C f-i 0 0 >

m m U r:l > P. 0 W rH W C/2 0

0 u 0 Cli U

... .. .

[I fill? iUP 1

kl

I+l 123

..j... ... 83 U32 i 1S9

m\ .So

fr>m

1300

2600

23 ! ^100

1! !l 1 II 112.3 H 27

V. \ 3S

r ^ 113

1 i j 77 392 17U

1 I.U3 1.20

I4

1300

2300

1 1 ! 21 1 U60O

36c

1 li 1 !! ! '' 10. s ;i 2k

^■^

33 103

?9 ] 332 1 139

I ?.U^ i.&'c 10

1100

1 200c 19

Ul:)0

320

11 i! <i ' ii 1 9.3 ii21

29

32

, 1 1 cl .312

lUU

3.U3

2.l!0

iS

"00

1700

17

3b"iO

1 2Sj

1 ii ! Il 1 7.S 'i IS

23

1

i-;^

272

129

I i 1 I+.U3 13.00

22

700

lUoo

13

1 1 1 3l'-\) 2 1^0

1 1| ; 11 i! •; 1 6.26 ji 15.^1 21.0

26. u

73

1 1 1 1 h^ 1232 !llU

1 1 1 1 i 1 3.U3|3.^7

2g

^29

11U3

13.39

2371 196

1 \ ] '' i k.E :i 12 . 17 1 23

63

37

1- -1 1 1 ! 1 i i 1 192 i 99 i 6M\k.20

3U

300

, soo

f. 11 ! 2100

1 3£o

11 |! 3.^ •' 9

1 i 13 20

^3

20

1 ! 1 1 ! 1 132 s^ 1 7.U3 iU.sc

i^O

i 1 I i'"oi 300

1 1 9 1 iSoo

1 i 120

,1 i.s ' 6

^ J 17 _

1 1'3 j 21 I112

' 1 ■ ' 1 1 69 1 3.U3 3.^10 1 Ub i-lCO

1 1 I 20c

7

i 1100 30

; 1 1! •-^ ■ - -> !lU

1 I 33 i 11

1 72 1 3U ; 9.^^,6.00

r 1^2 -300

-100

c

bOO k-O

! 1 i 1 1-1.2 1 0

1 1 ! 11

j 2^^ 1 ~

32

1 ' 1 ' 1 j i i ■ 3P I10.U3 t6.fiO! 3S

-300

r i 1 1 -^400 1 3

1 OP

0

12

-14-

?actors Helping to Aii'lyze tlie Jam Business on 35 Dai rv Tarns in Clinton, Bond, Uonroe, and Kontgonery Counties, 193^'-

	Your farr-	Average of 35 farms	12 ...est	12 least
Itens	profitable farms	profitable farms
		205.2 S3. 96 U2.7 $ 12.3s 7.39 U.S9 hz so	108.1; 85.9 36.7 $ 16.28 7.97 8.31 22	221 2
Percent of land area tillatle- - - - _		sU.i
Percent of tillaole land in hay ajid		50.1
2-ross receiTDts oer acre- -------		4 8.70
Cotal expenses per acre- ------- ^TpI" Tssr*^ t Til" c tv^t* ppi^— — —		6.51
	1.S9
Value of land x>er acre --------		Us
Total investment per acre- ------		80
_ .
A3 1*5 3 in 3o"n— — — — — — — — — — — — — Oats TTheat ---_ Hay ___ Tillable pasture- ------ Crop yields — Com, "bu. per acre- - - - Oats, "bu. per acre- - - - oheat, bu. per acre - - -		20.7 22.9 3^.7 31.5 U2.0 IS.l is.U 22.3	2).. 6 25.3 3S.5 26.7 35. g 18.1 21.1 23. U	IS. 5
	19-7
,	29.8
	3U.5
	58.7
	17.7
	12.8
	22.5
Val-J2 of feed fed to productive l.S. - Returns per $10C of feed fed to xroductivo livestock- --------		1 30U lis 113 ISU 6.5 ss 6U 13. c 5-35 7. Us	1 U12 137 129 179 6.7 92 75 13.6 6.29 9.7s	1 20S
	96
Hetums per §100 invested in: Cattle		S3
Prml'fT*'r _ „		157
Pigs Treajied per litter -------- Income per litter fe.rrowed ------ Dairy sales rier dairy cow- - _ iTumber of dairy cows __-_-----		6.1
	71
	55
	13.6
		5-13
		5.2U
;!cr. labor cost per crop acre ----- Machinery cost Dcr crop acre ----- Pc7,'cr and nach. cost per crop A. - - - Jarms with tractor ---------- Yalue of feed fed to horses- ----- Lian labor cost per $100 gross incorae - Z?n^nses -per SlCG gross income - - - - ?rr~. irrorovenents cost per acre- - - -		5. £3 1-1^ 3.72 225 2S 60 .SO 1 291 3£6 6.23f^= 2 3IK)	6.00 1.91 U.05 5S^ 30S 25 Ug .77 1 733 599 10. lo^ 3 231	>S7 1.63
	3.61
	25^
	291
	37
	75
Zjxess of sales over cash expenses - -		933
Increase in invpn'ho'r^T' — — — —		-35
P^te earned on investment- ------
	2.36^
C-ross receipts per farm- -------		1 92U

h2'-

-15-

Cliart for St-adyin,?: the Efficiencv of Various Parts of Your Business, Clinton, Bond, Monroe, and Montgomery CotmtieSi 193^

The nioinhers aho 35 daii^'- farms By drawing a li farm in that fa your locs.lity.

ve the lines across the middle of the page are the averages for the included in this report for the factors named at the top of the page, ne across each colwnn at the ntunher measurin:"^ the efficiency of your ctor, you can compare your efficiency with that of other farmers in

It

Bushels

Cost per

G-ross

per

acre

;-!

crop acre

0 0 J 1

recea

pts

t^

0) Vf

•&3-

-p

■H

<D

&

S 'd

ft

CD -P

0-j

fc

s

a

6

0

0 (D

Td

Ph Ph

0)

1j CD

xi

0

m 0

0 +J

CD CD

■H

Pi

m

ci

fl-'> i-1

0 u

(D

S w

E 0)

•P CD

-H

fn ri

l+H

ri +^

'-H

ri 0

rH >5

•H (D

0 Vl

t ^

m u

;>»

(D CD

1

U m

0

1-1 .4J

CT) 5h

>

0

0 (D

CD f-1

> ft

CD

i^

frt 0

-P

W -H

>, C

ri tH

CC CD

0 u

02 0

0 X

f-l

5^

•m

0 >

u

•H

ni

f-l -H

•H 0

s

Cj -P

(D

CJ

d

fU

■p

CO

•• f-H

;:>.T:i

-P

u

fl -H

U W

Q) .c;

en

oJ

<+i

ill

0) -rl

g

cti

rO m

W

u

r-H 0

• 0

0

d) ^

0 CO

U <D

Q) .t:i

F

-P

0

a &

iu) U

• H P

?S 0

m 0

r^

^ 0

'^ p

" fe

r-1 Cfl

^1

5-1

j-i

n3 fi

0

si

P 0

0 0

03 (U

0 iH

• rH

C^

0 ct3

OJ ^1

c f1

03 cd

a"

^"

0

W 0 13.7

0

fS

« 0

W Ph

0 P:

Ph -w-

i-q -to-

F-^

Ph B

h^ M

f-H -H

CQ 0

P^

Ph

^

33

37

23

13S

llU

33U

17 s

.bS

-rJ

3

lUoo

2S00

22

U300

353

! 12.2

30

314

21

12 s

10 1|-

30U

166

1.6s

.72

0

1200

2500

20

UlOO

323 1

10.7

27

31

19

lis

9U

27U

I5U

2.6s

I.U7

13

1000

2200

IS

3700

203

9.2

2)4

2S

17

108

sh

2UU

IU2

3.6s

2.22

IS

300

1900

16

3300

269

7.7

j 21

25

15

9S

7U

21U

130

U.6S

2.97

23

6co

1600

Ik

2900

23'^

6.23

IS.l

22.3

13

SS

bU

ISU

lis

5.6s

3.72

2S

3S6

1291

12.38

1 1 2 f^~kOl 203

'4.7

1 1 15

19

11

7S

5U

irU

106

6.6s

U.U7

33

200

1000

10

1 2 100 1 179

3.2

12

16

9

6S

1+u

12U

1 1 1 ! 9U

7.6s

5.22

3S

i 1 °

700

g

1700

1^9

1.7

i 9

13

7

f^S

V4

qU

1 1 i 82

1 s.6s

=^.'i7

1 U3

1 1 1 -200

Uco

6

13:"-0

113

.2

6

I 10

'5

ll.g

2);

Gk

1 1 i 70

1 i 9.6s

6.72

hS

1 i -400

100

h

900 83

-1.3

3

i 1 i 7

3

3S

t lU

3^

! 1 i <5S

10.60

i l.h-7

33

i 1 i -6C0 1-200

1 1 30c' 3'^

-iD-

Inilue7ice of AAA Progcraras on Cropping Systems and Fam Incomes

The farm-accoTint records in Illinois v;ere i-.il'l-j.enced iDotli directly and indirectly t^' the corn-hog and wheat adjijstuient programs. A large per- centrge of accounting far .is was under one or hoth contra.cts in 193'''- T^'^® acreiiges of corn and wheat on these farms were, therefore, less than norriial. This should have resulted in lower operating costs. Corn-hog "benefit pay- ;?.ents for the entire 193'-+ progran T/ill total ahout ko million dollars for the state, while wheat benefit payments Y/ill be about 2.U million dollars.

The benefit pa-/Tjents for accouiiting farus are indic?,ted in the following ta,ble, which shows the average payment for those farms receiving ■"layrnents, and incl-odes only those pa;/Taents received "by the cooperator before the 195^ boolrs v;ere closed. In some cases only the first corn-hog checl: is included, while in other cases the second check had been received. The second pa^TMents not received, and thje third ■pa;;.Tnents will be entered in the 193? hook.

AAA Benefit PajTnents Received on 73 Accounting Fnrras in Clinton, Bond, Lionroe, and Montgomery Counties for 193^

Corn wncat h.ogs

Average

hu-nber Amouiit Iromoor iicioiint iamoer Amo^jnt .. -.^

r. r. „ 01 all

of TDer of Tjcr 01 "oer ^ i'

^ ^ ' „ y „ ^- payment si

faiTis farm i arras fsrm larms faiin

1/3 most profitable farms IH $3[; 20 $163 1? $73 - $220

1/3 least -nrofi table farms 22 57 I7 I3I4 21 S5 2lU

All accc^jnting farms oO 5U ^5 lljo 56 71 205

1/ Total benefit pajTnents reported by acco"anting farms ijnder contra.ct for 193*^ dividod by total number of acco'onting farms.

On many fari:is the cash received from benefit pajTaents will more than pay for the year's taxes. As an a.verage for all accounting farms, the payments actually received v/ere $oU more tiisji sufficient to pay the 193^ taxes.

It is interesting to note the use made of the contracted acres, on the accounting farms. The average farm had I6.U contracted acres v/ hi ch were used as follows: 5*2 idle; 2.U red clover; H.l sweet clover; 1.9 soybeans; 1.6 alfalfa; and 1.2 acres were in other crops. These data indictite that most farmers inade good use of their contracted acres from the sta.ndpoint of soil improvement, as a large part of them were in leguncs. TThen the Govern- ment restrictions on the use of crops grown on contracted acres were removed, they wore on many farms the most profitable crops a.s they frjmished hay and pasture where badly needed in drouth arenas. The legumes had the f-crther ad- vrjitage of being immune to attack from, chinch btigs.

Farm earnings were influenced indirectly by the AAA program.s in tliat the reduction in production increased trxs price of the cor^moditios in- volved. The drouth was a more important factor in 1 educing r)roduction than the adJiTStm.ent programs, yet if it had not been for the corn-sealing progran there would liave been but little com in the hands of farmers at; the tim.e the major uirce advance became effective.

-17-

U25

Variation in ilarnings Over Tive-Year Period

A comparison of i^ro duct ion, income, and expenditures on the ac- coujiting farns in Clinton, Bond, Monroe, and Montgoinery Coinities for the last five years is very interesting 'because of the violent chan-^es in price level. 193^^ "'^s the second year of very low crop yields, yet total receipts per fanii were higher than in any other year in the last five, and v/ere 32 percent of the 1929 grons receipts. Operating costs per acre wore lov?or tha.n in any year of the five eijccept 1933- -lius profits vrerc the hest the county had experienced since 192S.

Earnings in 1935> 3S usual, will depend upon individua.l efficiency, weather and prices. A normal year will mean larger yields of ?ra.in a,nd prohahly lower prices.

Comparison of Earnings and Investments on all Accou:iting Eorms in Clinton, Bond, Monroe, and Montgomery Counties for 1930-^93^

Iteiris

I'um'ber of fanas -------

Average size of farms, acrcs-

1930i/^

Average rate earned, to pay for

manageuont, risk and capital - - - Avcv:.- .,-.?x; lahor and management wags -

Jross income per acre ------- -

Operating cost per acre ------

'verage value of land per acre- Jooal investment per acre - - -

.n/ostinent per farm in:

Total livestock- - _ _ - -

Cattle

Hogs -----------

Poultr;/-- ---------

36 173

1 . c- ,0

$-1+7

I93li'

1/

31 170

$-U£

0.25J

ik.Gk 12. ^U

67

lib

2 252

287

9.76

G-Toss income per farm -_---__ 2 ^^3

I

Income per fara from: j

Crops- ------------I

Miscellaneous income ----- 9I

Total livestock ,2 khS

Cattle 1 137

Dairy sales- -__-____- |i ^Qi-'

Fotiltry-

Average yield of corn in hu.- - - _j Average yield of wheat in "bu. - - - 1

Uq6

18 21

6U

103

1 s63

1 o?M

1I+2

271

~\ "^ ry r/

331

95 1 2S1

3G

734 16 1+ 325

35 21

1932 1

30

165

$-1 OO^l-

5.91 9.17

62

lOU

1933s

n

1 6^

902 10 S

qg2

22

67 ??57

5-1-3 109 2b2

40 22

3^ iqU

i.5< $-239

F_.J2 7.3s

-^1

1 607 0^2 1% 196

1 6^2

kli3 205

105 5U0 320 206

1

5

1/ r.ecords from Clinton County incltided fo^- 1930-

2/ Accords from Clinton, Bond, and Washington Oornities incluj.ad 10 1

73

200

6^2UfJ $619

12,72 7.52

53

81

1 310 619

153 130

2 5I+9

1 ISl r

1 2on 127 ^02

^^b7

17

933

AiniUAi PIEM BUSIffiSSS REPORT 0!T THIRTY-EIGJ-JT Fj\RI'.lS

m YFi'iimmA county, Illinois, 193U.

p. E. Johnston, T. R. Hedges, and J. B. Andrews'

The fam earnings of 33 accoimt-keeping farmers in Effingham County showed an increase in 193^ over those of 1933- This is the second consecutive year of improvement in the husiness of these fa,rms. The three years previous to 1933 showed very low returns.

These 38 accounts show for 193^ ^-^ average net income of $1,029 per farm, as compared with an average of $33^ in 1933 3-^d an average net loss of $UU2 in 1932- The average cash income in 193^ ^£^s $l,&ol per farm, the cash tusiness expenditures $900 per faim, leaving a cash balance of $9^1 to meet interest paj-Tnents and family living expenses. (Those who keep home ac- couiit hooks use the latter figure to represent the cash contrihution of the fairn to the "realized family income".) Besides the cash income there was an inventory increase of $666 per farm due to the rise in the prices of farra products. This increase, added to the cash halance, resulted in an a.verage excess of receipts over expenses of $1,627 per farm. The inventory increase was a much smaller part of the total farm income in 193^'- than in 1933-

These data must not he considered representative of average farm conditions, for they were secu-red from farms which are larger than average, and were managed hy farmers who are more efficient tii^n the average of all farmers in the county.

For the state as a whole, farm earnings were hotter in 193^ than in 1933 i^ spite of the fact tliat com and oat yields were very low due to the drouth and to chinch hug damage. In the western and southwestern parts of the state the drouth caused an aLuost total failure of hoth corn and oats, which accoujits for farm en.rnings heing lower there than in other parts of the sta.te.

The corn crop was hest in the southeastern part of the state and was fair in the northwestern section. ITheat yields were parti ciiJLarly good in the south and central portions of the state. Soybean yields were very good throughout the state, and there T/as a larger than normal acreage in Illinois in 193^' This state produced over half of the nation's 193^ crop of soybeans .

Chinch hug dsriage extended over most of the state last year hut was much more severe in some sections than in others, and was much T/orse on some farms than on other farms in the same community. Conditions affecting crop yields were very spotted; which accounts in part for the wide variation in farm earnings from one section of the state to another and the wider variations than us'oal from one farra to another.

*IIr. V. D. Evans, farm adviser in Effingham County, cooperated in supervising and collecting the records on v/hich this report is hased.

-2-

Industries other tlaan agriculture again sliov/ed improved earnings over the previous year. A group of SkO industrial corporations reported "by ■ a nationally knovm hank showed average earnings of 'j.O percent on their in- vested capital in 193'*'j ^-s compared with 3*^ percent for the same corporations in 1933* -^ similar group had a loss of one-tenth of one percent in 193^ and average earnings of 3*3 pei'cent in 1931*

In coraparin.'," the average earnings of corporations with the rate earned on investment on accovmting farms, it is well to keep in mind that in corporation accounting, charges are made for management, while in the farm accounts no comparahle deduction has heen made. On the other hand the farmer and liis family receive food, fuel, and other items of living from the faim for which the farm has received no credit in the records used in this report. For the average centr?.l Illinois farm family, consisting of five persons, the value of the food and fuel furnished "by the farm was ahout $250 in 193'^'-i when estimated on the "basis of the wholesale price for farm products.

Variations in Farm Incomes

There was a much wider range in farm earnings on the accounting farms in 193^ than in 1933- This was true for the farms included in this report, and was also true when the average earnings of farms in one section of the state are comp£.red with the ea,rnings of farms in other areas.

The extremely wide range in earnings was due to a comoination of physical and economic factors. The average yields of wheat and soybeans were much better, compared with the five-year average, than the average yields of corn a.nd oats. This variation favored those sections which had larger acreages of the higher yielding crops in 193^- There was also a wide range in average corn yields from one section of the state to anothei; as well as "between individual farms in the same area. The price of grains v;as high in 193^+ 2.S compared with prices of livestock and livestock products. Farms where grain sales constitute a large part of the fana income thus had an advantage. The rapid increase in the prices of farm prodticts, particularly grains, favored those farms which had large stocks of salable products on hand at the "beginning of the year. Many farmers who inventoried the corn on hand at the "beginning of 193^ ^'^ '^ cents a bushel, later sold this corn for SO cents.

In this group of 3^ accounting farms the most successful third shows an average net income of $18b0, the average net income of the least successful third of the farms was only $27^- Figured on a cash basis the more successful farms Iiad on the average I3I percent more cash income left to meet interest payments and family living expenses then did the least successful farms. In 1933 "^^.e comparable net incomes for the tv/o groups was $777 ^^^ $-126 respectively.

-3-

Investments, Receipts, Expenses and Earnings Eif in/j'hi-xi County Eai^.s in 193^

on

y

Items

CAPITAL liMVESTLSiTTS

Land -------

PaiTn improvements- Livestock total- - Horses - - - - - Cattle _ _ -

Sheet)-

Poiiltry- -------

Machinery and equipment- Peed and grain -----

Total capital invest. :ent

YoTir

f aim

Averacje of 52 farms

13 most profitalDle

farms

7 599 1 893 1 291

327 70s 92 32 132 930 939

$12652

7 756 1 996 1 '510

393

105 29

135

s6U 1 199

$13 32'5

13 least urofitalDle

farms

7.59^ 1 "iQh 1 121

3C3 592

97 16

113

902

755 $12 176

BECEIPTS Airo 1ST II<rCEEASES Livestock total- - - -

Horses ----------

Cattle

Hogs (incltiding AAA pa;-ments) Sheep- -__------_

Po-oltry- ---------

Egg sales- --------

Dairy sales- -------

Feed and grains (inclndinfi AAA payments) ---------

Lahor off farm -------

Miscellaneous receipts - - - Total receipts & net increases

1 221

31 209

256

Ui 101 ISb

397

S63

7S 2

$2 169

1 53s

U2 316 335

112 205

1

3C))+

90

1

$3 023

S7S

7 112

195 2

95 l^lO

5U1I

0

$1 U90

EXPENSES AI^ID IffiT DECREASES

Farm improvements- - - -

Horses ---------

Miscel!|.aneous livestock decreases

Machinery and equipment- - - Feed and grain -------

Livestock expense- -----

Crop expense --------

Hired lahor- --------

Taxes- -----------

Miscellaneous expenses - - -

Total exi^enses &. net decreases

llU

136

19 23

57

105

2S § ^U2

110

130

21 S5

23

122 27

582

132

150

17 ■77 2U

97 32

$ 3U1

ZECSIPTS LESS EXPEiTSEo-

Total impaid labor- -------

11 Operator's lahor ------

! Far::ily labor --------

'Ifet income from investment and management- ----------

Pj^TE EAHIISD on Iin'EST'.ffilTT

P.eturn to capital and operator's labor a.nd management- - - - - _

:'j of capital invested- - - - - -

--^OS -AI3 I.LillTAGEI.IElJT WAGE

$1 627

59s U07 191

1 029

0.13*5

1 U36 632

coU

$2 iiUi

521 U20 161

1 260

13.96^

2 220

566 $1 biU

$__9M

675 329

226

27U

S

663

609

_31

Tiie follov/ing table shows the nurater of farms having certain net incomes per acre. There was a marked difference hetvveen the most successful and the least successful farms.

Average net in- Kumher of Average net in- Hiaaher of

come "16 r acre farms come per acre farms

$13 2 $3 7

11 5 1 5

9 1 -1 1

7 3 -3 1

5 13

A further study of the farm "businesses made by com"oaring the in- vestments, receipts, ?jid expenses of the group of farms with the highest net incomes with those hp.ving the lowest should throw some light on the question of v/hy some fanners are more successful than others. This comparison is shown in the table on pa,ge 3 •

The total investment on the most profitable farms averaged $13,325* as compared with a total investment of $12,176 on the least profitable farms. The tv/o grov.ps had about the same amount invested in land and improvements but the most pz-ofitable faiTOS had a larger investment in productive livestock, and feed and grain. A difference of $355 ^^ "the sale a.nd inventory of feed and grain, accounts for much of tlie difference in income between the two groups. The total expense, including the charge for family labor; was $1,163 on the most profitable farnis, as compared with $l,2l6 on the least profitable group .

Changes in Inventories and Inventory Values

The year 193^ "^^'^^ similar to 1933 i^i that the prices of farm products continued to advance, causing further increases in inventory values. Ov;ing to the poor crop yields in 193^ there were fewer bushels of grain on hand to inventory at the end of the year than at the beginning. The value of the smaller amount of grain, however, was greater than for the larger amount on hand at the beginning of the year.

Sushels of Corn Inventoried

~ Jan. 1, 193^ Dec. 31. 193^4

Average of all farms 693 59^

Average of I3 most successful farms . . 1 062 877

Average of I3 least successful farms. . 392 356

Your farm

The most profitable farms had a much larger inventory of corn both at the beginning and end of the year; which a,ccounts in part for the difference in farm earnings.

$136	4
558
c
J
-37
$666

-5-

The average inventor^- increase for the acco'anting fanas in Effin^t^hara County was $666 in 153^>as compared v/ith $lUo in 1933 and an in- ventory loss of $372 a farrj in 1932. There were increases of $136 in total livestock, $55^ in feed and grain, and $9 in machinery, while improvements showed a decrease- of $37* Such an increase in inventory as .that for machin- ery results from the value of new replacements during the year "being in ex- cess of depreciation costs. This increase is of consideraole interest for it is the first time that such an increeise in machinery inventories has occurred since faiin earnings hegan to decline so drastically with the general depres- sion.

Inventory Changes for 193^

Befiinning Closing Inventory Inventory

Items inventory inventory changes changes

I-I-3H 12-31-3^ 19^U your farm

Total livestock $1 29I $1 U27

Peed and grains 939 1 U97

Machinery 33O 939

Improvements (except residence) 1 893 1 556

Total ^"5 5 053 ^5 719

Gome Adjust-ients on Effingham Coimty Farms Since 1929

Fan'ners have "been forced to mal^e adjustments in their cash ex- penditures as the result of changes in their cash incomes. From 1929 thro'ogh 193^ farm operating costs declined each year* Total operating expenses were 3 cents an acre less in 193^ tlian in 1933 > T'-'hile cash operating expenses were $S00 a farm in 193^ as compared with $72U in 1933* The largest increase in expenditujres over tlie previous year was for machinery and supplies for ma- chinery. Indications "ooint to an even greater expansion of spending for these items in 1935 since fanners have postponed machinery replacements during the four-year period since 1929«

Cash Income and E::penses on Accounting Farms in Effingham County 1929 and 1934

Your Average cash Your Average c-ash

Items farm exnense ner farm farm income per fan.i

^ 19iU "I93U 1929 193^ 19^U 1929

Livestock $ $ lOU $ I5I $ Si 1S9 $1 575

Feed and grains 1C6 3S2 ^96 UU2

Machinery 2U1 32I 96 122

Improvements 77 13S I-

Laoor 57 119 ' 7S 75

Miscellaneous 2g 22 2 \

Livestock expense 19 9

Crop expense 83 99

Taxes 105 125

Total $ $ 900 $1 366 $ $1 S6l $

3 222

Excess of cash sales over exr)enses $ $ 56l $ S56

Increase in inventory o6d 53^

Income to lahor and capital (Receipts less exiaenses) 1 S27 1 336

-6-

The cumulative effect of several years of low agricultural -prices on the demand for naniofactured goods can readily "be ascertained "by a com- parison of cash farm expenditures in I93U with those in I929, Although average cash income in I93U was SU percent of that in 1929. cash expenditures were only 66 percent as large. In 193^ livestock purchases were 69 percent, and feed and grain purchases U9 percent as large as in 1929- Ij^ 193^ these farms paid out 75 percent as much for machinery,- and SU percent as much for crop expense as in 1929 > vvhile taxes were reduced to SU percent of the 1929 level.

Coranarison of Farms 17ith Hi^h and Low Earnings

After deducting total expenses and net decreases, from income and net increa.ses there remained a net increase of $S.gO per acre for the most profitable farms, as compared with $1.2U per acre for the less profitahle group. For the first grout) this was a return of 13*96 percent on the capital invested in the hiisiness, and for the second group 2.25 percent. The reasons for this difference may he obtained from a study of the data on pages 3 ^^cL S.

The size of the aost profitable farras was 211 acres, as compared with 222 for the least profitable. However, the most profitable farras had 12 percent more tillable land and I5 more crop acres per farui tiian tlie least profitable farms. Tlie most profitable farms carried la.rger inventories in feed and grain, and productive livestock on T;hich to mal:e a profit when prices advanced. The cropping system was practically the same for the two groups. There was, however, considerable difference in the crop yields. The most profitable farms grew 10. 6 bushels more com, 5*^ bushels :aore oats and 3 bushels more wheat per acre than did the least profitable frrms. The larger crop production and the increase in grain prices accoiuited for the fact tliat the closing inventory of feed and grain was $906 per farm higher than the beginning inventory while on the less profitable farms it was only $376 higher.

The total investment in productive livestock was $^.oO per acre on the most profitable farms as compared with $3 '65 on the least profitable farms. The receipts from productive livestock v/ere $7*07 ■''-nd $3 '33 P°r -^cre respectively. The difference in livestock efficiency is further illustrated by the fact tha.t the returns per $100 of feed fed were $lU6 for the most profitable farras as compared with $105 for 'tl'^e less profitable farms.

The total operating expenses of the two groups of farms showed but little difference. The total operating e:Mpense per acre for the most profitable group was $5*50 a-S compared with $5.US for the least profitable group. The cost of power and mr-chinery v,ras Ug cents per crop acre lower while man labor costs were $1.02 per crop acre lower, for the most profitable farms .

lf32

lixfluence of AAA Programs on. Crop':3in..r; Systems and ?arm Incomes

The fam-accoimt records in Illinois -were influenced both directly and indirectly "by the corn-hog and v;heat adjustment programs. A larger percentage of accoimting farms were under one or hoth contracts in 193^* The acreages of corn and wheat on these farms were therefore less than normal. Tliis should have resulted in lower operating costs. Corn-hog "benefit pay- ments for the entire 193^ program will total about UC' million dollars for the state, while wheat benefit payments will be about 2.U million dollars.

The benefit payments for accounting farms a.re indicated in the following table, which shows the average pa;/ment for those farms receiving pa;^Tnents, and includes only those payments received by the cooperator before the 193'+ books were closed. In some cases only the first corn-hog checl: is included, while in other cases the second checl: had been received. The second payments not received and the third payments will be entered in the 1935 ^ook.

AAA. Benefit Payments Received in 193^

Corn Tneat I-ogs ,

Average

Number Araount iromber Amount IJximber AmoLmt „ ,,

r. o'L aii

of per of -oer of fer , i/

r, -. ' ^ " "oavmentsi'

ia.rms farm larms faim farms fa,n.i

1/3 most profitable farms 12 $62 6 $52 11 $US f\122

1/3 least profitable farms 9 5S 9 U9 g kj, 100

All accounting farms 30 52 23 kc 26 Uj 101

1_/ Total benefit payments reported by accounting fa,nns under contract for 153^+ divided by total number of accoimting farr.is.

On many farms the cash received from benefit payments will more tlian pay the year's taxes. As an average of all accounting farms, the pa.y- m_ents actually received vrere sufficient to pay 96 percent of the 193^ ta.?:es.

It is interesting to note the use made of the contracted acres on the accotmting fan:is. On the most profita.ble farms 5-7 ?icres were idle, i-.^ were in crops. On the least profitable farms 12.2 acres were idle and 5*5 were in crops. Tnen the Government restrictions on the use of crops grown on contracted acres were removed, they vrere on many faiTus the most profitable crops as they fui'nished hay and pasture where ba,dly needed in drouth area.s.

Farm earnings were influenced indirectly by the AAA programs in that the reduction in production increased the price of the commodities involved. Tlie drouth was a more important factor in reducing production tlian the adjustment programs, yet if it liad not been for the corn-sealing program there would liave been but little corn in the hands of farmers at the time the major price advance became effective.

-3-

Factors Helping to Analyze the Fam Business on 33 Effingham County Fai-ms in 193'^

Items	j Your farm	Average of 33 farms	13 most profitable farms	13 least profitable farms
Sine of farms — acres -------		210.8 50.1 10. 2« ^ .hi 36 60	211. U 86. U hi IU.30 5.50 8.80 37 63	221.7
Percent of land area tillable- - -		73-6
Percent of tillable land in liay and T3ast\ire- -------_-__-		Ug.9
Gross receipts vex acre- -----		6.72
Total expenses per acre- -----		5. Us
Net receipts per acre- ------ Value of land "oer acre ----- -		1.2U 3^
Total investment ner acre- - - - -		55
Acres in Corn- __-----_--		32.3 19.5 17.7 10.6 37-7 51 25. U 7-5 17.2	3U.9 20. U 20.3 16. U 37-1 Us. 7 29.7 11 IS. 5	30.5
Cats- --------		19. U
Wheat -__-		16. S
Soybeans- --------		6.2
Hay		36.2
Tillable nasture- - - - -		U3.5
Cror yields — Com, bu. ner acre- -		19.1
Oats, bu. -oer acre- -		5.6
'I'flaeat, bu. -ner acre -		15.5
Value of feed fed to productive L.S.		910 131 S3 219 6.U 90 U.76 5.65	1 025 ikS 92 233 c c llU R.60 7.07	831
Returns per $1C0 of feed fed to productive livestock- ------		105
Returns ner $100 invested in: Cattle- -		73
Poultry - - _		21U
Pigs vveaned ner litter ------		6.5
Income iDer litter farrowed - - - -		72
Dairy sales per dairy cow- - - - -		Uo
Investment in productive L.S. per A.		3.65
		3.93
Man labor cost ner crop acre - - -		U.90 1.6s 2.17 52fb 169 2S .5U 961 666 8. 13 2 169	U.61 •97 1.93 62fo 171 20 38 .52 1 3hk 1 097 13.96 3 023	5.63
Machinery cost ner crop acre - - -		1.30
Power and mach. cost "oer cron A. -		2.U1
Farms with tractor --------		U6^
Value of feed fed to horses- - - -		139
Man labor cost per $100 gross		U5
Expenses per $100 gross income - -		82
Farm imiDrovements cost ner acre- -		.62
Ihccess of sales over cash expenses		5S1
Increase in inventory- - - - -		36s
Rate earned on investment- - - - -		2.25
Gross receints oer farm- -----		1 U90

-s-

U31+

Chart for Studying the t^fiiciency of Various Parts of Your Business,

Effinghaj-a County, I93U

The ntimbers above the lines across the middle of the page are the averages for the '}S farms included in this report for the factors named at the top of the page. 3y drawing a line across each coliimn at the number measuring the efficiency of your farm in that factor, you can compare your efficiency with that of other farmers in

1 -p U CO c > p:'; 0	Bushels ■oer acre	0 p: 0 -P ■r\ •• 1-1 CO 0 0 \y-\ p.	Dairy sales per dairy cow	Poxiltry income per $100 invested	L.S. income per $100 of feed fed	Cost crop u 0	per acre P° 1	Labor cost per $100 gross receipts	Increase in inventory	Sales over cash e:q)enses	Gross receipts	■ri CO Q) U 0 -a;
c	CO -p 6	-p 1	0 P^
18.13	U3	22	27	2lt0	6s	U69	231				2166	i960	17. SO	377c	361
I 16.13	Ul	19	23	210	6U	U19	211	.90	•17		ISbb	1760	16.30	3U7C	1 331
11^.13	37	16	■ 23	ISO	60	369	191	1.9c	.67		1306	1360	1U.80	3170	301
;i2.i'^	33	13	21	130	-)0	319	171	2.90	1.17	c	1266	1360	13.30	2770	271
fio.13	29	10	19	120	32	269	131	3.90	I.S7	IS	966	1160	11. SO	2U7O	2U1
g.13	2R.U	7.^	17.2	90	Us	219	131	U.90	2.17	2S	566	961	10.29	2169	211
6.13	21	U	13	60	U1+	169	111	R.90	2.S7	3S	366	760	8 . SO	1S70	131
1 :U.13	17	1	13		1|0	119	91	6.90	3.17	U?	r r Db	3o0	7.30	1^70	If^l
2.13	13		11	0	36	69	71	7.90	3.67	3S	-23U	360	3 • SO	1270	121
.13	0		0 "J		32	10	nl	? . qc	I+.I7	Go	-(^34	16c	p^.30	970	0]_
-2.13	1 ' 3		1		23		31	9,90	I+.67	73	-S3U	-Uo	3. SO	■ 570	61

-10-

Inflnence of Price Cl'ianges on Farm Zaraings

Parrn prices in 193^ advanced more rapidly than did the prices of commodities which fanners ooii,sht. Fnn.iers of the United States as a .^roup could e:cch-ange their farm prodiicts in 193^ lo^ 7^ percent as many goods as for the period 190S-191^j while in 1933 they received only ok percent, and 1932 only 61 percent as much in exchange for wliat they Imd to sell as in the prewar period. In the month 01 February, 1935 » this index of purchasing pov.'er ha.d increased to SJ percent of prev/ar, the index 01 fam prices having risen to 111 as compared with en index of I27 for commodities which fanners "btiy. ^iien the line representing farm prices drops "below the line represent- ing prices paid hy fa-imers, fa.rm earnings are very low, hut v.hen these lines come close together fa,rm earnings increase. (See following graph.)

Index of Prices

Rate Famed

D

= Farm j^i^ces in U. 3. Aug. lyO^-July 1914 = IC'C

= Prices paid oy fa.imers. Aug. 1909-July I91U = IOC

= Rate earned on investment, accounting farms, central Illinois

J i_

J L.

-I L.

125b

105? si

z'i

Ofo

-2i

1917 'lo 'I9 '20 'cil ';:2 '23 '2U '25 '2£ '27 '28 '2S' '30 '3I '32 '33 '31+

hy.

-11-

Sincp the price of sone fara products advanced much more rapidly dtiring 193^ tlian other products, it is evident that some farms v/ould "benefit more than others, depending upon the kind and qf-antity of products sold. G-rain prices advanced much more rapidly than livestock prices; which result- ed in a very had price ratio for lanaers who 'b^xy large q^txantities of feedt ihe average Illinois farm price of corn v/as Ul cents a, bushel in Janitary, 193^1-; it advanced steadily iHitil the end of the year ;vhen it wa,s ?£" cents a hushel. Other grains made marlied advance although not so great an advance as corn. The price of hogs flucta^,ted from a low of $3*20 a hundred in iiay to a high of $6.30 in September. The low point in the fall came in iJovember when the average price was $5.1C. The price hr.s advanced quite rapidly since I'Tovember, the average price being $7*50 for February, 1935' Beef cattle were worth $H.10 a hundred in January, 193^^ ^'^^ advanced each month nntil Sentember, v/hen the price was $5 '90. They dropped to $9.2C in December but increased again to $7.U0 for February, 1935 •

The year 193^ ^^t a record for the reduction in the numbers of livestock. The percentage decreasfs by species were as fcllov/s: horses, 1.1 percent; mule's, ? .C percent; all cattle, 11.2 pprcent; she^p, k.7 percent; hogs, 35*3 percent. IThen all species are combined on the basis of their ca,pacity to consume feed, the reduction was I3 percent. This reduction will greatly reduce the demand for feeds produced in 1935 •

The rela.tive ch^ange in prices of important cora.iodities may be noted in the follov.dng graph, \;hich shows the average Illinois farm prices by m.onths as a percentage of the a.verage prices for the period 1921-1929-

Percent

Price Indices, 193^

I92I-I929 - 100)

Jan. Feb. Mar. Apr. May June July Aug. Seat. Oct. Nov. Dec.

All commodities index represents the wholesale price of a large nuiiber of commodities for the United States, as computed by Luj-eau cf Labor Statistics.

Grain and livcstoc;: indices represent average monthly fa::r. prices in Illinois,

-12-

Variation in Sarnings Over Five-Year Period

A comparison of production, income, and expenditures on the accoimt- ing faii.is in Effingham County for the last five years is very interesting ■becaiise of the violent changes in price level. 193^ ^"'^" 'the second year of very lo\7 crop yields, yet total receipts oer farm were higher than in any other year in the last five. Operating costs per acre were lower than in any year of the five. Thus profits were the best the coimty had experienced since 192S.

Earnings in 1935 ^-s usual will depend upon individur.l efficiency, weather and prices. A normal year will mean larger yields of grain and probably lower prices.

Comparison of Earnings and Investments on Accounting Farms in Effingham. Co^jnty for 1930-193^

Item.s

Kumber of farms ---------

Average size of farms, acres- - -

Average rate earned, to pay for

m.anagement, risk and capital - - Average labor and management v;age

Gross income per acre ------

Operating cost per acre -----

Average value of land per acre- - Total investment per acre - - - -

Investment per farm in:

Total livestocl:- ------

Cattle -----------

Hogs ------------

Poultry- ----------

Gross income per farm ------

Income per farm from:

Crops- -----------

Miscellaneous income - - - _ Total livestocl:- ------

Cattle

Dairy sales- --------

Hogs

Poultry- ----------

Average yield of corn in bu.- - - Average yield of wheat in bu. - -

1930

32

$-61

Mh

7-32

i

63

1 7U1

357 116

269 1 U06

62

Ug

1 296

lUl

Uic

U94

lU 13

1931

35 196

-o.i-;b

$-186

6.1s

6.21

67

1 506

819

107

211

1 210

21U 72

92U 82

330 132

363

3^

1932

3^ 199

•659

3.96 S.19

37

3U5

73^

96

183

726

U8 73s

95 252

123

260

3^ 13

1933

19U

.zi

$13

7.1s

5.UU 36

1 312

7^1

7H

167

1 39U

396 56 9U2 172 272 189

276

22 13

193^

211

8.13-:? $goU

IC.29 5.U1

36

60

1 291

76s

132

2 169

S68

2

1 221

209

397 256 101

25

IS

MKUAL FAPM 3USIL^SS E3P0RT ON EIGHTY- 'THESE PAK.IS IN JEFFERSON, EDWARDS, V/ABASH, JACKSON, IvIARION, FnlTE, SALINE, CRAWFORD, RICHLAiro, CLAY, WASHINGTON, WAYNE, AND JOHl^SON COUNTIES, ILLINOIS, I93U

P. E. Jolinston, J. B. Andrev/s, and E. L. Sauer*

The farm earnings of 23 account -keeping farmers in the atove counties showed an increase in 193^^ over those of 1933- This is the second consecutive year of improveraent in the "business of these farms. Tlie three years previous to 1933 showed very low returns.

These 23 accounts show for 193^ ^'^ average net income of $1,19^ per farm, as compared with an average of $353 i^ 1933» 9-^cl- ^.n average net loss of $Ul2 in 1932. The average cash income in 193^ was ^2,0'JG per farm, the cash "business expenditures $1,007 per farm, leaving a cash "balance of $1,071 to meet interest payments and family living expenses. (Those who keep home ac- count "books use the latter figure to represent the cash contri"bution of the farm to the "realized family income".) Besides the cash income, there was an inventory increase of $680 per farm due to the rise in the prices of farm products. This increase, added to the cash halance, resulted in an average excess of receipts over expenses of $1,751 P^r farm. The inventory increase was a larger part of the total farm income in 193^+ than in 1933*

These data must not "be considered representa,tive of average farm conditions, for they were secured from farms which arc larger than average, and which were mana,ged "by farmers who are more efficient tlian the average of all farmers in the county.

For the state as a whole, farm earnings were hetter in 193^ than in 1933> i^ spite of the fact that com and oat yields were very low due to the drouth and to chinch "bug damage. In the rre stern and southwestern parts of the state the drouth caused an almost total failure of "both corn and oats. This accounts for farm earnings "being lower there than in other parts of the state .

The corn crop was "best in the southeastern pa,rt of the state, and was fair in the northwestern section. YiTheat yields were particularly good in the south and central portions of the state. Soy'bean yields were very good throughout the state, and there was a larger tha.n normal acreage in Illinois in 193^- Tnis state produced over half of the nation's 193^ crop of soy"beans.

Chinch hug damage extended over most of the state last year, hut was much more severe in some sections than in others, and v;as much worse on some farms than on other farms in the same comnunity. Conditions affecting crop yields were vcrj'' spotted. This accoimts in part for the v/ide variation in fam earnings fi'om one section of the sta^te to another and the wider varia- tions than usiiiil from one farm to another.

*C. E. Twigg, W. D. Murphy, K. H. Lett, J. G. I.fcCall, P. J. Blackhurn, R. H. Clanahan, L. J. Fultz, H. Allison, G. L. Beatty, J. Q. Scott, L. R. Caldv/ell, E. S. Ai'.irine, and W. E. Gould, farm advisers in the a'oove Counties cooperated in supervising and collecting the records on which this report is "based.

-2-

Industries other than agriculture again showed improved earnings over the previous year. A group of 8kO industrial corporations reported by a nationally known bank showed average earnings of ^.0 percent on their in- vested capital in 193^» a-s compared with 3-^ percent for the same corporations in 1933- A similar groiip had a loss of one-tenth of one percent in 1932, and average earnings of 3.3 percent in 1931-

In comparing the average earnings of coirporations with the rate earned on investment on accounting farms, it is well to keep in mind that in corporation account in;!,-, charges are made for management, while in the farm accounts no comparable deduction has been made. On the other hand the fairaer and his family receive food, fuel, and other items of living from the faim for which the farm has received no credit in the records used in this report. For the average central Illinois farm family, consisting of five persons, the value of the food and fuel furnished by the farm was about $250 in I93U, wlien estimated on the basis of the wholesale price for farr.i prodticts.

Variations in Farm Incomes

There was a much wider range in farm earnings on the accounting farms in 193^ than in 1933- ^J^is was true for the farms included in this report, and it was also true when the average earnings of farms in one section of the state are compared with the earnings of farms in other areas.

The extremely wide range in earnings was due to a combination of physical and economic factors. The average yields of wheat and soybeans were much better, compared with the five-yea,r average, than the average yields of com and oats. This variation favored those sections which had larger acreages of the higher yielding crops in 193^* There was also a wide range in average com yields from one section of the state to another, as v/ell as between in- dividual farms in the same area. The price of grains was high in 193^ ^^ com- pared with prices of livestock and livestock products. Farms where grain sales constitute a large part of the farm income thus had an advantage. The rapid increase in the prices of farm products, particularly grains, favored those farms which had large stocks of salable products on hand at the beginning of the year. Many farmers who inventoried the com on hand at the beginning of 193^ at ^40 cents a bushel, later sold this com for SO cents.

The S3 account-keeping farms in this report were divided into the three following groups: 56 farms on the lower-valued larxd, 17 farms on the higher-valued land, and 10 dairy farms. The 56 farms on the lower-valued land were further divided to permit the usual comparative analysis between the most profitable farms and the least profitable farns. The group of 56 farms averaged ISU acres in size and had an average land value of ' $32 per acre. They received approximately one-half of their .jross income from feed and grains and one-half from livestock and livestock products. The group of 17 farms averaged 23U acres in size and had an average land value of $56 per acre. They received 65 percent of their gross income from feed and grains and 3^ percent from livestock and livestock products. The 10 dairy farms were selected on the basis of the number of dairy cows per fairn, and the pro- portion of the gross income received from dairy sales, the factors which usually indicate the relative importance and permanency of the dairy enter- prise on the farm. The 23 farms were divided into the above groups in order to give the account cooperators in Southern Illinois a better analysis of their farm business. Such a division permits the comparison of the individual farm business with the averages of farms of similar type and organization.

-3-

Investments, Receipts, Ejcpenses and Earnings on 56 Southern Illinois Er.rms on Lower -Valued Land in 193^

Items

Your farm

Ave rage 0 f 56 farms

19 most profitable .farms

19 least profita,ble farms

CAPITAL lUVESTMElTTS

Land -----------

Farm improvements- - - - -

Livestock total- - - - - -

Horses --__-_---

Cattle

Hogs ----------

Sheep- ---------

Poultry- --------

Machinery and equipment- - Peed and grains- -----

Total capital investment

ESCEIPTS AMD MET INCPJ Livestock total-

Horses -----------

Cattle ---- _--

Hogs (including AAA payments) Sheep- -----------

Poultry- ----------

Egg sales- ---------

Dairy sales- --------

Feed and grains (including AAA payments) ----------

Labor off farm --------

Miscellaneous receipts - - - -

Total receipts & net increases

1

5 970

1 532

901

313

3^40 110

Ui

97 631 7'^3

$9 7 S3

5 707

1 598 960

329 35s 125 hi 107 55U 867

$9 6 86

89^4

32

121 310 kl 78 180 132

S9U 60

u

$L

1 092

3S 179 39U

Us

80

231

122 1 259

79

2 $2 U32

U S51 1 272

2U3

291

Gk

51 82

665

US3

$8 002

613

27 kl

176

^3

63

123

lUo

U6i

57 8

^1 139

EXPENSES AND IIET DECEEASSS

Pann improvements- - - -

Horses ---------

Miscellaneous livestock decreases

Machinery and equipment- - - -

Peed and grains- -------

Livestock expense- ------

Crop expense ---------

Hired labor- ---------

Taxes- ------------

Miscellaneous expenses - - - -

Total expenses & net dGcrcascs$^

82

131

11 110

68

95 19

90

119

11

137

83

109 iq

$ S16

$ 568

71

lUs

11 79 31 70 19

$ U29

RECEIPTS LESS EXPENSES-

Total ■unpaid labor- -------

Operator's labor ------

Family labor --------

Net income from investment and management -----------

RATE EARNED Oil INVESTMSHT - - - -

Return to capital and operator's labor and management ------

5^ of capital invested- - - - - -

LABOR AKD liANAGEtffiNT WAGE

$1 336

5U6 386 160

790

8.08^

1 176 US9

$ 687

$1 86 U

510 382 128

1 35U

13.98/0

1 736

UsU

$ 710

60 R 376 229

105

1.3]

USl

I4OO

$ 81

■BIIHIHHIHimiUII Hint

HirHiTnifBUfwmimimmiimBi

ntmTftwtfwiT tum w iiimCTKBmMB»n^i*M*«

In the group of ^c farms on -.the lower- valued land, the most suc- cessful one-third shows an average net income of $1,35^> while the average net income of the least successful one-thii'd was only $105. The average net income on the I7 farms on the higher-valued land was $2,^76, and the average net income on the 10 daiiy farms was $1,277"

The following tahle, based upon all S3 accounting farms, chows the nxunher of farms having certain net incomes per acre. There was a raariced difference between the most successful and the least successful fa.rras.

Average net in- come per acre

$19

17

15

13

11

9

Kunher of farms

1

3 U k 7

Average net in- come per acre

$7

5

3

1

-1

-3

Nunher of farms

11

17

IS

8

7 1

A further stujdy of the farm businesses made by comparing the in- vestments, receipts, and exT)cnsos of the group of farms with the highest net incomes, v/ith those having the lowest, should throw some light on the question of why some farmers are more successful than others. This comparison is shown in the table on pages 3 s-^d. 5*

In the group of ^6 farms on the lower-valued land, the most profit- able farms averaged 1S6 acres each, the least profitable 1U6 acres. This difference in size accounts in part for the variation in the average invest- ment, receipts, and expenses in the two groups. The most profitable farms ha,d higher total receipts and not increases due to larger sales of feed and grains, and of livestock and livestock products. Althotigh the expenses per farm were higher on the most profitable f arras, the total expense per acre, including the charge for family labor, was less than it was on the least prof- itable farms.

The 17 farms on the higher-valued land were approximately the same size as the 10 dairy farms, but they had a much larger total farm investment, due chief Ij;- to their higher land values. The 10 dairy farms hr.d a larger in- vestment in total livestock, but not as large an investment in feed and grains as the 17 fo,rms on the higher-valued land. The I7 farms on the higher- valued land load higher total receipts and net increases, due to their larger sales of feed and gra,ins. However, they had smaller receipts from livestock and live- stock products than the 10 dairy farms. The total expenses per farm and per acre, including the charge for frjnily labor, were less on the 10 dairy farms than on the I7 farms on the hi ghe r-valu3 d land.

Investments, Receipts, Expenses and Earnings on 27 Southern Illinois Farms in 193^

Items	Your farm	17 farms on higher- valued lar.d	10 dairy farms
CAPITAL Il^IVESTI.fflTTS Land ----------___ Farm iinprovements- - - - _ Livestock total- -------		13 02l| 2 U9I 1 103 356 336 25^ 3^^ S3 $13 326	7 S3U 2 377 1 319
	$	290 790 13U 1 9S ^^2 $13 308
Cattle Ho^s - -
Sheep ___________ Poultry- -----_-___ Macliinery and eqoinment- - - - Feed and grains- -'----
EECEIPTS AID 1>IET IlICREASES Livestock total- -__-___		1 37s 26 I5U 103 lUo 163 2 636 62 1 $ h 079	1 llS
TTOT'CiPc; _ ^ _	$	70 153 U63 2 113 IU5 7gg 735 109 9 $2 629
C.Rfflf - -
Hogs (including A.4A na'/ments) Sheep- ----_-_-_-_ Poultry- ---_-_--__ Egg sales- --------- Feed and grains (including AAA paymients) Lahor off farm -------- Total receipts & net increases
EXPENSES Aim IGT DEC3EASSS Farm improvements- --__-_	$	lUU 207 21 isU 27s ISU 21 $ 1 039	111
Miscellaneous livestock decreases
Machinery and equipment- - - - Feed and grains- ------- Livestock expense- --___-	205 2S I2U
Hired lahor- --------- Tazes- ------------ Miscellaneous expenses - - - - Total expenses & net decreases	137 117 22 $ lUU
RECEIPTS LESS EXPENSES		$ 3 Oto S6U 160 2 U76 1^.13?^ 2 gso 9U1 $ 1 539	51 crs3
Operator's lahor -------	k?.o Igg
Net income from investment and management ------------ RATE EARIED Oil IlJVESTI'.iENT Return to capital and operator's lahor and management ------- 5^ of capital invested- ------ LJi^OR AlIL I;IAtTAGEI>EIJT WAGE	1 277 9 Mi 1 S97 676 $ 9S3

-6-

Changgs in Inventories and Inventory Valries . . .

The year 193^ was similar to 1^33 i^^ that the prices of farm pro- ducts continvied to advance, causing further increases in inventory values. Owing to the poor crop yields in 193^ there v/ere fewer "bushels of grain on hand to inventory at the end of the year than at the oeginning. The value of the smaller amount of grain, however, was greater than for the larger amount on liand at the beginning of the year.

Bushels of Grain Inventoried on 56 Farms on Loiver-

Valued Land

Corn

Y/heat

Jan. 1, '3^ Dec. 31, '3^ Jan. 1, nU Dec. 3I, '3^

Average of 5° farms . . . Average of I9 high farms. Average of I9 low farms . Yov.T farm

710 li33

232 775 273

'^3

200

6U

27 219

57

Bushels of Grain Inventoried on Farms on Higher- Valued Land and on Dairy Farms

Corn

Jan. 1. ^^h Dec. 31, '3^

If/heat

Jan. 1. '3^ Dec. 31. '3^

Average of I7 farms on

higher-valued land .... 1 826 1 2gl+

Average of 10 dairy farms * Skj 615

Your farm ,

159 183

5U3 171

The difference in qtiantities of grain inventoried was one of the factors influencing the difference in earnings. The most profitable farms in the lower-valued land group had larger inventories of com and wheat, both at the beginning and end of the year, than the least profitable farms in that group. The large quantity of grain inventoried on the I7 farms on higher- valued land significantly influenced their returns from feed and grains.

-7-

The average inventory increase for the S3 accounting farms in this study was $6S0 in 193^' There were increases of $57^ ii^ feed and grain, $7S in livestock, and $30 in machinery, while improvements showed a decrease of $2. Such an increase in inventory as that for machinery results from the value of new replacements during the year "being in excess of the depreciation costs. This increase is of considerable interest, for it is the first time that such an increase in machinery has occurred since farm earnings began to decline so drastically with the general depression.

Inventory Changes on S3 Accovinting Farms in Southern Illinois for 193^

Beginning Items inventory 1»1-3U

Total livestock ,$ 993

Peed and grains S90

Machinery 7^7

Improvements (except residence). 1 SZh Total $U UUU

Closing

inventory

12-31~3U

Inventory

changes

193^

Inventory

changes,

your farm

$1 071 1 U6U

757

1 S32 $5 I2U

$ 7S

57^

30

- 2

$630

Some Ad.justments on Accounting Farms in Southern Illinois Since 1929

Farmers have been forced to make adjustments in their cash ex- penditures as the result of changes in their cash income. From 1930 through 1933 > farm operating costs declined each year, but the year 193^ brought a reversal of this trend. The total operating expenses were 10 cents an acre higher in 193^ than in 1933. while cash operating expenses vrere $1,007 a farm in 193^ as compared with $732 in 1933* While there were increases over the previous year for all items of expenditures except feed and grain and live- stock expense, the most significant increases were for crop expense, machinery, labor, and improvements. Indications point to an expansion of spending in 1935 for repairs and replacements for machinery and improvements, since farm- ers have postponed purchase of these items during the five-year period since 1929.

Cash Income and Expenses on S3 Accounting Farms in Southern Illinois Counties for I929 and 193^

Items

Your farm

Average cash exDense per farm

19-5^

1929

Your farm 19^U

Average cash income per farm

193U	1929
$1 lUS	$1 975
797	596
5^	S3
s	h
67	73

Livestock , .$

Feed and grains

ifechinery

Improvements

Labor

Miscellaneous ,

Livestock expense

Crop expense

Taxes

Total $"

$ 126 139 239 lOU 120 20

15 12s

116

$ 236 U32

332

15s

161

21

15 130 16s

$

$1 007 $1 653

Excess of cash sales over expenses

Increase in inventory »■ ,

Income to labor and capital (Receipts less expenses),

$' $

$2 078 $2 7I1O

$1 071 $1 0S7

oSO 5U6

1 7^1 1 633

-s-

The cumulative effect of several years of low agricultural prices on the demand for manufactured goods cam readily te ascertained "by a compari- son of cash farm expenditures in 193^ with those in 1929- Altho-ugh the av- erage cash income in 195^+ was jS percent of that in 1929. cash expenditures were only 6l percent as large. In 193^^ livestock purchases were 53 percent, and feed and grain purchases 32 percent as large as in 1929- In 193^ these farms paid out 72 percent as much for machinery, 66 percent as much for im- provements, and 98 percent as much for crop expense as in 1929> while taxes were reduced to 69 percent of the I929 level.

Comparison of Farms with High and Lovt Earnings on Lower- Valued Land

The 19 most profitable farms on the lower-valued land had net re- ceipts per acre of $7 -271 as compared with 72 cents per acre for the I9 least profitable farms on the lower-valued land. The reasons for this difference may be obtained from a studj^ of the data on pages 3 and 12.

The most profitable farms v/ere 39 'S acres larger and had a larger proportion of their land a.rea tillable tlian the least profitable farms. They had 10.2 acres more com, 3-7 acres more oats, 16.6 acres more wheat, and 3*2 acres more soybeans tlian the least profitable farms. Since wheat and soy- beans were two of the high-profit crops in 193^> their larger acreage of these crops was an important factor in accotmting for the higher returns from feed and grains on the most profitable farms. The most profitable farms also carried larger inventories of feed and grains on which to malce a profit when prices advanced. Along with the larger acreage of crops, ?Jiother reason for the larger inventories of feed and grains was the higlier crop yields, there being an advantage of I3.8 bushels of corn, 2.0 bushels of oats, 5»5 bushels of wheat, and 5'0 bushels of soybeans per acre in favor of the high-profit group .

The most profitable farms had more livestock, and were more efficient in their livestock feeding operations than the least profitable farms. Tliey had an investment in productive livestock of $3.66 per acre, and fed $S26 of feed per farm, as compared with $3.35 invested per acre, and $57S of feed fed per farm, on the least profitable farms. The productive livestock on the most profitable farms returned $12S per $100 of feed fed, as compared vath returns of $101 per $100 of feed fed on the least profitable fairas. The most profitable farms had an income of $10U per litter farrowed, as compared with $65 for the least profitable group.

The larger income on the most profitable farms v;as secured v/ith a total operating cost of $5.79 per acre, as compared with $7.06 for the least profitable farms. The man labor cost per crop acre was $U.71 on the most prof- itable fams, as compared v/ith $6.71 per crop acre on the least profitable farms, while power and machinery costs per crop acre were $1.90 on the most profitable farms and $3. OS per crop acre on the least profitable farms.

m

Analysis of Fnrmn on Ii'i£;h8r-Val\Ted Land and Deivy Farras

The 17 fannd on tLe higlier-valtiBd land had net receipts per acre of $10.57, while the 10 daiiy farms liad net receipts per acre of $3'^7' The reasons for these retiirns maj he ohtained from a study of the data on pages 5 and lU. The rettirns from these two groups of faims may oe further analyzed "by comparing the data on them with the data on the 5C: farms on the lower-valued land, on par^BS 3 3-"^<i !'-•

The 17 far..is averaged 23^.'- acres in size, and liad 155 '5 crop acres per farm. They had 5!?''+ acres of corn, 13.6 acres of oats, ^7.0 a-cres of wheat, and 27.3 acres of hay. They carried large inventories of feed and grains on which to make a profit V7hen prices advanced. Their crop yields were very excellent, as thoy had an average production per acre of 36.2 hushels of corn, 33 •'^ bushels of oats, and 26.0 htishels of wheat. These 17 farms had an average investment in productive livestock of $3-13 P^i' acre, and fed $1,189 of feed per farm. They secured returns of $11^ per $100 of feed fed to productive livestock.

The 10 dairy farms liad an average investment in productive livestock of $U.US per acre, and fed $l,lSj of feed per fa.rm. They secured returns of $lUU per $100 of feed fed. These fam:s had an average of lU.2 dairy cows per farm, and liad a,verage dairy sales of $55 P^r do.iry cow. The 10 dairy farms averaged 233 acres in size, and ha-d 29-5 acres of com, 19.^ ncrcs of oats, 26.6 acres of wheat, U3.2 acres of hay, and 63-1 acres of tillable pasture per farm. They had avei'age crop yields of 26.5 bushels of corn, 1U.9 bushels of oats, and IS. 9 bushels of v.'heat per acre.

The 17 farms on the higlier va.lued land had total e:rpenses per acre, including the charge for family labor, of $6.. 85, as compared with $5.80 per acre on the 10 dairj'' farms. The man labor cost per crop acre ws.s $3-30 on the group of I7 farms, and $^..96 per crop acre on the 10 dairy farms. Power and machinery cost per crop acre averaged $2.76 for the I7 farms on the higher- valued land, and $2.30 per crop acre on the 10 dairy farms.

-10-

Inflnence of ?rice Cliarip^s en F--rrr. a??niin^':3

Farm prices in 133^ rdv-^nced more rapidly thari did the prices of conmodities 'vMch f,?nr;ers bo'O^'t. ^i'cuiiers of i".he United States as a grov.p could e::coiiange their farrn products in 193^^ i"03^ T^l- percent as many goods as for the period 1309-l:Jl4, \vMle in 1933 they received only 6'4 percent, and 1932 only 61 percent as much in excJiange for what they hjid to rail a.3 in the prewar period. In the month cf Fehiaia-ry, 1935» this index of purchasing power had increased to S'J percent of prev:ar, the index of laru prices lis.vin{j risen to 111 a,s compared v/ith an index cf IP-'J for conmodities \7hich f aimers "bvy, Y;nen the line representing fan;! prices arops "below the line represent- ing nrices -;aid "b'j f.?rn.ers, farm earnings are very low, but when these linos corae close together farrj earnings increase. (See following graph.)

Index of Prices

Hate Zr-rned

= Farm prf-ces in U. S. Aug. 1909-JuLy 191^+ = 100

= Prices paid hy farr::ers. A'J-k,- 1909-July I91U = lOr

n - Rate earned en investment, accounting farns, central Illinois

191-

'18 'I9 '20 '^1 '^2 =23 ^2^ '25 '26 '27 '2? '29 '30 '3

1 ly^ 133 .34

-11-

m

Sincp the pric'=! of sone farm products advancp.d mijch more rapidly during 193^ ti^ian other prodiicts, it is evident that some farrna v/otild benefit more than others, depending upon the kind and quantity of products sold. G-rain prices advanced much more rapidly than livestock prices; which resiilt- ed in a very "bad price ratio for farraers who tuy large q\xantities of feed. The average Illinois farm price of corn v/as Ul cents a. "bushel in January, 153^; it a,dvanced steadily luitil the end of the year when it was 28 cents a. bushel. Other grains made narked advance although not so great an advance as corn. The price of hogs fluct'oated from a low of $3*20 a hundred in Ma,y to a high of $$^.3C in September. The low point in the fall came in Hovember when the average price was $5.1C. The price ha-s advanced quite rapidly since November, the average price being $7«5C for Pebruary, 1535' Beef cattle were worth SU.IC a hundred in January, 193^ and advanced each month until Se-nteinber, when the price was $5.90. They dropped to $5.2C in December but increased again to $7.^ for February, 1935'

The year 193^ ^^^ ^ record for the reduction in the numbers of livestock. The percentage docr«a.sPS by species vr^re as fellows: horse?, 1.1 percf>nt; mul^s, ?.G percf-nt; all rattl^, 11.2 percent; she'^p, ''•^.7 percent; hogs, 35*3 percent, \7hen all species are combined on the basis of their capacity to consume feed, the reduction was I3 percent. This reduction will greatly reduce the demand for feeds prodvsced in 1935*

The relative change in prices of important comn-.odities may be noted in the follov.-ing gi-a.ph, vrhich shows the average Illinois farm prices by m.onths as a percentage of the avero,ge prices for the period 1921-1929-

Percent 120

Price Indices, 193^

(1921-1929 = loc;

Apr.

i^iay

June July Aug. Sept. Oct. Kov. Dec,

All co:!Traodities index represents the wholesale price of a large niimber of commodities for the Uhitr^d States, ss computed by Buxeau of Labor Statistics.

Grain and livestock indices represent average .monthly faiir. prices in Illinois

-12-

Factors Helping to Analyze the Farm Business on 56 Southern Illinois Fairos on Lov/er -Valued Land in 193^

Itesm	Your farm	Average of J 6 fan.is	19 most profitable farms	19 least profitable farms
Size of farms — acres ---___-		ISk.O S5.3 52.7 10.07 5.78 U.29 32 53	1S6.2 88.2 ^5.3 13.06 5-79 7.27 31 52	lU6.^
Percent of land area tillable- - -		Sk.k
Percent of tillahle land in hay and		60
Gross receiiots per acre- -----		7.7s
Total expenses per acre- -----		7.06
Net receipts ver acre- -__--_		.72
Value of land per acre ------		33
Total investment -oer acre- - - - -		55
		27.6 12.3 20.2 l+.U 32.9 U9.2 29.1 17. s 19-6 11.9	30.6 12.5 28.1 5.3 27.9 U6.5 3U.6 18.6 21.1 15.8	20 -U
Oats- -__----_--		S.8
Wheat _---_----_		11.5
		1-5
Hay		36.8
Tillable pasture- - - - -		37.1^
Crop yields — Com, bu. per acre- -		20.8
Oats, bu. per acre- -		16.6
^Theat, bu. per acre -		15.6
Soybeans, bu. per acre		10.8
Value of feed fed to productive L.S.		7U2 116 70 2US 6.5 S9 25 3.36 U.6S	826 128 77 26U 6.7 lOU 21 3.66 5.66	57s
Returns per $100 of feed fed to productive livestock- ------		101
Returns per $100 invested in: Cattle		6I4
Poultry -------		219
Pigs weaned per litter ------		6.2
Income per litter farrowed - - - -		65
Dairy sales per dair;;,'- cow- _ - - -		5^
Investment in productive L.S. per A.		3-35
Receipts from productive L.S. per A.		U.oo
Man labor cost per crop acre - - -		5.19 1.23 2.27 h-3i 1U3' 30 57 .U5	U.7I 1.01 1.90 58«S 1U3 .h8 1 022 SU2 13.9s 2 U32	6.71
Machinery cost per crop acre - - -		1.72
Power and mach. cost per crop A. -		3. 08
Farms with tractor --------		U2^
Value of feed fed to horses- - - -		lUs
Man labor cost per $100 gross		51
Expenses per $100 gross income - -		91
Farm improvements cost per acre- -		.98
Excess of sales over cash expenses		831 505 8. OS 1 852	Usi
Increase in inventory- ------		229
Rate earned on investment- - - - -		1.31
Gross receipts per farm- -----		1 139

-13-

450

Chart for Stu-dying the Efficiency of Various Parts of Your Business,

Southern Illinois Counties 193^

The nmnhers above the lines across the 56 faiTOS on lower- valued land included top of the page . By drawing a line ac efficiency of your farm in that factor of other fai-mers in your locality.

middle of the page are the averages for the in this report for the factors named at the ross each colimn at the mmiher measuring the , you can compare your efficiency with that

Bushel

s

Cost

per

Gross

per acre

crop

acre

0

receipts

CD ft CD

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139

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166

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5

1500

1831

20

3350

380

16.0

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^0

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129

u^

Uog

156

1.19

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1300

1631

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3050

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1^.0

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27

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1100

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500

12.0

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109

^^^1

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1^,6

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1.23

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900

1231

\h

2I+5O

260

10.0-

33

21

22

99

"50

2gS

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U.19

1.75

25

700

1031

12

2150

220

g.os

29.1

17.8

19.6

89

23

2Ug

116

5.19

2.27

30

505

S31

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1852

isi+

1 6.0

2^

1^

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79

20

203

106

6.19

2.75

35

300

631

8

1550

ll+O

k.Q

21

12

16

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15

16s

96

7.19

^.25

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100

1+31

6

1250

100

2.0

17

9

lU

39

10

12S

s6

2.19

3.75

1+5

-100

231

1+

950

60

0.

13

6

12

1+9

5

SS

76

q.19

U.23

50

-300

31

2

650

20

i j-2.0

0

3

10

39

0

ks

66

10.19

U.79

55

-500

-169

0

350

-Ik-

Factors Helping; to Analyze the Farm Business on 27 Soutlieni Illinois Farms in 193^

Items

Your

fann

17 farms on

highe r-valued

land

10 dairy farms

)ize of farms — acres --------

'ercent of land area tillable- - - -

'ercent of tillable land in hay and pasture --------------

l-ross receipts per acre- ------

'otal expenses per acre- - -

Fet receipts per acre- - - - - - - -

'alue of land per acre ------ -

'otal investment per acre- - - - - -

.eras in Com- -----------

Oats- ---- --__.

Wheat -----------

Soybeans- ---------

Hay

Tillable pasture- - - - - -

Top yields — Corn, bu. per acre- - - Oats, bu. per acre- - - ITheat, bu. per acre - -

.'3^.2 S5.7

3U.0

17. 1+2

6.S5

10.57

56

go

233.3 87.2

5U.7

5. 80 5.U7

3^ 58

55.^

18.6

U7.0

1.5 27.3

U1.2 36.2

33.0

26.0

29.5 19.4 26.6

U8.2 63.1

26.5 1U.9 IS. 9

alue of feed fed to productive L.S. te turns per $100 of feed fed to productive livestock- -------

teturns per $100 invested in:

Cattle- --_

Poultry --------

'igs weaned per litter -------

ncorae per litter farrowed - - - - -

'umber of dairy cows --------

lairy sales per dairy cow- - - _ - - nvestment in productive L.S. per A. leceipts from productive L.S. per A.

1 1S9 llU

91

276

6.1 76

5.1 32

3.13

5.78

1 IS5

im

121

250

6.9

93 1U.2

55

4. Us 7.31

[an labor cost per crop acre - - - lachinery cost per crop acre - - - 'ower and raach. cost per crop A. -

'arms with tractor --------

^alue of feed fed to horses- - - -

[an labor cost -oGr $100 gross income- -------------

bcpcnses per $100 gross income - - 'arm improvements cost per acre- -

Ixcess of sales over cash expenses increase in inventory- ------

tate earned on investment- - - - -

i-ross receipts per farm- -----

3.30 1.30 2.76

260

13 39 .61

1 650 1 390

I3.l5f^ U 079

U.9d 2.30

Gof,

187

26 M

1 U30 U55

9.^5^

2 629

-15^

Chart for Studying the Efficiency of Various Parts of Your Business, Southern Illinois Counties 193^

The nunbers ahove the lines across the middle of the page are the averages for the I7 farms on higher-val-ued land and the 10 dai ry farms included in this report for the factors nasaed at the top of the page. By drawing a line across each column at the ntnaher measuring the efficiency of your fai-m in that factor, you can compare your efficiency tvith that of other farmers in your locality.

21.6

Bushels per acre

u o

CJ

SI

+3

ci

(D

^■5.0

o o u

+-> ■H

•• r-< W

M u

160

o o o u

6 •'-<

20

CI

o

(D

U

•H

•H !h

qi4

CD

p^

0)

E o u

>5

'3 8

O rH

U6O

S cu

O «H

o

•H O

• o

00 o

• rH

I-; -e«-

Cost per crop acre

205

u o

Cj

si!

a;

u

o

o

O O rH

5-1 M

p. p.

•H

t1 O

O (D

O f^

O 1-5

O

0)

3^100

CD O 0)

H

c5^

30H0

Gross receipts

o

^ PM

2U.3S

6UOO

•H

CQ O U O

UUo

19-6

i£Z 32.^5

lUs

gU

U20

190

.13

.30

qoo

27U0

22.33

ssoo

i|00

17.6

U3

30. 0

13il

16

JU

330

115.

1.13 I 1.00

2U00

2UltO 20.33

3200

360

13.6

39 127.5

11'^

lU

6U

3U0

16c

:.13

1.150

10

1900 2ll|0

lg.33

U6co

320

13.6

i5_

25.0

100

12

300

1U5

^.13

2.00

15

1^0

igUo

16.33

Uooo

2 go

11.6

31. U

22.5

ic UU

263

129

U.l^

-2^

20

922

I5UQ

IU.35

333^

233. g

3A

20.0

JO.

3U I 220

ll'^

.13

3.00

II

I4CO

12^

12.33

^gOO

200

7.6

23

17.5

53

2l|

IgO

100

6.13

3.50

301 -100

9^0

10.33

2200

160

5.6

19

15.0 ^C^

ih

ito

83 7.13

U.oo

33 1 -600

6U0

g.35

IbOO

120

^.6

15

12.5

u

100

JO-

g.13

U.30

tlo

3UC'

6.35

1000

1.6

11 1 10.0, 10

oO

35.

9.13

;.oo

U5

Uo| U.35

Uoo

-16-

Influence of AAA Pi'OtTi'ans on Cropping Systeir.s and Farm Incomes

The farm-account records in Illinois v;ere influenced TDoth directly and indirectly by the corn-hO;^ and wheat adjustment programs. A large per- centage of accounting farms were under one or both contracts in 193^- The acreages of corn and v/heat on these farms wei-e therefore less than normal. This should have resulted in lower operating costs. Corn-hog "benefit pay- ments for the entire 193^ progKun will total about HO million dollars for the state, while wheat benefit payments will be about 2.h million dollars.

The benefit payments for accounting farms are indicated in the following table, which shows the average pa^Tuent for those farms receiving payments, and includes only those payments received by the cooperator before the 193^ books were closed. In some cases only the first corn-hoj check is included, v/hile in other cases the second check had been received. The second pa;y-ments not received, and the third pajmients will be entered in the 1935 book.

AAA Benefit Payments Received in 193^

Corn ITheat Hogs

Number Ar;Ount Number Amount Number Amount

Ave rat;e

-r ,. j7 of all ,

of per of per of per , 1/

„ „ „ ■navmontsi/

farms farm faiTas farm fams farm

10	U7	6	35	12	^9	66
15	91	lU	136	Ik	122	293
9	36	6	gl	ri 0	S3	1^7
63	6c	U2	91	6U	S5	157

1/3 most profitable lowo r-

valued land farms .... 15 $53 7 $100 I3 $ 89 $lUg

1/3 least profitable lojver-

valued land farms .... 17 hi ghe r- value d land farms

10 dairy farms

All accounting famas . . .

1/ Total benefit payments reported by accounting farms under contract for 193^ divided by total number of accoujiting faras.

On many farms the cash received from benefit payments will more than pay for the year's taxes. As an average for all accounting farms, the payments actually received were $Ul more than sufficient to pay the 193^ taxes.

It is interesting to note the use made of the contracted acres on the accounting farms. The average farm had 15*9 contracted acres which were used as follows: 3»3 idle; 3*2 mixed red clover and timothy; H.2 sweet clover; l.U soybeans; 0.6 alfalfa; and 3*2 acres were in other crops. These data in- dicate that most farmers made good use of their contracted acres from the standpoint of soil improvement, as a large part of them were in legumes. When the Government restrictions on the use of crops grown on contracted acres were removed, they were on many farms the most profitable crops as they fur- nished hay and pasture whero badly needed in drouth areas. Tlie legumes had the further advantage of being immune to attack from chinch bugs.

Fann earnings were i:ifluGnced indirectly by the AAA programs in tha.t the reduction in production increased the price of the commodities involved. The drouth was a more important fa.ctor in reducing production than the adjustment programs, yet if it liad not been for the corn-sealing program there would have been but little com in the hands of farmers at the time the na.jor price advance became effective.

-17- Variations in 5arnin£;s over Five- Year Period

A comparison of prod'uction, income, and expenditiores on the ac- coimting farms in Southern Illinois for the last five years is very interest- ing because of the violent changes in price level. Crop yields were good in most of Southern Illinois in 193^ and total receipts per fann were higher than in any other year in the last five. Operating costs per acre were lower than in any year of the last five except 1933- Thus profits were the best that this area has experienced since 1929-

Earnings in 1935> ^^ usual, will depend upon individiial efficiency, weather, and prices. With normal weather conditions, prices of grain are likely to go down to a more normal level which will give individual efficiency the responsibility for hi^er earnings on each farm.

Comparison of Earnings and Investments on Accoimting Farms in Southern Illinois for I93O-I93U

Items

1930.

1/

193

12/

193;

'i/

1933

V

193U

number of farms

Average size of farms, acres. . .

Average rate earned, to pay for

management, risk and capital . . Average labor and management wage

G-ross income per acre . Operating cost per acre

Average value of land per acre Total investment per acre . . ,

Investment per farm in:

Total livestock ,

Cattle

Hogs

Poultry ,

G-ross income per farm . . . . .

Income per farm from:

Crops.

Miscellaneous income Total livestock.

Cattle

Dai ry sale s . . .

Hogs

Poultry

Average yield of corn in bu. Average yield of wheat in bu

3U ISl

-3-Ofo

$-3g2

G.zk S.S3

37 67

1 60U 771 163 201

1 237

57

1 ISO

101

3 Us 316 39s

12 16

62

207

-l.3f.

$-309

6.16 7.03

32 "52

1 5'45 S09 1U6 165

1 2fk

239 90 9U5 1U5 31U 206 26U

31 29

39 17s

$-567

-5.1?^

3.UU 6.13

31 53

1 085

505 96

125

Sio

U9 561

10 265 115 167

32

15

30 193

$133

2.5fc

7.214 5.9U

32 52

1 039 U76 103

111

1 Uoo

03

200

9.!

$9S3

12.00 6.04

3S 60

993 39U 1U2

95

2 U03

33^^	1 232
69	U
993	1 100
Uo	137
SOb	217
19s	Uis
1S9	S7
29	31
lU	12

1/ Eecords from Edv/ards, P.ichland, and Wayne Counties included for 1930 •

2/ Records from Richland, Pope, T/ayne , Johnson, Williamson, and Franklin Coimties

included for 1931* ^/ Records from Richland, Vfeyne, Johnson, and Williai^ison Counties included for 1932- £/ Records from Jefferson, Maricn, Jackson, and Clay Counties included for 1933'

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