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Economic progress and changes in the structure of Canadian agriculture Eshete, Habtu 1954

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ECONOMIC PROGRESS AND CHANGES IN THE STRUCTURE OF CANADIAN AGRICULTURE by HABTU ESHETE A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE IN AGRICULTURE i n the Department of AGRICULTURAL ECONOMICS We accept t h i s thesis as conforming to the standards required from candidates for the degree of MASTER OF SCLEJfGE IN AGRICULTURE Members of the Department of A g r i c u l t u r a l Economics THE UNIVERSITY OF BRITISH COLUMBIA A p r i l , 1954 A B S T R A C T This study i s based on the hypothesis that (1) economic progress has altered the input structure of Canadian agriculture and (2) that t h i s a l t e r a t i o n has been associated with growth i n the economic e f f i c i e n c y of the industry. The method used to test this hypothesis has been to measure changes i n ; (1) the absolute and r e l a t i v e importance of inputs; (2) the absolute and r e l a t i v e impor-tance of various categories of output and (3) the economic e f f i c i e n c y of Canadian agriculture over the period 1926 to 1952. Inputs have been divided into eight categories, v i z . , labor, land, non-land c a p i t a l , cost of operating farm machinery, depreciation, taxes, f e r t i l i z e r s and miscellaneous items. Output was divided into four broad categories of; crops, livestock, forest products and house rent. E f f i c i e n c y vtas measured as the r a t i o of t o t a l out-put to t o t a l input within a given year. The r e s u l t s of the study strongly support the hypothesis. They indicate that economic progress has resulted i n s i g n i f i c a n t s h i f t s within the input structure of Canadian agriculture as follows: (1) A decline i n the absolute and r e l a t i v e importance of labor; (2) A decline i n the r e l a t i v e importance of land; (3) A large increase i n the r e l a t i v e and absolute importance of c a p i t a l input. - 2 -This s h i f t i n input structure has resulted i n only a small change i n the t o t a l of a l l inputs (about 10 percent over the whole period). On the other hand, the t o t a l volume of output has increased about 40 percent i n the period under study. Consequently the r a t i o of output to input (economic e f f i c i e n c y ) has increased i n the same period by about 30 percent. Thus the indications are that economic progress has resulted i n s i g n i f i c a n t adjustments i n Canadian a g r i -culture. These adjustments cannot, however, be viewed as independent events. They are part of a change r e s u l t i n g from technological development and the economic growth of the Nation. Thus changes i n the structure and the economic e f f i c i e n c y i n the a g r i c u l t u r a l sector of the economy are dependent upon events i n the other sectors of the economy. The r e s u l t s of the empirical study i n t h i s thesis i n d i -cate where emphasis might be placed i n order that the economic e f f i c i e n c y of agriculture may continue to increase. ACKNOWLEDGMENT The writer wishes to express his sincere gratitude to Dr. W. J . Anderson and Mr. S. S. Med-land f o r t h e i r help and guidance i n the course of the preparation of thi s t h e s i s . Their suggestions, c r i t i c i s m s and comments are genuinely appreciated. Vancouver, Canada H. Eshete TABLE OF CONTENTS Page LIST OF TABLES v Chapter 1. INTRODUCTION 1 I I . ECONOMIC PROGRESS 4 Concept of Economic Progress Conditions Necessary f o r Economic Progress Characteristics of Economic Progress Economic Progress and Agriculture I I I . ECONOMIC PROGRESS AND CHANGES IN THE INPUT STRUCTURE OF AGRICULTURE 18 Hypothesis IV. CHANGES IN THE ABSOLUTE AND RELATIVE IMPOR-TANCE OF INPUTS IN CANADIAN AGRICULTURE . 22 Method Results and Interpretations V. CHANGES IN THE ABSOLUTE AND RELATIVE IMPOR-TANCE OF VARIOUS CLASSES OF OUTPUT OF CANADIAN AGRICULTURE 42 Method Results and Interpretations VI. CHANGES IN THE OVERALL EFFICIENCY OF CANADIAN AGRICULTURE 49 VII. CONCLUSION 53 APPENDIX 57 BIBLIOGRAPHY 75 i v LIST OF TABLES Table Page 1 Population of Canada by Census Years 1871 to 1951 12 2 Index Numbers of Per Capita Consumption of Food i n Canada, 1949, 1950 and 1951 (1935-39 = 100) 15 3 Index Numbers of A g r i c u l t u r a l Inputs, Canada, 1926-1952, (1935-1939 = 100) 28 4 Index Numbers of Animals on Farms i n Canada, Selected Years, 1925-1949 (1935-1939 = 100) . . . 33 5 Changes i n the Relative Importance of A g r i -c u l t u r a l Inputs, Canada, 1926 to 1952, (1935-1939= 100) 35 6 Index Numbers of Canadian A g r i c u l t u r a l Outputs, By Categories, 1926 to 1952, (1935-1939 = 100) . . 45 7 Five Year Moving Averages of Index Numbers of Canadian A g r i c u l t u r a l Outputs, by Categories, 1928-1950 46 8 Changes i n the Relative Importance of the Various Categories of Output i n Canada, 1926 to 1952 . . . 48 9 Canada—Index Numbers of Average Output, Input and E f f i c i e n c y by Five Year Periods, 1926 to 1950 50 10 Index Numbers of Totals of Outputs, Inputs and E f f i c i e n c y i n Canadian Agri c u l t u r e , 1926 to 1952 (1935-1939 = 100) 51 - v -LIST OF TABLES (Continued) Table Page 11 Five-Year Moving Averages of Index Numbers of Totals of Outputs, Inputs and E f f i c i e n c y of Canadian Agriculture, 1928-1950 52 12 Values of Land and Non-Land Capital Inputs i n Agriculture, Canada, 1926-1952 59 13 Index Numbers of Prices of Land and Non-Land Capital Inputs i n Ag r i c u l t u r e , Canada, 1926-1952 (1935-1939 = 100) 61 14 Deflated Values of Land and Non-Land Capital Inputs i n Agri c u l t u r e , Canada, 1926-1952 . . . 62 15 Labor Input i n Agri c u l t u r e , Canada, 1926-1952 . 64 16 Values of Various Inputs i n Ag r i c u l t u r e , 1926-1952 66 17 Price Index Numbers of Commodities and Services Used by Farmers, Canada, 1926-1952 (1935-1939 = 100) 68 18 Deflated Values of Production Inputs i n A g r i -culture, Canada, 1926-1952 69 19 Canada—Total Farm Cash Income and Income i n Kind, 1926-1952 71 20 Wholesale Price Index Numbers of Farm Products, Canada, 1926-1952 (1935-1939 = 100) 73 21 Deflated Values of Farm Income 74 -• v i -ECONOMIC PROGRESS AND CHANGES IN THE STRUCTURE OF CANADIAN AGRICULTURE CHAPTER I INTRODUCTION The desire for economic progress i s one of the most s i g n i f i c a n t motivating forces of human existence. Different s o c i e t i e s have progressed at dif f e r e n t rates and times i n t h e i r history. Canada has been one of the nations which have achieved comparatively rapid economic progress i n the l a s t two or three hundred years; and Canadian a g r i -culture has been a s i g n i f i c a n t contributor t o , as well as a benefactor from the nation's economic growth. As a consequence of economic progress, many str u c t u r a l changes have taken place i n the different sec-tors of the economy. This study i s concerned with an - 2 -hypothesis based on such a s t r u c t u r a l change i n the a g r i -c u l t u r a l sector of the Canadian economy. The hypothesis i s : (1) economic progress has altered the Canadian a g r i -c u l t u r a l input structure and that, (2) t h i s a l t e r a t i o n has been associated with an increase i n the e f f i c i e n c y ( r a t i o of output to input) of the industry. Although several researchers have advanced t h i s hypothesis and some t e s t -ing of i t has been done, there has not been an empirical study designed to show to what extent and i n what direc-t i o n economic progress has altered the input structure, output and e f f i c i e n c y of Canadian ag r i c u l t u r e . I t i s therefore proposed i n t h i s study to measure these changes over the period 1926 to 1952. 1 It i s necessary f i r s t to define or explain the concepts of economic progress, structure, input, output and e f f i c i e n c y as used i n the hypothesis. Because economic progress i s a broad concept involving a large number of s o c i a l aspects, Chapter I I has been devoted to presenting a short resume of the different concepts advanced by both c l a s s i c a l and modern economists. This d e f i n i t i o n serves as a s t a r t i n g point and a guide to an understanding of the This period of only twenty-seven years i s taken because, p r i o r to 1926, some of,the data are not a v a i l -able or, at best, are only rough estimations. However, t h i s should not be a very serious handicap, since most of the adoptions of many of the technological developments that have precipitated the s t r u c t u r a l changes i n Canadian agriculture took place during the period 1926 to 1952. - 3 -meaning and implications of the hypothesis. The term structure refers to: (1) the change i n the absolute amount of any one class of input or output from one year to another ( i . e . change i n absolute importance); or (2) the rela t i o n s h i p of one input to a l l other inputs, or of one class of output to t o t a l output ( i . e . r e l a t i v e importance). The word input refers to an agent or a factor of production which i s em-ployed i n agric u l t u r e . The term output, as used i n th i s study, includes a l l a g r i c u l t u r a l products sold f o r cash or consumed at home each year. E f f i c i e n c y i s determined as the r a t i o of output to input i n any given year. The methods by which inputs, output and e f f i c i e n c y were mea-sured are presented under t h e i r respective headings i n the different chapters of the thesis. The l a t t e r part of the thesis deals with the implications of the results of the empirical study and the ways i n which these result s may be employed so as to achieve or maintain the desired rate of economic growth. F i n a l l y , i t should be mentioned that t h i s analysis i s concerned e n t i r e l y with secular changes i n the input and output structure and the e f f i c i e n c y of Canadian agricu l t u r e . I t was necessary, therefore, to abstract from short run changes that are caused by variations i n short period fac-tor p r i c e s , and any i n s t a b i l i t y i n a g r i c u l t u r a l output associated with the v i c i s s i t u d e s of nature. CHAPTER I I ECONOMIC PROGRESS Concept of Economic Progress The concept of economic progress can be explained i n terms of the processes and conditions which contribute to economic growth. Thus, Boulding defines economic pro-gress as consisting i n "...an improvement i n the e f f i -ciency of the use of means to a t t a i n ends." Economic progress i s concerned with the creation and adoption of processes which w i l l increase the supply and accumulation of material things which s a t i s f y human wants. It i s con-cerned with the means i n achieving these wants and not i n the wants themselves. The significance of economic progress arises from the fact that society's means of achieving wants are 2 modified by time and nature. Thus the achievement of a desired amount of a given product may be r e s t r i c t e d by the available resources and by the li m i t e d number of hours per day that human beings can work. Economic progress reduces A K. E. Boulding, The Economics of Peace, New York, Prentice H a l l , 1945, p. 74. 2 Loc. c i t . - 5 -the r e s t r i c t i o n s on production imposed by the s c a r c i t y of resources, and extends the t o t a l amount of output produced per man hour. Conditions Necessary for Economic Progress The conditions which make economic progress pos-s i b l e have been stated by both c l a s s i c a l ( p a r t i c u l a r l y 1 J . S. M i l l ) and modern economist, and may be summarized as follows: (1) Economic progress i s made possible be-cause of the "...perpetual, and so f a r as human foresight can extend, the unlimited growth of man's power over 2 nature." (2) Economic progress i s possible only when there i s security of persons and society. Since economic progress consists i n the improvement and accumulation of c a p i t a l goods, there must be security of persons and pro-perty (the right of ownership and use of physical posses-3 sions) i f economic progress i s to take place. As society advances, the i n d i v i d u a l i s protected from other i n d i v i -duals by l e g i s l a t i o n and police; from the government by better i n s t i t u t i o n s ; and from natural hazards by insurance x J . S. M i l l , P r i n c i p l e s of P o l i t i c a l Economy, New York, D. Appleton and Company, 1909, I I , 271-301. 2 I b i d . , p. 273. 3 Boulding, op_. c i t . , pp.78-79. - 6 -and technological advances which reduce production v a r i a -1 b i l i t y . (3) For a nation to advance economically there 2 must be greater cooperation between i t s i n d i v i d u a l members, and at the same time, the customs and manners must be 3 f l e x i b l e enough to accept and encourage innovations. The most rapid progress throughout the history of the world has taken place i n societies where in d i v i d u a l or group innova- . tors found an atmosphere conducive to change and a w i l l i n g -ness to accept new and better methods of s a t i s f y i n g human wants. This implies that individuals or groups of i n d i -viduals must not hamper the free play of competition bet-ween new and old methods, i . e . , "...superior methods must displace i n f e r i o r methods i f progress i s to take place, and the operators of i n f e r i o r methods must therefore be 4 driven out of business." (4) A nation must consume less than i t produces f o r , as has been stated above, economic progress requires the accumulation of c a p i t a l . Con-sequently, the consumption of goods as soon as they are produced i s not conducive to economic development. His-t o r i c a l l y , s o c i e t i e s which have encouraged f r u g a l i t y have 1 M i l l , l o c . c i t . 2 I b i d . , p. 213. 3 Boulding, og. c i t . , pp. 78-90. 4 I b i d . , p. 92. - 7 -been the ones which have achieved the most rapid economic 1 growth. Therefore, " i t i s evident that the rate of economic progress i s very closely a l l i e d to the s o c i a l and p o l i t i c a l environment of a society...where property i s secure, govern-ment responsible and stable, and customs and manners highly f l e x i b l e and subject to change, economic progress i s l i k e l y 2 to be rapid." Characteristics of Economic Progress Econonic progress i s characterised by growth of: 3 (1) population, (2) c a p i t a l and (3) production s k i l l s . The r e l a t i o n s h i p between the rate of growth of these three ch a r a c t e r i s t i c s determines the changes i n the amounts used and the prices paid to each of the factors of production. Two cases may be cited to i l l u s t r a t e t h i s f a c t . 1. In the case where population i s increasing while c a p i t a l and production s k i l l s are kept constant, the owners of c a p i t a l and land w i l l benefit; because, under t h i s condition, wages w i l l f a l l since the supply of labor i s 1 M i l , l o c . c i t . 2 Boulding, op. c i t . , pp. 78-79. 3 M i l l , l o c . c i t . - 8 -increased while the demand for i t does not increase. Pro-f i t s w i l l r i s e because the f a l l i n wages enables owners of c a p i t a l to obtain a larger share of the t o t a l product. Rent w i l l also r i s e because, to meet the additional demand for food, land of poorer q u a l i t y w i l l have to be used f o r production. 2. In the more general case, however, where population, c a p i t a l and production s k i l l s may be increasing; and where increasing demand for food i s s a t i s f i e d by a corresponding increase i n the supply of food, then there w i l l be "...a greater aggregate production, a greater pro-duce divided among the labourers and a larger gross p r o f i t ; but the wages being shared among a larger population, and the p r o f i t s spread over a larger c a p i t a l , no labourer i s better o f f , nor does any c a p i t a l derive from the same 1 amount of c a p i t a l a greater income." Economic Progress and Agriculture Economic progress i n agriculture i s a re s u l t of the a c q u i s i t i o n of knowledge which improves the production process and the dissemination of t h i s knowledge to farmers. Economic progress takes place i n agriculture when i n d i v i d u a l farmers use new methods i n order to produce more from the M i l l , op_. c i t . , p. 307. - 9 -same amount of resources, or to produce the same with lesser amounts of resources. In both cases the improvement enables farmers to expand t h e i r output per unit of input. The important types of changes that have taken place on farms as a res u l t of technological progress, have been mechanization, improved crop v a r i e t i e s , improvements i n c u l t u r a l practice (e.g., use of f e r t i l i z e r and sprays) and improvement of livestock (through improvements i n 1 breeding, n u t r i t i o n , s a n i t a t i o n , and disease c o n t r o l ) . Economic development from without affects a g r i -culture i n two ways, (1) the demand f o r i t s products, (2) the 2 supply of i t s factors of production. Over a long period of time the demand f o r a g r i c u l t u r a l products of any p a r t i -cular country i s altered by: (a) changes i n population (b) changes i n income per capita (c) changes i n consumer preferences and (d) changes i n foreign markets; while the supply of the agents of production i s altered by (a) d i s -covery of new resources, (b) changes i n technology and improvement i n s k i l l s , and (c) growth of the a g r i c u l t u r a l J . A. Hopkins, "Technological Development Aff e c t i n g Farm Organization," Journal of Farm Economics, XXI, (February, 1939), 165-177. o T. W. Schultz, The Economic Organization of A g r i -culture , New York, McGraw-Hill Book Company, Inc., 1953, pp. 1-10. - 10 -1 population. It i s the interactions of these forces that a l t e r the e f f i c i e n c y of the industry, and the r e l a t i v e importance of i n d i v i d u a l factors of production. I t i s necessary, therefore, to comment b r i e f l y on these forces before exam-ining the changes that have taken place i n the case of in d i v i d u a l inputs. Forces A f f e c t i n g the Growth of Demand fo r A g r i c u l t u r a l Products Changes i n population - Most countries now are experiencing population growth. Changes i n population are s i g n i f i c a n t to agriculture because of the fact that the addition or subtraction of one person to the t o t a l number of people means a corresponding increase or decrease i n the demand f o r food and other products of agr i c u l t u r e . 2 Malthus associated the growth of human population with the expansion of the food supply. He said that population tends to increase up to the l i m i t s of the means of sub-sistence because the rate of population growth was greater than that of the means of subsistence. This difference Schultz, 0 £ . c i t . , pp. 1-14. T. R. Malthus, An Essay on the P r i n c i p l e s of Popula-t i o n , New York, E. P. Dutton & Co., pp. 5-26. - 11 -between the rates of increase i n population and food supply-indicated that the ultimate check (li m i t e d means of sub-1 sistence) i s an important fact of human existence. Aside from t h i s ultimate check on population growth, Malthus d i s -tinguished also two immediate checks, v i z . : (1) "pre-ventive checks" (those calculated by man's own reasoning, such as postponement of marriage), and (2) "positive checks" 2 (such as wars, plagues, diseases, e t c . ) . In some countries of today the implications of his theory seem to e x i s t , but i n countries l i k e Canada and gen-e r a l l y most of the western group of nations, economic pro-gress has involved increases i n production as well as increases i n population. Consequently, population has not increased to the point where the l e v e l of l i v i n g i s one of subsistence. As may be seen i n the table below the popula-t i o n i n Canada has been increasing on the average 18.4 per-cent per decade. I t i s a well known fact that t h i s increase has been accompanied by increasing le v e l s of r e a l income. Changes i n income - A r i s i n g l e v e l of r e a l income per capita i s the second most important factor a f f e c t i n g the demand f o r a g r i c u l t u r a l products i n the long run. As a country advances technologically, the income per capita c i t . c i t . Loc. Loc. - 12 -TABLE I POPULATION OF CANADA BY CENSUS YEARS 1871 TO 1951 Census Increase over Percent Year Population previous decade Increase 1871 3,689,257 1881 4,324,810 635,553 17.2 1891 4,833,239 508,429 11.8 1901 5,371,315 538,076 11.1 1911 7,206,643 1,835,328 34.2 1921 8,787,949 1,581,306 21.9 1931 10,376,786 1,588,837 18.1 1941 11,506,655 1,109,869 10.7 1951 14,009,429 2,502,774 21.8 Ave. = 18.4 Source: Canada, Dominion Bureau of S t a t i s t i c s , The Canada  Year Boole, 1952-53, 1953, pp.xxvi, x x v i i . tends to increase because of the increase i n the output per unit of input i n the dif f e r e n t sectors of the economy. In Canada, t o t a l personal income increased from $4,092 m i l l i o n s i n 1926 to $15,818 mi l l i o n s i n 1951 i n current d o l l a r s , or from $3,360 i n 1926 to $8,573 m i l l i o n s i n 1951 i n terms 1 of constant d o l l a r s . However, the s i g n i f i c a n t fact as f a r as agriculture i s concerned i s that the income spent on food does not increase i n proportion to increases i n t o t a l 2 income. The proportion decreases as income increases, i . e . , 3 the income e l a s t i c i t y of food expenditure decreases as x Canada, Dominion Bureau of S t a t i s t i c s , The Canada Year  Book, 1952-53, 1953, pp. 1084 and 1010. 2 Engel's Laws. 3 Percentage increase i n amount spent on food r e s u l t -ing from a one percent increase i n income. - 13 -income increases. 1 Schultz gives the following estimates of income e l a s t i c i t y of food expenditure f o r "low food drain communi-t i e s " (those which are at the stage of economic develop-ment comparable to that of Canada and the United States). In such communities the income e l a s t i c i t y of food expenditure i s about 0.5 for a l l food. The figure approximates 0.25 on the farm produced part of food. The corresponding figure fo r non-farm services added to the farm produced part of food i s 0.625 when eaten at home, and 1.25 when eaten away from home. Thus the indications are that a given percent increase i n personal income of Canadians w i l l mean a lesser percentage increase i n the gross income of farmers. Changes i n consumer preferences have come about through (1) s h i f t s i n the proportion of the t o t a l popula-t i o n i n a large amount of occupations requiring physical energy to those requiring less physical exertion which r e s u l t s i n decreased per capita c a l o r i c requirements, (2) advances i n the science of n u t r i t i o n and the dissemina-t i o n of knowledge i n the composition of foodstuffs, r e s u l t -ing i n increased consumption of "protective foods," and (3) r i s i n g l e v e l of income r e s u l t i n g i n increase i n the proportion of food expenditure that i s spent on high qu a l i t y of foods. Consequently the per capita consump-t i o n of c e r t a i n a g r i c u l t u r a l products such as f r u i t , milk Schultz, op_. c i t . , p. 45. - 14 -and meats has been increased while the per capita consump-t i o n of other products such as cereals and pulses have been decreased. The combined effect of changes i n occupations, better knowledge of the make-up of balanced d i e t s , and r i s -ing l e v e l of r e a l income upon consumer preferences i n Canada may be shown by the following data. The per capita con-sumption of f r u i t increased from an average of 138.7 pounds i n the prewar period of 1935-39, to 199.0 pounds i n 1951, or by 43.5 percent. Consumption of milk and cheese increased from a prewar average of 52.0 l b s . per head to an average of 64.7 l b s . (24.4 percent) i n 1951. S i m i l a r l y per capita consumption of vegetables, meats and eggs increased from 78.4 l b s . to 95.4 l b s . , 118.3 to 133.9 pounds and 30.7 to 34.6 pounds respectively. On the other hand, the consump-t i o n of cereals and starch decreased from 205.7 pounds and 2.5 pounds per head to 172.6 and 1.6 pounds respectively 1 i n the period 1935-39 to 1951. The table below gives a more detailed analysis of the changes i n consumer food purchases i n Canada expressed as index numbers. Changes i n Exports - The demand f o r Canadian a g r i c u l t u r a l products i s pa r t l y dependent upon the export markets, because of p a r t i c u l a r production advantages i n A l l figures taken from The Canada Year Book, 1952-53, pp. 441-445. - 15 -TABLE 2 INDEX NUMBERS OF PER CAPITA CONSUMPTION OF FOOD IN CANADA , 1949, 1950 and 1951 (1935- 39 = 100) 35-Food Item 39 49 50 51 Cereals 100 81.4 84.0 83.9 Potatoes 100 108.2 122.8 104.2 Sugar and syrup 100 104.8 106.5 101.5 Starch 100 64 64 64 Pulses and nuts 100 84.1 89.7 85.5 F r u i t 100 128.1 131.9 143.5 Vegetables 100 110.2 120.5 121.6 Oils and Fats 100 102.4 108.2 106.3 Meats 100 117.1 113.0 113.2 Poultry & Fish 100 110.3 117.0 120.1 Eggs 100 108.8 112.4 112.7 Milk and cheese 100 122.5 124.0 124.4 Beverages 100 145.8 138.9 129.2 Source: The Canada Year Book, 1952-53, pp. 442-5. certain products such as wheat. The forces which deter-mine changes i n domestic consumption (population, income, and changes i n consumer preferences) also affect export demand. The fact that Canadian exports go mainly to countries which have experienced s i m i l a r trends i n income and population growths would seem to indicate that the export demand f o r Canadian a g r i c u l t u r a l products i s sub-jected to the same general type of forces as i n the domes-t i c demand. However, ce r t a i n other forces, primarily of a p o l i t i c a l nature, may produce results which tend to res-t r i c t growth i n export demand. Thus changes i n t a r i f f - 16 -rate p o l i c i e s and the s t r i v i n g toward a g r i c u l t u r a l s e l f -s u f f i c i e n c y of certain importing countries, when they occur, w i l l counteract the secular forces of growth. The above discussion of the effect of economic growth on the demand for a g r i c u l t u r a l products, p a r t i -c u l a r l y that i n Canada, may be summarized as follows: i n the long run, the demand f o r a g r i c u l t u r a l products increases as a country progresses. The factors which bring t h i s about are: growths i n population and r e a l income, and the development of f a c i l i t i e s f o r both domes-t i c and foreign trade. Forces Affecting the Supply of Factors of Production i n Agriculture The developments i n the supply of the factors of production i n ag r i c u l t u r e , often c l a s s i f i e d as land, c a p i t a l and labor, come about as a result of any increase i n the amount of physical resources, improvements i n the arts and s k i l l s , and growth i n the farm population. The amount of land resource may be increased by bringing new land under c u l t i v a t i o n , or by more intensive c u l t i v a t i o n of the land already being used. This i s achieved through such practices as conservation, s o i l - 17 -improvement, i r r i g a t i o n and drainage. The use of c a p i t a l may be extended through further improvements i n the pro-ductive capacity of machines, and through further research i n the improvement of li v e s t o c k , plants and production techniques. An increase i n the supply of labor result s from a high r u r a l b i r t h r a t e , s u b s t i t u t i o n of c a p i t a l f o r labor, and from any improvements i n the productivity of subsistence farmers. CHAPTER I I I ECONOMIC PROGRESS AND CHANGES IN THE INPUT STRUCTURE OP AGRICULTURE Hypothesis The hypothesis which i s to be tested empirically i s that technological development has had two s i g n i f i c a n t economic e f f e c t s . The f i r s t i s that o v e r a l l economic e f f i c i e n c y i n agriculture has increased. The second i s that technological advances have brought about changes i n the r e l a t i v e amounts used i n agriculture of the various agents of production. That i s to say the rates of increase i n the e f f i c i e n c y i n the various agents of production have not been the same. There may be: (1) an increase i n both the absolute and r e l a t i v e shares of the t o t a l product inputed to a given factor of production; (2) a decrease i n both the absolute and r e l a t i v e shares or (3) an increase i n i t s 1 r e l a t i v e share but decrease i n i t s absolute share. The new share attributable to a given factor w i l l depend upon the effect of the p a r t i c u l a r innovation upon the marginal productivity of the in d i v i d u a l input. I f , f o r example, the new discovery or technique increases the 1 Based on J . R. Hicks' analysis of " D i s t r i b u t i o n and Economic Progress," The Theory of Wages, New York, Peter Smith, 1948, pp. 112-134. - 19 -1 marginal productivity of both c a p i t a l and labour, and increases that of c a p i t a l more than that of labor, then the r e l a t i v e share of the t o t a l product accruing to c a p i t a l w i l l increase. But i f the new technique increases the mar-ginal productivity of c a p i t a l but decreases that of labor, then both the absolute and r e l a t i v e shares of c a p i t a l w i l l increase while the r e l a t i v e and absolute shares of labor w i l l decrease. In both cases c a p i t a l w i l l be substituted fo r labor, and the new invention i s termed a "labor saving" technique. On the other hand, a "c a p i t a l saving" invention w i l l increase the marginal productivity of labor more than that of c a p i t a l . This w i l l increase the r e l a t i v e importance of labor and w i l l r e sult i n the su b s t i t u t i o n of labor f or c a p i t a l . S i m i l a r l y , a "land saving" invention w i l l increase the importance of one or a l l of the other agents of produc-t i o n and decrease that of land. A "neutral" invention w i l l not affect the r e l a t i v e shares but i f i t i s to be used i t must increase t h e i r absolute productivity. In t h i s case 2 there w i l l be no substi t u t i o n of factors. 1 i . e . , the addition to t o t a l output r e s u l t i n g from additional units of c a p i t a l or labor. 2 For one factor to be substituted with another, i t s " e l a s t i c i t y of sub s t i t u t i o n " must be greater than one." An increase i n the supply of any factor w i l l increase i t s r e l a t i v e share...if i t s ' e l a s t i c i t y of s u b s t i t u t i o n ' i s greater than u n i t y " — t h e e l a s t i c i t y of su b s t i t u t i o n being "...a measure of the ease with which the varying factor can be substituted f o r others." (Hicks, op. c i t . , pp.117 f f . ) That i s , i f to produce a given output, a given r a t i o of labor to c a p i t a l i s used, no matter what the prices to - 2 0 -The above theoretical analysis of the changes i n the input structure of an industry r e s u l t i n g from techno-l o g i c a l progress i s v a l i d under the assumption of perfect competition. Within an industry, under perfect competi-t i o n , factors of production would be substituted one for the other u n t i l the r a t i o of t h e i r marginal p r o d u c t i v i t i e s to t h e i r prices were equal. Between i n d u s t r i e s , factors of production would be di s t r i b u t e d so that t h e i r respective marginal value p r o d u c t i v i t i e s were equal to that of equi-valent units of the factor i n a l l sectors of the economy. There are i n f a c t , several impediments to the attainment of perfect competition i n agriculture. Some of these impedi-ments are c a p i t a l r a t i o n i n g , imperfect knowledge, d i f f i -c u l t i e s associated with moving labor out of a g r i c u l t u r e , and the i n s t a b i l i t y of a g r i c u l t u r a l prices and production. However, these impediments are more s i g n i f i c a n t i n the short than i n the long run; because over short periods, land, (Continued from page 19) labor and c a p i t a l are, then the e l a s t i c i t y of s u b s t i t u t i o n of labor to c a p i t a l w i l l be zero. I f , on the other hand, a small change i n the price of one of the factors r e s u l t s i n a given output being produced by one factor alone, then the e l a s t i c i t y of su b s t i t u t i o n between the two factors i s i n f i n i t y . E l a s t i c i t y of s u b s t i t u t i o n i s one i f , f o r example, a given change i n wages re s u l t s i n an equal per-centage (but opposite direction) change i n the quantity of labor that i s combined with c a p i t a l to produce a given out-put. E l a s t i c i t y of subst i t u t i o n w i l l be greater than unity i f the change i n wages resulted i n more than a proportionate change i n the quantity of labor that i s combined with capi-t a l , and i f the change i s less than proportional then e l a s t i c i t y of su b s t i t u t i o n i s less than one. (Hicks, l o c . c i t . ) c a p i t a l and labor are r e l a t i v e l y f i x e d and are not e a s i l y adjusted to conform with changing marginal p r o d u c t i v i t i e s . Over longer periods the f i x i t y of factors i s eventually overcome. Thus i n the long run factors of production tend to f i n d alternative uses and to be substituted according to t h e i r marginal revenue p r o d u c t i v i t i e s . While inventions i n agriculture have increased the marginal p r o d u c t i v i t i e s of a l l factors (land, c a p i t a l and l a b o r ) , they have increased that of c a p i t a l more than the other two f a c t o r s , i . e . , inventions i n agriculture have tended to be either labor or land saving. In Chapter IV, an attempt i s made to measure these changes empi r i c a l l y . CHAPTER IV CHANGES IN THE RELATIVE AND ABSOLUTE IMPORTANCE OF VARIOUS INPUTS IN CANADIAN AGRICULTURE Method The measurements of the changes which have taken place i n the economic e f f i c i e n c y of agriculture and the r e l a -t i v e importance of the various factors of production were arrived at as follows: (1) the values of each input, for the period 1926 to 1952, were deflated by t h e i r respective price indexes to give values i n terms of constant d o l l a r s (the deflated figures are therefore measurements of the t o t a l amount of a g r i c u l t u r a l input); (2) an index series (1935-1939 = 100) of the deflated values of each input was constructed; (3) i n order to measure r e l a t i v e importance, the deflated values of each input were calculated as a per-centage of the sum of the deflated values of a l l inputs. The inputs were divided into eight categories and were measured i n terms of yearly cost to Canadian farmers. The eight classes of inputs were: (1) labor, (2) land, (3) non-land c a p i t a l , (4) cost of operating farm machinery, (5) depreciation, (6) taxes, (7) f e r t i l i z e r s and (8) mis-cellaneous items. The method by which the value of each of these inputs was derived i s set out below. - 23 -Labor - The yearly labor input from 1926 to 1952 was determined by multiplying the Canadian a g r i c u l t u r a l labor force estimate by average monthly wages without board. For the period 1931 to 1952 the labor force figures used f o r t h i s purpose were the Dominion Bureau of S t a t i s t i c s June estimates of a l l persons, 14 years or over, with jobs i n . 1 agricult u r e . The figures for 1926 to 1930 were estimated 2 by extrapolating the labor force figures of 1931 to 1952. The wage rates used were those estimated by the Dominion Bureau of S t a t i s t i c s as of May 15 of each year. The value of labor input i n current dollars was deflated by the index of wage rates to obtain the value i n terms of constant dol-l a r s . Thus the value of labor input was obtained by assum-ing that a l l persons i n the a g r i c u l t u r a l labor force, 14 years or over, perform the equivalent work of hired laborers on farms. This assumption gives less emphasis to the con-t r i b u t i o n of farm enterpreneurs and managers, but t h i s i s counterbalanced on the other side, by the fact that some family labor produces an output less than the equivalent of the going wage rate i n agriculture. 1 Canada, Dominion Bureau of S t a t i s t i c s , Reference Paper No. 23, Canadian Labor Force Estimates, 1931-1950, 1950, p.15. Canada, Dominion Bureau of S t a t i s t i c s , Special Surveys D i v i s i o n , The Labor Force Quarterly Surveys, IX, 7; X I I I , 15; VII, 16. 2 The figures for 1930 to 1926 were found by extrapola-t i n g labor force estimates of 1952 to 1930, and allowing for constant rate of growth i n the farm population. -24-Land - The annual input represented by land was calculated by multiplying the going rate of interest on 1 farm mortgages by the deflated value of land used. The values of land were obtained from Dominion Bureau of Sta-2 t i s t i c s estimates, and include the values of buildings and improvements. The values so obtained were deflated by the indexes of the average value per acre of a g r i c u l t u r a l land i n Canada i n order to obtain land input i n constant dol-l a r s . This value was multiplied by the pr e v a i l i n g i n t -erest rate on farm loan, and then deflated by the index of interest rates i n order to express land as an annual physi-c a l input. The interest rates used were 7 percent for the years 1926 to 1936 i n c l u s i v e , 6 percent f o r 1936 to 1945 3 i n c l u s i v e and 5 percent f o r 1945 to 1952. The annual input of land may be calculated i n either of two ways. One i s to apply re n t a l rates to land used i n a g r i -culture. The other (as has been stated above) i s to multiply going interest rates on farm mortgages by land value. Be-cause no series of rental rates were a v a i l a b l e , the l a t t e r method was used. 2 Canada, D.B.S., "Gross A g r i c u l t u r a l Wealth of Canada by Provinces," Monthly B u l l e t i n of A g r i c u l t u r a l S t a t i s t i c s , March, 1923, 1929-1931 and 1935. Canada, D.B.S., "Current Values of Farm Capital i n Canada by Provinces and Items," Quarterly B u l l e t i n of A g r i -c u l t u r a l S t a t i s t i c s , January-March, 1941 and April-June, 1945, 1947-1951. Canada, D.B.S., "Current Values of Farm Capital i n Canada, by Provinces and Items," Monthly B u l l e t i n of A g r i -c u l t u r a l S t a t i s t i c s , March 1937-i9T(n Appendix A. - 25 -Non-Land Capital - This input was calculated i n a manner s i m i l a r to that outlined above for land. The items included i n the non-land c a p i t a l were machinery and equip-ment and livestock. The deflators used to obtain t h e i r value i n constant dollar s were the indexes of prices of machinery and the indexes of prices of animal products re-spectively. The interest rates were the same as the ones used i n determining land input. Cost of Operating Farm Machinery - The value of this input was arrived at by taking the t o t a l yearly expense 1 (reported by the Dominion Bureau of S t a t i s t i c s ) incurred by Canadian farmers i n operating t r a c t o r s , trucks, automo-b i l e s , engines and combines. The deflator used was a com-bined index of the prices of the items constituting the oper-2 ating expenses of machinery, i . e . , gasoline, o i l and grease. Depreciation and Maintenance - The figures used to calculate t h i s input were the sum of the Dominion Bureau of 3 S t a t i s t i c s estimates of depreciation on buildings and mach-inery, plus the repair expenses of farm buildings and mach-inery. These estimates were deflated by an index constructed Canada, D.B.S. Reference Paper No. 25 (Part I I ) , .Farm Income, February, 1952, pp. 56-57. ~" 2 Appendix D. 3 Canada, D.B.S. Reference Paper No. 25, l o c . c i t . - 26 -from the indexes of prices of farm machinery and building materials. The weights used i n combining these two indexes were (as given by Dominion Bureau of S t a t i s t i c s , Depart-1 ment of Trade and Commerce) 9.9 and 3.8 respectively. Taxes - This input represents rural-municipal 2 taxation figures on owner-operated farms. I t was deflated 3 by an index of tax and interest rates. F e r t i l i z e r s - "Estimates were calculated and based 4 on o f f i c i a l s t a t i s t i c s of production and sales." The defla-5 tor was the index of f e r t i l i z e r prices. Miscellaneous Items - This includes a l l other 6 inputs (mainly such items as hardware and small tools) that were not included i n any of the categories enumerated above. To deflate t h i s value, the index of prices of hardware was 7 used. Canada, Department of Trade and Commerce, Prices Branch, Price Index Numbers of Commodities and Services Used by Far- mers, 1913-1948, July 21. 1948. pp.8 and 15. 2 D.B.S. Reference Paper No. 25, l o c . c i t . 3 Price Index Numbers of Commodities and Services used by  Farmers, l o c . c i t . 4 D.B.S. Reference Paper No. 25, l o c . c i t . ^ Price Index Numbers of Commodities and Services used by  Farmers, l o c . c i t . 6 D.B.S Reference Paper No. 25, l o c . c i t . 7 Price Index Numbers of Commodities and Services used by  Farmers, l o c . c i t . - 27 -Results and Interpretations Changes i n the amounts of the various inputs -The measures of the changes.in'the amounts of the various inputs described above are presented i n Table 3. The most s t r i k i n g fact that t h i s table shows i s that the t o t a l of a l l inputs has changed l i t t l e from year to year and during the whole period of 1926 to 1952. Except for the years during 1 the second World War, the index of t o t a l inputs changed only by 2 or 3 points from one year to the next. Over the whole 27 year period, the index varied by less than 10 points above or below 100. Thus the net effect of economic pro-gress has been to leave t o t a l inputs i n Canadian agriculture r e l a t i v e l y unchanged. That i s to say that any increase or decrease i n any one of the i n d i v i d u a l inputs has been o f f -set by a corresponding increase or decrease i n one or more of the others. A preliminary examination of the table i n d i -cates that there has occurred: (1) a r e l a t i v e l y large i n -crease i n the amounts of the inputs of non-land c a p i t a l , the cost of operating farm machinery, taxes, f e r t i l i z e r s and miscellaneous items; (2) r e l a t i v e l y s l i g h t changes i n the amounts of land (real estate) and depreciation; (3) a re-l a t i v e l y great decline i n the amount of labor input. The r e l a t i v e l y large decline i n the index for the. war years i s l a r g e l y attributable to the f a l l i n the a g r i c u l t u r a l labor force caused by the War's increased demand for manpower. - 28 -TABLE 3 INDEX NUMBERS OF AGRICULTURAL INPUTS, CANADA, 1926-1952 (1935-1939 = 100) 1 2 3 4 5 Non-Land Cost of 0per« Depreciation Year Labor Land Capital ating Farm and Machinery Maintenance 1926 86.3 90.2 107.5 63.5 118.1 1927 87.2 93.8 117.0 75.8 129.8 1928 88.1 97.4 119.9 90.7 133.6 1929 89.0 90.5 121.0 100.7 138.2 1930 90.0 104.7 115.8 99.8 135.0 1931 90.9 103.1 114.7 95.9 123.7 1932 92.4 103.6 114.4 84.9 116.1 1933 93.9 101.7 116.6 82.9 110.8 1934 95.4 107.5 101.4 87.9 106.5 1935 97.0 108.8 102.3 89.7 108.2 1936 98.5 105.6 103.5 94.3 100.0 1937 100.0 107.9 98.3 100.6 97.8 1938 101.5 97.1 94.4 104.4 96.7 1939 103.0 96.0 101.5 112.5 97.3 1940 100.6 98.6 100.7 120.3 93.4 1941 85.8 86.3 96.7 126.0 90.8 1942 97.4 89.2 100.9 126.5 96.7 1943 76.2 88.0 116.8 131.6 101.6 1944 85.6 88.0 111.8 144.4 103.7 1945 85.7 89.6 i n ; 9 154.7 111.4 1946 96.9 88.5 119.5 176.5 122.7 1947 88.6 88.5 116.6 185.2 124.4 1948 89.8 90.0 105.8 194.4 122.8 1949 85.1 89.9 110.1 228.8 119.6 1950 79.0 89.8 118.8 229.6 124.4 1951 75.6 91.1 127.8 267.4 113.5 1952 69.7 91.1 127.8 285.6 116.6 • - 29 TABLE 3 (Continued) 6 7 8 9 Taxes F e r t i l i z e r Miscellaneous Total 89.1 50.8 140.1 92.3 89.5 47.7 149.1 96.5 95.5 60.3 148.0 99.4 97.8 78.8 134.8 99.4 103.1 112.3 136.9 102.6 102.6 98.9 102.5 100.0 98.6 64.3 81.5 98.1 98.1 59.1 81.6 97.8 120.3 69.4 91.9 99.8 99.2 76.6 92.6 100.4 102.0 83.3 93.3 100.1 100.9 106.5 101.1 98.1 99.3 115.2 102.6 99.8 98.7 118.3 110.5 101.6 95.7 125.8 113.0 100.9 97.5 115.2 109.6 90.9 97.9 142.2 130.9 90.5 101.0 167.0 123.5 90.9 101.1 177.2 145.3 96.6 103.7 206.7 152.5 99.1 113.2 220.5 161.4 107.9 117.7 250.5 189.0 106.4 132.3 252.0 180.0 106.6 146.7 280.7 171.0 106.8 136.2 290.6 172.1 104.7 144.0 300.2 175.5 105.4 145.5 295.1 161.9 103.6 - 30 -Within these three categories there appear c e r t a i n short run aberrations i n the movement of the indexes of each input. These aberrations are mostly attributable to the effects of the great depression and the Second World War upon the a g r i c u l t u r a l economy. Thus, for example, i n examining the index of labor input (Table 3), the following s i g n i f i c a n t changes may be noted. Between 1926 and 1952, the index decreased from 86.3 to 69.7 or about 19 percent. Within t h i s period labor input was highest i n the years 1930 to 1939, averaging 97.0. This was probably due to unemployment i n industry which tended not only to r e s t r i c t the movement of labor out of agri c u l t u r e , but even to cause some movement of people into agriculture. During the war years 1940 to 1945 the figure declined to 88.6. At the end of the War, the index jumped sharply from 85.7 i n 1945 to 96.9 i n 1946, probably as a resu l t of the baclc-to-the-farm movement of the returning veterans. But the next year t h i s figure declined to 88.6 and since 1949 has gone down each year. However, for the whole period, the downward trend i n a g r i -c u l t u r a l labor force i s apparent. On the other hand, during the same period of time, there appears to be no secular trend for land ( r e a l estate) input. Between 1926 and 1952, land input increased only s l i g h t l y from an index of 90.2 to 91.1. During t h i s period, the index was somewhat higher i n the t h i r t i e s than i n the f o r t i e s . The decline since the t h i r t i e s i n this index may be explained i n terms of the changes i n farm building require-- 31 -merits for there has been a gradual increase i n the acreage of improved land. Thus, the decline i n the index since 1939 may have been caused by the fact that farm building require-ments have been reduced by the transfer from horse power to tractor power which has lessened the need for barns and feed storage space. The s l i g h t r i s e i n the index for land input i n the l a s t few years may be the r e s u l t of the increase i n the number of farm buildings, p a r t i c u l a r l y dwellings, i n Canada. In contrast to labor and land, the non-land c a p i t a l inputs (machinery and livestock) have increased by 19 percent between 1926 and 1952. However, t h i s figure does not appear to be as high as one might expect i n view of the large mach-inery sales and the improvements that have taken place i n the q u a l i t y of machinery and livestock during the period 1926 to 1952. Part of the reason for the smaller than expected increase i s the fact that the method of measuring the changes has the shortcoming that s i g n i f i c a n t q u a l i t y changes which have come about i n both machinery and l i v e s t o c k are not f u l l y r e f l e c t e d i n t h e i r s e l l i n g prices. While t h i s c r i t i c i s m applies also to the measurements of some of the other inputs, i t s effect i s probably more pronounced i n the case of non-land c a p i t a l . For example, i t i s a fact that a tractor of 1926 i s quite i n f e r i o r to a 1952 model; yet i t s p r i c e , after taking account of changes i n the value of money, i s not very - 32 -differe n t i n the two years. In the case of liv e s t o c k , the aggregate figure used to measure changes i n the input of livestock does not show which class of livest o c k caused the change. Table 4 below gives a breakdown by type of the changes i n livestock numbers. I t may be seen from the table that any increase i n the importance of livestock since 1926 has been due to an increase i n the number of swine and c a t t l e , which have offset the considerable decrease i n the number of horses. In the case of non-land c a p i t a l , moreover, the movement of the index i s more e r r a t i c than for the other inputs. These e r r a t i c movements are caused, aside from the effects of the depression and World War I I , by the effect on the index of hog and c a t t l e production cycles. However, when these short run changes i n the index are taken into account, i t appears that the secular trend for non-land c a p i t a l inputs i s s l i g h t l y upward. The trend i s also upward for the rest of the inputs except depreciation which has remained f a i r l y constant. The greatest expansion has occurred i n the case of f e r t i l i z e r inputs and the cost of operating farm machinery. Between 1926 and 1952, the increases were 482 percent f o r f e r t i l i z e r s and 350 percent f o r the cost of operating farm machinery. Taxes increased by 63 percent during the same period, with most of the increase taking place since 1945. - 3 3 -T A B L E 4 I N D E X N U M B E R S O F A N I M A L S O N F A R M S I N C A N A D A , S E L E C T E D Y E A R S , 1 9 2 5 - 1 9 4 9 ( 1 9 3 5 - 1 9 3 9 = 1 0 0 ) Year Horses "Milk Cows Other Cattle A l l Cattle Sheeps and Lambs Swine 1 9 2 5 1 1 8 . 2 8 6 . 6 9 5 . 3 9 1 . 5 8 5 . 3 1 0 1 . 8 1 9 3 0 1 1 2 . 7 8 5 . 5 9 0 . 2 8 8 . 2 1 1 1 . 5 9 4 . 8 1 9 3 5 1 0 2 . 8 1 0 1 . 6 1 0 4 . 0 1 0 2 . 9 1 0 4 . 6 9 2 . 7 1 9 4 0 9 8 . 1 9 6 . 5 9 5 . 8 9 6 . 1 9 3 . 6 1 5 2 . 4 1 9 4 5 9 1 . 2 1 0 5 . 8 1 3 7 . 0 1 2 3 . 4 1 1 7 . 5 1 5 3 . 0 1 9 4 9 6 3 . 4 9 5 . 8 1 1 0 . 6 1 0 4 . 2 6 7 . 3 1 3 1 . 1 Source: The Canada Year Book, 1 9 4 7 - 1 9 4 8 and 1 9 5 1 . In summary, i t seems that, although there have been some e r r a t i c movements i n the indexes of i n d i v i d u a l inputs, c h i e f l y attributable to the impact of World War I I and of the depression i n the t h i r t i e s , the t o t a l of inputs has remained quite constant. The t o t a l of labor input has declined markedly and i t has been replaced by other types of input. Changes i n the r e l a t i v e importance of the various  inputs - The above analysis indicates that the use of some factors of production has increased much faster than that of others, and i n the case of labor, there has been an actual reduction i n t o t a l input. I t i s obvious, therefore, that the r e l a t i v e importance of the various inputs has changed. The purpose of t h i s section i s to examine th i s s h i f t . - 34 -The measures of changes i n the r e l a t i v e importance of input f a c t o r s , calculated i n the manner described above, are presented i n Table 5. Before examining changes i n the r e l a t i v e importance of i n d i v i d u a l inputs, however, the following s a l i e n t points may be observed. The table reveals that throughout the whole period under study, labor input has remained the most impor-tant single factor of production i n Canadian a g r i c u l t u r e , having varied from 30 to 48 percent of the t o t a l input. The second most important factor has been land, which has con-s t i t u t e d about 20 percent of a l l input. Non-land c a p i t a l has been about 7 to 8 percent of the t o t a l input. The three together comprised from 60 to 70 percent of the t o t a l input. The range of change for most of the others has been so large that i t would be inappropriate to quote average fig u r e s . In 1952, however, the other inputs were, i n order of importance, the cost of operating farm machinery (16 percent), depre-c i a t i o n and maintenance (13 percent), taxes (6 percent), miscellaneous items (5 percent) and f e r t i l i z e r s (3 percent). Nevertheless, the significance of the findings as shown i n Table 5 l i e s not i n how much each factor c o n t r i -buted to t o t a l inputs i n a given year (or on the average over the whole period); rather, i t l i e s on the changes that have taken place i n the importance of the i n d i v i d u a l inputs. For, as has been shown above, the effect of economic progress on - 35 -TABLE 5 CHANGES IN THE RELATIVE IMPORTANCE OP AGRICULTURAL INPUTS, CANADA, 1926 to 1952." (1935-1939 = 100) 1 2 3 4 5 Non-Land Cost of Oper- Depreciation Year Labor Land Capital ating Farm and Machinery Maintenance 1926 44.10 20.56 7.88 3.87 14.43 1927 42.66 20.47 8.21 4.42 15.19 1928 41.81 20.64 8.16 5.13 15.16 1929 42.26 19.16 8.24 5.69 15.69 1930 41.35 21.47 7.64 5.44 14.85 1931 42.88 21.72 7.77 5.39 13.98 1932 44.41 22.23 7.89 4.86 13.35 1933 45.27 21.89 8.07 4.77 12.78 1934 45.09 22.68 6.88 4.92 12.05 1935 45.56 22.80 6.90 5.02 12.15 1936 46.42 22.20 7.01 5.30 11.28 1937 46.52 22.42 6.57 5.50 10.88 1938 47.99 20.49 6.41 5.88 10.94 1939 47.87 19.91 6.77 6.23 10.82 1940 47.04 20.57 6.76 6.70 10.44 1941 44.49 19.99 7.20 7.79 11.27 1942 41.41 20.76 7.56 7.87 12.06 1943 39.54 20.57 8.70 8.14 12.62 1944 41.83 19.17 7.84 8.41 12.12 1945 42.82 19.06 7.65 8.79 12 .-71 1946 42.38 17.27 7.50 9.20 12.84 1947 39.30 18.10 7.42 9.79 13.19 1948 39.75 17.78 6.72 10.26 13.01 1949 37.63 17.73 6.98 12.05 12.63 1950 35.58 18.06 7.68 12.33 13.40 1951 33.83 18.20 8.21 14.26 12.15 1952 31.75 18.52 8.35 15.50 12.70 «- Individual inputs expressed as a percentage of t o t a l inputs. - 36 -TABLE 5 (Continued) 6 7 8 9 Taxes F e r t i l i z e r Miscellaneous Total 3.87 .51 4.78 100.00 3.72 .45 4.88 100.00 3.85 .56 4.69 100.00 3.94 .73 4.28 100.00 4.03 1.01 4.21 100.00 4.12 .91 3.23 100.00 4.03 .60 2.62 100.00 4.03 .56 2.63 100.00 4.84 .64 2.90 100.00 3.96 .70 2.91 100.00 4.09 .76 2.94 100.00 3.99 .97 3.15 100.00 3.99 1.06 3.24 100.00 3.90 1.07 3.43 100.00 3.80 1.16 3.53 100.00 4.30 1.16 3.80 100.00 4.34 1.44 4.56 100.00 4.46 1.69 4.28 100.00 4.20 1.69 4.74 100.00 4.20 1.89 4.86 100.00 4.21 1.88 4.72 100.00 4.44 2.16 5.60 100.00 4.98 2.17 5.33 100.00 5.51 2.42 5.05 100.00 5.22 2.55 5.18 100.00 5.48 2.62 5.25 100.00 5.63 2.62 4.93 100.00 - 37 -agriculture has been to increase the amount used of some inputs r e l a t i v e to others. The main o f f s e t t i n g factor to those inputs which have increased has been the decline i n the input of labor. This i s as might be expected i n view of the labor-saving nature of many of the advances made i n a g r i -c u l t u r a l technology. As w i l l be seen.later i n the discussion of the o v e r a l l e f f i c i e n c y of Canadian a g r i c u l t u r e , t h i s s h i f t i n importance has been associated with an increase i n the economic e f f i c i e n c y of a g r i c u l t u r e . Today, Canadian a g r i -c u l t u r a l production i s higher than at any other period of i t s h i s t o r y , and t h i s i n the face of the smallest number of people engaged i n the industry. The change i n the r e l a t i v e importance of labor i n agriculture was as follows: labor i n agriculture contributed 44 percent of a l l a g r i c u l t u r a l inputs i n Canada i n 1926. The figure declined to 34 percent i n 1952, a drop of 21.4 percent i n importance i n the 27 year period. The drop i s even greater for a shorter period. In 1931 labor was 42.19 percent of a l l inputs. The decline over the 13 year period between 1939 and 1952 was 35 percent. In the post-war period of 1946 to 1952, the index declined 24.9 percent. How long t h i s decline w i l l continue w i l l be determined, according to Schultz, by: 1. The rate at which labor saving practices and techniques are introduced and c a p i t a l i s substituted for labor--the lower t h i s rate, the fewer the people that w i l l f i n d i t necessary to leave farming; - 38 -2. The rate of growth of demand for farm pro-ducts ( f u l l e r employment, larger exports, more indus t r i a l uses of farm products, better d i e t s , larger population), the higher t h i s r a t e , the smaller the necessary movement of people out of farming; 3. The rate at which farm people reduce the number of hours they work per year...the greater the rate at which free time and l e i s u r e are i n t r o -duced the fewer the persons migrating from farms; and 4. The rate of the natural increase of farm people—the lower t h i s rate of increase the less the necessary movement off farms.1 On an "a p r i o r i " basis, therefore, i t would seem that the net r e s u l t (as f a r as Canada i s concerned) of the four conditions mentioned above would be a continuation of the downward trend i n the r e l a t i v e importance of labor i n agriculture for the foreseeable future. Land input has also shown a s i g n i f i c a n t decline i n r e l a t i v e importance (Table 5). Land (real estate) declined i n r e l a t i v e importance by about 10 percent. Throughout the period 1926 to 1930, land input constituted, on the average, 20 percent of a l l production inputs i n Canadian agric u l t u r e . This figure rose to an average of 22.3 percent i n the depression period of 1930 to 1935; i t declined to about 20.6 percent i n the prewar period of 1936-1939. During the war period (1939-1945) land input comprised on the average 20 percent of t o t a l inputs and 1 T. W. Schultz, "Changes i n Economic Structure A f f e c t i n g Agriculture," Journal of Farm Economics, XXVIII (February, 1946) 19. - 39 -declined to 18 percent for the post-war period. These f i g -ures indicate a declining r e l a t i v e importance of land as an input of production as Canadian agriculture has advanced technologically. The figures also suggest that events which hinder technological development increase the r e l a t i v e importance of land. Thus, i n the t h i r t i e s when the returns of farmers were reduced, and the addition to and the replace-ment of machinery and building c a p i t a l were c u r t a i l e d , the r e l a t i v e importance of land was increased. Conversely, dur-ing and a f t e r the second World War, when the rate of adoption of better techniques was r e l a t i v e l y more rap i d , land became less important as an agent of production. The technological changes which caused t h i s decline i n the importance of land are: (1) those which have resulted i n increased output per acre (improve-d crops and better c u l -t u r a l p r a c t i c e s ) , (2) the replacement of horses by tractors which has released farm land from the growing of feed f o r power to the production of food f o r human use. Moreover, the effect of technology has been not only to decrease the importance of land, but also to increase the size of farm. This fact i s indicated by the increase i n acres per farm over the years since 1921 which has occurred to accommodate the adoption of equipment which enable a man to handle more acres. - 40 -The conclusion that may be drawn from the empirical evidence i s that any s c a r c i t y of additional good land has been offset by the development and adoption of "land-saving" techniques. This appears to be i n l i n e with Schultz's f i n d -ings f o r the United States for he states that technological development "...has reduced the income claims of t h i s factor (land) to an even smaller f r a c t i o n of the national income; and i t has given r i s e to profound changes i n the e x i s t i n g forms of income-producing property. The underlying economic development has modified i n an important way and relaxed su b s t a n t i a l l y the e a r l i e r i r o n grip of the niggardliness of 1 nature." Thus the two most important factors of production i n a g r i c u l t u r e , labor and land, have declined i n r e l a t i v e importance by about 30 and 10 percent respectively, between the years 1926 to 1952. Miscellaneous items and depreciation have remained almost unchanged i n t h e i r r e l a t i v e importance. Hence, the declines i n the r e l a t i v e size of the labor and land inputs have been offset by an increase of 6 percent i n the r e l a t i v e importance of non-land c a p i t a l , 300 percent i n the cost of operating farm machinery, 400 percent i n f e r t i l i -zers and 45 percent i n taxes. These and previous figures x T. W. Schultz, The Economic Organization of Agriculture, Toronto: McGraw-Hill Book Company, Inc., 1953, pp. 125-126. - 4 1 -therefore give the numerical estimates of the extent of sub s t i t u t i o n of factors of production i n Canadian a g r i -culture. The way i n which t h i s s u b s t i t u t i o n of inputs has been associated with a g r i c u l t u r a l production and e f f i c i e n c y i s discussed below. CHAPTER V CHANGES IN THE ABSOLUTE AND RELATIVE IMPORTANCE OF VARIOUS CLASSES OF OUTPUT OF CANADIAN AGRICULTURE Method The following i s an attempt to measure the changes i n output of Canadian agriculture that have come about during the period 1926 to 1952, and that have accompanied the st r u c t u r a l changes discussed i n the preceding chapter. A g r i -c u l t u r a l output has been computed as the t o t a l cash value of sales of crops, l i v e s t o c k , livestock products and forest pro-ducts, together with the value of the amount of these pro-ducts consumed on farms, and the value of house rent. Changes i n inventory and income transfers to agriculture by government have not been taken into account. Year to year inventory changes have l i t t l e significance when dealing with a period of years since t h e i r value eventually appears as farm income. Income transfers can legiti m a t e l y be excluded since they are not t r u l y a part of the product of the industry. Thus the measure of Canadian a g r i c u l t u r a l output used i n t h i s study i s the sum of: (1) the value of t o t a l cash income and income i n kind from crops (including f r u i t , vegetable and maple products); - 43 -(2) cash income and income i n kind from livestock and l i v e -stock products (including dairy products, poultry and eggs), 1 less the value of feed sold off farms; (3) cash income and income i n kind from forest products grown on farms (including lumber and firewood) and (4) an inputed value of farm house rent. The deflators used i n the case of crops, l i v e s t o c k and forest products were the indexes of wholesale prices of f i e l d products, animal products, and lumber and timber pro-ducts respectively. An index with which to deflate r u r a l house rent was constructed by taking the average of 50 per-cent of the index of the costs of building materials and 50 percent of the index of tax and interest rates, under the assumption that house rent i s d i r e c t l y proportional to the costs included i n such an index. Results and Interpretations Total a g r i c u l t u r a l output, measured i n constant dollars increased from an index (1935-1939 = 100) of 106 i n 1926 to 153 i n 1952, an increase of 44 percent. The s i g n i -ficance of a comparison between any two years may be doubtful x This i s to avoid the double counting of feed sold f i r s t as a crop and then as a livestock product. - 44 -i n view of the great v a r i a t i o n from year to year. For example, i n 1937, due to widespread drought the index stood at 88.2; while i n 1944 t o t a l production was almost double with an index of 164.7. Nevertheless, the data c e r t a i n l y does have a d i s t i n c t upward secular trend which shows up quite c l e a r l y i n the five-year moving average (Table 8). In Table 6, the index numbers of the changes i n the t o t a l amounts of the four categories of output are pre-sented; while i n Table 7, five-year moving averages of these indexes are shown. From the two tables i t may be seen that the growth i n output of crops has been highly e r r a t i c , while that of l i v e s t o c k has been f a i r l y steady. On the other hand, there appears no tendency to increase i n the case of forest products and house rent, which i n fact shows a small decline. The changes i n r e l a t i v e importance of the four categories are presented i n Table 7. There appears to be no general tendency of increase or decrease i n importance of either crops or livestock between 1926 to 1952. The two categories have remained f a i r l y equal i n r e l a t i v e importance, and any change i n any given year has been mainly due to the fluctuations i n crop production attributable to weather con-d i t i o n s . Thus, for example, the range i n the r e l a t i v e importance of crops i n any p a r t i c u l a r year has been as low as 34 percent (1937) to as high as 57 percent (1952). Over the whole period, however, crops and l i v e s t o c k have each - 45 -TABLE 6 INDEX NUMBERS OF CANADIAN AGRICULTURAL OUTPUTS, BY CATEGORIES , 1926 to 1952 (1935-1939 = 100) 1 2 3 4 5 Year Crops Livestock rorest nouse Total and Products Rent Livestock Products 1926 118.8 93.3 123.8 99.3 106.0 1927 118.2 97.3 124.8 107.1 108.3 1928 152.6 96.8 119.4 111.3 122.5 1929 119.4 93.4 116.1 113.6 107.1 1930 92.6 82.9 127.9 112.1 91.7 1931 97.6 95.1 134.4 113.8 99.7 1932 107.7 93.0 122.9 105.0 101.7 1933 98.4 99.4 110.5 104.6 100.0 1934 101.5 93.0 102.1 103.8 97.9 1935 97.6 93.7 107.6 109.0 97.3 1936 88.3 103.5 100.5 101.9 96.9 1937 71.6 100.9 98.5 97.2 88.2 1938 101.5 97.4 97.5 97.3 99.2 1939 140.9 104.5 95.5 110.6 99.2 1940 123.5 115.6 100.6 87.5 118.5 1941 128.1 100.6 88.4 82.6 121.8 1942 117.2 142.9 92.5 81.5 124.5 1943 144.1 146.6 110.4 85.9 138.7 1944 197.1 155.1 114.4 83.8 164.7 1945 142.5 155.0 115.9 83.8 141.9 1946 140.8 143.7 130.0 87.5 137.2 1947 160.8 131.1 126.9 91.6 140.1 1948 176.8 135.9 111.5 90.4 148.0 1949 192.8 132.2 111.0 90.1 148.0 1950 140.2 125.8 95.5 86.5 127.0 1951 187.3 123.2 88.1 86.5 145.2 1952 206.7 122.7 90.8 85.5 153.1 - 46 -TABLE 7 FIVE YEAR MOVING AVERAGES OF INDEX NUMBERS OF CANADIAN AGRICULTURAL OUTPUTS, BY CATEGORIES, 1928-1950 1 2 3 4 " 5 Year Crops Livestock Forest House Total and Livestock Products Products Rent 1928 120.3 94.7 122.4 108.7 107.1 1929 116.1 93.1 124.5 111.6 105.9 1930 114.0 92.2 124.1 111.2 104.5 1931 103.1 92.8 122.4 109.8 100.0 1932 99.6 92.7 119.6 107.9 98.2 1933 100.6 94.8 115.5 107.2 99.3 1934 98.7 96.5 108.7 104.9 88.8 1935 91.5 98.1 103.8 103.3 96.1 1936 92.1 97.7 101.2 101.8 95.9 1937 100.2 100.0 99.9 103.2 96.2 1938 105.2 104.4 98.5 98.9 100.4 1939 113.1 103.8 96.1 95.0 105.4 1940 122.2 112.2 94.9 91.9 112.6 1941 130.8 122.0 97.5 89.6 120.5 1942 142.0 132.2 101.3 84.3 133.6 1943 145.8 140.0 104.3 83.5 138.3 1944 148.3 148.7 112.6 84.5 141.4 1945 157.1 146.3 119.5 86.5 144.5 1946 163.6 144.2 119.7 87.4 146.4 1947 162.7 139.6 119.1 88.7 143.0 1948 162.3 133.7 115.0 89.2 140.1 1949 171.6 129.6 106.6 89.0 141.7 1950 180.8 128.0 99.4 87.8 144.3 - 47 -contributed on the average between 40 and 50 percent of t o t a l output. On the other hand, forest products and house rent have declined i n r e l a t i v e importance i n the period 1926 to 1952. They have both declined by about 30 to 40 percent between the early and l a t t e r years of the period. - 48 -TABLE 8 CHANGES IN THE RELATIVE ! IMPORTANCE OF THE VARIOUS CATEGORIES OF OUTPUT IN CANADA, 1926 to 1952 1 2 3 4 5 Year Crops Livestock Forest House Total and Products Rent Livestock Products 1926 46.8 39.4 ' 6.1 7.7 100 1927 45.7 40.2 6.0 8.1 100 1928 52.1 35.4 5.1 7.4 100 1929 46.7 39.0 5.6 8.7 100 1930 42.3 40.5 7.2 10.0 100 1931 41.0 42.7 7.0 9.3 100 1932 44.3 40.9 6.3 8.5 100 1933 41.2 44.5 5.7 8.6 100 1934 43.4 42.5 5.4 8.7 100 1935 42.0 43.1 5.7 9.2 100 1936 38.1 47.9 5.4 8.6 100 1937 34.0 51.2 5.8 9.0 100 1938 42.9 44.0 5.1 8.0 100 1939 49.8 39.5 4.2 6.5 100 1940 44.6 44.7 4.5 6.2 100 1941 44.0 46.7 3.8 5.5 100 1942 39.4 51.4 3.8 5.4 100 1943 43.5 47.3 4.1 5.1 100 1944 50.1 42.1 3.6 4.2 100 1945 42.0 48.9 4.2 4.9 100 1946 42.9 46.9 4.9 5.3 100 1947 48.1 41.9 4.7 5.3 100 1948 50.0 41.1 3.9 5.0 100 1949 52.7 38.7 3.8 4.8 100 1950 46.2 44.3 3.9 5.6 100 1951 54.0 38.0 3.2 4.8 100 1952 56.5 35.9 3.1 4.5 100 """ Components-parts expressed as a percentage of t o t a l of outputs. CHAPTER VI CHANGES IN THE OVERALL ECONOMIC EFFICIENCY OF CANADIAN AGRICULTURE The o v e r a l l economic e f f i c i e n c y of Canadian a g r i -culture was calculated by multiplying the r a t i o of the indexes of t o t a l output and t o t a l inputs by 100. The e f f i c i e n c y so calculated i s presented i n Table 9. The index of economic e f f i c i e n c y shows an increase of 44 percent from 1926 to 1952. A comparison of any two years may be doubtful for the same reason that a comparison of output of any two years may not be si g n i f i c a n t since year to year effects of weather and other variables d i s t o r t the secular trend. Nevertheless, i t appears that Canadian agriculture was most e f f i c i e n t during the f i v e year period of 1940 to 1945, and least e f f i c i e n t between 1930 to 1935. The table below gives a summary of the changes i n output, input and e f f i c i e n c y i n f i v e year periods. The low index of output (hence low e f f i c i e n c y i n 1931-1935 was caused by the general drought which seriously affected yields i n the p r a i r i e areas. The low input (and high e f f i c i e n c y ) i n 1941-1945, was caused mainly by the reduction i n the farm labor force to meet the war demand for manpower. These two periods represent extremes of low and high e f f i c i e n c y i n the a g r i c u l t u r a l sector of the economy. - 50 -TABLE 9 CANADA--INDEX NUMBERS OP AVERAGE OUTPUT, INPUT AND EFFICIENCY BY FIVE YEAR PERIODS, 1926 to 1950 Period Output Input E f f i c i e n c y 1926-1930 107.1 98.0 109.4 1931-1935 99.3 99.2 100.1 1936-1940 100.4 100.1 100.3 1941-1945 138.3 93.1 147.6 1946-1950 140.1 106.5 131.5 In general, however, the main fact which emerges from the study of the r a t i o of output to input i n the twenty-seven year period under study i s that technological progress has resulted i n about 40 percent more a g r i c u l t u r a l output with a comparatively s l i g h t increase i n input. This means that the increase i n output has come about not through an increase i n t o t a l input but rather through an increase i n the productivity of factors of production v i a new techniques and improvements i n the factors themselves. This has resulted i n the sub s t i t u t i o n of ce r t a i n inputs for others with r e s u l t s as shown i n the above analysis of input structure. This fact i s even more apparent f or the years 1930 to 1945 when pro-duction increased greatly along with a s l i g h t decrease i n t o t a l inputs. Moreover, the years of highest e f f i c i e n c y have indicated that production might be maintained or even increased along with a further reduction of ce r t a i n factors of produc-t i o n such as labor. -51-TABLE 10 INDEX NUMBERS OP TOTALS OF OUTPUTS, INPUTS AND EFFICIENCY IN CANADIAN AGRICULTURE, 1926 TO 1952 (1935-1939 = 100) 1 2 ~ 3 Index of Year Index of Index of E f f i c i e n c y Total Total (Col. 1 f Outout Inputs Col. 2) 1926 106.0 92.3 114.8 1927 108.3 96.5 112.2 1928 122.5 99.4 123.2 1929 107.1 99.4 107.8 1930 91.7 102.6 88.9 1931 99.7 100.0 99.7 1932 101.7 98.1 103.7 1933 100.0 97.8 102.2 1934 97.9 99.8 98.1 1935 97.3 100.4 96.9 1936 96.9 100.1 96.9 1937 88.2 98.1 89.0 1938 99.2 99.8 99.3 1939 99.2 101.6 97.6 1940 118.5 100.9 117.4 1941 121.8 90.9 134.0 1942 124.5 90.5 137.6 1943 138.7 90.9 152.6 1944 164.7 96.6 170.5 1945 141.9 99.1 143.2 1946 137.2 107.9 127.2 1947 140.1 106.4 131.7 1948 148.0 106.6 138.8 1949 148.0 106.8 138.6 1950 127.0 104.7 121.3 1951 145.2 105.4 137.8 1952 153.1 103.6 147.7 - 52 -TABLE 11 FIVE-YEAR MOVING AVERAGES OF INDEX NUMBERS i OF TOTALS OF OUTPUTS, INPUTS AND EFFICIENCY OF CANADIAN AGRICULTURE 1928-1950 1 2 3 Year Outputs Inputs E f f i c i e n c y 1928 107.1 98.0 109.4 1929 105.9 99.6 106.4 1930 104.5 99.9 104.7 1931 100.0 99.6 100.5 1932 98.2 99.7 98.5 1933 99.3 99.2 100.1 1934 88.8 99.2 99.6 1935 96.1 99.2 97.1 1936 95.9 99.6 96.2 1937 96.2 1Q0.0 95.9 1938 100.4 100.1 100.0 1939 105.4 98.3 107.5 1940 112.6 96.7 117.2 1941 120.5 95.0 127.8 1942 133.6 94.0 142.4 1943 138.3 93.6 147.6 1944 141.4 97.0 146.2 1945 144.5 100.0 145.0 1946 146.4 103.3 142.3 1947 143.0 105.3 135.9 1948 140.1 106.5 131.5 1949 141.7 106.0 133.6 1950 144.3 105.4 136.8 CHAPTER VII CONCLUSION The study has attempted to determine the change i n e f f i c i e n c y and the associated changes i n the amount of inputs which have occurred i n Canadian agriculture over the past 27 years. The results indicate that the effect of economic progress over the period has been to increase the economic e f f i c i e n c y of Canadian agriculture.by about 40 percent. Economic progress, however, i s not achieved with-out adjustments because the increase i n productivity of var-ious inputs obviously goes forward at d i f f e r e n t rates. This f a c t , plus changes i n the r e l a t i v e prices of fa c t o r s , neces-s i t a t e s substituting one factor for another. I t i s note-worthy that the whole process has involved comparatively l i t t l e increase i n t o t a l a g r i c u l t u r a l input, as indicated by the fact that the aggregate of a l l inputs increased by only about 10 percent i n the period under study. But sub-s t i t u t i o n has had a marked effect upon the r e l a t i v e and absolute importance of different factors. Thus labor i n agriculture has decreased i n favor of c a p i t a l inputs, and the input of land (and attached c a p i t a l ) has declined i n r e l a t i v e importance although r e a l estate input has remained almost constant i n t o t a l amount. These results seem to - 54 -support the theoret i c a l analysis of the hypothesis advanced i n this thesis (Chapter I I I ) . The value of a study such as t h i s l i e s i n the fact that i t points out something of the kind and rate of adjust-ment imposed on agriculture by economic progress. I t i s well to recognize these changes since the benefits of progress are associated with special problems i n agriculture which must be taken into account i n any long run policy f or the industry. The empirical study brings out some evidence to show what di r e c t i o n such long run p o l i c i e s may follow. Thus, for i n s -tance, i t may be seen that any p o l i c y which i s aimed at main-taining or extending the economic e f f i c i e n c y of a g r i c u l t u r e , must f a c i l i t a t e the movement of ce r t a i n factors of production into the industry and others out of the industry. The pre-sent d i r e c t i o n of development c a l l s f o r an increased amount of c a p i t a l and an outward movement of labor f o r , as was shown e a r l i e r , the substitution of c a p i t a l for labor w i l l depend on the rate at which labor saving and c a p i t a l using production techniques are developed. However, the depen-dence of agriculture upon ov e r a l l economic p o l i c y such as that of f u l l employment i s clear, because c a p i t a l w i l l not be substituted f or labor unless the displaced a g r i c u l t u r a l population finds alternative employment elsewhere. This fact suggests that the e f f i c i e n c y of labor i n agriculture i s dependent upon the ease with which a g r i c u l t u r a l labor can be - 55 -replaced with various forms of c a p i t a l . I t may be that t h i s process w i l l have to be f a c i l i t a t e d i n the interest of a g r i c u l t u r a l e f f i c i e n c y and welfare. The effect of the outward transfer of labor upon the e f f i c i e n c y of agriculture 1 was made more evident i n Canada and the United States, when during the second World War, the a g r i c u l t u r a l labor force declined with no reduction i n the volume of output. This resulted i n the improvement of both e f f i c i e n c y and income of a g r i c u l t u r e . The implication i s that, p r i o r to t h i s time, labor and c a p i t a l i n agriculture were combined i n a manner that f e l l f a r short of optimum e f f i c i e n c y . Depres-sion, lack of f a c i l i t i e s f o r supplying c a p i t a l and d i f f i -c u l t i e s involved i n changing occupations are forces which r e s t r i c t the transfer of labor out of and the movement of c a p i t a l into a g r i c u l t u r e . I t i s evident then that economic progress brings agriculture into closer relationship with the other sectors of the economy. For example, Canadian agriculture i s dependent more and more upon other industries f o r the supply of various inputs and as an outlet f o r i t s products. As a consequence agriculture has come to share not only the f r u i t s of progress i n other industries but also some of t h e i r pro-x T. W. Schultz, Agriculture i n an Unstable Economy, New York, MacGraw H i l l Book Company, 1945, pp. 95-98/ - 56 -blems, since any adverse changes i n the economic well being of other industries tend to be shared by a g r i c u l t u r e . Thus, for example, agriculture has become increasingly vulnerable to depressions and t h e i r attendant consequences. The study too would seem to have implications which might enable presently underdeveloped countries to predict the course of t h e i r own development. The entire economy of most of these countries i s based on a g r i c u l t u r e . Therefore, the p o s s i b i l i t y of economic development l i e s i n improving the low productivity of the a g r i c u l t u r a l labor force. This low productivity stems from a number of reasons, among them being a s c a r c i t y of resources per man, d i f f i c u l t i e s associated with securing c a p i t a l , lack of alternative employment possi-b i l i t i e s and b e l i e f s and customs that are not conducive to change. Undoubtedly programs w i l l be developed to aid i n overcoming these obstacles. In developing these programs, the rate and d i r e c t i o n of economic growth of these countries might well be aided by the Canadian experience which has been analysed i n t h i s thesis. - 57 -A P P E N D I X i - 58 -APPENDIX A FARM MORTGAGE INTEREST RATES The interest rates used to calculate the annual input of land and non-land c a p i t a l (pp.24-25) were Canadian Farm Loan Board interest rates graded s l i g h t l y upward to conform more closely to actual market rates of i n t e r e s t . The Canadian Farm Loan Board rates were as follows: A p r i l 1929 to July 1936 i n c l u s i v e . . . .6-^  percent July 1937 to March 1945 i n c l u s i v e . . . .5 percent A p r i l 1946 to March 1952 inclusi v e . . .4^ percent A p r i l 1952 to date inclusive 5 percent The rates used i n this study were as follows: 1926 to 1936 inclusive ' . . 7 percent 1937 to 1945 inclusive 6 percent 1946 to 1952 inclusive 5 percent - 59 -APPENDIX B LAND AND NON-LAND CAPITAL INPUT IN AGRICULTURE, CANADA, 1926-1952 (see pp. 24-25) TABLE 12 VALUES OF LAND AND NON-LAND CAPITAL INPUTS IN AGRICULTURE, CANADA, 1926-1952" ( i n thousands of current d o l l a r s ) Machinery & Year Land Implements Livestock (a) (b) (c) 1926 4683637 547247 785626 1927 4999459 577165 863104 1928 5193629 608267 933080 1929 4696998 638122 947498 1930 4698745 665172 758224 1931 4053282 650664 516714 1932 3489400 610658 415886 1933 3425200 573867 444092 1934 3467808 538685 457654 1935 3662234 511163 538994 1936 3554474 494197 577490 1937 3634981 478454 607316 1938 3271970 474990 594132 1939 3371018 469287 656363 1940 3321328 462120 698267 1941 3029846 596046 623486 1942 3253535 605154 816353 1943 3490997 611592 1202960 1944 3703418 592058 1179423 1945 3773606 605268 1168184 1946 3969014 784260 1148731 1947 4363312 810131 1242197 1948 4923146 883295 1342202 1949 5040534 1008683 1475912 1950 5417828 1179005 1626438 1951 6004892 1334613 2254085 1952 6004892 1334613 2254085 - 60 -""" The values f o r land and machinery for the years 1926 to 1929 were found by int e r p o l a t i n g values of 1922 and 1930 as follows: F i r s t the values f o r 1922 and 1930 were deflated by t h e i r respective price indexes. Then the difference between the two values was appor-tioned f o r the eight years, 1922 to 1930. These values were then i n f l a t e d to give values i n terms of current d o l l a r s . These operations are presented below: 1. Method of Adjustment f o r Values of Land, 1926 to 1930 (thousands of d o l l a r s ) . Value of land, 1930 - 4 ,698 ,745 " " n , 1922 4 ,232 ,588 Deflated Value of land, 1930 - 3 ,532 ,891 Deflated Value of land, 1922 = 2 ,549 ,752 Difference 983 ,139 Yearly Increment = 122 ,892 Apportioned values, 1926 = 3 ,409 ,999 1927 = 3 ,287 ,107 1928 = 3 ,164 ,215 1929 = 3 ,041 ,323 Inflated Values, 1926 = 4 ,696 ,998 1927 - 5 ,193 ,629 1928 = 4 ,999 ,459 1929 = 4 ,683 ,637 2. Method of Adjustment f o r Value of Machinery, 1926 to 1930 (thousands of d o l l a r s ) Value of Machinery, 1930 = 665 ,172 n n n > 1922 I 391 ,660 Deflated Value of Machinery, 1930 = 685 ,744 Deflated Value of Machinery, 1922 r 435 ,662 Difference - 250 ,082 Yearly Increment = 31 ,260 Apportioned Values, 1926 = 560 ,704 1927 = 591 ,964 1928 = 623 ,224 1929 = 654 ,484 Inflated Values, 1926 r 547 ,247 1927 = 577 ,165 1928 = 608 ,267 1929 = 638 ,122 - 61 -Source: Canada, D.B.S., "Gross A g r i c u l t u r a l Wealth of Canada, by Provinces," Monthly B u l l e t i n of A g r i - c u l t u r a l S t a t i s t i c s , March, 1923, 1929-1931 and 1935. Canada, D.B.S., "Current Values of Farm Capital i n Canada, by Provinces," Quarterly B u l l e t i n of A g r i - c u l t u r a l S t a t i s t i c s , January-March, 1941 and A p r i l -June, 1945, 1947-1951. Canada, D.B.S., "Current Values of Farm Capital i n Canada, by Provinces and Items," Monthly B u l l e t i n  of A g r i c u l t u r a l S t a t i s t i c s , March, 1937-1940. The current values of land and non-land c a p i t a l were deflated by the following price indexes: TABLE 13 INDEX NUMBERS OF PRICES OF LAND AND NON-LAND CAPITAL INPUTS IN AGRICULTURE, CANADA, 1926-1952 (1935-1939 = 100) Year Land Machinery Animal Products (a) (b) (c) 1926 154.2 97.6 130.2 1927 158.3 97.5 127.8 1928 158.3 97.6 138.2 1929 154.2 97.5 144.4 1930 133.3 97.0 133.3 1931 116.7 94.9 92.7 1932 100.0 94.1 70.5 1933 100.0 92.1 69.2 1934 95.8 94.6 86.5 1935 100.0 95.5 94.1 1936 100.0 97.8 93.7 1937 100.0 97.2 106.0 1938 100.0 104.1 104.8 1939 104.2 103.6 101.5 1940 100.0 105.8 106.7 1941 104.2 109.1 124.4 1942 108.3 114.4 144.6 1943 116.7 117.1 161.8 1944 125.0 118.2 166.1 1945 125.0 115.1 170.2 1946 133.3 118.8 181.2 1947 145.8 126.3 200.2 263/7 1948 162.5 138.8 1949 166.6 158.6 265.4 1950 179.2 166.4 281.4 1951 195.8 186.8 336.9 1952 200.0 196.0 277.5 - 62 -Source: (a) Calculated from average values per acre of occupied farm lands i n Canada as given i n the D.B.S., Quarterly B u l l e t i n of A g r i c u l t u r a l S t a t i s t i c s , XLVI, 1953, 18 and XE, 1952, 31. (b) Canada, D.B.S. Department of Trade and Commerce, Prices Branch, Price Index Numbers of Commodities and Services used by Farmers, 1913 to 1948, Rev. 1948, July 21, 1948, p. 8, A p r i l 1951, p. 3 and January 1952, p. 3. (c) Canada, D.B.S. Prices Section, Prices and Price  Indexes, XXII, 1948, 53. Canada, D.B.S., Department of Trade and Commerce, Prices and Price Indexes, XXXI, 1948, 10. TABLE 14 DEFLATED VALUES OF LAND AND NON-LAND CAPITAL INPUTS IN AGRICULTURE, CANADA, 1926-1952 (thousands of d o l l a r s ) Year Land Machinery and Implements Livestock Total 1926 3037378 560704 603399 4201481 1927 3158217 591964 675355 4425536 1928 3280877 623224 675166 4579267 1929 3046043 654484 656162 4356689 1930 3524940 685744 568810 4779494 1931 3473249 685631 557406 4716286 1932 3489400 648946 589909 4728255 1933 3425200 623091 640306 4688597 1934 3619841 569434 529311 4718586 1935 3662234 535289 572789 4770312 1936 3554474 505314 616318 4676106 1937 3634981 492237 572940 4700158 1938 3271970 456282 566920 4295172 1939 3235142 452910 646663 4334715 1940 3321323 436786 654421 4412535 1941 2907722 546330 501195 3955247 1942 3004187 528981 564559 4097727 1943 2991428 522282 743486 4257186 1944 2962734 500895 710008 4173697 1945 3018885 525863 686360 4231108 1946 2977505 660152 633958 4271615 1947 2978952 641434 620478 4240864 1948 3029628 636380 508988 4174996 1949 3025531 635992 556109 4217632 1950 3023342 708564 577981 4309887 1951 3066850 714461 669066 4309887 - 63 -The deflated values were expressed on an annual basis by multiplying them, by interest rates on farm mortgages (see Appendix A) and are presented i n columns 6 and 7 of Table 16. - 64 -APPENDIX C LABOR INPUT IN AGRICULTURE, CANADA, 1926 to 1952 (see p.23) TABLE 15 LABOR INPUT IN AGRICULTURE, CANADA, 1926-1952 Labor Average Monthly Annual Labor Year Force Wages Wages Input u; vb) (c) (cU 1926 1143 $49.99 $599.88 $685,662 1927 1155 51.51 618.12 713,929 1928 1167 51.14 613.68 716,166 1929 1179 49.78 597.36 704,287 1930 1191 44.25 531.00 632,421 1931 1203 33.64 403.68 485,627 1932 1223 25.35 304.20 372,037 1933 1243 23.61 283.32 352,167 1934 1263 25.01 300.12 379,052 1935 1284 26.62 319.44 410,161 1936 1304 28.78 345.36 450,349 1937 1324 31.18 374.16 495,388 1938 1344 31.91 382.92 514,644 1939 1364 33.52 402.36 548,819 1940 1329 40.14 481.68 640,153 1941 1210 46.62 559.44 676,922 1942 1127 60.01 720.12 811,575 1943 1107 74.17 890.04 985,274 1944 1126 84.25 1011.00 1,138,386 1945 1134 90.60 1087.20 1,232,885 1946 1274 96.27 1155.24 1,471,776 1947 1163 103.96 1247.52 1,450,866 1948 1186 113.07 1356.84 1,609,212 1949 1123 113.89 1366.68 1,534,782 1950 1066 114.00 1368.00 1,458,288 1951 998 127.00 1524.00 1,520,952 1952 926 135.00 1620.00 1,500,120 (a) Thousands of persons, 14 years or over, with jobs i n agriculture as of June of each year. (b) Average wage rates without board, as of May 15 of each year. The figures f o r 1926 to 1940 were calculated by con-- 65 -verting index numbers of wages by talcing average wage rates fo r 1935-1939 = $30.4. This l a t t e r figure was calculated from 1951-1952 figures of wage rates and index numbers of wage rates f o r the two years. (c) column (b) x 12. (d) column (a) x column (c). Source: (a) Canada, D.B.S., Reference Paper No. 23, p. 15. Canada, D.B.S., Special Surveys D i v i s i o n , The  Labor Force, Quarterly Surveys, LX (No. 6), VII Wo. 2), V r f (No. 2). (b) Canada, D.B.S., "Farm wages," Quarterly B u l l e -t i n of A g r i c u l t u r a l S t a t i s t i c s . XLIV, Nos. 1, 2 and T. - 66 -APPENDIX D VARIOUS INPUTS IN AGRICULTURE, CANADA 1926-1952 TABLE 16 VALUES OF VARIOUS INPUTS IN AGRICULTURE, 1926-1952 (thousands of current d o l l a r s , except where specified) 1 2 3 4 5 Non-Land Cost of Year Labor Land Capital Operat- Depre-(Deflated) (Deflated) ing Farm Machinery* ciation""" 1926 685662 212616 81487 46647 139368 1927 713929 221078 88712 51606 150713 1928 716165 222661 90887 58890 158043 1929 704287 213223 91745 65760 164463 1930 632421 246146 87819 64935 153422 1931 485627 243127 87013 57997 132866 1932 372037 249258 86720 53108 120946 1933 352167 239764 88438 50361 115671 1934 379052 253389 76912 54406 113948 1935 410161 256356 77565 54232 116327 1936 450349 248813 78514 55287 112770 1937 495388 218099 63910 56917 113411 1938 514644 196318 61392 58500 114572 1939 548819 194109 65974 62309 117918 1940 640153 199250 65472 67500 117227 1941 676992 174463 62852 76137 119963 1942 811575 180251 65612 83377 138536 1943 985274 179486 75946 86886 150039 1944 1138386 177764 72658 95327 160012 1945 1232885 181133 72733 101924 169783 1946 1471776 148875 64706 118176 190964 1947 1450866 148948 63096 129294 208887 1948 1609212 151481 57268 153147 233677 1949 1534782 151278 59605 173361 249278 1950 1458288 151167 64327 191766 271994 1951 1520952 153343 69176 226419 285111 1952 1500120 153343 69176 246399 303929 Source: Col. 1, Appendix C. 2-3, Appendix B. 4-8, Farm operating and depreciation expenses taken from: Canada, D.B.S., Reference Paper No. 25, Farm Income, Part I I , February, 1952 and Quarterly B u l l e t i n of A g r i -c u l t u r a l S t a t i s t i c s , XLVI, (January-liarch, 1953), No. 1. - 67 -TABLE 16 (Continued) 6 7 8 X Taxes F e r t i l i z e r Miscellaneous 49536 6182 47032 49491 5798 49290 51285 6849 50168 53462 8878 44265 54347 12050 44174 50346 9935 33009 45833 5657 26255 41442 5309 24735 50531 6410 28145 41122 6989 28802 41529 7695 29112 40667 10157 32968 41009 11189 34530 40953 11141 36223 40111 12574 39784 41194 12348 40165 41916 16305 50712 44063 17728 48107 46172 18815 56507 48276 21622 58929 54463 23608 62913 60680 28379 78890 69392 31157 89267 76972 37288 90750 80662 40168 93512 39704 45015 106151 96393 50296 106632 Total expenses i n operating t r a c t o r , truck, automobile f o r business, engine and combine. Includes machinery and building repair expenses. Includes f r u i t and vegetable supplies, veterinary expenses, binder twine, i r r i g a t i o n charges, fence re-p a i r s , harness r e p a i r s , s a l t , hardware and small t o o l s . - 68 -TABLE 17 PRICE INDEX NUMBERS OF COMMODITIES AND SERVICES USED BY FARMERS, CANADA, 1926-1952. (1935-1939 » 100) i 2 & 3 4 0 6 7 8 Wage Int- Opera- Depre- Tax F e r t i - Miscel-Year Rates erest t i o n of c i a t i o n Rates l i z e r laneous Rates Machin-ery 1926 164.5 109.4 127.7 102.2 135.5 129.4 104.0 1927 169.5 109.4 118.1 100.5 134.7 129.4 102.4 1928 168.3 109.4 112.8 102.4 130.8 120.7 105.0 1929 163.8 109.4 113.5 103.0 130.3 119.8 101.7 1930 145.6 109.4 113.6 98.4 128.4 114.1 100.0 1931 110.7 109.4 105.1 93.0 119.5 106.9 99.8 1932 83.4 109.4 108.7 90.2 113.2 93.5 99.8 1933 77.7 109.4 105.5 90.4 102.9 95.5 93.9 1934 82.3 109.4 108.2 92.6 102.3 98.2 94.9 1935 87.6 109.4 105.1 93.1 101.0 97.0 96.4 1936 94.7 109.4 101.9 97.6 99.2 98.2 96.7 1937 102.6 93.8 99.7 100.4 98.2 101.4 101.0 1938 105.0 93.8 97.4 102.6 100.6 103.3 104.3 1939 110.3 93.8 96.2 104.9 101.1 100.2 101.6 1940 131.8 93.8 97.5 108.7 102.1 106.3 109.1 1941 163.5 93.8 105.0 114.4 102.9 114.0 113.5 1942 211.7 93.8 114.5 124.0 104.3 121.9 120.0 1943 267.8 93.8 114.7 127.8 106.3 112.9 120.7 1944 275.3 93.8 114.7 133.6 111.2 112.9 120.5 1945 298.1 93.8 114.3 131.9 113.4 112.9 119.7 1946 314.6 78.1 116.3 134.7 117.2 113.9 120.8 1947 341.4 78.1 121.3 145.4 125.6 120.5 129.3 1948 371.2 78.1 136.9 164.7 127.8 131.5 153.6 1949 373.3 78.1 139.2 180.5 127.8 141.3 164.4 1950 382.4 78.1 145.1 189.4 144.3 147.0 168.3 1951 416.6 78.1 147.1 217.4 151.8 159.5 187.4 1952 445.5 78.1 149.9 225.7 161.4 181.3 204.1 Source: Canada, D.B.S., Prices Branch, Price Index Numbers of Commodities and Services used by Farmers, 1913-1948, July 21, 1948, pp. 5 and 8. A p r i l 1951. p. 3 and January 1952, p. 3. Canada, D.B.S., Quarterly B u l l e t i n of A g r i c u l t u r a l  S t a t i s t i c s , XLIV, 1948, No. 1 p.23 and No. 2, p.119. - 69 -TABLE 18 DEFLATED VALUES OF PRODUCTION INPUTS IN AGRICULTURE, CANADA, 1926-1952 (in thousands of d o l l a r s ) 1 2 3 4 Cost Of Oper-Year Labor Land Non-Land Capital ating Farm Machinery 1926 416816 194347 74485 36529 1927 421197 202091 81090 43647 1928 425529 209927 83078 52207 1929 429968 194902 83862 57930 1930 434355 225545 80273 57161 1931 438687 222237 79537 55182 1932 446088 223271 80269 48857 1933 453239 219163 80839 47736 1934 460574 231617 70303 50283 1935 468220 234322 70900 61600 1936 475553 227436 71768 54256 1937 482737 232586 68134 57088 1938 490137 209294 65449 60062 1939 497569 206939 70334 64770 1940 485700 212452 69800 69231 1941 414020 185995 67006 72511 1942 , 383361 192165 69949 72818 1943 367914 191350 80965 75750 1944 413507 189514 77461 83110 1945 413581 193106 77541 89072 1946 467825 190621 82850 101613 1947 427905 190714 80789 106590 1948 433516 193957 73327 111868 1949 411139 193698 76319 131725 1950 481351 193556 82365 132161 1951 365087 196342 88574 153922 1952 336727 196342 88574 164376 - 70 -TABLE 18 (Continued) 5 6 7 8 9 Depreciation Taxes F e r t i l i z e r Miscellaneous Total 136368 36558 4777 45223 945103 149963 36742 4481 48135 987346 154339 39210 5674 47779 1017743 159673 40130 7411 43525 1017401 155917 42326 10561 44174 1050314 142866 42131 9295 330V5 1023010 134086 40489 6050 26308 1004418 127954 40274 5559 263/(2 1001406 123054 49395 6527 29&58 1021411 124948 40715 7205 29£78 1027795 115543 41864 7836 30105 1024361 112959 41412 10016 32642 1037575 111669 40764 10832 33106 1021313 112409 40503 11119 35653 1039296 107844 39284 11829 36466 1032606 104863 40033 10832 35388 930648 111722 40188 13376 42260 925829 117401 41452 15702 39857 930383 119769 41522 16665 46894 988442 128721 42571 19151 49231 1012974 141770 46470 20727 52080 1103956 143664 48312 23551 61013 1088838 141880 54297 23694 58117 1090656 138104 60228 26389 55201 1092600 143648 55899 27325 55563 1071868 131146 59117 28222 56644 1079082 134661 59723 27741 52244 1060398 - 71 -APPENDIX E AGRICULTURAL OUTPUT IN CANADA BY CATEGORIES, 1926-1952 (see Chapter V) TABLE 19 CANADA—TOTAL FARM CASH INCOME AND INCOME IN KIND, 1926-1952 ( i n thousands of current d o l l a r s ) 1 2 3 4 5 6 Cash Income : in C o l . l Cash i n - Feed Col. 4 Year Income Kind from plus come from Expenses i minus from Crops Col. 2 livestock Col. 5 Crops 1926 555794 44204 600178 388146 59047 329099 1927 523866 38927 562753 399167 61243 337924 1928 618486 34822 653308 427526 62132 365394 1929 484255 38109 522334 429459 60093 369366 1930 271188 41182 312370 353973 52300 301673 1931 177777 24529 202306 281713 35614 246099 1932 186163 21263 207426 213223 29269 183954 1933 190738 28065 218803 219648 26374 193274 1934 231702 28804 260506 260343 34606 225737 1935 234530 28157 262687 286032 36897 249135 1936 255877 31704 287581 318212 42984 275228 1937 262479 31774 294253 362171 57368 304803 1938 296589 29976 326565 339714 52261 287453 1939 343985 32081 376066 354626 52310 302316 1940 303020 33201 336221 408277 53872 354405 1941 328504 34511 363015 531675 70017 461458 1942 365862 44038 409900 701431 96719 .604460 1943 539102 53355 592457 830897 133118 697779 1944 852922 54998 907920 932761 173673 759088 1945 681510 56628 738138 970077 197113 772964 1946 736167 62086 798253 950740 193093 757647 1947 877129 66693 943822 1017128 280392 736736 1948 1060102 70279 1130381 1330350 292887 1037463 1949 1104213 64902 1179115 1314473 280512 1033961 1950 795552 62271 857823 1346062 287388 1058674 1951 1129484 67272 1196756 1538600 295966 1242634 1952 1338154 91050 1429204 1296541 281444 1015097 Source: Canada, D.B.S., Reference Paper No. 25, Farm Income, Part I I , February 1952, pp.32, 33 and 46 and Quar-t e r l y B u l l e t i n of A g r i c u l t u r a l S t a t i s t i c s , XLVI (1953; No. 1, pp.23 f f . TABLE 19 (Continued) 7 8 9 10 11 12 Income i n Col. 6 Cash Income Income i n Col. 9 House Kind from plus from Forest Kind from plus Rent Livestock'"" Col. 7 Products Forest Products Col.10 85166 414265 21934 32948 54882 77263 86229 424153 22234 31698 53932 83506 90669 456063 23638 30516 54154 85271 90645 460011 23894 29344 53238 87706 74973 376646 21909 29113 51022 80487 54449 300548 16611 29495 46106 73742 39479 223433 12867 24578 37445 63346 41326 234600 12181 22332 34513 61229 48561 274198 14325 21246 35571 61415 51332 300467 15468 21635 37103 63974 55536 330764 16581 21834 38415 62501 59817 364620 17326 21990 39316 62745 60636 348089 16817 22166 38983 60492 59351 361667 17451 22335 39786 61701 66148 420553 23711 22452 46163 59533 77190 538648 25078 22189 47267 59523 99824 704284 31712 22808 54520 64225 111201 898980 36971 34644 71615 70036 119014 878102 43142 37659 80801 74296 126320 899284 44224 38232 82456 75588 130293 887940 55512 42675 98187 79803 158062 894798 70790 52406 123196 87577 184302 1221765 72696 60108 132804 97040 161870 1195831 76095 60529 136624 100315 148625 1207299 81908 64706 146614 107772 172462 1415276 85354 74023 159377 120796 145668 1160765 84097 73135 157232 123869 * Includes dairy products, poultry and eggs. - 73 -TABLE 20 WHOLESALE PRICE INDEX NUMBERS OF FARM PRODUCTS, CANADA, 1926-1952 (1935-1939 = 100) 1 2 3 4 F i e l d Animal Lumber & House Year Products Products Timber Rent 1926 158.5 130.2 112.1 124.8 1927 149.4 127.8 109.3 125.0 1928 134.3 138.2 114.7 122.8 1929 137.2 144.4 116.0 123.8 1930 105.8 133.3 100.9 115.1 1931 65.0 92.7 86.8 103i9 1932 60.4 70.5 77.1 96.7 1933 69.3 69.2 79.0 93.9 1934 80.5 86.5 88.1 94.9 1935 84.4 94.1 87.2 94.1 1936 102.2 93.7 96.7 98.3 1937 128.9 106.0 101.0 103.5 1938 100.9 104.8 100.7 99.7 1939 83.7 101.5 105.4 104.6 1940 85.4 106.7 116.1 109.1 1941 88.9 124.4 135.2 115.5 1942 109.7 144.6 149.1 126.4 1943 129.0 161.8 164.1 130.7 1944 144.5 166.1 178.6 142.1 1945 162.5 170.2 179.9 144.6 1946 177.9 181.2 191.0 146.2 1947 184.1 200.2 245.6 153.3 1948 200.6 263.7 301.2 172.2 1949 191.6 265.4 311.4 178.5 1950 191.9 281.4 388.2 199.7 1951 200.4 336.9 457.3 224.0 1952 216.9 277.5 437.8 232.4 Source: Col. 1-2, Canada, D.B.S., Prices Section, Price & Price Index, XXII, 1948, p. 53. Col. 3, Computed from above source, p. 15 & XXXI, Nos. 1 and 8. Col. 4, Canada, D.B.S., Prices Branch, Price  Index Numbers of Commodities and Ser-vices used by Farmers, 1913-48, July 21, 1948. Col. 5, Index Constructed by taking the aver-age of 50% of index of costs of building materials and 50$ of index numbers of tax and int e r e s t rates. - 74 -TABLE 21 CANADA: DEFLATED VALUES OF FARM INCOME ( i n thousands of d o l l a r s ) 1 2 3 Total In- Total In- Total In- Total In-come from House Rent Year come from Crops come from Livestock come from Forest Products Grand Total 1926 378661 318176 48958 61909 807704 1927 376675 331888 49343 66805 824711 1928 486454 330002 47214 69439 933109 1929 380709 318567 45895 70845 816016 1930 295246 282555 50567 69928 698296 1931 311240 324216 53118 70974 759548 1932 343420 316936 48567 65508 774431 1933 313733 339017 43687 65206 761643 1934 323610 316992 40376 64715 745693 1935 311241 319306 42549 67985 741081 1936 281390 353003 39726 63582 737701 1937 228280 343981 38927 60623 671811 1938 323652 332146 38712 60674 755184 1939 449302 356322 37748 58987 902359 1940 393701 394145 39761 54567 882174 1941 408340 432997 34961 51535 927833 1942 373655 487057 36566 50811 948089 1943 459268 499988 43641 53585 1056482 1944 628318 528659 45241 52284 1254502 1945 454238 528369 45834 52274 1080715 1946 447709 490033 51407 54585 1044734 1947 512668 446952 50161 57128 1066906 1948 563500 463316 44092 56353 1127261 1949 614442 450577 43874 56198 1165091 1950 446769 429033 37767 53966 967535 1951 597184 420088 34852 53927 1106051 1952 658923 418294 35914 53300 1166431 - 75 -B I B L I O G R A P H Y - 76 -BIBLIOGRAPHY 1. REFERENCES CITED A. Books Boulding, K. E., The Economics of Peace, New York, Prentice H a l l , 19W. Hicks, J . R., " D i s t r i b u t i o n and Economic Progress," The  Theory of Wages, New York, Peter Smith, 1948, pp. 112-134. Malthus, J . R., An Essay on the Pr i n c i p l e s of Population, New York, E. P. Dutton & Co., Book 2, n. d. M i l l , J . S., Princi p l e s of P o l i t i c a l Economy, New York, D. Appleton and Company, 1909, Vol. I I . Schultz, T. W. , Agriculture i n an Unstable Economy, New York, MacGraw H i l l Book Company, Inc., 1945. Schultz, T. W., The Economic Organization of Agr i c u l t u r e, New York, MacGraw H i l l Book Company, Inc., 1953. B. Government Publications Canada, Dominion Bureau of S t a t i s t i c s (D.B.S.) The Canada  Year Book, 1952-53, Ottawa, D.B.S., Department of Trade and Commerce, 1953. The Canada Year Book, 1948-49, Ottawa, D.B.S., Department of Trade and Commerce, 1949. Canadian Labor Force Estimates, 1931-1950, Ottawa, D.B.S., Reference Paper No. 23, 1950. Farm Income, Ottawa, D.B.S., Reference Paper No. 25, Part I I , January 1952. The Labor Force, Quarterly Surveys, Ottawa, D.B.S., Special Surveys Di v i s i o n , LX, No. 6; VIII, No. 2.; VII, No. 2. - 77 -Price and Price Indexes, Ottawa, D.B.S., Depart-ment of Trade and Commerce, Prices Section, XXII, 1948; XXXI, 1953. Price Index Numbers of Commodities and Services  used by Farmers, Ottawa, D.B.S.', Department of Trade and Commerce, Prices Section, July 21, 1948; A p r i l 1951; January 1952. Monthly B u l l e t i n of A g r i c u l t u r a l S t a t i s t i c s . Ottawa, D.B.S., A g r i c u l t u r a l Branch, March, 1923; 1929 to 1931; 1935 to 1940. Quarterly B u l l e t i n of A g r i c u l t u r a l S t a t i s t i c s , Ottawa, D.B.S., A g r i c u l t u r a l D i v i s i o n , January-March, 1941, 1948, 1951, 1953; A p r i l -June, 1945, 1947-1951, 1953; July-September, 1952. C. Periodicals Hopkins, J . A., "Technological Development A f f e c t i n g Farm Organization," Journal of Farm Economics, The American Farm Economics Association, XXI, (February 1949), 165. Schultz, T. W., "Changes i n Economic Structure a f f e c t i n g Agri c u l t u r e , " Journal of Farm Economics, The American Farm Economics Association, XXVIII (February 1946), 19. 2. GENERAL REFERENCE A. Books Clark, C o l l i n , The Conditions of Economic Progress, London, Macmillan & Co., Ltd., 1940. Keirstead, B. S., The Theory of Economic Change, Toronto, Macmillan Co. of Canada Ltd., 1948. - 78 -Moulton, H. G., Controlling Factors i n Economic Development, Washington, The Brookings I n s t i t u t i o n , 1949. Schultz, T. W., Production and Welfare of Agriculture, New York, Macmillan Company, 1949. B. Periodicals Brewster, J . M., "Farm Technological Advance and Total Population Growth," Journal of Farm Economics (hereinafter referred to as J.F.E.), The Ameri-can Farm Economics Association (hereinafter referred to as A.F.E.A., XXVII (August 1945), 509. Carver, T. N., "Rural Depopulation," J.F.E. t A.F.E.A., IX (January 1927), 1. E a r l , D. R., "Agriculture i n Our Economic History," A g r i c u l t u r a l History, The A g r i c u l t u r a l History Society, XXII ( A p r i l 1948), 65. E l l i c k s o n , J . C., and Brewster, J . M., "Technological Advance i n Agriculture," J.F.E., A.F.E.A., XXIX (November 1947) 827. Haythorne, G. V., "Canadian A g r i c u l t u r a l Manpower Pro-blems," J.F.E., A.F.E.A., XXXI (February 1949), 385. Heady, 0. H., "Basic Economic and Welfare Aspects of Farm Technological Advance," J.F.E., A.F.E.A., XXXI (May 1949), 293. Heady, 0. H., "Changes i n Income D i s t r i b u t i o n i n A g r i c u l -ture," J.F.E., A.F.E.A., XXVI (August 1944),. 435. Hopkins, J . A., "Changing Structure of Agriculture and i t s Impact on Labor," J.F.E., A.F.E.A., XXIII (February 1941), 89. Johnson, S. E., "Technological Change and the Future of Rural L i f e , " J.F.E., A.F.E.A., XXXII (May 1950), 225. Long, E. J . , "Some Theoretical Issues i n Economic Develop-ment," J.F.E., A.F.E.A., XXXrV (December 1952), 723. - 79 -C. Ms eel lane o us Kiefer, R. S., et a l . , "The Influence of Technological Progress i n A g r i c u l t u r a l Production," i n Farmers i n a Changing World, U.S.D.A. Year Book, Washington, Government Printing O f f i c e , 1940, pp. 509 f f . 

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