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UBC Theses and Dissertations

A manual on farm accounting and methods of financing for British Columbia farms Matchett, Robert Gordon 1955

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A MANUAL ON FARM ACCOUNTING AND METHODS OF FINANCING FOR BRITISH COLUMBIA FARMS by ROBERT GORDON MATCHETT  A THESIS SUBMITTED I N PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE I N AGRICULTURE  i n t h e Department of A g r i c u l t u r a l Economics  We a c c e p t t h i s t h e s i s a s c o n f o r m i n g t o t h e s t a n d a r d r e q u i r e d from c a n d i d a t e s f o r t h e degree o f MASTER OF SCIENCE I N AGRICULTURE  Members o f t h e Department o f A g r i c u l t u r a l Economics  THE UNIVERSITY OF BRITISH COLUMBIA A p r i l , 1955  ABSTRACT The present t h e s i s i s a study c o m p i l i n g farm management i n f o r m a t i o n to be used as the b a s i s f o r e x t e n s i v e l i t e r a t u r e f o r d i s t r i b u t i o n t o B r i t i s h Columbia  farmers.  The phases of farm management which are presented here are farm accounting, the use of farm accounts i n making p r o d u c t i o n plans f o r the farm b u s i n e s s , and the methods of a c q u i r i n g f i n a n c i n g farm b u s i n e s s e s i n B r i t i s h  and  Columbia,  An i n t r o d u c t o r y chapter c o n t a i n i n g data with r e s p e c t to the p o s i t i o n of the a g r i c u l t u r a l i n d u s t r y i n B r i t i s h Columbia  precedes the chapters on farm management p r a c t i s e s , A system  of farm a c c o u n t i n g , which i s p a r t i c u l a r l y  adapted t o the f i l i n g  of the F e d e r a l Income Tax r e t u r n s i s  d e s c r i b e d i n the second c h a p t e r .  In a d d i t i o n , a d e s c r i p t i o n  of other u s e f u l farm records i s given t h e r e . The t h i r d chapter i s concerned with the use of the farm records i n the a n a l y s i s of the present farm b u s i n e s s o p e r a t i o n and i n the f o r m u l a t i o n of f u t u r e farm p r o d u c t i o n plans. The f i n a l chapter i s devoted to a d e s c r i p t i o n of the methods used i n a p p r a i s i n g a farm f o r purchase or l e a s e j the procedure f o l l o w e d i n a c q u i r i n g Crown l a n d i n B r i t i s h Columbia; Columbia  the sources of l o a n funds a v a i l a b l e to B r i t i s h farmers, A sample accounting and p h y s i c a l r e c o r d s form  t o g e t h e r with a suggested l e a s e form i s appended to the t h e s i s .  ACKNOWLEDGMENT  The writer wishes to thank Dr. W.J. Anderson, of the Department of A g r i c u l t u r a l Economics f o r h i s h e l p f u l suggestions, d i r e c t i o n and c r i t i c i s m . Thanks are also expressed to the Members of the Faculty of Agriculture, who composed the committee under which t h i s thesis was written; t h e i r suggestions and encouragement are appreciated. Mr. E.L. Menzie of the Department of A g r i c u l t u r a l Economics kindly gave the writer advice with regard to the study and thanks are tendered herewith to him f o r h i s helpfulness and co-operation.  TABLE OF CONTENTS CHAPTER I  PAGE INTRODUCTION  1  The Purpose o f the Manual  1  The P r e s e n t a t i o n of the M a t e r i a l  1  The A g r i c u l t u r a l I n d u s t r y i n B r i t i s h Columbia  . .  3  The P a t t e r n o f A g r i c u l t u r a l P r o d u c t i o n i n B r i t i s h Columbia  8  The Lower M a i n l a n d and Vancouver I s l a n d  ...  8  The Okanagan-Mainline and the Kootenays  ...  10  The C a r i b o o  11  C e n t r a l B r i t i s h Columbia  11  The Peace R i v e r  12  The M a r k e t i n g o f Farm P r o d u c t s i n B r i t i s h Columbia  12  The M i l k Board  13  F r u i t and V e g e t a b l e M a r k e t i n g Boards  14  The Canadian Wheat Board  15  Livestock Marketing  .  Other M a r k e t i n g The Number, S i z e , and V a l u e o f Farms,  15 16  British  Columbia and Canada  16  Farm Income i n B r i t i s h Columbia and Canada . . .  18  Farm Expenses i n B r i t i s h Columbia and Canada . .  23  The P h y s i c a l Volume o f P r o d u c t i o n i n B r i t i s h Columbia and Canada  25  TABLE OF CONTENTS ( C o n t i n u e d ) CHAPTER  PAGE  I (Continued) Future Production of the A g r i c u l t u r a l Industry i n B r i t i s h Columbia II  26  FARM RECORDS  29  F i n a n c i a l Records  29  O b j e c t i v e s and Purposes  29  Form  30  Double E n t r y  30  Single Entry  30  The Recommended System o f A c c o u n t i n g  31  When t o P r e p a r e I n v e n t o r i e s Recording the P h y s i c a l A s s e t s  34 .  35  E n t e r i n g t h e Items i n t h e Account Book  36  V a l u i n g t h e Items  37  P r e p a r a t i o n o f t h e B a l a n c e Sheet  38  Cash Income and Expense E n t r i e s  40  P r e p a r a t i o n o f t h e P r o f i t and L o s s Statement . .  41  Supplementary A c c o u n t s  . . . . . . . 42  U s i n g t h e Supplementary A c c o u n t s  43  How t h e System Meets t h e I n t e n d e d O b j e c t i v e s . .  43  S i n g l e E n t e r p r i s e Accounts S p e c i a l Problems i n K e e p i n g F i n a n c i a l Records Valuation  44 . .  45 45  TABLE OF CONTENTS (Continued) CHAPTER II  PAGE (Continued) Depreciation  46  Income Tax Returns  48  Physical Records  50  Objectives and Purposes  50  Form  51  Farm Haps  51  Land Use Record  51  Crop Records  53  Pasture Records  . . . . . . . . .  53  Livestock Records  53  Labour Records  54  Other Physical Records . . . . . . . . . . .  55  Problems i n Keeping Physical Records III  MANAGEMENT AIDS OBTAINED FROM FARM RECORDS  55 ....  Analysis of the Farm Business  57 57  Measures of Solvency  57  Net Capital Ratio  59  Working Ratio  59  Current Ratio  59  Measures from the P r o f i t and Loss Statement . .  60  Farm Capital Turnover  60  Net Farm Income  60  Labour Returns  61  Return to Capital  61  TABLE OF CONTENTS ( C o n t i n u e d ) CHAPTER III  PAGE (Continued) Measures f r o m P h y s i c a l Records Crop Records  62  . . . . . . . . . . .  62  L i v e s t o c k Records  63  Labour Records  65  M a c h i n e r y Records  66  Budgeting  „  ... . . .  I n v e n t o r y o f Resources  66  Price Expectations  .  67  Production Plans  68  Crop P l a n s  68  Livestock Plans  . . . . . . . . . .  69  E x p e c t e d Expenses  IV  66  69  Summary o f R e c e i p t s and Expenses  70  A l t e r n a t e P l a n s S h o u l d Be P r e p a r e d  71  THE ACQUISITION AND FINANCING OF A FARM BUSINESS. . P u r c h a s i n g a Farm  72  S e l e c t i o n o f a Farm E s t i m a t i n g t h e V a l u e o f a Farm F i n a l S t e p s i n P u r c h a s i n g a Farm L e a s i n g a Farm  72  72 .  75 76 77  A p p r a i s i n g a Farm t o Rent  78  Cash R e n t a l  79  Share R e n t a l  81  W r i t t e n Leases  84  TABLE OF CONTENTS ( C o n t i n u e d ) CHAPTER IV  PAGE (Continued) Crown Lands  85  Pre-emptions  •  .  85  Purchases  87  Leasing . •  89  L o c a t i n g a Farm i n B r i t i s h Columbia . . . . . . .  89  Sources of I n f o r m a t i o n f o r S e t t l e r s  89  The F a r m i n g A r e a s and t h e C l i m a t e  90  The A r a b l e and P o t e n t i a l l y A r a b l e Acreage  . . . .  92  Land V a l u e s  33  The F i n a n c i n g o f Farm B u s i n e s s e s  94  Long Term  94  Canadian Farm Loan Board Mortgages  94  I n t e r m e d i a t e Term  96  Farm Improvement Loans  96  Machinery C r e d i t  97  S h o r t Term  98  Feed and S u p p l i e s .  98  Fertilizer  98  Livestock f o r Feeding  98  Bank Loans  . . . . . . . . . . . .  Other Sources o f S h o r t Term Loans BIBLIOGRAPHY  99  . . . . . . .  99 1  0  0  TABLE OF CONTESTS ( C o n t i n u e d )  APPENDIX A.  F i n a n c i a l Records  B.  Suggested P h y s i c a l  C.  A F l e x i b l e Farm Lease  Records  INDEX OF TABLES TABLE 1.  PAGE Percentage of Land Area i n Farms, Population on Farms, Total Value of Net Production from Agriculture, Canada and Nine Provinces, 1951; Rank i n Value Farm Gross Income by Provinces, 1951  2.  4  Farm Numbers, Area, Improved Acreage, Average Size, Value of Land, Buildings, Machinery and Livestock, Canada and B r i t i s h Columbia, 1941 and 1951  3.  17  Net Farm Income Per Farm and Per Dollar of Farm Investment Value B r i t i s h Columbia and Canada, 1941 and 1951  4.  18  Net Farm Income Per Person i n the A g r i c u l t u r a l Labour Force, 1941, 1946-1953, Canada and B r i t i s h Columbia  5.  19  Farm Cash Income from the Sale of Livestock and Livestock Products, Canada and B r i t i s h Columbia, 1953  6.  20  Farm Cash Income from the Sale of F r u i t , Vegetables, and Potatoes, Canada and B r i t i s h Columbia, 1953  7.  Farm Net Income As Percentage of Farm Cash Income Canada and Nine Provinces, 1953  8.  21  24  Hired Labour, Feed and Seed Costs As Percentages of Total Farm Operating Expenses, Canada and B r i t i s h Columbia, 1926-1953  25  INDEX OF TABLES ( C o n t i n u e d ) TABLE 9.  PAGE Land Use R e c o r d  52  10.  Net Worth V a l u e s o f Two Farms  58  11.  Crop P l a n  68  12.  Livestock Plan  69  13.  Summary o f E x p e c t e d R e c e i p t s and Expenses  ...  70  14.  Land Tenure i n B r i t i s h C o l u m b i a 1951 . . . . . .  77  15.  D e t e r m i n i n g a Cash Rent by t h e Budget Method . .  80  16.  L a n d l o r d ' s and Tenant's C o n t r i b u t i o n s t o t h e Factors of Production  17.  D i s t r i b u t i o n o f Net Farm Income A c c o r d i n g t o To f o l l o w .p. 83  Contributions 18.  83  Land V a l u e s , B r i t i s h C o l u m b i a  ....  93  A MANUAL ON FARM ACCOUNTING AND METHODS OF FINANCING FOR BRITISH COLUMBIA FARMS  CHAPTER I INTRODUCTION  THE PURPOSE OF THE MANUAL T h i s manual i s an attempt t o c o n s o l i d a t e , p r e t , and make a v a i l a b l e under one c o v e r , i n f o r m a t i o n  interon f a r m  a c c o u n t i n g , and methods o f a c q u i r i n g and f i n a n c i n g farm b u s i nesses i n B r i t i s h Columbia.  The m a t e r i a l c o n t a i n e d i n t h e  manual i s an i n t e r p r e t a t i o n o f m a t e r i a l , much o f which i s a v a i l a b l e i n f a r m management t e x t s , government p u b l i c a t i o n s , and  other a g r i c u l t u r a l  literature.  These s o u r c e s o f i n f o r m a -  t i o n , however, may be somewhat i n a c c e s s i b l e t o f a r m e r s and i n some i n s t a n c e s bia.  a r e not d i r e c t l y a p p l i c a b l e t o B r i t i s h Colum-  The p r o c e d u r e i n t h i s s t u d y , t h e r e f o r e , h a s been t o  gather information  f r o m these s o u r c e s and t o s e l e c t and adapt  some o f t h e i n f o r m a t i o n  i n a way t h a t w i l l make i t u s e f u l i n  i m p r o v i n g t h e management on B r i t i s h Columbia f a r m s . THE PRESENTATION OF THE MATERIAL I n o r d e r t o a c c o m p l i s h t h i s purpose t h e s t u d y i s p r e s e n t e d i n f o u r p a r t s as f o l l o w s :  1  2  (1)  An introductory chapter describes the a g r i c u l -  tural industry of B r i t i s h Columbia i n general terms, i n d i cates some methods of marketing peculiar to B r i t i s h  Columbia,  and presents s t a t i s t i c a l data with respect to the position of the a g r i c u l t u r a l industry of B r i t i s h Columbia r e l a t i v e to the industry i a Canada.  The future production pattern of the  industry i n B r i t i s h Columbia and the contributions which the p a r t i c u l a r phases of farm management described i n t h i s manual can make to increase the e f f i c i e n c y of production i n the industry are discussed at the end of t h i s chapter. (2) The second chapter indicates the advantages accruing to farmers from keeping records.  Special emphasis i s  given to describing a system of f i n a n c i a l records which i s suited to the needs of the farmers of B r i t i s h Columbia;  this  system of records i s designed to simplify the f i l i n g of income tax  returns and to provide the farmer with a record of h i s  farm business f o r the year.  Problems found i n record keeping  and a description of physical records to supplement the financ i a l records are also presented i n t h i s chapter. (8) The t h i r d chapter deals with the use of farm records i n measuring the f i n a n c i a l safety of the farm business, the returns to the farmer from c a p i t a l and labour invested, and the making of future production plans f o r the farm business. (4) The f i n a l chapter describes the methods of purchasing and leasing farms, together with the procedure to f o l low i n acquiring Crown lands.  The sources of c a p i t a l available  for financing farm businesses coacludes the chapter.  3  THE AGRICULTURAL INDUSTRY IN BRITISH COLUMBIA B r i t i s h Columbia i s the t h i r d l a r g e s t i n a r e a  and  p o p u l a t i o n o f the t e n Canadian p r o v i n c e s ; i t s l a n d a r e a of 229,938,560 a c r e s i s 9.5  p e r c e n t of the l a n d a r e a of Canada  and i t s p o p u l a t i o n of 1,165,210 p e r s o n s i s 8.3 Canadian population."**  p e r c e n t of the  B r i t i s h Columbia r a n k s t h i r d of t h e  p r o v i n c e s i n the t o t a l v a l u e o f p r i m a r y and s e c o n d a r y product i o n but i s s i x t h i n t h e v a l u e of i t s a g r i c u l t u r a l p r o d u c t i o n . 2 E x c l u d i n g Newfoundland,  a g r i c u l t u r e forms a l o w e r p r o p o r t i o n  o f the p r o v i n c e ' s economy, than does a g r i c u l t u r e i n the economy of the o t h e r e i g h t p r o v i n c e s .  B r i t i s h Columbia has the low-  e s t p r o p o r t i o n o f t o t a l l a n d a r e a i n f a r m s , the l o w e s t t i o n o f t o t a l p o p u l a t i o n on f a r m s , and has the lowest  proporpropor-  t i o n of the t o t a l v a l u e o f the n e t p r o d u c t i o n o f p r i m a r y 3 secondary i n d u s t r i e s  and  a t t r i b u t a b l e to a g r i c u l t u r a l production.  Table 1 compares B r i t i s h Columbia's a g r i c u l t u r a l i n d u s t r y w i t h the i n Dominion d u s t r y i nBureau Canadao fandS t at th ei s tPircosv,i nNcienst.h Census o f Canada 1951, V I , P a r t 1, T a b l e 1 (Canada), Ottawa, Queen's P r i n t e r ,  TI953). o  Because of the s c a r c i t y of d a t a r e g a r d i n g a g r i c u l t u r e i n Newfoundland and because the i n d u s t r y i s s m a l l i n t h a t p r o v i n c e , Newfoundland i s d i s r e g a r d e d i n t h i s s t u d y . 3 Dominion Bureau of S t a t i s t i c s , Survey o f P r o d u c t i o n 1938-1951. pp. 4, 9, 25-30, and 31, Ottawa, Queen's p r i n t e r , (1953). ""Net p r o d u c t i o n i s computed by d e d u c t i n g from the t o t a l v a l u e o f output ( e x c l u d i n g i n d i r e c t t a x e s ) f o r each i n d u s t r y , the c o s t s of m a t e r i a l s , f u e l , p u r c h a s e d e l e c t r i c i t y and p r o c e s s s u p p l i e s consumed i n the p r o d u c t i o n p r o c e s s Ope r a t i n g expenses on a l l f a r m l a n d , net farm r e n t , wages t o l a b o u r and i n t e r e s t on mortgage and o t h e r debt a r e deducted f r o m g r o s s f a r m p r o d u c t i o n ( l e s s house r e n t ) t o g i v e the net v a l u e of a g r i c u l t u r a l p r o d u c t i o n . "  4  TABLE 1 PERCENTAGE OP LAND AREA I N FARMS, POPULATION ON FARMS, TOTAL VALUE OF NET PRODUCTION FROM AGRICULTURE, CANADA 3  AND NINE PROVINCES, 1951; RANK I N VALUE FARM GROSS I N COME BY PROVINCES, 1951  Percentage of Land a r e a i n farms  Can.  7.5  Population 20.8 on farms T o t a l net p r o d u c t i o n 20.8 from a g r i culture Rank i n v a l u e farm gross income  B.C. A l t a . Sask. Man.  2.0 10.3 6.7  6  Que.  Ont.  47.6  78.4  29.1  18.0  47.6  11.4  17.1  13.5  62.2  4  7  8  9  27.9  40.5  12.6  36.7  48.0  28.2  15.3  19.5  53.8  80.8  43.1  12.6  3  2  5  1  9.0  N.B. N.S. P.E.I.  5.0 19.7  1  P r i m a r y and s e c o n d a r y i n d u s t r i e s . S o u r c e s : N i n t h Census o f Canada 1951. V I , P a r t 1, T a b l e 1 (Canada); S u r v e y o f P r o d u c t i o n 1938 - 1951, Farm Net Income 1953 (Dominion Bureau o f S t a t i s tics).  a  There a r e numerous r e a s o n s why t h e a g r i c u l t u r a l i n d u s t r y i n B r i t i s h Columbia i s s m a l l e r r e l a t i v e t o o t h e r t r i e s than i t i s i n the o t h e r p r o v i n c e s .  indus-  Among t h e c h i e f r e a -  sons a r e t h e mountainous topography o f t h e p r o v i n c e , t h e h i g h c o s t o f c l e a r i n g l a n d and t h e c o s t s o f i r r i g a t i o n , and f e r t i l i z a t i o n n e c e s s a r y  drainage  t o produce many o f t h e s p e c i a l i z e d  5  c r o p s grown; a l s o c o n t r i b u t i n g i s : t h e h i g h wage r a t e p r e v a i l i n g f o r farm l a b o u r , t h e d i f f i c u l t y i n a d a p t i n g l a b o u r  saving  machines t o t h e p r o d u c t i o n o f many o f t h e s p e c i a l i z e d c r o p s and the c o m p e t i t i o n and  f o r t h e use o f a g r i c u l t u r a l l a n d by i n d u s t r y  housing. At present,  t h e r e remains l i t t l e o r no l a n d s u i t a b l e  f o r a g r i c u l t u r a l settlement  which does n o t r e q u i r e c l e a r i n g .  T h i s i s e s p e c i a l l y t h e c a s e i n t h e Peace R i v e r B l o c k and Cent r a l B r i t i s h Columbia. production  Much o f t h e l a n d b e i n g brought i n t o  i n the o l d e r s e t t l e d areas r e q u i r e s the i n s t a l l a t i o n  o f d r a i n a g e o r i r r i g a t i o n systems b e f o r e a g r i c u l t u r a l p r o d u c t i o n can be c a r r i e d o u t .  C l e a r i n g land i s expensive,  as t h i s  q u o t a t i o n * shows: TABLE OF AVERAGE COSTS PER ACRE LightCover  R o o t - p i c k i n g and w o r k i n g down...  $15.00 2.00 10.00 10.00 $37.00  MediumCover  Heavy« Cover  $35.00 2.50 15.00 15.00 $67.50  $45.00 5.00 15.00 20.00 $85.00  0  L i g h t cover has t r e e s of 6 inches i n diameter o r l e s s , a l t h o u g h t h e r e may be a few 8- t o 1 0 - i n c h t r e e s p e r a c r e without adding t o the cost s u b s t a n t i a l l y . Medium c o v e r ranges f r o m 8- t o 1 0 - i n c h t r e e s i n g e n e r a l , w i t h some 12-, 14-, o r 1 6 - i n c h t r e e s t h a t a r e u s u a l l y pushed o v e r by t h e p i l e r s . These l a r g e r t r e e s can i n c r e a s e the c o s t by a s much a s $1 p e r t r e e . P r o v i n c e o f B r i t i s h Columbia Lands S e r v i c e , The F o r t F r a s e r F o r t George B u l l e t i n A r e a . B u l l e t i n A r e a No. 7, p. 22, V i c t o r i a , Queen's P r i n t e r (1954).  6  Heavy c o v e r has l a r g e numbers o f 1 2 - , 14-, and 1 6 - i n c h t r e e s , and c u t t e r s cannot be used t o advantage. Such t r e e s must be c u t by saw and axe o r , b e t t e r walked down by a p i l e r . The c o s t s i n t h i s type o f cover a r e t o o g r e a t to make f a r m i n g an economic e n t e r p r i s e , e x c e p t i n s p e c i a l cases.  The  d i s t a n c e i n v o l v e d and t h e c o n s e q u e n t i a l h i g h c o s t  of r a i l and highway t r a n s p o r t a t i o n tends t o keep t h e industry relatively  s m a l l i n B r i t i s h Columbia.  h a l f of the province's population concentrated  agricultural  W i t h o v e r onei n t h e Lower  F r a s e r V a l l e y , t h e G r e a t e r Vancouver A r e a , and Southern Vancouver I s l a n d , p r o d u c e r s i n t h e Peace R i v e r B l o c k and t h e o t h e r remote d i s t r i c t s a r e p r e c l u d e d f r o m m a r k e t i n g  t h e i r products i n  these populous a r e a s , because o f l o n g h a u l s and h i g h t r a n s p o r t a tion  charges. Many p a r t s o f B r i t i s h Columbia a r e s e m i - a r i d and i r r i -  g a t i o n i s necessary  t o produce c r o p s t h e r e .  Some i r r i g a t i o n i s  used t o i n c r e a s e crop and p a s t u r e y i e l d s i n t h e C o a s t a l even though t h e a n n u a l r a i n f a l l i s h i g h .  The need f o r i r r i g a -  t i o n i s due t o t h e heavy w i n t e r p r e c i p i t a t i o n d r y summers.  Areas,  and t h e r e l a t i v e l y  B r i t i s h Columbia had 138,382 a c r e s under i r r i g a -  t i o n i n 1951, t h e second l a r g e s t i r r i g a t e d  acreage o f t h e n i n e  p r o v i n c e s ; A l b e r t a w i t h 447,032 a c r e s , had t h e g r e a t e s t gated a c r e a g e .  1  irri-  The C o a s t a l s o i l s o f B r i t i s h Columbia r e q u i r e  l i m e and most o f them r e q u i r e f e r t i l i z e r . Labour i n B r i t i s h C o l u m b i a e n j o y t h e h i g h e s t wage N i n t h Census o f Canada. V I , P a r t 1, Table 15 (Canada).  7 r a t e s i n Canada.  T h i s i s t r u e o f farm l a b o u r , because f a r m e r s  must compete w i t h i n d u s t r y f o r t h e i r l a b o u r r e q u i r e m e n t s .  The  l a r g e i n d u s t r i a l e x p a n s i o n and t h e c o n t i n u e d h i g h employment i n the  l o g g i n g i n d u s t r y of the p a s t few y e a r s has kept the demand  for labour high.  The f o l l o w i n g t a b l e i l l u s t r a t e s t h e h i g h e r  wage r a t e p r e v a i l i n g i n B r i t i s h Columbia f o r farm h e l p :  1  TABLE 2. AVERAGE WAGES PER DAY OP MALE FARM HELP I N CANADA, BY PROVINCES, AS AT JANUARY 15, 1952, 1953, AND 1954 With board 1952 1953 1954 Maritime Provinces Quebec Ontario Manitoba Saskatchewan Alberta British Columbia , Canada  $  $ 4. 30 4. 70 4. 70 4. 40 4. 10 4. 50  4.30 4.70 4.70 4.50 4.70 5.20  6. 60 4. 60  6.80 4.70  E x c l u d i n g Newfoundland available.  $  Without board 1952 1953 1954  $  4. 30 4. 60 4. 90 4. 60 4. 90 5. 50  $ 5. 40 5. 70 5. 90 5. 40 5. 30 5. 50  5.40 5.70 6.20 5.50 6.10 6.20  5. 40 5. 70 6. 20 5. 80 6. 10 6. 80  6. 20 4. 60  7. 90 5. 70  8.60 5.80  8. 30 5. 90  $  f o r which d a t a a r e n o t  Many of the h i g h l y s p e c i a l i z e d c r o p s make i n t e n s i v e use o f l a b o u r a t c e r t a i n seasons o f the y e a r .  A l t h o u g h machines a r e  b e i n g developed t o p e r f o r m t a s k s i n the p r o d u c t i o n o f some o f t h e s e c r o p s , t h e r e s t i l l remains a number o f p r o c e s s e s which must be performed by hand. Dominion Bureau o f S t a t i s t i c s , Q u a r t e r l y B u l l e t i n o f A g r i c u l t u r a l S t a t i s t i c s , J a n u a r y - March 1954, p. 3, Ottawa, Queen's P r i n t e r (1954).  8  I n d u s t r y and h o u s i n g a r e competing s u c c e s s f u l l y w i t h a g r i c u l t u r e f o r t h e use o f l a n d i n t h e G r e a t e r Vancouver A r e a , p a r t s o f t h e Lower F r a s e r V a l l e y , t h e S a a n i c h and t h e Okanagan V a l l e y .  Peninsula,  Some o f t h e most p r o d u c t i v e a g r i -  c u l t u r a l l a n d has been p u t t o o t h e r u s e s ; a s t r i k i n g example i s the urbanization o f Lulu I s l a n d . B r i t i s h Columbia's d i v e r s i t y o f s o i l s and c l i m a t e e n a b l e s t h e p r o d u c t i o n o f n e a r l y a l l t y p e s o f Canadian farm products.  Some o f t h e a g r i c u l t u r a l p r o d u c t s , produced h e r e ,  a r e n o t produced e l s e w h e r e i n Canada.  D e s p i t e the d i v e r s i t y  o f i t s a g r i c u l t u r a l p r o d u c t i o n , B r i t i s h Columbia i s a n e t i m p o r t e r o f many f a r m p r o d u c t s .  Products  t h a t a r e produced  i n s u f f i c i e n t q u a n t i t i e s f o r home consumption and e x p o r t a r e t r e e and s m a l l f r u i t s , v e g e t a b l e s i n s e a s o n , and o c c a s i o n a l l y eggs.  S p e c i a l i z e d c r o p s such a s f l o w e r s , b u l b s , and h o l l y a r e  exported a l s o .  S e l f s u f f i c i e n c y has been a t t a i n e d i n f l u i d  m i l k production but l a r g e q u a n t i t i e s o f feed g r a i n s , f l o u r , b u t t e r , cheese, and meats a r e i m p o r t e d each y e a r . The P a t t e r n o f A g r i c u l t u r a l P r o d u c t i o n i n t h e Major A g r i c u l t u r a l  Areas  1  The f o l l o w i n g p a r a g r a p h s d e s c r i b e b r i e f l y t h e c h a r a c t e r i s t i c s of a g r i c u l t u r a l production generally c a r r i e d B r i t i s h Columbia Department o f A g r i c u l t u r e , Some F a c t s about B r i t i s h Columbia Canada, pp. 18-24, V i c t o r i a , Queen's P r i n t e r (1952). A comprehensive d e s c r i p t i o n o f a g r i c u l t u r a l p r o d u c t i o n i n B r i t i s h Columbia i s c o n t a i n e d i n t h i s p u b l i c a t i o n .  9  on i n the major a g r i c u l t u r a l a r e a s o f B r i t i s h Columbia.  In  each of t h e s e d i s t r i c t s , t h e r e a r e o t h e r a g r i c u l t u r a l e n t e r p r i s e s engaged i n by some farmers and t h e p a t t e r n i s c h a n g i n g c o n t i n u a l l y as new  v a r i e t i e s o f c r o p s a r e developed,  and as  new  markets d e v e l o p f o r the farm p r o d u c t s of each d i s t r i c t . The Lower M a i n l a n d and Vancouver I s l a n d F a r m i n g i n the Lower M a i n l a n d and on Vancouver I s l a n d i s r e l a t i v e l y intensive i n character. farms i n these a r e a s .  There are many s m a l l  Production i s s p e c i a l i z e d , mainly i n pro-  d u c t s f o r which t h e r e i s a ready demand i n the urban markets o f the area.  Some c r o p s a r e grown f o r e x p o r t . D a i r y i n g i s the c h i e f l i v e s t o c k e n t e r p r i s e .  i s some hog and sheep p r o d u c t i o n and i n the p a s t few  There  years  beef p r o d u c t i o n has been e n t e r e d i n t o by a number of f a r m e r s . The m a j o r i t y of the goats kept i n B r i t i s h Columbia a r e i n t h i s area.  F u r f a r m i n g ( m o s t l y mink) and r a b b i t r a i s i n g , f o r f u r  and meat, i s m o s t l y c o n c e n t r a t e d i n t h i s a r e a . P o u l t r y a r e kept i n g r e a t numbers i n the Lower M a i n l a n d and on Vancouver I s l a n d .  I n a d d i t i o n to the u s u a l f a r m  f l o c k o f hens kept as a s i d e l i n e , t h e r e are many s t r a i g h t p o u l t r y e n t e r p r i s e s . Most of t h e s e p o u l t r y e n t e r p r i s e s a r e s p e c i a l i z e d , w i t h p r o d u c t i o n i n one o f t h e s e f i e l d s :  (a) Eggs  f o r market; (b) h a t c h i n g eggs; ( c ) b r e e d i n g s t o c k ; (d) meat; (e) commercial h a t c h e r i e s .  Turkey b r e e d i n g i s c a r r i e d on as a  s p e c i a l e n t e r p r i s e . Ducks and geese a r e r a i s e d a s a s i d e l i n e ,  10  but t h e r e i s one duck farm on Vancouver I s l a n d , which s p e c i a l i z e s i n meat and "guano" p r o d u c t i o n . F i e l d c r o p p r o d u c t i o n c o n s i s t s o f hay, f o d d e r p o t a t o e s and some g r a i n .  N e a r l y a l l o f the c o n c e n t r a t e  and l a r g e amounts of hay a r e i m p o r t e d .  feeds  There i s a l a r g e  p o t a t o growing i n d u s t r y and many f a r m e r s s p e c i a l i z e i n potato  crops,  growing  seed. Over 80 p e r c e n t of the s m a l l f r u i t grown i n B r i t i s h  Columbia i s produced i n t h i s a r e a .  S t r a w b e r r i e s a r e the most  i m p o r t a n t o f these but t h e r e i s c o n s i d e r a b l e p r o d u c t i o n of r a s p b e r r i e s , l o g a n b e r r i e s , and o t h e r s m a l l f r u i t s .  These f r u i t s  a r e s o l d l o c a l l y as f r e s h f r u i t o r f o r p r o c e s s i n g and t h e s u r plus i s exported.  The p r o d u c t i o n o f v e g e t a b l e s f o r market and  p r o c e s s i n g i s a l s o c a r r i e d on i n t h i s a r e a . I n a d d i t i o n to the above, t h e r e a r e a number o f h i g h l y s p e c i a l i z e d c r o p s produced i n t h i s a r e a .  Among them a r e : f l o w e r  and v e g e t a b l e seeds j b u l b s jj f l o w e r s and h o l l y ; n u t s ; and The  Okanagan-Kainline  tobacco.  and the Kootenays  These a r e a s a r e famous f o r t h e i r t r e e f r u i t i n d u s t r y . The  Okanagan V a l l e y has the l a r g e s t a c r e a g e i n o r c h a r d s i n  B r i t i s h Columbia and produces a p p l e s , peaches, p e a r s , c h e r r i e s and plums; the K o o t e n a y s ' f r u i t p r o d u c t i o n i s s m a l l e r and i s c h i e f l y apples.  There i s some s m a l l f r u i t p r o d u c t i o n i n t h e s e  areas. V e g e t a b l e s , e s p e c i a l l y tomatoes, a r e grown i n the Okanagan; peas f o r c a n n i n g a r e produced i n the N o r t h Okanagan.  V e g e t a b l e seed p r o d u c t i o n , as w e l l as seed and t a b l e p o t a t o e s a r e grown i n t h e s e a r e a s c o m m e r c i a l l y . I n t h e N o r t h Okanagan, t h e r e i s an expanding  dairy  i n d u s t r y ; t h e r e i s not much s p e c i a l i z e d d a i r y f a r m i n g i n the Kootenays.  Hogs a r e r a i s e d i n t h e N o r t h Okanagan and a number  of c a t t l e ranches a r e l o c a t e d a t M e r r i t t , Kamloops and ton.  Prince-  There a r e a l s o a few sheep r a n c h e s i n the Southern  Int-  erior. G r a i n i s grown i n the N o r t h Okanagan and on the C r e s t o n F l a t s i n the Kootenays. i n the N o r t h Okanagan.  A l f a l f a i s the major hay c r o p  Much o f the a l f a l f a grown t h e r e i s  s h i p p e d t o the C o a s t . The  Cariboo  The C a r i b o o a r e a i s the main b e e f - c a t t l e r a n c h i n g a r e a of the P r o v i n c e . Crown.  Most o f the ranges are l e a s e d f r o m the  The a r a b l e l a n d i n t h i s a r e a i s m o s t l y i n t h e v a l l e y s  and i t s p r o d u c t i o n i s p r i n c i p a l l y hay.  N e a r l y a l l of the  range  l a n d s a r e t a k e n up and t h e r e i s not much room f o r e x p a n s i o n i n t h i s area. Central B r i t i s h  Columbia  Farming, i n many s e c t i o n s o f C e n t r a l B r i t i s h Columb i a i s s t i l l i n the p i o n e e r s t a g e . time e n t e r p r i s e s .  Many o f the farms are p a r t  P r o d u c t i o n i s m o s t l y o f t h e mixed g r a i n -  l i v e s t o c k combination.  Forage c r o p seed and seed p o t a t o e s a r e  the e n t e r p r i s e s engaged i n , on s p e c i a l i z e d farms.  12  There i s a l a r g e amount o f p o t e n t i a l l y a r a b l e l a n d i n t h i s a r e a but c l e a r i n g c o s t s are h i g h .  Considerable c a p i t a l i s  n e c e s s a r y , i f a g r i c u l t u r e i s t o be the main s o u r c e o f income f o r the f i r s t few y e a r s a f t e r t h e l a n d has been s e t t l e d . The Peace R i v e r G r a i n growing i s the p r i n c i p a l f a r m e n t e r p r i s e i n the Peace R i v e r a r e a .  S p r i n g wheat i s t h e most i m p o r t a n t c r o p ,  f o l l o w e d by o a t s and b a r l e y .  Forage c r o p p r o d u c t i o n i s i n c r e a s -  i n g both f o r seed p r o d u c t i o n , and hay and p a s t u r e .  Alfalfa,  sweet c l o v e r , a l t a s w e d e , brome g r s s s and t i m o t h y are a l l grown s u c c e s s f u l l y here. L i v e s t o c k p r o d u c t i o n i s i n c r e a s i n g i n the Peace R i v e r a r e a ; beef p r o d u c t i o n b e i n g more i m p o r t a n t than d a i r y i n g .  Hogs  a r e k e p t i n c o n s i d e r a b l e numbers but p o u l t r y p r o d u c t i o n i s l i m i t e d . The M a r k e t i n g o f Farm P r o d u c t s i n B r i t i s h  Columbia  The m a r k e t i n g of farm p r o d u c t s i n B r i t i s h  Columbia,  as elsewhere i n Canada, i s done to a g r e a t e x t e n t by m a r k e t i n g a g e n c i e s r a t h e r than by i n d i v i d u a l f a r m e r s .  These a g e n c i e s a r e  more s u i t e d t o modern f o o d m e r c h a n d i z i n g p r a c t i s e s , which r e q u i r e graded, s t a n d a r d i z e d and packaged f o o d p r o d u c t s .  These  p r a c t i s e s are such t h a t t h e y make i n d i v i d u a l m a r k e t i n g imposs i b l e f o r most f a r m e r s , l e a v i n g t h e d i s t r i b u t i o n o f f a r m p r o d u c t s more and more i n the hands o f commercial  enterprises,  f a r m e r s ' c o - o p e r a t i v e s , and m a r k e t i n g boards o p e r a t i n g under  F e d e r a l and P r o v i n c i a l  legislation. The M i l k Board  M i l k marketing i s c o n t r o l l e d i n c e r t a i n areas of B r i t i s h Columbia by a board s e t up under p r o v i s i o n s of the 2 Public U t i l i t i e s Act.  T h i s board i s a p p o i n t e d by t h e P r o v i n -  c i a l Government and c o n s i s t s o f a chairman and two members. I t i s known as the M i l k Board and i t c o n t r o l s the m a r k e t i n g and d i s t r i b u t i o n of f l u i d m i l k i n the a r e a s d e s i g n a t e d .  It  f i x e s the p r i c e p a i d to m i l k p r o d u c e r s by m i l k d i s t r i b u t o r s . D e l i v e r i e s t o d i s t r i b u t o r s by p r o d u c e r s a r e c o n t r o l l e d by means of  quotas.  These quotas r e g u l a t e the q u a n t i t y o f m i l k produced  i n a d a i r y e n t e r p r i s e t h a t may  be d e l i v e r e d f o r f l u i d m i l k  s a l e s ; the b a l a n c e o f the m i l k produced must be s o l d f o r p r o c e s s i n g and b r i n g s a l o w e r p r i c e than the m i l k g o i n g i n t o t h e fluid  market. P r o d u c e r s ' quotas may  not be s o l d but may  be t r a n s -  3 f e r r e d i f a herd i s s o l d . ing  Any p e r s o n c o n t e m p l a t i n g e s t a b l i s h -  a d a i r y e n t e r p r i s e i n a r e a s under M i l k Board c o n t r o l s h o u l d  make s u r e t h a t t h e y can a c q u i r e a quota, o t h e r w i s e the o n l y A l l m a r k e t i n g boards i n B r i t i s h Columbia o p e r a t e under The N a t u r a l P r o d u c t s M a r k e t i n g A c t , R.S.B.C., 1948, Chap. 200; The A g r i c u l t u r a l P r o d u c t s M a r k e t i n g A c t , 13 George V I , Chap. 16, 1949, o r i n the case o f the M i l k Board, The P u b l i c U t i l i t i e s A c t , R.S.B.C., 1948, Chap. 277. 2 The Lower F r a s e r V a l l e y , G r e a t e r Vancouver, and Vancouver Island. 1  The M i l k Board, " S h a r i n g the M a r k e t , " F l u i d M i l k MarketI n f o r m a t i o n B u l l e t i n , No. 1, Vancouver, (1954). 3  ing  14  market open t o them i s the p r o c e s s i n g one. M i l k Board must approve a l l s u c h  I n a l l c a s e s the  transactions.  F r u i t and V e g e t a b l e M a r k e t i n g Boards C o n t r o l l e d m a r k e t i n g of f r u i t and v e g e t a b l e s i s i n e f f e c t i n some a r e a s of B r i t i s h Columbia.  M a r k e t i n g of these  p r o d u c t s i s c a r r i e d out by m a r k e t i n g boards s e t up under the p r o v i s i o n s of the N a t u r a l P r o d u c t s M a r k e t i n g A c t . The B r i t i s h Columbia F r u i t Board r e g u l a t e s the mark e t i n g o f t r e e f r u i t s grown i n the Okanagan V a l l e y , the C r e s t o n Grand F o r k s a r e a , Salmon Arm and t h e Kamloops d i s t r i c t . Growers i n t h e s e a r e a s may  d e l i v e r t h e i r tree f r u i t s to e i t h e r co-  o p e r a t i v e o r independent p a c k i n g h o u s e s - - s e v e r a l l a r g e do t h e i r own p a c k i n g .  growers  S a l e s by the p a c k i n g houses a r e made  through a c e n t r a l s e l l i n g agency, B r i t i s h Columbia Tree F r u i t s Limited.  The r e t u r n s from t r e e f r u i t s a l e s a r e a l l p o o l e d .  Growers r e c e i v e i n i t i a l payments on d e l i v e r y and f i n a l payments when the c r o p i s s o l d . Two potatoes.  boards r e g u l a t e the s a l e of v e g e t a b l e s and  The I n t e r i o r V e g e t a b l e M a r k e t i n g Board o p e r a t e s i n  much the same a r e a as the F r u i t Board, and the B r i t i s h  Columbia  Coast V e g e t a b l e M a r k e t i n g Board o p e r a t e s i n t h e Lower M a i n l a n d and Vancouver  Island.  D e l i v e r i e s o f v e g e t a b l e s and p o t a t o e s  can be made d i r e c t l y t o s t o r e s and w h o l e s a l e houses by  growers  but t h e Board must approve o f such d e l i v e r i e s and t h e i r t a g s must be on the s a c k s a t t h e time o f d e l i v e r y .  The Coast  Board  15  o p e r a t e s warehouses i n Vancouver and on Vancouver I s l a n d . P o o l i n g o f s a l e s i s accomplished  through a c o - o p e r a t i v e  which o p e r a t e s i n c o n j u n c t i o n w i t h t h e Board. The Canadian Wheat Board Wheat grown i n t h e Peace R i v e r and t h e C r e s t o n Wynndel a r e a s i s marketed under t h e r e g u l a t i o n s o f t h e Cana d i a n Wheat Board. Livestock Marketing L i v e s t o c k m a r k e t i n g i n B r i t i s h Columbia i s done through d r o v e r s , d e l i v e r i e s t o p a c k i n g p l a n t s and s t o c k y a r d s , and by a u c t i o n s .  An o u t s t a n d i n g f e a t u r e o f t h e B r i t i s h  Col-  umbia b e e f - c a t t l e i n d u s t r y i s the d i s t a n c e t h e r a n c h e s a r e from the s t o c k y a r d s and p a c k i n g p l a n t s a t Vancouver.  The  B r i t i s h Columbia L i v e S t o c k P r o d u c e r s * C o - o p e r a t i v e * o f f e r a s e r v i c e t o t h e i r members t o overcome t h e d i f f i c u l t y which d i s t a n c e from m a r k e t s imposes on r a n c h e r s .  The C o - o p e r a t i v e  m a i n t a i n s a f i e l d m a n s e r v i c e by w h i c h s a l e s o f c a t t l e may be made a t t h e r a n c h e s .  When a r a n c h e r has c a t t l e f o r s a l e , he  n o t i f i e s the Co-operative, which, i n t u r n , advises t h e p a c k e r s ; the p a c k e r s send t h e i r b u y e r t o t h e r a n c h where he i s met by a f i e l d m a n o f t h e C o - o p e r a t i v e , who a c t s a s an i n t e r m e d i a r y between t h e r a n c h e r and t h e buyer. J.S. C a r m i c h e a l , and T.S. Rackham. L i v e s t o c k M a r k e t i n g i n W e s t e r n Canada, p. 5 5 , R e g i n a , P r o v i n c e o f Saskatchewan, Department o f C o - o p e r a t i o n and C o - o p e r a t i v e Development. 1  16  Cattle auctions are held at several centers i n B r i t ish Columbia each year; feeder and f a t c a t t l e are sold at these sales.  Bull sales are held annually at Kamioops. Other Marketing  Small f r u i t growers i n the Lower Mainland and on Vancouver Island use various forms of marketing; co-operative and independent packing houses are u t i l i z e d and some growers s e l l d i r e c t l y to stores or do t h e i r own s e l l i n g i n road side stands. Poultrymen may make d e l i v e r i e s of eggs to egg wholesalers or have t h e i r own egg routes i n towns and c i t i e s . Specialized products such as flowers, h o l l y , tobacco and furs have t h e i r own s p e c i a l outlets. The Number. Size, and Value of B r i t i s h Columbia and Canadian Farms In the ten years between the 1941 Census and the 1951 Census, the t o t a l acreage i n farms remained almost constant but the number of farms decreased i n Canada, while i n B r i t i s h Columb i a both t o t a l farm acreage and the number of farms increased. The average farm size increased i n Canada by 23 acres of 9.0 percent; B r i t i s h Columbia farms decreased i n average size by 7 acres or 3.3 percent.  The decrease i n the average s i z e of  farms i n B r i t i s h Columbia can be attributed to the increase i n the numbers of part time and small scale farms.  The value of  land, buildings, and l i v e s t o c k increased i n the lnter-censal  p e r i o d by 123.3 p e r c e n t i n Canada and by 172.1 p e r c e n t i n B r i t i s h Columbia.  T a b l e 2 p r e s e n t s Canadian and B r i t i s h  Columbia f a r m numbers, a r e a s , improved a c r e a g e s , average s i z e , a n d t h e v a l u e s o f l a n d , b u i l d i n g s , m a c h i n e r y , and l i v e s t o c k f o r the two c e n s a l y e a r s . TABLE 2 FARM NUMBERS, AREA, IMPROVED ACREAGE, AVERAGE S I Z E , VALUE OF LAND, BUILDINGS, MACHINERY AND LIVESTOCK, CANADA AND BRITISH COLUMBIA, 1941 and 1951  British  Canada Item  1941  21,800 a 26,406  173,563  174,046  0.3  4,034  4,702  1.6  91,636  96,852  5.2  893  1,148  28.5  256  279  9.0  185  178  -3.8  4,241,476  9,470,876  Farm a r e a (,000 a c r e s )  Value land, buildings, machinery, livestock ($000)  1941  -8.3  677,500  Average s i z e (acres)  Percent Increase)  623,091  No. o f farms  Improved a r e a (,000 a c r e s ) !  1951  Columbia 'ercent 1951 ncrease  e  21.2  123.3 150,063 408,266 172.1  1941 Census f i g u r e s r e v i s e d i n Canada Y e a r Book 1954, t o conform w i t h t h e d e f i n i t i o n o f a f a r m used i n 1951 Census. Source:  N i n t h Census o f Canada 1951. V I , P a r t 1, T a b l e 1 (Canada).  18  Farm Income i n B r i t i s h Columbia and Canada The n e t f a r m income p e r f a r m i n B r i t i s h Columbia was above t h e n a t i o n a l average i n 1941 b u t was below t h i s i n 1951; s i m i l a r l y  average  t h e n e t f a r m income p e r d o l l a r o f t o t a l  f a r m i n v e s t m e n t was g r e a t e r i n B r i t i s h Columbia i n 1941 and l o w e r i n 1951, t h a n f o r Canada as a whole. this  Table 3 presents  data: TABLE 3  NET FARM INCOME PER FARM AND PER DOLLAR OF FARM INVESTMENT VALUE BRITISH COLUMBIA AND CANADA, 1941 AND 1951  Item  Year  British  Columbia  Canada  Net farm income per farm  1941 1951  1245 2052  763 3474  Net farm income p e r d o l l a r farm investment  1941 1951  0.18 0.13  0.12 0.23  S o u r c e s : N i n t h Census o f Canada 1951. V I , P a r t 1, T a b l e 1 (Canada): Farm"Net Income 1953; Handbook o f A g r i c u l t u r a l St.atistic§. P a r t 2 (Dominion Bureau of S t a t i s t i c s ) .  Comparing n e t f a r m income on an a v e r a g e p e r f a r m b a s i s does n o t do j u s t i c e  t o B r i t i s h Columbia's  agricultural  i n d u s t r y because o f t h e h i g h p r o p o r t i o n of s m a l l s c a l e and p a r t time f a r m e r s w i t h i n t h e i n d u s t r y ; 44.2 p e r c e n t o f t h e t o t a l number o f farms i n B r i t i s h Columbia were s m a l l s c a l e and p a r t time i n 1951, w h i l e Canada a s a whole had o n l y 24.4  19  p e r c e n t o f i t s farms i n t h e s e c a t e g o r i e s i n t h a t y e a r . net  1  The  f a r m income p e r p e r s o n i n t h e a g r i c u l t u r a l l a b o u r f o r c e  i n B r i t i s h Columbia compares f a v o u r a b l y w i t h t h a t o f t h e industry nationally.  The f o l l o w i n g t a b l e shows these s t a t i s -  t i c s f o r 1941 and from 1946 t o 1953: TABLE 4 NET FARM INCOME PER PERSON I N THE AGRICULTURAL LABOUR FORCE, 1941, 1946-1953, a  CANADA AND BRITISH COLUMBIA Difference B.C. and Canada  Year  Canada  1941  $427  $653  $+226  1946  901  1657  +656  1947  1035  1276  241  1948  1426  1447  21  1949  1483  1472  -11  1950  1405  1794  389  1951  2159  1748  -411  1952  2057  1659  -398  1953  1853  1901  +48  a  B r i t i s h Columbia  Labour f o r c e a s a t June 1.  S o u r c e s : Canada Y e a r Book. 1954; Labour F o r c e . November. 1945. - March. 1952; Labour F o r c e . V o l . 9, Nos. 5 and 6; Handbook o f A g r i c u l t u r a l S t a t i s t i c s . P a r t I I ; Farm Net Income. T 9 5 3 (Dominion Bureau of S t a t i s t i c s ) .  N i n t h Census o f Canada 1951. V I , P a r t 1, T a b l e 25 (Canada).  The t o t a l f a r m cash income from the s a l e o f f a r m p r o d u c t s i n 1953 f o r B r i t i s h Columbia was $103,400,000. Analysis  o f t h i s income shows t h a t t h e major s o u r c e o f r e v -  enue t o B r i t i s h Columbia f a r m e r s was l i v e s t o c k and l i v e s t o c k products.  The v a l u e o f s a l e s o f t h e s e i t e m s i n 1953 were  $62,420,000; t h i s was 60 p e r c e n t o f t h e t o t a l f a r m cash i n come.  The f o l l o w i n g t a b l e compares B r i t i s h Columbia's  sales  of l i v e s t o c k and l i v e s t o c k p r o d u c t s w i t h t h o s e o f Cam da f o r 1953: TABLE 5 FARM CASH INCOME FROM THE SALE OF LIVESTOCK AND  LIVESTOCK  PRODUCTS, CANADA AND BRITISH COLUMBIA, 1953  Item  Canada $000 330,705  British Columbia  B.C. as p e r cent of Canada.  9,633  $000 11,080 679  3.6 6.9  Hogs Poultry  300,537 134,233  2,608 10,783  0.9 9.5  Dairy Products Eggs  413,127 123,774  26,392 9,744  6.3 7.6  2,310  112  4.8  8.844 1,323,163  1.022 62,420  11.6  C a t t l e and C a l v e s Sheep and Lambs  Wool F u r Farming Total  4.8  S o u r c e : Farm Cash Income. 1953, No. 4 (Dominion Bureau o f Statistics).  L i v e s t o c k and l i v e s t o c k  p r o d u c t s have c o n t r i b u t e d the major  s h a r e o f B r i t i s h Columbia's f a r m c a s h income f o r many y e a r s ; on the a v e r a g e , t h e i r s a l e s have formed 55 p e r c e n t (range 46 t o 67 p e r c e n t ) of the t o t a l farm cash income f o r the 28 y e a r p e r i o d 1926-1953. F r u i t and v e g e t a b l e s a l e s were next i n v a l u e t o livestock  and l i v e s t o c k  p r o d u c t s i n 1953;  their value  was  $27,142,000 o r 26.4 p e r c e n t o f t h e cash income of B r i t i s h C o l umbia f a r m e r s l a s t y e a r .  B r i t i s h Columbia's  was 16 p e r c e n t of t h e p r o v i n c i a l v a l u e was  f r u i t sales value  t o t a l f a r m cash income; t h i s  39.6 p e r c e n t o f t h e n a t i o n a l t o t a l f o r f r u i t .  and v e g e t a b l e s a l e s were as i n T a b l e  Fruit  6:  TABLE 6 FARM CASH INCOME FROM THE SALE OF FRUIT, VEGETABLES, AND CANADA AND  Item  POTATOES,  BRITISH COLUMBIA, 1953  Canada  British  Columbia  B.C. as percent of Canada  Fruit  $,000 41,807  $,000 16,570  Vegetables Potatoes  61,899 31.707  8,102 2.407  13.1 7.8  135,413  27,142  20.0  Total  Source: Farm Cash Income. 1953, No. 4 (Dominion Statistics).  39.6  Bureau o f  22  F r u i t and v e g e t a b l e s a l e s v a l u e i n B r i t i s h Columbia r a n g e d from 20.0 p e r c e n t t o 41.0 p e r c e n t f o r the 28 y e a r p e r i o d 1926-1953 and averaged 35.0 p e r c e n t o f the f a r m cash income f o r the p r o v i n c e . G r a i n s , s e e d s , and hay formed a p p r o x i m a t e l y 5 p e r c e n t o f the t o t a l farm cash income o f B r i t i s h Columbia i n 1953; t h e i r s a l e s v a l u e was $5,296,000.  Tobacco, honey, m i s -  c e l l a n e o u s f a r m p r o d u c t s , and farm f o r e s t p r o d u c t s made up the remainder o f the f a r m c a s h  income.  B r i t i s h Columbia's t o t a l farm cash income of $103,400,000 f o r 1953 was of $2,741,252,000.  3.8 p e r c e n t o f the n a t i o n a l  The 28 y e a r average  total  (1926-1953) o f B r i t i s h  Columbia's farm cash income was 4.1 p e r c e n t o f the f a r m cash income of Canada (range 2.8 to 4.8 p e r c e n t ) .  D u r i n g t h e same  p e r i o d t h e n e t f a r m income averaged 4.2 p e r c e n t (range 2.1 t o 9.6 p e r c e n t ) of the n e t farm income o f Canada.  I n 1953  Bri-  t i s h Columbia's n e t f a r m income was $39,913,000, which was  2.4  p e r c e n t of t h e net f a r m income o f Canada. The percentage o f Canada's f a r m cash income a c c r u i n g to B r i t i s h Columbia f a r m e r s v a r i e s f r o m y e a r t o y e a r , m a i n l y because of the e f f e c t o f the v a l u e of the P r a i r i e f a r m c a s h income.  The P r a i r i e s *  Provinces'  f a r m r e v e n u e s a r e t h e most  v a r i a b l e i n Canada; f o r example, t h e farm cash income o f Saskatchewan  ranged from 13.4 p e r c e n t t o 30.5 p e r c e n t , and  a v e r a g e d 22.5 p e r c e n t o f t h e f a r m cash income o f Canada from 1926  t o 1953.  The c o e f f i c i e n t o f v a r i a t i o n i s 18.4 p e r c e n t  f o r Saskatchewan,  w h i l e t h a t o f B r i t i s h Columbia i s 3.3 p e r c e n t ,  when f a r m cash income p e r c e n t a g e s a r e compared. Farm O p e r a t i n g Expenses i n B r i t i s h Columbia and Canada O p e r a t i n g expenses o f farms i n B r i t i s h  Columbia  averaged 60.2 p e r c e n t o f t h e f a r m c a s h income o f B r i t i s h Columbia i n t h e 28 y e a r p e r i o d 1926-1953, w h i l e i n Canada a s a whole t h e average f o r o p e r a t i n g expenses was f i v e l e s s o r 55.2 p e r c e n t .  I t i s more s i g n i f i c a n t ,  percent  however, t h a t  t h e o p e r a t i n g expenses o f B r i t i s h Columbia farms i n c r e a s e d from 61.2 p e r c e n t i n 1951 t o 73.8 p e r c e n t i n 1953, w h i l e i n Canada a s a whole, t h e i n c r e a s e was f r o m 44.8 p e r c e n t t o 47.6 p e r c e n t i n t h e s e y e a r s .  B r i t i s h Columbia f a r m o p e r a t -  i n g expenses were 5.8 p e r c e n t o f t h e t o t a l o p e r a t i n g expenses of Canadian farms i n 1953 and o p e r a t i n g expenses and depr e c i a t i o n charges were 5.3 p e r c e n t o f the n a t i o n a l  total.  From 1926 t o 1953, t h e 28 y e a r averages were 4.6 p e r c e n t and 4.2 p e r c e n t r e s p e c t i v e l y f o r t h e s e c h a r g e s . The h i g h o p e r a t i n g and d e p r e c i a t i o n expense c h a r g e s which were deducted from t h e f a r m c a s h income gave t h e f a r mers of B r i t i s h Columbia a n e t income o f 38.6 p e r c e n t o f t h e i r cash income i n 1953. T h i s was t h e second l o w e s t p e r c e n t a g e f o r t h e n i n e p r o v i n c e s and much l o w e r than t h e n a t i o n a l p e r c e n tage.  Table 7 presents t h i s data:  TABLE 7 FARM NET INCOME AS PERCENTAGE OF FARM CASH INCOME CANADA AND NINE PROVINCES, 1953  Province  Percent  Canada B r i t i s h Columbia Alberta  51.9 38.6 54.8  Saskatchewan Manitoba  60.2 46.0  Ontario Quebec  48.1 52.7  New Brunswick  44.0  Nova S c o t i a P r i n c e Edward I s l a n d  34.7 42.5  S o u r c e : Farm Net Income. 1953 (Dominion Bureau o f Statistics).  The two dominant c o s t f a c t o r s i n t h e h i g h  operating  expenses on B r i t i s h Columbia farms a r e h i r e d l a b o u r , and seed and f e e d .  These two i n p u t s have c o n s i s t e n t l y comprised t h e  l a r g e s t p e r c e n t a g e o f expenses throughout t h e 28 y e a r p e r i o d 1926  t o 1953. These p e r c e n t a g e s a r e f a r above t h e n a t i o n a l  p e r c e n t a g e s f o r t h e same i t e m s f o r t h e same p e r i o d .  The  f o l l o w i n g t a b l e compares h i r e d l a b o u r , and f e e d and s e e d c o s t p e r c e n t a g e s f o r Canada w i t h t h o s e o f B r i t i s h  Columbia:  TABLE 8 HIRED LABOUR, FEED AND SEED COSTS AS PERCENTAGES OF TOTAL FARM OPERATING EXPENSES, CANADA AND  BRITISH COLUMBIA,  1926-1953  Item  British Columbia  Canada  H i r e d Labour ( a v e r a g e ) Range Feed and Seed ( a v e r a g e ) Range H i r e d Labour and Feed  Percent 18.2 13.7 - 23.8 17.2 5.7 - 30.2 .  Percent 25.5 17.9 -  30.7  30.0 17.4 - 48.1  35.4  55.5  and Seed ( a v e r a g e ) Range Sources:  23.5 -  45.4  43.1 - 67.9  Handbook o f A g r i c u l t u r a l S t a t i s t i c s . P a r t 2; frarm Net Income 1953. (Dominion Bureau of Statistics).  B r i t i s h Columbia's h i r e d l a b o u r , and f e e d and seed c o s t s were 22.6 p e r c e n t and 32.6 p e r c e n t o f t h e t o t a l o p e r a t i n g expens e s r e s p e c t i v e l y , w h i l e i n Canada as a whole t h e i r c o s t s comp r i s e d 13.7 p e r c e n t and 21.5 p e r c e n t r e s p e c t i v e l y i n 1953. The P h y s i c a l Volume o f Farm P r o d u c t i o n i n B r i t i s h Columbia and Canada The f o r e g o i n g s t a t i s t i c s have d e a l t w i t h t h e monet a r y v a l u e of B r i t i s h Columbia's a g r i c u l t u r a l  production.  Comparison of t h e p h y s i c a l p r o d u c t i o n o f t h i s  province's  26  a g r i c u l t u r a l p r o d u c t i o n w i t h t h a t of Canada shows t h a t B r i t i s h Columbia's p r o d u c t i o n i s comparable t o the n a t i o n a l i  production.  The t r e n d o f the p h y s i c a l p r o d u c t i o n i n d e x o f  Canadian a g r i c u l t u r e i s e x p r e s s e d by t h e e q u a t i o n , y = 124.8  + 3.1x  (19 y e a r p e r i o d 1935-1953, 1935-39 =  1G0),  w h i l e the t r e n d o f the i n d e x o f p h y s i c a l p r o d u c t i o n i n B r i t i s h o  Columbia i s e x p r e s s e d by t h e e q u a t i o n , y = 122.8 + 2.8x. F u t u r e P r o d u c t i o n i n B r i t i s h Columbia's A g r i c u l t u r a l I n d u s t r y B r i t i s h Columbia's a g r i c u l t u r a l i n d u s t r y has t h e r e f o r e k e p t pace w i t h t h e i n d u s t r y o f Canada i n p h y s i c a l  produc-  t i o n ; i t would seem, t o o , t h a t f u r t h e r e x p a n s i o n o f p r o d u c t i o n may  be brought about by i n c r e a s i n g farm l a n d a c r e a g e , by t h e  use of f e r t i l i z e r , by i r r i g a t i o n , by improved c r o p r o t a t i o n , by i n c r e a s i n g t h e l a b o u r i n p u t on the p r e s e n t l a n d a r e a , and by i n c r e a s i n g the use o f l a b o u r s a v i n g machines.  1953, 9  The use o f  Dominion Bureau o f S t a t i s t i c s , Index of Farm P r o d u c t i o n Ottawa, Queen's P r i n t e r (1954).  y = 124.8 + 3.1x i s the e q u a t i o n of a s t r a i g h t l i n e f i t t e d t o the d a t a by the method o f l e a s t squares t o e x p r e s s t h e t r e n d i n t h e volume of p h y s i c a l f a r m p r o d u c t i o n f o r Canada from 1935 t o 1953. I n t h i s equation the value of y e x p r e s s e s the i n d e x o f farm p r o d u c t i o n i n any y e a r o f the s e r i e s computed by a d d i n g t o the c o n s t a n t 124.8 (the v a l u e i n t h e y e a r o f o r i g i n ) , 3.1 times the v a l u e of x (x b e i n g t h e number o f y e a r s from the y e a r o f o r i g i n , p o s i t i v e v a l u e s a r e g i v e n t o the y e a r s s u c c e e d i n g the y e a r o f o r i g i n and n e g a t i v e v a l u e s t o those p r e c e d i n g ) e.g. the v a l u e o f y f o r 1946 would be computed t h u s : y = 124.8 + 3.1 (2) = 124.8 + 6.2 =s 131. The e q u a t i o n f o r B r i t i s h Columbia i s computed i n t h e same manner. The y e a r of o r i g i n i s 1944 i n both e q u a t i o n s .  each of these factors of production w i l l be increased as B r i t i s h Colombia's a g r i c u l t u r a l industry meets the increasing demand f o r foodstuffs by her increasing population. Hew land i s being brought into a g r i c u l t u r a l production as housing and industry encroach on the present a g r i c u l t u r a l land; new farm communities are developing to supply food to the new i n d u s t r i a l centres being created by industries l o c a t i n g i n B r i t i s h Columbia.  New r a i l l i n k s and highway con-  struction are opening up such areas as the Peace River Block and Central B r i t i s h Columbia.  Labour use at present i s not  increasing but the use of labour saving machines i s increasing greatly.  Increases i n the use of f e r t i l i z e r , i r r i g a t i o n ,  drainage, and crop rotation are much i n evidence and these practises w i l l continue to increase. It would appear that increased production of pork, beef, and dairy products offer better opportunities f o r expansion than does increased production of f r u i t and vegetables. The continuance of the Freight Assistance Plan f o r feed grains puts B r i t i s h Columbia farmers i n a competitive p o s i t i o n with the P r a i r i e s i n the production of animal products.  Unless new  outlets are found f o r the products, which B r i t i s h Columbia has as surpluses, expansion of t h e i r production seems l e s s favourable. Improved farm management can increase the net returns to agriculture i n B r i t i s h Columbia.  The e f f i c i e n c y of produc-  tion may be increased by better enterprise combinations; by  farmers u s i n g t h e i r r e c o r d s to a n a l y s e tions;  t h e i r business  opera-  and by the use of r e c o r d s and market i n f o r m a t i o n i n  the p r e p a r a t i o n of f u t u r e p r o d u c t i o n  plans.  CHAPTER I I FARM RECORDS Farm records are a p r e r e q u i s i t e to good farm management.  Ho single system of keeping records can be devised  that w i l l f i t the detailed requirements  of every farm but  c e r t a i n general p r i n c i p l e s are common to a l l systems. Farm records are of two types.  F i n a n c i a l records  record the f i n a n c i a l aspect of the business; physical records record production, consumption and other quantitative s t a t i s t i c s of the farm operation. FINANCIAL RECORDS Objectives and Purposes F i n a n c i a l records must be designed so as to provide the farmer with: (a) An adequate system o f accounting that i s reasonable f o r the amount of time required on the part of the farm operator; (b) A record of the transactions of the farm business; (c) A knowledge of the f i n a n c i a l status of the business; (d) A basis f o r analysis of the farm business and budgeting f o r the future; (e) Information to f a c i l i t a t e making income tax returns; ( f ) Information to f a c i l i t a t e obtaining c r e d i t ; and (g) Information needed i n case of insurance claims or i n the settlement o f an estate.  30  Form Systems of farm accounting have been advocated by many farm management workers.  But i n keeping h i s f i n a n c i a l  records the farmer must make a choice between a double entry or a s i n g l e entry system. Double E n t r y Double entry accounting, despite i t s u n i v e r s a l use by business f i r m s i s not the system recommended to the average farmer f o r the f o l l o w i n g reasons: (a) I t i s a complex system r e q u i r i n g expert knowledge of the s u b j e c t . (b) I t i s time consuming and may r e q u i r e s e v e r a l hours per day i n making the e n t r i e s and p o s t i n g . Large farms and ranches, where bookeepers are employed, can keep t h e i r f i n a n c i a l records under the double entry system but the m a j o r i t y of farmers r e q u i r e a system Which i s simple, comprehensive, and understandable. Single Entry S i n g l e entry accounting as i t s name i m p l i e s , i s a system i n which an item i s entered only once.  I t i s the system  used i n n e a r l y a l l farm account books d i s t r i b u t e d by government agencies or as a d v e r t i s i n g media by commercial f i r m s . These ready-made account books have c e r t a i n l i m i t a t i o n s .  One  of the main c r i t i c i s m s of them i s that they a r e too i n f l e x i b l e f o r the p a r t i c u l a r needs of many farmers. Another i s that  31  they are not designed with an eye to income tax accounting. The Recommended System of Accounting The following system i s recommended to farmers i n B r i t i s h Columbia.  I t i s a f l e x i b l e system, adaptable to most  farm businesses, e a s i l y kept and r e a d i l y provides the informat i o n f o r f i l i n g of income tax r e t u r n s .  1  At the same time, i t  provides the farmer with the basic data necessary to the succ e s s f u l operation of h i s farm. The equipment required f o r the system recommended o  consists of an account book,  a pocket notebook, several f i l e s ,  and a copy of the Farmer's and Fisherman's Guide, f o r the preparation of T l General, Income Tax Returns. There are four main parts to the system recommended, namely: 1.  L i s t of assets and l i a b i l i t i e s , (Inventory).  2.  Balance sheet.  3.  Cash Income and expenditure.  4.  P r o f i t and loss statement.  These are supplemented with an account of c a p i t a l expenditures and receipts and an account f o r personal withdrawals from the farm business. For f i l i n g income taxes on a cash or accrual basis. 2 See Appendix A f o r sample account  system.  Farmer's and Fisherman's Guide a v a i l a b l e from the Taxat i o n D i v i s i o n , Department of National Revenue or at nearly a l l Post Offices.  32  The l i s t of assets and l i a b i l i t i e s must include the r e a l estate, machinery, feed and supplies, and cash and other assets on hand at the beginning and end of the year.  The  values of these assets are d i f f e r e n t because of depreciation (wear, tear and obsolescence) and to purchase and s a l e s of l i v e s t o c k , buildings and equipment.  For buildings, drains  and fences the following information i s required; the year acquired, value when acquired and the rate of depreciation. The same applies to machinery.  The value of buildings, drains,  fences and machinery i s the new value less depreciation to date.  For example, a tractor purchased i n January, 1950 f o r  $2,000 can be depreciated at a maximum r a t e of 15 pereent or $300 per year.  I t s value at the beginning of 1953 i s $1100  ($2,000 l e s s $900) and at the end of the year the value i s $800 ($1100 l e s s $300).  Land i s valued at i t s market value  without buildings and improvements.  Livestock on hand at  the beginning and at the end of the year i s valued at beginning of the year market p r i c e s .  Feed, seed and supplies are  valued at current prices. The balance sheet i s a summary of the assets and liabilities.  The net worth f i g u r e obtained from the balance  sheet represents the operator's equity i n the business. Cash income and expenditures are itemized l i s t s of cash receipts and expenses.  To a s s i s t i n making out the  income tax return ( T l General) the items entered should be classed to correspond to the categories used on the income tax form.  The following system i s recommended.  Assign a  number to each category of income used on the income tax return as follows: Crops and seeds  (1)  Canadian Wheat Board Payments  (2)  Livestock and l i v e s t o c k products  (3)  Bees, honey, wax, maple products  (4)  F r u i t s and vegetables  (5)  Custom work  (6)  Patronage dividends, rebates  (7)  Wood, sand, i c e , h a i l insurance  (8)  Other  (9)  Do the same f o r the expense items as follows: Salaries and wages  (1)  Rent paid  (2)  Interest  (8)  Taxes and licenses  (4)  Insurance (except l i f e )  (5)  Repairs and maintenance  (6)  Auto and truck expenses  (7)  Farm machinery expenses (Gas, o i l , etc., except repairs)  (8)  Livestock purchased  (9)  Seed and plants purchased  (10)  Feed and straw purchased  (11)  Containers and twine  (12)  F e r t i l i z e r s and sprays  (13)  Other expenses  (14)  34  These numbers are placed a t the top of the approp r i a t e columns f o r the income and expense items.  By adding  up the income amounts marked (1) the amount to be entered on the income tax form under income from crops and seeds w i l l be obtained.  The same a p p l i e s to the other items o f income and  expense. As a f i n a l step the p r o f i t and l o s s statement be prepared.  should  This w i l l show the net r e t u r n to the operator  f o r h i s work on the farm during the year. The c a p i t a l account i s used to enter purchases  and  s a l e s of machinery and equipment, p r i n c i p a l payments on mortgages and on machines.  The account f o r personal withdrawals  from the business keeps t r a c k of the amount of money taken from the farm income f o r personal use. When to Prepare I n v e n t o r i e s Farmers u s i n g t h i s system are advised to take t h e i r i n v e n t o r i e s a t or near the beginning of the year.  Stocks of  feeds and other s u p p l i e s may be higher a t t h i s time than i n the s p r i n g but i t has the advantage of c o i n c i d i n g with the tax  year and there i s g e n e r a l l y more time a v a i l a b l e to take  stock at t h i s time of the year.  The end of year i n v e n t o r y  serves as the beginning of year inventory f o r the succeeding year; a f t e r an i n v e n t o r y has been taken once i t i s only a y e a r l y occurrence t h e r e a f t e r .  35  Recording the P h y s i c a l Assets The f i r s t step i n t a k i n g an inventory i s to take stock of the p h y s i c a l assets of the business.  The best way  to  do t h i s i s f o r the farmer to provide himself with a pad o f paper or a notebook and p e n c i l ; (Another person to w r i t e down the f i g u r e s w i l l shorten the time r e q u i r e d to take the invent o r y ) ; then he should make a p h y s i c a l check of a l l b u i l d i n g s , improvements, machines, l i v e s t o c k , feed and s u p p l i e s that he has on hand.  While making the check the f o l l o w i n g d e t a i l s  should be w r i t t e n down: (a) B u i l d i n g s - t h e i r age, s i z e and k i n d of materi a l they are constructed of. (b) Improvements - the date, type and extent of improvement s. (c) Machines and t o o l s - the age and number of machines and t o o l s of each k i n d . (d) L i v e s t o c k - the numbers and ages of breeding and work stock; the number and weight of each c l a s s of l i v e stock being f e d f o r s a l e . (A s c a l e should be a v a i l a b l e to weigh the animals, so that a r e l i a b l e estimate can be made of t o t a l weights). (e) Feed and seed- the number of bales or sacks of each k i n d of baled hay or packaged feed and seed; the volume of loose hay, straw, s i l a g e and g r a i n i n bins  in  cubic f e e t . ( f ) Supplies - the q u a n t i t y of each item of s u p p l i e s .  E n t e r i n g t h e Items i n t h e Account Book A f t e r t h e p h y s i c a l count o f t h e a s s e t s has been t a k e n , t h e i t e m s must be e n t e r e d i n t h e r e c o r d book.  The  f a r m e r u s i n g t h i s system w i l l make t h e e n t r i e s on one o r more o f t h e columnar s h e e t s i n h i s a c c o u n t book.  Sections  must be a l l o t t e d f o r t h e f o l l o w i n g c l a s s e s o f a s s e t s : I. II.  R e a l E s t a t e - Land, b u i l d i n g s and improvements, M a c h i n e r y and Equipment - T r u c k s ,  autos,  machines, t o o l s and equipment. III.  L i v e s t o c k ( P r o d u c t i o n ) - Work s t o c k ,  breeding  stock, stock kept f o r the production of l i v e s t o c k products. IV. for  sale. V. VI. VII.  Crops h e l d f o r s a l e . F e e d , Seed, S u p p l i e s . Cash - On hand and bank b a l a n c e .  VIII. Six  Livestock (Fattening) - Livestock being f e d  Other A s s e t s - Bonds, a c c o u n t s r e c e i v a b l e .  columns w i l l be needed f o r r e a l e s t a t e and m a c h i n e r y and  equipment; t h e y w i l l be headed a s f o l l o w s :  Year Acquired  U  Coat 0  S  T  »l«e Beg. y e a r v  Deprec. V a l u e Rate end y e a r  Depreciation Allowed  L i v e s t o c k w i l l r e q u i r e f o u r columns headed a s f o l l o w s : Beginning of year Number Value  End o f Y e a r Number Value  37 Crops f o r sale and feed, seed and supplies require four columns also: these are headed: Beginning of year Amount Value  End of Year Amount Value  Cash and other assets w i l l only require two columns, beginning of year value and end of year value. Space should be l e f t i n each section f o r l i s t i n g depreciable assets acquired during the year.  (In recording  these items the month of purchase should be noted). Sections must also be a l l o t t e d f o r recording the liabilities.  They should be l i s t e d under three c l a s s e s : long  term (e.g., mortgages and agreements of s a l e ) ; intermediate (farm improvement loans, machinery debts); short term (bank loans, accounts payable).  Beginning of year values and end  of year values are recorded i n two columns. Valuing the Items When the entries have been made the farmer must place values on the items.  I f he i s making h i s f i r s t inven-  tory, he w i l l have to calculate the beginning o f year values of the buildings, improvements, machinery and equipment from the o r i g i n a l cost of these items, less the depreciation accumulated to date.  I t i s probably best i n most cases to  use the straight l i n e rates o f d e p r e c i a t i o n set out under 1  Part XVII of the Income Tax Regulations.  I f an asset has  The diminishing balance method i s discussed l a t e r i n t h i s chapter. 1  38  been f u l l y depreciated i t should be l i s t e d with a zero value.  L i v e s t o c k , crops, feeds, seed and s u p p l i e s w i l l  be valued at market p r i c e s at the farm.  Q u a n t i t i e s of bulk  feed and grains w i l l have to be estimated using t a b l e s f o r converting volumes i n t o tons, bushels, e t c . *  The amount  of cash on hand and i n the bank w i l l be entered q u i t e r e a d i l y ; bonds should be valued at face value and 2 r e c e i v a b l e a t face value.  Liabilities  accounts  w i l l be entered at  face value. A sample form f o r the l i s t i n g of assets and  liabi-  l i t i e s i s i n Appendix A. Preparation of the Balance Sheet When a l l the items o f the i n v e n t o r y and t h e i r value have been entered, the t o t a l value of each s e c t i o n should be c a l c u l a t e d .  These t o t a l s are used i n preparing the  balance sheet, which should be on a sheet i n the book and i n the form of the sample sheet i n Appendix A. The balance sheet at t h i s stage w i l l only show the values f o r the beginning o f the year.  At the end of the  year another inventory must be taken i n order to r e c o r d changes which have occurred i n the inventory.  New a c q u i -  s i t i o n s w i l l have to be added i n and d e p r e c i a t i o n f o r the year w i l l be deducted from the beginning of year value o f 1  See Appendix A.  2  See "Problems i n V a l u a t i o n " l a t e r i n the chapter.  d e p r e c i a b l e a s s e t s s t i l l on hand.  Depreciation f o r the  f r a c t i o n o f t h e y e a r t h a t a new a c q u i s i t i o n i s owned must be deducted f r o m i t s c o s t p r i c e . When t h e end o f y e a r i n v e n t o r y i s t a k e n a n d e n t e r e d , t h e farmer can e n t e r t h e d e p r e c i a t i o n a l l o w a b l e column; t h i s column i s used t o e n t e r t h e amount o f d e p r e c i a t i o n a l l o w a b l e under the Income Tax R e g u l a t i o n s . one-quarter  Only  o f t h e d e p r e c i a t i o n o f t h e f a r m d w e l l i n g and  a maximum o f t w o - t h i r d s o f the d e p r e c i a t i o n on an a u t o m o b i l e i s a l l o w a b l e ; o n l y t h e s e amounts s h o u l d be e n t e r e d i n t h e d e p r e c i a t i o n a l l o w e d column.  The f a r m e r s h o u l d n o t  f o r g e t t o c l a i m d e p r e c i a t i o n f o r the l e n g t h o f t i m e he owned d e p r e c i a b l e a s s e t s s o l d d u r i n g t h e y e a r .  These  amounts w i l l go i n t h e " a l l o w a b l e " column.'*' Numbers o f l i v e s t o c k and q u a n t i t i e s o f f e e d , seed, s u p p l i e s e t c . w i l l p r o b a b l y have changed and t h e r e may have been p r i c e changes i n these i t e m s a l s o .  Such  changes w i l l have t o be t a k e n a c c o u n t o f i n t h e i n v e n t o r y for  t h e end o f t h e y e a r . Changes i n c a s h and o t h e r a s s e t s may have t a k e n  p l a c e and l i a b i l i t y v a l u e s w i l l be changed i f payments have been made on p a s t d e b t s o r i f new d e b t s have been assumed.  T h i s column i s n o t used i n t h e b a l a n c e s h e e t b u t i s used i n p r e p a r i n g t h e income t a x r e t u r n .  40  Cash Income and Expense E n t r i e s The columns f o r cash income items w i l l depend on the i n d i v i d u a l farmer's production program.  I f the farmer  i s producing s e v e r a l k i n d s of crops o r has s e v e r a l l i v e s t o c k e n t e r p r i s e s he may wish to r e c o r d the income from each of these sources i n separate columns i n order to assess the cont r i b u t i o n of each crop o r l i v e s t o c k e n t e r p r i s e to h i s b u s i ness.  A twelve column sheet should be s u f f i c i e n t to meet  the requirements of most farmers, i n that some of the items which occur i n f r e q u e n t l y can be grouped and placed i n one column.  1  The numbers appropriate to the tax c a t e g o r i e s of  the items are placed at the top of the columns.  Where more  than one category i s recorded i n a column the tax category number i s bracketed a f t e r the value of the item. Expense items are t r e a t e d s i m i l a r l y ; grouping of infrequent items may a l s o be done i n e n t e r i n g expenses.  If  d e s i r e d , more than one column may be used f o r expenses which are i n the same income tax category but which the farmer wishes to separate f o r h i s own convenience; e.g., separate columns might be used f o r d a i r y feeds and hog feeds where these two e n t e r p r i s e s form major p o r t i o n s of the farm business. Included i n expenditures f o r income tax purposes i s the value of board and l o d g i n g s u p p l i e d to h i r e d labour; these values are entered as expenses and are i n c l u d e d with the wages i n category (1). See Appendix  A.  41  The c o s t o f r e p a i r s t o t h e d w e l l i n g and t h e a u t o m o b i l e expenses r e q u i r e s p e c i a l t r e a t m e n t because o n l y oneq u a r t e r o f the c o s t o f r e p a i r s t o t h e f a r m home and a maximum o f t w o - t h i r d s o f t h e a u t o m o b i l e expenses a r e a l l o w a b l e under the t a x r e g u l a t i o n s .  I t i s recommended t h a t o n l y t h e s e amounts  be e n t e r e d i n the a p p r o p r i a t e columns;  t h e t o t a l amounts o f s u c h  c o s t s c a n be p u t i n b r a c k e t s a f t e r t h e i t e m e n t r y , e,g., gasol i n e purchase f o r a u t o : Date  Item  Jan. 4  (7)  G a s o l i n e ( a u t o ) (6.00)  4.00  R e c e i p t s and e x p e n d i t u r e s may be t o t a l l e d each month o r t h e y may be t o t a l l e d a t t h e end o f t h e y e a r . P r e p a r a t i o n o f t h e P r o f i t and L o s s Statement When t h e end o f y e a r i n v e n t o r y i s t a k e n a n d the r e c e i p t s and expense i t e m s a r e t o t a l l e d f o r t h e y e a r , t h e p r o f i t and l o s s statement i s p r e p a r e d .  T h i s statement i s a summary  o f the f a r m b u s i n e s s f o r t h e y e a r and i s r e c o r d e d on a page i n t h e a c c o u n t book i n t h e f o r m o f t h e sample page i n Appendix A. The average net. v a l u e o f t h e p h y s i c a l a s s e t s i s used a s t h e b a s i s f o r a s s e s s i n g the operator's c a p i t a l investment on the p r o f i t and l o s s s t a t e m e n t .  The n e t v a l u e o f t h e p h y s i c a l  a s s e t s i s t h e t o t a l v a l u e o f t h e s e a s s e t s l e s s amounts owing on mortgages,  n o t e s on m a c h i n e r y and s h o r t t e r m i n d e b t e d -  ness t h a t i s n o t i n t h e f o r m o f monthly a c c o u n t s  owing.  42 Supplementary A c c o u n t s Supplementary a c c o u n t s a r e s e t up t o p r o v i d e i n f o r m a t i o n r e g a r d i n g c a p i t a l r e c e i p t s and expenses, and p e r s o n a l w i t h d r a w a l s from t h e f a r m b u s i n e s s . These a c c o u n t s a l s o s e r v e as means o f c h e c k i n g t h e a c c u r a c y o f t h e a c c o u n t i n g system; they show how t h e n e t f a r m income i s used by t h e f a r m e r . C a p i t a l e x p e n d i t u r e and r e c e i p t s — a page o f t h e a c count book i s used t o r e c o r d c a p i t a l e x p e n d i t u r e s and r e c e i p t s . C a p i t a l expenditures c o n s i s t of the f o l l o w i n g : (1) P r i n c i p a l payments on mortgages, agreements o f s a l e , improvement l o a n s ( e x c e p t l i v e s t o c k p u r c h a s e s ) ,  machinery,  equipment and improvement o b l i g a t i o n s o f t h e f a r m b u s i n e s s ; ( 2 ) Payments f o r p u r c h a s e s o f l a n d , machinery and equipment, and f o r t h e purchase o r c o n s t r u c t i o n o f b u i l d i n g s and improvements f o r t h e f a r m b u s i n e s s . C a p i t a l r e c e i p t s c o n s i s t o f payments r e c e i v e d from the s a l e o f l a n d , b u i l d i n g s , m a c h i n e r y and equipment which a r e p a r t o f t h e f a r m b u s i n e s s a s s e t s . ( T r a d e - i n v a l u e s o f machinery and equipment a r e e n t e r e d as c a p i t a l  receipts).  P e r s o n a l w i t h d r a w a l a c c o u n t — m a y be k e p t i n a s e p a r a t e book o r i n t h e a c c o u n t book.  I t i s simply a record of  t h e amounts o f money withdrawn f r o m t h e f a r m b u s i n e s s f o r t h e 1  See Appendix A.  L i v e s t o c k purchases a r e e n t e r e d i n t h e c a s h expense columns.  q  See Appendix A.  p e r s o n a l use o f t h e o p e r a t o r and h i s f a m i l y ; the p e r s o n a l s h a r e o f a u t o m o b i l e expenses and house r e p a i r s a r e e n t e r e d i n t h i s account.  The a c c o u n t i s t o t a l l e d a t t h e end o f t h e y e a r f o r  use i n c h e c k i n g the p r o f i t and l o s s s t a t e m e n t . U s i n g the Supplementary  Accounts  The supplementary a c c o u n t s a r e used t o check  the  a c c u r a c y o f the p r o f i t and l o s s s t a t e m e n t i n t h e f o l l o w i n g manner: (A page o f the account book i s a l l o t t e d f o r t h i s p u r pose and e n t r i e s a r e made as shown i n Appendix A ) . The net cash f a r m income, c a p i t a l r e c e i p t s , c a s h on hand and i n t h e bank a t t h e b e g i n n i n g o f t h e y e a r a r e e n t e r e d as r e c e i p t s ; t h e c a p i t a l e x p e n d i t u r e s , p e r s o n a l w i t h d r a w a l s and cash on hand and i n the bank a t t h e end o f the y e a r a r e e n t e r e d as e x p e n d i t u r e s . How  These a c c o u n t s s h o u l d b a l a n c e .  the System Meets t h e I n t e n d e d O b j e c t i v e s I n t h e o p i n i o n o f the w r i t e r , t h i s system o f f a r m  a c c o u n t i n g i s adequate Columbia f a r m e r s .  f o r t h e use o f the m a j o r i t y o f B r i t i s h  The s y s t e m i s f l e x i b l e ; i t can be used f o r  most t y p e s o f f a r m i n g .  The t i m e r e q u i r e d i n k e e p i n g the r e c o r d s  i s not g r e a t except f o r t a k i n g t h e i n v e n t o r y , p r e p a r i n g the b a l a n c e s h e e t , and p r o f i t and l o s s s t a t e m e n t s , one o r two  hours  p e r week s h o u l d be s u f f i c i e n t time f o r making t h e e n t r i e s .  A  complete r e c o r d o f the t r a n s a c t i o n s o f the f a r m b u s i n e s s i s maintained.  The b a l a n c e sheet and t h e p r o f i t and l o s s s t a t e -  ment p r o v i d e adequate i n f o r m a t i o n of the f i n a n c i a l s t a t u s o f  the b u s i n e s s .  The f i l i n g o f Income Tax r e t u r n s i s s i m p l i f i e d  by i t s use; t h e m a j o r i t y o f f a r m e r s make t h e i r r e t u r n s on a cash b a s i s .  The b a l a n c e s h e e t and p r o f i t and l o s s statement  also provide information f o r e s t a b l i s h i n g c r e d i t .  An e x t r a  copy o f t h e i n v e n t o r y c a n r e a d i l y be made and k e p t i n a f i r e p r o o f p l a c e t o be a v a i l a b l e i n c a s e o f f i r e o r o t h e r l o s s . An A n a l y s i s o f t h e f a r m b u s i n e s s c a n be made from t h i s system o f f i n a n c i a l r e c o r d s .  A number o f measures o f  b u s i n e s s s u c c e s s and f i n a n c i a l s a f e t y c a n be o b t a i n e d from i n f o r m a t i o n a v a i l a b l e from t h e f i n a n c i a l r e c o r d s ; t h e s e methods are  d i s c u s s e d i n Chapter F o u r . Single Enterprise  Accounts  The recommended system o f a c c o u n t i n g i s adequate f o r t h e e n t e r p r i s e a c c o u n t i n g r e q u i r e m e n t s o f most f a r m e r s .  How-  e v e r , some f a r m e r s w i t h a number o f e n t e r p r i s e s i n t h e i r f a r m b u s i n e s s may w i s h t o do more e x a c t a c c o u n t i n g f o r each o f t h e s e enterprises. S i n g l e e n t e r p r i s e a c c o u n t i n g i s not used by t h e majo r i t y o f f a r m e r s f o r a number o f r e a s o n s .  I t i s a very d i f -  f i c u l t system o f bookkeeping because f a r m e n t e r p r i s e s a r e so c l o s e l y i n t e g r a t e d ; t h e a l l o c a t i o n o f t h e c o s t o f l a b o u r and machines t o each e n t e r p r i s e cannot r e a d i l y be done; the p r o p o r t i o n o f h o u s i n g , power, l i g h t and water c o s t s o f s e p a r a t e l i v e s t o c k e n t e r p r i s e s , u s i n g t h e s e f a c i l i t i e s i n common, i s d i f f i c u l t t o charge t o t h e s e p a r a t e e n t e r p r i s e s .  Valuation of  r e s i d u a l v a l u e s o f seed and f e r t i l i z e r r e m a i n i n g a f t e r t h e  45  year of p l a n t i n g o r a p p l i c a t i o n i s not a simple process. There are so many costs that are general to each e n t e r p r i s e , that separating them out i n e n t e r p r i s e accounting i s not worthwhile. Farmers keeping s i n g l e e n t e r p r i s e accounts must be prepared t o spend a considerable amount o f time on bookeeping and must have considerable knowledge o f accounting; a n a l y t i c a l methods described i n Chapter Four are adequate f o r most farm businesses. S p e c i a l Problems i n Keeping F i n a n c i a l Records Valuation S e v e r a l problems face a farmer i n v a l u i n g h i s a s s e t s , (e.g., how should a change i n land values be handled).  The best  method i s t o make a conservative estimate o f value, i f he has owned the asset f o r some time; i n the case o f a recent purchase i t i s valued a t i t s cost p r i c e .  Improvements made t o the l a n d  should be recognized; the value o f r e a l estate should be app r e c i a t e d i n amounts equal t o the c o s t o f such improvements. V a l u a t i o n o f work and breeding animals may be a problem.  Depreciation of animals i s g e n e r a l l y ignored due t o  the f a c t that a s the o l d e r ones depreciate i n v a l u e , young stock are a p p r e c i a t i n g i n value and the a p p r e c i a t i o n o f f s e t s the d e p r e c i a t i o n . F a i r market value i s the best b a s i s f o r v a l u i n g such l i v e s t o c k . The v a l u a t i o n o f home grown feeds, such as s i l a g e and straw, which a r e not normally marketed may a l s o t r o u b l e  46 farmers.  One method of v a l u i n g s i l a g e i s t o add the cost o f en-  s i l i n g t o the s a l e s value o f i t s components. An a l t e r n a t i v e method i s t o approximate i t s feeding value with comparison t o hay which has a s a l e s value; straw may he valued i n t h i s manner a l s o . Accounts r e c e i v a b l e that are not o f a current  type,  such as egg and m i l k r e t u r n s , may be discounted f o r the length of time that w i l l elapse before they are c o l l e c t e d . Some o f them may have t o be valued as t h e i r c o l l e c t i b i l i t y and p r o v i s ion made f o r c o l l e c t i o n costs i n some cases. Depreciation The choice of a method of d e p r e c i a t i n g assets may prove troublesome t o farmers.  One of two methods may be used  i n c l a i m i n g d e p r e c i a t i o n f o r Income Tax purposes; each of these methods has advantages and disadvantages. The simplest and most e a s i l y c a l c u l a t e d i s the s t r a i g h t l i n e method.  Using t h i s method, an asset i s assumed to have a  c e r t a i n number o f years o f use; the annual d e p r e c i a t i o n i s c a l culated by d i v i d i n g the cost of the item at a c q u i s i t i o n by the estimated number o f years o f use. The annual d e p r e c i a t i o n i s changed each year u n t i l the asset i s f u l l y depreciated;  (e.g.,  a machine expected t o have a u s e f u l l i f e of ten years, c o s t i n g $100,  i s depreciated as f o l l o w s :  years of u s e ^ l O  annual d e p r e c i a t i o n o r a t a r a t e o f 10 percent).  =  $ 1 G  The r a t e s of  d e p r e c i a t i o n given on page 5 of the "income Tax Guide" are on a s t r a i g h t l i n e b a s i s and serve the purpose very w e l l on the  47  whole.  I f a farmer f e e l s that h i s assets are going to l a s t  longer than these rates assume, he may depreciate them at a lower rate; the rates given are maximum ones. The chief c r i t i c i s m s o f the straight l i n e method are: the asset eventually reaches a zero book value; the method f a i l s to recognize that depreciation i s greatest i n the e a r l i e r years of an asset's l i f e .  While i t i s true that  machines, equipment, and buildings often l a s t longer than the l i f e expectancy under the maximum rates given i n the "Guide,** most farmers w i l l f i n d l i t t l e difference i n t h e i r tax p o s i t i o n because of t h i s .  The assets are s t i l l l i s t e d i n the farm i n -  ventory with a zero book value.  Machines, unless of an ex-  perimental design, do not become obsolete i n a few years.  A  machine i s generally worth more to a farmer than he can s e l l it for. The diminishing balance method of c a l c u l a t i n g deprec i a t i o n i s the a l t e r n a t i v e method allowed by the tax regulations. When t h i s method i s used r e c e i p t s from sales of depreciable assets must be accounted f o r . c l a s s i f y t h e i r assets.  Farmers using t h i s method must  Maximum rates are given f o r each c l a s s  on page 5 of the Guide under Part XI. The amount of annual depreciation i s never the same i n any year of the asset's l i f e ; i t gets less each year, e.g., a mower, which i s i n Class 8, costing $200, depreciated at the maximum rate of 20 percent would be depreciated $40 the f i r s t year.  1 0  Q  o  r  The second year's depreciation i s at a  rate of 20 percent but on a value of $160, being the depreciated value f o r the second year; the depreciation would amount  48  to  $32.  The amount of depreciation diminishes each year as the  depreciated value diminishes. The asset never reaches zero value under t h i s method. Although t h i s method does allow f o r greater deprec i a t i o n i n the e a r l i e r years of an asset's l i f e and the asset i s never f u l l y depreciated, i t i s not recommended f o r the use of farmers because i t i s a more cumbersome procedure than the straight l i n e method. of  The s i m p l i c i t y and ease of a p p l i c a t i o n  the straight l i n e method makes up f o r i t s shortcomings. Income Tax Returns The f i l i n g of income tax returns presents a number  of problems to farmers.  A thorough study of the Farmer's and  Fisherman's Guide, f o r the Preparation of T l General Income Tax Returns, i s of great benefit i n preparing tax returns. The amount of depreciation and the proportion of expenses allowable f o r the repair of farm houses and f o r the repair and operating expenses o f the automobile are apt to be confusing to the farmer when he makes up h i s inventory and operating statement.  Farm dwellings and automobiles are con-  sidered as p a r t l y business and p a r t l y personal assets under the taxation regulations.  The farm home i s not r e a d i l y separated  from the rest of the farm business assets and should be entered at i t s f u l l value i n the farm inventory.  Automobiles  pose a d i f f e r e n t problem; some farmers use their automobiles almost e n t i r e l y i n the farm business; others, who have trucks, may use their automobiles nearly a l l f o r personal purposes.  In  49 such c a s e s , t h e f a r m e r s must use t h e i r own judgment i n e v a l u a t i n g them i n t h e i r i n v e n t o r i e s .  I n any e v e n t , n o t more t h a n  o n e - q u a r t e r o f t h e d e p r e c i a t i o n and c o s t o f r e p a i r s t o f a r m houses, and a maximum o f t w o - t h i r d s o f t h e d e p r e c i a t i o n and r u n n i n g expenses o f a u t o m o b i l e s may be c l a i m e d a s d e d u c t i o n s . S m a l l t o o l s h a v i n g a l i f e o f f i v e y e a r s o r l e s s and c o s t i n g not more than $50 each may be c l a i m e d a s expenses f o r t h e y e a r o r t h e y c a n be added t o t h e i n v e n t o r y . C l a s s i n g t h e s e as expenses saves time i n t h e a c c o u n t i n g  procedure.  Farmers u s i n g the recommended system o f f i n a n c i a l r e c o r d s a r e a b l e t o f i l e t h e i r t a x r e t u r n s w i t h minimum e f f o r t . If  i n v e n t o r i e s a r e c l o s e d i n t h e l a t t e r p a r t o f December and  t e n t a t i v e t o t a l s o f r e c e i p t s and expenses a r e made a t t h e same time f i l i n g o f t h e T7B form can be done r e a d i l y .  I f i t i s not  c o n v e n i e n t t o t a k e t h e i n v e n t o r y t h e n t h i s f o r m may be f i l e d u s i n g the p r e v i o u s year's t a x r e t u r n .  T w o - t h i r d s o f the e s t i -  mated t a x p a y a b l e f o r t h e c u r r e n t y e a r o r t w o - t h i r d s o f t h e t a x p a y a b l e on t h e t a x a b l e income f o r t h e p r e v i o u s y e a r must be r e m i t t e d w i t h t h e form.  T h i s r e t u r n i s due on o r b e f o r e  December 31 each y e a r . The i n f o r m a t i o n n e c e s s a r y f o r f i l i n g T4 Summary a n d T4 Supplementary f o r m s i s a v a i l a b l e f r o m the expense r e c o r d s c a t e g o r y ( 1 ) , wages and v a l u e o f board s u p p l i e s t o employees. T4 Supplementary s l i p s must a l s o be d e l i v e r e d t o t h e employees. These forms a r e due on o r b e f o r e the l a s t day o f F e b r u a r y each year.  A l l o f the i n f o r m a t i o n r e q u i r e d f o r f i l i n g the T l form i s o b t a i n e d f r o m t h e f i n a n c i a l r e c o r d s , w i t h t h e e x c e p t i o n o f t h e v a l u e o f t h e f a r m produce consumed i n t h e home.  This  v a l u e i s g e n e r a l l y e s t i m a t e d due t o t h e g r e a t d e t a i l t h a t i s r e q u i r e d i n k e e p i n g t r a c k o f a l l t h e i t e m s used i n t h e home f r o m the garden, d a i r y and p o u l t r y house. Farmers s h o u l d n o t o v e r l o o k t h e s e c t i o n s i n the "Guide d e a l i n g w i t h l o s s e s a n d t h e a v e r a g i n g o f income.  I f income t a x  payments c a n be reduced by c l a i m i n g f o r l o s s e s o r by a v e r a g i n g income, t h e time spent i n making t h e c a l c u l a t i o n s i s w e l l  spent.  R e c e i p t s f o r c h a r i t a b l e d o n a t i o n s and m e d i c a l expenses s h o u l d be kept i n o r d e r t o c l a i m them a s d e d u c t i o n s . PHYSICAL RECORDS O b j e c t i v e s and P u r p o s e s P h y s i c a l r e c o r d s s h o u l d be k e p t i n such a way a s t o provide farmers w i t h : ( a ) A r e c o r d o f t h e use o f l a n d , acreages a n d y i e l d s o f c r o p s , and t h e numbers, f e e d c o n s u m p t i o n , and p r o duction of livestock. (b) I n f o r m a t i o n f o r a s s e s s i n g t h e e f f i c i e n c y i n t h e p r o d u c t i o n o f c r o p s and l i v e s t o c k . ( c ) I n f o r m a t i o n t o supplement t h e f i n a n c i a l  records  i n a n a l y s i n g t h e f a r m b u s i n e s s f o r the purpose o f p l a n n i n g p r o d u c t i o n and i n c r e a s i n g t h e e f f i c i e n c y o f p r o d u c t i o n .  51  Form P h y s i c a l records d i f f e r from f i n a n c i a l  records i n  t h a t t h e y a r e concerned w i t h p h y s i c a l q u a n t i t i e s o n l y .  Phy-  s i c a l r e c o r d s may be k e p t o f c r o p s , l i v e s t o c k p r o d u c t i o n , l a b o u r use and machine use and i n f a c t o f a l l t h e a c t i v i t i e s making up t h e t o t a l farm o p e r a t i o n . more u s e f u l r e c o r d s i s g i v e n below.  A d e s c r i p t i o n o f the These r e c o r d s may be k e p t  s e p a r a t e l y f r o m o r i n the same book a s the f i n a n c i a l  records.  Farm Maps A map o f t h e farm s e r v e s s e v e r a l p u r p o s e s .  It is  u s e f u l f o r r e c o r d i n g how t h e v a r i o u s f i e l d s a r e u s e d , t h e c u l t u r a l p r a c t i c e s f o l l o w e d on them, and t h e y i e l d s f r o m them. A map i s a l s o u s e f u l f o r p l a n n i n g changes i n the, f i e l d of t h e farm.  Farm maps s h o u l d be p r e p a r e d  layout  on a sheet o f p a p e r  r u l e d i n 1 i n c h o r l a r g e r s q u a r e s and s h o u l d be drawn t o s c a l e . Maps s h o u l d be l a r g e enough so t h a t d e t a i l s  o f t h e shape and  s i z e o f t h e f i e l d s show up and so t h a t t h e r e i s s u f f i c i e n t space f o r e n t r i e s r e g a r d i n g t h e use o f t h e l a n d .  Measurement  of t h e a c r e a g e s o f t h e f i e l d s s h o u l d be a s a c c u r a t e as poss i b l e i n order to obtain accurate y i e l d data.  A sample map  i s i n c l u d e d i n Appendix B, Land Use Records A r e c o r d o f l a n d u s e , c o n s i s t i n g o f a summary o f how the l a n d i s d i v i d e d and used, c a n be made t o supplement t h e 1  See Appendix B f o r examples o f p h y s i c a l r e c o r d s .  52  f a r m map.  The summary i s made i n two p a r t s : (1) A r a b l e a c r e -  age; ( 2 ) Non-arable a c r e a g e .  An example o f a l a n d use r e c o r d  of a one-hundred a c r e f a r m f o l l o w s : TABLE 9 LAND USE RECORD  Arable  Acres  Permanent P a s t u r e  30  Hay  20  F i e l d crops  15  Orchard and s m a l l f r u i t s Total  5 70  Non-arable 5  Farmstead, l a n e s , e t c . Native pasture  20 5  Wood l o t Waste Total T o t a l Farm Acreage  0 30 100  S e p a r a t e l a n d use r e c o r d s a r e made f o r owned and r e n t e d l a n d , i f t h e f a r m i s o p e r a t e d under two t e n u r e s .  53  Crop Records Crop r e c o r d s a r e s e t up so as t o r e c o r d t h e a c r e a g e o f each c r o p grown, the q u a n t i t i e s o f seed, f e r t i l i z e r , i r r i g a t i o n u s e d , t h e c u l t u r a l p r a c t i c e s f o l l o w e d , and y i e l d of crops harvested.  and  the  Where s p r a y i n g i s done, d e t a i l s  o f such s p r a y i n g a r e r e c o r d e d  also.  P a s t u r e Records Records s i m i l a r t o c r o p r e c o r d s a r e used f o r seeded pastures.  A l l pasture records should contain d e t a i l s of  a p p l i c a t i o n s o f f e r t i l i z e r and i r r i g a t i o n water, the k i n d and number o f l i v e s t o c k p a s t u r e d , and the number o f days the past u r e i s used.  Records o f r o t a t e d p a s t u r e s h o u l d have d e t a i l s  o f the l e n g t h o f time and numbers and k i n d s of l i v e s t o c k past u r e d i n each p e r i o d o f the r o t a t i o n .  L i v e s t o c k Records There a r e a g r e a t number o f l i v e s t o c k r e c o r d s t h a t may  be k e p t and the c h o i c e o f the r e c o r d s depends on the  o f l i v e s t o c k p r o d u c t i o n f o l l o w e d on the farm.  type  A l l livestock  r e c o r d s must r e c o r d the q u a n t i t i e s o f f e e d f e d to the l i v e s t o c k concerned  and the p r o d u c t i o n such a s t h e weight o f m i l k p r o -  duced by d a i r y cows, the g a i n i n weight o f a n i m a l s i n the f e e d l o t , and t h e numbers o f eggs l a i d i n the c a s e o f a d a i r y e n t e r prise. Dairymen a r e a d v i s e d to keep r e c o r d s o f the d a i l y m i l k p r o d u c t i o n o f each cow i n the h e r d .  T h i s can be done by  54  weighing the m i l k given by the cow at each m i l k i n g and the q u a n t i t i e s recorded on a form kept i n the barn or m i l k i n g parlour.  The form should provide spaces f o r each cow's name  or number and columns f o r r e c o r d i n g the q u a n t i t y of m i l k given at morning and evening m i l k i n g s each day of the month. A record of the q u a n t i t i e s of feed to each cow should be kept a l s o . Breeding records are u s e f u l to provide dates of c a l v i n g . Records of l i v e s t o c k i n the f e e d l o t should c o n t a i n the date, the number, and the weight of the animals at the commencement of the feeding p e r i o d , the q u a n t i t y of feed fed to the animals during the f e e d i n g p e r i o d , and the weight of the animals at the end of the feeding p e r i o d . Poultrymen should record the number of hens or p u l l e t s i n the l a y i n g pens, d a i l y egg production f o r each pen, and the q u a n t i t y of feed f e d to each pen. D a i l y production and feed consumption records should be kept i n the bam  or p o u l t r y house and entered i n t o the phys-  i c a l records i n the account book at monthly i n t e r v a l s or a t the c l o s e o f a feeding p e r i o d . Labour Records Labour records i n v o l v e more time and e f f o r t on the part of farm operators than any other record they may keep, e s p e c i a l l y i f they r e c o r d the use of labour i n each e n t e r p r i s e . Labour records must be entered d a i l y .  The farmer and h i s em-  ployees can keep t r a c k o f the time spent on v a r i o u s jobs by e n t e r i n g the information i n pocket note books.  These note  55  book e n t r i e s a r e then t r a n s c r i b e d i n t o the l a b o u r  record.  Other P h y s i c a l Records I n a d d i t i o n t o the r e c o r d s d e s c r i b e d  above, r e c o r d s  o f the use o f machines, the consumption o f f u e l i n t r a c t o r s  and  t r u c k s , and r e c o r d s o f many o t h e r o p e r a t i o n s  the  farm may  be k e p t .  connected with  Farmers must choose f o r themselves which a r e  worthwhile keeping. Problems i n K e e p i n g P h y s i c a l Records A l t h o u g h p h y s i c a l r e c o r d s are c o n c e r n e d w i t h cal  physi-  q u a n t i t i e s o n l y , t h e s e q u a n t i t i e s are o f t e n t r a n s f o r m e d  i n t o monetary v a l u e s when the f a r m b u s i n e s s i s b e i n g a n a l y s e d . I t i s t h e r e f o r e n e c e s s a r y f o r p h y s i c a l r e c o r d s t o be as c u r a t e as p o s s i b l e .  Farmers may  ac-  have t o e s t i m a t e q u a n t i t i e s  such a s the number o f b u s h e l s of g r a i n i n a b i n , the number o f t o n s o f l o o s e hay  or s t r a w i n s t a c k s o r mows, the number o f  t o n s of s i l a g e i n a s i l o , o r the acreage o f a f i e l d .  Methods  have been worked out f o r e s t i m a t i n g such q u a n t i t i e s and  their  use s h o u l d n e v e r be s u b s t i t u t e d f o r by guesses. The  use of s c a l e s i s recommended f o r w e i g h i n g r a t i o n s  fed to l i v e s t o c k . ing  S t a n d a r d measures are u s e f u l i f d a i l y weigh-  o f g r a i n r a t i o n s i s not d e s i r a b l e o r f e a s i b l e .  of great value i n f e e d l o t operations.  Scales  are  I f l a r g e numbers of a n i -  mals a r e b e i n g f e d i t i s o n l y n e c e s s a r y t o weigh  representative  a n i m a l s o r s e v e r a l f r o m each c l a s s i n o r d e r t o get a c l o s e  esti-  mate o f the average weight. a t e d from t h e s e averages.  The t o t a l weight i s t h e n c a l c u l -  CHAPTER I I I MANAGEMENT AIDS OBTAINED FROM FARM RECORDS Good b u s i n e s s management, a s w e l l as good husbandry, i s needed i n t h e s u c c e s s f u l o p e r a t i o n o f a f a r m .  Effective  f a r m b u s i n e s s management does n o t s t o p w i t h t h e k e e p i n g o f records. use.  Records, l i k e t o o l s , w i l l show r e t u r n s o n l y w i t h  T h e i r g r e a t e s t use c a n be i n t h e a n a l y s i s of the farm  b u s i n e s s and u s i n g t h e a n a l y s i s f o r making p r o d u c t i o n p l a n s for  the future. The m a r k e t i n g o f t h e produce o f t h e f a r m  study.  deserves  Consumer's b u y i n g h a b i t s and p r i c e t r e n d s s h o u l d b e  c o n s i d e r e d i n making p r o d u c t i o n p l a n s .  ANALYSIS OF THE FARM BUSINESS An a n a l y s i s o f t h e e n t i r e f a r m b u s i n e s s may be made from t h e system o f f i n a n c i a l r e c o r d s recommended i n Chapter I I . More p a r t i c u l a r a n a l y s e s may be o b t a i n e d by combined use o f t h e f i n a n c i a l and p h y s i c a l r e c o r d s .  Measurements can be  made o f a farm b u s i n e s s which w i l l show t h e s o l v e n c y , and t h e e f f i c i e n c y o f the business. Measures o f S o l v e n c y Balance s h e e t r a t i o s a r e measures o f the s o l v e n c y o r f i n a n c i a l s a f e t y of the farm business.  The n e t worth o r t h e  f a r m e r ' s e q u i t y i n t h e b u s i n e s s appears on t h e b a l a n c e  sheet.  58 Net worth f i g u r e s o f themselves mean v e r y l i t t l e a s f a r as f i n a n c i a l s a f e t y i s concerned.  Farms may have e q u a l n e t worth  f i g u r e s y e t t h e degree o f f i n a n c i a l s a f e t y might be much d i f ferent.  Two farms w i t h e q u a l n e t worth v a l u e s a r e compared i n  the f o l l o w i n g t a b l e : TABLE 10 Net Worth V a l u e s o f Two Farms  Item Total Assets Total  Liabilities  Net Worth  Farm A  Farm B  $35,000.00  $15,000.00  25,000.00  5,000.00  10,000.00  10,000.00  Farm B, though s m a l l e r , i s the more s o l v e n t o r has the g r e a t e r degree o f f i n a n c i a l s a f e t y .  Measurements o f t h e degree o f f i n -  a n c i a l s a f e t y a r e made by computing r a t i o s t o show the v a l u e o f the a s s e t s r e l a t i v e t o t h e v a l u e o f t h e l i a b i l i t i e s o f the business. Three r a t i o s a r e commonly a p p l i e d t o f a r m b u s i n e s s e s : the  net c a p i t a l r a t i o g i v e s t h e l o n g t e r m s o l v e n c y ; the w o r k i n g  r a t i o shows the i n t e r m e d i a t e term s o l v e n c y ; t h e c u r r e n t r a t i o shows t h e degree o f f i n a n c i a l s a f e t y i n t h e s h o r t term o r current period.  59 Net C a p i t a l  Ratio  Net c a p i t a l r a t i o i s computed by d i v i d i n g  the v a l u e  o f the t o t a l a s s e t s by t h e v a l u e o f t h e t o t a l l i a b i l i t i e s o f the b u s i n e s s .  Farm A i n the example above would have a net  c a p i t a l r a t i o o f $35,000 « $25,000= 1.4, w h i l e t h e n e t c a p i t a l r a t i o o f Farm B would be $15,000 • $5,000 = 3 . 0 .  A 50 p e r c e n t  d e c l i n e i n t h e v a l u e o f t h e a s s e t s o f Farm A would bankrupt t h e f a r m b u s i n e s s ; l i a b i l i t i e s would exceed the v a l u e o f t h e a s s e t s ; Farm B would s t i l l  be s o l v e n t a f t e r a 50 p e r c e n t d e c l i n e i n the  value of i t s a s s e t s .  E x p e r i e n c e has shown t h a t t h e n e t c a p i t a l  r a t i o s h o u l d be two o r more i n o r d e r t o p r o v i d e a s a f e margin of f i n a n c i a l s a f e t y to the business. Working R a t i o The w o r k i n g r a t i o i s computed by d i v i d i n g  the value  o f the w o r k i n g a s s e t s ( t o t a l a s s e t s - f i x e d a s s e t s ) by the v a l u e o f the i n t e r m e d i a t e and s h o r t term l i a b i l i t i e s .  This r a t i o  s h o u l d have a v a l u e o f two o r more. Current Ratio The c u r r e n t r a t i o i s computed by d i v i d i n g the c u r r e n t a s s e t s by the v a l u e o f the s h o r t term  the value of liabilities.  T h i s r a t i o w i l l v a r y depending a g r e a t d e a l on t h e type o f f a r m i n g being c a r r i e d  o u t ; i t s h o u l d never be l e s s t h a n 1 and h i g h e r  ratios are desirable.  60 Measures from t h e P r o f i t and Loss Statement The p r o f i t and l o s s statement  provides a basis f o r  measuring the r a t e o f turnover, the r a t e of r e t u r n to c a p i t a l , and r e t u r n s t o the farmer f o r h i s l a b o u r and management f o r the y e a r . Farm C a p i t a l Turnover Farm c a p i t a l the e f f i c i e n c y  t u r n o v e r i s a measure t h a t i n d i c a t e s  i n the use o f c a p i t a l i n t h e farm b u s i n e s s . I t  i s computed by d i v i d i n g  t h e average amount of c a p i t a l by t h e  t o t a l farm r e c e i p t s f o r the year.  T u r n o v e r measures show the  number o f y e a r s t h a t a r e n e c e s s a r y f o r t h e t o t a l r e c e i p t s t o equal the t o t a l investment;  (e.g., i f the t o t a l value of a farm  b u s i n e s s i s $15,000 and t h e t o t a l v a l u e o f r e c e i p t s i s $3,000, the r a t e o f t u r n o v e r i s 5 o r i t would t a k e f i v e y e a r s f o r t h e r e c e i p t s to equal the investment).  Turnover f i g u r e s t h a t show  many y e a r s a r e r e q u i r e d f o r r e c e i p t s t o e q u a l i n v e s t m e n t a r e indicative  o f i n e f f i c i e n t use o f c a p i t a l . Net Farm Income The v a l u e o f the n e t f a r m income i s found by d e d u c t i n g  f r o m t h e v a l u e o f the c a s h r e c e i p t s and i n c r e a s e s i n i n v e n t o r y , the v a l u e o f t h e cash expenses and i n v e n t o r y d e c r e a s e s .  This  sum r e p r e s e n t s t h e r e t u r n t o t h e c a p i t a l i n v e s t m e n t , wages t o t h e farmer f o r h i s l a b o u r and management and t h e v a l u e o f unp a i d f a m i l y labour f o r the year's operation.  Labour R e t u r n s Labour r e t u r n s may be c a l c u l a t e d f r o m the n e t f a r m income by deducting from i t t h e v a l u e t h a t s h o u l d be r e t u r n e d as i n t e r e s t on t h e n e t i n v e s t m e n t of unpaid f a m i l y l a b o u r .  i n t h e b u s i n e s s and the v a l u e  The amount o f i n t e r e s t charged  should  be based upon t h e i n t e r e s t which would be r e c e i v e d f r o m a n a l t e r n a t i v e investment.  I n g e n e r a l t h e r a t e used i s t h a t p r e -  v a i l i n g f o r farm mortgages.  Unpaid f a m i l y l a b o u r i s valued a t  the g o i n g r a t e s f o r s i m i l a r work.  The v a l u e thus f o u n d  will  r e p r e s e n t t h e income a c c r u i n g t o t h e l a b o u r and management o f the farm o p e r a t i o n .  To a r r i v e a t h i s l a b o u r e a r n i n g s the  v a l u e o f t h e produce used i n t h e home and an imputed r e n t a l v a l u e f o r t h e farm house i s added t o t h e l a b o u r income.  Asses-  sment o f management r e t u r n s may be made by d e d u c t i n g from t h e l a b o u r e a r n i n g s a sum e q u a l t o t h e wages o r s a l a r y which t h e f a r m e r c o u l d e a r n i n a l t e r n a t i v e employment.  To be c o n s i d e r e d  s u c c e s s f u l the f a r m b u s i n e s s s h o u l d r e t u r n f a i r wages t o t h e o p e r a t o r f o r h i s l a b o u r and management and r e t u r n t o c a p i t a l s h o u l d be a t the p r e v a i l i n g r a t e f o r s i m i l a r e n t e r p r i s e s . Return t o C a p i t a l The r e t u r n t o c a p i t a l may be c a l c u l a t e d by d e d u c t i n g f r o m t h e n e t f a r m income, t h e v a l u e o f t h e o p e r a t o r ' s c o n t r i b u t i o n t o l a b o u r a n d management and t h e v a l u e o f u n p a i d f a m i l y labour.  To e x p r e s s t h i s as a r a t e , t h e r e t u r n t o c a p i t a l i s  d i v i d e d b y t h e average n e t v a l u e o f t h e p h y s i c a l a s s e t s and m u l t i p l i e d by 100; e.g., A f a r m n e t income i s $5,000, t h e v a l u e  62  o f t h e o p e r a t o r ' s l a b o u r and management, and unpaid f a m i l y l a b o u r i s $3,500 and t h e average n e t v a l u e o f t h e p h y s i c a l a s s e t s i s $30,000. ^  1 5 0  The r a t e o f r e t u r n i s (5,000 - 3,500)  g Q Q Q ° =s 5 p e r c e n t . X  0  Low r a t e s o f c a p i t a l r e t u r n i n d i c a t e  that the c a p i t a l investment  i s t o o h i g h o r t h e f a r m income i s  too low. Measures f r o m P h y s i c a l Records Physical records provide data f o r c a l c u l a t i n g the p r o d u c t i o n e f f i c i e n c y o f c r o p s , l i v e s t o c k , l a b o u r and machines. By a s s i g n i n g monetary v a l u e s t o the i t e m s i n t h e p h y s i c a l records estimates of the f i n a n c i a l success o f v a r i o u s enterp r i s e s i n t h e farm b u s i n e s s may be made. Crop Records The s i m p l e s t measure t h a t can be made i s t h e y i e l d per acre of crops.  The t o t a l y i e l d o f each crop i s d i v i d e d by  t h e number o f a c r e s sown t o t h e c r o p t o g i v e t h e y i e l d p e r acre. Farmers who keep c r o p r e c o r d s and make note o f the c u l t u r a l p r a c t i s e s f o l l o w e d i n growing  t h e i r c r o p s , c a n use  them t o good advantage f o r f i n d i n g t h e b e s t c o m b i n a t i o n o f seed, f e r t i l i z e r , i r r i g a t i o n and c u l t i v a t i o n .  The c o s t o f  a p p l y i n g more f e r t i l i z e r , water o r o t h e r f a c t o r s s h o u l d be c o n s i d e r e d b e f o r e d o i n g s o , i n o r d e r t o be sure such  expendi-  t u r e s may r e s u l t i n a l a r g e r n e t r e t u r n f r o m t h e i r u s e .  L i v e s t o c k Records L i v e s t o c k r e c o r d s a r e used i n o b t a i n i n g a number o f e f f i c i e n c y measures.  The m i l k p r o d u c t i o n o f d a i r y cows, egg  p r o d u c t i o n o f p o u l t r y and t h e meat p r o d u c t i o n o f meat  animals  may be measured e i t h e r on an a n i m a l u n i t b a s i s o r from u n i t s o f t h e f e e d f e d t o such a n i m a l s . producers  From s u c h d a t a i n e f f i c i e n t  i n t h e h e r d s and f l o c k can be i d e n t i f i e d and a c t i o n  t a k e n t o e l i m i n a t e them. A measure t h a t may be a p p l i e d to l i v e s t o c k e n t e r p r i s e s i s t h e v a l u e of p r o d u c t i o n p e r $100 worth o f f e e d f e d . T h i s measure can be used by dairymen, p o u l t r y m e n ,  1  feedlot  o p e r a t o r s and i n f a c t by n e a r l y a l l l i v e s t o c k p r o d u c e r s . Home grown f e e d must be v a l u e d i n c a l c u l a t i n g t h i s measure.  The  formula i s as f o l l o w s : V a l u e o f l i v e s t o c k p r o d u c t s produced vaTuT-o? f e e d K  X  „  1 0 0  -  n n  "  r e t u r n s per $100 worth o f f e e d . Dairymen must i n c l u d e t h e f e e d f e d t o t h e i r e n t i r e d a i r y h e r d to a r r i v e a t t h i s value.  F e e d l o t o p e r a t o r s use t h e g a i n i n  v a l u e o f t h e a n i m a l s f e d as t h e v a l u e o f t h e p r o d u c t  produced.  T h i s v a l u e may be f o u n d as f o l l o w s : V a l u e o f a n i m a l s a t end of f e e d i n g p e r i o d V a l u e o f a n i m a l s a t b e g i n n i n g of f e e d i n g p e r i o d Gain i n V a l u e J.A. Hopkins and E.O. Heady, Farm R e c o r d s . T h i r d E d i t i o n p. 179, Ames, The Iowa S t a t e C o l l e g e P r e s s 11949). A  64 Farmers who do n o t keep f e e d r e c o r d s f o r each e n t e r p r i s e can measure t h e f e e d r e t u r n f r o m t h e i r o p e r a t i o n s from t h e i r i n v e n t o r y , r e c e i p t and expense r e c o r d s , and a r e c o r d o f the f e e d grown d u r i n g t h e y e a r . The procedure The  i s as follows:  beginning i n v e n t o r y value o f l i v e s t o c k plus the  v a l u e o f l i v e s t o c k purchased  during the year a r e subtracted  from the c l o s i n g i n v e n t o r y o f l i v e s t o c k p l u s the value of l i v e s t o c k and l i v e s t o c k p r o d u c t s s o l d and consumed i n t h e home d u r i n g t h e y e a r ; t h i s i s t h e v a l u e o f l i v e s t o c k and l i v e s t o c k p r o d u c t s produced i n t h e y e a r .  The v a l u e o f f e e d i s f o u n d by  s u b t r a c t i n g t h e end o f y e a r i n v e n t o r y f e e d v a l u e from t h e v a l u e o f f e e d i n t h e b e g i n n i n g year i n v e n t o r y p l u s v a l u e s o f purchased f e e d and home grown f e e d f e d d u r i n g t h e y e a r .  The s c h e d u l e i s  as f o l l o w s : R e t u r n p e r $100 F o r t h o f Feed Fed Livestock (1) B e g i n n i n g i n v e n t o r y Purchases Total (1)  Feed (3) Beginning Inventory Purchases Home R a i s e d T o t a l (3)  (2) S a l e s ( L i v e s t o c k and P r o (4) C l o s i n g Inventory ducts) T o t a l (4) Used i n home Closing inventory T o t a l (2) V a l u e o f l i v e s t o c k and l i v e s t o c k p r o d u c t s - T o t a l ( 2 ) - ( 1 ) Value o f feed T o t a l (3) - (4) ~ . (tmn V a l u e o f l i v e s t o c k and p r o d u c t s x 100 R e t u r n p e r $100 f e e d = Value o f feed T h i s measure shows t h e r e t u r n p e r $100 worth f e e d f o r the t o t a l f a r m o p e r a t i o n .  65 The r e t u r n p e r $100 worth o f f e e d f e d must be s u f f i c i e n t t o c o v e r a l l t h e o t h e r expenses o f t h e l i v e s t o c k e n t e r p r i s e s and i n a d d i t i o n g i v e r e t u r n s t o c a p i t a l and t h e o p e r a tor^  labour.  I f r e t u r n s are low, the operator should look  f o r poor p r o d u c e r s i n h i s h e r d , examine t h e r a t i o n s b e i n g f e d and t h e work methods b e i n g used. Labour  Records  >  Labour use may be a n a l y s e d from l a b o u r r e c o r d s o r by use o f a l a b o u r g u i d e .  A l a b o u r g u i d e f o r m showing t h e number  of days* work r e q u i r e d p e r y e a r p e r a n i m a l u n i t o r p e r a c r e o f c r o p may be found on t h e f o l l o w i n g p a g e .  1  ( T h i s g u i d e does not  make a l l o w a n c e s f o r time spent on r e p a i r s and maintenance o f b u i l d i n g s , improvements, and m a c h i n e r y ) . I n u s i n g the g u i d e the f a r m e r f i l l s i n t h e number o f each k i n d o f l i v e s t o c k k e p t o r t h e a c r e s o f each k i n d o f c r o p grown on t h e f a r m ; t h e s e numbers a r e m u l t i p l i e d by t h e work days p e r a n i m a l t o f i n d t h e number o f work days r e q u i r e d on h i s f a r m ; e.g., A h e r d o f twenty d a i r y cows i n f l u i d m i l k p r o d u c t i o n would r e q u i r e 20 x 15 = 300 work days p e r y e a r . The work days f o r t h e farm a r e c a l c u l a t e d f o r each e n t e r p r i s e c a r r i e d on; these a r e t o t a l l e d t o f i n d t h e t o t a l work days r e q u i r e d f o r t h e farm f o r t h e y e a r .  Average l a b o u r e f f i 2 c i e n c y i s 225 t o 250 work days p e r worker p e r y e a r . Lower H. R. Hare, Farm B u s i n e s s Management, p. 118, T o r o n t o , Ryerson P r e s s (1946JI \ 1  2  I b i d * . p. 119.  GUIDE IN DETERMINING LABOUR REQUIREMENTS ON CANADIAN FARMS Farm E n t e r p r i s e s 1. C a t t l e Dairy c o w s — f l u i d milk » « — m i l k f o r manufacture Beef cows o r f e e d e r s t e e r s on f a r m A l l o t h e r c a t t l e on f a r m Ranch c a t t l e a l l ages and c l a s s e s  No. o f Animals  2. Hogs Brood sows Market p i g s 3. Sheep Market Lambs 4. P o u l t r y ( p e r 100 mature b i r d s * Hens and ducks C h i c k e n s r a i s e d f o r market Turkeys and geese 5. Bees ( p e r c o l o n y ) 6. F i e l d Crops # G r a i n — P r a i r i e s (Peace R i v e r ) G r a i n — O t h e r areas Hay—one c u t t i n g two c u t t i n g s Forage c r o p seed F i e l d peas F i e l d beans and soy beans Corn f o r f o d d e r Corn f o r h u s k i n g Potatoes F i e l d roots Sugar b e e t s V e g e t a b l e seeds 7. F r u i t s and V e g e t a b l e s V e g e t a b l e s — t r u c k crops Orchards & v i n e y a r d s — i r r i g a t e d non-irrigated (not i n c l u d i n g p a c k i n g & m a r k e t i n g ) S m a l l f r u i t s and b e r r i e s 8. M i s c e l l a n e o u s Tobacco F u e l and pulpwood p e r c o r d Other e n t e r p r i s e s  Work Days P e r A n i m a l Farm 15 12 3.5 2 1 3  .5 .5 .2  20 5 40 acres  .5 Per a c r e 1 2 1 2 2 3 4 5 6 10 12 12 22 15 25 12 40 25  .2  Total # Summerfallow - No a l l o w a n c e i s made f o r summerfallow s i n c e i t i s a l r e a d y i n c l u d e d i n day's work p e r c r o p a c r e . * Truck c r o p s i n c l u d e the f o l l o w i n g c r o p s : a s p a r a g u s , c e l e r y , l e t t u c e , o n i o n s , tomatoes, c a u l i f l o w e r , cabbage, sweet c o r n , e t c . , when grown under f i e l d c o n d i t i o n s .  66  l a b o u r e f f i c i e n c i e s than these averages s h o u l d prompt t h e f a r mer  t o i n v e s t i g a t e t h e use o f l a b o u r s a v i n g machines o r make  changes i n h i s l a y o u t and work methods. M a c h i n e r y Records Records o f machine and t r a c t o r use and r e c o r d s o f r e p a i r and f u e l expenses may be used i n e s t i m a t i n g c o s t p e r a c r e o f o p e r a t i n g them.  Farmers who c a l c u l a t e machine and  power c o s t s must i n c l u d e d e p r e c i a t i o n , h o u s i n g , and i n t e r e s t on t h e i n v e s t m e n t i n t h e machine a s w e l l as f u e l and r e p a i r costs.  I n t e r e s t i s computed a t t h e p r e v a i l i n g r a t e on one-  h a l f o f t h e new c o s t ; h o u s i n g o f machines has been  estimated  a t 1 p e r c e n t o f h a l f t h e new c o s t o f machines.* BUDGETING B u d g e t i n g o r p l a n n i n g t h e farm o p e r a t i o n from a b u s i ness v i e w p o i n t  i n v o l v e s t h e use o f r e c o r d s , a n a l y s i s , and o u t -  look information.  Records a r e used t o show p a s t r e t u r n s , budget  a n a l y s i s t o determine where the o r g a n i z a t i o n c a n be improved, and o u t l o o k i n f o r m a t i o n t o p r o v i d e d a t a f o r e s t i m a t i n g p r i c e s . I n v e n t o r y o f Resources Budgeting i s c a r r i e d out i n steps o r stages.  The  f i r s t step c o n s i s t s o f t a k i n g s t o c k o f the resources a v a i l a b l e f o r p r o d u c t i o n . Land use r e c o r d s and i n v e n t o r i e s p r o v i d e most Wm. K a l b f l i e s c h , C o s t o f O p e r a t i n g Farm M a c h i n e r y ( E a s t e r n Canada), F a r m e r s B u l l e t i n 118, p. 9, Ottawa, K i n g ' s P r i n t e r (1950). 1  1  67 o f t h i s i n f o r m a t i o n b u t a s u r v e y o f l a b o u r r e s o u r c e s , and s o u r c e s o f c a p i t a l s h o u l d be i n c l u d e d . Price Expectations P r i c e e x p e c t a t i o n s f o r farm p r o d u c t s a r e taken c o n s i d e r a t i o n i n making t h e budget.  Expected  into  p r i c e s can only  be e s t i m a t e d ; r e c o r d s o f p a s t p r i c e s and o u t l o o k i n f o r m a t i o n a r e used i n making t h e e s t i m a t e s .  There i s l i t t l e o u t l o o k i n -  f o r m a t i o n p u b l i s h e d i n Canada; t h e F e d e r a l Department o f A g r i c u l t u r e ' s p u b l i c a t i o n , t h e C u r r e n t Review o f A g r i c u l t u r a l Cond i t i o n s i n Canada c o n t a i n s such i n f o r m a t i o n and some has been p u b l i s h e d by t h e E x t e n s i o n Department, The U n i v e r s i t y o f B r i t i s h Columbia, i n s p e c i a l  fields.  1  Market i n f o r m a t i o n i s a v a i l a b l e from numerous s o u r c e s . Radio b r o a d c a s t s , newspaper and farm j o u r n a l s , a n d Government p u b l i c a t i o n s a r e s o u r c e s which f a r m e r s may make use o f t o obt a i n market i n f o r m a t i o n .  The F e d e r a l Government has a v a i l a b l e  f o r d i s t r i b u t i o n market i n f o r m a t i o n w i t h r e g a r d t o many o f t h e  2 f a r m p r o d u c t s produced i n Canada. Farmers u s i n g o u t l o o k a n d market i n f o r m a t i o n w i l l be b e t t e r i n f o r m e d a s t o market t r e n d s and consumer p r e f e r e n c e s and can use t h i s knowledge i n f o r m u l a t i n g t h e i r p r o d u c t i o n p l a n s . W. J . Anderson and S. L. Medland, The P o u l t r y Outlook 1954. Vancouver, The U n i v e r s i t y o f B r i t i s h C o l u m b i a (1953). 1  2  I n f o r m a t i o n S e r v i c e , Department o f A g r i c u l t u r e , Ottawa. P u b l i c a t i o n s a v a i l a b l e a r e : The C u r r e n t Review o f A g r i c u l t u r a l C o n d i t i o n s i n Canada ( b i - m o n t h l y ) , The Economic A n n a l i s t ( b i m o n t h l y ) , L i v e s t o c k Market R e p o r t ( w e e k l y ) , D a i r y Produce Mark e t Report ( w e e k l y ) , Crop and M a r k e t Report ( F r u i t , V e g e t a b l e s and Honey) ( w e e k l y ) , Egg and P o u l t r y M a r k e t R e p o r t ( w e e k l y ) .  68 Production Plans When t h e r e s o u r c e s o f t h e farm b u s i n e s s have been s u r veyed and t h e p r o b a b l e p r i c e s f o r farm p r o d u c t s have been e s t i mated, t h e p r o d u c t i o n p l a n s can be made. Crop P l a n s The c r o p p l a n i s g e n e r a l l y made f i r s t . s h o u l d be made w i t h s o i l i n mind.  Crop p l a n s  c o n s e r v a t i o n and f e r t i l i t y  maintenance  Crop p l a n s s h o u l d a l s o be made so t h a t the use o f  l a b o u r can be s p r e a d over a l o n g p e r i o d r a t h e r than h a v i n g competing f o r l a b o u r use a t one t i m e .  crops  Crop p l a n s s h o u l d have  t h r e e o b j e c t i v e s : o b t a i n i n g t h e maximum n e t r e t u r n s f r o m c r o p s ; combining c r o p s e f f i c i e n t l y w i t h o t h e r e n t e r p r i s e s ; m a i n t a i n i n g soil  fertility. Expected y i e l d d a t a may be made f r o m p a s t y i e l d s o r i n  the case o f new v a r i e t i e s from p u b l i s h e d e x p e r i m e n t a l  results.  With y i e l d d a t a and expected p r i c e e s t i m a t e s , the c r o p p l a n c a n be drawn up a s f o l l o w s : TABLE 11 CROP PLAN  K i n d o f Crop  Acres  Expected /acre  yield total  Disposition Feed Seed S a l e s  Value  69  Livestock Plans L i v e s t o c k p l a n s a r e g e n e r a l l y drawn up a f t e r the crop plan.  Most farms market some o f t h e i r c r o p p r o d u c t i o n i n t h e  form o f l i v e s t o c k o r l i v e s t o c k p r o d u c t s .  L i v e s t o c k p l a n s must  i n c l u d e t h e numbers o f each c l a s s o f l i v e s t o c k k e p t , f e e d consumption and p r o d u c t i o n  expected  estimates.  The f o l l o w i n g i s a recommended f o r m o f l i v e s t o c k p l a n : TABLE 12 LIVESTOCK PLAN  K i n d o f L i v e s t o c k Number  Feed ConsuRl p t i o n Home grown P u r c h a s e d  Expected  Production Amount Value  Expenses  Expenses a r e e a s i e r t o budget t h a n r e c e i p t s .  Fixed  expenses, s u c h a s t a x e s , i n s u r a n c e , and d e p r e c i a t i o n do not v a r y much from y e a r t o y e a r nor do t h e y v a r y g r e a t l y w i t h d i f f e r e n t production plans.  E s t i m a t e s of expenses connected d i r e c t l y  w i t h t h e p r o d u c t i o n p l a n s must be made. Expenses f o r s e e d , f e r t i l i z e r and h a r v e s t i n g a r e e s t i mated f o r c r o p s : l i v e s t o c k p u r c h a s e , f e e d and s u p p l y c o s t s a r e  70  estimated f o r l i v e s t o c k .  L a b o u r , f u e l , and r e p a i r c o s t s may  be e s t i m a t e d f o r each e n t e r p r i s e o r may be e s t i m a t e d f o r t h e whole  operation. Summary o f R e c e i p t s  and Expenses  The summary o f r e c e i p t s and expenses i s t h e f i n a l step i n preparing  a budget.  The summary may be made a s f o l l o w s : TABLE 13  SUMMARY OP EXPECTED RECEIPTS AND EXPENSES Expenses  Receipts Livestock Dairy products Beef Hogs Other Poultry Total Crops Grain Hay Fruit Potatoes Other  Value  Operating M a c h i n e r y (upkeep) Truck and auto Tractor Labour Crop expense L i v e s t o c k expense Miscellaneous Total Feed Purchases Home Grown  Total  Total  P r o d u c t s used i n home Milk Eggs Meat Other Total  F i x e d Expenses Taxes Interest Insurance Building repairs Depreciation Total  Total receipts  T o t a l expenses  E x p e c t e d income  Value  71  A l t e r n a t e P l a n s Should Be P r e p a r e d S e v e r a l p r o d u c t i o n p l a n s s h o u l d be worked o u t and compared; t h e p l a n t h a t appears t o be most f a v o u r a b l e s h o u l d be adopted.  The o b j e c t i v e o f t h e budget i s t h e m a x i m i z a t i o n  of t h e farm net income. C u r r e n t r e c o r d s a r e made use o f i n f o l l o w i n g t h e budg e t ; t h e y show whether t h e performance i s a p p r o a c h i n g t h e p l a n or d e v i a t i n g from t h e p l a n .  Budgets s h o u l d n o t be r i g i d l y ad-  hered t o i f c o n d i t i o n s change a f t e r t h e y a r e made; new p l a n s o r adjustments new c o n d i t i o n s .  t o t h e o l d ones w i l l be n e c e s s a r y t o meet t h e  CHAPTER I V THE ACQUISITION AND FINANCING OF A FARM BUSINESS PURCHASING A FARM The s e l e c t i o n o f a farm i s most i m p o r t a n t .  The v a l u e  of l a n d and b u i l d i n g s forms t h e l a r g e s t p a r t of the t o t a l i n v e s t m e n t i n most f a r m b u s i n e s s e s .  (Land and b u i l d i n g s com-  p r i s e d 68 p e r c e n t o f t h e t o t a l i n v e s t m e n t i a B r i t i s h C o l u m b i a farms i n 1 9 5 1 M i s t a k e s made i n s e l e c t i n g a f a r m may be costly.  R e s e l l i n g a farm may be d i f f i c u l t w i t h o u t a l o s s i n  c a p i t a l e n s u i n g ; moving i s always i n c o n v e n i e n t and i s o f t e n e x p e n s i v e ; changes i n t h e l a y o u t o f the f i e l d s and b u i l d i n g s nay e n t a i l c o n s i d e r a b l e expense.  M o d i f i c a t i o n s i n the s i z e of  a f a r m , i n c a s e e x p a n s i o n o r c o n t r a c t i o n o f t h e b u s i n e s s i s des i r e d , may be d i f f i c u l t and u n e c o n o m i c a l ; t h e purchase o f a d d i t i o n a l l a n d o r t h e d i s p o s a l o f s u r p l u s l a n d cannot always be accomplished. S e l e c t i o n o f a Farm The t y p e o f f a r m i n g , which t h e p u r c h a s e r wishes t o engage i n w i l l determine what p h y s i c a l f a c t o r s he w i l l f o r i n choosing a farm. N i n t h Census o f Canada 1951. V I , P a r t 2, T a b l e 1, ( B r i t i s h Columbia). 1  look  The d i s t r i b u t i o n o f t h e l a n d a r e a and the l a y o u t o f f i e l d s s h o u l d be c a r e f u l l y c o n s i d e r e d ; a s c h e d u l e o f l a n d use and a map o f t h e farm a r e u s e f u l f o r t h i s purpose. graphy o f t h e farm i s an i m p o r t a n t f a c t o r .  The topo-  The p u r c h a s e r  s h o u l d a s k h i m s e l f how t h e topography w i l l a f f e c t t h e use o f machines and i f i t i s conducive  to erosion.  The s t a t e o f  t i l t h and t h e f e r t i l i t y o f the s o i l must be t a k e n i n t o c o n s i d eration.  He s h o u l d a s k t o see the c r o p r e c o r d s o f the farm.  S o i l maps s h o u l d be c o n s u l t e d .  These maps g i v e d e t a i l e d i n f o r -  mation w i t h r e g a r d t o s o i l t y p e s , water t a b l e s a n d t h e i r u s e w i l l i n d i c a t e whether t h e s o i l i s c a p a b l e o f m a i n t a i n i n g a g r i c u l t u r a l p r o d u c t i o n ; t h e y a r e a v a i l a b l e f o r many a r e a s o f B r i tish  Columbia.  1  B u i l d i n g s , f e n c e s , d r a i n a g e and i r r i g a t i o n systems s h o u l d be c a r e f u l l y i n s p e c t e d .  Notes s h o u l d be made o f t h e  c o n d i t i o n o f f o u n d a t i o n s , r o o f s and chimneys.  Buildings should  not be o v e r v a l u e d ; they s h o u l d be a p p r a i s e d as t o t h e i r u s e f u l ness i n t h e farm b u s i n e s s .  A r e l i a b l e s o u r c e o f water i s a l s o  an i m p o r t a n t f a c t o r on most farms. I n a d d i t i o n t o t h e s e a s p e c t s o f t h e farm i t s e l f , i t s l o c a t i o n w i t h r e s p e c t t o m a r k e t s , r o a d s , s c h o o l s and o t h e r a m e n i t i e s must be c o n s i d e r e d .  These a r e i m p o r t a n t  factors,  both i n t h e f a r m as a b u s i n e s s and a s a p l a c e t o make a home. A f a r m a p p r a i s a l form i s v a l u a b l e when t h e purchase o f a farm i s b e i n g c o n s i d e r e d .  S e v e r a l farms may be compared  P u b l i c a t i o n s Branch, Department o f A g r i c u l t u r e , P r o v i n c e of B r i t i s h Columbia, V i c t o r i a and 635 B u r r a r d S t r e e t , Vancouver o r , through D i s t r i c t A g r i c u l t u r i s t s ' o f f i c e s a t v a r i o u s c e n t e r s throughout t h e P r o v i n c e . 1  by u s i n g a f o r m such a s t h e f o l l o w i n g : Sample A p p r a i s a l B l a n k f o r F a r m s Farm "AJJ location Description Land Crop l a n d Grade A Grade B Grade C Pasture Tillable Rotated Permanent Wooded Woodland Idle land Farmstead, r o a d s , e t c . Buildings, etc. Dwelling Barn Other b u i l d i n g s Fences Drains Irrigation Water s u p p l y Farm l a y o u t : Size of f i e l d s Shape o f f i e l d s Arrangement P o s s i b i l i t y o f improvement Transportation Type o f r o a d Distance to hard s u r f a c e C h a r a c t e r o f neighborhood Educational Religious Labor s u p p l y  1  "B * 1  Remarks P r i c e asked E s t i m a t e d worth Based on n a t u r a l f e r t i l i t y , g e n e r a l c o n d i t i o n , d r a i n a g e , topography, and a l l e g e d y i e l d s . a  G. W. F o r s t e r , Farm O r g a n i z a t i o n and Management. T h i r d E d i t i o n , pp. 196, 197, New Y o r k , J ^ e n T T c e ^ l a l l , I n c . (1953).  75 E s t i m a t i n g the V a l u e o f a Farm The e s t i m a t e d worth o f a farm as a b u s i n e s s v e n t u r e can be measured by a p p l y i n g a f o r m u l a which c a p i t a l i z e s the e s t i m a t e d a n n u a l net r e t u r n t o the i n v e s t m e n t i n r e a l e s t a t e . The e s t i m a t e d r e t u r n t o investment  i s found by e s t i m a t i n g  the expected net r e t u r n t o the f a r m b u s i n e s s and  deducting  from t h i s amount v a l u e s f o r the o p e r a t o r ' s wages f o r h i s l a b o u r and management, wages f o r u n p a i d f a m i l y l a b o u r and r e t u r n s to h i s investment i n working a s s e t s . o f t h i s sum  Capitalization  i s c a l c u l a t e d as f o l l o w s :  Present Value =  Annual Net R e t u r n from R e a l Estat e l C u r r e n t Rate o f I n t e r e s t (Farm Mortgages)  B s  '  t i m a  '  t e d  F o r example, i f the annual income f r o m the l a n d and b u i l d i n g s was i n t e r e s t was  e s t i m a t e d t o be $1000 and t h e c u r r e n t r a t e o f 5 p e r c e n t , the p r e s e n t v a l u e would be c a l c u l a t e d  as f o l l o w s : Present Value  $  1  Q  0  ^g°  $20,000  The p r i c e of the f a r m s h o u l d be i n the neighbourhood  of  $20,000. A buyer o f farm l a n d , who  i s unfamiliar with farming  and farm l a n d v a l u e s s h o u l d a v a i l h i m s e l f o f the s e r v i c e s of a l a n d a p p r a i s i n g f i r m t o a s s e s s the v a l u e and p r o d u c t i o n p o t e n John D, B l a c k , e t a l . , Farm Management, p. 737, New The M a c m i l l a n Company, (1947). 1  York,  76  t i a l o f a f a r m b e f o r e he p u r c h a s e s i t .  A buyer s h o u l d never  r e l y on s t a t e m e n t s made by t h e s e l l e r o r h i s a g e n t , u n l e s s t h e y can support them w i t h a u t h e n t i c r e c o r d s o f t h e p a s t o f t h e farm.  performance  I n f o r m a t i o n r e g a r d i n g farms b e i n g c o n s i d e r e d  f o r purchase may o f t e n be g a t h e r e d from n e i g h b o u r s o r t h e l o c a l bank manager. The s e t t l e m e n t s e r v i c e o f the Department o f C i t i z e n s h i p and I m m i g r a t i o n w i l l make i n v e s t i g a t i o n s f o r and g i v e a d v i c e t o immigrants who a r e p u r c h a s i n g f a r m l a n d .  The D e p a r t -  ment o f V e t e r a n s * A f f a i r s a p p r a i s e s each o f the farms  before  v e t e r a n s b u y i n g farms under t h e p r o v i s i o n s o f t h e V e t e r a n s ' Land A c t a r e s e t t l e d on them. F i n a l S t e p s I n P u r c h a s i n g a Farm When t h e buyer has made a thorough i n v e s t i g a t i o n i n t o the f a r m , he s h o u l d then c o n s i d e r whether t h e f a r m f i t s h i s p l a n o f o p e r a t i o n , i f i t i s t h e p r o p e r s i z e f o r him t o o p e r a t e e f f i c i e n t l y , i f i t i s i n a d i s t r i c t where he would l i k e t o live.  I f he i s s a t i s f i e d on a l l t h e s e p o i n t s , t h e r e  remains  one i m p o r t a n t t h i n g f o r him t o do and t h a t i s t o r e t a i n a l a w y e r t o s e a r c h the t i t l e and t o g i v e a d v i c e w i t h r e g a r d t o any agreement t h a t may be made w i t h t h e s e l l e r .  Money s p e n t  f o r the s e r v i c e s o f a l a w y e r a t t h i s time may save t h e e x p e n d i t u r e o f a g r e a t e r sum o f money a n d n e e d l e s s worry l a t e r on. The o l d s a y i n g "Let t h e buyer beware" i s worth remembering when b u y i n g p r o p e r t y .  77 LEASING A FARM Ownership o f the f a r m o p e r a t e d i s t r a d i t i o n a l i n Canada, a s opposed t o tenancy which i s t r a d i t i o n a l i n Great Britain.  However, t h e r e a r e s i g n i f i c a n t  l a n d r e n t e d i n Canada.  acreages o f farm  The p r o p o r t i o n t h a t r e n t e d l a n d i s  of t h e t o t a l f a r m a r e a i n B r i t i s h Columbia i s l e s s than t h e p r o p o r t i o n i n t h e P r a i r i e p r o v i n c e s and g r e a t e r than t h e p r o p o r t i o n i n the Eastern provinces.  Farm l a n d t e n u r e i n B r i -  t i s h Columbia i n 1951 was a s f o l l o w s : TABLE 14 LAND TENURE I N BRITISH COLUMBIA 1951 By A r e a T o t a l farm a r e a Farm a r e a o p e r a t e d by owner Farm a r e a o p e r a t e d by tenant By Number o f Farms T o t a l farms Operated by Operated by Operated by Operated by 16  owners tenants p a r t owner, p a r t t e n a n t manager  Acres 4,702,274 3,714,231 988,043  Percent 100 79 21  Number  Percent  26,406 22,328 1,524 2,119 435  100.0 84.5 5.8 8.0 1.7  Source: N i n t h Census o f Canada 1951. V I , P a r t I , Table (Canada). R e n t i n g a f a r m o f f e r s an o p p o r t u n i t y t o t h o s e w i t h  l i m i t e d c a p i t a l t o engage i n f a r m i n g .  Modern f a r m i n g r e q u i r e s  a c o n s i d e r a b l e amount o f c a p i t a l , because o f t h e m e c h a n i z a t i o n of a g r i c u l t u r a l  p r o d u c t i o n and t h e c o m p a r a t i v e l y h i g h p r i c e s  for livestock.  There i s l i t t l e f r e e l a n d a v a i l a b l e t h a t can  be p u t i n t o p r o d u c t i o n  without c l e a r i n g .  Farmers who own  some l a n d may p r e f e r r e n t i n g r a t h e r than b u y i n g more l a n d . By r e n t i n g t h e y can put t h e i r r e s o u r c e s  i n working c a p i t a l  r a t h e r than f i x e d c a p i t a l . A p p r a i s i n g a Farm t o Rent The  s e l e c t i o n o f a rented farm e n t a i l s the considera  t i o n o f t h e same f a c t o r s which determine t h e s e l e c t i o n o f a farm b e i n g purchased.  However, u n l e s s  the f a r m i s b e i n g  r e n t e d w i t h a v i e w t o i t s u l t i m a t e purchase o r i s b e i n g l e a s e d f o r a l o n g term o f y e a r s , not a l l o f t h e f a c t o r s w i l l need t o be i n v e s t i g a t e d a s t h o r o u g h l y . for  Leases a r e g e n e r a l l y  a l i m i t e d time and i f a tenant i s not s a t i s f i e d w i t h t h e  f a r m , he c a n make a change w i t h o u t t h e s e r i o u s l o s s e s which a purchase might i n c u r . A t e n a n t i s i n t e r e s t e d p r i m a r i l y i n l e a s i n g a farm t h a t i s i n a good s t a t e o f c u l t i v a t i o n w i t h adequate b u i l d i n g s i n a good s t a t e of r e p a i r o f a s i z e which f i t s h i s equipment, h e r d and l a b o u r s u p p l y and l o c a t e d w i t h i n s u i t a b l e  distances  f r o m m a r k e t s , s c h o o l s and t h e o t h e r d e s i r a b l e a m e n i t i e s . tenant s h o u l d make i n q u i r i e s w i t h r e s p e c t l o r d , f o r good l a n d l o r d - t e n a n t  A  to h i s future land-  r e l a t i o n s c a n be a c h i e v e d o n l y  when each o f the p a r t i e s i s p r e p a r e d t o a c t i n good f a i t h . An i n v e n t o r y o f t h e v a l u e o f t h e r e s o u r c e s  being  contributed  by each p a r t y s h o u l d be made and an e q u i t a b l e c o n t r a c t drawn up which c l e a r l y s t a t e s the r e s p o n s i b i l i t i e s o f t h e tenant and t h e l a n d l o r d .  Cash and s h a r e r e n t a l a r e the two main k i n d s o f farm land r e n t a l c o n t r a c t s . of  Sometimes, t h e y a r e a c o m b i n a t i o n  both. Cash R e n t a l Cash r e n t a l c o n t r a c t s a r e g e n e r a l l y u n c o m p l i c a t e d .  The  l e n g t h of the l e a s e , the due d a t e s and  the amount of r e n t  t o be p a i d , t o g e t h e r w i t h the s t a t e d r e s p o n s i b i l i t i e s o f each p a r t y to the l e a s e i s a l l t h a t has t o be w r i t t e n i n t o them. The r e s p o n s i b i l i t i e s o f the t e n a n t a r e i n r e g a r d t o the husbandry methods to be f o l l o w e d , w h i l e t h o s e o f the l a n d l o r d are concerned w i t h the maintenance of b u i l d i n g s i n most c a s e s . These c o n t r a c t s i n v o l v e l e s s r i s k on the p a r t of the l a n d l o r d than i n the case of share c o n t r a c t s ; w i t h a s t i p u l a t e d cash r e n t the t e n a n t a c c e p t s the r i s k of t h e l o s s e s o r w i n d f a l l g a i n s a s s o c i a t e d w i t h v a r i a t i o n s i n c r o p y i e l d s and p r i c e changes. Cash r e n t a l s a r e determined by the power of the farm.  income-yielding  There a r e two methods, which a tenant  use i n j u d g i n g i f a cash r e n t i s a f a i r p r i c e f o r the use  may of  the r e a l e s t a t e , namely, the o b s e r v a t i o n a l method and the budget method. A tenant attempting  t o determine the amount of cash  r e n t he s h o u l d pay f o r a f a r m by the o b s e r v a t i o n a l method would f i n d out the r e n t b e i n g p a i d f o r s i m i l a r farms i n the d i s t r i c t ; he t h e n would compare these r e n t s w i t h the r e n t b e i n g asked f o r the f a r m t h a t he i s i n t e r e s t e d i n and make  h i s d e c i s i o n as t o the f a i r n e s s o f the r e n t . The budget method o f d e t e r m i n i n g a r e n t f o r a f a r m i s more p r e c i s e than t h e o b s e r v a t i o n a l method. t h i s method draws up a s c h e d u l e o f expected penses t o a r r i v e a t an expected  A tenant  using  r e c e i p t s and ex-  n e t income f o r t h e f a r m ; t h e  l a n d l o r d ' s expenses, such as t a x e s , r e p a i r s and d e p r e c i a t i o n o f b u i l d i n g s a r e i g n o r e d , o n l y t h e n e t income a c c r u i n g t o t h e tenant i s considered.  D e d u c t i o n s a r e made from t h e f a r m net  income f o r e s t i m a t e d v a l u e s of f a m i l y l a b o u r , t h e t e n a n t ' s l a b o u r and management and a r e t u r n on t h e c a p i t a l i n v e s t e d i n h i s m a c h i n e r y , equipment and l i v e s t o c k .  The b a l a n c e  r e s e n t s the amount o f r e n t t h a t c a n be p a i d w i t h o u t  rep-  reducing  h i s r e t u r n s t o c a p i t a l and l a b o u r . The budget method i s i l l u s t r a t e d by t h e f o l l o w i n.1 g: TABLE 15 DETERMINING A CASH RENT BY THE BUDGET METHOD  Expected r e c e i p t s Expected expenses Expected f a r m n e t income Estimated Estimated Estimated Interest  value f a m i l y labour operator's labour management l a b o u r on c a p i t a l a t 5% ($5000.00) Total E s t i m a t e d amount o f cash r e n t  $5000.00 1500.00  $3500.00  300.00 1000.00 500.00 250.00  Adapted from F o r s t e r , op. c i t . . p. 245.  2050.00 1450.00  The l a n d l o r d may n o t agree w i t h the t e n a n t ' s e s t i m a t e s but the  budget method p r o v i d e s a y a r d s t i c k f o r b a r g a i n i n g . Cash r e n t i n g of farms h a s an advantage over share  l e a s i n g i n t h a t , t h e r e n t i s a f i x e d c o s t t o t h e farm b u s i ness and any p r o f i t s due t o good management on the p a r t o f the  t e n a n t a r e not s h a r e d w i t h t h e l a n d l o r d , a s i n t h e case  of s h a r e r e n t a l s .  When t h e r e n t i s p a i d i n cash f a r m e r s tend  to a p p l y the v a r i a b l e f a c t o r s o f p r o d u c t i o n ( s e e d , f e r t i l i z e r , l a b o u r ) t o t h e f i x e d f a c t o r ( l a n d ) i n such q u a n t i t i e s a s t o g i v e t h e maximum r e t u r n s t o each e n t e r p r i s e ; t h e tendency i s toward t h e most e f f i c i e n t c o m b i n a t i o n o f t h e f a c t o r s o f p r o duction. Share R e n t a l Share r e n t a l s a r e l e a s i n g c o n t r a c t s i n which t h e p r o d u c t o f a farm b u s i n e s s i s s h a r e d between t h e owner o f the  f a r m and t h e t e n a n t who o p e r a t e s t h e farm.  There a r e  many v a r i a t i o n s i n t h e p r o p o r t i o n s o f t h e f a r m income which each p a r t y r e c e i v e s ; g e n e r a l l y t h e farm income i s s h a r e d i n accordance w i t h t h e customary r a t e t h a t p r e v a i l s i n the d i s t r i c t i n which the f a r m i s l o c a t e d .  The r i g i d  custom may not p r o v i d e a f a i r economic ing.  adherence t o  b a s i s f o r share l e a s -  Leases s h o u l d be f o r m u l a t e d w i t h both p a r t i e s a g r e e i n g  to t h e v a l u e s o f the f a c t o r s o f p r o d u c t i o n which t h e y cont r i b u t e t o the f a r m b u s i n e s s and the p r o p o r t i o n o f t h e f a r m income t h a t s h o u l d be r e t u r n e d t o t h e s e f a c t o r s .  82 Elements that influence the shares which landlords and tenants receive are:  1.  the amount of the factors  of production furnished by each party; 2. the quality of the factors of production furnished by each party; 3. the demand for and the supply of farm land; 4. the wage rates and a v a i l a b i l i t y of farm labour. Experienced tenants, who  have a l l the working assets  necessary f o r operating the farm, should receive a larger share than inexperienced  tenants, with l i m i t e d c a p i t a l .  Highly pro-  ductive land should receive a greater return than land of productivity.  low  Enterprises requiring intensive use of labour  should give a larger share to the tenant.  When the demand f o r  land i s high and farms to rent are scarce, landlords can drive harder bargains than when there i s a wide choice of farms available to tenants. may  When wage rates are high, land owners  prefer to share lease t h e i r farms rather than operate  them; tenants may make better bargains under these conditions. The problem of making an equitable contract can only be solved by mutual agreement between the landlord and tenant as to the value of t h e i r respective c a p i t a l contributions; the rate of return on t h e i r c a p i t a l , the value of the labour supp l i e d by the tenant.  I f the landlord assumes part of the man-  agement of the farm, the value of his managerial labour  should  be assessed. The procedure followed i n formulating an equitable share lease contract between a landlord and tenant i s shown below.  In the example the landlord supplies the land and  83  b u i l d i n g s and assumes some o f the management; t h e t e n a n t t r i b u t e s t h e p r o d u c t i v e l i v e s t o c k , t h e machinery  con-  and t o o l s , the  l a b o u r and t h e cash expenses o f t h e f a r m b u s i n e s s .  1  TABLE 16 LANDLORD'S AND TENANT'S CONTRIBUTIONS TO THE FACTORS OF PRODUCTION Factor  C o n t r i b u t e d by Landlord Tenant  Land and B u i l d i n g Productive l i v e s t o c k Machinery and T o o l s Labour  $15,000 1,500 300 700  Expenses ( e s t i m a t e d ) $16,000  3,500 (mana geroent) 1,500 ( t a x e s, repa i r s )  Total $15,000 1,500 3,500 1,800  1,500 ( ope r a t i ng)2,200 8,000  24,000  TOTAL The l a n d l o r d and t e n a n t b e i n g i n agreement t h a t each s h o u l d r e c e i v e a r e t u r n o f 5 p e r c e n t on t h e i r c a p i t a l , a d i s t r i b u t i o n 2 schedule  o f t h e f a r m income i s drawn up as shown i n T a b l e 17  on the f o l l o w i n g page. The l a n d l o r d and tenant s h o u l d f u r t h e r agree t h a t r e c o r d s be kept o f the farm b u s i n e s s and i f major d i f f e r e n c e s occur between the e s t i m a t e d expenses and the a c t u a l  expenses,  adjustments can be made i n t h e s h a r e p r o p o r t i o n s t o compensate Adapted f r o m F o r s t e r , op. c i t . . p. 225. 1  2  I b i d . . p. 227.  TABLE 17 DISTRIBUTION OP NET FARM INCOME ACCORDING TO CONTRIBUTIONS  Landlord's Claim Land & b u i l d i n g s 5% on $15,000  Tenant's C l a i m $750  C a p i t a l , 5% on $5,000  $250  Taxes & r e p a i r s (estimated)  700  E s t i m a t e d expenses 1,500  Labour (Management)  300  Labour  Total  $1.750  $3.250  T o t a l c l a i m o f both p a r t i e s Landlord's share i n percent Tenant's s h a r e i n percent  1.500  1750 x 100 BIER)  3250 x 100  S1J0"0  $5,000  35%  65%  84  f o r such d i f f e r e n c e s .  U s u a l l y , no c h a r g e i s made by t h e t e n -  ant f o r h i s l a b o u r i n e f f e c t i n g r e p a i r s t o t h e b u i l d i n g s and o t h e r improvements, n o r i s any v a l u e p l a c e d on t h e produce used i n t h e tenant *s home. The  above example s h o u l d s e r v e o n l y as a g u i d e i n  making s h a r e r e n t a l c o n t r a c t s ; each c o n t r a c t s h o u l d be f o r mulated b y c o n s i d e r i n g t h e c o n t r i b u t i o n s t h a t a r e p e c u l i a r to i t .  When an agreement has been r e a c h e d i t s h o u l d be w r i t -  ten i n t o the l e a s i n g contract. Written  Leases  A w r i t t e n lease o f farm property  s h o u l d be a s con-  c i s e as p o s s i b l e , w r i t t e n i n s i m p l e , e a s i l y u n d e r s t o o d l a n g uage and l e g a l l y a c c e p t a b l e .  The s e r v i c e s o f a l a w y e r t o  a d v i s e w i t h r e g a r d t o t h e l e g a l i t y o f a l e a s e a r e worth t h e f e e he w i l l charge.  A l e a s e must i n c l u d e : 1. an a c c u r a t e  d e s c r i p t i o n of the property  t o be l e a s e d ; 2. the term o f  the l e a s e ; 3. t h e agreement a s t o t h e s h a r e o f p r o d u c t s o r the amount cash r e n t t o be p a i d ; 4. t h e time and p l a c e o f such d i v i s i o n o r payment; 5. t h e s i g n a t u r e o f both p a r t i e s , w i t n e s s e d and n o t a r i z e d . A sample f o r m o f a f l e x i b l e l e a s e c o n t r a c t i s g i v e n 1  i n Appendix C.  J.R.S. J o r g e n s , "Suggested Form f o r F l e x i b l e Type o f Share L e a s e s . " The Farm Lease i n A l b e r t a . Ottawa, M a r k e t i n g S e r v i c e , Department o f A g r i c u l t u r e (1947).  CROWN LANDS C e r t a i n s p e c i f i e d Crown Lands a r e open f o r a g r i c u l t u r a l s e t t l e m e n t , by pre-emption o r p u r c h a s e .  Certain  o t h e r Crown l a n d s a r e a v a i l a b l e f o r l e a s i n g f o r g r a z i n g and hay making.  The c o n d i t i o n s under which Crown l a n d may be  pre-empted, purchased o r l e a s e d a r e p r o v i d e d i n the Land Act,  1  which i s a d m i n i s t e r e d b y t h e B r i t i s h C o l u m b i a , Depart-  ment o f Lands and F o r e s t s .  The S u p e r i n t e n d e n t o f Land's  o f f i c e i s i n V i c t o r i a ; l o c a l service i s provided a t centers i n each Land R e c o r d i n g D i s t r i c t by Land Commissioners  (also  known a s Government A g e n t s ) . Pre-emptions Pre-emptions a r e f r e e .  (There i s a $2 r e c o r d i n g  f e e and a $10 f e e f o r t h e Crown G r a n t ) .  The f o l l o w i n g quo-  t a t i o n s t a t e s b r i e f l y : what l a n d may be pre-empted;  who may  pre-empt and t h e e x t e n t o f such p r e - e m p t i o n s : Any o f the vacant u n r e s e r v e d s u r v e y e d l a n d s o f t h e Crown, n o t b e i n g p a r t o f a n I n d i a n s e t t l e m e n t may be pre-empted. Who May Pre-empt Any B r i t i s h s u b i e c t b e i n g : ( a ) The head o f a f a m i l y ; (b) a widow; ( c ) a s i n g l e Woman who i s over 18 y e a r s o f age and s e l f s u p p o r t i n g ; ( d ) a woman d e s e r t e d by h e r husband; (e) a b a c h e l o r over t h e age o f 18 y e a r s — may, f o r a g r i c u l t u r a l purposes o n l y , pre-empt l a n d t o the e x t e n t o f 160 a c r e s , o r , i n case o f a s u r v e y made 1 P r o v i n c e o f B r i t i s h Columbia, "Land A c t , " R.S.B.C., 1948, Chapter 175; 1950, Chapter 37; 1951, Chapter 43. 2 Land Commissioner's o f f i c e s a r e l o c a t e d a t : A l b e r n i , A t l i n , Burns L a k e , Cranbrook, F e r n i e , P r i n c e George, Golden, Kamloops, K a s l o , C l i n t o n , Nanaimo, N e l s o n , New W e s t m i n s t e r ,  under s u b s e c t i o n ( 6 ) o f s e c t i o n 6 o f t h e "Land A c t " may be i n c r e a s e d by any a r e a l e s s than 40 a c r e s . Such r i g h t s h a l l not extend t o foreshore o r t i d a l l a n d s , o r to t h e bed o f t h e s e a , o r l a n d s c o v e r e d by n a v i g a b l e w a t e r s , o r s t a t u t o r y f o r e s t l a n d s , o r l a n d s deemed unsuitable for agriculture. An a l i e n , upon making a d e c l a r a t i o n o f h i s i n t e n t i o n to become a B r i t i s h s u b j e c t , may a l s o a c q u i r e t h e r i g h t t o pre-empt....Any c h a r t e r e d o r i n c o r p o r a t e d company may, by a s p e c i a l o r d e r o f t h e L i e u t e n a n t - G o v e r n o r i n c o u n c i l , pre-empt l a n d . l A p p l i c a t i o n s must be made i n p e r s o n o r by m a i l t o the Land Commissioner  o f t h e Land R e c o r d i n g D i s t r i c t i n which  the l a n d i s s i t u a t e d , by t h e p e r s o n a p p l y i n g f o r a p r e emption.  To o b t a i n t i t l e t o t h e l a n d pre-empted, t h e s e t t l e r  must f u l f i l l  t h e r e s i d e n c e and improvement p r o v i s i o n s t h a t  are  r e q u i r e d under the " A c t . "  N o r m a l l y , these r e q u i r e m e n t s  are  r e s i d e n c e f o r a t l e a s t t e n months o f each y e a r f o r f i v e  y e a r s , and improvements t o t h e v a l u e o f $10 p e r a c r e , i n c l u d ing  t h e c l e a r i n g and c u l t i v a t i o n o f a t l e a s t f i v e a c r e s . Pre-  emptors, who do not f u l f i l l  t h e f u l l r e q u i r e m e n t s may o b t a i n  t i t l e by a term o f r e s i d e n c e of not l e s s than two y e a r s and improvements o f g r e a t e r v a l u e . ing  P r o v i s i o n i s made f o r g r a n t -  t i t l e t o p r e - e m p t o r s , who through i l l n e s s o r m i s f o r t u n e  cannot f u l l y meet the r e q u i r e m e n t s . P u l l i n f o r m a t i o n r e g a r d i n g the pre-emption of l a n d may be o b t a i n e d from Land Commissioners'  o f f i c e s o r from t h e  Vernon, Pouce Coupe, P r i n c e Rupert, Q u e s n e l , R e v e l s t o k e , P e i i t i c t o n , S m i t h e r s , T e l e g r a p h Creek, Vancouver, and V i c t o r i a . Correspondence s h o u l d be a d d r e s s e d t o the Government Agent a t t h e above p o s t - o f f i c e s , except V i c t o r i a where i t s h o u l d be a d d r e s s e d t o t h e S u p e r i n t e n d e n t o f Lands. How t o Pre-empt Land. B u l l e t i n No. 1 (Land S e r i e s ) , P r o v i n c e of B r i t i s h Columbia Lands S e r v i c e , p. 3, V i c t o r i a , Queen's P r i n t e r , (1952). 1  S u p e r i n t e n d e n t of Lands a t V i c t o r i a . pre-empt s h o u l d o b t a i n pre-emptor's  Persons i n t e n d i n g to maps, showing t h e vacant  l a n d s i n the d i s t r i c t which they w i s h to s e t t l e , and a copy o f the b o o k l e t "How  t o Pre-empt Land. * 1  Purchases Purchases of Crown l a n d s a r e made through the Land Commissioner's may  offices.  Purchases f o r a g r i c u l t u r a l  purposes,  be made by p e r s o n s over 21 y e a r s o f age; t o the e x t e n t o f  not l e s s than 40 a c r e s o r over 640 a c r e s o f v a c a n t u n r e s e r v e d , surveyed o r unsurveyed Crown l a n d deemed f i t f o r a g r i c u l t u r e . P u r c h a s e r s o f s u r v e y e d l a n d must d e p o s i t 50 c e n t s p e r a c r e w i t h t h e i r a p p l i c a t i o n which i s r e f u n d a b l e i f t h e a p p l i c a t i o n i s not a l l o w e d o r p r i c e and terms are not a c c e p t a b l e t o the p u r c h a s e r .  Surveyed l a n d s are c l a s s i f i e d  into  t h r e e c l a s s e s , namely: (a) f i r s t - c l a s s open t r a c t s s u i t a b l e f o r a g r i c u l t u r a l p u r p o s e s , o r w i l d - h a y meadow l a n d s ; (b) s e c o n d - c l a s s l a n d c a p a b l e of b e i n g brought under cultivation; (c) t h i r d - c l a s s l a n d wholly u n f i t f o r a g r i c u l t u r a l purposes which cannot be brought under c u l t i v a t i o n and does not c o n t a i n hay meadows.1 The minimum p r i c e f o r f i r s t - c l a s s l a n d i s $5 p e r a c r e and f o r s e c o n d - c l a s s l a n d i s $2.50 p e r a c r e . may  Payment  be r e q u i r e d i n f u l l , upon t h e a c c e p t a n c e o f the a p p l i c a -  t i o n or i f the amount i s l a r g e enough a down payment of onePurchase and Lease o f Crown Lands, B u l l e t i n No. 10 (Land S e r i e s ) , P r o v i n c e of B r i t i s h Columbia Lands S e r v i c e , p. 3, V i c t o r i a , Queen's P r i n t e r (1953). 1  quarter of the purchase p r i c e i s r e q u i r e d and terms o f three or nine years arranged  f o r the balance.  I n t e r e s t i s charged  at  a r a t e o f 4 a percent a n n u a l l y .  of  not l e s s than $5 p e r a c r e may be r e q u i r e d w i t h i n f o u r years  of  the s a l e as a c o n d i t i o n f o r the g r a n t i n g o f t i t l e . Purchasers  of unsurveyed l a n d s have a more compli-  c a t e d procedure to f o l l o w . to  Improvements to the value  They must stake the l a n d they wish  purchase, post and p u b l i s h n o t i c e s of t h e i r i n t e n t i o n s ,  and i f the purchase i s allowed, veyed a t t h e i r own expense.  they must have t h e l a n d s u r -  The surveyor i s r e q u i r e d t o  c l a s s i f y the l a n d and r e p o r t such c l a s s i f i c a t i o n to the Department o f Lands and F o r e s t s .  I f a s a l e i s decided on by the  "Department," they w i l l p u b l i s h a n o t i c e i n the " B r i t i s h Columbia  G a z e t t e " f o r t h i r t y days, g i v i n g a d e s c r i p t i o n o f the l a n d  and  the name o f the person a p p l y i n g f o r purchase o f i t ;  i f no other person  c l a i m s a p r i o r r i g h t t o purchase, the a p p l i -  cant i s a d v i s e d o f the p r i c e he must pay f o r the l a n d . the case  of surveyed  land f u l l  As i n  payment may be r e q u i r e d o r i f  the Department c o n s i d e r s i t a d v i s a b l e terms up to nine may be arranged.  then  years  I n t e r e s t i s a t 4-g- percent.  Hay meadows may be purchased under c e r t a i n c o n d i t i o n s ; i n f o r m a t i o n r e g a r d i n g t h e i r purchase can be o b t a i n e d from Land Commissioners. of  The booklet  "Purchases and Leases  Crown Lands" c o n t a i n s u s e f u l i n f o r m a t i o n f o r p r o s p e c t i v e  purchasers  o f Crown l a n d s .  Leasing  L e a s e s o f Crown l a n d s must be a p p l i e d f o r through the Land Commissioners* o f f i c e s . Department  They a r e g r a n t e d by t h e  f o r the purpose of c u t t i n g hay and g r a z i n g i f the  e x t e n t of the a r e a t o be l e a s e d does n o t exceed 640 a c r e s . Leases of a r e a s g r e a t e r than 640 a c r e s may Order i n C o u n c i l .  be g r a n t e d by  The p r o c e d u r e i s more c o m p l i c a t e d i n l e a s -  i n g unsurveyed l a n d s t h a n i n l e a s i n g s u r v e y e d l a n d s .  Informa-  t i o n r e g a r d i n g the l e a s i n g o f Crown l a n d s i s a v a i l a b l e i n the b o o k l e t mentioned above o r i f more d e t a i l i s r e q u i r e d from the l o c a l Land Commissioner o r from the Department  o f Lands  and F o r e s t s . LOCATING A FARM I N BRITISH COLUMBIA Sources o f I n f o r m a t i o n f o r S e t t l e r s P r o s p e c t i v e b u y e r s and r e n t e r s o f farms may  obtain  information regarding property that i s available f o r sale or r e n t from many s o u r c e s .  R e a l e s t a t e f i r m s , l a n d departments  of f i n a n c i a l companies, a d v e r t i s e m e n t s i n f a r m p e r i o d i c a l s and newspapers, l o c a l Boards o f Trade and o t h e r o r g a n i z a t i o n s are  a l l s o u r c e s o f such i n f o r m a t i o n . The t y p e of f a r m i n g , which t h e p r o s p e c t i v e B r i t i s h  Columbia f a r m e r i n t e n d s t o engage i n w i l l i n f l u e n c e h i s c h o i c e as t o the d i s t r i c t and a r e a of B r i t i s h Columbia he w i l l  settle  90 in.  1  The F a r m i n g Areas and the  Climate  The f a r m i n g a r e a s o f B r i t i s h Columbia are d i s p e r s e d and d i s c o n t i n u o u s ; t h e y are m o s t l y c o n f i n e d to r i v e r  valleys.  A d e s c r i p t i o n o f the topography of the p r o v i n c e , the l o c a t i o n o f the major a g r i c u l t u r a l a r e a s and t h e v a r i a t i o n s i n c l i m a t e i s g i v e n i n the f o l l o w i n g q u o t a t i o n : Most of the l a n d a r e a i s mountainous and rugged. Four major mountain ranges t r a v e r s e the P r o v i n c e i n a g e n e r a l north-south d i r e c t i o n , i n t e r l a c e d with f a s t f l o w i n g streams and r i v e r s , and d o t t e d w i t h c o u n t l e s s l a k e s . These l a k e s t a k e up a t o t a l o f n e a r l y 7,000 square m i l e s . S c a t t e r e d throughout a r e f e r t i l e v a l l e y s and p l a t e a u x , w h i l e toward the n o r t h - e a s t e r n p a r t o f t h e P r o v i n c e l i e s a r e g i o n o f l i g h t l y wooded a g r i c u l t u r a l l a n d c o m p r i s i n g the Peace R i v e r B l o c k . ....The major a g r i c u l t u r a l a r e a s o f the P r o v i n c e may be r o u g h l y l o c a t e d a s f o l l o w s : The Lower M a i n l a n d , which embraces the d e l t a o f the F r a s e r R i v e r and adj a c e n t l a n d e x t e n d i n g about 100 m i l e s eastward; t h e P r o s p e c t i v e s e t t l e r s o f f a r m l a n d i n B r i t i s h Columbia may o b t a i n i n f o r m a t i o n f r o m a number o f b o o k l e t s t h a t have been publ i s h e d by the P r o v i n c i a l Government. The f o l l o w i n g are recommended: 1. Some F a c t s about B r i t i s h Columbia, Canada. A g r i c u l t u r a l S e t t l e m e n t S e r i e s C i r c u l a r No. 1. T h i s b o o k l e t contains general information regarding a g r i c u l t u r e i n B r i t i s h Columbia and i s o b t a i n a b l e from the Department o f A g r i c u l t u r e . 2. Peace R i v e r D i s t r i c t . B u l l e t i n No. 25 (Land S e r i e s ) . T h i s b o o k l e t c o n t a i n s s p e c i f i c i n f o r m a t i o n about t h e Peace R i v e r a r e a . I t may be o b t a i n e d f r o m the Department o f Lands and F o r e s t s . 3. The F o r t F r a s e r - F o r t George. B u l l e t i n A r e a . No. 7. T h i s b o o k l e t i s concerned w i t h C e n t r a l B r i t i s h Columbia and i s o b t a i n a b l e f r o m the Department o f Lands and F o r e s t s .  91  eastern and southern c o a s t a l f r i n g e of Vancouver I s l a n d . The Okanagan M a i n l i n e d i s t r i c t , a T-shaped area bounded by the South Thompson River and Shuswap Lake country i n the n o r t h , and extending eastward through the Okanagan V a l l e y to the United States Border; The Kootenays, which cover a wide area reaching from Kootenay Lake to the A l b e r t a Boundary i n the south-eastern part of the Province; the Cariboo, a vast plateau area l y i n g northwest of the Okanagan-Mainline d i s t r i c t ; Central B r i t i s h Columbia, comprising the v a l l e y s of the Upper F r a s e r , Nechako, and B u l k l e y R i v e r s ; and the Peace River Block l y i n g west of the A l b e r t a Boundary on both s i d e s of the Peace River. Apart from the Peace R i v e r Block, there i s v i r t u a l l y no a g r i c u l t u r a l land i n that p o r t i o n of the Province l y i n g north of the C e n t r a l area. Because B r i t i s h Columbia covers a l a r g e area i n which there are considerable d i f f e r e n c e s i n l a t i t u d e , a l t i t u d e , and distance from the sea, there a r e great variations i n climatic conditions. The P a c i f i c seaboard has the m i l d e s t climate i n Canada. I n the summer the changing t i d a l waters tend to keep the day temperatures moderate, while the nights are u s u a l l y c o o l . The r a i n f a l l i s moderate and prolonged f i n e s p e l l s f r e q u e n t l y occur, p a r t i c u l a r l y i n the southern areas. During the winter months the prevalence of moisture-laden winds from the ocean causes heavy r a i n s on the western slopes of the mountains which extend i n a north-south d i r e c t i o n near the coast on the Mainland and on the neighbouring i s l a n d s . The eastern and southern s e c t i o n s of Vancouver I s l a n d a l s o r e c e i v e most of t h e i r p r e c i p i t a t i o n a t t h i s season. Passing i n l a n d t o the eastern s i d e of the Coast Range of mountains much greater ranges i n temperature p r e v a i l between summer and winter and considerably l e s s p r e c i p i t a t i o n occurs. I n some d i s t r i c t s (e.g. OkanaganM a i n l i n e ) the r a i n f a l l i s so l i g h t that d r y b e l t s e x i s t and i r r i g a t i o n i s necessary i n order to b r i n g the l a n d under f u l l y productive c u l t i v a t i o n . Owing to the d i v e r s e topography of much of the I n t e r i o r , c l i m a t i c c o n d i t i o n s there are v a r i a b l e . I n the Southern I n t e r i o r and the Kootenays the summer temperatures are h i g h , while i n winter the temperatures r a r e l y f a l l much below zero. I n the C e n t r a l and Northern I n t e r i o r ( i . e . , Cariboo. B u l k l e y V a l l e y , Nechako V a l l e y , and the Peace R i v e r ) the winters are c l e a r and c o l d , the summers short and warm. Summer f r o s t s are  92  e x p e r i e n c e d o c c a s i o n a l l y i n v a r i o u s p a r t s of these d i s t r i c t s . A t h i g h e r a l t i t u d e s i n these r e g i o n s the summers a r e r e l a t i v e l y c o o l and the s n o w f a l l i n w i n t e r i s often heavy. 1  The A r a b l e and P o t e n t i a l l y A r a b l e Acreage E s t i m a t e s o f a r a b l e and p o t e n t i a l l y a r a b l e l a n d range 2  from f o u r and o n e - q u a r t e r  3  m i l l i o n acres  t o over s i x m i l l i o n  a c r e s f o r B r i t i s h Columbia. Of the o c c u p i e d f a r m l a n d , the improved a r e a i n 1951 was s l i g h t l y more than one m i l l i o n 4 acres.  I n a d d i t i o n t h e r e were about two m i l l i o n a c r e s o f  g r a s s l a n d b e i n g used i n 1951; l a n d was  i n woods and p a s t u r e .  the r e m a i n i n g acreage o f farm The more a c c e s s i b l e and  e a s i l y c l e a r e d l a n d has f o r the most p a r t been s e t t l e d ; b u l k o f the p o t e n t i a l l y a r a b l e l a n d i s i n the c e n t r a l  the  and  n o r t h - e a s t e r n s e c t i o n s of t h e p r o v i n c e , a l t h o u g h t h e r e a r e s c a t t e r e d a r e a s s t i l l a w a i t i n g development i n the  lower  c o a s t a l r e g i o n , on Vancouver I s l a n d , and i n the s o u t h e r n I n terior.  No.  Some F a c t s about B r i t i s h Columbia. Canada, pp. 5, 6 1 (Revised E d i t i o n ) .  F.O. M u l h o l l a n d , The F o r e s t Resources o f B r i t i s h Columbia. V i c t o r i a , K i n g ' s P r i n t e r (1937). 2  3  W.J. Anderson, " N a t i o n a l and I n t e r n a t i o n a l A s p e c t s o f A g r i c u l t u r a l Development," T r a n s a c t i o n s o f the F i f t h N a t u r a l Resources Conference o f B r i t i s h Columbia. V i c t o r i a  "nwn—T  N i n t h Census of Canada 1951. V I , P a r t 1, Table (Canada?. 4  16  Land V a l u e s Farm l a n d v a l u e s i n B r i t i s h Columbia range from $2.50 p e r a c r e f o r raw Crown l a n d t o o v e r $1800 per a c r e f o r w e l l developed o r c h a r d l a n d .  The  v a l u e s i n some a r e a s o f B r i t i s h TABLE LAND VALUES,  f o l l o w i n g t a b l e shows l a n d  Columbia: 18  BRITISH COLUMBIA  District Lower M a i n l a n d , Vancouver I s l a n d Okanagan V a l l e y  Farm l a n d Orchard l a n d  F o r t F r a s e r - F o r t George Raw l a n d . Improved Peace R i v e r  Raw l a n d Improved (grey wooded s o i l ) (black s o i l )  Value (per a c r e ) $50  t o $1000  $50 t o $ 500 $600 t o $1800  $20  $3 to $  60  $5 $20 t o $ $40  25  S o u r c e s : Some F a c t s About B r i t i s h Columbia Canada. (B.C. Dept. of A g r i c u l t u r e ) ; F o r t - F r a s e r - F o r t George B u l l e t i n A r e a . (B.C. Lands S e r v i c e ) ; Peace R i v e r D i s t r i c t , (B.C. Lands S e r v i c e ) ; Farm O r g a n i z a t i o n i n the N o r t K e r n Skanagan V a l l e y . ( M a r k e t i n g S e r v i c e , Economics D i v i s i o n ; Canada, Department of A g r i c u l t u r e ) ; A Study of A p p l e P r o d u c t i o n i n the Okanagan V a l l e y of B r i t i s h ~ C o l u m b i a . ( M a r k e t i n g S e r v i c e , Economics D i v i s i o n , Canada, Department o f A g r i c u l t u r e ) .  THE FINANCING OF FARM BUSINESSES Farm b u s i n e s s e s a r e seldom f i n a n c e d by means of share c a p i t a l .  Long term f i n a n c i n g i s g e n e r a l l y p r o v i d e d by  agreements f o r s a l e o r mortgages; i n t e r m e d i a t e term f i n a n c i n g i s p r o v i d e d by c h a t t e l mortgages, Farm Improvement Loans, and machinery c r e d i t .  S h o r t term f i n a n c i n g i s o b t a i n e d by bank  l o a n s , p e r s o n a l f i n a n c e l o a n s , and c r e d i t f o r f e e d and supplies. Long Term The l a n d and b u i l d i n g s can be u s u a l l y purchased  by  making a down payment and an agreement o f s a l e b e i n g made t o a r r a n g e the terms of the b a l a n c e p a y a b l e .  Sometimes a s e l l e r  wants t o get h i s money a l l i n cash and a mortgage i s a r r a n g e d t o p r o v i d e the b a l a n c e due him.  Mortgages are o f t e n p l a c e d  on l a n d to p r o v i d e funds f o r p u r c h a s i n g more l a n d o r e r e c t ing buildings.  There are s e v e r a l s o u r c e s of mortgage f u n d s ;  among them are l i f e i n s u r a n c e companies, mortgage and  trust  companies, and p r i v a t e i n v e s t o r s . Mortgages a r e g e n e r a l l y r e p a y a b l e over p e r i o d s from f i v e to twenty y e a r s .  Interest  r a t e s a r e from f i v e t o s i x p e r c e n t a t p r e s e n t . Canadian Farm Loan Board Mortgages I n 1929  the Government of Canada s e t up the Cana-  95  d i a n Farm Loan Board. to  The Board was t o make a v a i l a b l e f u n d s  f a r m e r s f o r the purpose o f p a y i n g d e b t s , t o purchase  live-  s t o c k and f a r m implements, t o e r e c t new b u i l d i n g s , t o r e p a i r b u i l d i n g s , t o p r o v i d e f o r expense o f f a r m o p e r a t i o n , and t o a s s i s t i n t h e purchase o f a d d i t i o n a l f a r m l a n d . The Canadian Farm Loan Board i s s t i l l i n o p e r a t i o n and l o a n s a r e made t o bona f i d e f a r m e r s f o r t h e same p u r p o s e s . Long term f i r s t mortgage l o a n s a r e l i m i t e d t o n o t more t h a n 60 p e r c e n t o f t h e a p p r a i s e d v a l u e o f t h e f a r m ( l a n d and b u i l d i n g s ) o f f e r e d a s s e c u r i t y f o r t h e l o a n and a maximum o f $10,000.  I n t e r m e d i a t e term second mortgages may be o b t a i n e d  i n amounts t o b r i n g the t o t a l o f f i r s t and second  mortgages  to 70 p e r c e n t o f t h e a p p r a i s e d v a l u e o f t h e farm; the maximum t o t a l o f b o t h l o a n s i s $12,000. F i r s t mortgage l o a n s a r e r e p a y a b l e i n a n n u a l o r semia n n u a l i n s t a l m e n t s o v e r p e r i o d s o f 5, 10, 15, 20 o r 25 y e a r s ; second mortgages a r e r e p a y a b l e i n f i v e a n n u a l i n s t a l m e n t s . I n t e r e s t i s charged a t a r a t e o f 5 p e r c e n t p e r y e a r on f i r s t mortgages and 5-j§- p e r c e n t p e r y e a r on second mortgages.  Provis-  s i o n i s made f o r prepayment o f t h e l o a n s w i t h o u t p e n a l t i e s 2 a f t e r t h e y have been i n e f f e c t f o r two y e a r s . Canadian Farm Loan Board, " I n f o r m a t i o n f o r A p p l i c a n t s f o r Loans," Report o f t h e Canadian Farm Loan Board f o r the Year Ended March 3 1 . 1953. pp. 16-18, Ottawa, Queen's P r i n t e r , T1953). 1  2  B r i t i s h Columbia f a r m e r s i n t e r e s t e d i n o b t a i n i n g l o a n s f r o m t h e Canadian Farm Loan Board s h o u l d address i n q u i r i e s t o : The Manager, Canadian Farm Loan Board, 25-6th S t r e e t , New W e s t m i n s t e r , B r i t i s h Columbia.  96 Loans made to B r i t i s h Columbia farmers  i n the twelve  month p e r i o d A p r i l 1, 1950 to March 31, 1951 amounted t o $331,200 i n c l u d i n g f i r s t mortgage l o a n s t o the v a l u e o f $318,950 and second mortgage l o a n s to t h e value o f $12,250. Intermediate The  Term  obtaining of credit f o r operating c a p i t a l f o r  p e r i o d s of s e v e r a l years has o f t e n been d i f f i c u l t f o r f a r mers.  As a consequence the F e d e r a l Government i n 1944 passed  the Farm Improvement Loans A c t i n order to make i n t e r m e d i a t e c r e d i t more a v a i l a b l e to farmers. Farm Improvement Loans The Farm Improvement Loans A c t p r o v i d e s f o r l o a n s to be made to farmers guarantees  by the c h a r t e r e d banks; the Government  each bank a g a i n s t l o s s up to 10 percent o f the  value o f the loans made by the bank. enacted,  1  When i t was o r i g i n a l l y  the a c t was t o be i n f o r c e f o r t h r e e years and t h e  t o t a l amount o f l o a n s t o be guaranteed  was s e t at $250,000,000;  the maximum amount t o one borrower was l i m i t e d to $3000. S i n c e i t s enactment, the a c t has been extended t h r e e times.  The  l a s t e x t e n s i o n was f o r three years e f f e c t i v e from A p r i l 1, 1953.  The amount of l o a n s , a f f e c t e d by the 10 percent guar-  antee was r a i s e d t o $300,000,000 f o r t h i s p e r i o d and the maximum l o a n to an i n d i v i d u a l borrower a t any one time was i n c r e a s e d Dominion Bureau o f S t a t i s t i c s , Canada Year Book 1954. p. 372, Ottawa, Queen's P r i n t e r (195471  to $4000. Loans a r e a v a i l a b l e f o r the f o l l o w i n g purposes? (a) the purchase o f machinery; (b) t h e purchase o f l i v e s t o c k ( f o u n d a t i o n o r b r e e d i n g ) ; ( c ) the purchase and r e p a i r o f equipment, such as e l e c t r i c a l systems; (d) r e p a i r s , a l t e r a t i o n s o r c o n s t r u c t i o n o f f a r m b u i l d i n g s ; (e) f e n c i n g , d r a i n i n g and o t h e r developments t o improve the farm.  Loans may  be  r e p a i d over p e r i o d s as l o n g as seven y e a r s and the i n t e r e s t r a t e i s not t o exceed 5 p e r c e n t p e r y e a r .  Borrowers must  s u p p l y from 20 t o 33 p e r c e n t of the purchase p r i c e o r the c o s t of t h e p r o j e c t t h e m s e l v e s .  1  More t h a n two thousand l o a n s were made under the " A c t " i n B r i t i s h Columbia i n 1952; t h e s e l o a n s amounted t o nearly 2 l/4 m i l l i o n  dollars. Machinery C r e d i t  A l t h o u g h the l a r g e machinery companies have c r e d i t f a c i l i t i e s a v a i l a b l e to f a r m e r s f o r the purchase of f a r m machinery, t h e y have found l i t t l e demand f o r c r e d i t i n the 2 p a s t few y e a r s .  Farmers a r e e i t h e r t a k i n g advantage of Farm  Improvement Loans o r a r e f i n a n c i n g t h e i r p u r c h a s e s through l o c a l f i n a n c e companies. I n t e r e s t r a t e s a r e l o w e r when the L o c a l bank managers can s u p p l y f u l l i n f o r m a t i o n r e g a r d i n g Farm Improvement Loans. 2 Mr. J.M. S m i t h , C r e d i t Manager, I n t e r n a t i o n a l Harv e s t e r Co. L t d . , Vancouver, Telephone I n t e r v i e w , September 23, 1954. 1  98  funds a r e borrowed a t t h e banks under the " A c t " ; f i n a n c e compani e s ' r a t e s a r e h i g h e r b u t t h e s e companies p r o v i d e f a s t e r s e r v i c e t o buyers. S h o r t Term S h o r t term c r e d i t i s g e n e r a l l y o f a c u r r e n t n a t u r e but sometimes extends i s concerned  t o periods o f a year.  S h o r t term  credit  with the f i n a n c i n g of feeds, f e r t i l i z e r , supplies  and f e e d e r l i v e s t o c k . Feed and S u p p l i e s C r e d i t o f one month i s n o r m a l l y extended by f e e d and s u p p l y houses t o dairymen and p o u l t r y m e n .  1  Fertilizer Purchases  o f f e r t i l i z e r may be made on c r e d i t f o r  terms of f i v e t o s i x months by f e r t i l i z e r d e a l e r s ; a d i s c o u n t o of $2 p e r t o n i s made f o r cash. Livestock f o r Feeding Banks a r e t h e main source o f funds f o r t h e purchase of f e e d e r s .  I n t e r e s t r a t e s a r e g e n e r a l l y 6 p e r c e n t on these  loans. *" Mr. E. Peden, S c o t t and Peden L t d . , V i c t o r i a , I n t e r v i e w , Aug. 30, 1954. 2  Ibid.  Bank Loans A number of farmers f i n a n c e t h e i r f e e d , f e r t i l i z e r and supply purchasers  by borrowing  from c h a r t e r e d banks.  Int  e r e s t r a t e s on bank l o a n s vary depending on the s e c u r i t y the farmer o f f e r s ; funds a r e cheaper when bonds o r i n s u r a n c e p o l i c i e s are used as  collateral.  Other Sources of Short Term Loans Short term l o a n s may  a l s o be o b t a i n e d from p r i v a t e  l e n d e r s , c r e d i t unions and p e r s o n a l l o a n f i n a n c e companies. I n t e r e s t r a t e s on l o a n s o b t a i n e d from p e r s o n a l l o a n f i n a n c e companies are o f t e n at h i g h annual r a t e s .  100 4  BIBLIOGRAPHY Anderson, W.J., " N a t i o n a l and I n t e r n a t i o n a l A s p e c t s o f A g r i c u l t u r a l Development," T r a n s a c t i o n s of t h e F i f t h B r i t i s h Columbia N a t u r a l Resources C o n f e r e n c e . V i c t o r i a , The B r i t i s h Columbia N a t u r a l Resources C o n f e r e n c e , 1952. Anderson,  tf.J.,and H e d l a n d , S.L., The P o u l t r y O u t l o o k i n 1954. Vancouver, The U n i v e r s i t y o f B r i t i s h C o l u m b i a , 1953.  B l a c k , John D., e t a l , Farm Management. New Y o r k , The M a c m i l l a n Company, 1947. Canada, Department o f A g r i c u l t u r e , M a r k e t i n g S e r v i c e , Economics D i v i s i o n , Farm Account Book. Ottawa, K i n g ' s P r i n t e r , 1948. Canada, Department of N a t i o n a l Revenue, T a x a t i o n D i v i s i o n , Farmer's and F i s h e r m a n ' s Guide f o r t h e P r e p a r a t i o n of T l G e n e r a l Income Tax R e t u r n s . Ottawa, Queen's P r i n t e r , 1954. Canada, Dominion Bureau o f S t a t i s t i c s , Canada Year Book 1950. Ottawa, K i n g ' s P r i n t e r , 1950. Canada Y e a r Book 1954. Ottawa, Queen's P r i n t e r ,  1954.  Farm Cash Income 1953. No. 4, Ottawa, Queen's P r i n t e r , ±9U. Farm Net Income 1953. Ottawa, Queen's P r i n t e r ,  1954.  Handbook o f A g r i c u l t u r a l S t a t i s t i c s . P a r t 2, R.No.25, Ottawa, Queen's P r i n t e r , 1951. I n d e x o f Farm P r o d u c t i o n . 1953, Ottawa, Queen's P r i n t e r , 1954. Labour F o r c e . November 1945-March 1952. R. No. ftttawa, Queen's P r i n t e r , 1 9 O X  35,  Labour F o r c e M o n t h l y . I X , Nos. 5 and 6, Ottawa, Queen's P r i n t e r , 1953. N i n t h Census o f Canada 1951. V I , Ottawa, Queen's P r i n t e r , 1953.  101  Canada, Dominion Bureau o f S t a t i s t i c s , Q u a r 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 . X V I I , No. 1, Ottawa, Queen's P r i n t e r , 1954. S u r v e y o f P r o d u c t i o n 1938-1951. Ottawa, Queen's P r i n t e r , 1953. C a r m i c h e a l , J . S . , and Rockham, T.S., L i v e s t o c k M a r k e t i n g i n Western Canada. R e g i n a , P r o v i n c e of Saskatchewan, Department o f C o - o p e r a t i o n and C o - o p e r a t i v e D e v e l o p ment. E f f e r s o n , J.N., F a r a t R e c o r d s and A c c o u n t s , New Y o r k , John W i l e y and"~3ons, I n c . , 1949. F o r s t e r , G.W., Farm O r g a n i z a t i o n and Management. New Y o r k , P r e n t i c e - H a l l , I n c . , 1953. Hare, H.R.,  Farm B u s i n e s s Management. T o r o n t o , The Ryerson P r e s s , 1946.  H o p k i n s , J.A., and Heady, E.G., Farm R e c o r d s . Ames, The Iowa S t a t e C o l l e g e P r e s s , 1949. K a l b f l i e s c h , Wm., The C o s t o f O p e r a t i n g Farm M a c h i n e r y ( E a s t e r n Canada). F a r m e r s ' B u l l e t i n 118, D e p a r t ment o f A g r i c u l t u r e , Ottawa, K i n g ' s P r i n t e r , 1950. M u l h o l l a n d , F.D., The F o r e s t Resources of B r i t i s h C o l u m b i a . V i c t o r i a , K i n g ' s P r i n t e r , 1937. P r o v i n c e o f B r i t i s h C o l u m b i a , Department o f A g r i c u l t u r e , Some F a c t s about B r i t i s h Columbia Canada. V i c t o r i a , Queen's P r i n t e r , 1952. P r o v i n c e of B r i t i s h C o l u m b i a , Department o f Lands and F o r * e s t s , Lands' S e r v i c e , How t o Pre-empt Land. B u l l e t i n No. 1, (Land S e r i e s ) , V i c t o r i a , Queen's P r i n t e r , 1952. ^^^^^  Purchase and Lease of Crown L a n d s , B u l l e t i n No. 10, (Land S e r i e s ) , V i c t o r i a , Queen's P r i n t e r , 1953.  __________ ~  The F o r t F r a s e r - F o r t George B u l l e t i n A r e a . B u l l e t i n A r e a No. 7, V i c t o r i a , Queen's P r i n t e r , 1954. Peace R i v e r D i s t r i c t . B u l l e t i n No. 25, (Land S e r i e s ) , V i c t o r i a , Queen's P r i n t e r , 1953.  P r o v i n c e o f B r i t i s h C o l u m b i a , The M i l k B o a r d , " S h a r i n g t h e Market," F l u i d M i l k Marketing Information B u l l e t i n . No. 1, Vancouver, F e b r u a r y , 1954. T r e v o r , H.W., and Ware, D.W., Farm O r g a n i z a t i o n i n t h e N o r t h e r n Okanagan V a l l e y B r i t i s h C o l u m b i a . Ottawa. M a r k e t i n g S e r v i c e , Economics D i v i s i o n , Department of A g r i c u l t u r e , 1952. Ware, D.W.,  e t a l , A Study o f A p p l e P r o d u c t i o n i n the Okanagan V a l l e y o f B r i t i s h C o l u m b i a , Ottawa, M a r k e t i n g S e r v i c e Economics D i v i s i o n , Department o f A g r i c u l t u r e , 1932.  APPENDIX A FINANCIAL  RECORDS  Rules f o r E s t i m a t i n g Grains and 1.  To  find  t i p l y length by .8  Cubic f e e t i n a ton of  Roughages, and  Land Areas  Settled 1-3 months  the number of bushels of g r a i n i n a b i n : Mulby width by depth  ( a l l i n f e e t ) and  A b i n 10 f e e t l o n g  by 10 f e e t wide i s f i l l e d  g r a i n to a depth of 4 f e e t —  find  with  the number of bushels i n  bin.  Bushels of g r a i n i n 400 400  470  Clover  512  500  Timothy  640  625  W i l d hay  600  450  by width by h e i g h t  of cubic f e e t i n a ton of  hay  Example:  A mow  of c l o v e r hay,  s e t t l e d t h r e e and  one-half  months, measures 20' x 15' x 8' - f i n d the number o f tons of i n the  mow.  Volume of hay 400  Tons of hay  i n mow  20 x 15 x 8 = 2400 cu. f t .  i n 2400 cu.  ft.  =4.8  tons  cu. f t .  x .8  =320 bushels.  To f i n d the number of tons of hay  length  Settled over 3 months  485  feet  10 x 10 x 4 =  hay  A l f a l f a hay  hay  Volume of g r a i n i n c u b i c  2.  multiply  (eight-tenths).  Example:  the  of  Quantities  i n a mow:  ( a l l i n f e e t ) , and  1  Multiply  d i v i d e by number  hay.  3.  To f i n d the number of tons of hay  the  overthrow ( d i s t a n c e  the  top of the s t a c k t o the  length  by  the  from the  in a stack:  ground on  Multiply  side  over  ground on the o t h e r s i d e ) by  width a l l i n f e e t ; m u l t i p l y  ( t h r e e - t e n t h s ) to f i n d the volume i n c u b i c d i v i d e by  one  1  the number o f cubic  f e e t per  the r e s u l t by f e e t , and  ton of  the .3  then  hay.  t  Canada, Department of A g r i c u l t u r e , Farm Account Book. Ottawa, Queen's P r i n t e r (1948).  Canada, Department o f A g r i c u l t u r e , Farm Account Book. Ottawa, Queen's P r i n t e r (1948).  4.  To e s t i m a t e q u a n t i t i e s of corn s i l a g e i s used: Approximate C a p a c i t i e s of  Depth"'" Feet :  1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30  1  I n s i d e Diamet. o f S i l o 16 f t . 18 f t . Tons  1 2 3 5 6 8 9 11 13 15 17 19 21 23 25 28 30 32 35 38 40 43 46 49 52 55 58 61 64 67  Depth o f s i l a g e  1 3 5 7 9 11 13 15 18 20 23 25 28 31 34 38 41 44 48 51 55 59 63 66 70 74 79 83 87 97  2 4 6 9 11 14 17 20 23 26 30 33 37 41 45 49 53 58 62 67 72 77 82 87 92 97 103 108 114 119  2 5 8 11 .14 17 21 25 29 33 38 42 47 52 57 62 67 73 79 85 91 97 103 110 116 123 130 137 144 151  two days a f t e r  table  Cylindrical Silos  1 0 f t . 12 f t . 14 :f t . 1 2 2 3 4 5 7 8 9 10 12 13 14 16 18 19 21 23 24 26 28 30 32 34 36 38 40 42 44 47  the f o l l o w i n g  Weight Per Ft. # Pounds  when t a k i n g i n v e n t o r y the f o l l o w i n g example i s g i v e n : A cylindrical  20 f t . Cu. 3 6 9 13 17 21 25 31 36 41 46 52 58 64 70 77 83 90 97 105 112 120 128 135 143 152 160 169 178 187  18.7 19.6 20.6 21.2 22.1 22.9 23.8 24.5 25.3 26.1 26.8 27.6 28.3 29.1 29.8 30.5 31.2 31.9 32.6 33.3 33.9 34.6 35.3 35.9 36.5 37.2 37.8 38.4 39.0 39.6  filling.  Average weight per c u b i c f o o t f o r whole depth. U s e f u l i n e s t i m a t i n g tons i n r e c t a n g u l a r s i l o s . S i l a g e a t bottom o f the s i l o w i l l weigh more than the same volume at the top o f the s i l o . Source: E f f e r s o n , Farm Records  To estimate the number of tons r e m a i n i n g i n a s i l o  and Accounts,  p. 4 5 .  feet.  At i n v e n t o r y 12 f e e t remained,  been f e d . 97  s i l o was f i l l e d  to a depth  of 26  t h e r e f o r e 14 f e e t had  From the t a b l e , 26 f e e t would be approximately  tons and 14 f e e t would be approximately  41 tons; the  q u a n t i t y remaining would be 97 - 41 = 56 tons.  5.  To f i n d the acreage  of f i e l d s : M u l t i p l y the l e n g t h  by the width i n yards and d i v i d e by 4 , 8 4 0  (The number of square  yards i n an a c r e ) . Example:  A f i e l d i s 5 0 0 y a r d s l o n g and 300 yards wide -  f i n d i t s acreage. Area i n square yards 500 x 300 = 1 5 , 0 0 0 Area i n acres  "^''Q^Q  = 3 . 0 9 or approximately 3.1 acres.  Financial  Records  Inventory  Assets  Item  1. R e a l - E s t a t e  ^Year TCost a l | Kate oT Beg. o l Acquired A c q u i s i t i o n pepre- -Year r-ga-luo—  End of Year  depreciation "Allowable  Land Buildings— Improvement s. ._ T o t a l  real-estate  -U.  Macb-i-nery and Equipment -Total- machinery—and-e qpt. Beginning of-Year Number  Value  End —o Number  Year Value:  jx., L i v e s t o c k ( P r o d u c t i o n ) Total  production l i v e s t o c k  4.. L i v e s i o c k _ (Feeding) 1 Total-feeding livestock  t • f  4»-  - Quanti-ty  Crops-for_ SaleT o t a l crops f o r s a l e 16.  Feed, Seed-,--and-S.uppli.es-T o t a l - feed-,—seed,- s u p p l i e s  7. Cash o n—hand -and- i n bank 8.. Other—Assets Total other Assets Liabilities 1. Long Term,,. 2-. Intermediate. |3v S h o r t — T e r m —  -—>-•>  J3uanti.ty_  Net  Worth Statement (Balance Sheet)  ie g i n n i n g of Year  Knd of Year •  Assets  -  _  —  —  -^y.-A -  Machinery and Equipment  —  —  —  —  (feeding)  —  —  —  —  ;  — . _ .  • —  Liye.s_t o.c.k.._(pr_od.ucii.on.). Livestock  |  ]  -Re.a! .Es.taJte  —  ! 1  i  1  .  -  -  , „  ,--  , 1  |  Crops f o r s a l e Peed,_Se ed, S u p p l i e s  V  —  T o t a l P h y s i c a l Assets  —  —  - — -  —--  —  —  —  ^th^r  —  z  -  Ags^ts  —  :  -  !  :*—r1~ *  1 — ~ -  ahi 1 i t i e^ —  *—l JL. O t . U J L J U  -<*-JL"v \_7  —^  T  t ;  Total Assets Til  i  _i  (  1  » -• -  — —•—  "  • •  -  -—-  ~  ,_  —  —  -  -  .  -v- •  —  —-  . -e>.—  —  —  —  „_—  —  Y  C:  Worth -  ^n+^l  JL  1/ A J  —^  Ar c p+ o  • •  —•— ii m*  ~i i-—t-  • *  -  •  —  --  1 rtoc TX ^U +L c^tlx — JI -1 « h - i 1 i +,1 LiJLuUlX-L IA  — J . U I d JL—il&OTS-trO—JL POO  —  >-  —  •  —  —  —  ;  — - ~  _  —  —  —  —  —  —  !  —>_  ; ! 1j  -- -  v  —  —  —  _  _,-  ,  —  -  —  —  i  1  j | i  ,  —  -  I  >  — —  Y-  -  !  —1—1—  D  -  -  r  : 1 ! !  . . _ _ _ w . —  V-  i  T  P« <s a  i.  _ __  i  i.  O  V/  1  —  — —  ...  —  —  1  i  i  —Total—Li-abili-ti-es  •-  i  1  Short Tprm  i  j  ^  Tnt ermediat **  4 . \^ W  •  —  Lone Term  Net  -  j  —  i  Cash  -  —  *-  —  -  jr  —  —  -  - — ;  • —«  i I  1  Crops Seeds ^Khe.at Board Pmnts.  Receipts  Item  Total (2) (3) (4)  tSl |(6) 7) (8) (9) T o t a l Receipts-  Livestock & Livestock Products  Bees, Honey, Wax, Mapl.eSyrup^  F r u i t & Vegetables =Ve=ere=  / Custom /Wood / Work / Sand Patronage/ H a i l -PJL.VJ.-  Ansnrance^ .Oifeher—=  Wages, Farm j Board o f l R e p a i r s Auto Machinhelp. I and and Feed and S t r a w Expenses L i v e s t o c k Purchases ery Interest Mainten- Truck Expenses T a x e s i i n i ance ; Expense .Except "surance'Other—Dairy IHogs. .Repairs.: ICaJCtle: WE ( 1 ) ( 2 ) ( 3 ) ( 1 0 ) ( 1 0 ) (9) (9) (9) (8) (7) (6) Ircome F o r C a t e g o r y Date  _UX(.5)_  Item  (!) (21  Total  (<44 (5  I  <6  1  <7  ( 8 f  (10} (11)  I  II  ( 1 2 ) i II ( 1 3 ) i  iiA) -T.o_tal_Exp.ens.es  ii  containers Twine Fertilizer  Purchases "Other  11  ( 1 0 )  =  Sprays ( 1 2 )  ° Expenses t h e r  =  ( 1 3 )  (14)  P r o f i t and L o s s S t a t e m e n t  • 1 i i  i  1  !  Cash r e c e i p t s  i  i •  Cash expenses Farm Cash-Income  \  plus- Increase-in Inventory-—  t !-  -  1  --  -  1 1 t i 1 *  -  . _„  --— —  •  Kfot Farm Income -Tn-teres-t~i-on aver*ace net -  value o f physical—assets-at-5^- -  i  —  —N  Labour-Earnings-  | ^  1  —. -  — •—--—:—^•—  !  1  1  i  —  —  —  -  i  —-  _  — ~ ••  —  ' "t i  "T !  i —  ——  —  ;  ' 1  —  —  •  _  •  —i- <•  ?  —•-- •->—_  -I<• —|— —_ : i  '  —-  ~•——  ——  —  —<— _. ....  .  1  .I  --j —L_ .—  ——  • 1 0  —  — - —  1  —w  - j  <  ——>~  —  ._H— —  . —  _  —  I  —  I •  1  i  i  —  1  '  -A. —  1  •  .  _ ; > ----- -•  —.._  —  consumed i n home ( e s t i m a t e d )  " t  -<— — i  —•  —  —j  t  !  —i~  i  Labour Trleoine  > -  —  ——•—  -or 1 e s s D e c r e a s e — i n — I n v e n t o r y L a e a  1  —  —t V  _  —._  —  — —^  t  —  i ¥  —  —  . 1i' .1 ' •  -r4-  C a p i t a l Account  1  I  '  i  —  I  _-.  —•  mimMmf \r '  —-> pdF — V* %V«-  — - -—  - — - • — - — • —-—— - »  Rni1di«« l » e Land S a l e s Machinery Sales  i  - .  - — - - - -— — — - --ii -—  4.-.  _  — "  — > — > —  .  ...J.-.,. _  T o t a l C a p i t a l Receipts  •  —i-41  —  i  1  -  — —  —  —  j — J —  s-—  - —  • 4-  | i  T._n/1 ixcikiKA  — - - ..  T _ . - _  •  - ->  —  1  M  ••  — j — ,  '1  —.  ____  4-  . -.  E x p e n d i t u r es  ;  •  —  —  —  -  .- —  —  L  —  —  1 -  -  1  ^-  j  —  ———  —  -  1  ;j 1  1  1  1 1  '  ,—  ± ~  —  —  i  •-—  -  • i  •  -  --  -  —. i  < ~  —  .—  —  — „  —  —-—  -  : 1 TiT i_ 1  1  -  i  I \ —4, ) j 'T f-1 ji i 1  1  -----  1 j  j  —  !  ;  •-<--—  —  - — -  — _ . _  i  + -- -  -  —  —  —  1  t"  r  <v*_  v  Total Capital  -  ! !  i «•• • • •  —  i  M a c h i n e r y —"  !  —  •  I  Di*vis* V%r%  .. 1 -  !  . 1  i  rm oiJclcFtSo  uuxxuin^-  t  I  !  >—  P r i n c i p a l Payments Mortgage ____ -Loans-—  •-  i  i  Expenditures  t -•  - t  i1  -.  t  -  z  [  — -  1  —  i ——+—  —  1  _  I ; 1  —  —  —-.—.,—  }  ;. -  —  — -  A—  1-  -  —  —  1  :  1  —i —  —  i — _  r *  .J  Expend! t u r e  i  Receipts  I I  I  Receipts  —  —  t  i  t  —  i:  -  i  Personal Withdrawals  -  •  i •  P a r t i c u l a r s o f Withdrawal  i *  1 " :  t  Cash Cheque ft  W  j 4  >  -  1  t  i.  P e r s o n a l s h a r e o f c a r expense It  ;  * i  (•fiT-.'i f  hAiiqc  •  j  - \-  1  l  \—  ...  -  j  i  .  i . i  I  ;  1 —  '  i i —  i  !  1  1  \  • I  j  1  •  - . j  .  1 ;  ~  :  *  —  ii  j;  •i  —  - ---ij i >  —  —  —  _ _.  • -  -  - -  —  l! -  —  !  :l  - • •  •  i  i  i  ii "  i;  i' 1! .  . -  - -  1  -  ;i  i| II  '1  •  -  -  - -  -  •  .  Total Withdrawals  —  •  —  i  •  r-i  H-  _Balance_Checfc^ Capital-Expendilt.nr.e_and-Ca3h-Balance3 Receipts E x p e n d i t u r e s Receip.ts  J4-  Net- Farm-Cash Income  T  Capital-Receipts PJLus-Cash -on-hand and i n — bank, end o f y e a r To.tal_Receipts.____ E x p e n d i t ur.es P e r s o n a l Withdrawals._ -  —Capital-Expenditures  i  i  ELus Cash.. on hand and i n — bank.,__end_of~year_ _  _  Total 4-• - - 4— —  •ii-  --4-4-. 1  i  APPENDIX SUGGESTED  PHYSICAL  B RECORDS  Hap of Farm North  Record of Land Use Arable  Acres  Permanent Pasture Hay Meadows F i e l d Crops Orchard and Small Fruit Total E a s t  W e  Non-arable Farmstead, Lanes, etc. Native Pasture Wood Lot Waste Total Total Farm Acreage  South  I  _ __ ___  Crop-Record.  !  CTIT-.TTTRAT- » I » - C T  A  K i n d o f Crop. D e t a i l s  of Cultivation  f  \  Seed  iSK_ Irri. .ration.  1f e r t i l i z e : ,  1  _t_i_. _  .  .  .  -  •  . i  —  Seed  r_ —  —  — _ _  Sprays  .  r  Disposi T I G J S  PkODuCTiou Yield Total /acre Yield  —  — t - —  — -  —  :  . _  _  Feed  Sales  i  —  — . . . .  _ , - _ _  _  —  c—  —  -rf  :  Tj"  —  i j  >  "  ,  -  —  ~  1  —  1 •  . ,  —  — —  —  >  —  —  _  • __  i  —  _  .  —  —  —  —  -  1  i t  i  , i  ,1  i i_  ~'  —-L- )  __,  — . _ _  —  - —  —  _  •  i  • 1  _  - -~t"  —  -  '!  —  ! •  i  1 •  !-.  i  [  :  ~ -  _-.  —  — -  -  ..J  - . ; —  .-.4-  •—• — f —  i  —  _  —  -  — —  _  —  — * — * .  .  , | j  —  . 1  —  •  . . _ —  • •  — - —  •  _ < _ . + _  Tl  -  —  1  _  i  i  t  —  —  —L  — _ _  ;' 1  ^—  - —  ->—-  ~  —  _ - * - .  —  «—j...  r  — > — -  1 ',  —  ' 1  _  t —  1  1  i  I -  — , . _  _ _ _ _ _  _ _ — _  —  „  : —  _  ._  —  —  — • _  -  —  —  -  —<--t-  __  —  —  1  —  — . . _  —  ]  1  i  t  i  =*4=  M o n t h l y D a i r y P r o d u c t i o n , Feed and D i s p o s i t i o n Record 1  Motxth  Average I Zon*senJ/cow lbs_.|  Total lbs.  Number o f Cows M i l k e d  •Tai1  ,  !  —  i ; 1 1  — . _  -i  t;  Fei  ii  U—t-l  —  Hay  1 •  i  i  ;  ...Mair. ..  Silage  ;  Bedding  i1  _- , j — .  v  1  -  —  —  •  i |  ! 1  :  _  i  !  i  '  1  i —  1  ^  i  i  :  — r —  ...  1  •  I  1  1  July  Lbs  —  . 1  May June  —  —  -  Honae Use -i-  -----  April  Sales , Lbs  j  1  : i  —  0 —  Augus -t  —  -  —  —  —  —  _  —  —  —  "•  -Sept.  :1  QjTL-  —we-*.  <  —Nov-.  "  !  I  i  !  I  i  1  .  —  Airorri>  aYCFoge  XT—i  fly,  A*P  r_vi_T©  Ul- w 0 N 8  Tn+ ft'i <3 i o L a l o  —  —  >_  -  —  -  1 1  — -  laxxjvcu  —»  V o i r 1 Cell  i'  —  •  T  i  t  ' i  i i "i•  i  ! j  >-  —  1  -»_*_  • —  —  ;  -  J—J  —  — > „  -  1  ! :  .  :  •  i  J  fl—.  ._4_  t —  j  1  TfcM 1 l r c - . ^  f nt< iur  t "f • ! |  •  1  -Dec.  j  .  |  —  — — -  _  —  1  1  —  -t""  1  1  I  I  ; ! —1—r—  i ( 1 I  1  —f—  j •  t \~ 1 ;  — "  —  —  -  — -  —  _ .  — \  _ _ _ _  —  -  — !  -  . 1  1  Monthly D a i r y  P r o d u c t i o n , Feed and D i s p o s i t i o n Record  r_oducTtion_ Average /cow Iba", Zoncen=trat—s=  lEeed-  J  Month  Number o f Cows M i l k e d  Total lbs.  Hay  Silage  Bedding  -D-ispo3-i.t4-on. S a l e s Home Use lbs  Jan Feb Mar.  •-r-  April May_ June July August Sept.  !_JL_  No v.Dec. Average-No . — o f — Cows -Mi-lked- — — - _ — T o t a l s - for—Year-  -!-4-  Feed L o t , Record Kind of Livestock  "WeTghT at s t a r t  Prodi* n= Gain i n eig: weight a t enc  —  A  Concen-  _Jtrja_tesL  =F-eed= Hay  _Di&pO:si-tion  Silage  Bedding  Sales  Home Use  ,—  I  APPENDIX C SUGGESTED FORM FOR FLEXIBLE TYPE OF SHARE LEASE  Suggested Form f o r F l e x i b l e Type o f Share Lease (Date, Name and A d d r e s s o f P a r t i e s ) T h i s l e a s e made t h i s  day o f  between  Landlord  and  Tenant ( L e s s e e ) o f  , 19  (Lessor) of  WITNESSETH Section I (Description of Property) The L a n d l o r d hereby l e a s e s t o t h e Tenant, t o occupy and use f o r a g r i c u l t u r a l p u r p o s e s , t h e f o l l o w i n g d e s c r i b e d p r o p e r t y c o n s i s t i n g oY~_~J~_~acres7 more~or TessT TogeTher~witH a l l b u i l d i n g s and improvements t h e r e o n , s i t u a t e d i n t h e P r o v i n c e o f B r i t i s h Columbia, Canada. A l l t h i s p r o p e r t y t o g e t h e r i s h e r e i n a f t e r r e f e r r e d t o a s t h e "farm". SECTION I I  (Term o f Lease and Renewal)  The t e r m o f t h i s l e a s e s h a l l be from t h e day o f 19 to t h e day o f 19 ~",~and f r o m year t o year t h e r e a f t e r u n t i l w r i t t e n n o t i c e o f termination i s g i v e n by e i t h e r p a r t y t o the o t h e r on o r b e f o r e day o f b e f o r e e x p i r a t i o n o f t h i s l e a s e , which d a t e i s n o t Tess~than s i x months b e f o r e t e r m i n a t i o n o f t h i s Agreement. SECTION I I I  ( E x t e n t o f Agreement)  The terms o f t h i s l e a s e s h a l l be b i n d i n g on t h e h e i r s , e x e c u t o r s , a d m i n i s t r a t o r s and a s s i g n s o f b o t h L a n d l o r d and Tenant i n l i k e manner a s upon the o r i g i n a l p a r t i e s e x c e p t by m u t u a l agreement o t h e r w i s e . SECTION I V (No P a r t n e r s h i p C r e a t e d ) T h i s l e a s e s h a l l n o t be c o n s t r u e d a s giving r i s e t o a p a r t n e r s h i p , and n e i t h e r p a r t y s h a l l be l i a b l e f o r debts o r o b l i g a t i o n s i n c u r r e d by t h e o t h e r w i t h o u t w r i t t e n consent o f the other. SECTION V (The L a n d l o r d C p n t r i b u t i o n ) (a) The L a n d l o r d s h a l l f u r n i s h t h e above d e s c r i b e d p r o p e r t y i n c l u d i n g f i x e d improvements t h e r e o n . The i n v e n t o r y o f t h e L a n d l o r d ' s improvements and equipment i s a s f o l l o w s : (b) The L a n d l o r d s h a l l f u r n i s h f o r normal r e p a i r s and maintenance, and b u i l d i n g s , f e n c e s and w e l l s . ( c ) The L a n d l o r d s h a l l p r o v i d e i n making w e l l s o r r e p a i r s c o s t i n g more  m a t e r i a l s necessary f o r improvement t o s k i l l e d l a b o u r employed t h a n $ __• .  (d) The L a n d l o r d s h a l l c a r r y f i r e i n s u r a n c e on a l l b u i l d i n g s used by t h e Tenant; he s h a l l r e p l a c e b u i l d i n g s dest r o y e d by f i r e o r a c c i d e n t , which a r e e s s e n t i a l t o t h e o p e r a t i o n o f t h e f a r m , a s soon as p r a c t i c a b l e t h e r e a f t e r . ( e ) The L a n d l o r d s h a l l pay of the taxes on r e a l e s t a t e . ( f ) The L a n d l o r d s h a l l p r o v i d e o f wheat, oats, barley, f l a x , grass, clover, alfal?a7 Z Z °f o t h e r seed r e q u i r e d on t h i s farm d u r i n g t h e term o f t h i s ~ l e a s e . (g) The L a n d l o r d s h a l l f u r n i s h o f t h e conc e n t r a t e d f e r t i l i z e r m a t e r i a l s a s may be~purchased o u t s i d e o f the farm f o r use on t h e farm i n amounts a c c e p t e d by good r u l e s o f husbandry common t o t h i s d i s t r i c t . (h)  (ir_~"_~~ z z z z z z z z z z z z z z z z z z z z z  SECTION V I (The Tenant C o n t r i b u t i o n ) ( a ) The Tenant s h a l l f u r n i s h a l l l a b o u r t o o p e r a t e t h e farm e f f i c i e n t l y . E x c e p t i o n s , i f any, a r e a s f o l l o w s : (b) The Tenant s h a l l f u r n i s h a l l work s t o c k , o t h e r power m a c h i n e r y and equipment and s h a l l p a y o p e r a t i n g c o s t s and expenses f o r the same. E x c e p t i o n s , i f any, a r e as f o l l o w s : ( c ) The Tenant s h a l l bear a l l s p e c i a l o p e r a t i n g c o s t s such a s custom h a u l i n g , g r i n d i n g , b i n d i n g , t h r e s h i n g o r c o m b i n i n g . E x c e p t i o n s , i f any, a r e a s f o l l o w s : (d) The Tenant s h a l l p r o v i d e f o r h a u l i n g t o ~ t h e ~ f a r m "~ o f a l l m a t e r i a l which t h e L a n d l o r d f u r n i s h e s f o r making r e p a i r s and improvements, and t h e p e r f o r m i n g o f l a b o u r , e x c e p t s k i l l e d , r e q u i r e d f o r such r e p a i r i n g and i m p r o v i n g , e x c e p t : ( e ) I n a d d i t i o n t o t h e above a r t i c l e s o f t h i s l e a s e the Tenant a g r e e s : ( i ) t o p r a c t i s e a c c e p t e d e r a d i c a t i o n methods o f n o x i o u s weeds. The e r a d i c a t i o n o f n o x i o u s weeds r e q u i r i n g e x t e n s i v e o p e r a t i o n s s h a l l be p r o v i d e d f o r a s follows: ( i i ) to~perform~cultivating7 harvesting""and~other farm p r a c t i c e s a t t h e time and i n t h e manner t h a t conforms to t h e s t a n d a r d s o f good husbandry. To f o l l o w as c l o s e l y a s p o s s i b l e t h e f o l l o w i n g c r o p and s o i l programme: _ _ ( i i i ) t o ~ f o l l o w s t a n d a r d d i s e a s e treatment f o r a l l d i s e a s e s of small grains ( i v ) t o p r a c t i s e s t r i p c r o p p i n g and o t h e r c u l t i v a t i o n p r a c t i c e s which w i l l a i d i n r e d u c i n g w i n d a n d water erosion ( v ) n o t t o burn any s t r a w s t u b b l e o r o t h e r crop r e s i d u e  on the f a r m , n e i t h e r t o s e l l o r a l l o w any manure o r s t r a w t o be h a u l e d o f f the f a r m w i t h o u t consent o f the L a n d l o r d . ( f ) The Tenant a g r e e s : (1) n o t t o a s s i g n t h i s l e a s e o r s u b l e t any p o r t i o n o f t h e farm w i t h o u t the w r i t t e n consent o f the L a n d l o r d ( i i ) t o p e r m i t the L a n d l o r d and/or h i s agent t o e n t e r t h e f a r m at any r e a s o n a b l e time f o r r e p a i r s , improvements and i n s p e c t i o n . ( i i i ) t o y i e l d p o s s e s s i o n o f the f a r m at t h e end o f the t e r m o f t h i s l e a s e o r a n y renewal o r e x t e n s i o n t h e r e o f . (g) The Tenant agrees t o devote not more than _ a c r e s t o growing produce f o r use o f h i s own f a m i l y a n d Board" f o r h i r e d l a b o u r , such a s p o t a t o e s , garden and f r u i t . The Tenant may c u t from the dead t i m b e r o r from t r e e s d e s i g n a t e d by the L a n d l o r d such wood a s he may need f o r f u e l up t o c o r d s each y e a r . E x c e p t i o n s , i f any, a r e a s f o l l o w s : ~ Z Z  SECTION V I I  (Rent and D i v i s i o n o f Farm Income)  (a) The Tenant h e r e b y a g r e e s t h a t a l l income o r r e c e i p t s from the s a l e o f l i v e s t o c k , l i v e s t o c k p r o d u c t s , c r o p s e r o t h e r income f r o m o p e r a t i o n o f t h e farm w i l l be d i v i d e d a n d d i s t r i b u t e d between the two p a r t i e s a s d e s i g n a t e d below: Crops:  (1) (2) Z (3) Z (4) Z (5) (6) ~ (7)  ^ Z Z Z Z Z Z Z Z Z Z Z Z Z Z Z ~" Z Z Z Z Z  o f the wheat t o the L a n d l o r d the o a t s t o the L a n d l o r d e b a r l e y t o the L a n d l o r d the rye t o the L a n d l o r d o f the f l a x t o the L a n d l o r d Z t h e hay t o t h e L a n d l o r d of the t o the Landlord  Z Z Z  o  f  o  f  o  f  o  f  t h  Live Stock (1) to t h e L a n d l o r d (2) Z Z Z Z Z Z Z t o the L a n d l o r d (3) to the L a n d l o r d (b) The Tenant agrees t o c a r e f o r a n d d e l i v e r t o ( s t a t i o n o r s h i p p i n g p o i n t ) the L a n d l o r d ' s s h a r e o f Tive"stock""and l i v e s t o c k p r o d u c t s , g r a i n crops and other c r o p s , w i t h the p r o v i s i o n , however, t h a t the t e n a n t has t h e p r i v i l e g e o f purchasing the Landlord's share o f c r o p s f o r f e e d i n g purposes a t the market p r i c e . (c) The Tenant f u r t h e r a g r e e s t o p a y cash r e n t a s follows: $ _ _, f o r use o f the f a r m each y e a r , p a y a b l e raonthTsT p r i o r t o the end o f each l e a s e y e a r . The cash~rent o f $ _ s h a l l be s e c u r e d by p r o m i s s o r y note of $ to~be due a t the time the cash r e n t i s p a y a b l e and t o bear~_.nterest a t per cent t h e r e a f t e r u n t i l p a i d .  SECTION V I I I (Tenant's R i g h t t o Make Improvements and R e c e i v e Reimbursements f o r Unexhausted Improvements) ( a ) The Tenant may, a t h i s own d i s c r e t i o n , make m i n o r improvements and r e p a i r s o f a permanent n a t u r e w h i c h do n o t d e t r a c t f r o m the appearance o f t h e p r e m i s e s n o r m a t e r i a l l y change t h e arrangement o f t h e f a r m , and s h a l l not r e c e i v e compensation f o r improvements so made. (b) The Tenant, a t h i s own expense, may, w i t h t h e w r i t t e n c o n s e n t o f the L a n d l o r d , make improvements o f a nonpermanent n a t u r e , s u c h as new b u i l d i n g s , a d d i t i o n s o r r e p a i r s t o b u i l d i n g s , non-permanent h o u s e h o l d f i x t u r e s and equipment, new f e n c e s and o t h e r improvements of t h i s n a t u r e under t h e terms of w r i t t e n c o n s e n t o f t h e L a n d l o r d . Upon t e r m i n a t i o n o f t h i s l e a s e , t h e Tenant s h a l l r e c e i v e f r o m t h e L a n d l o r d a r e a s o n a b l e compensation f o r t h e une x h a u s t e d v a l u e o f such improvements on t h e b a s i s o f c o s t t o the Tenant ( i n c l u d i n g v a l u e of h i s own l a b o u r ) l e s s a g r e e d d e d u c t i o n f o r d e p r e c i a t i o n and use. I n l i e u o f compensation f o r such s t r u c t u r a l o r non-permanent improvements, t h e T e n a n t , a t h i s own d i s c r e t i o n and p r o v i d e d he has g i v e n t h i r t y d a y s ' n o t i c e o f h i s i n t e n t i o n b e f o r e e x p i r a t i o n o f the l e a s e , may w i t h i n s i x t y days a f t e r the t e r m i n a t i o n of the t e n a n c y remove such s t r u c t u r e s , p r o v i d e d he l e a v e s t h e ground from which s u c h improvements were moved i n a s good f a r m i n g c o n d i t i o n a s i t was p r i o r t o the e r e c t i o n o f such improvements. SECTION I X  (Compensation f o r Damage t o t h e Farm)  I n t h e c a s e o f the Tenant f a i l i n g t o p e r f o r m f a r m p r a c t i c e s a t t h e t i m e and i n t h e manner t h a t conforms t o s t a n d a r d s o f good husbandry and a c c o r d i n g t o t h e terms a s s e t o u t i n t h i s l e a s e , and i n t h e c a s e of extreme n e g l i g e n c e p e r m i t t i n g u n u s u a l d e t e r i o r a t i o n i n l a n d and improvements, such as f a i l u r e o f the Tenant t o c o n t r o l weeds o r d i s r e p a i r o f b u i l d i n g s and f e n c e s , the L a n d l o r d may e n t e r t h e p r e m i s e s and p e r f o r m t h e n e c e s s a r y o p e r a t i o n s o r make r e p a i r s and c h a r g e t h e c o s t s t h e r e o f t o t h e Tenant. The L a n d l o r d may c l a i m compensation o n l y f o r u n u s u a l d e t e r i o r a t i o n and d e p r e c i a t i o n i n l a n d and improvements a f t e r due a l l o w a n c e has been made f o r damage r e s u l t i n g from o r d i n a r y wear and d e p r e c i a t i o n , o r from c a u s e s beyond t h e Tenant's c o n t r o l . SECTION X  (Arbitration) Any d i f f e r e n c e s between Tenant and L a n d l o r d under t h i s l e a s e , such a s d i s a g r e e m e n t s a s t o the v a l u e s o f improvements, damages and the l i k e , s h a l l be r e f e r r e d t o a committee o f t h r e e d i s i n t e r e s t e d p e r s o n s , one s e l e c t e d by each p a r t y t o t h i s l e a s e and t h e t h i r d by t h e two thus chosen. The d e c i s i o n o f the a r b i t r a t i o n committed s h a l l be a c c e p t e d by and s h a l l b i n d b o t h p a r t i e s except i f a m a t t e r o f l a w o r a sum e x c e e d i n g $ i s involved.  SECTION X I  (Sale Clause) I t i s hereby agreed by and between t h e p a r t i e s o f t h i s l e a s e t h a t a t any time d a r i n g t h e l i f e o f t h i s l e a s e t h e Tenant has an o p t i o n t o purchase t h i s f a r m under t h e f o l l o w i n g terms: SECTION X I I ( O t h e r Agreements and Arrangements) (a) T h i s l e a s e supersedes a l l w r i t t e n o r v e r b a l agreements made by t h e c o n t r a c t i n g p a r t i e s p r i o r t o t h e d a t e o f t h i s l e a s e and n o t i n a c c o r d w i t h i t . (b) Any a d d i t i o n a l w r i t t e n agreements r e l a t i v e t o t h i s l e a s e s h a l l r e f e r t o t h i s l e a s e b y d a t e , s h a l l be s i g n e d a n d w i t n e s s e d j u s t as t h e o r i g i n a l l e a s e and s h a l l be c o n s i d e r e d a part o f t h i s lease ( c ) A d d i t i o n a l Agreements: _ _  I N WITNESS WHEREOF, we a f f i x o u r s i g n a t u r e s , day o f , A. D. 19 .  Owner o r A u t h o r i z e d Agent  Address  Tenant o r A u t h o r i z e d Agent  Address  Address  Witness as t o Signature  this  o f Owner  Witness as t o Signature of Tenant  Address  

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