4 CIRCULAR NO. 128, BUREAU OF PLANT INDUSTRY. 



between some of the methods of management of the farms and the 

 profits the most j)rofitable 100 farms were compared with the least 

 profitable 100. 



EXPLANATION OF TERMS USED. 



To make the discussion more brief and clear, a few of the terms 

 used will be defined liere: 



Capital. — The term "capital " as used here relates to the value of the farm and all 

 the equipment; it includes the value of the real estate, the machinery, tools, live 

 stock, hay, grain, seed, etc., plus the amount of cash ordinarily kept on hand. The 

 average of the amounts of capital at the beginning and at the end of the year, April 1, 

 1910, and March 31, 1911, is considered the average cai^ital invested in the farm business 

 for the year. 



Receipts. — "Receipts" include all the money received from the sale of any product 

 of the farm, including live stock, or for any labor of man or team performed off the 

 farm, or for rent or the like. If the amount of capital at the end of the year is greater 

 than at the beginning of the year, either as a whole or in some one class, such as live 

 stock, this difference would be included in the receipts. When referred to separately 

 it will be called "increased inventory." 



E.ipense.'i. — "Expenses " include all outlay for the farm, such as cash paid for labor, 

 feed, taxes, etc., but do not include any household or personal expenses of the farmer 

 or his family. Any decrease in the amount of capital during the year, or "decreased 

 inventory,'" is treated as an expense. 



Unpaid family labor. — "Unpaid family labor" is properly an item of expense. It 

 is the value of the labor of the other members of the farmer's family while assisting 

 in the farm work (not in household work). It will be treated here separately from 

 other items of expense. 



Farm income. — "Farm income " is the difference between the total receipts and the 

 total cash expenses. The farm income includes the value of the combined efforts of 

 the farmer, of those of his family who help him, and of the use of the capital which 

 he has invested in the farm business. 



Labor income. — "Labor income," or the "farmer's labor income," represents what 

 the farmer has earned by his own labor and supervision. It is found by subtracting 

 from the farm income the value of the unpaid family labor and also 5 per cent interest 

 on the capital invested. 



No account has "been taken of the perquisites the farm furnishes to the farmer, such 

 as a house to live in, firewood, milk, and vegetables. The farmer's labor income can, 

 however, be easily compared to the cash wages of a farm hand of the better class, who 

 is furnished a house, firewood, the opportunity to make a garden, etc. 



PROFITABLE AND UNPROFITABLE FARMS COMPARED. 



The averages of the group of 100 profitable farms (called in the 

 tables "better farms") are strikingly different in many respects from 

 those of the other group (called the "poorer farms"). Certain fac- 

 tors will be found in the following tables to dill'cr as widely as the 

 difference in profits (labor income), while in otlier respects the aver- 

 age for the farms of one grouj) does not dilTer apprecial)ly from that 

 of the other grouj). Care was taken to eliminate from this com- 

 parison those farms whicli made large ])rolits or losses because of 



[Cir. 128] 



