MINUTES OF EVIDENCE. 



55 



12 August, 1919.] 



MR. H. G. HOWELL, F.C.A. 



[Continued. 



the results would rest not with the Committee but 

 with the Board of Agriculture, to whom the Com- 

 mittee has to report: 1 That is so. 



1248. And that, in using the results for any parti- 

 cular purpose of advising farmers, the Board of 

 Agriculture might be influenced not only by the 

 position of the individual farmer, but to some extent 

 by national policy? Yes. 



1249. There is also a question I should like to put 

 to you raised by Mr. Parker as to the application 

 of the costings results to the fixing of prices. Mr. 

 Parker. I understood, used the word " average." How 

 would you use average costs so that you would avoid 

 using them to the detriment of individual farmers;' 

 Is not it true that you cannot fix prices on average 

 costs, and that you have never fixed prices on average 

 costs.'' Yes, I think so. 



Chairman : Mr. Howell does not fix prices. Various 

 questions have gone outside the scheme of what Mr. 

 Howell can answer. 



1250. Sir. Buichrlor: Although this Costings Com- 

 mittee came into being at the end of last year, it is 

 the case, I think, that you were not appointed Director 

 until April of this year:'- -That is so. 



12/51. I think it is also the case that there was 

 considerable delay in obtaining Treasury sanction in 

 regard to the costings officers who are now to be 

 appointed ? Yes. 



1252. And if not the principal, that is one of the 

 reasons for the position being so far back? Yes, that 

 is ono of them. 



1253. Mr. (Jfi'i'man : Will you bo prepared to look 

 into farm accounts and balance sheets <>i farmers who 

 are only prepared to show yon these accounts without 

 keeping what we understand to be separate costing 

 accounts as affecting each operation? Y'es. 



1251. You told Mr. Robbing that home-grown farm 

 produce should be charged at the cost of production. 

 Surely articles such as oat.-, and hay, for which substi- 

 tutes might be bought, should be charged at market 

 prices? For the particular purpose of getting at the 

 oo,t of producti'in of a product, I think not. Other- 

 H iso you are not getting at the cost to that farmer of 

 that product. 



12.V). I will put it in another way. A farmer 

 grown 20 acres of oats, which he could soil it ho oho.se 

 at market price, and he could buy in pre-war days 

 maize or some other foreign commodity which would 

 be a substitute. Why should you penalise that from 

 any profit in farm accounts ? No; 1 think such a 

 farmer should not IK) penalised a regards any profit, 

 and I think, although for the particular purpose of 

 getting at his costs you take those home-grown foods 

 at the cost price, yet eventually such a fanner is 

 found to get some return for his trouble and capital 

 involved in growing those foods. I do not know 

 H hither I have made my moaning clear. 



12.jf;>. I am thinking particularly of oats, because 

 tlioy are fed to the faun horse. Will that farm 

 horse show profit for having consumed those oats? 

 No. for the home-consumed oats it will not. 



1257. As regards the ordinary yearly valuation, I 

 only ask this for your advice for the guidance of 

 myself and other farmers in taking valuations. The 

 valuer who takes my valuation every year is a very 

 well known man, Mr. Robert Simpson. When ho 

 came to take my valuation last Michaelmas ho asked 

 me: "On what lines do you want your valuation 

 taken? " I told him I wanted everything valued at 

 market prices; and he will value again this year and 

 I shall tfll him the sanv> thing. Are those the liu/ti 

 that you persuade farmers to have their valuations 

 made on? Personally, no. I think a preferable 

 basis is cost of production, particularly, shall I say, 

 under present circumstanc"s, where, say, for Income 

 Tax purposes you may be paying your Income Tax 

 on a profit that is only a market movement for that 

 particular year; or, if you have a profit sharing 

 M-heTiio. you may l>o sharing out your profits that are 

 riot real, but only the result of a market movement. 



12-V*. Then you would have a valuation practically 

 ttanding on a steady level:' Yes. 



1259. Chairman : You mean costs, do not you, and 

 not at market price? Yes, at cost. I freely admit 

 that in practice there are many difficulties in this 

 question. 



Mr. Overman : I was going to put a question to the 

 Witness that the Committee is on the basis of im- 

 partiality, although I agree with Mr. l>allas it does 

 not look like it; but I must put in a protest that 

 Mr. Dallas' statement is not correct when he says that 

 the farmer has a balance in his favour on that Com- 

 mittee. 



Mr. Dallas : I would like it to be clear on that 

 point that I mean employers in agriculture, not 

 necessarily tenant farmers. 



Chairman: The statement Mr. Dallas made was, 

 that the employers in agriculture were overweighted 

 on the Costings Committee. Mr. Overman says that 

 is not so. 



1260. Mr. Uca: You say you think the proper basis 

 for valuation is costs of production. How about the 

 entering tenant who enters upon a farm and has to 

 buy his stock and other things at market price? 

 In that case the price he has to pay for his ingoing 

 would become to him the cost price that he should 

 adopt for future valuations. 



1261. Then he would really have to stick to market 

 price? Yes. 



1262. And with any fluctuations of market price 

 from year to year he would alter his figures to meet 

 the time's prices, I suppose? I think not. Having 

 started at his ingoing valuation at certain figures, he 

 should adopt those same figures for succeeding valua- 

 tions irrespective of market movements in the mean- 

 while. 



1263. But suppose those fall 50 per cent, in stock, 

 say, his valuation would not show his actual position. 

 It would show an unduly inflated position. 



< 'haii-maii : That is a very, very difficult proposition, 

 and one so clearly of accounting, and accounting only. 

 I do not know that Mr. Howell can quite answer what 

 the Costings Committee would do ; but as an 

 accountant, supposing a man came into a farm at 

 market value, at the end of the next year that would 

 figure as part of the charge to the profit and loss 

 account, but I do not think Mr. Howell could tell 

 how the Costings Committee would deal with a par- 

 ticular item. He can tell you on general lines. I 

 imagine that a particular question as to a particular 

 farmer would have to be dealt with according to the 

 circumstances of that particular individual. 



Mr. Rea : It is a question on which a great many 

 farmers have difficulty ; but your explanation, Sir, 

 clears it up. 



1264. In view of the uncertain climatic conditions 

 ami the interdependence of one crop on another, do 

 you think it is possible to arrive at any reliable cost 

 of production as regards any particular crop? Yes, 

 I do; but I say such figures would have a growing 

 value, as it went on over thd time they had been 

 kept. 



1265. For how many years do you think it would 

 be necessary to sec these accounts before you could 



get a reliable estimate as to the costs? They would 

 not have obtained their full value until the rotation 

 had elapsed, I think. 



1266. One particular crop may arise only once in 

 a rotation, and that particular farmer has put the 

 same amount of labour and the same amount of 

 manures into the crop which is not there, yet in the 

 next rotation he might have a good crop? Yes, that 

 is so. 



1267. So that how would you arrive at the cost in 

 that case? The cost of that crop would be the cost 

 under those particular climatic conditions. 



1268. You would treat each rotation as an indivi- 

 dual unit? Yes : although with due care being given 

 to apportionments, the result of each year can be 

 made of quite serviceable value without waiting until 

 the rotation has expired. 



