$120, which is insufficient to accumufate the equity for even the smallest 

 farm. If his house were furnished, and the above wage retained, he could 

 almost reach the bank equity for the one-man, 24-cow farm in 20 years. 



The Tenant Operator's Accumulation Potential 



To get some indication of the potential annual savings of tenant oper- 

 ators, some assumptions have to be made. The assumptions used are: (1) 

 the farms "rented" are the representative farms dealt with so far, (2) 

 the tenants are substantially without capital, so the farm owner furnishes 

 real estate, livestock, and equipment, (3) the lease arrangement used is 

 the New Hampshire stock share lease. ^^ The unshared contributions of each 

 party are added up. Then other expenses and income are divided in the 

 same proportion. Appendix Tables IV-A, B, C, D, E, F, G, H, I show the 

 division of expenses and income under this arrangement for each repre- 

 sentative farm.i-^ 



Table 12 shows the annual saving needed to accumulate 50 percent in 

 10 years and in 20 years. It also shows potential tenant operator savings 

 with milk at $5.00 and with 10 percent higher prices. Again, whenever a 

 "'potential annual saving" figure exceeds an "annual savings needed" figure 

 in the same farm size column, the equity accumulation is possible under 

 the conditions specified to the left of each line of figures. 



1. Accumulation of 50 Percent Equity in 10 Years 



A comparison in this manner shows that a 50 percent equity (as com- 

 monly required by Cooperative Farm Credit) can be accumulated by a 

 tenant operator in 10 years only with the 3-man, 72-cow farm, with depreci- 

 ables at one-half new price and with $5.50 milk. 



2. Accumulation of 50 Percent Equity in 20 Years 



In 20 years, $5.50 milk permits a 50 percent equity for tenant operators 

 of the 1-man, 40-cow, 2-man, 40- and 56-cow, 3-man, 40-, 56-, and 70-cow 

 farms, if they start with depreciables at 50 percent of new. With the same 

 milk price and depreciables at new value, only the 2-man, 40- and 56-cow 

 and 3-man, 56- and 70-cow farms have the necessary saving potential. With 

 $5.00 milk, tenant operators of the 2-man, 56-cow and 3-man, 56- and 72- 

 cow farms have the necessary saving potential, if they start with depreci- 

 ables at 50 percent of new. Starting with all depreciables at new price, 

 only the 3-man, 72-cow farm has the necessary saving potential. 



1^ Farm Leases, H. C. Wood worth. Cooperative Extension Service, University of New 

 Hampshire, Nov. 1950, AEL-4-350. 



12 Examination of these tables raises some questions as to the suitability of this 

 formula for the full range of labor forces and herd sizes studied here. A large amount 

 of labor relative to herd size, as with the 2-man, 24-cow, and 3-man, 40-coiW farms, 

 weights the income division heavily against the landlord. The 2-man, 40-cow and 3-man, 

 56-COW farms are on the borderline in that respect. For the purpose of the present 

 study this means that the saving potentials of the tenant operators of these farms as 

 shown in Tables 14a and 14b probably are on the high side of what could be expected 

 under long-run competitive conditions. On the other hand, the tenant-operator of the 

 1-man, 40-cow farm might well receive a larger part of net cash income than this 

 formula gives him. 



29 



