AGRICULTURAL ECONOMICS. 37 



as to the bearing of the valuation on the profit or loss result 

 shown by the accounts. 



It is difficult to over-estimate the importance of the valuation 

 in farm accounts, and it has an obvious bearing on the amount 

 of profit which the accounts will show. The total amount 

 of the valuation is generally greater than the gross income of 

 the farm for the year. 



Two Classes of Stock. The various items of live and dead 

 stock that are the subject of valuation at the end of each year 

 are not all of the same character, and are not meant to serve the 

 same purpose in the farm economy. This may affect the basis 

 on which the two classes of stock are brought into the Accounts. 

 In general terms, two distinct classes of stock are generally 

 included in the valuation, which may be termed " Fixed " and 

 " Circulating." 



Fixed. Machinery and implements, work horses, breeding 

 stock, etc. These are not intended to be sold but to remain 

 on farm as the means of production for that farm. They are 

 to that extent fixed or permanent or capital assets, and in their 

 present or equivalent form they must always be employed 

 on the farm while its present system of farming is continued. 

 They will be referred to as " fixed assets." They are the property 

 with which the farm is carried on, and the essential point to 

 remember is that they are retained for production purposes, and 

 are not intended to be sold. 



Circulating. The other class is represented by the crops 

 and live stock held for sale, miscellaneous stores of fertilisers, 

 feeding stuffs, etc., and tillages. These are primarily meant 

 to be sold and are not intended to remain on the farm. Some 

 of the crops may be sold, not as crops, but in the form of the 

 live stock to which they have been fed. 



The first class has already been termed the fixed asset, and 

 these may be correspondingly termed the " floating " or " circu- 

 lating " assets, in that they are always circulating, i.e., when 

 they are sold they are turned into cash this cash in turn is 

 used to purchase other live stock or to produce other crops and 

 stock these in turn will be again converted into cash, with 

 which crops and stock will be again produced and so the process 

 continues during the whole tenancy. The point to remember 

 is that they are intended for " circulation " or sale. 



Analogy of Industrial Concerns. The two classes of stock 

 just mentioned correspond roughly with the fixed assets and the 

 floating assets used in industrial concerns. The line of division 

 between the two classes is not so clear in farming as in other 

 industries, and in venturing to draw a comparison between 

 fanning and other industries, I am aware of the many essential 

 differences involved. 



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