28 MASS. EXPERIMENT STATION BULLETIN 439 



the land improvement work are amortized over a 5-year and 10-year period on 

 the basis that money was borrowed to pay the original costs. The crop and 

 pasture yields per acre are the amounts necessary to meet the annual costs of 

 land improvement expenses in the first column. They do not include the yields 

 necessary to meet the annual costs of production and are in addition to these 

 yields. 



When crops were valued at 1935-39 average prices for Massachusetts, land 

 improvement costs up to $100 per acre were paid with additional yields of hay 

 on a 5-year payment plan. If hay is valued at $20 per ton, it would take a yield 

 of 1.2 tons per acre for 5 years to pay for land improvement work costing $100 

 per acre. On a 10-year cost-spreading period 0.6 tons of hay were needed each 

 year to pay this cost of land improvement. Likewise, it would take 25 bushels 

 of potatoes per acre for 10 years to pay the cost of land improvement work at 

 $200 per acre. Additional grazing from pasture would carry a $50 per acre 

 land improvement cost over a 5-year period or a $100 per acre cost over 10 years. 

 Additional \ields of tobacco over production costs would pay for improvement 

 costs in either a 5-year or a lO-ye^r period. Physical limits on the total yields 

 of crops and days of grazing on pasture were the determining factors for the cost 

 of land improvement which could be justified on net returns. Costs of production 

 were paid first and the remaining \icld was applied to repay improvement costs. 



The costs for land improvement work, especially when the charges per acre 

 are high, should be spread over a long period. High costs per acre cannot be 

 expected to be covered by increased returns over two or three crop years. The 

 usual time period in paying for a farm, when income is derived only from the land, 

 is from 20 to 40 years. A farm is expected to pay for itself and furnish a living 

 to its owner in this period. Land reclamation on any extensive scale should be 

 handled in the same manner. There is no difference between paying $50 an 

 acre for land and another $50 for improvement work and paying $100 an acre 

 for improved land. In either case, the charges should be spread over a number 

 of years. 



The spreading of costs over a period ot years is one of the basic principles that 

 must be remembered by the land owner when he is deciding whether or not to 

 perform improvement work. The costs per year are to be compared to the 

 additional returns per year. It is good farm practice to invest in land improve- 

 ment that increases annual expenses by 10 percent, for example, it gross income 

 is increased by more than 10 percent thereby. 



In the case of a small amount of work or the improvement of only a few acres 

 at moderate costs it is not necessary to spread the costs over a long period. 

 The expenditure of $200 to improve four or five acres of pasture may be spread 

 over a two or three year period, and may be charged as operational expense. 

 Interest charges are then lower than when costs are amortized over a long period. 

 The contrast between short and long time financing is greatest in terms of small 

 and large expenditures. A total outlay of $200 usually can be carried in a year 

 or two but a total outlay of $2000 or more may have to be spread over a number 

 of years as illustrated above. The decision between short and long time cost 

 spreading rests on the two main factors of available cash and the amount of the 

 charges. Extensive operations, on which total costs are high, may be financed 

 over a long time and small amounts over a short time. 



Developing New Farms 



In only limited instances will it be profitable to develop new farm units trom 

 land not in farms. In the past few years a few farms have been carved out of 

 forest and brush land, but these have been specialized cases. New farms have 



