Group No. 5 took in over $57.00 gross receipts per acre, which is much above 

 the gross receipts of Group No. 4, yet they show a smaller labour income than 

 Group No. 4 when interest on investment is calculated at 7%. A striking disparity 

 is noticed in the labour incomes when interest is computed at 7% and 3%%, 

 respectively. (See last two columns of Table No. 7.) After studying these two 

 labour income columns and considering the economy of operation as shown in 

 column 6 of the same table, one cannot but draw the conclusion that in the farm 

 business studied during the year the average farmer could not afford to pay 

 interest at the higher rate. The interest charge of 7% was not excessive, as 

 money could not be secured from banks in British Columbia on farm property at 

 a lower rate; in fact, in many cases the rate was even higher. 



Land values for this report were based on actual selling prices of land, such 

 as prevailed in each district. For the year studied, and herein reported upon, 

 the land values were too high to allow the average farmer to make any wages 

 for himself where he paid* interest at 7% and paid cash for his family labour, 

 except in the case of Group No. 2, where the farmers received $159.05 as wages 

 for the year. In this group the average size of the farm was eighty-seven acres, 

 with thirty-five acres tillable. 



The average farmers of the other groups received, and lived on the following 

 items* which were allowed, but not necessarily paid: 



(1) Interest on investment at 7%. 



(2) Wages to the family for family labour. 



(3) Depreciation upon buildings and equipment. 



On the other hand, the best farms made good labour incomes at even the 

 higher rate of interest, as is set forth in Table No. 8. 



Table No. 8. 



Although the average farmer did not make a good labour income when 

 interest was calculated at the higher rate, Table No. 8 brings out the fact that 

 good labour incomes were a possibility. Returns to the operators of these .farms 

 were good. They applied thoughtful care in farm management and were rewarded 

 by good income for the labour they expended. 



A comparison of the average and best labour incomes of Table No. 8 shows 

 that, even on farms of approximately the same size, great variation in amount 

 of labour income occurred. The best were much above the average. This proves 

 that factors other than size of farm influenced farm profits. The application of 

 good farming methods on all sizes of farms was of greater importance than was 

 the size of the farm. 



The large farms had less unproductive capital tied up in buildings and 

 machinery (see Table No. 9), and were on this account able to conduct a bigger 

 business with less overhead charges per acre. 



The fact that the interest charge was higher than could be paid by the 

 average farmer was owing to the high capitalization per acre. It was the high 

 percentage of capital invested in land and buildings that raised the capitalization 

 per acre to a high point. (See Table No. 9.) 



By calculating interest at 3%%, practically the same goal was arrived at in 

 labour income as would have resulted by cutting real estate values in half. Under 

 this lower rate of interest, or with real estate values cut in half, the average of 

 all groups of farmers received a plus labour income. 



It should be noted that under the lower rate of interest the labour incomes 

 tend to increase with the increase in size of the farm. Group No. 3 is the only 

 exception to this rule, but an explanation of this case has been made. (See notes 

 on Table No. 7.) 



