14 



discussion is only to be used in obtaining averages, it will seldom 

 lead to wrong conclusions if these minus incomes be simply left 

 out of consideration. (See calculation 17.) The difficulty can be 

 completely overcome by using the total expense of conducting 

 the enterprise, including interest on the required capital, as the 

 measure of magnitude. It will seldom be practicable to do this; 

 the possible error in the other method is too small to justify the use 

 of this more laborious one in ordinary cases. 



57. Index of diversity. There are several expressions which 

 may be used for diversity of business. Each of them should be 

 calculated for use in different tabulations. 



a. In localities devoted quite largely to some form of live-stock 

 farming the percentage of incomes from crops is one way of express- 

 ing diversity. This percentage should be calculated. 



In regions devoted largely to crop farming the percentage of 

 income from live-stock enterprises is similarly useful, though 

 farming may be quite diversified on the basis of crops alone, as, 

 in fact, it may be also on the basis of live stock. In crop-farming 

 regions it is well to note the percentage of income from live-stock 

 enterprises. 



b. The number of enterprises producing more than 10 per cent 

 of the farm receipts may also be used as a measure of diversity, 

 except in cases of extreme diversity. It is possible for a highly 

 diversified farm to have no enterprises producing as much as 10 

 per cent of the receipts. 



c. In some cases diversity has been measured by giving the num- 

 ber of enterprises producing given incomes, as $200, $500, $1,000, 

 etc. This method is objectionable in that it does not distinguish 

 between size of business and diversity of business. It leads to 

 wrong conclusions because it attributes to diversity effects due to 

 magnitude of business. The method should never be used. But 

 if the income from each enterprise be expressed as a percentage of the 

 total receipts of the farm this objection disappears. "While it is of 

 no value in studying the relation of diversity to efficiency in farm- 

 ing, since the expression for diversity is not a definite figure which 

 can be used in tabulations, it is a useful method of presenting data 

 to the farmer in farm management demonstration work. A good 

 plan in such work is to classify the enterprises into groups producing 

 1-10, 10-20, 20-30, 30-40, 40-60, and over 60 per cent of the farm 

 receipts. Two or three enterprises in the four higher groups and 

 three or four in the two lower indicate a very satisfactory degree of 

 diversity for most localities. 



