A FARM MANAGEMENT SURVEY IN BROOKS CO., GA. 11 



pared with $19.41. Nearly half of the receipts from cattle consisted 

 of dairy products sold and consumed in the home, the balance being 

 mostly cattle sold on the hoof. The low receipts per animal unit 

 from cattle are due to the low grade of most of the native stock kept, 

 and to the presence of the cattle tick in the county Avhen these records 

 were taken. A strong effort is being made to eradicate the tick and 

 to improve the breed of cattle kept. The hogs grown are mostly 

 grade stock of fair to good quality. 



SOURCES OF INCOME. 



One means of measuring the importance of the different farm 

 enterprises is by the receipts from each in the form of sales and in- 

 creases in inventories. Figure 8 shows graphically the sources of 

 farm receipts and the relative importance of each, measured by this 

 standard. It is seen that cotton is by far the most important single 

 source of income, furnishing half of all the farm receipts, 1 that term 



1 Definitions. — The terms defined below will be used frequently throughout this 

 bulletin. 



Farm receipts include all sales from the farm and increase of inventories of live stock, 

 feeds, supplies. 



Farm expenses include all current cash expenditures, the value of farm labor per- 

 formed by the family (except the operator), depreciation on buildings and equipment, 

 and decreases in inventories of live stock and feed and supplies. 



Gross farm income is the sum of all farm sales, plus any increases in inventories. 

 The net farm income is the difference between this sum and the sum of all farm 

 expenses. For convenience, the term farm income is used to designate the net farm 

 income. 



Labor income is the sum that the operator has left for his own labor and management 

 after deducting from the farm income the interest on his investment figured at the 

 current rate on well-secured farm loans. In this study 8 per cent interest is the rate 

 used. Frequently prices of land are influenced by factors other than the present earning 

 power for farming purposes. In such cases it is better, when calculating labor income, 

 to use the interest on the working capital plus the net rent from the real estate instead 

 of the interest on the investment. In this study these two methods of calculation gave 

 essentially the same result, hence the simpler one was used. 



Farmer's earnings represent the sum of the labor income plus what the farm furnishes 

 toward the living of the operator and all others living or boarding in the farm home. 



Farm-management surveys have shown that the farm returns are largely dependent 

 upon size of the business. For many purposes it is desirable that the factor of size be 

 eliminated in order that farms of different sizes may be grouped together and compared. 

 For this purpose the index of earnings is used herein. This factor is determined as 

 follows : All farms of similar size are grouped together and the average farmer's earnings 

 for each group is computed. The farmer's earnings of each farm in a given group is then 

 compared with the average for that group, the group average being expressed as 100. 

 Therefore, the index of earnings is the farmer's earnings expressed as a percentage of 

 the farmer's earnings for all farms of a similar size. For example, if a farm shows an 

 index of earnings of 110, it means that the farm in question returned farmer's earnings 

 10 per cent larger than did the average farm of a similar size. 



The per cent return on investment is computed by deducting the value of the farmer's 

 labor from the net farm income and dividing the remainder by the total capital invested. 

 This figure expresses the profits of the business as that term is ordinarily used in the 

 business world, and is nearly independent of the size of the farm. Obviously, this factor 

 would have little value in comparing tenants with owner farms, but in this study all 

 farms have been reduced to the same tenure, namely, that of owners who operate their 

 own farms. 



The per cent return on investment eliminates the factor of size even more completely 

 than does the index of earnings. These two terms express the profits of the business 

 from different points of view, one ascribing the profits to capital and the other to the 

 operator's labor and management. Both having been found very useful in this study, 

 and are the ones used throughout as the principal measures of farm efficiency. 



