10 BULLETIN 853, U. S. DEPARTMENT OF AGRICULTURE. 



A study of the receipts and expenses of these 349 farms shows that 

 even if one knows the receipts of a farm it is not always possible to 

 tell whether the farm is prosperous, though large receipts seem to 

 be a pretty good indication that a farm in this region is prosperous. 



It will be noted that labor income increases from left to right — that 

 is, as the size of farm increases labor incomes increase — also that 

 while the little farms do not yield big incomes, neither do they show 

 big losses. 



There are two ways of increasing the farm income. One way is to 

 increase receipts and the other to reduce expenses. Too many 

 farmers give too much attention to reducing expenses and not 

 enough consideration to increasing receipts. By referring to the 

 chart it appears that the principal reason why some of these farmers 

 made more money than others was primarily because they increased 

 receipts and not because they reduced expenses. The lower half of 

 the chart shows that on most farms about one-half of the receipts 

 were required for expenses, though on a few farms expenses equaled 

 or exceeded receipts. On some of the more successful farms and on 

 the larger farms in general a lower proportion of receipts was required 

 for expenses than on the average farm. As mentioned elsewhere, 

 the larger farms have a lower proportionate expense for- building, 

 fencing, and machinery repair and depreciation than the small farms. 

 Note that some of the average-sized farms (100 acres for this area) 

 have larger receipts than some of the largest farms. Note that the 

 farm with the largest loss (the largest minus labor income) had an 

 acreage large enough for a fair income; the capital was not excessive 

 for farms of this size, but reference to the lower half of the chart shows 

 that the reason for the loss was that the expenses were out of pro- 

 portion to the receipts. On this farm the unusually large expense 

 was in part due to heavy bills for hired labor. 



Figure 7 shows the distribution of the farmer's gross income. In 

 preparing this chart the 349 farms were arranged in four size-groups. 

 The fifth bar shows the average for all the farms. It will be seen that 

 on the larger farms if the farmer is free from debt the amount avail- 

 able for family living is large, even though there is little or no labor 

 income. This sum is made up of the amount required for interest on 

 investment, the value of unpaid family labor, and whatever labor 

 income there may be. On these farms it totals over $1,150. 



PRODUCTION PER FARM. 



The amount of farm products for sale or for use in increasing the 

 size of business is one of the best measures in studying the efficiency 

 of a farm. While it is important that a farm be so organized as to 

 contribute liberally to the farmer's living, a farm can not be con- 

 sidered profitable until it is yielding enough products for sale to 



