FARM MANAGEMENT STUDY OF COTTON K.\ I:\1S. 25 



SIZE OF BUSINESS. 



In the tabulations which follow it is shown quite conclusively thai 

 the farm income increases as the size of the farm business increases. 

 But it should not be inferred from this that all farms should be 

 large farms. Many men who succeed fairly well on small or mod- 

 erate-sized farms would fail utterly on farms so large as to require 

 a great deal of hired labor. Many men who can themselves work- 

 efficiently can not direct efficiently the work of others. One reason 

 why large farms are generally more profitable than small ones is that 

 the men who run them are men of large ability. When a man of 

 small business capacity undertakes to manage a large farm he loses 

 money for the owner. 



In general, it is desirable that every farmer have as large a farm 

 as he can manage efficiently. 1 



In practically all the tabulations relating to size of business, 

 records from 115 farms are used, being divided according to size 

 into three groups of 36, 40, and 39 farms, respectively. However, in 

 some tabulations where costs were involved only 114 farms are used. 



RELATION OF SIZE OF BUSINESS TO DISTRIBUTION OF INVESTMENT. 



There is scarcely any difference in the price of land per acre be- 

 tween the small and the large farms. However, there is a slight de- 

 crease in the amount of working capital per acre utilized in the 

 larger farms. On farms of approximately 60 acres of crops the 

 working capital (work stock, equipment, cash required to run the 

 farm, etc.) amounts to about $20 per acre, while on farms of approxi- 

 mately 200 acres of crops the working capital amounts to less than 

 $14 per acre. This is due to the more efficient utilization of the stock 

 and equipment on the larger farms. 



The value of buildings per acre is also slightly less on large farms 

 than on those of smaller area, although the value of buildings per 

 farm is greater on the larger farms. The average value of dwellings 



1 " The minimum efficient unit " in agriculture is a farm of sufficient size and so 

 organized as to. give full employment at productive labor to the farm family. The farm 

 may be any amount larger than this, provided the operator has sufficient ability to make 

 the larger business efficient, but there are very distinct disadvantages if the farm busi- 

 ness is smalle:- than the most efficient unit as above described. When such is the case, 

 the farm family does not have the opportunity to exert its full earning power. 



The fact that the minimum efficient unit in farming is relatively very small a^ com- 

 pared with most other industries is the most attractive feature of farming as a business. 

 Because of the small size of this unit economic independence is fairly easy of accom- 

 plishment and many prefer independence with a moderate competence to independence 

 with a very small chance of pronounced success. 



The ideal size of farm is somewhat larger than the minimum efficient unit. It is such 

 as to permit a high standard of living and the education of the farm children, but the 

 ordinary family farm with good management will often permit this. — W. J. Spillman. in 

 U. S. Dept. Agr. Bui. 341, p. 54. 



41617°— 18— Bull. 659 1 



