UNIVERSITY OF CALIFORNIA COLLEGE OF AGRICULTURE AGRICULTURAL EXPERIMENT STATION BERKELEY, CALIFORNIA FARM=ACCOUNTING ASSOCIATIONS EDWIN C. VOORHIES BULLETIN 403 May, 1926 UNIVERSITY OF CALIFORNIA PRINTING OFFICE BERKELEY, CALIFORNIA 1926 Digitized by the Internet Archive in 2012 with funding from University of California, Davis Libraries http://www.archive.org/details/farmaccountingas403voor FARM-ACCOUNTING ASSOCIATIONS 1 EDWIN C. V00EHIES2 INTRODUCTION Agriculture has lagged far behind industry in adopting cost- accounting methods because of its recent emergence from a self- sufficing stage and because of the lack of appreciation of what farm accounting can do to help in efficiency. It has been difficult for agri- culture with its many small units to follow industry, as the latter, with its large units and its specialization, has been in a position to employ trained men to keep its books. Because of this handicap, agriculture has undoubtedly suffered in efficiency. The pressure of other matters and unfamiliarity with accounting methods have also been responsible for the failure of the farmer to gauge his business accurately. Farm accounting is becoming of increasing importance both to the individual farmer and to the state. Competition exists not only between individuals and between the several divisions of agriculture but between states and nations. Accurate knowledge of existing con- ditions is becoming of greater importance to the individual or the nation who would compete successfully. Questions of vital importance not only to the individual but also to the nation are being raised as to the most efficient size of farm enterprise. This has especially been the case in many of the countries of Europe. Other questions of con- sequence both to the individual and to the state can be mentioned. What, for example, is the long-time outlook and what are relative advantages and disadvantages of a highly specialized farm business? What are the possibilities of developing farms which will utilize avail- able labor and other farm resources not now fully used in the special- ized business? To what extent should the production of low-value specialized crops be discouraged where these are produced as one of the enterprises in the farm business combination when the outlook is not encouraging for the future disposal of these particular crops? How can farms now producing small amounts of an inferior quality of specialized products be reorganized so as to eliminate the most unprofitable parts of the business and at the same time maintain or 1 The writer is indebted to Professor O. H. Larsen, Professor of Agricultural Economics of the Royal Agricultural College, Copenhagen, Denmark, for informa- tion relative to farm-accounting associations during the writer's stay in Denmark. 2 Mr. Voorhies was Research Fellow on the American Scandinavian Founda- tion, 1924-1925. 4 UNIVERSITY OF CALIFORNIA EXPERIMENT STATION increase the present income ? What facts should be presented to the marginal producer? How can the production of highly specialized commodities be best adjusted to meet the long-time market prospects ? How can the efficiency of the present farm business be increased? These and many other questions have not been answered satisfactorily, although opinions have been rendered which have not been sub- stantiated by a reliable body of facts. The economic phases of agriculture have, especially since the World War, been attracting the attention of public and semi-public agencies in this and other countries. The various agricultural experi- ment stations together with the United States Department of Agri- culture have given marked attention to the cost of producing and marketing agricultural products. FARM ACCOUNTING IN THE UNITED STATES Efforts have been made in a number of states to encourage the keeping of farm accounts. Several agricultural colleges have been especially active in an effort to inaugurate systematic farm accounting, but on a different plan than that described in this publication. The College of Agriculture of the University of California has been engaged in both cost-of -production studies and farm-accounting work. Three publications on costs of production 3 have already been issued by the Division of Farm Management of the College of Agriculture. The Agricultural Extension Service of the College of Agriculture has also endeavored to conduct cost-of-production surveys for certain commodities and, in addition, has since 1917 attempted to encourage bookkeeping or accounting among farmers. At the present time the Agricultural Extension Service is extending the farm-accounting idea by four different methods of keeping accounts: (1) By means of accounts kept by the individual farmer, (2) by means of farm accounts kept in banks, (3) by means of senior farm business clubs, and (4) by means of junior farm business clubs. The first method has not been successful. Account books were distributed to farmers and but few books were kept. The second method has been used by eight banks in seven different counties in this state and in 1925 one hundred and thirty-nine different accounts were kept for farmers. The third 3 Adams, E. L. The cost of producing milk and butter fat on 246 California dairies. California Agr. Exp. Sta. Bull. 372:1-64, fig. 19. 1923. Adams, E. L. The results of a survey to determine the cost of producing beef in California. California Agr. Exp. Sta. Cir. 281:1-22. 1924. Adams, E. L. Cost of Work Horses on California Farms. California Agr. Exp. Sta. Bull. 401; 1-20. 1926. BULL. 403] FARM-ACCOUNTING ASSOCIATIONS 5 method has been tried but has not been entirely satisfactory because of the difficulty in getting farmers to keep their own records. The original plan was to hold a meeting of this club once a month with the extension specialist in farm management and the farm advisor for a discussion of problems involved in the accounting work. The interest of the young people in the community in farm account- ing was stimulated during the summer of 1925 by the organization of junior farm business clubs. The plan is to have a local banker act as local club leader. Inventories are taken by the club members with the assistance of the parent and the representative of the bank. Material for making entries in account books is collected at the bank by having the parent pay all bills by check and itemizing the nature of the expense. The parent also itemizes the deposit slips as to the source of income. Once a month the club meets at the bank and the members make entries in the farm-account book under the direction of the banker. 4 Because of the general interest in the subject of farm accounting it is believed that research and extension workers, together with farmers, will be interested in a discussion of a plan by which account- ing among farmers has been done cooperatively. INTRODUCTION OF FARM ACCOUNTING IN EUROPEAN COUNTRIES Germany. — In a number of European countries, attempts have been made by private individuals and by both public and semi-public institutions to encourage the keeping of farm accounts. The result has been in many cases the establishment of agencies generally termed bureaus. In 1872 Howard's Bureau was established as a private enter- prise in Leipzig, Germany, and proved a success. Several branches were organized and at one time over one hundred people were employed by the bureau. Under the bureau system, reports are made by the individual farmer to the bureau at stated intervals, such as every week or month. Expert bookkeepers on receipt of the farm reports and records, set up the books and keep them for their clients. The earlier bureaus were concerned mainly with the accounting for larger farms. In 1896 the German Agricultural Society's Bureau was founded, which differed from the one just described in that it was a semi-public institution. Most of the records, however, were received from large farms. Weekly reports were sent out from the farms to the bureau for posting. 4 The information on the work in California was kindly furnished by Mr. L. W. Fluharty, Farm Management Demonstrator, Agricultural Extension Service, College of Agriculture, University of California. b UNIVERSITY OF CALIFORNIA EXPERIMENT STATION Switzerland. — It remained for Switzerland to establish the system of accounting which has served as a model for Norway, Sweden, Fin- land, and Denmark. Since the same plan is used in all five countries, the accounts are comparable. During the past year Esthonia has been making preparations to inaugurate a farm-accounting system similar to that worked out in Switzerland 5 and especially as it has been modi- fied in Denmark. Minor variations occur between the actual methods used in keeping accounts in the countries mentioned. In addition, there are major variations in the manner of procedure in compiling the data, particularly with the Danish accounts. Under the leadership of Dr. E. Laur, Professor of Agricultural Economics in the Technical College at Zurich, the Swiss Farmers' Federation started the work of obtaining farm accounts from all classes of farmers in every section of Switzerland. The Swiss Farmers' Federation is a semi-public institution supported financially by the farmers of Switzerland and subsidized by the Swiss Government. The general plan of procedure in obtaining records for compilation was as follows: (1) Blank forms were sent to farmers who obligated them- selves to furnish information in the manner prescribed by the Farmers' Federation and after a year to send the completed papers to the central office of the federation for revision and analysis. (2) Free advice was given to the farmers for carrying out the details of the work. New participants were given three days of instruction. In addition, board and room and railroad transportation were pro- vided. (3) Participants received final reports of the analyses of farm records from the central office gratis. (4) The entire report of compila- tions was sent to all intrants. During the summer, farmers entering the work for the first time were visited by an expert who assisted in explaining doubtful details of the work. The expert also made certain observations and descriptions needed by the main office for completing the records. Farmers who carried out the accounts in a satisfactory manner were given a diploma and at times a small sum of money. The Swiss Farmers' Federation reserved the right to make all findings public, the names of private individuals being withheld. The results in Switzerland have been made public in The Agri- cultural Year Book of Switzerland (Landwirtschaftliches Jahrbuch der Schweiz). The work is done free for the farmers except for an indirect tax which the farmers pay in taxes, dues to the federation, etc. During the year 1923-24, a total of 444 farm accounts was obtained. Accounts have been examined and reports have been issued without 5 Unpublished data. Bull. 403] FARM-ACCOUNTING ASSOCIATIONS interruption since 1901. These 444 accounts were well distributed over Switzerland with the exception of the cantons of Inner Switzerland (Innerschweiz), namely Glarus, Appenzell, Freiburg and Tessin, which were poorly represented. TABLE I Farm Accounts Used by Central Agencies in Various European Countrikk for the Compilation of Annual Reports Switzer- la nd Total Norway Fin and Sweden Total Denmark Year Total New Total New Total New 1901-02 111 1902-03 58 1903-04 136 1904-05 179 1905-06 206 1906-07 230 1907-08 250 1908-09 287 1909-10 276 1910-11 270 1911-12 283 39 1912-13 291 42 21 122 1913-14 303 73 39 85 29 40 1914-15 288 82 36 94 47 81 1915-16 259 110 19 162 88 128 1916-17 300 101 27 135 22 157 1917-18 353 392 408 380 397 97 101 95 111 124 12 25 10 33 34 85 84 196 240 304 211 183 200 289 364 75 235 305 391 468 1918-19 183 1919-20 113 1920-21 121 1921-22 101 147 1922-23 406 444 121 151 23 53 338 380 500 534 586 670 7 110 1923-24 114 1924-25 134 1925-26 1845 6507 1247 2033 3764 6 Switzerland, The Swiss Farmers' Federation (Das Schweizerische Bauern- sekretariat). Norway, The Society for the Welfare of Norway (Det. Kgl. Selskap for Norges Vel). Finland, The Agricultural Department (Landtbrukssyrelsen). Sweden, The Royal Agricultural Department (Kungl. Lantbruksstyrelsen). Denmark, The Bureau of Farm Management and Agricultural Economics (Det land0konomiske Driftsbureau). 7 Estimate by Prof. O. H. Larsen, Bureau of Farm Management and Agri- cultural Economics, Copenhagen, Denmark. - UNIVERSITY OF CALIFORNIA EXPERIMENT STATION These farm accounts have been analyzed in considerable detail. From 1901 through 1923, 6507 accounts have been received. The average size of the farms represented was approximately 13.22 hectares or 32.67 acres (1 hectare = 2.4711 acres). The number of accounts received has been increasing slowly but steadily. An increase in the number would be valuable but if much larger the cost would be pro- hibitive, since the reports of the results are now issued annually in two parts and cover a total of approximately 210 pages. The number of reports received each year is shoAvn in table 1. A considerable turnover from year to year is evident from the following table. Of the 444 farms from which accounts were analyzed for 1923, reports had been received from them for a varying number of years as will be seen from table 2. TABLE 2 Distribution of Accounts Analyzed for the 444 Farms Reportng to the Swiss Farmers' Federation in 1923-24 with Reference to Number of Yearly Accounts for Each Farm Yearly accounts for each farm Number of farms 1 93 2 57 3 33 4 29 5 36 6 26 7 35 8 27 9 4 10 11 11 12 Yearly accounts for each farm Number of farms 12 15 13 10 14 4 15 6 16 4 17 9 18 6 19 12 20 9 21 2 22 23 4 Since 1901 these 444 farms have had a total of 2809 accounts analyzed. Norway. — Norway, through its "Society for the Welfare of Norway" (Selskapet for Norges Vel), organized a semi-public bureau after the Swiss model ; this bureau issued its first report in 1912 for the year 1911-12. Owing to limited finances, the number of accounts analyzed has been comparatively few. For the year 1923-24, one hun- dred and fifty-one accounts were received and revised. The number of accounts analyzed yearly, together with the number of new accounts coming in each year, will be found in table 1 (p. 7). Table 3 shows the number of yearly accounts which the one hundred and fifty-one farms completing accounts for the year 1923-24 have had analyzed. The 151 farms have had a total of 615 accounts analyzed since 1911-1912. The Society for the Welfare of Norway has not only published yearly reports on the results of the analyses made, but in addition has Bull. 403] FARM-ACCOUNTING ASSOCIATIONS made a number of special investigations with reference to specific phases of the accounts, such as studies in the use of labor in Norwegian agriculture. A special effort has been made by the society to introduce farm accounting into the Norwegian agricultural schools. TABLE 3 Distribution op Accounts Analyzed for the 153 Farms Kerorting to the Society for the Welfare of Norway in 1923-24 with Reference to Number of Yearly Accounts for Each Farm Yearly accounts for each farm Number of farms... 1 2 3 4 5 6 7 8 9 10 11 12 53 18 17 14 3 6 4 7 11 7 4 2 Finland. — Finland began the publication of farm-account analyses in 1913, when 122 farm accounts were received for the year 1912. The Agricultural Department (Lantbruksstyrelsen) of the Republic of Finland is in charge of this work. Table 1 (p. 7) shows the number of reports received each year. In addition to the above number there have been other accounts kept. For various reasons, such as lack of funds for analyses, or faults in the records, these accounts were not included in the above totals. The accounts are most evenly distributed, records being received from every province of Finland. The distribution according to area is not as uniform as might be desired. A difficulty encountered in most of the countries with established farm-accounting work is to obtain accounts from the smaller farms. For the 338 farms analyzed in 1922, the distribution according to area is as in table 4. TABLE 4 Distribution of Farm Accounts According to Area, 1922-23 Size of Farm Number Under 5 hectares : 12.35 acres 5 Between 5-10 hectares : 12.35-24.7 acres 43 Between 10-25 hectares : 24.7-37.05 acres 149 Between 25-50 hectares : 37.05-123.5 acres 79 Between 50-100 hectares : 123.5-247.0 acres 49 Over 100 hectares : 247.0 acres 13 Total 338 It should be remembered that, prior to 1918, Finland was a Grand Duchy under Russian protection. Civil war raged throughout the land in 1918 and it was not until 1919 that order was completely restored. The interest in farm accounting has grown steadily since that time. 10 UNIVERSITY OF CALIFORNIA EXPERIMENT STATION Sweden. — The first collective report in Sweden was issued in 1914 when results were reported for 1912-13 and for 1913-14. While this was the first collective report issued, a farm-accounting association had been established several years before. For the year 1921-22 the results from 380 farm accounts were analyzed. The Swedish accounts are analyzed and the results published by the Royal Agri- cultural Department of Sweden (Kungl. Lantbruksstyrelsen). The work in Sweden has grown slowly but steadily as table 1 shows (p. 7). The distribution of accounts according to area for the year 1921-22 and in addition for the ten years 1912-1922 is given in table 5. TABLE 5 Distribution of Farm Accounts According to Area, 1921-22 and Ten-year Period, 1912-22 1921 1922 1912-1922 Size of farm Number Total hectares Number Hectares Acres Up to 10 24.71 128 971 534 10. 1-25 24.96-61.78 108 1,671 533 25. 1-50 62.0 -123.55 44 1,594 430 50. 1-100 123.80-247.1 24 1,687 178 Over 100 247.1 76 16,795 358 Totals 380 22,718 2,033 The Swedish accounts include a large number of the accounts of small holdings — typical of Sweden, as the distribution of the total number of farms according to the area cultivated in 1919 was as follows : 8 Size of farm Number Up to 10 hectares 252,942 Between 10.1-30 hectares 62,993 Between 30.1-50 hectares 7,478 Between 50.1-100 hectares 3,233 Over 100 hectares 1,789 It should be noted that the division is according to the cultivated area, not according to the total area. While the organizations already described have served a most useful purpose, limitations in funds to carry on such work, together Kungl. Statistiska Centralbyran, Statistisk Arsbok for Sverige, 1-330'. 1925. BULL. 403] FARM-ACCOUNTING ASSOCIATIONS 11 with difficulty in arousing the interest of farmers, have prevented to a considerable extent the widespread growth of farm accounting. Denmark. — It was the failure of farm accounting to grow rapidly which led to a rather widespread discussion in Denmark of ways and means to promote such work. Under the auspices of the agricultural unions (Landboforeninger) farm accounts had been kept in various places in Denmark. On the Island of Samso, farm accounts have been kept since 1902, and the agricultural union in the vicinity, of Odense has carried records since 1911. In 1910 the Federation of Danish Agricultural College Graduates conducted an investigation to discover the causes for the failure of farm accounting to make progress. Three main reasons were assigned : (1) ignorance, (2) distrust of results obtained from analyses of farm accounts, and (3) pressure of other duties preventing the giving of the proper care in analyzing results of accounting. Shortly afterward a committee representing the various agricul- tural societies and interests of Denmark studied the situation and in 1913 made a report. This committee recommended that either special farm accounting associations (Regnskabsforeninger) or enlarged cow testing associations (Kontrolforeninger) be formed. It was also recom- mended that a system of farm accounts be prepared which could be used by all classes of farmers, for although accounts had been kept on many farms, the system was not uniform and consequently no comparisons could be made between farms nor could reliable com- parable statistical material be obtained. There was unanimity of opinion that the farm-accounting system should be the same whether for large or small farms, whether the farmer made up his own account or obtained outside help. By comparisons not only could various farm businesses in different sections of the kingdom be judged, but different enterprises of agriculture (e.g., dairying and grain growing) on the same and different farms could be compared. The hope was expressed that a uniform system would lead to a friendly rivalry and a desire on the part of many further to exert themselves. Emphasis was placed on the need for simplicity, especially in connection with the farmer 's daily work on the report. Many of the recommendations have since been carried out. The question as to ways and means of carrying out the work on the part of the farmer led to the recommendation for organization. That the most ideal procedure would be to have the farmer carry his own account was admitted, provided he was capable of carrying it through to completion. In this way the farmer would come in contact with all the details of the work and he would consequently have the 12 UNIVERSITY OF CALIFORNIA EXPERIMENT STATION best possible opportunities to use them in analyzing his business. Every effort having as its object the advancing of independent accounting should be encouraged. Danish farmers had long been familiar with the organization of cow-testing associations, as the first one in the world was founded in Denmark in 1895 with 13 members ; in 1926 these associations embraced 30,920 farmers owning 410,280 cows. They therefore anticipated some of the difficulties in the achievement of their ideal of having every farmer do his own accounting. Arguments against individual inde- pendent accounting were almost the same as those against the testing of milk by individual farmers. Farmers understood the methods used in the testing of milk, but the testing was not done regularly by them. The farmer as a rule did not have the time to spend in lines of work which he considered outside of actual production endeavors. Many farmers also believed that their time could be spent to better advan- tage in other ways and that the most economical way to have testing done was to invite the dairymen into a partnership for the purpose of employing a trained man to visit each herd at regular intervals and weigh and test the milk of each cow. Cow-testing associations were widespread and it was thought desirable to combine with them the accounting work. This, however, was not entirely practicable in every case. Hence, separate farm-accounting associations were formed, and these have been the most successful agents in making farm-accounting work known. In organization and operation these associations are quite similar to cow-testing associations. DANISH ORGANIZATIONS IN AGRICULTURE Danish agricultural organizations are of two types: (1) the agricul- tural societies (Landboforeninger and Husmandsforeninger), which promote the scientific and educational interests of agriculture and between them enroll 197,546 members (1925), and (2) the cooperative associations. Farm-accounting associations have been organized by the first type. These agricultural societies are again divided into two parts. Small landholders (farmers who possess less than 20 acres) comprise the membership of the one branch of the agricultural societies (Husmandsforeninger) while the remainder of the farmers constitute the other branch of agricultural societies (Landboforeninger). The latter societies, as might be expected from their organization, have been more active in forming farm-accounting associations. These societies (Landboforeninger) correspond to the county farm bureaus of California except that there are usually several agricul- BULL. 403] FARM-ACCOUNTING ASSOCIATIONS 13 tural societies in each county (or amt). There are in Denmark 22 counties (amter) and in these 136 agricultural societies with an average membership of approximately 914. The membership dues vary from 1 to 40 crowns (25 cents to $10) and in 1925 averaged a trifle over 5 crowns ($1.25) yearly. These societies concern themselves with all that has to do with the technical and educational side of agri- culture in their districts. Committees are appointed to look after the special interests of the community, for example, animal husbandry, agronomy, young people's work, farm machinery, farm accounting, etc. Farm advisors (Konsulenter) or specialists in these lines of work may be employed by these various societies. The state contributes two- fifths of the salary of these farm advisors or specialists, the society contributing the other three-fifths. Several societies in the same county may use the same advisor or one advisor may be placed in charge of several lines of work. Small holders' societies are organized as parish units and these in turn are organized as federations of societies. Farm advisors for various lines of work are appointed as in the case of the societies of larger landholders. One advisor may even serve both classes of societies. The organization of farm-accounting associations. — Farm-account- ing associations are as a rule formed as special branches of the societies just mentioned. The members of the agricultural societies by the pay- ment of a certain sum can join a farm-accounting association. At times cow-testing associations are used as the organization through which the farm accounting is accomplished, but a separate association is the rule. In a cow-testing association the size of the herd governs the number of members. In a farm-accounting association usually the size of the farm is the limiting factor in determining the number of members in any one association. The maximum number of farms which can be controlled by one man will not go higher than 40-50. The farm-account advisor or specialist. — The farm advisor or specialist in farm accounting is the most important member of the association. In practically all cases these specialists are graduates of the Royal Danish Agricultural College (Kgl. Veterinaer-og Landbo- h0jskole) and have had a basic training in economics. The farm- account advisor is therefore a man with some technical training. Under the Danish system he has had some farm experience, since experience is a prerequisite for admission to the Royal Agricultural College of Denmark. In education and experience the farm-account advisor would correspond to an Assistant Farm Advisor in California. The usual wage in Denmark for this work was 2500 to 7000 crowns 14 UNIVERSITY OF CALIFORNIA EXPERIMENT STATION yearly ($625 to $1750 in 1925). A mode of conveyance is not always necessary on account of the closely settled agricultural area but in going from farm to farm bicycles and motorcycles are used where Fig. 1. — Outline map of Denmark. Each dot represents the location of a farm-accounting - association. The Island of Bornholm (off the coast of Sweden) is represented in the lower right-hand corner. necessary. A few possess motor cars. To receive state support for the specialist's salary the accounting must (1) cover the entire farm business, (2) be conducted on uniform, prescribed accounting forms, and (3) be available so that the results may be analyzed and published. Bull. 403] FARM-ACCOUNTING ASSOCIATIONS 15 Fig. 2. — Map of California showing relative areas of California and Denmark. Denmark has 10.6 per cent of the land area of California. Denmark has approximately the same area as each of the shaded areas on the map. 16 UNIVERSITY OF CALIFORNIA EXPERIMENT STATION Procedure in associations. — The specialist visits the farm in his association as often as possible in order to facilitate the keeping of accurate accounts. As a rule the farmer makes entries in a day-book. The reports, however, are made up by the specialist himself in close cooperation with the farmer and without occupying any more of the farmer's time than is absolutely necessary. To insure uniformity in keeping accounts certain rules have been set up by the Danish Bureau of Farm Management and Agricultural Economics. Cooperation with the Bureau of Farm Management and Agricultural Economics is obtained by having the associations observe the following rules in order to facilitate comparisons later: 1. All accounts must start at the same time of the year, either April 1 or May 1. 2. The accounts must be kept on forms prescribed by the Bureau of Agricultural Economics and Farm Management. Form and extent of account. — Two types of accounts may be kept, the participant making his own choice. The first type, known as form A, is as a rule used for the small farm. Form B, the second type, gives far more detail and is especially adapted to larger farms on which several farming enterprises are carried on simultaneously. Form A takes into account the business as a whole without con- sideration of the internal details or enterprises. In final form it consists of four parts : 1. An inventory account is given with detailed statements of the capital used in agriculture and at least a summary of capital used in other enterprises such as the household. A private capital account (capital used outside of the actual farm business) is carried if a com- mon cash account is used. It is desirable to take complete inventories for purposes of control and to judge later of the economic foundation of the entire farm business. 2. A cash account is carried embracing all cash transactions. 3. A product and labor account aims to give a statement of the products and labor which are exchanged between the farm-business, the household and the private accounts (outside of agriculture and the household). 4. A yearly summary gives information on the cash income of agri- culture, together with costs. The profitableness of the entire business, the economics of the household, and the private income and expenses as well as changes in the inventory are recorded. In this, the farm business is treated as an entity. Form B carries six main parts as follows: (1) and (2) are the same as those listed under form A. BULL. 403] FARM-ACCOUNTING ASSOCIATIONS 17 3. A stock account lists the feeds used in the various branches of the livestock work and in addition notes are carried on additions and deductions to the flocks and herds as well as other information which is necessary for a clear and full knowledge of livestock accounts. In addition to the above mentioned features, cognizance is taken of the supplies and use of milk, grain and feedstuffs. The livestock account is divided into several sections — cattle, swine and horses. On the larger establishments cattle may be divided into milk cows, bulls, young stock, beef cattle, etc. If sheep, goats or poultry play an important role in the farm business special sections can be added. With each of these must be carried a corresponding feed account. On the other hand, all of the minor animal enterprises can be assembled under a common account labeled "Other Animals." When the member of the farm-accounting association is also a member of a cow-testing association, the work of the latter can be used as a link in the collective stock accounts. 4. A labor or field account is carried which either (a) has a common account for the field work and segregates the labor for field, livestock, other occupations, household, private account, etc., or (b) has field operations divided in accordance with the main crops which in Denmark are usually listed as follows : 1, grain, 2, root crops, 3, grass and green feed. When circumstances make it necessary fields can be divided further, for example, into 1, roots, 2, potatoes and tubers for sale, 3, grass, 4, meadows, 5, alfalfa, 6, crops for livestock (not already listed), 7, seed crops, etc. A special account can also be made for fallow land, etc. Recommendations are made that such detailed divisions of field crops should be made only in cases where areas of a considerable size are involved and where the crops involved play an important part in the economics of the farm business as a whole. Such a detailed specialization of a field account demands the most careful work in keeping a day-book. Reports on seed, manuring and crop yields are listed as with (a). 5. The household list includes all the home-grown products used on the farm. 6. The yearly report, in addition to giving an insight into the farm business as a whole, also gives details of the various parts of the business (figs. 3, 4). Costs of accounting. — The main expense in connection with the operation of the farm-accounting association is the salary of the farm advisor or specialist. Under certain specified conditions the state will 18 UNIVERSITY OF CALIFORNIA EXPERIMENT STATION Si 1 ! 1 1 I ii I 5 £ { i 1 l 3 i 5 5 +- in i J |5 1 5 i 1 5 1 ii r .5 1 1 1 a 1 1 *3 ! 1 1 1 1 j 1 i c 1 10 11 Hi i 1 1 < I i i 1 J I t 1 1 * 1 J £ 1 1! I -J 1 1 1 1 I 1 I t 1 f I 1 ! t I I 1 j ! | ! SI 1 i 1 1 1 i I 8Q •5 1 t (8 li 1 ! 1 1 | i i (2 I 5 1 1 I I 1 4 1 1 1 4 I 11) 4 I Bull. 403] FARM-ACCOUNTING ASSOCIATIONS 19 If s 1 8 5 1 V 5 s r 6 a I | 1 1 6 1 4 1 { 1 1 | & 1 1 IS 1 I 1 * 6 a 1? [5 1 c 1 5 1 % N t 1 4 f ! ^5 1 I 1 5 5 % •5 1 I n 1 1 1 s \ 1 I A: U j" -J (!) ! 1 1 1 ! { 1 1 .5 s i i .<& .0 I 1 ■s ? i <3 1 ! s .0 1 ~0 S ! IS I \ 1 .JJ I .5 I i I 5 ! E +. t Q 1 1 1 fc 1 « 1 1 Q) I ! i 1 5 * 8 ! 1 I T 3 I 5 1 | I a 1 C 1 CO < I. in \ 5j ! i * 1 J n I I { I 1 J I ! 1 1 I I 3 1 1 1 ft I t j 20 UNIVERSITY OF CALIFORNIA EXPERIMENT STATION pay two-fifths of the salary of the farm advisor provided the members of the association pay the remaining" three-fifths. The individual farmers pay in proportion to the area of their farms. A typical example is Copenhagen County. The farmers of Copenhagen County TABLE 6 Scale of Payment in a Typical Farm-accounting Association in Denmark T0nclelantfio Up to 30 31 to 40 41 to 50 51 to 60 61 to 70 71 to 80 81 to 90 91 to 100 101 to 120... 121 to 140... 141 to 160... 161 to 180... 181 to 200 ... 201 to 220... 221 to 240... 241 to 260 ... 261 to 280... 281 to 300... 301 to 325... 326 to 350... 351 to 375... 376 to 400... 401 to 425... 426 to 450... 451 to 475... 476 to 500 . 501 to 550... 551 to 600... 601 to 650... 651 to 700... 701 to 750... 751 to 800... 801 to 850... 851 to 900... 901 to 1000. Acres 37 39 52 65 78 91 104 116 129 155 181 206 232 258 284 309 335 361 386 418 451 483 515 547 579 611 643 708 772 836 900 965 1029 1093 1157 .7- .5- .4- .2- .1- .9- .8- .5- .2- .9- .6- .3- 51.4 64.3 77.1 90,0 102.8 115.7 128.5 154.2 180.0 205.6 231.3 257.0 282.7 .0- 308.4 . 7- 334. 1 .4- 359.8 .1- 385.5 .8- 417.6 .9- 449.8 .0- 481.9 .2- 514.0 546.1 578.3 610.4 642.5 706.8 771.0 5- 835.3 5- 899.5 8- 936.8 0-1028.0 3-1092.3 5-1156.5 8-1285.0 .3- .4- .5- .7- .8- .0- Cr owns 11 yearly 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200 210 220 230 240 250 260 270 280 290 300 310 320 330 340 350 360 370 380 390 400 Dollars 1 : 14.88 17.36 19.84 22.32 24.80 27.28 29.76 32.24 34.72 37.20 39.68 42.16 44.64 47.12 49.60 52.08 54.56 57.04 59.52 62.00 64.48 66.96 69.44 71.92 74.40 76.88 79.36 81.84 84.32 86.80 89.28 91.76 94.24 96.72 99.20 o The farm-accounting committee of "The Three Agricultural Societies' ' (De tre Landboforeningers Eegnskabsudvalg). io A T0nde Land is 56,000' square feet or approximately 1.285 acres, ii Danish crown = $0,268 (par). 12 Jan. 1, 1926, 1 crown = $0,248. BULL. 403] FARM-ACCOUNTING ASSOCIATIONS 21 (Kj0benhavns Amt) have three well established agricultural societies (Landboforeninger). The county in 1924 had one farm-accounting association with two spcialists. A committee 9 from the three societies set the scale of payment for 1923-24 and also for 1924-25 as in table 6. Thus a farmer with 20 acres in Copenhagen County would pay approximately $15 yearly, while the one with 40 acres $17.50, 100 acres $27, etc. Copenhagen County is rather fertile, the agriculture is intensive and the county occupies the same relation to the city of Copenhagen that Los Angeles County occupies to the City of Los Angeles. The Danish farmer is willing to pay for good accounting Fig. 5. — A typical farmstead (Bondergaard) in Denmark. This type usually has an area of from 32 to 150 acres. work. Costs vary in the different associations. Heretofore the small- holders' societies have lagged behind the other farmers in the forma- tion of the farm-accounting associations but during the past year an active agitation has been conducted among the small holders in order to interest them in accounting work. Progress of the farm-accounting associations in Denmark. — The first farm-accounting association of the type described was formed in Denmark in 1911. The growth was at first very slow. In the crop year 1916-17 only seven associations turned records over to the Bureau of Farm Management and Agricultural Economics for revision and analysis. The number of associations cooperating with the central bureau has grown steadily since 1916 as can be seen from table 7. TABLE 7 Farm-accounting Associations in Denmark Cooperating with the Bureau of Farm Management and Agricultural Economics Years Number Years Number Years Number 1916-17 7 1919-20 26 1922-23 50 1917-18 17 1920-21 39 1923-24 55 1918-19 26 1921-22 47 1924-25 59 22 UNIVERSITY OF CALIFORNIA EXPERIMENT STATION The total number of associations in 1925-26 was 66 including a limited number (3 or 4) of associations not cooperating with the central bureau. Approximately 3280 farms were studied daily by their owners and the accounting specialists. The total area of these farms was approximately 323,433 acres (133,100 hectares). The farm-accounting associations are quite generally distributed over Denmark (see fig. 1). The number is considerably larger in the Fig. 6. — Small holder's house (Husmand). The small holder lives on a farm of usually less than 20 acres. Fig. 7. — View on a large farm in Denmark (Herregaard). more fertile agricultural areas of the kingdom in East Jutland and in the islands east of the Peninsula of Jutland. The western half of Jutland is less fertile than the other sections of the country. The Island of Fyen (the second largest island of Denmark — east of the Peninsula of Jutland) with an area almost identical with that of Glenn County, California (1347 squares miles) has nine farm- accounting associations. Bureau of farm management and agricultural economics. — Form and organization. A discussion of the farm-accounting associations Bull. 403] FARM-ACCOUNTING ASSOCIATIONS 23 would be incomplete without reference to the Bureau of Farm Manage- ment and Agricultural Economics (Det land0konomiske Driftsbureau). This bureau corresponds to branches of large semi-public institu- tions in Switzerland, Norway, and Sweden. The bureau is adminis- tered by a committee whose members are chosen by a group of organi- zations especially interested in this work. The committee selects the leader of the bureau and determines with him the principles by which the accounts shall be analyzed. The leader of the bureau has the responsibility for the execution of the technical work, and in addition, undertakes to carry on the cooperative work with the local farm- accounting associations. For the past few years Prof. O. H. Larsen, Professor of Agricultural Economics in the Royal Agricultural College of Denmark, has been the leader. Every year a report is issued on the results of the investigations. This report is sent out to all farmers who have provided accounts for the investigation. The bureau is supported by various agricultural organizations including the Royal Agricultural Society, The Federation of Farmers ' Unions, The Federation of Small-Holders' Societies and the Coopera- tive Council. For the year 1926 the Danish Parliament made a direct contribution of 57,000 crowns for this work (one crown at par on January 2, 1926 = 24.80 cents). During 1925, in addition to the administrative head, the bureau consisted of one specialist and three regular assistants and an office force of five. The Danish bureau was comparatively late in getting under way, being established in 1918. It has as its main purpose the obtaining, analyzing and publishing of reliable farm accounts or the data for such accounts for Danish farms of different size, fertility, and loca- tion as well as of those of different business types. Accounting mate- rial is obtained through the cooperative efforts of the local farm- accounting assocations, farmers' associations, small-holders' associa- tions, and individuals. All of these seek to have the accounting done by uniform methods. During 1924-25, 59 out of the 63 farm-accounting associations were affiliated with the bureau. Results were published for the first time in 1918 after the foundation of the bureau for the year 1916-17 when statistics for 75 farms were analyzed and the number has grown steadily. Owing to the limited facilities of the bureau only the most typical accounts are analyzed. These are selected by the specialists in the various sections of the kingdom as being most typical. The aim of the bureau is to have as many sections of the kingdom as possible represented by these individual accounts. Not only the section but the area of the farm and the type of farming 24 UNIVERSITY OF CALIFORNIA EXPERIMENT STATION are taken into consideration. The bureau prefers to analyze accounts of farms from which analyses of records have previously been made. Analyses of farm accounts. — During the year 1922-23, 534 farm accounts were analyzed and the results compiled by the bureau. Of these, 499 were sent by the farm-accounting associations and 35 by the owners of large farms. Only a limited number of the accounts from the various associations are analyzed by the bureau and the results published. The remainder are analyzed by the farm-accounting specialist employed by the local association. A yearly record of the number of analyses of farm accounts by the Bureau of Farm Manage- ment and Agricultural Economics can be found in table 1 (p. 7). The number of yearly accounts sent in by the farms reporting in each of the years since 1916-17 can be found in table 8. TABLE 8 Distribution of Accounts Each Year Segregated According to Number of Yearly Accounts Farms have Eendered to the Bureau of Farm Management and Agricultural Economics Years 1916- 1917 1917- 1918 1918- 1919 1919- 1920 1920- 1921 1921- 1922 1922- 1923 1923- 1924 1924- 1925 Farms Yearly accounts: 1 75 183 113 121 147 110 114 134 2 52 146 82 103 121 98 91 3 46 128 71 85 92 81 4 40 109 55 64 78 5 38 94 48 55 6 35 86 32 43 74 7 8 30 Total for each year.. 75 235 305 391 468 500 534 586 670* Total accounts examined 3764 * Estimate by Prof. O. H. Larsen. Data are not at hand to show the percentage of farms remaining in associations from year to year. The above table, however, is indica- tive of the fact that a high percentage of farmers must be of the opinion that the work is worth while. Thirty of the farms out of the original 75 were listed for the eighth year of accounting. There may Bull. 403] FARM-ACCOUNTING ASSOCIATIONS 25 have been others of the original 75 farms on the active list of their accounting associations as the bureau uses less than 20 per cent of all the records. With the increase in the number of farm-accounting associations, the task of the bureau in selecting accounts from farms of comparable area has been greatly simplified. The following table shows the number of accounts by years divided according to area : TABLE 9 The Area of the Farms Used in Farm-accounting Investigations Year Under 10 hectares 10-20 hectares 20-30 hectares 30-50 hectares 50-100 hectares Over 100 hectares Average size hectares : acres 1916-17 3 13 23 20 15 1 36.8 90.93 1917-18 14 42 68 70 29 12 39.8 98.35 1918-19 24 51 78 95 38 19 42.4 104.77 1919-20 35 67 83 108 49 29 44.6 110.21 1920-21 47 90 111 121 60 37 43.4 107.24 1921-22 40 89 120 143 67 41 46.0 113.66 1922-23 45 82 88 95 121 129 154 160 74 69 52 51 50.2 46.2 124.04 1923-24 114.16 Average size, hec- tares, 1923-1924... 5.8 15.6 25.5 38.4 65.9 220.3 Acres 14.33 38.55 63.01 94.89 162.84 544.36 The distribution with reference to area is becoming more even. The interest among the small holders is such that during the past few years the bureau has been enabled to analyze a proportionally increasing number of accounts from farms with an area of less than 10 hectares (24.71 acres). THE AGEICULTUEAL AEEA OF DENMARK AND NUMBEE OF FARMS Of Denmark's total area of about 4,302,000 hectares (16,603 square miles or 10,625,940 acres), about 76 per cent is utilized for agriculture, 9 per cent is timbered, while the greater part of the remainder consists of areas which are useless for agriculture. The total area of Denmark is 10.6 per cent that of the State of California (fig. 2). The improved land in California farms (1920) covered an area of 11,878,339 acres while the improved land in Denmark (1920) amounted to approxi- mately 8,091,720 acres. 26 UNIVERSITY OF CALIFORNIA EXPERIMENT STATION Divided according to the size of the agricultural area there were in 1919 the following number of farms with an agricultural area of more than 0.55 hectares (1.36 acres) 13 as shown in table 10. TABLE 10 Area of Farms in Denmark Area Number Agricultural area hectares : acres Total Per cent 1000 hectares Per cent 0.55 to 3.3 : 1.36-8. 15 3.3 to 15 : 8.15-32.1. 43,891 90,748 65,916 4,039 916 419 21.3 44.1 32.0 2.0 0.4 0.2 82 721 1,879 332 153 147 2.5 21 8 15.0 to 60 : 32. 1-128.4 56.7 60.0 to 120 : 128.4-256.8 120.0 to 240 : 256.8-513.6 10.0 4.6 240.0 and over : 513.6 and over 4.4 Total 205,929 100.0 3,314 100.0 There were 136,413 farms in California in 1925 (117,620 in 1920). DISCUSSION OF EESULTS One of the most important features of the work is the discussion meetings which are held after the accounts are analyzed by the bureau. Matters vital to the entire community are oftentimes decided at these meetings. For a discussion of the general results of the work see page 32. The individual farmer is interested first in his own welfare. The following example will serve as an illustration. The Danish dairy farmer belonging to a farm-accounting association has before him the various items relating to his farm business. He has in addition the records of other farms and herds and can thereby make com- parisons. First of all, the dairy farmer has at hand the yields of his cows, and the relative amounts of concentrated feeds and roughage con- sumed — usually the main cost items listed on the accounts. Often one of the three items — yield of milk, concentrates, or roughage is responsi- ble for either profit or loss in the entire farm business, The income from mlik or butterfat, growth of young stock (and sale) at times may be out of line with incomes of similar farms, In a business of this type other cost items such as horse and man labor, depreciation, insurance, Bet Statistiske Department, Statistisk Aaarbog, 1-247. 1925. BULL. 403] FARM-ACCOUNTING ASSOCIATIONS 27 amortization, etc., in addition to interest on the investment, house rent, and managerial salary are taken into account by the Danish dairy farmer belonging to a farm-accounting association. An idea of the scope of the 203-page report issued by the bureau on the results of accounts analyzed in the year 1923-24 may be obtained from the table of contents of this report (page 28). Appendix C (page 32) gives more in detail the analyses of the accounts of certain farms in one of the farm-accounting associations. CONCLUSION The object of this publication is to give an account of the organiza- tion and results of farm-accounting associations of Europe, particu- larly those of Denmark. Much of the effort in Denmark was first expended in generalizing the system and making it uniform. This was brought about first by an agreement between various agencies as to the form of account most suitable to the kingdom as a whole. After agree- ment on this point, the next problem was to make the work of farm accounting known in the agricultural districts. Several agencies were entrusted with the task. Since Denmark possessed a system of well organized agricultural societies it was decided to interest these in the work. Meetings and short courses were held for those interested at the various agricultural schools and peoples' colleges. One of the serious problems in the way of extending farm accounting was a lack of trained men to take charge of the work. The various agricultural schools including the Royal Agricultural College were induced to train all students in accounting work following the system agreed upon by the agencies previously mentioned. The Danish farmer has been given an excellent training in self- government which has promoted a rapid development of cooperative organization and leadership. Also, the extensive system of agricul- tural education prevailing makes it possible for instruction to be given to a large proportion of the younger farmers. Another advantage in extending the system of farm-accounting work described is that Denmark is a small country, with a compara- tively large number of small and medium farms owned by the operators. In addition, a comparatively uniform system of agricul- ture is the rule. The farm-account iug association with its steady and sure growth augurs well to rival the cow-testing association in its scope and in its application to the business of farming in Denmark. 28 UNIVERSITY OF CALIFORNIA EXPERIMENT STATION APPENDIX A Table of Contents of "The Investigations of Business Conditions of Agriculture. VIII Farm-Accounting Results of Danish Agriculture for the Year 1923-24.' ' 14 Preface. 1. General conditions in 1923-24. (a) Weather and harvest. (6) Market and price conditions. (c) Common characteristics of year 1923-24. 2. Extent of investigation and composition of material. (a) Total number of accounts and grouping. (b) Use of area involved. (c) Amount of production. 3. Amount and composition of capital of farmers. 4. Gross returns. (a) Amount and composition. (b) Use of gross returns. 5. Business costs. 6. The results of the agricultural enterprise. (a) Net returns. (b) Interest on investment. (c) Income of debt-free farms and the services of the family. (d) Social returns of the family. 7. The influence of size of farm on the result. (ai) Farms under 10 hectares (small holders). (b) Farms between 10 and 50 hectares (medium farms). (c) Farms over 50 hectares (large and medium-large farms). 8. The economics of the individual branches of the enterprises. (a) Livestock. (1) Horses. (2) Cattle. (3) Swine. (4) Poultry. (b) Field crops. (1) Total field crops. (2) Crops grown for sale. (3) Home grown feeds. 9. Expenses of the household. 10. Additions. (a) Money transactions. (b) Wealth. 11. Main tables. (a) Use of area and harvest yields. (b) Capital. (c) Gross returns. (d) Expenses and results. 14 Larsen, O. H. Unders0gelser over Landbrugets Driftsforhold 8; Kegnskabs- resultater fra danske Landbrug i Aaret 1923-24, 1-203. 1925. BULL. 403] FARM-ACCOUNTING ASSOCIATIONS 29 APPENDIX B RESULTS OF INDIVIDUAL FARM ACCOUNTS The following table gives the individual results for eight different medium-sized farms in the same locality for 1923-24. It will be noted that the first six farms have given good returns while the returns from the last two are poor. The results of the farm cost-accounting are illustrations of the applications which are made by the individual farmer in connection with the analyses obtained. The following brief analyses of the above records are given in order to point out the manner in which the individual farmers can use the results obtained. It should also be remembered that these results are discussed at meetings of the local farm-accounting associations after the year of work is finished. Among the six farms is one (No. 1) a farm almost without cattle; and swine are used only for the domestic needs of the farm. The nearness of this farm to Copenhagen allows an almost direct sale of plant products. This is especially true of potatoes (about 400 crowns per hectare are received), while the remainder of the gross returns from agronomical operations are divided about evenly between grain, seed and straw. The costs on this farm are low, because little feed of a concentrated nature is purchased; on the other hand the pur- chase of manure is relatively large, although not so large as one might expect. No. 2 has a still larger area devoted to potatoes, since the sale of potatoes contributes not less than 540 crowns per hectare to the entire enterprise. On the other hand, there is but little sale of grain or seed. The sale of animal husbandry products is relatively large in spite of the relatively small herd of cattle. The cows have milked particularly well and there is also a large number of swine, which have paid fairly well. Taken as a whole, this is a farm managed in a very superior way, having in comparison to the large gross returns, such small expenses. Nos. 3 and 4 are both mainly producing sugar beets. No. 3 has, in addition, a large area devoted to the growing of seeds, and in this case it is an especially well paying venture in the growing of cocksfoot grass {Dactylis glomerata) which has brought the net returns to a high point, while the growing of seeds plays a small role on farm No. 4. The latter farm has on the other hand had remarkable results from the growing of sugar beets, the area devoted to them on this farm being one-fourth of the total. The grain yield and the milk yield are 30 UNIVERSITY OF CALIFORNIA EXPERIMENT STATION not greatly different on the two farms, but No. 3 has, on account of its large area in seed crops, a far less area in grain than No. 4. Neither of the two farms has large numbers of either cattle or swine, but there is a good milk yield on both farms. Costs, however, show an essential difference, since the expenses for feed are less in No. 4 ; and the labor TABLE 11 Eesults for Some Medium-sized Farms Farm l 2 3 4 5 6 7 8 Per cent returns on capital. 15.1 22.5 14.6 14.5 16.0 15.1 1.9 2.6 Agricultural capital per hectare, crowns 3075 2137 2589 3148 3272 3003 3062 2079 Land value per hectare, crowns 1482 961 1239 1449 1490 1015 1235 1136 Grain harvest per hectare, kilograms 3491 2851 3570 3267 3439 2753 3203 2307 Milk yield, kilograms per cow 4125 35.3 3583 28.6 3587 47.8 3969 46.2 2888 46.3 3041 42.7 3031 Per cent of area in grain 40.7 53.0 Roots (for feeding) and potatoes 29.4 41.1 6.3 5.0 23.1 17.9 15.1 16.7 Grass and green feed 21.8 19.7 24.9 19.6 30.7 25.1 27.9 30.3 Roots for market (sugar beets, etc.) 18.3 21.9 23.7 3.9 Seed crops 8.1 3.9 10.7 14.3 Fallow Size of animal husbandry unit per 100 hectares Number of work horses... 17 14 20 14 14 19 15 12 Number of milk cows 10 43 37 47 91 80 52 36 Number of young stock... 7 18 36 41 63 26 42 37 Number of swine 5 136 116 128 119 335 382 79 Gross returns, crowns per hectare 1154 1403 1347 1081 1614 1437 1513 600 From plant culture (agronomy) 1006 569 673 478 94 134 220 75 From animal husbandry 88 804 655 579 1439 1270 1264 507 From cattle 48 16 690 422 309 922 380 256 969 272 273 625 973 358 1089 585 640 983 418 806 1456 325 From swine 135 Costs, crowns per hectare.. 545 Labor 330 390 386 307 525 303 307 202 Feed 22 65 106 305 68 90 331 59 54 110 49 41 346 36 56 460 33 98 851 57 85 119 Manure 49 Buildings, inventory 47 Other costs 167 69 139 118 126 89 156 128 Net returns, crowns per hectare .. 464 481 378 456 525 454 57 55 BULL. 403] FARM-ACCOUNTING ASSOCIATIONS 31 costs are small in comparison with the large sugar beet area, which accounts for the net returns being about 80 crowns higher than in No. 3. Nos. 5 and 6 are farms with large animal husbandry holdings; the first has a large and exceptionally high producing herd of dairy cattle while the number of swine is quite large on No. 6. Not only does the latter farm possess a large number of swine, but the profit per pig delivered is high — 22 crowns apiece. In addition, this farm has a good income from the growing of grass seed. The low labor costs for No. 6 also contribute to the good results, while No. 5 has an uncom- monly large labor cost, far greater than on any of the other farms listed. The total cost is kept down, however, by the large area (23 per cent) in alfalfa, which lowers the cost of feed. The yields on this farm are high. Profits are not always synonymous with large gross returns. No. 7 has almost as large gross returns as No. 5 and the culture must be characterized as being as intensive ; but in this case there is a much larger purchase of feedstuffs than on any of the other farms — 851 crowns per hectare. The explanation for this lies in the large swine herd, which, in spite of the gross returns of 806 crowns per hectare, shows almost as large a deficit per pig, as there is profit on farm No. 6, namely, 23 crowns; and this is the main reason for the poor results of the farm considered in its entirety. The large herd of cattle is also partially responsible, since the average amount of concentrate given to each cow is far too large in proportion to the mediocre milk production, while on the other hand the roughage used is too small. If, however, the farming is perceived to be too intensive in No. 7, especially as it concerns the animal husbandry, the opposite seems to be the case on No. 8, where the herds are small, and where the animals have been fed too little. This is expressed in the far too small gross returns from the dairy herd. The small herd fed insufficiently furnishes only small amounts of manure and this reflects on the yield of grain, since in spite of the good soil it is only 23 hectokilograms per hectare; and this is so much more unfortunate as the grain area is comparatively large — 53 per cent of the total. 32 UNIVERSITY OF CALIFORNIA EXPERIMENT STATION APPENDIX C RESULTS OF DANISH FARM ACCOUNTS IN THE FINANCIAL YEAR 1924-25 15 Number and composition of accounts. — To demonstrate more clearly the value of the Danish farm accounting a limited number of illustrations will be used in the following discussion. The material analyzed comprises a provisional survey of two hundred accounts, grouped according to size as shown in table 12. It will be seen from this table that the grouping is not exactly the same for 1924—25 as for the preliminary report for 1923-24. This is because some farms have been omitted for various reasons ; also the accounts are not sent in to the Bureau of Farm Management and Agricultural Economics in the same consecutive order each year. TABLE 12 Grouping of the Accounts According to Areais 1924-25 1923-24 Size of farms (hectares) Number of accounts Average area, ha.* Number of accounts Average area, ha.* Less than 10 30 34 43 40 28 25 5.6 15.1 24.5 37.8 66.7 219.2 20 32 49 49 28 22 5.8 10-20 20-30 16.3 24.4 30-50 38.6 ' 50-100 66.4 100 or more 221.3 Total 200 53.0 200 52.3 * 1 Ha. = l hectare = 2.471 acres. In the following tables, therefore, the results of the 200 accounts from 1924-25 are not compared with the provisional report from 1923-24 (as in table 12) but with the total number of accounts of that year, because this gives a better ground for comparison. The bureau 's researches on conditions in 1923-24 comprised results from 586 farms with a total area of 27,073 hectares (66,897 acres). Within the 15 Prom unpublished material obtained through the kindness of Prof. O. H. Larseri, Director of the Bureau of Farm Management and Agricultural Eco- nomics and Professor of Agricultural Economics in the Boyal Agricultural College of Denmark. 16 The reports of 670 farms for 1924-25 are being analyzed by the Bureau. The analyses of 200 of these are being used in this discussion. Bull. 403] FARM-ACCOUNTING ASSOCIATIONS 33 different size groups for the two years there are, of course, small deviations with regard to the area of farms. It should also be men- tioned, that among the small holdings there is a larger percentage of accounts from the islands in 1924-25 (66 per cent) than in 1923-24 (50 per cent). See map, page 14. Agricultural Capital. — Table 2 gives a survey of the amount and distribution of agricultural capital. The differences between 1924-25 and 1923-24 are not very great, but with regard both to the permanent capital (land and buildings) and to the working capital the figures are, nevertheless, somewhat higher in 1924-25, on the average about 7 per cent. This is largely due to the fact that the 200 farms are on the average better than the total number of farms in 1923-24. The increase in the working capital is partly due to the increased livestock, partly to the increase of supplies and equipment and partly to the higher prices paid for grain, feeding stuffs and fertilizer. TABLE 13 Agricultural Capital in Crowns (Kroner) per Hectare^ Land and buildings Working capital Agricultural capital Size of farm (hectares) Livestock Supplies Other inventory Total 1924-25 1923-24 Less than 10 . 2711 2047 2110 1863 1855 1785 642 484 473 418 382 297 84 47 60 51 60 71 298 222 208 165 138 122 1024 753 741 634 580 490 3735 2800 2851 2497 2435 2275 3205 10-20 20-30 2694 2577 30-50 50-100 100 or more 2499 2302 2158 200 farms, 1924-25. 2064 1924 454 443 61 41 195 186 710 870 2774 All farms, 1923-24. 2594 Grass returns. — Compared with 1923-24 the gross returns for 1924-25 have increased considerably, partly owing to a greater yield, but chiefly to a rise of prices, especially for grain (30 per cent), potatoes (40 per cent), butter (15-16 per cent), bacon (11 per cent). The prices for cattle, beef and eggs are about the same as for the preceding year. For sugar beets and some seeds the prices are considerably lower than for the previous year, but for other seed crops there is an even greater decline. The price index for all agricultural products increased about 11 per cent. 17 1 crown (par) = 26.8 cents. January 2, 1926, 1 crown — 24.8 cents. 1 hectare = 2.471 acres. 34 UNIVERSITY OF CALIFORNIA EXPERIMENT STATION The influence of the circumstances mentioned above on the gross returns may be seen in table 14. With regard to the crop production the increase is chiefly due to the higher price for cereal crops, since the yield was a little smaller than in 1923. Potatoes gave a smaller yield while the yield of sugar beets was about the same as the previous year. TABLE 14 Gross Returns in Kroner per Hectare Products from Total Size of farms (hectares) Crops Cattle Swine Other animals Sundries 1924-1925 1923-1924 Less than 10 96 81 144 122 199 287 844 617 631 519 438 409 678 418 463 345 297 94 224 73 61 44 28 10 75 59 33 30 27 19 1917 1248 1335 1060 989 819 1549 10-20 20-30 1114 1017 30-50 50-100 100 or more 899 817 697 200 farms, 1924-25 148 111 584 506 394 304 73 66 41 36 1240 All farms, 1923-24 1023 In animal production there has been an increase in all branches, especially for swine and cattle. The increased returns for swine have amounted to 30 per cent, due to a larger production and to higher prices, whereas the increased returns for cattle are due chiefly to the increase of price on dairy products ; beef prices are about the same as for the former year. The gross returns, as a whole, have been increased by 217 crowns per hectare or about 21 per cent, and the increase is greatest for farms below 10 and between 20 and 30 hectares, amounting here to 25 to 30 per cent. The increase is probably partly a consequence of the fact that this group comprises more holdings on the good soil of the islands than the previous year. 18 Costs of the farm business. — The increase of the working costs is not quite proportionate to that of the gross returns. The average increase for all farms amounts to 161 crowns or 20 per cent. All the costs show an increase, but this is decidedly greatest for concentrates, amounting here to not less than 35 per cent ; next come ' ' other costs ' ' (taxes, insurance, repairs, improvements, etc.), with about 24 per cent, whereas the increase for the remaining costs ( feedstuff s other than is Denmark is as a rule divided into two parts: (1) the peninsula of Jutland and (2) the islands east of Jutland in the Baltic. Bull. 403] FARM-ACCOUNTING ASSOCIATIONS 35 concentrates, twine, seed, etc.) amounts to 5-15 per cent only. The increase of labor costs is about 12 per cent according to the new regula- tion of wages in the fall of 1924. Great uniformity exists in agricul- tural wages in Denmark. Agreements are entered into every year by organizations of laborers and farmers with reference to rates of payment. TABLE 15 Working Expenses in Crowns per Hectare, 1924-25 Size of farm Labor Con- centrates Artificial manure Other purchases Other costs Totals (hectares) 1924-1925 1923-1924 Less than 10 559 356 357 286 265 241 587 312 347 259 211 151 40 43 48 40 45 44 149 106 106 78 80 53 226 174 188 156 144 134 1561 991 1046 819 745 623 1266 10-20 20-30 883 801 30-50 708 50-100 100 or more 647 541 200 farms, 1924-25 346 309 316 234 44 38 96 93 172 139 974 All farms, 1923-24.. 813 The heavy increase in the consumption of concentrates is a natural consequence of the extended production of bacon, and increased milk production has also demanded a larger amount of concentrates in 1924-25. Results. — Table 16 gives a complete summary of the financial result. It appears that the net returns have increased from 210 to 266 crowns per hectare or about 27 per cent. The increase is rather variable within the different size groups of farms, but when the accounts of all 670 farms 19 are at hand the proportion between the various groups will probably be altered somewhat. On the average the net returns on the agricultural capital are 9.6 per cent against 8.1 per cent in 1923-24. If this percentage is cal- culated on the basis of the full sale value of the total capital the rise will not be quite so heavy, because the difference between the sale value and the booked value is greater in 1924-25 than in 1923-24. For the two years the net returns, based on the sale value, were 6.8 per cent and 6.1 per cent, respectively. The last two columns of the table show the actual labor earnings of the family when reckoning the normal interest on the total agri- cultural capital as 5 and 6 per cent, respectively, which cannot be 1!) The reports of 670 farms for 1924-25 arc being analyzed by the Bureau. The analyses of 200 of these are being used in this discussion. 36 UNIVERSITY OF CALIFORNIA EXPERIMENT STATION considered too high for the financial year 1924-25. Possibly it might have been more correct to have used a rate of 7 per cent because the official discount was about this figure for 1924-25. If we use 6 per cent, the average labor earnings of the family for all accounts were 262 crowns per hectare in 1924-25, against 204 crowns in 1923-24. TABLE 16 Complete Summary of the Financial Eesults Crowns per Hectare Agri- cultural capital Gross returns Work- ing costs Net returns, 1924-25 Net returns, 1923-24 Labor earnings of the family, 1924-25, when deducting Size of farm (hectares) Crowns per hectare In % of agri- cultural capital Crowns per hectare In % of agri- cultural capital 5 per cent interest 6 per cent interest Less than 10 3735 2800 2851 2497 2435 2275 1917 1248 1335 1060 989 819 1561 991 1046 819 745 623 356 257 289 241 244 196 9.5 9.2 10.1 9.7 10.0 8.6 283 231 216 191 170 156 8.8 8.6 8.4 7.6 7.4 7.2 624 296 282 210 196 119 587 10-20 20-30 30-50 268 254 185 50-100 100 or more 172 96 200 farms, 1924-25... 2774 2594 1240 1023 974 813 266 9.6 289 230 262 All farms, 1923-24... 210 8.1 204 TABLE 17 Labor Earnings of the Family Size of farms Crowns per hectare Actual earnings expressed in per cent of calculated earnings (hectares) 1924-25 1923-24 1924-25 1923-24 Less than 10 587 268 254 185 172 96 497 241 175 138 100 59 129.0 149.7 186.8 196.8 232.4 259.5 122.4 10-20 20-30 140.1 141.1 30-50 50-100 100 or over 142.3 147.1 184.4 Average 2,262 204 161.7 136.0 For the various size groups the labor earnings of the family expressed both in crowns per hectare and as a percentage of the calcu- lated return for family labor plus salary for management are com- pared, as may be seen in table 17. BULL. 403] FARM-ACCOUNTING ASSOCIATIONS 37 From this table (columns 4 and 5) it will be seen that the actual labor earnings have been considerably greater than the calculated normal remuneration. In the calculated normal remuneration is included labor at the going wage and in addition a certain sum for management. In 1924-25 on the average for all accounts the actual remuneration has been 61.7 per cent greater than the calculated remuneration. In 1923-24 this was 36.0 per cent. If reckoning with 6 per cent interest on the actual sale value (instead of the value on the farm books) the corresponding figures will be only 18.5 per cent and 1.3 per cent, respectively, and if using 7 per cent the figures will in spite of the favorable result of the year, be lower than the calculated normal remuneration. BIBLIOGRAPHY Borgedal, Paul 1922. Unders0kelser over jordbrukets driftsforhold. 13. Regnskapsresul- tater fra norske gaardsbruk; Regnskapsaret 1920-1921; 1-127, Gr0ndahl & S0n, Kristiania, Norway. 1923. Ibid. 14 ... . 1921-1922: 1-179, E. Sem, Fredrikshald, Norway. 1924. Ibid. 15 ... . 1922-1923: 1-112, E. Sem, Frekrikshald, Norway. 1925. Ibid. 16 ... . 1923-1924: 1-119, Gr0ndahl & S0n. Oslo, Norway. 1925. Bidrag til belysning av arbeidsforbruket i det norske jordbruk (Beitrag zur Kenntnis der Arbeitsverwendung in der Landwirt- schaft Norwegens), 1-92. Gr0ndahl & S0n. Oslo, Norway. Det kongelige danske Landhusholdningsselskab 1913. Udvalgsbetaenkning angaaende Eegnskabsf0ringen indenfor Land- bruget. Tidsskrift f. Land0konomi: 153-185. Aug. Bang, Copen- hagen, Denmark. DOKKEN, IVAR 1925. Landbrugs Regnskab. 1-147. Det Sch0nbergske Forlag. Copenhagen. Ellila, K. J. 1925. Undersokning av lanthushallningens rantabilitet i Finland 9, 10. Rakenskapsaren 1920-21 och 1921-22; Lantbruksstyrelsens Med- delanden 161 Allmanna Lantbruksavdelningens Publikation 20: Statsradets Tryckeri. Helsingfors, Finland. Five, Haakon 1913. Unders0kelser over jordbrukets driftsforhold. 2. Nogen Regnskaps- resultater fra norske gaardsbruk; Regnskapsaaret 1911-1912: 1-96. Gr0ndahl og S0n, Kristiania. 1914. Ibid. 3 . . . . 1912-1913: 1-106. Gr0ndahal & S0n, Kristiania. 1915. Ibid. 5 . . . . 1913-1914: 1-120'. Gr0ndahal & S0n, Kristiania. 1917. Ibid. 7 . . . . 1914-1915: 1-137. Gr0ndahal & S0n, Kristiania. 1918. Ibid. 8 . . . . 1915-1916: 1-143. Gr0ndahal & S0n, Kristiania. 1920. Ibid. 1 Veiledning i landbruksregnskap: 1-141. E. Sem, Fredriks- hald. 1924. Ibid. 4 Ovelsesopgaver i regnskapsf0rsel: 1-15. E. Sem, Fredriks- hald. 38 UNIVERSITY OF CALIFORNIA EXPERIMENT STATION Hertel, H. 1924. Kort Oversigt over det danske Landbrug: 18-20, 25-48. Blanco Lunos Bogtrykkeri, Copenhagen. Knudsen, H. M. 1926. Land0konomisk Aarbog for 1926: 1-101, 108. Gyldendlaske Bog- handel, Nordisk Forlag, Copenhagen. Krosby, Nils 1919. Unders0kelser over jordbrukets driftsforhold. 9. Regnskapsresul- tater fra norske gaardsbruk; Regnskapsaaret 1916-1917: 1-126. E. Sem, Fredrikshald, Norway. 1920. Ibid. 10 ... . 1917-1918: 1-125. Gr0ndahal & S0n, Kristiania. 1921. Ibid. 11 ... . 1918-1919: 1-139. Gr0ndahal & S0n, Kristiania. 1922. Ibid. 12 .... 1919-1920: 1-135. Gr0ndahal & S0n, Kristiania. Lantbruksstyrelsen (Finland) 1924. Undersokning av lanthushallningens rantabilitet i Finland. For- handsuppgifter for rakenskapsaret 1922-23, Statsradets Tryckeri. Helsingfors, Finland. Larsen, O. H. 1919. Unders0gelser over Landbrugets Driftsforhold. 2. Regnskabsresul- tater fra danske Landbrug i Aaret 1917-1918: 1-122. Aug. Bang. Copenhagen, Denmark. 1920. Ibid. 3 . . . . 1918-1919: 1-136. Aug. Bang. Copenhagen. 1921. Ibid. 4 . . . . 1919-1920: 1-172. Aug. Bang. Copenhagen. 1922. Ibid. 5 . . . . 1920-1921: 1-187. Aug. Bang. Copenhagen. 1923. Ibid. 6 . . . . 1921-1922: 1-190. Aug. Bang. Copenhagen. 1924. Ibid. 7 . . . . 1922-1923: 1-207. Aug. Bang. Copenhagen. 1924. Unders0gelser over Landbrugets Driftsforhold; Periodiske Beret- ninger 1; Begnskabsresultater for 12 fynske B0nderbrug f0r, under og efter Verdenskrigen. Aug. Bang. Copenhagen. 1924. Landbrugets Bogf0ring. M. Jespersen. 1-115. Copenhagen. 1925. Unders0gelser over Landbrugets Driftsforhold 8. Regnskabsresul- tater fra danske Landbrug i Aaret 1923-1924: 1-203. Aug. Bang. Copenhagen. Laur, Ernst 1920. Wirtschaftslelire des Landbaus, 203-280. Paul Parey. Berlin. 1921. Grundlagen und Methoden der Bewertung, Buchaltung und Kal- kulation in der Landwirtschaft. 2 Aufl., 1-600. Paul Parey. Berlin. 1923. Untersuchungen betreffend die Rentabilitat der schweizerischen Landwirtschaft im Erntejahre 1921-1922. 1. Separatabdruck aus dem Landwirtschaftlichen Jahrbuck der Schweiz 1923. 1-86. Verbandsdruckerei A — G. Bern, Switzerland. 1923. Ibid. 2 . . . . 1-115. Verbandsdruckerei A— G. Bern. 1924. Ibid. Erntejahre 1922-1923. 1 . . . . 1-96. Verbandsdruckerei A— G. Bern. 1924. Ibid. 2 . . . . 1-111. Verbandsdruckerei A — G. Bern. 1925. Ibid. Erntejahre 1923-1924. 1 . . . . 77-158. Verbandsdruckerei A— G. Bern.