FARM-MANAGEMENT Research Needed in Crop-Adjustment and Land-Use Planning

All change and readjustment in agriculture involves, directly or indirectly, judgment and action by the individual farmer. The most important test of the desirability of any proposed adjustment is whether or not it adds to the farmer’s net financial income or otherwise raises his standard of living. Weighing the advantages against the disadvantages of changes, arriving at decisions, and then carrying out the decisions, constitute the management function in the farmer’s job. An understanding of this management function is vital to the successful shaping and administration of adjustment programs.

In the earlier years of farm-management research its chief objective was to find the profitable forms of organization for farms and the most effective methods of farm operation, with a view to using the results in educational effort to make poor farmers good and good farmers better; in other words, to make farmers more efficient in the restricted sense of that term. Now with the development of governmental policies and programs for agriculture another objective of prime importance is in evidence. It is to obtain and make available to responsible public agencies the essential understanding of the farm-management function, and of the conditions under which the farmer operates. Farm-management research, to be effective in reaching this objective, must give those who conduct it an accurate and detailed understanding of what the farming actually is in the area being studied, and through such understanding give them a vision of what the farming can be with the best adjustments that are possible and practicable. It must also give an understanding of the forces and conditions that have made the farming what it is and that create its better possibilities—as yet unrealized. Only through such understanding can the effects of proposed measures for improvement and the effects of evolving economic conditions and forces be correctly judged. The considerations leading to managerial decisions are as important to a true understanding of agriculture as the results of the decisions themselves.

At this requires that farm-management research avoid the danger of being too formal and stereotyped. It cannot be carried out successfully merely through the gathering and analysis of statistics. Important as figures and their careful analysis are, the farm-management research worker must think and live himself into the farmer’s own situation and problems through adequate first-hand contact and observation, or his results will be sterile.

Farm-management research as thus conceived bears a vital and direct relation to public agricultural programs. This program is creating new considerations which the farmer must take into account in his own planning. They vitally affect the farmer’s mode of utilizing his private resources. It is important that the Government’s plans involving these changes be tested and approved by the criteria of sound farm economy.

Farm-Management Phases of Crop and Livestock Adjustment

The first great phase to be developed in the new public program for agriculture was crop and livestock adjustment. The leaders responsible for the development of this phase of the program realized from the beginning the importance of gearing it closely to the nature of the farm and the managerial problems of the farmer. However, haste was imperative and only limited recognition could be given to these considerations. With the first year of experience as a background, planning for future programs is being done with consideration of the effect of the details of such a program on the internal organization and operation of the farms affected.

   The farmer’s net return from operation is, of course, a function of three variables, volume, prices, and costs. The approach of the present adjustment program is primarily from the price side.  It is deemed imperative to secure for the farmer more adequate prices in order that the income side of his balance sheet may be restored to a more favorable condition. However, in the long run the cost side of the farmer’s equation cannot be ignored. In abroad way costs are tied up not only with the prices the farmer must pay for the things he produces with but also with the efficiency with which these things are used on the farm.

Costs Fixed and Variable

   It is important to consider the nature of the various cost elements entering into the farmer’s production. They may be broadly classed into two groups, those which are fixed and those which are variable.  In this sense the fixed costs are those which, within a given year, or longer, do not vary with the volume of the farm commodities produced.  The variable costs, on the other hand, are those which tend to rise and pretty much in proportion to the volume of product. One of the most important considerations from this point of view in planning an adjustment program is the effect which the program itself will have upon these two classes of costs. Without sacrificing the main objective of the program, namely, the adjustment of supply in its effect upon prices, it is extremely desirable so to shape the details of the program that it will be easy for the farmer to participate in terms of his internal organization and operation particularly with reference to costs.

By way of illustration, let us take the case of a Great Plains wheat farmer. His fixed costs consist of interest on his investment in land, interest and depreciation on improvements on his land and on his working equipment, and his own labor and that of his family. His variable costs are made up largely of expenditures for fuel and oil, for repairs for his equipment, and for such hired labor as he must engage. It has been determined from recent studies that, with the equipment now in common use in that area, the best use of the farmer’s resources can be realized on such farms by the proper adjustment of tillage and harvesting machinery to the power unit, let us say, a 15-30 tractor, together with the adjustment of acreage that will realize a maximum use of this outfit of equipment in carrying out the most effective production operations. g farm consisting of from 800 to 960 acres of which about 600 acres are in wheat seems to represent a best adjustment of this unit of equipment to land and to the farmer’s labor.  The major part of the cost in the operating of such a unit falls in the fixed-cost class. From the point of view merely of efficiency, a reduction of 10 to 20 percent in the wheat acreage means a lower utilization of this labor and equipment, and hence a decline in efficiency of use.  Granting that the benefit to the income side of the farmer’s business amply justifies this sacrifice in use, the problem remains of so adjusting the program, at least in its long-time aspects, as to make the sacrifice in utilization of his labor and other resources, and its effects on costs, a minimum disadvantage on the production side.

But No Costs Absolutely Fixed

In the long run no production costs are absolutely fixed. As machinery and power units become worn out and have to be replaced, and as the farmer has time, with the aid of Government agencies, to replan and reorganize his farm, these disadvantages can be reduced to a minimum. It is important to recognize these considerations at the outset and to provide in the planning definite means of their adjustment. In such planning the results of effective farm-management research have great utility.

The effect of proposed adjustments in one region may have important effects on the farming in other regions. There is much division of labor regionally in the complete production of some farm products as they finally reach the market. For example, the Corn Belt farmer buys feeder cattle and sheep from the rancher of the West, and raises feed for the dairy farmer of the Northeast. Due account must be taken of how proposed adjustments affect the individual farmer’s managerial problems, not only in the region where the specific adjustment is proposed, but in the other regions affected.

Another matter which is receiving increasing attention in plans for the future is that of giving the farmer a more flexible contract under which he can work out his adjustment with due consideration to his own peculiar farm conditions. A sliding scale in the percentage reduction has been suggested as one means of making these programs more flexible and more applicable to the varying conditions on farms. The combining of crops into groups representing a single acreage base, together with the requirement of a reduction within certain maximum and minimum percentages from this base, might be one way of realizing this desirable flexibility.

Another consideration of first importance, and one which is receiving increasing attention in the evolving plans, is that of soil conservation, Too often the farmer’s own program has involved a sacrifice of basic productivity in the light of immediate needs. The Government agencies are recognizing an opportunity in the adjustment program for governmental help to the farmer in correcting this evil. In this connection the nature of public effort needs to be determined through an adequate understanding of the farm organization and operation in the areas involved.

Farm Management in Land-Use Planning

Land-use planning is another major element in the general readjustment program for agriculture that involves many vital farm-management considerations. From the farm-management viewpoint it appears that there are two fundamental objectives in this program as it is being evolved. The first is a better conservation of natural resources basic to the agricultural industry, and the second is the more economic use of such resources currently, in order to provide better support for an adequate standard of living for those engaged in farming. These objectives have far-reaching importance both from the point of view of the public and of individual farmers.

In this phase of the Government’s program for agriculture, the public is assuming responsibility for the correction of much evil that has crept into the utilization of agricultural land through the working out of the previously prevailing land policy of the country which was based almost entirely upon private initiative in the selection, development, and use of farm lands. The program involves a major classification of land with reference to suitability for various types of uses; but, more important, it involves action facilitating the shifting of lands from undesirable uses into more suitable uses.

In both of these phases of the land-use program important farm-management considerations enter. Classification itself must be based on certain criteria or tests. Part of these tests relates to the public welfare arising out of its vital interest in the most economical use of the land itself; but part also relates to the providing, on a most economical and adequate basis, for the publicly financed means, such as roads, schools, and other facilities, for public service. Other tests, equally important, center in the farm economy itself. No use of land is desirable either from the social or individual point of view that does not provide for its users an adequate basis for the support of a good standard of living. This implies the necessity of farm-management tests.  No land now in use in farming can be classified as too badly fitted to its present use without adequate consideration of whether or not, under the best systems of farming possible, it can support a successful farming program. Nor can other lands proposed for development for farming purposes be so designated without these same farm-management tests as to whether successful and adequate programs of farming can be derived to fit this fiype of land. It follows that in the program of land classification an adequate understanding of the considerations Involved in the organization and operation of farms be made an important basis of the classification.

Relocation of Farm Families

The plans for action in this broad program involve very definitely the shifting of farmers from lands which may prove on examination too poor for their present use and the establishment of these farm families upon other lands which after due consideration may prove to be adequate for successful farming. This is the most vital phase of the program. Financial and personal considerations vital to the farm families being dealt with are involved. The agencies must be as sure as it is humanly possible to be that the new establishments will afford the opportunity which is intended. This should be tested by realistic considerations of what type or types of farming can be set up and operated in the new location, and what approximately, they may be expected to yield over a period in the way of money and living under a given projected economic situation.

For example, it has been proposed that in many parts of the country the conservation objectives in the way of preventing erosion and the building up and maintenance of soil fertility cannot be reached under the present system of farming, and that a considerable degree of consolidation looking toward larger farm units is necessary because the systems of farming which do promise better results in the direction of conservation, involving less grain growing and more hay and pasture, require larger areas for the support of a farm family. Closer examination in many areas reveals the probability that consolidation may not be feasible, that the remedies for the present difficulties must be sought in the direction of reorganization of cropping and livestock systems pretty much within the limits of the present size of farms. This all involves a most careful examination of the specific conditions within each given area from the point of view of the internal organization and management of farms.

C. L. HOLMES, Bureau of Agricultural Economics.