1| } l __’_ ! _4 fl _ _’_ _._, — , — v___ _ _._ _— — __- _._—_.— ”#— _._—.— — __._‘__ _._- _- — P_'__ ,____I_ __—,—. — __4__ #— l‘ l t W 5% W GUIDES TO FINANCENG THE FARM BUSINESS Thesis for the Degree of M. S. MICHKGAN STATE COLLEGE Cari Henry Moore f§46 TH This is to certifg that the thesis entitled Guides To Financing a Farm Business presented b1] Car]. Henry Moore has been accepted towards fulfillment of the requirements for _,M»_S. ___degree in_Fa.tm Management 257 §./W Major professor I)ate_Mgnn.t. 23,.1933 M-795 GUIDES T0 WEIR} TEE FARM BUSIMS w Carl Henry Eggs .A IRESIS Suhnitted to the Gramate School of Michigan State College of Agriculture and. Applied Science in partial fulfilment of the requirements for the degree of MASDER 0F SJIE'CE Demrtment of Fem Management 1946 1‘34 “‘73: ‘ ‘3' VITA Carl Henry Moore PERSONAL Age: :9 years Religon: Protestant Birthplace: Branch county. Michigan Height: 6 ft. 2 in. Nationality: American Weight: 165 Marital status: married Health: Encellent MICATIQI high school; graduated 1934 Michigan State College: Bachelor of Science degree in agriculture. Major: Animl Husbandry. 001.1331: ACTIVITIES President of Agricultural Council. Master of Student Grange. member of Block and Bridle and Campus 4-H clubs. AFFILIATION Farnhouse fraternity and Alpha Zeta honorary fraternity. PRACTICAL TRAINEE AND WE Born and raised on a general livestock farm in Branch county. Michign. Member of 4-H club for nine years with projects in sheep, swine. dairy. and handicraft. Assistant county agricultural agent in Midland cmmty. Michign. for seven months; August 1939 to March 1940. Assistant county agricultural agent in Geneseecounty. Michian. for sevenmnths incharge of the IandUse Flaming Study for the county: March 1940 to October 1940. District 4—H club agent in southwestern Michigan for nine months: October 1940 to July 1941. . Four and one-half years with U. S.Arnw Arum eighteen months in European Theater of Operations as Aerial Naflgtor with a medium bombardment group. Bank: Captain. Agricultural Supervisor for radio station WEAR. Michigan State College, East Lansing. Michigan. for eight months; Jammy 1946 to September 1946. ACWOWMTS The wthor is indebted to the Farm mnaganent Department of Mich- igan State Colleg for permission to use the farm records in their files. The advise and counsel given the author by Professors E. 3. Hill. Dr. K. 1'. men. L. H. Brown. andothermbers oftheFarmManagenmt Department of Michigan State College have been invaluable in the prepara— tion of this report. The information on beef cattle was prepared with the assistance of Dr. George A. Branaman of the Animal Husbandry Department. Mchign State College. Mr. A. C. Beltzer. Extension Specialist in dairy. assisted the author in the preparation of material on the dairy enterprise. Acknowledgement is also given to Mr. Ray Brmtage. Secretary of the Michigan Bankers Association. Mr. Fred Post. casMer. State Settings Bank. Ionia. Michigan. and Mr. K. L. Scott of the Farm Credit Adudnistra- tion, for help in collecting data. ' WIN Purpose of the study. DECIDING ON m LOAN CW5 Isthefamerhonest?............. Houwill theloan affect the fam business? . . Hownilltheloanberepaidt. . . . .. . . . . Part 1. TESTING THE W CAPACITY OF TEE PARA BUSINESS Theimportanceofgrossincome. . .. . . . . uplanationofthescorecard.. . .. . . . Sumarizingtheestimte......... .. How the score card works for the Jones' fem. Theloanforthecombine........... Computingthecost of owningacombine. . . When should additional livestock be purchased Factorstoconsider............ Part 2. ANALYZING m FARM BUSINESS 0 O O O O O C Q 0 O O O O O O O aZBObe-Sinesso O. O O O O O O. I O O. O O O O O Measuringthefarmbusiness............ size of the farm business Methods of increasing the Scils program . Crops program . Livestock program Expenses. . . Efficiency. . labor . . . Buildings . The farmer. O O O O O O C O O O O O O O O O O O O O O O O O O O O O O O O C O O O O I O O 0.. O O O O O O 0 O O TEPLAGEOFCWITEMFAEMBUSIMSS. SJMMARI.................. APPENDIX................. BIBLIOGRAPHY............... O O O O O O 0 O O O O O O O O O O O O O O O O C O O O O O O O O O C O O O O O O O O O O O 0 d fi$88$88888$8 ha U‘IUIO‘I 885555eq 03 HQ) MEMEEW CarlHenryMoore INTROJIDTION The pm'pose of this study is to present information. based in so far as possible on actual records. that will. be of value to bankers and others in - - - - l. Properly and quickly "sizing-tn)" a farm business 2. Helping farmers build a sound. financial program 3. Making farm loans his study is primarily concerned with production loans although some con- sideration will be avert to the calculation of long time earning capacity of a farm. Because of the wide variations in agriculture from one area to another and the time available for this. study it has been necessary to limit this report to the general farming area of south—central i.fi.c.h.:i.gan."I Much of the information presented will be applicable to other areas. but care should be exercised inusing it outside of this general fanning area where dairying and other intensive farm enterprises predominate. This report offers a procedure to follow that should enable a. banker or any other person. who knows something about farming and is ac— quainted with his community. to estimte the income possibilities of a given farm. that bankers are doing this now. They base their estimates on experiences and. are doing a conlnendable Job. But for those who are * See Figure l for location and description of the type of fanning area on which this study is based. TYPE OF FABJAING AHEAS IN MICHIG N ‘ Natural Line Basis ' ,, 701v J OHIO/moo” . . :31 t] -‘ ' M ——1. .' l— .. ' I 5me”: w: i . lmo” ' 1 7 - cm I 'cmPPflM \‘ ‘ L_ t EchooLCR/fl I \ 000057] l __i_| Cit/~40 _ . Farm" 3 ‘ ‘. ' b [7 s 'crlnraw ' an Area Home J ’3“ 1. Corn and Livestock J- _. ___, 2. Small Grains and Livestock M, m ' ”I” 3. Southwestern Fruit and _T . I 11! True]: Crops 1 _ , h. Poultry, Dairy and True}: I, ' m, ' "W" W“ ' Crops l :12 i 13 I - 5. Dairy and General Farming - i ______._ _-_—1...- i 6. Dairy and Cash CI‘OpS WEXFORD trim jawcmmv‘cc: l 7. Dairy, Hay, and. Special 5 Crops . - , ‘- ‘ ': ”7 ARM ' 8. Beans, Sugar Beets, ,7...” “A” O and Dairy 1 ‘ , J 0. Ca‘tle, Sh ., d g__ _L- " J :orace 88:3 8.1“: 3—7/5?er .176 u I " i I I 10. Central Potato and. l ‘10 ' Dairy _ ' _._l. - WW 11. I'orthern Fruit and Dairy ”5“ Immw" “Am” ‘ g; . 12.1'orthern Potato and Dairy 5 r "1‘“ | ‘ 13. General, Self—Sufficing, _ ‘ - ' W“ and Part—Time 7W“ “we” V 15. cattle Hay, and Spring “ ’ - . . Grains t w 16'. Dairy- and Potatoes ‘ - _._- lli. Cattle, Potatoes, and Self— I‘LL _6 btlfflClng ' £67m fiajlflagnT—j- [VI/V6570 M l 17. Potatoes, Dairy, and w 2ww1wu “Edna?— ”msuri' mm: Part—Time 3 | . . i o 3 1540.3!” '3 RM ILLSDA-LE _._ '- lew ' J i2 J ' 1 ' / - L- _ 7 llgurel-TypeoflamdngdreainLflchigan '“H mmamr‘qmuod “I“... "Fund?" less, experienced and to help others sake their loan with greater confi- dence. this report is desimd to present guides for testing the eaming capacity of the farm business. assesses-texts Walter Jones. a young farmer. hurries out of the wet, April drizzle and. into the unimposing IObby of his local bank. He shakesthe waterfromhis hat andmakns hisway to the cashier's window where he greets the cashier. Mr. Smith. with: "Good morning. Mr. Smith. I would like to talk with you about getting a loan. " ‘ . Mr. Smith knows this young famer as a hard working man who is honest and respected in his commity. He also knows that he is heavily in debt and that any additional loan should be given careful consideration. To "talk it over" they go back to Mr. Smith's office where Jones con- times: "I need a combine this year. Last year I lost near- lyafourthofnyoatsbecanse I couldnot get themcombined at the right time. I also have a chance to buy two good cows from Jack Williams who is selling his herd this spring. I would like to borrow about $900.! 193;; m m m mam Obviously, more ini‘ormation is needed before a decision is made. It is to the banker's advantage to links this loan if it is one that can be repaid. It is to the farmer's advantage if it will nuke his fann business operate more profitably. However. the loanwillbe ofnovalm to eitheroneifJones isunalble to repaythe loan or if he will be forced to liquidate part of his capital to pay his debts. Mr. Jones is Just starting—his fann business. He has been opera- ting the farm he is on now for the past five years and has lived on a “em mat of his life. He has three children who will soon be starting school. ' DECIDIEG ON 1m IDAN that are the questions that the banker should answer in naking his decision on this loan? In years past. bankers and other loaning agencies have been inclined to view such a loan application with one question. ”Is there collateral enough in this man's business to secure the loan?" If there is. make the loan and take a chattel on enough of the farmer's assets to secure the loan. This often meant that young Tanners starting in business had very little Opportunity of borrowing sufficient funds to establish their fans business. Other famers with sufficient assets were given loans that were a detriment to their business and their assets were soon taken as payment for debts. However. in recent years there has developed a trend on the part of bankers and other persons linking loans to farmers to take a more per- sonal interest in their client's business. They have leamed that their success depends moon the success of the men in their commity.* What then should be the procedure for appraising the loan? " In 1932 W. H. mm. then vice-president of the Millildn National Bank of Decater, Illinois. speaking on the University of Illinois' Farm and. Home Week Program said: "The first question any banker should ask a farmer concerning a loan is. 'What is the money going. to be spent for?” More and more people are taking a similar atti- tude towards loans and some banks are now employing specially trained personnel to assist their fanner bormwers in taking their business a success. thus insuring repayment of loans made to fame“. 13, gamma: certainly the first point to be considered is the honesty of the man asking for the loan. The banker met know the man and be satisfied that he is dependable and will keep his word. This report mkes no attempt to tell how this should be done. Most bankers know, or at least should know. the folks in their commity. mmmmmmmanm? Will this 10811ka the farm business more profitable? Will the purchase of the combine in- crease the cash receipts on Mr. Jones' farm more than it does the cash expenditures? Is this machine necessary to the efficient Operation of the farm. as Mr. Jones suggests when he says he cannot get his grain harvested on time When he depends on outside help? Even thongs the cost seems high. it may be necessary to the efficient operation of the farm business. Does Walter Jones have labor. feed. and housing facilities for the additional livestock he wishes to purchase? Will the returns from two additional cows be greater than the expense caused by their addition to the herd? Answers in the affimative met be made to questions like these before the loan can be Justified. The use that will be made of the money and the part it will play in the farm business are important facts in making decision on the loan. In this report an attempt will be made to answer the questions concerning the making of this loan and also to provide guides that will be helpful in arriving at answers to similar questions. 391 Hill the Loan be 39263.51? Will there be sufficient income from Mr. Jones' farm to meet the operating menses. such as: cost of feed. fertilizer. seed. repairs for buildings and equipnent. fuel and grease for the tractor; the cash living expenses of the family. clothing. - food, doctor bills. recreation. and education; with money loft for payment of the additional loan? Crop failures. hailstorms, and drought. of course. cannot be fore told. But the normal income and expenses of any given farm can be estimated. very closely by giving attention to a few important features of the business. Knowing the income and expense, it is a simple matter to see if the money will be available to repay the proposed loan. If 1t is evident that such money will not be available, then the banker cannot approve the loan. If it is a deserving case, but too much of a risk for the banker. the farmer may be able to secure a loan through the Farm Security Adainistration. ”PART 1. TESTING ran "mum CAPACITY or mm was BUSINESS Estimating the amount of money that a farm business will return over a period of years is not an easy task. Prices of farm products fluctuate rapidly over a wide range. The individual productivity of farms vary. even within a community. Farmers vary in their ability to operate a farm. Among 167 farms in southem Michigan. the labor income for one year varies from a. loss of over $2,000 to a profit of more than $11,000. (See figures 4-A. 4-3. and 4-0 for variation in other factors.) The study of thousands of actual records kept by farmers provides a basis for conclusions regarding the factors influencing farm income and. expenses. Gross income is one of the most important items to consider when testing the earning capacity of the farm business. Money must be taken in if the business is to show a profit. Rial gross income is especially important in a farm business because neny of the farm costs are fixed and remain about the same regardless of the amount of cash receipts. The cost of growing a crop of wheat that yields 10 bushels to the acre is about the same as for one that yields 30 bushels to the acre. It is also true that a cow that produces $100 of milk requires about the sam amount of care. and eats almost as much feed, as the one that produces $200 worth of milk. Figure 2 shows the income and feed costs per cow for cows producing var- ious quantities of milk. Obviously, the farm business with the highest gross income. other factors being comparable. will have the highest net income. A score card for estimating farm earning capacity is presented on page 9. This score card. is one of the major contributions of this H IL .. twice.“ 0.1 . occmtt. H . '0 . .. 00.. o .Qi -. .. .«to... va >> 0 o. :1 V 0' . .'D\. o. v. 5-WQi. . v . . «to. .. I .. Lumvtl. .. .... .MHW ..Td . . I... - t *6. - . . .H 4“ .5». “A ...to . ‘I-.. .4«.. I. to t - .... l . . .. .- f” ...A ... ... ..._ ... v . . t a t . vt t.r| . . . ”a I. VH?7OJ . Q .A to.Qth|.lO.o v1 .9 +oltl¢+'?.t. IQIOIOIOO ... v01 . LF v: .. otlv.*.£>Y1. . w...... _t. .tt\v ..--lott . . ...-v. °.v-90A 0... root. LT v _ . o” m..t.+. ...» sloo‘ .tv ,1? . . .. b.....- “It? lottetp .--- 3.1. . . 1 ...; fl .1 it... ...-H-s . . .... . _. -- o a. c . it. . . ..-- _. ”-8. if-.. . . .. : . ..-- .HIO ..o l.. t t . Nb ...... . - IL u.- .N ”at...- . 1:41.... . ...... - . . -- H. g HM . t. _. .Lta .. n. O. . .OA. 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P. g 06’. _ .v t t- . ol.w.. d . 3 L.” 4. flat . . . . .. . . .af. 0 i .. t*. o” f, .f. o. ”l u . o!” . . 36 o r . t . . 2t . . , .. . . . . .- u. . on. . 0 wk -9..t-'. ... .o 53 . p . -. .-11... ”a. -...t..¢....x .I 111.. 2.. .H - . t 23.....8 - ... u t. t. . . . . ...! . . .6...“ ...-. I . i .0 tot. IO- 0 .O!.. . ..l..a a: .. . _ - . .H t» n - i .inqe.n.-I-.....OLW.O...&JTW.J¢11 ... . l ...I. in 0 . ”L-V ..C NC.“ . .. u. H: H U . . 59:0 H ~ . “o . . . .. ... . . t ,5 volt... no . t 80.? 0:0 . ..folt .. . 00b|l . O“ .9 . ... ot.. . l . .Av H. . l“ _.o. _ H o '1 v . .... . o t .. . _ . 5 _. . . . .I . . . _ ..4 .. i .a \ ..M ..H - ..r a H: 83 H t.“ . x“ a ..U” .. u . - 55.-H . a. . e... . .. . ... r .. .__ i . . . : .... _ . 51. ..o . . . .t.. . ov .t 1!... t. .n -- .C . . u. ..v. ,. . H H. .1” a . . _ . _ 1.04 . 1 .tot . .. t to to... .«u v. o . o4! _ . . . .... . a. . . . .t to... . o .. ..ol. 1. . .F. m ~ . l _ ... .a Otto. m ..- M. ..M- IA A00. H» . .. . . o .. . . .h.. .0...: lll'ttl D“ . a n . n . Tn .. . .-.nv. ...q H. .i- ......H. . H. lqufiw. A .HMWH . 9:1... 92-“. . . ...: Ht. ml..- . t . .. o . . ...,o 9.00 .-w-o: .Q .$9c. o. . . to». Value of product (milk or cream) and cost of feed per cow per your. lstaett- (us-eh. ). 'i Frot~D.H.I.A. records study. It enmhasizes gross income". Gross income is synonyrmls with earn- ing capacity. The problem. then. is "How much money can this farm business be expected to return in a given period of time?" Wesfthsfissmfiasn " Imam nor. Animal an m Asia" (This section is divided into three columns.) 1. Average income for the years 1935-44 2. Average income for the years 1941-45 3. Average income for the past calendar year. 1945. The three divisions of this section of the score card are made to provide a more complete picture of the possible income from each enterprise. The income figure for the ten year period. 135-44. gives an indication of the income over a period of ten years including five years. 1935-39. which are considered about "normal". ‘ (If the five previous years. 1930 to 1934. had been included. the income would be about 14 percent less.*) The income figure for 194.]. to 1945 indicates possible income over a five year period. and the 1945 figures indicate the most recent annual income. _ It is. of course. impossible to forecast the price level for farm products for the next twenty. ten. or even five. years. However. it is believed that these three figures in the score card give mouél of the past history of farm prices so that sufficiently accurate estim- ates can be made for loan purposes. Figure 5. which shows the index of prices received by farmers and prices paid by farmers since 1910. Will be of interest in this connection. Here is an example of how these three gross income figures may be used. If the proposed loan is in thenature of a production loan «- * Based on U. S. Department of Agriculture. RAE. index numbers. No. of Gross Insane heador income Source of income Gross income for some for -45| this onthis this 1985-44 1941 1945 full fan: farm. (1) (a) " ('35 ' (45' " 'Ts'S'" 6 ""277 livestock: Per aminel Mrycow ‘ Other...(l) 55 60 53 _._... ...—_._. ...—...... Ieyinghen m 38168. 0 o 75 080 $4036 3-— _— '43—. Other. . . (2) .oo .78 3.06 __._.__ __ : _______ Sow ..... .. $275 $350 $350 $____ __ $____ new ..$12 $14$16$ ______ 53...... Feedersteer(3) $ $ $ $..__. _._... $_...._.._ Beefcow. . (3) $ $ t L... _._... L...— Crops: Paracreofthem'op ’ mt. O O O O 0 $ % $ 35 3 m $h * $~ Beans. field. . $32 $ 42 t 52 $_.____ _._... $___.____ Edam“) $30 $.40 $54 $..._.... _._... '$...._...... 1. Grossfarminconefortheyesr. ..... .. §_______ 2. Operatingexpense(ssmd"%thegrossincome)...... $________ 3. Netfamimome(ldnelmnusline2)............ $________- 4. Incomefromothersources........_..” ....... . $________ 5. TotalnetMome(Line3plusJJne4)............$_____ 6. Gashezpendituresforfmlyliving.............$____ 7. Anomtavailablefordebtpayment(mne5mmasline6)... $_____ 8. Ourmntpaymmtsmdebtsmeflouslycontmtei...... $_____ 9. AVWIURPWOFTmmAN(me7mmslimj)..._§.-_ 1f Income from sales of surplus stock such as calves. heifers. and cows. 2/ Income from sale of broilers. masters. and hens. 3/ No records are available on these enterprises. income figures for them is given in the 4/ contract labor and hauling. mom 3. -sdomcm A method of computing Appendix. These incone figures represent total beet sales less— 5 total sales for 10 Oper- Income Gross Invest- Gross ating less income meet 1.4%..me Bottom of first 182 515 t 4.017 t 8.822 $ 4.535 $5.211 $53 $151 '3 2.788 $7.022 $3.150 $3.988 $52 . $127 5 1.853 $ 5.758 $ 2.057 t 2.585 s as $112 testineachitem 561195J-1.548 $1.5303741s754. $7 $75 3' Income less expanse. less a charge for unpaid family labor and operator's labor. rigors AH. Variation in principle factors in the ram Business. me of Earning Area 5. 1945. Note: The columns of this table are independent of each other. Thetable shouldbereadupanddownandnotacross. Dairy Other Other sales dairy Egg poultry per income sales income Income Income cow per cow"I per hen per hen" per sow per ewe ..Highe t $4.05 sf $131.90W'h'1 $3.48 $15.90 $542 - $27 Botto of fi 1: quarter $27711i$64r8| $5.54 $8.55 $4.27 $20 Middle of each item ' $238 $ 40 $4.21 $ 2.00 $320 $16 tto fthirdquarte ggfinio$15 |$2.4§ $1.00 $2.07 $12 lowestineachitem $48l$ll$.45$.33 $38 $3 "' Includes income from sale of surplus stock such as calves. heifers. and cows; n Includes income from broilers. roosters. and hens. Figure 4—28. - Variation in Income Factors. Type of running Area 5. 1945 Note: The columns of this table are independent of each other. The table should be read up and. down and not across. 11 Improve- M 01:01) malt Labor Misc. bouglt expense amputee expalse expense T.A. per T.A. per T.A.. r T.i. per T.A. each 1 $36.29 $15.59 $9.71 $23.60 $7.08 07 t 4.43 $2.55 $ 4.00 $2.12 item .45 $ 3.48 $1.92 3 1.5) $1.33 quarter | 2.37 $ 2.52 $1.36 $ .51 $ .93 lowest in each ita . $ .92 l$ .13 $ .75 $ .58 $ .00 3 .21 figured—C. ~Variationinmlhctors mammals 194.5. Note: The colums of this table are independent of each other. metabhsmuldbemedupanddomandmtacrou. zoo ”..- Prices received by darmers Prices paid by farmers 180 160 .............. 140 120 100 80 60 4O * 20 O 1910 1912 1914 1916 1918 1920 1922 1924 1926 1928 1950 Figure S-A. Index of Prices Paid and Prices Received by Farmers 1910 to 1945. 13 The gross incomes for beef cattle and feeder steers are based on the best available information at Michigan State (Jollegefl'I come selected for use with the farm in question. As previously indicated. several factors should be considered before arriving at this figure. Four of the most important are: l. The length of time required for repayment of the loan 2. General business conditions anticipated during that period 3. Productivity of the farm as compared with the average 4. .Ability of the farmer to operate the farm In selecting this income figure it is wise to remember that the income per cow. sow. awe. and hen. for individual farms vary a great deal. Figure 4 shows the individual figures for 1945 on the 142 fame in Type of Earning Area 5. WMEmeLarpt - The figure for this column is found by multiplying the income per animal or acre. column five. by the lumber of head or acres in column six. Sumnarizing the Estimates in column six of the score card. (2) "W M" - - Operating expenses as haze consid- ered. include feed bought. depreciation and repairs on machinery. hired labor. crop expanse. depreciation and repairs on. improvements. taxes and "' Wright. K. T. and Taylor. H. B. 1938. BEE mum COSTS. F. M. m8 Michigan State College Note: Other than the study mentioned above. there are very few data avail- able on these incomes. Few actual records are available. The figures used have been adJusted to conform to prices of the periods and usual feeding practices. 14 miscellaneous expense such as telephone bill and. subscriptions to farm papers. On the average. farm operating expenses will be about one-third to one-half of the gross income. If the production per unit (per animal and per acre) is hin. then the percent of gross income needed for ex- penses will be less. (3) "_1§T_e_‘§_ M 11392933" - - Subtract expenses from gross income. (4) "M £11m M Sources" - 4 Enter here any income earned away from the farm and not included in the farm business such as work off the farm and custom work. Be sure to enter the m amount. Subtract any costs such as transportation, fuel. hired labor, and supplies. (5) "_‘I‘_o_ta_.l 181 M" - - Farm income plus other income. (6) "gash, matures EWM" - - The amount of cash that will be needed for family living expenses -- food. clothing. medical care. insurance. education. entertainment - - should be deducted from the total net income. This amelmt will vary within Wide limits. Size of fam— ily and age of the members influence the necessary expenditures. A summary of records kept by 18 Michigan farm families in 194.3 showed an average cash expenditure of $1.081 per family) (7) "M Available £03; an; M" - - Total net income less cash expenditures for family living. (8) "Current Paments 93 _Qe_b_t_§_ Previously Contracted" - - This should be the total ammal payments. interest and principle. that have already been contracted by the farmer. Installments on furniture or other household goods should be included. (9) "flmt Available f3; Pamnt 9;; Propgsed Loan" - - This my- “' Unpublished data from Home Economics Extension Department. Michign State College. East Lansing. Michigan. 1.5 presents the amount of money that will be available during the year for . payment on the proposed loan. If it is not an ammt that will retire the debt. then perhaps the time of payment can be extended over more than one year. Terms of the loan should be made on the basis of this amount. ' My gore Card Works for the Jones' Farm (See emmple score card on page 1e) Assume that Mr. Jones. mentioned. earlier in this report. has the following numbers of livestock and acres of cash crops. Dairy cows (including the two he wants to buy) . . . 10 Layinghens (average number for the year). . . . . .230 Brood sows (farrowing two litters a year) ..... . 3 Wheat......... .......... ..acresl8 Sugarbeets..................acres 6 Mr. Jones is growing enough feed grains and hay to feed the livestock. He has adequate housing for the additional cows and he also has a surplus of labor on the farm. It has already been mentioned that he has had consid- erable farm experience and is ambitious. For this example assume that he is above average in his ability to operate and manage a farm, but that his farm is below average in productivity. Crop yields in the past have not been average for the comnunity although they have shown improvement the last two years. ‘ ymmtegrisg - - Since the loan. if it is made. will be in the nature of a production loan it should be repaid within two years. Use the income figures for the past year adJusted to fit the Jones' farm. Althouai Mr. Jones is at least average in his ability. it is best to be slightly conservative and the figures in the table are probably more 16 contract labor and hauling. An Example: $- - - Score Card 395 Testi_._n_g _t_h_e_ ELI—“.125 Camitz _oi _t_h§_ Walter Jones mm | No. of Gross Income head or income e of income Gross income for acres for \ _ a this on this this 1935—44 “941-45 ' 194.5 farm farm * farm (1) (2) I (3) I (Z) (5) (6) T7) Livestock: * ‘ Dairy cow 136 Per mamas 240 lo 400 Milk sales . . . Other...(l):55 :60 63 LET $255; Laying hen . Fggsales. . . .75 .80 $4.86 % 200 g 960k Other. .(2) .oo .78 2.00 __.___ "W W “Sow........$275 $350 $299.. a $499; Em.......$12 $14 $16 $_;_;_ 3...... Feeder steer (3) $ $ $ $___ _._. 1...... Beef cows . -(3) $ $ ‘)$ $..____. _._... 55..., drops Per acre of the crop . Wheat......$25 $35 $ $35 18 $630, Beans.field..$32 ~$4.2 $52$ $ . seats.euaar(4)$so $4o’$54$40 6 $24o 1. Grossfarmincomefortheyear.......... .....m 2. Operatingexpense(Asslmed..‘§-thegross income). . . . . M 3.Netfamincome(ldne1ndmsline2)....... .....m LImmefmmo‘thersources............. .....$m 5. Total net income (Line 3 plus line 4). . ....... . . . m 6. Gashemdituresforfamilyliving...‘.......... w 7. Ammtavailable fordebt payment (line 5ndnusline6). . . m 8. Current payments on debts previously contracted. . . . . . . m 9. lvmmmrmn OFTBEIDANudne'imnneB). . . . $__§_§ 1f Income from sale of surplus stock such as calves. heifers. and cows. 2/ Income from sale of broilers. masters. and Inns. 3/ No records are available on these enterprises. A method of computing incomes for them is given in the Appendix. 4/ These income figm'es represent total beet sales less1 ~§ total sales for 17 representative of better than average fame in lhchigan. Two hundred and forty dollars should be a (fair estimate of dairy sales per cow and $50 for income from sale of surplus stock, veal calves. and cows. Poultry Returns - - Two himde and fifty pullets are put in the laying house each fall ani the number averages about 300 laying hens for the entire year. They are well cared for and eg sales in the past two years have been higher than most of the migfilbors. An income of $4. 80 from eg sales and $2.00 for returns from broilers, roosters. and hens. should be a conservative figure. §p_w_§_ - - The income in the score card are an average that in- clude some sows farrowing two litters a year. Mr. Jones mentions that his sows will not farmw until late April so it seems wise to use an in- come figure lower than the average. as they will be marketed after the normal high seasonal price. Past history on this farm indicates that hogs do not usually do very well, so use $300 per sow. M - - Yields of wheat on this farm have not been average for the community and altholgh the farm is improving in fertility through the efforts of Mr. Jones, a conservative income of $35 per acre is used. This is based on an estimated yield of 20 bushels per acre and a price of $1.75 per bushel. In using the full acreage of wheat in computing this income it is assumed that all of the wheat will be sold for cash and not fed to livestock. If some of it is to be fed, then only that portion expected to be sold should be used to compute the probably returns. m%--A small acreage of sogarbeets is being sown on one of the heavier soils on the farm. The farm is located several miles from the sugar factory and so the hauling costs will be somewhat above average. {Kile value of $40 per acre should be fair based on a yield of seven tons per acre and a price of $11 per ton. (Less 7:— for contract labor) 18 m 9;: W - - Following the income figures found on the example score card, it is seen that the final amount arrived at for pay- ing the proposed loan is $565. This means that Mr. Jones would be unable to repay the loan within one year. but could repay it in two years time. It would seem quite logical for the banker and Mr. Jones to agree that the loan be repaid either in swell monthly payments over a two year period, or in two or three large payments. perhaps one this fall and another at wheat harvest time the following sumer. Before purchasing any piece of farm equipment certain factors should be considered. {the primary consideration should, of course. be the effect on the net income of the farm business. As in any business, additional equipment can only be Justified by an increase in net returns. Obviously. certain items are necessary to every farm business. A plow, barrow. someform of power. and certain other impletments can usually be classed as essential. However, in some cases where only a small acreage is plowed. such as on a truck farm. even the plow might be non-essential if the plowing could be hired. Combines. corn pickers. ba- lers. field choppers. and sometimes grain drills and other special tools fall in the category of non-essentials on many Michigan farms. When is 2 Combine Essential? In determining the need for a combine consideration should be given to the following: 1. Availability of custom operators 19 2. Importance and necessity for timeliness of the operation. 3. Size of the farm. 4. Amomlt of power and labor available. If no custom operators are available or if they are available. but cannot be hired when the Operation must be perfonned. it is necessary to own the combine. The farm should be large enough to make efficient use of the combine. Adequate power and labor should be available to Operate the combine. If the operation is one that an be omitted, such as mlltipacling. or use of the rotary hoe then the machine cannot be considered essential to the farm business. If the operation does not have to be completed within a short period of time and can be delayed until custom Operators can be hired. such as hulling clover seed. then the purchase of the equipnent for doing the operation may not be profitable. ‘ The cost of owning a machine can be detennined by solving a simple problem in arithmetic. The following form and illustration shows how this is done. . Combine Originalcostofthemacbine (combine) . . . . . . . . . . $ 650 Salvage or trade-invalue at endofuseful life. . . . . . $ 100 Netcostofthemachineforperiodused. . . . . . . . . . $550 Estimtedlengthofuseful life ofmachine . . . . . . . . Byrs. (See figure 7 for glide) Annual cost of depreciation. . . . . . . . . . . . . ‘. $68.75 ' (Total net cost divided by years of life) Ammalchargeforinterest oninvestment. . . . . . . . . $ 39 (Six percent of original cost) Estimtedanmalcostofrepeirs. . . . . . . . . . . . . $ 86 (Four percent of original cost) Combine Totalannualcostofnechine"....... .. . $133.75 Nimberofacresmchinevdllbeusedonthisfann.....‘ 40 Cost per acre (anmJal cost dividedby acres used) . . . . . $ 3.34 Cost ofhiringthissarzeoperationdone . . . . . . . . . . $ 3.50 If the cost Of owning the combine or other piece Of equipment is greater than the cost Of hiring the ,job done, but the farmer still feels that it is mcessary to the efficient Operation of his farm, then the poss- ibility Of doing some custom work with the combine should be considered. If custom work is tO be done there must be labor available to do the work without Jeopardizing work on the home farm. This procedure can be applied to any other item of farm equipment. In general. there is a direct correlation between the amounts Of livestock kept and the net profit on most southern Michigan farms.""'I The more livestock. the greater the profit. In view Of this fact most fanners in southern inchigen who are not specializing in another type Of farming such as fruit or cash craps. should attempt to keep as much livestock as labor, feed. and buildings available will permit. In considering the purchase Of additional livestock. four factors should be given consideration: (1) Labor - - Additional livestock should not be purchased if ‘ If housing facilities are not available on the farm now, consideration should be given to the cost Of providing some protection for most fem , machinery. Depreciation will be high on machinery left outside all year. '"' Wriglt. K. T. . Michigan State Callege 1940. mm SUCCESS FACTORS IN CENTRAL MICHIGAN. Thesis, I (Ph. D. ) Cornell University. Ithaca they cannot be given proper care." Some farmers have more than they can care for without omitting some Of the essential Operations. Others. "putter" and spend a lot of time doing non—productive. nan-essential work around livestock. Sometimes the addition or more equipment twill enable the same number of men to take care of more livestock. On many farms the addition of extra cows or hens will Hake for more efficient use Of labor. (2) £929 - - The major part of the feed. other than concentrates, for the livestock to be purchased should be available on the farm. Pur- chase Of some additional feed for high producing animals is Often profit- able. but as a rule it is better to have most Of the feed. especially roughage. on hand that the additional animals will require. (3) Housig - - Unless a major increase in one livestock enter- prise is anticipated, housing space should be available before considering the purchase of more livestock. Many times the present buildings can be changed to make more room available. An Old barn or the second floor of a barn can Often be fixed up to acoomodate more laying hens. The use'of a pen-type dairy barn may permit the number Of dairy cows to be increased. Sows are usually kept in individual. portable cots that are inex- pensive or made from Old lumber. so housing is not Often a limiting factor in increasing the number of sows. However. if feeder pigs are to be bought and fed through the winter, it is important that adequate space for housing and feeding be available. Feeder steers also require considerable barn space and feed racks. Feeding steers is somewhat Of a specialized business and should not be undertaken on a large scale unless the feeder has had considerable exper- ience in feeding steers. l (4) gripe - - Next in importance in considering the plrchase'of additional livestock is the price that will be paid for them. In most ' commities there is a "going price" for livestock that is sold locally. This is usually a fair price. but it is wise to check this price with prices in other commmities: or, if the livestock being bought is traded on the terminal market. check the latest market quotations. LOCAL AUCTION SALES AM} EDT A W INDICATION OF TEE 1mm VAIIIE OF LIV‘EI.‘SPOCK."l "' The problems involved in bwing and selling pure bred livestock for breeding purposes is outside the mom Of this report. 83 “PARI' 2 AIIALYZIIE TEE FARM RISE-.258 If the test of the earning capacity of the farm business shows that it is not sufficient to repay the proposed loan within a reasonable time. then it may be desirable to take a closer look at the farm business and see why the income is not greater and how it can be increased. It is highly desirable that bankers and others midng loans to farmers understand some Of the factors that go to make up a successful farm business. Over a period Of years. through the study of actual farm records. certain things have been found to be closely associated with high incomes and others with low incomes. For those who wish to make a more detailed study Of the farm business this report presents a suggested method for analyzing the farm business. In this analysis seven major factors in the farm business are considered: 1. Size Of business 2. Soils program . Crop program Expenses Efficiency 7. The farmer 3 4. livestock program 5 6 These will be discussed in the order named. _Sigg of; Business One Of the most comnon faults Of the farm business in southern Mich- igan is the lack of an adequate amount Of productive work. It nay seem paradoxical to say that am farmer does not have enougl to do. but very Often he does not have sufficient volume Of business to make a profit. In 24 analyzing the farm business, then. the first item to consider is the size of business. There are three methods commonly used for measuring the size of the farm business. (1) Number of productive men work units (2) Gross income (3) Nimber Of tillable acres in the farm (1) Productive gag 32535 Un___i_..1_:§_ (P.M.W.U.) - - A productive man work unit is the amount of work one man will do in one ten hour day. The total P.M.W.U.'s in a farm business is found by multiplying the number of dairy cows. sows, and other livestock by a factor derived from cost account records. These factors and the P.M.W.U.'s for the Jones farm are on page . one of the Appendix. Figure 8 indicates the relationship of P.M.W.U.'s to labor income. Farm records also indicate that a successful fann business should provide between 300 and 400 P.M.W.U.!s 35% This means that if there are two men on the farm all year. plus some seasonal help. the total P.M.W.U.'s for the farm should be about 700 to 800. no not neglect the amount of fam- ily labor contributed in computing the number Of men available on the farm. Most farms in southern Michigan will have at least 1.5 men. counting family labor and hired labor during harvest. It can also be said that. in general. the farms in southern Michigan with less than 400 P.M.W.U.'s are not making money. (2) 9533s $3923.12 -- When gross income is compared to the investment in the farm business it is a good measure of the size of business. By it- self. it is not as good as P.L§.W.U. 's 0n farms with a total investment of from $8,000 to $15.U30 the gross income should equal the total investment in three to four years. On fame with an investment of greater than $15,000, the gross income should equal the total investment in five years. As a guide to estimting the total investment of a. given farm, tin average investment per tillable acre for 14.2 farms in central Michigan in 1945 was $130. (3) W 31; Tillable A3323: - On most farms this is by far. the easiest figure to compute. If the type of fanning is also considered, this is a fair indication of the size of the business. However. a forty acre fruit or truck farm may have more business than a 120 acre cash crop farm. A dairy farm of 130 acres where large amounts of feed is purchased may have a larger business than a 240 acre farm specializing in sheep or beef cattle. Number of acres is very often an indication of the possible size of business. In 1945 the average size of a farm on the 142 farms in area 5 was 160 tillable acres as compared with 153 acres in 1944. The average size of farm is becoming larger. Increased mechanization and shortage of labor is forcing farmers to handle more acres to utilize their labor and reduce machinery costs per acre. On the basis of past records, farms with less than 160 acres are not mking efficient use of machinery and. equipment. Methods 93‘- Increasigg the _S_i_ge_ g: 1132 M Business - - The size of the farm business can be increased by the following changes in the farm program. (a) Increase the M 93 Livestock - - This is one of the easiest and most effective ways of increasing the volume of a farm business. An- other dairy cow or a few more chickens does not greatly increase the labor or overhead expense and. it does not Haterially add to the gross income. (b) 935253 1:2. a More Intensive Class 93 Livestock F - Dairy cows and poultry are considered intensive classes of livestock. Beef cattle, sheep. ani hogs are extensive. (c) I_mprove Livestock Production - - Gross returns and. the size of the business can often be increased simply by keeping better care of those already on the fam (d) peg 9; guy Additional Productive I_._a_nd_ - - This method should be given careful consideration. Equipmnt should be available for hand— ling additional land and it should be procured at a reasonable cost. The quality of the land should be investigated. There is little profit in working poor land. (e) grove ngp M - - Improve cultural practices. Increase amount of fertilizer used. Use adapted, good quality seed. (f) 922.932 gr develop Meg Markets - - Many farmers have been able to build up a special trade for their products and in this way get a higher price. If a reputation for high quality is established most people will gladly pay sligltly more than the market value. MW Unprodmtive soils or improper use of the soil are often the cause of an unprofitable farm business. Soils are basic to the farm business. They determine. to a great extent. the kinds and amounts of crops than can be grown. Clinate is also an important factor but little can be done to change the climate unless the farmer moves to another region. A great deal can be done about the way in which the soil is handled. Low cropflelds and failure to get good seedings is perhaps the best indication that the soils are the weak spot in the farm business. Poor or impmper crOp and soil nenagement will also cause low crop yields. but con- 27 sistantly low crop yields and failures to get seedings usually indicate. one of the following - (l) the crOps grown are not suited to the soil. or (2) the fertility of the soil has been depleted by years of mis-use. Growing the right crap on the right kind of soil is very impor- tant. Marv farmers in Michigan are still trying to grow corn on soil that is sandy and rolling in topography. Some years they get a crop, but new years they fail completely. Mam farmers plant field beans on light land well suited to alfalfa or wheat and wonder why they fail to get a good yield. A good rule to follow is "Grow the kinds of crepe that will do at least average or better on your farm". It is very poor business to let the personal preference or likes and. dislikes of the fewer or his wife influence the kinds of crops grown or the kinds of livestock kept. If they like corn and hogs and insist on nekmg that the dominate enterprise. then they should move to a fann where those enterprises can be carried on profitably, rather than to mis- use a piece of sandy loam that should be growing berries and fruit. The soil and the markets should determine the type of farming and. not the likes and dislikes of the farmer. It is true that within certain limits personal preference can be given consideration. Most peoPle do better at the job they enjoy. but it met be realized that there are very definite limits to the range of crops that can be grown successfully on each farm. The maintenance of soil fertility is of utmost mnportance in the production of high yields. Follow the recommendations of the county agricul- tural agent and the soils department of £5le State College. (1) Test the soil for acidity - Lime if necessary (2) Mal-me liberal use of commercial fertilizer - one hundred pounds or more per acre per year is- not too mch (3) Apply barnyard manure frequently and in thin applications. (4) Make maximm use of green mama and cover crops manna; Crops grown should be adapted to the soil. climate. and use for which they are needed Let the crops determine the kinds and amounts of livestock kept. and let the soil and climate determine the crops. This cannot be a hard and fast rule. Marry times there is a choice of several crops that will grow almost equally well on the same farm. Then the use or market available should be considered. Quite often it is good business to grow the crOps grown by the majority of farmers in the commnity. Years of experience have. to a great extent, established those crepe that are most profitable. However. some farmers with initiative and ambition make a success by being different. This difference is usually a mique way of marketing. or a specialized type of farming such as truck crops. broilers. and is seldom, if ever. a wide variation from the usual use of soils and crops grown in the community. A suitable rotation should be followed. This practice has ceased to be an experiment in any sense of the word. The rotation may be long or short. In cases of tillable pasture it may rennin in one crap several years in succession; but must be reseeded and fertilized regularly. In- clude a cash crOp in the rotation if climate, soil. and markets are suit- able. A cash crOp such as wheat. beans, or sugar beets offers one more source of income to the farm business. Grow as many "High-value" crops as possible. See figure 9 for comparison of per acre value of various crOps based on their yield of n‘. '_ “ «- 31, .— J ('I ' '1 . \7‘ ... Percentage of Aillabls Land in L1 .e.a:e «cad urog. Drop Alalds. . . q ‘ - ‘ .‘u‘_ g . — "-1 w I“Eur—2C1 Value and bean Value Per were of en; Vario.s 64093 on Acccunting yarn: in the 114:: I'L.Go::ral fizrtirg Acre a 3 3 O ‘“ A -rgy Pa Ens ‘ . 1.7.73 1 l 73.0 133 'ts of Pro .310. ‘1 .‘..L.L U fllfalfa KELLY Corna ran in crop l? 15 d 3? ' 1.9 $13.70 Oct. 15, 1943 Crop valueM 41.8l “:7 ... . ... , u . ... , _ 1" ‘Lo allonance was made for feed Value or Mwatcher 15. 1943 price and.l€33~d2 £V£iw' on stcvar or straw. Warm-- Oihjr hay 'x‘} nun-...».-.— ' L'l-n‘ M .‘Q'- ‘\v" t” - attic; { O {‘0 $1.64 36.08 straw. . -. .- :3 .. .. were meal. and no value «-..—«”3“- ‘5'“? 03 4.5 \)~ h“ {_‘i C; Figure 9 - Relationship of Crops on Per Acre Basis a. 3-, . ... c... -..!" tn I”, F\ I L5? '\ i energy for livestock feed. Most successful farms in southern Iiichigan have about 40 percent of the tillable acres in hay and pastures. On many farms, where soil and tOpography are less suited to row crops, this per- centage can be increased to 50 percent or more. Livestock grogram The sale of livestock and livestock products provides the majority of income on nest southern L'hchigan farms. Fruit farms, truck crop farms, and those specializing in cash crOps such as sugar beets, bean, or potatoes, are the principle exceptions. How Much Livestock?— - Enough livestock should be kept to utilize available feed, labor and buildings. Ewing additional feed is good bus- iness if it can be bought at a reasonable price, and if it is the limiting factor in the livestock. enterprise. £333. £113 93 Livestock? - - Keep the kinds of livestock adapted to the farm. If the soil and topography. are best suited to production of forage crops, then keep livestock that will make efficient use of roughage. Cattle. especially dairy cattle. are the most efficient users of roughage. If the farm is best adapted to the production of corn and other row crops. the dominant livestock enterprise might well be hogs or beef cattle. Available markets nust also be given consideration in the selection of the livestock enterprises. A location near a large city may mean that dairy cattle and poultry will be most profitable even though much feed must be purchased. Keep 11$ Producing Animals - - High production per animal is essential to a profitable enterprise. At least average production should be maintained and low producing animals should be sold. ’ Ilse mmved management Practices. Follow recommendations of the county agricultural agent and those used by successful farmers in your community. _I_’_la_n X935 Marketing Progra . Plan production so that the majority of products can be sold when seasonal price is highest. Egg prices are highest in the fall mnths, so buy baby chicks early and have laying flock in production in October. Hogs sold before October usually brirg a higher price than those sold later in the fall. Plan to have sows farrow so that pigs can be sold in September. The likes and dislikes of the operator of a farm should be given minor consideration. in the selection of livestock enterprises for the farm. While it is true that he will take a greater interest in, and give better care to animals that he likes. the economic (markets, Strpply and demand) and the natural (soil, tOpograplnr, and climate) factors are so much more powerful than any personal factor that it should be given little consideration. It is sometimes surprising how quickly the likes and dis- likes of the Operator will change when he finds that what he disliked makes more money for him than what he 111m. If more than one enterprise has an equal chance of succeeding on the farm. then the choice may be de- pendent on the Operator's fancy. I 3392.332 Espenses are not usually an item of major importance in analyzing the farm business. hlam people merely check the farm buildings, and machin- ery to see that they are adequate and not excessive. If there are many unusual items of machinery around the farm, more than most farmers in the neighborhood have, then it would be well to investigate iurther to see if efficient use is being made of this machinery. The same can be said of buildings. me times the profit on the farm business would be greater if more money was spent, FOR THE RIGHT IE5. homer spent for fertilizer is profitable. Latest information indicates that amounts up to at least 100 pounds per acre per year at present fertilizer prices will return a profit above cost. Purcbase of additional feed very often enables a farmer to improve his livestock income well above the cost of the additional feed. Reducing expenses by buying low priced. untried. unadapted, poor quality seed is never profitable. Efficiency Efficiency may be one of the most difficult factors in the farm business to measure and also one of the most difficult to change. Human beings are creatures of habit and it is often difficult to get farmers to change their habits of doing farming operations to increase their efficiency. Recently. work has begun in several land grant colleges to study the working methods of farrrers in an attempt to help them improve their. efficiency. This research work is called "tire and motion study" and is similar to the work done in industries by time study engineers. Results are already showing places where many farmers can improve their work efficiency. No attempt is made in this report to present any of the results, but here are some guides based on past records and experience that can be helpful in Judging the efficiency of a farm business. £5103 - - Comparing the amount of work done by the Operator and that done by other farmers is some indication of his efficiency. The fol- lowing table gives some measure of labor efficiency. The values for each 33 column are arranged from the high to the low, and the average approximately in the middle. By placing a line across the column at the point were the figure for an individual farm fits. the rank of the labor efficiency. as Judged by this chart. for this farm can be readily seen. Work units Cows Hens th. of milk per man w w sold per nan 890 _17 1.350 1.250 320 14 1.100 ' 1,000 290 12 850 83) 270 11 700 73) 25) 10 63) 640 240 9 580 600 220 8 530 550 200 7 470 490 180 6 400 43) 150 5 £500 300 (From men Bummss cam. Deptartment of A.E. . N. State College of Agriculture, Ithaca. N. Y.) Buildings - - Farm buildings should be adequate but need not be expensive. Well painted buildings are desirable but may not be an indica- tion of the efficiency of the farm business. These points should _be con- sidered in checking the buildings for efficiency. 1. Are they adequate for the farm business? 2. Is there sufficient storage Space for feed and supplies. and room for housing livestock? 3. Is all or most of the building space available being used. or could more livestock be housed? 34 4. Could buildings be altered to accomodate more livestock or reduce their upkeep? 5. Average investment per tillable acre in buildings and improve- ments on 142 farms in types of farms. area 5, in 1945, was $31 and anmal expense per tillable acre was $1.93. liachineg - - fificient use of power and machinery is necessary to a successful farm business. Check the efficiency of this item by these points. 1. Is there sufficient machinery to do the necessary farm work? 2. Does the farmer have high cost machinery that is not being used except in a very limited way? Corn pickers. combines. field choppers are examples of high cost machinery. 3. The average investment in machinery on the 14.2 farms in type of farming, area 5. in 1945 was just over $19 per tillable acre, and the annual expense per tillable acre was $5.30. 229. m It is difficult to measure the ability of the farmer to farm ex- cept by his past record. Even t’re past record may not be completely accurate. One farmer may start with a better farm or prices may be in his favor. A series of accidents or poor health may cause a farmer to be unsxmcessful from the standpoint of making money on his farm. Iiany people have attempted to set Up guides for Judging the abil- ity of the individual to farm. The condition of the buildings, whether the weeds are kapt cut, neatness of the farm yard, and many others, have been used as an indication hof the ability of the farner to manage and Operate a farm efficiently. When asked to give what he thought to be 85' the most important trait of a good farmer, an elderly but successful farmer said. "Getting In) early in the morning. " Perhaps this is as good a criterion as any. ' Most bankers have learned by experience and through their know- ledge of the people in their commity. how to Judge the ability of a farmer. EaCh has his own preferred method and if it works for him it is sufficient. To add to the guides already mentioned. here are some of the more important indications of managerial ability from the stand point of good farm management. (1) Timeliness 9i; Qperations - - Are the crops planted at the proper time or is the farmer always just a few days later than his neigh- bors (on similar soils)? Is he always so late with his corn planting that he is late maldng hay and consequently late harvesting wheat? If he has insufficient equipnent to do the work‘with, or if the. soil is poorly drained or of such a nature that farming operations cannot be performed on time, then these should be remedied before criticising the farmer for being a poor manager. (2) General Organization 2133M Business - - Is the farm operated‘efficiently? Does the farmer make four trips to town when one would be sufficient if he had planned his work? Does he have his livestock arranged so that he can care for them easihr. or is the grainery a long way from the livestock and does he have to carry hay and bedding rather than Just throw it down from the mow? Some of these things may be unavoid- able because of arrangement of the hiildings but a good manager will find short cuts and if possible, re-arrange the buildings. Does he spend much of his time around the house and barn "putter- ing" or fixing machinery during the summer season when most of his neighbors are busy in the fields?s Iihe is spending several hours a day fixing machinery and chasing livestock that broke through a poor fence he is not planning his work efficiently. (3) m 9; M W - - Most of the item mentioned in the first paragraph of this section can be used occasionally as minor guides to the efficiency and managerial ability of the farmer. Care should be taken to avoid placing too rmch emphasis on them. The farm maidng the most money is not always the one with the neatest or best painted buildings. From the standpoint of making the farm pay. nary of the minor items that are very obvious to the casual observer are not very important. Fail- me to make minor repairs and repaint buildings on a rented farm are not an indication Of the Operators managerial ability. A well kept lawn and neat farmstead may only mean that there is extra labor around the farm to take care of such items or it may mean more important work - - from a business viewpoint - - has been neglected. However. poorly kept fences allowing livestock to get out frequently, or broken machinery are an indication that necessary farming Operations are not being done correctly or on time. Neatness is certainly a virtue. and one very desirable in the farm business but it is not always an indication of the dollars and cents being taken in by the business. THE PLACE OF CREDIT IN GTE FAPM BUSDESS During periods of high prices it is good business to pay off debts. A farm business with low indebtedness can continue to operate even if prices fall, mile one that is heavily in debt may be forced to liquidate its assets. Mortgaging the farm business above the "normal" long—time value is dangerous because it leaves the business vulnerable in case of falling prices. It is a well known fact that farm prices go up first and go high- er. drop first and go lower than prices of other commodities. However, going in debt for legitimte business reasons should be minared and not ridiculed. In the past few generations of farmers it has been considered somewhat of a disgrace to "be in debt". It was often looked upon as an indication of a "poor f armer". In reality, harrowing money is as legitimate a. business transaction as buying a ton of feed. IF TEE WHEY IS SPENT PROPERLY. A large portion of this nation's business is conducted on credit, and so there should be no stigma attached to the making of a business loan. With the amount of capital required today to own a farm business. it is virtually impossible for amone starting a farm business to own all of the business. Investments are now running as high as $30,000 to $30,000 on Michigan farms and on the larger farms of the corn belt. investments of upwards to $200,000 are not uncommon. Even for the owner of a farm who has all of his business paid for, borrowing money is often good business. Paw farmers are able to maintain sufficient amounts of capital to take care of more than small investments. On many smaller farms capital is the limiting factor in their business and it is impossible for them to operate at capacity without borrowing additional capital. Other farmers fail to take advantage of buying in carload lots or even by the ton because they do not have sufficient money to do so, and are not willing to borrow money. A saving of several dollars can sometimes be made by buying in large quantities when the price is low. Buying on the installment plan and having merchants provide credit is usually more expensive than getting‘a straight loan from a bank or other loaning agency. Banks are in business to loan money and can therefore usually provide additional capital cheaper than merchants who are in business primarily to sell goods. In borrowing money farmers should not be misled by low monthly interest rates. Many credit agencies advertise a low rate of interest when in reality the total cost of the credit is very high. 39 In this study the either has attempted. to bring together informa- tion tint will be useful to bankers and others maid-g loans to farmers. Throughout the study an effort has been made to approach the problems of farm credit from the viewpoint of both the banker and the farmer. It has been pointed out that they are both a vital part of any rural com- munity and that they should have an mderstanding of each others problems. making a loan to a farmer involves more than the signing of a note or chattel mortgage. It involves consideration of the use that will be made of the money and the effect of this loan on the farm business. In reality. the banker making a loan to a farmer is buying an interest in the farmer's business for the period of the loan. He should. therefore, be vitally interested in the condition of that business and not just in the assets available for collateral. A review of the literature in the field of farm credit indicates that very little has been written that gives actual income figures to be used in estimating farm income. The author believes that it is essential to have an actual income figure as a starting point in estimating farm income. Dairy sales per cow, eg sales per ban, and other income figmes in a dollar and cents value based on actual farm records provide a base for estimating fem income possibilities. The score card presented in part one of this report is designed as a guide in estimating the annual income that can be earned on a given farm. The method of using the score card is illustrated by applying it to the Jones' farm and his application for a loan to buy a combine and two additional dairy cows. |Ehe three income figures given in the score card give an indica- 40 tion of the income for one year. a period of five years, and a long time’ or ten year period. It is important that these guides be used as guides and not as exact figures to be used for all farms. In fact it would be a rare farm that would. be suited to the average income figures in each enter- prise. It is necessary to know the farmer and the farm before using this score card. Analysis of the farm business is essential to improvement in its operation. Part two of this report provides a procedure for analyzing the farm business. Standards are given that can be used in Judging the various factors of the farm business. Seven factors are discussed in detail. They are: 1. Size of business 2. The soils program 3. Il‘he crops program 4. The livestock program 5. Expenses 6. Efficiency 7. The farmer Credit is an essential part of any business. Lack of sufficient capital often prevents farmers in southern Michigan from Operating at the full capacity of their business. On most of these farms labor is a surplus item and capital is the limiting item. Borrowing of additional capital for the purpose of providing means of utilizing the surplus labor is good business. Farmers should not hesitate to borrow money for legitimate business expenditures, and bankers should realize that loans to farmers are one of the best investments they can make. They should also understand some of the problems involved in agricultural production and be prepared to male the terms of the loan on the basis of the farm's earning capacity. Methods of repayment should be adjusted to fit the production cycles of the farm business. A loan for seed and fertilizer for a potato crOp would normally be repaid at the time of sale of the crop whether it was six months or a year after the making of the loan. However. a loan for the purchase of a dairy cow inght well be repaid in small monthly in- stallments from the sale of the dairy products. Knowing each other and Imderstanding each other's business will make the banker—farmer team a more profitable arrangement for both the farmer and the banlmr. It will also help to establish a more stable ag- riculture and a more prosperous and progressive rural commnity. T”? J-LJA :13 341 LF Ill-FL CF .11 U) Ttem Combine Corn binder Corn picker Corn planter Cultivator, two-row insilage cu.;ter Feed grinder Grain binder Grain drill Harrow. dish Q Harrow, spring C"tooth Hog; loader Hay raise. side delivery Manure spreader flower Pick up baler Plow, sulky Plow, tractor Tractor This information, e: cept as noted. is taken from v-vN-u-a JisflilulnRY bbr J. B. Ibvi uSOn, PC ”‘3 3:90 I 11 D-fi * 1'0 ;.1chigan State Col Lege. T? n 1‘..- ‘ ..L' :LLL. - 'KN'Q“ LJile- _.L- -.J:JBY stinated len;2 th of _l___ife 9 l4: 9 15 8 l6 years"I years years" years years years years years years years years years 3,783.13" years years years Es ..imated from experience of Mricult ural ‘anineoriig Department, COLFEE‘IIG PRCEUCTI‘E 1U ‘.’."C Enterprise Dairy cow Beef cow Hature bull “fi'f ILLL UIITS 1-1 PQEII. ‘nsl'OU. ' S per head or acre ' 15.0 3.0 10.0 Heifers, calves or bulls under 2;years being raised 3.0 Steers or other Cattle to fatten Stallion Eolts Ewes (mature and.yearlings) Lambs raised Feeder lambs Brood sows Boers over 6 months HOgs raised to 200 pounds Hen Pullets raised Broilers Turkeys and.geese Turkeys raised ro's Corn for silage Corn for gran: Barley. Oats, or wheat Alfalfa, clover or mixed.hay Beans Potatoes(table stock) Potatoes (certifed) 2.0 15.0 4.0 0.5 0.1 0.1 3.0 2.0 0.5 6.18 0.10 0.02 0.30 0.15 3.0 (\J O (n (00) 0 Sugar beets (all labor) Sugar beets (contract labor excluded) Alfalfa or clover sec-d Sumner fallow 15.0 3.0 1.0 0.7 1-3 mas 0mm In 1937 and 1938 a study of the costs and returns in feeding steers was conducted by Dr. K. T. Wright and Professor H. B. Taylor of IJidiigan State College. Thirteen steer feeders cooperated in the study by keeping complete records on their feeding Operations. A total of 486 head of steers and heifers were included in the study. This study provides the only complete figures on income from feeding cattle that is available at Michigan State College. According to this study the net profit per steer averaged $23.15. However, the feeding enterprise has so many variations that it was deemed desirable to omit a gross income figure for this enterprise in the score , card. Income from feeding cattle will depend on the grade of cattle pur- chased, how long they are fed, whether they are fed largely on roughages or on grain. when they are purchased. when they are sold, and on the abil- ity of the feeder to care for the cattle. At the writing of this report (August 1946) the spread in prices on the Chicago market ranges from $27.75 for choice steers to $18 and dcvm for common grades and down to $10 for cows. With variations such as these in market prices it is practically impossible to compute a general income figure that will be of any value in estimating income from feeding cattle. In meldng loans for the purchase of feeder cattle the banker should consider very carefully the ability and experience of the farmer in hand- ling this type of enterprise. An experienced feeder will usually be able to sell his cattle for-at least as much as he paid for them. Disease, un- forseen drops in cattle prices. and accidents such as fire and Windstorm have been known to cut into even the orginal investment. However, an ex- perienced feeder will have these hazards reduced to a minimum. Men who successfully feed cattle usually will maintain the grade of cattle they feed. That is. if they purchase "good" calves they will ex- pect them to grade "good" when they sell them as finished cattle. But if they buy "medium" or "fair" cattle to feed, they as}. expect them to grade "good'I when they go back to market as finished cattle. if more fat has been tl’e limiting factor in keeping their grade below "good" previously. If the ratio between the price of feed and the price of beef is extremely favorable for feeding, feeders sometimes buy cattle. feed them for a limited time - thirty. sixty, or ninety days -- and send them back to narket without materially changing the condition or grade of the cattle, but making their profit on the added weight. 0n the other hand. thirty to sixty days feed may raise the grade as butcher cattle sufficiently to overcome relatively high feed costs. A. banker should consider the following points before making a loan for the purchase of feeder cattle. l. The experience and ability of the borrower as a livestock farmer and his general success as a business Iran. 2. Does the fanner have adequate facilities -- housing, feed racks, yards and fences - to care for the cattle? 3. Does he have feed on hand for feeding the cattle? If not. will he be able to purchase the feed at a price that will permit profitable feeding of the cattle? Buying all of the feed for feeding cattle is a specialized business practiced successfully by a few experts. l‘l‘uCh that has been said aboutfeeding cattle also applies to feeding sheep and. h0g3. It is a specialized business and if the farner has not had experience he should not invest heavily the first time. a as“; ...-{r cow Beef cows are not one of the dominant enterprises on south-central Michigan farms. Most farmers in this area have found it more profitable to keep dairy cows. However, some farmers prefer beef cows and if the econ- cmic and natural factors surrounding their farm are suited to beef cattle. they may be justified in maldng this one of their sources of income. The records on the income from beef cows are insufficient to pro- vide a reliable figure for the gross income from this enterprise. However, by Haldng certain assumptions the following procedure will give an approx- imation of the income that can be expected from each beef cow. Prices are not included in this procedure because it is felt that more accurate income figures will be obtained by using prices for the grade of cattle produced on each farm and for the period of time concerned. Prices of beef cattle have much wider ranges than the price of met other livestock products. Assume a herd of 100 good quality grade or pure bred beef cows. 0n the average they will produce 85 calves each year, half of which Will be males and half fexeles. IThe heifers will freshen at an age of two and one-half to three years and will normally be useful for at least five more years. This means that about 15 cows will have to be replaced each year. The income from these beef cows will consist of (1) sale of feeder calves (Whether sold on the market or credited to the herd and fed out on the fam) and (2) sale of cows being replaced. (1) Sale of 70 calves (85 less 15 heifers for replacements) at an average weight of 350 pounds ...... . $....._.__ 5 (2) Sale of 15 cows at average weight of 1,100 pounds. . . $__.._. Totalingross income. . . .. . .$ Divide total gross income by 100 to find income per cow. With 1945 prices and assuming "good" calves this is about $45 gnu ss income per beef cow. BIULIOGRAPHY BIBLIOGRAPHY Bird. A. W. , 1946. FARM FINANCIAL STATELEIT AS USED BY BY‘ERSVIIIE NATIONAL BANK. IOWA. Banldng. 38:72 F'46. Black. J. D. 194.5. AGRICULTURAL CREDIT POLICY IN THE UNITED STATES. 1945. Journ. Farm Econ. 27:591-614. Borum. C. S. and others 1945. CROP REPORT FOR IUCHIGAN. U. S. Dept. of Agri.. Bureau of Agri. Doom. Mich. Dept. of Agri.. lensing. . Brown, A. G. 1945. RAIN OR SIHIE FARM CIT-EDIT. Banldng. 38:57-8. Ag. '45. Brown. H. G. 1937. CREDIT FOR m OF FARM I’ACHIITERI. Burroughs Cleaning House. 22:18-20. 0'37. Brown. L. K. and Hill, E. B. 1946. LIVESTOCK PROGRTI. Memo.. Farm Igt. Dept., Ifiich. State Col. 3mm. Lo Ho and Hill, E. B. 1946. SIZE OF TEE FREJ BUSII‘ESS. Multi. Farm Mgt. Dept. , 111011. State Col. Brown, L. H. 1946. 11:31] SOILS PROGRAM. Multi” Farm Mgt. Dept... Mich. State Col. Brown. L. H. 1940. SOIE FACTORS TO CONSIDER mam ANALYZIIE A FARM BUSINESS. Mnlti., Farm Igt. Dept... Mich. State Col. Brown, L. H. 1941. EXPENSE AND EFFICIENCY FACTORS. Diplicated. Farm IJgt. Dept. . Mich. State 001. Burroughs. R. J. * . 1941. EXPERIEICD OF MICRIGAN RURAL BAIEKS WITH SHORE Tim IOAI‘JS TO PARIERS. Mich. Agri. Exp. Sta... Spec. 3111. 311. Butz, E. L. 1945. POSTWAR AGRICILTDRkL CREDIT PROBLEIS AND SUGGESTIOIIS ADJUST- ImNTS. Journ. Farm Econ. 27:281-296. My '45. Costanzo. G. . 1943. m OVERIIWTEDIESS OF FAR-ES AND Ema MEANS FOR ITS WHICH AND COMM. Internal Rec. Agrl. (Roma) Vol. 33. No. 5 ECkBrta Po So 1940. ATI‘ITUIIES OF FAKERS TO‘E’AE SOLE SDURCES AND CONDITIOEIS OF SEIORI‘ TERIilggJDIT. A Study of 108 Ohio RELI‘IIBI‘S - Huron Co. . Iiimeo. J. o o . Eckert. P. S. and Falconer, J. I. 1942. CHARACTERISTICS AIL) COSTS OF SIORT—TERI LOAIIS MADE BY OHIO CCUZTERY BABES. Ohio Agri. Ship. Sta. Bul. 633 Freemn, L. 1943. BORROW TODAY. SORRO‘.I TOLIORRO‘S'. Cornell Countryman. . 40:12 1211‘. '43. Fris'oie. S. K. 1.938. AGRICULTURAL LOANS OF A KIrKESTNTATIVE LCICHIGAN COUNTRY BANK. Thesis (If. A”) Rich. State Col. . Glarlock, F. L. 1941. COUIIIT RY RADIO; .I} III .‘JSCOIISI II DURIII} TEE] IEPIESSICII. U. S. Dept. Agri. Tech. 301. 777. Heist. A. H. and Bookhout, B. R. - 1944. FARLI snows mamas. .(nmw AITD G 1:11.11. 111131119. AREA 5). Harding. R. J. 1945. FARM EQUIP‘L'LTT CREDIT POLICIES: FIRST ILLIOLIAL BLAIR OF PLEASAIII‘OII. Burroughs Clearing House. 30:18-19. N. '45 Hartwick, L. H. 1943. IOAN OPPOPIE'IDII’I‘IBS OII LIVESTOCK PARIS. Battlers Monthly. 60:122-4. M. '43. Hart. V. B. 1937. 5013‘ FACTORS COl-IC ERITIJ} SHORT TERI FARI CMIT III 13.7 YORK. N Y Agri 001.. Cornell A. E 162 Hart, v. Bo. End-9135000, and. W91]. Co ' - 194:3. FARR AIT'XC“ ”FIT AID IAEICITII‘B. New York. Heminger. C. A. 1944. AGRICULTORRLYARDSTICKS. Banldng. 87:48.1I. Y. State Bank Assoc. Boson. D. P. 1919. FAR: LOAII BARK. Wallace Farmer. 44:23-67. N28. '19. Huston. G. 193). FHDBICIIIG TREE F.D1C1R.Hoard's Dairyman. 58:11-53. 13113, '3). Johnson. E. 0. 1936.11». OF LERC ‘IT CREDIT BY BAKERS. Minn. Agri., Ext. Spent. B111. 178:1- 8. Jones. L. A. 1945. TICKE£ERM FARI BET PICTURE. Agri. Situation. 29:11-14. Mr. . Jamba. II. A. _ . 1942. OUTSIDE PROGRA‘I FOR CCUl-PI‘RY BMKS. Banking 35:135—7. S. '42. Kisser, A. F. - 1944. FAR! BQUIP’L‘I‘I‘ ... W OPPORZ'UIIITIES; HOW TO EIALUATE TE£3 CREDITS. Bankers Monthly. 61:396. 5. '44.. Lange, N. G. and. o’dlers 1944. COST OF PROIIJCTIOH CBJIDIT. N. C. Agfl. E59. Sta. Tech. Bul. 80:1—38. mans. P. v. 1944. SHALL I B: A 3532.237 U. 8. Dept. Agri. m. 105. mm. o. H. (USDA) _ , . 1945. F333 01mm mamas m m PACIFIC mom--msm; TILE'LY 3002.. 2.10 11312333111011 FOR was; persons-.3313: . Wash. State C01. 32.1. 49. May. C. O. 1945. DO I WANT TO FARM Iiich. State Col. Ext. Bul. 267. May. C. O. and Heist. A. H. 1944. SUISMRY OF THE 194.3 FAR? EJSDESS JOKES. Mich. Agri. Exp. ta. Wt. 13111. 2?, No. 2. McClelland. H. 1945. FUTURE OF F5231! LOAIIS IS UP TO RAISES. Bailing. 38:67-8. S. '45. MCGanghey. W. R., McConnist, W. G.. and. Watson. C. 1932. m USE OF 12'; FUNDS III RESISEIIIR} SWORD TIME CREDIT TO FAEERS. Proceedings of program of Farm and Home Week. U. of Ill. 1932. Nclieill. J. M. 1944. BIBLIOGRAPHY OF AGRICUIR‘RAL CREDIT. U. S. Dept. Agri. Libr. List 7 (1944). Merchant. C. H. 194.3. FARM CREDIT III AROCSZ‘OOK COUIITY. mm Agri. Exp. Sta. Bul. 4.18:315—94. Meyers. W. I. 1941. A. CHALIJ. 33 TO BAIICIIS. Am. Banking Assn. MO shon. III. L. 1945. THIMY E533 CF Tn..- FLATS ISL £51.13 PRCUJCTICK RECORDS I}? ILL- IIIOIS. Journ. Farm. Econ” 27 (1945). Murray. W. G. 1941. AGRICULTURAL FIEL-UICE. Iowa State Col. Press. Norton. L. J., Ackerman. J., and. Sayze, C. R. 1938. CAPACITY TO PAY Ala) FARE FILIFICIIIG. Ill. Agri. Exp. Sta. Bul.449. 9 \ Oeis. D. H. 1988. LESSDNS III KAREN} FOR. RAKE-1.73. Bankers Monthly, 136:408-10, My. '38. Pond, G. A. ' 194.5. I'IHY 113301.335 VARY. Minn. Exp. Sta. Sol. 386. Pond, G. A., and Calvert, W. 1.. 194.4. HOW LOIIC- DOES IT TAKE TO PAY FOR A FAHI STARTING WITH A IDEAVY DIET? Journ. Farm 130011., No. 4-. Preston, H. H. 1936. OUR FARE CREDIT SYSEE. Journ. Farm. 230011., 18:673-811. II. '36. Salter. R. 13., Lewis. B. 13., and Slipher, J. A. 1936. OUR MIRAGE. TIE SOIL. Ohio Ext. Bul. 1'75. Sitterley. J. H. 1933. STORE TERI CREDIT USED BY 13]. OHIO FHHA.AE. Mimeo. Bul. 67. Ohio Agri. Exp. Sta. Ulrey, O. 19:57. FARE; cosrs m; PPICES III IICHIGAII. Mich. Agri. Exp. Sta. Quart. 13121. 20. N. '37. Very, K. A. 194.5. CORPSIATIOR 1933.233 POTATC PPQDUCTIOII PRACTICES A233 YIELDS III III?) WEE-R PILEIKSULA OF IHCHIGAII. Thesis (II. A.), Rich. State Col. Wallace, D. A. 1944. BORPCWIII} BY FHLERS. Ohio Agri. Ebrt. Bul. 200 (rem) Via-1.18.06, H. A. 1940. THIS PLACE OF FARE CREDIT III TILE lLATIOlIAL FARM PROGRAM. Processed. \‘Iash. D. C. Address: St. Paul, Minn” Ap. '40. Wall. N. J. 1936. AGRICULTURAL IDAIIS OF COMERCIAL "‘ ES. U. S. Dept. Agri. Tech. 3111. 521. Waller. A. G. and others 1945. SEALL I BUY A FARM? II. J. Exp. Sta. 13111. 719 WarranS. W. and Scoville, G. P. . 1943. LABOR IEQUIFEEIITS FOR 133.? YORK CROPS AID LIVESTOCK. N. Y. State Col. Agri., Dept. A. E. Warren. S. W. 1944. HOW TO STUD TIE FBI; BITE-I333. N. Y. State Col. Agri. . Dept.A.B. Wickard. C. L. --:¢- 10 Wright, G. ‘ ‘ 1944. MIRA'I‘ION OF 'QIOPSIAL" AGRICULTURAL VALUE OF FARE LALID ADD SOUITD CREDIT LIILLZS. West. Perm Econ. Assn. , Policies Proc. 17 (1944). Wright, K. T., and Taylor, H. B. 1938. BID“ IEDLCG COSTS. Farm Mgt. Dept.'. Mich. State Col. Bul. F. I.I.2£08. Yomg, E. C. _ ' 1940. TIE FITCTIOH OF CREDIT III LIODTRIT AGRICULTUIE. Proc. of Am. Farm Econ. Asson. , 1940. 194.3. AGRICUL: 21.11. Lo.1:s n: 110319.111. U. 5. Dept. Agni... 1m. 1987. ABC'S 0F CREDIT FOR 1113‘ FA.‘-.I FAMILY. U. S. Farm Credit Admin. Cir. 15, rev. Wash. D. C. 1945. BARK LOAIES TO FAR’FELS AIID DATA ON GOT/11:1.EET AGZICY COLETITIOII. '11. Deniers Assn. , Agri. Credit Dept. 1945 survey. 1937. 3011119111111133221 9011 1mm Va. Agri. Dept.‘Bu1. 345:9, 111-. :37. -----_ 194:3. EFFECTS OF CROP YIELDS 031$ FAR‘I RETIRE. Ind. Exp. Sta. Report 194.3. 1944. LOANS INCREASED A110 CEIALITY ILLPLDVED BY VISTS WITH mums AND DEAILLRS. Bankers I'Ionthly. 61:18, Jan. '44. w. USE ONLY _ ' Feb 18 z; (x JUI 2, 1’46 M27 19-43 (F... f‘. I - q f’ V k fif I‘ l .1 I O'.a ) . (Rafi 5L 1. 1.1 .‘ IA ;LV " . . .‘ l a ‘ , 4 J