FOR RELEASE Nov. 18, P. M.

THE FARM COST SITUATION

ARS 43-65 (FCS-23) t 'J. ·-I ~-· ) ,J ·.j'

Agricultural Research Service UNITED STATES DEPARTMENT OF AGRICULTURE

NOVEMBER 1957

FARM COST RATES, FALL 1957 %CHANGE FROM 1947-49

PRICES PAID -20 0 20 40 60 TAXES* ..................... L I --'-

I

FARM REAL ESTATE···· I I I

MACHINERY ·· ···· ······ ··· · · I I I

MOTOR VEHICLES ........ I I I

i

HI RED LABOR ............. · I I

BUILDING MATERIALS 0 1 I

FARM SUPPLIES ............ I I

I I

MOTOR SUPPLIES .........

FERTILIZER ................ .. I LIVESTOCK ···•·············· V//././/.

rzzzJ Main I y farm-produced SEEDS · · · · · · · · · · · · · · · · · · · · · · · · · rLLL./////

~ 1 I l FEED ................ ' ......... V//./////

~

*PER ACRE °FENCING MATERIALS INCLUDED

U.S. DEPARTMENT OF AGRICULTURE NEG. 157 ( 10)-22159 AGRICULTURAL. RESEARCH SERVICE

Cost rates and prices paid by farmers for goods and services used in pro­duction are about 19 percent higher this fall than they were in 1947-49. Production items that are lower in price are mainly those that originate on farms.

Goods and services used in production: Index numbers of cost rates and prices paid by farmers, United States

(1947-49'-100) Commodities, : :

;Building : Year interest, Commodities: : Motor : Motor : Farm Farm and · Ferti- . . Wage or Feed :Livestock supplies : vehicles ;machinery supplies ; fencing : : Seed : period taxes, and only : lizer rates

: wage rates : materials; : : : : : :

Average: 1910-14-----: 39 42 43 29 --- -- 42 42 34 70 41 23 1915-19-----: 59 63 68 44 -- -- 54 70 48 101 62 34 1920-24------: 65 61 60 33 -- --- 65 77 57 101 60 42 1925-29------: 65 61 58 lili 94 49 64 73 54 92 60 43 1930-34-----: so 47 39 25 74 49 61 61 47 75 40 28 1935-39------: 49 52 45 36 74 56 64 60 49 71 49 28

: 1940-----------: 49 52 43 41 71 56 64 62 49 69 42 30 1941--------: 53 55 47 46 74 59 65 66 53 69 40 35 1942----------: 60 62 57 54 79 64 69 73 58 76 54 46 1943----------: 68 69 68 61 81 67 71 82 60 81 68 61 1944----------: 73 73 75 58 82 73 73 86 64 83 77 74 1945-------: 77 74 74 6) 82 75 74 87 66 84 79 83 1946-------: 83 81 87 72 84 77 76 88 72 85 81 90 1947----------: 95 95 102 90 92 90 86 95 93 93 93 97 1948---------: 104 105 109 111 103 100 101 100 104 102 109 103 1949---------: 101 100 89 99 105 110 113 105 103 105 98 100 1950---------: 104 104 91 116 106 110 115 lOS 105 101 94 99 1951--------: 115 115 102 141 111 118 124 112 117 106 96 109 1952--------: 117 116 109 118 112 123 129 119 118 109 109 117 (\)

1953-------: 112 106 98 83 114 122 130 120 118 110 100 119 1954--------: 112 106 98 85 116 123 131 117 119 108 93 119 1955-------: 112 lOS 92 84 117 126 132 114 122 107 102 120 1956---------: 114 105 90 78 119 131 138 117 127 105 86 125

June------: 114 105 90 76 118 130 138 117 127 -- -- --July-------: 113 lOS 90 76 -- 130 -- --- -- -- -- 124 Aug.------: 114 105 91 79 -- --- -- --- --- --- -Sept.-----: 115 106 91 80 120 131 141 117 128 106 90 Oct.-------: 115 105 89 78 -- --- -- --- -- --- - 128 Nov.-------: 116 106 90 78 - 136 - - ---Dec.-------: 115 106 91 73 121 138 141 122 129

: 1957 :

Jan.--------: 117 108 91 79 -- 138 -- - --- --- -- 129 Feb.-------: 118 108 91 80 -- --- -- -- -- -- 91 Mar.------: 118 109 90 86 123 139 143 120 130 --- 91 J.pr .------: 119 110 90 90 -- --- --- 121 -- 105 89 131 lolay---------: 119 109 90 89 - --- - -- - -- 89 June--------: 118 108 87 88 121 139 146 122 131 -- -July-------: 118 108 87 89 -- 139 --- - -- -- -- 128 Aug.------: 118 108 87 89 -- - -- - -- -- --Sept.------: 118 109 86 89 122 139 149 122 132 106 86 Oct.-------: 119 109 85 92 -- --- - -- -- -- - 131

-Agricultural Marketing Service.

3

THE FARI~ COST SITUATION

Approved by the Outlook and Situation Board, November 7, 1957

General Situation Farm Labor ••••••••••••••••••••••• Farm Power and Machinery ••••••••• Feed •.•...••••....•••..••...•••.• Seed •............................

Cal TENTS

Building Materials .............. Farm Supplies •.•...•..•.....•... Farm Real Estate •••••••••.•••••• Interest, Taxes, and Insurance •• Costs and Returns by Type of

Page

18 18 19 22

Fertilizer •••.•.•.•...•.••.••.•..

Page

3 8

10 12 16 16 Far-m • • • • • • . . . • • • • • . • • • • • • • • • • 26

GENERAL SITUATION

Farmers' production costs are substantially higher in 1957 than they were in 1956. Although farm output is about the same, farm production ex­penses are some 2 percent higher. Prices paid by farmers for goods and services used in production were record high during the first 10 months of 1957 and the average for the year is expected to exceed the average for 1956 by about 4 percent. A sharp rise in interest rates on new farm loans, coupled with increases in prices of farmland and in farm wage rates, added considerably to farmers' overall production costs.

The October index of farm cost rates (prices paid by farmers for com­modities and services used in production, including interest, taxes, and wage rates) at 119 percent of its 1947-49 average was 3 percent above the October 1956 index and a record high for the month. All major components of this index, except feed and seed, were above the levels of a year earlier.

Cost rates and prices paid by farmers for major groups of production items this fall compared with a year earlier are as follm·!S:

Feeder livestock (October 15) ••.......•..•......• Up 18 percent Farm real estate (July 1) •••••••••..••••••••••••. Up 8 11

Motor vehicles (September 15) •.......••....•....• Up 6 11

Farm ~,1achinery (Septernber 15) •..•.•......•..•..•• Up 6 " Farm real estate taxes per acre •••••••••••••••••• Up 5 11

Far111 supplies (September 15) •.•......••.••..•••.• Up 4 11

·~,rage rates (October 1) •••••••••••••••••••••••••.• Up 3 11

Building and fencing materials (September 15) •..• Up 3 11

Notor supplies (September 15) •..........•.......• Up 2 " Fertilizer (September 15) •......................• Up 1 " Seed (September 15) • .• • • • . . . . • • . • . . . • . • . • • . . • . . • Down 4 11

Feed (October 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . :Dovm 5 11

4

Farm cost rates expected in 1958 relative to 1957 are as follows:

Farm property taxes (per acre), interest rates, and prices paid for farm machinery, motor vehicles, farm real estate, fencing materials, fertilizer, and some farm supplies are expected to be slightly to moder­ately higher.

Prices paid for feeder livestock are expected to be about the same while those paid for feed and seed are expected to average some1o~hat lower.

Looking Beyond 1958

Many of the forces that have governed farm cost rates in the past liill continue to operate in the years ahead. Farm wage rates will continue to be influenced by nonfarm employment opportunities and industrial wage rates. Prices of farm machinery will depend on prices of steel, industrial wage rates, and freight rates. Prices paid for feed and seed will tend to fluctuate with prices received by farmers for feed and seed crops. Prices of feeder cattle will depend chiefly on range conditions and prices of fat cattlea Farm property taxes will reflect the increasing cost of local gov­ernmental services - chiefly schools and roads.

L~portance of Cost Items

Individual farm cost items vary in importance according to type of farm. In 1956, for example, expenditures for feed, seed, and livestock ac­counted for 40 percent of all farm operating expenses on N ortheastem dairy farms but the same items accounted for less than 15 percent of the operating expenses on wheat farms in the Southern Plains. Machiner.r accounted for 56 percent of the expenses on the wheat farms but for only 26 percent on the dairy farms. Mainly because of these differences in composition of cost factors, the average increase in farm cost rates since 1947-49 has been about 12 percent on dairy farms in the Northeast (fig. 1) compared with about 26 percent on wheat farms in the Southern Plains (fig. 2).

Changes in Resources Used in Farm Production

The relative quantities of the different resources used in farm pro­duction change continually. Over a period of years, this may affect sienif­icantly the total costs of productiono Although in 1957 farm output will be a third larger than in 1940, it will be produced on about the same acreage of cropland with fewer f~rorkers, and on fewer but larger farms. In rela­tion to farm output, farmers now use more goods and services of nonfarm origin but fewer work animals and fewer man-hours of labor than they used in 1940 (fig. 3). New and improved motor vehicles, farm machinery, and farm supplies were made available at prices that made it profitable for farmers to substitute them for farm-produced animal power, farm labor, and land as farm wage rates advanced. Employment opportunities off the farm at increas­ingly high wage rates attracted workers from rural areas to industrial

DAIRY FARM COST RATES Percentage Change -

-25 TAXES 0 ...................... .

HIRED LABOR ·············· MACHINERY

REPLACEMENT MACHINERY SUPPLIES ··

BUILDING MATERIALS ·· FERTILIZER & LIME ....... .

MISCELLANEOUS ........ .

SEED & LIVESTOCK ...... .

FEED .......................... .

WIDTH OF BARS REFLECTS RELATIVE IMPORTANCE 0 PER ACRE CENTRAL NORTHEAST

U.S. OEP.\RTMEHT OF .\GRICULTURE

1957 from 1947-49 25 50

1- Average I

75

H/)Mainly farm-produced

7957 DATA ESTIMATED OCTOBER 1

NEG. 57 ( 10)-2404 AGRICULTUR_AL RESEARCH SERVICE

Figure 1

WHEAT FARM COST RATES Percentage Change -

-25 0 TAXES 0 ...................... ..

MACHINERY REPLACEMENT

BUILDING MATERIALS ....

MACHINERY SUPPLIES ...

HIRED LABOR ............. .. SEED ......................... .. MISCELLANEOUS ......... .

FEED & LIVESTOCK ...... .

WIDTH OF BARS REFL£CTS R£LATIV£ IMPORTANCE

0 PER ACRE' SOUTHE-RN PLAINS

U.S, OEP,.RTMENT OF .\GRICULTURE

1957 from 1947-49

25 50 75

I 1 j:\1:1 Mainly farm -produced

I I

1957 DATA ESTIMATED OCTOBER 1

NEG. 57 ( 10)-2403 AGRICULTURAL RESEARCH SERVICE

Figure 2

6

SELECTED RESOURCES USED Per Unit of Farm Output

2001---

1940 1945 1950 1955 1960 *usED FOR CROPS

U.S, DEPARTMENT OF AGRICULTURE NEG. 57(9)-2210 AGRICULTURAL RESEARCH SERVICE

Figure 3

centers and caused farm wage rates to rise. Hany farmers have learned that it is cheaper to use more machinery and other industrially produced goods and less human labor in their farming operations. As a result, farming has become more co~~ercialized and capital requirements have increased greatly.

The increased use of fertilizer on cash grain farms in the Corn Belt illustrates the type of adjustment that farmers are making to reduce costs and increase income. Here a farmer can expect to grow about 40 bushels of corn to the acre without using fertilizer. But under present conditions, with a yield this low his total cost per bushel might equal or even exceed the present price of corn. However, if he uses a little more seed and applies about $20 worth of fertilizer per acre, he can about double his yield in years when the weather is favorableo The cost of this additional output is approximately 60 cents a bushel, or about half the price of corn last spring.

Since 1952, the prices of most of the items that enter into the cost of raising corn in this area have risen about as follows: Land values, 15 percent; interest rates on new farm mortgage loans, 30 percent; real estate taxes, 38 percent; farm machineFf, 14 percent; gasoline,4 percent; and farm wage rates, 12 percent. However, the price of fertilizer, the most important item that farmers use to increase crop yields, has declined. This is espe­cially true of nitrogen fertilizers. In Illinois, the prices of anhydrous ammonia, the cheapest so1~ce of co~nercial nitrogen, were 17 percent below

7

the 1954 level in mid-April. Although these prices declined seasonally from April to September, they are expected to be higher next spring than they were this year.

The uptrend in consumption of fertilizer is expected to conti.Tlue. A . recent survey in the cash grain area indicated that about 40 percent of the farmers used no commercial fertilizer on corn in 1956. The average quantity used was found to be about 50 pounds of plant nutrients per acre. Some farmers reported using more than 4 times as much fertilizer on corn as the average.

Thus the cost of the additional production on these farms is relative­ly low compared with average costs. This is one of several reasons why farm output will be about 6 percent higher in 1957 than it was 5 years ago, de­spite the Soil Bank program and the fact that the parity ratio (prices received to prices paid) is expected to average 18 percent lower for 1957 than for 1952.

Farm Operating Expenses

Indications are that fann operating expenses for the United States will be record high in 1957. They are expected to exceed last year's total by about 2.4 percent, even though the level of farm output is expected to be about the same as it was in 1956 (table 1).

Table 1.- Index numbers of farm cost rates, farm output, farm operating expenses, and related data, 1955-57

1935-39=100 1947-49=100 Item

1955 1956 1957 1955 1956 1957 lL 1/ . .

Farm cost rates 2/-----------: 227 230 240 112 114 118 Farm output-----=------------: 147 149 150 112 113 113

Per farm-------------------: 192 199 205 128 132 135 Farm operating expenses 3/---: 400 411 421 124 127 130

Per farm--------------=----: 521 548 576 141 148 155 Per unit of farm output----: 271 276 281 110 112 115

1/ Indications as of November 1, based partly on unpublished data. ~ Prices paid by farmers for commodities and services used in production,

including interest, taxes, and wage rates. l/ The sum of current farm operating expenses, depreciation and other con­

sumption of farm capital, and farm property taxes, as reported in The Farm Income Situation, AMS.

8

Compared with 1947-49, farm operating expenses will be about 30 percent higher this year, but they will be only 15 percent higher per unit of farm output. During the last decade, farm operating expenses per unit of farm out­put increased somewhat less than farm cost rates, but during the preceding decade, the reverse was true.

Among types of farms, changes in operating expenses per unit of pro­duction have varied widely. On Northeastern dairy farms, for example, operating expenses per unit of production will be about 5 percent lower in 1957 than in 1947-49, but on wheat farms in the Southern Plains they will be about 70 percent above the 1947-49 average this year.

FAR11 LABOR

During 1957, farmers paid their hired workers 4 percent higher wage rates, on the average, than they did a year ago. This is about the same per­centage increase that occurred in 1956, but it is a greater rise than for any previous year since 1952 (table 2). From 1952 to 1955, farm wage rates rose less than 1 percent a yearo Currently, they are 30 percent above 1947-49. The rise in farm wage rates, however, has been smaller than the rise in indus­trial wage rates. Wage rates of production VTorkers in manufacturing estab­lishments vJere about 50 percent higher in 1956 than in 1947-49.

Higher farm wage rates prevail in all parts of the country this year. During the last year, the rise was greatest in the highly industrialized regions along the Atlantic coast. The higher level of industrial wages and the full employment situation of the last few years have exerted an upward pressure on farm wage rates. Farmers ha.ve had to pay higher wages in order to compete with nonfarm employers. Dii'ferentials in wage rates are only part of the picture. Fringe benefits, such as provision for paid va.cations and pensions, are ra.pidly becom:ing standard clauses of industrial labor contracts. They are added attractions to nonfarm employment.

Although slightly higher farm VTage rates a.re expected in 1958, the rate of increase will probably be less than that of the last 2 years. Indica­tions are that competition from nonfarm employers may not be as keen as it has been in recent years.

Advances continue to be made in substituting machinery and other inputs for labor. These advances, plus fewer acres of such important labor-using crops as cotton and tobacco, have resulted in use of less labor on farms this year than has been true in recent history. Output from fa.rms, however, con­tinues a.t high levels mainly because of improved yields. This means that the upward climb in farm labor productivity continues unabatedo Farm output per man-hour is two-fifths higher than in 1947-49.

In general, farmers have been able to obtain sufficient labor this year to get their work done well and on time. The supply of experienced year-rotmd workers continues to be tight, and no change in this situation is foreseen for 1958o The supply of seasonal workers, however, may be eased somewhato

Table 2.- Labor used on farms, labor productivity, wage rates, and related data: Index numbers, United States, 1940-57 1/

(1947-49:a100) . . : . : . . Farm employment . . . : : : : . . Gross . : : Man-hours :

. Farm : . Farm . Farm . farm . : ~ . : : output : . wage Year . . . of farm output income .

Total : Family : : : . per . : rates Hired work J/ . . y : y . : . : man-hour : per : !!/ . . man-hour : : . . : : . . . .

: 1940----------: 107 104 117 ll9 83 70 28 30 1941----------: 104 101 116 117 86 74 35 35 1942----------: 103 100 112 122 96 79 46 46 1943----------: 102 101 107 121 94 78 58 61 1944---------: 100 100 98 120 91 81 61 74 1945----------: 98 99 93 112 96 86 69 83 1946----------: 101 102 96 108 98 91 81 90 "' 1947----------: 102 102 99 103 95 92 99 91 1948----------: 101 101 102 100 104 104 103 103 1949----------: 97 97 99 91 101 104 98 100 1950----------: 91 91 91 89 100 112 108 99 1951----------: 88 88 87 91 103 113 122 109 1952----------: 85 85 84 89 107 120 125 117 1953----------: 84 84 85 88 108 123 120 119 1954----------: 83 82 84 85 108 127 ll9 119 1955----------: 80 80 83 85 112 132 116 120 1956----------: 77 76 81 83 113 136 124 125 1957 .2/------: 75 13 81 80 113 140 130 130

:

1/ Data on farm employment, wage rates, and farm incorr.e are from the Agricultural Marketing Service, United States Department of Agriculture. !/ Includes farm operators and members of their families. 3/ Net calendar-year production for eventual human use. 4/ Simple average of seasonally adjusted quarterly indexes. 2/ Preliminary. Estimates of farm output and man-hours for 1957 based on Septem-ber 1957 "Crop Production" report and other releases of the Agricultural Estimates Division, Agricultural Marketing Serviceo

10

Thus far in 1957, about 30,000 fe1rrer workers from J~exico and other foreign countries have been brought in for seasonal farm jobs than were con­tracted for during the smne period in 1956. The decrease this year was due partly to a longer period of employment under contract and partly to a delay in the cotton harvest. At the end of September, about 243,000 foreign con­tract workers were employed on United States farms, according to reports of the Bureau of Employment Security, United States Department of Labor. At that time, they constituted 8.7 percent of all hired farmworkers. Foreign workers will continue to be available for seasonal farm jobs in areas certified as having insufficient supplies from domestic sources.

Ii'Mll'-f PO~TER AND EACHJNERY

Retail and wholesale prices of farm machinery continued to increase in 1957, and both are nmv at record high levels. Prices paid by farmers for machinery and motor vehicles (automobiles, motortrucks, and tractors) in mid­September were 6 percent hieher than a year earlier. Wholesale prices of farm machinery, includine tractors, increased by more than h percent from September 1956 to September 1957 when they were about a third higher than in 1947 -!19. The level attained in September reflects in part an increa.se in freight rates, which became effective in late August and which may cause fur­ther increases in prices paid by farmers for machineryo

Domestic shipments of machinery and tractors for farm use have been considerably lower in recent years than they were in the peak year of 1951 (table 3). In general, the decline has been more pronounced for tractors than for other machinery and equipment. Factors that contributed to the de­cline were a continued reduction in the number of farms, the exceptior1ally large shipments from 1948 through 1951, and the relatively low farm income of recent years. During the next few years, replacement requirements may cause an increase in demand for most of the principal fann machines.

Although the rate of increase has declined, the total mnnber of trac­tors, motortrucks, and other important machines on farms continued to increase during 1956 to record levels. However, because of the relatively small volume of purchases in recent years and normal depreciation, the estimated value of machinery and equipment on farms, adjusted for price changes, has not changed materially in the last 3 years. The total number of automobiles on farms has been fairly constant since 1930, but as the number of farms has declined, the number of automobiles per farm has increased. Workstock continued to decline in number and, in most areas, it is no longer an important source of farm power.

Although prices received for farm products are generally higher than a year ago, they have declined considerc>.bly in the last 10 years. This, along 1rrith the increase in machinery prices, has caused an increasing number of farmers to buy secondhand equipment in recent years. Used machinery becomes available a.s operators of larger farms trade their machines for bigger and better models and as farm units go out of existence.

Table 3.- Power and machinery on farms and manufacturers' shipments of farm machinery and equipment: Index numbers, United States, 1940-57

(1947-49:al00) . Number on farms, January 1 . Value at 1947-49 prices of-: . : : : . Farm .Motor Domestic . Workstock . : .

; machinery .

: shipments Year . . . vehicles . 3 years : Tractors : Auto- : Motor- : . on farms on farms for . old and . y . mobiles . trucks . . .. . . . . · January l : January 1 . farm use . over . . . ~ y J/

. . . . . ~ J./ !!/ . y ~/ . : . . . .

1940-------: 144 54 91 55 61 83 1941------: 140 58 101 58 62 87 1942-------: 136 65 109 61 68 102 1943-------: 134 72 101 68 10 90 30 1944------: 130 76 98 13 68 78 55 1945-------: 125 83 91 19 13 73 60

~

1946-------: 117 87 99 82 81 72 69 ~

1947-------: 108 92 101 90 85 19 89 1948------: 100 99 99 101 98 98 107 1949------: 92 109 100 109 116 123 104 1950-------: 85 119 98 117 130 153 104 1951------: 71 129 98 122 141 173 118 1952-------: 67 137 99 128 153 187 101 1953-------: 59 144 99 133 159 185 93 1954-------: 52 149 99 138 161 194 77 1955-------: 47 152 99 143 163 194 85 1956 6/----: 43 158 99 148 163 194 70 1957 ~/----: 38 161 99 153 163 188 11

:

1/ Excludes garden tractors. 2/ Excludes tractors and other motor vehicles, but includes farm equipment. 3/ Original values adjusted for price changes and depreciation. 4/ Includes tractors, automobiles,-and motortrucks. 5/ Based on data published in Facts for Industry, Bureau of the Census. Includes tractors, farm machinery, and equipment. Excludes ~otortrucks, automobiles, and attachments and parts for tractors. Includes estimates for items not ~ 'orted for 1954. ~ Preliminary. 1/ Not available.

12

On farms on vJhich large machines can be used efficiently, the savings in labor and time reduce production costso In the last 5 years, the trend toward larger tractors has been especially pronounced. In 1953, for example, only 28 percent of the wheel tractors shipped for domestic farm use were 40 horsepower (maximum belt) or larger. But of those shipped in the first 8 months of 1957, 58 percent ~>rere in this size group and 24 percent v7ere rated 50 horsepower or largero The trend toward larger operating units and larger equipment is likely to continue.

In recent years, the proportion of new tractors designed to use lovrer cost fuels has increased. Of the wheel tractors manufactured in 1953 for farm use, 6 percent were designed for diesel fuel and 1 percent for liquified petro­leum gas. Among 1957 models, the proportions are 16 and 6 percent, respective­lyo Many farmers can reduce their production costs by using one or the other of these fuels instead of gasoline. The amount that can be saved depends on the number of hours the tractors are used and the relative costs of the different fuels, which vary considerably by regions. But any saving in ex­penditures for fuel must be balanced against the higher initial cost of the tractors that can use the cheaper fuelso

Prices paid by farmers for motor supplies averaged nearly 2 percent higher in mid-september than a year earlier. Increases in the prices of gas­oline and other fuels were partly offset by a decline in prices paid for miscellaneous motor supplieso Since 1940, hovrever, prices of gasoline have increased less than the index of all cost rates.

Hare and more farmers are using machines over a longer season and this trend is likely to continue. For example, some farmers no'lor use a combine to harvest soybeans and grain sorghu."lls as well as other grains. Extending the use of a machine reduces total cost per unit of output. Farmers often employ custom operators to do some of their vrork when <m expensive machine can be used to advantage. This helps the owner of the machine to reduce his per­unit costs and often means a saving for the farmer.

The rates that custom operators charge is an important factor in the demand for such machines a.s combines <md hay balers, and the cost of doing the work by hand is still a factor in the demand for such machines as cotton­pickers and potato harvesters.

FEED

The total supply of all feed concentrates for the 1957-SR feeding year is estimated to be about 213 million tons, 13 million tons larger than the record supplies of last year (table 4). Even with an increase over last year in the number of gra.in-consuming animal units of about a million head to 164 million, the supply per animal unit will be at a new record high, about 29 percent above the 1947-)1 average. The big supply of feed concentrates is adequate to meet all 1957-58 requirements a.nd to leave a carryover of about 57 million tons at the end of the feeding yearo

Table 4.- Supply and utilization of feed concentrates, and livestock fed, United States, 1937-57 !/

Supply : Utilization : : : Per gratn-consuming : : Stocks : : animal unit

Year :Stocks : : : : Seed : : of feed : Number : : :of feed:Produc-: Other : : hum~ :Concen-: rains :of grain-:Pr d -: S 1

beginning :grains :tion of: feed : Total : food :trates: :nd of' :consuming:ti~nu~f: u~~ y :Concen-October : . ': :concen-: : ' :fed to : : animal : : : trates • beg1n- • feed • t te • supply • industry,. 11 • year • . t • feed • concen- f d

· ning 'grains· ra s · • and • ve- • 3/ • unl. s • rains· trates: e • • • 2/ • • • stock • - • • g • • ·of year· · - • · e rt • • • • • • : : : : :xpo: : : :Million Million Million Million Million Million Million Million

tons tons tons tons tons tons tons units Tons Tons Tons Average:

1937-41---------: 16.9 99.3 19.9 136.1 12.1 104.9 19.9 153.1 o.65 0.89 0.69 :

1942-46---------: 14.7 ll7.3 29.4 161.~ 14.8 133.0 13.5 176.9 .66 .91 .75 :

1947-51---------: 22.2 ll6.9 25.5 164.7 12.5 123.9 23.5 162.2 .72 1.01 .76 :

1950--------------: 30.5 121.8 26.5 178.8 20.3 130.3 28.6 168.1 .72 l.o6 .78 ,_, LU

: 1951--------------: 28.6 ll3.l 27.5 169.2 17 .. 1 132.2 20.1 167.3 .68 1.01 .79

: 1952--------------: 20.1 ll9.7 27.3 167.1 16.9 122.1 27.0 158.8 .75 1.05 .77 . . 1953--------------: 27.0 ll7o5 28.0 172.5 16.0 126.0 31.7 156.7 .75 1.10 .80

: 1954--------------: 31.7 123.9 26.1 181.7 18.5 126.1 39.1 161.5 .77 1.13 .78

: 1955--------------: 39.1 130.9 26.4 196.4 20.5 131.5 43.3 165.6 .80 1.19 .79

: 1956--------------: 43.3 129.8 27.3 200.4 19.5 133.0 47.1 162.8 .78 1.23 .82

: 1957 g/-----------: 47.1 138.6 27.2 212.9 21.0 135.0 )7.0 164.0 .85 1.30 .82

:

1/ From Grain and Feed Statistics, May 1957, page 2, and Feed Situation, AMS, October 1957, table 2. 2/ Includes byproduct feeds, imported grains, and domestic wheat and rye fed. 3/ Stocks do not necessarily equal supply less feed and other utilization because of a difference in the crop

year for different feed grains. ~Preliminary estimates based on indications in October 1957.

Production of corn is down about 4 percent from last year. With the carryover from last year of 1.4 billion bushels, the total supply will be about 4. 7 billion bushels, about the same as the record supply of 19~6-~7. The supply of oats for this year is estimated to be about 1.6 billion bushels, just slightly above the supply a year ago. The supply of barley, which is estimated at ~83 million bushels, is 13 percent higher than a year ago. Pro­duction of sorghun grain was a1most 2t times that of last year and about 3 times the average of 19~0-~4. The supply of hay is the highest on record - 14 million tons above the supply last yeax. Production of hay was average or above average in most areas of the cotmtry. The major drought area was along the east coast, where the growth of forage crops was reduced severely.

The number of roughage-consuming livestock is expected to decline from 94 million head in 19~6-~7 to about 92 million head in 19~7 -~8, mainly be­cause of a continued decline in cattle numbers.

The index of prices paid by farmers for feed was ~ percent (10 points) lower in mid-October than a year earlier, 1~ percent below the 1947-49 average, and the lowest since Hay 1946. Oilseed meals and other high-protein feeds were dovm 1 to ~ percent from a year ago, about the same as formula feeds. Dai!"J feeds were not off a.s much as other formula feedso

The index of prices received by farmers for feed grains and hay dropped from 178 a year ago in mid-October to 1~6 this year, a decline of 12 percent. This index shor-rs a decline of 32 percent below the 1947-49 average. The index for feed grains, excluding hay, declined about 23 percent during the last year. The feed crops that showed the greatest declines 1r1ere corn, 13 percent, and grain sorghums, 13 percent. Prices of hay dropped only 14 percent. Oilseed prices, except flaxseed, decreased during the last year from 1 to 15 percent. The price of flaxseed is up about 2 percent.

Based on October 1~ prices, gross returr1s per $1.00 of feed cost were considerably higher than a year ago for all livestock enterprises except turkeys (table 5). The price per pound received by farmers for turkeys was nearly 4 cents less than a year ago and about 15 cents less than the 1947-49 average. Even though returns per $1.00 of feed cost from livestock opera­tions generally were more satisfactorJ, they were still about 20 to 25 percent below the 1937-~1 average for turkeys and broilers, 13 percent below avera.ge for eggs, and 17 percent belor-r average for butterfat.. The gross return per $1.00 of feed cost for cattle feeding was 23 percent above the 1920-~2 average.

15

Table 5.- Gross returns from livestock enterprises per $1,00 of feed cost, United States, based on prices for selected dates !/

Livestock enterprise or product

1937-51 average October

Dollars

Eggs--------------------: 2.09 Broilers----------------: 1.62 Turkeys-----------------: 1.85 Milk--------------------: 2.25 Butterfat---------------: 1.75 Hogs--------------------: 1.75 Sheep raising-----------: 1,68 Beef raising------------: 1.82

Cattle feeding----------: ~ 1.25

Eggs--------------------: 100 Broilers----------------: 100 Turkeys-----------------: 100 Milk--------------------: 100 Butterfat---------------: 100 Hogs--------------------: 100 Sheep raising-----------: 100 Beef raising------------: 100

Cattle feeding----------: ~ 100

=october 15, :October 15,: April 15, :october 15, • 1955 • 1956 : 1957 ; 1957

Dollars Dollars Dollars Dollars

1.78 1.54 1.24 1.82 lo51 1.15 1.37 1.27 1.91 1.54 1.60 1.39 2.16 2.14 1.87 2 • .35 1.38 1.32 1.31 1.45 1.54 1.60 1.77 1.94 1.28 1.30 1.52 1.65 1.59 1.51 1.70 1.98

1955-56 1956-57

1.15 1.54

Index numbers (1937-51=-100)

85 74 84 87 93 71 84 78

103 83 91 75 96 95 102 104 79 75 88 83 88 91 113 111 76 77 95 98 87 83 97 1a9

1955-56 1956-57

92 123

Y QuantUies of feed used in calculating the cost of feed follow: Per dozen eggs - 7 lbs. poultry ration; per lb. of broiler - 2.8 lbs. broiler mash; per lb. of turkey - 4 3/4 lbs. poultry ration; per 100 lbs. hogs - 1 1/2 bu. corn plus 20 lbs. S::>ybean meal; per 100 lbs. milk or 4 lbs. butterfat - 31 lbso concentrates plus 110 lbs. hay; per 100 lbs. beef cattle - 3 bu. corn plus 600 lbs. hay; per 100 lbs. sheep and lambs - 2 bu. corn plus 1,500 lbs. hay. Value of hay in Iowa and .Minne­sota was used for butterfat. Assumed 19 lbs. wool produced for each 100 lbs. sheep ~d lamb produced. The quantity o.f hay for milk cows, beef cattle, and sheep l.ncludes an allowance for silage and pasture. Feed nutrients from pasture assumed to cost a fourth as much as nutrients from hay. Cattle feeding returns are based on table 4, Livestock and Meat Situation, AMS, August 20, 1957, which is based on Corn Belt experien~e. ~/ 1920-52 average.

16

SEED

The mid-September index of prices paid by farmers far field seeds was 4 percent lower this year tban it was a year earlier and 14 percent below the 1947-49 level. This makes the third consecutive year in which fall prices of seeds have declined, although mid-May prices were somewhat higher this year. Seed prices were lower for all except 6 of the 26 differ­ent kinds of seeds for which comparable prices are available. Contrary to tbe general downward trend, prices of these seeds - common alfalfa, oats, barley, rye, and winter peas, averaged 4 percent above 1956 prices. Tbe mid-September price of seed wheat was unchanged from last year.

It appears that farmers may look forward to an adequate supply of all field seeds at favorable prices far fall and spring plantings. Supplies of a number of grasses, including orchard, brome, bent, smooth bromegrass, crested wheatgrass, sudan, and perennial ryegrass, are especially plentiful. The 1957 production of grass seeds was larger tban usual, and carryovers ot perennial ryegrass and bentgrass are the largest on record. Supplies of all major legume seeds are at least adequate, and the supply of white clover seed bas never been larger.

General soil moisture conditions for fall planting have been con­si~erably more favorable this year than in 1956. Farmers probably took advantage of the combination of adequate moisture and ample supplies ot seeds to increase fall seeding.

Competition among producers and dealers of hybrid seed corn may be intensified during the coming year, but the general price of hybrid seed cam is expected to remain at about the 1957 level.

As a result of a record large sorghum crop in 1957, prices of hybrid seed are expected to move downward during the coming year. Large supplies of oats, barley and rye, and the declining price level far all seeds are ex­pected to have a depressing effect on prices of these small grain seeds in the coming year.

FERTILlZER

Prices paid by farmers for straight nitrogen materials in September 1957 were about the same as those of last spring, or slightly lower than in September 1956. Prices paid for principal phosphate and potash materials this fall are slightly higher than they were in the spring when, in turn, they were a little higher than in both the spring and fall ot 1956. Tbe September United States average price of 10 grades of mixed fertilizers, which represent about 45 percent of total consumption of such fertilizers, was less than $1.00 per ton above the price a year earlier.

17

Significant technological advances have been made since the end of World War II in the production and distribution of fertilizer. These gains are reflected in the cost of fertilizero For example, farmers have paid 9 cents a pound for nitrogen in the form of anhydrous ammonia this yearo This is the same price that they paid for nitrogen in the form of ammonium sulphate in 1935-39 (fig. 4). In recent years, the cost of nitrogen has declined relative to the cost of phosphoric oxide and potasho

Consumption of fertilizer materials for the year ending June 30, 1956, was down about a half million tons compared with the previous year. But because of the rising nutrient content of fertilizers used, the reduction in use of plant nutrients was only about 60,000 tons. If the nutrient content of fertilizers continues to rise at the same rate as last year, fertilizer ship­ments as indicated by tag sales in States where information is available would indicate that consumption of plant nutrients for the year ending June 30, 1957, may have been about the same as that of the record year that ended in midsummer of l955o

Information on yield response to fertilizers and on quantities applied to crops in 1954 indicates that applications on some of the major fertilizer­using crops were well below rates that would be most profitable at crop prices somewhat below current levels. For example, it is estimated that on the average, an additional dollar spent for fertilizer on corn in the Corn Belt would result in an additional return of about $3.75. As higher rates are applied, this "marginal" return becomes smaller until the most profitable rate

COST PER POUND OF NITROGEN

0

NITRATE OF SODA 19¢

AMMONIUM SULPHATE

AMMONIUM NITRATE -1957

- 1935-39 ANHYDROUS AMMONIA

!!~~cD ON PRICES PAID BY FARMERS (AMS!

U.S. DEPARTMENT OF AGRICULTURE NEG. 57 ( 10)-2141 AGRICULTURAL RESEARCH SERVICE

Figure 4

18

per acre is reached - the rate at which an additional dollar spent would return just one dollar. But, because of risks, uncertainties, and the limited funds available to most farmers for all farm expenditures, the "practical" most profitable rate of application for most farmers is usually less than the rate which under ideal conditions would result in the highest profit per acre.

BUILDING MATERIALS AND FARM SUPPLIES

Building Materials

Prices paid by farmers for building and fencing materials averaged 3 percent higher in mid-September than a year earlier. Significant price increases are indicated for fencing materials (3 to 9 percent), paint (6 per­cent), asphalt shingles (6 percent), and cement (4 percent). Prices of lumber were off slightly.

The materials needed to build a mile of typical farm fence (32-inch woven wire with 2 strands of barbed wire) now cost about $80.5 compared 1'1i th $780 a year ago and less than $300 in the late thirties.

The outlook is for prices of iron and steel products to increase further in 1958. Copper products are expected to be cheaper, and some further reduction in retail prices of lumber may be in the offing.

Farm Supplies

The index of prices paid by farmers for farm supplies (pesticides, containers, twine, small tools, utensils, and so on) increased by 4 percent in the year ended October 1.5. Advances in retail prices of small tools, containers, and utensils were largely responsible for the continued rise in the overall index. The price of baler twine was slightly lower in 19.57 than in 19.56.

Pesticides

Prices of most pesticides are at about the same level as a year ago. Prices of a few, such as aldrin and 2,4-D, have moved upward along with chemicals generally. DDT, however, is priced somewhat lower than for 2 or 3 years. The price of copper sulfate, following that of copper, has dropped from above 16 cents a pound in mid-19.56 to less than 12 cents, or nearly to the 19.53-.54 level.

Production and use of pesticides have been generally at about the same level in 19.57 as a year ago. Use of calcium arsenate against strains of boll l'reevil that have developed resistance to organtc chlorinated insecticides has been appreciably less than last year. Synthetic organic fungicides are replacing copper sulfate. Many new pesticides, especially synthetic phosphate insecticides and organic weedkillers, are finding a place in pest control.

19

A recent survey made in cooperation with the United States Department of Commerce 1/ showed that in 1955 farm expenditures for pesticides (insecti­cides, fungicides, weedkillers, livestock sprays, and disinfectants) totaled an estimated $283 million, or about $60 per farm. Sixty-four percent of the total was for pesticides applied to growing crops, 17 percent for chemicals

lused to kill weeds and brush, 13 percent for livestock sprays and disinfec­tants, and 6 percent for materials used for other purposes, including control of rats, gophers, weevils, termites, and rot in wood and wooden structures.

FARM REAL ESTATE

The value of farmland in the United States continued to increase during the year ended July 1957 {table 6). Nationally, the increase was 8 percent which was the sharpest rise for any similar period since July 1951, when a 16-percent increase from the previous July was recorded. In July 1957, farm real estate values were higher than a year earlier in all States (fig. 5). Increases during the year were smallest in those States most severely affected by drought in 1956. Values in these States showed the first signifi­cant increase in the last 2 years in the spring and early summer of 1957. Elsewhere, values advanced by 5 percent or more from mid-1956 to mid-1957. In 23 States, the increase amounted to 8 percent or more. The sharpest increase occurred in Florida, followed by New Jersey, Delaware, and Rhode Island. Y

The increases in value during the year ended July 1 resulted from the many factors that affected the market for farmland. Some of them had"been present in the market for some time, while at least one - crop prospects -tended to increase values only during the spring and summer of 1957. Many of the factors are regional in nature; others are national in scope.

Crop prospects were generally favorable during the first part of 1957. These favorable prospects were responsible for part of the increase in land values, particularly in many Central and Western States. As of midyear, crop prospects were good to excellent in all areas where, in 1956, crops were very poor or failed completely because of drought. Other longer term factors continued to be those found in the nonfarm sector of the economy and in advancing farm technology. Also, the Soil Bank program has tended to sustain land values by further limiting the acreage of farmland for sale and increas­ing the number of people looking for land. ·

!/ United States Bureau of the Census, Farmers' Expenditures, Vol. III, Pt. 11, 1954 Census of Agriculture. !/ For greater detail, see U. s. Agr. Res. Serv., ARS 43-61, Current

Developments in the Farm Real Estate Market, March-July 1957, issued October 1957 •

20

Table 6.- Farm real estate: Index numbers of average value per acre, by regions, JQly 1957 with comparisons

. March 1 . July 1

Region : : .

1954 1955 . 1956 1957 1956 1957 . . . . . . : . Index numbers (1947-49=100} .

Northeast-----------: 121 123 130 139 132 143 Corn Belt-----------: 132 139 144 154 147 159 Lake States---------: 122 127 135 147 138 150 Appalachian---------: 123 126 1.30 139 133 142 Southeast-----------: 129 132 141 156 145 162 Delta States--------: 129 132 140 152 144 156 Southern Plains-----: 132 137 139 150 142 151 Northern Plains-----: 129 133 135 138 135 142 Mountain------------: 134 136 138 139 138 143 Pacific-------------: 124 130 137 146 139 151

United States-----: 128 133 138 147 140 151

CHANGES IN DOLLAR VALUE OF FARM LAND*

U. S. INCREASE a%

PER ACRE, INCLUDING IMPROVEMENTS

:Increase :July 1956

to :Jul;r 1957

Percent

8 8 9 7

12 8 6 5 4 9

8

U.S. DEPARTMENT OF AGRICULTURE NEG. 57(8)-/191 AGf~ICULTUfU\l Rl Sf ARCH 51 PVICI

Figure 5

21

Primary factors originating outside agriculture include the continued high level of business activity and its associated dispersal of industry, a slowly rising general price level, and the need for living space for a grow­ing population. Of primary importance within agriculture is advancing farm technology. The full benefits of many such advances that have been made in recent years cannot be achieved without increasing the scale of operations. On thousands of farms, this increase means adding more land. As the operators of many of these farms already own land free of debt, they are in favorable position to finance the purchase of additional land. They continue to bid actively for the limited acreage of land that is for sale each year.

Farm real estate observers' comments and reports during the last few years have indicated that the demand for farmland has been strong in most areas of the country. In many areas, the same factors that contribute to a strong demand for land also tend to reduce the acreage of land offered for sale. Both buyers and sellers of land are predominantly farmers. Conse­quently, when conditions make ownership of land attractive to prospective buyers, present owners find it desirable to retain ownership. In recent years, this has been an important cause of the tight supply and strong demand that have prevailed.

The tight supply of farm real estate in recent years continued through last winter and early spring, according to reporters in a March 1957 survey. The concensus of reporters in many Northeastern and Western States was that the number of farms listed for sale had increased. Conversely, in the eastern Corn Belt, and in Arkansas and Louisiana, reporters indicated that this spring the number of farms for sale was smaller. Elsewhere, the balance of opinion was that little change had occurred. Demand for farmland (as measured by the number of inquiries to buy land) also continued to be strong this spring. Strongest indications of greater interest in farmland were evident in many of the Central and Plains States, where the market was depressed by drought in 1956o The smallest change was noted in the Middle Atlantic States.

Reporters in the March survey of the farm real estate market expected the price of average farms to increase in all regions of the country during the summer and early fall of 1957. Expectations of further increases in the price of farms were reported more frequently for good than for poor farms.

As of mid-1957, the average value of farmland per acre was at record high levels in 40 States. Average values continue to be highest in several

I ~ortheastern States where large cities add site value to much of the farm­land, in the central ~om Belt, and in California. They average lowest in the Mountain States because of the extensive areas of arid grazing and nonirrigated cropland. Values of irrigated land in these States are as high as those of comparable land in the Corn Belt, but irrigated land accounts for a small percentage of the totalo

22

INTEREST, TAXES, AND INSURANCE

Interest

A highly significant development of the last 2 years has been a sharp rise in interest rates. Interest rates on securities offered in the open market have increased from l to 2 percentage points since September 1955. This increase has been a joint product of strong demand for credit, which emanated from rapid economic growth in the country, and a policy of credit restraint that was adopted in an effort to reduce inflationary pressures.

Interest rates on new farm loans have reflected, but lagged behind, the increase in open-market rates. For this reason, some further increases in rates on new farm loans in many areas are expected, even if rates in the open market should level off or decline slightly. The higher rates apply only to loans made since rates started rising. Thus no increases in rates of interest have occurred on the large volume of outstanding farm loans, which consist mainly of farm-mortgage loans, that were made several years ago.

Interest rates charged by the Federal land banks were raised substan­tially in the last year. The increases reflect higher yields on consolidated Federal Farm Loan bonds; in September 1957, representative issues of these bonds yielded 4. 75 percent as compared with 3. 75 percent a year earlier. In October, 8 land banks were charging 5.5 percent and 4 had a 5.0 percent rate. Life insurance companies also i!lcreased interest rates on farm mortgages. With very few exceptions for particularly desirable loans, mini­mum rates of major companies are now reported to average about 5.5 percent, compared with about 5.0 percent a year earlier. Because of favorable returns from other investments, some companies have reduced allocations of funds during the year for farm-mortgage loans. Lending practices of most lenders in 1957 have been more selective than during 1956.

Early in October 1957, all except 30 of the 497 production credit associations were charging 6 percent or more for loans, and 121 were charging 7 percent or more. At the beginning of 1956 - 20 months earlier -240 of the associations were charging less than 6 percent and only 1 had a rate as high as 7 percent. These increases in interest rates charged by the production credit associations resulted from increases in the discount rates of the Federal intermediate credit banks, which, in turn, were caused by the higher cost of raising funds through the sale of Federal Intermediate credit bank debentures. For the entire year 1957, it is estimated that the average rate of interest and service fees paid by borrowers on outstanding loans of the production credit associations was about 6.5 percent, compared with 6.2 percent in 1956.

Country banks also have increased their rates of interest on loans to farmers. But bank funds for making loans have been less restricted in agricultural areas than in the larger financial and trade centers. Because of their easier situation, country banks have not had to ration credit as rigorously, and have not increased their loan rates as much, as have banks

23

in the larger centers. From Federal Reserve data on bank loans in 19 cities, and reports from various sources, it appears that interest rates on loans to farmers probably were no more than one-half to three-fourths of 1 percent higher in September 1957 than 2 years earlier. For the year 1957, it is estimated that the average rate of interest and loan service fees paid by farm borrowers on the outstanding loans of banks was about 6.75 percent, compared with 6.25 percent in 1956.

Each production credit association charges the same rate of interest on loans made to all of its borrowers while a given rate is in effect. But banks do not follow this policy. They usually charge higher rates for small than for large loans and higher rates to borrowers who are relatively poor credit risks than to those who are in stronger financial condition. Accord­ing to reports, some banks have not yet made any significant changes in the interest rates charged their farm borrowers. But many have increased their rates, particularly on loans to borrowers who are marginal credit risks and to borrowers who previously received preferentially low rates. The higher rates paid on time and savings deposits are one of the reasons for increases in bank loan rates.

Unless open-market rates of interest decline substantially, it is anticipated that the average rates of interest and loan service fees paid by farmers who borrow from both banks and production credit associations during 1958 will approximate 7 percent.

Partly because of the anticipated further increase of interest rates on farm loans, and partly because the volume of farm debt continues to rise, a further increase in the interest charges payable by farmers is expected for 1958.

Interest charges on the farm-mortgage debt will probably total about $525 million in 1958, 8 percent above the $488 million payable in 1957, and 17 percent above the $448 million payable in 1956. The index of interest charges per acre (1910-14=100) is estimated at 176 for 1958 compared with 164 for 1957.

On the non-real-estate farm debt held by banks and federally sponsored credit agencies (excluding loans made or guaranteed by the Commodity Credit Corporation) interest charges and loan service fees payable by fanners in 1958 will probably total about $339 million. This is 7 percent more than the $316 million payable in 1957 and 14 percent more than the $298 million payable in 1956. Probably, costs of the non-real-estate credit obtained by farmers from merchants, dealers, finance companies, individuals, and others will increase also.

Farm-mortgage debt outstanding on January 1, 1958, will probably be about 7 percent above a year earlier. A further increase is expected in 1958. The rise in 1957 was at a somewhat slower rate than in 1956. Higher interest rates and a reduced number of farm transfers tended to reduce the demand for farm-mortgage loans and more selective lending practices on the

24

part of lenders was also a factor in the slower rise. Both the number and the amount of farm-mortgage loans made in 1957 are expected to be below 1956, although the average size for all loans may not change mucho

The non-real-estate debt of farmers to principal lending agencies is expected to average about $5,005 million during 1958, compared with about $4,868 million in 1957 and $4,765 million in 1956. Rising prices of produc­tion goods and services, an increased number of cattle on feed, and some increase in farm expenditures for equipment are mainly responsible for the increase that occurred in the last year.

Property Taxes

Farmers will probably pay about 5 percent more in property taxes in 1958 than they did in 1957. Total levies on farm real and personal property in 1957, payable largely in 1958, are expected to reach $1,265 million, compared with $1,203 million levied in 1956. This would be the 17th consecutive yearly increase.

Taxes paid on farm real estate in 1957, based on 1956 levies, are esti­mated at $977 million. The rise in prospect for 1958 would result in payments of about $1,032 million. This would bring real estate taxes per acre to $0.96, another record. In 1950, taxes paid on farm real estate averaged $0.66 per acre, and in 1945, $0.40 (fig. 6).

FARM REAL ESTATE TAXES .,. OF 1909-13 DOLLARS

400 Per acre 2.00 ( INDEX NUMBERS )

300 ' 1.50

200 f----

100 +----+----+-----1-----1 0.50

0 1910 1920

U.S. DEPARTMENT OF AGRICULTURE

1930 1940 DATA ARE FOR YEAR OF LEVY

1950 0

1960

NEG. 57 (7)-518 AGRICULTURAL RESEARCH SERVICE

Figure 6

25

For 1958, taxes payable on farm personal property will probably amount to about $233 million, for a gain of 3 percent over 1957. These 1958 payments would be more than 8o percent above tbe average of 1947-49.

Tbe continued rise in farm property levies reflects steadily growing revenue needs of State and local governments. Purchases of goods and services by State and local governments have increased at a rate of almost 10 percent a year in tbe last several years 1 and no downtm-n is yet in prospect. Payrolls continue to rise, and requirements for new schools, roads, and other capital facilities remain heavy. Despite a long-term decline in tbe relative importance of property taxation, this source still produces more than half of all locally raised revenue and more than a third of tbe total raised by States and localities combined.

An important cause of tbe increased demands on the property tax base lies in tbe steady movement of population into suburban fringe areas. Taxes on nonfarm property show this trend most clearly, but farm real estate levies are also influenced. Throughout tbe country, tbe rise in farm real estate levies bas been especially sharp in those counties with rapidly growing suburban areas. These increases may be associated with a rise in the number of small part-time farms having a bigb value per acre and a large proportion of the total assessed valuation attributable to farm buildinga and tbe operator's residence. It is likely, however, that even in those areas not immediately affected by population growth, the added revenue requirements to support expanded countywide functions may force farm taxes upward.

Insurance

Expenditures by farmers for property insurance increased again in 1957 as they bad in previous years. This increase is expected to continue into 1958 as contracts are renewed and more insurance is carried against wind and minor hazards. Part of tbe increase is due to bigber replacement costa.

Indemnities paid to farmers during 1957 by tbe Federal Crop Insurance Corporation were substantially less than tbe premiums collected.

Tbe amount of insurance against bail damage to growing crops con­tinued at a bigb level in 1957 but losses were relatively less than in recent years. Tbe net cost to farmers for this insurance (premiums minus loss payments) was therefore at a record bigb level.

26

COSTS AND RETURNS BY TYPE OF FARM

Farm production expenses both in the aggregate and per unit of farm output are estimated to be about 2 percent higher in 1957 than in 1956. The average increase per farm will be nearly 5 percent because of the continued increase in size of farms. In general, however, gross farm income including Government payments is expected to be up enough to offset the expected increase in farm production expenses.

A summary of costs and returns for 1957 on 4 types of farms is presented in table 7. These data are intended to show some of the differ­ences that exist among regions and types of farms; they are not intended to represent the situation on all farms in the United States. The percentage distribution of farm operating expenses in 1956 on typical farms is presented in table 8, page 29. Index numbers of operating expenses per unit of produc­tion and total cost per unit of production, by type of farm ~or 1956 and earlier years, are presented in tables 9 and 10, pages 30 and 31.

Dairy Farms, Central Northeast

Farm cost rates rose on central Northeastern dairy farms from 1956 to 1957 but operating expenses per unit of production remained about the same. Prices paid for goods and services used in production are about 4 percent higher than a year earlier. In recent years, increases in numbers of cows milked and in milk production per cow have largely offset higher cost rates.

Total farm output in 1957 will probably be up about 5 percent from 1956. Most dairymen in this particular section of the Northeast were not adversely affected by the drought that prevailed in other parts of the Northeast. Their net incomes in 1957 are expected to be record high primar­ily because of an 8-percent increase in the price of milk.

Hog-Dairy Farms, Corn Belt

In 1957, operating expenses on hog-dairy farms probably will be at an all-time high. They will average nearly 4 percent above 1956 and 35 perc~nt above 1947-49. Cost rates also w.lll average higher. Despite steady advances in total expenses, however, indications are that 1957 operating expenses per unit of production will be lower than last year and lower than the 19ij7-49 average. Production efficiency has increased enough on these farms in the last 10 years to offset increases in prices paid.

Expansion in farm size, near-record yields, increases in hog produc­tion and corn sales, higher milk production per cow, and a 6-percent increase in prices received are expected to boost 1957 incomes on ttese farms to 20 percent above last year and 10 percent above 1947-49.

27

Table 7.- Prospective costs and returns, selected types of farms, 1957, with comparisons

Type of farm and item

Dairy farms, Central Northeast: Gross farm income----------------------: Operating expenses---------------------:

Per unit of production---------------: Net farm income------------------------: Cows, 2 years. old and over-------------: Prices paid----------------------------: Prices received------------------------: Net farm production--------------------:

Hog-dairy farms, Corn Belt: Gross farm income----------------------: Operating expenses---------------------:

Per unit of production---------------: Net farm income------------------------: Corn production------------------------: Prices paid----------------------------: Prices received------------------------: Net farm production--------------------:

Cotton farms, Southern Piedmont: Gross farm income----------------------: Operating expenses---------------------:

Per unit of production---------------: Net farm income------------------------: Cotton---------------------------------: Other crops----------------------------: Prices paid----------------------------: Prices received------------------------: Net farm production--------------------:

Winter wheat farms, Southern Plains: : Gross farm income----------------------: Operating expenses---------------------:

Per unit of production---------------: Net farm income------------------------: Wheat----------------------------------: Grain sorghums-------------------------: Fallow---------------------------------: Prices paid----------------------------: Prices received------------------------: Net farm production--------------------:

!1 Tentative October estimates.

Unit

Dollar doo

Index Dollar Number Index

doo doo

Dollar do.

Index Dollar Bushel Index

do. doo

Dollar do.

Index Dollar Acre

do. Index

doo do.

Dollar do.

Index Dollar Acre

do. do.

Index doo do.

Average 1947-49 :

8,822 4,930

100 3,892

2lo9 100 100 100

10,191 4,552

100 5,639 1,820

100 100 100

3,581 2,016

100 1,565 18.5 42.5 100 100 100

14,186 4,169

100 10,017

300 18

167 100 100 100

Percentage of 1947-49

1956

ll5 120

95 109 121 108

90 132

108 130 101

90 152 114

78 129

118 125 103 109 89

100 112

95 121

51 115 161 32 66

170 91

121 86 66

1957 1/

127 124

95 131 122 112

91 138

121 135

99 110 156 ll8 84

137

lll 116 108 105

71 97

115 95

108

68 117 170

47 37

546 98

126 85 65

28

Cotton FNJ!lS , Soutlij;rn Piedplont

According to October estimates, operating expense per unit of pro­duction on southern Piedmont cotton farms will be 5 percent higher in 1957 than in 1956. Total cost per unit of production (including charges for capital and unpaid labor) will be nearly 10 percent higher. The increase in cost will be due to higher prices paid for goods and services used in production and to a smaller volume of production. The index of prices paid (1947-49 • 100) for production items by these cotton farmers increased from 112 in 1956 to 115 in 1957.

Net farm production in 1957 will probably average about 10 percent less than in 1956 but 8 percent above the 1947-49 average. The yield of cotton is expected to average the same as in 1956 but approximately 20 percent of the cotton acreage was put in the Soil Bank.

If prices received for lint and cottonseed around mid-October con­tinue through December, net farm incomes on southern Piedmont cotton farms including about $325 per farm in Government payments will average about $1,645 or 4 percent below the income received in 1956. The drop in estimated income is due almost entirely to higher prices paid for goods and services. Prices received for products sold on these cotton farms probably will average about the same as in 1956. Soil Bank payments offset the reduction in income caused by the smaller acreage of cotton in 1957.

Winter Wheat Farms. Southern Plains

In 1957, prices paid for goods and services used in production by operators of winter wheat farms in the Southern Plains are about 4 percent higher than in 1956 and 26 percent higher than in 1947-49. Compared with 1956, operating expenses this year probably will be about 2 percent higher per farm and about 6 p~rcent higher per unit of production.

Production per farm is expected to be about 2 percent lower than in 1956 and 35 percent below the 1947-49 average. The acreage of wheat har­vested per farm in 1957 was about half of the acreage harvested in 1956 and about 37 percent of the acreage harvested in 1947-49. Much of the land normally used for wheat on these farms was either placed in the Soil Bank or diverted to grain sorghums in 1957· The acreage of sorghums on these farms in 1957 is the largest on record. Crop yields in 1957 were somewhat above average but not as high as they were in 1947-49.

Net farm incomes on these farms including Government payments of about $1,300 per farm are expected to average about $4,700 in 1957. This is about 47 percent more than the incomes obtained in 1956, but only about half the 1947-49 average. The 1956 incomes on these farms were.greatly reduced by drought.

Table 8.- Distribution of farm operating expenses, specified types of commercial farms, 1956

Type and location of farm

Machinery]/

:Depreci- :Operation: ation : '!/ :

Hired labor

2/

Ferti­lizer

and lime

Feed and sev

:Buildings: :Livestock: and : : : fences

Taxes Other 2/

Percent Percent Percent Percent Percent Percent Percent Percent Percent Dairy farms:

Central Northeast-------------------: Eastern Wisconsin-------------: Western Wisconsin-------------:

Corn Belt farms: Hog-dairy------------------------: Hog-beef raising-----------------: Hog-beef fattening-----------------: Cash grain--------------------------:

Tobacco farms: Tobacco-livestock, Kentucky--------: Tobacco-cotton, North Carolina-----:

Cotton farms: Southern Piedmont------------------: Black Prairie, Texas------------: High Plains, Texas (nonirrigated)---: High Plains, Texas (irrigated)-----: Mississippi Delta (small)---------: Mississippi Delta (large-scale)----:

Peanut-cotton farms: Southern Coastal Plains----------:

Spring wheat farms, Northern Plains: ~eat-small grain-livestock---------: Wheat-com-livestock----------------: Wheat-roughage-livestock------------:

Winter wheat farms, Southern Plains: Wheat-------------------------------: Wheat-grain sorghum---------------:

Wheat-pea farms: 'l'l'ashington and Idaho--------------:

Sheep ranches: Northern Plains--------------------: Southwest-------------------------:

Cattle ranches: Northern Plains--------------------: Intermountain region----------------: Southwest--------------------------:

9.8 22.6 21.8

17.6 17 • .5 10.2 20.7

11.3 10.9

8.7 16.2 21.9 1.5.7 17.3 9.9

12,2

27.3 2.5.9 30.8

2.5.2 2.5.4

20.6

10.7 6.4

22.6 17.7 8.1

16.7 20.1 21.1

20.6 20.9 10.2 21.1

16 • .5 12.2

28.9 38.1 46.8 40.3 40.9 26,4

32.3

41.2 33.1 34.0

30.6 29,1

29.1

11.9 7.8

27.0 22.8 11.1

7.7 5.6 6.4

9.1 6.1 4.8 6.4

2.5.6 43.9

20.0 19.6 14.2 30.7 10.4 36.1

11.5

7.5 7.7 4.0

5.9 5.4

14.4

21.6 11.1

8.1 17.0 6.2

4.3 4 • .5 4.7

3.6 5.3 1.6

10.2

13 • .5 11.9

16.1 1.9

2.6 7.3 7.4

18.?

2.0 1.1

.2

1.9

9.3

38.3 18.5 17.8

22.3 24.3 19.2 12 • .5

8.6 4.2

7.2 10.0 6.5 2.4 8.9 6.7

14.3

3.5 8.6

11.7

12.8 13.4

5.1

29.0 36.8

5.5 7.4

40.0

2.1 1.0

.9

1.2 .7

39.9 .6

.s

.8

1.2 .4 .4 .1 .3 .1

.2

.7 2.3 1.4

.7

.e

.1

4.4 9.2

4.7 5.6 8.6

5.8 10.0

7.3

9.2 7.8 4.8 8.2

7.6 4.0

5.2 5.6 2.8

y 4.3 3.3 3.4

4.8

4.8 6.1 .5.5

6.3 6.3

4.7

3.2 14.5

.5.1 3.7

11.1

7.5 7.7

10.1

8.5 10.5 s.s

15.9

11.4 2.0

3.0 3.8 .5.4 2.0 2.4 2.7

2.4

9.9 11.3 9.9

13.2 13.9

9.4

9.0 7.5

13.9 21.7 9.2

7.8 10.0 9.9

7.9 6.9 3.B 4.4

s.o 10.1

9.7 4.4 2.0 1.9 9.2 7.3

3.lt

3.1 3.9 2.5

3.4 5.7

7.3

10,2 6.7

13.1 4.1 5.7

1/ Includes motor vehicles. 2/ Includes ginning, hauling, and other machine work hired. 3/ Includes payments to croppers. 4rrncludes cost of grazing permits. .5/ Exclusive of rent, interest, and unpaid labor charges. 6/ Includes irrigation wells and water djstribution systems. - -

1\) \0

Table 9.- Index numbers of operating expenses per unit of production, specified types of commercial farms, 1956 with comparisons !/

(1947-49-100) Type and location :Average : : : : ; ' ; ' ' 1956 1948 : 1949 : 1950 : 1951 : 1952 : 1953 : 1954 : 1955 : of farm ; 1937-41 ; . . . . . . . . 3/

: Dairy farms:

Central Northeast-------------------: 52 103 100 96 103 113 102 97 93 95 Eastern Wisconsin-------------------: 45 109 101 lo6 112 119 114 114 117 113 Western Wisconsin-------------------: 38 110 95 101 107 111 105 114 110 103

Corn Belt farms: Hog-dairy---------------------------: 50 99 98 105 112 112 111 102 105 101 Hog-beef raising--------------------: 50 100 92 96 108 104 113 117 98 93 Hog-beef fattening------------------: 44 105 99 114 134 112 105 114 109 110 Cash grain--------------------------: 49 91 98 115 118 126 131 127 125 109

Tobacco farms: Tobacco-livestock, Kentucky---------: 47 96 101 108 110 112 117 114 130 130 Tobacco-cotton, North Carolina------: --- 103 104 110 110 117 122 131 112 111

Cotton farms: Southern Piedmont-------------------: 49 96 103 113 106 118 111 121 97 103 Black Prairie, Texas----------------: 38 104 101 107 138 131 114 133 109 146 High Plains, Texas (nonirrigated)---: 44 114 93 105 126 171 277 114 121 129 High Plains, Texas (irrigated)------: - 114 90 112 120 118 126 109 126 114 w Mississippi Delta (small)-----------: --- 95 loB 114 142 136 129 135 117 129 0

Mississippi Delta (large-scale)---: --- 93 101 105 125 114 99 104 86 89 Peanut-cotton farms:

Southern Coastal Plains-------------: --- 98 110 111 123 134 128 137 109 110 Sprjng wheat farms, Northern Plains:

Wheat-small grain-livestock---------: 59 95 122 94 93 125 117 129 83 79 Wheat-com-livestock----------------: 60 90 126 115 100 149 117 121 123 118 Wheat-roughage-livestock------------: 92 94 122 108 110 158 104 125 102 117

Winter wheat farms, Southern Plains: Wheat-------------------------------: 90 105 124 lo6 155 84 148 121 142 161 Wheat-grain sorghum-----------------: 92 113 109 157 150 125 234 163 195 166

Wheat-pea fanns: : Washington and Idaho----------------: 60 104 112 105 122 114 106 100 130 109

Sheep ranches: Northern Plains---------------------: 50 94 129 105 113 136 114 122 120 127 Southwest---------------------------: --- 112 97 118 136 135 133 127 112 138

Cattle ranches: Northern Plains---------------------: 65 93 137 127 137 127 107 122 124 129 Intermountain region----------------: 48 92 122 135 136 142 146 168 154 130 Southwest---------------------------: --- 109 90 103 141 163 136 135 112 146

:

1/ Exclusive of charges for capital and unpaid labor. ?__/ Preliminary.

Table 10.- Index numbers or total cost per unit or production, speciried types of commercial farms, l956 with comparisons 1/

(1947-49-100) : : : : : : : : : :

Type and location :Average : 1948 : 1949 : 1950 : 1951 : 1952 :

1953 : 1954 : 1955 : 1956

of farm :1937-41 : : : : : : : : : '£/ : : : : : : : : : : :

Dairy farms: Central Northeast-------------------: 49 100 102 94 102 115 107 101 97 101 Eastern Wisconsin-------------------: 48 lo6 100 100 108 116 ll2 108 108 lo6 Western Wisconsin-------------------: 43 107 95 96 104 110 103 103 99 95

Corn Belt farms: : Hog-dairy---------------------------: 49 99 97 102 109 112 113 103 108 103 Hog-beef raising--------------------: 48 96 92 95 111 107 118 119 102 100 Hog-beef fattening------------------: 46 101 99 108 127 111 109 110 108 109 Cash grain--------------------------: 50 92 97 110 117 128 131 123 123 107

Tobacco farms: : Tobacco-livestock, Kentucky---------: 48 95 102 109 110 112 118 112 129 130 Tobacco-cotton, North Carolina------: --- 101 105 108 lo6 118 124 128 112 112

Cotton farms: : Southern Piedmont-------------------: 44 93 lo6 115 103 115 105 119 94 108 Black Prairie, Texas----------------: 44 107 95 113 142 127 101 133 105 158 High Plains, Texas (nonirrigated)---: 44 132 83 110 125 189 356 123 135 144 High Plains, Texas (irrigated)------: - no 89 119 124 125 131 113 130 116 Mississippi Delta (small)-----------: --- 90 108 113 143 131 115 128 lo6 120 Misbissippi Delta (large-scale)-----: --- 92 102 107 127 117 103 113 92 101 w ....

Peanut-cotton farms: : Southern Coastal Plains-------------: --- 97 108 104 111 119 112 124 96 96

Spring wheat farms, Northern Plains: : Wheat-small grain-livestock---------: 58 94 124 94 95 137 123 137 86 81 Wheat-com-livestock----------------: 53 89 125 111 98 155 119 122 122 116 Wheat-roughage-livestock------------: 78 94 122 lo6 110 162 108 125 100 114

Winter wheat farms, Southern Plains: : Wheat-------------------------------: 77 108 123 lo6 152 89 155 125 150 171 Wheat-grain sorghum-----------------: 78 120 lo6 159 163 136 262 180 218 188

~eat-pea farms: : Washington and Idaho----------------: 50 107 112 101 121 112 lo6 96 135 110

Sheep ranches: : Northern Plains---------------------: 47 94 126 105 110 132 112 121 115 120 Southwest---------------------------: --- 112 99 115 147 147 143 137 124 158

Cattle ranches: : Northern Plains---------------------: 56 96 128 120 119 126 114 112 118 128 Intermountain region----------------: 44 97 114 123 119 128 129 123 119 105 Southwest---------------------------: --- 108 96 110 136 167 142 149 126 165

:

1/ Includes charges for capital and unpaid labor. Y Preliminary.

UNITED STATES DEPARTl'1ENT OF AGRICULTURE

vJASHINGTON 25, D. C.

PENALTY FOR PRIVATE USE TO AVOID PAYMENT OF POSTAGE, ~300