xt72fq9q3k71 https://exploreuk.uky.edu/dips/xt72fq9q3k71/data/mets.xml Kentucky Agricultural Experiment Station. 1926 journals kaes_circulars_200 English Lexington : The Service, 1913-1958. Contact the Special Collections Research Center for information regarding rights and use of this collection. Kentucky Agricultural Experiment Station Circular (Kentucky Agricultural Experiment Station) n. 200 text Circular (Kentucky Agricultural Experiment Station) n. 200 1926 2014 true xt72fq9q3k71 section xt72fq9q3k71 i Qi
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UNIVERSITY OF KENTUCKY
COLLEGE OF AGRICULTURE »
Extension Division I °
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{ THOMAS P. COOPER, Dean and Director · _,
CIRCULAR NO. 200 rVAi Q
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THE IMPORTANCE OF FARM ACCOUNTS —iQ'-fj;
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GET I FARM HIYCWD UOOVQ
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Lexington, Ky.
August, 1926 `
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Published in connection with the agricultural extension work carried
on by co—operzttion of the College of Agriculture, University of Kentucky, _j§??
with the U. S. Department of Agriculture, and distributed in furtherzmce t {M
` of the work provided for in the Act of Congress of May 8, 1914. I
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The g1·0z1t0st i11C1'O21S(}S in fexrm
_ profits 211*0 made by imp1·0vi11g pru-
; du<21i<>11 at its weakest: points.
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_ CIRCULAR NO. 200 j
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The Importance of Farm Accounts
By H. A. WARD
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It is the ambition of every farmer to place his farm on a ji‘;'iji;=.q?i
better paying basis which will enable him to make more than a ·i»2¤,f°QQ
In€I'e living, enjoy Some of the comforts of life and to lay by l
something for old age.
Farming is of such a nature that it requires careful plan-
lling many months and sometimes years in advance of the time i __V’`
when the products will be placed on the market, At the begin- ’-i`_,
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‘ 4; Kentucky E.rtcnsz`0n Czrcular N0. 200
the keencst competition does not come from producers in the
same community but rather f1·om producers in other regions.
As long as this condition exists. farmers must know what the
producers in other regions and areas are planning to do, and to
· what extent they are endeavoring to supply the requirements oil
the market.
To be in a position to deal with his economic problems effec-
tively, the farmer should study and learn to utilize the facili-
ties that have been created hy the State and Federal agencies in
order to assist him in adjusting the combination of the various
crop and live stock enterprises to changing economic conditions.
The facts which farmers need to know regarding market rc-
- quiremcnts, advantages and disadvantages of competing areas,
l price trends and the like usually arc isolated, unrelated and
i widely scattered. Farmers cannot divert their attention from
I their production programs in order to collect these isolated facts
' and link them together in such a. manner as to give the true
· picture of conditions. 'l`lu?y must rely upon outside agencies
i to render this service. The .i\gricultnral lixperimcnt Station
' and the United States llcpartment of Agriculture are in a posi-
l tion to render this service. These agencies are unbiased and
l are striving to give the true and hest known intorination regard-
" ing the leading crop and live stock enterprises which will enable
farmers to plan their work according to market demands. chang-
. ing economic conditions and prohahlc price trends when the
_ products will bc placed on the market. 'l`his information is
available to farmers thru various publications and the state,
county and community extension agencies.
It is most important also. that the ;l’arn1er find ont the truth
i about his individual farm husiness. l*`armers may he ahle to
plan their production programs making the hest adjustment to
l changing economic conditions and still fail to make a fair return
for their year’s work. A l`ter deciding upon the right kind and
number of live stock to keep or the nnmher of acres of each crop
to plant their incomes will still depend very largely upon the
p methods and practices they use in the day-to-day jobs of grow-
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’ The Importance of Farm Accounts ' 5 I i
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Z ing their crops, feeding and caring for their live stock, and dis- _
posing of their products. One farmer may be using methods
tg and practices much less economical or less productive than those i {
K used by his neighbors. A considerable share of the wide differ- 2
ences between the earnings of the best farmers and the poorest i ·
farmers in a single area. for a given year has been found to be due in
to differences in the methods and practices used in running the
principal enterprises. The farmer who finds out his less eco-
nomical and less productive methods and practices and either {Ek _(··» "Y
correct or eliminates them, usually places his farm on a better lnjiijgj
paying biasis. Keeping records is an effect-ive means by which a
farmer can find out the truth about himself and his farm busi- . ·`i·' j
ness and determine his less economical and less productive me- l
thods and practices.
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WHY TAKE A FARM INVENTORY EACH YEAR? i
Because ; c do
]. lt shows the net worth or total value of all property
above the amount of liabilities and tells one whether he is get- l
ting ahead or going behind and how much.
_ 2. lt shows how the total investment is divided among the
different parts ot the farm business. - · T t
3. lt prevents drawing a false conclusion regarding pros-
perity from the amount of cash on hand at the end of the year. ]·
(lften a comparatively small amount of cash in the bank may
discourage a farmer who has done well but has his earnings tied
up in some kind of property. On the other hand a large amount
of cash may have come from a decrease in inventory of other
property. Cash on. hand taken ialone is not a safe guide to farm
earnm
4. lt helps to establish better credit. relations with the
T ban,ks or other loan agencies. in borrowing money.
5. It is very useful as a basis for adjusting losses in case
of tire.
6. It is necessary as a basis for keeping any system of ac-
counts. .
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. 6 Kentucky Extension Circular N0. 200
WHY KEEP FARM ACCOUNTS?
Because:
They reveal the less economical and less productive methods _
and practices used in conducting the farm business and show
where the farm income can be increased. They are of little or
no value unless they are analyzed and the results studied. `When
kept in the Kentucky Farm Account book the following facts
are revealed.
1, Net earnings of the operator. This shows the salary
the farm has paid the operator for his labor and management.
2. Gross farm receipts. This indicates the total amount
of farm receipts from the sale of crops, live stock, live stock pro-
ducts and any increases in inventories at the end of the year.
3. Total farm expenses. This shows the total expenses
. incurred in operating the farm.
4. Volume of business. This gives a measure of the vol-
_ nine of business by showing how much is received per acre from
_ crops, live stock, and live stock products.
5. Expenses per S100 income. This shows the thrift in
J . all parts ot the farm business and indicates how well expenses
t are being controlled.
· 6. Number of proclnctirve animal [units. This shows thc
; total amount of live stock.
I 7. Productive animal nnits per 10 acres of land. This
shows how heavily the farm is stocked in proportion to the
i amount of land operated.
8. Acres pastnretl per animal nnit. This indicates how
` economically pasture is being used on the farm.
9. Live stock receipts. This shows the gross receipts from
all the live stock enterprises.
10. Live stock receipts per animal unit. This gives a
measure of the returns from the live stock enterprises as a whole,
tending to indicate the quality of the live stock. Low returns
per animal unit indicate that some class of live stock is not
i giving profitable returns.
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- i The Importance of Farm Accounts 7 ;
11. Value of feeol fed. This shows the total value of feed i
R fed on the farm to all live stock. Q [
_ 12. Feed cost per animal unit. This indicates whether i 2
· the feed cost is high or low. Z
13. Returns per dollar’s worth of feed fed. This tells how
much money is being returned for each dollar’s worth of feed if-
fed on the farm to all live stock.
14. Returns from various classes of live stock. This shows ».`‘
which class of live stock is bringing in the largest return. .
15. Rate earned on the investment of the various classes of ji
live stock. This shows which class is the most profitable.
16. Returns per animal unit of the various classes. This 1
gives a measure of the returns from the separate classes of live
stock, placing each class on a comparable basis.
17. Relative importance of each live stock enterprise in the ·.·`· g_
farm organization. This is indicated by the per cent of gross
receipts coming from each class of live stock. Q
18. Use of labor. This indicates how well man-labor and
horse-work are being utilized on the farm. .
19. Productive man-labor. This shows the average num-
ber of 10-hour days of man-labor required to care for all the
crops grown and the live stock kept during the year.
20. Ai.¤ailal>le man-labor. This shows the total number of
days of available labor on the farm.
21. Labor index. This gives a measure of the use of man- .5 I;
labor on the farm by comparing the number of days of available
man-labor with the number of days of labor required by the
average farmer to care for all the crops grown and live stock
kept on the farm for the year.
22. Man equipment. This indicates the number of 1nen
used for a period of one year in running the farm.
23. Crop acres per man. This shows the number of acres
of crops grown per man on the farm.
24. Productive animal units per man. This shows the
amount of live stock kept per man on the farm. T
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· 8 1(chtucky Erfcrzsion C'z'rouZar N0. 200 `’·
25. Crop acres por horso. This shows the number of acres V e .i°Q¥{Q>Q
of crops grown per horse. 6 f
26. Days of procZ·zect·ire horse-work. This shows the total 1
number of 10-hour days of horse-work required by the average j_CJQ
farnier to take care of the crops grown and the live stock kept , _
during the year on the farm. j; _i·_
27. Days of zcorh per horse. This shows the number of _Y»'
days of work during the year for each horse on the farm. i''.' if
28, Less economical and less productive methods and prae- Q
1iees are revealed by a proper study of the record hook after it . A '._‘ _·
has heen analyzed. T ` f
_ 29. The analysis reveals tl1e strong points in the farm or- A A 1
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i 30. lt. shows what eau he done and what cannot he