A FARMER'S PROFITS

Evening Post, Volume C, Issue 89, 12 October 1920, Page 2

A FARMER'S PROFITS

Siiy—The following is extracted from your report, in last ■ evening's issue, of theevidence given before the Butter Prices Investigation Committee:—"A farmer, of Rototuna, said he had 50 acres, which ho bought six years ago at £32 an aore. He had refused £90 per acre. /His expenditure was £951 last year, and he mado £692, the loss being £259. He was not working oil the farm, which was in charge of his son, who worked on the average 13 hours a day, wages for the sod being shown on the balance-sheet at £208 a year. .The only reason he could carry on was because he had bought the land at £32 an acre. A farmer's only bank was the advance ia value of the land. The loss, of course, was calculated on tho pressntday value of the land." I trust that you will be able to find spaoe for the following brief comments on th» abovo figures. . (1.) Tho expenses, £951, are certainly ihigh. Probably they include items which are in the nature of oapita! improvements, and which, accordingly, are not a fair charge against the rear's receipts. But let that pass. The expenses also, doubtless, include interest on tho value of the land. (2.) The owner has refused an offer of £90 per acre for the land. We aro, there, fore, justified, in assuming that the minimum value of the land is £90 per acre. (3.) .The land cost £32 per acre six years ago. In six years, therefore, there has been an increase in value to tin owner of £58 per acre, or £2900" in all, or an average of £1-83 6s 8d per annum. (4.) The owner quotes his loss for tho year as being £259 It is far from probable_ that he has made a loss in each of the six years. But. grant that he has made a loss of £259 in each year. (5.) The fact then remains that, aftctdeducting from the £4-83 6f 8d per annum mentioned in (3) above, the £259 per annum mentioned in (4-)- above, them still remains an annual Vverase urofit of £224- 6s. Bd. Surely this is not bad for a man whe is "hot working on his farm." (6.) Tljf> farmer usually claims that u-ny increase in value of .his land "is due to his own hard work." This plea caanot be put forward in the present case as the owner "is not working on his farm." My reason for writing tho above is the hope* that it may induce some of your readers to analyse" some of tho statements which are constantly being made in connection with matters such as this. Analysis ot costs is. strictly speaking, an accountant's work, but few of your readers will have difficulty in picfciirg holes in some of the figures submitted to the Butter Prices Investigation' Committee.—l am, etc., G. ,' Ist October.