Farm Accounting

Northern Advocate, 20 February 1939, Page 12

Farm Accounting

A corespondent of the New Zealand “Accountants’ Journal” mentions that Mr R. O. Montgomerie of Kakatahi, near Wanganui, has been endeavouring for three years' to persuade the head office of the New Zealand Farmers’ Union to undertake to big task of acquiring statistics of the business of farming in the Dominion. He visions the recording of the occupation of farming in profit-and-loss-and-bal-ance-sheet form so that one could say definitely that farming in New Zealand, after making provision for all contingencies, during (say) the last five years has produced an income of so much on the capital invested. The industry would then be in a position, he claims, of being able to make a specific case for lessened tariffs or increased exchange. Mr Montgomerie also wishes' to know the average cost of replacing soil fertility by fertilisers and other methods, of combating noxious weeds, rabbit-nuisance and disease-loss among stock, together with such matters as capital requirement per head of sheep, etc.

The advent of the guaranteed price has compelled the dairying authorities to produce some very searching and carefully prepared costs in that branch of the industry. Mr Montgomerie would like to see this carried out in sheep and agricultural branches of farming and the economics of the whole industry carried a step further. A suggested step in this direction would be the keeping of proper books of account by all farmers. As the Head Office of the Farmers’ Union has not access to farmers’ books, it has been suggested that it have access to, by some means, to their income-tax returns, or to a copy of them. Mr Montgomerie’s leading point is that some arbitrary, but readily calculable means of assessing the depreciation of second-class land must be found and it has been submitted in this connection that land must be roughly classified, and a rate of depreciation fixed in certain classes where depreciation takes place. In a comment on the letter, the editor remarks: —“The subject is of farreaching importance, not only to the farming community but to the Dominion generally, and it might be advantageous to have a thorough investigation made by some leading accountants who could, no doubt, evolve a system which would be of practical value to men on the land. The subject might well form the basis of a thesis competition. “There is one point in the letter, however, which we think could hardly be given effect to, and that is in respect to access to income-tax returns sent in by farmers. Apart from such returns being regarded as strictly confidential by the Department, we are afraid that this plan would be impracticable.”