FARMING OPERATIONS

Timaru Herald, Volume CXXV, Issue 18646, 15 August 1930, Page 13

FARMING OPERATIONS

HORSE AND LABOUR COSTS. An interesting Agricultural Bulletin has been prepared by the Canterbury Chamber of Commerce in conjunction with the Canterbury Agricultural College, Lincoln, and the Economic Department, Canterbury College. This deals with horse and labour costs in farming operations. This Bulletin states that with the application of science to farming there has grown up,'particularly within the last two or three years, the demand for accurate information in regard to various operations on the farm. To supply this demand some system of costing is essential, since one of the basic instruments of arable farming is the horse team, an indication is here given of how horse costs may be arrived at, followed by an explanation of causes of variations that occur in horse costs. The example taken represents no actual - case, and is set out in this form merely as an example of a simple method of arriving at horse costs. Invetsigations made over a number of farms at various times show so much variation that it is evidently necessary, in order to obtain any satisfactory degree of accuracy, that each fanner’s costs should be calculated individually. Method of Arriving at Costs of Horse Labour. The costs can be easily arrived at by compiling a Horse Working Schedule on the following lines: — Example: Horse Working Schedule.

Total Cost for 6-Horse Team of 7 Horses .. £227 13 This is equivalent to approximately £32 10/- per horse. Assuming an average of five horses are worked 200 days in the year, 8 hours per day, 8,000 horse hours are worked, at approximately 7d per horse hour. Cost per Acre. Since, as will be shown later, the acreage worked is just as important as the cost per horse of per hour worked, the following schedule is inserted to show the method of arriving at the cost per acre ploughed. Similar methods can be used for estimating the cost per acre of other farm operations. Ploughing Cost Schedule. Cost of horse-labour per day (ploughing with six horses, working eight hours each, i.e., 48 horse-hours, at 7d), £1 8/-; cost of man-labour per day, working 240 days, at £2 per week and keep (£l6B per annum), 14/-; total labour cost, £2 2/-. Labour cost per acre (if 4 \ acres ploughed per day). Overhead cost; interest on plough, £25 at : per cent. £l/10/-; depreciation on plough. £25 at 5 per cent., £l/5/-; repairs £2/12/-; ploughshares £2; total £7/7/-. If 250 acres ploughed in year, overhead cost per acre ploughed will be 7d; total cost of ploughing per acre 9/11. Explanation of Items in Schedule. Feed.—The amount of feed required varies in proportion to the amount of work done by the horses. A hardworking horse in Canterbury requires approximately two acres of grass and five tons of chaff or additional feeds per annum; but for horses worked lightly, less chaff is necessary. Chaff should be charged on the schedule:— (a) Where it is produced on the farm—at average sale price, less cost *-f cartage to rail or store. (b) When it has to be bought—at average purchase price, plus cost of delivery on the farm. It is important to remember that where horses eat home-grown chaff, the cost of hard feed is only a cash charge, in so far as chaff-cutting, use of bags and twine, etc., are concerned; moreover, chaff can often be grown in a rotation when horses and man-lab-our would otherwise be less profitably employed, and as a surplus in seasons after the ground has been used for winter. Grazing.—This item should be the r:ntal value plus rates on the amount 0. grassland required for grazing purposes. Sundries.—These comprise general expenses in connection with horses, harness and equipment, and vary considerably from farm to farm. Depreciation.—Horses should be valued at the end of each year and a list made on the lines set out below. At the end of 1930 any purchases dur- ■ lng the year should be added to the \

1929 list, and any sales during the year added to the 1930 list. Any reduction in the value of the team, as disclosed by a comparison of depreciation to be written off. Value of Horses on Hand at the Beginning and End of the Year.

Value of team at July Ist, 1929 .. 175 Add purchased during year, Jean 4 35 4 35 Value of team at June 30, 1930 .. ..165 Add Sales during year Sam 8 15 £2lO £IBO Difference: Depreciation in value of Team, £2lo—£lßo, equals £3O. Where horses are renewed by breeding rather than buying, the increase in value of young horses is offset by the increase in the amount of feed required, the reduced amount of work obtained from the brood mares and the amount of service fees paid. On farms where horses are bred for the purpose of sale, it is advisable to keep all costs in connection with working horses separate. Over the last twenty years, work horses at the College have had a working life of 12 years, commencing at three years old; therefore, the annual depreciation between the ages of 5 and 15 has been 10 per cent, of the five-year-old value, although depreciation can, in some cases, be reduced by skilful buying and selling horses again at a profit. The value of horses affects both interest and depreciation costs. Prices should be fixed at conservative clearing sale values, according to the age and usefulness of each horse. The number of i horses kept should bear some relation to the acreage cultivated; the maximum acreage that could be handled per horse is usually reduced by the fact that the most profitable cropping rotation involves unavoidable peak periods; e.g., on the heavy wheatgrowing land the peak period for horse labour usually falls in May, and again in September; on the lighter plains land the peak period usually falls in December and February. Where sufficient horse or tractor power is kept on to cover peak periods, costs can be reduced by growing additional supplementary crops, or by carrying horses more cheaply with little feeding in the off period. If the acreage worked per horse becomes lower than the average it is usually the better plan to reduce horse numbers and do the extra work by contract. As a general rule, the lowest costs will occur on a farm where the horses are good, fast-moving, valuable horses, and six horses worked per man. With a low acreage worked per horse per year, cheaper and older, or breeding horses, can be kept, thus reducing interests or depreciation costs. The economic use of the 6-horse team of 7 horses, however, is usually only possible on the comparatively large cropping farm, where at least 120 acres of heavy or 240 acres of light land is cropped each year. Indirect Costs. Reference to the schedule will show that, to the total direct costs must also be added the indirect costs of interest on value of horses, and interest and depreciation on stable and harness, less manurial value of feed consumed. Total costs are the sum of all these items. Conclusion. An examination of the items involved will indicate that there is a considerable divergence in horse costs on various farms, and each case should, therefore, be considered on its own merits. At the same time, horse-lab-our costs are so considerable an item of expense in connection with cropping—costs amounting, for a six-horse team, to over £2OO per annum—that it is w: 11 worth the farmer’s while to investigate the expense of working his horses with a view to discovering whether or not these charges can be reduced, without prejudicing his returns. The total cost of horse-work-ing varies with the amount of work done, the most important point being total cost per acre worked, which should not be allowed to exceed contract rates. Working costs can be reduced by working not less than six horses per man, as many acres as possible per day, and making efficient use of man-labour when not engaged in team work.

Accurate cost records on the lines suggested in this Bulletin will place at a farmer’s disposal valuable information as a basis for important decisions in connection with farm management. For instance, complete cost records will materially assist in the solution of such problems as the relative advantages of team, tractor, or team plus tractor, the labour cost of permanent hands compared with contract workers, and the comparative net returns obtainable from cropping or grazing. The progressive application of modern business methods to farming ensures the early adoption of accurate costing systems by the farming community .which is responsible for the management of the Dominion’s xpost important industry.

6-Horse Team of 7 Horses. £. S. Direct Costs — Feed: 35 tons chaff, at £3 10/- . 122 10 Grazing: Rent and Rates for 15 acres grass .. .. Sundries: Veterinary, Shoeing, Clipping, Covers, Harness, Repairs, etc. . . 21 0 Depreciation: Difference in value of Team at beginning and end of year, as set out below .. 30 0 203 10 Indirect Costs— Interest on: £. s. Horses, £175 at 6% .. 10 10 Stables, £100 at 6% 6 0 Harness, etc., £40 at 6% 2 8 Depreciation on: Stable, £100 at 4% .. 4 0 Harness, etc., £40 at 25% 10 0 Total 32 18 Less Manurial Residues of 35 tons chaff, at 5/per ton 8 15 24 3

Name Age Value Age Value year 1919 years 1930 Dot 11 15 12 15 Dolly 10 15 11 15 Bess 9 20 10 15 Bill 8 25 9 20 Sam 7 30 Jess 6 35 7 30 Tom 5 35 6 35