USING FARM CAPITAL

Dominion, Volume 12, Issue 266, 6 August 1919, Page 10

USING FARM CAPITAL

Every fanner should recognise the foot that'.the capital invested in his farm ehould.be expected to earn interest foi him just as clearly as money deposited in a savings bank earns-interest (says an exchange). ■ A farmer who invests his money in a farm simply chooses the farm asvottering an opportunity for better re* turns.than would the same money return -if'deposited'in a savings bank oi invested in a farm mortgage,'and it ia just as much his business to see that it earns five or six or ten per cent, as it is for any man investing money in other lines of business to see. that it earns.a good-rate of interest. Ono of the'most effective ways in which to make capital earn interest ie to correctly proportion the amount of capital that goes into' Operating forms. Statistical data oovßruifr this point seems to indicate that from 25-to'33 per cent, of the total capital available should be used as operating capital.'.-*--• If -used for the purchase of good, liye'stock, for the purchase of suitable machinery, for the employment of labour, and -for the purchase of feeds and other material with which to keep the farm going, it will be in the safest form of operating- capital. On well-equipped dairy farms,, and especially where purebred stock is "kept, the proportion of capital in forms for operating may run as high as 40 per cent., with excellent relults. One starting in the farming business should, borrow money on the.real estate and invest it in .operating expense, first for the reason that it can be borrowed at a lower rate of interest on real estate; and, , second, because if ready cash is l available more stock and equipment is likely to be purchased. With available capital" for buying and selling and for making' a-'quick turnover when opportunity offers, the farmer, if good judgmieht is used, has many opportunities for making gains on his investment. On every farm thoro is a certain amount of labour which must be used on non-pro-ductive enterprises!" . On some farms this may run as high as 42 per cent. On welldiversified farms, and especially on dairy farms, it may run even as low as 20 per cent. On hignly-epecialised farms it may Tun even as low as 20 to 22 per cent. Obviously where 80 per cent, of the labouT ie expended on productive enterprises, such Oβ heavy yielding dairy cows, quickly fattened.hogs, and large yielding crops, the returns are bound to 1)o larger than where only GO per cent, of tho 'liabour is used for that purpose.