FARM ECONOMICS

New Zealand Listener, Volume 20, Issue 514, 29 April 1949, Page 18

FARM ECONOMICS

FARM ACCOUNTS. By Bray and Dawe. Oxford University Press. English price, 15/- net. HIS book was written for the Incorporated Accountants Research Committee and should be in the hands of every New Zealand farm accountant,» farm economist, government official dealing with farm business, and farmer who already has some knowledge of farm accounts and is interested in improving his own farm or maintaining farm business generally on a sound basis. The book will serve to clarify ideas already held by most good investigators |of farm accounts in New Zealand and strengthen their efforts to improve and standardise methods of presentation and | analysis of the farm accounts. _ Points of interest to all farmers are the advice to keep a Farm Banking Account separate from the private Banking Account and to bank all farm receipts promptly and intact. In England one-third of the value of the farm house is estimated as being used for farm business purposes; not one-quarter only’ as is permitted in New Zealand. Also since the Derating Act of 1928 agriculture in England bears no general rates.

In the farm Balance Sheet, the example used shows assets of £25,000 with .no liabilities apart from sundry accrued expenses, an example that most New Zealand farmers will envy and perhaps try to follow. The compilation of a Balance Sheet similar to a Limited Liability Company Balance Sheet is advocated with definite cash reserves set aside in the Balance Sheet: 1. for future income tax; 2. for deferred maintenance at the new and higher price levels; 3. for depreciation not only at the high book rates allowed in England, but to include extra sums to allow re-purchase at the new and higher prices; 7 4. for reserves to cover at least a four-year cycle of profits and for expansion.

It is also recommended that farmers should make a charge in the farm Profit and Loss Account for their own labour at highest paid rates and for the use of the farmer’s own capital, thus building up a return similar to that of a Limited Liability Company Account. The Act which many farmers have desired to see made law in New Zealand, whereby farmers may elect to treat the herds or flocks as capital stock, and not trading stock, is set out in detail. The method is explained by which a farm economist can assist qualified accountants by making analyses of similar types of farm accounts .and providing unit data per acre or per sheep or per cow against which the success oF failure of any, individual farm account can be tested. A Farm Management Primary Return by which standardised quantitative as well as money data can be collected by agricultural economists of England and Wales is included. This is to be used to assist the idea of just or fair prices as "although prices will of course fluctuate in the future, we shall probably no longer tolerate what may be called world chaos in agriculy tural production and prices."

References to the historical necessity for abolishing the common fields in England will provide lessons to many Maori farmers as to the necessity of better individual organisation for the handling

of their lands.

I. W.

Weston