BUSINESS & INVESTMENTS

BLUE RUIN CRY IN WEST IS NOT BORNE OUT BY FACTS; EFFICIENT FARMERS SUCCEED

There Are Exceptions, of Course, But in the Main Industry, Initiative and Intelligence Have Met With Success, Even in These Recent Slump Years

B. P. ALLEY July 1 1923
BUSINESS & INVESTMENTS

BLUE RUIN CRY IN WEST IS NOT BORNE OUT BY FACTS; EFFICIENT FARMERS SUCCEED

There Are Exceptions, of Course, But in the Main Industry, Initiative and Intelligence Have Met With Success, Even in These Recent Slump Years

B. P. ALLEY July 1 1923

BLUE RUIN CRY IN WEST IS NOT BORNE OUT BY FACTS; EFFICIENT FARMERS SUCCEED

BUSINESS & INVESTMENTS

There Are Exceptions, of Course, But in the Main Industry, Initiative and Intelligence Have Met With Success, Even in These Recent Slump Years

B. P. ALLEY

(Inspector for Western Canada of one of the Dominion's leading banks)

ONE two, frequently the West and hears Blue that Ruin, these are inseparable companions these days. The main reason given for this alleged deplorable state of western affairs is that the industry of agriculture is at a very low ebb where the unfortunate persons engaged in it cannot make a living, to say nothing of the profit on their operations which everyone but a rank Socialist will admit is the just and proper due of any man engaged in an industry so essential to the well-being of us poor food-consuming and clothes-wearing humans.

That this is so is attributed to a variety of evil genii which have produced high prices for almost everything but grain and cattle and which are, according to many more or less self-appointed authorities, led, tutored and spiritually advised by the chartered banks and other big interests, among which the grain exchange is given a prominent place. These are accused of draining the very life blood of the farming communities of this land of ours which is otherwise not unfair, except for a long winter, work, mosquitoes, occasional drought or too much rain, and a few other minor ills that flesh is heir to on these extensive and fertile plains, and elsewhere.

Some Specific Profits

WHAT these pessimistic people claim would be deplorable indeed, if true. I propose to present another side of the picture which shows that, fortunately for us all, themselves included, it is not true. Within the last month or so, I have had an opportunity to enquire carefully into the results obtained last year by a number of farmers scattered widely over the West, men who are not in any way exceptional, unless being capable farmers and careful in their expenditures makes them so. This is what I found:

A farmer in Southern Manitoba with 460 acres under cultivation made a profit of $3,122.

Another farmer in Southern Manitoba, living nearly 100 miles from the one last mentioned, with 420 acres broken made a profit of $3,884.

Still another farmer in Southern Manitoba with 1,200 acres under cultivation made a profit of $1,400. The crop in his district was less than a fair average.

A farmer living almost fifty miles north of Winnipeg, operating a half-section more or less on mixed farming lines, with 125 acres under crop, made a profit of $1,245.

A farmer in North-eastern Saskatchewan farming a section of land—640 acres—made a profit of more than $4,700.

A farmer in East Central Saskatchewan, with 216 acres in crop, made a profit of $2,400.

Another farmer in Central Saskatchewan, farming more than 1,200 acres near one of the large cities, made a profit of more than $6,000 after paying his living expenses on a scale of comfort which is exceeded by very few business and professional men with an income of less than $10,000. It has to be admitted that this man’s grain yielded exceptionally well, but it always does; he is that kind of farmer.

A farmer in Northern Saskatchewan

cultivating 960 acres made a profit of $11,000. He also is “that kind of farmer,” and perhaps it is not fair to include two men of that type in this list. But after all, they are no more favorably situated than many others and numerous instances of as good results could be produced.

Another farmer in Northern Saskatchewan, some 100 miles west of the last mentioned, farming 480 acres, made a profit of $2,200.

A rancher-farmer in North-western Saskatchewan, with 475 acres under cultivation, made a profit of $2,500.

A farmer in Central Saskatchewan, cultivating 900 acres, made a profit of $2,000.

Perhaps the most significant case of all is that of a farmer operating a large acreage in one of the areas which last year suffered from drought. This man is a capable farmer and a good manager. Unfortunately for his financial condition, he over-reached himself badly in the purchase of land during the years of war prices and is now carrying a very heavyload of debt with its accompanying burden of interest. His wheat yielded only twelve bushels per acre, but of a good grade. With this small yield he made enough profit over his expenses to meet his interest charges and taxes and leave him a small stake for next year. It must be admitted, of course, that this man is an exceptionally capable farmer.

No Wages Allowance

IN EVERY case these profits represent the net gain on operations after providing for the living expenses of the farmer and his family but without any other allowances for wages or provision for depreciation or interest on investment. It may be said that on this basis the return on the investment of some of these farmers is rather small, but the significant thing is that in these instances, selected from all over the Provinces of Manitoba and Saskatchewan, there is a return and in some cases a quite substantial one, in a year when it is widely' and vociferously claimed that farmers could not even make operating expenses.

This may be a good place to say something concerning the methods which are followed in figuring a farmer’s operating costs. It is always the practice, and quite properly so, to make an allowance for interest on the farmer’s investment and for wages for the farmer himself. Calamity howlers usually overlook the fact, however, that these sources of income provide perfectly good spending money.

There are people—they are not numerous in this country fortunately—who live on the returns from their investments and are generally regarded as the lucky ones in life. A very large portion of our population has no other source of income than the money paid it for its labor, whether of hands or brain. If a farmer, after providing for these items, has only broken even, is there any real reason to feel sorry for him?. He has at least had a steady job under a sympathetic employer—himself—and has made enough to provide food, clothing and shelter, representing in most cases^a not inconsiderable degree of comfort.

The average city worker of the “whitecollar class,” even those with a moderate capital invested in the business in which they are engaged, whom the farmer sometimes professes to envy as leading an easy and pleasant life in comparison with his ! own, has seldom done any better in the last few years. After providing for the bare requirements of Iris family he has had very little left to put by for a rainy day or to purchase an occasional luxury or entertainment. At the same time his job, and consequently his ability to keep a roof j over his head and a full larder, has not on the whole been anything like as secure as ; the farmer’s.

Mixed Farming Benefits

THERE is another angle also to the question of farming profits, and that is the extent to which western farmers as a class supply their table and provide for their ordinary living expenses from the small products of the farm. It would perhaps suit conditions better to say the extent to which they do not do these things. In most farming sections of the East the farmer who does not have a credit balance at the local store from the sale of butter, eggs, poultry, etc., after providing for his grocery bill is considered to lack thrift. Such was until recently very much the exception in the West. The adverse conditions of the last few years have, however, forced a material addition to the number, and to this extent may not have been an unmixed evil.

A bank manager in one of the sections of Saskatchewan which previous to last year had suffered several crop failures in succession, told me recently that those of his customers who kept a few cows, hens and hogs and made a practice of raising on the farm the things they mostly consumed, were either square with the bank once more or were in good shape as compared with the man who ran up a store bill in the course of the year for butter, eggs, condensed milk and other canned goods, which used to be the widespread practice.

As an indication of what is being done along these lines, it may be mentioned that the Central West produced more than two million dollars’ Worth of eggs last year. This sum is a half million dollars more than was paid the Hudson’s Bay Company for the country by the government of that day.

One packing concern paid out $45,000 for turkeys in one week in eight small towns in Manitoba, and 100 cars of turkeys valued at about $10,000 per car were shipped out of Winnipeg last year. Manitoba produced 2,000,000 lbs. of honey in 1922, and 26,000 Manitoba farmers ship milk and cream to the various dairies and creameries in the Province. Saskatchewan and Alberta also have numerous creameries, and what is true of Manitoba as to the development in this direction is true in a large measure of the other two Provinces as well.

Incidentally, it is interesting to note that The Grocer of London, England, recently stated that in a general way the butter shipped to England, from Manitoba, Saskatchewan and Alberta proved Í superior to the product of Eastern Canj ada and commanded a higher price. The credit for this is given to co-operation between the Provincial Governments and the creameries and to very efficient j systems of government grading.

A Few Deserted Farms

ALBERTA is, unfortunately, in a class by itself this year. It is well known that, on the whole, the southern part of that province has had very poor crop results for several years and a satisfactory crop was not obtained even last year over a large part of that area. A good many well-informed old-timers have always claimed that much of this part of the province was too dry for successful grain farming and it would seem that they were right. Irrigation will help to save the situation in certain fairly extensive areas, but it may be that a substantial section of Southern Alberta cannot be farmed successfully, at least on the lines which have been followed up to the present. It seems improbable, however, that a large area of fertile country, with so much sunshine and so short a winter as that for which Southern Alberta is famous, will he allowed to become a deserted waste, and the worst that seems likely to happen to the portion which does not get a satisfactory rainfall and cannot be irrigated is that it will go back in time to the pros-

pective ranching country that it was before the grain farmer took it up. This will doubtless be a slow process and a painful one for those now occupying the land, and their creditors. In the meantime, despite the efforts of the provincial government to cope with the situation through their Douth Area Relief Act, a considerable number of farms in the worst areas are being deserted and many of the farmers who remain are in a bad way financially. It is the case, though, that even all of Southern Alberta is only a corner of the whole West and that a substantial part of the older settled sections in that portion of the Province is by no means on its uppers. In addition, the irrigated areas, which are being extensively added to by projects now under way, have prospered and will continue to do so.

Northern Alberta had a poor crop last year and has also been hard hit by the depreciation in the cattle raising industry, being extensively a mixed farming country. However, this section of the province has been particularly fortunate in the small number of crop failures it has sustained and should be in a condition to stand a few bumps. The dry weather which was responsible for last year’s failure must, in the light of its past record, be regarded as abnormal, and with the improvement in the market for western cattle which is looked for by many authorities in that line, a quick return to prosperity in the northern part of the province may be expected. Even this year there are many farmers in that section who have prospered.

Speaking of cattle raising, it is maintained widely that there is no profit in this branch of farming under the conditions which have prevailed since cattle prices broke so badly after the close of the War. I know of a case, however, of a small ranching proposition in northern Saskatchewan with a total investment of around $20,000, which last year returned a profit of $1,100 over operating expenses including a living for seven adult partners. In this case no grain is grown for sale.

Cutting Losses on Cattle

CATTLE raisers did undoubtedly lose heavily when prices dropped; but they were in no worse situation than the merchant or jobber who was caught with a stock of high priced goods when prices began to fall. The merchant as a matter of course took out his next inventory at replacement values, wrote off his loss to profit and loss account and, if he had enough capital left to maintain his credit, went ahead again doing business on the new basis of values. Cattle raisers who followed the same process, had the right kind of cattle and applied the right kind of management, are making some money to-day, even if there is room for improvement in their line before it could be called a highly profitable one. There are those who believe that this may not be a bad time to get into the cattle-raising business; in fact, those who got into it at the top and lost, might devote a little thought to the possibility of getting into it again at the bottom and recovering some of their money.

Leaving out the areas in which climatic conditions last year were wholly exceptional or those which appear to have been unsuited from the start to successful grain farming on the lines there introduced—and, in all, these areas are not extensive when compared with the vast expanse of the West—it cannot he shown that a capable and reasonably thrifty farmer could not make progress last year; and is there any good reason why any other kind of farmer should expect to succeed either here or anywhere else?

On the other hand, I have discussed the matter with bankers and others familiar with the situation and believe that instances of success such as have already been detailed could easily be multiplied many times over. I have been informed by a credit officer of one of the large banks that his examination of the statements of affairs of the farmer customers of his bank, outside of the exceptional areas above mentioned, indicated that in general those who could properly he described as competent farmers made from five to fifteen per cent, on a reasonable valuation of the assets actually used in their farming operations after providing for their living expenses and a moderate additional allowance for wages and depreciation.