Economic and Marketing Information                                                                                                                                                                                          FOR INDIANA  FARMERS
Prepared by the Agricultural Staff of Purdue University, Lafayette, Indiana      
November  30,   1961
What The 1960 Farm Account Summaries Show
m AGKiC. ECONOwr*
by F. V. Smith, Agricultural Economics LAbad
More   favorable  prices   of   farm   products   in   1960— Wide Variation In Earnings
compared to 1959-coupled with the highest corn yields The dirTerenCeS in average labor incomes between the
on record were largely responsible for higher farm earn- more profitable and less prontabie gr0Ups of small farms
ings in  1960. Average labor income for 499 farm ac- in 1960 was $4J16 in the northern area. $7,473 in the
count farms1 was $5,672 in 1960-the same as in 1958. centra, area   and $4 540 fa the southern area. The dif.
Here's how 1960 compared with 1959 on important price ferences for the mediUm farms were $5,927, $9,388. and
and income factors: $5?039  for   the   northern?   central>   and   southern   areas
Prices received by Indiana farmers  Up 4 index points respectively.   For  the  large  farms  the  differences  were
Prices paid by  U. h. tarmers  Up  1 index point tfl       
Indiana livestock prices  Up 3 index points $11,451,   $18,240,   and   $/,811   for   the   three   areas   re-
Indiana grain prices            Down 2 index points spectively. Differences in the choices of enterprises, vol-
Indiana corn-hog ratio (from 13.3 to 15.6) ....Up 2.3 points 
Average net cash income, account ume  °1  business,   relative   prices,   and   efficiency   in   the
cooperators Up $2,546 production   of  crops,   livestock,   and   livestock   products
Average net change in inventory values  Up $3,116 l    
Average labor income, account cooperators ..Up $5,437 accounted   tor   the   major   part   of   these   differences   in
A earnings between the more profitable and less profitable
Average Earnings  Higher In  1960 ,                
groups of farms of similar size.
Although the average net cash income on Indiana farm
account cooperators'  farms  was  only  $2,546  higher  in .
Size Of Units Continues To Increase
I960 than in 1959, the average net farm income ($10,868)
was $5,647  higher  in  1960.  This  is  explained  by  the Average   acreage   per   account   farm   increased   from
fact that the net values of inventories increased $2,760 300 in  1959 to 310 in 1960. Average total capital in-
in 1960 compared to an average net decrease of $356 vestment increased from $100,113 to $103,916 (Table 1).
in 1959 (Table 1). Although several factors contributed During the past 10 years the number of acres operated
to this increase, one of the more important was higher Per cooperator has increased about eight per year.  In
hog prices in 1960 ($15.74 compared to $14.35 in 1959). the  same  period,   investment  per  farm  unit  has  more
 than doubled.
1 Account cooperators kept financial records on their farm busi- A, 
nesses. These records were classified,  summarized  and  analyzed Although the size of the units has increased, they  have
by the Agricultural  Extension  Service.  Cooperators'  farm  units been  operated  without  increasing  the  labor  force.   The
average about twice the size of all Indiana farms and are operated 
number  of  men  per  farm  has  averaged   about  
more  efficiently  than  average. 
Table 1. Average earnings and related data per farm, all account cooperators
Average
Item                                                              I960 1959                                 1955-59                                 1945-49
Number of farms                                                                   499 538                                         518                                         585
Total acres per farm                                                            310 300                                         279                                         225
Total capital investment                                            $103,916 $100,113                              $ 87,494                              $ 42,092
Capital investment per man                                       $ 60,648 $ 60,072                                $ 52,034                                $ 23.863
Number of men per farm                                                   1.7 1.7                                        1.7                                        1.8
Cash income                                                                $ 31,416 $ 28,163                              $ 26,729                              $ 16,325
Cash expenses                                                             $ 23,029 $ 22,322                              $ 19,960                              $ 10,073
Net cash income                                                         $   8,387 $   5,841                              $   6,769                              $   6,252
Net change in inventories                                          $   2,760 $   -356                              $      827                              $    2,057
Net farm income                                                        $ 10,868 $   5,221                              $    7,356                              $    8,025
Labor  income1*                                                             $    5,672 $      215                              $   3.001                              $    5,921
Rate earned on investment0                                             5.4% .9%                                      4.3%                                    15.1%
a Labor income is the amount left from cash farm income after deductions were made for cash farm expenses, unpaid family labor,
and interest at 5% of the total capital investment and adjustments were made for the net change in inventory values.
bRate earned on investment is the net farm income minus the wage charge for the operator minus a management charge (8% of
•he value of farm production)  expressed as a percent of the capital investment. No charge was made for management prior to 1957.