PRINCIPLES IN ESTABLISHING FARM SIZE A number of different principles might be used singly or in combina tion, to guide the determination of size of farms, project by project. They are: (1) A size of farm that, with average management, would provide a minimum acceptable level of living for the farm family; (2) a size of farm that would make reasonably efficient use of the labor supply of the average farm family; (3) a size of farm that would provide a labor income to the farm family comparable to nonfarm work; (4) a size of farm that would provide optimum efficiency in the use of all of the farm resources-land, labor, and capital; (5) a size of farm that would permit the maximum repayment ability on construction costs; and (6) a size of farm that would minimize the costs of the project water distribution system. In line with the general objective of providing maximum settlement opportunities on Federal reclamation projects, many projects have been planned with a view to creating as many settlement opportunities as possible consistent with a farm organization that would provide minimum acceptable levels of living for farm people. In pursuit of this general policy, the Congress passed special legislation for the Columbia River Basin reclamation development which authorized the establishment of sizes of farms varying with the qualities of land found in the areas to be irrigated. These sizes were established by application of the principle of farm budgeting which projected the types of farm organization and farming practices with an allowance for a minimum acceptable level of income for the farm family. This general approach has been used to test income expectancy from farm units in the planning and administration of most other Federal reclamation projects, although the authority to establish farms of a size comparable to that in the Columbia Basin does not exist for other projects. The general principle that has been followed generally in the past in appraising the question of farm size on reclamation projects is that of providing the maximum number of settlement opportunities consistent with the ability of the farm to produce a minimum acceptable income. Other principles, however, might be used that would be more meaningful in terms of public welfare and more generally acceptable by operators on reclamation projects and by potential settlers on new projects. Some combination of several of the principles listed above might lead to the most rational development of reclamation projects. Certainly so long as incremental values are created at public expense through reclamation development there are strong reasons for limiting the extent to which they accrue to any one individual. Moreover, the policy of encouraging family farms remains as a basic guiding principle. The question then becomes one of establishing guides for reclamation development that will lead to development of farms that will conform to the general objectives of the Congress in appropriating funds for reclamation. A combination of the principles Nos. 3 and 4 listed above would appear to be most rational in terms of economic use of the resources available to farm families on reclamation projects. This would require the establishment of a policy that would lead to the develop ment of farms on each reclamation project and on each type of land within a project that would provide the opportunity for reasonable acceptable efficiency in the use of the resources involved. Other factors, such as effect of farm size on project costs and on repayment ability of farmers on a project cannot, of course, be ignored completely. An insufficient number of studies have been made on the economies of scale or size of farms in irrigation farming to establish precisely at this time the size of farm by type and by soil characteristics that would be consistent with this principle. We know, however, that economies of scale do exist in all types of farming, that with present levels of technology reasonable efficiency in returns to farm resources is achieved at that scale which might be described as a medium-size commercial, family-operated farm. In wheat farming, for example, we know that relatively little economies of scale are realized on farms larger than approximately 1,200 acres in size. However, appreciable economies of scale are observed between farms of 400 and 600 acres in size. The same general principle applies to irrigated farms, although the size in terms of acreage would be much smaller. Some evidence is available that can be used to estimate the size of farms that would give reasonable efficiency for selected irrigated areas in the West and to compare net farm incomes with incomes obtainable in other segments of the economy. The attached table reports net farm incomes for a wide variety of types, sizes, and locations of irrigated farms. These data were assembled from a number of economic studies made in irrigated areas over the last several years. These studies have been made for different purposes and by different methods; moreover, the time and price levels prevailing differ among them. Therefore, these data are not necessarily comparable as among projects. Nevertheless, two general observations may be made about these data: (1) A wide range of net incomes may be observed among farms on different projects and between types and sizes of farm on the same project; and (2) in many instances better than average farm incomes are reported for farms of 160 irrigable acres or less in size. A close examination of these data in comparison with census data from irrigated areas leads to the conclusion that economies of scale are achieved at a point somewhat larger than the average size of farm now found in most irrigated areas. However, for many of the more intensively farmed irrigated areas reasonable economies of scale and at the same time quite acceptable levels of living can be achieved with a farm somewhat less in size than 160 acres of cropland, which is provided under present ownership limitations of one person. The most efficient size of farm in terms of acreage varies project by project with the length of growing season, the soil capabilities, the quantity and quality of water available, accessibility to market, and the state of technology. All of these factors must be taken into consideration in establishing an efficient farm business. They determine the crops that are adaptable and profitable in each farming situation. For example, in high mountain areas with an extremely short growing season, where only hay and small grains can be grown successfully, a much larger acreage is required for an efficient operation than in more southerly locations or lower elevations, where intensive crops can be grown. However, where a single crop is common over a wide range of irrigated situations, yields obtainable on this crop may give a guide to the appropriate size of farm in each situation. For example, studies in the intermountain region indicate that the yield of alfalfa is a good index to the productivity of the irrigated area generally. In areas suitable for alfalfa, small grains, and rotation pasture, the yield of alfalfa is a reasonably good guide of income expectations. Of course, markets and types of farms are important also. A grade A dairy will yield a net income as large or larger than beef cattle or farm flocks of sheep on about 80 percent as much irrigated land. Thus, with a yield of 4.2 to 4.4 tons of alfalfa per acre, a reasonably efficient farm would contain from 80 to 100 acres of irrigated cropland, depending on the type of farm. These farms in most instances would allow about $3,100 return to family management and labor at the USDA projected prices and leave some residual for repayment of water costs. At 3.8 to 4.0 tons of alfalfa per acre, farm size increases to a range of 100 to 120 acres of cropland to yield approximately the same net income. At a yield level of 2.8 to 3.0 tons of alfalfa, approximately 120 to 160 acres would be required. With alfalfa yields at 2.1 to 2.5 tons per acre, a cropland acreage of 200 to 220 acres would be required for an efficient operation. Any consideration of size of farm on reclamation projects must recognize that efficient size of farm operations can be achieved by means other than through ownership of the land operated. Limitations may be placed on landownership without necessarily jeopardizing the organization of efficient farm units. While limitations on acreage owned may achieve an acceptable distribution of increases in land values resulting from reclamation, the mechanism of land renting may achieve desirable flexibility in size of farm operating units. Some flexibility in size of farm operating units is necessary over time and between individual farms at the same time. Establishment of limitations on acreage of irrigable land owned consistent with a principle of optimum economic efficiency and comparability of income for farmers would require that studies be made for each reclamation project and for each major soil type within projects. Investigators making such studies would need to visualize the type of farming likely to be most successful under each situation. Furthermore, they must recognize that the goal of efficiency in the use of resources and that of comparability of income for farm families does not mean necessarily that all farms must be the same size even where similar conditions prevail. High efficiency may be obtained in many instances on small farms where custom work by specialized machines is used or where cooperative ownership of certain equipment leads to reasonable costs. Comparability of income for the family on a small farm often is achieved by combining farming with other occupations. Not enough economic studies have been made in irrigated areas to be able to establish the acreage required for efficient farming under all climatic, soil, and type-of-farming situations. Such studies could be made, however, as required to implement project planning. Precedent for them may be found in the Columbia Basin project planning. In the case of the Columbia Basin, the objective was to establish a size of farm that would provide a maximum number of settlement opportunities consistent with a minimum acceptable level of living for the farm family. The suggestion here is to establish a principle that would lead to development of a farm that would provide optimum operating efficiency and would provide a farm income expectation reasonably comparable to other income opportunities that might be available to farmers on reclamation projects. |