am '^ n ^ THE BALANCE SHEET FOR 1951 AND CURRENT FINANCIAL TRENDS OF AGRICULTURE THE BALANCE SHEET OF AGRICULTURE ASSETS CLAIMS I Financial I Oiher physical I Farm real esfcaie $BiL. — \ r LiiiiOwners* equities ,_^ Mother debt 150|-HiReal estate debt 100 1940 1945 1950 1940 1945 1950 DAM >^Äe AS Of iANJUAUr r EACW YEA« U. S. DEPARTMENT OF AGRICULTURE NEG. 47376-XX BUREAU OF AGRICULTURAL ECONOMiCS BAE Neg. 47376-XX Agriculture Information Bulletin No. 73 UNITED STATES DEPARTMENT OF AGRICULTURE Bureau of Agricultural Economics Washington/ D. Cv November 1951 GPO—Ô—BAE 147
Transcript
am '^ n ^
THE BALANCE SHEET FOR 1951 AND
CURRENT FINANCIAL TRENDS
OF AGRICULTURE
THE BALANCE SHEET OF AGRICULTURE
ASSETS CLAIMS
I Financial I Oiher physical I Farm real esfcaie
$BiL. — \ r LiiiiOwners* equities
,_^ Mother debt 150|-HiReal estate debt
100
1940 1945 1950 1940 1945 1950 DAM >^Äe AS Of iANJUAUr r EACW YEA«
U. S. DEPARTMENT OF AGRICULTURE NEG. 47376-XX BUREAU OF AGRICULTURAL ECONOMiCS
BAE Neg. 47376-XX
Agriculture Information Bulletin No. 73
UNITED STATES DEPARTMENT OF AGRICULTURE
Bureau of Agricultural Economics
Washington/ D. Cv November 1951
GPO—Ô—BAE 147
EXPLANATION
This is the seventh of a series of annual reports which are designed to carry forward the comparative balance sheet of agriculture since 1940. Each balance sheet is as of January 1 of the year it is issued.
The balance sheet views agriculture as though it were one large enterprise. It is an aggregate of individual series concerning farra assets and the claims to those assets. In effect it is comparable to a consolidated balance sheet of all farms. It is not, however, a balance sheet of farm operators, nor of people living on farms, nor of landlords. Rather it covers all the interests of all groups in farming as well as financial assets of people living on farms.
The balance sheet, formulated by the Bureau of Agricultural Economics for each of the years 1940 through 1944, was first issued in processed form in September 1944 in a publication en- titled, *'The Impact of the War on the Financial Structure of Agriculture.'V In August 1945, a printed report of this study under the same title was issued as Miscellaneous Publication No. 567 of the united States Department of Agriculture. In that report the nature and significance of the financial structure of agriculture were analyzed, and the meaning, use, and limitations of the balance sheet and its individual items were considered.
As many of the considerations in that publication are still pertinent, they may be referred to withprofit by those who examine the balance sheet of agriculture for the first tinne. At present it is enough merely to remind the reader that in a country so vast and diversified as ours, financial changes are never entirely uniform, either for the geographic areas or for individuals, so that even When the balance sheet accurately reflects the aggregate, it does not reveal the differences in circumstances that are found in different States and regions and among individual farmers.
The report for 195Ô was issued as Agriculture Information Bulletin No. 26 of the United States Department of Agriculture, The Balance Sheet and Current Financial Trends of Agriculture, 1950.
Data relating to the inventories of real estate, livestock, crops, machinery, and household equipment were prepared under the direction of the following persons: Real estate--M. M. Regan, W. H. Scofield; livestock--A. V. Nordquist; crops --C, E. Burkhead, T. J. Kuzelka, J.J. Morgan, John A. Hicks; machinery--E. W. Grove, Margaret F. Cannon; household equipment--Barbara B. Reagan.
Data relating to farm income and expenditures were compiled under the direction of E. W. Grove.
THE BALANCE SHEET FOR 1951
AND
CURRENT FINANCIAL TRENDS OF AGRICULTURE
Under the direction of NOFWAN J. WALL, Head, Division of Agricultural Finance, Bureau of Agricultural Economics
By F. L. GARLOCK, A. S, TOSTLEBF, R. J, BURROUGHS, H. T. LINGARD, L. A. JOVKS, and M. E. WALLACE
CONTENTS
Page Outlook for 1952;..,..........=/.. I Tlie 1951 balance sheet in
Page
The 1951 balance sheet in general . 2 detail - Cont. Agricultural income............... 10 \ Assets - Cont. Influence of the general economic Household furnishings and situation. . 12 equipment....... . ...,..,.. .. 26
The 1951 balance sheet in detail Bank deposits, currency, Assets.. 16 Í and United States Savings
Farm real estate. 16 Bonds 26 Livestock on farms 18 Net worth of farmers* Machinery and motor vehicles cooperatives .30 on farms-.,. 21 Claims 31
Crops stored on farms ,. 22 Farm real estate debt 31 Crops owned by farmers stored Non-real-es täte debt 36 off farms under CGC loan 25
OUTLOOK FOR 1952
The assets of agriculture willhave a higher value at the beginning of 1952 than on January 1, 1^5 1, when they amounted to 143 billion dollars. This will result from a higher level of prices and the further expansion of physical inventories during 1951 . The rise in the value of farm land in 1951 may not be quite as large as in 1950 but it will be substantial. The aggregate value of livestock is expected to be higher, mainly because of increasednumbers . Stocks of some of the grain crops will probably be lower on January 1, 1952 than a year earlier but prices will be higher. As the result of heavy purchases during 1951, inventories of farm machinery, automobiles, and household furnishings will be greater at the beginning of 1952 than at the beginning of 1951. Little change in the liquid financial reserves of farmers is indicated for 1951.
The indicated large growth in the value of assets of agriculture will not all be a net gain to farmers. Farm real estate debt will probably show an increase in 1951, as it did in 1950. A further large expansion in non-real-estate debt will also offset some of the rise in the value of assets. Nevertheless, by January 1, 1952, the equities held by the various owners of agriculture will probably be significantly greater than on January 1, 1951.
1
2 INFORMATION BULLETIN 73, U. S. DEPT. OF AGRICULTURE
The realized net income of farm operators is expected to be about the sarate in 1952 as in 1951, or about 15 billion dollars. Both cash receipts and expenses have been higher in 1951 thanin r950. Realized net income is likely to be about 18 percent higher than in 1950 and 11 percent higher thanin 1949, but approximately 5 per- cent lower than in 1948 and 12 percent lower than in 1947.
It is not yet possible to anticipate with certainty what influence the inventory adjustnaents of 1951 will have on the net returns to farm operators. On the one hand, the decrease in the feed on farms is a charge against net returns. On the other hand, the increase in the livestock inventory is a credit to net returns of operators.
Costs of farm production continued to rise in 1951 and for the year probably will exceed the high levels of 1950 by about 12 percent. This increase incosts results partly from a greater volume of some goods and services bought by farmers but mainly from higher prices paid for these goods and services. For the first 9 months of 1951 prices paid by farmers for commodities used in production averaged about 10 percent higher than for the same period of 1950. Prices of all important groups of items used in production were higher in 1951 than in 1950. The range of increase was fronn about 6 percent for fertilizer and motor supplies to 26 percent for purchased livestock. The 14-percent rise in the price of building materials was the largest for any group of nonfarm origin.
In 1952 costs of farnn. production may average 5 percent higher than in 1951. The number of g rain-consuming livestock to be fed in the year beginning October 1, 1951, is expected tobe about 2^ percent greater than in the preceding year. Consumption of higher priced feed will be heavy. Prices of fertilizer will probably be higher in late 1951 and consunnption is likely to rise slightly in 1952. For farmmachinery, a continuation of the high prices of 1951 or possibly further moderate price increases, appear to be in prospect for 1952. Demand for machinery will continue strong and the volume purchased may be limited only by the output of
machinery. Prices of other items such as building materials, seeds, and pesticides are expected to continue at current levels in early 1952.
Rising costs of expanding production and inventories during recent years have been mainly responsible for the increasing debt of farmers, especially non-real-estate production debt. The prospect for further increases of costs and inventories in 1952 would indicate a continuation of the rise in debt. This could result in the accumu- lation of debts which would place heavy claims on future incomes of many farnners. This situation willplace a high premium during the coming year on reduction of costs and on efficient operation.
THE 1951 BALANCE SHEET IN GENERAL
Physical assets of American agriculture increased 15 percent in current valuation during 1,950, but only 2 percent in terms of 1940 prices. Financial assets increased only 2 percent in current valuation; and the buying power of the "monetary'' portion of those assets (deposits, currency, and United States Savings Bonds) for purposes other than debt-payment went down 9 percent. Total indebtedness, aside from Commodity Credit Corporation loans, increased 13 percent. As a result of these changes the current
THE BALANCE SHEET OF AGRICULTURE FOR 1951 3
value of proprietors' equities, including those of both operators and nonoperating landlords, increased 14 percent during 1950.
Assets
The total assets of agriculture in the United States were valued at 143 billion dollars on January 1, 1951 - higher than ever before (table 1). Although this was 13 percent above a year earlier, the increase in total assets amounted to only 2 percent if the physical assets are valued at 1940 prices (table 2).
The largest percentage increase in financial assets was a 9 percent rise in investments in cooperatives. The much larger items of deposits, currency, and United States Savings Bonds in- creased only 1 percent, and their buying power (except for debt- payment) in January 1951 was at the lowest level since 1944 and 24 percent or nearly one-fourth below the peak in 1946 (table 3),
Much of the increase in current valuation of assets during 1950 was caused by rising prices of real estate, livestock, and other physical assets. Most of the increase in prices occurred in the second half of the year in response to factors associated with the Korean hostilities. In current prices, the valuation of farm real estate on January 1, 1951, was up about 9 billion dollar s, or 14 percent, from a year earlier. The aggregate current values of other physical assets increased 15 percent.
Physical changes--The physical farm plant including inventories (measured in constant 1940 prices) became larger during 1950 mainly because of an increase in the number of livestock and the quantities of machinery, vehicles, and household items (table 2). Real estate is believed to have changed little in physical quantity during 1950. Crops in storage that were owned by farmers decreased about 9 percent during the year. There was more livestock on farms on January 1, 1951 than a year earlier, but the amount was considerably less than during World War II.
The value at 1940 prices of machinery and motor vehicles on farm.s increased substantially during 1950, Since 1940 the quantity of this item has more than doubled, an increase gr.eater than that of any other physical asset of the Balance Sheet,
Mechanization increases production, but also cash outlay.-- Horses and mules as a source of power have been largely super- seded by tractors and trucks. On January 1, 1951, the value of tractors on farms was almost nine times, and the value of trucks was four times, that of work animals. This transition to mechanical power has brought a decided increase in the capacity of farmers to produce food and fiber for human consumption. Output per man-hour has been increased. Moreover, land formerly used to produce feed for work animals has been released for production of food and fiber. These factors, and the adaptability of machinery to continuous high- speed operation during rush periods have contributed to the greater ouput of these crops. On the other hand, greater mechanization makes farmers more dependent on the rest of the economy than they once were. Their operations now can be impaired by shortages of motor fuel, machines, and parts. Besides, naore of their costs of production require cash outlays than when farmers were more largely self-sufficient.
Financial as sets.--The financial assets of farmers rose slightly during 1950. Cash balances increased slightly, partly because
TAUE I,--Comparative balance sheet of agriculture. United States/ January 1, selected years, Í9W'51^
ïtem 1940 1945 1946 1949 1<Í50 1951 Net change
1940-51 1950-51 O PO S
o w a
ASSETS Physical assets:
Peal estate Non-real-estate:
Livestock— Machinery and motor vehicles -- Crops stored on and off farms® -- — --- Household furnishings and equipmenf*—---^
Financial assets: Deposits and currency--^^ ^-- •-- United States Savings Bonds--- — Investments in cooperatives -----^
Total - - -- — : — — -----
CLAIMS Liabilities- Peal estate debt --— • Non-real-estate debt:
To principal institutions: Excluding loans held or guaranteed
by Commodity Credit Corporation --■ Loans held or guaranteed by Conmodity
Credit Corporation -- To others® — --,-_
Total liabilities --■
Million do I lars
33,642
5,133 3,118 2,645 4,275
3,900 249 826
53,788
6,586
1,504
445 1,500
Million dollar s
46,389
9,012 6,114 6,396 4,232
800 ,714 167
^87 ,824
Mil lion dollars
52,114
9,742 ^ 6,072
6,030 4,415
13,500 4,498
^ 1,307
Million dol lars
65,168
14,657 ^11,706
8,417 6,000
14.800 5.025
^ 1,818
Million do I lars
63,527
^ 13,184 ® 14.271
^7,837 6,500
14.300 5,250
^ 1.995
Million dollars
72,650
17.517 15,517 8,030 7.175
14,400 5.307
^ 2.179
Percent
+116
+241 +398 +204 + 68
-i^69 +2.131
+164
^97,678 ^ 127,591 ^126,864 142,775 +165
933
1.622
683 1,100
4,682
1, 671
277 1,200
5,108
2,714-
1.152 2,200
5,407
2,838
1,719 2.400
5.828
3,372
806 2.800
-12
+124
467
Percent
+14
+33 + 9 + 2 +10
+ 1 + 1 + 9
+13
^
+19
--53 +17
o
a c
10.035 8,338 7,830 11.174 12.364 12,806 m +4
Proprietors' equities
Total
43,753
53,788
79,486
^87,824
'89,848
^97,678
116,417
^ 127.591
114,500
126,864
129.969
142,775
+197
+165
+14
+13
^ The margin of error of the estimates varies with the items. Revised.
^ Includes all crops held on farms for whatever purpose and crops held in bonded warehouses as security for Commodity Credit Corpo- ration loans. The latter on January 1, 1951 totaled 306 million dollars.
* Estimated valuation for 1940 plus purchases minus depreciation since then. ^ Preliminary. ^ Tentative. Includes individuals, merchants, dealers, and other miscellaneous lenders. tu
o
o
> Q
O c
G PO m
O
TABLE 2.--¿aZanee sheet of agriculture with physical assets valued at 19h0 prices, January 1, selected years, IBUO-Sl
Livestock-- — -- — — - - -- Machinery and motor vehicles Crops stored on and off farms- îlousehold furnishings and equipment^
Financial assets (actual value): Deposits and currency ^----- United States Savingà Bonds-- Investments in cooperatives-- •
Total-
CLAIMS Liabilities (outstanding amount): Beal estate debt--- ^-- — Non-real-estate debt: To principal institutions:
Excluding loans held or guaranteed by Comnodity Credit Corporation
Loans held or guaranteed by Commodity Credit Corporation---
To others Equities (residual balance)
Mil lion dollars 33,642
5,133 3,118 2,645 4,275
3,900 249 826
53,788
6,586
1,50-4
445 1,500
43,753
Total -— 53,788
Mi I lion dol lars ' 33,642
5,606 4.101 3,144 4.232'
10.800 3,714
^ 1,167
Mi Ilion dollars '33,642
5,402 4.182 2,910 4,415
13,500 ' 4,498 ^ 1,307
Mi I lion do Ilars ^33.642
4,835 ^5,956 3,436 6.000
14,800 5,025
^ 1,818
Mi Ilion do Ilars '33,642
^ 4,875 ' 6.653
3,340 6.500
14,300 5,250
^1,995
Mi Ilion do I lars ' 33,642
5,017 7,406 3,056 7,175
14,400 5,307
'*2,179
percent 0
-2 +138 +16 +68
+269 +2,031 +164
66,406 69,856 75,512 76.555 78,182 +45
4,933
1,622
683 1,100
58,068
4,682
1.671
277 1.200
62.026
5.108
2.714
1,152 2,200 64,338
^5,407
2,838
1.719 2,400 64,191
5.828
3,372
806 2,800 65,376
-12
+124
+81 +87 +49
66,406 69,856 75,512 76,555 78,182 +45
Percent 0
+3 +11 -9 +10
+1 +1 +9
n
+8
+19
-53 +17 +2
n
o So
> H O
tu a
o > S O c
50
1940 valuation of farm land and buildings. This figure does not reflect net physical improvements in farm buildings, or net deple- tion, of productivity of agricultural lands. ^ Revised. ^ Not deflated. Estimated valuation for 1940 plus purchases minus depreciation.
* Preliminary.
THE BALANCE SHEET OF AGRICULTURE FOR 1951 7
TABIX ^.--Index number of purchasing power in terms of commodities of the aggregate deposits, currency, and United States Savings Bonds held by farmers, ÍM0-5Í^
The value of these assets was deflated to a 1940 basis by application of the B4E index cl prices paid for corrmodities used for family living and production for January 15 of each year, llie resulting amounts were expressed as relatives to 1940.
farmers increased their borrowing. Accrued interest on United States Savings Bonds raised the value of farmers'holdings of these assets and investments in farmers' cooperative associations increased.
In terms of real purchasing power, the over-all cash position of farm people was somewhat less favorable at the beginning of 1951 than it was a year earlier. Prices paid by farnners for commodities used in production and family living advanced about 10 percent during 1950. But deposits and currency and United States Savings Bonds held by farm people increased a little less than 1 percent. Consequently, their quick assets, totaling 19.7 billion dollars on January 1, 1951, would have bought only 91 percent as many goods then as they could have bought a year earlier, when similar assets were valued at 19.6 billion dollars. The index that measures the purchasing power of these assets in terms of commodities bought by farmers declined from 242 (1940 = 100) on January 1, 1950 to 221 on January 1, 1951 (table 3).
Claims
The distribution of the claims to the assets of agriculture, which amounted to 143 billion dollars on January 1, 1951, shifted some- what during 1950 in favor of the proprietors. Claims (or equities) of proprietors, including landlords not living on their farms as well as owner- and tenant-operators, increased by more than 15 billion dollars, or 14 percent. The claims of creditors, which from the point of view of farmers and landlords are debts, increased less than half a billion dollars, or 4 per cent. The equities of proprietors were 91 percent and debts were 9 percent of total claims on January 1, 1951 compared with 90 percent and 10 percent, respec- lively, a year earlier.
Liabilities.--Although farm-nnortgage debt increased 8 percent and non-real-estate debt, not including CCC loans, increased 18 percent, total liabilities increased only 4 percent because of the sharp reduction in the nonrecourse price-support loans made or guaranteed by the Commodity Credit Corporation. As market prices of raany crops were above support prices, most farmers moved their' products directly to market rather than to storage. As a
TABLE 4*--Comparative income statement for agriculture. United States, 1BW~50^
Item
how net income was obtained
Gross income from agriculture: Cash receipts from farm marketings Value of products retained on
farms for home consumption-- Bental value of farm homes-—
Total Minus nonlabor production costs:
Feed bought *-- Livestock bought, except horses and mules ^
Fertilizer and lime bought----- Vehicle operation— Depreciation and maintenance Taxes on real estate and
tangible personalty Seed bought Miscellaneous
Total Plus increases or minus decreases
in inventory®
Total net income from agriculture
Plus Government payments--
Total net income from agricul- ture and Government payments
to landlords not living on farms® Interest to holders of farm
1,178
262 Returns to operators----- — 13,458
Total net income from agricul- ture and Government payments 6,323 8,719 12,865 14,697 15,025 15.464 18.066 19.394 21.721 17.133 17,756
Relation of total returns to realizea net income of operators
Total returns to operators- A'inus increases or plus
decreases in inventory
4,568
270
6,504
452
10,008
1,159
11,364
-176
11,525
-445
11,854
-391
13.893
-239
14,888
-2,185
17,056
1,318
12,848
-654
13,458
750
Realized net income of farm 4,298 6,052 8,849 11,540 11,970 12,245 14,132 17,073 15,738 13.502 12 708
* Revised series. ^Market value, in terms of prices at end of year, of increase or decrease in physical quantities of crops and livestock. 3 After subtraction of estimates for taxes, mortgage interest, and other expenses paid by such landlords.
H X
ttí > > 21 O
O
> Q 3 o a t¡ G m
O
10 INFORMATION BULLETIN 73, U. S. DEPT. OF AGRICULTURE
resuit, both the volume of support loans and the inventories of the Commodity Credit Gorporation were reduced.
The total mortgage and non-real-estate debt, not including loans made or guaranteed by the Commodity Credit Corporation, increased 13 percent during 1950. The total on January I, 1951, was 12.0 billion dollars compared with 7,6 billion on January 1, 1946, and 9.6 billion on January 1, 1940.
During and following World War 11, total non-real-estate debt gained in innportance over mortgage debt. In 1940, non-real-estate debt was only 34 percent of all debt but by 1951 it was 54 percent.
From January 1, 1940, to January 1, 1951, non-real-estate physical assets, which often are financed with non-real-estate credit, increased from. 31 percent to 40 percent of all physical assets. The increase in the value of non-real-estate physical assets was 33 billion dollars, while the increase in non-real-estate debt was less than 4 billion dollars. It appears that the sharp increase that has occurred in non-real-estate debt is well protected by assets, but only meager information is available concerning the relation of debt to assets on individual farms,
A number of shifts since 1940 in the geographic distribution of farm debt are, reflected by the loans of those lenders for which regional data are available. During 1950, while the loans of such lenders throughout the United States (not including CCC loans or miscellaneous non-real-estate debt but including mortgage debt) increased 11,6 percent, those in the Northeast increased only 6,1 percent. In contrast, such loans in the Mountain region increased 16.6 percent.
AGRICULTURAL INCOME
Agricultural income is the most important single influence on the Balance Sheet of Agriculture. Current income affects the ability of farmers to improve their farms and to accumulate liquid reserves. Prospective income affects the valuations of earning assets.
Cash receipts from farna nrtarketings were 2.7 percent higher in 1950 than, in the year before (table 4). Government payments, though 53 percent higher in 1950 than in 1949, were far below levels prior to 1948. Prices received by farmers for all crops and livestock averaged 3 percent higher in 1950 than in 1949, but physical production for sale and home consumption was 2 percent lower (table 5).
The increase in cash receipts was mainly the result of heavy marketing of meat animals at sonnewhat higher average prices than had prevailed in 1949. Receipts from dairy products, poultry, and eggs were slightly less. Receipts from crops also were slightly lower in 1950. Decreases were registered in receipts from food grains, feed crops, cotton, and vegetables. Increases occurred in receipts from oil crops, tobacco, fruits, nuts, and other crops.
Expenses reached an all-time high. Every major class of ex- pense increased. Nevertheless, net returns to operators, which reflect an adjustment for an increase during the year in the inventory of crops and livestock, were 4.7 percent higher than in 1949, On the other hand, realized net income of farm operators -- unadjusted for changes in inventory--decreased 5.9 percent.
THE BALANCE SHEET OF AGRICULTURE FOR 195Î 11
The purchasing power of realized net income of farm operators decreased by a greater percentage than did the income itself, because of the rise in prices paid by farmers for commodities and services used in family living. The purchasing power was 6,8 percent smaller'in 1950 than in 1949. Indeed, the purchasing power of realized net income was lower in 1950 than it had been in any year since 1941 (table 6).
Likewise, the purchasing power of net returns of farm operators, which differ from realized net inconne by inclusion of inventory ad- justments, was restricted by rising prices. Whereas net returns themselves were 4.7 percent higher in 1950 than in 1949, the pur- chasing power of the returns was only 3.7 percent higher.
TABLES,--Volunte of agricultural production for sale and for consumption in farm Iwmes and prices received by farmers. United States, 19^0-50
>TAH-E 6.-'Index numbers of purchasing power in terms of commodities of net re- turns and of realized net income of farm operators, United States, 19¿t0-50^
* Net returns and realized net income were deflated by 1940 prices paid for commodities and services used for family living.
12 INFORMATION BULLETIN 73, U. S. DEPT. OF AGRICULTURE
INFLUENCE OF THE GENERAL ECONOMIC SITUATION
The changes that occurred in the items of the Agricultural Balance Sheet during 1950 were chiefly responses to an alrnost uninterrupted rise in the prices of farm products that carried the index of prices received by farmers frona 235 (1910-14 = 100) for January 1950 to 300 a year iater, an increase of 27.7 percent. During the same period the percentage of parity received by farmers rose from 95 to 110, or 15.8 percent. The prospects for higher net farnci income, com^bined with fear that goods needed by farmers might become less plentiful and higher priced, gave rise to an increase in the value of farm real estate and encouraged farmers to add to their inventories of machinery, livestock, and household furnishings. These expansionary developments were acconnpanied by an increase in farm debts and in the equities of proprietors.
The increases both in prices received by farmers and in the percentage of parity were small during the first half of 1950. During these nnonths a moderate but steady recovery throughout the economy proceeded under the stimulus of expanding business outlays and rising consumer expenditures. Government purchases of goods and services and net foreign investment declined during the first half of 1950.
The invasion of South Korea late in June greatly accelerated the rate of spending by private buyers. After June nrtuch of the increase in spending by consumers and business firms was anticipatory and speculative - induced by fears of shortages and restrictions, and by a belief that sharp increases in prices were at hand. Public expenditures responded more slowly. At first. Federal expenditures were not greatly affected by the Korean outbreak, but in the fourth quarter of 1950 they rose sharply from an annual rate of 21.2 to 27.3 billion dollars, or 29 percent. Meanwhile the expenditures of State and local governments resumed a slow but persistent expansion which had been temporarily interrupted in the second quarter.
The upsurge in spending after June brought a further increase in industrial production, and it accelerated sharply the rise in prices. Frona January to June 1950 wholesale prices rose at the rate of about eight-tenths of 1 percent a month, but from June' 1950 to January 1951 they rose, on average, about 2 percent a month. Prices received by farmers rose at the rate of 1 percent a nnonth from January to June 1950. But from June 1950 to January 1951 they rose at the rate of nearly 3 percent a month.
Developments in the National Economy During the First Three Quarters of 1951
In the first quarter of 1951 the seasonally adjusted annual rate of personal consumption expenditures and of expenditures for private new construction appear to have reached peaks, at least temporarily (table 7). The decline to approximately the pre-Korean level of expenditures for consumer durable goods in the second and third quarters reflects the subsiding of the acute fear of imminent shortages, the restraining influence of restrictions on consumer credit contained in Regulation W, and the V* over bought" condition that resulted from successive waves of scare-buying in the latter half of 1950 and the first quarter of 1951.
TABLE 7- -Gross national product (expenditure) United States, annually 1939 and 19à5-50, and seasonally adjusted annual rates by quarters, 19^9-51^
Billion do I lars 9.9 10.7 28.7 30.2 42.7 33.0 m.9
36.8 32-1 32.8 30.5
40.1 47.9 47.3 60.2
60.1 65.6 55.7
Billion dollars 4.9 3.9
10.3 13.9 17.7 17.2 22.1
17.1 16.8 16.9 ^ 18.2
20.1 21.4 23.5 23.3
23.9 22.5 21,5
Billion do Ilars 4.6 7.5 12.3 17.1 19.9 19,0 22.5
19.4 19.5 18.8 18.3
18.9 21.4 24.5 25.0
25.9 27.2 28.1
Billion dollars 0.4 -.7 6.1 -.8 5.0
-3.2 4.3
'1.3 -4,1 -2.9 -6.1
1.1 5.2 -.7 11.8
10.3 15.9 6.1
Billion dol lars 0.9 -1.4 4.6 8.9 1.9 .5
-2.3
1.2 1.3 .2
-.5
-1.7 -1.6 -3.2 -2.7
-2.7 .0
1.2
Bill doll 13. 82. 30. 28. 36. 43. 42.
ion ars 1 8 9 6 6 6 5
43.1 44.5 43.5 43.3
41.3 40.1 40.8 47.8
53.4 60.4 68.2
Bill doll
5. 74. 20 15. 21. 25. 22.
ion
ars 2 8 9 8 0 5
25.6 26.6 25.1 24.5
22.0 20.9 21.2 27.3
32.3 38.9 46.6
Bi 11 ion dollars
7.9 8.0 10.0 12-8 15.6 18.1 19.7
17.5 17.9 18.4 18.8
19.3 19.2 19.7 20.4
21.1 21.4 21.6
/ Because of rounding, items do not always add to total. 1948-50 revised series. U. S. Department of Coninerce.
14 INFORMATION BULLETIN 73, U. S. DEPT. OF AGRICULTURE
The decline in the seasonally adjusted annual rate of private new construction in the second quarter of 1951 centered in residential building, which was restrained partly by restrictions contained in Regulation X covering loans on new buildings, and partly by the scarcity of mortgage money resulting from the Federal Reserve's general policy to curb the expansion of credit. Meanwhile expen- ditures for private nonresidential building continued to expand until June. In that month and throughout the third quarter these expendi- tures also declined, mainly as a result of a contraction in the construction of commercial buildings. On the other hand, the rate of expenditures for producers' durable goods continued to rise throughout the first three quarters of 1951 as businessmen, including farmers, acquired the machinery that would permit them to participate as fully as possible in production required by the defense effort (table 7).
During the first half of 1951 business inventories continued the rapid and large-scale increase begun in the fourth quarter of 1950. Business investment in additional inventory was at the unprecedented seasonally adjusted annual rate of 15.9 billion dollars in the second quarter of 1951 following large increases in the two preceding quarters (table 7). The decline in consumer expenditures and a high rate of production contributed to this expansion. The accumulation of such inventories continued into the third quarter but at a somewhat reduced rate. At the end of September business inventories stood at 69.8 billion dollars, only slightly under the record high of 70.3 billion dollars at the end of July. This compares with 55.1 billion dollars at the end of September 1950.
Prospects for the National Economy
The prospects are that a high rate of activity will be maintained in the national economy during the remainder of 1951 and in 1952. Under the inn.pact of rapidly rising Federal disbursements, gross national expenditures as a whole are likely to increase during this period even though an increase is not registered by every sector.
Consumers' income after taxes is likely to be higher in 1952 than in 1951, as the increases in wages and salaries will exceed the increases in personal taxes. But the anticipatory buying and the sharp price increases following the Korean outbreak, recent price uncertainty, and cut-backs in the production of wanted goods may restrain consumer expenditures in the months ahead.
The decline, in the second and third quarters of 1951, that carried expenditures for consumer durable goods below the level that prevailed in the 6 ncionths preceding the Korean outbreak, reflects an '^overbought" condition among consumers that resulted from, the scare-buying that followed the Korean outbreak. This conditionrnay continue to restrain expenditures by consumers in 1952.
Moreover, reductions in the retail prices of some commodities in the second and third quarters of 1951 may cause some consumers to adopt a wait-and-see attitude toward buying. Having seen some price concessions, consumers may await further declines before buying. It seems likely that this factor will disappear in 1952 and price considerations may again stimulate buying. On the other hand, consumer expenditures for durable goods are likely tobe
THE BALANCE SHEET OF AGRICULTURE FOR 1951 15
checked somewhat in 1952 by cut-backs in production made necessary by the defense demands for steel and other critical materials. Some diversion of spending from, durables to other consumers' goods nnay occur. Such diversion would tend to strengthen the demand for food and clothing.
The peak of private domestic investment (including business in- ventories) is also likely to have been pas sed in the first half of 1951, and a slightly lower rate of expenditures in this sector is probable in the months ahead. The expenditures on private residential con- struction in the latter half of 1951 and early 1952 will be held below the latter half of last year partly by restrictions on credit and partly by restrictions on materials imposed by the Controlled Materials Plan.
As for business inventories, the rate of growth, if not the actual size, will be reduced even though the inventories ofmanufacturers of defense goods expand. Many manufacturers, notably in the consumer-goods field, and retailers, particularly, found their inventories at niid-1951 uncomfortably large and they have already
made some downward adjustments through aggressive selling accompaniedby temporary price reductions, and through conserva- tive replacement. Such adjustnients are being encouraged in some cases by bankers seeking voluntarily to control credit. Moreover, some inventories are being reduced as a result of the Controlled Materials Plan and of regulations issued by the National Production Authority.; These influences are expected to continue in 1952.
On the other hand, business expenditures on new plant and equipment are likely to continue high in 1952. Anticipated expendi- tures for the second half of 1951, as reported by business to the Department of C omme r c e and the Securities and Exchange Conn- nnission, exceed slightly thosemade in the first half, and, in late July and August, indications were that the increase might be as much as 15 percent. But shortages of structural steel and cutbacks in production of machinery made necessary by Government alloca- tions of materials in short supply may hold the increase to a narrower margin, and later in 1952, with the more urgent demand satisfied, some decline may occur.
But any decline that may occur in the expenditures within the private sectors of the economy is likely to be more than offset by the rising outlays in the public sector. Although no marked change in the rate of spending by State and local governments is foreseeable, the expenditures of the Federal Government are sharply higher in the latter half of 1951 and will rise further in 1952. Total budget- ary expenditures, which announted to 19.1 billion, in the latter half of 1950, will probably exceed 30 billion dollars in the latter half of 1951 and rise above 37 billion in the first half of 1952. Military expenditures and expenditures for military assistance, mainly to European countries, account for the bulk of this anticipated increase. These alone rose from 7,7 billion dollars in the second half of 1950 to 12.4 in the first half of 1951. and they are likely to climb steeply to about 18 and 24 billions in the latter half of 1951 and the first half of 1952, respectively. Such increases are likely to lift the annual rate of Federal expenditures for goods and serv- ices in the fourth quarter of 1951 to about 53 billion dollars, and to about 67 billion dollars in the second quarter of 1952.
The volume of public and private spending stimulated by the defense program probably will continue to drive the National
16 INFORMATION BULLETIN 73, U. S, DEPT. OF AGRICULTURE
economy at high speed in every important sector during the months ahead. So far, on the military side, industry has been engaged largely in expanding its plant capacity and in tooling up. A large expansion in the output of military goods is therefore certain. But in view of the very high percentage of the NatiorL*s resources and labor force already engaged in production the possibilities of increased output of goods for civilian consumption is mainly limited to types that do not utilize critical materials. Hence further upward pressures on many prices may develop as higher personal incomes are offered for those civilian goods and services whose outputmay shrink as the defense effort expands.
However, upward pressures on the prides of the major farm products, if they develop at all in late 1951 or in 1952, are likely to be selective and very moderate. Sizable inventories of most farm products were carried into the current year, and production in 1951 has been large. It appears, therefore, that if normal weather pre- vails during the crop season of 1952, supplies generally will be sufficient to meet the increase in demand that may be generated by the defense program at prices not greatly different from those of 1951.
THE 1951 BALANCE SHEET IN DETAIL
The foregoing pages have provided a summary analysis of the balance sheet in general ternns, an account of the income position of agriculture, and an analysis of the influence of the general economic situation on the financial status of farmers. In what follows, each item of the 1951 balance sheet is treated in detail.
Assets
The assets fall into two general classes: (1) Physical assets, both real estate and tangible personalty, and (2) financial assets, which include cash, bank deposits, United States Savings Bonds, and farmers* investments in cooperative associations.
Farm Real Estate
The 9.1-billion-doliar increase in farm reale state values was the chief factor in the expansion in the assets of United States agricul- ture during 1950. The total value of farnrï real estate at the begin- ning of 1951 - 72.6 billion dollars - was the largest on record.
As the physical annount and condition of farm land and buildings change slowly, the increase in value was prirnarily due to the rise in prices. On March 1, 1951, the index of average value per acre of farm real estate was 193 (1912-14 = 100) (table 8). This was 14 percent higher than that of a year earlier and 9 percent above the previous peak, reached in November 1948. Although land prices rose slightly in early 1950, the upward movement did not become strong until the period of general inflation that followed the Korean outbreak.
Land values increased during 1950 in all States except Maine (fig, 1). The 5-percent decline in that State was probably caused by the withdrawal of price supports from potatoes, its most important cash crop. Increases of 17 to 20 percent in land values occurred in the Corn Belt States, and in Nebraska, Wyoming, Oklahoma, Texas,
THE BALANCE. SHEET OF AGRICULTURE FOR 1951 17
TABIE 8.—farm real estate: Index of average value per acre, by regions, March 1, selected years, 19^0-51
■ (1912-14 = 100)
fiegion
Northeast------ Appalachian Southeast------ Lake States Corn Belt-- Delta States— Great Plains--- Tex as -Ok 1 ahorna - Mountain --- Pacific
United States
1940
94 113 103 86 72 106 57 98 76 108
84
1945
121 177 160 120 110 165 86
136 120 171
126
1946
131 209 177 135 124 184 95
151 134 194
142
1949
163 264 222 168 156 248 136 191 163 196
175
1950
157 258 210 167 157 240 131 186 156 180
169
1951
170 288 236 191 185 271 150 220 176 199
193
Arizona, and Florida. The favorable livestock situation has con- tributed to higher land values in ail of these States, although in Florida the strong demand for citrus fruit has probably, been more influential. The removal of cotton acreage allotments has stim- ulated land values in the Southwest, particularly for irrigated land. In the Southeast, demand apparently is relatively stronger for farms suitable for pasture and timiber than for land suitable for row crops.
The rise in land values has been accompanied by a slight in- crease in the number of voluntary farm transfers. The rate of transfers per thousand farms increased from 37.1 during 1949 to 39,4 during 1950. But activity in farm real estate was substantially lower than in 1946, when the rate of transfers was 57,7 per thousand. The number of foreclosures and forced sales of farms continued in
CHAN G ES IN 1 OF FAR
sniages, Mar.
)OLLAR VAL M LAND* 1950 to Mar. 1951
UE
^DECREASE P OR
^ NO CHANGE
-□ PERCENT
INCREASE
E3 1 - 4
^ ! 0 - 1 4 gai5 & over
ULTURAL ECONOMICS
^M
i U. S, INCREASE
*eASED ON INDEX WUMBfR P£H ACRE. tNClUDING IMP
U. S. DEPARTMENT OF AGRICULT
! Of VALUE ROVEMENIS
URE
1 NEG. 4ei01XX BUREAU OF AGRIC
^ BAE 48t0 1 >X>ii.
Fiarâ 1.--Between March 1950 and March 1951, the national index of iarm real estate values (1912-14 = 100) increased 14 percent_, frcxn 169 to 193. Increases of 10 percent or more occurred in two-thirds of the States. In 11 States, mostly in the Midwest, the rise was the largest for any comparable period since 1919-20.
18 INFORMATION BULLETIN 73, U. S. DEPT. OF AGRICULTURE
INCREASE IN DOLLAR VALUE OF FARM LAND*
Percentages, 1935-39 to March I95i
U. S. INCREASE (33%
. S. DHPAfiTMENT OF AGRICULTURE
PERCEHT NCREASE
00 & over 80-99 60-79
^m 40-59 ES3Under 40
S099.XX BUREAU OF AGRICULTURAL ECONOMICS
FiaiEC 2.--From the prewar period 1935-39 to March 1951, the national index of farm real estate values rose 133 percent. Three States--Arkansas, Indiana, and Kentucky--had increases of more than 200 percent. All the New England States had increases of less than 100 percent.
1950 at 1.5 per 1,000 farms, or about the same as has prevailed for the last several years.
In March 1951, farm real estate values for the United States as a whole were 133 percent above those preceding World War II (1935- 39 average). Thirty States had increases of 100 percent or more during that period. In Kentucky, Indiana, and Arkansas real estate values rose more than 200 percent (fig. 2). The Northeast region had the smallest increase in land values. The two States with the smallest increases over prewar years are Massachusetts and Maine, with increases of 46 and 37 percent, respectively.
By July 1951 land values were 5 percent higher than in March. This brought the index of average value per acre to 202 (1912- 14=100), 17 percent higher than on July 1, 1950. It is probable that this level of land values already reflects much of the inflationary force generated in the agricultural economy since the Korean outbreak. Any further increase in land values in the second half of 1951 will likely be at a more moderate rate than that during the year ended July 1951.
Livestock on Farms
The value of livestock and poultry on farms was nearly 18 billion dollars on January 1, 1951, approximately a third more than a year earlier (table 9). Of the Balance Sheet items, only the value of real estate exceeded this amount. There were more cattle, hogs, and sheep on farms but fewer horses, mules, chickens, and turkeys. The values per head of all livestock except horses and mules were higher on January 1, 1951, than they were a year earlier (fig. 3).
Cattle on January 1, 1951, were valued at 13 billion doukrs, or 36 percent more than on January 1, 1950, Their value at the beginning of
TABLE 9.'-Livestock and poultry on farms: Number and value by classes. United States, January 1, selected years, 19^0-51
Class 1940. 1945 1946 1949 1950^ 1951
Number Value Number Value Number Value Number Value Number Value Number Value
Cfltf- 1A*-í
1,000 head 68,309 24,940 61,165 10,444 4,034
52,107 46,266
438,288 8.569
Million dollars 2,770 1,428
476 808 467 329 294 265
18
1,000 head 85,573 27,770 59,331 8,715 3,235
46,520 39,609
516,497 7,203
Million do liars
5,722 2,761 1,224
565 434 399 335 626
42
1.000 head
82,434 26,695 61,301 8,053 3,010
42,436 35.599
530.203 8,493
Million dol lars 6,280 2,994 1,468
462 401 411 341 671 49
1,000 head 78,298 24,416 57,128 5,898 2,348
31,654 27,651
448,676 5.540
Million do I lars 10,552 4,716 2,184
309 274 544 470 ' 746
48
1,000 head 80,052 24,573 60,502 5.274 2,149
30,743 27,099
480,834 5,986
Million dol lars
9.848 4,342 1,641
241 214 548 482 655 37
1.000 head 84,179 24,579 65,028 4,763 1,990
31.505 28,065
466,686 5,975
Million dollars 13,441 5,368 2,162
207 163 828 740 678 38
Milk cows Hnirc -
\4ules —— —- All sheep^
Stock sheep-- Chickens----— Turkeys—
Total -- 5,133 9,012 9,742 14,657 13,184 17,517
^ Bevised, ^ Also includes sheep and lambs on feed for market.
H
w
> > O
> M
O c¡ t-
C pa C4
O
20 INFORMATION BULLETIN 73, U. S. DEPT. OF AGRICULTURE
VALUE PER HEAD OF CATTLE, HOGS, AND SHEEP ON FARMS JAN. I
700
500
300
TOO
F 1910
p Cattle -
>
-
í ■ - Sheep* à 1
Jr^ \^ k.J^ í^^^'^^Hogs
.,., ¡ < p. < .... f ... , . . . . 1 . ■ 1 ■ f 1 < 1 , 1 . . . 1
U.S.DEPARTMENT OF AÊRICULTUBE NEG. 48220-XX BUREAU OF AGRICULTURAL ECONOMICS
^ , BAE 482Z0-XX FIQJHí! 3.--The value per head of cattle and sheep on farms was higher on January
1, 1951 than at the start of any other year» The value per head of hogs was higher than at the start of 1950 but below that for January i in 1947-49 in- clusive.
1951 was about three-fourths of the value of all livestock. The average value perheadof all cattle on January 1/ 1951, was $160, or $37 more than their value last year. The average value of milk cows was $218. These were the highest values per animal that cattle have ever attained. The total number of cattle increased 5 percent during the year, to 84 million. This is 7 percent above the average for 1940-49 but 2 percent below the record number in 1945. Milk cows were valued in excess of 5 billion dollars; they accounted for 40 percent of the value, and about 29 percent of the number, of all cattle.
The number of cattle that are being slaughtered in 1951 is at a 10-year low and slaughter of calves is at an 18-year low. A substantial number of cattle will be added to inventories by January 1, 1952, and thus the value of this asset item will be increased. It is predicted that the number of cattle and calves on farms will increase from about 84 million on January 1, 1951, to about 90 million on January 1, 1952. If the usual cyclical pattern is followed, the in- ventory is expected to reach about 96 million by 1953 and to be more than 100 million by 1955.
The aggregate value of. hogs on farms was more than 2 billion dollars as 1951 began, nearly a third more than at the beginning of 1950. Hogs ranked next to cattle in value and constituted an eighth of the value of all livestock and poultry. The average value of hogs at the beginning of 1951 was $33.20. This is 23 percent higher than that of last year but 22 percent lower than the value in early 1948. There were about 65 million hogs onfarms at the beginning of 1951. This is 7 percent more than the number a year earlier and 4 percent a,bove the 1940-49 average, but 22 percent below the all-time peak reached in 1944.
THE BALANCE SHEET OF AGRICULTURE FOR 1951 21
Further increases in the number of hogs on far in s may be expected by January 1, 1952. In the spring of 1951 nearly 64 Tnillion pigs were farrowed and saved. This is 7 percent more than the number last year. The 1951 pig crop of about 106 million head is second only to the 121.8 million crop of 1943. Slaughter also has been high. The prospects for 1952 are for a slightly smaller pig crop than in 1951.
Sheep on farms were valued at 828 million dollars at the beginning of the year. This increase of 51 percent in inventory valuations with- in a year exceeds that of any other class of farm animals. The average value per sheep was $26,28, an all-time record, and 47 percent above'the value for the previous year. The number of sheep increased 762,000, or 2 percent, reversing the decline that had lasted for 8 years. The number of sheep on January 1, 1951 -- 31 1/2 million--remained far below the 56 million of 1942, A substantial gain in the number of sheep is being registered in 1951 and further gains are expected in 1952.
The values of chickens and turkeys on farnns likewise were higher at the beginning of 1951 than they were last year. As numbers decreased, higher values per head were solely responsible for the increase in" the aggregate value. Not counting commercial broilers, about 467 million chickens remained on farins on January 1, 1951 -- more than 3 to each person in the United States. A further increase in numbers may be expected to bring still higher inventory values on January 1, 1952, '
As in other recent years, decreases occurred in 1950 and in 1951 in the inventory value of horses and mules on farms. Both numbers and values per head declined as a consequence of the substitutions of mechanical for animal power. The downward trend is expected to continue in 1952.
Machinery and Motor Vehicles on Farms
Machinery and motor vehicles on farms on January 1, 1951, were valued at 15.5 billion dollars connpared with 14,3 billion dollars at the beginning of 1950 (table 10). This increase .resulted mainly from the exceptionally large quantity of motor vehicles and farm machinery that farmers bought in 1950. Purchases have continued at a high level in 1951 but may be somewhat checked in 1952 by prospective cut-backs in the output of machinery and vehicles in consequence of shortages of metals. Prices of machinery are ex- pected to remain high.
Purchases during the year were the largest on record, amounting to 4.2 billion dollars compared with 3.8 billion in 1949. Purchases of farm machinery amounted to 1.7 billion dollars ; of automobiles, 1,1 billion; of tractors, 1 billion; and of motortrucks, 441 nnillion dollars,,
The phenomenal rate at which farms have been mechanized during and following World War II is reflected by the Balance Sheet ex- pressed in 1940 ^prices ' (table 2), The year-to-year percentage increase in the value (at 1940 prices) of m.otor vehicles'^ and machinery on farms from 1940 to 1951 has been as follows:
Preliminary 1950 Census data for 39 States indicate a smaller inventory of automobiles on farms than these percentages assunie.
22 INFORMATION BULLETIN 73, U. S. DEPT. OF AGRICULTURE
Year Percentage change Year
1940 7. 1 1946 8.2 1941 11.0 1947 15.0 1942 7.2 1948 14.5 1943 -. 3 1949 11. 7 1944 3.5 1950 11.3 1945 2,0 Since 1940 the increase in the value at 1940 prices was 138
percent as compared with an increase of nearly 400 percent when measured in current dollars. Gains in productive power auid efficiency of the American farmer that have resulted from this increased mechanization, though large, cannot be specifically isolated from gains such as those from improved seed, improved live stock, more soil conservation practices, and better managem.ent. During World War II gains in production per worker on farms matched, and in postwar years have exceeded, gains per worker in manufacturing and mining. The increasing investment in agricultural equipment, therefore, has more than financial implications; it has profoundly affected physical production.
Crops Stored on Farms
The proportion of crop production remaining on farms at the end of the calendar year varies widely by commodities. Truck crops move to consumers or to canneries or freezers as soon as they are produced. Little fruit for commercial use or sale is placed in farm storage. Other crops such as cotton, most types of tobacco, oilseeds, and some of the grains move rapidly to mills and processors, or are in market channels by the end of the year. The more important crops held on farms on January 1 are those listed in table 11. For those crops, the physical stocks on farms
T^IE 10.-'Farm machinery and motor vehiclee: Value by classes, United States, January Í, Í9^0-5Í
TARE 11.--Crops stored on farms: Value by classes, United States, January 1, se- lected years, im0'51^
Class 1940 1945 1946 1949 1950 1951
Food grains- Wheat" -- Other^----
Mi 11 ion dol lars
217 188 29
Mi Ilion dollars
579 554 25
Million do I lars
572 552 20
Feed grains- Corn Other^----
Hay and forage"*---
Oil crops-- Soybeans- Other^"-
Dry beans and peas-
Vegetab les ^ ^ - - -
Miscellaneous
Total - -----
1,^19 944 275
666
34 (5)
34
9
72
122
2,905 2.191
714
1,513
171 87 84
12
158
440
2,883 2/026
857
1,458
171 90 81
8
155
531
Mi I lion dollars
820 794
26
4,059 3,128
931
1,639
330 179 151
20
203
542
Mi I lion do I lar s
648 633
15
3,428 2,695
733
1,831
246 130 116
19
^191
451
2.339 5.778 5,778 7.613 6,814
Mil lion do Ilars
696 676 20
4,138 3,131 1.007
1,937
397 265 132
16
124
416
7,724
■*■ Includes crops sealed on farms under ComnodityCredit Corporation loan programs. ^ Rye, rice, and buckwheat. ^ Oats, barley, and sorghum grain. • ^ * All hay, corn silage and forage, and sorghum silage and forage. ^ Less than $500,000. ^ Flaxseed, peanuts, and cottonseed. ^ Potatoes, cabbage, and onions. ® Revised. ® Broomcorn, cotton, tobacco, and hayseed - including red clover, alfalfa, ies-
pedeza, alsike clover, timothy and sweet clover.
at the beginning of 1951 as a percentage of amounts produced during 1950 ranged from 9 percent for cotton tomore than 75 percent for the feed grains.
The value of all crops stored on farms, including those sealed under Gomniodity Credit Corporation loans, totaled 7.7 billion dollars on January 1, 1951. This is about 900 million dollars, or 14 percent, more than a year earlier. Higher prices accounted for the increased value, as the physical quantity of crop inventories äeclined about 1 percent during this period.
In view of the large numbers of livestock on farms in early 1951, the stocks of feed and forage are of special interest. Farm stocks of these crops (corn, oats, barley, sorghum grain, hay, corn silage and forage, and sorghum silage and forage) were valued at 6.1 billion dollars on January 1, 1951; they constituted.four-fifths of the value of all crops held on farms. The value of these stocks of feed and forage held on farms was about 800 million dollars greater than that on January 1, 1950. The physical quantities, however, as measured by valuations at constantp'rices, decreased 1 percent. Nevertheless, they continued near record levels. During
24 INFORMATION BULLETIN 73, U. s. DEPT. OF AGRICULTURE
1950 the quantity of hay and forage stocks on farms increased 5 percent; oats, barley, and grain sorghums as a group increased 14 percent. Farm stocks of corn, the major feed grain, were 10 percent lower at the beginning of 1951 than they were a year earlier.
Total stocks of feed grains on January I, 1951, both privately and Government owned, including farm stocks and stocks in terminal markets, interior mills, elevators, and warehouses, were at a record high for that time of year. These stocks amounted to 0.55 ton per animal unit to be fed. This was slightly below the record level of 0,58 ton per unit available at the beginning of both 1949 and 1950. Total hay supplies were 1 .02 tons per roughage-cons unriing aninnal unit, the largest supply per unit in the 14 years of record.
The supply of feed grains on October 1, 1951, was about 5 percent smaller than a year earlier .This reflects both smaller production and smaller carryover. Because of a prospective further expansion of livestock production, the quantity of grain to be fed during the 1951-52 season will be the heaviest since World War II, and will further reduce feed grain stocks . Prices of feed grains, because of a strong demand and smaller supply, are expected to average a little higher in 1951-52 than in 1950-51. In contrast, the total supply of hay for 1951-52 is the largest on record and will provide a near- record supply of hay per roughage-consunninganinaal unit on farms .
The value of food grains (wheat, rye, buckwheat, and rice) stored on farms at the beginning of 1951 was 697 million dollars, or about 7 percent higher than that of ayear earlier. The aggregate physical quantity increased 3 percent. Price increases were 4 percent for wheat, 9 percent for rye, 20 percent for buckwheat, and 18 percent for rice. The part of the food crops that rennains on farms; at the end of the year is smaller than that for feed grains. Food grains on farms January 1, 1951 amounted to only about 30 percent of produc- tion during 1950. The larger part had nnoved to nnills, elevators, and warehouses.
Total wheat stocks, both on-farm and off-farna, amounted to about 1 billion bushels on January 1, 195 1 .This is larger than the January stocks for any other year since 1943. These large stocks resulted from, continued heavy production and lower exports in 1949 and 1950. The 1951 wheat crop is about 1 billion bushels. Don^estic consumption and exports, however, are expected to exceed produc- tion; carry-over stocks on July 1, 1952, will probably be smaller than those on July 1, 1951. Average prices for the 1951 crop are expected to be near or slightly below the support level of $2.18 a bushel.
Farm inventories of oil crops, valued at 397 mtillion dollars at the beginning of 1951, were 6l percent higher than were these stocks held a year earlier. The quantity of soybeans, the major oil crop held on farms, was 58 percent greater; the 1950 crop matured a little later than in 1949. The movement of the record production to raills and off-farm storage was large in quantity but the percentage of the crop moved by January 1 was smaller than usual. Farm stocks of flaxseed, peanuts, and cottonseed ^s^ere smaller at the end than at the beginning of 1950. Compared with January 1, 1950, prices of oil crops were higher on January 1, 1951, ranging from 2 percent for flaxseed, 9 percent for peanuts, 29 percent for soybeans, to 136 percent for cottonseed.
THE BALANCE SHEET OF AGRICULTURE FOR 1951 25
Irish potatoes constituted the bulk of vegetables still on farms January 1, 1951. Although there were 10 million more bushels than a year earlier, farm stocks were valued at only 117 million dollars, or 57 million dollars less than on January 1, 1950, Between these two dates the market price of potatoes declined 37 percent. The elimination of price supports on potatoes in 1951 has reduced the acreage this year. This has resulted in a surplus smaller than that of 1950, which was particularly large.
Crops Owned by Farm^ers Stored off Farnns Under CGC Loan
Considerable quantities of crops owned by farmers are stored off farms. Estinrtates, however, are available only for those crops which were pledged to the Commodity Credit Corporation as security for loans under the price-support progrann.
On Jcinuary 1, 1951, the value of these crops stored off farms under CCC loans was 306 million dollars, or less than a third of the value in off-farna storage at the beginning of 1950 (table 12). The physical quantity of these crops in 1951 is indicated to be only 32 percent of the 1950 quantity. The reduction in com.modities under CCC loan has re suited primarily from, substantially improved prices during 1950. Cotton loans, which bulked large in past years, were reduced to insignificant amounts. Wheat accounted for four-fifths of the value of all off-farm crops under CCC loan on January 1, 1951, but it was not much more than half of the amount a year earlier. Because of increased production, larger quantities of barley and sorghum grain were placed under CCC loan in 1950 than
TABLE 12.--Quantity and value of crops owned by farmers stored off farms under CCC . loans. United States, January Í, Í950 and Í951
^ Market value or loan value, whichever is higher. ^ Excludes loans made to cooperatives whether or not individual cotton producers
have right of redemption. ^ Bales of 500 pounds gross weight. * Revised.
26 INFORMATION BULLETIN 73, U. S. DEPT. OF AGRICULTURE
in the year before, but the quantities pledged were small compared with the amount of wheat under loan.
Household Furnishings and Equipment
The value of household furnishings and equipment on farms on January 1, 1951, is estimated to have been 7.2 billion dollars. The value of this inventory item increased by approximately 10 percent from the 6.5 billion of January 1, 1950. Sales of furniture and household equipment to farmers appear to have been well maintained during 1950 despite the fact that prices were higher than in the year before.
Bank Deposits, Currericy, and United States Savings Bonds
Farmers appear to have increased their liquid financial reserves during 1950 despite a further decline in the realized net income of farm operators. The combined amount of bank deposits, currency, and United States Savings Bonds owned by farmers is estimated to have increased about 200 million dollars in 1950 (table 13). This increase --about 1 per cent--rever sed the decline of the preceding 2 years during each of which the liquid financial reserves of farmers dropped about 300 million dollars.
Demand deposits and the value of United States Savings Bonds owned by farmers appear to have increased during 1950. Currency held by farmers is estimated to have decreased slightly and time deposits to have remained at about the same level as a year earlier.
Deposits.--Data compiled by the Federal Reserve banks on the ownership of demand deposits show an increase in farmer-owned demand deposits of 2.7 percent during the year ended January 31, 1951. This compares with increases of 7.0 and 7.4 percent
^^^i^^l^.-Liquid financial assets owned by farmers, United States, January i _^ Í9¿t0-5Í
do I lar s 1.5 1.7 2.2 3.2 4.0 5.0 6.2 7.3 7.6 7.2 6.8 7.0
Time
Billio dollar
1.4 1.5 1.6 1.8 2.0 2.5 3.3 3.6 3.8 3.8 3.8 3.8
United States Savings Bonds^
Bill ion dollars
0.2 .4 .5
1.1 2.3 3.7 4.5 4.5 4.8 5.0 5.2 5.3
Total
Bill ion dol lars 4.1 4.7 5.8 8.1
11.0 14.5 18.0 19.4 20,1 19.8 19.5 19.7
' ^ffa^l i!^^^^^^ estimates, adjusted to a January 1 basis, are used for the period 1944-51,
Redemption value.
THE BALANCE SHEET OF AGRICULTURE FOR 1951 27
TABUE 14.--Percentage increase in demand deposits of individuals and nonfinancial businesses, by Federal Reserve districts, year ended January 31, 1951
District
Boston----------- New York- — --- Philade Iphia- -- —■ --- Cleve land - - - — - - - - - Richmond----' Atlanta- Chicago ^.----- St. Louis-- Minneapolis- Kansas City 13allas-- — ----- San Francisco ---
^ Adapted from table 3, page 507, Federal Reserve Bulletin, May 1951.
respectively for demand deposits owned by other individuals and nonfinaneial businesses (table 14). The demand deposits owned by these latter groups increased in all of the Federal Reserve districts but farmer-owned demand deposits increased in only 7 of the 12 districts. No annual surveys are made of. the ownership of time deposits, but it is believed that those of farmers held steady as there was little change during 1950 in the time deposits of banks located in agricultural counties.
Combined demand and tim.e deposits of all individuals, partner- ships, and corporations increased substantially during 1950 in all regions. When broken down by type of county as in table 15, the data indicate that the total deposits of farmers increased less than did those of others. In counties that contain major trade and financial centers the increase was 7.7 percent during 1950. For counties that contain secondary trade and financial centers it was 7.5 percent. These increases are much greater than the 4.6-percent increase in all counties that contain smaller trading centers or the 2.8- percent increase that occurred in 618 primarily agricultural counties. The greater percentage increase of deposits in counties that contain the larger cities, in which business and urban individual accounts predominate, is reflected by data for all major regions except the Pacific.
It may appear surprising that far nn er s increased their deposit balances during 1950 in view of the decline in realized net inconae of farm operators and of the increase in farm expeditures, particu- larly after the Korean outbreak. The main explanation is that farmers greatly increased their borrowing during 1950. Excluding price-support loans guaranteed by the Commodity Credit Corpora- tion, the increase in agricultural loans, including farm-mortgage loans, was nearly 1.4 billion dollars. This large expansion of loans helped farmers to meet rising costs, make large expenditures for livestock and capital equipment, and, at the same time, increase their working balances at banks.
28 INFORMATION BULLETIN 73; U. S. DEFT. OF AGRICULTURE
TA11.E 15.—Percentage increase in total deposits of individuals, partnerships^ and corporations in insured commercial banks, by class of county and by region, 1950^ :
Ail counties
Counties that contain -
Region Major
trade and financial centers^
Secondary trade and financial centers ^
anal1er trading centers*
Selected agricul- :tural
counties^
Northeast ------ Appalachian —- — Southeast -- Lake States G>rn Belt ------- Delta States -- — Great Plains —-- Texas-Oklahoma - - ^teuntain ---- Pacific -------
Percent 6.4 7.1 9.3 7.4
5.5 3.8
11.1 7.3 5.7
Percent 7.1
10.0 (\
11.8 8.1 ñ
18.8 (^ 5.8
Percent 5.8 9.2
10.4 10. 2 7.5 6.5 9.4 8.7 8. 2 4.3
Percent 3.9 4.9 8.3 2.3 3.9 4.9 2.3 8.3 6.5 5.7
Percent 1.2 2.1 5.0 -.2 2.7 5.9 1.4 6.1 4.1 5.5
' United States - 6.8 7.7 7.5 4.6 2.8
Data siç>plied by Federal Deposit Insurance Corporation. All counties that had total deposits of 1 billion dollars or more on June
30, 1948; also the District of Columbia and the independent city of St. Louis, Mo.
All counties that had total deposits of 100 million to 1 billion dollars on June 30, 1948.
"* All other counties of the United States; including selected agricultural counties.
" 618 of the counties that had total deposits of less than 100 million dollars on June 30, 1948.
No county in this region had 1 billion dollars of deposits on June 30, 1948.
Savings bonds--During 1950, purchases of United States 'avings Bonds by farmers declined to the lowest level since prewar, and redemptions of savings bonds by farmers rose to the highest level since 1946. In fact, 1950 was the first year since 1946 in which farmers cashed a larger amount of savings bonds than they bought. For the series A through E, redemptions exceeded purchases in all regions except the Great Plains (table 16). The redemption value of all United States Savings Bonds owned by farm^ers, however, con- tinued to increase during 1950 as interest accruals more than offset the excess of redenaptions over purchases.
The dr-op in purchases and the increase in redemptions of savings bonds by farmers during 1950 doubtless resulted from higher farm costs and from purchases by farmers of things that were expected to become scarce or to rise in price as a result of the Korean situation and the defense program.
Longer run trends,--During the war, the realized net income of farm operators rose far above prewar levels but supplies of automobiles, trucks, tractors, machinery, and building materials were so restricted that farmers saved a considerable part of their incomes for future use. They also made large payments on their debts. From January 1. 1942, to January 1,1946, the liquid financial reserves of farmers increased 12.2 billion dollars (table 17); farm
THE BALANCE SHEET OF AGRICULTURE FOR 1951 29
TABLE 16.—t/ni ted 5i a íes .Savings Bonds: Purchases by and redemptions for farmers, by regions, ±950^
Î 'egion I\irchases Hedemptions
Northeast-—--- Appa1achian T — Southeast- — — Lake States Corn Belt- Delta States--- Great Plains--- Texas-Ok1ahorna- Mountain-- ------ Pacifie--------
United States-
Mi I lion dellars 35 41 17 38
101 20 52 30 14 21
illion dollars 48 61 28 54 127 28 50 38 18 38
369 490
^ Series A thronghE oniy. Estimates based on data supplied by the United States Treasury Department.
TABLE 17.--JncOme and liquidf inane ial assets of farmers compared wit h total. United States, imO'50
Income during year Liquid financial assets at end of year^
*^ Currency, demand and time bank deposits, and United States securities. ^ Revised PAE series; based on Department of Commerce data with adjustments to
improve comparability with farmers* income. ^Revised series. Net realized income of farm operators, including Governirent
payments. These data exclude adjustments for change in inventory. * Excludes holdings of banks, insurance companies, savings and loan associa-
tions, nonprofit associations, foreigners, and governmental bodies and agencies. Demand deposits included in total are figured on a bank-record basis to make them comparable with estimates of farmer-owned deposits. Data from Board of Governors of the Federal Reserve System.
** Revised. Preliminary.
30 ^ INFORMATiON BULLETIM 73, U. S. DEPT. OF AGRICULTURE
debts (excluding price-support loans) were reduced about Z.3 billion dollars.
The decline in net farm inconne following 1947 tightened the cash position of farnners, particularly as many continued to make heavy investments in their farms. Although the liquid financial reserves of farmers during this period declined only 0 .4 billion dollars, farm debts increased 3.0 billion dollars. About 1.4 billion dollars of the increase in debt occurred in 1950, a yearin which farmers slightly increased their liquid financial reserves.
Prospects for 195Z.--The aggregate amount of liquid financial reserves held by farmers is expected to be about the same on January 1, 195Z, as a year earlier. Indications are that farmer- owned demand deposits and currency will increase slightly and that the time deposits and United States Savings Bonds owned by farmers will decrease by a small amount.
The larger inventories of farmmachinery and livestock that farmers are accumulating tend to reduce their liquid reserves. However,.higher operating costs require that farmers carry larger working balances at banks, and many farmers are obtaining addi- tional liquid funds by borrowing from banks and other credit institu- tions . As will be noted later, the non-real-estate loans of farmers at banks and federally sponsored agencies were about Z4 percent higher at mid-1951 than a year earlier.
Net Worth of Farmers' Cooperatives
Closely associated with the farm business are the thousands of farmers* cooperatives scattered throughout the United States. The^ financial interest of farmers in their associations represents an investment that greatly facilitates the production and marketing of agricultural products and the maintenance of the farm plant. During the period for which estimates have been made the net worth of farm cooperatives has been steadily growing. For January 1951, the net worth of these associations has been estimated at Z-Z billion dollars (table 18). This is 9 percent more than the net worth of a year earlier and 164 percent above the level of January 1, 1940.
Among the cooperatives having the,greatest growth during recent years are the marketing and purchasing associations , the production credit associations, and farmers* mutual fire insurance companies. The net worth of marketing and purchasing associations, which amounts to more than half the net worth of all farm cooperatives, increased Z73 percent between 1940 and 1951. This increase has been associated with higher prices for products marketed and supplies sold, increased inventories, new facilities, and additional service rendered. The production credit associations and farmers ' mutual fire insurance companies experienced increases in net worth belonging to members of 338 percent and Z31 percent respectively, between 1940 and 1951. The increased surplus and reserves of the insurance companies has resulted largely from increased membership, higher valuations of insured buildings, and relatively low fire losses. The large increase in the loan volume and the relatively small losses of production credit asso- ciations are primarily responsible for their higher net worth.
THE BALANCE SHEET OF AGRICULTURE FOR 1951 31
TÂIM 18.--farmers' financial interest in selected types of cooperatives, united States', selected years, January Í, 19Ù0-5Î
tives'- Production credit systems- Federal land bank system -
Mil Îion âol lar s 256 74
23
197
42
{') 31
203
Mi 11 ton dol lars
393 194
23
^ 209
^ 63
61 224
M il I i on do liars
464 229
23
^ 211
^71
68 241
Mi I I ion dol lars
674 336
23
^ 219
75 107 287
Mill ion dol lars
372
23
^ 221
^ 122
92 122 299
Mi I lion dollars
^ 820 ^ 412
23
223
139
110 135 317
Total- 826 1,167 1,307 1,818 '1,995 2,179
^ Net worth excluding intercooperative investments. Based on data collected by the Farm Credit Administration. Estimates for 1950 were made by PCA; estimates for other years by BAE.
^ Preliminary. ^ Investment in plant and equipment less borrowed money. Figure used for each
date is that for January 1, 1938. United States Bureau of the Census, Census of Electrical Industries, 1937.
* Net worth. Figure for 1940, from United States Bureau of the Census, Census of Irrigation of Agricultural î^nds, 1940; estimate for 1950 based on preliminary data from the 1950 Census of Irrigation; estimates for other years made by BAE. Estimates for years other than 1940 represent major revisions over those previ- ously published.
^ Revised. ^Surplus and reserves. Data for 1940 from Farm Credit Administration; data
for later years from B^. ^ Data supplied by Rural Electrification Administration. ^ Not available. s Net worth excluding capital owned by production credit corporations. Data
frcm reports of Farm Credit Administration. ^° Net worth excluding capital and surplus paid into the Federal land banks by
the Federar Government. There has been no Government capital or paid-in surplus in the Federal land banks since July 1, 1947. Data are taken from, or based on, reports of Farm Credit Administration. ,
Claims
The claims on the agricultural assets are of two general classes: (1) Liabilities, which are divided into real estate and non-real-estate debt; and (2) equities, which represent the value of the residual rights in agricultural assets belonging to the proprietors - owner- ope raters, tenants, and landlords. Included among these proprietors are individuals, financial institutions and other corporations, and Federal, State, and local Government agencies.
Farm Real Estate Debt
Loans secured by mortgages on farm real estate in the United States increased again during 19B0. The total amount of these loans
32 INFORMATION BULLETIN 73, U. S, DEBT. OF AGRICULTURE
outstanding on January 1, 1951, was a little more than 5.8 billion dollars --the largest beginning-of-the-year total since 1943 (table 19.) The increase during 1950 amounted to 7.8 percent, compared with an increase of 5.9 percent for 1949 and 4.6 percent for 1948. -
In the first half of 1951 totalfarm-n:iortgage debt, increased about 6 percent, which is somewhat more than the percentage rise for the corresponding period in 1950. This indicates that total loans outstanding will be greater at the end of 1951 than at the beginning, and that the percentage increasemay also be greater.
The increase in farm-m.ortgage debt during 1950 apparently stemmed for the most part from an increase in new borrowings. The dollar volume of farm-mortgage recordings has been at a relatively high level since 1946, but in 1950 it was 18 percent above 1949 and 15 percent above the 1946-49 average. Information for the first half of the year indicates that recordings have been higher in 1951 than in the preceding year.
Farm-mortgage releases, which had been declining in recent years, also increased somewhat in 1950. This ordinarily would suggest that principal repayments may have increased. However, it appears that much of the increase in the amount of mortgages released came about through the renewal, expansion, or refinancing of existing mortgages.
The sizable increase in the dollar amount of farnn-mortgage recordings during 1950 represented a 10-percent increase in average size and a 7-percent increase in number of mortgages recorded. The increase in average size reflects largely the sharp increase in farm real estate values. Unlike that in other years, most,of the expansion in loan size in 1950 occurred during the last half ojf the year, when a large part of the rise in land values took place. The average size of farm^ mortgages recordedby all lenders increased from $4,280 in 194910 $4,700 in 1950, or 10 percent, but for the' last half of 1950 tlie increase over the same period in 1949 was 18 percent. However, the ratio of debt to the purchase price of credit-finaneed sales was slightly lower in 1950 than in other recent years.
The increase in the number of mortgages recorded during 1950 over that of 1949 was sonríe what greater during the first half of the year than during the latter half -- 8.8 compared- with 4.9 percent. A 6-percent increase in the number of voluntary farm transfers, which usually occur in greater numbers during the first half of the year, undoubtedly was an important eontributory factor. Of the total farm, sales made in 1950, 54 percent were credit-financed--a slightly smaller proportion than in either of the two preceding years.
It is likely that some farmers have borrowed on real estate mortgages to finance improvennents and purchases of equipment. Others probably have refinanced non-real-estate loans previously obtained for these purposes. Non-real-es täte loans have more than doubled since 1946, and some farmers probably found it necessary to refinance some loans of this character on a long-term basis.
The sharpest percentage increases in farraL-mortgage debt during 1950 occurred in the Mountain and Southeastern States, where they amounted to 13,6 and 1.1.5 percent, respectively (table 19). Both of these regions have shown sharp gains in debt in other recent years. The snnalleSt increases were registered in the Northeastern and
TM^r 19.'-farm-mortgage debt: Amount outstanaing, January 1, I9¿t0^51, and percentage change, 19^0" 51 and 1950-51, by regions
34 INFORMATION BULLETIN 73, U. S. DEPT. OF AGRICULTURE
PERCENTAGE CHANGE IN FARM- MORTGAGE DEBT
U. S. INCREASE 7.S<7o
J. S. DEPARTMENT OF AGRI
PERCENT INCREASE 110,0 & over
5.0 - 9.9 0.0-4,9
NEG. 4B164.XX SUREAU OF AGRICULTURAL ECONOMICS
_ BAE 48Î64.XX FIGLTÍE 4.--The largest increases in farm-mortgage debt during 1950 took place in
the Mountain and Southeastern States. Ohly Florida had a rise in excess of 20 percent, but 13 other States experienced increases of 10 percent or more. The smallest increases occurred in the Northeast.
Pacific regions. In the former the increase approximated4 percent, ajid in the latter 6 percent; On a State basis, increases ranged from 2 percent in Pennsylvania to about 23 percent in Florida; 14 States had increases of 10 percent ormore (fig, 4).
Farm-mortgage loans outstanding on January 1, 1951, were ap- proximately 25 percent greater than at the beginning of 1946, when the lowest level inmore than three decades was reached. Since 1946, increases of 50 percent or more have taken place in the Mountain, Southeastern, and Delta States. Only in the Great Plains was the debt on January 1, 1951, below the 1946 level. In spite of recent sharp increases inmost regions, total farm-mortgage debt at the beginning of 1951 was still about 12 percent below that of January 1, 1940, In the Great Plains it was 45 percent lower and in the Corn Belt 30 percent lower. On the other hand, in the South- eastern, Delta, and Mountain States total m^ortgage debt exceeded that of 1940 by 27 percent or more.
Lenders have increased their mortgage holdings in varying proportions. The largest percentage gain was reported by life insurance companies. Their holdings were about a seventh larger at the beginning of 1951 than a year earlier, and they constituted 23 percent of the total farm-rnortgage debt (table 20). Insurance c omp ani e s m ade s üb s tan ti ally mo r e new lo an s in 19 5 0 than in 1949, and increased the average size of their loans as well.
Banks expanded their farm-mortgage holdings somewhat ñiore in 1950 than they did during 1949. An increase in both number and average size of new mortgage loans caused farm-mortgage invest-
ments of banks to rise approximately 7 percent during 1950, On January 1, 1951, these investments represented 16 percent of the total farm real estate debt.
TABLE 20, --Far m-rnort gage debt: Amount put standing, January i, 19W-5Í, and percentage ch<Mge, S9¿t0-51ona 1950-51, by lenders United States
1,000 do I la rs 2,312,902 2,223,921 2,143,697 2,011,762 1,899,586 1,799,277 1,789.932 1,891.296 1.960,470 2.089,.654 2.202,155 2,338.008
PERCENTAGE CHANGE
1940-51- 1950-51-
Percent
-^11.5 7.8
Percent
-52.9 4.6
percent -93.8 -25.0
Percent 570.4
13.3
Percent 36.2 14.4
percent
. 76.6 7.3
Percent
1.1 6.2
* Also include purchase-money mortgages and sales contracts. Loans were made for Corporation by Land Fank Commissioner. Authority to make new loans expired July 1, 1947.
^ For 1940-41. tenant-purchase loans only. Ffeginning 1942, also includes farm-development (special real estate) loans; beginning 1944, farm-enlargement loans; beginning 1945, project-liquidation loans; and beginning 1951, farm-housing loans. Also includes similar loans' from State Corporation trust funds.
* Revised by Bureau of Agricultural Economics.
O ta
36 INFORMATION BULLETIN 73, U. s. DEPT. OF AGRICULTURE
Individuals and miscellaneous lenders , who hold the largest part of all outstanding farm-mortgage loans (40 percent in 1951), increased their loans 6 percent during 1950. The number of naortgages recorded by individuals in 1950 was smaller than in 1949, but the average size was appreciably larger.
The Federal land banks, which are the largest holders of farm mortgages among the federally sponsored agencies, held 5 percent more in loans at the beginning of 1951 than they did a year earlier. This increase was slightly greater than that of 1949, when the total loans of the -land banks rose for the first time in more than a decade. These banks also made m.ore new loans in 1950 than in 1949 and the loans averaged slightly larger in amount. Loans held by the; Federal Farm Mortgage Corporation dropped another 25 percent as the Corporation proceeded with the liquidation of its loans. This agency has made no new loans since July 1, 1947. The Federal land banks and the Corporation together held about a sixth of all farna-mortgage loans on January 1, 1951.
The Farmers Home Administration increased substantially its m.o'rtgage holdings in 1950 . The 13-percent increase, however, can be attributed.to farm-housing loans, as the outstanding balances of its farm-ownership loans actually declined. During the year about the same amount of funds was available for helping farmers to become owners as for helping them to acquire better housing, but the amount of new farnn-ownership loans was more than offset by repay- ments of existing loans . This agency has had a little more nnoney to lend in 1951 than in 1950, although appropriations for the 1^52 fiscal year are somewhat less . Loans of other lenders that are insured by this agency (included in the loan data for the respective lenders) showed another sharp increase in 1950 and totaledmore than 29 million dollars at the beginning of 1951 compared with nearly 17 million a year earlier.
Interest charges payable on outstanding farm mortgages during 1950 amounted to 262million dollars, or 8 percent more than in 1949 i Nearly all of the increase in interest charges was the result of the increase in farm-mortgage debt. Interest rates on outstanding loans rose only slightly and ave raged 4 .7 percent on January 1, 1951, compared with 4.6 percent at the beginning of each of the years 1946-.50^ Expressed on a per-acre basis (all land in farms), interest charges for 1950 averaged 22.9 cents .The index of interest charges per acre rose from 76 (1910-14 = Í00) for 1949 to 82 for 1950.
Npn-Real-Estate Debt
On January 1, 1951 »the non-real-estate debt of farmers , excluding price-support loansmade or guaranteed by the Comnnodity Credit Corporation, reached more than 6 billion dollars (table 21). This was 18 percent higher than a year earlier and 115 percent above January 1, 1946.
The rise in non-real-estate debt during 1950 is a resumption of the rapid rate of expansion that prevailed from the end of the war to 1949, when a marked slackening in the rate of increase occurred. By 1949» farniers had connpleted many of the more necessary post- w^ar capital replacements and additions, and the downturn in agri- cultural prices was causing both borrowers and lenders to be cautious in the use and extension of credit. These forces, tending to restrain the expansion of credit, continued into 1950. Following the
THE BALANCE SHEET OF AGRICULTURE FOR 1951 37
TABLF 21.-'Farmers* non-real-estate debt, Tfnited States, January 1, 1940-51
Other loans by banks and federally sponsored agencies
Bi 11 ion do I lar s
1.5 1.6 1.8 1.7 1.7 1.6 1.7 2.0 2.3 2.7 2.8 3.4
Loans and book credits by miscel- laneous lenders*
Billion dollar s
1.5 1.7 1.7 1.5 1.2 1.1 1.2 1.5 1.8 2.2 2.4 2.8
Total
Billion dollar s 3.4 3.9 4.1 4.0 3.5 3.4 3.2 3.6 4.2 6.1 6.9 7.0
* Tentative estimates based on fragmentary data.
Korean outbreak, however, the use of non-real-estate credit increased rapidly. New factors introduced by the hostilities were expectations of higher prices and shortages of the things farmers buy, and a belief by many people that farming would become more profitable. The result was the use of large amounts of credit for buying, beyond current needs, goods for both production and consumption. Also, farm costs rose further. In the Midwest another factor was the heavy purchases of feeder cattle that were made partly because of the fear in the early fall that much of the 1950 corn crop Tñight be soft and unmarVi table.
Data from production credit u¿>oUCÍations indicate that the non- real-estate credit expansion that began in the summer of 1950 resulted more frona the increase in the amount borrowed per farmer than from an increase in the number of farmers using credit. The number of PCA loans made during the latter half of 1950 was about 5 percent greater than the number made during the latter half of 1949, but the average size of loans made increased 18 percent between these two periods. The number of PCA loans out- standing at the end of 1950 was less than 1 percent above a year earlier, but the average size of loans outstanding-was 16 percent higher.
Non-real-estate debt of farmers (not including CGC loans) falls into two general classes: The debt to banks and the federally sponsored lenders; and the debt to the miscellaneous lenders such as merchants, dealers, individuals, and finance companies . Only the data from banks and the federally sponsored lenders are available on a State basis to show area variations .
For the year 1950, the non-real-estate farm loans of these principal institutional lenders -- banks and federally sponsored agencies --increased 18.8 percent for the United States as a whole, A credit expansion occurred in all States except Vermont, North Dakota, and Arkansas, where slight decreases of 1.8 percent, 0.7
38 INFORMATION BULLETIN 73, U. S. DEPT. OF AGRICULTURE
NON-REAL-ESTATE FARM LOANS (HELD BY BANKS AND FEDERALLY SPONSORED AGENCIES}
Percentage Change, I950-5P*
HÍÍD OS G
U. S. OEPARTHENT OF AGRICULTURE MEG.48246-XX
°7ù DECREASE I I 0,0- 9.9
INCREASE E23 0.0-9.9
1 0,0 - 24.9 25.0 & over
«EAU OF AGRICULTURAL ECONO^flCS
FIOJRE 5.--During 1950 non-real-estate loans held by banks and federally spon- sored agencies increased 18.8 percent for the United States as a whole. In- creases of 25 percent or more occurred in Illinois, Iowa, Missouri, Nebraska, Kansas, Oklahoma, and Colorado, fkly three States--Vermont, North Dakota, and Arkansas--had decreases.
percent, and 0.9 percent, respectively, occurred (fig. 5). Increases of 25 percent or more were shown in a solid blockof States -- Illinois, Iowa, Missouri, Nebraska, Kansas, Oklahoma, and Colorado. Most of these States had substantial increases in the number of cattle on feed during 1950. The Delta States and the Southeast had #he smallest increases during 1950-- 5 percent and 6 percent, respectively.
Three-fourths of the non-real-estate debt that farmers owed to the principal institutional lenders was owed to banks (fig. 6). This debt to banks increased 23 percent during 1950, the largest increase for any class of lender. In the Midwest, where the demand for credit was especially heavy, banks made alarger proportion of the loans than did other lenders. Also, banks may have participated exten- sively in financing consumer expenditures for farmers in 1950. Out- standing loans of production credit associations increased 17 percent during 1950, and loans and discounts of the Federal inter- mediate credit banks to the other short-term lenders served by them, increased 22 percent. The Farmers Home Administration, however, experienced a 4-percent decline in its outstanding non- 'reaUestate loans during 1950. Congress authorized 18 million dollars more in FHA loans for the year ended June 30, 1.951, than for the year before, but repayments on outstanding loans were sufficient to offset the increased lending. A substantial repayment was made on loans which had been outstanding since before the war.
For the postwar period as a whole, January 1, 1946 to January 1, 1951, the non-real-estate debt owed by farmers to the institutional lenders doubled. The greatest increase for any region (150 percent) was in the Corn Belt. The Northeastern and Lake States regions, where dairying is important, were next with increases of 123 percent
THE BALANCE SHEET OF AGRICULTURE FOR 1951 39
NON-REAL-ESTATE FARM LOANS Held-by Banks and FederaUy Sponsoreé Agencies^
19Î0 1920 1930 1940 1950 ' JAN. I AND JULY I DATA. EXCLUDING LOANS HELD ÜR CUAflANTBBD BY COMMODITY CREDiy COÄP. • met. EMEffGENCy CROP 4 f££D AND R. A, C.C, LOANS 'INCL FEDeRAL IÑTtüMEOIAIS CKEDIT BANK oVsCOUNTS fOÄ OTHEÄ L£ND£«S
.S.DEPARTH . ECONOHiCS
BAE 464 10-XX
FLGiJRE 6.--Non-real-estate farm loans held by banks and federally sponsored lenders increased about 24 percent between July 1, 1950 and July 1, 1951» The total of such loans on July 1, 1951 --about 4,2 billion dollars-- was 129 per- cent above that for July 1, 1945 and 8 percent above the previous record level of July 1920;
and 121 percent, respectively. The Delta States and the Southeast region, both in the old Cotton Belt, experienced the smallest increases in non-real-estate debt during the postwar period--31 percent and 48 percent, respectively.
The long-time trend in non-real-estate farm debt owed to the principal institutional lenders is shown for the major regional groupings in fig, 7. In the Midwest, despite a large increase after World War II, the current debt is stillwell below the peak following World War I. In that region a drastic liquidation in non-real-estate debt occurred in the twenties and early thirties, The current sea- sonal average level in the Southern region is slightly lower and in the Northeast slightly higher than the debt at the 1920 peak. In the Western region, where a relatively large expansion in agriculture has occurred since World War I, the 1951 level of non-real-estate farm, debt is considerably higher than in 1920.
The current high level of non-reaí-estate credit in use is of special interest because of the vuinerability of this type of credit to sudden declines of farm income. Short-term loans have a relatively rapid turn-over and the amount of loans outstanding on any one date is only a part of the total amount of credit that is used and repaid during the year. For example, in recent years the amount of cash repaynnents on PGA loans has been about twice the amount of loans outstanding at the end of the year. This 2-to-l rate of turn-over may not exist for the entire non-real-estate farm debt of more than 6 billion dollars (including debt from mis- cellaneous sources as weU as from institutional lenders but excluding CGC loans) that has been estimated for January 1, 1951. Assuming the rate to be if to 1, the repayment on short-term loans by farmers during 1950 would have been more than 9 billion dollars. The amount that farmers paid off on their long-term farnn real
40 ■INFORMATION BULLETIN 73, U. S. DEPT. OF AGRICULTURE
NON-REAL-ESTATE FARM LOANS HELD BY BANKS AND FEDERALLY SPONSORED AGENCIES, BY REGIOKS*
DOLIARS ^ a It DONS)
0.2
0 1.4
Î.2
1.0
0,8
0.6
0,4
0.2
0
0.8
0.6
0.4
0.2
0
1 [ - I NORTHEASTÉRK
_ FEDERAI ^ AGENCIES i
WESTERN [ Î
• 1
L , FEDERAL j0 AGENCIES ^
-
L_j i .■ 1
OOILARS (ilUtONS)
L MIDWESTERN
[
2.-2
2.0
i:8
I —
1.6 f- 1 4
1.2
p JOMOOHOOOH foowowoi»« J 1
1.0 r^HI^*"^'"^ i- 0.8 J^J - ̂ m MM 0.6 s !^^m m^m
ms^^ji ̂ ^^^ 0.4
0.2
!S888888«O8O8SS8SQ8W^ ̂ ^^^
^^^^W: n SSSvSSi POOWflMWflgWflWOi 11
19Í0 Í920 1930 1940 1^50 1910 .1920 Î930 1940 1950 *Aa SMTÉ AND NATIONAL MhtitS MJQS TO IMi, IHSUtlù COMMfllCfAl MWKS 793S AND IHeSEÀFIÉB
JAN. I ANO JUtV f DATA, fXCi-UOPNG lOAHS HftO O* CLIARANTEf0 if COMMOOITV CííOfT CO«?0«AnON
U. 5, DEPARTMENT OF ASRICULTURE tUREAU OF-AGRICULTURAt ECONOMICS
BAE 47574.x
FIGURE 7.—AH major regions have shown increases during recent years in non- real-estate farm loans held by banks and federally sponsored lenders. The in- crease in the Northeast, however, was less marked than in the other regions. As compared with the peak of 1920 the levels of this debt on July 1, 1951, were higher in the Northeastern, Southern^ and Western regions but lower in the Midwestern region»
estate loans prol>ably did not exceed a billion dollars during that year.
An interesting comparison of this estimated 9-billion-dollar repayment of short-term debt can be made with cash farm receipts of 29 billion dollars in 1950, Farmers, of course, had other sources of funds with "which they repaid debts but for many individuals the repayments claimed a substantial amount of their 1950 income. It can readily be seen that any disruption of income could quickly cause difficulty for many far nie r s in repaying their loans.
The expansion of non-real-estate debt, part ofwhichis seasonal, continued into 1951 and by July the debt was estinaated at more than 7 billion dollars. No estimates of the total volume of such debt exist for the World War 1 period but thatpart owed to banks and federally sponsored agencies now exceeds, for the first time, the peak level of July 1920. The forces giving rise to the credit expansion continue to be strong and it is probable that non-real-estate debt of farmers will be substantially higher on January 1, 1952, than at the beginning of 1951.
THE BALANCE SHEET OF AGRICULTURE FOR 1951 41
Outstanding loans nnade or guaranteed by the Commodity Credit Corporation totaled 806 million dollars on January 1, 1951, or less than half of the amount outstanding a year earlier. The bulk of 1950 crop production was absorbed by the market because of the rise in agricultural prices during the second half of 1950. Reports of the Connmodity Credit Corporation indicate that corn and wheat loans on January 1, 1951 were little more than half of the amount existing on January 1, 1950; cotton loans, which had totaled more than 300 million dollars at the beginning of 1950, were down to 1 1/3 million at the beginning of 1951.
