Argument to Ag Commission

Argument
on which evidence will be given before the Agricultural Commission, 1919.
Hugh Charles Fairfax-Cholmeley

I am the owner of an estate of 3200 acres at Brandsby in Yorkshire. I succeeded to the estate in 1889 and since the year 1897 have farmed a farm varying from 200 to 1100 acres with my agent Mr. Wood for Manager, excepting for a period of seven years from 1909 to 1917 when Mr. Wood worked the farm as his own private venture. When I took the farm in hand again in 1917 it comprised 480 acres and I since increased it to 1073 acres. Next April it will be further increased by 200 to 300 acres.

My chief policy has always been the improvement of the social and economic conditions of agricultural labour and of the other workmen living on the estate and with that end in view the efforts of my agent have been directed to the development of the estate on a sound business footing. My agent is Mr. John Wood, a practical farmer and the son of a well known farmer in Northumberland. We have both of us given a great deal of time to the development of co-operation on the estate which at present comprises 13 farms between 50 acres and 400 acres and 8 small-holdings under 50 acres. In the year 1897, when Mr. Wood first came to me, there were 23 farms of from 50 to 400 acres with about the same number of small-holdings as at present; but four of these farms have been sold in the interval and six have been merged into my own large farm. The land is not suitable for corn. The average yield of wheat is barely 4 quarters to the acre and it is best adapted for stock breeding and mixed farming. Brandsby has been noted for its stock breeding for over 100 years.

Before I make any statement about finance I wish to lay down as a postulate that the foundation of agricultural economy must be a minimum wage sufficient to provide a decent living for all workers employed on the farms, and to state further that in our opinion the present minimum wage is no more than sufficient for this purpose in the present circumstances. Any statements I make are based upon this assumption.

If I am asked whether farming can be made to pay on our class of land under present conditions I am unable to give a definite answer. With so short a time to test present conditions one can do no more than conjecture; but my belief is that at the present time our economic basis is unsound. Owing largely to the artificial control of prices there is insufficient margin of profit to allow for the charges on land which must be provided for out of the returns during a period of years sufficiently long to strike a working average.

These charges are:-
(1) An adequate minimum wage for the workers.
(2) Rent which comprises
(a) Interest on capital sunk in the land by the landlord
(b) The difference in value between the farm in question and land on the margin of cultivation.
(3) Wages of management whether the farm is managed by a paid servant or by the tenant farmer or occupying owner.
(4) A fair rate of interest on capital employed by the farmer which should be commensurate with the risky nature of the undertaking.
My accounts shown are based upon these considerations. Unfortunately they only cover the period of the two years since I took possession of the farm in 1917 and the present Wages Board regulations have only been in force since September 1918.

Taking the above mentioned four points in order, No.1 in my opinion is not to be debated. No.2 is an inevitable economic fact. Interest on capital sunk in the land to make it worth cultivating must be reckoned whether this capital is provided by the landlord or the State, and it is merely a question of what is the market rate of such interest. No matter who supplies the capital, the interest must be charged as an expense of production.

The same applies to the second portion of rent which represents the market value of the difference between the land in question and the margin of cultivation. It does not matter who receives this rent charge so far as the economic effect is concerned, but the charge must be allowed for in reckoning profit or loss.

As regards No.3, it is important to emphasise this charge because it appears to be overlooked as a rule in calculations of farm profit. The management of the farm is the most important factor in profit or loss and people generally do not realise how much depends upon it. I do not think it is possible with our present experience to say what limits there might be to the amount spent on management on a farm like ours; it is a question of how intensively it is worked and how many diverse operations are undertaken. In the accounts presented £350 is charged for Mr. Wood’s salary as manager. It is an insufficient amount, at all events for the year 1918-19. The man who was capable of doing that work could have earned £500 a year in any other business. This applies to farming whether the farm is managed by the farmer himself or by a paid manager and the charge is one that should be reckoned in the accounts showing profit or loss.
Finally in the case No.4, the rate of interest on farming capital, the reckoning would be 5% and a sufficient amount to cover a reasonable business profit and the extra risk incurred by the enterprise in question. The precise amount of the second item may be a matter for debate; but even if we put the lowest possible calculation, namely, 7½% it will be seen that the accounts presented fall short of this.
The average amount of capital on which interest was paid during the two years covered by these accounts £8,568 and return on this 5% and a profit of about ———— and the wages of management are £150 below the figure that should be charged.

The record for the years 1909 to 1917 when Mr Wood was farming on his own account goes to confirm my conclusion that while there is hope that the results given above may be considerable improved if present conditions do not become worse, there is no great margin in reserve to meet disastrous years such as may be reasonably expected. Unfortunately detailed accounts for this period are not available and I am only able to draw conclusions from very rough data.

To estimate the profit or loss on the farm with any degree of accuracy I consider we should require accounts for a period of six or seven years, in order to cover the period of rotation of crops we practise, or propose to follow as soon as we can get a free hand after the recent restrictions imposed by Government and other authorities. You must have a sufficiently long period to allow the law of averages to come into play. Moreover the profit or loss on certain crops cannot be reckoned without taking the whole rotation into account, because the yearly crops are interdependent. For instance in a four year’s rotation a bare fallow, or some “fallow crop” such as turnips, is necessary in order to be able to grow the corn crops successfully. Therefore the cost of bare fallow must be distributed over each of the corn crop years and the cost of the turnip crop should be reckoned as the actual cost that year less the cost of bare fallow, if you want the actual value of the turnips reckoned.

Costings in farming cannot in any case be reckoned accurately all over the country alike. The cost of producing wheat on a farm like mine would differ from the cost of producing it on good wheat growing land, and the cost will vary from year to year according to the season, weather in harvest, rate of wages etc. For this reason alone the attempt to regulate the price of produce by too fine calculations is likely to produce great injustice to individuals and great injury to Agriculture.

The margin of profit allowed by the Controller of prices is insufficient in my opinion, judging from the general result of two years farming, and unless there is some prospect of release from Government control the outlook for Agriculture is very gloomy. I prefer the risks of an open market to the certainty of loss from Government interference. One of the worst troubles we suffer from is the uncertainty of Government policy. During the past twelve months it has been impossible to look three months ahead, not on account of the state of the markets which afforded anxiety enough in themselves, but because of the uncertainty of the way the Government might interfere and the unreliability of their pronouncements. Owing to Government action we were unable this Spring to make the necessary preparations for sowing sufficient rotation grasses for the double purpose of rehabilitating the soil that had been depleted on certain farms taken over from tenants, and for maintaining the number of cows in milk. This involves loss to us as well as a smaller output of milk. As it was, I took a heavy risk in commitments for sowing crops I might have been compelled to plough out; but had the Authorities been more reasonable and better prepared with a policy I could have more than doubled the crops to be sown that would have been most productive on the farm.

Reverting to the question of farmers profits, there is an erroneous idea about these, which arises from a misconception of the agricultural conditions. Though it is no doubt true that on good corn land and in certain other cases where circumstances were specially favourable, large profits were made during the war, in the majority of cases farmers’ profits have been fictitious – that is to say, they have been derived from the capital that was accumulated in the land and was taken out by the farmer to the detriment of the National Wealth. It was no fault of the farmers. Owing to the abrogation of agreements and encouragements given to cropping in a way that must destroy the accumulated fertility of the soil a large amount of its capital value has been destroyed. As a rule this capital value belonged to the landlord and some of it had been purchased by him from tenants. It will now cost the owners of such land enormous sums to restore it to its former productiveness, and the cost of production will be increased owing to the loss of fertility and the cost of restoring neglected fences, drains and buildings.

It is a fact that in many cases farmers are retiring or leaving their farms because they realise that they have accumulated money that they could not retain if they remained on these farms.
In the conservation of this capital value of the land, the landlords’ interest and the National interest happen to coincide. It is a national loss when any individual, whether owner or tenant, depletes the accumulated capital in the land and spends it. The fact that a number of tenant farmers have accumulated money by this means has led to the mistake of supposing they were making large profits out of farm produce.

The interference with cropping by Governing authorities during the war has not only caused me loss on my farm; it has also hampered and diminished our production. Possibly that may have been inevitable in the circumstances, but there can be no question of the undesirability of a continuance of the attempt to force farmers of such land as ours to grow grain.

This land can be made most productive by the use of rotation grasses with wild white clover. By this method I can keep the land up to its highest state of fertility and so readily turn to greater corn production at short notice in the case of a crisis such as the country has just passed through. Given a free market without controlled prices of produce I believe it should be possible to farm on a sound economic basis on our land, if the farm is large enough to organise the skilled work and employ machinery for most of the drudge labour. There is not sufficient data to prove the certainty of this by figures, but I can give good reasons for the belief.

I do not ask for guaranteed prices from Government if there is a market free from their interference; but there are certain matters for Government undertakings where individual farmers are powerless. Among other examples I would give the control of water courses that affect land drainage, the destruction of vermin such as rats and rabbits which are harboured by some to the injury of their neighbours, the prevention of contagious diseases among animals, and the improvement of transport and means of communication. All these are matters outside the control of individual farmers.

In the matter of the hours of labour as fixed by Wages Boards, I have no very serious complaint to make, I have always favoured a shorter day than was customary and a Saturday half-holiday. My manager agrees in this matter and only desires some rectification of certain unpractical regulations. We think that certain men who might be called “charge” men, such as shepherds in charge of a flock, should not be placed under a limit of hours. For such men a minimum annual wage or salary should be fixed which covers beyond doubt any extra hours necessary in their case. Such work to be satisfactory cannot be reckoned by the hour. A shepherd is in charge of his flock without regard to time. It is not a question of hours, but of successful management. His time is left to his own judgement.

In conclusion I would point out that while I myself am sufficiently interested in Agriculture to persist in the hope of success, the future prospect is not good enough to attract capable men to lay out capital in so hazardous an enterprise. Moreover the uncertainty of Government policy and the continual threat of enforced changes in farming deters us from laying out the capital necessary to certain enterprises.
In these circumstances it is only natural that Agriculture should be found to be on an unsound economic basis.