Small Holdings

The Economics of Small Holdings.

The relative advantages of large and small farms have long provided a field for animated controversy. The arguments in favour of the large farm are forcible. They are given in a recent work and may be quoted:— In the production of all commodities for which there is a large and constant demand the tendency is to make the fullest possible use of machinery. The profitable use of machinery depends on the relation of its output to its prime cost. If it can be used up to its maximum capacity the maximum profit from its use is obtained. In the case of agricultural machinery and implements it is impossible to use them to their maximum capacity because farming operations, unlike those of manufacture, cannot be continuous but are dependent on uncon trollable conditions such as the time of year and the weather. A steam plough for example, is capable of working every day in the year but it can only be used on a certain number of days. On a "medium-sized" farm its use is restricted not only by such conditions but also by the limited area on which it can be usefully employed. By extending the area of the holding the farmer has sufficient land to use the plough to its maximum capacity at all times when conditions permit. This applies to the whole mechanical equipment of the farm, though with less force to stationary engines which can supply motive power for various operations, some of which, like chaff-cutting, can be done at all times of the year. Somewhat similar considerations apply to manual as to mechanical power. With a large staff labour can be more effectively organized and work specialized. Shortly, the advantage of the large-scale farm, as of the large-scale manufactory or shop, is that overhead expenses are charged to a larger output.

The small holder has none of these advantages. He is fre quently inadequately equipped with implements and machinery. For times of pressure such as hay-time or harvest he often has insufficient labour, both horse and manual, and has consequently to arrange with a neighbour for mutual help. If he is the tenant of a public authority or of a good landlord his cottage, buildings, fences, etc., are probably kept in good order, but if, as often happens, the owner is himself (or herself) a "small" landlord the condition of the small holding is likely to be very bad. Usually the small holder has limited capital and in marketing his produce—unless he is fortunate enough to sell it direct to the consumer—he is generally handicapped in competition with larger farmers. His life is as a rule one of unremitting toil, from dawn to dark. Yet multitudes of small holders are contented and happy in their lot, and so long as they can make a modest living do not complain.

The reason is primarily psychological. A man will work for himself without stint, whereas if he is working for another he, unconsciously or consciously, regulates his work by his remunera tion. The incentive of personal reward proportionate to personal

effort goes far to explain the small holder's attitude. The socio logical advantages of small holdings in maintaining a class attached by the strongest of ties to the land are evident. Notwithstanding what has been said about large-scale farming small holdings have certain economic advantages of which the chief is the close per sonal supervision of the farmer himself. There is no doubt, that, especially where stock is kept, this is an important factor. Again the labour difficulties to which reference has been made lead the small holder to deal, so to speak, in small lots in arranging his cropping and to avoid "putting all his eggs in one basket." Thus if his gains are small his losses are never very serious.

The economic effect of the size of holdings has not been in vestigated. It is one of the many questions which the new science of agricultural economics (q.v.) must take up. The subject is complicated because in comparing one farm with another, or even one group of farms with another, it is difficult to isolate a single factor—size—from all other factors which affect output and profit. But it is commonly considered among agricultural econo mists on both sides of the Atlantic that "both the capital invested and the output per acre are larger on the smaller farms, but that expenses per acre are also heavier, while the output per man tends to increase with the size of the holding." The relative ad vantages of ownership and tenancy of small holdings have been warmly discussed in England. The position has been somewhat curious. Up to the latest act, that of 1926, the legislature de finitely discouraged the purchase of holdings, while, whenever the question was tested, all the evidence tended to show that with few exceptions there was no desire to become owners and that tenancy was preferred. There were, however, many who stren uously maintained that the preference for tenancy was attrib utable to the unattractiveness of the terms for purchase.

That ownership provides an incentive which is absent when a man is putting his labour into land not his own has long been accepted as a self-evident proposition. Arthur Young's dictum that "the magic of property turns sand into gold" has been re garded as demonstrating the fact. Plausible as the theory is, in practice there is no evidence that there is any general superiority in production or otherwise on holdings that are owned over those that are rented. Some investigations on the point have been made, mainly in the United States. The results are not conclusive but they fail to indicate that ownership is a dominant factor. This is another subject waiting further study by agricultural economists.