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""^ THE BALANCE SHEET OF AGRICULTURE
1957 I '^^
"-•--r^^LCL^^.,
THE BALANCE SHEET OF AGRICULTURE , ASSETS
'^3 Financial "|
$ BIL
200 CLAIMS
j Owners' equities j Other debt ¡Real estate debt
1940 1945 1950 1955 1940 1945 1950 1955 1960 DATA AKE AS OF JAMUAKY I EACH YCAK
U. S. DEPARTMENT OF AGRICULTURE NEC. 57(7)-9n ACRICULTURAt RESEARCH SERVICE
Agriculture Information Bulletin No. 177
UNITED STATES DEPARTMENT OF AGRICULTURE
Agricultural Research Service
Washington, D.C., October 1957
EXPLANATION
This is the 13th in a series of annual reports that carry forward the comparative balance sheet of agriculture first prepared for 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 of farm assets and the claims to those assets. In effect, it is comparable to a consolidated balance sheet of all farms, but it is not restricted to the assets and debts of farm operators. It includes, in addition, the farm assets owned and the farm-mortgage debt owed by npnoperators.
The balance sheet, formulated by the then Bureau of Agricultural Economics for each year from 1940 to 1944, was first issued in processed form in September 1944, in a publication entitled, **The Impact of the War on the Financial Structure of Agriculture.'* In August 1945, a printed report of this study under the same title was issued as Miscellaneous Publication 567 of the United States De- partment 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.
Many of the considerations in that publication are still pertinent. They may be referred to wiöi profit by those who examine the bal- ance sheet of agriculture for the first time. In a country as vast and diversified as ours, financial changes are never entirely uniform, either for geographic areas or for individuals. Thus, even when the balance sheet accurately reflects the aggregate, it does not reveal the differences that are found in different States and regions and among individual farmers.
The report for 1956 was issued as Agriculture Information Bulle- tin 163 of the united States Department of Agriculture, *'The Balance Sheet of Agriculture, 1956."
Data relating to the inventories of livestock^ crops, machinery, and hous ehold e quipment we re prepared tinder the di rection of the following persons : Livestock- -R.H. Moats; crops - -G. & Burkhead, J. J. Morgan, George D. Harrell; machiñery--E.W. Grove, Robert H. Masucci; household equipment--Jean L.Pennock.
Data relating to farm income and expenditures were compiled under the direction of E. W, Grove.
CONTENTS Page Page
The 1957 balance sheet in general 1 The 1957 balance sheet in detail- Agricultural income. , 5 Continued Influence of the general economic situa- Assets—Continued
tion...,. 8 Liquid financial assets... 17 The 1957 balance sheet in detail 10 Net worth of farmers* coopera-
Assets..,.,„....,., ..•„„...,. 11 tives .,...*„.„. 19 Farm real estate.,.. 11 The productive assets in agri- Livestock and poultry on farms 13 culture 19 Machinery and motor vehicles CkimSí,,...,„,....,,..,.,[[i,Íi"^"*Í!i]] 21
on farms.. 15 Farm real estate debt 21 Crops 16 Non-real-estate debts of farm-
*, Household furnishings and ers... 25 equipment .„,. 17 Total farm debt".'"!!!!"!."!!!!!!! 29
Formale by the Superintendent of Documents, U. S. Government Printinfç Office Washington 25, D. C. - Price 15 centj^
I
7^ THE BALANCE SHEET OF AGRICULTURE^1957 V
Under the direction of Norman J. Wall, Head, Agricultural Finance Section, Farm Economics Research Division,
Agricultural Research Service
By F. L.^arlock, L. A.^ones, W. H.^cofield, F. D.(Stocker, ano^J. A.^l^unger
THE 1957 BALANCE SHEET IN GENERAL
On January 1, 1957, the value of farm assets reached a new peak of nearly $177 billion, about 5 percent more than a year earlier. Farm assets rose in value each year from 1940 through 1948, and in 1950 and 1951, but they declined slightly in 1949 and to a greater extent in 1952 and 1953. Since resuming their upward climb in 1954, they have moved to higher levels than any recorded earlier. The equity of farm operators and other owners of farm properties also has moved to new heights, although farm debts have almost doubled since 1940. At the beginning of 1957, this equity amounted to more than $157 billion, compared with $149 billion a year earlier.
The principal farm asset is farni real estate. Throughout the period since 1940, increases in the value of this asset have been mainly responsible for increases in the total value of farm assets. But from the beginning of 1940 to the beginning of 1946, large in- creases occurred also in the value of other physical farm assets and in the value of the financial assets owned by farmers. In the following period, from the end of the war to the beginning of 1952, both farm real estate and other physical farm assets made large additional gains. Farmers invested heavily during this period in tractors, farm machinery, farm improvements, and household furnishings. Moreover, the prices of both crops and livestock rose sharply. These developments rapidly built up the value of farm real estate and other assets on farms; but little change occurred in the financial assets owned by farmers.
After 1951, farm income dropped steadily until 1955, mainly because of a decline in the prices of crops and livestock and then rose only slightly in 1956. In the 1951-56 period, farm real estate made further large gains in value, despite the decline in farm prices and farm income, and the financial assets owned by farmers also increased slightly. But a sharp decline in prices of livestock reduced the total value of other physical assets, even though the values of machinery andmotor vehicles and of household furnishings and equipment increased substantially.
It was the strength of the market for farm real estate that raised the total value of farm assets, and the value of owner s'equities, to new record levels after 1951. To operate efficiently, farmers now need larger farms than formerly. Their efforts to increase the size of their farms have combined with the expansion of urban areas and with the development of highways and recreational facilities to create a strong m.arket for farmland.
Assets
Farm assets rose during 1956 to a new record valué of $176.8 billion on January 1, 1957 (table 1). These assets include the finan- cial assets, automobiles, and household goods owned by farmers as well as all as sets used directly in farm production, such as farmland
1
TABUE 1 Coniparative balance sheet of agricultiire. United States, January 1, selected years, 1940-57
1940 1945 1950 1951 1952 1953 1954 1955 1956 1957 Net change^
Item 1940-57 1956-57
ASSETS
Physical assets: Billion dollars
33.6
5.1 3.1 2.7 4.3
3.2 2 .2
.8
Billion dollars
53.9
9,0 6.3 6.7 4.7
7.9 3.4 1.2
Billion dollars
75,3
2 12.9 11.2 7.6 7.7
9.1 4.8 2.1
Billion dollars
86.8
17.1 12.8 7.9 8.6
9.1 4.9 2.3
Billion dollars
96.0
19.5 .14.9
8.8 9.3
9,4 4,9 2.5
Billion dollars
96.6
14.8 15.4 9.0
10.0
9.4 5.0 2.7
Billion dollars
94.7
11.7 15.9 9.2
10.6
9.4 5.2 2.9
Billion dollars
98.8
11.2 16.0 9.6
11.1
9,4 5.4 3.1
Billion dollars
102.7
2 10.7 2 16.5
8.3 2 11.6
9.5 5.6 3.3
Bi I lion dollars
109.5
11.2 17,0 8.4
12,0
9.5 5.7 3.5
Percent +225.5
+118.4 +456.8 +214.0 +181.7
+194.3 +2,181.9
+323.9
Percent +6.6
Non-real-estate: +4.7 +3.1
+ .4
Household furnishings and equipment* Financial assets:
+4.1
+.6 +2.1 +6.1
Total^ 5 53.0 93.1 130,7 149.5 165.3 162,9 159.6 164-6 168.2 176.8 +233.1 +5.2
CLAIMS
Liabilities; 6.6
.4 1.5 1.5
4.9
.7 1.6 1.1
5.6
1.7 2.8 2,4
6.1
.8 3.4 2.8
2 6.7
.6 4,1 3.2
2 7.3
3.4
2 7.8
2.4 3.8 3.2
2 8.3
2.2 4.0 3.3
2 9.1
1.9 4.4 3.5
9.9
1.6 4.5 3.5
+50.3
+253,9 +197.2 +133.3
+9.2
Non*real^estate debt: To principal Institutions:
Loans held and guaranteed by Ccmmodity Credit Corporation^- ■———■ -16.3
+1,1 0
Total liabilities^ ^— 10.0 8.3 12.5 13.1 2 U.6 2 16.1 2 17.2 2 17.8 2 18.9 1^.5 +93.8 +3.1
Proprietors' equities^ 43.0 84.8 118.2 136.4 150.7 146.8 142.4 146.8 U9.3 157.3 +265,6 +5.4
2 5 53.0 93,1 130.7 149.5 165.3 162,9 159.6 164.6 168.2 176.8 +233.1 +5,2
^ Gonrputed fi^am unrounded data. 2 Revised. ^ Includes all crops held on farms for whatever purpose and crops held off farms as security for Commodity Credit Corporation loans. On January 1, 1957, the latter totaled
$1,058 million. * Estimated valuation for 1940, plus purchases minus depreciation since then. ^ Total of rounded data. 6 Although these are nonrecourse loans, they are included as liabilities because borrowers must either repay in cash or deliver the comniodities on which they were based. The
values of the underlying commodities are included among the assets; hence the loans must be included as liabilities to avoid overstating the amount of proprietors' equities.
"'' Includes individuals, merchants, dealers, and others. Estimates based on fragmentary data.
3
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m H O
i
THE BALANCE SHEET OF AGRICULTURE—1957 3
and buildings, livestock, tractors, motortrucks, andfarmmachinery. Inventories of stored crops, except those owned by the Commodity Credit Corporation, are also included. In total, the value of such assets increased about $8.6 billion, or 5 percent, during 1956. This was the largest increase in such assets since 1951.
The increase in the total value of farm assets during 1956 reflects principally an increase of about $6.8 billion, or nearly 7 percent in the value of farm real estate. Farm real estate values increased from 5 to 10 percent in most States and about 17 percent in Florida. But in Iowa and several Mountain and Plains States that suffered from drought or shortages of water for irrigation, values increased less. In some instances, they decreased.
Other types of farm assets also increased in value during 1956. Physical assets other than real estate rose, in total, about $1.5 billion, or 3 percent, and the financial assets owned by farmers increased about $0.3 billion.
The physical quantities of both crops and livestock declined slightly in 1956 but price increases raised the inventory value of each (table 2). Excluding stocks owned by the Commodity Credit Corporation, quantities of stored crops were lower on January 1, 1957, than a year earlier, despite increases in stocks of corn and soybeans. Also, numbers of all classes of live stock declined during the year, more than offsetting increases in poultry. But prices of both crops and livestock rose. Between January 15, 1956, and January 15, 1957, the index for all crops increased from 231 to 239, and the index for livestock and livestock products rose fromi 221 to 237.
Farmers* expenditures for all classes of motor vehicles and farm machinery, except motortrucks, were lower in 1956 than in 1955. Expenditures did not equal depreciation, but prices increased suffi- ciently to raise the inventory value of nnotor vehicles and machinery on farms. A further increase occurred also in the value of house- hold furnishings and equipment on farms.
The small increase in value of financial assets owned by farmers during 1956 resulted from accrual of interest on United States savings bonds and continued growth in the net worth of farmers* cooperative associations. No significant change in the currency and deposits of farmers is indicated. Because of an increase in prices of the goods and services that farmers buy, the purchasing power of the liquid financial reserves of farmers, which include United States savings bonds in addition to deposits and currency, dropped about 3 percent during 1956.
Debts
The farm debt increased further during 1956 to a total of $19.5 billion on January 1, 1957. This debt include s loans for price support and storage purposes that are made or guaranteed by the Commodity Credit Corporation, loans and contracts secured by farm real estate, and other agricultural loans and credits. Nonfarm owners of farms owe a part of each of these types of farm debt but the greater part is owed by farmers.
During 1956, the debt secured by farm real estate, which arises chiefly from the purchase and improvement of farms and from refinancing of debts, increased about 9 percent to $9.9 billion on January 1, 1957. But price-support and storage loans to individuals.
TABLE 2.—Physical assets of agriciiltui-e valued at 1940 prices, January 1, selected years, 1940-57
1940 1945 1950 1951 1952 1953 1954 1955 1956 1957 Net change^
1940-57 1956-57
Real estate^ — - _ « , .«
Billion dollars
33.6 5.1 3.1 2.7 4.3
Billion dollars
34.4 5.6 3.1 3.2 4.4
Billion dollars
35.8 4.8 6.0 3.2 5.4
Billion dollars
36.1 4.9 6.6 3.0 5.7
Billion dollars
36.5 5.1 7.2 2.9 6.0
Billion dollars
36.8 5.2 7.3 3.1 6.2
Billion dollars
37.1 5.1 7.5 3.4 6,3
Billion dollars
37.3 5.1 7.5 3.6 6.5
Billion dollars
37.5 3 5.1
7.5 3.5 6.6
Billion dollars
37.6 5.0 7.4 3.4 6.7
Percent +11.9 -2.0
+142.3 +27.5 +57.7
Percent +0.4 -2.3
Crops stored on and off farms Household furnishings and equipment*
-1.6 ,4.1 +2.0
Total-' ^- -- -- --*^ 48.8 50.7 55.2 56.3 57.7 58.6 59.4 60.0 3 60.2 60.1 +23.5 -.2
Computed from unrounded data.
2 This series is based on data for census years developed by Alvin S. Tostlebe in cooperation with the National Bureau of Economic Research. It takes into account changes in io«n^^* farms, acreage of improved land, and number and condition of farm structures. (See Agricultural Finance Review, November 1952-) Data for intercensal years, and for 1951-57, are extensions from census benchmarks based on net investment in farm structures (gross investment minus depreciation)
" Revised.
* Purchases since 1940 are deflated by an index of prices paid by farmers for housefumishinge. ' Total of rounded data.
3
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m
o
O 'Ti
a
THE BALANCE SHEET OF AGRICULTURE-1957 5
which were made or guaranteed by the Commodity Credit Corpora- tion, decreased about $0.3 billion, or 16 percent. On January 1, 1957, they amounted to $1.6 billion. Other non-real-estate farm loans and credits, which are used chiefly for current production and living expenses andfor the purchase of livestock and machinery, increased only fractionally to $8.0 billion at the beginning of 1957.
The amount of farm mortgages recorded continued at near-record levels in 1956, although it was slightly below the amount in 1955. All types of lenders increased their holdings of farm mortgages in 1956. The farm real estate debt of farmers increased more during 1956 in the Northern Plains, the Southeast, and the Mountain region than elsewhere. Major lenders report that delinquency on the farm mortgages they hold continues to be low.
A reduction of farm expenditures for automobiles, tractors, and farm machinery, accompanied by only small changes in farm inconne and farm operating expenses, probably explains why the non-real- estate debt of farmers for purposes other than price support showed little change during 1956. Data for the principal lenders indicate that this type of farm debt dropped slightly during 1956 in the Mountain and Plains regions but rose slightly in all other regions.
The decline during 1956 in price-support and storage loans nnade or guaranteed by the Commodity Credit Corporation re suited chiefly from a reduction in the quantity of cotton under loan from 5,4 million bales at the beginning of 1956 to 3.6 million bales at the end of the year. The quantity of wheat under loan also decreased during 1956. These decreases--chiefly the reduction in cotton--more than offset the effects of increases in the quantities of corn, soybeans, and some other crops that were under loan.
Proprietors' Equities
The equities of farmers and other owners of farm property in- creased during 1957 to a new record value of $157 billion on Jan- uary 1, 1957. The increase for the year was $8.0 billion, or 5 percent. Chief cause of the increase was the further rise in value of farm real estate.
AGRICULTURAL INCOME
Total gross farm income in 1956 amounted to $33.9 billion, an increase of about 1 percent from the $33.5billion in 1955 (table 3). This is the first increase since 1951. Cash receipts from farm marketings--the nnain source of inconne--rose from $29.5 billion to $30.4 billion. Government payments to farmers also increased from $229 million to $554 million, mainly because of the soil bank. The estimated value of farm products used at home and the rental value of dwellings changed only slightly. Crop and livestock inven- tories on farms declined by $470 million during 1956, compared with an increase of $271 million in 1955.
The increase over 1955 in cash receipts from marketings was mainly the result of marketing larger quantities of products (table 4). The volume of products nnarketed and consunned in the home rose 5 percent to a level 17 percent above the 1947-49 average. Both crop and livestock marketings increased between 1955 and 1956. Average prices received for all commodities combined were about the same as in 1955, with higher average prices received for crops offsetting a slight decline in average prices received for livestock and livestock products.
INFORM/LTION BULLETIN 177, U. S, DEPT. OF AGRICULTURE
TABLE 3.—Comparative income statement for agriculture, United States, 1940-56:
1940 1945 1950 1953 1954^ 1955^ 1956
HOW NET INCOME WAS OBTAINED
Total gross farm incomej Cash receipts from farm marketings Government payments to farmers Home consumption of farm products Rental value of farm dwellings Net change in inventory^ ■
Total-
Production costs, other than weiges, rent, and interest on mortgages:
Feed bought Livestock bought, except horses and mules Fertilizer and lime bought Repairs and operation of capital items- Depreciation and other consumption of farm
capital '■ Taxes on farm real estate and personal property- Seed bought — Miscellaneous
Total—
Net income from agriculture
HOW NET INCOME WAS DISTRIBUTED
if ages to hired labor (cash and perquisites)- Hat rent and Government pajments to landlords not living on farms^--
Interest on farm-mortgage debt Net income of farm operators — —
[fet income from agriculture
RMLIZED NET INCOME OP FAHM OPERATORS
Net income of farm operators- Net change in inventoiy -•
Realized net income of farm operators-
Million do Ilars 8,382
723 1^210
723 281
11,319
998 517 306
1,006
796 451 197 708
1,029
293 4j570
6,340
4,570 281
4,289
Million dollars 21,663
742 2,356 1,011 -439
Ail ilion dollars 28,405
283 2,051 1,366
859
Million dollars 31,169
213 2,075 1,669 -617
Million dollars 29,944
257 1,826 1,690
494
Million dollars 29,542
229 1,704 1,737
271
Million do I lars 30,372
554 1,716 1,727 -470
25,333 32,964 34,509 34,211 33,483
2,738 1,011 657
1,626
1,340 557 435- 974
3,330 2,000
978 2,969
2,743 919 531
1,611
3,755 1,320 1,246 3,448
3,539 1,089
560 1,937
3,906 1,563 1,274 3,332
3,645 1,122
542 1,894
3,728 1,530 1,266 3,393
3,752 1,187 597
1,965
9,338 15,081 16,894 17,278 17,418
1,064 221
12,411
17,883
2,750
1,153 264
13,716
2,792
1,213 347
13,263
1,159 376
12,684
16,065
2,736
1,067 410
11,852
15,995 16,933
12,411 -439
13,716 859
13,263 -617
12,684 494
11,852 271
12,850 13,880 12,190
33,899
3,919 1,611 1,247 3,511
3,821 1,208 541
2,042
17,900
15,999
2,790
1,180 429
11,600
15,999
11,600 -470
12,070
^ Revised. ^ Reflects the physical changes during the year in all livestock and crops on farms, except crops under
3CC loans, with the changes valued at average prices for the year. ^ After subtraction of taxes, mortgage interest, and other expenses paid by such landlords.
TABLE 4.—Volume of farm marketings and home consu^tion of agricultural products and prices received by farmers, selected years, 1940-56
(Indexes 1947-49 = 100)
All commodities Crops Livestock and products
1940-
1942-
1944-
1946-
1948-
1950- 1951- 1952- 1953- 1954- 1955- 1956-
97
97
99 101 104 108 109 112 117
37
59
73
^ 87
106
95 112 106 95 92 87 87
95 94 99
106 103 107 108
37 84
59 95
SO 107
92 104
103 97
94 102 107 105 108 107 98 110 98 113 96 > 117 97 123
37
59
67
83
96 115 105
93 87 81 79
THE BALANCE SHEET OF AGRICULTURE—1957 7
Cash receipts from farm marketings were above 1955 in 8 of the 10 regions (table 5). The largest increase--?.4 percent--occurred in the Mountain region and reflected higher cash receipts from livestock. The increase in the Delta States, where crop conditions were more favorable than in 1955, was relatively large also. Fur- ther decline in cash receipts occurred in the Great Plains, which were still experiencing drought in 1956.
Total production costs (excluding wages, net rent to nonfarm landlords and interest on the nriortgage debt) continued to rise. In 1956, they amounted to $17.9 billion compared with $17.4 billion in 1955, All classes of expenditures rose except seed and fertilizer, which declined slightly. Wages to hired labor, rent, and interest on farm mortgages also were higher in 1956 than in 1955.
TABLE 5.—Cash receipts from farm marketings, 1955 and 1956
Regions^ Change
Northeast Corn Belt Lake States Appalachian Southeast Delta States Southern Plains- Northern Plains- Mountain Pacific
United States-
dollars Million dollars 2,901 2,960 6,847 7,082 2,879 2,986 2,513 2,615 2,132 2,179 1,511 1,606 2,365 2,344 2,914 2,775 1,922 2,064 3,558 3,761
2.0 3.4 3.7 4.1 2.2 6.3
7.4 5.7
29,542 30,372
■'■ In this table and elsewhere in this report, the regions used and the States in each are as follows: Northeast (Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Pennsylvania, Delaware, Maryland),* Corn Belt (Ohio, Indiana, Illinois, Iowa, Missouri); Lake States (Michi- gan, Wisconsin, Minnesota); ^Appalachian (Virginia, West Virginia, North Carolina, Kentucky, Tennessee); Southeast (South Carolina, Georgia, Florida, Alabama); Delta States (ffississippi, Arkansas, Louisiana); Southern Plains (Oklahoma, Texas) ; Northern Plains (North Dakota, South Dakota, Nebraska, Kansas) ; Mountain, (Montana, Idaho, Wyoming, Colorado, New Mexico, Arizona, Utah, Nevada); Pacific (Washington, Oregon, Cali-
fornia. ) ^ Revised.
Because of increased costs, the total net income of farm opera- tors declined. But as a result of the liquidation of $470 nnillion in crop and livestock inventories, the net income which operators actually realized was $12.1 billion, about 4 percent more than the $11.6 billion realized in 1955.
The purchasing power of the realized net income of farm opera- tors increased about 2 percent between 1955 and 1956 (table 6). This increase occurred despite a 2-percent rise in the prices farmers paid for items used in family living. Prior to 1956 the purchasing power of realized net income had shrunk in each year since 1951. It is still low compared with World War II and early postwar years. On an index basis, with 1940equaling 100, the index of purchasing power for 1956 was 123; for 1950 and 1945 it was 148 and 199, respectively.
Income that the farm population received from nonfarm sources, not including such payments as retirement pay and veterans' pen- sions, reached a record high of $6.7 billion in 1956, equal to about 42 percent of the total net income from agriculture. Nonfarm income has increased each year except 1953 and 1954 since the end of World War II. In 1945, nonfarm income of $4.2 billion was only 26 percent of net farm income.
According to the recent Farmers' Expenditure Survey made by the Agricultural Marketing Service, about half of all nonfarm income
i INFORMATION BULLETIN 177, U. S, DEPT. OF AGRICULTURE
TABLE 6."Purchasliîg power of total and realized net Income of farm operators in tenas of commodities and services used for family living, United States> ig^O-Sâ""-
(Index 1940 = 100)
Net income of faim operators
Net income of farm operators
1940. 1941. 1942- 1943- 1944. 1945. 1946 1947 1948.
100 134 177 1Ö9 179 lâl 196 173 187
100 134 167 202 197 199 210 205 179
1949- 1950- 1951- 1952- 1953- 1954^ 19552 1956-
UO 148 159 W8 130 123 115 111
159 ]A8
156 149 1A5 126 120 123
^ îirst, total and realized net income were deflated by 1947-49 index of prices paid for ccanmodities and services used for family living. Then indexes were computed with 1940 equaling 100.
^ Revised.
received by farm operators andtheir families during 1955 was from wages or salary earned by the operator from nonfarm work. An additional 16 percent of the total was received from nonfarm busi- nesses or s elf-employment. Nearly a fourth of the nonfarm income was received by wives and other members of operators* families. The remaining 11 percent consisted largely of inconcie from interest, dividends, royalties, and rental of nonfarm real estate.
INFLUENCE OF THE GENERAL ECONOMIC SITUATION
Economic activity increased steadily during 1956 to new record levels. Gross national product for the year amounted to $414.7 billion dollars, $23 billion or 6 percent more than in 1955.
Consumers accounted for more than half of the rise in total expenditures for goods and services (table 7). Purchases of con- sumer durable goods were down a little from 1955, reflecting mainly reduced sales of new automobiles, while spending for nondurable goods and personal services showed a marked increase. Business investment expenditures advanced further in 1956, with outlays for new plant and equipnient 22 percent over 1955. This rise, however, was partly offset by an 8-percent drop in the value of private residential construction. Government purchases of goods and services gained $3 billion to inore than $80 billion in 1956; expenditures by State and local governments were responsible for most of the rise. Net foreign investment increased $1.8 billion, fronn a negative balance of $-0.4 billionin 1955 to a positive export balance of $ 1.4 billion in 1956.
Industrial output, after rising sharply to near-capacity rates in 1955, showed only a small further increase in 1956. At year end, the Federal Reserve Board*s seasonally adjusted index reached a record 147 percent of the 1947-49 average, compared with 144 a year earlier. Civilian employment increased almost 3 percent to a record average of 65 million, and unemployment remained low.
The rapid expansion during 1956 in business demand for invest- ment goods, coupled with a continued buildup in inventories, led to heavy demands for business loans. At the sancic time, the Federal Reserve authorities continued in effect policies designed to limit expansion of credit. Loans of commercial banks increased only $7,7 billion in 1956, compared with a rise of $12 billion in 1955. As in 19^55, the growth in business loans accompanied reduced bank
-Gross national product (expenditure). United States, annually 1939 and 194-7-56, and seasonally adjusted annual rates, by quarters, 1955-56 and first and second quarters 1957^
Gross national p3X)duct or ex- pendi- ture
Personal consumption expenditures
Durable goods
Non- durable goods
Gross private domestic investment
New con-
struc- tion
Pro- ducers • durable equip- ment
Change in busi- ness inven- tories
Net foreign invest- ment
Government purchases of goods and services
State and
local
1939
194-7 I94g
1949 1950— 1951— 1952 1953
1954 1955
1956 1955:
1st quarter- 2d quarter- ad quarter— 4th quarter-
1956: 1st quarter- 2d quarter-- 3d quarter— 4th quarter-
1957: 1st quarter- 2d quarter^-
Bi11 ion dollars
91.1
232.2 257.3 257.3 2Ö5.1 328.2 345.4 363.2 361,2 291.7 414.7
379.0 387.7 397.0 402.8
405.2 410.8 416.7 426.0
429.1 433.5
Billion dollars
67.6
165.0 177.6 180.6 194.0 208.3 218.3 230.5 236.6 254.4 267.2
247.4 252.1 258.3 259.9
262.8 265.0 268.6 272.3
276.7 277.8
Billion dollars
6.7
20.6 22.2 23.6 28.6 27.1 26.6 29.8 29.4 35.6 33.9
34.7 35.3 37.2 35.4
34.6 33.3 33.0 34.8
35.9 35.0
Billion dollars
35.1
93.1 98.7 96.9
100.4 111.1 116.1 119.1 120.6 126.0 133.3
122.4 124.8 127-4 129.2
130.9 132.7 134.4 135.3
137.3 138.1
Billion dollars
25.8
51.3 56.7 60.1 65.0 70.1 75.6 81.7 86.6 92.8 99.9
90.2 92.0 93.7 95.3
97.2 99.0
101.1 102.2
103.4 104.7
Billion do Ilars
9.3
29.7 41.2 32.5 51.2 56.9 49.8 50.3 48.4 60.6 65.9
55.6 59.7 61.4 65.4
64.4 65.3 65.5 68.5
62.7 64.8
Billion dollars
4.8
14-. 0 17.9 17.5 22.7 23.3 23.7 25.8 27.8 32.7 33.3
31.6 32.7 32.9 33.2
32.9 33.6 33.2 33.4
32.8 32.8
Billion dollars
4;2
16.7 19.1 17.8 21.1 23.2 23.1 24.3 22.5 23.7 28.1
21.3 22.4 25.2 25.9
26.3 27.2 29.0 29.9
30.7 30.5
Billion dollars
0.4
-1.0 4.2
-2.7 7.4
10.4 3.0
.3 -1.9 4.2 4.6
2.7 4.6 3,3 6.3
5.2 4.6 3.3 5.1
ill ion !o i lars
0.9
2.0 .5
-2.2 .2
-.2 -2.0 -.4 -.4 1.4
-.4 -.7
.2 1.2 2.0 2.4
4.1 3.5
Billion do I lars
13.3
28.6 36.6 43.6 42.0 62.8 77.5 84.4 76.6 77.1 80.2
76.5 76.6 77.2 78.2
78.2 79.3
85.6 87.3
Billion dollars
5.2
15.8 21.0 25.4 22.1 41.0 54.3 59.5 48.9 46.8 47.2
46.9 46.5 46.7 47.1
46.2 46.4 47.3 49.0
50.3 51.5
Billion dollars lars P]
8.2 ro *t>
12.8 15.6 18.2 2Î
19.9 21.8 23.2 X 24.9 M 27.7 m 30.3 H
33.0 u ^ 29.5 30.1 30.5 1 31.1 p 32.0 32.9 33.3 33.9
35.3 35.8
^ Because of rounding, items do. not always add to total. 2 Preliminary estimates by the Council of Economic Advisers,
" Deparliaent of Commerce.
10 INFORMATION BULLETIN 177. U S. DEPT. OF AGRICULTURE
holdings of government securities. Interest rates continued upward, and in 1956 interest yields on many types of securities reached their highest levels since the early thirties.
With the productive capacity of most industries fully employed during 1956, tiie general level of prices moved steadily higher. Wholesale prices continued the advance begun in mid-1955, and in January 1957, they averaged 4-1/2 percent higher than a year earlier. Consumer prices started upward in 1956 after several years of relative stability; during the year ended January 1957, the index increased 3.1 percent.
A continued rise in production and income in foreign countries, coupled with heavy foreign investment by private American busi- ness, contributed to a sharp upswing in united States exports during 1956. Government programs were an important factor in the rise in agricultural exports--a gain of 30 percent in value over 1955. Two-fifths of agricultural exports in 1956 went out under Govern- ment programs, including sales for foreign currencies, exports under barter agreements, outrightdonationsVand shipments financed by Government loans.
Consumer disposable income increased a little more than 6 per- cent from 1955 to 1956, supporting a s tronga dome s tic demand for farm products. With consumer's expenditures for food up about in proportion, food continued to account for about one-fourtii of after- tax income. Part of the increased outlays for food reflected growth in population. In addition, the costs of processing and marketing food increased in 1956. The farmer's share of the consumer's food dollar declined to 40 cents, from 41 cents in 1955.
Despite strong domestic and foreign demand, large carryover supplies of many farm products and another record output in 1956 limited the rise in agricultural prices. At the close of 1955, prices of farm products were the lowest in almost a decade. At the end of 1956 they were about 6 percent higher, though for 1956 as a whole, prices received by farmers averagexi 235 percent of 1910-14, or one point lower than in 1955. Farmers' realized net incomes rose 4 percent from 1955 to 1956, as increased niarketings, together with payments under the soil bank and wool incentive programs, more than offset higher production expenses.
General economic activity continued to rise in the early m^onths of 1957, Further gains occurred in consumer spending and Govern- ment outlays, but residential building continued to decline. Industrial production (seasonally adjusted) easçd in tíxe first few months of 1957 reflecting reduced output of durable manufactures; in late spring, activity was steady at a level 3 percent below the record of December 1956. Nevertíieless, both wholesale and consumer prices advanced further. Farm product price s for January to June averaged 2 1/2 percent above a year earlier. With higher producer prices and only slightly smaller marketings, cash receipts of farmers in the first 6 months of 1957 averaged a little above the correspondinff period of 1956. ^
THE 1957 BALANCE SHEET IN DETAIL
In the preceding paragraphs the balance sheet was summarized in general terms. An account was given of the income position of agriculture and the effect of the general economic situation on the fînancial status of farmers. In the following sections, each item of the 1957 balance sheet is treated in detail.
THE BALANCE SHEET OF AGRICULTURE--1957
Assets
11
Assets fall into two general classes: (1) Physical assets, both real estate and tangible personalty (fig. 1); and (2) financial assets, which include cash, bank deposits. United States savings bonds, and farmers* investnients in cooperative associations.
Selected Farm Capital Items
VALUE OF PHYSICAL ASSETS MACHINERY & EQUIPMENT*
^;<;ííí.:;í|LIVESTO< //////////_
1910 1920 1930 1940 1950 1960
U.S. DEPARTMENT OF AGRICULTURE
ft ¡NCLUDING HORSES AND MULES
NEC. S7(7)-998 AGRICULTURAL RESEARCH SERVICE
FIGURE l."Several significant trends are shown when market values of each of the major produc- tive assets in agriculture are expressed as a percentage of total assets. One of these is the almost steady 40-year decline in the relative value of land. However, since 1950, land has increased relative to other factors, and in early 1957, it represented 62 percent of all assets. This is the highest proportion since the late twenties. The relative value of buildings trended generally upward to 1940, but has since declined in most years. In early 1957, land and buildings together represented 79.5 percent of all physical assets. The investment in livestock accounted for only 8 percent of the total investment in 1957, the smallest proportion since 1937, Investments in machinery and equipment (incUiding horses and mules) have held about steady relative to other assets since 1953, amounting to about 12.5 percent of the total.
Farm Real Estate
The market value of farm real estate (land and buildings) reached a new record high of $109.5 billion on March 1, 1957. This was an increase of $6.8 billion, or 7 percent from a year earlier. The value of farm buildings was estimated at $24.6 billion, or 22.5 percent of the value of farm real estate.
The increase in the market value of farm^ real estate in the last year is a continuation of a trend thathas been underway since 1954. The only exceptions are in those States that have been most seri- ously affected by drought. Prior to 1954, only two short interrup- tions to the steady increase in values of farm real estate have occurred since 1941. Values dipped slightly in 1949 in response to
12 INFORMATION BULLETIN 177, U.S. DEPT, OF AGRICULTURE
minor postwar adjustments, and again in 1953 when the inflationary pr e ssure s that we re generated by the Korean outbreak slackened» Despite a decline in farm income» laiid values turned upward in 1954; in each of the two succeeding years, they increased by 4 percent. Thus, the 7-percent rise in the year ended March 1, 1957, was the largest since 1951 -52. It brought the total increase since the post-Köre an low in November 1953 to 15 percent.
In the year ended March 1, 1957, land values increased in all States except those affected by drought (fig, 2and table 8). Declines of 2 or 3 percent were reported for Nebraska, Wyoining^ Colorado and New Mexi c o, and value s we rè only slightly hi ghe r in Utah and Arizona. Increases ranged from 5 to 10 percent inmost other States. The lar ge st gains were in thcTse State s where cr op c onditions in 195 6 we re favorable, and in thos e having expanding urban cente r s. As it has done in the last sève ral years, Florida showed the largest increase --17 percent- -largely because of the rapid influx of popu- lation and the resulting demand for land for nonfarm uses. Similar deniand continued to push values upward in southern Galif or nia. New Jersey, Delaware, and other areas in the Northeast, The level of market price is for much of the land in these areas reflects location with respect to population centers and the present and expected rate and direction of urban and industrial expansion. Pre s ent and anticipated highways, particularly those to be built or improved under the new Federal highway program, serve to diffuse the effects of population growth into rural areas by extending the area from which it is practicable to commute to nonfarna emtploy- ment. New highways will also encourage further dispersal of Indus - try. In a market environment of this kind, market prices for land often bear little relationship to past or expected inconae from farming.
The strongest force within agriculture that has contributed to hi ghe r prie e s for farmland i s the r api d rate of adoption of new technology in recent years. Many tiiousands of comme r ci alfar mer s have found that larger acreages of land are needed to make nnore efficient use of the labor and machinery they now have, or would like to buy. The cutback in crop acreage as a result of the acreage- allotment and price-support prograins also has given farmers the inc enti ve to ac qui re addlti onal land with all otment s, Gons e que ntly, they have continued to bid actively for the limited acreage of land that is for sale. Thé return from the land added is often higher than
TABLE 8.--Percentage change in index of average value:_pf fajm real estate per acre, by regions, selected periods, 1955-57 -
Region
Northeast--——■ Com Belt——' Lake States Appalachian-—-• Southeast—- -— Delta States---- Southern Plains- Northern Plains- Mountain Paciiic-—-——
United States-
Change during year ending
March 1955
Percent +2- +5 +4 42 +2
: +2
>3 +1
March 1956
Percent +6 -Hi +6 +3 +7 +6 +1 +2 +1 +5
March 1957
Percent - - +7- -
+7 +9 +7
: +11 +9 +8 +2 +1
: +7
+7
Change during A months ending
March ■ 1955 '
Percent +1
+1 +2 +1 +2
March 1956
Percent +2 -1 0
- -0 +4 +3 0 -1 +1 +3
March 1957
+4 +2 +4 +2 +4 +3 +3 +1 +1 +2
THE BALANCE SHEET OF AGRICULTURE--1957 13
CHANGES IN DOLLAR VALUE OF FARM LAND*
Percentages, March 1956 to March 1957
U. S. INCREASE 7%
U.S. DEPARTMENT OF AGRICULTURE NEC. 57(4)-2I91 AGRICULTURAL RESEARCH SERVICE
FIGURE 2.—The average value of £arni real estate per acre on March 1,1957, was higher than a year earlier in aU States, except those in the drought area. Declines of 2 and 3 percent were reported for Nebraska, Wyoming, Colorado, and New Mexico. Increases of 6 to 9 percent were typical in the eastern half of the country^ Florida led with a gain of 17 percent.
would be realized if it were operated as a single farm unit because little, if any, additional equipment or labor is needed to farm the larger unit. Farmers who already own land also are in a more favorable position to finance the purchase of additional land, either from savings from past farming operations, or by a mortgage on their total holdings.
Livestock and Poultry on Farms
The combined value of livestock and poultry on farms on January 1, 1957, was nearly 5 percent higher ttian a year earlier (table 9). All classes of livestock showed increases in value per head and decreases in number. Poultry inventories were up and value per he ad wa s down f r om 1956.
Compared with January 1, 1956, the total value of livestock was up 5 percent; the value of cattle was up 2 percent, and the values of hogs 32 percent, horses and mules 4 percent, and sheep 4 percent. The overall value of poultry was down about 4 percent; the value of chickens was down 4 percent, and that of turkeys was up 7 percent.
In 1940 prices, the value of livestock and poultry on January 1, 1957, totaled $5 billion--2 percent less than a year earlier. De- creases in the total number of livestock on farms account for the reduced value in terms of 1940 prices.
An increase of $7 per head in the value of hogs led the way to higher values of livestock on farms. Asharpincrease in hog prices during the latter part of 1956 more than offset the decline of 5
14 INFORMATION BULLETIN 177. U, S. DEPT. OF AGRICULTURE
TABLE _9,--Livestack and poultry on farms: Number, value per head, and total value. United StateSj January 1, 1956 and 1957
'1956^
Value per head
Total, value
Value per head;
Total value
Cattle—— Milk cows^——-
Hogs-—;—- - Horses and mules- All she ep^—_ ^ _-.
Stock sheep*--- Chi ckens _ - -. Turkeys-.
Total -■
1.000 head 96,804 23,213 55,173 3,923
31,273 27,012
302,846 4,923
Dollars ÖS. 00
- 139.00 17.70 62.60 14.25 14.30 1.26 5.50
Mi I lion dollars -8,524 3,220
978 - 246 446 3ñ5 481- -27
1.000 head
95>166 23/028
- 52,207 .3,558
: 30,838 26,370
=392,811 5,745
Dollars, 91.60
147.00 24.70 71.60 14.97 14.90 1.17 5.05
10,702
Million do I lars
8,715 3,383 1,287
255 462 394 460
29
11,208
■*■ Revisei. ^ Included-in cattle. ■^ Include_s sheep and lambs on feed for market. ^ Included _in all sheep.
percent in hog numbers. The 1956 spring pig crop was reduced by 8 percent, and the fall crop by 4 percent, from the 1955 crops.
The number of cattle on farnis January 1, 1957, was down 2 per - cent or 1.6million head, from the all-tinie high a year earlier (fig. 3). The number of cattle kept for milk was down 1 percent, while the number of those kept primarily for beef was down 2 percent. This decrease ended a 7-year expansion in the number of cattle. Vadue per head of cattle was 2 percent above that of January 1, 1956.
GATTLE ON FARMS JAN. I MILLIONS
1880 1900 1920 1940 1960 *tttlFe(tS 4 CALVES NOT TOK MUK, AND Ait STEERS ifiUaS P2 YRS. * OlDER NOT FOR MUK
tCOWS 4 HfifERS 2 YRS. S, OLDER FOR MtiK DATA FOR 1957 ARE PRELIMINARY
U.S. DtPARTMENt OF AGRICULTURE NEC, 430A,57<2) AGRICULTURAL MARKETING SERViCE
FIGURE 3, "A 7-year expansion in the number of (»ttle on farms ended in 1956. Cattle numbers on January 1,1957, were down 2 percent from the record high a year earlier.
THE BALANCE SHEET OF AGRICULTURE-1957 15
The number of horses and mules on farms continued to decline during 1956. An increase of $9 in value per head as compared with January 1, 1956, more than offset the decline in numbers and ac- counted for a gain of about $9 million in total value»
Sheep inventories declined by 1 percent during 1956; the total of 30.8 million head on January 1, 1957, was the smallest since 1951. The decrease in numbers was more than offset by increases in value per head, so that the total value of sheep showed a 4-percent increase.
Chickens on farms (excluding commercial broilers) totaled 392.8 million on January 1, 1957, up 3 percent from a year earlier but 10 percent below the 1946-55 average. The value per chicken on hand was $1.17 compared with $1.26 a year earlier. The total value of chickens was down 4 percent.
Turkey numbers (excluding fryers) were 17 percent above a year earlier. Increased inventories caused a 7-percent rise in the total value of turkeys/despite a drop in average value per turkey.
Machinery and Motor Vehicles on Farms
The value of farm machinery and motor vehicles on farms reached a record high of $17.0 billion on January 1, 1957. This was about 3 percent above tiie previous record of $16.5 billion on Jainuaryl, 1956 (table 10). The rise in value occurred despite a 6-percent drop in expenditures for new farm m^^achlnery and motor vehicles,
TABLE 10.--Farm machinery and motor vehicles: Value by classes. United States, Jsmuary 1, 1940-57
Auto- mobiles
Jfotor- trucks
Other farm machinery
Millie dollai
1940- 1941- 1942- 1943- 19^-. 1945- 1946- 1947- 1948- 1949- 1950- 1951- 1952- 1953-■ 1954-- 1955^- 1956^- 19572.
503 586 782 986
1,100 1,425 1,206 1,108 1,391 2,005 2,365 2,526 3,060 3,125 3,153 3,150 3,309 3,369
Mil lion dollars
958 1,044 1,347 1,386 1,212 1,144
941 1,185 1,656 1,860 2,324 2,866 3,379 3,305 3,705 3,613 3,685 3,585
Ilion Million liars dollars
262 1,337 279 1,345 334 1,518 450 2,084 541 2,493 590 3,132 476 2,551 521 2,269 867 3,027
1,249 4,205 1,445 5,082 1,690 5,642 1,882 6,621 1,915 7,038 1,907 7,154 1,934 7,284 2,022 7,512 2,257 7,826
Million dollars
3,060 3,254 3,981 4,906 5,346 6,291 5,174 5,083 6,941 9,319
11,216 12,824 14,942 15,383 15,919 15,981 16,528 17,037
Revised. ■ Preliminary.
Nearly all of the major classes of farm machinery andmotor vehicles were up in value. The chief exception was a decline in the total value of automobiles from. $3.7 billion on January 1, 1956, to $3.6 billion a year later. The value of automobiles on farms on January 1, 1957, was at the lowest level since 1953.
Increases in value were largely the resxilt of price advances during 1956. Total expenditures for farm machinery and motor vehicles in 1956 were at the lowest level since 1947. In 1940 prices, the value of farm machinery and motor vehicles on January 1, 1957, totaled $7,4 billion, 2 percent below a year
16 INFORMATION BULLETIN 177, U. S. DEPT. OF AGRICULTURE
earlier. The decline in value, at constant prices, reflects the excess of depreciation over purchases of new machinery and motor vehicles during 1956«
Both wholesale and retail prices of farm machinery and equip- ment increased in 1956. However, many dealers, especially those in drought areas, continued to sell equipment below list prices by giving discounts for cash purchases or allowing more than market value for **trade-ins."
Numbers of most principal farm machines reached peak levels on January 1, 1957, despite the relatively low volume of new purchases in 1956 (fig. 4). Farmers tended to keep their old machines until, and even after, replacements were obtained.
PRINCIPAL MACHINES ON FARMS, TRACTORS*
COMBINES ^iL ^ 190 THOUS.
■^^r»ft DUuolkJuitoUQQOOQQ THOUS.
l.\ MIL.
MECH.CORN PICKERS 1110 THOUS.
•T-r??q456 THOUS. 715 THOUS.
■ 1940 m 1950 ^ 1957
U.& OCPARTMENT OF AGRICULTURE
♦CAROEW TRACTORS MOT INCLUDED
NE6. 57(7)-2350 AGRICULTURAL RESEARCH SERVICE
FIGURE 4.—Numbers of most principal farm machines were at record levels on January 1,1957. A rapid expansion in numbers of farm machines occurred between 1940 and 1950. Since 1950, new types of machines have accounted for the greatest increases.
Crops
Crop inventories of farmers, including crops pledged under loan to the Commodity Credit Corporation, were valued at $8.4 billion at the beginning of 1957, slightly more than the $8.3 billion a year earlier (table 11). The increase in value of crops stored on farms, from $7.0 to $7.3 billion, was mainly the result of higher values for corn and soybeans. Crops stored off farms under CCC loan decreased during 1956 chiefly because of a smaller volume of cotton.
THE BALANCE SHEET OF AGRICULTURE-1957
TiBLE 11.—Crop Inventories: Value by classes. United States, January 1, selected years, 1940-57^
17
Class 1945 1946 19562
Food grains Wheat Other^- ■
Feed grains Corn Other'^
Hay and forage^- Oil crops Soybeans Other^- ■
Cotton Vegetables'' Miscellaneous^--
Total
Million dollars
333 316
17 1,219
944 275 666
70 36 34
197 72
109
Million dollars
754 729
25 2,902 2,191
711 1,805
171 87 84
565 157 328
Mi I lion dollars
611 592
19 2,861 2,012
Ö49 1,742
153 91 62
469 155 283
Million do 11ars
1,086 1,063
23 3,476 2,736
740 1,758
271 137 134 537 191 271
Mi 11 ion dollars
993 908 85
3,466 2,554
912 2,009 380 272 108
1,172 124 196
Million dollars
950 872 78
3,645 2,850
795 2,047 587 444 143 804 147 192
2,666 6,682 6,274 7,590 8,340 8,372
Includes all crops stored on faims, including crops under loan to Commodity Credit Corporation. Includes only those farmer-owned crops stored off farms that are under loan to CCG.
2 Revised. ^ Buckwheat, rye, and rice. '^ Barley, grain sorghum, and oats. ^ 111 hay, corn silage, corn forage, sorghum silage, and sorghum forage. ^ Cottonseed, flaxseed, and peanuts. "^ Cabbage, onions, and potatoes. ^ Broomcorn, dry edible beans, dry field peas, tobacco, tung oil, and seeds for hay and pasture crops.
The physical quantity of crops owned by farmers, as measured in 1940 prices, decreased slightly between January 1956 and January 1957, fronfi $3.5 to $3,4 billion. There were smaller quantities in storage for all major classes of crops, except the oil and vegetable crops. In the feed-grain class, the increase in quantity of corn was not sufficient to offset the decreases in oats, barley, and grain sorghum*
Household Furnishings and Equipment
On Janua r y 1, 1957, furniture and app lianc e s in f a r m hou s eho Id s were valued at $12.0 billion compared with $ 11.6 billion at the beginning of 1956. During World War II, relatively few goods were bought for the home but since then their value has risen 11/2 times. In 1957, the value of home equipment and furnishings was about 70 percent as great as the value of farm, equipment and motor vehicles.
Liquid Financial Assets
At the beginning of 1957, bank deposits, currency, and Ü. S, savings bonds owned by farmers were estimated at $15.2 billion. A year earlier, they totaled $15.1 billion (table 12). These items account for the bulk of the financial assets held by farmers. The cash value of life insurance policies and corporate securities owned by some farmers miay be substantial, but farmers* holdings of such assets are believed to be relatively less important than holdings of nonfarmers.
A recent study of sources of off-farm income received by farm operators and their fanailies in 1955 indicates income of $450 million from interest, dividends, trust funds, and royalties.
Deposits and Currency.--Farmers* demand deposits (checking accounts) are estimated to have totaled $4.7 billion at the be- ginning of 1957. This was about the same amount as on January 1,
18 INFORMATION BULLETIN 177, U. S. DEPT. OF AGRICULTURE
TABLE 12.—Liquid financial aseets owned by fanners, January 1, selected years, 1940-57
1940- 1945- 1950- 1951- 1952- 1953- 1954.- 1955- 1956- 1957-
Currency-'-
Billion dollars
0.7 2-6 2.5 2.4 2.4 2.3 2.3 2.2 2.2 2.2
Deposits ■■■
Billion dollars
1.3 3.6 4.5 4.6 4.8 4.Ô 4.7 4.7 4.7 4.7
Billii dollars
1.2 1.7 2.1 2.1 2.2 2.3 2.4 2.5 2.6 2.6
United States savings bonds^
Billii dollars
0.2 3.4 4.8 4.9 4.9 5.0 5.2 5.4 5.6 5.7
Total^
Billion dollars
3.4 11.3 13.9 14.0 14.3 U.A 14.6 14.8 15.1 15.2
-^ Revised. Demand and time deposits have been adjusted to the level of the current estimate of demand deposits for 1957, as made by the Board of Goveiriors of the Federal Reserve System. The demand-deposits series was lowered by amounts ranging from a maximum of $0.9 billion in the period 1947-56 to a minimum of $0.2 billion in 1940. The series on time deposits was revised to keep the previous relationship with demand deposits. Each estimate of the currency series was lowered by 20 percent.
^ Redemption value.
1956. The use of checks is an important method of making ex- penditures by many farmers. A survey made by the Federal Reserve Board revealed that farm operators held nearly 3 1/2 million checking accounts on January 30, 1957. Some of these may be multiple accounts of one person, but it is probable that about two-thirds of all farmers have accounts.
For the united States, the average size of checking account was $1,350 (table 13). The highest average - $2,486 - was found in the San Francisco District, which covers the seven western- most States. That District includes many large farms and ranches. The smallest average accounts, $1,003 and $949, were in the Atlanta and Richmond Districts where farms are relatively small. These averages, which may seem unusually high, are influenced heavily by the relatively few holders who own very large deposits. The deposits of most farmers who have accounts are much smaller than the averages shown.
TABLE 13.--Demand deposits held by farm operators on January 30, 1957, by Federal Reserve District-"-
Number of accounts
Average size
I Boston II New York III Philadelphia- IV Cleveland 7 Richmond VI Atlanta 711 Chicago ■ 7III St. Louis IX Mlnneapolis--- S Kansas City--- U Dallas - ill San Francisco-
Total
Million dollars 22 117 94
192 281 341 818 564 501 665 529 547
70 173 296 340 585 535 409 462 289 220
1,158 1,918 1,343 1,110
949 1,003 1,398 1,054 1,225 1,439 1,830 2,486
4,671 1,350
Preliininary estimates by the Board of Governors of the Federal Reserve System.
Time deposits (savings accounts) of farmers increased only slightly during 1956 and when rounded in billions remiained at $2,6 billion. Currency held by farm^ers was estimated to be the same, or slightly less, on January 1, 1957, than a year earlier.
THE BALANCE SHEET OF AGRICULTURE—1957 19
United States Savings Bonds«--The cash value of United States savings bonds increased from $5,6 billion to $5.7 billion during 1956. This slight net increase resulted from the accrual of interest on outstanding bonds. Farmers cashed more, and bought fewer, bonds than in 1955. Factors that affected the purchase and cashing of bonds included the low income of many farmers, especially in the drought areas, and the general rise in interest rates which made some other investments more attractive. The sharp decline in purchases of series H bonds, which are often held by the larger investors, was mainly the result of the interest rate situation. U. S. savings bonds, however, continue to be the naost important type of financial asset for farm people. Except in areas of low income the proportion of bonds cashed prior to maturity is believed to be smaller for farnciers than for nonfarmers.
Net Worth of Farmers' Cooperatives
Farmers* cooperatives continue their steady financial growth. On January 1, 1957, their combined net worth reached $3.5 billion (table 14). This conrmares with $3.3 billion a year earlier, $2.1 billion in 1950, and $1.2 billion in 1945. Cooperatives that market farm products are most important and have net worths aggregating $1,320 million. Next in importance are the associations through which farmers buy feed, seed, fertilizer, and other supplies, and the credit cooperatives operating under the federally sponsored Farm Credit System. Each of these groups had a net worth of $640 million.
TABLE 14.—Net worth of selected types of cooperatives, IMted States, selected years, January 1, 1940-57
îype of cooperative 1940 1945 1946 1950 1955 1956
Marketing associations^ Purchasing associations^ FajTners' mutual telephone companies^ Farmers' mutual irrigation companies'^ Farmers' mutual fire insurance companies^ Rural electric cooperatives'^— Production credit system^ Federal land bank system^
Total
¡Hi Ilion dollars
256 74 23
197 42
3 31
203
Million dollars
393 194 23
230 63 31 61
224
Million dollars
470 229
23 237
71 39 68
241
Million dollars
779 369
23 264 108
92 122 298
Million dollars
1,216 592
23 29S 178 231 186 397
Million dollars
1,270 620 23
315 ^ 192
282 195 415
Mi 11 ion dollars
1,320 640 23
330 205 356 203 437
1,219 1,378 2,055 3,121 3,312 3,514
■'" Preliminary. ^ Excludes intercooperatlve investments. Estimates based on data from Farm Credit Administration. ^ Net investment for January 1, 1938, used for each date. U. S. Bureau of the Census, Census of Electri-
cal Industries, 1937. * Data for 1940 and 1950 from U. S, Bureau of the Census, Irrigation of Agricultural Lands, 1940 and 1950;
data for other years estimated. ^ Surplus and reserves. Estimates. ^ Revised. "^ Estimates before 1948. Beginning 1948, data reported by Rural Electrification Administration. ^ Excludes capital owned by production credit corporations. From Farm Credit Administration. ^ Excludes capital and surplus paid in by Federal Government. From Farm Credit Administration.
The Productive Assets in Agriculture
Value of assets used in farm, production represents about 75 percent of the total assets of the agricultural sector. If the value of dwellings, household goods, crops held for sale, part of the in- vestment in automiobiles, and most of the financial assets are excluded, the productive assets remaining totaled $132.3 billion on January 1, 1957 (table 15).
20 INFORMATION BULLETIN 177, U. S. DEPT. OF AGRICULTURE
TABLE 15.--Value of assets used in agrlciiltural production, United States, selected years, January 1, 1940-57^
All productive assets
1940-
1945-
1950-
1955- 1956- 1957-
ollars 38.7
67.7
95.8
121.0 124.6 132.3
Per farm- worker^
Dollars 3,413
6,625
9,615
14,318 15,127 16,813
Dollars 6,094
11,346
16,962
24,200 25,429 27,000
Farm machinery
Billion dollars
2.5
5.6
9.8
13.8 14.3 14.9
Per farm- worker^
220
548
1,633 1,736 1,894
Per farm^
394
938
1,735
2,76C 2,915 3,041
^ Revised. Includes farm real estate, less value of dwelling; livestock; machinery and motor vechicles, less 60 percent of the value of automobiles; crop inventories held for livestock feed; and a portion of the demand deposits determined for each year by adjusting the deposits of January 1, 1942, by an index of pro-
duction costs. 2 Number of farms and farmworkers used in computing these averages are as estimated by the United States
Department of Agricult\ire.
The total value of the productive assets has almost doubled since 1945. Not only has the investment expanded rapidly but it is in the hands of fewer farm operators and workers. The invest- ment per farm is now $27,000, an increase of about 140 percent since 1945. The investment per farmworker is about $16,800, more than 150 percent greater than in 1945 (fig. 5).
ASSETS USED IN PRODUCTION Average Value Per Farm Worker
$ THOU.
1940 1945 1950 1955 1960 U. S. DEPARTMENT OF AGRICULTURE NEG. 57(7)-2345 AGRICULTURAL RESEARCH SERVICE
FIGURE 5.—Investment per farmworker reached a record high of $ 16,800 on January 1,1957. Higher values of productive assets and declining numbers of farm operators account for the 150-percent rise in total investment per farmworker since 1946.
THE BALANCE SHEET OF AGRICULTURE—1957 21
Growth in mechanization has been particularly great during the postwar period. Between 1945 and 1957, the value of ma- chinery and equipment rose from $938 to $3,041 per farm, and per farmworker, from $548 to $1,894. These were in- creases of about 225 and 245 percent, respectively.
Claims
Claims on agricultural assets are of two general kinds: (1) Liabilities, which are divided into real estate and non-real-es täte debt; and (2) equities, which represent the value of the residual rights in agricultural assets belonging to the proprietors - owner- operators, 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
Farm-mortgage (real estate) debt rose in 1956 for the 11th con- secutive year (fig. 6). Total debt outstanding on January 1, 1957, was about $9.9 billion as compared with $9.1 billion a year earlier.
FARM MORTGAGE DEBT HELD BY MAJOR LENDERS
BIL. DOLLARS
12 il] Farmers Home Adm.
EiiiUFed. Farm Mort. Corp..
t//1 Joinf-stock land banks
.^ Fed. land banks
BB81 Life ins. COS.
Banks*
1910 1920 1930 1940 1950 1960 *W0-34, OPEN STATE AND NATIONAL BANKS: 1935-47. INSURED COMMERCIAL BANKS; 794«-. ALL OPERATING BANKS.
I. S. DEPARTMENT OF AGRICULTLRE NEC. 57 ( 7)-170 AGRICULTURAL RESEARCH SERVICE
FIGURE 6.--On January 1, 1957. farm-mortgage debt totaled $ 9,902 million, the highest since 1925. This marks the 11th consecutive year in which total debt has increased.
All major lender groups shared in the increase. By lenders, tfc.e percentage increases in mortgage holdings during 1956 were: Federal land banks, 16 percent; Farmers Home Administration
22 INFORMATION BULLETIN 177, U. S. DEPT. OF AGRICULTURE
(farm-ownership loans) 4 percent; life insurance companies, percent; and all other lenders, 8 percent (table 16).
TABI£ 16.-Farm-mortgage debt: Amount outstanding, Januaiy 1, 1940 and 1945-57, and percentage change, 1940-57, 1950-57, and 1956-57, by lenders. United States
MOUNT OUTSTANDING
1940-
1945- 1946- 1947- 1946- 1949- 1950- 1951- 1952- 1953- 1954- 1955- 1956- 1957-
Total debt
Million dollars
6,586
4,941 4,760 4,097 5,064 5,288 5,579
^ 6,303 * 6,042 "^ 7,412 ■^ 7,889 ^ 8,359 ^ 9,066
9,902
Federal land
banks^
Federal Farm Mort- gage Cor-
poration-'- ^
Million do liars
2,010
1,210 1,079
977 8Ö9 868 906 948 994
1,071 1,169 1,267 1,480 1,722
Million dollars
713
347 239 146 107
78 59 44 33 24 1Ö 13
0 0
Farmers Home
Adminis- tration^
Million dollars
^ 32
^ 195 * 184 ^ 192 ^ 198 ^ 192 4 193
^ 220 ^ 241 -^ 268 ^ 282 "^ 287 278 290
Life insxirance companies^
Insured commercial
banks
Million dollars
984
Millioi dolían
938 450 891 507 889 683 960 793
1,036 848 1,172 879 1,353 943 1,542 980 1,716 1,033 1,093 1,060 2,052 1,136 2,272 1,270 2,472 1,311
Individual and mis-
cellaneous
Million dollars
^ 2,313
"* 1,801 -^ 1,860 ^ 2,010 ^ 2,117 ^ 2,266 ^ 2,370 ^ 2,795 ^ 3,052 ^ 3,300 ^ 3,467 ^ 3,604 ^ 3,766
4,107
PERCENTAGE CHANGE^
1940-57' 1950-57- 1956-57-
Percent -14.3 90.1 16.4
Percent Percent Percent Percent Percent
799.S 151.2 145.4 84.9 __ 49.8 ■ 110.9 49.1 73.3
-- 4.2 S.B 3.2 9.1
^ Includes regular mortgages, purchase money mortgages, and sales contracts. 2 Loaiis were made for the Corporation by the Land Bank Commissioner. Authority to make new loans expired
luly 1, 1947. On June 30, 1955, loans of the Federal Farm-Mortgage Corparation were sold to the 12 Federal
^ For 1940, tenant-purchase loans and direct soil and water loans to individuals only. 1945-57 includes benant-purchase, farm-enlargement, fam-development, and project-liquidation loans; beginning July 1950, farm-housing loans; and beginning 1955, building-improvement loans. Data include loans from State Corpora-
tion trust funds. ^ Revised. ' Preliminary * Computed from unrounded data.
Farm-mortgage debt increased in every region. The largest regional increase in 1956 was the 14-percent rise in the Northern Plains States. Lacreases in the Mountain States and the Southeast amounted to 12 percent; increases in other regions ranged from 5 to 10 percent (table 17).
Recordings of farm nciortgages declined slightly from the near- record amount in 1955 but were higher than in any other year since 1923. By lenders, the change from 1955 to 1956 in amounts recorded was: Federal land banks up 8 percent; life insurance companies down 4 percent; all operating banks down 9 percent; and all other lenders up 2 percent.
The purposes of farm-mort gage loans changed little in 1956. Refinancing of debts and purchase of farm real estate continued to account for the major share of money borrowed. The relative numbers of farm transfers that were financed by various sources of credit in the year ended March 1956 are shown in figure 7.
TABLE 17.—I^nn-mortgage dett: Amount outstanding, Jamiaiy 1, 1940, and 1945-57, and percentage change, 1940-57, 1950-57, and 1956-57, by regions^
AMOUNT OUTSTANDING
1940-
1945— 1946- 1947- 194Ö- 1949- 1950- 19512. 1952^- 19532- 19542- 19552. 1956— 1957^-
Unlted States
Million dollars
6,586
4,941 4,760 4,097 5,064 5,288 5,579 6,303 6,842 7,412 7,889 8,359 9,066 9,902
llillian do I lar s
456 449 492 529 557 578 616 650 694 732 771 802 845
Com
Mi ZIion dollars
1,829
1,337 1,248 1,218 1,200 1,232 1,296 1,433 1,550 1,650 1,715 1,806 1,967 2,148
Lake States
Million dollars
907
712 672 666 674 687 715 787 842 900 942 990
1,063 1,150
Appa- lachian
Million do Ilars
386
301 303 332 358 375 379 448 495 538 572 605 643 689
Million dollars
248
201 204 228 248 264 271 341 381 421 AA4 470 506 566
gtate^
Million dollars
228
196 200 215 224 230 239 301 323 357 382 407 438 480
Plains Mi a ion dollars
586
440 422 434 456 484 518 595 637 707 767 811 884 939
FXftin
Million dollars
863
574 516 481 446 435 460 515 556 596 640 679 757 863
Million dollars
357
262 265 296 341 382 425 501 554 610 676 744
Million dollars
605
462 481 535 5Se 642 698 766 854 939
1,019 1,076 1,198 i,3l4
r >
w w w H
>
G r
PERCENTAGE CHANGE*
1940-57- 1950-57- 1956-57-
50.3 77.5 9.2
Percent
46.4 46.1 5.4
Percent 17.4 65.7 9.2
Percent 26.8 60.8 8.2
Percent 78.4 81.6 7.1
Percent 126.3 108.6 11.8
Percent 110.5 101.0
9.7
Percent 60.5 81.5 6,3
Percent
87.7 14.0
Percent 154.1 113.8 12.3
117.2 88.1 9.7
""" For regional groupings of States see table 5, ^ Revised. ^ Prellniinaiy. ^ Cançjuted from unrounded data. ^ Less than 0.05 percent.
24 INFORMATION BULLETIN 177. U. S. DEPT. OF AGRICULTURE
U. 5., 1956 1 CREDIT SOURCES FOR FARM PURCHASES
Other unclassified ^ Two or more lenders
sources ^w^.*<:«!P^ ^^^ 3%
Other individuals v^^í^^jlz^ojí^^
Federal ^^^^^^^^^^i
^^^^^L Seller ^^^^^^^^^^^ ( individuals)
Land Banks ^^^1 O^^^^^lL-^ ^^^^^^k
^^KSM^ §^K Insurance ^^^y^^^^^SBSSi ^^SsBW companies ^^j^^^mfflgM jBB^mr
Banks PEKCEHTAGE OF CREDIT PURCHASE! FINANCED BY EACH CLASS OF LENDER YEAR ENDING MARCH 1. T95< 1
U. S. DEPARTMENT OF AGRICULTURE HEG. 57(l)-2262 AGRICULTURAL RESEARCH SERVICE j
FIGURE 7.—Less than half of the credit purchases of farmland in 1956 were financed by institutional lenders. Within this group of lenders, banks and insurance companies each financed slightly less than one-fifth of the total, while the Federal Land Banks provided credit for about 10 percent of the total. The sellers of farm real estate, mainly individuals, provided the credit for nearly two- fifths of all credit-financed transfers. A significant part of these credit sales were financed by contracts, rather than by mortgages. Oily 3 percent of all credit purchases involved two or more lenders.
Principal repayments during 1956 were generally higher rela- tive to the total farm-mortgage debt outstanding than in 1955. Delinquencies and foreclosures continued low. Of 186,141 farm mortgages held by 16 life insurance companies on March 31, 1957, there were 507 with interest overdue 3 months or more and only 96 in process of foreclosure. This was about the same proportion as a year earlier. In 1956, delinquent and extended loans of the Federal land banks amounted to about the same proportion of total loans as a year earlier.
Interest rates on farm mortgages continued to move upward in 1956. Seven of the Federal land banks now have a 5-percent rate on new loans and 5 banks charge 5 1/2 percent. Life insurance companies generally reported higher rates in 1956 than in 1955, and are now charging a basic rate of 5 to 6 percent.
Farm-mortgage commitments of 16 life insurance companies and the Farmers Home Administration were lower in both number and amount in the first quarter of 1957 than a year earlier. Average size of new loans and commitments increased in 1956.
A joint farm-mortgage survey recently conducted by the Farm Economics Research Division, Agricultural Research Service, and the Bureau of the Census shows that total farm-mortgage debt on January 1, 1956, amounted to $9,066 million, an increase of 62 percent from the amount on January 1, 1950. The survey included a mailed inquiry to nearly 300,000 owners of farmland
THE BALANCE SHEET OF AGRICULTURE—1957 25
and also made use of information from the 1954 Census of Agri- culture.
The value of farm real estate kept pace with the increase in debt so that the ratio of debt to value for mortgaged farms of 25.0 percent in 1956 was about the same as in 1950. The proportion of owner-operated farms under mortgage increased from 30 to 35 percent during this 6-year period. Interest rates on total farm-mortgage debt outstanding rose from 4.5 percent in 1950 to 4,7 percent in 1956. Owners* equities in full-owner mortgaged farms averaged $14,200 in 1956 as compared with $9,123 in 1950.
A recent study of the Farm Economics Research Division, Agricultural Research Service, shows that farm-mortgage loans of life insurance companies are larger than those of other lenders. The average size of life insurance company loans on June 30, 1956, was about $21,400 in the Pacific Statesand $20,000 in the Mountain States. The United States average was $13,400, On insurance com- pany loans made prior to 1950 and still outstanding on June 30, 1956, more than a third of the original debt had been repaid. The average length of loan was about 19 years and the average interest rate was 4.52 percent.
Non-Real-Estate Debts of Farmers
Non-real-estate loans to farmers held by the principal lending agencies (excluding loans naade or guaranteed by the Commodity Credit Corporation) amounted to $4.5 billion on January 1, 1957 (fig. 8 and table 18). This reflected an increase in such loans
NON-REAL-ESTATE FARM LOANS Held by Banks and Federally Sponsored Agencies*
$ BIL
m F. H. A. ^ Prod, credit ass'ns * kll operating banks-
I960 * JAN. 1 AND JULY 1 DATA: EXCLUDING LOANS HELD OR GUARANTEED BY COMMODITY CREDIT CORP.
C INCL. EMERGENCY CROP 4 FEED AND R. A. C. C. LOANS
♦ INCL. FEDERAL INTERMEDIATE CREDIT BANK DISCOUNTS FOR OTHER LENDERS
U. S. DEPARTMENT OF AGRICULTURE NEC. 57(7)-505 AGRICULTURAL RESEARCH SERVICE
FIGURE 8.—Non-real-estate loans to farmers held by banks and federally sponsored agencies amounted to $4.5 billion at the beginning of 1957, compared with $4*4 billion a year earlier. Since 1951, these loans have risen above the earlier record level attained in 1920.
26 INFORMATION BULLETIN 177, U. S. DEPT. OF AGRICULTURE
during 1956 of only 1,1 percent. Loans of all operating banks de- creased by nearly 1 percent but those of the production credit asso- ciations increased by about 8 1/2 percent. The non-real-estate debt of farmers to nonreporting creditors, such as finance com- panies, small loan companies, merchants, dealers, professional people, and other individuals is estiniated to have been $3.5 billion on January 1, 1957, the same amount as a year earlier. Thus the total non-real-estate debt of farñaers for purposes other than price-support increased only slightly during 1956. Farmers' debts on price-support and storage loans, which are made or guaranteed by the Comnriodity Credit Corporation, de- creased from about $1,9 billion at the beginning of 1956 to about $1.6 billion at the end of the year.
xÄLJi-i:, j.ü.--rí±nnerB' non-real-estate dett. United States, January 1, 1940-57
Price-support loans made or guaranteed tfy
Commodity Credit
Corporation.-'-
Other loans by banks and federally sponsored agencies
Loans and book credits by miscel- laneous lenäers^
Total, excluding Commodity Credit
Corporation
Total, including Commcdlty Credit
Corporation loans
Billion dollars
1940- 1941- 1942- 1943- 194^- 1945- 1946- 1947- 1948- 1949- 1950- 1951- 1952- 1953- 1954- 1955- 1956- 1957-
0.4 .6 .6 .S .6 .7 .3 .1 .1
1.2 1.7 .g .6
1.2 2.4 2.2 1.9 1.6
1.5 1.6 1.Ö 1.7 1-7 1.6 1.7 2.0 2.3 2.7 2.S 3.4 4.1 4.2 3.8 4.0 4.4 4.5
Billion dollars
1.5 1.7 1.7 1.5 1.2 1.1 -1.2 1.5 1.8 2.2 2.4 2.8 3.2 3iA 3.2 3.3 3.5 3.5
Billion dollars
3.0 3.3 3.5 3.2 2.9 2.7 2.9 3.5 4.1 4.9 5.2 6.2 7.3 7.6 7.0 7.3 7.9 8.0
\illion
3.4 3.9 4,1 4.0 3.5 3.4 3.2 3.6 4.2 6.1 6.9 7.0
9.4 9.5 9.8 9.6
■'■ Although these are norffecourse loans, they are treated as debts. Borrowers must either pay them in cash or deliver the commodities on which they are based.
^ Estimates based on fragmentary data.
Although the non-real-estate debt of farmers for other than price-support purposes in the country as a whole shows little change for the year, data for the principeil lenders indicate some diverse regional trends (figs. 9 and 10). In general, non-real- estate farm loans held by these agencies decreased during 1956 in the Mountain, Southern Plains, and Northern Plains regions and increased in all other regions. Of the 14 States in the Mountain and Plains regions, 9 had decreases in such loans during 1956, whe reas inc reas e s occurred in all exc ept 4 of the 34 other State s. But a more significant fact is that the changes in most States were small. Of the 35 States in which non-real-estate loans to farm^ers rose during the year, only 5 (Maine, Rhode Island, Virginia, Mississippi, and Nevada) had increases amounting to
THE BALANCE SHEET OF AGRICULTURE—1957 27
NON-REAL-ESTATE FARM LOANS
$ BILLIONS
0.4
^ 1
NORTHEAST
HELD BY BANKS AND FEDERALLY SPONSORED AGENCIES, BY REGIONS*
$ BILLIONS
1.6 -I- SOUTH
1910 1920 1930 1940 1950 1910 1920 1930 1940 1950 1960 ♦ALL STATE MD HATIOHAL BANKS PRIOR TC 193S; ISSVüBü COMMEi<ClAL SAHKS 1935 AND THÍHEAFTcfi.
JAN. I AXD JULY > DATA; EXCLUMHG LOANS HELD OR GUARANTEED BY COmOùlTY C<iEOIT COtîPORATIOH .
U.S. DEPARTMENT OF AGRICULTURE NEG. S7(7)-506 AGRICULTURAL RESEARCH SERVICE
FIGURE 9."The non-real-estate loans to farniers held by banks and federally sponsored agencies increased slightly during 1966 in all major regions, except the West.
10 percent or more; and of the 13 States in which such loans declined, only 5 (Missouri, Kansas, New Mexico, Montana, and Utah) had decreases of 5 percent or more.
Most non-real-estate debts of farmers are incurred to meet operating and living expenses and to buy livestock and machinery. This is shown by studies conducted by the Federal Reserve System and the Farm Credit Administration during the last year. Of the outstanding non-real-estate loans to farmers (excluding price- support loans) held by banks on June 30, 1956, about 81 percent had been made for these purposes. A slightly higher percentage of the loans made by production credit associations during the year ended on that date had been nciade for such purposes. In seeking explanations of changes in the non-real-estate farm debt, attention naturally turns to changes in farm expenditures for these purposes. But changes in farm income, farm inventories, and the financial reserves owned by farmers must also be considered, as they affect the ability of farmers to pay debts and to make expenditures without use of credit.
28 INFORMATION BULLETIN 177. U. S. DEPT. OF AGRICULTURE
CHANGE IN NON-REAL-ESTATE FARM LOANS Held by Banks and Federally Sponsored Agencies, 1956-57*
U. S. INCREASE 1.1 %
'* JAN. 1 DATA, EXCLÜDtNG LOANS HELD Oft GUARANTEED Bf COM - MOD/TV CRED/T CORPORATION.
U.S.DEPARTMENT OF AGRICULTURE NEG. 57(7)-2344 AGRICULTURAL RESEARCH SERVICE
FIGURE 10,—During 1956, non-real-estate loans to tarmers held by banks and federally sponsored agencies increased only about 1 percent in the country as a whole. Such loans decreased in many of the Mountain: and Plains States andjn a few other States. Among the other States, only a few had increases of 10 percent or more.
In the country as a whole, none of these factors changedmuch from 1955 to 195ér. Cash farm operating expenses were slightly- higher in 1956 than in 1955, but farm expenditures for capital equipnient and farm improvements were lower. The total of these expenditures was only about 2 percent larger in 1956 than in 1955. Cash receipts from farmiing were up about 4 percent. If farm:ers used more credit to increase their expenditures in 1956, they also had greater cash receipts with which to repay loans obtained for the purpose. Thus the situation with respect to cash receipts, and to cash expenditures for operations and for capital goods apparently created little, if any, need for an increase in non-real-estate farm debt in 1956. This was true also of the s ituation of fa rme r s with re spec t to f inane ial re se rve s, which changed little during the year. In addition, according to reports obtained last fall in preparation for the Outlook Conference, farmers apparently were not mtuch inclined during 1956 to expand debts for living purposes.
A possible explanation of the decline of non-real-es täte farm loans in both the Mountain and the Plains States appears in the fact that the nuznber of cattle on farms and ranches In these regions dropped by about 5 or 6 percent during 1956. Probably some of the funds that farmers and ranchers in these regions obtained by reducing the size of their herds were applied in pay- ment of their loans.
THE BALANCE SHEET OF AGRICULTURE—1957 29
Interest charges and loan service fees on the non-real-estate loans of farmers held by the principal lending institutions are estimated to have increased from an average of about 6.3 percent during 1955 to an average of about 6.4 percent during 1956. This increase was not as large as the increase that occurred in central money market rates. Both production credit associations and country banks were slow in adjusting to changed conditions in the financial centers, and rates of the Farniers Home Administra- tion, which are fixed by law, were not changed.
Nevertheless, many production credit associations increased their interest rates during 1956. At the beginning of 1956, only 52 percent of these associations had interest rates as high as 6 percent. At that time, the discount rate of 10 of the 12 Federal intermediate credit banks was 3 percent. Most of the associations had operating spreads of from 2 1/2 to 3 percent. By the end of 1956, about 87 percent of the associations had loan rates of 6 percent or more, but 9 of the Federal intermediate credit banks were charging 4 percent on loans discounted. Despite the increase in their loan rates, operating spreads of a large proportion of the associations had been reduced to 1 1/2 or 2 percent, which prob- ably is below their needs. Unless money market rates decline, many production credit associations may find it necessary to increase their rates further.
The interest rates charged by commercial banks on loans to farmers outstanding at mid-1956 were determined in the Federal Reserve study m.entioned above. These rates varied markedly by type and size of loan. Rates for types of loans that usually are made on non-real-estate security w^ere as follows:
Average rate
Rates on loans of--
Loan to-- Less than $500
$25,000 or more
Pay operating and living
Percent
6.4 5.5 6.1
7.1
Percent
7.1 6.7 7.1
7.8
Percent
5.4 Buy feeder livestock Buy other livestock Buy machinery and equip-
ment
5.1 5.4
6.0
No data are available on the interest rates currently charged by banks on loans to farmers. But the rates charged by country banks usually change slowly. They probably do not reflect fully the in- creases that have occurred in the central money markets.
Total Farm Debt
Excluding price-support loans, the aggregate of farm-mortgage debt and non-real-es täte farm debts rose from $17.0 billion at the beginning of 1956 to $17.9 billion at the end of the year. This debt has increased about 124 percent since January 1, 1946, when it
30 INFORMATION BULLETIN 177, U. S. DEPT. OF AGRICULTURE
reached the lowest point since Wofld War 1. Despite this large increase, it equaled only about 10 percent of the valué of farm assets on January 1, 1957, compared with 7.5 per cent on January 1, 1946. :
Regional data on the part of the non-real-estate farm debt held by miscellaneous lenders are not available. But the aggregate of all farm-mortgage debts and the part of the non-real-e^state debt held by principal lenders increased about 6.6 percent during 1956 (table 19), The largest increase (9.8 percent) occurred in the Delta region; the smallest (3.5) percent in the Southern Plains.
TABLE 19.—Percentage change In total of all farm-morl^age debt and of non-real-estate debt held by reporting lending InstltutionSj by regions, January 1, 1946-57 and January 1, 1956-57
Percentage change
Region Jan. 1 1946-57
Jan. 1 1956-57
Region
Percentage change
njan. 1 1946-57
Jan. 1 1956-57
Northeast ■-■ Com Belt— LBLke States—- Appalachian—-- Southeast Delta States---
Percent +115.3 +105.3
+93.8 +143.5 +140.5 +118.3
Percent _ : +4.8
+6.4 +7.3 +6.Ö +9.5 +9.8
Southern Plains——
Northern Plains- ^— Mountain- .- — Pacific ———
United States-—-——
Percent +126.5 +82.2
+211.3 +178.1
Percent +3.5 +7.0 +7.0
' +7.4
+123.6 +6.6
*U. S. GOVERNMENT PRINTING OFFICE : 1957 O -443811
