Capital Requirements and Financing Practices for Restructuring Southern Agriculture

Abstract

faced by agriculture in its attempts to adjust its resources. While agriculture has been a major contributor to our economic growth and development, it has not shared in the resultant prosperity to the extent of other sectors, in large part because of its inability to make the needed adjustments. If one examines the elements of this industry, he will surely conclude, in plain and simple terms, that a relatively small portion of the farms is responsible for the rapid increases in productivity attributed to the industry. Tweeten [7] found that operators of Class V and VI commercial farms (annual sales of $50 to $4,999) comprised over one-fourth of all operators and over 36 percent of commercial farmers, but contributed less than 8 percent of gross farm output in 1960. At the same time, operators of Class I and II farms (sales of $20,000 and over annually) comprised one-tenth of all operators but contributed over one-half of gross farm output. While the distribution of farm incomes is wide in almost all areas, the South has long been known for its preponderance of small, lowincome farms.' To improve his income position, the low-income farmer must choose among (a) leaving the farm for nonfarm employment, (b) obtaining parttime employment to supplement his farm income, and (c) acquiring the use of adequate capital and land resources to complement fully his management and labor in farming. Other alternatives which may provide improvement within limits are those of reorganizing the enterprise mix and/or use of improved production techniques. However, since this consideration typically requires additional capital [6], we prefer to consider it to be included in (c). Crucial terms referent to each course of action vary drastically among in.. dividuals. Full-time nonfarm work is probably considered by most to be the extreme of the three. Age, education, experience, and physical characteristics of the individual are prime determinants of the type of employ