The following information on small farm capital comes from Five Acres and Independence by M. G. Kains. Five Acres and Independence is also available to purchase in print.
Perhaps no question is so difficult to answer satisfactorily as: How much capital should I have to start my little farm? Instead of attempting to set a figure (which probably would not apply in one case out of scores) suppose we consider a few specific crops and items that have more or less direct bearing on the general subject of capital.
In apple orcharding a paying crop can rarely be expected under seven years, more often it is 10 to 15. As many varieties bear satisfactorily only in alternate years they will rarely yield more than 15 crops in 37 to 40 or 45 years from planting. When such yields do occur other orchards will probably also have heavy crops so prices may be too low to make much profit. With pears and most nuts the times to reach bearing are about the same.
Peaches generally begin to be profitable in the fourth or fifth year. Some commercial growers who take special care keep their trees in profitable production for more than 20 years; but the majority count on only 10 or 12. Though the peach would naturally bear every year, an annual yield cannot be counted upon because cold winters and spring frosts often destroy the buds, flowers or newly formed fruits; so if a crop is gathered oftener than twice in three years it is “just so much velvet.”
Cherries and plums, which rarely become profitable before five years, are more regular annual bearers than apples and pears and are naturally longer lived than peaches—15 to 20 years for well managed sour cherries and plums and 30 or more for sweet cherries. The main objections to them are the cost of picking and their proneness to brown rot of the fruit and foliage.
Oranges, lemons and grapefruit require five years to bear profitable crops but, unless injured by frost, they usually bear well annually and for many years.
Currants and gooseberries begin to yield, usually, during the fourth or fifth year. As they are perfectly hardy they should bear well annually, provided they are properly managed, and continue for 10 to 12 or 15 years.
Raspberries, blackberries and dewberries generally start to pay during the third year and bear annually for six to ten years or more.
Strawberries, when 14 or 15 months old bear their most profitable crop. When a second crop is borne by the same bed it is not only lighter and inferior to the first but, because of necessary hand weeding, it costs relatively more to produce and often brings lower prices.
Among vegetables, asparagus cannot be expected to yield a paying crop until the third or fourth year, but when well fertilized it should yield annually for at least 10. The bed at my boyhood home yielded abundantly for more than 40 years to my certain knowledge, but it was fed lavishly. Other perennial vegetables should yield well the second or third season but they are much shorter lived.
Because of the time necessary to bring these plants into bearing the grower must be patient. They indicate also that he must have either ample reserve capital, have ways of hiring it during these periods of development or must pay the necessary yearly expenses by income from the place itself. Hence the reason for growing annual vegetable crops between the trees, bushes and vines until these woody plants need all the space.
Parenthetically it may be said that many a man, by growing vegetables and strawberries has developed his orchard, vineyard or bush berry patch through these periods with a balanced account and even a small profit before the fruit crops began to pay; but, conversely, probably far more have had a deficit; in fact, many have failed and lost their money, their property and, what is worse still, their reliance on themselves. It takes cash, confidence, courage, cultivation and patience to develop a fruit plantation of any kind. So the small farmer with limited means may prudently hesitate to go in for tree fruit growing, except on the basis of home supply or at most for a strictly local sale of his products. He will more likely succeed if his money crops are small fruits and vegetables and his other sources of income are dressed poultry, eggs, honey and perhaps pork and milk.
From all this it is evident that the amount of capital necessary to equip a place for crop production of any kind varies widely. The most important factor to reckon with when estimating is the man himself. He must consider his experience, his ability, his teachableness, his capacity to work himself and to direct others, and so on. Other important factors are locality, cost of land, character and adaptability of soil, size of place, use of greenhouses, hotbeds and coldframes, crops to be grown, ways of marketing, equipment necessary, labor to be hired or supplied by the family, style of living to be maintained, etc.
In the growing of annual vegetables which naturally requires smaller capital per acre than fruits and perennial vegetables, the estimates of experienced men vary from $25 to $500 an acre! The first is obviously too low for the majority of crops; the second too high except where considerable glass is employed. Small places require proportionately far more capital per acre than do large ones. However, the higher of these figures need not frighten even the man of small means and limited experience—provided that he will make haste slowly. Of course, the more limited the capital and the less the experience the smaller the area that can or should be handled, even when the man owns more land than he attempts to work. One is far more likely to succeed when 50, 25 or even a smaller percent of the available area is thoroughly well worked than when the seed, fertilizer, cultivation and especially the labor are spread out so thin that the crops get inadequate food and attention and weeds gain and maintain supremacy over them. The experience gained in producing a small crop of high quality that commands a good price is sure to foster one’s confidence and enthusiasm; whereas to fail because of too large-scale operation is sure to quash both.
In grain, hay and other field crop farming the rent or interest on the land cost may be 50% of the total expense of growing and harvesting; but in the production of inter-tilled crops such as vegetables the land rent or interest may be only 10%; that is, the total cost of bringing an inter-tilled crop from seedage to sale may be five to ten times as great, depending largely upon the amount of tillage, fertilizing, spraying and handling necessary.
Properly to work five acres of closely planted vegetables for a market within three to five miles and where greenhouses, hotbeds and coldframes are used (as they should be) not less than a man to the acre can be kept busy throughout the year with more or less extra hands, depending upon the class of crop during the harvesting periods. To attempt to get along with fewer is almost sure to invite disaster.
From all this it is evident that when the available capital is limited to say $1,500 or less with which to pay rent or interest on land cost, buy equipment, fertilizers, manures, seed, labor and other essential items, it is far safer to plant only two or three acres in inter-tilled crops than to sow the whole area to them. The balance of the land need by no means be left idle; it may be sown to green manures as an investment in its own improvement and, later, the profit of the owner. Every square foot should be made to give a good account of itself.
In view of all this it is important to consider what returns to expect from the various crops. The usual way is to calculate on the acre basis; but this is objectionable because it gives a false impression. A better way is the labor-hour basis. For instance, an apple orchard may show a gross return of $100 an acre and a profit of $50. Looks good, eh? A crop of oats may bring in $25 gross an acre and a profit of $7. “Not so good,” you say! Hay, considered a “cheap crop,” may yield only $15 gross and $6 profit an acre. “Humph! I’ll raise none of that!” you may ejaculate. But let’s look at the labor-hour calculation. The apples show a labor-hour profit of perhaps 25c, the oats 30c and the hay 60c! Thus the labor-hour method shows which crops pay best, which poorest and which are not paying, even when the acre-basis seems to show a profit! All this has a bearing upon the capital necessary to operate a place, the costs, yields, profits and other items necessary for production being estimated beforehand.
Vegetables and day-old chicks may pay well for themselves during the first season and strawberries the second but on a newly started place they cannot be expected to carry the whole load. So if the first year’s balance sheet shows that expenses have been met by production income the owner may congratulate himself as a rare exception to the general rule. In such cases the second and subsequent years are likely to be more encouraging, especially when some of the plantings are of bush and cane berries, grapes and asparagus.