On Monday, in article

"Torsten Brinch" wrote:

On Mon, 6 Jan 2003 09:13:30 -0000, "Michael Saunby"
wrote:


"Torsten Brinch" wrote in message
.. .
The avg income earner in UK had an income in 99/00
of £23400 (males)/£14400(females).
(Source: Survey of Personal Incomes, Board of Inland Revenue)

For comparison, avg farm income (Cash Income, rounded figures):
93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01
£39000 £43000 £53000 £52000 £41000 £35000 £33000 £31000
(Source: Farm Accounts Book)

Quite interesting that farm incomes £33000 are so close UK avg income
(i.e. 23400+14400) £37800. Though I doubt many others on slightly
less than the average income have quite such expensive to maintain
properties as the average farming family.

Look up the definition of Cash Income.

So it seems farmers are even worse off than that. Bad news.

The point is that the cost of maintenance of property relevant to the
farm business has already been deducted once in the calculation of
the Cash Income figure.

I would argue that Cash Income is misleading because some of these costs
may have been deferred in hard times, and Cash Income will thus not fall
quite so rapidly as other measures. Check the hedges thread for
discussions of how the short-term cash flow can be improved by not
cutting hedges so frequently, at the expense of higher costs later.

This all makes Cash Income a politically useful measure for playing down
the effects of short-term recession. As the financial pressures
continue, I expect some other figure to get the publicity.

Torsten, just which bunch of vultures are you pimping for?



--
David G. Bell -- SF Fan, Filker, and Punslinger.

"Let me get this straight. You're the KGB's core AI, but you're afraid
of a copyright infringement lawsuit over your translator semiotics?"
From "Lobsters" by Charles Stross.

On Mon, 6 Jan 2003 18:01:22 -0000, "Michael Saunby"
wrote:


"Torsten Brinch" wrote in message
.. .
On Mon, 6 Jan 2003 14:53:58 -0000, "Michael Saunby"
wrote:


"Torsten Brinch" wrote in message
.. .
On Mon, 6 Jan 2003 13:56:54 -0000, "Michael Saunby"
wrote:

.. The cost of maintenance of the residential building
is not and may not be deducted [to calculate Cash Income].
snip

Of course not, it is not relevant to the business.

It explains why folks need an income though.

I think you can safely assume that folks interested in the topic
of this thread already has a good grasp of why folks need an
income.

.. [Farmers] will take at most as much as the business can stand
snip

Sure, or one should hope so, and Cash Income is a good estimator of
how much that could be.


Right, so if they take at most what the business can stand, and at least
what they need to live - what happens when what is needed to live exceeds
what the business can stand? Presumably a farming recession. Isn't that
what we now have?

Michael Saunby

On Mon, 6 Jan 2003 18:01:22 -0000, "Michael Saunby"
wrote:


"Torsten Brinch" wrote in message
.. .
On Mon, 6 Jan 2003 14:53:58 -0000, "Michael Saunby"
wrote:


"Torsten Brinch" wrote in message
.. .
On Mon, 6 Jan 2003 13:56:54 -0000, "Michael Saunby"
wrote:

.. The cost of maintenance of the residential building
is not and may not be deducted [to calculate Cash Income].
snip

Of course not, it is not relevant to the business.

It explains why folks need an income though.

I think you can safely assume that folks interested in the topic
of this thread already has a good grasp of why folks need an
income.

.. [Farmers] will take at most as much as the business can stand
snip

Sure, or one should hope so, and Cash Income is a good estimator of
how much that could be.


Right, so if they take at most what the business can stand, and at least
what they need to live - what happens when what is needed to live exceeds
what the business can stand?

It dies. Otoh, Cash income has been on avg. £40000 per farm over the
last several years, so the species is hardly endangered.

On Mon, 06 Jan 2003 13:12:25 +0000 (GMT),
("David G. Bell") wrote:

I would argue that Cash Income is misleading because some of these costs
may have been deferred in hard times, and Cash Income will thus not fall
quite so rapidly as other measures.

You are forgetting, that the reason why the alternative measure which
everyone appear to have been brainwashed with -- Net Farm Income -- is
falling more rapidly is -not- that it involves a correction for this
effect.

You are also forgetting and that the use of Net Farm Income is
considered flat out malpractice, Cash Income the better choice for the
purpose of comparison with other income earners in society, which is
what we are doing here for the moment.

Cash Income figures indicate that the avg ability of farms in UK to
generate Cash Income has dropped to about half of what it was in 1995,
from about £55000 to about £30000.

For comparison, the avg income earner in UK had an income in 99/00 of
£23400 (males)/£14400(females).

This all makes Cash Income a politically useful measure for playing down
the effects of short-term recession. As the financial pressures
continue, I expect some other figure to get the publicity.

Bullshit. If Cash Income was getting all the publicity the churls
over at ukba would have known half a iota about it when it was brought
up. David, they had never heard of it. Tell you why: Net Farm Income
figures and trends gets all the publicity.

Torsten, just which bunch of vultures are you pimping for?

I work for myself. You?

On Monday, in article

"Torsten Brinch" wrote:

On Mon, 06 Jan 2003 13:12:25 +0000 (GMT),
("David G. Bell") wrote:

I would argue that Cash Income is misleading because some of these costs
may have been deferred in hard times, and Cash Income will thus not fall
quite so rapidly as other measures.

You are forgetting, that the reason why the alternative measure which
everyone appear to have been brainwashed with -- Net Farm Income -- is
falling more rapidly is -not- that it involves a correction for this
effect.

So why don't you tell us just what the difference is?

You are also forgetting and that the use of Net Farm Income is
considered flat out malpractice, Cash Income the better choice for the
purpose of comparison with other income earners in society, which is
what we are doing here for the moment.

Since when? I can assure you that I've not heard that claim before.

Cash Income figures indicate that the avg ability of farms in UK to
generate Cash Income has dropped to about half of what it was in 1995,
from about £55000 to about £30000.

Now, just which "average" is being used? Arithmetic mean? Mode?
Median? And is the average used some other measure of business size, or
is this the average Cash Income? How does it relate to business size an
turnover?

You do know the differences, and why they're important? And what's the
distribution? I'm fairly confident it will not be one of the usual
statistical distributions: it certainly isn't for the holding size.


Oh, what the heck, here's some figures for 1998 -- if you want something
more recent, find them and post them:


Holding Number of Percentage of
Size (Ha) Holdings Total Number

Under 10 48900 28.3%
10 - 30 41900 24.2%
30 - 50 23000 13.3%
50 - 100 29600 17.1%
100 - 200 19000 11.0%
200 - 300 5400 3.1%
300 - 500 3400 2.0%
500 - 700 1000 0.6%
700 and over 800 0.5%





Oh, and BTW, unless you're using the X-no-archive: header, people will
be reading your postings long after the URLs you give have vanished.
How will they know what on earth ypou're talking about?


--
David G. Bell -- SF Fan, Filker, and Punslinger.

"Let me get this straight. You're the KGB's core AI, but you're afraid
of a copyright infringement lawsuit over your translator semiotics?"
From "Lobsters" by Charles Stross.

On Mon, 06 Jan 2003 21:11:20 +0000 (GMT),
("David G. Bell") wrote:

On Monday, in article

"Torsten Brinch" wrote:

On Mon, 06 Jan 2003 13:12:25 +0000 (GMT),
("David G. Bell") wrote:

I would argue that Cash Income is misleading because some of these costs
may have been deferred in hard times, and Cash Income will thus not fall
quite so rapidly as other measures.

You are forgetting, that the reason why the alternative measure which
everyone appear to have been brainwashed with -- Net Farm Income -- is
falling more rapidly is -not- that it involves a correction for this
effect.

So why don't you tell us just what the difference is?

With an example farm, skipping details
Cash receipts 160000
Subtract
Cash expenditures 130000
you get:
Cash Income 30000

Subtract
Deprec. of fixed assets 15000
Subtract
Imputed labour costs 4000 (excl. farmer and spouse)
you get:
Occupier's net income 11000

Add
Deprec.of build&works 4000
Add
Interest payments 5000
Add
Occupiers expenses 500
Subtract
Imputed rent 10500
you get:
Net Farm Income 10000


You are also forgetting and that the use of Net Farm Income is
considered flat out malpractice, Cash Income the better choice for the
purpose of comparison with other income earners in society, which is
what we are doing here for the moment.

Since when? I can assure you that I've not heard that claim before.

I believe you, it is only the third time it has been made on this
thread.

Cash Income figures indicate that the avg ability of farms in UK to
generate Cash Income has dropped to about half of what it was in 1995,
from about £55000 to about £30000.

Now, just which "average" is being used? Arithmetic mean? Mode?
Median? And is the average used some other measure of business size, or
is this the average Cash Income?

When I write average Cash Income, I mean average Cash Income.

How does it relate to business size an turnover?

It doesn't. When I write average,all sizes I mean average, all sizes.

You do know the differences, and why they're important?

Certainly.

And what's the distribution?

We can look at the distributions around the means later, if you wish.

I'm fairly confident it will not be one of the usual
statistical distributions: it certainly isn't for the holding size.

Right. There are interesting patterns in the distributions of Cash
Incomes, particularly when you look at the data grouped by farm type.

Oh, what the heck, here's some figures for 1998 -- if you want something
more recent, find them and post them:

Holding Number of Percentage of
Size (Ha) Holdings Total Number

Under 10 48900 28.3%
10 - 30 41900 24.2%
30 - 50 23000 13.3%
50 - 100 29600 17.1%
100 - 200 19000 11.0%
200 - 300 5400 3.1%
300 - 500 3400 2.0%
500 - 700 1000 0.6%
700 and over 800 0.5%

Thanks, well, that's rather straight Pareto.

Oh, and BTW, unless you're using the X-no-archive: header, people will
be reading your postings long after the URLs you give have vanished.
How will they know what on earth ypou're talking about?

There seems to be a more immediate problem in that I am posting to
ukba *now* using current standard terms for measures of Farm Income
and noone seems to know what I am talking about.

Torsten Brinch wrote in message
...
On Mon, 06 Jan 2003 21:11:20 +0000 (GMT),
("David G. Bell") wrote:

There seems to be a more immediate problem in that I am posting to
ukba *now* using current standard terms for measures of Farm Income
and noone seems to know what I am talking about.

no, they are probably watching your gymnastics in open mouthed
admiration. You gave four figures and chose the one that suited your
particular agenda.
You then compared the income of a business with the income of an
employee, a procedure that can only be described as fatuous.
Why do you not compare farm profitability with that of other businesses
using accepted business profit bench marks?


--
Jim Webster

"The pasture of stupidity is unwholesome to mankind"

'Abd-ar-Rahman b. Muhammad b. Khaldun al-Hadrami'

"Jim Webster" wrote in message
...
You then compared the income of a business with the income of an
employee, a procedure that can only be described as fatuous.


Turnover per employee and profit per employee are valid parameters to
analyse a companies performance.

Hamish Macbeth wrote in message
...

"Jim Webster" wrote in message
...
You then compared the income of a business with the income of an
employee, a procedure that can only be described as fatuous.


Turnover per employee and profit per employee are valid parameters
to
analyse a companies performance.

true, but what do you do with an industry where many of the
participlating businesses have no employees? Even on farms with
employees, the proportion of the work done by the self employed or
owners/partners is far higher than, say, Tesco.
Obviously it would be an interesting exercise to compare UK farm
profitability with some other industry which is also predominantly run
on owner/family labour, perhaps small corner shops.
The problem with comparisons is that you have to chose a common factor
to compare. So that is why I chose return on capital. Most businesses do
function on invested capital. (although obviously there are exceptions
here as well.)


--
Jim Webster

"The pasture of stupidity is unwholesome to mankind"

'Abd-ar-Rahman b. Muhammad b. Khaldun al-Hadrami'

Xref: 127.0.0.1 uk.business.agricultu105983 sci.agricultu61787


"Jim Webster" wrote in message
...

Hamish Macbeth wrote in message
So that is why I chose return on capital. Most businesses do
function on invested capital.


But what figure do you use as capital when you own the farm?

To give a non-farming analogy. Lord Bath owns the Longleat Estate and runs a
bussiness from it.
Do you treat the value of the estate as the captitol and consider the
turnover and profits in relationship to that?

Or do you think his family already owned it as a private property and
utilise it to earn cash. A bit like someone owning a family car and earning
a little extra money weekends doing private car hire.

If you count the value of the estate as the capitol then you will probably
deduce he could do better putting the money in the building society and that
he is running the bussiness on poor returns.
If you treat it as a mechanism by which he enjoys the continued ownership of
a vast estate that otherwise would be lost to his heirs in taxes and the
capitol is only the extras spent purely to run the business, then the return
on capitol can look very good.

Your farm may be worth a million pounds as bare land and fixed buildings but
you could count this as something you own and you run a business to
maintain your possesion. in which case only the non-fixtures count as
business capitol.

A farm is somewhat different to most businesses, say a hairdressers or
retail shop where the bussiness premisses are normally not part of the
owners private and personal life. There is not the seperation between what
is enjoyed as a personal posestion and life enhancement and what is the
source of income.

I know that the whole thiing may have been bought under a business loan but
there is still the duality with a farm that does not exist in most business
activities.

In article , Torsten Brinch
writes
There seems to be a more immediate problem in that I am posting to
ukba *now* using current standard terms for measures of Farm Income
and noone seems to know what I am talking about.

Not enough to argue it, anyway.

If your end objective is to convince us that farmers are well rewarded
why start from an obscure accounting system.

In your example, a gross turnover of 290,000 puts the operation in the
100-200ha size (my guess) and hardly representative of an average farm
business.

regards


--
Tim Lamb

Hamish Macbeth wrote in message
...

"Jim Webster" wrote in message
...

Hamish Macbeth wrote in message
So that is why I chose return on capital. Most businesses do
function on invested capital.


But what figure do you use as capital when you own the farm?

we would basically take the capital as the money we would get if we
cashed everything in. Value of house, land, livestock, machinery, quota,
feed and fertiliser in hand.


To give a non-farming analogy. Lord Bath owns the Longleat Estate and
runs a
bussiness from it.
Do you treat the value of the estate as the captitol and consider the
turnover and profits in relationship to that?

If it was just his private house, and he ran a taxi firm from it, I
wouldn't. In his case the house and access to it is part of the business
so you have to take the value in.
Remember with a lot of these estates that the value might be enhanced if
you could demolish the house and rebuild something of your own design.
In a lot of cases the house is more of a millstone than an asset.


Or do you think his family already owned it as a private property and
utilise it to earn cash. A bit like someone owning a family car and
earning
a little extra money weekends doing private car hire.

If you count the value of the estate as the capitol then you will
probably
deduce he could do better putting the money in the building society
and that
he is running the bussiness on poor returns.

most businesses which are land based fall into that category in the UK.
In the US when land prices are lower they expect a far higher return on
capital.
Remember that the owner of a town centre shop may also be in a similar
position, and from memory several store chains have also had this
problem, they were at risk of being bought up purely for the new owner
to sell sites for development.

If you treat it as a mechanism by which he enjoys the continued
ownership of
a vast estate that otherwise would be lost to his heirs in taxes and
the
capitol is only the extras spent purely to run the business, then the
return
on capitol can look very good.

Your farm may be worth a million pounds as bare land and fixed
buildings but
you could count this as something you own and you run a business to
maintain your possesion. in which case only the non-fixtures count as
business capitol.

remember in many cases the business is paying the mortgage (or
attempting to) so the return on capital of a farm has to take into
account the capital value of land and buildings because it is the
business which has to fund the purchase of them. Longleat or similar is
unusual in this regard. In the case of most farms, even if the current
owner never had to buy the assets on the open market, they will have
often had to buy them off parents (so that parents could afford to
retire) or siblings (as your brothers and sisters are entitled to their
share.

A farm is somewhat different to most businesses, say a hairdressers or
retail shop where the bussiness premisses are normally not part of the
owners private and personal life. There is not the seperation between
what
is enjoyed as a personal posestion and life enhancement and what is
the
source of income.

if you are a businessman, the bank can demand security for your loan and
take your private house as security. In small businesses there is very
little separation between personal and business until you get to the
level where all the managers are employees of the company.


I know that the whole thiing may have been bought under a business
loan but
there is still the duality with a farm that does not exist in most
business
activities.

if you compare farms with businesses of similar size and turn over I
think you will find remarkable similarities. Look at pub landlords,
(whether owner or tenant) privately owned garages and similar.


--
Jim Webster

"The pasture of stupidity is unwholesome to mankind"

'Abd-ar-Rahman b. Muhammad b. Khaldun al-Hadrami'

"Jim Webster" wrote in message
...

we would basically take the capital as the money we would get if we
cashed everything in. Value of house, land, livestock, machinery, quota,
feed and fertiliser in hand.



Fair enough, but I think you need to add to the cash return of the bussiness
the lifestyle value of living on a farm.

Also care has to be made not to double count the investment return.

If you had bought your farm on a loan and a capitol deposit then repaid the
loan out of the business returns then
you either have to compare the return on capitol on the original deposit or
count the growth in value and the loan paid off as part of the return on
capitol.

Also from the lifestyle aspects. Possibly not so significant in cumbria, but
what would it cost to rent a property like your farmhouse if it was
freestanding and not part of farm?

If you start comparing different jobs I think you need to standback and look
at the lifestyle that an activity supports rather than a single metric such
as income as defined by the inland revenue.

Hamish Macbeth wrote in message
...

"Jim Webster" wrote in message
...

we would basically take the capital as the money we would get if we
cashed everything in. Value of house, land, livestock, machinery,
quota,
feed and fertiliser in hand.



Fair enough, but I think you need to add to the cash return of the
bussiness
the lifestyle value of living on a farm.

what cash value to you place on being on call 24hrs a day, living within
200yds of a slurry pit and silage pit.


Also care has to be made not to double count the investment return.

If you had bought your farm on a loan and a capitol deposit then
repaid the
loan out of the business returns then
you either have to compare the return on capitol on the original
deposit or
count the growth in value and the loan paid off as part of the return
on
capitol.

Also from the lifestyle aspects. Possibly not so significant in
cumbria, but
what would it cost to rent a property like your farmhouse if it was
freestanding and not part of farm?

Actually all you have to do is look at the council tax band which does
contain an element of deduction for being part of a farm, but this is
often not enough to drop it a band.


If you start comparing different jobs I think you need to standback
and look
at the lifestyle that an activity supports rather than a single metric
such
as income as defined by the inland revenue.

which part of the life style to you crave. Working outdoors whatever the
weather, the 24 hrs on call, no weekends off, no paid holidays, no sick
leave. No street lighting, roads poorly maintained, poor electricity
supply, poor telephone connection, the fact that if you want to go
anywhere at all there is no viable public transport and you have to have
a car.


--
Jim Webster

"The pasture of stupidity is unwholesome to mankind"

'Abd-ar-Rahman b. Muhammad b. Khaldun al-Hadrami'

"Jim Webster" wrote in message
...

..

which part of the life style to you crave. Working outdoors whatever the
weather, the 24 hrs on call, no weekends off, no paid holidays, no sick
leave. No street lighting, roads poorly maintained, poor electricity
supply, poor telephone connection, the fact that if you want to go
anywhere at all there is no viable public transport and you have to have
a car.


I don't think I implied any craving? I was just suggesting that cash income
from a farm business is probably a poor metric. To compare that with a
statistical average wage really does not produce a meaningful insight.

From this newsgroup it would appear that people given a choice of careers
have chosen farming over others which would have given holidays and sick
leave.