12 COSTS OF PRODUCING SUGAR BEETS
forms of capital, whether actually paid by the operator or not, were
segregated from the other costs.
With respect to such capital charges per acre as relate to use of
land on which sugar beets are grown, Table 37, page 48, presents
three sets of data:
(1) The first column is on the basis of interest at 6 per cent
on the market value of the land used.
(2) The second column is on the basis of interest at the local
bony mortgage rates on the market value of the land
used.
(3) The third column is on the basis of the annual net cash
rental of the land used.
Lt will be observed from this table that in Idaho interest at 6 per
cent on the market value of the land used shows the lowest land charge
per acre, while interest at the average farm mortgage rate shows the
highest land charge per acre. For the United States as a whole,
however, the cash-rental method gives a result approximately equal
to 6 per cent on the estimated market value of the land
The capital charges as shown in Tables 8 to 12, inclusive, pages 23
to 28, and elsewhere in this report, are based on the net cash-rental
value of the land per acre, either actual or as stated by the owners
or growers and checked by the agents of the commission, and on 6
per cent interest on the other capital employed in the production of
sugar beets.
The cash-rental method of calculating capital charges on land is
considered preferable to that of basing them on the market value of
the land at 5.5 or 6 per cent interest or at the prevailing mortgage
rate. The cash rental appears to be a nearer approximation to a
fair charge for the use of the land than is obtained by the other
methods because it includes little, if any, of the speculative or home-
site value and represents more nearly than any other charge the
present economic rent of land for agricultural purposes.?
On farms actually rented for cash the cash rental charge per acre
is the actual rental paid the landlord less the taxes and the actual
cost of maintaining fences and drains, where these costs were paid
by the landlord. On farms that were owned or share rented the
growers stated the net annual cash rental per acre that owners would
be willing to take and that tenants would be willing to pay for the
sugar-beet land.
For the three years 1921 to 1923 the average cash rental per acre
for all farms investigated in the United States was $13.43. Oa the
other hand, a 6 per cent charge on $222, the three-year average
market value of land, is $13.32, or only 11 cents less per acre than the
annual cash rental. This may be viewed in another way; if the
annual net cash rental is capitalized at 6 per cent, the resulting value
of the land is $224 as compared with the farmer's stated value of
$222. For the United States as a whole, therefore, it makes practi-
cally no difference whether the charge for the use of land is on the
basis of the net cash rental or a 6 per cent interest charge on the
market value of the land.
Wheat and Wheat Products, Report of the U. 8, Tarif Commission to the President of the United
States, 1924, pp. 7 to 10.
