craig k harris
department of sociology
michigan state university
429b berkey hall
east lansing michigan 48824-1111
> From: Mary Hendrickson[SMTP:email@example.com]
> Sent: Monday 7 September 1998 4:59 PM
> To: SANET
> Subject: Opportunity costs, profit and small farms
> Hi all,
> The comments that Greg, Alex and John have made about lower debt loads and
> opportunity costs are right on target. While I now tend to think like a
> sociologist my early BSing was in agribusiness and before that my swine
> and sheep FFA enterprise record-keeping. A Russian economist, Chaynov,
> wrote about "peasant" economics at the turn of the century and what he
> said makes sense. For most smaller farms -- at least those using operator
> or family labor -- the GOAL of the business is to reproduce itself, i.e.
> to continue on to the next generation.. Thus, these operators do not
> separate out "profit" and wages (or opportunity costs) but rather consider
> net return after paying actual expenses. This is what keeps the farm
> going until the next generation (and keeps debt loads low etc). This is
> true for most small, family-owned and operated businesses. Thus the
> household's goal is not the
> most profit, but rather to keep farming, or stay in the resturant business
> or something else. Thus, wages and profit are considered the same thing.
> As Bill Heffernan likes to say, returns to management and labor go to the
> same place in a
> family business, while in a corporation like Tyson they are separate.
> Moreover, because of the differing amounts of labor available at different
> cycles of the family farm, some households choose enterprises that don't
> look like
> money makers but might keep children busy, reduce household costs or
> small amounts of income. Those enterprises then need to be discontinued
> once that
> labor is no longer available. In sum, understanding profit cannot be
> separated from
> household decision-making which cannot be separated from intergenerational
> Mary Hendrickson, Ph.D.
> Department of Rural Sociology
> University of Missouri
> Columbia, MO 65211
> Tele: 573-882-7463
> Fax: 573-882-1473
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