Livestock Capital Formation-A Preliminary Estimation

David R. Dyer
1975 unpublished
This paper presents the first quantification of a partial capital flows account to show the formation and disposition of "natural" capital in cattle production. ' The analysis suggests that roughly $5.1 billion of annual cattle capital. formation lies buried in the USDA statistical series and perhaps $2.6 billion of this goes unrecorded. A capital flows account is a vehicle for tracing how the cattle industry trades between current and future production, and it is an important tool for
more » ... g the farming sector's economic performance." This paper also illustrates the impact of a different accounting treatment of livestock capital formation on the estimate of 1973 farm income. Perspective A significant amount of presently unrecorded or confusingly classified production and utilization takes place within the farming sector. This includes both intrasectoral transfers (farmer-to-farmer transactions) and "own-account" activity (same-farm production and utilization). Production on ownaccount can be used for consumption, for further production, or for capital formation. Consumption is measured officially by the Value of Home Consumption Series. If resulting further production is marketed, its net value is measured. But production for capital formation is entirely un-| measured output. Adding measures of farm-produced capital to the present farm income accounting system would improve that system by identifying investment behavior. I n particular, if the expenses farmers incur when producing this capital are included in the current-account expense _ category, our statistical picture of the farming sector does not clearly portray the effects of today's receipts and *The views expressed are the author's and do not necessarily represent those of the U.S. Department of Agriculture. 'While the subject of this paper is restricted to cattle, the logic can be extended to include other farm-produced "natural" capital, such as hogs, sheep, home-built machinery, buildings, or equipment. This framework has been presented as an alternative or supplement to currently used farm income accounts by other authorities, once at the WAEA meetings. For detail, see [2], [4], [5], 226 expenditures on either today's or tomorrow's output. Ownaccount capital formation must be measured to identifythe trade-off between production for current account and production for building and maintaining capacity.
doi:10.22004/ag.econ.323848 fatcat:4ibo7ghh2vbalj6gdx6dgleeum