By M. Buckett (Auth.)
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Additional resources for An Introduction to Farm Organisation & Management
It is very m u c h easier to c o n t e m p l a t e b o r r o w i n g m o n e y t o invest in such things as buildings a n d m a c h i n e r y w h e n interest rates are low, b u t unless t h e m o n e y is b o r r o w e d at a fixed rate of interest t h e interest payable m a y increase substantially later. T h e f a r m e r m u s t test t h e sensitivity of his p l a n s t o such possible rises. In Britain a n d s o m e o t h e r c o u n t r i e s t h e effective rate of interest is r e d u c e d because it can b e e n t e r e d i n t o a c c o u n t s as a cost a n d in t u r n attract tax relief.
14a. A s s u m e t h a t t h e energy r e q u i r e d is r e p r e s e n t e d by t h e p r o d u c t line, a n d t h a t this energy can b e supplied by 100 kg of barley or 93 kg of m a i z e . ) F r o m t i m e to t i m e t h e price of barley relative t o t h a t of m a i z e will change. If t h e price of energy from m a i z e is c h e a p e r p e r u n i t t h a n from barley t h e n it pays t o use maize. 93 kg m a i z e equals t h a t of 1 kg barley a n d a price ratio t a n g e n t c o n s t r u c t e d from this r e l a t i o n s h i p is a p p l i e d t o Fig.
T h i s m u s t b e c o m p a r e d w i t h t h e price b u t t e r is p r o b a b l y going to sell at in G e r m a n y . T h e i n t e r v e n t i o n price in G e r m a n y , as in Britain, is 3500 E C U / t . 46 E C U t h e n t h e r e is a n influence for b u t t e r to b e sold in G e r m a n y at 7609 D M / t , o r 1432 D M m o r e t h a n t h e price o b t a i n e d in Britain. O n t h i s basis it w o u l d p a y t h e British t o sell b u t t e r t o G e r m a n y a n d n o t t h e reverse way r o u n d .