In Germany (1907) the gradation was not so rapid; while in Denmark (1919) the largest proportion of arable was on the smallest holdings. But in the conditions of Britain, where there is a more free choice between arable and grass than in Denmark, the tendency of the smaller holdings toward grass farming is marked.

110. The intensity of cultivation must also be taken into account. Small holdings increase the amount of labour per acre; they, therefore, diminish the amount of land per person employed. It is agreed that the intensity of work is very great on holdings worked by family labour, under the incentive given by a position of independence. But we have not evidence to show the direct effect of further subdivision of the land on the national food product. Figures have been supplied to show that the gross product per acre is higher on small than on large holdings; and the effect of these figures would indeed be to show that the smaller a holding is the better. But the gross product is inflated by all the produce which has to be bought for the holding; and the small holding is less self-contained than the large one; a great deal of double counting is involved in records of gross produce, since the output of some holdings is credited with, for instance, feeding stuffs produced on, and already credited to other holdings. It is only by details of net produce that the question can be decided whether the substitution of one form of holding for another increases the whole national output of food. Sufficient evidence on this point is not available. Farming is carried on in this country on an arrangement of holdings which has varied little in the past 50 years; the small holder has kept the same relative position over all that period. As has been shown he farms with a very great degree of success; and there are certain products for which small holdings are specially suited. But if the question is whether comparatively large holdings should be divided into smaller ones, evidence is not available to show that there will be a direct increase of production by this method. This consideration does not, because it cannot, decide the question either way. If the suggestion were one, not of further sub-division, but of further consolidation of holdings in the interests of national food production, the question would be equally difficult to decide. The Acland Committee on Afforestation* (p. 29) refers to an Enquiry conducted by an official of the Ministry into the returns obtained from small holdings in a district of Wales before the war. The total cash family earnings, making allowance for the value of home produce consumed by the family, varied from 13s. 6d. to 21s. 6d. per week. The wage of a labourer alone in the same district at the same date was between 17s. and 19s. per week. This instance shows the difficulty of giving an opinion on the direct effect of small holdings on the net product of labour. In Denmark, the returns of the

* Reconstruction Committee: Forestry Sub-Committee. First Report (Cd. 8881/18).

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Agricultural Economic Bureau show that between 1918 and 1921 the profit per acre was usually highest on the smallest holdings, though the profit on capital was on the whole least. There are larger and smaller establishments in all industries, and some advantages in each, as well as the general advantage to the industry of variety of method.

111. The grounds on which the small-holdings policy can clearly be based are two. In the first place, it is a policy for maintaining rural population; it does this by satisfying an ambition and thereby impeding the rural exodus. In the second place, it is in the interests of the efficiency of farming as a whole that qualified labourers should be enabled to start on their own account, and to rise into the ranks of farmers. Agriculture, it may be repeated, is an industry to which this latter idea is so specially applicable that an effective small-holdings policy is a matter of social justice.

D.--Co-operation.

112. The organisation of farmers for the purpose of joint purchase of requirements and sale of products is a movement that is now proceeding throughout the world, and it occupies the largest place in current discussions of agricultural economics. It would be impossible to date the absolute beginning of this movement. It was connected in Germany with the foundation of the Raiffeisen societies, and these go back to 1862. The impulse toward a completer organisation of farmers has a history of about 40 years, and European countries have in that period been working out the application of the idea to their own conditions. The more distributed tenure of their land caused the advantages of organisation to be earlier realised, and it also gave a stronger social basis to build on. The report of the Irish Recess Committee of 1896 brought the matter prominently before agriculturists in Britain, and the conditions of Ireland were those to which it was most immediately and successfully applied. But British farmers as a whole had been advised by the Royal Commission of 1894 to improve their position by combination. In spite of a number of deputations to Denmark, which has become a demonstration plot for this purpose, organisation in Britain has been very slow, and our evidence shows that no great impression has yet been made on British farmers as a whole by the history of other countries, or of Ireland. Yet anyone who turns to the pages of the monthly Journal of the International Institute of Agriculture can see how, in countries of very diverse conditions, the impulse toward combination is creating a new outlook, and new aspects of farming policy. Apart from what may be considered as matter of example in the older countries which are on balance importers of food, the effect of organisation in new countries on their power of export is of more importance to this country than to any other, and its farmers can least of all afford to stand outside a defensive organisation of their own.

113. The fact that organisation of farmers is given the name of co-operation is apt to create the idea that organisation in agriculture is something different in principle from organisation in other industries, and that its type is the consumer's distributive movement. Even in regard to farmers' purchasing societies, however, the significance is not the same, for requirements bought on the better terms made possible by association are to be used for profit in the business of farming; and it is because of its business aspect that association of farmers even for purchase is rather to be compared with dealing on a large scale in other industries. Sale societies for the disposal of produce, on the other hand, are not of the industrial co-operative type, since farmers are not selling to each other for a rebate in price, but to the market for a profit. There is much similarity between agricultural sale societies and the selling agencies of other industries, especially when these take the form of Cartels, which do not make a profit on their own capital, but account for the whole surplus to their members. In other words, it should be realised that agriculture has to come into a general industrial movement, which has gone far in other industries, and whose significance is much wider than merely the manner in which the gains of association are distributed. The purpose of sale associations is not only to increase bargaining power, and lessen intermediate costs, but also to grade and standardise production, and to furnish a better outlook on market tendencies than their individual members can obtain. The farmer can give more of his time to farming if he can rely on an association to do his marketing. The agricultural co-operative movement is to be compared, as a matter of its general economy and significance, to what has been happening in iron and steel rather than to what has been happening in the distribution of household requirements. The manner in which the gains of organisation are distributed, provided they go to the farmers, is less important than the fact of organisation. The recent Reports of the Ministry of Reconstruction on other British industries after the war show the same desire to regulate production, to prevent panic" selling, to communicate information, to bring producers nearer their market, and to grade qualities, which is at least the business aim of agricultural co-operation.

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114. It is true that in some countries the business aims of the movement have not been the whole of it. Raiffeisen aimed at societies which included in their objects social and moral improvement of the villages. In Belgium, organisation is closely related to religious work, which causes welfare in a wide sense to be part of the activity of the local associations and gilds. In Denmark, there is the unique feature of large co-operative enterprises founded without share capital, because the agreement entered into between the associated farmers to deal exclusively with their organisation, has been itself an adequate basis on which to borrow capital from banks; in that country a certain type of education permeates agricultural life, and creates.

special possibilities for organised action. Yet the centre of the whole movement is business; its adoption anywhere should be urged on this ground; it will depend on national character and conditions what else it will lead to; and the British farmer is somewhat averse to being "improved." Exclusive supply agreements, even when described as loyalty to an organisation, are very much of a business matter; they exclude somebody or something else; they are competitive with some other method; their justification is simply their economy.

115. Besides their directly commercial results in enabling both purchase and sale to take place on the better terms obtained by combined action, co-operative agricultural societies have had important effects on production through the improvement of standards of quality. This is a very important aspect of their work. Association has created a system of control and inspection and has specialised in various ways the supervision of qualities. In respect of purchasing societies, it has been in all countries one of their primary motives to free the farmer from fraud, adulteration, and misrepresentation, especially as regards feeding stuffs, fertilisers and seeds. Thus it is reported that of 31,700 samples tested by the German control societies in 1911, 12,600 were found inferior. We have had evidence to show the need in this country for a similar form of control. As regards sale societies, these react on the standards of individual production, since they are in a position to point out to the farmers where their supplies fall short of the standard of quality on which the reputation of the whole organisation depends. It was thus that the Danish farmer was shown how to keep more cows to the acre, and to get a better price for milk. In Germany, as contrasted with the isolated production of former times, the tendency of co-operative action in dairying has been to improve and increase the milk production, and to exercise a remarkable influence upon the breeding and maintenance of stock, especially in small-holding districts."* The important discovery of the method of pasteurisation was the direct result of co-operative dairying in Denmark, and has spread to other countries. Then followed in Denmark, Holland and Ireland, the adoption of the national brands, which guarantee the quality of exported butter and bacon. Through the institution of the well-known system of the "Controls," the farmers can have the services of the visiting inspectors of their organisations, to test their methods of production and of costing, and to show where apparent savings are not in the end real savings. By all the reactions on production of co-operative work of this kind, the Danish peasants were enabled to overtake and surpass the standards of quality till then only reached on the large and well-equipped estates. And other countries have followed the example.

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116. It does not appear, from the example of Denmark, that the advantages of co-operation have been such as to commend

* Cd. 6626, p. xxiii.

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it only, or even predominantly, to "small" holders. The enquiry made in that country before the war showed the following percentage of holdings of different sizes which were associated with co-operative dairies and bacon factories :-*

117. The extent and form of co-operative organisation has also to be considered in relation to market conditions. Its great development in Denmark has often been attributed to the fact that her produce is, to an unusual degree, sold abroad. In this respect, her position is certainly very different from that of Britain, Germany, France, and Belgium. These are on balance food importers; but the food imports of Denmark are less than ten per cent. of all her imports, while the food exports are about 80 per cent. of all her exports. For a foreign market, animal produce must be bulked, graded, and preserved; while if there is a large home market, more of it can be sold fresh. There is not in Denmark a sufficient home market for fresh produce; so that methods of working up her produce, and grading it for export, must have had a great place in her agricultural development. But this does not explain co-operation; since the necessary organisation could have been purely commercial and mercantile. The essence of co-operative working is that it obtains for the farmers themselves the benefits of organisation, so that its gains are applied to an increase of productivity. Granting the fact that Denmark is to an unusual degree dependent on agricultural export, it remains true that co-operation was a farmers' movement made possible through a certain outlook and spirit of association, apart from which large exporting merchants, home or foreign, might have absorbed profits which now accrue to the land itself.

118. The fact that in some countries the market for produce is a home market does not lessen the possibility of co-operative action, but it may very well affect the type of produce to which it is most applicable. A near market is in itself better than a foreign one. But in a large home market, a greater proportion of the farmers' produce can be sold fresh; for fresh produce there is also a greater opportunity for local and individual selling; so that a co-operative organisation cannot be based, for some products, on such exclusive conditions as apply when the produce has to be worked up for export. But it is easy to except local sales for direct consumption; most agricultural produce is required for

*

Faber Co-operation in Danish Agriculture, pp. 42, 65.