1) Is a productive farm business always the most essential aim of a farmer? 2) What three reasons for inefficient capital use on farms were mentioned in the
text?
3) At what age do farmers typically reach an optimum size of their business? Why?
4) What does the problem of transferring a business from one generation to the next
consist in?

Some of the inefficiency in the use of capital is believed to be due to more basic
troubles.
Some farmers may not be capable of using additional capital profitably. Others may
not be interested in having a more productive farm business. Their aims in life provide strong enough disincentives to farm expansion. In such cases additional capital is not necessary.
Still another reason for the inefficient use of capital has been found to be associated
with the life cycle of the farm family. Traditionally, farms had to be financed every
generation. The young man to start farming had to begin with a rather small operation. His business was supposed to grow as he was able to reinvest his returns and borrow additional funds. Often the demands of his family for living expenditures were too high to make any profitable investment in his business. After his children had grown up, it became
possible for his farm to approach an optimum size. It continued to grow for a period but decline was inevitable due to increasing age of the operator.
Much attention has been given to the problem of transferring farms from one
generation to the next. Often there existed several heirs, which resulted in fragmenting efficient farm businesses. Even if the land was passed to a son, he had to acquire the necessary capital in order to buy livestock and provide for the living of his family. As a result, no considerable investment in farm business was made. In other cases the young farmer spent several years buying out other heirs.
There is great difference among farms in solving the transfer problem. The fact
remains, however, that at any time, some farms are on their way up and some on the way down. Economists believe capital productivity in agriculture to depend on this fact.