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. Repayment Ability .~ ,.,? Cost of production studies, in wh,ich all phases and operations of the ~~1 farm enterprise are analyzed to determine the labor requirements and cost e'l items including seed, fuel, sacks, depreciation, etc., have been made by c..) this and other agencies to determine the farmer's net income and his abili'o/ C) to repay the costs of construction for irrigatim purposes. Such analyses require the. expenditure of much time and effort; moreover, wide variations occur in reported results. The variations and discrepancies in cost of production methals have emphasized the need for a more concise yet relative~ accurate method for determining repayment ability. It is well recognized that while a farmer or landowner is often unable to furnish accur~te records as to the innumerable items of expense which enter into the cost of his enterprise, he is cognizant of that which con- stitutes an equitable distribution of the farm income between the farm operator ann the land oWner. Evidence of this knowledge is clearly dem- onstrated in land rental contracts specifying the portion of farm returns which are received by the land OwTIer as income from the land. The income- from-land methed of detormining rep~vment ability is based' on the premise that over a long period of time, under specific conditions, by means of trial and errer, an equitable division of the farm income has been estab- lished between the land owner and the farm operator. A common rental agree~ ment, and one adaptable to this repayment analysis, is one in which the owner furnishes the land and improvements, pays the taxes, water charges, and insurance on the buildings, and in return receives a stipulated portion of the gross crop returns. utilizing the established rental rates fer thio type of an agreement in any specific region, the farm owner r S income can be calculated in a relatively simple mann8r. On new land, repayment ability may be c'etermined by deducting frem the ovmer '8 stare of the anticipated gross crc-p incC'me, interest on investment, taxes un land and impr"wements, insu:'ance on farm builnings, depreciation and maintenance on permanent farm improvements and an allowance for farm management. On supplemental water project::; such as the Conejos division, intere8t on the increased investment in lane' development and farm builnings ann the resulting increased expenses are neducted from the larn owner's share of the increased gross crop income. In orner to obtain an equitable rlivision of the fnrm income, rental agreements are based upon the type of crops groWn and the relative contri- bution of both parties. There are many considerations influencing leasing ,practices',relative to particular crops and areas. However, there are regu- larities in the terms of agreement ~hau reduce~ to a common basis. The following fractions, representing the owner's share of the gross crop incrnB, are those in general use in the Conejos area wren the owner furnishes land and improvements and pays the taxes, water charges, ann insurance on the builoings, one-half of the alfalfa and other hays; one-third of the small grains, field peas, nry beans ann tame pasture; ann one-fourth of the pota- toes, sugar beets and truck. The remaining fractions, representing the renter's share of the gross crop income, cover other costs of proc'uction which include' cash outlays for hired labor; marketing containers; equipment repairs; seed, feed, materials ~ 4