AGRICULTUEAL ECONOMICS.— COST OF 

 PRODFCTIOX OF MAIZE. 



liy li. A. Lkhfeldt, D.Sc, 



Professor of J'Jroitoiiiics, Inircrsify CoUcfjc, Johau neshurg. 



Read Juhj 17, 1!)20. 



FLumers are, naturally eiioiig']!. averse from keeping 

 accounts, so that if one is to advocate tlie somewhat compli- 

 cated business of cost-accounting- for farmers, it must be on 

 solid grounds of advantage. 



Cost-accounting* consists in finding out, as precisely as 

 may be, what it has cost to tur.i out some particular product. 

 It is a system whicdi has come to be recognised as indispensable 

 in manufacturing. A manufacturer, turning out a number 

 of diiferent products, may be making a i)rofit on his business 

 as a whole. T^nless, however, his accountant can tell him how 

 much each article has cost, he is not sure but that he may be 

 losing on some of tliem ; he cannot tell in \a hat directions it 

 would be most jjiofitable to extend his business; in fact, he 

 has no proper guide to policy — he is working in the dark. 



The same is true of fanning. The choice of crops to grow 

 is usually a matter of tradition or of guessing. The only 

 scientific guide to investment is to find out how much each 

 crop costs to produce, and compare with the selling j)] ice. Xot 

 only is this important to the individual farmer, but it is 

 desirable as a matter of public policy, for the wildest and 

 most contradictory statements are current as to the cost of 

 producing important foodstuifs, and if Government is to 

 interfere, and regulate prices, it must do so with proper 

 knowledge. 



Cost accounts in farming are subject to certain sjjecial 

 difficulties. Of these the most obvious is the variability of the 

 yield of crops from year to year. One can work out how mmdi 

 it costs to grow an acre of maize, for example, but Avhilst the 

 manufacturer knows beforehand the precise amount of produce 

 he will get in excdiange for his outlay, the farmer's estimate 

 is liable to great uncertainty. The only thing to be done is 

 1o obtain records of yield over a numbei' of years. These aie 

 very lacking in South Africa, and in any case a new country 

 is at a disadvantage in this respect; it is all the more desirable 

 to begin recording at once. Tiie agriciiltural census instituted 

 by the Union Government is an important step. 



The other difficulties in the way of cost-accounting are 

 siich as are familiar in the case of manufacturing, too. They 

 may be grouped under three heads: — 



{a) Separation of ('<ipitaj and Current Outlay. — In the 

 case of what is obviously capital expenditure, interest must be 



