COST OF PRODUCING CROPS 51 



cost of producing oats in 1919 was 324 per cent of $8, or $25.92. 

 With an average yield of thirty-three bushels per acre, the cost 

 per bushel was about 78 cents on a December 1st farm basis. 



Manifestly, the weak point in the ratio method of determining 

 cost of producing crops is the character of the basic period. Did 

 the crops actually sell during the basic ten-year period for cost of 

 production? Manifestly, in some years they sold for less, and in 

 some years they sold for more. As an average of the entire ten- 

 year period, they must have sold for at least cost of production, 

 or farmers would gradually have reduced their acreage of the par- 

 ticular crop under consideration, or else gone out of business en- 

 tirely. As a matter of fact, in the ten-year period under con- 

 sideration, 1897-1906, land values were constantly advancing. It 

 would seem, on the whole that this particular ten-year period is a 

 fair one to use, and that as an average of these ten years crops 

 sold for approximately cost of production, no more, no less. 



It is always conceivable that over long periods of time there 

 might have occurred changes in supply or demand conditions that 

 would make the basic ten-year period altogether false for the pur- 

 pose of comparison. For example, in the case of oats, it is con- 

 ceivable that tractors, trucks and automobiles might so displace 

 horses as to make the city demand for oats decidedly less than 

 during the ten-year period extending from 1897 to 1906. The 

 oats acreage might therefore be considerably decreased, and oats 

 be produced in large quantities only in those sections especially 

 adapted to growing oats. It is conceivable, therefore, that the 

 ratio method may possibly give the cost of oats production at 

 rather too high a figure, a figure impossible of realization, one 

 year with another. In the case of standard crops, however, there 

 is remarkably little change in either supply conditions or demand 

 conditions. Methods of producing corn are pretty well standard- 

 ized. The market for corn is almost equally stable. It is be- 

 lieved that the ratio method of determining cost of corn production 

 will be approximately accurate for the next fifty years. 



