58 AGRICULTURAL PRICES 



As an example of a more complex application of the ratio 

 method, assume that after thoro investigation by the farm manage- 

 ment people, it is found that on typical farms 70 per cent of the 

 cost of producing hogs is represented by corn, 5 per cent by tank- 

 age, 3 per cent by oats, 3 per cent by pasture, 2 per cent by mid- 

 dlings, 6 per cent by man labor, and 11 per cent by miscellaneous 

 items, such as risk, interest, etc., all of which vary in about the 

 same ratio as the other items already enumerated. Spreading the 

 11 per cent of miscellaneous items over the other items, we find that 

 of the cost of producing hogs, 78 per cent is represented by corn, 

 3 per cent by oats, 6 per cent by tankage, 4 per cent by pasture, 

 2 per cent by middlings, and 7 per cent by man labor. Now, as 

 an average of the ten-year period, 1907 to 1916, the value in the 

 month of January, at Chicago, was 59.9 cents for corn and 1-3. 4* 

 cents for oats. The value of middlings on a Milwaukee basis was 

 $22.77 per ton. The value of tankage (this is a rough estimate) 

 was $46 per ton ; the value of pasture land, $66 per acre, and the 

 value of an hour of man labor 14.6 cents. Hogs averaged $7 per 

 hundredweight. 



According to the ratio theory, this ten-year average price of 

 $7 per hundredweight for hogs must represent approximately cost 

 of production. Seventy-eight per cent of $7 gives $5.46 as the 

 share of corn in the production cost, and in like manner 21 cents 

 is the value of the oats, 42 cents the value of the tankage, 28 cents 

 the value of the pasture, 14 cents the value of the middlings, and 

 49 cents the value of the man labor. With corn at 59.9 cents a 

 bushel, as it was during this ten-year period, and other feeds at 

 prices as mentioned in the foregoing, it is obvious that it required, 

 to equal one hundred pounds of hog weight, the value of 9.1 bushels 

 of corn, one-half bushel of oats, one-two hundred and fiftieth of 

 the value of an acre of ordinary rough pasture land, twelve pounds 

 of middlings, eighteen pounds of tankage, and 3.4 hours of man 

 labor. In the specific month of January, 1907, corn was worth 

 41.6 cents; oats, 35.4 cents; middlings, $18.37; ordinary rough 

 pasture land, $51 per acre; tankage, $40 a ton, and man labor, 13 

 cents an hour. Nine bushels of corn at 41.6 cents gives $3.78; half 

 a bushel of oats at 35.4 cents gives 18 cents ; twelve pounds of mid- 

 dlings at $18.37 per ton gives 10 cents ; one-two hundred and fifti- 

 eth of the value of an acre of ordinary pasture land, at $51 per 

 acre, gives 20 cents; eighteen pounds of tankage at $40 per ton 

 gives 36 cents, and 3.4 hours of man labor at 13 cents gives 44 

 cents. Adding, we get $5.06 as the cost of producing hogs in 

 January, 1907. In January, 1908, with corn at 58.5 cents per 



