COST OF MILK PRODUCTION 413 



the exact distribution of the expenses. In some instances the credit for 

 manure is much lower than the actual value on most farms, when proper 

 care is taken of this valuable by-product. (441) 



668. Formulas for cost of milk production. Since it is no easy task 

 to convert such data as presented in the preceding table from one set of 

 prices to the prices current at another time, various simple formulas have 

 been worked out for estimating the cost of milk production. In these 

 formulas all the costs are reduced to terms of feed and labor. Therefore, 

 by taking the current prices for feeds and labor, a more or less approxi- 

 mate estimate of the cost of producing milk can be made readily at any 

 time. One of the formulas most widely used is that of Pearson, 7 which is 

 based on an investigation of the cost of producing 5,683,992 Ibs. of 

 milk on Illinois farms in the Chicago market milk zone. According to 

 this formula, the approximate annual cost of producing 100 Ibs. of milk 

 in this district is equal to the current prices for 44 Ibs. concentrates, 

 188 Ibs. silage, 50 Ibs. hay, 39 Ibs. other dry roughage, and 2.42 hours of 

 man labor. In using these items as a basis for calculating the cost of 

 producing milk, it is assumed that as the prices of feeds and labor rise 

 or fall the other items of expense and the credit items will fluctuate 

 more or less in the same proportion. Tho the costs of all the factors 

 probably never change in exact unison, they usually keep close enough 

 together for purposes of comparison. 



To illustrate the method of using this formula, let us assume that the 

 cost of a good concentrate mixture for milk production is $30 a ton, of 

 silage $5 a ton, of hay $15 a ton, and of other dry roughage $8 a ton. 

 Farm labor costs about 20 cents an hour, including board. At these 

 prices the average yearly cost of producing milk will be about $2.14 per 

 100 Ibs., according to this formula. 



In the following table the original Pearson formula and a simplified 

 formula worked out later by him are compared with some of the other 

 formulas which have been proposed to meet conditions in various 

 districts. 8 



Comparison of formulas for cost of milk production 



Pearson Modified Warren Food Indiana Michigan 



Factors in formula (111.) Pearson (N. Y.) Adminis- 



(111.) tration 



Concentrates, Ibs 44.00 44.00 33.80 33.50 28.9 23.50 



Hay, Ibs 50.00 110.00 43.30 45.30 38.1 34.90 



Silage, Ibs 188.00 100.50 102.60 104.8 110.40 



Roughage, Ibs 39.00 10.80 11.50 9.9 15.20 



Labor, hours 2.42 3.00 3.02 2.88 2.4 2.11 



Corrective factor, per ct. . 25 23.7 45.8 



It will be noted that in some of these formulas, as in that of "Warren, a 

 "corrective factor" is given. This means that the cost of the given 

 amounts of feed and labor must be increased by the percentage indicated 



T I11. Bui. 216. *King, The Price of Milk, p. 121. 



