CHAPTER XVI 

 COST OF PRODUCTION AND FARM ACCOUNTING 



IN manufacturing, cost of production is one of the factors 

 claiming the consideration of the manager. In this field, certain 

 standardized units of costs have been worked out, and cost account- 

 ing systems fairly well developed. An era of " scientific manage- 

 ment" has been introduced. But in the field of agriculture rare 

 indeed has been the farmer who kept any cost accounts or had any 

 definite idea of the cost of producing his crops. In the language 

 of political economy the farmer is the manager or organizer in 

 charge of the three factors of production lanol, labor, and capital. 

 He seeks that particular organization of the th'ree factors that will 

 give him the highest net return. Considering the possible com- 

 bination of land, labor, and capital that can be made by a farmer, 

 ranging all the way from an intensive agriculture to an extensive 

 agriculture, it is obvious that knowledge of cost of production is a 

 very vital factor in success. This is illustrated by the introduction 

 of the Babcock milk test some years ago, which made possible a 

 cost accounting against each dairy cow. The simple apparatus 

 enabled many a farmer to weed out of his herd cows which were 

 not earning their board, although they were giving a large quantity 

 of milk. This is a hint, at least, that some system of cost accounting 

 is needed to apply to the various factors of production. It is per- 

 haps correct to say that there are now four factors of production 

 land, labor, capital and management or organizing ability. 



The Federal Department of Agriculture and the State Experi- 

 ment Stations have in recent years done a great deal in meeting 

 the need for information on the cost of 'producing crops, and in 

 devising workable schemes of cost accounting for farmers. 



The most noteworthy study in costs of producing crops was 

 that undertaken jointly by the Federal Department of Agriculture 

 and the Agricultural Experiment Station of Minnesota. This 

 study began in 1902, the aim being to 'continue it over five cycles 

 to four years each. 1 This continuous detailed study of actual 



1 The Cost of Farm Products: Hays, W. M., and Parker, E. C., United 

 States Department of Agriculture, Bureau of Statistics, Bui. 48, and Minne- 

 sota Experiment Station, Bui. 97, 1906. 



The Cost of Producing Minnesota Farm Products: Cooper, Thomas and 

 Parker, E. C., United States Department of Agriculture, Bureau of Statistics, 

 Bui. 73, and Minnesota Experiment Station, Bui. 117, 1910. 



The Cost of Minnesota Dairy Products : Cooper, Thomas, United States 

 250 



