COST OP PRODUCTION 219 



Such, is the comprehensive idea of cost of production, 

 but, as it stands, it is of little direct avail for the purposes 

 of making our estimates. It will be well to remember, 

 however, that such is the idea with which we start. 

 These various efforts and sacrifices will find a suitable 

 measure in the money which has to be paid for them, 

 and this will constitute the money cost of production, or 

 the expenses of production. These expenses will differ 

 on different farms, some farmers being able to produce 

 at a lower cost per unit than others. Account must be 

 taken of this fact, and in the case of a commodity such 

 as wheat, which obeys the law of decreasing returns, the 

 expenses of production are best estimated with reference 

 to the " margin of production," for it is here that the 

 amount which can be produced is determined. For our 

 purposes, however, the margin is not at present situated 

 among vastly inferior soils, where great differences in 

 yield are noticeable. It is methods of production which 

 bring about such widely differing yields more than 

 differences in soil fertility, because with a relatively 

 small area of production there are still large tracts of 

 fertile land open to the farmer. With sufficient regard 

 for these difficulties an attempt will be made in the 

 succeeding section to summarise the chief factors which 

 enter into the cost of production of wheat in New 

 Zealand. Actual statistics so far as they are available 

 will be used for the purpose of setting .out some fairly 

 reliable estimate. Such an estimate will doubtless be 

 open to correction, but it is given after a careful 

 observation of the wheat industry for some time, and 

 as a result of an investigation into the actual conditions. 

 The recent extraordinary conditions created by the 

 general rise in prices are not to be considered as 

 relevant to the discussion, only pre-war conditions being 

 considered. 



