CHAPTER XII 



THE costs of production of any commodity, by influencing the 

 amount of the supplies available at a given price, have an 

 indirect bearing upon movements in the market price. 1 In 

 the preceding chapters the questions relating to the resources 

 available now and in the future for the production of animal food- 

 stuffs throughout the world have been considered. The general 

 conclusion has been that the exportable surplus of such foodstuffs 

 from the principal producing areas is not likely to increase as rapidly 

 in the near future as it has done in the past, owing to the limited 

 extent of accessible productive land, and to the competition exer- 

 cised by food cereals, fibre crops and forest reserves for the use of 

 such land. With a view to elucidating questions of the cost price 

 of animal foodstufts, it is now proposed to survey the conditions 

 of supply, both present and future, with especial reference to the 

 costs of production. 



Two features in particular seem likely to predominate in the 

 conditions of supply in the near future. In the first place, tropical 

 highlands will probably furnish meat and meat-products, and 

 tropical lowlands oil-bearing nuts and seeds, on a much greater 

 scale than hitherto ; and in the second place, intensive methods of 

 production are likely to gain ground in all the more advanced 

 countries, whether of the industrial or of the purely agricultural 

 type. The first of these will tend to lower the prices of animal 

 foodstuffs upon the world's markets ; the second will tend to in- 

 crease them for a time owing to the general increased costs of pro- 

 duction. Though intensive methods may lead to a greater output 

 per acre, they do not necessarily mean a cheaper cost of production 

 per unit, initially, at any rate, as experience has shown. 2 



In order to maintain the rate of expansion in the supplies of 

 animal foodstuffs current during the last thirty years, it would be 



1 Demand is, of course, an equal factor in the determination of price. The 

 discussion of questions relating to demand is reserved for Part II., below, 

 dealing with consumption. 



2 The industry of beef-production, which is conducted under the extensive 

 (or ranching) , and also under intensive methods, is a case in point that shows 

 clearly how the latter methods involve increased costs of production. The 

 charges for land, practically non-existent under the ranching system, become 

 heavy as a rule under the intensive system. The same is true of the charges 

 for buildings and equipment. Very little labour is required under the former 

 system, and a great deal under the latter for successful management. Con- 

 centrated feedstuffs also have to be grown or purchased when a smaller area 

 is used on the intensive system. Compare U.S. Dept. Agric. Office of Sec. 

 Report, 109, p. 165, " The increasing cost of production may also be regarded 

 as a factor " (in the rise in meat prices). 



