METHODS OF STUDYING AGRICULTURAL QUESTIONS 411 



costs as a basis of valuation is that it balances the account and 

 carries any loss or gain over to the next account, thus blending 

 the profits of two or more enterprises, which is contrary to 

 the aim of cost accounts, and reduces the system more nearly 

 to the basis of simple bookkeeping which shows the profit of 

 the business as a whole. 



Valuation of ensilage. Ensilage is a feed which rarely enters 

 into commerce. True, it is sometimes sold at a sale and farmers 

 have sometimes sold ensilage by the load to their neighbors, but 

 in general ensilage is made for the exclusive purpose of feeding 

 it on the farm. The question then arises, How can market 

 prices be brought to bear in placing a value upon the ensilage? 

 One method which can be used successfully is to start with the 

 price of corn on the local market, subtract the cost of husking 

 the corn and hauling it to market. The corn value thus obtained 

 plus the value of the dry stalks in the field may be the basis of 

 valuing the standing corn in the field at the time when it is cut 

 for ensilage. To this should be added the cost of harvesting 

 the corn and putting it in the silo. The storage costs, including 

 interest and depreciation upon the silo and shrinkage, must 

 be added in order to have a complete basis of valuing the 

 ensilage. This may be called an opportunity cost, but differs 

 from actual cost in that it leaves the same amount of profit 

 in the corn account as would have been secured by producing 

 corn for the market. It also gives a rational basis for charging 

 the ensilage to the dairy industry, since the cows must be able 

 to pay at least this much for the ensilage in order that the 

 farmer can afford to produce ensilage instead of market corn. 



Valuation of hay. The valuation of the hay in the mow 

 or in the stack presents a series of problems. Should the farmer 

 use cost of production or the market price as the basis of valuing 

 the hay? It is a well-recognized fact that if all the farmers in a 

 given dairy district should decide to sell their clover hay instead 

 of feeding it to cows, they would find the market price dropping 

 to a very much lower level than during the time when they were 

 feeding most of their hay, some of them selling and some of them 

 buying hay. In the district where some hay must be shipped 



