412 AGRICULTURAL ECONOMICS 



in to maintain the dairy herds, it is obvious that the local market 

 price of hay, plus the cost of hauling the hay from the market 

 to the farm, is the basis which should be used in calculating 

 whether or not it pays to grow hay, also the basis for calculating 

 whether or not to increase or decrease the number of cattle kept. 

 This then would seem to be the correct basis of valuation of hay 

 on hand at the time of taking the inventory. On the other 

 hand, if the farmer's condition is entirely different if he is 

 raising hay for the market and finding it profitable to make 

 demand for only a part of the hay in the dairy he may use 

 market price minus the cost of putting the hay on the market 

 as a basis of valuation and as a basis of calculating whether to 

 grow more hay or keep more cattle. For many farmers cost 

 of production may prove a practical basis for valuing clover 

 hay. Taking the country as a whole, clover hay is a farm feed 

 and has little market except for cattle and sheep feed. It is 

 usually produced as an adjunct to the livestock industry and 

 yet it is a soil builder as well as a feed for livestock. The other 

 crops which grow in rotation with clover benefit greatly by its 

 presence in the rotation. The livestock furnish the avenue 

 through which to market the hay. For these reasons it would 

 seem correct to credit the fields and charge the cows with the 

 specific production cost of the clover hay and return the resulting 

 fertility to the field without charge to the field or credit to the 

 cows. Where this view is accepted, clover hay will be inven- 

 toried at cost of production. 



Valuation of livestock. In appraising the dairy herd and 

 taking the annual inventory a value should be placed upon 

 each animal in the herd. If a cow has been purchased recently 

 it is proper to inventory her at the cost price, because this is 

 presumably the market price. If a cow has been on the farm for 

 several years there may be some question regarding the price 

 at which she should be inventoried. Obviously the price for 

 which she would sell upon the date of the inventory seems to be 

 a fair valuation, and if the whole purpose of the inventory were 

 to ascertain the worth of all the farmer's assets, this would be 

 the correct basis of valuation. 



