APPENDIX 391 



by weather conditions that livestock costs in different locali- 

 ties would be greatly influenced by crop failures, if cost price 

 were used. Cost of marketing is not at all uniform through- 

 out a state, county or even smaller area. The cash market 

 price is uniform throughout a very large area. Accordingly, 

 a charge of market price to livestock for feed consumed affords 

 a uniform element of cost in livestock of a given class. A 

 comparison of other costs of producing the livestock would 

 then tend to indicate to some extent the degree of efficiency 

 in management. 



Of course, it may be said against the market price, in this 

 respect, that it does not afford a good basis for comparison of 

 costs of raising a given class of livestock in two or more suc- 

 cessive years on the same farm. This is because of the fluc- 

 tuation of market price of feeds from year to year. However, 

 the same objection may be made to the cost price, since the 

 cost per bushel of raising a crop may vary greatly from year 

 to year. 



(2) Using market price permits the crop account to show 

 a profit commensurate with it's nearness to market regardless 

 of whether it is all fed or all sold, or part fed and part sold. 

 If cost price were used, and the crop were all fed, it would 

 appear that no profit was made on the crop. 



(3) Market price gives both the crop and the livestock ele- 

 ments the same advantage because of their juxtaposition on 

 the farm. 



As a hypothetical case, assume that a 70-cents per bushel 

 market price of corn is made of the following parts : 1 



Cost of producing and harvesting $ . 55 



Cost of marketing .05 



Net profit on the crop 10 



Market price per bushel $ . 70 



What becomes of the corn when it is sold? The grain dealer 

 uses it to make a profit for himself. This additional profit 



1 These figures are taken merely for illustrative purposes and should 

 not be considered indicative of what the figures ought to be under 

 normal conditions in practice. 



