of capital invested in the remaining nonland factors of 

 production. To calculate the annual earnings a producer 

 can expect from machinery, equipment, and breeding 

 livestock, one should multiply the total value of these 

 assets by the rate of return to all production assets (for 

 example, 2.14 percent in 1985). 



ERS analysts calculate the return to land for livestock 

 enterprises in the same manner as the nonland factors, 

 multiplying the average current land value by the 10-year 

 rate of return. For dairy, land occupied by the barnyard 

 and farm buildings receives a cost in the allocated returns 

 section because the cost of land associated with feed 

 production is already covered. For crops, however, ERS 

 calculates a composite cash/share rental value by taking 

 the per-acre cash rental rate and the per-acre share rental 

 rate from survey data and by weighting each by its 

 respective share of total acreage rented. 



Because real estate taxes already appear in the taxes and 

 insurance costs, ERS subtracts taxes from the rental value 

 in the budget to prevent double-counting and to give a net 

 rental value. 



Machinery labor requirements for each budget relate 

 directly to machinery time requirements. Labor is 

 assumed to equal 110 percent of tractor use time (in the 

 case of pulled implements) and 120 percent of self- 

 propelled implement use time. Because tractor use time is 

 110 percent of pulled implement time, labor associated 

 with tractors and implements amounts to 121 percent of 

 the implement use time. Total hours of labor equal the 

 sum of all machine, irrigation, and livestock labor. 



Additional labor may be added to budgets when applicable 

 for irrigation or other hand operations as determined by 

 COP survey data. 



The wage rates for labor, based on data published in Farm 

 Labor (13), are the sum of the State's annual average 

 hourly rate for "all hired farm workers," plus the 

 employer's share of Social Security taxes. One should 

 subtract any expenses for hired labor from the total 

 estimated labor cost to leave a return to unpaid labor 

 provided by the operator, family, or others. 



Regional and National Aggregations 



Survey data are used to create State COP budgets for use 

 by the budget generator. These budgets are the basis for 

 regional and national weighted-average costs of 

 production that ERS publishes in Economic Indicators of 

 the Farm Sector: Costs of Production (-5). 



Another subroutine of the budget generator aggregates 

 numerous State budgets into regional budgets. Additional 

 data on land rents and real estate taxes are incorporated 

 (3, 7). The weighting criterion is the percentage of total 

 production each State has in relation to the total 

 production for the defined region. States arc grouped into 

 production regions according to the cultural production 

 practices most prevalent for the particular crop. The 

 boundaries of production regions for one crop, therefore, 

 may not be the same as those for another. Maps showing 

 these regions for each crop appear in each annual COP 

 report (4); States can be aggregated into other regions if 

 desired. 



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