CHAPTER 64 



Cost of Production 



Profits in farming depend on many factors, among which the cost of 

 production and the selling price are the most important. The chief 

 difficult}' at the present time lies in the fact that few farmers actually know 

 what it costs to produce a pound, bushel or ton of the various farm products. 

 The cost of production is more fully under the farmer's control than is the 

 selling price. 



The method of procedure in ascertaining the cost of producing different 

 crop and animal products on the farm will be outlined in another chapter. 



Cost Depends on Yields. — The cost of production per acre varies 

 less than the cost per unit of product, chiefly because of the wide variation 

 in yields. It costs a definite amount for the rent of land, taxes, labor of 

 men and teams, use of equipment and purchase of seed and fertilizers for 

 an acre of land, whether it produces a full crop or a half crop. It is, there- 

 fore, important that yields be made as large as possible by every economic 

 method. This will necessitate the use of the best strains of seed, the 

 application of the optimum amount of manures and fertilizers and the 

 right amount of labor per unit of land. The cost of producing 60 bushels 

 of corn per acre is very little greater than that of 30 bushels per acre. Divid- 

 ing the cost by 60 and 30 respectively, the cost per bushel is found to be 

 nearly twice as great in case of the smaller yield. 



The largest possible yield may not be the most profitable one. Yields 

 are affected not only by soil fertility, but by the amount of labor and 

 fertilizer applied to the land. In general, the more valuable the crop, the 

 more intensive may be the cultivation. Intensive methods applied to the 

 production of hay and cereals may actually reduce profits. A recent farm 

 survey of 135 farms ranging from 80 to 120 acres each, gave an average 

 labor income of $421 per farm. On 14 of these farms crop yields were 16.3 

 per cent above the average, but the labor income was $1 below the average. 

 In this case the cost of production was so much greater than the average 

 that the labor income fell somewhat below the standard of the community. 

 On 26 other farms where the crop yields were 12 per cent below the average, 

 the labor income averaged $835 per farm, or 98 per cent above the average. 

 In this case the cost of production was so reduced as to increase the profit- 

 Evidently, this survey was in a district where some were employing methods 

 too intensive for the type of farming. This is probably unusual. Gen- 

 erally, crop yields may be increased 20 to 25 per cent with a corresponding 

 increase in profits. Farm surveys of over 1300 farms in New York State 

 showed the crop yields on 13 farms making labor incomes of over $2000 



(800) 



