A STUDY IN THE COST OF PRODUCING MILK. 27 



In the recently-published results of a farm-management survey ^ it 

 is shown that on 378 farms in Chester County, Pa., operated by 

 owners, the length of time the average cow remains in these herds is 

 4.34 years. The yearly charge for depreciation on these farms is 

 very nearly $6.70 per cow. For 300 farms in Lenawee County, Mich., 

 the average cow remains in the herds 4.52 years, and the yearly 

 charge for depreciation is very nearly $2.14.^ 



With cows of good quahty the amount of depreciation may be kept 

 low by judicious selling. The heifers which are culled out can usu- 

 ally be sold without serious loss. The cows not discarded the first 

 year usually increase in value up to a certain age and then decrease 

 in value rapidly. Some dairymen keep their depreciation item to a 

 minimum by placing the cow on the market for dairy purposes just 

 before this decrease comes. However, this is a profitable practice 

 only from the standpoint of the seller, for it must be remembered 

 that the buyer must always stand the depreciation which the seller 

 has evaded. 



BUILDINGS. EQUIPMENT, ETC. 



In erecting buildings for the dairy herd profit often depends on 

 discretion. It is not unusual to fiuad places where, if the cows paid 

 interest on the money invested in dairy buildings, it would be im- 

 possible for them to pay for anything else. From an economic 

 standpoint an investment in buildings beyond that required to pro- 

 vide adequately for comfort, convenience, and sanitation is a per- 

 sonal matter with the owner. While cows kept in palacelike build- 

 ings are perhaps more fortunate, it is doubtful whether they are 



1 See g, p. 34. 



2U. S. Department of Agriculture, Bull. 341, pp. 93-95. In this publication the rate of depreciation 

 on dairy cows does not represent the annual rate at which an animal deteriorates after it passes its prime, 

 for as the calculation is made the depreciation of such animals is in part cancelled by the increase in value 

 of animals before they reach their prime. The method of calculation is the same as outlined on p. 13 of 

 this bulletin, with proper adjustment being made for the increase or decrease of the selling price of cows 

 during the year. But the rate obtained does represent approximately the average charge which must be 

 made for depreciation in determining the cost of maintaining the dairy herd. 



For 378 farms in the Chester County, Pa., area the average annual loss on dairy cows from depreciation 

 in value was 11.82 per cent of the average of the Inventory values for the beginning and the end of the year. 

 A similar calculation for 300 farms in Lenawee County, Mich., showed a corresponding rate of 4.07 per cent. 

 The authors analyze these figures thus: 



"In making these calculations it is assumed that it costs as much on the average to raise a dairy cow as 

 the average price at which cows are purchased in the respective localities. This may be in error, but even 

 if the cost be considerably less, the results would not vary greatly from those given, because of the rela- 

 tively small proportion of cows raised, especially in the Pennsylvania area. 



"The marked difference in the rate of depreciation of dairy cows in the two areas is due mainly to the 

 difference in the prices at which cows are bought and sold in the two localities. In the Michigan locality, 

 the dairy farmers pay on the average $48.48 for cows and sell their discards for S42, a difference of only S6.48, 

 whereas the dairy farmers in the Pennsylvania locality pay an average price of S63.84 and sell for $37.36, 

 a difference of $26.48. Thus the Pennsylvania farmer loses $20 more per cow bought and sold than does 

 the Michigan farmer. This accounts for the much larger annual charge for depreciation on the Pennsyl- 

 vania farms. 



" In the Chester County area the farmers on the average raise 37 per cent of their cows and buy the remain- 

 der. In the Michigan locality they raise 57 per cent. The proportion of the average herd discarded yearly 

 is 23 per cent in Pennsylvania and 21.6 per cent in Michigan. The average length of time the average cow 

 remains in these herds is therefore 4.34 years (= 100/23) in Pennsylvania area and 4.52 years in Michigan 

 area. The yearly percentage of deaths in the herds was 1.69 for Pennsylvania and 1.31 for Michigan." 



