UNITED STATES DEPARTMENT OF AGRICULTURE 



BULLETIN No. 994 



* — - - — m| 



j^&*^&L 



Contribution from the Office of Farm Management 



and Farm Economics 



H. C. TAYLOR, Chief 



Washington, D. C. 



November 15, 1921 



METHODS OF CONDUCTING COST OF PRODUCTION 

 AND FARM ORGANIZATION STUDIES. 



By F. W. Peck, Farm Economist. 1 



CONTENTS. 



Introduction 1 



The uses of cost studies 2 



Basic elements of cost 7 



Presentation of results 8 



The several methods of study 14 



Page. 



The accounting method 15 



The survey method 39 



Combinations of survey and accounting 

 methods 46 



INTRODUCTION. 



In 1902 the Minnesota Experiment Station began studies of the 

 cost of production and of farm organization, which have been con- 

 tinued up to the present time. The Office of Farm Management, 

 United States Department of Agriculture, began cost studies in 

 1906, and was closely followed by various State organizations. 



The economic changes caused by the World War accentuated the 

 growing demand for facts concerning the business side of the farmers' 

 production of food. During the war it was necessary to husband 

 the supply of certain food products; and to provide the food for 

 large numbers in foreign countries it became imperative to obtain 

 as large a production as possible of the staple food products. At 

 the same time prices were fixed for various commodities for the 

 purpose of stabilizing the market and acceleratiug the production 

 and movement of war supplies. From the experiences with the 

 setting of food prices it became apparent that there was a lack of 

 comprehensive, conclusive data relating to the factors necessary 

 to the understanding of the financial side of the farmer's business. 



The rising prices brought about by the war created many local 

 disturbances of prices of farm products, a ready example of which 

 is found in the controversy over the cost and price of milk in many 



1 Since July 1, 1921, Director of Agricultural Extension, University of Minnesota. 

 ' 56389°— 21— Bull. 994 1 



