4 BULLETIN 994, U. S. DEPARTMENT OF AGRICULTURE. 



usually allow more or less latitude for selection and for varying the 

 intensity of production and the general farm practices. Hence, 

 one of the prime uses of cost studies to the individual is to determine 

 the relative profits realized from the different parts of his business, 

 with a view to pointing the way to changes in management and 

 organization which will increase the total profit. 



Year in and year out, losses and low profits may be more often 

 caused by low yields in crops and low efficiency of production in 

 live stock than by the wrong choice of enterprises, yet right choice 

 of enterprises is the starting point in good farm management. 



Not all the enterprises on the farm need be equally profitable to 

 justify keeping them in the system of farming. Profits are in- 

 fluenced by the way enterprises fit together in utilizing labor, equip- 

 ment, land, and products. A given enterprise must prove more 

 profitable than any other enterprise which will fit into the same 

 place in the program of the farm if it is to be introduced or retained. 



The oat crop is notoriously low paying from a market standpoint 

 on many farms in the corn belt, yet because in many places it pays 

 better than wheat or barley, serves as a nurse crop, supplements 

 corn from the standpoint of the labor program, and serves as a 

 horse feed and a supplement in dairy and other stock rations, it 

 increases the total farm profit. Beef cattle feeding has often been 

 shown by standard accounting to appear unprofitable, yet because 

 it provides a ready market for coarse feeds and by-products, a 

 return for labor that would otherwise be wasted, and additional 

 fertility for the field crops, it may add to the total profits. 



Cost of production figures are valuable in making clear the com- 

 parative profitableness of the different enterprises and the different 

 methods of production and thus give basis for intelligent decisions 

 on what to produce and how to produce it in order to secure maximum 

 net profits. 



DETERMINING ECONOMY OF VARIOUS OPERATIONS. 



An important function of cost data lies in their application to the 

 ever-present farm problem of determining the relative economy of 

 various methods of performing farm operations. The costs of pro- 

 ducing field crops, for example, are usually reduced by increasing 

 efficiency in the use of labor and equipment. One of the advantages 

 of a good rotation of crops lies in the resultant weed control which 

 often eliminates tillage operations that would otherwise be necessary. 



The problem of intensity of culture is a question of relative costs 

 per pound or per bushel as affected by the different combinations 

 of the elements of costs in production. The choice of various methods 

 of doing farm work depends almost solely upon relative costs as 

 they bear upon the profits of the entire farm business. The knowl- 

 edge required to make these decisions must be gained largely through 

 cost studies. 



