22 BULLETIN 094, U. S. DEPAKTMEIsTT OF AGRICTILTTJKE. 



prises and an indication of the preferable uses of the various forms of 

 farm capital. For example, shall the crops grown on the farm be 

 fed to dairy cattle, to beef cattle and hogs, largely to hogs alone, or 

 sold for cash on the grain and hay markets ? Does it aid in under- 

 standing the farm business to show the profits from growing crops as 

 credits to the live stock that may be maintained ? It is plain that if, 

 for example, the intention is to show the profits in dairying, it can 

 often readily be shown that very low-producing cows will show a 

 profit if the basis for charging crops fed is the cost of production on 

 a farm where the land is fertile and good yields are realized. But if 

 a crop is looked upon as a separate enterprise, it is desirable to find 

 out the status of the enterprise with the return considered as being 

 available for use either in the form of cash from sale of the product 

 or in the form of feed charged to live stock at what the feed would be 

 worth were it purchased. 



On the other hand, it is apparent that one might consider the 

 returns from his farm as a double profit if he computed the profits 

 from his crops, and at the same time the crops when fed to live stock 

 were charged at cost and the crop profits again reflected in the live- 

 stock accounts. As a matter of fact, most farmers are interested in 

 the grand total profit and in eliminating as many of the low-producing 

 enterprises as possible. Where a farmer does not go into the details 

 of his costs in an analysis of his business, the easiest way of expressing 

 his profits from farming is simply to show the difference between 

 expenses and receipts in one lump sum. For example, if the prin- 

 cipal salable products from the farm business are cattle and hogs, 

 one may learn the profits from this business by deducting all expenses 

 of running the farm from the total receipts, and in expressing the 

 cost per unit of doing business it would be justifiable for the operator 

 to divide the total expense by the total number of salable units. 

 However, this process of accounting would not necessarily indicate 

 that there might not be more profitable alternative uses for the crops 

 that were fed to the cattle and hogs and for the other forms of capital 

 consumed in their production. 



Thus it will be seen that two entirely opposite conclusions may 

 be reached by the two different methods of considering the cost per 

 unit of product put on the market. Taking the example already 

 cited (p. 13), where home-grown feeds largely constituted the feed 

 consumed, the steers might cost, say, $60 per head, if the feed be 

 valued at its cost of production. If the feed is valued at its farm 

 value, which is the market value less the cost of marketing, the same 

 live-stock units might show a cost of over $100 per head. If we 

 assume that the live-stock units were sold at $100 per head, the first 

 method would show a profit of $40 per head, while by the second 

 method a loss would be indicated. As a matter of fact, the operator 



