METHODS OF CONDUCTING COST STUDIES. 39 



THE SURVEY METHOD. 



FARM BUSINESS ANALYSIS.i 



When the survey method was first used in studying the profits of 

 the farm business the studies were commonly called "Farm Manage- 

 ment wSurveys. " To distinguish the general survey from other 

 surveys of parts of the farm business, the term has been changed 

 to "Farm Business Analysis." This is primarily the study of farm 

 profits and of the fundamental principles underlying the organiza- 

 tion of the farm from the standpoint of financial return. The 

 Office of Farm Management has made a large number of farm business 

 analysis studies and has recognized three types of this method of 

 analysis. The first is the analysis of a large number of farms typical 

 of a rather well-defined type of farming in a region for one year only. 

 The second type is the continuing analysis, repeated on a number of 

 farms in the same locality each year for two or more successive 

 years. The third type is the repeated periodic analysis in a region 

 usually after the lapse of a 5 or 10 year period. 



ENTERPRISE COST STUDIES. 



By an enterprise is meant a separate crop or class of live stock. 

 In this type of studies emphasis is laid upon one particular enter- 

 prise. The studies are conducted along the lines of the farm busi- 

 ness analysis, in that the personal visit method is employed, ques- 

 tions being asked of the farmer, who depends largely upon his expe- 

 rience and knowledge of his farm practice for the answers. Of recent 

 years the keeping of farm records by farmers has greatly increased 

 the accuracy of the personal visit method, both in the study of the 

 farm profits and in the study of the cost of the operations of a partic- 

 ular enterprise. 



Enterprise studies are best obtained for special or more or less 

 staple products, such as wheat, cotton, sugar beets, potatoes, milk, 

 and fruit. Since such products constitute an important part of the 

 farm business, knowledge of the requirements for their production 

 is usually uppermost in the farmer's mind. 



An important phase of the enterprise work is the practical appli- 

 cation of the data to farm organization problems. Along with the 

 enterprise records it is usually desirable to obtain a farm business 

 analysis record of the entire farm, in order to understand the eco- 

 nomic place of the enterprise in the scheme of farming. This pro- 

 cedure is especially advisable when it is intended to draw conclusions 

 as to the advisability of continuing or increasing the production of 

 the particular crop or class of live stock under consideration. By 



1 For a complete description of the business analysis method, with a statement of the results obtained 

 by the Office of Farm Management over a term of years, and examples of the application of this method, 

 see Farmers' Bulletin 1139, ' 'A Method of Analyzing the Farm Business." 



