PRODUCING MARKET MILK IN NORTHWESTERN INDIANA. 15 



The average cost of producing 100 pounds of milk from all the 

 cows on which records were obtained in each of the winter and sum- 

 mer seasons can be found in the financial statement in Table 7. 



DETERMINATION OF BULK LINE COST. 



During the last 2 or 3 years a number of methods have been 

 developed for determining the price of milk on a cost of production 

 basis, and these plans are being used by a number of communities 

 as a basis for milk prices. If in these plans the figures that are used 

 merely represent the average cost of production, it is evident that 

 practically one-half of the producers whose costs are above the 

 average will not be sufficiently well compensated for their efforts. 

 This will have a tendency to discourage production and decrease the 

 available supply. On the other hand,, it would not be advisable to 

 pay a price based on the least economical producer since this would 

 encourage his poor methods and stimulate an overproduction by the 

 more economical producers. 



Between these two extremes there is a point under which the 

 greatest volume of milk is produced. Such a point or line of demarca- 

 tion has been designated as the bulk line. This bulk line, shown in 

 figures 5 and 6, is arbitrarily placed to eliminate that milk which is 

 produced at a relatively higher cost as compared with the bulk of the 

 milk produced, and yet is high enough to stimulate a corresponding 

 increase in the low-cost herds. 



If these figures are used in determining a price for milk it is ques- 

 tionable whether the credit for appreciation on cows should be 

 allowed, since it is doubtful whether normal market conditions 

 would ever produce an appreciation on cows. Furthermore the appre- 

 ciation in the value of cows due to market conditions gives a " paper 

 credit " rather than real credit since the cows were not actually sold. 



PERCENTAGE COMPARISON OF FACTORS IN MILK PRODUCTION. 



With the exception of November, the gross feed and bedding cost 

 in Table 9 ran higher during the winter months than during the 

 summer months. With this one exception there was apparently no 

 large variation in the feed cost from month to month within any 

 season during the two years. 



Since the manure and soiled bedding resulted from the feed and 

 bedding used by the cows, the credit for these latter items was 

 subtracted from the cost of feed and bedding when making a com- 

 parison of the net feed and bedding cost by months. The cost of 

 feed and bedding minus the credit for manure and bedding gave the 

 net feed and bedding cost. When the credit for manure and bedding 

 was subtracted, there was no large variation in the cost of feed from 

 month to month throughout the two years with the exception of 



