AND THE COST?

Ashburton Guardian, Volume 59, Issue 18, 1 November 1938, Page 9

AND THE COST?

THE WORKING OF THE FARM. ALWAYS A DIFFICULT PROBLEM. THE CASE IN REGARD TO CROPS. In farming, as in everything else in the trading world, probably, the vital factor to be considered is the -cost of producing this or that, and as far as crops are concerned, the question is of more than ordinary interest to Ashburton County growers, lor on it often turns the decision of the farmer as ft> whether he will grow crops or turn to something else, or whether he will put in more or less than he usually does.

When it conies down to tlfe point it is really a problem of book-keeping combined with a thorough knowledge of the land on which the actual cropping is being carried out. There are two groups into which costs have to he placed, one for the costs which are not affected by either large crops or small crops and one for those which do vary according to the size of the crop. The Two Groups. In the first group may be placed taxes, rentals, telephone costs, and annual maintenance payments which include drain cleaning, fence cutting and such like. In the second may be found the differing prices paid for seeds, manures, for instance. A grower’s decision in regard to the size of his crop does not have any effect on rentals, interest or taxes. These go on whether he crops or not. If he has a. regular staff of men, whom he -can keep going all the year round, this, also, is not affected, as far as wages paid out are concerned. A Problem to be Faced. It is a problem that must be faced if the true position of the farm is to he ascertained. Much has been written on the subject and in a recent issue of the “N.Z. Journal of Africulture,” Mr R. P. Connell had some interesting things to say about it. Speaking of market values and farm costs, he says:—

A matter of occasional importance is that sometimes costing should take into consideration the higher of two assessments of the same item. For instance, if peas which cost 4s a bushel to produce can bo sold at 5s a bushel on the farm, then the cost of baconer-produc-tion usually should be assessed not on the basis of what the peas cast to produce on the farm, but on the basis of what they can be sold on the farm. In a somewhat similar way, a farmer may have a chance to earn £1 a day for his labour. This should be the basis of costing any farm activity that would prevent his availing himself of the opportunity of earning £1 a day. However, such a line of action in costing can reasonably be carried only a very limited distance. To illustrate the danger attaching to carrying it too far it need be merely pointed out that if all farmers growing peas for pigs were alternatively to offer the peas for sale, then price of peas immediately would 'bo in danger of falling. From the views put forward in the foregoing statements it follows that to individual farmers what are called “average” costs may readily be highly misleading—in fact, are likely to he so unless such average costs relate to neighbouring farms of the same class in respect to such items as size, soil-type, equipment, and supply of labour. The Purpose of Crop-costing. It seems sometimes that there is a confusion of ideas about the purpose ol costing. Assistance in avoiding this confusion could be obtained by bearing in mind that the final measure of success is the total farm profits. From this it follows that the profits or losses from different systems of cropping rather than the profits or losses from [an individual crop should be the meai sure of the economic advisability of a i cropping programme. For instance, the economic worth of root crops on a dominantly grass-farm cannot be determined without considering their bearing on the returns from the pastures. From this it follows that ivhat may be called “fragmentary costing” (by which is meant the costing of one article on a farm where several are produced) is but seldom satisfactory and, of greater importance still, readily may be misleading. It does not follow fi’om all this, however, that the costing of individual crops is useless. This becomes clear if it is borne in mind that a most important purpose of crop-costing is to enable the farmer to determine the “make-up” of the cost of any product with a view to concentrating on economies which offer themselves after due attention is paid to costs and profits per unit of produce and also to total farm profits.