FARMERS' COSTS

Evening Post, Volume CXXVII, Issue 85, 12 April 1939, Page 6

FARMERS' COSTS

DIFFICULT TO ASSESS

In England, as well as in New Zealand, there is much discussion of farmers' "costs of production"—a difficult matter to assess.

i "Any accountant with a professional practice in an agricultural area knows the dearth of accurate accounting records in farming and the extreme rarity with which costing is affected," states an editorial article in "Accountancy" (London). "He knows only too forcibly I that to compute the cost of production of farming products is in present, circumstances well-nigh impossible except in the case of- some model farms.

"Accountants will, therefore, view with some scepticism proposals for the official fixing of agricultural prices on the basis of production costs. Yet it is this very thing that the National Farmers' Union is at present urging. The union has recently issued a manifesto calling for an official regulation of prices. Its scheme appears to differ in two respects from that which is at present in force for a number of larm products. In the first place, it would apparently apply to an unspecified but indefinitely extensible list of products; in the second place, revision of the level of prices would be provided for.

"Apart entirely from the general question how far price fixation is justified—a question upon .which we express no opinion—it is to be noted that revision of the basis prices would be largely entrusted to a small independent body on the lines of the Import Duties Advisory Committee, and this body would recommend revision of prices in the light of fluctuating production costs.

"It is indeed strange to find such stress placed upon costs of production in an industry which has been more reluctant than any other to introduce modern methods of costing. Whatever may be the fate of the National Farmers' Union's scheme it is to be hoped that the importance which the union itself attaches to production costs will lead to a readier appreciation among farmers of the necessity for keeping comprehensive accounting records. The difficulties of costing for farms are, of course, immense, but modern accounting methods can go a long way towards overcoming them—a fact which farmers would do well to take to heart."