THE UNIVERSITY OF ILLINOIS LIBRARY A6RICULTURAL LIBRARY UNIVERSITY OF ILLINOIS Agricultural Experiment Station BULLETIN NO. 216 THE COST OF MILK PRODUCTION COMPUTED ON THE YEAR BASIS BY F. A. PEARSON TJBBANA, ILLINOIS, APEIL, 1919 SUMMARY OF BULLETIN No. 216 INTRODUCTION. In studies pertaining to the cost of producing milk, a clear distinction must be made between milk produced for city trade and that produced for manufacturing purposes. The present study is confined to milk produced for direct consumption by the city trade. Page 343 BASES OF CALCULATION. There are three bases upon which the cost of milk production may be calculated; namely, the farm, the herd, and the cow. Page 344 SOURCE OF DATA. The data for the present study were obtained in the fluid milk district tributary to Chicago. Page 345 THE FARM AS THE UNIT. Calculations based upon total farm receipts and disbursements do not present an adequate method for determining the cost of milk production, as the milk receipts even in an intensive dairy district often represent little more than half the gross farm income. Page 345 THE DAIRY HERD AS THE UNIT. With the herd as the basis of calculation, the aggregate value of 2.42 hours of man labor, 44 pounds of grain, 50 pounds of hay, 188 pounds of silage, and 39 pounds of other roughage approximately equaled in the present study, the net year cost of producing one hundred pounds of milk. , Page 346 Prices of whole milk, however, cannot be constant thruout the year. A more or less satisfactory method for apportioning costs among the various months of the year is to use as a basis the percentage spread in the price paid for milk in the past. Page 356 THE Cow AS THE UNIT. With the cow as the basis for calculating the cost of milk production, only the expense of maintaining the mature cows and bulls and the returns from them are involved. In the present study the net cost of producing one hundred pounds of milk on this basis was found to approximate the value of 35 pounds of grain, 36 pounds of hay, 140 pounds of silage, 29 pounds of other roughage, and 2.36 hours of labor; plus 25.4 percent. Page 357 CONCLUSIONS Page 364 Acknowledgment Credit for the initiation of the studies of which this bulletin is a part, is due W. J. Fraser, Professor of Dairy Farming. His interest having been strongly drawn to the economic side of dairy farming, he early became convinced of the need of accurate studies in the cost of milk production, and in 1912 Mr. B. E. Brand was placed in charge and Mr. Pearson was secured to assist in these investigations. Since 1914 Mr. Pearson has been in charge. The present pub- lication is the first resulting from this series of investigations. Eecognition should also be given Messrs. Frank Turner and H. K. Eulison for their conscientious application in the collection of the data for the cow and herd cost of milk production and for their constructive suggestions. THE COST OF MILK PRODUCTION COMPUTED ON THE YEAR BASIS ' BY F. A. PEAESON, ASSOCIATE IN DAISY HUSBANDRY INTRODUCTION This bulletin reports the results of investigations into the cost of producing whole milk for city consumption, with 56 percent of the total produced during the winter months. It has no relation to the cost of producing summer milk primarily for buttermaking or to the cost of the surplus from general farming. Altho the business of dairying appears relatively simple, it is in reality one of the most complicated types of American farming, and the problems encountered in attempting to ascertain the actual cost of production are difficult to solve. Much confusion has arisen from the fact that the difference in the cost of producing milk for city trade and producing it for manufacturing purposes has not been sufficiently recognized, and also from the fact that the different methods of com- putation used have made impossible the accurate comparison of the studies of different investigators. Milk produced for urban consumption usually sells for more than it is worth for manufacturing purposes. Milk used for manufactur- ing purposes may be produced far from market, on pasture, which is the cheapest feed, and the finished product may be stored for winter use. Owing to the fact that whole milk is bulky and perishable, it must be produced relatively near the cities, where feeds are more ex- pensive than in districts more remote. Furthermore, a larger propor- tion must be produced in the winter months than is the case with milk for manufacturing purposes. This also leads to more expensive pro- duction, since feeds are more expensive in the winter than in the sum- mer months. The greater part of the dairy products sold from the farm are used for manufacturing purposes rather than for direct consumption in the form of whole milk by the urban population. The dairy pro- ducts used for manufacturing purposes are usually produced from small herds where dairying is a side issue to the other farm activities. The production of milk for direct consumption is generally re- stricted to the more or less intensive dairying districts adjacent to the larger cities and forms the greater proportion of the total farm business. 343 344 BULLETIN No. 216 [April, Since Chicago is the largest urban center within the state and the second largest milk-consuming city of the country, it was deemed advisable to make certain detailed, cost-accounting studies pertaining to the production of milk in the surrounding dairy districts. Most of the data thus far published have been expressed in terms of dollars and cents. As values are constantly changing, much of the work has not fulfilled its original purpose. In order, if possible, to eliminate the restrictions placed upon a study by fluctuating values, it was thought best to express the results of this investigation in terms of commodities whenever possible. There are at least three bases upon which the cost of producing milk may be calculated : namely, the farm, the herd, and the cow. From the data secured for the present study it is possible to calcu- late costs from each of these various points of view. By "farm cost" of milk production is meant the cost obtained by a method in which all farm receipts other than those from milk are deducted from the total farm expenses, leaving the remaining ex- penses to represent the cost of milk production. In case the receipts other than those from milk are almost negligible, this appears to be a satisfactory method; but the fact is that under the conditions of dairy farming in Illinois there are large receipts derived from sources other than milk. To use this "farm cost" method would in some cases be no more legitimate than for a railroad to find the cost of haul- ing passengers by deducting from the total expense of operating the railroads all receipts other than those for hauling passengers. By "herd cost" of milk production is meant the cost obtained by a method in which the herd is made the basis of calculation and the cattle raising that accompanies the dairying is included in the cost accounting. One objection to this method is that the amount of feed which goes into milk production cannot be ascertained separately from that which goes into growing stock. As the value of the young stock tends in general to increase rapidly with age and the milking stock in general depreciates with age, the aggregate amount of ap- preciation will depend upon the ratio of the number of young stock to milch cows. By "cow cost" of milk production is meant the cost obtained by a method in which the cow is the unit and credit is given for the value of the calves when dropped but the raising of the young stock is made a separate part of the business. The depreciation in the value of the milch cows becomes an expense of production. One advantage of the cow cost is that it permits a comparison of results secured on different farms in the same or in different regions, 1919] THE COST OF MILK PRODUCTION 345 or of the same farms or different farms in different years. The dis- advantage of the herd cost lies in the fact that the amount of young stock kept varies, and comparisons are therefore difficult to make. SOURCE OF DATA The" data presented showing the farm cost of milk production were secured in several townships in Kane and McHenry counties in 1911-12, and are based on the records of 680 typical dairy farms hav- ing a total of 19,802 cows producing for sale 104,516,900 pounds of milk. The average amount of milk sold per cow was 5,279 pounds. Of this, 57 percent was produced during the six winter months and 43 percent during the six summer months. The data for herd cost were secured from 36 farms located in the fluid milk district tributary to Chicago. They do not involve any of the farms from which the data for the study of the farm cost were secured. The 36 farms had a total of 873 cows producing during the fiscal years 1914-15 and 1915-16, 5,683,992 pounds of milk containing 205,415 pounds of fat. The average milk sold per cow during the period was 6,511 pounds. This milk contained 235 pounds of fat, testing 3.61 percent. Fifty-six percent was produced during the six winter months and 44 percent during the remainder of the year. The data for cow cost were secured from 16 of the farms from which the data concerning herd cost were obtained. These 16 farms had a total of 428 cows producing, during the years 1914-15 and 1915- 16, 2,924,164 pounds of milk containing 104,144 pounds of fat. The cows produced on an average 6,832 pounds of milk and 243 pounds of fat. The average percentage of butter fat in the milk was 3.56. Fifty-six percent of the milk was produced in the six winter months and 44 percent in the six summer months. THE FARM AS THE UNIT Many persons insist that the farmer should have but one profit in dairy farming, and that the farm is the real tinit on which the cost of milk production should be calculated. The farmer 's business, how- ever, is more complicated than is generally realized, and, altho not so large as many urban industries it is often more complex. The hog industry, the poultry industry, the dairy industry, and the individ- ual crop industries are all separate and distinct parts of farm admin- istration, and each may properly show a profit. Using the data secured from the 680 dairy farms in Kane and McHenry counties, it is possible to determine the approximate farm cost of the milk which they produced. Table 1 shows this method of determining the cost of milk production. 346 BULLETIN No. 216 TABLE 1. THE FARM COST OF MILK PRODUCTION [April, As Secured from 680 Dairy Farms in Kane and McHenry Counties, Having a Total of 19,802 Cows Producing 1,045,169 Hundredweight of Milk: 1911-12 Items of expense and return Amount Per farm Per cwt. Total cash outlay, depreciation, and unpaid labor $1 692 675 $2489 $1.62 Interest on operating capital at 5 percent 132 457 195 .13 x Rent of land and buildings 380 316 559 .36 'Farmer's labor 408 000 600 .39 Total expense $2 613 448 $3843 $2.50 'Receipts other than for milk 1 120 202 1 647 1.07 Farm cost of production $1 493 246 $2 196 $1.43 1P The rent charged is the current rate paid for cash rented land. 2 The farmers' labor is estimated at $600, which is the equivalent of hired men's wages. "The receipts other than those for milk include those from crops and live stock sold, increase in value of inventory, and receipts for miscellaneous products. The cost of production, as shown by this method of calculation, was $1,493,246 for the community, $2,196 per farm, and $1.43 per hundredweight of milk. The cash received for this milk totaled $1,664,931 for the community; $2,448 per farm; and $1.60 per hundredweight. If the farms studied sold nothing but milk, the farm cost might be an accurate method of determining the cost of producing the milk. But according to this method, the farmer would, for example, make no profit on his hogs in a good year and suffer no loss on his corn crop if the community suffered from a drouth, for all losses or gains from the various enterprises would be expressed in terms of milk. On farms with a variety of income it would be just as consistent to analyze the cost of egg production in this way as to use it to deter- mine the cost of milk production. The farms studied were in a very intensive dairy district, and yet only 58 percent of the receipts were derived from the sale' of milk. THE DAIRY HERD AS THE UNIT When the herd is used as the unit for studying the cost of milk production, the expense of rearing young stock is included in the cost. The total expense of maintaining the herd involves eight items : feed, man labor, interest on live stock, horse labor, use of dairy equipment, use of buildings, and miscellaneous charges. The total credits to the herd involve receipts from milk sold, milk consumed by the family, increase in stock, manure, and miscellaneous receipts. 1919] THE COST OF MILK PRODUCTION 347 EXPENSES FEED On the thirty-six farms studied from the standpoint of the herd cost of milk production, feed constituted about two-thirds (66.05 per- cent) of the total expense of maintaining the herd. In the following tables the farm-raised feeds are charged to the dairy herd at prevail- ing farm values, while purchased feeds are charged at the purchase TABLE 2. AMOUNT AND VALUE OF GRAIN FED TO 873 Cows, 35 BULLS, AND 225 YOUNG STOCK IN THE PRODUCTION OF 5,683,992 POUNDS OF MILK CONTAINING 205,415 POUNDS OF FAT Grain Value Weight in pounds Value per cwt. Value per cwt. of milk Amount fed per cwt. of milk, in pounds Corn $7799.96 817 777 $0.95 $0.1373 14.3874 Malt 5029.65 368 284 1.36 .0885 6.4793 Bran 3206.29 264 664 1.21 .0564 4.6563 Oats 2812.05 222 596 1.26 .0495 3.9162 Gluten ......... 2350.04 157 432 1.49 .0413 2.7697 Ajax 1 858 35 109 344 1.70 .0327 1.9237 Cottonseed meal. . . . Barley 1 495.69 1 150.92 96759 79 194 1.55 1.45 .0263 .0203 1.7023 1.3933 Oil meal 779.59 44775 1.74 .0137 .7877 Victor 674.15 47489 1.42 .0119 .8355 White Diamond. . . . Middlings 665.45 547.37 47700 43 110 1.40 1.27 .0117 .0096 .8392 .7584 Dairy feed 467.78 32600 1.43 .0082 .5735 R. K. D 443 45 31 840 1.39 .0078 .5602 Hominy 340.87 25290 1.35 .0060 .4449 Sugar feed 278.63 20475 1.36 .0049 .3602 Calf meal 192.91 5010 3.85 .0034 .0881 Germ meal 179.99 12000 1.50 .0032 .2111 Empire 124.62 11 725 1.06 .0022 .2063 Unicorn 104.20 5900 1.77 .0018 .1038 Shumacker 82.15 5 600 1.47 .0014 .0985 Rye 62 25 4980 1.25 .0011 .0876 Climax 44.50 3600 1.24 .0008 .0633 Akermane 40.30 2 660 1.52 .6007 .0468 Buckwheat middlings 39.72 4965 .80 .0007 .0874 Tip Top 36.40 3 000 1.21 .0006 .0528 Chicago 34.50 3 375 1.02 .0006 .0594 Oat meal 17.45 670 2.60 .0003 .0118 Rye bran 16.75 1 275 1.31 .0003 .0224 Sucrene 14.40 800 1.80 .0003 .0141 Purina 13.50 1 200 1.12 .0002 .0211 HB 13.00 1 000 1.30 .0002 .0176 Molasses 9.50 675 1.41 .0002 .0119 BK 9.60 600 1.60 .0002 .0106 Sherwood 9.09 625 1.45 .0002 .0110 Cowpeas 4.40 440 1.00 .0001 0077 Special 2.70 200 1.35 .0001 .0035 Blood meal 1.20 80 1.50 .00002 .0014 Oat bran .73 100 .73 .00001 .0018 Total $30954.10 2 479 809 $1.248 $0.54473 43.6279 348 BULLETIN No. 216 [April, price. The labor of delivering these feeds to the farm appears un- der the items horse labor and man labor. The pasture is charged to the stock at the prevailing cash rates in the districts studied. Grain. The 873 cows and 148 other cattle units 1 involved in the production of the milk on these farms consumed 2,479,809 pounds of grain valued at $30,954.10. This grain represents in value more than one-third (36.6 percent) of the total feed given to the herd. The kinds and amounts of grain fed are shown in Table 2. Of the total feeds classified as grain, the purchased feeds represent in value about three-fifths (61.8 percent) and the farm-raised feeds about two-fifths (38.2 percent). The Illinois dairyman feeds more farm-raised grains than the eastern dairyman. A. L. Thompson 2 reports that 98 percent of the value of grains fed to cows on 174 farms in New York in 1912 was purchased and 2 percent farm raised. In Illinois corn is the most important grain, either raised or purchased, which is fed to dairy cows. Hay. In Table 3 are presented the amounts and weights of the various hays fed to the dairy herds. This class of feed represents in value about one-fifth (22.1 percent) of the total feed. Alfalfa, clover, timothy, and mixed hay formed the major portion of the feeds classi- fied as hay. The consumption of hay per hundredweight of milk was 50.16 pounds. This hay is valued at 65.6 cents per hundredweight, which leads to a cost of 33 cents for hay per hundredweight of milk produced. TABLE 3. AMOUNT AND VALUE OF HAY USED IN THF PRODUCTION OF 5,683,992 POUNDS OF MILK (ETC,) Hay Value Weight in pounds Value per cwt. Value per cwt. of milk Amount fed per cwt. of milk, in pounds Alfalfa $10687.43 1 545 095 $0.69 $0.1879 27.1833 Clover hay 2885.49 479 300 .60 .0508 8.4324 Timothy hay 2445.60 355 145 .69 .0430 6.2482 Mixed hay 2444.38 411 725 .59 .0430 7.2436 Millet hay. . . 66.00 16000 .41 .0012 .2815 Barley hay 32.00 8000 .40 .0006 .1407 Oat hay 24.00 4 000 .60 .0004 .0704 Oat and pea hay . . . Pea hay 60.00 30.00 10000 6 500 .60 .46 .0011 .0005 .1759 .1144 Wild hay 38.00 15400 .25 .0007 .2709 Total $18712.90 . 2 851 165 $0.656 $0.3292 50.1613 1 One cow, one bull, or two head of young stock are considered a cattle unit. Two hundred and twenty-five young stock and 35 bulls are equivalent to 148 cattle units. "Thompson, A. L. Cost of Producing Milk on 174 Farms in Delaware County, New York. Agr. Exp. Sta., Cornell University. Bui. 364, page 124. 1915. 1919] THE COST OF MILK PRODUCTION 349 Succulent Feeds. Silage, green corn, and hays which were cut and fed green are classified as succulent feeds. These feeds represent in value one-fourth (25.8 percent) of the total feeds used. In Table 4 are shown the amounts and values of these feeds. TABLE 4. AMOUNT AND VALUE OF SUCCULENT FEEDS USED IN THE PRODUCTION OF 5,683,992 POUNDS OF MILK (ETC.) Amount Weight Value Value fed per Succulent feed Value in per per cwt. cwt. of pounds cwt. of milk milk, in pounds Silage $20836.84 9 940 800 $0.21 $0.3665 174.8911 Green alfalfa 60.00 20000 .30 .0011 .3519 Wet hay 2.00 400 .50 .00004 .0070 Green oat hay 20 00 10000 .20 .0004 .1759 Green corn 929.00 712 600 .13 .0163 12.5370 Total. . $21 847.84 10 683 800 $0.204 $0.38434 187.9629 Other Roughage. In the present study it was difficult to dis- tinguish between corn stalks and corn fodder used as bedding and that used as feed. Many farmers feed the cows corn stalks and fod- der, and after the edible portion is consumed the remainder is pushed back under the cows for bedding. In Table 5 are presented the amounts and values of these commodities so far as it was possible to classify them. TABLE 5. AMOUNT AND VALUE OF "OTHER" ROUGHAGE USED IN THE PRODUCTION OF 5,683,992 POUNDS OF MILK (ETC.) Roughage Value Weight Value per cwt. Value of feed per cwt. of milk Amount fed per cwt. of milk, in pounds Corn fodder $3 642.21 1 478 430 $0.25 $0.0641 26.0100 Oat straw 1 344 27 636 370 .21 .0237 11.1958 Wheat straw 94.25 37500 .25 .0017 .6597 Barley straw. . 77 75 33 000 .24 0014 .5806 Clover straw 35.00 30000 .12 .0006 .5278 Timothy straw 29.00 11 400 .25 .0005 .2006 Rye straw 10.00 4000 .25 .0002 .0704 Shavings 6.00 10000 .06 .0001 .1759 Total $5 238.48 2 240 700 $0.234 $0.0923 39.4208 Pasture. Pasture represents but 8 percent of the total value of the feed consumed by the thirty-six herds. Table 6 shows the, vari- ous classes of pasture and the value of each. The blue-grass pasture constituted 84.4 percent of the value of the total pasture. The other pastures classified as oat stubble, wheat stubble, barley stubble, and corn stalks represent largely gleanings and a little volunteer grass or new seedings. Timothy, alfalfa, clover, 350 BULLETIN No. 216 [April, TABLE 6. VALUE OF PASTURE USED IN THE PRODUCTION OF 5,683,992 POUNDS OF MILK (ETC.) Pasture Value Value per cwt. of milk Blue grass $5738.06 $0 10095 Oat stubble 233.00 00410 Clover 203.86 .00359 Corn stalk 174.80 .00308 Timothy 166.50 .00293 Alfalfa 129.80 .00228 Mixed hay 97.50 . 00172 Wheat stubble 40.00 .00070 Barley stubble 12.00 .00021 Total $6795.52 $0.11956 and mixed-hay pastures usually come after the crops have been cut. Altho the pastures other than blue grass represent but 15.6 percent of the total value of all pasture, they are of considerable importance, for they come at different periods thruout the pasture season and enable the farmer to rotate his fields. These stubble fields and cut- over hay fields form excellent pasture for short periods when the blue grass is dried up. Miscellaneous Feeds. These represent in value less than 2 per- cent of the total feed. In Table 7 are shown the amount and value of each. The skim milk, which was purchased, was the most impor- tant item. TABLE 7. AMOUNT AND VALUE OF MISCELLANEOUS FEEDS USED IN THE PRODUCTION OF 5,683,992 POUNDS OF MILK (ETC.) Feed Value Weight in pounds Value per cwt. Value per cwt. of milk Amount fed per cwt. of milk, in pounds Skim milk $826.91 315 373 $0.26 $0.0145 5.5484 Wet malt 161.82 40405 .40 .0028 .7109 Cottonseed hulls.. . . 16.21 5650 .29 .0003 .0994 Total $1 004.94 361 428 $0.0176 Feed Summary. The total amounts and value of all feed and forage entering into the production of the milk from the thirty-six farms under discussion, are summarized in Table 8. The total feed required to produce the 5,683,992 pounds of milk is valued at $84,553.78, or $1.49 per hundredweight of milk. 1919] THE COST OF MILK PRODUCTION 351 TABLE 8. SUMMARY OP ALL FEEDS FED TO 873 Cows, 35 BULLS, AND 225 YOUNQ STOCK IN THE PRODUCTION OP 5,683,992 POUNDS OP MILK CONTAINING 205,415 POUNDS OP FAT Feed Value Weight in pounds Value per cwt. of milk Amount fed per cwt. of milk, in pounds Grain $30 954 10 2 479 809 $ 5447 43.63 Succulent feeds 21 847 84 10 683 800 3843 187.96 Hay 18712.90 2 851 165 .3292 50.16 Other roughage . 5 238 48 2 240 700 0922 39 42 Pasture 6795.52 .1196 Skim milk 826.91 315 373 .0145 5.54 Other feeds 178.03 46055 .0031 .81 Total $84553.78 $1.4876 LABOR Next to feed, man labor is the most expensive factor entering into the production of milk. It includes the time spent in milking, in feed- ing, cleaning out barns, hauling feed, hauling milk, etc. Horse labor includes the time spent in hauling milk and feed, etc. Man labor and horse labor do not include labor required in the production of crops or in the maintenance of other live stock. TABLE 9. NUMBER OP HOURS AND VALUE OF LABOR USED IN THE PRODUCTION OP 5,683,992 POUNDS OP MILK (ETC.) Kind of labor Value Number of hours Rate per hour in cents Value of labor per cwt. of milk Hours of labor per cwt. of milk Man $21 750 12 137 792.25 15 7847 $0.3826 2 . 4240 Horse 4408.79 28225.00 15.6200 .0776 .4965 In the data presented (Table 9) man labor represents 17 per- cent of the total expense of producing milk and horse labor 3 percent. The average cost of man labor was 15.78 cents per hour, and 2.42 hours were required to produce one hundred pounds of milk. The aver- age rate per hour for the horse labor was 15.6 cents, one-half hour of which was necessary in the production of one hundred pounds of milk. EQUIPMENT The dairy equipment includes milking machines, milk carts, pails, strainers, can scales, etc. The cost of the dairy equipment constituted less than 2 percent (1.27 percent) of the total expense of producing the milk, and amounted on the average to about 3 cents per hundred- weight of milk. Depreciation represents 54 percent of the total equipment cost, and about one-fifth (20.59 percent) of the value of the equipment 352 BULLETIN No. 216 [April, TABLE 10. TOTAL COST OF DAIRY EQUIPMENT USED IN THE PRODUCTION OF 5,683,992 POUNDS OF MILK (ETC.) Value of equipment at beginning of the period . . . New equipment $4288.02 2 133.57 Initial inventory and purchases $6 421.59 Value of equipment at end of period $5 150.76 Equipment sold 388.10 Final inventory and sales 5 538.86 Depreciation CQOO 70 Repairs $494.70 Taxes 8.44 Interest on average value of equipment ($4,719.35 at 5 percent) 235.96 739 . 10 Net cost of operation $1 621.83 at the beginning of the period. Repairs constituted 30 percent of the equipment cost ; interest, 15 percent ; and taxes, less than one percent. MISCELLANEOUS EXPENSES The miscellaneous expenses include insurance, taxes on stock, grinding farm feeds, registration, testing fees, veterinary fees, breed- ing fees, commissions, coal, salt, acid, medicine, dehorning, fly pro- tector, whitewash, etc. They amounted to a total of $4,876.04, or 8.6 cents per hundredweight of milk, and constituted 3.8 percent of the gross expense of milk production. INTEREST ON VALUE OF LIVE STOCK Interest includes the annual charge for the use of the capital in the form of live stock. The average inventory value in the present study was $124,836.82 ; at 5 percent, the interest charge is $6,241.84, or about 11 cents per hundredweight of milk. BUILDINGS The building charge includes insurance, depreciation, interest on capital invested, cash repairs, labor repairs, paint, rent for the water system, etc. The total charge for buildings usually constitutes from 8 to 10 percent of the value of the buildings and 5 percent of the net cost of milk production. In this study it amounted to $4,563.65, representing 3.6 percent of the total gross expense. 1919} THE COST OP MILK PRODUCTION 353 RETURNS TO THE DAIRY HERD The returns to the dairy herd involve receipts from milk sold, milk used by the household, miscellaneous returns, and manure. All returns other than for milk are deducted from the gross expense. MILK. The milk sold represents three-fourths (75.2 percent) of the total income from the dairy herd. During the period of this study 5,527,069 pounds of milk were sold and 156,923 pounds were consumed by the household. The total value of the milk sold and that consumed by the family was $95,525.11. The average price received for all milk sold was $1.68 per hundred- weight. STOCK In using the herd as the basis of calculation, it must be borne in mind that the increase in the value of the young stock may be greater or less than the depreciation in the value of the milking stock, accord- ing to the policy of the dairyman. If it proves to be greater, as was the case in this study, then the net increase in the aggregate value of all the stock appears as an item of income. In Table 11 is shown the stock transactions during the period of the study. During the year, 13 cows died and 281 cows were sold. This represents an annual turnover of 32 percent. During the same period 116 cows were purchased and 180 heifers freshened. The total increase in the value of the stock ($18,231.73) constituted 14.73 per- TABLE 11. KINDS, NUMBER, AND VALUE OP STOCK USED IN THE PRODUCTION OF 5,683,992 POUNDS OP MILK (ETC.) Kind of stock Number Total value Cows and bulls at beginning of period 907 116 180 185 251 311 27 19 $88901.00 11218.04 14520.00 13390.00 12340.00 8745.07 1 657.20 265.00 Cows bought Heifers freshened Two-year-old heifers at beginning of period One-year-old heifers at beginning of period Calves at beginning of period Heifers bought . . Calves bought 1 996 $151 036.31 Cows and bulls at end of period .' 909 281 180 196 268 293 100 436 $88437.00 18384.06 14520.00 12663.00 14692.00 10505.57 5925.20 4 141.21 Cows and bulls sold during period Heifers freshened in period Two-year-old heifers at end of period One-year-old heifers at end of period Calves at end of period Heifers sold Calves sold Final stock plus sales 2663 $169268.04 Net increase 667 $18231.73 354 BULLETIN No. 216 [April, cent of the gross income from the dairy herds. In terms of milk, it amounted to approximately 32 cents per hundredweight. It should be explained that the actual market value of the cows and bulls at the end of the period was $4,283 greater than shown in Table 11, but as this amount was the result of appreciation in the general price level and not to appreciation in the value of the cows themselves, the cows were inventoried at the end of the period at the values prevailing at the beginning of the period. MANURE The simplest method of calculating the value of the manure is to consider only the manure hauled from the barns to the fields. The total value of this manure, estimated at $1 per load, amounted to $9,440.10. The labor in hauling the manure is charged to the crops, and not to the stock. Manure dropped on pastures is not included in this valuation since ordinary pasture rentals of $1 to $2 per head per month assume the return of that amount of fertility. MISCELLANEOUS CREDITS Miscellaneous credits form a very small part of the total returns from the dairy herds. The major items are sacks, bull service, hides, beef, and hauling. The total returns under this heading amounted to only $572.27, which is but one cent per hundredweight of milk. NET HERD COST The summary of the important factors of expense and of returns not milk are presented in Table 12. Feed is the most important item, constituting two-thirds (66.05 percent) of the gross expense. The feed cost per cow was $96.85, or $1.49 per hundredweight of milk, and the labor, $24.91, or 38 cents per hundredweight of milk. Man labor constituted about one-sixth (16.99 percent) of the gross expense. The total expenses other than man labor and feed, except pasture, aggregated $.5016 per hundredweight of milk (horse labor, $.0776; equipment, $.0285 ; interest, $.1098 ; buildings, $.0803 ; pasture, $.1196; and miscellaneous expense, $.0858). The total returns not milk (stock, $.3208; manure, $.1661; and miscellaneous returns, $.0100) aggregated $.4969 per hundredweight of milk, an amount ap- proximately equal to the total expenses other than man labor and feed, except pasture. The net cost of producing milk on these farms is then roughly equal to the sum of the man labor and the total feed exclu- sive of pasture. In Table 13 is presented a summary of the man labor and of the feed, except pasture, involved in the production of the 5,683,992 pounds of milk. 1919] THE COST OF MILK PRODUCTION 355 TABLE 12. SUMMARY OP TOTAL EXPENSE AND OF RETURNS NOT MILK INVOLVED IN THE PRODUCTION OF 5,683,992 POUNDS OF MILK (ETC.) EXPENSES Total Percent of total Per cwt. of milk produced Feed other than pasture $77 758.26 60.74 $1.3679 Pasture 6795.52 5.31 .1196 Man labor 21 750.12 16.99 .3827 Interest on herd 6241.84 4.88 .1098 Miscellaneous 4876.04 3.80 .0858 Horse labor 4408.79 3.44 .0776 Buildings . 4563.65 3.57 .0803 Equipment 1621.83 1.27 .0285 Total $128016.05 100.00 $2.2522 RETURNS NOT MILK Appreciation of stock $18231.73 $.3208 Manure 9440.10 .1661 Miscellaneous 572.27 .0100 Total $28244.10 $.4969 NET YEARLY HERD COST ........ $99771.95 $1.7553 TABLE 13. AMOUNT AND VALUE OF MAN LABOR AND OF FEED, EXCEPT PASTURE, USED IN THE PRODUCTION OF 5,683,992 POUNDS OF MILK (ETC.) Value Amount Value per cwt. of milk Amount per cwt. of milk Man labor $21 750.12 137792.25hrs. $0.3826 2.42hrs. Grain 30954.10 2 479 809. 00 Ibs. .5447 43. 63 Ibs. Silage 21 847.84 10 683 800. 00 Ibs. .3843 187. 96 Ibs. Hay 18712.90 2851 165. 00 Ibs. .3292 50. 16 Ibs. Other roughage 5238.48 2 240 700. 00 Ibs. .0922 39. 42 Ibs. Miscellaneous feeds . . 1 004.94 361 428. 00 Ibs. .0176 6. 36 Ibs. Total $99508.38 $1.7506 Owing to the fact that values are constantly changing, it seems necessary that results be expressed in terms of commodities whenever possible. The items of feed and man labor are most easily expressed in this way : man labor in terms of hours, and feed, except pasture, in terms of pounds. Since the feeds listed as miscellaneous 1 form a relatively small proportion of the total feed used, they may be dis- regarded in forming a simple, practicable, and comparatively accu- rate method for arriving at the approximate cost of milk production. For practical purposes the following amounts of feed, forage, and man labor represent the complete net cost of producing one hundred pounds of milk, and their use as a general formula offers a simple basis for computing the approximate year cost of milk production: Table 7. 356 BULLETIN No. 216 Grain .............. .... 44 pounds Hay ............... 50 pounds Silage .................. 188 pounds Other roughage ..... 39 pounds Man labor .............. 2 . 42 hours In using these items as a basis for calculating the expense of pro- ducing one hundred pounds of milk, it is assumed that as the prices of feeds and labor rise or fall the other items of expense and return fluctuate more or less in the same proportion. For instance, equip- ment, buildings, interest, pasture, and miscellaneous expenses fluctu- ate in proportion to the value of manure, the increase in stock, and miscellaneous returns. Altho there is probably no time when they fluctuate in exact unison, they keep close enough together for prac- tical purposes of computation. It is also assumed that the amount fed was not far from that which was physiologically most efficient under the prevailing conditions. This method operates as follows: Assuming the value of grain to be $55 per ton; hay, $10 per ton; silage, $6 per ton; and man labor, 25 cents per hour, we have: Grain ....................... 44 Ibs. @ $55 per ton = $1.21 Silage....*. .................. 188 Ibs. @ 6 per ton = .56 Hay ....... ................. 50 Ibs. @ 10 per ton = .25 Other roughage .............. 39 Ibs. @ 6 per ton = .12 Man labor ................... 2.42 hours @ 25c per hour = .61 Yearly herd cost of milk per hundredweight ............ $2.75 SEASONAL VARIATIONS IN THE COST OF PRODUCTION The application of current values to the hours of labor and pounds of grain produces a result termed the "year cost" of milk production, which does not represent the cost at any one season of the year. A more or less satisfactory method of distributing the year cost over the various months is to use the relative percentage variations in the prices paid for milk during the different months of the year at the market to which the milk was delivered. The buyers of milk desire a constant supply thruout the year, and it may be assumed, therefore, that prices have been adjusted to stimulate the production of the desired amount each month of the year. The per- centage variation by months, of the average annual Chicago price 1 of milk for the ten years 1907-1916, was as follows: Month Percentage Month Percentage variation variation January ........................ 119.0 July ......................... 83.7 February ....................... 114.3 August ....................... 94.2 March ......................... 106.5 September .................... 96.7 April .......................... 94.2 October ...................... 109.2 May ........................... 73.2 November .................... 118.3 June ........................... 70.6 December .................... 120.3 'Milk News. 1919} THE COST OF MILK PRODUCTION 357 It will be noticed that the December price is the highest, being 20.3 percent above the average price. The August price is 5.8 per- cent less than the average price. From December to June (the month of the lowest average) there is a variation of 49.7 percent. If it is assumed that the year cost of milk production is $2.75 pel- hundredweight, as shown on page 346, and the percentage deviations shown above are applied, the cost for January would be found to be $3.27 per hundredweight ($2.75X1-19=$3.27) ; the cost for August, $2.59 per hundredweight ($2.75X-942=$2.59) ; etc. The so-called monthly spread, monthly deviation, or monthly dif- ferential is based on the fact that a December price 20.3 percent above the average year price and a June price 29.4 percent less than the average year price, with the intervening months gradually approach- ing these extremes, produced in the past the desired volume of milk each month of the year, and therefore must have been somewhat com- mensurate with the cost. THE COW AS THE UNIT When the cow is made the basis for calculating the cost of milk production, the cost of rearing young stock to mature cows is elimi- nated. There are eight items of expense taken into consideration; namely, feed, man labor, depreciation, horse labor, interest on value of stock, buildings, miscellaneous, and dairy equipment, and they are of importance in the order named. There are three items of return other than milk; namely, manure, calves, and miscellaneous. The data used for this study are a part of the data obtained for the study pertaining to herd cost, but since some of the latter do not permit of a separation of cow feed from young stock feed, it is im- possible to include all in the cow cost study. EXPENSES FEED In the cost of maintaining a cow, feed is the most important factor. The farm-raised feeds involved in this study are charged to the cows at the prevailing farm values and not at the cost of their produc- tion. Purchased feeds are charged at actual market values. The man labor and horse labor required to deliver these commodities to the farms are charged under the items man labor and horse labor. Grain. The value of the grain fed the 446 cattle units involved in the production of the 2,924,164 pounds of milk constituted 39 per- cent of the total value of the feed used. About 40 percent of the total grains were farm-raised. Of these, the value of the corn represents somewhat less than two-fifths of the 358 BULLETIN No. 216 [April, TABLE 14. AMOUNT AND VALUE OF GRAIN CONSUMED BY 428 Cows AND 18 BULLS (446 CATTLE UNITS) IN THE PRODUCTION OF 2,924,164 POUNDS OF MILK CONTAINING 104,144 POUNDS OF FAT Grain Value Weight in pounds Value per cwt. of milk Amount per cwt. of milk, in pounds Corn $4 369.10 480 016 $0 1494 16 4154 Malt 2 113 47 158 463 0723 5 4191 Bran 961.08 75 179 .0329 2.5710 Gluten 715.69 46873 .0245 1.6030 Cottonseed meal 704.00 43388 .0241 1.4838 Ajax 631 39 37 993 0216 1 2993 White Diamond 592 42 42 465 0203 1 4522 Oil meal 474.80 27470 .0162 .9394 Barley 402 65 30606 .0138 1.0467 Oats 345 56 25 989 0118 .8888 Hominy 253 71 18 797 0087 .6428 Middlings 115.20 8091 .0039 .2767 Victor 44.48 3308 .0015 .1131 Sugar feed 44 41 3 617 .0015 .1237 Buckwheat bran 32 92 4 115 0011 .1407 Purina 13.50 1 200 .0005 .0410 Buckwheat middlings .... Schumacker . 9.60 9 09 600 625 .0003 .0003 .0205 .0214 Stock feed . 9 00 200 0003 .0068 Cottonseed hulls 7.48 2607 .0003 .0892 Cowpeas 4.40 440 .0001 .0151 Molasses feed 2 39 111 .0001 .0038 Oat bran .73 100 .0000 .0034 Total $11857.07 1 012 253 $0.4055 34.6169 value of the total grain feed. The value of the malt represents some- what more than one-third of the value of the purchased grains. Thirty-five pounds of grain, costing 41 cents, were required to produce one hundred pounds of milk. Succulent Feeds. In Table 15 is shown the amount and value of the succulent feeds. The cost of these feeds constituted about one- fourth (25.9 percent) of the total cost of all feeds, and the cost of the silage represents more than nine-tenths of the total cost of the succulent feeds. Of the succulent feeds used per hundred pounds of milk produced, 9 pounds were green corn and 131 pounds were silage. The average cost of succulent feeds per hundredweight of milk pro- duced was 27 cents. TABLE 15. AMOUNT AND VALUE OF SUCCULENT FEEDS USED IN THE PRODUCTION OF 2,924,164 POUNDS OF MILK (ETC.) Succulent feed Value Weight in pounds Value per cwt. of milk Amount fed per cwt. of milk, in pounds Silage $7 580.16 3 831 452 $0.2592 131.0346 Green corn 385.00 265000 .0132 9.0630 Total $7965.16 4 096 452 $0.2724 140.0976 1919] THE COST OF MILK PRODUCTION 359 Hay. About one-fourth (22.2 percent) of the value of the total feeds used, was hay. The more important hays were alfalfa, clover, timothy, and mixed. About 36 pounds (35.7) were used in producing one hundred pounds of milk. TABLE 16. AMOUNT AND VALUE OP THE DIFFERENT KINDS OF HAY USED IN THE PRODUCTION OF 2,924,164 POUNDS OF MILK (ETC.) Hay Value Weight in pounds Value per cwt. of milk Amount fed per cwt. of milk, in pounds Alfalfa $3307.89 428 363 $0.1131 14.6491 Mixed 1 167.26 190 107 .0399 6.5012 Clover 1 141.82 214 895 .0391 7.3489 Timothy 1 087.32 176 881 .0372 6.0489 Oat and pea 85.43 15 623 .0029 .5343 Millet. . 28.57 9524 .0010 .3257 Wild 20.80 9000 .0007 .3078 Total $6839.09 1 044 393 $0.2339 35.7159 Other Roughage. "Other" roughage constituted but 6.4 per- cent of the value of the total feed. In Table 17 are shown the amounts and values of these forages. Of the 29 pounds necessary to produce one hundred pounds of milk, 22 pounds were corn fodder and 7 pounds were straw. The total cost was 6.7 cents per hundred pounds of milk. TABLE 17. AiabuNT AND VALUE OF OTHER ROUGHAGE USED IN THE PRODUCTION OF 2,924,164 POUNDS OF MILK (ETC.) Roughage Value Weight Value per cwt. of milk Amount fed per cwt. of milk, in pounds Fodder $1 499 97 650 763 $0.0513 22.2547 Straw 466.37 203 852 .0160 6.9713 Total $1 966.34 854 615 $0.0673 29.2260 Pasture. In Table 18 is shown the total value of each class of pasture used. Blue grass was by far the most important. TABLE 18. TOTAL VALUE OF PASTURE USED IN THE PRODUCTION OF 2,924,164 POUNDS OF MILK (ETC.) Pasture Value Value per cwt. of milk Oat stubble $ 14.00 $.0005 Blue grass 1 750.33 .0599 Alfalfa 50.00 .0017 Clover 92.08 .0031 Cornstalk 61.45 .0021 Timothy 120.00 .0041 Total $2087.86 $.0714 360 BULLETIN No. 216 Feed Summary. The total feed involved represents over one-half (55.9 percent) the gross expense of producing the milk. In Table 19 is presented a summary of the amounts and values of the various feeds used. The total feed cost was $1.05 per hundred pounds of milk. TABLE 19. SUMMARY OF ALL FEEDS FED TO 428 Cows AND 18 BULLS (446 CATTLE UNITS) IN THE PRODUCTION OP 2,924,164 POUNDS OF MILK CONTAINING 104,144 POUNDS OF FAT Feed Amount Value per fed per Value Weight cwt. of cwt. of milk milk, in pounds Gr&io $11 857.07 1 012 253 $.4055 34.6169 Succulent, feeds 7 965.16 4 096 452 .2724 140.0976 Hay 6839.09 1 044 393 .2339 35.7159 Other roughage 1 966.34 854 615 .0673 29.2260 Pasture 2087.86 .0714 Total $30715.52 $1.0505 LABOR Man labor and horse labor are important factors in milk produc- tion; in the present study they constituted nearly one-fourth (23.7 percent) of the gross expense. It will be seen from Table 20 that to produce the 2,924,164 pounds of milk, 69,098.25 hours of man labor were required. This is 2.36 hours (37 cents) per hundredweight of milk. One-half hour (.523) of horse labor was utilized in the pro- duction of one hundred pounds of milk. TABLE 20. AMOUNT AND VALUE OF LABOR USED IN THE PRODUCTION OF 2,924,164 POUNDS OF MILK (ETC.) Amount Value per used per Kind of labor Total value Total hours cwt. of cwt. of milk milk, in pounds Man labor $10821.97 69098.25 $.3701 2.3630 Horse labor 2207.65 15289.75 .0755 .5229 EQUIPMENT In Table 21 is shown the various items involved in the equipment cost. It will be seen that the net cost of equipment constitutes a rela- tively small portion of the total cost of milk production. Of the total equipment cost, depreciation represents 57.7 per- cent; repairs, 20.7 percent; interest, 21.0 percent; and taxes, 0.6 percent. BUILDINGS The buildings necessary to house the 428 cows and 18 bulls con- stituted about 4 percent of the gross expense of producing the 2,924.164 pounds of milk. 1910] THE COST OF MILK PRODUCTION 361 TABLE 21. COST OP DAIRY EQUIPMENT USED IN THE PKODUCTION 2,924,164 POUNDS OP MILK (ETC.) Value of equipment at beginning of the period.. . . New equipment $1 083.70 1 227.77 Initial inventory and purchases $2311.47 Value of equipment at end of period $1 871.40 Equipment sold 236.75 Final inventory and sales 2 108.15 Depreciation $203 32 Eepairs $72 75 Taxes 2.04 Interest on average value of equipment ($1,477.52 at 5 percent) 73 88 148 67 Net cost of operation $351.99 STOCK In order to maintain milk production, it is necessary to continu- ally change the milking stock. To maintain the herds on the farms studied at an average of 428 cows, 95 cows were sold, 45 cows were bought, and 66 heifers freshened. Eight cows which died during the time of the study represent about 2 percent of the average number of cows. The farmers aim to keep the cows as long as they are economical producers and try to dispose of them when they become unprofitable. The animals that were sold represent 22.2 percent of the total number involved. In other words, the average cow remained in the herd about 4.5 years. TABLE 22. NUMBER AND VALUE OF STOCK USED IN THE PRODUCTION OF 2,924,164 POUNDS OP MILK (ETC.) Number Average value Total value Cows and bulls at beginning of period 443 $98.14 $43 476 00 Cows purchased 45 119 01 5 355 53 Heifers freshened 66 74 02 4885 00 Total stock involved 554 $96.96 $53 716 53 Cows and bulls at end of period 451 $94 66 $42 692 00 Cows sold 95 67 85 6 445 48 Final stock plus sales 546 $90.00 $49137.48 Depreciation $4579.05 INTEREST ON VALUE OF LIVE STOCK The interest on the capital invested in live stock ($43,084.00) at 5 percent amounted to $2,154.20, or 7.37 cents per hundredweight of milk. 362 BULLETIN No. 216 [April, Manure represents about one-seventh of the total income to the dairy. The amounts included in these calculations are those hauled from the barn; they do not include manure dropped on pasture. CALVES The 428 cows produced 363 calves, which number represents ap- proximately 85 living calves for each one hundred cows. The casual observer would probably think that the cows should produce a larger percentage of living calves, but the failure of cows to breed and the losses from diseases, such as abortion, increase beyond the usual con- ception the expense of milk production. MISCELLANEOUS RECEIPTS The miscellaneous receipts include hides, $89.65; beef, $37.60; bull service, $6tOO ; feed for hogs following cows, $11.25 ; milk haul- ing, $54.50; and feed bags, $47.30. They amounted in total to less than one cent ($.0084) per hundredweight of milk. NET Cow COST Table 23 presents a summary of all the factors of expense and of income except milk, involved in the production of 2,942,164 pounds of milk from 446 cattle units. From the above table it is seen that the value of the feed not pasture ($0.9791 per hundredweight of milk) plus the value of man labor ($0.3701) constituted 79.58 percent of the net cost of producing the milk ($1.6953). In other words, the total value of the feed not pasture and the man labor falls short by 20.42 percent of represent- ing the actual net cost of the milk. The reason for the lower pro- portion which feed and labor constitute by this method of calculation, as compared with the herd cost, lies in the elimination of the young stock from the records. It is of course an obvious fact that pro- portionately more feed would be required to produce one hundred pounds of milk when the feed given the young stock in the herd was included as a part of the cost of production, than when only the feed given the producing cows and bulls was included ; and also, in a study confined to cow cost there is no appreciation in value of young stock to offset various other items of expense, as there is in a study in which the entire herd is included. Table 24 shows in amounts as well as in value the man labor and feed except pasture involved in the production of the 2,924,164 pounds 1919} 363 TABLE 23. SUMMARY OP ALL ITEMS OF EXPENSE .AND OP RETURNS OTHER THAN MILK INVOLVED IN THE PRODUCTION OP 2,924,164 POUNDS OP MILK (ETC.) EXPENSE Item Amount Percent of total Per cwt. of milk Feed not pasture $28 627 66 52 2 $0 9791 Pasture 2 087 86 3 8 0714 Man labor 10 821 97 19 7 3701 Depreciation in value of stock 4 579 05 8 3 1566 Horse labor 2207.65 4.0 .0755 Interest on value of stock 2 154.20 3.9 .0737 Buildings 2 128.89 3.9 .0728 Miscellaneous 1 889.77 3.5 .0646 Equipment 351.99 .7 .0120 Total $54849.04 100.0 $1.8758 RETURNS NOT MILK Manure . . ..... $3 943 88 $.1349 Calves . . 1 089 00 .0372 Miscellaneous 246.30 .0084 Total $5279.18 $.1805 NET YEARLY COW COST $49569.86 $1.6953 TABLE 24. AMOUNT AND VALUE OP MAN LABOR AND OP FEED, EXCEPT PASTURE, USED IN THE PRODUCTION OP 2,924,164 POUNDS OP MILK (ETC.) Item Value Amount Value per cwt. of milk Amount per cwt. of milk Man labor $10821.97 69 098 25 hrs. $0.3701 2. 3630 hrs. Grain 11 857.07 1 012 253 . 00 Ibs. .4055 34. 6169 Ibs. Silage 7 965 . 16 4 096 452. 00 Ibs. .2724 140. 0976 Ibs. Hay 6839.09 1 044 393. 00 Ibs. .2339 35. 7 159 Ibs. Other roughage. . . . 1 966.34 854 615. 00 Ibs. .0673 29. 2260 Ibs. Total $39449.63 $1.3402 of milk. On this basis the approximate cow cost of producing one hundred pounds of milk may be secured by adapting prevailing prices to the following quantities of feed and labor and dividing this amount by 79.58 percent or by adding 25.6 percent of the value : Grain 35 pounds Hay 36 pounds Silage 140 pounds Other roughage 29 pounds Man labor 2.36 hours The use of these amounts presupposes that the prices of all items included change more or less in unison and also that the cost of each item not included fluctuates with some one of the items that is in- cluded : e. g., the cost of horse labor fluctuates with the price of feed ; the depreciation of stock changes with the price of feed and labor; at the same time credits not milk, such as manure, change with the price of feeds. Altho these fluctuations never occur in exact unison, 364 BULLETIN No. 216 they are never very far apart. Following is an illustration of how the formula may be used : Grain 35 Ibs. @ $55 per ton = $0.96 Silage 140 Ibs. @ 6 per ton = .42 Hay ._. 36 Ibs. @ 10 per ton = .18 Other roughage 29 Ibs. @ 6 per ton = .09 Man labor 2.36 hours @ 25c per hour = .59 $2.24 Add 25.6 percent of $2.24 .57 Yearly cow cost of milk per hundredweight $2.81 For a discussion concerning seasonal variation in cost, the reader is referred to page 356. CONCLUSIONS The cost of producing one hundred pounds of milk may be de- termined by computing either the cost of maintaining the entire herd or the cost of maintaining the producing stock alone. With the herd as the basis, the approximate year cost may be ascertained by applying current prices to the following amounts of feed and labor: Grain 44 pounds Hay 50 pounds Silage 188 pounds Other roughage 39 pounds Labor 2.42 hours "With the milking stock as the basis, the approximate year cost may be ascertained by applying current prices to the following amounts of feed and labor and adding 25.6 percent to the value thus obtained : Grain 35 pounds Hay 36 pounds Silage 140 pounds Other roughage 29 pounds Labor 2.36 hours Of course when studies pertaining to costs are restricted to a comparatively small number of farms supplying a given market, cer- tain limitations are placed upon the data which must be taken into consideration when applying the results to individual farms or to other districts. For instance, if high production and superior skill reduce the amount of labor necessary on the better farms, average farm wages should not be used in determining the labor cost, but rather the wages of the superior class to which the data are applicable. The same is true for feeds. Due cognizance must also be given to the ratio of winter milk to summer milk, for the cost of producing the former is much the greater. In the present study the lower cost of production resulting from the fact that better farms were involved tends to counterbalance the higher cost of the large proportion of winter production, but it is impossible to say with exactness which factor exerts the greater influence. UNIVERSITY OF ILLINOIS-URBANA