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MILK PRODUCTION
COST ACCOUNTS

PRINCIPLES AND METHODS

BY
CARL W. LARSON

SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS
FOR THE DEGREE OF DocToR oF PHILOSOPHY, IN THE
Facutty OF PurE ScIENCE, CoLuMBIA UNIVERSITY

JQew Bork
COLUMBIA UNIVERSITY PRESS
1916

MILK PRODUCTION COST ACCOUNTS

COLUMBIA UNIVERSITY PRESS
SALES AGENTS

New YORK:
LEMCKE & BUECHNER

30-32 West 27TH STREET

LoNnpDon:
HENRY FROWDE
AMEN Corner, E.C.

MILK PRODUCTION
COs t ACCOUNTS

PRINCIPLES AND METHODS

BY J)
*QQiow
CARL W LARSON

SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS
FOR THE DEGREE OF DocToR OF PHILOSOPHY, IN THE
FACULTY OF PurE SCIENCE, COLUMBIA UNIVERSITY

jQew Bork
COLUMBIA UNIVERSITY PRESS
1916

ame ae a La i,
Copyright, 1916
: By Cotumpra University Press _
: } Printed from type, August, 1916

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PREFACE

THE growing interest in the cost of producing milk is largely
due to the increase in price during the past few years. State
and Federal experts have studied the problem, and Extension
and County agricultural workers, city chambers of commerce,
special committees appointed by citizens, boards of health, and
‘other municipal organizations and officers are devoting con-
siderable effort to the study of milk cost.

There is considerable unrest in the dairy industry: The
producer commonly is not satisfied with the price he receives,
the dealer feels that he is receiving no more than his share of
the final price for the class of milk and the service demanded .
by the consumer, and the consumer objects to the increase
that from time to time is made in the price of milk. In gen-
eral, the production and the sale of milk are not on a sound
economic basis, and the method of cost computation discussed
herein is offered as a step toward establishing sound and equi-
table conditions. It is hoped that it will at least lead to a
standard method that may be used generally and that it may
afford opportunity for comparisons. This study only deals
with the problem from the standpoint of cost of production,
and does not include the subject of distribution, which con-
stitutes a problem of perhaps equal importance.

In the many bulletins and reports extant on the cost of
producing milk, no two of them follow the same plan; even
different reports from the same experiment station have been
worked out under systems that make comparisons impossible.
The various writers are not agreed on the relative importance
of the different factors involved and the methods of handling
them. In this discussion an effort is made to analyze each
item of cost and also to apply the methods and practices of
recognized authorities in factory cost accounting as far as they
may be applied to milk production cost.

vi PREFACE

The idea of pre-calculating feed costs has, as far as is known,
never been suggested before. At first thought it may seem im-
practical. Nearly all scientific and successful practical feeders
of dairy cattle, however, have full confidence in the reverse
of the formula recommended herein. On a basis of the re-
verse of the formula, or with some other standard, they com-
pute the feed requirements of their cows. The value of a
method for pre-calculating costs is obvious. Without it milk
costs are only history, and when finally computed are not
applicable under changed prices of feed. The value of the
method suggested herein is that by the use of it cost may be
determined at any time. It is only necessary to know the
kind and prices of feed. With the systems now in general
use the records of milk costs merely show what the cost has
been and may not apply when one feed has gone up in price
and another down. The author is looking to the ideal condi-
tion when we shall be able to figure milk prices as accurately
as the modern shop manager who, given the prices of material
and labor, can figure to a fraction of a cent the cost of pro-
ducing certain articles. The formula used herein is based on
Armsby’ Energy Tables and Maintenance Standard, com-
bined with Eckles? Milk Standards.

The author is aware of the fact that there is some differ-
ence of opinion as to which feeding standard is most nearly
accurate, and the standard here used may be changed slightly
without seriously affecting the use of the method. Such modi-
fication as the user wishes to make or finds desirable may be
applied with little change of formula. Even another standard
or basis of food requirement may be used. The Feed Unit
System with the Scandinavian Feeding Standard may easily
be substituted. This system would be even more simple and
would no doubt give satisfactory results. The Energy Method
is used because it is growing in favor in this country at the
present time and has given excellent results in practice.

It is thought the discussion of other items of cost will not
only serve the purpose of furnishing a method of cost estima-

1 U.S. Department of Agriculture, Farmers’ Bulletin No. 346.
* Missouri Agr. Exp. Sta., Research Bulletin No. 7.

PREFACE Vii

tion, but will show where increases or decreases come about,
the effect of increase in the price of labor on final cost, or
perhaps where costs may be reduced in one item or another.

The author wishes to acknowledge the helpful advice and
criticism of Professor O. S. Morgan. He also is grateful to
Helmer Rabild for data on the ages of cows.

CARL W. LARSON.
New York City
March, 1916.

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CONTENTS

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INTRODUCTION

Tue efficiency wave that has gone through our factories in
recent years is reaching the farms and dairies of the country.
Because of cheap land and the great natural fertility of the
soil, because new lands have been opened up almost every
year, and because the farmers have been able to succeed with-
out efficient management, they have been the last to make a
systematic study of operation and cost of production. Cost
determination is essential to efficiency. It not only furnishes
a guide to a profitable selling price, but also enables the pro-
ducer or manager to direct and control the different factors of
cost. A complete and properly arranged cost statement en-
ables the dairyman to study and to compare methods and
finally to determine by which method milk can be produced
most cheaply.

Milk is one of the most important of our agricultural prod-
ucts. There is no substitute for it, and it will always be in
demand. Such proper adjustment as will encourage the dairy
industry must and will be made. The consumer eventually
will pay the producer a reasonable profit. The results of
surveys and studies of cost estimates, however, indicate the
existence of rather startling conditions. Some of these are so
significant that it may be appropriate to quote at some length
from the discussions of conclusions made by men who have
studied. the concrete situation. The most sweeping statement
is made by Professor J. B. Lindsey,' who, in discussing the
results of an experiment covering 15 years, Says:

“Tt is very evident from our own figures and from those derived
from other sources that under present conditions it is not satisfac-
tory business to attempt to produce reasonably clean milk under

1 Massachusetts Agr. Exp. Sta., Bulletin No. 145, pp. 20-21.

xii INTRODUCTION

the most ordinary conditions for less than 5 to 53 cents per quart
at the farm. In fact, it is doubtful if practical business men would
consider it as a business undertaking unless they were able to se-
cure a price per quart for their milk at least 10 to 20 per cent in
advance over the cost of production.

“The cost of production naturally would be considerably in-
creased if the producer invests capital in a modern barn and well-
equipped dairy house, if his farm is located where taxes or labor is
high, if he purchases nearly all of his feed, if he employs a super-
intendent or charges a reasonable sum for supervision, or if he
makes an inspected or certified product.

‘““Why has the producer received so low a price? It is the belief
of the writer that in the past a great deal of milk has been made
and sold for less than the cost of production. In making an attempt
to gain a temporary livelihood from dairying, many have sacrificed
the fertility of their farms, employed the most primitive methods
of housing and caring for the dairy stock, while the family have
cared for the milk and dairy utensils without credit. The dairy-
man has forgotten or neglected to estimate his time at a fair value
and to take into consideration the cost and depreciation of barn
tools, dairy utensils, and such perishable foods and supplies as
brushes, salt, soap, ice, bedding, bull service, veterinary services,
and the like, all of which are absolutely necessary. In other words,
the keeping of accurate accounts and the application of the ordi-
nary business methods have been too often neglected. Such methods
on the part of the producer as against the organized business method
of the contractor have resulted in a measure at least in the estab-
lishing of a relatively low wholesale and retail price.

“Now that health authorities are with right demanding better
dairy methods, the producer is indeed confronted with a serious
problem, namely, how to conform to modern sanitary requirements
in the face of the increased cost of labor, grain and tools and pro-
duce milk at a reasonable profit. He is meeting this problem at
present in a negative way, by selling his cows and trying to turn
his attention to other lines of agricultural industry.”

Dr. A. L. Thompson,! in discussing the results of his inves-
tigations of cost of producing milk on 174 farms in Delaware
County, N.Y., is almost as skeptical of the dairy business.
He found that:

1 New York Agr. Exp. Sta. (Cornell), Bulletin No. 364, pp. 140-141.

INTRODUCTION xiii

“There were fifteen herds, or about one herd in eleven, that
showed a profit. There were forty-six herds, or about one in four,
that produced milk for $2 or less per hundredweight. At the prices
of feed, labor, and use of capital figured, the average cow in Dela-
ware County failed by $32.14 to pay expenses. To state the results
in another way, the average cow paid all costs excepting the value
of hay and forage that was raised on the farm. For this hay and
forage the cows paid 28 per cent of its farm value.

“Some farmers keep unprofitable cows for the sake of having
manure to use on their land. If the use of this manure is the cheap-
est means of building up, the land, the system is justified, but it
is possible for the manure to cost more than it is worth. With
the foregoing valuations for labor, feed, and use of capital, in order
to have prevented a loss on the dairy enterprise in 1912 manure
would have had to be worth $6.85 per ton in the barn. T he crops
generally grown in the County — corn, oats, millet, and hay — do
not justify paying such high prices for manure... .

“The question might be asked, how do these farmers live when
they sell hay to cows at a lower figure than its farm value, or when
they work for lower wages than the rates indicated, or when they
accept a lower rate of interest than 5 per cent. The dairymen of
Delaware County are doing one or more of these things.”

Although the author does not agree fully with these con-
clusions, they emphasize in a forceful way the importance of
a thorough study of the whole subject and especially the need
for a uniform basis and a correct and fair method of cost
accounting so that the industry may be placed on a sound
economic plane. Although as a rule little study is made of
costs on the farms of the United States, still adjustment does
take place. As soon as the price of milk becomes a little
greater than the cost of production, land and cattle advance
in price.. The adjustment is not always immediate, but when
net returns of the farms or bank accounts show that the in-
dustry is profitable in some cases, others extend their farm
operations to include dairying.

In pointing out some of the items of cost that it is thought
other writers should not have included, the author is not
doing so for the purpose of defending the consumer and some
dealers who attempt to keep the price down, but if possible

xiv INTRODUCTION

to determine a fair and definite method of cost accounting
that will be generally accepted. The different items are dis-
cussed. separately.

A cost method is important to the individual producer in
showing whether his dairy is profitable, whether some opera-
tion costs more one year than another, and possibly in sug-
gesting some means of producing milk more cheaply. A defi-
nite and correct system, used as a standard, should make it
possible to compare costs in different sections of the country,
and eventually to determine a price that will be fair and
reasonable to the producer and at the same time satisfy the
consumer that he is paying only what is equitable for the
capital, labor, and other expense necessary to produce milk.
Rough estimates and errors have the opposite effect.

Although in a great many localities surveys show an actual
loss in dairying when all costs are included, still the dairymen
usually are successful farmers, and dairy sections and dairy
communities are almost without exception prosperous. This,
of course, may be difficult for the consumer to understand.
Dairymen who are making a special product and getting a
special price for it are in most cases satisfied, but in those
communities where conditions show the dairy industry to be
unprofitable, there are several reasons why dairymen continue
in the business:

1. On account of changed conditions some are producing
_milk at no profit or at a loss. An improved method of ship-
ping milk may be a factor in this. A dairyman who lives near
a city is able to sell his straw, stover, and other feeds at a
higher price, and perhaps also his labor is high priced. With
improved facilities of transportation he is obliged to compete
with a farmer who occupies cheaper land and who places low
values on his coarse feeds.

2. There are those who are satisfied to produce milk at
actual cost in order that they may get some return for labor
that they could not use without the dairy.. To illustrate —
assume that there are two farmers, each with r6o acres of
equally good land, one having to cows and the other none.
Now we may suppose that the farmer with the 10 cows sells

INTRODUCTION XV

his milk at exactly the price that careful and accurate records
show it to cost. Figuring roughly that labor was charged at
$30 per cow per year, the farmer with 10 cows would then
have $300 more than his neighbor at the end of the year, for
he would spend no more for his labor. In the summer his chil-
dren are at home and do the milking, and during the winter
it can be done by the farmer himself. He is therefore $300
better off at the end of the year than his neighbor. Some
contend that this is a division of labor, others that it has
nothing to do with the actual cost of milk. It is nevertheless
one of the important reasons why some dairy farmers are
apparently more prosperous than those on similar farms and
without cows.

3. Some dairymen have land which can not be used for
anything except pasture, or have -stover or inferior hay and
other feeds that can be utilized for milk production, but that
could not well be marketed.

4. There are those who found the milk business profitable
when feed, labor, and other expenses were cheaper, and although
their price for the product may not have advanced in the same
proportion as cost, still they continue in the industry in the
hope that they will eventually get a higher price for the milk.

5. With some farmers a few cows fit in well with the gen-
eral farm scheme. To this class belong those who have a
little pasture, those who want a certain quantity of manure
for a particular crop, and those who want a certain small
cash income throughout the year. It is the farmers with
small herds, more than any others, who produce the bulk of
the milk of this country, and keep the price low.

The above reasons are not given to justify low prices of
milk, but rather to explain why some are producing milk
although when all actual costs are counted the business does
not show a profit.

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MILK PRODUCTION COST
ACCOUNTS

CHAPTER I

THE FUNCTIONS OF A COST SYSTEM

A cost system has for its object not only a direct benefit to
the particular dairyman who keeps accurate cost accounts, but
also an indirect benefit to the public by making it possible to
put the dairy business on a sound basis throughout the
country.

The ends to be attained by a system of cost accounts for
milk production are:

1. To regulate selling price.

2. To detect, locate, and eliminate waste in material, labor,
and other expenses incident to production.

3. To change any operation and determine the actual effect
on cost.

4. To enable the manager to direct the work with greater
efficiency.

5. To make it possible to standardize the work.

6. To compute costs at different times and under different
conditions.

7. To provide reliable statistics for comparisons and studies
in different States and localities.

Almost every dairy in the United States is a part of a‘ gen-
eral farm proposition, and without cost accounts for the dairy
itself it is impossible to determine to which enterprise profits
or losses are due. Although a dairy farmer may be getting a
fair interest on his capital and a fair wage for: his labor, sur-
veys or cost records of his dairy often show that the profits
are not derived from the cows. When the feeds are figured

2 MILK PRODUCTION COST ACCOUNTS

at prices at which they could be disposed of and the labor
is actual extra labor that must be paid for, it would of course
prove that profits are derived from the farm rather than from
the herd. This should prompt the dairyman to be more care-
ful in his cost estimates and endeavor to learn where his vari-
ous items of cost are higher than they should be, or higher
than formerly, and to look for a remedy. It may be that a
different ration would be less expensive, perhaps fewer or more
cows should be kept or perhaps the cows are poor producers.
The cows may be kept on too expensive pasture, or not pas-
tured enough; perhaps the farmer could buy cows cheaper
than he can raise them, perhaps he keeps calves too long or
he may be vealing calves at a loss. Where the feed prices are
figured on a basis of sale or market price or the price at which
they could be purchased in the community, it may be found
that it would be more profitable to market the crops in the
raw state instead of through the dairy. Labor also in some
localities makes it unprofitable to produce milk. Again, many
dairies are over-capitalized.

These are only suggestions of some of the factors which
may not be known unless cost accounts are kept. The effi-
ciency of individual cows is, of course, of great importance;
cows of the same size require about the same feed for main-
tenance,! so that a cow that produces 6,000 pounds of milk
annually produces it more cheaply per pound than a cow of
equal weight that produces 3,000 pounds.

The production cost will be discussed under three main di-
visions, the feed expense, expense for labor, and indirect expense,
the “overhead,” or indirect expense being further subdivided.
The following outline indicates the method of treatment:

1. Feed.

2. Labor.

3. Indirect expense, or overhead.

a. Buildings.
b. Cattle.
c. Bedding.

1 “A Study of the Cause of Wide Variation in Milk Production by Dairy
Cows,” Ekles, University of Missouri, Research Bulletin No. 2, p. 146.

THE FUNCTIONS OF A COST SYSTEM 3

d. Sire.
e. Miscellaneous.

The credit items which should be deducted as special credits
in order to determine the net cost of production are as follows:

1. Calves.

2. Manure.

The diagram below is given to show the relation of cost
items to net cost of production, under certain conditions. The
feed and labor costs are spoken of as prime costs, and they
constitute about 90 per cent of the total cost of production.

Indirect Returns for

. expense.
(10%)

manure and
calves.

Production
cost, not in-
cluding dis-

Net cost of
production,
without

tribution or
profit.

profit.

This diagram is given simply to show the cost factors and
approximately their relative proportions to the total cost under
particular prices and conditions, and although it represents
actual conditions in some sections at the present time, it is

4 MILK PRODUCTION COST ACCOUNTS

not the purpose here to show average conditions. Instead of
attempting to give any average cost, the author wishes to em-
phasize the fact that costs vary greatly and are determined
by certain definite conditions. It is no more reasonable to
say that it costs five cents to produce a quart of milk than to
say that it costs five cents to make a box. The manufacturer
of boxes before stating a price asks the size of the box, the
kind of material to be used, whether the sides are to be planed,
whether the box is to be made and used in the lumber and mill
region of Washington State or in New York City, and also
whether 10 boxes are to be made in spare time or 10,000 made
at once. Likewise the milk producer should ask in quoting or
estimating a price whether it is for 3 or 5 per cent butter-
fat milk, whether it is to be produced from tuberculin-tested
cows and in clean barns by clean labor working under clean
methods or by any cows and without particular care in pro-
duction, whether it is to be produced where hay is worth $10
per ton or $20 and grain $25 or $35, whether conditions are
such that the cows must be kept in the stable all or nearly all
the year for lack of pasture or whether they can feed on grass
six or more months of the year, and perhaps on land unfit for
other crops. It should also be known whether it is a price
for a small quantity produced as a side line or for a large
quantity produced as a specialty. It is to get at these very
items of cost, etc., that a cost system is needed.

The above diagram applies where an intensive feeding sys-
tem is practiced —that is, where considerable grain is in-
cluded in the ration. Where summer dairying is the practice
and where roughage forms a large part of the feed the pro-
portion of labor and indirect cost of production would be
greater. Also, in regions where intensive systems are prac-
ticed and a soiling system is followed the feed may cost less
and labor more. Expensive cattle and buildings increase the
proportion of indirect cost. The over-capitalized dairies are
shown by the amount of overhead cost. Some cows are bought
at such high prices and housed in expensive buildings that no
system of feeding, no possible production, and no reasonable
price for the milk could make them profitable.

THE FUNCTIONS OF A COST SYSTEM 5

There is even greater direct benefit from keeping records
of costs in milk production than in other lines. The most im-
portant records and the ones that require most time to keep
are absolutely necessary to intelligent feeding. It is necessary
for a feeder of milch cows to know just how much each cow
consumes and how much. milk results. He must have a record
of previous days. Records of the weight of the milk together
with the weight of feeds make accurate and efficient feeding
possible. The statement that one can no more feed a cow
intelligently without a record of production each day and of
the weight of feed than a fireman can attend a boiler without
a steam gauge is true. It is economy to increase coal if the
boiler responds with sufficient increase of steam power, but
there is danger if too much coal is used. With a cow it is
profitable to increase the feed as long as she responds with a
sufficient increase in milk, but there is danger of over feeding
and “throwing the cow off feed.” The most profitable pro-
duction of a cow is only secured by intelligent feeding and a
careful study of the milk and feed records, and it is these
records that form a large part of those necessary in milk cost
accounting.

The amount of time required to keep these records is slight.
A milk scales near the milk tank, and a simple chart with the
cows’ names or numbers and blanks for the different days are
all that is needed for the milk records, and the same scales
and a very similar feed chart can be attached to the feed bin
or cart for keeping a record of the quantity of feed used. The
other items of cost can be kept with even less labor. An
occasional weighing of the bedding, simple labor records, and
records of expenditures for special apparatus cover the other
chief factors of cost that require definite and special accounts.
These data can be calculated with little trouble.

The standards given are offered only as a guide, and although
local conditions may, for example, make it possible to bed the
cows more cheaply with sawdust than with shavings or straw,
the relative amounts given will apply, and when other ma-
terial is substituted in the formula the actual cost may still
be given.

CHAPTER II

THE COST OF FEED

THE largest and most important item of cost is the feed.
This varies greatly with different cows and with different
methods of feeding. The kinds of feed used, the amounts
consumed, and the cost have a marked influence on the total
cost of producing milk.

One of the first questions met with is whether feed should be
charged at cost of production or at market price, the market
price, of course, being considered as the price at which it could
be purchased. There is considerable difference of opinion as
to which cost should be used. Hawkins! in discussing this
from the factory standpoint sums up his conclusions as follows:

“The advocates of cost price claim that by means of it they
show the actual cost of manufacture and not what might have
been the cost, and that it does not interfere with the balancing of
the stores accounts in money value. Those who uphold market
price claim that it furnishes a sounder basis for estimating and for
competitive purposes by dealing with actual value rather than with
former value, and that it rightly causes the effect of fluctuations to
be seen in the stores accounts rather than in the job accounts, so
that profits or losses due to chance or speculation are distinguished,
as they should be, from ordinary trading results.”

In the production of milk it is a question whether the cost
of producing the feeds on the farm or the price they could
be sold for on the market should form the basis of cost cal-
culation. Unless the latter is used as the basis, the dairy cost
accounts may be lost in the profits or losses in the farm oper-
ations. If the cost of production price is assumed a difference
in cost of milk production may be more influenced by the cost
of production of the feeds than any other factor, and besides

1 “ Cost Accounts,” L. W. Hawkins, p. 78.

THE COST OF FEED 7

it is the profit of the dairy that is directly the result and
purpose of these accounts. Also, if based on cost of produc-
tion there is no profit for the work one puts in the production
of these feeds. If the production cost of feeds is high on a
particular farm it is reflected in the dairy accounts, and if by
efficient management of the farm the feeds are produced cheaply,
then the dairy receives undue credit. Pouli! in his studies of
milk cost in Switzerland says:

““By the introduction of the market price we want to exclude the
effect of variation of production cost ...so as to arrive at con-
clusions applicable to the general and average cost on the individ-
ual farm, we have then seemingly objective, but in reality also
varying estimates of prices, which can lead to the above variation
of prices. If we add to this the deviation of other expenses, then
we get varying conclusions of average cost, although the price rate
will correspond to the local or temporary circumstances, in the
estimates of the cost of milk production.”

When the dairy is considered separately from the farm,
there is no doubt that it should be charged with feeds at
market prices, but when the dairy farm is small or where the
dairy is distinctively a necessary part of the whole farm scheme,
then perhaps the cost price could be used. In an interview
with Mr. Nicholson, an authority on cost accounting,? he
stated that it was his practice in large plants that have sev-
eral departments to charge material from one to another at
market price, but with small plants actual cost of materials
is used.

In figuring feed costs there are several important points to
keep in mind; the following will be discussed:

1. The proportion of roughages or coarse feeds.

The amounts of roughage.

A balanced ration.

Amount of pasture.

Feed for maintenance.

The quantity and quality of milk produced.

AnH»

1 Produktionskostenberechungen, Archiv fiir Exakte Wertschaftsforschung,
Erg. 7.
2 “ Cost Accounting, Theory and Practice,” J. L. Nicholson.

8 MILK PRODUCTION COST ACCOUNTS

Methods of feeding and balancing rations are not discussed,
except in so far as is necessary for an intelligent use of the
formula or method of pre-calculating costs of feed.

The amount of roughage that a cow will eat depends largely
upon the kinds used and upon the size of the cow, also to
some extent upon the amount of other feeds or grain used.
Some cows are fed little grain, and must depend almost en-
tirely upon roughage for maintenance and milk. Such cows
can not produce a maximum for a long period, especially if
they have the ability to produce large quantities of milk.
When good silage and alfalfa hay are fed fairly large yields
may be secured. Good silage contains considerable corn, but
careful feeders have found it advantageous to add some grain
to the above ration. As a guide in computing roughage, the
following rule is offered: To determine how much hay to feed,
multiply the weight of the cow in hundreds of pounds by 0.6
and it will give the amount in pounds of hay. For example,
a 1,000-pound cow equals 1o hundred pounds, so that follow-
ing the rule to would be multiplied by 0.6, giving 6 pounds of
hay. To calculate the silage to feed, multiply the weight of
the cow in hundreds of pounds by 2.5. A 1,000-pound cow
then would be fed 25 pounds, and a 1,200-pound cow 30
pounds, etc.

Of all the items of cost, the pasture is most important,
though it has little mention in most previous writings on cost
records. Its importance is pointed out by Cooper,! however,
who says:

“The importance of pasture in the economy of the farm is illus-
trated by the small quantity of grain or roughage fed during the
pastural season . . . for practically 5 months out of each year the
cattle were supported almost entirely from the grass crop.”

Warren ?” says:

‘Pastures furnish our cheapest feed. The pasture of one cow
one day costs 3 to 6 cents, hay or hay and silage 12 to 15 cents,
grain 12 to 15 cents. A good pasture will replace all of the hay

1 Minn. Agr. Exp. Sta., Bull. No. 124, p. 97.
2 N. Y. Agr. Exp. Sta. (Cornell), Bull. No. 280, p. 355.

THE COST OF FEED 9

and much of the grain. Pasture produces more milk than other
feed at one-fifth to one-tenth of the cost.”

The amount charged for pasture varies with different in-
vestigators, as for example Hooper and Robertson! suggest
$1 to $1.50 per month, Rasmussen? 25 cents to $1 per month,
Lindsey * 5 cents per day, Thompson‘ $4.29 per cow and
accompanying stock for the season, and Woll® $5 per season.
At these prices the cost while on pasture is very much cheaper
than if the cows were fed in any other way. It shows, how-
ever, how important a factor the pasture is in calculating feed
costs and the importance of indicating in cost records the part
of the feed secured from pasture. Tables given by Woll on
pages 71 and 74 show how valuable pasture is to a dairyman
when it costs no more than $5 per season, as he has estimated.
The best Holsteins secured 1,153 feed units, or one-eighth of
all the feed units consumed from grass, while the best Jerseys
secured 1,506 units, or one-fourth. The total cost of feed for
the former was $99.23, and for the latter $80.06, and the pas-
ture furnished one-eighth of the units for the Holsteins and
one-fourth for the Jerseys at a cost of only $5. Good pasture
will supply ro feed units per day,® and a unit is based upon
the equivalent in feeding value of a pound of corn. When
corn, therefore, is worth 1 cent per pound a dairyman can
afford to pay ro cents per day, or $3 per month for good pas-
ture rather than feed his cows in the barn on feed of equal
cost. It should be said, however, that a high-producing cow
can not get enough feed from pasture to keep up her flow and
maintain her weight. When pasture is charged at a definite
price per month or season the economy of production favors
the smaller producer. Cows giving large amounts of milk
need some concentrated feeds in addition to pasture.

In pre-calculating costs, therefore, the amount of time on
pasture must be determined, and the time the cows are on
1 N.Y. Agr. Exp. Sta. (Cornell), Bull. No. 357, p. 140.

* New Hamp. Agr. Exp. Sta., Ext. Bull. No. 2, p. 4.
3 Mass. Agr. Exp. Sta., Bull. No. 145, p. 9.
4 N.Y. Agr. Exp. Sta. (Cornell), Bull. No. 364, p. 216.

5 Wisc. Agr. Exp. Sta., Research Bull. No. 26, p. 58.
§ Wisc. Agr. Exp. Sta., Circular No. 37, p. 6.

Io MILK PRODUCTION COST ACCOUNTS

pasture will depend, of course, upon the kind of pasture avail-
able, location, and season.

The next step is to arrive at a correct charge for the pasture.
It has been customary in the past to use the figure for pre-
vailing charge in community or simply a definite estimated
amount. Thompson,! however, bases the cost, with no profit
from land, as follows:

“Interest amounting to 5 per cent and taxes amounting to o.5 per
cent were charged on the actual value of the land in pasture. To
these amounts were added all other costs, such as making and re-
pairing fences, manuring, fertilizing, reseeding, mowing, and the
like. The average value per acre was $19.41. The annual cost of
this pasture was . . . $4.29 per cow and accompanying stock.”

With the accompanying stock deducted, the cost would
have been approximately $3.50 for the season. The interest
on the land was about three-fourths of the total cost, so that
if high priced land were used the cost would be increased.
This seems to be a satisfactory method for permanent pas-
tures that can not be tilled, or land that for some other reason
must be kept in permanent pasture. With land, however, that
can be farmed a better method is to charge pasture at the
rate per acre that it would return in hay, less the cost of
making, storing, and marketing. The fairness of this method
was pointed out by the great economist Adam Smith? more
than 150 years ago. He said:

‘““A great part of the cultivated lands must be employed in rear-
ing and fattening cattle, of which the price, therefore, must be
sufficient to pay not only’ the labor necessary for tending them,
but the rent which the landlord and the profit which the farmer
could have drawn from such land employed in tillage.”

In establishing a cost for pasture the steps are (1) to reduce
the pasture to a unit basis, that is, the number of acres needed
per cow, and the months that a cow can be fed on such pas-
ture, (2) to estimate the land rental, which should be charged

1 New York Agr. Exp. Sta. (Cornell), Bull. No. 364, D. 126.
2 “Select Chapters and Passages from The Wealth of Nations,’”’ Adam Smith,
p. 133.

THE COST OF FEED II

on the basis of a legitimate interest on the value of the land.
Five per cent is the basis used throughout this paper. All
authorities do not agree that interest, or rent, should be charged
on land that is owned. If interest were not charged on owned
land, it would be better for the farmer to have his money
invested in good bonds which would return dividends and pay
interest on a farm mortgage, and to include this interest in
the farm cost, or rent. The interest must be borne by the
owner of the land in some way, so that if it is not included in
the cost, it must be deducted from the profit, (3) to estimate
the general expense, which includes taxes, making and repair-
ing fences, seeding or reseeding, and fertilizing. Pasturage,
therefore, would be computed as follows:

1. Value per acre multiplied by 5 per cent, which may be
considered as rent.

2. General expense, which on the average will be about $1
per acre.!

3. Acres required per cow per season, or estimated on the
basis of cost per cow per month.

The formula for pasture cost where land is worth $50 per
acre and would pasture one cow on two acres for 5 months
would be as follows:

TRIOS Se eRe eee a Mala Mae Bihar eninge REI a Nes ee $2.50
Generaliexpense eistfaha ales «eres armen itera, rd senseapeears 1.00
COSMET ACTO 6157... 5c aan cfetepele eis tebapelenaaeens tai kedp vie wre Sado hs eee $3.50
AU OMACEES IPCI: COW, .casiecticte mietcp a ciels (erat ay cies Sie octncha = Heaton $7.00

The cost of pasture for the season would be $7, or, on a
basis of 5 months, $1.40 per month.

Now having determined the items of roughage and pasture
which have such an important effect upon the cost of produc-
tion, the grain ration must be considered. This in turn is
dependent upon the size of the cow, and has a direct relation
to the quantity and quality of milk produced.

The idea of the pre-calculated cost accounts for milk prob-
ably will be accepted without question except in the part that

1 N.Y. Agr. Exp. Sta. (Cornell), Bull. No. 364, p. 126; computed from
Table V.

12 MILK PRODUCTION COST ACCOUNTS

undertakes to determine the feed costs. The feed cost is
based on scientific feed-requirement standards, and it is assumed
that, given the size of the cow and the amount and quality
of milk produced, the amount of protein and energy necessary
to maintain the cow and supply enough of energy and protein
for the milk can be accurately determined. The first question
naturally asked is, are all cows equally efficient? They are
not, because not all produce the same amount of milk, but
those that produce the same quantity are practically equal in
efficiency. Stating this in another way, a cow of a certain
size requires for maintenance practically the same amount of
feed as any other cow of the same size, and the amount of
food required per unit quantity of same quality of milk is
practically the same. The following are selected quotations
from Eckles and Reed! in a careful study in milk production,
and indicate their conclusions from digestion trial:

“The digestion trial showed practically identical results.”

“The real cause of the difference in production was found to be
in the amount of feed consumed above maintenance.”

“After deducting the maintenance required one cow produced
milk as economically as the other.”

“The main difference between profitable and unprofitable dairy
cows is not to be found in the coefficient of digestion, or in the
amount of food required for maintenance.”

“The superior dairy cow is simply one with a larger capacity
for using food above the maintainence requirement and one that
uses this available food for milk production.”

It is obvious from these conclusions that of two cows of
the same size the one that will produce the greater amount
of milk is the more profitable, for the feed required for main-
tenance is practically the same. Two cows, each producing
1o pounds of milk per day, produce it at a greater cost than
one of the same size that produces 20 pounds. This is im-
portant in figuring feed costs.

When it is agreed that we have feeding standards that can
be relied upon for determining the requirements of cows, it
is certainly reasonable to use them in calculating feed costs.

1 Missouri Agr. Exp. Sta. Research Bull. No. 2, p. 146.

THE COST OF FEED 13

In this connection, however, it must be kept in mind that the
calculations are based upon the cows keeping a constant weight.
If the practice is to underfeed the cows during the winter,
depending upon the stored-up energy accumulated by the cows
while on pasture, less feed might be given with a return in
milk greater than the feed given would supply. This practice
is followed by many dairymen, and an allowance must be
made when this is done. That is primarily summer dairying;
the data which follow are based upon a year-round production.

The writer has applied the following method to a number of
actual cost calculations of feed required and the results are
remarkably near the actual —as near no doubt as the actual
weight records could be kept in a practical way.

The difficulty in applying this method to actual records
that have been published, except in a very few instances, is
that the amount of food secured from pasture has not been
stated. A definite price charged for pasture and the actual
amounts of the feed are given, but unless it is known what
amount of the total feed was furnished by the pasture, the
results can not be checked. It is important that cost records
give the returns from pasture, or the time the cows were
supplied by the pasture. Under some circumstances and con-
ditions the pasture would furnish an even greater part of the
feed for the year than is suggested by Woll in the work
referred to above.

Before applying the formula for feed cost it will be necessary
to give the material upon which it is based. This may be
presented in three tables, as follows:

TABLE I. MAINTENANCE REQUIREMENT FOR Cows.!

Pounds Therms
digestible net

protein. energy.
500-pound cow requires for maintenance... ..... i 3.80
750-pound cow requires for maintenance........ 4 4.95
1,000-pound cow requires for maintenance........ 5 6.00
1,250-pound cow requires for maintenance........ 6 7.00
1,500-pound cow requires for maintenance........ 65 7.90

1 Farmers’ Bull. No. 346, U. S. Dept. of Agr., p. 16.

I4 MILK PRODUCTION COST ACCOUNTS

TABLE IJ. REQUIREMENT FOR MILK OF VARYING RICHNEsS.!

Digestible
protein per Therms
Per cent. pound of milk energy.
3.00 .050 .26
3.50 .052 .28
4.00 055 30
4.50 .058 33
5.00 .062 36
5-50 .066 -40
6.00 .070 45
6.50 .075 .50

The following may be used when individual production is
not known:

Digestible Therms

protein. energy.

RO steinseirai nec ee ee iE eae 05 .26-.28
SHOrtho mise Nee aie ee ae ye 055 .28-.30
ASV ESMITES eh fe us ers seek CCG Rie nek .055 .28-.30
IBTOWAOWISSSs ha wae mioian wet cet ce .055 .28-.30
MJELSCY So ataate icine cusie Sete reeeORae .066 -40-.45
GUEINSEYV Se tetrneeniin sce seta cae ens .066 -40-.45

TABLE III. For THe Exact CALCULATION OF INDIVIDUAL RATIONS.”

Digestible protein, and energy values per too pounds.

Feeding stuff. Digestible Energy
true protein. value.
(pounds) (therms)
Green fodder and silage:

OTN Wes Wan et Met ace per see oe S yaa Goi 2.50 12.45
Clover—cHhmsOn® sino: sobs eer abi 2.19 II.30
Clovier<—redsyyeay Ansan se rnemelaine 2.21 16.17
Corn fodder — green................. 41 12.44
Corn suacerree ci rickets ran ele 0.88 16.56
un saniaMyerassen eer cine rn crioiee Taste 14.76
AAT OL aes eed PR Ace i mans Ce A et 2.16 11.43
RV GU cote eee ars tetas Hele eae 1.44 11.63
PT o thane eae aekeuras ays, eenkc eisee ee sie 1.04 19.08

Hay and dry coarse fodders:
sAllfaltayiiciyenm rs scree cletee etiearer ia memes 6.93 34.41
Cloverthayi——rede soni e erate neuen sete 5-41 5 34.74

1 “ Nutrients required for Milk Production,” Univ. of Mo., Research Bull.
No. 7, p. 138.
2 Pa. Exp. Sta., Bull. 111, p. 15, and Farmers’ Bull. 346, p. 15.

THE COST OF FEED

Hay and dry coarse fodders — Continued

Corn forage — field cured............ Pate)
COmMpStOversessecianes eotvaciiae aa eee 1.80
OW DEA MTAV Titre eet Uae a estepe ese 8.57
Euingarian hays sr.icis sereiia od ten eee 3.00
OPW AIS SRE Be ua alata Tine no Re 2.59
HOysMeanUhayys isn re a aeetavacraia-trears 7.68
Miao tay sary lees Cr eases auctor a eieieveveia's 2.05
Straws:
OEEISLTA Weusinaverrnd laa cra asian corals 1.09
ESVETSCLA Wr tniete so aire aa cimiel eon atl chee te -63
Wiheatistraw tacieatectsie cent ts co ceyees alate 37
Roots and tubers:
Garrotsivs Nek ees lets cee eka aoe 127
Miangelyunzelsie ns sine civ eeysstte. asieve wee 14
IROLATOES pi ras rae a tials Means are ng 45
IRittabarasy sotc\arae sae ees cite nese 38
BURT Se ayes ee pve wietice cuctene Batic a eee 22
Grains:
Banleyetarani acrid wie sisschiareta felsaae oes 8.37
(GROVER ESS eats Soy EER oe RIS pe ie ea 6.79
@or-and-cob meal os foo) eck 5-53
OVE Se Rll st ah N RES Ea 0 8.36
ea Teae Ny yh \aeiaals elses a eel aie wets 16.77
BRAY Cedar is easly eeu cia et be teva a Cheha ys col aeahe 8.12
NVIDGATM bran A ealrnbbrodiiawe Usher ely 8.90
By-products:
Brewers’ grains — dried.............. 19.04
Brewers’ grains — wet............... 3.81
Buckwheat muddlings) ()) 05 26 ..)) 1 22.34
Gottonseed meals: aes tis ee eda ads
Distillers’ grains — dried
Principally) com), 2/.02).. « BAS ase ate) 21.93
Piety TYE. oi Yeeeah olacaes 10.38
Gluten feed — dry.................6. 19.95
Gluten meal — Buffalo............... 25.56
Gluten meal — Chicago.............. 33-09
Linseed meal — old process........... 27.54
Linseed meal — new process.......... 29.26
WiaTiSpmate sya wes ita fio side went d 12.36
Bho eh ALATA Re a 11,35
Sugar-beet pulp — fresh.............. 63
Sugar-beet pulp — dried............. 6.80
Witheeae Pirate a ak ae oe Ne nin 3 10,21

39-53
26.53
40.76
44.03
26.07
38.65
33-56

21.21
20.87
16.56

7.82
4.62
18.05
8.00

5.74

80.75
88.84
72.05
66.27
71.75
81.72
82.63

60.01
14.82
75-92
84.20

79:23
60.93
79-32
88.80
78.49
78.92
74.67
46.33
56.65

7-77
60.10
48.23
77-65

15

16 MILK PRODUCTION COST ACCOUNTS

To illustrate the application of this method, certain condi-
tions may be assumed: suppose that we have a herd of Guern-
sey cows which average 1,000 pounds in weight, that give on
an average 8,500 pounds of milk per year, and that the milk
contains 5 per cent of butter-fat.' The first step is to calcu-
late the amount of protein and energy required by the cows.
Assume that 20 per cent of the year’s feed is secured from
pasture. The cows will no doubt be on pasture more than
20 per cent of the days in the year, but secure some other
feed a part or all of the time they are on pasture. We have
then to provide feed for 280 days. By referring to Tables I
and II we determine the following needs for cows of this sort:

Protein. Energy.
Maintenance........ 5X 250N = 240 6 X 280 = 1,680
8,500 pounds
5 per cent milk. ... .062 x 8,500 = 467 36 X 8,500 = 3,060
Total amounts needed............ 607 4,740

The cows must be supplied with 607 pounds of digestible
protein and 4,740 therms of net energy. Now let us assume
that we are feeding silage and clover hay for roughage. Re-
ferring to the formula suggested above, we find that a 1,000-
pound cow would consume 6 pounds of hay and 25 pounds of
silage, or 1,680 pounds of hay and 7,000 pounds of silage for
the 280 days. By referring to Table III we find that 1,680
pounds of red clover hay supplies 90.89 pounds of the digest-
ible protein and 583.63 therms of net energy. In like manner
the protein and energy supplied by the silage can be computed.

Pounds protein. Therms energy,
Amount needed....... 607.00 4,740.00
Supplied by hay. .90.89 583.63
Supplied by silage. 61.60 1,159.20
AROtAl PEA Ge et 152.49 1,742.83
To be supplied by grain 454.51 2,007.17

Now by turning to Table III we can select a ration that
has a ratio of protein to energy equal to that of the part to

1 “Studies in Milk Production,” Woll, Wisc. Exp. Sta., Research Bull.
No. 26,p. 74; figures from actual records of cows in contest.

THE COST OF FEED 17

be supplied by grain, which is about 1:6.5. Such a mixture
is supplied by the following ration:

Protein. Energy.
I50 pounds corn or hominy........... 10.5 132
too pounds distillers’ grains........... 22 79
TOO) POUNUS LAW yd aissys He hess systole chor els Io 48
LOO POUNASIOBES. |. ors sales eid plaral's shal siais 8 66.52
450 59.5 325

This ration supplies 50.5 pounds of protein and 325 therms
of energy. By dividing 454.51, the amount of protein needed,
by 50.5 we get the amount of this mixture needed for the year,
or nine. Expressed in another way, each cow of the size and
production indicated would require besides the hay and silage
9 times each of the different quantities of feeds used in the
above mixture. These feeds would not furnish the cheapest
ration at the present time, but are the ones commonly used
by the dairymen from whom Woll gathered his data. The
size and production of the cows assumed here are also the
averages for the Guernseys in these studies, and the prices
here assumed are the same as those used by Woll.

To summarize the feed cost, we have the following:

1,680 pounds of hay at $0.80 per 100............... $13.44
7,000 pounds of silage at $0.15 per I00.............. 10.50
1,350 pounds of corn at $1.00 per 100............... I3.50
goo pounds of distillers’ grains at $1.50 per Ioo..... 13.50
goo pounds of bran at $1.05 per I0o............... 9.45
goo pounds of oats at $1.10 per 100............... 9.90
PASEUTE TOG SEASON AC HS.OO.eni ac eels s <reta's cle esse lees 5.00
‘otal costiot feed fOr year. pains )ac fan aise ss 9,6 $75.29

The average cost of feed per year for 157 cows included in
the studies by Woll was for Guernsey cows of this class $70.95.
These cows averaged 8,500 pounds of milk, so the two results
differ by less than one-fifth cent per quart. Some of the
rations contained less distillers’ grains, making a cheaper ra-
tion, and some cows got more than 20 per cent of their total
food from pasture, both of which tends to reduce the average
cost. Others got some stover and straw.

This method requires considerable space for discussion, but

18 MILK PRODUCTION COST ACCOUNTS

it can be calculated quickly and easily, and can be applied
to any system of feeding. The accuracy of the method can
not be questioned, and it will not only simplify cost estimates,
but make them applicable under definite conditions at any
time. A further benefit from its use is that the advantages
and disadvantages of different systems may be studied. Gen-
erally it is not definitely known how valuable pasture really
is, and in some cases it is not considered economical to pasture
cows at all. A glance at the summary of feed costs on page
29 will show that although pasture was charged at $5 for the
season, still Woll’s figures indicate that the Guernsey cows in
the contests derived from 16.2 to 20.9 per cent of their total
feed units for the year from pasture. It is obvious that the
pasture was really worth several times $5.

As a further suggestion of the value of pre-calculated feed
costs, we find by referring to the Bulletin by Woll! that in
comparing the different breeds of cows, for the best 25 Hol-
steins the ratio of cost of feed to net returns was 100:107,
while for the best Jerseys the ratio was 100:143. The pasture
was charged at $5 per season, but on page 74 of Woll’s pub-
lication the 25 best Holsteins are shown to have received 12.8
per cent of their feed units from pasture, while the Jerseys
secured 25.4 per cent and at the same charge. This is simply
cited as an instance where such a method as is suggested can
be used in calculating feed costs, and in showing the advan-
tages or disadvantages of different systems.

Although in general it is well to have high production to
counterbalance the cost of maintenance, the last few pounds
of production of many cows cost too much. Often by feeding
less grain and not attempting to force to the very limit a cow
will produce somewhat less milk, but the total amount of milk
secured will be produced at proportionately less cost. A cost
calculation month by month will show when the cows are most
profitable and how expensive they are, or even how much the
profits of some months are consumed by expensive or forced
feeding during other months. ;

1 “Studies in Dairy Production,’ Wisc. Exp. Sta., Research Bull. No. 26,
p. 72.

CHAPTER III

THE COST OF LABOR

Lazor, although not the largest item of cost, is of consid-
erable importance in dairy herd management. It is of peculiar
interest because of its various phases and effects upon the
dairy industry. Some dairymen claim to have been driven
out of the business because of the difficulty of getting men to
work on farms where cows are kept, while others continue in
the business because it furnishes employment to regular help
at times when the men could not be used otherwise, although
it may not pay in full for the labor.

There is difficulty in securing good labor on dairy farms
when the men are expected to milk a few cows before break-
fast, then do a day’s work in the field, and return to milk
the cows again in the evening. Where the milking is consid-
ered an essential part of the day’s work there is no more diffi-
culty in getting good men on a dairy farm than on any other
kind of farm. On large dairy farms where the hours are defi-
nite and the work is regular, practically no trouble is found
in getting and keeping good men. On the small farms the
labor is performed with no extra cost and in addition to the
work in the field. When cost records on these farms show that
the milk is produced at a loss, it simply means that labor is
performed at a lower wage than the figure used in the cost
account, Often, however, the farmer is willing to do the work
for the increase in income, although it is less than a good
wage. Also the women and children do the milking and care
for the cows in some cases; on some farms the children are
home from school and can help with the dairying during the
busy season. Women and children usually are better milkers
than men, because their hands and muscles are not so hard.
The use of child labor on the farm is not to be compared with

20 MILK PRODUCTION COST ACCOUNTS

its use in the factory, for on the farm the children work with
their parents and under conditions that are helpful. The dairy
furnishes a good medium for using the children on the farm.
It may not, however, be out of place here to say that the
dairy farms more than any other are driving the boys to the
cities. Poor cows, poor barns, and the milking as extra work
discourage boys from remaining on the farm. On the other
hand, when good cows are kept, in convenient, comfortable
barns and when caring for them is considered a part of the
day’s work, or better still where the time is spent solely in
caring for cows, the work in the dairy is not objectionable to
most boys.

The labor cost does not vary so much on different farms
as does the feed cost, assuming that milk of equal quality is
produced. The system of management and the number of
cows kept are important factors. Where the labor is paid
for and used in caring for cows when it could be used other-
wise, it costs less for labor to increase the number of cows up
to a point where one man would devote all his time to the
dairy. There would be less time lost, the man would be
better satisfied, and the cattle better cared for. On the other
hand, it often develops that when the caring for the cows is
done on extra time or by women and children, and when the
herd is increased so much that the producer must hire extra
labor for the dairy, he often finds the business less profitable.
This in a large measure is the reason some dairymen who are
producing milk from large herds find it difficult to compete
with the smaller producer on a basis of the same grade of
milk. Some dairymen succeed with the larger herd by turning
to the production of a higher grade of milk, for which they
demand a higher price.

From the standpoint of actual time required per cow and
the efficiency of labor, the larger dairy is to be preferred. The
man who devotes all his time to the cows can give them better
care and lose less time. On dairy farms where men do work
in the fields much time is lost in changing from one job to
another, and a man can not do as good work in the barn when
he also does heavy work in the field.

THE COST OF LABOR 21

It is the practice of some in figuring milk cost to conclude
that the manure offsets the cost of labor. This may not be
far from correct on farms where summer dairying is practiced
and the cows are allowed to go dry in the fall and gather
their winter maintenance from corn fields and straw stacks.
Sheppard and Richards! in their cost estimates state that:

“Only the cost of feed is included in the cost of production. The
value of manure is taken as offsetting the cost of labor, as is cus-
tomary to do in preparing estimates of this kind. If the cows were
credited with the value of the manure, it would no doubt offset
the cost of labor required to care for the herd.”

With winter feeding and care, and especially where clean
milk is produced the manure is not worth the cost of labor.

The number of cows in the herd is a factor to consider.
Certain operations take about the same time whether many
or few cows are kept. In general, it takes five times as long
to milk five cows as one, but twenty cows can be fed or brought
from the pasture in about the same time as five. The amount
of milk a cow gives is also important, for it requires no more,
or only a little more time to milk a cow that gives a large
quantity than one that produces less.

The cost of labor required to care for a cow a year is given
by various authors as follows: Truman? $33.60, Minkler* one
man for twelve cows, at $1.50 per day, or $43 per cow per
year, Rasmussen * $22.33; on specialized dairy farms each man
takes care of fifteen cows, or $36 per cow per year. Hooper
and Robertson ® estimate the cost at $23.12 per cow, or 154.5
hours a year, or 25.4 minutes per cow per day. Thompson ®
states that on dairies studied, 155 hours of labor were required
to care for each cow and accompanying stock in herds of
twenty, or less cows, and 107 hours in herds with more than
forty cows; the cost was $18.11. Johnson and Ford’ state

1 “ Dairy herd records,’’ No. Dak. Agr. Exp. Sta., Bull. No. 91, p. 153.
2 Storrs Conn. Exp. Sta., Bull. No. 73, p. 130.

3 New Jersey Exp. Sta., Report, 1909, p. 165.

4 New Hampshire Exp. Sta. Ext., Bull. No. 2, p. 9.

5 New York Exp. Sta. (Cornell), Bull. No. 357, p. 153.

§ Tbid., Bull. No. 364, pp. 147 and 140.
7 Missouri Agr. Exp. Sta., Bull. No. 125, p. 310.

22 MILK PRODUCTION COST ACCOUNTS

the average cost of labor on certain Missouri farms was $24.60
per year per cow. Warren! concludes that in well-managed
dairies 150 hours are required per year per cow, and that in a
study of labor cost it is necessary to decide the kind of milk
being produced. The necessary extra time to produce clean
milk is less than many suppose. Whittaker? gives as the
additional time necessary to raise ordinary conditions 16 points
in score, only 15 minutes per cow per day. He summarizes
conditions involving expense as follows:

Item. Minutes per day per cow.

GCleanliness| Of COWS ec ieee iran ne 5
Cleanliness of stable and air................... 3
Cleanliness of milkhouse...................605 2
Scaldingvwtensilseweeccaectem civics tecceacine pias eek I
Waping udder: iv tis 4 be ee teye nines Crtecroreamrsrede 2
Removaltofanilky ys seer ties ae reeieini sje caret 2

MROEALA reenter he crore ienc ee ie hie 15

““To increase the score of a dairy from 42 to approximately 70
points, there may be in fifteen-cow dairies an added expense of 5
cents per cow per day for labor.”

In large herds and where a high grade of milk is produced
the following units of time for each operation will be found to
be applicable:

Operation. Time required per cow per day.
Cleaning stables of manure....7/...........5. 3 minutes
Beedherainvand roughage eae acsearle 3.5 4
GroOnt..c55.Upiaire aischece a aesteds Miniaiene C Sict eC aeette 3 .
Washtcows: a. voli de nether cee tect 3 us
IBECICOWS BARRA Wa WEREEAE cheinecy raters earths tana Tit a
Minlkcowsi twice at dari cvisieaty vesreisieiaiginern sis oe Io o

PRO Gale peel civ ery cosh wate Se eae EARS Marae 24 minutes

These units are only applicable where the barn is conven-
ient, and where the men do nothing but care for the milch
cow and not the young stock which accompanies them. It is
on a basis of each man doing a particular single operation.
The man who feeds does nothing else, and the milkers only
milk the cows.

1 “Farm Management,” p. 122.
2 U.S. Dept. of Agr., Bur. of Animal Ind., Circ. No. 170, pp. 128-129.

THE COST OF LABOR 23

A man can do the work in the barn where there are 20 to
25 cows, but when one man performs all the different opera-
tions he can not do them in the time stated. The above table
does not provide for the time required to care for the milk and
utensils. Where a system of soiling is followed, fewer cows
still could be attended by one man. Under conditions where
20 or more cows are kept and where pasture is used for several
months a figure of 180 hours per cow will be required. With
ordinary care this figure may be reduced considerably. This
accounts for the full time of a man 365 days at 1o hours per
day for 20 cows. Time of course must be deducted for vaca-
tion and holidays, but this is compensated for by the decrease
in labor when the cows are dry or when on pasture. It is
therefore a fair and practical procedure to calculate the cost
of labor on a basis of 20 cows per man, or to pre-calculate
labor cost by dividing the cost of one dairyman per year by
20 to get the cost per cow. At a price of $45 per month,
without board, the cost per cow is $27.

The cost of labor varies widely in different sections and also
with the seasons, but the dairy furnishes employment fairly
constantly for the men throughout the year. The study of
labor cost is also desirable to show the returns for labor per-
formed by members of the family when they are employed in
the dairy.

The milking machine is being used to a considerable extent
in some sections in an attempt to solve the labor problem.
With 20 or more cows the machine will likely come into more
general use. There is not, however, at the present time any
accurate record covering long periods where actual time records
show a decrease in cost due to the use of machines. It has
been shown in experiments by the author and others that the
machine in the hands of a careful man will milk a cow well and
apparently has no injurious effect upon the cow. It has also
been shown that with especial care milk with low bacteria
content can be produced with the machine.

CHAPTER IV

THE COST OF BUILDINGS

In dairying a charge must be made for the use of the build-
ings. This is best figured from costs which include interest on
investment, repairs, insurance, taxes, and depreciation. It is
a rent charge. Several problems present themselves in a cal-
culation of this cost. The first question to be answered is,
which buildings should be charged to the cows? It has been
customary to include buildings for cows and the storage barns
for hay. Where hay is charged to the cows at market price
it is not just to charge the cows with the storage barns also.
It is necessary to have the hay barn even if cows are not kept.
If the price of hay charged to the cows, however, is based on a
price of purchase of the year’s supply in haymaking season,
the storage will of necessity be included in the cost of milk
production. We shall not consider the storage-barn cost a
proper charge to cows, for we have charged hay at market price,
and it is necessary to have the barn to store the hay for market
even where it is not fed to cows on the farm.

The cost of a barn for dairy cows varies widely, depending
upon its durability, construction, convenience, and sanitary
condition. It may pay to build more substantial barns, barns
that will depreciate less, and be less subject to destruction by
fire. The difficulty has been that methods of housing has
changed frequently. The best shape or size of building has
not been definitely determined. The tendency has been to
construct expensive barns for the housing of dairy cattle where
especially clean milk is produced. In some cases cows are
kept in barns so expensive that the overhead charge for in-
terest, taxes, and insurance has made profitable milk produc-
tion an impossibility. The comfort and health of the animals,
however, must be maintained. The present tendency is to

THE COST OF BUILDINGS 25

build less expensive barns or to provide only open sheds for
dairy cows. In most sections this will greatly decrease the
overhead, keep the cows in a more healthy condition, and
decrease the cost of labor. Some large producers plan to have
one central milking and cleaning barn and allow the cows to
run in open sheds or in closed yards. This arrangement will
do away with the expensive milk barns and greatly reduce
the cost of labor, as it will not be necessary to keep so much
space clean enough for the milking. Some expenditure for
convenient barns often lowers the total cost of production by
decreasing the cost of labor.

The open shed system, however, has not come into general
use, and the calculations herein are based on the cost of per-
manent closed buildings. Stone, brick, cement, hollow-tile, and
other permanent buildings for dairy cows have come into gen-
eral use in recent years. The cost in some sections is only a
little more than for frame buildings, and the depreciation and
danger from fire is considerably reduced. The latter item is im-
portant, especially where a good strain of cows has been devel-
oped. Concrete floors with cement plastered walls are desirable
from the standpoint of sanitation. They can be cleaned easily
and thoroughly. Cork and creosoted wood blocks also are used.
These make the bed for the animals more comfortable; they
are not so cold, and the cows are less likely to be injured by
slipping. It should also be noted that these floors require less
bedding than where concrete is used, which in some sections
is sufficient to warrant the additional expense, in view of the
relatively high cost of bedding. The interest per cow on well-
constructed buildings is comparatively high, but the depre-
ciation is low. It has been the practice to build two-story
barns, with the feed stored above. In a study of this prob-
lem made by the author it was found that no saving in cost
results from the arrangement when the safety of the cattle
is considered; also that with the proper arrangement of feed-
ing facilities the labor required is not made greater by having
separate buildings for the feed and for the cows.

A two-story barn must be built strong enough to hold the
hay, and if a fire-proof floor is included the expense is consid-

26 MILK PRODUCTION COST ACCOUNTS

erable. By storing the hay on the ground floor the cost of the
storage barn is greatly reduced. The cows can then be housed
in a separate one-story barn, which can be kept more sani-
tary and in which the cows are in less danger from fire.

The number of cows to be kept in a herd is a factor in
unit cost of building. The cost per cow is less in a 50-cow
barn than in a 20-cow barn of the same construction. The
cost per cow for the barn varies in good dairies from $25 to
$100 or more per head. A 50-cow barn of modern construc-
tion, such as a hollow-tile or concrete barn with concrete
floors, walls, and ceiling, can be built for about $80 per head.
This is for a good barn with proper ventilation system and
modern sanitary arrangement, for a specialized dairy capable
of meeting all requirements for the production of a high grade
of milk.

Interest on investment may be figured at 5 per cent. The
insurance will be from o.2 to 0.4 per cent, depending on the
relation to other buildings, etc. The taxes will vary consid-
erably, depending upon the locality and method of assessment,
and especially upon whether the enterprise is taxed separately
or included in the whole farm tax. If assessed at one-half
value, at a rate of 2 per cent, the item of taxes would be 80
cents per cow per year. The depreciation and annual repairs
of a building of this kind would not amount to more than 4
per cent. A summary of the cost of building under these
conditions would be as follows:

Interests hoovatss Pers COM bernie pet -wuie eye etoche cee vers $4.00
IMsurancengsorat O.sppelCent remus erjorinicts tieie/vee p2

MAKES WACO Aba DEL ICEDIL.prscleie creicrt ay tetas ol ckateies sist ehevors .80
Depreciation: Sorat 4yper Cents. se je. eee cles ciel: «lr 3.20

MotalwuniticOst OMMOusin ee = .esemcise se ciate lainte oe $8.24

CHAPTER V

THE COST OF CATTLE

Tue charge for cattle or for their use is the most disputed
item of milk cost. A question that first arises is shall the
cows be invoiced at cost of production or at a price at which
they could be bought or sold as milch cows. Most cost ac-
counts make use of the latter figure. The cows are valued at
the beginning of each year at what is believed to be a fair
sale or purchase price of the animals, even if they have been
raised at less actual cost. This is not good business, for
it inflates the capital really invested, and does not represent
actual cost. In a previous chapter the feed charge is based
on selling price of feeds raised on the farm; with cows, how-
ever, the cost of production is recommended as a basis for
computing the cost. This may seem inconsistent, but the
charges are not on the same basis, for the farm is independent
of the dairy. The cost records are kept for the purpose of learn-
ing the income from the dairy itself. Profits may be secured
from the farm and it is unfair to give to the cows the credit
for the management and risk of that enterprise. The raising
of cows, on the other hand, is a part of the work of the dairy,
and, if the animals are sold the business is that of raising cows
and not of producing milk.

In calculating the cost of cattle in milk production, there-
fore, the depreciation, interest, insurance, and taxes should be
based on the cost of producing the cows if they are raised by
the dairyman, or on purchase cost if bought. When the cost
of production is less than purchase price for the same grade
of cows, the advantage of raising the cows is apparent. Often,
however, cows can be purchased for less than it would cost to
raise them. To build up permanent dairies it is necessary to
raise the cows, especially if a high-producing, healthy herd is

28 MILK PRODUCTION COST ACCOUNTS

to be maintained. When high-priced cattle are purchased the
overhead expense of cows is greatly increased.

In the raising of dairy cows to the age of two years the
studies of Bennett and Cooper! furnish material for pre-
calculating the cost. Careful records of cost for a period of 5
years were kept. The following amounts of feed were con-
sumed, on the average, during the first two years:

First year. Second year.

Wihote:miblonyii te. Seton Me ne nny eet 342
Sherman ki isa svete crae years tae Cares RAT Ora 3,165
IMGIXE Cay Wiener Stee AERA RAR Lae 857 1,120
Gorsilage. ce MAM ieyad rian tegatana, 352 3,250
Grainvmixturese ree ae eee eve 547
Basturals cayiceee ene Mate Meron niet nL eae 123 171
Cornystovierha wee uct mealies eeneeee Shaete 672

With these data the feed cost can be calculated. If we
assume the same prices for feeds as were used in figuring the
cost of feeds for cows, and with skim milk at 20 cents per
hundred, whole milk at $2. per hundred, mixed hay at $15 per
ton, corn silage $3 per ton, corn stover $6 per ton, and the
grain mixture $1.15 per hundred, we find that with the above
amounts consumed the feed cost to raise a heifer to two years
of age is $47.51. Some of these prices will apply to present
conditions; some are higher and some lower. They are used in
order that the same basis of prices may be carried throughout
this study.

The labor required to care for these animals during the first
year was 4o hours, and during the second year 23 hours. At
a price of 15 cents per hour, as is used above, the labor cost
would be $9.45 per head for the two years.

The other expenses, including interest, buildings, equipment,
bedding, loss by death, and miscellaneous expenses amount to
$16.67 for the two years. This makes the total cost of raising
the heifers, including feed, labor, and overhead, $73.63. <A
credit of $12 for manure for the two years makes the net cost
for a two-year-old heifer $65.63. This corresponds very closely

1 U.S. Dept. of Agr., Farmers’ Bull. No. 49.
2 Bran, 4 parts; oats, 5 parts; and oil meal, 1 part.

THE COST OF CATTLE 29

with other cost records. Truman! figured the total cost of a
two-year-old heifer to be $70, but he added $4 as the initial
value of the animal, while Lindsey ? found the cost under con-
ditions of higher cost of feeds and with an initial charge of
$4 to be $74.24.

An initial charge for the calf should not be included, for
there is no actual cost. The calves would be produced even
if it were necessary to slaughter them at once. When a cost
price for the calves is not allowed, the cost price of milk is
more nearly accurate. With male calves not needed to main-
tain the herd, instead of a charge the calf represents a credit.
The amount of credit to the herd for calves is discussed in a
later chapter.

With the heifer coming into the herd at a cost of $65, it
must next be determined how long she will likely be in the
herd as a profitable producer of milk and how much she will
be worth at the end of her period of profitableness as a milk
producer. The amount of depreciation per year will depend
upon the number of years the cow is profitable, and is the
difference between the cost of the cow at entry into the herd
and her sale price as beef. A high-cost cow depreciates more
than a cheaper one, for both are worth about the same when
sold for beef. Often the less expensive cow sells for more on
account of her more beefy conformation. The length of use-
fulness of cows varies, but on the average the economic life
of a dairy cow is much shorter than is generally believed, and
is a large item of expense, especially where high-cost animals
are kept. Various estimates have been made of the length of
time a cow should remain in the herd. The average life of a
cow according to Rasmussen*® is about 6 years. According
to actual records by Thompson ‘ in herds of Delaware County,
New York, changes in cows were made which indicated that
the average productive life of a dairy cow was only 3.6 years,
while in a survey of opinions of 174 farmers in the same county

1 Mass. Agr. Exp. Sta., Amherst, Bull. No. 164, p. 70.

2 Storrs, Conn. Exp. Sta., Bull. No. 63.

3 New Hampshire Exp. Sta., Ext., Bull. No. 2, p. 12.

4 New York Agr. Exp. Sta. (Cornell), Bull. No. 364, pp. 130-131.

30 MILK PRODUCTION COST ACCOUNTS

the average is estimated as 5.8 years. The statement is made
by Thompson that this is perhaps a more reliable figure.
Studies in farm management by the U.S. Department of
Agriculture! show that the dairy cows of Chester County,
Pennsylvania, remained in the herd 4.34 years, while in Lena-
wee County, Michigan, they remained 4.52 years. Four, five,
six, and seven years are given by different authors as the
average life of a cow in the dairy herd. There is no doubt
considerable difference in the productive life of a cow, due to
varying standards of production. By one dairyman under
certain conditions a cow may be considered a profitable ani-
mal, while with another under different conditions the same
production would be unprofitable. In the studies made by
the Department of Agriculture valuable data on the rate of
depreciation of dairy cows have been assembled. The results
are based upon the operations of 643 farms in Chester County,
Pennsylvania. The data are offered to form a basis of obtain-
ing the approximate average charge which must be made for
depreciation in cows, and the authors say: ‘“‘This method may
be applied to an individual herd of cows as well as to the
average of a large number of herds.” The average annual
loss in Chester County on dairy cows was 11.82 per cent of
the average of the inventory value for the beginning of the
year. Similar calculations for Lenawee County, Michigan,
gave the annual depreciation as only 4.07 per cent. This dif-
ference is due to the difference in price at which cows are
bought and sold in the two localities. In Michigan the aver-
age price paid for cows was $48.48 and the sale price of the
discarded cow $42, while in Pennsylvania the cost was $63.84
and the sale price $37.36.

Although these data are valuable, the percentages can not
be used except under the same conditions and prices. This
is seen by the great difference in the percentages for Pennsyl-
vania and Michigan. In an attempt to get a method that

could be used under all conditions the formula ~—~ , where x

represents the cost of the cows, y the sale price of discarded
1 U.S. Dept. of Agr., Professional Papers, Bull. No. 341.

THE COST OF CATTLE 31

cows, and m the years of usefulness, was decided upon. A
definite value for ” is a problem that is attended by the diffi-
culty of obtaining a figure that may be substantiated with
actual figures. The length of use of a cow in herds where
records of production and feed consumed are not kept can
not be used, for it is not possible to tell without these data
when the end of the cow’s usefulness has come. This no doubt
also largely accounts for the fact that during recent years the
length of service of a cow apparently has shortened. There-
fore records of cow-testing associations are resorted to. The
actual ages when the cows are discarded are not recorded,
but the ages of the cows are given. In records on file in the
Dairy Division of the U.S. Department of Agriculture the
ages of 13,856 cows in associations are given. These represent
cows in different sections of the country, kept under different
conditions of feeding and management, and in some cases
represent the same group of animals for six or seven years.
The ages of particular cows do not indicate definitely when
these particular cows will die or become unprofitable, but the
ages of great numbers indicate the probable length of life.
For the determination to be more exact and similar to the
method used by life insurance actuaries, a record of the cows
of the different ages that die during any particular year is
also kept. Owing to the large number of cows recorded and
the long period of years covered, it is assumed that the aver-
age age at exit can be calculated from the number living at
the different ages. In some sections a greater proportion of
the cows may have been discarded the first year of the asso-
ciation, though it will be seen that in the associations that
have been running for six and seven years the number of old
animals does not increase. The following table gives the ages
of cows in the 52 cow-testing associations reporting the ages
of the 13,856 cows recorded by the Department of Agriculture:

32 MILK PRODUCTION COST ACCOUNTS

AGES OF COWS IN COW-TESTING ASSOCIATIONS

Name of Association. Year.
Canton Maine i. eels tes Ge 1908- 9
Naot Wienges wel o avyted ie bie ashen 1910
Waterford and Norway, Maine..... IQO9-10
Waterford and Norway, Maine. ....1911-12
Waterford and Norway, Maine. ....1912-13
Waterford and Norway, Maine..... EQTS—EA\
Waterford and Norway, Maine..... IQI4-I5
Waterville, Maine................. IQIO-II
Somerset County, Maine........... IQIO-II
West Penobscot, Maine............ 1909-10
Winthrop, Mainesss 0.030. ass.er eee 1908- 9
Newaygo County, Michigan........ 1906
Newaygo County, Michigan........ 1907
Newaygo County, Michigan........ 1908
Newaygo County, Michigan........1909
Newaygo County, Michigan........ IQII
Newaygo County, Michigan........ 1910
Newaygo County, Michigan........1912
Newaygo County, Michigan........ IQI4
Stillwater, Pennsylvania. .......... IQI4—-15

Barron and Rice Lake, Wisconsin. . . 1909-10
Barron and Rice Lake, Wisconsin. . . 1910-11
Barron and Rice Lake, Wisconsin. . . 1914-15
Black River Falls, Wisconsin....... IQI4—-15
Bloomer and Eagle Point, Wisconsin . 1909-10
Bloomer and Eagle Point, Wisconsin . 1913-14

Briggsville, Wisconsin............. IgIo-II
Columbus )Wisconsins sto.) eee IQI3-14
Clear Lake and Reeve, Wisconsin. . .1914-15
BauiClair, Wisconsin. 50.5) pc. s. IQI4-I5
Fennimore, Wisconsin. ............ IQI4—I5
Fox River, Wisconsin. <2. 04. ... 4% 1909-10
Gilmanton and Dover, Wisconsin. . .1914-15
Pola Wiscanstare c/o by cael lal IQT3-14
Lake Mills, Wisconsin............. 1909-10
La Crosse, Wisconsin.............. IQI2—-13
Ontario, WiscOnsitie co)... 2/s'. ool IQI4-I5
Portage County, Wisconsin........ IQ13-14
Preston); Wisconsin’... s'o54 cre sealed IQI4-I5

River Falls and Roberts, Wisconsin . . 1913-14
River Falls and Roberts, Wisconsin . . 1914-15

2

4

5

32
94
62
47
35
35
28
13
28
28
41
ert
27
24
33
T5
15
28
46
68
24
30
46
37
30
14
2
33
27
22
17
23
58
48
34
33
19
36
52
30
34

34

THE COST OF CATTLE 33

AGES OF COWS IN COW-TESTING ASSOCIATIONS — Continued

7 8 9 POP te eas) tan, ea See 29) $8)" ‘x9! Total
35 SO BEI Ay) A a 318
57 60° 46 «28 8 EW yak SANE Sa aoe 574
43 33 22 14 rt Sie Sy Se NL 357
27 21 17 17 9 DS hy Sh NOW one iro 203
21 22 21 OF) {tO Fe Sits Reh ie ee 270
24 23 12 17 4 Sta A NAS ANT I 274
27 20 IQ LOY £5 AE MONS Te tae hae reg 288
20 20 5 II 5 Ze! CORNY e 179
29 22 II 8 5 STIR SAME Ge MMC Me to \ ire HAI 257
20 T5 9 3 5 Fo Ans 204
27 5 II 5 I ae 211
14 25 15 14 2 AVA MONON Es oT 211
26 25 II TRL aes SM Ze Onn 2 tO T 246
19 18 22 I5 a Qe aun 202
42 BUS EOS EO Te a By Ng 285
25 16 27 EZ 7 FOU 20/0.) 2 303
20 35 13 TALE ae ae 2 267
14 23 9 2i 9 7 ohiis 397
17 14 6 2 4 513 co ae 337
65 59 30 15 8 Bri Oe (28 One, One a 566
13 16 9 3 5 a 180
14 II 5 ,/ 2 Avi Moje Wat 175
21 23 Io 13 I TO VOR Oh On reed 337
17 22 7 6 I BS he Toe {2 269
16 I5 3 I 4 Ka Onn Ok cOl ys ot 104

7 7 2 5 To
20 28 2I 12 6 AAS NL 195
27 I2 6 4 3 a) io: I 208
13 I2 4 6 206
14 £5 to Z 4 Ay ti See 3 187
31 26 14 2 6 BRE 285
18 Vin yer tae A aa Oi MON nee 247
31 27 I9 Io 9 GMS Once san Ou re ae T 357
31 23 I5 II 2 Aone s 207
14 7 It 5 159
35 42 I5 8 6 Sete ere eT 249
19 22 I2 6 2 BAO: & 229
14 18 13 7 2 Gaya 268
24 20 12 8 5 Bei? 309
33 24 ste) Io 2 2 372
32 24 II 7 I 2 282

34 MILK PRODUCTION COST ACCOUNTS

AGES OF COWS IN COW-TESTING ASSOCIATIONS — Continued

Name of Association, Year. 2 3 4 5 6
sparta, NWISCONSIN. > ciesie Whine Seles IQOQ-I0 40 31 27 31 24
Stanleys| WISCONSIN. ws eee ak sis c ee IQI2-13 3 28 34 39 37
MomalasWASCONSION sete tginie steele I909-10 21 36 35 31 eit
Waukesha, Wisconsin............. Igo09-I0 7 19 26 22 16
Waupaca, Wisconsin.............. IQI3-14 58 47 36 54 21
Waupaca, Wisconsin.............. IQI4-I5 78 tI02 55 48 45
Waupuns Wisconsin. ..22. 00-5 426 IQII-12 47 39 20 31 35
West Salem, Wisconsin............ I9Q0Q-I10 40 44 56 40 32
West Salem, Wisconsin............ IQIO-II 25 49 33 44 42
Whitewater, Wisconsin............ 1909-10 23 39 38 18 29
Wialtses"Wisconsine. o)..'.025.cc see oe IQ13-14 44 31 42 65 42

MOG Es krastvaimiciads eta teiots te otro eraisiene as 1916 2,353 1,962 1,821 1,641

It will be noticed that there is an increase in the number of
three-year-old over the two-year-old cows. This is accounted
for by the fact that some are not bred to enter the herd until
three years or almost three years old. In order, therefore, to
get a figure for the probable number leaving the herd the
first year, an average may be taken of the decrease between
three years and six years as the decrease between two and
three. This is found to be 237. In some sections a larger
proportion of two-year-old cows are discarded during the fol-
lowing year than in others. Some discard heifers the first
year if they do not produce a certain amount of milk, while
others give the cows a longer trial. Assuming therefore that
the decrease between two and three is 237, the calculation
may be continued as follows:

Mier atytwoure nc utecier carries ie icleia ae cites 1,916
BNteraethreese ia catomertoe Cn ean eo gu eO eke 674

Mi Gtalvenitervinc wetetvorvareteuenne be acces. suesgers 2,590
Assumed decrease between 2 and 3.......... 237
Numbers yearsioina ges: on) escntsiace ceils 2,353

The next step is to get the average age at entry. Some
dairymen make it a practice to have the heifers freshen at

THE COST OF CATTLE 35

AGES OF COWS IN COW-TESTING ASSOCIATIONS — Continued

7 8 9 TO EE ee bs TAN, Be) FQ" EF 8 FO | Total
26 15 7 I ° Ae ge 211
28 20 Io 16 6 Pst wee 232
27 14 ste) I Aeon 02 217
13 II 7 ° 2 I 124
25 20 14 8 2 Chins 291
22 23 19 II 4 SM As ea best iy) ot 415
I5 16 5 3 2 Es RE 233
26 25 II 13 2 At NED OS Woy IME 296
20 17 IO 4 7 251
25 TG: =) TO 6 3 5 214
25 18 a) 14 7 Guy on ae 300
Bede: D054.) 083 4502 (233 190 .€0'' 43.17 Ir 6.) Fr 8 13,856

(Associations — 52.)

two years, while others for various reasons do not have them
come into the herd until older.

1,916 X 2 = 3,832
GOFAL: ='2.022

5,854.
5,854 divided by 2,590 = 2.26

The average age of entry into the herd is thus given as 2}
years. But it is customary to consider an animal two until
it is three years old; in some cases the nearest whole number
is given as the age. The average, therefore, of the two-year-old °
heifers will be 2} and the three-year-old heifers 34 years old
at entry, so one-half year must be added, giving an average
age at entry into the herd of 22 years. In the table below
the ages.are given in whole numbers. The number of three-
year-old heifers, for example, is 2,353, but these are really 3}
on the average, and the average age at exit between 3} and
4 would occur at four years.

26 MILK PRODUCTION COST ACCOUNTS

Age at Decrease.
exit.
Gh SE AR VS 711
4. X 391 = 1,564
5 i 24k = 705
Ox OOmn— Ooo
7 X 373 = 2,611
Ot Que A nO
9 X 451 = 4,059
Lox) Tor) =) 1,500
It X 269 = 23950
I2 X 43 = 516
I3) < 2EO. = 1)'0,430
TA Done ey (tigate
TS) (a e20r as 390
OnE 6 = 96
7X 5 = 85
EO) ux 5 = go
TO o = °
ZOU I= 20
Total 109,716

The total, 19,716, divided by the number of exitants, which
is 2,590, gives the average age at exit as 7# years. The aver-
age age at entry we found above to be 2% years, so that
average life is 44} years. It is probable that if the present
standard is maintained the years of usefulness will increase as
the associations become older and as better care is given the
cows. ‘This, however, furnishes a figure which should be very
near what may be expected, and if the cost of cows is computed
on the basis of depreciation which replaces them every 5 years
the herd will be maintained. There are many factors that
shorten the economic life of a cow. Death is a small factor,
and only accounts for 1.69 per cent in Pennsylvania dairies
and 1.31 per cent in Michigan.! Udder troubles, tuberculosis,
failure to breed, and accidents are some of the other causes
for a shortened period of usefulness in milk production. Some
valuable cows which continue to breed are kept after they are
not profitable as milk producers, but this number is very
small. In the formula below account is not taken of the cows

1 U.S. Dept. of Agr., Professional Papers, Bull. No. 341, p. 65.

THE COST OF CATTLE 37

that die or those that can not be sold for beef; in general the
relatively small number would have little effect on the average.

With a figure for the probable length of usefulness of a cow
to determine the depreciation per year, all that is necessary
is to subtract the final sale price of the cow for beef from the
cost upon entry, and divide the result by 5, the average length
first cost — final price

length of life

With a cow weighing 1,000 pounds, and cows selling for 4
cents per pound, and with a first cost of the cows of $65, the

of life in the herd. The formula would be

depreciation per year is 2-85. The depreciation would

be quite different if $200 cows were bought. In that case it
200-40

would be =$32 per year. A few good calves may soon

pay this extra cost, but when it is charged to the cost of milk
it is an important factor. Depreciation is least when large,
common stock is kept, for at the present high price of beef
large cows can be sold for almost as much for beef as they
could be raised for or bought as dairy cows. Some make it
a practice to be constantly buying and selling cows, but this
encroaches upon another business and should not be included
in the cost of producing milk.

Interest, taxes, and insurance are other charges in the cost
of cows. Interest may be figured at the same rate as above,
5 per cent, and taxes also at the same rate, although in many
sections it is a common practice to base the taxes on the land,
no greater taxes being charged where 50 cows are kept than
where there is only one. Dairy cows are seldom insured
against death by disease, except in the case of particularly
valuable animals. Insurance against fire and storm is a small
item. The total annual cost of cows is, therefore, as follows:

65-40
Depreciation, So ys OSU MUR $5.00
5
insuxancel posnatorg per Cet. ls. sce ciaissccce ese ss Wate sei
AXES MS 2.yO late AIMeEn CNC mnie nas coins e!selata nee 65
IMLETestio Gyalbs Gem eL CLs tusie sisters «chess w cisatete tats 3.25

WotaliGost Per COW PEF VERE. fovie sees ee ia viaje oss $9.21

CHAPTER VI

THE COST OF BEDDING

On the farm with a small dairy, especially where located
some distance from the city or from markets, the problem of
bedding is a small factor. In localities, however, where straw
can be sold at a good price and where a large number of cows
are kept bedding is a material item of cost. A great many
substitutes are being used for bedding for dairy cows, sawdust
and shavings being the most common. These are in quite
general use on farms where high-quality milk is produced,
because of the difficulty of getting straw that is free from dust.
It has been thought by some that sawdust and shavings are
injurious to the soil, though this has not been demonstrated.
It is, however, certain that the manure is not so valuable as
when straw is used. Waste hay and stover are also used to
bed cows, but usually these materials contain too much dust.

When the cows are kept tied in rows and on a platform,
the shavings and sawdust can be used with less work and will
keep the cows cleaner. Baled shavings are preferred to all
other kinds of bedding, for they can be handled with less
labor, will absorb the liquid manure well, will stay where
placed, making it possible to keep the cows cleaner, and are
relatively freer from dust than straw or stover. Where the
floor is tight and smooth both sawdust and shavings can easily
be removed.

The amounts of the various beddings needed will depend
upon the management, the length of time the cows are kept
in the stable, and the nature and condition of the floor.

The absorptive properties of different bedding materials are
given by Doane! as follows:

1 ““ Tests of Material for Bedding Cows,” Md. Agr. Exp. Sta., Bull. No. 104,
Pp. 9.

THE COST OF BEDDING 390

Water absorbing Pounds of bedding

Material. power of bedding. required to absorb
for 24 hours.
OE SEOMET raed is tiara icc hil al chats relat te 205 4.0
Re WHEAL SEEAW oon tc cay elles Hensice ses 2.0 5.0
MUmGuE witesty Straw etel- (0 lssayels|o'm «yene's 2.0 5-0
Sa rUSLie ee sve merce Hattie ve) eh cteleier shake ators 0.8 12.5
AVERAGES jo id'a x cies Se emt ad tala aie a's ohare 2.2 4.4

Before making a calculation of bedding cost it is necessary
to know the system practiced — whether the cows are kept in
at night, or for how long each day, and the length of time on
pasture. We may assume that they are kept in the barn 24
hours per day for 8 months. The other four months of the
year they would be in the barn a few hours perhaps, but
would likely not use bedding, except a little to absorb the
liquid manure if there were no other means of collecting it.
The amount of bedding needed per cow per year would there-
fore be 5 X 240, or 1,200 pounds of wheat straw, 12.5 X 240, OF
3,000 pounds of sawdust, and 4.4 X 240, or 1,050 pounds of
shavings. If we assume straw to cost $5 per ton, sawdust
$1.50, and shavings $6, we get costs for bedding with straw,
sawdust, and shavings of $3, $2.25, and $3.15, respectively.
The prevailing price can be substituted in particular cases.
Rasmussen! says that bedding cost at the New Hampshire
Station one-half cent per bushel for sawdust and one and one-
half cents for handling, making a total of two cents, and that
on the average 200 bushels are required per cow per year,
making a total cost of $4. Minkler,? of the New Jersey Sta-
tion, bedded cows with one bale of shavings per 20 cows, at
a cost of $5.30 per cow per year.

1 N. Hamp. Exp. Sta., Ext. Bull. No. 2, p. 14.
2 New Jersey Exp. Sta., Thirty-first Annual Report.

CHAPTER VII

THE COST OF SIRE

THERE are two factors that determine the cost of the sire
per cow, namely, the expense of keeping the sire and the
number of cows served. The first cost of a bull varies greatly,
and ranges from the cost of raising to hundreds and even
thousands of dollars. It requires for a particular herd no more
expenditure to raise a good bull than a poor one, but the initial
cost is more, and if the bull has especial promise or has been
tried and especially good animals secured, his sale price and
also his intrinsic value may be very high. The effect of a
sire that will get daughters with greater production ability
than their dams is worth much to the herd that is being
developed. From the standpoint of cost of production of
milk of a particular generation, it is not correct to figure the
cost of sire on the basis of an expensive animal, for a cow will
be no better as a producer and no more economical in her
production because of the use of a good sire in getting her
calves. The calves are of greater value, which will increase
the cost price of cows in the next generation. A bull that will
be likely to give calves equal to or better than the 8,500-
pound producers taken as a basis of calculation in a preced-
ing chapter would cost perhaps $50 when a few days old. It
would cost somewhat more to raise a bull to two years of age
than a heifer, but the bull could be used some during its sec-
ond year. It is reasonable, therefore, to assume a cost of
$100 for the bull at 1 to 1% years of age. The expense of
keeping a bull is somewhat different from that of keeping a
cow. More room is required and more bédding is needed,
while the feed will be somewhat less than that required by a
high-producing cow. The taxes, interest, and insurance should

THE COST OF SIRE 4I

be considered on the same basis as in the case of cows. The
depreciation is greater, because the initial cost is higher, and
the period of usefulness in a herd is no longer, on the aver-
age, though sometimes the bull may be sold at a price greater
than he would bring for beef, for use in another herd. A bull
usually is heavier and, unless old, will sell for more as beef
than a cow. On the average, 4 years is as long as a bull can
be used in one herd to advantage, unless a large herd is kept
and several bulls are used. In this case the bull could be
used with cows from other bulls.

On the basis of $100 for the sire, the following cost per year
must be charged as a part of the expense of producing milk:

GE Rae oe ites eter te aiet is ra tanay suas inter oh ears Pei heh he Stan ads $50.00
PabOr, HOG MGUES AR POLE Ss a). e's ots si PEs he ral ated aledehes 24.00
Depreciation, $100 to $60 in 4 years. ............--. 10.00
Interest on! Groolat 5 percent \. es eee siete 500
imsurance, Sroolat O12 per GENE: sq. <)-e))-13.5 a} olejsle mis 30
MAKES ps OVaAb ByPET COME. sieracl «'s/si0'e seve) shel cbereeveieieielsr aie 1.00

Mlotalicost, Wel Vedwa aida skn a tele claire eerste ita $90.00

CredrGtor manures ol ara wicise cleo aloererersraets 20.00
INGE GOSHEN Veale nos a mista aeolsneie cic ats so! ere) sesincetslieerenctele $70.30

The number of cows served by the bull is the greatest factor
in the cost per cow. A bull will serve as many as 100 cows
during the year, or even more, but in practice the service is
not regular, although an attempt commonly is made to have
fresh cows at different seasons. It should also be remembered
that there are not so many or seldom as many as Ioo cows in
the herd. The greater part of the milk of this country, as
is suggested above, is produced by small herds, and it is in
these that the bull service is so high, especially where expen-
sive bulls are kept. Following the table above, with a herd
of 10 cows the service per cow would be $7.03 per year, while
in a herd of 20 cows this cost is only one-half as much. The
manure produced must be considered as a credit. It is not
quite so much in value as from a cow fed for large production.
For a bull more bedding is required; the labor is about the
same as that required in caring for a cow. The bull usually
is kept in a separate pen, so that more time is required to

42 MILK PRODUCTION COST ACCOUNTS

groom him and clean his stall, but the time spent in milking
the cows is saved.

The cost of the sire is greatly reduced by codperation of
owners of small herds. Where several farmers in a neigh-
borhood organize and form what is known as a Bull Associa-
tion, this burden of expense is greatly lessened. There may
be some inconvenience in such a plan, and there is also dan-
ger of disease being carried from farm to farm, but these and
other apparent objections are being met, and the plan is
destined to prove valuable in building up our dairy herds
and in decreasing the cost of milk production.

CHAPTER VIII

MISCELLANEOUS EXPENSES

On a well-equipped dairy the miscellaneous expenses are
considerable. One or more of the items mentioned below may
not be necessary as costs for a particular dairy. For example
some dairies have good springs or an abundance of cold water,
so that ice is not needed. Under conditions, however, where
the milk must be prepared for shipment in a short time, ice
may be needed, even where there is a good supply of cold
water. In some sections ice can be stored at a small cost,
while in other sections it is necessary to buy ice at relatively
high prices. According to Rasmussen! about one ton of ice
is needed per cow per year to cool the milk of an 8,500-pound
producer, this being the amount produced by the cows in the
Wisconsin herds to which these formulae have been applied.
This makes a rather large item under conditions of high cost
of ice, but the amount cooled is more than twice the produc-
tion of the average cow. The actual cost of ice in the 174
herds of Delaware County, New York,? was only about $.50
per year per cow. More than one-half the dairies of this
country use no ice at all. Supplying wood and coal for heating
water and for steam where sterilizers are used adds another
annual expense item of 25 to 75 cents per cow.

Tools and special equipment such as scales, curry combs,
brushes, cards, clippers, forks, shovels, and carts and carriers
constitute another expense, which will amount to 50 cents to
$x per head on a well-equipped dairy. The utensils needed,
including pails and strainers, sterilizers, cans, and other tin-
ware, will cost about $1 per year per cow. Supplies such as
medicine, salt, soap, disinfectant, and fly exterminator cost

1 New Hampshire Exp. Sta., Ext. Bull. No. 2, p. 15.
2 New York Agr. Exp. Sta. (Cornell), Bull. No. 364, p. 133.

44 MILK PRODUCTION COST ACCOUNTS

from a few cents to $1 or more per cow. In surveys in New
Hampshire Rasmussen! found that medicine alone amounted
to about 45 cents per cow.

Another incidental expense is that for veterinary services
and for the supervisor of cow-testing associations where such
are used. On the average dairy the dairyman should be able
to handle ordinary diseases and should seldom be obliged to
call a veterinarian. An occasional visit from a veterinarian
is, however, necessary. The supervisor of a testing association
does a necessary work in herd management and can usually
do it cheaper and better than the dairyman. The cost of this
service depends upon the size of the herd. An average charge
of $1.50 per cow per year will cover it in most localities, while
the veterinary fees ought not to exceed 50 cents to $1 per
year per head.

Where the milk must be delivered to a station or creamery,
or even to a city, which involves the expense of hauling and
railroad transportation, a very material expense is incurred.
In the investigation of conditions in New England by the
Boston Chamber of Commerce? the average cost of collect-
ing and hauling to the station was about one-half cent per
quart, while the cost of railroad transportation on different
lines averaged about the same. With the 8,500-pound pro-
ducers the cost of hauling and transportation at these rates
would be over $18 per year per cow. Long hauls with small
quantities of milk in some cases are made at a cost that makes
the milk business unprofitable. Codéperation in hauling greatly
reduces the cost to small producers. In studies by Hopper
and Robertson * the average cost for delivery of 100 pounds
of milk was 11.7 cents, with an average hauling cost of $145.16
per farm per year.

This, although another item of legitimate charge to the cost
of production of milk, in some cases is not a real extra cost.
Often the country boy delivers a can or two of milk on his
way to school, so that although an actual expense would

1 New York Agr. Exp. Sta. (Cornell), Bull. No. 364, p. 133.
2 “Tnvestigations of Milk Situations in New England.”
3 New York Agr. Exp. Sta. (Cornell), Bull. No. 357, p. 151.

MISCELLANEOUS EXPENSES 45

otherwise be required to deliver the milk, it is done in this
way at no real cost. The total of $18 for hauling seems high,
but it is a reasonable charge. At 11.7 cents per hundred,
hauling 8,500 pounds of milk costs $9.80, leaving about $8
for railroad transportation. When this is paid at the farm
this item should be considered in determining the price at
which the milk should be sold.
All these costs may be brought together as follows:

NGOS TACOMA De ete aa sek rene Pe cia la evens e's foie le ater shatetepya evans $1.00
Woodard Goaltiarern seat sires ora eis: «ran alice Sater oeraers 75
UWitenstlsemy sete cian Metta aay sce ecilars i aldanepaterctaicie tant I.00
SUP LSS aye Par enn ee Ey eesctey atte aS cls cc ysia Wachee a avateN I.00
Veterinary service and tester...................008- 2.50
Haulingiand transportation. 26.5) « +-.5\<'s- snes ees 18.00

Total miscellaneous expense................... $24.25

These items cover conditions above the average, but no
better than are necessary for the production of high-grade
milk such as is now being demanded. Most farms use no ice,
no wood or coal for steam, and no sterilizers. The items of
tools, utensils, and supplies may be reduced in some cases, and
the cow tester is not an expense on most farms, although with
this service the cost would in most cases be returned many
times by the increased efficiency of the herd. Not only do
the records of the supervisor of the cow-testing association
show the profitable and unprofitable cows, but the tester is a
great help in the selection of calves to be used in future herds,
thus making intelligent breeding and herd improvement pos-
sible. The large item of $18 for hauling and transportation
should be deducted if the milk is sold at the farm and is
received there by the dealer.

CHAPTER IX

CREDIT FOR CALVES AND MANURE

Ir is difficult to determine an average credit for calves, as
they range in value from almost nothing to $50 or more when
born. The calves that can be sold for the high prices, of
course, add an expense to production, namely, the cost of
phenomenal breeding stock with very highly bred, high pro-
ducers. The added expense of caring for such animals, the
expense of advertising and selling, and the great increase in
depreciation and risk must all be included when the larger
credit for calves is allowed. It is assumed for present pur-
poses that the primary business is the production of milk.
From an ordinary milk herd the calves usually are sold as
veal. The number of calves to be credited to the herd each
year will not exceed four-fifths of the number of milch cows,
and when failures to breed, accidents, and deaths of calves
are considered, the number to be disposed of will not average
more than three-fourths of the number of cows in the herd.
Some calves must be kept to replace the cows, which, it has
been estimated, must be replaced on the average every fifth
year. This gives a credit per cow of three-fourths of the price
at which calves are worth in initial cost. The one-fourth is
not credited to the cows, for no charge is made as the initial
cost of the calves raised. When all the calves are credited to
the cows, the initial cost must be included in the calculation
of cost of cows.

The price at which a dairy calf can be sold when the milk
of a cow becomes normal, usually in three or four days, is in
most instances very small. For veal, a large calf when fed
and marketed at best advantage may bring a price that will
warrant the expenditure of $5 to $6 and in exceptional cases a
little more for raising, but many calves do not pay for the

CREDIT FOR CALVES AND MANURE 47

milk consumed and the labor invested in them. With a fair-
sized cow, such as is assumed in this discussion, an average of
$4 per calf is a fair sale price, and if fed 6 weeks the value
of the calf for veal would likely not warrant an initial charge
of more than this. Three-fourths of this gives a credit of $3
per year for each cow in the herd. Under conditions prevail-
ing in many sections the demand for heifer calves from cows
as good as the standard assumed herein would command as
much as $10, but of the three-fourths that could be sold about
one-half would be male calves, so that the credit possible
under these conditions would add but little to the credit per
cow allowed above.

The actual value of the manure produced by dairy cows
depends upon the kind of concentrates and roughage fed, the
nature and condition of the soil, and the productive value of
the land and the value of the crops grown. In cost estimates
various methods have been used to calculate the credit to be
allowed each cow for manure, and values of $8 to $36 are
given. Perhaps the most commonly used figure is $15. Ras-
mussen! arrives at this figure by assuming that 13 tons are
produced and the fertilizing value of fresh manure is $1.90
per ton, making a total value of $25. From this he deducts
two-fifths for hauling and loss due to leaking and fermenting.
The cows, however, should not be charged for careless hand-
ling of manure, but should be given credit for it to the limit
of practical methods of conserving the material. Rasmussen,
* like most other authors, bases the value of the manure upon
the cost of mineral fertilizers required to furnish the fertiliz-
ing elements in similar amounts. If the land of a particular
dairy needs these elements, and if they must be purchased in
the form of mineral fertilizers where not supplied by the
dairy, the method of basing the value of the manure on the
cost of the commercial fertilizers needed to supply the same
quantity of the fertilizing elements is correct. The humus
furnished by manure is of considerable value on some fields,
while others seem to produce as well with commercial fertil-
izers when a proper rotation is followed and green crops are

1 New Hampshire Exp. Sta., Ext. Bull. No. 2, p. 16.

48 MILK PRODUCTION COST ACCOUNTS

turned under. The value of manure is thought by some to be
overestimated when based on the fertilizing elements it con-
tains. When the full amount is credited at cost price of the
elements and the cows are fed a heavy grain ration, a large
figure for manure is obtained. In an experiment by Roberts!
in which 18 cows were kept in the stable and given a fairly
liberal ration the results indicated in the table below were
obtained. The liquid manure is included. The value is based
upon a price of 7 cents per pound for phosphoric acid, 15
cents for nitrogen, and 4.5 cents for potash.

18 cows for Average for
one day. I cow per day.

Weight/of cows, pounds... Nie c0e ene nsee es 20,380 Trae
Food consumed) pounds 42.47 -iein eis eles 1,347 75
Water drank poundsznnan une eevee 876 49
Total: excretions, pounds, ....:.....:.... 1,452.5 81
INIEFOGEN WPOUNGS sme ci nei eUiiyage hae nearer ees 7.35 41
Phosphoric acidspounasy cil cteieee ae ae 5-01 .28
Potash poundsean schisrcne en citire sitet 7.40 41
Valuetotinitrocen:: icin wade curses ton $ 1.10 $ .06
Value of phosphoricjacidiys.3. 5. c kine ci. YS .02
Maluecotspotashitnt ian caeet) sich ead dinn arc ene 133 02

Lotalivaluerenmancces ss nrte eich see eres $ 1.78 $ .10
Waluespertonyanicd sage cctiGmictei ane sees $ 2.27
Value per animal per day..............:..: .093
Value per 1,000 pounds live weight per day.. .082

Value per 1,000 pounds live weight per year. $29.82

From this must be subtracted the cost of hauling the ma-
nure to the field. At 50 cents per ton” and on a basis of 12
tons, the deduction is $6, leaving the value for manure as
about $23. Some loss takes place even under the best known
system of handling manure, but the value of the humus and
the straw used for bedding is not charged. The amount ?
and kind of grain fed to the cows is a factor in manure value,
feeds high in protein making more valuable manure. A sum-

1 New York Agr. Exp. Sta. (Cornell), Bull. No. 27.
2 “ Cost of applying manure,” Minn. Agr. Exp. Sta., Bull. No. 145, p. 48.
3 “ The Feeding of Crops and Stock,” A. D. Hall, p. 234.

CREDIT FOR CALVES AND MANURE 49

mary of studies in the manurial value of excreta of milch cows
by Sweeter! shows the relation of feeding to manure value:

1. “The feces from milch cows contains } of the nitrogen, 2 of
the phosphoric acid, and 4 of the potash of the food.

2. “The urine contains 3 of the nitrogen, almost no phosphoric
acid, and # of the potash of the food.

3. “The milk contains less than 3 of the nitrogen, } of the phos-
phoric acid, and 75 of the potash, or less than § of the manurial
value of the food.

4. ‘“‘When the urine is allowed to waste, more than 4 of the
food, or 63 per cent of the manurial value of the solid and liquid
manure is lost.”

Another method is to compute the value of manure on a
basis of increase in the value of crops. In farm management
studies by the U.S. Department of Agriculture? this plan is
being followed. The average value of the crops, corn, pota-
toes, wheat, oats, and hay on well-stocked farms in Pennsyl-
vania is given as $15.80 per animal unit more than on similar
farms with few animals. The animal unit, however, includes
animals other than dairy cows, which supply more fertility
than any other domestic animals. In similar studies in Mich-
igan the corresponding figure has been estimated as $8.22.
The difference is accounted for by the greater need for mineral
matter in the Pennsylvania soil and by the better care given
manure in Pennsylvania because of its higher value. This
difference shows that the value depends upon conditions and
needs of the soil of the dairy farm, and must to a large extent
be calculated with respect to each particular case. The in-
crease in crop value, however, usually is underestimated when
long periods of time are considered. Under conditions where
cows are well supplied with concentrated feeds and where the
manure is properly cared for, a cow of 1,000 pounds weight
will furnish $20 worth of added fertility per year. The prac-
tice in England, which is covered by a law affecting landlord

1 Penna. Agr. Exp. Sta., Bull. No. 54, p. 7.

2 U.S. Dept. of Agr., Professional Papers, Bull. No. 341, p. 96.

3 Jour. Royal Agr. Soc., 193, Reported in Jan., 1915. Jour. Board of Agr.,
PP. 931-934. Also “ Feeds and Feeding,” Henry and Morrison, p. 277.

50 MILK PRODUCTION COST ACCOUNTS

and tenant, gives a tenant credit for all manure resulting
from purchased feeds given to stock, on a basis of 3? of the
total value of the phosphoric acid and potash in the feed,
allowed for all unused manure. A credit of 70 per cent of the
total value of nitrogen is allowed when the stock is fed on
pasture, and of only 50 per cent when it is fed in the barn-
yard. When one crop has been grown after application of the
manure, a credit of one-half the above amounts is allowed.

There are tables in the English publications referred to
above giving the amounts of nitrogen, phosphoric acid, and
potash voided from the various grains fed to dairy cows.
Given the quantities of feed consumed and the prices for the
elements needed on a particular farm, the real value of ma-
nure under particular conditions of soil and feeding can be
definitely ascertained.

CHAPTER X

APPLICATION AND USE OF FORMULA

The costs and credits incident to milk production may now
be summarized. Under the conditions stated for each item,
which include a particular size and kind of cow, producing
8,500 pounds of 4 per cent milk with feeds at stated prices,
with the system of management given, and with a good barn
well equipped for the production of high-grade milk, cost
records will show the following as actual costs in the production
of milk:

Tota Cost.

oe dg 7 SNES GS bee oe TRE SR i OP $75.26

PUA DOT ate sigh Me een ela yaa ae bic esalcisorerd ale 27.00

UMMM AON Gs ats ate sue Gn tha ee eo me 8.24

Mem AUC Mp renee eelke tiats tate mate Shida sch sie aree 9.21

PMC ee ede at paid Sta choy ae aes ecole acone toe 3.25

(igh MSPS, Sch ake Bene tia Gea Pin Sa a cH

Fa) DEISCENANEOUS EXPONBES.. 665. o cie.e cis sete 2s 24.25 $150.75

CREDITS.

RRA sh LAU eRe 2 Jedd ore tacts Sin fia es 6 $ 3.00

SE VETTING oh cde. oe Rater Alec mre Wine aoeernue ee 20.00 23.00
En Comp Penicow Per YEA. foie elds Wee aage eas 8 $127.75

The average standard of production of these cows is as-
sumed as 8,500 pounds per year, which was also the average
production of the 985 Guernsey cows used in the Wisconsin
test, upon which the data in this study are based. Figuring
2.15 pounds to the quart, the production is 3,441 quarts.
Thus the cost of production per quart is about 32 cents. The
cost of 100 pounds, therefore, is $1.50. The Sheffield farms,
Slawson-Decker Company, New York,! perhaps the largest
independent milk company in the United States, recently an-
nounced its price schedule for milk as follows:

1 New York Produce Review, American Creamery, p. 975.

52 MILK PRODUCTION COST ACCOUNTS

Months. 1916. IQIs.
Aor arith a cade vemerterenge leet aethes $1.70 $1.75
May eee Conscaneortc ese done eae er I.40 I.40
Hl RUN SYP eran Miraes au NS Aa Res nee 1.40 I.40
Alitaisysteeee cea tuk eerecctanche ences ciereiak 1.60 1.50
ATIBUSE Sic veneeicle aap ta ehnanenome ae T. 715 1.65
Septem bere -yuatveesace ecient 1.80 1.75

This is for milk testing 4.5 per cent, which is one-half per
cent less than the standard used herein in calculating feed
cost. They, however, allow a premium of 4 cents per hundred
pounds for each one-tenth per cent butter-fat above 4.5 per
cent. Five per cent milk would be paid for at a rate of 20
cents more per hundred. Still further premiums are offered
for milk of Grade A, which are provided for in these cost
calculations in preceding pages. The winter prices are pre-
vailingly higher, but the production then is less. The average
price of milk of Grade A, testing 5 per cent, in New York is
$2 per hundred pounds. In some sections this price is less.

It should be further pointed out that the prices for feeds
are somewhat lower than prevail at the present time. At
prevailing prices for feeds the costs would be increased to
$90.49, and the total costs to $143.36, and the profit per cow
may be determined as follows:

Sale price of 8,500 pounds of milk................- $170.00
Cost of production of 8,500 pounds of milk......... 142.95
ProfitperiCOwW Ae Ada Gn isec sia eee ERE Ie Sirona ts $27.05

In a 20-cow dairy the profit for the year on this basis is
$532.80, in addition to an income of 5 per cent for all capital
used in the enterprise. The assumed total capital invested is
about $9,000. When the disease risk to the animals is con-
sidered, the profit under these conditions is not great, though
satisfactory.

For the standard herein, however, unusually high-producing
cows were selected. The average production of the cows of
the United States is only about 3,000 pounds. Animals of
this sort present a very different outlook for the business.
We may assume that cows of this standard are used to supply
milk to the same market, that is, Grade A. By referring to a

APPLICATION AND USE OF FORMULA 53

preceding chapter we find the food for maintenance would be
the same, and for 3,o00 pounds of milk is as follows:

Protein. Energy.

MEIN TENANCE 5 SC 2 SOF =a nc ces sie cic wij etoioies ies wives 140 6X 280 =1,680

S000 pounds milk}962 XX 3,000 =.) 1. os 6 sewn 3's 186 .36 X 3,000 = 1,080

shOtaleamMo mnt Meededs. 22,44. faders os creel ciets « 326 2,760
Pern EY oie sciatic 2) da charsis OW a aihiche bie v wle'e(e 90.89 583.63
POY STAR. Cine <!cheiotai dis ste ee ode ca vans 61.60 1,159.20
otal amount supplied sii. ste ses ashes = bh 152.49 1,742.83
Morbe supped (by Sralas. vy. faces sleds ee saunas 173-51 1,017.17

A ration of a ratio of 1:6 would supply this need. Using
the same feeds in slightly different proportions to give the
needed balance of 1 to 6, the following amounts of feed would
be required by cows of this production:

Feed required, with costs.

1,680 pounds of hay, at $.80 per 100................ $13.44
7,000 pounds of silage, at $.15 per 100.............. 10.50
450 pounds of corn, at $1.00 per I00.............. 4.50
300 pounds of dist. grains, at $1.50 per 100 ........ 4.50
300 pounds of bran, at $1.50 per 100.............. s.r
300 pounds of oats, at $1.10 per I00............-.- 3.30
IBASENTE TOR SEASON, (tip 5.O0.% wie )sis ois in ves cele leases leh 5.00
Totalicost of feed tor the years)... sac... ew ees $44.39

The cost for feed, therefore, would be $30.90 less per year.
The cost of labor, buildings, and bedding, and miscellaneous
expenses would be the same, while the cost of sires and cows
would be decreased only by the initial cost of the latter, which
would only decrease the cost per unit cow by a few cents.
The cow would cost as much to raise, but if purchased could
be obtained for a lower price. The total annual cost, then,
to keep cows of this kind would be $97.26. The milk at the
same price of $2 per hundred pounds would bring $60, which
would make a loss of $37.26 per cow per year. This is what
may be expected at present prices of feed and labor from
cows that produce no more than the average cow of the United
States, when a dairyman attempts to produce milk of good
grade, in good barns, using full grain rations, and practicing
year-round feeding.

54 MILK PRODUCTION COST ACCOUNTS

A further analysis may be made: Let us assume that the
cows are kept in a building worth only $1,000, that the cattle
are kept on pasture and fed chiefly straw and stover during
the winter, that the bedding could not be marketed, that much
of the hay could not be sold at $16 per ton on account of
being damaged by rain, that the equipment is relatively in-
complete and inexpensive; also assume that the cows are fed
less grain, producing most of the 3,000 pounds while on pas-
ture, and only given stover, straw, and perhaps a little grain
in the winter. The item of labor under this system would be
less. Under these conditions the annual cost of keeping cows
could be decreased to $60, or the sale price of the milk. Some
dairymen would continue under these conditions for the pay
of $27 per cow per year for labor.

With the data in the preceding chapters comparisons can
be made of each item of cost, so that they may be taken as
a guide to cost under any condition of management or prices.

An application of the formula warrants the following con-
clusions:

1. Under present prices of feed and labor a herd of high-
producing cows will when properly managed return 5 per cent
interest on the capital invested in a good plant, and an addi-
tional 5 per cent for services of the manager not included in
regular labor charge.

2. The average cow of the United States does not produce
enough milk to pay the cost of production when managed
under the same conditions and equipped to produce high-grade
milk,

3. Where the herd uses feeds that can not be marketed,
where a cheaper system of management is used, and where the
cows are housed in cheaper buildings and given less care, they
may pay the cost of production of milk.

4. Under some conditions, summer dairying would be more
profitable than the all-year practice.

5. It does not pay to use intensive methods or winter grain
feeding with low producing cows.

6. The value of pasture for dairy cows has been under-
estimated.

BIBLIOGRAPHY

Cost Accounting, Theory and Practice, J. L. NICHOLSON.

Factory Costs, FRANK E. WEBNER.

Cost Accounts, L. W. HAWKINS.

Accounts, W. M. Cote.

The Science of Accounts, H. C. BENTLEY.

Accounting Practice, C. M. Day.

Formula for Costs, L. E. ASHLEY, System, 27: 92-3, Jan., I9ts.

Simplified Cost Accounting for Manufactures, W. B. PALMER, Ann.
of the Amer. Acad. of Sci., 61: 165-73.

Fixing Manufacturers’ Costs; How German Manufacturers Pre-Cal-
culate Costs, R. GRIMSHAW, System, 24: I9I-—5.

Taking Factory Costs Apart, C. B. THOMPSON, System, 23: 131-7.

The Applied Theory of Accounts, P. J. ESQUERRE.

Accounting Practice and Procedure, A. L. DICKINSON

A System of Farm Cost Accounting, C. E. Lapp, Farmers’ Bull.
No. 572, 1914.

Farm Accounts, J. A. BExAtt, School of Commerce, Oregon Agr.
College.

Cost and Its Significance, HERBERT JOSEPH DAVENPORT, Amer.
Econ. Rev., Dec., 1911, Vv. 1: 724-52.

Cost Accounting, J. R. WILDMAN; 100 pp.

Factory Administration and Accounts, E. T. ELBOURNE, 1914; 638
Pp.

Depreciation, Reserves, and Reserve Funds, DICKSEE.

Distributing Overhead Expenses, N. T. FICKER, Eng. Mag., 49: 321-6.

What Constitutes Overhead, E. H. FIsu, Eng. Mag., 49: 488-97.

Farm Bookkeeping, E. H. Tuompson, Farmers’ Bull. No. 511, 19t2.

Farming on a Business Basis, J. M. OSKINSON, System, 23: 379-83.

Farm Management, WARREN.

Production Factors, A. HAMILTON CHURCH; 188 pp.

Studies in Cost of Production, No. Dak. Bull. No. ot.

Cost of Production of Farm Products, W. M. Hays and E. C. PARKER,
Minn. Bull. No. 97, 1906, p. 90. Minn. Bull. No. 117, 1910,

p. 69.

56 MILK PRODUCTION COST ACCOUNTS

The Cost of Producing Farm Products, Univ. of Minn. Bull. No. 96.

The Cost of Producing Farm Products, Tuomas P. Cooper, Univ. of
Minn. Bull. No. 124.

Cost of Producing Minnesota Farm Products, 2 W. PEck, Univ. of
Minn. Agr. Exp. Sta., Bull. No. 145.

The Cost of Production on Missouri Farms, Mo. Agr. Exp. Sta.,
Bull. No. 125.

Price of Products, HENRY C. Taytor, Univ. of Wisc., pp. 136-51.

Cost of Producing Dairy Products, T. P. Cooper, Minn. Bull. No.
124, June, 1911, pp. 89-188.

The Production and Consumption of Dairy Products, U.S. Dept. of
Agr., Bull. No. 177.

Sanitary Control of Milk Supply, ERNEST J. LEDERLE; Survey, 27:
1034.

Cost of Producing Milk, FRED RaSMUSSEN, Ext. Bull. No. 2, N.H.

Cost of Milk, Survey, 30, p. 386.

The Cost of Milk Production, N.Y. Exp. Sta., Cornell, Bull. No. 357.

The Cost of Milk Production, Mass. Agr. Exp. Sta., Bull. No. 145.

Memo. of Some Estimates Made by Various Authorities on the Pro-
duction of Meat and Milk, Statis. Soc. of London, v. 65 and
v. 67.

Cost of Producing Milk on 174 Farms in Delaware County, N.Y.,
New York Exp. Sta., Cornell, Bull. No. 364.

The Cost of Producing Milk, Larson, Proceedings of the Agr. Conf.
held by Corn Exchg. Nat. Bnk., Phila., 1913.

Investigation and Analysis of Production, etc., of Milk and Cream in
New England, Boston Chamber of Commerce, 1915.

Extra Cost of Producing Clean Milk, Circ. 170, Bur. of Animal Ind.,
U:S., Dept. of Agr.

Practical Lesson for the Management of the Dairy Herd, Univ. of
Wisc., Bull. No. 217.

The Milk Question, M. J. ROSENAU.

Milk Question, Ind., 74: 445.

What Does Milk Cost, Ind., 74: 1208.

North Carolina Dairy Herd Records, N.C. Bull. No. 184.

Transportation of Milk, Sci., N.S., 38: 375.

Freight and Prices of Milk, Milk Reports, Oct., 1915, p. 16.

Production and Handling of Clean Milk, KENELIN WINSLOW.

Milk Supply, Karlsruhe, GEORGE BERG, v. 58 and v. 140.

Municipal Milk Supply of Germany, Sci. Amer., 72: 40-1.

Regulation of Milk Trade in Prussia, Am. City, 8: 201.

BIBLIOGRAPHY 87

Milk Supply, Health of City, GODFREY HALLIS, 30-57.

Milk Supply, Minn., Wisc., C. J. CRANE, pp. 85-116.

Future of Milk Industry, Am. City, 9: 357.

Sanitary Milk Supply of Rochester, C. J. CRANE, 32-47.

Milk Supply of New York City, E. J. LEDERLE, and RUSSELL
RAYNOR.

Clean Milk Supply, N.Y. State Health Dept. Conf. on Infant Wel-
fare, 1913, PP. 194-5.

Clean Milk in New York City Conference, 1906.

Select Committees of Board of Health, New York, 1858.

Report on Milk Standards, Am. City, 9: 358.

Clean Milk and Public Health, JEssE D. BurKE, Ann. Amer. Acad.
Pol. and Soc. Sci.; v. 37; p: 436.

Investigation of Milk Business in New York City by Attorney General,
Sen. Doc. No. 45, State of N.Y., 1909.

Conference of Milk Commission on Milk Problems, 1910.

Milk Depots in New York City, Milk Commission Report.

Report of the Committee on Markets, Prices and Costs of the New
York State Food Investigating Commission, Aug. 1, 1912; 77 pp.
Part of Sale Price the Farmer Gets.

Clean Milk, S. D. BELCHER.

Fight for Clean Milk, W. H. ALLEN, Civics and Health, 252-67.

Milk Analysis and Examination, CARL OLAF JENSEN.

Solution of Milk Problem, in Diseases of Milk, NATHAN STRAUS,
1914, pp. 89-95.

Phila. Milk Comm. Rept., 1911.

Milk Problem in Child Problem, G. B. MANGOLD, pp. 67-79.

Milk Problem in St. Louis, Wash. Univ. Sch. of Soc. Eco., Rept.
No. 1, 1914.

Prices of Milk, etc., Bur. of Statistics, U.S. Dept. of Agr., Jan., rgro.

Interstate Conference to Fix Milk Prices, Survey, 29-836.

Three Months in the London Milk Trade, Eco. Rev., 4.

Fight with the Milk Trust, Country Life, 23, pp. 53-5.

Amer: Assn. of Medical Milk Commissions Reports.

Cost of Living and Food Prices, N.Y. Mayor’s Market Com. Rept.,
1913.

An Attempt to Regulate Selling Prices, Eco. Rev., v. 4, 1894.

Factors Affecting Commodity Prices, ROGER W. BaxBson, Ann. Amer.
Acad. of Pol. and Soc. Sci., v. 38, 1911, pp. 473-506.

Cost of Food Products, J. B. WEAVER, Jr., Harper’s Weekly, Mch.
26, 1910, v. 54:6.

58 MILK PRODUCTION COST ACCOUNTS

The Cost of Living, Discussion, E. F. McSweeney, S. H. BARKER,
and T. N. Carver, Amer. Eco. Rev., March, 1912, Suppl.,
Vv. 2: 109-16.

Living Expenses of Other Days, Harper’s Weekly, April 2, 1910, v.
54, 0-032,

Coéperation and Cost of Living in Certain Foreign Countries, Mes-
sage of the Pres. of the U.S., Tart, 62d Cong., 2d Sess., House
Doc. 617.

Increase in Cost of Food and Other Products, U.S. Bur. of Labor,
IQIO.

Value and Distribution, Univ. of Chicago Press, 1908, 582 pp.,
H. J. DAVENPORT.

Causes of the Rise of Prices, Contemporary Review, Oct., 1912, v.
102, pp. 483-92.

The Cost of Living, A. J. Nock, Titusville, Pa., Am. Mag., June,
EQIO, V. 70: 282-3:

High Cost of Living, Joun A. Kettner, Speech in House of Reps.,
June 16, 1910, Cong. Rec., 61st Cong., 2d Sess.

Report on Coéperation and Marketing, Agr. Codp., pt. 1, Ohio State
Board of Public Affairs.

Report of U.S. Ind. Commission, 1900, v. 6, Dist. and Dis. of Food
Products.

Comm. on Cost of Living, Ind. No., etc., New Zealand.

Price Maintenance, THomas A. FERNLEY; 311 pp.

An Introduction to the Study of Prices, W. T. LAYTON.

Movements in Prices, Mayo Smiru, Jour. of Pol. Eco. (?)

Prices and Index Numbers, Jour. of Pol. Eco., 1900, v. 8, pp. 171-
202; by R. S. PADOoN.

The Demand and Supply Concept, R. F. Hoxte, Thesis, Chi., 1906.

The Farmer Not to Blame for High Prices, H. O. SHarp, Harper’s
Weekly, May 7, 1910, v. 54:6.

How Food Prices are Made, ALLEN L. BENSON, Pearson’s Mag.,
May, roro, v. 23: 701-8, 30, 32.

The Laboring Man To-day as Compared with Fifty Years Ago, New
Eng. Mag., March, 1910, N.S., v, 42: 81-7.

Gambling in Food, R. J. ABERNATHY, Outlook, Aug. 13, 1910, Vv.
95: 849-50.

Real Reason for High Prices, SAMUEL Hopxins ApAms, Cosmo. Mag.,
Sept., 1910 v. 49: 460-5. ;

When Does a Food Become a Luxury, E. H. S. Battery, Pop. Sci.
Mo., Dec:,) 1910, Vv.) 77 507-3.

BIBLIOGRAPHY 59

Farmers’ View of Prices, W. 1. CHAMBERLAIN, Outlook, Jan. 7, torr,
V. 97: 45.

Advance in Prices of Farm Products During the Period from 1896 to
Ig1I, REED Smoot, Statement presented to Senate Aug. 26,
1912, Cong. Rec., 62d Cong., 2d Sess.

Farm Manure, Economic Value, N.Y. Bull. No. 94, N.S., 1895, 324,
Poi Rew ‘72Ss3.

Farm Manures, Nature and Value, Me. Bull. No. 126, 1906, 45-8.

Farm Manure, Value and Use, Ky. Bull. No. 140, 1909, p. 81.

Tests of Materials for Bedding Cows, Md. Bull. No. 104.

Composition of Manure, E. B. VOORHEES, New Jersey Rept., 1900,
p. 88.

Composition of Cow Manure, Mixed and Separate, with Different
Feeds, VOORHEES, N.J. Rept., 1901, p. 144.

Value of Manure per Ton, N.Y. Exp. Sta., Cornell, Bull. No. 56.

Manure Production, Ala. Bull. No. 114, 1901, pp. 68-72.

Manure Production, N.Y. Exp. Sta., Cornell, Bull. No. 56, 1893,
p. 157.

Value of Manure and Manurial Value of Feeding Stuffs, Mass. Rept.,
1888, p. 116.

Manure Production and Use, Minn. Rept., 1887, p. 160.

Barnyard Manure Value, N.Y. Rept., 1889, pp. 23-4.

How to Use Manure with Fertilizer, Ohio Bull. 221.

Digestion Experiments with Dairy Cows, HARRY SNYDER, Minn. Bull. 26.

Manure Production from Cows and Steers, Ohio Bull. 183 and Bull.
246, 1907 and 1912.

The Manurial Value of Excreta of Milch Cows, W. S. SWEETER,
Penna. Sta. Bull. No. 54, p. 7.

Cow Manure, I. P. Roperts, N.Y. Exp. Sta., Cornell, Bull. No. 27,

1801.

Manure from Cows, Value and Amount, N.Y. Exp. Sta. Rept., 1880,
Pp. 150-3.

Manure from Cows, Minn. Bull. No. 26, Jan., 1893, pp. 14, 18, 22,
a0, 28) s3T3 2.

Value of Manure from Milch Cows and Constituents Removed from
Farm in Milk, Conn. Sta. Rept., 1889, pp. 116-20.

Manure from Six Cows, Fla. Bull. No. 7, 1889.

Value of Cows’ Manure per Day and per Year, N.Y. Exp. Sta.,
Cornell, Bull. No. 27, 1900, p. 88.

Value of Fresh Cow Manure and after 70 Days’ Exposure, N.J.
Rept., 1900, p. 88.

60 MILK PRODUCTION COST ACCOUNTS

Cow Excreta, Manurial Value, Pa. Rept., 1900, pp. 321-51.

Cow Excreta, Value of, Pa. Rept., Bull. No. 54, Nov., 1900, p. 7.

La Question du blé, La Grande Revue, May 10, 1911, v. 67: 129-47.

Die Steigerung der Preise, Jahrbuch fiir Gesetzgebung, Verwaltung
und Volkswirthschaft, 1911, v. 35: 1-20.

Grendriss der Milch Kunde und Milchhygiene, C. E. JENSEN.

Produktionskostenberechungen, Archiv Fur LExakte Wertschafts-
Forschung, Erg., 7. Pauli.

Statistische untersuchung uber konsumption und produktion der milch
und deren produkis in Darmstadt und dersen umberling Darm-
stadt, 1897, PuHiItipp JortT, Ph.D., Dissertation at Giessen,
Ger., Univ.

VITA

Cart WItiiAM Larson was born at Saint Ansgar, Iowa, May
29, 1881. He received his elementary education in the public
schools of that city. In 1899 he graduated from the business
department of the Saint Ansgar Seminary. He received the
degree of Bachelor of Scientific Agriculture from the Iowa
State College in 1906. During the next year he was entered
as a graduate student in the same institution. From 1907 to
the present time he has taught dairying at the Pennsylvania
State College. Several months of 1911 were spent in study in
the dairy countries of Europe. He received the degree of
Master of Science from the Pennsylvania State College in
1913. Since that year he has been professor in charge of the
Department of Dairy Husbandry. He entered Columbia
University as a graduate student in ro15.

His publications, besides several circulars and special articles
for agricultural and dairy periodicals, are: “A Study of Penn-
sylvania Butter,” Bull. No. 93, Pennsylvania Experiment Sta-
tion; “Commercial Tests for Moisture in Butter and the Taylor
Absorption Process for Making Butter,’ Report of the Penn-
sylvania State College, 1909-10; “Profitable and Unprofitable
Cows, Codperative Cow Testing,” Extension Circular No. 43;
and, jointly with Professor F. S. Putney, “ Nitrogen Studies with
Dairy Cows in Milk,” Report of the Pennsylvania Agricultural
Experiment Station, 1914-15.

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