An inquiry into the costs of dairy farming and cheese manufacture in Southland

Abstract

The use of accounts in farm management; one of the greatest benefits yet to be derived by the farming industry is the use of accounts as a guide to farm management. Farm costing is as yet in its infancy. Can the cost of production of a commodity be ascertained? This has long been a controversial question particularly so regards joint products. Individual and farmer’s total costs for any particular product can, however, be definitely determines. In these depression days, one frequently hears farmers saying, “It is impossible for me to produce butterfat at these prices”. Ask the same farmers what it is actually costing them to produce a pound of butterfat and in 90 per cent of the cases they are unable to answer and in fact have no idea how to go about working out the cost of production. The farmer actually does not know at what level his costs must be maintained in order to show a profit. It is proposed to set out the simple procedure necessary for each farmer to employ in order to determine his own costs but before doing so, a general discussion of “Costs of Production” must be made.