UNIVERSITY OF CALIFORNIA COLLEGE OF AGRICULTURE AGRICULTURAL EXPERIMENT STATION BERKELEY 4, CALIFORNIA WATCHING FARM COSTS R. L. ADAMS' Costs of producing farm crops, livestock, and livestock products are reaching or have reached an all-time high. Though these increased costs are usually offset by the higher prices paid to producers, the farm operator is still confronted with the cost of farm labor, sometimes exceeding $1.00 per hour; record prices for piecework; limited supplies of machinery parts; and sub- stantially higher costs for sacks, baling wire, and other farm supplies. Unless economy is practiced wherever possible, farming incomes are bound to be reduced unnecessarily. The extent to which costs have advanced is perhaps best illustrated by several crops whose costs were determined under 1939-1941 conditions, with estimated and conservative changes pertinent to 1943. Table 1, presenting data for 14 field, of increased costs have been broken down to show separately the increases in cost of man labor, materials, and other items. The basic costs de- termining these percentages include all necessary use of labor, figured at prevailing wages (per hour, per day, or for piecework, depending upon custom) ; outlays for necessary materials such as seeds, fertilizer, spray materials, irrigation water, and marketing containers. The heading "other costs" covers the use of motive power (work animals, tractors, and farm trucks) and of various other farm equipment ; taxes on land and insurance on crops; depreciation of trees, vines, alfalfa; depreciation of trellises; use of prun- ing equipment, lug boxes, drying trays, and other special equipment; management; and interest on capital as represented by prevailing market TABLE 1 Estimated Percentage Changes in Cost of Producing Selected California Crops, 1943 vs. 1939-1941 Crop and yield per acre Increase: 1943 over 1939-1941 Labor Materials Other costs All costs Alfalfa hay; 5 tons Apricots, canning; 4 tons Barley, irrigated; 1,500 pounds Beans, baby lima; 1,200 pounds Cantaloupes, delivered to packing shed; 200 field crates Cotton, lint; 600 pounds Grapes, Thompson Seedless, raisin; 1 1/2 tons. . Oranges, Valencia; 250 field boxes Pears, canning; 6 tons Prunes, dried; 1 1/2 tons Rice; 2,500 pounds Sugar beets; 12 tons Tomatoes, canning; 6 tons Walnuts; 1,500 pounds Average fruit, and truck crops, sets forth the percentage increase in the cost of producing crops under the yield conditions indicated. Percentage figures per cent 133 104 91 126 99 134 168 89 70 130 54 67 85 136 106 per cent 8 10 84 92 13 7 4 4 13 58 9 30 39 29 per cent 22 5 11 17 9 11 4 28 16 20 11 9 10 13 per cent 20 51 40 58 64 69 73 30 43 63 40 40 51 57 50 Professor of Farm Management, Agricultural Economist in the Experiment Station, and Agri- cultural Economist on the Giannini Foundation. value of the land (and trees, vines, or other perennial crops) . As table 1 indicates, the labor cost of pro- ducing the 14 crops for which data are shown is substantial. The rate does vary, however, from a 54 per cent increase (rice) to a 168 per cent increase (raisin grapes). Averaged for the 14 r 1 1 UNIVERSITY OF CALIFORNIA LIBRARY COLLEGE OF AGRICULTURE DAVIS crops, labor costs have increased 106 per cent. Seven of the 14 crops reflect labor-cost in- creases exceeding 100 per cent. The rise in cost of materials depends on the items purchased. Only minor or no changes are recorded for fertilizers, spray materials, and irrigation water; but costs have risen markedly for fruit and vegetable crates and for grain sacks. The average increase in cost of materials shows 29 per cent for these 14 crops, though varying with individual crops from 4 per cent to 92 per cent. (Principal increases are in cost of seed and sacks for barley, beans, and rice.) No important changes are reflected in outlays for taxes, management, and interest on capital. The changes that do occur result from higher costs for upkeep of tractors and farm machinery, for the feed of work animals, and for baling (alfalfa hay). The average increase shows 13 per cent for these 14 crops, though varying by crops from 4 per cent to 28 per cent. Total increases vary by crops from 20 per cent (alfalfa) to 73 per cent (raisin grapes). The 14 crops show an average increase of 50 per cent. Reducing Costs by Increasing Yields . --Increas- ing the yield of any crop, provided the cost of the increase amounts to less than the value, is one way to reduce costs. Regardless of the yield, about the same outlay is required to prepare land, plant, cultivate, and irrigate. The additional cost of harvesting, while greater in total for the larger crop, is less per unit. Table 2 indi- cates the effect of yields upon costs, using data deemed pertinent to 1943. Reducing Labor Costs . — Table 3 shows the im- portance of man labor in the cost of producing crops; in fact, labor comprises the largest single item of expense. Because of this, one should seriously consider any means that will reduce the cost of labor by increasing efficiency, reducing wastes, lessening costs, or decreasing needs. Much is being done. Farmers everywhere are work- ing out new techniques and equipment designed either to reduce their man-power requirements or to increase their efficiency. This publication cannot summarize what is being tried and accom- plished. The field is large, and the opportuni- ties for further savings justify the best effort that can be given. Many innovations will doubt- less continue to be useful when farming returns to normal. In the examples selected to indicate the marked upward trend of costs-, attention has been con- fined to crops. A similar condition, however, faces the producers of beef, lambs and wool, hogs, milk, eggs and chickens, and other livestock, such as turkeys and rabbits. These operators as well as the growers of crops are obliged to meet mount- ing costs; they also should seek ways to econoaize, or to increase efficiency, with a view to reducing costs. TABLE 2 Effect of Yields of Selected Crops on Costs, 1943 Cost Data Reduct: ion in cost Crop and yield per acre per unit , high yields vs. low E_ sr cent Alfalfa hay; 8 tons vs. 5 . . 14 Apricots, canning; 8 tons vs. 4 26 Beans, baby lima; 1,800 26 Cantaloupes; 300 field 9 Barley, irrigated; 25 cwt. vs. 15 11 Cotton, lint; 750 pounds vs. 400 26 Grapes, Thompson Seedless, raisin; 2 tons vs. 1 . . . 29 Oranges, Valencia; 400 field 25 Pears, canning; 10 tons vs. 6 28 Prunes, dried; 2 1/2 tons vs. 11/2 11 Rice; 40 cwt. vs. 25 .... 10 S\igar beets; 20 tons vs. 12 . 27 Tomatoes, canning; 10 tons vs. 6 10 Walnuts; 2,500 pounds vs. 1,500 13 TABLE 3 Cost of Man Labor as a Percentage of Total Costs, Data as of 1943 Man-labor costs Crop and yield per acre as a percentage of total cost per cent 55 Apricots, canning; 4 tons . . 66 Barley, irrigated; 1,500 26 Beans, baby lima; 1,200 45 Cantaloupes; 200 field crates 64 Cotton, lint; 600 pounds . . 65 Grapes, Thompson Seedless, raisin; 1 1/2 tons .... 64 Oranges, Valencia; 250 field boxes 57 Pears, canning; 6 tons . . . 56 Prunes, dried; 1 1/2 tons . . 59 77 Sugar beets; 12 tons .... 63 Tomatoes, canning; 6 tons . . 63 Walnuts; 1,500 pounds .... 52 [2] 2m-ll, -43(8395)