Gann Valley, SD | tmgsssn - 11/6/2012 20:30
Yes they are real, but they don't change your costs. The cost of that hay is the fuel, labor, fertilizer, land rent it took you to make it. You can write yourself a check for your own hay if you want, but that won't change your bank account. Cost of production is just that, what it cost you to produce it not what you could have gotten if you did everything different. I never said anything about your horses being free, but your bank account is gonna be the same at the end of the day so I guess if you really like to do unnecessary accounting then go for it.
At the end of the day if you spend 100 dollars making hay and feed it to your horse it cost you 100 dollars. Not 180.
If it costs me $200 to make the hay but I let it get rained on repeatedly and nobody would pay me over $50 for it, then whether I feed it to horses, cows, or light it on fire, then I'm out $50 every time I consume a ton. My hay is worth precisely what the market will pay for it F.O.B. my hay yard. My feed cost is exactly that market price.
People who don't understand opportunity costs of paid-for land are destined to make more mistakes on the road to financial success than those who understand it. |
2013 HRW Cost of Production??
