ABSTRACT
It is a commonly held belief that economies of size exist in U.S. agricultural production and that these economies have been a significant factor, perhaps the most significant factor, in explaining our current agricultural structure. More specifically, the view is that the most economically efficient size of farms will prosper and other farms will tend to exit or gravitate to that farm size. Underlying production technologies drive the relationship (Heady 1952). This chapter will address the issue of costs of production with an emphasis on measurement issues and the variation in costs by farm size and other indicators of structure. Economic costs per bushel for corn, soybeans, and wheat will be examined.
