FOR
INDIANA
FARMERS
Prepared by members of the Agricultural Staff of Purdue University
ECONOMICS AND MARKETING
By
H. J. REED, Director
OVER A long period of years Indiana farmers receive
— about 50 cents out of each dollac. which consumers pay
for their products. The other 50 cents goes to those who
perform marketing services.
Last year, 1946, the farmers' share of the consumers food
dollar was a little larger than this. The cash income from
Indiana farm marketings was three quarters of a billion dollars (778 million). Marketing services amounted to an additional 400 to 450 million dollars.
k During periods of rising prices, the producer gets a rela-
f tively larger share of the consumer's food dollar and during
periods of falling prices he gets less. In the years immediately
ahead, the farmers' share of the consumer's expenditures
for food is expected to shrink. This is because farm prices
will likely fall more rapidly than marketing costs.
The 1947 session of the State Legislature made an appropriation to study and promote efficient and economical marketing of farm products. As a part of this service a new
periodical "Economic and Marketing Information for Indiana
Farmers" will be made available.
The purpose of this publication is to provide Indiana
farmers and others with timely market and economic information. It is our belief that this information will aid producers
in marketing their crops to the best advantage and in making adjustments in their production programs which will increase and stabilize Indiana farm incomes in the difficult
years ahead. To the extent that this objective is accomplished, both producers and consumers will benefit.
This is the first issue of this new publication and is a sample
of those which will follow.
It will be published each month by the Agricultural Extension Service of Purdue University and will contain articles
prepared by various members of the staff.
It will replace the smaller leaflet, "Economic Information
for Indiana Farmers", formerly prepared by the Agricultural
Economics Department.
The new publication will be sent to those people whose
names are on our mailing list for our former publication.
|   Others may receive it, without cost, by writing to R. H. Bau-
mon, Extension Economist, Purdue University, or by making
application through your local County Agricultural Agent.
PRICE ADJUSTMENTS LIE AHEAD
By
E. L. BUTZ, Agricultural Economics
DRICES received by Indiana farmers, on the average, probably reached postwar highs last October and again in
March, 1947. They may be expected to work moderately
lower in late 1947 and in 1948. However, seasonal increases
in certain livestock prices in late summer may temporarily
obscure the overall downward price trend.
The high points came last October following relaxation
of price controls, when the Indiana farm price index stood
at 268 % of the 1935-39 average, and again in March, 1947,
when a speculative flurry sent the index to 263% of the
1935-39 level. In January and February of this year, the
index was 30 points below.its last October high. In May it
was 15 points below last October. (See Chart.)
Farm Product Prices To Fluctuate Near
Present Levels During Next Few Months
Farm product prices will probably fluctuate around their
present levels, on the average, for a short time longer in the
summer of 1947 with weather and crop developments being
principal influencing factors. However, farm prices may be
expected to decline some in the last quarter of 1947 and
in 1948. Livestock prices will likely increase seasonally in
the two or three months immediately ahead, and then decline relatively more than will grain prices. This decline will
be neither as rapid nor as drastic as that which occurred in
1920, although it may be as much as one-fourth to two-fifths
from present levels. This will put prices received back about
where they were in the last year or two of the war. The
decline will be more in the nature of a cost-price realignment
than a recession.
The most important single factors affecting prices received
by Indiana farmers are the general level of all prices in the
United States and, tied closely with it, the status of consumer
purchasing power. It is therefore pertinent to examine these
carefully.
General Price Level Probably Near
Post War Peak
The general level of wholesale commodity prices in the
United States is now nearly as high as it was c*t the previous
peak in 1920. (215 in May, 1947, compared with 225 for
the year 1920; 1910-14-100). The index reached 240 in
the single month of May, 1920. During the war period from