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Farm Prices Rise for Second Month

April 30, 1987

WASHINGTON (AP) _ Prices farmers got for raw products in April, on the average, rose 1.6 percent from a revised March index and were above the year-earlier level for the second consecutive month, the Agriculture Department said Thursday.

The report said higher prices for cattle, hogs, onions and hay more than offset lower prices for lettuce, milk, tomatoes and strawberries. Overall, the index was up 3.3 percent from a year ago.

John Buche of the department’s National Agricultural Statistics Service said the preliminary figures for April and the revised figures for March pushed the price index above year-earlier marks for the first time since last September.

The April index also was the highest since last August but still was far below the record high reached three years ago, when prices of many commodities soared as the result of the 1983 drought and massive government acreage programs ordered to reduce production.

Bumper harvests since 1983, lagging export demand and lower government support prices for many commodities have pushed crop prices down the last few years.

Crop prices were unchanged from the March index but still averaged 11 percent below April 1986. But prices for livestock and livestock products jumped 4.2 percent in April and were 17 percent higher than a year ago, the report said.

″Both cattle and calf prices were at their highest levels since August 1980,″ the report said.

New quarterly figures showed that prices paid by farmers to meet expenses increased 1.9 percent from January and also were up 1.9 percent from April 1986.

″The feeder livestock index was the highest since November 1980,″ the report said. ″Prices also rose for fuels, autos and trucks, feed and farm machinery. Agricultural chemicals was the only (category) showing a decline.″

Prices paid commercial vegetable growers dropped 8.2 percent from March and were down 1.4 percent from a year earlier. Lower prices for lettuce and tomatoes were partly offset by higher prices for onions.

According to the preliminary April figures, based mostly on mid-month averages, fruit prices dropped 1.8 percent from March but still averaged 15 percent more than a year earlier. The April decline was due mainly to lower strawberry prices.

Prices of dairy products were down 1.6 percent from March but averaged 2.4 percent more than in April 1986, the report said.

The index for poultry and eggs was up 0.9 percent from March but was 2.6 percent below a year earlier.

Net farm income was estimated by USDA at around $29 billion last year, down from $30.5 billion in calendar 1985. Economists are forecasting an increase to about $32 billion in 1987.

Consumer food prices are expected to continue rising, perhaps averaging 2 percent to 4 percent higher than in 1986, when they gained 3.2 percent.

April commodity prices averaged 125 percent of a 1977 base used for comparison, according to the preliminary figures, up from the revised mark of 123 percent in March. A year ago, the April index averaged 122 percent.

The quarterly parity ratio was reported at 52 percent in April, up one point from the revised January reading of 51 percent. A year ago, the parity ratio was 50 percent. In September 1985, the ratio dropped to 49 percent, matching the all-time low set in June 1932 in the depths of the Depression.

Although many economists say the old parity standard is outmoded because it doesn’t take into full account changes in farm productivity, other contend the ratio is useful in comparing year-to-year changes.

Under the parity formula, prices farmers get for commodities are compared with prices they pay to meet expenses. It then uses a 1910-14 measurement to express what happened. At 100 percent, the indicator would theoretically mean farmers had the same buying power as they had in 1910-14.

For example, the average price of corn in April was $1.49 per bushel at the farm nationally, according to the preliminary figures. That was 31 percent of the quarterly parity price of $4.87 per bushel reported in April.

The report also said:

-Cattle averaged $63.20 per 100 pounds of live weight nationally, compared with $59.30 in March and $50.30 a year earlier. Those are averages for all types of cattle sold as beef.

-Hogs averaged $50.70 per 100 pounds, compared with $47.40 in March and $39.70 a year earlier.

-Corn, at $1.49 a bushel, was up from $1.47 in March but still below the $2.30 of a year earlier.

-Wheat prices at the farm, according to preliminary figures, averaged $2.59 per bushel, up from $2.58 in March but below the year-earlier level of $3.37.

-Rice averaged $3.52 per 100 pounds, compared with $3.68 in March and $5.32 in April 1986.

-Soybeans were $4.82 per bushel, compared with $4.73 in March and $5.23 a year earlier.

-Upland cotton was reported at 50.8 cents per pound, compared with 50 cents in March and 59.2 cents a year earlier.

-Eggs were 55.6 cents per dozen, compared with 54.4 cents in March and 56.9 cents a year earlier.

-Milk was $12.30 per 100 pounds, compared with $12.50 in March and $12.10 a year earlier.

-Broilers were 29.6 cents per pound, live, compared with 29.1 cents in March and 29.5 cents a year ago.

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