Farm Commodity Prices Continue To Decline
May. 01, 1986
WASHINGTON (AP) _ Commodity prices at the farm continue to show weakness in the face of huge stockpiles, declining exports and uncertainty about the future.
A preliminary report issued Wednesday by the Agriculture Department said that prices farmers get for crops and livestock, on the average, dropped 1.6 percent in April. That put the USDA's price index at 9.1 percent below a year ago.
Earlier this week, the department said April 1 stockpiles of grain were up sharply from a year ago, including a 50 percent increase in the corn inventory and a 27 percent gain in wheat stocks.
The report Wednesday by the department's Agricultural Statistics Board said the April price decline was mostly the result of lower prices for eggs, cattle, hogs, wheat and milk. Higher prices for lettuce, potatoes and tomatoes offset part of the decline for the other commodities.
Prices paid by farmers to meet expenses were said in April to be down 1.8 percent from February and 2.4 percent below April 1985. Because of government spending cutbacks, the board shifted after the February report to quarterly figures for prices paid by farmers. The next report will be released July 31.
According to the preliminary April figures, based mostly on mid-month averages, the farm prices of livestock and livestock products dropped 3 percent from March and averaged 5.9 percent below a year ago. Crop prices rose 0.9 percent from March but still averaged 11 percent below a year ago.
Cattle prices averaged $51.30 per 100 pounds, down $1.10 from March, and hog prices also dropped $1.10 to $39.30 per hundredweight.
Vegetable prices rose 14 percent from March and averaged 15 percent more than a year ago. Higher prices for lettuce and tomatoes accounted for most of the increase from March.
The report said the index of prices for poultry and eggs declined 8 percent from March, averaging 4.5 percent below the year-earlier level. Egg prices averaged 10.5 cents lower at 57.8 cents per dozen at the farm.
Prices for milk and other dairy products declined 1.6 percent from the March average, reducing the index to 6.8 percent below a year ago.
Consumer food prices are expected to rise moderately again this year, USDA economists say. For all of 1986, the increase may average 2 percent to 4 percent higher than in 1985, when retail food prices rose 2.3 percent.
Monthly farm prices are not considered necessarily good indicators of food prices because commodity prices make up only a small part of the value of retail food costs. Other factors include processing, transportation , labor, and merchandising expenses.
Net farm income dropped sharply in 1985, probably totaling $29 billion to $32 billion, according to USDA estimates. For 1986, department economists project another decline to a range of $21 billion to $25 billion.
Another complication has been a world grain glut and a decline in U.S. farm export fortunes. Total U.S. farm exports are expected to decline further in 1985-86 to about $28 billion, the lowest value in eight years.
Overall, April farm commodity prices averaged 120 percent of a 1977 base used for comparison, according to the preliminary figures. That was down two percentage points from the revised March reading of 122 percent. In April 1985, the index was 132.
The revised March index was up two percentage points from the preliminary level announced a month ago, meaning that the March index of prices held steady and did not decline from February as initially reported on March 31.
In April, the parity ratio was 50 percent, the same as in February but down from 53 percent in April 1985, the report said. There was no parity ratio reported for March because of the shift to quarterly computing of the prices that farmers pay out.
In computing parity statistics, an index of prices paid by farmers is essential to compare with those received by producers.
The April ratio was one percentage point above last September, when it sank to 49 percent and tied the low reached in June 1932 during the depths of the Depression, department records show.
Many economists say the old parity standard is outmoded because it doesn't take into full account changes in farm productivity. But others contend the ratio remains 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. The formula then uses a 1910-14 measurement to express what happened. At 100 percent, the indicator would theoretically mean that farmers had the same buying power as they did in 1910-14.
For example, the average price of wheat in April was $3.16 per bushel, according to the preliminary figures. That was 47 percent of the April parity price of $6.72 per bushel.
The report also said:
-Cattle averaged $51.30 per 100 pounds of live weight nationally, compared with $52.40 in March and $56.20 a year earlier. Those are averages for all types of cattle sold as beef.
-Hogs averaged $39.30 per 100 pounds, compared with $40.40 in March and $41.20 a year earlier.
-Corn, at $2.25 per bushel, was down from $2.29 in March and $2.70 a year ago.
-Wheat prices at the farm, accoding to preliminary figures, averaged $3.16 per bushel, compared with $3.28 in March and $3.43 a year earlier.
-Rice averaged $7.40 per 100 pounds, compared with $7.60 in March and $8.20 in April 1985.
-Soybeans were $5.13 per bushel, compared with $5.23 in March and $5.88 a year earlier.
-Upland cotton was reported at 55.1 cents per pound, compared with 55 cents in March and 57 cents a year earlier.
-Eggs were 57.8 cents per dozen, compared with 68.3 cents in March and 53.1 cents a year earlier.