Elasticities are for the demand at the retail level. If the price of 

 these commodities increases 1%, the price elasticities of these products indi- 

 cate that the quantity consumer demand would fall by 0.6196% for beef, 0.0933% 

 for vegetables, 0.6591% for poultry and fish, 0.4134% for fruits, and 0.0679% 

 for eggs (Table 13). 



Should the consumer's real per capita income rise by 1%, then the demand 

 should increase by 0.1212% for meat, 0.1816% for vegetables, 0.1682% for poul- 

 try and fish, 0.2613% for fruits, and 0.0625% for eggs. These elasticities, 

 of course, have important implications for retail revenue and pricing 

 strategy. 



The effects of income, the trend in real farm product prices, production, 

 and their implication to Southwest Florida and the State are more fully dis- 

 cussed in the following sections. First, they will be discussed as they apply 

 to individual commodities and later as they affect the entire agricultural 

 sector. 



Agricultural resource scarcity is tied directly to trends in the real 

 prices of agricultural products. Scarcity can be measured by the trend in 

 real prices of resources according to Barnett and Morse (1963). This trend in 

 real prices measures the interaction of supply and demand. 



Agricultural resource scarcity would mean rising real prices at the 

 wholesale level causing a diminishing return from the land. The ultimate 

 burden will be on the consumer if the standard of living declines. 



FARM EXPENSES 



Real farm expenses currently are growing faster than real farm income. 

 Real total expenses in 1978 for Florida farmers were $1,049 million and are 

 growing at an annual rate of 3.9%, but real farm income is growing 3.2%. The 

 difference is caused by the general decline in real farm prices and the in- 

 creasing real costs of production. 



A decline in prices is preceded by the sale of an additional unit of 

 output (marginal revenue), yet most real costs have been rising. Interest 

 prices rose 89% in 1975-79 followed by increases in energy prices (55%), farm 

 machinery (46.5%), and farm wages (38%). Fertilizers and agricultural chemi- 

 cal costs have fallen 9.6% and 6.2%, respectively. 



Pesticides, Fertilizers and Agricultural Chemicals 



The costs of agricultural chemicals, fertilizers, and pesticides gener- 

 ally declined in 1975 to 1979, but since then costs have begun to rise. Only 

 the price of limestone has remained stable. In 1978 in Northwest Florida, 

 farmers spent $12 million real dollars on fertilizer, an increase of 30% since 

 1954, whereas the State reported an increase of 41%. In 1978, fanners also 

 spent $8.4 million in real dollars on other agricultural chemicals. 



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