AGRICULTUBAL PRICES 



year period, whereas packers' manufacturing costs were probably 

 not in excess of 170 per cent of the ten-year period. 



It is conceivable that as the packing business becomes even 

 more centralized and further improvements in the use of by-prod- 

 ucts are discovered, it may be possible for packers to sell short- 

 ribs, as an average of a ten-year period, for a price no more than 

 the cost to them of 133 pounds of hog flesh. Under conditions as 

 they prevail at present, however, the 135-pound ratio is approxi- 

 mately correct. 



The ratio method of determining profits and losses in the man- 

 ufacture of various packers' products is not put forward as an aid 

 in any method of packing house accounting. It is, however, put 

 forward as a method by which the consumer and the farmer can 



PacKerV Profit and Loss Areas on Mfs o* Hcjs mt Rlk 



110515061107 1108 1101 1110 mi ni2 



nmiis. 



Illustrating when short-rib sides have been above and below their ten-year 

 average ratio to live hog prices. 



discover in a rough way when the packers are absorbing more than 

 their customary share. 



A similar chart worked out for lard gives much the same re- 

 sults, altho at times the profit and loss of the two products do not 

 always coincide exactly. For instance, in 1914, lard sold for far 

 less than its normal ratio during the entire year, whereas ribs sold 

 for slightly more than their normal ratio. In 1919, lard sold far 

 above its normal ratio and ribs were below. Similar ratios might 

 be worked out for all the various hog meats, and also for cattle and 

 the various cuts of beef. What examination we have made of some 

 of these ratios indicates that the packers, in their buying of live 

 stock and selling of products, regard each product as a law unto 

 itself. If there is a large amount of stored lard on the market, 

 on account of the shutting off of the German demand, lard prices 

 may be reduced, even tho hog prices are such as to warrant lard 

 selling at a dollar or two more per hundredweight. On the other 

 hand, if the Allies at the same time are in the market for ribs, the 

 prices will be advanced, even tho ribs may be made from hogs at 

 a dollar or two less per hundredweight. The problem of the pack- 

 ers is to buy as cheaply as possible and sell as high as possible, in 

 the knowledge that too wide a spread will invite competition. In 



