( 150 ) 



get the supplies from the farmer. The cost of handling food 

 between the farmer and the consumer, which consists largely 

 of labor and other inflexible items, does not change much 

 over a short period of time. The farmer is out at the tip of 

 the whip. 



The relationship of retail and farm prices of food might 

 be illustrated, using potatoes as an example. Farm and re- 

 tail prices might be in equilibrium as follows: 



Per peck 



Retail price $0.75 



Retailer's margin 0.15 



Transportation, storage 0.25 



Commission, inspection, bags, tags, etc. 0.10 

 Farm price 0.25 



If conditions in the retail trade improve, the retailer charges 

 $0.80. Then the most likely price situation would be about 

 the following : 



Per peck 



Retail price $0.80 



Retailer's margin 0.15 



Transportation, storage 0.25 



Commission, inspection, bags, tags, etc. 0.10 

 Farm price 0.30 



In this case retail prices rose 7 per cent and farm prices 

 rose 20 per cent, and the price controllers would tell us that 

 farmers were to blame for the rising cost of living. 



Farm Prices Fluctuate More Widely 



With passing time, and with the addition of more and 

 more inflexible charges for food distribution, the fluctua- 

 tions in farm prices have been increasing. Farm prices are 

 a residual. Rising costs of distribution make the residual a 

 small part of the consumer's dollar. If the farm price is a 



