FARM AXD TEEMIXAJL MAEKET PRICES. 5 



Area ''C" represents any area which produces a surplus and has 

 withm its boundaries a consumer's demand, either locahzed or scat- 

 tered. This may be two farms with a surplus and one farm with a 

 shortage; a village or city consumption or any multiple of those 

 numbers. The crop indicated on the chart, if sold at the terminal 

 market, would net 37 cents per bushel. By supplying the home 

 consumer at 40 cents net, 250,000 bushels to consimiers of "D" at 

 40 cents net and by selling the remainder of the crop at the terminal 

 for 37 cents net, the average farm price for the crop would be 38J 

 cents net, a gain of 1 J cents per bushel over the terminal net price. 



Area ''D" represents any consuming area that produces a part of 

 its supply within its boundaries, either localized or scattered, and 

 depends upon outside production for the remainder of its needs. 

 The farm price for the surplus production in this section would net 

 39 cents if sold at the terminal market. It can be assumed that these 

 consumers will pay practically the same price for the home produc- 

 tion as must be paid for supplies purchased outside, which in this case 

 is 48 cents as indicated on the chart. By selling at home and saving 

 the freight and handling charges, these producers will gain 9 cents 

 per bushel over the terminal net price. 



Area ''E" represents the area supplied from the terminal market. 

 The farm price for home production at the points supplied by the 

 terminal market is usually determined from the cost of the outside 

 supply, as at ''D." 



Some one of the examples cited occurs in a modified form at each 

 market point and will account in some degree for the different farm 

 prices reported for a State. 



Under the foregoing conditions it would not be well to consider a 

 price from any locaHty as representative of the amount being paid 

 for a bushel of grain in the entire State. If the several local prices are 

 weighted and averaged, the result will be a reasonable estimate of the 

 average State price. 



The percentage of the wheat crop moved previous to November 1, 

 1920, shown by the map on page 24 was the determining factor as to 

 the high or low average of State prices. South Dakota, Nebraska, 

 Colorado, and Utah were the only States to report a farm price of less 

 than S2 per bushel before November 1, 1920. 



