62 BULLETIN 1480, U. S. DEPARTMENT OF AGRICULTURE 
any other important farm product. The department is now working 
on the problem of a more satisfactory index of the price changes in 
dairy products than the farm price of butter. Because of the extreme 
range in the price of the many types and grades of tobacco the farm 
price of tobacco is not considered particularly satisfactory for any 
purpose. The break in the series of farm prices of fluid whole milk 
owing to the change in 1924 from the price per gallon to the price per 
100 pounds, disturbs their comparability even when the price is con- 
verted from one basis to the other. Any shift in relative importance 
of surplus and deficit areas of production within a State tends to 
upset the strict comparability of the series over a long period of 
time. 
A close corollary of the farm-price index number is the "price 
relative " of the price of a farm product. The price relatives are 
useful in comparing the trend of prices for several different farm 
products, as they are the expression of the price as a percentage of 
the price in some common base period, as 1910-1914. 
The same limitations which apply to use of farm prices for cal- 
culating farm income also apply to calculations of individual price 
relatives and to their use for index-number making, although in the 
latter case the combined index number is not likely to be appreciably 
influenced if the same prices are used continuously. 
COMPARISONS WITH OTHER ECONOMIC DATA 
In connection with various economic problems, farm prices have 
been compared with wholesale and retail prices of farm products and 
the spread between these prices has been determined as a measure of 
marketing and distribution costs or the farmer's share of the con- 
sumer's dollar. Farm prices should not be used in this way unless 
the State prices are those of States of surplus production. Farm 
products which reach the primary markets come from areas of sur- 
plus production, where the prices are generally lower than in deficit 
areas. Unless the State represents a surplus area only, the State 
average price will be higher than the price actually received by the 
producers in those sections from which the surplus products began 
their journey to market. 
With increases in freight rates and labor costs and increased effi- 
ciency in marketing, the spread between the farm prices of various 
farm products and wholesale prices of farm products has changed 
considerably, as has also the spread between the general average of 
all farm prices and wholesale prices of farm products. A comparison 
of the index numbers of farm prices and of wholesale prices of farm 
products shows that the spread has been much wider since the war 
than it was before. 
Comparisons are made between the present relative levels of farm 
prices and those of wholesale prices of nonagricultural commodities 
and between their pre-war averages. The purchasing power per 
unit of agricultural products in terms of the wholesale prices of all 
commodities or of nonagricultural commodities is determined by such 
a comparison. 
Farm prices have been used in comparison with other data, such 
as land values, farm wages, industrial wages, taxes, rents, freight 
rates, and measures of industrial and business activity. They have 
