RELIABILITY AND ADEQUACY OF FARM-PRICE DATA 63 
been used in comparison with the cost of production of a given 
product and as a factor in studies of the cost of producing livestock 
and livestock products. In connection with this use of a farm price 
it should be borne in mind that a so-called " farm price " is not 
usually the price at the farm but is the price at the local farm market. 
It usually includes the cost of transporting the product from the 
farm to the shipping point or market and may also include the cost 
of a container. With some products, such as potatoes and apples, 
the price Avhich the farmer receives may cover shrinkage and storage 
and, in some cases, the cost of retail sales and delivery. 
An adequate knowledge of relative changes in farm-price data — 
especially adequate information as to how the trend of farm prices 
compares with the trends of other prices, wages, land values, etc. — 
is indispensable as a basis for an intelligent constructive program 
for argriculture whether by Federal or State agencies or by 
organizations of farmers. 
PRICE CHANGES AS CAUSES AND EFFECTS 
Prices and price changes are both causes and effects in the field 
of economic phenomena. In the long run, the prices of farm products 
tend to control the supply. A year of relatively high prices for a 
given farm crop is frequently followed the next year by a marked 
increase in the acreage of the crop planted. Some interesting and 
worth-while studies have been made showing the farmer's response, 
in the acreage planted, and in the use of fertilizer, and the like, to 
changes in the price of cotton, potatoes, and other crops. 
Changes in farm organization and types of farming can fre- 
quently be traced to fundamental changes in farm prices. For many 
problems of this kind it is important to have price series which repre- 
sent price changes in the local farm market and at the same time 
are a composite for a definite geographical unit such as a State. 
Market prices are usually for a definite grade, whereas farm prices 
are an average of the grades actually being sold each year. Crops 
vary from year to year in quality and grade to such an extent that 
the price of one grade only would not always be a satisfactory index 
of the average price or value. Similar difficulties would be en- 
countered if the price of one variety was used as a measure of price 
changes for an entire crop. 
An intriguing field of economic research that has gained consider- 
able attention since the war is that of price forecasting (2) . Farm- 
price data are frequently the only available figures covering price 
changes of competing products in a particular area. The corn-hog 
ratio is an illustration of how the relative prices of corn and hogs 
at a given time may influence the supply of hogs to be marketed 
months in advance and hence the future price of hogs. 
The greatest limitation of all in monthly farm prices and one 
which it is very difficult to remedy at this time is the shortness of 
series, as these prices extend back only to about 1910. Seventeen 
years is all too short a time for a study of price relationships. 
December 1 prices of crops and January 1 livestock values, which 
date back to 1866-67, are frequently helpful when a longer price 
series is needed; but unfortunately they do not include the prices 
of livestock products such as butter, milk, eggs, and wool. 
