RELIABILITY A^ T D ADEQUACY OF FAKM-PRICE DATA 3 
within the State. The farm price in areas of surplus production 
(4, p. S-5) 1 tends to be the primary-market price less the costs of mar- 
keting which arise from the time the product leaves the farmer's 
hands until it reaches the primary market. With such crops as cotton 
and wheat (in years when wheat is on an export basis) the farm price 
is the world price as the Liverpool price is often called, less the cost 
of getting the product to Liverpool. 
There are different kinds of prices even in a surplus-producing 
region, as some farmers sell locally, although by far the major por- 
tion of the product is marketed through the regular market chan- 
nels. This is well illustrated by a farmer who sells milk at retail to 
persons living in a neighboring town, while most of his neighbors 
deliver to a condensery. In deficit areas there are occasionally farm- 
ers who produce several acres of a given crop and who may even be 
forced to market a part of their product at some distant market. The 
price in a deficit area is roughly equivalent to the price in the farthest 
surplus-producing region from which the deficit area must draw its 
supplies, plus the cost of handling and transporting the product to 
the deficit area. With a bulky crop like potatoes there is usually 
considerable difference between the prices prevailing in surplus- 
producing and deficit areas within the same State. The farm price 
of cabbage serves as a measure of the general trend of cabbage 
prices for the entire State, but it does not reflect the wide fluctuations 
which prevail in surplus-producing areas within the State. 
In some States the price of some commodities, such as potatoes or 
apples, is higher in a surplus-producing area than in those sec- 
tions which are practically self-sufficient. The price tends to be 
higher because the surplus produced is large enough to create and 
maintain an outlet into the general channels of trade, whereas in 
the self-sufficient area a small local surplus tends to depress the local 
price. This condition is frequently found in some localities in the 
Kocky Mountain States. 
There are only a few farm products, even in surplus-producing 
States, which enter the channels of trade in the same general pro- 
portion year after year. In a year of low production in certain 
parts of the county, the usual movement of the crop from the farm 
to primary markets may be reversed. When the winter wheat crop 
in Kansas is very short, spring wheat may be shipped into Kansas 
to take care of the local milling demand, and the usual price differen- 
tials between farm and market prices may be materially changed. 
During a year when a considerable surplus of corn is produced, 
the corn price in an Iowa county may be the primary-market price 
less the cost of handling and transportation to the primary market, 
say Chicago. The next year the crop may be small ; farmers will be 
buying corn of each other and from nearby counties or States : and 
the price at which local corn will be sold may be nearly as high as or 
higher than the primary-market price. 
The farm price for a State is usually an average of prices re- 
ceived by farmers as they sell their product all along the line, from 
the price paid for the product entering the regular channels of 
trade to the retail price received by the farmer who sells direct to 
the consumer. It should also include the price received when a 
'Figures in italics in parentheses- refer to literature cited, p. 65. 
