2 BULLETIN 1480, U. S. DEPARTMENT OF AGRICULTURE 
market and at the same time is a composite for a definite geograph- 
ical unit, such as a State, as well as a composite for the entire crop, 
including all grades and classes. 
This bulletin is designed to meet the needs of those students and 
research worker.: in the field of agricultural economics who may have 
occasion to work with the farm-price data which are collected and 
published by the Department of Agriculture. It is intended pri- 
marily for those students who are familiar with technical, statistical 
terms. The data published by the United States Department of 
Agriculture are too often taken for granted by the research worker, 
largely because the reliability and adequacy of the data have never 
been fully analyzed. Many students would like to know what is 
back of farm-price data — how and when collected, and their most 
obvious limitations before trying to use them in some important 
economic problem. 
DESCRIPTION OF FARM PRICES 
PRICES OF FARM PRODUCTS 
The prices received by producers of farm products, commonly 
called " farm prices," represent the price-reporting estimate of the 
average price of all grades and classes of commodities being sold in 
the local farm market oh or about the fifteenth of each month. The 
grades and classes vary from one season to another and even from 
one month to the next. The "wholesale price" of farm products 
usually means the price of a particular grade or class at a primary 
or central market, such as Chicago, Kansas City, New Orleans, or 
New York, for a given day or a weekly or monthly average of daily 
quotations. Both farm and wholesale prices are distinguished from 
future prices in that they both represent cash transactions for imme- 
diate delivery. 
The farm price is seldom an f. o. b. price in the case of potatoes, 
for example, there is usually some agency at the local market to buy 
from the producer, and these buyers must receive some compensation 
for their services. There is usually some spread between the farm 
price and the f. o. b. price. When the farmer sells direct to the 
consumer in a neighboring town the farm price and the retail price 
may be one and the same. 
Strictly speaking, the actual farm price or " price at the farm " 
of a farm product is practically impossible to learn or obtain. The 
price which is usually obtained is the one the farmer receives at his 
local market. For most farm products there is no " at the farm " 
price. The price is made only when the product changes hands. 
The prices reported to the United States Department of Agriculture 
are the prices at which the products first changed hands when sold 
by the producer. The price of wheat as reported includes the cost to 
the farmer of handling and delivering the wheat to the local elevator. 
The local handling cost may be relatively large with such products as 
butter, eggs, wool, and cotton. 
SURPLUS-AREA AND DEFICIT-AREA PRICES 
The State average of prices received by producers of farm products 
is made up of prices from both surplus-producing and deficit areas 
