FARM AND TERMINAL MARKET PRICES. 5 
Area "C" represents any area which produces a surplus and has 
within its boundaries a consumer's demand, either localized 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 consumers 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 38^ 
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 locality 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 $2 per bushel before November 1, 1920. 
