Agricultural pricesWallace, Henry A. (Henry Agard)
Science
Agricultural prices
Wallace, Henry A. (Henry Agard)
Agriculture -- Statistics; Farm produce; Prices
Manifestly, the weak point in the ratio method of determining cost of
producing crops is the character of the basic period. Did the crops
actually sell during the basic ten-year period for cost of production?
Manifestly, in some years they sold for less, and in some years they
sold for more. As an average of the entire ten-year period, they must
have sold for at least cost of production, or farmers would gradually
have reduced their acreage of the particular crop under consideration,
or else gone out of business entirely. As a matter of fact, in the
ten-year period under consideration, 1897–1906, land values were
constantly advancing. It would seem, on the whole that this particular
ten-year period is a fair one to use, and that as an average of these
ten years crops sold for approximately cost of production, no more, no
less.
It is always conceivable that over long periods of time there might have
occurred changes in supply or demand conditions that would make the
basic ten-year period altogether false for the purpose of comparison.
For example, in the case of oats, it is conceivable that tractors,
trucks and automobiles might so displace horses as to make the city
demand for oats decidedly less than during the ten-year period extending
from 1897 to 1906. The oats acreage might therefore be considerably
decreased, and oats be produced in large quantities only in those
sections especially adapted to growing oats. It is conceivable,
therefore, that the ratio method may possibly give the cost of oats
production at rather too high a figure, a figure impossible of
realization, one year with another. In the case of standard crops,
however, there is remarkably little change in either supply conditions
or demand conditions. Methods of producing corn are pretty well
standardized. The market for corn is almost equally stable. It is
believed that the ratio method of determining cost of corn production
will be approximately accurate for the next fifty years.
CONSUMERS’ RATIOS
During the past fifty years, a number of people have set themselves to
work to measure the shifting economic tides with index numbers. The more
complete of these index numbers really undertake to measure the changing
value of the dollar. In July of 1914, for instance, Dun’s index number
was $119.71, which meant that it required $119.71 to buy a certain given
amount of wheat, corn, oats, pork, beef, butter, eggs, wool, hides, pig
iron, lumber, petroleum, etc. On September 1, 1919, it required $238.34
to buy these same goods. The dollar of July of 1914 had become worth
about 50 cents in September of 1919, in its ability to buy wholesale
products. The consumer, in his buying, has certain choices. The man who
thinks pork is too high in price can shift to beef or mutton; or he can
leave meat altogether out of his ration and secure the needed nutrients
in dairy or poultry products.
Public-domain text, read in full here on John Shaqi.
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