"Economists are pessimists: they've predicted 8 of the last 3 depressions."
--Barry Asmus

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Wednesday, March 30, 2011

Farm Products Price Index

This report comes from the USDA, and tracks changes in the prices received by farmers and in prices paid by farmers. It doesn't get a lot of respect from the equity markets - the contents of this report are typically the things getting excluded from the "core" inflation measures so beloved by various analysts and agencies - but this has a significant impact on GDP. Let's face it, even if food prices aren't being tracked in inflation costs, rising food prices will limit disposable income for other purchases.
So, let's have a look at the March report. The All Farm Products Index of Prices Received by Farmers hit 174%, up 400 bps (2.4%) from February and 3300 bps (23%) from March 2010. The Crop Index is up 100 bps (0.5%) from February, and the Livestock Index is up 700 bps (4.9% from February). Meanwhile, the Index of Prices Paid for Commodities and Services, Interest, Taxes, and Farm Wage Rates hit a level of 199%, up 200 bps (1%) from February and 1900 bps (11%) from March 2010.
That level, by the way, is essentially looking at how much each of those indices has increased since the base period of 1990-1992. So yes, that means that farmers are earning 174% more than they did 20 years ago, and they're paying 199% more on their expenses. On average.
The actual report is 43 pages long, with a lot of detail about changes in crop prices, livestock prices, and food commodities. Have a look at it. It's... educational.

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