FACTORS AFFECTING FARM PRICES


 Many factors are involved in the explanation of price changes. Some
prices may be controlled by local supply and demand conditions in certain
instances, whereas in others, prices are affected more by national or
world supply and demand conditions. Many commodity prices are affected
by day-to-day changes reflecting opinions of buyers and sellers as to
supply and demand conditions, or by seasonal changes in prices due to
production peaks and storage costs. Most prices vary inversely with the
supply of the product available.
 Over a period of years the price of a single commodity may change
relative to other commodities, or to the general price level. These
changes may be caused by discovery or development of substitutes, by
technological improvements resulting in greater productivity or lower
farm costs, or by developing and shifting to lower cost farming areas.
Changes in consumer purchasing power and food habits also may affect
some product prices.
 Farm prices are affected by changes in the general price level. When
the general price level rises or falls, not all prices rise and fall alike.
Since the farmer is largely a producer of raw materials, his prices are
usually among the first to change when prices are rising or falling.
 The objective of this report is simply to document price changes and
not to analyze the causal factors associated with the observed changes.


 COMBINED INDEX OF 34 FLORIDA FARM PRODUCTS


 The index shows the general movement of prices for 34 of the most
 important crops and livestock products in the state since 1950 (Figure 1).
 Table 1 in Appendix A shows the commodities included, the weight assigned
 to each, and the method of construction.
 The index is strongly influenced by the movement of citrus, vege-
 table, and livestock prices and influenced less by field crop prices.
 Citrus accounted for 33.0 percent, livestock for 32.8 percent and vege-
 tables for 20.4 percent, respectively, of the total weight in the period
 1971-73.