FLORIDA FARM PRICES AND THE GENERAL PRICE LEVEL


 The index of wholesale prices of all commodities prepared by the
 U. S. Bureau of Labor Statistics is one of the most commonly accepted
 indicators of the general price level. It is used here as a basis for
 comparison of the movement of the Florida farm price index as shown in
 Figure 1. The index of Florida farm prices stayed slightly above United
 States wholesale prices from 1950 to 1974. It dropped below wholesale
 prices only in 1975 and 1976, concurrent with the drop in Florida sugar-
 cane and livestock prices.


 RELATIONSHIP OF PRICES RECEIVED TO PRICES PAID


 Prices Paid by United States Farmers for Commodities,
 Interest, Taxes and Farm Wage Rates


 There is no index of prices paid by Florida farmers, but the U. S.
 Department of Agriculture does prepare a monthly and annual index
 of prices paid by farmers for the nation as a whole. It represents
 changes in the cost to farmers of a fixed bill of goods at retail. This
 index includes prices of commodities used in living and production and
 payments for interest, taxes, and farm labor. It is more representative
 of the level of prices paid by farmers than is the index of United States
 wholesale prices. The farmer sells at wholesale but usually buys at
 retail. The index of wholesale prices of all commodities includes farm
 products--which the farmer is selling rather than buying--and does not
 reflect freight rates to retailers or retail margins, which are not uni-
 form for all parts of the country.
 In determining the exchange ratio or per-unit purchasing power of
Florida farm prices, the index of retail prices paid by farmers in the
United States for commodities used in living and production has been used.
This is not completely accurate, as Florida farmers do not buy the same
items or same amounts per capital as the average for all farmers in the
United States. However, if such an index were available for Florida, it
probably would show approximately the same general trends.