APPENDIX A
 INDEX NUMBERS


 Method of Construction of the Florida Farm Price Index


Type of Index
 The index is of the weighted aggregative type, using the formula

 E P Qo
 ------_' where Po equals prices in the base period, P1 equals prices
 E P Qo
 o o
in the current period, and Qo equals quantities sold in the base period.
Fixed quantity weights are used throughout the period of the index and
are constant for each month in the year.


 Commodities Included.--The combined index included 34 commodities
from September, 1951 through December, 1976, which represents 90 percent
or more of the cash sales of Florida farm and grove products (Table 1).
Squash was added to the index in October, 1950; and soybeans in
September, 1951.


 Systems of Weighting.--Commodities are weighted in the index by the
quantity of sales of each during the three calendar years 1971 to 1973,
inclusive. The use of quantities sold for weights, rather than pro-
duction, emphasizes the prices of products produced commercially, with
little or no weight for homegrown products consumed on the farm.
 In the preparation of an index covering a long period by the use of
fixed weights, some compromise must be made in selecting the period of
sales to use for weights. The farther the index is projected forward or
backward from this base period, the less representative the weights will
be of current marketing. The average annual sales during the period
underweights corn, peanuts, soybeans, sugarcane, and poultry products,
all of which have increased in production more than citrus and vegetables.
Only cotton, shade tobacco, tangerines, beans, and cucumbers have de-
creased production since 1971-73.
 A period more recent than 1971-73 for quantity of sales would give
weights which would be more representative at the present time but would