Effects of Changes in Prices, Inputs and Efficiency on Farm Incomes (1937-39 to 1948-50)

Abstract

LARGER net farm incomes in the last several years compared with those of the late thirties are often attributed solely to the higher prices received for farm products. These higher prices have been an important factor although they have been partly offset by the higher prices paid for items used in production. But in addition to. higher prices, the use of more resources and the greater efficiency in production also have contributed significantly to higher incomes. For farmers, as a group, changes in volume of production are associated with a tendency for prices of their commodities to move in the opposite direction. However, the relationship of volume and price is not the same for all farmers, but varies with the elasticity of demand for their respective products. For farmers as individual producers there is little, if any, relationship between volume of production and price, except that they may plan their of production in anticipation of a given set of prices at some later date. Since this analysis is concerned with the effects of these and other factors on individual farms of different types the relationship between volume and price may be ignored. Most farmers have benefited from the increase in the price during the decade of the 1940's, but not all of them have profited by recent technological changes. Some have adopted new techniques which have raised the level of farming but have added little to production. Some farmers have been unable to discard older techniques in order to reduce costs.