Farm Prices Decline 0.7% During Month : March Index at Lowest Level Since October, 1983

Associated Press

After holding steady for most of the winter, prices farmers get for raw products dropped 0.7% in March, averaging 7.6% below year-earlier levels, the Agriculture Department said Friday.

According to department records, the March index was the lowest since October, 1983. The index had last declined in December, 1984, and then remained unchanged in January and February.

The index, bolstered by 1983's short crops and rising grain prices, rose to a record level in April, 1984. But prices started to ease downward as prospects improved for last year's harvests. The index in August began a five-month slide, leveling off during the winter.

In March, the report said, lower prices for hogs, cattle, oranges, milk and wheat were mostly responsible for the decline in the index. Higher prices for tomatoes, eggs, cotton, potatoes and sorghum helped offset the drop for other commodities.

Meanwhile, the prices farmers paid in March also held steady for the ninth consecutive month and also averaged the same as a year earlier, the department's Crop Reporting Board said.

Increases Were Offset

Higher prices were paid for fuel and other forms of energy, along with higher costs for family living. But those were offset by decreases in the prices of feed, fertilizer and farm machinery.

Crop prices generally were up 0.8% from February but averaged 9.4% less than a year ago. Livestock and livestock product prices were down 2.8% from February and 6.6% from a year earlier.

Market prices for major crops have been weak for months because of larger harvests last year. In 1983, the government's acreage programs, along with severe drought, cut production sharply and helped boost market prices, which were reflected in the high index a year ago.

Department economists say overall farm income turned up in 1984 because of greater production and a rebuilding of inventories. They said food prices rose 3.8% last year, significantly above 1983's 2.1% increase, the smallest since 1967.

For 1985, the department says net farm income could drop to a range of $19 billion to $24 billion from the forecast of $29 billion to $33 billion in 1984. Net farm income dropped in 1983 to a 12-year low of $16.1 billion, mainly as a result of huge reductions in inventories.

The department says food prices in 1985 could increase an additional 2% to 5%.

Meat Index Drops

According to the preliminary March figures, based primarily on mid-month averages, the index for meat animals was down 3.9% from February and also was 6.3% below a year earlier.

Poultry and eggs were up 2.7% from February but were 22% below the year-earlier average.

The dairy price index dropped 1.4% during the month but still averaged 2.2% above March, 1984.

Fruit prices dropped 5.9% from February but still averaged 34% more than a year earlier.

Overall, March farm commodity prices averaged 134% of a 1977 base used for comparison, according to the preliminary figures, down one point from the February index. A year earlier, the index was 145%.

The March parity ratio of 54% was down from 55% in February. In March, 1984, it was 59%.

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