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Farm Prices Drop for 5th Straight Month

January 01, 1985|Associated Press

WASHINGTON — Prices farmers get for raw products declined 2.2% in December and averaged below year-earlier levels for the first time in 15 months, the Agriculture Department said Monday.

The price index for commodities, down for the fifth straight month, began dropping in August after holding fairly steady since last spring. Even so, until now, the index remained above year-earlier readings.

But officials said the preliminary figures for December pushed the index 4.3% below a year earlier, the first time that had happened since September, 1983.

Higher Outlays

Lower prices for for oranges, cotton, soybeans, broilers and milk were mainly responsible for the index decline from November to December, the department's Crop Reporting Board said. Those were only partly offset by higher farm prices for hogs, cattle, hay and turkeys.

The prices farmers paid in December for supplies, services, interest, taxes and wages were unchanged from November. But those still averaged 0.6% above their year-earlier levels. Prices of feed, fuel and fertilizer were down but higher prices for feeder livestock offset those declines.

As 1984 drew to a close, crop prices generally were 3.8% lower than in November and averaged 8.1% below a year ago. Livestock and livestock products prices were unchanged from the previous month and also matched the year-earlier level.

A major reason for the drop in crop prices in 1984 was a return to larger plantings of key crops. In 1983, the government's acreage programs, along with severe drought, cut production sharply and helped boost market prices.

With 1984 crop production returning to more normal levels, prices softened, particularly for corn and other feed.

Department economists had predicted a sharp upturn in 1984 overall farm income because of greater production and a rebuilding of inventories. They said 1984 food prices rose about 4%, 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 result of huge reductions in inventories.

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

According to the preliminary December figures, based primarily on mid-month averages, the index for meat animals was up 1.4% from November and was 3.5% above a year earlier.

Poultry and eggs were down 4.7% from November and were 18% below the year-earlier average.

Fruit prices dropped 15% from November but still averaged 56% more than a year earlier. Lower prices for oranges, lemons and pears were responsible.

Overall, December farm commodity prices averaged 134% of a 1977 base used for comparison, according to the preliminary figures, three points less than in November. A year earlier, the index was 140% of the 1977 base.

Last April, the index rose to 146%, an all-time high, and then declined in May to 144% where it remained until edging down in August and September as 1984 crop prospects were better known.

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