Farming's Price-Cost Squeeze Tightens

WASHINGTON - Oct 31/05 - SNS -- October saw prices received by farmers in the United States declined 7% from month earlier levels, while the cost of farming resumed its upward climb, rising 0.7% during the month for a 5.1% annual increase, reports the USDA.

This lifted the October index for Prices Paid for Commodities and Services, Interest, Taxes, and Farm Wage Rates (PPITW) at 143 (1990-92=100).

           Indexes of Prices Paid by Farmers and Related Parity Ratios
                  United States, October 2005 With Comparisons
--------------------------------------------------------------------------------
                                 :     1910-14 = 100     :    1990-92 = 100
             Indexes             :----------------------------------------------
               and               : 2004  :     2005      : 2004  :     2005
              Ratios             :----------------------------------------------
                                 :  Oct  :  Sep  :  Oct  :  Oct  :  Sep  : Oct
                                 :
Prices Paid by Farmers for       :
Commodities & Services,          :
Interest, Taxes, & Wage          :
Rates (PPITW)                    : 1,805  *1,889   1,903    136     142    143
  Production                     : 1,296  *1,367   1,383    134     141    142
    Feed                         :   541    *564     541    111    *116    111
    Livestock & Poultry          : 1,796  *1,769   1,887    141     138    148
    Seeds                        : 1,564   1,694   1,694    158     171    171
    Fertilizer                   :   542    *598     611    148    *163    167
    Agricultural Chemicals       :   737    *749     751    119    *121    121
    Fuels                        : 1,574  *2,040   2,225    204    *264    288
    Farm Supplies & Repairs      :   985  *1,020   1,020    139    *144    144
    Autos & Trucks               : 2,985  *2,974   2,989    112    *112    112
    Farm Machinery               : 4,130  *4,297   4,285    165    *171    171
    Building Materials           : 1,867  *1,935   1,956    137    *142    144
    Farm Services & Rent         : 1,460  *1,512   1,512
    Farm Services                :                          124     129    129
    Rent                         :                          120     123    123
  Interest 1/                    : 2,593   2,643   2,643    103     105    105
  Taxes 2/                       : 3,474   3,542   3,542    130     132    132
  Wage Rates                     : 6,022   6,067   6,067    161     162    162
  Production, Interest, Taxes,   :
   & Wage Rates (PITW)           : 1,804  *1,889   1,907    134     141    142
  Family Living-CPI 3/           : 1,813  *1,888   1,888    142    *147    147
                                 :
                                 :
                                 :----------------------------------------------
  Ratio (Received\Paid)          :                           84      82     77
  Parity Ratio 4/                :    40     *39      37
  Parity Ratio Adjusted 5/       :    42     *43      41
  PPITW Adjusted for             :
   Productivity 6/               : 1,223  *1,244   1,247
                                 :
                                 :
                                 :----------------------------------------------
  Crop Sector (PPITW)            :                          138    *146    147
  Livestock Sector (PPITW)       :                          133     138    139
                                 :
                                 :
                                 :----------------------------------------------
  Farm Sector (Production)       :                          128    *132    133
  Non-Farm Sector (Production)   :                          136     145    147
--------------------------------------------------------------------------------
*   Revised.
1/  Interest per acre on farm real estate debt and interest rate on farm
    non-real estate debt.
2/  Farm real estate taxes payable per acre.
3/  Bureau of Labor Statistics, Consumer Price Index for all urban consumers
    (CPI-U), for the previous month converted by the USDA.
4/  Ratio of index of prices received to PPITW (1910-14=100).
5/  Based on estimated cash receipts, from marketings and government
    payments, the preliminary adjustment factor is 1.105 for 2005 and the
    revised factor is 1.048 for 2004.
6/  PPITW is adjusted based on productivity trend for the prior 15 years.

PRODUCTION INDEX: The October index, at 142, increased 0.7% from last month and 6.0% from last year. Higher prices in October for feeder cattle, diesel fuel, LP gas, and feeder pigs more than offset lower prices for feed concentrates, complete feeds, feed grains, and gasoline.

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