Cost-Price Squeeze Tightens

WASHINGTON - Jul 31/06 - SNS -- The cost price squeeze afflicting farmer sin the United States tightened in July, with the average price received for what was produced remaining unchanged on the month, while the cost of farming rose one point, according to preliminary data assembled by the USDA.

The change is more dramatic when compared to last year. The index of prices received is up one point at 117, but the cost of farming is up seven points at 148.

Discussing the numbers, the USDA said, the Crop Index is down 3 points (2.4%) while the Livestock Index was unchanged. Producers received higher commodity prices for cattle, broilers, asparagus, and snap beans. Lower prices were received for grapes, cantaloupes, hogs, and broccoli.

The overall index is also affected by the seasonal change based on a 3-year average mix of commodities producers sell. Increased average marketings of grapes, wheat, tomatoes, and hay offset decreased marketings of milk, cantaloupes, potatoes, and asparagus.

The July Index of Prices Paid for Commodities and Services, Interest, Taxes, and Farm Wage Rates (PPITW) is 148% of the 1990-92 average. The index is up 1 point (0.7%) from June and 7 points (5.0%) above July 2005. Higher prices in July for feeder cattle, gasoline, feed grains, and diesel fuel more than offset lower prices for feeder pigs, nitrogen fertilizers, milk cows, and herbicides.

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