Developments in Marketing Spreads for Agricultural Products in 1963

Report Highlights: The spread between farm and retail prices of food products in the market basket of farm foods continued to widen in 1963. The increase of 4 percent last year was the largest since 1958 and double the average annual increase in 1953-62. Retail prices of farm-originated food products averaged only 1 percent higher in 1963 than in 1962. Thus, the larger part of the increase in the farm-retail spread in 1963 resulted in lower prices to farmers. Farmers received an average of 37 cents of each dollar consumers spent for farm-originated food products in retail stores last year, 1 cent less than in 1962. This was the smallest farmer's share since 1934, when it was 34 cents. Beef, processed orange products, and bread accounted for about three-fourths of the increase in the market basket farm-retail spread in 1963, although the spread for many other products also widened. Much of the increase in the market-basket spread came in the first quarter, when prices farmers received for beef cattle dropped much more than retail prices of beef. Consumers spent more per person last year for food than in 1962, but the proportion of their total income spent for food continued to decline. Retail prices of 25 items of cotton clothing and household furnishings averaged slightly higher in 1963. The farm-retail spread also increased modestly, as the farm value of the cotton used in these articles decreased slightly. Average prices and spreads for cotton products have varied within a relatively narrow range in recent years and have shown no marked uptrend. Retail prices of cigarettes continued a long-term uptrend. Total expenditures for cigarettes more than doubled from $3.0 billion in 1947 to $6.8 billion in 1962 (latest available data). However, the farmer's share of these expenditures has declined to less than 10 percent as total returns to farmers for tobacco used in cigarettes increased only from $418 million in 1947 to $672 million in 1962. Federal, State, and local excise taxes made up about 45 percent of the total expenditure for cigarettes in 1962, a slightly smaller proportion than in 1947.