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AND ANCH B ulletin April 15, 1959 Vol. 14, No. 4 D O A G R IC U L T U R A L PRIC ES A FFEC T SU PPLIES? Do supply and demand still affect agricul tural prices? culture, considerable time often is required for a change in price to affect supply. For example, the output of cotton, apples, or milk cannot respond immediately to a change in price. Pro duction takes time, and the farmer must esti mate the price that he is likely to receive when his commodities are ready for market. Frederick V. Waugh, Director of the Agri cultural Economics Division of the Agricultural Marketing Service, says that almost everyone accepts the law of demand — namely, that con sumers will buy more at a lower price than at Today’s price does not affect today’s supply a higher price. Statisticians have measured the of farm products but may affect supplies next effect of prices on consumption and have been month, next year, or two or more years in the able to forecast rather accurately what would future. Other complications — such as drought happen to consumption when prices change. and Government allotments and quotas — may However, some people seem to doubt develop during the time required for a change whether the law of supply still works in agri in price to affect output. Therefore, the extent culture; and, until recently, statisticians had to which a change in price affects the supply of not found convincing evidence that it does. The any farm product is not easily determined. law of supply tells us that farmers will produce According to Mr. Waugh, we are nearer than more at high prices than at low prices. If both ever to an answer on the effect of changes in the law of supply and the law of demand still work, prices which are too high will lead to price on supplies. Skilled mathematicians, econ surpluses since they will restrict consumption omists, and statisticians are using higher mathe and, at the same time, encourage production. matics and the new electronic calculating machines to work on this problem. If the law of supply did not operate, farmers These specialists are finding that the law of might be able to raise their incomes perma supply does still work in agriculture. Marc nently by selling less at higher prices. However, Nerlove, of the Agricultural Economics Divi as supplies decline and prices rise, in accord sion of the Agricultural Marketing Service, has ance with the law of supply, it generally already published studies on cotton, wheat, and becomes profitable to increase output in order corn. He and William Addison, also of the Ag to take advantage of the higher prices. Conse ricultural Economics Division, are completing quently, the larger supplies forthcoming as a studies of approximately 20 vegetable crops. result of favorable prices tend to lower prices, Without exception, they have found that (1) which, in turn, reduces the attractiveness of a high prices of any of these commodities, if further increase in output. maintained over a long enough period, defi In the past, the law of demand has proved nitely will raise production and (2) low prices, easier to study than the law of supply. In agri if maintained over a long enough period, will FEDERAL RESERVE DALLAS, BANK TEXAS OF DALLAS reduce production. Additional studies on other crops, livestock, and livestock products will be made as rapidly as possible. The specialists have every reason to expect that the findings for these commodities will be similar. New Systemic Insecticide Controls Cattle Grubs A new systemic insecticide for controlling cattle grubs — the cause of heavy annual losses to livestock producers — has shown promise and versatility in experimental use by entomol ogists at the United States Department of A gri culture. The AMS studies do not conclude that price is the only factor affecting production. Farm output is also affected by weather, acreage al lotments and marketing quotas, changes in The chemical, an organophosphorous com technology, and several other things. The pound, can be administered either orally or as studies do show that price is a powerful factor. a spray. Used orally, at the highest test dosage, For example, an attractive price maintained the insecticide provided 94- to 100-percent con over several years may defeat attempts to con trol; as a spray, it gave 99- to 100-percent trol production; an unprofitable price, in time, control. will reduce outturn. Experimental treatments were most effective The studies also make highly questionable when the dosage administered in bolus or cap the statement sometimes heard that farmers sule form amounted to 20 or 25 milligrams of tend to increase output in periods of declining the new chemical to each kilogram (about 2.2 incomes. Doubtless, there are times when some pounds) of body weight of the test animals. farmers increase output to offset a decline in Fair results were obtained when oral dosages price. However, the average farmer usually of only 4 to 15 milligrams per kilogram of tries to produce the commodities he thinks will body weight were given. be most profitable, and the producer is inter Almost perfect control of cattle grubs was ested in expanding output only if the expected obtained when 4 quarts of spray were used per price is high enough to cover expected costs animal, while a 2-quart application provided and to provide a profit. about 70- to 80-percent control. The spray fo r Mr. Waugh says that one of the major diffi mulation included a wettable powder contain culties in analyzing changes in supply in re ing 0.75 percent active material. Sprays were sponse to changes in price is the problem of applied under an operating pressure of 250 to finding out what price the farmer expects to 300 pounds. receive for his future production. The statis Good Brooder Management tician must use one of two methods: He can Essential survey farm opinion, or he can try to determine what prices farmers expect by studying their The first week after hatching is the most reactions to past prices. The AMS specialists critical period in a chick’s life. Since dead are obtaining good results by using the second chicks return no profit, every effort should be method, which assumes that farmers’ expecta made to provide as nearly ideal conditions in tions are based largely on actual prices in the the brooder as possible, says Ben Wormeli, E x past. tension Poultry Husbandman at the Texas A gri cultural Extension Service. The new methods of studying the effect of High-quality chicks should be purchased prices on supply also have proved useful in studying demand. A change in price may affect from a reputable hatchery, and the brooder consumption both in the short run and in the should already be set up and regulated when long run. The immediate effect often may be they arrive. The brooder, all watering and slight; but, over a long period, a high price may feeding utensils, and the inside walls of the cause consumers to substitute commodities, or house should be cleaned and scrubbed with a a low price may result in the development of solution which will kill external parasites. The thermostat on the brooder should be cleaned new and larger markets. i and adjusted so that it will operate within a 3° to 5° range. About 10 square inches of floor space per chick should be allowed under the hover, and the temperature should be set ac cording to the recommendations of the brooder manufacturer. Feed and water should be easily accessible to the chicks. One inch of feeder space per chick and a broad-base watering fountain for each 100 chicks are sufficient. The lip of the feeders should not be more than 2 inches above the floor, and the feeders should be kept full for the first week or so, in order that the chicks can eat easily. A draft guard around the brooder will lower fuel costs and prevent chicks from wandering away from the hover. The guard should be 1 foot to IV2 feet high and should be located about 4 feet from the brooder. Litter should be about 3 inches deep and should be kept free of dust and mold. Wood shavings, peanut hulls, ground corn cobs, and cane hay are commonly used for litter. Mr. Wormeli points out that observance of the above rules can mean higher chick liva bility and more profit in the long run. "S p a c e " Insects Aid Scientists Insects sent into the stratosphere on Navy balloons are helping scientists at the United States Department of Agriculture to find an swers to some of the space-flight questions brought about by recent advances in rocketry. Because of their small size and light weight, insects are useful for experiments to test sur vival of organisms in outer space. Many thou sands of insects and spores can be included in a single 1-pound package. Moreover, insects can stand tremendous decompression, and their chances of survival at extreme altitudes are far greater than those of higher animals. Orientation Planting for Corn $^\\ Test plots of corn planted with oriented kernels outyielded plots seeded in the usual manner by 3 W to 23 bushels per acre, report agronomists with the United States Department of Agriculture and the Illinois Agricultural Experim ent Station. (Orientation planting means seeding the corn kernels with their points down and flat sides parallel with the row.) In the natural growth pattern of corn, the first two leaves appear at right angles to the flat side of the kernel, and the other leaves occur slightly counterclockwise to the original pair. Orientation-planted corn produces leaves which spread across the row, so that up to 90 percent less sunshine strikes the ground. The leaves are less likely to shade one another, and each plant receives more sunshine. The ground is much better shaded, resulting in less evapo ration of moisture. The results are higher per acre yields of corn. Since the tests were for only a 1-year period, additional experiments will be necessary before the crop scientists recommend that corn farm ers try orientation planting. Moreover, a method of mechanical orientation will have to be developed. Texas-Grown Grains A study recently completed by the Texas Agricultural Experiment Station provides in formation on seven major grains produced in the State. In reporting on the study, Clarence Moore, of the Department of Agricultural Economics of Texas A. & M., says that the average yield per acre of grain sorghums during 1953-57 was almost double that in 1935-39. Although annual variations were large, yields showed a rising trend over the 23-year period (1935-57). Since most species of insects produce several The higher yields resulted from the use of im generations each year, the effects of space proved sorghum varieties, increased use of travel on genetics can be determined. Ento irrigation, more widespread planting of supe mologists at the USDA’s Agricultural Research rior hybrids, better cultural practices, and wiser Center test the insects returning from the bal use of fertilizer. In addition, acreages diverted loon flights for mortality, sterility, and genetic from cotton and corn to sorghums in the past mutations. few years may have been more productive. The study reveals that the average acreage and production of corn during 1953-57 were only about one-half the 1935-39 levels. Corn declined from 52 percent of the State’s total feed grain output during 1935-39 to 16 percent in 1955-57, while grain sorghums rose from 20 percent to over 70 percent. Mr. Moore at tributes this change to the lower production costs of the sorghums. Since 1950, the relative importance of wheat has decreased, while that of rice has increased. This change has been due mainly to the more favorable market for rice since World War II; at the same time, there has been a surplus of wheat. "H e a v y " Eater The United States De partment of Agriculture says that this is the story of a bull that acquired hard ware disease with a venge ance. The Vermont Extension Service recently re ported that, when slaughtered, the animal was found to have the following items in its stomach: a set of gold bridgework, half an in ner tube, two plastic bags, nine pennies, a rub ber doll, a toy wrist watch, a fishing spinner, five clothespins, six can lids, a 4-inch stack of bobby pins, 24 bottle caps, two earrings, two hypodermic needles, some small arms cartridge casings, two men’s rubber heels, five coffee can bands, one keychain, a broken pop bottle, some safety pins, a gold watch band, and 16 nails. Paint for Safety Specialists at the Louisiana Agricultural Ex tension Service say that paint can make the farm a safer place on which to live and work. Bright colors, such as red and yellow, can be used for caution signs around the farm. Black and yellow stripes often are used as a sign of danger; paint them wherever caution is needed. Strips of paint on power equipment, such as the handle of a portable grinder or the shield of a power saw, will remind the farmer to be careful when using the equipment. Boosting Cotton Yields in the El Paso Valley Increasing irrigation water from 34 inches to 52 inches resulted in highly significant gains in cotton yields in the El Paso Valley during 1957-58, according to D. E. Longenecker and P. J. Lyerly, Associate Agronomist and Super intendent, respectively, at the El Paso Valley Experiment Station at Ysleta, Texas. In tests on sandy loam during 1957, addi tional water alone increased seed cotton yields 500 pounds per acre. During 1958, yields on clay loam soil were raised 900 to 1,000 pounds per acre by seven additional summer irri gations. The combined effect of additional water and heavy fertilization boosted seed cotton yields on sandy loam 1,000 to 1,200 pounds per acre. On the more fertile clay loam, additional water was more effective than fertilizer in raising yields. With more frequent irrigation, cotton yields were increased by phosphate additions to the sandy loam soil, especially at the higher nitro gen levels. No gains were obtained from the addition of phosphate to the clay loam soil, indicating that sufficient available phosphate was present in the soil. Temperature Affects Sheep Breeding The reproductive performance of sheep in a late-spring breeding program can be improved by “cooling” the rams and by shearing the ewes later than usual, according to trials at the O kla homa Agricultural Experiment Station. During a 3-year test period, rams which were maintained in a room where the daytime tem perature did not exceed 85° Fahrenheit p ro duced 15 to 20 percent more lambs than did similar rams kept in a stall where the tempera ture reached as high as 97° Fahrenheit. Ewes shorn about 10 days prior to the breeding sea son produced 15 percent more lambs than did ewes shorn 5 to 6 weeks earlier. The FA R M A N D R A N C H BULLETIN Is prepared in the Research Department under the direction of J . Z. Rowe, Agricultural Economist.
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