The Revised Price Indexes: The 1950 Revision of the BAE Indexes of Prices Received by Farmers, and of Prices Paid by Farmers, Including Interest, Taxes, and Farm Wage Rates

The following article endeavors to develop a technical but nevertheless relatively simple explanation of the revised price indexes of the Bureau of Agricultural Economics. These ind xes are widely used not only for general purposes but also in the administrative calculation of parity prices which current legislation provides are to be so determined as to give farm commodities generally the same purchasing power in terms of "articles and services that farmers buy, wages paid hired farm labor, interest on farm indebtedness secured by farm real estate, and taxes on farm real estate" as prevailed during the base period January 1910–December 1914. This means that the indexes must measure broad changes over something more than four decades. This requirement sets a most difficult task in constructing farm price indexes, especially the parity index covering prices and cost rates paid by farmers owing to the great shift in farm production methods and, equally, farm family living patterns since 1910. We believe that the new indexes are as good a basis for tracing these changes as can be devised from the available data and it is with considerable pride that they are presented, especially since the need for such revision has long been recognized.