These figures are shown graphically in Diagrams A and B.

6. It will be seen that a sharp decline in agricultural prices occurred in 1921, and the decline has continued with few interruptions up to the present. Throughout this period, except in the months March to June 1923, the increase in agricultural prices as compared with the pre-war level has been greater than the increase in commodity prices generally. On the other hand, the increase in agricultural prices has, since the middle of the year 1921, been generally less than the increase in the cost of living. It should be borne in mind, however, that in spite of the fall which has occurred in the prices of agricultural requirements, the time which elapses between the initial costs of production and the sale of the farm products operates as much to the farmer's disadvantage when prices are falling as to his advantage when they are rising, for when prices are falling, a substantial part of his productive costs are incurred at a higher level than those prevailing when he sells his produce.

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A 4

reduce costs of production. The cost of feeding-stuffs and fertilisers has declined, but in his efforts to reduce his labour bill the farmer is confronted with the position that the fall in the cost of living has failed to keep pace with the fall in the market value of agricultural produce generally. That is to say, the prices realised by the farmer for the goods he produces have been relatively lower during the past two years than the prices which he and his employees have to pay for food and other commodities bought retail.

8. The figures shown in Table I. are, of course, general, and cannot be taken as necessarily applying to individual cases. All descriptions of agricultural produce have not suffered equally. The highest prices over the whole of 1922 as compared with the years 1911-1913 were realised by fat cattle, sheep, pigs, milk, poultry and eggs, while the cheapest relatively were the cereal crops, hay and hops, together with cheese and wool. Fruit and vegetables were dear in the early part of the year, but realised very low prices in the later months. The percentage increases in the market price of the individual commodities sold more or less regularly by the farmer during the twelve months ended August, 1923, as compared with the average prices in the corresponding months of the years 1911-1913, are shown in Table II.

TABLE II.

PERCENTAGE INCREASES IN THE MARKET PRICES OF THE CHIEF KINDS OF AGRICULTURAL PRODUCE AS COMPARED WITH THE AVERAGE PRICES IN THE CORRESPONDING MONTHS OF THE YEARS 1911-1913.

9. From these figures it appears that the farmer who has suffered most severely from the depression of prices during the past year has been the arable farmer. Similarly, as shown in our interim report on fruit and vegetables, the grower of these commodities was also badly hit in the year 1922-1923. Hence, although agricultural wages have been reduced on the average to between 50 and 60 per cent. above the pre-war level, or roughly to the same level as the prices realised for agricultural produce generally, many farmers find it difficult to pay these wages since the relative value of a large part of their produce is considerably below this point. Moreover, not only wages, but also other costs of production, have not fallen to the same extent as the prices of cereals, and during the year 1922-1923, potatoes, fruit and vegetables.

10. For many commodities, the actual spread between producers' and consumers' prices is difficult to ascertain, or even to define. In the case of bread, for example, the original product is subject to complicated manufacturing processes, in which other ingredients are introduced, and in which the home product usually forms only a small proportion of the total raw material used. Table III. shows for each month of the last cereal year the average increase in the retail price of certain kinds of food with the production of which the British farmer is directly concerned. The figures are those compiled by the Ministry of Labour and published month by month in the Labour Gazette.

TABLE III.

AVERAGE INCREASE IN THE RETAIL PRICE OF CERTAIN FOODSTUFFS ON THE FIRST DAY OF EACH MONTH, SEPTEMBER, 1922-SEPTEMBER, 1923, AS COMPARED WITH JULY, 1914.