ABSTRACT AN ENQUIRY INTO THE RELATIONSHIPS BETWEEN CHANGES IN OVER-ALL PRODUCTIVITY.AND REAL NET RETURN PER FARM, AND BETWEEN CHANGES IN TOTAL OUTPUT AND REAL GROSS RETURN, CANADIAN AGRICULTURE, 1926 TO 1957 By Siepko Hendrik Lok In this study the truth of the commonly encountered belief that rising productivity in agriculture has been detrimental to farm income is examined for Canadian agriculture. The evidence usually used to support the belief is found inadequate, and an apprOpriate verification is consi- dered important because the belief may be unfounded and yet become a guide- line for policy if it remained unchallenged. The following hypotheses were tested for the period 1927 to 1957: l. the relationship between annual percentage changes in over-all produc- tivity and real net return per farm is negative or zero for Canadian agriculture, and 2. the relationship between annual percentage changes in aggregate output and real gross return is negative or zero for Canadian agriculture. In preparation for the construction of an over-all productivity index for Canadian agriculture problems involved in its measurement are discussed. Theratio of total output to total input is used as a measure of over-all productivity. Sixteen separate output classes and eleven Siepko Hendrik Lek separate input classes were aggregated to get measures of total output and total input. In View of discrepancies caused by different weight periods and to avoid an arbitrary choice, six indexes of total output and total input were determined. Four of these are based on the fixed weight index number formula (Laspeyrss) using as weight periods: (1) 1935-39, (2) 1940-44, (3) 1945-49, and (4) 1950-54. In addition the Paasche and chain index formulas were used to get two sets of index numbers based on variable weighting. The construction of the indexes was programmed for, and the results obtained by electronic computer. The index numbers of total out- put were divided by the corresponding index numbers for total input to give an index of over-all productivity with the same base as the output and input indexes. Real net return is the value of all outputs, net of deprecie ation and operating expenses, in dollars of constant purchasing power. The annual measures of real net return per farm were obtained by dividing the sum of real net cash income minus supplementary Government transfer payments, and real value of income in kind by the number of farms. The index number formulas and base period used are the same as those used in constructing the productivity indexes. For testing the second hypothesis the total output index numbers based on the feur constant weight periods were averaged for each year because the slight discrepancies between the four indexes did not warrant separate analysis for each. . The same procedure was applied - and for the same reason - in determining the annual measures of real gross income. The transfer pay- Siupko Hendrik LOk ments were again deleted, and in view of the uncertainty whether adjust- ments should be made for changes in inventory values the measures real realized gross return (i.e. no adjustments are made) and real total gross return (increases in inventory values are included and decreases excluded) were both determined. Simple linear regression equations of annual per cent changes in real net return per farm and over—all productivity reveal, for each of the six index formulas used, a positive relationship between the two variables, and the coefficients of correlation are well above the value required to be significantly different from zero at the one per cent level. The first hypothesis is, therefore, not supported by the evidence. The regression and correlation analyses for the averages of annual per cent changes in output and real total gross return, and in output and real realized gross return, also produce positive regression coefficients, and correlation coefficients significantly different from zero at the one per cent level. The second hypothesis also is not supported by the empirical evidence and this brings into question the notion that the aggregate demand for Canadian agricultural products has been inelastic. Thus support is given to Gislason's contention that "Contrary to Canadian beliefs in general, the evidence at hand indicates that the demand for this wheat is not highly inelastic if inelastic at all." Shortcomings of the data and methods used are recognized in the study. These shortcomings may weaken the results but it remains to be seen whether more accurate data and more refined methods would support the hypotheses. AN ENQUIRI INTO THE‘RELATIONSHIPS BETWEEN CHANGES IN‘OVERPALL PRODUCTIVITY AND REAL NET RETURN PER.FARM, AND BETWEEN CHANGES IN TOTAL OUTPUT AND REAL GROSS RETURN, cannIAN AGRICULTURE, 1926-19 57 by Siepko Hendrik Lok A THESIS Submitted to Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Department of Agricultural Economics 1961 ACKNOWL EDGMEN TS The writer is indebted to nichigan State University for granting him the opportunity to do graduate work in Agricultural Economics which provided the occasion for this study. Thanks are extended to Dr. R. Barlowe, chairman of the guidance committee, and its members, Dr. G. L. Johnson, Dr. J. T. Bonnen, Dr. V. E. Smith, Dr. L. K. Zerhy and Dr. E. P. Whiteside, fer the direction they gave. The writer is also indebted to Dr. J. F. Booth, former Director of the Economics Division of the Canada Department of Agriculture, and Dr. M. E. Andal of the same Division for the arrangement under which this study could be carried out. The generous co-operation of several members of the staff of the Dominion Bureau of Statistics deserves special mention. Their prompt and helpful replies to all requests for information assisted greatly in the gathering of the required data. Discussions pertaining to various aspects of the study with Canadian colleagues were constructive and.stimulating. Harm.thanks are due to Miss L. Ferguson for the final typing of this stmiy. Host of all. the writer is grateful to his patient wife. who always stood ready to help in editing and proofreading. ii TABLE OF CONTENTS Page L131: OF l'ABLES ......OCOOOIOO.......OOOOOOOOOOOC......OOOOOOOO v LIS'P 0F F‘IGlIRES 0............OOOIOOOOOOOO......OOOOOOOOOOOOOOO 1x LIST OF CHARTS 0.0.0.........OOOOOOOOOOOO......OOOOOOOOOOOOOOO x I. INTROMJCTION ...............OOOOOOOOOOOOOOOOO0.0.0.0.... 1 BaCkgrOImd .....OOCOOOOOOOOOO......OOOOOOOOCOOCOOCC 1 ObJSCtiveS ....00......000............OOOOOOOOIOOOO b outline Of Stu“ ......OOOOOOOOOOOOOOOOO0.0.0.0.... 10 II. OVER-A1111 PRODUCTIVITY ooecoo-000.com...00.000.000.000... 13 Production Function Method ........................ 15 constant D011” metnOd 00.0.0.0.........OOOOOOOOOOO 17 III. WIGHT PMOD PmBLm 0................OOOOOOOOOUCOOOOOO 22 Current or'Constant Prices as Weights ............. 22 Weight Period Bias ................................ 26 Comparison Between Two Periods ................ 27 Comparison Between Several Periods ............ 34 Choice of Weight Period ....................... 39 1V. PROCEDURE FOR ESTIMATING AGGREGATE INDEXES OF TOTAL iNPUT AND TOTAL OUTPUT FOR CANADIAN AGRICULTURE, 1926-1957 ... 45 Farm.Inputs ....................................... 47 Labor ......................................... 50 I Service of Providing Capital (Interest Charges) .......................... 54 Supplementary Real Estate Inputs .............. 58 Repairs and Depreciation ................. 58 Taxes .................................... 58 Supplementary Machinery Inputs ................ 59 Repairs and depreciation ................. 59 Other 0......0............OOOOOOCOOCOOOOOO 59 iii umer lnmts ................................. Feed md 66“ ...........O................. Fertilizer an...cocoaoooeeeeoeoeeeoeoooeooe Elecmc Power oso...oooooooeoeooooeoocoeee Miscellaneous 00000000000000.00000000000000 rm Outfits ..........uu..........nun.......e Farm Outputs at Wholesale Prices, 1926-1957 .. Field Pmcta ..C......OOOOOCOO........... mm Products 0..........C............... b.0r68t Meta ......C...............‘O... House Rent Fm Outputs at Fm Prices, 1935-1957 coo-coo Field Promct’ CO......O................... minal Products COO......C................. Forest Products ... Honey and Maple Products 00.000000000000000 House th ................................ Discussion 0.0................OOOOOOCOOOOOIOOO V. ANDEXES UF OVER-ALL PRONCTIVI‘H, REAL NET RETURN PER FARM, AND ESTIMATES OF REAL REALIZED AND TOTAL GWSS mums 0.000....0.....0.............OOOOOOOOOOOOOOO.... indexes of Over-all Productivity .................. indexes of Real Net Return Per Farm ............... Real Realized and Tom Grog, Rama 0000000000000 VI. TETLNG 0F HIPOTHFSES 0.000.000.........OOOOOOOOOOOOOOOO First Wtheaia .....OOOOOOO......OOOOOOOOOOOOOOO. SOOMd motheais 0.0.0..........OOOOOOOOOOOOOOOOOO mSCuBSion ......0.00.00.00.00......OOOOOOOOOIOOOOO VII. SUWZING rmPOSlTLONS .00...........OOOOOOOOOOOIOOOOO BlBIJIOWfl 0.0.0.0000...-O...O.......OOOOOOOOOOOOOOOOO APPEDII I ............OOOOOOOOOOOOOO.....OOOOOOOOOOO. APPMDIX II ......OIOOOOOOOOOI......OOOOOOOIOOOOOO0.... APPMDH 111 ....0....0......C.........OOOOOOOOOOOOIOOOO iv 7h 7h 89 9h 9h 100 103 111 118 128 133 1th Number 1. 2. 3. 4. 5. 7. 8. 9. 10. LIST OF TAbLES Average Annual Deviation from 100 of Price Indexes of Selected Inputs Expressed as a Percentage of the Price Index of Real Estate for Different Weight Periods, Canadian Agriculture, 1926-1957 Changes in Age Distribution of Farm Operators, Canada, 1931 and 1951 June Estimates as a Percentage of the Annual Average of the Agricultural Labor Force (Persons with Jobs), Canada, 1953-1959 Percentage of Farm.Land Operated hy owner, Canada,_ 1926-1957 Indexes (1910-1914 = 100) of Prices Received by Farmers and.Wholesa1e Prices of Farm.Products; and Prices Re- ceived by Farmers as a Percentage of Wholesale Prices of Farm.Products, U.S.A., 1926-1939 Indexes of Over-all Productivity (1926 = 100), Based on (1) Constant Weight (Weight Periods: 1935—39, 1940-44. 1945-49, and 1950-54), (2) Paasche and (3) Chain output and Input Indexes, Canadian Agriculture, 1926-1957 Couputation of Indexes of Net Return from.Agricu1tura1 Production, Per Farm (1926-1957) and Per FarmtOperator (1946-1957), Based on 1935—39 Dollars, Canada Indexes of Real Net Return Per Farm,Based on (1) Con- stant.Weight (Weight.Periods: 1940-44, 1945-49, and 1950-54), (2) Paasche and (3) Chain Index Formulas, Canada, 1926-1957 Computation of Realized.and Total Gross Returns in 1935-39 Dollars, Canadian Agriculture, 1926-1957 Annual Per Cent Changes in over-all Productivity, Based on (1) Constant Weight (Weight Periods: 1935-39, 1940-41., 1945-49, and 1950-54), (2) Paasche and (3) Chain Quantity Indexzuumbers, Canadian Agriculture, 1926-1957 Page hl 51 Sh 58 62 76 33 87 91 95 Number 11. 12. 13. 15. 16. 17. 18. 19. 20. 21. 22. Annual Per Cent Changes in Real Net Return Per Farm, Based on (1) Constant Weight (Weight Periods: 1935-39, 1940.44, 1945-49, and 1950-51.), (2) Paasche, and (3) Chain Index number Formulas , Csnada, 1926-1957 Linear Regression muetmns of annual Per Cent Changes in heal 11 et Return Per Farm and uver-all Productivity, Based on Selected Index Number Formulas, and” Associated Standard Errors of Estimate (Syx) and Coefficients of Correlation (r), Canadian Agriculture, 1926-1957 Annual Per Cent Changes in Real Realized and Real Total Gross Returns, Based on the Constant Weight Periods: 1935—39, 1940-44, 1945-49 and 1950-54. Canadian Agriculture, 1926-1957 Annual Per Cent Changes in Total Output, Based on the Constant Weight Periods: 1935-39, 1940—44, 1945-49 and 1950-54, Canadian Agriculture, 1926-1957 Carry-over at Beginning of Crop Year of Wheat, Oats, Barley, and Rye, Canadian Agriculture, 1945-1957 Current Dollar Values of (1) Real Estate, (2) Machinery and (3) Livestock, Canadian Agriculture, 1926-1957 Interest Rate on Farm Mortgages, and Price Indexes (1935-39 = 100) of (1) Farm Real Estate, (2) Farm Machinery, and (3) Animal Products, Canada, 1926-1957 Real Estate, Machinery and Livestock at 1935-39 Prices, Canadian Agriculture, 1926-1957 Annual Interest Inputs at 1935-39 Prices for (1) Real Estate, (2) Machinery, (3) Livestock and (4) Total Investment, Canadian Agriculture, 1926-1957 Current Dollar Values of Supplementary (1) Real Estate and (2) Machinery Inputs, Canadian Agriculture, 1926—1957 Price Indexes (1935-39 = 100) of Supplementary Farm Real Estate and Machinery Inputs, Canada, 1926-1957 Supplementary Real Estate and Machinery Inputs at 1935-39 Prices, Canadian Agriculture, 1926-1957 V1 Page 98 101 102 109 1135 M6 11;? 1118 11:9 ’ 151 152 Number 23. 25. 26. 27. 31. 32. Page Current Dollar Values of (1) Labor, (2) Feed and Seed, (3) Fertilizer, (4) Electric Power, and (5) Miscellaneous, Canadian Agriculture, 1926-1957 (1941-1957 for Electric Power) 153 Price Indexes (1935-39 = 100; for Electric Power 1949 = 100) of (1) Labor, (2) Feed, (3) Fertilizer, (4) Electric Power, and (5) Hardware, Canadian Agriculture, 1926-1957 (1941-1957 for Electric Power) 1514 Labor, Feed, Fertilizer, Electric Power and.Misce1- laneous Inputs at 1935-39 Prices, Canadian Agriculture, 1926-19 57 155 Total Inputs at Average Prices of 1935-39, 1940-44, 1945-49 and 1950-54, Canadian Agriculture, 1926-1957 156 Aggregate Quantity Indexes (1926 = 100) of Total Input Based on (1) Constant Weight (Weight Periods: 1935-39, 1940-44, 1945-49, and 1950-54), (2) Paasche, and (3) Chain Index.Formulas, Canadian Agriculture, 1926-1957 157 Current Dollar Values of Farm Outputs: (1) Field Products, (2) Animal Products, (3) Forest Products, and (4) House Rent, Canadian Agriculture, 1926-1957 158 Price Indexes (1935-39 = 100) of (1) Field Products, (2) Animal Products, (3) Lumber and Timber, and (4) Building Materials, Tax and Interest Rates, Canada, 1926-1957 161 Field Products, Animal Products, Forest Products, and House Rent at 1935-39 Wholesale Prices, Canadian Agriculture, 1926-1957 162 Total Farm Outputs at (mainly) Average Wholesale Prices or 193 5‘39 5 1940““) 1945-49 and 19 50‘54 5 Canada , 1926-1957 163 Aggregate Quantity indexes (1926 = 100) of Total Out- puts Based on (1) Constant Weight (Weight Periods:- 1935-39, 1940—44, 1945-49, and 1950-54) . (2) Paasche. and (3) Chain Index Formulas, Using Primarily Whole- sale Prices as Weights, Canadian Agriculture, 1926—1957 16h Vii Rumber . 33. 34. 35. 36. 37. 38. Current Dollar Values of Seventeen Farm Output Categories, Canada, 1935-1957 Farm Price Indexes (1935-39 = 100) Pertaining to Seventeen Farm Output Categories, Canada, 1935-1957 Farm Outputs (Seventeen Categories) at 1935-39 Prices, Canada, 193 5-1957 Total Farm Outputs at (mainly) Average Farm Prices of 1935—1957 Aggregate Quantity Index Numbers of Farm Outputs (1935 = 100) Based Primarily on Farm Prices Using (1) Constant Weight (Weight Periods: 1935-39. 1940-44, 1945-49, and 1950-54), (2) Paasche, and (3) Chain Index Formulas, Canada, 1935-1957 Aggregate Quantity Indexes (1926 = 100) of Total Output Based (mainly) on Wholesale Prices for Years 1926-19341 and Farm Prices for Years 1935-1957, Using (1) Constant Weight (Weight Periods: 1935-39, 1940-44, 1945-49, and 1950-51.), (2) Paasche, and (3) Chain Index Formulas, Canadian Agriculture, 1926-1957 viii Page 165‘ 168 171 173 17h 17S LIST OF FIGURES Number Page 1 Effects of Shift of Supply Function on Prices and Sales of Hypothetical Products 2h ix Number 1. 2. 3. 4. 5. 6. 7. LIST OF CHARTS Page Price-Quantity Relationships of Farm Machinery, Canada, 1926-1957 35 Price-Quantity Relationships of Farm Labor, Canada, 1926-1957 36 Total Input Indexes for Canadian Agriculture, Based on (1) Constant Weight (Weight Periods: 1935-1939, 1940-1944, 1945—1949, and 1950-1954) . (2) Paasche, and (3) Chain Index Formulas, 1926-1957 - 70 Total Output Indexes (Including Intermediate Products) for Canadian Agriculture, Based on (1) Constant Weight (Weight Periods : 193 5-1939, 1940-1944. 1945-1949. and 1950-1954), (2) Paasche, and (3) Chain Index Formilas, 1926-1957 _ 72 Over-all Pr0ductivity Indexes for Canadian Agriculture, Based on (1) Constant Weight (Weight Periods: 1935-1939, 1940-1944, 19115-1949, and 1950-1954) , (2) 93383119: and (3) Chain Output and Input Indexes, 1926-1957 77 dexes of Real Net Return Per Farm (Excluding vernment Supplementary Payments) , Based on (1) Constant Weight (Weight Periods: 1935-39; 1940-44, 1945-49, and 1950-54), (2) Paasche, and'(3) Chain Index Formilas, Canada, 1926-1957 33 Annual Per Cent Changes in Over-all Productivity 'and Net Return (Minus Supplanentary Payments) For Farm (1926—57) and Per Farm Operator (1946-57), Based on 1935-39 Weights, Canadian Agriculture, 1926-1957 97 Relationship Between Annual Per Cent Changes in Over- all Productivity (1935-39 Weights) and Real Net Return ”Per Farm (1935-39 Dollars), Canadian Agriculture, 1926-1957 99 1. INTRODUCTION Background In speeches and literature pertaining to farm income problems in the United States and Canada, one encounters the belief that rising produc- tivity in the agriculture of these countries is detrimental to farm in- come. To substantiate this belief reference is made to declines in farm income (the terms net income, net income per farm, or real net income per farm are variously used) between certain periods, while agricultural pro- ductivity has been rising.1 The conventional explanation for this occur- rence is based on two notions: (l) greater productivity in agriculture invariably means greater output, and (2) the response of demands for, and supplies (particularly when farm prices drop) of agricultural products to changes in the prices of agricultural products is relatively inelastic. It has been demonstrated that the demand for some agricultural pro- ducts is indeed quite inelastic and a decline in- gross income accruing from such products will inevitably follow an increase in output. With- out offsetting effects from lower costs net income will decline as well. 1 After determining the decline in net income per farm in the United States between 1951 and 1955, E. O. Heady and J. Ackerman conclude: "Hence we are in a period when national 'prosperity' has been moving rapidly upward, but farm income has been going as rapidly downward, even though ptqsical productivity in agriculture is still increasing"; "The Income and Resource Problem", Aggy“ cultural Adjustmentjroblemg in a Growing Econoyg (Heady, E. 0., et al, eds. , The Iowa State College Press, Ames, 1958, p. 4. Unfortunately, however, the belief is often expressed in general terms, as if it applied to agriculture as a whole. The implication is that the aggregate demand for all farm products is inelastic. And the inevitable inference is that agricultural research, as one of the factors raising productivity, is undesirable from the farmers' viewpoint. It has been said that such research may well benefit society as a whole but at the farmers' expense. The migration of labor from agriculture is no longer deemed sufficient - research should be curtailed as well. Not only is output-increasing research felt to be harmful to farmers but cost-reducing research also, because as far as the latter is concerned the savings can be used on other inputs which raise production.2 After all, since the production of the individual farmer does not affect prices, and since he lacks control over the collective action of other farmers, it will be to his advantage to increase output at any level of farm prices as long as marginal. cost does not exceed marginal revenue. It is difficult to establish Just how prevalmt is the belief that agricultural research, greater productivity and increasing farm output cause a decline in the average net farm income. The belief is certainly not now. When those in agriculture prosper technical research is taken for granted and accepted, but whenever prices are falling the blame is placed on over-production and output-increasing research. 2 Cf. Heaw, E. 0., "Basic Economic and Welfare Aspects of Farm Techno- logical Advance", Journal of Farm Economics, Vol. 31, No. 2, Way 1949; and Johnson, D. Gale, "Labor Mobility and Agricultural Adjustment", Agicultural Adjustment Eoblems in a Growing Econom (Heacv, E. 0., et al, eds.), op. cit., p. 170. Statements about the conflict between technical advance and welfare in agriculture can be found in connection with the farmers' plight during 4 the thirties,3 and again after World War II. Since the Korean War con- cern over agricultural research has been expressed more frequently.5 The belief that the aggregate demand curve for farm products is inelastic in the United States appears well established}? These allegations could not go unnoticed by the farmers and their leaders. Some, in no uncertain terms, put the blame for low farm incomes 3 Cf. ".. . technological developments have been one of the important causes of at least temporary distress to many farm groups.", Johnson, S. E. , "Farm-Management Problems in an Era of Change", Farmers in a ggangigg World (1940 Yearbook of Agriculture), United States Depart- ment of Agriculture, Washington, D.C., p. 495. 4 Cf. "The fruits of our scientific farming and our agricultural colleges are found on the tables of the masses, not in the pocketbook of the farmers", Boulding, K. E., "Economic Analysis and Agricultural Policy", Tge Canadian Journal of Economics and Political Science, Vol. 13, No. 3, Aug. 1947, pp. 440-441. 5 Referring to the implication that the program of the conference on l'Ad;]usting Commercial Agriculture to Economic Growth" (Chicago, 1947) "appears to take for granted that research and education are at least partly responsible for some of the present farm income difficulties", S. E. Johnson and G. T. Barton continue: "This is not the first time that the finger of suspicion has pointed to research and education. The charge has hem made rather frequently in the last two or three years."; "Effects of Technological Research and Education", Agricul- tural Adjustment 131011le in a Growing Rooney, (Heady, E. 0., et al, eds.), op. cit., p. 39. 6 D. E. Hathaway in a recent article dealing with United States agricul- ture as a whole considers "... generally accepted ..." and "... verified by research in recent years" that, "The price elasticity of demand for food is low at the retail level and even lower at the farm level", and that, “As a result in (sic) the low elasticity of demand for food the changes in aggregate demand tend to cause large changes in the ratio of farm prices to non-farm prices over the business cycle, ..."; "Agri- culture in an Unstable Econonv Revisited", Journal of farm Economics, v01. 41’ NO. 3, Aug. 1959, p. 488. 7 scuarely on rising productivity and research. So strong were these convictions that in the fPll of 1956 twenty lowa farmers visited the administrators of iowa State University to request the curtailment of technical research because there was "too much efficiency" in agri- culture.8 The belief that increasing productivity and production is detri- 9 mental to farm net income has found ready acceptance in Canada. The belief seems to be supported by some of the recently published findings of the Royal Commission on Price Spreads. Volume 11 of the Commissionls report contains a table indicating that between the years 1949 and 1958 the average annual increase in the "Index of Farm Output" has been 1.5 per cent, whereas "(Real) Net Farm.0perating Income" per farm de- clined by an average of 0.8 per cent a year.10 v *7— ‘7 Cf. "While there are good and sufficient reasons for the large pro— gram of research on production technology ... I don't believe we farmers should deceive ourselves in believing that such programs will increase our net income", Buck, H. K., "Can we Shrink Produc- tion?", New Approaches on the Farm_rroblem, Proceedings Nineteenth Annual National Farm Institute, Feb. 15 and 16,1957, Des Moines, Iowa, p. 99, wd "The greatest crime that the American farmer has committed for himself is not inefficiency, but too much efficiency which has produced an abundant food supply",Stay1ey, 0. L., (National Farmers Organization), "Diverted Acres, Food Reserves, and Livestock Supports", ibid., p. 84. 8 Reported by E. Eldridge, "A.New Focus for Extension", Farm ggliqg Forum, Vol. 11, No. 4, 1958-59, p. 18. 9 Cf. "Too often the farmer increases his productivity only to find that it has been a blessing to almost everyone else in society ex; cept himself", Bentley, J. M., "Objectives of Canadian Agricultural Policy", Canadian Journalgof_Ag§igyl£ygsl Eponomics, Vol. 7, No. 2, 1959, pp. 17-18. 10 Report oi the Royal Commission on Price Spreads_ of Food Products, Vol. 11, The Queen's Printer, Ottawa, 1959, p. 1b." Although the economic argument explaining a decline in farm income seems plausible, and at times an increase in productivity and output ap— pears to be associated with a drop in both gross and net incomes, the question still remains whether increasing productivity can be held res- ponsible for declining farm incomes. The relationship between these variables cannot be obtained from atzomparison of changes in productivi- ty or output and net income between two selected periods. Should these changes move in opposite directions, this situation in itself would not be sufficient to warrant the inference of an inverse causal relationship. The objection lies with the likelihood that other factors affect- ing income will not be the same for the two periods compared. A few ex- amples may be helpful. Between the end of the 1940's and the end of the 1950's farm income came down, but to ascribe this drop to a rise in productivity would be to ignore the different economic conditions of the two periods. Shortly after the war when foreign demand for agricultural products was strong farm prices were, of course, higher than in.the late 1950's when foreign customers had greatly reduced their purchases from abroad. One might have chosen two other periods and found.that higher pro- ductivity is associated with higher incomes. Such a situation might be expected between the 1930's and the immediate post—war period. This oc- currence only shows that the years with low over-all productivity (years of drought in.the Prairie provinces) were also the years of world-wide economic depression, and.that during the years when agricultural pro- ductivity was on a rather high level the market conditions for agri- cultural products were generally good. obviously the requirement that in regression analyses of time series "... the $93133“ be random with respect to time" is not fulfilled.ll One way to reduce intercorrelation between time series which is due to existing trends is to apply the regression and correlation analysis to the first differences of the time series,12 or as has been done in this study, to the percentage changes in the index numbers. Further study to test_the alleged negative relationship between agri- cultural productivity and farm income is desirable because a belief in this relationship could be unfounded and.yet become a guideline for poliqy. Objectives, This study sets out to examine for Canadian agriculture as a whole the relationship between annual percentage changes in produc- tivity and real net return per farm over the>years 1926 to 1957. Since this relationship is at least\partly determined by the elasticity of the aggregate demand curve for agricultural products, the relationship between annual percentage changes in output and gross inCome were also examined for the same period and country.13 Canadian agriculture is a convenient test case. Befbre 1958 Govern- ment price supports for Canadian agriculture were of minor 11 Ezekiel, M. and K. A. Fox, Methods of Correlation and Regession Analzsis, third ed., John Wiley and Sons, New York, 1959, p. 328. 12 Lbid., p. 340. 13 The conclusions reached with respect to Canadian agriculture cannot igso facto be applied to agriculture in the United States. Further research would be required to establish whether or not a parallel case exists. 7 proportions.“+ From August 1944 to March 1958, the period over which the (Canadian) Agricultural Prices Support Act was in effect, a total of about 100 million dollars was Spent to aid producers of hogs and cattle, apples, potatoes, dried white beans, extracted honey, dry skimmed milk, cheddar cheese, creamery butter, shell eggs and fowl.15 Of this amount, the great- est portion (about $70 million) went to hog and cattle producers, largely to compensate them for losses caused by the foot and mouth epidemic in 1952. But these price supports are not the whole story. Throughout the 1926- 16 1957 period other forms of support have been in force. Since 1929 the Federal Government has endeavored to maintain stable prices for wheat, first through the Central Selling Agency, and since 1935 through the Canadian Wheat Board. At times the same price stabilizing policy was applied to barley and oats. For several other farm products, marketing boards were also set up and some legislation enacted to promote "orderly marketing" and to eliminate undue price fluctuation. During World War ii the Federal Government established price ceilings on all products, and for four more years wheat prices were at a maximum under the Canadian-United Kingdom ...— 14 "Although the Canadian Government has at various periods since the war bought farm products, the prices paid were ordinarily not high enough to entail any significant element of subsidy. In fact all the stock acquired was 8 old on the free market usually with relatively very slight losses or no losses at all, so that the expenditure on stabilizing farm incomes was unusually small.", Agricultural Policies in ago-pa and North America, The Organisation for EuroPean Economic Co-operation, Paris, 1956, pp. 288-289. 15 Canada, Department of Agriculture, The Current Review of Agriculmral Conditions'in Canada, Vol. 19, No. b, Nov. 1958, Conference issue, Ottawa, p. 60. - 16 Cf. Shefrin, F. and M. R. Cameron, Agicultural gssistance, War and figst-War, Department of Agriculture, Ottawa, 1949. wheat export agreement.U maximum prices were set in similar agreements for other agricultural products, such as cheese and pork. To the extent that price stabilizing programs did not cause the Gov- crnment to pay subsidies to the farmers, they can be considered as attempts to remove market imperfections, and thus do not interfere with conclusions about aggregate demand elasticity based on the relationship between changes in output and income. But a subsidy-free situation has not always pre- vailed for the wheat farmers. During the operation of the Wheat Board, the initial price payable to the farmers has in some years been higher than the average price that could be obtained for the available supply. As a result extra storage costs were incurred. Since 1955 the storage charges of re- serves in excess of a normal carry—over of 178 million bushels, were paid by the Federal Government. 18 Farmers were also aided in numerous other ways. Many of these pro— grams were designed to raise the productivity of the inputs (e.g. experi— mental farms) and the efficiency of management (e.g. extension service), Ito raise the quality of farm products (e.g. hog and cheese quality pre- miums), and to equalize the "laid-down" costs in the various regions (e.g. freight assistance). Such programs were meant to be income-raising but as they were continuous it would be unwarranted to consider them income- stabilizing. l7 Shefrin, F., Exports of Canadian Farm.gro mots War and Post4War De— velopments, Department of Agriculture, Ottawa, 1949. 18 Cf. Cameron, Marjorie E., and F. Shefrin, Federal_gggigultural Aggie— tance Eggggams, Canada, _9OQ-12§l, Department of Agriculture, Ottawa, 1952, pp. 44~493 and Cameron, Marjorie E., Federal Agricultural Assis- =“--M“- tance grograms, Canada, 1255-1256, Department of Agricul ture, Ottawa, 19 57, pp 0 79’82. There are, however, several programs (e.g. compensation for crop failure) that are welfare programs designed to raise the farmers' in- come in years when an adjustment of income is needed. In this study such transfer payments are eliminated from the annual income estimates. For the objectives of this study annual measures of productivity, output and incomes are required. The main concern is with the apprOp- riate measurement of changes in productivity. In recent decades considerable changes have taken place in the pro- ductive capacity of Canadian agriculture. These changes are most impres- sively reflected in output/ single input ratios such as average yield per acre or per animal, and in the reduction of labor requirements. Net pro- ductivity per acre of improved land rose by about 22 per cent between the periods 1935-39 and 1947-55.19 The Canadian average 1957 milk production per cow amounted to 5,493 pounds, an increase of about 65 per cent over 20 the preceding 30 years. Average annual egg production per layer rose by 110 per cent over the same Banear period.21 19 Drummond, W; M. and W. Mackenzie, Proggess and Erospects of Canadian culture Royal Commission on Canada's Economic Prospects, Queen's Printer, Ottawa, 1957, p. 81. 20 The estimate was obtained by dividing the total milk production by number of milk.cows (1927 data: Canada, Department of Trade and Commerce, Dominion Bureau of Statistics (hereafter abbreviated in the footnotes as D.B.S.), Uttawa, Dairying Statistics of Canada, 1953, p. bland,nonthly Bulletin of Agricultural Statistics, Feb. 1931, p. 543 1957 data: ibid., Dai Statistics 1957, pp. 8 and 9). 21 Canada, Department of Trade and Commerce, D.B.S., Ottawa, The Canada ‘Iearbgdk, 1223, p. 248, and.Productionégf’Poultgy and Eggs, 1251, p. 8. ' 10 An output/single input ratio may increase because the innate quali— ties of the input are improved, as has happened with higherayielding and disease-resistant crop varieties and animal breeds. The ratio may also increase when separate and.unique inputs, such as labor-saving machinery and well-ventilated stables with controlled temperature, are added to the production process. Increases in the productive capacity of the soil may be the result of proper fertilization and other soil management practices, as well as of the use of improved varieties of seed and breeds of animals, pesticides and other inputs. All these changes must be considered in de- vising a measure of productivity for agriculture as a.whole. Realizing the shortcomings of the single input productivity ratios, economists have developed methods to estimate over—all productivity rat- ings, which account for not just one but for all scarce resources. Be- cause such overball productivity measures are not available for Canadian agriculture it is an important task of the present study to fill this gap. Outline of Study It is important that the limitations of the procedures for measuring over-all productivity be made explicit. Two methods, therefore, are discussed in Chapter II, and the relationship between the two methods is pointed out. The so—called constant dollar method has been used to get an index of over-all productivity for Canadian agriculture. The problems associ- ated with this method include those inherent in the construction of index numbers. of particular concern in this study are the discrepancies between indexes when prices of different periods are used to weight the classes of 11 outputs and inputs. Often the choice of a weight period 22 makes little difference in the numerical value of the index numbers but as it turns out the discrepancies among the total input indexes for agriculture are con- siderable. The underlying reason for this troublesome aspect of the method is discussed in chapter III. Chapter IV contains a description of the steps involved in estimating aggregate output and input indexes for Canadian agriculture from 1926 to 1957. To establish the effects of different weight periods on the aggre- gate output and input indexes, and also on the index of overball produc— tivity itself, the outputs and inputs were weighted by the approprate awerage prices of the four periods: 1935-39, 1940-44, 1945.49 and 1950-54. In addition to these indexes based on fixed weights, two more sets of index numbers were determined by using quantity index formulas in which the ‘weights vary from.year to year. One is commonly referred to as the Paasche formula, after its original proponent; the other is the chain index, which is advocated by some researchers 23 and rejected by others. 24 22 The weight period is the period whose commodity prices (or commodity quantities as in the case of price indexes) are used as weights. The term.must:not be confused with base period, which is the period in.a time series whose index number has been made equal to 100. Cf. Black, J. D. and B. D. Mudgett, Research ig:Agricultural index Bumbers, Social ‘Science Research Council, Bull. No. 10, New'York, March 1938, p. 63; or Loomis, R.A., uEffect of Weight—Period Selection on.Measurement of Agricultural Production Inputs", Agricultural Economics Research, Vol. 9, No. 4,'United States Department of Agriculture, Washington, D.C., October 1957, p. 129. 23 Of. Hudgett, B. D., index Numberg, John Wiley and.Sons, New York, 1951. 24 Cf. Persons, W; M., The Construction ofélpdex Numberg, Houghton Mifflin 000, 3081303, 1928, p. 830 12 The six indexes of the total output/total input ratios, i.e. overball productivity, based on the different weight periods and index number for- mules mentioned above, are presented in chapter V. This chapter also con- tains the construction of similar indexes for real net return per farm,and of estimates of the annual real gross return to agriculture. In chapter VI regression analyses are made to test the following hypotheses: (l) the relationship between annual percentage changes in over-all productivity and real net return per farm is negative or zero for Canadian agriculture between 1926 and 1957, and (2) the relationship between annual percentage changes in aggregate output and real gross return is negative or zero for Canadian agriculture between 1926 and 1957. The concluding chapter V11 contains a summary of the findings of the study. . 1 II. OV£R_ALL PRODUCTIVITY In the previous chapter the term productivity was used as if its meaning were simple enough to be easily understood. However, when the concept has to be measured, particularly for an industry or a whole economy, its complexity becomes readily apparent. The output/labor input ratio, usually referred to as labor productivity,2 has often been used to indicate the productivity of firms, industries, and also of the economy as a whole. One reason for this pepular custom has been the availability of labor statistics while information on other inputs was notably scanty. When mechanization of production was comparatively primitive and the volume of production almost entirely determined by the number and skill of workers, the labor productivity ratio did serve as a measure for the productive capacity not only of labor but also of the production process as a whole. The relative importance of labor, however, has greatly diminished and with other inputs varying from firm to firm.and from industry to industry the output/labor input ratio can no longer serve to measure the productive capacity of labor, firm, or industry. There are thus good reasons for criticizing the indiscriminate 1 Also called total or global productivity. 2 The modifier '1abor' has often been omitted. Even now the term productivity by itself is usually intended and understood to mean labor productivity. 13 it use of the labor productivity ratio.3 The connotation of the term is of particular concern because the uninitiated may be misled into inter- preting a high ratio as necessarily preferable and something for which labor is to be credited.4 Such beliefs may be conducive to over-capitalization and undue wage demands when other inputs merit greater emphasis.5 In general the outputhingle input productivity ratios are useful only to indicate resource requirements, but for that purpose the reciprocals would be less ambiguous formulations. Because an increase in one output/single input ratio is often associated with the decline of another the question arises how to obtain a measure of over-all productivity that takes into account all inputs used. At the same time the measure must allow for changes in outputs. Economists have used two related approaches in their attempts 3 Cf. “... this measure is so obviously unsatisfactory that one would not waste space discussing it ..." (Farrell, M. J., "The Measurement of Productivity Efficiency", JO 0 the Re 1 Statistical Society, Vol. 120, Part 3, 1957, p. 2635. 4 In view of’the misleading connotation, it has been suggested labor efficiency be defined as the function of attitude and knowledge or skill, and labor productivity as the function of the total pro- ductive system (Wiles, P. J. D., "Notes on Efficiency of Labour", Oxford Economic Papers, Vol. 3, No. 2, June 1951, pp. 158-159. F. G. Sturrock prefers to define labor productivity as the amount of work accomplished per worker ("The Productivity of Labour in Agriculture", JOurnal of the Proceedin s of the A icultural Economics Society, Vol. 9, No. 1, July 1950, p. 36%. 5 Some national studies provide evidence that the marginal returns to "organization“ are higher than those to capital and labor (See Aukrust, 0., "Investment and Economic Growth", Productivity Measurement Review, European Productivity Agency, 0.E.E.C., No. 16, Feb. 1959, po 47). . 15 6 to measure over-all productivity. One is called the production function method and the other the constant dollar method. Production Function method For the production function method one requires the parameters of the production function of the industry for a certain period. Suppose the functional relationship between inputs and output is known for period to, then by substituting the inputs used in any other period (tn), the output for tn can be obtained on the basis of the productive capacity of the inputs used in to. The difference between the derived output and the actual output is ascribed to changes in the over—all productive capacity of the inputs, and the ratio of actual output to derived output is a measure of this change."7 The production function approach has appeal to those who consider the shift to a new function a measure of technical change,8 as distinct from.changes in the organization of inputs which, they feel, 6 The aggregation of inputs in terms of embodied labor is of academic interest only. Cf. Concepts and Problems in the Measure- ment and Analysis of Productivity, Report II (mimeographed), Interdepartmental Committee on Productivity Analysis, Ottawa, Jan. 1954, p. 5. '7 For a discussion of the assumptions involved, see: Ruttan, V. W}, Technological Progress ingthe Meatpagking industry, 1919:41, Marketing Research Report No. 59, U.S. Department of Agriculture, Washington, D.C., Jan. 1954, pp. 23-24. 8 See, for instance: Schumpeter, J. A., Business Cycles, Vol. 1, McGrawaHill, New York, 1939, p. 87; Heady, E. 0., "Basic Economic and Welfare ASpects of Farm Technological Advance", Journal of Farm Economics, Vol. 31, No. 2, May 1949, pp. 2949295; and Plaxico, J. 8., "Discussion", Agricultural Adjustment Problems in a Growing Economy, (heady, E. 0., et al, eds.), The Iowa State College Press, Ames, 1958, p. 55. 16 are reflected in moves over the same function and therefore not included in the ratio of actual output to derivedoutput.9 Attempts to separate changes in organization from changes in other 10 inputs seems unnecessary and arbitrary; Such a separation would be warranted if one were to provide a basis for the allocation of research funds, but it is irrelevant for the purpose of this study which re- quires a measure of the changes in the overball productivity of all inputs, including their organization. Furthermore, a meaningful production function for an industry would be well nigh impossible in view of the need for a period during which techniques of production remained unchanged, and which is long enough to provide the data necessary to estimate the parameters. It would be particularly difficult to determine a production function for agriculture where output is affected to such a large extent by weather A A—‘A‘fi-‘A 9 For an application of the principles of the production function method, see: Johnson, D. G., "The Nature of the Supply Function for Agricultural Products", The Anggjggggjgggyygygdheview, Vol. 40, No. 4, Sept. 1950, p. 559; Rattan, V. w., "The Contribution of Technological Progress to Farm Output: 1950-75",.2heufieview of ‘gggnomics eggggtgtistics, Vol. 38, No. 1, Feb. 1956, p. 67. Another approach to measuring the shift to a new function sepap rately has been followed by Solow, R, M., nTechnical Change and the Aggregate Production Function", The Reyiew_gngcgnogics and Statistics, Vol. 39, No. 3, Aug. 1957. 10 Of. Johnson, G. L., defines technical changes as "... the dis- covery of a new input which, like all other known inputs, is fixed or variable depending on economic conditions ...", and continues, "if ideas are recognized as inputs, as indeed they are, then new organizations can be regarded as technological changes." ("Supply Function - Some Facts and Notions", A icul- tural AdjLustment Problems in a Grcfingfigmon , (Heady, E. O. , et al, eds.), op. cit., p. 91 ft.). Cochrane, W. W. amends this definition by substituting "use" for "discovery" ("Some Additional Views on Demand and Supply", ibid., p. 9b). l7 and other exogeneous conditions affecting growth.ll Even if this problem were overcome there still remains the problem of aggregating various outputs. Constant Dollar Method This method also has shortcomings that should not be underesti- mated and the user of results obtained from this method should be wary of the limitations of their validity. But up to the present it is the only feasible way to get estimates of changes in over-all pro- ductivity for an industry. The procedure involves weighting the inputs and outputs of each period (usually a year) in the time series with their prices for a given period. By adding the resulting constant dollar values of all inputs and all outputs for each year single input and output measures are obtained. The annual total output/total input ratios are purported to reflect changes in the over-all productive capacity of the inputs. Since productivity is an ordinal concept the annual ratios are usually expressed as a percentage of the ratio for a selected period to give an index of_over-all productivity. The annual ratios of the index numbers of total output to the corresponding index numbers of total input would give an over-all productivity index with the same base and weight periods as the output and input indexes. The constant-dollar method is based on certain assumptions. First, it is assumed that the economic system in which the industry 11 The construction of a weather index will help to meet this difficulty. See Stallings, J. L., Indexes of the Influence of Weather on A ricultural Out ut, unpublished Ph.D. dissertation, Michigan State university, East Lansing, 1958. 18 functions is in competitive equilibrium. Under this assumption market prices of outputs reflect consumers' marginal satisfaction, and market prices of inputs reflect the marginal productivity (valued at prices of the resulting output) of these inputs. Since the marginal satisfaction of the last item bought applies to all members of its class the dollar value spent on the class represents its total satisfaction. Similarly the marginal productivities of all members of an input class are the same, and the total expenditure on that class represents its total productive capacity. Under the same assumption the satisfaction derived from each dollar spent by the consumer is the same, and so is the productive capacity of each dollar spent by the producer on inputs. Therefore, the dollar values of all output classes can be added to give a measure of the total satisfaction from all outputs, and the dollar values of all input classes can be added to combine the productive capacity of all inputs into a single measure. The ratio of total output values to total input expenses will thus measure the relationship between the sum total of consumers' satisfaction attained and the sum total of productive capacity'applied. By weighting the outputs of all years in the time series by their respective prices for a given year, the total output value of each year represents the total amount of satisfaction for that year if tastes were the same as in the given year. Similarly, the total input value at given year prices represents the total productive capacity usedfin terms of the productivity of the inputs in the given year. l9 Atythis point the need for another assumption becomes apparent because edual changes in inputs for production or consumption will not necessarily have the same effects on production output and consumers' satisfaction. To overcome this difficulty it must be assumed that all functional relationships between producers' inputs and outputs, and between consumers' goods and attained satisfaction are linear. Under the assumptions of competitive equilibrium of the economic system and linearity of all functional relationships involved, the weighted total output/total input ratios would have the same numerical value for all years and be equal to that of the weight period12 as long as the productive capacity of the weight period inputs remained unaltered. Ur,if'tastes are assumed to remain constant,~any deviation from the weight period ratio thus becomes a measure of change in the over-all productive capaCity of inputs. The numerical values of the annual total output/total input ratios can be expressed as a percent— age of the ratio of a selected period (the base period) to get an index of over-all productivity. The constant dollar method with arithmetic aggregation is essentially a linear case of the production function method. in the former the annual comparison is between average over-all produc- tivities whereas in the latter it is between total products. In terms of index number construction, the use of constant prices as weights to aggregate inputs and outputs which are different in kind corresponds to the Laspeyres' method for establishing quantity in- ‘-_“_._‘_‘_“4-_.A_‘ 12 See ft. 23, Chapter 1. 20 dexes. The problems connected with the construction of index numbers are, therefore, inherent in the constant dollar method. One of these problems is the choice of weight period. Frequently the discrepancies in indexes caused by different weight periods is insignificant and can be ignored, but this is so only under certain circumstances. What these circumstances are will be discussed in the following chapter. In concluding this chapter some of the causal factors behind the changes in the over-all productivity ratio will be briefly examined. Knowing these causes is not essential for the purpose of this study, but it is of value in avoiding misinterpretation of the results. Sometimes changes in over-all productivity (in some studies only the "technical“ changes, i.e. excluding the changes in organization 1V management, are meant) 13 are used to indicate changes in production resulting from research and education. This inference may be Justi- fied for some industries, but not for agriculture where the uncon- trolled environmental factors ere so important. Indeed as far as" Canadian agriculture is concerned most, if not all, of the year to year fluctuations in the over-all productivity ratio can be ascribed to the variable weather and pest conditions. The over-all productivity ratio of the industry will also change with certain inputs leaving the industry. If the preportion of poor 13 The distinction between organizational and non-organizational changes in production has already been discussed. Here it may be added that under the assumption of linear production functions the organization would not affect the over-all productivity ratio. 21 managers among the farmers leaving the industry is higher than among the farmers in the industry, the over-all productivity ratio will‘ rise. Economies of size would have the same effect on the produc- tivity ratio if firms are expanding. Another reason for a rising over-all productivity ratio that is .not the direct result of research and education would be greater ad- herence to the principle of comparative advantage. Specialization , within.farms may have become possible through risk reducing research, and regional specialization through improvements in transportation and storage facilities, but the concomitant rise in the productivity ratio as a result of these shifts in farm enterprises is clearly not something for which additional research effort had to be exerted in the technical sciences. There probably are still other factors affecting the produc- tivity ratio,14 but these few examples illustrate sufficiently that research and education are not the only factors that can change productivity. 14 Of. Johnson, G. L., op. cit., pp. 89-92. ill. WEthi'l' PERIOD PROBLEM One may wonder why the different output and input classes for all years in the time series should be weighted with prices pertaining to one particular period. Why not use current prices? The question is important and should be dealt with before entering into a discussion of the reasons for causing discrepancies in the numerical values of index numbers when constant weights pertaining to different periods are used. Current or Constant Prices as Weights As far as outputs are concerned, tastes become satisfied at different rates as time passes. Some acquisitive desires may dis- appear altogether while others are aroused with the appearance of new products. These changes cause shifts of the demand curves and estab- lish new price relationships. The change in price, however, is not only a function of the shift in the demand curve but also of the elasticity of both the demand and supply curves. Since these elas- ticities vary with different commodities a.unit change in the price of each commodity does not represent an equal change in consumers' satisfaction. Insofar as price changes are consequences of alterations in goods and services they may reflect changes in consumers' satis- faction. But added novelties do not necessarily add to the utility of an article. As long as the consumer is free to choose between 22 23 goods with or without the novelty, any shift towards purcnases of the former is likely to indicate that the novelty represents additional satisfaction for which the consumer is willing to pay.1 but when there is no choice and the consumer has to pay for a novelty which he does not value the price increase does not reflect greater satisfaction. Instead it will result in a decline of total satisfaction because less can be bought with the remainder of his income. The resulting over- estimation of consumers' satisfaction from using current prices as weights may or may not be offset by quality improvements which are appreciated by consumers but not reflected in higher prices. Prices also change as a result of shifts in the supply function, unless the demand for these products is perfectly elastic. The supply function can shift for a variety of reasons. Some of these are changes in techniques, in the availability of raw products, or in market con- ditions (e.g. a shift towards monopolistic markets). This kind of price change does not necessarily reflect a change in taste. Suppose, for instance, that research caused a shift of the supply function from MCO to MQL(Figure l), and that demand (Ba) for the output is perfectly inelastic below the point where MOO intersects. The amount consumed will thus remain unchanged and there is no reason for thinking that less satisfaction will be enjoyed Just because the price declined from P0 to P1. 1 The term "free choice" is not without ambiguity. Two of the neces— sary prerequisites that ensure the meaning the concept is supposed to convey are (l) the knowledge that makes rational choices possible, and (2) the opportunity to make choices. 2b Figure i.— Effects of Shift of Supply Function on Prices and Sales of Hypothetical Broducts D a Price of .MC Product Db MC Amount of Product The illustration is extreme in that the level of satiation has not been reached for most products. A lower price will usually attract potential consumers and.will induce active consumers to buy more. Should a similar technical change have taken place in the production of a product for which the demand is Db, a decline in satisfaction per unit might have followed.' It should be noted that the drop in price is less than that of a product whose satisfaction did.not decline at all. Price changes caused by inflationary or deflationary movements also do not indicate greater or smaller consumers' satisfaction. For those whose incomes rise proportionately less than the general price level total satisfaction will even decline. This brief examination of the causes of price changes leads to the conclusion that changes in prices fail as indiccs of changes in consumers' satisfaction. If the economic system were in competitive equilibrium each dollar spent would give the consumer equal satis- faction at any point in time, but for different periods a dollar's worth of satisfaction would be liable to be different. The use of current prices for weighting outputs would not provide comparable measures of satisfaction and it would be preferable to accept as weights the prices of one particular period, i.e. to aggregate in terms of constant consumers' satisfaction. A similar line of reasoning will reveal that changes in the prices of inputs cannot be used to measure changes in productive capacity, even if the equilibrium condition were to prevail. There is, moreover, another reason which makes it necessary to use input prices of one period as weights. Price changes are fre- quently associated with changes in quality, but if the output/input index is to reflect changes in productivity the quality changes of the inputs must be excluded from the denominator. Should, for instance, tractor A perform twice as much work as tractor B, then the difference in productive capacity between the tractors is expressed hy the ratios 2 w/l and w/l, and not by 2 w/2 and w/l. 26 Weight Beriod bias 2 it is a well-known phenomenon that different sets of weights produce discrepancies in the resulting index numbers. Those discrep- ancies, usually referred to as weight period biases, can occur only in aggregate indexes. Whatever weights are used (except zero values) to construbt simple index numbers, the weighted annual values stay in the same proportion and thus result in the same index numbers. As long as the discrepancies among aggregate indexes are relatively small, the error is likely to fall within the error of estimating the date. or should one be interested in the quotients of two sets of index numbers, as is the case in productivity ratios, errors in each set of index numbers are less important than the resultant error in the quotient. if the errors have opposite signs, i.e. an overestimation for one and an underestimation for the other, they will be compounded in the quotient. Errors with the same sign have an offsetting effect. in the following discussion of the reasons for the occurrence of the bias the simple case involving only two periods will first be con- sidered. It should be noted that this simplification shifts the dis- cussion to the Laspeyres (when beginning-period weights are used) and Paasche (when end-period weights are used) index number forumlas . 3 L.‘ 2 The word bias has been defined as ". . . a foreseeable tendency to err in one particular“. direction" (Eisner, i., The :4“ mking of index numbers, third ed. ., noughton mifflin, soston, 1.927, p. 8'0). 3 hereafter the letters L and :3 will refer to the terms Laspeyres and raasche respectively. 27 Although the discussion is not ipso facto applicable to index numbers based on beginning and end-period weights in a time series covering more than two periods it will expose the general nature of the bias. Comparison Between Two Periods The conditions under which the L and P formulas will give the same results can be ascertained for two periods and two commodities by equating the L and P index numbers of the following data: : Commodity : Period 3*; L : §_ : Ouantitz : fries : anntim ; Erica 3 to 40“ Po“ no” 90" ' b b 1"1 “1).15L 91a ‘11 91 The L and P aggregate quantity index numbers 4 for period t]. are a bp b a b ‘11 0 N1 0 cl1 1"1 + qlbpl and respectively. After equating the qowoa +qobl’ob “0&91‘El 4' qamp).b two ratios cross-mltiplication will give: qo‘qiapoapla + q1"“1101‘1’0‘25’1b + qoaqibpoblha + qob‘libl’obi’iID = qo‘lqial’ofil’ial + qoa‘lihi’o'flpib + qobqlapohpia + clob‘llihl’ohl’ib 3 or 1’0'5‘1’1ID (qiaqob ’ do‘filb) = PlaPOb (qiaqob " (10“!1”) , which reduces to poaplb = plapob ; (1) 4 The same conclusions would have been reached for price indexes. 28 and also qlaqob (poaplb - pobpla) = qoaqlb (poaplb- pobpla) . which reduces to qlaqub = qoaqib. (2) It thus appears that the L and P formulas will give the same result if (a) regardless of quantity changes, the prices of the items change in the same proportion, or (b) if, regardless of price changes, the quantities change in the same proportion.5 Two special cases can be exposed. Equation (1) is true if the price-quantity relationships of the items show perfect elasticity, be- cause under this condition the prices of the items do not change and the products of theprices as indicated in the equation will be the same regardless of the change in quantities between to and t1. Equap tion (2) is true if the price—quantity relationships of the items are perfectly inelastic, because then the quantities do not change and the quantity products as indicated in the equation will be the same regardless of the change in prices. In the second case the L and P index numbers are not only the same but also will equal unity. This conclusion can also be reached when the general forms of the L and P quantity index numbers for period t1 are written as: 5 The contention that the difference between the L and P index numbers "will equal zero only when ql = for all commodities involved" (Mudgett, B.D., index Numbers,q90hn wiley and.Sons, New York, 1955, p. 57) is incorrect; the word "only" should be de- leted because absence of change in the quantities of the items between to and t1 is a special case of the general condition stated above under (b). 29 2 qupoikqli/qoi) a glipli L01 = and P01 = ii ii i i sqo p0 20.113:L (0.0/01) Should the quantity of each item change in the same proportion between periods t0 and ti, the bracketed fractions can be placed in front of the summation sign. As indicated before, both index numbers will have the same value; it now turns out to be the value of the qli/qoi ratio. in the special case of quantities remaining constant both index numbers would equal unity.° it is obvious that the conditions under which the L and P formulas give the same aggregate index numbers are hypothetical. Knowing these conditions may be helpful in selecting an appropriate weight period, as will be shown later, but they neither explain the direction of the bias, i.e. under what circumstances is the L index number higher than the P index number and vice versa, nor do they explain the mamitude of the bias. L. von Bortkiewicz was first in providing these explanations. He formally demonstrated that the criterion determining the direction of the. bias is the ’sign of the weighted coefficient of correlation betwem the price and quantity relatives, i.e. weighted by the beginning-period values of the item comprising the aggregate H‘- ; 6 Mills, F.C. fallaciously states that the L price index has a downward bias and the P index an upward bias if quantities . remain constant (Statistical Methods _, Holt, New York, 1955, p. 452 ft.) . 30 index.7 Should the sign of this coefficient be negative the L index number will be higher than the P index number; if positive the L index number will be lower than the P index number.8 Only if the A .‘ AA_‘A_‘A_... = a poqokpl/pu - Lqul/qo - Lq) r (weighted) 0105 lap0‘10 where p0 = price of an item in the first period p1 = price of an item in the second period q0 = quantity of an item in the first period ‘ ql =.guantity of an item in the second period L ' Laspeyres aggregate price index number Lg = Laspeyres aggregate quantity index number 2 2 z Pqutpl/po "' LP) 0’1 = A -i S: quO 0,22 : poaokql/qO - L ) s: pqu To facilitate calculation the formula can also be written as: 2p ~2pq - sqq-ep r (weighted) = 0‘10 ll 01 1‘10 . 2 2 aqopo epoqowl/po LP) -2poqo(ql/qo Lq) (Bortkiewicz, L. von, (a) "Zweck und Struktur einer Preisindexzahl", Nordisk Statistisk Tigskgift,'Vol. 2, 1923, p. 376, and also in (b) "Die Kaufkraft des Geldes und Ihre Messung",.flgrdichgtati§r tical Journal, Vol. 4, Parts 1 - 2, 1932, pp. 15 and 16. See also: Staehle, H., "International Comparison of Food Costs", “Inter- national Comparisons of Cost qugiyin , International Labour Office, Series N, No. 20, Geneva, 1934, p. 15; and Siegel, I.H., "The Difference Between The Paasche and Laspeyres IndexéNumber Formulasm. igurnal_gf_the AmericangStatistigaLAggsociation, Vol. 36, No. 215, Sept. 1941, p. 345). 8 Ddsgrammatical explanations are given in APPEMDEX.I. 31 spread in the base year values is not large will the sign of the pp- 192.13% coefficient of correlation be a sufficient criterion.9 Von Bortkiewicz established furthermore that the magnitude of the discrepancy between the L and P index numbers,expressed as a fraction of the aggregate L index number, is determined by the arith- metical product of (l) the weighted coefficient of correlation be- tween the price and quantity relatives, (2) the ratio of the weighted standard deviation of the price relatives and the L aggregate price index number, and (3) the ratio of the weighted standard deviation of the quantity relatives and the L aggregate quantity index number.10 It thus follows that the larger the weighted coefficient of corre- lation the larger will be the difference between the L and P index numbers. If the coefficient is zero, as would be the case with price- quantity relationships that are perfectly elastic or inelastic (cf. p. 28) both index numbers will be equal. The explanation by von Bortkiewicz provides an answer to some seemingly contradictory statements in the literature about the direction of the bias. one author states, for instance, that the L fomula usually gives index numbers with a downward bias.ll Others 9 Evans, G.H., "The Index Numbers A. M. and A.M.I ", Journal of the American Statistical Igssoc lation Vol. 31, No. £96, Dec. 1936, p.726. lOP-L =r?’l__0’2 L L L P q (Bortkiewicz, L. van, (a) op. cit., p. 376, (b) op. cit., p. 15; Staehle, E., op. cit., PP. l5 and lb; Siegel, I.H., op. cit., p. 345. 11 Mills, F.C., (quoting Irving Fisher), op. cit. p. 451. 32 claim that the L index has an upward bias and the r index a downward bias}2 Exnpirical results show, however, that sometimes the L and at other times the t’ formula will give the higher numerical. value.13 The reason for the contradictory statements can be traced to the acceptance of the same price-quantity relationships for all items that make up the aggregate and between all periods in the series. An inverse relationship between prices and quantitiesxover time is as- sumed because consumers and producers will shift purchases to sub- stitutes that become cheaper. A positive relationship is assumed for outputs because the producer will shift production to goods whose prices are rising. A conflict in conclusions becomes immediately apparent if one con- siders that the outputs of a production process are also inputs either for further production or as consumer goods. The assumed price-quantity relationships pertain to a single moment in time and reflect negatively sloping demand curves (for in- puts) and positively sloping supply curves (for outputs) . But as far as the problem of weight period bias is concerned, it is the price— quantity relationship displayed over time by the points of intersection 12 Cf. Croxton, F. E. and D. J. Cowden, Applied Qen‘ eral Statistics, Prentice-Hall, Englewo'od Cliffs, 1958, p. 429. 13 Fisher, I. ,, referring to the Laspeyres and Paasche index numbers, observed already that the "two curves are very close together and even cross each other" , and "there is no tendency for either of the two curves to be constantly above or con- stantly below the other" (op. cit. , pp. 58 and 238 respectively); hmdgett, B.D. , commented that the situation in which the Las— peyres index is smaller than the Paasche index "happens repeatedly" (op. eit., p. 35). 33 of prices and quantities pertaining to the commodities included in the aggregate index that counts. This relationship is not necessarily the same for all inputs or for all outputs. it may also change for any particular input or output between different periods. A few examples will illustrate the variations that may occur in these relationships. The demand for agricultural products is, by and large, more stable than their supply. The intersections of their supply and demand curves are thus likely to show an inverse relationship between prices and quantities for periods not too far apart in time. Such a.negative relationship need not exist, however, between two distant periods. Through inflationary pressures and possibly through increases in demand, prices in the later period may well be higher than in the earlier period regardless of the changes in production. The price-quantity relationship between two periods is likely to be more erratic for inputs. Many of the industries supplying inputs are oligopolistic or price-making. Supplies (and prices) can be con- trolled to meet shifting demands and where that is done a positive price-quantity relationship may be expected. it can happen, of course, that a future demand is misjudged. An anticipated rise in demand may not take place, or it may even decline. In that case a comparison of two periods may show that a higher price is associated with a lower quantity. For other inputs the price-quantity relationship may be predomi- nantly negative. Labor would be an appropriate example; because wages are raised in response to a declining labor supply the 3h intersections of the supply and demand curves for labor will tend to follow the demand curve. The price-quantity relationships for farm machinery and labor are depicted in Charts 1 and 2. The charts clearly show that the price- quantity relationship of these two inputs can have opposite signs between the same two periods, and also that the sign of the relation- ship for either input depends upon the two periods c ompared. From this cursory examination it can already be inferred that some items comprising the aggregate index number of inputs and of outputs will tend to make the L index number larger than the P index number, whereas others will have Just the opposite effect. The deter» mination of the resultant weight period bias in the aggregate index number is thus a matter of weighting opposing tendencies. Comparison Between Several\Periods When more than two periods are taken into consideration.the terms Laspeyres and Paasche no longer apply to beginning and endpperiod weighting. The P method involves variable weighting, i.e. the weights to be used are those of the given year and.not those of the ends period of the time series.14 The L formula describes fixed weights but these weights do not necessarily have to pertain to the beginning- period in the time series. In general, therefore, weighting with beginningfiyear prices is an application of, but is not synonymous with 14 Of. F18her, IO, 02. Cite, pp. 492-93. 35 :35 .mm?53.me< no .....me .2235. 820203 .23 .z .m alum EoEmmecm wee Essa—QE— Eeem was «831:. outn— vco mourn. ..mdd .oueoEEoU was oven... *0 EoEteaoo .ovecou "wooeaow no.3 Eunice: 85m *0 0E:_o> *o wove. OVN CNN 8N bar of o: 92. 90— cm ow ov ON _ _ . v _ a _ _ _ _ . 4 _ 2.. en . en me an. 2... 8.. .Mn . 8. ...”.Si 3 . .3 an 8 0V 0 mi 0 VV O M! . ”V. t . 1 0V . . S e on . a. . 3 mm 0 mm 0 mm I O l on . «no So— . vet... 3.03.. of *e 3.3 we 2.3.2, was out; cos—:3 so on 8— cap o: of cm— 3222 .386 52.28: ...... .. 2.3.8.33. 5.53 .83. u .. .....u Ponies: Esau *0 wow:— outm lame—0;; Chart 2. - Price- Quantity Relationships of Fem Labor, Canada, 1926- 1957 (Average wage end Iebor brce of 1926-57 period I 100) 200 _ 5.7 5.? 180 .- 5.3 $5.5.‘e 52 0 51 160 '- 49 so . '43 ‘40 _ o 47 46 e f 120 "' 45 e Index 0 Farm Wages “ ' ‘00 '- 43 e 80 — 42 e 23 60 -- 4] 0°30 4.0 3‘ . 370.039 40 *- 32.33 0.36 38 33 20 - J l l l Ll\raso so 100 120 Index of Form Labor Force Sources: Canada, Dept. of Trade and Commerce, D.B.$., Quarterlx Bulletin of Agricultural Statistics and Canadian Labor Fgrce Estimates, 1931-1945 and The Labor Forcg, November 124§ - Jul! l2§§ s. H. LOK scowomcs DIVISION. DEPT. or Xcmcuuuns, OTTAWA 37 the L formula; and weighting with end-year prices is not synonymous with the P method. Failure to recognize this distinction, as has been the case with some authors?5 engenders the danger of applying conclusions based on the L and P formulas to beginning and end-period weighting. Thus Ruttan' s erroneous contention that "the 'true' measure of techno- logical change can be bracketed by using both beginning-period and end- period weights" 16 is based on his conclusion "that the Laspeyre Ls_i_c_) and Paasche indexes set the limits between which the 'true' measure of technological change must lie." 17 15 For misuse of the term Paasche see, for instance, Ruttan, V.W., "Agricultural and Nonagricultural Growth in Output Per Unit of . Input", .19qu 9f gem Economics, Vol. 39. No. 5, Dec. 1957, pp. 15 67-68; Stout, T. '1‘. and V. W. huttan, "Regional Patterns of Technological Change in American Agriculture", Journal of Farm Economics, Vol. (.0, No. 2, Nov 1.958, pp. 198-201; and Thomson, P., The Productivity of the Human Agent in Agflaggtgre: Ag lpternatigg- a1 Comparison, unpublished Ph. D. dissertation, University of Chicago, Illinois, 1951, pp. 22-23. 16 Ruttan, V. W. , "Agricultural and Nonagricultursl Growth in Output per Unit of Input", op. cit., p. 1568. 1? Cf. mitten, V. W., Technolo ice]. Pro, can in the, feat ackin Igduggg, 312-57, Marketing Research Report, No. 59, U. S. Department of Agriculture, Washington, D.C., Jan. 1954, p. 18. Because Rattan has published extensively on productiVity (per- taining to agriculture and allied industries in the 0.8.) in recent years three reoccurring conceptual errors in his writings warrant recapitulating: (1) his use of static production economics diagrams ”co-demonstrate the direction of the weight period bias for inputs and outputs is fallacious, (2) he incorrectly applies the term Paasche to end-year weighting in time series and (3) he compounds errors by concluding from errors (3.) and (25 that the limits of the bias are set by beginning and end—year weighting. 38 The way in which different weighting affects aggregate index numbers in time series can be shown by a simple illustration. Suppose that a time series consists of four periods, and that the prices of each are used to weight quantities. The four sets of L index numbers and one P index are indicated as follows (the first subscript of each index number refers to the period in time, the second to the period whose prices are used as weights): Laspeyres Index Numbers Using Period 3 t Diifgiint Weigh: Periodgt ; Indgiéggfigers : : Q 3 3 2 . 3 1 : : to ‘00 * ‘01 ‘02 ‘03 ‘00 t1 ‘10 ‘11 ‘12 ‘13 ‘11 t2 ‘20 ‘21 ‘22 ‘23 ‘22 t3 ‘30 ‘31 ‘52 ‘33 ‘33 4 4_4L“A! A..__.A‘A 4‘ .AA ..AA«.““‘ The discrepancies between any two of the constant weight indexes (all indexes having the same base period) can be explained by con- sidering the indexes with weight periods to and t1. The changes between to and t1 in the quantities and prices of the items that make up the aggregate index determine the difference between 110 and 111' Although the price weights remained the same for periods t2 and t3, the quantities between to and t2, and between to and t3 will have changed differently than between to and t1. Consequently the dis- crepancies between IlO and 111’ between 120 and 121, and between 130 and i31 will be different. 39 For one period each or the b indexes will have an index number that is the same as the P index number. For the other periods the L and P index numbers will be different, and the discrepancies will vary because in these cases not only the quantities but also the prices of the items are liable to change. Choice of Weight Period When the discrepancies between index numbers based on different weight periods exceed an acceptable margin of’error, the question arises as to which period provides the most appropriate set of weights, i.e. a set of weights that would produce index numbers that are the best possible reflection of the true changes in aggregate quantities or prices. One of the criteria of appropriateness is the representativeness of weights throughout the time series.l8 As for quantity indexes, the closer the proportions between prices of the weight period come to those of other periods in the time series, the smaller will be the maladjustments between weight period prices and non-weight period combinations of inputs or outputs. if all input and.all output prices were to change in the same proportion there would not be any weight period bias (of. p. 28). Some researchers believe that the center period in the time series 444 A A AA AAA;- 18 Of. Mudgett, B. D., op. cip.3 and Black, J. D. and B. D. Mudgett, Research in Agpicultural Index Numbers, Social Science Research 'Council, Bull. No. 10, New York, March 1938, p. 35. he provides the.most appropriate set of weights.L9 Although such weight— ing may be preferable to either the beginning or end—period weighting, the center period does not necessarily provide the most appropriate set of weights,as will become apparent. To establish a measure of changes in the proportions in which the input prices of this study stand to one another, the price index numbers were expressed as a percentage.of the index number of real estate value for each year in the time series. instead of real estate any other input could have been chosen as a basis for comparison. if all prices change in the same proportion the percentages would all be 100. The deviations of these percentages from 100 indicate, therefore, greater or smaller proportional price changes as compared with the changes in real estate values. For each input the deviations (with- out signs) were averaged over the years in the time series. The results are shown in Table l, where the items are arranged in order of decreasing percentage change in volume between 1926 and 1957 (see Tables 19, 22 and 25, Appendix ill). Consequently the higher the item is on the list, the heavier the average deviation must be weightei in deciding upon the most appropriate weight period. it is apparent that the input prices of the 1935-39 period on the whole deviate less from the prices of other>years in the time series than those of any of the other weight periods tested; the prices of 44444-4...4.‘ A‘ M 19 Cf. "0n theoretical grounds the year 1889 should have been selected, as it is situated somewhat nearer the center of our interval", Frickey, E. in "Some Aspects of the Problem of measur- ing Historical Changes in the Physical Volume of Production", ‘gxplqratignsuin Economics, McCraw-flill, New'Iork, 1936, p. 480. bl Table l.- Average Annual Deviation from lOO of Price indexes of Selected inputs EXpressed as a Percentage of the Price index of Real Estate for Different Weight Periods, Canadian Agriculture, 1926—1957 A ‘”“~.«~A—4—4—4—4 —A Hun-OHM 0-: w Weight Period 3 Farm input 3 ‘77‘7‘4," °- “ *‘ A ‘ .1230—341£2}5:}2;i940-44i1945-49312§9754_L O 1. Fertilizer 27 12 2O 19 27 2. Supplementary machinery inputs (gasoline, oil, etc.) lb 15 lb l4. l9 3. Feed 72 12 44 32 36 4. Property taxes 37 4 3o 26 33 5. Repairs and depreciation on machinery 38 ll 28 28 34 6. Miscellaneous 38 lO 27 28 34 7. Machinery investment 38 ll 28 28 34 8. Labor 128 52 00 42 43 9. Real estate investment 0 U 0 0 O 10. Livestock investment 91 24 44. 37 41 11. Repairs and depreciation on farm buildings 9b 28 49 41 43 12. interest 17 30 12 lo 14 the 1945-49 period come second best.20 The 1930—34 period provides the least desirable weights. But the most.appropriate index according 20 This procedure is reminiscent of one of the tests suggested by R. A. Loomis for selecting the most appropriate weight period. There is, however, one important difference. In the process of determining an average measure of deviation Loomis averaged (for the period 1910-40) the percentages (the price index number of a particular input as a percentage of the wage rate index) pertain- ing to each input. in so doing, plus and minus deviations were cancelled against each other which is undesirable. (“Effect of Weight-Period Selection on Measurement of Agricultural Production Inputs",'éggiculturalgEcongmggs Research, Vol. 9, No. 4, U.S. Department of Agriculture, Washington, D.C., p. 131). The con- clusions of both.approaches are nevertheless much the same. Loomis concluded in his analysis that the 1935-39 weight period is one of the suitable ones to use for the period 1910-39, and the 1947- 49 weight period appeared to be the best choice for the 1940-55 period (ibid., pp. 134935). h? to this test may still be inadequate. Particularly when price changes are large, which is likely to be the case over a lengtmr period such as the one considered in this stucbr, the weights of any one period will be inappropriate for some years in the time series. A difficulty closely related to the problem of representativeness of weights arises in connection with the introduction of new and the disappearance of obsolescent items. in long time series an early weight period may lack weights for new items, and a weight period - towards the end of the time series may lack weights for those which are no longer used. It is conceivable that there is no weight period which will provide weights for all items in the time series. To meet the problem of representativeness lengthy time series have been split into smaller, more homogeneous sections, and an ap- propriate weight period selected for each. The indexes pertaining to these subsections are then linked in the customary manner so as to get a continuous series. What happens in a theoretical sense is that the inputs in each subperiod are aggregated in terms of different produc- tive capacities, and the outputs are aggregated in terms of different units of conswners' satisfaction. By linking the indexes of the sub- periods an attempt is made to establish a uniform meaning for all index numbers in the whole time series. The extreme case of splitting a time series is the adoption of the chain index method. This method, like the Paasche one, involves different weighting for each period in the time series. But whereas the Paasche index number is based on a comparison between given and h3 base year, using weights pertaining to the former, the chain index number is based on a comparison between two successive years, using weights of the one that comes first in temporal order. Insofar as linking cannot be eXpected to be wholly satisfactory in converting all index numbers in terms of productive capacities and utilities of the first period in the series, the chain index primarily reflects changes between successive years. This characteristic will not be a handicap if cne's interest lies with year to year changes; one's only reser- vation would be the unlikelihood that the prices, of each year will be equilibrium prices. This study deals with the year to year changes in productivity and income. The Paasche formula would therefore be the least ap- propriate of the three types of index formulas mentioned. Apart from the problem of representativeness to which this index gives rise, its values for two successive years have a different meaning. As long as the weights for such years do not differ too mch, however, this index may be used. The chain index is desimed to provide comparisons between suc- cessive years. It offers a solution to the problem of representative- nese but it is likely that the equilibrium condition will be violated. The fixed weight index fcmla can be used when comparisons be- tween all periods are required. The constant weights will lead to the problem of representstivenees but it may be possible to select a weight period during'which equilibrium conditions were most closely lab realized. When dealing with lengthy periods (i.e. periods long enough to cause problems of representativeness of weights) there is no sure way in which to measure annual changes for aggregates. The simplicity of linking two or three subperiods, each with its own constant weight period, has an immediate appea1.21 But this same simplicity carries the danger of overlooking the likelihood that the linking procedure is inadequate to establish a uniform meaning for all index numbers in the series. in this study an experimental approach has been followed. instead of trying to choose an index that would be most appropriate for the purpose of the study, six different sets of indexes were determined: four sets of constant weight indexes, one Paasche index, and one chain index.< In so doing evidence is provided for the pattern and magnitude of the various weight period biases, and it becomes possible to show to what extent these biases affect the conclusions of this study. 21 Such an index can easily be derived from the four sets of con- stant weight indexes determined in this study. 1V. PROCEDURE FUR ESTIAATlNU AGGREGATE iNDEXES UF TUTAL lNPUT AND OUTPUT FUR CANADIAN AGRICULTUKE, 1926—1957 The period considered in the productivity analyses of this study runs from 1926 to 1957. Reliable information on most farm inputs is not available for the years before 1926, and 1957 was the last year for which payments to farmers by the Canadian Wheat Board were completed at the time the calculations were made. Historical data on quantities and prices are not readixy available for most inputs and outputs. instead current values and price indexes are published.1 The easiest way, therefore, to determine quantities at prices described by the index number formula 'used was to divide the value by the appropriate index number or ratio of index numbers. To find out the variation in index numbers associated with dif— ferent ways of weighting items measured in different physical volumes, six sets of quantity index numbers of both inputs and outputs were determined for Canadian farms as a whole. The first year in each of these series was adopted as base period. Four of these sets arelaased on the constant weight formula, one on the Paasche and one on the chain index formula. The general forms of these formulas are: 1 In this study the term 'current' is used to refer to the period under consideration, not necessarify the present time. LS 1:6 ‘3 (Vn / ln / 1w) i:(Vo/I‘o/Iw) (l) p for the constant weight formula, s: vn ‘(vo/lo/ln) (2) for the Paasche formula, and (3) t iv” / in / ln-l) . Cn—l for the chain index formula, where 1;.Vn-1 vn = the current value of the item for the nth period V0 = the current value of the item for the base period of the quantity index (i.e. 192s) In = the price index number of the item for the nth period the average price index number of the item for the weight period H S N of the quantity index Io = the price index number of the item for the base period of the quantity index (i.e. 19%). Cn.1= the chain aggregate quantity index number for the n-l period. The four sets of constant weight index numbers are based on weight Periods 1935-39, 1940-44, 1945-49, and 1950-54. Since nearly all of the price indexes used have the average price of the 1935-39 period as their base (i.e. equal 100) the inputs at 1935-39 prices were determined simply by dividing the appropriate price index numbers into the current dollar values. The constant dollar values of all inputs were then added for each year and the annual totals expressed as a percentage of the total value of the base year. To get quantities at prices of periods other than the base period of the price indexes, the la? base period was shifted to the required weight period and the division repeated. The same procedure was used to get quantity indexes for total output. The calculations for the constant weight formula were programmed for the Burroughs-205 computer. The Paasche and chain index.numbers were obtained by the l.B.M. 050 computer using the automatic coding system (For Transit).2 {Reproduction of the intermediate steps for all six sets of index numbers would take too much space. Only those leading to the index numbers based on 1935-39 prices are included (see Appendix llI). Farm inputs Official estimates of annual "Farm.Uperating Expenses and Depreciation Charges" are readily available for Canada and the pro- vinces (except Newfoundland) for the years beginning with 1926.3 The breakdown is as follows: 1. Taxes (excluding rented land and buildings) 2. Gross rent ' 3. Hired labor 4. interest on indebtedness (excluding rented land and buildings; secured and unsecured debt) 5. Feed and seed (purchased through commercial channels only) 6. Tractor 7. Truck — continued./52 2 The computer programs are in Appendix 11. 3 For method of compiling these estimates see source: Canada, Department of Trade and Commerce, D.B.S., Ottawa, Handbook of .ggricultural Statistics, Part ll (Farm income, 1926-57), Ref. Paper No. 25, rev. ed., 1958, pp; l7~22. ’IR 8. Automobile (expenses incurred from farm bu31ncss only) 9. Engine and combine 10. Machinery repairs (repair parts and mashinery shOp charges) ‘ ll. Fertilizer and agriculture lime 12. Fruit and vegetable supplies (pesticides, containers and nursery stock) 13. Building repairs (excluding rented buildings) 14. Electric power (reported since 1941) 15“ Miscellaneous (veterinary expenses, binder twine, irri— gation charges, fence repairs, rope, salt, hardware, artificial insemination charges, purebred livestock registration fees and livestock purchases) 16. Depreciation buildings (excluding rented buildings and machinery). Information on capital invested in agriculture is also available since 1926. Separate estimates are given for real estate, livestock and machinery. The grouping of inputs in this study was largely determined by the available price indexes. Under the heading "Price Index.Numbers of Commodities and Services Used by Farmers" index numbers covering the years 1926 to 1957 arenavailable for (1) tax and interest rates, (2) farm wage rates, (3) farm machinery, (4) building materials, (5) gaso- line, eil and grease, (6) feed, (7) fertilizer, (8) binder twins, (9) seed, and (10) hardware. This list was extended by a breakdown of the index numbers for tax and interest rates (provided by the Dominion Bureau of Statistics upon request), the wholesale price index of animal products (published), and an index of farm real estate values (computed). Also, since the published index of farm wage rates is based on equal weighting of wages with and without board and room, a new index of farm wages was calculated to include fully an allowance for board and room. h9 With this information on current values and prices the following in ut categories could be set up: l. Labor 2. Service of providing capital a. interest on real estate investment b. lnterest on machinery investment 0. lnterest on livestock investment 3. Supplementary real estate inputs a. Repairs and depreciation 0. Taxes 4. Supplementary machinery inputs a. Repairs and depreciation b. uther (fuel, lubricants, tires, etc.) 5. Uther inputs a. Feed and seed b. Electric power c. Miscellaneous Since the estimates of the Dominion bureau of Statistics for the current values of seed pertain to the amounts purchased through com- mercial channels, which is only a small portion of the total seed input, estimates of the annual total seed input were also determined. These estimates called for a rather elaborate procedure of determining separate estimates for forage and other seed inputs. The total esti- mates were surprisingly high but since these values changed little from year to year the aggregate input index was scarcely affected. With all seed included, the constant dollar value of total inputs would be pro- portionally higher in 1926 than in later’years; and the aggregate index numbers for the later'years would thus be somewhat lower than the index numbers which do not include all seed. The inclusion of non—commercial seed on the input side would necesm sitate an adjustment of cash sales on the output side. This would affect the aggregate output index in the same way as the input index. [in Since the remaining effects of seed on.both the input and output index numbers are in the same direction and of the same magnitude the effects are further eliminated in the productivity ratios. The procedure of determining tne total seed input would have complicated the computer programs considerably and this extra work did not appear justified. Only the commercial seed was therefore included. The procedure of weighting tne inputs will be described in detail for the fixed 1935-39 weight period only. The different weighting re- quired for the other fixed weight periods, and for the Paasche and chain index number formulas is indicated by the respective formulas (see p. 52). Labor The annual labor input could have been obtained by multiplying the agricultural labor force estimates (i.e. persons with jobs in agricul- ture in early June or at the end of May) and the average yearly wage (including an allowance for board and room) of the weight period. To keep the computer program as simple as possible, however, the annual current cost of the labor input and a wage rate index were prepared so that this input could be treated the same as were other inputs. The annual cost of the labor input was divided by the wage index to get the weighted labor force input. The available data have obvious shortcomings. Since the hours of work per day or week have been declining the labor input based on man- years will be increasingly overestimated as time goes on. On the other hand by evaluating all agricultural labor, including the operator, at 51 the same rate changes in the composition of the labor force are ig- nored. If it is true that the share of child labor and that of old people has been declining (data on child labor are not available; Table 2 shows a small decline in the proportion of farm operators of age 60 and over between 1931 and 1951) the labor input would for this reason be underestimated in later years.4 Because the effects of these shortcomings are offsetting and also because the labor force estimates are rough to begin with, any attempt to improve these estimates was con— sidered unwarranted. Table 2.- Changes in Age Distribution of Farm Operators, Canada,’ 1931 and 1951 AA‘l‘AkAA‘“ ...;‘44‘ _. A 4“_‘ 4 l._‘ #4 _A “g ‘ Age Group E 1931 f 1951 - per cent - Under 24.years 3.1 3.5 25 " 29 700 70b (:0 years and over 20.5 19.0 #‘A L—A ‘ AA; AA._._._‘__‘ # .4 ...-‘Al‘ 4. .4‘1‘4 AA 44....— SOURCE: Canada, Department of Trade and Commerce, D.B.S., Uttawa, Ninth Gen§u§_of Canada, 1951, Vol. VI (Agriculture), Part 4L, p0 2-1. . Regular labor force surveys (first quarterly; monthly after November 1952) were not undertaken until November 1945. The estimates of the Dominion Bureau of Statistics before this year are based on 4 Cf. Schmookler, J., “The Changing Efficiency of the American Econom: 1869—1938", The Review ongcongmics and Statistich ' Vol. 31., No. 3, Aug. 1952, p. 217. 52 census data which do not pertain to the Labor force but to the slightly different concept of gainfuLLy occupied. The labor force includes persons "14 years of age and over who, during the survey week: did some work; had jobs but did not work; or did not have JODS and were seeking work." 5 The unpaid female family worker on the farm would have to spend more than 20 hours per week on farm work to become part of the agricultural labor force. hy gainfully occupied is meant that the person so classified "earns money or assists in the production of marketable goods." 6 The main difference between the labor force and gainfully occupied concepts is that questions with respect to the labor force enquire about employment status during a Specific period of time, whereas no such time limitation was employed when enquiring about the gainfully occupied. Con- sequently the labor force includes people "whose chief activity during a period of one year is student, homemaker, and retired, as well as persons never gainfully occupied but seeking employment, merely because they worked a specific number of hours during the survey week or were actually'looking for work at that time." 7 These people were not con- sidered gainfully oscupied. On the other hand, the "voluntarily idle 5 Canada, Department of Trade and Commerce, D.B.S., Ottawa, The Labour Force,ANovember 1945unly 1953, Ref. Paper No. 58, rev. ed., 1958, p. 5. 6 Canada, Department of Trade and Commerce, D.B.S., Ottawa, Eighth Census of Canada, 1941, Vol. VII (Occupations and industries), p.xii. 7 Canada, Department of Trade and Commerce, D.B.S., Uttawa, Qgpsus of Saskatchewan, 1949, Vol. ll (Occupations, industries, Earnings, Employment and Unemployment), p. xii. are excluded from the labor force, whereas some of them, on the basis of usual activity, would be included in the gainfully occupied." 8 it was established, however, that the change in definition did not "ap- preciably affect the comparability of the occupation statistics." 9 The labor force estimates are classified by occupation and by industries. Agriculture as an occupation comprises (i) farmers and stock raisers, (2) farm managers and foremen, (3) farm laborers, (4) flower growers and landscape gardeners, and (5) others. Under agri— culture as an industry come the various farm enterprises, agricultural services, experimental and university farms. Although the labor force in agriculture as an industry includes people who are not immediately concerned with commercial farming, these data were nevertheless used because they are available for a greater number of years for Canada as a whole, and also are published for the provinces. Consideration of provincial data is relevant if the productivity analysis is to be extended to the regional level. The data on use of labor by industry have less serious short- comings than at first appear. Actually the difference between the occupational and.the industrial groupings is small (approximately 0.03 per cent in the 1951 census), and an error has little effect on the 4.4 A‘A____ 8 Canada, Department of Trade and Commerce, D.B.S., Ottawa, Canadian ‘Lgbouthorce Estimates, l931-l959, Ref. Paper No. 23, p. 2. 9 Canada Department of Trade and Commerce, D.B.S. , Ottawa, Ninth Census of Canada, 1951, Vol. X (General Review), p. 240. 5h index numbers as long as it isapproximately the same for eachjyenr. The labor force estimates are also broken down into (1) persons without Jobs and seeking work, and (2) persons with Jobs. It is the latter category that provided the estimates of the labor input for this study. Because the census data pertain to the beginning of June all annual estimates of the Canadian labor force are published as of this period. The procedure may seem to impose shortcomings for an industry in which employment is determined to such a large extent by seasonal weather conditions. Yet during the period for which monthly labor force data are available the changes in the June estimates follow reasonably closely the changes in the annual averages (see Table 3). Table 3.— June Estimates as a Percentage of the Annual Average of the Agricultural Labor Force (Persons with.Jobs), Canada, l953~l959. AAA‘ AJAAA‘A 4 __‘_‘ A ##4#AAA‘A Period A m i {953: 1954: 1955; i256: 1357: 1958: 1259 - per cent - June 106 103 107 104 104 104 106 A 4.. AA 4 A; A 4.44 A_4 ‘4-4 ‘44.. _._4 SOURCE: Canada, Department of Trade and Commerce, D.B.S., Ottawa, The Labour Force, November l945-July 1958, Ref. Paper'No. 58, rev. ed., 1958, pp. 58-59; The Labour Force (monthly). Service of Providing Capital (Interest Charges) The annual input of this service in constant dollars was estimated by (1) dividing the current value of each of the three investment inputs by the most appropriate price index to get these investments at base period prices, and (2) multiplying the investments at base period prices 99 by the average sate of interest on farm mortgages of the base period. The inclusion of services of providing capital, particularly capital fully owned by the farm operator, in the total input measure may need some elaboration. The question of which inputs to include for short-run comparisons (and how to quantify the inputs most appropriately) has not been completeLy settled by researchers in the field of productivity analysis.10 Some authors have suggested, however, that for annual come parisons inputs that do not affect changes in output over such a short period should be excluded from the denominator of the productivity ratio. Interest on the farm operators' own capital is a case in point. The interest charge on all capital invested in agriculture has nevertheless been included, because (1) annual interest on investment has remained relatively stable throughout the years l927 to 1957 (see Table 19), and as long as the over-estimation of total input would be about the same for each year its effect would be largely eliminated in the ratio, and (2) the item has been customarily included.and it will be useful to make the productivity index for Canadian agriculture comparable to those constructed for agriculture in other countries. Insofar as farm real estate is rented, the service for the use of this capital item is likely to be accounted for in the rent. Instead of treating all farms as if they were owner-Operated, the above des- cribed procedure could be restricted to that value of real estate which was actually owned by farm operators, and rent could be included as an 10. Cf. Hathaway, D. E., "Agriculture in an Unstable Economy Revisited", Journal of Farm Economics, Vol. Al, No. 3, Aug. 1959, p. 495; Griliches, 2., "Measuring Inputs in Agriculture: A Critical Survey", ibid., Vol. 42, No. 5, Dec. 1960, pp. i411—27. 56 additional innut. This alternative procedure would also conveniently take care of depreciation and taxes on rented real estate. 0r, since "... rented rates are likely to more accurately reflect the value of alternative uses of land for any particular year than a return based on a percentage of land value or price" 11 all farms could also be treated as if they were rented. Whatever procedure is followed one needS'to know the proportions in which farm real estate is operated by the owners and by tenants. First, if all real estate is assumed to be owner—operated, this pro- portion is required to adjust the charges for depreciation and taxes (both reported fer owner—operated real estate only) to include all farms. Second, if all farms were treated as if they were rented by the operators, the proportion must be known so that the rent can be extended to include all farms. And third, if rented and owner-operb ated real estate were treated separately, the proportion must be known so that an interest charge can be levied against the value of real estate owned by the operators. The proportion in which the two types of farm tenure occur is known for the census years, and estimates for the intergcensus years can be determined by interpolation. The validity of this procedure is affected somewhat by the fact that the proportion of farm ownership first declined and later increased during the 1921—1956 period. it is 11 Johnson, D. Gale, "Allocation of Agricultural income", Journal of Farm Economics, Vol. 30, No. 4, Nov. 1948, p. 730. assumed, however, that 1940 can be used as a breaking point between the‘years of decline and increase. With regard to the first and second methods there is also the assumption that owned and rented real estate belong to the same statis- tical population. This assumption is doubtful. If the better farms are operated by the owner, extending taxes and depreciation to include the rented farms would overestimate these inputs, and extending the published gross farm rent estimates to include the owner-operated farms would underestimate the total real estate input. The error of over- estimation is likely to be less than the error of underestimation because the larger proportion of farm real estate has been operated by owners. Neither error arises with the third approach in which owner and tenant-operated farms are treated separately. As it happens, the gross farm rent reported by the Dominion Bureau of Statistics is a synthesized estimate based on "... taxes, return on investment, repairs and depreciation on buildings" which "... were cal- culated from Census of Agriculture data projected annually according to official estimates of the values per acre of farm land and the value of 12 field crop production". in these circumstances it is doubtful whether the third approach offers an improvement over the first. The first approach was therefore followed which also eliminated the need for a price index of rent which is not available. 12 Canada, Department of Trade and Commerce, D. b. 8., Ottawa, Handbook of Agricultural Statistics, Part ll (Farm income, 192b~57), hef. Paper No. 25, rev. ed., l958, p. 18. S8 Supplementary Real Estate inputs The annual estimates of building repairs, depreciation and taxe513 published by the Dominion Bureau of Statistics are for owned buildings and land only. To get estimates of these items for all farms the figures of the Bureau were multiplied by the ratio of all farm land to that operated by owners (see Table 4). Possible biases introduced by this procedure have been discussed in the preceding section. Table 4.— Percentage of Farm.Land Operated by Owner, Canada, 1926—1957 v: Per :: : Ber .: : Per :° : P r :: Year ‘3fi9ent :: Year ‘5 pent_ :: Year:g: cept :. _Xear; :cent :: 1921 '* 85.4 1931 ‘* 77.0 1941 ‘* 70.3 1951'* 74.5 - — 1932 76.3 1942 70.7 1952 74.4 - - 1933 75.7 1943 71.1 1953 74.3 - - 1934 75.0 1944 7l.b 1954 74.3 - — 1935 74.3 1945 72.0 1955 74.2 1926 81.2 1936 73.7 l94b 72.4 1956'* 74.1 1927 80.4 1937 73.0 1947 72.8 1957 74.0 1928 79.5 1938 72.3 1948 73.2 1929 78.7 1939 71.6 1949 73.7 1930 77.8 1940 71.0 1950 74.1 SOURCE: Canada, Department of Trade and Commerce, D.B.S. Ottawa; census years (*): ‘gepsus of Canada, 1958, Vol. lI (Agriculturex Canada, table 1; other years: interpolated (1957 extra— polated). Repairs and.Depreciatigg,- The yearly totals of the cost esti- mates of building repairs and depreciation pertaining to all farms were divided by the price index numbers of building materials used by farmers, to obtain estimates of these inputs at base period prices. 13 Insofar as taxes are unrelated to short-run output it can be argued that they should be excluded from the total input measure. Because of the practical difficulty of separating the relevant input part of taxes and by reasons of its relatively minor importance, and also for comparability, all real estate taxes were included. 59 Taxes.- The yearly taxes pertaining to all farms were divided by the index numbers of property taxes to get estimates of the weighted annual tax payments. Supplementary Machinery inputs Repairs and Depreciation.- The yearly total costs of machinery repairs and depreciation were divided by the price index.numbers of machinery used by farmers to get estimates of these costs at base period prices. Q§hg§,- The cost of fuel, lubricants, tires, tubes, labor for repairs and insurance were totalled for tractors, trucks, combines and automobiles (only in the amount incurred by farm business). For each.year this total was divided by the price index number of gasoline, oil and grease to get estimates of these costs at base period prices. Other Inputs Feed.and;§eed.- The feed and seed that are home—produced and the inter—farm transfers are not included in the sales figures of farm products published by the Dominion Bureau of Statistics. This portion of these items can therefore be ignored on the input side also. Only the feed.and seed which were bought beyond the inter-farm transfers and thus either became recorded as a sale on the output side or had been imported from.outside the industry, need be entered as an input. Considering that seed is only a small portion of the total of feed and seed going through commercial channels, the annual estimates were divided by the price index numbers of feed to get estimates of this combination of inputs at base period prices. Fertilizer.— The fertilizer costs were divided by the price index numbers of fertilizer used by farmers to get estimates of the fertilizer input at base period prices. Electric Bower.- The annual costs of this input were not recorded until 1941 and its price index did not become available until 1949. Since this input would be excluded from the entire aggregate quantity index as long as price index numbers were missing for the weight period employed, the index was extended with unpublished estimates till 1941 and it was assumed that no price changes took place between 1935 and 1941. Although the price index numbers for the 1935-49 period are decidedly rough, it was felt that the resulting error would be less than the errors resulting from the deletion of electricity from the aggregate input indexes based on the 1935-39, 1940-44 and 1945-49 weight periods. The annual electricity costs were divided by the price index numbers of electricity to get estimates of the electricity input at base period prices. Miscellaneous.- The annual estimates of the categories "Fruit and Vegetable Supplies" (pesticides, containers and nursery stock) and "Miscellaneous" (veterinary expenses, binder twine, irrigation charges, fence repairs, rope, salt, hardware, artificial insemination charges, purebred livestock registration fees and livestock purchases) were added and the totals divided by the price index.numbers of hardware used by farmers to get estimates of this mixed category at base period prices. 61 Farm Outputs Farm price index numbers, the appropriate deflators for the values of farm products, are available for most farm products, but only since 1935. For the years 1926 to 1935 wholesale price index numbers of "field products" and "animal products" are published. For the purpose of obtaining continuous farm output index numbers for the years 1926 to 1957, two series of aggregate output values at constant prices were determined: one for the years 1926 to 1957, using wholesale price indexes; and another for the years 1935 to 1957, using farm price indexes wherever possible. One may wonder to what extent the quantity index numbers for the years 1926 to 1934 (i.e. the one based on wholesale prices) would differ from quantity index numbers based on farm prices, had it been possible to determine them for those years. The comparability would, of course, depend on the manner in which both the wholesale prices and farm.prices of agricultural products change. lf they change in the same proportion from year to year their index numbers (using the same base period) would be equal, and it would be immaterial whether the wholesale price index or the farm price index were used. Farm prices arelnmmonly'more subject to changes in the market conditions than wholesale prices, however, and.particularly for the 1926—1935 period, during which a serious economic depression occurred, one would expect the two price indexes to deviate. A comparison with figures for the United States may serve as an illustration. Table 5 shows that for the years 1927 to 1930 the relationship 62 between farm.and wholesale prices of agricultural products remained about constant. in 1931 prices dropped more on the farm than on the ‘wholesale level. Both indexes changed in the same proportion between 1931 and 1932, but from then on farm prices climbed faster. By 1936 and 1937 the relationship prevailing in 1930 was reached again. Table 5.- indexes (1910-1914,= 100) of Prices Received by Farmers and Wholesale Prices of Farm Products; and Prices Received by Farmers as a Percentage of Whole— sale Prices of Farm Products, U.S.A., 1926-1939. Prices Received :Wholesale PriceszPrices Receivedas : Year 3 by Farmers :of Farm Productsza Percentage of : v_ : (a) : (b) :Wholesale Prices : 1926 145 140 103.6 1927 140 139 100.7 1928 148 148' 100.0 1929 148 147 100.7 1930 125 124 100.8 1931 87 91 95.6 1932 65 68 95.6 1933 70 72 97.2 1934 90 92 97.8 1935 109 111 98.2 1936 114 113 100.9 1937 122 121 100.8 1938 97 96 101.0 1939 95 92 103.3 .- SOURCES: United States Department of Agriculture, Washington, Govt. Printing Office: (a) .ggricultural Statistics, 1954, p. 428; (b) ‘éggicultural Statistics, 1952, p. 683. These discrepancies between the changes in farm.and wholesale prices of agricultural products appear moderate, which may be ascribed to price stabilizing policies. in Canada, where such policies were notably lacking and the prices of some major agricultural products 63 there depended so much on conditions in foreign markets, the discrepan- cies were probably much more pronounced. But without more information concerning the movements of farm and wholesale prices in Canada, there is no basis for adJusting the quantity index numbers for the years 1926 to 1934.(based on wholesale prices) to bring them in line with the quantity index numbers based on farm prices. The two indexes in this study were simply linked to provide a continuous series from.1926 to 1957. it should be noted that in this study the intermediate products which entered an an an .n an ~u _n on .. .9 x. e. a. .q n. - .v a. .n .n an .n «a .n an fin .m on .~ s~ a” e~a_ .8 ../.... hmpww. . ....................... . on 8— .2. ? ,4 N5 1 I!!! . x. . a. .. If It. .... 9.0....” xx" Run. as .. \ / > m m. . . .. .. . i 8— 2 a . . .. 7 \ / \ / i u \x e ”WW .... .. / \ .. .. . x .e. ...u? \.. \ ../ .. / \ . w \ . ev— w ,..__ .... w... x... .... \ . v .. ...... ......u ......- ..:.3 ......o .3 2:. a ......» I . .....xx/ \..... \ < .. , \ ....3 ....a ... ...» s ...... g I. x n— cl I! a s o c w l o o I .... , ...... . .. I... . ...} 18...: i fie...» .\ ./ . ..... ...... .. < 11...: 3.8:. :1. z...- 23 ...!!!n ”Ml“... \ . \ 3..., O‘omxcigi‘u ............. i 8— . . / . 3333525131§iiifie ....... . .. \ . \ 3...: 8.3.: 33 1.3. ...-.20 R. / / \ 1:000; / \ ../.. ooze:— /\ . 8. $2.83 £225.: 52.... 5.23 A8 23 .2323.— GV £3.82 22 .2732 $.25— .mn.m8— ”mesa.— Euazv Ema; 2.32.8 8 .5 8mm: 9.53:2 .3528 E 238... 32355... ”52:2: 35... 2.5.5 .33 e :25 neqmnN xepuI 73 values over the last l0 years of the series include the index numbers based on the Paasche and tne l950—54 weight period formulas. The high limit marks tne essential difference between the patterns of the two sets of index numbers, and this will greatly affect the range of productivity ratios. For the outputs the chain index gives the highest values in the series, and not the 1935-39 constant weight period index as with the inputs. it is only since 1947 that the latter gives the highest value of the constant weight indexes. The index based on 1950-54 weights is the lowest of the four. Although in some years during the l950's the values of the constant weight indexes are as much as 10 points apart, they correSpond through- out the time series much more closeLy than is the case with the in— puts. V. lmDEXES 0F OVEHPALL PRUDUCTIVLIY, REAL NET shroud rm FAHM, AND ES‘l'lILATES OF uEAL HEAJJZED AND TUTAL GROSS RETUHNS indexes of Overball Productivity The ratio of the index numbers of total output to total input gives —- within the limitations of the unavoidable assumptions dis- cussed in chapter 11 - an index which indicates the changes in over- all productive capacity of inputs (including weather and other ' extraneous but relevant factors). For each productivity index the output and input indexes based on the same index number formula were used, because each formula con- veys its own particular meaning to the index numbers. The constant weight formulas aggregate outputs in terms of consumers' satisfaction of the weight period and inputs in terms of productive capacity of the weight period. The ratio of the two indexes for a given.year thus indicates the difference in. over-all productivity, had tastes of the weight period prevailed in the given year. in other words, the input- output relationship of the weight period is extended to other;years in the series. Unnecessary confusion would arise if one were to use an input-output relationship whose inputs referred to techniques of one period, but whose outputs referred to consumers' satisfaction of another period. 7h The incongruity of mixing fixed weight, Paasche, and chain output and input indexes to obtain productivity indexes is even more pro- nounced. Each of these indexes has its own limitations and usefhlness. Ratios of which one component, for instance, were chain index numbers (which reflect.year to’year changes) and the other raasche index numbers (which reflect changes between given and base year), would have little meaning. The productivity indexes based on the six sets of output and in- put indexes determined in the previous chapter are presented in Table 6, and are graphically depicted in Chart 5. The discrepancies between the output and between the input indexes are not offset in the produc- tivity ratios, because the discrepancies between the indexes and even their orderhng in each set are different. The productivity index based on the chain index formula, which since 1937 gave the highest output index numbers and intermediate input index values (the values were in the bottom half of the range during the last 10;years), forms the high limit for the years 1937 to 1957. From 1941 on the productivity index based on the 1935-39 weight period provides the low limit, which is partly explained by (1) ‘ the upward divergence and marked.departure of its input index from the other input indexes determined since that date, and (2) the closer concurrence of its output index with other fixed weight output indexes and the Paasche Output index. The spread between the productivity indexes is relatively small ‘until 1939, but the difference of 10 points in that year gradually 76 Table 6.-- indexes of Over—all Productivity (1926 = 100), Based _‘A;_ --_.‘-‘A on (1) Constant Weight (Weight Periods: 1935-39, 1940-44, 1945-49, and 1950-54) , (2) Paasche and (3) Chain Output and Input Indexes, Canadian Agriculture, 1926—1957 ACppstant; eight: Weight Period .4 A A AA__‘ ....A A...A_‘_‘_‘_.A_4 A.._4_4_4 ‘4‘4 0 O O O O O Year 1935-39 g 1940—44 9945-49 § 1950.51. Paasche : 03313 1926 100.0 100.0 100.0 100.0 100.0 100.0 1927 103.7 103.1 103.3 102.8 104.8 104.7 1928 105.6 104.6 105.1 103.8 106.6 107.6 1929 83.8 85.4 85.1 86.7 84.4 85.3 1930 33.3 39.1. 90.5 90.3 , 33.3 39.3 1931 34.4 37.3 37.9 90.3 37.3 37.3 1932 90.3 97.3 97.3 97.9 95.9 93.0 1933 86.0 88.1 87.6 89.3 85.9 87.1 1931. 33.0 39.0 33.3 39.4 37.9 33.3 1935 88.1 88.9 88.5 89.2 88.3 89.1 1936 83.0 85.2 83.4 86.2 83.2 84.6 1937 80.4 82.8 80.3 83.4 77.9 82.2 1938 91.0 91.0 90.4 90.8 91.9 97.3 1939 111.8 109.0 11.1.0 109.4 108.6 119.0 1940 110.2 109.3 111.0 111.0 108.6 118.8 1941 100 . 3 104. 104. 1 107 . 5 104. 3 113 . 1 1942 147.5 147.3 155.3 149.8 143.3 154.2 1943 100.5 109.1 108.9 112.7 110.9 118.1 1944 120.2 126.2 129.4 129.4 128.6 136.4 1945 96.6 103.8 103.9 105.8 103.8 110.1 1946 95.5 100.2 101.6 101.6 102.5 108.4 1947 98 .2 104.1 106.0 105.1 107.1 114.0 1948 106.8 110.3 114.7 111.3 113.2 124.0 1949 104.0 109.2 113.8 111.5 112.1 123.2 1950 101.5 108.9 114.8 111.7 111.2 124.0 1951 122.3 123.4 133.9 131.3 130.3 11.3.5 1952 132.6 139.8 152.7 145.3 143.1 164.0 1953 129.5 136.8 149.7 142.0 141.9 161.0 1954 103.4 114.6 120.5 119.2 117.6 134.9 1955 119.3 130.1 139.9 135.9 131.7 153.1 1956 132.5 143.8 158.0 150.6 148.2 169.6 1957 119.8 134.2 143.0 140.9 139.1 159.1 WAAA 77 .«togpsguuto Ema Eta 0.32.9 K... ...u use.» =3sans.macssssxofi..tnlnan.xnufinaln 11533551523133... I lllllleoetddgilrifiitl . Hiest_3!3.t.laeo}!]£r§le I £033.82 [3533;613:5-“3 .......... §I€.a_§§3.3§6}§5i3 .1...- 352. 235332.338}... {2:91; ........ tie-n.8,. 9...: (81.. 3.3136353£:§X£ ween... 00— u 0N0— Sm—.-o~m—.8xo_.=_ :3... _.._< ....E... 5...... .8 E2 .232... AS .Gmémm— _.._< .3732 $.32 .mm-mnm_ “3...... £523 2...... 222.8 E .... =33 .2._.._.u_.u< 5.5.8 .... 83...: 5.3.2.2.. =12... z... .5... . a: .3— .3— so IJOqIHIN IOPIH 78 increases to 39.3 points in 1957. The values based on the Paasche and 1940-44, 1945-49, and 1950-54 constant weight index numbers more or less cluster in between the outer limits over the latter half of the series. ‘Iet among these indexes also, the spread broadens toward the end of the series. it should be noted that since 1946 the productivity index based on 1945,49 weighting has higher values than any of the indexes based on the other fixed weights used. This phenomenon is empirical evidence for the fallacy of Ruttan's contention that ntechnological change can be bracketed by using both beginning-period and endpperiod weights." 1 In Spite of the erratic pattern of the productivity indexes, which largely reflect the effects of weather fluctuations on the output in- dexes, each shows an upward long-term trend. In some respects the changes in over-all productivity for Canadian agriculture are not unlike those for United States agriculture, but Cochrane's contention that productivity progresses in “spurts" is hardly supported.2 It 13 true that due to un- favourable weather and depressed economic conditions productivity changed little during the 1930's and that it rose sharply between 1937 and 1939, but for the last 20 years an upward trend is discernable. The interrup- tion during the;years 1945 to 1949 is explained by weather conditions adverse to growth and a pronounced increase in total inputs at the end of the war which slowly tapered off over the following;years. 1 Button, V. W., "Agricultural and.Nonagricultura1 Growth in Output per Unit of Input", Journal of germ Economics, Vol. 39, No. 5, Dec. 1957, p. 1568. 2 Cochrane, W. W., "Conceptualizing the Supply Relation in Agricul- ture". Journal of Farm Economics, Vol. 37, No. 5, Dec. 1955, p. 1169. 79 indexes of Real Net Return Per Farm in computing an index reflecting changes in income, the purpose for which it will be used must be kept in mind. it will be recalled that this study is an attempt to test the pepular thesis that in agri— culture rising productivity is detrimental to the welfare of farmers. if income is to serve in this context as an indicator of welfare it must be (1) derived from the productive effort only, i.e. excluding subsidies or transfer payments, (2) net of expenses, (3) in dollars of equal purchasing power, and (4) on a per capita or per farm basis. Whether the value of the changes in inventories should be included in the net income for each.year or not is less obvious. it may be argued that the presence of unsold output does not add any money in the farmer's pocket, and hence does not add to the farmer's welfare. This reasoning does not appear valid as far as livestock is concerned. The farmer might have sold the addition to the livestock inventory and if he does not do so it means he has invested some of his income in his own farm. Also, if the sales exceed the amount produced during the year the difference should not be considered as accruing from that;year's production and must be deducted from the cash.income. The case is some- what different for the additions to grain surpluses, because they usually arise from.lack of acceptable markets. But even here, sur- pluses are sold soon or later and the revenue obtained.can only be accredited to the year in which the surplus was formed. Since government supplementary payments under the Prairie Farm Assistance Act, Prairie Farm Income Plan, and the wheat acreage 80 reduction payments are considered transfer payments,3 they were ex? cluded from the cash income.4 The resulting value was adjusted for changes in the value of farm inventories, and operating and depreci- ation charges were deducted. Elimination of changes in the general purchasing power of the dollar was accomplished by inflating (or deflating) the annual net values by an index of farm family living costs; The deflated values were then augmented by the incomes in kind, deflated by the wholesale price index of farm.products,5 to get annual net returns in dollars of 6 constant purchasing power. Fer the purpose of obtaining a matching ‘44.— 3 For a description of these government programs, see: Shefrin, F., and.mardorie.h. Cameron, Aggicultural Asgigtance,jflgg_and.goat- War, Department of Agriculture, Ottawa, 1949, pp. 17-20. 4 These payments are treated as subsidies, and.not attributable to the production process, in national accounting (Canada, Depart— ment of Trade and Commerce, D.B.S., National_nccggpts income and gapenditure, 1226-1256, p. 116). This viewpoint, however, does not prevail in all government circles. When acreage payments to 'western grain producers were announced in 1960 the Prime minister said that the payments (between $41 and $42 million) were “... not a hand—out in any sense of the word.", but "... an amount roughly equal to the average of what the western farmer would get if a two— price system for wheat were put into effect." (House of Commons Debgges, Vol. 104, so. 144, Hug. 8, 1960, Queen's Printer, uttawa, P. 43). 5 income in kind was deflated separately by the wholesale price index of farm.products, because its cash value is determined by farm prices and the wholesale price index of farm products is the only series that covers the years 1926 to 1957. A similar pro- cedure was followed in the Repgrt of the Rgzal Commission on Price spreagg_of Food groducts, Vol. 11, Queen's Printer, Ottawa, 1959, P0 140 6 The term "net return" is used in this study to distinguish it from."net income" as defined by D.B.S., which includes govern— ment supplementary payments. set of net return indexes the index number formulas applied were the same as those used in computing total output and input indexes. Data on number of farms are available for census years. Some adjustments needed to be made, however, in view of the changes in the census definition which occurred twice during thelyears from 1926 to 1957. in 1931 and 1941 (and also in 1921) tracts of land one acre or more in size producing $50 worth of agricultural products were counted as farms. For the census of 1951 and 1956, however, a farm had to be three acres or more in size, or if from one to three acres the value of its agricultural production had to be $250 or more. it was estimated that of the decline in farms between 1941 and 1951 about 55,000 resulted from the change in definition.7 To improve comparap bility the census figures for 1921, 1931 and 1941 were therefore re- duced by this amount. Farms in Newfoundland, Yukon and northwest Territories were not included, because these areas were also excluded from the income estimates. The figures for the inter-census years were obtained by interpolation and extrapolation. Since 1946 the labor force surveys of the Dominion Bureau of Statistics provide estimates of “own account workers" and."emp1oyers" in agriculture. ”he totals of the annual averages of these two categories, which can be assumed to consist of farm operators, decline W”-M~ 7 Canada, Department of Trade and Commerce, D. B. 8., Ninth Census of Canagganlyl , Vol. X (General Review), 0ttewa., 1956, p. 455. 82 at a faster rate than the number of farms based on census data. Only for the years 1946 to 1949 are the labor force figures higher than the figures based on the census; in 1956 the former is almost 60,000 less. The discrepancy must be ascribed, of course, to the difference in methods and criteria used by the census and the survey. The census figures include small holdings whose operators remain outside the agri- cultural 1abor force, because most of the year they work in industries other than agriculture. The chances are much smaller that the labor force survey would count a farm.operator whose farm.was not included in the census. As long as the proportion of "farms" from which the operator derives only a minor part of his total net income is about the same for all census years, the matter of definition is no cause for concern. In this study the changes in net return per farm are required, and not the actual net returns per fanm. The computation of the index of real net return per farm.based on 1935-39 dollars is shown in Table 7. Since 1946 the index of real net return per*farm'operator has also been determined for comparison. Indexes of real net.return per farm.in terms of 1940-44, 1945-49, and 1950-54 dollars, and using the Paasche and chain index formulas, are set forth in.Tab1e 8. All six indexes of real net return per farm are depicted graphically in Chart 6. 83 Table 7.- Computation of indexes of Net Return from Agricultural Production, rer Farm (1926—1957) and For Farm Operator (1946-1957), based on 1935-39 D011ars, Canada Md.‘o --wd- ‘ Total net index of Wholesale ? : Cash income Farm Family : Price index - minus : Liv1ng Costs : income in : of Farm Year :Supplementary :(1935—39==100): Kind : firoducts : : Payments : : :(l935—39==100) : = lel_ a 1. (ID :__,16a1 : 1 (£91 a 1000 ' 000 1926 378484 121.1 239574 144.4 1927 391510 119.8 240410 138.6 1928 400398 118.5 241128 136.3 1929 171029 117.3 246069 140.8 1930 134987 113.7 226074 119.5 1931 — 46451 103.9 182360 78.9 1932 - 19135 97.8 149327 65.5 1933 - 44686 95.8 153633 69.3 1934 42311 97.9 160656 83.5 1935 71527 97.9 180109 89.2 1936 70140 98.3 174397 97.9 1937 129801 102.9 177223 117.4 1938 189832 101.9 174369 102.9 1939 252126 99.5 176992 92.6 1940 284490 108.5 175715 96.1 1941 267388 114.0 191871 106.6 1942 750380 119.0 223767 127.1 1943 513266 121.6 243174 145.4 1944 877482 122.8 247687 155.3 1945 602544 123.2 259191 166.4 1946 791052 127.1 269978 179.5 1947 833679 - 138.3 285037 192.2 1943 1217425 162.8 315907 232.1 1949 1098980 173.2 299179 228.7 1950 910031 177.6 295920 236.7 1951 1592067 198.6 334567 268.6 1952 1568420 210.0 345888 250.2 1953 1308066 203.6 334744 221.6 1954 698276 204.5 324569 213.6 1955 928191 203.8 323435 212.0 1956 1122929 204.5 329271 214.2 1957 724483 212.7 327435 213.6 - continued /90 Table 7.- Continued 4-w‘ ‘ Total net Total net . : : Cash income : income : income minus: : number : . minus :in Kind :Supplementary: number : of farm : Year :Supplementary' : in : Payments :of farms*:0perators : : Payments in :1935-39 : in 1935-39 : : : 1 :1935739 Dollars;Dollars : Dollars :‘_Ld)‘ 1‘ (e) : '000 '000 '000 '000 1921 656090 1926 312538 165910 478448 664857 1927 326803 173456 500259 666610 1923 337889 170910 514799 068363 1929 145805 174765 320570 670116 1930 118722 189183 307905 671870 1931 - 44707 231128 186421 673623 1932 - 19565 227980 208415 674044 1933 - 46645 221693 175048 674465 1934 43218 192402 235620 674886 1935 73061 186221 259282 675307 1936 71353 178649 250002 675728 1937 126143 150957 277100 676143 1938 186292 _ 169455 355747 676569 1939 253393 191.136 444529 676990 1940 262203 182846 445049 677411 1941 234551 179992 414543 677832 1942 630571 176056 806627 671995 1943 429206 107245 593451 666158 1944 714562 159439 874051 000321 1945 489078 155764 644842 054484 1946 622386 150406 772792 643647 679 1947 602805 148302 751107 642809 664 1948 747804, 136108 2533912 636972 669 1949 634515 130817 765332 631135 663 1950 512405 125019 637424 625298 614 1951 801645 124560 926205 619461 597 1952 746867 138245 335112 610090 543 1953 642463 151058 793526 600719 552 1954 341455 151952 493407 591343 572 1955 455442 154485 609927 581977 542 1956 549110 153721 702831 572606 513 1957 340612 153294 493906 563235 497 - continued /91 85 Table 7.- Continued : Net Return (i.e. Total Rhif: index of net Return (1.6. Income minus Supplementary : Total Net income minus Payments) in 1935-39 Supplementary Payments) :_*_ Dollarspv 1 : gg‘in 1335:29.P9ll§?51,11_ ; Year : : Ber Farm : : Ber Farm : -1, : Per Farm : Operator :_~rer farm :ggOQerator “_; 1926 720 100.0 1927 750 104.2 1928 770 106.9 1929 478 66.4 1930 458 63.6 1931 277 38.5 1932 309 42.9 1933 260 36.1 1934 349 48.5 1935 384 53.3 1936 370 51.4 1937 410 56.9 1938 526 73.1 1939 657 91.2 1940 657 91.2 1941 612 85.0 1942 1200 166.7 1943 891 123. 1944 1324 183.9 1945 985 136.8 1946 1191 1138 165.4 165.4 1947 1168 1131 162.2 164.4 1948 1388 1321 192.8 192.0 1949 1213 1154 168.5 167.7 1950 1019 1038 141.5 150.9 1951 1495 1551 207.6 225.4 1952 1451 1615 201.5 234.7 1953 1321 1438 183.5 209.0 1954 834 863 115.8 125.4 1955 1048 1125 145.6 163.5 1956 1227 1370 170.4 199.1 1957 877 994 121.8 144.5 - continued 92 86 Table 7.-— Continued. SOURCES: Canada, Department of Trade and Commerce, D.v.S., Ottawa; (a) 1926-1957: handbook of Agricultural Statistics, Part 4 II (Farm Income, 1926-57), hef. Paper No. 25, rev. ed., 19589 P° 26; (6) 1926—1952: Briggs and Price indexes, 1949-1952, p. 93, 1953—1957: .2E3Ce Index;Numbers offipommodities and_ Services Used by Farmers (3 times a year), Vol. 11, No. l, and Vol. 14, No. 1; (c) 1926-1951: Ibid., p. 104, 1952-1957: Prices and Price indexes, January 1960; (d) 1951: Ninth Census of Canada, 1951, Vol. VI (Agricul- ture), Part 1, p. 15, other census years: Census of Canada, 1256, V61. 11 (Agriculture), pp. 1 and 8 (see text for revisions), intercensus years: interpolated (1957 extrapolated); (e) 1946-1957: annual average of "Own account workers“ and "Employers" , The Labour Force4fi1§ovember 1945-July 1258, Ref. Paper No. 58, rev. ed., 1958, pp. 58 and 59. * Excludes data for Newfoundland, Yukon and Northwest Territories. From 1934 on the chain index diverges upward from the other five indexes. The largest discrepancy is in 1952 when the chain index number lies 44.6 points above the index number based on 1935—39 con- stant weights, which in that year is the second highest. The indexes based on the constant weight and Paasche formulas remain on the whole relatively close throughout the time series. Com- parison of the index numbers based on constant weights indicates that until 1941 the lowest index numbers resulted from the 1935-39 and the highest from the 1945-49 constant weight formulas. After 1941 the order is reversed, constant 1935-39 prices give the highest and constant 1945-49 prices give the lowest of the four sets of constant Table 8.- Indexes of Real Net neturn Per Farm, Based on (1) Constant Weight (Weight Periods: 1940-44, 1945-49, and 1950—54) , (2) Paasche and (3) Chain index Formulas, Canada, 1926-1957 ‘“3““*“‘““ ‘*-~‘¢‘ ‘4“..1.‘ Constsetgflsi ht . “-6 t‘- . O O A 4....4...._A.._!_“_4444_‘#‘-AAA“_.,mr.-.-m Year 3 1940—44 ; 1945-49 : 1950-54 ; Paasche : Chain 1926 100.0 100.0 100.0 100.0 100.0 1927 104.3 104.2 104.3 104.3 104.2 1928 107.0 106.9 107.0 107.0 106.9 1929 67.5 70.8 68.9 68.9 68.3 1930 164.9 69.4 66.8 64.5 66.3 1931 41.0 49.9 44.8 29.4. 41.4 1932 45.3 53.7 48.9 31.0 48.6 1933 38.5 47.1 42.2 25.9 37.3 1934 50.2 56.1 52.7 45.0 59.6 1935 54.3 60.0 57.0 51.5 66.5 1936 52.8 57.7 54.9 51.3 64.0 1937 57.8 60.7 59.1 58.5 70.8 1938 73.3 76.2 74.8 73.2 90.0 1939 91.8 93.7 92.7 90.7 112.4 1940 91.7 93.2 92.4 90.6 112.6 1941 85.5 87.5 86.3 84.5 104.6 1942 165.2 159.6 162.9 165.4. 208.2 1943 123.2 121.1 122.3 122.3 155.1 1944 182.9 174.9 179.5 176.6 _ 227.7 1945 135.9 132.0 134.3 132.4. 171.9 1946 16337 157.1 160.9 156.5 20437 1947 160.6 154.2 157.9 154.1 201.0 1948 190.1 180.3 185.9 179.0 235.0 1949 166.3 158.6 163.0 160.0 206.8 1950 140.1 134.5 137.7 135.3 175.2 1951 204.5 193.0 199.6 193.9 251.9 1952 198.8 188.7 194.5 194.7 246.1 1953 181.4 173.9 178.3 181.1 225.4 1954 115.6 114.4 115.1 115.8 143.8 1955 144.6 141.0 143.1 145.1 180.2 1956 168.9 163 . 2 166. 5 169. 5 210.8 1957 121.5 120.3 121.1 121.8 151.4 AA_‘+.~«“AA_¥AA _AA_‘_‘_‘A J .A“ 4#.- 88 «firs .mSSBEE 8 .Eua £9226 65968 .23 ... a B 3. an 3. an 1 Q 3 an 3 cc 3 3 9 3 9 .3982 .3553 5:22.35 2.85523. 9:331 Eu... 3.. 553. z: .62. s ”2%... 2a :28 :6... 520 3...: .83} .3 x: .o 32.x l 3...... .5 s: .o 3.} g a} 68.0 ...l...l .4... 188.. 1%,... 2.. .63: 83 12... .553 is... .- ex}... 2 . 9.: :6... 2...; .833 3.}... 3 .9218} 22:. .5850 - --- . 732:..." . «a: :3 22... .553 weaned OO—uono— $2-32 5.2.3 .8353“. $2.. 525 2: EE .2328 E 22 .2132 €733 .9733 H 32.5.. £93.: 2%; 222.8 2:: 88m ./ L—A 8p 8p 3— 3— 3— o- . 3N uoqumN xopug 89 weight index numbers. The annual changes of all six indexes are in the some direction. heal net return per farm dropped sharply from 1928 till it reached the lowest level in 1933. After 1933 the income situation improved, but it was not until 1942 that it passed the base year value. in spite of the annual fluctuations, a slight upward trend is dis- cernible between 1942 and 1953. over the last four years a decline in real net income per farm seems to have set in. Real Realized and Total Gross Returns The question of income adjustments for supplementary government payments and inventory changes which arose in the preceding section is even more relevant in the estimation of aggregate real gross returns. The latter are used to test the elasticity of demand; and it is, therefore, essential to get changes in gross returns based on production and market prices only. Supplementary government payments again must be deducted from the gross income. As far as the inventory changes are concerned the changes in their values were included in the estimates of real net return per farm partly because a decline in the inventory value could not be attri- buted to the productive services of the year in which the decline took place, and partly because an increase in the inventory value could be looked upon as a saving or an investment under the first hypothesis, where the income estimates served as indicators of welfare. The first reason is also valid for including the inventory 90 changes in the gross return estimates under the second hypothesis but the second reason only insofar as the savings or investments are voluntary. it is safe to assume that increases in grain inventories are involuntary in that the grain could not be:aold at acceptable prices. The extent to which increaes in the livestock inventory in- dicate poor current market conditions or good future market conditions is not so easy to establish. In view of this uncertainty two sets of gross return were determined: one in which the changes in inventory values are excluded, and another in which these-changes are included. The second hypothesis will, therefore, be extended to test the rela- tionship between total output and real realized gross return (i.e. no adjustments are made for changes in inventory values), as well as the relationship between total output and real total gross return (i.e. plus or’minus changes in inventory values). As in the estimation of real net returns per farm, cash income from the sale of farm products and current values of incomes in kind were deflated (or inflated) separately. The price indeX'used to axe press the income in kind in constant dollars was again the wholesale price index for farm products. But the index of farm family living costs would be inappropriate for calculating gross income estimates in constant dollars. A more suitable index is the composite price index of goods and services used by farmers in their business as well as in their households. The annual realized and total gross returns were determined on the basis of (1) 1935-39 dollars, (2) 1940-44 dollars, (3) 1945-49 91 Table 9.- COMputation of Realized and Total Gross heturns in 1935-39 Dollars, Canadian Agriculture, 1926—1957 --..‘44.+_11J O. O. O. .0 i0. ... OI dubash income from : Compositew—WECash income from Farm : Earp Proqugts“fl~‘_ index . rroducts in :No Adjust- : rius or : inclusive : 1935-39 Do‘II.].a_rs= : ment for minus : of Living :NO Adjust— : Elus or Year :inventory : inventory : Costs : ment for : minus : Changes : Changes :i935—39= 100 :inventory : inventory : La), ° A £9 Lb) “# : Changes : Changesw '000 '000 '000 '000 1926 961194 963326 126.3 758039 759721 1927 940399 1003405 126.7 742225 791953 1928 1064246 1040134 125.0 851397 832107 1929 931765 804062 123.7 753246 650010 1930 641925 725753 115.7 554318 627271 '1931 471913 452463 102.1 462207 443157 1932 409045 429404 95.1 430121 451529 1933 419643 386226 92.2 455144 418900 1934 503234 495930 90.5 521486 513917 1935 532583 536309 96.4 552472 556337 1936 587282 544760 98.2 598047 554745 1937 638456 627636 104.3 612134 601760 1938 649658 684705 101.8 638171 672598 1939 712076 765674 99.4 716374 770296 1940 735381 813034 107.5 684075 756311 1941 880849 828260 115.2 764626 718976 1942 1107615 1434368 126.6 874893 1133387 1943 1400243 1283463 134.7 1039527 952831 1944 1814596 1686213 137.9 1315878 1222780 1945 1664309 1425518 140.6 1184075 1013882 1946 1692543 1706045 145.0 1167271 1176583 1947 1936744 1885967 157.5 1229679 1197439 1943 2394673 2382055 133.7 1303578 1296709 1949 2412709 2314636 191.7 1258586 1207426 1950 2143786 2241731 197.3 1086562 1136204 1951 2782750 3074161 217.5 1279425 1413407 1952 2859143 3149220 229.8 1244188 1370418 1953 2786223 2870758 225.3 1236672 1274194 1954» 2375427 2277451 224.2 1059512 1015812 1955 2350198 2562051 224.5 1046859 1141225 1956 2663520 2883562 230.3 1156544 1252089 1957 2591861 2453191. 238.7 1085324 1027731 - continued /98 92 (a) 1926—1957: .I.—-- Handbook of Agricultgrglfi§t§tistics, Part 11 Table 9.— Continued : income in hind : Realized Gross : Total Gross Return a Year :in 1935-39 Dollars: neturn in : in 1935-39 : 4 ii : La 3 {1935-39 Dollars : holler; 1:1 '000 '000 1926 165910 923949 925631 1927 173456 915681 965409 1928 176910 1028307 1009017 1929 174765 928011 824775 1930 189183 744001 816454 1931 231128 693335 674285 1932 227980 653101 679509 1933 221693 676837 640593 1934. 192402 713888 706319 1935 186221 738693 742558 1936 178649 776696 733394 1937 150957 763091 752717 1933 169455 807626 842053 1939 191136 907510 961432 1940 182846 866921 939157 1941 179992 944618 898968 1942 176056 1050949 1309443 1943 167245 1206772 1120076 1944 159489 1475367 1382269 1945 155704 1339839 1169646 1946 150406 1317677 1326989 1947 148302 1377981 1345741 1943 136108 1439686 1432817 1949 130817 1389403 1338243 1950 125019 1211581 1261223 11951 124500 1403985 1537967 1952 138245 1382433 1503603 1953 151058 1387730 1425252 1954 151952 1211464 1167704 1955 ‘154485 1201344 1295710 1956 153721 1310265 1405810 1957 - 153294 1239118 1181025 SOURUhS: Canada, Department of Trade and Commerce, D.B.S., Ottawa (Farm Income, 1926—57), Ref. Paper No. 25, rev. ed., 1958. p- 26; - continued./99 93 Table 9 .- continued mpg: continued (b) 1926—1952: Prices and flice Indexes, 1942—1952, p. 93 1953—1957: Price index Numbers of Congnpdities and Services V7 v—vrfi—rv Used gm Farmers (three times a Wyear), Vol. 11, NO. 1,811di01. 11}, NO. 1; (c) 1926-1957: Table 7. dollars, and (4) 1950-54 dollars. Since the choice of weight period made little difference in the annual estimates, only the compu- tations based on 1935-39 dollars are shown (see Table 9). Vi. thTlNG 0F MYEUTHESES As will be remembered from Chapter I the following two hypotheses were to be tested for Canadian agriculture: (1) the relationship between annual percentage changes in over- all productivity and real net return per farm is negative or zero between 1926 and 1957, and (2) the relationship between annual percentage changes in aggre- gate output and real gross return is negative or zero between 1926 and 1957. It was also pointed out in Chapter I that the relationship between the index numbers of these two sets of variables is irrelevant for the _purpose of this study, and that instead the first differences or the per- centage changes of successive annual values must be related.to learn about possible causal connections between the two variables of each set. First Hypothesis The annual percentage changes in over-all productivity and real net return per farm.are given in Tables 10 and.1l. The changes based on 1935-39 weights are graphically depicted in Chart 7. The close correspondence of these changes already indicates lack of support for the first hypothesis advanced in this study. The percentage changes were plotted also in a productivity-return per farm diagram, and a simple linear regression equation of the per 9h {I [I III IQIIJ‘ ;sche Chain “...-on -- . s.——c.-»cn-~-~--* :Paasehe : :: L ‘- ...-M p-“mmm—w--ovm—wo O 42 w 0 9 :1C "ht 1 .1; per cent .2 t' ‘v‘. 01’ Constant Wei 94) H l 1940—44, 1945-49, and 1950—54), (2) Pa: and (3) Chain Quantity index numbers, Canadizn Agriculture, 1926~1957 =¥Ségzééai ’10 l‘ .9 )"J 1 1 Based on (1) Constant Height (Weight Periods: 19 :1935139 “able 10.— Annual Per Cent Changes in over—all Productivity, Year 38w]. £78 805 0070. 3410.30. 52 0.10.12 0.15IMOJ 51902 1 90.0.4481 “0.880. 910.10. oOmIW 1945 1947 1949 61982 e o o o . .ownim .- 82881 nmnhOannl 1 1.. 28431 26 mum ... CHANG/0.5 .maonzm.” 30.10.11?“ nw 8210. W. 1 laser 238.2% 1950 1951 1952 1953 1954 582 A A ‘~A‘A.——L ~~L O O O O ...“ :Rgggghg~_: Chain 0 O a 4%%% cent 38342 532810. 14 3 [~34nu.1 569me 14 59634 a» .omoma» 1. q; . 2520.12 % per v—v—v Constgnt Wei v" '— Unsed on (1) Constant Weight (Weight Periods: 1935-39, L940-44, 1945—49, and 1950—54), (2) Paasche, and (3) Chain index.wumbcr Formulas, Canada, 1926—1957 :193 - 9 34940-44-31945f59 Table 11.- Annual Per Cent Changes in Real wet Return for Farm, Year 532 14 WM“. . ... o0.0.8n/.2 l4 3 .... the absolute figures. * The per cent changes are not based on the index numbers but on 97 to .53 83:3 “Haggis...“ Ibfl.’ B on ma 3 an a pa 3 Oh ' h. 0' o 3 av av 3 8 I R a n 3 an an 3 a mu an E— n‘ J‘ d u d 4 1‘ J- : [1‘ d. 1 1‘ d d d. d 1 * * J 1 1 n u n d. 1! d I) .V.‘ ... M... ... .. .. ”v .. . .... ... o. ... ... W 7 a o . . .o . .. .. o .. .. .. . .. . .. . . .. : \ . . . .. o . a . . fl; 0 .. . . . . . o. . ... .. ...H... . IJ .. . .. .. .. . N .. .. . a. . o .. o. .o .- u s. a. .- . a .9 . . c g c . a . ... . n . .. u .. u . .. .r. .. e .. .. .. .. . .. .. Kilo m o C no .- o o. o . / /. .. .. . u .. .. .. .. .. H .. ,. .... . u ... .. . u. §§§_s§§u£§§l .. . 29:00 i: ... Elu— UL .685 32 ....... u .. 3.13.8.8: 63:132.. =15 . p 3 ocean; u 3.35 3:32 .5 :33 $2223..” 255 532. 32.22 £5.35: 5.23 .2938 52.3 s: ... ...: $.38 5: .... 3.2%.. .... ...: £525.... __.-_.s 5 sees as .... =22 -.. 55 3. on 8— woo 10d 98 cent changes in net return per farm on the per cent changes in over-all productivity was calculated (see Chart 8). The regression equations pertaining to the six index number formulas used in this study, to- gether with the associated standard errors of estimate and.correlation coefficients are given in Table 12. Table 12.- Linear Regression Equations of Annual Per Cent Changes in Real Net Return Per Farm and Over-all Productivity, Based on Selected Indexruumber Formulas, and Associ- ated Standard Errors of Estimate ( ) and Coefficients of Correlation (r), Canadian Agri ture, 1926—1957 4 #4 AA _‘ ##w .... _. Index Number Formula _ :;Hegression Equation * : Syx r Constant 1935-39 weights IO = 1.1.9 + 1.67 x 13.88% 0.88 Constant 1940-41. weights 2., = 0.11. + 2.27 x 9.13% 0.95 Constant 1945-1.9 weights IO = 0.0:: + 1.49 x 11.54% 0.89 Constant 1950-51. weights IO = 0.37 + 1.83 x 14.107. . 0.8o Paasche IO = 1.42 + 2.19 X . 17.55% 0.83 Chain 2,, = 0.79 + 1.90 x 17.59% 0.82 A. ___.‘_4A A 4 l4 4 _‘ " EC is the calculated annual per cent change in net return (minus supplementary payments) per farm; X is the annual per cant change in overball productivity. In all six cases the regression coefficients have positive values and the coefficients of correlation are well above the value required to be significantly different from zero at the one per cent level.1 On the basis of the data and methods used in this study the first hypo- thesis is not substantiated, and no evidence is provided for the belief ‘__‘A_‘.-_‘_‘M .- A._. 1 With 29 degrees of freedom the coefficient of correlation must be at least 0.456 to be significantly different from zero at the one per cent level (Cf. Snedecor, G. W., Statistical Methods, Iowa State College Press, Ames, 1959, p. 174). 99 Chart 8. - Relationship Between Annual Per Cent Changes in Ovet—ail Ptaductivity 0935-39 Weights) and Real Net Return Per Farm (1935-39 Dalian), Canadian Agticultute, 1926-1957 Annual Per Cent Change In Real Net 90 - Return Per Farm . 80 ~ 70 ,- 60 .J 50 - '40 - 30 ~ _ 20 x X . Annual Per Cent fix: "2 29 A39 410 Change In Over- + ..|..' l L L all Productivity + r- -l 0 - ~20 Positive Change in 'l' Productile F -30 Negative Change in X Productivity .--40' s. u. LOK acouomcs omsnou. can. or lanncuurune. OTTAWA 100 that in Canadian agriculture productivity and real net return per farm are inversely related. Instead, as far as Canadian agriculture is concerned, the regression equations suggest that with every per cent increase (decrease) in over-all productivity, net return per farm has increased (decreased) hy about 1% to 2 per cent. Second Hypothesis With the lack of support for the hypothesis that over-all productivity and real net return per farm are inversely related, the hypothesis that the aggregate demand for agricultural products is relatively inelastic also becomes questionable. It may be true that the demand for certain farm products is in» elastic, but here the question is raised whether the aggregate demand curve for all Canadian farm products is inelastic. Should the generali— zation be correct, it would follow that output and real gross income would be inversehy related. Only through.an offsetting reduction in costs and.in number of farms could the relationship between the changes in over-all productivity, which appeared to follow closely the changes in aggregate output (cf. Charts 4 and 5), and real not return per farm become positive. The annual per cent changes in real realized and real gross returns based on the four constant weight periods used in this study are presented in Table 13. The variations caused hy the different weight periods are only slight. The annual per cent changes in total output for each of the four 101 1935-39, 1940-45, 1945-49 and 1950-54, Total Gross unturns based on the Constant Height Table 13.— Annual Per Cent Changes in heal Realized and Meal Periods: __..._ - Weirht reriod mm‘ $35-393195LO—4/fi1945-49=1950-54:1935-39=1940-44:1945-49d95054i heal Total Gross Return cent __.__¥ per heal Realized Gross Return Canadian Agriculture, i92b-1957 A Egggpt Period A“ Year 1926 350 e 3146 352 e 353 e 1927 1928 1929 93392 7.47.91. 1935-39, 1940-44, 1945-49 cmt waight Period pa : 1940-44 102 and 1950-54, Canadian Agriculture, 1926—1957 1935239 the Constant Weight Periods: Table 14.- Annual Per Cent Changes in Total Uutput, based on 1926 MW ma jar INZOU no.9.hw 1929 1930 1931 43499 21H].80. . . JJJBJ 44002 1932 1933 1934 1935 1936 1937 1938 1939 86800 C O O O . 08726 321 .- . 27151 2u4mm . £9810. 300.27 AwSZ—JZ 1 0.1.0.8” 8%253 $317.1 Knead/222) 32788 O O O 0 77353 .1 0 MM mm 1947 mm mm seals 1950 1951 1952 1953 1954 1955 Mt 12.0 . —12.5 hflefi. 1956 1957 swmm 103 constant weight periods are derived from the total output estimates computed in Chapter IV. These four sets of figures, which are in Table 14, also compare closely. Because in these particular cases the choice of weight period made little difference, the averages of the percentage changes of the four weight periods were used in the regression and correlation analyses. The results of these analyses are as follows: (1) 11 = -0.27 + 0.90 X 3 r (2) $2 11 is the annual per cent change in.real total gross return, I? is the 0.92 3 and 0.74 + 0.30 x r 0.45 3 where annual per cant change in real realized gross return, and.x is the annual per cant change in total output. For both real gross return measures the regression coefficients turned out positive. 'With the high degree of correlation under equation (1) it seems that a one per cent change in total output is associated with a change in the same direction of almost one per cent in.real total gross return. Although the coefficient of correlation under equation (2) is about half as large as that under equation (l)‘ it still is significantly different from.zero at almost the one per cent level. The data and methods used in this study fail to support the second hypothesis also. Discussion The conclusions reached must be viewed in the light of the short- comings of the methods and of the data used. The assumptions Justifiying the constant dollar method for determining changes in over-all 10h productivity have been discussed. They obviously put severe restric- tions on the applicability of the method, and the unsolved problem of weight period choice adds an arbitrary element to the estimates of the over-all productivity index. The discrepancies between the pro- ductivity indexes based on different weight periods did.not result in contradictory'conclusions for this study because the annual changes in the index.numbers (i.e. increases or decreases) were in the same direction for the different weight periods used. Consequently the signs of the regression coefficients were the same for each case. All statistics used came either directly from.official sources or were derived from official estimates. How reliable these estimates are is an open question. It is obvious, however, that many difficul— ties are involved in their compilation. Particularly in the assembly of the input data the problems are pronounced, and.it would not have been possible for officials of the Dominion Bureau of Statistics to provide such a complete picture of various costs in agriculture since 1926 without a good deal of judgment and rules of thumb. The effects on the total input index of some input estimates used in this study, about’which a good deal of uncertainty exists, are no doubt considerable in view of their relative importance. Labour, for instance, is the largest single input and its annual estimates are among the least reliable. Another important input item is the wear and tear on buildings and machinery. The problems of estimating de— preciation even under the simplest circumstances are well known; for the whole agricultural industry any elaborate procedure would be out of 105 the question. The estimates of the Dominion bureau of Statistics are simply a certain percentage of the annual value of the capital assets involved. “he estimates of inventory values themselves are, of course, subject to many errors and arbitrary guesses. In estimating the annual incomes there is uncertainty about the cash value of incomes in kind. The estimates of the Dominion Bureau of Statistics are based on market prices the farmer would have re- ceived had he sold the products. But when income is used as a measure of welfare it might have been more appropriate to value at prices the farmer would have had to pay had he bought the products. The need to eliminate income-stabilizing supplements from govern— ment funds has been treated in this study by excluding the supplementary payments reported by the Dominion Bureau of Statistics in its.§gggr book ofLAgrigultyggngflpfidgtigg, Part II. The various forms of support, however, make a more complicated picture then is indicated hy this procedure. All such shortcomings must be considered in.interpreting the con- clusions of this study. The emphasis should not be on the relation- ships found but on the lack of support for the relationships stated in the hypotheses. Lack of evidence of a negative relationship between over-all productivity and real net return per farm should be interpreted with 106 caution as far as the results of research on the latter are concerned. It was pointed out that research is only one of the factors affecting over-all productivity and that variations in weather and other exoge- neous factors affecting growth are largely responsible for the annual fluctuations in overaali productivity. It would be incorrect to apply the findings pertaining to overaall productivity to agricultural re- search simply because the latter usually contributes to it.‘ To separate the effects of research from the changes in over-all productivity will be a difficult, if not impossible, task. Some esti- mate might have'been made if the effects of research were to assert themselves gradually over time by establishing a secular trend in over- all productivity. However, this approach is open to a.number of ob- .Jections. First, since the over-all productivity indexes based on dif- oferent weight periods diverge considerably towards the end of the time series an arbitrary decision is involved in selecting the particular 'index or combination of indexes on which the secular trend should be based. Second, even without the two preceding problems there may be =factors other than research that affect over—all productivity gradually lover time. The various forms of specialization on farms and in regions, ‘or the emigration of a certain class of farm managers out of agriculture 'could also fall in this category. It would be necessary, then, to sepa- rate the effectsof research from the effects of other factors contribu- ‘ting to a rising secular trend. Third, there is the belief that technical 107 innovations are not adopted gradually but more likely apasmodically.2 Fourth, it is not certain even that the adOption of technical innovations will always raise the over-all productivity ratio. If the production manager is forced through labor shortages to adopt labor saving machineny the smallest available size of which is larger than needed for the size of his farm, the ratio may well decline. And finally, if meaningful measures of changes in productivity as a result of research alone could be established, the testing of the first hypothesis would subsequently make it necessary to isolate from the changes in income the part that can be ascribed to the changes in productivity induced by research. The inescapable conclusion is that the composite parts of the changes in over-all productivity and real net income are inextricable. Under such circumstances it is well-nigh impossible to determine the extent to which research has contributed to over-all productivity, and to what extent it has affected real net income per farm. The long-run 'upward trend of both over-all productivity and real net income per farm is inconsistent, however, with the belief that agricultural research is detrimental to farmers' welfare. Lack of evidence of an inverse relationship between changes in total output and.either of the gross return measures suggests an elastic aggregate demand for Canadian farm products as a whole.3 As ... 4A .+4 2 Cf. Schumpeter, J.A.,_§usiness_chles, Vol. I, McGraweHill, New York, 1939; and Cochrane, W; W., "Conceptualizing the Supply Re- lation in Agriculture", Journal_of;Farm Economics, Vol. 37, No. 5, Dec. 1955, p. 1169. 3 This inference is supported by other research. Cf. "Contrary to Canadian beliefs in general, the evidence at hand indicates that the demand for this wheat is not highly inelastic if inelastic at all." (Gislason, 0., "How Much Has the Canadian‘Wheat Board Cost the Canadian Farmers?", Journal ofAFarngcongmics, Vol. 41, Aug. 1959) NO. 3, p. 592). 108 long as this relationship holds true a high degree of productivity, re- gardless of the cause, would be beneficial to farmers. Actually such elasticity is not surprising since a large proportion of Canadian farm products is sold in foreign markets."* Weather and other conditions affecting growth are not universally good or bad, and the amount traded in the world market tends to fluctuate less than the year to year supplies in a country with such variable conditions for growth as Canada. The quantity available for export will have less effect on the ‘ farm price than if this quantity were to be sold in the home market. One should not forget, however, that the price of wheat, the major export item of Canadian farm products, is set annually by the Canadian Wheat Board. it is possible that through the Board's policy the price of wheat has been kept within an elastic section of the total demand curve. At a time when surpluses are accurmllating (see Table 15) the floor price might approximate the dividing point be- tween an elastic and an inelastic range of the demand curve. The presence of unsold stocks of agricultural commodities seem to add weight to the argument against technical research and rising productivity. No doubt the presence of substantial surpluses will have a depressing effect on farm prices. But the increasing productive A.- AAAi‘ 4 In 1957 about 35 per cent of cash income from Canadian farm products was derived from airport (Canada, Department of Trade and Commerce, D.B.S., Ottawa, Handbogkuoi: Aggigultur‘al Statistics, Part II, Farm Income, 1926-5'7 , Ref. Paper No. 25, rev. ed., 1958, p. 26; Depart- ment of Agriculture, Economics Division, Ottawa, Canada ‘Tgade in wicgtural Products with thelgiiiécliKingdomAAthe United States and All Countries, 1356 and A1957, p. 13). #‘A‘..__.. camelty of Canadian agriculture is not the sole reason. to the tendency of traditional foreign customers to become increasingly self-sufficient and to shift to cheaper sources of supply. ##A 109 Much is due Table l5.-— Carry—over at Beginning of Crop Year of Wheat, Oats, Barley, and Eye, Canadian Agriculture, 1945-1957 AAA-.4 SOURCE: _‘_.‘ Crop Year Wheat Oats A Benita 44 me - thousand bushels - 1946—4'7 73 ,OOO 77,492 29,937 768 1947-48 86,141 69,484 28,761+ 755 1943-49 77,710 47,891 31,449 904 1949-50 102,411 60,507 29,669 1x318 1950-51 112,200 44,905 20,355 0,431 1951-52 189,203 95,177 53,496 3,299 1952-53 217 , 178 108 , 358 79, 504 8 ,774 1953-54 383,185 144,409 111,667 17,541 1954-55 ols,o75 125,769 145,910 22,235 l955~56 530,743 83 ,967 91,483 19,935 1956-57 579, 574 119.106 110,948 15,713 1957-58 733, 540 220, 215 142,779 14.160 Canada, Department of Trade and Commerce, D.B.S. , Ottawa, gtandbook of Agricultural Statistics, Part I (Field Crops, 1908-1958), 1959, PP. ISO-172- Instead of using the so-called surpluses as evidence of too high a level of productivity and a gratuitous amount of research, it can also be argued that ”productivity in Canadian agriculture is too low. The word surplus is not used in the dictionary sense of "that which remains when use or need is satisfied.",5 but in an economic sense of, "that which remains at a price".6 In a world where "... many millions 5 WebsterLs New Collegiate Dictiongz, Thomas Allen, Toronto, 1953, p. 854. Blau, G., Dismsal of Aglculmral Surpluses, Commodity Policy Studies, No. 5, Food and Agriculture Organization of the United Nations, Rome, J1me 1954, p. 3. O. O. 110 still go hungry, at least part of the time" 7 a surplus problem is obviously one of under-consumption, and not one of over-production. The demand is there, but it is ineffective. With increasing produc- tivity the unit cost might be reduced far enough to cause agricultural staples to be sold in countries where food shortages exist. it would be unrealistic indeed to seek the solution of the farm income problem in lowering agricultural productivity through the cur- tailment of technical innovations in the country. Sucha move would not help the Canadian farmer, but his competitor.8 7 United Nations, Ego Statemof Food and Aggculture, 1252, Food and Agriculimre Organization, p.106. 8 Cf. ". . . our ability to maintain markets in a period of increas- ing competition will depend to a considerable extent upon our ability to increase our efficiency of production (and marketing) and thereby to increase our competitive position in the market place.” (Heisig, c. P. , "Long Range Production Prospects and Problems', Journal of Farm Economics,_Vol. 35, o. 5, Dec. 1953, p. 750); and "This slow response to Ltechni change is doubt- less a significant reason wtw agricultural prosperity has lagged behind that of the rest of our economy", Pond, G. E., aDiscussion", AgiwIMQ Adjustment Problems in a re Econ (Hem, E. 0., et al, eds.), The Iowa State College Press, Amos, 1958, p. 19. VII. \SUMMARIZING PROPOSITIONS In this study an attempt has been made to examine the relation- ships between (a) the annual percentage changes in over-all productivity and real net return per farm, and (b) the annual percentage changes in total output and real gross return to farmers for Canadian agriculture for for the 1926 to 1957 period. ‘ The principal task in testing the first relationship was to determine the changes in oyer-all productivity. Six indexes of overb ‘all productivity were constructed: four using as constant weights the_ appmpriate prices of the periods (1) 1935-39, (2) 1940—41.. \3) 1945-49. and (4) 1950-54; one based on the Paasche and one based on the chain index number formula. The same weight periods and formulas were used to construct six indexes of real net return per farm. For the second relationship changes in total output and in “aggregate realized.and total real gross returns were determined on the basis of the four constant weight periods only. The fellowing propositions contain definitions, agreements and disagreements with statements from the literature, and conclusions larising from this study. The propositions are arranged.in logical order and not always in the order in which they are discussed in the text. They furnish a concise summary of the study. 1. A productivity ratio that is designed to take into account the want-satisfying capacity of all outputs resulting from a production 111 112 process and the productive capacity of all economic inputs necessary for that production process is called over-all productivity. 2. The weight period is the period whose commodity prices (in the construction of quantity indexes) or whose commodity quantities (in the construction of price indexes) are used as weights. The base periodis the period in a time series whose index number has been made equal to 100. 3. Over-all productivity is an ordinal concept, and is operationally defined by the constant dollar method as the ratio of all useful out- puts aggregmted in weight period dollars to all economic inputs aggre- gated in weight period dollars. 4. In this study the annual index numbers of total useful output were divided hy the corresponding index numbers of total economic input to ' give an index of over—all productivity with the same weight and base periods. 5. With the assumptions of competitive equilibrium in the industny and linearity between all output/input relationships, the annual changes in the over-all productivity ratios (as defined by the con- stant dollar method) of a production process reflect changes from the overball productive capacity of the weight period.inputs if the tastes of that period remained unchanged. 6. Weighting the inputs and.the outputs with constant prices through~ out a time series is necessary because for different periods a (current) dollar's worth of output represents different amounts of con- sumers' satisfaction, and a (current) dollar's worth of input repre- 113 sents different amounts of productive capacity. 7. Annual changes in tne over-ell productiv1ty of an industry are caused by a variety of reasons, such as technical innovations, economies of size, enterprise and regional specialization, decline in the proportion of inefficient or efficient producers. In agriculture the changes in environmental conditions are largely reaponsible for the annual fluctuations in over-all productivity. 8. The constant dollar method is essentially a linear case of the theoretical production function method. 9. In terms of index number construction the use of constant prices as weights to aggregate inputs and outputs measured in different units, correSponds to the Laspeyres' method of determining quantity indexes. '10. The expression weight period bias refers to discrepancies between indexes as a result of using different weight periods. 11. For a comparison between two periods only, the use of first period weights (LaSpeyres' method) will give the same results as the use of second period weights (Paasche's method) if (a) regardless of the quantity changes, the prices of the items change in the same propor- tion, or (b) if, regardless of the price changes, the quantities of the items change in the same proportion. 12. Mudgett's contention that the difference between the Laspeyres and Paasche index numbers "will equal zero only when q1 = q0 for all commodities involved" is incorrect; the word."only" should be de- leted. 13. Mill's contention that the Laspeyres price index has atiownward bias and the Paasche index an upward bias, if quantities remain 11h constant, is incorrect. With no change in quantities both index numbers will be the same and will equal unity. 1h. Some authors incorrectly base their argument that the Laspeyres price index has an upward bias and the Paasche price index aciownward bias on price—quantity relationships indicated hy the demand curve. 15. The relevant price-quantity relationships to be considered in explaining weight period bias are those established over time by the points of intersection of prices and quantities pertaining to the items included in.the aggregate index. 16. For two items and two periods it can be shown diagrammatically that the Laspeyres formula will result in a larger percentage change than the Paasche formula if the price-quantity relationships of the items is inverse between the two periods; if this relationship is positive the LaSpeyres formula will result in a smaller percentage change than the Paasche formula. ' 17. The price-quantity relationship over time of an input or output does not only depend upon the item but also on the periods between which the comparison takes place. '18. L. von Bortkiewicz formally demonstrated that the unequivocal criterion determining the direction of the weight period bias is the sign of the weighted coefficient of correlation between price and quantity relatives -— weighted by the beginning-period values of the items comprising the aggregate index. 19. In a time series of more than two periods weighting with beginning- period weights is an application of, but is not synonymous with the Laspeyres formula; and weighting with endpperiod weights is not synonymous with the Paasche formula. 20, Some authors inadvertentfy apply the term Paasche to end-period weighting in time series with more than two periods. 21, nuttan's fallacious conclusion that "the 'true' measure of tech- nological change can be bracketed by using both beginning-pcriod.and end-period weights" is based on inappropriate use of static models, and unwarranted extension of his conclusions pertaining to a.comparison between two periods to time series of several periods. 22.° The aggregate index numbers of total input for Canadian agricul- ture based on 1935-39 constant prices are over the last 17 years of the 1926-1957 period consistently higher than those based on the weight periods 1940—44, 1945-49, and 1950-54, and on the Paasche and chain index number formulas. 23. For 1957, the year with the widest divergence in the six indexes, the aggregate index.number based on 1935-39 constant prices is 13.9 points above the second highest index number (based on 1940-44.con— ~stunt prices) and 23.8 points above the lowest of the six:index:num- bers (based on the Paasche formula). 2h. The aggregate index numbers of total output for Canadian.agricul- ture from 1926 to 1957 based on the chain index number formula are since 1938 higher than those of the five other indexes determined. 25. The widest divergence between the six total output indexes is in 1956 when the chain index number is 31.9 points above the Paasche index number. ‘ 26w The‘index.numbers based on the four constant weight periods cor- .reSpond much closer for total output than for total input. 116 ‘27. chr the last 11 years of the 1926-1957 period the index numbers of total output based on 1935-39 constant prices are higher than those based on the weight periods 1940-44, 1945-49, and 1950—54, and the Paasche index number formula. I 28. The index numbers of over-all productivity follow closely the pattern of the index numbers of total output. .29. The index numbers of over-all productivity for Canadian agricul- ture from 1926-1957, based on the chain index number formzla are since. 193? higher than those based on the four constant weight periods end on the Paasche formula. 3 30. From 191.1 on the index numbers of over-all productivity based on constant 1935-39 prices are the lowest of the six indexes, which is explained partly by (1) the upward divergence and marked departure of its total input index from the other total input indexes determined since that date, and (2) the closer concurrence of its output index with other fixed weight output indexes and the Paasche output index. 31. The spread between the six indexes of over-all productivity is 10 points in 1939; it gradually increases to 39.3 points in 1957. The spread between the four constant weight index numbers in 1957 is 23.2 points. I 32. The index numbers of real net return per farm based on the four constant weight periods and on the Paasche forumla correspond closely. 33. The chain index of real net return per farm begins to diverge up- ward from the other five indexes in 1934; the widest divergence between the .chain and the next highest index is in 1951 with 1.7.1. points . 117 3b, The discrepancies caused by different weight periods and dif- ferent index number formulas are much less marked in the year to year per cent changes than in the indexes. 35. The hypothesis that the relationShip between annual percentage changes in over-all productivity and real net return per farm is negative or zero for Canadian agriculture is not supported for the years 1926-to 1957. 36. The hypothesis that the relationship between annual percentage changes in aggregate output and real gross return is negative or zero for Canadian agriculture is not supported for the years 1926 to 1957. 37. The belief that the aggregate demand for Canadian farm products is relatively inelastic is not supported for the years 1926 to 1957. BlBhlUGiAPHI Anonymous, methods of Labour Productivity Statistics, international Labour Office, Geneva, 1951. Anonymous, "The Concept of Productivity and Its Corolleries", Pro- ductivity_heasurement, Vol. 1 (Concepts), Deurinck, 6., (ed.), European Productivity Agency, 0.E.E.U., Paris, 1936. Aukrust, 0., "Investment and Economic Growth", Productivity Measure— ment Review, European Productivity Agency, 0.E.E.C., No. 16, Feb.1959. Barton, G. T. and h. h. Cooper, "Relation of Agricultural Production to Inputs", The Review of Economics and Statistics. Vol. 30, No. 2, May 1948. Barton, G. T. and R. A. Loomis, "Differential Rates of Change in Output Per Unit of Input", Journal of Farmggconomics, Vol. 39, No. 5, Dec. 1957. Bentley, J. M., "Objectives of Canadian Agricultural Policy", Canadian Journal of Agricultural Economics, Vol. 7, No. 2, 1959. Black, J. D. and B. D. Mudgett,_g§search in Agricultural Indgx Numbegg, Social Science Research Council, Bull. No. 10, New York, March 1938. Blau, G., Disposal_9f Agricultural Surpluses, Commodity Poliqy Studies No. 5, Food and Agriculture Organization of the United Nations, Rome, June 1954. Bortkiewicz, L. von, "Zweck.und Struktur einer Preisindexzahl", Nordisk Statistisk Tidskrift, Vol. 2, 1923. , nDie Kaufkraft des Geldes und Ihre nessung", Nordic Statistical Journal, Vol. 4, Parts 1-2, 1932. Boulding, K. E., "Economic Analysis and Agricultural Policy", The Canadian Journal of Economics and Politicgl_Sciengg, Vol. 13, No. 3, Aug. 1947. , Economic Analysis, Harper, New York, 1948. 118 119 buck, R. K., "Can We Shrink Production2", New Approaches on the Farm Problem, Proceedings Nineteenth Annual National Farm lnstitute, Feb. 15 and lo, 1957, Des moines, lowa. Cameron, Marjorie R. and F. Shefrin, Federal Agricultural Assistangg Programs,,Canada,,l900-l95l, Canada, Department of Agriculture, Ottawa, 1952. v Cameron, Marjorie R., Federal Agricultural Assistance Prggrams, Canada, 124§~19 6, Canada, Department of Agriculture, Ottawa, 1957. Canada, Interdepartmental Committee on Productivity Analysis, Ottawa, Concepts and Problems in the Measurement anQLAnalysis_of Productivity, Report ll (mimeographed), Jan. 1954. __, house of Commons Debates, Vol. 104, No. 144, Aug. 8, 1960, Queen's Printer, Ottawa. , Report of the_Royal Commission on Price Spreads of Food Products, Vol. 11, Queen's Printer, Ottawa, 1959. Canada,Department of Agriculture, Economics Division, Ottawa, A321? cultural Assistance, War and Postwar (F. Shefrin and M. R. Cameron), 1949 e , Canada Trad§_in;gggg§ultur§1_Products with the United Kingdom, the United States andgAll Countries,_l95o_and 195]. _,, , Federal Agricultural,Assistance Programs, Canada, 1200—1951 (Marjorie R. Cameron and F. Shefrin), 1952. __, Exports of Canadian Farm Products,_War and Postwar Developments (F. Shefrin), Ottawa, 1949. , Federa1,ggricultural Assistance Programs, Canada, 1255-1256 (Marjorie R. Cameron), 1957. s.1§9 Current Review of Agricultural Conditions in Canada, Vol. 19, No. 6, mov. 58, Conference issue. Canada, Department of Trade and Commerce, D.B.S., Ottawa, Canadian Labour Force Estimates, 1931-1950, Ref. Paper No. 23, 1951. ,_, Canadian Labour_Force Estimates, 1231-1945, Ref. Paper No. 23, rev. ed., 1957. , Canada.Year Book,,1933. , Census 9£_Canada,,l956, Vol. 11 (Agriculture). 120 , Census of Saskatchewan 1946, Vol. II (Occupations, Industries, Earnings, Emplqyment and Unemplqymcnt). —~J.2§}Iy Statistigs_(annua1). , Dairying Statistics_gf Canada (annual). , E1 hth Census_pf Canada, 194;, Vol. VII (Occupations and Industries). ‘_, Handbook of Aggim MturalCStatistics Part 1 (rield Crops); Ref. Paper No. 25. . _, Handbook of Agricultural Statistics, Part I (Field Crops), Ref. Paper No. 25, Supplement (November 1955). ,Handbook of Agricul tural Statistics, 1208—1258, Part 1 (Field Crops). ,Handbook of Agricultural Statistics, Part ll (Farm Income, 1926-57), Ref. Paper No. 25, rev. ed., 1958. , lpdex of Farm Production,_l958. , Monthly_Bulletin of Agricultural Statistics. , Natignal’AccountsVIncome and Expenditure, 1226—1256. , Ninth Census of Canada, 1251, Vol. VI (Agriculture) Part 1. , Ninth Census of Canada, 1951, Vol. I (General Review). , Prices and Price Ipdexes, 1949-1952. , Prices and Price Indexes (monthlies). , Price Index Numbers of Commodities and Services Used m Farmers (3 times a year). , Production of Poultry and Eggs,llflflz. , Quarterly Bulletin_of Agricultural Statistics. ,The Labour Force, November 1945~Jury1258 Ref. Paper No. 58, rev. ed., 1958. , The gabour Force (monthly). 121 , :l'g‘fdgpf Canada, Exiiyorts. . Trade of Canada, Imports. Cochrane, W. W., "Concoptualizing the Supply Relation in Agriculture", Journal of garm Economics, Vol. 37, No. 5, Dec. l955. , "Some Additional Views on Demand and Supply", Agricul- tural Adjustment Problems in a Growinngconomy, (heady, E. 0., et al, eds. ), The lowa State College Press, Ames, 1958. Commons, J. Rm, Institutional Economics, Its Place in Political Economy Macmillan, New York, 1934. Croxton, F. E. and D. J. Cowden, Applied General Statistics, Prentice- Hall, Englewood Cliffs, 1958. Duly,.fi. F., "Some Considerations in Appraising the Long-Hun ProsPects for Agriculture",ngpg7Range Economic Projection, Conference on Re- search in Income and Wealth, Princeton University Press, Princeton, 1954- Davis, H., "The Meaning and Measurement of Productivity", Industrial Productivity, L. R. Trip (ed.), industrial helations Research Associ- ation, Publication NO. 7, Madison 5, Wisconsin, 1951. Deurinck, G. (ed.), Productivity Measurement, Vol. 1 (Concepts), European Productivity Agency, U.E.E.C., Paris, 1936. Drummond, W. M. and W. mackenzie, Progress andFPrqspects of Canadian culture Royal Commission on Canada's Economic PrOSpects, Queen's Printer, Ottawa, 1957. Eldridge, E., "A New Focus for Extension", Farm Policy Forum, Vol. 11, No. 4, 1958-59. Evans, G. H., "The Index Numbers A.M.£ and A.M. 1", Journal of the American,§tatistical Association, Vol. 31, No. 196, Dec. 1936. Ezekiel, M. and.K. A. Fox, Methods of Correlation and Regression Anal sis, third ed., John Wiley and Sons, New York, 1959. Farrell, M. J., "The Measurement of Productivity Efficiency", Journal ,9f the Royal Statistical Society, Vol. 120, Part 3, 1957. Fawcett, E., Manual of Political Economy, Book II, Macmillan, London, 1863. Fisher, 1., The Making of Index Numbers, third ed., Houghton Mifflin, Boston, 1927. 12? French, D.C., b. L. Sammet and R. C. Bressler, "Economic Efficiency in Plant Operations with Special Reference to the Marketing of California Pears", Hilgardia, University of California, Vol. 21., No. 19, July 1956. Frickey, E., ”Some Aspects of the Problem of Measuring Historical Changes in the Physical Volume of Production", Explorations:ig. Economics, McGrawbHill, New York, 1936. Gislason, 0., "How Much Has the Canadian Wheat Board Cost the Canadian Farmers?", Journal of Farm Economics, Vol. 41, Aug. 1959, No. 3. Gutman, c. 0., "Investment and Production in Australian Agriculture", Review of mar etin and cultural Economics (Department of Agri- culture, N.S.W., Australiag, Dec. 1955. Hall, Margaret and C. Winston, "The Ambiguous Notion of Efficiency", The Economic Journal, Vol. 69, No. 273, Mar. 1959. Hathaway, D. E., uAgriculture in an Unstable Economy Revisited", Journal of Farm.Economics, Vol. 41, No. 3, Aug. 1959. Heady, E. 0., "Basic Economic and.Welfare Aspects of Farm.Techno- logical Advance", Journal_g§ Farm Economics, Vol. 31, No. 2, May 1949. Heady, E. O. and.J. Ackerman, "The Income and Resource Problem", A cultural Ad‘ustment roblems in a Growin Econ (Heady, E. 0., et al, eds.i, The Iowa State College Press, Ames, 1958. Heady, E. 0., et al (eds.) Agricultural Adjustment Problems in a Growin Econo , The Iowa State College Press, Amos, 1958. Hicks, J. 3., Value and.Capital, Clarendon Press, Oxford, 1948. Heisig, C. P., "Long Range Production Prospects and.Prob1ems", Journal of Farm.Economics, Vol. 35, No. 5, Dec. 1953. International Labour Office, Geneva, International Comparisons of Cost of Living ("International Comparison of Food Costs" by H. Staehle), Series N, No. 20, 1934. , 'ethods of Labour Productivity Statistics, (anonymous), 1951. Jevons, w. 3., Political Econgg, MacMillan, London, 1873'. Johnson, D. Gale, "Allocation of Agricultural Income", Journal of Farm Economics, Vol. 30, No. 4, Nov. 1948. 123 "The nature of the Supply Function for Agricultural Products", The QEREEEQQIEEQRQEiC Mggigg, Vol. 40, No. 4, Sept. l950. , "Labor mobility and Agricu.!turcl Adiustment", Aggigul- tu.1;< l AHJu tmcnt P.0blnm. in a (rmnwr Lf onow1,(h<°ov E. 0., et al, eds.), ‘lhe lows State UOJiltfié Pres;s, Amos, 1958. Johnson, G. L., "Sunplv Function - Some Pac.s and motions", Agricul— turrl Adju; {ment Problcus in a. Gronjng Economy, (heady, E. 0., et al, eds. ), “lhe lowa Sta te Colleie Pr s., Ames, l'jfio. Johnson, S. E., "Farm~nanagement Problems in an Era of Change", Farmers in a Changnnw Nor] d (l940 Yearbook of Agriculture), U. S. Department of Agriculture, Washington, D. C. , "PrOSpects and net:uirements for increased Output", Journal of harm Economics, Vol.. 34, No. 5, Dec. l952. Johnson, S. E. and G. T. carton, "Effects of Technological hesearch and Education", _Agriculturel Adju: tment Problems in a Growinngconomy, (heady, E. 0., et “al, eds.), The lone State College Press, Ames, I958. Kaplan, D., et al, The ProductiVity Measurement Prog_am of the bureau of Egbor Statistics, U. S. Department of Labor, Washington, l95h. Kendrick, J. E., "Nation- 1 Productivity and Its Long~Term Projection", heist-amuse. .Ecrqa0.19.1..0.,r319.3wunaligfiuslles,in Anaemia?! .118. .3914, Vol - 16, Conference on hesearch in Income and Wealth, national sureau of Economic Research lnc., Princeton University Press, Princeton, 1954. u‘--.¢.—‘.A..4 ccccccccccccc ”an wovcoo¢4o< Paper 53, National oureau of Economic Hesearcn, inc., New York, 1956. Kendrick, J. w., F. Strauss, and t. H. Bean, Gross 'Earm lnqqme_gnd Indexes of Farm Production and Prices in the United Stat% 69—Hi1_, U. HS. Department of Agriculture, Tech. null. No. W703, Dec. 1940. Ladd, G. W., "Biases in Certain Production indexes", Journal ofwgarm Economics, Vol. 39, No. 1, Feb. 1957. Lok, S. H., "Impact of Technical Change on the Agricultural indistry", Canadian Journalm oi Avricultural WEconomics, Vol. 7, No. 22, l959. Loomis, R. A., "Effect of Weight—Period Selection on Measurement of Agricultural Production inputs", Agricultural EQQQQKLQQ,WQ§QQREE: Vol. 9, no. 4, U. S. Department of Agriculture, Oct. l957. Mill, J. 8., Principlesigf,fiqlitigat;Economz, nook lV, C. C. Little & J. Brown, Boston, lSAS. 12h Mills, F. 0., Stetisticel Methods, holt, mew York, 1955. Mudgett, B. D., Indexfiumbegs, John Wiley and Sons, New York, l951. Hurray, J. A. H. (ed.), A Negjggglish Dictionary onfiistqrical Frig- ciplgg, Clarendon Press, Oxford, Vol. 3, Part 1, l89l, and Vol. 7, Part 2, 1909. Organisation for European Economic Co-operation (0.E.E.C.), Paris, Agriculture], Policies ig_mropg£n‘d~b£grth America, 1956. 4 A“, "The Concept of Productivity and Its Corollaries", (anonymousl , Productiiijz Aeseuremerut Vol- 1 (00116613158), VG.- Dwrinck (ed.) , The European Productivity Agency, 1956. _4_Al_“4 A 4.‘ “-4.4 Agency, No. lb, Feb. 1.959 ("investment and Economic Growth" by 0. Aukrust) . “afi-WQMW 00., Boston, 1928. Pigou, A. 0., Economics of welfare, Macmillan, London, 1932. Plaxico, J. 5., "Discussion", AgimlturelAdiustflenLfirgblems 91g}; Growingficonoggz, (Heady, E. 0., et al, eds.), The Iowa State College Press, Axnes, 1958. Pond, G. E., "Discussion", Ammumralflmustment Problems in a Growing Economy , (Heady, E. 0., et al, eds.), The Iowa State College Press, Amos, 1958. Rivett, K. , "Surplus Wheat and Asian Development", Australia' a Nazi hbours, Australian Institute of international Affairs, Jan. 1959. Robbins, L., An Essay 91;“th Esters and Simificance ,qf EQQQQMAQ Science, MacMillen, London, 1932. Rattan, V. W., Technological Progress in the Meetpeclging Indusm, 1919-47, Marketing Research Report No. 59, U. S. Department of Agriculture, Washington, D. 0., Jan. 1954. . #fi 4%,, A _, "The Contribution of Technological Progress to Farm Out- put, 1950-57", gefieviewéof Economics ‘and Statistics, V01. .38, No. 1, Feb. 1956. __ “A“ , "Agricultural and Nonagricultural Growth in Output Per Unit of input", Journal pf Farm Economics, Vol. 39, No. 5, Dec. 1957. 125 Schmookler, J., "The Changing Efficiency of the American Econoqy: 1869—1933" , 1111.9.) £929..le 0.1: .Eaaaaataaaad. lQE‘LEiéEiEE.’ Vol - 34, N o . 3 . Aug. 1952. «...M“da‘c.‘ New York, 1953. iii _A4 A , "Reflections on Agricultural rroduction, Output and Supply", Journaluof Farm Economics, Vol. 38, No. 3, Aug. 1956. Schumpeter, J. A., Businessigycles, Vol. 1, McGrawbflill, New York, 1939. Scitovsky, T., Weliare andgggnpetitign, Irwin, Chicago, 1951. Shefrin, F., Exports o£_Canadianugarm yrodugts, War and Posthar Dee velqpments, Canada, Department of Agriculture, Ottawa, 1949. Shefrin, F., and Marjorie ti. Cameron, Agriculturalggssistance, X'Iar#and Post4War, Canada, Department of Agriculture, Ottawa, 1949. Siegel, I. H., "The Difference between The Paasche and Laspeyres indexp Number Formulas", Journal_g§_thewgmericanUStatistigal_As§ociation, Vol. 36, No. 215, Sept. 1941. Slichter, S. h., "Efficiency",Agnqxglggaegia of_themSgcial_§giences, Vol. 5, Macmillan, London, 1931. Smith, A.,.Ag Inquiry into the,flatnrg_and Causes of the wealth_9£ 'gagiggg, Second Volume, Book II, sixth edition, A. Strahan and T. Cadell, London, l79l. Snedecor, G. w., Statistical Methods, Iowa State College Press, Ames, 1959. ' Solow, R. M., "Technical Change and the Aggregate Production Function", The_Review of Economics and_Statistics, Vol. 39, No. 3, Aug. 1957. Steahle, 3., "International Comparison of Food Costs", International Comparisons of Cost of giving, international Labour Office, Series N, No. 20, Geneva, 1934. Stallings, J. L.,,lndexes_of,theulnfluence‘Qifweather_onmAgriculturgl ‘Qgfigut, unpublished.£h.D. dissertation, michigan State University, East Lanaing, 1958. Stayley, O. L., "Diverted Acres, Food Reserves, and Livestock Supports", Eggignnoroache§_gn_the_Farm Probleg, Proceedings Nineteenth Annual National Farm institute, Feb. 15 and 16, 1957, Des moines, Iowa. 126 Stigler, G. J.,_Irendsuin_Outputgandmfimplgyment, national Bureau of Economic Research, lnc., New York, 1947. Stout, T. T. and V. W. Ruttan, "Hegional Patterns of Technological Change in American Agriculture", Journal_o£HFarm_Economics, Vol. 40, No. 2, May 1953. . Strand, E. G. and E. O. Heady, Eroductivitx of hesources Usedyqr; Commercial_Farms, Technical Bulletin No. 1128, U. S. Department of Agriculture in co-operation with Iowa Agricultural Experiment Station, Washington, D.C., Nov. 1955. Sturrock, F. G., "The Productivity of Labour in Agriculture", Journal of the groceedings of tthAgrigulturalggconomics Societz, Vol. 9, No. 1, July 1950. Taylor, H. 0., "Two Dimensions of Productivity", The‘Aggrican Ecg- nomic Review, Vol. 7, No. 1, March 1917. Thomson, F., “The Productivity_of the Human WAgent in Agriculture: An International Comparison, unpublished Ph.D. dissertation, University of Chicago, 1951. Tostlebe, A. S.,.The_Growthgof Physical Capita1_in Aggiculture, 1870—1250, Occasional Paper 44, National Bureau of Economic Research, New York, 1954. United Nations, Agricultural Sector Accounts and Tables,_A Handbook of Detiniti9Q§i§QQ Methods, E.C.E.-F.A.O. Agriculture Division, Agri-113, Geneva, Dec. 1950. g ‘_ A Disposal of Agricultural surpluses (by G. Blau), Commodity Policy Studies No. 5, Food and Agriculture Organization, Rome, June 1954. ,The State 01' Food and Agriculture 1959, Food and Agriculture Organization, Home. U.S.A., Department of Agriculture, Washington, D.C.,‘Agriculturgl Statistics (annual). _g4 4_#,‘_gricultural Economics Research ("Efiect of Weight Period Selection on Measurement of Agricultural Production Inputs" by R. A. Loomis), Vol. 9, No. 4, Oct. 1957. , Gross Farm Income and Indexes of Farm Production and Prices in the United States,_l869-1937, Tech. Bull. No. 703, Dec. 1940. 127 AA , Productivity of Resources Used Aon Commercial harms (by E. G. Strand and E. 0. death), in co-operation with love Agricultural Experiment Station, Nov. 1955. , Technological Progress in the Alvleatpacking Industq, 1212-57 (by V. W. ltuttan), marketing Research Report No. 59, Jan. 1954. , gearbook of Agriculture, 1940. U. S. A., Department of Labor, Washington, D. 0., The ProduActivitz Measurement Pro am of the Bureau of Labor Statistics (by D. Kaplan, et ails, 1950. Wiles, P. J. D., "Notes on Efficiency of Labour", Oxford Economic Papers, Vol. 3, No. 2, June 1951. . APPENDIX 1 L. von Bortkiewicz demonstrated formally that the L index.number will be higher than the P index.number if the weighted coefficient of correlation between the price and quantity relatives is negative; the L index:number will be lower than the P index.number if this coefficient is positive. If the diagrams customarily used in production economics depict the direction of the changes in prices and quantities as they actually occur between two periods, the von Bortkiewicz conclusion can be reached also diagrammatically. The following two illustrations deal with: l. aggregate quantity indexes of factors of production and consumers' goods, both as inputs; 2. (aggregate quantity indexes of consumers' goods and factors of production, both as outputs. - (1) Aggregate fiNflntity Index of Factors of Production and Consumers' Goods, Both as Inputs With the assumption of a negative price-quantity relationship be- tween periods to and t1 for the factors of production.x and.I, it must be shown that the L index number (i.e. sqlpo /£qopo). is greater than the P index number (i.e.qupl /zqopl ). It is assumed also, to simplify the exposition,that the techniques available for producing A from X and I have not changed between the two periods. 128 129 In terms of productive capacity the combinations qox + qOy and q 1x + qu (both combinations produce the some amount of output A) are equal and the aggregate quantity index of the inputs should be the same in both periods, i.e. the ratio (q f + (11),)“qu + qoy) should be unity. It can be shown, however, that weighting the quantities with tO prices will give a ratio greater than unity, and weighting with tl prices will give a ratio smaller than unity. When prices of tO are used as weights the numerator and denomi- nator of the index ratio are (qlxpo x+ qupoy) and (qoxpox + qoypoy) , respectively. To establish that the numerator is greater than the denominator it must be shown that the weighted amount by which qlx is smaller than qox, i.e. (qox - qlx)p0x, is smaller than the weighted, amount by which qu is greater than (107, i. e. mi - qoy)poy. AA = iso-product curve MG = price line tg NH = price line a ti N x Amount of q0 Input X x ql ........................ Amount of Input Y 130 It follows from the diagram that the ratio (qox — q 1x” (q 13" qoy) is smaller than the price ratio p0y / p0x . Therefore, the cross- prochct (qox - qlx)p0xis smaller than the cross-product (qu - qoy)p0y. Thus the numerator of the L index number for t1 is greater than its denominator, and the L index has an upward bias. The diagram also shows that the ratio (qox - qlx)/(qu - qoy) is greater than the price ratio ply / p11. Hence (qox - q]_x)p1x is greater than (ql - qoy) ply , and the weighted combination (113511 + quply) is smaller than the weighted combination (qoxplx + qoyply) Weighting with t1 prices, or the P index, thus gives a ratio smaller than unity and under-emphasizes the aggregate input value. The same conclusions will be reached for consumers' goods used as inputs by making AA in the diagram an indifference curve and assuming that tastes between to and t1 have not changed. (2) Aggregate Quantity Indexes of Consumers' Goods and Factors of Production, Both as Outputs With the 8.SSUIHIJt10n of a positive price-quantity relationship between periods to and t1 for the outputs A and B, it must be shown that the L index number (i. e. qupo / zzqopo) is smaller than the P inuex number (i. e.sqlp‘L /z:q0pl). It is assumed also, to simplify the exposition, that the same production function and input prices apply to both periods to and 1'1. Along much the same line of reasoning as used in the previous il- lustration the conclusion can be reached that beginning-period weight- 131 transformation curve price line at price line at t1 XX _ MG N Nh II I! ll Amount of qo Output A Amount of Output B ing will make the amount by which output A declines between to and t1 greater than the amount by which output B increases. This conclusion follows from the diagram which shows that (qoa - qla)/(qlb -000 0000 m000 #000 m000 N000 H000 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 mNHm 0NHm mHHm 0HHm mOHm oon 0000 000m 000m 0000 whom Obom 0000 0000 mmom omom m#0m 0#0m mmom omom m~0m 0N0m mHom 0H00 000m 000m 0N00 H00# 0N00 0NHm 0H00 0000 000# 0H00 0000 m#om 0H00 0H00 NHO# 0000 #00# NHom HHO# 00NH #HOP 000# 0000 HH00 000H 0H0h 000# NH #0 00 on #H mH 0N #H N0 #0 #H 05 #0 ON 00 NH #0 H0 NH 00 #b 00 0H N0 mh 0000! 0000 0000! 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000! 0000 0000 0000 Anomifiaaaé saunas 8 3.8% 3 ea! .3.32 E idea 3 «usages: mowed you queasy: sopH +.00mH + .3? $235 a8 :39” + Momma...so0 3 3 33.3an 3 A3 «833 also causes .8.“ .335: $3 + om + “£07,393 3 E ”SHE.“ 03.30300 05 he. 0058.893 on one g 5955 one so 33 23 mo 5332” one * 0m0h N00# 0#00 NNHM 0H0h .000# 0#om 0000 0H00 H000 0H00 0H0# 000m moon #00# mmHm 0000 0N00 #HOF CHOP N000 0m00 000# #000 N000 00 NF 00 NH 00 #0 #m #0 0H 00 mH NH mm Nb N0 0N 0H #m mh NH #H 00 #0 #H #H 0000 0000 0000! 0000 0000 0000 00 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 N000 000# 0N00 0H0> 0H0» 0000 0000 0H00 0000 #H0# #000 0H0# 000# 0H00 #00# N00# 0000 0000 MHOF mmom hmom NHON 0000 0H0h 000# #H NH NH #5 #h mm 00 MH mm NN 00 #5 ON N0 m0 #5 00 00 NH #5 00 NN mm #0 N0 0000 0000 0000! 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0H00 000# 0000 0000 0000 0000 0000 0000 0000 000# omor 00NH oNHm N000 NOHm Hoom mHom mHom moo# NHO# oaom moo# ooom Nfiom moo: owoa mace moor 0m0m moo» Hoes ~oos _N000 #0 m0 00 NH #H on 00 NN #h N0 Nh NH 00 #h NH #0 ON 00 ME NH mh NH Nh NH .mH oooo oooo 0000! 0000 0000 0000 0000 0000 0000! 0000! 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0H00 mHHm #m hHOh N00# 0000 0000 HHHH #000 N000 0#0m #000 0H0# H00m 000# 0000 000m 000v 0H0h .000b 0000 N00# 0N00 H00h 0N0m ma as #h N ## mm #N NH H N #H NH NH #5 Nm #m cm m0 #5 #0 00 ON N mm 0 0 0 0000 ! 0 HHHH ..omummfi 3 6.3 33nd 9&3: mesa fl? uofiecH 3358. engage 3a autos ac masts .m 135 aggaaahoov I'.’ omoo. 0000 #000 0000 N000 H000 0000 0#00 m#00 ##00 0#00 0#00 ##00 0#00 N#00 H#00 0#00 0000 0000 #000 0000 0000 #000 0000 N000 H000 0000 ;\0N00 0N00 50.0 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 0hN0 ObNm 00N0 00N0 00N0 00N0 0#N0 0#N0 00N0 00N0 0NNO 0NNO 0HNO 0HNO 00N0 00N0 00H0 00H0 00H0 00H0 00H0 00H0 00H0 00H0 00H0 00H0 0#H0 0#H0 00H0 00H0 oowm Hoop room onH 0000 :00» Noam sewn swam mmwm ooom mmmm omen flooo >-m ooom Hoop moan mono ofloo ooom mmmfl msflm duos oofim Hooo oaos oooo ”add once 00 #b NH 00 00 #0 00 ON NH 0N NH 0N NH 00 H0 #0 ON 00 N0 H0 00 #0 ON 00 ON NH HH 00 oooo. 0000 0000 0000 0000 0000 0000 0000 0000 0000 H000 0000 H000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 H000 0000 0000! HH00 0000 0000 0000 5000 000H 0000 0000 0000 0#0> #000 0#0h 0000 0N00 0000 0000 0000 0HOH 0000 000# NH#0 #000 00H0 0000 000# 0000 0000 0000 0#0> 000# HHHH .Hooe #0 #0 00 00 00 NH NH #0 00 #0 H0 #0 H0 00 NH 00 NH #0 00 ON 00 #0 NH NF 00 NH #0 00 #0 0000, oooo oooo oooo oooo oooo Hooo oooo oooo oooo oooo oooo oooo oooo oooo oooo oooo oooo oooo Hooo oooo oooo oooo oooo sooo oooo oooo oooo oooo oooo 000# 0>N0 0000 00N0 0000 0000 0000 N000 0000 .0000 HOH0 N000 0HNO 0000 0000 000H N00# 0000 00H0 N000 000k 0NOH H000 N00# 0000 0N00 00H0 .0#OP 0000 000H mH on mm om NH mm «M NH mm NH oo NH om NH NH oo :0 NH om ca :0 oo NH :0 NH am mm Na oo N“ 0000 0000 0000 0000 H000 0000 0000 0000 0000 0000 0000 0000 0000 H000 0000 0000 0000 H000 0000 0000 0000 .0000 H000 0000 0000 000# 0000 0000 0000! 0000! 000# 0000 0000 m00> 0000 0000 moHo 0H00 0000 0000 Nowo 0000 0~0> 0000 NhHm mmbH 0000 0000 mmos H000 ~000 HoHo ooom 0H00 :hoh hmhm #00# meow 00H0 000» 00 00 NH #0 H0 00 00 N0 NH 00 00 00 #0 H0 #0 00 NH 00 #0 00 NH 00 H0 NH #0 b0 #0 #0 00 00 0000 0NHO H000 0000 0000 0000 0000 0000 H000 0000 0000 0000 0000 0000 0000 0000 H000 0000 0000 0000 H000 0000 0000 H000 0000 #000 0000 0000 0000 0000 0000 0000 0000 00N0 #000 NH# H000 0000 0000 000 0000 H000 HHNO >000 #0N0 0000 0000 0000 0000 0000 NON 00H0 0000 H 0#00 0#00 HO0H #000 “oneness NH; -#0 H0 NH 0N NH #0 H0 00 00 NH 0N NH 0N H0 H0 NH NH H0 0N H0 HN #0 #0 #H 0000 0000 Hooo OIO COO 0000 H0 0 H0 0 H0 0 H000 0 0 0th .m 136 N>00 H>00 0>00 0000 0000 >000 0000 0000 #000 0000 N000 H000 0000 0000 0000 >000 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 0000 0000 0#00 0#00 0000 0000 0N00 0N00 0H00 0H00 0000 0000 00N0 pawn 0000 00N0 0000 000> 000# >00# >00> >00> 0N00 >00# 00H0 00H0 0H0> HO0H 0000 0000 000> 00 ~> i. NH 0 mo as No on on .1. NH Hm oo 0H 0000 0000 0000 0000 0000 00000 ,0000 0000 0000 0000 0000 0000 0000! H000 0000 0000 0000 HO0H 0#0# 0H00 0000 #00# 0000 0H0> 000# 0000 000> 000> 0000 #0N0 000H 0000 ‘ll 00 00 NN #H 00 N> 00 #0 #0 N# NN NH 00 ON 00 0> 00H0 0000! 0000 0000 0000 0000 0H00 0000 0000 0N00 0000 0000 0000 0000 0000 0000 0000 0000 H00# H00# 0000 000> 0H0> >000 0H0> N000 NON0 >00> 0000 NH00 0H00 0000 00 00 #> 00 00 NH ON #0 0N 00 >0 0N 00 N> 00 NH 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 0000 00m# o¢oo Nmo¢ mmoe omo¢ oooo mHo> mooe 0000 oeoo 000> HHO> “oma H000 >>>> 000> 00 00 NH 0> HH NH NH 0# 00 ON 0> #0 00 00 #> 0000 0000! 0000! 0000 0000 0000 0000 0000 0NHO 0H00 0000 0000 0000! 0000 0000 0000 0NOH H00# 0000 0000 #000 0000 0N00 H00# 0000 0000 000> 000> 0000 000H NON0 0000 00 #0 #H #0 0N NH N# N0 NH #0 NH 00 #0 0N00 Bofionoo .m 137 HnmchuCOOv uaHo omH 0.0 u cum o 0000 o .uaHo mmH 0.0 u 200 o 9000 o uaHo mNH 0.0 u saw o 0000 o uaHo HNH 0.0 u 2am o ooHo a .uch omH .ooH u H H H u o Nooo a uaHo mNH h .H u H N on o 0000 o uaHo «NH 00H * 0»; u h>4 o 3009 o uaHo mNH H + m>4 u m>4 0 H003 o uaHo NNH a 3003 u uaHo HNH 0H.H mH H o 0003 u uaHo omH >Ho mH<43044 u h>gz 0 soon a uaHo mHH H»z u m>4 o mama o uaHo HHH ~>z. H>z .0400 o 0003 o , uch oHH o u H p . 00H o 0003 a _uaHo 00H 0 u H h . aoH o 0003 o muaHo moH o 0030 u .uaHo poH m.uoH.H>_oH..».u H 3000 a uaHo moH .Amm.~..mm.>..mm.x H coco o uaHo moH .Hmm.>Ho.Ammvm.Hmm H 0000 o uaHo HoH .m..mm.< onmzmzHo o soon a -Nnmoumommm+ ooqom~o~oo+zoomHomoooot H n 0020 .20 ampmhm mchmoGOAm up00H000 .210.H no maxmccH_hp«vcumo cacao ecu anoudum mcwpsmsbo you Aszmcmna hom=v.auhmonm oohsom no mnwvde 138 H 00:50.58 } UQHO 0HN NH.¢ u H HN 00 0 0003 3 UQHO 0HN 0 3300 U UQHO 0HN HDQPDO o 3330 0 :UQHO 0HN 0 3333 U UQHO 0HN 000 0b 00 0 3333 3 UQHO ¢HN ¢ u ZwHH 0 3033 3 UaHO 0HN H H H 0 * 000 u 00 3 3033 3 UQHO NHN H H H 0 * 200 u 20 0 0033 3 UQHO HHN H H H N * 000 u 30 0 3330 3 UQHO 0HN H H H N * 200 u 20 3 3333 3 UQHO 00N MDZHHZOU 0 0003 3 UQHO 00N 3 3303 U umHO NON mzHHDOx HDQHDO 0 3033 U UQHO 00N ‘1 0 3003 u UQHO 00N 000 0H 00 0 3033 3 UQHO ¢0N H n ZMHH 0 3333 0 UQHO 00m 00 + 000 u 000 0 0003 0 UQHO NON H H H < u 00 0 3033 3 UQHO HON ZU + 200 u 200 0 3003 0 UQHO 0¢H H H H > x H H 3303 0 uaHO N¢H 0 * za 3 u 20 0 3330 3 UQHO H¢H 00 + 000 u 000 0 3333 3 UQHO 0¢H H H H > H 3033 3 UQHO 00H * H H 3 >H0 u 00 0 3033 3 UQHO 00H ZQ + 200 u 200 0 3033 3 UQHO 00H H H 3 x u 20 3 #333 3 UQHO 00H 40 3333 U UQHG 00H NxxHE. \ H H H H m * H coon a - uan on H H H x H +.z~-m zu o 3000 o z,, ;;-,i;ca:!-uaHamzm0m,: ‘;H H H >-* H H.w >Ho H:oooo to uaHo mom + on a an o 0000 o uaHo pom H H H x + za u za 0 mooo o -:.. i;:s:a-uaHo- com I -.:--- :- aws. ;. 1.0 0000 u uch mom om * H H H >Ho H 0000 o uaHo omw + on a on .o 0000 o uaHo, mmm H H H x + 21 u za - o pooo o uaHo ¢- o 0000 u uaHo mmw om3 u HHH 0 000; 0 uaHo 0H0 ‘ H + m>H n m»H 0 0000 0 uaHa 00¢ 00H . 20200 0 mom 0 uaHo 00¢ 0000000H + 000300 0 ..... -uaHo H0: { 0.0 0 0000 0 00H0 ~mm m . 0 H 3000 0 00H0 Hmm . < . 0H4 . 10200 0 0000 0 uaHo 000 H H,H N." H H H m 0 mH0H 0 uch own H H H > u H H H m 0 0000 a 00H0 0mm H H H x u H H H < 0 3003 0 - uaHo nmm 0H . H‘u H-mH 00 0 NH00 0 uaHo own 0 0000 0 00H0 mmm >H0 0340 momz u mHH H 0H .0 0H00 0 00H0 hHm 0 0000 u 00H0 on H00H00 0 0003 u 00H0 mHm 0 0000 0 uaHo ¢Hm 000 0H 00 0 0000 0 uaHo mHm 0 u EMHH o 0003 a uaHo ~Hm H H H < + 00 u 00 0 0000 0 «ochpuo0 .0 lhl A 00:50.53 00H0. «00:: :2; --..-Qe;;;:t 0.0000 0 H. 00H0 H00 2036.030 0H 022000000 0 0000 0 .--.-ls!,..sa§si.§i unaiHuNMEitif - .. NH‘OH oo .- 0 0000 . 0 00H0 0N0 H H H N u H H H 0 0 0H00 0 00H0 0N0 H H H H n H H H 0 0 0000 0 , I- x - -;.:;..;|:00H0- 0~0- 0.,;:. H H:H: -u H ~.H.< 0 0000 0 00H0 m~0 00 . pHuH 0H 00 0 0H00 0 00H0 -0 0 0000 0 00H0 H~0 H00H00 0 0000 0 00H0 000 0 0000 0 00H0 0H0 000 0H 00 0 0000 0 e:,.00H0 0H0 . -, . 9» u zmHH 0 0000 0 00H0 0H0 H H H < + 00 u 00 0 0H00 0 00H0 0H0 H H H > H H H H H 0 H 0000 0 I, 00H0 0H0 * H H HxH + 20 u 20 0 0000 0 00H0 0H0 H H H.» * H 0000 0 00H0 0H0 H H H >H0 + 00 u 00 0 0000 0 00H0 ~H0 - H H 0.x + 20 u 20 0 0H00 0 00H0 HHO 0 0000 0 00H0 0H0 0040 0<0m 0 0000 0 -.00H0 000 ‘ -. : ..- 1: ,-, -‘ 0 0000 0 00H0 000 000 0H 00 0 0000 0 00H0 000 0 u 0H 0 0000 0 -00H0 000 .1 -00 H PH 0 H 0H 00 0 0H00 0 .00H0 000 0.0 u 00 0 0000 0 00H0 000 0.0 u 20 .0 0000 0 ,1- .00Ho -000-,.¢;;-; 12-1-,;-0.0;u.00 0 0000 0 00H0 ~00 0.0.» 20 0 0H00 0 00H0 H00 0 0000 0 .zssiiiluzluaHos.meus:I!z:§:::;-i2!:iigis»; ,., -0 0000 0 .2::-xz;,: : 00H0 0H0 00H 0H 00 0 0000 0 085080 .0 1h 2 A wasnwucbov uaHo mmo . ZMHH + H ZMHH H 0000 o uaHo «no H m4 u H H H oH o oomo o uaHo omo o 0000 u uaHo mmo HaaHno mzHHnommom o 0003 u uaHo mmo o 0003 u uaHa pwo , mH . H H 0000 o uaHo owe 0H .m .p .¢ H OH 00 o 0003 o uaHo nmo Hoo. * NH u H H H N o 9000 a uaHo :mo .»4 u H H H > o 0000 o uaHo mmo x4 u H H H x o mom; 0 uaHo mmo oom oh oo o 0000 o .uaHo Hmo mm3H H HH o 0000 o uaHo mHo NH.>H.XH.HH . oHo o ¢o~o o uaHo HHo Hoo. * NH u H H H m o soon 0 uaHo oHo >4 w H H H m o coo: o - uaHo moo L- x4," H H Hi< o memo o uaHo moo How oh oo o 0000 o uaHo poo mw3J H HH o 0033 a uaHo ¢oo NH.»H.xH.HH . aHa .m .m H Homo o uch HNN .< .H>H Hm>4 HoHo .w .m H smog a uaHo «Hp .< .H>H .m>4 .quaa 0 ammo o uaHoH hHw o 0000 u uaHo lo wpm EMHH . H mH .oH .nm H 0000 o uaHo mH» .o .m .m .m H 0H 00 o 0000 a uaHo me H n H oH H 0000 a uaHo HHF u H ZMHH H uoH o 0000 o uaHo OH» H q H oH H 0090 o uaHo mo» u H EMHH H aoH o 3303 o uaHo mow oH . ruzaa o Homo o uaHo pep H .oH * H EMHH H u H coo: o uaHo con H mozm u H p H 0H o 0000 o uaHe anon H ZMHH H u * H ou H 0000 o uaHo .¢o> \ zu H w H zmHH H u o 9000 a uaHo no» H cu H 0000 o uch No» H mozm u.H o H 0H o 0000 o uaHo Ho» H zu H 0030 o uaHo o¢o H mozm u H m H 0H .0 0000 o uaHo omo H ea \ H .oooH * za H 0000 o uaHo one H H Hozm u H ¢ H 0H o 0000 o uaHo ”mo H on H 0000 o ,uaHo 0mg H Hozm u H m H 0H o 0000 a uaHo mmo H 2a H 3003 o uaHo ¢mo H mozm u H m H 0H o 3000 a amusdocoo .u APPEN DIX ill Tables Showing Computation of Total Input and Total Output Indexes for Canadian Agriculture lhh 1h5 Table 16.- Current Dollar Values of (1) Real Estate, (2) Machinory and (3) L1?sstock5 Canadian Agriculture, 1926-1957 —4l.l- ‘-‘” -1“.‘~-“ ' Real Estate Machinery ' LivSEESEE Year (11 ' “92).- ' (’11.... - thousands of dollars - 1926 4698745 665172 785626 1927 4698745 665172 859353 1928 4698745 665172 933080 1929 4698745 665172 947498 1930 4440476 650664 758224 1931 4053282 650664 516714 1932 3489400 610658 415886 1933 3425200 573867 444092 1934 3467808 538685 457654 1935 3449255 533546 540507 1936 3292258 524429 573632 1937 3253346 526876 603672 1938 3083056 543781 587077 1939 3106885 547393 644485 1940 2963226 568349 682522 1941 3029846 596046 621285 1942 3238024 660492 782648 1943 3454480 722277 1097966 1944 3649477 758083 1081967 1945 3711473 826632 1042301 1946 3897005 905491 1075332 1947 4214119 1026573 1148853 1948 4665126 1194947 1244981 1949 4716823 1415546 1370793 1950 5022642 1681075 1467581 1951 5512519 1931880 2014153 1952 5622186 2037947 1790874 1953 6034349 2152463 1556502 1954 5983724 2240868 1424076 1955 6236094 2210000 1462663 1956 6456456 2193297 1422720 1957 6527584 2197775 1516391 _ Ag- BOURGES.- Canada, Department of Trade and Commerce, D.B.S., Ottawa; (a) 1925-1934: Monthlx Bulletin of Agricultural Statistics (under heading "Gross Agricultural Whalth of Canada by Provinces”), 1935-1957: revised estimates from Agriculture Division, Farm Finance Section. lhé 223.8 Table 17.- Interest Rate on Farm‘uortgages, and Price Indexes (1935-39 a 100) of (1) Farm Real Estate, (2) Penn machinery, and (3) Animal Products, Canada, 1926-1957 ' Interest Rate ' Farm Real Estate ' Farm ' Animal ' (Z) on Pam ' Dollars ' ' Machinery ' Products Year ' Hortgages ' Per Acre ' Index ' Index ' Index __l ' _la) ' (h) ' ' lei ' old) 1926 7.5 37 152.9 97.6 130.2 1927 7.1 38 157.0 97.5 127.8 .1928 7.2 38 157.0 97.6 138.2 1929 7.3 37 152.9 97.5 144.4 1930 7.3 32 132.2 97.0 133.3 1931 7.3 28 115.7 94.9 92.7 ~1932 7.4 24 99.1 94.1 70.5 1933 7.1 24 99.1 92.1 69.2 1934 7.0 23 95.0 94.6 86.5 1935 6.8 24 99.1 95.5 ‘ 94.1 1936 6.4 24 99.1 97.8 93.7 1937 6.0 24 99.1 97.2 106.0 1938 5.9 24 99.1 104.1 104.8 1939 5.9 25 103.3 103.6 101.5 1940 5.8 24 99.1 105.8 106.7 1941 5.6 25 103.3 109.1 124.4 1942 5.6 26 107.4 114.4 144.6 1943 5.6 28 115.7 117.1 161.8 1944 5.4 30 124.0 118.2 166.1 1945 5.3 30 124.0 115.1 170.2 1946 5.2 32 132.2 118.8 181.2 1947 5.2 35 144.6 126.3 200.2 1948 5.2 39 161.2 141.6 263.7 1949 5.1 40 165.3 158.3 265.4 1950 5.2 43 177.7 165.1 281.4 1951 5.3 47 194.2 186.8 336.9 1952 5.3 48 198.3 195.4 277.5 1953 5.4 51 210.7 196.7 263.8 1954 5.5 50 206.6 197.9 256.2 1955 5.4 52 214.9 198.8 245.1 1956 5.6 55 227.3 209.4, 246.9 1957 5.7 56 231.4 258.0 A _____AH__‘ Department of Trade and Commerce, D.B.S., Ottawa; Agriculture Division, Farm Finance Section (the values of "Hortgages and Agreements for Sale” were divided by "Interest on Hertgsges and Agreements for Sale"); Quarterlz Bulletin of Aggicultural Statistics, Vol. 40, p. 31’ V01. 49’ p. 22‘ Prices and Price Indexes 1949-1952, p. 96, Eriqqalarld lPlzzic eHIndgiseg month 11 03) : Erices and Price Indexes, 1949:1952, p. 104, Prices Division. SOURCE8.- Canada, (a) 1926-1957: (5) 1926-1957: (c) («0 1926-1952: 1953-1957: 1926-1952: 1963-1957: Tabla 18 o - 1h? Real Estate, Machinery and Livestock at 1935-39 Prices, Canadian Agriculture, 1926-1957 __ Year Real=§state ' Machinery ' Livestock - thousands of dollars - 1926 3073084 681529 603399 1927 2992831 682228 672420 1928 2992831 681529 675166 1929 3073084 682228 656162 1930 3358908 670788 568810 1931 3503269 685631 557404 1932 3521090 648946 589909 1933 3456307 623091 641751 1934 3650324 569434 529080 1935 3480580 558687 574396 1936 3322157 536226 612201 1937 3282892 542053 569502 1938 3111055 522364 560188 1939 3007633 528372 634960 1940 2990137 537192 639664 1941 2933055 546330 499425 1942 3014920 577353 541250 1943 2985722 616804 678594 1944 2943127 641356 651395 1945 2993123 718186 612398 1946 2947810 762198 593450 1947 2914328 812805 573853 1948 2893999 843889 472120 1949 2853492 894217 516501 1950 2826473 1018216 521528 1951 2838578 1034197 597849 1952 2835192 1042962 645360 1953 2863953 1094287 590031 1954 2896285 1132323 555845 1955 2901859 1111670 596762 1956 2840500 1047420 576233 1957 2820909 982026 587748 1h8 Table l9.- Annual Interest Inputs at 1935-39 Prices for (1) Real Estate, (2) Machinery, (3) Livestock, and (4) Total Investment, Canadian Agriculture, 1926-1957 ' ' A— ' Total__“ =Xenr ' Real Estate ' machinery ‘ Livestock ' Investment - thousands of dollars - 1926 190531 42255 37411 270197 1927 185556 42298 41690 269544 1928 185556 42255 41860 269671 1929 190531 42298 40682 273511 1930 208252 41589 35266 285107 1931 217203 42509 34559 294271 1932 218308 40235 36574 295117 1933 214291 38632 39788 292711 1934 226320 35305 32803 294428 1935 215796 34638 35612 286046 1936 205974 33246 37956 277176 1937 203539 33607 35309 272455 1938 192885 32386 34732 260003 1939 186473 32759 39368 258600 1940 185388 33306 39659 258353 1941 181849 33872 30964 246685 1942 186925 35796 33558 256279‘ 1943 185115 38242 42073 265430 1944 182474 39764 40386 262624 1945 185574 44528 37969 268071 1946 182764 47256 36794 266814 1947 180688 50394 35579 266661 1948 179428 52321 29271 261020 1949 176916 55441 32023 264380 1950 175241 63129 32335 270705 1951 175992 64120 37067 277179 1952 175782‘ 64664 40012 280458 1953 177565 67846 36582 281993 1954 179570 70204 34462 284236 1955 179915 68924 36999 285838 1956 176111 64940 35726 276777 1957 174896 60886 36440 272222 1h9 Table 20,- Current Dollar Values of Supplementary (1) Real Estate and (2) machinery Inputs, Canadian Agriculture, 1926-1957 ' ‘ ' Real “Estate a TV Repairs ' Depreciation ' Repairs and ' Taxes Year ' ' ‘ Depreciation ' ' (a) ' (b) ' ' (c) - thousands of dollars - 1926 20771 61550 82321 61005 1927 22693 67237 89930 61587 1928 23202 68751 91953 64493 1929 24025 71178 95203 67949 1930 21914 64932 86846 69819 1931 20075 59480 79555 65384 1932 17174 50904 68078 60046 1933 16726 49562 66288 54774 1934 16878 50007 66885 54048 1935 17752 52590 70342 55331 1936 17373 51470 68843 56387 1937 17558 52036 69594 55723 1938 16994 50355 67349 56713 1939 17521 51918 69439 57165 1940 16708 50189 66897 56304 1941 17031 50458 67489 58863 1942 20464 54443 74907 59704 1943 22211 59242 81453 62539 1944 25675 62485 88160 65228 1945 29152 63151 92303 67776 1946 43670 66062 109732 75722 1947 46343 71015 117358 83423 1948 55141 77191 132332 94562 1949 56818 77689 134507 104813 1950 59673 83148 142821 110429 1951 88114 92235 180349 123592 1952 111481 ' 94569 206050 137060 1953 117950 101556 219506 149031 1954 119269 102246 221515 160764 1955 114990 106957 221947 165264 1956 133618 111023 244641 176350 1957 122928 112780 235708 184139 {a The published estimates were eXpanded to include all terms (see text p. 64). (continued) Table 20.- Concluded .. “-7. ~__ _ Machinery ______ ' Repairs "1 Depreciation ' Repairs and ' Other 4 Your ' ' Depreciation ' l L (a)... ' l (‘0) ' ‘ JELH... - thousands of dollars - 1926 ,17094 55431 72525 53370 1927 17803 60642 78445 58338 1928 17876 67046 84992 66267 1929 16697 72860 89557 74422 1930 16395 69426 85821 73899 1931 11795 59813 71608 65145 1932 12818 56252 69070 58951 1933 12512 53182 65694 55279 1934 13831 50126 63957 58746 1935 16302 48101 64403 58637 1936 15353 47167 62520 59397 1937 15728 47391 63119 61751 1938 17846 49022 66868 65746 1939 19177 49390 68567 73326 1940 19917 51662 71579 79669 1941 20416 54434 74850 89998 1942 27891 60215 88106 97033 1943 31478 65820 97298 99244 1944 36000 69004 105004 104381 1945 39060 75341 114401 108422 1946 42952 82630 125582 119725 1947 47386 94089 141475 132276 1948 54062 110236 164298 166387 1949 55999 131416 187415 192154 1950 60638 157129 217767 235726 1951 57890 181129 239019 265850 1952 62515 190389 252904 277308 1953 63611 201006 264617 292015 1954 56076 209447 265523 304511 1955 58357 205448 263805 316775 1956 64127 202481 266608 342833 1957 65340 201869 267209 352247 t Sum total of fuel. oil, grease, tires, tubes and insurance. SOURCF S- .- Canada, Department of Trade and Commerce, D. B. 8., Ottawa; (a) 1926-1957: Handbook of Agricultural Statistics, Part II (Fans Income, 1926-57), Ref. Paper No. 25, rev. ed., 1958, P. 69; (5) 1926—1957: Agriculture Division, Fanm Finance Section; (0) 1926-1957: as under (a), p. 68. 15:1 Table 21,- Price Indexes (1935-39 a 100) of Supplementary Farm Real 3state and Machinery Inputs, Canada, 1926-1957 ' ' -——"*—ffiw ' ' Gasoline, ' Building ' Preperty ' Fann ' Oil and Year ' Material ' Taxes ' Machinery ‘ Grease ' (a) ' wig) ; 9L ' in) 1926 114.0 144.7 97.6 127.7 1927 108.3 146.9 97.5 118.1 1928 114.7 139.5 97.6 112.8 1929 117.2 138.0 97.5 113.5 1930 101.8 134.9 97.0 113.6 1931 88.3 119.8 94.9 105.1 1932 80.1 109.1 94.1 108.7 1933 84.9 95.0 92.1 105.5 1934 87.5 95.6 94.6 108.2 1935 87.1 95.5 95.5 105.1 1936 97.3 96.9 97.8 101.7 1937 108.7 98.8 97.2 99.7 1938 98.7 104.1 104.1 97.4 1939 108.1 104.8 103.6 96.2 1940 116.0 107.0 105.8 97.6 1941 128.1 108.2 109.1 105.0 1942 148.5 110.6 114.4 114.4 1943 155.0 114.6 117.1 114.7 1944‘ 173.0 123.7 118.2 114.7 1945 174.8 128.0 115.1 114.2 1946 175.2 135.7 118.8 116.4 1947 186.7 148.2 126.3 121.2 1948 224.8 158.8 141.6 136.9 1949 237.1 170.2 158.3 139.3 1950 255.0 179.8 165.1 145.1 1951 296.1 191.2 186.8 147.1 1952 303.3 205.6 195.4 149.9 1953 307.8 215.8 196.7 150.4 '1954 307.0 226.0 197.9 153.0 1955 308.8 230.7 198.8 151.7 1956 316.6 241.2 209.4 152.5 1957 322.9 252.0 223.8 155.0 SOURCES.-‘ Canada, Department of Trade and Commerce, D.B.S., Ottawa; (a) 1926-19523 Prices and Prioewlndexes, 1949:1952, p. 96, 1953-1957: Price Indegdggggggs_gf Gommgdities and services used pv Farmers (3 times a year), Vol. 11, No. 1, and V01. 14, NO. 1; (b) 1926-1957: Prices Division. 152 "able 23.- Supplsmsntary Real Estate and Machinery Inputs at 1935-39 Prices, Canadian Agriculture, 1926-1957 . ———w—— '- ‘— ' “7‘ Real Estate <_' Machinery_ Year ‘—_chair5 and ' ' Repairs and ' ' Depreciation ' Taxes ‘:_Deprcciation,' DEEP? - thousands of dollars - 1926 72211 42160 74308 41793 1927 83038 41924 80456 49397 1928 80168 46232 87082 58747 1929 81231 49238 91853 65570 1930 85310 51756 88475 65052 1931 90097 54578 75456 61984 1932 84991 55038 73401 54233 1933 78079 57657 71329 52397 1934 76440 56536 67608 54294 1935 80760 57938 67438 55792 1936 70753 58191 63926 58404 1937 64024 56400 64937 61937 1938 68236 54479 64234 67501 1939 -64236 54547 66184 76222 1940 57670 52620 67655 81628 1941 52685 54402 68607 85712 1942 50442 53982 77016 84819 1943 52550 54572 83090 86525 1944 50960 52731 88836 91003 1945 52805 52950 99393 94940 1946 62632 55801 105709 102856 1947 62859 56291 112015 109139 1948 58866 59548 116030 121539 1949 56730 61582 118392 137942 1950 56016 61418 131900 162458 1951 60908 64640 127954 180727 1952 67936 66663 129429 184995 1953 71314 69060 134528 194159 1954 72155 71134 134170 199027 1955 71874 71636 132699 208817 1956 77271 73114 127320 224808 1957 72997 73071 119396 227256 153 Table 23.- Current Dollar values of (1) labor, (2) Feed and Seed, (3) Fertilizer, (4) Electric Power, and (5) Miscellaneous, Canadian Agriculture, 1926-1957 (1941-1957 for Electric Power) ' ' Feed and ' ' Electric ' Miscell- Year ' Labor ' Seed 4 ' Fertilizor' Power ' aneous ti ' (a_)"_ w ' (b) ' --.,(b) _ '_ (bL :1 (b) 1000 persons - thousands of dollars - 1926 1251 799389 62611 6182 46838 1927 1284 807636 64952 5798 48882 1928 1305 827370 69861 6849 49893 1929 1307 819489 63696 8878 43849 1930 1238 692042 55467 12050 43723 1931 1216 533824 37757 9936 32529 1932 1237 421817 30992 5657 25803 1933 1257 404754 27992 5309 24230 1934 1277 431626 36673 6410 27547 1935 1298 464684 39128 6989 28112 1936 1319 493306 45584 7695 28516 1937 1339 535600 60783 10157 32386 1938 1359 550395 55412 11189 35192 1939 1379 .584696 55467 11141 37213 1940 1344 623616 57677' 12574 ‘ 40792 1941 1224 664632 68440 12921 1770 48208 1942 1139 799578 109118' 17041 1914 58354 1943 1118 '987194 163977 18486 1914 62337 , 1944 1136 1116688 164096 19629 1954 69562 1945 1144 1224080 174163 22757 2152 71711 1946 1271 1418436 205581 24966 2616 75218 1947 1172 1416948 264065 29631 3194 88938 1948 1186 1564334 281844 32924 3636 99246 1949 1114 1484962 267877 39432 4463 102128 1950 965 1285380 271620 41903 6305 107720 1951 991 1474608 276579 46951 7919 126842 1952 927 1464660 285682 50905 9126 130560 1953 911 1457600 240155 58044 10967 129261 1954 ~906 1427856 274527 56021 12692 129084 1955 880 1365760 280197 54079 13914 138694 1956 808 1338048 321167 55644 15186 153697 1957 773 1360480 300695 56979 15914 148086 t‘ Bought through coinercial channels only. it Sum total of (1) "Fruit and Vegetable Supplies, and (2) "Miscellaneous". Department of Trade and Commerce, D.B.S., Ottawa; ggpadign_Labour Forcewgstipates, 1931-1945, Ref. Paper No. 23, rev. ed., 1957, pp. 20 and 15, The laboug_Force, nogember 1945-July 1958, Ref. Paper NO. 58’ rBVe Ode, 1958, pp. 58’59; as under (a), Table 11, p. 96. SOURCES.- (b) 1926-1957: 1946-1957: Canada 9 (a) 1926-1945: 15h Price Indexes (1935-39 a 100; for Electric Power 1949 n 100) of (1) labor, (2) Feed, (3) Fertilizer, (4) Electric Power, and (5) Hardware, Canadian Agriculture, 1926-1957 (1941-1957 for Electric Power) Table 24.- ' Electric ' ' Average Annual I [ Vigggfi112.flQlR_-' I 9 Year ' Dollars ' Index Feed Fertilizer ' Power ' Hardware ' _,(al_~ ' (b), (b) ' (a) ' (b) 1926 639 162.9 136.4 129.4 104.0 1927 629 160.4 145.6 129.4 102.4 1928 ._§34 161.6 143.5 120.7 105.0 1929 627 159.9 140.0 119.8 101.7 1930 559 142.5 105.8 114.1 100.0 1931 439 111.9 74.6 106.9 99.8 1932 341 86.9 73.5 93.5 99.8 1933 322 82.1 73.5 95.5 93.9 1934 338 86.2 95.0 98.2 94.9 1935 358 91.3 93.5 97.0 96.4 1936 374 95.4 97.6 98.2 96.7 1937 400 102.0 127.6 101.4 101.0 1938 405 103.3 100.8 103.3 104.3 1939 424 108.1 80.5 100.2 101.6 1940 464 118.3 90.8 106.3 109.1 1941 543 138.4 95.6 114.0 128.8 113.5 1942 702 179.0 113.3 121.9 128.8 120.0 1943 883 225.1 120.0 112.9 128.0 120.7 1944 983 250.6 125.1 112.9 115.6 120.5 1945 1070 272.8 127.6 112.9 102.6 119.7 1946 1116 284.5 128.3 113.9 103.0 120.8 1947 1209 308.3 139.8 120.5 104.8 129.7 1948 1319 336.3 204.0 131.5 99.6 152.6 1949 1333 339.9 209.5 141.3 100.0 164.8 1950 1332 339.6 225.3 147.0 103.7 168.2 1951 1488 379.4 228.2 159.6 108.5 187.5 1952 1580 402.9 233.3 181.3 110.8 204.1 1953 1600 408.0 215.7 182.1 114.6 202.7 1954 1576 401.8 205.3 182.8 115.9 201.7 1955 1552 395.7 214.7 181.2 116.0 200.2 1956 1656 422.2 206.4 180.8 115.6 209.9 1957 1760 448.8 204.5 183.4 115.2 224.1 SOURCE 8 e " Canada 9 Department of Trade and Commerce, D.B.S., Ottawa; (a) 1926-1957s 0uarterly_§ulletin of Agricultural Statigtice, preceded by Monthly_Bullqtin of Agricultural Statigtigg (for the period 1940-1957 the average of January, May and August wages was multiplied by 12); as under (a), Table 13, p. 97); Prices Division, Retail Section. (b) 1926-1957: (c) 1941-1957: 155’ Labor, Feed, Fertilizer, Electric Power and Miscellaneous Inputs at 1935-39 Prices, Canadian Agriculture, 1926-1957 Tabla 25 e " ‘ ' ' ' Electric ' Year __L_ Labor ' Feed ' Fertilizer ' Power ‘ Miscellaneggg - thousands of dollars - 1926 490724 45902 4777 45036 1927 503514 44610 4481 47736 1928 511986 48684 5674 47517 1929 512501 45497 7411 43116 1930 485644 52426 10561 43723 1931 477055 50613 9295 32594 1932 485405 42166 6050 25855 1933 493001 38084 5559 25804 21934 500726 38603 6527 29027 1935 508964 41848 7205 29162 1936 517092 46705 7836 29489 1937 525098 47636 10017 32065 1938 532812 54972 10832 33741 1939 540884 68903 11119 36627 1940 527148 63521 , 11829 37390 1941 480225 71590 11334 1770 42474 1942 446692 96309 13979 1914 48628 1943 438558 136648 16374 1927 51646 1944 445606 131172 17386 2178 57728 1945 448710 136491 20157 2704 59909 1946 498572 160235 21919 3274 62266 1947 459600 188888 24590 3924 68572 1948 465160 138159 25037 4704 65037 1949 436882 127865 27906 5751 61971 1950 378498 120559 28505 7832 64043 1951 388668 121200 29418 ‘9405 67649, 1952 363529 122453 28078 10612 63969 1953 357255 111338 31875 12336 63770 1954 355365 , 133720 30646 14118 63998 1955 345150 130506 29845 15460 69278 1956 316931 155604 30776 16930 73224 1957 303137 147039 31068 17801 66080 156 Table 26.— Totel Inputs at Average Prices of 1935-39, 1940-44, 1945-49 ’ and 1950—54, Canadian Agriculture, 1926-1957 ' _ w 1352543111: Poric'i — Yegr ' 1935-39 ‘ 1940-44 ‘ 1945-49 ' 1950-S4 - thousands of dollars - 1926 1087110 1563511 2359681 3076813 1927 1124700 1619365 2441049 3184357 1928 1155690 1658862 2496256 3254702 1929 1169929 1674496 2514310 3278309 1930 1168055 1651700 2465232 3222207 1931 1145941 1620587 2422291 3167089 1932 1121255 1598759 2401599 3135717 1933 1114621 1594650 2401922 3131872 1934 1124190 1608074 2423082 3157484 1935 1135154 1629250 2458640 3203246 1936 1129573 1627020 2462556 3202258 1937 1134569 1635982 2477305 3217675 1938 1146812 1657556 2512512 3262280 1939 1177322 1697095 2570907 3336449 1940 1157814 1663673 2514341 3261503 1941 1115486 1580417 2370108 3079139 1942 1130060 1571667 2336468 3045999 1943 1187319 1630997 2414982 3156901 1944 1200224 1650175 2440384 3188611 1945 1236128 1691829 2492981 3260502 1946 1340079 1845565 2730638 3568955 1947 1352539 1831241 2685471 3520658 1948 1315100 1791947 2623715 3430912 1949 1299404 1753886 2547877 3333012 1950 1281927 1692027 2415199 3167923 1951 1327749 1752029 2497857 3273763 1952 1318122 1725760 2446623 3212690 1953 1327627 1731980 2443108 3209304 1954 1358569 1763705 2485312 3266813 1955 1361103 1759610 2470081 3246916 1956 1372748 1753998 2445998 3220472 1957 1330069 1695466 2360191 3104880 157 Tdbld 27.— figgregdte Quantity Indexes (1926 2 100) of Total Input Bgu:d 0n (1) Constant Height (Weight Periods: 1935-39, 1940vé4, 1945—49, and 1950-54), (2) Paasche,and (3) Chain Index Formulas, Canadian Agriculture, 1926~1957 r—— Coyntgrt \feirrhti Eoight Period: Year ' 1935-39 f" 1940144 1945549 1950-54" Paasche Chain 1926 100.0 100.0 100.0 100.0 100.0 100.0 1927 103.5 103.6 103.4 103.5 102.8 102.8 1928 106.3 106.1 105.8 105.8 105.3 105.4 1929 107.6 107.1 106.6 106.5 106.5 106.6 1930 107.4 105.6 104.5 104.7 106.5 106.4 1931 105.4 103.7 102.7 102.9 105.5 105.0 1932 103.2 102.3 101.8 101.9 104.0 103.4 1933 102.5 102.0 101.8 101.8 103.2 102.7 1934 103.4 102.9 102.7 102.6 103.9 103.8 1935 104.4 104.2 104.2 104.1 104.6 104.6 1936 103.9 104.1 104.4 104.1 104.0 104.1 1937 104.3 104.6 105.0 104.6 104.3 104.5 1938 105.5 106.0 106.5 106.0 105.5 105.9 1939 108.3 108.5 109.0 108.4 107.9 108.8 1940 106.5 106.4 106.6 106.0 106.2 106.9 1941 102.6 101.1 100.4 100.1 101.6 102.5 1942 104.0 100.5 99.0 99.0 100.9 102.7 1943 109.2 104.3 102.3 102.6 103.1 106.8 1944 110.4 105.5 103.4 103.6 103.5 108.0 1945 113.7 108.2 105.6 106.0 105.1 110.4 1946 123.3 118.0 115.7 116.0 114.8 120.9 1947 124.4 117.1 113.8 114.4 112.4 118.6 1948 121.0 114.6 111.2 111.5 111.8 116.3 1949 119.5 112.2 108.0 108.3 109.1 112.9 1950 117.9 108.2 102.4 103.0 104.3 107.2 1951 122.1 112.1 105.9 106.4 106.5 110.9 1952 121.3 110.4 103.7 104.4 104.2 108.9 1953 122.1 110.8 103.5 104.3 103.6 108.7 1954 125.0 112.8 105.3 106.2 105.7 110.6 1955 125.2 112.5 104.7 105.5 105.5 109.9 1956 126.3 112.2 103.7 104.7 103.1 108.9 1957 122.3 108.4 100.0 100.9 98.5 105.0 158 Table 28,- Current Dollar Values of Farm Outputs: (1) Field Products, (2) Animal Products, (3) Forest Products, and (4) House Rent, Canadian Agriculture, 1926-1957 FieldfiProdugt3‘—‘—‘— I ' Cash ' Income ' Inventory ' Year ' income.k ' in Kind.tk ' changes ' Total ' 45) ' AOL ' Adi ' - thousands of dollars - 1926 555731 42502 3375 601608 1927 523798 37224 59229 630251 1928 618412 32917 - 18127 633202 1929 484178 36067 - 135435 384810 1930 271119 39409 82985 393513 1931 177720 23330 - 36142 164908 1932 186115 20330 13986 220431 1933 190696 27336 - 33829 184203 1934 231658 27752 - 5747 253663 1935 234482 26946 7458 268886 1936 255832 33052 - 42047 246837 1937 262431 30897 2459 295787 1938 296540 28665 39525 364730 1939 343931 30889 32662 407482 1940 303205 31761 54011 388977 1941 326591 33266 - 65754 294103 1942 364358 41357 316361 722076 1943 535388 50321 - 164508 421201 1944 851738 50327 - 118908 783157 1945 688834 53748 - 161310 581272 1946 729234 56554 50138 835926 1947 863775 58147 - 38212 883710 1948 1033623 62686 90306 1186615 1949 1087582 57292 - 100855 1044019 1950 778582 54295 154474 987351 1951 1164131 59658 231520 1455309 1952 1390522 81618 133561 1605701 1953 1321866 63778 49683 1435327 1954 889588 62568 . 133059 819097 1955 817505 62778 180553 1060836 1956 1067345 63515 213784 1344644 1957 952848 62365 - 152213 863000 2 Sum total of cash income from the sale of wheat, oats, barley, and L_‘ rye, plus Wheat Board payments. 7 24 Sum total of farm income in kind of (1) fruit and vegetables, and (2) other field products. (continued) 159 Table 28.- (Continued) m Animal Products I ' Cash Income ' Inventory ' Year ‘ income t ' in Kind it ' changes ' Total ' (b) (a) ' (g) ' - thousands of dollars - 1926 383529 85159 . 1243 467445 1927 394367 86279 - 6223 474423 1928 422196 90519 - 5985 506730 1929 423693 90910 7732 522335 1930 348897 75292 843 425032 1931 277582 54594 16692 348868 1932 210063 40140 6373‘ 256576 1933 216766 42007 412 259185 1934 257251 49191 - 1557 304885 1935 282633 52343 - 3732 331244 1936 314869 56232 - 475 370626 1937 358699 60784 - 13279 406204 1938 336301 61735 - 4478 393558 1939 350694 60875 20936 432505 1940 411269 61426 23642 496337 1941 530972 74582 13165 618719 1942 716460 90192 10892 817544 1943 837354 94526 47728 979608 1944 ‘ 931971 93429 - 9475 1015925 1945 946422 103106 - 77981 971547 1946 927853 106423 - 36636 997640 1947 1027334 112383 - 12565 1127152 1948 1317312 133600 - 102924 1347988 1949 1283206 121370 2782 1407358 1950 1321341. 115321 - 56529 1380133 1951 1563608 133229 59891 1756728 1952 1412284 122851 156516 1691651 1953 1413309 120096 34852 1568257 1954 1435564 112656 35083 1583303 1955 1480827 112770 31300 1624897 1956 1534633 106065 ‘6258 1646956 1957 1585872 103196 13546 1702614 2 Sum total of cash income from the sale of cattle and calves, hogs, sheep, and lambs, dairy products. poultry, eggs and other livestock and products. it Bum total of farm income in kind of dairy products, poultry and eggs, and meat. (continued) 160 Table 28.- Concluded Forest Products I I ' Cash ' Income ' ' House Year ' Income 4 ' in Kind ' Total ' Rent ' (b) ' (4L ' ' 40) 1.1 - thousands of dollars - 1926 21934 34650 56584 77263 1927 22234 33401 55635 83506 1928 23638 32421 56059 85271 1929 23894 31386 55280 87706 1930 21909 30886 52795 80487 1931 16611 30694 47305 73742 1932 12867 25511 38378 63346 1933 12181 23061 35242 61229 1934 14325 22298 36623 61415 1935 15468 22846 38314 63974 1936 16581 23112 39693 62501 1937 17326 22797 40123 62745 1938 16817 23477 40294 60492 1939 17451 23527 40978 61701 1940 20907 22995 43902 59533 1941 23286 24553 47839 59470 1942 26797 28689 55486 63529 1943 27501 29702 57203 68625 1944 30887 31558 62445 72373 1945 29553 30049 59602 73288 1945 35456 29793 65249 77208 1947 45635 31021 76656 83486 1948 43738 28220 71958 91401 1949 41921 27213 69134 93304 1950 43863 26843 70706 99461 1951 55011 30805 85816 110875 1952 56337 27125 83462 114294 1953 51048 28452 79500 122418 1954 50275 27837 78112 121508 1955 51866 26166 78032 126721 1956 61542 27792 89334 131899 1957 53141 27306 80447 134568 2 Sum total of cash income from the sale of forest and maple products. 22 Sum total of farm income in kind of (1) honey and maple products, and (2) forest products. SOURCE8-- Canada, Department of Trade and Commerce, Ottawa; (a) 1926-1957: flanggpgguogjggrigu13u3a1_3£§tigtigg, Part II (Farm Income, 1926-57), Ref. Paper No. 25, rev. ed., 1958, p. 38; (b) 1926-1957: 1210., p. 39; (c) 1926-1957: Ibid., p. 58; (d) 1926-1957: Agriculture Division, Farm Finance Section. 161 Table 29.— Price Indexes (1935-39 s 100) of (1) Field Products, (2) Animal Products, (3) Lumber and Timber, and (4) Building Materials, Tax and Interest Rates, Canada, 1926-1957 ' ' ' ' Building ' ' ' ' materials, Tax Year ' Field ' Animal ' Lumber and ' and Interest ' Products 8 ' Products 1 ' Timber.t ' Rates #2 ' (a) ' (a) ' (b) ' (c) 1926 158.5 130.2 111.6 124.8 1927 149.4 127.8 108.6 121.5 1928 134.3 138.2 115.5 122.8 1929 137.2 144.4 118.3 111.2 1930 105.8 133.3 100.3 126.1 1931 65.0 92.7 84.5 103.9 1932 60.4 70.5 75.3 96.6 1933 69.3 69.2 78.1 93.9 1934 80.5 86.5 87.2 94.9 1935 84.4 94.1 86.4 94.0 1936 102.2 93.7 97.0 98.2 1937 128.9 106.0 109.7 103.4 1938 100.9 104.8 99.2 99.6 1939 83.7 101.5 106.4 104.6 1940 85.4 106.7 118.5 109.0 1941 88.9 124.4 137.1 115.5 1942 109.7 144.6 152.8 126.4 1943 129.0 161.8 170.2 130.6 1944 144.5 166.1 183.9 142.1 '1945 162.5 170.2 185.2 144.1 1946 177.9 181.2 197.7 146.2 1947 184.1 200.2 262.7 155.8 1948 200.6 263.7 330.1 178.0 1949 191.9 265.4 349.2 187.9 1950 191.9 281.4 388.2 199.6 1951 200.4 336.9 457.3 224.0 1952 223.0 277.5 437.8 232.4 1953 179.4 263.8 419.2 238.0 1954 170.9 256.2 419.0 240.8 1955 180.1 245.1 441.3 243.0 1956 181.6 246.9 450.6 250.6 1957 163.6 258.0 433.3 257.4 ti Wholesale price index numbers. n Arithmetic average of (1) building materials, and (2) tax and interest rates. ' ' ' SOURCE82- Canada, Department of Trade and Commerce, Ottawag‘ (a) 1926-1951s Prices and Price Indexes 1949-1952, p. 104, 1952-1957: Prices and Price Indexes (monthlies); (b) 1926-1951: as under (a), p. 32 ‘ 1952-1957: as under (a); ‘ ' (c) 1926-1952: as under (a), pp. 93 and 96, 1953-1957: Price Index Numbers of Commodities and Services_fl§ed by Farmers (3 times a year). 16? ”able 30.- Field Products, Animal Products, Forest Products, and House Rent at 1935-39 Wholesale Prices, Canadian Agriculture, 1926-1957 A' Field ' Animal ' Forest ‘ House Year ' Products ' Products ' Product§*fi ' Rent - thousands of dollars - 1926 379563 359021 50702 61909 1927 421855 371223 51229 68729 1928 471483 .366664 48536 69439 1929 280474 361728 46729 78872 1930 371940 318854 52637 63828 1931 253705 376341 55982 70974 1932 364952 363938 50967 65576 1933 265805 374545 45124 65207 1934 315109 352468 41999 64715 1935 318585 352013 44345 68057 1936 241523 395545 40921 63647 1937 229470 383211 36575 60682 1938 361477 375532 40619 60735 1939 486836 _426113-_‘ 38513 58988 1940 455476 465170 37048 54617 1941 330824 497362 34894 51489 1942 658228 565383 36313 50260 1943 326512 605444 33609 52546 1944 541977 611634 33956 50931 1945 357706 570827 32182 50859 1946 469885 550574 33004 52810 1947 480016 563013 29180 53585 1948 591533 511182 21799 51349 1949 544043 530278 19798 49656 1950 514533 490452 18214 49830 1951 736202 521439 18766 49498 1952 720045 609604 19064 49180 1953 800071 594487 18965 51436 1954 479284 617995 18642 50460 1955 589026 662953 17682 52148 1956 740443 667054 19826 52633 1957 527506 659928 18566 52280 163 Table 31.- Total Farm Outputs at (mainly) Average Wholesale Prices of 1935-39, 1940-44, 1945-49 and 1950-54, Canada, 1926-1957 ‘ ..1 ... \‘Leightjori od .. _ Year ._ 1935-39 '4 19490-44 ' 1945-49— ' 1950-54* .- thousands of dollars - 1926 851196 1082962 1706999 2105256 1927 913036 1156597 1823407 2239194 1928 956122 1202295 1898588 2312311 1929 767803 991382 1548137 1943197 1930 807259 1023282 1614443 1989360 1931 757002' 986359 1542321 1954216 1932 845432 1078565 1697483 2100403 1933 750681 973572 1522493 1913339 1934 774292 992102 1556122 1931667 1935 783000 1003082 1573156 1954630 1936 741636 967694 1509679 1904535 1937 709938 926574 1444585 1821166 1938 838363 1069188 1680890 2071632 1939 1010450 1274751 2011707 2444050 1940 1012313 1287062 2027632 2477948 1941 914570 1186188 1857811 2312133 1942 1310184 1647593 2607053 3140254 1943 1018111 1332831 2081822 2606798 1944 1238499 1580301 2488661 3038239 1945 1011574 1314619 2057690 2559134 1946 1106273 1414885 2224997 2726341 1947 1125795 1438821 2261590 2766631 1948 1175863 1476181 2330894 2798866 1949 1143775 1444938 2277020 2748894 1950 1073010 1353771 2132868 2572769 1951 1315905 1633836 2589003 3070911 1952 1397893 1751095 2768545 3309213 1953 1464959 1821714 2886039 3425653 1954 1166382 1495408 2346088 2869132 1955 1321810 1681676 2644724 3208126 1956 1479955 1860150 2937752 3522349 1957 1258280 1610336 2527913 3084802 161; Table 32.- .iggrcgatc Quantity Indexes (1926 a 100) of Total Outputs Based on (1) Constant weight (weight Periods: 1935-39, 1940~44, 1945-49, and 1950-54), (2)Paascho. and (3) Chain Index Formulas, Using Primarily‘Wholedalc Prices as weights, Canadian Agriculture, 1926-1957 :ht Period:_ ' ' ' Constant Wei—zit Wei ==Xear ' 1935*39 ' 1230-44 {*1945é49 '1950f54" Paasche ' chfiifi..-—. 1925 100.0 100.0 100.0 100.0 100.0 100.0 1927 107.3 105.3 105.3 105.4 107.5 107.5 1923 112.3 111.0 111.2 109.3 112.3 113.4 1929 90.2 91.5 90.7 92.3 39.9 90.9 1930 94.3 94.5 94.5 94.5 94.3 95.5 1931 33.9 91.1 90.4 92.3 92.4 92.0 1932 99.3 99.5 99.4 99.3 99.7 99.3 1933 33.2 39.9 39.2 90.9 33.5 39.5 1934 91.0 91.5 91.2 91.3 91.3 92.2 1935 92.0 92.5 92.2 92.3 92.4 93.2 1935 37.1 39.4 33.4 90.5 35.3 39.1 1937 33.4 35.5 34.5 35.5 31.3 35.3 1933 93.5 93.7 93.5 93.4 93.5 102.9 1939 113.7 117.7 117.9 115.1 117.7 124.0 1940 113.9 113.3 113.3 117.7 113.4 124.9 1941 107.4 109.5 103.3 109.3 110.3 115.0 1942 153.9 152.1 152.7 149.2 152.0 157.5 1943 119.5 123.1 122.0 123.3 123.3 123.3 1944 145.5 145.9 145.3 144.3 145.3 152.4 1945 113.3 121.4 120.5 121.5 119.5 125.3 1945 130.0 130.5 130.3 129.5 130.3 137.2 1947 132.3 132.9 132.5 131.4 131.3 139.5 1943 133.1 135.3 135.5 132.9 135.9 144.5 1949 134.4 133.4 133.4 130.5 132.4 141.7 1950 125.1 125.0 124.9 122.2 123.2 132.5 1951 154.5 150.3 151.7 145.9 145.5 153.4 1952 154.2 151.7 152.2 157.2 153.3 171.7 1953 172.1 153.2 159.1 152.7 151.2 173.5 1954 137.0 133.1 137.4 135.3 134.3 149.3 1955 155.3 155.3 154.9 152.4 149.2 157.2 1955 173.9 171.3 172.1 157.3 154.0 134.2 1957 147.3 143.7 143.1 145.5 144.4 150.7 165 Avoznwvnoov cred memo waded moomh mNONm HHNNm bbomm mm¢mmm bmmd w>¢d ombOH >QMNH mNH¢o mOHNm mfimm¢ ¢m000 HmomOOfl cmmfl NmNH mmmm mamNH bmmmk >¢OH0 #mmmm bomHm mm¢mmb mmmd momfi ¢bbmfi Mbmdfl mmmom boomm mm¢mo oom¢¢ NNmmw¢ ¢mmH m¢wH ammo HNQNH Ohmmm omomm Ommflw mOHb¢ mmH¢OHH mmmH brmd ¢mOOH Nm>¢fl Nbooo mmNmOH 006mm 050mm MHmQONH NmmH mNmm mOOHH mm¢wd N¢¢bm bmmhm m¢mo¢ Omflbw O>mN¢HH HmmH ¢bm¢ ONmmH abwmfl mmbmm wbmwr mNm¢¢ mmbm¢ meHOb OmmH ©NH¢ me¢H .bomOH 0H¢¢m mmwbb mboow Homm¢ omomfib m¢mH 00mm NrmON omNm momH¢ mmem Hommm m>Nwm Hmflmmm m¢mH mm¢m ommm mmmm 00m®¢ m¢mmb mmmflm NOfim¢ mm¢mmm b¢mH Nmom Hm¢OH meb ¢mm0m N¢H¢> Hormm OmNmm ¢ommom o¢mH wvmm Noam Hmoo omHNm combo Nommw ¢m¢om ommmmm m¢mH mOHm mwom comm mmmmm m¢¢bo m¢>m¢ bHOm¢ N¢¢m¢m ¢¢OH Obm¢ mote moon ¢>MHN Nbflmm MNOO¢ m¢0m¢ ¢m¢mom m¢mH mowH 70mmm Hmfio N¢¢NN Hmom¢ 060mm bHNmm #mmm¢m NflOH ,OQOH ¢HH¢ brow m¢¢NH mdflo¢ homow obobm mmmNmH H¢mH ”brmH NONN Omm¢ ONNm om¢¢m mQNNN ¢®mmfl #HHNbN O¢OH bme bmmm bH¢¢ ¢¢¢mH moomm NmHmN ¢mmwm Nmmdmm mmmH §mm comm ¢O¢m momom mHQbN fimmwm mmbbfl 0¢mm¢m mmmfl #Oo¢ m¢mN mmmm mowed Ommwm OOHmN HHOHN m¢HHmH bmmfi Hmmw HwHH HHmm mH¢m m¢m¢m ocb¢m mmmmm Hwamvfi ommfl Ombm ##m Hmmm 00>0H ONNmN owmom o¢OoH mammbd mmmH .I OHUHHOU MO Gaga—HO 80. I va . “MM! . Hug . A.v . .va . flow . any . dev . you? .HObeU o ”00w Dad-MO a “PCCQ - 000309 - DCHPSONO> a Daufleom - 0.0930“ a mafia“ - and ham . find hobOHU . human . . . . It . . bmmdlmmmfl .dcdcdo .uoauowovdo vzmvbo Bunk nonfino>om Mo uofifiub hdHHon vnohhSU Iomm aflnnfi 166 Aoosnavnoov mom¢m~ Hmooa «ammo mnfioa pomm o~m~¢m ooo¢o¢ pnmnvm aw¢m¢ pmmfl ommama >Hm¢a omm0§ «mama mama mmam¢m mmmbov appoom omo¢¢ mmmfl Hubmma manna mflmoo «puma ppmm ommmmm Hamew «wagon mmmo¢ mmma momama mop¢a a¢moo «pmma Hm¢~ mmauom «mmnw¢ omeoow m>H0¢ ¢mma 333 2:2 «.82. 38H 83 38.8 comm? 382. $~$ mama ¢mm¢fla momba hood» mono” pmmm ommomm oawpmw camowm moom¢ mmma mbmoafl mao¢n «mmob ma¢aa omm¢ mmmmom m¢mom¢ ”padded om¢m¢ Hmma Ho¢mm Hmoma mmbmm mmmou mm¢m wmamom moonwm oommpb «waom ommfi «ammo ~m¢¢a oboom pm>m pmom mmooam «moco¢ Hmong» m¢mmm m¢ma Ho¢flm mmuma Hmpmo opmp mama bH~¢- oo~m«¢ ¢+mmmo warm” m¢m~ mm¢mm mama“ «puma meHH orb" mnemom ¢pm~pm mmwmmn Hoemm b¢oa mowb» m¢moa mopmm nape mmom mummma «mmomm oommo¢ canon o¢m~ mama» mowed ~mo¢m apnea mowm ommomfl «bmmom mmomm¢ comma mwmfi mbmmb ¢ooma .ouunm ~¢mm ~w¢m mmbooa mflm¢om mvmpmm bmmmm ¢¢ma mmomo mbmaa ommam ammo momm H¢>uma mmmmmm “madam mpmmm m¢m~ mummo mmaoa moom¢ «who «mam mm¢>m~ ooammm omHmH¢ mama" ~«ma ob¢mm «moo mma¢¢ cape ¢om~ «Hoam mombma oo¢~mm mnp>~ Hema mmmom pro bammm m¢am «Hum pmamb mmm~¢fl ompfiom ¢omm~ o¢mfl Hopao ammo ~o¢bm mopm mmma p¢mbo «momma Hooofim «mmmfi mama ~o¢oo mam» mmmom ob¢o oH¢H ¢¢m¢o mo>m¢fl o¢omofl ”mood mama m¢b~o umm¢ campm memo omou abooo psmowfl mammma o¢~o~ bmma Hommo ammo mammm ammo Nona ¢m~¢o pbwmma, «momma mafia ommd «homo m5¢o om§¢m «Hmm mafia ommmm afimama onwawn ¢mmm mmmfi i OHGHHOU MO nvfldnflcnfl .- Haw . may . ‘NHV . «Mu . flaw . Haw . 1~wv . \dnv . Amw . chow — o vofifiohnm - I Foflvahm - harm . H003 . umm rflv ”and . upofldohm - AGOflm . Q50 08a . buoy .naom . .Hqua can. «couch . . . hupnsom . hufinn .ona amon.uaaooufis,. . honom . . . . . . ..pruo. .1, . n“ coaaqanoo ..mm oupaa 167 Table 33.‘ Concluded SOURCES: Canada, Department of Trade and Commerce, D.B.S., Ottawa: (3) (b) (c) (i) (J) (k) (1) (m) (n) sum of cash income from the sale of wheat, oats, barley, rye, flaxseed, (figndbookgof Agricultural Statistics, Part II, Farm Income, 1926-57, Ref. Paper No. 25, rev. ed., 1958, p. 38) and corn (Agriculture Division, Farm Finance Section), plus Wheat Board Payments (Handbook of Agricultural Statistics, Part II, p. 38), plus income in kind from cereal products (Agriculture Division, Farm Finance Section), plus or minus inventory changes of field products (ibid); sum of cash income from the sale of potatoes (Handbook of Agri- cultural Statistics, Part II, p. 38), plus income in kind frdm potatoes (Agriculture Division, Farm Finance Section); sum of cash income from the sale of fruits (Handbook of Agni-o cultural Statistics, Part II, p. 38), plus income in kind from fruits and greenhouse products (Agriculture Division, Farm Finance Section); sum of cash income from the sale of vegetables (Handbook of Agricultural Statistigg, Part II, p. 38), plus income in kind from vegetables (Agriculture Division, Farm Finance Section); Handbook of Agricultural Statistics, Part II, p. 38; Agriculture Division, Farm Finance Section; sum of cash income from sale of D.B.S. miscellaneous and fibre flax (Agriculture Division, Farm Finance Section); sum of cash income from the sale of cattle and calves, hogs, sheep and lambs (Handbook of Agricultural Statistics, Part II, p. 39), and horses (Agriculture Division, Farm Finance Section), plus income in kind from meat (Handbook of Agricultural Statis- tics, Part II, p. 59), plus or minus inventory changes of animal products (Agriculture Division, Farm Finance Section); sum of cash income from the sale of dairy products (Handbook of Agricultural Statistics, Part II, p. 39), plus income in kind from dairy products Cibig., p. 58); - sum of cash income from the sale of poultry and eggs (Handbook‘gf Agricultural Statistics, Part II, p. 39), plus income in kind from poultry and eggs (ibid., p. 58); sum of cash income from the sale of wool (Agriculture Division, Farm Finance Section), plus income in kind from wool (ibid.); sum of cash income from the sale of forest products (Agriculture Division, Farm.Finance Section), plus income in kind from forest products (Handbook of Agricultural Statistics, Part II, p. 58); sum of cash income from the sale of maple products and honey (Agriculture Division, Farm Finance Section), plus income in kind from honey and maple products (Handbook of Agricultural Statistics, Part II, p. 58); Handbook of Agricultural Statistigs, Part II, p. 58. 168 “cassavaoov .ooa mo onshore coda-m ones a won or movesnve open oceans“ .m.m.n any a m.oma m.mma o.eau o.oma m.mm~ m.mflm «.mma e.HoH cams «.mma H.HHN m.o>~ e.om~ «.mem o.omu e.m¢m o.mmH one” e.mm~ ”.mmfl ¢.eflm «.mea mtoem o.mmH m.~em «.mefi mama m.om~ o.oom o.mo~ m.me~ «.mmm o.om~ o.mea m.HmH «mad b.0ea m.mmH o.eH« o.~e~ m.me~ n.ma~. «.mmn a.uom mama m.mmH o.mma o.~em e.oe~ e.oo~ m.ema e.ooe H.mam mama o.mmfl H.HH« o.mmm m.mm~ m.Hm~ ~.aea H.eea m.on mama o.emm o.oom o.mom m.eefl «.mam o.mma o.mma >.o- owed H.mmm p.0mm m.mam m.eefl o.mm~ m.oma e.moa «.mmm mead e.mo« o.mm~ e.mm~ o.mma m.emm «.mmfi m.mem m.om~ mean ”.moa m.mma H.om~ m.m¢a m.mo~ e.om~ m.ema o.mflm bead H.oo~ o.oo« e.mmfi o.m¢a «.mmfi ¢.Ho~ ~.emm e.m- mesa ~.emH p.00” m.me~ s.m~a o.ewa o.mw~ ¢.Ham e.oma meme m.mea o.mmH ~.eeH «.mma e.ema e.ema o.eea e.HmH «ems m.meH o.mma e.eoa m.oo~ m.mefl e.oon m.mo~ H.¢m~ mesa m.ema o.ooa ”.mma o.~m ¢.mma m.a~n e.oea e.mm meme m.mmfl m.mm~ ~.H«a a.um p.0am o.om ~.oo~ o.~m Hem” m.HHH 0.00” o.moa e.oe ~.oo~ ”.mm «.maa m.me oemfl «.moa 0.00” o.oma ~.em e.em ~.~m a.una m.me owed e.em m.mm «.moa «.moa «.em o.pm ”.mm m.mo~ mmma 0.5m H.HHH «.eo «.mHH o.eon o.moa «.moa «.mea puma e.mm ”.maa o.mm o.om ~.eoa e.mon ¢.oma o.em omma «.mo e.eo H.em m.mm e.HoH m.HoH n.eo o.~m mmmu on . any . Adv .‘ Nev . any . Adv . any . Auwl, . how .59 . doom no.6. «ave-m . aooeopoa.ue.3uvemo> . «avg . neovuubm . usage . use» . omwmpoh . human . . ill a o u . awed-mmoa .eeenee 5.2838 unease Ema 53:23 op meflfitom 32 u mmummmd .333 32a and he... ages 169 Auosnfipaoov .xovaw cowam onuoHosa « a.umm H.¢mm momme ¢.N¢ «.mbm a.uefl m.mbm m.amm ¢.>mm bmmfl 0.0mm m.o¢m o.om¢ «.me, w.m¢m m.oom a.uom momma o.mmm omma o.m¢m ¢.¢m¢ m.a¢¢ m.om o.¢¢m mobma momom m.omm o.wam mmma m.oem w.omm o.aa¢ >.¢m H.Hom m.oma o.>om H.>Hm o.aHm «mod o.mmm m.mmm m.ma¢ ¢.mm m.oom m.oam m.mom m.omm 5.0mm mmma ¢.mmm m.m0m mobmw m.m¢ N.Hmm m.bmd eombm m.mmm 0.0mm mmma o.¢mm m.>am m.>m¢ m.¢m momme o.>¢m boeem coupe m.o¢m Hmma m.mma m.oam m.mmm momm m.mmm m.mmH o.mvm o.m>m ~.HHN ommH a.uma H.0mm m.m¢m ¢.m¢ woman 0.0Hm mooom ¢.>mm m.moa mama o.ws~ o.HHm H.0mm m.bm m.mom m.HoN m.m>m m.mHm ¢.mma mema m.mmH ¢.mom >.mom ¢.wm a.uoa m.moa «.mmm moamm m.moH bead wooed m.mmm b.>mH ¢.mHH ¢.red m.moa «.mma H.0HN m.mmH owoa H.¢¢H b.mmm m.mmH m.mmH ¢.>¢H o.mmH o.mmH momma H.mmH meofi Homea m.m¢m m.me m.mma ¢.>¢H m.m¢H comma momma m.0ma eemfl m.oma o.mom N.0>H m.>HH cocoa m.mmH o.m>H ¢.>mfl m.>ma mead ¢.oma m.ooH m.mmH ¢.mm ¢.>¢H m.mma m.mmH ¢.moH o.mmH mama m.maa m.0mH H.>ma m.mm b.>¢a m.mHH o.mmH o.¢ma ¢.oHH Head o.mOH o.mHH m.mHH m.>o m.m¢H m.mm m.00fi m.¢HH oomOH oema o.¢om b.0HH ¢.moa m.oo w.mm ¢.mm m.>m m.>oa m.mm mmmH o.mm m.bm m.mm m.m> m.mm o.¢oa m.moa Homon o.moa mmma ¢.moa H.mm >.m0fl m.ooa m.mma H.HOH mowed o.m0H boeoa bmma m.mm m.mm o.>m ¢.HNH >.¢0H ¢.HOH m.om m.Hm m.om omma Ooem m.¢m ¢.om «.mma ¢.>> o.mm moom ,.H.Hm «.mm mmoH nmv . Adv . my“ . (Nov . Neg . “av . Adv . Amy . Anus . mopmm vmoaova.apesvoum. papaya . nah . Hoot. .ummm vsm.npeseonm.xoopno>wq. souaH . use no? 535$ :23. . Ea . 335m. tea . .3333... .8; .defihoPmm. . H .Honmog. .Ofivmoaon. . .. . H8330 . mnfiuHHdm. . .. a . . . . I: . cosaflpnoo Io¢m adage 170 Table 34.- Concluded SOURCES.- Canada, Department of Trade and Commerce, D.B.S., Ottawa; (8) (b) (a) (d) (a) (f) (8) Agriculture Division, Farm Finance Section; derived from quantity and current value estimates of domestic production, 1935-1945: Quarterly Bulletin of Agricultural Statistics, Vol. 39, pp. 146’150 ’ 1946-1957; Ibid., April-June issues; derived from average Canadian ferm.prices of tame hay, 1935-1940: Handbook of.AgEicultura1 Statistics, Part I (Field Crops), Ref. Paper No. 25, 1951, p. 133 under heading "Hay and Clover"), 1941-1953: Ibid., Supplement to Ref. Paper No. 25, Part'I, 1955, P0 9! 1953-1957: Agriculture Division, Crops Section; 1935-1952: Prices and Price Indexes 1949-1952, p. 20, 1953-1957: Prices and Price Indexes (monthlies); 1935-1952: as under (d), p. 30, 1953-1957: as under (c); 1935—1952: as under (d), p. 32, 1953-1957: as under (d); 1935-1957; as under (c), Table 20. 171 Anesnwnseev m¢m mmow H¢¢k mbmmm mfimmm mm¢¢~ m¢oom H¢m¢mm rmmfi mwb whom mb¢¢ ¢m¢¢m omorm enhbm «Homm common ommfl 0mm mNmb mooo mmmm¢ hmmbm mw¢mm omHHN b>m¢o¢ mmmH mam bmmm 0HNO mo¢bm mmwbm mmmmm rfioom owmoom emmH o¢0H domb memo Obm¢m mambm mmumm Hmmmm Nomo¢m mmmH Omb 000> NHHo «earn admom momma mmwom @moaom mmma omoH o¢mm mbmo m>¢Hm mebm Hmmbm mmmme Hfimomm HmmH omma OHmo mean bmmmm bmacm mmomm mammm oorbam ommH omoH momm mow¢ @mddm omm¢m mHmmN mmomm Odommm m¢mn ommm moam whom emmom mommm momma momma ombmmm m¢mfi mmbm «50¢ mmmm md¢mm medmm mwmvm mmfimm mmmmvm puma Hmmm owmm 055m o>¢mm oonm mmmom mmwmm mbmcmm o¢mfl mdmm 05mm «can moomm emoom ommmw ommmm mmmoma memfl ommw mmHm roam oooma mHmom mmmom Hmcmm bambmm ¢¢md mmflm oom¢ o¢om MHoom ##Hem mmmem Odemm Noawod mead Nomd ommm mmmc oomcm bmflmm mommm mmemm mobbom mead mwoa ¢¢om mmH¢ w¢omd mHmmm mmmbm ¢mo>m mbbmmd Head >H¢H Noam bom¢ momHH hmcem bHHbN bmmmd bmmbcm o¢od m¢¢H bmmm mmom momma mm¢¢m medmm bbm¢m mHHmmm mmmfi them Obmm ommm bmmmfl Nd¢wm Hmhmm «mmdm owwmmm mmmfl were HHHN mmom omm¢a #mmmm mammm eoadm mmbwmfl rmmd Hmmm mQOH mbhm mamm b¢wmm Omvmm omofim obmoma ommfl mmbm moma momm omHHH mmmmm mmemm mmdwm mmmefim mmmd I eumaaou Mo uvseosonv I nonoao . ueom ensue . upoem . oceanoe m,moHpc9ewe> . nnmwhh . neovmvom . unweau . use» use hem . use nopoao . uswsm . . . . . . emmaummofl .ueeeee ...ueum mmummmfi pa A..acom.eee a..pn.>.mv upsapeo euea -.mm oases 172 ommmm mmom mmHoH wfiomm Ham wwmmmfl ommomn mommmm Hmamfl emma mmmmm meme mmmba omomm 0mm mammbfl coward wommum mamma omaa wwamm mmmm «mama macaw mmm moomoa abomba mamflam moemfi mama oweom worm emmma mabmm mmm ommmma «owned mmemmm mamma enma mmwam maom ordbfl m¢mom Hem mmwmea «mused oomemm beoom mmma omame Hmbm mmmmfl woman 0mm wmo>¢n mommmfi memomm somow mmoa mmeme mmmw «awed ommom Hum marmaa ememma mowHHm emmma Hmoa ommme emme #mmna, ammom weed mmmwoa mmommm sermon mHHbH omma ommmw meme mmova obnmn mum 0Hm¢0H remand Herman comma mama mwmam eomm «mood momma ¢moa #mmHHH woman” emoaam Hemom mama mmmmw meme moemm «mass econ omeHmH mouse” Awesome Hemma bead oammm acme carom mmom omom meHHH ummooa mmmmmm ommom mwma ammom mooe omoma momm mama emmomn ommwoa. mmammm eofimm mama Ammom emoo memmm comm Nona ovemna mambon Hmmmmm mmmmm eema oemmm mopm mmaom bone wmmm boomm «momma mommrm mmmma mead ammon mmoo woman whom mmam omoeo Hmoeoa maemmm mmmba mama oweam woom ommmm ooam omen marom memoed wmmmem ommma Head baowm rmmm «memm moom emma moans bmeemfi Hmmemm mmbmfl mead mmmmm eaoo oommm memo ~m¢H «were ommmwa ammoom ommmfi omma mmboo oom> mbwom mHHm Hapa mwomm wmmmma aeoOmH maooa mmmfl «moon «woe semen mmbo Nona ommmo mmomma bummea Hmem bmmfl beomo mafia macaw ommm emea memmo oedema oabmea mmwm omma amomo ammo bmfloe ommm mmmni mmomo memema , bnwmmm comm mmma I mundane mo accesses» I Paom . avonuopm . uposnmmm . nah mmug mmwm was Mimposmoam . meexw. msoenm . easem . eflmmu use . vmenoh . hupasom . hufimm . use mwom.umaeomwfi_. snow . hence . I, . ..Hoeee. w; veesdecoo I.mm canoe 173 Table 36.- Total Farm Outputs at (mainly) Avarago Farm Prices of 1935-39, 1940-44, 1945-49 and 1950-54, Canada, 1935-1957 ‘— —— ' ‘_ Weight Period ___ ' __1935-39 ' 1940-44 ' _1945-49 ' _l950-54 - thousands of dollaro - 1935 789384 1062312 1717435 2087396 1936 739676 1017632 1622780 2016795 1937 719615 993255 1570607 1960055 1938 829243 1107133 1795286 2163102 1939 1039140 1358116 2255517 2665246 1940 1006905 1334498 2205911 2646475 1941 882594 1215441 1946753 2419533 1942 1316081 1697396 2864244 3333263 1943 942258 1305789 2076335 2599537 1944 1138442 1527563 ' 2492904 3015097 1945 941409 1288663 2043393 2521561 1946 1009770 1356338 2189007 2647930 1947 1047535 1399591 2248062 2703975 1948 1108625 1450035 2378901 2791635 1949 1066519 1405968 2289347 2715769 1950 ‘ 1027322 1351382 2192111 2589173 1951 1285917 1650657 2741452 3147153 1952 1379701 1770145 2949762 3410404 1953 1357226 1739515 2887728 3328679 1954 1109818 1483010 2365208 2845340 1955 1282905 1679726 2728324 3223373 1956 1436313 1850063 3052357 3544404 1957 1669082 2665796 3195941 1256322 17h Thblo 37.- Aggrogato Quantity Indox Numbora of Farm Outputs (1935 a 100) Based Primarily on Farm.Prioos Using (1) Conatant Whight (Whight Periods: 1935-39, 1940-44, 1945-49, and 1950-54), (2) Paascho,and (3) Chain Index Formulas, Canada, 1935-1957 ' Constant Whighti Hoight Period: ' Year ' 1935-39 ' 1940-44 '_;g45-49 ' 1950-54_:1 Paasche ' Chain 1935 100.0 100.0 100.0 100.0 100.0 100.0 1936 93.7 95.8 94.5 96.6 93.6 94.5 1937 91.2 93.5 91.5 93.9 88.0 92.2 1938 105.0 104.2 104.5 103.6 105.0 110.5 1939 131.6 127.8 131.3 127.7 126.8 139.0 1940 127.6 125.6 128.4 126.8 124.8 136.3 1941 111.8 114.4 113.4 115.9 114.7 124.4 1942 166.7 159.8 166.8 159.7 156.5 170.0 1943 119.4 122.9 120.9 124.5 123.7 135.3 1944 144.2 143.8 145.2 144.4 144.0 158.0 1945 119.3 121.3 119.0 120.8 118.1 130.5 1946 127.9 127.7 127.5 126.9 127.4 140.6 1947 132.7 131.7 130.9 129.5 130.3 145.1 1948 140.4 136.5 138.5 133.7 137.0 154.7 1949 135.1 132.3 133.3 130.1 132.3 149.3 1950 130.1 127.2 127.6 124.0 125.5 142.6 1951 162.9 155.4 159.6 150.8 150.2 174.4 1952 174.8 166.6 171.8 163.4 161.3 191.6 1953 171.9 163.7 168.1 159.5 159.1 187.8 1954 140.6 139.6 137.7 136.3 134.5 160.1 1955 162.5 158.1 158.9 154.4 150.3 180.6 1956 182.0 174.2 177.7 169.8 165.3 198.2 1957 159.2 157.1 155.2 153.1 148.2 179.3 Table 38.- Aggregate Quantity Indexes (19263100) of Total Output Basod (mainly) on Wholosalo Prices for Years 1926-1934 and Farm Prices for Years 1935-1957, Using (1) Constant Weight (Whight Periods: 1935-39, 1940-44, 1945*49 and 1950-54), (2) Paascho,‘ and (3) Chain Index Formulas, Canadian Agriculture, 1926-1957' ' Constant Whiggt; weight Period: ' ' Year ' 1935-39 ' 1940-44 ' 1945-49 '_;g§o-54 ' Paaaoh. ' Chain 1926 100.0 100.0 '_1QQ.Q 100.0 100.0 100.0 1927 107.3 106.8 106.8 106.4 107.7 107.6 1928 112.3 111.0 111.2 109.8 112.3 113.4 1929 90.2 91.5 90.7 92.3. 89.9 90.9 1930 94.8 94.4 94.6 94.5 ' 94.4 95.6 1931 89.0 91.0 90.3 92.9 92.4 92.0 1932 99.4 99.5 99.4 99.8 99.7 99.3 1933 88.2 89.9 89.2 90.9 88.6 89.5 1934 91.0 91.6 91.2 91.7 91.3 92.2 1935 92.0 92.6 92.2 92.9 92.4 93.2 1936 86.2 88.7 87.1 89.7 86.5 88.1 1937 83.9 86.6 84.3 87.2 81.3 85.9 1938 96.6 96.5 96.3 96.2 97.0 103.0 1939 121.1 118.3 121.0 118.6 117.2 129.5 1940 117.4 116.3 118.3 117.7 115.3 127.0 1941 102.9 105.9 104.5 107.6 106.0 115.9 1942 153.4 148.0 153.7 148.3 144.6 158.4 1943 109.8 113.8 111.4 115.6 114.3 126.1 1944 132.7 133.1 133.8 134.1 133.1 147.3 1945 109.8 112.3 109.7 112.2 109.1 121.6 1946 117.7 118.2 117.5 117.8 117.7 131.0 1947 122.1 121.9 120.6 120.2 120.4 135.2 1948 129.2 126.4 127.6 124.1 126.6 144.2 1949 124.3 122.5 122.9 120.8 122.3 139.1 1950 119.7 117.8 117.6 115.1 116.0 132.9 1951 149.9 143.9 147.1 140.0 138.8 162.5 1952 160.8 154.3 158.3 151.7 149.1 178.6 1953 158.1 151.6 154.9 148.1 147.0 175.0 1954 129.3 129.3 126.9 126.6 124.3 149.2 1955 149.5 146.4 146.5 143.4 138.9 168.3 1956 167.4 161.3 163.8 157.7 152.8 184.7 1957 146.5 145.5 143.0 142.2 137.0 167.1