Evening star., 1934-09-16
Farmer, Packer and Con.
sumner Agitated Over
Which viii Pay.
PRODUCER HAS PAID
DURING EARLY STAGES
College Professor Believes Packer
Will Pay Unless Purchasing
Power Increases.
Hy the Associated Press.

BY the Associated Press.
AMES, Iowa, September 15.-With
top prices for hogs lowering near the
highest point in four years, the ques-
ton agitating farmer, packer and
consumer is which of the three Is
going to pay the cost Of the hog re-
duction program.
Prof. Goeffry Shepherd Of Iowa
State College attempts to answer this
much-disputed question from mathe-
matiCal calculations and study OF
market data covering the last IL years
Shepherd concludes that except for
the effect of the Governments 1889
pig slaughter on market receipts, the
farmer has been paying the processing
tax during the early stages Of the pro-
gram in the form Of depressed market
prices.
But he further predicts that with
the program already beginning to
show up in reduced market receipts.
the packer is about due to begin pay
ing the cost of the program because
of his reduced volume Of business
that will result.
Tax Is Passed to Consumer.
A study Of charts showing the
margin between live hog prices and
wholesale hog product prices shows
the margin has widened with each
application Of higher processing tax.
Apparently the packer passed the tax
on to the consumer or back to the
farmer.
Although retail prices have strength
ened, Shepherd concludes this merely
represents stronger demand for pork,
due to improved industrial conditions.
that decrease Of 10 per cent In pork
production results in an increase Of
10 per cent in retail prices.
The natural inclination Of the con-
sumner Is to spend only so much money
for pork, and consequently q 10 per
cent lift in prices merely results In his
getting 10 per cent less pork for his
money.
with the packer faced with the
probability OF q. consumers strike II
he attempted to pass the tax on, there
has been but one place for the tax to
be collected, from the farmer. Shep-
herd says.
Farmer Receives Less.
He estimates the farmer has been
receiving about $1.60 less per 100
pounds Of live hog during the first part
of 1884 than he would have received
had there been no tax.
xxTI.A kov AA
been collected from him but for the
Governments slaughter of 100000
pigs last year, which hghtened market
supplies about 10 per cent for the
nine or ten Winter and Spring months
that followed.
Since 10 per cent reduction In hog
production normally brings about 20
per cent increase In market prices,
Shepherd calculates the pig-killing
campaign raised prices about 65 cents
on 100 pounds over what they would
have been with q processing tax In
effect, but with no Government
slaughter Of young pigs.
When market receipts decline, as
they already are doing, however, Shep-
herd says it will be q different story.
Increase In Farmers Income.
While 10 per cent reduction in pork
production increased retail prices 10 per
cent, according to studies OF market
data, q 10 per cent reduction in hog
production results in 20 per cent In
crease In the market price Of live hogs.
This increase In price means an In
crease I'm the farmers RTOSS income of
about per cent for 10 per cent fewer
hogs.
Although the 1894 Government pig
report has forecast decrease Of 81
per cent In numbers, Shepherd esti-
mates actual market receipts may fall
off only 20 per cent, due to marketing
Of breeding stock and feeding to heav-
Ter weights.
theoretically, a 20 per cent reduc-
ton would result In IL per cent in
crease In gross income, although there
has been no such large reduction since
the war to serve as a guide to statfsti-
clans.
Unable to exact the tax from con-
sumers unless there Is q decided in
crease In purchasing power, the pack
ers win pay the tax after all, Shep-
herd concludes. Not because they will
pay It out Of reduced margins, but be-
cause their volume may be reduced by
about 20 per cent. Competitive condi-
tions, he expects, will prevent success
Of any attempt to widen packers mar
gins to make up for the reduced vol
ume.