CURRENT PRICES PAID INDEX

The prices paid by farmers indices by sub-component shown in the graph below represents the average costs of inputs purchased by farmers and ranchers to produce agricultural commodities. Conceptually, the average price when multiplied by quantity purchased should equal total producer expenditures for the item.

The prices paid data are obtained from establishments that sell goods and services to farmers and ranchers. Annually, about 8,500 firms are randomly selected from lists by type of item sold with an average response rate in the range of 75-80 percent. Firms are asked to report the price for the specified item "most commonly bought by farmers" or that was the "volume seller". The survey reference period for most items is the 5 business days centered on the 15th of the month. Separate prices paid surveys are conducted for agricultural chemicals, fuels, feed, fertilizer, machinery, and seed.

The 2006 data shown in the graph represents the prices sampled in mid-July 2006, with previous years shown as annual averages. Energy prices have increased since last month, with the July diesel fuel index at 253 versus a revised June index of 251, and diesel prices are 10% higher than July 2005. The July nitrogen fertilizer index, at 200, is 7.5% above July a year ago but is down 1.5% from the June index. The July 2006 phosphate and potash fertilizer index is also down 0.7% from June, but is 7.4% percent above July 2005.