What is the Farm Price Index (FPI)
The Farm Price Index (FPI) released by the U.S. Department of Agriculture, National Agricultural Statistics Service (NASS) monitors the prices farmers receive for sales of crops and livestock. The more common names for this report is the Agriculture Price Index.
The monthly food price outlook usually comes out on the 25th of every month, except when the 25th falls on a weekend or a holiday. In that case, it publishes it publishes on the 23rd or 24th.
BREAKING DOWN Farm Price Index (FPI)
Analysts and economist consider the Farm Price Index (FPI) an essential economic indicator. Economic indicators are vital statistics which predict the direction of an economy helpful in economic forecasting. The Agriculture Price Index is a lagging indicator which changes after the economy has begun to follow a particular pattern or trend.
Farm prices can be a seen as an indicator of the general level of prices for goods, and if that price is rising or falling over a given period. Study of this price movement gives analysts an idea about the direction of overall inflation and deflation in the U.S. economy. Because these price movements, whether higher or lower, have drastic effects on the investment markets as well as the overall economy, the FPI is an invaluable predictive tool.
Other economic indicators frequently used by economist and market analysts include:
- The Producer Price Index (PPI), released monthly, tracks the changes in prices, over a given period, paid to domestic producers. The PPI considers the areas of industry-based production, commodity-based production, and commodity-based final- and intermediate-demand output. There are roughly 10,000 individual products and groups reported which include nearly all goods-producing industries in the U. S.
- The Consumer Price Index (CPI) is a lagging indicator measure the average change over time in the prices paid by urban consumers for a representative market basket of consumer goods and services, reported monthly by the U.S. Bureau of Labor Statistics. While the all-items CPI measures the price changes for all consumer goods and services, including food, the CPI for food measures the changes in the retail prices of food items only.
Industry analysts, food market participants, and policymakers follow the FPI, PPI, and CPI closely. Of special interest to those in the agriculture sector, is data which tracks farm products and processed foodstuffs and feedstuffs.
Who Produces the Farm Price Index
A mission of the research arm of the USDA is to research and report on trends and issues about the nation’s agriculture and food industries. The production of data in the U.S. is primarily through two divisions within the USDA. Additional branches of the USDA also complete foreign and global information collection and reports.
- The Economic Research Service (ERS) provides research information to the public and private sectors and assist in decision making and policy issues related to agriculture, food, natural resources, and rural America.
- The National Agricultural Statistics Service (NASS) conducts monthly and annual surveys and preparing official USDA data and estimates of production, supply, and prices.