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Show FIRST VICTIM Deflation a Threat to Farmer Producers of farm commodities, although strongly entrenched in the present economy and apparently destined to remain so, at least for the immediate future, may be the first group to feel the full impact of any reversal of the current inflationary in-flationary trend. That warning was issued by federal fed-eral reserve board researchers in a midyear study of the position of agriculture, indicating that, even in flush times, the well-being of farmers farm-ers is in a state of delicate balance. If the present boom were to develop de-velop into a tailspin, price falls in the agricultural commodity field probably would be greater than in other areas of the economy, the report re-port points out. Record returns to farmers attributed to prosperous urban consumers and an almost unlimited un-limited demand from abroad could be reversed in a flash. The federal reserve board survey explained the danger of deflation to farmers by citing three factors now operating to keep prices high. IThe share of consumer incomes going to food consumption is much larger than has been customary. cus-tomary. 2 Profit margins of producers and distributors are greater than usual. 3 Speculative factors play an im- portant part in maintaining prices on numerous markets. "Consequently, with any reversal of inflationary tendencies, food prices may be particularly subject to downward pressures." While the financial position of farmers has undergone a vast, gen-Ml gen-Ml improvement as compared with pre-war years, many individ- j ual farmers have increased their indebtedness, and the new debt is written on the basis of sharply ad- j vanced values. In particular, the report declared ! that land values must start declin- ; ing before much longer. Thus, while the farmer is enjoying a high level of income and prosperity as a result of the prevailing inflationary economy, econ-omy, the same forces which are now operating to his benefit appear as a lurking but altogether possible : danger to his future security. |