Was wheat a more profitable crop 90 years ago?

the rising cost of living


NOW:

Those were the good old days. When The Western Producer, then known as The Progressive, published its first edition in August 1923, times were simpler.

Neighbours helped neighbours, fresh bread was a dime a loaf and you could buy a brand new Ford Model T for less than $600.

But that’s not to imply that everything was peaches and cream.

After all, running water was still considered a luxury by most farm families, rural telephone service was non-existent in most parts of the West and the vast majority of prairie farmers were still hauling grain by horse and wagon.

So was life really better in the 1920s?

When leafing through past editions of The Western Producer, some interesting comparisons can be made between rural life today and life on the Prairies 90 years ago.

For example, an annual subscription to the paper in 1924 was $2, just a bit more than the value of a bushel of No. 1 Northern spring wheat marketed through Saskatchewan’s recently formed provincial wheat pool.

On Sept. 3 of that year, the newspaper reported on its front page that a proposed final payment of 11 cents per bushel would be distributed to farmers who sold No.1 Northern wheat through newly formed provincial wheat pools in Saskatchewan, Manitoba and Alberta.

That final payment, when combined with initial and interim payments of $1.55, bumped the total payment up to $1.66 a bu.

“The first year’s operation of the joint pools will be most satisfactory to their members,” the paper reported.

“Not only has the influence of orderly marketing had the effect of stabilizing the price upward for the whole market, but the real average price of the season on this basis has been obtained for some 50 percent of the farmers of the West. Every expectation of the advocates of this system of marketing has been more than realized.”

The value of wheat in 1924 relative to today makes for an interesting comparison.

Projected returns for No. 1 wheat were $1.66 per bu. nearly 90 years ago.

In the fall of 2013, projected returns for No. 1 CWRS, 13 percent protein, were estimated $307 per tonne in store at port, or roughly $8.35 a bu.

Assessing the real value of a bushel of wheat in 1924 is difficult, largely because it is impossible to accurately gauge inflation over that period.

However, a review of consumer prices in 1924 provides context.

According to the Chicago Daily News Almanac, bacon was 37 cents per pound in 1924 Chicago, eggs were 48 cents a dozen and milk was 56 cents a gallon.

Thecostofliving.com, an American website that monitors inflation and the price of consumer goods, says the average car in 1924 was priced around $375 while the average worker earned $1,066 per year.

The average house price in the United States was $8,142, or 7.6 times the average annual income.

According to the Bank of Canada, a basket of consumer goods that cost $10 in 1924 would cost roughly $137 today, denoting a annual compounded inflation rate of 2.98 percent over the past 89 years.

Using that same rate of inflation, a bushel of wheat that was worth $1.66 in 1924 should be worth roughly $22.75 today.

Comparing the value of any single commodity over such a long period is difficult, suggests U of S economist Robert Lucas.

That’s because products available in the marketplace were far different in the 1920s than they are today.

As such, direct comparisons can be misleading.

“According to the Bank of Canada calculator, www.bankofcanada.ca/rates/related/inflation-calculator/, something that cost $1 in 1924 would cost $13.70 today,” Lucas said.

“But this figure should be taken with a grain of salt, since most of the goods today did not exist in 1924.”

University of Saskatchewan agricultural economist Richard Gray recently provided more context about Canadian wheat prices and their value relative to the consumer price index (CPI).

He said in an email that the price index was established at a base value of 100 in 1981.

Working backward from that value, Gray estimates the 1924 CPI at 18.2 and the 2013 CPI at roughly 215.

In other words, a basket of consumer goods that cost $18.20 in 1924 is now worth roughly $215.

Extrapolating from those numbers, Gray estimates that the real value of a bushel of wheat today, all other things being equal, should be in the neighbourhood of $19.40 per bu.

“This (is) a little approximate … but it is in the park.”

Saskatoon economist Bill Brown agreed that the current value of wheat relative to other consumer goods appears to be lower today than it was 90 years ago.

However, Brown said Canadian wheat farmers are more productive today, as are domestic and global wheat supplies.

As well, supply and demand are the primary factors that determine the value of any commodity.

“Obviously there was deflation in the 1930s, but it would appear the current price is lower than in 1924,” Brown said.

“However, the early 1920s were pretty good years for wheat and now farmers produce a lot more wheat per acre as well,” he said.

“These kinds of comparisons are always dangerous because so many things have changed.”

And how about The Western Producer?

How have its annual subscription rates fared over the past 90 years, relative to the consumer price index?

That $2 annual subscription rate in 1924 has since increased to $82.92 per year plus applicable taxes, a cumulative inflation rate of 4,146 percent, before tax.

At today’s prices, that’s roughly 10 bu. of wheat for 52 issues.

A brief footnote: The Western Producer published about 16 pages per week in the mid-1920s, compared with roughly 88 per week today.

THEN: The greatest achievement in agricultural history

The final Pool payment for the 1924 crop is now ready for distribution.

The basis of payment is $1.66 per bushel, after deducting carrying charges in both country and terminal elevators.

The first year’s operation of the joint Pools will be most satisfactory to their members. Not only has the influence of orderly marketing had the effect of stabilizing the price upward for the whole market, but the real average price of the season on this basis has been obtained for some 50 percent.

THEN: Seante reform

The executive report of the Trades and Labor Congress, meeting in Ottawa this week, states that “the time has arrived when amendments to the British North American Act should be secured, which would give greater authority to the Dominion parliament and bring about more centralization of our laws which vitally affect the condition of wage-earners in this country, and that it is only by such a step that any essential special reform can be brought about and made equally applicable to all citizens of Canada.”

  • Dayton

    All you have to do is compare Wheat to Gas. Gas has increased 17 times the price in 1924 so Wheat should be $28 per bu.