| In general, when farmers receive more money for their
crops or livestock they make a higher profit. As their profit goes up, they
have more money to spend on new farm equipment. One caveat to this is that
some crops are heavily subsidized by the government. so, in the short run
price fluctuations may have nothing to do with actual economic conditions.
But, over the long rung, as the chart below shows, the prices that farmes are
paid for their crops or livestock is a leading indicator of farm equipment industrial
production. On average, changes in the prices paid to farmers lead changes in
farm equipment industrial production by eight months. |
