US agricultural economic growth in this century has been characterized by a slow rise in the demand for food and faster growth in farm output as against nonfarm productivity. In such an environment, one expects the size of the farm sector to decline as a share of the rest of the economy. What is not so clear is the effectiveness of the price system in signaling the appropriate resource adjustments or of the resource market in responding to available signals. We examine four terms-of-trade measures conceptually and, since 1929, empirically. We find that even distortions from farm programs have not offset the long-term trend of declining terms of trade. Labor and capital markets respond, albeit imperfectly and slowly.