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economics, as published by the New York State College of Agriculture, in which it was published in July, and I am taking the January prices.
It says the index of farm prices at that time were 223. The index of the cost of farming was 338. The index of the earnings of factory workers was 633.
When you have a disparity like that it is pretty tough to try to carry on and feel that everything is O.K.
We believe the most prosperous Nation in the world, the United States, should practice abundance and not scarcities.
This problem of fair-price relationship between groups goes much deeper than curtailing the acreage of wheat or corn. It is a momentary problem which can only be solved by research, and much more research. It has now been over 20 years since real research has been done on a monetary system, and during these 20 years every experiment has been tried on production controls and agriculture still suffers from a poor price relationship with other groups.
The Farm Bureau asked for a stable price level through an improvement of the monetary program. Most of our farm mortgages are paid in periods of war, and most of our foreclosures occur in periods of postwar.
We of the Farm Bureau do not believe that success should come to only those farm people who are born the right time in the century, nor does the Farm Bureau think that milk strikes are the answer to unfair price relationships.
We do think that research on a monetary system would allow farmers to produce freely without Government supervision, and it would allow all of the people who work to thrive in a fair, free-enterprise system.
The CHAIRMAN. Thank you, sir.
STATEMENT OF MORRIS LA FRANCE, RANDOLPH CENTER, VT.
Mr. LA FRANCE. Mr. Chairman and gentlemen of the committee, my name is Morris La France. The CHAIRMAN. Give us something new, if you have it.
Mr. LA FRANCE. The only thing I can see is that there be a quota system in the Federal marketing orders. If we were paid for our class 1 milk and for our class 2 milk and allowed to have our share of the class 1 market, if we cut out our class 2 production, then an individual could do something about the present situation.
The CHAIRMAN. How would you attain that end, now?
Mr. LA FRANCE. We are paid for our class 1 milk, and we are paid for class 2, but it is figured on the milkshed. So if an individual cuts production today, he cuts his class 1, he cuts his class 2.
It is the manufacturing milk which is hurting us financially.
Mr. LA FRANCE. Our class 2, or our manufactured milk. If we could be assured of our share of the class 1 market, even though we cut our production, then the individual could do something about it.
The CHAIRMAN. I understand that. But the question is, how would you figure it, so that the production of class A would be what the trade demands?
Mr. LA FRANCE. We have our Federal orders, and they have the records, and it is feasible. I believe it would mean more bookkeeping, but most of it does, anyway.
We get paid a blend price for our milk, so much for that, that is used for fluid purposes, so much as is used for manufacturing purposes. If we would just be assured of the same percentage, be assured of our fluid market, even though we cut our production. In other words, if we could cut our production and still retain our fluid market
The CHAIRMAN. The class A ?
Mr. LA FRANCE (continuing). Then an individual could do something about it.
The CHAIRMAN. I well understand what you want, but now the question I am asking you is how to attain that; how would you do it?
Mr. LA FRANCE. You would have to do it with an amendment to the Federal order. That is all.
Senator AIKEN. How much milk do you make, Mr. La France ?
Mr. LA FRANCE. An individual could-some individuals might cut out most of their class 2. Some would cut out none.
Senator AIKEN. How would you decide who was to cut out?
Mr. LA FRANCE. No one would have to do it. If we were paid for class 1 market and paid for the manufacturing milk, then an individual could do as he wished. Many would cut their class 2 production to the point where it would bring it in to much closer balance of supply and demand. I am not the only one in the country that is talking about this—perhaps the only one that has mentioned it in the Federal order areas—but I know there has been discussion throughout the country of a grading or quota system.
So far as I can see, there is no other way that would enble an individual to do something about the situation.
I have not gone deeply into the quota system in my statement, but there are different sources of getting the information.
The CHAIRMAN. Your whole statement will be placed in the record, and we will give it study.
Thank you ever so much. (The prepared statement of Morris La France is as follows:) In the beginning I would like to nuake a few general observations about the farm problem.
It is indeed a fine commentary on our present civilization that a group of people that has provided food and fiber so abundantly and so reasonably for our whole Nation should now be made to suffer for their industry and good work. By any Christian standard, an abundant food supply should be a blessing. It is, in fact, becoming a curse to those of us who have produced it.
I believe it to be true that very seldom is there a so-called balance of production. By the very nature of agricultural hazards, there either is not enough or too much. Obviously from the Nation's food interest, a plentiful supply is desirable; to the farmer it is disastrous because a small surplus sets the price for the total output. This is not true of other segments of our economy.
In this testimony I shall limit my remarks, as much as possible, to dairying which has been my business for 22 years—the last 12 as owner and operator.
There is today general agreement that dairymen are under financial strain due to the prices they receive being out of line with the prices they pay. There is, I believe, general agreement that this situation will not be remedied until supply is more nearly in balance with demand. Here the agreement ends.
The philosophy behind present Federal action is that lower prices will discourage production and bring about the desired balance which in turn will be followed by better prices. Flexible price supports have so far failed to improve prices of milk or milk products. The reason is that flexible supports flex down when there is a surplus, the only time when supports are needed. While forcing some people off the farm this lowered price tends to increase the production of the farms trying to stay in business. The farmers costs remain the same or go higher and as prices drop, bore production is needed to meet them. This effect tends to keep milk production stable or on the increase in times of falling prices. A study of the comparison of milk prices and production over the past 30 years proves this tendency of inverse effect.
Dairying is a long-term operation. It is expensive to establish and takes years before it is operating smoothly and efficiently.
Once established the tendency is for dairymen, in periods of low prices, to exploit themselves and their families, to seek employment off the farm, to mine their farms, and to use all means at their disposal to stay in business. In other words, they subsidize their dairy operation. This is happening today at an alarming rate to the detriment of farm families and the communities in which they live.
An impoverished, overworked farm population cannot build or maintain healthy communities. It is not necessarily the most efficient farmers who stay in business. It can be a small operator with full-time work off the farm. It can be one who has made no improvements in buildings and who has incurred no major debts. In fact, in our area (depending on the wholesale marketing of milk) it is possible that the larger farms are having the hardest time because hired help is necessary and must be paid. Also, since these farmers are fully employed on the farm, it is most difficult for them to earn money from other sources.
Now, there is one other way. A quota system should operate effectively in Federal order markets and benefit all dairy areas because as production of surplus or manufacturing milk was cut in the order areas, the prices of manufactured products would certainly rise.
Some of the oldtimers remember a ating plan handled by dealers many years ago. This was not popular. Today, however, we have our Federal order and an administration to handle the records. I do not claim that this quota system would be without problems, but I believe that it is the only solution available so far to bring production into line with demand. The present policy will ultimately financially ruin enough dairymen to bring about the proper balance which, of course, will be followed by too little production, since demand will continue to increase as population increases. Under a quota system more good farms would be kept in operation and able to produce the increase that will surely be needed.
A quota plan would allow every producer his share in the current market according to his recent history. There would be no limitation on production, but surplus production is effectively discouraged because only this average realized surplus-disposal price is paid for surplus mills.
The CHAIRMAN. Our next witness is Mr. Dean Smith.
STATEMENT OF DEAN SMITH, RHODE ISLAND ASSOCIATION OF
FARMERS, INC., LAFAYETTE, R. I. Mr. SMITH. Mr. Chairman and members, I am from Rhode Island. I am representing Mr. Stroberg, who, because of illness in his family, is unable to attend. He is a dairy farmer.
We do have agriculture in Rhode Island, in spite of what some people may think.
The CHAIRMAN. What is it, principally?
Mr. SMITH. We have dairy, potatoes, and poultry, and market gardening. We do quite a lot of market gardening.
The CHAIRMAN. Do you can much of the produce?
Mr. Smith. Most of the produce, sir, is sold on roadside stands and to local markets.
Senator HOLLAND. Do your dairies largely supply the Providence and Newport areas?
Mr. SMITH. The Fall River area, and Providence, in that area. Some of them are on the other side, the Narragansett Bay side.
Senator HOLLAND. Is there a Federal marketing order for the city of Providence or for that area?
Mr. SMITH. I could not tell you, sir. I am not sure.
The CHAIRMAN. Suppose you skip over those that have been covered and just give us any new ideas.
Mr. SMITH. I will say that we do have one on reclamation and irrigation projects.
The CHAIRMAN. We have heard that from almost every meeting that we have had—to curtail them. That is what you are in favor of?
Mr. Smith. Yes, sir. And the soil fertility bank.
The CHAIRMAN. We have had that pretty well, unless you have something new as to how to pay the rental, or have you got any plans?
Mr. SMITH. The plan that the farmers down there at our meetings came up with was that they would recommend that the landowners be paid on the cost-share basis of compliance grant for planting and maintaining these diverted acres to soil-building crops, and that none of the crops produced on these acres find their way to the marketplace in any form.
The CHAIRMAN. How much would that cost? Have you figured it? Mr. Smith. No; they did not get into that.
The CHAIRMAN. Would you want a payment in the nature of a rental, or merely an amount to pay you for the work necessary?
Mr. Smith. 'I'here were both plans discussed.
Mr. Smith. Both plans were discussed. Many of them discussed the rental. The majority of the farmers in Rhode Island felt they would rather have so much given to help.
The CHAIRMAN. To conserve the soil and enrich it?
On the potato situation, we do not quite agree with the State of Maine, because we do not grow potatoes like the State of Maine and most of the potato growers. We have DP's from Maine, I guess. They are potato farmers in Rhode Island who grow from around 30 acres to 300 acres. The potato farmers we have are fair sized.
Here is what our president of the potato growers wrote:
“The potato farmer, in spite of current low prices caused by high supplies of prior programs, still remembers the unfavorable results of the potato price-support programs of a few years ago and wish to remain on a free-enterprise system."
The CHAIRMAN. I suppose that Rhode Island produces just about enough for her own consumption requirements?
Mr. Smith. I am afraid that we have got Maine potatoes in Rhode Island. In fact, we ship an awful lot of them in there.
The CHAIRMAX. You do not produce enough in Rhode Island ?
Mr. Smitu. No; we do not. There are a lot of potatoes produced in Rhode Island. They do not go along with the Government support program, nor the subsidy program, in any form.
The CHAIRMAN. Since you do not produce enough, you do not have that heavy freight that the State of Maine has to pay, therefore you ought to be
Mr. SMITH. No; I cannot see that. I do not know what the price is. I cannot see that it is very good. It is about $1.50 a hundred. I think that is about all I have to add. And I will just file this statement.
The CHAIRMAN. Yes; you may file it as though you had read it.
(The prepared statement of Burton Froberg, president, Rhode Island Association of Farmers, Inc., Lafayette, R. I., is as follows:)
The opportunity of presenting the viewpoint of the Rhode Island Association of Farmers and the farmers of Rhode Island with respect to issues under consideration by the subcommittee is appreciated.
The Rhode Island Association of Farmers is an organization of some 290 farm families and is wholly supported by dues paid by members on a voluntary basis.
As an individual, I am president of this association and also a farmer. I own and operate a dairy farm consisting of 200 owned or leased acres, with a herd of 115 dairy animals producing 1,200 quarts of milk daily for the Rhode Island market. I am also a student of the other types of agricultural enterprises, and have been formerly engaged in potato, poultry, and sweet-corn farming. I have also served on the State agricultural stabilization and conservation committee. The continued prosperity of the Rhode Island farmer and the American farmer, too, not only is of concern to me because I am an officer of a farm organization but also as one who is currently engaged in farming and who hopes to continue in farming for myself, and with the hope that my sons will do likewise.
This statement is based on the policies adopted at the annual meeting of the Rhode Island Association of Farmers held on November 1, 1955. Prior to the annual meeting, a series of local meetings were held throughout the State providing every farm family in Rhode Island the opportunity to present his or her views at either these local meetings, the annual meeting, or both.
The sentiments of the Rhode Island farmer on agricultural policy are clearly expressed in the following resolution which was unanimously adopted at the annual meeting: “Agricultural policy
"Agricultural income continues to decline while total national income is rising. Per capita farm income has been increasing, but has not kept pace with per capita nonfarm income.
"The primary reason for low farm prices is that the supply of agricultural products continues to exceed the demand. The logical solution would be to expand our markets, both foreign and domestic, to consume this production. The expansion of markets to this extent, however, is questionable. Our continually increasing population likewise is not consuming all the increased production.
"There probably will be a period some years in the near future when our population will require a much-increased agricultural production. We should plan now for that period. To bring about a more stable general price level as a means of providing a favorable climate for economic growth and a rising standard of living we recommend the following:
“1. That the Government call a temporary halt to Government reclamation and irrigation projects. No new projects should be started. Plans, however, for future projects should be prepared, in preparation for a time when it is necessary for increased agricultural production.
“2. That we reaffirm our position of opposing a rigid high price-support program with its accompanying mandatory production controls and stiff violation penalties and that we favor a level of medium variable supports with some production controls, and with the ultimate goal of eliminating all price-support programs and letting the market place determine the price.
"3. That acres taken out of production of crops in surplus not be planted to crops that could produce surpluses in other commodities. These diverted acres should be used as a soil-fertility bank which could be brought back into production when more agricultural products are needed. We oppose the Government purchase of this land. We would recommend that the landowner be paid on a cost-share basis, with a compliance grant, for the planting and maintaining of these diverted acres to soil-building crops, and that none of the crops produced on these acres find their way to the market place in any form.