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We have had all kinds of proposals made. Have you given thought to it to tell us what you would do in the event that Congress should decide to reduce our plant so as to in effect reduce our surplus?
Mr. BENHAM. I have a thought on this subject. It is my opinion that it would be far more effective and practical to try to develop a program that would take our least efficient plants entirely out of production than a program that would take a part of our good plants out of production. That is, I question taking 10 or 20 percent of a farm that is on good land out of production. The first, would not that be to decrease the efficiency of the operations on that farm as you decrease the acreage and the volume of product. Certainly, it would seem to me that we would have to have quite a sizable administrative and policing force. Certainly, it would not be of any value unless that sand, this percentage of farms that was taken out, was put into grasses and no harvest or pasture from it. Otherwise, you would defeat your purpose. And I could foresee that when there came a rather dry season in any area, there would immediately arise a demand to allow the crops to be harvested from this acreage and the cattle to pasture on it. And I have some question whether you gentlemen could stand up under such pressures.
The CHAIRMAN. In respect to the policing that you have just mentioned of these areas, it was suggested by some that this land be put under the jurisdiction of those who handle the conservation program and make it so that a farmer who sets aside these acres and does not comply with the requirement would lose payments on the supported crop. What do you think of that plan?
Mr. BENHAM. It might have some effect. I am not at this point saying that I would be 100 percent against that. I would have some reservations as to its value.
The CHAIRMAN. I understand. It is my judgment, and I am speaking for myself only, that from the mass of information we have obtained that there seems to be quite an urge to set aside acreage until our surpluses are reduced. We are in search of a formula to carry out that thought.
Mr. BENHAM. I would point out that, as a dairyman, if I set out on a program to reduce the production of milk on my farm, I would not sell the best cows to the butcher-I would send the poorest ones. I think that idea is practical when you come to look at our land resources, too.
The CHAIRMAN. What the proponents of such a plan had in mind is by setting aside the land. It might cause seed and feed to go up and thereby you would probably dispose of some of your cows that would not be economical to keep.
Mr. BENHAM. It has the advantage if you require that the land be kept in grass, so that the fertility is retained-it is there when we need it. It has some advantages. I still question its practicability.
Senator AIKEN. You would not object to squeezing out the 4,000pound cow?
Mr. BENHAM. Perhaps we would say that is what I am proposing to do with agriculture as a whole.
Senator AIKEN. I notice that you are opposed to squeezing off people; you would not oppose squeezing out the uneconomic produc
Mr. BENHAM. I am opposed to trying to starve people off land, but I recognize the necessity of encouraging them to get off. I do not think we can push them off, but I think it has to be done through programs that will make them have alternative opportunities, so that of their own volition they will decide there are better opportunities for them otherwise than on the farm.
We would approve the adoption of a two-price plan for agricultural products, to be administered either by Government or by farmers themselves under a program somewhat similar to what the dairymen are suggesting.
The CHAIRMAN. What commodities would you suggest that on?
Mr. BENHAM. I would say that that would be particularly true with our cereals and probably dairy products, as long as they are in surplus. We feel that it is fair probably to assess part of the losses resulting from sales at these lower export prices back on the farmers, possibly with adjusted percentages according to the supply of surplus.
The CHAIRMAN. Does your plan envision a fixed price for the domestic consumer?
Mr. BENHAM. I will touch on that a little later. You will have to have the prices established somewhere.
The CHAIRMAN. I understand the two-price system would mean as to all products that are sold domestically you would have a fixed price?
Mr. BENHAM. You would have a higher price than the export price.
The CHAIRMAN. It would have to be a fixed price?
Mr. BENHAM. It would have to be fixed, but whether it could be flexible or adjustable or not, that is, a different price adjustable from time to time, from year to year.
The CHAIRMAN. The surplus would be sold abroad at whatever the market would bring, the world market?
Mr. BENHAM. Yes. We say that because farmers have been in no way responsible for the high price levels we find ourselves operating under in this country, and we question whether it is fair to assess all losses on such export sales back against the farmers, something he was not responsible for and cannot help.
Fourth, we would propose that agriculture cooperatives and other domestic corporations should be encouraged to develop facilities for manufacturing and merchandising agricultural products in foreign countries, and our Government should make available technical skill and low-cost financing for such purposes. Of course, the surplus products should be made available to them at prices which will be competitive in those markets.
Fifth, we believe that Government should do more than it has been doing in the field of research in hopes of developing more practical industrial uses for agricultural products.
The CHAIRMAN. You know that during the last 2 years we have appropriated much more than in the past.
Mr. BENHAM. We appreciate that.
The CHAIRMAN. I believe that is going to continuously increase—I hope so, anyhow.
Mr. BENHAM. So do I. There is a big field there that I think we have not anywhere near cultivated to the extent that we could profitably.
The CHAIRMAN. Senator Aiken and I happen to sit on the subcommittee of the Appropriations Committee that handles these appropriations. Senator Hollad also is on that, and I can testify to the fact that we have had a considerable increase in funds for all kinds of research.
Mr. BENHAM. Our sixth point is on a subject which I have rarely heard mentioned as being associated with our agricultural problems or with any of our industrial problems. I think it has importance greater than we ordinarily think of it having. We would suggest that qualified men should study the effects of foreign-curreny devaluations upon both our agricultural and industrial export problems, and recommend actions to counteract those effects.
The CHAIRMAN. You mean by our Government?
Mr. BENHAM. To meet the problems that these currency devaluations of nations have presented, those nations that we would export to, or who are offering similar products in the world markets--the advantage that has given them over us in world trade.
The CHAIRMAN. What they do is to subsidize commodities so that they will be sold just under what we have to sell. Would you want us to follow the same policy?
Mr. BENHAM. I am not saying what we should do.
The CHAIRMAN. And a study would not do any good unless our country was willing to meet the challenge they pose. I do know that in Brazil, for instance, they got rid of their crop by subsidizing it. That is, the Government itself came into the picture and subsidized to the point where it was sold abroad just under what we could get.
Would you want our Government to do the same thing?
Mr. BENHAM. I was not talking about direct subsidizing of agricultural products.
The CHAIRMAN. That is what they do.
Mr. BENHAM. I was talking about the advantage that the exporters of agricultural products have gained over us in countries where the country is deliberately devaluating its currency. I do not know that we can do anything about it, but it is a rather serious matter. Certainly, it deserves to be studied in the hope that some solution might be found. I am not proposing what the solution is.
The CHAIRMAN. They have a method of devaluating their own currency. Ours is devalued as our debt increases, as you know.
Mr. BENHAM. So far as our domestic use of it is concerned.
The CHAIRMAN. That is correct. I hope that we put a stop to that soon.
Senator AIKEN. I think, Mr. Benham, we could do something about foreign currency manipulations, if such were directed at the United States. We have plenty of ways of doing something about it to make them think twice before they engage in those pastimes.
Mr. BENHAM. I am frank to admit that I am not familiar enough with the subject to suggest correction, but I can see the results, and I hope that some method of correcting it can be found.
Seventh, I guess we can all agree on Government and agriculture working together, and should provide and use every means available to teach our people the value of good diets. And also that the use of public funds to provide health-giving foods in school-lunch programs should be continued. That is, to the end that the general health of our future adults will be better than the present generation.
The CHAIRMAN. I do not think you need fear that will be changed, because we have had it on the statute books for some time and no one seems to object to the program. I am proud to say that I was the author of it, together with Senator Russell, from Georgia. The tendency is to increase and not decrease.
Mr. BENHAM. The value obtained in getting rid of a few additional agricultural products is a very small part of the value of such a program.
Eighth, we would urge that there be continuous study to determine the varying degrees of improved efficiency and resulting reduction in farm production costs as a result of technical and mechanical adyances, to the end that the parity bases for different farm prices should be adjusted to reflect these changes.
The CHAIRMAN. You mean with a view of decreasing the parity price because of more efficiency?
Mr. BENHAM. If there had been a greater efficiency possible, a greater reduction of costs possible in one crop than there had been in another, then if you are to have equitable price levels the prices between those crops have to be adjusted to reflect the fact that greater improvements have been possible
The CHAIRMAN. You would apply that as to crops?
Mr. BENHAM. Livestock, all. If it has been possible. I expect that through breeding programs the productivity of certain types of livestock has been increased greater than in other types as compared with some previous period of time.
The CHAIRMAN. What would you do with the small farmer who is not able to mechanize as compared to a large one who is?
Mr. BENHAM. I assume that no matter where we get price levels established on agricultural products we will have varying degrees of opportunity available to individual farmers, depending on the efficiency, his location, his willingness to work, and so forth. If the fellow is on, we will say, an average farm, we should expect, if he is an able operator, to make a fair living. Someone is fortunate enough to be on better land or larger operations, that gives him some efficiency that the medium sized or smaller farmer does not have, I guess you will have to say he is entitled to make a few dollars more. Likewise, the individual who is on a small farm, or the individual who is a poor operator, has to expect to have a poor income.
In the last point I have I touch on this subject of the support price levels. I am not offering much advice on that. Many people are studying that, probably far more capable people than I am, but we would say that if support prices on a flexible basis must be continued and I think we recognize that certainly in some crops they will have to be-I am not offering much advice what I am saying is they are continued on a flexible basis, they should be administered with a full recognition of the two following points:
First, that low agricultural prices do not reduce production except after a long period of time. I point out some of the dangers of
keeping agricultural prices low for a long period of time. We tend to defeat the soil, which is a serious matter.
The CHAIRMAN. The arguments which I have heard against flexible price supports was that is what it does. It does not reduce production.
Mr. BENHAM. I am saying that if we must use flexible price supports, let us keep that in our mind all of the time while we are doing it.
And secondly, keep in mind that the ultimate goal for agricultural prices should be 100 percent of parity.
The CHAIRMAN. How would you reach that now? That is our goal. Secretary Benson wants that. President Eisenhower, all of us, want it. I want to do it. I wish you would have a prescription for it.
Mr. BENHAM. I had prior to this last statement read eight points which I think would be helpful, and I certainly hope that you have had other suggestions that are sound and would tie in with what we are discussing here and supplement it to the end that we could reach this point. We know that we cannot do it overnight. We are aware of the problems that have been encountered and the farm people have been patient, but I would point out-you will agree with me, I am sure, from the way you have spoken-neither the Government nor the people of this country should expect farmers to continually take less than full parity. We do not hear anyone suggesting anyone else in this country should take less than parity.
I think as Mr. Wright pointed out, the farmers provide the most essential services our system requires. We cannot be treated as secondclass citizens.
The CHAIRMAN. We cannot live without them.
Mr. BENHAM. I do not think that we would too long tolerate any. thing less than a first-class citizen is entitled to, an equitable share of the Nation's income.
The CHAIRMAN. That is what we are here for, sir. We are glad to hear from you. It is our hope that this coming January or February we will be able to put a law on the statute books that will materially help the farmers. That is my hope.
Are there any questions? If not, we appreciate very much your being here.
Mr. BENHAM. These remarks that I have typed here are condensed from a much larger statement that I had prepared and before I found the time was somewhat limited here. I will leave them both with you.
The CHAIRMAN. All right, they will be incorporated in the record at this point.
(Mr. Benham's prepared statement is as follows :)
Inasmuch as representatives of other agricultural groups here in the Northeast have and will present to you a picture of their present situation, I shall confine my remarks, as far as local conditions are concerned, to the position that the 24,000 dairy farmers who are members of the Dairymen's League find ourselves in. These dairymen live in the States of New York, New Jersey, Pennsylvania, Vermont, Massachusetts, and Connecticut. We bring the following facts to your attention:
I. CONTINUING FALLING PRICES
More disturbing than anything else to dairy farmers in our New York milkshed is that while the economy of our Nation is prospering at an alltime high, returns to dairy farmers continue to decline.
In a release by the USDA on October 31, 1955, it was noted that farmers' realized net income for the third quarter of 1955 is 10 percent below the rate in