This is exactly the problem facing one of my neighbors, Mr. Roger Richmond of Penn Yan. He is a veteran of World War II, the father of three small children and he operates a one-man general poultry farm. Ten days ago he was served notice by a United States marshal that he is being sued in district court in Rochester for exceeding his acreage of wheat.

There is nothing in the law that says that a Kansas wheatgrower will be fined for keeping a flock of chickens, instead of buying New York State eggs. We do not want price supports on eggs. We believe that the success or failure of any farming business should be determined by the ability of its management to compete with others under a system of free enterprise.

The

Not only does enforcement of marketing quotas discriminate against individuals, but there is also discrimination in setting up the program. The law says that penalties go into effect if two-thirds of the eligible wheatgrowers favor the program. Then it limits eligibility to those who grow over 15 acres. net effect is to allow a large proportions of the commercial wheatgrowers to vote themselves a raise without competition from the thousands of small wheatgrowers in the northeast who feed their wheat and must buy other feed besides. To us this is taxation without representation.

This program is forcing honest citizens to break an unfair law to make a living. It seems to me to be poor citizenship training to encourage disrespect for any law.

I have no argument with local officials of the Agricultural Stabilization Office in assigning quotas. They have been as fair as the law will permit. I have attempted to avoid controversy with this agency, by asking the courts to rule on the constitutionality of this act. The United States attorney claimed in district court, that such a request was out of order since I was not prevented from growing wheat. He claimed that all I needed to do was pay the fine or give the wheat to the Government. The case is now in the court of appeals.

My attorney, Mr. Paul Taylor of Penn Yan, feels that this point should be brought to your attention. In nearly every regulation concerning this act in the past 2 years, the Administrative Procedures Act has been voided, with a statement that it is not in the public interest to comply with the Administrative Procedures Act.

I know of no poultrymen who are asking for price supports. We don't want Government handouts. We want the poultry industry to stand on its own merits.

I respectfully ask your help.

The CHAIRMAN. We will next hear from Mr. Hakes.
Give us your name in full, please, and your occupation.

STATEMENT OF A. D. HAKES, PITCHER, N. Y.

Mr. HAKES. Mr. Chairman and gentlemen of the committee, my name is A. D. Hakes. For nearly 40 years I owned and operated a dairy farm located in Pitcher, Chenango County, New York State. For the past 3 years, in partnership with one of my sons, we have been operating a small farm-machinery business in Cincinnatus, Cortland County, N. Y. In addition to the farm equipment, we have an automobile agency and sell a few new cars and a larger number of used ones. Our trading area is distinctly rural, with the emphasis on dairying.

This year we find it increasingly difficult to make sales to farmers and even more difficult to make collections, especially on repair jobs. Sales of automobiles are largely made to parties having an independent income from some activity other than dairying. We have made many demonstrations of tractors and a desire has been created for newer and more efficient equipment, but we hear the same story over and over again: "I can't buy now but perhaps later on if things look better, and I can see my way clear to take on more obligations."

Prices on farm equipment advanced recently about 7 percent. This means as much as $150 on a medium-size farm tractor. Tire prices

have also advanced. In fact, practically everything the farmer has to buy for his operation is up in price. This is a serious situation, when we consider that the dairy farmer for the past few years had already been receiving, comparatively, a very low labor return.

One or two typical cases of the plight of individual farmers might be interesting. Case No. 1 is a medium-size farm, about 25 milking head. Practically all the work is done by the owner-operator, a man of perhaps 45 years of age. He came to us about 2 months ago and asked for an estimate on repairs for his manure spreader. We told him that repairs would cost more than it was worth, that he might better invest the $100 which repairs would cost in a new spreader as downpayment, and have something to show for his money. He said that he realized that would be a better deal in the long run, but that he did not feel that he could go further in debt as it took all the money he could get to pay current expenses and live. We repaired his spreader at a cost of $107, and he still owes us for it.

Case No. 2 is of a larger operation. Father and son operate this business-approximately 80 head of dairy cattle, some cash crops, mostly potatoes. They are using for one of the farm tractors an old, inefficient machine. They realize that it is inadequate, but the older man told me that until he could pay for a new one out of current income he would not make any change, that it was poor business to draw savings out of the bank and put them into a business that was losing money.

Case No. 3 is a man on a small, yet efficient, operation-35 milking cows. He makes up for poor equipment by working longer hours and keeping expenses down. He owes no one for anything: pays cash for all purchases; has owned the farm for many years. The tractor he is using is 30 years old. He knows that he could operate more efficiently with a new one, but will not go in debt for it.

This problem is serious. No solution appears to be both adequate and acceptable to all concerned. Here in New York State with high production costs, farmers lose money on manufactured milk. It cannot be produced for class III prices under Federal Order 27. This order might well be amended to include a later marketing area, preferably northern New Jersey and all of New York State not now under State orders. However, amending a Federal order seems to be a long, tedious process.

In the absence of any other solution, it seems that higher support prices on manufactured dairy products are a must. My concept of parity is fair consideration for all. Disparity is the present lot of the dairy farmer. In the interests of all of the people in these United States it must be corrected.

The CHAIRMAN. Thank you.

Our next witness is Mr. James G. Lyons.

STATEMENT OF JAMES G. LYONS, ASSISTANT COMMISSIONER OF AGRICULTURE, STATE OF NEW YORK, ALBANY, N. Y.

Mr. LYONS. Mr. Chairman and gentlemen, my name is James G. Lyons. I am the assistant commissioner of agriculture, and I have the statement by Gov. Averell Harriman, Governor of New York, who was very desirous of being here today but a previous commitment made it

impossible, and I ask your permission, gentlemen, to read this brief statement on behalf of Governor Harriman.

The CHAIRMAN. Very well. You may proceed.

Mr. LYONS (reading):

At the outset let me commend the members of this committee for holding this series of hearings throughout the Nation. You deserve the thanks of all Americans, farmers and city people alike, for your tireless effort to get to the bottom of what is generally known as the farm problem.

Your hearings have brought forth testimony on a wide range of subjects germane to that problem. I have no desire to add to your already voluminous file of testimony, but I would be remiss as Governor of New York if I did not speak out for the agriculture of our State.

Some people may think of New York as a State of trade and industry. But we're a big farm State, too. Nationally we rank second among the dairy States, third in vegetable production, fifth in fruits, and ninth in poultry, as measured by cash receipts from farming.

Ours is a highly specialized, commercialized type of farming. New York farmers sell most of what they produce, and in turn must buy most of the necessities they use in living and producing. Consequently, cash costs consumer a very high proportion of cash receipts from farm products.

In common with farmers in other sections of the Nation, these factors leave our farmers extremely vulnerable to the ravages of a cost-price squeeze such as they are caught in today.

In 1952 cash receipts from all farm products in New York State totaled nearly $1 billion, and by 1954 the total had declined by about $140 million. And indications are that there will be a still further drop for 1955.

The continued decline in farm prices and the simultaneous upward spiral of farm costs is real and painful to New York producers. In October 1955, for example, they suffered the following percentage decreases in prices of farm products, as compared with the 1947-49 average: 11 percent for milk; 24 percent for milk cows; 19 percent for eggs; 31 percent for chickens; 15 percent for apples; 30 percent for beef cattle; 42 percent for calves; 16 percent for wheat; and an astounding 62 percent for potatoes.

How can anyone possibly stand a 62 percent cut in his income without a commensurate cut in his costs? It is little wonder to me that hundreds of our family-sized farms go out of operation every year.

Now let us look at the cost side of the picture.

The Cornell University index for dairy-farming costs shows that they climbed 11 percent between the 1947-49 period and October 1955. In terms of production costs, the dairy costs, the dairy farmers' income dropped 20 percent in that time. The USDA reports that from the 1947-49 base period to September 1955 percentage increases in certain items of cost to United States farmers included: motor supplies, 16 percent; motor vericles, 26 percent; farm machinery, 34 percent; building and fence materials, 23 percent; taxes on farm real estate, 51 percent; interest on farm real-estate debt, 72 percent, and wage rates for farm labor, 20 percent.

We know from Department of Agriculture studies that the dairy farmer in New York State received an average of about 51 cents an hour for his labor in 1954. Undoubtedly our potato farmers made nothing at all for their labor this year, and many of our other producers are probably little better off.

The farmer's only fault, after all, is that he has done too well in serving us. During the war and after, his productivity met the food needs not only of his own countrymen but of people around the world. He responded to our need. Now, when he is suffering from the effects of expansion, he should be protected. Instead, he is being treated like some kind of economic delinquent who deserves to be punished.

I say it is wrong for farmers not to receive their full share of the national income. I can see no reason why a farmer's average return for his labor should be so far below the national minimum wage in other fields.

I am certain that millions of our city folks will agree with me because they too know that you can't isolate hard times. The fact is that city people must, in their own long-run interest, join with the farmers to reverse the dangerous decline in farm income. They are well aware that agriculture is a foundation stone of the general economy.

In brief, this is the economic picture in which the New York State farmer finds himself today. The question, of course, is what to do about it; a question you gentlemen have been asking farmers throughout the Nation.

Here in New York, we are dealing with the problems of our dairy families by a vigorous and coordinated campaign to increase the consumption of fluid milk, and we are getting results. However, the farm problem is essentially a national problem that calls for national action.

I have several recommendations.

The national school-lunch program should be made more effective. This program affords us an ideal opportunity to increase the consumption of farm commodities and at the same time build up the health of our children.

Many Americans are receiving public assistance for one cause or another. I would like to see something like the food-stamp plan to enable them to buy more and better food. Such a plan would help increase consumption of our disposable surpluses.

Food is one of the greatest weapons we have in the cold war. But distribution of our excess farm commodities abroad should be done in such a way that it adds to the diet of people who need additional food, or in other ways contributes to their economic development, and not by dumping, which would injure the legitimate interests of other friendly countries.

The present national system of disposing of farm surpluses discriminates against potato growers in New York State. This is clearly shown in a letter which Daniel J. Carey, our commissioner of agriculture and markets, sent to Secretary of Agriculture Ezra T. Benson on October 19, 1955. I shall present a copy of that letter to the committee at the conclusion of my statement.

The present program may have some beneficial results in other States, but it has been of no help whatever in New York.

I believe our potato farmers—and those in other States-are entitled to an overall, orderly marketing agreement for their product. Such an agreement should place on the farmer himself the responsibility for planting what is needed. Until such time as a program of that type is developed, however, the New York State potato grower should not be rated as a stepchild of the national administration, as he is at present.

The Agricultural Marketing Agreement Act of 1937 made possible an effective milk-marketing order for the New York metropolitan area, the world's largest market. I think nothing should be done that might weaken this Act.

I believe these recommendations I am outlining would go far toward alleviating the distress our farmers find themselves in today.

I further believe, however, that the farmers need and deserve the additional safeguard of an adequate price-support program.

We could extend the soil conservation program to divert acreage temporarily from production, when it is not immediately needed. This, however, is not an answer to the farm income problem unless it is accompanied by an adequate price support program. As a method of providing adequate income without the necessity of storing perishable commodities, we might well try production payments where there is no other satisfactory way of supporting farm income, on a temporary basis during the present emergency. Such payments, as are now being used in the case of wool, have the advantage of putting farm products into consumption. In the meantime, price supports for dairy products should be restored from 75 to 90 percent of parity.

I would like to point out that agriculture is New York State's oldest and largest industry-and its remarkable progress over the years received its impetus from family-sized farms. In some States, agriculture is based on enormous, corporation-type farms, and I know you must have received testimony on that kind of operation.

I believe that as a Nation we should do more to encourage family-sized farms before they are completely swallowed in the trend of the times.

Nothing is more traditional in the United States than the fact that a man going into business for himself-as a farmer or in any other field-starts as a small operator. He builds his business by his own hard work and that of his family; he is the true backbone of America.

I say that it is time we did something nationally to encourage the continuance of that tradition and not discourage it, as some of our present laws and current administrative policies in Washington are doing. Those policies serve to foster

even bigger corporation-type farm operations than presently exist in many States, and while doing this they are making it difficult for family-sized farms to continue.

In closing, I want to say that if we can keep the hard times farmers are now experiencing from spreading to the cities, we should soon see the current depressing agricultural surpluses disappear.

We must keep in mind that these surpluses-although they must be dealt with-are temporary. Only between 2 and 3 percent of total production is surplus now, and consumption is rising constantly. Our population is increasing by over 2 million a year. Thetre are 8 million families making under $2,000 a year-they and many others do not have an adequate diet, and if we help them increase their productivity and incomes, they will buy more and better food.

I am convinced-and conservative economists agree that our gross national product can be raised 40 percent in 10 years, with a commensurate increase in consumer purchasing power if we pursue wise policies. So, we can anticipate that our present surplus problem will disappear.

In the meantime, however, we should take prompt and vigorous action to bring our farmers much nearer to the goal of a fair share of the national income. (The letter dated October 9, 1955, is as follows:)

Hon. EZRA T. BENSON,

Secretary of Agriculture,

Washington, D. C.

OCTOBER 19, 1955.

DEAR MR. SECRETARY: I am taking this opportunity to call your attention to the administration of your national surplus-potato program as it affects our potato producers in New York State. From a practical standpoint the program is of no value to our producers.

In other areas you make the potatoes available to other outlets. To New York producers the only outlet you make available is for animal feed. Then you place an impractical regulation, which says that these potatoes must be chopped at the source. This is, first, a very expensive procedure and, second, potatoes after chopping when moved in packages or large quantities in bulk will deteriorate very rapidly and almost overnight would be unsuitable for animal feed. Our potato-growing areas in general are not contiguous to cattle-feeding areas. With the situation on Long Island the only possible diversion should be to starch flour or alcoholic plants. In fact, the program will not work in New York State.

Understand, sir, I am not protesting the use of section 32 funds which are allocated to you by Congress for diversion or new uses for surplus agricultural commodities. I believe it was the intent of Congress that a large share of this money be used for diversion of perishable commodities. I'm sure potatoes would fall in this category. Since these funds are derived from protective tariff revenues, and since farm income has been driven down, at least to some extent, because of apparent surpluses and since Congress has authorized these funds for these diversion purposes, I believe that section 32 funds should be used for the purpose so authorized by Congress. I am saying this because I find that $414 million of this fund was not expended for these purposes last year when farm prices were on the decline and, in fact, $414 million was returned to the Federal Treasury. I cannot accept a policy that would reimburse the Federal Treasury by this revenue in order to render to large corporations relief from taxes on profits derived as a result of the protective tariff from which these funds originate. However, at this point I am protesting the administrative discrimination against New York State potato growers under your national potato diversion program. I respectfully request that this condition be corrected.

Very truly yours,

DANIEL J. CAREY,
Commissioner.

The CHAIRMAN. Thank you, Mr. Lyons. Give the Governor my warm regards.

Mr. LYONS. Thank you. I shall.

The CHAIRMAN. Our next witness is Mr. Humphreys. Give your name in full for the record, your occupation.