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20 percent of net farm income. No apologies are required for the cost of a program which gives real hope for removing so heavy a burden.

There is no plan which can solve quickly problems which have been many years in developing. We must be careful not to overpromise. But the soil bank, with the acreage reserve program and with the conservation reserve, which I am about to describe, will make sizable contribution toward a vital balancing of supplies with market demands.

CONSERVATION RESERVE

The second part of the soil bank proposed by the President is a longrange program called the conservation reserve. This, too, would be voluntary. It would be open to all farmers regardless of the crops they grow. Objective would be to shift about 25 million acres from cropland to forage, trees, or water storage. This shift would be intended as a long-range adjustment in land use. Some of our less productive lands would be brought into the program, as well as some of the acres which have been diverted out of wheat and cotton into feed grains and other crops.

Government would bear a fair share of the costs involved in estab lishing a suitable cover, up to a maximum amount that would vary by regions. Further, as the farmer reorganizes his farm along these soil conserving lines, the Government would provide certain annual payments for a period of years related to the length of time needed to establish the new use of the land. Since this annual payment on the conservation reserve would be forthcoming regardless of yields, this program as well as the acreage reserve program has an element of crop insurance.

On both the acreage reserve and the conservation reserve, historic acreage allotments would be protected. There would be no grazing on the acreage reserve. Grazing would be prohibited on the conservation reserve for a specified period following the establishment of cover, and in no case would grazing be permitted if the stand of grass would thereby be endangered.

The acres set aside under this provision should be specific acres so as to remove them from the rotation.

In recommending this program, the President thus emphasized its advantages in conserving and improving our soil, water, and forest

resources:

We cannot accurately predict our country's food needs in the years ahead, except that they will steadily increase. We do know, however, that the sound course both for today and tomorrow is wisely to safeguard our precious heritage of food-producing resources so we may hand on an enriched legacy to future generations. The conservation reserve program will contribute materially to that end. ✶ ✶✶

Forest lands under good management are a constant and a renewable resource. One-third of our forest area is in farm woodlands. From this source can come a large share of our lumber, pulpwood, and other forest products to meet the growing need of our expanding economy. The conservation reserve can mean protective and productive tree cover for less productive lands now used for cultivated crops.

If to the proposals in the President's message we add the Watershed Act and the Water Facilities Act of 1954, and add still further the incentives for conservation offered in the Internal Revenue Code for 1954, we then have the most extensive program of all time for the improvement and protection of our natural resources.

In order to make clear the provisions of both phases of the proposed soil bank, I have prepared a brief tabular summary setting and contrasting the major features.

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Form of participation: Under the acreage reserve, a voluntary underplanting of acreage allotments would be the objective. Under conservation reserve, a voluntary placing of specific acres in the conservation reserve.

The use of soil bank acres: No crop for harvest, under the acreage reserve, would be devoted to soil conservation uses. Under conservation reserve, establish forage, water conservation or tree cover.

Grazing: Grazing would not be permitted under the acreage reserve, and would be prohibited for a specified period under the conservation reserve.

The base acreage would be protected in both cases.

The time element: It is estimated 3- or 4-year program in the case of the acreage reserve, but would terminate when the surpluses are reduced and brought under control. In the case of conservation reserve, there should be flexibility of course, but possibly as much as 5- to 10-year contracts would be necessary in order to achieve the long-range objectives.

Compensation to farmers: Under the acreage reserve, the compensation would be in the form of negotiable certificates based on the commodity, redeemable in cash or in kind at specified rates. Under the conservation reserve, there would be two payments: first, a fair share of the cost of establishing the cover, and, second, annual payments for a limited period until new uses are well established.

A rough estimate of the cost: It depends, of course, in the case of the acreage reserve on the number of crops and the rate of compensation and the degree of participation. Under the conservation reserve, the estimate is that perhaps $350 million the first year, and approximately $1 billion over the first 3 years.

I should like to make clear the meaning of the soil bank to livestock farmers. After all, 56 percent of farm income is from livestock and livestock products.

Our excessive supplies of feed grain have unduly stimulated the production of hogs and the feeding of cattle, with resulting low prices for both. The soil bank will cut into the production of feed grains, including corn if the acreage reserve program can be adapted to that crop. This would tend to shorten the supply of feed grain, lift the feed grain price structure and reduce the present incentives for excessive production of grain-consuming livestock. The effect would be to bolster prices, especially of hogs and feed cattle.

Quick action can make the soil bank operative for 1956 crops. A month or two of avoidable delay might cost us a year's time in getting the program launched.

I shall not discuss in detail all aspects of the President's message. Its various parts differ in importance and in the amplification needed. Certain actions are recommended firmly; other questions are suggested for study. I have selected from the message several topics in addition to the soil bank on a basis of interest, urgency of action, and difficulty of solution.

CORN

The President indicated that the acreage reserve program should be applied to corn if the necessary participation can be achieved. He pointed out the considerable difficulties involved, and presented an alternative in the form of freedom from controls, coupled with price supports on a discretionary basis.

As the President indicated, many corn producers have chosen not to observe acreage allotments. In 1955, only about 40 percent of the corn grown in the commercial area was within allotments and eligible for support. During November, the average farm price of corn was 60 percent of parity, despite support at 87 percent.

With substantial noncompliance with generally good yields the corn carryover has grown to more than a billion bushels. With this heavy supply, existing law would indicate a further cut in acreage allotments this year and a substantial cut in the level of price support as well.

With so unattractive a prospect, compliance for the 1956 crop could be low indeed.

Corn should be reasonably abundant and reasonably priced in fairness to those livestock producers who buy feed. If corn is in surplus and very low in price, the production of grain-consuming livestock is unduly encouraged. This leads to heavy supplies and low prices of hogs and fed cattle.

There is certainly no need for further stimulation of hog production, or of cattle feeding. Both those who sell and those who buy corn would be ill-served by a decline in the price of this coming year's corn crop.

We are endeavoring to form a judgment as to whether the opportunity to participate in the acreage reserve program, as an added inducement, would cause greater compliance with corn allotments in 1956 If this should prove to be the case, then the corn carryover could be pulled down, corn prices could be strengthened, and the incentive to produce excessive supplies of hogs and fed cattle would be reduced. Our State and county agricultural stabilization committeemen are being consulted.

Acreage allotments by themselves, even with price supports approaching the legal maximum, have been shown to be an inadequate method of controlling corn production. Thus corn lacks effective and continuing methods of production control. The President suggested, therefore, that the Congress consider the elimination of acreage allotments for corn, and consider the use of price supports for corn on a discretionary basis comparable with the other feed grains. As the President pointed out, with no acreage allotments and with discretionary supports, all corn producers would be eligible for price support in 1956. There is good reason to believe that corn should be supported on a discretionary basis at a level substantially above the market price which prevailed during the 1955 harvest.

You may be assured of my sincere search for a solution that will result in better corn prices than prevailed last fall. We do not intend to impose upon corn farmers controls which they do not willingly choose. We must have a program which will be sound for those who buy corn, for those who sell it, and for those who produce their own corn and sell it on the hoof.

DOLLAR LIMIT ON PRICE SUPPORTS

The President asked the Congress to consider placing a dollar limit on the size of price-support loans available to any one individual or farming unit. He pointed out the rapid increase that has occurred in the average size of our farms.

To the degree

said the President

that this trend is associated with the development of more efficient farm units, it is in the interest of farm families and of the Nation. To the degree, however, that it has resulted from the removal of risk for large farm businesses by reason of price supports, it is much less wholesome and constitutes a threat to the traditional family farm.

The President pointed out that occasionally price-support loans of tremendous size have occurred, and stated that it is not sound Government policy to underwrite at public expense such formidable competition with family-operated farms.

In my speech before the National Grange at Cleveland on November 23, 1955, I again invited suggestions regarding farm programs. More than 7,000 people were gracious enough to respond to the invitation. Frequently suggested was a limitation on the amount of price support to any one person. In recent weeks, this proposal has been made more frequently by farmers than any others.

We made a departmental study, as yet unpublished, of the distribution of loan funds according to the size of the farm operation. The following brief table reports that a large share of the total dollars are loaned on the production of relatively few farms.

This table shows the percentage of the dollars included in the largest 1 percent of the loans on the 1953 crop loans. In the case of wheat, that would be 1 percent, included 12 percent of the volume; cotton, estimated from acreage allotments, 18 percent; corn, 6 percent; oats, 11; barley, 24; flaxseed, 8; grain sorghums, 11; and soybeans, 8.

We will be happy to make available to this committee such statistics and analyses as we have regarding this problem. We share with the President his feeling that a limitation should be sufficiently high to give full protection to efficiently operated family farms.

SURPLUS DISPOSAL

The President said that expanded opportunities would be sought to barter agricultural products, which deteriorate and are costly to store, for increased quantities of nonperishable strategic materials. Additional legislation may be needed to insulate from the market the strategic material thus acquired.

The President recommended repeal of section 304 of Public Law 480. This section restricts export dispositions of Government stocks to friendly nations.

As the President said, I am appointing an Agricultural Surplus Disposal Administrator. The duties of the Administrator will relate to all activities of the Department associated with the utilization of Commodity Credit Corporation stocks and of current abundant. production.

RURAL DEVELOPMENT PROGRAM

The rural development program is addressed to the needs of the million and a half farm families with incomes of less than $1,000 a year. President Eisenhower transmitted to the Congress his recommendations regarding this program on April 26, 1955. Only a part of this program was enacted.

Until now, I have not commented before this committee regarding the rural development program. In brief, it is a cooperative program involving research, education, credit, technical assistance, employment information, and vocational training. Broadened opportunities are opened to rural people for both farm and nonfarm activities.

This program is already under way. Pilot work is going forward in more than 30 counties widely spread throughout the United States. The Congress has already passed part of the legislation needed to effectuate this constructive program. The full program should go forward.

PORK PURCHASE

The President's special message indicated that the pork-purchase program now under way will shortly be stepped up to supply new and expanded outlets now being developed. I am sure you wish to know what these expanded outlets are, what volume is being considered and what timing is contemplated.

The outlets referred to by the President are domestic charitable institutions and needy persons, as well as possible foreign donations and sales for local currency.

We added, recently, a program a distribute food to 600,000 needy people in New York State. We are negotiating toward a similar arrangement with Michigan. We are endeavoring to develop outlets for pork and lard through the International Cooperation Administration and through the use of Public Law 480.

Now that the breeding season for the spring litter is past, it will be possible to step up our hog purchase program without the danger of bringing about increased spring farrowings. Just this week we contracted to buy 7,600,000 pounds of pork.

And I may say that since this was written yesterday, we have accepted bids on hams and other products that brings this total up to 10 million pounds, which is the largest week of purchases thus far.

Total purchases now aggregate 47 million pounds of pork and 31 million pounds of lard, a total of 78 million pounds purchased to date. It is probable that certain receiving institutions can use pork products in either frozen or smoked form. This in itself will increase outlets.

Whatever we can do that is constructive, we shall earnestly undertake.

Special school milk:

The President recommended the extension, for 2 years, of the special school milk program, with funds increased from $50 million to $75 million per year.

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