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Senator Johnson. May I ask one question? On exhibit A you mean billion dollars instead of million there, don't you?
Secretary BENSON. We sometimes make that mistake, Senator. Senator JOHNSON. I believe it should be billion. Secretary Benson. You are correct; yes, sir. We stand corrected. Thank you.
The CHAIRMAN. All right, sir; will you proceed and answer the question ?
Secretary Benson. One of the effects, Mr. Chairman, the immediate effects which we think will come with the passage of legislation along this line, would be to give immediate buoyancy to market prices.
When the President announced his message, you may recall the response in the cotton markets, and some of the other markets. I think cotton went up $2 a bale. We think it will have that effect immediately, as soon as the people know in the markets that we are going ahead effectively on the disposal of the surpluses.
The CHAIRMAN. Well, how will the farmers benefit by that? They have sold most of their cotton. In fact, I think most of it is under loan now, and I think the same holds true with much of the other commodities that are in surplus.
Secretary BENSON. I think you will find that there is probably quite a quantity still in the farmers' hands. True they have disposed of part of it, but it certainly will tend to have a good effect in the market place.
Of course, on the gasoline tax item, farmers will benefit immediately from that. Of course, the higher support prices suggested for soybean and flaxseed, that will be immediate.
The exemption of durum wheat, of course, will be readily received by the farmers, where that applies, and the exemption of marketing quotas in the case of feed wheat would certainly have immediate effect on farmers. Certainly the milk program will give immediate help throughout the entire dairy area. The pork purchase program, I think, is having its effect right now, and we are stepping it up very greatly immediately.
The CHAIRMAN. Will you expand on that a little bit? As I understand it, you set aside $80 million for purchases. Now, do you propose to increase that amount?
Secretary BENSON. The first suggested amount was $85 million, I believe, Mr. Chairman.
The CHAIRMAN. I stand corrected.
Scretary BENSON. We do have additional funds available, and those funds could be used for that purpose, and no doubt some of them will be used. We intend to attack that very vigorously in the immediate days ahead.
The CHAIRMAN. I was informed that there might be a similar program for the purchase of beef. Can you tell us whether or not that is in the offing?
Secretary BENSON. We have the authority, as you know.
Secretary Benson. This authority comes from legislation granted by the Congress. We are watching the situation very closely. We are consulting with the industry. We did enter such a program, you remember, 2 years ago.
The CHAIRMAN. Yes, sir.
Secretary BENSON. I think it was helpful at that time. There has been no firm decision made as to whether we will purchase beef.
However, through our urging and through the cooperation of the military service, substantial purchases are being made, particularly of heavy cattle, and have been made now for a number of weeks. The heavy cattle was the soft spot in the markets, as you know, and that purchase has been very helpful.
The CHAIRMAN. Now, you mentioned increased support for soybeans. How will that come about? Have you decided yet what you are going to do about it?
Secretary BENSON. We have not announced the support level. We need to study it a little more, but we feel that because of the statistical position of soybeans, it is going to be possible to lift those supports.
Our objective, of course, is to put the supports as high as possible consistent with moving the product into consumption, and we think that flax and soybeans will permit some increase next year.
The CHAIRMAN. What has caused the Department or the administration to change its position with reference to the support on corn from the mandatory flexible basis to discretionary at the behest of the Secretary himself! You also recommend the same in regard to rice?
Secretary BENSON. Yes.
The CHAIRMAN. As you know, we have the flexible price support for both.
Secretary BENSON. Yes.
The CHAIRMAN. What has caused the change of attitude in regard to those two commodities?
Secretary Benson. Of course, we learn as we go along. We found this to be true: That corn farmers are not participating in the program. They have chosen not to comply with the acreage allotments, and therefore are not entitled to price supports.
There is only about 40 percent of the corn production in the commercial corn area participating at the present time. However, we believe that if the controls were lifted completely, there would then be opportunity to provide price support on a discretionary basis as the Congress has provided on other feed grains, so that all farmers could then benefit from price supports without any control on acreage.
The CHAIRMAN. Well, is it your view that if your suggestion are followed, there will be less of those grains planted ?
Secretary Benson. Well, not necessarily, Mr. Chairman. Of course, our first suggestion is that we try to make the soil bank fit corn if
There are some difficulties in the way, as you can recognize, but if it is deemed that the soil bank is not suitable for corn, then we suggest for consideration the other approach.
The CHAIRMAN. As a matter of fact, you are leaning very heavily on the so-called acreage reserve program in decreasing future surpluses?
Secretary BENSON. Yes, we think it is necessary to get these burdensome surpluses moved out of storage in order to give any program an opportunity to really get started.
The CHAIRMAN. Mr. Secretary, do you believe that this acreage reserve program and the conservation reserve program can be made effective on a voluntary basis as you have proposed ?
Secretary BENSON. Mr. Chairman, only time will tell, of course.
The CHAIRMAN. If we depend on time, things will be too late.
The CHAIRMAN. Things ought to be done now to curtail those surpluses.
Secretary BENSON. I agree, and I think if the incentive is at the right level, we can get sufficient participation on the part of farmers to make the program truly effective.
The CHAIRMAN. What would you suggest as an adequate incentive? I notice that you as well as the administration—that is, as shown in the President's message leaves that to Congress.
Of course, we will have to consult with you, but I wonder if you will venture an opinion as to what would be the minimum required to induce farmers to follow the suggestions made by the President in his message, and by you this morning, in order to get this 15 or 20 million acres out of production; that is, allotted acreage.
Secretary BENSON. Yes. Well, obviously, Mr. Chairman, there are a lot of details on the administration and so on that we will need to counsel with the committee on and work with you on.
But I would say offhand that that incentive should be at least slightly above the net return which the farmer normally gets from those acres that he takes out of his allotted acres. Otherwise his alternative, it will be just as attractive for him to go ahead and plant. It has got to be high enough so that he will consider that his best choice.
The CHAIRMAN. In that connection, would it not be better to say to the farmer that we believe his allotted acres ought to be reduced, say, about 10, 15, or 20 percent, whatever amount may be decided, and attach a requirement that to receive price-support payments on the rest of the acreage that he is to plants he must so reduce his acreage?
Secretary BENSON. That, of course, would introduce considerable compulsion; would it not?
The CHAIRMAN. Yes, sir; that's right, and I believe that it might be necessary if you are to accomplish your goal.
Secretary Benson. I think we will want to set goals all right.
Secretary BENSON. And shoot for those goals. But I believe we can accomplish it without compulsion. I think we can do it through voluntary appeal and through the proper incentive to the farmer.
The CHAIRMAN. Would you make it so that the farmer would get at least as much out of these idle acres, those that you think ought to be set aside, as he would have received had he actually planted that acreage?
Secretary BENSON. Yes. I think it should be at least that much, possibly just a little more, so there will be an inducement there not to plant but to come into the program. And I believe we will get cooperation because the farmer will recognize this as a program to help him.
The CHAIRMAN. Well, I agree that if you make the incentive big enough, you might get him to not plant anything at all.
Secretary Benson. I think the incentive ought to be within reason, of course.
The CHAIRMAN. Yes. But you would make it at least as much as what he would receive or make if he planted those diverted acres.
Secretary Benson. The net return, yes; that is the basis on which you would have to put it.
The CHAIRMAN. Now, in respect to the conservation reserve program, you have set that up also on a voluntary basis.
Secretary BENSON. Yes.
The CHAIRMAN. How would you proceed to carry that out? What inducements would you give the farmer so that he could carry that out as you anticipate?
Secretary BENSON. There again the incentive would have to be sufficient to be attractive to the farmer.
The CHAIRMAN. What would that incentive be?
Secretary BENSON. There would be two separate payments, as I see it, Mr. Chairman. The first would be the payment which would cover the costs of moving that land out of cash crops-say, feed grains-into conservation cover.
The CHAIRMAN. What do you mean by "moving” it!
Secretary BENSON. Planting it. Instead of planting it to feed grains or cash crops, he would plant it to grass or other forage or put it in trees or ponds and reservoirs and so on.
The CHAIRMAN. So that you would begin by at least paying him the amount of money necessary?
Secretary BENSON. That's right.
The CHAIRMAN. You would finance the planting of trees or grasses or whatever is necessary?
Secretary BENSON. That's right.
The CHAIRMAN. You would finance whatever is necessary to carry on the conservation program that you have devised.
Secretary BENSON. That would be the first payment.
Secretary Benson. Then the second part would be an actual payinent to assist the farmer in making the transition and the reorganization of his operations on a better land-use program. Now, that will vary
In some areas it takes 2 or 3 years to get a crop established, a crop of grass, for example; in other areas it would be shorter.' There would have to be some flexibility, I think, in the administration State by State and region by region.
The CHAIRMAN. What would be the basis of payment after the seed or the trees are planted? What would be necessary to carry on the conservation program that you have in mind? How would you determine the amount of money to be paid to the farmers, on a per acre basis or whatever other plan you have in mind?
Secretary BENSON. Now, Mr. Chairman, we have not firmed that up in any detail. We are working on it-our technicians are working
We assume that probably the payments in the early years would have to be a little higher, then they could taper off as the farmer got his stand established and got reorganized on a better land-use program.
The CHAIRMAN. Would it be left to Congress to write into the law a specific amount, or would it be expected that the Department would
determine in years to come the amount per year that would be paid as compensation to the farmers !
Secretary BENSON. I think, Mr. Chairman, it would be very helpful to us if the Congress could give us some guidelines, but I think it will be important for the success of the program that there be considerable administrative discretion.
The CHAIRMAN. As to the amount paid?
The CHAIRMAN. Now, essentially what are the differences between the conservation reserve program you have just been speaking about and the program for the Great Plains that we have been presented with this morning! Will you tell us the difference between those two?
Secretary BENSON. As a matter of fact, Mr. Chairman, they fit very well together.
The CHAIRMAN. Is there any difference? Secretary BENSON. Yes; there is some difference because the Great Plains program contemplates some things that are not included in the conservation program, including the classification of land, for example, and things of that sort that are of a very long-range nature, and it requires some State action and cooperation on the part of local and State agencies.
The CHAIRMAN. Now, as I understand, first the reserve program is to apply solely to allotted acres?
Secretary BENSON. That is correct.
The CHAIRMAN. The reserve program, conservation reserve program, is to apply solely to cultivated acres !
Secretary BENSON. That is correct.
The CHAIRMAN. And then the Great Plains program may apply to cultivated acres as well as any other acres that you may decide should come under the program!
Secretary BENSON. Yes; I think that is true. The Great Plains program is very broad and very flexible.
The CHAIRMAN. Yes. Now, can you give us an estimate of what the cost of each program will be if carried out according to what you think ought to be done, let's say for the first year, second year, or over the period of time that may be necessary in order to make it effective?
Secretary Benson. Of course, that will have to await the development of costs and a lot of detailed material will have to be worked up. A rough estimate, I think, is in the case of the conservation re
It would run in the neighborhood of $350 million the first year, probably a billion dollars over say a 3-year period.
In the case of the acreage reserve, our best estimates have been that there would be approximately—as a matter of fact, we don't have the figure made up, but we have indicated that it will probably move out as much as a billion dollars' worth of commodities the first year.
The CHAIRMAN. That would be the cost of it, of course, about $1 billion?
Secretary Benson. Well, of course