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And this does get at the question of diverted acres, and those that were supporting cross compliance, of course, were hoping that that would get at the problem of diverted acres. I think this gets at them much more effectively.
Senator AIKEN. We know that there will be those who will criticize the cost of this program and regard it as a total loss and a handout to the farmer. Do you see, and to what extent do you see, conservation benefits to the entire country in the form of stronger national economy and stronger national security by putting this land to proper use?
Secretary BENSON. I think there will be very definite long-term benefits resulting. As a matter of fact, I think the farmers' own land will increase in value because of this program, because of the conservation features in it.
Senator AIKEN. I have one last question which is prompted by a question by Senator Ellender, as to the possibility of a farmer holding his certificates in return for reducing his planting of allotted acres, thereby hoping to get a higher price, which we hope will develop as a result.
In the event the farmer decides to hold the certificates for 6 months or a year, and the Commodity Credit Corporation is still obligated to supply him with standard grade commodities, do you contemplate that the farmer would then pay the storage on those commodities from the date of the certificate?
Secretary BENSON. No; I would think not, Mr. Chairman.
Senator Aiken. But suppose he decided to hold the certificate 2 or 3 years, wouldn't there be an expiration date on them somewhere?
Secretary BENSON. There will have to be a maturity date and an expiration date on the certificates, I assume.
Senator AIKEN. I had not thought of that before until the question came up in connection with the one asked by Senator Ellender.
The CHAIRMAN. Certainly it would have to be the year that you planted.
Secretary Benson. Yes; there would have to be a limit on it, of course.
Senator AIKEN. That is all.
The CHAIRMAN. If my colleagues will pardon me, I have one important question I failed to ask you, Mr. Secretary:
If you recall, there have been suggestions made by some of us on the committee that we ought to aim at having the farmers produce quality commodities, commodities that are readily merchantable and salable. Will you have any objection to writing into the law a formula whereby rigid price supports would be made for the production of quality merchandise, if it were possible, of course, to define, put a yardstick in the bill that would define what we mean by quality and merchantable commodities.
Secretary BENSON. Yes. The Department now, as you know, has some discretion in the establishment of discounts and premiums based on quality. We announced a program for wheat for this coming year.
Generally speaking, we feel that the market itself will reflect these differences in quality. We have got a good example in the case of durum wheat where the current market price has well been above
the support level because of the demand for that commodity and high milling quality wheat, that is true also.
The CHAIRMAN. Well, all that may be true, Mr. Secretary, but what I had in mind was a provision that would encourage the farmers to produce these quality commodities by guaranteeing them in advance of the planting that if you plant commodities that will reach the standards written in the bill, we will give you 90 percent of parity or maybe a little more than that, because we need them, we ought to have them. Wouldn't you look with favor on a program of that kind?
Secretary Benson. Certainly I look with favor on the production of quality products, the products which the market wants, and it seems to me the most effective incentive to a farmer is the premium which is paid in the market place for that quality item.
The CHAIRMAN. You would be surprised how much more he might plant if he knew at the time he produced it and had it for sale that he would have at least so much.
Secretary Benson. We don't want to get into position where we are fixing price on a particular quality because we will fix it at a level that will bring too much production, we will be back piling it up in Government warehouses.
The CHAIRMAN. That would be far from my intention. As you know, Mr. Secretary, when we ended up the year let us say in wheat, we had 1,030 million bushels of wheat on hand and as I recall, almost two-thirds of that was not considered of the millable types that the mills liked.
By the same token with respect to cotton with over 10 million bales on hand we had in the neighborhood of 42 percent as I recall under an inch.
Secretary BENSON. I think there has never been a time when we have not had in CCC stocks a great abundance of good millable wheat. There have been statements that much of it has been in bad condition but generally speaking our stocks have been in good shape. In the case of cotton I have a memorandum on that. The average grade of CCC stocks on hand August 1, 1955, was slightly higher than the average grade of total stocks and that of the last 2 crop years. That is, our stocks averaged a little higher than stocks outside of CCC. That is, the quality averaged a little higher. The cotton shorter than 1 inch staple in CCC stocks today is 38 percent of the total. That was on August 1, 1955. During the 5 years, 1950 to 1954, 76 percent of the cotton was shorter than 1 inch.
The CHAIRMAN. What do you attribute that to, Mr. Secretary TI
Secretary Benson. I didn't finish the last statement. Seventy-six percent of the cotton shorter than 1 inch was produced in Texas, 8 percent in Oklahoma, and 16 percent in other States. But all the way through a good percentage of our cotton has been of the better grades. We do have some of the lower grades, of course. As I mentioned here, 38 percent was shorter than 1 inch on August 1 of this year of our total stocks.
The CUAIRMAN. Would you attribute the lesser amount of shorter cotton today, that is 1955 compared to the years past, to the fact that since we had acreage control the farmers probably selected the best land they had and used more fertilizer and better seed and a system of production and a better season?
Secretary BENSON. That could be an influence.
Senator JOHNSTON. Mr. Secretary, I notice you state her on the soil bank it would be voluntary and temporary. Do you mean by temporary that a man takes his acres out of cultivation this year, he can put it back next year?
Secretary BENSON. No. In the case of the acreage reserve it would be temporary in the sense when the surpluses were moved down to normal that part of the program would end. The conservation program would go on as long as the Congress thought it was necessary.
Senator JOHNSTON. In that you make this voluntary for the farmer, each individual will be the one who will give up his acreage; is that right?
Secretary BENSON. Yes.
Senator JOHNSTON. So the human element will enter into it; isn't that it?
Secretary BENSON. Yes.
Senator JOHNSTON. Say a big farmer that has a big outlay of irrigated farm and already has his machinery do you think he is going to give up any of his acres?
Secretary BENSON. There again, Senator Johnston, it will depend upon the incentive. The farmer will decide what is his best alternative.
Senator JOHNSTON. Today we find that a great many farmers are giving up some acres say, in cotton year after year; isn't that true?
Secretary Benson. Yes.
Senator JOHNSTON. They kind of go out of the growing of cotton volume themselves, isn't that true?
Secretary BENSON. Well, I don't know how. There is some of that, of course. There is always some of that shifting.
Senator JOHNSTON. There has been a great shifting in the growing of cotton and other commodities at the present time and of the raising of cattle there is a shifting of that.
Secretary BENSON. That is true.
Senator JOHNSTON. Those people who are going out of the raising of cattle or the growing of this commodity, you are going to give them money because they would probably have gone out of that anyway, isn't that true?
Secretary Benson. I think there would be very little of that, Senator. Of course, any person who has an acreage allotment I assume would be eligible to cut back on that acreage allotment and therefore qualify for payments under the acreage reserve.
Senator Johnston. Take my State for instance, in cotton they don't grow all the cotton you allow them now, do they? The percentages are way below them each year. Secretary Benson. There are some farms of course that underplant
Overall you use up your acreage allotment for the State. Senator JOHNSTON. We try to distribute it back to other people. You will find a great many of that is sent back to the counties. This man is not going to send it back to the counties to give it to any other farmer if he will get paid for it, see.
Secretary BENSON. The objective is to reduce the total acreage planted in order to get at these surpluses.
Senator JOHNSTON. So we do run into all these troubles in bank we set up.
Secretary BENSON. These are some of the administrative difficulties that will have to be worked out.
Senator Johnston. Some of the difficulties we are going to run into. Now, then, I believe the President put out a great cry to help the little farmer; isn't that true?
Secretary BENSON. Well he has been very much interested as we all have I am sure in the problem of the low-income farmer.
Senator JOHNSTON. Do you think that this soil bank will put more little farmers out of the acres that they have or the big farmers.
Secretary BENSON. Well, the whole thing is voluntary.
Senator JOHNSTON. I know it is voluntary, but if a man raises cotton maybe a thousand acres or more, some of them have three, four, five, and ten thousands and they have the machinery already bought and the irrigation put in, do you think that man will cut off much on his acres?
Secretary BENSON. He may find it to his advantage not to cut down any. He gets some benefit because of the improvements in market prices.
Senator JOHNSTON. He will stay in and get it too—the big farmer.
Secretary BENSON. I don't know about the big farmer or the small farmer. He will choose what is best for him. You come back to the incentive that is offered. If the incentive is high enough to cover the net return plus a little more on those acres, he will go
program. Senator JOHNSTON. Let's look at the certificate for a few minutes. This certificate will be good for so many dollars or so many pounds of cotton or so many bushels of wheat; is that right?
Secretary Benson. The certificate I assume will carry a dollar value.
Senator JOHNSTON. At the time you issue these certificates, suppose the commodity later goes up, no one will buy it if it goes up. He will take the commodity if the commodity is worth more than the dollar; isn't that true?
Secretary BENSON. He would have his choice at the time to either take it in dollars or commodity at a certain price.
Senator JOHNSTON. You know yourself the man will take the thing that he can get the most of if the commodity is worth more than the dollar, he will take the commodity; isn't that right?
Secretary Benson. I am anxious he get all that he can in reason.
Senator Johnston. If the commodity is lower, he will not take it and that is the time the farmer needs it; isn't that right?
Secretary Benson. The certificate would probably be calculated on the basis of the support level.
Senator JOHNSTON. If you had a certificate worth say-
Senator JOHNSTON (continuing). $200,000 or a hundred thousand bushels of wheat, and you found that the hundred thousand bushels of wheat was not worth but $150 million, it had gone down to that, you wouldn't take it in wheat, would you?
Secretary BENSON. The certificate will have a dollar value on it. He can translate it into dollars or into wheat I suppose at the current level.
Senator JOHNSTON. You are not disposing of your commodities that you want to dispose of so badly. When it goes down, it works in the opposite direction. Isn't that true?
Secretary Benson. You are cutting down the supply and that in itself will provide a vacuum into which you can move commodities out of CCC stock so that is the same effect.
Senator JOHNSTON. Hadn't we better have it some way when the commodity goes down, the farmer will be protected instead of protecting him when that is already gone up. We can probably work out something in the certificate.
Secretary BENSON. That is right.
Senator JOHNSTON. But if you keep it the same, you will work into that problem, I believe.
Secretary BENSON. Yes.
Senator JOHNSTON. Now, then, another thing. You haven't given up everything. You haven't changed; you are not for 90 percent parity for all basic commodities, are you? You haven't changed on that, have you?
Secretary Benson. I wouldn't think so, Senator from anything in here.
Senator JOHNSTON. So you just changed in some few things but not the main thing as I see it.
Secretary Benson. We are constantly striving to strengthen and broaden our programs and I am willing to accept anything that I think is economically sound and feasible and workable and good for the farmer.
Senator JOHNSTON. What I am getting at is when the newspapers, some of them, say you made an absolute flopover you have not flopped all the way over?
Secretary Benson. I don't think I have flopped at all.
Senator Young. Mr. Chairman, I want to say first there is much in your statement that meets with my approval. In fact I think you go a little further in some directions than I would go myself. For example, I think this is the first time since the depression years of the thirties that we propose to pay something to the farmers for doing nothing. We propose also to pay them for plowing under wheat, isn't that true?
Secretary Benson. In areas where it is an accepted practice of soil conservation we suggest that provision be made so that a growing crop of wheat could be worked into the soil. There are some areas where that is an accepted practice, as you know.
Senator Young. But under the acreage reserve program you would pay farmers to plow under wheat now, wouldn't you?
Secretary Benson. No; not in all cases. If it is an area where that is an accepted practice, I assume that it could be used.
Senator Young. How would the acreage reserve program affect the winter wheat for producers this year, if he didn't plow it under!
Secretary Benson. To that extent that that practice was followed it would get at the winter wheat already seeded. That is the reason it is provided.
Senator Young. It wouldn't have much effect on this year's wheat crop?