Secretary BENSON. It would leave some effect on the winter wheat but only to the extent that something was done with what is already planted.

Senator YOUNG. May I pursue further this question of 90 percent support? Would you approve a program for 90 percent support or above 90 percent parity for the top-quality wheat or lower support, 60 or 70 percent of parity for wheat produced that is only good for feed purposes?

Secretary BENSON. We don't have separate parities for the different grades. We do have some discretion to adjust these support levels for the average grade to take up any discounts that are imposed on the lower grades.

Senator YOUNG. But they must average out at 76 percent of parity? Secretary BENSON. That is our obligation to see that they do, yes. Senator YOUNG. I would think that the only way you could help most of the producers this year would be to raise the support levels such as you have done in soybeans and flaxseed, as you propose to do, rather. Why do you raise support prices for soybeans? I am not opposed to it, but I can't understand your logic. Soybean production this year is at an all-time high and the carryover is at a near alltime high.

Secretary BENSON. Currently, soybeans are selling at substantially above support. There is a vigorous export market for soybeans and edible fats and oils. A reduction in cotton production in 1956 will reduce the supply of cottonseed oil and meal. Also, one of the big factors was the fact that our overall supply of protein is not excessive and when it is related to our heavy livestock population-and cattle and hogs are at peak pevels you know-we think we are justified in some adjustment there on soybeans.

Senator YOUNG. Why don't you make an adjustment on others? Secretary BENSON. We are reviewing all commodities.

Senator YOUNG. Recently I've noted the Department of Agriculture is concerned with cheap prices for feed because of the results it has had in cheaper prices for pork and beef.

Why don't you raise the support price for oats? As regards surpluses, oats is in a better position than soybeans.

Secretary BENSON. We have a tremendous carryover of oats and other feed grains. It is not a high-protein feed to the extent that soybeans are of course. Nor, is the demand-supply picture as favorable.

Senator YOUNG. There are many more questions I would like to ask but I know there are other members of the committee who also have questions.

Secretary BENSON. I am glad to come to your office and discuss it. Senator YOUNG. We are moving in the direction of more and more controls and it may be necessary. Is that an admission that flexible supports will do little about controlling surpluses?

Secretary BENSON. As a matter of fact, I think this moves into the direction of less controls. Everything we are recommending here is voluntary and the purpose is to clear the decks so we can give the flexible support program an opportunity to operate. It is smothered now under the burden of some stocks overhanging the market. There are a number of things in the wheat legislation that tend to go in the direction of greater freedom.

Senator YOUNG. Do you think that lower prices of farm commodities have tended to reduce production?

Secretary BENSON. Well, during the wartime, when we wanted to get maximum production we used as the incentive to get it, the high incentives of course, the high supports. I am very anxious that the supports be at any level that will move the commodity into consumption but if it is just going to pile it up in Government warehouses then that is a depressing effect on our market. Our economists estimated that the income in 1955 would have been $2 billion more had it not been for the overhanging surplus. I want to get rid of that surplus. Senator YOUNG. How do you account for the fact that this year we have the highest production in history despite the fact that the prices of farm commodities have dropped 30 percent since 1951?

Secretary BENSON. We will have to give the good Lord most of the credit. We had all-time high yields per acre.

Senator YOUNG. Low prices had no effect on the production? Secretary BENSON. Prices always have an effect but I think that was not a major item in this year.

Senator YOUNG. I would like to thank you, Mr. Secretary.
The CHAIRMAN. Senator Holland?

Senator HOLLAND. Mr. Secretary, I certainly think that the statement is constructive and I wish I could ask questions regarding most of the points in it but I am going to have to confine myself largely to questions that relate to the acreage reserve. I note that you state that that reserve will be voluntary and temporary.

The reason why it would be temporary is because it would operate only until the surplus stocks were reduced to a reasonable carryover; is that correct?

Secretary BENSON. That is correct, Senator.

Senator HOLLAND. As to its voluntary nature, is the reason why you want to make the acreage reserve voluntary the fact that you think if it was made compulsory that the allotment programs might not be adopted by the requisite number of producers?

Secretary BENSON. That was one factor. That was not the only factor or the major factor probably. We just felt we could get participation and give greater flexibility to the program if we gave the farmer an opportunity to choose. We will have to set some guidelines of course, probably a limit, what proportion of a farm can be brought in? We will probably set goals and give considerable flexibility and leeway to the administrators of the program in the States and in the counties.

Senator HOLLAND. One of the reasons you are making it voluntary is because you don't want to upset the willingness of the farmers by the required majorities to continue to approve an allotment program. Secretary BENSON. Yes; I think that was a factor in our considera

tion.

Senator HOLLAND. Now, I note on page 6 of your statement eight lines from the top reference to the size of the acreage cut proposed under your acreage-reserve program. What is the size of the acreage cut that you propose, for instance, in the case of wheat?

Secretary BENSON. In our estimates we have contemplated about 12 to 15 million acres of wheat.

Senator HOLLAND. What percentage would that be as applied to the plantings of 1955?

Secretary BENSON. In 1955 the minimum acreage was 55 million, About 20 percent of the acreage planted in 1955, I would say.

Senator HOLLAND. I noticed that the illustration that the President gave in his message applied a 20-percent figure. What you are hoping for is something like a 20-percent reduction in acreage on the average?

Secretary BENSON. That is right. Until the surplus is moved out. Senator HOLLAND. And that would mean, would it not, that there will not be any limitation in the amount of the reduction that any particular farmer could make?

Secretary BENSON. We would assume probably there might be a limitation. You set your goal and let the State administrators possibly would want to set some maximum, so that all farmers would be given an opportunity to participate.

Senator HOLLAND. We know, of course, that when you start that there is going to be a considerable number of farmers that will not voluntarily put themselves under the acreage restriction because of reasons already suggested in this record.

Now you have proposed to offset that by allowing sizably more than 20-percent reduction in any particular case if a farmer voluntarily requests it as to his allotted acres.

Secretary BENSON. Yes. I think there would need to be flexibility in it.

Senator HOLLAND. What is the maximum percentage of retirement of alloted acreage that you recommend to be allowed to any particular farmer of wheat?

Secretary BENSON. That is a detail we really have not firmed up. We have some people working on it and we will have some suggestions to make on some of those details but we have not firmed it up.

Senator HOLLAND. Well, you recognize of course that it is going to be necessary to have such a limitation. If not, you would probably find many small farmers electing to put in all their acres.

Secretary BENSON. That is right.

Senator HOLLAND. You don't want that result.
Secretary BENSON. Generally speaking I think no.

But if it is to

their best advantage to do it, it may be all right. You may want to limit it to a percentage of their acreage in that crop and then provide for a minimum to take care of the small farms. A certain number of acres regardless of the size of the farm and the quantities grown but then set an upper percentage.

Senator HOLLAND. Then you don't want to have a restriction which would preclude small farmers with limited acreage from turning all of that alloted acreage into this acreage reserve program?

Secretary BENSON. This acreage, I think not, I don't know. That is something we need to study a little further I think, Senator, but certainly the small farmers ought to have an opportunity to participate in the program.

Senator HOLLAND. The point of this part of my questioning is this. You refer to the size of the acreage cut proposed. You have indicated you propose about a 20-percent cut overall. It seems to me that it is absolutely necessary if you are working toward a goal to also have limitations in the field that I have just been discussing. Secretary BENSON. I think that is right.

Senator HOLLAND. To come to the certificates, would they cover the total value of the estimated amount of the commodity that the farmer could produce that part of his acreage which he puts into the acreage reserve?

Secretary BENSON. The net return, the normal net return from those acres I assume is a minimum. Congress may want to raise it just a little above that net return in order to make it more attractive for him.

Senator HOLLAND. Let's make it specific. In the case of a wheat farmer that produces on the average 15 bushels to the acre, suppose he is retiring 20 percent of his allotted acreage and his certificate would cover that 20 acres, what percentage of the value of the crop, that is the sales price of each, would be covered by the certificate? Secretary BENSON. That is another detail we have not worked out. Senator HOLLAND. Isn't it an all-important detail? Secretary BENSON. Yes; very important.

Senator HOLLAND. You don't want to leave the impression at all in this record that what you propose to do is to have certificates which will cover the full value of the amount of the wheat that the farmer

Secretary BENSON. No. I think I made that clear. If I have not I would like to restate it. The certificate would cover approximately or a minimum at least of the net return he normally gets from those acres he is taking out from his allotment.

It probably would have to be just a little higher than his net return in order to make it attractive to him to come in, that is the net return he normally gets from those acres based on normal yields.

Senator HOLLAND. Would that be with reference to each bushel— 40 cents a bushel or what?

Secretary BENSON. I assume, that the certificate would be related to the support level for that commodity in figuring out the actual dollars. Senator HOLLAND. Would you give some approximation of the amount per bushel that you would expect the certificate to cover? I think it is all important that this record show something specific in this field, because the impression has already gone out and is being reflected for instance in my mail, that what you propose is to allow the farmer to claim from the CCC stock the exact bushels that he would have produced, whereas I now see, and I thought this was the case all the time, that what you are trying to do is to approximate the profit he would make on that return and to give him a certificate which allows him to either take that amount in cash or to claim from the CCC stocks the amount of bushels which that particular amount would purchase at support price levels; is that correct?

Secretary BENSON. That is correct.

Senator HOLLAND. That, of course, is a very far different thing from the general impression which has gone out. I am afraid it is too generally understood that what the farmer would get under the certificate would be the right either to his dollars or to claim the same amount of bushelage that he would have produced on the acres out of his allotment which he turns into the acreage reserve.

Secretary BENSON. As you pointed out, then it will be necessary to carry on a very comprehensive and vigorous educational program in connection with this if the Congress decides to move in this direction.

Senator HOLLAND. There has been contention in recent years that many of the farmers have not had any net return from their wheat

production for instance. How would that kind of case be covered when the certificate was simply assuring them the net return which they would have received from that part of their acreage which they turn into the acreage reserve?

Secretary BENSON. The incentive overall would have to be such as to induce them to come into the program and if they-there may be cases, of course, where they have not made any net return. Generally I think there has been some net return. The incentive would have to be applied at a level that would attract enough farmers to participate in it to make it effective and try to achieve the goal.

Senator HOLLAND. I thoroughly agree with you that if the program is to become effective then it has to be such as to offer a real inducement to farmers to retire acreage and I have hoped that you would suggest a specific program because it seems to me that the program cannot be based on the certificates covering ordinary net return but on a substantial inducement beyond that to persuade the producer to put some of his acreage into the acreage reservation.

Senator BENSON. Some of the guidelines will need to be written in the law but I hope there will be adequate flexibility in the administration so we can meet these special cases as we go along.

All of these details have not been worked out. It was only last weekend that these recommendations were worked out finally but we have people working on them now and we will be glad to come back very shortly and consult further with the committee on some of these details.

Senator HOLLAND. I would think that it would be absolutely necessary that the legislation should prescribe the standards very carefully, otherwise I can't conceive of any pressure that you have been subjected to in the past which would be comparable to what you would be subjected to if you had turned over to you a program which left it up to you as to how much you will allow to go into these certificates. You agree with that; don't you?

Secretary BENSON. That is a very powerful statement. Yes: I agree. There should be some guidelines set very definitely and spelled out as much as it is practical in the law. That would help us if we are expected to administer the law.

Senator HOLLAND. Had you given thought to the displacement of business affected by these voluntary retirements, for instance, seed business, fertilizer business, labor market, equipment market, and the like?

Secretary BENSON. Yes; we have given consideration to it, because it is very much in our mind. Our past programs have cut back farmers in some areas to the extent that it has affected the economy of the local areas.

That is one of the reasons why I think there will have to be some provision to spread this out and not to concentrate it in a few areas so that the cutback will not be so heavy that it will adversely affect the local communities.

Senator HOLLAND. You understand, of course, that a cutback of 12 million acres of wheat production would have a very real effect on all of the markets that I have mentioned and perhaps on others that I have not mentioned.

Secretary BENSON. Yes; and we would hope at the same time it will give some buoyancy to prices in the market also and it will thereby increase the farmers' income on that portion he did produce.