Senator HOLLAND. With reference to the conservation reserve I think that is easier understood. Is it correct that that does not have to come out of allotted acreage?

Secretary BENSON. That is correct.

Senator HOLLAND. It does not even have to come from price supported commodity acreage?

Secretary BENSON. That is correct.

Senator HOLLAND. It may come from any acreage whatever. Isn't it more comparable to a sizable enlargement of the ACP program than any other comparison that could be made?

Secretary BENSON. Possibly it is. Permitting longer time commitments it is more like the ACP Program.

Senator HOLLAND. It is really an enlargement on a vast scale of the soil-building practices which we had under the ACP program which you suggest in this conservation reserve.

Secretary BENSON. I think that is true in a general way.

Senator HOLLAND. Mr. Chairman, I yield. These issues are so interesting that I yield with reluctance; but we shall hope to have much additional guidance from you.

Secretary BENSON. Thank you.

The CHAIRMAN. All of us feel the same way, Senator Holland. Senator Thye?

Senator THYE. Mr. Secretary, in the main you have outlined a proposal here which will enable us as Members of Congress to work out an effective program that will promise to lift the farm economy to a higher level than it is at present. There are phases of the program that I think are particularly constructive and they are those dealing with the diverted acres.

There lay our trouble last year. The man who reduced his cotton acreage and complied on cotton, but stepped over and produced corn on his so-called diverted acres from cotton, nullified what reductions were made in the Corn Belt.

Secretary BENSON. Right.

Senator THYE. The man who reduced wheat acres, planted barley, bought sows, farrowed pigs and fed the barley. He nullified what we endeavored to do in the feed-producing area and he helped to glut the pork market. So you have approached in a very realistic manner this one problem of how to get compliance on diverted acres; that is, compensating for soil-building practices. There are, however, a few phases in the program that have me uncertain as to their ultimate effect. For instance, on an increase in flaxseed and soybean support, which, of course, is something from which we in Minnesota and in the Northwest will greatly benefit-Minnesota is one of the high soybean-producing and flax-producing States-you will be dealing with high protein feed. Isn't the end product of high protein feed more pork, more beef, more eggs, more milk? Isn't that the end result of increased proteins?

Secretary BENSON. Of course, that is the purpose. It is to provide adequate protein supplies for a very heavy livestock situation. The oil situation is very improved. However, reduced cottonseed meal production will probably offset any increase in soybean meal. Senator THYE. I know.

Secretary BENSON. This is a very important source of oil.

So we don't have anything overhanging the market in the oil stocks. Senator THYE. However, now, knowing of the increase in the soybean acreage of the past year, and knowing of the problems in the pork market today and knowing the anticipated situation of beefand I think I see also the trend in the dairy industry-if we have an increase in the supply of protein feeds will the end product continue to be a problem to you because of the abundance of pork, beef, as well as eggs and possibly dairy products?

That is the question which concerns me, and yet I want to commend you for specifically making certain that in that Northwest region we are promised a better return for crops which we normally can grow. I do, however, recognize a possible problem with respect to beef, pork, and dairy products.

Secretary BENSON. Of course we feel that the acreage reserve program, Senator Thye, will tend to reduce somewhat the feed grain total acreage and the soil bank will also affect cotton which will affect production of cottonseed meal and oil.

So you have these other factors that we think will offset any possible increase we will get in soybean or flax.

Senator THYE. It is a situation that will have to be watched very carefully and that is the reason I bring it up.

I should have first commended you and then gone on to say that I had won one of my major objectives in getting a promise on the question of soybeans and flax, because we are definitely interested in our State, but I couldn't help but see the problems which might arise with respect to the end products from high-protein feeds.

Secretary BENSON. You remember about 2 years ago we actually ran short of protein for livestock. It was at that time that we sold large quantities of powdered milk for feed.

With our very heavy livestock population we don't want to get into a position where we are short of protein feeds and I think this will be justified this coming year.

Senator THYE. Thank you for that reply. The other question that concerns me very much is that you stated you were increasing pork purchases.

Secretary BENSON. Yes.

Senator THYE. It immediately occurs to me that last spring's farrowed pigs are already marketed, and many of them hit the low market.

Secretary BENSON. That's right.

Senator THYE. We know fall pigs-last fall's-will come to market any month from now on into the spring. You will benefit this producer. However, here is the question.

Will the man with inventories today be the beneficiary of your increased pork-buying and increased price due to the fact that you are buying heavily, but the consumer will not necessarily be the beneficiary of the lower pork prices that the producer suffered in the past 3 months or even 4 months? There lies the problem. Unless you, as Secretary of Agriculture, get on the air, if you see a trend to a stiffer pork market in retail channels, and flay those who may take advantage of the increased pork price due to your stepped-up purchases, unless that is done, the Treasury will have to a great extent aided those who now hold the inventories. As you step up your buying, it should

result in stronger markets, but it will be reflected in wholesale and retail prices unless you are in there as Secretary.

It does not do me much good to cry out that the consumer is being taken, but I believe you, as Secretary of Agriculture can have a very potent effect upon the retail as well as the wholesale market.

Secretary BENSON. Senator Thye, you may overemphasize my influence.

Senator THYE. No, sir; I do not think so.

Secretary BENSON. But I share your concern very deeply. The spreads as between farm prices and prices at the retail level-and you know the study we are making in these spreads constantly, we are digging in vigorously and I would not hesitate to go at the matter even more vigorously if I find there is a real basis for it and I am inclined to think there might be.

Senator THYE. That is the reason I bring it out here, because we have excellent press representation here. I don't want it to happen, as it so often has happened, that clerks and others interested refer to the farm support programs as being responsible for the high cost of food to the consumer. I don't want that to happen when I know of the extreme low pork prices the producer has suffered in these past 4 months.

The other question deals with a relationship of supports to the amount of commodity loans given the producer. We received much intelligent testimony throughout the fall on that question and I think it is a very serious one. I have endeavored for the past 6 weeks to get specific information from your Department relative to average commodity loans and the percentage of producers who receive loans of certain amounts. I have not been able to get the figures because you apparently do not have the figures for 1954 or 1955. I have now directed a letter to you asking for such statistical information as I think it is necessary that we get those figures. In a magazine article we all have seen referring to a million dollars or more in commodity loans, three and four hundred thousand dollars commodity loans, if that article is true and there is no doubt in my mind but what it is, then this must be corrected. If not, the Government is actually underwriting the one who is in agricultural production as a means of investment. In other words, the Government is assuming a part of his financial risks and is underwriting them. It is my belief, therefore, that we must correct this situation and approach it in a realistic manner.

I have seen too many-and you have too of the smaller farmers who could not bid as high a rent per acre annually as the big corporate type farmer. The smaller farmer lost the opportunity to rent. The corporate farmer either bought or rented it. We have seen this trend across the Nation. We must stop it. I introduced a bill a few days ago providing a graduated scale of supports based on the amount of commodity loans. It is designed to help the family farm. If a man comes along and makes an application for a small commodity loan he is not the man who adds to the surplus. However, he oftentimes needs to get cash in the fall to pay his obligations and he will redeem the loan in the spring. This is the farmer who should be helped.

Secretary BENSON. Those studies we made were for internal use. However, if the Congress should direct us to release them we will be happy to do so of course, but we have used them in connection with

our internal studies. We have not made them public and they do not cover the 1953 crop as I recall.

Senator THYE. I do believe as we study the need to control the amount of a commodity loan offered by CCC that we shall have to have those figures.

Secretary BENSON. That would be helpful to the committee and we can make them available.

Senator THYE. Is there not a sound reason to give consideration to the question of a small operator who obtains a thousand dollar commodity loan and his eligibility to receive a higher percentage of price support than one who obtains from the Commodity Credit Corporation a loan running into the hundreds of thousands of dollars? If we could conceive and develop a scale that would be just and equitable, would we not accomplish this: we would eliminate the destructive elements that have been threatening the small family farmer across our Nation because he could not compete with the big operator with diesel powered units and big machines who got the maximum return for man-hour labor? Wouldn't that be an approach that would be sound and constructive?

Secretary BENSON. Certainly it is worthy of careful consideration. I can see some administrative difficulties in the way, but you have that in most programs. It may serve as a means of boosting the general price support level unless there was a corresponding reduction on the heavy, on the large side. In which event you may get it to a point where you produce more than the market would take. You have to take that into consideration.

Senator THYE. The last thought that I want to mention is that if you got the support price low enough to the large operator, then you would in effect have actually a two-price system because the large operator would have very small if any benefit. The cash market or the market place should offer more than what the commodity loan would be and that would actually put your surplus into the international channels on a price level that would be competitive with international prices and if you had the large operator receiving only a small portion of a commodity loan, he would then offer his on the cash market rather than to offer it to the Commodity Credit Corporation on loan. That thought has come not only from my mind, but from others throughout this land, and I think we need to give it very careful study.

Again I commend you for broadening up a proposal here on which I think we can legislate constructively.

Secretary BENSON. Thank you.

The CHAIRMAN. Senator Anderson?

Senator ANDERSON. Referring to page 3 of your paper, you mention that, aggressive as disposal efforts have been, they have not kept pace with the problem. I look at charting which is the lists surpluses and it shows, for example, that cotton has gone from 5,600,000 bales to 13,300,000 bales during these last 3 years, indicating that aggressive as the steps may be they have not been enough to move the cotton. Have you any other ideas for moving it?

Secretary BENSON. We have recommended certain things here to broaden our authority. One of the big factors in that big step-up last year was weather. We aimed for a 10-million-bale crop and we got 15 million bales.

64440-56-pt. 8- -4

Senator ANDERSON. During this time the acreage of cotton has gone down from 25 million acres to less than 8 million acres and the carryover has doubled. What will you do to get compliance, which I doubt you will, on the voluntary system? If you get compliance to reduce acreage 20 percent, you will still increase the cotton carryover. Isn't it desirable to put restrictions on the basis of bales produced rather than on acres?

Secretary BENSON. That was suggested as you recall in the President's message. It will be studied.

Senator ANDERSON. I notice on page 4, you recommend the program of acreage will apply to wheat, cotton, corn, and rice-Why not peanuts and tobacco? Particularly tobacco?

Secretary BENSON. We thought particularly these are the crops that are planted in larger acres and these are the ones that are in serious distress. We have some surplus on tobacco and some of the varieties of course at the present time, but we thought we ought to try it out on these crops that cover larger areas probably first.

Senator ANDERSON. You do recognize that you are in some trouble on tobacco?

Secretary BENSON. Yes; in certain varieties that is true.

Senator ANDERSON. Now on rice, which is in this program. We used to produce some 17 million hundredweight of rice and then we got up to 30 million. Last year or the year before we had 50 million hundredweight of rice.

You have no visible market for more than 30 to 32 million. Are you going to shrink that down from 50 to 32 or will it be dropped pretty gradually?

Secretary BENSON. Any adjustment ought to be gradual, I would hope we can do some expansion in sales abroad. I feel that our ricegrowers in this country can produce rice as efficiently as they can anywhere. I hope any program that is approved would be such as to give us a firm competitive position in the world's markets.

Senator ANDERSON. Don't you feel that the rice surplus will continue for many years unless there is a drastic reduction in acreage? Secretary BENSON. There will have to be some reduction, yes; or an expansion in outlets.

Senator ANDERSON. On page 5, you mention that legislation will establish suitable criteria.

Secretary BENSON. There is the other alternative about turning loose and putting the support on a discretionary basis. That was suggested as a possible alternative for the consideration of the committee.

Will

Senator ANDERSON. You mention suitable criteria on page 5. you submit them to the committee? Senator Ellender is very anxious to get out a bill early. It would be unwise for the committee to try to establish these criteria alone. Surely they ought to be suggested by the Department. You have people all over the country.

Secretary BENSON. They are in course of preparation right now. Senator ANDERSON. Now may I turn to

Secretary BENSON. We are also working on a draft putting in legislative or legal language, provisions which will be necessary we think to carry this into operation.

Senator ANDERSON. May I return to one question which was asked you earlier about rigid price supports on quality goods? I didn't quite