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understand that you answered him definitely. Senator Ellender, as I recall it, said "Would you look with favor on these rigid price supports if they resulted in improved quality ?" Your answer was you always looked with favor on improved quality.
The intermediate step is: Would you look with favor on rigid price supports?
Secretary BENSON. I think it would not be to the advantage of the commodity to have rigid price supports on any quality. You get into price fixing then and you may produce more than the market will take which piles up again and depresses markets. We have to guard against that.
Senator ANDERSON. You said earlier that 76 percent of this shortstaple cotton was produced in Texas. If you raised the quality schedule to 1 inch in place of seven-eighths, 76 percent of your penalty will fall on 1 State, the State of Texas. I can't imagine that Senators or Congressmen from that State would be wildly enthusiastic.
You indicate that corn might be put on a discretionary basis. Isn't the present flexible basis a discretionary basis? Have you not authority to go anywhere you want between 75 and 90 percent regardless of the size of the carrier ?
Secretary BENSON. Yes. There are certain criteria set up by the Congress as you well know, but there is leeway. In fact we can go above 90 percent.
Senator ANDERSON. You understand that I have believed that you should have authority to go about where you want to on these things.
Secretary BENSON. I understand. That is borne out of xperience I think.
Senator ANDERSON. You have illustrated here that even though the corn support was 87 percent, the average farm price was 60 percent. Do you feel that the lifting of the price level to 90 percent would have helped the 60 percent any? If you lifted the support level which you set at 87 percent to 90 percent, would that improve the 60-percent farm price which they got under the 87-percent level?
Secretary Benson. No. Probably negligible if at all 60 percent of the production was outside of the support program entirely by choice of the producers.
Senator ANDERSON. There has been a great deal of discussion that the problem would be quickly solved if you restored the level to 90 percent. Certainly the experience in corn would not indicate that.
I am not too happy with the suggestion of a dollar limit on these price supports because of the size of the farming operation. The biggest wheat producer-I am not sure of this—is possibly Tom Campbell who may farm 400,000 acres or more. If you say to him we will not give you any price supports and he votes against going into quotas and is permitted to dump his wheat on the market does he not tend to establish the markets by that dumping operation?
Secretary Benson. Well, of course, he would get some price support. As we envision this you would set an upper limit. Up to that point of course he would get supports on his crop and in addition to that he would benefit from the total support program in the market price.
Senator ANDERSON. But is it Tom Campbell's wheat that has caused you trouble or is it other than wheat?
Secretary BENSON. Well, it is wheat.
Senator ANDERSON. Let's get to the specific. I will take that answer. We will go to cotton.
Secretary BENSON. The big operators of course have contributed substantially.
Senator ANDERSON. Go to the cotton. I question whether the big operators have. The biggest cotton operator I know much about is perhaps Russell Griffin, let's take him—in California. He sold his former big plantation to Anderson Clayton for $71/2 million and then started another larger plant. He had the largest of all the cotton loans. The $3 million loan was probably the largest of all. I saw Mr. Griffin after he put his cotton under the loan. He told me he took it all out without a dollar's cost to the Government. Is that the usual practice of all the farmers to take all their cotton out without a loss to the Government?
Secretary Benson. No; and neither do all the large operators. If it is to their advantage they take it up.
Senator ANDERSON. The next biggest operator would be Delta probably in the delta country of Mississippi. As I understand it, you don't take a loss on Delta's cotton.
Secretary BENSON. I would have to check that. I am not sure. Senator ANDERSON. I don't believe you do, or on the Anderson Clayton cotton and their 20,000 acres of cotton. I am wondering if denying the large operator the same price support as others is entirely an answer. Sometimes he has helped to stabilize the market and the costs are far less to operate your program.
Secretary Benson. As you noted, the President simply asked that the Congress study that and take a look at it. There is some precedent for it. We have a limitation in the ACP program and a limitation in the Federal land-bank loans and of course in the case of the big operator on these loans he would benefit from the stabilizing effect of the total support program even though his loan was limited in total dollars.
Senator ANDERSON. I know you do have a limitation on ACP programs. My wages on my farm near Albuquerque were about $27,000 last year and my ACP payments were about $300. It was not the contributing factor to why we made money. I sold some cattle in the Los Angeles market last week for 13 cents after I had been fattening them for a long time and that did break my back a little bit. I do feel that this question of large operators is not what is causing the main trouble. There is a difference between the size of loans because that did tend to put corporations in the farming business.
Secretary BENSON. It is not our contention that they are largely responsible for the buildup of supplies if that is what you mean, but it does provide pretty stiff competition for the family system, familysize farm, commercial operation. These excessively large ones in some cases were where they have been absorbing family-size farms, and where we take the risk out of their operation, there is some justification for considering a liberal upper limit.
Senator ANDERSON. Perhaps the reason I took up your question of absorbing family-size farms is that I finished absorbing three familysized farms at a new operation at Clovis, N. Mex. The three families all starved out. I don't believe giving a man an opportunity to starve is essentially the desirable attitude toward family-sized farms.
Secretary Benson. We don't want to get into a position where we are subsidizing inefficiency or at the same time penalizing efficiency. I would certainly agree with that principle.
The CHAIRMAN. Senator Mundt.
Senator MUNDT. Mr. Secretary, I direct your attention to the conservation reserve and acreage reserve and your statement where you are making payments for grass foliage, for trees and for ponds and for reservoirs, which is certainly a very commendable feature. I wonder if you have given some thought as to the payments you are going to make to the cooperators in line with the fact that the man who plants trees or the man who impounds water on his farm engages in a semipermanent retirement of acreage as against the man who simply plants grass and whether it is not conceivable that the man who plants trees and the man who impounds water on his farm should receive a higher rate of payment from the Government than the man who simply plants grass?
Secretary BENSON. The initial payment of course would be different, because that is intended to cover the major part of the cost.
Senator Mundt. I am thinking in terms of the long-term transaction.
Secretary BENSON. The annual payments.
Secretary BENSON. Probably there should be some difference there. Certainly that is one of the items where we need flexibility in the operation of the program.
Senator MUNDT. Because it is certainly true that there is less likelihood of divert ing a tremendous planting or a pond to next year's production tha nthere is by the fellow who plants grass.
Secretary Benson. That is correct.
Senator MUNDT. And we should recognize that in the payments. I wonder whether it is conceived, as I would conceive it, that a man who puts a small game reserve on his farm, taking it out of production should be entitled to the same payments, the same as if he were planting grass or foliage?
Secretary Benson. I think that is not in our department.
Senator MUNDT. Our committee would be setting up the criteria. You would recognize that would also be a legitimate diversion of lands from crop production and would serve a general public welfare purpose?
Secretary BENSON. Yes; it well might.
Senator MUNDT. The reason I mention that in talking in terms of incentives, we have several States in the Union, of which mine is one which have been on the verge at different times of making payments to farmers who would create a small game reserve and properly planted. It is conceivable and not inconsistent without purposes that some State legislatures of a State game and fish department might decide to further induce farmers to take their acreage out of production by adding a little State payment to the man who would be engaged in a State game preserve operation. If we run our criteria properly we might get a lift from certain States who would add a State payment to the Federal payment giving a greater inducement still to the farmer for taking that acreage out of production.
Senator MUNDT. I presume the Department now has figures. Dr. Wells there has figures on everything. We were discussing further
down the table the fact that this program is devised to give the farmer slightly more than his net income if he were going to plant his allotted acres and in order to find out what net income is of course we have to know what the average cost of production is for these crops by areas or by States.
Does the Department have tables, figures, statistics available for the guidance of the committee in that connection?
Secretary Benson. I think our production economist would have that. I could ask Dr. Wells to comment on that if he would care to. If we can get at the costs.
STATEMENT OF 0. V. WELLS, ADMINISTRATOR, AGRICULTURAL
MARKETING SERVICE, UNITED STATES DEPARTMENT OF AGRICULTURE
Mr. Wells. Mr. Secretary, the farm-management people do have
The CHAIRMAN. Will you come up to the microphone and give your name to the reporter for the record?
Mr. WELLS. O. V. Wells, Administrator, Agricultural Marketing Service. The farm-management people who are now in the Agricultural Research Service do have quite a bit of material on farm costs and farm returns split down between the cash or out-of-pocket costs and the kinds of cost the farmer incurs.
I expect Mr. Paarlberg is better informed as to how these are organized than I am.
Senator Mundt. I would like to have you say for the record whether you have the figures not only by crops but by areas of the country and by States. Because there is a great deal of difference there.
STATEMENT OF DON PAARLBERG, ASSISTANT TO THE SECRETARY,
UNITED STATES DEPARTMENT OF AGRICULTURE
Mr. PAARLBERG. We have a great deal of information of that sort. There is some question as to whether our breakdowns accountingwise are exactly appropriate for the special needs of this program. I am sure we would have to reexamine our records in the light of the special needs of this program but there is convincing evidence, I think, that we can establish some pretty good benchmarks. Along with the judgment of our people in the agricultural stabilization committees who are very close to these things I think there is good reason for believing that we could come up with some very good benchmarks and guides.
Senator MUNDT. That is fine because in connection with the questions asked by Senator Holland it is tremendously important that we have the best guidance possible in trying to arrive at the proper figure for these negotiable certificates.
That will depend in large part on the cost, the statistics involved.
A final question: At this 20-percent goal we are setting it seems to me that there has to be considerable flexibility within certain limitations as to the amount that an individual farmer can take out of production, because I think it is entirely possible that on some of the smaller allotments a man might want to take his whole allotment out
of that particular crop rather than to fool around with an unprofitable farm operation with too small an allotment.
We should not preclude the possibilities of a man taking out a hundred percent of his allotment if that is small, because that will contribute to the 20-percent overall figure.
If you insist that a man farm a certain amount even if it is an uneconomic operation simply because there is a 20-percent guidance figure, we will be making a mistake.
Secretary Benson. That 20 percent is simply used as an example. There may be cases, an older couple not wanting to farm their farm where they would want to put it in the acreage reserve or the conservation reserve.
There is a need for some limitation in order to get distribution thoroughout the country.
Senator Mundt. I grant that. But I want to strike against a situation where we compel a farmer to invest a lot of money in specialized machinery in order to farm a little segment of a crop which could not be profitable but in order to participate he would have to do it.
You don't want to put him in that operation. Secretary Benson. You would not want to encourage the operation of an uneconomic unit.
Senator MUNDT. You would capture that much more of the production in the process.
The CHAIRMAN. Senator Humphrey.
Senator HUMPHREY, Just one quick question on the matter of the soybeans which have been discussed here at some length. You contemplate having an increase in the price support on cottonseed?
Secretary Benson. We haven't firmed up our recommendation on cottonseed as yet, Senator Humphrey. We are going to consider rather promptly all of these commodities on which there are price supports. We haven't reviewed them all in detail as yet; so we are not prepared to make a firm statement on it as yet.
Senator HUMPHREY. It is true that cottonseed competes directly with soybeans, isn't it?
Secretary Benson. That is generally correct. As I indicated, we do not at the present time have any great stocks of oil seed products. We were fortunate in moving that into foreign consumption largely, the heavy stocks we had a couple of years ago.
Senator HUMPHREY. We have always considered it rather good to have these products in balance on price-support levels; isn't that correct?
Secretary BENSON. Generally speaking they are considered to be competitive, and when we consider one, we usually keep in mind the relationship to the other.
Senator HUMPHREY. Mr. Secretary, just to go back to the acreage reserve program and the conservation reserve program, which, as you described them, are parts of the soil bank yet separate, but interrelated, as I gather it, did I understand you to say in the colloquy here with one of my colleagues that the acreage reserve aspects of the soil bank program had just been perfected over the weekend?
Secretary BENSON. Well, no. I wouldn't say perfected over the weekend. "We didn't know finally what the President would approve, until the draft was in what we considered final form for his con