any commodity should be placed in a national safety reserve completely insulated from any effect upon prices in the market. Planned current production for any year should not be set that year below expected domestic consumption and exports, augmented by programs mentioned earlier, that will return parity rewards to farmers in a full employment economy. Secondly, phase 1 of the soil bank is not designed to improve farm prices and income but will aid only in selling a part of Commodity Credit Corporation owned stocks at bargain basement prices into the usual channels of trade. As far as being a program to help farmers' income, phase 1 of the soil bank is nothing more than a wheel-spinning exercise in futility. This is true whether the scope of the program is a dollar a year or $3 billion a year. The farmer agrees not to produce a bushel of wheat or a bale of cotton and Mr. Benson takes a bushel or bale out of his stock and sells it. Third, phase 2 of the soil bank proposed by President Eisenhower is only one-third as large as it needs to be if it is to be effective in helping to raise farm family income. In addition to the vast conservation values, the major farm income benefit of the conservation acreage reserve introduced by Senator Humphrey in the Senate and by several Representatives on the House side and approved by National Farmers Union is: that for each 1 percent reduction in total United States farm production that the plan is effective in bringing about, the 1 percent cut will have a tendency to raise prices received by farmers by about 6 percent. Prices received by farmers in December 1955 in a full employment economy would have to be raised by 25 percent to put them where they ought to be. This indicates a needed production cut in 1956 of at least 4 percent from 1955. To obtain this size cut in marketings would probably require an acreage drop in the neighborhood of 8 percent. To do this would mean that about 30 million acres of cropland and an equal acreage of pasture should be placed into a conservation acreage reserve and not used for commercial production in 1956. This is a total of 60 million acres instead of the 25 million proposed by the administration. The administration's soil bank phase 2 proposal apparently contemplates an average per acre payment of only $14 ($350 million divided by 25 million acres). In our opinion, this proposed payment is too low to effectuate the purposes of the voluntary conservation acreage reserve we have proposed. Secretary Benson agreed before the committee last week that the per acre payments should equal slightly more than the net income per acre the family could earn by using that acre for commercial production. His statement omitted land ownership costs, taxes, and other land charges which would have to be covered by the payment in addition to net income. And in addition, Secretary Benson's statement left unsaid a very important consideration. The main question is "the net income to be covered in that earnable at what level of parity?"-The present low 60-80 percent of parity to which farm prices have been allowed to drop or at the 100 percent of parity level where they ought to be? Obviously, the difference is quite important to farmers' net income. The difference is of more than 40 percent in the size of payment per acre. We fully support the recommendations (1) that the conservation acreage reserve be completely voluntary, and not crosscompliance in disguise; (2) that adequate protection for tenant operators be incorporated in the program. This we feel should take the form of requiring that the reserve contracts be made between the Secretary of Agriculture and the farm operator whether he be owner or tenant. The tenant can then make his customary deal with his landlord. No landlord would be eligible to participate who had reduced the number of tenants on land owned by him. And (3) the prohibition of haying and grazing on reserve acres to forestall the development of new competition against milk producers and cattle raisers whose incomes are already much too low. Aug mented payments for small and low income farmers should be incorporated in the legislation. Moreover, completely adequate criteria should be written into the legislation to provide full protection to consumers from misuse of the device to bring about artificial food scarcities. Taking these considerations into account, we recommend that phase 1 of the soil bank not be enacted and that phase 2 be improved and expanded into a fully effective voluntary conservation acreage reserve. Our current calculations indicate a need for $1 billion for conservation award payments and $500 million for the augmented ACP program or a total of $1.5 billion per year. My recommendation is for about $100 million less Government expenditures than the administration's total figure. But it will be at least three times as effective, in my opinion, in raising farm family net income. And concern for raising farm net income, gentlemen, is the main reason we are here today. I appreciate your courtesy in having listened so attentively to my statement. I hope you will seriously consider and adopt the suggestions we have made. I have not covered in this statement the vitally important matter of the need to establish a yardstick family farm credit agency. I have here a brief summary of National Farmers Union comprehensive full parity family farm income protection program which I ask permission to place into the record at this point in my statement. I shall be most happy to discuss further with you any phase or question of the farm income problem you desire. I would like to put that summary in the record. The CHAIRMAN. That will be done. Mr. PATTON. I also have here a brief statement from our president in Minnesota, Mr. Edwin Christianson, which he asked me to ask permission to have filed in the record. The CHAIRMAN. Without objection, it will be filed. (The summary and the statement are as follows:) SUMMARY OF NATIONAL FARMERS UNION FULL PARITY FAMILY FARM INCOME PROTECTION PROGRAM I. Specific income protection and fair trade for farmers. 1. Enactment of mandatory income protection of family farm production of all farm commodities at 100 percent of a fair parity, by means of production payments in workable combinations with price support loans, purchase agreements and purchases (S. 1991, Humphrey; 1175, Mansfield; 625, Kerr). Effective for 1955 harvest and sales. 2. Revitalize and expand Federal crop insurance programs (S. 1852, Humphrey, Kerr, Monroney, Sparkman). 3. Price reports for farm timber products (S. 2105, Humphrey, Neuberger, Sparkman). II. Expand domestic and foreign human use and demand for farm commodities. 1. National food allotment stamp plan (S. 45, Aiken, Young, Humphrey; or S. 627, Clements, Kerr, and others). 2. Expand school lunch program to all schools. 3. Federal financing of fluid milk for school children (S. 2121, Humphrey). 4. Credit program to encourage improvement of terminal markets for perishable farm commodities (S. 1075, Humphrey). 5. Better terminal market inspection of perishables (H. R. 5337). 6. Provide more nearly adequate nutrition standards for public institutions (Armed Forces, Veterans' Administration, State institutions). 7. Expand and extend duration of Agricultural Trade Development and Assistance Act. 8. Additional international commodity agreements, including improvement and renewal of international wheat and sugar agreements. 9. International food and raw materials reserve (S. Res. 85 and 86, Scott, Humphrey, Murray, and others). 10. Expand point-4 program of assisting free world economic growth. 11. Continue and use Reciprocal Trade Agreements Act. Pass customs simplification. 12. Trade adjustment aids to United States industries, communities, workers, and farmers injured by tariff and import quota reductions (S. 751, Humphrey). III. Keeping market supply in balance with augmented demand. 1. Establish adequate voluntary conservation acreage reserve (S. 1396, Humphrey). 2. Improve marketing quota legislation and extend privilege for all farm commodities. 3. Revise and extend privilege for marketing agreements and orders to all commodities including timber products. IV. Establishment of a "yardstick" Family Farm Loan Agency by expanding loan authorizations and appropriations for Farmers Home Administration (S. 2106, Humphrey, Kerr; S. 1199, Sparkman and Kefauver; and S. 634, Kerr and Monroney). V. Reestablish authority of farmer committees (S. 544, Humphrey). STATEMENT FILED BY EDWIN CHRISTIANSON, PRESIDENT, MINNESOTA FARMERS UNION, ST. PAUL, MINN. Developments since the visit of the Senate committee to Minnesota in October make it important to register the position of the more than 35,000 farm families of the Minnesota Farmers Union and to analyze the proposals of the President's agricultural message in the light of the policy of our organization. Just a few days before the Senate hearing at Worthington and prior to Secretary Benson's visit to Moorhead, Minn., I informed him of my fears that a pork surplus removal program would not be adequate. In my communication, a copy of which is attached, I warned that a limited program such as he was contemplating might not even be able to halt the drop in hog prices much less rally the market price. I suggested that Secretary Benson should use all available section 32 funds in the form of direct payments to farmers during the peak marketing season. I indicated the clear authority in the section 32 law for use of direct payments to farmers and pointed out that the use of the funds in direct payments would be a substantial help. It appeared that he had about $114 million available for use in any single commodity. Mr. Benson did not deny that he had both the funds and the necessary authority to use direct payments, but commented in the press that farmers did not want a dole. He persisted in his announced $85 million surplus removal program. To this date, according to the best information available, he had used only about $15 million and his efforts have been very ineffective. Hog prices continued to fall and eventually reached a low about $3 lower than when he launched his program. Recognition is now growing inside the Congress and out that the surplus removal is of negligible benefit to the producer and that it serves mainly as a bonus to the packer for taking the farmer's products at a disaster price. There is growing support now for a direct-payment program on hogs as shown by several proposals now being made. However, new legislation is needed only because of the unwillingness of the administration to use existing authority. Without a single particle of new legislation the administration could use several hundred millions in hog support and pork purchase measures. The fact that they do not do so, indicates the need for the Congress to make provisions for a mandatory program of hog payments to assure at least a 90-percent market level. A recent issue of the Wallace's Farmers, published in the heart of the CornHog Belt, reported a poll of farmers on the merits of using direct payments or surplus removal measures. Results of the poll showed that three-fourths of the farmers favored use of direct payments, with some undecided and only a very small percentage in favor of the surplus removal system. Support of the direct-payments system was uniformly high irrespective of the political or farm organization affiliation of the farmers responding in the poll. I think that one factor that has been overlooked in the discussion of the hog situation is that we do not have a particularly large surplus of hogs. The marketings for the year 1955 will not be very much larger than for the previous 10-year period. I believe that in addition to any support measures which might be adopted for price protection on hogs or beef, it would be extremely helpful in promoting orderly marketing for the Secretary to be authorized and provided with funds to make incentive payments to encourage marketing of hogs and beef at prime weights. For example, the use of a premium of $2 to $3 per hundredweight on hogs which are marketed at 200 pounds or under, would bring many animals to market at these lighter weights. Through use of such payments, the Secretary could forestall glutted markets by bringing the animals to market at lighter weights. With such payments the farmer would be better off to market lighter hogs. Marketing of hogs at weights under 200 pounds would mean a better product on the market and would give the consumer the equivalent of a meat-type hog. If such a program resulted in the reduction of the average weight of hogs coming to market by 50 pounds, it would make a very sizable reduction in our meat stocks. (The average Minnesota hog goes to market at 250 pounds. An incentive program, if fully effective, therefore, could reduce the pork production by 20 percent in a single season-and we have a surplus today of less than 5 percent.) The advantage of a premium type of incentive program would be that it would keep up our productive capacity. We would have the hogs available to meet the demands for food. If a possible surplus was looming, the incentive program could draw the hogs to market at lighter weights. If there was a shortage the premium incentive could be dropped and the hogs would be fed to heavier weights and would thus increase the meat volume. Beef supplies could be regulated in the same manner. Hogs and beef are only two of the problems which fail to be dealt with in an adequate way in the President's agricultural message. There is no direct attack upon the problem of low prices. And a farm bill which does not go to the roots of the trouble-low prices-will not be effective in stopping the downward trend in farm prices and income. There is no provision to improve the price levels on wheat and corn, on the feed and oil-seed grains, on dairy products, beef, eggs, or poultry. There is no move to improve the parity yardstick either by going back to the old parity on basic commodities or to develop a new, higher, and more realistic formula. The delegates to the Minnesota Farmers Union convention in mid-November pointed out that a conservation acreage reserve program is important but that it would be effective only as a supplement to a price program of 90 to 100 percent of parity, not as a substitute for such a program. A soil bank does not do anything directly to raise the price levels in the market place. Even if the soil-bank payments were sufficient to compensate farmers for the loss of income from the diverted acres, these payments would in no way solve the problem of the low prices which would be in effect upon the crops which the farmer does produce on his remaining acreage. A soil-bank program, no matter how good it is, will not halt the downward price trend this year or next as long as it is tied to the flexible support system. The soil conservation payment programs of 1936 to 1938 were worthwhile as a national investment in building soil fertility but they did not appreciably cut production or improve farm prices. The experience of those years, clearly indicates that soil banks will not be effective in limiting production unless the program is tied to at least a 90-percent price program. If low prices are permitted to exist, they will exert pressure toward increasing production and thus nullify by use of more fertilizer and intensive cultivation whatever cutback there may have been in acreage. Besides the land-bank program, there are several good proposals made in the President's agricultural message. Among them are the idea of putting a limit on the price supports available to any one producer, the idea of extending the noncommercial wheat area, the suggestion to put crop controls on a unit basis instead of on acreage, and the proposed refund of Federal gasoline tax on gasoline used for nonhighway purposes on the farm and extending of the Sugar Act and the International Wheat Agreement. However, taken all together, it is only half a program. It needs to be tied together with a comprehensive program of price supports on all the major commodities. On the other hand there are some disturbing features. The option of taking the soil-bank payment either in cash or in grain is one of them. Of course, whether farmers would avail themselves of that opportunity would depend upon how the price compared with the open market price. However, if a large number of farmers did take their payments in grain, this fact would tend to defeat the purpose of the cutback. There would be roughly as much grain in circulation and on the market as if the grain had been produced on the acres involved in the soil bank. Perhaps the most dangerous proposal is that of removing corn from the category of basic crops and making its support discretionary with the Secretary of Agriculture. Corn is the balance wheel of the entire livestock economy. Unless there is a firm price floor under corn at 90 percent of parity or higher, there are likely to be serious repercussions in the markets for the perishable items. If corn is to get the same kind of treatment as oats, rye, and barley, then the outlook is bleak indeed. The surest way to weaken the general price level for farm products is to allow the corn price to break. Our experience with livestock prices resulting from cheap feed this year should be enough to deter us from any more ventures in that line. An idea which has some merit is the proposals for support differentials according to quality. However, there are dangers here too if it is spelled out loosely and subject to too much leeway by the administrator. There is some justification for discouraging production of varieties with poor milling and baking qualities. However, the details of the plans for quality differentials has not been revealed and therefore cannot be evaluated. However, it is important that the support must be based upon a floor of 90 percent of parity with only a small differential for grade or quality. The bulk of the crop must be supported at or very near to 90 percent of parity otherwise the support program will not be effective. If too great a differential is made, or if too much is left to the Secretary to establish, the result may easily be that the bulk of the crop will go at price levels substantially lower than 90 percent. |