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The CHAIRMAN. That is fixed by law.
Senator THYE. You would not tamper with that without bringing chaos in there.
Senator Young. May I ask a question ?
Senator Young. Would you say soybeans would be eligible for 90percent support this year?
Mr. SHUMAN. I am not sure.
Mr. WOOLLEY. The carryover of soybeans at the end of 1955 was 10 million bushels, which was a very nominal amount of carryover of soybeans.
Senator Young. It was about six times higher than it was a year before, though.
Mr. WOOLLEY. But in that instance, 6 times higher does not mean anything, because the production of soybeans is in the neighborhood of 380 to 400 million bushels.
Senator Young. I still cannot understand how you justify an increase in the soybean support level. Now, I am not opposed to it, but I do not know how you can justify it on the basis of the formula used on other crops, when your production this year has increased about 30 million bushels over a year ago, and is at an alltime high, and when our carryover is at a near alltime high.
Mr. WOOLLEY. The Farm Bureau is not recommending an increase in the price support on soybeans. The question was asked by Senator Thye, as I understood it, as to what commodities could the Secretary go to 90 percent on from a standpoint of the supply situation.
Senator THYE. That is it, exactly.
You see, I wanted to understand better how you could administer this act, and for that reason I just asked the question in the hopes that you could specifically state the various commodities that could possibly come in under the act and be qualified to receive the 90 percent of parity price, because you say here:
At our last convention we reaffirmed our belief in the principle of variable price supports. We also continue to favor provision for 90 percent of parity price support for the first year that marketing quotas are in effect for any commodity immediately following a year in which marketing quotas were not in effect on such commodity.
And that was where I was interrupted, and the question was, What commodities would actually qualify in what he has stipulated in this particular paragraph?
Mr. WOOLLEY. We misunderstood your question, if I might answer further.
Mr. SHUMAN. Yes.
Mr. WOOLLEY. What this contemplates, Senator Thye, is this: You remember that in the case of cotton we had marketing quotas on cotton, I think in 1950, and then in 1951 we got a tremendous increase in production-my years may be wrong—and the supply figures were such that the price support for the first year we would have gone under marketing quotas would have been less than 90 percent.
Now, what we say is that the first under marketing quotas, after having been out from under them, that that year, regardless of the supply and demand situation, for that 1 year the level would be 90 percent, and then the level of price support for subsequent years would depend upon the success of the growers in bringing supplies in line with demand.
Senator THYE. Yes; that is true now as far as cotton is concerned. But in applying this recommendation to the other crops, what crops could we expect would and could qualify to come under the 90 percent ?
Mr. WOOLLEY. In 1956?
Mr. WOOLLEY. None, because all of the quota crops are now under marketing quotas.
Senator THYE. Yes.
Mr. WOOLLEY. They would first have to be out from under marketing quotas, and then get themselves in a bad supply and demand situation before this would become operative.
Senator Thye. Yes; that is why I asked the question.
Senator THYE. I wanted definitely to make the record show that this particular paragraph could not give any relief to the producer of any given commodity simply by offering the possibility that he could get 90 percent, because there is not any commodity that you might apply it to other than soybeans or the linseed crop.
Mr. WOOLLEY. Excuse me.
Mr. WOOLLEY. It would not apply to soybeans, because soybeans are not a marketing quota crop in this particular instance. You see, that 90 percent would not apply there. I had misunderstood your original question earlier.
Senator THYE. I see.
Mr. WOOLLEY. This only applies to the quota crops, and only is a provision to say that the first year they come back under quotas, they are not penalized that 1 year because of an excess supply.
Senator THYE. That clarifies the question as far as I am concerned.
SUPPORT AND ADJUSTMENT PROGRAMS
Price support and production adjustment programs have a place in an overall agricultural program because we, as a nation, sometimes fall short of achieving the more general policy objectives that are fundamental to the maintenance of prosperity, and because of certain conditions peculiar to agriculture which causes farm prices to fluctuate more widely than farm costs.
Government programs for agriculture should be designed to help farmers achieve high per family net income, but we do not consider it the responsibility of the Government to guarantee profitable prices to any group.
Real farm income cannot be protected by policies which draw excessive resources into agriculture, create unmanageable surpluses, or cause artificial prices to be capitalized into land values.
Price support and production adjustment programs should take into account not only our experiences with existing programs, but also the differences that exist among commodities. For example, it must be recognized :
(1) That some commodities are reasonably storable at moderate cost, while others can only be stored for short periods, at a high cost, or after expensive processing.
(2) That some commodities are produced for sale, while other are produced primarily for use as livestock feed.
(3) That the shifting of acreage diverted from protected crops under Government control program creates serious problems for the producers of these crops and also has serious implications for the producers of unsupported crops. This problem becomes more serious as the acreage involved increases.
(4) That some commodities are little involved directly in foreign trade, whereas others need export markets, some are under pressure from imports, and still others must be imported to supplement domestic supplies.
(5) That some commodities face more competition than others from substitute and synthetic products.
(6) That producers are more favorably disposed toward production controls and price supports on some commodities than on others.
It must also be recognized that individual commodity programs may have far-reaching effects on other commodities.
I want to insert in there that quite in contrast to some of the previous testimony before the committee, we do not believe that the commodity-by-commodity approach will ever solve the problems of agriculture, any more than one simple act of Congress can solve the problems of agriculture. The commodity-by-commodity approach is absolutely unsound, because these commodities, no matter what they are, are interrelated, and what you do to one affects all of them.
Finally, it should be recognized (a) that a Government storehouse is not a market, and (b) that farmers cannot get fair prices for farm products in the market place as long as we are faced with surpluses of such products.
The committee now has a bill making specific proposals. Since we have not had ample opportunity to analyze the provisions of this legislation, we would like an opportunity to file a supplemental statement with the committee with regard to detailed provisions of this proposal.
Then following is our own draft of a proposed bill, “Surplus Reduction and Soil Bank," which we have filed and will not read.
The CHAIRMAN. Mr. Shuman, as you know, Senator Aiken has introduced a bill here yesterday, I think it was, and we have a draft of one based on the grassroots hearings we have held.
Mr. SHUMAN. Yes, sir.
Mr. SHUMAN. That is what we would like to do very much, sir.
The CHAIRMAN. Are there any further questions?
Senator YOUNG. Are you familiar with section 106 of the administration bill which permits the Department of Agriculture to sell CCC stocks into the market?
Mr. SHUMAN. I am only generally familiar, since I only read the newspaper reports on it. I might be able to answer a question on it and I might not.
Senator Young. Would you be in favor of selling these commodities into the market at less than the present provision, which provides, you know, 105 percent of parity? And it was proposed, I think, by the administration previously to sell them into the market at pricesupport value plus carrying charges.
Mr. SHUMAN. We think, Senator, that our approach in our bill is far better where we connect the underplanting to the amount which is to be released for compensation to farmers. We think in that way we would tie the releases to the reduction, and that would not result in price-depressing action on the market.
Now, I am not familiar with just exactly what the Secretary or what this bill intends to do. We are not in support at this time of that provision.
Senator Young. Thank you.
SENATOR THYE. I do not know whether you have seen the bill or not, Mr. Shuman.
Mr. SHUMAN. I have not had a chance to read it.
Senator THYE. I introduced that variable support bill, S. 2776, and it proposes to pay a higher support to the man who has but a very small commodity loan, whether it be corn or wheat, and pay a lower support price to an applicant for a larger commodity loan. Now, I introduced that for the purpose that rather than to have a ceiling beyond which we would pay no supports at all, we would put it low enough so that there would be supports but it would be at a very low level after they got to $15,000, or we might alter the figures if we deemed it advisable.
I have requested the Department of Agriculture to give me statistics as to how many loans fall into the different categories of support here.
But have you ever given thought to that idea that we would sayfor instance, here comes a small producer making an application for a commodity loan of $1,000 on wheat or corn, and at that small level he is not adding much to the surplus of this Nation. You would give him 100 percent so as to give him protection, but when you got down here to a man making application for $15,000 or more in commodity loans, he would be supported at not to exceed 70 percent or not to exceed 65, whatever figure we agreed upon.
So you would have a scale that would average out somewhere around 85 or 90 percent for what becomes the average commodity loan, whether it be corn or wheat or whatever commodity it might be. In that manner, you would not have to establish a ceiling above which cne man could not get any consideration. All the production that
he would have beyond that ceiling would be out on the cash market at any figure that he could get.
It is just a thought on which I have heard many discussions, and I have given it some thought, and I introduced a bill on it in order to get it considered along with the other proposals we are working on. Now, we have got here today before us three major proposals that embody a very wide field of items and commodities. It is like a bundle of material that we have carried into this table.
We are going to take it and try to fabricate a farm bill out of it. I put my bills in, both on a soil-bank proposal as well as on this variable price support, in order that they will be additional material that we can use in our endeavor to frame some kind of farm bill here.
But what do you think of the idea of varying from a higher price support for the little fellow to a lower support for the big fellow?
Mr. SHUMAN. Senator, of course, I certainly think that we ought to explore all possible ideas and approaches to this very difficult problem. These problems cannot be answered by one single approach. I have not had the opportunity to read-I will plan to read it—the bill which you have introduced. In general, on this idea of whether it is a ceiling on the level of price supports or whether it is a graduated price supports schedule, you would need to raise the question, and I raise the question, as to whether our objective is to control production through the allotment and quota approach, or whether we want to put in an incentive to divide up
farms. Now, I am not saying that your bill does it, because I do not know. But we need to keep in mind what our objective in this legislation was, which was to get compliance with the quotas and to adjust production.
Now, that is the criteria by which I would examine the bill in my own mind, and I would not be in position to say whether or not your particular approach was sound or not until I had a chance to try to think it through, and I might be wrong after I thought it through.
Senator THYE. Thank you.
The CHAIRMAN. In that connection, does the bill you propose, provide for any kind of limitations?
Mr. SHUMAN. No, sir.
Mr. SHUMAN. No, sir. Our bill does not provide for any limitation. We would not favor a limitation.
The CHAIRMAN. That is why you did not put it in, then?
Mr. SHUMAN. The reason why we would not favor a limitation is because we think that the objective of these control programs is to control production and not force division of farms.
The CHAIRMAN. All right. Thank you, Mr. Shuman.
SUPPLEMENTAL STATEMENT FILED BY THE AMERICAN FARM BUREAU FEDERATION
REGARDING COMMITTEE PRINT OF JANUARY 17, 1956, AND S. 2949, INTRODUCED BY SENATOR AIKEN ET AL.
Since the committee print dated January 17, 1956, indicates it is merely a draft prepared by the committee staff, to illustrate suggestions made to the committee, we are not commenting on all of the points raised by the committee print. We are likewise merely commenting generally on S. 2949.