Mr. GARVER. Well, I think they ought to be substantially larger than alternate opportunities for the use of the land in the present stage of depressed prices.

In other words, to use the language of the street, Senator Schoeppel, it ought to look like to the farmer that there was some gravy in this thing, by going into it.

Senator THYE. I take exception to the word "gravy." I don't like it, and I don't want to be associated with anything pertaining to an agricultural program that is referred to as "gravy." If you want to use that language, that is yours.

Mr. GARVER. Perhaps it is the wrong word, but I'd use it in the sense that it means something extra.

Senator THYE. But I will say right now, I am thinking about the kind of payment that will justly compensate the farmer for the lands which he takes out of production-lands he is paying taxes on, and possibly also paying a very substantial interest on in connection with the obligation that he incurred when he bought the land. That is the kind of a payment I am thinking about. I don't want any gravy in this bill of any kind, whether it be chicken or turkey or goose. The CHAIRMAN. Or rabbit.

Senator ANDERSON. But Secretary Benson used almost the same term he did. He wanted an inducement.

Senator THYE. There is a lot of difference between an inducement resulting from a legitimate rental for the land that is laying idle. under a grass or legume crop, that is going to build fertility, than to pay what would seem to be a "gravy" payment to get compliance. There is a great deal of difference between gravy and a proper conservation payment.

The CHAIRMAN. But particularly, Senator Thye, is that true where a farmer is asked to set aside some of his allotted acres?

Senator THYE. Certainly, because he is going beyond

The CHAIRMAN. That must be greater than just to conserve the soil.

Senator SCHOEPPEL. That is the point I want to make from this witness, who is appearing here for the National Chamber of Com

merce.

Now we are asking in your appearance for you to give us your views, and I would like a thumbnail sketch of what you would include. It might be helpful.

Mr. GARVER. Let me start over. Instead of using that word, let me say there should be a premium in this which makes it more attractive than just farming the cropland under the present price level. Senator THYE. Mr. Garver, the fact of the matter is this. We have too large a farm plant. We are going to have to reduce the plant. If you were an industrial plant manager, it would be relatively simple. You cut your production by laying off people and closing portions of your plant. The farmer can't do that. If he leaves an acre idle, it is subject to erosion or subject to noxious weeds. It is subject to a lot of deterioration of this character.

Therefore, if you are going to get a diversion and a proper management of the diverted acres, you must have a program to bring the producer into compliance, for one thing, and, secondly, to compensate him for laying idle a certain part of his unit.

To reduce our farm plant, we are going to have to pay the producer both for legume planting and for laying his land idle. Therefore, I think it is just an economic question of what is a just and a reasonable payment for that acre when it is laid idle.

Mr. GARVER. I think I agree with everything you say, except that it has got to be enough, more than what it can make by cropping; that is the point.

Senator THye. No.

The CHAIRMAN. You mean in set-aside?

Mr. GARVER. That's right.

Senator JOHNSTON. You mean the net profit that he would have made on that acreage?

Mr. GARVER. That's right.

Senator JOHNSTON. And a little bit on top of that.

Senator AIKEN. I think the Secretary has made very plain his position as to what he thinks the compensation should be. It should be such as the Secretary determines, and I am quoting:

as the Secretary determines will provide producers with a fair and reasonable return for reducing their acreage of the commodity, taking into consideration loss of production of the commodity on the reserve acreage, any savings in cost which result from not planting the commodity on the reserve acreage

And then this:

and the incentive necessary to achieve the reserve acreage goal.

That means to make it worth a little bit more to take the land out of production than it is to keep it in production. I wouldn't regard it as gravy, exactly.

Senator SCHOEPPEL. Now do you agree with that?

Senator AIKEN. That is pretty plain, what he thinks would have to be done.

Senator SCHOEPPEL. Do you agree with that?

Mr. GARVER. Yes, sir.

I think there should be something above what you would make by cropping, substantially above, so that it is a sober, straight-out inducement to do it.

The CHAIRMAN. In other words, to get a sufficient number of farmers to do this, and in order to make certain as to the amount that will be set aside, wouldn't it be better to put it on a compulsory basis, so that you will know the exact number of acres that are going to be set aside to attain the goal that you have in mind, rather than leave it to the farmer to decide. I am speaking of now only of allotted acres.

Mr. GARVER. This will be only on the acreage reserve, then.
The CHAIRMAN. Yes.

Mr. GARVER. Yes.

The CHAIRMAN. Acreage reserve only is what I am talking about. Mr. GARVER. You have a degree of statutory compulsion in that, anyway, sir, under marketing quotas. It might be possible to make that part of it compulsory, but I would say that on the conservation reserve, we would certainly prefer it, and even on the acreage reserve that it be voluntary, on the proposition that there are so many variations in a farmer's operation that you ought to let him decide.

The CHAIRMAN. The conservation features may be a little different. But on this other, if you set a goal to attain and you leave it to 6 million farmers to decide, you may not reach that goal.

Senator HOLLAND. Mr. Chairman, I did not get the last statement of the witness. The witness' face was turned away from me. I wish he would make that statement over or let it be reread. It is very important.

The CHAIRMAN. Will you read it?

(The statement was read by the reporter.)

Mr. GARVER. That is right.

Senator HOLLAND. You say you would prefer, then, to have that voluntary in both instances?

Mr. GARVER. That is right.

Senator JOHNSTON. Is it not true that the man who volunteers to release some of his acres is helping, we hope, to increase the price that the other fellow gets? That does not decrease his at all.

Senator AIKEN. He will also increase the price on the remainder of his own crop, theoretically.

I would say that the difficulty in a compulsory program would lie in putting the same percentage of reduction on the crop regardless of the variety or the quality produced. I am inclined to think that if we put it on a voluntary basis, we might get the largest reduction in the lower-grade qualities. I see merit in the compulsory idea, but I also see great difficulties in applying it.

Senator MUNDT. Olin, I cannot for the life of me figure out the mental processes of any farmer who would decline voluntarily to go into a program if we do what the Secretary suggests and give him a greater net income because he does it, than if he does not do it. The farmer is a businessman looking for profits like all the rest of us, and if we give him an honest program, where he gets more if he goes in than if he stays out, that is compulsion enough, and he will do it voluntarily.

Senator JOHNSTON. If every farmer had the same amount of acres and it was situated in the same field and everything, it would be true. But you will find the farmers with so much variation; some of them want to get out and will naturally get out if you do not offer them an inducement. Others want to increase their acres, or they want to keep them, and they will keep them regardless of what you offer. would almost have to give them the gross of what they are making on the acres to keep them out of it.

Senator HOLLAND. Mr. Chairman

You

The CHAIRMAN. Senator Mundt, you take, for instance, the production of, let us say, cotton on a large scale. Certainly it costs less to produce it where mechanization is used than on a smaller farm, where it is all hand work.

Senator MUNDT. There is no question about that.

The CHAIRMAN. Now, in the same locality you may have a cost differential there of maybe 10 percent.

If the Secretary of Agriculture says, "X number of dollars for a cotton farm," and there is a neighbor over here, it may satisfy him. but it may not, because of this differential in the cost of production. I doubt that the Secretary would be able to figure out a compensation that would be acceptable to all the farmers even within 2 or 3 miles of each other. That is what I fear. If you put that on a voluntary basis,

it is going to resolve, in my humble judgment, in making it impossible for us to attain the goal of getting X number of bales of cotton out of production, or X number of bushels of wheat out of production.

Senator HOLLAND. Mr. Chairman.

The CHAIRMAN. Senator Holland.

Senator HOLLAND. I would like to ask the witness if it is not true that under the corn program for the last several years a few, relatively few, less than half, of the farmers have operated under the allotments, and that more than half have refused to operate under the allotments, and have produced more corn than they were allotted? And is it not true also that many of the farmers who observed the allotment brought the corn at a great advantage over those who planted it on acreage much above their allotted acreage?

Mr. GARVER. I think that is true.

Senator HOLLAND. Now, why do you feel that that same sort of absurd undoing of the program would not follow in this instance if no compulsion is applied?

Mr. GARVER. Well, I think the difference there, Senator Holland, is that the price-support program and the loan program was probably unrealistic in terms of the corn economy, and I would assume that if we start fresh on the acreage and conservation reserves, you would make your inducements or your rental rates realistic and try to find

that level.

Senator HOLLAND. In other words, your answer to the question is that you do not think that the corn-allotment program has been a proper program; is that it?

Mr. GARVER. That is right. I think so.

Senator HOLLAND. Would you suggest what would be a proper cornallotment program? That is one of the commodities which is very seriously involved in this present suggestion; is it not?

Mr. GARVER. I would have to say-this would be categorically, without necessarily being the chamber of commerce's position-I have to speak from technical judgment-that probably it was a mistake to attempt to allot corn or to support corn, in the first place.

Senator HOLLAND. In other words, you think that corn probably is not entitled to have any support program-since the majority of it, the great portion of it, is consumed on the farms or in the neighborhood where it is produced, and since it is a feed crop largely instead of a food crop?

Mr. GARVER. I would have to differ from the language "not entitled," because that is the ethical judgment in terms of ethical rights to the farm program. But I would say whether it is or is not entitled to it, it is practically impossible to make it work.

Senator HOLLAND. Then the observations that you have made in relation to the suggestions for voluntary compliance relate not only to corn but to other crops covered by the present allotment programs; is that it?

Mr. GARVER. Yes. I believe, Senator Holland, I would like to make the participation on corn acreage voluntary, the same as anything else. Senator HOLLAND. But you have just suggested that you would not favor allotment for corn at all.

Mr. GARVER. No, because it is too hard to police it and to measure it and enforce it. But if you contract

64440-56-pt. 8- --19

Senator HOLLAND. Well, just rest on that point. Then there could not be any coming under this program as to the acreage reserve, because if you exempted corn from the allotment program, it could be considered only under the conservation reserve; is that not true? Mr. GARVER. Well, I am being misunderstood if what I said is interpreted as abolishing corn allotments.

Senator THYE. Mr. Garver, that was my understanding of your statement, and I could not take it in any other manner except that you wanted to put the corn on a free basis with no controls.

Mr. GARVER. Senator Thye

Senator THYE. Absolutely. And I wanted to question you about it when Senator Holland got through with it, but I certainly understood your statement to be that.

So when Senator Holland is through, I would like to ask you a couple of questions on that point.

Senator HOLLAND. Mr. Chairman, I yield now to Senator Thye. The CHAIRMAN. All right.

Senator HOLLAND. I was simply trying to bring out what has been my very strong conviction that what applies to one commodity does not necessarily apply to another, and that corn, regardless of what we do with it, is in a different classification from these other grains, and there is no way for us to make it otherwise.

But I yield now to Senator Thye.

Senator THYE. Mr. Garver, if corn was not in the program as of the present time, what would be the pork situation today? Would it be improved or could we expect to have had even more pork than we have today? What would be your best judgment?

Mr. GARVER. I would have to do some figuring, Senator Thye. My impression is that we would probably be in about the same situation as we are. Cheaper corn, which is what I think you imply, would not necessarily result, because there would not have been the inducement of the corn program to produce corn for us. So I do not know that there would have been any more corn produced than there was.

Senator THYE. Mr. Garver, assuming that you had so many acres that you had to put into a crop of some kind, we know it would not be profitable in oats, because that is in distress; it would not have been any more profitable in barley, because that is in distress. And you certainly would not want to encourage it to go to wheat, because that is in distress.

Therefore, I must come back to you and ask you, if you had no program on corn and corn was offered on the cash market or the producer had no other recourse than to feed it, would you not have been confronted with the problem of possibly more pork than you now have, and you certainly know that there is too much pork? Would you not be threatened with a greater production of finished cattle coming from the feed lots? And if you put 200 pounds on a carcass, you are going to have a lot more beef on your hands than you have right now.

And would you not have aggravated the dairy situation? And you certainly would not ask the dairy situation to be any worse than it is now.

Now, is that not the ultimate situation, while your farm plant is too big? If you put your corn on the open competitive market, would you not be confronted with that situation?