It seems to me that we might be selling more plumbing fixtures out in Minnesota and South Dakota, than we will be in Afghanistan if we spend some time on the program. Senator SCHOEPPEL. Let the record show I regret I could not be at the opening of the session here. I was in another series of conferences on another matter. Mr. Thatcher, going to one question, can we start with the premise that with these terrific storageable commodities that we have that we are in the nature of things, confronted with what is known as "out of condition" grains of various and sundry kinds? We do have grains in storage, whether it is privately held or Government held, that are out of condition. If that is the case, and I am sure that it is, as times goes on, should not the Department, and I am speaking now of the legitimate out of condition grains, and the human aproach to the thing to determine it-do we have leeway in the Department administratively-not necessarily to pinpoint it by law, to provide for the disposal of that grain, in an orderly way! Mr. THATCHER. Of course. Senator SCHOEPPEL. That is cardinal, is it not? Mr. THATCHER. Yes. Senator SCHOEPPEL. I was interested in that because with these tremendous stocks there is a tremendous amount of that. Mr. THATCHER. Yes. Senator SCHOEPPEL. That continually goes out of condition and that the Department should have quite generous leeway on thatdo you agree with me? Mr. THATCHER. They have to use their judgment, of course. Senator SCHOEPPEL. Do you believe that in strict cross compliance that we should invoke that by a matter of writing it into the law? Mr. THATCHER. I think that the farmers should take the whole parity program or none of it. He has the right to stay clear out but if he is going to go in a planned full parity program, he should take it all. Senator SCHOEPPEL. You remember we took out of the law the cross-compliance features. You think that ought to go in when the man goes in? Mr. THATCHER. Two years I said no in my testimony. Senator SCHOEPPEL. I recall that. I had some misgivings about it myself. But you think now that we should invoke strict cross compliance across the board? Mr. THATCHER. I would urge you to write such an attractive full parity program he would want to comply. But if he does not want to, stay out. Senator SCHOEPPEL. I will concur with you on that. I will buy that bill. We have a lot of new lands coming in under irrigation projects, tremendous amounts of money and it is not exactly common to anyone section throughout the United States. Do you feel during this period of the surpluses, we should go slow on these projects. Mr. THATCHER. From what I know, and that is pretty limited, about this irrigation business, it certainly would seem a strange thing to me that you would bring new land into production while you are taking the other land out. I would certainly lock up the new land until I was satisfied I was giving a fair break to the farmers that are operating on the land they now have. That may be a bad thing as public policy. I don't know. I think there ought to be a constant building of new reserve land for, the growing population. Senator SCHOEPPEL. The Government took thousands of acres of land during the last two wars-thank God they are over--a lot of it has been the finest agricultural land. This acreage has been taken for military installations and lands that the Government in its wisdom needed for a lot of other things. We are finding those lands leased by the Government not only in my State but in all other sections of the country that land goes right back into competitive crops with many individuals leasing them that have never been in farming before as a legitimate farmer's living on the land. Do you concur with me that all of that land during these surplus periods should remain idle rather than producing crops to be sold back to the Government again and thereby increasing our surpluses? What do you think about that? Mr. THATCHER. You have raised a question I haven't thought about. But as long as we are taking these established farm families and putting them over the hump, I would do everything I could to exclude land from production that was not normally farm family production. Senator SCHOEPPEL. I am glad to have your answer. We found that different governmental agencies have entered into leases of 1, 2, 3, as much as 5 years, and we have a problem of the contract and sanctity of the contract. I realize these are tough problems to beat, but we have hundreds of thousands of acres owned by the Government of the United States that are in strict competition with the legitimate farmers. With the surplus situation as it is, we will have to wrestle with all of these problems. Mr. THATCHER. Based on what you stated, and I believe everything you state, that does not square with my feelings. Senator AIKEN. Just one more question, Mr. Chairman. First I want to say that I consider the Farmers' Union Grain Terminal one of the really great farm cooperatives of the country. I have said so frequently and I say so now. You went into a field and into an area where something had to be done, and have done a splendid job in raising farm income and establishing orderly marketing procedures. I do differ with you quite broadly as to the extent which a farmer should depend upon the Federal Government. I think the farm cooperative is a far safer reliance in the long run. But a little over a year ago in the Minneapolis-St. Paul papers there was carried a story to the effect that you were asking the Farmers' Union Grain Terminal Association and its affiliates to provide from 2 to 4 million dollars to defeat the administration's farm program. The question is: Did you get the money? Mr. THATCHER. We never went after it. We could not, for $25 million, have bought TV time that would do as much good as the President's message stating to the Congress that these farm families should be preserved and their income raised. I hope you follow his message in those two respects. Senator AIKEN. Thank you. I never heard anything of the proposal afterward, and I was just wondering what happened to it. The CHAIRMAN. Any further questions? Mr. THATCHER. I would appreciate it very much, and if Senator Young would agree, to place in the record about three pages of the hearings before your committee, on February 29, 1952, where Secretary Brannan was here and explaining to you-at least Senators Thye and Young and you were here he was explaining to you the need for more production. We had to have more cotton; we had to have more corn; we had to have more wheat. That he was getting the cooperation of the draft service to leave more boys on the farm, getting more steel for the manufacturing of farm machinery, and getting more fertilizer. You made a statesmanlike statement, as you usually do and always do, as far as I know, and you pointed out the inherent dangers that might arise if the Lord was good to us, etc., what would happen. That was in February 1952, when he were at war. Senator Thye went into the matter. The smart businessmen were sophisticated enough to come to the Government and get contracts so they would be protected. Senator Young pointed out there were so many millions of bushels of wheat carried over at the time and what could happen to wheat. We were short of those supplies, in accordance with the opinion of the Congress and the Secretary of Agriculture at the end of 1952. That is very important to have in this record as a part of the matters that you are considering, that these surpluses have come on us fast in these last few years following the end of that Korean war, and the farmers do not get the same kind of a deal that the business people got through their contracts. The farmers did not get the same treatment. Senator AIKEN. No disagreement at all. The CHAIRMAN. It has been cited many times, but if you will get the extract, Mr. Thatcher, we will put it in the record. Do you want to do that? Mr. THATCHER. Will you do that? Senator YOUNG. I will do that. Mr. THATCHER. February 29, 1952. Senator YOUNG. I recall that I said at that time that I thought the farmers would comply with the Government request to cut production but that they would be cutting their own throats in doing so. (The excerpts from the hearings noted above are as follows:) FARM PRICE SUPPORTS AND PRODUCTION GOALS FRIDAY, FEBRUARY 29, 1952 UNITED STATES SENATE, Washington, D. C. COMMITTEE ON AGRICULTURE AND FORESTRY, The committee met, pursuant to call, at 2: 15 p. m. in room 324, Senate Office Building, Senator Allen J. Ellender (chairman) presiding. Present: Senators Ellender (chairman), Young, Thye, and Mundt. * * * The CHAIRMAN. The thing that bothers me and I am sure it bothers a lot of producers-is this: I mentioned cotton because I am a little more familiar with it than with other crops. It is grown in my State and all of the States around me. What the farmer fears is not so much what the price will be, if 16 million bales are grown, but what will happen if more is produced and that excess dangles over the market. That excess may depress the market, and the cotton farmer is going to really lose if he should make much more than you anticipate. As we go along, I would like to try and develop that part of the program to determine whether or not something feasible could not be done whereby if in any event the goals that you have fixed are exceeded something can be done with the excess production, thereby stabilizing prices rather than allowing this excess amount to dangle over the market and depress the price. Secretary BRANNAN. We are aware, Mr. Chairman, of your very deep interest in that problem. Also, we understand your apprehension that such things could happen and that they are real apprehensions, well founded. We have been trying to bring forth some suggestions that might be useful in that connection and are still working on them. Senator YOUNG. That is exactly the situation with wheat today. The fact is that you have called for all-out production. This goal has been substantially met, and we have a sizable carry-over, something close to 400 million bushels. That in itself is a most effective price control. Because we have this carry-over, the price of wheat is held down to support levels. The only thing the farmer can look forward to is possibly 75-to-90-percent support. On top of that, switching to a new parity formula will mean a further drop in the price level. It is a severe penalty that the former is now facing to meet the production goal. It seems to me there ought to be something more substantial and sound to offer to the farmers when you ask for all-out production to meet the war necessities than the prospect of lowered prices. The CHAIRMAN. The farmer ought to be put in the same category as the man who is now being asked to go all-out in production of guns and things like that. He is almost guaranteed a certain profit. Here we are demanding that the farmer so all-out in production for wheat, for cotton, for corn. Senator THYE. Most of those war contracts are cost-plus contracts, so that the contractor could not lose if delivered. The CHAIRMAN. You could not lose if you tried to; yes. But here we are being asked to produce to the limit of our ability. Senator THYE. For example, Mr. Chairman and Mr. Secretary, a year ago we knew the great need for increased production in meat, in order to check the inflationary trend, especially in beef prices. The producer went all-out in the production of pork. Right at the present time pork will not net a farmer in Minnesota, where they are dependent on the South St. Paul market, $17 a hundred for choice hogs. By the time he pays his trucking, and so forth, it will not net him that. The last market quotations was about $174 a hundred pounds. That is your choice top hog. The producer is not breaking even on that type of pork price when you consider, first, what the cost of the corn is that he is feeding that hog. What I am getting at is the present price of pork at $17 a hundred. A tractor is twice as much today as when he received 28 cents a pound, or $28 a hundred, for his pork. Secretary BRANNAN. Or more. Senator THYE. The farmer is told constantly by almost everybody that he is the most favored citizen of the land, because he has these guaranteed prices, and so forth, but in reality they do not consider the overhead that he is faced with, the tremendous expense in all of his farm operations, and that these prices are so low. That is true both in poultry and in hogs. They just are not breaking even. The CHAIRMAN. I just pointed out, Senator, what I am sure worries the cotton producer in the South, and that your farmers are worried in the same way, is that overproduction may result without any price protection. And all of us know from experience that the greater the production the less you are apt to receive for your commodity. It strikes me that the Department ought to do something very quickly in order to assure the farmer that prices will not be depressed if the Lord is good to him and he makes crops in excess of the goals set. Secretary BRANNON. Turning to production goals, I think there is no need for me to outline in detail the acreage goals which we have established for 1952. However, tables showing acreages and production for 1950, 1951, and the 1952 goals are attached. American farmers and ranchers are being asked to increase agricultural production, if possible, by as much as 6 percent in 1952. The defense program and the maintenance of living standards in this country have drawn heavily upon our reserves since Korea. Domestic consumption and foreign requirements are continuing at a relatively high level. It seems important not only to meet current requirements but also to make provision for rebuilding commodity reserves if and as this is possible. Senator YOUNG. Do you think it would be possible to get the farmers to meet these production goals for the preparedness program without price supports? Secretary BRANNAN. I certainly do not. I think price is an incentive to the production of agricultural commodities, as much as it is any other thing that is turned out industrially or otherwise. Senator YOUNG. Would you be in favor of lowering of price supports during this period? Secretary BRANNAN. I certainly would not, Senator. I do not think I have been caught over on that side ever. Senator YOUNG. I am glad you say you have not. What will happen to production if we permit a drop in the price-support levels which is scheduled commencing with the 1954 crop; what will happen to your production goals? Secretary BRANNAN. Well, Senator, I am told that in the case of wheat it could have a serious impact. I think that might be the situation with other crops. Senator YOUNG. With wheat, for example, if the support-price program as of today were switched over to the modernized parity formula, it would mean a drop of about 28 cents a bushel in the support level? Secretary BRANNAN. That is right. Senator YOUNG. Certainly most wheat farmers would shift to some other production or seed down more of their ground to grasses and other things, if that drop in the support level took place? Secretary BRANNAN. Yes. Senator YOUNG. I think from the farmer's own personal viewpoint he would be far better off now to cut down in production, because this surplus he is ereating is holding the prices down to support levels. If support levels drop some more the prices are bound to drop. It could not be otherwise. He is digging his own grave by increasing his production. Secretary BRANNAN. Well, Senator, I do not think anybody could argue with you about that, except I hope that the farmers do not curtail their production. Senator YOUNG. I do not think they will, but I feel it is the duty of Congress to see that some reasonable guaranty is given the farmers if they meet this production goal, and that they will not, as a result, find themselves in a difficult financial situation and probably bankruptcy. Secretary BRANNAN. I agree with that, too, Senator. The CHAIRMAN. Mr. Secretary, have you any apprehension whatever as to the goal on any of our basic crops being reached? |