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"If the larger operators were forced to dump their holdings on the market in the fall they would force prices well under the loan. There would be no market for the small farmer the Secretary is trying to protect.

“The idea of loan limitations is not good. The price of cotton will automatically revert to the lowest levels. There is no guaranty that the limits, once imposed, will not be lowered progressively through the years until the most inefficient remain in the cotton-growing business and they not for profit, but for a mere subsistence existence."

Corporate farming has increased. So have corporate manufacturing, corporate finance, and corporate distribution. The trend of the times favors larger operation in practically everything.

As for farming, the trend has been the same during the present administration as it was during the two previous administrations. This is shown by the recently released agricultural census taken for the year 1954. Actually, the big farms are decreasing in size. It is the middle-sized farm that is increasing in acreage, and this is not an unhealthy situation.

We emphatically urge the Secretary of Agriculture to announce immediately the 1956 loan-support level on upland cotton. Farmers are in the dark regarding their economic prospects at present.

We respectfully urge the earnest consideration of our above recommendations by the members of the Senate Committee on Agriculture and Forestry.

The CHAIRMAN. All right, Mr. Gehlbach, we will now hear from you.

Will you give your name in full for the record and your occupation?

STATEMENT OF MELVIN P. GEHLBACH, CHAIRMAN OF THE

BOARD OF DIRECTORS, SOIL-BANK ASSOCIATION, LINCOLN, ILL.

Mr. GEHLBACH. I am Melvin P. Gehlbach, chairman of the board of directors of the Soil-Bank Association, farmer, and for the past 15 years have devoted my entire time to supervising and analyzing the farm business records of Corn Belt farmers.

I am a fieldman for the Farm Bureau Farm Management Service, supervising Farm Bureau records for Corn Belt farmers.

The CHAIRMAN. Are you with the Farm Bureau?
Mr. GEHLBACH. No; it is a nonprofit cooperative association.
The CHAIRMAN, Connected with?

Mr. GEHLBACH. Cooperating with the university and the farm bureaus and it is an association of farmers, whereby we have 24 fieldmen working in the State of Illinois, helping farmers in supervising their records and analyzing their farm businesses through the Farm Management Service.

The CHAIRMAN. Very well. I noticed you have a written statement there.

Mr. GEHLBACH. That is right; I would like to have this statement made a part of the official record of the hearing, if I might.

The CHAIRMAN. You may do so, and if you desire to highlight it, Mr. GEHLBACH. I think it will save time if I go right through it. The CHAIRMAN. You may proceed in any way you want.

Mr. GEHLBACH. I appeared before your committee on April 2, 1954, and presented the soil-bank plan for American agriculture. I am happy indeed to reappear before this committee to testify in behalf of this approach.

The CHAIRMAN. There was a little better atmosphere now than when you appeared before. Mr. GEHLBACH. I am not sure.

The name; yes.

The name; yes.

do so.

We have read and conscientiously studied President Eisenhower's special message to Congress relative to agriculture. We should like to quote from the President's message:

Clearly new action is imperative. We must stop encouraging the production of surpluses. We must stop shifting acres from one crop to another, when such shifts result in new surpluses. Nor can crop problems be converted into millstones weighing down upon the producers of livestock.

Remedies are needed now, and it is up to the administration and Congress to provide them swiftly. As we seek to go forward, we must not go back to old programs that have failed utterly to protect farm families.

The President then went on to recommend a nine-point program, the first of which was a soil bank. We have long advocated the shift of emphasis from price fixing and rigid controls to a soil-bank approach, and the three-pronged attack spells out well what must be done-namely, adjust production of crops in greatest surplus, properly handle diverted acres, and practice conservation on lands poorly suited to tillage.

We like the changed approach, but disagree with the implementation. We feel that the acreage reserve, in which the farmer underplants allotted acres, would be completely ineffective in accomplishing the desired adjustment in production, and in properly handling the diverted acres; in fact, the program as outlined may increase production, create more surpluses, and lower farm prices still further. This would only increase the difficulties confronting the American farmer.

The first exception we must take to the acreage-reserve program is that it will not adjust production. The effectiveness of an agricultural program is dependent upon what Mr. Farmer will do on his own farm as a response to its provisions.

Will the acreage reserve as proposed adjust the overall production on an individual farm?

We would answer "No." Why? Because it would not prevent a shifting of diverted acres. It is difficult to identify and locate diverted acres on a farm. This is especially true when several crops are grown in the same year.

Now the application to various types of farms:

Let us look at a typical wheat farm, a cotton farm, and a grain farm before and after complying with the acreage-reserve program.

Wheat farm

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The CHAIRMAN. That would happen under the bill presented by the administration?

Mr. GEHLBACH. That is right. Unless-I have never seen further safeguards to prevent a man from placing into the acreage reserve land that is already in summer fallow, or land that is already in soil building.

The CHAIRMAN. That is, if you made it on a voluntary basis, that is what he could do?

Mr. GEHLBACH. Or on a compulsory basis.
The CHAIRMAN. All right.

Mr. GEHLBACH. We have tried hard to find a way that they can properly implement the acreage-reserve program and we of the SoilBank Association, who first presented the soil bank plan about 21/2 years ago, cannot find it.

The CHAIRMAN. That was presented to us in 1937 when I was first a Member of this Senate. It was not called the soil bank but it was about the same principle. It is nothing new.

Mr. GEHLBACH. We will later get into the principle as we are proposing it.

The CHAIRMAN. All right.

Mr. GEHLBACH. What is to keep a wheat farmer from putting his normal summer fallow land into the acreage-reserve and overplanting feed grains? Acres diverted from wheat cannot be identified on a farm.

Cotton farm

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The cotton farmer, too, will be happy to underplant cotton, be paid for doing it, and then satisfy the acreage reserve with idle land or a portion of his pastureland. He, too, can expand his acreage of corn and the other feed grains since you cannot identify the location of his diverted acres.

(a) A grain farmer in compliance with corn allotments plants more soybeans.

Grain farm

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Reducing the allotment by 20 acres, plant 50 acres of soybeans, a crop that does not have acreage allotment, retain his 30 acres of oats, have his 10 acres of hay in pasture, and put 20 acres of his alfalfa into the acreage reserve and account for his 180 acres.

Then take his certificate and draw out of the present Government stockpile of surpluses a part of the production of the 20 acres that he has underplanted his acreage allotment and bring more commodity out onto the open market to depress the farm prices still further.

And in the Corn Belt we have another group of farmers that have not been in compliance with acreage allotments. I think Secretary Benson stated in his testimony the other day that 60 percent of the corn farmers are not in compliance and 40 percent are in compliance.

Let us take a look at a grain farm in noncompliance.

(B) A grain farmer in noncompliance, deciding that the corn price may be higher, makes this adjustment—more acres in corn and fewer acres in soybeans.

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Under the acreage reserve plan as we see it, the grain farmer in noncompliance could increase his acreage of corn from 120 to 140 acres, hoping that other farmers adjusting production might make the price higher, he could reduce his soybean acreage from 40 to 20 acres, retain his 20 acres of oats.

He is not eligible to receive certificates because he put nothing into the acreage reserve but has expanded his production of corn.

The CHAIRMAN. Let us go back to your first example, 400 alloted acres for wheat, then 50 for feed, and 100 for summer fallow.

Suppose under the compulsory plan that some of us are advocating, that you pay him a sufficient sum on the 100 acres we would take out of the 400 acres, and make the payment on price supports dependent on his carrying out what ought to be done, would not that keep that 100 acres out of cultivation altogether?

Mr. GEHLBACH. Yes, but what can The CHAIRMAN. I say, but would it not do it? Mr. GEHLBACH. No. The CHAIRMAN. Why not? Mr. GEHLBACH. Because he already has 100 acres of summer fallow which he can substitute in place of that 100 acres and not adjust production.

The CHAIRMAN. We are talking row about diverted acres.
Mr. GEHLBACH. That is right.

The CHAIRMAN. That would be 100 acres that he could not useif he did he would lose the support price.

Mr. GEHLBACH. All right. We already have summer fallow in the Wheat Belt. That can be called the acreage reserve and you cannot identify a diverted acre out on a farm. You can take a map of a farm, with all of the acreage accounted for, and all of the crops written in, and then look at the blank map for next year, you cannot put your finger on the area of that farm that is going to represent the diverted acre. That is why

The CHAIRMAN. But his acreage, though, is fixed here?
Mr. GEHLBACH. Yes.

The CHAIRMAN. That he can plant to wheat, at 400, and one of the plans offered is that on these allotted acres, if he further reduced it by

100 acres, that is, the planting, he will get special benefits on the 100 acres--if it is that that he takes out, he will get a special benefit for that—that will mean just so much less wheat, that he will plant and thereby reduce the surplus.

Mr. GEHLBACH. That is right, Senator. But it will not prevent him from expanding his feed grains and substituting crops, and placing into the acreage reserve summer fallow land that is already there.

And while you will be paying him the difference between summer fallow, possibly, and what he wouli have grown as wheat

The CHAIRMAN. How would you do it? Would you prevent him from planting anything at all, let him retain summer fallow?

Mr. GEHLBACH: May I come to that as I present my proposal?
The CHAIRMAN. All right, go ahead.

Mr. GEHLBACH. It is true, is it not, that he could substitute under the present proposal of the acreage reserve, he could substitute 100 acres of summer fallow land he already has into the acreage reserve and expand his feed grains 100 acres and be in compliance?

The CHAIRMAN. But the point is though, that he must reduce his allotted wheat acres, that is the point.

Mr. GEHLBACH. Yes, he will reduce, but he will shift crops. We have the same problem of chasing diverted acres throughout the country that we have had under the old program which has made the old program fail, in adjusting agricultural production.

The CHAIRMAN. The first part of the soil-bank plan is to curtail the planting of allotted acres; acres that the farmer has a right to plant under the law as it now exists.

Mr. GEHLBACH. That is the acreage reserve, but not the soil-bank plan as originally proposed and as we are still proposing it.

The CHAIRMAN. I understand that.

Mr. GEHLBACH. All right. Is there any question you would have on the cotton or the grain form?

The CHAIRMAN, I will just take that as an example.

Mr. GEHLBACH. That is a very good point. I mean that is one that we must clear before we will ever have a farm program that will operate successfully.

The CHAIRMAN. All right. Let us hear what else you have.

Mr. GE LBATH. Corn farmers might also increase production and those under the acreage reserve could use certificates to bring Government-held farm surpluses back out onto farms to depress prices.

With 60 percent of corn farmers not in compliance with corn acreage allotments, it would be unfair to let them continue to overproduce and thus lower prices for farmers in compliance in the Corn Belt or other areas. It would not be fair for cotton and wheat farmers to underplant their allotments and increase feed grains on underplanted cotton and wheat allotments. We must adjust production in all agricultural areas and all share equally in the benefits derived.

We do not think that the acreage reserve program will adjust overall production or protect producers of other crops and livestock from excessive production on diverted acres. A soil bank plan we will discuss later in this statement could be effective, however, in accomplishing these things.

In the United States we have 142 million acres of cropland planted to hay and pasture. We also have about 30 million acres temporarily

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