The CHAIRMAN. The next witness is Mr. H. J. Hughes.

STATEMENT OF HON. CARL T. CURTIS, A UNITED STATES SENATOR FROM THE STATE OF NEBRASKA

Senator CURTIS. I have appeared before the committee this morning to accompany a farmer from Nebraska, Mr. Hubert Hughes of Imperial, Nebr.

Mr. Hughes is Chairman of the Commodity Credit Advisory Board, at the present time. He is vice president of the National Association of Wheat Growers; he is a member of the Nebraska Wheat Commission.

In the fall of 1955, he attended the conference in Geneva concerning the renewal of the International Wheat Agreement, in the capacity of an adviser representing the United States.

I have known Mr. Hughes a long time. He is a man of integrity, a successful farmer, and has given a great deal of time and attention to farm legislation, particularly relating to wheat.

Senator YOUNG. I know him myself.

The CHAIRMAN. Thnk you, Senator Curtis. Would you sit with us, if you have time?

Senator CURTIS. I thank you so much.

The CHAIRMAN. All right.

Mr. Hughes, you may proceed.

STATEMENT OF HERBERT J. HUGHES, VICE PRESIDENT AND CHAIRMAN OF THE FARM PROGRAM COMMITTEE, NATIONAL ASSOCIATION OF WHEAT GROWERS, IMPERIAL, NEBR.

Mr. HUGHES. Mr. Chairman and members of the committee, my name is Herbert J. Hughes, my home is at Imperial, Nebr., and I make my living producing wheat.

I appreciate the opportunity to visit with you today about the problems of the wheat producers and I am sure you recognize the seriousness of those problems.

To a large extent, wheat illustrates many of the difficulties which confront producers of all the so-called export crops. It involves problems of price, acreage allotments, marketing quotas, storage, surplus disposal, foreign trade, market expansion, subsidies, and most important of all, the welfare of a great many farm families and large segments of our agricultural communities.

These problems are not the problems of farmers alone. They are also important to the vast grain and food trade upon which farmers necessarily must rely to get their crops marketed and consumed.

The kind of programs employed in agriculture very often interfere with an effective job of marketing. We cannot afford to fail to look at all sides of the problem if we are to be successful in our search for effective solutions.

These problems are and, of course, should be of real concern to our Government, if for no other reason than that it is currently the largest buyer, seller, and owner of wheat in the world.

In suggesting that the problem of wheat should be of concern to our Government as well as to wheatgrowers, I do not wish to infer that

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wheat farmers should look to Government to solve all their problems. All I mean to indicate is that all of us, including Government, have the responsibility of attempting to solve these problems together.

I would like to say that just recently on the 4th and 5th of Janu ary the Secretary of Agriculture invited a number of wheat producers and members of the wheat trade, to meet with he and members of his policy staff, to discuss these particular problems relating to wheat.

The group unanimously recommended an approach to the solution of these problems which is contained in my statement. I just want to say briefly that I am deeply disappointed that in the legislation that has been sent over to the committee, no recognition of those recommendations has been made.

The CHAIRMAN. When did that group appear?

Mr. HUGHES. January 4 and 5. This committee met with the Secretary and members of the staff at the Department.

The CHAIRMAN. Did you get any encouragement from him as to the proposal you are now presenting?

Mr. HUGHES. They said, the Secretary stated his mind was open on this particular point, and that certainly it deserved full consideration. The CHAIRMAN. Proceed.

Senator AIKEN. You understand that the President's Advisory Commission on Agriculture differed with your Wheat Advisory Committee?

Mr. HUGHES. They did not tell us. So far we have not been informed of the findings of the Commission. They have not been made public.

Senator AIKEN. I have heard it said but I do not know; that is why I asked you.

Senator YOUNG. Your committee was unanimous, you say?

Mr. HUGHES. Yes. There were 13 wheatgrowers representing. I believe, 8 States, and 2 members of the trade, 1 from Kansas City, and the president of the Grain Trade Council, Mr. Farrington, from Minneapolis.

Senator AIKEN. Was Pennsylvania, New York, and Ohio represented on that?

Mr. HUGHES. From where?

Senator AIKEN. Pennsylvania, New York, and Ohio?

Mr. HUGHES. No, it was mostly the Midwest, Illinois, and then most of the rest of the States were west of the Missouri River.

Senator AIKEN. But Oregon and Washington were represented? Mr. HUGHES. Yes, they were represented; Nebraska, Kansas, North Dakota. I just don't recall now, Colorado. I think there were 7 or 8 States represented among the growers.

The CHAIRMAN. Proceed.

Mr. HUGHES. Our attitude will necessarily have much to do with our success in finding appropriate solutions. If we can approach the problem with an open mind and abandon thoughts of personal or political advantage if we are bold enough to dare to put new ideas to use, we have the right to hope for success.

But if we hold fast to out-of-date programs which no longer fit present-day conditions or which have been proven inadequate, or if we continue to attempt to apply blindly a single program to the problems of every commodity, whether it fits or not, wheat farmers are likely to be in for some even more difficult experiences.

I shall not review the circumstances that have led up to this point. We as wheat growers have little interest in the debate over which party's past policies are responsible for our current situation, and I am sure you are very familiar with all of our past farm program provisions of whatever origin..

We are interested now only in what is to be done about our present serious low-income situation. As members of this committee, you will have a large share in determining that policy.

There are some who will tell you that flexible price supports will solve this problem-that all you have to do is wait. We wheatgrowers have no faith in this solution for wheat.

Actually, there will be little flexibility under such a program. But for the 8212 percent minimum level of support established by law for 1955, the flexible support program for wheat means nothing but a straight drop to rigid 75.

With a 75-percent price-support level for wheat nothing will have been accomplished except to further reduce farmer's income from wheat, and bring about some saving in the amount of export subsidy. Consumption will not be increased. New markets will not be opened.

And it will be necessary to keep in effect all the controls which are now in operation. Every complaint that has been made against the 90 percent rigid level of support can be made with equal validity against the flexible price-support program when applied to wheat.

So long as we pursue the policy of fixing prices as we do under the present wheat-support program, we will be caught on the horns of dilemma. We will either have to fix prices so high as to price wheat out of many of its natural markets and make the Government itself the principal market, or we will have to fix prices low enough to permit entry of wheat into the markets of the world.

If the latter course is followed, wheat farmers would be compelled to sacrifice a fair return on that portion of the crop which is sold domestically for food in order to have access to the world market.

We believe that the only sound program for wheat is one which will return to wheat growers their historic right to compete fairly in the markets of the world without export subsidies paid out of tax funds and without having to sacrifice a fair return on that large portion of the wheat which is consumed domestically for food.

The only effective means that we know of to accomplish that objective is the domestic parity plan. This program has frequently been referred to as the two-price plan.

But the term "two price" is a misnomer. The reference to it as a two-price plan actually has been the cause of some misunderstanding. It has resulted in the domestic parity plan being confused with prior proposals. It is a misnomer because under the domestic parity plan there are not two prices.

All wheat will be sold freely in the market at the going market prices. The prices will be established freely by competition and not by Government edict.

Bills have been introduced in the Senate covering this program and are available to you so I shall proceed to discuss other proposals which have been made for the solution of our problem and compare their possibilities with the domestic parity program.

It seems to me any proposal should be measured by about six questions. They are:

1. Is it calculated to give greater or less income to the farmer? 2. Does it make it easier or more difficult to enter world markets? 3. Does it make it easier or more difficult to enter the feed market? 4. Does it encourage more or less Government control?

5. Does it hinder or help buyers of wheat to buy what they want and to reflect quality differentials?

6. Does it call for more or less appropriations from Congress? The Administration has recommended some changes in the wheat program and

The CHAIRMAN. May I interrupt you? As I understand your proposal, there will be no curtailment of wheat acreage, but all of the wheat that will be produced by the farmers will be sold at whatever the market is, both on the domestic as well as the foreign market.

You propose that the amount of wheat that is sold on the domestic market the Government will make the difference between what it sells for and a certain fixed price. Am I correct in that?

Mr. HUGHES. Senator, you are erring in a point or two. We would like to see the program operate in the way that you describe it as far as not having any restrictions on acreage, but we realize that with the tremendous supplies now in the hands of the Government, and the possible production we cannot hope for that.

So we have provided in the act that the Secretary shall have the discretionary authority to require compliance with acreage allotments at all times that it is necessary.

The CHAIRMAN. What is the inducement, that you get a better price for that which is consumed domestically?

Mr. HUGHES. The bill also provides that the loan rate may be established at a low level, low enough to prevent undue competition with other feed grains so you would not disrupt the feed-grain market or undercut the row market.

The CHAIRMAN. Would that be applicable to all of it?

Mr. HUGHES. All of it. There would be one loan rate.

The CHAIRMAN. Is that loan rate left to the discretion of the Secretary?

Mr. HUGHES. Yes, completely to the discretion of the Secretary. The CHAIRMAN. And the reason for that, I presume, is not to let the wheat market tumble too low?

Mr. HUGHES. That is right.

The CHAIRMAN. What suggestions have you to make as to what that loan rate should be? What is the minimum?

Mr. HUGHES. In our thinking, I think it will take some experimentation on the part of the Secretary.

In the past we have had one guide. Back in the thirties, starting in 1938, when we had our first wheat-support program, and for 6 years following that time up to, I believe, 1942, there was a variation between the loan rates for wheat and corn, ranging from 2 to 6 cents a bushel.

And during that period of time, the amount of wheat that moved into feed varied from roughly 100 million bushels up to 143 million bushels.

So with that as a guide, which is about the only guide he would have at the present time, he might establish a loan rate something like that.

Senator AIKEN. Let me ask you, would you ask to have the Secretary fix the rate for the feed wheat

Mr. HUGHES. For all wheat.

Senator AIKEN (continuing). At a level

Mr. HUGHES. All wheat.

Senator AIKEN. All wheat-higher than the loan rate for feed grains?

Mr. HUGHES. Yes.

Senator AIKEN. Not higher than the market price of feed grains? Mr. HUGHES. That is right.

Senator AIKEN. But higher than the loan rate. That would be corn, $1.58

Mr. HUGHES. Of course, he would have the discretion.

Senator AIKEN. You have sorghum and oats entering into the picture there. Would they have to be reduced to equivalent values?

Mr. HUGHES. I think that that would be something he would have to determine. He would have to take all of those things into consideration as he somewhat does now in establishing support rates for those different things.

Senator AIKEN. You say he would have to fix a support rate of $1.65; that would be 7 cents above the loan rate of corn?

Mr. HUGHES. Something like that. Of course, he would have full discretion to take all of these things into consideration.

Senator AIKEN. Would all wheat growers wherever located have the same proportionate share of the domestic market?

Mr. HUGHES. You mean, what they got for the food?

Senator AIKEN. Yes. The thing that bothers me is that the twoprice system might freeze wheat growing in the eastern and southern States, because Pennsylvania can almost outvote Nebraska in number of growers, not quite, I guess; Ohio, probably.

Mr. HUGHES. That would be probably true. However, Senator, we have been unable up to the present time to do anything that would set allotments on any other basis.

Senator AIKEN. But you say that Pennsylvania, Virginia, and the Carolinas would have their proportionate share of the domestic market

Mr. HUGHES. Yes.

Senator AIKEN (continuing). Even though the millers used 80 percent Nebraska-type wheat to 20 percent of Pennsylvania-type wheat in making their flour?

Mr. HUGHES. Of course, we would like to see it differently, but we recognize that you are unable today to set the acreage allotments on any other basis. So I do not see how you could do it on this any better.

Senator AIKEN. I think you could get a good share of the commercial growers out of the wheat market if they could produce for feed. Mr. HUGHES. We are proposing that they can do that. We are proposing that they can produce for feed. We are also proposing that if they do not desire to produce for feed, they can produce only the amount of the food quota.

Senator AIKEN. I rather read in your statement that you seem to think that if they produced everything for feed, it would not solve the problem. I believe you asked that all wheat growers everywhere be permitted to produce in excess of normal allotments?