Mr. HUGHES. Well, only if there was no reason to control the production, if supplies were in line with demand.

Senator AIKEN. I think Eastern wheat growers-and there is an awful lot of them now-who keep within their allotments and have a good wheat crop, turn it over to the Federal Government. But originally if they had planted a couple of acres more for feed, they would not be able to do that, except at a support level which would not pay them to do it.

Mr. HUGHES. Of course, under our program there would be no penalty.

Senator AIKEN. This is problematical. I have heard it estimated that the feed wheat bill would take 100 million bushels out of the commercial wheat supply. I think that is rather high. But I have not had anything to go on.

Mr. HUGHES. I have studied it in some degree, Senator, and I just cannot see where we are going to move a lot of wheat into the feed market. There is nothing in the past, except during the wartime when it was subsidized and there was a scarcity of other feed grains, we did move a lot of it.

Senator AIKEN. I think you are probably right. The poultrymen are not feeding the wheat they used to, I understand.

Mr. HUGHES. No. They would, I think, feed more wheat.

The CHAIRMAN. Mr. Hughes, how does your proposal differ from the present law insofar as determining the number of acres that are to be planted by wheat farmers?

Mr. HUGHES. Nothing; no different under the present law.

The CHAIRMAN. In other words, it would be done by vote of the farmers, two-thirds of them, and include all farmers? You will not establish a commercial area?

Mr. HUGHES. It would operate just exactly the way the present program operates, only that there would be no referendum on quotas. because there would not be any quotas.

The CHAIRMAN. No what?

Mr. HUGHES. There would not be any marketing quotas under the domestic parity plan.

The CHAIRMAN. I see.

Mr. HUGHES. There would be acreage allotments.

The CHAIRMAN. Acreage allotments?

Mr. HUGHES. Yes.

The CHAIRMAN. Now, how would you determine the amount of wheat that each farmer would be entitled to sell and receive a better price for if it is consumed domestically?

Mr. HUGHES. Now, you are thinking if we started this program next year, for example?

The CHAIRMAN. Yes.

Mr. HUGHES. All right. On a 160-acre farm, a man might have at the present time a 60-acre wheat allotment, and probably a normal yield of 20 bushels. That would produce 1,200 bushels. Now, approximately 55 percent of our current production is used for food. So he would receive a certificate for 55 percent of that 1,200 bushels which he would be able to cash.

The CHAIRMAN. So your base would be the estimated present allotment?

Mr. HUGHES. The present allotment.

The CHAIRMAN. Now, that applies to the commercial area. But now you are going to bring in quite a few, as Senator Aiken pointed out, from noncommercial areas. You do not think that will make much difference?

Mr. HUGHES. We would not have this program apply in the noncommercial areas.

The CHAIRMAN. Now, how would you proceed in paying the wheatgrowers for that part of their crop which is domestically consumed, that is, for food and not for animal feed?

Mr. HUGHES. The Secretary would estimate the average market price for the coming year, and he would have a guide in this loan rate that he would establish, you see. Then the difference between that and full parity would be the value of the certificate. And that would be paid by the millers when they milled this wheat into flour. They would buy these certificates in the amount that they processed to provide the money to pay the grower. It would just be a revolving fund. The CHAIRMAN. These certificates would be issued by the Secretary of Agriculture

Mr. HUGHES. Yes.

The CHAIRMAN (continuing). And given to the farmer as his share of wheat produced for that year, which would go into domestic consumption?

Mr. HUGHES. Yes.

The CHAIRMAN. And the miller would have to have that certificate

Mr. HUGHES. No. Actually, the farmer would cash it at the ASC county office, and it would go back to the Commodity Credit, and they would buy from the Commodity Credit.

The CHAIRMAN. Where would that money come from?

Mr. HUGHES. The millers would buy from the Commodity Credit, the certificate covering their processing. For every bushel they processed into flour, they would buy and place into the Commodity Credit revolving fund the money to pay for this.

The CHAIRMAN. In other words, they would pay the 100 percent of parity price fixed by the Secretary in advance for that portion of the wheat that they used for domestic milling purposes?

Mr. HUGHES. Yes.

The CHAIRMAN. Now, what inhibition would you have in the bill to prevent the millers from utilizing other wheats?

Mr. HUGHES. Well, just the same as we do, I presume, for example, to see that they pay their income tax. Their books would have to be opened to see that they had purchased these certificates for the amount that they had bought.

The CHAIRMAN. There would be no prohibition against their milling the common run of wheat?

Mr. HUGHES. Oh, they can buy wheat anywhere they want, any amount of wheat anywhere of any quality. There would be no restrictions whatever on their buying wheat. They merely have to buy this

The CHAIRMAN. Would not that require quite a bit of administrative work and policing, in order to see to it that the millers, wherever located, did not violate the regulations and sell from their bins wheat on which they do not have a certificate?

Mr. HUGHES. Well, you see, the certificate does not follow the wheat at all. They move out and they buy in the market exactly as they do now. The millers do not enter into this at all until they are ready to sell the flour that they have milled from wheat. At the time they are ready to sell the flour, then they must buy from the Commodity Credit certificates covering the number of bushels which they have processed into that flour. It would just be merely a matter of checking their books maybe at the end of the year to see that they have bought that.

The CHAIRMAN. You think it would be that easy?

Mr. HUGHES. Yes.

Senator AIKEN. May I give you a hypothetical example to illustrate this point? I want to see if I got it straight.

We will assume that the parity price for wheat is $2.10, and that part of the crop used on the domestic market would be entitled to the difference between what the producer got for his crop and $2.10; is that right?

Mr. HUGHES. Yes; what the Secretary estimated the average market price would be.

Senator AIKEN. All right. Suppose the average market price was $1.70 and the parity price was $2.10. That means that each wheatgrower would get 40 cents a bushel additional for that part of his crop which is used domestically?

Mr. HUGHES. That is right.

Senator AIKEN. All right. Now, we will say Senator Young is a pretty good wheatgrower, and he sold his wheat for $2.20 a bushel. I think he gets more than that, but actually we are taking that as a figure.

Senator YOUNG. No; we do not.

Senator AIKEN. I do not know.

Senator YOUNG. I would like to get that right now.

Senator AIKEN. That means that he would get 40 cents a bushel more, and he would get $2.60?

Mr. HUGHES. Right.

Senator AIKEN. Now, I see Herschel Newson in the back of the hall here. We will assume that he got a lot of garlic in his wheat and he sold it for $1.50. He would get 40 cents additional. So he would get $1.90?

Mr. HUGHES. Yes.

Senator AIKEN. However, Senator Young would get the same percentage of the domestic market as Mr. Newsom would; would he not! Mr. HUGHES. Yes.

Senator AIKEN. And therefore he might get $2.60 for 75 percent of his crop

The CHAIRMAN. 55.

Mr. HUGHES. 55 is about the way it works out.

Senator AIKEN. 55 percent.

Mr. HUGHES. Yes.

Senator AIKEN. Well, I was thinking that he grew a lot of good wheat and that 75 percent of what he raised would be his 55-percent share. But he would have to sell a lot of his high-grade wheat. He would get a good price, I think, anyway.

The CHAIRMAN. No; but he could not get it, though, because the millers

Senator AIKEN. It would go into the feed wheat?

Mr. HUGHES. Oh, no. I think you misunderstand the purpose of

the program.

The millers will be free to go in and buy their wheat and pay premiums for quality, just as they do now.

Senator AIKEN. That is right.

Mr. HUGHES. In fact, they would be more encouraged to do it, because as you lower this loan rate down to the point where it is feed value, more or less

Senator AIKEN. But if a wheat grower got the premium-we will say he got $2.30-and then the difference between the average selling price and the parity price was another 50 cents a bushel, he would get 50 cents on top of his premium; is that right?

Mr. HUGHES. That is right. He would get the advantage in that

way.

Senator AIKEN. Then the Indiana grower, if he sold his crop for $1.50, we will say, and got 50 cents additional, would not even be getting the parity price?

Mr. HUGHES. That is right.

Senator YOUNG. Were you through, Senator Aiken?

Senator AIKEN. Yes.

The CHAIRMAN. Senator Young.

Senator YOUNG. A farmer who produced a good quality wheat would get a break in the open market and get a better price for the stuff he produced

Mr. HUGHES. That is right.

Senator YOUNG (continuing). Whereas a producer of poorer quality of wheat would get the same as a producer of good quality on that part that is used for human consumption. Payment on the certificate would be the same whether he produced good wheat or poor wheat?

Mr. HUGHES. That is right.

Senator YOUNG. But it would provide a much greater incentive? Mr. HUGHES. Very much greater than we have provided in the market place, which is about the only place where you can get premium for quality.

Senator YOUNG. Then the consumers of bread would be paying what is a fair price, or parity, for what they use?

Mr. HUGHES. Yes.

Senator YOUNG. And there would not be any extra tax on bread, would there?

Mr. HUGHES. I cannot see how there could be. The bakers say that the flour is costing them as much today as it had at any time in history. They are actually paying the highest price for flour now they have ever paid.

Senator YOUNG. Some of our wheat has been selling for as much as 30 and 40 cents a bushel of premium in the last fall. The premiums have dropped down now.

Mr. HUGHES. I was just going to say, mine have, too. In fact, they have been eliminated as of the middle of December.

Senator YOUNG. Just one more question.

Is Mr. George Mickleson of my State on your committee?
Mr. HUGHES. Yes. He attended this meeting.

Senator YOUNG. He approved the plan here?

Mr. HUGHES. He had one reservation. He felt that he would go along with the idea, with the principle, but he felt that these domestic quotas should be based on the percentage of use. In other words, the spring wheat, if it all went into the food market, then they should get it on all their wheat.

Senator YOUNG. He is looking after interests?

Mr. HUGHES. Yes. We sympathize with that, although my wheat, where I happen to live-I raise premium winter wheat-last year I got a premium of 25 cents a bushel over the support rate for every bit of my wheat.

Senator YOUNG. Mr. Mickleson is a very good farmer, and he is vice president of the Farm Bureau.

Mr. HUGHES. Yes.

Senator YOUNG. He is a very good farmer.

Mr. HUGHES. However, we just recognize that when it comes to trying to legislate anything like that, on that basis you would have the same difficulty that you would have to try to set allotments on that basis. We cannot set allotments on that basis. So I do not see why we should try to do it on this.

Now, there are other ways that that quality thing can be accented. I think personally that these growers, as you lower this loan rate in these areas where they are growing poor quality wheat, and they must get their price in the market place we may get some reduction of the production there. I just do not think they will continue to produce wheat for that low price.

Senator AIKEN. Under your proposal, it would be possible for some wheatgrowers, we will say, to get a guaranty which would be well over parity, 100 percent, and probably others who never could achieve parity; is that correct?

Mr. HUGHES. That is right. But the ones that were getting the overparity would be because they were producing quality, and they were getting it in the market place.

Senator AIKEN. If you take a few years ago, Kansas, which normally produces high grade wheat, produced a lot of 51-pound wheat. Mr. HUGHES. Yes.

Senator AIKEN. What would happen to that? They would just have to sell it on the open market?

Mr. HUGHES. That is right. They would get the loan rate, which would be based on pretty much the feed value of the wheat. They would not get any premium.

Senator AIKEN. Would it be possible for western Kansas to get one price and eastern Kansas another price?

Mr. HUGHES. That is true today.

Senator AIKEN. Would the effect of this generally be to give Nebraska, the Dakotas, Montana, and western Minnesota a premium for their grain which might not be received by Indiana and Pennsylvania?

Mr. HUGHES. Yes.

Senator AIKEN. Where would the Pacific States of Washington, Oregon, and Idaho fit into this?

Mr. HUGHES. A big percentage of their they would either have to change their varieties and produce wheats of a better milling quality,