or else they would have to take a considerably lower price, because their wheat is not good milling wheat, most of it.

The CHAIRMAN. The hearings developed there that they wanted a two-price system

Mr. HUGHES. Yes. They are perfectly willing. They think it will encourage that change.

The CHAIRMAN (continuing). So that they can dispose of their excess abroad?

Mr. HUGHES. Yes. And also they are selling for poultry feed. Senator AIKEN. They used to raise it for feed primarily out there. Mr. HUGHES. Yes. We have had a big increase in poultry production, as you folks know. It seems unfair that the wheatgrower is shut out of that increased market, because of factors beyond his control, and it is a good poultry feed. Much of it would move into poultry feed if it were available.

Senator AIKEN. It is conceivable, then, that a considerable part of the area of the country that is growing wheat now would not do so well under the multiple-price system as they do under the present program of supports.

Mr. HUGHES. I think that is right. I think that is the way we should go. We should encourage the production of this wheat in the most economical areas.

Senator AIKEN. I was considering the problem in terms of votes, Mr. Hughes. More States would get less money than would get more. That is really a practical matter around here.

Mr. HUGHES. I know it is, but if we are ever going to straighten out this mess we are in, we have to think in terms of encouraging the production where it is economically sound to do it and where they can produce quality.

Senator SCHOEPPEL. Mr. Hughes, I would like to ask you, do you envision that under our plan you would make no change in the minimum acreage, for instance, in about, say, 15 acres?

Mr. HUGHES. Well, there would be an acreage allotment, and if they did have an acreage allotment, they could plant wheat, but they would not be eligible for any certificate or any payment on this domestic part of the food market.

Senator SCHOEPPEL. I want to get this strictly on the record. That is the reason I asked you.

Mr. HUGHES. Anyone who did not go along with his acreage allotment, whenever it was necessary to have them, would not participate in this domestic market.

Senator SCHOEPPEL. In other words, then, every man who produced this wheat would have to have an acreage allotment?

Mr. HUGHES. If they were in effect. If it was necessary to control production, where supplies were out of line with demand, then you would have to have an acreage allotment to get the certificate, and would have to comply with it.

Senator AIKEN. I have one more question.

The CHAIRMAN. Are you through, Senator Schoeppel?
Senator SCHOEPPEL. At this time, yes, sir.

Senator AIKEN. I have just one more question.

In talking to some of the wheatgrowers out in what some of you call the good wheat country, I find that they seem to be under the

impression that this plan will permit them to raise all the wheat they want to, and just get the different prices for it.

Do you think they are fully aware of the fact that they would still be under strict controls?

Mr. HUGHES. I think they are. I think most of them are.
Senator AIKEN. They understand that now?

Mr. HUGHES. The plan was originally sold on that basis, that they would get this much, and they would be free to produce. But I think every wheatgrower recognizes now the serious supply situation, and that they could not hope to do anything like that until we get it more controlled.

Senator SCHOEPPEL. Mr. Chairman and Senator Aiken, that is the very thing I wanted absolutely to get into the record here, because at the beginning of some of these approaches to the domestic parity plan, there was the assumption, widespread, that they could produce all tht wheat they wanted to, and you simply cannot get the folks to buy that program in the Senate of the United States.

Senator AIKEN. I think that was true even in Kansas, Senator Schoeppel.

Senator SCHOEPPEL. That is right.

Senator AIKEN. They thought they were going to get the restrictions off production.

Senator SCHOEPPEL. I have had many, many men come to me within the last year in Kansas and say to me that if we had the domestic parity program, if we could get the 100 percent of parity, or the parity price, on the wheat domestically consumed for food, ther we could produce all the wheat we wanted to and sell the rest at the regular market price.

I understand there has been a shift in that thinking.

Mr. HUGHES. That is right.

Senator SCHOEPPEL. That is the reason why it is well to get it at the very beginning of this into the record.

Mr. HUGHES. I think the confusion results from the fact that this proposal was made at a time when we did not have these excessive supplies, and as we have been able to move into this type of program, we may have been able to have enlarged our market sufficiently to have avoided the need for controls.

But since we now have these supplies built up, there is not any question that we will now have to continue to control production until we get supply down in line with demand.

Senator SCHOEPPEL. And do you recognize at the present, which is the lowest figure they can go to now, unless changed, of 55 million acres with reference to wheat, that would be the basic acreage figure that you would start with in the invoking of your program?

Mr. HUGHES. Yes. I think that is the way it has been sold over at least the past year.

The CHAIRMAN. Proceed, Mr. Hughes.

Mr. HUGHES. I might say in the beginning that we are not far apart in principle except on the problem of raising wheatgrowers' income in 1956 and future years.

I think it might be well to ask questions you have on each of these points as we proceed.

(a) Proposal to remove penalties from production in excess of allotments if all wheat is used for feed or seed."

We have two objections to this proposal:

1. It is no relief to the commercial wheat producer who can feed no wheat since he has to sell some wheat and who has had to sacrifice about one-third of his normal production under the control program. Under the proposed measure, a farmer is to be exempt only if he feeds all his wheat on his own farm to his own livestock. How is this to be determined? Why should a farmer who desires to feed his livestock be deprived of doing so merely because he markets some of this wheat production? Why should a producer of poultry or livestock who does not produce wheat be compelled to buy feed at supported price levels when he must market his livestock or poultry in competition with farmers who do not do so?

2. While the measure would benefit those wheat producers who would be exempted from penalties and permitted to produce all the wheat they desire for feed or seed, it would increase wheat acreage, increase total wheat production and, in our opinion, would work in exactly the opposite direction from the declared objectives of the wheat program. It would also work in just the opposite direction from the declared objective of the Secretary of Agriculture, who has stated that he wants to see a program under which wheat will be produced in regions where it can be grown most efficiently and which permits the wisest and most effective utilization of our productive resources and capacities.

3. It will seriously endanger the control program by encouraging maneuvers to avoid the penalty.

Now, if you want me to, I can give you an example of that.
Senator AIKEN. Yes. Go ahead.

Mr. HUGHES. You want me to give you an example.

Well, let us take a farm out in my area. We will use a 320-acre farm, where it would have been a normal practice to plant 160 acres of wheat and have 160 acres of summer fallow. The allotment on that would now be about 100 acres. So instead of an alternate 160acre rotation, I switch to 100 acres one year and then double it the next year.

Well, the year that I am under the alltoment and can plant only the 100 acres, I get a marketing card which permits me to sell all the wheat I raise. The next year I have 200 acres planted, and that year I say I am going to feed all my wheat, and I do not ask for a marketing card. I merely put it in the bin, and maybe I feed some of it, and maybe grain sorghums and barley and oats are available and I do not feed much of that wheat.

The next year I am back under my allotment again of 100 acres, and again I get a card which says I can sell all the wheat.

Now, what is to prevent me from carrying wheat over from the previous year that was raised in excess of the allotment and selling it the following year?

Senator AIKEN. In the years when you reduced your acreage, would you not be reducing your allotment for the next year?

Mr. HUGHES. You see, we have an alternate wheat-summer fallow practice. So the year that we cut down on the allotment, we would have a larger acreage of summer fallow, and then the next year that would be ready for wheat, and that year we would exceed our acreage allotment, maybe almost double. And that year we would say we

were not going to sell any wheat; we were going to feed it. We would just put it in a bin.

Senator AIKEN. Do you think the wheatgrower is more adroit than the corn grower?

Mr. HUGHES. I do not follow you, Senator.

Senator AIKEN. I say, do you think the wheatgrower is more adroit than the corngrower?

Mr. HUGHES. Oh. Well, I would not say as to that, but I think we have wheatgrowers who would be looking for means of increasing their income under present conditions, and they might try to do somethink like this.

Senator AIKEN. I see.

Mr. HUGHES. I think it would be a danger to our control program. Senator AIKEN. I think it is impossible for this Congress to enact any legislative program that somebody is not smart enough to get around if he sets his mind to it.

Mr. HUGHES. They will at least try, I am sure.

Senator AIKEN. Well, they have demonstrated considerable ability in that direction.

Mr. HUGHES. I would like to say that under the domestic parity program, this would not be a problem, because there would not be any penalties to contend with. Anyone could feed some wheat if he chose to do so. But he would not be able to participate

Senator AIKEN. But he could not collect a bonus on what he fed? Mr. HUGHES. He could not if he exceeded his acreage allotment. But if he wanted to feed some wheat out of his acreage allotment instead of marketing it all, he could do that under our program. [Continuing:] (b) Enlarge the noncommercial wheat area.

This has some dangers at this time because some dramatic increases have occurred in the States already in this category. This has happened because the lower loan rate offered in this area does not necessarily lower the marketing price which is influenced by the loan rate in the commercial area. Removing acreage allotments under these conditions seems unwarranted in view of the continued buildup of surplus stocks and the severe production cutbacks suffered by others.

This would not be the case under the domestic parity program since there would be only 1 loan level and 1 market price level.

Senator AIKEN. Where has that occurred? I have heard of 1 State.

Mr. HUGHES. Alabama has dramatically increased. They went from about 30,000 acres in 1954 to 88,000 in 1955, and according to the estimates for this coming year, they have 146,000 planted.

Senator AIKEN. Well, did not the reduction in the acreage for cotton have something to do with that?

Mr. HUGHES. It could have.

Senator AIKEN. It went from one price-supported crop to another. And also, was that wheat in Alabam planted for grain or feed, or as we do in New England, as a nurse crop?

Mr. HUGHES. It was planted for grain, I am sure, because I checked that with the Department. But nothing was included in there that would be included in the soil for grain manure or anything like that. It might have been planted for a nurse crop if it was harvested as

such. But I checked that very carefully with the Department, and while the increase in other States-I think Arizona and Florida were the other two States that went up considerably-the New England States principally went up some, but not in large amounts

Senator AIKEN. It permits them to seed ground in the fall if they can use wheat. Rye is too heavy and oats not hardy enough. So wheat is a good nurse crop there. But in the case of California, didn't that State increase their plantings by producing new type durum seed for Senator Young's State?

Mr. HUGHES. I would not know.

Senator YOUNG. They did some reproducing for us there.

Senator AIKEN. Was it Selkirk?

Senator YOUNG. Here is what happened. Our experiment station developed some new varieties of rust-resistant durum, in very small quantities, and we sent them to Arizona and old Mexico to reproduce during the winter, and then we sent them back during the spring. Senator AIKEN. Yes.

Mr. HUGHES. Actually, these increases have not been alarming at this point. It is the trend that alarms us. If you enlarge this noncommercial area to take in all these other States that plant less than 240,000 acres, then you have an increase in those, as has happened under these, at a time when commercial wheatgrowers are severely restricted, and they are cut back a third. It just seems unjust.

Not only that, but it will affect future allotments. It will tend to push allotments out of the commercial area and allocate them to these States even though it is not put into effect, because allotments are based that way.

Senator SCHOEPPEL. Mr. Chairman, I would like to ask Mr. Hughes at this point, again for the record, with reference to your commercial wheat areas as you envision your program, they would have to have wheat allotment acreages in the commercial areas, or noncommercial areas and commercial areas?

Mr. HUGHES. They would not have to. If you want to retain or enlarge the noncommercial area under the domestic parity program, we can see no objection. However, there would not be any allocation of domestic certificates made in the noncommercial areas, since there were no allotments there at any time that allotments were in effect. They would not participate in the domestic parity program in the noncommercial area. But it would remove this objection that I spoke of.

The CHAIRMAN. Would they ever come into the picture?

Mr. HUGHES. Well, they would in the event that they got supply in line with demand to the point where they can dispose with allotments. Then they would be eligible. Any time that there were acreage allotments in effect, they would have to comply with them in order to be able to get this certificate.

Actually, we are not concerned about this if we have the domestic parity program, because then you would just have one low loan rate and one market price in the commercial area and in the noncommercial area. There would be no encouragement in the market price for the noncommercial grower put there by the support in the commercial area. Now, I have the figures here, which I have checked, from the Department, which show that reaction to market price.