Mr. PATTERSON. I think or presume that to mean that the International Wheat Agreement, if there were a price there, that they could not go below, or something like that.

The CHAIRMAN. So that again you have to take that into consideration.

Mr. PATTERSON. Yes.

The CHAIRMAN. And the wheat price, if it is $1.80, it cannot go below that?

Mr. PATTERSON. If that was an agreement we had made, that is right.

The CHAIRMAN. I believe that is about what the price is now.

Mr. PATTERSON. No. 4, foreign trade policies of friendly foreign exporting countries. I do know this is an example: That there have been some foreign countries that we have made an effort to give wheat to that have rejected it, and they said the only way we could handle it is on a longtime program.

Because if we took it for a year or two and built up our living standards and then had to quit, we would be in a serious condition with our populace.

No. 5, other factors affecting international trade in wheat including exchange rates and currency regulations.

The CHAIRMAN. You are proposing that? I presume you have thought it through you are presenting it to us?

Mr. PATTERSON. That is right.

The CHAIRMAN. Suppose you were the administrator of the law today and taking conditions as they now are, what would the support price on wheat be?

Mr. PATTERSON. With this one exception, Senator, I don't know exactly what the minimum is under the International Wheat Agreement.

The CHAIRMAN. Let us assume it is $1.70-that is what it is. I think that is what it is.

Senator SCHOEPPEL. Very close that that.

The CHAIRMAN. I think it is that. Assuming that the international agreement on wheat is $1.70, what would the support price for the wheat be—that is, which would not be used for domestic consumption? Mr. PATTERSON. It would have to be somewhere around that figure, if we followed this closely.

The CHAIRMAN. That is about what it is now.

Mr. PATTERSON. We are making another International Wheat Agreement.

The CHAIRMAN. I understand that. The point I am trying to make is that the support price would be about the same as it is now-not far away. So to sell that program and then given that certificate that you speak of would be pretty difficult.

I am taking the negative in this just to bring out the point.
Mr. PATTERSON. That is right. We appreciate that.

The CHAIRMAN. That is what I am trying to bring about.

Mr. PATTERSON. This is not the think we wanted in our program. If we didn't have this supply that we have hanging over our heads, we would not want this at all.

The CHAIRMAN. You would depend upon supply and demand?

Mr. PATTERSON. That is right. With this thing, these are some of the things that came out of the conference with the Department

and the different things that had to be considered in this to protect the whole thing.

In regard to our soil bank: Of course, the machinery part of that thing is more or less in the air, but I am afraid that we in the State of Kansas at the present time have more overseeding than we ever had. If this soil bank can be attractive, where there is some cash around there, it will be very beneficial, we believe, and it will get good participation.

As I said to you in our resolution, it was voluntary. We do not believe that any new program instigated should ever be compulsory, especially the first year, because there are always technicalities in it that nobody can see, everywhere down the line, and then if it does not work, we are ready to concede something needs to be done because we have to stop building up this stockpile. That is all there is to it. The CHAIRMAN. We talked about the price under the agreement. It provides for a minimum of $1.50 and a maximum of $2.05.

Mr. PATTERSON. The minimum is what we are referring to. The CHAIRMAN. My recollection is that the amount now is about $1.70 or $1.72-that is about what it is.

Mr. PATTERSON. I think in this the minimum would be considered. Senator SCHOEPPEL. You would think in that, that the minimum would be considered, so it would be $1.50, somewhere around there. Mr. PATTERSON. Yes.

The CHAIRMAN. $1.55. That would mean if the wheat that you have on hand cannot be sold for value on the market the owner could come in and borrow that much money on it.

Mr. PATTERSON. Yes; that is right.

The CHAIRMAN. Proceed.

Mr. PATTERSON. I was back to the soil band: Under the condition of things, I think the major point with the wheat grower at the present time is that he has to find some way from going broke. That enters into funds. When we get into that, if this soil bank comes out here, we have a lot of wheat growers that are small growers, with allotments of 100 acres or less. He has to endeavor to be able to secure some type of an income.

If the soil bank comes out, compulsory or not compulsory, my honest belief is that unless he can see some returns from that thing he will not participate in it. That was very clear at our annual meeting, because he has to do something.

In other words, if he figures around here that he is going to be working on an individual setup here, he has come down to the place where he has to have some funds.

If he sees that he cannot in that thing get a return or it seems to me like I have had it presented to me in the thinking nothing has been ironclad yet, it would be probably his mere cost that he would receive, well that does not bring to him anything in the way of return, and there is a question in my mind whether he would participate in it, either voluntarily or compulsorily.

Senator YOUNG. May I ask a question here? How is the average wheat farmer going to make it when price supports go to $1.81 this year and $1.68 next year and $1.50 something the year afterwardsthat is the definite schedule that you cannot get away from under the present program?

Mr. PATTERSON. In our meeting, Senator, that the Secretary called, we were unanimous when we informed him that we could not make it under that program.

Does that answer it? That is our feeling right down the line. That is the reason we are so sincere and so earnest here now on this. That we just can't make it under that figure.

Whenever you cut the allotment on one end and the price on the other it is like chopping rope.

The CHAIRMAN. On top of your $1.50, or $1.55 a bushel, if you sell your grain into storage, and off the farm, you would deduct another 10 cents for storage.

Mr. PATTERSON. Yes.

The CHAIRMAN. And would go down to less than $1.50 a bushel, and there is no escape from that under the present program.

Mr. PATTERSON. We can't see that there is.

The CHAIRMAN. You mean the flexible?

Senator YOUNG. The surplus situation is such that the price is just bound to go down that way if you leave the flexible program in effect and the modernized parity formula in.

Mr. PATTERSON. I would like to make this statement to you, gentlemen: There is not very good feeling among the wheat growers in our State in reference to the corn grower. We had quite a warm meeting over that thing, as to where they have filed to participate.

I understand their compliance this year was somewhere between 35 and 40 percent, and the rest of them were outside of their allotments. I understand they are now suggesting that we have no corn on allotments for another year.

We have felt in analyzing this situation as it has come to us that we need to reduce this stockpile that we have; that we would bring out of that into the feed channels home figure between 50 and 200 million bushels a year properly channeled into feed.

We felt like maybe being a good neighbor maybe that should be pegged there for a little bit until the feed price stabilized and then begin on that.

I just want you to know the feeling back there about it because it is warm on that thing.

Senator YoUNG. I would think that wheat farmers would be aroused over that proposal. So far as I am concerned, as a farmer, the way wheat prices are going we would rather stay out of the wheat program entirely. We are in a noncommercial wheat area and largely are cattle holdings, and cattle feeding operations.

I know other farmers are doing the same thing, and more are planning to do that.

Mr. PATTERSON. That thing enters into it. We have had the difficulty of the maize situation.

I'd like to make this statement: I think our wheat farmers in Kansas want to be good, true cooperators with the program, but they have got to the the place where their funds are gone. They are borrowing right now.

I could name you instance after instance where they have to bring in FHA. The banks can't handle it any more. It is getting that serious. There is no question about it.

64440-56-pt. 8-33

Senator YOUNG. Even FHA cannot handle it. They will have to liberalize their provisions.

Mr. PATTERSON. That is right. If we have a failure this year from Mother Nature, and so forth. there will be a huge number of those fold up. The pitiful part of it is that a lot of them are GI's who came back and started. They had to go into debt to get started.

I wonder what psychological effect that will have on those boys who went out here and fought for the country and then came back and the very same country takes everything they have.

Senator YOUNG. There was a young veteran in my office, in my hometown just before I left-one of many, the last one-who had a mortgage on his car of $500, and he was about to lose it. He did lose it. He had four kids to haul to school.

The Farmers' Home Administration, under long-established policy, cannot refinance a car. In fact, the policy is against refinancing of anything.

I think that policy is going to be changed. Here this war veteran lost his car and could not haul his kids to school after being broke besides.

Mr. PATTERSON. Then there was another point in our resolutions, that if we decide to try and reduce this stockpile-and I will say that when this came up this was not unanimous, one way or another on this discussion of selling that back into feed some felt like we should honor the neighbor in the corn section and some thought we ought to tell him where to go-but we do feel if that is straightened around this law should be changed so that when the time shows up that it can be moved.

We do not like the philosophy that a lot of it will have to go into feed channels, that we will have to admit that. Because it won't meet the requirements of the American miller. Some of it won't meet requirements for export. That has to go into that feed channel.

We do not like to see it go in to CCC at $2 plus and come out at $1. The taxpayer does not like that, either.

Senator YOUNG. Would it help the situation very much if we provided the top level price supports to farmers who planted varieties of wheat which normally produced good quality wheat?

When you go into the other phase of it, basing your price support entirely on quality, you run into the problem of the grain dealer having to test every load of wheat that comes in and he cannot properly test it there for baking quality, etc.

If you took the first step and either penalized a farmer who plants varieties of wheat that never produce a good quality of wheat or else compensated the farmer who plants varieties that normally produce good qualities of wheat-and even the best quality of wheat does not every season produce the top quality

Mr. PATTERSON. That is right; go farther than what we have on

the 20 cents now.

Senator YoUNG. Yes.

Mr. PATTERSON. This would be strictly a personal opinion, Senator, from looking the situation over in Kansas, this 20 cents has made marvelous goal. Maybe the other would make more.

We have some sections in Kansas that were producing to a large extent some of these varieties. Well, the millers just would not buy it, that is all, when you got it in carlots.

Since that went into effect the Crop Improvement Association took some surveys the other day and it had come down almost to negligible. In some of those places where they were running 15 to 31 percent of those varieties the seedings last fall showed it was down to less than one-half of 1 percent. So that has made a large improvement. Maybe the other would make a larger one, I don't know.

I think we have to be on that trend somewhere or other.

There is this other side of it, too, when you look at it. When you get to the place where all are producing, then there is no premium left, if it is all perfectly good wheat.

Senator YOUNG. You would have a better chance to export it, though.

Mr. PATTERSON. You will have a better quality. That is the thing we must get at. We must produce quality. You can always leave a better taste and a better feeling when you sell something good than when you sell something that isn't good; that is right.

Senator SCHOEPPEL. In order to clarify the record, your Kansas folks that you represent here, start with the idea that something has to be done about the surpluses and you are willing to go to practically the minimum wheat acreage that we have established now, 55 million

acres.

Mr. PATTERSON. We have accepted that.

Senator SCHOEPPEL. Then do you accept the proposition that whatever program comes out of here there has been a lot of thought given to it, and there have been probably some changes contemplated— that there should be adherence to cross compliance? How do you feel about that?

You may not have taken an actual official position on that but how do you feel on that personally?

Mr. PATTERSON. There was no official position taken on it. It was discussed. This will be my personal opinion here.

Senator SCHOEPPEL. Give us your personal opinion, if you have not taken an official position on it.

Mr. PATTERSON. Unless there is a revenue to bring this man in some income, I mean above cost, I don't believe he will stand for cross compliance. He will take the chance of busting. I think he will.

If there is a chance of some income revenue over and above cost, of course, we figure the soil bank is the same thing as cross compliance, he takes this out and leaves it out-no other crop to go on it at all, only a soil-conserving crop, either grass or legumes or something like that-that there is no use for.

The CHAIRMAN. Proceed, sir.

Mr. PATTERSON. Those are the main points I wanted to bring out. I did not want to be in repetition with what went on this morning. The CHAIRMAN. Any further questions?

Senator SCHOEPPEL. Do you generally agree with the position taken here this morning and very ably presented by Mr. Hughes, of Nebraska?

Mr. PATTERSON. Yes; that is our program right down the line. We are in agreement.

Senator SCHOEPPEL. I want to get on record how you folks representing your Kansas people here felt about that.

Mr. PATTERSON. That is right. I want you gentlemen to know that all of us in Kansas are of this feeling.