SOIL BANK RESOLUTION

Whereas the United States Department of Agriculture is proposing to develop within the national farm program a soil bank by retiring productive farm acres into production of soil building legumes and grass crops; and

Whereas increased grazing land and forage production would further increase the already surplus supply of beef, thereby further jeopardizing the economic position of ranchers and longtime beef producers of this Nation: Therefore be it Resolved, That soil-bank acreages not be used for grazing livestock or for the production of such forages as hay, silage, or seed under any circumstances.

Secretary Benson in addressing our convention at New Orleans, stressed the statement that production of grass per acre resulted in much less animal feed per acre than where the same acreage was devoted to the production of feed grain crops. I call attention, however, to the fact that any land devoted to grass production can be utilized only by cattle, sheep, or horses, unless used strictly as a green fertilizer. Further, that only approximately 8 or 9 percent of the corn raised in this country is fed to cattle, whereas almost twice that amount is fed to poultry, and approximately five times that amount is fed to hogs. Consequently, land taken out of corn and planted to grass would actually produce much more feed that could be used for livestock than were it to remain in corn, and of course the same statement can be made even more forcibly with respect to land taken out of cotton and planted to grass.

I call your attention to the fact that between January 1, 1955, and December 31, 1955, the price of choice slaughtered steers 900- to 1,100-pound class, Chicago, declined from $27.10 per hundredweight to $20.50 per hundredweight, or a percentage decline of 24 percent.

Despite this huge decline in price, the cattle industry is sticking by its guns and maintaining its traditional position of opposition to Government controls of any kind and especially price supports or direct subsidies. It is needless to say that the situation in the cattle industry is critical. A speaker at our New Orleans convention warned that on the basis of present fat cattle prices, feeder cattle this fall would have to sell $3 to $4 per hundred cheaper than in the fall of 1955.

It is self-evident that the decline in cattle prices referred to above is the direct result of an oversupply. The demand for beef is at a record high, but the fact remains that the market has been almost constantly oversupplied throughout the past year or two with the resultant deadly effect on prices.

Cattle numbers on January 1, 1955, were also at an all-time high. For the past 2 years the United States Department of Agriculture statisticians have officially predicted a decline in cattle numbers, but each year the number has increased rather than declined. This year again it is expected that there may be a slight decrease in numbers, but the decline, if any, is expected to be relatively small.

The number of cattle on feed January 1, 1956, according to a release just issued by the Department of Agriculture, is up 1 percent from a year ago. The estimated number January 1, 1956, was 5,823,000 head, while the average of the 5-year period from 1950-54 was 5,001,000.

Another comparative figure that will show that the meat needs of the Nation are being adequately met now is that domestic meat production in 1940 amounted to 19,076,000 pounds while 1955 production was estimated at 26,700,000 pounds. Of this 1955 total, 134 million pounds are beef. While beef production in 1940 amounted to 7,125,000 pounds.

Again making a comparison of 1940 and 1955, to illustrate the greatly increased production capacity of the beef cattle industry, in 1940 there were 10,676,000 beef cows and heifers 2 years old and older; while on January 1, 1955, there were 24,166,000 or over twice as many. We believe that these figures definitely show the beef cattle industry is more than keeping pace with the demand. At this point it is struggling desperately to pull out of the present unhealthy situation without Government help. Any move to expedite shifting from grain or cotton production to beef production would surely be disastrous price-wise.

There has already been a substantial shift from basic crops to livestock production, and the cattle industry has accepted this development and as stated above is making a desperate effort to get on a sound economic basis at the new level of production, but the proposal to shift at least 25 million more acres from basic crops to livestock production with the aid of Government payments cannot now be successfully put into effect. This is particularly true in view of the fact that beef is a nonstorable, perishable commodity.

We submit that it would be a most difficult problem to police the use of land planted to grass even with the fullest cooperation of the land owner or tenant. Where there is lush grass and livestock in the same area they have a way of getting together whether or no. It would seem that some rather drastic penalty must be provided to insure the protection of the cattle indusry against a stimulant to production that at this critical period could drastically damage the whole industry.

The CHAIRMAN. All right, Mr. Montague.

STATEMENT OF JOE G. MONTAGUE, ATTORNEY FOR TEXAS AND SOUTHWESTERN CATTLE RAISERS' ASSOCIATION, FORT WORTH,

TEX.

Mr. MONTAGUE. Mr. Chairman, there are only two phases of this that I want to comment on, and you gentlemen have already been talking a lot about one of them.

That is, with reference to S. 2949 and the committee report that I believe is being considered at the same time by the committee here. The first is this soil bank feature. With reference to that, when this matter first came up last summer, and it received quite a lot of notoriety and publicity. On the 1st of November I wrote Mr. Benson a letter which I would like to read to you gentlemen here because it brings out some of the ideas that you have been talking about and elaborates on them a little bit. This is addressed to Secretary Benson.

This letter follows a conversation we had this morning in which the subject discussed was "diverted acreage." You indicated to me that you and your assistants were now studying the problem and that you would like to have a written expression of our ideas on the subject.

By diverted acreage we were just discussing that type of acreage which was taken out of the production of supported crops. The other idea had not been advanced at that time.

The second type of this soil bank acreage:

By "diverted acreage" I mean that land which has been, or which will be, taken out of the production of crops that have price supports under the law, such acreage being the amount in excess of the legal limitation fixed in the administration of the price support law. This diverted acreage cannot be used to produce any of the supported commodities.

So the question arises: "For what should this diverted acreage be used?" From the standpoint of the beef-cattle producers, and I am sure the same applies to dairy-cattle producers although I do not speak for the dairy industry, some unfortunate statements have been made concerning the use to which this diverted acreage should be turned. These statements, some of them by persons in high official position, have been to the effect that such diverted acreage should be planted to forage, grass, and legumes and used for grazing livestock, especially cattle.

Such statements are of grave concern to us.

As you know, the beef-cattle industry has taken a terrific beating during the last few years. Prices today are very much lower than they were and cattle numbers have been steadily and rapidly increasing. During the past 3 years cattle numbers have risen from 87,844,000 on January 1, 1952, to 95,483,000, the present reported number. At the same time, the average liveweight price on beef cattle has decreased from the January 1, 1952, price of $27.30 to $15.30 per hundredweight, the present reported average price.

It is a little less than that now.

On January 1, 1952, cattle were selling at 137 percent of the calculated parity. Today they are selling at 73 percent of such parity.

Now 67 percent, I believe.

The inventory value of all cattle on January 1, 1952, was $15,722,846,000. On January 1, 1955, the inventory value was $8,478,697,000. In this same period of time there was an increase in cattle numbers of 7,589,000.

The conclusion to be drawn from these statistics is clear. During the 3-year period of from January 1, 1952, to January 1, 1955, cattlemen not only suffered an inventory loss of $7,244,149,000, but, in the same time, have produced 7,589,000 head of cattle for nothing.

Nevertheless, cattlemen have taken all this with consistent courage and remarkable perseverance. They have never weakened in their refusal to seek or even accept a system of price supports for cattle. And cattlemen will never change in their attitude to this proposition. They wish to continue to operate on a natural market, without governmental control and without governmental intrusion into their business. That is the nature of the cowman.

These statements are considered appropriate in a discussion of the diverted acreage problem becasue there is grave danger that the handling of that problem may develop into just such an intrusion into the cattle business by the Government as has long been and is now feared by cowmen.

The total of diverted acreage is reported as being approximately 30 million

acres

I believe the Secretary's report is now 40 million

such land is already improved acreage. It is cultivated land, generally capable of far greater production than ordinary rangeland. Much of this acreage would support a cow to the acre. I do not believe it would be n exaggeration to state that the 30 million acres of diverted land would carry and support at least 10 million cows.

And if the owners of this diverted land follow the advice and suggestions that have been made to them and run cattle on this land, it is believed that they would use cows and produce and market calves.

This would aggravate an already dangerous situation. It would add 10 million head to the cow numbers in this country and at least 8 million head to the annual increase in total cattle numbers.

And we already have more than an adequate cattle population. Our present cattle population is more than sufficient to supply the demand. In fact, there have been numerous recommendations made to the industry to reduce cattle numbers.

From our economic standpoint the cattle industry cannot stand the increase in numbers that would follow the acceptance of the recommendations that have been made to the owners of diverted acreage.

An uneconomical surplus would result and that would be disastrous to the industry, with serious repercussions throughout the whole economic structure of this country. This is true because the cattle industry is so basic and so tied into the national pattern that such a disaster would not be confined to just the cattle industry.

And it would be grossly unfair to all those people who are now in the cattle business and who have so been for many years, to now allow this diverted acreage, which is the result of an extensive plan of subsidization, to be used in competition with natural grazing and wholly unsubsidized land.

Such an increase in cattle population, especially in cows, could easily develop such a surplus that the Government would be confronted with still another large item in its already troublesome "surplus problem"—

Senator Thye, you dealt with that a minute ago.

And the industry would be confronted with a dilemma, not of its own making. Unsubsidized cattlemen would either have to go out of business or join the ranks of the subsidized. By handling diverted acreage so that an unwieldy surplus of cattle results, the same situation would be developed in the cattle industry that caused the diversion of acreage from other industries. The problem would just be transposed from one commodity to another. Thus, instead of solving a problem, a new and probably more difficult one would be created.

Cattlemen deserve fairer treatment than this at the hand of their Government. They do not fear competition from each other, but they dread competition with the Government and its subsidy complex.

For these reasons, cattlemen ask you to take another look at this diverted acreage program. And when you do, as I am sure you will, it is sincerely hoped that you will come up with a plan for such land that will not be a hazard to the existing cattle industry and to the economy of the country,

Secretary Benson quickly replied to this letter giving us assurance that he was studying the problem involved and his recommendations. made to this committee in his testimony and in S. 2949, which I understand to be the departmental bill, demonstrate that the Secretary is not only aware of the dangers pointed out in the quoted letter, which I understand to be the departmental bill, the bill now under consideration submitted by the administration, but he advises a course of legislation he believes would avoid such dangerous results.

We appreciate the Secretary's attitude when he recommends that, in the event the Congress authorizes the installation of the soil bank plan, the diverted acreage, also called the reserve acreage, is not to be used for grazing of livestock.

Our concern now is in how the prohibition against the use of this. diverted acreage can be practically enforced. To avoid the dangers. pointed out, this prohibition must be in plain and unmistakable language and the method of enforcing it must be set out in the act so that it will be effective.

On pages 4 and 8 of Senate bill S. 2949, you have this language,. about the same in both places

shall not harvest any crop or graze the reserve acreage unless the Secretarydetermines that it would be in the national interest to permit grazing and gives. consent thereto.

I take this view of that language: That certainly is not in itself sufficient to give the cattle industry any assurance that it will not be grazed. It does not provide for any penalty, and then it leaves the Sword of Damocles hanging over us-the Secretary may at any timedetermine that the land ought to be grazed.

He does not state with reference to wheat or corn or rice or anything else, in the event that the Secretary determines that in the national interest it be required, they be allowed to use it for producingrice or wheat or corn or whatever it might be.

So I do not understand why he singles out this particular type of acreage and says that the Secretary may allow it to be grazed.

Senator AIKEN. Is that not true because in the case of the acreage reserve it is a 1-year contract, and in the conservation reserve it allows contracts up to 10 years? They could hardly establish grazing in 1 year. Anyway, I think under the acreage reserve they would be prohibited from cropping or raising or selling anything off it. I think that probably accounts for it.

Mr. MONTAGUE. They provide on page 8 on this type of acreage that the contract shall run to January 1, 1959, so I don't understand that.

Senator AIKEN. I understood from the message that it would be on a year-to-year basis.

Mr. MONTAGUE. Yes, but the language of the bill that is offered, as I understand, to be the departmental bill

Senator AIKEN. It probably should be in it if it is a 4-year contract that is made.

Mr. MONTAGUE. Yes, sir; I recommend to the committee that you put it into language there that is unmistakable. And I do not fear Secretary Benson on this feature, but I do not know who will be in there don't know what the result will be down the line, and I don't.

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like to give anybody such powerful discretionary powers over the industry.

If you are going to have a contract, let us have one.

Senator AIKEN. If the same safeguard were put in the conservation acreage reserve, you would be happy. That is, if that langauge were put in the other part of the bill on conservation reserve, you would be much happier?

Mr. MONTAGUE. I would; yes, I would.

Then I think there should be some type of penalty provision in case they do graze it they lose price supports on the land that this was diverted from, on which they are getting price supports some such provision as that to protect us against the use of that land for grazing purposes.

How you are going to actually enforce it on the ground that still is something I do not understand, because a lot of that land will not be fenced. It will be a part of an open field and there will be no fences between it and the other land. I do not know how it will be done. Senator BARRETT. You will just have to have a fence.

The CHAIRMAN. In the case of corn and wheat the farmer protects himself.

Senator BARRETT. Yes.

Mr. MONTAGUE. Take a corn crop. After he gathers his corn in the fall then he turns cows and hogs in there to glean it.

Senator THYE. The judge is entirely right. Once in the acreage diversified area you may have taken your crop of corn off and you can electrically fence or you have permanent fence and you let the livestock in there. They run over the corn stalks; they go in and they

browse.

In one of your so-called conservative acres, or conserved acres, or diverted acres into clover, they will graze that along with the corn stalks and they have 2 or 3 months of feed and they can stretch their winter supply by several months by having feeding in that clover or alfalfa or that meadow that should have been absolutely held away from any pasture or grazing.

So that phase of it has got to be written in or otherwise your program is no more effective than when you diverted acres from any other crop into another feed crop.

Senator BARRETT. It has to be done or you cannot have any protection.

Senator THYE. It is useless to contemplate production in your farm plant unless you put some specifics in there to make it mandatory that they leave it idle.

Senator AIKEN. I think the language of the bill is broad enough so that the Secretary could require fencing.

Mr. MONTAGUE. I would like a little legislative history on that in the report or something. There has got to be something done or else your program won't ever be successful.

Now, then, the second part of my statement is very short, very simple.

You have heard testimony from other witnesses recommending the adoption of a price-support program for all agricultural products including beef cattle. None of the witnesses making such recommendations represented beef cattle producers and did not claim to do so.