1. Be consistent with general economic development. 2. Permit a more effective use of Federal funds.

3. Encourage the American ideal of free enterprise.

4. Assure adequate supplies for consumers now and in the foreseeable figure.

5. Work toward elimination of Government-held surpluses.

6. Strengthen farmer purchasing power.

7. Reward efficiency in producing and marketing of farm products. 8. Preserve the independence of farmers.

9. Protect our Nation's soil and water resources.

AS TO RECOMMENDATIONS AND EXPLANATIONS

As a sound course of action to solve the problems of agriculture today, the Illinois State chamber recommends the following 8-point program:

Point I: Reduce the inflow, and eventually eliminate, Governmentheld surpluses by lowering support prices so that the Government ceases to be a market for farm commodities.

High, rigid price supports have encouraged overproduction and priced some commodities so high that markets at home and abroad have been lost. As a result of its price-support activity, at such a high level, the Commodity Credit Corporation has accumulated more than $8 billion of deteriorating farm commodities.

Supports at the 90-percent level were only meant to be a wartime. expedient. The Agricultural Acts of 1948 and 1949 provided for flexible supports but these provisions were not allowed to go into effect.

The Agricultural Act of 1954 was a step in the right direction. Provision was made for some flexibility to be introduced into support prices. The degree of flexibility introduced was negligible, however, and considerable rigidity still exists in current price support operations.

The rigidity is evidenced by the fact that (a) the range of support prices is high and narrow; and (b), the minimum support schedules are too high.

Senator YOUNG. How low do you think the minimum support level should be reduced; to what level?

Mr. WESTRICH. We will come to that later.

We feel, again, we will come into this as you tie into the soil-bank program. We have not tried to define a lower level but we feel that the lower level should be flexible, you would say in the eyes of the committee, and should be set at a lower level to prevent disaster to the farmer, but not to encourage production.

Senator YOUNG. You say a lower level. The minimum on the basic now is 75 percent. Do you think it should go to 50? Mr. WESTRICH. Not necessarily.

Senator YOUNG. 60?

Mr. WESTRICH. It might be.

Senator YOUNG. It might be-Why do you make a proposal like that when you do not have any better idea what you want?

Mr. WESTRICH. From the State chamber standpoint, we have discussed this matter, and there have been opinions rendered within the limits that you have stated. The recommendations of the subcommittee and of the State chamber was frankly of the feeling of estab

lishing a policy and having the limits set by people such as yourselves, that were thoroughly aware and cognizant of the given problems.

But we feel, we definitely feel, that the narrow range of supports that exist currently is not sufficiently broad to be effective.

The CHAIRMAN. Has your chamber studied any methods by which the consumer could get the benefit of these lower prices paid to the

farmer?

As you know, no matter how low commodities go, pork and other things, the consumer is paying the same amount for the food he buys. Have you made any study of that?

Mr. WESTRICH. Well, what you are saying is the marketing costs have not followed the trend of farm prices.

The CHAIRMAN. I am not saying anything except that I do know, and I am speaking from personal experience, that irrespective of how low the commodity sells, the consumer pays about the same thing. That is the thing that I believe that the chamber of commerce could give a lot of its attention to.

Mr. WESTRICH. The chamber, as we will come into it here, certainly urges

The CHAIRMAN. How is that?

Mr. WESTRICH. I say, we will come onto it in our recommendations here.

The CHAIRMAN. Proceed.

Mr. WESTRICH. We certainly urge that the marketing angle be covered and studied.

Senator THYE. Might I ask Mr. Westrich this one question, Mr. Chairman?

The CHAIRMAN. Yes; proceed.

Senator THYE. In your State, have you made any specific study to determine what the producer now gets of the consumer's dollar spent for what is normally termed the "food basket"?

Have you made a study of that?

Mr. WESTRICH. Those figures were brought out. Mr. Ronchetto is the secretary of our committee. Have you those figures with you today?

J. G. RONCHETTO (secretary, agriculture-business relations committee, Illinois State Chamber of Commerce). Not with me. The CHAIRMAN. It is 39 cents.

Senator THYE. I wondered whether it was different in Illinois than it was in other parts of the Nation. That is a question I think the chamber of commerce might well concern itself with.

About the year 1947, the producer received around 54 cents out of the consumer's dollar spent. And the last figure, as Senator Ellender said, is about 39 cents. That is a terrific drop.

The consumer has not derived any particular benefit from the depressed farm economy.

Mr. WESTRICH. Of course, there are certain factors that have gone into the distribution system in the way of packaging and the handling of materials to the consumer which are a little different than they were 10 years ago, too.

Senator THYE. You mean that is involved in the cost?

Mr. WESTRICH. That has involved a cost that apparently the American public wants.

Senator THYE. I had a little experience going to the market with my wife one Saturday afternoon. I complained about the price of potatoes in the bin-nothing had gone into preparing the package of potatoes, because they were loose in a little bin, and you picked them out yourself and put them in a bag.

We had just come out of a hearing where potatoes were reported to be less than $1 a hundred in the State of Maine and here they were asking 5 cents a pound for these potatoes. That would be $5 a hundred, right there in the bin, you see.

When I complained, I said, "Those potato prices are unreasonable"--the young fellow said, "It is the farm support program." I said, "What?"

"The farm support program makes this high cost."

I said, "Are you sure you know what you are talking about?" He became quite indignant. He said, "Yes. Haven't you heard Secretary Benson talk?"

You are talking somewhat like that right now. asking you these questions right now.

That is why I am

Senator ANDERSON. To put it another way, the price of milk has gone down to the producers in the New England States and the price has gone up to the consumers, all represented by wage earnings of the people who handle the distribution system.

Mr. WESTRICH. I can't disagree with you on the disparity of pricing between the consumer level and the farm level. However, you have one set of factors working on the distribution level which is a study of itself, in my own opinion.

Senator ANDERSON. Yes; but put it

Mr. WESTRICH. If you are going to have those factors exist they are going to be passed on to the customer-whether right or not is something else.

Senator ANDERSON. But at the time, as Senator Thye has indicated, the top figure we had was 54 cents of the consumer's dollar going to the farmer. That is when we had price controls, when these other things were pretty well held in line.

Of course we want to get to a free income, but it is quite a lot of freedom when you go from 54 down to 39 cents.

Mr. WESTRICH. There is no challenge there.

Senator THYE. The only reason I took the time of the committee to ask the witness this question was that I realize Mr. Westrich is here speaking for the State chamber of commerce.

Mr. WESTRICH. That is correct.

Senator THYE. You have made a charge that the supports have been the cause of some of the problems facing agriculture today. So I brought up this little experience I had with potatoe prices because I believe you, as a chamber of commerce representative, could have made a rather thorough study of the problem of the consumer from the standpoint of what he is paying for a product on which the farmer has suffered a terrific drop in price. The consumer is not getting any particular benefit.

That is true on pork prices; it is true on beef prices; it was true on egg prices. When eggs were down to 9, 10, 11 cents a dozen-why the consumer was not getting the benefit.

I think you, speaking for the chamber of commerce and representing the agricultural division of a catalog house, might go into that phase

of the problem rather than to come out here and put yourself up as a critic of the farm-support program.

The CHAIRMAN. On the other hand, we had a lot of evidence produced to this committee to show that although when the price of wheat went down because of lower support prices, the consumer paid more for the bread. How do you account for that?

Mr. WESTRICH. How would I account for it?

The CHAIRMAN. Yes.

Mr. WESTRICH. I would account for it from the processing and the manufacturing costs that went into it.

The CHAIRMAN. It is not the support price that did it, as you are now alleging.

Mr. WESTRICH. I have stated here that high rigid support prices have encouraged overproduction.

Senator YOUNG. May I ask this question then: Since February 1951, the prices of farm commodities have dropped about 30 percent. Mr. WESTRICH. Correct.

Senator YOUNG. And this year we have an alltime high in production. How do you account for the fact that we have an alltime high in production after a 30 percent drop in prices, if prices have as much effect on production as you claim they have?

Mr. WESTRICH. It is the consensus of the committee that studied this, and in turn was approved by the full committee of the State chamber's agricultural and business committee, and in turn passed by the board of directors, that the support prices that were put on here in many cases, were unrealistic, and definitely encouraged production. far beyond the lines of realistic figures.

The CHAIRMAN. You have no support price at all on hogs. What caused that to go down, and be in surplus? You have no support price on cattle. We are oversupplied in that.

Mr. WESTRICH. I think your history on livestock, just as you will find in poultry, you will find whenever you have got a good price, it will stimulate production which in turn will be followed. Let the law of supply and demand take over.

Hogs as of a year or 2 years ago were selling at a very realistic and very satisfactory price. It encouraged the production of hogs. The same way as on poultry. Our poultry generally runs in 2 to 3 year cycles. Your poultry prices were depressed a year ago. Your poultry prices in turn are coming back this year.

Senator THYE. But, Mr. Westrich, did you mean to say that poultry runs in a 3-year cycle?

Mr.WESTRICH. Well, previous to the war they ran in about a 3-year cycle. Recently they have been running in about a 2-year cycle. Senator THYE. Because the extreme low was in 1954, on eggs, and poultry, and your more favorable price relations were in 1955.

You know that it only takes 3 weeks to hatch an egg. It only takes 6 months from the time that you set that egg until you have a laying pullet. You can change the cycle pretty quickly in chickens. Mr. WESTRICH. I am speaking from our own experience.

Senator THYE. If you had said cattle 3 to 5, and pork from 2 to 3, you might have hit it closer, but do not get poultry mixed up with that 3-year cycle.

Mr. WESTRICH. The only thing I can say, I believe if you will check the records of the poultry industry and the record of poultry—and

with your egg production, there has been a normal cycle of trend there, in the year of 1955; whereas in 1954 it was a very poor year, with you, was still a very poor poultry year.

Senator THYE. Which?

I agree

Mr. WESTRICH. The year of 1955 just closed up until-I am talking about the fall of 1954 to the fall of 1955-to the fall of 1955.

Senator THYE. Yes, sir.

Mr. WESTRICH. I believe you will find that your industry was off about 40 percent-35 to 40 percent. Now that is coming back again. Your egg feed ratio is very favorable currently, whereas 2 years ago it was not.

And when that thing happens people go out of production. When it gets favorable again they begin to go in. This will hit another cycle in my opinion.

Senator YOUNG. What happened to the cycle back in 1932—all through that period?

Mr. WESTRICH. You are going back too far for me. However, to answer you specifically, I cannot answer that question, but to the best of my knowledge, again whenever your egg feed ratio on poultry is advantageous you will find poultry advancing. And wherever it is adverse you will find poultry curtailing.

Senator YOUNG. You know that in 1929, and for practically 10 years afterward, farm prices were depressed, barley was as low as 1 cent a bushel in my State; cattle were 2 or 3 cents a pound. The same thing for hogs. Yet people could not buy meat.

I recall that back in 1932, the United States Chamber of Commerce, as bad as the situation was, recommended in their annual convention, I think held in June that year, a liquidation of all of farm programs designed to support prices.

Do you see anything in the future now, particularly your suggestions for agriculture, that would solve our farm price problem? Mr. WESTRICH. Cut out all of the price support

Senator YOUNG. Let me put it another way: Do you think that supply and demand will take care of the farm situation that we would not be again faced with the bankrupt prices we had back there?

Mr. WESTRICH. Not 100 percent, no, and we are not advocating that.
Senator YOUNG. You are advocating a lower price support.

Mr. WESTRICH. We are advocating-I would like to qualify that. We are advocating use, if necessary, of a lower limit in the flexible price supports as against the narrow limits that currently exist.

Senator YOUNG. You would not say how much below 75, but you say lower?

Mr. WESTRICH. I am not in a position, speaking for the Illinois State Chamber of Commerce, to do so. As an individual, I would say certainly a step in the right direction would be to go down to a minimum of 60.

Senator YOUNG. If you get down to 60 or 50, you might as well not have any at all.

Mr. WESTRICH. I don't agree with you at all. For example, with the wheat situation as it exists today, and under your present methods of the use of the parity structure, and the cost of production of producing wheat today, on many farms you would produce a terrific quantity of wheat at the 60 percent level.