7. To maintain our productive capacity and to avoid injury to our American farmers, who must remain on a standby basis to produce for war, it is only reasonable that having expanded our production, we be permitted to continue to enjoy a reasonable and legitimate share of the tremendous Japanese market, which can absorb any portion of our production which might otherwise be surplus. 8. Administration of the strategic reserve of rice should be entrusted to the Defense Department and this quantity should, in its entirety, be excluded from the available supply when the Secretary of Agriculture makes a determination of acreage allotments and the level of support prices. 9. Because of the unique importance of rice in international affairs, it is strongly urged that the establishment of the strategic reserve for rice be effected independent of legislative action on any other commodity. 10. No flexible-support plan can possibly succeed unless present stocks are removed from the available supply of rice. PROPOSED FLEXIBLE DOMESTIC SUPPORT PLAN FOR RICE A flexible-support plan, whereby production for the domestic market is supported at one level, and production for export in the world market is supported at a lower level, is the means whereby rice farmers can continue to produce with optimum utilization of land and equipment. The work of the Rice Program Development Committee in proposing such a system has been most able, and it is hoped that the system, as proposed, may be put into effect during the current year, thereby permitting intelligent, aggressive action on the part of rice exporters in holding our share of export markets, in developing new markets, and in increasing our exports to such an extent that the Commodity Credit Corporation will not be burdened with any additional stocks under the support program. If farmers should continue a policy of producing rice only for a rigid high support price, they must price themselves out of the world market, resulting in increased surplus. Under existing legislation this surplus will cause a continuing reduction in acreage, a vicious cycle of cause and effect. An official press release of the Department of Agriculture, dated December 30, 1955, states: "The 1956 national acreage allotment of 1,639,084 acres is a reduction from the final national allotment of 1,928,334 acres for the 1955 crop of rice. This is the minimum acreage permitted by law, which provides that the national allotment for 1956 can not be less than 85 percent of the national allotment for the preceding year (1955). If the allotment had been determined on the basis of the law's supply formula, the 1956 acreage would have been reduced to 936,302 acres." To the credit of the rice industry, let it be recognized that the leaders are determined to make an aggressive effort to hold and expand foreign markets through private enterprise in cooperation with Government, rather than following a policy of producing for sale to the Government. While rice is the most important food in the world, the per capita consumption within our country is so insignificant that the quantity needed to supply this domestic market could be supported well over 100 percent of parity without causing any variation in consumption or any complaint from consumers. The high support would not be significant at the retail or consumer level, as this fact has been proven by actual sales policies over a period of years covering variations of several hundred percent in retail values. Conversely, in the foreign market the American farmer must compete with rice grown by cheap hand labor in some countries, and by modern methods in countries benefited by our many foreign-aid programs which supply our machinery, our experience, and our most advanced technical knowledge. Your committee, and Congress in general have properly been concerned about increasing the utilization of farm products. You have appropriated millions of dollars for research and other aids to increased consumption. Rice has a ready-made market in Japan and other foreign countries for two and a half billion pounds. No merchandising is involved, since the consumers prefer rice to any known feed. Rice is presently being rationed in Japan, and, if war occurs, or if the Communists gain control of the rice production in Burma and Thailand, Japan will be almost entirely dependent on the American rice farmer for sufficient food to exist. We must preserve our productive capacity. Without considering these very evident facts, we have for 2 years continued to maintain a uniform high support price, to cut our acreage, and to increase our surplus. We are irreparably damaging our ability to produce in an emergency. A composite support price, higher for our primary markets than for our export markets, will permit our farmers and processors to survive. Respectfully submitted. ERNEST E. EDMUNDSON, Jr. The following representatives of the rice industry have endorsed the views advanced in this brief and as evidence thereof have affixed their signatures hereunto: Joseph L. Alioto, Rice Growers' Association of California, San Fran- The CHAIRMAN. Mr. Dockery. STATEMENT OF JOE R. DOCKERY, RICE PROGRAM DEVELOPMENT COMMITTEE, CLEVELAND, MISS. Mr. DOCKERY. I would like to say that Mississippi has been in all of these committee meetings of this group, and we feel that this is the most sensible, commonsense approach to the matter that we know of and that it will tend to get the rice industry out of a disastrous situation which they are in now. And it will also take the Government out of the rice business so far as commodity credit loans are concerned. I have had some experience with other commodities which are in surplus and I believe this is the best approach to alleviating a bad situation. Those of us in Mississippi are 100 percent behind this committee's aims. At this point, I wish to place in the rceord a statement of the Ohio Farm Bureau Federation, by Douglas R. Stanfield, executive secretary, a statement by Mr. C. V. Cochran, Route 2, Topeka, Kans., and a statement by the American Cotton Manufacturers Institute. (The statements are as follows:) STATEMENT FILED BY DOUGLAS R. STANFIELD, EXECUTIVE SECRETARY, The Ohio Farm Bureau Federation appreciates this opportunity to present to this committee the thinking of its members regarding revisions of the present farm program. Our organization is composed of 50,000 farm families and our objective is to increase farm income and improve rural standards of living. We are members of the American Farm Bureau Federation and cooperate with our national organization in the development of agricultural policy. We must be concerned with bringing about improvements in the present program because agriculture is not sharing equitably in the general prosperity of the country. In 1955, we held more than 3,500 policy-development meetings throughout the State with our members to ascertain their thinking on what might be done by themselves and the Government to improve the farm-income situation. We believe that our 1,500 Farm Bureau advisory councils give us a rather accurate picture of what Ohio farmers are thinking. Farm Bureau advisory councils are groups of 10 to 12 farm families who meet monthly in farm homes throughout the year studying farm problems and seeking sound solutions. One of their chief concerns the past year has been the drop in net farm income. Farmers continue to be in a severe cost-price squeeze. Net farm income has declined seriously-28 percent since 1951. Products which farmers must purchase for production purposes continue to increase in price. National legislation could improve this inequitable situation. We believe in the principle of variable price supports. Flexibility in meeting new conditions is just as important in agriculture as it is in any other business. Our present surpluses make it impossible for variable price supports to operate effectively. Too much land, labor, and capital have been devoted to agriculture in recent years to permit adequate returns to be obtained per unit of resources. The 90 percent price-support system worked to give us the results needed under wartime conditions but under present conditions has contributed materially to our surplus problem and has prevented agriculture from adjusting to a peacetime economy. We are living in a decade when our productive capacity has been increasing 3 percent a year and our consumptive capacity has been increasing only 2 percent a year. This requires that greater attention be given to reducing resources devoted to agricultural production to bring supply in line with demand for agricultural products. Therefore, we recommend that the present farm program be continued and make the following suggestions which we believe would improve the present farm-income situation, 1. SOIL BANK We should add to the present farm program some means of adjusting production to bring supply of agricultural products in line with demand. In order to get this adjustment we recommend the development of a soil bank along the lines recommended by the President in his farm-program message of January 9, providing for an acreage reserve and a conservation reserve. We believe that such a program would definitely move to bring supplies in line with effective demand, improve the income situation of the farmer, and build up one of our greatest natural resources-the soil. The extent of participation under the acreage reserve plan and under the conservation plan would depend upon the size of the payment made to the farmer. We believe that these payments should be large enough to get participation which in turn would make possible the other objectives previously mentioned. A voluntary plan would be more acceptable to Ohio farmers than a mandatory plan. In addition to the payments that would be made for underplanting the acreage allotments which should compensate a man for normal returns, a fair rental on the productive value of the land plus out-of-pocket expenses for conservation practices necessary would encourage land being taken out of production including whole farms now being farmed by part-time farmers, absentee landlords, and others. The level of payment for this land will determine the number of acres that will voluntarily be taken out of production. A large enough percentage of land must be taken out of production to bring current supply in line with demand plus an additional amount to reduce the surpluses. Certainly there should be no new land brought into production while surpluses exist, and the rental returns on Government lands now producing agricultural products should be high enough to make them self-liquidating. 2. LOW-INCOME FARMERS There is a definite need for a program to assist and help adjust low-income farmers so that they might obtain higher income in or out of agriculture. Industrial decentralization in southern and southeastern Ohio is already playing an important role in this area. 3. RESEARCH There is continued need for research with special emphasis on marketing problems and with increased attention given to reducing the margin between the producer and consumer and returning a fair share of the consumer's dollar to the farmer. 4. FAMILY FARM The efficient family-type farm, which of necessity must be an economic unit, is the backbone of our Ohio agriculture, and we believe the proposed program of the President-especially the soil-bank features-plus the provision for some limitation on the size of loans would aid materially the family-type farm as it comes into competition with corporation farming. We have some of the latter in Ohio, and we certainly should do nothing in a Federal farm program to encourage corporation farming. 5. TRADE There are two basic approaches to reducing the surpluses. One is that of increasing consumption, both at home and abroad, and an adjustment program. We believe the soil bank provides an effective adjustment program with definite conservation advantages. But, in the long pull, we must expand our markets and increase world trade in farm products-imports as well as exports. We should attempt to increase the exporting of farm products through normal exchange channels by accepting local currency or needed supplies from foreign countries that need our supplies, by placing more emphasis on quality in export items, and by gradually lowering trade restrictions on all commodities. Our first attention shoud always be directed toward increasing our normal trade with other nations but we should continue aid to friendly nations by technical assistance and by supplying them with our agricultural surpluses through voluntary agencies of the churches and other groups registered with our Government for this purpose when consistent with our foreign policy. 6. QUALITY PRODUCTS It is important to all farmers in the area producing soft red winter wheat and to farmers in certain areas producing soft white wheat that the wheat portion of the Federal farm program be revised to reduce production of hard red winter wheat which has created the present surplus. This calls for recognition in the program that different types of wheat are used for different purposes and that within types of wheat there is a very great difference in the value of different varieties. Grain standards should be revised to recognize the different kinds and varieties of wheat as well as to improve the quality of wheat on the domestic market and to make our wheats competitive on the foreign market. 7. FARMER COOPERATIVES Besides a Government program the farmer must be active in helping himself. Farmer cooperatives provide an important means whereby farmers can help themselves. Here in Ohio for example the Ohio Farm Bureau Cooperative Association saves its patrons 8 to 9 cents a bushel per year on grain stored in its terminals. Similar savings are made on production supplies. In this way farmer cooperatives help materially in the cost-price squeeze in which the farmer finds himself. 8. RAILROADS RATES The railroads are proposing a 7 percent general increase in freight rates to become effective February 25, 1956. If permitted to become effective, the costprice squeeze confronting the Ohio farmer will be further aggravated. The statement of the railroads before the Interstate Commerce Commission, in justification of the proposed increase, states that this country is enjoying the greatest wave of prosperity in its history. We submit that this does not correctly portray the condition of agriculture. Here is a sobering example of the effect of the freight increase on an Ohio grain farmer. The grain farmer stands the transportation cost to the consuming market. Therefore, the day the freight increase becomes effective the price paid to the farmer will be dropped to reflect the 7 percent increase. At the same time materials purchased by the farmer will go up to compensate for the increased transportation cost. At the present time a farmer in Ohio must produce 50 bushels of corn to pay for 1 ton of fertilizer. If the increase becomes effective, he will then have to raise 52.1 bushels of corn to buy the same ton of fertilizer or the cost will be increased 4.2 percent. In conclusion, I want to say again that Ohio farmers are not sharing fully in the general prosperity. For this reason we are in substantial agreement with the soil-bank plan advanced by the administration and believe that it will work on a voluntary basis provided the payments, in cash or in kind, to the farmer are adequate to secure his participation. We also believe that it is of the utmost importance that early action be taken in order that as many as possible of the benefits of such a program will accrue to farmers in 1956. STATEMENT FILED BY C. V. COCHRAN, TOPEKA, KANS. My name is C. V. Cochran of Route 2, Topeka, Kans. I am a farmer, living on the farm and have no income other than from the farm. I am secretary of a small local grain cooperative elevator, the Kaw Co-Operative Association of Topeka, Kans.; however, I am not speaking as a representative of that organization but as an individual. I farm about 300 acres of land in wheat, corn, alfalfa, milo, oats, barley, and soybeans. I also raise and sell 50 to 100 hogs per year and my wife has about 200 hens. We have what we think is a diversified program. In my opinion the present so-called farm problem will never be solved until the present mountainous surpluses are disposed of. The inexorable law of supply and demand will not be repealed. We did set it aside, we thought, but it now has caught up with us and we are suffering the penalty. The determining factor in the price of any commodity is, sooner or later, the quantity of that commodity available; a relatively small shortage or a relatively small surplus is very important in the determination of the market price of any commodity. I believe that if we did not have, at the present time, the stupendous surpluses, we would not be here today discussing the farm problem. So, it seems to me, our present problem is to dispose of the surpluses. I realize the difficulties of doing that. They are many. But perhaps they are not insurmountable. Many suggestions have been made, most of them good as far as they go. The school lunch program, the food stamp plan, an expanded crop use program in crop utilization in the manufacture of synthetics, plastics, and other products, the CARE program, various church and charitable organization programs, and perhaps many others have been brought to your attention. But all of these together, unless they are expanded many, many times will be only the proverbial drop in the bucket. Last week I listened with much interest to Senator Capehart's explanation of his bill to your committee. Here, it seems to me, is the greatest opportunity for the solution of our surplus program. It includes not only the outlets listed above, but makes it worldwide in scope. If we could distribute our problem to the millions who go to bed every night hungry, and who do not have sufficient clothing, our problem would not last very long. I hope the Capehart bill or some modification of it will pass, for I believe it will go far toward solving the first part of the farm situation. I realize its difficulties but surely they are no greater than our present difficulty. This program will be assailed as a giveaway program. The enormous loss to the Government will be proclaimed from the housetops. But let me remind you, gentlemen, that the commodity storage costs are also a loss. I have seen estimates of this cost as high as $1 million per day. You gentlemen have more accurate information as to that than have I But it is a tremendous cost. Then there is another cost. That is in the deterioration of quality of the commodity stored, particularly of grain. At St. Joseph, Mo., there are a large number, perhaps 100, of huge tents, circus-tent size, which are being used for wheat storage. Each tent, I am told, shelters about a million bushels. They have been there about 2 years. I do not speak from personal knowledge, but I have been told that a large percentage of that wheat hs spoiled, is no longer fit for human consumption, or even for feed for livestock. If this is true, there has been a terrific loss there, and such storage should not be continued. The second part of the solution of the farm problem is to see that surpluses are not again built up. This I believe can be accomplished through the soil-bank plan retiring producing acres from production, payment by the Government of a fair rental value to the farmer as an incentive to him for such retirement. It |