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2. Two-thirds of our farms produce so very little that they cannot take ad. vantage of or benefit from the price support programs carried out by the Commodity Credit Corporation.
3. No wonder average per capita farm income is but one-half of the average per capita nonfarm income-two-thirds of our farmers contribute very little to total farm income. Their inclusion by definition as "farmers" only serves to make average per capita farm income compare unfavorably with per capita nonfarm income.
Secretary Benson, in his talk at the Pantograph Farm and Soil Day, Bloomington, Ill., last August 25, put it this way:
"It is the very low incomes of the part-time and noncommercial farmers, lumped into agricultural income statistics, that distort the true picture. The real truth is that incomes of commercial farmers—farmers who operate familysized units such as predominate in this area--compare favorably with those of urban people with similar abilities and capital."
It is obvious then, Mr. Chairman, that the chief beneficiaries of our price support programs have been and are the upper one-third of our farmers who produce 80 percent of the annual marketable crop value in this country and who receive 80 percent of farm income. These farmers, financially speaking, are the best off of our farm population; but, without doubt, even most of these farmers, because of the nature of price competition they operate in, need price-support assistance during certain periods. It is among this top one-third of our farmers that we find most of the family farms which, as President Eisenhower noted in his special agricultural message, “are the bulwark of our agriculture.”
How does the average per capita income of these farmers compare with that of the nonfarm workers ? Very favorably indeed, Mr. Chairman, and remember these are the farmers who produce the bulk of our food, and these are the farmers who are the chief beneficiaries of our price support programs. The 1970 Census of Agriculture, as I have previously noted, published for the first time complete information on farm income by economic class of farm. Analysis of this data reveals that:
1. 1.2 million of the then existing 5.3 million farms, containing 209.1 million acres of harvested cropland, produced crops or livestock for sales at a value of or in excess of $5,000. Expressed another way, 22 percent of the farms existing in 1949 produced 74 percent of the total value of farm products sold, utilizing some 60 percent of the total harvested cropland.
2. The average family income, including both money and nonmoney income, of the 5 million persons living on these 1.2 million farms was $5,143. By comparison, in 1949, the average family income of all families on farms was $2,650, and the average family income of urban and rural nonfarm families was only $3,650, some $1,493 less.
3. The average per capita income—including both money and nonmones values-of these farms was $1,229, twice the average per capita farm income of all people on farms, which was only $651.
It is evident, Mr. Chairman, that the income situation of some one-third of our farmers, who produce 85 percent of our annual marketable crop value, is actually superior to that of the average nonfarm family. Our producing farmers are sharing in the great economic prosperity which the people of this country hare enjoyed during the Eisenhower administration. Let no one make a mistake about that.
Our real income problem in agriculture is the welfare of those two-thirds who produce very little, and a great majority of whom are actually only part-time farmers. The inclusion of these income figures in agricultural income statistics not only has led to a distorted and unfavorable comparison of farm with nonfarm income, but also to the assumption that price support can help this large group of small farmers and part-time farmers. Actually the concealed need of this group, as President Eisenhower's special report on low-income farmers told us, is for public programs largely nonagricultural in nature.
But the most startling fact of all, Mr. Chairman, is that only 9 percent, or 484,000, of the farms in 1949 produced 51 percent of the total value of all farm products sold, utilizing only 34 percent of the harvested cropland. These are the largest and most efficient farms, operated by farmers with the highest incomes.
1. The average family income, including both money and nonmoney, of this 9 percent of our farmers was $6,585, nearly 21,2 times that of all farm families.
2. Their average per capita income, including both money and nonmoney, was $1,594, about 212 times that of all farm people.
These also are the farms whose operators are and have been receiving the largest subsidies under the price-support programs. One private research organization recently reported that 1.9 percent of our farmers received 25 percent of the price-support subsidy in 1953.
As I pointed out in my supplemental view contained in the 1955 Report of the Joint Committee on the Economic Report:
“For every dollar that the small farmer received through price support, many more dollars go to the big operator, and the competitive advantage of the big operator is thereby increased.
"For example, in Kansas for the 1953 crop, the averge wheat loan was $1,525 and the average of the 5 largest loans was $106,963. In Mississippi the average cotton loan was $372 and the average of the 5 largest loans was $479,535. In Iowa, the average corn loan was $2,154, while the average of the 5 largest loans was $98,535.
"For wheat, corn, and cotton in the above States the 5 largest loans averaged 25, 46, and 1,290 times as great as the State average" (pp. 64–65).
Mr. President, the largest loans under the price-support program are those received by "corporation farms"—not family farms. With respect to cotton, the largest loans were made by
1. The Delta & Pine Land Co., of Scott, Miss., which placed 7,220 bales under loan in the amount of $1,269,492.66.
2. Giffen, Inc., of Huron, Calif., which placed 7,314 bales under loan in the amount of $1,246,516.46. With respect to wheat
1. Harrigan Farms, of Prosser, Wash., which placed 152,810 bushels under loan in the amount of $354,339.
2. United States Wheat Corp., of Hardin, Mont., which placed 184,516 bushels under loan, with a loan value of $348,646.20. With respect to corn
1. Adams Bros. & Co., of Odebolt, Iowa, which placed 124,800 bushels under loan, at a face value of $190,944.
2. Emil Savich, Rensselae Ind., who placed 102,648 bushels under an, in the amount of $166,289.76. These farms are among the 484,000, or 9 percent, which, as I have noted, produced 51 percent of the total value of all products in 1949.
Mr. Chairman, I am quite well aware of the fact that the parity ratio has fallen from 107 percent of parity in 1951 to 80 percent of parity in December 1955; and I am also aware of the fact that the prices received index has fallen from 302 in 1951 to 223 in December 1955. But I would remind you that whatever effect the increased production of the basic commodities--wheat, corn, cotton, tobacco, rice, and peanuts—has had upon the drop in the parity ratio and prices received by farmers, that effect was increased under the rigid 90 percent price support program !
You are aware, as well as I, that although the Republicans have been in office since January 20, 1953, the basic commodities were supported under wartime legislation during this period, enacted by a Democratic-controlled Congress calling for 90 percent support, until the summer and early fall of 1955, when the flexible price support provisions of the Agricultural Act of 1954 went into operation.
It is also evident that the ability of the flexible price support program to bring the supply of basic commodities into line with demand cannot be demonstrated at this time because, as Secretary Benson told you last Thursday, “the law is smothered by the surpluses accumulated under our past programs. As of December 5, 1955, the Commodity Credit Corporation had in inventory: (1) 919,436,423 bushels of wheat, (2) 696,538,203 bushels of corn, (3) 6,336,412 bales of cotton.
Personally, I was pleased that the President did not take the politically expedient way out by recommending a return to the 90 percent rigid price support program. The size of the CCC inventories of their three basic commodities should make it evident to all of us that a return to that now-discredited program does not offer farmers any relief from the low price situation they are currently facing.
From what I have said, I believe it is evident that the producing part of agriculture, that is, those farmers who can take advantage of price support-some 2 million farm owners and operators are relatively in a sound financial position. But it is also obvious that before they can take advantage of and receive useful and effective price support assistance under the flexible support program, the current surpluses must be disposed of.
SOIL BANK PLAN
As a means of reducing these surpluses which, as Secretary Benson told the committee last Thursday, "we should not ask the Nation to undertake more than once,” the President has proposed the establishment of a soil bank. This soil bank, as the Secretary also told you, is proposed “to help bring about a balance of supplies and markets.” You are familiar with its details and I need not, therefore, discuss them.
I am of the opinion, based upon two opinions prepared for me by the American Law Division of the Legislative Reference Service of the Library of Congress (attached to my statement as exhibits 1 and 2), that the Secretary of Agriculture now has the authority under the Soil Conservation and Domestic Allotment Act of 1936, as amended, to establish the proposed acreage-reserve program and to make payments to participating farmers in "cash" under that same authority, if the Congress will appropriate funds for payments to farmers for withdrawing soil-depleting crops from production, which it has not done since 1943. The Secretary can also make payments in "kind" under the general and specific powers contained in the Commodity Credit Corporation Charter Act.
I am also of the opinion that the Secretary of Agriculture has authority under the Soil Conservation and Domestic Allotment Act of 1936, as amended, to establish the conservation-reserve program and to make cash payments to participating farmers under an expanded agricultural conservation program to include, in addition to the present soil-building practice payments, cash payments for withdrawing soil-depleting crops from production.
Although these competent legal opinions seem to support my opinion, I beliere it essential that the Congress, as a statement of national policy, should formally enact such a soil-bank plan and pull this diverse authority together into one piece of legislation. I can fully appreciate the desire of the executive branch of the Government in wanting to have the Congress—the legislative and policy-forming branch of the Government-outline the basic framework and details of this dynamic proposal. The President and Secretary Benson are to be complimented. not criticized, for seeking congressional guidance in this matter which so vitally affects not only the welfare of agriculture but also the welfare of the entire country.
Mr. Chairman, I sincerely hope that the committee will give considerable attention to local administration of this program. Specifically, I believe there will be need of increasing the number and quality of full-time office personnel trained in administration in county agricultural stabilization and conservation committee offices. The administrative details are going to increase and complicate local administration.
I believe it essential that, in light of livestock prices and the effect production of nonbasic crops on acreage diverted from basic commodities has had in many areas, grazing of livestock or cropping must be rather strictly controlled on reserved lands. The committee, in this respect, ought to give serious consideration to requiring that farmers, in order to participate in these programs, must agree (1) to comply with their acreage allotments and marketing quotas in order to get payments under the agricultural conservation program, and (2) to place part of their acreage in either the acreage reserve or conservation reserve as a condition of eligibility for price support.
DOLLAR LIMITATION UPON PRICE-SUPPORT ASSISTANCE
Mr. Chairman, the lack of a limit upon the amount of subsidy farmers can receive gives unnecessary financial assistance to most of the 484,000 farms in the first 2 economic classes of farms, which, as defined by the Census Bureau, produce products valued at $10,000 or more. It is clear, as I have already pointed out, that many of these farms simply do not need unlimited price-support assistance. Many of these farms, year in and year out, will return to their operators net incomes much higher than 90 percent of our people ever hope to receive, eren if they did not receive a dollar of Government subsidy. This they can do by applying to their land just the right amounts of labor and capital equipment to produce the largest possible volume at the lowest possible per unit cost, resulting in the highest gross income possible to achieve with their particular size of farm.
These are the farms which have been producing the bulk of the basic commodities now in surplus, encouraged by a rigid 90-percent-price-support program. They produce not for consumption, not those commodities in greatest need, but for Government-storage warehouses. How well they have succeeded is evidenced by
the record high inventories of these commodities which as of December 5, 1953, the Commodity Credit Corporation had in inventory: Wheat, 919,436,423 bushels; corn, 696,538,203 bushels ; cotton, 6,336,412 bales.
I should also like to point out, Mr. Chairman, that ample precedent exists for limiting the amount of financial assistance farmers may receive from the Federal Government. The Sugar Act of 1948 provides for a reduction in the rate of payment of from 5 to 50 cents per hundredweight, depending upon the quantity of sugar produced off the farm's “proportionate share" or acreage allotment, when that quantity is in excess of 350 pounds, ranging up to more than 30,000 pounds. Also, Mr. Chairman, assistance a farmer can get under the agricultural conservation program was, by law, limited to $10,000. By a provision in the Department of Agriculture's appropriation act, that amount has been further reduced to $1,500.
Therefore, Mr. Chairman, I hope the committee will recommend a limitation of $75,000 as the amount of price-support subsidy a farmer can receive on the products grown on his farm during any year. This amount is sufficiently high to give "full protection to efficiently operated family farms," as President Eisenhower recommended in his special agricultural message.
Mr. Chairman, I have devoted considerable study to the proposal to repeal section 304 of Public Law 480 in order to permit sale or barter of agricultural surpluses to the U. S. S. R. or nations controlled or dominated by the U. S. S. R. My conviction is that Congress should very carefully review this proposal for these reasons:
1. U. S. S. R. foreign policy is designed to accomplish world domination and elimination of democratic government and the capitalistic system wherever they exist.
2. U. S. S. R.'s lack of ability to get increased agricultural production, as the Joint Committee on the Economic Report pointed out in its excellent study, Trends in Economic Growth, A Comparison of the Western Powers and the Soviet Bloc (1955), “is the tightest bottleneck for Soviet economic expansion and one that may become an important obstacle to further rapid industrialization of the Soviet Union” (p. 25). At present, agriculture requires the effort of over one-half the total population compared to less than one-sixth in the United States; and the productivity per farmworker in the U. S. S. R. is but one-fifth that of the average farmworker in the United States.
3. At first glance it seems that the 8,500,000 square miles of area in the U. S. S. R. would "give the impression of providing enormous agricultural potential" as the joint committee's study previously referred to expressed it, but such is not the case. Competent authorities cited in the study point out that “about 55 percent of the total area was judged to be completely excluded from agricultural occupation” (p. 100) because of climatic and topographic factors, and that the U. S. S. R. “has only about 70 percent as much standard farmland as the United States" (p. 101)-not enough to solve its overall agricultural problem.
4. It may well be, therefore, that to give the Russians our surplus commodities under these circumstances will be in fact to give the U. S. S. R. and “nations dominated or controlled” by her the most strategic commodities we have as far as the U. S. S. R. is concerned. Simply put, Soviet Russia cannot continue to increase her industrial production---weapons and war materials primarilyuntil she can release more agricultural workers for industrial employment. This the U. S. S. R. cannot do until she can increase her food supply.
5. It would be absolute folly in my opinion to remove the major “bottleneck" to continued industrialization faced by the U. S. S. R. by giving her our surplus commodities as long as the objective of her foreign policy is world domination. Events since Geneva, in this respect, do not convince me that this is still not the objective of her foreign policy. As long as the President has set aside $42.4 billion, or 64 percent, of the new 1957 fiscal year budget for "protection” for deterring possible aggression and for strengthening our international alliances, it seems the Congress should approach this matter with extreme caution.
Mr. Chairman, as you know, the President requested an increase of 25 percent in research funds so that for the 1957 fiscal year $103 million will be available not only to carry out the usual research activities of the Department but to ex
pend research relating to the development of new uses, new markets, and new crops.
During the fiscal years 1948–55, the Department of Agriculture spent $47.0 million in marketing and related economic research and State agencies some $9.8 million under the Research Marketing Act during the same period. Now I am in complete agreement that we “must further improve our marketing mechanism * ** so that the benefits of our abundance may be still more widely dis tributed,” as the President stated in his special agricultural message. But I am also convinced that mere improvement of the marketing mechanism—a real boon and subsidy to the processing, transportation, wholesale and retail food industries-does not necessarily mean that (1) resulting lower marketing costs are passed on to the farmer in the form of higher prices or lower handling costs (quite to the contrary, I suspect that most of this "saving" finds its way into the profits account) and (2) the total demand is increased for the commodity in question whose marketing costs are lowered.
As much is implied by the President's statement in his special message that “Marketing margins have continued to increase, even while farm prices have been declining. Thus the farmer's share of the retail-food dollar has slirunk appreciably. Retail prices have changed little, thereby impeding desired increases in consumption. We must find ways to lower costs of food distribution."
Now it may be that lower marketing costs, resulting from marketing research carried out by the Department of Agriculture at a cost of $56.8 million during the past 8 fiscal years, have been swallowed up by increased labor and transportation costs. But, as I have watched the press releases from the Department over the past few years announcing the results of many of these “marketing research projects," it is difficult for me to see how some of these findings could result in (1) any material increased demand for the commodity in question, or (2) higher returns to farmers.
Research undoubtedly is an effective way to help attain the goal of lower costs of food distribution, but it should not be carried out by the Department of Agriculture if it will not help farmers sell more food at higher return. I recommend to the committee, therefore, that it undertake a study of (1) the effect marketing research activities of the Department have had upon this matter, and (2) its method of approving the initiation of specific projects, and (3) its method of evaluating the effect each specific project has had upon commodity prices and demand.
STRENGTHENING COMMODITY PROGRAMS
Sugar.- Mr. Chairman, I appeared before the Senate Finance Committee on January 16 to urge adoption of the committee-print amendment proposed by Mr. Bennett to H. R. 7030, to amend the Sugar Act of 1948. Therefore, today I will limit my testimony on this matter to the discussion of only a few major reasons why I believe the Congress should adopt the President's recommendation with respect to the Sugar Act.
The demand for sugar, Mr. Chairman, as we all know has continued to increase as our population has increased. One authority has estimated this increase to be 135,000 short tons, raw value per year based upon an annual 2.5 million addition to total population, which has been the annual iucrease for several years. Per capita sugar consumption has also increased over the years from 18 to 96.2 pounds during the period 1860–1954, which also saw our total population increase from 31.4 million to some 164 million.
So that you may have a concise but comprehensive picture of the domestic sugar industry, which will be affected by the action the Congress take, let me digress just a moment and call these facts to your attention :
1. Sugar beets are grown as a cash crop in 22 of our Western and North Central States, on some 27,965 farms. In 1954, the latest year for which reliable figures are available, the total farm value of the beet crop was $185.828.000).
2. Sugarcane grown for sugar was grown as a cash crop on 3,908 farms in Louisiana and Florida during 1954, with a total farm value of $55,713,000.
3. In 1955 there were some seventy and odd sugar beet factories in operation, 57 cane mills and some refineries. The investment in land, plant, and equipment, which this part of the sugar industry represents, totaled over one-third of a billion dollars.
4. Some 300,000 seasonal workers are given employment during the planting and harvesting season; some 70,000 plant workers depend for a livelihood upon the production of domestic sugar; and some 50,000 producers depend upon sugar beets and cane for a large part of their cash income.