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Secretary Benson. It stands for price support purposes.
Senator THYE. So that if he is out of compliance with the 91 acres that is now his allotment, he will not be eligible for a seal-up on that corn and receive his $1.50 a bushel or whatever it would figure out to. He must be in compliance with the already-announced 1956 corn acreage.
The other point, then, is that you establish the 51 million acres allotment, and the producer will have to go into the soil bank program with that additional acreage, if they desire, but the producer must go to the soil bank with the difference between 51 million and the 43 million that you have already announced for 1956.
Secretary Benson. If I understand you correctly, my own conclusion would be the same as yours, that we have two different bases. One we would use to measure for price supports, and one for soil bank participation.
Senator THYE. I think we must emphasize this sufficiently so that we completely understand it, because I can visualize that if your base of 43 million acres stands, you are not going to get compliance in the areas where the vast acreage of commercial corn lies, because 43 million is not a realistic figure. It was not so recognized when we passed the bill and wrote the 51 million acreage provision into it, and it was the only reason that there was support for that phase of the program from the gentlemen representing the corn area. We must make a study of this question.
The CHAIRMAN. Will Senator Thye yield ?
The CHAIRMAN. As I understood H. R. 12, as it went to the President, the bill canceled out the 43 million acres and established a 51 million acre base. That was the intention, wasn't it? I think that was my understanding of it, and I believe with all good faith in the action of the men representing such States as the big commercial corn acreage area, they must have shared that same conviction, or they could never have supported the bill in the manner that they did.
Senator HOLLAND. Mr. Chairman, I think that the Secretary is in error in that also.
Subsection (a) of section 403 of the bill as vetoed, I think, canceled out the 43 million-acre provision by implication in these words: notwithstanding any other provision of law, whenever base acreages are in effect for cornbase acreages now
Secretary Benson. I was not commenting on what was in the bill, but what the facts are now in the new bill that offers the soil bank.
Senator HOLLAND. Oh, I see.
To continuethe Secretary shall require as a condition of eligibility for price support on corn, that the producer (1) devote an acreage of cropland tilled in normal rotation at the option of the producer to either the acreage reserve program for corn or the conservation reserve program, equal to 15 percent of such producer's farm base acreage for corn, and (2) not exceed such farm base acre age for corn. Corn acreage allotments shall not be effective for the 1956 crop.
Now, that is stated as a condition for price support. Assuming that the provision again appears in the soil bank bill that is presented. the same effect would be occasioned; that is, that the price support
would then be based on compliance with the soil bank out of the 51 million acres.
Secretary BENSON. But that is not now in the bill that was introduced yesterday. The 15 percent is not, but the 51 is.
Senator THYE. The 51 is, and that phase of it is most important. You are not going to get compliance, you are not going to get legislative support if it is understood that the producer of corn in the commercial area must be in compliance with his proportionate allotment of 43 million acres in the commercial corn area. You cannot expect a man in the strictly commercial corn-producing area to get in compliance with a 43 million acre base.
Senator HOLLAND. Will the Senator yield?
If there is going to be acceptance and compliance in such vast commercial corn-growing places, in States such as I now name—we can start with Indiana and come right straight across through Indiana, Illinois, Iowa, certain parts of Nebraska, Wisconsin and Minnesotait will be most difficult for us to ask our producers to go to that low an acreage allotment in their commercial allotment of acres.
Now, you have given greater assurance to other corn producers, by the proposed supports which have been rumored as somewhere between $1.25 and $1.30 in the noncommercial corn areas.
You have given the greater protection to that type of producer by the rumored price support levels; so we are moving in the right direction.
Now I yield to my distinguished friend from Florida.
Senator HOLLAND. I wonder if the Senator from Minnesota has overlooked this part of the statement of the Secretary which says:
That is the announcement that price supports would be made available for noncompliance corn in the commercial area.
All corn used in the commercial area, regardless of compliance with acreage, will be eligible for price support. It seems to me that provision makes a point the distinguished Senator raised.
Senator THYE. I qualify what you have referred to, Senator Holland, and that is the supports on the noncompliance, as well as the supports in the noncommercial corn area.
Now, I must ask another question, Secretary Benson.
Senator THYE. I would like to ask another question but if you would like to comment on that, go ahead.
Secretary Benson. One of the compelling reasons for our announcement that we would establish support levels on corn in the commercial areas, but outside the program-noncompliers—was the very thing you mentioned. We have not fixed the support level. In doing so, we will want to take into consideration, of course, the support level for the compliers, those who control their acres, the support levels for the noncommercial corn producers; and the support levels for the other feed grains.
We have not arrived at a firm conclusion on that, but hope to be able to announce it before very long.
Senator THYE. Mr. Secretary, I think it would be well if you could arrive at an announcement, because the success of all of us in supporting the soil bank program will depend greatly on what you do
now with the noncommercial corn support price, and with the noncomplier because the entire question is wrapped up with that important question.
Secretary BENSON. We hope to announce it before next week.
Senator THYE. I understand that you are proposing from $1.25 to $1.30 for the noncommercial corn producer and the producer in the noncommercial areas.
Secretary BENSON. The noncommercial is pretty well fixed at 75 percent of the level in the commercial area. We cannot adjust that. It is 75 percent in the law, 75 percent of the support level in the commercial area where they comply with the allotments. That would be about $1.125 a bushel.
Senator THYE. Then the rumor I got is strictly a rumor, sir, and you are going to have some trouble.
Secretary BENSON. The other is to be announced.
Senator Thye. I wish you were able now to give us a firm reply on that because I have it from no less a person than by own Republican chairman in Minnesota.
Secretary BENSON. Republican chairmen and the Democratic chairmen don't always know what we are going to do.
Senator HOLLAND. Is the Senator implying-this is very important to some of us who are not as directly affected as he is-is he implying that the same price support level should be extended to compliers in the commercial corn areas as will be announced and extended to noncompliers ?
Senator THYE. I can only report the rumor to this effect, that the man in the commercial area that is out of compliance would receive the same support as the man in the noncommercial area who was growing corn. I don't know how you are going to separate those two. I don't think you can because you have never supported the noncommercial corn in any other respect except as you may have applied feed grain supports, in your discretion, to it.
Secretary Benson. There is authority to support the noncompliers in the commercial area. There is no level or no formula set up to direct it.
But the noncommercial areas, the formula is very definite, 75 percent of the support level in the commercial area for those who comply with their acreage.
Senator THYE. That is why I think we should have a positive statement, Secretary Benson, on that question in very, very immediate future, because your entire success on this soil-bank bill, of which 45 members joined in sponsoring, rests with what your decision is on that.
The CHAIRMAN. You mean in setting what the price support will be! Will that be the influence? It smells of politics to me.
Senator THYE. We can't separate, of course, politics from this because we have politics in all our congressional work simply because we have two political parties.
The CHAIRMAN. The Senator implies that much of this came from his Republican chairman in Minnesota. Where did he get his information from?
Senator THYE. I am trying to firm up the rumors here by specific facts because I qualified my statement by saying that I had not received the report direct; I received it in a roundabout manner. But I want to firm it up here, to the best of my ability, by asking the question.
I have one more question that I would like to ask.
Secretary BENSON. Could I comment on that? I would like to say whether you got it from your State chairman or from someone else's State chairman, it is not accurate, and we have not reached a conclusion. We have had some very preliminary discussions, but we have determined that we are going to reach a decision not later than next week, we hope early in the week.
Senator THYE. It is important if you could settle right down to that question and give us an answer, because we know, Secretary Benson, that you are going to have difficulty getting compliance if the 43,000,000 acres is your national allotment under the commercial corn area.
Secretary Benson. That has to stand, Senator. Under the old law, we cannot change it.
Senator Thye. Then, it is important to the question of the legislation as to what is the price to the noncomplier and on the noncommercial corn, because the corn situation will influence the feed grain prices. If the corn support is right, we need not worry too much about the feed grains. That is a certainty. And I want to add that I have been one of the strongest advocates of the soil bank."
The other question is what would you anticipate your national corn acreage to be if you have supports on the noncommercial corn? What would you anticipate your national corn
Secretary BENSON. I doubt if it is going to influence it too much. All of the acreage is planted.
Senator HOLLAND. May I interrupt, a roll call vote is in progress?
Mr. Secretary, we have but one more Senator who is to question you, and he has not returned from the Senate Chamber as yet. I intended to ask you a few more questions awhile ago when I was interrupted.
Now, Mr. Secretary, I want to ask you again, if in your considered judgment the imposition of the 90 percent of parity price supports would have meant more production than there will be under the
supports that you now proposed to grant administratively?
Secretary BENSON. Well
The CJAIRMAN. Please bear in mind that in both cases, that is, with the 90 percent, or as you propose administratively, that the acreage will be the same. As you know, under the bill that was vetoed, there was no change and no way by which these allotted acres could be changed as to the basics. You will agree to that, won't you?
Secretary Benson. Yes, I think so, Mr. Chairman.
The CHAIRMAN. I wish you would give me a positive answer now and give me a reason for it. How can you tell the committee that with the same acreage planted this year, that 90 percent would mean more production than the support you propose to allow to the farmers administratively, and as you have discussed them this morning?
Secretary BENSON. Of course, I pointed out the difference in the support level in dollars and cents, the difference between $2 and $2.26 That means some increased incentive.
Now, when the acreage is fixed as it is, and planting is underway, there isn't the opportunity that there is if the farmer was free to make his decision before planting time based on the difference in the surport price.
However, there is still the opportunity to intensify cultivation on some of those acres, intensify fertilization and to do other things which will mean increased costs and probably increased yield, which he would probably not do with a lower dollar and cents incentive. No one can measure accurately how much that will be.
The CHAIRMAN. Wouldn't a farmer have more incentive to produce more on a given number of acres if the price is lower? A farmer must have a certain amount to meet his expenses, whereas if the amount is higher that incentive does not exist.
Secretary Benson. Farmers generally respond to price, as the rest of us do, and I think that Congress was absolutely right in using the price incentive to try to get more production during the war. I think all of our studies indicate that, that an increase in price tends to increase production over the long run and, conversely, a decrease in price tends to reduce production of a crop:
The CHAIRMAN. Now, Mr. Secretary, if you take into consideration the huge amount of wheat on hand, the huge amount of cotton on hand, I just don't see how, now that you have an opportunity to apply the 75 percent formula, which you have been asking for, to reduce production, why didn't you apply this lower level for this year? I hate to ask these questions over and over, but I would just like to have it for the record; to have your reasoning as to how you figure out that what you are doing administratively will reduce production more than the 90 percent fixed in the law. Then, I would like you to reconcile your concept of the flexible price supports when you say, and when the advocates of that plan say, that flexible price supports will tend to decrease production. As I understand your theory, as a commodity becomes abundant, the price support should be decreased and with the price support lowered production would be decreased. There will be less incentive to plant because of lowered supports.
Secretary BENSON. Mr. Chairman, as you know, the President has indicated several times his determination that in making these shifts we use moderation, that we not make abrupt shifts to the extent that it would tend to disrupt the economics in the areas affected.
That is true in wheat, it is true in cotton. We have tried to do what was best for the farmer in the long run.
The CHAIRMAN. I wish you and the President had given the Congress the same feeling. That is what we tried to do. We tried to do the very thing that you are now talking about and that is to increase the income of the farmer, which income has now sagged so low that unless something is done within the next few years, it may portend a depression.
Secretary Benson. The setting of supports, without any particular relationship to market conditions tends to dry up markets, and reduce consumption and, in the long run, it hurts the farmer rather than help him.