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Our California population has increased rapidly, but both numbers of farms and farmers have remainded about stable in the last 15 or 20 years.

The CHAIRMAN. Mr. Wilson, you are now stating the problem. I think the committee knows a good deal about that. I wonder if you could confine your statement to a remedy, if you do not mind.

I want to assure you that the entire statement will be put in the record, setting forth the problem, but what the committee would like to get from you is a solution to the problem.

Mr. WILSON. I will come to that.

The CHAIRMAN. I know you will come to it. But suppose you come to it now.

Mr. WILSON. Since 1920, except for the war years, farmers have continuously been faced with surpluses. We have tried throughout this time to raise farm prices through Government action, without at the same time adding to the surpluses. This has not been accomplished.

You may remember that after Pearl Harbor and after we were actively in World War II, we still had acreage restrictions on the production of wheat and sugar because of the heavy surpluses then on hand. Most farmers had come to the conclusion that it is just as impossible for a farmer to get a fair price for his commodity in the market place, while our warehouses are bulging, as it is for the producers of radios, television sets, Fords, and Chevrolets, to get a fair market price for their commodity when everyone knows that their warehouses are bulging.

It would seem, then, that our first objective must be to reduce the total farm surpluses to a point where they are not a depressing factor in the market. We have done a great deal with the active support of Congress in developing legislation and programs which have encouraged increased exports of the surpluses.

We hope the actions already taken will result in more exports in a year or two ahead. This may require some changes in State Department policy.

I might say here that it seems to me that there are some things which the Congress can do. Your investigation, I think, is going to help a great deal in that. But I believe there could be some policy statement, even if you went as far as giving to the Department of Agriculture definitely some increased responsibility in this field of export.

Further, the Commodity Credit Corporation should trade more on needed perishable farm surpluses for valuable and easily storable strategic materials. They could do it at the present time, but a little change in directive, I think, from the Congress, would assist in that rather materially.

Another one of the factors which I think is quite real is that, quite naturally, the industrial group of America is far better represented in the State Department than the farmers of America are represented. I have traveled somewhat, and have found this to be true in foreign countries.

I believe that we could designate definitely that there should be agricultural representation within the State Department. We could help this situation quite a bit.

We are exceedingly fortunate that the American economy is stable. and that people are eating well. We believe, however, that a well organized and continuing drive supported by the Department of Agriculture, our colleges and farmers and industry, dependent upon agriculture for the increased consumption of animal proteins, could bring material results in reducing our excessive supplies of grains and other livestock feeds.

The beef program, the dairy program, lambs and poultry programs have been good, but we believe a concerted program, including all of the animal proteins, would be most effective. And by this I do not mean just saying that we are going to have a little program. Neither do I mean that the Government should spend a lot of money, because I think other sources would make all of the money available that is needed to carry out a program, but if we really concentrate on an animal protein program in which all of the animal industry, livestock, red meats, poultry, dairying contribute, then we would eliminate a feeling on the part of a lot of people that they cannot get in and support a single program.

I am thinking of the distributing people in the country, and a great many others, who would support, I am sure, an all-out program in this

area.

A realistic appraisal, however, would indicate that even with the stepped up foreign and domestic sales we will not reduce our surpluses effectively, if we continue to add to the supply in the warehouses as fast as we now are.

In 1945-55 we sold or gave away 2.1 billions worth of our surpluses, but we added 3.2 billions to our surpluses. This is in dollars. This, of course, is a net loss to us.

We, therefore, must develop an efficient means of actually reducing the overall production of farm commodities for which there is no active demand today.

We have tried restricting acreage for the basic commodities. This has resulted in a very aggressive game on how do we outfox Uncle Sam by producing more on the restricted acreage.

This is demonstrated this year with an increase in production of cotton, in the face of a 14 percent decrease in acreage. This 14 percent diverted acreage has likewise gone into grains, vegetables, and other commodities, further adding to the surpluses and depressing prices for all farmers.

Theoretically I believe farmers recognize that these diverted acres should be prohibited from production of crops, for harvesting or feeding to livestock. We recognize, however, that the administrative difficulties connected with carrying out such a program through compulsion or as a condition for support prices is very difficult.

Any program whether called a soil fertility bank program or under any other name must be simple of administration and relatively easy to assure compliance with this provision. But above all, it must result in a material net decrease in overall farm production and must not only prohibit but must prevent use of these conservation acres for livestock production.

During this period immediately ahead of us much could be done by the Department, colleges and others in assisting farmers in cutting the cost of production for the purpose of increasing that net farm income.

With a little ingenuity, imagination and research, a number of methods can be developed which will cut farm costs and at the same time result in reduced production. This helps both net income and price, if the production and costs exceed the reduction in gross income. We support further increases in appropriations for research and extension. We will insist more emphasis be placed on cutting the cost of production and increased markets and efficiency of marketing. I must call attention of the Senate committee to the fact that taxes are one of the farm costs which have increased materially, and about which something can be done.

For example, I would refer particularly to the gasoline tax and the transportation tax. These taxes were war measures which fall particularly heavy on farmers. It was acceptable during the period of war and relatively high farm income, even though it may not have been entirely equitable. Today, however the gasoline tax has been to all practical purposes changed from a general tax for the support of Government to a highway tax. In this case simple justice indicates that gasoline used for nonhighway purposes should be exempt from

this tax.

Even as a general tax I would call attention to the fact that farmers use more horsepower than all of the factories of the United States combined. In our factories this is largely electrical power, and a special tax on electricity was taken off several years ago. The farms use gasoline as a source of producing horsepower to a far greater extent than any other group of primary producers in America.

Consequently, this tax falls particularly heavy on agriculture at a time of materially reduced net income.

One of the heavy costs placed upon agriculture is that of the transportation tax. The tax now placed on transportation of farm and other commodities becomes very oppressive at a time when we should not be called upon to carry this special tax.

The elimination of these costs could be brought about shortly by the Congress, and could make an immediate, direct contribution to the net income of farmers.

We oppose the 90 percent price support in peacetime. A return to 90 percent fixed supports would be economic suicide. The act of 1954 is not flexible enough.

Flexible supports, however, will not alone solve the problem. They may give us time to solve them.

Any program of cash payments to a 90 percent or other level above the market price is ultimately disastrous for both producers and consumers. All crops should have opportunity to use marketing agreements. I realize that water is not directly within the jurisdiction of the Senate Committee on Agriculture and Forestry, but we know, to your interest in this area, and believe we should comment upon the necessity of the Congress quickly and restating legislation which recognizes fully the ownership of the water by the States and not the Federal Government.

This has been the oft-repeated position of the Congress and the courts for 150 years, but has been recently challenged by those who would take rights from individuals and concentrate these rights and powers in centralized government.

Under State water law, the water is assigned to the individual pieces of property where farmers have continued rights to their share of

the water available, so long as it is beneficially used. This is a primary given right directly comparable to the right of the work of man to the continued possession of his tools, or of the doctor to his medical instruments, or of the attorney to his law library.

Water in an irrigated area is one of the essential tools of production and livelihood for the farmers.

If the Federal Government can now, by any means, as they are now trying to do, to deprive a farmer of water, his principal tool of production, then it is only a step to deprive the working man, the doctor, the lawyer, or other citizen, of their tools of production, and their human rights.

This struggle between States and Federal ownership of water is a struggle between highly centralized government and human rights of individuals.

We thank you sincerely for this opportunity to appear before you and particularly for your courteous and impartial approach to this difficult problem.

The CHAIRMAN. Thank you.

The sugar beets section have already handed in their statements. As a matter of fact, I am glad that they did, because this committee has no jurisdiction over legislation dealing with sugar beets.

We will next hear from Mr. Lloyd.

Give your full name and your occupation.

STATEMENT OF E. A. LLOYD, PETALUMA & SONOMA POULTRY GROWERS ASSOCIATION, PETALUMA, CALIF.

Mr. LLOYD. Mr. Chairman and members of the Senate committee, my name is E. A. Lloyd, formerly head of the poultry department, now consultant in the poultry breed program, with the Petaluma Cooperative Hatcheries.

I am presenting this statement on behalf of the Petaluma & Sonoma Poultry Growers Association.

In the beginning let me state that our case is based largely upon the index numbers of the prices of various agricultural products, which you will find on the front page of this statement, and for your reference, are included in the official pamphlet put out by the Agricultural Marketing Series of the United States Department of Agriculture. The CHAIRMAN. We have that.

Mr. LLOYD. I will try and make this statement short, Mr. Chairman, because I know that there is limited time.

The CHAIRMAN. I will be indebted to you.

Mr. LLOYD. I should like to have this tabulation placed in the record. The CHAIRMAN. It is so ordered.

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Agricultural prices, September 1955: Index numbers of prices received by farmers, United States, Sept. 15, 1955, with comparisons

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Mr. LLOYD. The extreme depression in the prices of poultry products in the past 2 years even as compared with prices of other agricultural products has been clearly shown in official reports issued by the Agricultural Marketing Service of the USDA.

Reference to the latest available report September 30, on agricultural prices, page 1, "summary table," shows indexes of prices received for farm products varying from 233 to 246 for 1954 and 1955.

Such prices represent parity ratios of 84 to 88. On page 8 of report are found index numbers of prices received by farmers, United States, September 15, 1955, with comparisons 1910-14. Examination of the data in the tables reveals grave disadvantages to poultry farmers in the prices received for their products as compared with those received by producers of other animal products which are comparable.

Taking dairy products as an example and one with which poultry products are frequently grouped, it is seen that the seasonal adjusted index numbers representing the scale of dairy products for the past 2 years have been very steady at around 250-248 to 252-and somewhat higher than the average of all farm products as shown above. However, the prices received for poultry products as shown in the index numbers are much lower ranging from a low 150 to a high 189. Referring to index numbers of prices received for other comparable animal products in the unadjusted figures it is seen that livestock and products varied in price from 237 to 249 and meat animals from 250 to 282. In the same group of unadjusted indexes of prices of poultry products the levels were 162 to 202. The last figure, 202, is somewhat misleading, since it represented prices for a limited period only, prices having dropped to a considerably lower index since that time. This is particularly true of prices of broiler and fryer chickens which have just dropped to the lowest figures for many years, with an index estimated at not higher than 160, or very low parity.

At the same time that prices of poultry products have been allowed to drop to such low levels, the price of feed, materials, and services paid by poultry farmers have remained at a comparatively high level, the latest figure announced by Washington October 29 being 230. Such differences between cost to farmers and prices received for their products constitute an impossible handicap for poultry farmers to

overcome.

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