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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.
Ány 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.
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.
Agricultural prices, September 1955: Index numbers of prices received by farmers, United States, Sept. 15, 1955, with comparisons
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.
Already by September 1954 the slump in net income of poultrymen had caused much distress in the industry. At that time egg prices had dropped to 64 percent of parity and other poultry to 65 percent.
After months of serious financial losses suffered by many poultrymen and outright ruin to others a mass meeting of poultrymen was called for in Santa Rosa, Calif., on October 3, 1954. The case of the poultry farmers was heard by Mr. Rizley, Assistant Secretary of Agriculture of the Federal Government, and a 4-point program for relief adopted unanimously by the meeting. The proposals were presented to the Department of Agriculture in Washington by delegates from California on October 13, 1954.
However, apparently on account of representations made from other groups to the Government against assistance on the supposition that the situation would right itself in a short time, the proposals of our group from Sonoma County were not agreed upon.
Meanwhile predictions that the law of supply and demand would take care of the situation and that satisfactory levels of prices would follow have not proved to be reliable, as shown by the indexes for prices as stated above.
Except for a brief period of higher prices, relief has been limited and temporary, many poultry farmers finding themselves in a worse financial position than they were last year. On account of the drain of continuing low prices, many have not only had their credit stretched to the breaking point but have had to use up their savings to remain in business. Some poultry farmers, moreover, have become dependent upon mortgages to feed companies. Others with exhausted funds have had to operate under mortgages and special contracts with large corporations.
Modern poultry farming has become a highly specialized business requiring years of training and experience, extra skill, and knowledge for successful operation. The successful application of scientific principles in production to meet increasing demand for eggs and meat of high quality has been responsible for raising poultry farming up to a very high position among the different branches of agriculture. With poultry products in the United States reaching an estimated value of $4 billion in the year 1953, poultry products were exceeded in value by few other agricultural products. However, on account of low prices received by poultry farmers throughout the country, values shrank to $3.5 billion, showing a loss in values of $500 million in 1954.
The importance of poultry in the economy of the State of California is indicated by the fact that the value of its products exceeded $300 million in 1953, which gross value was similarly reduced to around $250 million with a decrease of $50 million in 1954. The above great shrinkage in values is not due to lower production but to lower prices.
Reports in the press this past weekend covering the recent conference between President Eisenhower and Secretary of Agriculture Benson regarding farm policy officially acknowledge that "farmers today are not getting a return for their work in line with that enjoyed in other segments of our population.” If prices received by farmers for commodities other than poultry are admittedly low, showing price indexes far above 200, the status of prices for poultry products with index prices far below 200 must be considered as inferior indeed. It is submitted that poultry deserves similar treatment and considera
tion to that given other branches in a Federal policy, and should no longer be considered as the untouchable branch of farming.
In view of the circumstances as stated, we urge that serious consideration be given to the following proposals:
1. As long as grain and other principal items in the cost of producing poultry are supported by parity prices, or for other reasons remain out of line with prices received by poultry farmers for their products, measures should be adopted to stop prices of poultry products from dropping below a reasonable parity index.
The CHAIRMAN. May I ask you a question at that point ?
As you know, in price supports for grain and other commodities we have an acreage control. Now, suppose we were to adopt a policy to protect the poultryman as you suggest. How would you curtail the production of poultry?
Mr. LLOYD. I do not think, Mr. Chairman, it would be necessary to have any measure of control if a reasonable parity index price were adopted.
The CHAIRMAN. How would you adopt it, though? How would you enforce it? Mr. LLOYD. By consultation with the producers who would be able The CHAIRMAN. You think they would do it on a voluntary basis?
Mr. LLOYD. I think that it would be easily-it would be possible to secure a statement of prices that would be reasonable as a stock price, or you might call it a flexible parity price without too much difficulty.
Now, in that connection, Mr. Chairman, may I suggest that in Canada they have had a support price for eggs ever since the war, and that support price has worked and it has not been responsible for causing undue increased production.
The CHAIRMAN. I would be very much interested in a support price if you could show me how to work it.
I am asking you now. You say a sufficient price ought to be agreed upon or made available to poultry. I am asking you how would you do that? You certainly have to curtail production; do you not?
Mr. LLOYD. Yes. I would suggest, Mr. Chairman, that it be done, as I said, in consultation with poultry
The CHAIRMAN. I know, but would that be on a voluntary basis? Mr. LLOYD. Well, in that connection may I suggest that just this last week we were preparing a statement, we had discussions on this question among the growers and it was agreed among the growers- I am not making this statement officially but this is what happened—that a price of around 25 cents probably for the Nation at large for fryers—or broilers, as you call them, in Georgia, Georgia now being a leading State in the Union that way-or possibly around 48 cents per dozen, even for grade A large eggs, might be a reasonable parity price. I am speaking about this on the basis of a price.
The CHAIRMAN. Well, now, you say that you would want the Government through consultation to fix that level? • Mr. LLOYD. Yes.
The CHAIRMAN. Well, now, suppose a lot of people would want to go into the business, more than you now have, and create a surplus; how would you take care of that?