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In the latest figures by the United States Department of Agriculture prices received by farmers for food products in the third quarter of this year were 7 percent less than in the same period of 1954 and the farmers share of the food dollar is estimated tentatively at 41 cents, 2 cents less than in 1954.
With the CCC holding in stocks, as of September 28, 1955, the following dairy products: 114 million pounds of butter, 274 million pounds of cheese, and 33 million pounds of powdered milk; and with dairy income dropping it shows that the present system of flexible supports, as administrated by Secretary Benson is not working.
For example, in our own herd as the prices decline we have to keep increasing our herd to cover our fixed costs that continue to rise, while the income drops. This is a general condition in the dairying areas. This is also the condition nationally as we watch the figures for milk production for the year. This increase in milk production for the year 1954 in California was brought on by two ways. First we had an increase of 2.2 percent in the number of cows; and, second, we had a 3.8 percent increase in the average production of milk per cow. As was stated above the present system of flexible supports is not working because:
1. The present system of taking surpluses off the market by purchase has cost the taxpayers of this country billions of dollars and has not given agriculture a fair income.
2. Consumers probably are the heaviest contributors to these taxes and their money is being used to buy farm commodities off the market, store them, and make it necessary for them to buy back at a higher price in the market place.
I think we have subsidized the large manufacturers of dariy products long enough and under the present setup that is just what we are doing. They continue to manufacture more products than they can sell on the open market because they know they can sell the balance to the Government at a profit. This stock of surplus is used as a lever to hold our prices down.
We believe it would be very valuable to the economy of this country, both so far as producers and consumers are concerned—as an experiment, if two universally used farm commodities such as dairy and poultry were allowed to flow into the market unrestricted and reach whatever level in the market place which the production of these commodities might bring about, and if the market level goes lower than parity, then pay the producers the difference between the parity level and the market price. We believe such a program would cost less than the one now in use and further it would make available to the consumers of this country, without interference by the Government, the production of these two universally used commodities. We are certain it could result in not having millions of pounds of butter in storage, much of which deteriorated to the point where it cannot be used. It is time we did something as the future continues to look darker for agriculture under the present setup, especially dairying.
The figures used in this brief were taken from California Dairy Industry Statistics for 1954 issued by the California Crop and Livestock Reporting Service, special publication No. 256.
STATEMENT FILED BY CHARLES C. GOODALE, STOCKTON, CALIF.
WALTON SOIL PLAN
I am a family-sized conservation-minded farmer, owning 250 acres of grassland, marketing livestock in Petaluma, Sonoma County, 17th agricultural county of the United States.
What is the Izaak Walton League? It is a conservation organization supported by its members dues, dedicated to the defense of soil, forests, water and wildlife. The Waltonians in the minds of many people are connected with fishing, but actually their interests are much broader for they realize that forests, water, and wildlife are utterly dependent upon the condition of the soil. This Walton soil plan, in my opinion, is a two-pronged program; first, as a soil-conservation program; and, second, as a price-support farm program. I beliere that it is a generally accepted fact that our present agricultural difficulties are mainly due to the fact that we are producing more than is needed. As you well realize our storage capacity is full and we are still producing surpluses. A peculiarity of farming is the fact that as prices decrease, the farmer is forced to produce more to pay his expenses so that the pressure is in low prices for increased production as that is the only way a farmer can survive.
The Walton plan goes to the basis of all agriculture, which is soil. It proposes that the Government rent from the farmer some 50 to 70 million acres of class 3 to 6 land which is about 10 percent of our productive land. Under USDA land classification, class 3 to 6 land is the poor quality land which is not suited for cultivation. This land that is rented from the farmer is to be put into restoration crops such as legumes and timber where suitable. These leases are for 5, 10, and 25 years; 5 years in normal rainfall area ; 10 years where droughts occur; and 25 years where timber is a desirable crop.
One might ask why the Govenment should rent this land from the farmer. It is my belief that the Government through its various agencies has caused this surplus land to be brought into production, such as irrigation districts, reclamation projects, and so forth. Of course, everyone is going to be interested in the cost of such a program. It has been estimated that this will cost around $450 million. Now to offset this cost, it is possible that reductions can be made in various other programs. Since this is a conservation program for the land most badly in need of stabilization and since the stabilization would be the most complete possible, it would be entirely appropriate to reduce the agricultural conservation program, which I believe is running around $250 million annually. Also, it would be possible to cut some of the losses of the Commodity Credit Corporation which are running in the neighborhood of $130 million annually. It is estimated in the Newsweek magazine of September 1954 that the loss of the 1954 crop would be $450 million and that by the time the 1954 harvest was completed, the Corporation would have almost $10 billion invented in surplus commodities.
Assuming that the figure is $8 billion, it is probable that the combined interest, storage, and deterioration losses would reach some $500 million to $600 million a year, just to hold the surplus.
As mentioned before, the Izaak Walton plan can be considered as a pricesupport farm program. It is not suggested that our present price-support program be done away with immediately. It is suggested that in the first year this Walton program was placed in effect, support prices would be reduced to not over 75 percent of parity; in the second year to not over 70 percent; and in the third year to 65 percent. After this, price supports should not be needed since this program is in itself a price-support program of an indirect nature.
To assure the Government acquiring our poorer lands, it is suggested that the following percent table be used in arriving at a basis of rent, based upon an appraisal made of land values arrived at by the USDA appraiser and a local professional. It is recommended that a figure of 6 percent be used.
Percent Class 1 land.
60 Class 2 land.
70 Class 3 land.
80 Class 4 land.
90 Class 5-8 land.-
100 Some may not understand USDA land classification system, so it might be well to state that class 1 land is our best land without any need of any conservation practices except possibly improving fertility. Class 2 land is land with very small problems. Class 3 land is land that can be cultivated but is hazardous. Class 4 land is land that can be cultivated only occasionally, and so on.
The administrative committee, accompanied by an experienced land appraiser evaluates the field. The land has been producing corn, wheat, soybeans, and occasionally clover. The committee estimates what a fair cash rental would be assuming that corn was selling for $1.82, beans $2.82 and wheat $2.50 per bushel. They might arrive at a figure in the range of $12 to $16 per acre. For convenience, let us assume they set the figure at $14 per acre.
Meanwhile the USDA fieldman classifies the land as class 4 and therefore eligible to 90 percent of parity rental. The rental offered the farmer is set at $12.60 per acre per year. This happens to be very close to the average cash rental of all Illinois farmland the last 3 years.
A second example may be taken from the growing Dust Bowl of southeast Colorado. Here a bona fide farmer and not a suitcase farmer was involved. He operated two sections of wheatland. The dry cycle had hit him hard. He applied for a lease. The land was classified as 800 acres of class 3 and 480 acres of class 5, due to the high sand content. The average wheat production was around 12 bushels per acre when it rained ; and the fair cash rental on the class 3 land set at $5 per acre and on the class 5 land at $3 per acre.
The rental was therefore set at 80 percent of $5 or $4 per acre for the class 3 land and 100 percent or $3 per acre for the class 5 land.
The USDA fieldman prescribed a seeding of the best holding cover known at the time. The farmer decided that a sure return of $4,640 per year was better than gambling on the weather. He moved off the farm as soon as the seeding was permanently established.
There was less wheat to glut the market for the next 10 years; and there was less dust in the air in the Midwest. Of course, when wheat rose to $2.20 on the open market and the rain cycle returned, the farmer wanted to resume wheat growing. His 10 year lease was not terminated, as the wheat was not needed and there was no justification for renewing the hazard of blowing soil.
There is nothing compulsory about this Walton soil program as each individual farmer makes the decision as to whether he desires to rent land to the Government or not and the price paid would greatly influence his decision. If he desires to rent, the application for leases would be accompanied by a fee of $10 to defray part of the cost of the appraisal and so forth.
It is my belief that this is a workable program. It is the first farm program that I have ever been able to support. As to the possible results, I believe that when this is wholly in operation, the old law of supply and demand will be able to operate freely and our poor lands will be given a rest and put in a condition whereby they will be improving rather than deteriorating. I feel that this is a good plan for our future and that in time of drought, we will be able to draw on these lands in the midst of where the drought is; in time of war, they will be immediately available for production and they will still be in experienced farmers' hands; lands ready for immediate production. It will do away with acreage controls, no compliances or cross compliances, and it will give the farmer parity in the market place. I hope we will never hear discussions of a farmer getting various percents of parity again. I would like to set up a goal where the farmer is justified in believing that an acre of foodstuff will be worth more to the public than an acre of homesites.
STATEMENT FILED BY DEL SECARA, CHAIRMAN, Economic STUDY COMMITTEE,
CALIFORNIA CREAMERY OPERATORS ASSOCIATION, CHOWCHILLA, CALIF. CALIFORNIA CREAMERY OPERATORS ASSOCIATION ORGANIZED IN 1900 TO PROMOTE THE
DAIRY INTERESTS OF CALIFORNIA As introduction you will note from the heading on this report our organization has been functioning continuously for the past 55 years. It is the oldest dairy association west of the Mississippi River. It is comprised of people engaged in all phases of the dairy industry.
The matter before your committee is national in scope. California is deficient in those dairy products involved in Government support. We have for many years been an importing State for some of our butter and cheese. Nevertheless, we realize our economy is interrelated with that of other States. We have maintained continual routine relations with dairy groups in other States as well as with Government agencies in the USDA. Our philosophy has been that the dairy industry is one industry interrelated economically both intra- and interstate. We approach the matter before you in this light.
In late 1953 we presented a report to a United States Legislative Interim Committee visiting California. Our recommendations then were for flexible price supports and to work toward eventual elimination of their need. These remain our objectives.
A review of the surplus situation since April 1, 1954, tends to substantiate our position relative to flexible supports. Prior to that date on a 90 percent of parity support program surpluses mounted to where the Government was purchasing supported dairy products equivalent to 11.1 billion pounds of milk. Following this date support prices were dropped to 75 percent of parity. During the following 12 months Government purchase of supported products was the equivalent of 5.8 billion pounds of milk or about half of the previous amount.
This plus vigorous advertising and sales promotion programs by the industry increased consumption of both butter and cheese. Increases in civilian consumption have since reflected increased prices to producers. Prices paid producers the last week in September this year were--all milk 88 percent of parity, manufacturing milk 81 percent, and milkfat in cream 78 percent. Following are comparative purchases by the Government for the first 4 months of 1955 as
compared with the same months of 1954, which show a continuation of the trend toward less Government support: Government purchases first 4 months of each year
(In millions of pounds)
The above in our opinion tends to support the program of flexible price supports. We are hopeful that in a few more years we as an industry will again be able to "stand on our own feet." We wish to remind you that all the butter and cheese held by this Government is not surplus. Prior to the Government price support program the industry did its own storing of these products during the season of high production for use during winter months of less production. Prices then were flexible to both producer and consumer and varied with the amounts of storage. Currently the Government does the storing. Consequently flexible price supports are not new.
During the presentation of our paper in 1953 to the United States Legislative Interim Committee we pointed out only certain elements or parts of our industry were directly involved, the producers of milk and cream used for manufacture of those products operating under parity support. We stated we favored flexible supports to check the mounting of Government purchases and surpluses of 1953, but in so doing not to overlook the fact that large portions of our total prduction went into market milk which was not directly involved in parity supports. On the contrary much of it is under Federal or State milk marketing programs.
Good judgment and management of these marketing programs would seem to dictate the inclusion of the percentage of parity for manufactured products in formulas or other means of arriving at prices for market milk. Your committee knows this matter has been before Congress in Washington. We regret the absence of a national economic research study to determine whether or not the milk marketing programs are in surplus volume sufficient to affect the overall program and purpose. In fairness to producers of both classes of milk this question should be answered factually. We urge that you give considera. tion to having such a study made by the USDA. Conclusions:
(1) We continue to favor flexible price supports.
(2) From information available to us we believe the program of flexible price supports is developing satisfactorily.
(3) We urge a research study to be made by the USDA to determine (a) to what extent are parity prices for dairy products used in formulating market milk prices, (6) is there an excess of surplus market milk going into manufacture of dairy products to influence the prices paid to producers of manufacturing milk and cream?
STATEMENT FILED BY ROBERT J. TAYLOR, JR., GEORGE ZARINOVICH, FRED BEAR AND
KENT A. FISH OF ORANGE COVE, CALIF., AND L. R. HAMILTON AND A. APHARIAN OF REEDLEY, CALIF.
American farmers, the backbone of this country, are calling on you and your Department to innovate some adjustment that will make farming a better business and establish it on a secure basis for the benefit of the farmer and the entire economic setup.
We realize your position that you have inherited a tremendous job of handling the huge surpluses piled up by previous administrations. We feel you devote more attention to the disposal of these surpluses than to the marketing of the crops maturing yearly; these are most economically important to the country.
We would like to turn back to 1932 when a new President established the New Deal. He waited until the suppliers got all they needed to run us that year then
he instructed that all the surpluses be destroyed; kill the little pigs, plow under corn, wheat, oats, potatoes or any other crop that we could not sell to suppliers for that year.
Then in 1945 another President took over. He was really a New Dealer. He waited until the suppliers got all they wanted, then he paid the growers good prices for all that was left and started to pile these crops up in storage for his full 7 years. This program cost several billions of dollars, and filled practically all the storage spaces in the country. The public are entitled to a detailed statement of the scope and actual expenditure of this program.
Secretary of Agriculture, Mr. Benson, you came along in 1952 to carry on with this great handicap and the tremendous expense added to your Department. You are faced with many elements. Let us list a few of them :
1. Human element
8. False pretense elements These and many more are playing a big part in this country and the world economy. We have to do everything we can to keep them under control or they will dominate us. Every man or woman in our Government, county, State, and Federal, every Member of Congress, Cabinet officers, and all citizens should keep intouch with each other to try to meet this condition and make this a clean country to live in not only for ourselves but for the coming generations.
We submit for your consideration the fact we have farm bureaus all over the Nation with departments already set up for all the various farm products. There is also in each county a stabilization and conservation office of the USDA. We ask that each Farm Bureau office and each USDA branch office prepare and submit to the Department of Agriculture a detailed report from their various departments on their different problems, what they have to contend with and what they need to help them out to establish farming on a more secure basis and prevent these inroads and losses.
As you know, a farmer is a very tired man after his day's work is over and what he has to contend with to control pests, diseases, weather, and marketing problems. Farmers are reluctant to attend meetings and service clubs like other lines of business. He operates under free enterprise. He is more interested in expenditures to improve his quality and production then he is in the marketing factors important to the sales of his products. Strange as it seems, he is slightly apathetic to markets-he is inclined to consider marketing problems as far and beyond his power to control.
It is our suggestion that a mailing list be made up of all the farms in this country and that your Department furnish them with a simple form of questionnaire for them to report to you of their problems and crop prospects, and let them make suggestions from their own operations. This information should be very valuable, especially from the point of establishing fair prices for farm commodities.
Rapid transportation is a most vital factor in our fresh fruit and vegetable industry. We desire to impress the United States Department of Agriculture with the importance of providing our products with fast deliveries to market. Due to the perishable nature of our commodities and the market value dependent upon fresh appearing, unspoiled arrivals the grower is risking an entire year of production costs plus packing and material charges upon the interval of time and the nature of the handling by carrier between shipping point and market arrival.
Prior to World War II, using the years 1934–38 as the base period, we exported an average of 8,298 tons a year of table grapes (mostly Emperors) to European countries, including England. Since the war, our export of table grapes has been practically nothing, amounting to less than 1 percent of our prewar tonnage. Compared to 8,298 tons per year prior to the war, we exported only 1.585 tons in 1946, nothing again until 1951 which was only 96 tons, only 187 tons in 1952 and 31 tons in 1953. You can see that these postwar shipments of grapes to Europe are negligible.
In the General Agreement on Tariffs and Trade, the European countries were permitted to exclude importation of certain commodities until their dollar position reached a satisfactory stage. The dollar position of some of these countries