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We are told that the huge mountain of surplus of agricultural products are causing the low prices, yet the consuming public, including the housewife find prices still going up on all of these finished products they have to buy.

It is common knowledge that we have a surplus, Army, Navy, and Air Force and each group has stores of guns, ammunition, planes, ships, and other necessary equipment, but they are called defense reserves, so let's take a new approach to this agricultural problem and set up a defense food and fiber storage or a world food basket if you please, and get away from that old nasty word of surpluses. At the beginning of World War II we had a surplus of agricultural commodities, yet they were consumed before we ended the war. Today, we have just about as much agricultural surplus as we had at the beginning of World War II.

If these surpluses, or defense armies, navies, and air force are necessary, then we must assume that a defense food basket is necessary, for food and fiber is vital to our defense.

In setting up a defense food basket, we would want it large enough to run this country and her allies 2 or 3 years, so that the amount of overproduction each year, divided into the size of the food basket, would give the number of years to fill the basket. If it takes 3 years to fill the basket, we would be filling it one-third each year, then as each year's surplus goes into the basket, one-third of the older products are taken out and disposed of through world trade, thereby keeping a fresh supply on hand at all times for any emergency that might arise, but definitely dispose of the older or obsolete products, and not carry any more surplus.

The Secretary of Agriculture should designate commercial grain sorghum areas, where these crops have been produced prior to 1951, and price supports be maintained in these areas at not less than 10 percent below the price supports on corn; grain sorghums produced in noncommercial areas should be reduced in the same proportion as price supports on corn produced in noncommercial corn areas.

It is also necessary that the 15-acre or 200-bushel producer of wheat, without a penalty be eliminated, and to qualify for the production of wheat for market, he must have a wheat allotment for his farm, and quality milling wheat be used as the basis for price support, therefore we need extensive revision in United States grades and standards of wheat for export and domestic use.

Now as to diverted acres, they should be the percentage of national cut, as applied to any commodity, and on each individual farm, under allotment, along with a soil-fertility bank, payment for the control of those diverted acres, and to help preserve the soil for future use.

The CHAIRMAN. Before you go to the next paragraph, about this soil-fertility bank, I imagine what you contemplate is that these acres will be set aside?

Mr. CHITWOOD. Right.

The CHAIRMAN. The land would not be used in competition with other producers, say, of livestock, to be specific in what I mean, as we have in the Southwest, the West, and the North. A lot of people who use their diverted acres to plant feed grains compete with people who grow nothing but feed grains.

Mr. CHITWOOD. That is right.

The CHAIRMAN. They have done damage to those people, and your idea would be to set diverted acres aside and not to have them used, they would remain in fallow, or they would be nonproductive, except to increase their fertility?

Mr. CHITWOOD. Right.

The CHAIRMAN. What would be your method of inducing farmers? Mr. CHITWOOD. Senator, I feel as you have noted-I have specified here that those acres that have allotments be used as diverted acres. That would include, naturally, only those crops that are allotted. The CHAIRMAN. Í understand.

Mr. CHITWOOD. But, by the same token, the person who is being supported at an equitable price, if they are to be supported at all, it should be an equitable price, should not mind leaving out their diverted acres from production.

The CHAIRMAN. What do you mean by an equitable price? How would you attain that goal?

Mr. CHITWOOD. Of course, that goal is-what is known as the parity formula.

The CHAIRMAN. Would you give it a percentage of the parity formula or the whole of it?

Mr. CHITWOOD. No; I would not particularly be interested in giving a percent of the parity formula for this reason: If we do not move the surpluses that we now have, even 150 percent of parity would not answer the problem because the mountain of surplus would continue to grow, and your acres would continue to decrease. That is the adverse reaction to a controlled program. If you allow any overproduction to build up, you keep cutting the production itself.

If you do not happen to get it just exactly right each year, and you never know what nature is going to do with the return she is going to yield from a crop you plant.

The CHAIRMAN. Well, what would you call an equitable return? Would you propose that the farmer's acreage should be controlled? Mr. CHITWOOD. That is right.

The CHAIRMAN. All right.

Now, in order to induce him to do that, would you want to give him a fixed sum, percentagewise or whatever way you want, of parity? Mr. CHITWOOD. Yes, sir.

There is some need of some definite support price there.

The CHAIRMAN. Would you want it to be fixed in the law with a rigid formula?

Mr. CHITWOOD. There are a number of ways at arriving at the thing. The CHAIRMAN. Give us new ways.

Mr. CHITWOOD. Perhaps the Secretary

The CHAIRMAN. We have tried the old ways. If you have some new ways let us have them, because we are anxious to hear from you in that regard.

Mr. CHITWOOD. Under the revised parity formula, all of these other costs of production were supposed to be included in parity, were they not?

The CHAIRMAN. Labor costs were added, but not the farmer's own labor; just hired labor. There may be something wrong with the parity formula.

Mr. CHITWOOD. That is right. That was the thought that I had in mind there.

The CHAIRMAN. Yes.

Well, you know that when the new parity formula came into being, we were told that within 4 or 5 years that new parity formula would catch up with the old parity formula.

Well, I was one who did not believe that and, through my efforts and that of a few other Senators on the committee, we retained both in the law; we enacted the

Mr. CHITWOOD. Transitional period.

The CHAIRMAN. No. We enacted the new formula, but we retained the old formula, and whichever gave the farmer the highest, that would be the one that would be taken by the Department of Agriculture.

Mr. CHITWOOD. That is right.

The CHAIRMAN. But that is neither here nor there. We are trying to look for new methods, new ways, and if you can give us just a little inkling as to how to do that, why, the committee will appreciate it. Mr. CHITWOOD. Well, I still do not think that absolute rigid supports are the answer and, as I stated in the beginning

The CHAIRMAN. What would you put in the law? How would you state it in the law?

Mr. CHITWOOD. It would have to be a flexible program from a certain percent. You want a definite percent, I assume?

The CHAIRMAN. No; I am not asking you. I do not know. I said in the opening statement I did not believe that either would do the job within themselves.

Mr. CHITWOOD. Within themselves.

The CHAIRMAN. That is right. But if I have to choose at this moment between flexible and rigid, I think I would take the rigid supports with the other additional amendment as to basics.

Mr. CHITWOOD. Other ramifications to fit into the program.
The CHAIRMAN. That is as to basics.

Mr. CHITWOOD. I understand; I can see your point there.

The CHAIRMAN. But what I am looking for is light as I am sure all members of the committee are. That is why we are making this record for other Senators to read, for the Congress to read, for members of the Department of Agriculture to read, and it is my belief that these hearings will stimulate the thinking of people, and some Moses might come forward and just with a little spark give us the answer to all these problems. You might be that Moses. You may proceed.

Mr. CHITWOOD. I still think the flexible idea has a better chance of working if you will move the surpluses, Senator.

The CHAIRMAN. How is that?

Mr. CHITWOOD. If the surpluses will be removed.

The CHAIRMAN. That is the whole problem, my dear sir.

Mr. CHITWOOD. Certainly.

The CHAIRMAN. If we had no surpluses now you would not need any price supports at all. That is the problem. We have got to get rid of the surpluses in some way.

Mr. CHITWOOD. You would after 1 year's time, would you not?
The CHAIRMAN. You would after what?

Mr. CHITWOOD. After 1 year's production you would have a surplus again.

The CHAIRMAN. Would you want to stop our whole farming operations? We have enough wheat stored now to last for a year. If you want to tell all the wheat farmers, "Don't grow any more wheat," we will solve it in a year.

Would you want to do that?

Mr. CHITWOOD. Well, that was the point I was getting at in setting up a formula for the removal of surpluses.

The CHAIRMAN. We have several gadgets, and so far they have not moved much. We have Public Law 480 to sell surplus commodities abroad; and we have the school-lunch program as well as other gadgets, to effectuate them, but the great difficulty with all those gadgets is that the surpluses are not being sold fast enough. It is a cost and a drain on the Government, and what I am trying to do is to try to assist the American taxpayers and at the same time find some ways by which we can dispose of these surpluses without it being a drain on the taxpayers.

Now, that is the problem; that is what we are looking for the solution to today.

If we did not have any surpluses, I am sure Senator Anderson would agree with me, we would not have too much of a problem to solve.

But, when we start writing up a new program, we have got to remember this great surplus dangling over the markets which is depressing the prices. That is why the farmers are feeling the pinch today, a good deal of it, because of the fact that millers of wheat, for instance, will not stack up much because they know there is a big surplus; cotton mills will not stack up very much because they know we have a big surplus; don't you see?

If we could simply remove these surpluses overnight, why, our farm problem could probably be solved, well, within 30 days in Congress. That is my belief.

Mr. CHITWOOD. I will agree with you on that, Senator. But don't you also think

The CHAIRMAN. Let us go on to your views.

Mr. CHITWOOD. This is with respect to this setting up a type of an idea I have given you here, a world food basket, removing them from the category of surpluses, and putting them in a food basket, as other arms of our Nation are being done today, and you will have the psychological effect with an orderly movement of that stuff at the end of 3 years, of taking this apprehension from your millers and from your processors that now exists.

The CHAIRMAN. Yes. But what products would you put in the food basket?

Mr. CHITWOOD. Well, practically all of our nonperishables or food and fiber that is essential to our national defense at any time.

The CHAIRMAN. In other words, any perishable commodity, would not be put in your food basket?

Mr. CHITWOOD. Not on a 3-year basis; you could not do that. The CHAIRMAN. That would include what now? How about dairy products?

Mr. CHITWOOD. Certain forms of those can be maintained for periods of time under certain procedures.

The CHAIRMAN. Aside from basics, then you would probably add dairy products?

64440-56-pt. 4- -12

Mr. CHITWOOD. Some parts that could be adequately kept. There is no need of adding anything to our storage that cannot properly be maintained.

The CHAIRMAN. That would be the test then, storability?

Mr. CHITWOOD. That is right.

The CHAIRMAN. Proceed, sir.

Mr. CHITWOOD. Just one thought further there as to the attitude of the millers and the processors. They tell me and I have talked with numbers of them in different meetings throughout the United States, not only New Mexico, but other States, where they used to set aside a 12-month supply for their needs, that now a 30- or 60-day supply is what their average supply is, due to this surplus.

They think, well, this thing is going to push down, and "If I have got a year's supply and my competitor will come along and get it 20 cents cheaper than I, he can outsell me."

So actually instead of the picture being a true picture of surplus today, we have about 10 months of our domestic supply included over in that group of surplus where it should not be considered as such.

The CHAIRMAN. Well, I am sure that the same thing would apply to foreign purchases. I just returned from a trip around the world about 3 weeks ago. I have been living in an airplane now since August 13, and I suggested before I left, and since I came back, that if the President would let the foreigners know that these surpluses we have on hand are not going to be given to them, it will go far toward alleviating this thing. They are all there waiting on the fence, waiting there in the hope, don't you see, that something will happen whereby we will continue to give and donate, give it to them. If we could only let them know that those surpluses are going to remain here, and if they want it they are going to have to buy them, why, we might get some place.

Mr. CHITWOOD. Or else trade for them in some manner for something that is of value to us.

The CHAIRMAN. Oh, yes. I do not want to go into that, but I could give this audience a good idea as to what I found abroad as to what is being done in this respect. We could easily sell for their currencies and use their currencies to buy things that they have in surplus like tin. I would rather have a mountain of tin in my back yard than bales of cotton, but when you deal in the soft currency countries with the United Kingdom at the head, why, they say, "No, we won't let you buy any of these with our soft currencies; you have got to use dollars to get our stuff." Don't you see, those are the things that I know Senator Anderson is acquainted with. We have been trying right along to get these countries to buy with their own currencies and then, in turn, we would use their own currencies to buy their surpluses. We always meet with some opposition from some of these countries in the soft currency bloc, particularly led by the United Kingdom, you see, and whenever we go to buy from them they say, "We cannot use our soft currencies for tin or rubber or wool; we have got to have dollars from you."

If we could just have this interchange of currency, convertibility as we have often heard it, a good many of our pains would be removed immediately.

Mr. CHITWOOD. Don't you think the principle of the World Bank is going to answer that problem to a certain extent?

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