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The farmer has to buy his supplies, his tools, and equipment, and hire his labor in a very well protected market, and it stands to good reason that he should be allowed to sell his products used in this country, with some protection, such as would be afforded under this plan.
Item No. 3 has to do with the taking care of the stocks of cotton which are now held and being accumulated in this crop year by the Commodity Credit Corporation. All Commodity Credit Corpora-tion stocks of cotton held at the time such new program would be put into effect should be frozen, except to allow some trading and/or limited sales by the Commodity Credit Corporation to private merchandising firms covering grades and staples which are in short supply during the transition period of changing from the present program to the new crop under the proposed plan.
It is estimated that the Commodity Credit Corporation is going to own something like 10 or 11 million bales of cotton after this crop. A restricted sales program of approximately 400,000 bales of Commodity Credit Corporation cotton should be sold each year, for about 15 years, to allow the gradual disposal of Commodity Credit Corporation stocks down to a level of an emergency stockpile of approximately 4 million bales. I think that has been mentioned here before this morning, that some of these agricultural products should be stockpiled, just the same as nickel and tin and copper, and so forth.
The sales of Commodity Credit Corporation stocks should be limited to a period of time which would not interfere with the marketing of each current crop; we will say a period from March through August of each year. This cotton could be marketed during that period.
Under this general program, I know that there would be a lot of crying out and talking about unrestricted production and that the market would not stand it, but I think that it is time that we get back to our basic economic laws of supply and demand, and the value of goods.
Prices are going to pretty well determine the amount of cotton that will be grown, or any other agricultural commodity, and will govern the distribution of the acreage throughout the different sections of the country as farmers will divert from crop to crop, depending on the financial returns offered by each one.
Manufacturing concerns plan their production along these lines, and there is no sound reason why a farmer cannot do the same. It is rather unsound to think that a farmer would continually produce crops that he could not sell at a price that would at least return him his expenses.
It was said once here this morning, Senator, that the policy of the present administration is responsible for a lot of this, but I beg to submit to you that the basic troubles with the surplus agricultural products we have has been brought about by high support prices.
The CHAIRMAN. Just a minute. Let us apply that to cotton. In 1950–1951, you had marketing quotas for cotton and harvested 17,843,000 acres. We produced just slightly over 10 million bales: We had a quota system.
We cut it down to 10 million. All right. The next year, when the war was on, 1951-52, unrestricted production went into effect because of the war. That made it go up to 15,149,000 bales.
In 1952–53 the same condition occurred because of the war. You had no trouble with the planting of cotton or the sale of it. Everything was satisfactory, nobody suffered, the weather was good, in fact everything was most favorable. During that period of unrestricted production we produced 15,139,000 bales.
You remember that, because of the fact that we grew a very small crop in 1950–51, prices shot up, and in order to save some cotton for ourselves an export embargo was placed on cotton. Mr. LOVELACE. It was not exported.
The CHAIRMAN. Yes, an export restriction was imposed.
The CHAIRMAN. We had a shortage of cotton and, of course, with the unlimited production, not because of the 90 percent of parity price supports, but because the country thought that we would need it, the Government said: “Plant all you can, boys, and we will take care of it."
Well, they did. They produced 15 million-plus.
Mr. LOVELACE. I think that is an important thing there. Go ahead now.
The CHAIRMAN. That is right.
In 1953–54 again with unrestricted production, but with the farmers voluntarily reducing their acreage from 25,921,000 to 24,341,000, harvested acres, lo and behold, instead of producing 15 million they produced 16,465,000. Weather did it, and not the 90 percent.
You will agree to that, will you not?
The CHAIRMAN. Yes, I wish you would. I wish you would try and straighten this record, because I have just given you the facts. Mr. LOVELACE. I know. I am not arguing with the figures.
The CHAIRMAN. All right. Now, you remember there was no limitation ? Mr. LOVELACE. There was no limitation.
The CHAIRMAN. The Government.--our great Government said the President said—the Secretary of Agriculture said—“We need cotton. We have got to have it. Produce it.” So the farmers did.
Jr. LOVELACE. With high support price under it. We did not start accumulating this big surplus. It started in 1950. That is when we started, really, accumulating this surplus, what we call a surplus.
The CHAIRMAN. But we had a marketing quota in 1950. We produced only 10 million bales.
Mr. LOVELACE. All right.
The CHAIRMAN. Suppose, on the other hand, marketing quotas had been put, as was the case in 1950–51, can you not see that we would have produced less and less ?
Mr. LOVELACE. The last 2 years we have cut our acreage right down to the bone, and we keep producing more cotton.
The CHAIRMAN. It was not the 90 percent that did that. We obtained full production without restrictions, and if we had imposed a law-in other words, if we had made use of the tools we then had in 1951-52, as we did in 1950–51, we would not have the total we have today. Now, let me just finish the record.
We had a marketing quota on the 1954–55 crop, and we harvested only 19,251,000, a drop over 5 million acres, and on that 19 million, we produced 13,696,000.
This year, on this crop year of 1955–56, we again have a marketing quota, and the acreage harvested is down to 16,636,000 acres. The estimated production according to this report, will be 12,728,000. You may have to jack that up a little bit not because of the 90 percent but because of good weather conditions and everything else again favorable.
Mr. LOVELACE. Good weather conditions, and the high use of fertilizer, better farming practices, yes; the weather has been in our favor, but it has not all been the weather.
The CHAIRMAN. Of course not; of course not.
Mr. LOVELACE. You can take over here on the plains of Texas, where there is a lot of this land that is irrigated, they do not depend on the weather any more.
You can take it in the irrigated valleys of New Mexico and check and see how much fertilizer they have been buying.
The CHAIRMAN, You will agree, then, that good weather conditions, better seed, better mechanization, better farming practices, and good weather has really mounted the crops?
Mr. LOVELACE. That has done it. The reason that the farmer has made that investment in fertilizer has made that investment in land leveling and better farming practices is because that price has been away up there where he could make darn good money by increasing his production in order to do it.
The CHAIRMAN. The same thing has occurred, and the same argument has been made by the producers of dairy products. And what does the record show! You have had flexible price supports for the last 2 years, and this year will be a banner year in production. You have produced more dairy products, more milk this year, than you ever did in your life, and yet you have the flexible price supports. So argue that one for me, if you please. Mr. LOVELACE. I do not know anything about milk.
The CHAIRMAN. I happen to know a little bit about it. When somebody tells me that the 90-percent price support has caused all of this, many of them, with all due respect to them, are not being logical, in my humble judgment, without looking at the figures. Because, I repeat, if it had not been for the fact that production in 1951 was down and the prices were up, and we needed the cotton, we might have been able to impose quota restrictions, and in that way we might have made this law operate to the point where our surpluses would not be as great as they are. You can see that, can you not?
Mr. LOVELACE. We did have marketing quotas for 1950-51-restricted acreage.
The CHAIRMAN. In other words, in 1950–51 you curtailed acreage 10 million from the year before. Mr. LOVELACE. That is right. The CHAIRMAN. Ten million acres.
Mr. LOVELACE. Quite a cut.
The CHAIRMAN. It certainly was, and we did it by using the law we had on the statute books.
Mr. LOVELACE. Yes; that is all very true, but that does not change the fact, as I see it, Senator, that under the present conditions we have got our cotton priced out of the market. It would not move in foreign competition.
The CHAIRMAN. You are exactly correct in that, but you and others have said that under any 90-percent price-support program, you cannot sell your cotton abroad. How in the world can you sell it if you are going to reach 100 percent, as many are saying, that the flexible price-support program will bring to us? That is the goal of Mr. Benson; that is the goal, according to those who want the price flexed. They say they are going to bring you 100 percent at the market place. Mr. LOVELACE. I do not think it will. The CHAIRMAN. That is our goal. Mr. LOVELACE. As a matter of fact, until we do put our cotton on a world market basis, we are not going to regain our markets.
The CHAIRMAN. And you are never going to put it on a world basis if our farmers get 100 percent of parity; you never will. Mr. LOVELACE. No. The CHAIRMAN. Because you cannot sell it. Mr. LOVELACE. I agree with you. The CHAIRMAN. You would have to subsidize it some way. Mr. LOVELACE. That is all right. That is what we propose here.
The CHAIRMAN. When you pass that on to the consumer, your method will be one of two ways: by the tariff and by the excise tax. If you think you can do that and get it through Congress, please show me how it can be done. Mr. LOVELACE. It would not cost what it is costing now.
The CHAIRMAN. Not in taxes, but in the additional amount that the users of those commodities would have to pay.
Mr. LOVELACE. They are paying for it twice now. The CHAIRMAN. I cannot see it that way. Mr. LOVELACE. Their cotton goods are costing them when they go to buy a sheet or a pillow case. It is costing them, based upon current prices of cotton; is it not?
The CHAIRMAN. Let us put it this way: This shirt that I am wearing right now has about three-quarters of a pound of cotton in it. Mr. LOVELACE. Not very much.
The CHAIRMAN. What does the maker of the shirt care about the difference in the price of 2 or 3 cents a pound he pays for cotton ?
This shirt, as I said, cost me, or would have cost me $2.50 5, 6, or 7 years ago, and today $4.50. Mr. LOVELACE. That is right. The CHAIRMAN. And the cotton has not gone up in proportion. Mr. LOVELACE. No. The CHAIRMAN. Of course not. So do not blame the price of cotton. Mr. LOVELACE. We are not blaming the price of cotton on that, but I was trying to answer your question, that you said it would cost the consumer too much. It would not cost him any more than it is costing him now.
The CHAIRMAN. It will cost him more because he is apt to pay an excise tax on that, whereas the income tax may be cheaper for him.
You take the people who really need help, the people who really want
do not pay an income tax, but you would want to put a sales tax on them. Mr. LOVELACE. You have misunderstood the program. The CHAIRMAN. No, I have not. What you want is an excise tax.
Mr. LOVELACE. The excise tax would be the difference between what the cotton sold for and 90 percent of parity. The farmer would not get more than 90 percent of parity, which he is getting now.
The CHAIRMAN. Who pays for the excise tax?
The CHAIRMAN. Of course, but the consumer does not pay an income tax necessarily.
The farmers today are paid out of the Treasury from the taxes that are collected from those able to pay. That is where he gets his pay from, but if you put an excise tax on cotton, the man who may not pay an income tax would be bound to pay it.
Mr. LOVELACE. That is true, but he is paying it now, because his cotton is costing him.
The CHAIRMAN. I will not argue with you any further. If you have any further statement to make, proceed. Mr. LOVELACE. No, sir; that concludes it. The CHAIRMAN. Thank you. Is Mr. Copeland present?
STATEMENT OF JACK COPELAND, NARA VISA, N. MEX. Mr. COPELAND. Mr. Chairman, I suppose that I would be classed as a rancher, although I do have a small farm.
The CHAIRMAN. That is because you are in New Mexico. We would call you a farmer in Louisiana.
Mr. COPELAND. Senator, many people have gone down several lines that I certainly agree with today. Some of those lines I do not agree with.
I am a strong believer in 90 percent of parity. I have no desire to see the farmers and the ranchers of this great Nation have their standard of living lowered to where we can meet the world price, the world market.
I do not say at this time that I am in favor of a price support on my cattle, although we need it, but until this farm price can be worked out until it is 90 percent or 100 percent of parity, perhaps we rancher folk can get along.
I do not want my statement to be misunderstood or misinterpreted. I am not a rugged individualist. I never claimed to be one. In fact, I am not-I do not say that 100 percent of parity is the answer, but I know in my own mind that flexible support is not the answer.
You might say, if you are a rancher why are you in favor of giving the corn boys and the grain sorghum boys, or the boys that raise the feed, 90 percent or 100 percent of parity? I contend that the cheaper the grain gets, the more we will feed to the cattle, the more cattle we will have.
We have a big advertising campaign that no doubt has increased the beef consumption. But on the other hand, pork is fed on feed. We cannot do that, and get in more deeply.