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It looks to me like it is piling up on us to where it will just be more trouble and trouble. It looks like we could sell some of that stuff.

Some of these gentlemen were talking about in the long run. A fellow told me yesterday that he made one long run in 1929 until about 1935, and that he was 65 years old now and he was afraid he could not make another long run. I figure that way about it myself. The CHAIRMAN. When you speak of 90 percent, you mean on the basics?

Mr. WARD. On the basic crops.

The CHAIRMAN. Are you advocating a two-price system?

Mr. WARD. Well, Iwould love to see it tried.

The CHAIRMAN. You mean a law on all commodities?

Mr. WARD. On all commodities.

The CHAIRMAN. Have you any idea to give us as to how to do that-let us say, for cotton?

Mr. WARD. Senator, over in Waco, at a meeting the other day, some man asked us as to what the answer to this thing was, and he is the head man down at the PMA committee. I got to ask him to explain the two-price system to me. He said that he would see me after the meeting. I never did see him. If he could not explain it, I could not, either.

It seems to me like it would work.

The CHAIRMAN. Many advocates of that system, as well as 100 percent, have answered when I asked the question, “Well, that is why the people elect you, to find a way to do it."

Mr. WARD. Well, that is right.

The CHAIRMAN. We have to get our views from men like you who are advocating it, and in advocating it you must have studied it. You must have some ideas. No matter if it is only a trickle, we would like to have it.

Mr. WARD. Yes, sir. We have taken some big losses on some other on the open market and try to find a market for some of this surplus that we have got. There are people that need it, I guess. Some have so said here.

The CHAIRMAN. You could give it away, of course, but the trouble is to get a plan whereby you can get this 90 percent support working on whatever you consume domestically. I presume that your idea would be to sell the rest of it at any price?

Mr. WARD. At whatever price you could move it for.
The CHAIRMAN. At whatever price you could get?

Mr. WARD. You bet.

The CHAIRMAN. You would restrict the acreage then?

Mr. WARD. I would love to have that.

The CHAIRMAN. Restricted acreages?

Mr. WARD. You bet.

Senator EASTLAND. Let me see if I understand you. You favor the two-price system.

Do I understand that you favor 90 percent support prices with acreage controls, and then that the Government sell competitively or move enough cotton to give you a reasonable export?

Mr. WARD. Yes, sir.

64440-56-pt. 4-21

Senator EASTLAND. You favor the Government taking the loss on the difference between 90 percent support price and the price that is necessary to export the cotton?

Mr. WARD. Yes, sir. We have taken some big losses on some other stuff.

Senator EASTLAND. I understand-I am just trying to understand whether you favored that. I am not arguing with you. Some people think that a two-price system is one where a farmer gets 90 percent on that part of his crop that goes into the domestic consumption, and then that the farmer takes the loss on that which is exported. Mr. WARD. I think the Government could take the loss.

Senator EASTLAND. That is right.

Mr. WARD. I do not think that the farmer could.

Senator EASTLAND. Your position is that the Government move the cotton at whatever price is necessary?

Mr. WARD. At whatever price it can.

Senator EASTLAND. And that the Government take the loss?

Mr. WARD. You bet. The Democrats had me sort of bothered in the thirties, all of those years, while they were up there. I was sort of confused as to whether I was going to the show in the pick-up or the car, whether I would live in town or out on the farm.

Mr. Roosevelt fixed it where I would have no worry. I had to sell my home. I am moving back to the farm next week. So I am not confused anymore.

Senator EASTLAND. I thought that with this big acreage and high prices you would be riding in a Cadillac.

Mr. WARD. Well now, whenever they talk about sliding parity, did you ever see anything slide up?

Senator EASTLAND. No; I cannot conceive of anything going up. Mr. WARD. And they talk about cotton, that people quit raising the stuff if it gets cheap enough. I raised cotton for 4 cents in 1932. And, brother, I had to raise all I could raise.

Senator EASTLAND. You raised it for the banker?

Mr. WARD. You bet.

Senator EASTLAND. In 1932?

Mr. WARD. You bet. When I was a kid, some kids came down to my house visiting one Christmas morning, and they had their toys. And I asked where they got them. They said, "Santa Claus gave them." I asked who Santa Claus was. And they tried to tell me. And I was 30 years old before I knew there was a Santa Claus.

The CHAIRMAN. Thank you.

Senator EASTLAND. Could I ask another question?
The CHAIRMAN. Yes, indeed.

Senator EASTLAND. Are you chairman of the county committee?
Mr. WARD. Yes, sir, the ASC committee.

Senator EASTLAND. What about the difference in acreage allotments between the arid regions of Texas and the cotton grown in the raingrowing regions-would you have any comments on that, sir?

Mr. WARD. Well, we have felt like that we have gotten sort of a rough deal. Some of these west Texans are going to kill me now, I know, but we felt like we got a rough deal on the cotton allotment in the last few years.

We met with the State PMA committee the first of the year, and they kept back 10 percent of our allotment; I mean, they kept back 10 percent of the State allotment, which was over 700,000 acres. They kept back about twenty-some-odd-thousand acres of our cotton.

We met with them, and they finally gave us 1,900 acres of our cotton that they kept out of that State reserve.

The CHAIRMAN. They gave it to whom?

Mr. WARD. They gave it to the West-well, just say from here west, but this year they have changed that thing. We are getting 260,000 acres, that is, central Texas, that we did not get last year, and our allotment is a little bigger than last year.

I hope down home they do not hear this, because we have not told them yet what it was. We have gotten a little increase in our cotton allotment in our county. We think that it is going to be all right. The farmers are not against acreage control.

Senator EASTLAND. About what percentage has the acreage been reduced in your county?

Mr. WARD. Well, I believe when we did not have a program in 1950 and 1951 and 1952, we planted 210,000 acres in cotton-and this is not on the record now-our allotment this year is 116,142. So you can see we have been cut not hardly 50 percent, but in our county the thing that causes more static about the program-I know you are not interested in that is the man that had 100 acres in cotton during the years when there was not any program and he got, we will say, 33-acre allotment on those 100 acres. You see, that cuts him 67 acres, but the man who has not been planting but 30 acres of cotton on his farm, he only took a 3-acre cut.

And, boy, that is where the fun starts, when you mail out the allotments.

That is on the cropland basis. But this year we went history for 1956.

The CHAIRMAN. That was optional, was it not?

Mr. WARD. It was optional.

We feel like now that is going to be the answer to the thing, with the boys who have been planting the cotton, but am I in trouble up home where we have been planting those 30 acres of cotton on those 100 acres.

The CHAIRMAN. Are you satisfied with the law as it stands, insofar as the distribution of what acres are to be allotted?

Mr. WARD. You bet. You all did a good job on that. All we want is 90 percent of parity.

The CHAIRMAN. All right, sir. Thank you.

Next is Mr. Nelson.

Give us your name in full, your occupation.

STATEMENT OF HAROLD NELSON, NEW BRAUNFELS, TEX.

Mr. NELSON. Mr. Chairman and members of the committee, my name is Harold Nelson. I live on and operate a grade A dairy farm 5 miles south of New Braunfels, Tex.

Senator Ellender, in Albuquerque you stated that you and your committee are seeking a way to dispose of surplus farm products without placing a drain on the taxpayer.

I heartily concur in the object of your search and, after having discussed this problem with dairy farmers throughout the State of Texas, I can assure you that they endorse your motive.

Under the present system dairy farmers find themselves in an economic squeeze that is strangling them to death, and many are on the verge of bankruptcy.

In view of the economic importance of the "dairy dollar," legislation is urgently needed which will alter the present chaos in which the dairy farmer finds himself.

I should like to urge upon this committee the adoption of a plan which has previously been submitted to both Houses of Congress. These bills embody a self-financing dairy stabilization plan.

The need for support and stabilization of dairy product prices arises from the inherent characteristics of the dairy industry and its products. Prices paid to farmers for milk and butterfat historically have been subject to frequent and wide fluctuations. This is because milk is a bulky and perishable product which must be marketed daily, with the consequence that a small surplus sends prices tumbling. Contrariwise, when market needs are not met a small shortage may cause consumer prices for dairy products to skyrocket. Violent price changes benefit neither farmers nor consumers.

It is an axiom of the dairy business, furthermore, that the needs of the market cannot be met adequately without some excess supply. That extra quart of milk or pound of butter, for example, must always be there when the consumer calls for it. Dairy farmers, therefore, are haunted by surplus milk and low prices most of the time. But they cannot produce for distress prices and remain good customers for city-produced goods. Nor can consumers be assured of continuing adequate supplies of high quality milk and dairy products unless dairy farmers enjoy a level of prosperity comparable to that of other segments of the economy.

The need for stabilization is self-apparent. The questions are: Who should stabilize and support dairy prices, and how should it be done?

THE HISTORY OF STABILIZATION PROGRAMS

For a period prior to World War II, dairy farmers operated their own stabilization program. With the cooperation of the Government, a number of leading dairy farmer cooperatives organized the Dairy Products Marketing Association in 1938.

DPMA was a voluntary nonprofit organization, created specifically for the purpose of stabilizing prices for dairy products. It was financed by loans from the Commodity Credit Corporation. During its operation-from June 1938 to April 1942-it purchased 144 million pounds of butter at an administrative cost of less than one-tenth cent per pound. No losses were incurred on the products handled. The organization made money and repaid with interest all CCC loans.

It is of particular significance to note that if DPMA operations had been less favorable-if it had been obliged to dispose of the 144 million pounds of butter it bought at a total loss, its stabilization aims, nevertheless, would have been accomplished at a cost to farmers of less than one-half cent per pound of butterfat, or less than 2 cents per hundred-weight on all milk marketed during the 4-year period.

Wartime conditions ended the need for DPMA's stabilization program. In 1941 the Government stepped in with a general agrícultural price support program to encourage production by assuring guaranteed prices against drastic price slumps. Under this program there have been Government price support purchases of dairy products since 1949-ranging from a low of less than 1 percent of total production in 1951 and 1952, to a high of 8.2 percent of total production in 1953.

There are three aspects of the Government price support program which, in particular, have proved unfavorable to the dairy farmers.

1. Under the Government program, dairy farmers have borne the brunt of all the adverse publicity heaped upon price supports and the criticism against the Government's accumulation of surplus stock of all farm commodities. This complaint against dairy farmers has existed even though the cost of supporting prices for milk and butterfat has been a minor item in price support expenditures. The publicity aimed at discrediting price supports has not helped increase consumption of milk, butter, cheese, or the many other dairy products— even at the moderate prices which have prevailed, and in spite of the promotion efforts of the industry.

2. Dairy farmers have suffered a 20 percent cut in prices received from the sale of milk and butterfat since 1952. Government price supports on dairy products were lowered from 90 to 75 percent of parity April 1, 1954, for the stated purpose of curtailing production and stimulating consumption of milk and dairy products. However, the lower prices to farmers did not result in a drop of milk production, nor has consumption been measurably improved on a per capita basis.

3. The Government's policy in administering dairy supports is to set minimum prices that will insure adequate supplies, rather than optimum price levels consistent with the national economy. Even though supply and demand for milk and dairy products are now more nearly in balance-as a result of "give away" programs and increased population-one proposal often suggested as the price-tofarmers of higher support levels for dairy products is production controls or marketing quotas. Although production control devices may work well with some commodities, their application to the dairy industry is questionable.

SELF-HELP THE DAIRY FARMERS' ANSWER

Dairy farmer leaders believe that a producer-financed and controlled program will change this picture. It will eliminate consumer criticism of Government expenditures for dairy price supports. It will make possible better returns to dairy farmers. It will substitute for a policy of minimum levels of price support, a policy of higher levels consistent with the national economy. Moreover, it will accomplish these ends without cost to the taxpayer; without penalizing the

consumer.

Dairy farmer spokesmen believe that a self-help program operated by dairymen will be more responsive to trends and factors affecting the dairy farming industry. They feel that operated outside of Government, self-help will be a more efficient merchandiser, a better salesman, and a better exporter.

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