5. Sell present stored surplus of wheat back to the farmers for feed, since that seems the only possible way of disposing of it other than dumping it in the ocean. DAIRY PROGRAM When the price support on dairy products dropped from 90 to 75 percent the price of grade A milk to the producer dropped 15 percent. The price the consumer paid dropped a little, but now the consumer price is back up to or above what it had been but the producers' price still remained at 75 percent. This 15 percent drop forced a lot of little operators completely out of business. The consumer hasn't benefited in any way. So there seems to be no relation between what the producer receives and the consumer pays. The producers' margin of profit came out of that 15 percent, and at present most of them are operating at a loss. An investigation should be made into the processing and retailing of all farm products to see why there should be such a spread between what the farmer receives and the consumer pays. The CHAIRMAN. Mr. Van Pelt? STATEMENT OF GERALD D. VAN PELT, BELOIT, KANS. Mr. VAN PELT. I am Gerald D. Van Pelt from Beloit, Kans. I with my son farm grain and raise cattle and hogs. We believe in the fairmindedness of our fellow farmers. They can tighten their belts to submit to tight acreage controls and cross compliance to solve this problem. We believe we can do that. We don't believe it can be solved by price controls. We believe we have got to solve overproduction by laying out our acres and cross compliance will help. I think the machinery for operating this is already set up. I don't see why we have to set up complete governmental, change the agricultural setup because with what we have got plus soil conservation service, they can handle the idle acres situation with some shifts in the law, it needs to be changed in spots, we can get the job done. We raise hogs. I think the Government made a mistake last month or last week in attempting this buying program. Hogs go up and down in a quick cycle and we producers will take care of it. We cut down breeding. If they maintain the price we will also maintain the number of gilts that we farrow each year. The CHAIRMAN. Do you think expenditure of $85 million in the purchase of hogs will make the hog pricing up to 25 cents? Mr. VAN PELT. I do not. I don't think it will help it at all. The CHAIRMAN. To keep it from going further down; isn't that a good idea? Mr. VAN PELT. That is questionable how far it will keep it from going down. The CHAIRMAN. It did good for cattle some time ago. It might do good for hogs. Mr. VAN PELT. What I am afraid of is there are quite a few isms in Government philosophy and I would hate to see continued spread of the Government owing us a living and we should avoid that in any future law. We should get back to-I recognize we are going to have to have some help to get out of the spot we are in because it was a spot setup by mechanical needs. The CHAIRMAN. The war did it. Do you not think the war had. something to do with establishing this great big plant? Mr. VAN PELT. Yes; but one witness mentioned politics had something to do with it, and I thoroughly believe that also, and he can start pinning me down on that, too. Senator YOUNG. I wish you would enlarge upon that statement. How do you mean that? Mr. VAN PELT. I believe the Secretary of Agriculture when they delayed putting on or rather took off cross compliance last year, I believe it was, it should have stayed right on. Senator YOUNG. Is that politics? Mr. VAN PELT. It looked to me like it. It looked to me as that was the sentiment in our area, the farmers thought that, that there was something back of it besides good of the farmer. Cross compliance would have helped to keep down surplus. We went to milo. We went to other things and increased our livestock program to consume it. Senator YOUNG. Do you suppose if the Government would enforce cross compliance on wheat all across the Nation that with price supports at 76 percent of parity or about $1.60 a bushel, that farmers would still vote for quotas? Mr. VAN PELT. I recognize that probably wouldn't be true, but the basis of all our trouble is we are overproduced. Let's attack it from that basis and get overproduction down. Senator YOUNG. How would you do that? crops. Senator YOUNG. I think you are right. You don't want to apply all the penalty on wheat farmers. It seems they are taking the most terrific licking of all. Mr. VAN PELT. Judicious changes in the present setup would take care of it. I think there are enough fairminded people in the country to work it out. It won't be perfect, but it will get something that is workable. Senator YOUNG. That is the only politics you think there is in this farm price program, just the thing Benson did? Mr. VAN PELT. I am not thinking of Secretary Benson, I admire Secretary Benson for the intestinal fortitude he has. Senator YOUNG. You think he was playing politics when he didn't enforce cross compliance? It wasn't Benson; was it? Mr. VAN PELT. He could have done it. The law permitted it. I commend you Senators for taking all this time to get this information. It is a good sign for our democracy and I hope it continues. Senator THYE. I would like to ask a couple of questions. If I understand your belief in farm supports, we would be better off if we really abolished all the farm program and left a free competitive situation? Mr. VAN PELT. No, sir: I do not believe that. I believe we must have some system that is flexible to maintain us through the tight spot we are in now to get us out. We have to have our ability to go ahead and produce as an individual unit maintained and if we cut our production down to 50 percent by releasing acreage, we have to have some other way of building it up, but if production is down, then it is justifiable to maintain price supports, no matter what they might be, to keep income up. Senator THYE. You are in full agreement that the present flexible is just the amount that you would desire? Mr. VAN PELT. No, sir. Senator THYE. You wouldn't recommend any change in the feedcrop situation or any change in the percentage that is to go into effect in wheat, in 1956? Mr. VAN PELT. My son and I farm 960 acres and of that we have a 400-acre allotment for wheat and we believe if wheat drops below $1.50 we will be just on the average yearly rate of production, we will just about break even. That is as low as we can go. If we keep buying equipment, you have to have more than $1.50 on the farm to break through this period of overproduction. Senator THYE. Then you are satisfied with the farm program, you would not recommend a lower level in supports. Mr. VAN PELT. The supports, as I see them now, are low enough but I believe the Secretary of Agriculture should not be pinned down to one specific point. He should have freedom of moving it up or down. Senator THYE. He has that freedom, sir. Mr. VAN PELT. That is the way I feel it should be. Senator THYE. He definitely has that freedom. You don't think it was advisable to have bought pork at this time? Mr. VAN PELT. No, sir; I don't think it will do any good except maybe for the school lunch program. Senator THYE. You are acquainted with the provisions of the law whereby imports of perishable commodities are subject to a duty which builds up a fund known as section 32 funds and that these funds can be used and are intended by Congress to be used to relieve a glutted market. You see, when a livestock market breaks, as it might as cold weather comes on and feed lots, temporary summer lots, are emptied, the intent of Congress in approving this particular provision of the act was that the Secretary of Agriculture could use his discretion to make purchases in order to avoid ruinously low prices when the market was receiving the full weight of the products. Therefore, I would have to disagree with you on the buying of pork because the intent was that the Secretary was to make purchases at a time when the market is receiving the full weight of the product and is threatened by a price depression. That is today's pork situation. Mr. VAN PELT. It might be reflected back to the pork raiser. I am afraid it is only the packer who will receive that. Senator THYE. Then there is something basically wrong in the program if it does not reflect back to the producer. That is why I asked questions on the dairy situation, because I wanted the record to show specifically that neither the consumer nor the producer particularly benefitted from the reduction in dairy supports. The CHAIRMAN. Thank you, sir. May I state this to the rest of the witnesses, that it is now 4:20 and up to this moment we have heard 37 witnesses and we have 71 more on the list. Now it goes without saying that we will have to move along if we get through by midnight. I don't expect we will hold that long, but I simply want to again emphasize to you the importance of trying to limit your statements to some new matter and let's not accumulate the same evidence time and again. If you can do that, I am sure we can get it all in the record and any new thought is what we want. STATEMENT OF TED BOURQUOIN, COLBY, KANS. Mr. BOURQUOIN. Gentlemen, a lot of what I have to say has been stated, and I will try to avoid repetition, but I would like to present a new angle. I think the farmer is going to have to help himself somewhat. He is going to need the cooperation of Congress to go along with it. I am a farmer from Thomas County. I am glad that you have seen fit to come out to the grassroots to find out the farmers' problems firsthand. Western Kansas is an area with a little over 18 inches of rainfall annually. This is not enough moisture to produce a wheat crop every year. Consequently it has become a practical land-use policy to summer-fallow half of the cultivated acres each year and plant the other half alternately to wheat. The formula for establishing wheat acreages for counties and farmers is based on history of seedings a certain percentage on 10 years, 5 years, and 2 years. Well, the trend has been that while western Kansas has been summer fallowing one-half of their land and planting one-half to wheat, the farmers in the heavier rainfall districts have built up larger acre histories. Last year the northwest district of Kansas had 23 percent less acres than in 1945. The southeast district had allotted wheat acres of 9 percent more than 1945, a difference percentagewise of 32 percent. What has happened is that western Kansas wheat farms have lost their heritage of the right to grow their share of good quality wheat by following a good land-use policy. The farmers from the Corn Belt areas have turned to growing wheat for which there is less demand all because of high loan rates which have built up our surpluses. Our western Kansas farmers have a large investment in equipment and land. Last year we were only allowed to plant 34 percent of our cultivated acres to wheat. This means that a farmer must have 3 cultivated acres for each acre that he is allowed to plant to wheat. We have no good dependable crop that we can substitute in the place of wheat. Winter barley has not been too successful. Milo is another crop that is a poor substitute for wheat. For instance, a lot of the milo this year was not even harvested. In order to raise milo in northwest Kansas one should summer fallow the year before. Then the next problem is to take this summer fallowed land through the fall, winter, and windy spring without it blowing away. I contend that due to the fact that wheat is a product mostly used for human consumption that areas that can grow high-quality wheat that the miller demands should be given a square deal. I believe that due to the fact that western Kansas farmers have been summer fallowing for 25 to 30 years or longer. That it is a land-use plan in the production of wheat and that perhaps 50 percent of our summer fallowed acres be classed as seeded acres in establishing western Kansas wheat allotted acres. I have been told that it would take an act of Congress to change the formula for establishing wheat allotment base acres. I would like for the Department of Agriculture to take an inventory of the wheat that is in storage to determine how much wheat we actually have that can be used for human consumption. It would be better to sell the inferior wheat for what it will bring than to continue to pay storage year after year to large grain terminals and then dump it. I think that if this were done we would find that we do not have a surplus of quality wheat. The ever-normal granary plan has been used since Bible times and is sound, but it should be of good-quality usable wheat. I think the farmers in the future can help control surpluses by only growing the best quality wheats for which there is a demand. The automobile industry continues to improve their cars in order to sell as many as possible, and farmers should do the same with their wheat. I believe that Congress can establish a better marketing agency through the Department of Agriculture to sell wheat to foreign countries. I think that this department should sell wheat only on a quality basis and guarantee that quality is as good or better than specified in the contract. Canadian exports are shipped from the top of the barrel. Most of our exports have been from the bottom of the barrel and are poor advertising even if given away. The country out to buy wheat is going to get the best quality for the money. That is only good business. I wish to commend Congress and the Secretary of Agriculture for the action that they have taken on creating a difference in loan rates of 20 cents per bushel on wheat that is in demand for human consumption and just wheat. My opinion is that it should have been 40 cents instead of 20 cents. If it is only fit for feeding purposes then the rate should be the same as corn or comparable feeds. I sincerely believe that if only high-quality wheats were grown and a department within the Department of Agriculture was set up that did nothing but promote disposal and sales of wheat that our surplus problems would soon vanish. The CHAIRMAN. We have had that right along. We have a law before the Congress to do the very thing you are talking about. Tell us how to do it instead of telling us about the necessity. Insofar as wheat is concerned, Mr. Benson has been able to make that change without legislation, but we think it should be mandatory. Have you any way by which that could be done? Mr. BOURQUOIN. No, I haven't except this department should open up new research and new sales promotion in the world. The CHAIRMAN. We have been told that. We have spent money for research, spent more this year than ever, and expect to spend more next year. Mr. BOURQUOIN. I believe the Government can help to stabilize the law. The law of supply and demand was enforced for acres. I believe that high supports on wheat without considering quality has contributed to the surpluses that we have today. We have priced ourselves out of the market for the quality of merchandise that we have to sell. The flexible support plan is not perfect but is worth a try. The Government can help to stabilize markets but the law of supply and demand has been in force for ages and after all is the most effective. In conclusion, the western Kansas farmer is caught between unfair wheat acreage allotments, lower gross income, higher fixed costs, greater operating expenses due to higher prices charged for machinery and things he must purchase. If the Nation is to have a sound economy |