The committee also noted, and I quote, "The October forecast puts production. in the United States this season at 13.8 million bales, an increase of 1 million bales or 8 percent over the previous estimate. The indicated yield of 405 pounds per acre is 64 pounds higher than the previous high record set last year and well above the average of 279 pounds. This explains why, despite a 14 percent cutback in acreage, current production is actually some 2 percent more than last season. "The significance of this unexpectedly large crop is manifold. Total supply in the United States will be at an alltime record of nearly 25 million bales. Considering the probable level of domestic consumption and exports, there is certain to be a very significant increase in carryover stocks in this country on August 1, 1956. Stocks could very well rise to over 13 million bales or even higher than in 1939. "From the viewpoint of policy it should be even more imperative for the United States to find a way to mitigate the present surplus problem. Under present legislation, the policy of flexible supports will be operative next season and, based on present estimates, cotton supports would fall anywhere from 1 to 4.5 cents under their present support level of 33.50 cents for Middling 1516-inch cotton, depending on administrative estimates of future supply and demand. At the same time an even more rigid acreage control program can be expected next year." Since then Secretary of Agriculture Benson on October 14 proclaimed a national cotton marketing quota of 10 million bales, the minimum allowed by law, and a national acreage allotment of 17,391,304 acres for the 1956 crop of upland cotton. The fact that the farm program-costly though it admittedly has been-has been the least expensive of all the Government subsidies has been largely ignored. The cost of the farm program has, in fact, been but a drop in the bucket compared to overseas aid and subsidies to big business here at home. For example, the entire cost of the farm program for 20 years has been less than the possible cost, currently, of the foreign-aid program for 90 days; or, put it another way, money available for the foreign-aid program this fiscal year would finance the entire farm program, on the basis of the past 20 years, for a total of 80 years." Senator W. Kerr Scott, of North Carolina, in a recent speech in his home State announced that from 1945 to 1955, Government aid, direct and indirect, to farmers amounted to $3,773 million, whereas, Government aid to business during the same period amounted to $5,880 million. The amount to agriculture is represented by farm products in storage, which, when sold, will return part of this money to the Treasury. Business subsidies on the other hand, are largely unrecoverable by the Government.13 Senator Scott itemized subsidies to business, in summary, as follows: Railroads, public land financial assistance valued at a quarter billion dollars; ocean shipping lines, operating subsidies, $100 million a year, construction, $45 million a year; airlines receive millions annually for mail with direct subsidies amounting to $73 million last year.18 He said that during World War II the Reconstruction Finance Corporation paid out over $3 billion in direct subsidies for processing of commodities. Rapid tax writeoff certificates permit industry and big business to hold back billions of dollars from the United States Treasury and use this money interest free for a number of years.13 Government aid to labor has been tremendous. The Government guarantees labor a minimum wage; higher wages and wage increases definitely raise industrial prices and thereby cost taxpayers millions of dollars a year. Government aid to industry and commerce have often been justified on the basis of national progress and national security. Many have been necessary to speed development, but the people who are calling on farmers to renounce farm subsidies fail to say anything about subsidies and handouts to business, industry, and labor. Another reason why farmers aren't doing better is that the middleman is taking an increasingly large proportion of the food dollar. Farmers got $17.7 billion in 1950 and $18.7 billion in 1954 for food goods they sold. Middlemen got more than that for handling it; $21 billion in 1950 and $26.4 billion last year. So while farmers collected a billion more, the middleman got $5.4 billion more (much of this going to pay higher wages).“ 12 Congressman Otto Passman, news release, October 20, 1955. 12 Mid-South Cotton News, October 1955. 14 Farm Journal, November 1955. The farmer's share of the consumer food dollar is expected to decline to 40 cents next year because of increased marketing costs, the Agriculture Department stated on October 31.15 It will cost about $28 billion to process and market the Nation's food supply this year, a 44-percent increase from the 1947-49 average, the Department estimated. The 40 cents farmers are expected to receive out of every dollar spent on food next year compares with an estimated 41 cents this year and 43 cents in 1954." Although farm income is off approximately one-third since 1953, food and fiber prices to the consumer have steadily risen." The farmer is not only receiving about a third less income since 1953; he is paying about 13 percent more for machinery, equipment, chemicals, and other supplies produced by industry and labor." Further evidence of the cost-price squeeze in agriculture was indicated when the United States Department of Agriculture recently announced that farm wage rates on October 1 were up 3 percent from a year earlier—and up 2 percent from July 1." Production costs have jumped to 30 percent above 1947-and farmers have had only a 1-percent increase in cash receipts to meet these bills. The drop in net farm income is almost entirely due to higher costs." 18 Farmers expanded during the war for a big overseas and domestic market. Now we are having trouble slowing down. We have increased output 11 percent since 1950, 34 percent since 1940." One of the important reasons that we are overproducing is that we have lost a considerable part of our export market. We have lost it because: Foreigners are raising more of their own food and fiber and we have helped them do it through foreign-aid programs. Our State Department has often prevented us from moving our exports to meet the foreign competition. Some say that it is more interested in courting foreign political friends than in building farm markets. Since 1951 the number of acres growing crops for export has dropped 45 percent-down from 55 million acres in 1951 to 30 million acres last year. Since 1951 the acreage used to grow feed for horses and mules has dropped from 18 million down to 12 million acres. These reduced exports and the drop in horses and mules have idled the market for 31 million acres of United States farmland— which is about the same as the acreage cuts made in basic crops through Government programs." The national farm debt has mounted steadily since 1947. Mortgage debt has almost doubled from $4.9 billion in 1947 to $8.2 billion this year. Farm debts on other than land have almost tripled, spurting from $3.6 billion in 1947 to $9.8 billion this year. This makes a total farm debt of $18 billion.18 Farm mortgage debt figures for Louisiana are as follows: 1945, $48,070,000; 1950, $52,195,000; 1953, $70,704,000; 1954, $82,209.000. In my opinion, for 1955 the State farm mortgage debt will exceed $100 million.10 In contrast with the economic problems presented by the slump in farm income, the general business outlook of the Nation is good. While some economists are warning of the high credit and loan levels, lest they outstrip industrial production and thus set off the spiral of inflation, indications are for continuance of high-level production, wage rates, and consumer spending. Continued industrial prosperity is expected generally. There are no heavy inventories which generally portend a falling off of consumer spending. A joint survey by the Department of Commerce and the Securities Exchange Commission reports expenditures for new plant and equipment will hit a record level in the latter part of this year. These preparations for an increase in production betokens the confidence with which the American business world views the future. Since the competition between the free world and the Communist world seems to be shifted to the economic arena, the brightness of the business outlook is encouraging. It also points up more sharply the need to raise farm income." 15 USDA, news release. October 31, 1955. 16 Congressman Otto Passman, news release, October 20, 1955. 17 Statistical summary, USDA. AMS, October 19, 1955. 18 Farm Journal. November 1955. 10 Agricultural Economics Department, College of Agriculture, Louisiana State Unlversity, and American Bankers Association. 20 Cotton Trade Journal, October 14, 1955. RECOMMENDATIONS In summary, our Louisiana Delta Council offers the following recommendations: 1. That the Congress pass Senate bill 2702, which directs that the Commodity Credit Corporation use its existing powers to encourage sales for export of such quantities of cotton as will reestablish and maintain our fair share of the world market. This bill also directs that United States cotton mills be protected by import quotas at reasonable levels on manufactured cotton goods. Japanese sales of cotton cloth to buyers in this country since midsummer have spiraled to a dimension equivalent to 19,000 United States textile jobs. Such volume, unless checked, must inevitably take a toll in mill employment and a reduced market for the United States farmer's cotton. August fabric sales by the Japanese Government to United States buyers totaled 52 million yards-a 1-month figure exceeding the entire amount of cloth imported from Japan. during all of 1954, which was 47.8 million yards.20 Japan buys the greater part of its raw cotton from countries other than the United States, so this flood of cloth imports also is the equivalent to the importation of many thousands of bales of foreign-grown cotton. Agricultural law in this country requires United States mills to use only domestic cotton except for a negligible fraction of foreign specialty growths under a quota. Only the imposition by Congress of an import quota on cotton manufactures, similar to the quota long in effect on raw cotton, can protect the jobs of United States textile workers and the market of the United States cotton farmer. United States cotton mills are committed to the cost and wage structure of the United States economy. They now have a floor of $1 an hour minimum, established by Congress to be effective March 1, 1957, as compared to 0.13 cent an hour for the Japanese. 2. We recommend closer coordination at Cabinet level aimed at resulting in a stepped-up program of surplus disposal and expansion of markets. It is reliably reported that when the workable cotton export program first developed by the Department of Agriculture reached the White House for discussion with the President, Secretary Benson urged adoption of the program, but Secretary of State Dulles opposed it. Vice President Nixon also spoke out strongly for the plan. The President sided with Dulles and the argument that sale of stocks at world prices would have international political and economic repercussions."1 Further, when the March by Congress on the White House forced some action, the President, still over State Department protests, authorized the limited sale of surplus cotton after January 1. Announcement of the qualities to be soldall grades of fifteen-sixteenths inch and shorter staples-shows that the State Department succeeded in having them eliminated from cotton eligible for sale." The result has been that, while foreign buyers await cheaper cotton under the revised sales program after January 1, they are buying very little American cotton and are filling their needs from stocks of Mexican and other foreign cottons at prices 3 to 5 cents a pound under the American price. Exports so far this season have been less than half what they were a year ago.22 3. There are approximately 4 million bales of low-grade short-staple cotton in the Government loan. We recommend that the future basis of the loan be determined on the average grade and staple rather than middling % inch in order to discourage the production of such unwanted cotton and permit the buyers to discount same at their actual market value. 4. We recommend a minimum 1957 national cotton acreage allotment based upon an estimated production of 14 million bales, with annual goals of 9 million bales for domestic consumption and 5 million bales for exports. Our cotton economy cannot survive further acreage reductions. The development of our rural area is retarded by reduction in farm income. The Soil Conservation Service calculates that in our Louisiana Delta Council area the total land available for agricultural use comprises 3,466,178 acres. Of this amount, 62.4 percent is presently in woodlands. Acreage which could be profitably cleared in the next 5 to 10 years is estimated at 108,000 acres. Continued adverse economic conditions will obviously retard the development of such land into efficient agricultural producing units. Cottoncast, Gerald Dearing, Farm and Ranch, November 1955. 5. We recommend that a 1 percent national acreage reserve for aiding small farm hardship cases be set up in addition to the national cotton acreage allotment. 6. We urge that Secretary of Agriculture Benson announce the 1956 cotton price-support level sufficiently in advance of the marketing quota referendum on December 13 to permit farmers to more accurately evaluate their situation. 7. We urge that the Department of Agriculture start research at once to determine the competitive position of United States cotton and foreign cotton; the competitive position of United States cotton and synthetics, both domestic and foreign; and the price relationship in principal end uses. 8. We recommend an expanded program of research emphasizing new crops, new uses for farm crops, lower costs of production, marketing methods, and expansion of markets. 9. We urge expansion of our rural development program for low-income families. 10. We also recommend that our technical assistance program should not encourage the foreign production of any crops in world surplus supply and on which acreage restrictions apply in the United States. We respectfully urge the earnest consideration of our above recommendations by the Senate Committee on Agriculture and Forestry. I should like to express my appreciation for the privilege of appearing before this committee. Please accept the thanks of the Louisiana Delta Council for this opportunity to present our views to the Congress. The CHAIRMAN. Is Mr. Lovell present? Give us your name in full for the record, and your occupation. STATEMENT OF LAWRENCE L. LOVELL, CHENEYVILLE, LA. Mr. LOVELL. Lawrence L. Lovell from Cheneyville, La. I am a farmer. The CHAIRMAN. Will you proceed? I notice you have a written statement. Mr. LOVELL. I am not going to speak entirely from the written statement, Senator. I am going to refer to it. The CHAIRMAN. I can give you assurance that the whole statement will be printed in the record at this point unless you choose to read it. Mr. LOVELL. I am going to read only part of it. First I would like to say that too much emphasis has been placed on the role of price supports as a guaranty of farmers' income. Price support alone cannot insure a farmer an adequate income since income is both volume and price. Farmers must be allowed to produce if they are to have a stable income no matter at what level prices are supported. One hundred percent of zero would still be zero. Price supports have a role in any farm program but that role is orderly marketing and protection against sudden disastrous price drops. To attach too much emphasis on price supports simply clouds the problem and centers attention on details instead of the main issue. The solution of the cotton problem demands increased consumption since removal of surplus by acreage restriction alone invites bankruptcy. If price supports are high enough to materially reduce consumption then they are a hindrance to farmers. To illustrate the point of overemphasis on price supports. had cotton been supported at 100 percent of parity the average cotton farmer of Avoyelles Parish would have received $100 more income using 400-pound lint to the acre as yield. Had he been allowed to increase his plantings by 25 percent his income would have been increased by $315 at 90 percent parity. He would have made $200 more at 80 percent of parity with a 25-percent increase in plantings. The Louisiana Farm Bureau Federation is in favor of price supports and thinks they should be retained but their limitations as well as their benefits should be recognized. Their possible harmful effects should be kept in mind. Price supports are not a magic cure-all. Since increased consumption is necessary in the cotton industry more thought should be given to an agricultural program which would promote the production of the more desirable grades of cotton. I think it should also be kept in mind that considerable interests outside of agriculture have a more vested interest in high price supports than do farmers. I particularly refer to the money-lending agencies and the competition of agriculture. Increased consumption is a necessary part Senator EASTLAND. What do you mean by agriculture's competition? Mr. LOVELL. I am speaking of synthetics. I am speaking of cotton when I say agriculture. The CHAIRMAN. How about lending agencies? They are all government, are they not? Mr. LOVELL. No, a number of bankers are very much in favor of high price supports because it takes risk out of lending money on farm loans. Senator YOUNG. Do you believe price supports should be lowered now? Mr. LOVELL. My position is that price supports should be as high as possible as long as they are not interfering with free movement in the market. Senator YOUNG. Do you believe they are too high at the present time? Mr. LOVELL. As far as cotton is concerned, they are based wrong. I will get to that. Senator YOUNG. Will you state whether you think the price support is too high on cotton and tobacco and rice? Mr. LOVELL. Too high on seven-eighths cotton but not 1. Senator YOUNG. That offers an area where a compromise might be reached in Congress. If we place 90 percent supports or something like that on quality cotton and wheat, I think there is a chance we might get together. Mr. LOVELL. In my next phase I will make a specific recommendation. I believe that a step in the right direction toward improving consumption of the cotton would be to change the parity base from seven-eighths staple to 132 staple, supporting the new base at approximately 90 percent of parity and averaging the grades above and below this staple length to the same support price. The CHAIRMAN. What would you put Mr. LOVELL. 1132. The CHAIRMAN. What would you start that at? Mr. LOVELL. Approximately the present support price of 12. Mr. LOVELL. Yes. The CHAIRMAN. Then whatever is below that-how much would you reduce seven-eighths or shorter than seven-eighths? |