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much is being used to compete with American agriculture, whether the competition is direct such as raw cotton or indirect such as synthetics. Rather than to continue the aid to our competition we believe that everything possible should be done to reduce the level of foreign competition.
Further, we think all reclamation projects using Federal money should be held up as far as agriculture production is concerned until such time as present surpluses are dissipated. It is foolish to take land out of cultivation in one area and spend thousands of dollars per acre to replace it in another area.
The CHAIRMAN. As you know, we have a law passed I think last year, or year before I think my good friend Senator Eastland had something to do with it-in providing cheap money to develop irrigation projects in the South. Would you cut that out, too? Mr. LOVELL. Yes, sir; I would cut that out, too.
The CHAIRMAN. All right; I just wanted to know. Mr. LoVELL. A farmer's income, as stated previously, is volume times price. His net income is volume times price less expenses. To ignore the role of cost in the present farm squeeze would be burying our heads in the sand. The major portion of all farm costs, direct and indirect, is labor. The percent of the consumer's dollar that the farmer gets is constantly dropping and is now only 40 percent. The reductions in farm prices have not reached the consumer but have gone into increased processing costs.
The CHAIRMAN. In that connection that is one of the problems posed to us at every meeting we have attended. I wonder if you could divert a bit if you do not have it in your statement, and tell us how you would improve that situation.
Mr. LOVELL. I will tell you but you may not like it. The tendency in the Federal Government to constantly increase minimum wages and social security benefits by law is not helping the farmer. Further, farmers are answerable to the Sherman antitrust laws and we do not object to this.
Senator THYE. Might I pose a question at this point? Did your wages go up when the minimum wage was increased in the past session of Congress?
Mr. LOVELL. I can; we haven't felt the impact of the next minimun wage. We will feel it this coming year.
Senator THYE. Aren't your wages normally above a dollar an hour or 90 cents an hour?
Mr. LOVELL. You mean wages I get for my work?
Senator THYE. No; what is paid the industrial worker in any area of the United States. Isn't that above the minimum wage at the present time?
Mr. LOVELL. In general, yes, sir.
Senator TuyE. Then how do you charge that as affecting your own welfare or the farmer's income?
Mr. LOVELL. You are taking me out of context. If I may finish the next sentence, the two are tied together.
Senator THYE. I don't want to disrupt the presentation of your statement, but I did want to say at this point that I considered this 6444056-pt.
question very carefully. Incidentally, I voted for the increase in the minimum wage. Our State is predominantly agricultural, so therefore I was not motivated by any labor influence. I found that the wage paid, unless it was in some small particular area, was above the minimum wage, and agricultural help does not come in under that particular minimum wage anyway.
Mr. LOVELL. That is correct. I said it wasn't helping the farmer; I didn't say how much damage it was doing to him.
Senator THYE. You accused us of being instrumental. Mr. LOVELL. I say the tendency of Federal Government to constantly increase minimum wages and social security benefits by law is not helping the farmer.
Senator THYE. The Federal Government does not do anything unless Senator Ellender or Jim Eastland has had something to do with authorizing it.
Mr. LOVELL. We understand that. The reason I put the statement in is:
Further, farmers are answerable to the Sherman antitrust laws and we do not object to this. But if monopolies are bad, then they are bad even if they are labor monopolies, for we don't think organized labor would be any less likely to abuse its power than farmers. We strongly urge that laws be passed making labor unions answerable to the antitrust laws.
Surpluses are the major problem facing American agriculture yet 90 percent of our research money is being spent for increased production. We feel a shift in our research should be made to give more emphasis to marketing research.
It doesn't make too much sense to try to solve a problem which is really overproductoin by having everybody that is in the Extension Department trying to increase production.
The present farm program with rigid acreage controls has a tendency to freeze agriculture in the pattern that existed at the imposition of the controls. This point is well illustrated by a recent study of cotton production costs by the National Cotton Council. The report showed a variation of about 10 cents per pound between the highest cost areas and the lowest cost areas. The desirable thing would be for the high cost areas to shift to the more profitable agricultural lines. However, under the present law failure to plant the allotted crop results in the loss of the right to raise this crop, retarding the natural shifts. Thus cotton is being produced and added to the surplus at little or no profit to the farmer in order to retain a right to produce cotton at some future date. A greater degree of flexibility must be incorporated into the agricultural program.
In addition to the greatest possible flexibility the agriculture program should contain no limit on opportunity. It is the desire of a small farmer to become a larger farmer, that is American tradition. Laws which define small farms at any given level are detrimental to opportunity. Certainly a 5-acre cotton farmer is a small farmer but so is an 8-acre cotton farmer.
To give special consideration to the 5-acre man will hurt the 8-acre man and limit the opportunity of all small farmers.
Any country's standard of living is inversely proportionate to the number of people engaged in agriculture, therefore any law which
limits opportunity in agriculture will ultimately reduce the standard of living as a whole. We especially deplore the tendency in some quarters to doom farmers to a low standard of living for all time by supporting the first few thousand dollars gross income at a high level, say, 100 percent of parity and reducing the support price on the subsequent income at graduated intervals. Such a law would doom the agricultural population to a substandard role for all time. American farmers want the right to grow and progress as well as any other business. You would not consider a law that would limit the gross sales of a department store.
To summarize, Louisiana cotton farmers are going broke under the present law. We would go broke if supports were raised to 100 percent and the rest of the law unchanged-it might take a year longer. We doubt if you could return to a free agriculture, certainly it would take several years to do so. The agriculture credit structure is too deeply involved with price supports to allow any sudden shift in policy without disastrous results. But basic changes in the agriculture program must be made. We must produce the most desirable product, have increased flexibility to allow natural shifts to occur without artificial hindrance and product controls.
Agriculture does not desire to be allowed to operate as a monopoly. Such power would be too great to entrust to mere humans. But if we operate as free, independent, competitive units we have a right to be protected against monopolistic practices in the cost of services we must purchase.
Now, the present farm program with its rigid controls has a tendency to freeze agriculture in the pattern that existed at the time the controls were imposed. This point is well illustrated by recent study of National Cotton Council on production costs report showing variations of 10 cents per pound between highest cost area and lowest cost area. The desirable thing would be for high cost areas to shift to more profitable lines of agriculture. However, under the present law failure to plant allotted crop results in loss of right to raise this crop and retarding what would be a national shift. Thus you have cotton being produced and added to surplus and little or no profit to farmer in order to retain rights to produce cotton in the future.
We must get a greater degree of flexibility into our control program. I speak there primarily of a number of farmers I know from experience growing cotton merely because they don't want to give up allotments.
Senator Young. If it wasn't for the present price support program, what level do you think cotton would be sold at?
Mr. LOVELL. With present surplus?
Mr. LOVELL. It would go to 5 cents a pound. You have a year's consumption on hand.
Senator YOUNG. Do you advocate lower supports?
Mr. LOVELL. I advocate that supports be at the highest level not to interfere materially with a free market.
Senator YOUNG. How long would that have to be now?
Mr. LOVELL. At present my best guess is if you reduce price support on 11/32 cotton to what it would be if you change parity base, that would be sufficiently low. You would have actually lowered price support of cotton of course, because now cotton is supported above 90 percent.
Senator YOUNG. Would you make it rigid at that amount?
Mr. LOVELL. The question of flexibility versus rigid price supports has been very confused. The desire of the people that proposed the flexible price supports was to allow a transition from commodity to commodity and not peg the relationship of the commodities together. If you are asking me do I think flexible supports will solve the problem in the end, no, but had they been imposed at the time they were passed we may not have gotten the problem.
I would like to illustrate by saying something. You know that it wasn't many years ago that it took six cows to buy a mule. Now it would take 10 mules to buy a cow. What if you had tried to control the relationship between mules and cows where it existed 10 or 15 years ago? Where would you be today?
Senator YOUNG. I think the parity formula itself if you had one on mules would indicate a much lower price than it used to be.
Mr. LOVELL. Haven't lowered the price. You put the rigid on and kept it there.
Senator Young. Parity is only a Government definition of what is supposed to be a fair price. If a fair price for a mule 20 years ago was $200 and now you don't use it much it might not be more than $75 per head.
Mr. LOVELL. I speak of relationship between commodities. The idea of the original concept of flexibility in price controls was to allow the shifts on the farm from commodity to commodity but it won't solve the problem now. We might as well forget it.
Senator Young. The previous witness indicated how we have done a pretty good job of shifting under the present program.
Mr. LOVELL. Yes.
Senator Young. Are you speaking for yourself or a farm organization? Mr. LOVELL. I am speaking for myself. Senator YOUNG. Are you an official of a farm organization? Mr. LOVELL. Yes, sir; chairman of the cotton group of the Louisiana Farm Bureau Federation.
Senator THYE. I would like to ask a question or two of Mr. Lovell.
What would you suggest that we shift to under the flexible system, taking into consideration all agricultural commodities?
Mr. LOVELL. I don't think you can solve your problem by flexible price supports. You might have avoided it having happened but as you understood me to say I don't think that is so.
Senator THYE. Of course all the pipelines are full.
Senator THYE. There might have been some who thought a year and a half ago that it would be a good idea to shift to pork production, but it is obvious too many headed in that direction.
Mr. LOVELL. That is correct.
Senator THYE. The philosophy of the flexible system came at a time when you had an embargo on the exporation of fats and oils of all kinds because this Nation was in dire need of them. That was not many years ago.
Mr. LOVELL. That is correct.
Senator THYE. Had there not been this embargo, there would have developed an inflationary trend in the price of oils, such as linseed and cottonseed and soybean seed oil. The flexible theory was written to get a shift from, say, cotton if we were long, in that commodity, or shift from wheat, if we were long there, or a shift from corn, if it was long, to a shorter crop in the northwest such as flaxseed or soybeans. However, the pipelines are now full. I couldn't divert to any other commodity, and therefore the flexible philosophy rests only on the volume or the surpluses that exist in a given commodity. Therefore, having made this little explanation of my thinking may I ask you this question:
Is there any other recourse at the present time except reduction of the overall agricultural plant?
Mr. LOVELL. I would like to make one further point.
Senator THYE Cannot you answer the question whether or not in your opinion the farm plant is too big?
Mr. LOVELL. Before I answer that question, if I may, I would like to make one other point, since I know what the question is leading to and I want to be
Senator THYE. I am glad you anticipate what my thoughts are.
Mr. LOVELL. I would like to say one further thing. In the agricultural program to summarize must have a greater degree of flexibility must produce a product that is wanted by the markets and must not be supported at a detriment to the consumption of the commodity and if production controls are determined to be necesary they must be written so that they will work.
Now, your present production controls are no more production controls than the man in the moon. We are producing 15 million bales of cotton this year and if you plant next year you will produce another 15 million bales.
Senator THYE. The question is, do we amend the low? Here are five of use sitting, who serve on the Agriculture Committee, and we are going to have to express our wisdom in our votes. We are seeking information from the grassroots to determine what would be the best course of action and how we should vote to get on this course.
Therefore, I ask you this question: Is the number of acres tilled and harvested annually too great when we consider our domestic consumption needs and our ability to sell abroad? Now understand this, we have voted $1,700 million in Federal funds for the promotion of export sales in all commodities in the effort to recapture foreign markets or to expand existing foreign markets. We haven't failed you. We have also adequately provided for the school-lunch program. But the fact of the matter is that we have a year's supply of wheat on hand if we never turned a threshing machine wheel. We have practically, as you have stated yourself, a year's supply of cotton. We know that we have an ample supply of dairy products. Where do we go now then unless we reduce overall acreage?
Mr. LOVELL, Could I answer the question by a little bit in wording? Let's go back to see what happened. During the war and postwar period you constantly asked American farmers to increase production. They did not materially increase production. The number of acres in cultivation was not increased. I think it decreased. Production was increased by increasing productivity per acre.