Mr. LOVELL. Everything below that and everything above that would have to be averaged so that the average is whatever you support the base figure at. As I understand, that is the way the law is worded. Seven-eighths would be The CHAIRMAN. Would you be more drastic in trying to discourage production of this cotton that isn't in demand; isn't wanted by the mills? Wouldn't it be better to discourage production to the point where you could use that lower-grade cotton to compete on world markets? Mr. LOVELL. Yes, that would be the intention of the change. Senator EASTLAND. This low-grade cotton is used by the mills at a price; is it not? Mr. LOVELL. That is correct. Senator EASTLAND. It is marketable if the price is right. Mr. LOVELL. Yes. My guess is you would lower the price of seveneighths cotton about $30 a bale, maybe better. It depends on-you would have to average it out. You couldn't pick out just one grade and say I want to put you out of business and nobody else. This would discourage the present tendency to overproduce the shorter staple lengths and make the supply picture less artificial. Further, we think the Government should take immediate steps to remove all cotton of less than 1 inch staple from the loan and dispose of it. We feel that at present some markets for 1 1/16 cotton are being lost to rayon because of the shortage of this grade of cotton. Any program you work in the face of a 13-million-bale surplus will not work. It is a handicap. The CHAIRMAN. You suggest it be sold to whoever will buy it at whatever price? Mr. LOVELL. Yes, in whatever currency they could buy it. Mr. LOVELL. We can keep it until such time something in that country of an unprocessed nature is available. The CHAIRMAN. I have just returned from abroad and I have learned that in the soft-currency area it is all right for us to sell our surpluses there and accept their currencies, but when we buy from them tin and rubber and other things we pay with dollars, they won't accept their own currency. You know who is behind that, our friend, the United Kingdom. Mr. LOVELL. I realize it is a problem, but I do think America would be better off to retain surplus of currency in that country for an indefinite period. The CHAIRMAN. That is subject to going up and down. I have seen the franc lose a third of its value over a few days and the lira in Italy lose almost half in a short while. You wouldn't want to pile that money up to where you might get zero for it. Mr. LOVELL. I said we would be better off if that was the situation, if we couldn't do anything about it, because no farm program will work if you put 13 million bales of cotton around its neck to start with. The expansion of cotton production outside the continental United States and synthetics throughout the world poses a grave threat to the cotton industry of the United States. We feel that the Federal Government should stop all aid in the form of money and know how 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 THYE. 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 64440-56-pt. 5- -28 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? Senator YOUNG. Yes. 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. How low would it have to be? Senator YOUNG. NOW. Mr. LOVELL. At present my best guess is if you reduce price support on 112 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. Mr. LOWELL. Yes. 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. |