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CONTINUED PRESENT PROGRAM AND POLICY

In the light of experience, we harbor no illusions as to the ultimate outcome of continuing on our present course. It involves briefly:

(a) reduction of production

(b) reduction of price

(c) loss of markets

(d) increased foreign production of cotton

(e) increased production of synthetics here and abroad.

We suggest that this program constitutes a complete blueprint for the slow suicide of the American cotton industry as it now exists.

Already underway is the migration of more and more families from the farm. Already apparent is the growing concentration of farming in the hands of largescale, corporation-type farm operators.

Even the advocates of this type of agriculture admit that the farm community will be greatly weakened under such a system, and that under it agriculture will cease to be the great factor of strength in defense of the Nation and of the free world which it is today.

Cuts in farm prices have never reached the consumer. Continuously, what the farmer buys goes up, and what he sells goes down. Experience demonstrates that farm price cuts do not make markets. Neither do they produce desirable shifts in production totals. Currently they simply reduce the farmer's income. Ultimately, they threaten the stability of the national economy. Right now, administration policy has given away at least one-half of the American cotton farmer's share of the world market. Unless conditions change, it is gone for good. Three years will see the end of all American cotton in the world market if we pursue the same course. This course leads to extinction.

NEW OPERATING POLICY

Admission of our mistakes and adoption of an honest, straightforward operating policy can reverse the dangerous trends inherent in the present program. We suggest the following revisions of policy:

(a) Adopt a fair and positive rule to replace the mathematical system which presently forces the farmer to produce less each year, and to accept less for each succeeding crop.

(b) Act to insure a world market for not less than 5% million bales of American cotton each year, adopting whatever competitive pricing devices that may be needed to insure the suggested volume.

(c) Impose reasonable and equitable import restrictions against cheap foreign textiles. (Senate bill 2702 is a step in the right direction, requiring recognition of national responsibility for the plight of the cotton producer.) (d) Establish and maintain price supports at not less than 90 percent of parity, and adjust acreage allotments upward as rapidly as conditions permit. (e) Revise the loan program to eliminate eventually undesirable cotton. We suggest that this adjustment be made through premiums and discounts that would discourage production of undesirable cotton. To change the loan base from Middling seven-eighths inch to Middling inch would, in our opinion, result in a back-door cut in price for all grades and staples and would not accomplish the desired objective. The USDA reports that it would be impossible to state the effect a change in the base loan rate would have on the various grade and staple combinations. This is true because the board of directors of CCC approves the schedule of premiums and discounts individually for each loan program. We suggest that the survival of the American cotton farmer as a solvent and productive unit of the Nation's economy depends upon four things: fair access to world markets, price supports at survival levels, production of desirable cotton, and the reasonable acreage allowance which these reforms would naturally produce.

With these weapons the American cotton farmer should resist the encroachments of foreign growths and of synthetics wherever produced.

A NEW APPROACH

Scrap price-support programs, either stable or sliding scale, and adopt an entirely new approach to the cotton problem. Such an approach might be through the production payments route, or the so-called two-price system. In considering the production payments route, we suggest:

(a) That the minimum national marketing quota of 10 million bales be continued.

(b) Allocate to each farmer (on a history basis) his proportionate share of the national quota and pay to each farmer the difference between the price he receives for the cotton he produces and the price at 100 percent of parity. ( (Sales prices to be determined according to average prevailing prices, quality, and other pertinent considerations.)

(c) Assign to each farmer a "secondary quota," representing his proportionate share of 4 million bales, paying him the difference between the price he receives for this production and 50 percent of parity; subject to the same determinations.

It is confidently believed that need for the secondary quota would quickly disappear since it is proposed as a safeguard against unrealistic production during the early life of the program. Relaxation of the minimum national quota as the program progresses would justify a systematic reduction of production payment guaranties, possibly at approximately 5 percent of parity for each millionbale increase in the minimum national allotment.

The suggested approach is particularly attractive in that it separates the producer from other segments of the cotton industry, leaving the farmer some degree of freedom in adjusting production to his personal need and situation. Estimated costs would not exceed those of administering the present program.

In our opinion, the two-price system and the production-payment plan will produce eventually the same end result. Major differences would be in the administration of the two programs. Under the two-price program it would be necessary:

(a) To maintain the current loan system for the amount of cotton produced by each farmer under the national marketing quota.

(b) Provide special considerations for American cotton mills, and perhaps other segments of the cotton industry.

The two-price system points to the Commodity Credit Corporation becoming finally the marketing agency for all American cotton. Administration of such a program would be extremely complicated, and the logical tendency would be toward disruption of many or most of the normal channels of trade.

MOVE CCC STOCKS

Regardless of the choice of program, immediate governmental action to dispose of current stocks as rapidly as possible into world trade would be basically necessary.

In our opinion there is no way, absolutely no way at all, for this country to reestablish or maintain a healthy and prosperous cotton economy unless stocks held by the Commodity Credit Corporation are reduced to a level consistent with normal demand, plus sensible reserves for national security.

FARM CHOICE

In our opinion there has been too much talk by people and organizations purporting to represent farmer thinking, and not enough from the farmer himself. We urge that the farmer be given an opportunity to express his views on the type of program that he thinks best suited to himself and his neighbors. If the farmer were allowed to choose between a continuation of present programs and policy, a new operating policy for the current program, and a new approach to the cotton problem, it would erase once and for all any doubts as to what the farmer would really like to have. It seems only fair to make this opportunity available, and we sincerely recommend that the Congress provide an opportunity for the farmer to vote on the type of farm program that he wants at the same time he votes in a marketing quota referendum.

SOIL FERTILITY BANK

We note with misgivings a growing sentiment for a plan for withdrawing American acres from production through some sort of Federal rental or other payment arrangement and described by its proponents as a fertility bank. Posed in general language up to this time, the plan apparently implies Government expenditures with a dual purpose of relieving the present financial plight of the farmer and, with the same payments, building into the Nation's soil a reserve of fertility against possible future need

In the light of our present knowledge the proposal appears impractical, expensive, and visionary in the extreme.

We submit that the present programs of the Soil Conservation Service, imple mented by incentive payments through the Agricultural Stabilization and Conservation Service are husbanding the fertility resources of the Nation by present methods in an adequate and satisfactory manner; we submit that minor expansion of these services to meet possible contingencies would be both sensible and economical should greater need arise in the future. Although we heartily endorse and fully appreciate these services and their contribution to the national economy, we see no present need for any extensive enlargement.

Farmers through their own initiative, and with the adequate assistance of present Government programs, are currently both increasing crops and improving the farmlands of the Nation. Food production has increased by 40 percent during the past 15 years. From a standpoint of man-hours per unit of production, it has increased 90 percent since World War II.

In our opinion agriculture cannot only keep pace with population growth, but can supply any foreseeable emergency demand in the future. Increasing per acre production, it would seem, is the best possible evidence that American soils suffer neither from lack of fertility nor careful management and use. The evidence at the moment points to more, not less, farm products per person in the United States.

We conclude, therefore, that proposal of a fertility bank is less to safeguard our future fertility than to justify Federal payments to farmers for withdrawal of producing acres. The people of this country are now enjoying the cheapest and healthiest diet in the world. One hour of labor can be traded for more and better food than has ever been possible before in the history of the human race. There is no reasonable basis for doubt that agriculture, even without benefit of future scientific discoveries, can meet any reasonable challenge of the future.

A soil fertility bank through the use of Federal land rentals would be almost impossible of practical administration. It would further encroach on the farmer's personal liberty and judgment, precluding him from gearing his operations to personal need or changing conditions. Such a bank would produce many impressive changes. That it would, to any satisfactory degree, solve the present difficulties of the farmer, we sincerely do not believe.

SMALL COTTON FARM

We recommend a national reserve of not to exceed 1 percent of the national allotment to be established and to be in addition to the national allotment, and allocated to States on the basis of need for adjustments in small farm allotments. Such a reserve would relieve a difficult situation in those States and counties having a high percentage of small farms. The matter of small farm allotments is a national problem and we urge that it should be handled as such.

CONCLUSION

In conclusion we affirm that agriculture and agricultural production must finally be fitted into a national economic scheme contributing to and sharing in the Nation's progress and prosperity.

We recognize the fact that sacrifices and adjustments will certainly be involved in such a project; that for some of us it may produce major changes in our way of life. Yet, we believe that such a project would be welcomed by most of our members and their fellow farmers as resolving the cloud of doubt, the pinch of purported remedies, and the continuing threat of economic extinction.

APPRECIATION

To the honorable members of this committee for their courtesy and attention, our sincere thanks. In furtherance of your purpose, the services of officers and members, employees and all facilities of this association are at your call at any time.

Thank you.

Mr. BRACEY. First of all, I want to say that Missouri Cotton Producers Association is affiliated with the American Cotton Producers Associates and we endorse the statement of Mr. Cortright. However, I think we are up at a point where farmers are searching for a new

way of maintaining a farm income. I am going to suggest a thought, what I term more or less a new approach. That is to scrap our pricesupport program altogether, stable or sliding scale, and consider production payments or two-price system.

First of all, I would like to suggest here what we term as a production-payment route. First minimum national marketing quota of 10 million bales be continued and, second, allocate to each farmer on a historic basis his proportionate share of national quota and pay to each farmer the difference between price he receives for cotton he produces and price at a hundred percent of parity.

Sales price to be determined according to average prevailing prices, quality, and other pertinent considerations.

Th CHAIRMAN. Is that in addition to what Mr. Cortright stated? Mr. BRACEY. This is entirely different from what Mr. Cortright stated, I think.

The CHAIRMAN. Can you tell us the difference in the proposal you now make and the so-called Brannan plan?

Mr. BRACEY. Well, sir, I don't know exactly what the Brannan plan entails.

The CHAIRMAN. The Brannan plan entails production payments along the line you suggested. That is, it would be similar to the wool law.

Mr. BRACEY. That is right.

The CHAIRMAN. The wool law, as you know, provides that there will be a free market for wool, sell on the free market and whatever difference there is between free market price and whatever is agreed upon the Government would pay the difference.

Mr. BRACEY. That is correct.

The CHAIRMAN. That is along the same line as the Brannan plan, so-called Brannan plan, as I understand it.

Senator YOUNG. Could I ask a question?

It

The western wheat growers are proposing a two-price system and the Grange, too. It is a wheat certificate plan, self-financing. would provide a hundred percent support for all wheat used for human food. The Federal Government would pay the difference between what the farmer actually got and full parity by a wheat certificate. The plan through a tax on bread, and so forth, would be selffinancing. It is hard to explain here. Would yours be a self-financing plan on the order of the Grange, or strictly one of production payment out of the United States Treasury?

Mr. BRACEY. It would be out of Treasury payment strictly.

Senator EASTLAND. What is the difference in that and the Oscar Johnson plan that was the law at one time back in the early thirties? In fact, it was the cotton program.

Mr. BRACEY. As I understand it, sir, not a great deal of difference. But it would allow the farmer to exercise a certain amount of control over his production and at the same time the price factor as a detriment to moving cotton on the market. That is the thought that prompted this suggestion.

Senator EASTLAND. How did it work back in the thirties when it was a law? Did it work all right?

Mr. BRACEY. All I can say is from what I read and heard. I understood it worked quite well.

The CHAIRMAN. Would this payment be made only on what you sell abroad or on the entire crop?

Mr. BRACEY. The difference between market price, sir, and a hundred percent of parity on the minimum national quota.

The CHAIRMAN. Proceed.

Mr. BRACEY. We propose a secondary quota that would be the difference between 10 million and 14 million bales and on that portion that he be supported at 50 percent of parity. The reason is to allow the farmer enough cotton to stay in business and at the same time to hold production down the first year or two while the program gets underway and not get this to an all-out cotton fight again to plant as much as we can. We could produce 20 million bales the first year if we were turned loose. We suggest once it gets underway if it gets proper consideration that probably we could eventually forget about the 14 million bales altogether and reduce the payment 5 percent of parity and increase the minimum a million bales and reduce the parity price 5 percent each time. That is essentially the same thing as the twoprice system except you take everybody out of the picture except the producer himself and the Government. In other words, shipper isn't concerned with it, your miller isn't concerned because he can buy cotton on the open market and it doesn't confuse the issue for the spinner. That is the objection on the two-price system. He has to have protection because that is our best market. That is about the sum and substance of it because we all think the first things have to come first, and that is to move what we have on hand.

Another thing we would like to see if we can get to it is allow the farmers a choice in what type of farm program they have. At least a vote on it. When they vote in the marketing quota referendum let them vote for two-price or flexible or sliding scale or stable. We think it would be something we have never had before and we could get at least past this argument as to what the farmer would want. The CHAIRMAN. Would you think it necessary that the program submitted would have to have a majority vote of the farmers, or what? Mr. BRACEY. I hadn't thought too much. Two-thirds majority like the marketing quota vote would be all right.

The CHAIRMAN. Suppose you didn't reach two-thirds on any one proposition? Would the whole thing go out of the window?

Mr. BRACEY. We couldn't have that. We would have to have a safeguard.

The CHAIRMAN. You can see the difficulty that would prevail if your method were to be followed.

Mr. BRACEY. One other comment on the soil fertility bank. We think from the standpoint of diverted acres it would be all right, but to adjust production, we don't quite think it will do it and we don't think we could justify it as building up reserves against future need because our soil is under pretty good care now, our yields indicate that and if it is going to be used to offset declining farm income and restricting diverted acreage, anybody would be all right, but to adjust production we are afraid it wouldn't work and we have heard it advocated for such reason.

Those are the only things we have to suggest here except the things that have already been said. I do appreciate this opportunity. Thank you very much.

64440-56-pt. 5—31

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