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Sufficient quantities of foodstuffs have been available for export to needy countries wherever such has been deemed in the best interests of world peace. Sufficient reserves are available to offer much reassurance in event of another war.
Many thousands of farm workers who have been reared and educated on farms have been released to industry to increase the production of nonfarm goods and services. This has contributed to a continual improvement in the standard of living of the average American citizen.
No further elaboration seems necessary to establish the fact that from the point of view of service to the Nation agriculture is strong.
From the point of view of reward to itself agriculture is not doing nearly so well. Agricultural prices and farmer's net income remain a major weak spot in the current generally strong economic picture. Agriculture has made tremendous strides in efficiency as have most segments of our economy. However, a very large share of these gains has been passed on to the consuming public. Increasing percentages of gross farm income are going for materials and services provided by industry. Rising costs for these items, which include increasing wages to industrial labor, accompanied by declining farm prices, are squeezing net farm income lower and lower. This, I am sure most of us agree, represents the major problem in agriculture.
Having made these general comments I would like to turn now to the current situation in North Carolina agriculture.
There were 4.3 million people in North Carolina in 1954. The rural farm population totaled 1.25 million or 28.4 percent of the total population. Nearly 60 percent of the people were so classified in 1920 when total population was 2.6 million. Between 1920 and 1950, the rural farm population decreased 8 percent. During this period, the rural nonfarm population increased 154 percent and the urban population increased 153 percent. Net loss out of agriculture was 341,000, most of which occurred in the 1910–50 decade. This shift out of agriculture is much smaller percentagewise than in other Southeastern States.
LAND IN FARMS, AND LABOR RELATIONSHIPS Compared with other States, North Carolina has very little land per farm person. North Carolina ranks 47th in amount of cropland per farm person with a total of 5.1 acres per farm resident. In terms of cropland per male farm resident 14 years old and over, exclusive of those employed in nonfarm work, North Carolina has only 18.9 acres and ranks 48th among the States.
The most profitable use of land and labor--that is, the products which it is most profitable to produce depends on the amount of labor the family has in relation to their land and other capital. Historically North Carolina farmers have attempted to increase their farm incomes by producing crops which use large amounts of labor per unit of land. These crops return a high value per acre of land. On the other hand, they yield a low return per unit of labor employed.
Tobacco and cotton are major sources of income to North Carolina farmers. The amount of labor used and the return per hour of labor and per acre of land in the production of these commodities are compared with other North Carolina farm products in table 1. The return per acre of land used in the production of these commodities is higher than for other major farm commodities. The return per unit of labor, however, is low.
TABLE 1.–Labor requirements and income above direct cash expenses per acre and per hour of labor used, selected enterprises produced with recommended farm practices in North Carolina
Source: C. R. Pugh, Cost of Producing Farm Products, revised, Department of Agricultural Economics, North Carolina State College. Based on 1952-54 product prices and 1955 prices paid for items used in production.
In recent years efforts have been made, with considerable success, to diversify agriculture by the use of more livestock and feed crops which provide a higher return per hour, a fuller employment of labor, and a better soil conservation program. This has been possible as yields have increased and row-crop acreages have been reduced.
INCOME Cash receipts from crops, livestock, and livestock products in North Carolina totaled $928 million in 1954. This is 32 percent above the average of $899 million for the period 1950–53. Cash receipts in 1955 are expected to be equal to or above the 1954 level, perhaps exceeding the record year of 1951 when receipts totaled $954 million. With the exception of hurricane-damaged areas in the coastal plains, bumper harvests are expected over the State.
Despite high total cash receipts from farm marketings in recent years, considerable damage from droughts, hurricanes, late frosts which destroyed most of the fruit crops this year, and hail damage in some local areas has created serious problems. Crop and livestock losses and farm property damage from hurricanes alone in 1955 have been estimated to total $91 million in 28 eastern North Carolina counties. These counties have been declared eligible for emergency credit and other disaster-relief measures. In 1954 farmers in dire circumstances in 87 counties were declared eligible for emergency credit as a result of severe drought. Of these 87 counties 39 were eligible for livestock feed under the emergency feed program. Drought conditions were more general in 1952 and 1953. A limited number of farmers in all counties in the State were then eligible for emergency credit.
TABLE 2.-Cash receipts from farming, North Carolina, 1940-54
Source: Cash receipts from marketings, by States and commodities, calendar years 1924-44, January 1945, various farm income situations.
Average cash receipts from farm marketings per farm in North Carolina was $3,464 in 1954. The 1955 Census of Agriculture reports, however, that 64 per. cent of the farms in the State reported the value of farm products sold in 1954 to be less than $2,500 (table 3).
TABLE 3.–Farms by economic classification, North Carolina, 1950-54, compared
1 Provided that less than 100 days of off-farm work is performed by the operator and that the income of the operator and members of his family from nonfarm sources is less than the value of all farm products sold.
2 Farms with a value of sales of farm products of $250 to $1,199 on which the operator performed 100 or more days of work off the farm or on which the nonfarm income received by him and members of his family exceeded the value of farm products sold.
3 Farms with a total value of farm products sold of less than $250. Abnormal farms omitted. Source: U.S. Census of Agriculture, 1950 and 1955.
Average net income per farm household in North Carolina in 1950 has been estimated at $1,650. Income per nonfarm hosehold in 1950 was approximately 50 percent greater than the income per farm household.
Personal income per capita in North Carolina, including both the farm and nonfarm sectors, was $1,190 in 1954. Compared with other States, the per capita personal income rank of North Carolina was 43 in 1954, 42 in 1950, and 43 in 1945. Personal farm income in the State was 13 percent of the total personal income in 1954, whereas the rural farm population that year is estimated to have been approximately 25 percent of the total population. Personal farm income differs from farm marketings in that personal income is primarily a measure of net business earnings plus wage and salary payments received by hired farm
labor. It includes Government payments, the value of home-produced food and fuel, the rental value of farm dwellings, and changes in crop and livestock inventories. Thus, although the State ranks low in personal income per capita, the farm sector has a lower per capita income than the nonfarm sector, even when factors other than net cash farm receipts are included.
THE PRICE-COST SQUEEZE
The net incomes of many farmers have declined in recent years. This has been due to the price-cost squeeze. The prices that farmers receive have been somewhat lower than the postwar peaks. On the other hand, prices farmers pay for production and consumption goods have risen. Due to the effectiveness of the tobacco program and to the heavy influence of this crop in North Carolina agriculture, the ratio of prices received to prices paid is somewhat more favorable in North Carolina than in the United States as a whole.
Falling farm prices are due to the supply-demand situation. The supply of farm production has outstripped demand. Declining exports are responsible for part of the decrease in demand. The characteristics of the demand for farm products is such that an oversupply results in sharp price dips.
The decline in farm prices has been aggravated by a low-price elasticity of demand for farm commodities. When the supply of farm commodities increases, the percentage decrease in price is greater than the percentage increase in quantity purchased. This varies widely from one farm commodity to another and suggests the difficulty of handling all commodities by the same formula. Prices of farm commodities are further depressed by a low-income elasticity of demand for farm commodities. As real incomes of consumers increase, they spend a smaller proportion of their incomes for farm commodities. The capacity of individuals to consume food and clothing does not increase proportionately to increases in income. Hence, as consumers' real incomes increase, a larger proportion is spent for nonfarm commodities.
An additional factor contributing to the decline in incomes in agriculture has been the decline in purchases of farm products by foreign countries. The dollar shortage and high prices have restricted foreign sales of United States farm products. The export market is an important outlet for farm commodities grown in North Carolina. In 1954, receipts from tobacco and cotton, which are important export commodities, made up 62 percent of the receipts from the sale of farm products by North Carolina farmers.
In 1954, about three-fourths of the cash receipts from farming in North Carolina came from crops and one-fourth from livestock and livestock products, Receipts from tobacco made up more than one-half (53.5 percent) of total cash receipts. Cotton accounted for about 8.3 percent and peanuts 3.5 percent of total cash receipts.
The production of crops and livestock in North Carolina have varied over the past several years with weather conditions and other factors. To minimize weather effects, data for the 5-year period, 1925–29, are compared with similar figures for 1950–1954. The data show some rather significant changes over this 30-year period.
Tobacco production has more than doubled and cotton production has decreased 56 percent. Peanut production has increased 32 percent. Production of corn and wheat increased by 64 and 107 percent, respectively, with only small increases in acreage. Expansion has occurred in the acreage and production of soybeans, grain sorghum, oats, hay, lespedeza seed, and improved pasture. Over this period, milk production has increased 50 percent and egg production has more than doubled. Broiler production has risen by nearly 400 percent. The number of cows has increased by 60 percent, and the number of hogs by 29 percent, while the number of sheep decreased 45 percent.
More recent changes in the production of basic commodities in North Carolina are shown in tables 4, 5, and 6. In summary, here is what has been taking place.
Tobacco.—The yield of flue-cured tobacco increased about one-third from 1940 to 1955. With an acreage in 1955 about 32 percent above 1940, production was almost doubled. Production and yield in 1955 were at record levels. The record yield in 1955 has been due to increases in technology and extremely favorable weather.
Cotton.—The acreage of cotton harvested in 1955 is about 56 percent of the 1940 acreage. There has been no consistent trend in cotton yields. Total production in 1955 was the lowest on record, except for the extremely poor cotton year of 1950.
Peanut 8.—The acreage of peanuts increased substantially during World War II and has been cut back drastically since the peak of 1945. Yields of peanuts have shown an increase in the past 5 years, due to improved varieties and better fertilization and cultural practices. The production of peanuts in 1955 was about 22 percent below the high of 1944. Right now, it looks like the production in 1955 will be below estimates. Quality and size of kernels are poor due to unfavorable weather.
TABLE 4.-Changes in acreage, yield, and total production for basic commodities
in North Carolina, 1940–55
Corn.—Corn acreage has shown a steady decline over the past 15 years, while yield has almost doubled. With an acreage about 16 percent below 1940, production 1955 is expected to be about 55 percent above 1940.
Wheat.-The acreage of wheat decreased about 25 percent from 1940 to 1935, while total production was slightly higher. Wheat yields have increased about one-third over the 15-year period.
Dairy.The average number of cows milked in North Carolina was 333,000 in 1940. This increased to 384,000 in 1944, then declined slightly, but was back up to 377,000 in 1954. Milk production per cow increased from 3,930 pounds in 1940 to 4,520 in 1954. Total milk production in 1954 was 1.7 billion pounds. Of this amount, 754 million was used on farms, 120 million retailed directly from farms, and 830 million sold to dealers.