organizations, particularly the Farm Bureau, the Grange, Farmers Union and all other organizations, to try and get together and get their membership together, get their committees together so as to formulate plans to devise ways and means of solving the problems of cross compliance and what to do with these diverted acres and also on ways and means of establishing the so-called fertility bank of which we have heard so much. If any of you folks in this audience have any evidence or any ideas on the subject this committee would certainly appreciate it. You may proceed, sir. Mr. COLVARD. One further comment on that point. It is very difficult to ascertain within the total statistics just what shifts take place individually but on corn, for example, in 1940 we were producing about 2,441,000 acres. In 1955 we had 2,053,000 acres. So that I think it would be safe to say while there may have been shifts in given areas, we have increased slightly in soybeans but very small acreage, something like a hundred thousand acres, but I think one other point should be made on the diverted acres in North Carolina and that is that the crops to which these diverted acre programs apply most widely occupy very small acres and in that respect it may differ somewhat from other States. Our tobacco, for example, 53 percent of our income, occupies this year only 665,000 acres against over 2 million for corn. We have only a few counties in corn. One other point that I would leave open for you is this matter of promoting industry in agricultural areas. That gets close to the heart of the thing that could be controversial. The CHAIRMAN. You mean promoting industrial plants? Mr. COLVARD. Let me develop that. The CHAIRMAN. That is more or less left to the local people to encourage industry to come here. Mr. COLVARD. In our Piedmont area where a lot of our smaller farmers are on a part-time basis, they have been able to supplement their income very substantially and in the area that prevails their living standards are better. The CHAIRMAN. I would like to see the farmer go back to the farm and not depend on industry. We want to make farming attractive enough so he can get all his income on the farm. We have a bill before us now to provide ways and means of aiding individuals engaged in part-time farming. That may be all right. I am for it to a certain extent but let's devote our time to making it profitable for a farmer to produce all his income on a farm and let's make it attractive enough for him, so that he will not have to depend on industry. That is my own personal view. Mr. COLVARD. What I have attempted to do, and have done much more fully in the statement, is to give a little background of the general agricultural pattern and I would defer the discussion to others. The CHAIRMAN. All States are not as fortunate as the State of North Carolina to have these diversified industries, cotton mills and tobacco factories, processing plants, and so forth. It may work well here but in North Dakota, South Dakota, Minnesota, you may have difficulty in assisting them in that regard. Mr. COLVARD. We do have a different problem in that we have so little farmland per farm person. The CHAIRMAN. Any questions? If not, we thank you very much, Mr. Colvard. STATEMENT OF HARRY B. CALDWELL, MASTER, NORTH CAROLINA STATE GRANGE, GREENSBORO, N. C. Mr. CALDWELL. Needless for me to say, we are happy to have you and the members of this committee come to North Carolina for this hearing. It has been my good fortune to know you personally, and members of the Senate Agriculture Committee, for many years and we have followed your work with great interest. We appreciate the many fine things your committee has done to help agricultural people, not only in North Carolina, but throughout the Nation. As a farmer I want to commend you for coming here and we express our thanks to you for your untiring efforts in trying to hear witnesses and get information that will be made available to you here today. The CHAIRMAN. Don't throw all the bouquets at me. All the committee has worked and my good friend, Harold Cooley, has been at the forefront trying to solve the farm problems. We work hand in hand and we hope that the bill he sent us and which is now before our committee may be used as a vehicle to get a bill enacted in the early part of the next session, not later, I hope, than the 15th of February. Mr. CALDWELL. We have had the opportunity to tell Harold how much we appreciate him down here many times, but haven't had that privilege with you before, and we wanted to say it while you were our guest. I am not going to take time dealing with the background of this problem. The CHAIRMAN. We know what the problem is and if you would only give us the key to the solution Mr. CALDWELL. I wish I had the key but I mention things that might be helpful. First of all, some of us believe that the disparity between farm and nonfarm income must be eliminated by increasing income of farmers if the Nation is to avoid disaster. There has been some tendency on the part of persons to assume that the problems of agriculture are the result of the increased income of working people and increased profits of nonagricultural segments of our economy. Some of us believe that the answer is not to be found by pulling them down, but rather by raising the income of agriculture so that we keep pace with the march of progress in the United States. I put that down as No. 1. We want to solve this problem by raising the income of farmers and not by lowering the general income level of the Nation. Now, I am not going to discuss all of the things in this brief; the brief will be for the record. I am going to pick out a few of the high points as we go through and I will talk informally. The CHAIRMAN. I wish you would do that. Your statement as a whole will be placed in the record at this point. (Mr. Caldwell's prepared statement follows:) I am Harry B. Caldwell, master of the North Carolina State Grange, and secretary of the Farmers Cooperative Council of North Carolina, from Greensboro. 64440-56-pt. 6—17 We appreciate this opportunity to present the views of our members on the farm problem to this great committee. We are happy to join with our own Senator Scott and others in welcoming you to North Carolina. The Grange is a general farm organization and we have members in all areas of the State. Our local or subordinate Grange units meet at least once a month. It is here that members-farm men, women, and young people discuss problems and prepare resolutions which are later acted upon by delegates at the annual State Grange convention. Our last convention was held in Goldsboro on October 24-26, of this year, and I am presenting the program adopted at that time. North Carolina is a great agricultural State. We have a larger number of small farms and we produce a variety of farm commodities so that this is a good place to get advice about the present program and suggestions for its improvement. Our members are alarmed by the continued decline in farm prices. We believe that the disparity between farm and nonfarm income must be eliminated by increasing the income of farmers if the Nation is to avoid possible disaster. This decline in farm income, which began in 1951, has occurred during a period when employment, wages, corporate profits, and national income were advancing to record levels. In fact, personal incomes in the United States have increased about 46 percent since 1948 while farm income declined about 36 percent. Business and professional income, salaries and wages, dividends, and personal interest income all showed significant growth during that period. This emphasizes the need for immediate action by farmers and their Government if we are to avoid the pitfalls which led to disaster in the past. North Carolina Grange members want a program which will provide abundant supplies on a sustained basis at prices which are fair to both producers and consumers; expand domestic and foreign consumption and markets; encourage the efficient use of soil, water, and timber resources; strengthen the farmer owned and operated farm unit; and provide a constantly rising standard of living for all farm families. The problems in agriculture are largely due to excess supplies. Production has been rising faster than effective demand, and some important foreign markets have been lost. I remind you, however, that this situation developed during a period of falling farm prices and rising consumer income. Consequently, there is little or no possibility of solving the problem by lowering prices at the farm level. Action of this kind is not likely to expand markets or bring about necessary adjustments in the level of production at this time. The net effect of a lower price-support policy will be a further cut in farm income. We recognize the complex nature of the problem and realize the difficulties in finding solutions which will be acceptable to all area and commodity interests. We believe that a commodity by commodity approach is desirable and necessary. Farmers must have a program which will take into account the shifts and changes in markets as they occur. We must also keep supplies in line with effective demand. Action of this kind will help farmers to get their income from the market place and thus reduce the need for price supports. EXPANDING MARKETS Any successful farm program must seek to expand markets. It is possible that more of the productive capacity of agriculture can be utilized as a direct result of an aggressive market promotion program. We have seen market patterns for cotton change radically in the past. The threat of foreign competition, and synthetics suggests the need for a comprehensive study of price, quality, and marketing procedures. There are some markets where price is not a factor, while it is the all important element in other instances. While there is little, if any, possibility that a lower price now will materially increase markets for cotton, we must recognize the effect of price on market demand as we face the future. We need a research program that will lead to lower production costs, improved quality and better marketing procedures There is also an urgent need for a greatly expanded program of utilization research. It will be possible for cotton to hold its own in the market place if we have a soundly conceived and adequately financed research program. By building a program in this manner, it should be possible to hold and expand cotton markets on a basis which will give producers a constantly rising standard of living. Anything less will not be acceptable to producers or in the long-time interest of the Nation. There is evidence that some manufacturers are blending synthetic fibers with Manucotton when it can be done without consumer knowledge or resistance. facturers will likely follow this practice more and more, and thus destroy a market for cotton unless steps are taken to correct this situation. Congress should enact a labeling law which will require the manufacturer to declare the fiber content of the fabric. This will protect the producers and consumers of cotton from practices carried on for the sole benefit of the manufacturer. Population growth will increase market demand in the long run, but it offers little hope for the immediate future. There are potential world markets for large quantities of agricultural commodities. Trade restrictions, lack of dollar exchange, competition from other surplus producing areas and the extremely low income of many people throughout the world present problems in need of attention. The world demand for food and fiber will increase as underdeveloped areas build up the earning power of their citizens or as other means are provided to supply them with their requirements. Some of our excess agricultural stocks should be made available to relieve suffering and to aid those areas in becoming more economically secure. Care must be exercised in the administration of surplus disposal programs so that the efforts of the people themselves to expand production and income will not be impaired or destroyed. Research can help farmers find and retain markets which would otherwise not exist. We hope that Congress will provide adequate funds to carry this research forward. Money spent in this manner will return dividends in terms of expanded markets, improved productivity, and better products. Our Government should be ready at all times to meet the problems of low income or unemployed groups within this country. This is not the responsibility of farmers or of a farm program and the expense should not be carried as a farm program cost. The possible use of a domestic food allotment program and similar devices should be explored. The special school milk program has helped to expand markets and should be reenacted on a permanent or continuing basis. We believe that additional world markets can be secured and maintained. We commend the administration for current efforts to expand those markets. The transfer of the agricultural attaches to the Department of Agriculture and the additional emphasis now being given to the problem by the Department is beginning to get some results. We favor adjustments in tariff rates consistent with the general welfare; simplification of customs procedures; and the use of trade agreements. We were pleased to note that the Department of Agriculture has been able to barter some farm products for strategic materials needed in this country. We hope that this practice will be followed whenever the mutual interests of the countries involved can be served. We are informed that some sales for local currencies have also been made during recent months. Here again is a possible method for expanding trade and consumption and we approve the practice. We also recommend the appropriation of sufficient funds to carry out the activities of FAO and the technical assistance programs. These agencies can assist the underdeveloped areas of the world increase their purchasing power and thus become strong, self-reliant members of the free world. It is our opinion that a domestic parity or two-price program, if safeguards are included to prevent dumping and an international price war, may be found helpful in expanding world markets for some agricultural products. It offers possibilities and we suggest that provision be made for its development and use with safeguards when agreed to by the producers of any export commodity. Consumer education and sales promotion can also help expand markets in this country for farm commodities. We recognize, of course, that a high level of employment and efficient merchandising are also essential in any program to expand consumption. While some expansion in consumption seems possible, it is our opinion that additional Governmental devises will be needed in solving the farm problem. We, therefore, recommend the continuation of price supports at levels which will be fair to both producers and consumers with adequate provisions to bring about desirable adjustments in production. We will discuss price supports first and then turn our attention to production adjustments. PRICE SUPPORTS Farmers cannot rely upon the law of supply and demand alone to assure them of dependable markets and fair prices. Price supports are necessary under existing conditions or any program designed to maintain adequate reserves at all times will wreck the agricultural economy of the Nation. Instability in production and demand creates serious problems. Even small changes in either causes relatively large changes in prices. Farmers exercise little, if any, influence on prices in the market places. They live and operate in an economy dominated by administered prices in industry, by wage levels protected through union action, and by Government favors to both. Fair trade laws, protective tariffs, minimum wages and social security are but a few of the many protective measures given by Government to business and labor and are beyond farmer control. The decline in farm prices occurred when nonagricultural employment and income were advancing to a new high. Consequently, it is apparent that while a high level of employment and income are essential in maintaining prosperous conditions, they do not assure farmers of dependable markets and fair prices for their commodities. Price supports simply place floors at levels determined to be desirable for farmers and the Nation. They become operative only when free markets fail to take the output of agriculture at or above those levels. They tend to reduce fluctuations so that consumers can be assured of abundant supplies and farmers a reasonable share of the national income. While we must always strive to develop a program which will enable farmers to get full parity in the market place, there is likely to exist, even under the most favorable conditions, a need for price supports. There is a growing need for some price support for livestock and dairy products. The farmers of the Nation sold their livestock in 1951 for $11.5 billion, when the volume of production was considerably lower than it is today. In fact, stepped up production until there was enough to provide everyone with 153 pounds and gross receipts dropped to $9 billion. Any price-support program for dairy and livestock products should be carried out in a manner that will move the products into the channels of consumption. Some groups advocate the use of production payments for livestock and dairy products. It is our opinion that this plan may lead to real trouble for farmers. Its use, once begun, could so change market demands that all farm products would eventually be forced to call for similar action in self-defense. Farmers would then be dependent upon Government payments for their existence, and a portion of the consumer cost for farm commodities would be shifted from the market place to the taxpayer. We should strive to find a way to get a fair return for farm commodities with as little direct subsidy as possible. PRICE GOALS FOR AGRICULTURE Some people argue that farm prices are too high and that a lower price will expand consumption, foreign markets and income for producers. Past experience does not support this theory. Farmers are businessmen and workers. They should receive a wage and investment return comparable with the nonfarm segment of the economy. If farmworkers received the minimum wage now fixed by law and a return on their investment comparable with manufacturing corporations, it would more than double the net income of agriculture according to Lloyd Halvorson, economist for the National Grange. It would be tripled, he said, if farmworkers received wages comparable with the average factory workers. This analysis shows that full parity, as now determined, would return about $9 billion less than the amount required to give farm workers only the minimum wage fixed by law and owners an investment return comparable with manufacturing corporations. It points up the reasonableness of farmers when they ask for a price support (minimum wage) at only 90 percent of the current parity figure. Can anyone expect farmers to be satisfied with less? While there are many factors that must be taken into account, the record indicates that price supports at 90 percent of parity is not too high if our objective is to assure farmers a fair share of the national income. Our examination of the problems leads us to conclude that a new formula is needed for determining parity. If full parity were to give farm workers and owners a wage and investment return comparable with the nonagricultural sector of the economy, then it would be possible to provide for a wider range between the level of price supports and parity without bankrupting the agricultural producers of the Nation. We hope that Congress will inaugurate a study of this question at once. Our members believe that the successful operation of any price-support program depends upon the willingness and ability of producers to adjust production |