Senator ANDERSON. But I am just trying to say that when you start to figure the drop of the price of wheat in the market place, because of the use of certificates, the only way you could tell what effect it would have on corn would be to look at what had happened when wheat prices dropped. You couldn't tell by looking at acreages. Mr. NEWSOM. I think you have to take both into account, obviously. Senator ANDERSON. I agree with you there is something very substantial in the point that increase in wheat has resulted in decrease in other

Mr. NEWSOM. In total, yes. Just as sure as the world. It is the maximum flexibility to exercise my own judgment as a farmer that I am striving for here. I will make the decision, all things considered, that is best for me and best for the total economy, if I have the privilege of doing it.

The proposed domestic certificate program would also authorize the Secretary of Agriculture to establish price supports for total wheat production at levels from zero to 90 percent of parity, taking into consideration the support price of corn and other feed grains, thus corn producers have the additional protection of law against their unfounded fears of competitive injury.

Let me emphasize that if it were not for this stock that is in the hands of Government and otherwise here in this country, we wouldn't have to put this kind of a complicating factor in here. But we have got those stocks and it is just foolishness to close our eyes to them.

Senator MUNDT. While we have them, I can understand why you would have this proposal to establish price supports down as low as zero; but assuming there comes a time when we don't have them, because we might want to have an incentive to raise them at some time and put it far above a hundred percent, it seems to me it would look a little better anyway to give the Secretary the right to make it a hundred or a 90 percent as the top.

Mr. NEWSOM. Frankly, I don't know that I have any strong feeling in that, Senator.

Senator MUNDT. Obviously he wouldn't make it a hundred if we were having an oversupply. But if it should come to a short supply, that would be an incentive and it would look a lot better, than assume 90 percent is all of the equity that the wheat farmer should ever receive. Mr. NEWSOM. Well, I am not prepared to make any meaningful comment on that one. I don't know as it matters to me.

It must also be recognized that the comparatively high returns that producers of wheat would receive under the plan for wheat consumed domestically as human food are derived from the consumers of wheat and not from the taxpayers. These increased returns are possible because wheat products are capable of being sold in the market place to consumers for prices sufficient to give wheat producers a fair return for the wheat contained therein. It is difficult, therefore, for us to see how corn producers can complain because wheat producers have devised a plan to obtain from customers or consumers of wheat a fair return (parity) for wheat consumed as food in the United States.

There are in reality two markets for wheat-one for domestic food use and the other for feed and exports. We like to link the latter 2, of course, in 1. It would be most unfair to compel wheat pro

ducers to sacrifice the domestic food market and compel them to sell wheat for food for the price of feed or at world price levels as will be the case under either the flexible or rigid system of supports, unless the support level is fixed at the domestic food price level and taxpayers are required to pay out heavy costs for subsidizing exports or for piling up and storing surpluses, as is presently the case.

The same spokesmen who place reliance on the present program of flexible price supports have also attempted to conjure up the proposition that the domestic certificate plan would in some way result in dumping wheat in the world market and thereby offend our international friends who would in turn engage in some form of retaliation. Arguments of this character actually show the extent to which opponents go to try to find some argument against the certificate program. Thus, they resort to the use of the ugly word "dump" in an effort to stir up unwarranted fears.

In the first place, the domestic certificate program which enables American farmers to obtain from American consumers a fair price for the wheat purchased and consumed in the United States as food, can in no way constitute dumping. In no sense are exports or feed being subsidized by the Government, as is now the case. The use of the domestic certificate program actually will provide the means for the eventual elimination of the program of "dumping" which is currently going on and which is inherent in either the flexible- or rigidsupport program. So long as that is applied on a strictly horizontal across-the-board way, both of which require millions of dollars of taxpayers' moneys every year to subsidize American wheat into the export markets of the world. In this connection, it is important to point out that Canadian wheat growers and farm leaders have repeatedly indicated a preference for the opportunity to compete for the world market with American farmers on a competitive basis instead of having to compete with the Treasury of the United States via export subsidies.

Apparently, well knowing that their former arguments have been found wanting and without merit, those who oppose the domestic certificate program for wheat have recently resorted to attempts even to pit wheat farmer against wheat farmer and rice producer against rice producer by attempting to create fears in their minds that somehow the domestic certificate program would be unfair between producers by saying that "marketing certificates would be distributed among farmers on the basis of their historical production, without regard to whether they have been producing for domestic consumption or for export and feed."

Where have these "paragons of fairness" been all of these years? The proposed method of distribution of the domestic food quota is the same method that has been used for the past fifteen-odd years, and which is now being used to distribute the national wheat allotment among farmers. We do not say that this system is perfect or that it may not be improved, but the argument that when it is used with the domestic certificate program it somehow becomes unfair is not very convincing. Actually, the flexible price program, which has been so stoutly defended by the opponents of the domestic certificate program, as well as the rigid price support program, encourages the production of qualities of wheat which are not desired, since producers of low

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quality wheat fare just the same as producers of high quality wheat. As heretofore indicated, the domestic certificate program is self-compensating in this respect, since it would provide strong incentives to wheat growers to produce and sell the quality of wheat for which the market manifests demand, measured in price differentials.

Under the two-price domestic certificate program:

(1) Returns to farmers would be as large or larger than under any of the other programs in effect or under consideration.

(2) Production controls would be greatly minimized and eventually eliminated.

Some of you gentlemen know our good friend, Bill Parker. A year ago last February, in the National Farmers Institute out at Des Moines, Bill Parker had a statement to make that I think should sober up every one of us here in this country, when he said that, “As a Western Canadian wheat farmer I submit to you that I must be prepared to compete in the markets of the world with the most efficient wheat farmers anywhere in the world or get out of the wheat business; but I likewise submit to you that it is unfair for me as an individual Western Canadian, to compete with the American taxpayer as represented through the Treasury of the United States Government."

Now that is exactly what we are forcing Bill Parker to do under the present program, again using the figures used by the Secretary out in Kansas last Friday, to the tune of 80 cents a bushel, and the only alternative or the only modification in that export subsidy or dumping program that is possible under either of the alternative programs before this group, is the amount of the subsidy.

Senator THYE. If I may interrupt just momentarily, have you made a study of what the Canadian producer is receiving on an average, or has received in the past 3 or 4 or even 5 years on an average!

Mr. NEWSOM. Yes, we have, Senator. I confess to you I don't have the figures readily available. We can supply them to you. As a matter of fact, we have been having joint meetings with them. Senator THYE. Roughly, can you venture a sort of a guess as to how close have they come to what our producers in the United States have received under the so-called 90 percent mandatory exports?

Mr. NEWSOM. They have come awful close to the differential between this 80 percent average subsidy we are paying, and our average farm price here, because as you know full well, 96 percent of the total world's wheat crop in 1954 was under some governmental control or price-support program. The Foreign Agricultural Service recently issued a bulletin that I think is very important now. I don't recall the exact figures, but I believe it is a total of 6810 billion bushels produced in the world, of that amount 6410 billion bushels moved under some governmental sort of program.

(3) Farmers would be free to produce and compete for the world market without Government subsidy.

(4) The heavy costs of current programs to the taxpayer would be greatly reduced and eventually eliminated.

(5) Government activity in buying, warehousing, and selling wheat in competition with private enterprise would be reduced and eventually eliminated, thereby resulting in further savings to the taxpayer.

(6) Greater efficiency in farming would be obtained by better farming practices developed.

(7) Producers of livestock and poultry wherever situated would be able to produce wheat for feed or buy wheat for feed at feed prices-not at food prices.

(8) Consumption of wheat could be expanded through increased exports, new outlets and new uses through sales at competitive world prices.

We think it should be entirely clear that any realistic price support program for wheat or rice must provide an effective way for the commodities to be competitive in world markets, otherwise we will progressively reduce the United States to the category of a residual supplier with disastrous consequences to American farmers and to our national economy.

We strongly urge that the wheat and rice farmers be given the opportunity of putting the domestic certificate program to the test of experience.

Senator HICKENLOOPER. May I ask about this statement? You said they have come very close to the price considering the 80-percent Government subsidy. Do you mean they have been receiving a price close to our price less 80?

Mr. NEWSOM. That is right.

Senator ANDERSON. We just opened an umbrella there; that is right. Senator HICKENLOOPER. In other words, the Canadian is getting 80 cents better than our price; is that right?

Mr. NEWSOM. That is about what it amounts to.

And the point I was trying to make I think is rather significant. These figures from Foreign Agricultural Service clearly indicate that there is, relatively speaking, no such thing as a broad world market. Actually, the closest thing we have to a world market is a Canadian export price from the Canadian wheatgrower, and that is the sort of circumstance under which we are operating, that is why I say that probably the most accurate measure that we have available of what the price to Canadian farmers actually amounts to is the level of our export subsidy, because we are dominating the world market or protecting the world market, just as we have been doing here, and we have just decided to do it at 80 cents less than previously.

Senator MUNDT. Now, Mr. Newsom, would this wheat certificate plan or two-price plan apply to all grades of wheat, or is this for milling wheat only?

Mr. NEWSOM. You mean the certificate? I think it was previously in the testimony, so I will back up here. The certificate would be made available to individual what producers for their proportionate share of the domestic food or wheat for human food market. In other words, if we determine that 50 percent of the prospective crop of wheat is likely to be consumed for food. I am going to get certificates for 50 percent of as much as I would get a marketing quota for under the present arrangement, and then those certificates will be negotiable, I will proceed then without interference from the Government or anybody else to market my wheat for whatever I can get bids for it. I might do like my father used to, take a sample down to Ballard & Ballard in Louisville and get a bid on it and sell it.

Actually, nowadays, we do it through the local dealer, of course. But the point is we would have the incentive then to produce the quality of wheat that Ballard & Ballard or some other buyer wants.

Senator MUNDT. I understand, then, it is for milling wheat only? Mr. NEWSOM. No; it is for a number of bushels of wheat. We are not going to segregate wheat at all. We are going to get the Government out of the business of interfering with the market, you see.

Senator HICKENLOOPER. In a few words, as I understand it, and I will state it so I will see if I understand it. The Secretary determines in advance how much the domestic consumption of wheat of all kinds will be; then makes county allocations.

The farmer can produce that much wheat; I mean on his ratio basis he can produce that much wheat which will be protected at the price, which will be parity price, 90 percent or somewhere in there, and all the other wheat he produces over and above that he sells it for whatever he can get for it. But he is protected on the parity formula on his allocated share on the wheat which is necessary for domestic consumption alone.

The rest either goes in the world market or goes to whatever he could get for it. Is that correct?

Mr. NEWSOM. I think you understand it. I prefer to say the other way, because you are still implying here that the Government has something to do with the marketing of this 50 percent, and it doesn't.

Senator HICKENLOOPER. I didn't mean to. The Government has something to do with marketing the first fifty percent.

Mr. NEWSOM. No.

Senator HICKENLOOPER. Of the amount determined to be for domestic consumption.

Mr. NEWSOM. No.

Senator HICKENLOOPER. They have to issue certificates. The Government stands behind certificates, so to that extent the Government steps in there on wheat for domestic use. On the other the Government doesn't.

Mr. NEWSOM. Actually the certificate becomes nothing more than a means of cash payment to the wheat producer on the basis of 50 percent of what is marketing quota under the present structure.

Senator HICKENLOOPER. Well, your 50 percent is an arbitrary term there as I understand. You don't know whether your total production will be 50 percent or not. You estimate a hundred million bushels as needed for domestic consumption next year.

Mr. NEWSOM. That is right.

Senator HICKENLOOPER. And you go around and allocate in each county of wheat producing areas that are eligible, you allocate an acreage allotment based on that estimate of the domestic need for next year, and the farmer will get a certificate that he can sell or dispose of at a guaranteed price, that is, he will be protected by the Government on that certificate.

Mr. NEWSOM. That is exactly right.

Senator HICKENLOOPER. For a parity price for that amount of wheat. Now, if he raises three times that amount of wheat, over and above his allocation, based on domestic needs, he sells in the open market, whether it is a foreign market or domestic market, he sells, and the Government doesn't guarantee him any price, he gets whatever price he can get for it.

Mr. NEWSOM. That is exactly right, except I still, for the purpose of emphasis would like to say that he sells it in the private grain trade market rather than to commodity credit corporations.