Mr. WEATHERFORD. Senator, we are in agreement with your thinking in this matter.

At the last meeting of the National Association of Wheat Growers. the committee on marketing and marketing research made such a recommendation to the Secretary.

I would like to point out, however, that there has been some question about the allocation of numbers of certificates. It has been mentioned that if an individual produces durum wheat, that he should receive certificates on all of his production.

Gentlemen, we believe that the quality of his wheat and the fact that he is able to sell all of his wheat at a top market price, plus the value of the certificate on half of it, constitutes an outstanding premium; and we believe that it would be compounding the premium, offering a double premium, to give him certificates on his full crop.

Actually, when the full effect of open market price is in force, premiums are automatically received by the farmer who produces a good quality wheat, and discounts are automatically received by the individual producing a poor-quality wheat, and the penalties and the premiums are relatively automatic, sir.

Senator YOUNG. What is so terribly wrong with our present program is that presently, for example, hard spring wheat, as I pointed out-some of it is grown in Montana-is now selling for a premium on the Minneapolis market for as much as 70 cents a bushel-or around $3 a bushel. Actually that wheat has a lower price support than wheats produced in other areas of the United States where the cash price is way below support levels, and where there is no demand a+ all for it for human food consumption.

Off the record.

(Discussion off the record.)

Senator YOUNG. Back on the record.

So long as we provide higher price support for low quality wheat, which is only good for feed purposes, than we do for top quality wheat, which is in great demand for baking, that would destroy any kind of a price support program. That is exactly what we are doing today, and it would do it whether it was based on 65 percent support, 75 percent, or 90 percent support.

Mr. KENDRICK. Mr. Hughes, do you have any comments you want to make now?

Mr. HUGHES. I have a couple, yes.

It seems to me the sooner that we embark on a program that we will give the benefit of quality and make them get it in the market place and not try to do it with loan, the better off we will be.

Now, exactly, the situation you bring out occurs in this area. I, myself, produce the wheat that commands a premium. Yet, administratively, it would be very difficult to apportion the certificates on the basis of quality. The only place to provide the incentive is in the market place.

Senator YOUNG. The durum producer would receive about $3.75 a bushel based on those figures, and the hard spring wheat about $2.65 a bushel, ordinary about $1.85, and the poor quality would bring $1.50 a bushel. That is quite an incentive in production.

Mr. KENDRICK. The difference in price per bushel is considerable incentive, yes.

Senator YOUNG. Have you studied this new two-price proposal proposed by Dean Kelso? I read it recently in the GTA Digest, which is a Farmers Union Grain Terminal publication.

Some of these proposals sound very attractive. I would like to have you read it.

Mr. HUGHES. I should like to say, Senator, it seems to us, in reading the Secretary's speech, we can see nothing in the present program or anything he proposed that would correct the situation, as we now have it.

Senator YOUNG. Well, I think that this speech that I commented on a while ago that the Secretary made in Kansas, was one of his better speeches and he recognized that price supports had to be made on quality. You had to have a price differential to reflect good quality in wheat. I think he plans to move in that direction. In fact, he started out to do it, I think it was a year ago in April, and announced certain price support differentials. In July he canceled them again. But at least he recognizes the need of better price support differentials.

Mr. KENDRICK. Some sort of incentive for quality production of wheat is necessary.

Senator YOUNG. And isn't that thinking prevalent among wheat producers in the whole of the United States? It certainly is in our

area.

Mr. HUGHES. I think it is recognized and there is a great demand for something to be done about it.

I would like to add one word of caution, by using an example. The administrative difficulties of trying to do this at a loan rate. In my particular area, we grow hard red winter wheat which is of a quality that commands a premium. All of it is on the market and none is delivered to commodity credit to speak of.

Now it just happened this past year that an area immediately north of us, about 25 or 30 miles, that normally produces the same varieties we do and did this year, encountered a bad spell of weather right at a time when the wheat was in the dough stage. Our wheat was far enough along that it was ripe and it didn't affect it. But this wheat was at a stage where it did. The premiums offered to them by the mill buyers were 20 cents a bushel lower 30 miles north of us on the same variety of wheat than those offered in our area.

Now, it would be very difficult to anticipate that sort of thing in a loan structure. That is why I made the remark that it is very hard to do this. I think we can help the situation with a loan-rate structure, but you can't entirely cure it.

Senator YOUNG. I think you are right; you can't entirely cure it. But certainly the loan rates for wheat we know isn't good for anything but livestock feed shouldn't receive the same price support as top quality wheat. There are certain types of wheat that are poor. Mr. HUGHES. That is right.

Senator YOUNG. Isn't it true, too, Mr. Hughes, that the top quality wheat is usually lower yielding?

Mr. HUGHES. Generally, that is true. Sometimes the earlier varieties are poor quality and they plant them because they want to spread their harvest. There are a number of reasons why they use them besides yielding.

Senator YOUNG. If all farmers planted only top quality wheat that in itself would tend to reduce the production, and, of course, there would be greater demand for the better wheat.

Mr. HUGHES. Very true.

Senator YOUNG. I have talked with farmers in both England and Germany. They produce a wheat there that it is common to yield 70 bushels to an acre, but it is not nearly as good a quality of wheat as we have here.

You could take some of those varieties with greater rainfall here, and pour on the fertilizer and probably get 75 bushels to an acre here. Mr. HUGHES. That is right.

Mr. WEATHERFORD. At this point in the record, Senator, I think it might be well to show a very brief excerpt from a publication called the Wheat Situation which is put out by the agricultural marketing section of the United States Department of Agriculture, and this is dated February 28, 1955, with a code No. WS142.

And on page 9, the title "Each class of wheat has particular food uses and price factors. Production by classes in fairly definite areas." And I think a couple of sentences are important:

Each class has its particular food uses: Hard red spring and hard red winter wheats are suited especially for bread flour when they contain relatively large amounts of strong, elastic gluten, and of other properties needed in breadmaking. Some of the red winter and soft white flour are both generally low in protein, and because of this characteristic are especially suitable for pastry, crackers, biscuits and cakes. Durum wheat is processed into semolina, a coarse grind, used in making macaroni and spaghetti and related products.

Then the next paragraph:

The differentials between the price of the various classes of wheat are influenced by changes in the different demand and supply situations. The belowaverage quality of hard red winter in 1952-53 and 1953-54, which resulted from unfavorable growing conditions, and not from a change in variety, caused prices to be lower relative to prices of hard red spring wheat.

I thought the record ought to show that the matter of quality is not always a matter of varieties.

Senator YOUNG. I think that is true. Montana probably produces the highest protein wheat in the whole United States, and I think it is due a whole lot to their climate and soil conditions.

I know in North Dakota-the protein content is higher if you put it on ground that was summer-fallowed the year before. Of course, the protein content varies with the season. One year you will have a lot of high-protein wheat, and the next year most of it will be comparatively low protein.

Mr. KENDRICK. That is right; and weather conditoins, within a short period, can affect quality adversely.

Senator MAGNUSON. May I interrupt?

Senator HOLLAND. Yes, Senator Magnuson.

Senator MAGNUSON. I am one of the cosponsors of one of these pieces of legislation, as you know. We grow a lot of wheat out in our country, and most of the farmers I have talked to-the wheat farmers, and we have a new association-Don Moos is here representing the Washington Association of Wheat Growers, are quite concerned over this whole problem. I am no expert on these matters, but I do know they have discussed this and mulled it over a long time, and come up with this conclusion which is embodied in this legislation. It may

not be perfect; it may not be the whole answer, but there is a distinct realization that with the flexibility of the farm program, particularly as it effects wheat, and with the differences in parity we are going to have to do something or otherwise it may be disastrous for the wheatgrowers.

And particularly, as you well pointed out, the tendency is to forget about the quality of wheat and just grow, if you get the chance. Senator YOUNG. That will destroy our whole program.

Senator MAGNUSON. Yes.

Senator HOLLAND. Senator Magnuson, don't your people also feel that any rigid program which didn't make a distinction between the uses to which the wheat could be put and the differences in breads and varieties would in itself defeat its purposes.

Senator MAGNUSON. I would think so, because as well pointed out here, to coin a phrase, wheat is————

Senator HOLLAND. In other words, what has got to be done is to work out something new.

Senator MAGNUSON. Yes.

Senator HOLLAND. Thank you very much.

Senator MAGNUSON. Thank you. Now I will

I am sure you people will be glad to hear from Mr. Moos if he desires to say anything.

Senator HOLLAND. We certainly will.

I want to ask you about one more thing. I am no expert in this field, but it has always seemed questionable to me as to whether durum should be considered in the same grouping at all or should be subjected to the same system. Of course, the law passed last year at Senator Young's suggestion-and I think this whole committee supported

it

Senator YOUNG. That is right.

Senator HOLLAND. Took one step at least in an effort to disjoint it from the program.

Just what was the effect of that act, Senator Young? If you don't mind stating it.

Senator YOUNG. There is an extreme shortage of durum wheat. This legislation permitted farmers to plant any amount of wheat on land that was suitable for that purpose in those four States.

Senator HOLLAND. In other words, it took off the allotment requirements for planting of durum in the areas where it was known that durun might be produced?

Senator YOUNG. And as a result, durum-wheat acreage was increased by at least 700,000 or 800,000 acres. Probably all of the seed that was available was planted. If it is not attacked too severely this year by rust, we will produce-not as much as we need in this country-but we will approach our needs. The situation will be far better than it would have been otherwise.

Senator HOLLAND. My personal reaction was that we were going in the right direction. In view of that fact, I wonder if the witness would indicate why he feels that this program would involve the issuance of a certificate on the durum wheat, or whether it is better just to declassify it entirely and give it complete separate treatment. Apparently, here in this program that he is suggesting he would require the issuance of a certificate even for production of durum.

Senator YOUNG. The present situation is, I think, a rather temporary one. Durum wheat over the years has been approximately the price of hard wheat in our area. It would average a few cents higher than durum wheat. We have 4 new varieties-I suppose we have 15,000 or 20,000 bushels of-that may be more rust resistant and if they are we may catch up with domestic needs again.

Mr. WEATHERFORD. I think Senator Young has made a very important point there. These situations are not always permanent. Some are more or less of a temporary nature, such as the current shortage of durum wheats. Furthermore, individual farm operations vary from year to year, and it is difficult to forecast or to determine in advance whether a man will grow durum-and in addition to that it is difficult to tell whether or not durum will be of a quality that is high enough to command the premium price. Weather conditions may be such that it will alter the quality so that it won't have the demand that we ordinarily think of for durum.

Furthermore, I should like to point out that under the domestic parity plan, Senator, there are no penalties. If this plan had been in effect it would not have been necessary to pass legislation last year because there will be no penalties for overproduction aside from the fact that the man is not entitled to his certificate. There will be no cash penalties as there is under the present law.

Senator YOUNG. One of the criticisms of this program though, I think comes from corn producers or producers of other feeds, aren't they afraid that these lower prices for wheat will be competitive with corn? What is your answer to that?

Mr. WEATHERFORD. Senator, Mr. Kendrick has some comments on that in his testimony, and I would like to offer for your consideration that he proceed.

Senator YOUNG. Very well.

Mr. WEATHERFORD. If that is satisfactory.

Senator HOLLAND. All right, Mr. Kendrick, you may proceed.

Mr. KENDRICK. We were dealing with some advantages of the domestic parity plan.

No. 6. Another advantage previously mentioned but very important is, one open-market price, competitive, fluctuating according to supply and demand with premium wheat continuing to benefit by that premium on all wheat sold and not just on the domestic allotment. The farmer would again have to merchandise his product and be on his toes in order to take advantage of the best market.

Although the present supply situation demands production controls on wheat regardless of which price-support program is in effect, the domestic parity plan will work toward a program of full use and maintained production and will direct wheat production into use rather than into storage.

There have been some objections raised to this plan and we feel constrained to comment upon 1 or 2 that may need clarification. First, some have expressed concern lest, under this plan, the consumer might make the accusation of bread tax, resulting in a building up of consumer resistance and criticism to the plan. It has been said that under this plan the houswife would be paying more for her wheat products than the consumer of American wheat abroad, or the livestock on our farms. In this regard it should be pointed out that