The effect of this situation is that the individual farmer, as long as he can stay in business, tries to meet falling prices by shifting around from commodity to commodity and to increase total production in a futile attempt to maintain income.

The record of history of the United States shows increasing agricultural production and accumulating stocks pressing against consumer demands in every peacetime period, except 1900 to 1914, a period of extraordinary population increase.

In all other peacetime periods of our history the ability of farmers to produce has increased more rapidly than population. Total farm production has in the past and continues to increase year after year either from new lands and increased workers on farms or from farm technological advance. Total demand for farm products also increases from year to year based largely on population increases and rising per person real incomes of nonfarmers. But historically and currently, expanding farm output has tended to push constantly ahead of increasing money demand. The result has been, and will be, in the absence of a specific farm program cure, chronically low farming prices and dragging farm family incomes.

In fact, the productive ability of farmers has increased so rapidly over the years that together with the normally high farm birthrate an increasing part of farm born youth has had to find careers off the farm. Just in the last 45 years the index of farm output per man-hour of farmwork has increased from 46, 1910-12 average, to 123, the 1952-54 average. To the extent that total farm production runs ahead of increased demand, farm prices and incomes fall. To the extent that the rate of drop in national farm income exceeds the rate of decrease in the number of farm-operator families, per form and per family income drop and living standards on farms fall. History indicates that during most peacetime periods farm production increases at a faster rate than total national population and national farm income drops faster than farm family numbers. The result is an industry made up of over 3 million commercial farm-operating families whose incomes are chronically low because of low prices resulting from relatively weak market bargaining power and a total production that expands faster than money-backed demands.

If there are good reasons for continuing to tolerate corporate mergers and big business, and there are many reasons why we do so even to the extent of Federal subsidies and protections for industries characterized by a small number of firms, then it is only a matter of simple justice that the powers of the Federal Government be used to even up the bargaining power of farm operators.

We are convinced that Congress agrees to the justice involved in the farm parity concept. We believe that the great bulk of American citizens are, also, agreed. It was the 80th Congress in 1948 that adopted the following definition for parity farm income.

b. Public Law 897, 80th Congress, Agricultural Act of 1948, title II, section 201 (a) (2)

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'Parity', as applied to income, shall be that gross income from agriculture which will provide the farm operator and his family with a standard of living equivalent to those afforded persons dependent upon other gainful occupation. 'Parity' as applied to income from any agricultural commodity for any year, shall be that gross income which bears the same relationship to parity income from agriculture for such year as the average gross income from such commodity for the preceding ten calendar years bears to the average gross income from agriculture for such ten calendar years."

This definition is as good today as the day it was adopted. It should be made the specific goal of the Nation's farm programs.

DO FARM FAMILIES RECEIVE PARITY INCOMES?

Judged by this definition, farm families certainly are not anywhere near to getting parity farm incomes. Even in 1952, when farm prices averaged 100 percent of parity the median income of farm families was $300 per year lower than that of unskilled and service labor which was the lowest of the 6 nonfarm groups reported by the Board of Governors of the Federal Reserve System. See Chart I. Bureau of Labor Statistics has estimated that a Denver, Colo., city worker's four-person family in terms of 1949 prices needed an income of $3,800 in order to have a modest but adequate standard of living. In terms of the lower prices

farm families pay for food and rent (15 percent less) that means that a farm family should have had about $3,200 (in 1949 dollars) in total income available for family living in order to have what might be termed a "modest but adequate American standard of living on the farm."

Less than one-third of America's family farmers (1,002,372) were able to earn this much or more income in 1949. More than two-thirds (2,500,819) had less. Gallup poll in 1953 found that farmers think that about $2,100 per year is the "smallest amount needed for a farm family to ge by on."

By the measure suggested by farmers themselves, approximately 1,608,517 (45 percent) family farmers had inadequate incomes, and about half (50 percent) of all families living on farms had inadequate incomes according to the United States Census.

FARM DISPARITY GROWING

Chart J indicates that the disparity between farm and nonfarm family income became greater from 1952 to 1954. Whereas per family farm income dropped by 10 percent, there was no change in the per person income of nonfarm people. Profits of large corporations was up 10 percent. Over the same period farmers' net worth dropped by $10 billion and their debts rose by $1 billion.

Official figures make it clear that farmers never have had parity income and their disparity has been getting progressively worse over the past 2 years as the sliding-scale philosophy has been successively applied to more and more farm commodities.

CHART E.-Farm prices and income fall rapidly while farm costs are rising or

Source: Agricultural Marketing Service, USDA Farm operator's gross income, costs, and net income.

High overhead costs keep farmers producing. Industry can escape costs by cutting down production.

Farm fixed costs are high proportion of total costs.

Annual overhead fixed costs, amount_

Percent of total costs____.

Source: Bureau of Agricultural Economics.

Industrial fixed overhead costs are low proportion of total costs.

$35, 000, 000

16, 000, 000

19, 000, 000

54

Result is industry can cut costs greatly by reducing production. Farmers cannot.

Farmer can save only 23 percent of his total costs by his cutting production in half.

Industry can save 45 percent of total costs by cutting production in half.

CHART I.—Middle family incomes of different occupational groups

1 Half of families in group had more income than shown and half of families had less. Source: Board of Governors, Federal Reserve System. In 1954 Statistical Abstract of United States. Based on scientific sample survey.

Middle family incomes of farm families compared with other families, 1952 City families...

Rural town and village.

Farm families...

Source: Bureau of the Census. In 1954 Statistical Abstract of United States.

$3,678

3,408

2, 011

Net worth of United States farm families dropped $10 billion or 7 percent

SLIDING-SCALE APPLICATION

The Eisenhower sliding-scale philosophy has resulted in repeated cuts of the price-support level for milk and butterfat, for corn, oats, rye, barley, and grain sorghum, and for cottonseed, flax, and soybeans. The sliding-scale philosophy caused the administration to sit complacently aside while prices of beef cattle, calves, and lambs tumbled from well above parity to less than 70 percent of parity. Sliding-scale thinking prevented action to stop disastrous drop in the prices of eggs and chickens, even though high-ranking partisans, including the national chairman of the President's own political party, were reported by the press to have called in person to urge remedial action at the summer White House in Denver. As the members of your committee know, prices of pullet eggs were allowed to drop as low as 6 cents per dozen. So low in fact that one successful candidate for Congress was reported to have carried a hen during the campaign and didn't bother to save the eggs because they were so cheap.

FARMERS HEADED FOR ECONOMIC BASEMENT

The result of this inaction, as members of the committee know, Mr. Chairman, has been a severe drop in farmers' gross income from sale of commodities produced by them. And an even greater cut in the net farm income available for family living that is the wages or take-home pay for the operator's family labor and management.

We have prepared a chart, Mr. Chairman, showing the effect upon the average farm in the United States. This chart is based upon official figures of the Department of Agriculture.

This first bar shows the production costs and income of the average United States farm in 1952 when prices received by farmers averaged 100 percent of parity. You will note that the average farm family averaged about $200 per month for its labor and management.

SLIDING SCALE CUTS TAKE-HOME-PAY IN HALF

Administration efforts to reduce farm price-support levels started early in 1953 with the results shown in the second bar on the chart. And the efforts were continued throughout 1954. The last bar shows the estimated production costs and income of the average farm when we reach the bottom of the Eisenhower sliding-scale law. You will note that at the bottom of the sliding scale the average United States farm family will be able to earn about $100 per month for its labor and management, about one-half the 1952 figure. In 1954, farm families were about half-way to the bottom of the sliding scale at about $150 per month earnings.

FARMERS WANT SLIDING SCALE REPEALED

We submit that these simple, but eloquent, facts demand early action to repeal the Eisenhower sliding scale. We are fully conscious of the fact that at least one contemporary farm organization has urged that the sliding-scale law be left on the books. But, in this matter we are convinced that they are not representing the majority opinion of farm people nor the best interests of the Nation's farm families.

A 75 percent of parity law means that the large majority of farm families can earn less than $100 per month; a 100-percent law would mean that average family could earn under existing conditions about $200 per month of take-home pay before taxes.

FARMERS UNION FAVORS FULL PARITY SUPPORTS

National Farmers Union favors the enactment of legislation that will provide support at 100 percent of parity, by means of production payments in effective combination with other methods, for the family farm production of all farmproduced commodities. We are convinced that if our farm program is to last it must deal with what might be called the discrimination problem. In the long run, this is a question of whether we want shared prosperity or shared disaster.

SHARED PROSFERITY OR SHARED DISASTER

Unless Congress repeals the sliding-scale law, wheat farmers in 1956 will join dairy farmers in the economic basement at the bottom even if they approve