We believe that to make our operations pay as dairymen, we must have prices which average 100 percent of parity. It is clear, that under the present program, producers are in serious difficulty, and those producers, who like myself, have felt that they should stay in dairying, have had no alternative but to expand production to make up for the lower prices. The program of 75 percent supports in effect since April of 1954 has done nothing to protect our income. It is not doing anything to improve the dairy picture. We believe that the soundest method of supporting dairy products would be to allow the milk to find its own price level in the market and have the Government make a direct payment to the farmer to bring his total return up to the parity level. The Kandiyohi County Farmers Union is on record for full parity price supports as you can see from the attached resolution, exhibit 1. I want to give you some of my own experiences with dairying in the past few years: I farm 160 acres, which happens to be best suited to dairying. In 1952, I had a gross income from dairying of $2,601 from the production of nine cows. In 1953, I increased the herd to 11 cows and had $2,137 gross income. In 1954, I increased the herd to 13 cows and had $1,679 gross income. The total gross income during those years has dropped from $6,966 in 1952 to $4,961 in 1954. You may perhaps feel that I have been making a bad situation worse by adding to the milk surplus. However, from the standpoint of the individual farmer who has a large investment in his dairy operations, you do not go in or out of dairying overnight. After years of breeding and culling to build up a fine herd, you don't sacrifice good cows. Milk cows which averaged $280 per head in 1952 are averaging only $160 today in Minnesota. That is a loss value of about $120 per head. Also, with the support prices of dairy products being cut 15 percent by the United States Department of Agriculture, and with a 6 percent increase of my operating expenses from 1953 to 1954, how am I to meet the continually rising expenses? The most recent raise being a 7 to 10 percent raise on farm machinery and steel products on October 1, 1955. If I had shifted out of dairying, should I have shifted into dependence upon cash grains for my income? I have attached a list of the paying prices for grains by one of the leading elevators in the area, exhibit 2. As you see, the farmer's price on these crops is down 20 percent and more since 1952. If I had raised the grains and put them on the cash market, I would just have contributed to the surplus at that point. I quit raising hogs in 1954 and 1955. Consider now what my position would be, had I shifted to hogs at current prices. I was not the enly one who stayed in dairying and expanded production. A check of the records of the creamery to which I sell my milk shows that production has gone up steadily. In 1954, this creamery bought 714,889 pounds of butterfat, as compared with 611,765 pounds in 1952. The total return to the farmers in 1952 was $521,835. In 1954, despite the fact that farmers put more than 100,000 pounds of butterfat more on the market, their return was $496,847, or 5 percent less. 64440-56-pt. 27 The rate which the creamery paid per pound of butterfat dropped 15.8 cents from 1952 to 1954, a slump of about 20 percent. It is clear that production has gone up about as rapidly as the price has gone down. Other indications of the dairy farmer's financial position is that advances being drawn against their accounts have increased sharply. I am attaching a letter from one of the creameries in the county showing that overdrafts are at an alltime high, exhibit 3. In conclusion, I wish to say that I believe that the supporting of dairy products through production payments would be one of the best investments which the Government could make, both on behalf of the farmer and on behalf of the consumer. I believe that dairy producers would be willing to keep production in line with demand if they were assured a fair return for their products. I believe there is a place in our society for the family type farmer and that if he fails the entire community loses something which is difficult to measure in dollars and cents. If the small farmer is forced out of production, as will happen if low prices policies are continued, someone else will take over and production will continue. But there will be an increase in the unemployment lines. I want to thank this committee for the opportunity to appear and close with a statement of William Jennings Bryan: "You may destroy your cities, and they will spring up again as if by magic, but destroy your farms and grass will grow in the streets of every city and village." The CHAIRMAN. Thank you, sir. (The documents referred to follow :) EXHIBIT I KANDIYOHI COUNTY FARMERS UNION RESOLUTION ON PARITY AND FARM ISSUES 1. We believe farmers must have 100-percent parity on all farm commodities to be able to meet their obligations and stay on the land. We urge that laws be enacted providing price protection on all major agricultural commodities up to a $25,000 limit per individual. 2. We reject the so-called modernized parity formula which simply cannot be justified and upon the reconvening of Congress, we will immediately urge the reintroduction of a bill to accomplish this purpose. 3. We urge that agricultural imports be excluded from this country at any time the domestic prices are below full parity. Every bushel of imported grain displaces a bushel of American grain. Therefore, imported grain should not be counted in computing normal supply for production-control purposes. 4. We recognize the need for an expanded ACP program. The program should remain on a Federal level. The move to decentralize it to a State level is in reality a move to kill the entire program. 5. A dependable supply of farm credit is important to family farmers and is particularly vital to young people who are beginning farmers. We urge that Federal farm-credit agencies and cooperative-credit agencies must be retained, strengthened, and provided with sufficient appropriations to make low-interest credit readily available wherever needed. EXHIBIT 2.-Comparison of grain prices received by farmers in Kandiyohi County, Minn. The following figures will show the trend in the livestock prices for the years 1951-55: Average price paid for feeders and stockers from USDA, Agricultural Marketing Average prices paid for hogs and beef cattle in Minnesota, 1951–55, from StateFederal crop and livestock reporting service PENNOCK CO-OPERATIVE CREAMERY & PRODUCE CO., To Whom It May Concern: We find about 75 percent of our patrons have no ready cash for small operations as their income has been cut one-third, as far as the creamery is concerned. As of today, our overdrafts are the highest in the history of our creamery. The dairy products they produce do not cover the cost of the products they purchase such as feed, fertilizer, seed, and locker supplies. The morale of the farmer is low due to the fact that the operating costs are too high in comparison to what they receive. (Signed) Carl Sandberg, President. STATEMENT FROM ARNOLD ACKERMANN, OF WILLMAR, MINN., MANAGER OF THE FARMERS UNION OIL CO. And SecretarY-TREASURER OF THE WILLmar Farmers UNION CREDIT UNION The credit requests of our farm patrons in the Farmers Union Oil Co. has greatly increased this year over the previous years. Many of our patrons are unable to pay their tickets for gasoline purchases in the 4-month period required by the State of Minnesota for their gas-tax refund, thereby losing the tax, or 20 percent of the purchase price of the gasoline. They do not have the money available and are unable to borrow the money from loaning institutions. Also there is a decrease in the supplies and equipment that farmers would normally purchase to more efficiently operate their farms if they would have the necessary finance. Our Willmar Farmers Union Credit Union, which has a limited amount of moneys available, does grant loans to our farm patrons to help on their credit needs. The applications for loans from our farm patrons has tripled this year over just 1 year ago; however, since our finances are limited, we are unable to take care of all of them. Since we are a farmers organization, we feel quite confident that if farmers were getting at least 100 percent of parity for their commodities and had lowinterest finance available to them, that farm people would not only be able to operate and produce more efficiently, but also would purchase more supplies and equipment, thereby helping our entire economy. The CHAIRMAN. Mr. Kloempkin and then Mr. Lang. STATEMENT OF GORDON L. KLOEMPKIN, GLENCOE, MINN. Mr. KLOEMPKIN. Mr. Chairman, my name is Gordon L. Kloempkin. I started farming in 1949. I am a little bit off the record here of what I got on the paper. I started in 1949 because I got out of the service in 1947; I could not afford to start farming. I worked in Minneapolis for 2 years, and I started in 1949. In 1947 I lived in Minneapolis here until 1949. I rent and operate a 122-acre farm in New Auburn Township, Sibley County, Glencoe, Minn. I operate a general type farm on which dairying is my chief source of income. In 1952 I had 10 head of cattle milking, in 1953, 14 head, and in 1954, 17 head, and I shall have 19 head milking before 1955 is ended. The farm I operate has a lot of land that can only be used for dairying. If I am to keep my income up, I must increase my herd to utilize my farm. But if the price keeps dropping and production keeps rising where will it end? A cut in price will increase production according to several farmers I have talked to who have increased their herd by 2 or 3 cows after the support was dropped in April 1954. The month of September 1952 I received 88 cents for butterfat. In April 1954, 65 cents for butterfat, and in April 1956, I'm afraid of another April fool's joke like the one our dairy farmers had from our Secretary of Agriculture in 1954. The loss to me in the 9 months following the April 1954 price cut was a $220.72 net loss. I did not enjoy it. I raise all my own feed as my neighbors do and my cost of production is up. My rent has increased $122 this year over last. My milk trucker's rate has stayed the same even though my income has dropped. New replacement machinery and machinery repairs are higher this year than in 1953. I have talked to some of my neighbors, who operate 80-, 160-, or more acre family farms, and all have a problem. One of them raised a few more hogs to make up for his loss of dairy income and you gentlemen here today should know how he came out with 13-cent hogs. He just sold them. A lot of young farmers I know are worried as where do we go from here. If prices go down some more it's going to get rougher and a lot of farmers will be forced off the land. I went through the books of my neighbor, Mr. Clarence Emch, Glencoe, Minn., and here is what his books indicate. He gave me authority to use them in his name. He is an old-established farmer, a lot older than me. The loss to him after the support price was cut from April 1954 to April 1955 was $532.84 on butterfat and $75.08 on skim milk. His operating expense was up. His real-estate and property taxes in 1953 were $350.71 and in 1954 were $571.37, an increase of $220.66. Figure that on to what he lost on his dairy herd and it is quite a sum off his net income. That adds up to $828.58. I believe that the only fair solution to the situation is production payments directly to the farmer at not less than 90 percent of parity— a hundred percent is a fair share of income. I do not believe in modernized parity because I figured it out, and it does not look good enough when you get down to the bottom of the page; you can drown in production, but if there is no price, you are done. I have gone to agriculture school; I went under the GI bill. They taught us production, but they never taught us price until some little joker in the back got up and said one night-he says, "What happens if I got the corn and I can't sell it?" I thank you, gentlemen. Senator THYE. Mr. Chairman, I would like to ask one question. Can you tell us what your investment was in personal property when you went farming? Mr. KLOEMPKIN. I borrowed every cent of money I had. Senator THYE. I know you did, and that is the reason why I thought you would give us the answer. Mr. KLOEMPKIN. What my investment was? Senator THYE. Yes, sir. Mr. KLOEMPKIN. It cost me $12,000 to farm the first year. Senator THYE. To farm how many acres? Mr. KLOEMPKIN. To farm 122 acres. Senator THYE. Mr. Chairman, there is the answer, $12,000 that the young man invested; and if you let the bottom go out of these prices, you might just as well know that young man is not going to pay the interest or maintain the payments. The CHAIRMAN. Thank you, sir. Mr. Lang. STATEMENT OF WILLIAM LANG, SECRETARY, BLUE EARTH COUNTY FARMERS UNION, MANKATO, MINN. Mr. LANG. I am William Lang, from Blue Earth County, Mankato, and I am the secretary of the Blue Earth County Farmers Union, and some of the things I say pertain to the Farmers Union and some of them are my own thoughts. I am representing the Blue Earth County Farmers Union, and wish to state some of the facts regarding the present price of dairy products and how it has affected the operator of the family size farm. Probably the hardest hit are the young farm families, particularly the young veteran who began farming a half dozen or so years ago. They bought their machinery and livestock at a time when dairy products were 100 percent of parity. They are being squeezed out of business by the very low prices of the day. I live about 6 miles southeast of Mankato. There is only one herd of dairy cows between my place and Mankato. These farmers all had dairy herds consisting from 5 to 15 head of milk cows. Today they do not have any cattle because they couldn't make money at present prices. They have gone into grain farming, which has helped to raise the grain surplus. If it takes between 3 and 4 acres of land to keep a cow for 1 year, just see how many acres have been added to grain acreage. I believe another thing that has lowered the consumption of dairy products, especially butter, was the food stamps we were issued during World War II. The consumer couldn't get enough butter and got used to using other spreads which are much cheaper than butter. They found that they could get along with these spreads, or by mixing them |