Mr. BLAIR. We believe that any such program would only lead to greater difficulties in solving the problems confronting us for the following reasons:

1. Increased production,

2. Resulting in rigid unworkable controls.

3. Government will accumulate an untold supply of a perishable product-beef. This would result in a terrific burdensome cost to the taxpayers of our Nation and some waste, storage, et cetera.

We offer the following solutions:

1. We commend the policies taken by Secretary of Agriculture Ezra Taft Benson.

2. We ask for the continued cooperation of the Department of Agriculture in our beef promotion program.

3. Further study and research on matters relating to our industry, including beef byproducts.

4. We suggest more recognition and research in the control and eradication of livestock diseases.

5. We recommend where the Federal Government is participating in a school lunch program that generous amounts of beef be included in the program in order that the children will be furnished a good, nutritious, well-balanced diet.

6. We recommend that female breeding cattle be voluntarily reduced either through the selling of heifer calves for slaughter purposes or a heifer spaying program.

7. Because of excess production of practically all of our agricultural products due to overproduction, we recommend that serious consideration be given to any further development of irrigation projects that tend further to increase such production.

8. Since there is a serious water shortage confronting South Dakota in the range and farm area and also in some of our towns, which can only be met by more water storage, we recommend that our State and Federal officials take immediate action to facilitate storage of water at its source.

9. We recommend that acres taken from production from controlledacreage crops be completely idle.

We feel that with the above-enumerated points and with the increase of 11,232 new babies per day, we will work our way out of our problems in the beef industry in a much faster, sounder, and better manner than can be accomplished through any program of subsidies or price supports.

The CHAIRMAN. Thank you, sir.

Mr. BLAIR. I will relinquish the balance of our time to Senator Jim Ramey, who is also a rancher, and who will comment on this a little, and also attempt to answer your questions.

Thank you.

STATEMENT OF JAMES RAMEY, SOUTH DAKOTA STOCK GROWERS ASSOCIATION, WANBLEE, S. DAK.

Mr. RAMEY. Gentlemen, I am at your pleasure. I will either elaborate on these particular points or you can go right into a question and answer affair, and I will choose to answer questions, whichever you decide.

The CHAIRMAN. Well, the statement is rather plain. His position is well stated.

Are there any questions?

Senator HOLLAND. I would like to say first that the position taken by the speaker who preceded you was precisely the same as that taken by the stockmen of the State of Florida.

I would like to say also that insofar as they are concerned they feel that any program that supplied a mandatory 100-percent price support structure for a limited, so-called, family unit farm would put a handicap on incentive and skill, and a premium on incompetence.. How do you feel about that?

Mr. RAMEY. I think that is definitely true.

Senator HOLLAND. Thank you.

The CHAIRMAN. Any further questions? If not, we thank you very much, sir.

Senator THYE. I have no questions.

Mr. THUE. At this time we will have the representative of the South Dakota State Grange, Mr. Ervin Lucke.

STATEMENT OF ERVIN LUCKE, SOUTH DAKOTA STATE GRANGE, WOLSEY, S. DAK.

Mr. LUCKE. Honorable Senators, I would like to bring before you the South Dakota State Grange theory on how to take care of crop surplus. I will have to read most of this because our master is out in the western part of the State and cannot be here, and I just got this. this morning. So I am kind of green at it.

The CHAIRMAN. Will you state your name in full for the record? Mr. LUCKE. Ervin Lucke.

Senator HOLLAND. I hope you live up to your name.

Mr. LUCKE. I hope so, too.

The CHAIRMAN. Proceed, sir.

Mr. LUCKE. The South Dakota State Grange appreciates the opportunity accorded by this committee to present our views concerning the farm problem today.

With the downward trend of prices for what the farmer has to sell and the continued upward trend of what the farmer has to buy, the squeeze keeps getting tighter. Something has to be done soon.

The Grange hasn't too much faith in subsidies but, as long as other segments of our Nation are receiving them, we feel the farmers are entitled to them, too.

Since the close of the war, there has been a continuing debate in the Halls of Congress and elsewhere over the future of American agriculture and the type and methods of price supports which are to be used to assist farmers in stabilizing production and maintaining farm income. It has been the consistent position of the Grange that the issue is not as simple as the one that has been popularized in the public eye as simply a clash between advocates of high supports on the one hand, as against those urging flexible supports from 75 to 90 percent of parity. As we see it, neither program will serve as a cure-all or meet the fundamental needs of each of the different commodities. The Grande believes that an effective solution demands an abandonment of the policy of attempting to apply one program to all com

modities, and urges the adoption of a commodity-by-commodity approach with such coordination between programs as will best serve all agriculture and the total national economy. We have constantly maintained and we know that our point of view is gaining strengththat no single formula can possibly serve with intelligence to meet the needs and requirements of all commodities. We are firmly convinced that continued adherence to wartime price-support levels in all instances as a permanent or long-time program is not only expensive to all of us as American taxpayers but that it cannot effectively achieve or maintain agricultural prosperity. Continued supports at this level as a permanent policy, particularly for those commodities which must depend upon substantial export markets for outlets, will do great damage to farmers by destroying their opportunities to maintain or expand markets.

On the other hand, we have no faith in the present flexible pricesupport program serving as an effective solution for the problems of wheat which we in this part of the country are interested in, and for rice. Stocks of these two agricultural commodities are at or near record levels and farmers have been forced to cut back production drastically. The matter of the continued decline in farm prices when industrial prices and wages remain high or continue to rise should be a matter of deep and serious concern to all interested in agriculture or in a sound and constructive balance for our national economy. The decisions that must be made must not be characterized either by timidity or by unwillingness to try new programs or by a blind adherence to either rigid or flexible price-support formulas. We must analyze the problems and needs of the different commodities and tailor our programs to meet the needs of the respective commodities.

As this committee knows, the Grange, in cooperation with the wheat growers of the Nation, has been vigorously seeking the adoption of an improved wheat program-the wheat certificate or two-price plan, as it is sometimes called. But the term "two-price" is misleading. The reference to it as a two-price plan actually has been the cause of some misunderstanding. It has resulted in the wheat certificate plan being confused with prior proposals. It is misleading because under the domestic parity plan there are not two prices. All wheat will be sold freely in the market at the going market prices. The prices will be established freely by competition and not by Government edict.

The wheat certificate plan actually is nothing but a system of marketing which is designed to give producers a return equal to parity for that portion of the crop which is consumed domestically for human food, and the going market prices for the portion used for feed or export. Higher and better uses should obviously support a higher return. An important factor of the proposals is that all the wheat is permitted unrestricted movement and sale at competitive prices through all channels of trade and at all stages of marketing through to the miller and exporter.

Under the proposal, there would not be any Government subsidy or price support in the market place. The plan would be self-financing through the use of marketing certificates. Consumers of bread and other wheat food products would continue to pay in the market place, as they do now, only a fair price. But unlike the present program, there would no longer be any necessity for consumers as

taxpayers making a second payment in the form of taxes for export subsidies, for storage costs or losses because of spoilage.

The plan is particularly suitable for wheat because the demand for wheat for food uses is highly inelastic. That means that about the same amount will be consumed whether the price goes up or down. Thus it would not help to cut the cost of wheat which goes into bread. On the other hand, the demand for wheat for feed and export is relatively elastic. By letting wheat again be sold at competitive market prices the chances of expanding outlets and increasing demand are good. There have been a number of instances where export sales have been lost by one-eighth of a cent or less because of the rigidity of our prices which are fixed by the Government through the amount of the export subsidy. Grain merchants or millers under the present system cannot merchandise wheat and wheat products-all they can do is call up the Department of Agriculture and find out what subsidy is being paid. That establishes the prices and if foreign buyers cannot buy cheaper anywhere, then the United States may make the sale. Is it any wonder that our exports markets are dwindling?

The best thing about the wheat-certificate plan, however, from the standpoint of wheat growers is that their returns will be higher under it than under the present program, even if the plan doesn't result in any increase in consumption. According to the best estimates available, from a wholly impartial source, wheat producers in 1954 would have received on the same volume of wheat about the same returns, under the certificate plan as they did under the 90 percent of parity program. If, however, an allowance is made for some increase use for feed or export, as could reasonably be expected, there would have been an income difference in favor of the certificate plan. In 1955, with the support level under the present program reduced to 822 percent of parity, a minimum of 7 percent more income would have been received with the wheat-certificate plan on the same 55 million acre national allotment. In 1956, it is estimated that the return would be 9 or 10 percent greater.

I know that many of you are familiar with the operation of the wheat-certificate plan, but I would like to review it because there apparently has been some confusion of lack of understanding as to its operation, particularly in high places of Government and by some farm leaders.

First. At the beginning of each marketing year, the Secretary of Agriculture would determine the portion of the wheat crop which would go into consumption for human food. This amount, which for years has been about 500 million bushels, would be the domestic-food quota. This amount would then be allotted among wheat farms of the Nation substantially on the same basis as acreage allotments are now made, except that in this case the acreage would be translated into bushels and the share of each farm would be in bushels.

Second. Each farmer would receive a certificate stating in bushels his share of the estimated domestic consumption of wheat for food. Third. This certificate would have a value in dollars and cents representing the difference between the average market price of wheat (as estimated in advance by the Secretary of Agriculture) and 100 percent of parity.

64440-56-pt. 3- -5

For purposes of illustration, let us assume that the number of bushels in your own domestic food quota (represented by the certificate) is 1,000, and that the difference between the estimated market price of wheat and full parity is 75 cents per bushel. In that case, your certificate would be worth $750.

The marketing certificates would be negotiable drafts on the Commodity Credit Corporation. They could be issued to farmers ahead of harvesting time, thereby helping them to finance farm operation during the high-expense season.

The certificates could also serve to some extent as insurance against low crop yields.

Fourth. The wheat-certificate plan is self-financing. Each miller or processor of wheat into human food would have to purchase (from growers or from the Government) certificates covering the total amount of wheat processed for domestic consumption as human food. It would not be necessary for farmers to deal directly with millers because the Commodity Credit Corporation would act as the clearinghouse.

Fifth. The value of the certificate plus the price received in the market place will return to growers the equivalent of full parity on that portion of the crop consumed domestically as food. For the portion of the crop used for feed or export, growers would receive whatever the wheat sold for in the market place.

A very important advantage that the wheat-certificate plan has over the present support program is that here will be a real incentive for producers to raise quality wheat-of the type that is in demand in the market place. This incentive would arise from the fact that the value of the certificates would be based on the average price of all wheat. The wheat would actually sell in the market place at competitive prices. Producers with higher quality wheat would naturally receive higher prices. Thus, unlike the present program, quality production will be rewarded according to the value of the wheat determined competitively instead of by Government edict.

The principal opposition that has been raised against the wheatcertificate plan for wheat has come from some Corn Belt farm spokesmen who have expressed the fear that this plan might result in an increase in the total quantity of livestock feed and thereby adversely affect the price of corn. They contend that if wheat producers are able to get a return equivalent to parity on the part of the crop consumed as food, it will increase their average returns and, therefore, they will expand production. The Grange does not believe that these fears have any real foundation. However, the Grange realizes that whatever benefits accrue to wheat must not be at the expense of corn or any other crop. To give double assurance that the wheat-certificate plan will not affect adversely the interests of corn and feed grain producers, it is proposed that the Secretary have discretionary authority to support the price of all wheat just slightly higher than that for corn and that he also have discretionary authority to impose acreage allotments. And the Grange has long incorporated a land-rental program for cases of this kind in its total program.

We feel that corn producers have no reason to fear the wheat-certificate plan for wheat because all evidence points to the fact that if the wheat-certificate plan did result in expanded wheat acreage, it would reduce, rather than increase the total supply of feed grains. In 1954,