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producers of these diverted acres to

Mr. AGNEW. Well, we feel this way about that, Senator: If that 10 percent is not enough to control the thing, let's make it a little bigger, 15 or 20 percent.

The CHAIRMAN. In other words, make it enough to take care of the diverted acres?

Mr. Agnew. Of the surplus. We are producing about 15 percent more on the average than we have any use for for domestic consumption or for export.

The CHAIRMAN. Your suggestion is that the percentage of acres to be taken out of production be at least equal to these diverted acres so that no harm will be done to the producers of crops that are already in trouble. Mr. AGNEW. Approximately that.

The CHAIRMAN. All right. Mr. AGNEW. I would like to make this point, if I may, gentlemen: There is only one approach that we have to the solution of that problem and that is upgrading agriculture, because there is no probability of doing anything detrimental to industrial protection, there is nothing in the picture that is apt to happen with respect to lowering the minimum wage level, for instance, so we have only one way to go and that is up with agriculture if we get on a par.

The CHAIRMAN. Thank you.
Any questions?
Thank you ever so much.
(Mr. Agnew's prepared statement follows:)

This statement is made on behalf of the officers and directors and the more than 19,000 farm families in South Carolina who are members of Farm Bureau. We are grateful for this opportunity. We wish to commend you for making known the fact that you did not want this hearing to be used as a sounding board for farm organizations, but rather that you wanted to hear from as great number as possible of individual farmers in South Carolina as to what they desire by way of improvement in farm-program legislation, particularly with respect to support prices for farm commodities.

We would like to give you a few quotations from our 1953 policy resolutions :

1. “We believe that farm people are better qualified to speak for themselves than is anybody else.”

2. We favor a reduction in Federal taxes just as quickly as it can be accomplished without impairing our defense program. Our Federal Government should take the proper steps to gradually decrease the national debt but any debt-reduction program should encompass proviisons for maintaining a free and prosperous national economy.”

3."The primary interests of farm people aside from overall national problems, have to do with maintaining abundant production of foods and fibers without loss of opportunity and freedom to participate fully in development, maintenance, and expansion of a sound and prosperous economy. We pledge our vigorous support of every part of a program to accomplish this objective.”

4. “We joint heartily in widespread support of the provisions of the Agricultural Act of 1949, and we shall just as heartily join in defense of its basic provisions if need be. We favor 90 percent parity support price for all basic commodities, and that producers earn such supports by voluntarily adjusting production to consumption. We favor 90 percent of parity support price on any basic crop when growers, by a two-thirds majority vote, impose marketing quotas upon themselves."

5. “We do not favor any two-price system.” 6. “We oppose a Federal sales tax.”

7. “We vigorously support rural electrification and REA telephone service to the point that American agriculture be adequately serviced, and we shall vigorously oppose any move designed to cripple these services or to hinder expansion to the point that American farmers be not completely and economically serviced.” ,

8. “We believe that the prime responsibility for recommendations pertaining to the development of a sound national farm program, including acreage control and support-price features of such a program, rests upon the individual producers of each separate commodity, and that recommendations of such producer groups should prevail if and when such recommendations can be justified and proven not to be contrary to the public interest or the overall farm program."

The following are from our 1954 resolutions :

1. “We agree that overplanting of any allotment crop should render a farm ineligible to receive soil-conservation payments."

2. “We are opposed to cross compliance. Eligibility for support price should not be affected by overplanting of one allotment crop except to the extent of that one crop.”

3. “We urge the Congress to investigate and publicize the causes of the wide spread between farm prices and prices to consumers."

4. “Since the control of diverted acres would have an effect of discouraging the proper diversification of crops, including the adoption of new and different crop varieties which are not likely to be in surplus. we are opposed to the control of diverted acres and favor the adoption of control programs on individual crops if and when these crops become in burdensome surplus.”

5. “Since the Federal transportation tax was imposed as an emergency measure and since this tax affects both producers and consumers of agricultural products, we request the South Carolina congressional delegation to use its full influence in obtaining the repeal of the transportation tax law."

6. “We support the basic principles of present law with respect to support prices on basic commodities and other commodities. Such support is predicated upon the fact that such provisions of present law are the result of having given individual treatment to the separate commodities based upon their characteristics, adaptabilities, and support price program experience. We believe in the adjustment principle and its practical application as a basis for determining the level of support price by law. We do not believe that all basic commodities. are entitled to the same level of support price without regard to a practical application of the adjustment principle as evidenced by the separate commodity producer groups in living up to their obligations under the adjustment principle.”

Our State farm bureau resolutions committee meets here in Columbia next Wednesday to formulate policy resolutions for presentation to our delegate body at its annual meeting to be held at Clemson on November 20, 21, and 22.. Several hundred local farm bureau meetings have been held during recent months in this State. Most of our county farm bureau organizations have re. cently held their annual meetings and resolutions from these respective counties are pouring into our office for consideration by the State resolutions committee and the voting delegate body. Some of these expressed policies may be changed at this next annual meeting of the South Carolina Farm Bureau on November 21 next.

When the index of prices received for agricultural commodities was 113 percent of parity as an all-time high, the average per capita income of people oft the farm was approximately double the average per capita income of people, on the farm. Therefore, even 100 percent of parity as an average price for all agricultural commodities would not afford farm people much more than one-half of their share of the national income on a per capita basis.

In other words, approximately 200 percent of parity would be required to give farm people the average per capita income that off-the-farm people in this country are receiving. This does not indocate that farmers in recent years have been living in any dream world.

The Congress faces a very difficult situation with respect to making adjustments that will enable farm people to earn and get a fair share of the national income in this time of prosperity.

In recent years farm prices on the average have declined some 23 to 24 percent while the cost of production on farms has risen by 29 to 30 percent. Although gross farm income in 1954 was exactly the same as in 1947, production expenses had increased $4.3 billion, resulting in a $4.3 billion reduction in net farm income.

The cost of marketing farm products has increased rapidly since 1947. The record shows a steady increase from $18.4 billion in 1947 to $24:5, billion in. 1953. These costs have certainly not been reduced since 1953.

Agriculture is unique in that it is much less able to pass on its tax burden to consumers than would be true so far as most industries are concerned. In recent years farmers have paid an annual Federal tax of about $60 million on gasoline used on farms. An additional 1 cent per gallon Federal tax would increase this burden by approximately $30 million annually.

If you gentlemen of the committee had not already been thoroughly familiar with the fact, you. would have learned in this series of hearings that farmers are really in a tight squeeze between lowering prices and increasing costs of production.

We believe that you realize as well as we do that farmers today are in relatively very poor position as compared to other segments of our economy insofar as relative prosperity is concerned. We believe that the Congress really desires to do something about this bad situation in agriculture. We recognize the problem, but we do not have any ready answer. We realize also that the level of support price is no answer to all the problems of agriculture.

We realize that there is abroad in the land many pressures from many directions for lower prices for farm commodities. In the face of the facts, we know, and we feel certain that you know, that there is no real justification for such pressures to lower farm prices.

For instance, recent findings of some of the Nation's most competent economists clearly indicate that a reduction in the price of cotton would not be reflected at the consumer level, would not materially expand the domestic consumption of cotton, nor would it materially expand the foreign demand for American cotton. These same economists found by careful analysis of the cost of production of cotton in this country that the average American cotton farmer could not stand any reduction in the price of cotton when viewed from the standpoint of costs of production. They presented facts and figures to show that in this southeastern area where mechanization is not generally practiced, allowing 62 cents an hour for farm labor, that the average cost of production of cotton under existing conditions is 42 cent per pound which is 6 cents per pound more than we have received for any cotton of the 1955 crop.

In spite of the fact that agriculture has lost one-third of its labor force in the last 15 years, and the population of this country has increased by about 3 percent a year, we are plagued with surpluses of most farm commodities. We have too much of most everything that comes from the farm. This is fine for the consumer, but it is terrible for the farmer.

As aids to the solution of the basic problem of trying to adjust agricultural prosperity to the same high level being enjoyed by business and industry and labor, many and varied proposals are being made. They include 2-price systems, and even 3-price systems, various soil-fertility bank programs, sale of farm commodities abroad for soft currency, export subsidies and giveaway programs at home and abroad. Still another is a program of compensatory payments.

Since industry and business and labor are being afforded protection by way of tariffs and the imposition of import duties and quotas and the minimum wage, and since it is not likely that the removal of any of these protections will soon become politically feasible, then the major problem at hand resolves itself into one of trying desperately to raise the level of agricultural prosperity to the level of prosperity being enjoyed by other segments of our national economy.

There are many who seem to believe that agricultural prosperity is really relatively unimportant since such a minor part of the labor force of this country is actually employed on farms. We need but recall what happened in 1920 when the War Finance Board decided to stop the inflation spiral after World War I to see what would likely happen again if the same kind of treatment be meted out to agriculture. The basic philosophy that prevailed at that time was that if industrial prices and wages were kept at a high level that the consumer buying power would be sufficient to create a demand for agricultural products and prevent lower farm prices. The net result of that kind of treatment was that by 1930 business, industry, labor, and agriculture altogether were beginning to wallow in the mire of real depression.

History indicates that an agricultural depression in this country will certainly eventually result in a general depression. With farm prices headed downward and production costs rising, the trend is certainly in the direction of a farm depression. The major problem is how to reverse the trend in farm prices and farm income. Price alone is not enough since production times price determines income.

Compensatory payments afford no satisfactory solution as evidenced by the way such a program is operating in connection with the wool industry at present. Two-price systems would be very difficult to administer and very expensive. Export subsidies hold some promise but are not satisfactory based upon experience with the wheat program.

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The various soil fertility bank proposals might well be refined into one program that could conceivably be extremely helpful. In this area where our major cash crops are export crops, cotton and tobacco, such a soil fertility bank program might well serve the purpose of affording some degree of supplemental income to farmers to compensate for the loss in income by reason of reduced acreages in allotment crops. Obviously no such program could be developed that would be a satisfactory substitute for existing price-support programs but might well be considered on the basis of being a supplemental program. Another very important feature of this kind of soil fertility bank program would be to take diverted acres out of production and not aggravate the situation by continuing to pile up surpluses in other crops from which there are no acres diverted and which do not enjoy the privilege of support price. The costs of this kind of a program are as yet, of course, undetermined; but even what might appear to be a very high cost may well prove to be cheap if it accomplishes the purpose of avoiding an overall eventual depression which we could ill afford in the light of the present high tax income required to support our governmental services and programs. There is nothing to indicate that such high level governmental expenditures are to be substantially reduced in the near future.

There is much misunderstanding abroad in the land, particularly on the part of farm people, with respect to provisions of present law. There is no such thing as a high rigid support price although certain references often made to provisions of existing law which provide for 90 percent of parity support prices under certain conditions are often referred to as such. The flexible, or so-called flexible, support-price provision of present law is something that is often fixed in the mind of the average southern farmer as providing no more and no less than 75 percent of parity support price. Actually, existing law provides 90 percent support price for basic commodities when supply is kept reasonably in line with demand for the product. The level of support price would be decreased according to the percentage of oversupply above a normal supply-except as in the case of tobacco where growers fail to vote quotas upon themselves then there is no support price, and in the case of other basics where the support price becomes 50 percent of parity when growers disapprove marketing quotas.

Our farm people want no more than belongs to them. When one group or segment of our economy gets more than it earns, then another group or segment gets less than it earns. Apparently the American farmer of today is not getting all his earned income. To correct this situation would be a most difficult task if viewed in the light of agriculture alone as related to the national economy. It may be well nigh impossible as a matter of practical politics, and political considerations cannot possibly be eliminated in the coming session of Congress.

It is not possible to foretell all the various proposals that Congress will be called upon to consider as parts of an overall program to lift agriculture in this country to its proper position. Therefore, our appeal to you is to give very serious consideration to every proposal. That you be sure that you do not put your stamp of approval upon any proposal that is against the agricultural interest or the public interest of this country

The farmers of this country owe to the Congress a great debt of gratitude for many pieces of constructive and helpful farm legislation enacted during the past 20 years. The Congress is by no means responsible for all the difficulties in which farmers find themselves today, and the Congress is not altogether responsible for the total solution of all the major farm problems of today. In some instances, a more sympathetic and understanding administration of the farm program laws could have more nearly carried out the intent and purpose of the law.

Farmers themselves have a major responsibility in this connection. In some instances, you provide the machinery for the farmer to use for self-help-like the provisions for holding referendums on marketing quota acreage allotment programs. Your attention is respectfully called to the fact that South Carolina farmers have always come through with heavy favorable votes in such referendums. This is clear evidence of the fact that our farmers do believe in the adjustment principle, that they are quite willing to make the necessary adjustments in production to justify a continued 90 percent of parity support price, and that they will and do make right decisions if given full information and an opportunity to express themselves.

As to the responsibility that the Congress bears for agriculture's plight today, it isn't that you haven't been very kind, considerate and helpful to agriculture; but that you have been in some instances more kind, considerate and helpful to other groups-witness the result of the recent minimum wage legislation increasing from 75 cents to $1 an hour the legal minimum. Although this action was fully justifiable in the light of increased costs of living, it did levy a rather severe penalty on agriculture by reason of the fact that the results of the round of wage increases have already served, even before the law becomes effective, to tighten the squeeze in which farmers live today by tending to lower the price of everything that he has to sell and increasing the cost of everything he has to buy. We are not complaining about the minimum wage increase. We farmers like for our off-the-farm friends to have full employment at good wages so that we can find a ready market for our products.

What we are asking is that you do something comparably good for us. No one single thing can possibly accomplish the purpose. It must be a combination of things to encourage expanded market outlets and new uses for farm products at home and abroad. We feel confident that you gentlemen of this committee have already distinguished yourselves through your efforts to be of constructive assistance to agriculture, and we hope that you are successful in prevailing upon your colleagues to go along with you in the development, the refining, and the implementation of a farm legislative program that will do all the multiple problems of agriculture. Increased foreign sales of agricultural agriculture to obtain more nearly its rightful share of the national income.

Obviously, acreage-control and support-price legislation is not the answer to all the multiple problems of agriculture. Increased foreign sales of agricultural products under the law providing for sales of such products for foreign currency is helpful. Successful domestic sales-promotion programs for meats, fruits, vegetables, and milk have been found helpful, too.

The squeeze in which farmers find themselves must be worked on from both ends. Efficient low-cost production and distribution are vital to farm prosperity. The major factor in both is the cost of labor.

On the other end, research and education to encourage the production of products of high quality that the consumer wants is a major approach to the solution of the problem of the farmer getting more of the consumers' dollar

To put all the emphasis on the level of support price would be equivalent to defending the fort from one side when it is being attacked from four sides. While support prices have been most helpful, we have demonstrated that support price alone does not guarantee farm prosperity. While South Carolina farmers subscribe heartily to 90 percent of parity support prices and the adjustment principle, they also are very conscious of the need for additional income. We believe in holding the line on 90 percent support prices under present provisions of law while we join you in working diligently for the expansion of foreign and domestic markets and the finding of new uses for our farm products. We realize fully that we cannot produce for domestic consumption alone and ever expect to again have farm prosperity.

Our export crops are the ones in most serious trouble. The trouble did not stem for the most part, as claimed by many, from high support prices, but rather from the effects of our foreign aid and trade programs that have contributed largely to the loss of export markets for American agricultural products. So it is by indirection as well as direction that we must look with hope to some solution of agriculture's problems.

We feel that it is the primary responsibility of this committee and the House Agriculture Committee to keep the Congress well informed as to the prospective effects of all proposed national legislation with regard to its probable impact on agriculture. In other words, our appeal to you is for the same kind of considerate treatment for agriculture in the future that business, industry, and labor have received in the recent past. Under this kind of treatment for agriculture, and with accelerated programs of sales promotion and self-help on the part of farmers themselves, we farmers could face the future with confidence.

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