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many substantially supplement the industrial income by raising food for the family and some for market. A trip through the area is convincing evidence that it is a good system.

Perhaps the Government can do much to encourage the development of industry in rural areas.

SUMMARY

1. From the point of view of service to the Nation, agriculture is strong. Consumers are buying more high-quality foods for a smaller percentage of their earnings than at any time in history.

2. Farmers are not sharing proportionately the increase in net incomes characteristic throughout most other segments of the economy.

3. The number of people engaged in farming is declining while demand for farm products by a rapidly growing population is expanding.

4. North Carolina has more farm people than any State and less cropland per male farmworker (18.9 acres) than any State.

5. Major crops grown in North Carolina provide a high return per acre and a low return per hour of labor.

6. Livestock production has increased in North Carolina. This has provided a fuller employment of labor, a better soil-conservation program, and greater stability. Cash income from livestock and livestock products increased 554 percent from 1940 to 1954.

7. Farmers have sustained heavy losses from droughts, hurricanes and other natural hazards in recent years.

8. More than 64 percent of the farms in North Carolina sold less than $2,500 worth of farm products in 1954.

9. Cash sales of farm products in North Carolina in 1955 are expected to equal or exceed the highest previous record. This is due largely to the heavy influence of tobacco which has increased in production and for which prices have been relatively stable.

10. From 1940 to 1955: Tobacco acreage increased 32 percent while production doubled; cotton acreage decreased 44 percent and production by a like amount; peanuts acreage and production declined; corn acreage declined 16 percent while production increased 55 percent.

11. The major problem in North Carolina is low net income of farmers. 12. Courses of action to be considered for increasing net income: (a) Higher prices through price supports and production adjustment. Each commodity presents a specific type of problem; (b) Adjustments in land, capital, labor, and technology on individual farms; (c) Expanding domestic and foreign markets; (d) Reducing costs per unit through research and education; (e) Developing more industry in agricultural areas.

Mr. COLVARD. Senator Scott asked me if I would make a general statement and I will file for the record the statement that I have prepared and will spend just a very few minutes outlining in brief some of the highights of the agricultural situation as I see it.

I would say, Senator Ellender, that we understand that this is a hearing of farm people and not of professional people like myself. We do have some of our colleagues here who can provide statistical information if desired. Some are in the audience.

I would like first to make two brief comments concerning agriculture in general which I am sure you are very familiar with.

It seems to me it is clear that from the point of view of service to the Nation that agriculture has done a fine job. Our consumers are eating more good-quality foods for a lower percentage of their income than at any time in history. I could elaborate that into the way in which the war needs were taken care of and many other reasons I think to support that, but suffice to say that from the point of view of service to the Nation it seems to me that agriculure is very strong. We feed our people well.

From the point of view of reward to its agriculture in the Nation, as well as in our State, is not doing so well. This resolves itself down

in our State to a number of international problems but expressed in a broad way the problem of net farm income is the crux of it.

I might make 1 or 2 comments on some shifts that have taken place in our State which might be more pointed for our particular area than you would have on a national scale.

We have more farm people here in North Carolina than any State. About 28 percent at the present time, a little more, of our people are on the farms actually farming, as contrasted to 14 percent for the Nation.

The CHAIRMAN. Is that due to the fact that you have a lot engaged in tobacco production where it requires more hand labor? Mr. COLVARD. That is one of the factors.

The CHAIRMAN. What are the other factors?

Mr. COLVARD. That is the major factor. We have less farmland per farmworker than any State in the United States. We have from 18 to 19 acres of farmland for each person 14 years of age and over. Our pattern involves a limited number of acres. To increase per capita income has been the problem of farming with relatively little land compared to the rest of the country.

Our farmers tried to increase their incomes by producing crops which involve large amounts of labor on limited areas of land. Tobacco is the one crop. I have in the record the hours of labor required for a crop. In tobacco it is considered 482.

The CHAIRMAN. That is an average?

Mr. COLVARD. Yes. Some more and some less. That can be contrasted to 9 hours for wheat-these are national figures-with cotton our next crop which requires a lot of labor, which amounts to about 118 hours.

The CHAIRMAN. That is where it is done by hand?

Mr. COLVARD. Yes, under prevailing combinations that exist in the State. It would be influenced by mechanization.

The CHAIRMAN. In the average you gave is that a farm, such as a cotton farm, that is worked by tractor or by the old method of horses and mules?

Mr. COLVARD. This is an average figure that would be blended between the situations that prevail in North Carolina. We have some of all. I do not have them separated in the record.

The CHAIRMAN. Have you got them separated anywhere?
Mr. COLVARD. I think that data could be made available.

The CHAIRMAN. I wonder if you could do it for the record, not for today, but if you can get that data for us it might be very valuable to us to show this trend as to how many hours are necessary under the old and under the new method.

Mr. COLVARD. We can provide that information for you.

The CHAIRMAN. Particularly in a State like North Carolina where you have these crops that require a good deal of hand labor, it may be of value to us.

Mr. COLVARD. We will be glad to provide that.

The CHAIRMAN. If you can supply that within the next 2 weeks, we will see to it that it is put in the record in connection with your testimony in the permanent record.

Mr. COLVARD. That is just a brief comment on the land and labor relationships. I have a much fuller statement.

From the point of view of income, I would like to make just a few comments here. We had cash receipts from sales of all commodities in North Carolina last year of $928 million. This year we will equal or exceed that amount. The principal reason why the cash-this is cash sales-the tobacco sales will be up substantially and tobacco weighting our total economy as it does, we are anticipating from 60 to 70 million dollars more from tobacco this year than last.

The CHAIRMAN. Is that because of the bigger crop?

Mr. COLVARD. Yes, with fairly stable prices.

The CHAIRMAN. Is it a different variety that resulted in greater production per acre?

Mr. COLVARD. There are new varieties in the picture and weather conditions had a great deal to do with it. It is a combination of weather and new technology, including new varieties. Cash sales I believe this year will be as high as they have ever been. We have studied the latest records available but it will be weighted largely by tobacco.

Now, at the same time while we will have a big cash income we have an estimated $91-million damage from hurricanes and weather hazards and we have some counties and some areas that are very greatly distressed because of this almost complete destruction of many of their crops. I might say since 1940 the shifts in income have taken place largely as shifts between crops and livestock. We have gained about 550 percent since 1940 in livestock.

However, the crops constitute a very large percentage of our total income, some 75 percent of the total comes from crops with about 53 or 54 percent coming from tobacco. Cotton and peanuts would follow in that order.

Now, the average cash receipts per farm are quite low. We have only an average of $3,460 in 1954, and I am filing for the record here a classification of farms by income levels for 1949 and 1954 compared. And about 64 percent of our farms actually have cash sales of less than $2,500. But that includes the part-time farms.

Now, while I have said that cash sales were up there is no doubt that the price-cost squeeze is bringing down the net incomes and that is the important thing, the net income of farmers. I am sure you have the statistics on prices paid and prices received. We view it as the sharp problem.

The CHAIRMAN. Does your statement incorporate any suggestions as to how to solve the situation in North Carolina and over the Nation. Mr. COLVARD. Let me make this comment to that point. Our tobacco program has been successful. I think that the parity ratio on tobacco is probably in as good a shape with respect to the prices as any commodity and so to that point I would say that the tobacco program has been a very successful program.

The CHAIRMAN. You are not suggesting any changes?

Mr. COLVARD. Except as the tobacco people who are here who are more familiar with these problems than I, they will have suggestions I am sure as to the production controls, but it seems to us that with appropriate adjustments the program has been highly successful and can be successful.

I won't elaborate on the other crops.

I would like to make a few comments concerning these specific crops and I am filing for the record here the acreage, yields, per acre

and total production. In the case of tobacco, as an example, our acreage has increased slightly from the 1940 period from somewhere between five and six hundred thousand acres up to about 665,000 in 1955. Our yields per acre have increased very sharply. Flue-cured tobacco yields have about doubled since 1940 and one of the reasons we have a real surplus problem this year in tobacco is the fact that in this 1 year we have an increase in yield per acre of a little more than 200 pounds per acre which is a greater increase in a given year than has been recorded. It seems to me that here is an increase in yields per acre which is good in terms of unit costs but which does create a problem of making adjustment in the present program which I am sure the tobacco folks will comment on later.

The CHAIRMAN. I am glad to say that although my State doesn't produce tobacco except perique, strong tobacco, I introduced the title to that law, which is now in the law, I put it in the hopper and it formed a part of our present agricultural act with very little change except that a few amendments were made to make it work better. The foundation of it was introduced by me back in November 1937.

Mr. COLVARD. It seems from the statistics we have a lead on programing because from the statistics that Commissioner Ballantine's group puts out we will see that the index price of tobacco has held better than for other commodities. I won't go through these

The CHAIRMAN. I would rather you give us the prescription: We don't want statistics. If you give us the prescription as to how to cope with the situation that is what we are here for.

Mr. COLVARD. I am not going to give you a prescription to solve all the problems.

The CHAIRMAN. As far as you know in North Carolina, that might give us a clue as to what to do with other sections.

Mr. COLVARD. I would make these comments and then I will conclude such comments as I have for any questions that you may have.

It seems to me as we have studied the matter that we come back in summary to the basic problem which is low net income, price-cost squeeze and all of the things inside. To approach that, we have the problem first of the price program and controlled production and that we have here in some of our crops and especially using tobacco, as an illustration, an instance in which this has been successful and an instance in which the base of the program which has been developed over a period of years provides a working point for further adjustments of production with the price program having held.

I think it should be pointed out we would be the first to say that every commodity does not perform in the same manner. All the studies we have indicate that the price of tobacco has relatively little to do with the total volume of consumption.

It is what they call a fairly inelastic demand.

The CHAIRMAN. This is Harold Cooley, chairman of the Committee on Agriculture and Forestry in the House of Representatives.

Mr. COLVARD. It seems this leads to the general conclusion that price policies can be effective in improving net income, especially on commodity such as tobacco. I think in the case of a commodity such as beef that we do have a very definite difference, where we have a consumer response to price that is very different from what it is in the case of a commodity like tobacco.

But it seems we have clear evidence here that a price policy program can be effective and that the tobacco program is one of the best examples in the Nation of a program which has been effective.

Now, some other approaches which I would mention for appraisal and discussion and as background here would be this matter of adjustment on the individual farm. I would point up one item here, especially. We have pretty clear evidence that especially in our certain parts of our State that the capital available on these small farms is one of the very limiting factors to income.

The CHAIRMAN. You mean to enlarge it and mechanize it? Mr. COLVARD. To use in various ways, including mechanization, that there is a definite limitation on the use of capital and that an increase in the capital available and any Government policy which could encourage availability of capital would make a contribution toward net income of the small farmers. We have studied small farms in the Piedmont, some of which are part-time farms and the evidence is that some of those farms have an investment of $4,500. If the money could be available at, say, 5 percent, would return very substantially if the farm program was set up under optimum condi

tions.

Of course the third approach, which I am sure is one that a lot of people in this room have worked hard on and you have, and I know Congressman Cooley and Senator Scott have, is this matter of the markets, the expansion of the markets and the various ways they can be expanded. I think my own appraisal is we should not expect the marketing situation to take care of the immediate problem, that this is a little bit slower than some of these other things. At the same time I think we would state very firmly that it is an area that needs all the strength from Government policy and from other sources that it can be given.

A fourth area

The CHAIRMAN. In that regard I believe that is one of the most fertile fields to work in. When you are trying to sell agricultural products-only 4 or 5 years ago the farmer was receiving about 52 cents out of the consumer dollar. He is now down to 40 cents. There is something wrong somewhere. Somebody in between is getting a little too much in my humble judgment. How to get around that, to me, poses a very serious problem and if you have any ideas on that we would like to have them.

Mr. COLVARD. I would make these two comments on that: One is that a part of these added costs of marketing do have to expand market. That is, they may add value, they do have to expand the market. I think one of the things we have been working for in some of our commodities is a better grading, better packaging, better selling, better advertising to expand the market for our commodities. To the extent that is effective I think there is some added wealth involved so long as our consumers will take those things and they seem to demand them.

The CHAIRMAN. The great difficulty I find throughout these hearings it that the price of what the farmers produces has been going down and down and the consumer has not received the benefits of the downward prices.

Mr. COLVARD. That is right.

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