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Mr. CALDWELL. We do not support flexibles as such. There are some instances where flexible price supports may be the best answer to some commodity problems but for the basics where we use other devices in balancing supply and demand we are not for the flexible price support program but rather we favor a rigid program. I would like to pick up one other thing.

There is a growing need for price supports for livestock and dairy products. The farmers of the Nation sold their livestock in 1951 for $11.5 billion when the volume of production was considerably lower than it is today. In fact, the annual meat consumption was 136 pounds that year. În 1954 we had stepped up production until there was enough to provide everyone with 153 pounds and population had grown. Yet the gross receipts dropped to $9 billion. We had more meat but we got $2 billion less money gross from the sale of that meat.

The CHAIRMAN. That may be the reason you sold more because of the lower price.

Mr. CALDWELL. It may have been partially responsible, although there had been a substantial increase in consumer purchasing power during the same period and I don't believe the consumers got the full share of that drop in price that the farmers took, either.

The CHAIRMAN. I can speak from experience. I market just 2 blocks from where I live and I have been watching prices. I go there almost every other day and the beef steaks that I paid $1.18 a pound for last year I will still pay almost that, and the year before that it was also about the same.

Mr. CALDWELL. We don't believe the problem is going to be solved by just letting the law of supply and demand operate. There are some groups that advocate the use of production payments for dairy and livestock products. It is our opinion, however, that this plan may lead to real trouble for farmers. Its use once begun could so change market demands that all farm products would eventually be forced to call for similar action in self-defense.

Farmers would then be dependent upon Government payments for existence and a proportion of the consumers cost for farm products would be shifted from the marketplace to the taxpayer. We should strive to find a way to get a fair return for farm products with as little direct subsidy as possible.

I have very definite feelings on that point. I wrote a footnote to a report now coming out from one of the important organizations in Washington, where many prominent economists are suggesting possible use of production payments, and I pointed out some of the dangers inherent in it. Production payments used to solve the problems for one commodity, may create unfair competitive advantages over others, so that they will be forced to demand similar action and little by little we would move in that direction. We would like to see the Congress hesitate before you begin a program that has the potential dangers that we foresee in it.

The CHAIRMAN. That is what caused me to vote against the wool bill because of the production payments involved. It may be that it is a good thing, but up to now I need to be convinced.

Mr CALDWELL. We see dangers in it and I mention it here What

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tant question. Some people argue farm prices are too high and lower price will expand consumption, foreign markets, and income. Past experience does not support this theory. Farmers are businessmen and workers. They should receive a wage and investment return comparable with nonfarm segments of the economy. Here is a right interesting statement. If farm workers received the minimum wage now fixed by law by Congress and a return on their investment comparable with manufacturing corporations it would more than double the net income of agriculture.

If we gave farm workers the average wage which includes the fringe benefits it would more than triple the net income of agriculture.

The CHAIRMAN. That would increase the price to the consumer, I guess.

Mr. CALDWELL. Probably. I would say that from our
The CHAIRMAN. Have you figured out how much?

Mr. CALDWELL. From our examination of this problem we believe that the time has come when we need to reexamine our parity formula. If parity, if 100 percent of parity meant an income for farmers, that would give the workers a wage return comparable with the minimum wage guaranteed by law to nonagricultural workers and the farm owners an investment return comparable with the investment return of nonfarm businesses, if that was 100 percent of parity you could flex your price supports down below 90 percent of parity, and you would have a wider range of flexibility without bankrupting farmers. If we were to get 100 percent of parity under the present formula we would still be $9 billion short of what I just said farmers would receive if they had a wage and investment return comparable with the nonagricultural segment of the economy.

The CHAIRMAN. That is another phase of our problem that I hope all of the organizations can get together on and give us ideas as to how to improve that parity formula.

Mr. CALDWELL. Tobacco growers are calling for a reconsideration of the acreage allotment for 1956. I produce some tobacco, I have a 7-acre allotment, we are calling for reexamination of the acreage allotment for 1956, and such adjustments in the allotment as may be necessary in gradually bringing about a better relationship between supply and demand.

The tobacco program has worked well and served farmers well, but we have been increasing the surplus stocks. We are reaching a point where they can become dangerous to the program itself unless we take steps to bring about gradually a better balance between supply and demand. We do not believe it ought to be done in any short period of time. To do so would greatly disrupt agricultural practices and dislocate many agricultural workers, especially among tenant farmers.

The CHAIRMAN. We got a suggestion yesterday that a law should be passed when Congress meets to enable the Department to present the matter to the tobacco growers with a view of curtailing the acres for next year.

Mr. CALDWELL. We support that.

The CHAIRMAN. I doubt we could do that but we can try. I doubt we could give relief along that line, but if it were possible to get tobacco farmers to do it voluntarily I would try it. You have such a small amount, 2 or 3 States involved, and it strikes me that the farmers ought to try to help themselves in that regard.

Mr. CALDWELL. We have tried this voluntary curtailment program, tried it in cotton in 1931 and 1932.

The CHAIRMAN. I wouldn't suggest it in cotton because there are too many States involved, but here you have tobacco only in a handful of States.

Mr. CALDWELL. There is the same philosophy among individuals. "If my neighbors are going to cut theirs voluntarily this is a good year to step it up."

It doesn't change. We hope Congress will carefully consider this problem when it is finally presented to you because it is a matter of grave importance to the tobacco program and if we lose the program certainly the agricultural interest of this State and throughout the Southeastern States where tobacco is produced will be seriously impaired. We hope very much that members of your committee and the Congress will give careful and thoughtful consideration to that suggestion when it is presented to you.

The CHAIRMAN. Is there unanimity among tobacco growers?

Mr. CALDWELL. I think so far as I know there is general agreement among them.

The CHAIRMAN. That won't do. You have to have almost unanimous agreement.

Mr. CALDWELL. I think you will find it is almost unanimous that some action will be necessary. Congress is exploring the possible use of poundage quotas for burley tobacco. The adoption of such a program is fraught with grave dangers. Burley growers in North Carolina have taken a firm stand in opposition to this proposal. We hope that Congress will drop this proposal.

Marketing agreements and orders can be employed to stabilize markets. We hope that Congress will broaden the act to cover additional commodities and provide for the continuous operation of marketing agreements and orders despite any short-run price variations.

You have heard that matter discussed by Mr. Brinkley from your State whom you know, Homer Brinkley, and others, and I know that you are very familiar with the argument.

Then there are some soil bank and land rental proposals now being discussed as another way for balancing production with demand. I understand there are almost as many soil bank proposals right now as there are people talking about it. We are not so much concerned about whose program may be considered as having the right program on the books that will help to bring about the kind of adjustments that are needed.

There is general public support for conservation expenditures. It seems to us that major emphasis must be given to measures which conserve resources and yet do not result in an immediate increase in production. It is our belief that an expansion of the present agricultural conservation program offers the most practical method for doing the job.

We believe that the machinery now set up in the agricultural conservation program can be used and it would be more practical to work within the framework of the existing setups in trying to expand conservation, soil banks, or whatever you call them, then to set up something new.

The CHAIRMAN. That is the purpose of soil conservation; isn't it?

Mr. CALDWELL. Yes. I would like to point out that the land capabilities survey needs to be completed if we are going to use these

has not appropriated enough money to permit it to go forword. If we are going to rely upon soil conservation as a means of taking land out of the production then we certainly ought to have that soil survey completed so that we can devise the most practical program that will be in the long-term interests not only of farmers būt of the Nation as well. We would urge you to give some consideration to completing the land capability survey as quickly as it can be done within reasonable limits.

The nation has a vital stake in abundant supplies and reserves. The question is, How large should these reserves be and how should they be handled ?

The need for sound national policy is evident. A small surplus brings bankruptcy to farmers and a short supply means high prices for consumers. Some way should be found to assure the Nation of abundant supplies without destroying the price structure of producers. We hope that Congress will explore this problem. How large should the reserve be in corn or wheat or cotton in terms of national interest, what should it be and how can that reserve be managed so as to prevent the reserve itself from depressing income of farmers who produce these products ?

I don't believe anyone has ever defined the size of the reserve that is needed in the long-term interest of the Nation. There are a number of other things we could talk about. We mentioned the need for research and education. Certainly they are important tools in solving the problem.

Then we need to develop stronger cooperatives that will help farmers gain bargaining power in the market place and so will enable them to provide services for themselves which would not otherwise be readily available.

We talk about the problems of the small farmer. The small farmer is often at a disadvantage because he doesn't have mass purchasing power. The corporation farm you mentioned a moment ago may own its fertilizer mixing plant and warehouse for storing cotton or other surplus commodities. It has buying power that will enable it to get volume discounts. The rank and file of little farmers lack that and the only way they can get it is by working together through their purchasing association.

We know the members of this committee realize the need for cooperatives, but we must never forget that there are powerful forces seeking to weaken or destroy them. We solicit the continued interest and support of the members of the Agriculture Committee on this phase of the farm program because we believe it, too, can make a contribution in helping to find a way out.

Crop insurance is also important. We have been talking about the costs of programs. All of these programs are going to cost money but we need to realize that there are some price tags on the other side of the ledger, too. If farmers depend upon free markets then we are going to face some general economic problems and unbalance our general farm program to such an extent that the Nation will suffer. This means that

crop
failures or existence of some emergency

demand may create serious food shortages and it is our opinion that the net cost to the Nation will be much less if we provide farmers with the

the Nation will be served better in that way than any other way.

I have taken more time than I planned. "If you have any questions I will try to answer them.

The CHAIRMAN. Are there any questions, Senator Scott?

Senator SCOTT. Some time ago at another meeting you mentioned something about water resources. I wonder if you would put your statement in the record on that because it has a bearing on this thing, too.

Mr. CALDWELL. It has a very definite bearing and I will be glad to insert it in the record for the benefit of the record.

The CHAIRMAN. Is that in line with the law we enacted here recently?

Mr. CALDWELL. This is in connection with the Hoover Commission report on water resources. We had a hearing conducted by the subcommittee headed by Congressman Jones of Alabama here in this same room a few weeks ago, and I presented a statement on that subject and we will present it for the record. On the Small Watershed Act, we would like to see the Small Watershed Act strengthened. I might say farmers around here find it difficult to understand why they are required to pay such a large percentage of the cost of a smallwatershed project which benefits an entire area while flood-control projects on a major stream are financed entirely by the Federal Government. A few industries can go to Washington and say, "Our businesses are being destroyed by floods and we need a flood-control program," and the Army engineers make a survey and recommend building of a big dam that will cost millions of dollars and if Congress is convinced that the benefits will exceed cost they appropriate money to cover the full cost of it.

The CHAIRMAN. In most instances they are multiple-purpose dams and electricity pays for most of the cost, and in areas in the West you have irrigation which is repayable by the farmer, however, without interest.

Mr. CALDWELL. Right now we don't see any particular reason for using public funds to reclaim nonarable lands or bring lands in production in competition with crops in surplus.

The CHAIRMAN. Your whole statement will go in the record on that. (Statement to be furnished by Mr. Caldwell follows:) I am Harry B. Caldwell, master of the North Carolia State Grange, from Greensboro.

We appreciate your visit to the State.

The grange is a general farm organization with members in all areas of the State. Our members have a keen interest in water-its conservation, control, and use—and in the development and use of electric power. We want to see the resources of the State developed for the benefit of all.

We believe that the economic growth of the State will depend to a large extent upon the supply of water and power and the use made of these resources. North Carolina is in the high rainfall area. Even so, we are frequently plagued by droughts during certain seasons of the year which destroy our crops and endanger the water supplies for municipalities and industry. We have the potential water resources which, if properly developed and wisely used, will meet the current and foreseeable needs for agriculture and industry in this area.

While there is much that can and should be done by the State and local units of government and by the people themselves, there is a real need for Federal action in flood control, valley development, soil, timber, and water conservation, navigation, drainage, and electric-power program.

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