situation would work back to supply and demand in which the farmer would take his chances on survival on the efficiency of production of his farm. The second view is: A. That the farmer is the low man on the totem pole of our industrial economy. There is great disparity with labor and industry. So here we are with costs fixed by the wages and charges arbitrarily set by labor and industry. Yet we have a decreasing income and we are not yet integrated in this new economy on a basis of equality. B. With this as the basis of this diagnosis overproduction is not our trouble but that most of it is due to laws, subsidies, and special benefits which labor and industry have obtained from our Government. As industry is not selling its production in a free market, nor is labor, but in a market supported by many special concessions, so we cannot sell our agricultural products on the supply and demand and stay on an equality with those other groups. Thus, we, using this view must have some support for agriculture. We may not like the remedy but our society to again paraphrase Lincoln cannot exist half free and half slave. Most surpluses are only surplus at a price, because they exist in quantities easily within the ability of the country to consume, except possibly wheat and cotton. The disparity between the income of the farmer and wages and industry is not explained by overproduction as our income is only low in comparison with the artificial high wages and charges which constitutes agricultures cost of production. As for example, there is no shortage of labor, yet wages keep advancing, our products are in the same position as the supply of labor, yet on the other hand they keep going down. So let us conclude: Overproduction is not the primary cause of our trouble but most of it is due to industry, and labor having the jump or preferred position in comparison with agriculture. Solution: Shall we knock down supports for labor and industry? The answer is no. The proper solution is give all agriculture equivalent support to maintain the family-sized farm. The program which would, in my opinion, do this very thing and allow the family-sized farm to continue at the least cost to the Treasury is as follows: 1. Let us discard the concept of parity as outmoded and outworn. 2. Let us substitute a standard of support based on income and not on price. 3. Let us pay the farmer in cash the difference between the support standard and the average selling price. 4. Let us establish a fair base. Take the 10 years 1940-50. 5. Let us limit the amount of payments under this plan to the average production of the family-sized farm and keep it high enough to benefit most farmers but not industrialized farms. 6. Let us determine purchasing power by dividing the cash receipts by the index of prices paid by farmers for supplies, machinery, and services. 7. Let us adopt a unit of measurment which is applicable to all agricultural commodities upon which support can be reasonably expected. 8. Let us determine eligibility by : (a) Observance of soil and conservation practices. (b) Compliance with programs to provide against wasteful production or disorderly marketing. Under this plan which has been presented many times with many variations by many in both high and low position, we would have production payments which would keep the supplies ample for high consumption and the farmer happy with assurance that he would be on a parity with other segments of our economy. Our objective must always be parity between prices and income. In conclusion, the theory that farm price must be allowed to drop to a low level to bring about a decrease in volume cannot be subscribed to by many. It means that price support would not be available when it is needed most. The program to be set up must effectively serve the farmer and his family on his farm. It must not discriminate against consumers. The program outlined herein will meet the need of protection of both farmer and consumer with plentiful supplies at a fair price. The CHAIRMAN. Our next witness is Mr. Stout. Give us your full name for the record, and your occupation. STATEMENT OF STANLEY E. STOUT, PENN YAN, N. Y. Mr. STOUT. Mr. Chairman and gentlemen of the committee, I came here to speak against the penalties on the growing of wheat for feed. That was well covered this morning by Mr. Smith. I will not repeat any part of my statement on that. I am more concerned over something which I have heard this afternoon. I was going to make it a part of my statement, that I knew of no poultrymen who were interested in supports on eggs or poultry. I was very much surprised to hear from those groups this afternoon. I want to say, on behalf of the poultrymen of central and western New York, that we are very much opposed to any supports. We do not want subsidies, because we do not want controls. We want the poultry industry to stand on its feet. Gentlemen, if I may add this: I think the best advice, some of the best advice which we could get from Washington would be a reminder that this country was built on the initiative and self-reliance of people, and not on Government help. Thank you. The CHAIRMAN. Thank you. Your entire statement will be made a part of the record at this point. (The prepared statement of Mr. Stout follows:) My wife and I own and operate a general poultry farm located near Penn Yan in Yates County. This part of western New York is well adapted to grain growing. Since starting farming in 1947 we have increased our poultry operation as we have increased our grain production. In.some years, the law of supply and demand has ruled that returns from poultry were to be small, but in general such years have been more than offset by years of good prices and we have accepted these hazards in the belief that if a type of farming is adapted to an area and the business is operated efficiently, it will yield a reasonable profit. During the past 2 years, we have felt the effects of another law besides the law of supply and demand, which law is the Agricultural Adjustment Act of 1938 as it effects production and marketing quotas on wheat. The law says that if a farmer raises more wheat than his quota provides, even if such wheat is raised as necessary feed for livestock, he must either: (1) Store the wheat; (2) pay a penalty on the excess; or (3) give the wheat to the Secretary of Agriculture. I believe that this law is arbitrary and unfair for, if a farmer attempts to obey the law and refuses to grow the grain which he needs, he immediately faces some problems. First, he is forced to buy wheat on the open market at about twice his normal cost of producing it. This, of course, will help western grain growers. Secondly, he is not allowed to use to maximum capacity the large amount of equipment which he has purchased at high cost. Thirdly, a poultryman faces a serious problem as to what to do with the land. If he is to grow grass or roughage and harvest it, he is then faced with investing several thousand dollars in equipment which his poultry cannot use. If he does raise roughage and sells it, he rarely makes a profit, for the cost of shipping a bulky product like hay, soon removes any profit. Commercial hay farms in western New York have nearly gone out of existence. If he feeds the hay, he must then launch into another livestock enterprise at great expense and attempt to compete in another field which already has its overproduction problems. The net effect of this law is to force poultrymen, who raise wheat to feed, to pay three times for the price support program. First, the poultryman along with everyone else pays his share of the taxes needed to administer the program. Secondly, he pays a higher price for every ton of feed that he buys because the Government has withheld grain supplies from the market. Now he is asked to pay a third time by being fined for exceeding his quotas, or by having his excess wheat taken from him. In effect, the law says that it is a crime for a young farmer to attempt to support his family by intelligent management such as raising feed. This is exactly the problem facing one of my neighbors, Mr. Roger Richmond of Penn Yan. He is a veteran of World War II, the father of three small children and he operates a one-man general poultry farm. Ten days ago he was served notice by a United States marshal that he is being sued in district court in Rochester for exceeding his acreage of wheat. There is nothing in the law that says that a Kansas wheatgrower will be fined for keeping a flock of chickens, instead of buying New York State eggs. We do not want price supports on eggs. We believe that the success or failure of any farming business should be determined by the ability of its management to compete with others under a system of free enterprise. Not only does enforcement of marketing quotas discriminate against individuals, but there is also discrimination in setting up the program. The law says that penalties go into effect if two-thirds of the eligible wheatgrowers favor the program. Then it limits eligibility to those who grow over 15 acres. The net effect is to allow a large proportions of the commercial wheatgrowers to vote themselves a raise without competition from the thousands of small wheatgrowers in the northeast who feed their wheat and must buy other feed besides. To us this is taxation without representation. This program is forcing honest citizens to break an unfair law to make a living. It seems to me to be poor citizenship training to encourage disrespect for any law. I have no argument with local officials of the Agricultural Stabilization Office in assigning quotas. They have been as fair as the law will permit. I have attempted to avoid controversy with this agency, by asking the courts to rule on the constitutionality of this act. The United States attorney claimed in district court, that such a request was out of order since I was not prevented from growing wheat. He claimed that all I needed to do was pay the fine or give the wheat to the Government. The case is now in the court of appeals. My attorney, Mr. Paul Taylor of Penn Yan, feels that this point should be brought to your attention. In nearly every regulation concerning this act in the past 2 years, the Administrative Procedures Act has been voided, with a statement that it is not in the public interest to comply with the Administrative Procedures Act. I know of no poultrymen who are asking for price supports. We don't want Government handouts. We want the poultry industry to stand on its own merits. I respectfully ask your help. The CHAIRMAN. We will next hear from Mr. Hakes. STATEMENT OF A. D. HAKES, PITCHER, N. Y. Mr. HAKES. Mr. Chairman and gentlemen of the committee, my name is A. D. Hakes. For nearly 40 years I owned and operated a dairy farm located in Pitcher, Chenango County, New York State. For the past 3 years, in partnership with one of my sons, we have been operating a small farm-machinery business in Cincinnatus, Cortland County, N. Y. In addition to the farm equipment, we have an automobile agency and sell a few new cars and a larger number of used ones. Our trading area is distinctly rural, with the emphasis on dairying. This year we find it increasingly difficult to make sales to farmers and even more difficult to make collections, especially on repair jobs. Sales of automobiles are largely made to parties having an independent income from some activity other than dairying. We have made many demonstrations of tractors and a desire has been created for newer and more efficient equipment, but we hear the same story over and over again: "I can't buy now but perhaps later on if things look better, and I can see my way clear to take on more obligations." Prices on farm equipment advanced recently about 7 percent. This means as much as $150 on a medium-size farm tractor. Tire prices have also advanced. In fact, practically everything the farmer has to buy for his operation is up in price. This is a serious situation, when we consider that the dairy farmer for the past few years had already been receiving, comparatively, a very low labor return. One or two typical cases of the plight of individual farmers might be interesting. Case No. 1 is a medium-size farm, about 25 milking head. Practically all the work is done by the owner-operator, a man of perhaps 45 years of age. He came to us about 2 months ago and asked for an estimate on repairs for his manure spreader. We told him that repairs would cost more than it was worth, that he might better invest the $100 which repairs would cost in a new spreader as downpayment, and have something to show for his money. He said that he realized that would be a better deal in the long run, but that he did not feel that he could go further in debt as it took all the money he could get to pay current expenses and live. We repaired his spreader at a cost of $107, and he still owes us for it. Case No. 2 is of a larger operation. Father and son operate this business approximately 80 head of dairy cattle, some cash crops, mostly potatoes. They are using for one of the farm tractors an old, inefficient machine. They realize that it is inadequate, but the older man told me that until he could pay for a new one out of current income he would not make any change, that it was poor business to draw savings out of the bank and put them into a business that was losing money. Case No. 3 is a man on a small, yet efficient, operation-35 milking cows. He makes up for poor equipment by working longer hours and keeping expenses down. He owes no one for anything; pays cash for all purchases; has owned the farm for many years. The tractor he is using is 30 years old. He knows that he could operate more efficiently with a new one, but will not go in debt for it. This problem is serious. No solution appears to be both adequate and acceptable to all concerned. Here in New York State with high production costs, farmers lose money on manufactured milk. It cannot be produced for class III prices under Federal Order 27. This order might well be amended to include a later marketing area, preferably northern New Jersey and all of New York State not now under State orders. However, amending a Federal order seems to be a long, tedious process. In the absence of any other solution, it seems that higher support prices on manufactured dairy products are a must. My concept of parity is fair consideration for all. Disparity is the present lot of the dairy farmer. In the interests of all of the people in these United States it must be corrected. The CHAIRMAN. Thank you. Our next witness is Mr. James G. Lyons. STATEMENT OF JAMES G. LYONS, ASSISTANT COMMISSIONER OF AGRICULTURE, STATE OF NEW YORK, ALBANY, N. Y. Mr. LYONS. Mr. Chairman and gentlemen, my name is James G. Lyons. I am the assistant commissioner of agriculture, and I have the statement by Gov. Averell Harriman, Governor of New York, who was very desirous of being here today but a previous commitment made it impossible, and I ask your permission, gentlemen, to read this brief statement on behalf of Governor Harriman. The CHAIRMAN. Very well. You may proceed. Mr. LYONS (reading): At the outset let me commend the members of this committee for holding this series of hearings throughout the Nation. You deserve the thanks of all Americans, farmers and city people alike, for your tireless effort to get to the bottom of what is generally known as the farm problem. Your hearings have brought forth testimony on a wide range of subjects germane to that problem. I have no desire to add to your already voluminous file of testimony, but I would be remiss as Governor of New York if I did not speak out for the agriculture of our State. Some people may think of New York as a State of trade and industry. But we're a big farm State, too. Nationally we rank second among the dairy States, third in vegetable production, fifth in fruits, and ninth in poultry, as measured by cash receipts from farming. Ours is a highly specialized, commercialized type of farming. New York farmers sell most of what they produce, and in turn must buy most of the necessities they use in living and producing. Consequently, cash costs consumer a very high proportion of cash receipts from farm products. In common with farmers in other sections of the Nation, these factors leave our farmers extremely vulnerable to the ravages of a cost-price squeeze such as they are caught in today. In 1952 cash receipts from all farm products in New York State totaled nearly $1 billion, and by 1954 the total had declined by about $140 million. And indications are that there will be a still further drop for 1955. The continued decline in farm prices and the simultaneous upward spiral of farm costs is real and painful to New York producers. In October 1955, for example, they suffered the following percentage decreases in prices of farm products, as compared with the 1947-49 average: 11 percent for milk; 24 percent for milk cows; 19 percent for eggs; 31 percent for chickens; 15 percent for apples; 30 percent for beef cattle; 42 percent for calves; 16 percent for wheat; and an astounding 62 percent for potatoes. How can anyone possibly stand a 62 percent cut in his income without a commensurate cut in his costs? It is little wonder to me that hundreds of our family-sized farms go out of operation every year. Now let us look at the cost side of the picture. The Cornell University index for dairy-farming costs shows that they climbed 11 percent between the 1947-49 period and October 1955. In terms of production costs, the dairy costs, the dairy farmers' income dropped 20 percent in that time. The USDA reports that from the 1947-49 base period to September 1955 percentage increases in certain items of cost to United States farmers included: motor supplies, 16 percent; motor vericles, 26 percent; farm machinery, 34 percent; building and fence materials, 23 percent; taxes on farm real estate, 51 percent; interest on farm real-estate debt, 72 percent, and wage rates for farm labor, 20 percent. We know from Department of Agriculture studies that the dairy farmer in New York State received an average of about 51 cents an hour for his labor in 1954. Undoubtedly our potato farmers made nothing at all for their labor this year, and many of our other producers are probably little better off. The farmer's only fault, after all, is that he has done too well in serving us. During the war and after, his productivity met the food needs not only of his own countrymen but of people around the world. He responded to our need. Now, when he is suffering from the effects of expansion, he should be protected. Instead, he is being treated like some kind of economic delinquent who deserves to be punished. I say it is wrong for farmers not to receive their full share of the national income. I can see no reason why a farmer's average return for his labor should be so far below the national minimum wage in other fields. I am certain that millions of our city folks will agree with me because they too know that you can't isolate hard times. The fact is that city people must, in their own long-run interest, join with the farmers to reverse the dangerous decline in farm income. They are well aware that agriculture is a foundation stone of the general economy. |