Freeman

ARTICLE

Paupers and Party

JANUARY 01, 1960 by LAWRENCE SULLIVAN

Mr. Sullivan is Coordinator of Information, House of Representatives.

Farm relief broke a political leg when Congress laid a hand to an official list of all growers who received government checks for $50,000 or more in price support loans on their 1958 crops.

One rice producer got a loan of $5,369,078; another, $1,331,723.

The top barley-loan check was for $1,140,431; another, $1,115,­860; a third, $951,076.

Many legislators long had re­garded parity support loans as a government subsidy calculated to shield struggling sons of the soil from the on-rushing sheriff. Few were prepared for individual par­ity checks ranging into millions of dollars a year.

Fairly representative of the in­stant reaction on Capitol Hill was the blunt challenge hurled by Con­gressman William J. B. Dorn (D., South Carolina) on August 3, 1959.

"Government price supports have not, cannot, and will not solve the American farm dilemma…. If agriculture is to regain its inde­pendence and be a real factor in the cold war, we must get the gov­ernment out of the farming busi­ness…. We must eliminate gov­ernment price supports and acre­age controls."

The third largest rice-loan check was $646,379; the fourth, $500,772.

Three dry-bean growers got checks for $567,944, $520,039, and $441,672.

The largest loan check in wheat was $515,265; in soybeans, $307,­322; in oats, $247,954; in grain sorghums, $120,885; in flax, $78,­766; rye, $44,074; peanuts, $34,- 017; honey, $27,324.

Individual parity checks in cot­ton, corn, and tobacco were not itemized in the report of the De­partment of Agriculture, the tabu­lation showing only that 102 corn farmers and 249 tobacco growers were eligible for loans in the range of $50,000 and up, along with ap­proximately 2,000 cotton growers.

This congressional examination of the larger price-support loans was in no sense directed to any hint of corruption or irregularity, nor to any conduct tinged by moral turpitude or callous business eth­ics. All the parity payments re­ported were precisely in accord with the letter of the law. Con­gress merely was exploring the possibility of some legal ceiling on future loans, on the broad theory that government-guaranteed prices for the basic crops should apply only to needed production, not to surpluses for dead storage. As one distinguished member of the House Committee on Agriculture ex­plained, his personal interest in the blue-chip parity lists had been prodded chiefly by the classic ob­servation of the late Will Rogers: "We ought not spend money we haven’t got for things we don’t need."

Throughout the country 117 wheat growers received 1958 loans in excess of $50,000 each, for a to­tal of $9,117,417. At the end of the crop-year last August all of the 5,257,518 bushels of wheat covered by these loans (plus a great deal more) was government surplus.

Individual loans greater than $50,000 each made up 25.3 per cent of all funds loaned on ricethat year; 9.9 per cent of all loans on dry beans; 7.8 per cent of all barley loans; roughly 1 per cent of all price-support checks in wheat, oats, and soybeans.

Soil-Bank Payments

Another tabulation from the De­partment of Agriculture—this one filled sixteen pages in the Congres­sional Record—listed individual payments of $10,000 or more for acreage temporarily retired from production during the crop-year 1957. One wheat grower got $322,­012; another in the same state, $278,187. A western cotton grower got $209,701; another $135,107. In this list was another group of 67 farmers who received checks of $50,000 or more, this time for lands withdrawn from production.

For the entire country there were 2,422 soil-bank payments of $10,000 or more. These payments covered 1,597,661 acres on which no crops were raised, the govern­ment paying $43,855,793 for the combined nonproduction—an aver­age of roundly $28 per empty acre.

Total soil-bank acreage retired for 1957-58 was 23 million, at an average federal cost of $28.55 per acre. Any farmer eligible to put 160 acres into Uncle Sam’s soil bank that year, at the average rate, was assured before the plant­ing season a non-harvest check for $4,568. For the year, some 7.1 per cent of the total soil-bank funds were disbursed in checks of $10,­000 or more.

The 1960 soil-bank program calls for 28 million acres, an increase of 5 million acres in our still expand­ing conservation reserve.

The Storage Problem

Government holdings of surplus farm products at the end of 1959 were $8.7 billion, up $1.7 billion over a year ago.

Some principal items in today’s rapidly deteriorating, but grow­ing, agricultural stockpile:

 

Wheat…………………………………………………………………

1,143,453,837 bushels

Corn……………………………………………………………………

1,041,248,627 bushels

Cotton…………………………………………………………………

6,981,592 bales

Tobacco………………………………………………………………

859,740,111 pounds

Dried Milk……………………………………………………………

141,712,694 pounds

Rice……………………………………………………………………

785,192,300 pounds

Butter…………………………………………………………………

78,166,284 pounds

Grain sorghums…………………………………………………

13,982,006 tons

 

Approximately 18 million bush­els of this corn surplus was tagged from the 1955 and 1956 crops. Other items in today’s surplus stock-pile are flaxseed, barley, soy­beans, oats, cheese, rye, linseed oil, rosin, honey, tung oil, and $14,­096,622 in shelled peanuts.

For the fiscal year ended June 30, 1959, the net operating loss on all price support inventories was $821,127,779. Currently, the net op­erating loss averages $100 million per month. Storage costs alone are more than $1,000,000 a day, not in-eluding interest, deterioration, or transportation charges. Govern­ment surplus crops sold for blocked currency in the overseas disposal programs, as a measure of foreign aid, bring the Commodity Credit Corporation an average of 70 cents on the dollar invested at the farm.

In a special message to Congress January 29, 1959, President Eisen­hower emphasized that growers who produce some 238 different farm commodities not under gov­ernment price-support programs "have generally experienced grow­ing markets rather than a build-up of stocks in warehouses." Only the twelve to fifteen crops eligible for federal price-support loans are in persistent and ever-increasing oversupply.

"The price-support and produc­tion-control programs have not worked," the President declared. "Clearly, the existing price-sup­port program channels most of the dollars to those who store the sur­pluses, and to relatively few pro­ducers of a few crops. It does little to help the farmers in greatest dif­ficulty."

Our present surplus wheat in government storage makes very close to a full two-year normal sup­ply—with another new crop of roundly a billion bushels coming on this summer. Storage facilities are filled to bursting, and 370 surplus merchant ships now hold some 100 million bushels of carry-over wheat.

"These heavy costs might be justifiable if they were temporary, if they were solving the problems of our farmers, and if they were leading to a better balance of sup­plies and markets. But unfortu­nately this is not true," the Presi­dent’s message concluded.

Improved Farming Methods

Current price-support theories and equations were formulated in the early 1930′s when it required 106 man-hours of farm labor to produce 100 bushels of wheat. To­day’s national average is 22 man-hours per 100 bushels. The 1938 support price on wheat was 59 cents per bushel; the 1959 support price was $1.81 per bushel.

Our basic wheat area of 55 mil­lion acres was established in 1938, when the average yield was slight­ly less than 13 bushels per acre. Today’s basic wheat allotment area still is 55 million acres, but our 1958 yield was 27.3 bushels to the acre! How long will it take to bal­ance supply and demand under these fantastic price incentives?

As President Eisenhower sug­gested in his message last Janu­ary: "It is small wonder that a program developed many years ago to meet the problems of de­pression and war is ill-adapted to a time of prosperity, peace, and revolutionary changes in produc­tion."

Nor do overseas give-aways re­duce our mountainous surpluses. Since that avenue of escape was first opened by law in 1954, total surplus holdings of the Commodity Credit Corporation have shown a consistent annual increase rather than a steady diminution equal to total government food sales and gifts abroad.

In a survey of several abortive disposal programs, a special advi­sory committee of nongovernment farm economists reported in mid-1959: "So long as our support prices are such as to guarantee profits, thus providing a most un­usual incentive, this situation is likely to continue…. A gradual correction of this violation of sound economics and the Ameri­can tradition, is indicated."

Expanding Yields per Acre

Spectacular advances in farm technology are one considerable factor in our ever-expanding sur­pluses. In broad terms, we are pro­ducing on our farms today almost 50 per cent more tonnage than in 1940, on fewer acres, and with about one-third less man-hours of labor. Tractors, electricity, ferti­lizers, irrigation, and pest sprays have combined to more than dou­ble the yield per acre over vast areas of grain and fiber production.

Since 1900 we have expanded our harvested acreage by only 14.6 per cent, while our population has increased by 138 per cent. In 1900 we farmed 295 million acres to feed 76 million people. Today we feed 180 million people from 338 million acres—and still the sur­plus piles ever higher from year to year.

This trend over the last half century is summarized dramati­cally by Marvin L. McLain, As­sistant Secretary of Agriculture, in the statement: "Total crop out­put for 1958 was the largest of record, despite the fact that the planted acreage was the smallest in more than forty years."

Total crops in 1959 were larger than in 1958.

A Persistent Pattern of Failure

In the perspective of twenty-five years, government price supports have tended principally to build up unmanageable surpluses in fifteen basic farm products, while dis­couraging natural expansion in some 235 other agricultural prod­ucts, as called for by our steadily expanding national economy. Rep­utable scholars have estimated that perhaps 50,000,000 acres of land now "frozen" in wheat, cot­ton, corn, and tobacco production under government-guaranteed prices, might well be diverted profitably to specialty crops, lux­ury items, and pharmaceutical plants. The Department of Agri­culture has many times described price supports as a drag upon the whole national economy "when they serve as a stimulant to un­wanted and uneconomic produc­tion."

"Unfortunately, the high-level supports put into effect during World War II were kept too long…. When price supports are set at uneconomic levels, uneconomic consequences are bound to follow."

Between 1938 and 1958 our U.S. population increased by 32 per cent, and our total farm output by 50 per cent.

Assistant Secretary McLain bluntly urges a return to the free market: "We must allow the nor­mal influences of market demand and price to have greater effect on production and marketing…. Basic changes in legislation are needed to pave the way for pro­gram adjustments to meet these needs."

Congressman Jamie L. Whitten (D., Mississippi), chairman of the Appropriations Sub-committee on Agricultural Funds, likewise urges greater reliance on the free mar­ket: "Now, in the first place, for us to ever straighten out this agri­cultural situation, we are going to have to do it by sales through nor­mal channels, and by pulling domestic production down to domes­tic and world markets." Subsidized disposal abroad, Mr. Whitten regards as "sweeping our overproduction under the rug; we are kidding ourselves, for it shows up in the losses of the Commodity Credit Corporation…. It has al­ready reached something over $6 billion…. I think we should be­gin to dry up this approach."

Unmanageable Surpluses

All our fabulous efforts in "farm relief" over the last twenty-five years have foundered on the rocks of unmanageable surpluses.

Moreover, government price-fix­ing on the farm has stimulated in­flation throughout the entire econ­omy. Parity in farm prices re­quires that agricultural products must advance in price from year to year, as higher city wages push up the cost of things the farmer buys. At the same time, the "esca­lator clause" in labor contracts automatically advances city wages step for step with advancing food and living costs. These two poli­cies, together—both literally en­forced by government action in­volving deficit spending—present automatic, built-in inflation. The two programs working together present economic perpetual motion—farm prices chasing wages, and wages chasing farm prices, ever upward.

Yet all our heroic billions-a-year efforts at parity have not main­tained farm purchasing power at the arbitrary government calcula­tion. The Department of Agricul­ture reports that during the last ten years aggregate farm prices have declined 13 per cent while ag­gregate nonagricultural prices in the parity equation have advanced 28 per cent.

Thus, "farm relief" has not, in fact, achieved or maintained par­ity, but our jovial Uncle Sam, nev­ertheless, still is holding the bag on $9 billion worth of surplus farm production.

Viewed in calm historical per­spective, the record appears clear enough. Some 5,000 individual price-support payments each year in the range of $10,000 to $5,000,­000 do not reflect a solid national program in agriculture.

Every government payment for surplus production is a direct Treasury bounty for crops we don’t need, can’t use, and can’t dispose of in any direction before the next harvest.

All reputable economists now are agreed that revised national policies looking to early re-estab­lishment of a free market in agri­culture would offer far more solid hope for every farmer in the land—and immeasurable new hope for every taxpayer.

ASSOCIATED ISSUE

January 1960

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