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.
