Price support payments—1963-crop feed grains (fiscal year 1964)1

Secretary FREEMAN. Well, the feed grain program for 1963 involved a program of acreage diversion, under which some 29 million acres, that otherwise would have produced feed grains, were converted to soil-conserving purposes.

The net result was a substantial reduction in production, both actual and also potential, than if there had not been a change in the basic law. So that by the end of the 1962-63 feeding year there will be in the neighborhood of 850 million fewer bushels of feed grains on land than was the case 2 years ago. And, as I say in the statement, in this budget there is $150 million less for storage and other carrying charges for feed grains than was the case 2 years ago.

Now the program for 1963 is a slightly different program, quite a different program. Well, let me go back. The 1962 program involved also a price support at $1.20, and only the farmer who chose voluntarily to comply with that program would get the price support, and the grain, therefore, came in under loan and we turned around and resold it through the medium of payments in kind, in effect resold it, to the tune of close to a billion bushels of grain in fiscal 1962, the net result being a very substantial increase in farm income, a rather high Government cost which goes along with the voluntary program, a substantial cutback in the amount of production as compared certainly with the law that was on the books 2 years ago which would have resulted in a continued buildup of surpluses of between 300 and 400 million bushels a year.

This program has worked extremely well and much better, frankly, than I expected it would.

Mr. WHITTEN. Mr. Secretary, could we have, for the record, the figures having to do with production costs, payments, amounts on hand, and other things in line with what you have just said in a general way?

Secretary FREEMAN. Yes.

(The figures requested follow :)

Feed grains: Summary of estimated supply and utilization for marketing years

1961-62, through 1963-64, under existing legislation (current outlook as of

Feb. 27, 1963)

Feed grains: Major elements of CCC costs for marketing years 1961-62 through 1963-64 under existing legislation (current outlook as of Feb. 27, 1963)1

1 Summarizes the major elements of Commodity Credit Corporation costs under the various programs, these costs cover major elements only during the marketing year and are for comparative purposes. Costs during a marketing year cannot be compared directly with budgetary expenditures within a particular fiscal year.

Denotes receipt.

PRESENT AND FUTURE PROBLEMS OF THE COMMODITY PROGRAMS

Mr. WHITTEN. May I say that a majority of this subcommittee has never felt that you could have high level price supports and no controls. Each man can speak for himself, but I have heard enough of them speak in times past to know the majority never felt otherwise. By the same token, unless you use section 22 to prevent pricesupported commodities from coming into this country, and unless you use the right to sell for what the traffic will bear in the world market. so as to keep our fair share of the world market, I don't see any way for us to even up supply and demand. Where can you get sufficient demand at the market place unless you keep your own outlet and protect our domestic market from incoming commodities? I don't see how you can cut down supply to that point.

Of course, it is not economical to produce far beyond what we can use and sell except as a reserve for war or emergency. I agree with you on that point.

Now, what do you envision in the future? In the future are farmers going to be dependent for a livelihood upon this $900 million payment from the Treasury? Why should the farmer have to have his fair return paid out of the Treasury when labor and industry have theirs carried forward as a part of the retail price which is not visible to the public. In other words, the farmers' linens show. Yet industry and labor which have the same share, I think a much larger share under the law, pass their fair return on to the user of their products.

Now what do you envision in the future years? How much is the farmer going to have to look to a direct cash payment as compared with the right to demand it, by his fair share of the law as a part of the retail price?

Secretary FREEMAN. Well, the chairman, as he knows, puts his finger on an extraordinarily difficult problem because the farmer is not, and has not, on most commodities been able to organize as other segments of our economy.

I agree with the chairman's observation that it is hardly fair or equitable, and may not be politic in the long run, for the farmer in order to try and balance out this inequity to receive some kind of a payment where it is obvious and so labeled while other segments of our economy are able to extract the same thing in ways that are more socially approved, perhaps because they are less understood. But we deal with a very practical operating reality on a commodity-by-commodity basis-let me shift the ground a little bit and take a look at wheat. I know Congressman Horan will perk up when I mention wheat.

Mr. WHITTEN. May I interrupt to say this? In connection with all of these matters I hope that you will put the figures into the record. Secretary FREEMAN. Yes, we will do that. In going into these I should have refreshed my memory on all of it. I just don't have that. (The information referred to may be found on pp. 43 and 44.) Mr. WHITTEN. That doesn't bother us. I don't expect you to carry the figures around in your head.

WHEAT PROGRAM

Secretary FREEMAN. Well, in the case of wheat, we are moving toward a two-price program, where we will be able to provide for the producer a fair return on the domestic market and where in the world market we will move the commodity at world prices which will, therefore, not require a subsidy to move wheat out of the country. Depending upon the relationship between the domestic price and the world price, it may very well require the application of section 22 for internal protection.

This is the only way I know that we accomplish the goal that you refer to.

FEED GRAIN PROGRAM

In the case of the feed grain program, referring now to the 1963 feed grain program, this program was changed from the preceding one. Instead of paying the farmer for diverting acres, 50 percent of the acreage yield of those acres, a new element that paid him a certain amount of the average production per bushel was added, as you know, in conference. So this year-and this is a more expensive program than the 1962 program-this year the payment is 20 percent of the average yield of diverted acres plus 18 cents a bushel of the normal production from the entire yield on that man's operation.

This means with the 18-cent payment that we do not have to subsidize our exports, and it means that no one can compete with us domestically because our market prices are below world prices.

So with the application of the payment, we meet the twin objectives of income to the farmer, of being able to compete in world markets, and of not being subject to unfair competition from other producers. But we do not meet the very proper point that the chairman makes, since there is a payment made which is not hidden like that, shall we say, of other segments of the economy that are able to tailor their production. A moment ago in the other committee Congressman Poage pointed out in great detail how this is done in oil very effectively. They just prorate whatever effective demand there is, they produce that much oil and that is it, and there is an interstate

compact and it is the clearest kind of supply management, of controls or what-have-you, and very effectively equates supply and demand and commands a fair price in the marketplace.

This is done by some other segments of our economy, as you well know. It is hard to do it in agriculture because we have so many, many producers.

MARKETING ORDERS

We do it successfully in agriculture, as you also know, through marketing orders on a number of special commodities. We have not yet tried to apply marketing orders on a nationwide basis. On certain specialty commodities, where this might point the way to our being able to do what other segments do, and do it in terms of being able to get an appropriate return in the marketplace rather than having to do it through the instrumentality of Government.

But we are going to have to move toward larger marketing order areas because today we find competing production from different segments of the country and the ability to move it very rapidly in transportation.

I remember so vividly standing in the end of a line of lettuce in California and asking the producer how much did you get for that crate, and he said three and a half. I said, "That is pretty good." He said, "Yes, I am going to make good money this year." I said, "What did you get last year?" He said, "90 cents." I said, "Why the difference?" He said, "Well, this year they don't have a crop in Texas and I am getting three and a half. Last year they had a crop in Texas and I got 90 cents."

Now the orange people, not all of them, but on balance the orange producers in Florida because of the freeze are going to make more money this year than they would have made without the freeze.

When I was Governor and I was at the Governors' conference in 1958 my hosts put on quite a party for all the Governors. It was a wonderful party. We got a little nervous and thought it was going too far. In any event, I finally said to my host, "Good grief! You guys are spending a lot of money around here. You had a bad year. You lost all those oranges in the freeze." He said, "It worked out fine. I made a lot more money this year than if we hadn't had a freeze."

Well, somehow or other-and I would only say that I am not dogmatic about this-what will work with one won't work with the other, what will be acceptable one time politically won't be acceptable another.

NEED FOR MANDATORY PROGRAM

In the feed grain program I happen to feel very strongly that the so-called mandatory program would have worked, the referendum would have passed, would have been effective and would have balanced out. Congress was not willing to accept it, as you all know. We had quite a hassle. The voluntary program is working, but it is costing $600 million more than it would have cost to do it with the mandatory program. Well, we have got to get the job done. We are getting the job done, but it is costing more.

Mr. WHITTEN. Mr. Secretary, I said many years ago that I doubted if I would ever want any general farm program to carry my name.