Wheat: Total U.S. stocks, stocks owned and controlled by CCC, and free supplies, as of July 1, 1952–63

Mr. GODFREY. You will notice, here, again, the effects of a wheat acreage reserve program. In addition to that, there was a drought in 1957 and 1958 which reduced the supply materially, also. But we built up to a high of 1.411 billion bushels in 1961. We pulled it down some in 1962. We are estimating pulling it down further in 1963. Mr. WHITTEN. Mr. Godfrey, you are thoroughly familiar with this, as are the members of this subcommittee, but it is to be noticed the very small amount of free stocks that you have in each of those commodities where CCC has a large stock.

That will always be true, as long as the Government has stocks available that can be pulled out?

Mr. GODFREY. Yes.

Mr. WHITTEN. It leaves private industry without any necessity for carrying any large backlog, is that not correct?

Mr. GODFREY. This is true for practically every commodity except tobacco. In the case of tobacco the companies carry an average of 2.5 years' supply on hand because they have certain aging processes that they go through that are different for the different companies, but this is true for practically every commodity. You notice it has been materially the same. It changes a little here. The free stocks change a little because of the short supply the year before. It changed a little here because of uncertainty about the next year's programs. And then the free stocks increased materially here because of increased exports primarily, and we increased exports of wheat. Then they decreased here, again, because of indecision as to what next year's program is going to be like.

I might say that the acreage reserve program from 1956 through 1958 here cost about $377 million.

(The chart and table referred to follow :)

WHEAT: HARVESTED ACREAGE, US, 1952-62

Mr. WHITTEN. We will want cash outlay and the purposes for which it went, included with each of these.

Mr. GODFREY. All right. This is just to give you an illustration of what is happening to us in wheat and what has created part of our problem here. We used to harvest somewhere in the neighborhood of 80 million acres of wheat. When we passed the law back originally in 1938, with the 55-million-acre national minimum allotment, we had a 12.5-bushel-per-acre yield.

We are now up to about a 25-bushel-per-acre yield, and, even though the acreage is down to around 41 million acres, we are still producing about the same amount of wheat that we could have produced back then with the 80 million acres.

0

CCC

COTTON

(The material referred to follows:) Now, we come to cotton, the carryover and the CCC stocks of cotton.

1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963

? Includes cotton pooled, owned, and loans outstanding. Estimated total, including CCC stocks and other stocks.

Mr. GODFREY. This has followed a little different pattern from the wheat that we showed on a different chart, but it begins back in 1950, and then the effects of the Korean conflict is shown here. You will notice the CCC stocks were almost completely depleted during 1951. Many of you may recall that we actually went out and visited farms in an effort to get additional cotton planted in 1951. We did not have cotton acreage allotments or quotas in effect in 1951, 1952, or 1953. They were reinstituted in 1954, and we gradually built our stocks up then, and they reached a high point here of almost 15 million bales in 1956, and, because of the insistence of this committee that the cotton be made competitive in world trade, we began bringing them down some, and when the committee insisted and action was taken by the Department to make our cotton competitive, then we began bringing our cotton down and moving more.

This had a bigger effect, if you will notice, upon CCC stocks than it did on total stocks. But then we come over to 1959 and 1960 with the particular cotton programs that we had in effect, the choice A and the choice B, where CCC purchased all of the cotton that was planted under the A plan, and CCC stocks went up materially.

Then in preparation for the 1961 crop year, when the choice A and B would not be in effect, CCC stocks were almost depleted again. Now, we are getting up a little bit again.

IMPORTANCE OF CCC STOCKS FOR NATIONAL SECURITY

Mr. WHITTEN. Mr. Godfrey, as you know, I do not happen to farm at all, but I perhaps know a little more about this program than others coming from an area where this is quite a big operation which is quite vital to our economy. There are several other factors that might be mentioned in connection with this statement that you are presenting to us now, a picture of the cotton situation.

One is the 1951 and 1952 experience. When we had Korea, which was in some ways a local engagement, so we got down to where we were virtually without any reserves whatever, and, sitting as I do now on the Defense Appropriations Committee, where something like $45 billion is being spent and where we see about 63 percent of all gov

ernmental income going into defense, it leaves us wondering how best to keep an essential reserve from depressing markets.

I think this Nation would be very, very foolish, if the international situation is one-tenth as serious as our President, our Commander in Chief, and all the people who testify before my own Subcommittee on Defense indicate, to have any chance of a shortage. I am talking about all these basic commodities.

CURRENT COTTON STOCKS AND WORLD PRICING

Now, how to have an adequate reserve and, at the same time, not to have it depress the going market, is a real problem.

I also point out here that there is another factor where you saw the goods build up in CCC hands in 1959 and 1960. At that time there was an agreement-I say this advisedly-that the cotton trade from the producers that still held the cotton, which largely was cooperatives, all the way through, would not change the overpricing in world trade, and, for all practical purposes, we were not competitive during that period, and we could not get the Department to get competitive. They came before our committee at our request, and attempted to say that if they were competitive on an average for the 3 years, that that satisfied the law which required the Secretary to estimate our fair share and to sell competitively to the point of retaining it.

Such an argument to me does not hold water, but I point out that in 1959 and 1960, in actuality, we were not competitive, and the records will show it.

In 1961, we began to get competitive again, and may I say, before we finish here, I am going to ask a lot of questions. I am beginning to wonder if you have not got back to where you are not competitive again.

Mr. GODFREY. There are several other things that go into the cotton situation, as you well know-that is, the mill consumption, the competition from synthetic fibers, the actual world prices of cotton, the production larger than disappearance in some years.

I might point out here that in 1956-57 marketing year and the 195859, even in the 1960 marketing year, up until 1961, our U.S. cotton production was less than the disappearance. We were getting rid of the overburden, so to speak, but last year and the year before last we actually produced more than the disappearance.

Mr. WHITTEN. Another thing that you have here is that cotton being a commodity that you can keep in storage for a long, long time mere talk, just mere talk about reducing prices or increasing prices will seriously affect the immediate situation.

If you are talking about reducing prices, they lay off buying until you change. If you are talking about increasing them in the future, the mills rush in and buy it in anticipation of an increase, so that is quite a factor.

Mr. GODFREY. This is very vividly indicated here because, when we went out of the A and B program, you notice the decline in CCC stocks.

Then came the talk about the textile subsidy, and you will notice an increase in CCC stocks. It means that the pipelines are getting empty now of cotton. So, unless some action is taken pretty quick, then the pipelines will continue to stay empty, and we will carry just