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farm income by 1967 would decline almost $5 billion, or about 40 percent. Bear in mind that this result assumes that other commodity programs would continue, and that our wheat export programs would continue.

Few things could do greater damage to the rural community or accelerate the negative trends in the rural economy than a decline in farm income of this proportion. Few things could be more threatening to the national economic well-being. The farmer, after all, is the No. 1 consumer.


Commodity programs strengthen the family farm, although in recent years it seems to be fashionable to say that the benefit of these programs goes only to the very largest farmer. It is hard to understand this contention when over 40 percent of the commodity loans in the major crops are less than $1,500 in value, and the adequate sized family farm must gross $10,000 or more. To the farmer in Idaho or Texas or Alabama or Maine who can put his crop under loan at harrest, when market prices are low and redeem his loan when prices become higher, commodity programs are very important.

Thus, commodity programs meant a 33-cent-per-bushel difference in price for a wheat farmer in Canyon County, Idaho. The price at harvest was $1.59 a bushel. The loan price was $1.68, and the farmer repaid the loan 5 months later when the market price rose to $1.92.

Mr. Chairman, if it wouldn't unduly burden the record because this contention is made, I have before me some instances of exactly this in modest sized operations for wheat in Oregon, Idaho, Pennsylvania; for corn in Virginia, Nebraska, and other States; soybeans in a number of States around the Nation that are specific instances and if thev

Mr. WHITTEN. Mr. Secretary, I believe it would be well to include those in the record as exhibits following your testimony, so as not to break the continuity here.

Secretary FREEMAN. Very good.
(The information referred to appears on p. 16.)

Mr. WHITTEN. If you wish to discuss them, you can do so at this time.

Secretary FREEMAN. I would like to touch on it, because it gets down to cases which I have tried to do instead of generalities.

Oregon is close to home to Congressman Horan. This one was Johnny Campbell, Route 1, Madras, Oreg., Jefferson County; 777 bushels of wheat, loan rate was $1.86. The local price at the time the loan was made was $1.83. It was held for some months and was sold at $2.10, for the difference of 27 cents a bushel and difference to this farmer of $209.79.

This fellow's name is Carl Guthrie, Miami, Mo.; loan rate $1.22; local price on corn at the time of the loan was $1.06. At the time the loan was repaid, it sold at $1.27. It made a difference of $559, being able to hold it for a few months in that instance.

I have a number of soybean cases. Here is one down in South Carolina, Walter Walling, Fort Motte, S.C.; 479 bushels of soybeans, loan raté $2.21. Local price at the time, $2.45. Loan repaid when the price of $2.66. It made a difference of $100.59.

I think these are somewhat typical. I won't burden you with more, but at a time when it has become very fashionable to say these programs only help the big farmer, I think it well to point out how they assist the small farmer.

Mr. WHITTEN. Mr. Secretary, with regard to that, you have cited these illustrations which show the individuals' profit by reason of price supports or the loan program being available. This is actual profit. What doesn't show is that if you had not had the loan, and all of this had gone on the market at the same time, the producer might have taken practically nothing in the first instance, which is over and above the benefits that followed in these specific instances.

Secretary FREEMAN. The point is very, very well made and, of course, that is absolutely true.

The limitations of commodity programs are not that they cannot help the family farm or strengthen agriculture. Their limitations are that they cannot directly help the 9 out of 10 farm youth today who must look outside agriculture if they are to find a satisfying and rewarding occupation.

Commodity programs cannot directly combat the effect of the changes now occurring in agriculture-changes that mean fewer people will be required to operate our family farm agriculture. The rural community must provide alternative opportunities both for those who will farm part time and for those who seek nonfarm jobs. This is a gap we must fill.

This is a gap which RAD seeks to fill, not only for the farm youth, but also for the young people growing up in cities and towns throughout rural America, for the farmer who seeks a job off the farm to supplement his income, and for the nearly 19 percent of those in rural areas who now are unemployed or underemployed.

With this by way of introduction, let me now turn to the case histories which illustrate the specific goals under RAD, and the kind of progress that is possible through this effort.


Many programs--including conservation, credit, research, and education-contribute with the commodity programs to strengthening the family farm.

In Georgia, a young farm couple has, through a supervised farm credit program under the Farmers Home Administration, nearly doubled the farm in size and financial position. FHA credit has enabled the family to buy better equipment, pay operating costs, and to finance land purchases.

In Montana, a farmer discouraged by the expense of trying to grow wheat on 460 acres of rocky, sloping ground, turned to grass and

grazing. Through the Great Plains conservation program, designed to help family farmers in this region of low rainfall and high climatic hazard, he was able to seed his cropland to grass and alfalfa, build the necessary fencing, and construct watering wells.

In Colorado, 40 family farmers formed a cooperative livestock association and, with the help of a Farmers Home Administration loan, purchased 12,300 acres of land and assumed leases on an additional 2,640 acres. Some 1,440 acres of these lands were in crops, and were

shifted to grass. Acquiring access to this land enabled these farmers, some with incomes as low as $1,500 to $2,000, to add a livestock enterprise to their irrigated crop farming system, and add an estimated $2,500 yearly to each family's income a total of around $100,000 a year to the community.

What we are doing here through various techniques of credit and technical assistance is to overcome the growing barrier which many young people are finding as they attempt to enter farming. In 5 years, we expect that about half of today's farmers will be over 55. With an average investment in a farm now estimated at over $51,000, the young family which hopes to replace these farmers will need assistance-unless they hope to inherit a farm. We must come to grips with this problem, for it will determine whether families or financial power dominate agriculture in the future.


The major methods for strengthening farm income are through better farm prices, reducing production costs, and expanding the domestic and oversea markets for what the farmer produces. Commodity programs, trade development, food stamps, utilization research, food for peace * * * all of these are the means for directly raising farm income. Over the past 3 years, gross farm income * * * largely as a result of the programs enacted by the Congress and of administrative actions *** has been $8 billion higher than if 1960 income levels had prevailed. Total net farm income has averaged almost $1 billion higher per year and per farm income increased 16 percent to an average $3,430 per farm.

We are helping farmers to discover new sources of income. There are RAD programs, particularly those designed to encourage the development of new and more efficient uses for farm resources, which help to increase farm income directly. Other major contributions, however, to increased income for the farm family through RAD will be through the techniques and programs which follow.


* * *

Utilization research not only creates new uses for farm products, but also new jobs to produce the new products developed by research. The most recent example of this situation is the development of a commercial process for sweet potato flakes. Plants to make this new product are being built in Mississippi, Louisiana, and North Carolina, and will provide hundreds of new jobs as well as new markets for farmers.

Research results, however, do not come as fast as the need for new jobs is growing in rural America. Thus, we seek to encourage new and expanded industries of all types together with the various service enterprises that provide employment to locate or expand in the rural areas, especially in low-income areas. Last year, the rural electric and telephone organizations, which are borrowers from REA, helped to launch at least 535 industrial and business enterprises in rural areas.

These efforts to encourage new and expanded industry and commerce helped to create almost 60,000 new jobs during 1963. Those jobs represent an investment of a half billion dollars—92 percent of it local and State money.

Most of the financing was local and the "seed" fund from Federal sources came from the Area Redevelopment Administration and the Small Business Administration. About $670,000—or one-tenth of 1 percent-came from REA section 5 loans to rural electric and telephone borrowers.

Adequate water supplies sometimes spell the difference between getting or losing an industry. In Leavenworth County, Kans., the area around the little town of Basehor would have lost a dairy if a USDA loan had not made possible the development of an adequate water system. Some wells in the area were becoming contaminated, and the dairy, with its 75 employees and $30,000-a-month payroll, was in danger of closing.

The Department made an $80,000 loan and local people put up $10,500 to build a community water system. Now the dairy has all of the clean water it needs, new homes are going up all over Basehor, and business firms and schools no longer have to ration water during dry spells.

RECREATION AS A FARM CROP A 220-acre dairy farm in New York had a net income last year

of $3,450–$2,050 of it came from a vacation farm enterprise that the family ran during the summer months.

A midwestern cash-grain farmer with an 85-acre lake found he could make almost as much from renting fish poles as from farming. His net income last year from selling fishing privileges after deducting the cost of stocking the lake and other expenses was over $2,800.

We estimated that many farmers are adding $4,000 to $8,000 a year in total income because of a recreation enterprise. Some farmers also are likely losing money. With technical assistance * * * and research *** * the number with profitable projects can be increased, and those that would end in failure can be avoided.

Since the passage of the Food and Agriculture Act in 1962 which provided authority for the Department to assist farmers in recreation development, we estimate that 18,000 farmers who are members of soil and water conservation districts have established a recreation project on part or all of their land. Another 18,000 are considering recreation possibilities.

FHA loan funds for recreation development have helped establish recreation projects in 166 areas in 41 States. These are funds well invested for they open to the farmer and the rural community the means to share in the $20 billion a year outdoor recreation business

a business that is growing rapidly. Recreation development also provides new jobs * * * jobs the rural community needs. I am reminded particularly of the Blue Knob ski resort near Bedford, Pa. Part of the funds for this project came from an REA section 5 loan, and, as a result, much criticism has been directed at the project and REA. Yet, without the loan, the project would never have begun.

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und er Mr. WhitrEn. Mr. Secretary, I have felt that, whatever the merits

Thx of that type of program from a financial standpoint, the REA has rent d enough problems with private power companies without getting into

something that has resulted in as much adverse publicity as this has. Om F We shall develop this more thoroughly later. But even though this ion ti is thoroughly sound, REA has got about all the load it can carry, in

my opinion, without getting off into this area.
Has there been any investigation to see whether this type of opera-

tion could more properly be carried on by the Farmers Home Admineen goed istration which, after all, is set up from the standpoint of making che are and supervising loans?

Secretary FREEMAN. Yes, sir; there has been, and there have not e wie been recreation loans made by REA in recent months, Mr. Chairman, and to because of the problem in connection with it.

Mr. Whitten. I don't know what the Government should do. I

don't know how far REA should go. But I am aware that we live put up in a very practical world and that some agencies are better set up to sall & handle certain types of things than others and such operations by -asehat some agencies are generally more accepted by the public than others, during We will get into that later, but I am glad to know some thought

has been given to this possibility.
Secretary FREEMAN. I thank you, Mr. Chairman.

I did want to call this to your attention-because it was controverTear ol sial, and I know the committee is interested. Of course, this com

mittee knows these things I just note this experience for the record and for the information of others in connection with it.

If I may continue, Mr. Chairman, today the resort is drawing an rming average reekend attendance of 3,000 persons, and is grossing about er de $10,000 a day. Some 58 people have jobs that were not there a year

ago, and next year at least 30 more jobs will be created.

But that is only half the story. Merchants in surrounding towns are suddenly finding business they never before knew existed. And, as a reporter for one of the top business publications wrote, Blue Knob will become one of the top half dozen resort areas in the eastern section of the country.”

There is one further benefit of recreation that most people don't which realize. It is far cheaper to loan the farmer, or groups of rural patient citizens

, the money to convert cropland to recreation than to pay to take of coll that land out of production and have it lay idle.

For example, a group of citizens in Hardin County, Iowa, obtained an FHA loan to convert an 80-acre farm into a 9-hole golf course. As

the local newspaper editor noted, the Government, because of the blish loan, “won't have to battle some 128,000 bushels of corn as surplus."

Recreation is more valuable than corn to the community.

Mr. Whitten. May I interrupt there to point out that we have the
Small Busniess Administration where Government loans are made
available to small businesses.
I mentioned that at this point in the record to indicate that this

is not the only place where the Government is lending money for from the purpose of developing and expanding small business.

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