SECOND ANNUAL REPORT OF THE FEDERAL FARM BOARD1 NEW PROBLEMS CREATED BY BUSINESS DEPRESSION The activities of the Federal Farm Board were markedly influenced by the unusual economic conditions prevailing during the year. The present world-wide business depression has been of unprecedented scope, duration, and intensity. In the United States the severity of the decline has been accentuated by the particularly high levels attained during the business boom which reached its peak in 1929. From 1922 to 1929 the general trend of wholesale prices in the United States had been approximately level at about 40 to 50 per cent above pre-war averages; from late 1929 on, the decline brought the average to approximately pre-war level by June, 1931. American industries, for the most part, were able to meet the reduced demand by reducing output. As a consequence, industrial output in June, 1931, was 35 per cent smaller than in June, 1929. This reduction in production prevented the prices of manufactured products from falling so sharply as they otherwise might; from June, 1929, to June, 1931, wholesale prices of finished products declined but 23 per cent. The nature of farming, on the contrary, limits the promptness with which farmers can readjust production, nor are farmers organized so as to make such shifts. Agricultural production continued virtually unchanged; total crop acreage increased 0.5 per cent in 1930, and showed no significant decline in 1931, as a whole, while numbers of livestock continued to increase. The purchasing power of domestic consumers meanwhile fell drastically. Factory pay rolls dropped 39 per cent from June, 1929, to June, 1931. This was practically as great a decrease in total pay rolls as during the 1920-21 decline. In 1920 prices of many sorts fell with but little hesitation; in 1930 and 1931 taxes, wage rates, retail prices, and many other types of prices have fallen only slowly and to a slight extent. As a consequence the purchasing power available for buying food and clothing was still further reduced, while the industrial readjustments needed to correct the unemployment were stretched over a much longer period than in 1920-21. For most farm products domestic consumption could be maintained only by marked price reductions; for cotton, which is This report is for the fiscal year ending June 30, 1931, except where otherwise indicated. 1 used largely for industrial purposes, and for wool, consumption decreased in spite of lowered prices. As a consequence of these conditions the burden of the price depression fell on American farmers with exceptional severity. From June, 1929, to June, 1931 (according to the index numbers of the United States Department of Agriculture), the prices of products farmers sell fell 41 per cent, whereas the prices of goods farmers buy fell but 16 per cent. Furthermore, many cash payments farmers have to meet, such as taxes and interest, have shown little or no decline. The decline in industrial production was especially severe in the key industries, including steel, automobiles, building, and railroads. Bank failures have been numerous. Values of all forms of collateral have fallen sharply, and confidence generally has been at low ebb. The extremely low level of agricultural income during the year and the great unevenness between sections caused by the drought of 1930 played an important part in intensifying adverse business conditions. European demand for American farm products has likewise been curtailed by rising unemployment and declining consumer purchasing power. Tariffs have been raised in most European countries and regulations requiring the use of a high percentage of domestic grain in milling operations have been widely adopted. Both developments reduced foreign consumption of American products. The striking increase in Russian exports tended to disorganize farm product markets, and further increase the difficulties of United States exporters. Heavy depreciation of the foreign exchange values of South American, Australian, and New Zealand currencies were an additional unsettling influence in international trade. The rapidly declining prices threw great strains on all private business agencies. Cooperative marketing associations also had difficulties in carrying out their financial programs and marketing plans. The board was frequently called upon to help the cooperatives meet emergency needs. Extensive stabilization operations were made necessary by the extraordinary situation. Under these conditions the work of the board, discussed in detail in the following pages, was carried on the past fiscal year. PROGRESS IN COOPERATIVE MARKETING The most important activities of the board during the year were in helping cooperative marketing associations. The agricultural marketing act clearly indicates that Congress looks to the development of a system of cooperative marketing associations, producerowned and producer-controlled, as the outstanding means of attaining its ultimate objectives. The drastic declines in prices produced a most difficult situation for the cooperatives to meet. Losses have been large in some cases, but no larger than those of comparable private businesses. Errors in business judgment have been no more frequent or more costly than in the business world generally. Out of the trying experiences of the year important lessons have been learned and definite improvement has been made in cooperative organization and management. The board has record of 11,950 cooperative associations that operated during 1930-31, with a total membership of 3,000,000. Many farmers, however, are members of two or more organizations, and the membership rolls of many associations include some inactive members. Surely over 2,000,000 different farmers are now active members of cooperative organizations. The total business transacted by cooperative associations in 1930-31 was $2,400,000,000. Of this total, $130,000,000 represents the sale of cotton and cotton products; dairy products accounted for $620,000,000; forage crops, $1,200,000; fruits, vegetables, and nuts, $332,000,000; grains, $621,000,000; livestock, $300,000,000; poultry and poultry products, $86,000,000; tobacco, $7,000,000; wool and mohair, $26,000,000; miscellaneous commodities, $61,800,000; and the purchase of supplies, $215,000,000. Since 1927-28, the last year prior to the creation of the board for which such information is available, the number of associations has increased approximately 500, and the volume of business handled by cooperative associations has increased in value by $100,000,000, in spite of the lower prices. If prices in 1930-31 had remained at the same levels as in 1927-28, instead of the much lower levels which actually prevailed, the increase in the value of products handled cooperatively would have been much more marked, averaging 41 per cent for all products, and for individual products as follows: Cotton, 137 per cent; dairy products, 28 per cent; poultry products, 195 per cent; fruits and vegetables, 28 per cent; grain, 43 per cent; livestock, 20 per cent; wool and mohair, 614 per cent; and tobacco, a decrease of 35 per cent. The actual quantity of the product handled by cooperative associations is available for two commodities-cotton, and wool and mohair. In 1927-28 cooperative associations handled 825,786 bales of cotton; in 1930-31, 2,442,001 bales. During 1927-28 cooperative associations marketing wool and mohair received 22,575,000 pounds; in 1930-31, 130,349,499 pounds. The growth in actual numbers and volume does not entirely measure the progress in cooperative marketing. The unusual economic situation has caused many groups sincerely interested in developing cooperative associations to postpone organization for a while. The board has given much attention to helping to coordinate the activities of existing cooperative associations. It believes that in FIGURE A.-Two years' growth in cooperative marketing of four commodities Farmers National Grain Corporation and its member agencies handled 196,000,000 bushels of grain in 1930-31 crop year American Cotton Cooperative Association handled National Livestock Marketing Association's agencies The four charts above show the increased amount of wool and mohair, grain, cotton, and livestock handled by cooperatives in 1930 compared with 1928. Since 1928, national marketing agencies owned and controlled by farmers have been established, with the aid of the Federal Farm Board, for handling these commodities. Notations at the bottom of the charts give the names of the national organizations and the amount of products handled by these nationals and their member associations most cases local cooperatives can develop more surely when they have their own agencies controlling the sale of their products in the terminal markets and when they work together for a common purpose. During the first year of its operation the board assisted producers and their associations in the organization of six national cooperative marketing agencies-the Farmers National Grain Corporation, the National Wool Marketing Corporation, the American Cotton Cooperative Association, the National Bean Marketing Association, the National Livestock Marketing Association, and the National Pecan Marketing Association. During the past year it has assisted in setting up two more national agencies-the National Beet Growers Association, which was incorporated August 13, 1930, and the National Fruit and Vegetable Exchange (Inc.), which was incorporated May 21, 1931. Also during the year the board has given assistance in setting up State or regional associations as follows: 7 dairy and poultry or poultry associations, 7 sugar-beet associations, 3 truck-crop associations, 3 associations for marketing livestock, 2 for wool, and 1 for potatoes.2 Up to June 30, 1931, the board made loans to 105 cooperative associations. Affiliated with these organizations, either as members, stockholders, subsidiaries, or participants, are approximately 3,375 regional or local associations. The total membership of the associations which have participated directly or indirectly in board loans is 1,100,000, or approximately 730,000 individual farmers, after allowance is made for the fact that many farmers hold membership in more than one organization. The number of associations in each commodity group to which loans have been made and their estimated membership is as follows: "These include the Interstate Associated Creameries, Portland, Oreg.; the Dairy and Poultry Cooperatives (Inc.), Chicago, Ill.; the Indiana Poultry Cooperative (Inc.), Indianapolis, Ind.; the Plains Cooperative (Inc.), Plainview, Tex.; the Colorado Poultry Association, Grand Junction, Colo.; the Producers Mutual Exchange of North Carolina, Raleigh, N. C.; the Northwestern Turkey Growers Association, Salt Lake City, Utah; the Wheatland Beet Growers Association, Wheatland, Wyo.; the Southern Colorado Beet Growers Association, Rocky Ford, Colo.; the Montana-Wyoming Beet Growers Association, Billings, Mont.; the Idaho Beet Growers Association, Pocatello, Idaho; the Central Nebraska Beet Growers Association, Kearney, Nebr.; the Southern California Beet Growers Association, Oxnard, Calif.; the Central California Beet Growers Association, Stockton, Calif.; the West Tennessee Truck Marketing Association, Humboldt, Tenn.; the Florida Truck Growers (Inc.), Bradenton, Fla.; the Utah Fruit and Vegetable Growers (Inc.), Salt Lake City, Utah; the Iowa Livestock Marketing Corporation, Des Moines, Iowa; the Intermountain Livestock Marketing Association, Denver, Colo.; the Illinois Livestock Marketing Association, Chicago, Ill.; the Indiana Wool Growers Association, Indianapolis, Ind.; the Wisconsin Wool Growers Association, Portage, Wis. ; and the Wisconsin Potato Growers Exchange, Waupaca, Wis. |