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Senator ELLENDER. What did you have reference to then when you said that Congress should not spell out what these committees ought to do or even suggest the establishment of them but the decision ought to be left to the Secretary?
Mr. Davis. Well, I did not mean exactly that. I meant that we did not think we should go as far as this bill does in reorganizing the Department of Agriculture and spelling it out in law, that these agencies should be drawn together under a social and economic administration, and so forth.
Senator ELLENDER. As to the manner and method in which the bill states that the soil conservation program should be administered, you have no objection to that, I understand ?
Mr. DAVIS. No.
Senator AIKEN. You are simply referring to the set-up within the Department of Agriculture itself and expressing the belief that we should leave the Secretary more freedom there instead of spelling it out?
Mr. Davis. Because we are going to have changing conditions in the future.
Senator ELLENDER. As to the power of the national council, you say that that council ought to be more or less advisory and should not in any manner have any policy-making rights?
Mr. Davis. Yes. First, the policy would be generally laid down by Congress. Then the responsibility of operating the program would be up to the Secretary of Agriculture, but in order that he might have advice from the country you would have a board that was well chosen geographically and with respect to commodities, and so forth, which would come in periodically or on call and advise him.
Senator ELLENDER. Do you think that a council of that kind is necessary?
Mr. Davis. Yes, I think it would be advisable if it would operate on as effective a basis as has, for example, the committee under the Marketing and Research Act.
Senator AIKEN. The only place in the bill where they are given authority other than advisory is in the case of an emergency or unusual condition where the council with the Secretary will raise or lower the support level.
Senator ELLENDER. That is what I am going to bring out. As I understand the council, it has nothing but advisory capacity and it is only in the event of emergency that they are given authority other than advisory
Senator Lucas. Why give them that power?
Senator Lucas. The greatest power they could have would be in an emergency.
Senator AIKEN. If that emergency power for the council is stricken out of the bill, it seems to me it would leave it just about as Mr. Davis is recommending, other than we do specify that there shall be four farmers, five farmers really, because there would be four elected by the States and four appointed by the Secretary, representing industry, and so forth, and consumers and one from the land-grant colleges.
Mr. Davis. Actually, most of our farm legislation has been written during periods of emergencies. It seems to me that that is a prerogative of Congress.
Senator AIKEN. We are trying something a little different in that we are attempting to write legislation to prevent an emergency rather than wait until we get into one and try to write legislation to get out of it.
Senator Lucas. That would be granting a tremendous amount of power to some outsider who was not either elected by the people or confirmed by the Senate of the United States. I just do not believe that is constitutional.
Mr. Davis. Advisory councils of this nature should periodically report to the Congress and recommend changes in legislation and budgets needed to accomplish the coordination needed and to eliminate duplication of function where additional authority is necessary.
Likewise in the States there is need for agricultural councils to coordinate the various Federal and State agencies handling conservation and educational programs, and for the county agricultural councils made up of producers, marketers, and program representatives.
These councils, under proper supervision and encouragement toward coordination and efficiency, will accomplish more real progress than any other type of organization to remedy a confusing situation existing at the operations level.
Title III of S. 2318, dealing with parity formulas and price support is the heart of the bill and probably is the section that will arouse the most controversy.
Before coming to grips with specific points of this section, I should like to outline briefly our general position on price supports to set the stage for the following discussion.
Members of the National Council of Farmer Cooperatives believe that price supports should be resorted to only after all other possible steps are taken by farmers themselves and the Government to move farm products into consumption at fair prices.
If we reach a point where the Government becomes the chief market for farm products or where prices are rigidly set, we tend to cripple our free markets which are our most effective means of handling farm products.
Before support prices are resorted to, we believe that every effort should be made to move farm products by upgrading the American diet through research, education, merchandising, improved marketing techniques, promotional campaigns, and by finding new uses and increasing our exports.
We hope the Research and Marketing Act of 1946 will be of value in this direction.
Several proposals have been advanced for supplementing consumer incomes where the limiting factor to adequate diets is inadequate income. We should give extensive study and research to such programs so as to expand our markets and simultaneously improve our living standards.
On the supply side we favor stimulating employment adjustments in rural areas through development of adapted industries to provide for balanced use of local labor and natural resources.
Along this same line we favor increased vocational training and employment services to facilitate that movement of underemployed farm people into industry. We do not believe in continuing inefficient units in agriculture by the use of subsidies. We urge further
systematic study and research into the feasibility of industrializing overpopulated farm areas.
Now with this background let me turn to certain specific points regarding price support in S. 2318.
We feel that the use of two parity price formulas as set forth in S. 2318 will have the effect of introducing more confusion into an already confused subject. It will also lay agriculture open to criticism of opening another road to the Federal Treasury. We favor the retention of the present parity formula until a better one can be agreed upon. We believe that the suggested alternative formula which reflects the relationship between agricultural commodities over the most recent 10-year period is sound.
In modernizing the parity formula we urge the inclusion of farm labor.
Senator ELLENDER. Is that hired labor?
Mr. Davis. We think it could be done either way, but we think it makes a difference in the way you set up your
formula. We think the cost of living items, the food items, and items consumed in the home would have to probably be eliminated or accounted for differently if all labor is included. I think the most feasible plan is probably to include the hired labor. You approach a cost of production formula if you include all labor, I think.
Under S. 2318, price supports are mandatory for only seven commodities, namely, cotton, wheat, corn, tobacco, rice, peanuts, and wool. You will hear from the wool people next, I understand.
I might say our wool division is in favor of putting wool in as a basic commodity.
If these commodities are to be supported, we believe that similar security should be provided in one form or another to the producers of all farm products. In 1946, which is the last year for which figures are available, the seven basic commodities accounted for only 20.5 percent of total farm cash receipts in the United States. Actually, the most hazardous farming of all is not with respect to basic commodities but perishable commodities.
In 1946 cash receipts from four of the seven commodities, namely, rice, tobacco, peanuts, and wool, totaled only $1,377,641,000. The total of these four was less than one-third the cash receipts from cattle and calves; about one-half the cash receipts from hogs; about one-half the cash receipts from wholesale milk; and slightly less than the cash receipts from eggs,
Cash receipts from potatoes totaled more than that for wool, rice, and peanuts combined.
To write into law, however, at this time, that price supports are mandatory for all agricultural commodities. would, we believe, be a serious mistake. We think that they should be permissible. If mandatory, it could involve tremendous administrative problems and result in an outlay of billions of dollars in times of depression. We do believe, however, that producers of the so-called nonbasic com
modities should be entitled to some kind of support in depressed tinres. That would be permissive possibly but not made mandatory.
Senator ELLENDER. Have you outlined a plan?
Senator ELLENDER. Why do you not outline a plan? It is easy to say that and all of us have been confronted with that. I would like to have your views expressed on this subject.
Senator AIKEN. The committee has been unable to find any formula that would cover that situation.
Senator ELLENDER. It is easy to shout from the treetops.
Senator AIKEN. It was pointed out yesterday and the day before that the Commodity Credit Corporation charter bill provides for the support of nonbasic commodities but in discussing the matter with officials of the Commodity Credit Corporation I find they would like to have something more explicit written in the bill than to rely on their broad general authority which is in the charter.
Mr. Davis. Answering your question, for the most part the fruit and vegetable people in the associations that are in our organization, and the livestock associations, have been against support prices for their commodities. In fact, they more or less have been against support prices in general, but at our meeting this last week when we were talking about long-range agricultural policy this was pretty much the sentiment—that if a long-range agricultural policy is to include support prices for basic commodities, then our members think they are going to be driven to the position that all segments of agriculture should have somewhat similar treatment.
Senator ELLENDER. Can you offer any suggestion as to how it can be done?
Mr. Davis. Just this, that we want a study made of the feasibility of using a compensatory payment program for some of the perishable commodities. The problem is that you cannot store such commodities. They have to be moved immediately.
If the Government takes title, then the Government becomes the market. We would like to avoid that. The alternative it seem to some of our people is to let the products move in the market at some price since they are perishable and then compensate the farmer. We are not for that but we are for the study of that and all other methods.
Senator THYE. I was going to say, Mr. Davis, that with a seasonal perishable product, just the moment you have a surplus the price starts tobogganing.
Mr. Davis. That is right.
Senator THYE. Unless you were to step in to support the price the season would end and the producer would have a tremendous loss.
Mr. Davis. I think that during the war there were times when the fact is the Government was ready to step in prevented the price from going downhill.
Senator AIKEN. It would be more economical to remove a small percent of the crop from the market in order to prevent a price collapse than it would be to let the price collapse and then undertake to reimburse farmers for the loss.
Senator THYE. That is what I contend.
Senator AIKEN. We have the dairy industry which is about the largest branch of farming and prices have been pretty well kept from
collapsing in that industry although costs have not been kept very closely in check. Prices have been kept from collapsing through marketing agreements which have covered about a third of the industry but which served to regulate prices for the rest of the industry.
Could we not go much farther in the field of marketing agreements in supporting prices on nonbasic commodities?
Mr. Davis. We think that should be studied.
Senator AIKEN. I understood in the early part of your testimony you had reference to the extension of marketing agreements. You said we should exhaust every other means before resorting to price support. I do not think that statement is at all inconsistent with the provisions of this bill because when prices fall to the danger point where farmers are required to produce at a loss of-over a considerable period of time—it would indicate that the other means of supporting prices had not sufficed and it was time for support by the Government to come into the picture. Mr. Davis. No, I do not think it is inconsistent with your
bill. Senator ELLENDER. What I find difficult in supporting the price of these commodities is that in many cases there is no way by which you could control these surpluses and if we are to keep on supporting prices and then not at the same time to be able to cut the spigot off, why a lot of the consuming public would have just cause to criticize the Congress for spending a lot of money to maintain prices on a commodity the surplus of which cannot be curtailed.
We often cite the case of the eggs where in we have on hand approximately $50,000,000 worth. Within the next few weeks some agency of the government is going to support the price and keep on storing them, notwithstanding the fact that there is already a large supply on hand. The consumer public finds it difficult to understand why it must pay 65 cents for eggs when we have a big surplus that could be sold much cheaper.
Senator AIKEN. I think it is interesting and worthy of mention here to consider the fact that the Commodity Credit Corporation was permitted under the wartime legislation to incur losses up to $500,000,000 in suporting the price of a nonbasic commodity and that as of the present time I understand that the total amount charged up against that $500,000,000 has been a little over $40,000,000, which seems to me a remarkably low price to pay for the support which has been given all of these nonbasic commodities in order to prevent collapse of prices.
Senator LUCAS. That is true, Senator.
Senator AIKEN. I was surprised to find out that so little had been actually charged up against the $500,000,000.
Senator Lucas. I seriously doubt that you can justify that as a base for future consideration upon legislation.
Senator AIKEN. Possibly not because some of the commodities they have supported the price on, like powdered milk, for instance, European countries have taken off their hands at, I expect, a little profit, not much, but a little bit.
Senator Lucas. You see, in your statement, Mr. Davis, you first say:
If these commodities are to be supported, we believe that similar security should be provided in one form or another to the producers of all farm products.