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of such a program, not as to the wisdom of desirability of acting now.. The need is obvious. We live in a world of daily hazard. The political circumstances of our times, with which economic circumstances are so inextricably entwined, change from day to day, and farmers cannot rely solely upon past or present patterns either of governmental programs or of internal or foreign commerce.
At present, of course, and for the past several years, agriculture has been relatively prosperous even though within agriculture itself there unfortunately remain many so-called depressed areas and many poverty-stricken individuals and families. But there remains a widespread fear among farmers of all kinds that ultimately economic depression will come as it always has come in the past. All public opinion and attitude polls reveal this deep-seated pessimism; and, for that matter, it can be confirmed after only a few minutes' conversation with almost any farmer.
For this reason, if for no other, we commend the committee and its staff highly for wrestling ,with one of the most complex of all legislative problems. But, more than that, we believe that S. 2318 and the report of the committee which preceded introduction of the bill constitute a landmark in such legislative efforts, and we strongly hope that a bill of this general character will be adopted by this Congress. I shall propose on behalf of our organization various modifications here and there in the measure, but I should like to make it clear that we regard the bill in the large as a valuable and constructive measure.
Before discussing the administrative realinements proposed in the earlier part of S. 2318, I should like to discuss with the committee, first, the provisions of title III, the title relating to price supports, and to a revision of the parity formula. A major contribution of the measure, of course, is its proposal of a new system for the support of agricultural prices in which the level of support is related to the volume of supplies of each major farm product. The theoretical base of the proposal is admirable. It offers, to my mind, one way of moving toward three objectives that many eminent economists and agriculturists have recognized as desirable:
(1) More adequate recognition in price supports of changes in demand.
(2) A shift in emphasis from control simply for the sake of price boosting to control as an instrument for adjustments in production as between groups of commodities.
(3) A tacit admission of the fundamental importance to each other of producer and consumer through relating farm income to volume of production as well as price.
The proposal of such a formula by such distinguished legislators as the sponsors of this bill is in itself a great step forward in thinking on agricultural subjects. With the philosophy of the suggestion I have no quarrel; and, indeed, it has close kinship with the views expressed by the National Farmers Union on more than one occasion. As to the mechanics of operation, however, I should like to lay before the committee one or two suggestions.
The use of "supplies” as the basis for fluctuation in the levels of support prices can conceivably lead to anomalous situations. If, for example, heavy exports or a disastrous drought or other natural cause should reduce the carry-over of a particular commodity beyond a certain point, then the "supply” would be "abnormal” rather than “normal" although in the bill's definition it still would be regarded as "normal.” I am aware of the provision in section 301 (g) of a means for adjustment in computing the annual averages of supplies by increasing or decreasing the figure for actual supplies for any one year if that actual supply is less than 80 percent or more than 120 percent of the actual average. But this base still seems to me to have some objections to it.
Moreover, I should like to suggest to the committee that it should be possible to be both more creative and more realistic. The Department of Agriculture during the war years evolved a valuable procedure for the establishment in advance of annual production goals. Thus, we have at hand a tool which could be used, I believe, to get at the problem faced in this part of the bill by the committee. Why not relate the level of support to be given to any commodity to the production goals hammered out by the Department and the farmers in the annual meetings with which we all have become familiar? Then, instead of seeking to encourage or discourage production by reference retroactively to the production of previous years, we should be tackling boldly and with vision the real problem, which is to encourage or discourage, as the general interest requires, the production in the forthcoming crop-year.
Senator THYE: Mr. Patton, would you object if you had an interruption at this point ?
Mr. PATTON. No.
Senator THYE. I think it is so important when you say you can hammer out production goals in conference. That is a splendid idea and thought; but let us assume you could not get full cooperation on the part of the producer and that the producer, because he was either engaged in raising one particular crop or another which he found highly profitable, did not see fit to follow the recommendations developed in the conference of the various agricultural committees. Supposing a high percentage of the producers just went on blindly and produced and thereby created surpluses that were just impossible to deal with from the standpoint either of the program or by the Department of Agriculture.
It was that thought, I think, the committee members had in mind when they wrote that page providing that a carry-over would have some influence in the price of parity or the support-price feature. In my opinion, the committee gave consideration to the carry-over phase in order to avoid specific control which would be mandatory and place it on the basis of influence by price to prevent overburdening the support-price-structure feature. I wonder whether you have given consideration to that phase.
Mr. PATTON. Yes; I have; and I do not have too much difference of opinion, but it seems to me the other factor should be added, Senator, namely, that forward pricing should be given more emphasis in relation to next year's production goals so that you get shifts within the total structure.
My own concept is that—with the exception of an occasional time when we ought to have a pretty large storage of wheat and a few of those other commodities——that a sharp emphasis in the price differential will shift production pretty rapidly in a forward year.
For example, in my part of the country they grow quite a few sugar beets, as they do in some parts of your State; and when the Depart
ment, in 1946, I believe, wanted to get a heavy shift from sugar beets to beans—when they shifted price support over to beans—they shifted a very large percent of the sugar-beet acreage out.
As a matter of fact, some of the factories complained about it and closed down.
I think the historic base of supply measured over a period of time should be one of the factors, but I would like to see some emphasis given to participation of the farmer.
Senator THYE. Mr. Patton, in peacetimes, when you could not say the oil crop is necessary because of a war emergency, could you expect that you could get a subsidy or a high price level guaranty that would have an influencing factor there?
In peacetime you could not hope to have the appropriations to influence production in the manner that you could get them in wartimes when they recognize the need of an oil crop and they could place a price so favorable in the oil crop that you would get an influence or change in acreage by the very influence of the price.
I wonder whether under peacetimes we could hope to bring that about because of the money involved in the guaranteeing of price, the same as flax was guaranteed. Mr. PATTON. Of course, I think your price supports, if you
have a sufficient program planning in terms of production goals and needs, can be shifted in such a way that actually they will involve the Government in a very small way, particularly if there are hammered out by agreement with farm people themselves alternate crops to which they could shift.
I do not think, obviously, that they would go to a crop that they could not produce even if you made a wide variance in price; but, just using the one example—the shifting from sugar beets to beans and then back again-I think that could be a substantial influence. I think there is one very important thing that I had in mind in drafting this thing, Senator, and that is that I hope that we can devise out of this whole program a basic concept of production for plenty rather than resorting to a scarcity device.
Senator THYE. I share that feeling with you, and therefore I am happy to have you make that statement.
Senator AIKEN. Let me say, Mr. Patton, that this whole thing, needless to say, is one of the most complex problems that can ever face the Congress, and the committee is still working on this very problem which you have pointed out and is trying to arrive at some tentative language which will meet the point which you raise. [Reading:]
328. (a) Not later than February 1 of each calendar year, the Secretary shall estimate the carry-over of each of the commodities, corn, wheat, oats, barley, and rye, for the marketing year for such commodity beginning in such calendar year. For each calendar year for which, as thus estimated
(1) The carry-over of corn exceeds 500 million bushels; or
(2) The total of the carry-overs of corn, wheat, oats, barley, and rye exceeds one billion bushels, and for each succeeding calendar year until, but not including, the first succeeding calendar year on which, as thus estimated (A) The carry-over of corn does not exceed
bushels, and (B) the total of the carry-overs of corn, wheat, oats, barley, and rye does not exceed
bushels In other words, when the supply reaches a certain level, provision would be made for a finding by the Secretary, a referendum by the farmers, and, if necessary, an allocation of acreage by the Secretary,
I am saying that to show that we recognize the problem you pointed out and are trying to find the answer to it, which will be satisfactory to all concerned.
You would not go so far as to leave it up to the Secretary to find the requirements in the case of basic commodities the same as he does when he supports the price of the nonbasic commodities now!
Mr. PATTON. Not entirely. I think it ought to be worked out as nearly as possible with the growers in relation to consumption; and probably, as I say later in my testimony, there ought to be some consideration of the over-all economic picture, not only within agriculture but in relation to the total thing.
I like the principle involved there, Senator, because I sincerely believe we can well afford as a Nation to have a rather large evernormal storehouse, particularly when one considers that the longest period we have ever had in the history of agriculture in this country where we did not have a drought was 12 years, and we have had 11 pretty good years so far in terms of production.
Senator AIKEN. As you notice in the bill, we intend to specify 500,000,000 bushels of corn or wheat or a billion of all grains together as the danger point; and then, when the danger point is reached, referendum controls and allocations would come into effect, unless, through the method of disposal which we will probably prescribe in the bill, the danger point could be eliminated in some way.
Mr. Patron. I hope in•that connection in a future agricultural policy we can get away from capitalizing into land the acreage allotments, because I think basically that is an inaccurate predication of the whole economy.
Senator AIKEN. We are trying to work on a program that would leave that as a last resort. I think if all of the other parts of the bill work as we hope they will work, the actual controls of acreage would seldom have to be used.
Mr. PATTON. May I say that I think this committee is to be commended for having done a very fine job, and these suggestions or criticisms which I have are intended to be completely constructive. I think this is an excellent piece of work.
Senator AIKEN. I would like to say, too, that I do not think any committee of the Congress ever had more cooperation from the farm people and farm organizations than we have had; they have criticized parts of the bill-as you will-and we have asked them to do that. That is why we have you come here, because we want it to be truly a national program applicable to the different communities and worked out by the people who know best what such a program should be.
Mr. PATTON. Such a system, I am inclined to believe could be worked out as readily as the mechanics now included in S. 2318, and I believe would provide a far more effective means of adjustment. This kind of programing_ahead, incidentally, would be very close to the kind sought by the Farmers Union in its suggested Family Farming Act, which we proposed both to this committee and to the House Committee on Agriculture earlier in the Eightieth Congress, although the mechanics put forward in that bill also differed from the mechanics I am suggesting today on the basis of present provisions of S. 2318.
I have not attempted to suggest specific language or to do more than outline the general idea at this time. It seems to me, however, that it should be added that the establishment in advance of levels
of support prices and of production goals is of such critical importance to the whole Nation, farmers and nonfarmers alike, that it should not be the sole responsibility of the Department of Agriculture, which inevitably and perhaps appropriately must interest itself primarily in farmers and farm subjects. Therefore, if the committee should adopt a system of the kind indicated here, I believe it also would be well to specify in the bill that such production goals shall not become effective until personally approved by the President, upon the advice of the Council of Economic Advisers. The development of such economic goals and review of departmental programs is the express job of the Council of Economic Advisers. Through such a device, the interest of the whole people might be more adequately secured than in any other way, and the question of the adequacy of supplies of food and fibers is so important to the national welfare that they must be safeguarded to the fullest possible extent.
The other major proposal made in title III of S. 2318 is of course the concept of an "alternative parity price”, through the addition to the existing parity formula of a new formula which includes the now well-known idea of a moving base price coverig the 10-year period prior to any current year. We believe that the proposals made by the committee here are thoroughly sound proposals and that they should be of considerable assistance in making more flexible and current the formulas on which the Government must base its levels of support prices.
Parenthetically, it may be remarked that in our view the importance of parity formula revision has been over-estimated and that, for that matter there has been too much concentration upon price questions alone in dealing with agricultural problems. Our members recognize however, as do all farmers the necessity of fair prices for farm products. We also recognize, however, that, while good prices may solve the problems of individual farmers, tinkering with price formulas will never solve the basic problems of agriculture such as soil conservation, the correction of inequalities within agriculture, the elimination of rural slums, and the provision to farm people on a parity with other people of such facilities as health care, education and housing. Since that question refers more to matters not covered by this bill than to those covered, I will not dwell upon it.
In conclusion, concerning title III, it should be noticed that neither this title nor the other two titles of S. 2318 repeals any of the machinery of restriction provided in the Agricultural Adjustment Act, the Soil Conservation and Domestic Allotment or the Agricultural Marketing Agreements Acts. Thus while the emphasis of this bill is away from policies and programs of restriction toward those of abundance, the emphasis in the basic statutes is all the other way.
The National Farmers Union agrees that some such laws are perhaps necessary as stand-bys for use in possible emergencies, but we also believe that a reversion to their use will be an admission of national failure to attain that fully productive economy to which all of us have pledged our allegiance in recent years. I point this out in no carping spirit but rather to keep the record straight and to emphasize the service that S. 2318 has done by making a start at any rate toward abundance.
Senator AIKEN. Before we leave that point, Mr. Patton, you realize that the committee inserted two possible parity formulas, either one