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support features of the bill as it relates to the commodities which they market for their producer members.

They have now come to the conclusion that, in view of high investments and cost of operations, producers of these products cannot protect and stabilize their industries without a price-support floor as insurance such as other agricultural industries have against financial liquidation in case of price collapse.

Accordingly, on their behalf, I wish to amend the testimony I gave at the Senate Committee on Agriculture and Forestry hearing on April 14 on S. 2318, in behalf of the National Council of Farmer Cooperatives, to urge that price supports for citrus fruits, fresh and dried deciduous fruits, and edible tree nuts be made mandatory within a range of 60 to 75 percent of parity, according to normal supply schedule.

Representatives of the commodities involved expect to be in Washington the week of April 26 to confer with members of the Senate Committee on Agriculture about specific details of a support program.

I request your approval of making this letter a part of the record of hearings on S. 2318.

Sincerely yours,

JOHN H. DAVIS, Executive Secretary.

AGRICULTURAL ACT OF 1948

THURSDAY, APRIL 15, 1948

UNITED STATES SENATE,

COMMITTEE ON AGRICULTURE AND FORESTRY, Washington, D. C. The committee met, pursuant to adjournment, at 10 a. m., in room 324, Senate Office Building, Senator Arthur Capper (chairman) presiding.

Present: Senators Capper, Aiken, Bushfield, Young, Thye, Thomas, and Ellender.

The CHAIRMAN. The committee will come to order.

We will resume the hearing on S. 2318, and our first witness this morning is one of the leaders of the farm organization groups. We call him Jim Patton out in Kansas where we know him pretty well. He has a pretty good organization out there.

STATEMENT OF JAMES G. PATTON, PRESIDENT, NATIONAL FARMERS UNION, DENVER, COLO., AND RUSSELL SMITH, LEGISLATIVE SECRETARY, NATIONAL FARMERS UNION, WASHINGTON, D. C.

Mr. Patton, how long have you been president of the National Farmers Union?

Mr. PATTON. I was elected in 1940, Mr. Chairman. I have been in the organization work directly since 1932.

The CHAIRMAN. You make your home in Denver?

Mr. PATTON. That is right; yes, sir.

The CHAIRMAN. We shall be glad to have you make any statement you desire to make.

Mr. PATTON. Thank you, Senator.

Mr. Chairman and members of the commitee, for the record my name is James G. Patton. I am president of the National Farmers Union. I reside in Denver, Colo.

For the National Farmers Union I am glad to endorse in general the bill before the committee and to express the gratification of our organization that Senator Aiken, co-sponsor of the bill, and this committee have tackled so energetically and courageously the problem of providing a new approach in the relationship between farmers and Government.

There is a substantial agreement among everyone interested in agriculture that the preparation of a long-range program ought to be undertaken now and completed within a reasonably short period. Most of the doubts that have been expressed on this score have been simply doubts as to the feasibility of obtaining approval by Congress

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 agricul turists 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 "nor

mal" 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.

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