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(The biographical sketches follow:)


Mr. Steele was born on June 27, 1909, at Highmore, S. Dak. He received his B.S. degree from South Dakota State College in 1931 and his M.S. degree in 1932. He took additional graduate work in land economics at the University of Wisconsin. Mr. Steele was land consultant in South Dakota for the National Resources Board during 1934–35. From 1936 to 1954 he carried out land and water economics research work in the Great Plains and Missouri Basin areas. Since 1954 he has been in charge of land and water economics research in the Agricultural Research Service and later in the Economic Research Service. In December 1962 he was appointed Director of the Resource Development Economics Division of ERS. Mr. Steele has undertaken many special assignments. In 1952 he was assistant executive director of the President's Missouri Basin Survey Commission. In 1959 he was chairman of the USDA task force established to prepare an analysis of "Land and Water Potentials and Future Re quirements for Water” for the Senate Select Committee on National Water Resources. Currently, he is co-chairman of the USDA Land and Water Policy Committee.


Mr. Waldman was born December 1, 1925, in New York City, N.Y. He entered City College of New York in 1943, and received his B.S.S. in economics and statistics in 1949. From 1944 to 1946 he served with the U.S. Army in Europe. He was employed by the New York State Department of Public Works as a statistician from 1949 to 1952. While in Albany he attended the graduate program in public administration sponsored by New York and Syracuse Universities. From 1952, when he began his Federal service, until 1962, he was with the Directorate of Civil Engineering, Department of the Air Force. During this period he served in a budgetary and program management capacity. Mr. Waldman joined the Department of Agriculture in 1962 at his current assignment as Chief, Budget Branch, Division of Budget and Finance, Office of Management Services.


Mr. KOFFSKY. Mr. Chairman and members of the committee. I appreciate this opportunity to review the 1964 budget proposals for the Economic Research Service.

The Economic Research Service performs research on the broad spectrum of problems associated with agriculture. It evaluates and provides guidelines for the use and development of resources in agriculture and the adjustments farmers make and can make to rapidly changing conditions, while at the same time maximizing cost-reducing efficiencies and net returns from farming.


Mr. Chairman, as illustrations of work in the area of farm economics research, I refer to the status of program, pages 12 to 17, of the explanatory notes.

Mr. WHITTEN. We shall be glad to have them included at such point as you wish to have them.

I might say we are changing this procedure a little bit. Heretofore we have put all the justification pages in at one point. This time we would like for them to go into the appropriate place in line with the discussion. Please feel free to suggest where you would like to have them.

Mr. KOFFSKY. Thank you.
(The matter referred to follows:)



Farm economics research deals with many and varied economic problems of agricultural production and resource development. The work is concerned with the economics of organization and management of farms, extent, and utilization of land and water resources, watershed and river basin development, use of capital and labor in agriculture, production and conservation practices, adjustments in production and resource use, economic development of depressed rural areas, farm financial problems of credit, insurance, and taxation, and appraisal of alternative production policies and programs.

Rapid technological change in agriculture and the tendency for farm production to outstrip growing demands for products gives rise to continued need for economic adjustments in our farm economy. Farms are decreasing in number and increasing in size and degree of specialization. Farm machinery, fertilizers, and other innovations, are substituting for land and labor. These trends, along with continued concern over the use, development, and conservation of the Nation's land and water resources, and with growing concern over income opportunities and other problems of rural people, especially those in chronically depressed areas, challenge the most rigorous research in the field of farm economics. Results of farm economic research are used widely as aids in management decisions at the farm, area, watershed, regional, State, river basin, and national levels.

The Department's program of research and related statistical reporting in farm economics is conducted from headquarters in Washington, D.C., and is concerned chiefly with problems of regional and national scope. Field studies generally are conducted in cooperation with State experiment stations and often in cooperation with other Federal agencies. When studies are made jointly by Federal and State workers, Federal people usually are most interested in regional and national applications of results, while State workers are most often interested in local applications. Close-working relationships between Federal and State agencies have long been traditional in this field.


1. Farm output and productivity.-Preliminary estimates of farm output in 1962 indicate that it may equal the 1961 level, 6 percent above the 1957–59 average (fig. 1.). Both crop production and livestock production in 1962 indicate continuation of the 1961 level of production. Crop production is nearly 2 percent below the 1960 record. Production of food grains declined 8 percent from 1961 and 3 percent from the 1957–59 average. Feed grains increased one percent, chiefly due to record corn yields. Cropland used for crops is at the lowest level of record. However, crop production per acre is at a new peak. Livestock production in 1962 remains at the record high set in 1961, 7 percent above the 1957–59 average. The number of animal breeding units increased 2 percent, offsetting a slight decline in livestock production per breeding unit. Total inputs used in agriculture in 1962 is unchanged from last year. The reduction in labor was offset by increased use of other inputs. Labor used on farms reached a new low of 9.3 billion man-hours in 1962. Nearly 40 percent less labor was required to produce the record-equaling output in 1962 than was used in 1950. Farm output per unit of input in 1962 continued at the record 1961 level. Labor productivity in 1962 was at a new high, with farm output per man-hour about 3 percent higher than in 1961. This was a little less than the average rate of increase during the last decade.

2. Farm debt rise continues.—Both farm mortgage debt and other farm debt (excluding Commodity Credit Corporation loans) have risen this year at about the same rate as in 1961 (fig. 2). The continuing improved level of farm income, the slightly higher prod etion costs, and the co ng enlargement of farms are factors in the further debt increase.

Farm debt on January 1, 1963 (including CCC loans), is expected to total about $29 billion. If farm real estate values increase as anticipated, this amount of debt would be equal to about 13.7 percent of farm assets, slightly higher than a year ago, and about halfway between the 1940 ratio of 18.9 percent and the 1950 ratio of 9.5 percent. Repayments on farm mortgage loans, and most other available indicators of the condition of farm loans, have remained favorable in 1962. As in the past few years, farm foreclosures have continued at a very low level.

One notable development this year is the sharp increase in Farmers Home Administration lending, both direct and insured. This reflects an increase in loans for rural nonfarm housing under broadened authority, as well as an expansion in FHA lending to farmers. However, the FHA will probably hold or have insured only about 6 percent of the total farm debt as of the end of 1962.

3. Variation in net income among types of farms.—Preliminary estimates show wide variation in production, costs, and returns for 1962 on 11 important types of commercial farms in widely separated areas. Net returns for 1962 varied from an average of $2,661 per farm on egg-producing farms in New Jersey to $12,583 on cattle ranches in the intermountain region (table 1). Net returns in 1962 were higher than in 1961 on four of the farm types, lower on six types, and about the same on one type of farm.

Table 1.— Net farm income, specified types of commercial farms, 1961, with



General crop large).
Peanut-cotton farms, southern coastal plains..
Tobacco farms:
North Carolina coastal plain:


Tobacco (small).
Kentucky bluegrass:

Tobacco-livestock, inner area

Intermediate area.

Outer area.
Spring-wheat farms:
Northern plains:

Wheat-small grain-livestock.

Winter-wheat farms:
Southern plains:


Wheat-grain sorghum. Pacific Northwest:


Cattle ranches:

Northern plains..
Intermountain region.

Sheep ranches:

Northern plains.

32, 324
21, 431
59, 581
2, 315

32, 877
85, 025

40, 041
26, 172
79, 405
3, 218

16, 324
25, 826
80, 904

3, 416

3, 208
3, 925
2, 355

2, 770
3, 543
2, 314

5, 275
3, 234

5, 864

4 7,111

3,491 4, 718 3, 010 7,318 2,494 4, 657

7, 451

2, 390


2, 909
5, 122

5, 192

5, 205

4, 405
5, 073

5, 674
5, 559

1, 423


9, 805 9, 206 11, 998 13, 471

9, 135 8, 841 13, 500 • 15,797

5, 249
11, 409
7, 519

10, 666
12, 161
11, 136
11, 868

10, 619
12, 195
11, 434
11, 940

6, 277
10, 028
8, 167

6, 268
8, 635
5, 603

4, 980
7, 475

12, 583


10, 803
9, 710

10, 121


1 Preliminary.
? Tentative estimate, November 1962.
* Not available.
* Revised.

NOTE.-Information presented here is on an owner-operator basis primarily for comparability between types of farms. Net farm income is the return to operator and unpaid members of the family for their labor and management on the farm and return to total capital. No allowance has been made for payment of rent, interest, or mortgage.

Changes in prices received and the impact of weather on farm production were the most common factors contributing to changes in net farm income from 1961 to 1962. The farms with higher returns in 1962 also had higher net farm production and received higher prices for products sold. On the seven farm types with lower net farm income in 1962 compared with a year earlier, net farm production was lower on six. Prices received for products sold averaged lower in 1962 on four farm types, higher on two types, and the same on one.

Estimates on costs and returns have been completed for 1961 and earlier years for 39 important types of commercial farms. Net farm incomes averaged higher in 1961 than in 1960 on 27 of these farm types. They were lower on seven types of farms and about the same on five. Returns were higher in 1961 on dairy farms in the Midwest and Northeast, Corn Belt farms, western cattle ranches, tobacco farms in the Coastal Plain of North Carolina, and tobacco-livestock farms in the Bluegrass area of Kentucky. They were lower on poultry farms and western sheep ranches.

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