vegetable gum crops, to reduce our dependence on imported materials, and annual crops for use as paper pulp raw materials.

8. Lower marketing margins prospects for bread.-A study of the baking industry completed during the past year shows that technological improvements such as oven firing, automatic handling, and continuous dough mixing make possible significant reductions in the cost of producing bread. To fully realize such economics the volume of output per plant needs to be increased. Thus it was determined that plants producing 2,000 pounds of bread per hour with standard equipment and operating 36 hours a week might have production costs of between 11 and 12 cents per pound loaf whereas bakeries producing 8,000 pounds per hour, using improved equipment and operating 108 hours per week might expect costs of between 6 and 7 cents per pound loaf. It also was discovered that economies in distribution can be achieved with possible savings of 3 to 4 cents per pound loaf. Such economies may explain the activity of some of the food chains in acquiring their own baking plants or arranging longer term purchase commitments with particular suppliers. Some of these organizations have reduced retail prices of bread by as much as 5 cents per pound loaf below the U.S. average.

9. Marketing apples in new form found economically feasible.-The commercial possibilities of dehydrofrozen apple slices appear to be excellent in the baking industry. Dehydrofrozen apples, with 50 percent of the weight and volume removed, compare favorably in quality with regularly frozen apples, yet incorporate some of the economic advantages of dehydrated products, such as savings in handling and shipping costs. Extensive field surveys, were conducted during the year with bakers, brokers and fruit processors. Favorable baker reaction was found, especially in large and extra large institutional and wholesale bakery operations where savings in transportation and storage are substantial. Today, there are at least eight commercial processors of dehydrofrozen apple slices, and others are investigating the possibilities, anticipating production. In addition, several national and regional chains have adopted this new product in their baking operations.

DOMESTIC AND FOREIGN ECONOMIC ANALYSIS

Mr. KOFFSKY. The service analyzes the supply and demand for farm commodities both here and abroad with the view of pointing up opportunities for farmers not only to market their products intelligently but also for expanding their markets. The commodity situation and outlook reports which are published as a result of much of this research are the prime means for getting this information out to farmers through the State extension services, as well as through various information outlets. The service assembles and analyzes agricultural trade statistics and foreign economic developments as they relate to U.S.export operations. Illustrations of work in this area are on pages 22 to 29 of the "Notes."

(The pages referred to follow :)

CURRENT ACTIVITIES AND TRENDS

This project consists of three major activities:

A. Domestic economic and statistical analysis covers the gathering, analysis, and interpretation of information on American agriculture as a whole, and on specific items, including important crop and livestock products, farm income, prices, population, and labor. The major objective of the work is to keep farmers and others concerned with agriculture fully informed on both the present and prospective agricultural situation through regular reports and special analyses for specified commodities and geographic areas. This work also provides the basis for many of the projections of demand, supply, and utilization of farm products.

B. Foreign development and trade analysis research is concerned with appraisal of foreign market programs, the effect of foreign economic development on agriculture, and trade statistics and analysis. The research emphasizes the appraisal and evaluation of the economic implications of policies and programs of the

United States and other countries on our foreign trade in farm products and the efficient use of our excess food production and other resources in economic development abroad. The information thus gained will be employed in improved formulations of national policies, positions, and programs in the area of foreign agricultural marketing, foreign economic development, and foreign agricultural trade.

C. Foreign regional analysis is concerned with research on food and agriculture in more than 100 foreign countries in the Western Hemisphere, Europe, including the Soviet Union, Asia, Africa, and Oceania. For each country, the research is centered on economic analysis and interpretation of conditions, forces, and developments affecting supply, demand, and trade in farm products, and their impact on current and prospective U.S. agricultural exports.

SELECTED EXAMPLES OF RECENT PROGRESS

1. Current situation and outlook reports issued throughout the year Major developments affecting farmers' economic situation were included in the regular commodity situation reports issued during the year, such as:

(a) Farm income.-Net income realized by the Nation's farm operators in 1962 will be as high as the estimated 1961 level of $12.8 billion, the highest since 1953. With farm income leveling off and a further decline in the number of farms, realized net farm income per farm is estimated at a record high of $3,470 in 1962, about 3 percent above the 1961 level.

(b) Feed grains.—A major development in the feed situation in 1961-62 was the 13-percent reduction in planted acreage of feed grains, largely as a result of farmer participation in the feed grain program. Even though yield per acre reached a new record high, production dropped 10 percent and fell below total requirements for the first time in 10 years. Carryover stocks of feed grains were reduced about 14 million tons in 1961-62 after reaching a record high of 85 million tons at the beginning of the marketing year (fig. 8). In 1962, participation in the feed grain program increased and farmers reduced feed grain acreage another 4 percent. The 1962 crop was estimated in November at 141 million tons, about the same as in 1961. This year's production is expected to again fall below total requirements and another substantial reduction in carryover is in prospect in 1962-63, probably about equal to the reduction in 1961-62. (c) Wheat.-The stocks on hand at the beginning of the 1962-63 year were sharply reduced by the record heavy exports in 1961-62, the first reduction since 1958. With total disappearance expected to exceed the 1962 crop, which was reduced by the special 1962 wheat program, stocks will again be reduced by the beginning of the 1963 marketing year.

(d) Cotton. The carryover of cotton on August 1, 1962, was 7.8 million bales, about 600,000 bales more than a year earlier when the carryover was the smallest since 1953 (fig. 9). By August 1, 1963, a further increase in carryover of over a million bales is expected.

(e) Dairy.-Milk production continued its rise to a record 126.5 billion pounds in 1962 and is expected to reach about 127.5 billion pounds in 1963. Consumption of milk from all sources in 1962 will exceed 1961 levels by about 1.5 billion pounds milk equivalent, reaching a total of 117 billion pounds, a new record for civilian consumption. The prospect is for a further increase in 1963. However, the anticipated gain in consumption is expected to be less than farm marketings in 1963, and CCC purchases in that year may be even larger than in 1962. 1962, the average price of wholesale milk declined as a result of lower support prices. In 1963, prices will be somewhat lower than 1962. Cash receipts from farm marketings in 1962 are about 1 percent under 1961 and are likely to decline a little in 1963.

In

(f) Poultry and eggs.-The higher prices than in 1961 received by broiler and turkey producers in 1962 appear to have set the stage for a large expansion in poultry production in 1963. Some increase in egg production may also occur. U.S. poultry exports to the Common Market have enjoyed a phenomenal growth since 1958. However, this growth has been arrested because the EEC imposed much more restrictive levies against imported poultry on August 1, 1962, than had previously prevailed. Over the longer term the Common Market is expected to become largely self-sufficient in poultry.

1952 1954

UNDER LOAN OR OWNED BY CCC.

STOCKS OF CORN AND SORGHUM GRAIN OCT. 1; OATS AND BARLEY JULY 1.

1963 BASED ON PROSPECTS FOR PRODUCTION AND DISAPPEARANCE AS OF SEPT. 1962.

U. & DEPARTMENT OF AGRICULTURE

NEG. ERS 1326-62 (8) ECONOMIC RESEARCH SERVICE

FIGURE 9

CARRYOVER OF WHEAT, COTTON,
CORN AND DAIRY PRODUCTS

YEARS BEGINNING: WHEAT, JULY 1, COTTON, AUG. 1; CORN, OCT. 1; AND DAIRY PRODUCTS, JANUARY 1.
1963 BASED ON INDICATED PRODUCTION AND DISAPPEARANCE AS OF OCT. 1962.

U. S. DEPARTMENT OF AGRICULTURE

NEG. ERS 1514-62 (10) ECONOMIC RESEARCH SERVICE

(g) Tobacco.-Total supplies of flue-cured and burley-the two large-volume tobaccos for 1962-63 will be around 3 percent larger than for 1961-62 and above each of the preceding 4 years. Further gradual increases in cigarette and cigar consumption seem likely in the year ahead. Although calendar year 1962 exports are estimated to be the largest in 6 years, the presently scheduled duty rates on tobacco of the Common Market and strong competition from foreign producers cast a shadow on future prospects.

2. A study, "Agriculture and Economic Growth," in process

This study demonstrates that throughout the history of the United States, agriculture has made large and decisive contributions to the Nation's economic development. One of the most important during the 19th Century was the provision of export earnings.

Contributions during this century can be identified under seven headings: (1) release of workers to industry; (2) lowering of food costs relative to income; (3) increased purchases of industrial goods; (4) continued export earnings; (5) sustained output during economic depression; (6) the response to wartime needs; and (7) assistance to world economic development.

Underlying these contributions has been the longtime upward trend in total U.S. agricultural output. Gains in productivity per man-hour in agriculture have been particularly marked since the midthirties and have increased more rapidly than in the nonfarm sector.

Most of the dramatic contributions of agriculture to our domestic economic growth lie in the past, but those in the future will still be substantial. The dynamic contributions of American agriculture in the years to come will be to world economic growth.

3. Farm population estimates revised

In 1960, a new definition of the farm population was adopted by the Bureau of the Census and the Department of Agriculture in order to obtain a more objective measurement of the farm population. Use of the new definition excluded about 5 million people from the farm population who formerly were counted in it, but who had very little connection with farming. This change thus produced a decided break in the annual farm population series and made comparison with former years impossible. After considerable research, a rerised annual series of estimates was prepared, beginning with year 1941. The

revised estimates show the farm population declining from 30,547,000 in 1940 to 15,635,000 in 1960, compared with a decline from 30,547,000 to 20,541,000 under the old series. The revision greatly increases our estimation of the amount of outmigration from the farm population that has taken place in the post-World War II period. The farm population has declined to 14.8 million in 1961 and to approximately 14.3 million in 1962.

4. Farm income estimates improved

In 1962, estimates of the income of the farm population were developed and published for the first time on a personal income basis, permitting direct comparisons with personal income estimates published regularly in the national income accounts. The total personal income of the farm population from all sources in 1961 was $20.3 billion, $13.3 billion from farm sources and $7 billion from nonfarm sources. Based on revised farm population data, the per capita personal income of the farm population from all sources was $1,373 in 1961, less than 60 percent of the average per capita personal income of the nonfarm population.

5. Farm manpower, employment and wages analyzed

Almost 31⁄2 million persons worked for wages on farms during 1961, some 200.000 less than in 1960. Sixty percent of them are employed on farms for less than 25 days during the year. Excluding casual workers, the average worker was employed at farmwork for 134 days and earned $6.55 per day worked. When wages from non-farm-work are added to farm wages, average total cash earnings in 1961 came to $1,054. The year-round male hired farmworkers (250 days or more employment on farms) averaged $2,455 from both farm and nonfarm-work in 1961.

This survey also revealed that almost 60 percent of all farm wage workers had completed no more than 8 years of school. Among adults (25 years of age and over) practically three-fourths had no more than a grade school education, and 30 percent had less than 5 years of schooling. Farm wageworkers with some high school education earned more pay per day of farm wagework, had steadier farm employment, and more often held nonfarm jobs than did workers with less education.

6. Economic factors affecting fiber consumption studied.

This study develops estimates of final domestic textile fiber consumption in the United States and identifies the major economic factors affecting variations in fiber consumption. The new estimates of consumption represent the equivalent volume of fiber used by domestic consumers in terms of cotton equivalent. The single economic factor with the most influence on consumption was level of income. For the individual fibers, level of income and respective fiber prices were found to have the most effect on their consumption.

7. Major economic relationships that affect the supply and price of hogs analyzed Hog production and prices have fluctuated through two fairly regular cycles since 1953. This study explains these cycles and measures the effect of such factors as prices of feed, beef, and poultry, and consumer income on the hog economy. For instance a 10-percent increase in the October-December corn price results in a 2-percent decrease in farrowings the following year; a similar increase in beef prices decreases farrowings by 1 percent. A 10-percent increase in the October-December hog price is associated, on the average, with a 4-percent increase in farrowings the following year.