Rice (rough basis): Price support activity and farm income

1 During an earlier period, 1956 through 1958, acreage reserve payments were also made in the following amounts: 1956 crop, $1,300,000; 1957 crop, $14,900,000; 1958 crop, $12,000,000.

The historical record shows crop years 1959 and 1960 as the years in which the strong expansion of the U.S. soybean crop and domestic and foreign utilization of U.S. soybeans was arrested. It likewise shows crop years 1961 and 1962, as having returned the U.S. soybean crop production and its domestic use and export to a strong expansion trend.

Soybean price support was lowered from $2.09 in 1958 to $1.85 per bushel for the 1959 crop because of the large 1958 crop and quantity of soybeans placed under loan. Planted acreage decreased in 1959 by over 1.8 million acres and production declined by 47 million bushels. Prior to 1959 planted acres had increased each year from 1949 through 1958 at an average annual increase of 1.3 million acres. The average annual increase in production had been almost 35 million bushels.

Support was held at the $1.85 per bushel level for the 1960 crop. Although acreage increased in 1960 by 1 million acres and production by 22 million bushels, the total supply, which had fallen from 601 million bushels in 1958 to 595 million bushels in 1959, fell to 578 million bushels in 1960 because of reduced carry-in. A shortage in supply to meet the expanding demand for soybeans became apparent in January 1961. Soybean prices rose in the spring of 1961 to well over $3 a bushel after the farmers had disposed of most of their crop, and crush and export of soybeans were seriously curtailed by reason of lack of supply. Soybean meal moved to market at the high prices. However, as a result of the increase in soybean oil prices, certain European countries used reserve stocks of fats and oils and shut off purchase of soybean oil during the latter part of the 1960 marketing year. Consequently, as an unusual result of the shortage of soybeans, the United States found itself holding the largest carryout stocks of soybean oil in history. A serious imbalance between soybean oil and soybean meal was created. imbalance has remained to plague the industry ever since.

This

The support price on soybeans was increased from $1.85 a bushel for the 1960 crop to $2.30 a bushel for the 1961 crop. Planted acreage increased by $3.3 million and production by a record 124 million bushels for the 1961 crop. However, domestic use and export of soybeans increased so greatly during the 1961 marketing year that carryout stocks increased by only 51 million bushels.

Support was placed at $2.25 a bushel for the 1962 crop. Acreage increased by about 0.8 million acres but as a result of a decline in yield the 1962 production approximated that of 1961. Total supply at 733 million bushels, or 47 million bushels above 1961 because of carryover, is sufficient to continue strong expansion in crush and export during the present 1962 marketing year.

Soybeans: Price support level, value of crop, CCC investment and supply disposition, crop marketing years 1959, 1960, 1961, and 1962

2 Current market (including futures) prices of soybeans suggest that all loans will be redeemed and that no 1962 crop soy beans will be acquired by CCC. However the historical record suggests that about 25,000,000 bushels of the 35,000,000 prospective carryout likely will be held or controlled by CCC involving an investment of about $60,000,000.

DAIRY

Under the Agricultural Act of 1949, as amended, prices to producers for milk and butterfat must be supported at such level, from 75 to 90 percent of parity, "as the Secretary determines necessary in order to assure an adequate supply."

The support prices for manufacturing milk and butterfat in cream for the 1959-60 marketing year were $3.06 per hundredweight and 56.6 cents per pound. respectively, the same as for the previous marketing year, when the support prices were reduced to 75 percent of parity. These prices were a percentage point or two above the legal minimum for the 1959-60 and 1960-61 marketing years be cause of slight changes in the parity prices. In September 1960 the support prices were increased to 80 percent of parity by act of Congress. The manufac turing milk support price was increased to $3.22.

In March 1961, the Secretary increased the support price to $3.40. This was 83 percent of parity as of the beginning of the 1961-62 marketing year. At the time of the announcement, according to the data then available, total milk production. which had decreased 1 percent in 1958 and 1 percent in 1959, increased 1 percent in 1960. The increase in consumption in commercial channels offset this increase. The percentage of farm marketings purchased for price support in the 1960-61 marketing year was 3 percent of the milkfat and 8.7 percent of the nonfat solids marketed by farmers as milk and cream compared with 3.1 and 9.3 percent respectively in 1959-60. The dairy products were being used effectively. Butter and cheese were being used mainly for domestic school lunch and welfare purposes. Most of the nonfat dry milk was being donated for food for peace programs. Moreover, CCC had no uncommitted inventories of butter and cheese, and 10% million pounds of nonfat dry milk compared with acquisitions in 1960-61 of 837 million pounds.

The developments that followed were unexpected. Milk production in 1961-62 increased 2.4 percent. However, commercial consumption, which until then had been slowly trending upward, but not as fast as the population, declined 1 percent. Government purchases removed 9.5 percent of the milkfat and 13.4 percent of the nonfat solids in the farm marketings of milk and cream. Net expenditures on dairy price support and related programs of about $600 million was double that of the previous 8 years. This excluded $89 million expended under the special milk program.

In early 1962, the President, in an effort to prevent a serious drop in dairy farm income, recommended the passage of a joint resolution to extend the exist ing level of dairy price supports ($3.40 per hundredweight for manufacturing milk and 60.4 cents per pound for butterfat) for another 9 months pending the development of a dairy supply management program.

The Congress did not follow the President's recommendation. Under the law and in the existing circumstances, the Secretary had no alternative but to reduce dairy price supports to 75 percent of parity. It is estimated that cash receipts from farm marketings of milk and cream in the 1962-63 marketing year fell $160 million below 1961-62. Purchases in the 1962-63 marketing year are equivalent to about 8 percent of the milkfat and 13 percent of the nonfat solids marketed by farmers. Net expenditures on dairy price support and related programs are estimated at $480 million.

The developments in the past 2 years underscore two weaknesses of the present program. It does not assure adequate incomes to dairy farmers. Also the Government is obligated to support unlimited milk production, regardless of cost. Because of these serious shortcomings, the President has requested that the Congress enact new legislation which would apply to the dairy industry, the same successful principles of voluntary supply management as is being used in feed grains. Under such a program, cooperating dairy farmers' incomes would be improved while reducing Government costs. Through a combination of market prices and payments, cooperating dairy farmers would receive higher incomes than noncooperators. Another advantage of such a program is that consumer prices of dairy products, expecially of butter, would be reduced.

1 Marketing year beginning Apr. 1, unless otherwise indicated.

2 Changes effective Sept. 17, 1960, and Mar. 10, 1961.

3 Includes special and military milk programs; regular military procurement, and shipments to territories.

4 Includes domestic distribution by Commodity Credit Corporation and sec. 32 for school lunch and

welfare programs.

Less than 500,000 pounds.

• Inventories as of Mar. 13, 1963.

? For fiscal years ending June 30.

Purchase and other costs (processing, repackaging, transportation, storage and handling), less proceed from sales. Excludes Government costs of activities under titles I and II of Public Law 480. Estimated as of March 1963.

CONSERVATION RESERVE PAYMENTS, 1959-62

In 1959 and 1960 contracts were signed under the conservation reserve program to withdraw land from production for a period up to 10 years. Although no additional contracts were signed in 1961 and 1962, the cost of this program continued, since existing term contracts remained in effect. Payments in 1959 and 1960 totaled $692 million. Although these amounts declined during the first 2 years of this administration, $638 million was required to meet commitments of earlier years.

By 1960 nearly 29 million acres were under contract, and yet surplus stocks continued to increase. In this 2-year period feed grain stocks increased more than 17 million tons and wheat stocks increased about 116 million bushels. In marked contrast were the declines in stocks during the 2 years 1961 and 1962: Feed grains, more than 23 million tons; and wheat, 186 million bushels. Conservation reserve payments for calendar years 1959-62 are shown below: [Millions of dollars]

NOTE. For putting land into the conservation reserve, 2 types of payment were provided: (1) An annual rental payment to compensate for the loss of income the acreage would otherwise produce, and (2) a cost-share, practice payment to assist in establishing an approved conservation use on the land.

USE OF AMERICAN SHIPS FOR PUBLIC LAW 480 SHIPMENTS

Mr. WHITTEN. Now, turning to one other thing, I have had several folks ask me why it is that the Department of Agriculture, with our international problem of dollar exchange, does not use American ships to ship all of these commodities abroad. It is the law, as I understand it, that you must use at least 50 percent American ships.

I realize that this is in the area of overall Government policy. Could you provide for the record how much cash has been paid out to foreign shipping to move these commodities from the Department of Agriculture?

Mr. GODFREY. We may have that with us. If we don't have, we can provide it for the record.

Mr. WHITTEN. Over a reasonable period of time.

Mr. BEACH. What period would you like covered?

Mr. WHITTEN. For about 8 or 10 years. There is no need of you doing a lot of work. We will take what you have that is readily

accessible.

Mr. BEACH. Total ocean freight paid through December 31, 1962, since the inception of the title I, Public Law 480, program is $548,131,227.

Mr. WHITTEN. When you say "inception," what is the date of that? Mr. BEACH. 1954. I do not have the breakdown between how much of that is represented by foreign ships and how much domestic. That we can furnish.

Mr. WHITTEN. Please do.