basic commodity, but to be successful it is recognized that the plan must be thoroughly understood and supported throughout the country. The object of any program adopted would be to establish a sound basis for fair prices to the beef cattle men insofar as supply and marketing practices permit. BEEF AND DAIRY INDUSTRIES CLOSELY RELATED It should be pointed out that the decline in cattle values has had a strong competitive effect on the dairy industry. Many beef raisers have milked beef cows or even bought dairy cows, and reports of creamery butter manufacture indicate that many of the range States have greatly increased their production of butter within the past year. Hence any improvement accomplished in the beef industry as such will tend to be of indirect help to dairymen. The relationship between the beef and dairy industries is so close that no program of production control and benefit payments may be undertaken in either without due regard for the effect it may have on the other. OLEOMARGARINE AND BEEF Besides interesting themselves in the proposed marketing agreement with the packing industry, the beef men are keenly interested in a marketing agreement which has been offered to the Administration by the Institute of Margarine Manufacturers. While this agreement is handled in the Cotton Section of the Administration owing to its close relation to the cottonseed industry, the representatives of the American National Livestock Association and other meatanimal interests have appeared in support of it. The beef men desire to see one of the provisions of the proposed oleomargarine agreement perfected and adopted. This provision would limit the production of oleomargarine to animal and vegetable fats and oils produced within the United States. Naturally such products as oleo stearin and other byproducts of the beef industry are regarded in this connection. However, the oleomargarine industry seems split into two equally strong factions respecting this proposed agreement. The manufacturers of oleomargarine from domestic fats and oils favor it and the importers of copra and coconut oil oppose it. Its adoption would confer more actual benefits on the beef industry or the beef packers than it would on the dairy industry. This is because oleomargarine produced from domestic materials would still be a dairy competitor, while the exclusion of foreign ingredients in making butter substitutes would probably extend the outlet for beef byproducts. II. SHEEP The situation with regard to sheep in the United States is very different from that of cattle. Representatives of sheep and wool producers' organizations have expressed the opinion that their industry is now in a strong position. They anticipate that the numbers of sheep will be gradually reduced during the years 1934-35, on account of the large number of aged ewes now being held in all the range States. Also, the small numbers of ewe lambs that had been retained for replacement purposes during Chart 27.-Sheep and Lambs on Farms and Ranges, April 1, 1930 the last few years have brought about a condition that seems to be very favorable from the standpoint of the producers. This condition is reflected particularly in the range States where sheep are held in large numbers. There has also appeared another factor helpful to the sheep producers, namely, the world shortage of wool which has resulted in wool values having increased 300 to 400 percent in the last 20 months. The only desire the sheep men have expressed to the Administration has been that no tax be levied on wool. CHAPTER 12 SURPLUS RELIEF OPERATIONS SALIENT FACTS ABOUT SURPLUS RELIEF PURCHASES 1. Expenditures already made for surplus basic commodities by Secretary of Agriculture_-_ 2. Amounts of basic commodities purchased by Secretary. (See item 1.): Pounds of cured pork.. Pounds of butter (purchased and ordered) 3. Expenditures for pork and pork products now under way under second pork-buying program. 4. Total of expenditures by the Secretary of Agriculture. 5. Expenditures from Federal Emergency Relief funds.. $20, 481, 000 131, 000, 000 45, 242, 760 3, 602, 000 $10, 000, 000 $30, 481, 000 $23, 031, 493 An important phase of the Agricultural Adjustment Administration's activity has been the removal of surpluses of a number of farm commodities from ordinary competitive trade channels. This has been accomplished through an arrangement with the Federal Emergency Relief Administration, which is distributing these surpluses to needy and underfed persons on relief rolls throughout the country. In the introductory chapter of this report, headed "Objectives and Mechanisms", it was stated that the surpluses of some farm products are so great that even if every hungry person in the United States had all he could eat, there would still be an oversupply. However, the families of many unemployed men and women have actually not been consuming as much food as they would like to eat. Furthermore, their diet has been severely restricted and they have lacked the variety of foods they need for health and strength. The obvious fact was this: Huge oversupplies of farm products were begging for a market. Large numbers of people were suffering from hunger or malnutrition. The trouble was that, temporarily at least, our system of distribution and exchange was failing to function. To make it possible for these hungry people to avail themselves of the huge stores of food, direct action was necessary. Therefore the Agricultural Adjustment Administration, with the approval of the President, and the cooperation of the Federal Emergency Relief Administration, launched a program of purchase of surplus farm products for distribution to the families on relief rolls. ORDINARY SALES NOT DECREASED Purchase of such supplies has removed them from competition with that portion of the farm output sufficient to meet the demand in the markets. Since they are given to persons who otherwise would not be able to buy them, ordinary sales of these commodities are not decreased. Part of the purchases have been made by the Secretary of Agriculture and part by the Relief Administration. The Secretary has purchased and donated for relief purposes, pork and dairy productsbasic commodities for the removal of which funds were available from processing taxes. Surplus agricultural products, such as cattle for corned beef, dry beans and apples, on which processing tax funds are not available, have been purchased with Relief Administration funds on recommendation of the Secretary when he has found that their removal would benefit producers. (See exhibit 14 of appendix F for the list of these commodities and the amounts bought.) Through the expenditure of funds from the two Administrations, a larger variety of products has been provided to the needy than would otherwise have been possible if the operations had been confined to basic commodities only. Also, the benefits of surplus removal have been extended to the producers of nonbasic commodities. Funds of the Relief Administration have been used not only for the purchase of the nonbasic commodities, but also for the processing and distribution of those classed as basic. FEDERAL SURPLUS RELIEF CORPORATION As an operating agency for this cooperative project and for other purposes, the Federal Surplus Relief Corporation was created October 4, 1933. This is a nonprofit corporation, organized under the laws of Delaware. Its principal officers are: President, Harry L. Hopkins, Federal Emergency Relief Administrator; vice president, Henry A. Wallace, Secretary of Agriculture; and treasurer, Harold L. Ickes, Secretary of the Interior and Public Works Administrator. These three men, together with W. I. Myers, Governor of the Farm Credit Administration, constitute the board of directors. The corporation combines powers granted by Congress under the Federal Emergency Relief Act, the Agricultural Adjustment Act, and the portion of the National Industrial Recovery Act dealing with public works. It may derive funds from each of these three sources and from the States to which surplus commodities are shipped. Thus far the Federal Surplus Relief Corporation has cooperated primarily with the Agricultural Adjustment Administration and the Federal Emergency Relief Administration and has served as an instrument for the procurement and distribution of food supplies. EXPENDITURES OF $30,000,000 Directed toward the dual objective of removing surpluses and providing food to the destitute, purchases by the Secretary up to January 15, 1934, totaled more than $20,000,000. Of this amount, $9,231,000 was used for pork, and $11,250,000 for butter and cheese. A second program, involving the expenditure of approximately $10,000,000, is now under way and will bring the total to $30,000,000. All these purchases are financed with funds from processing taxes levied or to be levied under the Agricultural Adjustment Act. Approximately 100,000,000 pounds of salt pork constituted the first purchase made in the surplus relief operations. This pork was donated by the Secretary of Agriculture to the Relief Corporation, which latter purchased for the Secretary about 31,000,000 pounds of smoked pork. In the earlier purchases, bids were accepted from the packers on the basis of processed pork. The expense was divided between the Agricultural Adjustment Administration, which paid the cost of the live hogs from which the pork was processed, and the Relief Administration, which met the processing charges. Purchases of 27,000 head were made in Chicago in November; and 94,000 head were bought between December 4 and December 26 in 8 markets Chicago, Kansas City, Omaha, St. Louis, St. Paul, St. Joseph, Indianapolis, and Sioux City. During most of January 1934, under the second program mentioned above, hogs were purchased and slaughtered at the rate of more than 20,000 head per day. Beginning January 24, new contracts were effective for the purchase of more than 23,000 head each day and by January 31 this number had been increased to 33,000 head per day. In order to support the hog market after February 1, when the processing tax on hogs was raised from $1.00 to $1.50 per hundredweight, the Federal Surplus Relief Corporation was authorized by the Agricultural Adjustment Administration to purchase about 10,000,000 pounds of lard and about 8,000,000 pounds of commercial cuts. METHOD OF BIDDING CHANGED On the more recent purchases the method of bidding and awarding contracts has been changed in a manner intended to benefit the producer of hogs, by returning to him a larger share of the total Government expenditure than previously, while a smaller share goes to the packer. Awards of contracts are now placed on a basis whereby the packer becomes the agent of the Government for purchasing hogs from the producer. For this operation the packer is paid a small buying charge per head. In addition he is paid separately for the cost of processing the meat. The hogs are bought by the packers for the Secretary in such amounts and over such periods as are best calculated to sustain the market during periods of unusually heavy marketings. This method is expected to maintain a steadier and higher market price level. CANNED BEEF With Relief Administration funds the Corporation purchased 400,000 pounds of canned beef in November 1933. In addition to this, contracts were let for the purchase of 2,200 head of cattle daily for a period of 20 market days, expiring February 2, and further awards of the same amounts were made for 20 market days after February 2. The purchases of beef have been made with Relief Administration funds, because beef is not designated as a basic commodity and processing taxes are not available from this product for surplus relief purchases by the Secretary of Agriculture. BUTTER AND CHEESE During the summer of 1933 unusual conditions resulted in an unprecedented production of butter and large amounts moved into storage. This resulted in a sharp market decline in prices. Alarmed by this situation, a delegation representing a large number of producers, processors, and distributors of milk and its products appealed to the Secretary to purchase a sufficient amount of the surplus to bring commercial storage stocks down to normal. This step was urged to enable dairymen and farmers to obtain fair prices. |