WYOMING.-No revision of official estimates for State; three counties submitted claims in excess of official estimates for counties; revisions were made in seven counties.

In other States participating in the wheat program no changes were made in official figures and no readjustment was made among counties.

Table 7 shows the preliminary United States Department of Agriculture official base-period average acreage and production estimates for wheat, on which the tentative State production allotments were based at the beginning of the wheat production control campaign. It also shows the final and official Department of Agriculture estimates as revised in December 1933, on which the final State production allotments have been based.

TABLE 7.-Wheat acreage estimates, tentative and revised

Preliminary official estimates used
as tentative basis for wheat allot-
ment, July 1933

Revised official estimates used as final basis for wheat allotment, December 1933

State

All wheat-seeded acres production All wheat-seeded acres production

THE OUTLOOK

There are two fundamental objectives of the wheat program: (1) To increase the income of wheat producers toward parity for that portion of their crop consumed in this country, through adjustment payments which are in addition to the market price for the wheat they sell; and (2) to effect such a reduction in the national production as will bring it into approximate line with effective demand, and keep it there.

Three main factors will influence the amount of wheat that will be harvested in 1934. The first is the amount of the reduction that will be accomplished under the wheat reduction program. The second is the effect of weather conditions and insect damage. The third is the aggregate amount of wheat that will be produced by farmers who did not sign the contract.

At the beginning of 1934 some parts of the Great Plains region were deficient in soil moisture, and another subnormal wheat crop appeared possible. But even another small crop in 1934 would not reduce the carryover much below normal.

It is possible that farmers who did not sign the reduction contracts may increase their wheat acreage in 1934. The total acreage not covered by the contracts is 15,000,000 acres. Much of this acreage goes in and out of wheat as rotation practice or market conditions dictate, and there was less incentive for owners of this acreage to sign the reduction agreement than for growers who specialize in wheat.

It is not yet possible to forecast with precision the definite effect of the production of the nonsigners upon the total 1934 wheat production. The widespread and urgent requests of many of them to be permitted to qualify later indicated a growing tendency of farmers to seek the advantages of adjustment payments as a supplement to income, and disclosed possibilities of increasing effectiveness of the plan.

V. PROCESSING TAX

The wheat production-adjustment payments are made from a fund derived from a tax levied upon the first domestic processing-the milling of wheat for human consumption. Wheat milled for the use of the producer himself or his household, is exempt from the tax, and the tax is refunded on products milled from wheat if they are turned over to some recognized agency for distribution among the needy unemployed. The tax is also refunded on flour which is exported. No tax is imposed upon the processing of wheat for feed for livestock.

At the beginning of the marketing year, fixed by the Secretary of Agriculture, as July 9, 1933, the rate of the tax was set at 30 cents per bushel, the difference between the current average farm price of wheat, and the parity price. This rate of tax holds for the current marketing year only.

The Agricultural Adjustment Administration's estimate for the Bureau of the Budget for the current crop year is shown in table 8.

TABLE 8.-Wheat program estimates covering marketing period July 9, 1933 to

June 30, 1934

Besides the expenditures listed above, administrative expenses are estimated at $2,010,479.

CONFERENCE OF PROCESSORS

In June, before the rate of the tax was determined and announced by the Secretary of Agriculture, representatives of all groups of wheat processors were called to Washington for a conference on the subject. At the conference some millers favored the measuring of the tax in terms of flour and other wheat products; others desired to have the rate fixed according to the number of bushels of wheat milled. Largely because of the legal provisions of the Adjustment Act, the latter method was adopted.

Regulations establishing the rate of the tax and the conversion for calculating the amount of wheat in different finished products subject to the floor stocks tax on products that had been processed and were in stock before the tax became effective were issued by the Secretary of Agriculture and approved by the President on June 26. Supplemental regulations constituting definitions and amendments to the previous regulations were approved later.

For several months before the imposition of the tax, milling was at an exceptionally high rate. When the tax was imposed there was a corresponding decrease, which, however, was no greater than had been anticipated. Collections from the various taxes imposed on wheat and its products from July 9 to November 1 were:

Processing tax....

Import compensating tax_
Floor stocks tax..

Total___

$17, 246, 951. 30

7, 679. 04 12, 489, 293. 50

29, 743, 923. 84

Because the tax on wheat processed during any one month is not payable until the following month, the above record covers processing from July 9 to October 1 only. Because the Bureau of Internal Revenue, charged with the collection of the tax, extends the time for payment in some case, collections as shown above do not represent the total amount to be collected for wheat processed during the period July 9 to October 1. The above statement on collection of floor stocks taxes is fairly complete.

It is estimated that between July 9 and October 1 about 100,000,000 bushels of wheat were processed. Not all of it was taxable, however, because of the exemptions provided under the Adjustment Act. It has been estimated that most of the wheat eligible to be ground under the exemptions provided for producers was ground during the period covered by the above statement and that a larger percentage of the wheat processed during the remainder of the year will be subject to the tax than was the case from July 9 to October 1.

"BOOTLEGGING" OF FLOUR

In connection with the producer-exemption provisions of the act it has been found possible to avoid, illegally, the payment of the tax. Such cases of alleged "bootlegging" of flour have been called to the attention of the Adjustment Administration and have been reported to the Bureau of Internal Revenue. It has been reported that taxfree flour has been turned over by farmers to town or city merchants to whom they were indebted, or even sold to city consumers. In order that this practice might be reduced to a minimum, the Administration and the Bureau of Internal Revenue have from time to time issued warnings to producers and others reported to be abusing the producer-exemption privilege. No record is at present available on the amount of refunds of processing tax on flour distributed through relief agencies.

In order to prevent "plugging" of country elevators, with consequent loss to farmers of storage facilities, and interruption of normal flow of grain to market, both adversely affecting market prices, it was found necessary to interpret certain provisions of the Adjustment Act in such a way as to permit grain for which warehouse receipts had been issued to farmers to move to market without cancelation or surrender of the receipts. The interpretation was made after a public hearing on the question. The hearing was held at Chicago August 11.

VI. NORTH PACIFIC MARKETING AGREEMENT

Soon after the 1933 wheat crop began moving to market it became evident that supplies of white wheat in the North Pacific region, including Washington, Oregon, and northern Idaho, would be considerably in excess of domestic requirements. Carryover from the 1932 crop was larger than usual and the 1933 yield was average. Under sections 8 (2) and 12 (b) of the Adjustment Act, the Secretary of Agriculture entered into a marketing agreement with producers, handlers, and exporters of wheat in the North Pacific region with the purpose of removing the surplus of wheat from the depressed domestic market and disposing of it in foreign markets and through public agencies for the relief of the unemployed.

The surplus stocks which had developed in the area concerned were not only depressing the market there, but were threatening markets in the southeast and even along the Atlantic seaboard.

An informal hearing on the situation was held in Portland, Oreg., on August 21, attended by representative groups of producers and handlers of wheat in that territory, and by representatives of the Adjustment Administration. Another hearing was held at Portland on September 7 to determine the basis for the marketing agreement.

PROVISIONS OF AGREEMENT

The agreement provides for the organization of the North Pacific Emergency Export Association consisting of growers, millers, and exporters of grain. The association, under the agreement, is authorized to purchase wheat, at the domestic price, from producers and others in the North Pacific region, and to permit its members to sell in foreign markets wheat or flour in competition with wheat or flour from other wheat-producing countries. The difference between the

domestic price paid to the producers and the price received from the sale of wheat and flour is paid to the exporter from the proceeds of the processing tax on wheat. The agreement also provides that wheat or flour may be sold by the association to unemployment relief organizations in the domestic market.

It is estimated that not more than 35,000,000 bushels of wheat will be handled under the terms of the agreement and that the amount required from the processing tax fund to finance the operation will not exceed $8,000,000.

Under the agreement there was allowed to the elevator operators, wheat exporters, and millers and exporters of flour, a return corresponding approximately to what they would receive if they were handling the wheat under normal competitive conditions with the United States domestic prices in normal relation to world prices.

An important provision of the agreement restricts its operations so that purchases of wheat by the association may not exceed sales by more than 1,000,000 bushels at one time. This prevents the association from entering into stabilization purchases of wheat not being sold for export. The agreement was signed and became effective October 10.

PRESSURE OF SURPLUS RELIEVED

By operation of the agreement, the depressing effect of the acute surplus in the North Pacific region has been considerably relieved. On July 15 the price of No. 1 Western White at Portland was 26 cents under the Chicago December option. On December 1 the North Pacific Emergency Export Association was buying No. 1 Western White delivered at Portland at 9 cents under the Chicago December option.

Wheat and flour exported under this agreement have been distributed among markets that ordinarily buy flour from the Pacific coast. Sales for export from October 19 to December 1 are compared with the exports of the last 2 years in table 9. The f.o.b. prices at which wheat and flour have been sold for export under this agreement have ranged from 50.1 cents to 59.5 cents per bushel for wheat and from $2.55 to $3.77 per barrel for flour. These prices, when converted to c.i.f. prices in the markets where the wheat and flour were sold, averaged slightly higher than the prices of wheat and flour selling in those markets from other exporting countries of the world.

Under the provision of this agreement wheat has been sold for export to the Chinese Government, Japan, Salvador, Peru, Ireland, Belgium, and other countries. Flour sales have been made to the following destinations: Philippine Islands, China, a number of ports in Central America, a number of ports in South America, Federated Malay States, Haiti, Scotland, England, Manchuria, India, and Finland.

AGREEMENT WITH CHINESE REPUBLIC

An agreement between the Secretary of Agriculture and the National Republic of China was drafted pursuant to the provisions of section 12(b) of the Agricultural Adjustment Act. The agreement has for its purpose the removal of surplus, and therefore satisfies the requirements of section 12(b).

The agreement is essentially as follows:

(1) The Chinese Government agrees to draw upon the funds extended to it by the Reconstruction Finance Corporation under a