FEDERAL CROP INSURANCE

MONDAY, MARCH 8, 1937

UNITED STATES SENATE,
SUBCOMMITTEE OF THE

COMMITTEE ON AGRICULTURE AND FORESTRY,

Washington, D. C. The subcommittee met, pursuant to adjournment, in the hearing room, 324 Senate Office Building, at 10 a. m., Senator James P. Pope presiding.

Present also: Senator McGill, Senator Schwellenbach, Senator Frazier, and Senator Hatch.

Senator POPE. The committee will be in order.

As I am advised, this morning we have a number of representatives of farmers from, I believe, 12 States. Mr. Thatcher is chairman of the committee that was set up some time ago, I think in December, following a conference here in Washington, and I suggest that since he is acquainted with the witnesses who appear this morning, he introduce them to the committee.

May I say to all who have gone to the trouble of coming this far to be heard, that the committee appreciates very much your appearance. Mr. THATCHER. Mr. Chairman, our committee is very grateful for the courtesy extended by you and your committee in recessing the hearing to permit time to bring these representatives from the 12 farm States who make their appearance here, and we will try to get through within a couple of sessions.

As a matter of background, Secretary Wallace called to Washington as of November 7 a large group of representatives of different farm organizations to consider the question of crop insurance and its application to different farm commodities. It appeared at that meeting that no commodity group had given as much study to the question of crop insurance or was so interested as the wheat growers.

Following that conference of November 7, at the request of the Secretary of Agriculture another conference for the wheat growers was called, to give them an opportunity to be heard with respect to the question of whether or not the Federal Government should undertake the program of crop insurance for the commodity wheat.

Those hearings were designated by the Secretary of Agriculture, and the farm folks came in and were heard about the matter on December 2 and 3, at which time they set themselves up to form an association designated as the Wheat Conservation Conference, to work with this session of Congress in the matter of a crop-insurance program for the wheat producers and some other related legislation that they feel is necessary to give full treatment, rather complete treatment to the commodity wheat.

The witnesses who will appear before you are coming from 12 States. To economize the time of this committee and keep the record as clear as possible and avoid repetition the representatives of the whole Wheat Conference group have read over the hearing as you have received the presentation up to date, and there are particular matters that they would like to offer testimony about, although they support the bill almost entirely as drawn.

These people represent farm organizations and regional cooperative associations.

The first witness we should like to have appear will be Mr. C. C. Talbott, of Jamestown, N. Dak., president of the Farmers Union of North Dakota, vice president of the Grain Regional Farmers Union Terminal Association.

Senator POPE. We will be glad to hear Mr. Talbott. I think you have been introduced, so you may just go right ahead and make your statement.

STATEMENT OF C. C. TALBOTT, JAMESTOWN, N. DAK., PRESI

DENT, FARMERS UNION OF NORTH DAKOTA AND VICE PRESIDENT OF THE GRAIN REGIONAL FARMERS UNION TERMINAL ASSOCIATION

Mr. TALBOTT. Mr. Chairman and gentlemen of the committee, I want to say in opening what few remarks I have to make that I really marvel at the completeness of the bill as drawn and the clearness with which its purposes are expressed. It shows such thorough understanding of the purposes that it seems there is very little to be added, but I would like to call attention to one or two things, not necessarily to make them mandatory in the bill or the legislation, but just to have it in the minds of the Senators who will have to conduct this bill through the sessions of Congress, and I am not unmindful of the fact that there will be many people called upon to vote yea or nay on this bill who do not understand farming and its intricacies, and for that reason I would like to put a little testimony in the record on this bill.

The thing I want especially to bring to your attention is the fact that there is no definite base period set out in the legislation, and it might not be possible to do so, but it should be thoroughly brought to the board, if, as, and when this legislation is passed, that this is one of the vital things, in our judgment, in the operation of this piece of legislation when it becomes law.

Senator Frazier will, of course, understand my language more readily than some of the other Senators when I say that we have probably 15 counties-I want to make it conservative-I think it is nearer 25-in the State of North Dakota which if a base less than 15 years is used would not only have an infiintesimal coverage, but their premiums would be so high that in most cases it would make this insurance entirely inoperative and prohibitive for these farmers.

Take Bottineau County, for example, Senator. For 3 or 4 years. during the war, when meat prices were high, Bottineau County was unfortunate enough to have almost a complete crop failure for about 3 years. Prior to that time it was one of the heavy producing counties in North Dakota in wheat and rye and other commodities.

Then after the war, in 1921, 1922, 1923, and up to 1929 it was again almost equal to your valley counties in production. Since 1929 they have not had anything. They have had crop years, but Canada's grasshoppers came over the line and swept the crop clean in 1932. The grasshoppers have reproduced very well in North Dakota, and the counties along that border in that particular area, with fine soil and great productive ability have been completely out of the game since 1929, and not produced anything at all, part of the time due to drought and part of the time due to the scourge of grasshoppers.

The southwestern part of the State. I have in mind Adams County, Senator, for years considered one of our best wealth-producing counties of the State, and they likewise have been so unfortunate that if a base period less than 15 years were used for the purpose of finding the proper rate for premiums of insurance they would be out of it entirely. That applies, as I say, to not less than 15, and I will say nearer 25 counties in my State.

Added to this, I would be derelict in my duty to the farmers of my State, and also of eastern Montana, if I did not bring to the committee's attention the fact that our legislature passed a joint resolution asking for a 15-year base period. That is another reason I should have it in the record, and I understand that Montana, whose witnesses will testify here, passed a resolution for not less than 10 years as a base period, for the benefit of eastern Montana.

Senator POPE. I understand also that the Governor has issued a proclamation calling for a crop insurance day in North Dakota.

Mr. TALBOTT. Yes; in Montana. Governor Ayers, of Montana. Senator SCHWELLENBACH. Doesn't this bill cover it as well as we ean in a bill, on page 7, line 17: "for a representative base period. subject to such adjustments as the Board may prescribe."

Mr. TALBOTT. That is right. I said in opening my remarks that I did not want to give this testimony for the purpose of writing it into the law, but for the purpose of information for the committee, who will have to carry this legislation through Congress, and I think it is vital, and I feel, as I say, that I would be derelict, in my duty to my people if I did not bring these things to the attention of the committee. Of course, Senator Frazier, who is a member of this committee, knows of the facts that we have, and will no doubt bring them into the discussions that will no doubt be had on the legislation.

Senator POPE. I think that will be helpful to the board of directors of the Corporation in considering this matter. Of course, the testimony has appeared that they do not have accurate individual production records back of, say, 5 or 6 years, but they do have the power to adjust, to the best of their ability, the actual production back of that time.

Mr. TALBOTT. Let me say, Senator, that that may be true in-of course, the people who draw this bill must have a national picture, naturally. So far as North Dakota is concerned, Senator, we can go to the assessors' records and get a fair average production for the last 20 or 30 years, so that does not apply. We never had the Government conscious of these records until the triple A act was passed. Then they began to use them for the purpose of triple A performance. But so far as our State is concerned and I think you will find that true in some other States-there is available now records that are as

accurate as any records you could very well get.

Senator POPE. Would those records be as to individual farms?

Mr. TALBOTT. Oh, yes; absolutely. You see, the assessor took the production and the number of acres and all of those things over a period of years in the State of North Dakota. I am not sure, however, as to how many States that condition will be found to be true. I know that is not true in all cases but it is in the case of North Dakota. I am not sure whether the regulations would permit the board, the operating agency, to discriminate as to the base period as between States. It seems to me that it would be sensible and practical if such could be done, but in my candid judgment, Senator, the vital floor and base for this legislation to become practical and equitable to everybody is that the longer the base period the more equity there will be in it for all regions. They cannot disadvantage any region by having the base period spread out a long distance, because in a short period you could just as easily catch a high surplus area, with the exception of the present past year, we will say-but a long period of time would average the base, you see, even in a surplus producing area where there were not crop failures, and with every crop failure there would still be a leveling out of production, so it would be uniform and a better, a sounder thing for everybody, including the Government, than to have a short period for a base.

Now, I think that is all I have to say, unless there are some questions. Senator POPE. Are there any questions?

Mr. THATCHER. May I ask a question, Mr. Chairman?

Senator POPE. Yes.

Mr. THATCHER. Mr. Talbott, I think it would be helpful to the cause of the producers here if you would offer some testimony with reference to the attitude of your State organization on this matter, county organizations and the people over the State, the action over the State since this has become current news over the Nation.

Mr. TALBOTT. I should say for the record that immediately after this legislation was proposed, our farmers were highly elated with the thought that there would be such legislation, or could be, but constantly their fear has been that this base period would be narrowed up, because the Department was using a base of 6 years to figure out the actuarial figures on the proposed legislation, and I have been bombarded from the very time last fall that we began to discuss this in the way of legislation, and apparently the burden of the thought was only that the base period would not be uniform for everybody and give everybody an equal chance. However, they are almost 100 percent for this legislation, and I do not think you will find two farmers out of 100 in the State that are opposed to it, not even in the Red River Valley, do you think, Senator?

Senator FRAZIER. No; I think practically all of them are for it.

Mr. TALBOTT. I want to repeat that the only fear, the only sentiment that I have found in opposition to the bill in any way-and not opposition to the legislation but the fear that the base period would be narrowed up so that it would not give everybody an opportunity to participate in the legislation. I think that is the same identical fear that has spread into Montana over the eastern half of the State. Otherwise I do not think there is any piece of legislation that has been proposed in Congress for agriculture that has had the uniform enthusiasm that has been shown for crop insurance and the ever normal granary, in my territory.

Senator FRAZIER. Along the line of the base period, there is another question that enters into the percentage, or the amount of insurance. On page 7 [reading]:

Such insurance shall not cover losses due to the neglect or malfesance of the producer. Such insurance shall cover a percentage, to be determined by the board, of the recorded or appraised average yield of wheat on the insured farm for a representative base period.

One of the men from the Department submitted a table here of average yields, and they stated that an average of 6 to 8 bushels per acre was about right. What is your opinion on that question?

Mr. TALBOTT. Well, it is easy to understand how they found such a figure as that, Senator, because they used the 6-year period, and the drought area, comprising the major part of the wheat States is disadvantaged by figuring a 5- or 6-year base. Kansas probably in 1932 would raise their average a little higher than probably any other section. Maybe Oklahoma might come in in the same way. Maybe all three of the Southwestern States that one year having an abnormally high crop would raise their average level, but we did not have an abnormally high crop in 1932. You remember we just had probably a little better than an average crop, not much more than average, and the rest of that time in the Northwest, in eastern Montana, South Dakota, North Dakota, during this base period from which those figures were taken the crop was almost a blank, or part of the Red River Valley. So that those figures are very far out of line. As a matter of fact, Senator, I think you will find in checking the assessors' records and all the available records we can get, that the average over a period of 15 or 20 years in North Dakota, and I will say for 50 years in North Dakota, if you will, that the average production of wheat has been approximately 11 bushels to the acre, the Statewide average, and we believe that if normal conditions return, as scientists tell us they will, that we will in the future come back to that average, and I think we are safe in using a long period to base premiums on, because we are due to come to such a cycle, and inevitably we are getting closer to a cycle of more production all the time. Senator FRAZIER. We hope so, at least.

Mr. TALBOTT. That is a natural belief.

Otherwise we might just as well begin putting the bows on the wagon and start moving. Senator POPE. Some of them have done that.

Mr. TALBOTT. I am sorry to say that we have lost a lot of mighty fine farmers from our State because of that.

Senator FRAZIER. Under the law of averages the drought areas are entitled to several good crops, it seems to me.

Mr. TALBOTT. Yes. Of course, we have a lot of fun about it and joke about it, but seriously that is a fact, that the worst period we can take for actuarial figures in figuring the premium base is the last 5 years.

Senator FRAZIER. You spoke of Bottineau County. I have in my office a picture of the grain elevators at West Hope in that county just before the World War, when they held the world's record as the largest primary wheat market, and Bottineau County held the State record for 5 years straight in that time for production of wheat in the States, and in the last 5 or 6 years they have not produced wheat enough to feed their own people nor forage crops enough to feed their own livestock, and they have had to sell off half their cattle.