The Herald-news., July 08, 1954, Page Page Six, Image 6

About The Herald-news. (Wolf Point, Mont.) 1940-current

Image provided by: Montana Historical Society; Helena, MT

                
Page Six
U.S. CHAMBER OF COMMERCE
MAN EXPLAINS FARM PROGRAM
The following article, com
piled by Eugene F. Rinta, re-
March director of the Council
of Chambers of Cotnmerce, i«
published in this newspaper
in an effort to enlighten its
readers on the recent history
of the government’s farm price
support policies.
The article’s source of sta
tistics Is the United States De
partment of Agriculture. It's
release at this time is of
particular timeliness and sig
nificance in the local area.—
The Editors.
THE POLITICS AND
ECONOMICS OF FARM
PRICE SUPPORTS
The Congress has been promis
ing the American people a more
economical and sounder farm
price support program since 1948.
Yet the Government continues to
pile up inventories of surplus
farm products under rigid high
level supports which were initiat
ed during World War II to en
courage maximum agricultural
production. The chronology of
events since 1948 indicates that
there has been a recurring clash
between the economics and the
politics of the farm price situa
tion with politics winnng out to
date.
The Agriculture Act of 1948
provided for flexible price sup
ports ranging from 60 per cent
of parity beginning in 1950 for
the si x “basic” commodities;
namely, cotton, wheat, corn, to
bacco, rice and peanuts which
were then supported at fixed le
vels of 90 per cent of parity or
more. Under the flexible supports
called in this Act the level of
support for a commodity was to
vary from year to year according
to the relationship of the esti
■mated total supply of the com
modity to the normal supply. If
the total supply equalled the nor
mal supply, prices would be sup
ported at 75 per cent of parity;
if it dropped to as low as 70 per
■ cent of normal, the support level
would be 90 per cent; and if the
total supply rose to over 130 per
cent of normal, the support level
would be 60 per cent of parity.
This system of flexible price
supports would have removed
much of the existing incentive for
.farmers to produce these basic
commodities in quantities greatly
in excess of demand while at the
same time it would protect the
farmers against economic disaster
RE-ELECT
Evron G. Shuman
SHERIFF
Roosevelt County, Montana
— Republican Ticket —
YOUR VOTE AND SUPPORT IS SOLICITED UPON MY PAST
w
RECORD AS YOUR SHERIFF
Inserted and paid for by Evron G. Shuman
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PHONE 104 WOLF POINT, MONT.
which could result from sharply
falling prices. The platforms of
both political parties in 1948 re
cognized the merits of flexible
price supports as compared to
fixed high supports and favored
them. So, too, did all the major
farm organizations at that time.
Every Secretary of Agriculture
since Henry Wallace has favored
flexable supports at one time or
another and, in addition to Sec
retary Benson, former Secretaries
Wallace and Anderson still favor
them.
Before the flexible support pro
visions became operative, how
ever, Congress amended the 1948
Act in 194 Q and postponed their
effective date from the 1950 crop
year to 1951. At the same time
introduced the range of flexibility
from 60-90 per cent to 75-90 per
cent. But in 1950 these provisions
of the 1949 Act were postponed
further to the 1953 crop year
through executive action taken
by Agriculture Secretary Bran
nan. Under an emergency provi
sion in the 1949 Act the Secretary
determined that it was in the in
terest of national security to con
tinue high flexible price supports.
Flexible supports for basic crops
were put off once again by Con
gress in 1952. The amendments
of that year made the price sup
port provisions of the 1949 Act
effective in the 1955 crop year.
Elsenhower Recommends Flexible
Supports
Soon after the Eisenhower Ad
ministration took office, Secre
tary of Agriculture Benson insti
tuted an exhaustive study of the
nation’s agriculture problem with
the cooperation of hundreds of
farm leaders. numerous farm
groups, agricultural colleges and
research institutions. The facts
and views developed by this study
become the basis for a new farm
program which the President sub
mitted to Congress in January.
And once again the heart of the
program involves flexible price
supports for the basic commodi
ties, just as did the 1948 and 1949
farm programs.
Other major proposals in the
President’s program are these:
1. Modernized parity for all
farm products will become ef
fective January 1, 1956 as pro
vided in existing law. At the
present time, parity is based
on the 1910-14 period for
wheat, corn, cotton, and pea
nuts and on the most recent
ten-year period for other
crops.
2. Up to $2.5 bilion of pre-
THE HERALD-NEWS, Wolf Point, RooseveK County, Montana
sent surplus stocks in Gov
ernment inventories will be
set aside from use in com
mercial markets and will be
eliminated from price support
computations to ease the
transition to the new pro
gram.
3. Special efforts will be
made by the Agriculture De
partment to help increase ex
ports of American farm pro
ducts within and outside of
normal trade channels.
4. When land is diverted
■from production because of
acreage restrictions agricul
tural conservation program
funds will be used to advance
soil consevation and long
term efficiency.
How Price Supports Work
Under existing law prices are
supported by loans, purchases and
purchase agreements made by the
Commodity Credit Corporation.
I Supports are mandatory for the
six basic commodities: corn, cot
ton, wheat, rice, tobacco and pea
nuts. They are also mandatory
for these nonbasic commodities;
wool, mohair, tung nuts, honey,
milk and butterfat. Supports for
other commodities can be provid
ed by the Secretary of Agricul
ture when he deems them neces
sary and practical after consider
ing a series of eight factors laid
down in the law. The basic com
modities are now supported at no
less than 90 per cent of parity
while supports for other products
are flexible.
Parity, which is the bench-mark
for support computations, is the
price of a commodity which
would give it the same purchas
ing power it had in a selected
base period when prices received
by farmers and paid by farmers
were considered to be in proper
balance. This purchasing power
is measured in terms of an index
based on commodities used in
family living, things used in farm
production, interest on farm real
estate debt, taxes on farm real
estate, and under modernized
parity, cash wages for hired la
bor.
Moit Of Price Supporting Done
By Loans
The method of price support
used most is loans to producers.
These are four per cent loans
made on storable commodities
through banks or other lending
agencies approved by the CCC
agreeing to take over the fban if
requested. The CCC also makes
direct loans. Under the loan meth
od a producer may borrow an
amount equal to the value of his
crop based upon the support price
and for this loan he pledges his
crop as collateral. If the market
price raises above the support
price, the producer may redeem
his collateral for sale in the open
market after repaying the loan
plus interest. But if the market
price falls below the support
price, he can discharge his loan
without interest payment or loss
merely ^by delivering the pledged
commodity to the CCC.
For example, if a farmer ob
tained a loan on his wheat at the
support price of $2.20 per bushel
and saw the market price fall to
SI.BO per bushel by the time his
loan matured, he could deliver
the wheat to the CCC and dis
charge his loan without paying
any interest. The CCC would ab
sorb the interest cost and any
loss which might result when it
sold the wheat or otherwise dis
posed of it.
Purchase agreements provide
the same level of support as do
loans. They are agreements en
tered into by the farmer and the
CCC for the latter to purchase,
at the farmer’s option, not more
than a stated quantity of a com
modity at the support price. The
farmer may elect to sell any part
or none of the stated quantity of
his commodity to the CCC de
pending upon the market at the
time of disposal.
Purchase agreements provide
the same level of support as do
loans. They are agreements en
tered into by the farmer and the
CCC for the latter to purchase,
at the farmer’s option, not more
than a stated quantity of a com
modity at the support price. The
farmer may elect to sell any part
or none of the stated quantity of
his commodity to the CCC de
pending upon the market price at
the time of disposal.
Direct purchases of commodities
are made by the CCC when it is
not feasible to support through
loans or purchase agreements.
For the most part these purchases
are restricted to perishable com
modities, particularly milk pro
ducts.
The Secretary of Agriculture
has a reasonable degree of author
ity to permit controlling the ex
cessive acquisition of surplus com
modities through purchase and
purchase agreements, but he is
under considerable political and
economic pressure which forces
him to use these devices in con
nection with certain commodities
when supplies exceed demand. He
has virtually no control, however,
over accumulation of inventories
of basic commodities under the
loan program after a crop is plant
ed. And it is the loan program
through which most funds for
support are extended. For exam
ple, 85 per cent of the $1,061 mil
lion of support extended on 1951
crops was in loans, similarly, 73
per cent of the $2,865 million sup
port on 1952 crops was in loans,
and 82 per cent of the 1953 sup
ports of $3,843 million.
Acreage Allotment. And
Marketing Quota.
The Secretary does have one
method of holding down accum
ulation of excessive inventories of
the basic commodities by the
CCC. He can do this by restrict
ing production through acreage
allotments and marketing quotas.
The acreage allotments are im
posed before a planting season
begins and are used in determln-
ing marketing quotas which are
merely the quantity produced
from the allotted number of acres.
These quotas must be proclaimed
each year on peanuts and tobacco
and periodically when supplies of
corn, cotton wheat and rice reach
designated levels.
After the Secretary has pro
claimed marketing quotas, a ref-'
erendum is held among the pro
ducers. If two thirds of the pro
ducers of,a commodity favor mar
keting quotas, they become ef
fective for all producers of that
commodity and the producers are
of substantially reduced price
supports for marketings from
acreage in excess of individual
acreage allottments. If more than
one third of the producers vote
against marketing quotas, they
will not be in effect but in such
case price supports are eliminated
for tobacco and reduced to 50 per
cent of parity for other basic
crops.
One weakness of marketing
quotas is the fact that farmers
have been successful in increasing
production per acre when the
number of acres allotted is re
duced. Another is that it involves
Government control of production
which smacks of the police state.
And finally, it involves the un
economic principle of scarcity to
hold up prices.
Surpluses Pile Up Under
Exlsltlng Farm Program
The Government’s investment
in price support operations of the
CC C reached an all-time high of
$6.29,489,000 on March 31, 1954,
the latest date for which figures
are available. Here is how this
investment, consisting of inven
-tories and loans outstanding, has
varied in recent years:
In January, 1949, it amounted to
$2,031 million. Then it rose stead
ily to a record high of $4,036 mil-
Hon in February 1950. After the
Korean War started there was a
steady decline in inventories along
with a down trend in Idans until
June 1952 when the total CCC in
vestment in price support was
down to $1,437 million, of which
$1,073 miUion was in inventories.
By the end of March 1953 the to
tal investment was $3,066 million
consisting of $1,164 million inven
tories and $1,902 million in loans.
During the succeeding twelve
months inventories were increas
ed to $2,791 million and loans were
up to $3,438 million for a total
investment of $6,229 million on
March 31 last.
Four of the basic commodities —
cotton, wheat, corn and tobacco —
accounted for most of the loan
total on that date. The commod
ities, quantities pledged and loans
outstanding were:
Cotton 7,719,056 bales ~ $1,271,977,999
Wheat 467,316,806 bu 1,019,401,417
Corn .365,810,989 bu 570,927,051
Tobacco 624,274,758 lbs 273,780,321
Other — 302.721,489
$3,438,808,277
The CCC inventories whicherations totaled $2,790,681,285. B.ere
were acquired under loan, purchaseare the items and their cost to
ageement and direct purchase op-CCC:
Wheat 438,317,216 bu $1,163,259,005
Corn .... 441,682,860 bu 721,307,165
Butter 330,441,421 lbs 222,312,377
Cottonseed Oil 1,028,245,309 lbs 184,157,215
Cheese 319,115,208 lbs 129,022,512
Dried Milk 570,102,908 lbs 95,191,938
Wool 91,390,164 lbs 62,494,214
Linseed Oil 88,596,427 lbs 19,554,889
Field Seeds 128,485,091 lbs 42,505,496
Cotton Linters 589,492,872 lbs 56,452,076
Cotton . 235,439 bales 33,820,086
Gum Rosin 311,594,183 lbs 23,400,865
Peanuts 147,610,276 lbs 16,252,115
Dry Edible Beans 973,356 cwt 10,283,321
Flaxseed 422,548 bu 1,729,579
Tung Oil 5,775,177 lbs *— f 1,559,125
Tobacco • .... 4,183,707 lbs. ;_J. 1,187,407
Cottonseed Meal 97,278,184 lbs 2,315,773
Other 1 — — 3,876.127
I
. $2,790,681,285
The significance of the quantities
of some of the above commodities
already in the hands of CCC or
pledged for loans can be more
readily grasped by these facts.:
There Is enough wheal to pro
vide every man, woman and child
in the United States, including
the armed forces overseas, with
a loaf of bread for 364 days, and
enough tobacco to provide the na
tion’s 60,000,000 cigarette smokers
with 183 packs each. There is
enough cotton to make 117 shirts
or 91 house dresses for every
Ameican family and enough corn
for feed to provide the natoin with
a normal six months supply of
pork and pork products. Inven
tories of butter and cheese would
supply every member of our pop
ulation with about two pounds of
each and cottonseed oil inventor*
ies are sufficient to supply every*
one with five pounds of margar
ine.
The Co.t. Of Farm Price
Supports
The net realized loss incurred
by the CCC on its price support
program from its inception in 1933
to June 30, 1953 was sl,llO mH
Hon. This figure becomes more
HAVE DINNER SUNDAY
AT
FIRST LUTHERAN CHURCH
Served to all by
THE LUTHER LEAGUE
NO SET PRICE: Only a free will collection at the serving table.
OPPORTUNITY TO VISIT, to keep cool.
ALSO TO MEET OSCAR HANSON, Evangelist of the Evangelical
Lutheran Church.
BRING THE FAMILY
SERVING STARTS at 11:30 a.m., just following the 10:00 worship
service.
PROCEEDS will be used for Bible Camp In “The Pines” at Fort
Peck.
Hugh Massman Holds Poplar Meeting Spotlight
■ fl
>^BQHR HP)
THIS PICTURE taken during
the recent meeting In Poplar to
discuss law and order problems
on the reservation, shows Hugh
Massman, assistant attorney gen
eral from Helena, as he explains
the rather Involved matter of
jurisdiction on reservations. To
the immediate right of Mr. Mass
man is Rev. Allen C. Erickson,
Poplar, moderator of the meet-
significant when analyzed as to
its occurrence. The net loss from
October. 17, 1933 to June 30, 1941
was only S6O million and during
the period July 1, 1941 to June
30, 1946 a profit of $126 miHion
was realized. During the post war
period July 1, 1946 to June 30, 1953,
however, a net loss of $1,175 mil
lion jvas sustained. This loss would
almost certainly have been much
higher had it not been for the
Korean War which created increas
ed demand for farm products. In
the first nine months of fiscal 1954
the net realized loss was $lB7
million as compared to s6l mil
lion for the whole of fiscal 1953.
Furthermore, the investment of
CCC in price supports rose so
rapidly in fiscal 1954 that it be
came apparent that the authority
of CCC to borrow from the
Treasury to finance its operations
ceiling of $6,750 million. The
ceiling of 6,750 miUion. The
President requested and Congress
approved an increase in this ceil
ing to $8,500 million. Barring an
other national emergency, losses
from price supports are likely to
increase considerably’ if the present
program should be extended by
Congress beyond this year.
In considering the costs of farm
price supports, account should be
taken of several other programs
besides the CCC program which
have the primary purpose of sta-
bilizing farm prices and income.
These include the International
Wheat Agreement which cost $558
million from fiscal 1950 through
1953 the program fob removal of
surplus' commodities costing $1,568
million from 1936 through 1953,
acreage allotment payments under
the Agricultural Conservation pro
gram costing $2,355 million from
1937 through 1946, and $1,920 mil
lion for a number of other pro
grams since 1932 after allowing
for net gains of 296 million by the
Sugar Act and $320 million by
CCC from other than price sup
port activities. The net cost of all
these farm price and income sta
bilization programs, including loss
on CCC price supports, was $7,516
million by June 30, 1953. In ad
dition, $690 million has been spent
on the national school lunch pro
gram since 1943 and one of the
basic purposes of this program is
to provide an outlet for surplus
foods.
Political Value Of Fixed Price
Support. May Be Exaggerated
There can be little doubt that
the Congressional eye to the farm
vote has influenced the repeated
Ing; Rev. Kenneth Lehman, Cal
vin Yellowrobe, chief of Indian
Police, Bruce O. Mefford, repre
senting Montana Liquor Control
Board; Walter K. Greufe, district
liquor inspector; Gordon White,
Valley county attorney, and E. E.
Bonebright, mayor of Culbertson.
Backs to camera, left to right, J.
M. Nass, mayor of Poplar, Austin
Buckles, chairman of the Ft Peck
Tribal Council, Hope McDonald,
postponement of the effective date
of flexible price supports fgr the
basic commodities. And for the
same reason favorable Congres
sional action on the President’s
farm program is now threatened.
Analysis of the relative im
portance of the basic commodities
as a source of cash receipts in
dicates that the importance of fix
ed price supports as an induce
ment for a favorable farm vote
may be greatly compiled by the
Agricultural Department sh ow
that only 23 per cent of the na
tional cash receipts from farm
marketings in 1952 came from ba
sic commodities. Marketings of
commodities with no price sup
ports produced 56 per cent of all
farm cash receipts. And 21 per
cent of cash receipts came from
products under flexible supports.
Moreover, 56 per cent of total re
ceipts were from livestock, dairy
Q THIS HUOS circus!
wiu. play a T 0
ALLOW TIME FOR FEEDINO AND WATERING ITS MANY
ANIMALS. THESE PREVAILING CIRCUMSTANCES WIU, AF
FORD LOCAL "CIRCUS-FANS" THE OPPORTUNITY OF
SEEING THE LARGEST AND FINEST CIRCUS EVER TO
VISIT THIS AREA.
POPLAR
tebraLY 3®
JIB
I
FEATURING: TERRELL JACOBS
WORLD’S GREATEST WILD ANI
MAL TRAINER.
2 nd - WPO -ELEPHANT!^]
I6SDouble length All-Steel Semi-Trailers!
A Jungle-Bred RUMMER QS /
*450 PEOPLE ★ 14 ACRES OF TLNTS*
218 ANIMALS 128 GdMtU&ig MEN
£360.00^ BXPtNSE^OB^e^ Stars!
fa 7A WR |
VfjiuahinShaiAtii^^
ADMISSIONS..
★ * TSacA to Prt- War "Prices / ★ *
pm™...sQ» ^^ADULK«S
| LARGEST, MOST VARIED & COSTIFEBBBE
COLLECTION OF RARE ANIMALS OUC
EVER EXHIBITED.
2 COMPUTE PERFORMANCES I
START 2^B PUR
neMiMLi I
I ivuisHotiaftotNos at sa.m. |
THURSDAY, JULY % 1954
tribal reporter, and F. A. Asbury;
secretary of the Wolf Point Cham
ber of Commerce. Others at the
speakers’ table and not shown In
the picture were: Frank Delger,
Roosevelt county undersheriff,
C. C. Funk, mayor of Wolf Point,
Orrle Woods, Montana highway
patrol, and Sgt. Alex Stephenson
of Helena, representing the high
way patrol.
—Herald-News Photos
products and poultry, the produc
ers of which incur higher costs /
because the fgeds they buy are
supported at high prices.
Only one of the leading farm
organizations, the National Far
mers Union, favors fixed pries
supports. The Union would- go far
beyond the existing program by
urging enactment of mandatory
supports at 100 per cent of parity
for all farm products produced on
family farms.
The American Farm Bureau
Federation favors the principle of
flexible price supports and exten
sion of modernized parity to those
crops on which the 1910-14 base
period is still used.
The National Grange favors
emphasis on. pushing the sale of
surplus commodities by the use of
a two-price system and other mea
sures to encourage exports. Where
these measures fail to solve the