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Mr. BELCHER. I have always had this feeling, and that is the reason why I am asking these questions, I have never had the feeling that wheat would ever become very competitive with feed grains. I have never thought that it would harm corn or many of the other feedgrains to any extent on the free market.
Mr. ALBERT. On the free market?
Mr. BELCHER. Yes. If this bill of yours establishes a two-price system for wheat and then a wheat allotment price-support program, too, I do not think you will have a Chinaman's chance of passing it, because our biggest argument has always been what Mr. Smith and Mr. Breeding were talking about, that we are taking the wheat farmer off the taxpayer's back and that we are making the bread consumer pay rather than the general taxpayer. But if you are going to keep the wheat allotment price-support program and establish the twoprice system in addition
Mr. ULLMAN. No, we are not doing that, Mr. Belcher, at all. You are putting this wheat on the open market. I feel as you do, I feel that it will not be competitive. As long as it is not competitive with corn, you will not have any other price support system at all. And so I feel that this is no problem. This is merely a provision in the bill, in case it should, that the corn producer will be protected. In other words, we are not taking any chances that it is going to get into the feed market to any great extent; and, therefore, protecting them. In my opinion it will not.
In my opinion, we will not have to utilize this because I do not think that wheat on the open market will be competitive with the corn. I agree with you wholeheartedly.
Mr. BELCHER. My thought was that if a man raises wheat and sells it for feed he won't be raising feed grains and selling it for feed, because he can't raise both of them on the same land.
Mr. ULLMAN. It will take a lot of feed.
Mr. BELCHER. He will reduce the amount of feed grain that is produced, and to his competitor it does not make any difference whether he is selling wheat or feed grains.
Mr. ULLMAN. That is right.
Mr. JOHNSON. I was brought up and raised in a feed store, and I remember in 1932, I believe it was, we got wheat in to grind up and sold it for $20 a ton. That is the only time I remember that wheat was ever cheap enough to be sold for feed and then farmers just bought it as pig feed or something like that.
Mr. ALBERT. You know the feed grains subcommittee will have hearings. If this gets into the matter of competing with feed grains including corn, we will have a problem working out an omnibus bill. Mr. ULLMAN. That is right. In my opinion, it will not. And I think historically it has not competed with feed grains. And so I do not believe that that is a problem before the committee. But this section is put in, and it is placed upon the Secretary's shoulders to keep it from being competitive. In other words, this is merely a protective feature so that it will not be, in case something should happen that lowers the price.
Mr. BELCHER. That section of your bill might prevent the passage of the whole bill. I am in accord with the two-price system for wheat. I think we should be careful that we do not load it down with other
things that will destroy the arguments we have for the two-price system.
I think the real argument we have that appeals to all Members of Congress is the fact that will take the Government out of farming. Mr. ULLMAN. Yes.
Mr. BELCHER. We have heard so much about taking the Government out of farming. To that extent that will take the Government out. The taxpayer will not be carrying the burden of this program at all? Mr. ULLMAN. That is right.
Mr. BELCHER. The consumer will only be paying a fair price, but, in addition to that, it will be a stabilized price, so that he will not be subject to one year paying a very high price and the next year a very low price, because under this system, I think, it would stabilize the consumer markets. And I think the consumer should be interested to that extent of always having a stabilized product rather than peaks and dips in the cost of bread or other products. For that reason we have a good argument, I think, for the bill.
I haven't studied the other provisions. The only reason I am asking these questions I would dislike to see the argument for this bill destroyed by putting back into the bill some things that would continue what we now have.
Our best argument is that we have a new relation, that we are changing it from the taxpaper carrying the load to letting the consumer pay the bill.
Mr. ULLMAN. You have made an excellent argument for the bill, of course. And this provision is not necessarily an integral part of the bill. It was merely, as I understand it, an insurance policy that was put into the bill. If the committee should decide that the insurance policy is not needed, I, certainly, would go along completely with the wisdom of the committee.
Mr. BELCHER. I might say that I have not read your provisions of the bill, and I am not saying that I am disagreeing with them or against them. I am merely trying to bring out the picture to see whether or not it will be an advantage to your bill or a disadvantage. If it is a disadvantage to the bill, you do not want it, either. Mr. ULLMAN. I do not want it, either.
Mr. BELCHER. If it is an advantage to the bill, I want it.
Mr. ULLMAN. That is right. But we have got to realize that we operate within a totality of agriculture and sometimes we have to put in provisions to satisfy other segments of the producing economy that we would not ordinarily do. And I think this is the only reason it was put in.
Mr. BELCHER. That is all. Thank you.
Mr. ALBERT. Are there any further questions?
Mr. KRUEGER. If I understood you correctly you said that the Secretary should issue certificates in the spring of the year?
Mr. ULLMAN. That is right.
Mr. KRUEGER. Is that in the spring of the crop year?
Mr. ULLMAN. The Secretary issues
Mr. KRUEGER. I didn't read your bill. I am in the same position that Mr. Belcher is.
Mr. ULLMAN. The Secretary of Agriculture would estimate the value, in other words, of the certificate during the spring of the year.
It will not be harvest. That is the spring of the actual year. I do not know what month he would determine it, but when the farmers need money to operate, in other words, to put in their crop, he determines the value. He estimates what it will sell at in the fall. And so he issues these certificates which are the difference between the support price and the estimated value. And each farmer gets that difference in cash and he gets it in the spring when he needs it.
Mr. KRUEGER. I understand that part of it. How can the Secretary estimate the crop that the farmer may harvest that year? He may issue a certificate way in excess of what that grower may harvest.
Mr. ULLMAN. He bases those estimates upon the production during the period-my bill calls for a 3- and a 5-year period, but I would like to state on the record here that the conference report was for a 10year period to determine the quotas I would, certainly, concur in that, although the people in our county feel it would be more advantageous to have a 5-year for a statement allotment and a 3-year period for county allotments. We, certainly, would be prepared to go along if it is more advantageous to other parts of the country on a 10-year quota system.
Mr. KRUEGER. I understand that part of it all right. But if the farmer will have at that time a carry-over surplus from the prior year or years he could furnish that wheat, but say his bins are empty, he has no wheat, he will not harvest any-what becomes of that certificate?
Mr. BELCHER. Will you yield there? This is what actually happens. The Secretary determines the amount of food that will be consumed, the amount of what that will be consumed in the United States for the coming year. Supposing he determines that to be 500 million bushels. Then he distributes that 500 million bushels on the basis of history to the various States, the various counties, and down to the farm. And then if the farmer, we will say, when he gets his share of that national consumption, it is 1,000 bushels, then his certificate is based on that. He may not raise 500 bushels. He may raise 5,000 bushels. He gets a certificate on his share of the amount of wheat that is to be consumed in the United States in the coming year and then beyond that he is entirely on his own. He can raise 5,000 bushels, or in a bad crop year, he may have 500 bushels of wheat but that is immaterial.
Mr. KRUEGER. If he has only 500 bushels of wheat and his certificate calls for 1,000 bushels, that is issued for 1,000 bushels, isn't he getting more than he is raising or is entitled to?
Mr. BELCHER. That is true.
Mr. ALBERT. That is true.
Mr. WATTS. If I may interpose, say, normally he raises 1,000, and the next year he may raise 2,000, still he will only get a certificate for the same amount. In other words, one year he runs over what he produced and the next year he runs under, so you would average out. In other words, if he was normally producing 1,000 bushels of wheat, and his certificate was for 500 bushels, and one year he didn't raise but 300 bushels, he would get paid for 200 bushels that he didn't raise on the certificate, but the next year he normally would produce 1,000 but he produces 2,000, still he gets a certificate on the 500 which would be a fourth.
Mr. KRUEGER. What if I am that farmer, and I quit farming in the meantime?
Mr. WATTS. If you quit farming, I am assuming that the next farmer will fall heir to whatever your predicament was when you quit, because the history would go to the farm and not to the farmer. Isn't that correct?
Mr. KRUEGER. I am asking the question. I want to find out. Mr. WATTS. The certificate goes to the farm and not to the farmer. Mr. SMITH. I cannot see that we are going to establish a future trading market here. If he could not deliver it that is his hard luck. We, certainly, are not going to put in a system for the farmer if he does not raise it that he gets something for nothing. He has to deliver the wheat to the mills. That is 1,000, if that is his allotment. If he does not raise it and he has it in storage back from a previous year, he can still deliver the 1,000. That does not mean that he gets dollars for that number of bushels of wheat that he has failed to raise.
Mr. KRUEGER. As Mr. Ullman has said, the certificate is to be issued in the spring of the year. And when the farmer harvests his wheat he hasn't enough wheat to deliver.
Mr. ALBERT. Will you yield there? This certificate, as I understand it, would be issued on the difference between the domestic parity price and the estimated market price at the market season. Well, if there was no difference he would not get any certificate, is that right?
Mr. BELCHER. Right.
Mr. ULLMAN. Correct. Mr. Krueger, the bill actually says, not later than July 1 of each calendar year the Secretary shall determine and proclaim the domestic food quota for wheat for the marketing year beginning in the next calendar year. Such domestic food quota shall be that number of bushels of wheat which the Secretary determines will be consumed as human food in the continental United States during such marketing year.
By the spring of the year we mean prior to July 1 that the Secretary shall issue the certificates based upon his estimate of the domestic consumption during the following year. Those certificates shall be issued to the farmer. He takes them to the bank, and cashes them. The miller, in turn, has to buy them from the banker for every bushel of wheat that he mills, which means that he has to have a certificate to accompany it.
Mr. KRUEGER. I understand all of that. I am still sort of confused here. The question has not been answered. What if the farmer cannot deliver the wheat for which he has received a certificate from the Secretary?
Mr. ULLMAN. Normally, it will be 50 percent, around that, of what the domestic production is. I am assuming that if there is a complete catastrophe and he loses all of the wheat for some reason or anotherI am not prepared at this moment to say what would happen-but there are not many chances that will happen.
Mr. KRUEGER. I hear the gentlemen whispering one to the other that he can borrow that wheat from his neighbors.
Mr. ALBERT. If there are no further questions, Mr. Ullman, I again want to thank you.
Mr. ULLMAN. Thank you very much.
Mr. ALBERT. And I note a representative here from the Department of Agriculture, Mr. William O. Shofner, and Mr. R. O. Stelzer, is that correct?
You have no statement that you want to present to the committee today?
Mr. SHOFNER. No, we do not. We are here
Mr. ALBERT. At the invitation of the committee.
Mr. SHOFNER. Yes, and to assist in any way we can. Mr. ALBERT. I would like to state this off the record. (Discussion off the record.)
Mr. ALBERT. Back on the record. I note the presence of another colleague who is, also, the author of one of these bills, Congressman Berry, from South Dakota, author of H. R. 4637, which is the bill, incidentally, upon which the adverse departmental report was issued, under date of April 22, 1957. Congressman Berry, would you like to be heard at this time?
STATEMENT OF HON. E. Y. BERRY, A REPRESENTATIVE IN CONGRESS FROM THE SECOND CONGRESSIONAL DISTRICT OF THE STATE OF SOUTH DAKOTA
Mr. BERRY. Mr. Chairman. I was tied up in another committee hearing and I did not get to hear all of the testimony of Congressman Ullman, of Oregon. I did come in in time to hear part of the questioning at the last end and I wonder if it has not probably been pretty well covered, the testimony that I would give. Possibly I should my statement and not take the time of the committee.
Mr. ALBERT. We will be glad to have you proceed in such manner as you desire. Without objection you may file your written statement at this point in the record.
(The statement referred to is as follows:)
STATEMENT OF HON. E. Y. BERRY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF SOUTH DAKOTA
Mr. Chairman, let me first express my appreciation to this subcommittee for the opportunity of appearing here today on behalf of my bill, H. R. 4637, and other similar bills which are being considered by this subcommittee at this time.
The plan proposed in H. R. 4637 and similar bills is, in my judgment, a must for the wheat-producing farmers of the United States. The present support system has not functioned to the benefit of the wheat producer. Some action must be taken and must be taken immediately.
The plan this bill proposes is not new. It has been proposed many times under what is called the two-price system, the domestic parity plan, the bushel allotment plan, and by the certificate plan. The principals of this plan are in successful operation by the dairy producers under marketing agreements. It is something similar to the plan in operation by the fruit growers of the west coast. It does one thing which must be done if there is ever to be any control over the production and marketing of wheat, and that is to put the allotment on a bushel instead of an acreage basis.
Briefly, the plan and its operation may be described as follows:
First, all wheat would be sold without marketing quotas or restrictions of any kind.
Second, at the beginning of each marketing year the Secretary of Agriculture would make an estimate of the average going market price for that year. He would also announce the parity price of wheat for the year.
Third, the Secretary would estimate the probable amount of wheat which would go into domestic consumption for human food during the marketing