128 Mr. B meantir Mr. farmer quit, be Isn't th Mr. Mr. Mr. tradir We, if he has t lotm prev he g faile M in t he l sta pa: W th 130 WHEAT year. This amount, which for many years has been approximately 30 min bushels, would then be allotted among the wheat farms of the Nation on stantially the same basis as acreage allotments are made now, exopt that in this case the acreage would be translated into bushels and the allement t each farm would be in bushels. Each wheat farmer would receive a cri stating the number of bushels constituting his share of the estimated dimet consumption of wheat for food. This certificate would have a value in dollars and cents of the number of bushels which it represented multiplied by the difference between the going ket price of wheat as estimated by the Secretary and full parity. Let us assume for the sake of illustration that the number of bushels repre sented by this certificate is 1,000 and that the difference between the estinged price of wheat and full parity is 75 cents per bushel. In that event the certificate would have a value of $750. The next question is how would the farmer realize cash on this certificate and from whence would the money come? The answer to that question is that each miller or other processor of wheat will have to purchase certificates covering the total amount of wheat which he processes for domestic consu tion as human food. It will not be necessary for farmers to deal directly with millers because under the pending legislation the Secretary of Agriculture is authorized through the Commodity Credit Corporation to buy and sell marketing certificates. The the Commodity Credit Corporation would act as a clearinghouse. Farmers would turn their certificates in to the Commodity Credit Corporation through the county agricultural stabilization committee and millers in turn would bay certificates from the Commodity Credit Corporation. The program in general would be administered by the county agricultural stabilization committees which administer other agricultural programs. The benefits which may be anticipated from this legislation are numerous and may be summarized as follows: First, returns to the farmer will be somewhat greater than under the present program and there is a good prospect that expanded outlets will further increase these returns in the future. Second, marketing quotas and penalties will be eliminated and acreage controls greatly minimized and possibly entirely eliminated in the course of time. Third, relief to taxpayers will be afforded through an immediate substantial reduction and eventual elimination of practically all the costs of the present program under which export subsidies and storage costs amount in the aggregate to over $400 million per year. Fourth, to a large extent it will take the Government out of the warehousing and merchandising of wheat and in the end probably do away with such activities altogether. Fifth, wheat would be produced for market instead of for sale to the Govern ment and would be sold on the basis of quality, thus encouraging good farming and the production of superior varieties. Sixth, producers of livestock and poultry wherever situated would be able to produce wheat for feed or buy wheat at feed prices. Seventh, there would be some expansion of wheat exports through the elimination of redtape, delays, and other obstacles existing at present. Eighth, it would result in moving wheat into its natural outlets and market channels. Ninth, it will return to the farmer greater freedom and control over the operation of his own farm. The only real objection to this plan for wheat has, in the past. come from the I also call your attention to the fact that there is in the bill itself a provision vent wheat from coming into unfair competition with corn as a feed grain. ere will be less feed grains produced, if this proposal is adopted, than have been herwise. Furthermore, this provision does not go into effect automatically; twords of the wheatgrowers voting in a referendum must vote to put it into effect. Mr. ALBERT. If you want to respond to questions the committee will glad to proceed in that order. Mr. BERRY. There is nothing in the bill which answers the questions at members have been asking, what if the farmer is unable to produce imself on his own farm the wheat covered by the certificate. On he other hand, there is nothing in the bill that I know of or in the plan hich would prevent him from obtaining it from his neighbor, in the vent he did not have it. Mr. ALBERT. Would that not put him in the position of a wheat roker who might have to go out on a deficit market and buy wheat it a very high price after he obtained a certificate at the parity price? It seems to me that is something that has to be worked out better than it is. Mr. BERRY. If the market price is above the certificate price, then your certificate is not issued in the first place is it? Mr. ALBERT. Here is the situation, if I understand this-and I haven't studied it in detail-this is what I am thinking about. You get a certificate in advance of your crop. Is that true? Mr. BERRY. That is correct. Mr. ALBERT. You have a general crop disaster. You have a nationwide disaster which is not a rare thing in the Wheat Belt. You can have a drought. The farmer cannot deliver his wheat. You have a short crop and the price goes above the parity price which has happened in times of crisis. What would be the situation. Would you then be compelled to deliver wheat, or would he pay back the amount of the certificate, or what? Mr. BASS. Mr. Chairman, will you yield at that point? Mr. ALBERT. Yes. Mr. BASS. First, I want to ask a question. The certificate would, certainly, not be money which is based on the total value of the expected crop, is it? Mr. ALBERT. Of course not. Mr. BASS. What would be the maximum amount of the certificate with relation to the proposed crop? Mr. BELCHER. All right, the maximum amount of the certificate would be the difference between the prevailing market price and 100 percent of parity on the number of bushels that was allotted to him. If he was allotted 1,000 bushels, and the difference between 100 percent of parity and the market price was 60 cents, then he would get $600. Then that is the certificate, that is a check. He can go to the bank and cash his check. From just glancing over this bill, there is nothing that he has to do any further. He does not have to deliver a bushel of wheat to anybody. Mr. Bass. I would say that, in my opinion, after listening Mr. BELCHER. He just raises wheat and sells it. He is bound by his allotment. He isn't bound by anything. Mr. BASS. I say that if the farmer was not in a position to deliver the amount of wheat on which he drew his certificate, that probably he would be, or should be bound for some type of repayment, either year. This amount, which for many years has been approximately 500 million bushels, would then be allotted among the wheat farms of the Nation on substantially the same basis as acreage allotments are made now, except that in this case the acreage would be translated into bushels and the allotment to each farm would be in bushels. Each wheat farmer would receive a certificate stating the number of bushels constituting his share of the estimated domestic consumption of wheat for food. This certificate would have a value in dollars and cents of the number of bushels which it represented multiplied by the difference between the going market price of wheat as estimated by the Secretary and full parity. Let us assume for the sake of illustration that the number of bushels represented by this certificate is 1,000 and that the difference between the estimated price of wheat and full parity is 75 cents per bushel. In that event the certificate would have a value of $750. The next question is how would the farmer realize cash on this certificate and from whence would the money come? The answer to that question is that each miller or other processor of wheat will have to purchase certificates covering the total amount of wheat which he processes for domestic consumption as human food. It will not be necessary for farmers to deal directly with millers because under the pending legislation the Secretary of Agriculture is authorized through the Commodity Credit Corporation to buy and sell marketing certificates. Thus the Commodity Credit Corporation would act as a clearinghouse. Farmers would turn their certificates in to the Commodity Credit Corporation through the county agricultural stabilization committee and millers in turn would buy certificates from the Commodity Credit Corporation. The program in general would be administered by the county agricultural stabilization committees which administer other agricultural programs. The benefits which may be anticipated from this legislation are numerous and may be summarized as follows: First, returns to the farmer will be somewhat greater than under the present program and there is a good prospect that expanded outlets will further increase these returns in the future. Second, marketing quotas and penalties will be eliminated and acreage controls greatly minimized and possibly entirely eliminated in the course of time. Third, relief to taxpayers will be afforded through an immediate substantial reduction and eventual elimination of practically all the costs of the present program under which export subsidies and storage costs amount in the aggregate to over $400 million per year. Fourth, to a large extent it will take the Government out of the warehousing and merchandising of wheat and in the end probably do away with such activities altogether. Fifth, wheat would be produced for market instead of for sale to the Government and would be sold on the basis of quality, thus encouraging good farming and the production of superior varieties. Sixth, producers of livestock and poultry wherever situated would be able to produce wheat for feed or buy wheat at feed prices. Seventh, there would be some expansion of wheat exports through the elimination of redtape, delays, and other obstacles existing at present. Eighth, it would result in moving wheat into its natural outlets and market channels. Ninth, it will return to the farmer greater freedom and control over the operation of his own farm. The only real objection to this plan for wheat has, in the past. come from the Corn Belt area because of their fear that wheat would be placed on the market in competition with corn as a feed crop. Let me suggest that if the Department of Agriculture, under the present law, could put an effective acreage limitation upon wheat which would reduce wheat production to wheat consumption for food purposes, then the acres which would be taken out of wheat production would necessarily either go into the production of some other feed crops so that actually the corn situation would not be changed. I also call your attention to the fact that there is in the bill itself a provision which provides that the Secretary of Agriculture may establish acreage allotments on wheat. So he has it in his power to prevent such an expansion of production of wheat as will result in an increase of the total feed grain supply. Furthermore, the Secretary has the authority to put a low loan upon wheat, and one ingredient of that is the price of corn, so that he has the authority to prevent wheat from coming into unfair competition with corn as a feed grain. There will be less feed grains produced, if this proposal is adopted, than have been otherwise. Furthermore, this provision does not go into effect automatically; twothirds of the wheatgrowers voting in a referendum must vote to put it into effect. Mr. ALBERT. If you want to respond to questions the committee will be glad to proceed in that order. Mr. BERRY. There is nothing in the bill which answers the questions that members have been asking, what if the farmer is unable to produce himself on his own farm the wheat covered by the certificate. On the other hand, there is nothing in the bill that I know of or in the plan which would prevent him from obtaining it from his neighbor, in the event he did not have it. Mr. ALBERT. Would that not put him in the position of a wheat broker who might have to go out on a deficit market and buy wheat at a very high price after he obtained a certificate at the parity price? It seems to me that is something that has to be worked out better than it is. Mr. BERRY. If the market price is above the certificate price, then your certificate is not issued in the first place is it? Mr. ALBERT. Here is the situation, if I understand this and I haven't studied it in detail-this is what I am thinking about. You get a certificate in advance of your crop. Is that true? Mr. BERRY. That is correct. Mr. ALBERT. You have a general crop disaster. You have a nationwide disaster which is not a rare thing in the Wheat Belt. You can have a drought. The farmer cannot deliver his wheat. You have a short crop and the price goes above the parity price which has happened in times of crisis. What would be the situation. Would you then be compelled to deliver wheat, or would he pay back the amount of the certificate, or what? Mr. BASS. Mr. Chairman, will you yield at that point? Mr. ALBERT. Yes. Mr. BASS. First, I want to ask a question. The certificate would, certainly, not be money which is based on the total value of the expected crop, is it? Mr. ALBERT. Of course not. Mr. BASS. What would be the maximum amount of the certificate with relation to the proposed crop? Mr. BELCHER. All right, the maximum amount of the certificate would be the difference between the prevailing market price and 100 percent of parity on the number of bushels that was allotted to him. If he was allotted 1,000 bushels, and the difference between 100 percent of parity and the market price was 60 cents, then he would get $600. Then that is the certificate, that is a check. He can go to the bank and cash his check. From just glancing over this bill, there is nothing that he has to do any further. He does not have to deliver a bushel of wheat to anybody. Mr. BASS. I would say that, in my opinion, after listening Mr. BELCHER. He just raises wheat and sells it. He is bound by his allotment. He isn't bound by anything. Mr. BASS. I say that if the farmer was not in a position to deliver the amount of wheat on which he drew his certificate, that probably he would be, or should be bound for some type of repayment, either a mortgage or some other liability to make this good in case he was not able to produce the wheat. Otherwise, I think the bill would be a very weak bill. If there were no obligations placed upon the farmer to insure delivery of the goods, I think the bill would be drastically weak. Mr. BELCHER. If he did not deliver a bushel of wheat, the wheat market would be in much better shape. Mr. Bass. In that instance, he would be able next year to make good this money that he received without producing any goods. But I think there should be some obligation if the farmer draws cash on a proposal, we will say, guaranteed by the Government, and if he does not produce, then he should have some liability in this case. Mr. BELCHER. Under the present system we are penalizing him for raising too much and not too little. Mr. BASS. That is very true. I think in case where we advance him money, though, looking toward production, if he does not produce then he should be liable to return the money in some way or another. Maybe the next crop year or the next. Certainly there should be some liability on the part of the producer to return the money. Mr. ALBERT. The Department has commented rather indirectly on this in its report, I think, which is on the last page of the departmental report: Aside from these more fundamental considerations, many complex administrative problems are inherent in the system of marketing proposed in this bill. For example, the Department would have to determine the value of the certificate in advance of the marketing year, based on the amount by which the estimated parity price exceeds the estimated average price received by producers. Errors in these estimates may result in consumers having to pay more than parity for wheat, and to offset such errors complex administrative procedures would be required. On the whole the program would involve the Government more instead of less in the handling of wheat in direct competition with the private trade. That is what the Department says about these particular subjects but they have not gone into it in detail. They have used it merely as an example of the administrative problems involved. Mr. Bass. I should think that the bill, I mean for the passage of a bill or anything else, there should be a financial liability, a requirement for production in some instance. Mr. ALBERT. Let me ask this question: Would it destroy the effect of these bills if we issued the certificates at the market season, rather than at the spring season, would that do great damage to the purposes of these bills? Mr. BERRY. It would not. And it would not adversely affect the legislation, if the certificates were not made negotiable. Mr. JOHNSON. Were not made what? Mr. BERRY. Negotiable. If they were not negotiable then you would not have this problem arising betwen the spring and the fall. Mr. BASS. If the chairman will yield, if I remember correctly, when Clifford Hope, former Member from Kansas, was on this very committee he introduced several bills and his idea was that the farmer would receive a certificate to be cashed after he delivered the wheat to the mill. Mr. DAGUE. That is correct. Mr. KRUEGER. There is some sense to that. |