(The data referred to is as follows:)

Acreage and production of wheat for the selected States, 1926-58

Source: Grain Division, CSS, Agriculture, Washington, Apr. 22, 1958.

Mr. SMITH. And you think that they would not have produced it except for the program?

Mr. MCLAIN. I am sure that a lot of them never would have gone into it if we had not done what we had.

Mr. SMITH. Now, as I understand your basic objection to this, the so-called two-price system, is, first, because you want to maintain the good diplomatic relations which we have. In other words, that is the first thing you picked out, that we cannot jeopardize our international relations by dumping wheat on the world market-that is the basic objection?

Mr. MCLAIN. Well, I think that responsible people that sponsor this approach recognize that.

Mr. SMITH. And the second reason, as I understand it, is because of the consumer.

Well, in other words, as I get it, there are three basic objections of the Department: The international relationship is first. Second is the consumer; and third is the feed grain problem?

Mr. MCLAIN. Those are the three basics.

Mr. SMITH. Well, then, I wish that you would turn the page to page 18 of your statement down to No. 1, where you say:

This range is to narrow to permit the expansion of markets needed to absorb the increased production which our farms will likely produce and are capable of producing.

Now, that is what you say there, but when you are talking about the domestic, that is exactly what you object to.

Mr. MCLAIN. Well, again, the principle

Mr. SMITH. In other words, at one time you are for it, and at another time you are against it?

Mr. MCLAIN. No; I do not believe you can read that out of what we said.

Certainly, we don't aim it to be that way.

Mr. SMITH. That is the way I gather it.

Mr. MCLAIN. We are talking about two different things, because, then, here we are talking about one level of support and in the other we are talking about two levels.

Mr. SMITH. In other words, you say that we have too narrow a range in one case, and you say that you have to have that because the present parity range is too narrow.

Mr. McLAIN. In the first place, nobody has said that we would reduce the wheat price as far as 60 percent. We asked for the discretion to have that range. All of the evidence is to the effect that the Secretary has not used his authority for many commodities to set price supports below 70 percent of parity.

We feel that only a fixed formula, and a fixed narrow range is not a wise way to operate. We think that the range ought to be expanded and discretion given with fair minimums. Let us have one support level. That would do some of the things that the advocates of the two-price plan would like to have done.

Mr. SMITH. The Secretary is always talking about freeing the farmer, to take the farmer out of bondage. So, then, why don't you go to the farmer and say, "All right, you get your 50 percent or whatever your domestic allotment is, and you go ahead and produce all of the wheat that you want"--and that will free him.

Mr. MCLAIN. Not under that type of system, because it is not freedom; because, under the one system, you have got the power of having the prices pegged

Mr. SMITH. It will not increase the cost of grain?

Mr. MCLAIN. Well, I wish we were both around here after this is put into effect to see whether it would.

Mr. SMITH. I cannot understand why it is that you will not say to the farmer, "Go ahead, if you want to raise all of the wheat; go ahead, but, if you do, you do it at your own risk."

Mr. MCLAIN. Well, I have not seen any wheatgrowers that are advocating this type of program.

Mr. SMITH. One thing that I noticed about the Department of Agriculture: Every time some Congressman makes a statement as to what his farmers want, they say that is not so.

Well, I happen to talk a lot to my farmers for their views-for one thing, I have political inclinations, and I talk to them; and if you go out to the farmers in my district you get a lot of different answers from what you said

Mr. MCLAIN. Well, I am well acquainted with a lot of small farmers, as well as big ones; and I know that there are varieties of opinions. Mr. SMITH. Well, I am talking about the High Plains farmer, and not about the farmer in Ohio or Indiana or Illinois. I am talking about the High Plains.

Mr. McLAIN. And I have got some pretty good friends among them, too.

Mr. SMITH. Name one.

Mr. MCLAIN. Herb Hughes. I know him pretty well.

Mr. SMITH. He is not a wheat farmer.

I beg your pardon. I am thinking about another man, who is always sticking his nose in-he raises white-faced cattle.

Mr. MCLAIN. I think that Herb Hughes is a wheat farmer.

Mr. SMITH. I had another Hughes in mind. There are too many of them, just like there are too many Smiths.

That is all, Mr. Chairman.

Mr. ALBERT. Any more questions?

Mr. KRUEGER. Mr. McLain, you indicated in your statement that you expected a large 1958 wheat crop in this country.

Mr. MCLAIN. Yes, sir.

I will say this: This is on the basis of the crop estimate reporting people that we have in the Department of Agriculture, who, I think, are as skilled as anybody in the world in this field. I think they would be the first to recognize that anything can happen between now and harvesttime.

Mr. KRUEGER. Yes.

What are the prospects of the wheat crops in other wheat-producing countries?

Mr. McLAIN. Of the world?

Mr. KRUEGER. Of the world.

Mr. MCLAIN. From the information that I have, I don't think that we need to worry about any shortage of wheat worldwide.

However, we do have to concern ourselves with vast numbers of people that would like to have wheat that do not get it because they do not have the wherewithal.

Mr. KRUEGER. What about Canada?

Mr. MCLAIN. Well, Canada, it is a little early to tell-you are near the border and you know that they are late.

My guess is, a pretty good crop.

Mr. KRUEGER. Do you have any estimates of spring wheat?

Mr. MCLAIN. We have not.

Mr. KRUEGER. I am wondering about some countries like Canada, Argentina, and Russia, countries producing large quantities of wheat. Do you think that they will have large crops?

Mr. MCLAIN. The two larger producers are the United States and Canada.

Australia, for instance, this last year, had a very short crop but, still, there were ample supplies of wheat to go around worldwide. Mr. KRUEGER. What about the Russians?

Mr. McLAIN. Well, we are very interested in what is going on there, and we try to keep our ear to the ground; but it is kind of difficult.

Mr. SORKIN. Their season is late. They are farther north than we

are.

Mr. KRUEGER. I see.

Now, would you say that it does not look too favorable for the wheat farmer

Mr. MCLAIN. I would not say that.

Mr. KRUEGER. Well, the yield per acre is about 15 bushels, our yield, and to compete with wheat raised in Illinois, Indiana, or Ohio, where they raise 50 or 60 bushels of wheat-we are at some disadvantage.

Mr. McLAIN. Of course, the cost of raising that much on smaller acreage is higher, but we certainly do not want to sell the wheat farmer short. We think that the future of the wheat industry is still pretty good.

Mr. KRUGER. Well, I have been home the week before Easter, and I talked to quite a few farmers, and some of them have actually have changed their minds about support prices on wheat. They thought it should be eliminated in some of those States or areas where they raise large bushelages per acre. They would probably go out of the wheat business if the support prices would be lowered, and that would give our wheat a better price because we are raising of course, you know we are raising a great deal of durum wheat and durum is is now at par with hard premium.

Mr. MCLAIN. Yes.

Mr. KRUEGER. It used to be quite a bit higher, but now we have caught up.

Mr. MCLAIN. Yes; we have plenty of supplies now.

Mr. KRUEGER. Well, then, the

Mr. MCLAIN. I think that the view you express from some of your farmers is general, pretty general, and in quite wide areas in your part of the country, and it has been reflected by other Congressmen to

me.

I think this is a growing concern people have, they feel that they would kind of like to have the wheat raised where the quality wheat can be raised, in the area it ought to be raised and not somewhere else. That is the way they feel.

Mr. KRUEGER. That is all.

Mr. ALBERT. Mr. Heimburger has some questions, I believe.

Mr. HEIMBURGER. Thank you, Mr. Chairman, there are 2 or 3 points.

Mr. McLain, you know, I had something to do with the drafting of the two-price principle some years ago, and I had some background of what they were trying to attain at that time and so I was a little surprised by the statement that in your prepared statement the purpose of the support level is to prevent competition.

I think that is a misinterpretation of what the intent of the pricesupport provision of the bill is. It is not intended to prevent competition and on the contrary I think it is quite clear it is intended to make American wheat competitive with feed grain and competitive with wheat offered on the world market by other countries. Admittedly, it is intended to prevent cutthroat competition.

Mr. McLAIN. Well, this is what we had in mind

Mr. HEIMBURGER. If I may continue, the interpretation you put on the support price or level, slightly above the world-price level is not in my opinion a correct interpretation of the legislation, it is to make it evenly and fairly competitive.

Mr. McLAIN. With the world price?

Mr. HEIMBURGER. With the world price.

Mr. McLAIN. Well, this is not the interpretation

Mr. HEIMBURGER. I say it is not the interpretation

Mr. SORKIN. World price or domestic feed price?

Mr. HEIMBURGER. Well, there has to be synthesis of these various factors by the Secretary and the objective is a support price for wheat which would make it fairly competitive with feed grains and with the world price.

Mr. MCLAIN. May I ask you a question?

Mr. HEIMBURGER. Yes.

Mr. MCLAIN. Do you visualize under this bill that it would set the support at approximately the world price today?

Mr. HEIMBURGER. I don't know what the world price today is, but don't pin me down and

Mr. MCLAIN. But I mean in general.

Mr. HEIMBURGER. Approximately where the world price is, as nearly as it could be approached still taking into consideration other factors relative to feed values and that sort of thing. In other words, this is just about what was done for cotton, under the stimulus of which you made it competitive on the world market but you did not go into cutthroat competition, you set a price and you sold an awful lot of cotton at the world price starting from that position.

Now, the objective of this legislation is to give wheat substantially that sort of a price structure.

Mr. McLAIN. If I may comment, I think that if you set it at a level that would do that exportwise, you would certainly immediately have broad repercussions in the wheat-growing countries

Mr. HEIMBURGER. At what percentage of parity; where would you set it?

Mr. SORKIN. Around $1.50.

Mr. HEIMBURGER. Under this section as you interpret it you would set the prices at about $1.50?

Mr. SORKIN. Well, there is one other point. If you took it down to the world price level and half of it went to feed and export and half went domestic, there would be no increase in income for the domestic producers. Now if you are going to go through this whole operation. without increasing the income of the domestic producers, I think you are going through a whole lot of needless operations.

Mr. HEIMBURGER. Let me comment

Mr. SORKIN. Let me give you the mathematics of it. If half of it goes out at $2.40 and half of it at $1.20 then the average is $1.80 which is the present support level.

Mr. HEIMBURGER. And compare that with your recommendation. Mr. SORKIN. Well, we were comparing this with the present program and I think that is what the chairman asked us.

Mr. HEIMBURGER. I am asking you to compare with what you recommend

Mr. SORKIN. No one knows at what level the Secretary will establish a support. Obviously he cannot come out with $1.20 because you would have no additional farm income and as I understand the purpose of this legislation it is to increase the income of the wheat producers.

Mr. HEIMBURGER. I think there is one thing to clear up. You have referred from time to time to half of the wheat crop moving at a certain price and half at another price. Now, that argument is notit simply establishes a method of computing the payment to farmers.