APPENDIX TABLE 4.-Wheat subsidies on exports under the International Wheat NOTE. Similar subsidies have been paid on nonagreement sales for several years. Our present wheat agreement quota is 132,098,561 bushels. Minimum and maximum prices under the IWA are $1.50 to $2 per bushel. APPENDIX TABLE 5.-Farm prices and national average support prices, 1938–58 1938. 1939. 1940. 1941. 1942. 1943 1944. 1945. 1946. 1947. 1948. 1949 1950. 1951 1952 1953. 1954 1955 1956. 1957 1958 1 ! Preliminary. 1938 1939. 1940. 1941 1942. 1950. APPENDIX TABLE 6.—Acreage allotments and seeded acreage, 1938-57 NOTE.-Acreage allotments were proclaimed for the 1943 and 1951 crops but were terminated under emergency powers. 1945. 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 APPENDIX TABLE 7.-CCC-owned stocks of wheat, quantity under loan, and delivered to CCC, 1945-56 I Through Jan. 15, 1958. APPENDIX TABLE 8.—Summary of realized cost of agricultural programs primarily for stabilization of farm prices and income for wheat, fiscal years, 1932-56 and 1957 Acreage allotments and marketing quotas. 45. 1 12.0 Parity payments, AAA of 1933, Agricultural Marketing Act revolving fund and The total for 1932-56 excludes certain administrative expenses which cannot be allocated to individual commodities. It also excludes $244.9 million in program expenses which were raised by processing taxes on wheat. If we include the funds raised by processing taxes, the total cost of wheat programs for the fiscal years 1932-57 amounts to $3,969.6 million, but this still does not include all administrative expenses. AMERICAN FARM BUREAU FEDERATION SUPPLEMENTAL STATEMENT RE MULTIPLE PRICE PLANS, PARTICULARLY WHEAT Multiple price plans for agricultural commodities are not new. The McNaryHaugen proposals of the 1920's were two-price plans. There has been a long series of related bills dating back for at least 15 years. Elements of multiple pricing are evident in classified price plans for milk, the International Wheat Agreement, Public Law 480, export subsidies, market agreements, the compliance, noncompliance, and noncommercial loans on corn, and others. Many of the above programs are designed to be temporary and flexible in nature. Some involve small areas of operation. Some provide for diversion into products that cannot be reconstituted back into the original product. Some keep inferior products from entering normal channels of trade. Despite the fact that many price programs in operation today have multiple pricing aspects, there is not one in existence that even remotely resembles the current multiple-price proposals for wheat, rice, dairy products, and other agricultural commodities. These currently proposed plans generally are mandatory, permanent, inflexible, and involve processing taxes and certificates. None of these features are basic characteristics of plans with which we have had experience. Truly, we will be out on uncharted seas if we embark on any of these untried multiple-price proposals. This in itself should not condemn the many new proposals before us, but it does indicate that we should subject them to a most careful examination before we think seriously of adopting them. The objectives which the American Farm Bureau Federation has for a farm program are outlined in our AFBF policy statement. Essentially, these objectives are expanded markets, more freedom, and higher net farm incomes. Could it be that some of the various multiple-price proposals would contain provisions that would be helpful in making progress in this direction? Let us examine some of these, first in broad scope, and then individually, to see how they might contribute to a long-range solution of the farm problem. Perhaps we should pause to take a quick look at the general features that characterize most of these plans before we delve into an analysis of specific ones. The basic objective of multiple-price proposals is to divide the market for the commodity in question into a primary market, which would be charged a parity or near parity price, and one or more secondary markets, which would be supplied at lower prices. The mechanics of most of these plans are such that the specified commodity would move through United States trade channels at one price with variations for class, quality, and location. The actual cost, however, of acquiring the commodity would vary according to the use that is made of it. Under most of these plans, producers would be given marketing certificates for a pro rata share of estimated domestic consumption. Processors would be required to buy such certificates in proportion to the use in products destined for domestic human consumption. The values of such certificates would be determined by the Secretary of Agriculture on the basis of his estimate of the amount by which the parity price of the commodity will exceed the average farm price for the year. Thus, producers would be assured of something approximating parity for a percentage of their crop, which would be equal to the percentage of the total production that is consumed domestically. Certificates would not be required for exports, or in some cases, for nonfood domestic uses. Refunds equal to the value of the certificates involved would be made when products are exported. As we now switch from description to analysis, let us first examine the probable effect of these programs on our foreign markets. These programs are designed to expand exports. Will they do it? Certainly they will not solve the foreign exchange problems which limit our sales in many areas. They will not change the fact that our products are not always competitive in terms of quality. Increased quantities of our products may be available for export markets at world prices if we subsidize foreign shipments by giving United States producers additional income for the domestically consumed portion of production. If foreign countries, however, impose restrictions against the importation of our products, what have we gained? We have made it a point in our organization to discuss multiple-price proposals with the many foreign agricultural visitors who come to our offices almost weekly. We have explored these plans in conversations with foreign traders and Government officials in our visits abroad. We have brought these plans to the attention of importers and exporters in our conferences on trade development and international affairs. We discussed these proposals at a number of important gatherings, including the recent world conference of the International Federation of Agricultural Producers. A part of the statement relative to multiple-price plans and international trade, which was presented by Walter Randolph, vice president of the American Farm Bureau Federation, in behalf of the federation, follows: "So far as United States policy relating to international trade is concerned, we believe it should be designed to promote trade with other nations on a fair basis and at a high level. "The application of this principle to United States Government price policy has particular significance to you and to us: "(1) We agree that it is not fair on a continuing basis to subsidize the production of surpluses of our export crops through policies which require Government surplus disposal programs to market the commodity. That is why we have insisted that so-called surplus disposal programs should be temporary. We are not interested in their becoming a way of life. "That is why we have insisted that Government price policies on supported commodities should be consistent with production objectives. We would remind you that the six commodities having price supports about which much of our discussion has centered account for less than 25 percent of United States cash farm receipts and that commodities accounting for over 50 percent of cash farm receipts have no Government price supports. "(2) This objective of conducting international trade in farm products on a fair basis cannot be attained by proposals to assure producers a relatively high price for that portion of the crop sold domestically-or for a part of that portion of the crop sold domestically as in the case of the three-price wheat proposal which has been under discussion in the United States and which was referred to earlier in this meeting. "United States feed grain and livestock producers are as frightened by the possibility of this sort of economic dumping on a permanent basis in the domestic market as are the producers in other wheat exporting countries who have analyzed its implications to them. "What is the real test of fairness so far as the production and export sales policy of any Government with respect to price-supported agricultural commodities? "Is such test whether the supported commodity is sold for export at a price not lower than the price at which the production of the commodity was induced by Government programs? Such programs include loans, purchases, blend prices arrived at by multiple-price schemes, payments (incentive payments, deficiency payments, compensatory payments, production payments, etc.), and other similar devices. "If this can be accepted as the proper test, then all of us have an opportunity to move gradually in the direction the test points." After these inquiries and discussion, we are forced to conclude that a permanent program of maintaining high prices in a protected domestic market, in order to produce more for export to foreign markets, would be considered export dumping by other countries. We do not allow other countries to dump products into our markets and we can expect them to retaliate if we engage in such practices. In the case of importing countries who have domestic producers of the commodities in question, the retaliation probably would come in the form of restrictions against the importation of that product. In the case of exporting countries, the retaliation could be expected against United States export of other agricultural products and manufactured articles. Many foreign countries already are extremely unhappy over our present programs of export subsidization. The recent violent objections of Canada to our recent wheat export activities is only one of many that have come to our attention in recent months. Fortunately, we have some flexibility in our present operations and we are in a position to make changes when conditions warrant. Our foreign competitors console themselves with the knowledge that we are trying to get out from under a serious surplus situation and that we have not committed ourselves to a program of subsidizing exports on an expanding scale. When and if we do, we are told that we will be embroiled in a prolonged bitter struggle that inevitably will restrict our trade and endanger our international relations. Can we afford to take this chance? WILL DOMESTIC CONSUMPTION BE AFFECTED? Since multiple-price plans generally incorporate high levels of domestic price support, it is necessary to consider the effect of this pricing policy on consumption. It is important to note that prices have a marked effect on domestic consumption of dairy products, cotton, meat, and a host of other agricultural commodities. Even for wheat and rice, prolonged periods of high prices may induce important shifts in consumer habits. High prices will encourage a further increase in the consumption of synthetics and other substitutes. WHO WILL BE HURT? Each proposal should be analyzed to determine if it is fair to United States consumers, to producers of quality products, and to producers of other agricultural commodities. If we try to obtain satisfactory prices for wheatgrowers, milk producers, and others through a processing or similar tax, these payments may be interpreted to be bread taxes, milk taxes, or taxes on other consumer necessities. This could create an adverse public reaction which would affect consumer demand for the products in question and could jeopardize the successful operation of the program. While the American consumer should expect to pay a fair price for food, it is quite a different thing to tax domestic consumption of individual commodities to finance the export of these commodities. Processing taxes shift the burden from those more able to pay to those less able to pay. Now, support money comes from Federal funds, part of which comes from graduated income taxes. Increased costs of domestically consumed foods, brought about by processing taxes, would be borne by the users and would bear as heavily on the low income segment of our population as on those more able to pay. Consumers can be expected to object strenuously to programs that permanently increase their food and fiber costs in order that foreign consumers may pay less. Many of the proposed programs distribute certificates according to production history and bear no relationship to the historical participation in the domestic market for the product. In the 5-year period, 1952-56, domestic consumption of durum wheat average 105 percent of production; hard red spring wheat, 88 percent of production; soft red winter, 73 percent; hard red winter, 74 percent; and white wheat, 37 percent. Is it equitable to give the producers of each of these varieties of wheats equal shares of the domestic food wheat market? Any plan established for one commodity may have serious implications for producers of other products. When devising a multiple-price plan for a commodity such as wheat, we need to consider the effects of this plan on feed grain producers, livestock growers, and others. In considering the use of processing taxes, it would be advisable to take into account the almost certain opposition of processors. In the past they opposed processing taxes and were successful in getting the processing taxes, established under the original Agricultural Adjustment Act of 1933, declared unconstitutional. They can be expected to attack the constitutionality of current proposals and might well win their case in the courts. The possibility of this eventuality would add confusion and uncertainty in the operation of the program. PROBLEMS OF ADMINISTRATION Administration of multiple-price systems will be difficult and complicated. The proposals require in general all the administrative decisions necessary under present plans. In addition, advance estimates of domestic quotas, parity prices, and market prices will be required. Also, there will be certificates to handle. The administrative costs of collecting and processing taxes and making payments to farmers would be high. Multiple-price plans might produce black markets through which wheat, rice. and other products would move into human consumption without payment of the processing tax or purchase of a food certificate. This could result in administrative problems of auditing and enforcement far beyond first expectations. A natural development of a two-price plan would be a multiprice system with prices varying according to usage. In fact, present wheat proposals, if adopted, would result in at least 3 levels of price-1 for food, 1 for feed, and 1 for foreign shipments. Expansion of a 2-price system to a 3- or 4-price system would greatly complicate administrative problems. A general adoption of multiple-price plans will result in increased involvement of Government in the individual affairs of farmers and in the production and marketing of agricultural commodities. This will not be good for agriculture or for America. WILL FARM INCOMES BE INCREASED? Overproduction is one of the big problems in agriculture today. There appears to be nothing in any of the proposed multiple-price plans that will help solve this problem. In fact, production could be expected to increase. If higher |