provision does not specify what criteria would determine the issuance of additional certificates.) The Secretary, once he had proclaimed a domestic food quota for wheat, would thereupon determine: (1) The estimated parity price and the estimated farm price for wheat; (2) the value of the marketing certificate. The value of this certificate must be equal to the amount by which the estimated parity price exceeds the estimated farm price. The Secretary would then buy and sell these certificates at their prescribed value through the Commodity Credit Corporation.

Under section 380 (e) of the proposed legislation all persons engaged in the processing of wheat into food products, composed wholly or partly of wheat, would be prohibited from marketing any such products for domestic food consumption or export containing wheat in excess of the quantity for which he had acquired marketing certificates. It is not clear from the language of the bills whether this prohibition would reach down to the baker. Provision is made for a referendum to determine whether wheat farmers would favor such a program; and, if more than one-half of the farmers voting in the referendum favor the program, it would become effective.

What would be the effect of this program on the consumer and the baking industry? Millers would be required to purchase from the Commodity Credit Corporation an amount of certificates equal to the value of the wheat they process. Wheat farmers would redeem the certificates which had been issued to them by the Secretary with the Commodity Credit Corporation. The payments by the millers to the Commodity Credit Corporation presumably would provide the funds. The millers, having purchased the marketing certificates, could naturally be expected to add the cost of such certificates to the price of the flour which is sold to the baker. The bakers in turn, whose margin of profit leaves them no possible area for absorption of this charge, would be forced to increase their prices to the consumer or to operate at a loss; thus the cost of the marketing certificates would be passed on to the consumer through higher prices. A processing tax would be levied upon consumers of bakery products for the specific benefit of a special group of citizens, namely the wheat farmer; thus we have, in effect, class legislation through the taxation of one group of our citizens for the specific benefit of another. The Tax Foundation has estimated that the buyer of a loaf of bread already pays a total of 151 indirect taxes. We strenuously object to the imposition of any more taxes on bakery products. We raise serious question as to the principle of such a tax for the benefit of a special group.

We cannot stress too strongly our desire and fervent wish that the consumption of wheat would increase substantially. We believe the problem is one of increased consumption rather than price juggling through a program such as this. It is our opinion that an approach such as proposed in the pending legislation, which deals only with price, misses the target of increased consumption. Our industry has sponsored a nationwide program since 1946 financed through voluntary subscriptions of our member companies to stimulate increased consumption of bakery products. This has benefited the wheat farmer. We would like to see wheat farmers at the State levels develop a program for contributing so much per bushel of wheat sold. Such funds could be added to those from the baking industry as a self-help measure to stimulate increased consumption.

We know that responsible leaders in the wheatgrowing States have given consideration to such an approach. If it could be worked out, and we think it can, we believe that this would go far to increase the consumption of wheat through the greater consumption of bakery products. As a further suggestion, it would seem logical that the Department of Agriculture give greater emphasis to the consumption of wheat products than it does. We are all aware of the good work the Department does in stimulating increased consumption of dairy products; yet its efforts to encourage increased consumption of wheat products have always appeared to us to be less than commensurate with its investment in wheat holdings.

We sincerely hope that a solution to the oversupply of wheat will be forthcoming. We are convinced, however, that the proposals contained in the bills before this committee, calling for a two-price system for wheat, will only compound the difficulties of the wheat farmer without providing a solution. They should, therefore, be rejected.

Mr. ALBERT. I have here also a resolution which was adopted by the Farmers Cooperative Grain Dealers Association of Oklahoma at their annual convention on April 10, 1958, entitled "Price Support Program." Without objection this statement will be inserted in the record.

(The statement referred to is as follows:)

PRICE SUPPORT PROGRAM

(This resolution was adopted by the Farmers Cooperative Grain Dealers Association of Oklahoma at their annual convention on April 10, 1958.)

We have carefully analyzed our resolution of 1957, in the light of subsequent developments; and with certain additions and clarifications as italicized herein, we feel it is still a logical statement of principles and recommendations.

We wish to emphasize however that a resolution does not automatically become a part of the statutes. It will require individual effort and contact on the part of each member with his Congressman and Senators. If the resolution is worth adopting, it is worth fighting for.

We strongly reaffirm our position that our grain farmers desire only opportunities comparable to other segments of society and seek only their fair share of the national income. We continue to feel that the parity principle, which includes the fair-exchange value concept along with an equitable support price program fairly administered, will help to accomplish that end and operate not only to the best interest of our grain farmers, but also to the general public as well.

We realize that technological advances and improvements in land management, may in future years bring about some need for changes in parity formulas. We, however, do not agree that the so-called modern parity formula now in effect is equitable insofar as grain is concerned. It is difficult for us to understand how with farmers' costs of production continuing to rise, any formula that lowers the parity price can be viewed as equitable.

It is our carefully considered opinion that flexible price supports have increased rather than decreased our grain surpluses. We realize that sound economic procedure requires that when grain prices are supported, rigid acreage controls and marketing quotas must be in effect, and efficiently administered. We agree that acreage taken out of production of one commodity should not be allowed to produce farm products in competition with other supported agricultural products.

We feel impelled to reaffirm our position and to urge that our support price program now in effect be amended to provide a support price of 90 percent of old parity. We, of course, understand that the operation of the support price program is not all that is necessary to bring about parity income for grain producers, but we have learned by experience that it has a great bearing on grain prices. We feel that equitable grain prices are imperative at this time and not only to the welfare of grain farmers, but to the general economy of our Nation as well.

We are further concerned over the lack of any production restrictions applied to growers of 15-acre wheat patches. During the past 3 years, these unregulated farms have contributed over 250 million bushels to our surplus stocks of wheat. Collectively, these small acreages constitute an important factor in our wheat economy; and we consider it inequitable that they should participate in the benefits of the wheat program, without bearing their just share of the restrictive burdens incidental to acreage allotments, marketing quotas, and penalties.

We are deeply concerned over the fact that the combined results of the soil bank, and the assignment of marketing quotas, are not effecting the reduction in wheat acreage which we believe is necessary to bring our production into reasonable balance with utilization. Our investigations reveal that one of the principal weaknesses of our present program is that there is no adequate deterrent against overseeding. Many thousand acres are today overseeded, and our entire wheat program is in danger of collapsing from abuse.

As an example, a producer under the present law who consistently ignores the program and overseeds both his acreage allotment and his acreage base not only penalizes his neighbor and his State, but is permitted to profit from his noncompliance.

His acreage base (and consequently, his future allotment) is gradually increased at the expense of his neighbor.

His excess production contributes to the growing surplus.

Though he cannot participate in the loan program, he derives the benefit of it because of the close relationship of the loan price and the market price. And his only penalty is a token wrist-slapping, because in many cases he pays no penalty at all; and in any case he pays only 45 percent of the parity price on his marketing excess.

In connection with overseeding, we are also concerned with another complication. A producer in compliance is credited with his diverted acres in establishing his wheat acreage base, so that his base is not disturbed. However, under present USDA interpretation, if he seeds more than his allotment but less than his base, he is deprived of a credit for those acres he does divert. The base and subsequent allotments of the farm will therefore be reduced; and the owner of the farm suffers a severe loss in the value of his farm.

We believe the penalty for overseeding should be severe, direct, and unequivocal; and that it should not be assessed in such a manner as to affect or limit the future productive capabilities of the farm.

We, therefore, recommend that the present penalty provided in section 1340, USCA, title 7, be increased from 45 percent of the parity price on the marketing excess, produced by a farmer, to a penalty of 50 percent of the loan value applied to all wheat currently produced by the noncomplying farmer; but that the wheat acreage base of a farm shall not be affected by the factor of overseeding.

We believe the majority of farmers understand the principles involved and would willingly curtail their own production if they could have confidence that a farm program was designed and administered in a manner that all producers were required to make comparable sacrifices for the common benefit.

(The following statements were placed in the record at this point by request of the chairman :)

STATEMENT OF HON. J. FLOYD BREEDING, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF KANSAS

Mr. BREEDING. Mr. Chairman, I should like to take this opportunity to restate and reemphasize briefly the necessity for maintaining the price of wheat at $2 per bushel.

The economic plight in which the farmers of the Nation find themselves-plight caused by an increasingly widening disparity between farm prices paid and those received-need not, I think, be stated again. The farmer's unfavorable economic position is known to us all, I'm

sure.

However, in the case of one agricultural product, wheat, I feel fully justified in calling attention to the fact that should the presently scheduled $0.22 drop in the per bushel price of wheat to $1.78 take place, the wheat farmers of the State of Kansas stand to lose between $40 and $50 million in realized income. and therefore purchasing power.

To cause a loss of consumer purchasing power of this magnitude in one State, at a time when our country is beset by a nationwide economic recession, is hardly what I would call a constructive administration move designed to relieve the depressed condition of either the farmer or the small-business man.

I urge this committee to consider favorably H. R. 10228, and similar measures, the purpose of which is to forestall any cut in the price of wheat at this time.

Thank you. Mr. Chairman.

STATEMENT OF HON. GEORGE S. McGOVERN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF SOUTH DAKOTA

Mr. McGOVERN. Mr. Chairman and members of the committee, I deem it a privilege to have the opportunity to appear before the wheat subcommittee and offer a brief statement in support of H. R. 3987 and H. R. 10204, both of which I have sponsored.

These measures are primarily of an emergency nature. This is especially true of H. R. 10204. Its provisions would simply prevent the United States Secretary of Agriculture from reducing price supports on wheat this year below 1957 levels. H. R. 3987 provides for price supports at 90 percent of parity for those who comply with acreage allotments and marketing quotas.

Secretary Benson, as you know, has announced a 22-cents-a-bushel drop in wheat price supports for 1958. For the Nation's wheat farmers, this represents approximately a quarter of a billion dollars in lost farm income, through the loss in price. Free market price levels are closely pegged to those of the support level. When the support price drops, the free market price under normal circumstances declines a similar amount.

I represent a sizable wheat-growing district. The Secretary's 22cent drop per bushel means a loss of $9 million to South Dakota farmers.

I believe Congress acted wisely when it voted to prevent the Agriculture Secretary from reducing price supports this year below last year's levels.

It is amply clear to me that the economic recession we are experiencing today was farm-led and farm-bred. Consequently, if we are to deal with it properly, we must go to the source of the trouble. That means we must meet the needs of a depressed agriculture.

Agriculture has been suffering for fully 6 years now from a growing price malnutrition. Farm purchasing power has been steadily drying up, resulting in fewer sales on main street, which in turn has affected the economy all down the line in a chain reaction.

I was keenly disappointed with the President's veto of the action Congress has taken to stop further deterioration of the farm-price structure. I believe the President was ill advised and acted unwisely in doing so, and I urge a strong bipartisan effort by Congress to override the President's veto of that legislation.

Since 1952, wheat farmers have been forced into a very painful economic position. Wheat farmers this year will have experienced a 42 cents a bushel drop in price-support levels in the past 6 years (this includes the latest 22 cents per bushel decrease for 1958), along with a forced cut of 3313 percent in crop acreage.

It should be enough when farmers agree to drastically cut back their acreages as wheat farmers have demonstrated they are willing to do. But when they are forced to also take a severe cutback in price, this is completely unfair.

I urge this subcommittee to give serious consideration to any proposal that will improve the current grossly inadequate program.

May I add one personal point, Mr. Chairman. While we have an abundant supply of wheat, I do not consider 1 bushel a liability to this Nation. In my opinion, it represents one of our most powerful assets

for building world peace. As long as there are hungry people in the world, we cannot rightfully consider our abundance as a surplus. I earnestly hope the Congress will give careful thought to a more effective distribution of our agricultural surpluses among the less fortunate nations of the world.

STATEMENT OF HON. WALT HORAN, A REPRESENTATIVE IN CONGRESS FROM THE FIFTH DISTRICT OF THE STATE OF WASHINGTON

Mr. HORAN. Mr. Chairman and members of the committee, I am indeed happy that this committee has seen fit to consider the domestic parity plan and other proposals from the Pacific Northwest.

The wheatgrowers in our area are truly solid producers. They are progressive and make a tremendous contribution to the breadbasket of America.

The testimony you are to hear this morning should be of distinct interest to the subcommittee since it was born from earnest meditation and practical consideration by those actually active in the wheat industry.

As the subcommittee knows, I have introduced legislation which carres out some of the ideas which will be advanced to you today. And, I am hopeful that the subcommittee will consider H. R. 5308 and other legislation introduced by my colleague, the Honorable Al Ullman, of Oregon.

I feel definitely that we must in America move in the direction of policies which will progressively avoid acreage restrictions and at the same time provide security for our wheatgrowers. I do feel that the domestic parity program should be given every consideration in this regard.

We in our area are very proud of the great work that the president of the National Wheat Growers' Association, Mr. Floyd Root, is doing and I know that his presentation will be very beneficial to the committee.

Mr. ALBERT. The committee is delighted this morning to have with us representatives of the National Wheat Growers Association and other organizations. We have Mr. Herbert J. Hughes, Imperial, Nebr., who is past president of the National Wheat Growers Association and is chairman of the field crops committee, National Conference of Commodity Organizations; Mr. Floyd Root, Wasco, Oreg., president of the National Association of Wheat Growers, assisted by Ted Fiedler, Holyoke, Colo., chairman of the program committee, National Association of Wheat Growers.

Off the record.

(Discussion off the record.)

Mr. ALBERT. I would be pleased at this time if the entire group would come forward and present their testimony. You may proceed as you desire.