STATEMENT OF THE NATIONAL ASSOCIATION OF WHEAT GROWERS, BY HERBERT J. HUGHES, CHAIRMAN, FIELD CROPS COMMITTEE, NATIONAL CONFERENCE OF COMMODITY ORGANIZATIONS; AND FLOYD ROOT, PRESIDENT, NATIONAL ASSOCIATION OF WHEAT GROWERS; ASSISTED BY TED FIEDLER, CHAIRMAN, PROGRAM COMMITTEE, NATIONAL ASSOCIATION OF WHEAT GROWERS

Mr. HUGHES. Mr. Chairman, Mr. Root, president of the association, has a prepared statement, and subject to the wishes of the committee, will read it.

Mr. ALBERT. You may proceed, Mr. Root.

Mr. HUGHES. Mr. Chairman and members of the committee our association feels sincerely that we cannot have a workable program unless somehow we can find a solution to the feed grain problem in the United States. Therefore, we have made every effort to work with the other commodity groups through the National Conference Commodity Organizations to try to assist in finding a solution to the feed grain problem in order that our wheat program might have a chance to operate if it were enacted into law.

As chairman of that committee I have worked with the feed grain people and the cotton and rice, and soybean growers also, in trying to work out a program. Now that was finally accepted in Kansas City in December unanimously by these various groups and the wheat part of that, again, was reaffirmed, our position was reaffirmed at our national convention at Spokane, and that will be embodied in the statement of our president, Floyd Root.

Mr. ALBERT. Thank you, Mr. Hughes.

Now, Mr. Root, we would be glad to hear from you.

Mr. RooT. Mr. Chairman and members of the committee, my name is Floyd Root. I am a wheatgrower from Wasco, Sherman County, Oreg. I am president of the National Association of Wheat Growers, whom I represent here today.

We wish to commend the committee for their decision to hold hearings on wheat programs in an effort to find a solution to the problems which face our wheatgrowers.

We, as wheatgrowers, recognize that the total United States agricultural plant is capable of producing 10 to 15 percent in excess of our marketing demands. We also recognize that no one commodity program can be successful until the surplus problem of all commodities can be overcome. This is the reason that the National Association of Wheat Growers joined with other commodity groups in the National Conference of Commodity Organizations, first, to develop a program that will reduce the present oversupply of all commodities to a normal carryover and, second, to develop a long-range program for wheat and other field crops.

At the annual convention of the National Association of Wheat Growers in Spokane, Wash., the 4th, 5th, 6th, and 7th of February this year, the association reaffirmed the position taken by our delegates at the Kansas City meeting of the National Conference of Commodity Organizations in December of 1957 and approved the National Conference of Commodity Organizations Committee Reports.

DOMESTIC PARITY PLAN

The National Conference of Commodity Organizations Committee Report states, and I quote:

We therefore now make the following specific recommendations: No. 1, enactment of domestic parity by Congress.

And the National Association of Wheat Growers Committee report from Spokane states:

We recommend the enactment of the domestic parity plan by Congress.

The National Association of Wheat Growers feel that our present agricultural program is not making the proper approach to the wheat problem. Reducing acres to offset surplus production has not solved the problem and is a negative approach. Acres shifted from wheat are producing surpluses in other crops and acres shifted from other crops are producing surplus wheat. Actually, what are we doing? We are simply stalling for time. We are waiting for 1975 or the year 2000 when, we hope, our population can consume our agricultural production.

This year with an established loan rate for wheat at 75 percent of parity, it is quite certain there will be no increase in the amount of wheat consumed domestically for food or any reduction in the price of wheat products to our consumers. A United States Department of Agriculture study, published in the Marketing and Transportation Situation, February 17, 1954, states:

No matter what happens to the price of wheat in the future, it will have little effect on the cost of wheat products to the consumer.

For these reasons we ask you to consider the domestic parity plan, a marketing plan, which will move all wheat on a free, open market at an open-market price and return to the producer, through the use of parity certificates, full parity for his share of the wheat consumed domestically for food. The wheat producer feels this is only fair since everything he buys-farm equipment, automobiles, clothing, furnishings for his home, and so forth-are all bought on a protected domestic market and, since price does not affect the volume of his domestic market, he should receive a domestic price for his share of the domestic wheat market.

Multiple price systems are not new. They have been operating throughout the country under Federal and State legislation for many years to prevent the accumulation of surpluses. The best examples are marketing agreements applying to milk, fruits, and vegetables. The domestic-parity plan for wheat is sometimes incorrectly called a two-price plan. Two-price is an incorrect name because the farmer would sell all his wheat on an open market at the prevailing market price.

The domestic-parity plan is not a complete farm program in itself. It is an amendment only to that portion of the Agricultural Act of 1938 which deals with loans, parity payments, consumer safeguards, and so forth.

First, the plan is designed to move wheat freely into food, feed, export, and industrial channels at free-market prices and to return parity to each farmer for his proportionate share of wheat produced

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in the United States that is consumed domestically as food. This could be accomplished as follows:

(a) The Secretary of Agriculture would determine each year, prior to the beginning of the wheat-marketing year, the portion of the crop estimated to be used domestically for food, and proclaim such portion as the domestic food quota.

(b) The domestic food quota, so proclaimed, would be apportioned among the States and counties on the basis of acreage allotments and normal yields. Each producer would share in the domestic food quota and his share would bear the same ratio to his average production that the domestic food quota would bear to the total national production. For example, if the Secretary determined that out of 1 billion bushels national production, 500 million, or one-half, would be used domestically for food, the farmer's share of the domestic food quota would then be one-half of his total average production.

(c) Parity certificates would be issued to each producing farm in a number sufficient to cover the bushels in its share of the domestic food quota.

Second, the value of each parity certificate would be the difference between the estimated parity price and the Secretary's estimate of the national average farm price of wheat.

Third, to insure orderly farm marketing of wheat, to protect friendly world exporting nations, and to protect producers of feed grains against competition of wheat for feed, loans would be made available to wheat producers at a level based on

(a) The supply of the commodity in relation to the demand thereof;

(b) The price levels at which corn and other feed grains are being supported and the feed value of such grains in relation to wheat:

(c) The provisions of any international agreement relating to wheat to which the United States is a party;

(d) Foreign trade policies of friendly wheat-exporting countries; and

(e) Other factors affecting international trade in wheat, including exchange rates and current regulations.

Fourth, persons making first sales or importations of any product manufactured wholly or in part from wheat would be required to purchase parity certificates from the Secretary sufficient in number to cover the bushels of wheat used in the product sold domestically or imported for food. The Secretary is authorized and directed, through the Commodity Credit Corporation, to buy and sell marketing certificates issued for any marketing year. For the purpose of facilitating the purchase and sale of certificates, the Secretary may establish and operate a pool, or pools, and he may also authorize public and private agencies to act as his agents, either directly or through the pool, or pools. Certificates shall be valid to cover sales and importation of products made during the marketing year with respect to which they are issued and after being once used to cover such sales and importations, shall be canceled by the Secretary. Any unused certificates shall be redeemed by the Secretary at the price established for such

certificate.

Fifth, the cost of the processor of the parity certificates, added to the cost of the wheat purchased by him at free market prices, would equal

approximate parity. Thus domestic consumers of flour, bread, and other wheat products would, under the operation of this plan, pay no more for the wheat than intended under the operation of the present program. The objective of which is the attainment and maintenance of parity prices to producers.

We want to make one point very clear. Under the domestic parity plan there would only be the open-market price with allowances for quality, grade, and market fluctuations. This would permit wheat to move in to all channels of trade and usage. This would reward the producers of premium wheat since they would receive, in the market place, a premium on all of the wheat they produce and sell as well as receiving certificates for their share of the domestic food quota.

This completes a brief description of the domestic parity plan. However, there are a few general comments I would like to make about it.

We see no reason to believe that the domestic parity plan would lead to large-scale export dumping. This plan provides for loans to producers based on export and/or feed prices. If the world wheat price declined below the loan price this loan would automatically stop competition in international trade and prevent export dumping. Such developments, in fact, are resulting from the operation of present programs under which surpluses from one crop are added to another until the supply which is owned by the Government has reached such unmanageable proportions as to lead to large-scale surplus removal programs as a matter of disposal.

The plan would be essentially self-financing. The support price, when needed, would be set very close to export prices at levels that would encourage movement into export without disruption of world trade.

Indications are that returns to wheat producers with the operation of this plan would be larger than returns obtainable from the operation of our present program, under which, stringent acreage allotments are necessary. Even with identical acreage allotments in effect, under either program, returns to producers from the domestic parity plan as outlined would be as high or higher than under programs now in effect.

The principal objection to this program, which we have heard from other farmers, is that it would put wheat in competition with feed grains. To look at the matter realistically, we know that most wheat acreage taken out of production by control programs has gone into feed grains such as corn, sorghum, barley, and oats. This acreage is producing more feed in the form of these grains than it would in the form of wheat. We would hope the domestic parity plan will increase the use of wheat for livestock feed by 100 to 150 million bushels. This is about 2 to 22 percent of the 5 to 6 billion bushels of feed grains used annually. Most of this would be fed in areas like the Pacific Northwest or the Northeast where it would have the least adverse effect on the market for other feed grains.

We discussed the necessity of including 100 to 150 million bushels of wheat for feed as part of any long-range wheat program with feed grain producers at the Kansas City meeting. They agreed that there would be no adverse effects of moving wheat into feed use if we would support a long-range conservation program which would re

duce feed grain production on diverted wheat acres. I will have more to present on this phase of our program later when I discuss the soil bank program.

In summary, let me support this statement by relating advantages which this plan offers.

First, it gives the farmers assurance to go ahead and develop longrange plans for his farm. Growers would shift out of wheat on farms where other crops would be more profitable. High-cost producers would be inclined to limit production to the amount which could be sold profitably for domestic consumption. Others, in areas where crop diversification is not practical, no doubt would raise wheat in excess of their share of the national food quota as that would probably be the most efficient use of their land. Conservation farming would be given a boost as acres for this purpose would not be competing with production of high priced wheat as in the past.

Second, the plan promises more income to farmers because it emphasizes full production and marketing. Wheat would move freely into export, industrial, and feed uses. Once the present large surplus is worked off, acreage allotments could be materially increased. Growers who produce quality wheat would benefit because they would receive a premium above the average market price for all their wheat in addition to their share of certificates. Growers who operate in areas where weather causes wide fluctuations in yields would benefit because their certificates would be issued on their average production and not the actual production of any one year. Thus the certificates would serve as an insurance against low crop yield. This would stabilize income which should be an objective of any sound program. Third, the plan restores greater freedom to the market place. Wheat would again be bought and sold competitively on a quality basis. The Government, to a great extent, could withdraw from the field of buying, warehousing, and merchandising wheat, and free competition would be extensively restored in all wheat markets.

Fourth, in addition to being self-supporting, the plan would help farmers to finance their operations during the high-expense season, since the certificates would be issued before harvest.

We who have studied the domestic parity plan believe that it is the best proposal to date for wheat as it is a plan that makes sense. It emphasizes expanded markets rather than restricted production. It appears to us that the domestic parity plan is a middle of the road approach to solving the wheat problem. In effect it would meet the aims, to some extent, of both the rigid and flexible price-support proponents, as it would provide full parity for domestic consumption and permit the principle of flexibility to apply to the surplus portion of the crop.

This completes my statement on domestic parity. Before I present the rest of our wheat program to you, we will be glad to answer any questions you might have on this plan.

Mr. ALBERT. Let's finish the whole statement.
Mr. Root. All right, sir.