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is, cooking and salting-for ultimate sale to the consuming public. The members of this association purchase in large quantities, and it has been estimated that the association annually purchases at least 75 percent of the total production of the extra large and medium type Virginia shelled peanuts.

The ePanut & Nut Salters Association is opposed to any legislation that will reduce peanut acreage, and thus reduce the supply of available peanuts.

Our only worry is the question of any possible reduction in peanuts. The growers grow them; the shellers shell them. We process them and sell them to the consuming public.

During the last few years, we have had several problems. One was some relief from the Tariff Commission, imports on peanuts. I think peanuts today are in rather short supply. And our purpose in coming here is to tell you that we would hate to see any legislation that would cut down the supply for the consuming public.

Other than that, we do not desire to go into the technicalities of the two bills.

Mr. McMILLAN. Any questions?

Mr. ABBITT. Mr. Gravelle, as I understand it, section 2 of the billand that is on page 2—does amend the minimum acreage allotment clause of the present law.

Do I understand you to say that if that section were eliminated, that your association, as of now, would have no objection to the bill?

Mr. GRAVELLE. I would rather put it this way. I think you have some rather technical legislation that is being proposed. I was in hopes that the Department of Agriculture would have gone on first this afternoon, so we could have had detailed information as to what, in their opinion, this bill would do or would not do. And in the absence of any information in that connection, we would much prefer to just tell the Congress that we don't want you to cut down acreages, because we sell more peanuts if they are available.

Mr. ABBITT. I can well understand your not wanting to go into the technicalities. I wouldn't want to myself, unless the Department made a statement.

Mr. GRAVELLE. Yes. We were in hopes that the Department representatives would testify first.

Mr. ABBITT. But what you are mainly concerned with now is that section that deals with more or less modifying and doing away with the minimum-acreage allotment, as guaranteed—1,160,100.

Mr. GRAVELLE. That is right.

Mr. ABBITT. I might, for your information, say that a number of people have expressed to me the same feeling, and I think it is generally understood, among the people interested in this particular legislation-certainly those I have talked to—that if the bill were reported out, that provision would not be in it.

So far as I am concerned, I can speak for nobody else but myself, and don't pretend to. So far as I am concerned, that section is not necessary to the legislation. And I think the main reason it was put in there was, I understood, the Department had been harping on the fact that they could not get a good program so long as we had a guaranteed minimum, that they couldn't handle it or do anything about it.

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The State that I happen to represent in the Congress is perhaps the one State that is more dependent upon agriculture than any other State in the Union. And although it was not possible for me to get an assignment to this great committee when I came to the Congress last year, nevertheless I have been keenly concerned about the

growing and mounting crisis in agriculture. There is no question in my mind and I do not believe there could be in anyone's mind that the loss of purchasing power which farm families are suffering now and have suffered in the recent years has laid the basis for much of the current economic recession or depression, call it what you will, that - now confronts our entire economy.

Anyone can readily understand that when millions of farm families lose their purchasing power, that this takes a heavy toll in lost demand for the products of business and industry. And with that problem confronting us and for that reason, we meet today here to consider that problem, a problem which is not just a problem for rural America, but à problem which must be solved if our entire national economy is to prosper and if we are to meet our commitments as a world power.

Mr. Chairman, the bill that I am appearing on behalf of today, H. R. 10966, has been introduced in similar form by my good friend from California, Congressman Roosevelt, who has introduced the H. R. 10967 and who comes from a district which is practically entirely a metropolitan district.

I think that is quite significant, Mr. Chairman. The bills that we are interested in and which we are now suggesting to this committee we believe speak in the best interest of both the rural parts of America and the consuming and metropolitan areas. There is no question in my mind, as I say, that this loss of prosperity which our farm families suffered recently presents a situation we must meet and it is for that reason that we are meeting here this morning on behalf of these bills.

Mr. Roosevelt and I believe that our proposals are geared to the demands of 20th century agriculture and to the best interests of the farmer, the consumer, and the taxpayer. We do not contend that the specific language of our legislation embodied in these bills is in the best possibe form. We recognize that the members of your committee, without regard to party labels, have a vast range of experience in agricultural matters and that with that experience they can improve our proposals at various points.

We believe very strongly, however, Mr. Roosevelt and myself, that the basic principles of this legislation are economically sound and that they may serve as a depature point for improved farm legislation.

Since the bills include a provision for direct compensatory payments to farmers who comply with other portions of the program, I might say that this is a principle which was first suggested to the Congress almost 20 years ago. Mr. Ed O'Neal, the beloved and colorful late president of the American Farm Bureau Federation, proposed such a program in 1939 and again in 1940 in testimony before congressional committees. Mr. O'Neal asked for 85 percent of parity support floors on farm commodities with a $500 million appropriation that might be used to pay farmers the difference between 85 percent of parity and full parity, or the difference between the market price and full parity, whichever was smaller.

At about this time, however, World War II began. The demands of wartime caused us to place the accent on maximum food production. Farmers were encouraged to increase production and were given the assurance that they would be protected by a price-support program in the event of a postwar slump.

In 1949, after American agricultural production had helped to stave off a food shortage in Europe, it seemed to many authorities that we needed a new approach to Federal farm programs that would keep production in line with market opportunities and at the same time maintain farm income at a reasonable level. This was the background for a challenging proposal by the then Secretary of Agriculture, Mr. Charles Brannan, for a system of direct production payments to farmers in return for cooperation of farmers in a program designed to reduce the necessity of expensive storage and price-support operations.

I am very grateful, Mr. Chairman, I am gratified that the former Secretary of Agriculture, the distinguished Mr. Brannan is with us this morning and that he has kindly agreed to explain the technical principles of these bills and he will be before the committee in a matter of a very few minutes.

Before Congress could act on this proposal, we were involved in the Korean conflict and once again permanent action was postponed. At the end of the Korean conflict, a new Secretary of Agriculture was in office. The present Secretary I am sure is a devout, religious man who doubtless believes in his programs. The fact remainsand we are not attempting at this point to blame anyone—however, that net farm income has dropped 19 percent since 1952, farm surpluses have tripled and the cost of the farm program to taxpayers has skyrocketed.

Without attempting to lay the blame for this situation on anyone, Congressman Roosevelt and I have devised proposals which we believe are practical.

The proposals which are being suggested to your committee were summarized in a letter which we sent to the Members of the Congress under date of March 10, 1958.

Mr. Chairman, I think in view of the limited time and the fact that we do have a very distinguished witness to present here in a very few minutes, that I will ask you for unanimous consent at this point to file the letter attached to the statement which the members of the committee have which we sent out to the Congress under that date of March 10.

Mr. Poage. Without objection.
(The letter referred to is as follows:)

FAMILY FARM INCOME IMPROVEMENT ACT OF 1958 We believe that the Congress should move now to develop a more satisfactory program for American agriculture.

There is little to be gained in arguing the question of who is to blame for the current predicament of the farmer. The fact remains that agriculture_our largest and most important industry—is in trouble. Falling farm prices, rising costs, the paradox of surplus food in a hungry world—these are the familiar aspects of the problem.

Farm purchasing power is several billion dollars below the level of 5 years ago, or 10 years, or even 15 years. This is a painful experience, not only for farm families; it is equally painful for city dwellers who are unemployed because the farmer is unable to purchase the industrial goods that his city cousin would like to produce. Lost farm purchasing power is a problem, too, for businessmen who see their sales dropping in rural areas.

In short, our entire economy suffers from the depressed condition of agriculture.

This costly problem can be solved by a proper Federal farm policy. It is our responsibility to formulate that policy. Each month that we delay means a loss of many millions of dollars to the American economy.

What kind of a Federal farm program would be of maximum benefit to the farmers and to the Nation as a whole?

We believe that any such program must take into consideration four major factors: (1) It must be of maximum benetit to the family-size farmer who makes up the great bulk of our rural population. (2) It must not raise food costs to city consumers. (3) It must not be unreasonably costly to the Federal Treasury. (4) In view of our position as a leading world power, a Federal farm policy should be related to our opportunities and responsibilities abroad.

With these considerations in mind and working with the assistance of experienced agricultural experts, we have drafted comprehensive farm legislation (H. R. 10966 by Mr. McGovern and H. R. 10967 by Mr. Roosevelt). The following are the major provisions of this legislation :

(1) Building on the concept of “parity of income,” it maintains returns to farmers at not less than 80 percent of full parity of income in relationship to comparable labor and investment in the nonfarm elements of society. Such protection is extended to all types of farm commodities, not just a few favored “basics."

(2) In return for this assurance, farmers would establish marketing quotas and other forms of market adjustment to remove the necessity of expensive price support and storage operations during periods of full prosperity. Quotas would be assigned so that farm marketings would clear the market during periods of full employment and prosperity.

(3) During years of less than full employment (when the number unemployed is 3 percent or more of the civilian labor force), farm prices would be permitted to drop while farmers continued to produce for market a volume equal to what would clear during full employment. To the extent that resulting prices were less than the parity prices set by the act, the differences would be paid directly to farmers in the form of parity income deficiency payments.

Such payments would, in effect, be a subsidy to consumers designed to offset declining consumer purchasing power by enabling the farmer to sell for less than he would during a period of full employment. This would be an excellent antirecessionary device.

(4) The benefits of the program are limited to family farm production. No farmer would be given more than $3,500 of parity income deficiency payments in any 1 year. Larger producers would be required to take greater cuts under the marketing restrictions of the bill.

(5) The Commodity Credit Corporation and its Board would be converted to a Federal Farm Income Improvement Corporation and Board. Five farmer members would be named to the Board by elected members of the State farmer committees.

It will be recognized that the above proposals follow in part some of the principles suggested by former Secretary of Agriculture Brannan in 1949. The Brannan principle has been operating through the National Wool Act for several years and has been extremely effective. With some modifications and adjustments, it can work equally as well with other farm commodities.

A more detailed discussion of the proposed legislation may be found in the Congressional Record of February 27, 1958, pages 2671-2673, under the heading “Family Farm Income Improvement Act of 1958."

We trust that you will be able to find time in your busy schedule to consider this proposal. We think it is significant that one of us is a representative of a predominantly agricultural district, while the other represents a metropolitan area. Our legislation is drafted with the best interests of both areas in mind.

It is most urgent that the Congress move now in this session to meet the agricultural depression which is taking such a heavy toll throughout our entire national economy. Very sincerely yours,

GEORGE MCGOVERN (First District, South Dakota).

JAMES ROOSEVELT

(26th District, California). 23886-58-3

Mr. McGovern. If the members will turn to page 2 of the attached letter that I have referred to and which I have just provided for the record, you will find five statements which summarize very briefly the principles of the bills and I would like just quickly to touch on all of those points.

The bill speaks of the concept of "parity of income,” which is a comparatively new formula. It is a formula which is simply designed to bring the income of the farmer into line with the income enjoyed by other segments of the economy.

I might say that the concept of "parity of income" has been endorsed by the National Farmers Union, the Grange and by 35 individual commodity associations which make up the National Conference of Commodity Organizations. The second principle of the bill is this:

In return for this “parity of income” assurance, not less than 80 percent of the parity level, the farmers would agree to establishing marketing quotas and other forms of market adjustments so as to remove the necessity of expensive price support and storage operations during periods of full prosperity or full employment.

Thirdly, during years of less than full employment, when the number of unemployed is 3 percent or more of the civilian labor force, farm prices would be permitted to drop while farmers continued to produce for market a volume equal to that which would clear during periods of full employment.

I might say in that connection, Mr. Chairman, that in other segments of the economy, for example, the automobile industry and the steel industry, during periods that would ordinarily result in falling prices on those commodities, it is customary for the industry to cut back on production and to administer the prices. We have seen it happen in the steel and automobile industries in recent months, and in that fashion they maintain without regard to a fall-off in demand.

What we are suggesting is that food is such an essential part of our way of life and our standard of life that farmers must be encouraged to maintain production even during periods of recession at a level that they would normally produce during periods of full employment and when the market drops, as in all probability it will, then the Secretary of Agriculture would be authorized to make direct payments to compensate farmers for the difference between the market price and 80 percent of parity of income.

We picked the figure of 3 percent unemployment as the point at which that provision of the program would go into effect; that is, when the production payment feature would go into effect. It may be that the committee would feel that 3 percent is too low and a figure somewhat higher ought to be selected.

The fourth principle is this: The benefits of the program are limited to family-farm production; that is, no farmer would be given more than $3,500 of parity income efficiency payments in any one year. Larger producers would be required to take greater cuts under the marketing restrictions of the bill.

The fifth point and finally, the Commodity Credit Corporation and its Board would be converted to a Federal Farm Income Improvement Corporation and Board. Five farmer members would be named to the Board by elected members of the State farmer committees.

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