Special Message to the Congress on Agriculture.

To the Congress of the United States:

I submit herewith for the consideration of the Congress a number of recommendations affecting the Nation's agriculture.

PART I

The agricultural problem today is as serious and complex as any with which the Congress will deal in this session. Immediate action is needed to arrest the growing threat to our present agricultural program and to prevent the subsequent economic distress that could follow in our farming areas.

I have given assurances to the American farmer that support of existing agricultural laws, including continuance through 1954 of price supports on basic commodities at 90 percent of parity, was a moral and legal commitment that must be upheld. Along with the fulfillment of this commitment, an unending effort has proceeded in the past twelve months to provide the American farmer his full share of the income produced by a stable, prosperous country. This effort requires for success a new farm program adjusted to existing conditions in the Nation's agriculture.

This message presents to the Congress that new program. It is designed to achieve the stability and growth in income over the years to which our farmers are entitled and which the Nation must assure in the interest of all 160,000,000 of our people.

STUDIES OF THE PROBLEM

In constructing its program, this Administration resolved to get the benefit of the best thinking of the Nation's farmers, as well as that of its farm experts. Over sixty different survey groups, and more than 500 of the most eminent farm leaders in the country, have participated in these studies. Agricultural colleges and research institutions contributed their work and thought. Scores of producer, processor and trade groups, as well as national farm organizations, gave their findings and proposals. Mail from thousands of individual farmers, and opinion polls among farmers, have been analyzed and weighed. The bipartisan, broadly-representative National Agricultural Advisory Commission has steadily worked and consulted on the problem for the past twelve months. Numerous commodity organizations have been consulted. Many members of the Congress have shared their own rich experience in this effort. Accordingly, as promised a year ago, the most thorough and comprehensive study ever made of the farm problem and of governmental farm programs has been completed.

RECOMMENDATIONS BY COMMODITY

The recommendations which have been reaped from all this inquiry are in the best traditions of bipartisan approach to the Nation's agricultural legislation. They recognize that each farm crop has its own problems and that those problems require specific treatment. Accordingly Part II of this message presents detailed proposals for the treatment of sixteen commodities or commodity groups. I here confine myself to those aspects of the farm program in which all farmers and all citizens are equally concerned.

SOME FUNDAMENTAL CONSIDERATIONS

In its approach to this problem, the Administration has held to the following fundamentals:

1. A stable, prosperous and free agriculture is essential to the welfare of the United States.

2. A farm program must fairly represent the interests of both producers and consumers.

3. However large surpluses may be, food once produced must not be destroyed. Excessive stocks can be removed from commercial channels for constructive purposes that will benefit the people of the United States and our friends abroad.

4. For many reasons farm products are subject to wider price fluctuations than are most other commodities. Moreover, the individual farmer or rancher has less control over the prices he receives than do producers in most other industries. Government price supports must, therefore, be provided in order to bring needed stability to farm income and farm production.

5. A farm program first of all should assist agriculture to earn its proportionate share of the national income. It must likewise aim at stability in farm income. There should therefore be no wide year-to-year fluctuation in the level of price support.

6. No single program can apply uniformly to the whole farm industry. Some farm products are perishable, some are not; some farms consume the products of other farms; some foods and fibres we export, some we import. A comprehensive farm program must be adaptable to these and other differences, and yet not penalize one group of farmers in order to benefit another.

7. A workable farm program must give the Administration sufficient leeway to make timely changes in policies and methods, including price support levels, within limits established by law. This will enable the Administration to foresee and forestall new difficulties in our agriculture, rather than to attempt their legislative cure after they have arisen.

8. Adjustment to a new farm program must be accomplished gradually in the interest of the Nation's farming population and in the interest of the economy of the Nation as a whole.

9. Research and education, basic functions of the Department of Agriculture since its beginning, are still indispensable if our farmers are to improve their productivity and enlarge their markets.

10. The soil, water, range and forest resources of the United States are the natural foundation of our national economy. From them come our food, most of our clothing, much of our shelter. How well we protect and improve these resources will have a direct bearing on the future standard of living of the whole nation.

THE PRESENT AGRICULTURAL SITUATION

Present laws discourage increased consumption of wheat, corn, cotton and vegetable oils and encourage their excessive production. The huge and growing surpluses held by the government act as a constant threat to normal markets for these products. Thus, present law produces results which in turn are hurtful to those whom the laws are intended to help. Partly because of these excessive stocks, farm income has fallen steadily over the past three years.

The urgency in this situation may be illustrated by a few basic facts. During the past year, the investment of the Commodity Credit Corporation in farm commodities more than doubled, increasing by about $2,500,000,000. As a result the financial obligations of the Corporation are pressing hard against the $6,750,000,000 limitation on its borrowing authority. In order to assure that present price support commitments on 1953 and 1954 crops will be covered, I shall request the Congress to take early action to restore the Corporation's capital losses as of June 30, 1953, and to increase its borrowing authority to $8,500,000,000 effective July 1, 1954.

The Government's commodity holdings are enormous. It has investments in more than $2,000,000,000 worth of wheat alone. This includes 440,000,000 bushels owned outright. About 400,000,000 additional bushels are under loan, the greater share of which the government can expect to acquire. This is more than the domestic wheat requirements of the entire nation for a full year.

The cotton carry-over will amount to about 9,600,000 bales. Here again the carry-over is approximately equal to the domestic needs of the entire nation for a full year.

The carry-over of vegetable oils may be about 1,500,000,000 pounds, roughly double the carry-over that should normally be maintained.

Because such tremendous supplies are already in hand, acreage allotments and marketing quotas have had to be applied to wheat and cotton. An appeal by the government for sharp acreage reductions for corn appears unavoidable. These allotments are expected to reduce the acreage planted to these crops in 1954 by the following amounts: wheat, 16.5 million acres; corn, between 5 and 6 million acres; cotton, 3.5 million acres. Without the most careful handling, a diversion within a single year of 25 million acres of productive crop land-- about 8% of the total--from their accustomed use could have the most unfortunate impact on the total economy.

Even these reductions probably will not appreciably lower the surpluses of wheat and cotton because of the likelihood of increased yields that will be sought from the reduced acreage, and because markets will continue to shrink as a consequence of rigid price supports. As for corn, it is estimated that enough diverted land will be used for oats, barley, and sorghums to hold total supplies of feed grains at present levels, thus largely offsetting the purpose of the corn acreage reduction. It is also expected that some 3,000,000 diverted acres may be planted to soybeans, thus aggravating the tremendous oversupply of vegetable oils. The likely production from other diverted acres threatens producers of potatoes, sugar beets, rice, alfalfa, flaxseed, vegetables and many other crops. Therefore, we must move without further delay to treat the fundamental causes of our present excess supplies of farm commodities.

The Nation's agricultural problem is not one of general overproduction: Consumer demand continues at or near record high levels; the average prices of farm products that lack direct price supports have been as high in recent years as those of price-supported products. The problem is rather one of unbalanced farm production, resulting in specific surpluses which are unavoidable under the present rigid price supports. The problem is complicated by the continuing loss of some of those foreign markets on which American agriculture has depended for a large part of its prosperity.

MAJOR FEATURES OF FARM PROGRAM

The new farm program here proposed is consistent with all the foregoing conditions and fundamental considerations. It has five major features:

1. The new program should first be given an opportunity to start operating without the handicap of such large accumulated surpluses. This is to be done by setting aside certain quantities of our surplus commodities, eliminating them from price support computations.

2. The 1948 and 1949 Agricultural Acts were soundly conceived and received bipartisan support. The principles on which they were based are particularly applicable to the agricultural industry today. Although based generally upon those principles, the proposed agricultural legislation of 1954 contains certain new features, improvements and modifications.

3. The amendment to the 1949 Agricultural Act providing for mandatory rigid supports, attuned to war needs and demonstrably unworkable in peacetime, will be permitted to expire. After the 1954 crops the level of price supports for the basic commodities will be gradually related to supply, promising farmers greater stability of income.

4. Modernized parity is to become effective for all commodities on January 1, 1956, as scheduled by law. Provision should be made for moving from the old to modernized parity in steps of five percentage points of the old parity per year until the change from old to modernized parity has been accomplished.

5. The key element of the new program is a gradual adjustment to new circumstances and conditions. Application of modernized parity and the relation of basic crops to supply levels require a transition period to assure a stable farm economy. This transition should be accomplished in a prudent and careful manner to avoid sharp adjustments which would threaten the dislocation of the program.

6. In keeping with the policy of gradual transition, the Secretary of Agriculture will use his authority under the Agricultural Act of 1949 to insure that year-to-year variations in price support levels will be limited.

7. The authority of the Secretary of Agriculture to apply price supports at more than 90 percent of parity when the national welfare or national security requires should be continued.

PARITY AND PRICE SUPPORTS

Under the provisions of the Agricultural Acts of 1948 and 1949 the government will:

1. Support the prices of basic crops of those farmers who cooperate with acreage allotments and marketing quotas when such are in effect;

2. Announce the price support level for various crops before those crops are planted, insofar as practicable;

3. Support price levels at up to 90 percent of parity. For some products a schedule of price floors will also be provided as authorized by the 1949 Act, ranging from 75% to 90% of parity, according to the relationship of total to normal supply; and

4. Vary the price support level one percentage point for every two percentage points of variation in the total supply. If the supply is short, higher support levels will encourage production. If the supply is overabundant, a lowered price will stimulate consumption. Thus, not only will a floor be placed under all basic crop prices, but variations in price and supply will tend to offset each other, and thus stabilize the income of the farmer.

MODERNIZED PARITY

Parity calculations for most commodities under the old formula are based upon price relationships and buying habits of 40 years ago. Because methods of farm production have changed markedly, the Congress has wisely brought the parity concept up to date. Modernized parity takes account of price relationships during the most recent I o years. It permits changes in farm technology and in consumer demand to express themselves in the level of price support and restores proper relationships among commodities.

For the basic commodities, the law provides that until January 1, 1956, the old or modernized parity, whichever is higher, shall be used. For all commodities except wheat, corn, cotton and peanuts, modernized parity is already in use.

Equitable treatment of the various commodities requires that we should use modernized parity for all farm products as now provided by law, beginning January 1, 1956.

INSULATION OF SURPLUSES FROM MARKETS

Removal of the threat of huge surpluses of farm commodities from current markets is an essential part of the program here presented. Destruction of surplus commodities cannot be countenanced under any circumstances. They can be insulated from the commercial markets and used in constructive ways. Such uses will include school lunch programs, disaster relief, aid to the people of other countries, and stockpiled reserves at home for use in war or national emergency.

I recommend that authority be provided to set aside reserves up to the value of $2,500,000,000 from the stocks presently held by the Commodity Credit Corporation. Broad discretionary authority should be provided to manage these "frozen" reserves. This authority should be coupled with legislative safeguards to prevent the return of these stocks to domestic or foreign markets so as to cause disturbance in normal trade. Perishable stocks should of course be rotated. Stocks of wheat, cotton, vegetable oils and possibly some dairy products should be set aside after this program takes effect.

The special circumstances relating to the crop and the date of initiating the proposed new program should govern the time for establishing each such commodity reserve. This reserve program will be effective only if it is carefully integrated with the new program as a whole. The insulation of our excess reserves of food and fiber is an essential first step in launching this new program.

EXPANSION OF FARM MARKETS ABROAD

One of our largest potential outlets for present surpluses is in friendly countries. Much impetus can be given to the use of a substantial volume of these commodities by substituting to the maximum extent food and fiber surpluses in foreign economic assistance and disaster relief. I shall request a continuation of the authority to use agricultural surpluses for this purpose.

It is not enough, however, to rely solely on these measures to move surpluses into consumption. No farm program should overlook continued economic growth and expansion. By revolutionary increases in farm productivity during and since World War II, American farmers have prepared our nation to supply an ever greater proportion of the food needs of the world. Developing commercial markets for this expanded production is part of the larger problem of organizing a freer system of trade and payments throughout the free world. Because our farmers depend to a considerable degree on foreign markets their interests will be particularly served by strengthening of the work of the Department of Agriculture in developing market outlets both at home and abroad. In my Budget Message I shall recommend that sufficient funds be appropriated for this purpose.

Meanwhile, a series of trade missions, working in cooperation with our representation overseas, will be sent from the United States, one to Europe, one to Asia, one to South America, to explore the immediate possibilities of expanding international trade in food and fiber. Moreover, the Secretary of Agriculture, in cooperation with the Secretary of State, is organizing discussions for the exchange of views with foreign ministers of agriculture on subjects affecting the use of agricultural surpluses and stockpiles.

USE OF DIVERTED ACRES

In addition to the removal of surpluses and the expansion of markets, special measures must be taken to deal with the use of acreages diverted from crops under allotment. To avoid these difficulties, the number of diverted acres must be reduced to a minimum. The proposed program accomplishes this by increasing the utilization of commodities, thereby reducing the need for acreage restrictions.

When land must be diverted from production, it is essential that its use be related to the basic objectives of soil conservation--to protect and to improve that land. Wherever acreage adjustments are especially difficult, Agricultural Conservation Program funds will be used to help farmers make these adjustments in a manner that will advance soil conservation and long-term efficiency.

SMALL FARMS

The chief beneficiaries of our price support policies have been the 2,000,000 larger, highly mechanized farming units which produce about 85% of our agricultural output. The individual production of the remaining farms, numbering about 3,500,000, is so small that the farmer derives little benefit from price supports. During 1954 the Secretary of Agriculture, in cooperation with the National Agricultural Advisory Commission, will give further special attention to the problems peculiar to small farmers.

CONCLUSION

The agricultural program proposed in this section, and in Part II which follows, will open new market outlets both at home and abroad, not only for current supplies but for future production. It will provide a firm floor on which our farmers can rely while making long-term plans for efficient production and marketing. Year in and year out, it will provide the best prospects for the stability and growth of farm income.

It will help the farmer attain full parity in the market. It will avoid creating burdensome surpluses. It will curtail the regimentation of production planning, lessen the problem of diverted acreage, and yield farmers greater freedom of choice and action.

It will bring farm production into closer balance with consumer needs.

It will promote agricultural interests, along with the public interest generally. It will avoid any sharp year to year change in prices and incomes.

The program will again stimulate and encourage good farm management. It will prevent arbitrary government control and afford the greatest freedom to the individual farmer. It will provide added incentive to make wise use of all our agricultural resources, and promises the Nation's agriculture a more stable and reliable financial return than any alternative plan.

I urge its early approval by the Congress.

PART II

In this part of the Special Message the principles developed in Part I are applied to specific commodities and commodity groups.

WHEAT

Wheat is a prime example of the results that ensue from a support program which fails to adjust to the level of demand. As of December 16, more than $2,000,000,000 of Commodity Credit Corporation funds were invested in wheat.

The export market, historically vital to our wheat farmers, was itself partly responsible for the expanded production of American wheat during the war and postwar years. To meet the food needs of devastated countries, our farmers continued their high level of production after the war and thus rendered a great service to humanity and to the cause of freedom throughout the world. These expanded outlets have since greatly diminished. Yet the support price has remained at the level associated with wartime needs. The result is that production has continued at wartime levels and, annually, more and more of this production has become surplus.

In foreign markets, the high rigid support program of the United States has become an umbrella for competitors. This has created an artificial competitive situation which has cost the American farmer a substantial part of his world wheat market. During the past two years our exports of wheat outside the International Wheat Agreement have fallen from 220 million bushels to 64 million, while Canada's free market sales have risen from 105 to 161 million bushels. Thus our price policy shrinks the very market that could otherwise help absorb our excess stocks of wheat.

Continuance of present price support levels for wheat would confront us with two undesirable alternatives:

(1) Curtail production to the amount needed for domestic use and very limited exports. This would require a reduction in wheat acreage of about 40 percent--from the 79 million acres planted in 1953 to between 45 and 50 million acres.

(2) Subsidize the consumption of wheat by increasingly severe burdens upon the taxpayer.

The foregoing alternatives make it increasingly clear that the Nation must depart from the high rigid support level for wheat. It is, therefore, recommended that:

(1) A substantial part of the present excessive wheat carry-over be set aside as an emergency reserve and removed from the market.

(2) After the 1954 crop, the level of price support for wheat be related to supply. Because of the substantial set-aside, computations of the support level under the Agricultural Act of 1949 would insure that changes in support levels would be gradual. The Secretary of Agriculture will use his authority under the Agricultural Act of 1949 to insure that year-to-year variations in price support levels will be limited.

(3) Beginning January 1, 1956, a change be made at the rate of five percent a year from old to modernized parity;

(4) Acreage allotments and marketing quotas be continued, with the anticipation, however, that adjusted support levels will increase the incentive to employ some of the present wheat land for other purposes.

RICE

Price supports for rice at 90 percent of parity have had no recent application. Market prices have been at or above support levels; restraints on production have not been needed; stocks have not accumulated. Nevertheless, present price supports for rice can inhibit an adjustment, if one should be needed, in the same manner that they prevented the adjustment for wheat, when it was needed.

It is therefore recommended that mandatory price supports at 90 percent of parity for rice be allowed to expire after the 1954 crop.

CORN

Corn is a dominant factor in the feed-grain--livestock economy. This economy is based on an interdependent process involving the production of feed, its conversion into livestock products, and its movement into consumption as meat, dairy products and eggs. To hold this economy in balance, prices are a critical factor, encouraging and discouraging livestock production by turns, rationing feed when it is scarce and moving it into use when it is plentiful. For the efficient use of corn, some price freedom is indispensable.

A program of high rigid price supports for feed grains involves the danger of curtailing our livestock industries and limiting the quantity of their products to consumers. We have made great strides in improving the efficiency of corn production and in passing some of those gains on to consumers in the form of reasonably priced livestock products. Our corn support program should be designed to encourage those trends.

Corn is used in the same manner as pasture and hay on farms where grown. Seldom does more than 25 percent of our corn crop move through commercial channels, and the bulk of this is eventually used as feed by other farmers. Farmers, therefore, are the principal users of corn. It follows that a high support price for farmers who produce corn for sale aggravates the cost-price squeeze on other farmers who normally buy corn and competing feeds to produce livestock products.

To guide the corn price support program, the adjustable price and income-balancing features of the Agricultural Act of 1949 on the whole are well suited. The level of support specified is designed to move corn into use. Livestock producers are assured of a steady supply of feed at reasonable prices.

The old parity formula holds the support price for corn too high in relation to livestock prices. Use of modernized parity, scheduled by law to become effective on January 1, 1956, will help to balance these vital price relationships.

It is, therefore, recommended that:

(1) Modernized parity for corn become effective on January 1, 1956, with modification limiting the rate of the transition to 5 percent in any single year;

(2) Except as provided in (3) and (4) the provisions of the Agricultural Act of 1949 become effective for the corn crop of 1955 and subsequent crops;

(3) The Act of 1949 be amended to provide a change, within the range of 75 to 90 percent of parity, of one percentage point in the support price for corn for each one percentage point of change in supply, thereby giving greater flexibility to corn support prices and tending to prevent the building up of excessive holdings by government;

(4) Legislation be enacted to raise the normal carryover allowance for corn from I o percent to 15 percent of domestic use plus exports, to become effective for 1955 and subsequent crops. This would help to assure more stable feed supplies and reduce the impact of current carryover stocks on future production controls and support levels;

(5) Upon adoption of the foregoing recommendation, the system of marketing quotas be abolished.

FEED GRAINS OTHER THAN CORN

The Agricultural Act of 1949 authorizes price support for such nonbasic crops as oats, barley, and grain sorghums at not to exceed 90 percent of the parity price. The amounts, terms and conditions of price support operations and the extent to which these operations are carried out are determined or approved by the Secretary of Agriculture upon consideration of various factors specified in the law.

Inasmuch as this program has worked satisfactorily, it is recommended that these provisions be continued.

MEAT ANIMALS

The fact that mandatory price supports are ill adapted to meat animals has been recognized by Secretaries of Agriculture for years. The present law provides tools well adapted to deal with the problems peculiar to the livestock industry.

It is recommended, therefore, that the existing conditions with respect to meat animals be continued.

DAIRY PRODUCTS

The Agricultural Act of 1949 requires price support for dairy products at such levels between 75 and 90 percent of parity as are necessary to assure an adequate supply. Sufficient discretionary authority is provided to operate a satisfactory program.

It is recommended that these provisions of law be continued.

POULTRY AND EGGS

Price supports have not been generally desired by the poultry industry. Temporarily, and in special circumstances, price supports can, however, be helpful.

It is recommended, therefore, that:

(1) Provisions of the 1949 Act be continued for poultry and eggs, with discretionary authority for the Secretary of Agriculture to support prices at not to exceed 90 percent of parity;

(2) Discretionary authority be continued to purchase poultry products for use in the school lunch program, in non-profit institutions, and for certain other purposes.

COTTON

Cotton, like wheat, is an export crop whose price is currently supported above the world level. Carryover stocks in the United States have been accumulating rapidly in the past two years. These stocks, probably close to 9,600,000 bales by next August, will approximate a full year's domestic requirements.

Our high rigid price support program stimulates competition of foreign producers and reduces exports. During the twenties and early thirties our net exports of cotton generally exceeded domestic consumption. Current exports amount to hardly a third of our larger domestic requirements.

Our problem is to develop a program which will help growers adjust gradually to changing circumstances, including foreign and domestic competition of rising intensity.

The Agricultural Act of 1949 provides price supports for cotton at a level between 75 and 90 percent of parity, dependent on the supply. Thus changes in supply and price would tend to offset one another, giving a relatively stable income. This plan will allow limited price variation, thus affording growers reasonable market stability and yet offering added inducement for heavier use of cotton in years of abundant supplies.

Separate legislation has made the adjustable pricing provisions of the 1949 Act ineffective for cotton. The Secretary of Agriculture is now required by law to set such marketing quotas and allotments that the required price support level can seldom if ever fall below 90 percent of parity. Instead of relying in part on the schedule of price floors intended in the Act of 1949, the law requires reliance almost entirely on production controls.

It is recommended, therefore, that:

1. A substantial part of the present large carryover of cotton now in prospect be set aside as an emergency reserve and removed from the market.

2. After the 1954 crop, the level of price support for cotton be related to supply. Because of the substantial set-aside, computations of the support levels, under the Agricultural Act of 1949, would insure that changes in support levels would be gradual. The Secretary of Agriculture will use his authority under the Agricultural Act of 1949 to insure that year-to-year variations in price support levels will be limited.

3. Modernized parity becomes effective for cotton as scheduled on January 1, 1956.

4. The Congress repeal the present provisions whereby the maximum use of production restrictions .before there can be any reduction of the price support level is required.

TOBACCO

Tobacco farmers have demonstrated their ability to hold production in line with demand at the supported price without loss to the government. The relatively small acreage of tobacco and the limited areas to which it is adapted have made production control easier than for other crops.

The level of support to cooperators is 90 percent of the parity price in any year in which marketing quotas are in effect.

It is recommended that the tobacco program be continued in its present form.

PEANUTS

The law requires that mandatory 90 percent supports for peanuts continue through 1954 and that old parity remain in effect until the end of 1955.

This program, which has experienced some difficulties in adjusting supplies to demand at the supported price, can operate successfully with certain changes.

It is recommended that:

(1) The Agricultural Act of 1949 become effective for peanuts on January 1, 1955.

(2) The shift to modernized parity for peanuts begins as now provided by law on January 1, 1956.

(3) A transitional provision be provided to limit the change from the old to modernized parity to not more than 5 percent per year.

TUNG NUTS AND HONEY

Tung nuts and honey should be in the same category with other products for which price supports are permissive rather than required. It is recommended, therefore, that the mandatory price supports for these commodities be discontinued.

OIL SEEDS

Price support is authorized for soybeans, cottonseed and flax at not to exceed 90 percent of the parity price. It is recommended that the provisions of the Agricultural Act of 1949 be continued for these commodities.

FRUITS AND VEGETABLES

Existing law authorizes the use of 30 percent of general tariff revenues to encourage the exportation and domestic consumption of agriculture commodities. In the event of market distress these funds may be used for limited purchases of market surpluses of such perishable commodities as fruits and vegetables. No purchases may be undertaken unless outlets are available.

It is recommended that:

(1) Present provisions for the use of funds from tariff revenues be continued.

(2) Authorization for the use of marketing agreements be continued and liberalized to

(a) provide for inclusion of additional commodities to which marketing agreements are adapted;

(b) enlarge and clarify the authorization for agencies established under marketing orders to engage in or finance, within reasonable limits, research work from funds collected pursuant to the marketing order;

(c) provide for the continuous operation of marketing agreements, despite short-term price variations, where necessary to assure orderly distribution throughout the marketing season; and

(d) enlarge and clarify the authorization for the use of marketing orders to promote marketing efficiency, including the regulation of containers and types of pack for fresh fruits and vegetables.

POTATOES

It is recommended that legislation be enacted to allow assistance to potato growers in the same manner as is available for producers of other vegetables and of fruits.

SUGAR

The Sugar Program, extended in 1951, is operating in a generally satisfactory manner. It is recommended that this program be continued in its present form.

WOOL

Price support for wool above the market level has resulted in heavy accumulations of wool--now nearly 100 million pounds--by the Commodity Credit Corporation and the substitution of imported for domestic wool in our home consumption. Two-thirds of the wool used in the United States is imported; yet our own wool piles up in storage.

A program is needed which will assure equitable returns to growers and encourage efficient production and marketing. It should require a minimum of governmental interference with both producers and processors, entail a minimum of cost to taxpayers and consumers; and align itself compatibly with over-all farm and international trade policies.

It is recommended that:

(1) Prices of domestically produced wool be permitted to seek their level in the market, competing with other fibers and with imported wool, thus resulting in only one price for wool--the market price;

(2) Direct payments be made to domestic producers sufficient, when added to the average market price for the season, to. raise the average return per pound to 90 percent of parity;

(3) Each producer receive the same support payment per pound of wool, rather than a variable rate depending upon the market price he had obtained. If each grower is allowed his rewards from the market, efficient production and marketing will be encouraged. This has the further advantage of avoiding the need for governmental loans, purchases, storage, or other regulation or interference with the market. Further, it imposes no need for periodic action to control imports in order to protect the domestic price support program.

(4) Funds to meet wool payments be taken from general revenues within the amount of unobligated tariff receipts from wool.

(5) Similar methods of support be adopted for pulled wool and for mohair, with proper regard for the relationships of their prices to those of similar commodities.

DWIGHT D. EISENHOWER