Veto of the Farm Bill.

To the House of Representatives:

I am returning herewith, without my approval, H. R. 12, designated as the "Agricultural Act of 1956."

It is with intense disappointment and regret that I must take this action. I assure you my decision has been reached only after thorough consideration and searching my mind and my conscience. Our farm families are suffering reduced incomes. They had a right to expect workable and beneficial legislation to help solve their problems. This bill does not meet their needs.

I am disappointed at the long delays which this legislation encountered. My first special request in this session of the Congress was for prompt remedial farm legislation. A sound, constructive 9-point program to this end was submitted on January 9, with an urgent request for action. It was a program that came from the grass roots. Suggestions and criticisms from large numbers of farm people, in every type of agriculture, from every section of the country, were analyzed and used. It offered no magic panacea because, we can all agree, there is none. It did strike directly at the root of the low price-low income problem.

The problem is price-depressing surpluses. Excess stocks of certain farm commodities have mounted to market-destroying, price-depressing size as a result of war-time price incentives too long continued. Any forward-looking, sound program to meet the needs of farm people must remove the burden of these accumulations. They are depressing net farm income by many hundreds of millions of dollars a year.

H. R. 12 would not correct this situation. It would encourage more surpluses. It would do harm to every agricultural region of the country and also to the interests of consumers. Thus it fails to meet the test of being good for farmers and fair to all our people.

The bill is self-defeating. The Soil Bank proposal has been incorporated. This would be constructive, had it not been encumbered by contradictory provisions. The Soil Bank would provide an income incentive to farmers to reduce production temporarily so that surplus stocks might be reduced. Other provisions of this bill, however, would result in an equal or greater incentive to increase production and accumulate more surplus.

Among the provisions which make this bill unacceptable are: (1) the return to war-time rigid 90 percent of parity supports for the basic commodities; (2) dual parity for wheat, corn, cotton, and peanuts; (3) mandatory price supports for feed grains; (4) multiple-price plans for wheat and rice. The effect of these provisions would be to increase the amount of government control and further add to our price-depressing surpluses.

Specific objections relative to each of these provisions may be summarized as follows:

1. Price supports at war-time 90 percent of parity on basic crops were in effect in each year from 1944 through 1954. They were not responsible for the high commodity prices and high farm income of wartime and the immediate postwar years. Prices were then above support levels due to wartime inflation and the insatiable markets associated with war. Neither did 90 percent supports prevent prices from falling as postwar surplus stocks began to accumulate.

Price supports at wartime 90 percent on the six designated basic crops did encourage production of these crops relative to others. At the same time consumption was discouraged and the use of substitutes was stimulated. Market outlets shrank, and surplus accumulations mounted. Acreage controls had to be invoked, thereby rationing the right to produce. Wheat acreage was reduced from 79 to an allotment of 62 and then to the present 55 million acres. Cotton was cut from 25 to 20 and then on down to the present 17 million acres. These drastic reductions, forced by the application of the price support law, penalized many farmers directly by resulting in shrunken volume and uneconomic farming operations. In addition, acreage diverted from the basic crops shifted surplus problems into many other crops and livestock. Now almost every farmer is adversely affected, regardless of what crops or livestock he raises.

If wartime rigid 90 percent supports were the answer to the problem of our farm families, there would now be no problem.

Farm incomes have declined in every year except one between 1947 and 1954, and in all these years 90 percent supports were in effect.

Farmers are not interested in price alone. What they really want for their families is more net income, which is affected by volume and costs as well as by price. The 90 percent of parity approach focuses on support price alone.

To return now to wartime 90 percent supports would be wrong. Production would be stimulated. Markets would be further destroyed, instead of expanded as must be done. More surplus would accumulate--and surpluses are price depressing. Regimentation by ever stricter production controls would be the end result.

It is inconceivable that we should ask farm families to go deeper into this self-defeating round of cause and effect.

2. The provision for dual parity would result in a permanent double standard of parity for determining price supports. Four crops would receive preferential treatment out of 160 products for which parity prices are figured. There is no justification in logic or in equity for such preferential treatment.

Particularly is this true because, under the working of the modernized parity formula enacted by the Congress, increasing the parity prices of some commodities automatically lowers the parity prices of all other commodities.

If parity prices for wheat, corn, cotton and peanuts are to be higher, then parity prices of the other products must be lower.

To whatever degree prices would be further artificially raised there would be a corresponding stimulus to production, more controls on farmers, reduced consumption, increased accumulations, and lower prices in the market. Such a device for parity manipulations could destroy the parity concept itself. It places a potent weapon in the hands of opponents of all price supports for farmers. We have no right to place the welfare of our farm families in such jeopardy.

3. The provision for mandatory supports on the feed grains would create more problems for farmers. The market for feed grains would shrink as livestock production would come to depend more on forage and less on grain. The flow of feed grains into government stocks would increase and production controls would necessarily be intensified. Price relationships between feed, livestock and livestock products would be distorted. Producers of feeder cattle, feeder lambs, and feeder pigs would be faced with downward pressure on prices. An imbalance would develop between feed crops and livestock products, with all its adverse consequences.

4. The multiple price plans for wheat and rice would have adverse effects upon producers of other crops, upon our relations with friendly foreign nations, and upon our consumers.

There are other serious defects in the bill, such as certain provisions found in the section dealing with the dairy industry. Still other features are administratively bad and would require the hiring of thousands of additional inspectors and enforcers.

I recognize that the restoration by H. R. 12 of wartime mandatory 90% price supports applies only to 1956 crops. This, in combination with other objectionable features of the bill, would put us back on the old road which has proved so harmful to farmers.

Bad as some provisions of this bill are, I would have signed it if in total it could be interpreted as sound and good for farmers and the nation.

After the most careful analysis I conclude that the bill is contradictory and self-defeating even as an emergency relief measure and it would lead to such serious consequences in additional surpluses and production controls as to further threaten the income and the welfare of our farm people.

Because the good features of the bill are combined with so much that would be detrimental to farmers' welfare, to sign it would be to retreat rather than advance toward a brighter future for our farm families.

We now have sound and forward-looking legislation in the Agricultural Act of 1954. Neither that Act, nor any other, can become fully effective so long as it is smothered under the vast surpluses that have accumulated. We imperatively need remedial legislation to remove this burden and enable the fundamentally sound program provided in the Act of 1954 to become workable. Such remedial measures were proposed in my message of January 9.

I am keenly mindful that the failure of the Congress to enact a good new farm bill can have unfavorable effects on farm income in 1956, unless prompt administrative efforts to offset them are made immediately. Particularly, the failure to enact a Soil Bank before planting time this year makes such administrative efforts imperative.

Consequently, we are going to take prompt and decisive administrative action to improve farm income now. I have conferred with the Secretary of Agriculture and the Administration is moving immediately on four major fronts:

1. In 1956, price supports on five of the basic crops--wheat, corn, cotton, rice and peanuts--will be set at a level of at least 82½% of parity. Tobacco will be supported as voted in the referendum in accordance with existing law.

Within this range of price support flexibility, the Administration intends to set minimum support levels that will result in a national average of:

Wheat at $2.00 a bushel

Corn at $1.50 a bushel

Rice at $4.50 per hundred pounds

A separate support for corn not under acreage control in the commercial corn area will be announced at an early date.

Price supports on cotton and peanuts have not yet been announced but will be at least 82½% of parity.

The Secretary of Agriculture will announce shortly the details of the new cotton export sales program.

2. For this year the support price of manufacturing milk will be increased to $3.25 per hundred pounds. The support price of butter fat will be increased to 58.6 cents a pound.

3. We will use Department of Agriculture funds, where assistance will be constructive, to strengthen the prices of perishable farm commodities. We will have well over $400 million for that purpose for the year beginning July 1.

These actions, the Administration will take immediately.

I now request Congress to pass a straight Soil Bank Bill as promptly as possible. It should be in operation before fall seeding for next year's crops. It is vital that we get the Soil Bank authorized in this session of the Congress. There is general agreement on it. I am ready to sign a sound Soil Bank Act as soon as Congress sends it to me. That can be accomplished in a very few days if the leadership in Congress will undertake the task.

This combined program of Administrative action and legislative enactment will begin now to improve the income and welfare of all our farm families.

Here is a challenge for both the Legislative and Executive branches of the Federal Government.

DWIGHT D. EISENHOWER