Special Message to the Congress on Agriculture.

To the Congress of the United States:

In recent times, it has become customary to speak of American agriculture in terms of distress and failure, as a burden on the taxpayers and a depressant on the economy. But this is only one part of the picture. As the provider of our food and fiber, American agriculture is a highly successful and highly efficient industry. In no other country, and at no other time in the history of our own farm economy, have so many people been so well provided with such abundance and variety at such low real cost.

Nor is this bounty confined to our own people. We are today the world's largest exporter of food and fiber. Seventy percent of these exports are sales for dollars, one of the principal bulwarks of our export trade. The other thirty percent is made available under special programs to promote economic development abroad and to relieve hunger and suffering--efforts that are fundamental to our world leadership and security.

In short, our farmers deserve praise, not condemnation; and their efficiency should be a cause for gratitude, not something for which they are penalized. For their very efficiency and productivity lies at the heart of the distress in American agriculture which--while it represents only a part of the picture--constitutes that part to which our efforts must be devoted. The steady and continuing decline in income has been most serious for the seven million people engaged in farming operations, and substandard conditions on the farms--which are so important to our economy--lead directly to substandard conditions in all segments of the national economy. Farming remains our largest industry--it employs 12 times as many people as work in steel and 9 times as many as in the automobile industry. It employs, in fact, more people than steel, automobiles, public utilities and the transportation industry combined. The farmer is a consumer as well as a producer, and other economic groups are affected by the continued drop in farm purchasing power. Some $40 billion is spent each year for production goods and services needed on our farms and for the consumer goods used by farm families. Six million people are employed in the manufacture and distribution of the supplies that farmers use. Each year farm families spend from $2.5 to $3.0 billion for new automobiles, trucks, tractors and other farm machinery; and $3.5 billion for fuel, lubricants and maintenance of motor vehicles and machinery. It is deeply in the interest of all Americans that our agriculture be not only progressive but prosperous.

Yet as our farm families enter the 1960's, their incomes are lower relative to the rest of our population than at any time since the 1930's. Although there has been a continuous rise in consumer prices during the past ten years, farm income has steadily declined. Abundant production has filled our bins and warehouses, but one out of ten American households have diets so inadequate that they fall below two-thirds of the standard nutrition requirements.

These paradoxes are of concern to all of us--the farmer, the taxpayer and the consumer. They affect the vitality of our nation, the strength of our most basic industry, agriculture, and the economic health of every community in the land.

Much of the current problem results from four factors:

First. The inability of millions of separate producers to control either output or price of their products. Acting individually the farmer can neither plan his production to meet modern requirements, and shift away from commodities for which there is limited demand, nor bargain effectively for a fair return.

Second. A technological revolution in agricultural production, which is still under way, that has resulted in generally increased yield from a reduced input of acreage and manpower--so that today each farmer produces the food and fiber necessary for 25 people, while at the turn of the century each farmer produced the food and fiber for only 7 people.

Third. A faulty system of distribution, which allows one-half of the people of the free world to suffer from malnutrition at the very same time our surpluses have reached a point where the availability of adequate storage facilities has become a real problem.

Fourth. The steady and continued increase in farm costs. The average farm requires an investment of $36,000. The farmer's interest costs have increased over 300 percent in the past decade. His equipment costs have increased seventy-five percent.

The solution lies not so much in severe restrictions upon our talent to produce as upon proper channeling of our abundance into more effective and expanded uses. American agricultural abundance can be forged into both a significant instrument of foreign policy and a weapon against domestic hardship and hunger. It is no less our purpose to insure that the farm family that produced this wealth will have a parity in income and equality in opportunity with urban families--for the family farm should be protected and preserved as a basic American institution.

Our intention is to accomplish these goals while eventually reducing the cost of our programs to the taxpayer. This can be accomplished in part because it is cheaper to use our agricultural products than to store them. Present storage costs total over $500 million a year or $1.4 million every day.

But it must also be our purpose to see that farm products return a fair income because they are fairly priced. No farm program should exploit the consumer. But neither can it subsidize the consumer at the cost of subnormal incomes to the farmer. We cannot tolerate substandard conditions on the farm any more than we can in industry. A fair return is a necessity for labor, capital and management in industry. It is equally necessary for those who produce our food and fiber.

It must be our purpose to provide an agricultural program that will eventually eliminate the vast farm surpluses that overhang the market and overburden the economy; that will permit effective economies of administration; that will recognize the right of the consumer to fair prices; and that will permit the farmer to receive a fair return for his labor. This will be neither simple nor easy. It will require the cooperation and effort of the farmer, government, and the urban dweller. But the alternative is not alone a substandard rural economy--it is a weakened nation.

I. A WIDER RANGE OF TOOLS TO BOOST FARM INCOME

This Administration's studies to date on how to meet our responsibilities in agriculture have led us to the following conclusions:

--There is no single farm problem, and no single solution. Each commodity requires a somewhat different approach.

--Swift and frequent changes in weather, acreage, yield, and international market conditions require federal programs alert and sensitive to change.

--The Secretary of Agriculture is now equipped with broad responsibilities for the maintenance of farm income. In order to fully and effectively meet these responsibilities he has had authority to set and adjust the level of support prices, set the level and terms of loans, prescribe acreage allotments, specify conservation payments, establish marketing agreements and orders, and take other steps to adjust supplies and protect the prices and incomes of farmers. But these powers have not been fully employed in recent years; and neither are they sufficiently flexible for all contingencies.

I am deeply concerned--and I believe the Congress shares that concern, along with most of our consumers, taxpayers and the farmers themselves--that our farm program is drifting into a chaotic state, piling up surpluses, penalizing efficiency, rewarding inertia and noncompliance, and constantly being torn and weakened by disputes and conflicting pressures. This is not a situation that can be ended by any one sweeping act of magic. It will require diligent study, hard work, imaginative initiative, and sound, constructive leadership. But I believe that the decline in farm income and the drift in farm policy can both be gradually reversed by the program I recommend.

This will require that the Secretary of Agriculture make full and effective use of all the responsibilities now reposed in him; and that the Congress establish guidelines to enable the Administration to exercise responsible leadership in consultation with those farmers most concerned in establishing sound programs for each commodity for which they are needed.

A generation ago, Congress enacted the Reciprocal Trade Agreements Act to place in the Executive Branch the authority for a tariff-by-tariff approach that could be more effectively and equitably handled there instead of in the hails of Congress. The Reorganization Act similarly shifted the initiative in that complex field to the Executive Branch. Now agriculture needs a commodity-by-commodity approach, fitting each program to the pertinent problems, initiated by the Secretary of Agriculture under Presidential direction, subject to the approval of the farmers voting in referenda and to final review by the Congress.

The authority Congress has previously granted to the Secretary for the management of farm supply and the stabilization of farm income requires additional adjustment. A variety of gaps must be filled before all necessary administrative tools are available for every commodity. I am therefore asking the Congress to enact legislation to be submitted shortly and to be known as the Agricultural Enabling Amendments Act of 1961, covering the following matters:

1. The Agricultural Marketing Agreement Act of 1937, which now authorizes marketing orders for milk, certain fruits and vegetables, tobacco, soybeans, and some specialized crops, should be amended to permit marketing orders to be used for a wider range of commodities, to make it more flexible in dealing with commodities for which a national or area program may be devised, and to permit, subject to the approval of producers and acceptance of the Congress as noted below, the establishment of quotas and allotments for individual producers. This will enable the valuable tool of the marketing order to be extended and combined with effective production control where the latter is essential.

2. The Agricultural Adjustment Act of 1938 should be amended to permit supply adjustment through marketing quotas for any agricultural commodity for which quotas might be most effective in achieving our goals and subject to affirmative approval by producers and acceptance of the Congress as indicated below. Quotas should be authorized either in quantitative terms-pounds, bushels, or bales--or in terms of production for individual farm acreage allotments. This will insure effective supply adjustment where this is indicated under proper safeguards. Such adjustment in turn is our best assurance against excessive costs to the taxpayers.

3. The Agricultural Act of 1949 should be modified to permit, subject to similar producer approval and Congressional acceptance, the method of supporting producer income that is most appropriate to the competitive and international position of the commodity, the nature of the supply adjustment needed, and economy to the taxpayer. There should be authorization of compensatory payments as well as commodity loans, commodity purchases, diversion programs, incentive payments, and export payments as circumstances require. All of these measures, properly safeguarded as to use, have proven their value in practice and are essential if the programs are to be adjusted to needs of individual commodities. As a part of payment programs the Secretary of Agriculture should be authorized to make payments in kind in cases where producers prefer such payments and where the Secretary determines that the goal of reduction of available stocks makes such payments feasible.

4. The Soil Conservation and Domestic Allotment Act of 1936 should be amended to provide for the establishment of national farmer advisory committees for every commodity or group of related commodities for which a new supply adjustment program is planned. Members of the committees would be elected by the producers of the commodities involved or their appropriate representatives. In consultation with the Secretary of Agriculture, they would be charged with the responsibility for considering and recommending individual commodity programs. To make it possible for farmers to participate in the work and consultation necessary for the development and implementation of sound proposals, the bill should authorize the payment of expenses for the members of these farmer committees.

In order to insure effective farmer participation in the administration of farm programs on the local level, the Secretary of Agriculture is being directed to revitalize the county and local farmer committee system and to recommend such amendments as may be necessary to safeguard such farmer participation.

5. Programs formulated in accordance with the enabling legislation here proposed and involving controls over production and marketing should not go into effect until approved by a majority of two-thirds of the producers voting under regularly authorized voting procedures and there should be legislation to this end. Such voting will be after full opportunity for debate and discussion and will insure that the producers of no commodity will be asked to accept programs to which they have not given strong affirmative approval.

6. All comprehensive programs prepared under existing and requested authority will be duly submitted to the Congress of the United States not less than sixty days before taking effect. If within the sixty-day period the program is rejected by either House of the Congress, the program will not go into effect. Thus no agricultural program will be adopted if it is regarded adversely by a majority of either House of the Congress.

Agricultural programs must always involve an effort to take the best of the available alternatives. Our task, building on past experience and present authority, is to find a simple and rapid accommodation to changing circumstances which is both effective and consistent with our democratic traditions. I believe that the present proposals will go a long way toward achieving these goals.

II. EXPANDING THE USE OF OUR FARM ABUNDANCE

A. To Improve Distribution and Nutrition at Home.

We have already taken a number of steps toward greater utilization of our agricultural abundance at home as well as abroad. I have directed the Secretary of Agriculture to increase both the quantity and quality of our surplus food distribution to the needy; and under this program the amount of food going to each needy family has already been doubled. In addition, pilot food stamp programs are being launched in eight areas to provide emergency aid where the distress is particularly acute. These pilot plans will furnish operating experience necessary for our determination of the most effective kind of food allotment program.

To improve further our system of distribution I recommend:

1. An expansion of the school lunch program, with the increase going to those schools providing a high proportion of free lunches because of the high level of unemployment in their localities, and with a change in the allocation formula to include, in addition to school age population and per capita income, the number of children who actually receive school lunches. In this way the best possible nutrition will be made available to every school child, regardless of the economic condition of his family or his local school district.

2. Extension and improvement of the special school milk program. Existing authorization for this program expires June 30. No lapse should be permitted.

B. To Improve Nutrition Among Needy Peoples Abroad.

We have barely begun to explore the ways in which our abundance can advance the cause of peace and freedom around the world, and contribute to the well-being and stability of undeveloped nations whose peoples eye our storage stockpiles with hungry dissatisfaction. I have already dispatched a series of missions to such areas to ascertain how we can best use our food in a helpful fashion. In addition, I ask the Congress:

1. As previously requested, to authorize an additional $2 billion for this calendar year under Title I of the Agricultural Trade Development and Assistance Act of 1954, which permits the sale for local currencies of our surplus agricultural products. The need for this legislation is urgent, for the funds now available under this Title are virtually exhausted. Until Congress acts we will be unable to process new requests now coming in from friendly governments.

2. To extend and expand the Agricultural Trade Development and Assistance Act of 1954 for a period of five years. Unless there is some assurance of a continuing program we can neither make the advance plans best suited to an effective instrument of foreign policy nor gauge its long-term effect upon our domestic program. Title I sales should be authorized at a higher level; and our contributions of food and fiber to voluntary agencies such as CARE for use abroad should be liberalized.

C. Improved Research.

We should not only continue our research activities directed toward better production and lower costs, but we must expand research into marketing, nutrition and especially utilization. Today approximately two-thirds of our agricultural research is directed toward improved production and only one-third toward utilization. Yet these small expenditures have resulted in the past in developing such items as frozen orange juice, potato flakes, and other foods which have vastly increased food demand and made possible the use of an estimated 500 million pounds of additional animal fats in livestock feed, an additional 250 million pounds of additional animal fats in the manufacture of plastics, and an additional 800,000 bales of cotton for washable cotton fabrics. The proportion of our effort directed at food and fiber utilization should be increased.

In addition, I am directing the Secretary of Agriculture to survey the nutritional needs of our Nation and to formulate plans for helping achieve optimum nutrition goals for all Americans. The Secretary and the Food for Peace Director have already initiated a study of the food and fiber needs of other free countries. With completion of these studies we will be in a position to press forward vigorously to eliminate malnutrition and starvation as a common experience.

D. Expanded Exports.

I am directing the Secretary of Agriculture and all other appropriate departments and agencies of the Government to intensify our efforts to expand dollar sales of agricultural products. The Foreign Agricultural Service's assignment of market promotion specialists and agricultural attaches to critical areas will be encouraged. This will strengthen our overseas programs of trade fair exhibits and trade centers, improve information services and market news to the United States trade, and supply us with vitally needed information about agricultural developments abroad and the competition our products face in world markets.

In our progress toward a trade liberalization program, there has been a marked lag in convincing other nations to reduce barriers on agricultural products. Especially at this time, it is important that we redouble our efforts to gain access for more of our agricultural products to the markets of foreign countries.

III. ENCOURAGEMENT OF COOPERATIVES

One of the methods by which farmers can increase their bargaining power and thus remedy to some extent their weakness in the market place is through the effective operation of their own cooperatives.

To this end I recommend legislation to reaffirm and protect the right of farmers to act together through, their cooperatives in the processing and marketing of their products, the purchasing of supplies, and the furnishing of necessary services. This legislation should specifically permit farmers' cooperatives to purchase, acquire and build processing plants and related facilities and to merge with other cooperatives so long as such activities do not tend to create a monopoly or substantially lessen competition.

IV. LOW INCOME FARMS

In those areas where farms are predominantly in the lowest income group, entire rural communities have suffered severe economic damage. The small businesses are liquidating, the community facilities are deteriorating and community institutions are weakened. These present a special problem.

The Area Redevelopment Bill now under consideration by the Congress is needed by farmers as urgently as it is needed in cities and towns. I reiterate my urgent recommendation for the speedy enactment of this bill, and thus enhance the resources available to the Secretary of Agriculture as he mobilizes all the services available to him, such as FHA, REA, Forest and Extension Services, to assist in the development of better levels of living, better income opportunities, and better communities in our rural depressed areas.

V. FARM CREDIT AND REA

One of the features of modern agriculture that poses an increasing problem to farmers, especially during periods of low income, is the need for increased capital investment, accompanied by the high cost of credit.

I am directing the Secretary of Agriculture to liberalize and extend the lending operations of the Farmers Home Administration so that any needy farmer can obtain loans for operating capital and for farm home improvements at low cost, and I recommend that the present legislation be amended to permit farm improvement loans to be secured either by mortgages or by other acceptable forms of security.

I have further directed the Secretary of Agriculture to initiate two measures that will encourage the storage of grain on the farm and strengthen economic activity in farming areas:

(a) Modifying present farm credit regulations to permit farmers to borrow up to 95 percent (instead of the present 80 percent limit) of the cost of materials for building farm storage facilities and equipment; and

(b) Guaranteeing that farmers will be able to earn two full years' storage payments for continuing to store 1960 crop wheat, corn and grain sorghum, and at least one year's storage payments for continuing to store other 1960 crops.

The loans are for 5 years at an interest rate of 4 percent. The effect of this directive will be to increase the demand for steel, wood, and other building materials, to procure the additional farm storage needed for 1960 crops, and to place an estimated $40 million in credit funds in the rural economy in the months ahead.

I have also directed that the Rural Electrification Act be administered in accordance with the original intent and purpose of that program, which has done so much to advance agriculture throughout the Nation. Over 95 percent of our farms now have electricity. But much remains to be done. There are constantly increasing demands for additional power. Only one-third of our farms have modern telephone installations. The cooperatives which so successfully brought light and power to the farm can make an enormous contribution to the continued development of our rural communities.

VI. FOREST RESOURCES

One of our most important natural resources, and one of our most neglected, is our forest land.

We need to give special emphasis to the improvement of the 256 million acres of small, privately owned farm woodlands and other small forests. This is an important sector of our agricultural economy in which the rate of progress and production is far from satisfactory. Yet here is a crop which is not in surplus and to which many farmers should turn, for their benefit and the Nation's. If our grandchildren are to have only the same continuous supply of timber products as we now have, growth of timber on these farm woodlots and other small holdings will have to be doubled within the next forty years. To insure adequate forest resources in the future by sound, effective programs relating to privately-owned woodlands as well as our National Forest, the following administrative and legislative measures are needed:

1. Rejuvenate the Forest Service's long-range program for the development and improvement of our National Forests--a program already returning substantial revenues to the Treasury and designed eventually to return $500 million a year. Accompanying measures were requested in my earlier message on Resources.

2. Accelerate, through a larger Federal grant, the present Federal-State cooperative assistance program to farm and small forest owners for the application of scientific forestry techniques.

3. Expand tree planting funds, in order to make productive fifty million acres that will not restock naturally within a reasonable time, and to increase the timber stand on another one hundred million acres.

4. Increase protection against losses caused by fire, forest insects, and tree diseases. The Federal Government's share of the burden in preventing and controlling forest fires has not been met, even though the states contribute the greater share.

5. Emphasize our incentive cost-sharing programs with owners for tree planting, timber stand improvement, and certain other practices under the Agricultural Conservation Program.

6. Expand forestry research, too long neglected.

7. Encourage the establishment of management and marketing forest cooperatives.

VII. SOIL AND WATER CONSERVATION

We have so taken soil conservation for granted in this generation that we forget it is a task which is barely under way. By June 30, 1960, the Soil Conservation Service had helped 1,301,450 farmers and ranchers to complete basic conservation plans and an additional 500,000 were being assisted. But this represents only twenty-seven percent of all farms and ranches in soil conservation districts. Nearly three-fourths of this important job remains to be done.

I am requesting the Congress to provide the funds necessary to accelerate this program for permanent soil conservation practices and to increase our efforts for small watersheds as well. These smaller projects, now being planned and developed, may well hold the key to our future water and soil requirements at a time of rapidly growing population.

CONCLUSION

The measures I have recommended are not directed solely to the purpose of aiding the farmer. Nor are they simple prescriptions for Federal assistance to a harried segment of our population. Rather they are directed toward broad goals of achieving agricultural production geared to meet needs for food and fiber at home and in the free world, under programs that will enable the farmers of this nation to earn a fair income.

We cannot expect to solve the farm problem in a day or in a year, or perhaps even in this administration. But we can and must adopt a new approach based on a clear recognition of the goals we seek, a realistic appraisal of the problems involved, and a firm determination to solve these problems and attain these goals.

The bills I have suggested will be debated and discussed in terms of general Administration policies and powers. Various portions will undoubtedly be challenged as restrictive upon the farmer or inconsistent. with complete freedom in the market. But I am convinced that the objectives of these programs will, when accomplished, provide for a reasonable balance between supply and demand. They will eliminate the hardship and suffering which inadequate returns force upon so many of our farm families; they will reduce our surpluses to manageable proportions; they will relieve the taxpayer of the unnecessary drain upon the Federal budget; they will spur our national economy, and they will assure the consumer of stable price levels.

Responsibility must be accompanied by the authority to accomplish these goals. If we move forward along the lines I have recommended, the entire Nation will benefit. The farmer can join the city-dweller in the march toward economic health.

JOHN F. KENNEDY