Message to the Congress Transmitting Annual Report of the Commodity Credit Corporation.

To the Congress of the United States:

I am pleased to transmit to the Congress the Annual Report of the Commodity Credit Corporation for fiscal year 1967.

The Report shows that the Corporation has continued to reduce agricultural surpluses. This success is directly related to the substantial gains in the level of farm income since 1960--amounting to 24 percent in total realized net income, and 50 percent in net income per farm.

Despite this progress, per capita income for farmers still fails short of the level for urban workers.

Parity of income for farmers remains an unachieved goal. We began moving closer to its achievement with the passage of the Food and Agriculture Act of 1965. This legislation gives us the flexibility needed to adjust wheat, feed grain and cotton production levels. Supply management programs are vital if we are to improve returns to the Nation's farmers.

In my 1968 Message on the Farmer and Rural America, I have recommended the permanent extension of the 1965 Act to insure that authority for basic commodity programs will not be terminated. The farmer could ill-afford such a lapse.

With surpluses gone, the market operates more freely today than in many years. But the absence of surpluses also means that we must carefully maintain planned security reserves--a National Food Bank. I have recommended the new legislation which will be required to establish such a Bank. We must be able to hold reserve stocks of commodities in readiness for emergency use. At the same time our farmers must be protected against the price-depressing effects of such reserve stocks, particularly during their build-up.

Even though burdensome surpluses are no longer overhanging farm markets, farmers still need and use price-support loans to protect their prices from the depressing effects of temporarily large supplies, particularly at harvest time. In fiscal year 1967, farmers took out loans of nearly $1.4 billion on 1966 crops, and at the end of the year, price-support loans outstanding on these and previous crops totaled $1.5 billion. In addition, price support purchases, primarily of dairy products, amounted to $327 million.

Commodity inventories owned by CCC at fiscal year end had a value of $1.9 billion. This was more than $1.2 billion less than a year earlier and more than $2 billion less than two years ago. The inventories have dropped further since the end of last fiscal year. The smaller inventory level is bringing substantial reductions in CCC's storage, handling and transportation costs. In fiscal year 1967, these costs were down to $310.7 million, compared to $472.9 million in fiscal year 1966 and $513.6 million in fiscal year 1965.

The CCC, in financing P.L. 480 sales for foreign currency and under long-term credit, helps to provide added outlets for U.S. farm production and to supplement the supply of agricultural commodities for people in the less developed countries. During fiscal year 1967, the total costs of this financing amounted to nearly $1.3 billion.

The fiscal 1967 Report demonstrates that the broad authority of the Commodity Credit Corporation is being used to benefit both the U.S. farmer and those in great need abroad. No longer the caretaker of large and costly surpluses, the CCC is returning to its original objective of helping farmers to hold commodities off markets for better prices. And farmers are moving into a new era of balance between supply and demand, while continuing to help free the world from the danger of hunger.

LYNDON B. JOHNSON

The White House

May 15, 1968