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These council members serve without salary. The council meets at least twice a year. In addition to advising and working with the board, its chief function (sec. 3) is to nominate to the President 36 individuals (three chosen from each district by the council members for that district) from whom he shall appoint one from each district as a member of the board (sec. 5).

The board is required to meet weekly, or at the call of the chairman, whom the members select. It is given broad general and special powers. It is authorized (sec. 7) to advise farm organizations on crop adjustments necessary to secure maximum benefits under this measure, and to work with all agencies for the development of additional markets for American farm products.

Its primary function is to assist in the control and disposition of crop surpluses. (Sec. 8.) To accomplish this the board shall assist in withholding or removing such quantities as are temporarily not required, under agreements with cooperative associations or with processors.

The measure provides (sec. 11) that for a period of three years after its passage the board may not collect equalization fees on cotton and corn, but that operations shall be financed during that time out of the revolving fund. This provision defers the start of the equalization fee with cotton and corn, but leaves the way clear for immediate operation. The problem of corn is one best met by carry over, and increased livestock population. With cotton it is one of financing the current stock in trade and the carry over so that unrequired quantities need not be forced on the market until the market is ready for them. Neither carry over transaction—with cotton or cornpresents a certainty of loss to the revolving fund, although there is that possibility. Over a period of years it may be assumed that the gains on the carry over one year would offset the losses on the carry over another year.

With wheat, hogs and cattle, where the problem is one of exporting a surplus rather than storing it, the collection of the equalization fee is not deferred. The first and most important step toward corn price stabilization is to encourage a normal livestock population and then to maintain it through the operations with livestock.

Postponement of the start of the equalization fee with cotton and corn, the carry-over crops, would afford time for the board, the producers, and the cooperatives to do essential organization and educational work.

The measure provides for a revolving fund of $250,000,000, which is merely an advance or loan repayable to the Federal Treasury, (Sec. 16.)

16.) When operation with any commodity is determined upon the board is authorized to draw from the revolving fund for an equalization fund, an amount sufficient to finance operations which it expects to authorize in withholding, removing, and disposing of the surplus of that commodity. (Sec. 12.) The board estimates the equalization fee or charge which it shall collect upon the commodity subject to the three-year provision for cotton and corn. (Secs. 10–11.) Fees go into the equalization fund for each commodity handled and may be used in repaying the advances from the revolving fund.

How the surplus operations of the board might be conducted can best be illustrated by considering specifically some of the commodities it is proposed to deal with.

The following discussion of cotton, wheat, and hogs has no significance beyond such as it may possess for illustrative purposes. It does not imply that this is the only way in which the board could function with any commodity or that the illustrations set forth the best procedure in any case. We submit, however, that they do indicate possible and practicable methods of operation.

The American supply of cotton is the chief controlling factor in world price. The world total cotton exports have ranged between ten and thirteen million bales during recent years. American exports have aocounted for approximately six or seven million bales of that amount.

It is to the best interest of the cotton producers, cotton manufacturers and the consumers of cotton that the whole American supply be fed out to the world and domestic markets in an orderly manner as is now being done by cooperative associations with the cotton of their members. To accomplish this for the benefit of the American cotton growers as a whole it will be desirable for the board to arrange for the withholding from the market of varying quantities in years of excess production, in addition to the cotton held by cooperative associations. The board's agreements covering such surplus transactions would probably run to subsidiary corporations set up and controlled by cooperative associations whose marketing organizations will be used by the board in the functioning of this plan.

With the assistance of the equalization fund, drawn from the revolving fund, it will be possible for the board to finance carry over, including surplus, in such a way that cooperative associations can make complete settlement for their share of the carry over at the time of removing it from the market, so that they will not be placed at a disadvantage as compared with growers outside of the association. If the subsequent year's price were such as to cause a loss on this carry over the amount of the loss would be absorbed out of the equalization fund. If the price were higher in the subsequent year the gain on the carry over would be turned into the equalization fund. After the third year of operation any losses would be paid out of the equalization fee levied on the whole crop, and the balance would be held in the equalization fund or used to retire its debt to the revolving fund.

Provision is made to pay back to the growers serially all or a portion of the payments into the equalization fund if it becomes larger than is required for financing the surplus. This method is used rather than a suspension of payment of the fee, in order that costs levied and benefits received may as nearly as possible occur at the same time, and run to the same persons.

It should be clearly recognized that in the case of cotton the objective is to secure for this great American crop the highest price obtainable and economically practicable, in the markets of the world.

Wheat: The operation of the board in the case of wheat is probably much more widely understood than in the case of cotton or hogs, which are the other illustrations used.

The American wheat supply is not as dominant a factor in the world price as either cotton or pork. A relatively small surplus of wheat,

which in normal years must sell abroad at competitive prices, holds domestic wheat prices at about the world level notwithstanding the fact that Congress and the President have provided a tariff amounting to 42 cents a bushel, which is intended to equalize producing cost in the United States, with costs in competing foreign countries.

It would probably be desirable to create a wheat trading corporation as a subsidiary controlled by various wheat and grain marketing cooperatives, now in existence or to be created. It is desirable from a national viewpoint that our wheat exports be sent abroad in the form of finished products, so that milling capacity and labor in this country may be employed, and feed by-products retained in the United States. The wheat cooperatives and the millers and other processors therefore, would find it economically advantageous to: work closely with the board in handling the wheat surpluses.

The millers and other processors of the United States should not object to buying their wheat on a protected American price level if they are not foreclosed by that price, from the export business which they have built up. Many milling companies have established a demand for their products abroad, and have their export agencies which could not be duplicated without unnecessary expense.

The wheat equalization fund should be used to support agreements which the board would enter into to compensate for the loss sustained on wheat purchased at the protected American price and sold in the markets of the world. If this were done there would appear to be no serious interference with milling processes.

Under agreements with the board, the supply of wheat could be adjusted to the domestic demand by a segregation of the grades of wheat best adapted for export, and by its milling and exportation so that the American price would reflect substantially the amount of tariff above the price at which wheat from competing countries could be laidi down in American markets.

The equalization charge in this case would be collected from the miller, or other processors in the case of wheat not milled.

The upper level to which American wheat prices could be raised and maintained would be the point at which imports would commence to flow into the United States.

Hogs and pork: A lesson applicable to the pork situation may be drawn from the contract between producers and distributors of fluid milk around many of the large cities. In those cases the producers and distributors come together and agree upon a price to be maintained for a given period on the volume of milk which, it is estimated, can be absorbed by the consuming public as fluid milk. This volume is called “base line” production. Milk that is produced and brought to market in excess of this base line production is taken at a surplus price, the basis of which is agreed upon in advance.

In case of hogs it would be possible for the producers to establish a pork trading corporation as a subsidiary whose stock is held by the farm and hog producers organizations in the leading hog growing States. This corporation, in conjunction with a committee representing the packers and slaughterers of the United States could determine upon a generally practicable price level for a given period for that volume of pork or number of hogs which normally would be consumed in the domestic market. This might be considered the “base line" production. An agreement then might be reached for

the maintenance by the packing companies in the principal markets, of a price for all hogs delivered that conformed substantially to the price agreed upon. No loss need be sustained, nor could any unusual profit be taken, on that part of the pork production consumed in the United States. Such loss as might be incurred in the sale in export of pork output in excess of the base line production would be made up from the equalization fund on hogs. This fund, of course, is under the direction of the Federal Farm Board.

Having worked out the principles of such an agreement the proposal would then be submitted to the board for ratification. When agreed to, the operation period would commence. There is abundant packing capacity in the United States to take care of any probable How of hogs to our markets. Upon assurance of an opportunity to resell at a price having the normal relation to the price paid for live hogs, the processors through their buyers would be able to maintain during that period substantially the price agreed upon with the producers.

Or the producers' trading corporation might find it advantageous to contract for packing services, so that it could undertake directly the task of taking at the "base líne” price level such excess deliveries of hogs as might threaten for a time to break the market. The sale of the product of such purchases would be protected from loss by the equalization fund, but the price adopted by the producers as fair and economically practical for the operation period could be maintained.

Such a price would ultimately be determined by certain economic factors. It could not be too high because consumers would turn to other meats and fats in preference to pork and lard.

If a stable hog price were maintained, the population of hogs would tend to adjust itself to that price and remain fairly constant provided there was no shortage of corn such as occurred in 1924. To guard against that exigency the board should assist producers in carrying over a supply of corn from the years of high yield so that herds would not need to be reduced in years when the yield of corn is abnormally low.

The equalization charge would be collected from packers and slaughterers. In this way the hog and pork industry as a whole would provide the means for its own stabilization.

Cattle: Under present conditions in the cattle industry which is apparently facing a season of rising prices, operations by the board may be unnecessary. Cattle, however, is a "basic agricultural commodity,” and operations in cattle and beef products would be an exact parallel to operations in hog and pork products. Under this law the board could apply its experience gained in operations in the hog industry to the cattle industry immediately at any time when the associations of beef-cattle raisers request operations in their commodity by the board.

It is also advisable that the board should keep in close contact with cattle raisers and their associations for their mutual benefit, and this contact would be more intimate if cattle and beef products were under the provisions of the law from the beginning.

The farm organizations who bring this measure forward do not consider it emergency legislation, but a step in a long-time national agricultural program.

A stable price level for farm products will benefit consumers in the long run fully as much as farmers. Manufacturers of raw materials. recognize the importance of steady price levels to them. A definite policy, such as this bill proposed, to insure the Nation's supply of principal food and raw material crops, is distinctly for the general welfare of the United States.

It should be noted that the Federal farm board proposed can not buy or sell directly or through agencies for its own account. It operates through agreements with cooperative associations or manufacturers for export, whereby losses on storage, carry over, or export transactions authorized by such agreements are compensated for out of the equalization fund for each separate commodity group.

Under this measure the producers of a tariff-protected commodity will be able to adjust supply to demand in the domestic market so that the price will reflect the amount of the duty which has been provided by the tariff laws. The measure does not go beyond existing tariffs. It does seek to make them effective. It recognizes that increases in duties, where present ones are inadequate, should be sought in the usual manner through act of Congress or under the flexible provisions of the tariff act of 1922.

The board's operations must be through agreements with cooperative associations or corporations created by them, or with concerns engaged in processing for export. For a period of two years, however, if there is no cooperative association to deal with, the board may use other agencies for its purposes.

It should be recognized that the provisions for agriculture in this bill are directly in line with the present day tendency of industry to consolidate itself by means of trade associations, interlocking, and subsidiary corporations, etc., for the purpose of stabilization.

Under this measure the board can not enter into agreements with agencies for any surplus transaction in which the purchase price is in excess of a fair and reasonable price and can not be held for the payment of loss on sales in export or on carry over unless such sales have been approved by the board. This is for public protection.

In conclusion, let me say:

This plan does not put the Government into the business of buying or selling farm products.

It does not involve Government price fixing. It is a sincere legislative attempt to give producers of farm commodities some voice as to the price at which their products move to market.

It does not involve Government subsidy, since the Government funds that are advanced for use in anticipation of equalization fees to be collected, are repayable to the Treasury.

This plan utilizes economic forces and institutions to enable producers to adjust supply to demand in the domestic and world markets at the fairest price obtainable. It is economically sound, and can not fairly be attacked by those who support as proper other legislative devices that operate for the protection and stabilization of other groups in our national life.

We respectfully urge that the Committee on Agriculture and Forestry of the United States Senate accept this statement, in which we concur, as representing our views and wishes on legislation to establish a national farm policy and program for agriculture. There are several features which, the committee will recognize, are vital

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