Evening star., 1949-04-24
Farm Subsidy Program
Deoeptively Simple
in Principle
by joseph HonIon


gram, based on an economy Of
rather than an econ
omy of scarcity.
In principle, the Brannan plan
is deceptively simple; in operation
it will depend on the application
of an involved series Of formulas.
Some attempt will be made to de-
scribe later in this account the
basic formulas, but this would be
easier If each reader had a slide
rule handy.
New Element
In its simplest terms the Bran
nan proposal is TO- let farm prices
fall as farm surpluses grow. That
would mean prices at the grocery
and butcher counter low enough
to enable the people to buy and
eat what is produced.
Then a new element is intro
duced. The 'Brannan plan recog-
nizes that the new low prices
would mean a disastrous depres-
sion on the farms and that this
might spread through
the economy. So it introduces as
a compensating factor the con-
cept of income support" rather
than parity of price" If they
sold their produce for less than an
amount required to maintain farm
prosperity, the farmers would look
to the United States Treasury to
compensate them for the differ
ence. That is what income sup
port" means.
This is. of course, a grossly over
statement of the Bran
nan plan. 1t scraps the price
parity" concept which has been
the formula favored by major
farm organizations for many years
and is incorporated in the Hope
Aiken Farm Act of the Repub-
lican 80th Congress.
Under the price parity" con-
eept, the Government attempts
to buy up enough of surplus crop
production so that the price Of
what goes on the market will ap-
proximate parity. The parity
price. generally speaking, is the
price which nets the farmer. in
real" dollars. or in purchasing
power. what he netted on the
average for the years 1910-1914,
which is taken as a period in
which there was a proper rela-
tionship between the cost of what
the farmer buys and the price
Of what he sells.
Both Cost Taxpayer
Let there be no mistake: Either
plan will cost the taxpayer money.
New and higher levels of farm
production have been established
to meet war needs and our post
war commitment to feed other
peoples. The war is over; the
other peoples are approaching
self f-suficiency in food production,
and we are faced with enormous
present price levels.
No one can tell in advance what
either program will cost. Factors
which cannot be anticipated. such
as weather, boil weevils, potato
bugs, and effective demand. which
in turn is based on the level of
prosperity in the non-farming
community. will determine the
cost.
And let there be no mistake on
this point either: There will be
q program to support farm prices
or farm income by drawing on
the United States Treasury. The
recognized necessity of maintain
ing farm prosperity as a condition
to prosperity Of the
whole economy would assure that
even If the farm lobby. one of
the most influential in Washing
ton. did not. Both major parties
are committed to the principle of
farm subsidies.
AS between the two plans, the
income-support program
has one obvious virture. Under
it. whatever is produced would
be consumed. Under the price
parity system part Of what is
produced has been withdrawn
from normal consumption and. If
not destroyed. put to less effec-
tive use.
The Case of Potatoes
The potato fiasco under the
existing parity formula furnishes
an extreme example. The Gov
is committed to support
potato prices at 90 per cent Of
parity. So 1t is buying up pota-
toes at the rate currently of about
81 .000. 900 a day, and over the
last three years has spent $780,
000, 900 for potatoes. These high
cost potatoes. which the market
would not absorb at the parity
price, have been sold to other
farmers as hog feed for q frac-
ton of. their cost.
The result is that consumers
have been paying more than they
should for potatoes at the grocery.
and ut the same time have paid
$500 900 900 In taxes to keep the
price high for those same pota-
toes.
Under Mr.. Brannan's plan the
Government would stop buying