Madison County Democrat. (London, Ohio) 19??-1958, 1950-09-12
Korean War And
Farm Outlook
Broadcast by Harry M. Palmer
:. Senior Research Assistant
Federal Reserve Bank of

The most noticeable reaction of
farmers to the outbreak of the
Korean war was a rush to buy
new farm machinery and equip
inent. In this respect farmers act
ed much the same as their urban
counterparts who rushed in to
place long delayed orders for
manufacturing equipment.
About a year ago, it was ac-
knowledged that farm machinery
manufacturers had finally salts
fled the backlog of demand for
their equipment which had been
built up during the war and i'm
mediate postwar periods. Last
Fall, buying of tractors, combines
and other such items slowed down
and exhibited a tendency to re-
sumo the prewar seasonal pat
tern with purchases concentrated
around planting and harvesting
times. Since the beginning OF the
Korean conflict, however, farmers
have feared a recurrence of short
ages and seem to have returned
to the immediate postwar pat
tern of ordering any machinery
for which need might develop
in the next year or two. Many,
who would otherwise have waited
antil present equipment required
replacement, are buying now.
Others, who had postponed their
purchases in the hope of lower
prices, now believe that prices
are more likely to go up than
down and are waiting no longer.
The general rise in prices since
the Korean outbreak is well
known. Farm commodities were
among those registering the
sharpest advances. Prices of farm
products had been increasing
gradually under the stimulus of
generally good business conditions
ever since last December when
the postwar low point was reach
ed. Then in one month, from June
to July, farm product prices rose
67a percent-slightly more than
in the entire preceding six months
and in August further small rise
occurred.
With the upturn in prices this
Summer farm income has inn
proved accordingly. During the
first half of this year monthly
cash receipts from farm market
ing were consistently below the
levels of the corresponding per-
iods last year. Since the end of
June, however, receipts have been
about equal to the year-ago fig
ures, or perhaps slightly higher.
When the years marketings are
completed, gross farm income may
prove to be lower than in 1949
by as little as two percent, in
stead of the ten percent anticipa-
ted before the war started. On the
other hand, prices that farmers
pay for supplies have also risen,
but they have not yet risen as
much as selling prices. 1t may be
expected, therefore, that large
part of the improved cash, re-
ceipts position will be reflected
in net incomes. Earlier in !. the
year net farm income was ex-
pected to average about IS per-
cent lower than last year, but
now it appears that a much small
er drop is likely.
Production controls on 1851
crops will be more lenient than
was anticipated before war broke
out. In the cases of wheat, cotton
and corn, such controls were in
effect this year for the first time
in several years. Acreage allot-
ments were established for wheat
and corn; and for cotton the
more stringent control of market
ing quotas was adopted by vote of
the producers. The purpose of
these measures was to restrict
production and thereby assist the
Government in supporting agri-
cultural prices. AS recently as
last Spring the Governments
price-support investment in cot
ton, wheat and corn was nearly
So billion. Government-financed
stocks of these commodities were
then frequently referred to as
'surpluses." Now there are no
longer commonly considered sur
pluses, but are regarded as part
of the reserves available if need
ed, for the enormous demands of
a war boom economy.
Because wheat is a crop that is
largely planted in the fall, it was
the first of the important crops
to reflect the fact that war has
changed the outlook for agricul-
ture. It was planned last Spring
to cut the authorized wheat acre
age for 1851 about seven per-
cent below the national allotment
for 1850. Just three weeks before
the final deadline for fixing the
1851 allotment, however, the
North Korean army crossed the
38th parallel, and within those
three weeks the Secretary of
Agriculture revised his plans SO
as to allow an acreage equal to
the 1850 allotment. The intention
is to provide for the maintenance