Evening star., 1953-02-22

attempt to coordinate and control
farm production. The little pigs
were plowed under, but the farm
economy was not stabilized. Then,
in 1888, the second Agricultural
Adjustment Act was passed. That
was the beginning of the present
direct price support program.
The act said that farm incomes
should be on parity" with the
farm cost Of living. It was decided
that In the years l909-1914 such
q relationship had existed, SO this
period was used as q basis for
parity calculations. The Govern
ment, under the act, was to see to
1t that farmers got fair shake in
comparison with that normal
period.
How Props Worked
The act specified that the Gov
ernment could support the prices
Of storable commodities by lending
farmers money and storing the
crop for market rise. Perishables
we're to be supported by Govern
ment purchase Of those commod-
tiles at the market for a price
above the falling market price.
The present version of the law,
which will run through 1854 unless
amended by Congress, specifies
six 'basic" commodities corn,
wheat, cotton, peanuts, rice and
tobacco-that must be supported
at 90 per cent parity" by means
Of loans.
Another group Of commodities
wool, mohair, honey and tung nuts
ARE to be supported at from 80
to 80 per cent of parity, the exact
figure to be set from time to time
by the Secretary of Agriculture.
Dairy products are to be supported
at IS to 80 per cent.
Discretionary Power
AL other farm products may be
supported up to 80 per cent at the
discretion bof the Secretary of
Agriculture. Criteria for a price,.
support determination are: Supply
relative to demand; price levels
OF related commodities; money
available; perishability; impor-
tance Of the crop to the agricul-
tural and national economies; the
Governments ability to dispose of
stored goods; need for offsetting
temporary losses in export markets
and the ability and willingness Of
producers to keep supply In line
with demand. In rare cases the
Secretary may 60 above 90 per
cent. Only one such program Is
now in effect: American Egyptian
cotton at lS5 per cent.
Mony Below Pority
Many commodities now sell on
the open market for less than<10O
per cent Of parity. Wheat sells at
SO per cent, corn at 81 per cent.
The current wheat loan program
expired January 81, but farmers
still can get 80 per cent loans on
corn. Dairy products are now sup
ported with Government pur-
chaSes. (See story on Page C-5.)
Loans on storables keep low
price commodities off the market
and make for artificial scarcities
and higher prices. Similarly, pur-
chases keep perishables from fall
ing In price. When prices rise,
stored commodities are dumped on
the market and the Government
purchases cease, so the prices are
again checked, this time from
rising too fast.
Result Is Stability
All this juggling, according to
theory, results in stable market
for farm commodities at reason
able percentage Of parity.
However, 1t does not always work
that way. The Government some-
times buys ridiculous amounts Of
commodities remember the pota-
toes in l949?-when overproduction
is serious, and the public COM
plains. Price supports are accom-
panied by restrictions, regulations
and paper-work, to the chagrin Of
the farmer.
Even persons who firmly adhere
to the New Deal price support
philosophy would be happy to find
q more workable formula. Nom
believers persons who feel price
supports represent creeping social
ism and are sapping the initiative
and morale Of the farmer--want
to Junk the program and return
to free market.