The Farmville herald and farmer-leader. (Farmville, Va.) 1934-1957, 1954-08-13


s. Cost plus guarantees discredit
the farm program.
The price-support principle Is
an accepted part OF farm pro-
grams. for the greater part WILL
ingly endorsed by farmers and
nonfarmers alike. Certain unique
characteristics Of riculture
make price supports appropriate.
The wide fluctuations Of market
prices and the hardships to which
they subject farm people. the dif-
ficulty which farmers experience
in pooling their bargaining power
in order to match that Of labor
and capital. the essential nature
Of food. and the vulnerability Of
farm people to physical and eco
nomic disaster--all these things
argue for an effective price sup
port program.
But price supports. long con-
tinued. at high levels. serve to
build up heavy stocks. become
costly, and result in nlisallocation
Of resources. Thus they antagonize
those who would willingly support
more moderate program.
8. The farmers concern Is net
| income. not price alone.
With price supports at 80 per-
cent of parity and controls strict
~ applied. the volume of agri-
cultural production must be
sharply curtailed. Net income. not
price alone. is the concern Of
agriculture. Net income is affected
by volume and by costs as well
as price. Restricting output often
raises the cost per unit OF produc-
ton, and Of course reduces the
number of units sold Thus. while
price may be enhanced by the
strict controls necessary to obtain
80 per cent Of parity it does not
necessarily follow that net farm
income increases.
The appropriateness of parity
prices as a sole objective of farm
price-support programs is evil
denced by the fact that while
during the past 40 years farm
prices have fallen 8 per cent rela =
tive to nonfarm prices: per capita
net farm income has increased III
per cent relative to per capita in
comes of nonfarmers. Thus, since
1904 farmers have improved
their net income position relative
to nonfarmers. They did this by
turning out greater volume, and
by increasing their efficiency, and
in spite OF a relative decline in
prices.
10. Unwarranted SURPRISES incur
red today cause Ms to borrow
from tOm0rr0w'S market.
About 10 per cent OF the 1858
farm production wound UP in the
hands OF the Commodity Credit
Corporation. This increased farm
incomes for the 1853 crop.
But there will be another year
when these stocks must be re-
leased, unless we let them spoil
which is unthinkable, or give them
away, which in this strange world
is not only expensive but difficult
When these commodities are re-
leased they win add to the market
supply as much as they withdrew
from it this past year. Farmers
current incomes in the year of
disposal will be curtailed about as
much as they were helped in the
year OF acquisition.
Thus storing excessive Quanti-
ties of agricultural products serves
to increase farm incomes while the
accumulation occurs. But the
cycle should be completed before
fair Judgment can be rendered.
ii. High and rigid supports do
not permit needed adjust
ments.
1t is sometime argued that since
the legislation recommended by
the President would permit price
supports at 80 per cent Of parity
for basic commodities. the sup
ports might as we'll be fixed at
80 per cent by law.
There Is. however, great
difference.
The flexible program serves to
keep in the foreground the fact
that supplies must be held in line
with demand In order for price
supports to be at or near 80 per
cent of parity.
Ihere are numerous unforeseen
events which might occur.
The minimum acreage proyi-
sions for certain crops might be
raised by law.
Acreage allotments and market
ing quotas might not be invoked.
Yields might be extremely high.
Export markets might suddenly
be diminished.
Domestic outlets might be cur
tailed.
II supplies pile up as a conse-
quence of such circumstances. 1t
is important that there be an
opportunity for lowering the sup
port price to encourage consump-
ton, to reduce the incentive for