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    Publishing Information

    Farm Aid-Fourth Stage

    By Mordecai Ezekiel

    The Nation
    February 26, 1938
    Vol. 146, No. 9, p. 236-238

    Washington, February 21

  1. The federal government has already gone through three stages of positive action in dealing with the problem of farm production and prices: Farm Board price-stabilization purchases in 1930-32, AAA commodity-control programs in 1933-35, and the agricultural conservation program of 1936-37. The farm bill just passed initiates the fourth stage.

  2. The ever-normal granary is a dominant element in the new legislation. That concept, gradually evolved out of past experience with gluts and shortages, is a daring attempt to satisfy and protect both producers and consumers. For consumers, it encourages the establishment of reserve food supplies adequate to protect t against short crops due to drought or other natural causes. Pinched recently by high prices for hams, bacon, and other hog products, consumers realize the need for such assurance. Those high prices, the direct consequence of the destruction by drought of half the crops of corn and other feed grains in 1934 and 1936, show the need of heavier feed reserves to protect against weather hazards. To farm producers the ever-normal-granary plan offers a guaranty that even in years of bumper yields prices and incomes will not be driven to disastrous lows.

  3. To protect against future crop disasters, supplies at the end of the season will be built up to levels materially higher than in the past. Acreage allotments will be so adjusted that, with normal yields, carry-overs of wheat will run about 210 million bushels, as compared with an average of 140 million in the past. Carry-overs of corn will be increased by nearly 100 per cent. Meanwhile farm income will be maintained, despite the higher storage stocks, by benefit payments, commodity loans if prices are low and supplies are large, and parity payments. These last, however, will depend entirely on whether appropriations for them are made hereafter.

  4. Commercial producers of the several major crops will be given acreage allotments so calculated as to produce the supplies necessary to satisfy domestic and foreign demand and to provide carry-overs larger than the averages of the past. Producers who keep within these acreages, and who also carry out the soil-conservation practices that may be required, will receive benefit payments and be fully eligible for crop loans. But despite these acreage controls, bumper yields may produce crops larger than are anticipated, or carry-overs may prove to be larger than was expected when the acreages were allotted. If the current supplies are in such excess as to provide carryover reserves of some 250 million bushels of wheat or 400 million bushels of corn, then marketing quotas will be imposed. These quotas will restrict sales f r the season, with a penalty tax on sales in excess of individual quotas. Marketing quotas will become effective, however, only if two-thirds or more of the farmers to whom they will apply, voting in a referendum, favor them.

  5. The law also formalizes the procedure for extending crop loans to farmers. It materially reduces the administrative discretion in handling such loans, and specifies the amount of the loans under given conditions. Minimum loans to cooperating producers of wheat, cotton, and corn will be at not less than 52 per cent of the parity price. Under existing conditions this would tend to put a floor to farm prices of approximately 60 cents for wheat, 43 cents for corn, and 10 cents for cotton. Loans will not be made in any season when the price is above 75 per cent of parity, except in the case of corn, for which they may be made in any year, regardless of price, when the corn crop is estimated at more than a year's normal domestic requirements and exports. Loans will be available to non-cooperating farmers, but only at the flow level of 60 per cent of the loan rate to cooperators. No loans will be available for a commodity in any season when its supplies are so heavy that marketing quotas are proposed for it but are rejected by the farmers' vote.

  6. In actual operation, the program will not be devoid of difficulties, in essence it will tend to keep domestic market prices lower in years of small crops and higher in years of bumper crops than would otherwise be the case. In the case of corn this should tend also to hold live-stock production and prices within more stable limits. But for the export crops, especially cotton and wheat, complications may still follow. Holding our domestic price above the world market in years of large crops tends to check our own exports and to encourage expanded production elsewhere. (As a matter of fact, however, a large part of the increases of foreign cotton acreage has been in response to other factors, such as the low price of coffee or exchange depreciation abroad, which have no relation to our own cotton policies.) As an offset to this possibility, the pending legislation provides broader powers to "stimulate exports." Funds adequate to carry on a large export-dumping program, either in wheat or cotton, are not, however, provided; nor is there any assurance that exports could be subsidized on a large scale without leading to retaliatory action by foreign countries. If adjustment of production in this country were matched by concerted production adjustments in other countries, this difficulty would not arise. In a recent speech outlining his wheat policy, the Secretary of Agriculture expressed a willingness to revive the international wheat agreement, under which the leading wheat exporters had agreed to curtail production. Such action for cotton was once proposed by Egypt, but was never followed up. For this crop, for which our export market is still a major one, such an international agreement would be even more helpful than for wheat, but less progress has been made in that direction.

  7. The increased emphasis on adequate supplies meets the accusation of "scarcity economics" which in the past has often been leveled at the AAA. As a matter of fact, scarcity as such has never been an objective of New Deal farm policy. Rather "balance" has been the keynote, to obtain the proper proportion between the supplies of farm products and the domestic and export demand for them. This resolves itself down to maintaining the proper balance between the production of farm products and that of industrial products. Larger industrial production and increased consumer buying power for farm products will be welcomed by farmers, and the demand gladly supplied, but low industrial production cannot be remedied by glutting the existing markets for farm products. Viewed in this way, the whole AAA mechanism is a device to put farmers, who formerly operated under free competition, in a position of bargaining equality with modern industry, which operates under the economy of monopolistic competition.

  8. The soil-conservation features of the farm program are a protection to consumers even more than to farmers. If soil depletion went to the bitter end of inadequate supplies of farm products, the major burden would fall upon consumers. Food would have to be shipped to this country from the distant corners of the earth; expensive artificial fertilizers would have to be used far more extensively than now; food prices would shoot up. Such possibilities do not seem far-fetched to anyone who has visited the productive black-land area of Texas and seen the infertile white subsoil coming to the top on the upper slopes of all the gently rolling fields, or who on the fertile loess bluffs bordering the Mississippi, from Wisconsin to Arkansas, has seen the ravines and gullies cutting back deeper and deeper, and great sheets of soil washing off slopes above. Nation-wide surveys show that already 35 million acres of good land have been destroyed by gullying or other forms of erosion, while more than half the remainder of our farm lands is more or less advanced stages of top-soil destruction.

  9. In its intensive demonstration projects the Soil Conservation Service (previously the Soil Erosion Service) is showing dramatically what can be done to hold the soil in place and to increase its fertility. The AAA, in its general soil-conservation program, is trying to spread such practices generally among all farmers. The program demands that an adequate proportion of the land of each farm be devoted to soil-improving crops; that not too much be used for the inter-tilled crops which deplete the soil or accelerate erosion; and that such production practices as the use of winter cover crops, terracing, strip-cropping, and green-manure crops be adopted to build up the organic content and fertility of the soil. From the point of view of soil conservation, the chief question is whether the AAA and the Soil Conservation Service can move fast enough to save much of the good land that is still left.

  10. The new legislation, in many of its detailed provisions, provides for modifications of methods previously in use. Some of these changes may work well in practice; others may cause difficulties and require correction later. The marketing quotas, for example, in the case of tobacco, wheat, and rice are expressed in units of the commodity marketed, while for cotton they are expressed in terms of the actual yield of the given year on an allotted acreage. That would mean that in a year like 1937, when the crop is large solely because of unusually high yield per acre, the cotton marketing quota would have little effect upon the quantities marketed. On the other hand it might increase the effectiveness of the voluntary acreage control, since non-cooperators who greatly expanded cotton acreage would be penalized when selling the product of their excess acres if the sales quotas were in operation.

  11. The proposed stabilization of live-stock production through corn prices represents a new measure. Under the original AAA the voluntary contracts directly limited the production and marketing of hogs, as well as the acreage of corn. Under the soil-conservation programs of 1936 and 1937 there was no control of hogs, and control of corn was entirely voluntary. Under the new law the corn program will apply primarily to the commercial farms in regions of heavy corn production. In those areas there would be definite acreage limits on corn under the soil-conservation program, backed up by corn loans, and then by marketing quotas once the national granary was filled to the generous levels already mentioned. Three-quarters or more of our corn is fed on the farm where it is produced, and is marketed as hogs or cattle. Accordingly the "marketing quotas" for corn are to be enforced, not by penalizing corn sales, but by requiring that an appropriate share of the crop be withheld from the market. The stored corn would then be released for feeding or marketing in years of shortage. It is expected that this device will reduce the range of fluctuations in corn supplies and corn prices, and thus lead to more constant production of live stock and live-stock products. This recognized the fact once stated by a Southern Senator during farm-bill hearings, "Why, suh, a hawg is nothin' but cawn on foah laigs."

  12. The penalties imposed on sales above the quotas are of moderate proportions: 15 cents a bushel on corn and wheat, 2 cents a pound on cotton (or 3 cents a pound if marketed in a subsequent year), 1/4 cent a pound on rice, with relatively heavier penalties on tobacco. Whether the threat of these moderate penalties, plus the loss of the soil-conservation benefits and of most of the loan privileges, will be sufficient to lead most farmers to cooperate in the adjustment program and will thus be adequate to prevent continued excess production after the granaries are filled, is one of the questions which only operating experience can answer.

  13. In many other details the new legislation shows efforts to meet problems which have arisen in the past. An attempt is made to provide a flexible basis for allotments to individual farms instead of freezing them in the rigid mold of past averages. The early AAA programs calculated individual farm allotments directly upon the "historical base" of average acreages on each farm in the years preceding 1933. Farmers who had already reduced their production of export crops or who were following good farm management with low cash crop acreages often suffered severe injustices. The present legislation modifies this rigid system in various ways, including use of a moving average of past acreages for distribution among states and counties. New effort is made to protect small farmers by providing minimum acreage allotments for them, increasing the benefits payable to them, and exempting them from some of the marketing quotas. Likewise, beginning in 1939, the total benefits payable to any one individual, partnership, or estate in any one state are limited to $10,000.

  14. In part, the new legislation crystallizes into definite statutory form administration devices which have evolved under the broad authorizations of previous legislation; in part it provides new and more powerful mechanisms. Some of these new mechanisms may work as expected; others may reveal defects which will require farther modifications later on. The basic objectives of the new farm program remain much the same as under the current programs: to stabilize farmers' incomes; to assure consumers adequate supplies; and to protect both the farmers and consumers of the future by conserving our soil resources.