AGRICULTURE: The Heavy Overhang

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As they slid from the 1951 peak, farmers have fared much better than they did after World War I. In the two years after the farm peak of that war, gross farm income dropped 41% and the net fell 60%. More than four years after the war-induced peak of the World War II-Korean War era, farmers are still better off than they were in the late 19303. In 1940, with a gross income of $11 billion and a net of $4.3 billion, the farm-parity ratio (balancing what the farmer sells against what he buys) was 81, and his share of the consumer dollar was 40¢. In the first ten months of 1955, with gross income of $32.6 billion and a net of $10.6 billion, the farmers had a parity ratio of 85 and 41¢ of the consumer dollar.

Too High & Too Long. While the farm situation does not add up to distress, hardly anyone is satisfied with it. The leading Democratic contenders for the presidency, Adlai Stevenson and Averell Harriman, have come out for a return to the old program of rigid price supports for basic farm products at 90% of parity. But few serious students of farm economics, ex politics, would accept that solution.

New Mexico's Democratic Senator Clinton Anderson, onetime (1945-48) U.S. Secretary of Agriculture, rejects high rigid supports completely, blames them for much of the current trouble, and thinks that the Eisenhower Administration's flexible (75% to 90%) support program "should have a longer trial." Louisiana Democrat Allen J. Ellender, chairman of the Senate Agriculture Committee, says that a return to 90% supports "would not stand a ghost of a chance to pass the Senate." Ezra Benson has a label for the old 90% plan: "a bankrupt program."

The policy of supporting farm prices at 90% of parity was inaugurated in 1942 to encourage maximum production of food to fill the wartime demand. In the present situation, the logical aim is exactly the opposite—to encourage less, not more production. The greatest drag on the farm economy in 1955 was created by 90% of parity, which encouraged too much production after war demand ended. The result was a $7 billion glut of farm products hanging over the market. When it was encouraging the building of these burdensome surpluses, the 90% parity plan did not keep prices up. All but 3% of the farm-income decline since 1951 occurred before January 1, 1955, while the high rigid supports were still in effect.

Today the real farm problem is over-storage, not overproduction. Despite a huge surplus-disposal program, the U.S. Government still holds 6,327,000 bales (a year's supply) of cotton, 913,000,000 bushels (a year's crop) of wheat, 657,703,000 bushels (three months' supply) of corn, and hoards of butter, cheese, dried milk, barley, beans, flaxseed, sorghum, oats, rice, rye, soybeans, honey, peanuts, tobacco, wool, winter cover crops, linseed oil, olive oil, tung-nut oil and whey. Except for these market-depressing surpluses, the consumption of U.S. farm products in 1955 would be only 1% less than production. Obviously, the real key to the farm trouble is to find more, better and faster methods of unloading the surpluses, not building more and more of them by going back to 90% of parity.