AGRICULTURE: The Heavy Overhang

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Ham & Eggs. The aspect of the farm problem that has been getting the most headlines in recent weeks has little direct relationship to the long-term basic trouble. The hog-price crisis is one of current supply and demand that may very well work its way to solution in less than a year. Last year hog prices were high (96% of parity) and feed prices were low, making hog-feeding attractive. Reacting to supply and demand at work, farmers increased hog production and sent to market a record-breaking run that pushed prices down 20%.

To ease the hog producers' pain, Secretary Benson last week began an $85 million Government pork-buying program. He will buy only high-grade pork, thereby hoping to encourage production of better quality; he will dispose of the pork into school lunches and other current Government food programs, to avoid adding to the glut of stored surpluses. Benson thinks that his plan will stop the drop in hog prices, but he does not believe that it will cause an increase. He expects the current price situation to encourage a reduction in farrowing, thereby cutting the supply of hogs and pulling prices back up by next fall.

Ezra Benson likes to work out farm problems by depending heavily on the farmers and the laws of supply and demand. He points to a recent experience in the poultry market as a good example. A year ago poultry production was high and prices were weak. The industry considered asking for Government intervention, but decided against it. Instead, producers voluntarily reduced their flocks. Result: poultry prices have improved substantially. In September poultry prices were 79% of parity v. 66% a year ago, eggs were up to 87% from 64%.

Because he thinks the laws of supply and demand can have a similar impact on all farm crops, Benson has an almost religious fervor for flexible price supports—higher supports when demand is near to supply, lower supports when there is a surplus. He has no intention of abandoning his plan, but last week, outside the Denver hospital room, he announced six proposed improvements he had outlined to the President earlier. Items: ¶An expanded program of cash payments to farmers to take land out of production of surplus crops and turn it to grass or to other conservation crops. This would have the triple effect of reducing acreage of surplus crops, improving the soil and putting some politically palliative money into farmers' not-so-fat purses. ¶A stepped-up program of surplus disposal, including expansion of exports, which might call for disregarding some State Department fears that unloading U.S. surplus crops abroad would disturb world markets.

¶Vigorous purchase programs to remove temporary market gluts wherever they occur, e.g., current pork-buying plan, thereby assisting farmers in adjusting to market demands.

¶Expansion of the rural redevelopment program for low-income farm families, including efforts to educate them for other occupations or to find ways in which they can supplement their income (farmers already get 30% of their income from nonfarm sources, e.g., industrial jobs or investments).

¶An increased research program aimed toward lower production costs, new crops, new markets and new uses for farm products.