farm, and ran a highly capitalized farm business. A fair return to labor-a medium salary as manager with interest on accumulated capital-should make him a well paid farmer-businessman. But it did not.

Following the recent world-wide drought and food shortage American farmers became heros. For a brief time we were on a par with other good businessmen, earning for the first time a fair return to labor, management, and capital. But our government stepped in, embargoed grain, allowed George Meany to stop shipments, scrapped farm programs, and asked farmers to plant fence to fence with promises of profits for the expanded production. In learning to survive under cheap food policies, American farmers had become the world's most efficient producers of food and fiber, while American labor demands for more pay and less work had priced many American products out of markets. Farmers responded dramatically to requests for all-out farm production to provide foreign exchange to pay for oil; and farm products soon flowed to the far corners of the world at prices so low that few dollars came back to balance payments for oil controlled by cartel.

Thus excess dollars flowing out to pay for oil and other products accumulated in foreign hands and are now being used to buy American farm land. Farmers subsidized consumers for years and are now subsidizing the foreigners who are buying our land. That is why we are here-not to ask that land sales to foreigners be stopped. We might want to sell and they pay good prices. We are here to tell you that profitable farm prices will keep farm land in farmers hands; and to tell you that Government holds the key. Most farmers have little or no control over prices they pay or prices they receive.

In recent years farmers have operated in a harsh economic climate. We have learned to live with skyrocketing input costs. Half million dollar loans are common. Spending most of one's income for interest, taxes, and insurance has become a way of life for many. Inflation allowed bigger loans on land to replace lost income during the past four years when many farmers have been forced to sell crops and livestock at tremendous losses. Today USDA projects flat prices near or below cost of production on all grains and cotton through the next two years.

Senators, the moment of truth has come. Farmers can no longer produce food at today's prices. Something must be done now to improve prices for 1978 crops. Many farmers can not plant unless something happens-and please gentlemen— do not talk about more loans. Income is what we need. Some farmers who still have equity see no reason to plant at today's prices. A few are selling out from necessity or from choice. Several total liquidation auctions have been held in Middle Georgia recently. Many farmers are seriously considering lucrative offers from investors representing foreign interests. Gentlemen, bold action now to make farming profitable again will keep land in the hands of American farmers who still love to work and watch crops grow. When I walk outside my farm home late on a fall night I can sometimes hear several combines running. Usually the owner is in the seat. It is pride in ownership that makes us efficient.

Senator Talmadge, you are considering many good proposals which would raise farm income. We recommend one that can be implemented now. Pay farmers now for twenty-five percent setaside.

In closing I would remind you that cheap food for consumers is not what these foreign companies have in mind.

STATEMENT OF ELMO DUKE, JR., PLACIOS, TEX.

My name is Elmo Duke, Jr. I am a third generation Texan and farmer. I am 38 years old, married and have three children, one daughter and two sons ages 18, 17 and 15. I have farmed rice for 22 years and now farm rice, soybeans and maize. Farming is my life as it is my children's. All my children have been actively participating in the business since they were big enough to sit on a tractor and their feet touch the floor, about 8 years old. Both my sons are looking forward to the day they can fit in the groove they have been molding for themselves all these past years. My wife and I have worked hard and long hours side by side and we feel as other farmers and ranchers, their wives and families do that we need a better Farm Bill.

In the eyes of the American family farmer and rancher the new farm bill HR 7171 created by the 95th Congress in the 1st Session spells complete bankruptcy. According to statewide statistics in Texas alone over 2,000 farmers and

29-974 O 78 20

ranchers a year are going broke and leaving the farm. Every week I receive a notice of another farm auction-another farmer going broke-selling out. This is very disturbing to other farmers and ranchers because we believe in the effectiveness of family owned and operated farms and ranches.

I want to advise you of the facts that concern every rice producer in this continental United States. The 1977 rice crop sold at a fairly good price. The Washington Riceletter, Washington, D.C. predicts that close to 3 million acres of rice will be planted in the crop year 1978. This is considerably more acres than U.S.D.A. predictions of planting intentions of 2,482,000 acres. The 1977 production yield was 10% below normal crop yield and there was still sufficient rice produced. We are concerned about the 1975 rice in government storage, 19 million hundredweights that is hanging over today's market. If the sale of this rice depresses our market at harvest time, we will be in deep trouble. Our cost of production has risen sharply with inflationary prices. We feel that this cost of production per hundredweight should be put into the farm bill in the form of a government loan through Commodity Credit Corporation. All these factors alarm and concern all the 1978 producers.

You need to take a closer look at the voting results on marketing quotas in previous years. These results were 90-95% in favor of marketing quotas. Every grass-roots rice producer I have talked to is 100% for making the rice acreage planted in 1977 by a rice producer to be made compulsory for 1978. This would be a total acreage nationwide of 2,261,000 acres according to U.S.D.A. report of acreage planted in crop year 1977. This would possibly save the American taxpayers a huge sum of money which could equal the 1976 deficiency payments on rice of $128.2 million.

The urban consumer and taxpayer doesn't like the government paying these deficiency payments to the farmer. They call it a give-away. The urban consumer and the farmers are both going to relate their feelings at the polls. The American Agriculture Movement is going to vote for and elect senators and representatives and other public officials that vote favorably on a farm bill this year that will benefit the farmer. The officials that publicly and actively back the farmer will have the farmers' support at re-election time. Nationwide, according to Harris Survey, the urban consumer is sympathetic to the farmer and is willing to pay more for their food.

Voluntary set-aside will not work! It has got to be made mandatory nationwide. We cannot live with overproduction, high expenses and low prices for our products.

According to Washington Riceletter, P.L. 480, rice sales to Indonesia have been held up 5 months because of Carter's human rights' issue. We stand to lose this market and others if we keep holding back on rice sales because of human rights issues. There are other willing suppliers for Indonesia and other countries to turn to for this food source that they need now. Indonesia is a prime buyer at present and in future years. We cannot stand to lose these valuable markets. Secretary of Agriculture Bob Bergland said in his report to the Senate that farm assets rose $731 billion in 1977-a $60 billion gain in one year. The purported gain is affected by inflation and makes the paper value of farm land greater than actual value.

Secretary of Interior Cecil Andrus proposed a vast land reform plan. The big farms running into thousands of acres would be broken up by the government and sold off in 160 acre parcels to deserving applicants. The plan is startling-even shocking! For half a century the Department of Agriculture has been telling us that small family farms are no longer practical, that the bigger the farm the greater it's efficiency in producing food, grain and cattle. Secretary of Agriculture Bergland wrote Andrus that larger operating units may be necessary to provide a return to management and operator labor sufficient to maintain a viable farming operation. That is a fine line of gobbledegook. It means that a farm has to be bigger than 160 acres to pay off. But even Bergland seems quite willing to limit the size on any one family's holdings and he suggested that farm size should be held down by limiting leasing privileges to some specific number of acres. By what right does the Federal government force American landowners to sell their productive land?

In conclusion I want to present some concents that should be made and enacted into a farm bill immediately. They are the following:

1. Freeze or control rice acreage at 1977 acreage of 2,261,000 acres. Make this compulsory to every rice producer.

2. Corn, wheat, milo, soybeans and all small grain-cut 20% of the national acreage based on each farm number in the ASCS office files. If this fails to achieve 100% parity, cut production accordingly.

3. Decreases in crop acreages for following crop year be announced in June 1 of current crop year.

4. Increases in crop acreages announced by March 1 of current crop year. 5. Discontinue crop reporting service.

6. Say no to futures market on rice.

I close with these remarks. My income this year was far below what it should have been for the long hours-sweat-laying my life's work on the line-trusting in good weather conditions—to see me clear another year.

[From the Houston Post, Jan. 30, 1978]

AMERICANS SYMPATHIZE WITH FARMERS

By 80-13 percent, an overwhelming majority of Americans is in sympathy with the farmers who have taken to their tractors to protect falling farm incomes. Moreover, by 5 to 1 the public supports the basic demand of the farmers, which is to raise the prices of the crops they sell so that they would be based on 100 percent of parity. This would guarantee them a profit.

Of course, the acid test of such public backing is whether consumers would be willing to pay higher food prices to relieve the plight of the farmer. Over the past few years, Harris Surveys have consistently shown that, along with energy and health, more than 8 of every 10 Americans attribute their rising cost of living to the high cost of food.

Indeed, in this latest survey of 1,259 adults nationwide, when asked how worried they would be about their own food costs rising rapidly if farm prices were allowed to go up sharply, 35 percent said they were "greatly worried" and another 47 percent were "moderately worried."

Despite this, the public feels so strongly about the plight of the farmer that a 54-36 percent majority would be willing to have food prices rise by 5 percent in order to give farmers their parity goals. To be sure, when people were asked if they would be willing to see their food costs go up 10 percent, a 68-19 percent majority then said they would oppose the farmers' position.

But accepting a 5 percent rise in food costs is not insignificant. There are few occasions these days when Americans express a willingness to pay more for any product or service.

Part of the reason for this deeply-felt sympathy for the farmers can be traced to the fact that most people do not blame farmers for high food prices. By a lopsided 87-4 percent, a majority continues to agree with the charges of farm protest leaders that "food middlemen rather than the farmers are the ones who make most of the profits in food."

In many ways, these latest results are an unusual testimony to the fact that people do not behave strictly according to their own ecenomic self-interest. Farmers are now less than 4 percent of the population. More than 3 out of every 4 Americans live in an essentially urban setting. Yet is is apparent that most people do not view the question as a simple matter of producer vs. consumer interests.

This becomes clear in a more detailed analysis of the pivotal question dealing with people's willingness to see their food prices rise by 5 percent in order to give farmers 100 percent of parity in prices.

Among people who live in big cities. a 48-37 percent majority favors parity, even if it means a 5 percent rise in food costs. To be sure, rural residents support the move by a higher 60-33 percent. But the key fact is that in the big cities, the issue has not been cast as consumers against farm producers.

Among union members, a high 59-33 percent majority would be willing to pay 5 percent more in food costs to give farmers their price goals. It is evident that union labor is capable of identifying with the plight of farmers, despite the long history of farm and labor union organizations being at loggerheads on most issues in Congress.

The most affluent and educated groups are also most supportive of the protesting farmers' movement. Among the college-educated, a 57-34 percent majority is willing to pay 5 percent more for food costs, as is an even higher 62–29 percent majority of professionals. Among those with incomes of $25.000 and over, willingness to pay more to see parity given to the farmers reaches a high mark of 63–33 percent.

It is evident that the plight of farmers has become a matter of conscience to millions of Americans. And their depth of conviction is such that they are willing to affect their own economic status to see what they feel is just done for farmers.

[The following information was supplied by Mr. Hoffman and referred to on p. 87.]

200 acres 30 A s/a=170 A at 110 bushel 18,700 bu at $2.50/bu___ 46.750 Direct cost $78.60/AX170 A--

Balance

1

Fixed cost $133.25/AX200 A----

Net

13, 362

33, 388

26, 650

6, 738

1 Direct costs include fertilizer, lime, seed, chemicals, machine operating, drying and interest on operating capital.

2 Machinery and equipment, taxes, land maintenance, storage bins and land cost.

With 15 percent setaside combination of increased price and reduced cost increases income, $5,108.

No return to labor and management included.

STATEMENT OF BILLY M. DAVIS, LAUREL, MISS.

I am Billy M. Davis from Laurel, Miss. My family and I operate a 620 acre diversified family farm in the S.E. Miss. We run a small herd of Reg. Polled Herefords and have been Polld Hereford breders for over 25 years. We double crop all our row crop land with soybeans, milo, cowpeas, rye, oats and rye grass, most of which are produced for the commercial seed market. However, today I shall cover our third major enterprise.

We run 72,000 chickens for the broiler market under a contract for a major poultry producer. Our position as a contract grower/producer is not unique to the poultry industry. Produce, fruit, cattle, experimental animals, fish, even mold cultures are being produced by this type farmer. He is no longer a unique individual; however, the unique thing about this farmer is he is rapidly becoming a victim of conglomerate corporate holdings that use the contracting corporation for "paper loss" tax features. My particular company is two companies removed from the holding company. Without undue belaboring of such a resultant problem to a quasi-captive contractor I would like to point out some realities within the industry and suggest some ways we as poultry growers feel you, our duly elected officials can possibly help us as to general conditions:

1. We furnish the land. buildings, equipment, labor and special management. The company furnishes the chicks. feed, medication, field assistance. processing and marketing, all of which are taken into account by the company in setting their wholesale price.

However, as you will note from the attached sample settlement the total cost per pound through the growing period is totaled to arrive at a cost per pound of 21.90 cents per pound to the catch point on this batch of chickens.

Including the grower's share, the cost per pound would be 24.40 per pound. The Chicago Board of Trade quotations this past week closed at 40 58 for iced broilers leaving 16.18 cents per pound to operate their processing, administration and marketing or 39.87 percent compared to the growers' share of 5.66%. At no point in the settlement statement of the contract agreement is there given considerations for the investment of the grower in facilities, overhead, or labor. Please

don't get the wrong idea; we do not advocate direct intervention in a contractual situation nor do we say the producers are all bad guys. We just desire to be a respected, qualified part of an end product of good quality poultry at a reasonable price to the consumer.

The settlement statement does not reflect the following:

(a) 36,000 chicks occupying two 40'×360' insulated, single level, high wall broiler houses built one year ago at a cost of $40,000.00 each, equipped. Today these two houses identically equipped would cost over $46,000.00 just in material and equipment. This represents 83% increase over the cost of the same building and 163% on equipment over just 3 years ago. Comparitively our per pound receipt over the same period was an 11.5% increase. Refer to appendix #2 for my growers share of the cost of production.

(b) We are unable to obtain long term FHA financing on these houses due to low limits of loans, absence of return to investment, and low evaluation on realty by FHA (31 percent of the going farm price per acre in our area not including any value to improvements, which they disregard). We were forced to obtain 10 percent money after 6 months of negotiating and obtaining a surety letter from our producers. This was difficult to do since we clearly met the no credit elsewhere provision under FHA guidelines. Therefore, it takes the production of all four of our houses to meet the quarterly payments of $4,950 with a grow out average income gross of $6,081.88 or $1,131.88 gross usable income after debt retirement on facilities. Even without debt retirement it would be difficult to make a living on this income when proper accounting techniques are applied to resultant income.

2. The retailers, particularly the chain food stores, habitually use poultry as a loss leader to draw customers. This is well and good from the retailers standpoint; however, it has a depressing effect on our producers when we see normal retail prices of 59 cents to 68 cents chopped to 39 to 43 which are equal to C. B. T. wholesale price. The resultant effect is pressure on the grower for a more desirable feed conversion rate. However, the grower can only intensify his management since he has no control over quality of birds, feed. medication or prior to delivery environmental exposure of baby chicks. Pressure to change facilities, configuration, management techniques and labor application are tremendous.

3. The removal of many of the desirable drugs for growth and feed efficiency by Federal agencies based upon insufficient research and ridiculous hypothesis have forced our producers to search for a highly hybridized bird with growthiness and resistance to a vase gamit of diseases. This is an impossible task with cost squeeze from above (wholesale-retail) and below (cost of production). Many of the geneticist I have talked with term this genetic suicide.

4. The pressure of conglomerates for paper losses have held independent producers in line on price as well as keeping the industry impacted with surplus production. The producers have held this surplus over the head of growers for years. I do not feel this is an overt attempt to keep us in line, yet, the result of frustrations of corporate components to excell in economical production with the "don't try too hard attitude" of the once removed corporate holding firm to keep the tax advantage status. Growers are naturally afraid to speak out knowing they can be manipulated into an undesirable position by employees of their producers with subjective criticism of management or even more severe techniques can be applied to force them out or cut them off for speaking up. This is deplorable when growers generally desire their producers to monitarily succeed. If, however, we are cut off for any reason, we are generally unable to get contracts with other companies because of the cut off, justified or not (blackball).

Contractors in general business get their prices by determining their cost of production and considering general trade practices. This price is usually a bid or stated value. To utilize their service one must pay the agreed price.

However, this is not so in contract farming. The price is set by the company desiring the services of a grower. The price is based upon the margin they desire to deplete their net usable income considering their needs of the service, just reverse the normal accepted practice in business and industry. This system has no consideration for the cost of production the grower must endure. In a general depressed farm economy, farmers traditionally seek increased volume of production and, or, more regularity in cash flow, both at the expense of their equity with an ever increasing debt limit. The contract farmer in the United States has become a depressed, landed tenant with no imput into his destiny. Therefore, I would request the following suggestions be considered:

1. Revision of our Internal Revenue codes to eliminate tax losses across corporate bodies within a conglomerate structure. Further, any individual, partnership or corperation which earns more than half its income from an actual farm