U.S. bakers on Thursday had asked the Price Board to grant them increases in the retail price of bread, claiming that export sales have reduced the domestic supply and have driven up wheat prices. The bakers wanted a 1-cent to 3-centa-loaf increase.

The action taken by the Agriculture Department yesterday changes the subsidy program for wheat exports. The department will no longer guarantee U.S. exporters a sliding scale of subsidies that pays the difference between the domestic and the lower world price.

Since July, when the United States and the Soviet Union reached a wheat sale credit agreement, exporters have sold the Soviet Union an estimated 400,000 bushels of wheat-about one-fourth the total American crop.

In the same period, the domestic price of wheat has climbed from about $1.50 per bushel to more than $2.

"The action (limiting subsidies to exporters) is being taken to maintain ample supplies of wheat at reasonable prices for domestic consumers," USDA said in a statement.

Carrol Brunthaver, assistant secretary of agriculture for foreign trade, said the new policy on export subsidies was not aimed at reduced domestic wheat prices, but might prevent further price rises. If the new policy causes exporters to sell less wheat, he said, more will be available in the U.S. market, thereby lessening the push toward higher prices. . . .

The administration's dilemma has been that it is pleased with what the Soviet grain deal has done for our diplomacy, for balance of payments and for farmers, but now is concerned about the effect on consumer bread prices.

"The bakers are very disturbed about price increases, yet the price increase to farmers has not been unfair, so we have to walk a fine line." Brunthaver said yesterday, in explaining the new policy to exporters.

[From the Journal of Commerce, Aug. 28, 1972]

BAKERS SEEK BREAD PRICE INCREASE

WASHINGTON, Aug. 27 (UPI)-Blaming the sale of 400 million bushels of U.S. wheat to Russia, the baking industry has requested government authorization for an immediate, across-the-board hike in bread prices.

The American Bakers Assn. said Thursday that rising flour costs-averaging two-thirds of a cent per loaf-have placed in jeopardy the profits of hundreds of bakeries.

ABA General Counsel, Joseph M. Creed, in a letter to Director Donald Rumsfeld of the Cost of Living Council, requested a compensatory price boost to recoup higher flour costs. Mr. Creed said the increase should be authorized across the board, without the usual need for individual applications by large companies. Mr. Creed said he also requested permission for increases by firms which would normally be blocked from such action by limitations on profit margins.

This action is needed, Mr. Creed said, because of local competitive conditions. He explained that if one baker in a local market was unable to raise prices because of profit controls, his competitors who may have sub-par profits will be forced to keep their prices down and suffer losses.

[From the Minneapolis Tribune, Oct. 11, 1975]

RECORD CROPS SEEN; POLAND TO GET GRAIN

New grain sales to Poland were approved Friday by President Ford following a new Agriculture Department estimate showing that American farmers are harvesting record crops of corn and wheat this year.

The department's Crop Reporting Board said corn production is expected to total 5.74 billion bushels, up 23 percent from 1974's harvest and 1 percent more than indicated a month ago.

A record wheat crop of almost 2.14 billion bushels also was indicated, up 19 percent from last year. The new estimate, based on Oct. 1 surveys, was up slightly from the September forecast.

Soybean production was estimated at 1.47 billion bushels, up 19 percent from last year and 2 percent more than the September forecast.

(In Minnesota, the corn crop estimate was lowered to 411.8 million bushels, compared with the Sept. estimate of 445 million bushels and the Aug. 1 estimate of 502 million bushels.

(The drop represents increasing evidence that late summer rain was insufficient to revive parched corn in much of southwestern and central Minnesota.

(The soybean crop, however, is expected to yield 91.8 million bushels, up from 88.1 million estimated a month ago.)

As livestock feed, corn and soybeans are key suppliers for producing meat, poultry and dairy products for American consumers. They also are prime commodities in the export market.

Sales to Poland and the Soviet Union were halted this summer after purchases of U.S. grain soared, causing fears that American consumers might see another round of skyrocketing food prices.

Ford said in Detroit that negotiations are continuing with both nations on a long-term agreement. But the embargo on further grain sales to the Soviet Union remains in effect although it is under study.

Asked why the embargo on sales to the Russians remains in effect, Ford said there is a "very simple explanation." The United States wants a long-term agreement with the Soviet Union while the Russians want grain now, he said. He called it "a matter of good old Yankee trader action to block immediate sales until securing a long-term contract."

PRICES RECEIVED BY FARMERS AND PARITY COMPARISONS, UNITED STATES, ALL CATTLE (U.S. PRICE DATA) 700 LB AND OVER

Note: 1973 was the high record for cattle prices from 1933 to 1973. Cattle were full parity (100 percent). Imports the highest on record, 2,020,000,000 lb, carcas weight. However the total slaughter of all cattle was 33,687,000,000, over 2,000,000 less than in 1972, while consumption per person went down from 116.1 lb to 109.6 lb.

Source: USDA Statistical Reporting Service.

U.S. LIVESTOCK PRODUCT EXPORTS EXCEED IMPORTS AGAIN IN OCTOBER

U.S. exports of livestock, meat, and meat products topped imports by $40.1 million in October, bringing the net surplus of trade in these products for the first 10 months of 1977 to $233.3 million.

U.S. exports of these products fell to $162.5 million in October, 8 percent below those of October 1976. Although exports of tallow and greases were larger, lower shipments of hides and skins, and pork pulled the October total down. Imports in October dropped 22 percent below the year-earlier levels to $122.4 million, primarily because of the dock strike against containerized freight. The items most affected by the strike were imports of beef, which dropped 31 percent in October below those of October 1976, and those of pork, which dropped 27 percent.

STATEMENT OF HOMER AYRES, STURGIS, S. Dak.

My name is Homer Ayres, I live in Sturgis, South Dakota. I am nearly 79 years old. I began ranching when I was 18 years of age on the North Moreau river near Zeona. I had many friends among the original settlers, who were the cowboys for the big cattle companies, and later ranched for themselves. Our family ran cattle and sheep and also saddle-bred horses. We existed through the 1920's when many ranchers were being foreclosed due to the deflation policy of the big-city banks. Over half of the state's banks folded, along with the ranchers and farmers. Those who didn't go broke were the ones too poor to borrow money and survived on very little.

I also ranched in the 1930's during the depression and the drought that lasted for many years. I feel qualified to speak on the problems of ranchers, because I have not only been a rancher but have written about the problem for many years, from about 1946, or before.

I take the position that the number one factor in the problem is the fact that farmers and ranchers are producers of food, which is a necessity for maintaining human life and can't be purchased at any second-hand store, like clothing, cars, and certain kinds of housing material.

The number two factor in the problem is that it is necessary that farmers keep on producing this food, because food production is a national, social and economic problem. Therefore it is the obligation of society to make up the difference to agricultural producers between what they receive for their products at the marketplace and what is necessary for them to keep operating, which consists of all operational costs, taxes, interested on the investment, depreciation, labor for hired people and family labor. Otherwise the farmers and ranchers are underwriting a part of the food bill by having money lending institutions make up their deficits.

The great depression of the 1930's brought to a head the basic contradiction in agriculture, when farm commodity prices were tied to complete collapse of the economy, and a truck load of grain would only pay for a grease gun for the tractor, and commission companies sent bills to livestock shippers because the stock didn't pay the railroad freight.

The whole of Congress, the Roosevelt Administration, and all of the farm organizations came to recognize this contradiction, and enacted the farm legislation based on the concept that from then on the prices of farm commodities should be related to their production costs as they existed in the period from 1909 to 1914, a period said at the time to be "fair" to farmers, or "parity." This was a break from the concept that had existed all through the many years that farm prices were determined by a law, known as the "law of supply and demand".

However at this very time certain economic forces were proposing the destructive scheme to eliminate the smaller agricultural units to keep healthy the larger ones to the tune of about half to two-thirds or the then six million units. This elimination process has prevailed since the 1930's with various degrees of speed. The so-called farm legislation each session seemed to be a result of the differences in method by which the "boys would be weeded out to save the men." The slogan was offered to the whole nation that farmers had to get big or get OUT. Those who were big watched the smaller ones go with the same vision that is portrayed when men in a small boat see a spurting hole come in one end. The ones in the end away from the hole smile because the hole is NOT in their end. Ranchers come to me and say: "the men are being weeded out now, not just the boys."

Thus for all practical purposes the advocates of a market oriented farm economy have taken the whole farm economy back to the days of the feudal “law of supply and demand." The outcome will be that in the not too distant future agriculture will be in the hands of concerns as powerful as the big energy companies, with power to lift prices comparable to coffee, or higher, so the stockholders can secure as large dividends as any other big corporation or conglomerate, either with price fixing or federal grants or both.

To tie farm prices to unemployment figures, to grain needs in foreign countries, to starving millions who can't pay for food themselves, and have to have their governments buy food to keep them alive, is certainly devastating to the U.S. producers who have fixed operating costs. To great U.S. production, and the prices of this production to our foreign policy and the need for foreign exchange for oils is unworkable, even if it helps the makers of gas guzzling cars sell their luxury wagons, as is demonstrated today when the big wheat crops are way below cost of production on the market.

A sane society should, and perhaps would, insure its continued food production by setting the agricultural end of the economy out, so to speak, and deal with in a special manner so it will be in the hands of many, instead of a few, and enact the necessary laws to pay all costs of production, depreciation, taxes, labor, and even management. I reject any plan that will simply be NEARLY enough, as today, historically, we have come to the point where there is nobody to make up the deficit when the farmers and ranchers do not get enough to keep operating. What I have suggested is in the interest of city consumers as much as the country producers. They should know this when they buy coffee and pay gas bills. But any program to shrink food production to a scarcity level to elevate farm prices to the prosperity point for farmers would make most food a luxury item for all except the wealthy, while the poor would be reduced to the place that where robbery would be considered as the way to feed the family.

The record today is very clear that in food processing and in retailing there is a tremendous "rip-off." In the recent antitrust case tried in a California federal court the jury found that the chain stores, conspired to fix cattle prices that damaged the cattlemen twenty cents a pound on all cattle sold in the United States from 1964 to the time the suit was filed in 1968. In this historic case, Bray vs. A&P, according to the Judge's decision, which is now law, the National Association of Food Chains organized secret meetings in which the representatives of the chains were identified only color badges, and discussed methods of fixing prices. This rip-off amounted to $200 on a 1000-pound animal. As the Judge's decision is now the law of the land, I would think it is now the duty of the Congress to make sure the violators of the antitrust laws were brought to court on criminal charges. All such rip-offs should be searched out, exposed and punished. At present the retail price spread, which is the difference between what the retailer pays for carcass beef, when it is bought from the packer, and that received from the consumer, is $240 per 600-pound carcass, the highest in history. In the December report published by M. J. Hankins, a Stanton, Nebraska cattle feeder, who has kept price spread records for years says: "The chains and the packers have been charging us about $300 per head for handling the beef from an 1100 pound steer. Local locker plants will do essentially the same work for about $100. Retail price spread has increased nearly $50 per head this year over 1975." When the report was written beef cattle were selling at only 55 percent of parity.

I am well aware that there will be opposition in some places to any sort of federal farm-ranch program, especially from certain cattlemen and their organization. They say "we don't want the government telling us what to do. We want to make it on our own." But any examination of the facts refutes this idea. It takes 30 to 40 acres of $100 an acre land to run a cow-calf unit in this area, at least. The interest on the land will not covered by the returns on calf crop, to say nothing of taxes, depreciation, and other operating costs. No young person can even begin to ranch nowadays unless he has a gift of about $250,000. But if he had this much he would not need a ranch.

I am enclosing a copy of a letter I wrote to the Rusmore News, in Sturgis, S.D. which I wish to include with my testimony. The facts were taken from the Billings. Montana WESTERN LIVESTOCK REPORTER, dated April 6, 1972, first published by the USDA in a supplement to the January MARKETING AND TRANSPORTATION SITUATION.

I wish to thank Senator McGovern for his suggestion that I submit my testimony in writing to him, in as much as it is not possible for me to attend the hearings the committee will hold in Sioux Falls, S.D., February 26, 1977.

Organized trade unionists, federal, state, county and city employees receive wage and salary increases, some written into wage contracts tied to cost of living, which help as inflation catches up with them and threatens their ability to make a living. No such thing exists for farmers and workers as the inflation outruns the prices of agricultural products in the form of ever increasing equipment prices, taxes, interest, and land values. It is thus necessary for society, through the government, to make up the difference between what farmers and ranchers get in the marketplace and full parity prices, prices that will enable them to continue ranching and farming and not be forced into bankruptcy.

Amendment 2. I oppose restrictions on the importation of manufacturing beef, or live cattle, as a means to boost prices on feeder calves and yearlings by boosting the price of choice slaughter, through boosting the price of manufacturing beef bought mainly by low income families. 1. The United States exports more dollar's worth of livestock products today than it imports, the measure has little chance of passing Congress, and is part of the world-wide, and much feared protectionist movement. Further it ill-behooves any country that exports many times more agricultural commodities than it imports to make restrictions on food eaten by the poor and low income people, using a Rube Goldberg theory that reduced amounts of beef from lean cows and bulls will in some manner raise prices in Sturgis and St. Onge on well-bred feeder calves and yearlings that are converted into U.S. Choice slaughter beef.

STATEMENT OF T. A. CUNNINGHAM, PRESIDENT, INDEPENDENT CATTLEMEN'S ASSOCIATION OF TEXAS, AUSTIN, TEX.

Members of the Committee, it is with pleasure that I once again appear before you on behalf of the Independent Cattlemen's Association of Texas. Over the past three years I have appeared before you numerous times to express the position of this association and to ask for your help for the cattle industry. I am aware that the members of this committee have put a great deal of effort into helping the people in agriculture.

When this organization was founded in 1974, during a great depression in the livestock industry, we went to all people in agriculture to seek their help. We preached time and time again that agriculture is one family and that if one member of the family finds itself in such a depression, than the whole family would soon find itself in the same situation.

Today we regret to see that agriculture as a family is experiencing the worst depression in recent history.

The farm problem is not only a farm problem. The farm problem is not only a farmer's problem. The farm problem is a national problem. A nation can maintain its greatness only as long as it can compete in the world market with a raw product produced by its own industry. For years the raw materials produced on the farms and ranches of this nation have managed to balance trade until now. There is no way of telling how many dollars have been lost in trade to the ridiculously low prices placed on our agricultural products. Foreign nations do not buy our products because our products are cheaper. They buy our products because they need them.

We are the only nation that buys products we do not need, such as beef. Over the past weeks many ranchers and farmers have traveled here to Washington to express to you and your colleagues their need for some sort of assistance. Their solution, a guaranteed 100 per cent parity, may not be in the realm of possibilities. It is sad that these people have been pressed to the point that they must come here to demand what is rightfully theirs a fair return on their investment. It is even sadder that the government has let the finest agriculture in the world reach a state of bankruptcy.

The people in agriculture are, in essence, asking that the policies of the government be changed from a cheap food policy to a fair food policy. In curbing inflation, government policies have sacrificed the agricultural sector of the nation. Prices received by the farmer have been held down while at the same time the farmers' costs have risen at an alarming rate.

Inflation is much like a body of water. It flows toward the least resistance. So few of us constitute such a small segment of the total United States population. Just more than 3 per cent of the total population provide food and fiber for 215 million people in the United States alone.