(e) $1.48 minus the difference from 20¢ storage and terminal storage rates of 25¢ for 3 years (15¢) = $1.33. = (f) $1.33 minus freight to terminal storage (15 cents) $1.18. See page 5. (g) Taking into account the policy the Secretary of Agriculture has set by using the "minimum of loan" in the law at $2.25 and stocks ending of 1977, production for 1978, and possible ending stocks of 900 million bushels each year. The base loan figure of the 1977 Farm Bill is $2 within 3 years. (h) Using the Secretary's "minimum of the law policy," 140% is the release figure of the current loan; even after the producer has reduced production 3 years. Therefore, after 3 years, 140 percent of $2 (then achieved loan) $2.80 release price. = (i) $2.80 release price less interest (53 cents), less freight (15 cents), less additional storage (15 cents), less $2.01 principle of the loan, spells out a 4 cent loss to pay the note back which amounts to $1.97 wheat or turning it over to the C.C.C. Let me point out to you that Oklahoma State University is the Land Grant College of the Federal Government for my area of the United States. The economists there tell us our cost of production for our area should be and is $3.78 a bushel. I ask the question, if their figures and my cost of production figures agree closely with theirs; then who is right Okla. State University, Elbert Urban or the 1977 Farm Bill with a $3 target price on 80 percent of what a producer harvests, which with a 20 percent set aside equals 64 percent of $3 or the truth again $1.92 wheat? I think that when this House Agriculture Committee honestly answers the questions I have raised; you and the rest of the U.S. Government will start doing some fast swimming trying to alleviate this great ill of our society. I wish to make this short statement of policy before I introduce my remedy. I'm for modern day free enterprise. I'm for modern day business atmosphere. I am not for solitary confinement in poverty of the American Farmer. So as a statement of policy we need to design a farm program which fulfills the two basic desires-modern day enterprise and a modern day business atmosphere. 1. The Congress of the U.S. immediately implement the principals and objectives of the National Association of Wheat Grower's Legislative recommendations: HIGHLIGHTS OF NAWG POLICY FOR 1978 The following is a review of policy resolutions developed and adopted by grower delegates to the 28th annual meeting of the NAWG: Loan Rate.-National loan rate of no less than 60 percent of parity ($3.03) which should be a net loan and not be reduced by storage costs. Extended Loan Program.-Producer option to start with current crop year for annual renewable contracts from 1-5 years; a storage rate no less than 25¢ per bushel; waiver of interest charges; release levels by classes of wheat. Commodity Credit.-CCC release at no less than 18% of current loan level or 100 percent of parity, whichever is lower; immediate reinstatement of one-year reseal provisions on maturing loans if adequate changes are not made in extended loan program. Target Price.-Enactment of legislation setting targets at no less than 80 percent of parity ($4.04). Facility Loans.-To be based on 5 years production, loan limit increased to $100,000 for period of 10 years at no more than 5 percent interest. Set-Asides.-Imposition of a minimum 20 percent set-aside in any year that the previous carryover is more than 4% percent of current world consumption; maximum 55 percent of acreage out of production; compulsory cross compliance and improvements in off setting compliance between farms. Resource Adjustment.-Immediate implementation of resource adjustment authority in 1977 Farm Act to help producers regain the cost of production lost maintaining 1978 set-aside acres. Land Division Payments.—To be implemented immediately if 1978 planting intentions reports indicate the voluntary set-aside program will not cut 1978 production by 20 percent; immediate implementation of the "Special Grazing and Haying Program." Disaster Program.-Enactment of legislation moving trigger for disaster benefits to two-thirds of normal yield at rate of 50 percent of target price for 1978 and 1979; all risk crop insurance and disaster program effective with the 1980 crop year. International Wheat Agreement.-Support for a new IWA with minimum corridor price at F.O.B. equivalent of target price and the maximum at a level permitting U.S. producers to receive at least 100 percent of parity. Public Law 480.-Continued strong support for Public Law 480 with emphasis on malnutrition and food needs rather than human right. Market Development.-Support for doubling of funding for USDA Foreign Agricultural Service and foreign wheat market development cooperators. Trade Expansion.-Endorsement of Humphrey-Findley Bill for expanded credits and increased U.S. agricultural exports. 2. Conservation of Natural and Economic Resources of American Agriculture. American Agriculture in the U.S. is the only business in the world that can be described as an accumulation of manufacturing plants without a sales and promotion division. Our Constitution in the beginning guaranteed man only equality under the law. But, somehow, this is not so today. As the 1977 Farm Bill and all previous farm legislation has allowed some farmers to produce and pay nothing for sales and promotion while other farmers are producing and not only paying for the sales and promotion for their production but for the sales and promotion of these other producers. Consequently, a law must be passed to insure the conservation of the natural and economic resources of the U.S. and the farmer must have equality under the law. Example: If one producer pays for sales and promotion, they all pay the same or we don't pay at all. If one producer has a limit of production, we all have the same limit. This law must prescribe the following: 1. Each commodity will have its own sales and promotion; the structure will be: Example: U.S. Wheat, Incorporated. The Board of Directors will be each States' President, the Chairman of the Board will be elected by the States' Presidents, each state will have a vote commensurate to the production of his state. Each state will have county leaders who are elected by popular vote of producers. The State President will be one of these leaders and will be elected by the county leaders. Each county will have voting power according to that county's crop production. Voting on the county level will be by using the same method we use to elect our County Committeemen for A.C.S. The A.C.S. office will oversee this election. The Chairperson of Wheat, Inc. will sit on a collective Board of American Agriculture's Commodities. This Board will elect the Spokesperson for American Agriculture. This Spokesperson will be heard at all times by the U.S.D.A. 2. Permits to produce must be sold to obtain funds to pay for sales and promotion. This will be viewed by the producers as a check-off and will be a guarantee against conglomerate farming as a limit will be set on the bushel and acreage permits any one group or individual can buy. In other words, the permit will specify quantity and quality. Therefore, no one will produce or sell any commodity without a permit. A producer will specify his major commodity and must use the greater percent each crop year. Permits issued must comply with a healthy, viable interrelationship of commodities. No permits will be sold to anyone producing on land or lands having foreign ownership or a link to foreign ownership. 3. Each commodity will have the right to limit its production using a simple formula set by law to insure a favorable supply-demand situation; plus sufficient production to insure an ample supply of food for the American people. Also, the U.S. producer will comply with any fair International Reserve programs that the U.S. may enter into. 4. Each commodity will be allowed to promote contracts of future sales with guarantees there will be no intervention. The producer will be paid no less than 100 percent of parity of price index at the time of shipment from the U.S. if intervention occurs. 5. The Boards of Trade will create an U.S. physical supply trade market. Example: If the producers of the U.S. have sold 3 billion bushels, only 3 billion bushels worth of contracts will be traded. If 1 billion bushels are sold for consumption or shipment in world trade, then only 2 billion will be traded till new wheat enters the market. A producer's bushel of wheat is not traded until he puts it on the market and sells. Then it can be traded. 6. Imports: a guideline of limitations which will have to comply with a healthy and viable U.S. Agriculture. In conclusion, it has not been my intent to be abrasive or rude to anyone. I have presented a family farmer's physical involvement with the past and present Farm Bills. I believe that I have asked pertinent questions that must be answered only by using the well being of the U.S. as a directory. It must be realized the producers of American Agriculture are not victims of the free enterprise system; but, are victims of a mixed economy. The producer has no control of the elements of a mixed economy. The government cannot conglomerate itself to regain control because it was not meant to have control in the first place. Therefore, the concept introduced here today has great merit as a means to regain parity for the American Farmer. RESERVE PROGRAM The guidelines of the Reserve Program allows the producer an opportunity to hold and own his production. If the U.S. projected goal of 350 million bushels in the Reserve Program is not met then C.C.C. will purchase stocks until the announced goal is attained. The Facility Loan Program gives the producer an opportunity to construct storage facilities so he may take advantage of the policy of the farmer holding and owning his own production. Let me ask-Do we have the free enterprise system when the producer does not have the right to produce, store, and market his product to his best interest? Why does a producer who wishes to relocate his farm stored grain to commercial terminal storage of his choice and in his best financial interest have to pay for the transportation to the terminal storage, when elevator stored grain is eligible for C.C.C. loan to the producer to pay for the movement of his grain to terminal storage? Example: Producer A moves his farm stored grain to his local elevator, then he is allowed to borrow the freight rate from C.C.C. to move the grain to the commercial terminal storage facility with which the local elevator is affiliated. But, when Producer B moves his farm stored grain direct to a terminal storage facility of his choice and in his best interest financially; he cannot borrow the freight from C.C.C. FARMERS FINANCIAL LOSS AS DESIGNED BY THE 1977 FARM BILL Steps for a farmer to produce himself a loss and financially his best option to take under the 1977 farm law: 1. 100 acres cultivated land. 2. 100 acres wheat planted and harvested in 1975, 1976, and 1977. 3. 100 acres planted in 1977 for 1978 harvest. 4. above prescribes 100 acres of normal crop acres (NCA). 5. 16.7 acres set-aside (100 NCA ÷ 6) 6. 100 acres minus 16.7 acres set-aside equals 83.3 acres harvested 9. 80 acres times 32 bushel yield equals 2,560 bushels 10. 2560 bushels times 98 cents target price payment equals $2,508.80 ($2.25 government loan minus 10 percent equals $2.02 loan. $3 target price minus $2.02 equals 98 cent target price payment.) National average price of wheat must maintain above 105 percent of loan, if not the Secretary of Agriculture will reduce the government loan (income support) no more than 10 percent. Facts are: there will be 1.2 billion bushels carry over wheat stocks June 1, 1979. 300 million is the limit set by the Secretary to be in the reserve program. Therefore, the market place is looking at 900 million bushels available to the market. 11. $1.78 income support per bushel ($2.02 loan minus 3 cents fees and charges minus 20 cents storage minus 1 cent adjustment) 12. 83.3 acres harvested times 32 bushel average yield equals 2665.6 bushels produced 13. 2665.6 bushels produced times $1.78 income support loan equals $4744.76 14. Gross income: Support loan___. Target price payment.. Total gross income__ -- $4,744. 76 +2,508. SO 7, 253, 56 15. $7,253.56 gross income 83.3 acres harvested equals $87.07 per acre gross by taking government loan 16. Land owners share or rent to let the farmer use the land is one-third of crop ($29.02 rent per acre) one-third of fertilizer and spraying still will be deducted from $29.02 (varies from $6 to $9 per acre.) 17. 16.7 acres cultivating expense to maintain set-aside acres equals $1,619.23 ($3.78 average cost of production according to Oklahoma State University, Stillwater, Okla. A land grant college of the U.S. Government. $3.78 times 32 bushel average yield equals $120.96 per acre (less combining $12.00 and fertilizer $12.00 equals $96.96 per acre expense times 16.7 acres set-aside equals $1,619.23) 18. $3.78 cost of production times 32 bushel average yield times 83.3 acres harvested equals $10.075.96. Several weeks ago we printed an interview with Sir Leslie Price, chairman of the Australian Wheat Board in which he maintained that the U.S. controlled the world price of wheat. Price wondered why the U.S. insisted on selling wheat below other countries at the expense of not only American farmers, but other countries who have wheat to sell. Following is a statement by Robert G. Lewis, chief economist, National Farmers Union, Washington, which supports Price's position. Read on : "American farmers are getting the lowest prices for their products of any farmers in the world, and the Carter Administration seems determined to keep them at the bottom of the economic totem pole. "The Farmers Union has made an intensive study of prices received by farmers throughout the world. Available information from the Food and Agriculture Organization of the United Nations, the International Wheat Council, and the U.S. Department of Agriculture all show U.S. farmers at the bottom rung of farm prices. "Wheat prices guaranteed to farmers by 34 countries' governments as reported by IWC is a fair example that wheat-the staff of life reflects prices of grain generally in most countries. Grains account for about 75 percent of the total human food supply, either directly as food or indirectly as meat, milk, eggs, and poultry. Therefore, the price of wheat is a good indication of the prices farmers generally get. "The top wheat price guarantee is in Japan, at $10.91 a bushel, followed by Switzerland at $10.52, compared to only $2.29 in the U.S. Only Argentina-at $2.25-ranked below the U.S. in 1976-7. It was also lower in 1975-6, but far higher in the two years before that. That small country, like Canada and Australia, cannot buck the mighty weight of the world clearance price set by the U.S. price support loan rate," Lewis said. "Every other country in the world strives to give to its farmers prices that will provide an approximation of parity with other citizens. Exactly half of them guarantee wheat prices higher than the 90 percent parity loan rate that the Farmers Union recommends as the "floor" in its proposals for 'Parity for Abundance.' "American Farmers' prices are close to the lowest level in our own history too. Prices received by farmers in 1977 averaged only 67 percent of parity, lowest in purchasing power of any year except 1931 and 1932. In January 1978 prices were down to only 65 percent of parity. "It makes Uncle Sam look like the world champion cheapskate when it comes to paying farmers for food. "Why? They give us a whole string of excuses: If we raised the price support loan rates we might ‘price ourselves out of the market', they say. "The truth is we are pricing our grain under the market. Every country that imports our grain-rich and poor alike-puts a tax on it at the border to raise the price to what their own farmers get. The European Community levied a tax of $3.56 a bushel on imported wheat, $2.94 on corn, and $3.18 on sorghum last week. The Japanese government makes nearly three times as much on every bushel of our grain that it imports as the total price received by U.S. farmers. "Canada, Australia and Argentina want higher prices for their farmers. Their governments control the price at which their wheat is sold for export and they all would raise their selling prices if the U.S. would raise the loan rate. "Moreover, they'd all hold their share of a world reserve off the market, in storage, to maintain higher prices. All other countries that export any grain at all have to pay subsidies to bring the price down to ours," Lewis said. "That excuse is a phony. But there are more: There's a 'huge surplus' they tell us. "But the surplus is a hoax. The world grain supply is really tight. Total world grain carryover is only about 50 million tons more than the less-than-abundant 'pipeline' stocks carried over at the worst of the 'world food crisis' in 1972-4. The entire reserve would be wiped out in a single bad crop year comparable to 1965, or 1966, or 1972, or 1974. "There are still more excuses. They tell us decent prices for American farmers 'would encourage too much production'. But the government's other hand is busily subdizing other countries to increase foreign food production, and the word from the other side of the same government mouth says (and it's true) that world food production must be increased enormously in order to feed all the hungry people," Lewis said. "They tell us it would cost too much'. But a higher investment for price support loans would raise prices much higher than the same amount of money spent for direct payments, so why not get more help to farmers for the money? "None of the excuses stand up. The real reason is never mentioned, cheap food. "Harry Truman was the last American President who sought faithfully and successfully to achieve parity prices for farmers. Farm prices averaged 100 percent of parity or higher in every year while Truman was president. "For 20 years after Truman, farm prices declined in relation to other costs and prices. Everyone else's wages, salaries, prices, profits, fees, commissions and everything else went up-but farmers' prices went down enough to almost offset all the rest, and the 'cost of living' index was held nearly steady," Lewis concluded. DENISE LOVE, Senate Agricultural Committee, WM. M. TURRENTINE, Garden City, Kans., March 3, 1978. Russell Senate Office Building, Washington, D.C. DEAR MS. LOVE: In connection with the current hearings which are being conducted by the Senate Committee on Agriculture, Nutrition and Forestry regarding agricultural legislation I am submitting herewith my prepared testimony on this matter. Since I have found it impossible to attend these hearings and to present any testimony in person I have gone to considerable detail regarding legislative recommendations. I have submitted detailed cost studies for my farm which I believe to be typical of current costs for our area. These should be of some assistance in determinations for recommended levels of price targeting. I would appreciate it very much if you would introduce my testimony into the proper channels for review by the committee. Please accept my thanks for your accomodation. Washington, D.C. (Attention of Ms. Anita Brown). DEAR MS. BROWN: Pursuant to our telephone conversation as of this morning I have enclosed herewith the testimony I referred to for the Agricultural Committee. I certainly appreciate your cooperation in taking this testimony personally in hand and placing it in the proper channels for review of the committee. Yours very truly, Enclosure. WM. M. TURRENTINE. |