AGRICULTURE IN A WORLD OF UNCER- 48-012 Printed for the use of the Committee on Agriculture and Forestry U.S. GOVERNMENT PRINTING OFFICE WASHINGTON: 1975 ! CARL P. ROSE, Counsel FOREST W. REECE, Professional Staff Member JAMES W. GILTMIER, Professional Staff Member DALE L. STANSBURY, Economist THOMAS REESE SAYLOR, Economist JAMES C. WEBSTER, Chief Clerk and Press Secretary REIDER J. WHITE, Research Assistant DIXIE LEE TALLEY, Finance Secretary BETTY M. MASON, Clerical Assistant (II) FOREWORD The Committee on Agriculture and Forestry is in the process of reexamining the principal provisions of the Agriculture and Consumer Protection Act of 1973, especially as they relate to loan levels and target prices for wheat, corn, and cotton. Two full weeks of hearings were held on all aspects of the existing program. The most important and most repeated message of witnesses was directed to the absolute inadequacy of existing loan levels and target prices in light of the substantially increased costs of production that have occurred since the present law began its journey through the legislative process in the Senate in early 1973. At that time, for example, the Senate opted for a target price for wheat of $2.28 per bushel for the 1974 crop year, with cost of production increases to take effect in 1975. This amounted to 70 percent of the April 1973 parity price for wheat. That target price, however, was reduced to $2.05 in conference. Today this level amounts to only 46 percent of parity. Similar experiences can be cited for feedgrains and cotton. The singular villian has been rapidly rising production costs. Since that time, costs of production reported by the Department of Agriculture as measured by the index of prices paid by farmers for production items, interest, taxes, and farm wage rates have increased by 36 percent. In an effort to determine precise cost figures I wrote State Experiment Station Directors asking that they provide the Committee with such production cost data available to them on crops produced in their States. These data were analyzed and averages and ranges determined where possible and total costs projected to 1975. In the case of wheat, the total cost of production was projected at $3.50 per bushel, with ranges from $2.56 to $4.13. For corn, the average total cost was estimated at $1.94 per bushel, with ranges from $1.82 to $2.42. For cotton, total costs were 52 cents per pound. All State data are contained in this report. Under these circumstances existing target prices and loan levels for specified agricultural commodities are totally unrealistic. Considering only cash costs, existing levels still afford no price or income protection to farmers whatsoever. And yet, our farmers have been asked to produce to the maximum extent possible for the benefit of this Nation's consumers and for the hungry of the world. Our stocks of major agricultural commodities are at perilously low levels. They must be replenished for our own security. Food is absolutely essential to life. We cannot take chances that our supplies will be inadequate. Under these circumstances it is in the national interest to assure, to the extent possible, that our harvests will be bountiful. |