The New Crop 



Adlustment Bill 



M LONG-TIME program for 

 mZMt agriculture designed to sta- 

 ^^^^ / bilizc farm prices and farm 

 income at approximate parity is the object 

 of the proposed Agricultural Adjustment 

 Act of 1937. Operating directly on five 

 major commodities, cotton, wheat, field 

 com, tobacco and rice, the bill is designed 

 to maintain a normal supply, including a 

 reserve of these crops, and to prevent 

 price-wrecking surpluses and the condi- 

 tions of the '20s and early '30s that 

 brought on national calamity in 1932. 



To the principal objective of parity 

 prices for these five crops, the bill adds 



If the parity price is 80 cents a bushel, 

 then the co-operating farmer would be 

 eligible for a loan of 85 per cent of 

 parity or 68 cents per bushel on any por- 

 tion of his corn produced up to his total 

 production, the com being the exclusive 

 collateral behind such loan. He would 

 be paid, in addition, 15 per cent of 

 parity which in this case would be 12 

 cents per bushel on the normal yield of 

 corn within the base acreage devoted to 

 the crop, at the end of the marketing 

 year. However, if the current average 

 farm price was above the loan rate of 



H«re are the high lights explaining 



How the New Triple JL act would operate 



two more ; namely, the maintenance of an 

 ever-normal granary, and second, con- 

 servation of soil by preventing waste of 

 fertility in production of excessive crop 

 surpluses. 



"The Secretary ot Agriculture is directed 

 to enter into contracts with farmers to 

 carry out the purposes of the Act. There 

 would be only one contract per farm. 

 The plan is not compulsory, but certain 

 penalties are provided for the non-co- 

 operator which make it advisable for him 

 to work with his neighbor for his own 

 welfare and that of the industry. 



The first contracts offered are for a 

 three-year period beginning with crops 

 harvested in 1938. "The co-operator will 

 continue to receive Class II or soil- build- 

 ing payments, also Class I or diversion 

 payments on commodities other than the 

 five mentioned. But in lieu of diversion 

 payments on these five crops, the co- 

 operator will receive "parity payments" 

 under the proposed bill. Contract signers 

 only will h« eligible for commodity (sur- 

 plus reserve) loans secured solely by the 

 commodities stored in accordance with 

 the rules. These loans, under the bill, 

 are to be administered by a "Surplus Re- 

 serve Loan Corporation" to be estab- 

 lished. The basis of loans on corn and 

 wheat, also parity payments, and maxi- 

 mum income rates are set forth in the 

 accompanying table. 



If the total supply of corn, which 

 means the carryover plus the estimated 

 production, is 100 to 105 per cent of a 

 normal year's domestic consumption, the 

 loan rate would be 85 per cent of parity. 



68 cents, then the payment would equal 

 the difference between the current farm 

 price and the parity price. 



Following is an example of the opera- 

 tion of the plan when there is a sub- 

 stantial surplus. Let's assume that the 

 total supply of com is somewhere be- 

 tween 110 per cent and 115 per cent of 

 the normal year's domestic consumption. 

 And let's say that at that time the parity 

 price is 80 cents a bushel. In such case 



the loan rate is 65 per cent of parity (see 

 table) or 52 cents a bushel, and the 

 parity payment rate is 25 per cent or 20 

 cents a bushel. Therefore the most any 

 co-operator can get for his com yield is 

 72 cents or 90 per cent of parity. Let us 

 further assume that the average farm 

 price of com at the time is 60 cents. The 

 difference between 60 cents and 72 cents 

 is 12 cents a bushel. Therefore, under 

 such conditions the parity payment would 

 be only 12 cents and not 20 cents per 

 bushel. 



The bill provides no payments for 

 diversion of acreage. It is not based on 

 scarcity philosophy. Any diversion of 

 acreage required in order to prevent the 

 accumulation of surpluses above normal 

 reserves is undertaken by the contract 

 signer without special compensation and 

 in return for the benefits of a stabilized 

 income. 



The consumer gets fair consideration 

 in this proposed long-time program for 

 agriculture. Whenever the total supply 

 of a major crop is below normal, the 

 Surplus Reserve Corporation must call 

 its commodity loans, but not at a rate to 

 upset the maintenance of parity prices. 



A flexible tariff feature is another safe- 

 guard to the consumer. When the farm 

 price of a basic crop is more than 10 per 

 cent above the parity price, the import 



SCHEDULE A 

 Surplus Reserve Loan, Parity Payment, Maximum Income Rates 



Q 

 O 



s 

 s 

 o 

 u 



LOAN, PARITY PAYMENT, and 

 MAXIMUM INCOME RATES are 

 following Percentages of 

 Parity Price: 



Surplus Parity Maximum 



Reserve Payment Income 



Loan Rate* Rate 

 Rate 



If TOTAL SUPPLY 

 is as follows: 



Up to 120% ) 



120% up to 130%) 

 130% up to 140%) 

 140% or more ) 



Up to 105% ) 



105% up to 110%) 

 110% up to 115%) 

 115% or more ) 



of a normal 

 years' domestic 

 consumption 



of a normal 

 year's domestic 

 consumption 



* The parity payment rate is a maximum. If the parity payment rate is greater 

 than the difference between the current average farm price and the maximum in- 

 come rate, then the rate of payment equals such difference. 



L A. A. RECORD 



