60 GENERAL FARM PROGRAM 



Mr. McArthur. On corn, it has been pretty much on a historical 

 basis. As I said before, the loan rate in New Jersey does not reflect 

 the full freight difference over Chicago or the sin-plus corn-producing 

 areas in Illinois. It goes appreciably in that direction, but not enough 

 to encourage more than normal production in those areas. 



Mr. HoEVEN. An Iowa farmer may say to me, ''I am getting $1.36 

 and they are getting $1.60 in New Jersey. Wliy is that?" What am 

 I going to tell him? You say the historical price figure is taken into 

 consideration, as -well as the freight rate and the handling charges. 

 Is there any other consideration? On what do you base your deter- 

 mination of these figures? 



Mr. McArthur. As the Secretary has brought out, the producer in 

 New Jersey is entitled to a support higher than the producer in Iowa 

 is because on a historical basis the prices have always been higher 

 there. 



Mr. HoEVEN. That may be true, but why is it $1.60 and not $1.62 

 in New Jersey, and why is it not $1.40 in my section instead of $1.36? 

 Just give us the things that are considered in finding the particular 

 figure. I would like to have it broken down. 



Mr. McArthur. Wliat you are bringing out is that we have to take 

 the historical production by areas and weight it by the proposed loan 

 rates to see that they come out at the national average. 



Mr. HoEVEN. And that is the historical figure. Then do freight 

 rates enter into it? 



Mr. McArthur. In the case of corn, freight rates influence but do 

 not determine entirely to the extent they do in wheat, because such 

 a large percentage of corn is fed on the farm, while a large percentage 

 of wheat, for example, flow^s to markets. 



Mr. Pace. Will the gentleman yield? 



Mr. Hoeven. Yes. 



Mr. Pace. Would it be satisfactory, Mr. Hoeven, to ask Mr 

 McArthur to prepare and submit to the committee tomorrow, if 

 possible, from his records, exactly how the dift'erent supports are 

 arrived at and the elements that are taken into account and the weights 

 given to each element? Would you let us have that in the morning 

 with enough copies for each member of the subcommittee? 



Mr. McArthur. Yes. 



Mr. Hoeven. That will be satisfactory. 



(The information is as follows:) 



How County Loan Rates on Corn Are Determined 



Originally Commodity Credit Corporation loans were made available to pro- 

 ducers at a flat rate over the entire producing area. Since under free market 

 conditions corn prices are lowest in the areas of heaviest production relative to 

 consumption and are highest in the areas of greatest consumption relative to 

 production, a flat loan rate proved to be more attractive in the low-price heavy 

 producing areas than in the high-price consuming areas. Consequently, under 

 these flat-rate loan programs an undue amoimt of corn moved into storage in the 

 low-price areas and stocks in these areas accumulated to undesirable proportions. 

 Similar shifts in the location of stocks were experienced in connection with flat 

 loan rates on cotton. The percentages of the cotton crop put under loan increased 

 with the distance of the States from the heavy consiuning areas in the East. 



In order to correct this tendency toward uneconomic concentration of corn 

 stocks resulting from flat loan rates, CCC put location differentials on corn loan 

 rates into effect in 1941. 



Since about 85 percent of the corn crop is not shipped as corn but is fed to live- 

 stock on farms close to where it was grown, the loan differentials were determined 



