GENERAL FARM PROGRAM 145 



from which we would be working toward narrowing, and eventually 

 closing, the historical gap between farm and nonfarm income. 



Formulas: As the start for our moving ])ase, we have taken the 

 average annual purchasing power of cash receipts from farm market- 

 ings for the years 1939 through 1948. From that, with the aid of the 

 old parity index, we have moved first to an income-support standard 

 and then to a specific price-support standard for the individual 

 commodities. 



Application of support: Loans, purchase agreements, production 

 payments, and direct purchases should be available for use. These 

 several methods would be used singly or in combination as experience 

 and prevailing circumstances warrant. 



Commodit}^ loans and purchase agreements are probably the most 

 effective and efficient methods for the commodities which do not 

 appreciably deteriorate in storage and for those which should be held 

 in reserve in appreciable quantities for production stability or against 

 national emergencies. 



Production payments, on the other hand, seem more adaptable as 

 a method for supporting highly perishable commodities and those 

 for which storage is too costly. 



In the case of both perishables and storables, it may sometimes be 

 desirable to remove surpluses or to obtain supplies for storage or 

 collateral programs by purchasing directly from producers or inter- 

 mediate processors. 



Conditions of support: The availability of orice support cannot be 

 separated from the acceptance by farm.ers of reasonable undertakings 

 to advance or accompoish the over-all objectives of a sound farm 

 program in the interests of the public and of their fellow farmers, such 

 as (a) the observance of minimum and sound soil-conservation 

 practices; (b) compliance with or adoption of whatever programs are 

 found necessary to curtail wasteful production or disorderly marketing 

 (such measures as acreage allotments, marketing quotas, and market- 

 ing agreements which may be adopted from time to time through 

 referendums or by the authority of the Secretary under terms of 

 specific legislation such as is now on the statute books) ; (c) the limita- 

 tion of eligibility for price support to a defined volume of production 

 on each farm — a volum.e high enough to benefit most farms but one 

 which will not encourage the development of extremely large, 

 industrialized farming. 



Those are my recommendations in brief. I have left out many 

 significant details and comparisons which we can go back to, now that 

 you have the over-all picture. 



The income and price-support standards: If there is anything new 

 in what is here proposed, it is the recommendation that we actually 

 start out computations with an income criterion as the base on which 

 price supports are determined. We have had income critiera in our 

 laws — so-called parity and income definitions — but so far we have not 

 used them. Since income is what finally counts, I tliink it is time to 

 start relating support prices to an income standard. 



The factor which has discouraged real use of the parity-income 

 definition in the past has been the gap between farm and nonfarm 

 income. This is so wide that a program based on real dollar equality 

 looks unrealistic as an immediate objective. Under the old defuiition, 

 for example, farmers last year received 160 percent of the theoretical 



