GENERAL FARM PROGRAM 147 



I am aware that this standard does not close the gap between average 

 per capita farm and nonfarm incomes. However, as I indicated 

 earlier, one of our problems is to get somethmg which will work here 

 and now. 



We contemplate that the base used for determining the income 

 standard should move forward. I am proposing that this 1939-48 

 income base be used for 1950 and that thereafter the base should be 

 the fu-st 10 out of the last 12 years. In other words, there should be a 

 2-year lag between the base period and the year of actual operations 

 so as to allow administrative preparation well in advance of operations 

 and so that the Congress may become aware of the effects of the moving 

 standard before new calculations are put to use. 



After determining the aggregate income standard for a year, the 

 next step is the determination of a corresponding schedule of com- 

 modity prices. In .doing this, average farm prices for the 10 im- 

 mediately preceding years — or marketing seasons — would be multi- 

 plied by the ratio of (a) the current income-support standard to (6) 

 the actual average level of cash receipts from farm marketings during 

 the 10 immediately preceding years. This formula will keep price 

 relationships among commodities on a moving, up-to-date basis. 



For example, the average cash receipts for the 10 years 1940-49 — • 

 using an estimate for 1949 as this ihustration— is $20,980,000,000, 

 while the estimated minimum-income standard for 1950 is $26,- 

 234,000,000, assuming the parity index remains at its current level. 



Since the support standard is 1.25 times the average cash receipts, 

 the support-price schedule would be determined by simply multiplying 

 the 1940-49 average farm price for each of the several commodities 

 by 1.25. 



Now, let us see how these formulas compare with the familiar parity- 

 price formula. So far as income and prices are concerned, the stand- 

 ards are about equal to what current marketings would bring if farm 

 prices were to average the present parity level for 1949, but with the 

 prices for the three great staples — corn, cotton, and wheat — averaging 

 only about 90 perrent of the old parity level. A.t the same time, it 

 follows that prices for a number of the other commodities, especially 

 livestock and livestock products, would average above the current 

 parity level. The method of calcalating the income and price stand- 

 ards, as well as a number of price comparisons, is shown in detail in the 

 accompanying tables. [Exhibits A., B, and C] 



Application to specific commodities: Our ultimate ability to assure 

 these minimum income and price-support standards is of course 

 dependent upon the av^ailability of funds and specific authorization. 



I recommend that the Congress designate those commodities which 

 should have first priority on the funds available for price-support 

 purposes. This list should include the agricultural commodities of 

 prime importance, both from the standpoint of their contribution to 

 farm income and their importance to the American consumer family. 



This list should include, at least, the following commodities: Corn, 

 cotton, wheat, tobacco, whole milk, eggs, farm chickens, and the meat 

 animals — hogs, beef cattle, and lambs. 



I recommend that the prices or returns of these first-priority, or 

 group 1, commodities be maintained at not less than the full support- 

 price standard. It should be clearly understood that the support- 

 price standard is not a ceiling. 



