148 GENERAL FARM PROGRAM 



Those commodities not included in the group one or priority hst 

 should be supported in line with or in relation to group one com- 

 modities, taking into account the available funds and authorities, 

 the ability of producers to keep supplies in line with demand, and other 

 relevant factors. There will also need to be discretionary authority 

 available for adjusting supports for these commodities in order to 

 maintain desirable commodity relationships, especially in order to 

 maintain normal feeding ratios or feed value relationships. 



It may also on occasion be necessary to recommend to the Congress 

 certain adjustments in support prices for one or more of the group one 

 commodities in order to maintain feed ratios or feed value relation- 

 ships. 



The authority should be available to support any commodity at 

 whatever level is required to increase supplies or meet national 

 emergencies. 



Price support methods: Commodity loans a.nd purchase agreements 

 are methods well adapted to the support of storable commodities 

 which can be carried over without processing for a number of market- 

 ing years, if necessary. Storables account for roughly 25 percent of 

 our annual cash receipts from farm marketings and include cotton, 

 corn, wheat and other grains, tobacco, the oilseed crops, dry beans 

 and peas, wool, and peanuts. These are not all equally storable. but 

 experience has shown that loans and purchase agreements are effective 

 for all the commodities on this list. Nevertheless, it would be desir- 

 able to have available, as a supplementary method, the authority to 

 make production payments under certain circumstances. 



The nonstorables — products which are either highly perishable or 

 which can be stored only at heavy expense — include fruits, vegetables, 

 meat animals, milk, butterfat, poultry, and eggs, and account for 

 roughly 75 percent of cash farm receipts. Production of these com- 

 modities is geared largely to domestic demand and this demand 

 fluctuates with employment, wages, and other factors which change 

 mass purchasing power. We can hope to increase per capita consump- 

 tion of all or most of these products in a healthy economic climate. 



When it is necessary to apply supports to any of these nonstorable 

 commodities, I recommend that we rely mainly upon production 

 payments. 



The term "production payment" means exactly what it says — a 

 payment to the farmer to go on producing to meet genuine consumer 

 needs, rather than restricting output short of that need. 



Under this system the farmer would be paid in cash the difference 

 between the support standard for commodities which he produced 

 and the average selling price for those commodities in the market 

 place. Because the payment would go directly to the farmer it would 

 be an efficient support operation. 



Another big advantage is that the system would induce efficient 

 production and marketing, because any farmer who could exceed the 

 average market price by quality of product or good bargaining would 

 benefit to the extent that his selling price exceeded the average market 

 price. 



A third advantage of this system is that it would allow farm income 

 to remain at a high enough level to sustain abundant production 

 while retail prices sought their supply and demand level in the market 

 place. This level is bound to be reasonable for consumers because 

 of the larger supplies brought out. 



