GENERAL FARM PROGRAM ]49 



It is obvious, of course, that the use of production payments must 

 be cpiahfied in such a manner as to avoid extremely depressed prices 

 in the market place or a wasteful use of soil resources. 



The paj^ment method is not new. It has been used for various 

 purposes before and during the war, and we know it is administratively 

 feasible. We know it is a method which not only protects the farmers 

 but gives consumers a real break. 



I want to make it clear that I believe production payments should 

 be used to encourage increased consumption as well as to support 

 farm returns. Let me illustrate: In some of our larger cities, milk 

 consumption per capita was much higher in 1947 than in 1940. The 

 increases ranged from 15 percent to nearly 50 percent. Since 1947, 

 in some of these same cities, the average person has been using less 

 and less milk. Consumers have not simply decided they want or 

 need less milk. The decision to buy less was forced upon them for 

 the most part by the rising cost of the commodity. The result is 

 bad for both consumer and producer. 



Through production payments, we can keep the market price 

 within reach of more people and maintain returns to the dairy farmers 

 at a level which will bring forth the necessary production. As we 

 indicated in our long-range testimony in 1947, we should be producing 

 and consuming 150,000,000,000 pounds of milk by now instead of 

 something less than 120,000,000,000. If it is necessary to get milk 

 down to the area of 15 cents a cjuart at retail in order to have maximum 

 consumption, and use production payments to assure farmers of 

 fair returns, I think both farmers and consumers will want to do it. 



I believe the production payment authority should be so written a& 

 to allow it to be used as a supplement to our milk marketing agree- 

 ments and orders. 



The same principle should apply to other commodities to which 

 marketing agreements and orders are adapted. 



Parenthetically, I believe authority to support hog and milk prices 

 through direct payments should be available before January 1, 1950. 

 If it becomes necessar}^ to support prices of hogs and milk this year as 

 now required by law. authority to make payments will facilitate the 

 job. 



Another price support method which should be available for use on 

 perishable commodities is the direct Government purchase program. 

 One of the biggest obstacles that fruit and vegetable producers 

 encounter is a seasonal glut in markets. It may be local and tempo- 

 rary. Or it may be general and prolonged. There are times when 

 marketing agreements and merchandising programs will not wholly 

 meet the situation. On those occasions, it is necessary for the Govern- 

 ment to make direct purchases and divert supplies from normal trade 

 channels. 



In preparing for this testimony, I gave considerable study to the 

 possibility of using a "food stamp" or "food allotment" program as a 

 price support method. The attractiveness of such a program lies in 

 the fact that it encourages increased food consumption and aids those 

 consumers who are most in need. On the other hand, as we now see it, 

 such a program would be administratively expensive, difficult, and 

 would provide only an indirect aid to agriculture. 



The use of an equal amount of funds in production payments or the 

 other price support methods would give farmers far more aid and at 



91215—49 — pt. 2 2 



