GENERAL FARM PROGRAM 213 



Secretary Brannan. They do have marketing quotas and acreage 

 allotments. 



The Chairman. Suppose we permit the Secretary to fipish his 

 statement. Then we can come back to the questions later. 



Secretary Brannan. The next item is hogs. Of the nonstorable 

 or perishable commodities in group 1, hogs present one of the most 

 difficult support problems with which we may be confronted. 



For the purposes of an example, let us take a year's production 

 goal of 20,000,000,000 pounds of hogs, live weight, and a price support 

 level of about $16.50 per hundredweight. Then, let us assume that 

 we have 1,000,000,000 pounds of live hogs which will not clear the 

 market at a price which will reflect the support price to the farmer. 

 Assuming this excess production, there is an immediate obligation 

 to support the price of hogs through a pm-chase program, the only 

 method now authorized by law. This would cost about $230,000,000. 

 This estimate is reached as follows: 



The initial obligation would be about $165,000,000 ; this assumes that 

 we would buy the hogs at the farmer's gate and that the acquisition of 

 the hogs could be accomplished with no expense whatsoever to the 

 Government. Everyone knows that this is an uni^easonable assum- 

 tion because we cannot buy hogs at the farmer's gate, nor, in fact, 

 can we buy them at the stockyards. 



The only practical way to buy hogs is from the packer after slaugh- 

 tering, processing, curing, and so on. Buying from the packer in the 

 form of fresh and cured pork would involve the additional expenditure 

 of at least $65,000,000. Immediately upon acquisition of the pork, 

 arrangements must be made for its proper storage. This means 

 additional handling and storage charges by the month. Pork can be 

 kept in good condition under the best refrigeration for onl}^ 6 months 

 to 1 year. That being the case, the Commodity Credit Corporation 

 would have to go into the world market to find a purchaser within 

 a relatively short time. The pork obviously could not be sold into the 

 American market because it would break the support price again. 

 The Government would be faced with a total loss of the $230,000,000 

 plus carrying and disposal charges, less whatever could be realized 

 from sales to offshore customers. 



With this $230,000,000 a production payment to farmers could be 

 made on 21,000,000,000 pounds of hogs in the approximate sum of 

 $1.10 per hundred, live weight, or more if payments were made only 

 on marketings. In other words, the price of hogs, live weight, in the 

 market place could be reduced by $1.10 before it would cost this 

 Government 1 cent more money than it would be obligated to pay 

 luider the purchase method. This $1.10 is about 7 percent of the 

 $16.50 assumed support level. If a 7-percent reduction could be car- 

 ried aU the way through to the retail level, it would be possible to 

 reduce the consumer's price of pork by about 7 percent and at the 

 same time give him access to the finished pork product from 1,000,- 

 000,000 pounds of live hogs. Perhaps this example is an oversimpli- 

 fication. There are many factors which might influence the final 

 conclusion in a small way in either du'ection. But I do believe it 

 summarizes the essential facts. 



91215— 49— pt. 2- 



