GENERAL FARM PROGRAM 215 



As I previously indicated, the payment method could be used, if 

 Congress so decided, not merely to support prices but directly to 

 encourage greater production and consumption of mUk. Prices of 

 fluid or class I milk to consumers over the country these past few 

 months have ranged between 22 cents in several eastern cities to a 

 low of 14 cents in one of the major Midwest cities. In a 4-quart con- 

 tainer, milk is now selling in grocery stores in Chicago at IQji cents 

 a quart. 



To the extent that the objective is to increase consumption of milk 

 by lowering the price to the level which will secure the greatest con- 

 sumption, it may be necessary to use additional sums of money and 

 relate the payments to costs of production, the support operation, 

 and the reduced price to consumers. 



For whatever assistance it may be to the committee, here is one 

 guide estimate. If a payment of 1 cent were made on every quart 

 of class I milk consumed in fluid form, the cost to the Federal Govern- 

 ment would be around $150,000,000 per year. It is obvious, how- 

 ever, that to achieve the desired result such a payment would not be 

 necessary on much in excess of one-half of the milk so consumed. 



POTATOES 



Wliile the demand for the main livestock items is relatively elastic, 

 this is evidently not true of potatoes. Small changes in market 

 supplies cause much greater changes in market prices. I believe a 

 satisfactory production payment program can be operated for a great 

 deal less money than we have been spending on potatoes. 



When the Commodity Credit Corporation has fulfilled its obliga- 

 tions under the existing law to support the price of potatoes for the 

 marketing season of 1948, it will have expended approximately 

 $225,000,000. This program will have maintained the price to pro- 

 ducers at an average of $1.75 per bushel for grade A potatoes. The 

 total production last year was 445,000,000 bushels. Therefore, in 

 order to maintain this level it will be necessary to withdraw from the 

 market and dispose of approximately 123,000,000 bushels. With the 

 use of $225,000,000, we could have reduced the price to consumers to 

 about $1 per bushel and retained the farm price at the support level. 



Let me make it very clear that, in my opinion, the major portion 

 of the potatoes withdrawn from the market during the 1948 season 

 represents excessive and unjustified production, which by the use 

 of production payments, acreage allotments, or marketing quotas, or 

 marketing agreements and orders, should be elimmated in future 

 years so that such losses to the Government on a single crop would 

 not be incurred. 



There are other commodities now receiving support, both storables 

 and nonstorables, for which we have made no comparisons, and the 

 general factors would be the same as those previously discussed. 

 Some will continue to be supported. 



Some of the commodities not now under support are of sufficient 

 importance to the income of some sections of the country and are of 

 sufficient importance to the national diet that it is conceivable that, at 

 some date in the future, support prices should be made available to 

 them under appropriate circumstances. But to estimate those kinds 



