GENERAL FARM PROGRAM 441 



3. It means Govermnent-administered farm prices and farm income, 

 with Government control of all land and livestock production. 



4. It introduces a cheap food philosophy. It seeks to establish 

 the principle that taxpayers shoulcl pay a considerable portion of the 

 grocery bill of consumers. 



5. The proposal would place a ceiling on opportunity in agricul- 

 ture. This, in turn, would result in penalizing efficiency. Food prices 

 eventually would reflect this inefficienc3^ We view any unit limita- 

 tion as a dangerous precedent — an opening wedge which eventually 

 would result in Government supervised and stabilized agricultural 

 poverty. 



6. The cost of implementing this proposal would be staggering: 

 (a) We have made some estimates as to the cost of the proposed 



milk subsidy pro])osal, exhibit A. 



If you will turn the page you will find a reasonable estimate of the 

 cost of appying the milk subsidy proposal. 



In Secretary Brannan's testimony he stated : 



As we indicated in our long-range testimony in 1947. we sliould be producing 

 and consuming 1.50.000.000,000 pounds of milk by now instead of something less 

 than 120,000,000.000. If it is neces;sary to get milk down to the area of 15 cents 

 a quart at retail in order to have maximum consumption, and use production 

 payments to assure farmers of fair returns, I think both farmers and consum- 

 ers will want to do it. 



Now, in order to make a reasonable estimate of cost, let us assume 

 that this proposal is made seriously; i. e., that it is the wish and inten- 

 tion of the Secretarv to devise a program which might be expected 

 to produce 150,000,000.000 pounds of milk and to furnish it at 15 

 cents a quart at retail. 



In the first place, it will be necessary to get the milk produced. The 

 income standard proposed by the Secretary for payment to farmers 

 would not get it, since the costs are to be held relatively stable, and 

 since the income standard is A^ery close to the present wholesale i)rice of 

 milk, and current production is less than 120.000.000,000 pounds — not 

 150,000,000,000. In 1048 we had an increase in milk production from 

 the 1935-39 period of 12 percent. This increase resulted at the same 

 time the price was increased 169 percent. To get an increase of pro- 

 duction of one-eighth, the price was increased 1.7 times. 



Parenthentically, of course, there was different competition for the 

 use of resources at that time. 



We shall be very conservative. Let us assume that a 25 percent 

 increase in production as proposed by the Secretary can be secured 

 with an increase in price of 20 percent. The cost would be $1,224,- 

 000,000. Twenty percent of the March 15, 1949 price of $4.08 equals 

 81.6 cents per hundredweight. One and a half billion hundredweight 

 times 81.6 cents equals $1,224,000,000. 



Now, we have got our 150,000,000,000 pounds of milk produced. 

 Everyone knows, of course, that the Secretary's assumption that this 

 would be cheaper is true. The demand for milk at the going rate of 

 21 cents per quart is satisfied now. 



Again, let us take the Secretary's inference that if there were 25 

 percent more for sale, the price would be 15 cents a quart. Now, 

 in order to carry this calculation forward, it is necessary to get our 

 figures into quarts of milk consumed. Thirty percent of the total 

 production of milk is currently consumed as fluid milk. This would 



