GENERAL FARM PROGRAM 



551 



Table ilUistrating details 0/ issuance and use of parity supporting certificates and 

 parity payment certificates to operate a two-price system for ivheat, cotton, 

 and all meats 



Nature of transaction 



Illustrating 

 use of certifi- 

 cates in cotton 

 piu-chases 



Illustrating 

 use of certifi- 

 cates in wheat 

 purchases 



Illustrating use of certifi- 

 cates to support 90 per- 

 cent of meat prices and to 

 enable the Government 

 to buy and divert 10 per- 

 cent of all mutton, pork, 

 and beef into relief uses 

 or to export at current 

 market price level 



1. Amount of product sold by farmer 



2. Current market price paid farmer by 



buyer. 



3. Total cash paid to farmer for his product 



by the buyer. 



4. Parity payment differential of product 



per unit. 



5. Face value of parity supporting certifi- 



cates issued buyer of product and sold 

 with product when buyer sells it. 



6. Percentage of product for domestic use 



and amount on which parity benefit 

 payments are made to the farmer. 



7. Face value of parity payment certificates 



attached to the parity supporting cer- 

 tificates and which are detached by the 

 buyer and given to the farmer selling 

 the product. 



8. Export portion or portion diverted to 



lower or relief uses. 



9. Amount of parity supporting certificates 



taken up by the Government and paid 

 for. 



10 bales 



20 cents per 



pound. 

 $1,000 



5 cents per 



pound. 

 $250 



60 percent or 6 

 bales. 



10,000 bushels 

 $2 



$2,000 



50 cents per 



bushel. 

 $500 



percent or 

 800 bushels. 



$150. 



$400. 



40 percent or 4 



t5ales. 

 $100 at export 



point. 



20 percent or 



200 bushels. 

 $100 at export 

 point. 



10,000 pounds on hoof. 

 20 cents per pound. 



$2,000. 



5 cents per pound. 



$500. 



90 percent or 9,000 pounds. 



$450. 



10 percent or 1,000 pounds. 



$50 at processing point. 



In the 10-bale cotton purchase the buyer after negotiation of the sale of the 

 cotton by the farmer at market price, 20 cents per pound, would go to the bank 

 and buy $250 worth of parity supporting certificates at 5 cents per pound or $25 

 per bale on the entire purchase. Attached to these parity supporting certificates 

 and coming without extra charge, or free, would be parity payment certificates 

 of a face value of $150 or 5 cents a pound on the 60 percent of the cotton that was 

 declared for domestic consumption. This certificate would be torn from the 

 parity supporting certificate and given to the farmer. It would be negotiable 

 and could be redeemed at the Treasury at full face value any time before its 

 expiration date, which date would be set and written on the certificate when it 

 is issued, say 6 months after its issuance. The wheat purchase would operate 

 similarly. 



The meat purchase needs special explanation. It would be vised when the 

 Government wished to support a product that had to go through processing plants 

 soon after leaving the farmer's hands and a product entirely or largely used do- 

 mestically as is the case with pork, beef, and mutton. 



The illustration assumes that the Government wishes to buy at market prices 

 10 percent of all meats and divert it into food stamp, shool lunch, or relief uses 

 at home or abroad selling it at the nonsupport or mai-ket price. Or possibly the 

 Government may wish to give it away as relief. The other 90 percent would sell 

 to regular consumers at market price plus 5 cents parity support since the Gov- 

 ernment would take up 90 percent of the parity supporting certificates at the 

 processing point but would not pay packers for these. Packers would pass the 5 

 cents on to consumers. It is as.sumed that the Government purchases of the 10 

 percent and withholding it from the open-market channels would reduce open 

 market supplies sufficiently to prevent packers from charging the 5 cents parity 

 support cost back on farmers but must pass it forward to the consumer's prices. 



Although it is opposed and not recommended by the writer and is opposed by 

 the Grange also, if the Government wished to use this certificate as a mechanism 

 for paying farmers a 5-cent production payment or any other production payment 

 it could do this by buying up all parity supporting certificates at processing plants 

 both the 90 percent open-market portion and the 10 percent relief diversion pay- 

 ments. The packers could thus sell all meats to consumers at the lower market 

 price, but the farmers would have been paid 5 cents above the market price on 



