898 GENERAL FARM PROGRAM 



puting parity the price would be increased 38 cents per hundredweight. 

 We have already stated our reasons for the inclusion of farm wage 

 rates. Some members of the committee might wonder why it would 

 only raise the price 18 cents in 1948 and raise it 24 cents the next 

 year. That is largely due to the inclusion of the moving average 

 method of computing prices. 



In addition, it is our judgment that allowance should be made for 

 the wartime subsidy payments to producers. These payments were 

 made solely for the purpose of increasing mOk production to meet 

 wartime needs while at the same time prices to consumers were held 

 down. Therefore, these payments were given in lieu of advances in 

 prices and should be considered as part of the price during the period 

 they were in effect, 1943-46. 



Amendment of the parity provisions of title II of the Agricultural 

 Act of 1948 in line with these two suggestions would increase the 

 parity price for milk sold wholesale to $4.51 per hundredweight. 

 Ninety percent of this figure is $4.06 per hundredweight — the support 

 level. .A-pplying the Department's formula of 88.5 percent of this 

 latter figure gives $3.59 per hundredweight. This indicates an in- 

 crease of 47 cents per hundredweight above methods currently used 

 by the Department of .Agriculture in computing manufacturing milk 

 support levels. The different methods of computing parity and the 

 inclusion or exclusion of wage rates and producer payments result in 

 manufacturing milk price support levels as set forth in table 2. These 

 comparisons are computed on the basis of the Department's 88.5 

 percent rule for manufacturing milk. 



Increases in farm income under the methods described for computing 

 parity and support price levels would be as follows: 



1. By amendment of title I of the Agricultural .A.ct of 1948 to 

 include farm wage rates, an increase of over $100,000,000 per year 

 for manufacturing milk would be secured. Fluid-mUk sales values 

 would increase this total by another $81,000,000. 



2. Amendment of title 11 of the .Agricultural Act of 1948 to include 

 producer payments and farm wage rates would increase dairy farm 

 income from manufacturing milk by $260,000,000 yearly. Increases 

 for fluid milk would raise this total by another $211,000,000. 



It is our judgment that modification of title I as recommended, and 

 title II of the Agricultural Act of 1948 as recommended, will result 

 in placmg dairy products in their proper relationship to other major 

 farm commodities. At the present time we believe dairy products 

 should be supported at 100 percent of parity, figured according to our 

 computations. 



The leaders of the member organizations of our federation fully 

 realize that there must be some flexibility in support prices. For 

 example, it is possible under a support-price program to maintain 

 prices at such a level under existing demand conditions that a large 

 volume of surplus dairy products finds its way into the hands of the 

 Department of Agriculture. Unless there were adequate outlets for 

 these products either by direct distribution to the under privileged 

 or through the preferable food allotment plan for the underprivileged, 

 it probably would be necessary to reduce support levels in relation to 

 parity to care for the situation. We believe in the principle of flexible 

 support prices depending upon the supply and demand conditions 

 existing, but we further believe that in no instances should the support 



