GENERAL FARM PROGRAM 923 



tory support program for milk and its products ranging from 75 to 100 percent 

 of parity, with parity to include wages of hired farm labor and wartime producers 

 subsidy payments. 



Although no direct statement was made, the inference is clear that unless the 

 needed amendments are enacted the present provisions of the Agricultural Act 

 of 1948 as related to milk and its products are not acceptable to the dairy farmers 

 of America. This is especially true in the case of title II. 



In order that there may be no misunderstanding of the position of the members 

 or our organization, I desire to file this letter as supplementary to my statement 

 on May 3, 1949. 



The provisions of title II, which under present law become effective on January 

 1, 1950, are grossly discriminatory against the interests and welfare of the dairy 

 farmer and his cooperative. We recognize that there is a considerable area of 

 disagreement among the producers of the variouis agricultural commodities af- 

 fected by the provisions of the act and we want to make it clear that our state- 

 ment is confined strictly to the applicability of the act to milk and its products. 



We reiterate our request for immediate amendment to title II which will accord 

 to milk and its products a proper recognition of their importance to the national 

 economy and their need for mandatory governmental price support. In the 

 event that Congress is unable, at this time, to amend title II in line with the 

 requirements of dairy farming as we have recommended, we cannot too strongly 

 urge that the provisions relating to milk and its products not go into effect on 

 January 1, 1950. In lieu of title II, therefore, we earnestly urge the extension 

 of title I, with the modifications suggested, for such period as may be necessary 

 in which to secure the inclusion of our amendments in title II. 



Referring again to my testimony, it was recommended by the National Coop- 

 erative Milk Producers Federation that the methods of computing parity of the 

 Agricultural Act of 1948 be amended, as far as the computation of dairy product 

 parities is concerned to provide: 



1. For the remainder of 1949, the inclusion of farm wage rates in the computa- 

 tion of the parity index — the index of prices paid b.v farmers for commodities 

 bought; and 



2. Amendment of title II of the act of 1948 to provide for inclusion of farm 

 wage rates and the producer subsidies paid during the war period. 



In the questioning following the presentation of the testimony, you raised ques- 

 tions indicating that if the producer payments were allowed during the war 

 period, this would immediately harm all other commodities by reducing their 

 parities. The questions follow: 



"Mr. Pace. You do realize, however, under the 10-year moving in the Aiken 

 bill that would immediately punish every other commodity while in the 10-year 

 moving in the Secretary's plan it would not. Do you agree with that? 



"Mr. HoLMAN. I do not know that I am qualified to answer that question. 



"Mr. Pace. That is, when you give dairy products credit for the subsidy, 

 you raise their relative position as to the price thev enjoyed during the preceding 

 10 years, and therefore raising theirs, you would naturally have to lower the 

 respective parity prices to get rid of the commodity. 



"Mr. Reed. I do not believe it would work that way. 



"Mr. Pace. Let us use an illustration, that the ceiling price on butter was 50 

 cents and that the subsidy was 25 cents. When you have gotten your over-all 

 parity figure, when you get into the 10-year moving average, giving each com- 

 modity a parity as compared to the market price during the 10-year moving of each 

 of the other commodities, when you raise the market price of a commodity, which 

 you would do by crediting butter with the 25-cent subsidy for 5 years, you natur- 

 ally have to give butter a higher figure and therefore consume that much of the 

 total, and we would give everybody else a slightly lower figure. You see what I 

 am talking about? 



"Mr. Reed. Are you figuring the income support standard? 



"Mr. Pace. No. The difficulty is, in the Secretary's plan you would not hurt 

 the others any, because when you added the subsidy, you would add to the left- 

 hand column, increasing receipts from the sale of commodities. 



You may help everybody there because when you added that 25 cents a pound 

 subsidy, the 19 billion in the left-hand column of the Secretary's portfolio might 

 become 19.5 billion. You would therefore help everybody under the Secretary's 

 formula, whereas you would hurt everybody under the Aiken formula. You 

 study that. 



"Mr. HoLMAN. We will be glad to study that, but even then, there is a bigger 

 issue, what kind of an economic life are we going to have in this country?" 



