924 GENERAL FARM PROGRAM 



First, as to the statement that adding in the dairy subsidies would immediately 

 harm all other commodities, no categorical "yes" or "no" answer is possible. 

 Unless the index of prices received by farmers for all farm commodities were 

 revised to include higher dairy product prices during the base period, thereby 

 increasing the index of prices received by farmers, the inclusion of the wartime 

 dairy subsidy payments would have no influence whatever upon the parity price 

 of other commodities. It would not change the index of prices received by farmers 

 very much in any case, even though the increased dairy prices during the 1943-46 

 period were used in revising the index, thereby raising it slightly. 



Even if the index of prices received by farmers were revised to take account of 

 the higher dairy product prices, it is indeed difficult to see how this would be an 

 injustice to the other commodities. Dairy product prices were maintained at 

 artificially low levels during the war by the payment of subsidies. Therefore, all 

 other commodities are now gaijiing, or will when title II of the act of 194S goes 

 into effect, by the fact that dairy prices were artificially low and the index of prices 

 received by farmers for all commodities is thus somewhat lower than would be the 

 case otherwise. In any case, the National Cooperative Milk Producers Federa- 

 tion made no recommendation that the prices received by farmers index be revised. 

 Hence, under the federation's proposal, no other commodity would be harmed. 



If only a given sum of money is appropriated for agricultural purposes, any 

 action that tends to raise the relative prices of one commodity may result in the 

 program for that commodity taking a relatively larger share of the sum appro- 

 priated. However, we maintain that at present the dairy farmer is not adequately 

 cared for in the various methods of computing parity. 



With respect to the statement that under the program proposed by Mr. Bran- 

 nan the inclusion of the dairy subsidy would raise the level of support for all 

 commodities, the answer is it would do so, because anything that raises the total 

 of cash farm receipts during the base period raises the entire support level for 

 all commodities. However, merely adding in the gross sums paid out under 

 dairy subsidy programs during the war would not correct the situation as far as 

 the dairy farm is concerned. His average price would still be lower than it 

 would be when due account is taken of subsidies. It would not suffice merely 

 to add the total subsidy payments to cash farm income, but in addition, if dairy 

 farmers are to receive fair treatment, it would be necessary to revise the dairy 

 product prices upward by the amount of the subsidy. 



One more comment with respect to the Brannan plan, and the comments that 

 the federation proposals would harm other commodities. It is to be noted that, 

 under the Brannan plan, most of the livestock products, including milk and 

 butterfat, would be supported at much higher price levels relative 'to the so- 

 called basic commodities than will be the case if the moving-average formula in 

 the Hope-Aiken Act takes effect January 1, 1950. Under the Brannan proposal 

 to the committee, wheat supports would be increased 1.6 percent; corn, 8.1 

 percent; butterfat, 14.6 percent; milk sold wholesale, 14.0 percent; hogs 14.4 

 percent; and beef cattle, 14.1 percent. It thus appears that the Brannan pro- 

 posal is designed in part to raise the relative profitability of the livestock products 

 as compared to the major field crops. 



If this letter does not clear up your questions, we would be glad to discuss 

 the matter further either with you or your committee, as you may desire. 



I will appreciate it if you will incorporate this letter in the record as part of 

 my testimony on the general farm program. 

 Sincerely yours, 



Charles W. Holman, 

 Secretary, National Cooperative Milk Producers Federation. 



