1120 GENERAL FARM PROGRAM 



problem of adjustments between farming and other occupations has primarily , 

 to do with the low-production farmers who do not have any supplementary family 

 income. The solution suggested is to convert them gradually into farm's fitting 

 into one of the other categories, i. e. commercial, part-time, or residential farms. 



The report points out that many of the Govenunent commodity programs of 

 recent years have been confined almost entirely to helping the more prosperous 

 commercial farmers, while the supporting evidence for the need of such programs 

 was drawn from the deplorable situation of farmers in the low-income group. 



From this it may be concluded that agricultural price policy is of minimum 

 importance to low-income farmers who have httle or nothing to sell. Their 

 problems have been more the concern of the Farmers Home Administration, with 

 its grants and loans for relief and rehabihtation. Similarly, the Bankhead-Jones 

 Tenant Purchase Act of 1938 provides loans to finance the purchase of farms by 

 tenants under liberal terms and carefully made individual farn) plans. 



Price policy is of maximum importance only to the comparatively well-to-do 

 commercial farmers. With them, we concluded that it might be looked upon as a 

 business proposition, and that it might best be treated as a legitimate problem in 

 "insurance." 



There are a number of arguments which favor consideration of price policy in 

 ""insurance" terms. 



1. It avoids governmental manipulation of domestic market prices, as well as 

 the inequities and retaliatory features of most two-price systems. 

 BD 2. It leaves prices to move freely in relation to one another, and in relation to 

 nonagricultural prices, and to corresponding international market prices. Prices 

 can perform their economic functions of guiding production, stimulating consump- 

 tion, clearing surplu-^es, and freeing international trade. If the maximum basis 

 for payments is not excessive, it can avoid imeconomic allocation of national re- 

 sources to farming or to certain types of farming. 



3. Consumers are not doubly penalized by having to pay twice for farm support: 

 First, through taxes to finance the program; and, second, through artificially 

 jiigher prices for their food and raw materials. 



4. The cost of the program is mor^ equitably distributed than is the case when 

 it is financed largely thrr>ugh artificially high prices. The.se latter represent a 

 form of sales tax which falls upon rich and poor alike. Most sales taxes avoid this 

 inequity by exempting staple foods and clothing. High prices are an unfair 

 burden on the poor, including perhaps one-half of all farmers, all of whom have 

 to buy clothes and staple foods, but get small benefits from price supports. 



5. iPayments to farmers in depressions would be anticj^clical, being widely 

 ^distributed and spent rapidly. 



6. Freely fluctuating market prices for basic raw materials and foodstuffs 

 should stimulate general economic recovery, as people find ways of using low- 

 priced foods and fibers. 



7. While the parity price formula could be used as a basis for calculating pay- 

 ments, the exact correctness of parity would Ijecome academic. Moderate 

 inaccuracies would not upset market relations, feeding ratios, and the like, 

 because parity would not be used to fix prices. 



8. The system can be set up to avoid a weakness of the price-support method, 

 which ignores entirely the volume of production sold at t-he supported prices. 

 Under the present program a producer benefits doubly from a large crop and has 

 no protection against excessive losses from a crop failure. 



9. Finally, the system makes possible a return to the concept that bountiful 

 crops are a national blc'^sing, and not a calamity. Good harvests should mean 

 cheap and abundant food and farm products for all the people. 



We are aware that farm organizations ha\e bi*ter!y resisted supplemental 

 income types of programs. They say they do not want subsidies for the farmer, 

 but merely fair prices in the market place. They argue with some justification 

 that the farmer should not have to gamble on whether or not the Congress will 

 vote appropriations. 



Some of us have felt that farm organization objection might be at least modified 

 by the insurance approach to this problem. We have believed tha^ a stronger 

 case for a sort of farm-security insurance can be made both economically and 

 politically than is possible for any other form of protection. As a Nation, we 

 are insurance-minded. There are few citizens who do not carry insurance of one, 

 or several kinds. We are aware of the necessity of spreading unavoidable financial 

 risks over the widest possible base. Farm-security insurance is not a far step from 

 such common protections as group accident and health insurance. State industrial 

 accident insurance. State unemployment insurance, Federal bank deposit insur- 

 \ace. Federal housing loan guaranties, social security, and the like. 



