1124 GENERAL FARM PROGRAM 



of producers (or farms) in normal crop marketings, of "absolute insurance price" 

 after the range of insurance price had been established by statute, of actual 

 "national average farm selling price," or of "insurance years" for the several 

 included farm products. The major problems would arise not administratively, 

 but in the writing of the statute: (a) 'i'he selection of commodities to be included, 

 (b) the fixing of the statutory range of insurance price and premium rates (if fixed 

 by statute) for each included commodity, and (c) size of the capital or borrowing 

 power necessary to establish the Federal Farm Insurance Corporation. These 

 are interrelated problems; for the wider the selection of commodities included 

 and the higher the statutory range of insurance price, the larger might be the 

 necessary annual expenditure. It should be observed, however, both that no 

 payments would be necessary and a reserve would accumulate in years when 

 actual market price of each included commodity equaled or exceeded absolute 

 insurance price, and that in some years payments might be necessary on a few 

 commodities but not on many, or all. 



2. The question of proper use or investment of the reserve fund in periods when 

 it accumulates' is identical to the same question for other Federal funds such as 

 social security, etc. It would seem that under present conditions such surpluses 

 should be employed only for debt retirement. 



3. With respect to commodities included, ail significant contributors to farm 

 income, whether crops or livestock and its products, could be covered, subject 

 to available funds. It is true that administrative work would increase with the 

 number of items covered; but this is not a compelling reason for initial selection 

 of very few. Wide inclusion is made possible by the concept of basing insurance 

 income payments upon normal crop marketings, because this concept immediately 

 eliminates the problem of administrative ditterentiation between feed and seed, 

 on the one hand, and marketed products, on the other. The farmer who normally 

 produced corn solely for sale would have an insurance policy for marketed corn, 

 but not for hogs or cattle fed on his corn by some other producer. The farmer who 



-normally produced corn wholly for feed on his own farm would have no claim for 

 insurance-income payments on corn but would have a policy covering the marketed 

 hogs and cattle fed on his corn. Normal marketing practices, in short, would 

 determine the nature of any farmer's claim to insurance payments. Of two 

 farmers normally producing equal quantities of corn, one might have large 

 claims to corn payments and small claims to hog payments, while the other 

 might have small claims to corn payments and large claims to hog payments. 

 Except as administrative work on farm products contributing very little to farm 

 income seems undesirable, the insurance-income system might cover the widest 

 possible range of products on the principle of extending benefits to all. The farmer 

 who normally markets a variety of products and the farmer who normally markets 

 only one could then share equitably in the benefits of the insurance-income system. 



4. With respect to the statutorv range of insurance price, the range might be 

 anywhere from well below parity to approximately the parity-price level. For 

 example, the minimum might be at 60 percent of parity, at which point the 

 Secretary of Agriculture would be required to institute price-support measures 

 under traditional methods for the specified commodities. 



5. It is expected that the market structure will continue to be aided, and losses 

 thus reduced, by continuing certain justifiable diversionary and stock-piling 

 operations. The purpose should not be for price raising, but properly conducted 

 programs for nutritional education, protecting feed supplies, and ECA exports 

 will give incidental support to the markets. 



6. While administration of the plan seems complicated in respect to determining 

 the "normal share" and "actual marketable production" of individual producers, 

 actually the difficulties would indeed be less than under our present price policy. 

 It must be remembered that very detailed information about individual farm 

 operations has been accumulated under our present acreage, production and 

 marketing control, and crop-yield-insurance systems. To the extent that new 

 commodities may be included, the work may be multiplied; but, otherwise, gather- 

 ing these data is a far simpler job than the business of making loans, buying and 

 taking possession of commodities, holding stocks, managing exports, and the 

 like. Ihe work will be largely confined to the county level, with State and 

 National offices performing only the directional, supervisional, auditing, central 

 accounting, and financing functions. 



7. The burden of reporting by farmers may be confined to their applications 

 for policies stating their production plans, and reports of their "actual marketable 

 production" after harvest. 



W^hile policies should be written for 5-year or longer periods, the farmer will 

 file an amended application whenever he plans a marked change in his marketable 

 production. 



