1208 GENERAL FARM PROGRAM 



Congress has in the past permitted price support for wool through 

 nonrecourse loans (1938-39) and purchase program (1943-49). These 

 support operations have been of material benefit and are greatly 

 appreciated. 



Under these methods of support certain difficult problems have 

 developed, such as: (1) the inability of Government agencies to mer- 

 chandise wool effectively, (2) the building up of wool stock piles at 

 the wrong time, (3) the technical problems involved in the physical 

 appraisal of wool by Government employees, and so forth. We think 

 that the major difficulties could be overcome through the production 

 payment method for wool which would lend stability to the producer 

 and to the market. The producer would know and the market would 

 be aware at the beginning of the year what price level in general could 

 be expected for wool and therefore the uncertainty in the minds of the 

 producers as to price, which has been the greatest cause for the recent 

 decline in production, would be largely overcome; wool would be 

 available to the highest bidder at all times and would be taken into 

 business channels in the normal way and utilized, thereby avoiding 

 the creation of a stock pile to hang over and depress the market at a 

 later date, and the true value of the wool would be arrived at by the 

 producer and the merchant. 



We visualize this method of support for wool and mohair would 

 operate in the following manner: 



1. All wool would be sold on the open market and through the 

 regular and normal channels of trade either on consignment to coopera- 

 tives and others or outright sale by the producer. 



2. At the time of sale by the producer, certification or other evidence 

 required by the Government would be sent by the handler, agent, or 

 purchaser of wool to a designated agent of the Department of 

 Agriculture. 



3. This certified bill of sale would show the pounds of wool sold, 

 price received, date sold, to whom sold, and any other information 

 considered necessary. One copy of this certified bill of sale would go 

 to the Bureau of Agricultural Economics for the purpose of determin- 

 ing the average price received by producers. 



4. Certification would be made only at the time the primary pro- 

 ducer disposed of the wool. 



5. As January 1 of every year has been determined as the beginning 

 of the marketing season for wool, the Secretary of Agriculture at that 

 time would determine the level of support for wool for that year. 



6. Evidence on the certified bill of sale would supply the Govern- 

 ment with the figures from which to determine the average price 

 received by producers during the year. 



7. The difference between the support price and the average price 

 received would determine the amount of payment due the producer if 

 a support program were necessary. Of course, if the average price 

 received were higher than the support price, no payment would be 

 forthcoming; it would be unnecessary. 



8. If the average price received were lower than the support price, 

 the difference would be expressed in terms of pcu'centage. From the 

 standpoint of the producer this percentage is the key to the successful 

 operation of the production-payment program. Without it we 

 seriously doubt the advantages of such a program over the present 

 purchase program. 



