GENERAL FARM PROGRAM 1219 



Production Payment Price Supports Versus Nonrec>3URse Loans 



(Statement by C. J. Fawcett, general manager. National Wool ^larketing Corp., 



Boston, Mass.) 



The National Wool Marketing Corp. is a national wool-selling agency serving 

 22 State cooperative wool-marketing associations with a membership of 70,000 

 wool growers. Serving in this capacity, the National Wool Marketing Corp. is 

 the largest handler of domestic wool in the United States. Our principal sales 

 office and warehouses are located in Boston, Mass., in order that our stocks may 

 be accessible to the manufacturers at all times. A very large percentage, probably 

 85 to 90 percent of the wool used in the United States, is manufactured within a 

 radius of 400 miles of Boston. 



We have been invited by your committee to present our views with respect to 

 the use of pioduction payments as a means of implementing a price-support 

 program on wool as distinguished from methods now employed in agricultural 

 support programs through loans, purchases, or other operations. 



The matter of production payments has had careful consideration by the 

 majority of our State inarketing associations and their wool-grower meinbership 

 since the plan was first introduced in the earl}- forties bj- the Boston wool trade 

 as a substitute for the CCC wool-jnirchase program then in effect. All of our 

 associations and their individual membership, so far as we have been able to 

 ascertain, favor a nonrecourse loan such as has been recommended for nonperish- 

 able or storable commodities by the Secretary- of Agriculture rather than the 

 production-payment plan. Wool is a commodity that lends itself to support 

 programs involving extended storage periods for it does not deteriorate with age 

 when properly stored. 



Domestic-grown wool is a deficiency commodity and probably always will be. 

 We now produce approximately one-third of our annual requirements. For this 

 reason, large stock piles of domestic wool are not probable if priced on a competi- 

 tive basis with comparable foreign grades. So long as we require 2 pounds of 

 foreign wool to 1 pound of domestic wool our market values are largely governed 

 by foreign market levels. Stock piles of deficiency commodities are not a menace 

 to market values if properh' regulated and intelligently marketed. In fact, the 

 advisability of creating a stock pile of wool is now under consideration by the 

 Munitions Board as a safeguard against an emergency situation such as occurred 

 in 1941 and 1942 and as an insurance policy aganst unreasonable price advances 

 in foreign markets upon which we must rely for the bulk of our requirements. 



There is abundant evidence at hand that the most efficient use of our natural 

 resources in the form of feed and grain will include an expansion of the sheep 

 numbers in the United States. In a recent analysis made by the Department of 

 Agriculture pertaining to the 1949 goals, sheep and lambs, we find the following 

 itatement : 



"Present range grazing resources are now being utilized less fully than they 

 have been during the last 30 vears. Much of these resources can be utilized best 

 by sheep. The possibility of increased sheep numbers is greatest in the western 

 range area. As farmers reduce their acreages of cultivated crops they may find a 

 need for increased sheep numbers to utilize their increased pasture and forage, 

 particularly in some of the wheat-producing areas. There is a possibility also 

 for an expansion in sheep numbers in the farm flock areas so as to utilize more 

 fully the pasture now available and which will become available when crop 

 acreage is reduced." 



This report would seem to substantiate the need for a support jirogram. The 

 purpose of this brief, however, is not to supply additional evidence that a support 

 price is needed, if our industry is to be maintained at present levels, but rather 

 to discuss the most desirable type of a support program to be employed. 



Since it organization in 1930, the National Wool r^Iarketing Corp. has operated 

 under two support programs — a nonrecourse loan program in 1938 and 1939 and 

 under the outright purchase program in effect since 1943. It is our considered 

 opinion, based on experience with both programs, that a nonrecourse loan type 

 of program provides the most protection to the producer and that its application 

 is more simple, therefore, more efiieient than the present purchase ]3lan. It is also 

 our firm conviction that it would operate at far less cost to the Govenunent than 

 ■either the present plan or the ])roposed production-payment plan. 



