I. A. A. Record— February, 1934 



1^ 



Left to right I CheMter C. Davis, AdminlHtrator, Aerlcnltnral AdJnRtment Act; 

 President Elarl C. Smith; Secretary Geo. E:. MetEger; and Ed^vard A. O'Neal, presi- 

 dent, American Farm Bureau Federation. 



re Incomi Ahead 

 if or Co-operators 



Chester Davis, AAA Chief, Explains Dairy, Hog, and Beef 



Cattle Situation ^ 



CLEANCUT and searching 

 analysis of problems facing 

 American farmers and the Ag- 

 ricultural Adjustment Administration, 

 a brief review of accomplishments of 

 the AAA, and a word about the farm 

 program of the administration in 1934 

 and 1935 were given by Chester C. 

 Davis, chief of the adjustment admin- 

 istration who spoke before a full house 

 in the big armory at Danville Thurs- 

 day night, Jan. 25. 



Mr. Davis, well known through his 

 former association with the I. A. A., 

 was given a warm ovation, led by 

 Farm Adviser J. H. Checkley, follow- 

 ing his introduction by President Earl 

 Smith. 



Programs already under way pro- 

 vide for distribution in the form of 

 benefit payments to co-operating farm- 

 ers of $762,000,000 in 1933 and 1934, 

 Davis said. Commitments of $85,000,- 

 000 for removal of surplus bring that 

 total to $847,000,000, and if general 

 programs now contemplated are 

 adopted for the dairy and beef in- 

 dustry, the figure will exceed one bil- 

 lion dollars. 



The speaker frankly discussed the 

 three major problems and questions of 

 chief interest to corn belt farmers, 

 namely, future plans for improving 



prices for milk and butterfat, who 

 pays the processing tax on hogs, and 

 what can be done to help the beef 

 cattle men. 



Davis admitted that the milk trade 

 agreements operating on the larger 

 milk markets had been disappointing. 

 In this effort, he continued, we some- 

 times tried to lift milk prices far our 

 of relation to the price of competing 

 milk sold for manufacturing purposes. 

 This situation decreased the consump- 

 tion of fluid milk and piled up higher 

 surpluses of butter, cheese, and con- 

 densed milk. 



"A price improvement that is last- 

 ing must give not only producers for 

 fluid milk markets a fair return," he 

 said, "but also butterfat producers. 

 Our attempts to fix milk prices to 

 consumers taught us that the govern- 

 ment cannot fix resale prices and 

 enforce them, unless it goes further 

 and assumes the power and respon- 

 sibility of regulating the intermediate 

 steps between producer and consumer. 

 In other words, the milk industry 

 would have to be dealt with as a pub- 

 lic utility. 



"Our new dairy policy is based on 

 the lessons we learned from experi- 

 ences with these two objectives. 

 Briefly that policy is this: We are 



ready to go into any market with the 

 consent of producers, and license all 

 distributors under the requirement 

 that they pay producers a uniform 

 price for whole milk. We will put that 

 price at the highest level that can be 

 justified and sustained in the light of 

 all economic factors in the industry 

 and that can be enforced in the face of 

 competition from other milk producers. 

 It must be an enforceable price. It 

 must be a price that will not unduly 

 disturb producers for other markets. 

 Having done that, we want milk pro- 

 ducers to cooperate in adjusting milk 

 supply to the current demand so that 

 prices for the entire dairy industry can 

 be raised toward the parity level 

 which the Agricultural Adjustment 

 Act sets as our objective. 



"Our obligation is to the entire dairy 

 industry and in arriving at enforceable 

 prices the whole industry must be con- 

 sidered. Establishment of bases for 

 those prices must be the function of 

 the Agi^icultural Adjustment Admin- 

 istration which. cannot be delegated to 

 another agency if federal enforcement 

 is to result. 



Treat All Alike 



"Our policy treats the dairy in- 

 dustry as a whole: not as unrelated 

 parts. The new marketing agreements 

 are relied upon to bring stability into 

 the whole milk market, while we all 

 :; work in unison toward higher price 

 levels. The prices that we can estab- 

 lish and enforce for whole milk are not 

 as high as we all would like to see 

 them set. I am sorry that this is the 

 case. If by any other means producers 

 themselves can maintain better prices, 

 we wish them every success." 



Within a short time we expect to 

 go before the country with a complete 

 general program for the dairy in- 

 dustry, Davis said, and present it at 

 regional conferences with dairy pro- 

 ducers. 



That Processing Tax 



Answering the question, "Who pays 

 the processing tax on hogs?" the ad- 

 ministrator admitted "that when sup- 

 ply rather than demand dominates the 

 market the tendency is to take the 

 processing tax out of the price to pro- 

 ducers. That is what is happening in 

 hogs now," he continued. "The situa- 

 tion is different as to cotton and 

 wheat because here the export mar- 

 ket is the determining factor. But 

 pork is a perishable commodity with 

 little export demand and when the 

 supply is relatively large the tax can- 

 not be passed entirely on to the con- 

 sumer." 



Davis asserted that as soon as 

 farmers cut pork production and re- 

 move the surplus the processing tax 



