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I. A. A. Record— April, 1934 





Chi 



icaqo 



ucers 



Annual Meeting 







Direct Buying, Organized Selling and Other Problems 



; Discussed by Speakers : 



•..< 



H. H. PARKE 



npHE obvious answer to the direct 

 "*• buying problem is to concentrate a 

 greater volume of livestock in the 

 hands of co-operative sales agencies, 

 Earl C. Smith, president of the Illi- 

 nois Agricultural Association, told 

 nearly 300 livestock growers at the 

 annual meeting of the Chicago Pro- 

 ducers C mmission Association in the 



Sherman Hotel, 

 Chicago, M a re h 

 13. Henry H. 

 Parke of DeKalb 

 county, president 

 of the Producers 

 Association, pre- 

 sided. Mr. Smith 

 challenged the 

 Illinois producers 

 who comprised 

 the bulk of the 

 audience to 

 V . -^ ; ..: :. .:■■■- ; <double the per- 

 centage of livestock marketed 

 through co-operative channels dur- 

 ing the coming year. ^ ^^^ ; • 



"I hope that the State of Iowa and 

 other states will not follow, but lead 

 us in organizing their bargaining 

 power in the sale of livestock," he 



said. -. . . ' ' •;?.■;••••,■•:.:. •: 



' .•»».••■_ 5 * • ^• ' i'/* I T .1' .*•..' 1. ..J . • 



Mr. Smith emphasized that there is 

 a big difference between organized 

 direct selling and packer buying. He 

 said that a good rule for district co- 

 operatives to follow is to sell direct to 

 packers only when the advantage in 

 freight, commission savings, yardage, 

 etc., can be reflected in the .price to 

 the producer. 



Buy *Em Cheaper . 



The harm in direct buying, he said, 

 lies in the fact that local packers who 

 secure their supplies of hogs in this 

 way usually buy them cheaper and so 

 are in a position to undersell the buy- 

 ers operating on the terminal mar- 

 kets. He pointed out that this prac- 

 tice sets up a vicious circle in which 

 packers are placed in competition with 

 one another to buy hogs at a lower 

 and lower price. Co-ordination of sell- 

 ing through local co-operatives in the 

 country with selling through the 

 terminal marketing agencies would 

 solve the problem. - ! - 



. • ^ ■ v» 



Mr. Smith expressed the hope that 

 the time would come when 90 per 

 cent of all farmers held membership 

 in one organization (applause). This 

 goal appears to be a long way off , he 



continued. -v-'v-;:-/;;/'-..., ,: •.^ v.--.' :';•• ^ ';■' ;>• 

 Many economists and market ex- 

 perts agree that consumers could 

 have purchased approximately 70 per 

 cent of the hog crop during the past 

 year at the parity price which today 

 is approximately $8.12 per cwt. at the 

 farm. If we received parity prices for 

 70 per cent of our livestock, Mr. Smith 

 said, we could almost afford to give 

 away the other 30 per cent. 



The State of Illinois furnished more 

 than 75 per cent of the receipts of the 

 Chicago Producers Commission As- 

 sociation during the past year. Ap- 

 proximately 20.8 per cent of all stock 

 in Illinois was marketed co-operatively 

 last year. -::■:- ■:\.-^ ■yy:y.: 



>\ Mr. Smith reviewed at length the 

 problems involved in raising the prices 

 of corn and hogs and alluded to a let- 

 ter from Henry A. Wallace received 

 in June, 1932 in which he predicted 

 that unless hog production were re- 

 duced there was every prospect of the 

 .price dropping to $2 per cwt. by the 

 fall of 1933. People who criticised 

 the pig slaughter program, he said, 

 failred to understand the market situa- 

 tion. _ ^ •••,:■ ,.;.••, '.v^-. ;••. ' • .^ ■;/;::, 



Simplified Plan 



Recognizing that several farm pro- 

 duction control plans now being ad- 

 ministered by the AAA are of only 

 one or two years' duration, Mr. Smith 

 asked farmers to consider using the 

 farm as the unit in future production 

 control plans rather than the com- 

 modity. 



"It is apparent," he said, "that 

 many of our surplus problems cannot 

 be completely solved within the next 

 year. Approximately 40,000,000 acres 

 were added to the cultivated areas of 

 this country during the war as a re- 

 sult of greatly increased foreign de- 

 mand for farm products. It seems un- 

 likely that foreign outlets for this sur- 

 plus production will be completely re- 

 stored at an early date. Therefore 

 some form of production control will 



undoubtedly be necessary for several 

 years to come if reasonable prices for 

 farm commodities are to be secured," 



In effect, the suggestion applies the 

 principle of the present commodity 

 control programs. There would be 

 merely a change in administration 

 whereby each farmer would be called 

 upon through contract, license, or oth- 

 erwise to retire annually from pro- 

 duction, given percentages of the cul- 

 tivated area on each farm. With such 

 retirement of acreage, the govern- 

 ment would have no interest in nor 

 authority over the remaining cultivated 

 area of the farm. 



Mr. Smith stated that it was his 

 belief there would be very little, if 

 any, shift from one crop to another; 

 that each farmer would continue in a 

 large measure to grow the same crops 

 he had been growing throughout the 

 years, and that any program calling 

 for a cut in production would raise 

 the price level of all basic farm com- 

 modities. . '■■■■■'-'•■//: ■ .■'..■•••;/■■';• 



•:■•■•;■ Cut Out Tax ;^:- ■;:■;■';. ■ 



"Such a plan would be very simple 

 in its administration. It would make 

 possible a great reduction, if not the 

 discontinuance entirely, of present 

 processing taxes, and would be so 

 simple in its application that not only 

 the farmer but also the general pub- 

 lic could understand every detail of its 

 operation." = -, 



Mr. Smith explained that this pro- 

 posal, offered merely for study and 

 thought, in no wise was suggested to 

 replace, impair, or detract from the 

 administration of present policies of 

 government; that it was offered mere- 

 ly for consideration and worthy of 

 thought as farmers look to the future 

 for a more permanent but sound pro- 

 gram. ■ ■••••■••"•-• ••■■':■. ;-^:" 



Prof. R. C. Ashby of the University 

 of Illinois who addressed the gather- 

 ing, stated that farmers had given 

 ten times more attention to marketing 

 costs than to livestock prices. He said 

 that the 50 per cent of livestock go- 

 ing through the terminal markets are 

 paying the bill to maintain such mar- 

 kets which establish prices. His study 

 of the situation, he said, revealed that 

 local markets are getting the best hogs 

 which go direct to the packers and 

 that in general the poorer hogs are 

 going to the big terminals. 



Can Undersell 



He pointed out that the freight rate 

 on dressed pork from Iowa is only 77 

 per cent of the live hog rate which 

 gives the smaller Iowa packers the ad- 

 vantage and enables them to undersell 

 the terminal packers in the eastern 

 J (Continued on Page 12, Col. 3) 





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