LIVESTOCK LIQUIDATION? 



DEAN RUSK WARNS CORN-HOG RATIO MAY FORCE IT 



A word ot warning' that there is rial 

 danger that hqtiidation of livestock 

 might very rapidly go too far if the 

 delicate balance of price relationships 

 becomes too unfavorable, and especially 

 if such unfavorable relationships are 

 maintained too long, was issued bv 

 Dean H. P. Rusk of the U. of I. College 

 of Agriculture at the livestock confer- 

 ence of the American Farm Bureau 

 Federation annual meeting. 



Dean Rusk soundeil tliis note of 

 caution as he concluded his discussion 

 of the present livestock and feed sit- 

 uation in which he co\ered the new 

 ceiling price on corn, longtime hog- 

 corn ratios and the general feed situ- 

 ation. 



Referring to current hog corn ratios. 

 Dean Rusk said. "The new ceiling of 

 SI. 16 on corn, Chicago basis, and the cur- 

 rent support price of SI 3.75 on hogs 

 gives a hog-corn price ratio slightly above 

 the long-time average." Dean Rusk re- 

 ported. "On the other hand." he adiied. 

 "this ratio will apply mainly to hogs 

 now on hand. The bulk of ne.xt year's 

 pig crop will come to market :<fter Oct. 

 I. 194-1. when the announced support 

 price of Si 2.50 becomes effect i\T'. On 

 the basis of this support price and Si. 16 

 corn, the hog-corn price ratio may be as 

 low as 10.77 which is considerably be- 

 low the 11.39 long-time average. 



"Farmers who continue maximum 

 hog production imder such conditions 



Edwin Bay. Sangamon county iarm ad- 

 viser, president of Illinois Association of 

 Farm Advisers, center, chats with L. V. 

 Toyne, Greeley, Colo., president of Na- 

 tional Association of County Agricultural 

 Agents, left, and W. H. Sill, Parkersburg. 

 W, Va.. secretary, right. 



wouiti be gambling on wartime prices 

 considerably above support prices. The 

 more efficient producer would prob 

 ably find this a good gainble. especial 1\ 

 it the ceiluig on hogs is not lowered. ' 

 Harlier in his speech, Dean Rusk re 

 [H)rted that "many farmers believe that 

 hog prices will ailvance, probably to 

 the ceiling, after the heavy nms are 

 over and before another hog crop is 

 finished. However, the large number of 

 sows coming to market, and reports 

 from. many heavy hog-produciijg areas 

 indicate that growers are rcsporlding to 

 .ippeals for a reduction in numbers " 



Dean Rusk also asserted that if "wc 

 lould be assured that the present ccil- 

 mgs on hogs will not be lowered we 

 would probably get a better distribu- 

 tion of marketings and be less likely to 

 discourage efficient producers who 

 should stay in the business." 



Dean Rusk pointed out that with the 

 hog ceiling now at Sli.7'S. It is only Si 

 above the present market floor of Sl3.- 

 ■"i. This is entirely too narrow a 

 spread, he said, since the normal sea- 

 sonal spread is about 20 per cent. Such 

 .1 normal spread with a Sl3.7<i floor 

 would m'ln the spread shouh) be S2.'''> 

 iustfid of Si. 



"If we had a S,2.~'< spread we wouKl 

 li.ive pulleil tnore of these hogs into 

 pi.irket earlier." he said, "instead of let- 

 tini: them come in at the enil of the 

 •-eason. 



The price floor under the market 

 l^ to be S12.50 after Oct. 1. 19J<. Now 

 it they leave the ceiling where it is, 

 (SI i.T*)) thev would have about the 

 usual siire.ul in price. encour.iging 

 better distribution of marketing next 

 fall. ■ 



.Some redintion in the livestock num- 

 IxTs is imperative because the total 

 leed supply is limited. Dean Rusk ex- 

 plained. He pointed out that price rela- 

 tionships established by government 

 agencies encourage a very rapid ex- 

 pansion of livestock numbers. Rela- 

 tively low corn price ceilings have pre 

 vented the normal swing in the hog- 

 lorn price ratio and have encouraged 

 an overexpansion in hog production. 



1 presume it may be just as logical 

 to argue that the support price of hogs 

 has been too high as it is to contend 

 that the ceiling price of corn is too low. 

 The support price of hogs was placed 



H 



Dean H. P. Rusk 



higher than at least one state war board 

 recommended. In view of this support 

 price commitment, the only honorable 

 way to read)ust the hog-corn ratio was 

 to allow corn prices to rise," Dean 

 Rusk declared. 



CAirrent attempts to encourage the 

 )Moduction of milk by payment of sub- 

 sidies will tend to make a more favor- 

 able net income showing for the dairy 

 farmer if he can get the feed," he said. 

 But;so long as price relationships en- 

 courage the farmers in the areas that 

 normally produce surplus grain to fceif 

 it to other classes of livestock rather 

 than sell at ceiling prices, payment ot' 

 subsidies to the dairj' fanner will not 

 help him to get the feed. Increases in 

 the price of corn and in returns for 

 products are both needed to put dairy- 

 men in a more favorable competitive 

 position with producers of hogs and 

 other classes of li^estock." 



A poll of the cattle feeders, lamb 

 feeders and hog producers present at 

 the livestock conference was taken to 

 tmd out their intentions for 19 '1 for 

 producing ineat animals. This poll rep- 

 resented a cross section of the entire 

 1,'nited -States. Here are the residts of 

 the poll : 



I nc revise ()\ir 



S.imc- as ' I ^ 

 less Tli.m 1^ 



Oittle 



FtcdtTS 



1 



18 



IS 



Pnuluccrs 



8 

 29 

 Si 



Lamh 

 Feeders 



■t 

 s 



It was the general opinion of the en- 

 tire group that the livestock committee 

 of the American Farm Bureau Feder- 

 ation should become more effective and 

 active in 194 i. and that the committee 

 should serve as a clearing house, 

 throuch which the livestock producers' 

 problems could be solved and coordi- 

 nated for the livestock producers of the 

 entire country. 



tu 

 15 

 fa 



P' 



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20 



I. A. A. RECORD 



