LIVESTOCK LIQUIDATION? 



PEAN RUSK WARNS CORN-HOG RATIO MAY FORCE IT 



A word of warning that there is real 

 danger that liquidation 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 by 

 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 sounded this note of 

 caution as he concluded his discussion 

 of the present livestock and feed sit- 

 uation in which he covered the new 

 ceiling price on corn, longtime hog- 

 corn ratios and the general f^ed situ- 

 ation. 



Referring to current hog-corn ratios, 

 Dean Rusk said, "The new ceiling of 

 $1.16 on corn, Chicago basis, and the cur- 

 rent support price of $13.75 on hogs 

 gives a hog-corn price ratio slightly above 

 the long-time average," Dean Rusk re- 

 ported. "On the other hand," he added, 

 "this ratio will apply mainly to hogs 

 now on hand. The bulk of next year's 

 pig crop will come to market after Oct. 

 1, 1944, when the announced support 

 price of $12.50 becomes effective. On 

 the basis of this support price and $1.16 

 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 under such conditions 



Edwin Bay, Sangamon county form 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, Porkersburg, 

 W. Va. secretOTTf tight 



20 



would be gambling on wartime prices 

 considerably above support prices. The 

 more efficient producer would prob- 

 ably find this a good gamble, especially 

 if the ceiling on hogs is not lowered." 

 Earlier in his speech. Dean Rusk re- 

 ported that "many farmers believe that 

 hog prices will advance, probably to 

 the ceiling, after the heavy runs are 

 over and before another hog crop is 

 finished. However, the large number of 

 ' sows coming to market, and reports 

 from many heavy hog-producing areas 

 indicate that growers are responding to 

 appeals for a reduction in numbers." 



Dean Rusk also asserted that if "we 

 could be assured that the present ceil- 

 ings 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 $14.75, it is only $1 

 above the present market floor of $13.- 

 75. This is entirely too narrow a 

 spread, he said, since the normal sea- 

 sonal spread is about 20 per cent. Such 

 a normal spread with a $13.75 floor 

 would mean the spread should be $2.75 

 instead of $1 . 



"If we had a $2.75 spread we would 

 have pulled more of these hojjs into 

 market earlier," he said, "instead of let- 

 tine them come in at the end of the 

 season. 



"The price floor under the market 

 is to be $12.50 after Oct. 1, 1944. Now 

 if they leave the ceiling where it is, 

 ($14.75) they would have about the 

 usual spread in price, encouraging 

 better distribution of marketing next 

 fall." 



Some reduction in the livestock num- 

 bers is imperative because the total 

 feed 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- 

 corn price ratio and have encouraged 

 an overexpansion in hog production. 



"I 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 



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 readjust the hog-corn ratio was 

 to allow corn prices to rise," Dean 

 Rusk declared. 



Current attempts to encourage the^ 

 production 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 feed 

 it to other classes of livestock rather 

 than sell at ceiling prices, payment of 

 subsidies to the dairy farmer 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 livestock." 



A poll of the cattle feeders, lamb 

 feeders and hog producers present at 

 the livestock conference was taken to 

 find out their intentions for 1944 for 

 producing meat animals. This poll rep- 

 resented a cross section of the entire 

 United States. Here are the results of 

 the poll: 



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 1944, and that the committee 

 should serve as a clearing house, 

 through which the livestock producers' 

 problems could be solved and coordi- 

 nated for the livestock producers of the 

 entire country. 



L A. A. RECORD 



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