ADMINISTRATION OF 

 PRICE CONTROL 



NEEDS OVERHAULING 



Official Position of American Farm Bureau Federation on Price 



Control Legislation and OPA Presented to House 



Banlcing and Currency Committee by 



President Edward A. O'Neal 



M 



The American Farm Bureau Federa- 

 tion has aggressively advocated legisla- 

 tion to control inflation ever since the 

 beginning of the present emergency. 

 The record shows that we advocated 

 effective controls over industrial prices, 

 farm prices, and wages during hearings 

 on the Emergency Price Control Act 

 of 1941 and during hearings on the 

 Stabilization Act of 1942. 



We wish to reiterate, with increased 

 emphasis, our former position on this 

 very important issue. However, we be- 

 lieve that the administration of the 

 price control program has been faulty 

 ,in many instances, and we believe that 

 tlie intent, as well as the plain terms 

 of the law, has been violated and is 

 being violated, and I wish to protest 

 in the strongest manner possible against 

 such violations. 



The Stabilization Act of 1942 defi- , 

 nitely directs that farm prices shall be 

 adjusted to meet changing conditions. 

 I quote from the Act : 



"Provide further, That modification shall 

 be made in maximum prices established for 

 any agricultural commodity and for commod- 

 ities processed or manufactured in whole or 

 substantial part from any agricultural com- 

 mixlity, under regulations to be prescribed 

 by the President, in any case where it appears 

 that such modification is necessary to increase 

 the production of such commodities for war 

 purposes, or where by reason of increased 

 labor or other costs to the producers of such 

 agricultural commodities incurred since Jan- 

 uary 1, 1941, the maximum prices so es- 

 tablished will not reflect such increased costs; 

 . . . Provided further, That in fixing price 

 maximums for agricultural commodities and 

 for commodities processed or manufactured 

 in whole or substantial part from any agri- 

 cultural commodity, as provided for by this 

 Act, adequate weighing shall be given to 

 farm labor." 



This language is very specific and mandatory 

 in character. There can be no reasonable 

 doubt but that Gjngress intended to require 

 that ceilings on agricultural commodities or 

 products thereof must be adjusted from time 

 to time to whatever extent necessary to get 

 the necessary production and to offset farm- 

 ers' increased labor costs and other costs since 

 January 1, 1941. 



In defiance of the clear wording and plain 

 intent of this provision of the law, the ad- 

 ministrators of the price control program 

 have failed to make these price adjustments. 

 Maximum farm prices have been imposed 

 on some cases below levels which would re- 

 flect parity prices to farmers. In other cases 

 ceilings have been imposed below the support 

 prices which the War Food Administrator de- 



10 



termined were necessary to get adequate pro- 

 duction. In other cases ceilings have been im- 

 posed below levels necessary to offset farm- 

 ers' labor costs and other costs since January 



1, 1941. 



We therefore respectfully urge that Con- 

 gress, in extending price control legislation, 

 take adequate steps to safeguard farmers and 

 other citizens against such maladministration 

 of the act. 



We therefore respectfully recommend the 

 adoption of an amendment which would for- 

 bid the imposition of any penalty on any per- 

 son for the sale, heretofore or hereafter, of any 

 agricultural commodity at a price which is no 

 higher than the price which would reflect to 

 the producers of such commodity the price 

 required by Section 3 of the Act of October 



2, 1942, including the modifications which 

 are required by that section for the purpose 

 of securing increased production and offset- 

 ting farmers' increased costs. 



The purpose of this amendment is to pro- 

 tect farmers and others from arbitrary dis- 

 criminatory orders and regulations which are 

 not in accord with the provisions and intent 

 of the statute. At present they are virtually 

 helpless to get effective redress of such griev- 

 ances. 



Instead of adjusting price ceilings to pro- 

 vide for increased costs of production, the 

 OPA has embarked on a consumer subsidy 

 program which, in my opinion, was never 

 contemplated by Congress when it passed this 

 legislation. The American Farm Bureau Fed- 

 eration strongly favors legislation to require 

 the gradual elimination of consumer subsidies, 

 and the lifting of ceiling prices to compensate 

 for the amount of subsidy withdrawn. 



It is our contention that the best assurance 

 of fair prices to the consumer is abundant 

 production. Experience proves conclusively 

 that whenever fair support prices have been 

 provided to encourage abundant production, 

 farmers have responded by producing amazing 

 volumes of the commodities involved, with 

 the result that prices have gone down. The 

 outstanding instances involve such staple foods 

 as potatoes, pork and eggs. Last year at this 

 time, there were serious shortages of all three 

 of these products. Today all are so abundant 

 that government agencies have taken definite 

 steps to encourage greater consumption so 

 that current stocks may be eased up. Scarcity 

 was changed to abundance by the simple 

 process of offering farmers prices high enough 

 to encourage increased production. And in 

 every case, prices to the consumers have fall- 

 en, in spite of government efforts to support 

 them. 



There has been no undue rise in farm 

 prices. Many have commented on the percent- 

 age increase in farm prices since the 1935-39 

 period. The fart is that farm prices were 

 only 83 per cent of parity during this period. 

 They had a long way to go before they 

 reached fair exchange value. Therefore the 

 percentage rise in farm prices is extremely 

 misleading. While farm prices have been 

 above parity by 11.5 per cent, for the previous 



twenty years they averaged 22.3 per cent below 

 parity. 



Because of the impressive results obtained 

 through adequate support prices, we favor 

 amending present price control legislation so 

 as to include the principle of the McClellan- 

 Eastland milk control bill as amended, which 

 would require periodic reviews of ceiling 

 farm prices after public hearings and proper 

 investigation, and the adjustment of ceiling 

 and floor prices to whatever extent may be 

 necessary to secure the needed produoion. 



Against the wishes of the overwhelming 

 majority of farmers, administrators of price 

 control have held consumer food prices down 

 through the subterfuge of subsidies, justifying 

 that procedure with the excuse that it was 

 needed to prevent inflation. We maintain 

 that the amount saved to the consumer by sub- 

 sidies has not been enough to constitute a 

 factor of any consequence whatever as far a? 

 inflation is concerned. Further, we maintain 

 that consumer subsidies are not needed, since 

 consumer expenditures for food at present 

 amount to the smaljest percentage of their 

 incomes than at any previous time in all our 

 history. In addition, the cost of the subsidies 

 is automatically added to the public debt, and 

 the original cost will be very much enlarged 

 by the time it has been finally paid off. This 

 policy simply transfers the burden of part of 

 the current food bill to the future taxpayers 

 of this country. Congress has repeatedly 

 voted against consumer subsidies, and I trust 

 that you gentlemen will lend your suport at 

 this time to an amendment to the present law, 

 providing for gradual elimination of all con- 

 sumer food subsidies. 



Turning now to another phase of the price 

 control program, I must report that farmers 

 are extremely bitter over the delay and con- 

 fusion and inequities which have accompanied 

 the inept administration of the law. We be- 

 lieve that prevailing dissatisfartions could have 

 been avoided if administration of the program 

 had been centered in the War Food Admin- 

 istrator. Dividing the authority among two 

 or more agencies simply does not work out 

 effectively in programs of this kind. At times 

 when speed and efficiency were paramount 

 considerations, administration of farm price 

 control has been characterized by delay and 

 inefficiency. Such things are particularly 

 galling to farmers at a time when they are 

 really and truly working beyond their powers 

 of endurance to make their contribution to the 

 war effort. Remember that the average age of 

 farm operators is 55 years. Universally, they 

 have been overtaxing their strength in their 

 efforts to produce the last pound of food 

 and fiber which they and their families are 

 capable of producing. I am sure that all of 

 you realize that their difficulties have been 

 seriously intensified by shortage of manpower 

 and farm equipment. They feel that many of 

 the agencies affecting their business have been 

 manned by people who simply do not under- 

 stand the problems of agriculture. I feel that 

 I speak for the vast majority of farmers, there- 

 (Continued on page 18) 



L A. A. RECORD 



"-7— 

 JUNE, 1944 



