lAA PRESIDENT 

 SHUMAN ASKS FOR 

 MORE PRODUCTION 



(Continued from page }9) 



Rationing and Price Control 



The Congress of the United States is 

 now considering the request of the Presi- 

 dent for authority to reimpose price ceil- 

 ings and rationing on farm products and 

 other commodities in short supply. The 

 record of the Association is clear on this 

 subject. We supported these price and 

 rationing controls during the war as an 

 emergency measure, but insisted that such 

 controls must apply to all commodities 

 and the wages of labor. At the end of 

 the war after many exceptions to the 

 restrictions had been granted, we took a 

 position of leadership in demanding that 

 the OPA and other wartime controls 

 be ended. It would be a grave mistake 

 to attempt to restore price control and 

 rationing at this time. Past experience 

 has demonstrated that this type of pro- 

 gram cannot succeed unless all phases of 

 our economy are rigidly controlled. The 

 American people will not submit to this 

 kind of regimentation during peacetime. 

 I am sure that farmers will unite to 

 vigorously oppose the return of ration- 

 ing and price control. 



Revision of Parity Formula 



Let us now turn to some of the more 

 specific problems facing agriculture. Gen- 

 eral recognition by the nation of the 

 fundamental justice of the parity price 

 concept for agricultural commodities is 

 the greatest victory that organized agri- 

 culture has ever achieved. Farmers should 

 fight to the finish any attempts to de- 

 stroy this principle. At the same time, 

 we are forced to recognize that changing 

 conditions necessitate modernization of 

 the actual formula. Present suggestions 

 of a ten year moving average as an ad- 

 justment to the I91O-I914 base would 

 seem to give most promise of correcting 

 some unfair relationships that exist be- 

 tween individual commodities. 



- Coordination of Agencies 



Conservation and rebuilding of our 

 soil resources is a national responsibility, 

 yet the fanner on the land is the only one 

 who can actually do the job. The na- 

 tion's responsibility is twofold; first, to 

 see that an adequate research and educa- 

 tional program brings to the farmer the 

 necessary knowledge of how to conserve 

 the soil; second, to see that agricultural 

 price disparities are corrected so that 

 farmers are not forced to resort to soil 



mining in order to exist. 



Soil conseri'ation has been a very pop- 

 ular activity of government. As a result, 

 several agencies under the U. S. Depart- 

 ment of Agriculture are carrying on more 

 or less duplicating programs. This has 

 caused considerable confusion and waste. 

 All of the government soil conservation 

 activities should be combined under one 

 agency. Research projects should be as- 

 signed to the recognized research institu- 

 tions — the experiment stations. Educa- 

 tional and promotional activities should 

 be administered by the Extension Service, 

 which is the agency best fitted to do this 

 work. These changes would not hamper 

 the good work being done by the many 

 local Soil Conservation Districts, but 

 should in fact speed up the program. A 

 more efficient and better coordinated pro- 

 gram is essential if we are to turn the 

 tide that is rapidly carrying us toward 

 national soil poverty. 



Costs of Distribution 



One of the factors causing the serious 

 long time disparity of farm prices is the 

 constantly increasing cost of the distribu- 

 tion of farm products. The total costs 

 of marketing, processing and distributing 

 our products increase rapidly during in- 

 flationary cycles, but remain practically 

 unchanged when prices fall. This con- 

 dition is partly a result of the growth of 

 monopolistic restraints and practices in 

 the distribution industries and partly a 

 result of resistance of labor to lower 

 wages in periods of lower prices. Farm- 

 ers should insist that the full power of 

 government be used to break up these 

 monopolies and controls. In addition, 

 organized farmers have another very ef- 

 fective tool that they can use more ef- 

 fectively — their cooperatives, both mar- 

 keting and purchasing. 



Farm Cooperatives 



Our agricultural cooperatives are being 

 attacked vigorously by certain groups in 

 business. Charges are being made that 

 cooperatives are socialistic and that they 

 have been successful because they have 

 unfair tax exemption. Let us look at 

 facts. A true farmer cooperative is of the 

 very essence of democracy. It is in fact 

 private business. Farmers have the same 

 right to combine their resources and op- 

 erate a business organization just as any 

 other group has a right to combine their 

 funds to operate a corporation. 



The taxation issue is also easily an- 

 swered. The distributed earnings of a 

 cooperative, even if it is one which is 

 completely exempt from Federal income 

 tax, are taxable in the hands of the pa- 

 tron members. The question is whether 

 these savings should be more heavily 



taxed before distribution to the patrom 

 who are the owners of the business. Your 

 Association, by resolution of the voting 

 delegates has stated its position. It rec- 

 ognizes that earnings of cooperatives 

 which are retained within the cooperative 

 structure and not distributed as patronage 

 dividends to members should be subject 

 to the same treatment as funds so re- 

 tained within the corporate structure of a 

 private business corporation. However, 

 cooperative earnings up>on member busi- 

 ness which are returned to members as 

 patronage dividends, either in cash or 

 stock, should not be subject to tax against 

 the cooperative. Any private business 

 corporation which makes advance agree- 

 ments or a contract requiring the return 

 of its profits to its customers as refunds 

 can put itself in the same p>osition. If it 

 makes such agreements and makes the re- 

 funds, the private corporation would be 

 entitled to deduct the amount of these 

 refunds from its taxable income just as 

 a cooperative is entitled to deduct the 

 amount of the patronage refunds which 

 it had paid from its taxable income. The 

 income tax in both cases would be paid 

 by the recipient of the refund. 



Unless some of the inefficiencies and 

 monopolistic practices of private busi- 

 ness in the field of distribution are cor- 

 rected, it will be necessary for farmers 

 to provide the needed comf)etition by 

 greatly increasing their cooperative ac- 

 tivities. 



Emergency Agricultural Programs 



Most of my discussion today has been 

 based upon the hope that steps can be 

 taken to avert the type of national dis- 

 aster which fell upon us in the period 

 1929 to 1937. Agriculture must, how- 

 ever, be prepared for every contingency. 

 The nature of this emergency program is 

 the most controversial subject in agricul- 

 tural circles today. There are some sug- 

 gestions being made to the effect that all 

 past programs be abandoned and a com- 

 plete new theory used. I cannot agree 

 with this reasoning. While it must be 

 admitted that several of the programs 

 tried in the past were not successful, yet 

 there are many valuable features in the 

 existing legislation. Farmers should not, 

 and I am sure will not, give up such im- 

 portant instrumentalities as the parity 

 price principle, the Commodity Credit 

 Corporation and the marketing agree- 

 ments provisions embodied in existing 

 legislation. The wise course will be to 

 build up>on and improve our present ag- 

 ricultural legislation. 



In this formative stage, it would be 

 unfair for any individual to spell out any 

 proposal in any considerable detail. Farm- 

 ers' thinking will guide the course of 

 agricultural legislation as no plan will 



JANUABY. 1948 



