What was the trend of farm income in 1957? The answer to that question depends on which measuring rod you use.

There are three principal ways to measure farm income:

1. Realized net income of farm operators: This excludes changes in the farm inventory. According to this measuring rod, which is one customarily used, farm income was down 4 percent in 1957.

2. Total farm net income: This includes realized income plus changes in inventory. According to this measuring rod, farm income was up 4 percent in 1957.

3. Per capita income of people on farms: This is the most realistic gage of income because it more accurately reflects the whole picture, particularly changes in population. According to this measurement, the 1957 income per person on farms, from all sources both farm and nonfarm, was the highest in history.

Now let's look at the figures. Farmers' realized net income in 1957 was $11.5 billion, compared with $12 billion in 1956. This drop resulted from two primary causes:

First, a 3-percent increase in total farm production expenses-one of the jaws of the old familiar cost-price squeeze. Production expenses reach a new high last year.

Second, a wet fall and delayed harvest which sharply reduced marketings late in 1957 and thus caused a very substantial buildup in stocks on farms as of January 1, 1958.

In other words, some income which was produced and which would normally have been realized in 1957 was postponed and will be realized this year.

In contrast to the dropoff in realized net income, total net income. including the inventory change rose from $11.6 billion in 1956 to $12.1 billion in 1957-a gain, as I mentioned earlier, of 4 percent.

We use this total net income figure in determining the per capita income of farm people. It is also more comparable with the way the income of nonfarm people is computed. On a per capita basis, income of the farm population from all sources was at a record high of $993 in 1957, up 10 percent from 1956 and 2 percent above the previous peak reached in 1951. Much of the change from 1956 to 1957 reflected the estimated 8-percent drop in farm population for 1957.

PRODUCTION AND SUPPLY

Our agriculture in 1957 was characterized by high production, strong domestic demand, and record exports. Output of both crops and livestock products held at or close to the peak 1956 level. Expanding population, high economic activity, and record consumer income created a strong domestic market for food and other farm products. Heavy exports of wheat, cotton, and rice reduced carryovers of these commodities during the 1956-57 year and further decreases are in prospect in 1957-58.

Aided by Government programs, wheat exports in the 1956-57 cropmarketing year reached an all-time high of 549 million bushels. Twothirds of our wheat exports were moved under special Government programs. The wheat carryover dropped 124 million bushels to 909 million on July 1, 1957. A further reduction of about 30 million bushels may occur by July 1, 1958, on the basis of expected exports of about 400 million bushels.

United States cotton exports in fiscal 1957 were the largest in 23 years; and the supply of cotton in the current season is considerably smaller than the record high of 27.6 million bales of 1956-57. The starting carryover last August 1 was about 11.2 million bales-3.3 million bales smaller than the record of 14.5 million August 1, 1956. The 1957 crop, estimated at 10.9 million running bales was 2.3 million below the 1956 crop. We expect the carryover on August 1, 1958, to be reduced another 22 million bales-making a total reduction of more than 5 million bales in 2 years.

Feed supplies are in a different situation. Total feed concentrate supplies, which reached 200 million tons for the first time in 1956, increased another 9 percent in 1957. The big supply, estimated in January 1958 at 218 million tons, resulted from a favorable growing season and record stocks of 49 million tons carryover from previous years.

A further increase of around 10 to 12 million tons in carryover stocks by October 1, 1958, is in prospect.

The big carryover for 1958 practically assures adequate supplies for 1958-59 as well. This would be true even if the 1958 growing season should be the poorest in 50 years.

FOOD CONSUMPTION AND OUTLOOK

Our people continue to have an abundance of available food. Civilian consumption of food per person in 1957 was 1 percent lower than in 1956, but it exceeded the rate of the immediate preWorld War II period by 12 percent, and that of the immediate postwar period by 2 percent. Our people ate record per capita amounts of chicken and turkey meat and a near record quantity of beef.

Domestic demand has been strong and rising throughout most of the period since 1951. The number of consumers has steadily increased. During 1957, business activity, employment, and consumer incomes were high. Consumers continued to spend about one-fourth of their disposable income for food.

Even though there has been some slack off in employment in recent weeks, buying power is still sustained at a high level. It is fortunate that the economy has been, and continues to be, sound during the adjustment period for agriculture.

Domestic demand for food this year is expected to continue at about the same level as last year. Food supplies will be close to the high 1957 level and civilian consumption per person will be about the same as last year. Red meat and egg consumption may drop a little, while consumption of poultry meat may rise slightly. Per capita consumption of milk and dairy products is expected to exceed slightly the 1957 overall rate.

THE CURRENT SITUATION AND OUTLOOK

As for production, record harvests and declining prices of feed are strong stimuli to livestock. The 1957 fall pig crop was 2 percent larger than in 1956. The 1958 spring pig crop may be up 6 percent from 1957, according to farmers' intentions in December 1957. Prices of hogs will likely hold up well through midsummer. Prices in the fall of 1958 will be lower than a year earlier, but no severe price reduction is expected.

Cattle numbers on farms probably will hold steady or decrease a little for another year or two. If consumers' incomes and demand for beef remain high, gradually rising prices for cattle can be expected during this period.

Total milk output in 1958 will set a new record. Abundant supplies of feed and increasing milk production per cow will be important factors. Production probably will be a billion or more pounds above the 126.4 billion pounds produced in 1957.

Egg producers should find 1958 a more profitable year than 1957, but prospects for producers of poultry meat are not as favorable. Broiler production for 1958 will probably rise above the 1957 record

of about 1.4 billion birds.

Other aspects of the current situation are these:

During the present fiscal year, agricultural exports, while not likely to equal the record level of $4.7 billion in 1956-57, will probably exceed the level of 1955-56.

The level of living on farms is at an alltime high.

The rate of farm foreclosures in the year ending March 1, 1957, was down slightly from the year before and continued at low levels compared with the 1930's and early 1940's.

Farm assets are an alltime high-$188 billion as of January 1, 1958. Farmers have less than $11 in debts for each $100 of assets. Owner equities rose 7 percent during 1957 to a peak of $168.4 billion.

Farm ownership is also at a record high. Only 1 in 3 owneroperated farms has a mortgage.

The family farm continues to dominate agriculture. Ninety-six percent of our farms and ranches are family operations, about the same as 30 years ago.

The postwar downtrend in prices which started in 1951 has been reversed. Prices received by farmers increased 2 percent from January to February and are 8 percent above a year ago and 11 percent above 2 years ago.

The buildup of surpluses has been reversed. Government investment in surplus farm products owned and under loan has dropped considerably in the past year and a half.

But we all realize that, despite these more favorable developments, agriculture is still having difficult times. Nobody knows that better than I. And nobody is more deeply concerned about it.

The farm part of our economy has not shared adequately in our national prosperity.

The people on over half of our farms-the small farms do not receive much benefit from price-support programs.

Smaller and smaller acreage allotments are restricting the opportunities for our cotton farmers, our tobacco growers, our wheat and corn producers. Efficiency in many cases is bound to be crippled when cotton allotments are less than 15 acres; as 7 out of 9 allotments now

are.

Land diverted from wheat and cotton has gone into sorghums, oats, and barley.

Corn producers can't live within their allotments-which is why only one-seventh of the corn produced in the commercial area last year was in compliance. These conditions pose a threat to hog producers,

to the entire livestock industry, to poultry producers, to the dairy industry.

Farmers are being hurt by the cost-price squeeze-by rising prices of operating necessities.

Since 1950 gross farm income has gone up $2.3 billion; but farm costs of operation have gone up $3.7 billion. They went up $600 million last year alone. There is no question about it, farm incomes today are out of line with profits and wages.

This is the background against which we view the work of the Department in the months ahead.

DISPOSAL OPERATIONS

The record of the past few years in moving our commodity surpluses into useful consumption is undoubtedly pleasing to the chairman and other members of this committee. This has been, of course, a costly but necessary operation. Most of our commodity stocks must be sold for less than their acquisition value, and a sizable quantity must be disposed of through outright donation. Nevertheless, there are several favorable factors in our current disposal program.

In the period from July 1, 1953, through December 31, 1957, the latest date for which complete information is available, surplus commodities having a cost value of $12.2 billion were moved out of the CCC inventory. This substantial outmovement of farm products has at last exceeded the rate of acquisition. From an alltime peak of $8.9 billion in February 1956, the CCC investment in commodities owned and under loan had been brought to $7.2 billion in December 1957; a drop of $1.7 billion in a little less than 2 years.

CCC stocks of several commodities are still larger than we'd like to see. They put downward pressure on prices received by farmers, they are costly to store, and there is always the danger of deterioration and waste. Consequently, any decrease in the commodity stockpile is gratifying. You'll recall that not too long ago the surpluses were coming in the back door faster than we could move them out the front. In fiscal years 1956-57, for every dollar's worth of surpluses taken into the inventory, $1.41 was moved out. For the 1953-55 period, however, for every dollar's worth taken in, only 56 cents' worth moved

out.

In carrying on our disposal activities, we have strongly emphasized sales for dollars. It's a policy that is bringing results. Sales for dollars constitute, by a big margin, our most important disposal outlet. Of the $12.2 billion worth of commodities disposed of in the past 42 years, 60 percent of the volume represented dollar sales. The actual dollar proceeds on these transactions amount to $5.8 billion. Export sales for dollars in fiscal 1957 were $700 million higher than in fiscal 1956.

Other disposal methods must be used when dollar sales cannot be made. Fortunately, the Congress has provided us with a "kit" of disposal "tools" that will fit almost every need.

For example, we can barter. Under this authority we have swapped $1.4 billion worth of surplus farm products in recent years for such strategic and critical materials as cadmium, titanium, and industrial diamonds.

Since July 1, 1953, about $1.4 billion worth of CCC-owned commodities have been disposed of for foreign currencies under Public Law 480-the Agricultural Trade Development and Assistance Act of 1954. The foreign currencies acquired under the program are loaned or granted to importing countries for economic development purposes. They also are used by the United States to buy strategic and critical materials; to develop new markets; to procure military equipment and services; and to pay our obligations abroad. This, obviously, is not a giveaway program. It has been a positive factor in advancing our interests abroad. And it has been helpful to other countries. It has, in fact, been a most constructive use of our abundance.

In addition, food surpluses are being donated for useful purposes both at home and abroad. In this country surplus foods are going to school lunch programs, and to needy people in institutions and on relief rolls. Through private welfare organizations, international organizations, and the International Cooperation Administration, surplus American food is being used to relieve hunger abroad. Our country is reaping rich dividends from these donations.

During my recent trip around the world, I saw the gratitude with which our food supplies were received-the friendliness it was engendering in Japan, and Hong Kong, and Pakistan and other places of dire need. I feel sure that these donated commodities are helping to develop eating habits that may, in the long run, mean future markets for our agriculture.

Section 32: Section 32 operations continue to be an important mechanism for supporting the market for various commodities, removing surpluses and providing commodities to eligible outlets, particularly the school lunch program. In 3 of the past 4 years-1954, 1956, and 1957-obligations for purchase of commodities under section 32 have been the highest on record. In recent years, the scale of section 32 operations has turned very largely upon the extent of purchases of livestock products, especially pork and beef.

For example, in fiscal year 1954, $84 million was spent for canned beef and gravy and in 1956, $101 million was spent for pork and lard. Substantial amounts were also used for dairy and poultry products. For dairy products, especially butter, $87 million was spent in 1954, $78 million in 1956, and $55 million in 1957. Other large programs in 1957 included $16 million for eggs and $10 million for turkeys.

For the first half of fiscal year 1958, obligations for commodity purchases under section 32 totaled approximately $74 million, with the largest amount being committed for butter. Total section 32 commodity program outlays for 1958 will probably not be much less than for 1957. Dairy products will account for most of the expenditures in 1958. In 1957 expenditures were distributed over a wide range of commodities.

School lunch programs and other eligible outlets are generally being provided with requested commodities available from CCC inventories. School lunch programs are given first priority on available surpluses. Accordingly, there have been instances, such as the current situation with regard to butter, when the inventory position was such as to preclude a program of providing butter to States for relief distribution to needy families.