available to wheat producers on their 1939 crop. The program is administered by the Federal Crop Insurance Corporation, an agency of the Department of Agriculture, as a part of the A. A. A. farm program. County committees of the A. A. A. are in charge of writing the insurance, the measurement of acreage, and the adjustment of losses.

Crop insurance for wheat guarantees participating farmers some wheat to sell every year, regardless of unavoidable crop losses. Under this plan the burden of crop losses is carried, not by the individual grower over a short period, but by wheat farmers all over the country over a long period.

Policies totaling nearly 166,000 were issued on the 1939 wheat crop. These provided protection on 7,200,000 acres against loss from all such unavoidable hazards as drought, hail, wind, frost, winterkill, fire, disease, and insect and animal pests. Holders of about one-third of the policies collected indemnities totaling more than 10,000,000 bushels.

Nearly 380,000 contracts for insurance on the 1940 crop were approved, more than twice as many as in 1939. These contracts insured production on approximately 12,000,000 acres for a guaranteed estimated production of 106,250,000 bushels. The premiums paid by the growers on these contracts totaled about 14,750,000 bushels.

Wheat farmers who insure their crops under the program guarantee themselves either 50 or 75 percent of their average yield, determined from the actual average yield or an appraisal of the yield for the farm over a representative period. Premiums likewise are based on the actual or appraised loss experience of the farm for the base period. This "loss cost" is blended with the loss experience of the county in which the farm is located to smooth out the effect of any accidental losses which may have occurred on the farm during the base period, or, conversely, to reflect any general losses which this particular farm may have been spared in the base period.

WHEAT RESERVE ESTABLISHED

Premiums paid in by producers are invested in an insurance reserve held by the Corporation in the form of actual wheat in storage. Indemnities are paid from the wheat reserve. The Corporation may build up the reserve only as growers pay premiums and may reduce the reserve only as wheat is required to pay the losses of insured crops. In addition to the wheat reserve, $20,000,000 has been obtained by the Corporation through the sale of its authorized capital stock. This capital supplements the wheat reserve.

An unusual and important feature of the crop insurance plan is that all operations are carried out in terms of actual bushels of wheat. Insurable yields and indemnity and premium payments are all calculated in terms of wheat. Growers may pay premiums in wheat with a warehouse receipt representing wheat in storage, in the cash equivalent of wheat at the market price at the time payment is due, or by assignment of A. A. A. conservation payments.

7. WHEAT FARMERS FACE THE FUTURE

Following expiration of the 1939 wheat loan and the intensification of the European war in May 1940, the price of wheat fell, but 1940

United States prices continued to be well above the world level. As the war continued into the summer of 1940, an expansion of nonfarm foreign trade and increased industrial activity and employment in connection with the national defense drive helped to improve the domestic farm market. This improvement, however, showed indications of affecting farm income from products other than wheat, the price for which was already above the world price level.

Therefore, as the United States wheat farmer faced the future, the prospects of a limited world market continued to confront him. There was little to encourage confidence that the days of the free and expanding wheat markets would return soon, if ever. Before this could take place, further adjustments by the wheat farmer would be necessary. He had the best farm program in history to help make such adjustments, but the fact remained that, with the facilities for producing wheat that he had developed and the economy built around wheat, he would continue to produce for the export market. And as long as he did that in a torn-up world he would continue to need an aggressive export policy and all the other measures he could command to protect his income and safeguard the Nation's productive

soil.

8. SUMMARY OF PROGRESS

After 2 years of the program, the wheat farmer could point to undisputed progress toward three major objectives. First of all, at a time when trade barriers, economic wars, and military campaigns had choked off world wheat trade to less than half its former size, the United States wheat farmer had freed himself from complete dependence on a depressed world market. He had been able to hold domestic wheat prices above the world level. At the same time he had armed himself to fight for his share of the world market that remained,

Second, he had learned the lessons of price-depressing surplus on the one hand and of drought-imposed scarcity on the other. He had built a well-stocked Ever-Normal Granary, but although supplies were permitted to continue well above all immediate needs, he had the machinery to handle those supplies in an orderly manner.

Third, by using the combined measures of his program, the wheat farmer was able to protect and improve his income, and by conserving soil fertility that otherwise might have been wasted in useless overproduction, he was insuring his income in the future.

II. THE PROGRAM FOR CORN

The importance of corn as a basic commodity in the United States lies in its value as livestock feed. Considering production cost, feeding value, and storage efficiency, there is no satisfactory substitute for corn.

That is why the supply of available corn has always been the principal factor in determining the supply of meat animals and livestock products in the United States.

Only in certain areas is corn grown primarily as a cash crop. Over most of the Nation's Corn Belt, small farmers feed the corn they produce to the livestock on their own farms. Many farmers feed

all the corn they produce and buy still more for feeding. These farmers make the market for the cash corn grower.

The A. A. A. program for corn, therefore, is primarily, if indirectly, designed to bring about an adjustment of livestock numbers to the level of effective market demand, with definite provision for abundant reserves at all times. That adjustment, based on the constructive principles of agricultural conservation, is the program's chief means of improving the income of Corn Belt farmers.

1. THE GENERAL SITUATION AFFECTING CORN PRODUCERS

The progress being made under the corn program may best be evaluated after various factors affecting the welfare of Corn Belt farmers have been considered. The supply situation, the effects of 3 successive years of high corn yields on hog production, and the economic disturbances caused by war are among the foremost of these factors.

THE CORN PROBLEM IN 1939

The national average corn yield in 1939 was 29.5 bushels per harvested acre, the highest since 1920 and 6 bushels above the average for the 1930-39 period. In the commercial corn area, the yield was 41.7 bushels per harvested acre.

These high yields resulted in a total crop of 2,619 million bushels, about 300 million bushels above the 1928-37 average, although only about 91 million acres of corn were planted. This acreage was the smallest in modern times and well within the A. A. A. corn acreage goal of 94 million to 97 million acres for the year.

There were several reasons for the unusually high average yield in 1939. One was the large acreage planted with hybrid seed corn. Hybrid seed developed commercially much more rapidly than was thought possible even by those most closely in touch with the situation. Almost 40 percent of the Corn Belt acreage was planted with hybrid seed in 1939 and more than 50 percent in 1940.

Technical developments also played a part in the bumper yields. The all-purpose tractor and other improved equipment coming into wider use made it possible for the operator to prepare better seed beds, to carry out tillage operations at more opportune times, and to produce more corn on a given acreage at a smaller cost per acre. It should be remembered, however, that this increased efficiency, which has added to farm surplus problems, also is of great benefit. Increased efficiency reduces production costs, leaves larger acreages for soil-conserving crops and uses, increases immeasurably the farmer's opportunity for profits, and lessens the cost of farm products to consumers. However, until full allowance is made for increased yields and production, surplus problems are likely to recur.

Another cause of the high yield in 1939 was the fact that the growing season was one of the most favorable on record. Spring acreage abandonment was below normal. Whereas the crop often declines after midsummer in withering heat and wind, the 1939 crop improved with each succeeding crop estimate. Frost was sufficiently delayed to permit full maturity. Not only was the crop large, it was also high in quality. Corn Belt farmers probably produced more No. 1 corn in 1939 than ever before in history.

Σ

This was the third successive year of above-normal yields. The national average was 28.3 bushels per acre in 1937 and 27.8 bushels in 1938. On hand at the beginning of the 1938-39 corn marketing year were 363 million bushels of corn, almost twice the normal carryover. By the fall of 1939, the carry-over had grown to 583 million bushels. That amount, added to the 1939 crop, gave a total supply for the 1939-40 marketing year of 3,202 million bushels, one of the largest on record.

EFFECTS ON HOG PRODUCTION

Along with the increasing corn supply, hog production was far in excess of demand in 1939. The United States pig crop for the year was 84 million head-the largest on record-and live hog production was about 17 billion pounds, compared with an average of about 142 billion pounds for the preceding 10 years.

As in the production of corn, increased farming efficiency played a part in bringing about the excessive supply of hogs. In recent years the average number of pigs saved per litter has increased more than 20 percent, due to the wider adoption of the latest approved practices in animal care.

A more important factor in the big supply of hogs was the unusual situation that had developed during the 1936-38 period. In the drought year of 1936, hogs became extremely scarce and prices rose accordingly. In the last part of 1937, without an adequate adjustment program, farmers began to expand their production of hogs. Corn was abundant and cheap, and the expansion continued in 1938. In that year legislation setting up the present A. A. A. program was enacted just before planting time but too late to be fully effective. Thus, the stage was set for the record hog production of 1939.

THE CORN BELT AND THE WAR

The outbreak of the war in the fall of 1939, following many months of foreboding and economic uncertainty throughout the world, found the Corn Belt and United States farmers generally prepared to meet any emergency that might arise. Their preparedness, in a large sense, had its basis in a Nation-wide, flexible organization, administered with the aid of trained farmer committeemen, and in a program designed to conserve the soil and make agriculture stronger. The Ever-Normal Granary corn reserve, in particular, helped guarantee an abundant food supply to the Nation.

Studying the probable effects of the war on their crop production plans, markets, and incomes, farmers found, however, little prospect that their markets would improve; they saw continued need for an adjustment program to protect themselves from the impact of worldshaking trade changes.

Exports of corn as grain ordinarily average about 1 percent of a normal corn crop. But pork and lard are major export commodities. At one time around 8 percent of the United States corn crop was used to produce pork and lard for export. The drive for selfsufficiency in Europe lessened this market, and war reduced it still further.

A critical period lay ahead of the corn-hog farmers of the Nation, and continuation of the adjustment effort through use of all applicable features of the A. A. A. farm program was necessary if new upsets and complications were to be avoided. Corn producers still had a surplus problem in 1939-corn that would have to be transformed from an uncontrolled surplus into an orderly reserve, and a hog supply that was certain to depress prices when it moved to market.

Midway in the 1939-40 marketing year it appeared that corn farmers, through the mechanisms of their program, were on their way to finding the solution.

2. OPERATION OF THE CORN PROGRAM IN 1939

The A. A. A. program for corn, under which special farm acreage allotments for corn are established, is applicable to an area designated as the "commercial corn area." In 1939 this area embraced 586 counties in 12 States, and included all counties which, during the preceding 10 years, had produced an average of 450 bushels of corn per farm and 4 bushels of corn per acre of farm land. It also included bordering counties in which any townships met the same specifications.

Within this area, which extends in an almost solid block from Ohio to Nebraska and from Michigan to Missouri, about two-thirds of the Nation's corn crop has for many years been produced. Here corn is the source of a large part of farmers' cash income. Outside the area, corn is used principally for feeding workstock and livestock for products mainly for home consumption, or for sale in local markets. Individual farm acreage allotments for corn are not established outside the commercial corn area, but corn is included in the total soil-depleting allotments.

CORN ACREAGE GOALS

In 1939 a national corn acreage goal of 94 million to 97 million acres was established. In line with this goal, 41,239,659 acres were allotted to the commercial corn area for distribution among States, counties, and individual farms. This corn acreage allotment, plus the usual planted acreage outside the commercial area, made up the national goal.

Table 4 shows the division of the 1939 corn acreage allotment among the States, with the number of commercial corn counties in each State.

TABLE 4.-Corn acreage allotments for 1939 by States, and number of commercial corn counties in each State