OC 1-59. Evaluation of economic effects of trading stamps and other promotional devices.

OC 1-61. Development of improved costing procedures for poultry-slaughtering plants.

OC 2-53. Extent and effects of major labor-employment practices on the costs, adequacy, and structure of agricultural marketing.

OC 3-1. Marketing situation and outlook reports.

OC 3-2. Development, maintenance, and analysis of farm-to-retail price spreads and other marketing statistics on entire marketing process.

OC 3-14. Providing statistical and economic information relating to the marketing of agricultural products.

PROJECTS INITIATED

OC 1-38. Marketing costs and practices for peaches.

OC 1-45. Marketing margins for oilseeds and animal fats used in the manufacture of food products.

OC 1-62. Costs of marketing fresh citrus fruits grown in Florida and Texas. OC 1–63. Margins, costs, and trade practices in marketing chicken fryers, eggs, and turkeys in the San Francisco area.

OC 1-64. Buying turkeys from producers on the basis of ready-to-cook weights and grades.

OC 1-65. Effects of keeping and utilizing proper records on the costs and efficiency of processing and distributing dairy products.

OC 1-66. Effect of dating regulations on costs of milk processing and distribution. OC 1-67. Margins, costs, and trade practices in marketing frying chickens, eggs, and turkeys in the Northeastern States.

OC 1-68. Analyzing price spreads, margins, and costs for grain and feed products. OC 1-70. Costs and efficiency in marketing eastern apples.

OC 1-71. Costs and efficiency in operating alfalfa dehydrating plants.

OC 1–73. Marketing costs and efficiency and the organization of the California date industry.

OC 2-99. Marketing of products of class III milk in the New York milkshed.

OC 2-100. Effect of marketing changes upon marketing costs and upon demand and consumption of poultry meat.

Projects completed

OC 1-40. Handling practices and marketing costs for Florida sweet corn.

OC 1-42. Power and labor utilization in cottonseed oil mills.

OC 1-47. Impact of St. Lawrence seaway on costs of marketing agricultural products, with emphasis on grain and grain products.

INFLUENCE OF PRICE ON VOLUME OF FOODS CONSUMED

Mr. WHITTEN. Dr. Paarlberg, I think it will get us into a real depression if raw material prices continue to go down and down. It is my belief that it has led to depressions in the past. It disturbs me to see the press and many national leaders argue that the thing to do is spend more money on defense contracts. Defense contracts, at best, may be essential to our safety, but the defense dollar never contributed an earned income dollar to the Nation in history. It is a dead weight that we have to carry and it would be so much more sound, in my judgment, to see that the base of our economy, which is the raw-material level, got its fair share of the national income dollar.

You and the Secretary constantly insist that by reducing the prices to the farmer you will increase consumption. Now it is my understanding that the lack of food is not what is bothering the United States, that we rather eat too much.

If the people in Florida gave away the citrus on the trees, or the people growing tomatoes in my State, around Crystal Springs, gave them away, or if the fellow producing cotton in my section just gave it to the mills, under our system I honestly wonder whether there would

be any increased consumption at all. It might shift from potatoes and hamburger to steak, but in total quantity of food consumed or in clothes worn, the average fellow would wear one suit a day. If the farmer gave it all away, I doubt if you would increase consumption 3 percent.

And under our system the commission man goes down to Florida and buys citrus and ships it north, and everybody marks it up to the point that they can get by with and still sell it. You might have a little drop in the citrus-fruit market the first 2 weeks but, so help me, after that if it were all given away the retail price would be right back at the thing which controls it, and that is buyer resistance. Now do you still believe that reductions in these prices would increase consumption?

Mr. PAARLBERG. Putting the whole thing together, in the aggregate, a reduction in price will be accompanied by a much, much smaller increase in consumption of agricultural products.

If you dropped the overall average price of farm products by 10. percent in the short run, the consumption would go up well, different researchers have come out with different figures. I have heard figures like 1, 2, 3 percent-I don't know exactly what it would be. Now, over time, this figure would become larger as people became adjusted to it, as new markets were developed, export markets would

grow.

Mr. WHITTEN. Well now, let's put it this way. Let's don't get export mixed up with this. There has never been any connection between export and support. Insofar as the law is concerned, there has never been any tie between export prices and support levels, has there?

Mr. PAARLBERG. The CCC operations permit exports at competitive prices.

Mr. WHITTEN. Let's take your family, the neighborhood in which you live or anywhere in this country. Now, you may have some lazy people, you may have some indigent people, you may have some elderly people, but is there anybody that doesn't eat about as much now as they would if the prices were different.

Will a change in prices change what you eat?

Mr. PAARLBERG. It will change what you eat. Given more time the changes will be larger.

Here is what would happen. They would consume more of highly palatable and highly nutritious foods like beef, livestock products in general. These products take a lot more in the way of human labor and land to produce a man's food supply than do some of the other products.

So that if the overall level of prices was dropped, as you indicated, and some time went on to permit the adjustments, we would consume, I think, pretty near the same amount of calories. We would consume more proteins, we would consume more meat and milk and eggs. We would consume more

Mr. WHITTEN. You are talking about changes now.

Mr. PAARLBERG. We would consume more fruits and vegetables. We would consume probably less of wheat, potatoes, and similar foods.

Mr. WHITTEN. Now you are referring to retail prices. If the retail price went down, it might have the effect you are talking about. But under our system, where each fellow sells for what the traffic will pay, what basis do you have for believing that retail prices would go down? And before you answer I would like to point out that each time you have reduced prices, it didn't get passed on to the consumer. Mr. ANDERSEN. Mr. Chairman, might I interrupt at this point? Mr. WHITIEN. Let him answer first, Mr. Andersen. Mr. ANDERSEN. This will only take a moment.

EFFECTS OF REDUCED DAIRY PRICE SUPPORTS IN 1954

What I wanted to say in relation to your last statement, Dr. Paarlberg, is this: Senator Edward Thye told me this morning about the drop in 1954 in price supports in dairy products. He said that holding it up was doing just what you had said it would do, Dr. Paarlberg, that it would develop more consumption and eventually bring more return to the dairy producers.

That it did do. It brought a benefit of four-tenths to the consumer. The consumer benefited by only four-tenths in that particular drop, and the processor got the balance.

I believe those are figures right out of your department, Mr. Wells. Mr. WELLS. Yes.

Mr. ANDERSEN. So it would seem that the big result of that drop in price support, Mr. Chairman, went directly to the processors.

Mr. WHITTEN. One thing that I would like to point out about this report is that, perhaps the Secretary has not understood that when your price supports are 80 or 60 percent, the Government is going to end up with only the surplus.

PRICE SUPPORTS AND SURPLUSES

Mr. PAARLBERG. The size of the surplus will differ, depending on your supports.

Mr. WHITTEN. But what the Government is going to end up with is the surplus.

Mr. PAARLBERG. It might be a low surplus in a year of low supports and a high one at a high support level.

Mr. WHITTEN. That might be entirely possible, but the fact is the Government is going to wind up with the surplus.

Then you have to consider the Trade Act. We have to meet our world trade and our special uses in meeting competitive prices. Mr. PAARLBERG. Authority was provided to do that.

Mr. WHITTEN. If you let the farmer get 60 percent of parity, that is 60 percent of parity as compared with all these other segments. Mr. PAARLBERG. Compared with what?

Mr. WHITTEN. Compared with all these other segments of our population, such as labor and industry.

If you let that condition exist, is not the farmer subsidizing the other segments of our economy?

Mr. PAARLBERG. In my opinion the farmer is subsidizing a number of other segments of the economy, in a number of respects, Mr. Chairman. He educates the young people in the rural areas. That is part of the local cost. And these young people in many cases migrate to

other areas at a productive age. This is a sort of subsidy that agriculture provides for the rest of the economy. There are others.

Mr. WHITTEN. Let us look to the monetary end of the question now. We will say that the farmer was getting 50 cents out of the consumer dollar 6 or 7 years ago, but now he is getting 40 cents. In the meantime, let us assume that the other group got 50 cents and is now getting 60 cents.

My question is: If the former situation was the normal one, does it not mean that the farmer is now subsidizing that group to that extent ? Mr. PAARLBERG. I would say yes. But there is a big "if" there.

If I might, I would like to point out a couple of pretty big questions that are involved in giving an answer to your statement.

One is the question of whether the period to which you are relating was a normal one, which it may not have been. We have been talking about 1947, 1949.

Mr. WHITTEN. If I am not mistaken, I believe you said that the farmer has been living a little too high on the hog, or higher than he had a right to expect.

As I recall, you said that a farmer had no right to continue to expect to live like people, or something to that effect.

Mr. PAARLBERG. No. Do not misquote me, because I would not want. to be misquoted.

Mr. WHITTEN. I would be glad to have your exact remarks on the

record.

Mr. PAARLBERG. I cannot give you the words verbatim. But what I said was that this period was a period in which there was a tremendous market for farm products at home and abroad. I said that production costs had not yet risen and had not yet been hardened into the price structure. I said they were years of wonderful yield and that they were years which, for those reasons, could not be counted as normal. I said this was a dream world.

Mr. WHITTEN. Perhaps that was saying it in a left-handed manner. You told us a little bit about your recollection. Perhaps I was sort of building it up while you were toning it down.

I would be glad to have you put in the correct words, because I do not mean to misquote you.

We have seen where farm income has gone down and that was followed by unemployment. We have seen what conditions are in agriculture areas.

We have the records of your Department which show that, while farm prices have been reduced, the profits of the rest of the economy have increased. Or, as some people would say, the rest of them increased their profits because of the low prices that made up the difference.

Are you still convinced that the answer is further reductions in price supports?

Mr. PAARLBERG. Might I ask: This is not the answer?

I do not think there is any one answer. There are a number of things that should be taken into account.

Mr. WHITTEN. We are still told by the Secretary that our answer is to give him authority to reduce price supports on a 60 percent basis. Mr. PAARLBERG. This is a part of the program that the Secretary has laid before the Congress. I might say that I personally find myself in full accord with it.

A number of things should be done. Not just that one thing should be done but a number of things should be done.

Mr. WHITTEN. What are some of the other things that should be done?

Mr. PAARLBERG. I would say that instead of more restriction on agricultural production there should be less restriction. That is a very, very important part of it.

Mr. ANDERSEN. Might I point out something here, Mr. Chairman? Mr. WHITTEN. Yes, Mr. Andersen.

Mr. ANDERSEN. I would like you to consider for a moment my Minnesota farm, now, what restrictions are there on my production in Minnesota? On my farm I produce just what I want to produce. Of course, naturally, I cannot get any

Mr. PAARLBERG. Then you do not follow your corn allotments.

Mr. ANDERSEN. I was not able to follow it because of the fact that I could not get a sufficiently large allotment to make it economically feasible to do so. But outside of that, I do not see any control on my 369 acres at all.

While I am at it, I will say that I don't appreciate hearing the Secretary talk about "Four Freedoms." I have all the freedom I want to produce, except that I do not have the freedom to get a fair price for what I produce.

I just wonder, Mr. Chairman, exactly what Mr. Benson means when he talks about freedom of action by the individual farmer.

We have always had all the freedom of action that we care to have. It was voluntary with us whether or not we wanted to go into the corn base. We decided not to do so. As far as production is concerned, there has been no hamstringing of us whatsoever. In my opinion, that is where Mr. Benson is missing the boat. And I do want that right on the record. I think the average farmer is getting sick and tired of hearing of his freedom to do this or his lack of freedom to do that. What we need is a fair price for what we produce, gentlemen.

Mr. MARSHALL. If my colleague will yield to me.

Mr. ANDERSEN. Yes, sir, Mr. Marshall.

IMPRESSIONS GAINED AS RESULT OF TRIP TO ARGENTINA

Mr. MARSHALL. I would like to tell you about the trip that some of us took last fall, when we visited a country where there is a considerable amount of individual freedom. We visited Argentina. In Argentina, the man driving a car is not bothered with stop signs; he is not bothered with stoplights; he is not bothered with anything that interferes with him in any way whatsoever except the man driving the other car. Of course, you cannot do anything about the other man, because he has his individual freedom, also.

We took a trip out in the country. Out there, the farmer is not bothered with any kind of controls. Take the problem of insects. If the fire ant takes over his pastures and takes over his fields, perhaps the fire ant has some freedoms, too. And it seems like the farmer is not concerned about that. Alongside of the road, also, we saw livestock lying there dead. The farmer was not even required to bury it, because that would interfere with his individual freedom. We all know of the great livestock industry in Argentina, and it is a great