—-Lancaster Farming, Friday, April 6, 1956
12
What About Soil Bank Proposals?
Ag Economics Extension Answers
(Editor’s Note: What about the soil bank proposal?
A soil bank has been proposed as a method of reducing
surpluses and thereby raising farm income. Therefore, it
seems to be an appropriate time to examine some of the
fadtgrs involved in the proposal. Fred Robertson, Agri-
Extension, The Pennsylvania State Uni
versity, University Park, Pa., from “Pennsylvania Farm
Economics,” No. 10, March, 1956). '
The problem of falling farm
income is not a newcomer to
the American scene Farmers
have traditionally suffered from
ups and downs in the farm price
level. During periods when
economic activity is relatively
high; farmers in general have
done well. However, during de-
L pressions they and all other folks
have usually been hard hit.
Farmers today find themselves
in th 6 unhappy position of see
ing farm income decline while
incomes in other industries have
risen and remain at a record
high level
This unusual situation has
been recognized as a weak spot
in our national economy by near
ly everyone. Both major political
parties are committed to an agri
cultural policy which will help,
farmers to receive income from
the use of their capital and la
bor comparable with the income
paid for similar employment of
capital and labor m the rest of
the economy. Production con
trols arid Government support of
prices appear to be the accepted
means of achieving this goal,
The real issue appears to be how
this shall be done rather than
whether it should be done.
Story on Production Controls
Few people deny that there is
record production of many com
modities in agriculture The. fact
that surpluses do exist coupled
with the fact that a small sur
plus of many agricultural pro
ducts will bring about a large
drop in price, places farmers in
a partncu'laily weak position
The role of weather and techno
logy in agriculture production,
however, makes it difficult to
-adjust supplies with a high de
gree of accuracy even through
the use of production controls.
By contrast, other industries up
on which agriculture depends
both for markets and raw ma
terial often make effective use
of production controls. Industry
maintains the balance between
supply and demand by adjusting
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output of whatever commodity
they are producing. This holds
prices of things farmers buy rela
tively stable. In trying to mam
tiam income farmers tend to
maintain or increase output and
see the prices for their products
vary. Thus it follows that pro-,
duction controls have some ap
peal to farmers as a means of in
creasing prices of agricultural
products regardless of the dif
ficulty involved in controlling
supplies. Particularly so, since
one of the characteristics of most
agricultural products is that
farmers as a group stand to get
a greater total return from a
small crop at a higher price
than from a large crop at a lovV
er price.
A desirable companion of pro
duction controls in maintaining
income is a favorable price for
the commodity produced. The
price which is generally accepted
as being desirable is parity price.
Parity is a relative price aimed
at giving farmers the same abil
ity to buy as they had m a
period when agriculture was in
good balance with the rest of
the economy.
Price supports have been used
to achieve various purposes, de
pending upon the time. Prior to
World War II they were used
primarily to raise farm income
During the war they were used
to encourage production of cer
tain commodities needed to win
the war. Now they are being
used mainly to bolster farm in
come and stabilize supply.
Since the war, price supports
have ranged from zero on some
commodities to over 100 per
cent of parity for others. Gen
erally the range has been from
60 to 90 per cent.
Price supports are sometimes
spoken j»f in terms of either
flexible or rigid price supports
The definition used for, rigid
supports is a stated level of price,
such as 90 per cent of
which does not change as the
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supply of the supported com
modity changes. Flexible sup
ports are defined as a support
price which may vary between
two levels, such as 50 to 90 per
cent of parity, as the supply of
the commodity increases or de
creases
Price Supports and
Efficient Farming
It is often heard that high
price supports promote ineffi
ciency These folks say price
ought to be set at the market
place and thereby regulate pro
duction. Also, when price is sup
ported above the free market
price, production is stimulated
and surpluses accumulate; this is
a misuse of productive resources.
Arguments by others in favor
of rigid support say that a high
price support removes some of
the unceitamty of low prices;
this encourages investment in
improved technology which
makes for efficient production.
Also, farmers spend their money
readily and high incomes in
agriculture bolster the rest of
the economy.
Farm Policy and Alternatives
Agricultural policy proposals
aimed at promoting economic ef
ficiency sometimes call for rath
er drastic changes in the produc
tion pattern on many farms. The
difficulty in finding suitable al
ternative methods of maintain
ing farm income has not always
been recognized Nevertheless, it
is .likely to be uppermost in the
minds of farmers themselves
Therefore, dairy farmers, poul
try farmers, potato farmers, fruit
growers, cash grain farmers, and
others are likely to look at
change in agricultural policy in
terms of the effect on their in
dividual farm operation
Farmers with high fixed costs
and large investments seldom
favor reducing the size ot their
operation They are usually anxi
ous to recover as great a por
tion of. their long-time invest
ments as rapidly as possible par
ticulaily so if they are getting
along in years
Current Proposals
A soil bank plan has been pro
posed by the President to im
plement the Agricultural Act of
1954 The proposal is composed
of two paits, namely (A) Acre
age Reserve and (B) Conserva
tion Reseive
(A) Acreage Reserve
Land would be retired from
regular acreage allotments of
corn, wheat, cotton, and rice.
The objective is primarily to
reduce pioduction of allotment
crops
Pennsylvania farmers are not
expected to be directly affect
ed 01 concerned with the acre
age reserve part of the soil
bank. However, it is a mea
sure to reduce surpluses through
restricted production, thereby
raising the price of the commod
ity. Therefore, a long-run effect
could be to mcVease feed cost
to purchasers of commercial
'feeds, such as dairymen and
poultrymen.
(B) Conservation Reserve
This part of the soil bank
proposal is aimed at taking less
productive cropland out of pro
duction. In order to be eligible
for inclusion in the conservation
reserve, land must have been
used for row crops or small
grain in at least one of the last
three years. The goal is to put
as much as 25 million acres of
low productive land into other
uses, such as forage, trees, or
water storage.
The Senate Committee on
Agriculture and Forestry recom
mended similar provisions with
respect to the soil bank, but rec
ommended a return to rigid price
supports for certain commodities.
Areas of Controversy
The principal area of disagree
ment in the debate oyer the farm
bill is the level of price support
and its effect on the surplus prob
lem Therefore, would be well
to keep in mind the commodities
which are to be supported when
evaluating the proposals.
Much controversy arising
from lowering the level of price
supports stems from its effect on
individual farm incomes. Thus,
there emerge two different points
of view which have never been
successfully reconciled in agri
cultural gohey, (1) economic ef
ficiency and (2) the protection
of individual farm incomes.
These two points are likely to
have an important bearing on
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Octoraro Farmer
Club Reports
Feeds Adequate
Octoraro Farmers Club held
the March meeting on Saturday,
March 17, with Mr. and Mrs.
Levi B Pownall, Christiana. All
families were represented but
four
A short business meeting was
held before the dinner hour
with president, Ammon Huber,
in charge. The club re-convened
for the afternoon session at 2
p. m.
Devotions were in charge of
Elma K. Maule. The inspection
committee, Toln Halladay and
Walter Ferguson, reported every
thing in good Shape, with
plenty of feed tfor the beef
cattle.
The program consisted of the
following questions which were
discussed by the group: “What
in your opinion makes the best
type of farm implement shed’”
“Can anyone suggest ways to
make use of old baler twine’”
“In addition to tidiness and
cleanliness, what is the best
method of ridding a-barn of rats
and mice’” “What farm imple
ments would you consider the
essential minimuih on an aver
age dairy farm?”
The group sang “My Wild
Irish Rose,” and James Jackson
Jr, gave a report on his 4-H
project.
The host’s essay was given by
L. B. Pownall on “The Life of a
Beef Cow."’ David Huber told
of “The Flying Farmer” and
Mrs. Almus Shoemaker gave
some experiences from her re
cent jury duty in Philadelphia-
Roll call - was responded to
with Irish jokes Club will meet
at the regular time in April with
Almus and Kathryn Shoemaker.
The problem before .the re
public today is how to spend
money without limit and without
taxation.
the content of farm legislation
that emerges from this session.of
Congress
Meaning to Pa. Fanners
From the standpoint of most
farmers 'm Pennsylvania, the
particular issues being debated
are not the most important ones
facing them today. More impoit
ant to Pennsylvania farmers is
that business activity and the
purchasing power of the consum
ing public remain at a high level.
If the conservation reserve be
comes law it will present faim
ers an opportunity to retire land
from cultivation.
It is probable that the incen
tive payments for diverting the
cropland and the annual rental
for the life of the contract will
make participation a feasible al
ternative.
Participation in the acreage
reserve by Pennsylvania farmers
will probably be negligible. Rela
tively few farmers have large
acreage allotments of eligible
ciops in this state.