Economic and Marketing Information for Indiana Farmers, v. 01, no. 03 (Sep. 1947) |
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FOR INDIANA FARMERS INFORMATION Volume 1 No. 3 Lafayette, Indiana September, 1947 Prepared by members of the Agricultural Staff of Purdue University WHAT WE NEED IN AGRICULTURAL POLICY (Summary of remarks by DR. O. B. JESNESS, University of Minnesota, at luncheon meeting of Indiana State Farm Management Tour, July 22, 1947) IT is wise for farmers and farm leaders to discuss the salient features of a sound agricultural policy during times of high prosperity on the farm. It is during such times that we can view the crucial issues objectively and come nearer reaching a sound conclusion than would be possible in times of distress. Farm groups everywhere need to meet and discuss intelligently the various aspects of agricultural policy in order that they can make their desires known to legislators and congressmen in the difficult adjustment days ahead. Question Of Support Prices One of the most important questions American farmers must face is whether they want a permanent program of support prices for farm products. The prices of most major farm products are currently supported at 90 per cent of parity during 1947 and 1948. At the moment, most prices are so high that this support is ineffective. However, there is strong sentiment in many quarters to extend this type of support on a permanent basis. Consequences Of Support I am not here to argue whether farmers should or should not campaign for a permanent system of support prices. I do contend, however, that those who favor support prices should be fully aware of the consequences which go with them. It is an economic axiom that any level of artificially supported prices will call forth production in excess of the quantity which will be absorbed by the market at the existing price. This will create a "surplus" problem. This will lead inevitably and rather quickly to some system of production control. It is my general impression that most farmers during the 1930's and early 1940's did not favor the system of production controls. I doubt if most farmers would want to return to that system. However, it must be recognized that production control is the Siamese twin of artificially supported prices. Some people believe that it should be possible to support domestic prices at an artificial level and to market the surplus abroad. To do this, however, would call for some type of subsidy on that portion of the crop marketed abroad, because the foreign market usually will not absorb any great quantity of foodstuff at an artificially maintained price level. This process of marketing surplus abroad at sub sidized prices is what is commonly known as "export dumping". This system of marketing rapidly leads to international complications and to retalliations from other producing areas in the world. It is almost always pre-doomed to failure. Export Rate Can't Continue At the present time foreign markets are absorbing tremendous quantities of American foodstuffs. However, the current rate of exports cannot continue. At the present time, our exports exceed our imports by a net annual rate of approximately 15 billion dollars. This volume of exports is being maintained by loans to European countries, the utilization of dollar balances foreign nations hold in this country and various other devices whereby foreign countries can obtain dollars in the United States. However, we face an imminent shortage of dollars held by foreigners. When the pinch comes, the volume of exports must inevitably level off. This will suddenly bring us face to face with the realization that the foreign market for agricultural foodstuffs is not insatiable. We need to recognize that if we are going to continue to export foodstuffs to foreign countries over a long period of years, it must be at a price level which they can afford to pay. Moreover, our program of exports must be in conjunction with some program of imports. After all, over the long run, the only way foreign countries have to pay for exports which we send abroad is with imports which we accept from them. Foreign trade is a two-way road. Every American needs to realize this fact. Farm Economy Cushion If American farmers should decide against support prices for individual farm products and production controls that go with them, they may want to recommend some kind of a cushion under the farm economy in times of distress. This might take the form of income payments to individual farmers which would prevent their level of income from falling below a "distress level". Such a system of payments would still permit considerable individual freedom of the farmer to plant what he chooses and manage his farm as he sees fit. (Continued on Page 3)
Object Description
Title | Economic and Marketing Information for Indiana Farmers, v. 01, no. 03 (Sep. 1947) |
Purdue Identification Number | UA14-13-econ194709 |
Date of Original | 1947 |
Publisher | Purdue University. Agricultural Extension Service |
Subjects (LCSH) |
Farm produce--Indiana--Marketing Agriculture--Economic aspects--Indiana |
Genre | Periodical |
Collection Title | Extension Economic & Marketing Information (Purdue University. Agricultural Extension) |
Rights | Copyright Purdue University. All rights reserved. |
Coverage | United States - Indiana |
Type | text |
Format | JP2 |
Language | eng |
Repository | Purdue University Libraries |
Date Digitized | 02/26/2015 |
Digitization Specifications | Original scanned at 400 ppi on a BookEye 3 scanner using Opus software. Display images generated in Contentdm as JP2000s; file format for archival copy is uncompressed TIF format. |
URI | UA14-13-econ194709.tif |
Description
Title | Economic and Marketing Information for Indiana Farmers, v. 01, no. 03 (Sep. 1947) |
Purdue Identification Number | UA14-13-econ194709 |
Transcript | FOR INDIANA FARMERS INFORMATION Volume 1 No. 3 Lafayette, Indiana September, 1947 Prepared by members of the Agricultural Staff of Purdue University WHAT WE NEED IN AGRICULTURAL POLICY (Summary of remarks by DR. O. B. JESNESS, University of Minnesota, at luncheon meeting of Indiana State Farm Management Tour, July 22, 1947) IT is wise for farmers and farm leaders to discuss the salient features of a sound agricultural policy during times of high prosperity on the farm. It is during such times that we can view the crucial issues objectively and come nearer reaching a sound conclusion than would be possible in times of distress. Farm groups everywhere need to meet and discuss intelligently the various aspects of agricultural policy in order that they can make their desires known to legislators and congressmen in the difficult adjustment days ahead. Question Of Support Prices One of the most important questions American farmers must face is whether they want a permanent program of support prices for farm products. The prices of most major farm products are currently supported at 90 per cent of parity during 1947 and 1948. At the moment, most prices are so high that this support is ineffective. However, there is strong sentiment in many quarters to extend this type of support on a permanent basis. Consequences Of Support I am not here to argue whether farmers should or should not campaign for a permanent system of support prices. I do contend, however, that those who favor support prices should be fully aware of the consequences which go with them. It is an economic axiom that any level of artificially supported prices will call forth production in excess of the quantity which will be absorbed by the market at the existing price. This will create a "surplus" problem. This will lead inevitably and rather quickly to some system of production control. It is my general impression that most farmers during the 1930's and early 1940's did not favor the system of production controls. I doubt if most farmers would want to return to that system. However, it must be recognized that production control is the Siamese twin of artificially supported prices. Some people believe that it should be possible to support domestic prices at an artificial level and to market the surplus abroad. To do this, however, would call for some type of subsidy on that portion of the crop marketed abroad, because the foreign market usually will not absorb any great quantity of foodstuff at an artificially maintained price level. This process of marketing surplus abroad at sub sidized prices is what is commonly known as "export dumping". This system of marketing rapidly leads to international complications and to retalliations from other producing areas in the world. It is almost always pre-doomed to failure. Export Rate Can't Continue At the present time foreign markets are absorbing tremendous quantities of American foodstuffs. However, the current rate of exports cannot continue. At the present time, our exports exceed our imports by a net annual rate of approximately 15 billion dollars. This volume of exports is being maintained by loans to European countries, the utilization of dollar balances foreign nations hold in this country and various other devices whereby foreign countries can obtain dollars in the United States. However, we face an imminent shortage of dollars held by foreigners. When the pinch comes, the volume of exports must inevitably level off. This will suddenly bring us face to face with the realization that the foreign market for agricultural foodstuffs is not insatiable. We need to recognize that if we are going to continue to export foodstuffs to foreign countries over a long period of years, it must be at a price level which they can afford to pay. Moreover, our program of exports must be in conjunction with some program of imports. After all, over the long run, the only way foreign countries have to pay for exports which we send abroad is with imports which we accept from them. Foreign trade is a two-way road. Every American needs to realize this fact. Farm Economy Cushion If American farmers should decide against support prices for individual farm products and production controls that go with them, they may want to recommend some kind of a cushion under the farm economy in times of distress. This might take the form of income payments to individual farmers which would prevent their level of income from falling below a "distress level". Such a system of payments would still permit considerable individual freedom of the farmer to plant what he chooses and manage his farm as he sees fit. (Continued on Page 3) |
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