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each $100 net CCC expenditure on the wheat program and about $100 for each $100 net CCC expenditure on the cotton and rice programs.

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In the light of these facts, Dr. Wilcox suggests a number of implications for future farm policy.

He finds American consumers' food costs low, American agriculture's efficiency unexcelled, and farmers' freedom increased by recent changes in price-support programs.

Although the 1.5 million farm families which market most of the farm products are a minority of the families in the rural areas, they and the industries which service them provide a large part of the rural employment and financial support for local government and welfare services.

The evidence presented indicates the possibilities and economic incentives for increased use of fertilizers and other improved practices are so great that if a sharp decline in farm income is to be avoided, diversion programs, similar to those now in effect, will be needed for the indefinite future.

Taking into account humanitarian as well as foreign policy considerations, Public Law 480 exports might well continue at current levels, or be expanded as conditions warrant, as a desirable alternative to grain acreage diversion.

Dr. Wilcox suggests that the long-term cost of voluntary acreage diversion programs perhaps could be reduced by entering into 10- to 12year contracts with producers on low-yielding lands for the diversion of entire farm feed grain and wheat base acreages.

Analyses indicate cattle ranchers' incomes might well have been a third lower in the last 3 years in the absence of price supports on grains. The facts presented indicate they almost certainly would benefit from feed grain and wheat diversion programs even though pasturing were permitted on a part of the diverted acres. Perhaps per unit diversion costs could be lowered by giving producers the option of receiving smaller payments and pasturing their diverted acres.

Dr. Wilcox presents a great deal of economic information about farm programs in recent years and dynamic forces in agriculture which will be relevant when Congress considers the extension of price support programs which terminate this year.

Because of the interest of all Members of the Senate in the facts. presented, we recommend that this report be published as a committee print by the Senate Committee on Agriculture and Forestry.

Sincerely yours,

GEORGE MCGOVERN.
MILTON R. YOUNG.
EUGENE J. MCCARTHY.

THE LIBRARY OF CONGRESS, LEGISLATIVE REFERENCE SERVICE, Washington, D.C., December 30, 1964.

Hon. GEORGE S. MCGOVERN.
Hon. MILTON R. YOUNG.

Hon. EUGENE MCCARTHY.

I am transmitting herewith a report entitled "Farm Programs and Dynamic Forces in Agriculture," prepared in response to your request of May 27, 1964, for a review and appraisal of farm price support programs, and of the dynamic functioning of agriculture in recent years. This report incorporates slight revisions in the interim report "Farm Program Benefits and Costs in Recent Years," submitted to you on September 16, 1964, and issued as a committee print by the Committee on Agriculture and Forestry, on October 6, 1964, as well as other related information.

Many of the facts presented in this report are the result of special studies by analysts in the Economic Research Service and the Agriculture Stabilization and Conservation Service, made at my request. Their full cooperation made this report possible.

This report also was improved by suggestions received from high ranking economists at Harvard University, Iowa State University, Kansas State University, University of Nebraska, North Dakota State University, Oklahoma State University, Pennsylvania State University, and South Dakota University, who reviewed an earlier draft.

Sincerely yours,

WALTER W. WILCOX, Senior Specialist in Agriculture.

FARM PROGRAMS AND DYNAMIC FORCES IN AGRICULTURE

DYNAMIC FACTORS IN FARM PRODUCTION

In the past 10 years increased specialization, mechanization, and production per acre have proceeded at record rates. A trend toward larger farms also has proceeded very rapidly. This report summarizes and analyzes these trends and indicates their relevance to farm price support programs.

Potential farm production increasing three times as fast as 30 years ago In the 20-year period 1920 to 1940, farm production increased at the rate of 1.1 percent a year. In the 15-year period 1940 to 1955, the rate of increase was 2 percent a year. This rate of increase in production has continued since 1955 even though substantial acreages of feed grains, wheat, and other cropland were diverted to conservation

uses.

In the absence of acreage diversion programs in these most recent years, and even though acre yields would likely have been lower, farm output (production) might well have increased at the rate of 3.5 percent a year-over three times the annual rate of increase in the 1920's and 1930's-and almost twice the rate of increase in the 1940's and early 1950's.

Meanwhile, the U.S. population also was increasing but at the slower rate of 1 percent a year in the period 1920 to 1940 and up to about 1.8 percent annually in recent years. However, with an increase in real income per capita along with the increase in population the domestic demand for food was expanding slightly faster than farm output in the period 1920 to 1940, at about the same rate in the period 1940 to 1955, and at a slightly slower rate than farm output with diversion programs in effect in the period 1955 to 1963.

Source of change in farm output for human use

The Economic Research Service has estimated the change in farm output for human use attributable to each of several factors, for the years 1919 to date. These estimates for specified periods are shown in table 1.

TABLE 1.-Factors accounting for change in farm output for human use

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