Farms on which the voluntary diversion is 20 percent of the farm allotment would produce noncertificated wheat when the actual yield per acre was above the normal yield for the farm. On farms on which there is no voluntary diversion and the producer plants all of his 1964 wheat allotment, with a normal yield per acre there would be wheat produced for which certificates would not be issued. In this situation the producer could place the noncertificated wheat under loan at the local noncertificated price-support rate ($1.30 a bushel national average). Any noncertificated wheat produced on a participating farm may also be sold on the market, sold to other producers, fed to livestock, stored, or used for seed. PROVISIONS FOR SMALL FARM ALLOTMENTS The wheat program for 1964 does away with the provision through which any farm could produce as much as 15 acres of wheat without being subject to marketing quota penalties. The new law also removed the authorization for the production of up to 30 acres of wheat without a marketing quota penalty provided all the wheat was used on the farm on which it was produced. For small farms, the wheat allotment will be the larger of— 1. An allotment determined in the same way as for the farms with more than 15 acres of wheat, or 2. An allotment equal to 90 percent of the average wheat acreage for the farm for the 3 years 1959, 1960, and 1961. This average cannot be more than 15 acres. The operator of a farm with an allotment of less than 15 acres may choose to participate in the program as an allotment grower. If he chooses to be an allotment grower and participate in the program, he must do so at least 7 days before the referendum-his deadline for the decision is May 13. The back of the notice of farm allotment (MQ-24) has a space for this purpose. If he signs up to become an allotment grower he is eligible: To vote in the referendum; to receive his share of the marketing certificates; to qualify for diversion payments; and to put wheat into the price-support loan. The small growers who agree to become allotment growers have the option of diverting their entire acreage up to 15 acres to conserving uses all at the high diversion rate based on 50 percent of the county support price rate. If the small farm operator does not choose to become an allotment grower, he can plant wheat up to the larger of his average wheat acreage for 1959, 1960, and 1961 or his 1964 allotment without being subject to a marketing quota penalty. Production in excess of that limit would be subject to marketing quota penalties. He will have no vote in the referendum. He can sell wheat at the noncertificated wheat market price, or as seed or feed, or use it in any way that he likes. He will not be eligible for price support, certificates, or diversion payments. An example of a participating farm with a small wheat allotment: Acres 1959. 1960_ 1961- Average acres of wheat-13 acres. This is the small farm wheat base. of Wheat 15 9 15 Allotment based on 3-year average acres-90 percent of the small farm base11.7 acres. This will be the 1964 allotment for the farm unless the allotment calculated by the same method used for farms with more than 15 acres is larger, in which case the larger figure will become the farm allotment. The normal yield per acre for the farm is 30 bushels. The allotment of 11.7 acres is planted for 1964 and 1.3 acres are diverted and devoted to conservation use in addition to the normal conserving use for the farm. This farm would then be eligible for 1. $2 price support (national average) on 80 percent of the normal production of the allotment of 11.7 acres: 80 percent of 30 bushels X11.7X $2= $561.60. 2. $1.30 price support (national average) on 20 percent of normal production of the allotment, 11.7 acres: 20 percent of 30 bushels X11.7×$1.30= $91.26. 3. A diversion payment on the 1.3 acres of wheat diverted to conservation The diversion payment would be: 30 bushels 1.3 acres (30 percent of $2)=$23.40. use. The income from wheat on this farm would be: Certificated wheat.. Noncertificated wheat.. Diversion payment--- Total____ $561.60 91. 26 23.40 676. 26 On this farm the entire wheat acreage could be diverted for payments at the rate of 50 percent of the support price for certificated wheat. The diversion payment would be: 50 percent of $2×30 bushels=$30 per acre. 13 acres diverted: 13× $30=$390. Under this circumstance there would be no certificates for this farm since all the wheat acres would be diverted to conservation use. Operators of small farms who choose not to participate would be subject to marketing quota penalties on wheat produced in excess of their 3-year average acreage (the small farm wheat base) or their allotment whichever is larger. If the operator of this farm did not choose to take part in the program, 13 acres of wheat could be produced without any of the wheat being subject to marketing quota penalty. The operator would not be eligible for a price-support loan on his wheat, he would receive no certificates, he could not vote in the referendum, and there would be no diversion payment. If the 13 acres of wheat produced a normal yield of 30 bushels to the acre there would be 390 bushels of wheat that could be sold at the market price at the time of sale. Small farm operators who choose to participate in the program will be subject to marketing quota penalties for the wheat produced on an acreage above the farm allotment. (However, where practical the excess may be stored under bond to postpone or avoid such penalty.) NO HARVESTING OF CROPS FROM DIVERTED ACRES The diversion payment will not be made automatically to those producers who divert acreage from wheat production. Each producer who wants the diversion payment will file with his ASC county office an intention to participate by a deadline date. The production and harvesting of a nonapproved crop from the minimum required diverted acreage on farms with allotments of more than 15 acres and on small farms where the operator has elected to be an allotment grower will make the acreage subject to a land use penalty. The land use penalty per acre will be figured on the basis of 65 percent of the parity price of wheat multiplied by the normal yield of wheat established for the farm. The maximum acreage on which this penalty could apply is 11.11 percent of the 1964 wheat allotment. GRAZING OF DIVERTED ACREAGE Grazing the acreage diverted from wheat production to conservation use will be permitted without change of payment up to a spring date and after an established date in the fall. State ASC committees will establish these dates for their States. In addition, the diverted acreage may also be grazed during the summer, but the diversion payment per acre will be reduced by one-half. Wheat growers who want to graze their diverted acreage should make application at the county ASC office. Such arrangement should be made at the time of signup. MARKETING QUOTA PENALTIES When marketing quotas are in effect, the law provides for marketing penalties on wheat produced on acreage in excess of the farm allotment. The penalty rate per bushel is 65 percent of the national parity price for wheat-about $1.65 a bushel. The penalty applies on a bushelage equal to twice the normal yield per acre times the number of acres in excess of the farm allotment. However, if the proven actual yield is lower, the ASC county committee may reduce the number of bushels that are subject to the marketing quota penalty to the actual yield. Producers who have excess wheat may avoid paying the marketing quota penalty by storing the excess wheat in accordance with regulations issued by the Secretary similar to past programs. This wheat may be taken out of storage in subsequent years by underplanting the farm allotment or when the yield per acre is less than normal. If excess wheat is stored, the wheat grown on the allotment is eligible for price support and certificates if other provisions of the program, including conserving use on the diverted acres, are met and the normal acreage of conserving use is maintained. Farms with excess wheat acreage are not eligible for diversion payments and the excess wheat is not eligible for price support. For an explanation of marketing quota penalties on small farms when the operator did not elect to be an allotment grower, see the section, "Provisions for Small Farm Allotments," p. 3. GROWING WHEAT ON FEED GRAIN ACREAGE If there is a feed grain diversion program in effect in 1964, wheat production on permitted feed grain acreage will be authorized. Price support on such wheat would be at the support level for noncertificated wheat ($1.30 a bushel national average). NONCOMMERCIAL WHEAT AREA There will be no noncommercial wheat area in 1964. NO INCREASES IN ALLOTMENTS FOR A CLASS OF WHEAT IN SHORT SUPPLY The Food and Agriculture Act of 1962 authorizes the Secretary of Agriculture to increase the farm allotments for any class of wheat in short supply or likely to be in short supply. None of the classes of wheat are in that position; therefore, the authorization will not be used in 1964. VOTING ELIGIBILITY Producers who have an interest in a 1964 farm wheat acreage allotment are eligible to vote in the 1964 wheat marketing quota referendum. However, if the allotment is less than 15 acres, the operator must elect by May 13 to participate as an allotment grower in 1964 if he and other producers on the farm wish to vote in the referendum. This election is made by signing in the space provided on the back of the regular allotment notice, MQ-24, for the farm or on another copy of the form provided by the county ASC office. A person can cast only one ballot in the referendum regardless of the number of wheat farms in which he is interested except: 1. Individual members of a partnership shall each have a vote, the partnership as such shall not have a vote. (An individual member of a qualified partnership who also has an individual interest in another farm is not entitled to more than one vote.) 2. A person may also vote as the representative of an organization, such as a corporation. (Such an organization is entitled to only one vote.) 3. A person may also vote as the administrator or executor of an estate, or as a trustee or guardian, but the persons whom he represents are not eligible. Producers who have an interest in an allotment include 1. Landowners who receive all or a share of the wheat crop or proceeds thereof.-Landowners who rent their land to a tenant for cash are not eligible. In the event land is owned jointly by two or more persons, the following will apply: (a) In the States of Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington, which have community property statutes, owners of community property (both husband and wife) are eligible to vote if the allotment is on community property. (b) In all States, joint owners (both names on the deed) are eligible to vote if the allotment is on the jointly owned property. 2. Tenants or sharecroppers having an interest in the farm acreage allotment because of sharing in the wheat crop or proceeds thereof.-Producers who lease land as joint tenants (both names on the lease) are each eligible to vote. Examples: (a) Husband and wife both sign written lease to operate farm-both are eligible to vote. (b) Only the husband signs written lease to operate farm-only the husband will be eligible to vote. (c) Husband and wife lease the farm on a verbal lease with the owner, and the referendum committee determines that both are responsible for carrying out the tenant obligations under the lease-both can vote. POLLING PLACES Each ASC county committee will designate and announce polling places for the referendum. IF MARKETING QUOTAS ARE DISAPPROVED If more than one-third of those who vote in the referendum on May 21 disapprove marketing quotas, they will not apply to the 1964 crop of wheat. Price support would drop to 50 percent of parity-about $1.25 per bushel national average. The national average would be adjusted for class, grade, and location. Only those growers who stay within their allotments would be eligible for the 50-percent-of-parity price supports. The farm wheat allotments would be the same as though marketing quotas were in effect. In addition, there would be no diversion payments, and no wheat certificates issued. Those producers who did not stay within their allotments would not be subject to marketing quota penalties, and they could sell their wheat for whatever the market would pay. QUALITY, GRADE AND LOCATION As in the past, the price-support rates for wheat produced in 1964 will take into consideration the class of wheat, the location of the wheat, the grade, and such factors as protein and sedimentation value. The class, grade, and location factors are based on the long-time differentials for such factors between the terminal markets. The price-support rates will take into consideration premium grades, discounts for lower grades, and moisture content. Secretary FREEMAN. The vote in the referendum was such that the program now in effect would allow unlimited plantings with no marketing quotas or marketing quota penalties. The support level would be 50 percent of parity, a level that would permit wheat to compete as a feed with other feed grains, for those who saw fit to comply with their acreage allotment based on a national allotment of 491/2 million acres. This program, then, a voluntary one, would involve a loss in wheat farmer income or $500 to $700 million. The objective of the President's program is to recover that farm income without increased costs of bread to the consumer and without any increased costs to the taxpayer. That can be accomplished through the medium of a voluntary certificate program which has, in large part, passed out of the House Subcommittee on Wheat to the Committee on Agriculture, providing for certificates, one for our domestic usage at approximately 70 cents, another for export at approximately 25 cents on about 82 percent of the normal production on the 4912 million acres. This would involve only a small additional cost. Our estimates on a program of this kind indicate Government expenditures may increase about $100 million but, because the current price of wheat would be maintained, the cost to the consumer would not increase while $400 to $500 million would be recaptured for the wheat farmer. The program is a very simple one. Wheat would move in the market freely at a price which would be in the neighborhood of $1.30, which makes it competitive with corn as a livestock feed. Before any miller could mill wheat into flour, he would have to acquire equivalent domestic certificates. The exporter would have to have equivalent export certificates. In this fashion, the moneys involved and the difference between the current support level and the level at which the combined market price and certificate would reach would be maintained, but the income would be held for the producer. That is the essence of the program, Mr. Chairman, and it is also pending. I understand that it has been acted on favorably with some minor modifications by the Senate Committee on Agriculture and Forestry and is pending in the Senate and embodied in general the administrative recommendations which were not specific in terms of detail, but left these, in each case, to the respective committees to iron out. But this program would accomplish the goals of recapturing significant farm income without an appreciable increase in cost to the taxpayer, without increased cost to the consumer, and would bring our surplus down about another 100 million bushels of wheat. Mr. WHITTEN. Mr. Secretary, we all stay busy with hearings before other subcommittees handling other departments. Personally, I am meeting in the mornings with the Defense Subcommittee and I am sure everyone here has somewhat the same problem. So you have an occasion to see the members of the Agriculture Committee, perhaps, far more than we do at this time. What is the outlook for legislation in these two areas, in your own opinion, either on or off the record. Secretary FREEMAN. Off the record. (Discussion off the record.) EFFECT ON BUDGET ESTIMATES Mr. MICHEL. Mr. Chairman, might I inject a question here, particularly with respect to the Secretary's comments on pending legislation relative to cotton and wheat? Does the budget, which you presented, reflect the cost of those programs or is it deficient in that sense? Secretary FREEMAN. It does reflect the cost of those programs. It reflects what would be spent on wheat in fiscal year 1965 regardless of whether there is legislation or not, so that is unchanged. It reflects a savings in cotton of in the neighborhood of $200 million. The present projection on the programs under consideration now in the Senate would, as I recall the figure, be about $160 million, which in this volume, is within the same general range. PROPOSALS FOR DAIRY PRODUCTS Mr. WHITTEN. Proceeding then to dairy products, the President says the following: Modern dairying requires a large capital investment and a high degree of technical skill. No industry is more important to our health. Yet income to many efficient farmers is cruelly low, and this year it was reduced considerably by drought in many areas. I believe that a system for voluntary adjustment of output is the key to a successful dairy program. I recommend legislation to: (1) provide incentives to dairy farmers to reduce surplus production; and (2) permit producers in Federal milk marketing order areas, through a "base excess plan" to reduce their production of milk without reducing their share of the class I market. |