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ri ulwral

Federal Reserve Bank of Chicago -

•

February 3, 1961
NET FARM INCOME rose throughout 1960. The
annual rate of realized net farm income for the fourth
quarter is estimated at $12.4 billion, nearly 15 per cent
above the fourth quarter of 1959. This is the highest
rate since the fourth quarter of 1958, and, except for the
$12.7 billion registered in that period, the highest since
the fourth quarter of 1953.
For the year as a whole, realized net farm income
totaled about $11.6 billion, 3 per cent above the 1959
level of $11.3 billion but still 11 per cent less than the
$13.0 billion in 1958.
Reflected in the increased income is a record volume of marketings of farm commodities__ and slightly_
lower average prices. Marketings of both crops and
livestock were in larger volume than in 1959 with crops
up 4 per cent and livestock up about 2 per cent. The
major exceptions to the pattern of rising volume were
hogs and eggs. While both of these were marketed in
smaller volume than in 1959, prices were substantially
higher and thus helped to boost farm income. Income
from crops rose only because price support programs
kept the larger volume of grain from depressing prices
severely.

•

Prospects for 1961 continue to point to relative
stability in cash receipts, production expenses and
net farm income.
However, there continues to be considerable dissatisfaction with the level of farm income in general,
and real concern as to problems being created by the
continued build-up of surpluses. Price supports obviSales, Expenses and Realized Income of Farm Operators
(seasonally adjusted annual rates by quarters)
IV

Year

(billion dollars)

•

1957
1958
1959
1960

Cash
29.7
33.6
34.0
32.3

Receipts from Farm
30.0
29.6
33.1
33.6
32.4
33.5
34.0
34.1

1957
1958
1959
1960

23.2
24.6
26.2
26.3

Farm Production Expenses
23.6
23.3
23.4
25.2
25.4
25.7
26.3
26.1
26.1
26.5
26.2
26.2*

23.4
25.2
26.2
26.3*

1957
1958
1959
1960

10.9
13.6
12.3
10.2

Farmers' Realized Net Income
11.4
10.8
11.0
13.0
12.7
12.7
10.6
11.5
10.8
11.9
11.8
12.4*

11.0
13.0
11.3
11.6*

* Preliminary.

Marketings
29.8
30.0
33.5
33.7
32.7
33.2
34.3*
33.7*

, OF

BR
FEB141961
RECORDS
ClIRREHT SERIAL

Number 593
ously cannot be continued indefinitely unless the buildup of surpluses is brought to a halt by reducing the inflow to Government storage or increasing the dispositions, or both.
THE PERENNIAL SEARCH fora workable solution
of "the farm problem" continues with farm leaders,
Government officials and others again sifting the chaff
of an endless array of proposals in search of kernels
which will prove helpful. Several task forces appointed
by the new Administration have submitted recommendations recently and the President has said that he will
soon make specific proposals to Congress.
It is reported that there is agreement among the task
forces that the objective of farm policy, as in the past,
should be to increase farm income and bring supply and
demand into balance. Except for the cotton group, there
was agreement also that some type of land retirement
program should be used to help halt the build-up of surpluses.
With no change in current programs it was estimated
that surpluses would continue to accumulate with a net
annual cost to the Treasury of 2 to 4 billion dollars.
Included in the proposals of the various task forces were
recommendations that: Government programs whi ch encourage increased production, such as payments for conservation practices which increase yields, should be
ended; higher price supports be provided for feed grains
to farmers who participate in a program to reduce stocks
and production; any land retirement program should prohibit any productive use of the land set aside; a national
marketing quota for wheat• be adopted with price support
being provided only on that amount of wheat, and the
exemption of farmers growing less than 15 acres be
eliminated; the 1960 cotton program consisting of price
supports, acreage allotments and export subsidies be
continued in 1961.
Experience indicates that spectacular new programs
should not be expected. Farm programs have been evolutionary in their development, not revolutionary. Current programs consist of a mix of price support, output
controls, export subsidies, consumption subsidies and
other measures. Any new program is likely to be composed of familiar ingredients but possibly in different
proportions than in the past.
Research Department