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THE TEDE AI RIESE VIE
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January 61 1949
The Hoover Commission, studying Governmental reorganization, has
d —*task
force surveying the USDA. Last week the recommendations of this groupl?,ecti:me,-,public.
The Department was the object of considerable comment on what is said -6 ;b6"'its present
disorganized structure, which the observers attributed to the piecemeal growth of the
Department. Aiming at elimination of duplication and overlapping_ of functions within
the Department and between other Governmental agencies outside the Department, and at
clarification of where the farmer stands with a large number of USDA agencies, the report re.lommends the following: (1) that conservation payments be made to farmers only
for those practices which brinz about proper land use, with no subsidies concealed in
the loayments, and that when the conservation program is completed, payments end; (2)
the
consolidation of agricultural lending activities into one organization to handle production and marketing credit, such organization to include the Federal land bank system,
the bank for cooperatives, and the Production Credit Corporation, with all real estate
loans to be handled through the land bank system including those now handled by the
Federal Farm Mortgage Corporation and the Farmer's Home Administration; (3) that agencies
dealing with land resources in USDA and the Interior Department be consolidated in one
USDA division, with water development activities to be put into a new department of conservation, but with mineral resource activities on the public domain settled outside
USDA; and (4) that one central regulatory agency be set up to handle all regulatory functions dealing with food products and with all drug regulation transferred to the public
health agency. After such reorganization the USDA would have, instead of a large number
of bureaus and agencies as now, eight maijor divisions: the Office of the Secretary, a
Division of Administrative Services, a research service, an extension service, a conservation division; a commodity adjustment service, a regulatory agency, and an agricultural
credit division.
A rise of 1.
er cent in land values for the U.S. from March 1 to November 1,
1948, is reported by USDA. The November figure puts land values at four per cent above
the previous high point reached in 1920. The rise for the March to November period was
less than one per cent in Seventh Federal Reserve District states. Estimates in the report show that the net return to capital (based on USDA estimates of farm equities) was
eizht per cent in 1948 compared with five per cent in 1940. . This is after deducting from
net farm income an allowance of $1,350 wages to each farm operator and working member of
the farm family, the same wage rate as paid to hired farm labor. The report further
points out in explaining the high level of Land values that this rate of return on capital
is better than can be realized in most other lines of investment in view of the earnings
retention policy of most corporations.
Prices received by farmers declined one per cent from mid-:November to December 15
as compared with declines of two per cent in. November and four per cent in October. Most
of the drop was in livestock and livestock product pribes—hogs, cattle, and eggs. The
level of prices paid by farmers was unchanged, putting the farm product price level
at
nine per cent above parity.
A recent report of BLS on consumer prices ("cost of living") shows
that from the
August-September peak (all-time high) to December 151 consumer prices
at retail have
dropped 1.8 per cent, due almost entirely to lower food prices,
which have declined 5.4
per cent from mid-July. This may be compared with a
drop of nearly 12 per cent in farm
(over)
product prices. Retail meat prices declined 12 per cent from August to December. It
should be remembered that there is almost always a time lag between farm price declines
and their reflection in lower retail food prices.
The December Pig Crop Report, issued since our last Letter, shows U.S. farmers
intentions to produce a spring pig crop of 56.5 million pigs, or 10 per cent above the
194-8 spring crop. The USDA goal was for an increase of 17 per cent or 60 million head, •
and hog-corn price relationships recently have been high enough to suggest a spring crop
25 per cent above last year. But producers have insured their position by putting corn
under Government loan rather than take the price risks on expanded hog output. It is
reported to us that some producers are suspicious that hogs may be at a support level of
around $17.00 when the 1949 spring crop goes to market. Unlikely as this see= now, unless 1949 is to see a bigger sdip in employment, incomes, and consumer demand than present
indications appear to warrant, it is nevertheless a factor inducing producers tozp slow
on hoE expansion.
A 1949 potato price support program at 6o per cent of parity became official last
week when Secretary Brannan announced the one-third reduction from the 1948 support level.
He said at the same time that 90 per cent of parity would be the support level for all
other supported commodities except turkeys at bo per cent if turkey prices should fall to
that level.
Loans and purchase agreements in support of dry edible beans which were to be
available only through the end of 1948 have been extended by CCC through February 28. The
extension was made because of the inability of processing facilities to condition the
large crop for eligibility by the end of December.
USDA announced officially last week that wool prices will be supported at slightly
over 42 cents to producers during calendar 1949. Some charyces in the 1949 program have
been made from the 1948 levels, but they have to do with types and grades of shorn and
pulled wool and are made in order to stimulate the preparation of wool for the market in
more readily saleable condition.
CCC announces that losses it absorbed on supporting prices of commodities sold and
shipped as a part of the relief to foreign countries totaled 58 million dollars on 1948
activities. The losses by commodities were: 24.2 million dollars on eggs; 13.8 million
for potatoes; 8.8 million on prunes; 6.8 million on raisins; 1.7 million on citrus juices;
and 0.9 million for honey.
A report of the House Small Business Committee says that TVA operations have not
contributed to a reduction in the cost of producing fertilizers. The report cites wartime experience in which private industry delivered phosphorus pentoxide at 75 cents per
unit (under OPA pricing) at the same time that TVA was billinE_to the Government at over
$1.00 per unit. The report also states that there is evidence substantiating the charge
that TVA, after meeting test and demonstration allotments and filling Government requirements, distributed the residual only to cooperatives and other "favored" outlets.
A hopeful note on foot-and-mouth disease was sounded last week by a special committee of the Senate Appropriation Committee when it reported the expectation that the
next 10 months will see plans worked out that will result in eradication of the disease.
But the committee warned that an epidemic could break through the barrier into this country at any time and urgpd continued cooperation to "police" the disease in Mexico. Recent
reports, however, have been encouraging, with some infected areas having been cleaned up
and the quarantine lifted.
#152
-
Walter B. Garver
Senior Economist
FARM
BUSINESS
CONDITIONS
DECEMBER 1948, WITH COMPARISONS'
1948
ITEMS
PRICES:
Received by farmers
Corn,
Oats, No.3 white, Chicago
'
Soybeans, No. 2 yellow, Chicago
.
Hogs, all purchases, Chicago
Beef steers, good grade, Chicago
Milk, wholesale, U. S.
Butterfat, local markets, U. S.
Chickens, local markets, U. S.
Eggs, local markets, U. S.
Milk cows, U. S.
Farm labor, U. 5.1
.
PRODUCTION:
Industrial, physical volume
Farm marketings, physical volume
INCOME PAYMENTS:
Total personal income, U. S.
Cash farm income, U. S. ***
Farm'
DEC.
DEC.
250
193
109
202
1711
2.38
1.42
.87
.2.62
21.01
27.82
4.81
.66
194
29.754
253
193
110
203
172
2.33
1.38
.88
2.58
22.68
30.68
4.83
.64
.29
.58
192
29.25b
281
191
123
200
167
3.09
2.61
1.27
3.93
26.31
29.62
5.08
:88
.25
.59
163
29.00c
97
98
80
98
101
.90
.62
.38
.95
6.27
11.86
2.07
.35
.13
.27
63
-
54.49d
54.50'
51.29d
(1935-39=100)
(1935-39.100) ....
194d
158
195'
180
192d
151
136d
121
(Annual rate, bil.of dol.).
(Annual rate, bil.of dol.).
217d
29
216'
29
201d
32
82d
9
-
(dol.per
(dol..per
(dol.per
(dol. per
(dol.per
(dol.per
(dol.per
(dol.per
(dol.per
(dol.per
(dol.per
bu.)
bu.) .
bu.)
bu.)
cwt.)
cwt.)
cwt.)
lb.)
lb.)
doz.)
head)
.31
.53
(dol.per week ..
without board or room)
(dol. earned per week)......
Factory labor, U. S.
INPLOYMENT:
NOV.
(1935-39=100)
No.3 yellow, Chicago
..-
.
(millions)
.
Non-agricultural
1940
_
DEC.
(.1935-39=100)
.(1935-39.100)
(1910-14=100)
(1935-39.100)
Paid by farmers
Parity price ratio Vtholesale, all commodities
Paid by consumers - "cost of living"
Wheat, No.2 hard winter, Chicago
1947
(millions)
.
Demand deposits, weekly reporting member banks* ........ (bil.of dol.)
Loans, weekly reporting member banks, all leading cities:2
.
Total*
(bil.of dol.)
.
26.93d .
--
7.1
51.7
9.0
51.9
7.5
51.0
37.3
47.8
47.3
48.7
-
25.6
15.6
253
25.2
15.5
253
23.3
14.7
257
_
45
FINANCIAL:
Commercial, industrial, and agricultural*
U. S. Government total gross direct debt**
(bil.of dol.)
(bil.of dol.)
.
ajanuary 1, 1949.
bOctober 1.
cjanuary 1, 1948.
dNovember.
'October.
fEstimated.
*Lstst Wednesday of the month.
***Based on estimated monthly income.
**End of month.
.1Revised series, not comparable to data published prior to
. December 1948.
2Reviied series, data not comparable to former series on "Weekly Reporting Member Banks in 101 Cities."
Compiled from official sources by the Research Department, Federal Reserve Bank o Chicago