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=E.D/?£ AoriCU1ELiIal Federal Reserve : : : 1: \ :6: icago THE BUDGET submitted to Congress early this year estimated Federal expenditures on behalf of agriculture and agricultural resources (excluding "Food for Peace" programs) at $3.4 billion for the fiscal year ending June 30, 1967. This would be about $500 million less than the expected total in fiscal 1966, nearly $1.5 billion below the actual expenditures in 1965. Moreover, it is the smallest amount budgeted for agricultural outlays since the mid-Fifties. Actual budget expenditures for agriculture in the recent years, however, have proven exceedingly difficult to estimate accurately. Indeed, actual expenditures have exceeded estimates in 7 of the past 10 years. In fiscal 1965, the budget was originally estimated at $3.2 billion; it was later revised to $4.5 billion, and the actual expenditure totaled $4.8 billion. Again, the 1966 budget was originally projected at $3.9 billion but was recently revised to $4.3 billion. The largest item in the agricultural budget, of course, continues to be programs to bolster farm income. Expenditures in fiscal 1967 for this purpose are estimated at about $3 billion. This is $145 million less than in the current fiscal year, partially reflecting the smaller amounts of grains expected to be placed under the price support program because of the lower loan rates on most price supported commodities. Under the Food and Agricultural Act of 1965, greater emphasis will be placed on direct payments to farmers-rather than on high support prices through commodity loans-to induce participation in acreage reducing programs. Budget expenditures Farm income stabilization Agricultural land and water resources Rural eletrification and telephones Farming and rural housing loans Research and other agricultural services Total "Food for Peace" program Tota I agriculture and "Food for Peace" 1S06 f,At11J Actual Estimated 1966 1967 (mi I lion dollars) 1965 ~~ b e - Prices of fed cattle have increased sharply in recent weeks. Choice 900-1,100 pound steers at Chicago averaged about $29 per hundredweight during the week ended March 5-nearly $3 higher than at the start of the year and more than $5 per hundredweight above the yearearlier price. Prices are up even though the number of cattle slaughtered under Federal inspection has continued to exceed year-ago levels. Slaughter during January averaged about 6 per cent above a year ago, and average weekly slaughter in February showed a gain of about 5 per cent. Fed Cattle Prices Increase Sharply Dollars per cwt. 30 29 2,989 28 341 392 268 374 193 90 348 196 - 612 26 522 4;TI3 452 3;172' 24 1,701 1,539 23 6,914 4,911 Food for Peace expenditures are not included in the a~ricultural budget estimates for fiscal 1966 and 1967, although the program continues to be handled largely through the U. S. Department of Agriculture. These ex- ~ penditures for fiscal 1967 are currently estimated at about $1.5 billion-a slight decline from a year earlier, reflecting primarily the anticipation of lower prices for wheat and cotton and lower ocean freight rates. The amount of commodities shipped is expected to be larger. Legislation now pending, to replace the expiring P.L. 480 under which the present Food for Peace program operates, could neccessitate an upward revision of this estimate, however. 3,134 6,539 er Number 847 3,438 Another projected reduction would be effected through legislation in the Federal financing area that would authorize the sale of certificates of participation in Farmers Home Administration loans to private investors. Other cutbacks in the proposed budget would result from shifting the full cost of meat and poultry inspection to a system of fees collected from processors, from a reduction in the volume of milk distributed through the school lunch program and from the use of Rural Electrification Administration loan receipts to offset its expenditures. Each of these, however, would require additional legislation. tt • ,, 27 ,,,..,.... , 25 / 22 ,, 21 F M A / ...,.,. M ✓ / / '-- ..... ....... 900-1, 100 pound choice steers at Chicago A 0 N D Sales of beef futures contracts on the Chicago Merchantile Exchange indicate that many individuals are expecting choice cattle prices to continue near current levels during the spring and early summer months. Each of the near-term contracts is well above $28 per hundredweight. The report of cattle on feed in January indicates some further increase in marketings of fed cattle during the second quarter. Any accompanying price decline, however, would be tempered by the continued strong demand for beef, resulting from continued small pork supplies and further increases in consumer incomes. Roby L. Sloan Agricultural Economist FARM BUSINESS CONDITIONS December 1965 with Cornps.r is i ons 1Q6S December November ITEMS 1()61+ December PRICES: Received by farmers ( 1957-59=100), , . , , . . . . , , . , Paid by formers (1957-59=100) .. , , , . , . . . , , , . , . Parity price ratio (1910.14::100) . . . . , . . . . . . . , .. Wholesale, all commodities (1957-59:.100) . . . . , , .. Paid by consumers ( 1957-59=100), , , . , . , , , . , . , . Wheat, No. 2 red winter, Chicago (dol. per ~v.), .. , . Corn, No. 2 yellow, Chicago (dol, per bu.) , , , .. , .. Oats, No. 2 white, Chicago (dol. per bu.), , . , . , , , . Soybeans, No . 1 yellow, Chicago (dol, PIH by,) , , . . . Hogs, borrows and gilts, Chicago (dol. per cwt.) ..• , Beef steers, choice grpde, Chicog(> (dol. per cwt.) .•. Milk, wholesale, U. S. (dol. per cwt.) . . . . , . . . . . . Butterfat, local markets, U. S. (dol. per lb.) . , , . . . . Chickens, local markets, U. S. (dol. per lb.), , . I •• , Eggs, locol markets, U. S. (dol. per doz.) . .. , .. , •. Milk cows, U. S. (dol. per heod) . . . . . , . . . . . . ••• 104 111 :i..69 1.24 ,77 2.66 28 .44 26.6a 1,.6o .62 . 11~ . l-1-1 217 Form labor, U. S. (dol. per week without board), ...• Factory labor, U. S. (dol. earned per week) • • • • • • I' 110. 92 109 .30 106 .55 PRO DUCT ION: Industrial, physical volume (1957-59=100) Farm marketings, physical volume (1957-59=100) .••• 14-8 132 146 159 137 137 INCOME PAYMENTS: Total personal income, U. S. (annual rate, bil. of dol.) Cash form income, U. S.1 (annual rote, bil. of dol.) • , 551 44.4 546 40. 6 506 39 .6 EMPLOYMENT: Farm (millions) Nonagricultural (millions),, . . . . . . , . . . , • , , , • • 3.6 69 .1 4. 1 68 .7 3. 8 66 .6 123 121 124 115 115 117 215 234 213 233 187 204 ........ ................... ...... FINANCIAL (District member banks): Demand deposits: Agricultural banks (1957-59::100) . . . . . . . . . • ••• Nonagricultural banks (1957-59=100). , .. , .• , • , • Time deposits: Agricultural banks (1957-59=100) . . . , . , .. , , ••• Nonagricultural banks (1957-59=100) . . . , .. , . , • , 107 lll 80 -- 103 110 11 104 111 1.66 1.16 .72 2.54 24 .69 26.68 4. 62 .62 .14 . 38 21 5 -- 91 107 75 101 109 1.52 1.27 .76 2. 91 15.86 24-.01 4.47 .6o .13 .33 203 -- 1 Based on estimated monthly incoml!!, Compiled from official sources by the Research Department, Federal Reserve Bank of Chicago,
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