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THE FEOER ~ L RESER VE B~ nI\ 0F CHICR GO 0 October 4, 1945 The soybean loan and purchase program as announced by the USDA will be essentially the same as on last year's crop. The support price continues at $2.o4 on beans grading #2 or better with 14 per cent moisture, plus and minus differentials for higher and lower grades. AAA County Committees will do the buying. All producers of beans in approved stor~_ will be eligible for loans and they will receive storage payment of 7 cents a bushel for b~ns stored under the loan . The Farm Bureau has just submitted to the Administration a 1946 farm program calling for support prices on all farm. commodities for which an increase in production has been asked, and for support prices during the first postwar year on total acreages of annual crops under pr8duction January 1, and after the first postwar year support prices on these commodities to the extent that farmers respond to requests for adjustments in production. Secretary Anderson says that in view of the expected decrease in consumer demand there will be some reduction in the 1946 over-all food production program. "Wo 1 re going to destroy farm prices and SUDports if our goals are based upon the naximum that agriculture can supply." Because of the temporary shortage of protein meal and co.ke the USDA is recommending a series of protein conservation measures to tide over the situation until a new supply of protein feeds becomes available, Recommencbtions include: more grain and less protein for turkeys, broilers, and lnte hatched chicks, culliiig"of old hens and slowly maturing birds; more pasture end less protein for dairy and beef cattle; and use of protein supplements for brood sows and f'all p;i.gs, rather than for market hogs. The War Department reports that the Army food procurement plans for the next 12 months call for the purchase of 53 per cent less meat, 48 per cent less fats and oils, 51 per cent less sugar, and a 61 per cent over-all reduction dairy proaucts . Total food requirements for the period are reported as 42 per cent below pre -VJ estimates . The Department of Connn.erce reports that during the next two to three months practically all of the national lumber supply will be available for civilian consumption. This will result from a sharp decline in military purchasing and the ending of wartime controls on lumber production, distribution, and use . The Department warns, however, that huge civilian orders mean a sustained pressure on suppliers for large quantities of lumber, and therefore not all needs can be met immediately. A group of ec onomists from the OPA and USDA have just tendered to Government officials reconnn.endations that beginning at once wartime subsidies to farmers and processors be gradually eliminated. They say that the earlier subsidies are removed the better, since removal at a future date my be vigorously opposed because of the possible weakening of farm prices. Taking the subsidies off now when demand is high would permit price increases to absorb the losses, whereas later no price increases might be possible thus resulting in a direct reduction in farm income . On dairy products they suggest that dairy production payments be gradually removed between now and next spring when production is flush . Termination of butter and cheese subsidies on December 1 is recommended, offset by selling price increases. Fluid milk subsidy would run to June 30, after which they would require producers to absorb the difference. On the other hand, soybean subsidies are recommended to continue indefinitely. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis :rn- AGRICULTURAL LETTER Milk producer~ through their trade federation, are asking for a peacetime program free of subsidies, which now run about one~half billion dollars a year. They also ask Government assistance in promoting higher quality milk production, and in adjusting seasonal milk production to ccnauription demands. Request is· also made for continuance of Government help in the drive to stimulate increased consumption of milk as a beverage. As to removal of dairy production subsidy program, close students of the situation believe that the program is likely to continue at least through March, particuJ.B.rly in view of the fact that the subsidy payments are nearly one -fifth of milk producers ' incomes . They point out that immediate elimination of the sub sidy would require an estinated increase of 14 to 15 cents in the consumer price of butter,__ an increase of 12 cents per quart of milk, and about 7 cents per pound of ·cheese . Senate Agricultural Committee has approved a bill which would noke surplus equipment such as tractors, trucks, and bulldozers available for use in soil conservation work. Purpose of the bill is to enable Secretary of Agriculture to requisition surplus equipment, materials and supplies and use or distribute them by grant or loan to states and other subdivisions for use in soil and water conservation work and related activities. Twenty-one Chinese professional agricultural workers, graduates of colleges of agriculture, are in this country at the behest of their government, in training to aid in the development and expansion of extension work in China . They are now at Iowa State College, Ames, but will study methods in other states and will live individually with farm families in order to study first-hand the practical application of scientific farming methods. Under the support program for potatoes Government has already acquired over 6,000 carloads of the "intermediate" states' crop . However, some farm representatives say many growers are taking extr-emely low prices, 40 to 50 cents a bushel, rather than wait for benefits under the support ~?::_ogrn~1 _ which the growers think operates too slowly. About 40 per cent of the purchases have gone into regular etorage places. The balance has gone to various relief agencies, has been sold for stock feed, to starch manufacturers, and to canners. The report on the operations of the Federal Intermediate Credit Banks for the year ending June 30, 1945 shows that the banks extended $874 million of credit to 600 cooperative associations and other financial institutions during the year . To obtain loanable funds these banks sold dur'ing the year $396 million wor:th of consolidated collateral trust debenturEi's: These were sold to the investing public without Government guarantee. There was a minor increase in the interest rate borne by these debentures, the report states, but "no change was made in the interest and discount rate of the Federal Intermediate Credit Banks . " The report also states that since the organization of these banks in 1923 losses, including reserves carried on June 30 for estimated losses, amounted. to only one-tenth of one per cent of the total amount of credit extended during the period. The index of prices received by farmers as of September 15 dropped about 3 per cent from August, due chiefly to the sharp break in truck crop prices, but due in part also to lower meat animal prices and a contra-soasonhl decline in egg prices. Meanwhile, prices paid by farmers rose slightly during the mon~h . Research Department https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Wa 1ter B . Garver Agricultural Economist
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