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Federal Reserve Bank of Chicago - September 14, 1962
Government programs have figured importantly in the .
rapid growth of agricultural exports in recent years.
Since price support programs for wheat, feed grains and
some other commodities have maintained domestic prices
above world prices, the Government Commodity Credit
Corporation makes export payments in cash, subsidizes
exports through payments in kind or sells stocks at less
than domestic market prices in order to keep American
farm commodities competitive in world markets. In addition, there are "special" Government export programs;
the best known is Public Law 480. These programs include sales for foreign currencies, credit sales for dollars, barter and donations for famine and emergency
relief and for the promotion of economic development
in underdeveloped areas. Taken together, these "spe-cial" programs constitute ciur "food-for-peace" effort.
Agricultural exports are of vital importance to the
United States. Part of nearly every farm commodity is
sold abroad. In recent years, the value of agricultural
exports has averaged about 13 per cent of farmers' total
cash receipts from marketings. Furthermore, agricultural
commodities now account for about one-fourth of total
merchandise exports.
Of the $5 billion of United States agricultural commodities exported in 1961, $1.5 billion moved under the
"special" Government programs. Sales for dollars with
subsidies totaled about $2 billion. The remaining
$1.5 billion was commercial sales for dollars which included Government subsidy to bridge the gap between
domestic and world prices. These subsidies have been
in the form of credits for short periods, sales of Government-owned commodities for less than domestic prices
and export payments in cash or in kind.
•
Grain exports from the United States have been increasing rapidly. Over 36 million tons of grain was exported from the United States during the fiscal year
ended June 30, 1961, up from 32 million-tons in the previous year. This was about half of the total world grain
trade and about 23 per cent of the domestic grain production. Foreign markets took over half of the wheat and
rice produced by American farmers last year, in addition
to 10 per cent of the barley, 15 per cent of the grain sorghum and about 8 per cent of the corn. Before World
War II, exports of feed grains (corn, oats, barley and
sorghum) were negligible—averaging less than 1 per cent
of total annual production.
In fiscal 1961, over three-fourths of our grain and
cotton exports received subsidy payments from the CCC
in the form of cash, credits, payments-in-kind certificates and other devices. Subsidy payments on grain and
cotton exports totaled $637 million or about one-fifth of
the domestic market value of these commodities.
•
The amount of subsidy needed to bridge the gap
between domestic and foreign prices varies widely
among commodities. Payment-in-kind subsidies on rice
Iturat
tt
II
D T. OF AGRICULTURE
L AGRICULTURAL LlBRY
SEP
5 1962
11
Number 670
exports last yeal-4417,Tge,4 $2.92 -per hundredweight—
well over half our-maritet price bf VI:Bei-cwt. received by
farmers in January 1961. Wheat exports received subsidies averaging about 51 cents per bushel—or roughly
28- per -cent of the United States farm price; Payments
for cotton averaged about $32 per bale—about 25 per cent
of the domestic market price. At the other end of the
scale, subsidy payments for corn averaged about 6 cents
per bushel last year compared with the farm price of 96
cents. It is worth noting that price supports on corn
have been reduced mere than on other major commodities.
So long as the United States maintains price supports above world market levels on major agricultural
commodities, Government subsidies will be required in
order to sell these farm commodities in the competitive
world market.
Payment-in-kind Subsidies
for the Exportation of
Agricultural Commodities
Commodity
Payment-in-kind
certificates
Wheat, bu.
Barley, by.
Corn, bu.
Grain sorghum, bu.
Oats, bu.
Rye, bu.
Rice, cwt.
Cotton, bale
Fiscal year ending June 30, 1961
Average
Production Quantity Total Subsidy
('60 crop yr.) Exported, Subsidy, Per Unit
million
1,363
423
4,353
638
1,066
32
54
14
504
48,
129
69
11
6
17
7
Subtotal
$259
8
8
48
2
2
5
220
$ 0.51
0.16
0.06
0.05
0.18
0.31
2.92
31.65
557
Other
60
TOTAL
637
SOURCE: USDA Commodity Credit Corporation
Research Department
FARM BUSINESS CONDITIONS
July 1962 with comparisons
,
1962
ITEMS
..
PRICES:
Received by farmers (1947 - 49 =100)
Paid by farmers (1947 - 49 =100)
Parity price ratio (1910 - 14 =100)
Wholesale, all commodities (1947 - 49=100)
Paid by consumers (1947 - 49 =100)
Wheat, No. 2 red winter, Chicago (dol. per bu.)
Corn, No. 2 yellow, Chicago (dol. per bu.)
Oats, No. 2 white, Chicago (dol. per bu.)
Soybeans, No. 1 yellow, Chicago (dol. per bu.)
Hogs, barrows and gilts, Chicago (dol. per cwt.)
Beef steers, choice grade, Chicago (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.)
Eggs, local markets, U.S.(dol. per doz.)
Milk cows, U.S.(dol. per head)
Farm labor, U.S.(dol. per week without board) ......
Factory labor, U.S. (dol. earned per week)
June
July
1961
July
89
89
87
122
122
120
79
78
79
119
129
2.15
1.14
119
129
2.17
1.15
119
128
1.87
1.15
.74
.68
.70
2.514.
2.53
2.66
18.34
16.93
26.50
25.25
3.86
.14
3.71
.58
.14
17.85
22.38
4.03
•30
217
.28
217
.58
.60
.12
.34
222
50.00
31
47.501.
48.25
96.56
97.27
93.23
'
PRODUCTION:
Industrial, physical volume (1947 - 49 =100)
Farm marketings, physical volume (1947 - 49 =100) ....
180
126
179
114
170
131
INCOME PAYMENTS:
Total personal income, U.S.(annual rate, bil. of dol.) ...
Cash farm income, U.S. '(annual rate, bil. of dol.)
442
__
441
35
421
37
EMPLOYMENT:
Farm (millions)
Nonagricultural (millions)
,
6.1
6.4
6.5
63.5
63.2
62.0
103
103
103
99
lo4
165
163
144
173
171
147
,
FINANCIAL (District member banks):
Demand deposits:
Agricultural banks (1955 monthly average =100)
Nonagricultural banks (1955 monthly average =100)...
Time deposits:
Agricultural banks (1955 monthly average =100)
Nonagricultural banks (1955 monthly average =100)....
-
lo6
1 Based on estimated monthly Income.
W April
Compiled from official sources by the Research Department, Federal Reserve Bank of Chicago
,
@FedFRASER