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AGRICULTURAL
NEWS LETTER
THE
Vol. 1

FEDERAL

RESERVE

BANK OF

Dallas, Texas, March I 5, 1946

DALLAS
Number 1

Foreword
This Agricultural News Letter is issued in the interests of agriculture and of
the banks in this Federal Reserve District. It will be issued monthly as a permanent
feature of this bank's service lo the Southwest, in the hope that it will be of real
value.
The purpose of the letter is to bring to its readers information which will
stimulate interest in agricultural problems, particularly those affecting this area,
and thus, perhaps, hasten their solution. Unfortunately, there are many problems
in connection with farm management, agricultural prices, farm credit, agricultural
marketing, and Government policy with regard to agriculture which remain to be
solved. In general, though perhaps only in a small way, it is hoped that this letter
will be helpful in keeping the agricultural and banking interests of the area abreast
of current developments in the field.
We are anxious to provide this service in a manner which will be of greatest
value to its readers. Therefore, we urge you to offer us your suggestions as to how
the letter can be improved to give you greater service. Also, we solicit from our
readers a frank expression of the value of the letter to them. We encourage your
comments as to the type of material and the content which you believe might be
most useful in achieving a furtherance of our mutual interest in the area's agricultural problems.
If any bank in the district woitld like to receive a limited number of copies of
the letter monthly for distribution to agricultural leaders and others in the commimity especially interested in the agricultural problems of the area, we will be
pleased to mpply such copies with01d charge. Also, we will be glad to add to our
regular mailing list the name of any individual or institution to whom this letter
might be of special interest.
William A. Faught,
Agricultural Economist
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

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AGRICULTURAL NEWS LETTER

FARM PRICES AND INCOME
Government Conitrol of Farm Prices Under
Attack
Various farm organizations are· supporting
the movement which is beginning to take
shape in Congress to remove price controls
from all farm commodities. Senator Thomas
of Oklahoma has announced that he will work
for removal of the controls. Concurrently,
Representative Pace of Georgia and other
farm leaders in Congress have indicated that
they may seek to call up the Pace Bill for
action. This bill provides for a readjustment
of the parity price formula to reflect all farm
labor costs, and, if passed, would result in a
considerable rise in the parity price of most
farm commodities.
Representatives of the dairy industry, appearing before the House food investigating
committee recently urged the removal of price
ceilings on all dairy products by July 1, and
an immediate increase in butter prices of eight
to twelve cents a pound. Representatives of
134 livestock organizations, meeting in Chicago in March, announced that they would
send a delegation to Washington to appeal for
abandonment of all subsidies and controls
affecting livestock prices.
The increased agitation to remove price
controls or reformulate the parity concept
came in the wake of the announcement of
the Administration's new wage policy and of
efforts in the Senate to extend the provisions
of the proposed minimum hourly wage bill
to cover «first processing" workers in agricultural enterprises, such as canneries, cotton
gins, or dairies. These measures would tend to
increase the farmer's cost of production.
Additional Subsidy Payments Authorized
The Senate has voted to authorize the Reconstruction Finance Corporation to make
additional payments of $12 5,000,000 in meat
subsidies and of $2 5,000,000 in flour subsidies during the next four months. These payments would be in addition to the $ 590,000,000 meat subsidy and the $190,000,000 flour
subsidy authorized by the last Congress for
the :fiscal year ending on June 30. John Good-

loe, RFC General Counsel, in presenting the
request for authority to make additional payments, pointed out that recent wage increases
in the packing industry were an important
factor in the Corporation's decision regarding
the need for additional meat subsidies.
Meanwhile, officials of the Office of Price
Administration and representatives of the
milling industry were conferring in an effort
to formulate a program to adjust flour ceilings and subsidies in line with the new wheat
extraction rate.
Proposals Made to Cope with Future Fann
Surpluses
As a result of the tremendous expansion in
production achieved by the nation's farmers
during the war, questions have arisen as to
the potential productive capacity of agriculture and the future demands for farm products. The Department of Agriculture has
estimated that within ten years American
farmers can feed about two and one-half times
as many people as they were feeding in 1943.
If such large production should occur, it probably would be brought about by the more
extensive use of improved farm machinery,
the development of more producti~e types of
plants and animals, and the application of
other improved cultural practices. In order
to assure that such expansion shall not be
brought about by exploitation of the soil and
destruction of its fertility, the Department
of Agriculture is placing increased emphasis
on soil conservation. Such a program would
tend to reduce the acreage of many soil-depleting crops but would encourage the expansion of pasture acreage and livestock production.
Any great increase in over-all farm production might result in a supply in excess of future demands, causing the accumulation of
huge surplus stocks of farm commodities
which might depress prices. To reduce this
possibility, Secretary Anderson has called for
a program of close cooperation between producers and processors to reduce production
costs and selling prices in order to broaden
the market for farm products. Senator Hugh
Butler of the Senate Agriculture Committee

AGRICULTURAL NEWS

has indicated that he proposed to introduce a
bill in the near future to encourage an expanded use of farm products in industry so
that it wiJI not again be necessary to ttpay
farmers not to produce."

FARM MANAGEMENT
Soil Conservation Program Discussed
The Gulf Coast Soil Conservation and
Drainage Supervisors Association, meeting in
Angleton, Texas, in February, stressed the
need for additional agricultural research and
for close cooperation between farmers, businessmen, and public agencies in carrying out
a successful conservation program. The desirability of combining farm soil conservation
programs and public drainage projects-gearing one to the other-was discussed, as well
as the need for further research to discover
ways in which costs of production might be
lowered. It was recognized that, in order to
broaden the market for agricultural products
and to meet competition of foreign products
and substitutes, the costs of producing farm
commodities must be lowered. One method of
achieving this would be to increase per-acre
yields through the improvement of plant varieties, the more efficient control of insects
and plant diseases, and the preservation and
improvement of the productive capacity of
the soil.
Now is a particularly propitious time to
consider expanding the soil conservation program, for the fertility of the soil has declined
seriously during the war. In an effort to meet
unprecedented demands for farm products,
many farmers over-grazed and over-cropped
their land, and shortages of labor, equipment,
and supplies seriously hindered the application
of proper conservation practices.

reviving for i n dem nd ,
activity
d ·ncrea d comp t tio
thetic a
r fib
r re t 1ct g the
mestic mark t or cotton.
In an effort to move a portion of the burdensome supply of cotton held by the Commodity Credit Corporation and to aid in reviving Japanese peacetime industries, arrangements have been completed to ship about 200,000 bales of cotton to Japan each month. It
is estimated that Japan can use as much as
1,400,000 bales in the next twelve months.
Until private trading is resumed, movement
of cotton will be carried on through Government channels. Stocks of cotton held by the
Commodity Credit Corporation will be
shipped to Japan, and textiles manufactured
from this cotton will be accepted in an amount
adequate to reimburse the United States in
full.
Secretary of Agriculture Anderson and
members of the textile industry have warned
that costs and prices of cotton products must
be reduced in order to expand the market for
cotton, and that this will require cooperation
between producers and manufacturers. Artificial controls and price floors cannot solve the
problem of achieving an increased demand for
American cotton in world markets.
The serious implications of the cotton problem were reviewed at a meeting of producers,
processors, and agricultural workers at College Station in February. Dr. L. P. Gabbard,
Chief of the Texas Agricultural Experiment
Station, stated that the loss of foreign markets
has been due largely to a pricing policy which
forced the price of American cotton far above
the prices of comparable foreign growths. It
was also pointed out that these markets can
be regained only by reducing the production
cost and the sale price of American cotton.

COIVIMODITY NOTES
Cotton Situation Reviewed
The familiar problem of the cotton industry
of finding an outlet for American cotton is
again receiving attention. The already reduced
foreign markets for American cotton were
almost completely shut off during the war
period, and present record stocks of lowpriced foreign cotton are available to fill the

· Increase in Texas Cotton Production
Appears Unlikely
In a recent meeting, leaders of the cotton
industry in Texas expressed the opinion that
cotton production could not be significantly
increased in 1946 because of shortages of labor and machinery, coupled with the inadequate supply of seed and its poor germinating

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AGRICULTURAL NEWS LETTER

qualities. They also pointed out that grain
sorghums, paying about $2.50 per hundred
pounds, might yield a greater profit per acre
than cotton. Furthermore, the sorghums can
be harvested by machinery and require relatively little labor in production, thus tending
to reduce demand in the short farm labor
market.
Reports from other sections of the cotton
belt show a slightly improved farm labor situation in some areas, but most reports still
show a shortage of workers. A low supply of
seed of indifferent germinating quality was
also reported for most sections.
Govemment Requests Further Expansion of
Food Crop Acre.a qe

The Government has asked that farmers in
the United States increase plantings of grains
and other food crops by 3,200,000 acres above
previously announced goals. This brings the
new goals for wheat up to 69,875,000 acres,
compared with 68,781,000 planted last year.
Corn acreage goals have been increased to 97,760,000, compared with 92,867,000 last year,
and goals for soybeans have been set at 10,700,000, compared with 10,873,000 for last
year. The emphasis upon larger acreages of
grain is a result of greatly curtailed foreign
crop production and of increased needs for
grains for human and livestock consumption.
Due to the livestock feed shortages, farmers were again urged by the Department of
Agriculture to reduce the numbers of livestock. They were asked to decrease turkey
production by about 10 per cent below last
year, to continue heavy marketings of beef
cattle, to market heavy hogs immediately, and
in the future to bring hogs to market at
lighter weights.
Members of farmers' organizations and feed
and grain associations have expressed doubts
that the increased plantings called for by the
Secretary of Agriculture will be met. They
point out that the availability of farm equipment and labor, and weather conditions at
the time of planting are the factors which
will largely determine the extent of plantings.
Moreover, they suggest that uncertainty in
regard to the Government price policy may

make farmers reluctant to increase plantings.
The acreage planted to soybeans may be limited by the fact that soils adapted to their
growth have been depleted during the war,
when proper rotations and fertilization were
impossible.
Efforts Made to Meet Wheat Export Goals
Statistics of the Department of Agriculture
indicate sufficient wheat to meet export goals
and domestic demands and provide for a slim
but safe carry-over. Practical difficulties, however, have led Secretary of Agriculture Anderson recently to report that it is improbable
that the Government will meet its export program of 6,000,000 tons of wheat by June 30.
He indicated that shipments in February
would fall short of the 1,000,000-ton goal by
about 15 0,000 tons and that March exports
were expected to fall even farther below goals.
The Department has insisted that the main
obstacle to meeting the goals has been the difficulty of securing adequate transportation facilities, and after March, increasing competition for these facilities is expected from industrial plants.
In an effort to stimulate an increased flow
of grain to market and to encourage farmers
to reduce feeding activities, an increase of two
to four cents per bushel in the ceiling prices
of most grains was made effective on March 4.
It was also announced that the subsidy of 5O
cents per 100 pounds now paid cattle feeders
to encourage feeding operations would be terminated on June 30. Price ceilings on hogs
will not be changed prior to September 1, but
the subsidy on the heavier weights may be
lowered before that date.
Texas Dairymen Seek Relief from Critical
Feed Shortage
With stocks of grain sinking rapidly and
supplies of protein supplements far below
demand, Texas dairymen have appealed to the
Production and Marketing Administration for
aid in s'o lving the grave feed shortage. They
have asked that the export of soybean, cottonseed, and flaxseed products be stopped and
that adjustments be made in the price regulations affecting cottonseed and soybean meal
imported from Mexico.