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AGRICULTURAL
NEWS LETTER
FEDERAL

THE

RESERVE

BANK OF

Dallas, T exas, October 15, 1946

Vol. 1

THE FEED SITUATION
The fccc.l situation promises to be materially
improved for the Nation during the 1946-47
f ceding season, according to recent reports of
the United States Department of Agriculture,
but shortages of protein feeds are expected to
persist. In the Southwest, however, the reduced
production and small carry- over of most feedstuffs, together with the general shortage of
protein feeds, may cause serious feeding problems for livestock producers.
upplies of feed grains per animal unit in
the nation as a whole arc expected to be substantially greater during the current feeding
ca son than during 194 5 -46. This expectation
is based chicfl y upon the anticipated record
volume of thi s year' corn crop, estimated on
September 1 at 3 ,3 71 ,707 ,000 bushels, comp.1red with 3,018 ,410,000 bushels produced in
194 5. Corn generally accounts for well over
half the quantity of all grain :rnd other concentrates fed to livestock. Consequently, mod er.1tc declines in this year's o:it and barley crops
from last year's production and a rather sharp

DALLAS
um he r

decline of 17 per cent in the production of
grain sorghums will not criously affect the
national supply of feed concentrates per animal
unit.

In fact, this year's \'cry large crop of good
quality corn will more than offset not only
these declines in current pr duction of other
feed grains but also the hortnc of the stocks
of corn, barley, and grain orghum on hand
at the beginning of the 1946-47 feeding eason.
Therefore, it is expected that the total national
upply of feed grains, including both carryover stocks and thi year's production, \'ill be
well above that of last sea on and ;lppro imatcly 20 per cent brger than the prewar
average supply ( 1937-41), with the pos ibilit:
that it may approach th' record supply of
1942. Thus with reduced number of livestock,
the domestic upply of feed grain per unit
this ca on is ex pectcd to be over I 0 per c~n t
larger thm in 194 5-46 and approximately 15
per c~nt larger than the average for the pa ·t
five years. If the estim:itcd quantities of imported grains arc added to the don1estic sup ply, the total quantity per animal unit will he
the largest on record.

1 oHmb(•r 11
through December 7 will be the period of the 1 ·ovemher Promotion dnrin~
whi<'h th(• Treasury, supported by banks, the radio and pres., husin<"ss firms, and others, "ill
rc-<•mphasiz • tlH' im1wrfam·e fo individuals of continuing to hold and to buy
nitNl ,'faf<'i'

~aving-. ·

Bonet..

During World War 1 I the farm people did a magnificrnt job for tht'ir country ancl for
flwmst•h•t•s h) producing th<' food and fiber nt•cdt•d to win the war, by reducinp; th ir clehts, :ind
hy investing more than $:),000,000,000 in war bonds. That sound 1>radic<' of putting· farm financial res<"n'<'. into bonds of our Fed ral GoYemment should be a p rmanent and dt•finif<' part of
flw finand:ll progTam of ('\'Cry farm family. Farming· is a speculatiYe bu. incss at ht•st . . 11hj<·<·I
fo tlw nq~·ari ... of flw wcatlwr, price changes, and numerous other factors. Farm p •opl<• tH'< d
to hold adequate financial rc'serves in the , afest possihle form to meet un1u·Nlidahll• 4.'0nting ncies which are tlw outcome of de,'elopm(•nts over which th<• farm ptOJ>h' haH littlt or
no control. L nifr l :-itaks Savings Bond· provide that needed inYcstnH•nt m1eclium for the farm
p •opl of th nation.

1

1• armer of the Southwest, now mark<•ting one of th mos I profitable crops in history. can
protect their own and f h(•ir families' future by i1westing as much as po.-sibll• of this year·: cash
incomt.• in . a~ings Bonds. They can BUY their F.-XTRA B0 .1 ' DS , ' 0\\', ev n in adnlnc • of tlw
1 to\' •mh •r Promotion,
without inf<•rruptillfl..\· their rt.•gular monthly hond-huying program.

2

AGIUGULTURAL NEWS LETTER

The removal of certain limitations on uses

of grain which has been announced will increase, to some extent, the demands of industry for many grains. At the same time, however, larger supplies of byproduct feeds should
result. The removal of requirements for a
hi a her than usual extraction rate in flour milling, together with the strong domestic and
foreign demand for wheat flour, is expected to
increase substanti:tlly the supply of wheat mill
feeds in 1946-47. The somewhat expanded
use of grain permitted brewers and distillers
will increase slightly the supplies of dried
grains from these sources. On the contrary,
supplies of high-protein feed, such as cottonseed, soybean, and linseed cake or meal, in
1946-47 will be below those of the previous
year. Though this year's production of cottonseed is expected to be slightly greater than last
year's, it will be far below average. The indicated production of soybeans and peanuts is
slightly below the crops of last year, and the
estimated linseed production is far below that
of 194 5. Hay production is expected to fall
well below that of last year, so that, in spite
of large stocks carried over from the past season, total supplies during this year will fall
below those of 194 5.
In contrast with the favorable national situ~1tion, the indicated production of feedstuffs

in the Southwest docs not present so optimistic
a pro pect for livestock producers in this area.
Corn production in the five Southwestern
states-Te:>...as, Oklahoma, Louisiana, Arizona,
and N cw Mexico-was indicated on September 1 to be only 9 5 per cent of last year's production and only 83 per cent of the 10-year
( 19 3 5-44) a vcragc. The estimated production
of oats, barley, and grain sorghums in 1946 also
falls well below the production in 1945, and,
\ rith the c, ccption of grain sorghums, considerably below a vcrage. The feeding situation in
this area is further darl encd by the fact that
the production and carry-over of hay arc far
below last year, and that in many areas which
suffered from a prolonged drought during the
summer months, prospects for winter ranges
arc poor. Finally, the general shortage of highprotein feeds, such as cottonseed, oybean, and
limccd meal, is expected to cause particular
<lifficulLy for livestock prnduccr in the western

part of the area who depend primarily upon
these sources for supplementary winter feed.
The indicated reduction in feed supplies in
the Southwest may be partially offset by a d ·cline in livestock numbers. It appears probable,
however, that shortages of some types of feed,
particularly proteins, will develop during th:
coming winter. In an effort to assure an ordcd)
distribution of feeds in short supply and sufficient stocks of these feeds to strengthen rang
animals through the winter months, live tock
producers in Texas and New Mexico arc attempting to secure early deliveries of prot in
supplements. Such efforts might well be accompanied by the seeding of additional acreages of small grains, legumes, and grasses t
furnish fall, winter, and early spring grazin .
In view of the present high prices of purchased
feed, such pastures will be unusually profit
able. Similarly, it will be a gain to continu
close culling of livestock so as to dispose of all
animals that do not make efficient use of feed.

CAUTION SUGGESTED IN PURCHASE OF FARM MACHINERY
Many farmers will be considering the pu rchase of new farm machinery in the montbw
~1head, either to replace equipment worn-out
during the war or to perform some farm ta k
now done by hand. Some farmers will be a bl
to pay for such machinery out of wartirnr
sa \'in gs, while others will require the ex ten ion
nf credit to finance at least a portion of th ,ir
purchases. In either case, it is important to conider the soundness of the financial invest1ncnt
-whether reduced farm operating cost or
possibly increased farm incomes will be sufucicnt to co,·cr the annual cot of the nc''
machines.
On this subject Harold C. Larsen has pr··
scntcd several points worthy of con iderati n
in an article entitled «How Fann Machiner
Can Earn Its \Vay," in the September issue of
T /](' Agricult nral Situation, pub]ished by th'
United States Department of Agriculture.
First, he defines the annual capital cost of .
new machine as the amount that will pay fi
the price of the machine over its estimated lifot irnc and include interest on the money in·
n~Hed. If the former borrows the money t

AGIUUUL'l'Ul~AL

purchase the machine, he will have to pay
interest to the lender. lf he uses savings to buy
the machine, he should include interest to hi111•;d f in the co t, for he could invest his money
dsewhere and draw interest. To the annual
capital cost of the machine must be added the
<.:<> t of operation in order to ascertain the annual cost of performing the farm operation
by machinery. This cost should be compared
with the cost of performing the task by other
methods and with the increase in income that
111 i gh t re ult from the use of the machine. If
the cost of performing the job with the machine is less than that of performing it with
hand labor or with other machinery, sclfowncd or hired, or if the increased income
more than offsets the difference in cost, the
purchase of the machine should be a financially
•.oun<l investment.
J\ Sl:Cond point emphasized ii; this article is
that the purchase of equipment tends to innl!asc the total fi, ed cost of production, so
1 hat the farmer making the purchase will have
the annual cost regardless of what prices of
{.rnY1 commodities do. If these prices continue
.1t: present levels or advance, the farmer, by
11 · ing a portion of his cost, will increase his net
in ome. However, if prices should decline, the
fi,·cd cost will cause his net income to foll even
Lister than prices. This is a contingency that
puts many farmers into financial distress.

Fi1,;illy, it is pointed out that farmers h;1vc
cnjCJycd a particularly favorable price relationship during the World \\!:11· TI period, for prices
re ·eivcd by farmers advanced more rapidly ;111d
to higher levels than prices paid. The s;1me conditions prevailed durin
\'V'orld \~far r, hut
werl' n.:vcrsed shortly after the close of the \va1·,
with prices received for farm com modi tics
f:dling nrnrc Ltpidly than prices paid by formers. J\ repetition of thosl! experiences any time
duri11 1 ~ the m· ·t fcv./ yc;lrs would make it cxtrl'mely difficult for he. vy purch:i crs of new
f. rm equipment to m ct their operating costs
.rnd recover their capital in vestment. The :lrt ide <.:onclude.s with thi · warning to prnspccti' c purclusers of farm equipment, particularly
th11 l' who must horrow :111 or ;1 brgc portion of
thl' rost, to consitb· c.trl'fully all LH.:turs int

NI<JWS LETT.Im

\'oivcd bdore con1mitting thcrnselvcs to Luge
e,· pcnditun.:s for new equipment.

FARM CREDIT
Increased U""e of Bank Credit
!\ recent report of the / gricultural Commission of the American Bankers Association

reveals that the farmers of the United States
used rnorc bank credit in 194 5 than ever before. During the year the banks extended
$ 3 ,48 8,5 62,000 in credit to 42 per cent of the
11~1l ion's farm operators, and, according to the
Association, more than twice that amount of
addition~1l credit was available for agricultural loans if the nel:d for such loan had
arisen. ln spite of this increased use of bank
credit by farmers, however, the outstanding
volume of anrjcultural loans held by all banks
at the beginnjng of 1946 was only $1,873,7 3 5 ,000, compared with approxim.nely
s2,220,000 000 a year earlier, and accounted
for only 2 6 per ccn t: of the total agricultural
debt, cornp:ucd with about 28 per cent at the
beginning of 194 5. The c developments and ~;
substt1ntial increase in both financial and physic1I ass ts held by f:1rmers clearly reflect continued impro\'emcnt in the financial position
or agriculture. The increase in financial assets
w .1s brought about by an increase in the volume of bank deposits, Government bonds, an<l
other securities held by farmer , but the increase in the value of physical assets wa~ due
p1·im:1rily to rising prices.
In the Southwest, fa ·m loan devdop1111.:nts
1(H5 followed the same general pattern as
fo1· the natio1 as a whdl:, c.·cept th.it the per
cent of farmers in 01· 1~1hom;1 and Tc,·as who
borr<l .\·cd from banl·s was much lar 0 cr than
for lie n:1tion as a whole, whill! tn New Mexico,
Arizona, and Louisiana, the per cent was much
smaller, with only 6.1 per cent of ;111 farmers
in Louisiana securing loans from banks. In
the c :fi vc st:1tr a gricu ltmal loan. by banks
totaled ~+~2,8 54,000, while bani· funds rcponed :1s :w.1iLthle for :1ddition:1l loans tot:llcd
more than L wice th.1t: fi" ure.

111

4

AGRICULTURAL NEWS LETTER

FARM PRICES
New Price Regulations
The maximum price for rough rice has been
increased $1.00 per barrel, according to an
announcement by Acting Secretary of Agriculture Charles F. Brannan. Adjustments were
made also in the maximum price of finished rice
so as to reflect the price increase for rough rice.
In announcing these increases, Mr. Brannan
stated that this action was "necessary to encourage increased production and orderly distribution of finished rice by assuring the procurement of sufficient rough rice from which
to procure the quantities of finished rice necessary to meet commitments on a current
basis.''

FARM LABOR

pears likely to become important to the building industry. 1t has been found that rice hull
mixed with cement can be used for making
building blocks. The e blocks arc known a
ricemcnt, and tests haYe shown that they can
be cut with a hand saw, can hold a nail r
screw, arc fire-proof, termite-proof, have :t
low water-absorption ratio, and supply almo t
complete insulation. The material does not expand when heated, does not sweat as concrete
doc under certain conditions, and can be
polished.
Production of this new material will begin
soon at El Campo, Texas, with plans calling
for an extension of manufacturing throughout
the rice-producing areas of Texas, Louisiana.
Arkansas, and California.

Further Increase in Farm Employment
Indicated for 1947
New Harvesting Equipment Developed
Farm employment in the United States,
A tractor-mounted sweet potato digger ha
which declined throughout the war period,
been
developed at the sweet potato experiment
reached a low point in January 1946, about 12
station
at Gilmer, Texas, according to a stateper cent under the 193 5-39 average. Since Janment
by
Mr. R. B. Hickerson, assistant far111
uary, however, total agricultural employment
labor
supervisor
with the Texas A. & M. Exhas increased substantially, and, according to
tension
Service.
The
machine plows the por.1the United States Department of Agriculture,
toes
out
of
the
ground,
and an attached finger·
at the beginning of the harvest season on
like
arrangement
gathers
them out of the soi
August 1, the number of workers employed on
and
leaves
them
on
top
of
the
bed. It is said tha:
farms was four per cent above the same date
potatoes
harvested
with
the
digger
are not cut
last year and only four per cent below the
and
bruised
as
much
as
those
dug
with ordi193 5-39 average. A smaller than usual seasonal
nary
equipment.
Plans
and
blue
prints
of thl
increase has occurred since that time, but a
sweet
potato
digger
may
be
obtained
by
writfurther increase is in prospect for 1947, when
ing
to
Texas
A.
&
M.
College,
Extension
Sen~
the average for the year may reach the highest
level since 1940. Farm wage rates, already at ice, College Station, Texas.
record levels, arc expected to increase further,
Sweet potato vines can now be harvc tc
at least through the :first half of 1947. If, as economically for use as hay, as a result of t:h
seems likely, however, more able-bodied indi- dcvclopmcn t of a new harvester by engineer'
' iduals come into the farm labor force next d the United States Department of Agricul
year, it is expected that the quality of farm turc. In reporting this development, the T cxtr.
labor will improve, offsetting, in part at least, Chcm11rgic Ncns for August l stated that th
the effect of rising ·wage rates on production machine may prove to be a cheap and ca.·'
costs. The availability of more and improved mean of salvaging sweet potato vines for feed
farm machinery will further aid in relieving Tests show that these vines have a feed valu
the labor hortage which many formers h~we :llmmt equal to that of alfalfa. The ma hin
experienced in recent years.
i said to be inexpen ive to build and simple t:
operate. Without damage to the potatoe , 1
TECHNOLOGICAL DEVELOPMENTS cuts the vines, picks them up, and loads thc11
New Use of Rice Hulls Developed
in one opcr:-ttion. Ten to twenty tons can l
Rice hulls, former! y a waste product of the handled per day where the crop of vine ;
rice milling industry, have a new use that: ap- hc.n·y.