Full text of Agricultural News Letter : Volume II, Number 1

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

AGRICULTURAL
N E W S LETTER
THE

FEDERAL

Volume II

RESERVE

BANK

Dallas, Texas, January 15, 1947

CAUTION URGED IN THE
PURCHASE OF LAND

OF

DALLAS

Number 1

peak and that a downward trend may be ex­
pected in the near future. Secretary of Agri­
culture Clinton P. Anderson, in stressing the
dangers which exist in buying land at present
inflated prices, stated that the only sound
basis for determining the value of land is its
long-term earning capacity and that, although
higher incomes of farmers may continue for
some time, current abnormally high demand
and prices for farm products must, in time,
be adjusted to the long-run situation at home
and abroad. He warned that land purchased
now at inflated prices may have to be paid
for after the period of adjustment has be­
gun, when smaller demand and lower prices
prevail. Therefore, present inflated land val­
ues based on recent high returns may have
to be revised downward as the earning ca­
pacity of the land, in terms o f money, de­
clines.

The old adage, "Let the buyer beware,”
never had more meaning than it does today
for prospective buyers of farm land. Ever
since the present boom in farm land values
began, the United States Department of Agri­
culture and many other agencies have issued
repeated warnings of the risks involved in
purchasing such land at inflated prices. But
all these warnings seem to have had little ef­
fect, in view of a continued large volume of
purchases of farm land at sharply rising
prices. The upward movement of the farm
real estate market brought land values in the
United States as a whole on November 1,
1946, to a level 79 per cent above that of
1941, while in the Eleventh Federal Reserve
District values were 65 per cent above those
existing in 1941. Current values in this dis­
trict are only six per cent below the 1920
peak, which preceded a long decline in land
values that continued into the early thirties.
Moreover, preliminary reports indicate that
the volume of land sales throughout the coun­
try in 1946 was higher than in the preceding
year and well above the peak of World War
I, reached in 1919. According to the Bureau
of Agricultural Economics, cash transactions
accounted for a large proportion of the sales
made in 1946, but heavy debts were built up
on many farms and the long downward trend
in the farm-mortgage debt appears to have
been reversed. The total farm-mortgage debt
for the United States increased $80 million
between January 1 and July 1, 1946— al­
most offsetting the decline which occurred in
the full calendar year 1945, and bringing
the total debt on July 1 to $5,160 million.

The ill effects of such adjustments may be
cushioned somewhat by the relatively strong
position of farmers as exemplified by their
large holdings of liquid assets and by the still
low general level of mortgage debt. Other
factors considered favorable to the attain­
ment of an orderly adjustment are the Gov­
ernment price-support program and the
strong demand for farm products at home
and abroad, which is expected to continue
for some time at least. On the negative side,
however, the establishment of very heavy
mortgages on many individual farms and the
overall increase in the mortgage debt men­
tioned above are elements of danger. More­
over, a threat to the continuation of the cur­
rent high level of farm incomes lies in the
fact that prices of many farm commodities
could decline drastically before reaching sup­
port levels.

There is a feeling in some quarters that the
rise in land values may now be reaching a

I herefore, in the opinion of those who
take a long-term view of farm land values,

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

2

AGRICULTURAL NEWS LETTER

farmers contemplating the purchase of land
in the near future and lending agencies which
may be called upon to finance such purchases
will do well to consider the fact that the
number of high-income years remaining may
be very limited. They may recall that follow­
ing World War I the prices of agricultural
commodities dropped sharply after a brief
postwar upswing. Between 1919 and 1922,
beef cattle in the United States dropped 44
per cent in annual average prices, wheat 5 5
per cent, cotton 37 per cent, and cottonseed
54 per cent. Moreover, the decline in prices
of farm products was much more rapid than
the decline in production costs, with the re­
sult that net farm incomes were sharply
squeezed. Due to inability of many farmers
to meet their heavy mortgage obligations,
farm foreclosures increased rapidly.
Recognizing the possibility of a repetition
of those unhappy experiences, the United
States Department of Agriculture has recom­
mended that farmers postpone the purchase
of land and use current high incomes to retire
debts, purchase savings bonds, build up fi­
nancial reserves, replace worn-out equipment,
or make farm improvements. It advises pres­
ent owners who wish to expand their opera­
tions to lease land from others, and cautions
those who do purchase farm lands at present
prices to make heavy cash payments and to
avoid short-term mortgages and inflexible
mortgage provisions. It further suggests that
these purchasers reduce their indebtedness
as rapidly as possible while incomes and prices
remain at relatively high levels. Elderly farm ­
ers and others wishing to dispose of farm
lands are urged to consider the advantages
of sale in the present market, which will net
the owners a high return. Finally, the De­
partment advises all lending agencies, includ­
ing commercial banks and private investors,
to use long-time earning capacity of the land
as the controlling consideration in making
farm real estate loans.

HIGH LEVELS OF PRODUCTION
ASKED FOR 1947
Another year of near wartime levels of
production has been called for by the United
States Department of Agriculture in an­

nouncing the production goals for 1947.
These goals are suggested in spite of the fact
that this year may bring some reduction in
the demand for farm products for export
and for use at home and amid apprehension
on the part of many farmers over the pros­
pects of price declines in the coming months.
Secretary of Agriculture Clinton P. Ander­
son states, however, that there are several
sound reasons in justification of the an­
nounced goals. First, a strong domestic de­
mand, stimulated by high industrial employ­
ment while industry is catching up with the
backlog of demand for its products, is ex­
pected to continue, although abating some­
what in the latter part of 1947. Second, many
foreign countries still are critically short of
food and other farm products, and it is be­
lieved that through the United Nations or
some other organization, these needs will be
met in spite of discontinuation of U N RR A Third, depleted stocks of certain farm prod­
ucts need to be replenished. The stocks of
such commodities as cottonseed, soybeans,
flaxseed, milk products, and rice are reported
as critically short, and stocks of cotton,
wheat, corn, and others are low relative to
demand. In the opinion of the Secretary of
Agriculture, considerations of national safety
warrant the building up of stocks o f these
commodities well above present levels in or­
der that the danger of serious shortages may
be avoided. Finally, he points out that the
nation’s farmers must allow for the possibil­
ity of less favorable growing weather and
lower yields than have prevailed in recent
years.
Though the 1947 goals are intended to
keep farm production in general at high
levels, the Secretary warns, nevertheless, that
present domestic and world conditions do
not indicate that an unlimited or equally
strong demand exists for all farm products.
In fact, the goals suggest a downward ad­
justment from 1946 in the production of
many commodities. The point is stressed,
also, that cooperation of all farmers is needed
in conforming to these goals as closely as
possible in order to avoid serious difficulties
in marketing, ease the burden on the pricesupport commitments of the Government,

AGRICULTURAL NEWS LETTER
and, at the same time, relieve shortages of
many commodities, such as fats and oils and
sugar.
The application of these goals to the 1947
farm production of the Southwest is of espe­
cial interest to farmers in this district. There
is a request for a small increase in the pro­
duction of feed grains and hay, a substantial
increase in the production of cotton and flax­
seed, but a reduction in the acreage devoted
to peanuts and truck crops. The goals call
for little change in the acreage of wheat, rice,
Irish and sweet potatoes. A reduction in the
number of beef cows on farms is suggested
for each of the states in the district, as well
as for the United States as a whole. The
goals contemplate an increase in the amount
of milk produced on farms in these states
in 1947, despite the fact that the number of
cows kept for milk is expected to continue
to decline, though at a reduced rate. There­
fore, if the proposed milk production goal
is to be achieved, it will be necessary to in­
crease the production per cow. The goal rec­
ommended for stock sheep and lambs on
farms at the end of 1947 involves a slight
reduction in the number from the beginning
of the year in all states of the Southwest and
in the United States as a whole. An increase
over last year is recommended in the number
of sows to farrow in the spring in Texas and
Oklahoma; in Arizona no change is called
for, while a sharp reduction is suggested for
New Mexico. An increase in the number of
turkeys to be raised in 1947 is recommended
for Texas, Arizona, and Louisiana, while a
reduction is called for in Oklahoma and New
Mexico.
That the program for 1947 calls for a
larger production than is desirable from the
standpoint of proper use and conservation of
the land was realized by the Department of
Agriculture and the State Production and
Marketing Administration committees, who
approved the goals, but it was felt that the
needs of the nation and of the world justi­
fied such a course of action. It was also be­
lieved that achievement of these goals will
give farmers an opportunity to dispose of
another very large crop at relatively high
prices and thus enjoy one more year of high

8

incomes. In order to offset as far as possible
the drain on the soil resulting from continued
heavy production, the Department of Agri­
culture urges that every farmer carry out as
complete a conservation program as he can.
It believes that such conservation farming
can tide the land over until a better balance
between soil-depleting and soil-preserving
crops can be restored.

TECHNOLOGICAL DEVELOPMENTS
Spraying Methods Recommended for
Livestock
Some valuable suggestions for ranchers in
the Southwest regarding the use of livestock
sprays were given by Ray L. Cuff of the
National Live Stock Loss Prevention Board
in the December issue of the Chemurgic Di­
gest. Experiments conducted in 1945 and
1946 by the United States Bureau of En­
tomology and Plant Quarantine, in coopera­
tion with various state groups in Kansas and
Oklahoma, indicated that properly treated
cattle will make an average gain per head of
one-half pound per day more than like un­
treated cattle during the 90 to 100 days when
flies are most numerous. These experiments
also demonstraaed that protecting cattle from
flies and other insects will aid in preventing
the spread of such diseases as Anthrax and
Anaplasmosis and in controlling tabanids and
other blood-sucking insects which, by punc­
turing the skin of cattle, provide ideal spots
for the screw worm fly to lay its eggs.
Best results, so far, have been obtained
from the use of D D T suspensions or emul­
sions as sprays or dips. In the Southwest, Mr.
Cuff recommends the use of a minimum of
four pounds of 50 per cent wettable D D T
powder to 100 gallons of water, or a 0.24 per
cent mixture, applied with a power sprayer
to the top line of cattle at the rate of one
quart per animal. If a hand sprayer is used,
it is recommended that the proportion of
D D T be doubled. Treatments were found
to be effective against most insects for a
period up to three weeks. When the bottom
line of the cattle was sprayed as well as the
backs, it was found that the period of effec­
tiveness was increased by approximately one
week. In order that the spray may be most

4

AGRICULTURAL NEWS LETTER

effective, Mr. Cuff suggests that barns and
sheds where cattle are housed be sprayed and
that manure piles and other fly-breeding
places near barns be removed.

ers, warehouses, or mills. For those who can ­
not use the present system satisfactorily, a
simpler method of grading to be known as
"bag grading” is suggested.

The most practical method of treating
large numbers of cattle so far devised re­
quires herding the animals closely into an
eight-foot alley. Spraying can then be done
from catwalks built on either side of the
alley, the nozzle of the sprayer being held
close to the backs of the cattle, so that as
little of the mixture as possible is wasted.
Any spray failing to adhere to the cattle or
lost in run-off is practically worthless.

The new system would involve the estab­
lishment of several classes based on various
specifications of condition and quality. Each
bag of mohair would be examined upon ar­
rival at the warehouse and placed in the
proper class. Buyers interested in a particular
grade of mohair then would have to inspect
only a single class rather than a multitude of
individual lots in order to find the desired
grade. Mr. Nisbet believes that marketing
would be speeded, and more attention could
be given to variations in quality. Producers of
high-quality mohair would be rewarded by
a higher price, while low-quality producers
would be penalized.

Soil-Testing Laboratory Established
at Texas A. & M.
A soil-testing laboratory has been set up at
Texas A. & M. College to make chemical
analysis of soil samples. This service is avail­
able to the public, and analysis will be made
at fees ranging from 2 5 cents for a soilacidity test to $7.50 for a complete soil analy­
sis. Those desiring soil analyses are urged to
write to the Soil-Testing Laboratory, Texas
Agricultural Experim ent Station, College
Station, and ask for directions for sending in
samples. Soil samples must be accompanied by
forms furnished by the laboratory giving nec­
essary information concerning the use and lo­
cation of the soil that is to be tested. After the
soil analysis is completed, the results are
referred to the Extension Service for recom­
mendations to the landowner as to soil im­
provement.
Bag Grading. Suggested to Improve
Quality of Mohair
Bag grading of mohair would be an im­
portant contribution to the efforts of Texas
goat raisers to improve the quality of their
product and would, at the same time, aid in
orderly marketing, according to Walker R.
Nisbet, animal husbandman with the Texas
Extension Service. Mr. Nisbet points out that
substantial progress has been made since the
inauguration in 1939 of a grading program
aimed at developing a system of marketing
mohair on its merits, but he finds that this
program does not meet the needs of all grow­

ANNOUNCEMENTS
Wildlife Conference
The 12th North American Wildlife C o n ­
ference will be held in San Antonio Febru­
ary 3-5, to discuss problems of conservation
of resources and the preservation of wildlife.
More than 50 papers will be given at the con­
ference on the general theme "Americans,
Wildlife, and their Land.” It is expected that
the conference will be attended by tech­
nicians and research specialists from Canada
and Mexico, as well as from all parts of the
United States.
______
New Mexico Feeders Meet
The 8th Annual Meeting of New Mexico
Stock Feeders will be held at New Mexico
A. & M. College on February 17. This an­
nual meeting is sponsored jointly by the
State Experiment Station and the State E x ­
tension Service. The program has been plan­
ned so that stock feeders can discuss their
problems and hear reports on the progress
of feeding experiments carried on by the ex­
periment station. The program will include
both talks and demonstrations of interest to
feeders. Special subjects to be discussed in­
clude insect control, the market outlook, and
results of recent feeding experiments at the
college. Lunch will be served on the campus
to visitors.