Full text of Agricultural News Letter : Volume II, Number 12

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AGRICULTURAL
N E W S LETTER
THE

Vol. II
SOIL

FEDERAL

RESERVE

BANK

Dallas, Texas, December 15, 1947
C O N S E R V A T I O N

The advantages of the application of soil
conservation measures and the waste created
by erosion and depletion of the soil if such
measures are ignored were impressed upon a
large group of business and agricultural lead­
ers who recently toured several farm com­
munities of Texas under the sponsorship of
the Burlington Lines and of the Second N a­
tional Bank of Houston. Stopping first at
Corsicana, in the heart of the Black Prairie
Cotton Belt, the group visited a number of
farms where overcropping and continuous
planting of soil-depleting crops without the
application of conservation measures have
seriously reduced the supply of organic matter
and soil minerals, stripped away the top soil
by exposing the surface to erosion, and created
serious problems for the community in the
control of silting and floods. In contrast, the
operators of other farms visited in the area
had maintained the fertility of the soil by
the establishment of proper rotations, the
use of green manure crops and commercial
fertilizers, the construction of terraces and
water ways, and contour cultivation.
Near Fort Worth in Tarrant County, the
group viewed ranges where the sod had been
improved and the carrying capacity increased
through proper grazing and seeding, applica­
tion of phosphate, and mowing for control
of weeds. On other ranges, however, the
carrying capacity had been seriously reduced
and the native sod destroyed as the result of
overgrazing and lack of proper care.
The effects of wind erosion and the need
for conservation of water and proper stock­
ing of ranges were observed on the High
Plains near Amarillo and Lubbock. Practices

IS

GOOD

OF

DALLAS

Number 12
B U S I N E S S

for controlling wind erosion, such as the use
of cover crops and crop residue management,
were demonstrated on several farms. Other
projects visited revealed the possibility of im­
proving ranges through proper stocking and
seeding and the proper distribution of stock
water supplies. Additional methods of ero­
sion control and soil improvement were in­
spected during stops at Wichita Falls and
Abilene.
Although the most spectacular and direct
physical effects of soil depletion can be realiz­
ed by observing an eroded and wasted farm,
it is necessary to know the history of a soilimpoverished farm community to understand
the full significance of such depletion. The
first effect is, of course, felt on the farms. As
productive capacity of the soil declines, yield
per acre of cropland falls, and carrying capa­
city of pastures or ranges is reduced. The
low yields of crops produced in the South­
west which reflect, in part at least, the effect
of soil depletion, are readily apparent when
yields in this area are compared with those of
other agricultural areas of the Nation. Even
though Texas produces more cotton than
any other state in the Union, it ranks third
from the bottom in respect to yield per acre.
It is the eighth most important producer of
wheat, but in yield per acre it ranks 37th
among the 41 wheat-producing states. It
ranks ninth in the Nation in total corn pro­
duction but only 3 8th in yield. The position
of other states in the region is similar to that
of Texas in regard to yields per acre.
If the productivity of farm land declines,
cost per unit of production rises, so that net
income and purchasing power of farm fa mi-

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AGRICULTURAL NEWS LETTER

lies suffer a decline. This decline is immed­
iately reflected in a reduced volume of sales
by merchants selling to farmers and a fall in
bank deposits. The effects, unless offset by
developments in other lines, cumulate and
spread, resulting eventually in lowered econo­
mic activity throughout the area.
The social consequences of such decline in
economic activity are equally unfortunate.
Many of the best businessmen and farmers
leave the blighted community to seek better
opportunities elsewhere, thus removing anoth­
er valuable resource from the area and reflect­
ing a general disintegration of community
life. Repair and modernization of farm dwell­
ings are neglected. The rural church loses in
membership, resources, and influence. Tax
revenues fall, and local government is no
longer able to perform its functions effec­
tively. Roads and streets cannot be main­
tained or new ones built; schools deteriorate
both in equipment and in quality of instruc­
tion; and public health service must be dis­
continued.
In view of these effects of soil depletion on
the economic prosperity and social well-being
of rural communities, there is a growing
recognition among bankers and other busi­
nessmen that they have a responsibility to
encourage and promote the conservation and
proper utilization of the land. All business­
men, and especially bankers, can play an
effective part in arousing interest in conserva­
tion and can actively participate in the
establishment of sound, coordinated conserva­
tion programs in their communities. To busi­
nessmen desiring to aid in arousing interest in
conservation, the following suggestions adapt­
ed from the program proposed by the Agri­
cultural Commission of the American Bank­
ers Association should prove helpful:
1. Stimulate and encourage individual
farmers to establish conservation
programs on their farms to dem­
onstrate the practical value of soil
conservation.
2. Sponsor tours of farms where con­
servation programs are in progress

or visits to experiment stations so
that farmers and others on the tour
may observe the results of apply­
ing conservation measures.
3. Give awards to farmers and soil
conservation districts for outstand­
ing performance in achieving ob­
jectives of soil conservation.
4. Sponsor meetings of farmers and
businessmen and arrange for speak­
ers to discuss the community’s soil
conservation problems and methods
of solving them.
5. Keep community interest alive by
distributing literature and sponsor­
ing motion picture shows and ex­
hibits dealing with soil conservation.
If a soil conservation district has not been
organized in the community, businessmen
should participate in its organization by
bringing land owners together and interesting
them in the problem and aiding them in con­
tacting the Soil Conservation Service; if the
businessmen themselves are land owners, they
can participate actively in both the organiza­
tion and the operation of the district. Bankers
and others extending credit may be able to
assist in working out a sound program to fi­
nance contractors in the purchase of such
expensive heavy equipment as bulldozers,
blade graders, ditching machines, rock crush­
ers, terracing machines, and other equipment
needed in carrying out a conservation pro­
gram. Wherever there is a sound basis for
credit, lending agencies might make loans to
farmers for the purchase of seed, fertilizers,
lime, and livestock and for the construction
of the terraces, fences, ponds, or buildings
which are required for the establishment o f a
complete conservation program.
To the business executives making the in­
spection tour mentioned above, the practical
value of a comprehensive soil conservation
program was clearly demonstrated on the
farms where such programs have been carried
on for several years. On these farms, yields
were not only maintained but increased sharp-

AGRICULTURAL NEWS LETTER
1y, and, as a result, farmers’ net incomes were
boosted, and the whole community benefited.
Similar results on thousands o f farm s
throughout the Nation demonstrate that con­
servation farming has advanced beyond the
experimental stage and is a practical solution
to the rural community’s problem of falling
productivity, reduced incomes, and declining
population. Soil conservation programs, there­
fore, are entitled to the interest and active
support of all bankers and other businessmen
because of the basic relationship between a
prosperous agriculture and the prosperity of
the community as a whole.

GENERAL AGRICULTURAL OUT­
LOOK FOR 1948
Outlook reports prepared by the United
States Department of Agriculture indicate
another generally prosperous year for agri­
culture in 1948. The prospects regarding
farm prices and farm incomes in the South­
west, as in the Nation generally, have seldom
appeared brighter from the farmer’s stand­
point.
Employment, industrial production, and
individual income — which underlie domestic
demand for farm products — have set peace­
time records in 1947 and seem likely to be
very high next year. If they should decline
moderately, demand might level off somewhat
from its present position of pressing against
supply and causing prices to rise; but only a
sharp break, which is possible but not expect­
ed, could cause a big drop in domestic de­
mand for agricultural products next year.
American consumers will spend less money for
food in 1948 than in 1947 only if their in­
comes arc smaller or if their rate of saving
increases, neither of which seems likely. At
present levels of employment, no drop in in­
comes is expected. The rate of saving has been
going down in the last two years despite rising
incomes, and this reduced rate of saving is
expected to be maintained in 1948.
In the opinion of the Department of Agri­
culture, foreign needs for American goods
in 1948 will be large, though the effective de­

8

mand will be limited by the supply of dollar
exchange available. Foreign purchasers prob­
ably will not earn exchange much faster next
year than in 1947. Their holdings of longand short-term dollar assets and gold are
being reduced. Moreover, commitments un­
der present United States Government for­
eign loans and grants are approaching an end.
New Government loans or grants, now under
consideration by Congress, will, therefore,
be very important to United States export
trade in 1948. Only under the most favor­
able circumstances, will total agricultural ex­
ports, including military shipments of food
to foreign civilians, be as large next year as
in 1947. Whether or not grain exports will
be equal to those in 1947 depends on the
policies of the Government and the trends
in prices, as well as on the size of the grain
crops in 1948. Foreign demand for fats and
oils, which are intermediate in cost per calo­
rie, will be nearly as strong as for grains.
Dairy products, dried fruits, and other foods
of higher cost per calorie will feel the pinch
of restricted supplies of dollar exchange. Cot­
ton exports in the 1948 calendar year prob­
ably will be somewhat smaller than the total
for 1947, although at a higher annual rate
than that indicated for the second half of the
current year.
If total demand for farm products is as
high in 1948 as the Department now ex­
pects, prices received by farmers will remain
close to their present levels. This prospect ap­
plies to most commodities produced in the
Southwest. With a continuation of the present
demand, prices of farm products will likely
remain close to current levels in the first half
of 1948, but very large crops might lower
them in the second half of the year. Even under
these circumstances, however, the Department
of Agriculture believes that the average of
prices received would be high compared with
most years before 1946.
Wheat production in the United States in
1948 is expected to exceed domestic consump­
tion in spite of present poor prospects in
many areas; therefore, whether or not wheat

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AGRICULTURAL NEWS LETTER

prices will decline to support levels will de­
pend largely on the quantity exported. Cot­
ton production in 1947 is estimated to be con­
siderably above the quantity that will be con­
sumed domestically in the 1947-48 season, but
it is likely that there will be effective foreign
demand to absorb the remainder of the crop
if the proposed government programs to aid
Europe become effective by early 1948. The
wool price support program will assure wool
growers prices that probably will average
higher than in 1947 and certainly as high as
in 1946. Reduced supplies of all classes of
meat — beef, veal, pork, and lamb — are in
prospect for 1948 as the result of a general
decrease in livestock numbers, and, in view
of anticipated strong consumer demand for
meat, livestock and meat prices are expected
to remain at relatively high levels, at least
through the first half of 1948.

expected to be even higher in 1948, with the
exception of D D T, which has declined in
price during 1947.
Farm land values and rentals are expected
to continue at high levels for several years.
Changes in land rentals usually lag behind
the movements of farm prices and farm in­
comes; so the present level of rents is likely
to continue in the coming year. Interest
charges paid by farmers on farm-mortgage
debt during 1948 are expected to advance as
shifts continue from low-interest loans to
loans bearing higher interest. An increase in
volume of loans made by higher rate lenders
is resulting in a higher average interest rate
paid by farmers, even though the rate pattern
of individual lenders has tended to remain
relatively stable or to decline. Interest obliga­
tions on short-term or non-real-estate agricul­
tural loans are on the increase because a greater
volume of loans is being made.

Prices which farmers must pay for what
they buy, including interest and taxes, will
According to the outlook reports, cash re­
probably be as high in 1948 as in 1947, or
ceipts from farm marketings in 1948 are
higher. Farm wage rates are expected to con­
likely to total more than in any year before
tinue near the 1947 level. Although produc­
1947, and the distribution of such receipts by
tion of farm machinery in 1947 is believed
commodities may not differ much from that
to have exceeded the previous record out­
of 1947. It seems likely, however, that pro ­
put of 1946 and prospects are favorable for
duction expenses, which have risen more than
continued high production in 1948, prices
16 percent during 1947, will show a further
are approximately 50 percent above prewar
rise in 1948. Farmers’ net income, therefore,
and are expected to continue at about this
may decline, as compared with 1947; but in
level next year. Feed prices in general will
any event, farm income after expenses in
continue high during the coming winter al­
1948, while probably not up to the estimate
though not necessarily as high as the record
of 18 billion dollars for 1947, will likely be
levels attained in 1947. Prices paid by farm ­
well above the average for recent years.
ers for most seeds during the spring of 1948
are likely to be relatively high, in view of
the probable continued strong demand for
ANNOUNCEMENT
seed and because of the limited current prouction and stocks of seed. Farmers paid from Broadcast Time of Reserve Bank's Saturday
Review Changed to 5:30
10 to 12 percent more per ton for fertilizer
Broadcast time for “ Your Southwest Busi­
during 1947 than in 1946, and slightly higher
prices may be expected in the first half of ness Review,” the 15 -minute radio program
1948. Although production of fencing, nails, of the Federal Reserve Bank of Dallas, has
staples, bale ties, roofing, pipe, and the like, been changed to 5:30, Central Standard Time.
continues at a high rate, the demand is not This program, presented every Saturday over
being met fully, and prices are not expected to Radio Station WFAA 570, reviews current
decline for some time. Prices of most insecti­ developments in agriculture, industry, busi­
cides and fungicides continue to rise and are ness, and finance as they affect the Southwest.