The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
WE HAVE WHAT IT TAKES
Address by
Chester C. Davis
President, Federall Reserve Bank of St* Louis
Before the
Mississippi Cattlemen's Association
Heidelberg Hotel
Wednesday afternoon, January 18, 1950
Jackson, Mississippi
m
HAVE TOAT IT TAKES
A discussion of soil and water management is timely anywhere now, but
I think that is particularly true of the Mid-South. Newspapers and farm publications have been full of talk about the controversial cotton acreage allotments.
Farmers throughout the United States airs-TOndering what to do with the acres
they are going to take out of cotton, peanuts, wheat and corn.
The individual
planter faces the problem of maintaining his income while reducing his acreage
in these crops. That is the short-term side of the picture. There is a longterm side, but more of that later.
As tough as this problem is for many individuals and for agriculture
as a whole, I have felt ever since the first r>low-up campaign that it is a
blessing in disguise unless we delude ourselves with the dream that in the long
run we can make ourselves richer by producing less.
The blessing comes to the
extent our effort to find a solution to the problem leads to better use of
our soil and water resources in crowing the products for which there will be an
elastic and growing demand in the future.
Please don't get me wrong.
principal cash crop,
Cotton will continue to be Mississippi's
I1m in favor of growing all of it the market will take
at a fair r>rice and on the land best adapted to cotton.
But cotton is grown
on a lot of land today that would be better off in grass and pasture. And
there is no reasonable prospect that demand for cotton will ever emoloy more
of the land resources of the state than now. The challenge we face here is
how best to develop and use the land and human resources that cannot profitably
grow cotton, including the land now being taken out of cotton under allotment
as well as the millions of acres not now used to advantage.
-2This question concerns everyone in Mississippi, businessmen and bankers
as well as land owners and operators.
Sometimes people get the idea that bankers
are not interested in agriculture, or that at best their interest is sentimental.
But it doesn*t take much thought to realize that unless the planter, the farmer,
and the livestock man are enjoying reasonable prosperity, sooner or later the
businessman and the banker will be hurt. This question of soil and water
resources is not one which demands the attention only of the land owner or
operator.
It concerns every citizen of this state. And what we do about it
today will affect even more drastically generations yet to come.
Mississippi has a land area of approximately 30 million acres. About
19|- million of these acres are classified as "Land in Farms11. The total crop
land is about 8j million acres. Thus, there is approximately ll|; million acres
included in farms but not classified as crop land.
This area is classified as
woodland pastured, 3-| million acres; woodland not pastured, 3.3 million acres;
"other land" pastured, 3.3 million acres; and all other land, 1.0 million acres.
Only 8U8,000 acres of the total of V)\ million acres in farmland are
classified as "crop land used only for pasture". After accounting for all the
\9\
million acres in farms, there is still another 10?r million acres to be
accounted for. A vast amount of this acreage is either in timber or is
potential timber or pasture land.
Let!s take a look at another resource - the water supply. "While other
areas in the United States face critical shortages in their water supply, this
is one resource which Mississippi has in abundance. The average annual rainfall
in this state is about 53 inches, although the figure for 19U8 was 6£.29.
Contrast this with the 30 inches which Texas can expect on the average and,
of course, much less in some areas; 32 inches for Oklahoma, llj. inches for
-3Wyoming and Colorado, and even less rainfall in great stretches of the Great
Plains which rank in the forefront of livestock production.
The water problem in Mississippi is not one of supply, it is one of
management.
How can we make the greatest use of this abundant supply of water
so that it may actually be the productive asset it should be rather than a
threat of property damage and even death and destruction when inadequately
controlled?
Mississippi has another very important asset in its climate.
This is
particularly important to the livestock man because when taken in connection
with abundant rainfall it means a long pasture season.
Those of you who have
always lived in Mississippi may not fully realize what a tremendous competitive
advantage this is when compared to other livestock producing areas which are
plagued by disastrous drouths or have to undergo long and rigorous winters.
Thinking of these tremendous resources - soil, water, climate immediately brings back the question of cotton acreage allotments. As the
matter now stands I understand that Mississippi is expected to reduce its
cotton acreage from 2,8UO,000 acres in 19U9 to 2,295,000 in 1950, a cut of 19%,
or something over a half million acres. In many individual cases it is much
higher. We can!t afford to let this much land lie idle.
If too much is
planted here and elsewhere to soybeans, we will soon have the same problem of
overproduction in soybeans.
Other row crops mean higher costs and uses for
which the land and climate are not best adapted.
Much of this land can be
brorght into pasture to broaden the base for a grovdng beef and dairy industry.
The situation constitutes both an opportunity and a responsibility for the
Mississippi Cattlemen1s Association,
-hMe must recognize that this is no short-cut to prosperity and wealth.
Abundant pasture and feed resources are not the only factors to be considered
as the livestock industry in Mississippi grows toward its maximum development.
There is a tremendous problem of farm management or farm reorganization.
Naturally, the management of a beef herd or a dairy herd requires specialized
labor, and it takes time to train this labor.
I believe this group understands,
too, the importance of producing a quality product. There is almost as much
opportunity for improvement in the quality of cattle coming out of some sections
of the South as there are possibilities in increasing the volume of that
production.
You men arc more competent to discuss that than I am. As you know,
it involves the use of better bulls, management practices too numerous to
mention here, but which go far in determining the value of your product. Notwithstanding the fact that the Mid-South has developed some of the best purebred
herds in the country - and you have examples right here in Mississippi, - there
is need for better breeding stock throughout the South. Your association is
in a strategic position to help.
Quality improvement is particularly important
in connection with the development of out-of-state markets if and when you
need them.
Right now and perhaps for a good many years to come, there will
probably be sufficient demand within the confines of your own state to utilize
all of the good cattle you can produce, and they ought to be slaughtered and
packed near home. We need the industry.
But looking ahead, there is a potential out-of-state market,
I know
of one commission firm in St. Louis that shipped over 9^000 beef calves from
Texas during 19h9 into the Corn Belt, principally Illinois and Missouri. These
calves weighed about U2^ pounds and cost from &23 to &2ii per cwt#, f.o.b. Texas,
The freight rate from that section of the country was about $.80 per cwt.
-5~
The freight rate from most of your state to East St. Louis is $.61.
To the
feeder sections of Illinois and Missouri it would be about the same as from
Texas and Oklahoma points.
There is no discrimination against calves from
Mississippi and other parts of the South, provided they are of comparable
quality and can be purchased in large enough numbers to make sorting and
shipping operations practical.
It is true, of course, that many of the Corn
Belt feeders are accustomed to getting their calves from the West, the Southwest, or the Northwest.
Some promotional work vail be needed if and when you
find it desirable to develop a market for surplus calves in the Corn Belt,
We can be reasonably sure that there rail always be a market for good feeder
calves, and that from the standpoint of production and transportation costs
the cattlemen of Mississippi are in an excellent competitive position.
One reason why I feel so much confidence in the future possibilities
of livestock production in your state, is because of the actual figures which we
have been able to assemble.
Let me pick out one from a number of cases we have
studied, and use it as an example of what can be done.
The M# M. McKinnon farm, in Tate County, shows the income possibilities
of a well-rounded farm development program on the brovm loam soils of Northern
Mississippi. Mr. McKinnon pays tribute to the inestimable assistance which he
has received from Mississippi State College and from other public agencies
working in agriculture. Mr. McKinnon started his pasture development program
in 1932. He began with a small herd of dairy cows but later added a herd of
beef cattle.
Since then his cotton yields have increased from 375 to 597
pounds of lint cotton per acre Yjhile at the same time his cotton acreage declined
from 100 to 73 acres. He increased his corn yield from 2l± to U9 bushels per
acre, and cut the acreage from 65 to U3 acres. His pasture acreage was increased
-6from 181 to 279. The important fact, however, is that Mr. McKinnon increased
the total annual value of crops and pasture from $6,239 to an average of
$12,615 for the years 1939 to 19U7. This increase was not due to price changes,
because all income has been figured at the 1933-U2 average Mississippi farm
prices in order to eliminate the effect of high war-time prices and to give
comparable measures of output for all years.
In 1932 Mr. McKinnon*s pasture return was of no real value. The return
from his pastures from 1939 to 19lj.7 averaged $U,809. On a percentage basis,
that means from practically zero to almost one-third of the total farm income,
The average return per day of labor increased from $3.88 per day in 1932 to
$6.33 in 19U7.
It not only costs money to do this, but it takes energy, initiative,
ambition and careful planning.
The dollar cost over the 16-year period was
$26,663, or $29 per acre, but there was increased income of about $76,000
which-can be traced directly to Mr. McKinnon1s farm improvement program.
Bear
in mind that in arriving at these figures average 1933-U2 prices were used,
not actual war-time prices. Deducting $26,000, vAiich represented the cost of
the improvements, leaves a net increased income of over $£0,000 - and this does
not take into account the actual residual value of the improvement program
which remains on the farm.
This farm represents only one example out of many which could be cited
if time permitted.
There are equally striking examples of pasture development
programs which have been carried out in the Delta areas of Mississippi and
other Southern states. All of them point to the conclusion that much of the
land now being devoted to cotton or other row crops can be advantageously
converted into pasture.
By so doing the owner cannot only maintain his profits,
-7build up the productive capacity of his land and reduce his labor expense, but
at the same time be in a position to pass that land on to his successors in
far better shape than it was -when he took it over.
Any short talk is likelj^ to lack balance and perspective. These
lessons apply not only to land that is being taken out of cotton now.
It is
much more important in the aggregate to improve the productivity of the rest
of the 1$% million acres of land in farms in Mississippi, and of the 1C% million
acres in the state not in farms. After all, the Mississippi cotton acreage in
19k9 was less than 3 million acres.
Conversion of land taken out of cotton to use as pasture and to produce
feed for livestock farming, won!t go far in providing employment for surplus
farm labor resulting from acreage limitations and technological changes on the
farms.
It will take productive use of the millions of acres now non-productive
and poorly used, and above all else, the expansion of this staters program of
industrial growth and diversification, to do that.
Tie do not have time to discuss fully the long-term aspects of soil
and water management, but I can at least urge that the same amount of consideration be given to them.
This includes more efficient development of our
timber resources, reforestation, and many other related questions.
After having expressed so much confidence in the future of the cattle
business, some words of caution are in order. Maybe that reflects the banker
viewpoint, but they are just as essential to the farmer or livestock producer
if we are to keep the business growing on a sound basis.
First, let me say that this transition from a cotton or row crop
operation to a pasture-livestock operation is not an overnight process. It
involves in many cases a partial or complete reorganization of the farm or
-8plantation.
It requires the use of limestone, phosphate, and other fertilizers
which are indicated by soil tests. It means fencing and some buildings and
other equipment peculiar to the livestock industry.
Incidentally, these farm
improvement programs are of tremendous interest to the businessman because they
mean vast amounts of supplies to be purchased in the form of fertilizers,
building material, limestone, etc. They are of interest to the bankers because
such purchases frequently involve needs for additional credit while the programs
are in process. Another word of caution.
Let's avoid overexpansion.
Donft
encourage anyone to increase his cattle numbers more rapidly than he is in a
position to care for them.
Thoughtful attention must be paid to the cattle industry as a whole.
Over the long pull the future of both the beef cattle and the dairy industry
is attractive to the efficient operator.
The changing relations between live-
stock population and human population are revealed in some interesting figures.
In 1888 there were 97 cattle and calves for each 100 persons. The low year
was 1928 when we only had I4.8. The 1931-lj.l average was 5>2, while in the year
of 19U8 the figure was 5>U. In terms of the numbers of livestock as related
to our growing population, there is no surplus.
In 19U8 we only had 17 dairy
covrs per hundred persons against the 1939-Ul average of 19. There were 2\x
sheep as compared to 39 in the base period, and 38 hogs as compared to U2.
Faster turnover and increased efficiency of our livestock units at present
tend, of course, to offset the reduction in numbers of livestock per hundred
persons.
However, we must be prepared for those swings in price cycles which
have important bearing on the profit or the lack of it in any business. I
believe the best word of caution that I could extend would be that any
individual who launches out on a program of pasture-livestock development should
-9seek the cooperation and advice of the Mississippi State College, the experienced
members of your Association, and other agricultural agencies. If he is using
credit, he should, of course, counsel with his banker. Your Association can be
of much service to the thousands of farmers throughout your state who are or
should be interested in a pasture-livestock development program.
The subject which was assigned to me is so broad, and has such farreaching horizons, that it cannot be adequately covered in any one talk. I
recognize fully the inadequacy of my attempt.
I am grateful, however, for the
opportunity to express to you even in a small measure some of my own enthusiasm
for your state and its possibilities in the field of livestock-pasture development*
In conclusion, I would like to remind you, however, that the end
product of all of this effort in the direction of sound management of soil and
water resources is not merely to make a little money or increase our farm
income.
The real objective is to make it possible for the people who live on
the land to enjoy a better standard of living, have better homes, better schools,
better churches, and to make those farms and the communities of which they are a
part, so attractive that the most alert, aggressive, and intelligent boys and
girls will ask nothing better than to make their homes on the land.
If we are
successful in doing this, we must see that our short-term program of land and
water use will provide current income and that our long-term program of
management of our soil and water resources will guarantee a prosperous agriculture for succeeding generations.
If, through better management of soil and
water resources we can take care of our economic problem, we will have gone a
long way in taking care of some of our most pressing social and political problems.
000OOO000
-10-
LIVESTOCK PER 100 PERSONS IN THE UNITED STATES 1/
All
Cattle
and Calves
Peak Year . . . . . 91 ('88)
Low Year
, U8 ('28)
1939-Ul Average . . 52
19h2
19U3
19kh
19U5
19U6
I9k7
191*8. .
56
59
62
61
58
56
5U
Horses
Milk
CoWS
Total
SheeD
Hoes
2k ('88)2/
17 CU8)~
19
12U C67)
2U CU8)
39
9h ('72)
31 ('35)
1x2
30 (^93)
6 («U8)
11
1*5
10
10
9
9
8
7
6
20
20
20
20
19
18
17
k2
and
Uo
5U
37
33
30
28
2U
61
U2
U3
-81
0
-38
-1U
-60
423
-10
Mules
Uo
38
Pet. Change from
Peak Year. . . . -hk%
Low Year . . . . +12
Prewar Average . 4> h
19U7
-U
-29$
0
-11
-6
-80JS
0
-U6
-1U
-5
1/ Source: Livestock population estimates from the United States Department of
Agriculture; human population estimates from the United States
Department of Commerce.
Note: Faster turnover and increased efficiency in both livestock
production and in processing results in somewhat more moat being
produced per animal on farms January 1 in recent years than in
earlier periods.
2/ 1869, 1875 and 1891 also were years of 2U milk cows per 100 persons.
Department of Marketing
American Meat Institute
Table No. 215
March 3, 19U8
@FedFRASER