A Two-Point Farm Program

December 19, 1955

A few weeks ago Secretary of Agriculture Benson invited “everyone” in the country to send in his ideas about solutions to the farm problem. “I guarantee to you,” he said, “that those ideas will receive the most careful attention possible.”

Thus encouraged, I should like to propose a very simple farm program. I have already suggested, in Newsweek of Oct. 31, some ways in which the government might extricate itself from the present farm fiasco, but those proposals tried to take into account what political pressure groups might accept. If we consider merely what plan would work best economically, such a plan could be reduced to two points.

The first point may strike some readers as extremely novel, because it is almost nowhere being suggested. This is that Congress stop all price guarantees and all promises of support-buying of any kind on any crop that has not yet been planted.

Let us look at the remarkable advantages that such a plan would have. (1) It would mean immediately an enormous saving to the nation’s taxpayers. (2) It would soon mean a great saving to the nation’s food buyers and food consumers. (3) It would end any further accumulation of farm surpluses. Marginal farmers would stop raising crops on marginal acres. Farmers and the government would cease to hold crops off the market. We keep forgetting that the present farm surpluses are purely the creation of the price-support program itself. Farmers raise crop surpluses because they are encouraged to do so by an excessive price. The surpluses pile up because they are unsalable at the price set.

(4) With the removal of price guarantees and supports, there would no longer be any need for government acreage control or marketing quotas. Farmers do not plant crops on which they do not expect a profit. Marginal producers are no longer induced to grow crops on marginal acreage. (5) Removal of price guarantees and supports would restore a better balance of farm production. Unfavored farm commodities would no longer be caught in an artificial price-cost squeeze. (6) Our foreign economic relations would immediately improve. We would no longer need to impose farm import quotas or try to dump surpluses abroad.

But while termination of further price guarantees or supports would prevent the present situation from getting still worse, as it otherwise threatens to do, it would not solve the problem of the huge $7 billion worth of surpluses that the government already holds. This brings me to the second step of my proposed program. The government would sell its existing surpluses back to the farmers themselves. Each farmer might be allowed to buy an amount proportionate to that of his own production of a surplus commodity in preceding years. The government could assure the sale simply by offering the surpluses to the farmers at, say, two thirds of the world market price of each commodity at the moment of sale. Each farmer would be free to dispose of what he bought as he saw fit. He could store it at his own expense, or sell it through the speculative markets.

There would then be no need to subsidize the farmer to put his acreage in soil-conserving crops. Once again guided by free market prices, most farmers would realize the folly of raising more of a crop until the existing surplus was worked off. They would meanwhile have sufficient incentive to conserve their own soil.

It is true that the government would take a big loss in selling these surpluses back to the farmers. But most of this loss is inevitable anyway. It will be immensely greater, in fact, if the government continues with its present program. It is true that individual farmers would for a year or two be paid, in effect, for not raising crops in which surpluses existed. But the twin objectives of a “soil bank” and of getting rid of surpluses would be achieved.

The only alternative to halting present farm price supports is further losses to taxpayers, further piling up of surpluses, and ultimately much further harm to farmers themselves.