Chapter 11

The broad directions of basic U.S. farm policy changed very little during the period 1965—68. Farm production continued in most areas to be highly mechanized, with heavy use of fertilizers and chemicals, steady increases in yields, a trend toward larger, more consolidated farms.

The farm population continued to decline, as it had been doing for generations, and reached a new low of just over 5 percent of the population. Yet so great was the efficiency of U.S. producers that each farm worker on the average produced enough food in 1967 for more than 42 other persons.

Two central problems occupied farm policymakers—overproduction and low rural income.

For some of the nation's most important crops, like feed grains, wheat and cotton, there was continual danger that farmers, pouring on the fertilizer and insecticides, using the most modern production methods, would produce more than could be sold at a profit. When that happened, it was feared, prices would drop precipitously, eventually driving some farmers out of business, speeding up the rural migration to the cities to create new welfare problems, and endangering the whole economy with a farm-initiated depression.

The traditional Democratic answer to this threat was a system of production controls and income aids, first tried in the 1930s and kept in effect continuously (except in wartime, when controls were not needed) since then. It applied to about a dozen and a half of the most important crops.

Production controls, in the form of acreage limitations, helped to limit oversupply and prevent price breaks. At the same time, the Government, through standing ready to buy or offer loans at a fixed price on farm produce, with the latter as collateral, could peg the price received by the farmer at some desired rate.

President Johnson in 1965 helped put through Congress a revision of the system of production limitations and price support devices. One problem to be faced was that if price supports were set too high, U.S. products might not be able to compete on the international market. But if they were set too low, some of the less efficient, smaller farmers might find them inadequate to sustain their income at decent levels.

The 1965 basic legislation was designed to reduce surpluses of cotton, corn and wheat. It asked farmers to retire a certain portion of their cropland from production of these surplus crops and put it to soil-conserving uses. In return, they were made eligible for a price support on their crops plus special, direct cash payments of different types.

The price support was to be fixed at a level that would result in a market price competitive with overseas prices, but the farmer's income was maintained by giving him the additional direct payments. Thus the U.S. surplus crops could find markets without dropping the farmers' incomes to a disastrously low level.

This system, a new and more sophisticated variation of the basic price support system in effect since New Deal days, was put into effect by the Johnson Administration with the assurance that it would reduce surpluses of wheat, cotton and corn to manageable proprotions without costing too much.

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