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Title: Considerations for national legislation with respect to agriculture in the United States
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 Material Information
Title: Considerations for national legislation with respect to agriculture in the United States
Physical Description: 22 leaves : ; 28 cm.
Language: English
Creator: University of Florida -- Agricultural Economics Dept
Publisher: University of Florida, Dept. of Agricultural Economics
Place of Publication: Gainesville, Fla.
Publication Date: January 6, 1965
Copyright Date: 1965
 Subjects
Subject: Agriculture and state -- United States   ( lcsh )
Agricultural laws and legislation -- United States   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
non-fiction   ( marcgt )
 Notes
Summary: "The principal intent of this report is to present suggestions believed to merit serious consideration in connection with the formulation of public policies and the enactment of Federal legislation affecting agriculture. The suggestions should not necessarily be interpreted as firm and unqualified recommendations for action."--Foreword.
Statement of Responsibility: Department of Agricultural Economics, University of Florida.
General Note: Cover title.
General Note: "January 6, 1965."
General Note: "... a large number of the members of the professional staff of the Department of Agricultural Economics participated in the development of this report."--Foreword.
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Bibliographic ID: UF00090263
Volume ID: VID00001
Source Institution: University of Florida
Holding Location: University of Florida
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Resource Identifier: oclc - 252088490

Table of Contents
    Front Cover
        Page i
    Foreword
        Page ii
    Introduction
        Page 1
    Main
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
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Full Text






Foreword


The principal intent of this report is to present suggestions believed
to merit serious consideration in connection with the formulation of public
policies and the enactment of Federal legislation affecting agriculture. The
suggestions should not necessarily be interpreted as firm and unqualified
recommendations for action.

To some extent, a large number of the members of the professional staff
of the Department of Agricultural Economics participated in the development
of this report. However, major responsibility for specified sections was
assumed by the following persons:

Introduction: W. W. McPherson

Some General Comments:

1. Land retirement, W. W. McPherson
2. Price supports, W. W. McPherson
3. Transfers of quotas and allotments, Blair J. Smith
4. Strategic storage, Ralph A. Eastwood

Fruits and Vegetables: Kenneth M. Gilbraith
Donald L. Brooke
Marshall R. Godwin
William T. Manley

Sugar: W. W. McPherson

Flue-Cured Tobacco, Peanuts, and Cotton: C. E. Murphree
Roger P. Hill

Feed Grains, Wheat, and Protein Supplements: Ralph A. Eastwood
Blair J. Smith

Dairy: Ralph A. Eastwood
Blair J. Smith

Poultry and Eggs: Ralph A. Eastwood
Blair J. Smith

Labor: Kenneth M. Gilbraith
Marshall R. Godwin
Donald L. Brooke

Land Policy: W. K. McPherson

The Noncommercial Sector in Rural Areas: C. C. Moxley
Roger P. Hill












Introduction


The U. S. economy has been in a period of sustained growth since World

War II. In current dollars, per capital disposable income of the nonfarm

population has increased since 1940 in each year except one. For the farm

population, this figure decreased in six years during this period. In 1963,

per capital disposable income among the farm population was 63 percent of the

nonfarm figure and was about equal to the nonfarm per capital disposable

income in 1949.

Thus, despite the fact that the economic welfare of farm people is

increasing over time, the nature of the agricultural sector is such that

farm people generally have not shared fully in the progress that our economy

has experienced. As a result of adjustment problems created by this over-

all progress, many farmers are confronted with essentially no alternative

but that of seeking employment outside agriculture in order to benefit from

general economic growth. Consequently, rapid growth of the nonagricultural

sector is essential in order for the farm sector to prosper,

It is generally concluded that, at our present levels of living, the

demand for agricultural output is inelastic with respect to price and a

smaller proportion of income is spent on agricultural products as average

income increases. Farm production of agricultural inputs (farm power for

example) continues to decline, consequently, additional farm resources are

available for producing market products. The continuous flow of new and

improved productive inputs tend to increase the supply of farm commodities

and to substitute for farm labor. Under these conditions, while shifts

among commodities occur in response to relative prices, aggregate output










does not seem to decline in response to general price declines. Consequently,

there is continuous downward pressure on market prices for farm products and

continuous adjustments will be required if farm people are to share in our

national progress.

In response to the changes that have been taking place, farm people

have been making adjustments at rather phenomenal rates. For example,

despite continuous unemployment in the economy as a whole many persons

formerly working in agriculture have shifted to other employment. For 1950

to 1960, the USDA and the Department of Commerce show estimates of the de-

cline in numbers of persons employed in agriculture that range from 24 to

38 percent, or reductions of 1.8 to 2.8 million persons. Changes in farms,

classified by value of farm products sold, were as follows (Source: U. S.

Census of Agriculture):


Value of Products
Sold


TOTAL

Less than $2,500

$2,500 to $4,999

$5,000 to $9,999

$10,000 or more


Number
s
Thousands
1950 1959

5,379 3,701

3,291 1,637

882 617

721 653

484 794


of Farms
Percent
of Total
1950 1959

100.0 100.0

61.2 44.2

16.4 16.7

13.4 17.6

9.0 21.5


Percent of Total
Percent Change Value of Farm
in No. of Farms Products Sold
1950 to 1959 1950 1959

31.2 100.0 100.0

50.3 12.2 5.3

30.1 14.4 7.5

9.4 22.7 15,5

+ 64.0 50.7 71.5


Changes that result in progress for some persons often affect others

adversely. Thus, a major role of public programs should be aimed at

assistance for those who are affected adversely in order that they may

adjust their economic activities more readily and share in the over-all

progress.










In the following discussion of programs concerning particular

commodities and other matters, emphasis is given, but not limited,

to those with which we are especially concerned in Florida. For con-

venient reference, the value of cash receipts from Florida products sold

in 1963 are given in Table 1.


Table l.--Cash Receipts, by Commodities and Commodity Groups, Florida, 1963.

Commodity Cash Receipts
Million Percent
Dollars of Total

Citrus 301.5 34.0

Other fruits and nuts 11.2 1.3

Vegetables 184.3 20.7

Greenhouse, nursery 62.1 7.0

Sugarcane 39.8 4.4

Tobacco 25.2 2.9

Feed crops 6.6 0.8

Oil crops 11.5 1.3

Forest products 7.3 0.8

All other crops 6.3 0.7

Total Crops 655.8 73.9

Meat animals 93.0 10.5

Dairy products 88.0 9.9

Poultry and eggs 47.0 5.3

Misc. livestock 4.0 0.4

Total livestock 231.9 26.1

All commodities 887.7 100.0


Source: Farm Income State Estimates, USDA, ERS, FIS 195 Supplement,
August, 1964.










Some General Comments

1. Land retirement. Removal of land from production alone is not a

sufficient means of raising low incomes in agriculture. In 1959, total

cropland harvested on Economic Classes V and VI farms, those with $50 to

$4,999 of total value of farm products sold, amounted to only 45.6 million

acres, an amount about equal to the total reduction in cropland used between

1950 and 1962. In 1959 these farms produced only 12.8 percent of the total

value of agricultural products sold in the U. S.

On larger farms the effects of land retirement on total output will

depend largely on the extent to which farmers can economically substitute

other inputs for land.

2. Price supports. A large percentage of the lower-income farm

families cannot be reached effectively by means of the support of market

prices. For example, in 1963, cotton prices would have had to be increased

by unreasonable amounts merely to bring the operator and family labor in-

come up to $2,500 on typical small cotton farms of the Delta and Southern

Piedmont. Increases of 12.5 cents and 17.8 cents per pound, respectively,

would have been required.

For the larger farms current price support programs cannot effectively

maintain farm incomes over time, without undue accumulation of surpluses

and public cost, unless production is reduced below and/or consumption is

increased above the levels achieved in recent years. This adjustment can

be accomplished by reductions in production or by increases in consumption,

though production adjustments are generally conceded to offer the best hope

for success. If price supports are continued, in addition to the matter of

general adjustments of production and consumption, particular consideration










should be given to the long-run effects of substitute products, competition

from foreign production, our export markets, and technological changes in

production that have occurred since the present parity levels and relation-

ships among prices were established.

3. Transfers of quotas and allotments. If measures to adjust pro-

duction include the use of marketing quotas or acreage allotments, it would

be appropriate, in the interest of economic efficiency, to make them trans-

ferrable over as wide a geographic area as is politically feasible. It is

recognized that a sudden and substantial decline in the production of a

locally important commodity may upset the economic base upon which the

community is dependent. Though a quota or allotment presumably would not

change hands unless both the buyer and seller believed they would benefit

from the transfer, account must be taken of the possible adverse effects of

the transfer on other persons in the community. Since the short-run effects

would likely be more severe than the longer-run effects, it is suggested

that consideration be given to increasing, in definite steps, the area over

which transfers can be made with unrestricted transfers within the U. S.

as the ultimate goal.

4. Strategic storage. CCC stockpiles of grain and foods would be much

more useful in the event of national disaster if significant quantities were

stored in appropriate locations near centers of livestock feeding, and

milling and other processing centers. Standby feed and food milling facil-

ities would round out these strategic stockpile sites.

Similarly, competent technical study regarding the procurement and

strategic storage of seeds and plants is needed to assure more dependable

supplies of critical farm seeds in case of nuclear bombardment or other

national disaster.










Fruits and Vegetables


Marketing agreements and orders are the principal means suggested for

dealing with the policy problems of commercial producers of fruits and veg-

etables. From the standpoint of creating efficiency through orderly mar-

keting the Agricultural Marketing Agreement Act of 1937 is perhaps the most

important legislation affecting producers and handlers of perishable agri-

cultural commodities.

Widespread use of this legislation has been and is being made by

commodity groups throughout the nation. However, producers of certain

perishable commodities have experienced a great deal of difficulty, and

failure in a number of cases, in attempting to establish and maintain orderly

marketing conditions and the parity price goals that are included in the

declared policy of the Act. In reevaluating this legislation it is sug-

gested that the following proposals be considered:

1. Greater flexibility for administrative committees, Under certain

market conditions, especially when major changes occur suddenly, committees

have been unable to act with sufficient speed to keep serious marketing

problems from arising because of required administrative procedure. The

Act should be amended to provide for greater freedom of action by the

administrative committee in imposing and lifting regulations within the

limits of a broader policy framework.

2. Regulation of imports. Under present provisions control over

imported perishables is limited to placing restrictions on grade, size

and maturity. Where other regulations such as the standardization of

container weight are needed on domestic products to stablize the market

the Act should require the same regulations of imports.










3. Volume control. In many cases the placing of restrictions on

grades and sizes alone does not provide for sufficient control over volume.

This method of controlling volume also affects farming and packinghouse

efficiencies and creates problems of equity. Consideration should be

given to amending the Act to permit the use of producer quotas.

4. Administrative committee. In most cases the interests of the

farmer and those of individuals at the secondary and tertiary levels of

trade are not the same. For example, farmers may find it necessary to

restrict volume in order to prevent a loss, but by restricting volume the

income from packinghouse operations can be affected adversely. Under such

conditions, the success of a marketing order program is severely hampered

by having an administrative committee made up of both growers and grower-

shippers. Since the declared policy of the Act is to achieve and maintain

specified levels of prices to farmers through orderly marketing, considera-

tion should be given to amending the Act to permit only farmers who are not

grower-shippers to serve on the administrative committee.

5. Enforcement and penalties. A criticism often heard of the Market-

ing Agreement Act is that enforcement is too slow and penalties for viola-

tion are not severe enough to be effective. In addition to providing for

more rapid enforcement and greater penalties, consideration might be given

to amending the Act so as to provide for a board of control at the Federal

level which would assist in the enforcement of all Federal Marketing Orders.

A second suggestion would be to tie the compliance of Federal Marketing

Order regulations to the P.A.C.A. licenses of terminal market handlers.

6. Advertising. Advertising programs by producer groups have in-

creased rapidly during recent years. In many instances this interest in

advertising has been the primary reason for initiating state marketing order










programs. Consideration should be given to amending the Marketing Agree-

ment Act of 1937 to permit advertising programs to be incorporated into

Federal Marketing Orders.


Sugar

Sugar prices have gone through an extremely wide swing since the

supplies from Cuba were discontinued. Without our domestic sources of

supply, the price probably would have jumped even higher. Despite the

fact that domestic sugar prices normally are held above "world prices" in

order to protect our domestic industry it is suggested that the sugar

program be continued to insure a minimum share of our consumption require-

ments.

More systematic long-range planning with respect to the domestic pro-

duction of sugar is needed. It is quite uneconomical to allow expansions

in plantings, which produce for three years or so, and in milling and re-

finery capacity which are long term investments with no alternative use,

and then to reduce allotments and quotas below the capacity of these

heavy investments. Thus, it is suggested that domestic production goals

should be consistent with mill and farm capacity, and farm allotments and

mill sales quotas should be kept consistent with each other.


Flue-Cured Tobacco, Peanuts, and Cotton

In Florida, cotton production has declined and the allotted acreage

is usually underplanted. On the other hand, in an area of North Florida

embracing approximately 25 counties, both the flue-cured tobacco and pea-

nut programs are important factors in the income position of farmers. In-

volved are almost 7,000 flue-cured tobacco allotments and 5,000 allotments

of peanuts for harvest. Estimates vary, but the aggregate market value of

these allotments probably exceeds $30,000,000.







-9-


An alternative to these acreage allotment programs equally effective

as a means of elevating the value of the annual crop of peanuts or flue-

cured tobacco would be difficult to devise. Despite the fact that acreage

allotments in the past have failed to keep production down to levels that

would clear the market at support price levels for some commodities, a

restriction placed on land can be effective in controlling the output of

a crop such as flue-cured tobacco or peanuts. It is true that new tech-

nology increases yields and opportunities exist to substitute other factors

for land. On the other hand, until land is eliminated entirely as a fac-

tor of production, a relationship between the quantity of land used and

output will exist. Thus, the major problem facing flue-cured tobacco and

peanut producers is not one of an unworkable and inadequate means of

creating producer income benefits, but is a matter of developing an

acceptable means for distributing the benefits of these programs among the

participants.

A redistribution of the benefits of the program occurs with each change

in the size of allotments unless all changes in yield per acre by producers

are uniform. For example, consider the consequences of varying increases

in yields among producers. Suppose all producers initially have a yield of

1,500 pounds per acre, which is, in turn, increased to 2,000 pounds per

acre. But instead of a uniform increase of 500 pounds per acre, assume the

average yield of one group of producers after the increase is 1,700 pounds

per acre. For a second group the average yield per acre after the increase

is 2,300 pounds per acre. If after the increase it is necessary to reduce

output to its former level, all allotments are reduced by 25 percent. The

reduction in acreage is proportional, but in terms of program benefits, the

position of the low yield producer has deteriorated. After an unequal in-







-10-


crease in yields and a proportional reduction in acreage to achieve the

former output, the fractional acre of producers with a yield of 1,700

pounds is reduced to 1,275 pounds while the fractional acre of the high

yield producer represents an output of 1,725 pounds.

One solution to the problem of shifts in equity seems to be marketing

quotas instead of acreage allotments. With a poundage quota, a downward

revision in quotas for all producers by a common percentage may have an

unequal effect on producers from the standpoint of cost, but the relative

revenue position of all producers within an industry is preserved. Under

marketing quotas increasing yields would no longer be a device through which

a producer maintains or improves his relative revenue position when re-

ductions in the output are ordered. Therefore, with such an arrangement

the advantage of units on which the higher increases in yields have occur-

red is lessened considerably in the event of a declining demand. On the

other hand, acreage allotments in combination with a declining demand for

the product could very well lead to a level of dissatisfaction on the part

of small allotment holders, where yields have increased least, that would
1
endanger the continuance of a program.

A marketing quota system, compared with an acreage allotment system,

while providing less incentive for yield increases would provide greater

incentive for emphasis on efficiency and on quality as indicated by market

prices.


Feed Grains, Wheat, and Protein Supplements

As comprehensive work on feed grains and wheat has been done by the

mid-western states in recent years, the statement here is not intended to


For a technical discussion of the equity implications of acreage
control, see Florida Agricultural Experiment Station Technical Bulletin
643, February, 1962.







-11-


be a complete coverage of the complex part of U. S. agriculture,

If the present subsidy and control programs on feed grains, wheat,

and protein supplements were to be altered in a manner such that prices

would fall, then both the producers of these commodities and the livestock

farmers who use them as feeds would in time suffer losses in net incomes.

The loss would be direct and immediate for the producers of those com-

modities, and delayed and indirect for the feed users. Increased pro-

duction of livestock and livestock products would occur as a result of

heavier grain feedings encouraged by the lowered feed prices. Consequently,

output would be increased and prices of livestock and livestock products,

and in turn, net incomes would decline.

If at any time the decision is made to remove the subsidies and supply

controls from feed grains, we strongly urge that the removals be phased

over at least five years. This would materially aid farmers, processors,

and consumers to adjust their economic activities to the new terms of

trade. This phased adjustment cver time would minimize the disruption to

be expected in the agricultural and industrial equities that have been

accumulated, as price support and supply controls are removed.


Dairy

If enhancement of dairy farm income is a national objective, a helpful

step would be the amendment of federal procurement regulations so that the

Department of Defense would be required to pay local minimum prices for milk

and dairy foods to be used in military rations. Such a change undoubtedly

would increase the cost of military rations to the Department of Defense.

It probably would not increase the over-all cost to government of enhancing

dairy farm income. It certainly would reduce the animosity which exists







-12-


among dairy farmers and milk dealers toward procurement policies of the

Department of Defense.

Base right values accrue to dairy farmers through normal courses of

trading. These rights become reasonably good monetary measures of the per-

formance of price enhancing devices in the market for raw milk. We are

not aware that the legality of base plans ever has been eSiablished by

Federal Courts. We urge, therefore, that steps be taken by the appropriate

authorities to definitely establish the legal status of the base rights as

practiced in the dairy industry.

In many milk markets of the United States, a closed basing system,

whereby dairy farmers would be entitled to establish their bases for Class

I sales in the market, would be a highly beneficial step. This would enable

a dairy farmer to regulate his farm production either to the Class I market

or to the total market available. Accordingly, each individual dairy farmer

could manage his farm affairs to produce milk for whatever combination of

Class I and manufacturing milk he chooses among those available to him.

This system would reduce materially the propensity to produce excess milk

in at least several milk markets. We believe the Class I base plans should

generally be available to dairy farmers upon a suitable referendum basis.

There might be adequate argument for making base plans mandatory in mar-

kets with heavy surplus production. Each plan should be tailored to each

individual market, in any event. Such a system of Class I bases would

reduce government costs of supporting dairy farm incomes. Of course, it

would tend to reduce the domestic production of milk and other dairy foods.

It would reduce production costs of oversupplying fluid markets. Assuming

a protective tariff structure, this action probably would result in higher

consumer prices for reduced supplies.







-13-


There may be reasonable grounds for considering a national market for

base right certificates. However, interregional competition in milk pro-

duction and marketing is so vigorous that individual defense of equities

would be expected to defeat any such plan. However, in individual markets

(especially those with market equalization pooling) we believe the per-

ceived advantages would outweigh the perceived disadvantages in the minds

of most producers. Accordingly, we recommend that bases should be made

fully transferable among dairy farmers within as large a market area as

the producers concerned will authorize by suitable referendum, with the

ultimate goal of making them transferable, without geographic restrictions,

throughout the United States.

Enabling legislation to permit easier enactment of federal milk mar-

keting orders is thought by some to be desirable. In defense of this rec-

ommendation, it may be said that markets most in need of the stabilizing

effects of these orders are most disorganized and are unable to muster the

necessary support for the market research required to prove need at a

hearing. Also, such market areas may be unable to muster the necessary

vote to initiate an order. From the view point of administering an order

successfully, it is highly desirable that producers in the market be well

organized and overwhelmingly in favor of an order. This support is

needed to minimize costs to the USDA and maximize the likelihood of long-

term positive working relationships between the market leaders and the

USDA. Similar general considerations should obtain concerning regional

orders.


Poultry and Eggs

Substantial markets for breeding stock, hatching eggs, and baby chicks

originating in Florida exist throughout the Caribbean Area. We strongly







-14-


urge the Congress to do whatever it can to ease the conditions and terms of

trade experienced by our exporters of these products in that area.

Also, Florida has an interest in the easing of import restrictions on

poultry meat throughout the world--especially Europe. Assuming that the

tariff protection of the EEC provides a rough indication of the differences

in the efficiency of poultry production in those countries as compared to

the United States, the importation of poultry meat into the United States

would be a problem of no practical consequence. However, Canadian eggs at

specific times and in special markets would be of substantial detriment

to American producers.

Any efforts to initiate meaningful supply scheduling programs among

broiler growers and turkey producers are likely to meet with strong

resistance. The demand for these commodities is growing. The industries

are relatively new. Production efficiency has continued to improve. The

owners are expansionistic and individualistic in their industrial outlooks

and production is closely integrated with feed supply, hatcheries, and

processing. Accordingly, any program designed to directly restrict the

output of broilers and turkeys is unlikely to be acceptable to the industry

at the present time.


Labor

To producers of many agricultural commodities, labor policy is per-

haps the most pressing area of concern at the present time. Of particular

importance is the seasonal variations in the demand for labor on sugarcane

and some vegetable farms. In the past, immigrant workers have been employed

to fill the demand during seasonal peaks in demand. In reevaluating

policies and programs pertaining to labor the following proposals are

suggested for consideration:






-15-


1. Housing. The legislation that covers farm labor housing is

limited in several respects. Consideration should be given to amending

present legislation as follows:

a. Increase the loan limits and provide for repayment over

longer periods of time.

b. Provide credit for farm labor housing to individuals

other than farmers.

c. Provide credit for farm labor housing that is constructed

on property other than farm land owned by the borrower.

d. Provide for an accelerated rate of amortization for farm

labor housing loans.

2. Health. Further effort should be made to assure adequate medical

assistance to migratory workers who do not qualify under state residence

requirements for health services or care.

3. Wages. Federal legislation should provide for protection of the

farmer insofar as making supplemental foreign labor available to him under

reasonable conditions in the same manner that it provides for protection

of the domestic farm laborer. Regulations relating to wages and terms of

employment are not as present administered in this manner. The current

method of administration almost always results in higher wage rates for

those producers who use foreign labor than for farmers who use only domestic

labor. For example, a farmer who produces two crops, one of which requires

foreign labor, must pay all workers on his farm the same wage. A second

farmer producing the same crop as the first farmer, but the one that does

not require foreign labor, does not have to pay as high a wage to his

domestic labor. The legislation should specify that regulations be con-

fined only to those crops and activities which require foreign labor--not

to all crops and activities of a specific producer.







-16-


4. Immigrant employees. At certain critical seasons of the year

Florida agriculture is highly dependent on workers brought in from the

off-shore islands. Attempts to recruit domestic workers for these jobs

have not been successful. Under the circumstances these immigrant workers

have the opportunity of earninghigher incomes than they otherwise could

earn and they are not closely competitive with domestic workers. It is

suggested that legislation should provide a continued and consistent pro-

gram under which immigrant workers can be brought into the United States

to fill the demands for farm labor during the critical seasons.


Land Policy

The price of agricultural land has been rising much more rapidly than

the income owners receive from the production of agricultural products.

From 1940 to 1963, the average value of farm real estate per acre rose 327

percent, whereas the net returns from farming rose only 107 percent and the

acreage of land used for crops decreased 9 percent or about 32 million

acres. During the same period, the average tax on farm real estate rose

from 39 cents to 1.36 dollars per acre.

Increases in real estate prices and taxes are not new phenomena in the

United States. For more than 150 years, the impact of rising real estate

prices and taxes was offset by a national policy of making new land

available to settlers and speculators at little or no cost. As long as it

was possible to exploit the public domain, the price of farm land never rose

much above the value of average annual net earnings capitalized at the

current rate of interest, except on the peripheries of cities and towns.

Nevertheless, the price of land rose steadily in response to an expanding

demand for farm products, reductions in the cost of producing agricultural







-17-


products, and an increase in the demand for land for nonagricultural uses.

Thus, in addition to earning the current rate of interest on their real

estate investment, land owners received long-run capital gains for which

they had paid little or nothing.

When the supply of free land was exhausted, a growing and more

prosperous population quickly bid the price of land up to levels that

placed a positive value on the privilege of speculation. Much of the

nation's agricultural land is currently selling at prices that permit

the owners to earn only 3 or 4 percent on the current value of land, and in

some instances less than 1 percent. The difference between the amount

owners earn by using land for the production of agricultural products and

the commercial rate of interest represents the value they place on land

for speculation. Now an increasingly large number of land owners are

producing agricultural commodities as a means of minimizing the cost of

speculation rather than as a principal source of income. In many instances

they are refraining from investing the capital needed to improve land and

reduce the per unit cost of production in order to obtain maximum specu-

lative gain possible at any given time. Whereas the market for the goods

being produced at any time was a major factor in determining how the land

was used in the past, the speculation market for land is now exercising

considerable influence on how land is used at the present time.

As long as the amount of land available to a population that is in-

creasing in both size and productivity remains constant, differences in

the value of land based on current and future uses can be expected to in-

crease still further. Consequently, the role that the market for goods

at any given time plays in the allocation of land among its alternative







-18-


uses during that time will decline even more, unless the right to use land

for different purposes and/or at different periods of time are classified

as different commodities and a market established for each. Several schemes

for doing this have been proposed and some are being used.

The problem is further complicated by the rapidly increasing demand for

urban and industrial land. In addition to reducing the supply, the pos-

sibility that agricultural land will be transferred to other uses sharply

alters the manner in which it is used. This aspect of the problem has

already stimulated the enactment of laws and changes in state constitutions

designed to enable farmers to continue to farm land until it is actually

needed for other purposes. It is also being suggested that the land tax

either be eliminated altogether or be related to the earning capacity of

the land rather than its capital value. The possibility of using the right

of eminent domain, zoning, and taxation to bring about a more desirable

land-use pattern within the framework of a competitive economic system have

all been considered and used extensively in urbanized areas. At the pre-

sent time, however, no national policy for using the nation's land re-

sources has been developed for the specific purpose of making the nation's

natural resources best serve the needs of an expanding population over

an extended period of time.

It is recommended that the Congress create an Agricultural and Forestry

Land Use Study Commission and make it responsible for:

(1) Determining the manner in which land to produce agricultural and

forestry products is affected by:

(a) Rising land values.

(b) The manner in which land is appraised for the purpose of

taxation.





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(c) Rising ad valorem real estate tax rates.

(d) Capital gains taxes.

(e) Income taxes (both personal and corporate).

(f) Zoning.

(g) Public land acquisition programs.

(h) Possibly other important items.

(2) Submitting a comprehensive report of their findings to the

Congress within two years.

(3) Recommending legislation, if any is deemed to be needed, to

insure farmers of having access to the land required to produce sufficient

agricultural and forestry products to maintain and enhance the level of

living in this country without requiring them to speculate in land values.


The Noncommercial Sector in Rural Areas

This section is concerned primarily with rural families and individuals

whose resources are inadequate for the support of minimum levels of living.

A close scrutiny of existing programs reveals that many avenues toward

progress are already available, but that certain problem situations are not

likely to be remedied under existing legislation, or at least under present

implementation of existing laws.

The problems of low income farm families are not greatly different

from problems of low income nonfarm rural residents. A program suitable

or effective in raising levels.of living for one group probably will apply

to the other. Likewise, it is probable that farm programs designed to raise

incomes of commercial farmers will not be effective in materially raising

incomes of farm families whose limited farm resources restrict physical

production to very low levels. In view of this situation, it appears







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that farmers underemployed would receive greater benefits from programs

involving measures that are other than strictly agricultural in content.

In meeting legislative needs for low income rural people, there may be

cause to consider different objectives than for commercial farmers.

A distinction must be made between remedial legislation and laws which

only alleviate present hardship. If it can be assumed that existing

welfare agencies and organizations are adequate to prevent undue suffering

among indigent people, or if it can be assumed that such needs should be

considered under welfare legislation per se, there remain problems of pre-

venting continuance of low income in rural areas or the shift of low income

problems from rural to urban areas as population shifts.

If the goal of national legislation in this field has as its main

purpose an enlightened citizenry capable of earning incomes adequate for

wholesome levels of living, consideration should be given to: (1) pro-

viding employment for people within their present capabilities, or (2)

helping people to acquire the training necessary to perform available jobs

and thus earn the income necessary for satisfactory levels of living. There

appears to be very limited opportunity to provide the kind of employment

which many underemployed rural people are capable of performing. Such

activity often is not economically feasible. Similarly, it is usually not

feasible to train residents of low income areas for employment in jobs which

do not exist in their localities. A program which combines training with

relocation of the trainee may be the best solution for many areas. Un-

employed or underemployed people being trained in such programs would need

to be subsidized for maintenance of a satisfactory level of living during

the training period.







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In situations where suitable training and employment cannot be

provided within the community, solutions might be found through sub-

sidization of out-migration. This would need to be accompanied by

vocational training and/or rehabilitation in the new area. Here, again,

the over-all program should be coordinated and implemented by one

organization in order to avoid conflicts and duplications.

It is further suggested that consideration be given to the use of

Federal funds to purchase land in submarginal units now being farmed by

low income families. Purchase of such land could be done systematically

over time as present owners die or as the lands become otherwise available

for purchase. As these lands are acquired they could be placed in forests

or other conservation or recreational use. They could be held in the public

domain until there is economic justification for reselling to private

interest in units of efficient size.

Due to conflict of interest among people and communities, the above

types of programs should allow individuals to participate on a voluntary

basis without undue pressure or coercion. In carrying out such adjustments,

many nonfarm businesses and services would be seriously affected. Pro-

visions might be made for them to receive public adjustment assistance to

the extent that societies' demands or programs had led to the infliction

of economic loss. Certain parts of the Economic Opportunity Act, the Area

Redevelopment Act and the Manpower Development and Training Act, appear to

offer hope for some of the above problems, but they are far from adequate

in meeting the total needs of low income rural communities. Solutions may

lie in revision or expansion of these acts, or replacement by additional

legislation.







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In general, programs in this area must be flexible in terms of

content and geographic area to meet the various specific problems,

adequate resources for accurate analysis of opportunities must be pro-

vided, and it is important that such programs be designed in a manner

that individual initiative and incentive will be stimulated and not

destroyed.



END -




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