NECESSITY FOR 110-PERCENT PROVISION (In response to the request of Congressman Crawford for a statement with respect to the necessity for the 10-percent margin above parity, Mr. O'Neal subsequently submitted the following statement :) If farmers are to attain parity prices, it is essential that no ceiling be placed on any agricultural commodity or product thereof at less than 110 percent of the parity price thereof. The parity principle has come to be generally recognized as a sound national objective. Congress has repeatedly declared as its policy the restoration and maintenance of farm prices on a parity with industrial prices, and has passed numerous measures to aid farmers in obtaining parity. The Agricultural Adjustment Act promises parity to American agriculture. If ceilings were to be applied to agricultural commodities at parity, the actual price would fluctuate somewhere below parity and farmers would never attain parity except for brief periods. The proposed 10-percent margin above parity is necessary on account of seasonal fluctuations in farm prices. Agriculture is a seasonal industry. There are seasonal fluctuations in the prices of practically all farm commodities. Therefore, in order that the average prices received by farmers for a given commodity may approximate parity, it is essential to permit a reasonable fluctuation above parity as well as below parity. I want to make clear again that this 110-percent provision is not a floor or a guaranty in any sense of the word that farmers that going to get 110 percent of parity for their commodities if this provision is adopted. This provision merely prevents imposing price ceilings at a level lower than 110 percent of parity prices. It is a minimum ceiling instead of a floor. This provision merely safeguards the parity policy already well established as a congressional policy. As I have already pointed out in my prepared statement, this 110-percent provision should be modified in two respects: First, it should include a requirement for an adjustment of the price ceilings on agricultural commodities periodically, preferably on a monthly basis. Secondly, the 110-percent provision should apply also to the primary products of agricultural commodities as well as agricultural raw materials. Furthermore, this measure should include a requirement that wherever ceilings are placed on agricultural products, appropriate action should be taken wherever necessary to prevent existing margins being widened at the expense of farmers. (In response to the request of Miss Sumner with respect to periodic fluctuations of farm prices, Mr. O'Neal subsequently submitted the following information and charts :) Normally there is a considerable variation in the prices of most farm commodities. Wide swings are quite usual. For example, in 1937 the average farm price of cotton dropped from 13.72 cents per pound on April 15 to 7.67 cents on December 15; the average farm price of wheat dropped from $1.26 per bushel on April 15 to 82 cents per bushel on November 15; the average farm price of corn dropped from $1.21 per bushel on May 15 to 48 cents on November 15; the average farm price of hogs per hundredweight dropped from $11.46 on August 15 to $7.54 on December 15; the average farm price of butterfat dropped from 38.4 cents per pound on December 15 to 23.7 cents the following June. Statistics show that on the average during recent years the price of 92-score butter in New York has fluctuated from a high of about 32 cents per pound in February to a low of about 25.5 cents per pound the following June; Choice and Prime steer prices at Chicago have fluctuated from a low of about $10.25 per hundredweight in June to a high of about $11.40 per hundredweight the following September; veal calf prices at Chicago have fluctuated from a low of about $8.50 in April to about $10.75 the following September; the price of fresh eggs grading "firsts" at New York City has fluctuated from a low of about 22 cents in April, May, and June to a high of about 32 cents the following November; the price of No. 3 yellow corn at Chicago has fluctuated from a low of about 72.5 cents per bushel in November to about 88 cents per bushel the following April; the United States farm price of soybeans has fluctuated from about $1.01 per bushel in November to a high of about $1.32 the following June. All of the fluctuations listed in this paragraph represent average seasonal fluctuations over a period of 10 or more years. farm products Similar seasonal fluctuations occur in the price of amost all other CHART 122. SEASONAL CHANGES IN CREAMERY BUTTER PRODUCTION AND PRICES OF 92-SCORE BUTTER AT NEW YORK CITY (1929–38). CHART 123. SEASONAL CHANGES IN BEEF STEER PRICES AT CHICAGO (1929-38). CHART 124. SEASONAL CHANGES IN VEAL CALF PRICES AT CHICAGO (1901-37). Dollars per 100 pounds CHART 125. SEASONAL CHANGES IN EGG PRICES AND RECEIPTS AT NEW YORK CITY |