Two developments during 1968 will compel the new Nixon Administration to confront the nation's farm policy questions in 1969. One is the record harvest, more than 2 percent above the previous high, which raises the specter of larger crop surpluses. The other is the fact that Congress extended the Food and Agriculture Act of 1965 by only a single year, pushing the expiration date to the end of 1970.
Crop production in 1968 was up in most categories. The major exception was born where, with acreage down more than 4 percent from 1967 but yield per acre higher than ever, total output did not quite match the previous high. Wheat acreage was also down, but yields were up more than enough to produce a record. Barley and oats had both higher acreages and higher yields than before. Rice had a larger acreage and the same per-acre yield. For sorghum, a higher yield more than offset lower acreage. Cotton acreage and yield were well above 1967. And so it goes, with ample or record output of virtually every product.
From this performance it is clear that a large potential surplus exists in American agriculture. The existing crop acreage, number of farms, farm machinery, and other productive elements could turn out a great deal more output under favorable conditions. The purpose of agricultural programs is to restrain this productive capacity. For the past three years, the potential surplus has been restrained by a combination of generous payments for the reduction of crop acreage and by increased exports, commercial as well as subsidized.
Federal programs to raise the prices of farm commodities and to increase farmers' incomes have been a prominent part of the American scene since 1929, when the Federal Farm Board was created during the Hoover Administration. The farm programs were greatly changed and expanded in the New Deal period of the 1930's. While there have been some changes in the ensuing years, the programs are basically the same today as they were thirty years ago. Farmers still are given cash payments in return for their agreement to limit the acreage of certain crops or to withdraw land from cultivation under various conservation measures. Surpluses unsalable at the support prices are put into storage, and a substantial volume of agricultural commodities has been exported at less than commercial prices.
During the later 1950's the programs then in effect led to a build-up of very burdensome stocks of some grains, cotton, dairy products, and other commodities. These were the years of the Soil Bank. Even though this program aimed at taking a considerable acreage of cropland out of production, output continued to climb. After 1960, the accumulated surpluses were reduced considerably, in part by more vigorous efforts to dispose of them abroad, in other part by higher payments to farmers to produce less. Proposals were made by Secretary Freeman to impose compulsory crop controls, but neither farmers nor Congress would accept them. Instead, they sought and were able to obtain continued direct appropriations for price support and acreage limitation.
The 1965 Act made only modest changes. Somewhat lower support prices were compensated for by supplemental income payments, especially for cotton. The higher payments to farmers induced a greater reduction in acreage.
The 1965 Food and Agriculture Act was designed to expire, in most essential respects, at the end of 1969, a schedule which forced a reconsideration of the Act in 1968. Some farm bloc strategists apparently had felt that the prospects for an agricultural act favorable to farmers were better in an election year when many politicians would court the farm vote. The Johnson Administration sought a four-year extension of the Act; however, in October, Congress passed a simple one-year extension with no important changes other than extension of the expiration date. If crop output is to be controlled or influenced in 1971 and later years, new legislation is required in 1969. Otherwise, the terms of the program and the measures to implement it are not available far enough in advance of planting time to be effective. Thus, some farm measure almost surely will be placed before the Congress in 1969.
A nearly successful effort was made in the House in 1968 to limit the size of crop payment that any farmer could receive. This issue is sure to recur in consideration of a new bill. Regardless of what one thinks about the social justice of large farmers getting large federal payments not to produce crops, the fact is that the kind of program now in effect requires a high rate of participation on the part of large commercial farmers. Otherwise, crop output may climb, surpluses will accumulate again, prices will decline, and the whole structure will undergo severe strain or perhaps failure. An attempt to restructure the scheme of payments to farmers requires restructuring the whole program.
Reconsideration of the farm program will occur at a time of mount-ing stringency in the federal budget. Programs aimed at improving the lot of the poor and dealing with urban problems have been passed but are not yet funded at levels sought by their sponsors. Under these circumstances, farm programs may encounter stiffer resistance than in the past.
For agriculture, 1968 was a year of deferral. Federal agricultural programs have been described as unsatisfactory to nearly everyone. The basic alternatives are well known: 1) the program could simply be allowed to expire, forcing the farm economy into a painful adjustment; 2) the program could shift to income subsidies, one variant of which would stress the transitional character of the subsidy while moving manpower out of agriculture; 3) if price supports are maintained, they could be based on acreage controls, as at present, or there could be a shift to production or marketing controls. President Nixon carried many of the important agricultural states in the 1968 election; he will face difficult farm policy choices in his first year in office.
