Business: THE FARMERS’ PLIGHT .

Not As Bad As It’s PaintedTHE U.S. last week got the bill for1955’s farm price-support program.

For the fiscal year, the Government spent a record $2.1 billion supporting farm prices. The total investment for crop buying and loans is now a staggering $7 billion, a full $1 billion more than last year, even though the Government disposed of $1.3 billion worth of surplus products at a net loss of $800 million in 1955. Yet despite such vast spending, U.S. farmers complain that they are worse off than before.

Net farm income is down to $11 billion, a drop of 30% from the Korean war peak of $15.8 billion and the lowest level since 1942. The Democrats blamed the Administration’s system of flexible price supports, wanted a return to rigid supports; the Republicans snapped back that it was rigid supports that had saddled them with the farm problem in the first place, that the flexible program had not yet begun to take effect. But for many nonfarmers, the big question was: Are U.S.

farmers really in as bad shape as the figures indicate? Everyone agrees that many farmers are in a squeeze, and that it hurts no matter whether it is called a rolling readjustment (similar to what industry went through in 1954) or a plain, ordinary slump. After years of unparalleled prosperity, the farmer’s share of the consumer’s food dollar is down from 52¢ in 1946 to 42¢. Farm parity (the index of what farmers receive in relation to what they must pay for what they buy) has slipped to 84, the lowest point since the beginning of World War II.

But the price and parity statistics do not tell the whole story. Looking at the overall picture last week, the Federal Reserve Board concluded that “the general financial position of farmers remains relatively strong.” The reason is that while farmers started out with lower cash incomes than most of the U.S. (but grew much of their own food), their incomes shot up faster than anyone else during World War II and in the postwar boom. From 1939 through 1951, per capita farm incomes zoomed from $244 to $970, a gain of almost 300%; at the same time, non-farm incomes climbed only 175% to $1,735. And farmers have managed to hang on to most of the gain. Historically, farm prices have plummeted at least 50% after a war; in the years since the Korea peak, the drop has been only 21%. Furthermore, because so many millions have left the farms, the slump has brought only a 5% drop in per capita income. Farmers who remain have bigger farms, run them more efficiently and are earning enough money to expand still more.

There are plenty of other encouraging signs. Farm land prices are climbing to new records, have jumped 5% since 1954. In Chicago the Federal Reserve reported that land prices in its area were up 2% between April and July alone. Farmers’ total assets are rising, currently average about $22,000 a family. And the ratio of debts to assets is dropping, has fallen to 11% v. 19% in 1940 and 21% in 1930. Most important, farm economists think the bottom of the slide has been reached for many farm prices.

Last week the Agriculture Department predicted that while farm prices for the first eight months of 1955 were 4% below 1954, there would be little further drop in prices this year. Said the department: “It appears that much of the general price adjustment . . . has taken place.” Despite all the outcry, flexible supports seem to be working for some crops. The once huge stocks of dairy products have been whittled down to size (TIME, April 25). With a boost from the Government through a low-grade-beef buying program, the beef producers recovered from the worst of their price slides.

Despite such optimistic notes, politicos and farm organizations are mulling more than half a dozen new plans to help the farmer, including Secretary Benson’s plan to take 40 million acres out of production by paying farmers some $500 million a year to plant grass and cover crops rather than commercial crops. Farm economists were quick to point out that this plan, like almost all farm plans, has a loophole for farmers. Farmers could graze cattle on the idle land, and by increasing beef production would put a downward pressure on beef prices.

The biggest unsolved problem of all is the growing spread between the price of food on the farm and at retail stores. For many farm products, spiraling distribution costs have kept retail prices high regardless of the drop in farm prices. Thus a fall in farm prices has not usually brought a drop in retail prices and an increase in consumption to use up the surplus.

All this meant that a premium was being put on the efficient farmer and that the marginal farmer was being squeezed out. It was also true that, despite the price slump, the efficient, mechanized farmer was still making good money—far more than the cold, overall figures show.