Shortcomings in Current Explanations of National Farm Surpluses

Abstract

T HE productivity of American agriculture continues to amaze most of us and to perplex those who would control it. During recent years, despite restrictions on major crops, successive all-time production records have been established. This year promises to be a near-record notwithstanding drought through the central part of the country and in spite of additional measures to check output. We are experiencing a condition described as a surplus many years ago by John D. Black: A volume of production continuing so large over a period that the producers of it have to sell at prices that will not allow them to operate with their accustomed profits, income and scale of living. Dr. Black's definition conforms fairly well to what most people have in mind when they speak of a surplus. I am aware of the fact that the definition is subjective, dependent exclusively upon judgments of producers and hence more prone to discover a surplus than some other definition might be. The size of the surplus is a controversial point. Certainly not all the $8.5 billion worth of farm products owned by and under loan to the government is surplus. Undeniably, a large share of it is. Not only is there an accumulation of surplus stocks for particular crops like wheat, cotton and corn. Current production of these and other products has run ahead of commercial outlets. If we consider the surplus to be that quantity of current production that will not move through the commercial channels at the supported price, but must be stockpiled or moved at home and abroad by extraordinary governmental measures, then the surplus is considerable. During the past three years dispositions of government-owned stocks have totaled about $6 billion, and in spite of this there has been a net accumulation in government hands of about $6 billion more. This makes a yearly average takeover of about $4 billion, or more than 10 per cent of gross farm income. Agricultural surpluses, both as accumulations in the hands of government and as excessive current production, have persisted in recent years. This is in the face of such favorable basic conditions as unexpected population growth, record nonfarm civilian employment, a fairly stable general price level, rising per capita real income, high-level per capita consumption of foods and fibers, improving economic conditions abroad, and vigorous government efforts to restrict production and dispose of sur-