Official Solution of Wheat Farmer’s Problem
By HENRY C. WALLACE.
• Secretary of Agricultare.
The wheat industry of the United
States Is in a period of serious de
pression. A great many farmers
have already lost their farms or
other property and the financial
condition of others is critical. This
condition of things lias resulted
from the decline In wheat prices,
the relatively high level maintained
K in the prices of other commodities
and services, and also from the mal
adjustments which exist in the
Wheat industry itself.
Present low prices are caused by
the large world supply of wheat,
for which there is not an effective
demand at higher price levels. The
total world crop outside of Russia
is estimated at 3,400.000,000 bushels,
which exceeds the production of lust
year by 300,000,000 bushels and the
prewar average by '00,000,000, ex
' eluding Russia. Both importing and
exporting countries whose produc
tion fell during the war are resum
ing rapidly the position they pre
viously held as wheat producers.
Moreover, the evidence indicates that
competition in wheat production will
Increase very materially. Russia Is
gradually restoring her agriculture
and is already exporting some bread
grains. Argentina, Austialia and
especially Canada are selling abroad
large amounts of wheat and will
in all probability continue to ex
pand their wheat exports. These
countries enjoy material advantages
over the United States in the pro
' ductlon of wheat. So long as the
United States produces a surplus,
the prices of American wheat will
be determined largely in the mar
kets of the world and American
farmers as exporters of wheat must
be prepared to meet the keen com
petition of foreign producers for
these markets.
Farmers’ Costs Too High.
Although wheat prices have drop
ped to pre-war levels, prices of
manufactured commodities and of
services remain high. The costs
which enter into the production and
marketing of wheat are so high
that, at present prices for wheat,
ihe farmer can not continue to pay
them and remain in business. Tuxes
machinery, wages, freight.rates, and
prices of food and clothing are out
of proportion to the price of wheat
and the earnings of tlur wheat funn
el*.'
Too Much Depend* on Wheat.
A number of factors within tht
wheat industry itself also have con
tributed to the present wheat crisis
l«ands on which wheat cannot un
der present economic conditions be
grown profitably have been brought
into cultivation in some regions
This fact coupled with the depend
ence placed upon wheat as a cash
crop accounts for the lueses of some
farmers. .Furthermore, high prices
and the appeal for larger food sup
plies during the war induced many
farmers to expand unduly their
farm operation* and to Incur lia
bilities which since the break in
wheat prices they have been unable
to carry. The financial distress
which has come as a result of these
various causes is conaiderably ag
gravated by losses which are due
to inefficient farm management.
Many farmer* are growing and
marketing wheat* which do not
fulfil! the highest market require
ment* and consequently fail to
yie»d maximum net returns. On
gome farms, furthermore, exces
sive emphasis on wheat carries
with it an unsatisfactory seasonal
distribution of farm lnlwr with re
sulting heavy expenditure* for
hired help. The financial difficulties
of many, In short, would be re
duced if their farm business were
operated along more efficient lines.
Self Help for Farmers.
It is important to bear in mind
tliat the solution of present agri
cultural difficulties depend* quite
as imiMi upon the efforts of farm
ora themselves u* upon any govern
ment action. There are fundamental
and far-reaching adjustment* in
production and uiurketlnjr which
fanner* themselves mu»t make a*
a part of a longtime program. A
survey of the situation indicates
that well-considered action In a
number of direction* will bring
wheat farmer* a substantial men
Mil re of relief.
A large number of wheat produc
er» arc on the verge of bankruptcy.
Many of them are, no doubt, beyond
the point where further credit ex
tension* would benefit them. On the
other hand, a larger number can
and should be saved by the renewal
of loons or by additional credit on
reasonable term*. Where a large
volume of credit exists and the
mortgage statu* of the farm per
mlt*. outstanding short time loan*
should be funded into long term
mortgage loans at lower rated of
Interest. In this connection full ad
vantage should be taken of the fa*
cjltHeM afforded under the Federal
Farm Loan act. Moreover, the new
credit facilities provided in the fed
eral intermediate credit banks
should be utilised to reduce the cost
of personal credit to the farmer. In
this bankers should lend a willing
hand even where such action does
not Increase their Immediate profits.
The constructive country banker
will readily see that in tbe long run
such action benefits him as well os
the farmer.
Expert Financing Needed.
To meet successfully foreign
competition in some markets In
which exchange rates and oppor
tunltles for exchange of commo
dities favor purchases of wheat
from other sources, easy credits on
American purchase* may be neces
sary. The War Finance corpora
tion should m»ke special effort to
finance the exportation of wheat in
line with the joint resolution of
congress, January, 1921. reviving
the activities of that corporation.
The wheat surplus may be le
duced materially by increasing do
mestic consumption. The per cap
ita consumption of wheat flour and
bread has been lessened by the war
time campaign to pave food coupled
with the high prices fur bread
which have since been maintained.
A reduction in the price to coasiim
era by narrowing the margin be
tween wheat flour and bread would,
no doubt, increase the consumption,
and a return by publit eating
houses and dining cars to the cup
tern of serving bread free with or
ders would contribute to*the same
•end. Furthermore. at present
price* wheat can be economically
substituted for corn as livestock
f***d In many iwiits of the country,
and it* use for this purpose may
h* ftn * sed to advantage.
lawn Freight Rales.
\imrican freight rates, which
are still 4'. per cent and more above
those of 1913. have not been ad
justed to meet the decline in farm
prices, whereas Canadian rates are
now practically back to their pie
war level. To inert the emergency
a reduction of at least 2’% per cent
in inu estate rates on wheat and
wheat products originating in the
distressed wheat areas would be
helpful, these rale* to remain offeo
live until wheat prices ahull have
more nearly reached a parity with
the ptices of other commodities or
until a readjustment ha* been made
m all freight rates. In order to tie
termine a proper basis for this ad
justment, the Interstate t'onrunerce
t'onimission to a .-pecini coniinis
sion composed of representatives of
railroads and shippers, and created
for that purr *s* should review
without delay the entire structure
of interstate railroad rates and
should make or submit recommen
dations for adjustments which will
return adequate revenues to the
railroads and as well afford Borne
relief in the way of reducing the
cost of transporting agricultural
products.
Cut in Taxes Imperative.
Farm taxes In many sections 'of
the country have become a serious
burden, especially in regions where
farmers are in financial distress,
and a downward revision is essen
tial. The partial substitution of
taxes based on Income for the pres
ent property taxes would provide a
measure of relief. Further shining
of the cost of good roads to those
who make most one of them,
through taxes on gasoline and
motor vehicles, offers still another
means of a more just distribution
of the tas burden.
Developed Output Needed.
< lurnged market conditions necee
:ate important readjustments in
crops As foreign outlets for
American wheat become more re
strict cd, the production of wheat
should be gradually placed on a
domestic basis, and the wheat nrpr
age should be reduced as fast as
profitable alternatives can be
found.
Adjustments in agricultural pro
duction should be made in accord
ance with differences in regional
and farm conditions In some of the
wheat territory some shift from
wheat to corn probably will be prof
itable. Oats for local consumption
might be substituted tor wheat to
a slight extent. With present
prices flax will be a profitable
alternative on suitable land for a
small portion of the wheat acre
age In the northwest. Since the
prices of dairy products have con
tinued relatively strong, further
emphasis should be placed on dairy
ing and the production of feed
crops. This increase in diversity
ef crops and livestock will in gen
eral result In better organization
of the farm business and also help
to stabilise the farm income.
A safer tj^e of farming taunt be
developed for the semiarld regions,
latnds which are unsuHed to fleM
crops should Ire dropped from culti
vation and revert to grass land.
Some forage crops and livestock
should be grown on every dryland
farm. Reserves of feed, livestock,
poultry and capital should be car
ried from year to year to tide over
periods of crop failure, and the
farm business should be so organ
ised as to secure the maximum re
turns per man.
Kach fanner should carefully re
view the possibilities which lie be
fore him. Undoubtedly diversiflea
lien will result, from careful
thought on this subject, in many
of the states where the surplus
wheat acreage is found. On the
other- hand, in those regions where
wheal is grown as part of a diversi
fied system of farming, it may be
more profit able than any alterra
live crop.
!w-lf-Sufficient Farming.
In the present critical situation
it is very essential that wheat
farmers adopt methods which re
duce production costs and conserve
toe cash income. This may be ac
complished by avoiding out of-pock
et cost, by growing on the farm in
so -far as possible the feed supplies
for the stock and provisions foi
the family, a policy which is made
more urgent by the increase in
freight rates and the high cost of
processing and retail distribution
by utilizing to the fullest possible
stent the available labor supply
and the farm equipment through a
well-balanced diversification of
tops and a better distribution of
labor throughout the year. b>
keep.ng land of low production in
grass and other crops demanding
but little labor or eipense. and by
devoting labor and capital to such
• rops and livestock enterprises as
promise to give the greatest
profits
Grew Keller Quality.
Improvement in the quality of
wheat produced will materially in
ci ease profits in the wheat Indus
'ry. t'ertain classes of milling
wheats are in special demand and
aliould be substituted for less de
sirable wheat wherever conditions
are favorable. Moreover, heavy and
unnecessary losses are incurred by
farmers in producing and market
ing dirty and low-grade wheat. The
production and marketing of dock
age is expensive. Wheat should te
■ leaned before sowring and market
ing. care shot-id be exercised In its
storage, and such seed selection
and farm practices in growing and
harvesting should be adopted as
will result in the best market
Slades of wheat.
Prices paid at terminal markets
’ eflect quite accurately the varia
lions in quality of wheat: prices
paid at country points frequently
do not. Farmers must know the
quality and grade of their wheat
in order intelligently to bargain
for the best market price. Wheats
of high . gluten content usually
command .premiums at terminal
markets. While the federal grades
for wheat through subclass speci
cations indicate broadly the gluten
content, the only practicable meth
o<l of measuring it require* ex
tensive laboratory equipment. It is
desirable, therefore, that state au
thorities. in co-operation with the
federal government, undertake to
A Word of Thanks
I bis Special Wheat Growers’ Edition of The
Omaha Bee is the culmination of months of work by
Mr. N. B. Updike—in Washington, in Omaha and
throughout the country. We believe it is a definite
step toward the accomplishment of those things nec
essary to the happiness and prosperity of the
American wheat growers and the continued and
certain prosperity of the entire country. Mr.
Updike and The Omaha Bee express thanks to Sec
retary \\ allace and those other members of cabinet,
senators and congressmen who have aided in the
collection of the data used in this edition, as well as
appreciation of those public-spirited citizens of
Omaha whose financial contributions have made its
publication possible.
determine and make available as
early a* possible In the harvest
w-anon information in regard to
ttie gluten content of wheat in the
important wheat-producing areas.
Wheats may vary widely In gluten
content within local areas: farmers
should, therefore, have Individual
tests made of their wh*ats by the
agencies set up for this purj-ose.
Place of Co-Operation.
ttonoertod and coordinated action
in the form of producers' organize
tions should improve the proouctlon
and marketing of wheat. Higher
returns may be obtained by stand
ardising the production of wheat In
conformity with market demands,
and substantial economies may be
made in the coet of wheat market
ing Co-operative organizations ef
ficiently managed will contribute to
this end. and their development
should, therefore, be still further
encouraged.
The movement of farmers into other
occupations which is now underway
will help to restore the balance be
tween agriculture and other indus
tries Every farmer who is not able
to make a living w here he is shouid
review carefully his own possibili- ,
ties, but should not make a blind
move into other types of farming
or into city occupations. There are.
however, thousands of farmers skill
ed in the industries of the city who
will doubtless turn 40 their foimer
occupations for relief.
The adjustments that !. ive been
indicated are part of a long time
program for agriculture ami must
be made in considerable measure
through the efforts of the formers
themselves. Yet all of these means
will not go far toward promptly re
storing the purchasing power of the
farmer s dollar, which lias been un
reasonably reduced by the rapid de
flation which agriculture was leas'
able to resist.
Otlier Prices Too High.
Since the immediate difficulty i*
the present situation is the
adjustment in price ratios, what is
most needed right now is some wa>
to restore the proper ratio* either
by increasing the prices of farm
products or by reducing the price?
of commodities.
The prices of farm equipmeny
food, « lothing end bu.ldmg mate
lials, as w~H as farm wag*«. are
influenced by the costs of mining,
transportation and m .nufa* turmc
and by the ability to adjust produc
tion to that limit- of supply wri* m
can Iv sold m the domestic market
*t a price to yield o prof.t.
One of t ie largest element*
the production cost of manufactured
products as well as in transporta
tion cos? is ?he wages of labor
Wages have remained high sime
the war. The Immigration and
Adamson laws, together with t‘.c
policies of organized labor, bav -
been potent factors n main ?: ir ^
wage scales. On liie other hand
the domestic market for the produ* »s
of the Tnanufacturing industr. s
rrakes it possible for them to - or.
t.nue production at a profit ev.
w ith bigl. wa«*K for industrial l&fcr
L’nder these cond tions organised in
dustry can maintain high pi ices in
the domestic market and dump ~
pluses in forc:gn r.iarkets at lew
prices.
Fanners' Right to Convideraiion
The question may he raise i
whether protection to labor and in
dustry shall he withdrawn n ord*.'
i hat the inflow of foreign labor
and manufactured products may re
duce the prices of lh* prod :;e
which farmers buy to the level of
farm products or whether some bet
ter remedy should be (Ng [be %
better and more practical a'te.n..
live may be to try to improve p* • t»
of farm products of which we li*ve
an exportable surplus and wbi-h
aie. therefore, unduly depressed
Abundance of work at good wage*
gives assurance of good demand f< -
farm products, but Justice teqai--*
•hat the farmer be helped wo far . «
possible and proper to secure
tively good wages for his labor in
deed, industry and labor can r •
hope long to enjoy a diapmpo; •
tionately high price level for th. , -
products for the simple reason that
farmers constitute about *<> per
i-ent of the purchasers of s,: i
products and if the farm-.s il.f v
to buy is materially lessened fer
any length of time l>oth tec.-. -t.v
and labor suffer through lessened
demand aud pii«-es will be f«» • i
lower
Co-operation among t*-- - as -
been suggest'd i« a m«.iti
tainlng the end -ought. V u
operation is to be encouraged a- *
of the best nevus of imp' a re
marketing methods ami >»d ■ :
marketing coots, as well :«* ..t
proving the quality of far pi.d
ucts. It does no: appear po-si > u d
certainly not within a short p>
of time to organise the p > «
of the great staples of A met u i
agrlotilture so rffwthx!y as to gi\«
them that control over supply w
ia mcsmrt mlwbr'is'li i at
t ence poAat
