You take the other 25 percent, and that is 19,444,000 acres, and then you take 80 percent of your 51.5 yield, and cut it down to 41.2, and you come up with 801,092,000 bushels, giving you a total projected yield, based on last year's production for next year of 3,816,520,000 bushels.

To go back to the same Government report, you find that last year the Department of Agriculture collectively in exports, in the giveaway programs, and everything else, got rid of 3,900,520,800 bushels of corn.

So that that figure right above, 3,816,520,000 bushels is below what we got rid of last year.

This looks pretty good on the surface.

Our total production last year was 4,404 million bushels. If you cut that down in 1960, to 3,816,520,000 bushels, that is a net reduction in 1960 of 588 million bushels. That is a net reduction from last year's crop. It gets this thing down below our total use of last year. Here is the interesting thing. You not only cut the total amount of corn in the hands of the producers by 588 million bushels, but in order to do it, you have to use 801,092,000 bushels of corn that is in Government bins. So you cut the amount that is in the farmers' bins by 588 million bushels, and you cut the amount that is in Government bins by 801,092,000 bushels. And if you add those together, it gives you a net change in position on your surplus of corn of 1,389,092,000 bushels.

The CHAIRMAN. What is the value of that?

Mr. LIVINGSTON. We will say $1 a bushel. Let us rough it off at $1 a bushel.

The CHAIRMAN. In the corn program we propose to have 1,389,092,000.

Mr. LIVINGSTON. So far as the Government treasury is concerned, but we already have the corn. So it is only a bookkeeping entry. The CHAIRMAN. I am not arguing with you.

Mr. LIVINGSTON. I understand that. I want to point out that you simply use the corn for money, but it does require, from an appropriation standpoint, a transfer of a capital asset over into the cash register, and from the standpoint of the total appropriation dollar, we would still have to consider that we might be buying it over again.

Mr. POAGE. Would you apply the same principle to wheat, cotton, rice, and peanuts?

Mr. LIVINGSTON. Absolutely. I do not see any reason why they

could not do it.

Mr. POAGE. The only question is the cost.

Mr. LIVINGSTON. Yes.

Mr. POAGE. I think that everybody would like to have the privilege you propose for corn producers. Do you think that other farmers would want the same treatment?

Mr. LIVINGSTON. I am quite sure that they would go for it.

The CHAIRMAN. Do you not think that the figure of 80 percent that you have is rather high on your normal yield?

Mr. LIVINGSTON. No, because here is another sheet which

in front of you showing the breakdown for the farmer. The CHAIRMAN. Which sheet is that?

you have

Mr. LIVINGSTON. This is on the other sheet, Mr. Chairman. I have a breakdown here roughly of the cost to do this.

The CHAIRMAN. We have a bill that provides a payment in kind program of two-thirds of the normal yield.

Mr. LIVINGSTON. Two-thirds, that is right.

Mr. ALBERT. Can I ask about the figures here? On the first page, you have an average of 77,996,000. It looks like that the next year it would be higher than that. Have you included the diverted acreage there?

Mr. LIVINGSTON. To be honest with you, I do not know. I took just gross figures here on this sheet.

Mr. HOEVEN. They are included.

Mr. LIVINGSTON. They are included.

Mr. ALBERT. Are the diverted acres included in that item?
Mr. HOEVEN. Yes.

Mr. LIVINGSTON. They are included.

You understand, I do not represent any organization. I do not have a secretary. This is just a hobby, and I am paying my own expenses and everything else, because I think that we are headed in the right direction on it.

So the diverted acres are included in this.

To go back to the subject of wheat for a minute, I think that there are two things or two opportunities on wheat. Any wheat that is milling wheat could be used under a similar type of formula, and the feed wheat, the wheat that is not milling wheat, could be used as feed wheat on one condition, and that is that it be used to put feed grain acres out of production; in other words, to get the producer of feed grains to accept wheat in lieu of corn or milo, and to put either corn or milo acreage out of production, and then you could get rid of your wheat without upsetting the feed grain market, that is, feed grain wheat without upsetting the feed grain market, and there is not any other way that you can do it.

The CHAIRMAN. You have 80 percent of the normal yield. How do you justify that figure?

Mr. LIVINGSTON. Well, because it is a high payment, you might say you could work this thing down reasonably fast. I have no objection to any other farm plan. I am just trying to get an interim plan. The CHAIRMAN. I am not arguing the point. You put it at 80 percent because you want to make the program attractive?

Mr. LIVINGSTON. Yes.

The CHAIRMAN. So that the farmer will reduce the acreage?

Mr. LIVINGSTON. Exactly.

The CHAIRMAN. That is the way I have always though about our price supports program, that you should have higher levels.

Mr. LIVINGSTON. That is exactly right.

The CHAIRMAN. You know how we have run head on, on that proposition with Mr. Benson?

Mr. LIVINGSTON. Yes.

The CHAIRMAN. That is, every time we have proposed that. I regard it as an inducement to reduce the acreage.

Mr. LIVINGSTON. That is exactly what will happen here. The more inducement you put on it, the faster you will reduce it.

The CHAIRMAN. The Secretary sat here in the committee room and did not agree with you. I believe that when you need to reduce, make the inducement high, and when you need to increase, make it less attractive. However, I do not believe that we will ever sell this to Mr. Benson.

Mr. LIVINGSTON. I am not qualified to say what Mr. Benson will or will not do.

The CHAIRMAN. I know that one of the authors of this bill has more influence down there than I do.

Mr. LIVINGSTON. The only thing that I have tried to do as a corn farmer from the Middle West is to produce a basic plan that will get the job done without using any new money, really, because what we are using is the grain and the stuff that we already have to pay with. Mr. HOEVEN. May I suggest that you refer to your second table, where you show the breakdown on a particular farm?

Mr. LIVINGSTON. Yes. I think that this is quite important; this second sheet. It is an example of a 100-acre farm. Here is what happened under this setup.

For 1959, a production on 100 acres of corn at 50 bushels per acre, would give him 5,000 bushels of corn.

Now, under this program in 1960, he would voluntarily cut 10 acres off, because the base is down 10 percent, as you see on this sheet, so he automatically cuts 10 percent or 500 bushels that he reduced, if he produces the same number of bushels.

Now take the 75 percent of this acreage that is left, 75 per cent of 90 acres at 67.5, that is, the number of acres at 50 bushels an acre, that gives him 3,375 bushels that he raises on the 75 percent.

Then 25 percent of 90 acres is 22.5 acres that he is going to put out of production, but for putting it out of production, he is going to get back 900 bushels of corn or 80 percent of that yield of 50 bushels; so, therefore, he is going to wind up with 4,275 bushels, and his net reduction in production is 725 bushels.

However, now go down a little bit below where I have made some rough estimates as to where he is coming out dollarwise.

If he takes the 10 percent voluntary reduction, which is 10 acres and then reduces it 25 percent, that is 22.5 acres, making a total reduc tion in acreage of 33.5 acres.

Now, then, let us suppose that he puts on 15 pounds of alfalfa, which is pretty high in our part of the country-usually it is 12, at let us say 30 cents per pound for the 15 pounds to the acre, and that is $4.50 for that. And say that he puts on a bushel and a half cover crop, that is another $1 and let us say that he spends $9.50 for gas and his time and labor, and for the tractor for disking and seedingdisking it in and harrowing in getting the crop in. And he has no harvesting costs, because he cannot harvest it.

Then some time during the summer, he will have to clip it under the regulations under which this would take place. So let us say it costs him $2 an acre to clip, which is high.

There you have a total of $16 an acre that he will put out in money. He gets 900 bushels of corn for doing it. Let us say that it is only $1 a bushel and that is $900, so that leaves him with $380 net under the bill.

Another thing about it is that this is not going to interfere with the small town businessmen, then men who sell the hardware and the machinery. It is not a crash program designed to do it all at once. It is designed to keep this thing going along evenly.

The CHAIRMAN. That is based on the value of the normal yield? Mr. LIVINGSTON. Yes.

The CHAIRMAN. Now you come down to the second part, and you minimize the cost of production, and you say that it costs $16 an acre to produce this corn.

Mr. LIVINGSTON. No, no, this $16 an acre, Mr. Chairman, is to put that acre out of production-it is just for seeding it down and getting it into the soil conservation practice.

The CHAIRMAN. In other words, you are giving him 80 percent of the normal value of his normal yield. He has costs for fertilizer and nitrogen.

Mr. LIVINGSTON. Normally, you would not do much of that where you are seeding down on a deal like this.

The CHAIRMAN. It will be done.

Mr. LIVINGSTON. I see. That is wonderful. That is fine.

The CHAIRMAN. I do not believe you can operate a program on that basis.

Mr. JONES. How are you going to have any assurance that he will not increase the yield on the 75 percent that he keeps? That is onething that I have been worried about. In acreage reduction, acreage conservation, every time we take acreage out of one place on the farm, we increase the yield on another place on the farm. What will you do to keep him from maintaining his normal production on the 75 percent remaining?

Mr. LIVINGSTON. Frankly, there is no provision in the bill for that. I do not think that we can do anything about it. You might get a slight increase-some of these men might go out and increase it some, but where you are paying a man practically his normal net profit on what he is taking out of production, he is not liable to increase production on the rest of the acreage, as it has been under the old program, where we did not pay so much.

Mr. JONES. I want to be assured that he does not use the money that he gets from the Government to increase his yield on the other parts of his farm. It has been done in the past.

The CHAIRMAN. You would not object to an amendment, such as that, to be put into the bill to prevent that, would you?

Mr. LIVINGSTON. So far as I am concerned, no.

Mr. JONES. You have 25 percent out and you are going to farm 75 percent. He is going to increase his yield, so that the figures on the normal yield will not be applicable.

Mr. LIVINGSTON. Well, now, there is another angle to this that we do not want to overlook.

Under the provisions of this bill, and practically every other bill that I have read, the farmer gets a certificate and it is a nonnegotiable certificate, until the end of the crop year. In other words, he does not get any money in the spring except just barely enough for his fee.

Mr. JONES. If you were to put something in there that you are going to pay this man with a payment in kind, and he is going to get

that payment in kind if he has not increased his production on other parts of the farm, all right, but where the yield on the other parts of the farm have increased, you would deduct that from the payment in kind, then I think that you would have a program that would work. Mr. LIVINGSTON. In theory, that would be swell. And if there were someway to do it at the local ASC office level, within the scope of the facilities they have, all right, but I am really not qualified to say whether that could be done at that level at this moment.

Mr. JONES. You say here that he has 75 percent of his acres, and he is going to produce 50 bushels per acre, and that he will produce so much and then you will pay him in kind 900 bushels. If he produces 3,500 bushels of corn on the 75, then we would reduce this 900 to 775 to come out with the same figure at the bottom. If you do that, I think that the program will work. And I think that you can sell it to the public. I do not think that you will sell it where you will permit unlimited production on the acres that he is going to cultivate, and then pay him with payment in kind. I think that could do that to make the whole thing come out right.

you

It is

Mr. LIVINGSTON. I will go along with your basic thinking. swell. But here is one of the difficulties you would run into trying to fix it on a bushelage basis. This man might go out and not put on any fertilizer on the rest of his farm anymore than he has been putting on the basic 75 acres, and yet this may be a drought year or a real dry year and he still would come up with a real low yield on the other 75. On the other hand, another man who does not put on extra fertilizer and has rain, gets 10 bushels per acre more where it was not because of fertilizer. We have there the weather factor that from an overall standpoint will balance it out.

Getting back to the figures for national production and the production yield per acre, while we have been going up every year on the production yield per acre, 3 or 4 bushels per year, supposing we went up one or two bushels more, we would still be getting well pretty fast.

The CHAIRMAN. Let me interrupt you. I do not believe that you can possibly conceive of any Federal law that would retard or restrict the profits that he is now making on the farm. We have heard a lot about reducing the acreage and increasing the yield. That is perfectly logical to me. You could restrict the man from the use of the land that is taken out under this program, but it seems to me that you are going beyond all reason.

Mr. LIVINGSTON. I keep coming back to one thought. The only reason we are having hearings today is because we have surpluses in the country. If we did not have surpluses, we would not be having farm problems and we would not be having hearings. So, therefore, we have got them. And this is a simple, quick, easy way of getting out from under them without hurting anybody.

The CHAIRMAN. You say that it will not hurt anybody. It will amount to over $1 billion of the taxpayers' money.

Last year we had a bill dealing with another commodity, wheat, and my recollection is that it provided for a 25 percent reduction. Mr. ALBERT. Yes.