“REAGE gains m M” Thesis {or 53:19 Dogma o? M S. ‘ u xtm‘z s 2v v :1! I] “4 EM 3: mm b W I « I H NIO 1 H0 «H9 2 m3 Wm H! II If”! Y J ichigan State L I B R ‘4 P. University M E WHEAT ACREAGE SHIFTS IN PECHIGAN AND THE DIPLICATIONS By Eber W. Eldridge A THESIS Submitted to the College of Agriculture, Michigan State University of Agriculture and.Applied Sciences in partial fulfillment of the requirements for the degree of METER OF SCIENCE Department of Agricultural Economics 1957 / * 74-3" 3") G-JTY‘T‘S ACKNOWLEDGMENTS The author wishes to express his appreciation to his major professor, Dr. Lawrence Witt under whose guidance and direction.this study was made. Special thanks are due Dr. Dale E. Hathaway whose assistance and suggestions were greatly appreciated. Appreciation is also expressed to the personnel of the Agricultural Stabilization and Conservation offices in Kalamazoo, Livingston, Sanilac, Gratiot and Isabella counties, and in the state office located in Lansing for their splendid cooperation with this project. WHEAT ACREAGE SHIFTS IN I~EICHIGAN AND THE DIPLICATIONS By Eber w. Eldridge AN ABSTRACT Submitted to the College of Agriculture, Michigan State University of Agriculture and Applied Sciences in partial fulfillment of the requirements for the degree of new: OF SCIENCE Department of Agricultural Economics Year 1957 Approved XMM Wfléf ABSTRACT The records of 978 farms in four areas of southern Michigan were compiled and examined. This data was made available through the COOperation of the county ASC offices. The wheat acreage from 1951 through 1957 and the farm allotments from 19Sh through 1957 were examined as a basis for supporting the hypotheses; (1) Since the use of marketing quotas a greater percentage of the wheat acres are located in farms with lS-acre allotments and less, and (2) Wheat acres are shifting from areas of specialized wheat production to areas of less specialized wheat production as a result of the acreage allotment and marketing quota program. Three types of shifts are occurring: 1. There is a shift of wheat acres away from the larger farms to the smaller farms. Farms of over 180 acres had wheat acreage curtailed by N6 per cent from their 1951-1953 average. Farms 70 acres and under have been curtailed only 19 percent. 2. There is a shift in wheat acres from one area in Michigan to another. Kalamazoo and Livingston counties have been increasing wheat acres slow y but have not exceeded their allotment in any year since marketing quotas were applied. Sanilac and Gratiot-Isabella have increased their planting at a much more rapid rate. The former exceeded its allotment by 10 percent in 1957 while the latter exceeded its allotment by 2b percent the same year. iv 3. There appears to be a relative shift in wheat acres harvested from the specialized wheat regions to the less specialized wheat regions in the United States. During the last three years Kansas harvested 75 percent of the state's allotment while Michigan was harvesting 102 percent. During the same period the four states, Ohio, Indiana, Illinois, and Michigan, harvested 78 percent of their pre-quota 10-year average while Kansas, Nebraska, North Dakota, and Oklahoma were harvesting 65 percent of their 10-year pre-quota average. These shifts have implied effects on income distribution and efficiency. Income distribution is likely to shift in the same direction as the shift in wheat acres. The degree of this income shifting will depend on the availability of alternative crops and the use of new technology. Specialization has been curtailed on the larger farms, while the smaller farms are able to gain in their competitive position relative to large farms. The control program may change the comparative efficiencies of the large and small farms. TABIE OF COI‘JTENTS CHAPTER I INTRODUCTIOI\IOOOOO00...O...000......OOOOOOOOOOOOOOOOOO COnSidering'the ProblemOOOOOoooo00.000000000000000 ObjectiveS.......................................o The HypotheSiS..’................................oo Importance of Wheat in Fichigan................... II RACKGROIHJD IIQFORI‘ELXTIOI‘IOOOOOOOOO0.0.0.0000.00.00.00.00 Problems Arising From a Supported Price Program... The surplus prOblemoooooooooooooocoo.00.00.0000. The trade prOblemaooooooooooocoooooooooooooooooo Production control problemS..................... The discrimination prOblemoooo0.0000000000000000 Non-farm to farm trans-fersooooooooo00000000000 Farm-to-farm trans-fersooooo00000000000000.0000 legislative BaCkground-ooooooooooo00.000.000.000... Excemts from Related Stlldiescooo00.000.000.000... III PROCEDIIRESOCOOOOOOOO0.0...O..00...00.000000000000000. The SmlGOOOO.OOOOCOOOOOOOOOOOO0.0.0....0.0.0.... Framework 0f Assumptions...cocoooooooooooooooooooo IV POSSIBLE EFFECTS OF SUPPORT AND CONTROL PROGRAMS-coo. Possible Effects on Income Distribution........... Possible Effects on Efficiency.................... V m DATAOOOOOOOOOOOOOOOOCOOOOOOOOOOOOOOOOOOOOOOOOO... Shifts in Acreage Prior to Allotments............. Relation of Farm Size to Allotment Size........... Shifts in Wheat AcreSoooooooooo0.0000000000000000. Farm to farmoooooooo000.000.000.000...0000.000. Area t0 area..................................o Overplantingoooooooooooooooo000000000.oooooooooooo Related to farm size........................... Related to area................................ Related to allOtmemooooooooooooooooo0000.00.00 1957 Acres Compared With Preallotment Acres....... Trends in.A110tment 81230000000000.00000000000.... Regional Comparisons of Wheat Acreage Shifts...... Potential Wheat Increases in MiChiganooooooooooooo Page m tel—1H oo two-q WM MCI) b.) \J'L Cu» V)O\ a a ‘ ' . -. - . ~ 2 ‘ ' . . . - n - ~ - » I 00.9: , - . u H - . ; -. ’3 Q ~ I! I O I O n o I . n o . . 0 r o a o I ‘ A O U I . . l‘ I! t 0 G O - n W 9 a ~ ~ 0 S a 4 - . o I Q " ’ N c Q ~ 3 'l t . h Rh.an q I O . v Q g a t I‘ V O ‘ O '3 9 O 'l I Q I t a I . roo- TABLE OF CONTENTS - Continued CHAPTER Page VI SUM-EARY AND COI-TCLUSIONS............................... 6h Shifts in Wheat Acres.cooooooooooo0.000000000000000 6h Shifts from large to small farms................ 6h Shifts between areas of Michigan................ 65 Shifts between specialized and non-specialized areas Of the United StateS................... 6? Implications Of These Sh-iftsooooooooooooooo00.00000 68 EffeCtS On Income Distribution.................. 69 Effects on Efficiency................."no"... 70 BIBIIIOGRAPIIYOCOCOOCO0.0.0...0.0.0.0....0.00.00.00.00...0.0.0.... 72 APEMICESCCOCOOOOOO00......OOOOOOOOOOOOOOOOOOOOOOOOOOQOOOOOOOOC 7h sun 7". p n TABLE (h \n Cr to 10a 10b ll 12 13 LIST OF TABLES Shifts in Acreage Prior to Allotments-qul Sample Farms.. Comparison of Wheat Acreage Changes on Farms With 15 Acres and Under of Wheat With Farms of Over 15 Acres 0f Wheat PI‘ior to AHOtmentSoooooooooooo00000000000000 Relation of Farm Size in Each Area to Allotment Size..... Shifts in Wheat Acres Related to Farm Size by Years...... Shifts in Wheat Acres and Allotment by Area.............. Comparison by'Area-AWheat Acres Percentage of Allotment, l95h'57oooooo0000000000000000000000000000000000000000. Comparison of Overplanting on Farms of the Three Size GroupSCCOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO Comparison of Percentage of 1957 Wheat acres to Their 1951-53 Average Wheat Acres on Farm That Overplanted in 19570000000000.0000000000000000.000000000000000.-00 Overplanting on Farms 15.Acres Allotment and Under Overplanting on Farms With Over 15 Acre Allotment........ Farms With Less Than 15 Acres of Wheat, 1951-53 Average, Compared With the 1957 Acreage of the Same Farms....u Fifteen Wheat Acres and»Underlooooooooo0.0000000000000000 Trends in AllOtment SiZGCOOOOOOOOOOOOOOOOOOOOOOOOOOOOO... Comparison of Regional Harvested Acreage and.Allotments.. Potential Increase in Wheat Acres Under 15 Acre and 30 Acre Ifinj-mum Acreage......00....000000.0.0.0...00.O... Page 12 143 145 he h7 AB 50 51 52 55 56 S7 S9 61 'IQQI‘O DfiiOVOVC 1 9 II Q '! I a u a a I 'I I C " 1 fl , . , O O I" C 4" I o I ‘ O D O " a 0.... .lth F'Of’. CHAPTER I INTRODUCTION Considering the Problem Farmers in the United States who are less than 50 years of age have never Operated a farm in an unsupported.market. Price supports and their companion feature, production controls, have become nearly as much a part of American agriculture as tilling the soil. Society believes these programs are necessary because of the "problems" in agriculture. Basic agricultural imbalances can be placed into three broad categories:1 1. The low income farmer situation, or income distribution problem 2. Producing the wrong combination of farm.products 3. Too many total resources devoted to agriculture (too much total production for the prices farmers want to receive) From 1951 until the present, 1957, the general price level has been remarkably stable. Non-farm incomes have been rising steadily (about 12 per cent since 1951). The Gross National Product has been steadily increasing: l95h, $359 billion; 1955, $387 billion; 1956, $h15 billion. Against this framework of prosperity, farm prices declined 19 per cent between 1951 and 1956. In Spite of the 11 billion lWallace Ogg, "The Farm Situation", Farm Policy Forum, (Summer, 1956), pp. 2-h. - 2 - dollars worth of farm commodities purchased by the government, farm income declined from 1h billion in 1951 to 10.7 billion in 1955. In the attempt to alleviate the income situation, allotments and marketing quotas are the most widely used instruments of United States price policy. These programs, chiefly emphasizing acreage allotments but sometimes augmented by marketing quotas and.marketing agreements, have been applied to the politically designated "basic crops"--wheat, corn, cotton, tobacco, peanuts, and rice. Curtailing output below the level of normal supply will result in a larger total revenue because of the inelastic demand of most agricultural COWIIOdit ies . The success of production controls in utilizing this principle depends on the effectiveness with which supply can be regulated by controlling acreage. However, because of the elasticity of supply and advances in technology, he production often.exceeded that which was eXpected at a fixed price. If the demand for a farm product is quite inelastic, a small reduction in output will result in a large increase in price with a gain in total revenue. If the supply curve is relatively elas- tic, pegging prices above the equilibrium level will call forth a.huge surplus. In 1957 our agricultural price policies are receiving a more thorough scrutiny than ever before. This is being done by legislators, farm organizations, administrators, economists, and the general public. "Are these programs doing what we want done?" is the big question. Before the answer to this question can.be approached an attempt -3- must be made to determine the goals of society toward which these programs are directed. In this study a belief regarding these goals and values will be expressed and discussed. The second part of the answer involves the actual results of price programs. Do production controls control the supply of the commodity? Do controls have any effect in total agricultural pro- duction? Do they change the pattern of production which exists? This study will be devoted to the effects of marketing quota- acreage allotment in the production.pattern of wheat as indicated by a study of 978 Kichigan farms. With the present marketing quota regulation on wheat, every farmer can grow a minimum of 15 acres of wheat without penalty. This is not eXpected to have much effect in a specialized wheat state such as Kansas. But how much effect will it have in Michigan where 8h percent of the farms plant 15 acres or less?2 .Are these farms under 15 acres growing the maximum? If so, does this increase nullify the reduction on farms with more than 15 acre allotments? It is the purpose of this study to examine this problem. Objectives The primary objective of this study is to examine the shifts of wheat acres between 1951 and 1957 in four areas of southern Michigan with particular emphasis on comparing those farms under 15 acres allotment with those farms over 15 acres allotment. 2Commodity Stabilization Service, USDA. For the year, 1955. Letter from Raymond J. Pellock, Director, Grain Division. See appendix. -24.. From this examination an attempt will he made to draw conclu- sions regarding: (l) the effect of the 15 acre minimum on causing wheat sacres to shift in Michigan (2) the possibility of acreage allotment-marketing quota programs causing: a. a shift in wheat acres from larger farms to smaller farms in.Kichigan b. a shift in wheat acres from areas of specialized wheat farms to areas of less specialized wheat farms, such as the shift from Kansas to Kichigan (3) the effect of marketing quota-acreage allotment programs on income distribution and efficiency. An attempt will be made to relate the possibility of these programs causing income shifts within hichigan and income shifts between regions of the United States. The Hypothesis If relatively high price supports (in terms of percentage of parity) continue and if the prices of other farm produced commodities remain in approximately he same price position relative to wheat, and if marketing quota-acreage allotments remain in effect with 15 acre minimum on wheat, a greater percentage of the wheat acres will be located on farms with less than 15 acre allotments. The assumption will be made in this study that the farms with the larger wheat acreages are more specialized in the production of wheat. ‘With this assumption in mind it can be hypothesized that wheat acres are shifting from the areas with farms of more Specialized wheat production to areas with farms of less Specialized wheat pro- duction as a result of the marketing quota—acreage allotment program. Importance of Uheat in ITichigan3 Kichigan farmers in 1955 produced 27,966,000 bushels of wheat on 9h8 000 acres. This gave hichigan a rank of ninth in the United States in.production and twelfth in total acres of winter wheat. Within the state wheat ranked second to corn with a total value of 5h,53h,000 dollars. Iichigan wheat acreage went up 50 per cent from l9h6 to 19h? and more than doubled from l9h2 to 1952. In cash receipts from farm nar- getings, wheat ranked first in the state and approximately double 1' the receipts of dry beans and corn. wheat accounts for approximately 25 per cent of the cash receipts from crops and 10 per cent of total cash receints. Cash receipts from livestock and livestock products are about 50 per cent larger than cash receipts from all crops. Shoat makes an important contribution to the income of the 32~Iichigan Agricultural Statistics, Ilichigan Department of Agriculture, Jul;, 1956, pp. 5e6. "KAPTIR II “‘fi—PfiaiAvvfim $1‘r‘qA-jsrgm-v-AsY 1.».va J:«\ :41. 'U I. u- K-~.»¥.L.L'sll Problems Arising from a Supported Price Progra*n Public information sources mate frequent reference to the "far. n problem". The "farm problem" actually consists of a series of verv cornp olicated problems all interwoven to sore de Jee. Some of hese farm proClers are sa lto be caused bg' governmcnt programs tha.t were installed to alleviate th 1e agricultural situation. Problems which arise from marketing quota-acreage allotment programs are quite uni- forml; recognized. J. K. Galbraith states: There are four faults to the old program which were of commanding importance. I venture to suggest that there would be considerable measure of agreement on the list as follows: 1. the surplus problem the control problem 2 3. the trade problem h b. the discrimination problem The surplus problem.-Jar Speeded our saift to mechanization and stimulated adoption of improved technology with marked effects on productivity and output. This trend has continued unabated. ‘Nar ex- pansion improved productivity, and coupled with the rather prompt re- covery of European agriculture from the disruptions of war, meant a hJ. K. Galbraith, "Farm Policy, the Current Position", Journal 2£_Farm Economics, .‘VVII(I°3, 1955) p. 293. - 6 - - 7 _ return of surpluses in the late l9h0's. Korea interrupted this, but only temporarily. By 1952 we again were piling up stocks under the price support program. Although the foreign demand for our agricultural commodities decreased sharply when foreign countries rebuilt production, there was no decrease in production in the United States. Our agricultural production continued to increase under the stimulation from incentive price support programs. In two years, from the 1951 Korean export peak to 1953, the United States lost foreign outlets for the output of 22 million acres. The result was a large accumulation of surpluses. Without numerous subsidized export programs United States exports would have remained low and our surplus stock would have continued to increase. If price supports had been removed and the surpluses thrown on the market, prices would have declined drastically with harmful effects on the incomes of producers both in the United States and other countries. Because of the numerous export programs and resulting increase in shippinss abroad, a general increase in surpluses has been prevented even though production has remained at high levels. For some com- modities, rice and cotton for example, stocks are being reduced but for others, notably wheat, feed grains, and tobacco, excess stocks are practically as great as they were when export programs were launched. The excess supply of wheat has not been reduced materially despite the fact that wheat is the most widely used commodity in the special export programs. The carry-over into the 1956-1957 crop was more than 1 billion bushels. Exports are markedly higher this year than last but the prOSpects are that total domestic consumption plus - 8 _ exports will not be large enough to appreciably reduce the surplus. Thus the carry-over into the 1957-1958 crop year is expected to remain close to 1 billion bushels. For feed grains, the supply, crop, and carry-over this year is greater than probable domestic consumptions and exports. The problems caused by surpluses are difficult for many people to understand. As stated by Lawrence Witt: Farm people in particular believe the ample food and a full stomach must somehow be a definite benefit to international good will They fail to recognize that food eXports can also create problems.§ The trade problem.-The rapidly increasing surpluses naturally threw the spotlight on exports in the hope that they might provide an easy way out of the dilemma. This is eSpecially so for such pro- ducts as cotton, wheat, tobacco, rice, fats and oils, and some fruits and vegetables which we have been accustomed to exporting. The United States was unable to maintain a competitive position in world.agricultural trade partly because of United States price supports but also because of dollar shortages, import restrictions, bi-lateral trading arrangements and numerous other barriers to trade in United States farm products. Special types of programs to stimu- late eXports of United States agriculturalgroducts have therefore been undertaken. In three fiscal years, l95h—l956, these programs moved over 3 billion dollars of farm.products into export channels. This amounted to hO per cent of the total agricultural exports. SLawrenceWitt "What Are Our Alternatives?", Farm Policy Forum (Spring, 1957;, p. 27. - 9 - The ambitious government sponsored export programs have marked effects and consequences not only here in the United States but also in the receiving countries and in other agricultural exporting coun- tries. They have affected the general pattern of world trade in agricultural products and.they have had an impact on the relations between the United States and many foreign countries. well over half of the record level of exports in 1956-1957 were made under the Special disposal programs of Public Law h80, section hOZ of the Hutual Security Act, and sales at competitive prices by the Commodity Credit Corporation. In 1955-1956 shipments under Public Law hBO and section hOZ accounted for approximately 70 per cent of the exports of wheat and dairy products and approximately 60 per cent of the exports of coarse grains, cotton, and rice. Howard E. Tolley of the National Planning Association reports: The export drive has brought an increase in the United States' share of total world trade in several commodities. On the other hand available statistics indicate that to date exports from other countries have not declined seriously and world prices have been relatively stable. For example, world trade in wheat exports has increased from about 25 per cent in 1953-195h to more than 33 per cent in the current year, 1956-1957. During this period, Canadian exports have held about even. Similarly world trade in rice has risen each year since 1953. Our rice exports and our share in world trade declined from 53 to 56, but in the current year our exports have shown a marked increase. he problem in connection with trade is this: rapidly mounting surpluses held by the Commodity Credit Corporation have had an un- settling effect upon foreign governments. It is feared that we might 6Howard H. Tolley, "Results of Our Farm Export Programs", Farm Policy Forum.(Spring, 1957), p. 20. - lO - someday find the surpluses intolerable and launch an all-out dumping program to get rid of them. This sense of uneasiness is shared by agricultural producers in the United States and abroad who have no way of knowing what the ultimate solution will be or how their operations will be affected. It is feared that our increasing emphasis on exports will dis- place the exports from some of thefhnaign countries. Great harm can be done to the economies of friendly and neutral countries if we de- prive them of important export markets, or if through miscalculations we should materially reduce world commodity prices. These dangers should not be discounted merely because they have been avoided thus far; continued caution will be required in the future. Another problem is the cost. The cost of the program to the government is large. Commodities acquired at price support levels and held in storage for varying periods are sold at competitive prices. Sales for foreign currencies and barter transactions are made at eXport market value. The Commodity Credit Corporation incurs sub- stantial losses for storage and transportation. Cash subsidies are paid on exports under the Internation Uheat Agreement. The government receives no payment for grants, for emergency relief or donations to voluntary agencies for needy persons abroad. The vigorous export program is playing an important role in dis- pOSing of surpluses. Even if continued for a period of years it alone cannot be expected to solve the surplus problem. he problem of balancing agricultural production with consumption can be solved by a many sided approach including significant adjustments in the production of many commoditie s . Production control problems.-When an agricultural crop is sup- ported at a price above the equilibrium price for that commodity, too many resources will be devoted to the production of that crop. As a result more of that crop is produced than society wishes to consume at the established price. This has caused the surplus problem and brought to attention the various means of controlling production. The customary way of controlling production has been to limit the use of one of the resources used in production of that particular agricultural crOp, namely land. There are two ways of looking at control programs: (1) the effectiveness in controlling acres, and (2) the effectiveness in controlling total production. The extent to which acreages are reduced depends upon compliance with the program. According to a report of the North Central Farm Management Committee: The proportion of wheat producers who complied with their wheat acreage allotments varied greatly among the six states studied. Compliance by the farmers in Kansas who were inter- viewed was virtually complete, 99 per cent canplied. The lowest percentages of compliance were in Indiana and Michigan where only slightly more than half of the wheat producers complied with their allotments.7 Compliance with programs is closely associated. with penalties involved and the number of alternative crops available. In the case 7"Farmers' Reaction to Acreage Allotments", A report by the Subcommittee on Diverted Acres, North Central Farm Management Research Committee, December, 1955. (Iexington, Ientucky: Kentucky Agriculture Echeriment Station), p. 6. -12.. of wheat, the marketing quota—acreage allotment program reduced the harvested acreage 30 per cent between 1953 and 1955. Large reductions in acreages of wheat were made in all of the specialized wheat areas as a result of the control program. Although acreages have been successfully controlled on a single crop, this has had very little effect on total agricultural production because the diverted acres have been employed effectively to produce other agricultural commodities. According to the Department of Agri- culture report: Despite important shifts in acreage of individual crops, allotment programs have affected major uses of land very little. The total planted acreage of all field crops de- creased only 1 per cent from 1953 to 1955. Relatively little land was shifted from harvested acres to pasture. As a result of acreage controls the uses of land changed. Acres devoted to particular crops were reduced, but total agricultural acres for agricultural production was not significantly decreased. It becomes evident that one must look at the control problem not from acres alone but from a standpoint of total production. Allot- ment programs that control acreage do not always control production to the same degree which acreage is reduced even in a particular crop.9 8"Effects of Acreage Allotment Programs, 195).; and 195 ", Sgimixffy Re ort Production Research Report 319. _3_, United States Departmen o Wture,TgricMesearch Service (June, 1956), p. 6. 9Research evaluating the effectiveness of production controls includes T. W. Schultz and O. H. Brownlee, "Effects of Crop Acreage Control Features of AAA on Feed Production in Eleven Midwest States", ricultural E eriment Station Research Bulletin liq. g_9_8_ (Ames, Iowa: ipril, I955}; E. E. gandow and E. W. Lume, "The Effects of the 1951; Acreage Restrictions on Crop Production in Southeastern Pennsylvania", Progress Re ort No. 128 (State College of Pennsylvania: Agricultural Expefimen'ET—t atiBH, member, 1951;); and, Dale E. Hathaway, "The Effects of Agricultural Production Controls in 195).; on Four Michigan - 13 - With acreage restricted producers tend to step up the use of ferti- lizer and other yield-increasing practices. Yields of wheat increased by 15 per cent and yields of cotton by 28 per cent between 1953 and 1955. Much of this increase in yield probably would have been accomplished without acreage allotments but the allotment programs undoubtedly accelerated the use of yield-increasing practices. Between 1953 and 1955 the production of the four allotment crops, corn, wheat, cotton, and rice, decreased 8 per cent. However, the production of seven non-allotment crops increased by 23 per cent. The result of combining the ll crops was an increase of l per cent in total. agricultural production in spite of marketing quotas and acreage allot- ments. The problem of controlling production was described by J. K. Galbraith as follows : Either the controls were politically acceptable and not very effective or they were effective and politically disagreeable. The recent experience with controls over diverted acreage and its abandonment during thelslection campaign suggests the nature of this difficulty. 11:12 discrimination problem-(or the transfer of income and assets) The free market is generally considered an allocator of incane and assets between individuals and groups. Occasionally society has decided through the democratic process that the resulting allocation was not equitable. Consequently, measures were taken to change this distri- bution. One of these measures is the agricultural price support pro- gram. Farming Areas", Quarter Bulletin, Michigan Agricultural Experi- ment Station (May, 195 , pp. - 3. 10.1. K. Galbraith, 92.213. -11” During the year ending June 30, 1957, 3.3 billion dollarsll were Spent supporting agricultural commodities in the United States. This money, collected from tax sources, is an obvious redistribution of income from the non-farm sector to the farm sector of our economy. This is done because of a valuation that all sectors of our economy should share relatively equally and the belief that the fam sector of the economy was not sharing in this manner. Along with price supports we have production controls for certain crops. According to Dale Hathaway : The major reason for production controls on certain crops seems to be to keep the income transfers from the non-farm economy within the bounds of political feasibility. 0c- casionally this is not possible and the support program is ended, as was the potato program. In addition to the transfer from tax sources, there is another element of transfer from the non-farm to the farm economy resulting from production controls. This is true only if the production con- trols actually result in reducing total production. As a result of reduced total production, higher prices will be paid at the market place by purchasers of agricultural commodities. WEE-£3.31}. 152 Eng transfers.- Transfers from the non-farm sector to the farm sector are one type of transfer. There are also elements of income and asset transfers within agriculture that are inherent in the production control programs. These can be into region-to-region transfers and farm-to-farm transfers. One of the elements in the region-to-region —_ 11Quoted in g. 3. News EEC}. World Report, August 23, 1957, from U. 8. Treasury and USfiA sources. 12Dale E. Hathaway, "The Impact of Agricultural Production Controls on the Income and Asset Distribution Within Agriculture", unpublished article, Michigan State University. -15- transfer is the way in which allotments themselves are distributed. According to Dale Hathaway: An outstanding example is offered in the case of cotton in 195k. One of the more spectacular features in United States cotton production has been.the increase in production in the - west. Irrigation, technology that made possible the mechani- zation of cotton production, and relatively favorable prices brought a sharp increase in cotton acreage, particularly since world War II. Since total cotton acreage in the United States has had a downward trend since 1930, the western region has increased its percentage of total acreage even more sharply. Most of this increase in percentage came at the expense of the southeast region. Thus it would appear to be something more than coincidence that Congress provided that in voting on.marketing quotas for the 1950 crap growers.must have been producing cotton in.l9h8, thereby excluding some of the growers in the western region who might otherwise have voted down the marketing quotas rather than have their rapidly expanding acreage cut back. It is not surprising to expect that growers in the West might have ob- jected, since they were receiving a substantially larger cut (36 per cent) than most other regions. In any case the quota was approved and the Southeast and Delta regions' percentage of the reduced acreage increased.13 When it became apparent in the case of cotton that allotments and marketing quotas would be required on the 195k crop, a struggle took place in Congress between the western and Southeastern cotton areas. This trouble hinged.primarily on the income distribution as- pects of these allotments. The existing law declared a historical average would be the preceding five years excluding l9h9. Including l9h7 instead of 19h9 had significant implications re- garding income distribution. In l9h7, historical cereage for the west was only 57 per cent of its l9h9 acreage. The‘Western region in l9h9 reached its highest percentage of the national acreage and a new high for the West. Including l9h9 in the historical average would have given the western region a higher percentage of the allotment. 13Ibid. -16.. The issue was finally resolved in Congress in a conference cmmmittee by increasing the total national allotment, granting special additional acreage to the western region, and by Specifying that this Special additional acreage would not count in future his- torical allocations. The resulting reductions remained substantially against the'western regions and continued in 1955 and 1956 crops. Another element to be considered is the availability of new technology in varying degrees to the different regions. There exists between areas a difference in the possibilities for application of new technology. Cotton will again serve as an illustration for this type of shift. .A Southeastern region received a revised allotment for the 195h crop which amounted to 85 per cent of the acreage planted in 1952, while the Western regions were alloted 7h per cent of their 1952 acreage. Although the Eastern states produced only 77 per cent as much cotton as they had in 1952, the'Western states produced 88 per cent as much cotton in l95h on.7h.per cent of their 1952 acreage and the South- western regions exceeded.their 1952 production. A similar shift is taking place in the wheat producing areas. Twenty-three wheat producing states east of the Mississippi seeded 17.5 per cent of the wheat in 1952 and produced.23 per cent of the wheat harvested from that crop. These same states received 17.3 per cent of the total acreage alloted to wheat in.l95h and produced 30 per cent of the crop. There is a third element in the region-to-region shift. Not all regions have equal possibilities of falling back on altennative crops in case marketing quota-acreage allotments are applied. In some of the -17- specialized wheat areas in western Kansas hardly any alternative crOps exist. A.severe cut in acreage allotments means a severe cut in.farm income at a fixed price. In areas where numerous alternative crops exist, any one of which would produce approximately the same income as the wheat crop, marketing quotas and acreage allotment reductions in wheat would not as severly affect the farm income. Earmftggfarm transfers.-There is abundant evidence to prove a wide variation in the amount of benefit the farmers receive from price support. Fiftybone per cent of the wheat that was sold in Nebraska in l9h9 was produced by 19 per cent of the wheat farmers. Forty-nine per cent of the wheat that was sold.in Kansas in l9h9 was sold by 18 per cent of the wheat farmers. A small producer does not benefit from the price support program on a scale that approaches the benefit received.by the large producers. The many producers who raise none of the price supported.commodities for sale receive no benefit at all. many agricultural commodities are not supported in any way. One could argue that the livestock producer is actually penalized by buying supported feed and selling an unsupported product. Therefore, it can be argued that the non-farm sector of the economy as well as a large portion of the agricultural sector are paying taxes for’which a few agricultural producers receive the benefits. Another redistribution of income that occurs under'production control is due to the original provision of minimum acreages below which producers cannot be cut. The greater the number of years that a given production control program is in effect with yearly reductions and allotments, the more difficult this aspect of the program'becomes. The burley tobacco program is a good illustration of what happens -18... with minimum acreage provisions. The yield of burley has been in- creasing steadily from 19140 on. Because of this increase in yield, it has been necessary to continually decrease the acreage allotments for tobacco. In 1951» burley tobacco yields increased to an extent that it was found necessary to request Congress to authorize an additional reduction in the acreage for 1955. At that time the minimum acreage below which a grower could not be cut was .7 acres. It was pointed out that 80 per cent of the growers were already at the minimum; therefore, the other growers would be required to bear the entire burden of the additional 25 per cent reduction in acreage that was being proposed. There are incidents in cotton which illustrate the ultimate effects of minimum acreages. In North Carolina in 1951; only 20 out of 77 counties with cotton allotments had acreage remaining after establishing minimum allotments. In 1951; one county in Alabama used all of their allotments to establish a minimum leaving one grower who had 750 acres in 1953 with a five acre allotment in 1951;. In 1955 the cotton production control law was changed and county committees were given the authority to disregard acreage minimmns. It is one of the purposes of this study to ascertain whether or not a similar trend exists in the wheat situation. Another important factor in income distribution is the possibility that an allotment might become capitalized into the value of the fam. Before the allotment can become an asset of significant value, it must be an accepted fact that the program is of long duration. The price of the supported crop must be such that it would greatly increase the farm's income and few alternative crops would be available. Here again -19.. the burley tobacco control program gives the best examples. A case has been cited where the use of burley base for one year was offered to the highest bidder and the bids ranged from $100 to $176 per acre.1h Not all of this figure is the asset value of the allotment, but certainly some of it is implied. It should not be assumed that all acreage allotments have asset value. There is little evidence of any capitalization into the value of the farm for many of the supported commodities. At amt rate there is sufficient evidence that with one particular supported commodity, burley tobacco, the value of the allotment is an asset which affects the income transfer between farms. Legislative Background Most legislation that provides for price supports also provides forproduction controls. In the case of wheat, a national acreage allotment was required by law in the Agricultural Act of 1938, and was therein designated as: ...That acreage which the Secretary determines will, on the basis of the national average yield for wheat, produce an amount thereof adequate together with an estimated carry-over at the beginning of the marketing year for such crops and im- ports, to make available a supply for such marketing year equal to a normal year's domestic consumption and exports plus thirty per cent thereof. The national acreage allot- ment for em year shall not be less that 55 million acres.15 1’40. L. Johnson and C. B. Haver, "Decision Making Principles and Farm Management", Bulletin 522, Kentucky Agricultural Emeriment Station (1953), p. 31. 15The national acreage allotment for wheat for 1938 was set at 62,500,000 acres; special legislation provided a minimum of 62 million acres for 1951; only. The allotment for 1955 and 1956 was 55 million acres. -20.. The Secretary was directed to ascertain and proclaim, not later than July 15 of each marketing year, the total supply and normal supply of wheat for the marketing year and to proclaim the national acreage allotment for wheat.16 Acreage allotments for wheat have been in effect for the crop years 1938 through 19h3 inclusive, and for years 1950, 1951, 195b, 1955, 1956, and 1957. The 1951 allotments were terminated in January, 1951, and the 1955, 1956, and 1957 allotments were made inoperative in the noncommercial states. As Specified in the law of 1938, the national marketing quota for wheat consists of a normal year's domestic consumption and exports plus 30 per cent, less (1) the sum of the carry-over at the beginning of the marketing year, and (2) estimated amount which will be used on farms as seed or livestock feed during that year. Marketing quotas for wheat are required under the law, as of 19514, whenever (I) the total supply exceeds the normal supply by more than 20 per cent, or (2) the total supply for the marketing year is not less than the normal supply and the average farm price for three successive months of the marketing year has not exceeded 66 per cent of the parity price. Marketing quota provisions do not apply to an;r farm on which the acreage planted to wheat does not exceed 15 acres or the normal production of the acreage planted to wheat is less than 200 bushels. 16m the Agricultural Act of 1951;, Section 332 of the Agricultural Act of 1938 was amended to read "not later than May 15.u -21.. IMarketing quotas were in effect for wheat in the crop years l9hl, 19h2, 19h3, and in 195k through 1957. They have been proclaimed for 1958. The quotas for 19h3 were set, but the restrictions were removed before they could.be applied. The national wheat acreage allotment is allocated to states and the state allotment to counties according to the average wheat acreage in each state and county for the 10 years immediately preceding the year in which the allotment is decided.17 That is, the 1956 allotment was computed in 1955 according to statistics from.l9h5-l95h. Adjustments are made for abnormal weather, for trends in acreage, and for diversion under previous allotment programs. The state reserve for new farms is approximately 1000 acres. The Michigan 1958 allotment available for apportionment to counties is 965,008‘acres. The following procedure was used in apportioning this state allotment to counties: (1) The wheat history data used were the combination of Agricul- tural Marketing Service official estimates and.wheat acreage data obtained by Agricultural Stabilization Conservation committees, 12For example, the national wheat acreage allotment for 1956‘W35 determined by the following formula: Beginning stocks, July 1, 1956 950 m. bu. IIHPOI'tS ' 3 mo bu. Available without 1956 crop production. 953 m. bu. Normal year's domestic consumption and exports plus 30 per cent* 12h1 m. bu. Available stocks, July 1, 1956 - 953 m. bu. Needed from 1956 crop 288 m. bu. 288 m. bu. 5 15.5 (national average yield) g 18,580,6h5 acres needed. *Normal year's domestic consumption 675 m. bu. Normal year's exports 280 m. bu. Total 9?; m. bu. Plus 30 per cent 286 m. bu. 1m mo bu. Agriculture Stabilization and Conservation Office, February 28, 1956. .. 22 .- (2) Adjustments were made for abnormal weather, war crop credit, and diversion under previous allotment programs, (3) An average was obtained of the five-year, 1952-1956, and two- year, 1955-1956, acreages of wheat seeded in each county, (14) A. preliminary base acreage was established by adjusting, when necessary, the 10 year adjusted average acreage to within 98 per cent and 102 per cent of the 5 year plus 2 year average acreage, and (5) Adjustments of not more than 2 per cent were made from the preliminary base acreage for some counties by the State Committee. The total of the 1958 county base acreages established was 1,109,198 acres. The state scaling factor was obtained by dividing the state allotment available for apportionment to counties by the total of the county base acreages. This scaling factor, applied to each county base acreage to obtain the 1958 county allotment, was a .6799672’48 (this factor x the county base acreage :- the current county allotment). By the use of the above formula, the average 1958 county allotment is 68 per cent of the county~ adjusted base for the farms in the county on which allotments were required for the 1958 crop of wheat.18 The county wheat acreage allotment is divided among the farms in the county with each farm allotment based primarily on the farm's wheat history during the past four years. Marketing quotas are based on the acreage allotments. Quotas apply to all farms with more than 15 acres of wheat, in the commercial wheat states, since quotas were approved in the July referendum. (The law requires the Secretary to proclaim marketing quotas and hold a referendum when the total supply of wheat exceeds the normal supply by 1 more than 20 per cent). A penalty of .15 per cent of the parity price, 18USDA, Part VIII, letter No. 6, 1956. Wheat Acreage Allotments, State Administrative Officer, Wendell Becraft to county ASC officers, (Kansas). Method described herein is used with Michigan statistics supplied. -23- as of May 1, 1956, was assessed.against any excess wheat produced on a farm.19 The penalty rate on the 1957 crop excess wheat was $1.12 per bushel. Farmers with a 1957 wheat acreage in excess of their farm wheat allotment were given until June 1, 1957, to adjust their acreage into compliance. The excess wheat acreage could be plowed.under as green manure, pastured, or cut for hay. All of these methods used to reduce the wheat acreage are required to be carried out in such a 'way that the wheat does not reach.maturity. There are certain circumstances under which a growerlnay avoid the payment of the hS Per cent of parity penalty in the event he has overseeded his quota of wheat. Excess wheat produced in 1957 may be stored, at the producer's expense, and by doing so the producer will be allowed to postpone or to avoid the payment of the penalty. Excess wheat which is stored to postpone or avoid payment of the penalty must be kept in a place adapted to the storage of wheat and.may be inspected at any time by officers or employees of the United States Department of Agriculture or members, officers, or employees of the State or County Committee. There are two conditions under which a producer may later remove all or a portion of his marketing excess from storage without penalty: (1) By underplanting the farm acreage allotment for a subsequent crop, and (2) by producing a subsequent crop which is less than the normal production of the farm's acreage allotment. Under these circumstances a producer may remove from the storage without payment of penalty that lgAs Specified in the Act of 1938, the penalty for noncompliance under acreage allotments was loss of the price support. Under marketing quotas producers were to be penalized.with a fine forlnarketing or feeding pro- ducts in excess of their quotas. -21” quantity of wheat which represents the difference between normal pro- duction for farm acreage allotment and the actual production in any subsequent year. In the past, county normal yields have been determined on the basis of the yield per acre seeded for harvest as grain, with adjustments for abnormal weather conditions and trends in yieldSo For the 1957 and 1958 marketing quota yields, the deter- minations have been made on the basis of the yield per har- vested acre for the 10 year period, 1910-1956, inclusive, with appropriate adjustments for abnormal weather conditions and trends in yields. It has been determined that a yield per harvested acre is more reasonable and more accurate, since the amendment to the Agricultural Adjustment Act of 1938, as amended, adOpted in 1951;, provides that marketing quota penalties shall in effect be determined basically on the wheat acreage harvested. Harvested yields per acre also are considered to be more reliable than yields per acre seeded for harvest as grain in most areas of the country and their use in determining county normal yields will help eliminate the wide fluctua- tions between counties and also tend to stabilize yields between years. In determining the county normal yields, the Act speci- fies that adjustments shall be made for abnormal weather conditions and trends in YieldSQQOOOQQOQO Trend adjustments have been made by averaging the ad- justed 10 year average yield with the adjusted five-year (1952-1956) average yield giving equal weight to each. The adjustment for trend has not been made in those counties in which it has been determined that due to abnormally unfavorable weather conditions it is impossible to determine if there has been any trend in the county.20 Excerpts from Related Studies The following are selected quotations from studies related to the hypothesis presented herein. All are concerned with the question, "What acreage shifts are associated with acreage allotments, and marketing quotas?" 20Quoted from a letter to the chairman of the Michigan ASC State Committee from Assistant Deputy Administrator, Production Adjustment, USDA, 1957. -25.. One research study has investigated.this question for burley tobacco: The larger part of the burley legislation approved during the years 1933 to 1950 which affected the distribution of the allotments directly increased or maintained small allot- ments and indirectly redistributed acreage to the sparse, outlying areas where allotments had been.predominantly small. This tendency was carried over into the administration of the programs. Outstanding legislative provisions for main- taining and expanding small allotments were: (1) minimum allotment sizes prescribed in legislation of l9h3 and l9hh, (2) limits on reduction of small allotments prescribed in legislation in 19h0 and l9h6, and (3) extra acreages or poundage quotas for distribution to smaller allotment holders prescribed in the legislation of 193h, 1938, and 19h0. However, any measure which tended to increase or maintain burley prices joined with large technological advances to enable land formerly submarginal for burley production to be used to grow burley profitably; Many acreage histories, eventually resulting in new farm allotments, were established on land of this kind especially in 193b, 1935, and 1937 and during the war years. Another study, regarding cotton, was undertaken by the California Agricultural Experiment Station: By 1955, the allotment program had reduced California cotton acreage from its 1953 level by about hS per cent. The statutes and regulations were such that these cuts may be somewhat less severe for farmers producing fewer than 15 acres of cotton before allotments. Often no out at all was required for the farmers who previously had produced not to exceed 5 acres of cotton. Otherwise, available data would indicate that percentage cuts in cotton acres were fairly uniform.among farms of varying size. ,A large proportion, about 65 per cent, or the total cotton allotments in the San Joaquin valley, east side, went to operators on farms with 60 acres or less of open cropland. Emmy'of these small growers also produce grapes or tree fruit. For such operators, the cotton crop may be of secondary importance and represent primarily a source of 21James F. Thompson, "Interefarm.and Inner-area Shifts in Burley Tobacco Acreages Under Government Control Programs, 1930-1950" (Lexington, Kentucky: Kentucky Agricultural Experiment Station, University of Kentucky), p. 66 (Summary). -26- supplementary income. Usually the grower is interested.chief1y in the fruit enterprise and gives it most of his attention. The effects of cotton allotments on such farms might vary considerably from.those on the larger and.more specialized field crop farms in other portions of the San Joaquin Valley. If so, it is important to discover what these differences are and specifically to evaluate the effects of cotton allotment programs on the small grape-cottonfarmers.22 In still another study, made jointly by 6 states (Ohio, Indiana, Michigan, Kentucky, Iowa, and Kansas), these paragraphs appear: There is wide-spread interest in hOW'north central farmers reacted.to the programs. How many complied with corn and wheat allotments? What were their reasons for complying and not complying? How did they change their acreage of corn and wheat and their production practices? ........ The proportion of wheat producers who complied with their wheat acreage allotments varied greatly among the six states. Compliance by the farmers in Kansas who were interviewed was virtually complete-99 per cent complied. The lowest percentages of compliance were in Indiana and Michigan where only slightly more than half of the wheat producers complied with their allotments......... The reasons given by the farmers for not complying with their allotments also differed among the states. In Ohio, Indiana, and.Michigan a number of farmers said they did not comply because they did not wish to disrupt established ro- tations or because their allotments were too small. In Ohio, Indiana, and Michigan many other farmers indicated they did not comply because they used their wheat for feed. Many'farmers who did not comply produced fewer than 15 acres of wheat; hence, they were not subject to penalty payments for non-compliance......... In general, compliance with 195h wheat allotments and the reasons given were closely related to the types of farming sperations carried out in the areas. In the general farming areas, compliance was lower because acreages often were small and some farmers felt that continuation.of established rota- tions and livestock programs were more important to them.than eligibility for price supports. In the specialized wheat 22D. C. Athanassatos and Trimble R. Hedges, "Farm.Adjustments and.Earnings Under 1955 Cotton.Acreage Allotments", California Agricultural Experiment Station, Giannini Foundation of Agricultural Economics, in cooperation with the Production Econamics Research Branch, Agricultural Research Service, USDA, mimeograph report No. 19h, (May, 1957), p. 3. a... 8091‘. -27.. area in Kansas, the one case of non-compliance was due to inadequate information at planting time as to the allotment.23 23npamers' Reaction to Acreage Allotments", pp. cit. , pp. 6, 7, and 8. -—- CHAPTER III PROCEDURES The Sample The sample used in this study was selected for a personal interview survey in 19511.2h The sampled area covered 1; different types of farming areas in the lower peninsula of Michigan. (See Figure; 1, Appendix B). This selection was made for two important reasons: (1)-to select farms with different types of production decisions and alternatives which were typical of the decisions being made in the commercial farming areas in Michigan, and (2) to obtain a random sample within counties in these types of farming areas. This sample does not represent all Michigan farmers. In the original randomly selected sample 1, 1&2 farms were 2("The following studies were made from this survey: Hsiang Hsing Ieh, "Estimating Input-Output Relationships for Wheat in Michigan Using Sampling Data, 1952-94" (Master's Thesis, Michigan State University, East Lansing, Michigan, 1955). William Delmar Murphy, "Attitudes of Michigan Farmers Toward Government Production Control Pr0grams as Shown in a 1951; Survey" (Master's Thesis, Michigan State University, East Lansing, Michigan, 1955). Myron Eugene Wirth, "Production Responses to Agricultural Controls in Four Michigan Farming Areas in 19514" (Master's Thesis, Michigan State University, East Lansing, Michigan, 1956). Dale E. Hathaway, "The Effects of Agricultural Production Controls in 1951; on Four Michigan Farming Areas", 92. gig. Lawrence Witt and Dale E. Hathaway, "Farmers' Plans to Change Livestock Numbers as Related to Agricultural Production Controls", Quarterly Bulletin (East Lasning, Michigan: Michigan State University, May, 1936"", Vol. 38, No. h, pp. 511-519. Charles Beer, (a study in process), "A Study of the Effects of Price Supports and Acreage Controls Upon Farm Operations in Michigan", Michigan State University, East Lansing, Michigan. -28.. -29.. included. The counties covered were Kalamazoo, Livingston, Sanilac, Gratiot, Isabella, with Gratiot and Isabella considered as one area. Since this particular study covered the period from 1951 to 1957 it was necessary to have complete data on the farms for that entire period. It was necessary to eliminate 161; of the original sample because of incomplete data for the period. This left 978 farms which are included in this study. The counties were selected to represent four types of farming areas in the most commercial farming sectors of Michigan?5 Kalamazoo County is designated as a dairy, livestock and corn area. Sources of farm incomes are approximately equally divided be- tween these enterprises. The 1950 Census classified this area as about 29 per cent dairy, 21; per cent general farms, 15 per cent as cash grain, and 1h per cent as livestock other than poultry. From 1910 to 1950 the wheat acreage increased about 65 per cent. The second area studied was Livingston County, considered to be a dairy and general farming area. The 1950 Census classified 38 per cent of the farms in this area as dairy, 15 per cent as cash grain, 11 per cent as livestock other than dairy or poultry, and 18 per cent as general farms. From 1911.0 to 1950 this area increased its wheat acreage 100 per cent. The third area considered in this survey was Sanilac County, classified as a dairy and cash crop area. The 1950 Census classified )42 per cent of the farms as cash grain farms, 28 per cent as dairy farms, 25E. B. Hill and Russell J. Maw’oy, "Types of Farming in Michigan", Special Bulletin 226 (East Lansing, Michigan: Michigan State Agricultural Experiment Stat-ion, September, 1951;). _ 3o - 22 per cent as general farms, and 2 per cent as livestock farms other than dairy. This area also increased its wheat acreage by about 100 per cent. Dry field beans, wheat, and sugar beets are the major cash crops. The fourth area sampled consisted of segments of two counties, Gratiot and Isabella, both of which represent a cash crop and dairy type of farming area. The 1950 Census classified 20 per cent of the farms in this area as cash grain, 30 per cent as dairy, 5 per cent as livestock other than dairy or poultry, and 22 per cent as general farms. This area increased wheat acreage by'more than 2%-times from l9h0 to 1950, and during this same period production increased by more than h times. 'Within each county townships were selected by considering soil maps in an attempt to select townships of consistent soil types. For the fourth area, Gratiot-Isabella, it was necessary to select townships from.both counties in order to accomplish this purpose. Selection of the townships was further restricted by eliminating all those that had been in a similar survey in 1952 or where township agent programs were in.progress. It was felt that this restriction would reduce dual enumeration.by Michigan State University. For each township a random sample was drawn from the wheat listing sheets of County Agricultural Stabilization and Conservation Committee. When this sample was taken in 19Sh, the wheat acres were recorded for the selected sample from.1951 to l95h and.the 195k allot- ment was also recorded. In order to bring the information up to date the County'Agricultural Stabilization and Conservation.Committee Offices of these counties were revisited in 1957 and wheat acres and wheat -31.. allotments for 1955, 1956, and 1957 were recorded. The 1957 wheat acreage figures were made after measurements of the farms had been completed. However, it is possible that some of the farms over 15 acres in allotment might have destroyed wheat acres after the recording in order to comply with their allotment. Since there were very few of these, it is not expected.that this slight difference in.wheat acres would affect the conclusions. It is, of course, possible that the farms dropped from.the study because of incomplete data might cause some bias in the study. In examining the areas it appears that there is little significant difference in the number of farms dropped between the four areas studied. In Kalamazoo lb per cent were dropped because of incomplete data; in Livingston, 15 per cent; in Sanilac, 10 per cent; and in Gratiot-Isabella, 17 per cent. It is necessary to assume that those dropped from the study are random in effect and will not significantly bias the results. There were three principal reasons which appeared for disappearance of a farm from.the ASC records. One of the most important was the failure to grow any wheat for three consecutive years. If a farm grew no wheat, regardless of the size of their allotment, for three consecutive years they were dropped from the records and their allot- ment was given.to someone else. Reconstitution was a.frequent occurrence in this period. This means that the acreage was combined with another purchased or’rented tract of land and a new allotment assigned to the farm. Farmpsplitting was a frequent occurrence. Part of the farm.was sold and.a part of the was retained; in many cases this involved a split or disappearance of the wheat allotment on that farm. -32.. Framework of assumptions American agriculture has been advancing rapidly in technology and efficiency of production. The influence of specialization, mecha- nization, and new production tools and techniques permitted an in- crease in production of nearly to per cent between 1930 and 1955 while the farm labor force was decreasing by approximately to per cent. An advance such as this has a twofold effect with a competitive price mechanism. The lower cost, more efficient farms increase pro- duction and gain in comparative income. This increase in production, which results from greater efficiency and specialization, causes a shift to the right in the commodities aggregate supply function. Lower prices are the result of this shift. The lower prices cause lower incomes to the less efficient operators since their production has not increased. Therefore, the less efficient operators lose in comparative income and are under pressure to shift to other crOps, leave agriculture, or reduce their level of living. With a price support program the benefits of technology still go to the more efficient operator. However, marketing quota-acreage allotments might curtail further specialization, especially on the larger farms. The greatest difference is in the effect upon the less technologi- cally advanced farmer. The higher support prices insure that the later adopters of new technology also have a margin which permits the accumu- lation of capital and the possibility of investing in further techno- logical advances. Price security will encourage these investments. Within this framework at least two values become important-equity -33.. and efficiency. The American society (and the farmer, too) is interested in productivity and efficiency. A number of Irograms, both government and private, are devoted to advancing efficiency. The results have been phenomenal. In 1920 one farmer produced enough food for six people. He now produces enough food for 19 people. The increase has been larger than society is willing to purchase at acceptable prices to the farmer. In this way the equity value has come into focus. Society has indicated that competitive prices bring incomes to agriculture which are too low compared with other sectors of the society. Various measures have been adopted which limit the price reducing effects of advancing production. By supporting prices above the equilibrium level and by establishing marketing quota-acreage allot- ments a redistribution of income has been achieved. While these two values are held by farmers and society there is a lack of understanding regarding the means to these ends. Frequently, the means are employed which conflict with a prominent value of society in an attempt to attain a different goal. In this study the shifts in wheat acres resulting from marketing quota-acreage allotments will be related to: (1) effects on income distribution, and (2) effects on efficiency. No attempt is made to ascertain what changes would have taken place without marketing quota-acreage allotments. It is assumed that any trend which existed prior to marketing quota-acreage allotments would have continued. Therefore, any slowing, stopping, or reversal of these trends will be considered as the influence of the control program when logic indicates this possibility. Only the marketing quota-acreage allotment program is considered. -31” The related effects of programs such as the soil bank are not within the scope of this study. CHAPTER IV POSSIBLE EFFECTS OF SUPPORT AND CONTROL PROGRAMS One of the prominent values held by the people of the United States is that a free competitive market system should decide the income and asset redistribution. Apparently, however, this value is held in prominence only when all sectors of the economy are prosperous and enjoying a "fair share" of the national income. When income of one sector declines or is under pressure (as in the case of agriculture) society appears to give more prominence to another value--that gross inequalities of income should be mitigated.26 Actually, this value was being largely attained through the price system, but when this means is not fully satisfactory other techniques are brought into operation. Society was willing through the political process to employ the resources of the national government to achieve this goal. Inother value that is held by agriculture and society in general is that more efficiency and more productivity are desirable. This value has sparked our nation into becoming productively efficient. This has taken place in agriculture as well as in industry. 26Dale E. Hathaway, "Agricultural Policy and Farmer's Freedom", Journal pf Farm Economics (November, 1953), pp. 1496-511. -35.. -36.. Both of these prominent values of our society are closely related to our farm.programs. If the farm programs are to be considered means to a desired end, then all farm programs should be analyzed on the basis of their probability of contributing to these ends. In order to understand the significance of the data presented in the next chapter the possible effects of support and control programs on income distribution and efficiency will be discussed. Possible Effects on Income Distribution Since this was discussed in some detail in Chapter II only a brief summary will be given here. (1) (2) Income transfer from non-farm sectors to the farm sector of the economy is one of the primary purposes of a support and control program. _ This is accomplished in two ways. First, agricultural support programs are financed by taxing the entire society for the benefit of one sector, agricultural sector. The more costly the program the greater is the transfer of in- come. Although this study is devoted to control and support programs it should be noted.that income transfer is taking place in the education, conservation, and credit prograns designed for agriculture. Second, control of acres is designed to control the supply. If supply of the commodity is successfully controlled, the consumer must pay a higher price in the market place for the controlled commodity. This higher price is also a form of income transfer from the consumer to the producer. If payments are made for supporting price and if supply is controlled income is transferred from the non-farm sector into agriculture. The income transfer often overlooked is the one which takes place within agriculture. First, there is a vast difference between regions in their ability toxnake use of technology. Cotton production in the West compared with the Southeast is an example. If one area can make more use of technology it can continue to increase production relatively by increasing yield even though acreages remain constant. This results in a gain in wheat income in one region relative to the other. - 37 - There is another side to this situation, however. If one region is slow in adopting new techniques, marketing quota-acreage allotments can keep this region in production despite competition from the more progressive regions. The control program.might give the less progressive regions time to adopt new technology. This might even permit the development of new techniques which would allow the less progressive region to compete successfully with other regions. Burley tobacco areas offer examples of this. If capital is the limiting factor in the less progressive region, a supported price above the equilibrium.level might alleviate the situ- ation. In an unsupported market the progressive regions increase pro- duction first and most rapidly as a result of new technology. The increased supply which results depresses the market price. The less progressive regions suffer a.more than.proportionate decrease in income because they face the lower price without the benefit of reduced costs and increased.production. Therefore, it becomes even more difficult for the less progressive region to invest in new technology. With a supported.price the less progressive regions can secure a margin of profit regardless of the activity of the more progressive regions. If the margin is large enough some capital accumulation is possible. If this capital is invested in technological improvements there tends to be equalization between regions in.the extent to which new technology is used. .Associated with technological advances is improvement in income. ‘With.production controls the production increases of the more progressive areas are stopped or slowed considerably. If minimum acreages are used production could remain constant or increase in the less -38- progressive areas. Thus, a further income transfer is encouraged. Without the price support program the progressive area would con- tinue to increase first and more rapidly than other regions. The least progressive region could be forced out of production entirely or its income severely reduced. Second, there is a great difference between regions in availability of alternative crops and farm enterprises. In some areas (such as western Kansas) wheat is the only satisfactory income producing crop. When wheat pro- duction is reduced in these areas the obvious effect is a nearly proportionate reduction in income. In other areas (such as Michigan) alternative crops are available which would produce nearly as much income as wheat. Corn, beans, soybean, barley are examples of these crops. Marketing quota-acreage allotments would have a greatly differing income effect in the two regions. The alternative crops which are used on the diverted acres can cause an income transfer. Acres taken out of cotton and wheat were planted to feed grains, primarily. This increased the supply of feed and reduced the price with a resulting hardship on the farmers who depend upon feed grains for their major income. It can be argued that an income transfer exists from producers of unsupported commodities to producers of supported crops. Third, the potential overplanting varies between regions. In regions where small wheat acreages pre- dominate, extensive overplanting is more probable be- cause the minimum acreage provision would permit more overplanting without penalty. In regions of large wheat acreages the penalty for non-compliance over the minimum acreage greatly discourages overplanting. The state which has a high percentage of small wheat acreages (less than the minimum) can consistently over- plant its allotment. A state which is composed of large units is much less likely to overplant in total, and may frequently underplant because of abandonment. This allows the regions with a high percentage of smaller wheat acreages to gain from the trend adjustment provided in computing allotments. Fourth, the transfers from farm-to-farm are similar to those taking place between regions. In the surge to- ward specialization which thrived in the l9h0's the mar- ginal producer who found it difficult to specialize was left further and further behind. Marketing quotas and allotments stopped this trend in the controlled crop. If the program prevented the marginal producer from being eliminated it permitted him to retain a crop income which he would have lost. -39.. If with the use of minimum acres as in wheat many small producers and marginal producers can maintain their normal production while the more specialized are being curtailed, income distribution would definitely be affected. The degree of effect would again depend on the availability of alternative crops. The farmer who is able to use new technology has an advantage from the standpoint of yield (and income) over one who cannot or will not. The history of new technology has indicated that first users reap the gain. The late adopters are forced to use the new technology without gain or be eliminated. If the program permits the farmers to retain the gain it will increase farm income.27 By eliminating uncertainty and allowing the marginal producer to adopt more efficient production techniques, the program would affect the distri- bution of gains from new technology. From the long time point of view this permits the small farm to gain in income relative to the large farm. (3) Capitalization of allotment. If the allotment is of a nature that would add value to the farm, the very existence of the allotment is an asset. The amount depends upon the size of the allotment and to the extent which the price exceeds the equilibrium price. Not all allotments are of this nature, but tobacco is an example of a crop where this has occurred. Possible Effects on Efficiency Several concepts of efficiency have been widely discussed. A measure of disagreement exists regarding the presence of specific inefficiencies and the degree of effect. A few of the possible effects on efficiency will be outlined. (1) If the supported price is above the equilibrium price a supply of a commodity will be produced which is in excess of the amount demanded at that price. The result is an accumulation of surpluses. If surpluses are present the wrong combination of products are being produced according to the preferences of the consumer. A misallocation of the nation's resources exists. 27G. L. Johnson, "Barley Tobacco Control Programs, Their Overfll Effect on Production and Prices, 1933-50", Bulletin 582 (Lexington, Kentucky: Kentucky Agricultural Elqnerimsnt Station, 1952), pp. 79-80. -ho- If controls successfully reduce total agricultural production by causing a resource to be unused, (such as land) excess capacity is present. These are generally called inefficiencies. (2) Certain regions seem to be adapted to specialization.of a particular commodity. Capital is available, natural advantages exist, and new technology is used quickly and effectively. These regions tend to increase pro- duction, increase size of operation, and reduce costs below other regions. They become highly efficient. In this particular region and on.these specific farms if a control program stops this trend.toward more speciali- zation it is causing a curtailment of potential efficiency. If the trend is reversed inefficiency is promoted. However, outside the region of specialization, effi- ciency in the production of that commodity may be encouraged by the curtailment of the specialized region. Without a support or control program the Specialized region could increase the production, depress the price, and force less specialized regions out of production. (See item 2, Effects on Income Distribution). The control program would stop or sl w down the increase in production in the specialized region, and with minimum acreages the less specialized.might gain relatively. The supported price would allow a margin of profit in the less specialized region. This could result in capital accumu- lation.which might be invested.in new technology. As a result, instead of being forced out of production the less specialized region may become adequately efficient enough to permit competing successfully even without controls. Thus, support and control programs may discourage efficiency in some ways, and encourage it in other ways. In Chapter V, the data collected on 978 Michigan farms will be presented. The concepts of income distribution and efficiency out- lined in this chapter will be used as a basis for drawing conclusions from the data. These questions will be asked: (1) Is there evidence of the movement of wheat acres from.large Specialized farms to the smaller less Specialized farms? (2) Is there evidence of the movement of wheat acres from one area in Michigan to another? (3) Is there evidence of the movement in wheat acres from.more specialized regions of production such as Kansas to less specialized regions as Michigan? (h) If these movements exist what is the probable effect on efficiency and income distribution? CHAPTER V THE DATA In.preceding chapters an explanation was given of four problems confronting agriculture. The surplus problem, the trade problem, the production control problem, and the discrimination problem. It was suggested that these are problems resulting from government support and control programs. A brief explanation was given of studies conducted in other areas in an attempt to find answers to some of these problems. Frequent reference was made to the cotton and tobacco marketing quota and.acreage control programs. This study is primarily devoted to the discrimination.problem. In this chapter the data collected from.978 Michigan farms will be examined. Conclusions will be drawn from this data regarding shifts that are taking place in wheat acreages in Michigan as a result of the marketing quota—acreage allotment program. A brief look will be taken.at the wheat situation in the corn belt and western regions to see if the same shifts are taking place between regions that are apparent within, the state of Michigan. The trends, or shifts, that are observed will be analyzed in terms of their prObable effect on income distribution and efficiency. -82.. Shifts In Acreage Prior to Allotments It has been suspected that farmers anticipated the establishment of marketing quotas in 195h in time to build up their historical wheat acreage base. An examination of Table 1 shows no evidence that this has happened. All areas increased their wheat acreage in each suc- ceeding year prior to allotments. TABLE l.-Shifts in acreage prior to allotments--All sample farms — I 1. Totals for raiis ingsample‘ic Totals r6? counties 1951 1952 1953 % 1953 County County % 1950 wheat wheat wheat acres of acres acres acres of Area acres acres acres 1951 19h0 1950 19h0 acres acres Kalamazoo hh33 h528 h882 110% 19,119 31,139 163% Livingston hh29 h627 h628 105% 12,306 20,h7l 166% Sanilac 3638 8688 h981 137% 3h,285 60,657 177% Gratiot- Isabella 581h S907 6832 111% 2h,655 58,938 239% Total (all areas) 18,31h 19,710 20,923 11h% 90,285 171,205 190% Michigan 1953 acres 123% of 1951 acres. On first inSpection this appears to be evidence of an attempt to build up allotments. However, consideration must be given to the trend that existed in Michigan prior to 1951. In the 10-year period from 19h0—l950 the feur areas in the sample increased their wheat acres by 90 per cent. During this period the entire state of Michigan increased its wheat acreage by 50 per cent. The increase in acreages that took place in 1951, 1952, and 1953 were merely continuations of a trend that had existed for the previous ten years. If anything, the trend Showed signs of slowing down during the years preceding allotments. For the state of Michigan as a Whole the 1953 acres were 123 per - h3 - cent of the 1951 acreage. In the four areas studied the 1953 acreage was 11h per cent of the 1951 acreage. These areas at least increased their acreage at a slower rate than the state of Michigan as a whole, unless new wheat acres account for the difference. The sample farms in Sanilac county increased acreage 137 per cent from 1951 to 1953. This is a cash grain area that has been eXpanding wheat production very rapidly, partly due to drainage projects. When the farms were divided into two categories, those with 15 acres and under of wheat and those over 15 acres, a slight difference can be observed regarding their activity prior to allotments. (See Table 2). TABLE 2.-Comparison of wheat acreage changes on farms with 15 acres and under of wheat with farms of over 15 acres of wheat prior to allotments 1952 1953 195h Percent of sample farms increasing 15 wheat acres and under 30% 33% 17% Over 15 wheat acres 55% 57% 5% Wheat acres percent of previous year ‘ 15 wheat acres and under 98% 99% lgégs Over 15 wheat acres 110% 108% 39%% *Many farms moved from over 15 wheat acres category to the 15 wheat acres and under category. The farms possessing over 15 acres of wheat appeared to be ex- panding wheat acreage at a faster rate than those possessing 15 acres and under. During the years 1952 and 1953 the farms having 15 acres of wheat and under did not increase their total wheat acreage. The farms having over 15 acres of whea; showed a 10 per cent increase in wheat acres over the previous year in both 1952 and 1953. -m- Conclusion: Examination of the total sample shows no evidence of attempts to build up wheat historical base in anticipation of allot- ments. The increase which did take place appeared to be coitinuations of a trend that had existed in the previous ten years. This greater increase on farms having over 15 acres of wheat could be interpreted as (1) a greater move toward Specialization on the larger farms, or (2) it might imply an attempt to build an historical base on the 1arger.farms. This, however, is merely an indication and not evidence that such an attempt actually exists. Relation of Farm Size to Allotment Size The two areas classified as dairy and general farming--areas l and 2--show larger average size farms than areas 3 and h which are classified primarily as cash grain areas. (See Table 3). There appears to be practically no difference in the percentage of farms 70 acres and under in the four areas. However, the 180 acre division shows considerable difference. In area 1 and area 2 nearly a third of their farms are over 180 acres. There appears to be a marked correlation between the number of farms with 15 acre allotments and under and the size of the farm. Area 1 has an average size farm of 57 acres greater than area h, and has 30 per cent fewer farms with allotments of 15 acres and underiahan does area b. Conclusion: There is a definite relationship between the size of the farm and the size of the allotment. The smaller the farm the greater the probability of having an allotment under 15 acres. This, of course, is as eXpected, but it is reassuring to find verification -hS- in the data. TABLE 3.-Relation of farm size in each area to allotment size (all figures for 1957) Total Acres in Farms % of farms % of farms % of farms 70 acres 70.1 acres 180.1 acres % of farms Area Average and under to 180 acres and over under Farm Size* (small farms)(medium (large 15 acre farms) farms) allotment 1. Kalamazoo 157 20 h9 31 53 Total farms (163) 2. Livingston 153 17.5 55 27.5 73 Total farms (El) 3. Sanilac 128 18 67 15 80 Total farms (251) h. Gratiot-Isabella 100 20 72 8 83 Total farms (353) .K. Total acres. Shifts in Wheat Acres Each of the three size groups were increasing in the average wheat acres from 1951 to 1953. (See Table h). The decrease in wheat acres as a result of marketing quotas in 195h was approximately hO per cent in each of the three size-of-farm groups. However, since 1955 there has been a steady increase in the average wheat acres per farm on the small and medium farms while on the large farms - h6 _ there has been a decrease in average wheat acres per farm. TABLE h.-Shifts in wheat acres related to farm size by years Percent decrease in 1957 from 1951 1952 1953 l95h 1955 1956 1957 1951~53 average Samplelfarms 70 acres and under% Number of farms--h03 Total wheat acres” h310 héht S26h 3185 2962 3337 3833 Averag a wheat acres 10.7 11.5 13.0 7.9 7.3 8.3 9.5 19% Sample farms 70.1 to 180 acres Number of farms--h86 Total wheat acres= 9653 10,593 11,017 6725 6085 6hh6 6966 Average wheat acres 19.9 21.8 22.7 13.8 12.5 13.3 1h.3 33% Sample farms 180.1 acres and over Number of farms--89 Total wheat acres“ h351 bh71 h6u2 281k 2550 2617 2h§1 Average wheat acres h8.9 50.2 52.1 31.6 28.6 29.h 27.5 h6% * Crop acres =Wheat acres (when referring to the sample) are less than planted acres and more than harvested acres. These are the June 1 acres after wheat has been destroyed in order to comply with allotments. It is significant to note that in 1957 the small farms are only 19 per cent under their 1951-1953 average wheat acres. The medium farms _ u7 - are 33 per cent below their 1951-1953 average wheat acres. The large farms are h6 per cent below their 1951-53 Wheat acres. Table 5 shows that wheat acres were increasing in all areas in 1951, 1952, and 1953. Marketing quotas were applied in l95h with a TABIE 5.—Shifts in wheat acres and allotment by area Number of farms 1951 1952 1953 l95h 1955 1956 1957 Kalamazoo 163 Acres h833 8528 h882 2911 2791 2856 2925 Allotment 3151 2926 2895 2971 Livingston 211 hh29 8627 8628 2707 2890 2876 2623 Acres 3008 2816 259k 2662 Allotment Sanilac 251 Acres 3638 h688 h981 3113 2562 305h 322h Allotment 3295 29h? 2832 2931 Gratiot—Isabella 353 Acres SBlh 5967 6h32 3993 375h hOlB hh78 Allotment h167 3673 3572 3623 Total (all areas) 978 18319 19710 20923 12728 11600 l2hoh 13250 (acres) Total allotment 13621 12363 11893 12187 resulting hO per cent decrease in wheat acres. From 1955 to the present, wheat acres have again been increasing in each of the areas even though acreage allotments and marketing quotas have not been increased. Table 6 shows that areas 3 and b have been increasing wheat acres per farm more rapidly than areas 1 and 2. In 1957 area 3 and h both signifi- -h8- cantly exceeded their allotment while areas 1 and 2 were complying with their allotments. TABLE 6.-Comparison by area—-wheat acres percentage of allotment, 195h-57 Number All Sample Farms of Farms 195h 1955 1956 1957 1. Kalamazoo 163 % of allotment planted 92 95 98 98 % of farms overplanting 15 21 26 28 2. Livingston 211 % of allotment planted 9O 88 95 99 % of farms overplanting 25 29 32 hh 30 Sanilac 251 . % of allotment planted 9h 86 108 110 % of farms overplanting 29 32 5O 63 h. Gratiot-Isabella 353 % of allotment planted 96 102 112 12h % of farms overplanting ._27 h5 50 6h Total--% of allotment planted 93 9h 10h 109 % of overplanting 26 3h ’42 53 Entire sample exceeded 1957 wheat allotment by 9% (acres planted) Entire state of Michigan exceeded 1957 wheat allotment by 8% (acres harvested) Area 1 and area 2 are increasing their acreages but the trend is at a slower rate. If the trend continues, areas 1 and 2 are likely to exceed their allotments in 1958. In 1957 over half of the farms in areas 3 and.h are overplanting their allotments. Considering all four areas together the entire sample exceeded.the wheat allotment in 1957 by 9 per cent. When considering the state of Michigan as a whole, the 1957 allotment was exceeded by - h9 - 8 per cent. Conclusions: (1) Areas 3 and h have gained in wheat acreages relative to areas 1 and 2 with the result that a greater percentage of the wheat acreage exists in these two areas than was the case prior to allotments. There are two possible reasons for this; first, areas 3 and l; have more small farms. With the l5 acre minimmu established for acreage allotment and marketing quotas, these two areas have more farms able to take advantage of the minimum.law. Second, areas 3 and h are cash grain areas where wheat at present prices is a.more attractive crop relative to other alternatives. (2) The trend toward increasing wheat acres in each area since 1955 is apparent. There appears to be no reason why this trend should.not continue until the maximum.wheat acres under marketing quota-acreage allotments are produced.in Michigan. This trend indicates two things. First, more farmers are becoming aware of the opportunities under the 15 acre minimum, Second, wheat is continuing its increase in.popularity as a cash crop in.Michigan. The wheat production on the larger farms is being curtailed.to a much greater degree than the wheat acreage on the smaller farms. The implications involved are: (1) a transfer of income from the larger farms to the smaller’farms, (2) a stopping or reversal of the trend towards specialization, and (3) with the assumption that the larger farms are more efficient, this means sacrificing efficiency of pro- duction.28 28See Chapter IV for a discussion of the income transfer speciali- zation and efficiency aSpects. _ SO - Overplanting The small farms began exceeding their allotments in 1955, only one year after marketing quotas were installed. In 1957 68 per cent of these farms overplanted. As a result, all small farms in the sample exceeded their allotment by 39 per cent. (See Table 7). TABLE 7.-.Comparison of overplanting on sample farms of the three size groups =‘ "' 3:- } M Small farms Medium farms Large farms 70 acres and under 70.1 to 180 A. 180.1 and over g'of % of %’of %'of glof %'of farms allotment farms allotment farms allotment l95h 32 96 2h 9h 6 90 1955 us lot 30 95 10 88 1956 56 123 37 102 6 91 1957 68 139 50 109 5 85 ‘v The medium farms began exceeding their allotments one year later than the smaller farms. In 1957 this group of farms exceeded its allot- ment by 9 per cent. The large farms have not exceeded their total allotment since marketing quotas were applied. These farms have actually been under- planting their allotments by approximately 10 per cent. Fifty-three per cent of all farms included in the sample over- planted in 1957. Table 8 shows that areas 3 and h had the most over- planting with over half of the farms committing the practice. When isolating these farms that overplanted and considering them separately, it appears that they are planting about the same wheat acreage as they had planted on the average in the years 1951-53, prior to allotments. - 51 - TABEE 8.-Comparison of percentage of 1957 wheat acres to their 1951-53 average wheat acres on farms that overplanted in 1957 l._. _. -«nm -~' — —._._— ~— ~. .._._ --_ . % of farms 1951-53 % of overplanting average 1957 1951-53 Area 1957 acres acres average 1. KalamaZoo 28 511 522 102 2. Livingston an 1,268 1,207 95 3. Sanilac 63 2,251 2,092 93 h. Gratiot- 6h 2,762 2,766 100 Isabella Total(a11 areas) 53 ' 6,792 6,587 97 53 per cent of farms overplanted in 1957. These farms exceeded their allotment by 68 per cent. In 1957, 76 per cent of the farms in the sample had 15 acres allotment or less. These farms operated 58 per cent of the wheat acreage included in the sample. (See Table 10b). Over half of the farms with 15 acres of allotment and under are overplanting in each of the four areas in 1957. (See Table 9). There appears to be more room.for expansion in wheat acres in areas 1 and 2 since three-fourths of the farms in areas 3 and h are now overplanting. However, the potential excess of allotment is greater in areas 3 and h. (See Table 13). The rate of overplanting has increased much more rapidly in areas 3 and )4. There could be several reasons for this. First, there are more small farms with a greater potential for increase with a 15 acre minimum.of wheat. -52- TABLE 9.-Overp1anting on farms 15 acres allotment and.under (sample farms) _: - ‘ r‘ _—-_ Area 1951:, 1955 1956 1957 1. Kalamazoo % farms overplanting 29 38 h8 51 % of their allotment 173 160 179 172 % of allotment--all farms under 15 A. 97 108. 118 121 2. livingston % farms overplanting 36 39 h3 56 % of their allotment 185 157 180 176 % of allotment--a11 farms under 15 A. 102 99 107 120 3. Sanilac Z farms overplanting 37 ho 61 7h % of their allotment 152 156 163 173 % of allotment-~all farms under 15 A. 100 9b 120 139 h. Gratiot-Isabella z farms overplanting 36 51 6o 75 7. of their allotment 173 17h 178 181 % of allotment-all farms under 15 A. 106 113 128 1&8 Total % farms overplanting 35 hh 55 68 % of their allotment 169 165 17h 177 % of allotment--a11 farms under 15 A. 102 10h 120 136 Overplanting on farms with over 15 acre allotment Total % farms overplanted 11 9 h 6 % of their allot-ant 96 93 9h 99 (all farms over 15 ,‘acre allotment). Second, areas 3 and.h are cash grain areas. 'With the recent improvements in technology (small combines, use of fertilizers, etc.) wheat has become a more attractive crop in this area with the present supported price. -53.. With a high support price it becomes preferred to corn, dry beans, oats, or barley, which are alternative crops for areas 3 and.h. In a cash grain area a rapid change can be made from one crop to another. Third, areas 1 and 2 are primarily dairy and livestock areas. These areaaare more stable and do not change as quickly because of the investment in the livestock enterprises. Although these areas can raise high yielding wheat, this crop is not as likely to be a determining factor in the farm.planning. The farms that are overplanting appear to be doing so in about the same degree in each area. These farms are exceeding their allot- ments approximately 75 per cent. The difference between areas is largely due to the number of farms that are overplanting. Because there is this difference in number, areas 3 and h are approaching the point where a11.farms under 15 acres are exceeding their allotment by nearly 50 per cent, whereas areas 1 and 2 are exceeding allotments by approximately 20 per cent. When looking at the farms divided into two groups, 15 acres and under allotment, and over 15 acres allotment, it becomes apparent that the farms in the smaller group are increasing their wheat acreage relative to the larger. In the four-year period, the number of farms in the smaller group has increased from.686 to 73h. (See Appendix, page 77). The per cent of overplanting has increased steadily as well as the degree to which the group exceeds its allotment. In 1957 the smaller group exceeded its total allotment by 36 per cent, with 68 per cent of the farms in this group overplanting. For the group with over 15 acres allotment there has been no increase in overplanting and a slight decrease seems apparent. Never -51... has this group exceeded its allotment although in 1957 it planted 99 per cent of the specified allotment. Conclusions: Areas 3 and h have exceeded their allotments to a greater degree and have shown a more rapid increase in overplanting. Second, apparently the farms with over 15 acre allotments are held. in check by penalties. Third, the number of farms with 15 acre allot- ments and under that overplant their allotments are increasing each year. It appears that more farmers either are becoming aware of the 15 acre minimum privilege or are becoming able to take advantage of this privilege. Fourth, it appears that farmers believe that compliance for the purposes of price support is less important each succeeding year. Fifth, it appears that the smaller the farm the greater the percentage of farms overplanting, and the larger the percentage that these farms exceed their allotments. The larger farm groups have not exceeded their allotments but have consistently underplanted. With the exception of the larger group of farms, it seems that the degree of overplanting is increasing each successive year. As would be expected, as the degree of overplanting increases, the percentage that the group exceeds their allotment also increases. Sixth, over half of the farms in the sample are overplanting their allotments, and are planting about the same acreage as they did prior to allotments. The overplanting is the most severe in areas 3 and h, the cash grain areas. 1957 Acres Compared With Preallotment Acres Table 10a is concerned with farms that had 15 acres of wheat and under as an average for '51, '52, and '53. There has been an increase in the disparity between areas regarding the percentage of farms under -55- 15 acres. (See Table 10b). This indicates that there were more farms on the 15 acre border in area h. These farms dropped below the TADLE 10a.-Sample farms with less than 15 acres of wheat, 1951-53 average, compared with the 1957 wheat acreage of the same farms -—‘ % 1957 Number of % of farms 1951 to wheat acres sample 15 wheat acres 1953 is of farms 15 and under average 1957 1951-53 acres and 1951-1953 wheat wheat average wheat less (average) acres acres acres 1. Kalamazoo 62 38 53h h98 93 2. Livingston 101 h8 975 859 88 3. Sanilac 137 55 1,279 1,369 107 h. Gratiot- Isabella 196 55 1,911 2,126 111 Total (all areas) h96 51 h,699 h,852 103.5 15 acre mark when allotments were applied. Table 10a indicates that the farms that were under 15 acres in '51, '52, and '53 have changed their production patterns very little. In 1957 they were planting approxi- mately the sane acres as they were in 1951-53. Areas 1 and 2 were slightly under the 1951-53 average while areas 3 and h were exceeding their 1951-53 average by approximately 10 per cent. The entire sample exceeds its 1951-53 average slightly, by approximately h per cent. Conclusion: The farms that had small wheat acreage in 1951 and 1953 are planting approximately the same wheat acreage in 1957 under marketing quotas. The cash grain areas, 3 and h, again show the greatest increase. -56- TABLE lOb.-Comparison of percentage of sample farms with 15 wheat acres and under for 1951-53 (average), 195k, and 1957 1951-53 (average) 195k 1957 % of sample total % of farms % of farms % of farms wheat acres on with 15 wheat acres 'with with these and 15 wheat acres 15 wheat farms in Area under and under acres and.under 1957 1. Kalamazoo 38 51 52 39 2. Iivingston h8 68 73 5h 3. Sanilac SS 73 8o 68 h. Gratiot-Isabella 55 78 83 72 Total for area 51 70 76 58 Trends in Allotment Size Those farms in each area that had exceeded allotments for each of the four consecutive years were separated and examined. (See Table 11, Part.A). Nearly one-fourth of the farms in area b had exceeded their allotment every year since marketing quotas were applied. However, there was no apparent indication from the 195h-57 data that allotments were being increased as a result of building a larger historical base. In the allotments given the areas for 1958 there appears to be indications of redistribution of allotments. (See Table 11, Part C). Area 1 received a very slight increase, and area 2 was decreased. However, area 3 received a 2.5 per cent increase while area h received a significant 9 per cent increase. This corresponds with the degree of overplanting allotments. Area 1 and 2 have not exceeded.their allotments. Area 3 has exceeded its allotment by approximately 10 per cent for two years. Area h, which received the significant 9 per cent increase in 1958 allotments, has exceeded its allotment for the last three years, reaching a 2h per .pmmfl mom pcoEpOHHw one news 9mg” 5.“ mono-w poms: came-poo owe-Eta. .pwoh humps passpoaam Emma...- ooooooxm mama page. memo.“ was owes-Ha. as am wow-wmc.OH mmH.ch.OH cow-amm.OH mam.eom.0H «mm.saw.HH senate a case amoH moo-mom omo.ama wee-ace oma.eoo.H ch.meo.H cameras: a awe-me Hem-He wem.se Fae-ma ecH.ee 4 aces m.m omm.aa mam-es ome.ae Nac.~m see-em m nose H . mHm.aH mma.aH mam.aH NeH.HN Hem-mm a sane H com-mm mmm.mm OHm.mm o~m.mm Nom.mm H seed .1. .. e pace w ma nun choose-ea mm poo-50H? Maw-Boo Hope-H mOH awH.NH mam-HH mom-NH Ham.mH mam Hseoe emH mac.m Nam-m mac.m aHH.: mmm a coca OHH Hma.m ans-N are-m mam-m Hmm m coca am moo-N :am.m ch.m moo-m HHN m cone m seem - we Haa.m mam.m owe-N HmH.m mcH H eoe< W ”Em-503m mama-Mm anagram _ maH owe as: am: cmm we a seed mom mmm mmm Ham mam as m soa< mcH weH NnH mcH maH Hm N coaa <_eaea How eOH cOH eOH mHH aH H eoaa march carapace-coo m ”Ems no.3“? $86863 nephew... om 0H poo-5 0.3m pcospoadm 9:950 duo puma-8H3 Pcospoaflw web-mm 6.85er 39.. R3 momma $3 $3 no .H0 R hop-52 mmho< Rm®£3 ONfim pug-50H: 5». evacuating” Bmd-H- cent excess in 1957. Allotment information for 1958 was not available for the farms included in Part A, Table 11, when the data was collected. In view of the apparent redistribution of the allotments exhibited in 1958 for these counties, it is possible that the farms included in Part.A (those which exceeded their allotment every year) benefited more than the entire group in area 3 and area b where allotments were increased. There appears to be no shift in allotments relative to the states, Michigan and Kansas. Conclusions: The first four'years of marketing quotas on wheat gave no conclusive demonstration that allotments are being changed by building larger historical bases through overplanting. In 1958, however, this evidence appears to exist. The redistribution of allotments in 1958 coincides with the extent of overplanting in the counties included in this study. This is an indication that similar’redistribution of allotments will extend.to the individual farms and to the regions of wheat production if there is a large difference in the relative rate of overplanting. Regional Comparisons of Wheat Acreage Shifts The data collected from the 978 farms in Michigan provide abundant evidence that wheat acres are shifting from the large farm to the small farm, and from areas of larger farms (which by assumption we said are more specialized) to the areas of smaller, less Specialized.farms. Since this is actually happening in Michigan, it can be expected to take place between regions. Table 12 shows that the specialized.wheat states (Kansas, North -59- Dakota, Nebraska, and Oklahoma are the four largest wheat producing states) are receiving an allotment which is a higher percentage of the historical base than are the corn belt states. TABLE 12.—Comparison of regional harvested acreage and allotments Per cent Per cent Per cent Harvested harvested Per cent of 1958 allotment acres for for '55, '56 States farms 15 A. is of 19h5-5b 1955-56 and and '57 (acres) and under wheat '57 is of allot- is of 'h5 1955 acres ment for the to '5h same years average Michigan 8h 79 102 82 Kansas 22 83 7h.5 81 Ohio, Indiana 81, 77 m Illinois, Michigan 70, 8h 77 1'0 78 Kansas, N. Dakota 22, 3 81 81 65 Nebraska, Oklahoma 26, 23 In spite of this the corn belt states have harvested 100 per cent of the allotment or more for the past three years on an average. The wheat states have a higher degree of abandonment and the harvested acreage falls considerably short of the allotment. As a result the corn belt states are growing a significantly higher percentage of their historical base than are the Specialized wheat states. For the past three years Kansas has harvested approximately 75 per cent of the states allotment. This amounts to 2,659,552 acres lost on the basis of 1958 allotments. The acres abandoned in Kansas are nearly three times the Michigan allotment. -60.. However, this has not been reflected.in the size of the allot- ments to the states because the 10 year historical average is based on seeded acres. Table 12 is computed from.harvested acres. If actual production in bushels was used, the difference would.be even greater. The less specialized wheat states have been increasing yields more rapidly than the wheat belt states. Michigan's average production for the 195h-1956 period was 132 per cent (not shown in the table) of the 10 year period.prior to 195h. During the same three year period Kansas produced only 79 per cent of the 10 year pre-quota period. If planted acres are used for computation, the difference between the state's percentages disappears. (See appendix, page 7h ). ,Allot- ments are approximately 75 per cent of the ten year pre-quota planted acre base for all states. All of the states included in Table 12 planted approximately 100 per cent of their allotment (99-101) in the three year period, 19511-1956. Conclusions: Since marketing quotas in 195h, a higher percentage of the wheat produced in the United States is being produced in the less specialized wheat states. There are probably several reasons for the higher percentage of acres harvested in the less specialized states: (1) There has been a much higher degree of abandonment in the wheat belt states. (2) A trend.toward rapidly increasing wheat acres existed in most of the less specialized states before l95h. (3) The less specialized states have more farms under 15 acres. These states have more potential for percentage increases due to legal overplanting under the minimum acre provision. Potential Wheat Increases in Michigan Michigan was rapidly increasing wheat acreage prior to allotments. - 61 - The collected sample provides evidence that the trend still exists. The trend prior to allotments was on the larger farms (see Table 2), but since marketing quotas the smaller farms have been taking advantage of the 15 acre minimum to a greater extent each successive year. This raises the question as to how far this trend can go before it is stopped by 15 acre limitation. Table 13 shows that the entire sample could exceed its 1957 allotment by 36 per cent before reaching the limit. TABLE l3.-Potential increase in wheat acres under 15 acre and 30 acre minimum.acreage 14.1w Area Area Area Area Total 1 2 3 h sample Maximum possible percentage of 1957 allotments if all farms with 15 acres and.under allot- ment grew 15 acres of wheat 1111 133 137 156 136 Percentage of harvested acres in 1957 is of 1957 allotments 98 99 110 12h 109 Maximum possible percentage of 1957 allotments if all farms 30 acres and under grew 30 acres with the 30 acre minimum. 172 2&3 260 286 2h5 Percentage of 1957 allotment if all farms with 30 acres allotment and under returned to their 1951-53 average wheat acres with a 30 acre minimum. 137 162 lb? 162 152 The farms in the sample have an upper limit of 16,57h acres. Thirteen thousand two hundred and.fifty acres of wheat are now being harvested (1957). In 1951, 18,31h acres were harvested. Extending these same percentages to the state indicated.that Michigan has the possibility of exceeding its 1957 allotment by 3hh,527 acres. - 62 - This would give a possible 1,291,5h7 acres competed with the 19h5-5h average of 1,208,000 acres. The 3hh,527 acres represent an increase of 36 per cent over the 1957 wheat allotment in Michigan. This, however, would only be 3.5 per cent of the Kansas allotment. Table 13 shows considerable difference in the potential increase between areas of Michigan. While area 1 has the possibility of increasing by lb per cent, area b has a 56 per cent potential increase of the 1957 allotment. This potential increase computed in Table 13 assumes that allot- ments will remain the same. If one area or region builds a larger his- torical base it can increase its potential relative to other areas. A bill designed to curtail this latter shift was introduced in 1957. It was considered but not adopted.29 By not permitting this build up of a historical base a relative gain in allotments would be prevented. However, another bill (likely to have the opposite effect) did receive favorable action from the 1957 Congress. USDA outlined general provisions of recent legislation permitting farmers whose wheat acreage allotment is less than 30 acres to grow up to 30 acres of wheat for use exclusively on the farm where produced.3O Although none of the wheat could be sold off the farm under the 30 acre minimum provision, it offers a greater potential for overplanting and is likely to accentuate the shifts between areas. It is impossible to know the upper limits because the amount of wheat that could be used 29A bill providing that wheat acres planted in excess of allotments not be counted in setting future allotments will be considered by a House Agriculture subcommittee next month. It is by Aufuso (D., N. Y. ), washington Farm Re orter, Report no. 679, May 25, 1957. 30"The Daily Summary", USDA, August 30, 1957. -63- on the farm cannot be ascertained. Table 13 shows that Rfichigan would exceed its 1957 allotments by 50 per cent if all farms under 30 acre allotments returned.to their 1951-53 average wheat acres. The maximum.potential (which is unlikely due to the feeding limitation) would be 2.5 times the 1957 allotment. Another'way Michigan can increase wheat production is through new farms adding the enterprise to their operations. There are lh0,000 farms (approximately) in.Michigan, half of which are producing wheat. Many of the nonawheat farms are too small, others do not have soil suited for wheat production. However, these remaining farms offer a source for a great increase in.wheat production in.Michigan under the 15 acre or 30 acre minimum. Conclusion: The trend toward overplanting is apparent. Mere acres are overplanted each year. As overplanting increases, the small farm gains relative to the large farm. The less specialized areas gain relative to the more Specialized areas. This gain takes place in.two ways: (1) the harvested.acres are a higher percentage of alloted acres, and (2) larger historical bases are built and larger relative allotments are received as a result. Michigan and similar states still have a great potential for increasing wheat acres. If the present trend con- tinues more of this potential will be used in the future. There are three ways that Michigan can increase wheat acres under'the narketing quota-acreage allotment program: (1) All eligible farms can increase to the 15 acre minimum, (2) loW'allotment farms able to feed wheat may in- crease above 15 acres to the 30 acre minimum, and (3) some of the 70,000 farms not producing wheat may start producing under the 15 acre or the 30 acre minimum. CHAPTER VI SUM-MY AND CONCLUSIONS The records of 978 farms in four areas of southern Michigan were compiled and examined. This data was made available through the coopera- tion of the county ASC offices. The harvested wheat acreage from 1951 through 1957 and the farm allotments from 19% through 1957, were examined as a basis for supporting the hypothesis: (1) since the use of marketing quotas a greater percentage of the wheat acres are located on farms with less than 15 acre allotments, and ( 2) wheat acres are shifting from areas of Specialized wheat production to areas of less specialized wheat pro- duction as a result of the marketing quota-acreage allotment program. Shifts in Wheat Acres The evidence presented in Chapter V indicates three types of relative wheat acreage shifts taking place. §_I_1_if_t§_ £39311. large _t_<_>_ £113}; mwThere is a shift of wheat acres away from the larger farms to the smaller farms in Michigan. Farms of over 180 acres have had wheat acreage curtailed by h6 per cent from their 1951-53 average. Farms 70 acres and under have been curtailed only 19 per cent. In 1957 the farms 70 acres and under exceeded their allotment by 39 per cent, with 68 per cent of the farms in this category overplanting. The farms over 180 acres underplanted allotments by 15 per cent. -614... -65.. There appears to be several reasons for these shifts. First, because of the production control programs the market price of wheat has been very close to the supported.price in recent years. This price has made wheat attractive relative to other crops, and has eliminated an important reason for complying with allotments. In addition the price program has eliminated a degree of uncertainty which has encouraged small farms to undertake the production of wheat. Second, there appears to be a definite relationship between the size of the farm and the size of the wheat acreage on that farm. Pridr to allotments in 1953 the farms 70 acres and under averaged 13 acres of wheat. The farms 70.1 to 180 acres averaged 23 acres while the farms over 180 acres were averaging 52 acres of wheat. The marketing quotas in l95h and through 1957 have reduced the degree of difference in the size of wheat acreage between the three groups. The farms 70 acres and under averaged 9.5 acres; the farms 70.1 to 180 acres averaged lb.3 acres; and, the farms over 180 acres averaged 27.5 acres in 1957. Since the small farm has the smallest acreage of wheat it has the most opportunity to take advantage of the 15 acre wheat minimum under the law. In some areas these small farms have greater acreages of wheat than.were these same farms prior to allotments. The larger farms have been more severely curtailed by allotments and threat of penalties. W between areas 93 I~Iichigan.-There is a shift in wheat acres from one area of Michigan to another. Kalamazoo and Livingston counties have been increasing wheat acres slowly but have not exceeded their allot- ment in any year since marketing quotas were applied. Sanilac and Gratiot-Isabella have increased their planting at a much more rapid rate. - 66 _ The former exceeded its allotment by 10 per cent in 1957, while the latter exceeded its allotment by 2h.per cent the same year. There are four possible reasons for these area shifts. First, the shifts taking place between type of farming areas in Michigan are closely related to the number of small farms with under 15 acre allot- ments in the area. Gratiot-Isabella counties have 83 per cent of the farms with under 15 acre allotments and are planting 12h per cent of their allotment with a potential of 156 per cent. Sanilac county has 80 per cent of its farms under 15 acre allotments and is planting 110 per cent of its area allotment with a potential of 137 per cent. Iivingston county has 73 per cent of its farms under 15 acre allotments and is planting 99 per cent of its allotment with a potential of 133 per cent. Kalamazoo has 53 per cent of its farms under 15 acre allot- ments and is planting 98 per cent of its area allotment with a potential of 11h per cent. The more small farms in the area the greater the potential for acreage shifts because of the 15 acre wheat minimum. Second, Sanilac and Gratiot-Isabella counties (especially Gratiot- Isabella) are cash grain areas. At the present price of wheat it has become a more attractive cash crop relative to other alternatives in these counties. The cash grain areas are rather flexible in their cropping programs. If the crop appears profitable these areas can shift rapidly into or out of the production of a crop. Third, Kalamazoo and Livingston counties are dairy and general farming areas primarily. These areas tend to be more stable in their cropping plans. The price of wheat is not as likely to influence them to change their established cropping patterns. -67.. Fourth, it appears that under present conditions, overplanting provides the possibility of an area gaining in allotments relative to other areas. Gratiot-Isabella has an increase of nearly 10 per cent in 1958 allotment over 1957. This is the area that has overplanted to the greatest degree . Shifts between specialized and non-specialized areas 2f the United §tatg§.-There appears to be a relative Shift in wheat acres harvested from.the specialized wheat regions to the less Specialized wheat regions in the United States. During the last three years Kansas harvested 75 per cent of the states' allotment while Michigan was harvesting 102 per cent. The four states, Ohio, Indiana, Illinois, and Michigan, were har- vesting 100 per cent in this same period, while Kansas, Nebraska, North Dakota, and Oklahoma were harvesting 81 per cent. Computed on the basis of the 19h5 to 195k average the harvested wheat acres in Ohio, Indiana, Illinois, and.Michigan were 78 per cent of that 10 year base. The har- vested acres in this same period in Kansas, Nebraska, North Dakota, and Oklahoma were 65 per cent of the 10 year base. There are at least three reasons for regional shifts in wheat acres. First, a state such a Michigan has more potential in relation to its allotment than does a state such as Kansas. Michigan has 8h per cent of its farms with 15 acre allotments or under compared with 20 per cent for Kansas. In the sample 76 per cent of the farms had allotments of 15 acres and'under. These farms had operating control of 58 per cent of the wheat acres in the entire sample. Because there are many more small farms in Michigan and because a.much higher percentage of the total wheat acreage is on these farms, Michigan and similar states have a greater potential for exceeding the state's wheat allotment. - 68 - Second, the greater natural hazards in the wheat belt such as drouth, insects, and disease, cause a higher degree of abandonment in the specialized wheat states than in the less specialized.wheat states. For the past three years Michigan has harvested very nearly the same number of acres as were planted, while Kansas has averaged only 75 per cent of its allotment harvested. Each year Kansas had.planted acres exceeding its allotment. Third, there is no evidence that Michigan is gaining relative to Kansas in allotted acres. However, this continues to be a possibility and should not be ignored. These shifts are indicated for 978 identical farms from 1951 through 1957. Since 1951 many new farms have started producing wheat. These farms are not considered in this study. However, it is likely that these new wheat farms would have small wheat acreages which would accentuate thelshifts already reported. Therefore, the degree of’shifting acres suggested in this study probably is more conservative than the actual changes taking place in Michigan. Implications of These Shifts The second Objective of this study was to examine the implications of the results on income distribution and efficiency. In Chapter h a number of possible effects of production control on income distribution and efficiency were discussed. It is probable that most of these effects exist to some extent as results of production control programs. However, this report proves only that acreage shifts have taken place. Only the income and efficiency effects that are closely related to these acreage shifts will be discussed in concluding this study. -69- Effects 22.1nggmg_distribution.AWheat acreage shifts depend upon wheat prices remaining high enough to make wheat income attractive re- lative to alternative crops. Wheat income will shift with the number of wheat acres. The small farmer will gain relative to the large farmer; Sanilac and Gratiot-Isabella counties will gain relative to Kalamazoo and Livingston; and, the less specialized wheat regions will gain re- lative to the more specialized wheat regions. The extent of these income shifts depends on the degree to which acreage shifts are taking place (and will take place in the future). In addition, the actual effect on income as a result of these shifts will depend upon several things not Specifically covered in this study. (1) Even though the wheat acreage shifts, the degree of effect upon the farm income will be related to the availability of alternative crops. If an alternative crop is available to the large farm or the specialized wheat area after it has suffered curtailment in wheat acres, the effect on in- come will depend on the value of this alternative crop. If it is nearly as profitable as wheat the final effect upon the farm's income will be slight. However, many areas do not have such alternative crops. (2) The degree to which the farm income is affected will depend on the ability to use the most effective technology. As an example, fertilizers can be used to increase production in spite of acreage curtailment. Fertilizers are most effective in areas of high moisture. In this particular case the advantage would be with the less specialized states due to generally higher annual rainfall than in the more Specialized wheat regions. If technology can be used to alleviate the curtailment in wheat acres, the income change is not as great. (3) In some crops, burley tobacco in particular, the allotment has been capitalized into the value of the land. There is no proof that this occurs with wheat allotments. Income distribution is likely to shift in the same direction as the shift in wheat acres. The degree of this income shifting will depend on a number of things not specifically covered in this study. These are availibility of alternative crops and use of technology. -70- Effects 22 efficiency.-Many possible effects of support and control programs on efficiency were discussed in Chapter IV. Only those effects that are related to shifts in acreage will be considered here. These effects are primarily concerned with economic efficiency from.the view- point of society. Whether or not acreage shifts will affect efficiency will depend on: (1) the degree to which utilization and allocation of resources are affected, (2) the degree to which techniques of production are affected, and (3) the degree to which production is encouraged in low cost farms. Prior to marketing quotas in 195h a trend toward larger wheat acreages on the larger farms existed. This implies that the larger farms and the larger wheat acreages were becoming more specialized and more efficient in wheat production. Marketing quotas in 195h and penalties for non-compliance above 15 acres caused a reversal of this trend. The larger farms are becoming less important in the production of wheat and the smaller farms are increasing in importance. The obvious conclusion is that acreage allotments and marketing quotas are inter- fering with Specialization and efficiency. However, the degree of efficiency is related to the use of the most effective production techniques. In this case no conclusions can be drawn because there is evidence of opposing results. It is believed by some economists that guaranteed profits under high support prices encourages technological inefficiency. 0n.the other hand there is evidence that smaller farms improve efficiency under a support program. The program removes price uncertainties and allows the small farmer to invest in improved production practices with confidence of a stable price for his commodity. Thus, allotments and quotas may change the comparative -71.. efficiencies of large and small farms. Alternative crops also have a bearing on the degree to which efficiency is affected. If the alternative crop is nearly as profitable as wheat, efficiency is only slightly deterred. However, if there are no alternative crops such as in some areas of western Kansas, the land which was formerly in wheat becomes idle or severely curtailed in pro- ductivity. The lack of utilization of this land is economic in effi- ciency. Price support and production control programs have been adopted through the democratic process to achieve certain goals held by society. It was assumed in this study that society held these values: (1) income inequalities between sectors of our society should be mitigated, and (2) more efficiency is desirable. From examination of production controls it appears that income distribution is taking place from.the large farmer to the small farmer, from one area of Michigan to another, and from the more Specialized.wheat regions to the less specialized wheat regions. The same program.which is contributing to one goal, income distri- bution, is sometimes contrary to anOther goal, more efficiency. Must efficiency be sacrificed to achieve income distribution? Can a program be designed to contribute to both goals? These are questions for our future agricultural policy to answer. BIBLIOGRAPHY Athanassatos, D. C. and Hedges, Trimble R. "Farm.Adjustments and Earnings Under 1955 Cotton Acreage Allotments". California Agricultural Experiment Station, Giannini Foundation of Agricultural Economics, in cooperation with the Production Economics Research Branch, Agricultural Research Service, USDA, mimeograph report No. 19h, May, 1957 0 Anonymous. "The Daily Summary". United States Department of Agriculture, Beer, Charles. "A Study of the Effects of Price Supports and.Acreage Controls Upon Farm Operations in.Michigan"(study in process). East Lansing, Michigan, Michigan State University. Brandow, G. E. and Lurne, E. w. "The Effects of the 19Sh Acreage Re- strictions on CrOp Production in Southeastern Pennsylvania“, Progress Report N2. 128. State College of Pennsylvania: .Agri- cultural Experiment Station, December, 195k. Commodity Stabilization Service, USDA. Letter from Raymond J. Pollock, Director, Grain Division. "Effects of Acreage Allotment Programs, l95h and 1955", Summgpy Re ort Production Research Report No. 3. United States Department 0 Agriculture ,‘KEriTulturai RE's'ear'ch Service, June, 19 56. "Farmers' Reaction to Acreage Allotments". A report by the Subcommittee on Diverted.Acres, North Central Farm Management Research Committee, December, 1955. Lexington, Kentucky: Kentucky'Agriculture Experiment Station. Galbraith, J. K. "Farm.Policy, the Current Position", Journal pf_Farm. Economics, Vol. XXXVII, May, 1955. Hathaway, Dale E. "Agricultural Policy and.Farmer's Freedom", Journal pf Farm Economics, Novermber, 1953. Hathaway, Dale E. "The Effects of Agricultural Production Controls in l95h on Four Michigan Farming Areas", Quarterl Bulletin. IMichigan Agricultural Experiment Station, May, I955. Hathaway, Dale E. "The Impact of Agricultural Production Controls on the Income and.Asset Distribution Within Agriculture", unpublished article, Michigan State University. . Hill, E. B. and Mawby, Russell J. "Types of Farming in.Michigan", ecial Bulletin ggé. East Lasning, Michigan: Muchigan State Egricultural Experiment Station, September, 195k. -72... -73.. Johnson, G. L. "Burley Tobacco Control Programs, Their Overall Effect on Production and Prices, 1933-50", Bulletin égg. Lexington, Kentucky: Kentucky Agricultural Experiment Station, 1952. Johnson, G. L. "Decision.Making Principles antha m Management", Bulletin 593. Kentucky Agricultural Experiment Station, 1953. Michigan Agricultural Statistics, Michigan Department of Agriculture, July, 1936. Murphy,'William.Delmar. "Attitudes of Michigan Farmers Toward Government Production Control Programs as Shown in a l95h Survey". Master's Thesis, iichigan State University, East Lansing, Michigan, 1955. Ogg, wallace. "The Farm Situation", Farm Policy Forum, Summer, 1956. Schultz, T. w. and Brownlee, 0. H. "Effects of Crop Acreage Control Features of AAA on Feed Production in Eleven Midwest States", Agricultural Experiment Station Research Bulletin M2. ggg, Ames, Iowa: April, l9h2. Thompson, James F. "Inter-farm and Inner-area Shifts in Burley Tobacco Acreages Under Government Control Programs, 1930-1950". Lexington, Kentucky: Kentucky Agricultural Experiment Station, University of Kentucky. Tolley, Howard R. "Results of Our Farm Export Programs", Farm Policy Forum, Spring, 1957. USDA, Part VIII, Letter No. 6, 1956. Wheat Acreage Allotments, State Administrative Officer, Wendell Becraft to county ASC officers (Kansas). lb Size 39.01 "£221. 522232, August 23, 1957- washington.Farm Re orter, Report No. 679, May 25, 1957. Witt, Lawrence. "What Are Our Alternatives?", Farm Policy Forum, Spring, 1957. 'Witt, Lawrence and Hathaway, Dale E. "Farmers' Plans to Change Livestock Numbers as Related to Agricultural Production Controls", Quarterl Bulletin. East Lansing, Michigan: iMichigan State University, MEEI'T§36, vol, 38, No. A. 'Wirth, myron Eugene'Wirth. "Production Responses to Agricultural Controls in.Four Michigan.Farming Areas in.l95h". Master's Thesis, Michigan State University, East Lansing, Michigan, 1956. Yeh, Hsiang Hsing. "Estimating Input-Output Relationships for Wheat in Michigan.USing Sampling Data, l952-5h". Master's Thesis, Michigan State University, East Lansing, Michigan, 1955. APPENDICES APPENDIX A . I ' l u - OI. a c I I t . u I c h I .- I l I- I c e I l I u 9 e o t c Q t l . I v I. I I | I A U I I I u." 0" JI. I 0 -9- I n ' I I r . I. I 3.! ‘| f. fl Ann I! ‘III‘ ’1"I.‘n‘0.viulllt.|lanc.u [I I '7“ a cl... I c...’ u I ‘I . D . OI'III'-‘ all C.‘ '29.... 'lo.lt|-rc a In. ‘tq. C'n‘l v 10 ’.'ul¢ ‘a-. - 75 - TABLE B PERCENT OF FARMS SEEDING 15 ACRES OR LESS OF WHEAT FOR THE 1955 CROP YEAR NEW York New Jersey Pennsylvania Ohio Indiana Illinois Michigan Wisconsin Minnesota Iowa lfissouri North Dakota South Dakota Nebraska Kansas Delaware Maryland Virginia west Virginia North Carolina South Carolina Georgia Kentucky Tennessee Arkansas Oklahoma Texas Montana Idaho Myoming Colorado New Mexico Utah washington Oregon California 82.1 77.0 90.h 81.1 77.0 69.6 8h.h 96.9 h9.6 67.3 77.8 3.3 12.6 26.1: 22.2 51.5 70.2 92.6 92.5 95.? 9h.5 91.0 82.3 91.2 86.3 23.h 28.9 1h.0 57.1 26.8 19.9 36.0 73.5 29.6 51.7 29.5 Source: Commodity Stabilization Service, USDA -76.. TABLE 0 SHIFTS IN RELATION TO FARM SIZE 0N FARMS 0m 15 ACRES OF mam 1951 1952 1953 19511 1955 1956 1957 Farms 70 acres _a_n_g under* Number of farms 90 99 121? ""21; E" 7 15 over 15 acres Total wheat acres 2071: 2399 3018 1:66 189 123 267 Ayerage acres 23 21.2 2u.3 19.h 17.2 17.5 17.8 Farms 20.1 3.2 182 acres Nuhber of farms over 15 acres 275 301 308 153 121 117 150 Total wheat acres 7936 8911 9358 3511: 261.3 2521; 3180 Average acres 28.8 29.6 30.1; 22.9 21.8 21.6 21.2 Farms 180.1 and over Number of fame over 15 acres 80 8h 81.: ‘ 71 73 71 69 Total wheat acres h269 1136 1.616 2612 2389 2115 2291. Average acres 53.3 52.8 94.9 36.7 32.7 311.0, 33.2 ‘II' . “1 -i--i- o o -W In 0N HT; 1. "Isl-V ."i o i‘ Farms 19. acres 93 undefi- Nmnber of farms 15 acres or less 313 3014 279 379 392 395 388 Total acres 2236 2215 22h6 2719 2773 3211; 3566 ..Average acres 7 7.11 8.0 7.1 7.1 8.1 9.1 Farms 70.1 22 180 acres Number of farms 211 18'5"“ I78" 333 355 369 336 15 acres or less Total acres 1717 1681: 1659 3211 31.12 3922 3786 Average acres 8.1 9.1 9.3 9.6 9.h 10.6 1.1.2 ; Farms 180.1 acres and over Number of farms - 15 acres or less 9 5 5 18 16 18 20 82 35 26 202 161 202 157‘ M A A #1, #10er acres » a u .- -I v a u n o .« - u — .., e o.-.-c \ . - l' . . .. 4 I . . . . v“ - - - . . ‘. ~ .. . . . ‘ u . . . r . o O . r v p- e ‘ v | n.‘ - I I fv-l. ‘- A. I ‘- . t ‘ i \ , . a ,— I , I C O . . - . . . . . ‘ .. .. I “ ‘ . . . . ..- - . -o. . .- rO- - . , I .. ‘ - -.~ - -..—o— w.‘ c-o—e —.-~ . x g. .. . I - I n ' .~ ._ .. u ' ,' ‘ ._ . ' O -. - -_ p—eI - I --‘ D O 1 .v - n . , . -. - A , . ‘ A . 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I I: ,u C“.. .1 ‘I- o— —o—.' .o- -, -.--o qMQOHI ICHIGAN estock and Corn stock and Corn '1 Fruit, Dairy and Truck .ry and Truck metal Farming 'Ttme .nd Truck uh Crops Ind Dairy much am Part-Tun. oes md Truck n Fruit and Dairy Time and Pot-toes art-Time and Cattle toes and Part-Time and Pun-Time 48(on oes. Part-Time Forestry O -" o ' traovo p... can ... 2.... Em *“Nt—n O O O O ~uuo’w ”—6.” uauu' o o . Southwestern Fruit, Dairy and Truck . Dairy and General Farming . Dairy, Potatoes, Part-Time Forestry O'TYPE OF-FARMING AREAS IN MICHIGAN (Areas on a natural- line basis) ‘0. I / us? i .I z ' ‘1 ' Ontonooon I" 9' 90'000 .J' L... - 3 I r L-v-"q '- g I I Gooebnc . i . IMorqueIto ' _____ .JLuce I I ....-.J. I 7.1. - . , ‘ . 1.... _ Jlron I ...;j-AIOer rm.) '7 E Chippewa . 4 \ I ' ______ ’ °°\ i _ isfifltoolcrott -.k_II-ozkunoc 1L _. °'\ I '- .' ' ' I ' & I ' P ' ‘VD ' Ch ‘. C L ______ I ....... -:_._- ...... ~Katha: oICrOVIOrd - MIC HIGAN General Livestock and Corn Dairy, Livestock and Corn Dairy, Poultry and Truck Dairy, Part-Time and Truck Dairy and Cash CrOps Cash Crops and Dairy General Livestock and Part-Time Dairy. Potatoes and Truck Northwestern Fruit and Dairy Dairy, Part-Time and Potatoes Forestry. Part-Time and Cattle Cattle, Potatoes and Part-Time Cattle, Hay and Part-Time Dairy and Potatoes Townships included in study The 83 counties in Michigan are here grouped into 17 type-of-farming areas as indicated in this map. The “natural” boundaries of these areas do not. how- ever, follow county boundaries., but lines representing the influences of soil, climate and markets. FIGURE 1. Location of Tc .mshins Used as Sample Areas (A, R0058 USE ONLY Date Due Demco-293 flICHIGQN STRTE UNIV. LIBRQRIES HI “I III II lllll II ”III “IN 9 312 3010930364