Special Message to the Congress: "Prosperity and Progress for the Farmer and Rural America.

To the Congress of the United States: The farm was here before the factory.

It was the promise of productive land that pushed our people westward, and America was built on a foundation of farms and ranches supplying the food and fiber for a bountiful and restless Nation.

It was the farmer's qualities-his hard work and perseverance, his independence and initiative--which gave strength to a Nation's character.

Agriculture, our first industry, remains our greatest. It is the vital center of our economy--fueling our industry and commerce, feeding our people and the hungry of the world.

--Almost 18 million Americans work at growing our crops, processing them and shipping them to market, and supplying our farmers.

--Americans spend $125 billion yearly for the products of our agriculture-which brings the family the most nourishing food in the world, at a modest share of its income.

--The harvest of one out of every four acres moves into foreign markets. Last year American farm exports set a new record--$6.8 billion.

--Millions of people in other lands live today because of food grown and shipped from American farms.

--Agricultural technology, combined with modern machinery, seeds, and fertilizers, has revolutionized production. Each farmer today grows enough food for 40 persons, compared to only 10 thirty years ago.

But the American farmer, who helped to build America's prosperity, still does not fully--or fairly--share in it.

While retail food prices have risen in recent years, the prices the farmer receives have actually declined 9 percent in the past two decades.

Too many rural communities have been by-passed in the climb to abundance, the poverty of its people standing in stark contrast to the wealth of the land.

THE RECORD TO DATE

Farm-led and farm-fed, the depression of the 1930's plunged American agriculture into its darkest hour. The plight of the farmer was intolerable--five cent cotton and 20 cent corn, failure and foreclosure.

Out of those grim days, as the Nation regained strength, the basic principles of a national farm policy evolved, guiding the farmer's recovery. Through conservation and credit, price stabilization and research, a partnership with government grew. It was a new concept, but it rested on an honored American tradition--that the Nation's strength lies in independent, land-owning farmers and ranchers.

When Franklin Roosevelt signed the Agriculture Adjustment Act of 1938--30 years ago this month--he could tell America: "By experience we have learned what must be done to assure agriculture a fair share of an increasing national income, to provide consumers with abundant supplies of food and fiber, to stop waste of soil, and to reduce the gap between huge surpluses and disastrous shortages."

The farmer rose to the challenge of the time as he fed and clothed America's victorious armies of World War II--and, in its aftermath, fed a war-ravaged world.

But in the middle fifties the farmer fell victim to his own progress and to government indifference. Production increased while Federal programs faltered. As a result:

--Farm income from 1952 to 1960 dropped by almost 20%. Farmers netted $2 1/4 billion less per year than in 1952.

--Farm surpluses swelled. By 1960, the Commodity Credit Corporation had accumulated over $8 billion in stocks.

--Exports, a major source of farm income, failed to keep pace with rising production.

While farm programs cost the taxpayer more, farmers received less and less.

These were bitter disappointments--and from them we learned much. They led to the constructive programs of the sixties which have already shown these signs of progress:

--Today, net income per farm is 55% higher than at the beginning of the decade.

--1966 set an all time record for gross farm income and net income per farm.

--1967 produced the second highest per farm income in two decades, even after a disappointing price drop.

--Exports soared to a record $6.8 billion last year, up 51% from 1960.

--Price-depressing surpluses in most commodities have been eliminated. Commodity Credit Corporation investments are down $4.5 billion from 1960. Inventories are below $1 billion for the first time since 1953.

THE PROBLEM TODAY

But as significant as these achievements are, their importance to the farmer is diminished by the realities he faces:

--His income lags. It is less than two-thirds the per capita income of the city dweller.

--His production costs are rising, and he is trapped in a vicious price-cost squeeze.

--For most commodities, he has no practical means of tailoring his output to total demand. Now he grows his crop or raises his livestock--and hopes for a good market. If that market does not come, he will not receive a fair price for the fruits of his toil.

WHAT IS REQUIRED

Much will be required to assure the farmer his fair and full share of America's abundance.

First, we must reinforce the partnership between the farmer and his Government.

Like any sound businessman, the agricultural producer seeks a fair return for his efforts and his risks. Yet, because of the individual nature of his operation he does not have the means to assure this return. It is here that he needs the helping hand of his Government.

That partnership works to the benefit of all. For the prosperity of the farmer is of concern to all--from the factory worker who makes the tools and machines the farmer buys, to the family who buys the food and fiber the farmer grows, and to the whole economy which is strengthened by a steady flow of farm income.

Second, we must seek out new ways to solve an old problem--overproduction, the consequence of the American farmer's enormous capacity to produce far more food than we are able to consume. For more than thirty years we have tried to balance supply and demand, to shatter the income-depressing cycle of glut and scarcity.

We have not yet succeeded in reaching that difficult goal--but in recent years we have made great strides. The foundation for progress is now in place with the Food and Agriculture Act of 1965. That Act gives us the machinery to tailor production to demand, to produce the right kind of food-at the right time--in the right amounts.

We are learning to operate that new machinery more skillfully now in cooperation with farmers and their organizations.

Still, more is needed to reach the farmer's just goal of parity of income--a fair return for his labor, management and investment.

I believe 1968 can be the year in which we move closer than ever before to that elusive goal. It can be a year of decision for the American farmer.

I propose a 7-point plan to bring new prosperity to rural America.

1. Permanent extension of the farmer's basic charter--the Food and Agriculture Act of 1965.

2. Continuation of the Food for Freedom Program through 1971.

3. Creation of a National Food Bank--a security reserve of wheat, feed grains and soybeans to protect the consumer against food scarcity and the farmer against failing prices.

4. New bargaining authority for the farmer, to give him a stronger voice in setting terms and conditions for the sale of his products.

5. Stronger regulatory programs to guard the farmer against fraud in the market place.

6. Aid and hope for the small farmer.

7. Continued revitalization of America's rural heartland by improving men's lives through decent housing, better jobs, and more rapid community development.

Taken together, these measures can hasten the day when the men and women who grow our food can share more fully in the abundance they help to create.

THE FOOD AND AGRICULTURE ACT

The Food and Agriculture Act of 1965 is the backbone of our support for the farmer.

--For the first time, it recognized that stabilizing the market supply of our basic commodities--wheat, feed grains, and cotton--is a continuing, not a temporary, problem.

--It established price supports at near-world levels for these major commodities-with payments to stabilize incomes and acreage allotment programs to prevent surpluses from piling up.

--It provided the flexibility to adjust the farmer's production to meet domestic needs, export demand and projected shipments under the Food for Freedom Program.

Two years after its passage, the Act faced a severe test. Larger wheat and feed grain allotments for 1967 crops set under the Act were followed by a series of unforeseen events: world-wide bumper crops, smaller total demand--and lower prices for the farmer. These are the uncertainties to which every estimate--involving millions of acres, millions of tons of food and the variability of weather--is subject.

Those events of 1967 once more spurred the old cry: 'get the government out of agriculture."

But the 1965 Act did not fail the farmer. Direct payments under the Act provided the margin between profit and loss for many producers: an additional 48 cents for each bushel of wheat, 15 cents for each pound of cotton, 20 cents for each bushel of corn.

To terminate the 1965 Act would bring catastrophe and ruin to many farmers.

Cash prices to the farmer would fall--and there would be no government payments to cushion the impact. Farm income could drop by as much as one-third--back to 1959 levels.

--Wheat prices would drop to about $1.10 a bushel--compared with the 1967 blend price of $1.89, including the wheat certificate.

--Corn prices would drop to about 75 cents a bushel, compared with a blend price of $1.30 in 1967.

--Cotton would sell for 18 cents a pound, compared with 42 cents in 1967 with price support payments.

--With lower grain prices, livestock supplies would soon overburden the market so that livestock prices would decline by at least 10%.

Certainly the Act can be improved. Suggestions to strengthen it should be carefully reviewed. But it must be continued.

This should be permanent legislative authority. The need for price protection will not end in one--or two--or even the four years provided in the 1965 Act.

While the Congress may choose to modify these programs in future years, the farmer should not run the risk of sudden termination of this vital protection. Only permanent authority will assure that he is never the innocent victim of a program lapse.

Although the Act does not expire until 1969, it should be extended this year. Before this Congress adjourns, the 1969 wheat program must be announced. And before Congress meets in 1969, final year programs for all the other commodities under the current Act must be announced.

The agricultural producer, like all prudent businessmen, should be in a position to make his plans well in advance.

To postpone consideration of this vital legislation until next year would create grave risks for the American farmer.

l recommend that the Congress begin hearings at the earliest possible date to extend the Food and Agriculture Act of 1965•

FOOD FOR FREEDOM

The clock continues to tick in the developing nations--as the shadow of hunger threatens to turn into a nightmare of famine.

That awesome problem has long summoned America's attention. Since World War II, we have helped meet world food needs with contributions from the storehouse of our agricultural abundance.

In 1966, I proposed that the United States lead the world in a war against hunger. At that time, I asked the Congress to join in a new and concerted food aid program--Food for Freedom. Two years of achievement show that the program was wise as well as compassionate:

--The bounty from America's farmlands and granaries has rescued millions of people from the brink of starvation.

--Developing nations are helping themselves through national policies centering on agricultural development.

--Sales are now shifting from foreign currencies to dollars. This repayment trend will improve our own balance of payments.

--Food shipments are creating future overseas markets for the products of our farms and our industry, as the economies of developing nations grow stronger.

This lifeline of hope to the needy of the world cannot be withdrawn. The Food for Freedom Program expires at the end of this year.

I recommend that the Congress continue the Food for Freedom Program for three more years--to December 31, 1971.

As before, our efforts must be rooted in self-help. Aid that does not encourage the maximum effort of each nation to feed its own people is illusory--and a deception to those who receive it.

Our efforts must also continue to be grounded in world cooperation, because hunger is a world problem which must be met by many nations.

The Kennedy Round turned that principle to action as other nations joined the United States in the International Grains Agreement.

I recently asked the Senate to approve that Agreement. It calls for a three-year program of food aid. Participating nations have agreed to supply 4.5 million tons of grain annually. The U.S. share--1.9 million tons--will be met as part of the Food for Freedom Program.

The Grains Agreement is good news for the American farmer. It provides new insurance against falling wheat prices. And it builds new cash customers for his products.

I again urge the Senate to ratify the International Grains Agreement at the earliest possible time.

SECURITY COMMODITY RESERVE--A NATIONAL FOOD BANK

When the talk is of farm surpluses, the term "food scarcity" has an unrealistic ring. Yet even America is not completely immune from a natural disaster or some other emergency that could imperil our food supply.

America's food stocks are also affected by another factor--our humane response to the hardship and hunger that may strike other nations.

In the light of these contingencies, we must develop a national food strategy to assure that:

--Production is sufficient to meet domestic needs.

--Additional production is scaled to meet requirements for exports and food aid shipments.

--A security reserve is on hand to protect against unforeseen emergencies or variations between production estimates and actual need.

The Food and Agriculture Act of 1965 and the Food for Freedom Program provide a solid basis for this national strategy. Acreage allotments established under the 1965 Act are based on anticipated domestic consumption and foreign demand. Food for Freedom shipments furnished an important part of that total demand.

But, as we have learned, no system of estimates can be precise. Searing winds, drought and flood can deplete production quickly and cause scarcity. And as we have also learned, surplus stocks---even when temporary--can depress the farmer's income.

What America needs is a National Food Bank--where deposits can be made in time of plenty, and withdrawals in time of shortage.

Last year, legislation was introduced to create such a Bank--a Security Reserve of wheat, feed grains, and soybeans. Hearings have been held in both Houses.

I urge the Congress to complete consideration of this important legislation at the earliest possible date. This Administration will continue its strong support of a measure which includes these principles:

--The establishment of a reserve owned by farmers through strengthened reseal provisions in the price support program. The farmer would control sales from a part of this reserve, but some of these stocks would be held under long-term arrangements for emergency use.

--Authority for the Secretary of Agriculture to purchase an additional reserve at market prices. It should not be necessary for prices to drop to the support levels to add to the reserve stocks held by the government.

--Insulation of this food bank from the commercial market. The Secretary of Agriculture should not sell reserve stocks at less than parity adjusted for government payments.

A National Food Bank can provide important protection for all Americans.

--The farmer will not have to bear the burden of depressed prices when production exceeds current needs.

--The consumer will be protected from unanticipated food scarcity.

--The government will have a reserve stock "cushion" in making acreage allotment decisions, and in responding to international emergencies.

FARMER BARGAINING POWER

Government programs for wheat, feed grains, cotton, or other basic commodities strengthen the bargaining power of participating farmers. Under the loan program with its recently expanded reseal privileges, the farmer can hold his crop for a better market.

But items which provide 60 percent of gross farm income--including livestock, poultry, fruits and vegetables--are not covered by Government price support and payment programs.

The producer sells these commodities for what the market will bear.

This is fair enough--if the farmer has the power to bargain effectively with those to whom he sells. But he does not.

--There are millions of farmers and their power is diffused and fragmented. In contrast, the distributors and processors who buy the farmer's products are relatively few and well organized.

--Farmers do not have the means to tailor carefully their production to market demands. If they produce too much, they have little hope for a decent price at market time.

--Most businessmen can set a price for their goods. Most farmers must sell their products for "what they can get." In some ways, government action helps the farmer to bargain for better terms in the market place. Government purchases under Section 32, Food Stamp, School Lunch, Milk, and commodity distribution programs create additional demand--and even out over supplies which could depress prices.

Still, the Government is--and can be--a customer for only a fraction of the total market.

The fact remains that the farmer does not have the bargaining power he needs--he still does not have the ability to price his products for a fair profit.

Some farmers--in cooperatives and marketing associations---have found that their collective voice is far stronger than individual efforts. They have utilized marketing orders and marketing contracts to achieve higher prices and better terms of sale. They are the pioneers.

Now thousands of other farmers are beginning to think about farmer bargaining.

They seek an end to the frustration caused by their lack of bargaining power.

They see the opportunities for lower costs and better prices through market organization and coordination of supply.

They know the value of transforming haphazard farm production into steady flows of products of uniform quality--fitted to the needs of our modern food industry.

Several months ago, I directed the Secretary of Agriculture to study the various bargaining and marketing tools available to agricultural producers.

I asked agricultural economists and other experts from outside the government to participate in this effort. The farm organizations have taken leading roles in advancing bargaining techniques.

It is now time for the Congress to join this effort.

I urge the House and Senate Committees on .Agriculture to hold hearings this session on the various means of strengthening farmer bargaining power in the market place.

Among the issues the hearings should consider are these:

--Will bargaining efforts be equally effective for all commodities?

--What kind of bargaining unit should farmers establish?

--For what should farmers bargain? Better price? Uniform quality? Other terms of sale?

--Should the bargaining unit be able to limit marketing or production to meet bargaining objectives? If so, how should these limitations be administered or enforced?

One matter is clear. The government may act as an advisor, or it may serve as an umpire. But the plan must be designed for farmers to use if they choose. It cannot be forced upon them. Under any proposal, farmers must make their own decisions and control their own destinies.

Upon completion of these studies and the Congressional hearings, we will make specific recommendations for action.

FRAUDULENT PRACTICES

Fraudulent and deceptive practices sap the vitality of our economy. In the case of the farmer, they impose special hazards and handicaps. Wherever these practices are found, they must be rooted out.

Last week, I was proud to sign a measure guarding against fraud and manipulation in the Nation's commodity exchanges.

But there is still unfinished farmer protection business before Congress.

I urge the Congress to modernize the Packers and Stockyards Act.

This Act is intended to safeguard livestock and poultry producers against cases of deceit, fraud and unfair competition. The present law has failed to keep pace with developments in the livestock and poultry industries since the Act was first adopted almost half a century ago.

LIFE IN RURAL AMERICA

The proposals I have discussed to this point are designed to place American commercial agriculture on a sounder and stronger footing.

But this is only half the battle.

For there are thousands of men and women in rural America who need a different kind of help.

The statistics tell the grim story:

--Farm employment has fallen by 46% between 1950 and 1967.

--Nearly 1.5 million small farmers earn less than $5,000 per year. Their resources are meager and they have little to sell. Their existence may hang on a thin thread: a few acres of tobacco and cotton, an old-age pension, and the Food Stamp Program.

--The rate of unemployment and underemployment in rural America far exceeds the national average.

--10 million people in rural America-one in every five falls under the poverty line, and millions of families live in housing that shames a modern nation.

What promise is there for the sharecropper who has been replaced by a machine? What new job will open up to the 50-year-old farmer who has spent his entire life working the soil? What future can a young farm boy aspire to, when only one out of ten can expect to earn a living as a full-time farmer?

Unprepared and untrained--with nowhere else to go--they have left the land they know and streamed into the teeming slums of American cities.

The problem they pose touches us all. It is a problem of urban America no less than rural America.

We have long spoken of parity of opportunity for rural Americans. I speak now of making that promise a reality.

It will require action--both long and short range. The foundation of that effort has been built.

--The war on poverty is quietly transforming the lives of thousands of men and women in rural America.

--"Operation Outreach," launched last year, brings 90 Federal programs, from health to housing, from education to economic development, to the countryside. Under the coordination of the Secretary of Agriculture, Technical Action Panels organized at the regional, state, district and county level are assuring that these programs turn into effective action for the people.

Food Stamps

But some people still go hungry in rural America.

The Food Stamp Program has been an effective instrument to supplement the purchasing power of low-income families. When I signed the Food Stamp Act of 1964, the program was being tested in 43 areas. Today, it is operating in over 850 counties. By early summer, it will extend to 1200, providing the basic essential of life to over two million needy men, women and children.

I recommend that the 1969 appropriation authorization for the Food Stamp Program be increased from $225 million to $245 million.

The Small Farmer

Many of our poorest farmers cannot leave the farm for other work. They are untrained. And they have passed the age when job opportunities can open up a new life. They are boxed in.

They cannot "go into something else," for there is no place else to go. But they can be aided more effectively--and economically--on the farm.

I have directed the Secretary of Agriculture to focus the full range of the programs under his jurisdiction to help the small farmer.

I am also proposing legislation that will:

--Increase funds available to small farmers to begin new farm and non-farm enterprises; and to provide credit to help the farmer to convert his land into income producing recreation areas.

--Improve the loan program for grazing associations.

--Establish a credit program for rural cooperatives now ineligible for assistance from the Banks for Cooperatives or the poverty program.

I am also asking the Congress to appropriate additional funds to help low-income ranchers, who depend on National Forest lands for much of their livestock grazing, and to increase technical assistance to cooperatives owned by small farmers.

Rural Electrification

Thirty years ago, the lights went on across the farmlands of America. Rural electrification liberated the farmer and his family from the tyranny of darkness. Lights, appliances, radios-all the conveniences of modern living--replaced the kerosene lamp and the flickering candle. Electricity eased the farmer's burden, and brought industry and jobs to rural America.

Rural electrification is a great American success story.

We must advance that success and bring it up to date by assuring the growth of the nation's rural electrification systems in the areas they have been called upon to serve. Those systems must have access, under fair and reasonable rates, to bulk power supplies. In this way, they can continue to provide a reliable, uninterrupted, and inexpensive flow of electricity into America's farm communities on a par with more populous communities.

Rural Housing

There are places in the hollows and small country towns that look as if America had never moved forward from the grim days of depression.

Over three million families outside our metropolitan areas live in ramshackle and dilapidated dwellings.

More than half of the Nation's 6 million substandard housing units are outside our metropolitan areas.

But our federal housing programs have not been able to reach effectively enough into those dusty roads of a by-passed America.

I propose that we move now to correct this situation.

First, I have already recommended legislation to launch a new program, in cooperation with industry and labor, to add 6 million new housing units over the next 10 years for families with low and moderate incomes.

I am directing the Secretary of Agriculture to work with the Secretary of Housing and Urban Development in bringing this new program to our rural areas.

Much of the necessary assistance can be rendered by the Farmers Home Administration. For more than three decades, it has helped provide home financing for rural citizens.

I want to make certain that the residents of rural America participate fully in this important housing program. Second, I have recommended legislation which will:

--Authorize the Secretary of Agriculture to reduce the interest rates for low and moderate income families so they can borrow under existing rural housing loan programs.

--Broaden the eligibility for credit under the rural housing loan program.

--Make low-income non-rural residents who have jobs in rural areas eligible for housing loans.

Third, I have directed the Secretary of Housing and Urban Development to insure that the rent supplement program has maximum impact in rural as well as urban areas.

Jobs and Rural Development

The rural American displaced by technology has a proud heritage of hard work. He does not want welfare. He wants a job.

If the jobs are in the cities, men will move there.

Eighteen months ago, in Dallastown, Pennsylvania, I said:

"History records a long, hard struggle to establish man's right to go where he pleases and to live where he chooses .... We lose that freedom when our children are obliged to live someplace else if they want a job or if they want a decent education. Not just sentiment demands that we do more to help our farms and rural communities. I think the welfare of this Nation demands it. And . . . I think the future of the cities of America demands it, too."

Today 70 percent of our people live on 1 percent of our land. By the turn of the century--if present trends continue--there will be 240 million Americans living in urban areas occupying only 4 percent of this great and spacious nation.

I think we can change this trend by setting a goal of full parity of opportunity for Rural America. Industry, technology and transportation can bring jobs to the countryside rather than people to the cities. And government must help.

In our growing economy, private enterprise-today-is creating thousands of new jobs in the small towns of America. We can do more to develop job opportunities and to provide assistance to those who want work.

With legislation now on the books, we can move to reduce rural underemployment and unemployment by the end of 1968. I have directed:

--The Secretaries of Commerce and Agriculture to develop an expanded credit program for firms seeking to locate new plants in rural areas.

--The Secretary of Commerce and the Administrator of the Small Business Administration to give top priority to loans for the construction of industrial buildings in rural areas.

--The Secretary of Labor to extend work training and job counseling programs. With the Census Bureau, he will undertake regular surveys of labor market conditions in rural areas.

--The Secretaries of Agriculture, Labor, and Health, Education, and Welfare and the Director of the Office of Economic Opportunity to coordinate expanded area-wide manpower planning, and concerted education and training services.

--The Secretary of Housing and Urban Development and the Director of the Office of Economic Opportunity to help finance the creation of additional community centers where the rural resident can have access to all the programs designed to help him and his family.

--The Secretary of Labor to extend the Concentrated Employment program, which brings together a wide range of manpower and related services in selected geographical areas, to an additional 70 areas--35 of them rural.

In addition, I have recommended legislation which would provide training facilities-and temporary housing during training-to enable low-income rural residents prepare for improved employment opportunities.

But jobs alone are not enough to make the countryside more livable and more convenient for rural Americans. What is needed is a restoration of rural-urban balance--a balance that assures rural America its full, fair share of educational, economic, social and cultural opportunity.

To help accomplish this, I recommend that the Congress:

--Increase Federal programs to assist rural communities in building modern water and sewer systems.

--Extend the period of eligibility for grants for comprehensive water and sewer projects.

--Authorize recreation projects in Resource Conservation and Development areas.

--Appropriate funds for ten new multicounty, multi-purpose Resource Conservation and Development areas during Fiscal 1969. This will give the Nation fifty-one such areas, encompassing 100 million areas.

In addition, I urge the Congress to take action on two important measures pending before it:

--To finance comprehensive planning for groups of rural counties. Such planning can help rural communities attract business and industry and make better use of Federal programs. It can help neighboring communities pool their resources--health, education, training-to meet the common needs of their people.

--To provide additional sources of financing for rural telephone systems. We must continue to build and upgrade our telephone systems to speed economic development and community growth.

THE SPECIAL NEED

Our earliest destiny was shaped by those who, in Jefferson's words, "labor in the earth."

The hand that worked the plow--that led the team--that husked the corn--was the hand that guided America to its greatness.

The stability and endurance of the farmer are a priceless part of our nation's heritage. His love of the land expresses the American dream--that a man should be able to shape his own destiny with his own hands.

The American farmer today stands in the proud tradition of generations of his fathers.

But he is faced, as no generation before him, with the problems of an accelerating technology. It is bringing fundamental and forceful change to the farmer and the rural community.

The farmer and the rural community need government's help, and government must respond.

Since I have been President, I have been proud to sign 184 measures designed to assist farmers and the rural community. Each of these has filled a special need.

The proposals I have outlined in this message continue that vital work.

This is a total program---one for the years ahead as well as for today--through which the American farmer can claim his place and privilege in the life of his Nation.

LYNDON B. JOHNSON

The White House

February 27, 1968