ECONOMIC

The controls on soybean exports seemed justified by special circumstanceswhich made domestic processors and livestock producers unable to pay worldprices for the available supplies of soybean products. The ceiling prices onred meats in March, the later freeze on all food prices in June, and the risingcosts of feedstuff's combined to place producers in a severe profit squeeze. Asa result, they cut back their production plans and began to slaughter breedinganimals, a response that could have seriously reduced food supplies formany months and even years if it had continued. However, the export controlsraised serious conflicts among a variety of national objectives. Removalof meat price ceilings and the earlier termination of all special efforts toexpand exports gave domestic and foreign buyers equal access to U.S. suppliesof feedstuff's and food commodities, thereby reducing the necessity ofexport controls.* * * * * * *The recent shifts in resource use and output mix in agriculture have occurredin response to increased worldwide demands for agricultural productsand tighter domestic supplies of farm resources. These changes havebrought an end, at least temporarily, to the chronic excess capacity in agriculture.Exports have expanded swiftly, so much that large carryover stocksof grain commodities have been depleted. With supplies of feedstuffs forlivestock extremely tight, livestock production has stopped expanding. Cropand livestock production are now competing more directly for the Nation'sfarm resources. Over the last year, extensive adjustments have occurred inagriculture in response to changing price relationships and sharply risingprices. Tightened markets for food have brought a new awareness of manyinterrelationships that could be safely ignored during periods of surplusesand have made policy decisions relating to food and agriculture morecomplex.AGRICULTURAL POLICY FOR THE FUTURESignificant progress has been made in the past decade toward less Governmentintervention in and control of farm production. The agriculturalacts passed in 1965 and 1970 moved the Government out of mandatory controlprograms for major farm commodities and provided a more flexible andeffective means of controlling farm output. Another significant step towardmaking farm legislation more market oriented was taken when Congresspassed the Agriculture and Consumer Protection Act of 1973, whose principalinnovation is a system of target prices for wheat, feed grains, andcotton. When market prices are above the targets, no Government "deficiencypayments" are made to farmers and the Government has little involvementin agriculture. In years when market prices fall below the targetprices, Government payments to farmers make up the difference betweentarget and market prices on base production. The Government also placesa floor under market prices by being ready to purchase crops from farmersat relatively low prices. Farmers are thereby assured in two ways of at least133