same time not make it impossible to pass the legislation. So let's look further at this particular element.

Mr. KREBS. I just feel, Senator, that when you do that, things need to be very specific in terms of the law. I noted with some interest, for example, just a couple of Sundays ago there was a story on the front page of the New York Times about the problems that the Environmental Protection Agency is having regulating pesticides. One of their major problems is that the regulations were vague.

I had some firsthand experience working on that piece of legislation when I was with the Agribusiness Accountability Project back in 1972. That is the very argument we were making at the time of the passage of the law, that the regulations were too vague.

As I say, if we use the bill as an educational tool and get people concerned about this, I think we have accomplished something. But I think it would be far more valuable to do that and have a strong bill that we could hold up as a model than to have a weak bill and then have to come back later and have all kinds of problems on our hands because we have left too many gaps. That is why I argue in terms that $15 million is too high.

Senator BAYH. I want to educate, but I also want to legislate.
Mr. KREBS. Yes.

Senator BAYH. Not just go through some charade that raises people's concerns and expectations and then find out that they haven't really gotten it.

Mr. KREBS. That is right.

Senator BAYH. Thank you very much, Mr. Krebs. We appreciate it. [Mr. Krebs' prepared statement, and additional material follow:]

PREPARED STATEMENT OF A. V. KREBS

Members of the Subcommittee, my name is A. V. Krebs, Editor and Publisher of Agribusiness Accountability Publications, a public interest research project, currently headquartered in San Francisco, Calif. I am also a board member of Rural America Inc.

Agribusiness Accountability Publications exists to notice in some detail the encroachment of corporate power throughout rural America and the U.S. food economy. It is directed toward and seeks to serve both concerned individuals and local, state, and national farm, consumer, labor, church and other public interest organizations who see the researching and publication of corporate agribusiness accountability issues as central to their organizing efforts.

For the past nine years as corporate research director and director of the Agribusiness Accountability Project and now as editor/publisher of my own publications, I have been quite concerned over the growing concentrated economic power in agriculture and the food industry and its effect on both farmers and

consumers.

Dr. Walter Goldschmidt, the eminent California anthropologist and social scientist, in an address at the University of Missouri in Columbia, Missouri in 1976. I believe, described for us beautifully the very crux of the problem that faces U.S. agriculture today.

"I said earlier that one aspect of that Protestant ethic *** is a belief that each individual's value is established by his accomplishment, and that for that reason each person should be allowed to grow as wealthy and as powerful as he can. But this unfettered growth of wealth and power threatens the very social framework out of which it has emerged. It is not an easy dilemma to solve, for it confronts freedom with equality-an age-old issue.

"*** How much freedom? How much equality? Very much is at stake, not only for the farm communities, but for the whole of the American polity.

"Even if I could, it would not be appropriate for me to solve this issue for yon. It is not enough that I ask you to give it your individual and collective attention. There is, however, a simpler solution.

48-507-80-9

"If, as I have suggested, the growth of corporate control of agriculture is not a product of efficiency, intelligence and hard work-of virtue according to the Protestant Ethic-but a consequence of policies and maripulations, the matter takes on a different character. The task is to reformulate policies respecting agriculture so that the competitive advantages of large scale operations are removed, so that the ordinary working farmer has an equal chance. If this is done, it may not be necessary to resolve the dilemma between freedom and equality."

THE CONSEQUENCE OF POLICIES AND MANIPULATIONS

Indeed, the "consequence of policies and manipulations!"

Back in 1962 a blue ribbon panel of 200 businessmen and educators, under the aegis of the Research and Policy Committee of the Committee for Economic Development (CED) issued a report, "An Adaptive Program for Agriculture." Authors of this report included many individuals who in the years to come would be initiators of government policy and who would implement those policies: Dale Hathaway, former assistant secretary of agriculture with responsibilities for overseeing the farm price support and other government programs; T. W. Schultz, University of Chicago economist; Paul Samuelson, M.I.T. economist, and Herbert Stein, former head of the Wage and Price Council and the top economic advisor in past administrations.

This 1962 report begins with a clear presentation of CED's view of the problem.

"The common characteristic shared by these (agricultural) problems is that, as a result of changes in the economy, the labor and capital employed in the industry cannot all continue to earn, by producing goods for sale in a free market, as much income as they formerly earned, or as much as they could earn employed in some other use: that is the industry is using too many resources!" Using too many resources, measured by return on investment, is then pinpointed as the key problem, and they immediately inform us that,

"The movement of people from agriculture has not been fast enough to take full advantage of the opportunities that improving farm technologies, thus increasing capital, create."

THE ADAPTIVE APPROACH

Thus, having stated the "farm problem" as too low a return on investment caused by farmers not leaving agriculture fast enough, the CED report goes on to describe "Three Possible Approaches to the Problem of Agriculture" which include a "Laissez-Faire, Protectionist and Adaptive Approach." The last of these is their proposed solution.

"The adaptive approach utilizes positive government action to facilitate and promote the movement of labor and capital where they will be most productive and earn the most income. Essentially this approach seeks to achieve what the laissez-faire approach would ordinarily expect to achieve but to do it more quickly and with less deep and protracted loss of income to the persons involved that might result if no assistance were given.

"The adaptive approach requires improved knowledge of available employment opportunities, and measures to finance movement and retrain workers; that is, a generally improved labor market. It works best when there is a high rate of economic activity and employment."

Thus they stipulate their approach as “adapting" agriculture through the removal of excess "resources" (farmers), and then utilize these in other sectors of the economy where they can generate a greater return on "investment of resources." As they state over and over again, there is a "persistent excess of resources, particularly labor, in agriculture over the quantities that could have earned, by sale of their product (Labor power) in free markets, incomes equivalent to what similar resources could have earned in other uses."

Having defined the problem, they go on to look at the causes of this failure of "resources to flow" out of farming, and state that, "the support of prices has deterred the movement out of agriculture."

Having developed a careful explanation of the problem as being too many farmers engaged in agriculture, which is caused by the support of farm prices, they go on to spell out their solutions. "The Choices Before Us: (a) leak-proof control of farm production or (b) a program, such as we are recommending here, to induce excess resources (primarily people) to move rapidly out of agriculture." The Committee for Economic Development's "Program for agricultural adjust

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ment calls for (a) policies and programs to attract excess resources for use in farm production and (b) for measures to cushion the effects of the adjustment on property and people." In keeping with their concern that the program be "largescale vigorous, and thorough-going, they propose."

"If the farm labor force were to be, five years hence, no more than two thirds as large as its present size of approximately 5.5 millions, the program would involve moving off the farm about two million of the present farm labor force, plus a number equal to a large part of the new entrants who would otherwise join the farm labor force in five years."

In spelling out the policies and programs needed to bring about this change of "removing resources" (primarily people) from agriculture, they focus on the primary strategy of adjustment of agricultural prices. As they explain,

"The basic adjustment requires to solve the farm problem, adjustment of resources used to produce farm goods (farmers) cannot be expected to take place unless the price system is permitted to signal to farmers."

They go to recommend that "*** the price supports for wheat, cotton, rice, feed grains and related crops now under price supports be reduced immediately. The importance of such price adjustments should not be underestimated. The lower price levels would discourage further commitments of new productive resources to those crops unless it appeared profitable at the lower prices. Also, the lower prices would induce some of the increased sales of these products both at home and abroad * * *"

THE BIG SQUEEZE

Of course, the fact that many of the authors of this 1962 report were in positions of policy-making power in the government does not necessarily mean that these policies were in fact implemented. However, we do have the historical record of agriculture at that time, and a 1974 follow-up report from the CED itself to determine the actual implementation of this plan to squeeze farmers out of agriculture.

The CED begins the 1974 report with this observation: "The situation of U.S. agriculture has changed drastically within a decade. In 1962, when the Committee issued the policy statement "An Adaptive Program for Agriculture," the problems of U.S. farming were mainly related to maintaining farm income in the face of continuing surpluses. The diagnosis was that agriculture was using too many resources; fewer farms and farmers could produce all the output then required or even more than could be marketed. As a result of these findings, we prescribed programs "for the better use of our resources in agriculture (that), vigorously prosecuted, would enable the people involved in farming to receive higher incomes without government controls or subsidy."

"In general, policies of this nature have been pursued by the U.S. government, with the result described in the present statement: namely, that U.S. agriculture today is far more efficient, a far more productive industry."

Their evaluation is that past analysis and recommendations were fundamentally correct, the government had faithfully implemented their recommended policies and that the desired results were achieved, e.g., one-third fewer farmers.

As indicated in the brief introduction cited above, the 1974 policy planners for CED concluded that enough of the "excess resources" had been removed from agriculture (primarily through the enforcement of below parity pricing), that it was time to "stabilize the farm population to maintain production for both helping the world food crisis and for keeping food prices down here at home." Thus the ultimate goal of the CED had been accomplished.

"Because of the sustained reduction in farm population, production has become concentrated on fewer farms. As a result, two readily identifiable segments of agriculture have emerged, one geared largely to farming, the other to jobs in the industrial and service economies.

"The farm population (4.5 percent) is now so small in relation to the total population that further migration from farms will not be substantial. Annual agricultural employment, which was 4.5 million persons only ten years ago, is now about 3.5 million persons, or only 4 percent of the total labor force, and it is still declining. It represents approximately the optimum farm labor force that this Committee envisaged for the 1970's in its statement "An Adaptive Program for Agriculture."

The creation of a two-tier system, with a few large farms and the majority poor enough for welfare was accomplished.

Later, they summarize their 1974 statement:

"This statement examines the vast changes that have taken place in U.S. agriculture in the past decade. The reduction in the number of farms, the great increase in productivity, the industrialization of farming, and the urbanization of rural life have produced two readily identifiable agricultural sectors.

"One sector consists of large farms that, although numbering about 25 percent of all farms, produce 80 percent of all food marketings. This group is engaged in the production of the major food and fiber crops such as grain, oilseeds, and cotton. These products of commercial agriculture have been the focus of U.S. agricultural policy over the past forty years and are now the major crops in world trade.

"The other 75 percent of U.S. farms, accounting for only 20 percent of the output, are operated largely by farmers who are increasingly dependent on the industrial and service sectors of the economy to provide supplemental or fulltime employment. Where financial distress exists in this group, it is rooted mainly in general social and economic causes, not in farm prices. Assistance for these farmers should be extended not through special support programs but rather through the same kind of program that should be made available to all disadvantaged Americans, urban or rural (i.e., through a national welfare assistance program based on a minimum annual income). (Emphasis added.)

COMMUNITIES OF ECONOMIC INTEREST

Let us make no mistake about it, the authors of this 1974 CED report, like those in 1962, are in strategic and well-positioned roles both inside and outside government to see that there recommendations are enacted.

For example, the membership of the CED's Subcommittee of Government Farm Policy, which drafted the 1974 report, served on the board of directors of Independent Bancorporation, Control Data Corp., Kraftco, Deere & Co., Green Giant Co., Ralston Purina, Del Monte Corp., Universal Foods Corp., Pillsbury, H. J. Heinz, Quaker Oats Co. and CPC International among others.

In addition others who were advisors to the subcommittee represented the Stanford University Food Institute, Harvard, University of Chicago, the Agricultural Development Council, Cargill Inc., and Luther Tweeten, from Oklahoma State University's Department of Agricultural Economics.

Tweeten's role is interesting for in addition to being the primary contributor to Secretary of Agriculture Bob Bergland's 1978 Report to Congress on the Status of the Family Farms he is a key policy writer within the curernt administration.

At present he represents the thinking which is pushing for policies which would create a U.S. agricultural system consisiting of a large number of small farmers, supported primarily by off-farm income and supplying necessary inputs to larger farmers, and farms, basically corporate financed and extremely capital intensive, which would successfully eliminate almost all moderate-size family farms.

Reading through the 1974 CED report their actual strategies and tactics become abundantly clear. However, their underlying goals and motivations remain vague until the very end of the report. Then they wrote:

"The absence of widespread surpluses and economic distress resulting from low farm income has provided an atmosphere relatively free of the political pressures from farmers experienced in the past."

Thus the real target of the CED appears to be the political strength of the farmers, and they acknowledge that their tactics enforcing below parity prices, and providing income subsidies, has successfully minimized farmers' ability to exercise political power.

MINIMIZING FARMERS' POWER

My California colleague, Mark Ritchie, and the person who truly deserves the credit for putting together this analysis of CED's strategies, tactics and goals (Copies of The Loss of Our Family Farms: Inevitable Results or Conscions Policy can be purchased through him at 824 Shotwell, San Francisco, California 94110) like myself sees the minimizing of farmers' power as crucial to corporate agribusiness for several reasons.

(1) Farmers have historically aligned themselves with trade unions and arban workers, including the formation of Farmer-Labor Parties which held political power in a dozen midwest and southwest states. These parties were committed to the restriction and control of corporations in their states.

(2) Corporate agribusiness clearly has three main goals: a) substituting capital for efficiency and technology for labor; b) standardizing the food supply, and c) the creation of synthetic food. In each of these goals the role of the farmer in producing food is greatly diminished.

(3) The political strength of the farmer has been displayed in their ability to get farm policies, such as parity income. These policies helped strengthen their economic, thus political power, making it difficult for corporations to control agriculture as they were attempting to control all other industries.

This fact is apparent in CED's admissions that "capital could not receive an adequate return on investment." This strength of farmers, (Measured by low return on corporate investment) lead the CED planners to attempt to break the power of the farmers by forcing a third of them off the land and often into unemployment. Once this is accomplished to their satisfaction, maintaining the large majority of those left on welfare becomes a secondary task and insures the farmers' political impotence.

As Kenneth Boulding, one of the authors of the 1962 CED report, emphasized: "The only way I know to get toothpaste out of a tube is to squeeze, and the only way to get people out of agriculture is likewise to squeeze agriculture. If the toothpaste is thin, you don't have to squeeze very hard, on the other hand if the toothpaste is thick, you have to put real pressure on it. If you can't get people out of agriculture easily, you are going to have to do farmers severe injustice in order to solve the problem of allocation."

Severe injustices, from below parity prices, to putting farmers into debt for their entire lifetimes, have been the conscious policy recommendations of major corporations represented by the CED, and in many instances, they were successful in implementing these policies through our government. They succeeded in squeezing farmers out, and are now wanting to put most of these few (75%) who are left on welfare.

PROGRESS???

Corporate planners have already recognized certain "changes" in their strategies which must be adopted, and are adjusting accordingly.

One change is the recognition that if "the toothpaste is thin, it will squeeze out of the tube easier." If farmers are resisting moving out of agriculture, and are able to demand and receive a certain amount of "help" in Washington, then it makes sense to define their problem as "cash flow," point to the inflated land prices as a sure sign of income to farmers, and extend more credit to them to help "tide them over."

This tactic both puts extreme pressure on farmers to produce more and more to meet their payments, and it insures that if farmers are "squeezed" out that they will owe most of their assets (often built up over several generations of labor) to the bank ending up with nothing.

As Andy Kitmer, a dairy farmer, has noted:

"Progress is if you can get enough money to buy your neighbor out. You're progressing. But then we wonder 'when's it going to be our turn for our neighbors to buy us out? Then when you buy three neighbors out who can afford to buy you out? The big corporations."

Another change in the strategy of groups like the CED is their adoption of the "plight of the small farmers" as an issue of important concern. Their initial plans to "squeeze" these farmers out was resisted by many who chose to work another job off the farm or to accept an even lower income to retain the small yet important assets which they controlled.

Policy writers for corporations, such as Luther Tweeten, recognized this pattern, and discovered how it could be used to the advantage of their long-term goals. These small farms came to be seen as important suppliers of inputs to larger farms especially those inputs which were extremely labor-intensive, such as feeder pigs, broilers, etc. These were much more cheaply produced on small family-type farms than on large, hired-labor and capital intensive corporatetype farm.

NEEDED FEDERAL LEGISLATION

It is with this analysis that I now want to direct attention to family farm antitrust legislation for I feel such legislation has an extremely important role to play if we are to only save family farms, but also promote a family farm system within rural America.

I say it has a role because I also believe that pending legislation such as the Reclamation Lands Opportunity Act (H.R. 3393) and the Family Farm Develop