for the income lag of agriculture. During the last five years, the annual
net additions to stocks of major crops have amounted to little more
than 5 percent of the harvested cropland.
Assuming for the next three to five years that we continue an
average rate of economic growth, no wars, existence of present farm
programs, average weather, and current trends in productivity, we
can expect continued high output and further accumulation of stocks.
3. Income Prospects. Prospects point to expanded livestock
production and lower prices and income in the feed grain-livestock
economy. Feed grain use is not likely to increase enough to halt fur-
ther accumulation of feed grain stocks. If the wheat problem were to
be solved by expanding the use of feed wheat, the price and income
problems of the livestock producer would become even more serious.
With huge wheat stocks in CCC storage, production potentials, and
possible changes in legislation, a substantial reduction in wheat prices
and incomes could occur. Cotton prospects are not bright in the three
to five year period ahead.
Prices, particularly of livestock products, will fall more than out-
put will rise. Wheat, cotton, and feed grain stocks probably will in-
crease above current levels. Farm costs likely will increase in the
three to five year period and combined with the general supply-demand
situation will cause net farm income to decline substantially.
D. Problem
American agriculture will in the foreseeable future face the diffi-
cult problem of balancing production to market outlets at prices to
producers that are considered reasonable. With relatively slow growth
in the demand for farm products accompanied by rapidly improving
technology and the lag in adjustment of agricultural resources, the
stage is set for large production and relatively unfavorable returns to
agriculture in the period ahead.
Adjustment of resource use in agriculture will need to be con-
tinued. Total resources currently devoted to agriculture produce an
output which causes incomes of farm people to be lower than those of
nonfarm people. The general feeling is that adjustment of resources
should be encouraged along lines which are naturally developing, i. e.,
more capital relative to land and labor devoted to agricultural pro-
duction.
Of the many possible approaches for adjusting resources in agri-
culture in the next three to five years, the following were chosen for
elaboration:
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