Food Price Subsidies

Report Outline
Food Price Under Defence Production Act
Food Subsidy Programs in World War Ii
Alignment of Forces on Consumer Subsidies
Special Focus

Food Price Under Defence Production Act

The Defense Production Act of 1950, as now written, will A expire on June 30, 1951. Revision and extension of the act was asked by President Truman in his State of the Union message, Jan. 8, but administration proposals for change, although promised by mid-February, have not yet been sent to Congress. The delay appears to be due to disagreement among the President's advisers on whether to seek some relaxation of the price protections now enjoyed by agricultural commodities or to recommend a system of consumer subsidies to stabilize food prices at retail.

Under present provisions of the Defense Production Act no price ceiling may be set for any agricultural commodity which is below the current parity (“fair” market price) for that commodity or is lower than the highest price received by producers in the month before the Korean war. It has been possible under this formula to freeze prices of beef cattle, sheep and hogs, but prices of commodities still below parity, including such important food products as wheat, corn, milk and butterfat, remain free to rise. And any increases in prices of these commodities in primary markets may be passed on through the various stages of distribution for ultimate payment by consumers.

Concern Over Rising Prices for Food

Economic Stabilizer Johnston and Price Stabilizer DiSalle agree that the general price level will continue to rise—by about five or six per cent before mid-summer. DiSalle said at Chicago, Feb. 17, that his objective would be to stabilize prices of agricultural commodities “at parity or a near-by level that will gain maximum production.” But Charles E. Wilson, director of mobilization, has been reported to be “very concerned” over rising food prices and to be preparing recommendations for revision of the Defense Production Act to permit tighter control of this important element in the cost of living.