Food Subsidies and Parity Prices

February 9, 1946

Report Outline
Food Price Control and Food Subsidies
Evolution of the Farm Parity System
Revision of Agricultural Price Policies
Special Focus

Food Price Control and Food Subsidies

Two issues upon which President Roosevelt clashed repeatedly with Congress during the war years are again up for action at the 1946 session. They are (1) whether the federal government shall continue to pay subsidies on leading food products to hold down living costs, (2) whether the parity formula of the Agricultural Adjustment Act of 1938 shall be revised to permit a rise in the prices of basic farm commodities. Both questions are a part of the larger question of what the federal government should—or can—do to assure permanently a “fair share of the national income” to agriculture.

Proposal to Renew Price Control and Subsidy Powers

In his annual message of Jan. 21 President Truman asked Congress for quick action to extend the Price Control Act for an additional year after June 30, 1946. This action was necessary, the President said, to avert the “national disaster” which would result from removal of price ceilings at a time when inflationary pressures on prices and rents were “at an all-time peak.”

The President asked also for renewal of the present authority to pay “rollback” subsidies on primary food products; this authority is likewise scheduled to expire June 30. The President said: “If we fail to take this necessary step, meat prices on July 1 will be from 3 to 5 cents higher than their average present levels; butter will be at least 12 cents a pound higher, in addition to the 5 cents a pound increase of last fall; milk will increase from 1 to 2 cents a quart; bread will increase about 1 cent a loaf; sugar will increase over 1 cent a pound; cheese, in addition to the increase of 4 cents now planned for the latter part of this month, will go up an additional 8 cents.” The impact of these increases “would result in more than a 3 per cent increase in the cost of living,” which would make it “extremely difficult for us to control the forces of inflation.” New pressure on the prices of agricultural products was foreshadowed, Feb. 7, when President Truman ordered into force a sweeping conservation program designed to make additional food supplies available for export to meet “a food crisis … which may prove to be the worst in modern times.”

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