Forty years ago, a Georgia boy, Stephen R. Pace, wrote the nation's peanut farmers into federal price support legislation to boost their income and assure an adequate supply of peanuts.
Pace, a Democratic congressman, went on to serve 14 years on the House Agriculture Committee, and the peanut support program went on to cost the U.S. Treasury almost a billion dollars.
Today, two other boys from Georgia (the nation's biggest peanut state), Herman Talmadge and Jimmy Carter, are overseeing an effort to reverse what Pace did and reduce the federal role in peanut farming. "The President told me he was going to let me handle it," Talmadge, chairman of the Senate Agriculture Committee, mused the other day. "I told him I preferred to let him handle it."
The President did.
And now the Senate and House Agriculture committees have approved administration proposals to drastically cut federal peanut purchases that could have cost the government an estimated %1.1 billion in the coming five years alone. That's more than the $879,246,570 paid out in the past 40 years.
Instead, the five-year estimate is now $258 million.
What is happening is a fundamental shift in a farm policy, designed to get the government to stop buying surplus peanuts and instead make those peanuts more competitive in the world market, thus boosting exports.
This change has been forced by technology and inflation, which over-whelmed a rigid law made the program a multimilion-dollar flash-point for criticism. "It won't help" is how Talmadge assesses the political impact on him in a state with a $400-million-a-year peanut crop. "But most of the peanut people realized something had to be done to salvage the program."
Begun in 1938, the program has been tinkered with over the years, but essentially it works like this: The law says the Secretary of Agriculture should decide each year how many pounds of peanuts the country needs and then determine how many acres should be planted to grow that amount.
Except for one thing. The acreage cannot be below 1,610,000. That was not too much of a problem until the early 1960s when new techniques and improved peanut plants sent yields soaring. In 1962, the average yield for each acre was about 1,225 pounds and four years later was 1,700 pounds. Today, the average yields is 2,400 pounds an acre.
But domestic demand has not grown that fast, and the government has had to buy up unsold peanuts. Of every five pounds grown last year, the government bought one. In other years it has been as high as one of every three pounds.
Not only has the government bought peanuts, it has had to do so at 75 per cent of parity. Parity is an index of farmers' purchasing power, and as inflation eroded the buying power the index rose. The government-supported price tagged right along, increasing from 12.8c a pound in 1970 to 20.7c last year. As a result, government losses on buying peanuts at artificially high prices and disposing of them at lower, more realistic prices have increased. The Commodity Credit Corp. lost $66 million on peanuts in 1970, and last year it lost $107 million.
"The problem is that the minimum support increased faster than the market price, so the government became the market," says Dallas R. Smith, chief of the Agriculture Department's peanut branch. "There isn't a surplus of peanuts, there's a surplus of peanuts at a [high] price."
What the House and Senate bills would do is maintain relatively high prices on enough peanuts to fill the United States' needs and a lower price for the remaining peanuts. In theory, these cheaper peanuts would be bought by foreign countries, not the U.S. Treasury.
All of that would be accomplished by allowing farmers to plant their 1,610,000 allotted acres as usual. But over the coming five years there would be a gradually declining amount of peanuts covered by the government-supported price of $420 a ton (21c a pound). The remaining peanuts would then be up for export at world market prices, currently about $220 a ton (11c a pound).
In other words, the twin problems of ever-increasing amounts of peanuts and ever-rising prices supports would be solved. The price support would be fixed, and the amount of peanuts covered by it would decline. All at savings to the taxpayer but possibly at some cost to farmers.
Talmadge says, however, that the blend of high priced domestic peanuts and lower-priced export peanuts still "will assure a profit" for peanut farmers.
"We feel we can live with it," says peanut farmer Emmett Reynolds, the president of the Georgia Farm Bureau Federation, "but there are some people who will never like it."
"This is a new element for peanut farmers," notes Kay Wygal, a marketing specialist for the Agriculture Department. "If they want to make some money, they're going to have to make some marketing decisions," such as how many acres to plant an how much to plant. Wygal foresees a new marketing process replacing the current one in which buyers are guaranteed a supply and sellers a profit.
Wygal served on the administration's "peanut task force" set up by Agriculture Secretary Bob Bergland to recommend changes in the peanut program. What with the President being a peanut farmern, any modifications could have been suspect. But Carter supported revisions during his campaign last year, and, by all accounts, divorced himself from the task force.
"He said he didn't want to know what was in the bill until it came to his desk for signature," said one source.
"I don't even know that Jimmy Carter had any say-so - I don't mean to say it that way," said task force chief P. R (Bobby) Smith, a friend of the President. He corrected himself and added, "This is the Department of Agriculture's bill."
Carter was razzed during the campaign by former Agriculture Secretary Earl L. Butz for benefitting from the peanut program. Carter directly received $2,728 since 1970 on two sales to the government. Others say, however, that his peanut seed and warehousse businesses were aided indirectly by a federal program that stimulated peanut production.
Butz, for his part, was criticized by others for manipulating the peanut program in such a way as to send government losses soaring.
Not that the current legislation is the final word on peanuts. It continues, after all, the controversial decades-old allotment plan under which only those holding allotments can grow peanuts or sell or rent their peanut acreage at inflated prices.
And the legislation would expire in the early 1980s. In some circles it is viewed as a transitional bill designed to ease the American peanut farmer from the womb of total government support to a less secure, more competitive world.
But there is a limit to just how far one Georgia boy will go in undoing the work of the first Georgia boy of 40 years ago. Says Herman Talmadge: "I don't anticipate it will be a transitional bill."