indicate that each pair of telephone wires may carry double or triple the number of messages now practicable. REA also encourages use of existing electric utility poles for new telephone lines where savings are assured. Through such means and close cooperation with all segments of the telephone industry, REA engineers are driving hard to cut construction costs and thus open the way for service to farms once considered out of reach. During fiscal 1956, REA approved 207 telephone loans amounting to $80,980,000, a substantial increase over the previous year in both the number of loans and the dollar total. Of these loans, 121 were to new borrowers, bringing the total number in the program to 466. The borrowers include 270 commercial companies and 196 cooperatives. These loans will bring modern dial service to approximately 187,000 rural subscribers, including about 80,000 who will have telephone service for the first time. Applications for loans on hand in REA at the end of the year amounted to $46,766,000. Additional applications were being pre pared by 170 telephone systems, including 121 new applicants, for loans totaling $49,250,000. Construction was at a record level with 23,052 miles of pole line erected. This is about one-third of the 68,607 miles of pole line completed to date by REA borrowers. At the close of the year, 227 borrowers had placed in service a total of 846 modern dial exchanges. The telephone borrowers paid $928,991 in interest and $1,199,901 in principal on their loans during the year. Twenty-eight borrowers were in arrears for a total of $553,624. The 1954 Census of Agriculture showed that 48.8 percent of the Nation's farms had some type of telephone service. A sample survey in July 1955 by the Agriculture Marketing Service indicated that of those farms with telephone service, 51 percent had modern dial service, 18 percent had common battery service, and the remaining 31 percent had magneto service. All REA telephone loans to date. will provide modern service for 695,389 subscribers from 201,524 miles of pole line and the attendant central office equipment. FARMERS' HOME ADMINISTRATION W. T., a 31-year-old farmer, owns a 150-acre farm in Wright County, Mo. He is married and has one young son. He bought the farm, unimproved, about 10 years ago. By 1955 the family had a small framehouse, a set of farm buildings, a fair line of farm equipment, and a herd of 15 Jersey cows. At that point their progress was blocked. They needed to make sizable improvements to the barn in order to get on the Grade A milk market. They needed more pasture, more cows, and a larger house. Additional funds plus further improvements in their farming operations would solve their problem but they had gone as far as they could on their own or with conventional credit. They discussed their situation with the local supervisor for the Farmers' Home Administration. With the supervisor, they worked out a plan to develop and improve their farm through a loan that could be repaid from increased farm income over a period of years. Included in the loan for $8,400 which was closed in January 1956, were funds for constructing the milking parlor, remodeling and enlarging the house, pasture improvement, and the refinancing of their existing real estate debts. The farm and home plan upon which the loan is based calls for a balanced farming system of pasture, silage, small grains and hay, and for increasing the herd to 25 head within the next 2 years. Farm records, kept in connection with the loan, show that the present Jersey herd is averaging 7,000 pounds of milk a year. Through improved breeding and other herd management practices, including selective culling, they expect to increase production per cow to at least 8,000 pounds. Funds for the loan were advanced by the MFA Mutual Insurance Company under the insured farm loan program in which the Farmers' Home Administration guarantees repayment and takes care of all loan-making and servicing activities. The interest on the loan is 31⁄2 percent and there is an additional 1 percent charged for insurance and administrative expenses. Although the loan was made repayable over a 40-year period, the T. family expects to repay in a shorter time by making larger than scheduled payments whenever they can. The Grade A dairy will add about $1 per hundredweight to the price they receive for their milk. Mr. T. is a member of the official board of his church, has been a 4-H leader on tractor maintenance and an ASC community committeeman. Mrs. T. is active in community affairs. They are REA members and take an active part in all local agricultural programs. anced systems of farming and make full use of their resources. Farm ownership loans to buy or develop 5,100 family-type farms totaled $58,765,000, of which $39,765,000 was provided through the insured loan program. Both the total amount loaned and the amount insured reached higher levels than at any time in the past. Emergency loans helped 45,840 farmers continue normal operations under emergency conditions. These loans totaled $87,044,000, including $13,330,000 for special livestock loans and $25,442,000 for loans made in counties designated for the special Great Plains credit program. Soil and water conservation loans were advanced to 2,320 farmers for a total of $11,910,000, of which $10,589,000 was insured. These loans are used to develop irrigation and farmstead water systems and to carry out soil conservation practices. Farm housing loans for the construction and repair of farmhouses and other essential farm buildings were available during part of May and June. Funds were advanced for 560 loans totaling $3,721,000. Including farmers who already had loans, approximately 242,000 families farmed with Farmers' Home Administration credit during 1956. With loans to operate, buy, enlarge, or develop farms, and with some types of soil and water conservation loans, the agency's county supervisors in the more than 1,500 county offices assisted borrowers in preparing farm and home plans, keeping farm records, in obtaining advice on farm and home problems, and in analyzing their operations. Farmers applied for loans at the county offices which serve agricul tural areas throughout the United States, Alaska, Hawaii, Puerto Rico, and the Virgin Islands. In each county a committee of three local people, at least two of whom were farmers, determined applicants' eligibility and worked closely with the county supervisor in adapting national policies to local conditions. Loans were made only to farmers whose credit needs cannot ade quately be met by other lenders. Borrowers were required to refinance their loans with other lenders as soon as they were able to do so. RURAL DEVELOPMENT PROGRAM In close cooperation with the Department, more than half the States have begun to move forward with this program. Rural development committees, made up of representatives of agricultural and nonagricultural agencies, were formed in 19 States. Pilot counties where basic farm-town development work is under way were singled out by State leaders in 21 States. In spite of severely limited Federal-State funds for the program in fiscal 1956, outstanding work has already been accomplished. Many pilot county leaders have inaugurated broad development programs including resource surveys, additional Extension assistance on small farms, business-industry promotion, new vocational education programs, local government changes to permit broader economic improvement. More Progress Ahead In fiscal 1957 the Department of Agriculture will provide additional support for State and county leaders giving direction to pilot programs. The program is expected to operate in about 55 pilot counties in 24 States. The sum of $640,000 was appropriated for payment to State extension services for rural development work in the 1957 fiscal year. This will help provide for intensive extension work in selected low-income areas. The Farmers' Home Administration has been granted new authority to make loans to parttime farmers. In addition, the Soil Conservation Service, through increased technical aid in pilot counties, and the Agricultural Research Service and the Agricultural Marketing Service, through broad-scale research on farm problems in disadvantaged areas, will make a direct contribution to the rural development program. Other agencies of the Department, including the Forest Service and the Rural Electrification Administration, are supporting the program and contributing technical counsel. Through developmental technical assistance to rural areas, and the encouragement of cooperating State agencies, other Federal departments such as the Departments of the Interior; Commerce; Labor; and Health, Education, and Welfare are also playing a vital role in the program. The net realized farm income of farm operators was about 4 percent higher in 1956 than in 1955. This gain, the first since 1951, was due mainly to increased marketings, and to new Government programs, including payments under the Soil Bank and the wool program. In 1956, prices of farm products averaged the same as a year earlier; while prices paid by farmers were also up about 2 percent. The parity ratio in 1956 averaged approximately 83, one point less than a year earlier. Net realized farm income should be a little higher in 1957 than in 1956. While it is always difficult to forecast the amount of change in net income, our best estimate now is a rise of about 5 percent. We expect a further slight increase in the average level of farm-product prices. But we also expect another AND THE OUTLOOK rise, again small, in prices paid by farmers, and some increase in marketing costs. Supply Continued large supplies were a major cause of the drop in farm income from 1951 through 1955. The slight improvement in income in 1956 occurred in spite of continued high output and high carryovers. Farm output again reached a record high in 1956. So did marketings of farm products. So did the carryover stocks of major farm products. Heavy exports and production adjustments will probably reduce carryovers of cotton, wheat, and rice in 1956-57 crop year. But corn stocks are expected to increase further. We may reach the turning point in agricultural supplies in the 195758 crop year, assuming a large and successful Soil Bank. Thus, we may make a start in 1957 toward bringing supply into better balance with demand. It is important that these adjustments be prompt and adequate. Crop yields per acre have risen by about 12 percent a year so far in the 1950's. This is equivalent to adding more than 5 million acres a year to our farm plant. There may be a tendency for the less productive acres to go into the Soil Bank. Granting all this, however, we expect some reduction in total agricultural output in 1957. The demand for agricultural exports has been much less steady. Reaching a high point in 1951-52, after the Korean outbreak, the value of our agricultural exports in the following fiscal year dropped about one-third. Helped by Government programs, it then increased gradually in 1953, 1954, and 1955. During 1956, exports rose very substantially, partly due to stronger demand and partly to Government assistance. The value of our exports in calendar year 1956 was about the same as that in 1951, and the quantity was an alltime high. This brighter picture in exports is an important factor in the improving agricultural situation. Looking ahead to 1957, we expect still further improvements in business, in the incomes of domestic consumers, and in the domestic demand for food. Agricultural exports will continue high during the present crop year. But it will be difficult to maintain the present rate of exports for several years. A number of countries are now buying some of our farm products for stockpiling. Livestock and Livestock Products The outlook for hogs in 1957 is much improved. This is based largely on the reduction in supply that is already in progress. The 1956 spring pig crop was down 8 percent from the previous year and the fall crop was down 4 percent. Hog slaughter has declined and it will be considerably smaller in 1957 than in 1956, at least in the first 6 to 8 months. Even though the downtrend in production may come to a halt in 1957, hog prices and the income of hog producers will average higher. Cattle production continues stable. Slaughter in 1957 will likely be much the same as in 1956, but lighter weights will reduce beef output. Prices may average a little higher than in 1956. Milk output in 1957 probably will rise a little from the 1956 record of 127 billion pounds. Price ratios are favorable and the rising trend in annual output per cow (a record high of 6,060 pounds in 1956) probably will continue. If price supports in the 1957-58 season, beginning April 1957, are not much different than this season, dairy income will be higher. Production of poultry and eggs was very large in 1956, and prices were lower. Since production in 1957 is expected to be at least as high as in 1956, no significant improvement in prices is in sight. Wheat Our exports of wheat in the marketing year 1956-57 are expected to be substantially more than 400 million bushels, at least 70 million bushels more than last season. This would result in the first significant reduction in our carryover of wheat |