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 syst cluding 121 new applica loans totaling $49,250,000. Construction was at a reco with 23,052 miles of po erected. This is about onethe 68,607 miles of pole li pleted to date by REA bor At the close of the year, 227 ers had placed in service a 846 modern dial exchanges. The telephone borrower $928,991 in interest and $1. in principal on their loans the year. Twenty-eight bo were in arrears for a to $553,624. The 1954 Census of Agri showed that 48.8 percent of tion's farms had some type phone service. A sample su July 1955 by the Agricultur keting Service indicated t those farms with telephone s 51 percent had modern dial s 18 percent had common service, and the remaining 3 cent had magneto service. All REA telephone loans will provide modern servi 695,389 subscribers from 2 miles of pole line and the atte central office equipment. FARMERS' HOME ADMINISTRATION W. T., a 31-year-old farmer, owns a 150-acre farm in Wright County, M is married and has one young son. He bought the farm, unimproved, about 10 years ago. By 1955 the fami a small framehouse, a set of farm buildings, a fair line of farm equipmen a herd of 15 Jersey cows. At that point their progress was blocked. They needed to make sizable im ments to the barn in order to get on the Grade A milk market. They needed pasture, more cows, and a larger house. Additional funds plus further im ments in their farming operations would solve their problem but they had g far as they could on their own or with conventional credit. They discussed their situation with the local supervisor for the Farmers' Administration. With the supervisor, they worked out a plan to develo improve their farm through a loan that could be repaid from increased farm in over a period of years. Included in the loan for $8,400 which was closed in January 1956, were for constructing the milking parlor, remodeling and enlarging the house, p 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. During 1956 an alltime record of $308,492,000 was loaned or insured by the Farmers' Home Administration throughout the United States. The 1956 total was 5 percent greater than the approximately $293 million loaned in 1955 and also in 1954, and more than 34 percent higher than the total loans made in 1953. Collections on principal and interest during fiscal 1956, including collections on insured loans, amounted to $282,330,000, an increase over the $257,927,000 in 1955. Loans outstanding as of June 30, 1956, totaled $943,283,000, compared with $896,739,000 as of June 30, 1955. Approximately 55,000 borrowers repaid their loans in full during the year and reached a position where they can obtain the credit they need from other sources. Operating loans to 78,280 operators of family-type farms, for purchase of farm equipment and livestock and for fertilizer, insecticides, tractor fuel, seed, and other farm and home operating expenses, totaled $147,052,000. These loans helped owners and operators of family-type farms develop bal 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 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 States, Alaska, Hawaii, Rico, and the Virgin Isla each county a committee local people, at least two d were farmers, determined cants' eligibility and worke with the county supervisor i ing national policies to lo ditions. Loans were made only to whose credit needs cann quately be met by other Borrowers were required nance their loans with other as soon as they were able to 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 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 extension services for rural d ment work in the 1957 fisc This will help provide for in extension work in selected come areas. The Farmers Administration has been new authority to make loans time farmers. In addition, t Conservation Service, throu creased technical aid in pilo ties, and the Agricultural R Service and the Agricultura keting Service, through broa research on farm problems advantaged areas, will mak rect contribution to the rural opment program. Other agencies of the I ment, including the Forest and the Rural Electrificatio ministration, are supportin program and contributing te counsel. Through develop technical assistance to rural and the encouragement of co ing State agencies, other F departments such as the D ments of the Interior; Com Labor; and Health, Educatio Welfare are also playing a vit in the program. THE 1956 RECORD 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. Demand Domestic demand has been strong and rising throughout most of the period since 1951. The number of consumers has steadily risen. During 1956, business activity, employment, and consumer incomes have been very high. And consumers have continued to spend about onefourth of their disposable income for food. 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 di maintain the present rate of for several years. A nu countries are now buying our farm products for stoc Livestock and Livestock Pro The outlook for hogs in much improved. This i largely on the reduction in that is already in progres 1956 spring pig crop was percent from the previous y the fall crop was down 4 Hog slaughter has declined will be considerably smaller than in 1956, at least in the f 8 months. Even though the trend in production may co halt in 1957, hog prices and come of hog producers will higher. Cattle production ues stable. Slaughter in 19 likely be much the same as i but lighter weights will redu output. Prices may average higher than in 1956. Milk output in 1957 probab rise a little from the 1956 re 127 billion pounds. Price are favorable and the rising in annual output per cow (a high of 6,060 pounds in 1956) ably will continue. If prid ports in the 1957-58 season, ning April 1957, are not mu ferent than this season, income will be higher. Prod of poultry and eggs was very in 1956, and prices were Since production in 1957 is ex to be at least as high as in 19 significant improvement in p in sight. Wheat Our exports of wheat in th keting year 1956-57 are expe be substantially more tha million bushels, at least 70 m bushels more than last season. would result in the first sign reduction in our carryover of |