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Butter Imports, Reduction in Tariffs, Present Situation (1935)

The Drought and Current Farm Imports - 1935 - Section 4

Section four from the 1935 Booklet Issued by the WPA covers topics on the importation and consumption of butter, Tariffs on Grains and other products, and the impact of imports on the present situation (Depression).

Butter Imports

Butter imports increased during the first months of 1935, due to relatively high prices caused by lowered supplies and lowered production, which in turn were due to feed shortage because of the drought. There is no adjustment program for butter.

Approximately 8,500,000 pounds of butter were imported, paying a duty of 14 cents a pound, between January 1 and the end of March, arriving mostly from New Zealand.

This increase in imports did not offset the reduction in domestic production caused by the drought. Butter production from September through February was 37 million pounds below that of the corresponding period a year earlier.

Storage stocks of butter had also been reduced to unusually low levels. As of February 1, storage stocks were approximately 19 million pounds, as compared with 76 million pounds a year ago, and a 5-year average for February 1 of 44,671,000 pounds.

Domestic consumption of butter in February including imports moving into retail trade channels, was 24 percent under the volume consumed domestically in the same month a year ago. Butter prices were expected to decrease later in the spring, when fewer imports should be expected.

Imports of butter into the United States have been smaller in recent years than they were 10 years ago. This has been due largely to increasing tariffs, and partly to the low domestic price of butter during the early depression years.

Imports in 1932, 1933, and 1934 were little more than a million pounds each year, or less than a hundredth of 1 percent of our average annual production of around 1,500,000,000 pounds. (See table 4.)

Exports of butter have about matched imports from 1928 through 1934, with both exports and imports declining during this period.

TABLE 4.-Butter: Exports and imports, 1927-35, with 1923-27 average (Note 1)

TABLE 4.-Butter: Exports and imports, 1927-35, with 1923-27 average 1
  1. From Handbook of Dairy Statistics and Market News Service, Bureau of Agricultural Economics.
  2. Tariff 8 cents a pound until 1 Apr. 5, 1926, when it was raised to 12 cents a pound.
  3. June 12, 1930, tariff raised to 14 cents a pound.

No Reduction in Tariffs

The grains and other products which have been attracted into the United States by shortage due to the drought have scaled the regular tariff walls, in accordance with the Tariff Act of 1930.

Wheat for human consumption has paid a duty of 42 cents a bushel, while wheat unfit for human consumption has paid a 10 percent ad valorem tariff.

Corn has paid the regular duty of 25 cents a bushel, oats 16 cents a bushel, barley 20 cents, and rye 15 cents a bushel. Beef has paid a duty of 6 cents a pound, or not less than 20 percent ad valorem for canned beef.

Only in the case of hay and straw was there removal of the tariff to allow increased imports, and this was done in order to help growers of stock and dairy animals for whom the feed situation due to the drought was most acute.

The move to allow temporary free entry of hay and straw was initiated by livestock producers, who petitioned the President. In answer to this petition, the President issued a proclamation which became effective on August 30, 1934, temporarily removing the tariff on hay and straw.

The tariff may be reestablished as soon as the acute situation with regard to feed is sufficiently mitigated. Hay which has come in duty free has been consumed mostly in the drought areas near the Canadian border.

Imports of corn, wheat, oats, and other products have been drawn into the United States through shortages and high prices caused largely by the drought.

Importation is possible only when American domestic prices are sufficiently above prices in foreign producing countries, so that ocean freight, insurance, and handling charges, plus the duty, plus such freight and handling charges as may be necessary within the borders of the United States, can be paid by foreign sellers and still leave them a profit.

Present Situation Abnormal

Obviously these conditions can be met only during a very abnormal situation, such as exists at present. As production in the United States resumes, and with normal growing weather, the differential between domestic and foreign prices is certain to be reduced to a point at which importation is unprofitable. Even at the present time, the margin is so narrow as to permit a relatively minor amount of imports.

These small quantities of imports are, however, the evidence that farm prices have risen to the top of the tariff wall. They show that the farmers are really getting a temporary benefit of the tariff. Under all normal circumstances, the tariff has no such effect upon farm prices.

Only the unusual circumstance of drought has caused a domestic shortage of farm products such as to give the tariff the degree of effectiveness which it usually lacks, so far as the farmers are concerned.

Farm imports normally are not attracted into this country because farm prices usually are kept down by excess supplies to a point where it does not pay to ship competitive agricultural products into this country.

Such imports as have been received have been utilized for the most part in areas along the coasts of the United States, far from the large producing areas of the interior.

Thus, corn has entered the ports of the Atlantic and the Pacific, and has been used mostly for feed near the metropolitan centers of the seaboard. Corn imports have not displaced corn available in the Corn Belt, but has supplemented short feed supplies along the coasts.

Meanwhile, the high domestic prices for wheat, corn, oats, and other products have benefited American producers. Though the United States is temporarily on a domestic basis for most of its agricultural products, the total returns to farmers are greater than they have been in recent years when large surpluses forced low domestic and world prices. The point to be noted, however, is that no changes in the tariff schedule have been made since 1930.

Index to Part I of the Current Farm Imports 1935 Booklet

  1. Introduction, Export-Import Status, Imports in 1923
  2. Current Imports, Relative Volume and Corn Imports
  3. Adjustment of Oats, Barley, and Rye; Meat Imports; Slaughter of Animals
  4. Butter Imports, Reduction in Tariffs, Present Situation
  5. Should Imports be Prohibited, Export Basis, Agricultural Exports
  6. Exchange of Goods, AAA Programs, Livestock Programs
  7. Drought Shortages and Excess Crop Acreage
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