2 minute read
How federal can work against dealers subsidies
rnHE TOWN of Ellis, Kansas, population r Z.SOO. is now down aqain to one lum' ber yard.
This fact alone is probably not particu' larly newsworthy, especially as the esti' mated maximum annual lumber sales in Ellis are not much over $200,000 per year. But what does make this fact of interest to any privately owned tax-paying business, to any taxpayer and to any housewife who buys bread, is not only the reason why there is now only one lumber yard, but also the reason why there were ever two yards in the first place.
And because Ellis, population 2,500, is an ideal study laboratory, the research stafi of the National Federation of Independent Business conducted an inquiry into the case of the defunct lumber yard.
Story sI s Glonce
How one lumber dealer managed to just stay in business, competing against another using Your tax dollars and selling below cost'
Under a government program to aid farmers to hold wheat crops for a more favorable price, a cooperative built two grain elevators under a special provision permitting construction costs to be charged ofi in five years.
As wheat was delivered to the elevators the Commodity Credit Corporation loaned money on the grain so that growers had immediate cash while waiting for price increases. And in addition, the government paid the cooperative a monthly rental fee for storing the grain amounting to threefourths-of-a-cent per bushel per month.
For many years, the co-oP's income from these rental fees ran around $300,000 annually, which after operating expenses, gave grower members assurance of a pretty good dividend.
However, the co-op's controlling group decided this income was not enough and branched out into other forms of business under the tax-shelter provided for cooper' ative enterprises.
This included opening a feed outlet as well .as a gasoline and oil enterprise and finally to opening a lumber yard. In this operation, presumably to drive out the independent yard already established, larnber was solil lor less than oaerhead, costs to show a loss on the operation.
But losses incurred in lumber yard operations were subsidized by using part of the government grain storage fees paid into the cooperative.
Then came the smashing blow. The government called in all stored wheat on which it had loans outstanding to central terminals and tle cooperative found it no longer had the assured $300,000 storage fees coming in from the government, and unable to subsidize the losses being taken on the lumber yard from government checks, had to close it down.
The people in Ellis, Kansas, where wheat is the way of life, are indeed puzzled. A typical comment is, "About fifteen years ago wheat was bringing $2.50 per bushel and a loaf of bread in the store was ten cents. Today wheat is bringing $1.32 per bushel and that same loaf iif bread is 28 cents."
) Quclity kiln-dried lumber in oll grcrdes.
) Plywood, in shecthing qnd sonded, exterior qnd interior, DFPA-grode stcrmped, up to 5'by l0'.
) Engineered timber {cbriccrtion.
) Mixed cqrs oI lumber, plywood cnd "stock" glu-lom becrms.
) Susiained yield oI old growth Douglos lir.
