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AIR IMPORTS OF ORNAMENTAL CROPS, BY WEEKS, VIA BOSTON, DALLAS, HOUSTON, MIAMI, NEW ORLEANS,
[In cartons unless otherwise stated)
AIR IMPORTS OF ORNAMENTAL CROPS, BY WEEKS, VIA BOSTON, DALLAS, HOUSTON, MIAMI, NEW ORLEANS, NEW YORK CITY, SAN ANTONIO, TAMPA, AND TRUCK IMPORTS VIA SOUTH TEXAS POINTS—Continued
[In cartons unless otherwise stated)
The CHAIRMAN. We appreciate very much, Mr. Rutledge, your consideration of the committee and your discussion of your problem. I am certain that the committee will keep it in mind and consider it when we get into executive session.
Mr. GIBBONS. Mr. Rutledge, for the committee can you tell us the dollar size of the Florida citrus industry?
Mr. RUTLEDGE. The Florida citrus industry, I think we have to get back to how big it is; we have almost a million acres of citrus now in the ground in Florida, and about 25 percent of that is not even producing yet. So, you can see we are in an overplanted surplus supply situation very definitely.
This year, our retail sales will be about a billion dollars. Orange concentrate, for example, is selling now at the rate of about $1.5 million per day. So, we are engaged in a pretty big business here and we want to keep it healthy and profitable, if at all possible.
Mr. GIBBONS. So, your annual Florida citrus business is about a $1 to $2 billion a year business; is that right?
Mr. RUTLEDGE. Yes, sir.
Mr. GIBBONS. Where are potentially the greatest competitors from the outside ?
Mr. RUTLEDGE. Mexico is one. Brazil is another. Those two countries have the capability of producing considerably more citrus than they are at the present time if they could gain access to our markets.
Mr. GIBBONS. You say their labor costs are about eight times cheaper than our labor costs?
Mr. RUTLEDGE. Yes, sir. Mexico can pay the 1-cent-a-pound labor tariff, and they are, on fresh citrus, and still ship into the United States and be more than competitive under our prices and make a profit. They shipped in about a half million boxes last year.
Mr. GIBBONS. Do you feel that the escape clause provision of the
Tariff Act needs to be amended in order that seasonal shipments of fruits and vegetables can be considered by the Tariff Commission in making a decision to determine injury?
Mr. RUTLEDGE. I do not believe this would affect our industry.
Mr. GIBBONS. The vegetable end of the Florida agricultural business is hurt more by the seasonal impact ?
Mr. RUTLEDGE. Yes, sir. This is a tree crop. A citrus tree is going to be there for at least 50 years. So, it presents an entirely different problem.
Mr. GIBBONS. I know this is not your area of expertise but in the areas of strawberries and tomatoes those industries feel the impact greatly by the seasonal glut of the Mexican production, particularly, and some of the others close at hand?
Mr. RUTLEDGE. Yes, sir. They have to adjust to it by taking a chance to plant or not to plant. In the past, as history has shown, they have had to take the course of not planting in the face of this kind of competition.
With us, with the trees in the ground, we are going to run a 50-year cycle here where we are going to have plenty of citrus in the United States and we can't change it without cutting down the trees, and we certainly don't want to do that.
Mr. ĠIBBONS. You know, we talk about opening a factory and closing a factory. You can build a factory, I guess, in a couple of years but it takes how many years to plant an orange grove and bring it into production?
Mr. RUTLEDGE. It takes 5 to 8 years to bring it in where it is paying for its own production cost. From then on, we have groves well over 50 years old in Florida.
Mr. GIBBONS. During all that time, they require a great deal of tending and care?
Mr. RUTLEDGE. Yes, sir; it costs about $300 an acre to fertilize, tend and take care of a citrus
PETTIS I would like to ask this question about the situation in Florida. I am somewhat familiar with it in California, having been a citrus grower for some 25 years. What is the effect on what I call the small citrus grower? Are these new plantings tending to be corporate plantings or are there more small operators going into the business?
Mr. RUTLEDGE. During the last 6 to 7 years, sir, most of the plantings have been planted by syndicates and corporations and rich people who wanted to have a place to write off expenses against income. Now they can no longer do that because in the Tax Reform Act there is a section in there that makes them now capitalize that expense money until the grove starts producing; I mean for 4 years; so that it has virtually stopped planting.
Where ordinarily as a grower you would plant 10 acres, 20 acres, 50 acres, or 100 acres, we have groves that have been planted recently in Florida of 10,000 acres. We have one grove that has rows in it that are 8 miles long. So, a 5,000, 10,000, even 20,000-acre grove is not uncommon now.
When you were in the citrus business and when I started in the citrus business, a medium-size grower or good-size grower was 50 to 100 acres. So, this has completely changed
our picture. Mr. PETTIS. I want to commend the gentleman for this statement.
This situation which you describe this morning is not limited to the State of Florida, then?
Mr. RUTLEDGE. No, sir.
California, as well, has, in my opinion, over-planted. They had the largest crop last season that they had in 20 years. You have probably heard from them on that.
Mr. PETTIS. That is right.
Although we have known you a long time and quite favorably, for our record we would appreciate your identifying yourself.
STATEMENT OF HENRY H. WILSON, PRESIDENT, BOARD OF TRADE,
CITY OF CHICAGO
Mr. WILSON. Yes, sir.
I am Henry H. Wilson, president of the Chicago Board of Trade, and speaking in that capacity in behalf of the Chicago Board of Trade.
The CHAIRMAN. We are glad to have you with us. I hope you feel as comfortable out there as you used to when you were coming to the committee twisting arms.
We are glad to have you.
I must say that my experience in Washington was that it was my arm being twisted by the Members of Congress.
The CHAIRMAN. I imagine that is true.
I am deeply grateful for the opportunity to participate in this review of the proposed Trade Act of 1969 with special reference to agricultural trade. Our association is devoted wholeheartedly to the strengthening and expansion of trade.
The Chicago Board of Trade is the world's leading futures market for agricultural commodities, with member offices in 22 different countries. As such, our memberships recognizes the major importance of expansion of international trade in agricultural commodities.
The world in which we live is growing increasingly interdependent. The United States must depend on many other countries for several of the critical materials and even some of the amenities of life. The United States is one of the factors—but only one in the determination of world prices and terms of trade. Shifts in production and buying patterns of other nations can have a serious effect on the well-being of our farmers as well as on our balance of payments. As one of the foundation stones of free world viability, in addition to military and political factors, there should be a community of economic interest, too. For we are a community of interdependents.
No group in our economy has a greater stake in international trade than the American farmer. In the 12-months ending with June, we will export over $6 billion in agricultural products—equivalent to the crops from one out of 4 acres of our harvested land. We are exporting some 60 percent of our ride production, 40 percent of the soybeans, in oil equivalent, and about 40 percent of our wheat.
The encouragement of commercial sales for export is of the greatest importance to our farmers, and to labor and business, as well. Increased agricultural exports can provide a basis for the farmer to increase production with profit. They can be a major contribution to maintaining a favorable balance of payments and they can increase job opportunities and profits throughout our expanding agri-business industries.
For these reasons, we must develop new markets and we must expand, or at least maintain, our participation in present markets. We should do everything feasible to keep other nations from curtailing our exports by erecting high tariff and nontariff barriers.
The terms of the President's proposals are well-known to this committee. It is essential that the bargaining authority of the President of the United States be expanded and extended. In general, the proposals of this bill should, if implemented, generate some additional momentum in liberalizing trade and provide authority to take somo additional steps in international trade policy.
The Trade Act of 1969 will carry forward this Nation's 34-year-old policy of moving toward freer trade-toward an era of ever greater international cooperation. The Trade Act of 1969 rests primarily on two basic elements of U.S. policy-one, that trade liberalization is an essential step toward the closer integration of the free world economy; two, that liberalization of trade restrictions on all sides will bring a better allocation of world resources, and will stimulate economic efficiency, innovation, and enterprise.
These are the two legs on which U.S. foreign policy stands—a commitment to an economic philosophy of freedom and to a political philosophy of interdependence. In addition, this legislation is based upon the belief that, through export expansion, the United States can achieve equilibrium in its balance of payments without resorting to restrictive policies affecting the movements of goods, services, and capital and without weakening its commitment for defense and economic aid to less developed countries.
Agriculture for too long a time has received insufficient attention in negotiations for trade liberalization, especially since it involves complex problems. Levels of domestic farm income are involved in the economic policies everywhere. As a result, governments intervene in the markets with resultant distortions of world trade patterns. Supports to other measures, as current experience in the EEC is demonstrating, often aim at excessively high price targets. The resultant surpluses are inevitable with today's technology.
To implement programs of high guaranteed prices, unreasonable trade barriers are erected—including such devices as variable levies. The inevitable and logical sequence of these uneconomic actions follows:
1. Announcement of excessive price support level;