tably hand this market over to our competitors in Europe and other areas of the world. To deprive American business of the Venezuelan market world likewise result in lower profits and unemployment in the Detroit area. There is a tremendous demand in the world today for petrole If Venezuela cannot sell oil, iron ore and other products of her cour try in the United States, she will readily find a market for these good in the sterling area and in many other regions of the world. Vete zuela will not, however, be able to convert the currencies, received in payment for her exports to Europe into United States dollars for co tinued purchasing of American products. Thus, she will be forced to reorient her entire trade pattern to other regions of the world. Brit ish automobiles will replace American-made vehicles on the streets of Caracas, Maracaibo and other cities in Venezuela. American-made drugs and chemicals will be replaced on the shelves of stores in Vere zuela by those made in Britain, France, Germany, and so forth. Conclusion: There are many other provisions in the Simpson b to which we equally object, such as the imposition of additional dutie on zinc, zinc oxide, ores and concentrates. In general we disapprove entirely of H. R. 4294 and strongly believe that it is a long step backward in the development of American world trade and an intellige American economic foreign policy. Passage of this bill could lead to another depression. It would certainly affect profits and employ ment in the city of Detroit and the State of Michigan. It is dangerou in the extreme. Therefore, the Detroit Board of Commerce and its entire membership strongly urges the committee to follow the advice of Preside Eisenhower and adopt a 1-year extension of the reciprocal trade agre ments program without change. The CHAIRMAN. Does that conclude your statement, Mr. Frost Mr. FROST. Yes, sir. The CHAIRMAN. Mr. Curtis? Mr. CURTIS of Nebraska. Are you opposed to the present peril point and escape clause provisions? Mr. FROST. Yes, we are opposed to the whole reciprocal trade agre ments program. We would rather have the tariffs lowered across the board. It is a little futile for us to go in and expect to have a qui pro quo basis on cutting trade barriers when you have a dollar shortage abroad such as you have. Mr. CURTIS of Nebraska. Is Sturgis, Mich., close to Detroit! Mr. CURTIS of Nebraska. The Derridge Shear Co. of Sturgis, Mich is one of the applicants for relief under the escape clause now before the Tariff Commission. Mr. FROST. That does not particularly surprise me. There are probably a great many people that would like to come down here for a subsidy or tariff concession of some kind. The point we are making is let us look at this in the interests of the American economy. Which is more important, a minor industry in Sturgis or the automotive industry? Mr. CURTIS of Nebraska. Do you know anything about that situation? Mr. FROST. I am not familiar with it at all. I am a bit familiar with the dairy situation, having been over in Denmark a short time go where we poured millions into Denmark to build up the cheese ndustry so that they would be able to sell cheese to us in exchange for he machinery and other products that they so badly need. Mr. CURTIS of Nebraska. Now in this Derridge Shear Co. case, it is our theory that if it becomes necessary that they be sacrificed, why, we should do it? Mr. FROST. There is nothing, Mr. Curtis, in free enterprise to the ffect that no one should be sacrificed. The very idea is that the maretplace is the place to make the decisions. In other words, someone who can make a better product at a cheaper price ought to be allowed o do so. Certainly there will be people hurt. There are people hurt very day in our domestic economy. There was a question that came p while Mr. Simpson was discussing with another witness the subect of equalization of costs. We do not have equalization of costs n the United States itself. You are bound to have people hurt; that 3 the basis of free enterprise. Mr. CURTIS of Nebraska. But it is your position that even under he trade agreements we should not have the peril point and the esape clauses? Mr. FROST. No, sir, our feeling is, though, that this whole problem as to be studied, and we believe that the President is on the right rack when he asked for 1 year to review and study and see what type of program the administration ought to have, and we think he ought o have that opportunity. Mr. CURTIS of Nebraska. That is all. The CHAIRMAN. We thank you. Mr. FROST. Thank you, gentlemen. The CHAIRMAN. The next witness is Mr. Samuel Fraser, executive ice president of the National Apple Association. We are very happy to have you here, sir. I am happy to have you as a constituent from Livingston, N. Y. TATEMENT OF SAMUEL FRASER, EXECUTIVE VICE PRESIDENT, INTERNATIONAL APPLE ASSOCIATION, WASHINGTON, D. C. Mr. FRASER. I would like to thank this committee and the chairman for the many kindnesses which have been given me during the years. The CHAIRMAN. If you will just state your full name for the record. Mr. FRASER. Samuel Fraser, executive vice president for the International Apple Association. The International Apple Association is a nonprofit membership Association with offices at 1302 18th Street NW., Washington, D. C. Its United States membership is located in all the important producng sections and distributing markets of the United States. The nembership includes the leading apple and pear shipping organizations, individual shippers and firms, leading growers, apple and pear Cooperative associations, wholesale dealers, distributors, exporters and mporters, and service organizations. In addition, its membership extends to other countries, including Canada, South and Central America, Great Britain, continental Europe, Africa, Asia, and Australasia. The association was organized in 1895, and is representative of the apple and pear industries of the United States. I will restrict my comments to the apple and pear industries and some of the problems which attend and their relationship to the proposed legislation. TAKING APPLES FIRST The apple came in with the colonists. Apple exports were a matter of record in 1755. London, England, reported a glut in 1773. The business is long-established. I may say that my father was here buying apples for export in 1870 following his service in the War Between the States, so my contact with the subject comes from my family. From 1870 to 1900 the apple was a slowly but steadily expanding industry. It moves in periods-heavy plantings followed the War Between the States which reached peak production 1880-1900. A moderate increase in planting was seen in 1900, with a heavy increase in planting 1910-20 which came into production 1920–30. World War I caused restriction in exports between 1914 and until November 1918 followed by a strong development in the export busi ness in the years 1920-30, when exports in certain years totaled in excess of 21 million bushels and England took 10 million bushels of the total. OTTAWA ACCORD AND THE TRADE AGREEMENT POLICY Following the Ottawa accord, effective in 1930, and the restrictions applied by Canada, Great Britain, and by others, the industry was thrown into difficulties and violent adjustments due to the loss of one market and another. This led to interest in the trade agreement policy looking to restora tion of markets and on behalf of the industry it was my privilege to work for the passage of this legislation and participate in practically every trade agreement made. From 1934 the policy was one of growth-the agreement with England was not reached until 1938 and it has had no chance to operate because World War II began that year. By the close of the war in 1945 world markets were so decimated that export trade was in difficulty, except shipments which were practically gifts, not trade. EXPORTS LIMITED Today there are few exports, the past year, 1951, showed a total of 3,500,000 bushels. In 1952-and I am speaking now of crop years because I have not yet sold my 1952 crop, it runs from June to June-it may run perhaps 1 million, chiefly to markets where Ameri can dollars are available in trade such as Venezuela with its million barrels of oil a day, and even Koweit, the State of Bahrein, Cuba in exchange for sugar. Exports may be shown to places where Ameri can troops or officials are fed. Brazil, an important outlet, is ir financial difficulties now and is seeking aid in financing. The aftermath of war is still with us. She owed some $400 million, and we picked up the chit for $423 million, and I am just in receipt from some of our members there that seek a subsidy of $1.25 a bushel, and they will apply, instead of the official $0.55 to the cruzeiro to 1 of 20 cruzeiros to the dollar which is in use in Argentina and buying apples in Argentina they want them to apply 44 cruzeiros to the dollar. In other words, the price of our apple would be up to a point two times that of the Argentine. You know we are good friends with Brazil, and yet that is about the way exchange is manipulated, and we have a very good trade agreement with Brazil. PRODUCTION RESTRICTED To meet the loss of markets the industry has restricted production. At one time the census report showed 200 million trees, these were on farms. Today there is estimated 40 million bearing trees and barely enough not in bearing to maintain 40 millioan trees in production. The industry has gone through 5 years of unprofitable returns and with increasing labor costs (often 500 hours of hand labor to grow and pick and pack an acre of applies of 400 bushels yield at $1 an hour against 20 cents in 1914). We see mechanized production in many other competitive food crops and under these conditions an increasing number of orchards have been removed or abandoned. This continues, and even young orchards are being bulldozed out in order to grow hogs, something that can harvest the crop at less expense and go to market in a concentrated form. A few areas are showing sufficient new plantings to maintain production, but as a taxpaying industry, the apple is not at present one on which you can place much reliance. With the present tax structure there is but limited possibility of interesting venture capital in the apple business. To put new capital in annually for a 10-year period and no returns, and then meet the present uncertainties in selling a crop when it arrives, necessitates a specific type of ability and mind. It is an urge. It is hardly business. The apple industry needs and misses the markets which formerly took specific varieties and sizes, and since it takes 10 years to bring an orchard into production in most varieties, the variety problem is a marked determining factor in success and the cycle is long-25 to 30 years, while hogs can go from cellar to peak and back in 5 years. Capital once placed in an apple orchard is not easily changed. In recent years, with the demand for dollars, we are receiving importations of apples. Great Britain this year has set aside a sum of money available for apples and pears, but none are permitted to enter from Canada or the United States, no permits being available. Canada is therefore moving into the United States as has been the case for a decade, with a steady annual movement, sometimes 2 million bushels may enter. In the past calendar year, 1952, there was a movement from the United States to Canada to the extent of about 316,000 bushels. This movement is through normal channels of trade. Importations into the United States are also seen from Australia, New Zealand, Argentina, and recently some from Europe-Netherland and Denmark, with Italy and Switzerland showing keen interest. A complete reversal is possible. I had a letter this morning from Italy asking if I could name the man who would be ready to handle some of the Italian crop. With peace with Japan the movement of apples from Hokkaido has this year taken the Hong Kong market. In the past year Delicious from Japan have been delivered Hong Kong at $2.80 a box with a San Francisco price of $4 for United States apples. With shipping in Japanese hands, should Korea secure peace, the supply of apples from Korea and Japan would, on price, take the Pacific coast markets I may say that 30 years ago I had a man at Cornell with me who served 3 years in Korea, and I know full well that their oppor tunity, once they get these, and had they stayed under the control which the Japanese exercise, and the supply I know they got from this country you would see 20 million or 30 million bushels moving in short order. Japan's northern islands are stepping up production. Korea s very well adapted to apple growing. On the other side, Western Australia moving deck cargo or ventilation would take the market the balance of the year, also that of Java. India, Ceylon. We have had movement in the past to all of these points. Thex few items illustrate a problem. There is the problem of loss of markets continuing and exchange complexities favoring importations in a crop which we have developed to supply domestic and expor markets. I will try to give further illustrations. With interest previou aroused and supplemented by the training and financial aid extended by the United States ECA and other programs, the development of apple production in Europe has moved ahead in recent years from 120 million bushels to a possible 250 million bushels annually ne including cider apples with a marked increase in apples for use fresh Denmark, some 25 years ago, grew about 600,000 bushes and in recent years has offered 9 million boxes for export. That is from an area the size of Delaware. The Netherlands has markedly increased production and facilities for cold storage of apples. Italy has made marked advances in production, grading, and packing and has taken a firm place in the British market and is shipping on consignment and with payment in soft lira and transportation connections and charges favorable. Switzerland has shown increased production and the same is true of France and Belgium. I may say, gentlemen, that within 90 miles of Trieste, in the spar of a circle, you have a crop of 40 million bushes, as large as that of Washington, our leading producing State. So there is a great prob lem there. Great Britain has 250,000 acres of apples and where they formerly grew 12 million bushels a year and imported 18 million bushels, a heavy proportion from the United States and Canada, along with sp plies from Australia and New Zealand, in certain recent years the production has been above 25 million bushels and with supplies from the Continent and Australasia they got along after a fashion. As shown in the 1951 season, the British consumer demonstrate that they desired and would pay good prices for American apples. The demand is there. The whole of Europe and other countries are showing increasing interest in apples and the competition for these and other markets promises to be keener. |