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Mr. BREEDING. As I understand it he has to have a certificate in order to mill that wheat. He must purchase the certificate in order to get his wheat.
Mr. Watts. I am going to mill a million barrels of flour. I go to the Department, I assume, and purchase the certificate, make arrangements to purchase the certificate from the grower, and the miller purchases from the grower, is that right?
Mr. BREEDING. That is right. That is the way I understand it. You can get it from a banker, too. I can use that as a grower—I can take it down to the bank and deposit it.
Mr. WATTS. The certificate will be issued to the grower. He may negotiate through a bank, but the miller has to get hold of it before he can buy the wheat?
Mr. BREEDING. As I understand it he has to buy it.
Mr. BELCHER. But under the system that we had in mind, you issue the certificate to the farmer. The farmer actually cashes that certificate for so many dollars. That certificate then is cashed and the banks will cash that with the Department of Agriculture, the Commodity Credit Corporation.
Then the miller, before he can mill a bushel of wheat, must have a certificate for a certain number of bushels of wheat that he buys from the Department of Agriculture, the CCC, and then he can buy that wheat at any price he can buy it for.
Mr. WATTS. What I am talking about is this, he buys a certificate sufficient to mill his desired quantity of wheat. What is there in the bill as to enforcement to prevent him from then milling a million and a half bushels of wheat that he bought on the black market, that is what I want to know.
Mr. BELCHER. He must have certificates, he must show the number of bushels of wheat that he has milled. The records will show how many
he has milled. He will have to have a certificate to cover every one of those bushels of wheat. So there is no such thing.
Mr. WATTS. The enforcement angle of it would shift away from the farmer and to the buyer, to see that they did not mill more flour than they bought wheat under the certificates
Mr. BELCHER. That is right. The miller will have to have a certificate for every bushel of wheat he mills.
Mr. Smith. In other words, Mr. Watts-
Mr. SMITH. Before they started to operate they would have to go up and deposit so many million dollars for the stamps. At the end of a certain period of time, the stamps they bought have got to jibe, so to speak, the same way with the miller. If he milled a thousand bushels they know how many bushels of wheat it takes to make a barrel of flour. They would have to check his books.
Mr. WATTS. The answer to my question is this then, There would be people who check the millers to see that they stayed in line ?
Mr. ALBERT. Actually, you would have only the millers to check, which would be less than the number of farmers.
I would like to ask you a question. Is it your opinion at this time that if we have an omnibus farm bill and then a wheat title or section that you
would like this bill or some similar type of bill included as a
part of it?
Mr. BREEDING. Yes, sir, I would; because I think this bill fits my area of the United States very well. I would go all out for a wheat bill similar to this in such a bill.
Mr. ALBERT. We thank you very much.
Will you come forward and make your statement, Congressman Ullman Mr. Ullman comes from a great wheat-producing section of the Pacific Northwest.
STATEMENT OF HON. AL ULLMAN, A REPRESENTATIVE IN CON
GRESS FROM THE SECOND CONGRESSIONAL DISTRICT OF THE STATE OF OREGON
Mr. ULLMAN. Thank you, Mr. Chairman, and members of the committee, I appreciate very much the opportunity of appearing here today on behalf of the domestic parity plan for wheat.
I have introduced H. R. 7815 which is similar to the other bills that have been introduced, and the one that you are considering here today.
Let me say that the State of Oregon has been very much interested in the domestic parity plan. It stems from the old McNaryHaugen bill, and Senator McNary, from the State of Oregon, was one of the original sponsors of this idea in the marketing of wheat.
The Oregon Wheat League has been an active association for many years, and has been behind this plan, and the Oregon Grange.
I am very happy that Mr. Floyd Root, president of the National Wheat Growers who comes from my district is here today, and he. will testify before this committee.
The problem of agriculture in this country, certainly, has not been solved and the problem of the wheat has not been solved.
This domestic parity program, in my opinion, affords the best method available to us to provide a solution to the problem of the raising of wheat.
I have figures from the Library of Congress substantiated by Mr. Root that the 1958 wheat crop is estimated at 1,150 million bushels, which is 200 million bushels over 1957, the largest production since 1953; the fourth largest of record. And as all of us know, this probably will mean additional surplus of wheat.
The Government subsidy of exports must, of course, be continued.
I want to say now that I am in favor of a continuation of the Public Law 480 program because I think it has been a very effective program. But the cost of storage and handling run in the neighborhood of $300 million a year, as you know.
The Oregon Wheat League has, in cooperation with the National Association of Wheat Growers, the National Grange, and State Wheat Association, prepared a bulletin called Wheat Is Everybody's Problem.
That, in my opinion, very adequately approaches this problem of the domestic disparity, so that the ordinary person can understand it. And I will just refer very briefly to this booklet in a simple explanation of the solution under domestic parity.
In addition to the price received in the market place, of course, under a domestic parity plan each grower would receive certificates based on his average production. The Secretary of Agriculture would estimate the value of the certificate during the spring of the year and would issue these certificates to the farmers and they could cash them in at the bank, of course.
And then they are based, of course, as was brought out in the conversation a few minutes ago, upon the average yield. And assuming that the domestic consumption would run about 50 percent of the total production, the certificates would be issued for about half of the production of the farmer.
The value of the certifirates would be estimated as the difference between the market value and the full parity for that particular year, and certificates coming from a revolving fund set up by the Secretary And the money for this fund would come from processors who will purchase certificates on wheat they mill for human use in the United States.
The manufactured products would thus carry the cost of the program, and thus it would not cost the taxpayer of this country very much.
The miller would purchase wheat on the open market, and recognize quality wheat with normal price premiums. He would purchase certificates from the bankers, or he could purchase them from the Department, to cover the number of bushels of wheat processed into food. The value of the certificates being the same as that paid by the farmer.
The money received from the miller would be forwarded by the banker to the Secretary to be deposited in this revolving fund and used to pay for the certificates which had been distributed previously to the farmer. Thus it being a revolving, self-supporting plan, and the farmer being encouraged to grow the highest quality of wheat and the miller to sell competitively in the export market.
The grain buyer would buy the wheat from the farmer at the market price and the wheat would move freely into export and feed channels and a loan would be established at a level to protect the foreign producer from unduly competition.
One of the main objections of the Department of Agriculture has been the fact that they first maintain that it would interfere with the other feed commodities. However, the bill that I have introduced and all of these measures-do provide that the Secretary will protect the other feed commodities in the Nation by further providing that something in the form of a disaster loan rate that would be above the established price on corn and other feed commodities.
Another objection of the Department has been, of course, that it would interfere with our foreign relations with other nations, because of the fact that we would put a lot of our feed on the foreign market and disturb the international balance of trade. Here again the Secretary is authorized to set up this disaster loan program base to keep the price of wheat from falling at that point where it would disturb the international marketing of grain.
Another objection has been—and the Department raises it in its report—that the consumer would have to pay more for the price of grain. In this respect I refer again to the pamphlet. The price of wheat has very little influence on the cost of the loaf of bread. The farmer could give his wheat to the miller, in other words, if he gave the wheat to the miller free it would only reduce the cost of a pound by 2.7 cents. The figures are a year or so old, but it still is relatively true. The farmer's share in the loaf has continued to decrease since 1947. The other costs in milling and baking and in distribution have added the difference in the cost.
Therefore, it is my opinion that it will not materially affect the cost of the commodity to the consumer in this country.
Mr. Chairman, I again want to say that I think this is a good plan. I think that it should be enacted by this Congress. It is supported by the wheat industry after a very thorough study of their problems.
It is my further opinion that if we do enact an omnibus bill that the domestic parity plan should be incorporated as a part of the omnibus approach to agriculture.
I have always been a stanch advocate of the commodity-by-commodity approach to the solution of our agricultural problems. I think this offers an admirable approach to the solution of the wheat problem of this nation.
I want to thank you very much for being here.
I wish to thank you for appearing before the committee and giving the committee the knowledge you have of the subject and the thinking of the people in your section of the country.
Are there any questions?
Mr. BELCHER. I would like to ask a question. I do not entirely understand how you are going to set up the disaster loan program to protect other feed grains.
Mr. Ullman. This would be set up in my bill, section 380K, and subsection (b).
The Secretary of Agriculture is authorized to make available through loans, purchases, or other operations, price support to producers of wheat who are cooperators. The amount, terms, conditions, and extent of such price operations shall be determined by the Secretary, except that the level of such supports shall be determined after taking into consideration the following factors :
1. The supply of the commodity in relation to the demand therefore. 2. The price levels at which corn and other feed grains are being supported and the feed value of such grains in relation to wheat.
3. The provisions of any international agreement relating to wheat to which the United States is a party. 4. Foreign trade policies of friendly wheat-exporting countries, and 5. Other factors affecting international trade in wheat including exchange rates and currency regulations.
Admittedly, this is going to involve a problem for the Secretary of Agriculture, but in my opinion, it is not a problem that is insurmountable.
Mr. BELCHER. As I understand that, that is in respect to the price support parity of your bill. But supposing that an excess of wheat starts to affect the market of the other feed grains, how would you protect the other feed grains against surplus of wheat being sold for feed?
Mr. ULLMAN. By setting up-in my opinion, the Secretary of Agriculture has the discretion, under this law, in my opinion, he would have the duty and responsibility to protect the other feed proclucers. He would set up, I imagine, a loan rate above that level that would affect adversely.
Mr. BELCHER. You mean, he would just increase supports on feed grains to offset the competition of wheat ?
Mr. ALBERT. If you will yield, you mean you would increase the support, if I understand you, your wheat would travel at a lesser support rate and, therefore, you would put the wheat in competition with other feed grains ?
Mr. BELCHER. But in determining the amount of the certificates the man gets, he does not take into account what the wheat program is used for.
Mr. ULLMAN. That is right.
Mr. BELCHER. In other words, if the difference between the 100 percent of parity and the prevailing market price of wheat amounts to 60 cents per bushel, he gets a certificate for 60 cents a bushel ?
Mr. ULLMAN. Yes.
Mr. BELCHER. After he gets that he can sell that all for feed-all of the wheat he raises?
Mr. ULLMAN. He could put it into that. Mr. BELCHER. He could put it into the feed-grain market. How will you protect the feed-grain producers against the competition of wheat, I mean under this bill?
Mr. ULLMAN. If he were guaranteed a price above that which would be
Mr. BELCHER. You mean the feed-grain producer or the wheat producer?
Mr. ULLMAN. The wheatgrower. It has to be approached from two angles. He is regulating both the feed grain and the wheat, and this so-called disaster level on wheat. The wheatgrower is not going to sell below the support level as set by the Secretary.
Mr. BELCHER. I agree with you that I have never
Mr. ULLMAN. He will not sell it that low, and by the same token the Secretary has the responsibility of maintaining supports under the feed grains. So that he can establish a feed grain support and in turn a support on wheat, so that wheat will not be overly competitive with these other things.
Mr. BELCHER. The higher you establish a support on feed grains the more wheat will become competitive?
Mr. ULLMAN. That is right, except that wheatmen will not sell their commodity for below what the disaster level or the support level on wheat is going to be; and, therefore, it does not have to be competitive with corn.
Mr. BELCHER. Under your bill—and I have not read your bill, that is why I am asking this—under your bill do you have a price-support system and a two-price system, both ?
Mr. ULLMAN. That is what section 380K does.
Mr. BELCHER. Aren't you going to be met with the proposition that you are establishing two systems, instead of eliminating one and establishing another?
Mr. ULLMAN. None of these problems of agriculture are simple. And if we come here and oversimplify this two-price support plan, and do not put these provisions in and it does not work and it works adversely to some other segments of agriculture, then we won't be doing a service. We have to recognize this problem. And I think you raise a very legitimate problem. This could fall low enough.
This is what the Department of Agriculture says, that it could fall low enough so that it could affect the feed producers and international markets.