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WHEAT-TREATED FOR SEEDING PURPOSES

TUESDAY, MARCH 25, 1958

HOUSE OF REPRESENTATIVES,

COMMODITY SUBCOMMITTEE ON WHEAT,
OF THE COMMITTEE ON AGRICULTURE,

Washington, D. C. The subcommittee met, pursuant to notice, at 10 a. m., in room 1310, New House Office Building, Hon. Carl Albert (chairman of the subcommittee) presiding.

Present: Representatives Albert, Jones, Watts, Belcher, Smith, and Krueger.

Also present: Mabel C. Downey, clerk; John J. Heimburger, counsel. Mr. ALBERT (presiding). The committee will please come to order. The committee is meeting this morning to consider two bills of our colleague from Michigan, Mr. Bentley. The bills are H. R. 3360 and H. R. 11581, bills to remove wheat for seeding purposes which has been treated with poisonous substances from the "unfit for human consumption" category for the purposes of section 22 of the Agricultural Adjustment Act of 1933.

(H. R. 3360 and H. R. 11581 are as follows:)

[H. R. 3360, 85th Cong., 1st sess.]

A BILL To remove wheat for seeding purposes which has been treated with poisonous substances from the "unfit for human consumption" category for the purposes of section 22 of the Agricultural Adjustment Act of 1933

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That, for the purposes of proclamation numbered 2489 issued May 28, 1941, pursuant to section 22 of the Agricultural Adjustment Act of 1933 (55 Stat. 1649) and paragraph 729 of the Tariff Act of 1930, wheat for seeding purposes which has been treated with poisonous substances shall not be classified as unfit for human consumption.

[H. R. 11581, 85th Cong., 2d sess.]

A BILL To remove wheat for seeding purposes which has been treated with poisonous substances from the "unfit for human consumption" category for the purposes of section 22 of the Agricultural Adjustment Act of 1933

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That, for the purposes of proclamation numbered 2489 issued May 28, 1941, pursuant to section 22 of the Agricultural Adjustment Act of 1933 (55 Stat. 1649) and paragraph 729 of the Tariff Act of 1930, wheat for seeding purposes which has been treated with poisonous substances or otherwise made unfit for human consumption shall not be classified as unfit for human consumption but shall be classified as wheat. This Act shall apply only with respect to articles entered, or withdrawn from warehouse, for consumption on or after thirty days after the date of enactment of this Act.

Mr. ALBERT. We will now hear from our colleague from Michigan, Mr. Bentley. We are very pleased to have you here, and we would like to have your statement at this time.

22856-58-pt. 1-10

139

STATEMENT OF HON. ALVIN M. BENTLEY, A UNITED STATES REPRESENTATIVE FROM THE EIGHTH CONGRESSIONAL DISTRICT OF THE STATE OF MICHIGAN

Mr. BENTLEY. Thank you, Mr. Chairman. I am here to speak on my bill, H. R. 3360.

Mr. KRUEGER. I have a similar bill.

Mr. ALBERT. You have a similar bill?

Mr. KRUEGER. Yes.

Mr. ALBERT. The record will note that our colleague on the committee has a similar bill. What is the number?

Mr. KRUEGER. H. R. 4663.

Mr. BENTLEY. Mr. Chairman, I might say that Mr. McIntosh has a bill, and his bill accomplishes the same purpose, but it was referred to the Ways and Means Committee. I might also say that, first of all, I am going to try to summarize the prepared statement that I have, but I request consent that it be included in its entirety in the record.

Mr. ALBERT. Without objection.

(The statement referred to is as follows:)

STATEMENT OF HON. ALVIN M. BENTLEY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

Mr. Chairman and members of the committee, I appreciate this opportunity to appear before you and to testify regarding my bill, H. R. 3360, which I introduced on January 22, 1957, and which would remove wheat for seeding purposes which has been treated with poisonous substances from the “unfit for human consumption" category for the purposes of section 22 of the Agricultural Adjustment Act of 1933.

I first introduced legislation to this effect in 1955 and then, on January 5, 1956, reintroduced H. R. 8105, which contains the identical language to the bill now before you. This was done at the request of the Michigan Crop Improvement Association for reasons which I shall go into later. An identical bill, S. 3706, was introduced in the Senate by Senator Young, of North Dakota.

The Department of Agriculture stated, under date of July 26, 1956, that the enactment of this legislation would assist in the application of the provisions of the Tariff Act to treated seed wheat. However, the Department, on request of the Bureau of the Budget, did not take an official position at that time.

The Department of State in a letter to the Bureau, on October 15, 1956, opposed the enactment of this legislation because of "adverse international repercussions," presumably with Canada. No further action was taken on this legislation during the 84th Congress.

I introduced the pending bill, H. R. 3360, last year. A companion bill, S. 666, was also introduced in the Senate by Senators Young and Langer, of North Dakota. I understand that this bill has now been reported out of the Senate Agriculture Committee and is pending on the Senate Calendar.

The Treasury Department reported, under date of September 16, 1957, that no administrative difficulties would be encountered if the bill were enacted into law. A change to give time for the notification of customs officers was sug gested, which the committee may wish to consider as an amendment.

I have in my files a photostatic copy of a recent letter from the State Department to the Bureau of the Budget in which the Department renews its opposition to the enactment of this legislation as being contrary to our international commitments under the General Agreement on Tariffs and Trade and as adversely affecting our relations with Canada. The Department suggested the possibility of administrative relief in the event it were determined that domestic producers were being injured by increased imports.

The Department of Agriculture reported, under date of February 28, 1958, that it had no objections to the enactment of this legislation, although clarifying

language was suggested which the committee may wish to consider inserting in the bill.

Now, Mr. Chairman, I would like to speak briefly on the pending legislation and my purpose in introducing it. It would state, in effect, that wheat for seeding purposes which has been treated with poisonous substances shall not be classified as “unfit for human consumption.”

Wheat which has been so treated is classified by the Bureau of Customs as unfit for human consumption at the present time, and is dutiable at the rate of 5 percent ad valorem, or approximately 10 cents per bushel, as compared with 21 cents per bushel on millable wheat. As the Department of Agriculture said in its 1956 report:

"It appears evident that the provision of a lower duty rate for 'wheat unfit for human consumption' did not contemplate the inclusion of treated seed wheat in this category. It also seems evident that the provisions of Presidential Proclamation 2489 exempting 'wheat unfit for human consumption' from the import quota did not intend the exemption of treated seed wheat, and that the provisions of Presidential Proclamation 2550 were intended to apply to all wheat for seeding purposes, regardless of whether it was treated. It is our opinion, therefore, that the enactment of H. R. 8105 would insure the application of the tariff rate intended under the provisions of the tariff act and would insure the application of the provisions of Presidential Proclamations 2489 and 2550 in accordance with the intended purposes of those proclamations."

This problem of tariff evasion was dramatically called to the attention of the House by my colleague, Mr. McIntosh, of Michigan, in a speech on February 5 of this year, in which he said:

"Beginning in fiscal year 1954, foreign importers began to color their seed grain or treat it with chemicals in such a way as not to impair the premium quality for seed wheat purposes and insisted on the classification of such grains as being unfit for human consumption because of its color or chemical treatment. By this method of classification, seed-wheat exporters were able to send into the United States increasing volumes of seed wheat qualifying for the 5 percent ad valorem duty and escape the 21 cents per bushel tariff rate.

"The important advantage of using this classification is clearly evident from the import figures, showing the rapid jump in volume of such wheat imports. From 1953, seed-wheat imports jumped from 6,297,000 pounds to 13,456,000 pounds in 1954. During 1955, imports nearly trebled to 38,105,000 pounds. In 1956, imports more than trebled again to 135,303,000 pounds. Imports dropped slightly in volume in 1957. But, for the first 5 months of the 1958 fiscal year, imports were nearly trebled again over the figures for the corresponding months for the previous years."

My own figures, Mr. Chairman, show similarly startling uprisings in seedwheat imports, both for the State of Michigan and for the country as a whole. When I introduced this legislation in 1956, I sent copies to our three major farm organizations and requested their comments. The only one replying, the American Farm Bureau Federation, stated that some corrective action would be desirable in the matter of Canadian seed-wheat imports. However, the Farm Bureau recommended Executive action to amend proclamation 2489 to include treated seed wheat within the quota. They did recommend an amendment to paragraph 729 of the Tariff Act of 1930 to make treated seed wheat subject to the full rate of duty. I understand that the Farm Bureau may present a more recent statement to the committee on this matter.

The basic purpose of my bill, Mr. Chairman, is to raise the duty on seed wheat only, but not on wheat that could be used for feed. In other words, if my bill should pass, wheat that has been treated will be removed from the 5 percent ad valorem bracket and moved into the same tariff range as now occupied by milling wheat. Other wheat that is unfit for human consumption but can be used for feed will remain at the lower duty.

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I understand that certified seed of soft white winter wheat imported from Canada delivered at various points in Michigan was between $2.35 and $2.40 per bushel and in other States may be as low as $2.10. Our certified seed-wheat producers cannot compete with such prices and, therefore, a large portion of our certified seed wheat goes under Government loan at current support prices. According to Mr. Harry E. Rohlfs, of Akron, Mich., in a letter dated September 25, 1954, the net cost of Michigan farmers of certified wheat delivered to the jobber is not less than $2.60 per bushel.

In 1956. Senator Young's office told me of North Dakota growers who were selling uncleaned, untreated wheat to their elevators for $2.35 per bushel while Canadian seed wheat was coming in, eleaned and treated, and sold at $2.10.

I would like to read the committee excerpts from a few of the many letters I have received on this subject:

Mr. H. R. Pettigrove, secretary of the Michigan Crop Improvement Association, writes December 6, 1957): “Our certified seed growers are being priced out of the market on seed wheat."

I am also in receipt of a letter from Mr. Pettigrove, dated March 22, 1958, which I quote as follows:

"The membership of the Michigan Crop Improvement Association is desirous to have action taken on bill H. R. 3660. to place a duty on seed wheat being imported into the United States equal to the duty on standard commercial wheat used for human consumption.

"The membership was informed at their annual meeting, December 10, 1957, of the progress of your bill and expressed themselves as desiring speedy action since the present situation made it impossible to compete with imported wheat on a seed basis due to extra costs involved in the seed-certification procedure.

"Farmers at several county meetings during the past 3 months have inquired about the progress of your bill and again hoped for speedy action since they were uncertain of the plans they should make for the future in the production of seed wheat.

"The directors of the association hope some action may be forthcoming early, since it will require immediate plans to meet the needs for seed wheat this fall and a year later.

"The directors feel it will be expedient to have the law go into effect immediately, since each year there is a delay our seed stocks become smaller.

"With the increase of seed-wheat imports becoming greater each year, the farmers of the State of Michigan are finding it necessary to go out of business so far as seed-wheat production is concerned.

"The membership of the Michigan Crop Improvement Association is concerned with the future so far as the availability of seed wheat is concerned since they will be at the will of another country and the varieties said country may develop. Should something happen, our seed-wheat situation would be in a very critical status.

"The membership is also concerned about the quality of the wheat varieties which may be produced in the future. Michigan has enjoyed the position of producing a very desirable soft wheat for cakes and cookies. We might lose this situation if we rely on another country to produce our seed from unknown varieties.

"The membership feels this situation could work a decided handicap on the function of our experiment station in its work toward a better wheat for use by our millers and production by our farmers.

"The members of the Michigan Crop Improvement Association hope for positive action on your bill which should improve the present and future development of Michigan agriculture.

Mrs. Emil Heine, 8425 Dixie Highway, Fosters, Mich., says (April 6, 1955): "Last year we were over our allotment for wheat so had to pay a penalty. At the same time Canada was shipping seed wheat into Michigan because of a so-called shortage of certified seed. The wheat law seems very inconsistent to me when certified seedgrowers must operate under the same quota as other wheat and at the same time there is absolutely no quota on the amount of seed wheat that Canada is allowed to ship in."

Mr. Burton McCaffrey, Route 3, Owosso, Mich., writes (February 22, 1958): "As a certified seedgrower I, like many other seedgrowers, can't compete with the Canadian wheat. We have been growing it at a loss for 2 years."

Mr. Robert Moore, Route 2, Elsie, Mich., says (February 21, 1958): "Since 1954 our wheat market has been on a very uncertain basis. The dealers delay buying with the thought that the Canadian wheat will force our price down. It does. This kind of a market encourages growers to sell uncertified seed wheat to meet competition. This uncertified seed has no field or bin inspection therefore is a lower quality seed. I believe that we, the Michigan seed producers, will lose the confidence of our farmer customers if we are forced to produce this lower quality seed, therefore, possibly losing a business in the State of Michigan."

Mr. Harry Salden, Route 4, Ithaca, Mich., states (March 8, 1958): “It had been brought to my attention that our Canadian friends are importing to Michi

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