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Mr. ALBERT. Under the Executive orders, isn't there a special category for seed wheat for tariff purposes?

Mr. HIGMAN. No, there is not, sír. Under the Executive order there is

Mr. ALBERT. Only for quota purposes?

Mr. HIGMAN. Only for quota purposes. It comes out of the tariff commodity known as wheat, certain quantities of it become certified seed wheat, exempt from quota. But it does not attach to any type of wheat a category of seed wheat. I think there is no tariff category for seed wheat.

Mr. HEIMBURGER. In other words, Mr. Higman, when you are given the responsibility of classing wheat for tariff purposes, you have only two categories in which to put it: either “Wheat” or "Wheat, unfit for human consumption”?

Mr. HIGMAN. That is right.

Mr. HEIMBURGER. It still is a little unclear to me why, faced with a shipment of wheat which the importer declares is going to be used for seed, which has attached to it the certification of the Canadian Government official saying it is going to be used for seed, that you should classify it as "Wheat, unfit for human consumption.

Mr. HIGMAN. We would not, unless it is poisoned.
Mr. HEIMBURGER. Even so, you are faced with a choice there.

Now, the seed wheat was never interded for human consumption; so that does not seem to be a very important factor in whether or not it should be classed as "Wheat” or classed in as low a category as “Wheat, unfit for human consumption."

Is there any wheat unfit for human consumption brought in, to your knowledge, for any purpose other than seed?

Mr. HIGMAN. Oh, yes-
Mr. HEIMBURGER. Except the seed wheat?

Mr. HIGMAN. It is brought in for industrial uses. There are many uses to which wheat is subjected other than for human consumption purposes. They use it'in making flour for molds-well, I do not

Mr. HEIMBURGER. Actually, the wheat which we are talking about is indicated by the importer as wheat to be used for seed.

Is that correct, Mr. Higman, since he has to state the end use of it? Mr. HIGMAN. Yes, that is correct.

Mr. JENNINGS (presiding). Did you ever get an observation to your question ?

I think you hit the nail on the head, but I never-
Mr. SMITH. I have not heard that answer.

Mr. JENNINGS. I have not, either, and I would like to have an answer to it, or an observation to the question; because I think that Congressman Smith got to the crux of what we are considering here.

Mr. HIGMAN. I wonder if I could have that question again, so as to see if I could answer it from the basis of

my

information. Mr. Smith. That is the practical matter.

The border between Canada and the United States is wide open. I can go up into Canada and get a truckload of 600 bushels of wheat, drive up to the port of entry and say: "This is unclassified. It is not fit for human consumption."

Now, there is nothing said about seed at all. It comes in at a certain duty. He takes that wheat and he goes down to Chicago or Fargo, N. Dak., and sells it to an elevator as unfit for human consumption.

The elevator man puts it in his bins. The farmers around Fargo find out it is Canadian wheat down there unfit for human consumption, and they want to plant some wheat so they go out and say: "I want some of that wheat that you have in your elevator."

The elevator man does not say, “What are you going to do with it?" He cannot say to the farmer, "Don't you dare plant this."

They agree upon the price. He takes it out on his farm and plants it.

Now he has deprived the certified seed wheat, the wheat dealer who wants that particular type of wheat, from raising it, and making a profit on it. Now that is what is going on.

Mr. HIGMAN. We have not had any case on those specific facts brought to our attention, but it seems that if a man uses any wheat for seeding purposes he is not using it for human consumption purposes; so that, if he foresaw that situation, he would have no difficulty in declaring, when that wheat arrived at the border-if he was going to use it for seeding purposes—that he was

Mr. Smith. Forget, please, about what he is going to use it for. The trucker does not know. He is getting 12 cents a bushel for hauling it down to Fargo, N. Dak., and he does not care anything about the wheat. He bought it up there from some Canadian elevator, and he is just in the business of transporting it. It is wheat unfit for human consumption.

He takes it down to Fargo. The Fargo elevator man puts it in his elevator and sells it to a farmer. You cannot say to that farmer, "You cannot plant that wheat."

Mr. ALBERT (presiding). Mr. Higman, we thank you.

You have no legislative recommendations, I take it, with respect to this?

Mr. HIGMAN. No. We worked very extensively a couple of years ago in connection with some legislation on this wheat problem, helped out technically, and nothing has developed yet. But we have not any suggestions on this poisoned seed wheat question.

Mr. ALBERT. Would you mind standing by in case we need to ask you some further questions? I believe we have finished with your principal testimony.

Mr. Johnson. I want to ask him one question. The wheat that is being used for seed is probably the best grade of wheat they have; isn't it? The seed grain is where they pick the very best they have?

Mr. HIGMAN. I would think so. I do not really know.
Mr. Johnson. Isn't that generally understood?

Would not it seem then that grain that is going to be used for seed purposes should not be in a lower--I suppose it carries a lower tariff by being put in “Unfit for human consumption”. Mr. HIGMAN. Yes. Mr. JOHNSON. And by treating it for rust and things like that ahead of time, they make it not fit for human consumption, and they are getting around the tariff laws that way?

Mr. HIGMAN. At least, if they have put this wheat in a condition where it cannot be consumed by humans, whether by the application of poisonous substances to it or the introduction of meat products, or however they do it, it is, in fact, unfit for human consumption and obtains the "Wheat, unfit for human consumption" classification.

Mr. Johnson. You could treat seed wheat and do part of the things that the farmer would have to do, treat it for rust and different diseases, and still make it unfit for human consumption; and yet make it worth more for seed, because the farmer would have all that done when he bought it for seed?

Mr. ALBERT. Well, the problem here grows out of the fact we have two different acts and they are not on all fours with each other.

You have the National Seed Act, which has one criterion with respect to seed wheat coming into this country; and you have the Tariff Act, which has entirely different criteria-it does not recognize seed wheat as a separate type of wheat ?

Mr. HIGMAN. That is right.
Mr. ALBERT. We thank you very much for your testimony.

We would now be pleased if the representatives of the Depatment of Agriculture would come forward and give us the benefit of their further opinion on this matter.

Would you please state your names and official titles within the Department?

Nr. BURMEISTER. Gustave Burmeister, Assistant Administrator, Agricultural Trade Policy and Analysis, Foreign Agricultural Service.

This is Wilbur Youngman, seed marketing specialist, in our Grain Division.

Mr. ALBERT. Did you come with any prepared statement this morning?

Mr. BURMEISTER. Yes.
Mr. ALBERT. We will be very happy to hear your statement.
Before you proceed-

Mr. Higman, I forgot to ask you, do you have with you a copy of the regulations which you issue to your port of entry men, which we might have for the record ?

Mr. HIGMAN. I can give Mr. Heimburger reference to it.
It is section 10.106. I will send you a copy.
Mr. HEIMBURGER. It is section 10.106 in the Code!

Mr. HIGMAN. It is in the Code of Federal Regulations as well as in the Customs Regulations.

Mr. HEIMBURGER. If you could send a separate copy of that for the record, it would be helpful.

Mr. HIGMAN. I will supply that. Mr. ALBERT. Without objection, it may be inserted in the record. (The regulations referred to are as follows:)

CUSTOMS REGULATIONS

WHEAT

Sec. 10.106 Wheat, unfit for human consumption; other wheat.-(a) There shall be filed in connection with each entry covering wheat entered under paragraph 729, Tariff Act of 1930, as modified, as "wheat, unfit for human consumption,” a declaration of the importer setting out whether any part of the importation is to be used with or without blending with other wheat in the manufacture of products for human consumption. If it is declared that no part of the shipment is to be so used, a further declaration shall be made stating the use to which the wheat is to be put. When it is shown by the declaration that the wheat is to be used in the manufacture of products for human consumption, it shall be classified as "wheat" under the provisions of paragraph 729, as modified. However, when the declaration states that the wheat is to be used otherwise than in the manufacture of products for human consumption, the procedure outlined in Treasury Decision 47577 shall be followed, and in the absence of other controlling factors, the wheat shall be classified as "wheat, unfit for human consumption" under the provisions of paragraph 729, as modified, if it contains 30 per centum or more of damaged kernels. (Sec. 1 (par. 729), 46 Stat. 634; 19 U.S. C. 1001 (par. 729).)

STATEMENT OF GUSTAVE BURMEISTER, ASSISTANT ADMINISTRATOR, AGRICULTURAL TRADE POLICY AND ANALYSIS, FOREIGN AGRICULTURAL SERVICE, UNITED STATES DEPARTMENT OF AGRICULTURE; ACCOMPANIED BY WILBUR YOUNGMAN, SEED MARKETING SPECIALIST, GRAIN DIVISION, UNITED STATES DEPARTMENT OF AGRICULTURE

Mr. BURMEISTER. Mr. Chairman, we did not attempt to incorporate in this statement what we have in the letter addressed to Chairman Cooley. This is supplementary and, therefore, quite short, and I trust it will be kept in mind this is simply supplementary information to what we had in our letter.

Mr. ALBERT. That is what we want.

Mr. BURMEISTER. Practically all imports of seed wheat from Canada are spring wheat varieties, and nearly all of such imports move into the North Plains States where spring wheat is grown. There is no shortage of good spring wheat seed in the United States.

Wheat seed imports totaled 2,256,388 bushels in 1955–56 and 2,047,648 bushels in 1956-57.

During the 8 months' period, July 1957-February 1958, the imports amounted to 2,102,638 bushels, nearly twice as much as the 1,151,427 bushels imported during the same period in 1956–57. This would indicate that imports in the current year are likely to total over 3 million bushels, the largest on record.

As is apparent from the table attached, imports of seed wheat as wheat unfit for human consumption did not become substantial until 1954–55. Such heavy importations were the result of Canada's allowing exports of Selkirk seed wheat and the general realization of importers that the “unfit for human consumption" category for imports meant about 11 cents saving in duty per bushel.

The Federal Seed Act of August 9, 1939, as amended, provides that all seed imported for planting purposes must be tested for germination and purity and not contain more than the stated maximums for noxious and total weed-seed content. All lots of field seeds of 100 or more pounds and sampled at the point of entry by the Collector of Customs are forwarded to the nearest Federal Seed Laboratory for analysis. Upon notice of release by the Federal Seed Laboratory and payment of duty, the seed is released to the importers. Seeds failing to meet the standards are prohibited entry.

As a consequence of the Federal Seed Act, reliable statistics on imports of seed are available as shown in column 5 of the table attached.

22856-58-pt. 1-14

Import statistics for the current year are, of course, not as yet complete, but, for the 8 months' period, July 1957 through February 1958, imports of seed unfit for human consumption, most of which are undoubtedly treated seed, amounted to 2.1 million bushels, almost double the 1.1 million bushels received during the same 8-month period of 1956–57. At this rate, imports in this classification are likely to exceed 3 million bushels.

With approximately 14 million acres being taken out of production during the last year under the soil-bank program, domestic requirements for seed wheat would be reduced by about 14 million bushels. Consequently, these increased imports are increasingly competitive with domestic seed.

This is especially true since imports at the reduced duty rate under the "wheat unfit for human consumption" classification gives the imported varieties an advantage of approximately 11 cents per bushel over the untreated seed wheat.

The present proposal to classify all seed wheat, whether treated or not, as seed wheat, will not result in the decreased importation of seed wheat from Canada, except insofar as the additional duty may tend to have a restrictive effect and assuming the Secretary issues the necessary permits.

The proposal will result in a much clearer definition of wheat imports because it will restrict imports of wheat "unfit for human consumption" to animal-feed wheat, which wheat was the original reason for this separate category at a reduced duty. It also clarifies the meaning of the President's proclamation.

For these reasons, the Department of Agriculture has no objections to the enactment of this legislation.

(The table referred to is as follows:)

United States: Imports of wheat for domestic use, fiscal years 1948-57

(1.000 bushels)

[blocks in formation]

1 Reported by Bureau of Census. U. 8. Department of Commerce; excess over Imports under quota plus amounts of whent permits represent presentations for imports not allowed entry.

* As reported by the Bureau of the Customs.
* All seed is subject to inspection by AMS, USDA under the Federal Seed Act.

• Permits issued by the Denartment of Agricrl'ure for certified seed wheat in amount of 100 bushels or more and not ch'rgeable agrist the quota; any excesses over imports under the Federal Seed Act are due to unused permits or importations of less than full amounts of permits.

3 Estimate derived by subtracting col. 6 from col. 5. * Preliminary.

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