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Mr. Hill. He has little or no effect on the market if he only has a flock of 7 or 8 head. That would be just the opposite of what you are saying about the corn and wheat.
Mr. WOOLLEY. Well, that of course, involves a very deep-seated question of your philosophy as to qualifications of voters. Our basic philosophy is that everyone who has an interest ought to be permitted to vote, and the fact that that interest is a small interest should not be weighed against someone who has a larger financial interest. It may be that this small interest that the person has is all the interest that he has in any commodity, and it may be very important to him although it is very small in terms of dollars and cents.
Mr. Hill. Well, doesn't your reasoning come from the idea that you are letting political issues affect your thinking on agriculture? Now certainly the people who produced the wool ought to set or influence the type of legislation.
Mr. WOOLLEY. Well, of course, Mr. Hill, when we
Mr. Hill. Now they do that politically, but certainly not in wool production because I can take 10 States, maybe not quite 10 States, and find 75 to 90 percent of your wool production.
Mr. WOOLLEY. We are not adverse to a requirement that is based on the number of head of sheep. We are not opposed to that. We think that that could be worked in.
Mr. Hill. That is probably the way it ought to be.
Mr. WOOLLEY. We are not opposed to that. We think it ought to be in conjunction with all growers, too. We think you could say
Mr. Hill. The thing that is causing my thinking, I will give you an illustration: The State of New York has four hundred thousand some acres of wheat, but they grow most of it for what? Feed. Then when it comes to a vote to control the price of wheat, which they do not put in the market at all, very little, then you say to our growers in the High Plains and the western section of the United States, "Well, here these little folks with 15 to 20 acres of wheat have just as much power at the ballot as the man with a thousand acres in Colorado or Kansas.” Now, just tell me a more unfair way of voting you could have than that?
Mr. WOOLLEY. We think it is an inevitable consequence of mixing up economic problems with political problems. We think that when an economic problem gets tossed into the political arena farmers must stand on the political effects as well as economic effects. This is a part of the problem on the whole farm program. How to reconcile political and economic considerations when they both come together the way they do in the farm program. This is one of our real problems.
Mr. Poage. Thank you, Mr. Woolley, we are glad to receive your statement.
Mr. WOOLLEY. Thank you.
Mr. Poage. Congressman Fisher must go to his own committee so we will hear from him now.
STATEMENT OF THE HON. 0. CLARK FISHER, 21ST DISTRICT,
Mr. FISHER. Mr. Chairman, the hearings are about to conclude on the extension of the Wool Act, which was passed by Congress 4 years ago on sort of a trial-run basis to see how it would work.
It seems now that practically all organizations dealing with this subject are in favor of it, the National Grange, the Farmers Union, the Farm Bureau, and most all of the witnesses, in fact in this committee all of the witnesses who have been heard here, are in favor of it. So apparently it has worked very well. This being a deficit commodity, this undertaking to stabilize it and encourage more production seems to have worked very well.
There is one thing that I would like to point out in conclusion, reemphasizing what I said at the original hearings held about 2 months ago, and that is the problem that has developed about the financing of the program. When the incentive payment program under the National Wool Act of 1954 was first proposed, it was felt that over the years an amount equal to 70 percent of the specific duties collected on wool and wool manufactures would be sufficient to finance the payments required to bring the national average price received for wool in the free market up to incentive level.
The National Wool Act of 1954 limits the total amount of payments up to any date to the cumulative total of that amount from January 1, 1953, to the same date. Only 70 percent was taken so as not to interfere with the 30 percent appropriated for use under section 32 of the Agricultural Adjustment Act. No one wanted to disturb that, of course. Seventy percent of the specific duties only were taken because in 1954 it was thought that such a portion would be adequate even though the specific duties constitute only about two-thirds of all duties collected on imports of wool and wool manufactures. In addition to the specific duties, there are the ad valorem duties. These are the duties collected at a rate in percentage of the value of the produce being imported. The specific duties are the ones that are figured at a fixed number of cents per pound. Raw wool, for example, carries only a specific duty. Wool fabrics imported carry both a specific duty and an ad valorem duty.
With the general decline in imports of raw wool in recent years, and the lower prices received for wool by domestic growers than was anticipated, it is apparent that the specific duties are insufficient to finance the payments required to maintain the incentive price for shorn wool at a truly incentive level.
I think everyone realizes that if and when the act is extended provision should be made to provide sufficient funds for carrying out its intent, and we believe the logical method to do this is the amendment as originally proposed, about 2 months ago, which would allow the use of funds to an amount equal to 70 percent of all wool duties, rather than limiting it to just 70 percent of specific duties.
I wanted to emphasize that, Mr. Chairman, in conclusion, and I also ask permission to include that as part of my statement. Mr. POAGE. Without objection it will be made a part of the record. (The document referred to follows:)
SUPPLEMENTAL STATEMENT OF REPRESENTATIVE O. CLARK FISHER, OF TEXAS
Mr. Chairman, at the time of the original hearings on the 15 bills pending before this committee to extend the National Wool Act of 1954, with the concurrence of the authors of all these bills, I propose to this committee 2 amendments. One would provide more funds if needed to carry out the intent of the program and the other would lengthen the period of time for which the act would be extended.
Developments since the early February period at which these amendments were presented, together with later figures and estimates of need, indicate even more than before the importance of these amendments for committee consideration.
In April, the first month of the 1958 marketing year, the average of prices received by growers for shorn wool was 37.7 cents a pound. After reaching 56.4 cents last June, the reported monthly average of prices received by growers has declined to the lows of late 1955 and early 1956. The current market quotations at Boston are even lower—they are the lowest in 12 years, being down to their levels of late 1946 and early 1947.
Prices for wool in the domestic market began to decline last June following the reduction of prices in the world market. Curtailed buying by the United States and Japan and uncertainty of demand prospects in the United Kingdom and France were initially depressing factors in the world market. Inventory accumulation was discouraged by the increases in interest rates in both the United States and the United Kingdom. Subsequently, there was a further easing of demand for wool in the world market generally.
Before the decline in prices began last summer, world production and consumption of wool were about in balance. However, after having increased for 3 years in a row, consumption began to decline in 1957 and by the last quarter was about 10 percent below a year earlier. The rate of United States mill consumption of apparel wool has declined to less than two-thirds of what it was a year ago and is now about one-half of what it was before the decline in United States mill consumption began in the summer of 1956.
Historically, United States mill consumption of wool has followed a cyclical pattern, the cycle being from 144 to about 3 years in length. It has now been on the decline since the summer of 1956.
Wool prices in the United States are currently being unduly depressed in relation to prices in the world market by the combination of three factors-the cyclically low rate of mill consumption, the resulting high ratio of stocks to mill use, and the recession in general business activity. Wool prices have always been most sensitive to general economic outlook. Uncertainty on the part of buyers as to the duration and extent of the decline in business activity is doubtless a predominate factor accounting for the current low level of prices in this country.
Even with the reduced consumption of wool per capita resulting from the trend toward lighter weight fabric and competition from the manmade fibers, the deficit situation of the United States with respect to wool is such that imports will continue to be required over the years ahead even with domestic production of shorn wool increased to 300 million pounds, grease basis, annually:
Over the long run with the CCC-owned wool out of the picture and the United States continuing on an import basis, wool prices in this country will largely be determined by the level of prices in the world market. The major wool exporting countries whose national economy is largely dependent upon wool, have a vital interest in maintaining prices and from past history may be expected to take steps to prevent disastrously low prices for wool. Prices in the world market have declined to levels where steps are already being taken in New Zealand and South Africa to support prices. With any stability of prices in the world market, wool in the United States is in position to promptly reflect any cyclical improvement in mill consumption or in the general business outlook.
Except for periods like the present which is considered temporary, the national average of prices received by growers for shorn wool may be expected to range from 45 to 50 cents a pound. At such levels, the annual payments required under the National Wool Act of 1954 with the incentive price for shorn wool at 62 cents will total from 40 to 50 million dollars.
With these things in mind, I have worked up a table showing a projection of payments under the wool payment program and the duty collections which would be available through the 1958 marketing year with prices at approximately their current level. I would like to file that with the committee for the record. It should be realized these are projections and there is every hope that there will be an improvement in the market situation before the bulk of the 1958 clip wool is sold. In such event, the required payments would not be as large as indicated in this table. Projections of payments under wool payment program and duty collections available
for payments through the 1958 marketing year
No payments were required on mohair the first 3 marketing years as the average price received by growers in the free market was above the support price of 70 cents.
• The average price received by growers for shorn wool for the first 10 months of the 1957 marketing year was 54.4 cents per pound. The actual average for the full marketing year will not be available unti late June.
. Assumes some improvement in prices between now and March 1959. The average in April, the 1st month of the current marketing year, was 37.7 cents & pound.
• At $3,000,000 for each 1 cent the national average price received by growers for shorn wool is below the incentive level of 62 cents, the wool payments will total around $66,000,000. At $200,000 for each 1 cent the national average price received by growers for mohair is below the support price of 70 cents, the payments on mohair will total around $4,000,000.
Estimated on the basis of imports of raw wool during the 1957 marketing year being about 25 percent below those of a year earlier.
• Assumes domestic mill consumption during the 1958 marketing year will increase to about 10 percent above that for the 1957 marketing year and larger imports will be required to supply such requirements.
From these figures it appears that the total amount of payments required for the 4 marketing
years under the National Wool Act of 1954 may exceed the duty collections available for payments through the close of the 1958 marketing year by around $25 million. Under the act the duty collections after the close of the marketing year and up until the time the payments are actually made can be used in figuring the total amount available for payments. However, unless wool prices improve or imports are greater than assumed in these projections, provisions should be made for additional funds to make the payments for the current marketing year; otherwise the payments may be unduly delayed.
When the incentive payment program under the National Wool Act of 1954 was first proposed, it was felt that over the years an amount equal to 70 percent of the specific duties collected on wool and wool manufactures would be sufficient to finance the payments required to bring the national average price received for wool in the free market up to an incentive level.
The National Wool Act of 1954 limits the total amount of payments up to any date to the cumulative total of that amount from January 1, 1953, to the same date.
Only 70 percent was taken so as not to interfere with the 30 percent appropriated for use under section 32 of the Agricultural Adjustment Act. Seventy percent of the specific duties only were taken because in 1954 it was felt that sich a portion would be adequate even though the specific duties constitute only about two-thirds of all duties collected on imports of wool and wool manufactures. In addition to the specific duties, there are the ad valorem duties. These are the duties collected at a rate in percentage of the value of the product being imported. The specific duties are the ones that are figured at a fixed number of cents per pound. Raw wool, for example, carries only a specific duty. Wool fabrics imported carry both a specific duty and an ad valorem duty.
With the general decline in imports of raw wool in recent years and the lower prices received for wool by domestic growers than was anticipated, it is apparent that the specific duties are insufficient to finance the payments required to maintain the incentive price for shorn wool at a truly incentive level.
Demand for raw wool in this country is being restricted and hence prices to growers lowered because of the competition from imports of wool manufactures. So in figuring the amounts available for price assistance to woolgrowers, it would be only logical to consider all duties instead of only the specific portion of the duties collected. This would increase the amounts available for payments by about 50 percent.
I think everyone realizes that if and when the act is extended provisions should be made to provide sufficient funds for carrying out its intent and we believe the logical method to do this is the amendment as originally proposed which would allow the use of funds up to an amount equal to 70 percent of all wool duties, rather than limiting it to just 70 percent of specific duties.
At this point, I would like to present to the committee a table showing the ad valorem amounts of duties collected as well as the specific duties. Duties collected on wool and wool manufactures imported into the United States
(In thousands of dollars)
5, 15067, 059 14,35081, 40956, 986
46, 941 3, 70845, 763 12, 277 58, 04040, 628 32, 5,527 73, 66720, 627 94, 294 66, 006 51,567 6, 116
76, 938 26, 232 103, 170 72,219 53, 857 4, 82874, 897 28, 725 103, 62272, 535
52, 428 5, 110 50, 733 25, 036 75, 76953, 038 35, 513 4,716 36, 272 20, 363 56, 635 39, 644
25, 390 1, 30311, 075
15, 65810, 961 7,752 6, 405 44, 972 28, 600 73, 572 51, 500 31, 480
2, 478 6, 417 4, 492
8,043 5, 630
2, 584 2, 775 5, 359 3, 751
482 3, 284 2, 701 5, 985 4, 190
2, 879 5, 569 3, 898
2, 671 4, 965 3, 476
2,757 3,490 2, 308 2, 407 2, 360 1, 383 2, 105 1, 809 1, 718 2, 925 2, 223 2, 473
30, 06110, 165 27, 260
2, 299 2,287 2, 181 2, 455 1,883 1, 740 1, 606 1, 224
1 Estimated on the basis of 26.0 percent, the average of compound duties collected from Jan. 1, 1953, through Mar. 31, 1956.
* Estimated on the basis of 26.3 percent, the average of compound duties collected during the first 6 months of 1954.
Note.-Compiled from data furnished by the Treasury Department.
This table shows that the amendment would make available approximately 50 percent more funds than under the present language of the act, in the event it was needed.
The second amendment proposed to your committee earlier would remove the 4-year limit on the operation of the act.
The incentive payment program under the National Wool Act is proving to be a sound solution to the special problem of wool and it really should be continued without termination date. Due to the longtime nature of sheep and wool production, woolgrowers must be assured of the continuance of such price assistance over a period of years in order for them to maintain and increase their production in accord with the intent of the act. Farmers or ranchers cannot afford to go into sheep or wool production for a short period as they can in the case of crops. There is a problem of obtaining breeding stock and arranging for the grazing and maintenance for the animals the year round.