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DEPARTMENT OF AGRICULTURE,

Washington, D. C., January 16, 1958. Hon. HAROLD D. COOLEY, Chairman, Committee on Agriculture,

House of Representatives. DEAR CONGRESSMAN COOLEY: This is in reply to your letter of August 30, requesting a report on H. R. 9539, a bill to extend the National Wool Act of 1954 (68 Stat. 910) for an additional 4-year period. This report also applies to H. R. 9995.

The Department recommends the extension of the National Wool Act of 1954.

The act provides for an incentive price for shorn wool to be established at such level as the Secretary of Agriculture, after consultation with producer representatives and after taking into consideration prices paid and other cost conditions affecting sheep production, determines to be necessary to encourage an annual production of 300 million pounds of shorn wool. Growers sell their wool in normal marketing channels. After the end of the marketing year and the average price received for shorn wool during the marketing year by all producers is known, payments are made to bring the national average return per pound up to the incentive level. The act also provides for the support of pulled wool and mohair. Under the existing legislation, such support is limited to wool and mohair marketed during the period beginning April 1, 1955, and ending March 31, 1959. In addition to supporting prices for wool and mohair, the act authorizes the Secretary to enter into agreements with marketing cooperatives, trade associations, and others for the purpose of developing advertising and sales promotion programs, such programs to be financed by deductions from payments.

Wool is one principal agricultural commodity in which our country is deficient in production. The act was developed to handle the special problem of price assistance for domestic woolgrowers without (a) adversely affecting foreign trade, (6) adversely affecting the competitive position of wool with imported wool and other fibers, and (c) having the Government in the wool-merchandising business. The payment program under the act is an alternative to supporting wool prices by loans or purchases or by raising the tariff to protect domestic growers' prices against the lower prices of imported wools. Support by loans and purchases resulted in domestic wools accumulating in the hands of the Government while mills looked to imported wools for an increasing share of their requirements. Raising the tariff to obtain higher prices in the domestic market would adversely affect foreign trade and also the competitive position of wool with other fibers.

The incentive price for shorn wool was established at 62 cents for the first marketing year of the payment program and has been continued at that level for each year since. The payments the first 2 years were greater than anticipated when the 62-cent incentive level was first established because of the greater than expected decline in the prices received for shorn wool in the free market. The national average received by producers for the 1955 marketing year was 42.8 cents per pound and for the 1956 marketing year, 44.3 cents. Part of the decline in prices may have been the cost of getting back to free market after several years of support at fixed prices. Also the CCC stocks accumulated from the previous price support loan programs were a depressing influence on market prices at the outset. The monthly average prices received by growers for shorn wool declined from early 1955 to a low of about 38 cents in January 1956 but in early 1957 were at their levels of 1952, 1953, and 1954. Consequently, the amounts of payments henceforth are expected to be less than the first and second years. Each i cent the national average price received by growers in the free market approaches the incentive price means around $3 million less required in payments.

Under the act the total payments are limited to 70 percent of the specific duties collected on wool and wool manufactures since January 1, 1953. These amounts have ranged from 25 to 35 million dollars a year-$28 million last year. Through March 27, which includes the years 1953 and 1954 plus the first 2 years of the new program, the total was $128 million. Payments totaled approximately $58 million the first year and around $53 million the second. Deducting these $111 million in payments from the amounts available for payments, leaves a $17 million balance for the current and later years to cover payments in excess of duty collections.

With regard to the progress being made toward increased production of wool in accord with the intent of the act, sheep numbers and wool production continue at low levels. Shorn-wool production in 1957 is estimated at 226 million pounds compared with the 300-million pound goal under the act. The net decline in

wool production the last few years has been primarily due to reductions in sheep numbers in Texas and several of the Western States where severe drought conditions prevailed. Due to the nature of the enterprise, year-to-year increases in wool production can be expected to be only gradual even under most favorable conditions.

Attached is a table showing the number of stock sheep in the United States: domestic production, imports, and consumption of wool; prices received by producers for shorn wool; payments made under the National Wool Act of 1954; and duty collections on imports of wool and wool manufactures by years.

Enactment of this proposed legislation would continue the existing program and would result in no increase in employment or in administrative costs.

The Bureau of the Budget advises that there is no objection to the submission of this report. Sincerely yours,

TRUE D. MORSE, Acting Secretary.

Number of stock sheep in the United States; domestic production, imports and consumption of wool; wool prices and payments under the National

Wool Act of 1954 and 70 percent of duties collected on wool and wool manufactures

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I Converted to domestic greasy shorn equivalent on basis of 1 pound pulled wool equal to 1.6 pounds greasy shorn wool.

* Apparel wool converted to domestic greasy shorn equivalent on basis scoured yield equal to 44 percent of greasy shorn wool.

3 Shorn wool, percent of net proceeds received by each producer, unshorn lambs, cents per hundred pounds liveweight.

* Estimated. • Marketing year beginning Apr. 1, 1955; calendar year prior to 1955. For JanuaryMarch 1955 period 70 percent of specific duty collections totaled $8,000,000.

& Preliminary. Prepared by Livestock and Dairy Division, CSS, Jan. 16, 1958.

Mr. Matthews. I want to make an explanation to you ladies and gentlemen who have come from some distance to appear before our committee. I regret very much that we do not have a large number up here. I would like to assume that we make up in quality what we lack in quantity here this morning.

This committee is nonpartisan, but many of our colleagues have made plans a year ahead of time to make special talks during this week. And that is the reason that they are not here with us this morning.

We feel that we have an obligation to you, ladies and gentlemen who have come a long distance to be with us and despite the fact that we do not have the full committee here, we want to assure you that the full committee will be informed of your testimony, it will be in the record. We think we can give you the opportunity of a good hearing, in spite of the fact that a number of our members are away.

We are delighted to have the ranking minority member, Congressman Hill, with

us, and most of you know Congressmen Johnson, Dixon, and myself.

With the permission of our witnesses who have come from some distance, we have two Members of Congress here, who have a very brief statement to make, and I am going to give them the opportunity to make their statements because they are members of other committees that are meeting at this same time, and they will have to leave soon. I am going to ask first of all Senator Yarborough to present his statement.

Mr. Hill. I would like to make this request, that Congressman Keith Thomson of Wyoming have an opportunity to file his statement following the testimony that we have here of the Senator from the State of Texas and other Members of Congress.

Mr. MATTHEWS. Without objection, permission is granted. Following the Senator's testimony, Congressman Thomson of Wyoming and other colleagues who would like to present testimony may do so in the record at this point.

Senator Yarborough, we will be delighted to hear from you. STATEMENT OF HON. RALPH YARBOROUGH, A UNITED STATES

SENATOR FROM THE STATE OF TEXAS Senator YARBOROUGH. I greatly appreciate your courtesy in letting me present this brief statement, particularly in the light of the informed witnesses who are leaders in the wool industry from over the Nation. I only ask this permission to present mine first because I am a member of the Senate Post Office and Civil Service Committee, that is meeting at 10 o'clock, and they have a little difficulty obtaining a quorum. They meet the same difficulty that this honorable committee is meeting this moring. I am pledged to leave here and go there as soon as possible. It is my privilege to be a coauthor with Senator Barrett of Wyoming, that great wool-producing State that has been mentioned here, of a bill pending in the Senate, on which hearings have already been held to extend the Wool Act of 1954, which expires this year for an additional 4 years.

I consider this a privilege to be here because our State is a leading wool-producing State, and we are concerned with this decline because 10 or 11 years ago Texas produced about 25 percent of the wool produced in the United States. In 1957 we produced only 10% percent of the wool produced in the United States. The woolgrowers there have had to combat 7 years of drought in addition to the economic factors that have otherwise worked as adverse forces on the wool industry. And other persons who will appear before this committee, Mr. Kincaid, president of the Texas Sheep & Wool Growers Association, who is well informed on this question.

Mr. Chairman, I would like to point out that the number of sheep in this country is far smaller now than was the case 10 years ago.

In my own State of Texas, we had, in 1945, 842 million head of sheep. In 1957, after 7 years of drought, we had 4,700,000 head of sheep. The sheep population is about cut in half. You cannot double the number of sheep, in a year's time. And wool is a critical material, a strategic material.

At the beginning of World War II we were caught short with an inadequate supply of wool. We tried to import it from South Africa, and from Australia, and that first year the German submarines stopped about 85 percent of our wool imports.

The aim of the National Wool Act is to stimulate production so that we will produce domestically one-third of the wool we consume. Even if the purposes of this act are successful we will be importing two-thirds of our wool and producing only about one-third.

I would like to point out also that with the end of the drought this extension of this act is needed as a stimulation to wool production.

We are not in the status on wool that we bave with cotton where we can produce our domestic needs and export millions of bales.

Sheep on the farms and ranches of the United States number about 27 million head this year, and as I have stated about 4,700,000, or about 18 percent of these are on the Texas farms and ranches. So our area is very much interested in the act.

There have been objections from some wool producers to the act. But last fall, to find out what this situation was, I made a factfinding trip on the Edwards Plateau region of Texas in the great woolproducing area around San Angelo, Sonora, and the other woolproducing centers, and I found that the overwhelming majority of the woolgrowers there think that the act has not been sufficiently supported and that it is absolutely essential if we are to keep up this domestic production of one-third of our national needs. This has led to other industries.

We now have industries in Texas that are engaged in scouring this wool to get the grease out. We have wool textile plants at Houston, Eldorado, Brownwood, and San Antonio, although most of our wool is shipped out of the State to Boston and other great markets for processing and for use in the textile plants in the eastern part of the country. But the most important of the manufacturing phase is probably the processing phase in my State where efforts are being made to scour the grease to put it in a premium class where it will bring more money.

Mr. Chairman, I have a little bit more extended statement than that describing the terrain and the vegetation problem in Texas during the years of drouth. In the interests of this committee and knowing that many experts will follow me and they will doubtless cover all of these fields, I would like to just file my statement with the reporter.

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