Source: Reports from ASC offices. Livestock and Dairy Division, CSS. 121, 676 640, 974 56, 080 74,246 130, 326 20, 884, 246 4,094, 535 24,978, 781 257, 729 1, 299, 174 156, 600 176, 760 333, 360 43, 811, 742 7,889, 303 51, 701, 045 1,472, 019 495, 545 607, 299 178, 555 EXHIBIT S How WOOL PAYMENTS ARE FIGURED Incentive payment on shorn wool After the marketing year is over and the average price received for shorn wool by all producers is known, the rate of the incentive payment for the marketing year is announced. The rate of payment will be the percentage required to bring the national average price received by all producers up to the announced incentive price. Use of the percentage rate recognizes quality production and encourages producers to improve the quality and marketing of their wool to get the best price possible in the open market. Following is an example of how the rate is calculated: Incentive price as announced_ Assuming average price received by growers for the year is Difference... Percentage necessary to bring 50-cent average up to the 62-cent level-- $0.62 .50 .12 24 The announced percentage will be applied to the net proceeds received by each producer for the wool he marketed during the marketing year as shown by the sales documents, like the bill or account of sale, to determine the amount of his incentive payment. The following example illustrates how the county office will use the announced percentage.rate to determine the amount of payment to a producer. Net proceeds from sale of 2,000 pounds of shorn wool at 50 cents.. Payment... Unshorn lambs (pulled wool) payments $1,000 24 240 When the rate of incentive payments for shorn wool is announced, the rate of payments for unshorn lambs sold during the marketing year will also be announced. The rate of payment will be a fixed number of cents per hundredweight of animals sold to reflect, on the average, the approximate number of pounds of wool on the animals at the time of marketing. The quantity of wool on unshorn lambs sold for slaughter during the year averages around 5 pounds per hundredweight of live animal. Wool on lambs sold for slaughter is coarser and of shorter staple on the average than the United States shorn wool clip; hence, a lesser payment per pound to compensate for pulled wool is appropriate. Allowing for these factors, the following is an example of how the rate will be calculated: Incentive price for shorn wool as announced.. Assuming average price received by producers for the year is.... Difference $0.62 .50 .12 5 80 percent of difference to adjust for difference in grade and staple (cents) 9.6 Wool, greasy shorn basis (pounds per hundredweight of lambs).. Rate of payment per hundredweight of unshorn lambs (cents)__ .48 The rate of payment for unshorn lambs as announced at the end of the marketing year will be used by the county office to compute the amount of payment to each producer who qualifies for a payment. The number of pounds of unshorn lambs, as shown on the sales documents submitted by the applicant for a payment, will be multiplied by the rate per hundredweight. Following is an example of how the amount of payment would be calculated in the case of the sale of unshorn lambs by original producer: Net weight of 300 unshorn lambs sold (pounds). Payment. 30,000 $0.48 $144 A downward adjustment is made in the payments to a producer if the sale of shorn wool or unshorn lambs, as the case may be, includes lambs or wool from lambs purchased unshorn. This adjustment in the payment to a later owner is designed to eliminate duplication in the total amounts paid. If the applicant shears the lambs or resells them unshorn, the downward adjustment in his payment is, in effect, the amount due the previous owner. Thus, the original pro ducers and later feeder or breeder-owners share in the total lamb payment according to the weight gained by the lambs while in their possession. Following is an example of how the payment would be adjusted in the case of a feeder who sells purchased lambs: Weight of 300 unshorn lambs sold (pounds) - Less weight of 300 unshorn lambs purchased (pounds) -- Net weight produced (pounds). Lamb payment rate per hundredweight.. Payment. 30,000 21, 000 9,000 $0.48 $43. 20 In the above example, the original producer selling the 300 lambs to the feeder would be entitled to the payment on the 21,000 pounds at 48 cents per hundredweight, or $100.80. If the later owner shears the lambs and sells the shorn wool,'his payment will be calculated by figuring the amount of payment on the shorn wool and adjusting downward by the payment on the unshorn lambs purchased ($100.80 in this case) which the original producer is to receive. Mr. MATTHEWs. Are there any questions? Mr. HILL. Mr. Matthews, I would like to call attention to the fine statement that has been made by Assistant Secretary McLain, and to say that I think this would answer all of the objections that anyone might have to the extension of the Wool Act. I might ask Mr. McLain, is it the Department's position that we should not have a definite end of the program, just make it continuous? Mr. MCLAIN. We reported, Congressman Hill, on the bill for an extension for 4 years, and our testimony was prepared before the amendments on the Senate side and those here this morning were offered. The Department would not have any serious objection to elimination of the 4-year termination date. Mr. HILL. Of course, you understand any Congress can offer amendments any time it is in session. Mr. McLAIN. That is right. Mr. HILL. If it is working well, there would not be any reason why it should not be extended. And if there are parts of it that are not working well, amendments can always be offered. So the danger of no particular ending of a program is not as serious as it first would appear; is that correct? Mr. McLAIN. I think that is correct. Mr. HILL. That is all of the questions I have. Mr. MATTHEWS. Mr. Dixon? Mr. DIXON. There was a complaint among the woolgrowers themselves when the act was first put into operation that it was unfair to the growers and gave the feeders the advantage-and by "feeders" we mean the people who buy the lambs-in other words, the feeders would take the lambs for 6 weeks or 2 months and fatten them and get incentive payments on the wool, whereas the growers got none. Will you please tell us whether this objection has been removed? Mr. McLAIN. As mentioned in my statement, we now have the program working so that the original producers and the later breederor feeder-owners share in the payments. And to my knowledge, at least, our present plan has been very acceptable to all segments of the industry. Is that not correct, Frank? Mr. IMMASCHE. The first year when we were more or less feeling our way, we made the payments for pulled wool on the basis of the lambs going to slaughter. As the Congressman has indicated, we had a number of complaints on that method. Mr. DIXON. In other words, the man who slaughtered the lambs got all of the incentive payment on the wool? Mr. IMMASCHE. All the payment for pulled wool was made to the last bona fide owner of the lamb for 30 days. But now we have it where the original producer and any later feeder-owner share in the payments according to the weight gain of the lambs while owned by each. The payment is figured on the basis of a fixed amount of wool per hundredweight of live lamb and therefore does not cover the precise amount of wool on each lamb, but it seems to be working out very well. As the Assistant Secretary mentioned, we are getting practically no complaints on the present procedure and our thought is to continue it as is. Mr. DIXON. Recently I have heard no complaints, whereas the first year I heard many. Mr. IMMASCHE. That is right. Mr. DIXON. Now another question. On page 7, you say: With the general decline in wool prices in world market since last May it appears that the backlog available for payment may be completely exhausted by the end of the fourth year. As I understand it, the fourth year will start this April 1? And it will end, when-March 31? Mr. MCLAIN. March 31, 1959. Mr. DIXON. So the implication is that you would favor Congress fixing an amendment to take that word "specific" out so that you might get 70 percent of the tariff? Mr. McLAIN. Our position, Congressman Dixon, is that if we are going to have the act, we should have the funds to run the programs in the manner that was intended. I do not think anybody in this room can predict accurately how much money it will take 4 years ahead because nobody knows what the price level will be, or what the domestic price or the world market will be. But it is the Secretary's feeling and I share in it, that if we are going to have the act we ought to have the funds to operate it in the way it was intended. To do other than that would defeat the purpose of the act. Mr. DIXON. Another question, Mr. McLain. Do you feel that the wool people need this checkoff more than the producers of red meat? Mr. MCLAIN. I missed the first part of your question. Mr. DIXON. Do you feel or do you not feel that the producers of wool need this checkoff that is in the bill? Mr. MCLAIN. The checkoff? Mr. DIXON. More than the producers of red meat, and why? Mr. McLAIN. There are many things that we produce in surplus. We would like to urge farmers to produce the things that we do not produce in surplus. And, certainly, wool and lamb come in this category. Therefore, we feel anything we can do to help stimulate the production of wool and lamb would be beneficial not only to the wool and lamb grower, but, also, to all of agriculture in the United States. Diversion into wool and lamb can be of some help to areas and commodities now having surplus problems. Our position in the Department on the checkoff is that we have had a lot of reservation about involuntary checkoff as such. However, we did go along with section 708 in the initial Wool Act and, as EXTEND NATIONAL WOOL ACT OF 1954 45 mentioned in my statement, we do not propose to do otherwise this time. We feel that an exception can be made because of the special situation of wool and lamb, the history of the Wool Act, and the interest the wool and lamb people themselves have shown in the advertising and sales promotion of their products. As I stated, upon extension of the National Wool Act it is planned to hold another referendum to determine the desire of growers in continuing the program. They will be the ones who will determine whether the promotion program is continued. But it should not be construed that because of this particular program we would be wholeheartedly for any involuntary checkoff that might be developed because we think that in principle there are some dangers in moving in that direction. Mr. DIXON. I have in mind another point, too; that is, the competition with synthetics with the wool industry. Mr. McLAIN. That is right. Of course, the cotton industry is plagued with synthetics about as much as the wool industry, as you well know. Mr. DIXON. And cattle and hogs do not have that competition? Mr. McLAIN. I think that is correct. Although I must say in all fairness, that cattle and hogs do have some competition from poultry and other things. So we should not say that they do not have competition, because they do have. Mr. DIXON. Not from synthetics, as textiles do? Mr. JOHNSON. I think if you go down the line they suffer from more competition. Mr. DIXON. I mean from the competition of synthetics. Thank you, Mr. McLain. testimony. Mr. MATTHEWs. Thank you very much, Congressman Dixon. Are there any other questions? I would like to have inserted without objection, a statement by Representative William A. Dawson. He could not be here this morning. (The statement referred to is as follows:) STATEMENT OF HON. WILLIAM A. DAWSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF UTAH Mr. Chairman, in the wool legislation that is before the committee today we have something almost unique. That is, we have a farm bill that actually works. It is of utmost importance that this measure be extended as it is and not made unworkable by loading it down with amendments that would extend its provisions and principles to other commodities which, however important to our Nation's welfare, do not fall in the same category as wool. When this measure was first enacted almost 4 years ago, it had no termination date. It was proposed as a permanent cure to a very sick domestic woolgrowing industry. A termination date was inserted by the House which, wisely I think, decided that this law should be reexamined after 4 years to see if it was actually working. I submit, Mr. Chairman, that it has worked. The National Wool Act during the past 31⁄2 years has restored initiative and enterprise to our domestic wool industry. In doing so, it has formed the basis for an increased production of this fiber-a production vital to our national security and economic well-being. It has resulted in domestic wool production for consumption, not for Government warehouse as was the case prior to its enactment. In short, Mr. Chairman, this law which we are asking be extended saved the domestic wool industry from extinction and has and will if reenacted offer the woolgrowers of the country the necessary incentive to continue their operations. I have yet to hear a reasonable alternative to extension of the present act. A return to a straight and rigid price-support program would again result in the 23102-58 4 |