of Walnuts Grown in California, Oregon, and Washington (Amended Order No. 84)."

With the increasing importance of shelled walnuts, as our crops grew in size, it became more and more evident to the industry that an effective means should be found for establishing minimum standards of quality on shelled walnut shipments, as well as upon in-shell shipments. It was felt that such minimum standards on shelled-walnut shipments were necessary not only to protect the interests of American consumers but also to improve and stabilize the demand for the better grades. Accordingly, marketing order No. 84 was amended, effective October 4, 1957, to authorize the establishment of minimum standards of quality and maturity on shelled walnut shipments. The amended order also provides that all shelled walnuts shipped by the domestic industry shall be inspected by a neutral inspection agency prior to shipment. The authority for the grade and size regulation of shelled walnuts and the inspection and certification of shelled walnuts is found in sections 984.45 and 984.46 of amended order No. 84. Beginning with the 1957 crop year the industry has been operating under these minimum standards and inspection requirements.

Attached hereto as exhibit A are excerpts of testimony by Anthony J. Tarlock, assistant manager of walnut control board, who testified concerning the need for improvement of quality of shelled walnuts shipped by the domestic industry. I should like to add to Mr. Tarlock's observation that the importance of improving and maintaining quality standards cannot be overemphasized in marketing our products in the highly competitive edible tree-nut industry.

This regulation of American walnut shellers under the marketing order means that they are required by law to grade and ship only such classes of shelled walnuts as meet the minimum standards established pursuant to the order by the United States Secretary of Agriculture. Therefore, it is clear that the industry is doing its utmost to ship only such shelled walnuts as will give good consumer satisfaction. At the same time, the elimination of substandard shelled walnuts from the market tends to advance and stabilize the prices for the standard packs which are acceptable to consumers. The industry believes that foreign producers or importers should be required to meet the same standards as American growers and shellers. The only way of accomplishing this is to amend section 8 (e) of the Agricultural Marketing Agreement Act of 1937, as amended, by adding shelled walnuts to the list of commodities contained therein. This would give the Secretary of Agriculture authority to establish minimum grades and inspection procedures on all shelled walnuts imported into this country. Such minimum standards and inspection procedures should be identical to those imposed on the domestic industry by amended order No. 84.

The walnut industry experienced, in the season of 1955-56, extreme and destructive competition from large quantities of substandard imported shelled walnuts. During the 1955–56 marketing year, domestic producers and shellers were enjoying very favorable shelled walnut prices and foreign producers exported walnuts into the United States in huge quantities, partly because of our attractive price level and partly because 1955 foreign crops were the largest since 1938. In fact, the volume of imported shelled walnuts during the 1955-56 marketing year rose to nearly double the level of average shelled walnut imports.

In order to apprise the trade of the quality of the imports, we collected samples and tested them in our laboratory. The results were alarming. The Iranian samples averaged 3.4 percent moldy kernels, 4.7 percent worm-scored kernels, and 5.6 percent rancid kernels. They also contained 0.7 percent dust and shell. Thus, the defects totaled 16.4 percent by weight, which means that 16.4 percent of these lots was unfit for human consumption. Under the standard maintained by the industry through amended order No. 84 it would not have been permissible to ship such shelled walnuts. The Turkish samples obtained contained 23 percent worm-scored kernels and 2.1 percent dust and shell, giving a total of 25.1 percent of material unfit for human consumption. Furthermore, chemical analyses of the Turkish walnuts showed that they were rancid. Under the standards and inspection procedure pursuant to amended order No. 84 these shelled walnuts could not have been shipped. The Italian walnuts obtained contained wormdamaged kernels amounting to 3.4 percent by weight and rancid kernels amounting to 0.9 percent, or a total of 4.3 percent unfit for human consumption. Under the standards and inspection procedure pursuant to amended order No. 84 these shelled walnuts could not have been shipped. The Indian pieces obtained by the research department were rancid by chemical analyses and also contained 1.4 percent by weight of dust and shell. Under the standards maintained pur

suant to marketing order No. 84 these shelled walnuts could not have been shipped.

These actual analyses of samples of imported shelled walnuts indicate the potential of how imported walnuts may fail to be of such quality as is fit for human consumption. Another and still larger indication of the substandard quality of many walnuts imported during the 1955-56 marketing year is that some of these offgrade lots of imported shelled walnuts remained on the domestic market at declining prices during the 1956-57 marketing year.

Attached hereto as exhibit B is a table which shows the decline in prices of the imported substandard shelled walnuts and, more important, the disastrous effect of marketing these imported products on the domestic price. The committee will note that the domestic price of $1.10 per pound for shelled walnuts was maintained during the 1955-56 season because of long-term contracts under which most of thet domestic pack is sold.

Wen these contracts expired in the fall of 1956, the impact was felt and it really hurt. From $1.10 per pound the price went to 722 cents. There can be no doubt that substandard merchandise hurts the entire industry and drags the prices of quality products down along with their own prices.

The inspection of imported shelled walnuts could be performed by the Inspec tion Service of the United States Department of Agriculture on the basis of very low charges to importers. Domestic shippers pay an inspection fee of 2.75 mills per pound and here the material must be inspected at widely scattered geographical points. Since most imported material comes in through New York, Boston, and Philadelphia in substantial blocks, the inspection of such material could be performed at least as cheaply as the cost domestic handlers are paying. The subcommittee will note the fact that such an inspection cost is infinitesimal in relation to market prices and cannot be considered burdensome.

In conclusion, it should be noted that the inclusion of shelled walnuts under section 8 (e) of the act is entirely consistent with the purpose of that legislation. These marketing order programs are self-help programs which enable agricultural producers to build up their industry by their own efforts and section 8 (e) is an important aspect of the entire marketing program. At the time it was enacted, shelled walnuts did not have quality regulation in the walnut marketing order. Now there is such regulation and our experiences in the past demonstrate the need for import regulation. Certainly there is at least as much justification for including shelled walnuts now as there was for including tomatoes. Irish potatoes, eggplant and the other commodities now included under section 8 (e). We urge the committee to take favorable action on both of these bills introduced by Congressmen Sisk and McFall.

EXHIBIT A

EXCERPTS OF TESTIMONY BEFORE UNITED STATES DEPARTMENT OF AGRICULTURE HEARING MAY 1, 1957, DOCKET AO 192-A3, ON PROPOSED AMENDMENT TO WALNUT MARKETING ORDER

(P. 138:)

TESTIMONY OF ANTHONY J. TARLOCK, SAN MATEO, CALIF.

Q. (By Mr. Graham:) Mr. Tarlock, will you state, please, your name and address to the reporter.-A. My name is Anthony J. Tarlock, and I'm assistant manager of the Walnut Control Board, 710 South B Street, San Mateo, Calif.

Q. Mr. Tarlock, are you in position to testify with respect to amendment No. 18, Section 984.44a: Establishment of Grade and Size Regulation for Shelled Walnuts? A. Yes, sir.

Q. Will you please proceed.-A. Section 984.44a: Establishment of Grade and Size Regulation for Shelled Walnuts. This section provides authority for the regulation of grade and size and the establishment of minimum standards for shelled walnuts in the same manner that such authority is provided for unshelled walnuts in section 984.43. It places in paragraph (a) the authority to establish a minimum standard for shelled walnuts within the meaning of section 2 (3) of the act, and provides that such minimum standard shall be established as being equal to or better than the requirements of the United States commercial grade as defined in the effective United States standards for shelled English walnuts (Juglans regis): except that the minimum size shall be pieces

not more than 5 percent of which will pass through a round opening six-sixtyfourths inch in diameter; and provides that such minimum standard may be modified by the Secretary on the basis of a recommendation by the control board or other information.

Congress after exhaustive hearings and representations by agricultural industry groups, amended the Agricultural Marketing Agreement Act to permit minimum standards of quality and maturity to be maintained irrespective of whether the season average price was above parity. This amendment resulted from situations in which agricultural industries have desired to maintain quality and maturity standards through compulsory inspection of all shipments even though no other authorized regulatory features were maintained. Producers and consumers alike had previously been deprived of many important and highly beneficial provisions of marketing agreements and orders which have had for their objective the establishment of minimum standards of quality, maturity, grading, and inspection requirements and the elimination from the market of low quality, offgrade, immature commodities or products commonly known as culls, in order that producers could market and consumers could receive mature, satisfactory products of good quality. The proposed provision relating to the establishment and maintenance of minimum standards of quality and maturity and inspection requirements is aimed primarily at obtaining a higher quality product for the market. Higher quality products benefit both consumers and producers. Consumers obtain a better product and producers are relieved of competition from inferior and low-grade products. Frequently, both are benefited through increased marketings because better crops are obtained by improved cultural practices and proper care of orchards. It is important that continuity of a uniformly high-grade product be maintained both from the standpoint of the producer and the consumer, irrespective of the parity price level in any given season.

The proposed provisions of section 984.44a (a) for shelled walnuts will permit the quality of shelled walnuts to be regulated in accordance with these standards and objectives and provide the flexibility of operation which is so necessary in program administration. It is contemplated that this regulation will not prevent good, marketable products from reaching the market. It is intended, however, that offgrade merchandise, culls, unclassified or immature and improperly formed products will be kept off the market each year irrespective of the season average price to walnut growers. Such action is believed to be in the interest of the consumer as well as in the interest of the producer.

EXHIBIT B

Representative domestic and imported shelled walnut prices, December 1955 to February 1957

Quotations by a large New York importer.

Cents

Cents

80

$1.10 21. 10

21. 10

.725

.725

2 $1.10 per pound domestic price held for 1955-56 season because majority sales were made under contract. * Opening prices of 1956-57 season reflected price break due to competition from carryovers of low quality imports.

Mr. HAGEN. Are there any questions of Mr. Bryce? I would like to ask you one question, Mr. Bryce.

These products, including walnuts, are inspected at times by the Food and Drug Administration. These proposals would establish a mandatory inspection by the USDA rather than a permissive episodic action of the Food and Drug as currently obtains, is that correct?

Mr. BRYCE. Yes, sir.

Mr. HAGEN. What inadequacy do you feel exists on the current state of inspection?

Mr. BRYCE. We feel, Mr. Chairman, inadequacy in two respects. The first point to be made is that the standard that the Pure Food and Drug Administration operates under is too low to really provide consumers with a satisfactory product.

Secondly, we feel that the Pure Food and Drug inspections are too episodic and infrequent to protect the quality of the merchandise coming in.

For some time our industry, and I might add other California agricultural industries, have been disturbed by the fact that the Pure Food and Drug Administration does not seem to have the personnel nor the finances to do a better job of inspection. But that problem aside, we still feel that we need every shipment inspected and on the basis of a higher standard than the Pure Food and Drug operates under.

Mr. HAGEN. Thank you very much.

Mr. BRYCE. Thank you.

Mr. HAGEN. The next witness I have listed is Mr. Dickson Loos, attorney at law.

Will you identify yourself further?

STATEMENT OF DICKSON LOOS, ATTORNEY AT LAW,

WASHINGTON, D. C.

Mr. Loos. Mr. Chairman, I am speaking for the entire citrus industry in the United States, both Florida and California.

As Mr. Haley pointed out both segments of this industry are together and emphatically supporting the provisions of this bill where it substitutes any citrus fruit for grapefruit or lime. In Florida it is especially important to the growers there because they operate under a Federal marketing order-that is order No. 33-which controls and regulates quality. And they have been experiencing from time to time imports, especially, I am told, from the Isle of Pines and from Mexico which are substandard in their quality and which compete against the Florida product and has been causing a lot of difficulty. In California there is no particular marketing order which regulates quality at this time. Nevertheless, the growers in California are very much in favor of this legislation because from the general principle we feel that when you do have a marketing order program it is very important to be able to control quality and you cannot do that if imports come in which are sold and have no regulation of quality. We control the quality within the industry itself. That is of much higher quality than any Government regulation would impose. I am sure of that.

And the only other point which I would like to add is that I am told by the various people who attend the meeting of the National Conference of Commodity Organizations in Kansas City that that conference is solidly behind this legislation, also.

Mr. HAGEN. Does that complete your statement?

Mr. Loos. That does.

Mr. HAGEN. I would like to ask you one question. Do you have any questions?

Mr. TEAGUE. Just one question, Mr. Chairman. That is bound to come up sometime. I do not know that I quite know the answer. These other commodities-walnuts and dates and figs, the contention was made, one of the big reasons, one of the big justifications for this type of legislation has to do with the health factor.

What is the situation in that regard as applied to citrus?

Mr. Loos. Well, now, I am told that some of this citrus that is grown in other countries is infested with a fruitfly. I am told that it stings the fruit and lays eggs in it. I am not at all sure and I very frankly could not answer you whether that is deleterious to health or not. It is an adulteration of the product which makes it a substandard prod

uct.

Also, I think that these fruits sometimes are pickled and shipped in varying stages of maturity, so they are not a good product.

I think that in our case here it is a situation where one is an inferior product from the consumer angle. And that is, certainly, very bad for the entire citrus industry.

Mr. HAGEN. Lime and grapefruit are already afforded this protection. When did they get into the statute, do you know?

Mr. Loos. I am not sure of the history. I think it was probably put in when the section was first added to it.

Mr. HAGEN. Was there any rational basis for including limes and grapefruit and not including other forms of citrus?

Mr. Loos. I see no real basis for it. The same arguments apply equally forcefully for oranges, especially in Florida, since they are controlled by a Federal marketing order and would also apply to lemons, if lemons came under it-that marketing order.

Mr. HAGEN. Thank you very much.

Mr. Loos. Thank you.

Mr. HAGEN. Our next listed witness is Mr. Edwin G. Martin, of New York City.

STATEMENT OF EDWIN G. MARTIN, WASHINGTON, D. C.

Mr. MARTIN. Mr. Chairman, I would like to correct the record about the address. My name is E. G. Martin. I am a resident of Washington and my office is in the National Press Building. My client is S. M. Wolff Co., of New York City. That probably acts for the address. Mr. HAGEN. If you have a prepared statement, Mr. Martin, you can either read it or submit it and just comment informally, if you wish.

Mr. MARTIN. I have some notes, Mr. Chairman. We didn't learn of this hearing until Friday and we have not had time to prepare a statement. But I have made some notes that I would like to use in my testimony.

Mr. HAGEN. Very well; proceed.

Mr. MARTIN. S. M. Wolff Co. is probably the principal importer of figs.

We learned this morning that dates were also included in this hearing, and S. M. Wolff Co. represents the Iraq Date Trading Co. We have not had opportunity to consult the Iraqi about their position on the bill. But I think it should be noted that dates are the principal export that Iraq has to ship to the United States. Also, that the