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Mr. REGGIO. They lost money because there was a small crop in California and the importers they brought in more goods, and as they did the prices in Europe went up or from the countries of supply, and California raised their prices, and the Europeans raised their prices and it got to a point where the consumer would not pay the price. And much as we try to make regulatory restrictions, there is still the law of supply and demand.

Mr. ANFUSO. They just would not buy?

Mr. REGGIO. That is right.

Mr. ANFUSO. That created a surplus?

Mr. REGGIO. It would create a surplus. If you wanted to move them you had to take sacrifice prices. When the prices got more realistic and normal the people began to buy.

Mr. HAGEN. One of the purposes of the various programs is to assure a stable supply so that could not happen.

I want to advert to something that you said earlier. You implied that prices on walnuts from some of these other countries, other than India and Iran, would amount to as much as $1.08 a pound?

Mr. REGGIO. At the time that the Californians were $1.10, French were getting $1.05 to $1.08 a pound.

Mr. HAGEN. Was there a substantial import from those countries at that time?

Mr. REGGIO. At that time-I have the figures here from the customs imports-in 1955, for example, the duty paid imports amounted to $8,600,000 pounds of which France shipped 2,800,000 pounds. Mr. HAGEN. What was the average price?

Mr. REGGIO. I didn't get the average; I didn't take the average price down. I didn't know you would be concerned with that. They are a matter of record with the customhouse.

Mr. HAGEN. If the prices were that close, $1.10 for domestic and $1.08 for foreign, there would be no incentive for you to buy abroad; would there?

Mr. REGGIO. Well, there is an incentive because when I quote you the price of $1.08, I am quoting the price that the manufacturers would have to buy them at. The importer, certainly, had a profit takeon there, which the California interests were including in their marketing program, they were not buying them not to sell them at a profit.

The California people would go direct to the bakers and the confectioners and so on. These prices of $1.08 would include a profit. The importer would, of course, have them at a lesser price and his profit on it.

Italy had in that year 1955, 1,059,000 pounds.

Mr. HAGEN. If the French walnuts were selling at $1.08 and Indians at 85 cents, you would buy from the Indians?

Mr. REGGIO. Not necessarily. As was pointed out in the date picture, you have people of all categories buying these products. The man that wants the cheap thing, you can sell a suit for $15, as Gimbels were doing a few weeks ago, and you can sell a few for $125-I am talking of readymade suits-some people have limited means and can pay for different quality and others just try to get the cheapest thing they can get by with.

Mr. HAGEN. Let me ask, do the Indian importers of walnuts market under a brand name? Do they?

Mr. REGGIO. Generally speaking, no. They practically when they enter and go into the hands of either the maker or the man that packages them they lose their identity. They are maybe on the package "imported walnuts" in a little cellophane package, but they do not say what country they come from.

Mr. HAGEN. Nor is there any requirement that they put "imported" on the package?

Mr. REGGIO. No.

Mr. HAGEN. The housewife getting rancid walnuts might think she was getting them from California?

Mr. REGGIO. There is the identity of the word "imported" on the package.

Mr. HAGEN. That is a requirement?

Mr. REGGIO. I do not know whether it is a requirement. But I am of the opinion that it is—on olive oil it must say "imported olive oil" if it comes from foreign origin, but does not have to say French, or Greek, or Italian or what. It just says "imported."

Mr. ANFUSO. I think that is a requirement of the Food and Drug. Mr. REGGIO. That may be on the original package, but when repackaged it can lose its identity so fast.

Mr. HAGEN. There is a possibility that the imported walnuts can be sold on the grocery shelves without indication they are imported? Mr. REGGIO. No.

Mr. HAGEN. You are not certain of that?

Mr. REGGIO. I will say this that the Californians are not going to pack their walnuts and not say "California."

Mr. HAGEN. The housewife may not be as educated as the other people and will assume unmarked walnuts come from California.

Mr. REGGIO. The housewife is not as educated as we are in the trade. That is why they call us experts, but the housewife can get food just as badly if the package is marked that way when the people just put on the outside of the case "shelled walnuts," and do not say where they are from.

Mr. ANFUSO. We have a lot of witnesses. Let us get down to the purpose of your testimony. I just want to ask you this question. You are inspected under the Food and Drug Act?

Mr. REGGIO. That is correct.

Mr. ANFUSO. Why do you object to this proposal here, this change here, to place you under the marketing restriction?

Mr. REGGIO. We don't feel that the foreign products under the Department of Agriculture are any better protected than they are under the Food and Drug Administration.

Mr. ANFUSO. Restrict yourself to walnuts.

Mr. REGGIO. I am restricting it to walnuts.

Mr. ANFUSO. So far as walnuts are concerned?

Mr. REGGIO. That is correct. That is what I am restricting it to. Mr. ANFUSO. There may be a difference?

Mr. REGGIO. There may be other products, there are other items that they inspect with 2 or 3 items, Bureau of Plant and Entomology as well as the Bureau of Food inspect different items.

Mr. ANFUSO. Supposing you have a bad quality of walnut coming in, what happens.

Mr. REGGIO. Generally speaking, the walnuts are sold under these standards. We have standards for French, we have standards for Italian, we have standards for Turkish shelled walnuts. And in the event that the quality does not come up to standards there have been years when all three of those countries have shipped walnuts in because the prices were right, and they were just shipping out anything they could, the way those goods were not up to quality standards, if they passed the Food and Drug because sometimes quality can mean that they are amber-colored in with the light-colored walnuts, there is no difference so far as the quality is concerned of the walnut, but the color of the skin makes the amber ones less desirable than the light ones-they would be turned over to a reconditioner who would by hand labor sort those out and pick them over.

Mr. ANFUSO. Speaking about quality, where do you think the best walnuts come from?

Mr. REGGIO. From my point of view, if you talk about the domestic walnuts, I think the Northwest produces the far superior shelled walnuts. When you talk about foreign nuts I think France produces about the finest walnut in the world.

Mr. ANFUSO. Would you say that the domestic walnut is better than the imported walnut?

Mr. REGGIO. I would say that since the Northwest derived their stock from the French, that they are the closest of the two, I mean it would be hard to say, if you got a really good Oregon walnut it would be pretty hard to differentiate. It is a question of people's taste. Mr. ANFUSO. Can the consumers tell the difference?

Mr. REGGIO. An educated consumer could tell the difference. They could pretty readily tell the difference.

Mr. SISK. Would you yield?

Mr. ANFUSO. Sure.

Mr. SISK. Do you feel that the Diamond walnut, that is, the "Diamond Brand," taken as the top brand of the domestic producers' walnuts, actually have any foreign or imported walnuts that meet their standards of quality?

Mr. REGGIO. Yes.

Mr. SISK. What percentage of the imports would you say meet that standard?

Mr. REGGIO. I am afraid I have never made a survey.

Mr. SISK. Would you estimate 5 percent? You mentioned the French walnut as being a very fine walnut.

Mr. REGGIO. That is right. It depends on the year.

You see, qualities vary. This year there will be very few French walnuts imported because the prices paid in Europe are way up. Mr. SISK. How about the Indian, the English walnuts, how do they compare?

Mr. REGGIO. I would say the Indian walnuts in some years are inferior in quality. This year, for example, they are very nice. Mr. SISK. But probably still not as good as the domestic?

Mr. REGGIO. That depends on the point of view. I still think that even the name "Diamond" does not denote always the best in quality. There are other producers in California smaller than Diamond that in my opinion produce better California walnuts than the Diamond people do.

Mr. SISK. Thank you.

Mr. ANFUSO. Have you completed your statement?

Mr. REGGIO. Yes, sir.

Mr. HAGEN. I wonder if you might submit those standards.

Mr. REGGIO. Yes. I would be very happy to submit 3 or 4 standards. Mr. HAGEN. These are the industry standards?

Mr. REGGIO. These are the industrywide standards and most of the importers will not buy unless the foreign shippers agree to sell under these particular standards.

Mr. HAGEN. These standards were adopted by whom?

Mr. REGGIO. By the Association of Food Distributors, the members of the Imported Nuts Section.

Mr. HAGEN. And they determine that?

Mr. REGGIO. They determine that.

Mr. HAGEN. If you will submit copies to the reporter for the record we will include them at this point.

(The standards referred to are as follows:)

STANDARDS FOR FRENCH SHELLED WALNUTS

Amended March 1, 1928-Readopted From DFA Standards, July 25, 1950 I. All walnut meats must be of the crop designated, which means that under no circumstances can be mixed in any percentage of a previous crop. They must be cracked and packed in healthy surroundings and the case must weigh when packed, 25 kilos net, without paper; natural shrinkage not to exceed 1 percent on arrival; paper to be used for lining to be white parchment paper.

II. All cases to be marked "Products of France," net weight 25 kilos as well as 55 lbs. net, name of shipper and shipper's town. Each case should further bear importer's mark, as per arrangement between shippers and importers, and in addition, exporter's initials or some other distinguishing counter-mark. Cases must be marked clearly, either:

SHELLED WALNUTS EXTRAS-HALVES
SHELLED WALNUTS BROKEN-INVALIDES
SHELLED WALNUTS HARLEQUINS, ETC.

III. A. Extra Bordeaux Halves.-Must be the product of the Perigord (Dordogne, Lot) district, and the departments Correze, Aveyron, Charente, Allier and Vienne, Lozere, Charente-Inferieure, Indre, and Indre-et-Loire and of good average light color, free from yellow and brown (Harlequins) discolored, wormy or worm-eaten, rotten, mouldy, dried up and shriveled kernels, dust, shells, or husks, and all extraneous foreign matter. Halves must contain no broken kernels at all when packed. A walnut-half, three-quarters whole, counts as a good whole, but the percentage of three-quarter wholes must not exceed 8 percent by weight when shipped by an exporter.

B. Bordeaux Walnut Pieces.-Of the same origin as "A." All walnut kernels 34 halves and smaller count as pieces. Must be free from yellow, brown (Harlequins), discolored, wormy or worm-eaten, rotten, mouldy, dried up and shriveled kernels, dust, shells, or husks and all extraneous foreign matter.

C. Extra Small Bordeaux Walnut Halves.-Of the same origin as "A." Of good average light color, free from yellow, brown (Harlequins), discolored, wormy or worm-eaten, rotten, mouldy, shriveled, or dried-up kernels, dust, shells or husks and all extraneous foreign matter; of small fairly uniform size, not less than 750 per kilo (340 to the pound English). Halves must contain no broken kernels at all when packed. A walnut half, three-quarters whole, counts as a good whole, but the percentage of three-quarter wholes must not exceed 5 percent when shipped by the exporter.

D. Chabertes Halves.-These must be the products of the Dauphine, comprising Departments Hautes-Alpes, Basses-Alpes, Isere and Drome. They must be free from yellow, brown (Harlequins), discolored, wormy or worm-eaten, mouldy, dried up and shriveled kernels, dust, shells or husks and all extraneous matter, of average good light color, fairly uniform in size, and run at least 750 to the kilo (340 to the pound English). Halves must contain no broken kernels at all when packed. A Chaberte-Half, three-quarters whole, counts as a good whole,

but the percentage of three-quarter wholes must not exceed 5 percent when shipped by exporter.

E. Should crop conditions be such, as to make for a heavy or large kernel, a special grade of large Chabertes, with stipulated count, is to be offered in addition to regular Chabertes. All other regulations for large Chaberte halves to correspond to regular Chaberte halves. No standard Chaberte halves to be mixed with the large Chaberte halves.

F. Mayette Halves.-Large or small must be halves of good color, flavor and appearance of fairly uniform size, well selected, and the product of the Mayette Walnut. No pieces at time of shipment. Otherwise conform to Bordeaux and Chaberte Halves.

G. Chaberte or Mayette Walnut Pieces.-Must be really the product of the quality designated; otherwise conform to B.

H. Walnut Halves or Pieces.-Must not contain any dust, shells, husks, or extraneous foreign matter.

I. Harlequins.

1. Halves (No. 1 Grade): Must be bright yellow in color, otherwise conform to Bordeaux, Chaberte, or Mayette Halves, respectively.

2. Halves (No. 2 Grade): Must be light brown, otherwise conform to Bordeaux, Chaberte, or Mayette Halves.

3. Halves (No. 3 Grade): Brown in color (not black), should be sold on sample only.

4. Pieces (No. 1-2-3 Grades): Should correspond to the above, and the Bordeaux, Chaberte, and Mayette pieces, respectively.

J. In the case of Extra Bordeaux Walnut Halves and Harlequin Halves, the tolerance for breakage in transit will be maximum 8 percent by weight, in the case of Extra Small Bordeaux Halves, Chaberte Halves and Mayette Halves, the tolerance for breakage in transit will be maximum 5 percent by weight.

K. All French shelled walnuts are guaranteed to conform with the requirements of the Food and Drug Administration of the Federal Security Agency, by seller.

L. Shippers are requested to exert special care as to the proper curing of their shipments to ensure good condition on arrival at destination; i. e., the kernels must be dry and packed in perfectly seasoned cases. It is, however, understood that goods travel for account and risk of purchaser and that mould that might occur in transit from causes other than improper curing or unseasoned cases, is not to imply liability of shipper.

IV. All claims regarding weight and quality must be made within twenty days after goods have been discharged from the steamer and are available for inspection, and while they are still on dock or in public warehouse. Weighing and sampling is to be done by public weighers and samplers, and cases to be used for these purposes must not have been opened previously.

V. All disputes regarding contracts of shelled walnuts, which cannot be amicably adjusted by interested parties are to be settled by Arbitration according to the rules and regulations of the Association of Food Distributors, Inc., New York.

VI. All contracts for sales made under these standards should state, "Terms and quality in accordance with A. F. D. Standards as readopted July 25th, 1950." VII. Letter of Credit Terms.-Letter of Credit for imports of walnuts shall be opened for 100 percent available by two drafts as follows:

One for 85 percent of the full invoice value, to be accepted unconditionally on presentation of documents, payable against shipping documents.

The second draft for 15 percent of invoice value, to be accepted after passing U. S. Food & Drug Administration of the Federal Security Agency and buyers examination.

A. Upon notification by the importer that the goods, after arrival and examination have been found satisfactory.

B. If the importers do not notify the bank and do not produce documents as described below in substantiation of any deduction within 30 days after arrival. examination and approval, the second draft for 15 percent is to be accepted unconditionally by the bank.

C. In case quality and/or weight of shipment are not satisfactory, the second draft for 15 percent is to be accepted less the deduction agreed upon either by adjustment between shipper and importer directly or through the agent or the broker, or in case no agreement can thus be reached, by the Association of Food Distributors, Inc. of New York, arbitration, such arbitration award to be final. The importer shall notify the American Bank within three business days

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