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Washington, D.C. The subcommittee met, pursuant to notice, at 10 a. m., in room 1308, New House Office Building, Hon. Clark W. Thompson (chairman of the subcommittee) presiding.

Present: Representatives Thompson, Gathings, Jones, and Krueger. Mr. THOMPSON. The committee will be in order. Gentlemen, for the benefit of all here present, I would like to give you just a little bit of the background of this particular meeting.

The rice industry is a very troubled and worried industry from producer on through miller, including everybody, I guess, except the consumer; and some places in the world, the consumers are a little troubled.

We don't know, in the industry, what the future holds.

We don't know what the export program is going to be for next year. We are not sure that we know what the acreage program is going to be. We don't know what the price support will be.

With those various problems in mind, and without any specific questions to ask at this particular time, anyway, we have asked Mr. Marvin McLain, who is certainly—if he isn't the policymaker, he is on the policymaking level so far as this industry is concerned, if he would come up here and tell us exactly what we have to look forward to and what the program is to be.

I am going to suggest that after he has testified in any manner that he desires, that we go ahead with what questions occur to us and then let others from the industry who may be present, whether they made themselves known to me or not, join into the discussion either as witnesses or, perhaps, since it is a small group and a small place, we can make it more or less as a round-table discussion.

Mr. McLain, with that introduction and story of what we are trying to accomplish, we will appreciate hearing from you. STATEMENT OF MARVIN L. McLAIN, ASSISTANT SECRETARY OF

AGRICULTURE, WASHINGTON, D. C. Mr. McLain. Mr. Chairman, I have prepared here a very brief statement. We can get some of the facts as we see them in the Department out here, if I just run through them hurriedly. We will try to answer any questions you may have about the stateLet me say this to begin with, that I have many very fine friends in the rice industry and have been very close to some of them, and I think they are a pretty practical group of people. I think that they are interested in any long-term approach to the rice problem that should be helpful to you people that are charged, of course, with the responsibility of writing the laws that the Department must operate under.


So, with that, I will go ahead and read this brief statement. We have tried to get into it some of the facts that ought to be of interest to this committee.

I am happy to be here today to discuss with you the rice situation with special reference to the administration's recommendations for rice.

As one of the basic crops involving mandatory price support and acreage allotments determined by formula, we feel it most appropriate for this committee to consider the problems of rice and possible solutions. While we have taken many actions to assist rice producers, we recognize that all of the problems have not been solved.


We recommended and the Congress enacted, in 1954, the Agricultural Trade and Development Act, commonly known as Public Law 480, to dispose of surpluses.

Under title I of this law, we have programed the export movement of about 251,2 million bags of milled rice. This is the equivalent of about 37 million hundred weight of rough rice.

Incidentally, unless action to extend Public Law 480 is taken soon, rice producers will lose some of the benefits which, otherwise, would be derivedf from title I of Public Law 480.

I am happy, may I say, to note that the House is going to move on hearings on Public Law 480. We have been successful in getting it through the Senate side, and I think it is to the interest of rice growers as well as wheat growers and many other growers that action be taken as soon as possible on it.

Under title II of Public Law 480 we have programed for donation to various governments 4.8 million hundredweight of rice—rough basis.

We recommended and the Congress enacted, in 1956, the Soil Bank Act.

Under this law, rice producers have made and are making substantial reductions in acreage and have received or will receive total payments of about $28 million for the years 1956 through 1958.

We are providing supplies of rice for distribution to the schools under the school lunch program and to institutions. In the last fiscal year, we distributed 33 million pounds under this program.

We are making rice available for donation to the needy through various State outlets. In the last fiscal year, we distributed about 48 million pounds under this program.

We are sharing our abundance of rice with the needy abroad through various religious and charitable grouns. In the last fiscal year, we distributed 201 million pounds under this program.

Under our barter authority, we have exported approximately one million hundredweight, rough basis.

vided by co-ops.

Under our special storage programs, we have been able to increase available storage tremendously.

Fine storage facilities for drying and handling the rice crop have been developed. They will be a permanent asset to the rice industry.

In the past 2 years new storage facilities for several million hundredweight of rough and milled rice have been provided. I am happy to say that a substantial part of this total new storage has been pro

Of course, a tax writeoff was the main help in this area.
Major efforts in our rice research program involve:

(1) A search for sources of breeding stocks resistant to prevalent diseases and insects, improved quality, increased yield, and improved straw;

(2) Finding and developing new and expanded uses for rice, including means of achieving better keeping qualities of milled or partially milled rice.

We are also cooperating with Cuba, Venezuela, and Colombia in an emergency program to develop resistant varieties for control of the destructive Hoja Blanca disease.


By the start of the 1958–59 rice marketing year on August 1, 1958, we expect rice stocks to be down to about 17.3 million hundredweightthe lowest beginning-of-the-season stocks since the 1955–56 season.

At this level, stocks would be about 50 percent below the peak reached at the start of the 1955–56 season.

The total rice supply in 1958–59 is expected to be 62.6 million hundredweight. At this level, the supply would be slightly less than the level of the 1957–58 season.

Rice utilization in 1958–59 is expected to be about 43.5 million hundredweight, the same as in 1957–58. The exact level will depend upon our export volume. Currently, we anticipate 1958–59 exports of about 16 million hundredweight.

Subtracting the prospective utilization of 43.5 million hundredweight from the prospective supply of about 62.6 million hundredweight leaves the prospective carryover of 19.1 million hundredweight.


We again have an acreage allotment and marketing quota program, price support, and an acreage reserve program for the 1958 crops.

The national acreage allotment has been established at 1,653,000 acres, the minimum permitted by the Agricultural Act of 1956. In the absence of this minimum, the allotment would have been only 1.1 million acres.

Price support will be at not less than $4.33 per hundredweight. The current parity figure, I think, would make this $4.45, wouldn't it?

Mr. MARTIN. About. Mr. McLain. This support level is subject to review at the start of the 1958 crop season when we will recalculate the supply percentage to determine whether the combination of this more up-to-date supply percentage and the parity price for July will require an upward adjustment.

The acreage reserve program signup for the 1958 rice crop will be a little over 170,000 acres. This compares with 242,000 acres in 1957.

The reasons for this difference in signup is accounted for largely by the $3,000 maximum payment per farm required by law for the 1958 soil bank program and the wet weather in Texas in 1957.

It is contemplated now that there will be no acreage reserve program for 1959 crop rice.


While it is still too early to make a definite statement, it would now appear that on the basis of present law, the 1959 acreage allotment for rice would be approximately 1 million acres, about 40 percent below the 1958 acreage allotment.

Since the domestic consumption of rice for the 1958–59 marketing year is expected to be about 27.5 million hundredweight, which is approximately the same quantity used during each of the 2 previous years, the size of the 1959 national rice acreage allotment under existing legislation will be dependent to a large extent upon the quantity of rice exported during the 1959–60 marketing year.

Now a word about the administration recommendations:

On January 16, 1958, the President submitted a series of recommendations to the Congress with respect to agriculture. Included in these recommendations were the following:

1. Authority to increase acreage allotments for * * * rice * * * should be provided.

The President pointed out that it is likely that under the present legal formulas allotments for certain crops are likely to be reduced further.

He requested authority to allow the Secretary, in accordance with criteria to be submitted by the Secretary of Agriculture, to increase allotments up to 50 percent above the levels determined by existing formula. However, he pointed out that any acreage increases—

* * must be related to price adjustments which will permit the growth of markets necessary to absorb the increased production.

This authorization for higher acreage allotments will permit greater efficiency and reduced costs of production.

The criteria for increased acreage allotments submitted by the Secretary follow:

If the Secretary determines after investigation that such increase is necessary in the interests of the welfare of the agricultural economy

1. To avoid hardships to producers of the commodity;
2. To meet potential market demands for the commodity;
3. To avoid undue restrictions on marketing;

4. To prevent disruption in the orderly marketing of the commodity;

5. To insure adequate farm income;

6. To make allowance for statistics of the Federal Government more recent than those used in the original determination of the marketing quota or acreage allotment; or

7. Because of any combination of these factors.

Section 312 (b) of the Agricultural Adjustment Act of 1938, as amended, provides that the Secretary may increase the national marketing quota for tobacco above the formula determination by not more than 20 percent, if he determines that such increase is necessary

* * * in order to meet market demands or to avoid undue restrictions of marketings in adjusting the total supply to reserve supply level.

This authority has been used for a number of years.
May I say this thing further, Mr. Chairman?

I have, as I say, many good friends in the rice industry, many of the leaders. When they are in Washington, and they call on you, they call on me, also.

I am convinced that they are ready and willing to take some steps in the direction of what we are suggesting here if this good subcommittee can see their way clear to do it. 2. The escalator clauses in the basic law should be abolished.

The President pointed out that under present law, price supports must be raised as the surpluses are reduced in accordance with the schedule of the Agricultural Act of 1949.

This means that incentives are provided to build new surpluses. Thus, farmers will continually face the problems created by price depressing surpluses. Elimination of these escalator clauses is necessary if these programs are to achieve their purpose.

3. The overall range within which price supports may be provided should be substantially widened.

Under the President's recommendation, price supports for rice would be determined administratively on the basis of following eight guidelines now provided by law for practically all commodities except the basics. 1. The supply of the commodity in relation to the demand therefor;

2. The price levels at which other commodities are being supported and, in the case of feed grains, the feed values of such grains in relation to corn;

3. The availability of funds;
4. The perishability of the commodity;

5. The importance of the commodity to agriculture and the national economy;

6. The ability to dispose of stocks acquired through price support operation; 7. The need for offsetting temporary losses of export markets, and

8. The ability and willingness of producers to keep supplies in line with demand.

Thus, price-support policy would provide a means to expand markets, increase acreage allotments, and reduce the threats of price depressing surpluses.

In the President's recent veto message, he stated that if given the authority requested in his agricultural message of January 16, 1958, that the acreage allotments for 1959 would be equal to or higher than the levels prevailing for 1958.

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