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 provided by co-ops.

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.

SUPPLY AND UTILIZATION OF RICE

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.

1958 CROP PROGRAMS

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.

1959 ACREAGE ALLOTMENT

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.

Mr. DEAN. This 1,400,000 hundredweight of pearl rice is from the 1956 crop in California which is the result of the industry not moving, going ahead and putting the rice in Japan for dollars. This rice is the 1956 crop rice, and it is pearl rice. The only home normally for rice on the west coast is to Japan.

Since this crop was taken over in 1956, we have taken over, as I indicated earlier this morning, 2 million hundredweight from the 1957 crop in California, and another crop will be coming along for harvest in September. We put this 1,400,000 hundredweight up for barter. and restricted it only to the 1.4 million pearl type.

We held back Calrose rice in California because we think we can move it for dollars, as it is a long-grain rice. So what we were attempting to do by bartering this surplus rice in California was giv ing it equal treatment with the relatively small quantity of pearl rice which you have in the South. We think we can move the pearl rice out of the South for dollars without any help from a barter program. We were very specific to tie down the barter program for only that quantity of price.

Mr. GATHINGS. You realize, though, by virtue of just earmarking California rice, that the ears pop up all over of these other States that grow rice?

Mr. DEAN. Mr. Carter called me the day the press release went out. He raised the same question. I pointed out to Clyde as well as I could the amount of assistance we have given to rice, not only the rice producer in Arkansas, but the rice milling industry since 1953.

So what we were attempting to do with this relatively smaller quantity in California was to give it equal treatment with the southern rice.

We look at the rice problem as a whole, not State by State. We have been paying carrying charges on this rice in California for over 2 years, and we have got to move it. So our best opportunity for attempting to move it, since we can't move it for dollars, is to try to move it for barter.

If we had the same problem in the South, on the old crop-keep in mind that in the South we have no rice from the 1953 crop. It is gone. We have no rice from the 1954 crop; it is gone.

We have no rice from the 1955 crop; it is gone. So what we have left in the South is a relatively small quantity of 1956, plus the 10 million we took over in March.

Mr. GATHINGS. We are anxious, though, to keep our customers. and we are hopeful that you will continue to look at it as a national problem, of course.

Mr. DEAN. We would say this, Mr. Gathings, that if you had some old-crop rice in the South, we would work it off either through barter, try it through barter-it is old-crop rice that is the only reason we put it up under the barter program, because we see no other opportunity for movement, and we would certainly do that in any State where we had old-crop commodities.

Mr. GATHINGS. Whether barter or otherwise, we have tried to dispose of it and the storage is an appreciable item. In any eventMr. DEAN. The rice in California is 1,400,000 hundredweight and if it goes out of condition, which it could do, then what do we do? We throw it immediately on the domestic market for feed, and break

feed prices. And then you hear from the corn people. You hear from the grain sorghum people.

So we say, let's get it behind us. You want us to move it.

Mr. GATHINGS. Just one other thing. I hate to take up so much time, Mr. Chairman.

Here a few years ago we noticed on the Washington market here some broken rice in larger bags, 5- and 10-pound bags; I just wonder why you don't have those bags of broken rice for sale any more?

Mr. MILLER. Congressman, the mills offer broken rice for sale to the trade. Ordinarily it doesn't move well. Sometimes in perhaps times of depression, perhaps times of uncertain circumstances, you can sell some so-called second-heads, as they call them, or we have a brand we call Wonder Bits of rice which is second-heads which we offer in larger packages. But, frankly, they just, they are offered wherever the trade will buy them, but they are always available from the mills, and it is just that they won't move under certain circumstances.

Mr. GATHINGS. I had a letter from a fellow who had 7 children in his family and he said to me that he didn't want to buy a little old 1-pound package of rice; that he required a lot of rice for his folks. Mr. KRUEGER. He didn't want to discourage that.

Mr. THOMPSON. Does that wind it up?

Mr. GATHINGS. Yes.

Mr. THOMPSON. I want to have my committee members hear this, and this is only subject to your approval, gentlemen. I would like to have Judge Satterfield and Mr. LeMay, or whoever in our shop is the proper one to do it, to draw us up a little bill embodying the $64,000 question I submitted to Mr. McLain, remove the escalator clause and leave this price support where it is, leave the acreage where it is, for next year.

I don't know whether we ought to project it beyond that or not. Mr. SATTERFIELD. Let me ask this question, Congressman: I don't know whether you know of the rice industry group's testimony in the Senate here a couple of months ago in which all of the witnesses testified to the effect that they felt that the whole, both milling industry and producer groups, would go along with not a removal of the escalator clause, but suspension of it for 2 years-I mean 3 years, for an extension of the present acreage for 2 years.

Now, do you want this bill drafted

Mr. THOMPSON. Draw it that way.

Mr. SATTERFIELD. Suspension of it, or repeal of it?

Mr. THOMPSON. I don't care; whichever is the more proper thing. Probably suspension.

Mr. SATTERFIELD. This was their testimony.

Mr. SORKIN. We would prefer complete elimination.

Mr. GATHINGS. I believe that some of these other commodities are planning on a 3-year program.

Mr. THOMPSON. Three-year suspension.

Mr. GATHINGS. Yes, 1959 through 1960 and 1961. Most of those programs are being considered now and cover 3 years.

Mr. THOMPSON. Let's leave it, then, to the General Counsel. I think that is the place to leave it and make it fit the rest of the program, so far as possible. But I would like to have it in bill form and submit it to the rice industry. Let them look at it and see what they think. Can we do that?