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rice. Now, a miller, cannot sell the rice until he owns it; he can't buy the rice unless he sells it. When you are dealing with cargoes of rice, 10,000 metric tons at a time, just a small deviation in price can be a catastrophe.
Now, if there was a basis on which we could go to our Government and say, "We would like to have an option to buy a cargo of rice from you, a certain kind-you have got it in stock—you want to sell it and we would like to have that option at a certain price”—if necessary they could charge us for the option and if necessary we could be required to give a bond of performance as a matter of good faithwe want no favors—we just want a chance to know what the price of admission is.
Then, if we had an option, we could go to the Government of Greece, or the government of any other country and say, "We will mill and sell you this rice on this kind of a basis." We would be in a position to trade.
But under the present circumstances, although we are grateful for DL-500 program, it is wonderful, it is a vast improvement, it is the best thing we have ever had to date, it is still just a little bit like a bridge that almost gets to the other side. You can just almost cross the chasm, but you can't quite make it, because there is just a little bit more space
than you can run and jump over. Now, I am not suggesting that this option arrangement is the only method. There are probably others, but under the present circumstances, trying to work this thing from a practical standpoint, it certainly would be helpful if there were some way we could know what the price at which we can buy the rice at the time that we are trying to sell it is.
Unless we can get either the selling price fixed to us, or the buying price fixed to us at one end or the other, we cannot trade.
So, that little gap left there, which we cannot get over, is quite a gap as far as we are concerned.
Now, second, if acreage controls could be eased as rapidly as practical and ultimately abolished, I am convinced that United States rice farmers and processors are sufficiently efficient to increase their production and meet world prices without the need for price supports or other governmental help.
Third, in managing the present surplus, so long as price supports preclude American rice from moving freely in world trade, as much consideration should be given to the protection of the American rice industry as to political considerations abroad and to other factors.
In a managed economy, one group can be severely penalized by the artificial creation of a set of circumstances that may inadvertently cause that penalty.
In the spring of 1956, one decision caused rice millers to suffer great hardships.
In the spring of 1957, another such decision caused even greater hardships and financial losses to rice millers.
While neither decision was intended to cause these hardships, nevertheless great financial losses to rice millers resulted.
Millers have been or may have been responsible to some extent for their own troubles, but circumstances beyond the millers' control also were greatly responsible for those troubles, in my opinion.
It appeared that in making these decisions, great consideration was given to the effect in other areas as a lack of consideration was given to the damage they were doing to the United States rice millers.
Such far-reaching powers as a managed economy gives to the managers must be used with extreme care and caution or great damage can be done to an important food processing group.
Fourth, I am convinced that there never has been a rice surplus or price surpluses but instead a shortage of salesmanship. Given an opportunity to compete freely in the domestic and world market, I believe United States rice millers can mill and sell all the rice that United States farmers can produce. If permitted to operate in a free economy, I believe rice farmers and rice millers can solve all their own problems and can prosper and pay taxes to help carry their share of the costs of government. Unless this freedom to live, work, and pay taxes comes soon, it
may be too late for some of the rice mills.
Finally, I want to say, to thank you for having this opportunity to express my own personal views. I want to say again that I speak for myself alone, not as a representative or spokesman for any group.
Mr. THOMPSON. Mr. Miller, let me ask Mr. McLain a question. This gap that Mr. Miller so graphically described, cannot be taken care of administratively or does it require a change in legislation?
Mr. McLAIN. Mr. Dean will be happy to answer this. We have this question raised many times. We have some people on the Hill that have some firm ideas on this, and they are on very important committees.
Mr. Dean. This is not a new problem in reference to an option. It is a policy of CCC not to grant any kind of an option on any kind of a commodity that is owned or controlled by CCC.
The second thing is that we have a mandate from Congress, the House Appropriations Committee, to offer these commodities for sale in world markets on competitive bids.
The commodities that we offer on a fixed price are dairy products. I realize what Mr. Miller says. This Greek program of any program under title 1, Public Law 480, the purchaser buys from us on competitive bids. If Mr. Miller buys from us and he is high bidder and somebody else comes along and makes the sales to the Greeks under title 1, Public Law 480, he has his money in that lot of rice.
CCC turns the rice over to Mr. Miller after he bids. Mr. Miller desires to make a sale to Greece but by the time he gets ready to work with the Greeks, Mr. Gathings comes along with a cent or half a cent under Mr. Miller's negotiating price and Mr. Gathings makes the sale. Mr. Miller pays the carrying charges and the storage charges on the rice, not CCC, for he becomes the owner of the rice.
So Mr. Miller or anybody else takes those risks.
Mr. MILLER. Yes, sir. You are absolutely right, Mr. Dean, and that taking that risk is--the compulsion to take that risk is what diminishes the chance of selling rice at export.
Mr. McLain. I think it is a very fine statement but I would like to say this to you, Mr. Miller: I have been in the grain business all my life. If the Government wasn't in this at all, you would have to take this same risk. This risktaking is free enterprise. I think sometimes we get mixed up. We blame the Government sometimes for things they should not be blamed for. There is some hedging that you can do in certain commodities and some you can't. That is just one of the risks that, God bless you, you have as a free enterpriser.
Mr. Dean. I appreciate what you said about the new program. We think it is a good program, too, because it puts the emphasis back into private trade. It puts competitive forces at work.
Mr. MILLER. I agree with you, Mr. Dean, it is a wonderful program. I think it could be—I suggest, sir, first, when I said that we are grateful for it, that we appreciate it, and thank you so much. I frankly said I believe that there could be some improvements made in it that would help facilitate two things:
One, the disposition of your surplus; and, second, the saving of the rice mills.
I don't believe that it is generally understood, the terrific plight that the rice mills are in today.
It is one thing to express your sympathy after they drop dead. That won't revive them. It is another thing to do something for them before they are quite gone.
I think, frankly, that some of them are definitely in the throes of their dying agonies, as financial institutions at the present time, and I believe that is going to be a terrific loss to this country to see them go.
Therefore, if something could be done—and I am not, our company is not in the throes of bankruptcy-I assure you that Comet Rice Mills is doing reasonably well under the circumstances under which it has to exist, but I am concerned with other rice mills because no one can do well in an industry that has many sick members. That illness is contagious. It has contaminated all of the rice-milling operations.
So I simply say, thank you for what you have done; we are grateful for that; we ask respectfully if this won't work, would you be willing, please, to consider perhaps working out some ways to make it a little easier.
We don't ask for any–we don't ask you to give us anything. We don't want any subsidies. We don't want any help or support. We just would like some way of having a basis on which we can buy so that
we can go and make sales. Mr. Dean. We are always happy, as you well recognize, to look at any industry recommendation.
Mr. THOMPSON. We seem to be in the phase of the problem that is a little new to me as chairman of this subcommittee.
I wouldn't be a bit surprised but what at some stage of the game we ought to take this subcommittee to some central point in Texas or Louisiana or Arkansas or somewhere and hold some hearings on this very thing. I take it that the Department would come along on those hearings and sit in on them,
Mr. McLAIN. Of course, we respect the problem. This applies not only to the rice-milling industry, but we hear much the same problem with the flour-milling industry. They have had casualties, as you recognize.
Mr. THOMPSON. I will discuss it with Mr. Miller when we get away.
I have just one question I wanted to ask. You heard me ask Mr. McLain the $64,000 question, namely, what would be his personal reaction to freezing the acreages as they are now, this year, and eliminating the escalator clause. Eliminating the escalator clause would leave the floor at 75 percent, would it not?
What do you think, speaking only for yourself, and not committing anybody else, what do you think would be the reaction in the industry?
Mr. MILLER. Let me answer that question two ways.
First, as far as I am personally concerned, I think that such a move would be generally beneficial.
Now, answering the question as to the reaction in the industry, I must say I think that would be mixed. I think that there would be those who would be on one side and those on the other, but I believe that generally speaking such a move would be well received by a majority of the people in the rice producing and processing activities. Mr. THOMPSON. I think it ought to be submitted
to them. Mr. Gathings.
Mr. GATHINGS. Who would be on one side and who on the other, Mr. Miller?
Mr. MILLER. That is a purely speculative thing, Congressman. I think that the people whose sole interest was in raising rice would naturally want the highest support price that they can get.
After all, rice is supported at a level higher than the world levels pricing in the United States. Mr. Gathings. How much?
Mr. MILLER. Well, sir, when I was in the Orient, it seemed to me that our prices at that time were substantially, almost twice, the world prices; that we would have to sell rice at almost half of what those prices were at that time.
Mr. GATHINGS. Has there been a change since then? That was almost 2 years ago, I believe.
Mr. MILLER. That is right. As Mr. McLain pointed out, or Mr. Dean, one, I believe Mr. Dean said the world price market is a nebulous thing. It varies from place to place. I have some prices here that Japan pays one price for rice to Taiwan, Formosa. They pay a different price for comparable rice to other countries because of other trade relationships.
For instance, they said in Japan that they had to pay Taiwan, Formosa, at one price because Taiwan bought fertilizer from them. If they didn't pay Taiwan, Formosa, this price for rice. Taiwan would quit buying their fertilizer and they had to sell their fertilizer to keep their trade balance with Taiwan.
Mr. GATHINGS. No set rule for rice pricing in world? Mr. MILLER. From day to day, I think the price of rice varies to some extent in the world market. It varies from country to country. Some countries like one kind of rice. For instance, the Japanese prefer zenith and pearl type rices and they will pay more for that than they will for long grain, but in this country, and I would like for the record to show that, and Mr. Dean nods his acquiescence in that statement, yet in this country we support the long grain rices at a higher level than we do the short grains because we consider here generally the long grain the more desirable type of rice.
Mr. GATHINGS. I think you are right. Mr. MILLER. So the world market is a nebulous thing. The world market is what you can get for rice today.
Mr. GATHINGS. Mr. Miller, that is going to be working against the grain with a lot of producers, though, if we are going to arrive at a program whereby we would come up with a competitive plan for rice and the farmer would get a competitive price—it is going to put him out of kilter with the price he has to pay for the rice equipment that he has to purchase, and other costs.
Mr. MILLER. I am not as convinced on that point as I might be, Congressman, for this reason:
As it is now, the farmer is cut down on the amount of acreage of rice that he can grow.
He has paid a higher price for his rice, but he can't grow enough of it. Rice acreage is a very, very valuable property, much sought after now.
Mr. GATHINGS. No doubt. Mr. MILLER. I am convinced, personally, that if we did away with all price supports, with all acreage controls, and let rice find its level, that American farmers could produce rice and sell it in the world market on a competitive basis and that they would end up better off than they are today, and many of them agree with me.
Mr. GATHINGS. However, they could, of necessity, have to take an approximately 50 percent cut in price.
Mr. MILLER. No, sir. I don't think they would have to take anything like that, because domestically they can get a much higher price for rice.
Mr. GATHINGS. That is only 40 to 45 percent of the production.
Mr. MILLER. Yes, sir, but we in the rice industry, and that is this organization that is made up of millers and processors and producers, are trying our best to undertake a program that will increase rice consumption in the United States. And we think the price of rice in the United States is too low. It certainly has not kept pace with other prices.
As a matter of fact, I just wrote an article for the Rice Journal on the subject, that the price of rice is too low. It is too low domestically because while other prices have risen, the price of rice has not.
Now, the price of rice can rise domestically and will, I think, if we create an adequate demand for it; but we must sell the excess at export at the world prices. If we do not, the world simply won't buy our rice. That is the reason we have had surpluses stacked up, because we wouldn't meet the world prices.
Mr. Dean. Let me make a statement off the record, Mr. Thompson. (Discussion off the record.)
Mr. MILLER. The United States produces only about 2 percent of the rice crop. If the contribution of the United States, as is not likely, if we exported all of our rice surplus every year, it wouldn't likely materially affect or disturb the world market.
Mr. MCLAIN. That is important.
Mr. MILLER. Japan could, if it choose, take all of our surplus and hardly affect its import of rice because it imports such a tremendous amount of rice.
India could do the same thing.
Now, there are other countries, any one of which could take all of our rice surplus. They won't take all of our rice surplus because they have trade relationships to maintain with other countries. Japan feels they must trade with Red China because Red China is their best customer. They make no bones about it. They don't like Red China's politics, but they must have an outlet for their manufactured goods, so they must trade some with Red China.