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The Department favors enactment of legislation as proposed.

As we understand your proposal, if enacted the legislation would provide (1) that the production of cotton or peanuts on a farm in 1957 or any subsequent year for which no farm acreage allotment was established would not make the farm eligible for an allotment as an old farm under provisions of existing legislation, (2) the production of these crops without an allotment would not cause the farm to be ineligible for a new farm allotment, and (3) the production of peanuts without an allotment would not be deemed as past experience in the production of peanuts for any producer on the farm.

Under provisions of existing legislation the production of peanuts on a farm for which an allotment has not been established makes the farm eligible for an allotment as an old farm in the following year. In the case of cotton, the farm is eligible for an allotment the following year if reserve acreage is available to the county for establishing an allotment for such farms. Thus the allotments for farms on which cotton or peanuts have been grown for a number of years are subject to continued reduction to provide acreage for farms which become eligible for allotments by reason of planting cotton or producing peanuts without an allotment. These reductions have been particularly disruptive in the case of peanuts.

We would recommend that the word "production" appearing twice in section 344 (n) of the bill you plan to introduce should be changed to "planting."

Enactment of the proposed legislation would not involve the expenditure of additional funds.

The Bureau of the Budget advises that there is no objection to the submission of this report.

Sincerely,

TRUE D. MORSE, Acting Secretary.

Mr. GATHINGS. It does not seem to me that it could do any harm. I do not see that the change in the law as suggested by Mr. Matthews could in any way be objectionable.

Now, I want to ask you this. What percentage of the 54,000 acres in the State of Florida is held back at the State level as a reserve for the present year and for last year? Do you know what the Florida situation is?

Mr. MATTHEWS. Yes, I believe I could give you that.

In the State of Florida last year they actually received 53,031 acres which was apportioned among 6,405 farms. They held out for reserve 440 acres.

Mr. GATHINGS. Who got that acreage?

Mr. MERRILL. The old growers. But to show you how the thing works, a farmer with a 10-acre allotment in Florida received 9.8 acres, because they had to factor all the allotments in the State about 98 percent in order to bring allotments within the acreage allotted to the State.

Mr. GATHINGS. The farmers have been complaining to you, Mr. Matthews, have they, that they have received about 9.8 out of a 10acre allotment?

Mr. MATTHEWS. Well, I would say that the general complaint is that they just don't understand why their allotment is reduced each year, when they look and see that the total amount apportioned to the State is pretty constant. They just don't understand it. Would the gentleman yield?

Mr. GATHINGS. Yes.

Mr. MATTHEWS. Mr. Merrill, could you give me an idea as to how many of these six-thousand-odd peanut growers in Florida are those who just plant 1 acre each year?

Mr. MERRILL. The ones who plant less than 1 acre each year are not reflected in the 6,000 because under the act we do not establish allotments for farms on which 1 acre or less of peanuts are grown.

You have numerous farmers in the State of Florida who grow half an acre or just, say, less than 1.1 acre peanuts. They are not reflected in this total.

Mr. MATTHEWS. They have to plant at least 1 acre to get an allotment?

Mr. MERRILL. Yes, sir. The act excludes both for penalty and for allotment purposes farms where 1 acre or less of peanuts is produced. Mr. MATTHEWS. In other words, the point I am trying to get at is, the general idea of the total number of peanut producers that might be affected if this legislation is passed to the extent it would deprive them of the opportunity of planting their 1 acre.

Mr. MERRILL. It would not deprive any farmer of planting 1 acre. It would simply deprive those farmers of obtaining allotments that plant over an acre of peanuts without an allotment.

Mr. ABBITT. Would the gentleman yield?

Mr. MATTHEWS. Yes.

Mr. ABBITT. In other words, if a man planted 4 acres without an allotment, in the next year he would come in with a request for an allotment because of his peanuts that he produced?

Mr. MERRILL. That is right. This act, if I may say so

Mr. ABBITT. The tobacco people have taken care of their problem by similar legislation?

Mr. MERRILL. That is right.

Mr. ABBITT. So that when a man plants 1 acre of tobacco he gets no credit.

Mr. MERRILL. It is rather interesting to know how the law reads on that point and I will read from section 358 (d):

The Secretary shall provide for apportionment of the State acreage allotment for any State through local committees among farms on which peanuts were grown in any of the three years immediately preceding the year for which such allotment is determined.

Then it goes on and about one or two sentences down it says:

Any acreage of peanuts harvested in excess of the allotted acreage for any farm for any year shall not be considered in the establishment of the allotment for the farm in succeeding years.

These farms had no allotment, so it would appear that there is a slight conflict there as to what Congress intended.

Mr. ABBITT. Would you read that last sentence again?

Mr. MERRILL (reading):

Any acreage of peanuts harvested in excess of the allotted acreage for any farm for any year shall not be considered in the establishment of the allotment for the farm in succeeding years.

Mr. THIGPEN. I might add that if a farm would have peanuts harvested on it, it would not be eligible as a new farm for next year. Mr. MERRILL. That is right.

Mr. HAGEN. As I understand it, any grower can grow 1 acre of peanuts.

Mr. MERRILL. That is right.

Mr. HAGEN. And that does not classify him as an old farm?

Mr. MERRILL. Yes, sir; it classifies the farm as an old farm.

Mr. HAGEN. Even if he grew less than an acre?

Mr. MERRILL. Yes, sir.

Mr. HAGEN. What do they do with those peanuts? They cannot market them, can they, without penalty?

Mr. GATHINGS. Well, now, would the Department look with favor on some type of referendum that would give the grower the privilege of getting increased acreage under the lower price support? You would have two choices in such a referendum.

Mr. McLAIN. This has the big disadvantage of immediately setting up two classes of ricegrowers which I think has a lot of disadvantages.

Of course, it is being talked about now for cotton. We think that would be unfortunate for rice. We think that the statesmen we have got in Congress ought to face up to the real problem. that the industry is willing to lower this support level with some consideration on acreage for a period of 3, 4, or 5 years or, as we have suggested, permanent charges. That this would be much more desirable for rice.

Now, we have a lot of reluctance about referendums. We have tried it. We tried it on corn. You have always the question whether you are going to have a 50-percent or 66% vote. Stop and think about referendums and analyze them, and the philosophy behind them, and ask yourself whether you would like to have labor set out by referendum to determine what the minimum wage was going to be and whether you wanted to turn over that authority to any group.

I think it is something that if I were a Congressman I would have many reservations about. I think that legislation is a function of Congress. I think you ought to be able to know from talking to your constitutents what they do want and then do what is best and stand on the record.

I think that is a much firmer and better way to work out this legislation.

Mr. THOMPSON. He is confused now, too.

Mr. McLAIN. It seems to me that this legislation is your responsibility, and not to be left up to the referendum.

I think there are a lot of people who are very gravely concerned even about the marketing-quota approach. I hear it all the time, because the people who don't like it, of course, complain to the Secretary of Agriculture and blame him for it.

Mr. GATHINGS. Is our problem in rice a matter of price, like this situation in some of the other commodities? I do know that in some of the commodities that I happen to be a little familiar with, the question of competitive price is most important.

Mr. MCLAIN. While I think it is more true with cotton than it is with rice, Mr. Gathings, it also applies to rice. Certainly we have seen. what has happened to the cotton industry domestically. I think we have a realization by all people in the cotton industry today that something different has to be done.

I think the major problem in rice is not the price in the domestic market. However, it is a factor domestically, too. It is a big factor in our export movement, and it will be because we are going to have to be competitive in our export movement.

But currently, one of the real problems in the rice business, of course, is that countries that consume rice just don't have enough dollars to buy the rice. We are recommending the extending of Public Law 480 until that condition can be changed. We hope some day it will be changed.

Mr. GATHINGS. Public Law 480 is most important to the rice industry, no doubt. You know there is something that might be very valuable in the record right here.

If, and I am sure you have it readily available, you could let us have it, it would be a listing of the demand for rice over the past few years by various different countries, how much we have been able to furnish them.

Mr. McLAIN. Of what they wanted?

Mr. THOMPSON. I mean demands on 480. You have that, don't you? Mr. McLAIN. We would have to talk to our 480 people about that. I don't know whether they keep a record of all the demands for all commodities or not.

Mr. THOMPSON. It would be very helpful to us when we try to get 480 passed to be able to say that this is what has happened in Public Law 480: We have had so many requests; we have filled so many. If we had more authority, we could fill so many more.

Mr. McLAIN. I would suggest this, if I might: You are going to have the hearing when all the 480 people are going to be here. I think you ought to have this information for all commodities. I would request that at that time. I think it would be more appropriate. Mr. SORKIN. It will be up on the 5th.

Mr. DEAN. Getting back to Mr. Gathing's question: As you remember, Mr. Gathings, after the takeover in 1952, 1954 and 1955 a milling program was developed because of a lack of storage, particularly in the South for rough rice and the milled stocks moved into CCC inventory. These stocks were put up for sale on a competitive bid basis for export for dollar sales and title I, Public Law 480.

Now, as you know, recently, we have changed the rice sales program where we are now offering CCC-owned rough rice for sale for export on competitive bids under the requirement that all of the milled rice from this rough rice must be exported.

Basically, I wanted to bring it up and I wanted to get the record clear that we have not had any trouble in moving a reasonable quantity of rice for dollars.

This is over 1 million hundredweight that we have moved for dollars and we are planning for this coming year about 3 million. Here is the program for this coming year.

In the past, what did CCC do for the rice people? We would take the rough rice over under the price support program and move it into a mill and exchange the rough rice for milled rice. Then we would take the milled rice and put it into storage until the rice could be programed. We have done that for 3 straight years. This year, the program is simply this:

We are going to mill a certain quantity of the takeover of rough rice and we have just recently completed takeover in the South of 10 million hundredweight and 2 million on the west coast.

We are going to mill enough rough rice to get out of the way of the new crop.

In other words, we can't leave our rice out there to take up storage space when we have a new crop coming on, so that quantity will be milled and put into storage for program needs, particularly title 1.

The balance of the rice, which we will hold in the form of rough, will be put up for sale for export by our officer in Dallas, Tex., on competitive bids; the successful bidder must export the quantity of

eligible for allotments by reason of planting cotton or producing peanuts without an allotment. These reductions have been particularly disruptive in the case of

peanuts.

So obviously we have had more trouble than cotton but I think there is a similar problem with cotton.

Mr. GATHINGS. It could arise.

Mr. ABBITT. It looks like the old growers in cotton have a little more protection than the old growers of peanuts.

Mr. MERRILL. Congressman, I think this is a major problem in those States like Texas that receive such large cotton allotments and therefore have tremendous reserves, because it speaks here of "if there is a reserve available," and you heard them speak of that tremendous reserve. I don't know what the allotment is in Texas-5 million or 6 million acres.

Mr. GATHINGS. About 40 percent of the total allotment in the Nation.

Mr. MERRILL. And you could see how with that much acreage you would have a tremendous reserve and the problem would come about.

Mr. THIGPEN. That letter would not have been sent unless the Department felt that there was a problem on cotton and this, of course, was checked with the people in the Cotton Division-the letter was.

Mr. GATHINGS. I would like to have a little more information with respect to cotton from someone in the Cotton Branch because it is highly technical and we would like to know just where the problem is, if it does exist, and what the problem is and to what extent it exists. Even though it does affect peanuts to a high degree in Florida, I wonder why it is that it is not affecting peanut growers in Virginia. Mr. ABBITT. It does affect them.

Mr. GATHINGS. But not as much?

Mr. ABBITT. No, but our people are interested in it.

Mr. MERRILL. I think I can answer that question. The growing of peanuts in Florida has spread. At one time, there was a tremendous percentage of the acreage in Florida that was grown in Jackson County. The growing of peanuts has spread into other areas of Florida because the land there is suitable for the production of it and as it spreads, more people come in.

In the State of Virginia you will find, I believe, Congressman Abbitt, that nearly everyone in the so-called peanut area has an allotment of some type, whereas that is not true in Florida.

Mr. ABBITT. Practically every farm in that area-but they have some of the problems.

Mr. MERRILL. They have some of the problems, and I pointed out a while ago that there was a reduction taken there a couple of years ago because of this, but it is more prevalent in areas where just a few farmers have peanut allotments and others are attempting to come in. Mr. THIGPEN. And in Virginia it is more stable in the peanut production pattern than in Florida.

Mr. GATHINGS. They have been growing peanuts for a longer period of time in Virginia. I do not know much about peanuts and I am anxious to learn.

I just wonder what happens to these little growers. They do get these allotments. Do they plant that allotment in subsequent years? Do they follow through? Do they go into this thing really to establish themselves in the business of growing peanuts?

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