mained a surplus in the fund at the end of the year, then that would be taken into account in setting the deduction the following year. Mr. ABBITT. Thank you very much.

Mr. MCMILLAN. Thank you, Dr. Reagan.

Mr. Rawlings, will you take the stand and explain the difference between your bill and the Burleson bill.

Mr. ABBITT. Mr. Chairman, I would like to say Mr. William D. Rawlings is executive secretary of the Virginia Peanut Growers Association. I have known Mr. Rawlings for many years. He is a dedicated agriculturalist. He knows the peanut program better than anybody else in our area. I am delighted to see him here, and I know he will contribute materially to the information which we will need in developing information on this current legislation.

STATEMENT OF WILLIAM D. RAWLINGS, EXECUTIVE SECRETARY, ASSOCIATION OF VIRGINIA PEANUT AND HOG GROWERS

Mr. RAWLINGS. Mr. Chairman and gentlemen of the committee: My name is William D. Rawlings. I am executive secretary of the Association of Virginia Peanut and Hog Growers, and I am a producer myself.

My time before the committee this morning I want to spend discussing in some detail H. R. 12566 which was introduced by Congressman Abbitt.

At the outset, I would like to make it clear that the growers of Virginia and North Carolina have never had any intention of asking that a peanut bill be reported out of this subcommittee or the full committee as separate legislation. We recognize full well the hazards which have been pointed out here this morning by people who are genuinely interested in the peanut program as we are.

We have made every effort that we knew how to make to get a complete understanding among grower interests in all three areas. I believe Mr. Wilson mentioned the fact that back in November 1957, the grower associations in Virginia and North Carolina actually took the lead in calling a meeting with representation from the other 2 areas in Atlanta, Ga., and we had a very construction 2-day meeting there.

Later there was another meeting of the same two grower associations, inviting in the grower representatives from the other areas, here in Washington. At that time a little more differences of opinion had developed than were manifest at the Atlanta meeting.

We of course recognize the hazards of an attack on the peanut program as has been mentioned here, but our growers feel very strongly that we have a real responsibility to mend our fences and get our program in a more defensible position and not wait until a late hour when we are called over and are under attack again.

We do not think we have a bad program as it is set up now, but we feel there are areas in which there can be very constructive improvements in the program which will put it in a much more defensible position if and when the opponents of the program seek to attack it again.

We certainly do not want to leave any impression that we want to provoke or be a party to or countenance any fighting among the grower representatives from the three areas.

for marketing or otherwise disposing for feed, or for crushing into oil and meal. or for export, any shelled peanuts of lower grades specified by the Secretary with regard to which use limitations are established by the Secretary pursuant to subsection (d) hereof; (3) providing payments to peanut grower cooperative associations which contact directly with the Commodity Credit Corporation in making price support available to producers for any administrative expenses, incurred by such associations in connection with peanut price support activities, which are in excess of the net income derived by such associations through price support activities; and (4) developing and conducting publicity, promotion, and other programs designed to increase the consumption of peanuts and the products thereof: Provided, That if, beginning with the calendar year immediately following the year in which the referendum is held, fewer than three years remain of the period for which marketing quotas have been approved by farmers, any fund approved by farmers shall be established only with respect to the crops of peanuts produced in each of the calendar years which remain of the period for which marketing quotas have been approved: Provided further, That, if as many as two-thirds of the farmers voting in any referendum vote in favor of the establishment of such fund, no referendum shall be held with respect to such fund during the years which remain of the period for which the fund is established. No fund shall be established for any calendar year during which marketing quotas are not in effect. The Secretary shall proclaim the results of the referendum within thirty days after the date on which it is held.

"(b) Payment shall be made into any fund established pursuant to this section by the person who buys or otherwise acquires the peanuts from the producer, or if the peanuts are marketed by the producer through an agent, the payment shall be made by such agent, and such person or agent may deduct an amount equivalent to the payment from the price paid to the producer: Provided, That no payment shall be made into the fund with respect to the crop of peanuts produced in any calendar year during which marketing quotas are not in effect. If the person required to collect such payment fails to collect such payment, such person and all persons entitled to share in the peanuts marketed from the farm, or the proceeds thereof, shall be jointly and severally liable for the amount of the payment.

"The amount of any payment made into the fund for the crop of peanuts produced in the first calendar year for which this program is in effect shall not exceed 10 per centum of the national average per ton level of price support for the crop of peanuts produced during such calendar year, as determined by the Secretary in accordance with section 101 (a) of the Agricultural Act of 1949, as amended, and not in excess of 5 per centum any year thereafter.

"(c) The Secretary is authorized to designate a person or agency to receive any payments made into the fund established pursuant to this section and the Secretary or his designee shall receive such payments and shall make expenditures from such fund for the purposes of this section.

"(d) The Secretary shall appoint from time to time a peanut advisory committee of twelve members consisting of two representatives of peanut producers from each of the major peanut producing areas (Virginia-Carolina, Southeast, and Southwest), three shellers, one from each area, and three manufacturers of processed peanuts and peanut products, to make recommendations to the Secretary or his designee with respect to (1) limitations upon the quantities of lower grade shelled peanuts, by types and grades; and (2) the amount of expenditures to be made, and the manner in which such expenditures shall be made for the purpose of subsection (a) (4) hereof, during any calendar year. The compensation of the members of such committee shall not exceed $10 per day while actually employed and actual necessary traveling and subsistence expenses, or a per diem allowance in lieu thereof.

"(e) In determining the amount to be expended for the purposes stated in subsection (a) (4) hereof consideration shall be given to demonstrated successful prior accomplishments from such expenditures and such amount shall in no event exceed three-fourths of 1 per centum per annum of the support price. "(f) The Secretary is authorized, upon recommendation of the peanut advisory committee, to limit, pursuant to regulations issued by the Secretary, by types and grades, the quantity of shelled peanuts of specified grades and qualities, such as U. S. No. 2, split kernels, small shrivel kernels, oil stock, and pick outs. If such limitations are placed in effect, the Secretary shall determine rates of payments to be made to shellers for such peanuts which will compensate shellers for such peanuts in a total amount equivalent to the market value, as determined by the Secretary, of such peanuts for edible or other purposes

We feel a cushion of 5 percent, a quota which would provide 105 percent of the estimated requirements, is no more than a necessary safeguard against a short supply and the resulting bad effects that it has on the market.

Mr. ABBITT. How does that change the present law?

Mr. RAWLINGS. No cushion is allowed. I shall get to that point next. Frankly, under the present law we have a minimum national allotment of 1,610,000 acres, which with our trends in yields is producing roughly 10 percent more peanuts than there is need for. As long as we know that the quota with anywhere near normal yield will produce more peanuts than there is a consuming market for, there is no need for a 5 percent cushion.

But when we get to the next point where it is proposed to reduce from the minimum of 1,610,000 and the quota is set more accurately and realistically in line with estimated demand, then you get to the need of a cushion to safeguard against short supply.

Mr. ALBERT. We would not put any minimum acreage in the statute; is that right?

Mr. RAWLINGS. Yes, sir, Congressman Albert. We are proposing that we still have a minimum national allotment, but that it be set at a figure 10 percent below the present minimum, and further provide that the national allotment cannot be reduced by more than 5 percent in any one year. So if the present calculations, as we understand them from the people in the Department, are correct, it would take about a 10 percent reduction in the national allotment if we were to set this thing pretty much in line with demand; it would take a 5 percent reduction for 2 years to approach that.

We cannot tell conclusively what course this trend in yields per acre will take. A major research is being conducted on that right now. Actually we are making rather phenomenal progress in increasing the yields per acre. That is what we are confronted with.

I think that question clarifies the next point I wanted to cover so far as reducing the minimum national allotment but not an outright repeal of it.

Mr. ABBITT. Your information from the Department and others is that the minimum allotment is slightly too much?

We

Mr. RAWLINGS. That is correct. In other words, we have made. faster progress in yields per acre than in consumption. made modest progress in increasing consumption, but our yield per acre has increased at a little faster rate.

Mr. ABBITT. You are increasing your production per acre more than you are increasing the consumption.

Mr. RAWLINGS. That is correct, sir.

The next major point, which I think consumes more space in H. R. 12566 than any other point, is a program which is intended to put the peanut program on a self-supporting basis and at the same time provide a continuing national fund for use in promoting the increased consumption of peanuts and peanut products. It provides that there will be a deduction from growers of not to exceed 10 percent for the first year, and thereafter 5 percent, in order to take care of four major items:

(1) The cost of diverting surplus quota peanuts;

(2) To pay for the administrative expenses of the three producer cooperative associations which administer the price-support

Section 358, subsection (a) of the Agricultural Adjustment Act of 1938, as amended, is amended (a) by inserting in the first sentence of subsection (a) immediately following the words "prospective demand conditions" the language "so as to provide, together with the carryover of peanuts, for a normal supply of peanuts"; (b) by inserting at the end of subsection (a) the following: "Provided further, That the acreage allotment in each State shall be increased by the estimated number of acres required under normal conditions to result in the harvesting of the number of allotted acres determined according to the first sentence of this subsection; such adjustment in acreage under this provision shall not be considered in establishing future State, county, and farm allotments by amending section 358, subsection (c), paragraph 2 of the Agricultural Adjustment Act of 1938, as amended, is amended to read as follows:" (2) Notwithstanding any other provision of law, the Secretary shall make an investigation not later than February 1 of each calendar year for each area to determine whether the estimated supply as of the first day of the marketing year which begins in such calendar year will be less than 90 per centum of the estimated consumption of peanuts from each area during such marketing year plus 90 per centum of the estimated consumption during the period from the beginning of the marketing year through the first full calendar month in which there normally is heavy movement of new crop peanuts (that is, October for the southeast and southwest areas and November for the Virginia-Carolina area).

"If the Secretary finds an estimated short supply in any area, acreage allotments shall be increased to the extent deemed necessary, on the basis of the average yield in such area in the preceding five years, adjusted for trends and abnormal conditions, to provide additional production equivalent to the difference. Such increases in allotments shall be made for farms in the area by a uniform percentage of the regular allotments for farms for that year. The additional acreage required for such increases shall be in addition to the national acreage allotment, the production from such acreage shall be in addition to the national marketing quota, and the increase in acreage allotted under this provision shall not be considered in establishing future State, county, or farm acreage allotments."

The Agricultural Adjustment Act of 1938, as amended, is amended by adding at the end thereof a new title V as follows:

"TITLE V-PEANUT FUND FOR PUBLICITY, PROMOTION, RESEARCH, AND OTHER PURPOSES

"SEC. 395. (a) The Secretary shall not later than December 15th of each calendar year, conduct a referendum of farmers engaged in the production of peanuts in the calendar year in which the referendum is held to determine whether such farmers are in favor of, or are opposed to, the establishment with respect to the crops of peanuts which are produced in the three calendar years immediately following the year in which the referendum is held, of funds for the purpose of (1) developing and conducting publicity, promotion, and other programs designed to increase the consumption of peanuts and the products thereof, (2) research on peanuts, (3) providing payments to peanut grower cooperative associations which contract directly with the Commodity Credit Corporation in making price support available to producers for any administrative expenses, incurred by such associations in connection with peanut price support activities, which are in excess of the net income derived by such associations through price support activities in that year, (4) providing payments to shellers for marketing or otherwise disposing of for crushing into oil and meal, for export or for feed, any shelled peanuts of lower grades specified by the Secretary with regard to which use limitations are established by the Secretary pursuant to subsection (f) hereof, and (5) defraying the net losses sustained by the Commodity Credit Corporation in disposing of peanuts acquired under its price support prograin: Provided, That is, beginning with the calendar year immediately following the year in which the referendum is held, fewer than three years remain of the period for which marketing quotas have been approved by farmers, any fund approved by farmers shall be established only with respect to the crops of peanuts produced in each of calendar years which remain of the period for which marketing quotas have been approved: Provided further, That if as many as two-thirds of the farmers voting in any referendum vote in favor of the establishment of such fund, no referendum shall be held with respect to such fund during the years which remain of the period for which the fund is

established. The Secretary shall proclaim the results of the referendum within thirty days after the day on which it is held.

"(b) Payments shall be made into funds established pursuant to this section by the person who buys or otherwise acquires the peanuts from the producer, or if the peanuts are marketed by the producer through an agent, the payment shall be made by such agent, and such person or agent may deduct an amount equivalent to the payment from the price paid to the producer: Provided, That no payment for purposes other than under subsection (a) (1) and (2) above shall be made into the fund with respect to the crop of peanuts produced in any calendar year during which marketing quotas are not in effect.

"The amount of any payment for the crop of peanuts produced during any calendar year of the period for which the fund is established shall not exceed the lower of (1) 10 per centum of such national average per ton level of price support, or (2) that per centum of such national average per ton level of price support which the Secretary determined necessary to provide a fund sufficient during such subsequent calendar year to accomplish the purposes for which such fund is established: Provided, That the amount of any payment made into the fund with respect to the crop of peanuts produced during such calendar year which shall be designated for the purposes of subsection (a) (1) and (2) hereof shall not exceed one per centum of such national average per ton level of price support: Provided further, That if the amount designated for the purposes of subsection (a) (1) and (2) hereof which remains unexpended or not allocated as of the end of any calendar year equals or exceeds $5,000,000, the amount of any payment into the fund for the crop of peanuts produced during the next succeeding calendar year and each succeeding calendar year thereafter, which is to be designated for such purposes, shall be that per centum of such national average per ton level of price support, but not in excess of one per centum, which the Secretary, upon recommendation of the Peanut Advisory Committee established pursuant to subsection (d) hereof, determines it necessary to maintain the amount designated for such purposes at a level not in excess of $5,000,000 and not less than $2,000,000 after expenditures for such purposes are made or allocated during the succeeding calendar year: Provided further, That each area shall separately bear the cost of the program in its area except for the purposes under subsection (a) (1) and (2) above.

“(c) The fund for each area, except for the purpose under subsection (a) (1) and (2) above, shall be maintained separately and the program, except for the purposes under subsection (a) (1) and (2) above, in each area financed out of the fund for that area. The deduction not to exceed 1 per centum shall be uniform and shall be maintained in a common fund for all areas. The remaining deduction may vary between areas depending on the estimated costs in each area and shall be maintained and administered in a separate fund for each area.

"(d) The Secretary is authorized to designate a person or agency to receive any payments made into the funds established pursuant to this section and the Secretary or his designee shall receive such payments and shall make expenditures from such funds for the purposes of this section.

"(e) The Secretary shall apoint from time to time a peanut advisory committee of 12 members consisting of two representatives of peanut growers from each of the major peanut producing areas (Virginia-Carolina, southeast, and southwest), one peanut sheller from each area, and three manufacturers of peanut products. The Secretary shall name the two grower representatives from each area from a list of five names submitted by the grower association in each area contracting directly with the Department to carry out the price support program in that area; namely, the Southwestern Peanut Growers Association in the Southwest area, the Georgia-Florida-Alabama Peanut Association in the Southeast area, and the Peanut Growers Cooperative Marketing Association in the Virginia-Carolina area; the Secretary shall name the sheller representative from each area from a list of three names submitted by the sheller organization in each area; namely, the Southwestern Peanut Sheller Association in the Southwest area, the Southeastern Peanut Association in the Southeast area, and the Virginia-Carolina Peanut Association in the Virginia-Carolina area; the Secretary shall name the three representatives from the manufacturers by naming one from each of lists of three names submitted by the National Confectioners Association, the Peanut Butter Manufacturers Association and the Nut Salters Association. This committee shall recommend to the Secretary or his designee with respect to (1) limitations upon the quantities of lower grade 23887-58-3