An increase from there, rather than to start with some million acres, instead of the 1.6 million, plus that he has in 1958. You go back there to Texas. I know when I go back to Arkansas, they are aware what that rice acreage in 1958 is, but they don't know what to anticipate in 1959 provided there is no new law passed in the interim.

So I think when we go to talking about any type of a program for 1959, we ought to bear in mind the attitude of the farmer that is growing rice, and he is thinking about 1,630,000 acres national allotment. Mr. THOMPSON. That is what we had this year?

Mr. GATHINGS. He knows that. He knows something about that. But when you go to talking about cutting him back some 40 percent, and then start from there with any type of a program, the approach is quite different.

Mr. THOMPSON. He has already taken 40 percent cut below-what year was it that we started with, Judge?

Mr. SATTERFIELD. We started in 1955.

Mr. THOMPSON. In 1955. He has taken a 40 percent cut since 1955. Mr. SATTERFIELD. Yes.

Mr. THOMPSON. And now we ask him to take 40 percent, another 40 percent.

Mr. MCLAIN. We were just 1 year late in starting the cutback.
Mr. THOMPSON. You didn't have it in the law?

Mr. McLAIN. A lot of people thought if we interpreted the law right, we should have acreage allotments 1 year earlier. I will put it that way.

Mr. THOMPSON. It certainly would have helped. There is no question about that. You wouldn't have had an overhanging surplus to plague you.

If we can interrupt this phase for a little while, let's ask Mr. Miller of Comet Rice Mills to make a statement.

Won't you sit there at the end of the table?

Mr. Miller, excuse me. Let's go back to your feeling, Mr. McLain, about a plan to remove the escalator clause. I had in mind, and I thought I had made it clear, that we were supposing that you would not lower the acres below what we had this year; that would be 1.6 million, wouldn't it?

Mr. McLAIN. I gathered from the way you raised the question that that was what you meant. I understood it that way.

(Discussion off the record.)

Mr. THOMPSON. Mr. Miller, we appreciate your coming before this subcommittee this morning, and we will be very glad to hear whatever may be on your mind, hoping that you will develop a solution for the whole industry.

I consider Mr. Miller a constituent of mine because he operates so extensively down there in my country.

(Off the record discussion.)

STATEMENT OF CLAUDE MILLER, PRESIDENT, COMET RICE MILLS

Mr. MILLER. Thank you, Mr. Chairman.

It is a privilege to have this opportunity to appear before this congressional committee. However, since I first learned that I was to be here at noon yesterday, I have not had time to prepare myself properly.

I am glad to express my opinions and beliefs, but I cannot hope to answer questions as to the detailed facts or give statistical data, as I have not had an opportunity, nor time, to prepare such material. While I am president of the Rice Industry Association, a national rice promotion association that was formed recently, I do not speak for that group or any other group, but express only my own personal views and opinions.

I want to say at this point that in my dealings with the Department of Agriculture, I have found all of the officials and employees patient, considerate, cooperative, and helpful always.

I believe that some of the present practices and policies in dealing with rice could be improved. I am convinced that the world market can and will absorb all United States rice if rice produced in this country is offered for export at prices competitive with other sellers in the world market.

I believe if we could dispose of all rice surpluses and all future surpluses could be avoided

Mr. GATHINGS. Would you suffer an interruption now, Mr. Miller? That is the very point I have been trying to get at this morning. I just wondered if you could give us a little light on the subject as to just where that level would be, and what is that competitive price on a particular type of rice that is used in the rice-consuming nations of the world.

Mr. MILLER. Congressman, I have in mind in the body of the little statement that I roughed out this morning, to suggest some of these changes that would meet this situation.

Mr. GATHINGS. I don't want to jump the gun.

Mr. MILLER. If I may, when I have finished, I will be happy toI have some world prices here in my brief case that I have recently received from Japan and other places, and I will be happy to go into those to any extent that you wish.

Mr. GATHINGS. I know that you have visited in the Orient in recent months, and that you do know that situation full well.

Mr. MILLER. I went over there. I don't know how much I know about it. I tried to learn something.

Mr. MCLAIN. A pretty big place, isn't it?

Mr. MILLER. Yes, sir.

As I was saying, I think that all future surpluses could be avoided if certain improvements were made in the management of rice. It may be that existing laws compel the policies. If so, perhaps the law should be changed.

In other words, I am not suggesting why it is true. I am just suggesting that these are policies and practices which we respectfully submit could stand some improvement.

Unless some changes are made, serious consequences may befall rice millers. Some rice mills have closed in recent years, victims of the conditions that have made it impossible for them to continue to operate unless some relief is forthcoming soon.

It seems probable that other rice millers may be forced into bankruptcy also. Under the present circumstances that exist, it is difficult for even the most efficient rice mills to continue operating. Mills are expensive and cannot be easily and quickly replaced. If present mills are forced to close, it may be a long time before investors are found to build new rice mills.

During World War II there was need for rapid expansion of rice milling facilities. During and after the war, United States rice farmers and millers were called upon to meet unprecedented demands to feed our Armed Forces and send rice to allies and the other countries that depend upon rice, but whose crops had been destroyed by war activities.

Mr. McLain brought that point out in his earlier testimony.

United States rice millers met the demand, investing large sums in plants and equipment. Independent millers invested their own private funds to build these expensive mills. During the Korean war again, rice millers were called upon to meet increased demands and again they made further investments.

Since the end of the Korean war, the imposing of acreage controls has cut down the amount of rice to be milled, and the high support paid United States farmers has priced United States rice right out of the world markets.

Rice millers have been patriotic and have made big investments of funds, but they have found themselves in great difficulty. Some mills have had to close, others may be forced to suspend operation soon unless relief is found.

If another emergency should arise, the fine milling facilities that were once available, and which would be so urgently needed again, may go.

Replacement cannot be made quickly nor easily. Recently, I read that the Government is spending 42 percent of a $3 billion rehabilitation campaign to keep American shipping adequate to meet demands that could arise during an emergency.

We read that there is stockpiling of various types of strategic materials that may be needed in time of emergency. All this requires huge expenditures of public funds. If it is wise to spend billions of dollars to build ships and stockpile materials for possible future emergencies, it seems unwise to adopt practices and policies that are slowly destroying a vital food processing industry that is needed now and would be indispensable in an emergency.

I am convinced that rice millers do not want, nor need, subsidy nor Government help. I believe that if rice millers and rice farmers were permitted to carry on their business under the basic principles of free enterprise, they could grow and prosper and be ready to do their part promptly and well whenever the Nation needed them in peace and

in war.

Specifically, some of the ways that present policies and practices could be improved, in my own personal opinion, are:

First, present rice surpluses held by CCC could be offered for milling and export at prices competitive with the world market. Under RRDL 500, which Mr. Dean mentioned a few moments ago, or similar announcements, if option were granted for 30-day periods on stated lots of rice at realistic prices to individual rice millers, I believe the surpluses would soon disappear. These options are desirable since it. is difficult to try to make sales unless one knows the cost of goods to be sold.

Let me stop and digress for a moment to explain what I mean. For instance, the Government of Greece at the present time has tenders out asking for submission of bids to sell rice to them.

The Government of the United States has rice offered, but it is offered on a basis of the bidder bidding the highest price to get that

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 commit

tees.

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.