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Mr. Chairman, members of the committee, I am Oren A. Wright, a purebredsheep breeder and farmer. I live at Greenwood, Ind. I am the National Farmers Union representative on the board of directors of the American Sheep Producers Council

Thus, both as a grower, as the designated representative of a national general farm organization, and as a member of the board of the organization set up within the entire sheep producing industry to activate section 708 of the National Wool Act of 1954, I have participated in the activities and benefits of the program established under the act.

The Farmers Union supported the original enactment of the National Wool Act. We believe that during the short period in which the Wool Act has been in effect, we have seen proof that it is an excellent instrument for restoring price stabilization to a livestock industry with two separate commodities to market.

Remembering that payments for only, two marketing years have thus far reached the growers, it is easy to conclude that the results thus far have been excellent and that only more time is needed to show the act fully effective as a method of stabilizing a basic industry and increasing the production to a needed goal.

Incentive payments utilized for wool fit into the pattern of the need program to provide farmers a stronger bargaining power in the markets. In testifying, Mr. J. A. Baker, representing our organization before the Joint Economic Committee of the Congress as printed in their report of November 22, 1957, stated:

“Imports of competing farm commodities would have to be restricted at all times when the domestic market price was below the parity income equivalent level or alternatively, and preferably, a system of parity deficiency or production payments would have to be instituted or the two methods be used in combination as has been done in the case of wool and sugar.”

There is no doubt in our minds that the incentive payments approach used in combination with a partial tariff protection has proven the economic soundness of this farm income protection method in regard to wool.

Being a two-product industry, incentive payments on the wool alone, of course, cannot fully solve the market place price problems of the entire industry when lar income is such a major portion of the total income on sheep.

Thus, the industry's own effort in the American Sheep Producers Council through activation of section 708 plays a very important role in creation of demand and price stabilization for the industry's two products—wool and lamb.

I was an original member of the board when the ASPC was formed by the major industry producer organizations together with the general farm organizations, except one, interested in the welfare of the sheep industry to activate section 708 and develop a method of promotion as permitted by the law. Our organization helped with the educational work to the growers at the time a nationwide referendum of producers was held and in which more than 70 percent of the producers voting, who also represented more than 70 percent of the production, voted in favor of the promotion program and the method of using a portion of the incentive payment to finance it.

I served on the board as we then developed a plan of organization in the most democratic manner we could devise so that the producers and organizations in every section of the Nation could be represented by delegates and directors in relation to the amount of money contributed by the growers in their area.

I can testify that we have now developed what we believe to be a most democratic type of control by the growers of the expenditure of their money within the framework of the intent of the National Wool Act of 1954.

We believe it to be bringing stability to our market through better distribution of the meat production. The National Farmers Union, in working with this commodity group whose producers have given unstintingly of their time, as well as making the monetary contributions to make it possible, believe we have found a true coinmodity approach by an industry on its own behalf to commodity bargaining power:

We do feel that the funds available for continuation of the act may prove to be inadequate in coming years, and we fear that Department of Agriculture setting of incentive price levels may be too low to accomplish the purpose of the act unless Congress makes available more funds if needed.

We approve the approach which has been discussed in meetings of the producer organizations within this commodity group in that rather than restricting the effectiveness of the program, the Congress permit 70 percent of all wool duties including ad valorem, as well as specific, inasmuch as imports are competitive with American production, to be made available in order to make successful this combination of partial tariff protection and partial production incentive payment approach.

The National Farmers Union recommends the extension of the Wool Act in its present form with the two suggested amendments to provide sufficient funds.

Thank you.

Mr. Poage. Mr. Baker, we are very much obliged to you for your statement. It shows that your organization recognizes the desirability of the use of direct compensatory payments where they seem appropriate to be paid; and I am especially pleased to find that your statement takes notice of the fact that they should be used in other industries where they can in the way in which they have been used in wool.

I understand that your organization does favor that, because that seems to be the best method,

or as a part of a method in combination with others, which may help the farmers' income.

Mr. BAKER. That is correct, Mr. Chairman.
Mr. PoAGE. Any questions?
(No response.)

Mr. BAKER. Mr. Chairman, in response to a question that you asked another witness earlier:

Our endorsement of these bills with the 4-year extension does not mean that we would recommend that the Wool Act expire at a certain date and the cotton law be extended to another date and the milk bill of Mr. Johnson at still another date.

You know, Mr. Poage, I kind of consider that you and I and our national president are the fathers and initiators of the idea that all these laws ought to expire on the same date.

Mr. Poage. And I would take judicial notice of the fact that your organization has had that viewpoint and I think it is a correct viewpoint.

Mr. BAKER. I would like the record to show that we would suggest that all parts of a comprehensive bill expire at the same time for the review of Congress.

Mr. PoAGE. Any questions?
Mr. Johnson. I have one.

Now, what would be the view of the farmers—the National Farmers Union, your recommendation, as to taking care of wool; should that be by a bill for wool alone or in one bill with other commodities, Mr. Baker?

Mr. BAKER. Mr. Johnson, we very strongly feel that we have a total farm industry in this country and whatever the commodity, if a farm family is trying to make a living raising and selling their commodity, it is a very important commodity to that family.

The justice and fairness of the situation, the economics of the situation when you cannot really operate a program in splendid isolation from the economic standpoint does not make sense unless you have got similar programs for most of the other farm commodities.

And then, again, we are not at all sure that you can pass legislation if you try to take them up one at a time; and we do not want to go through this business of getting all shredded up and cut up in the process of consideration, by trying the one-commodity approach.

Mr. JOHNSON. I was very much interested, because that is the same view I had: to put them all together in one bill.

Mr. BAKER. And I am sure that you would agree, all of the commodities being in the same piece of legislation-but it does not mean that you have the same program for wool and milk.

You adapt the program for each of the different commodities covered, but let us all put our separate programs together into one bill and then we can have the consideration taken on the farm income problem as a whole.

Mr. Poage. Are there any further questions? (No response.)

Mr. PoAGE. We are very much obliged to you, Mr. Baker, and to your organization.

Mr. BAKER. Thank you, Mr. Chairman.

Mr. PoAGE. Are there any other farm organizations present who want to be heard on this matter?

Are there any representatives of the American Farm Bureau Federation present this morning?

(No response.)
Mr. PoAGE. Is there anyone else who wants to be heard?
(No response.)

Mr. PoAGE. I want it understood that we are not closing the hearings with this meeting, and there will be further opportunity for anyone to express his views on this wool matter.

We do not propose to close down these hearings without allowing everyone the opportunity to make a statement. We want to give them a full opportunity to express their opinions.

Mr. Hill. Mr. Chairman.
Mr. PoAGE. Mr. Hill.

Mr. Hill. I think that I should say that, first of all, I want to express my appreciation to Mr. Poage, chairman of this subcommittee, for giving this opportunity to the woolgrowers and the sheep producers to testify while they are here in Washington, having come to appear before the other body, and I want all of you to know that Mr. Poage is very cooperative with some discomfort to himself that he made it possible for them to appear today.

I want the committee and everybody to understand how much the woolgrowers who have come a long distance appreciate your holding this meeting, Mr. Poage, and I want to say particularly that this being Abraham Lincoln's Birthday—I am glad to be here listening to this testimony, although perhaps I should have been out making Republican speeches.

We are happy to have such a large crowd. I might also say that the testimony, both yesterday and today, Mr. Chairman, was testimony that we can really appreciate and of great value to the committee.

The testimony, I must say, has been extra good.

Mr. PoAGE. Now, Mr. Hill, I want to join you in expressing my appreciation to the woolgrowers and the producers for having appeared here.

They have done an excellent job, and they have given us very good testimony, and the committee will consider it very carefully.

Finally, I want to thank Mr. Matthews for presiding yesterday when I was unable to be here, and, also, I wish to thank all of the staff, who have gone to a great deal of trouble to help us out.

Mr. Hill. And I want to say, Mr. Chairman, that that goes for the ranking Republican member, and I want to say also that Mr. Matthews and the entire staff have been just as cooperative as they could possibly have been.

Mr. Poage. The committee will now stand in recess, and we will have another meeting on this subject, I assure you.

(Thereupon, at 11:50 a. m., the subcommittee recessed to reconvene subject to the call of the Chair.)

(The following statements, data, and telegrams were submitted to the subcommittee:)

STATEMENT OF HON. ARTHUR V. WATKINS, A UNITED STATES SENATOR FROM

THE STATE OF UTAH Mr. Chairman, I appear here this morning in support of H. R. 10049. Because the committee must hear a good many witnesses this morning, I shall keep my remarks brief and to the point.

In section 702 of the National Wool Act of 1954, Congress declared: "It is hereby recognized that wool is an essential and strategic commodity which is not produced in quantities and grades in the United States to meet the domestic needs and that the desired domestic production of wool is impaired by the depressing effects of wide fluctuations in the price of wool in the world markets.

The same provisions of law declared it "to be the policy of Congress, as a measure of national security and in promotion of the general economic welfare to encourage the annual domestic production of approximately 300 million pounds of shorn wool, grease basis, at prices fair to both producers and consumers in a manner which will have the least effect upon foreign trade.'

Sections 703 and 704 authorize the Secretary of Agriculture, through the Commodity Credit Corporation, to obtain this level of domestic production by use of incentive payments. The payments, when added to the national average price received by producers, are to provide producers a national average return equal to the support level set by the Secretary.

Congress thus recognized that certain impediments, which are inherent in the nature of the wool industry, interfere with the natural price mechanism to such an extent, that the market alone cannot be relied upon to guarantee an annual domestic clip of 300 million pounds. For example, an incentive must be provided during the period of expansion of this industry, if producers are to be able to incur increased costs of (1) acquiring additional rangeland, (2) carrying out range improvements on presently held lands so as to increase forage yields, and (3) obtain competent herders at wages comparable to what these people can get in other occupations.

All these things must be done and growers cannot, over the relatively long period of time it takes to increase sheep numbers and thereby wool production, by themselves finance such an undertaking without at least a guaranty of receiving 100 percent of parity.

For this reason, during the 1955 and 1956 marketing years, the actual payment rates were set at levels (19.2 cents per pound and 17.7 cents per pound, respectively) which, when added to the national average prices received in the market place (42.8 cents and 44.3 cents respectively), would give growers a total return of 62 cents per pound, or 106 percent of parity. Preliminary data provided by the USDA indicate that the total return for the 1957 clip probably will be between 100 and 101 percent of parity.

I think it is appropriate for the committee to evaluate the progress which the industry has made during the past 3 years toward expanding production upward so as to provide an annual domestic clip of 300 million pounds of shorn wool. In this connection, I think it well to call to the committee's attention the last paragraph of the Department of Agriculture s favorable report on H. R. 10049 which reads as follows:

“With regard to the progress being made toward increased production of wool in accord with the intent of the act, sheep numbers and wool production continue at low levels. Shorn wool production in 1957 is estimated at 226 million pounds compared with the 300 million pounds goal under the act. The net decline in wool production the last few years has been primarily due to reductions in sheep numbers in Texas and several of the Western States where severe drought conditions prevailed. Due to the nature of the enterprise, year-to-year increases in wool production can be expected to be only gradual even under most favorable conditions."

Concerning the effect of the drought, I would point out to the committee that wool production in the Western States for the years 1955, 1956, and 1957, at 112.2, 111.0 and 107.3 million pounds respectively, was well below the 10-year average (1946–55) for the Western States of 112.8 million pounds.

Other factors not mentioned in the USDA favorable report on the bill now before the committee, which served to mitigate the effect an incentive payment program normally would have upon productions, include these: First, when the Wool Act of 1954 became effective, the Commodity Credit Corporation had some 150 million pounds of wool in its inventories. This served to depress market prices which made growers move cautiously in the direction of increasing sheep numbers. Second, this effect upon domestic production was reinforced by the then low prevailing world price for wool.

On the other hand, several things have occurred recently which in my opinion point to much better prospects for gradually increasing domestic production to an annual clip of 300 million pounds. That is, if the incentives provided by the National Wool Act are extended to growers.

First, the drought has been broken, and western range conditions are the best in several years.

Second, there is some indication that a buildup of flock and herd numbers is beginning to take place and that shorn-wool production, although sheep and lamb prices in 1958 may not average much differently than those in 1957, will be up somewhat in 1958. Third, only a few weeks ago the Commodity Credit Corporation disposed of the last pound of its wool stocks, which were acquired under nonrecourse loan program prior to passage of the National Wool Act of 1954.

There are, however, several problems which may prevent realization of the congressionally expressed goal of getting an annual domestic clip of 300 million pounds, unless the Congress takes appropriate steps to remedy them. First is the need to insure that adequate funds will be available to make incentive payments to growers.

There is some doubt that the present method of providing these funds will be sufficient in the years immediately ahead, as the following portion of the USDA's report on the bill before you implies:

"Under the act, the total payments are limited to 70 percent of the specific duties collected on wool and wool manufacturers since January 1, 1953. These amounts have ranged from 25 to 35 million dollars a year-$28 million last year. Through March 1957, which includes the years 1953 and 1954 plus the first 2 years of the new program, the total was $128 million. Payments totaled approximately $58 million the first year and around $53 million the second. Deducting this $111 million in payments from the amounts available for payments, leaves a $17 million balance for the current and later years to cover payments in excess of duty collections."

For this reason, I suggest that the committee consider amending the bill before it, so as to make 70 percent of the ad valorem duties, as well as the specific duties on wool imports and manufacturers, which have been collected since January 1, 1953, available for use in making the incentive payments. If this were done, Í have been informed, that it would increase the size of the fund by nearly 60 percent.

I realize there has been some objection to the self-help promotional program authorized by section 708 of the National Wool Act. This criticism seems to come mainly from those people who prefer a program of publicity, research, and information conducted on a national basis for all meat products by one organization. The sheep industry, however, seems to feel that such an approach, as far as it is concerned, is and would be inadequate, since sheep are dual-purpose animals, whose major products, wool and lamb, require an entirely different promotional effort than do other forms of livestock.

In this connection, also, I want to point out that the American Sheep Producers Council, the promotion organization authorized to carry out the approved program, has been handicapped in its efforts to increase wool and lamb consumption at better prices to growers by the drought, which caused heavy marketing of cattle, as well as sheep and lambs, and resulted in lower returns to growers. Το date the administrative costs incurred by the council have been modest. Through December 1957, they amounted to only 4.7 percent of total disbursements of nearly $3 million. As of the same date, receipts in excess of disbursements are slightly in excess of $3 million as well. În my opinion section 708 should remain as part of the National Wool Act.

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