EXTENSION OF RESTRICTIONS ON IMPORTED CITRUS FRUITS, DATES, AND FIGS THURSDAY, MARCH 6, 1958 HOUSE OF REPRESENTATIVES, SPECIAL ACTION SUBCOMMITTEE ON DOMESTIC Washington, D. C. The subcommittee met pursuant to notice at 10 a. m., room 1310, New House Office Building, Washington, D. C., Harlan Hagen presiding. Present: Representatives Hagen (presiding), Anfuso, and Teague (California). Also present: Representative Sisk. Mr. HAGEN (presiding). The committee will come to order. This is a continuation of the hearings which we had on February 25, and which we kept them open at the request of Mr. Wolff, I believe it was. And since then there are other people who have indicated they have a desire to appear. I might say that the people who have indicated a desire to appear are both pro and con on some of these proposals. And since the date of the first hearing Mr. Sisk has introduced another bill which combines all of the commodities mentioned in his original bill plus the addition of dates, and so forth, that is H. R. 11056. (The bill is as follows:) [H. R. 11056, 85th Cong., 2d sess.] A BILL To amend section Se of the Agricultural Adjustment Act (of 1933), as amended, and as reenacted and amended by the Agricultural Marketing Agreement Act of 1937, as amended, so as to provide for the extension of the restrictions on imported commodities imposed by such section to all imported limes, grapefruit, lemons, mandarins, all types of oranges, including temples, tangerines, murcotts, and tangeloes, dried figs, fig paste, sliced dried figs, shelled walnuts, dates with pits, dates with pits removed, and products made entirely of dates Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 8e of the Agricultural Adjustment Act (of 1933), as amended, and as reenacted and amended by the Agricultural Marketing Agreement Act of 1937, as amended, is amended by striking out “limes, grapefruit" and inserting in lieu thereof "limes, grapefruit, lemons, mandarins, all types of oranges including temples, tangerines, murcotts, and tangeloes, dried figs, fig paste, sliced dried figs, shelled walnuts, dates with pits, dates with pits removed, and products made entirely of dates." Mr. HAGEN. Is Mr. Wolff in the audience? Mr. E. G. MARTIN. Mr. Chairman, Mr. Ernest Brown is the representative of the Iraq Date Trading Co., who would like to appear in lieu of Mr. Wolff. Mr. Wolff will not be here. Mr. ANFUSO. Mr. Brown will take place of Mr. Wolff? Mr. MARTIN. Yes, sir. Mr. HAGEN. The first witness I have listed here is Mr. Koch, vice president of the Bordo Products Co., Chicago, Ill. Do you have a statement that you want to submit? Mr. KOCH. I would like to present it orally, if you do not mind. STATEMENT OF ARTHUR L. KOCH, VICE PRESIDENT OF BORDO PRODUCTS CO., OF CHICAGO Mr. KоCH. Mr. Ladies and gentlemen of the committee, my name is Arthur L. Koch and I am a vice president of Bordo Products Co. of Chicago, Ill. Our company has distributed bulk and packaged imported dates for about 35 years. We recommend that the reference to imported dates be deleted from the several bills being considered at this hearing. I believe some of the members of this subcommittee are aware of the fact that there have been 2 hearings before the Tariff Commission within the past 2 years relating to imported dates. The purpose of these investigations was to determine whether the Tariff Commission should restrict the importation of dates so that they would not be imported in quantities to render ineffective the Federal date marketing order program of the Department of Agriculture. A vast amount of data was obtained at these hearings and made available to the Commission, and it is suggested that the members of this subcommittee become familiar with this material in considering H. R. 7937 introduced by Congressman Saund, and H. R. 11056 introduced by Congressman Sisk February 27, 1958. Imported and domestic dates differ in so many important respects such as appearance, physical properties, sugar composition, moisture content, keeping qualities, etc., that they are technically interchangeable only to a limited degree. In the United States dates have two distinct markets in which both domestic and imported dates are sold, the retail trade, and the confectionery and baking trade. Until recently imports supplied almost the entire industrial market for dates. Most domestic dates are marketed whole and unpitted for sale through retail outlets as fresh fruit. Only in recent years have domestic dates been used in appreciable quantities by confections and bakers, and the consumption of them has been primarily in the form of product dates rather than whole dates. Product-form dates are pitted, dehydrated, flattened, mascerated, or otherwise processed to meet the requirements of industrial users. The Department of Agriculture recognizes that such competition as exists between the imported and domestic dates that are marketed in the form of whole dates through retail outlets is not of sufficient intensity of interfere materially with its program for dates. We believe that restrictions either through import restrictions or such restrictions as could be administered against imported dates if they were included as an amendment to section 8e of the Agricultural Act of 1954, as amended would not assure materially greater success for the Department of Agriculture programs. These programs were undertaken to establish orderly marketing for an expanded output that resulted primarily from increased plantings during the war years 1941 to 1945. For example, the 1937-39 average crop was 6.5 million pounds. Consideration should be given to the fact that the resumption of international trade in the postwar period brought the expanded out put of domestic dates into competition not only with imported dates but with many other sweets that were again available in abundant supply. Unlike the programs undertaken for other agricultural products confronted with a similar postwar problem, the programs for dates have operated not to remove marketable dates from the United States food market, but rather to limit the share of a date crop that could be marketed as whole dates in the retail market and to direct that the remainder be offered to the confectionery and bakery market. The latter market which until recently was supplied almost entirely by imported dates has never been large, and is of a type that cannot be rapidly expanded. Imported dates marketed to retail channels do not displace any appreciable quantity of domestic dates so marketed, and the Department of Agriculture does not contend otherwise. It would therefore appear that the bills to be considered in this hearing are concerned primarily with the volume of imported dates that will go to industrial users. Only a part of the sales of imported dates will be to users whose decision to buy domestic or foreign dates will be governed solely or primarily by considerations of price. Calculation of the price disparity itself presents some difficulty inasmuch as few domestic productform dates are sold in the same form in which the bulk of imported dates are marketed. Many confectioners and bakers are hesitant to substitute a new domestic product-form date in a long established manufacturing process based on the successful use of imported dates. They would prefer to pay a much higher price for imported dates than for domestic dates. Annual sales of domestic product-form dates the past several years averaged 5.4 million pounds (in terms of whole dates with pits); they accounted for about 20 percent of the total sales of domestic dates during these years. The bulk of these dates consisted of dehydrated granules or pieces with a moisture content of less than 5 percent. No commercial method has been developed to produce from imported dates a dehydrated date product with a moisture content of less than 5 percent. As a consequence imports cannot interfere materially with the production or sales of the domestic diversion product that currently accounts for the bulk of the consumption of domestic product-form dates. Because of the difference in the kinds of dates that are produced in the United States and those that are imported, as well as the difference in the form in which the two are generally sold, strict price comparisons between them cannot be made. The average wholesale price of imported pitted dates distributed through retail outlets has long been higher than the corresponding price of domestic dates, whether pitted or unpitted. Not only have imported dates generally been higher priced than domestic dates, but the trend of prices of imported dates during the past 2 years has been upward, and no reversal of that trend is in prospect in the immediate future. From the foregoing it is apparent that to the extent that price considerations influence buyers in choosing between imported and domestic dates the influence has been in the direction of favoring the purchase of domestic dates. The principal retail marketing season for both domestic and imported dates is the period between mid-November and Christmas. Imports of dates do not generally arrive in sufficient quantity early enough in the year to enable importers to meet the heavy year-end holiday demand with fruit grown in the same year. Much of the holiday trade is consequently supplied from imports carried over from the preceding season; also, since most imports enter during only a few months of the year, stocks must be carried to fill ordinary trade demands throughout the year, consequently importers must carry large stocks for extended periods at considerable cost to cover storage and interest on funds invested. Actually consumption of imported dates was not materially larger in 1956-57 than in 1955-56, and indications are that consumption of imported dates during 1957– 58 will not exceed the 2 prior years. From the foregoing it would appear that such changes as have recently occurred in the United States inventory of imported dates, and in the volume of actual domestic consumption of imported dates, have been too small to cause material interference with any of the Department of Agriculture programs for dates. All domestic programs for diverting dates to industrial uses have been in existence only since 1954. Considerable research has been conducted both in the technical and merchandising fields with substantial results, notwithstanding that bakers and confectioners are disinclined to switch to somewhat different products from new sources of supply as long as time-tested articles from customary sources are available. This reluctance was partly overcome, however, with the successful introduction of date granules, which are particles milled from domestic dates dehydrated to a moisture content of less than 5 percent. The principal users of this product state that no acceptable substitute made from imported dates is presently available, and that none is expected to be available in the near future. A successful diversion program for domestic dates must in the long run rest upon the development of new product forms that will appeal not only to present industrial users of imported dates but also to bakers and confectioners who currently use few, if any, dates, either imported or domestic. Under present conditions a restriction in the volume of imported dates available to domestic bakers and confectioners would no doubt operate to promote the sale of domestic dates, but certainly not to the extent that imports would be reduced. Industrial users can be denied imported dates, but they cannot be forced to use domestic dates. A limitation of imports by curtailing the aggregate consumption of dates used in the bakery and confectionery trade could well divert the Department of Agriculture long-run objectives to expand the consumption of domestic dates by commercial users. You see, gentlemen, the Tariff Commission has within the past 2 years made 2 complete and exhaustive investigations with reference to the impact of imported dates on the marketing program of the Department of Agriculture. In both cases the Commission found that imports did not interfere with that program. These investigations were under section 22 of the Agricultural Adjustment Act, which directly provides for control of agricultural imports. Having failed in their efforts to restrict imports directly under section 22, it would seem that the California date industry and the Department of Agriculture are now attempting, by an indirect method |