effective price of the farm level on the consumption of peanuts is a study of 1952, a 1-percent cut in price of farm level that could only be expected to increase consumption by four-tenths of 1 percent. So you see how the farmer comes out when you carry that on for a few months. Mr. ABBITт. What did you say the total reduction was that you take? Mr. RAWLINGS. It is a combination of going from 90 percent of parity to 82 percent of parity plus a 10-percent further price cut on two 5-percent bites on modernized parity and we have got right near that much more to go on modernized parity at 5 percent a year. I will tell you this. When you get through with modernized parity alone, it will take approximately some $40 a ton off the support price of peanuts if we still had a 90-percent program. That is approximately correct; isn't it, Steve? Mr. PACE. Yes. It has been pretty heavy, that modernized parity. Mr. RAWLINGS. I wanted to get that in the record. We are not up here asking for something we think is unreasonable or something we think we have to apologize to anybody about. Mr. ABBITT. Mr. Chairman, I would just like to introduce the chairman of the Virginia ASC Committee, Mr. Delmar Carr. He doesn't care to make a statement, but he is from the peanut area and is doing a splendid job in his effort to help the farmers of Virginia. Mr. MCMILLAN. Stand up and give the reporter your full name and whom you represent. Mr. ABBITT. And Mrs. Carr, his charming and gracious wife. Mr. CARR. Mr. Chairman and Mr. Abbitt, I want to thank you for the recognition. I have no statement. It is a pleasure to be here with you. Mr. MCMILLAN. Thank you. You have a mighty good Congress man. The committee will hold these hearings open for other meetings at a later date and consider all the statements that have been made here today. If we want to call you in later, we will certainly do it. We will certainly have a report from the Department sometime in the near future, and will take further action on this bill at a later date. The committee will stand adjourned until the call of the Chair. (The following statement was submitted to the subcommittee and without objection by the chairman is inserted in the record:) STATEMENT OF MARSHALL BALLARD, JR., PRESIDENT, AMERICAN TUNG OIL ASSOCIATION Mr. Chairman and honorable members of the committee, my name is Marshall Ballard, Jr., of Lumberton, Miss. I am president of the American Tung Oil Association, and a member of the board of directors of the National Tung Oil Marketing Cooperative and of the Tung Research & Development League. Membership in these three organizations produce two-thirds or more of the total United States production of tung oil annually. Like all other officers and directors of our three organizations, I am a tung grower; and like the great majority of tung growers, my life savings, and all that I have and own are wrapped up in the tung industry. I speak to you therefore not as a professional attorney, nor as a hired lobbyist, but as a plain farmer who will succeed or fail in the tung industry during the coming years. At this time, I am serving as chairman of the committee on miscellaneous commodities of the National Conference of Commodity Organizations. Represented on my committee are such commodities as peanuts, tobacco, sugar, naval stores, potatoes, fruits and vegetables, honey, and, of course, last but not least, tung. This Committee of the National Conference is more or less a coordinating committee for the various commodities just mentioned. I do not pretend to pose as an expert on all of the commodities represented on my committee. I understand that most of these commodity groups are offering specific legislative proposals on which their respective representatives will address you gentlemen in the course of these hearings. I, therefore, shall undertake to answer specifically only for tung. The American tung oil industry is still relatively new. Our oldest producing commercial orchards are under 30 years of age and the great majority of tung trees are under 25 years old. The product of the tung tree is tung nuts and from tung nuts is expressed tung oil. Tung oil has unique and unduplicatable qualities for use in paint, varnishes, waterproof goods, printers' ink, and many other products. It was regarded as so essential to the domestic security during World War II that the entire domestic production was commandeered by presidential proclamation and was allocated only for strategic uses. Tung oil is used by American industries to the extent of some 40 to 50 million pounds annually. Its production in the United States is limited by weather and soil requirements and is thus restricted to a belt about 50 miles wide near the Gulf Coast and extending from Texas to Florida. The American tung industry now produces from one-half to three-fourth of the Nation's requirements for tung oil annually. We feel sure that there is competent leadership in all phases of American agriculture to present their own problems and to propose solutions which are worthy of your most serious consideration. As a still new agricultural industry, we studied with great interest the recent interim report prepared by the President's Commission on Increased Industrial Use of Agricultural Products. This Commission was created by Congress and instructed to make recommendations for such legislation as may be needed to increase the industrial utilization of new and familiar farm crops. The interim report by the Commission as you may recall, made a series of recommendations (1) for the introduction of certain new crops, (2) for an unparalleled program of research for developing the usage of new crops and established crops, and (3) to provide varied forms of financial support by the Federal Government until what was termed the "awkward period" for these new crops and new uses of established crops had passed. The point we wish to stress here is that the tung industry is now in the "awkward period." We acknowledge with a great deal of gratitude our appreciation of the assistance of the Federal Government for its program of research to develop basic information on sound cultural and fertilization practices and the like for tung, all of which has been necessary to the efficient production of this new crop. We are most grateful, also, to the Southern Regional Research Laboratory at New Orleans for its studies on the chemical and physical structure of tung oil-all of this related, of course, to the extension of tung oil markets through the development of new uses. These services have been valuable, indeed, to our developing industry but are small indeed compared to what is proposed under the interim report to Congress referred to above. Literally, gentlemen, the tung industry has been lifting itself by its own bootstraps beginning about 30 years ago. The present tung belt was then a vast area of cutover pineland. The farm population was small. The interior communities were small and were threatened with extinction as the sawmills cut out the timber and closed down and provided no remaining employment for the population. The soil in this particular area is not inherently fertile, although it is blessed by abundant year-round rainfall and a magnificent climate. Cotton had played out due to the coming of the boll weevil and for other reasons inherent to this area. Returns from corn production were meager; and the chief remaining source of income were the gaunt native longhorn cows and scrub sheep which ranged over the cutover pinelands—a very mediocre source of livelihood at best. In this unpromising situation a group of farseeing men-beginning in Florida and gradually extending through Georgia, Alabama, Mississippi, and Louisianaconceived of tung as the one crop that would thrive best under our local circumstances. During the years that have followed, and until quite recently, the tung industry flourished. With it have developed also a thriving modern livestock industry, utilizing improved pastures, a large poultry industry and an even larger dairy industry, along with a very comprehensive reforestation program. As a result the general tung belt area has progressed to an amazing extent. But the basis for and hard core for all the progress farmwide in this particular area has been tung. Apparently until just a few years ago, we were well on the way toward the development of a prosperous and profitable agriculture in an area which had been almost desolate a mere quarter of a century before. During these years of tung development, we have invested some $50 million in farms including buildings, orchards, pastures, fences, machinery and equipment, and in processing plants. We have survived the earlier mistakes-and they were numerous and costly-and, we now feel that we have a lot of the know-how. For the past 5 years the price of tung oil has declined year by year to a point where even our better managed tung farms are hard pressed to make ends meet. It is true that we have had some disastrous weather conditions, but the hazards of late spring frosts have been recognized from the beginning. We expected to recoup in good years losses suffered during bad ones. Such was the case during the earlier years, but it has not been our experience during the past 5 years. We had bumper crops in 1952 and 1953. A rather small crop in 1954, a virtual crop failure in 1955, and fair crops in 1956 and 1957. Apparently, we now have an excellent crop on the way. But do we have a change to recover our losses? We do not. The price of tung oil is now so low that even with an excellent yield in prospect we cannot hope to do much more than break even. Actually, gentlemen, the yield of tung oil, even from our better managed operations during the past 4 years has returned less, after the costs of harvesting and milling, than was paid to many other types of farmers for not producing under the Federal soil-bank program. And we feel that our future, gentlemen, is no brighter than the recent past, unless there shall be decisive action on the part of you gentlemen in the Congress. Those of us who have lived with-who have virtually devoted our lives to the tung industry—are convinced that our problem is threefold. These threefold phases are (1) A parity price formula which is totally unfair to us; this phase of the problem we understand is common to many other segments of agriculture and must be corrected by some fair and adequate means; (2) Support prices established at levels so low as to force the downward trend of tung-oil prices we have experienced during the last 5 years; and (3) An excessive and altogether unreasonable allowance of imports of tung oil from foreign countries. These three factors are interdependent and inseparable. The salvation of the tung industry is absolutely dependent on the solution of these 3 problems-not just 1 of them nor 2 of them, but all 3 of them. I. AN EQUITABLE PARITY PRICE We, in the American tung industry like many other segments of American agriculture with whom we have discussed the problem feel that a modernized version or method of computing parity is highly essential at this time if our producers on the farms are to share equitably in the fruits of our national economy. If American farmers and United States tunggrowers are no exception and are to receive a fair and equitable price for the fruits of their labors, a more modernized and sounder method of computing parity prices must be forthcoming immediately. The National Conference of Commodity Organizations is working on a new method of computing parity. We are cooperating closely with the NCCO in the study of this whole subject and we are inclined to feel that a constructive proposal will soon be forthcoming from the NCCO relative to an adequate solution of this troublesome problem. By way of example, we might add that the effect of the present sliding-scale method of computing parity prices has been particularly disastrous to tung. During the original base period we enjoyed fairly good prices; but because of low support prices and further considerations to be discussed later, the parity price of tung has gone down and down. Thus, the parity price of tung nuts was $100 per ton in 1949, $105 in 1950, $112 in 1951, $108 in 1952, $97.50 in 1953, $91.60 in 1954, $85.10 in 1955, $82.70 in 1956, and $80.20 in 1957. Unless something is done by Congress, within the next 2 or 3 years, we shall have eliminated all the good price years and our basic parity price will be somewhere around 21 cents per pound. In that unhappy event even 90 percent of parity would be of little worth to United States tunggrowers. II. SUPPORT PRICES IN LINE WITH AMERICAN STANDARDS OF LIVING The Agricultural Adjustment Act of 1933, as amended, was enacted by Congress to assure that American agriculture received a fair, adequate, and equitable share of the fruits of our United States economy. It set up the price-support program, backed by loans made by CCC. Certain crops are designated as "basic," support of which is mandatory at 75 to 90 percent of parity; the support of other crops, including tung, may range from 60 to 90 percent in the discretion of the Secretary of Agriculture. The support price is established annually. The wide range in the percentage of parity which may be used by the Secretary of Agriculture as the basis for the support price, has been particularly harmful to the tung industry. This is because of the very low percentage employed. Since 1950 we have had 9 years of support-3 at the rate of 65 percent, 1 at the rate of 62.2 percent, and 5 at the rate of 60 percent. Our pleas for even 75 percent of parity have been denied. Worst of all, the support price has a direct influence on the general market; experience indicates that the consuming industries use it as a yardstick for measuring fair market price. And whether so intended or not, we are convinced that the ever-declining price of tung oil since 1951 is attributable in large measure to the decline in support price year after year in recent years. Almost without exception since 1953, the support price when announced was lower than the then prevailing market price-and almost without exception the market went down. III. SENSIBLE REGULATION OF IMPORTS OF FOREIGN TUNG OIL During recent years, as our city population has increased and as our farm population has decreased, critics who have not thought the farm problem through, have increasingly condemned the farm program as a whole because of the cost of Commodity Credit Corporation operations. That cost has been considerable, it is true. But full truthfulness requires also that we consider other aspects of the national economy, and above all, that things be kept in true proportion. The amount of money we have spent in support of our American farmers is small indeed when compared to the billions of dollars we have spent overseas for defense and rehabilitation of countries all over the world. Even from a domestic standpoint, it is small indeed, compared to the subsidies granted to labor through minimum-wage legislation, to industry such as shipping by direct subsidy and to many other industries through fast tax writeoffs and the like. We do not quarrel with any of these subsidies or the policies establishing them. Rather than condemning these policies and practices, we most heartily approve of most of them. Any other course would be foolish. The point we wish to emphasize is that the expenditure of these multibillions of dollars have so vitalized industry that industrial earnings have been for years the highest ever experienced; and so stimulated the need for labor that industrial workers in the United States for years have enjoyed the greatest prosperity ever experienced by any people in the history of the world. Agriculture, meanwhile, has experienced ever-decreasing prices for products sold and ever-increasing prices for necessities purchased. Who among those groups of our people who have enjoyed this unprecedented prosperity shall cast the first stone at long-suffering agriculture? When viewed in the light of the above perspective, the amount of money that has been spent in support of our own American farmers is small indeed, gentlemen, when compared to that which has been spent to stimulate such unprecedented prosperity in other segments of our national economy, to say nothing of that which has been spent to bolster the prosperities of countless foreign nations around the world. But more about this surplus of farm commodities in the hands of CCC. Most of you remember learning at your mother's knees the story of Joseph in Egypt. Joseph, by his interpretation of the pharaoh's vision, foresaw that Egypt would enjoy a series of fat years, followed by a series of lean years. Whereupon Joseph ordered the storage of surplus food produced during the fat years. I imagine that the people complained a great deal about the amount of money the Egyptian Government was spending to subsidize its farmers. But when the lean years came, there was food aplenty, and the people rejoiced. Many of you will recall the frantic appeals in World War I for farmers to produce more, because armies travel on their bellies. Farmers did produce more, and they kept on producing to feed and clothe our allies, even our former enemies. But they built up surpluses over the years; prices went lower and lower year by year and American agriculture as a whole was virtually bankrupted in the early thirties. Then came the drought years, and the very surpluses which had so nearly destroyed farmers everywhere provided cheap food and fiber for a nation unemployed, in hunger and want. The same continuing surpluses came in right handy in World War II, when we found it necessary to feed and clothe, not only ourselves and our allies, but later on our conquered enemies, and still later, people all over the world who were and still are in need and hungry—people ripe for the beguiling promises of communism. So, gentlemen, is it fair in the light of history to criticize too severely our so-called farm surpluses? They saved Egypt in Biblical days. They saved our allies during two World Wars and have contributed greatly to recovery after peace came. The threat of another war-a war more destructive, perhaps, than the human mind can conceive of-hangs over our heads constantly. God grant that it may never come. But if it should come, the very surpluses of farm commodities under such vicious attack today, will be among our greatest treasures. Tanks and guns and planes and other horrible implements of modern warfare are necessary, of course; but so is food and clothing. Our reserves of food and fiber are not a burden; in fact, they are among our greatest assurances of national security. After this stout defense of reserve farm products in the hands of CCC, you may be surprised at the following statement: Tung producers of the United States, in the truest sense, are not responsible for 1 pound of the some 15 million pounds of tung oil now in the hands of CCC. We have never produced in the United States enough tung oil in any year to supply United States factory requirements, never even in our very best production years. The one reason why domestic tung oil has remained under loan more than temporarily is that imports of foreign tung oil have been permitted to flood our markets year after year. Tung oil, like most other products of human labor, sells at a lower price on world markets than on United States markets. Many of our industrial and agricultural products are protected against excessive imports by tariff fees, import restrictions, and similar devices. Not so, in the case of tung. And so, a peculiar but altogether distressing market situation has arisen. Tung growers of other nations of the free world have practically no home market for their product and practically their entire production must be exported. Naturally they seek the highest market available, even if the gain is no more than a fraction of a cent a pound. In the United States we are protected by a support price which is entirely too low but which nevertheless provides an umbrella over all tung oil sold in these United States. Our domestic producers will not sell at lower than the support price. This gives the foreign producers the opportunity to undercut the prevailing United States price and thereby force the domestic production into the hands of CCC. Red China has dominated the European market for a number of years, and the European price has been consistently lower than the United States price. During the past year, however, large quantities of tung oil from free world countries have been shipped to Europe and a price war has resulted. Tung oil is today around 8 cents per pound cheaper in Europe than in the United States. Under Presidential decree we permitted the import of some 26 million pounds during the year. This amount, much greater than needed, was imported at prices just under the prevailing market price and in several instances even slightly under the support price, so that much of our domestic production was forced under CCC loan. Thus our support price, while giving insufficient but greatly needed protection to United States growers, has served as an umbrella to protect the price of some 26 million pounds of foreign oil. The basic cause of this situation is excessive imports of foreign tung oil Now, the tung industry is in another position which is somewhat unique. We feel that it is to the best interest of the public, the manufacturers, and our own producers, that sufficient oil be available at all times to supply all reasonable factory demands. To this end we do not want to prohibit imports of tung oil |