STATEMENT OF WILLIAM A. HUTTON, PRESIDENT, CONNECTICUTMASSACHUSETTS TOBACCO COOPERATIVE, SOMERS, CONN.

Mr. HUTTON. Mr. Chairman and gentlemen, my name is William A. Hutton. I am representing the Connecticut-Massachusetts Co-op and myself as a tobacco and potato farmer.

The CHAIRMAN. All right. I wonder if you could confine your remarks to anything that has not been brought up yet.

Mr. HUTTON. I own and operate a farm of 250 acres in Somers, Tolland County, Conn. On this farm I raise 100 acres of potatoes, 17 acres of Broadleaf tobacco and keep about 40 head of Hereford cattle. I employ 3 men the year round and may employ as high as 25 during the tobacco and potato harvest season.

As a farmer I am concerned about the economic squeeze that farmers are in. For several years now the commodities farmers sell have been declining in price, but labor, machinery, fertilizer, spray materials and other costs have been increasing. Percentagewise, farmers are getting a smaller and smaller part of the total national income each year. Since farmers are among the largest users of steel, rubber, and electricity and petroleum products in the United States, this trend

does not seem to be in the best interests of our national economy. Certainly it is not a trend that will encourage the investment of capital into farming or a trend that will enable farmers to maintain a standard of living comparable to that of people in other segments of our economy.

Connecticut has special problems as an agricultural State. As you know, our State is highly industrialized. Only 60,000 people out of 2.2 million live or work on farms. This is only 3 percent of our population. And yet Connecticut produces 65 percent of the milk and poultry products it consumes and our production of cigar tobacco, vegetables, potatoes, and fruit is large enough so we are a net exporter of those commodities.

Cash farm income in Connecticut is approximately $100 million a year. Dairy and poultry account for about two-thirds of this. Tobacco ranks third with about $25 million and potatoes, fruit, and vegetables make up the balance.

In my capacity as president of the Connecticut-Massachusetts Tobacco Cooperative I would like to submit first extracts from a statement that was prepared for this hearing by Samuel J. Orr, who is manager of the Connecticut-Massachusetts Tobacco Cooperative. Senator AIKEN. He will not be here?

Mr. HUTTON. He will not be here.

The CHAIRMAN. Proceed.

Mr. HUTTON. It is as follows:

CHAIRMAN,

HOLYOKE, MASS., November 14, 1955.

United States Senate Committee on Agriculture,

State House of Representatives Chamber,

State Capitol Building, Montpelier, Vt.

DEAR SIR: The Connecticut-Massachusetts Tobacco Cooperative is a nonprofit farmers' organization representing the Havana seed and Broadleaf tobacco growers of Connecticut and Massachusetts. There are approximately 1,400 members, or three-fourths of the cigar binder tobacco growers of the Connecticut Valley. The production of Havana seed and Broadleef tobacco, which is used for cigar binders, is the principal source of livelihood for these farmers.

Havana seed tobacco (U. S. Type 52) and Broadleaf (U. S. Type 51) come under the provisions of the Agricultural Adjustment Act with prices supported at 90 percent of parity. This aspect of the Agricultural Adjustment Act has been a godsend to our growers. The nonperishable nature of tobacco has made it ideally suited to achievement of the goals of the price-support program. Operating since 1949 in this area, temporary surpluses of tobacco have successfully been carried over to year when this temporary surplus could be marketed through normal channels, with no loss to the Government as a result of the price-support operations. This cooperative, which administers the price-support program for tobacco in this area, last year liquidated 100 percent of the 1949 crop Commodity Credit Corporation loan and paid a patronage dividend to the participating growers.

The CHAIRMAN. That is October 17, 1933, when it was on its way back and efforts were made to help it up to June 30, 1955, it had made a profit for the Government of $187,844, aside from the dollars that were collected on taxes from cigarettes, et cetera.

Mr. HUTTON. We are very proud of that record. We are participating in it up here.

The CHAIRMAN. What you are really saying there is that you do not want it changed.

Mr. HUTTON. I think that is right, but I think that I should go on further and say that although we liquidated the 1949 crop, we paid back the loan to the Commodity Credit Corporation. In other words, we have handled this crop at no loss to the Government and, in addition, we have paid on those two crops $285,000 in interest back to the Government.

The CHAIRMAN. And except for the 90 percent support price on that you would not have been able to do that.

Mr. HUTTON. I think that is correct. [Reading:]

We have recently liquidated 100 percent of the loan on the 1950 crop and will be paying a patronage dividend on this crop in the near future. I have every reason to believe that we will continue to be just as successful in utilizing the price-support provisions of the Agricultural Adjustment Act to remove temporary price depressing surpluses from the market, without cost to the taxpayers.

There has recently been developed a synthetic cigar binder which utilizes our low grades of tobacco for binder purposes which were not heretofore used. The impact of this synthetic binder on the economy of the Connecticut Valley is very serious. Our growers are aware that drastic readjustments in their farming programs are necessary which will entail tobacco acreage cutbacks. At a meeting attended by 800 growers they indicated their willingness to reduce tobacco acreage while we are going through this readjustment period by unanimously recommending to the Department of Agriculture that quotas be reduced 25 percent.

The directors and membership feel that the present agricultural program which provides for supporting the prices of tobacco at 90 percent of parity is sound and is of major importance in stabilizing the market for our crops. We strongly urge a continuance of this program.

Sincerely yours,

SAMUEL J. ORR, Manager.

By the same token, I may speak for myself as a tobacco and potato farmer.

The CHAIRMAN. Have you anything in that statement that is new to add to what you have just said?

Mr. HUTTON. I think so.

The CHAIRMAN. I wish that you would confine yourself to that.

Mr. HUTTON. I will do that.

As a tobacco farmer I am also seriously concerned about what is happening to the cigar binder industry of the Connecticut Valley,

both in the Broadleaf area of Connecticut and in the Havana seed areas of Connecticut and Massachusetts.

The development of the processed or homogenized binder is creating serious economic problems which much bring about major adjustments in our production. Last year one of the major purchasers of Havana seed failed to buy tobacco in the valley. This year the major purchaser of Broadleaf has announced that his company will drastically curtail their purchases of Broadleaf.

This year we expect the purchases will be less than 1,000 acres. The CHAIRMAN. What caused that?

Mr. HUTTON. This is the homogenized or processed binder. Are you familiar with that at all?

Senator AIKEN. I am not. I was going to ask you about it.

The CHAIRMAN. Tell us what that is. Put something in the record about that.

Mr. HUTTON. Probably Mr. Newberry is going into that in some detail, but briefly

The CHAIRMAN. I knew that there was homogenized milk.

Mr. HUTTON. You have a lot to learn, Senator. You should live in the Connecticut Valley.

The CHAIRMAN. Will you tell us what that is, for the record?

Mr. HUTTON. Briefly, we have always been proud of our binder. To us a binder, which is the covering that goes under the wrapper, we have always assumed that that leaf should be sound and free from holes and damage, because if it had holes in it, it would not draw. It had to be of high quality. Under this new process you can take any tobacco practically, the damaged tobacco, the kind that normally went for stemming, it is ground up stems and all, and a catalytic agent is combined with it and also some fiber-it is mixed up more or less like mortar.

The CHAIRMAN. It is still tobacco?

Mr. HUTTON. It is still tobacco with a catalytic agent or some agent put in to bring it together and to hold it together and it is turned out in sheets or rolls and has no holes in it. It is a perfect leaf. That poses a certain threat.

The CHAIRMAN. What would you suggest we do to stop that? Mr. HUTTON. I do not know. I think that is partly the farmer's problem. And if I can go on I will tell you what we are doing. The CHAIRMAN. Maybe he can produce a tobacco with no holes. Mr. HUTTON. The point is that we are living in an area where we compete with high price industrial labor, and we have always been able to get high prices for our tobacco. And the reason we could survive has been that. This thing can utilize cheap tobacco. And we question whether we can stay in business.

The CHAIRMAN. Can they use a tobacco different from what you raise there to do this homogenizing?

Mr. HUTTON. We believe that they can. We believe it is being done. It is very difficult to get any concrete information on this. This process is quite secret.

The CHAIRMAN. Who is doing that, the manufacturers of cigars? Mr. HUTTON. There are three patents now being used that I know of. One is held by the American Machine & Foundry, one is held by General Cigar & Dexter Paper Co. in Windsor, Lawrence. These

processes vary somewhat, but they are all being used to create a processed or manufactured leaf out of cheap tobacco.

The CHAIRMAN. All right. What would you suggest we do about it? Mr. HUTTON. Why do you not let me tell you what we are doing, first?

The CHAIRMAN. It may be that you do not need us.

Mr. HUTTON. That may be. We hope that we do not.

Senator AIKEN. May I ask, have they developed any synthetic wrappers?

Mr. HUTTON. I think that Senator Holland would be very much concerned about that, because they have a shade-grown area down in his part of the country. I will say this, if they can develop a synthetic processed or homogenized binder, call it what you will, it is possible to make a synthetic or homogenized wrapper. I think that you can realize the impact of that on the shade tobacco-growing industry if it becomes a reality.

Senator AIKEN. Do you not think they will get a synthetic filler? Mr. HUTTON. I would not bet against that.

Directly or indirectly, I think we can reasonably assume the homogenized binder has been an important factor in their decision to reduce purchases of natural binder.

The Conn.-Mass. Tobacco Cooperative of Holyoke, Mass., handles Connecticut Valley tobacco under the price-support program. It is the only cushion that the Broadleaf and Havana seedgrowers have to absorb the shock of the adjustment that appears inevitable. As a farmer and as president of the Conn.-Mass. Cooperative, I urge the continuance of the Agricultural Adjustment Act as it now applies to tobacco. Any change at this time in our opinion would definitely be a hardship to the Connecticut Valley grower in the face of the other major adjustments he must make.

Tobacco growers, both Broadleaf and Havana seed, are facing the threat of the homogenized binder with stern reality. At a recent meeting of the Conn.-Mass. Tobacco Cooperative 800 growers in an amazing demonstration of grower unity voted unanimously to endorse a 25-percent cut in acreage recommended by the board of directors. This action was made a matter of public record at a public hearing called by the tobacco branch in Washington on November 10, 1955, to determine quotas. This action points out, I think, that we are not asking for subsidies that will build surpluses, but for a sound farm program that will aid us in our struggle for survival.

We believe so far as tobacco is concerned that the 90-percent program which gives us 90 percent of parity is sound. I think any program is sound if it does not lose money for the Government.

The CHAIRMAN. I do not think you need to change it. Congress will not do a thing about that now or soon.

Mr. HUTTON. We hope not at this time.

The CHAIRMAN. In my humble judgment it would not be done, because the administration is behind it and I do not know of any Senators against it; as a matter of fact, any Congressmen, either. So you can sleep well tonight.

Mr. HUTTON. Thank you.

The CHAIRMAN. We will not change that. I do not think there is a chance.

Mr. HUTTON. If I can divorce myself of the tobacco business for a minute and take over my role as a potato farmer, I shall do so.

As a potato farmer, I feel there is a definite need for some kind of a potato program that will prevent the production and accumulation of surpluses that depress and destroy the market year after year. This is a problem that the farmer as an individual seems unable to cope with. It is a national problem since potatoes move in interstate commerce and a surplus in any major producing area can depress prices all over the country-I had not discussed this with the Maine. gentlemen before. I think that we can probably get together with them.

The CHAIRMAN. Listen, let us have your view of it. You may have a better scheme than he has.

Mr. HUTTON. The amazing part of it is, without discussion, we come up with almost the same answer. It varies some in detail.

May I suggest consideration of a farm program for potatoes with or without price support where individual quotas are based on the number of bushels or units of measure that a farmer might sell during the season. This would place the problem of surplus disposal where it belongs-with the farmer. In a good year, when nature intervened favorably, and he had several acres left when he had dug his marketing quota, he would simply fail to dig the remainder.

I realize that such a system would involve compulsory Federal-State inspection of all potatoes but this has proven practical and workable in areas where marketing agreements are now operating. Compulsory inspection to determine grade protects both the producer and the consumer. I would strongly recommend that any potato program be supplemented by marketing agreements in all production areas.

The CHAIRMAN. It is my recollection the witness who proposed that potato program said that he thought there would be no unanimity among the growers in the area, which would include all of the New England States. Do you think that would be possible?

Mr. HUTTON. I think it is very possible.

The CHAIRMAN. We will hear from others.

Mr. HUTTON. I think that we have a common problem and we are searching for a practical solution.

The CHAIRMAN. I believe the other potato growers who want to testify from this area may have something to tell us. We will find out whether or not what you say is correct. Thank you, sir.

Senator HOLLAND. I want to call attention to the fact that we have had three different suggestions about the potato problem solution from this rather limited area of New England here today. One from Maine and one from Connecticut and one from Vermont, which points up the fact that there is not complete unanimity here in thinking, at least up to now. It just intensifies and accentuates the problem which we find in that industry and others.

However, what I wanted to ask about was tobacco. You have been testifying for the producers of the Broadleaf tobacco and the Havana tobacco, both of which are binders.

Mr. HUTTON. That is right.

Senator HOLLAND. You are not testifying for the wrapper leaf tobacco, the shade-grown Sumatra leaf tobacco, are you?

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