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(3) shall limit the charge made to recipients of such commodities or products to not more than actual cost to the nonprofit organization including processing and transportation (excluding local transportation in the country or area of distribution);

(4) may permit such nonprofit organization to contract with a processor to process any such commodities in exchange for byproducts thereof (provided that the fair value of the byproducts does not exceed the reasonable charge for such processing).

PAYMENT FOR COMMODITIES

SEC. 8. (a) The Board is authorized to distribute commodities and products under this Act at such prices, not in excess of the fair value thereof, as recipients are able to pay, and as are consistent with the purposes of this Act. Payment for such commodities and products may be in the form of

(1) raw materials needed for stockpiling for national defense purposes; (2) goods and services needed by Armed Forces personnel; or

(3) United States or foreign currencies.

Any foreign currencies acquired under the provisions of this subsection shall be purchased from the Board by the Export-Import Bank of Washington at current rates of exchange.

(b) Notwithstanding any other provision of this Act, the Board may make commodities or products available for distribution under this Act without any cost whatever to the distributing agency when the persons to whom ultimate distribution will be made are unable to make any payment therefor (or any payment in excess of transportation and processing costs).

(c) Amounts received by the Board under this section may be used to defray any proper costs of this program and any remaining funds shall be paid into the Treasury as miscellaneous receipts.

APPROPRIATIONS

SEC. 9. There are authorized to be appropriated such sums as may be necessary to enable the Board to carry out its functions under this Act.

MISCELLANEOUS PROVISIONS

SEC. 10. (a) As used in this Act, the term "Government-owned surplus agricultural commodity" means agricultural commodities acquired by the Commodity Credit Corporation prior to the date of enactment of this Act through price-support operations or pledged to the Commodity Credit Corporation under agreements entered into prior to such date, and agricultural commodities acquired prior to such date through the use of funds made available under section 32 of the Act of August 24, 1935 (Public Law 320, Seventy-fourth Congress). (b) The Board shall take such action as may be necessary in order to make known to prospective applicants the availability of agricultural commodities and products for distribution under this Act.

(c) Agricultural commodities and products stored in accordance with section 5 (4), shall remain the sole property of the United States and subject to its exclusive control until distributed by the Board in accordance with a program promulgated under this Act. No commodities or products so stored shall be returned to the United States except in case of national emergency.

(d) The President is authorized to transfer to the Board any functions or duties of any other agency of the Government relating to the disposition of surplus Government-owned agricultural commodities.

(e) The Board shall transmit to the Congress annually a report of its activities under this Act.

SEC. 11. This Act shall expire on June 30, 1960.

The CHAIRMAN. We are glad to have with us Congressman Mahon. You may proceed, sir.

STATEMENT OF HON. GEORGE H. MAHON, A REPRESENTATIVE IN CONGRESS FROM THE 19TH CONGRESSIONAL DISTRICT OF THE STATE OF TEXAS

Mr. MAHON. Mr. Chairman, I am very grateful to you and the members of the committee for this opportunity of testifying before

you.

Like you, I have many ideas on farm surpluses, and other aspects of the farm program. You have already had exhaustive hearings. I should not impose on your time to discuss those ideas.

I come to discuss with you something that refers particularly to my own area, and to the cotton particularly.

My congressional district produces one-tenth of the cotton of the Nation and, naturally I have a very great interest in that aspect of the farm program.

The CHAIRMAN. Is that all of Texas?

Mr. MAHON. No, it is just

The CHAIRMAN. I thought the whole of Texas produced more than one-tenth of the cotton.

Mr. MAHON. The whole of Texas produces between 30 and 40 percent of the cotton produced but my district alone produces one-tenth of the national output in cotton.

So having that very special interest, I have been alarmed by some of the proposals which have been in the air here recently.

I would like to say in the beginning that here is a time when the representative in the Congress from the city, along with the man from the country, and the general public, are all saying, "Let us do something for the farmer."

I hope through legislation this year we can do something, not of a temporary makeshift nature, but something that will help us through the years, because the atmosphere may not be so nearly conducive to good legislation from the farmers' standpoint a year or 2 or 3 years from now.

So it does seem to me we ought to try to get something worthwhile at this time.

Why am I alarmed? The President in his agricultural message said that he wanted to change the support program, the basis for support on cotton from 8-inch staple to the average.

Well, the average staple length of cotton is 1 inch; with % as a basis on the 90 percent support on cotton you have one price but if you change that to 1 inch, it will reduce the support program for all cotton, for 1-inch cotton, for 7-inch cotton, all cotton.

According to the Chief of the Cotton Division of the Department of Agriculture, this recommendation of the President, which unfortunately is contained on page 3 of this proposed bill, before you would have reduced the price support on cotton in 1955, by $14 a bale, or $200 million.

According to the authorities of the Department of Agriculture, in 1956, if we should adopt this 1-inch provision which is proposed as a standard upon which you will base support programs and parity, if you adopt this 1-inch formula, you would reduce the support price of all cotton, generally speaking something over 3 cents a pound,

which would reduce the income of the cotton farmer by $259 million in 1956, assuming that we produce about 15 million bales.

Of course, we hope for a reduced program. I know that the only object, the prime object in a new farm program is to raise the income of the farmer. The proposal with respect to 8-inch cotton is a device for reducing the income of the cotton farmers of the Nation $200 million a year, which would be an intolerable situation.

Perhaps the heaviest cotton producing area in the United States is the district I represent and I come to voice that opinion because it is vitally significant and it would be hypocrisy for us to say, “We are trying to take care of the cotton farmer" and come up with a law which would reduce the income of the cotton farmer alone by a quarter billion dollars.

The CHAIRMAN. Could you state for the record where this cotton is produced that is under an inch?

Mr. MAHON. Yes; 25 percent normally of the cotton of the country is of less than 1-inch staple. My State of Texas produces about 80 percent of the cotton of less than 1-inch staple, but this gadget

The CHAIRMAN. Is that confined to your district?

Mr. MAHON. No, this is confined to the whole State. But this gadget would not only hurt my State, it would hurt Alabama; it would hurt Georgia; it would hurt Louisiana.

Your cotton farmer, under the proposals, Senator, in this bill, the suggested bill here I have only read 3 pages of it because it has not been available-would cut down the support program to your cotton farmers next year in excess of $17.30 a bale.

The CHAIRMAN. You mean assuming that we go back to the 90 percent rigid price supports?

Mr. MAHON. Assuming that, if you base it on 1 inch rather than seven-eighths inch, you will reduce the income of the farmer of 1 inch or in excess of 1 inch to the extent of $17 a bale.

The CHAIRMAN. Suppose that the law remains as it is, that is, the flexible price support from 75 to 90 percent for other cotton and instead of that you put 90 percent back in.

Mr. MAHON. On 1 inch?

The CHAIRMAN. On 1 inch and above.

Mr. MAHON. Yes?

The CHAIRMAN. Would it not be of more benefit to the farmer as a whole?

Mr. MAHON. No, no. If you put it on 1 inch and above, the 90 percent, you will still reduce that income approximately $17 per bale in

1956.

Senator THYE. Might I ask this one question? What would be the problem that your producer would be confronted with, if he had to go to producing an inch or better?

Mr. MAHON. That is a very good question.

We have a requirement for good lumber and bad lumber. For some fine piece of furniture you need a very high grade of lumber. To build a barn, you do not have such high grade.

If we are going to compete with synthetics we need the highest quality of cotton as well as the lower quality that will sell for less.

Senator THYE. However, your short staple is the greatest problem today and your long staple is in the more favorable situation, as I understand it?

Mr. MAHON. Yes, it is, slightly.

Senator THYE. And, therefore, what would be your problem of trying to get into compliance with your producing more of your long staple? I do not know. I am not in the cotton areas.

Mr. MAHON. I think I can clarify that. Seventy-five percent of all cotton is now 1 inch or above. So it is perfectly clear from that, that our problem in cotton is not brought about primarily by the shortstaple cotton.

Of the short-staple cotton seven-eighths inch and lower, only 8.6 percent is in that class. Short-staple cotton has not brought on this condition.

It is true that in the overall cotton production, slightly more of the short-staple is in the loan than is in the entire carryover. There is some problem there.

But to force everybody to produce 1-inch staple would not give industry the variety in price and in quality that industry is using, if you get my point, compete with the synthetics, shall I say.

Senator JOHNSTON. Is it not true that the staple that is below 1 inch is the staple that we are having trouble disposing of at the present time?

Mr. MAHON. We have at least 5 million bales of surplus cotton of 1-inch staple in the loan now, because only one-fourth of cotton produced in the first place was short-staple.

Senator JOHNSTON. To prove that is so you not only have onefourth or 25 percent today in the loan, but you have 38 percent of the cotton that is in the loan at the present time, you will find also, below 1-inch staple.

Mr. MAHON. I have not checked that figure.

Senator JOHNSTON. Let us see what the reason for that is: Is it not true that the staple that is longer makes a very much stronger fiber when you weave it into cloth, so the mills are desirous of getting a long-staple; is that not right?

Mr. MAHON. Yes; but if all cotton is long staple, then the longstaple producer is forced into a more competitive position and this sort of thing in the law, in my opinion, would hurt both the short- and long-staple producers of cotton, if you get what I mean.

Senator JOHNSON. The long staple is worth more and sells for more, but there also would be a difference, too, when it sells for more and is worth more, there ought to be some difference in what the Government puts on it, also, do you not think?

Mr. MAHON. I think there ought to be some difference and there is a difference. These differentials-in other words, it is not being advocated that you lend 35 cents a pound on shortest staple cotton. The support price of 90 percent of parity and the price in the market place is subject to these variations of grade and staple prices.

If you take short-staple cotton to the loan or to the cotton buyer, you get less for it. We already have that taken care of.

And to put a support price of 90 percent on 1 inch and above, and have, say, 75 percent on 1 inch or below, well, you would have to have another referendum, or should, for the people who get 75 percent of parity to determine whether they would want to go into a quota program. Otherwise, they would be discriminated against.

The point is that in the market now there is a wide variation of price and, of course, short-staple cotton is not worth as much as long-staple

cotton even though they are both supported at 90 percent of parity. That is the point I make.

The thing that alarms me greatly is that our area has a short grow, ing season and we cannot, by reason of this short growing seasonthe experts in their industry and in the Department of Agriculture agree that we cannot produce successfully the 1-inch staple, it is not a matter of choice. We have increased along with the rest of the Nation the length of our fiber. We cannot produce the 1-inch satisfactorily.

By irrigation we can often produce the 1 inch but it is often of poor quality. It is often not as valuable to the spinning mills because it does not have the quality and character that you need in the cotton.

My point is this: In the first place you hurt all cotton farmers if you go to 1 inch. I think that is crystal clear. You reduce it about $17 a bale.

In the second place, if you go to variable parity, say, 90 percent on 1 inch and less than 90 on the rest, you strike a body blow at the producers of the shorter staple cotton. And the shorter staple, since it is cheaper, is more able to compete with the synthetic fiber. It does have a use in many, many ways.

My point is, let us treat everybody alike and let the natural differential take care of the variations.

Senator JOHNSON. Is there any way for you to plant a different variety of cotton and get a long staple?

Mr. MAHON. That is our problem.

Senator THYE. Why can you not do that?

Mr. MAHON. Because when a tree grows it makes rings.

Senator THYE. We are talking about cotton now.

Mr. MAHON. A fiber of cotton is somewhat like the stalk of a tree, with the rings indicating growth, and cellulose is deposited on this fiber of cotton, and it takes time to make those deposits there.

If you do not have the time, if you have the colder nights in August and the shorter growing season you cannot produce the staple length along with the quality of cotton that you otherwise would produce. Senator THYE. What is your poundage? Does that short-staple produce compare in poundage to the long-staple?

Mr. MAHON. Well, yes.

Senator THYE. Per acre?

Mr. MAHON. There are many varieties of cotton. Some varieties produce a little longer staple. Some produce more per acre.

Senator THYE. I realize that, but can you in an area where you are most apt to have the short-staple cotton get as large poundage per acre on that short-staple as you can on the long-staple?

Mr. MAHON. We probably can get in many cases a larger poundage per acre on the shorter staple because it is more adapted to the climate and to the area.

Senator THYE. But only in this area, not necessarily in another area where the long-staple is more commonly grown?

Mr. MAHON. The long-staple can be grown where the growing season is longer, of course.

Senator THYE. What about moisture?

Mr. MAHON. Well, moisture has a great deal to do with it; drought is another reason.

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