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Senator THYE. In an irrigated area the long-staple is not a problem.
Mr. Mahon. In one-fourth of my district we could not during the dry years produce one-tenth of the cotton crop of the Nation unless we had irrigation. We have it, but even with irrigation with the short growing season the experts from Beltsville and in the Department of Agriculture, I would like for you to get that before you—they will invariably say, “You cannot successfully produce the long-staple ootton, the 1-inch-staple cotton.”
Senator THYE. What geographical area is the long-staple most adaptable to-Louisiana, Mississippi, Georgia, Florida?
Mr. Mahon. I would say in California and Arizona, they adapt perfectly. They have the long growing season. They have the water when needed. It is simple to produce the longer staple. That is one of the reasons.
Senator Thys. Can you not do that down in the Rio Grande Valley?
Mr. Marox. Yes; you can do it there. You can produce it there but I am 600 miles north of the Rio Grande Valley.
Senator THYE. I am trying to legislate for your congressional district, I am afraid.
Mr. Mahon. I am trying to legislate for all cotton in opposing going to the 1 inch, if you get my point, and then I am insisting that it would be an unjustified discrimination to place a support level of, say, 90 percent on 1 inch and less than 90 percent on the other.
Senator Young. How much price differential is there in the present program between the long-staple and short-staple cotton under our program?
Mr. Mahon. On seven-eighths-inch cotton, the support program on seven-eighths-inch cotton is about 31 cents middling.
Senator HOLLAND. What percentage?
Mr. Mahon. And about 3 cents more per pound or $15 a bale more for 1-inch cotton.
We already take a $15 per bale reduction, because of the short staple, but
Senator HOLLAND. What percentage-
Senator HOLLAND. What percentage of parity is the support price for your seven-eighths inch? Mr. Manox. The percentage of parity now if it is merchantable
and eligible for the loan is 90 percent; it was last year on all cotton. That is where we think it ought to me maintained. If it is not eligible, if it is not marketable, not spinnable that is a different situation.
We are talking about quality cotton.
Senator HUMPHREY. I think this is very helpful, clarifying testimony. What you are trying to say to us who have limited information is that a 90 percent price-support crop loan on 1-inch staple is at a higher cash-loan price than 90-percent price-support loan on seveneighths. Mr. MAHON. That is right.
Senator HUMPHREY. So there is already a price differential based on grade.
Mr. MAHON. Yes; there is already a penalty for producing a short staple. I do not argue with that.
Senator HUMPHREY. Getting that straight, in other words, the layman now knows that 90 percent price-support crop loan on cotton does
not yield the same amount of dollars on 7-inch cotton as it does on 1 inch. Is that clear for the record ?
Mr. Mahon. That is right.
Senator HUMPHREY. Now, we get down to this: how do you figure, as you say in your statement, that if the proposal in this draft bill before us went into effect, that it would reduce further your income per bale. I think you said something like $17 a bale.
Mr. Mahon. That is right.
Senator HUMPHREY. Explain that to a fellow that does not know very much about cotton.
Mr. Mahon. If you fix the standard on seven-eighths inch, then you go up and down from there and seven-eighths is your norm. It is now your standard. That is where you get the optimum price at seven-eighths.
But if you raise that optimum price to 1 inch, then the 1-inch cotton does not get the advantage which it now has. The 1-inch cotton now brings 3 cents more than seven-eighths inch, but if you bring the one down to seven-eighths and make it the standard, then you have lost $17 a bale.
Senator HUMPHREY. Does it get 3 cents more on the basis of a crop loan or market price?
Mr. MAHON. By reason of the fact that the loan is based on seveneighths the 1-inch gets more in support.
Senator HUMPHREY. In a crop loan that is the only way the support works on cotton, is it not?
Mr. MAHON. That is right.
Under date of January 13, the top man in the Department of Agriculture on cotton, Mr. Rhode explains it this way:
If the 1955 loan had reflected 90 percent for milling 1 inch, instead of milling seven-eighths, and assuming the same schedules of premiums and discounts had been used, it would have had the effect of reducing the loan rate on each quality of cotton by 2.8 per pound.
Do you see my point? This may seem a little complicated but there is no doubt about it that it is a fact.
And he goes on to say that next year by reason of these differentials that are reflected in the designated cotton markets, the reduction in support would be 3.46 cents per pound.
If you want to reduce the price of all cotton, we would put in this provision now contained in the suggested bill before you, "Middling 1 inch shall be the standard grade for the purposes of parity and support."
That is the way to bring it down, to reduce the income of the cotton farmer by $260 million.
The CHAIRMAN. I wonder if you have these figures available. Suppose during 1955 that instead of 90 percent of parity you had an effective rate of 75 percent—what difference would it make?
Mr. MAHON. I do not have the figures. That would have reduced the price by perhaps $200 million, that is, the income of the farmers.
The CHAIRMAN. But only as to the cotton that is under an inch?
Mr. Mahon. Oh, no. I am sorry, Senator. It would have reduced the price of the longest staple along with the shortest staple.
The CHAIRMAN. I see that but the question I would like answered is, assuming that the present production, that is, the 1955 production had
been at 75 percent of parity, instead of 90 percent, what would have been the difference in the income of the farmer!
Mr. MAHON. Well, a bale of cotton, say, worth $150, you reduce it by 10 or 12 percent, you take off that, it would be about $15 per bale less. In other words, that would hurt the cotton farmer just about like the. 1-inch proposal will hurt if we place it in operation in 1956, in my judgment.
In other words, if you put the parity support at 75 percent, and then you put the standard at 1 inch, you would just really take the shirt off the cotton farmer and his trousers, too, if they were made of cotton.
Senator HUMPHREY. Even the synthetic shirt ?
I think Secretary Benson toyed with the idea of giving a higher price support, that is, percentagewise.
Senator JOHNSTOŅ. For 1 inch?
Mr. MAHON. And above. I think he toyed with that idea and I think last fall he said, “Well, I might relent in my opposition on 90 percent of parity for special premium production," or words to that effect, but I would like to read this from this letter, from the Department.
That has apparently been abandoned. That idea has been abanboned as impractical and it is impractical. If you should make the difference, the disparity so great between short and the long staplesgrading cotton is guesswork, anyway, and they almost have open war over the grades that the farmer gets, and if you would make it so serious that there would be, say, $30 or $40 difference in the price of a bale of cotton, depending upon judgment as to the staple length, you would have a program that would be most difficult to administer, and the farmer would utterly rebel unless you had mechanical devices and more than what we now have—the educated guess of the cotton classer-we would have havoc in trying to administer such a program.
I think that is one reason why the Department has abandoned the idea. I will quote from this letter:
In response to the question regarding the placing of different qualities of cotton on different percentages of parity levels, we have no knowledge of any consideration being given to this scheme.
As a matter of fact, it does not appear to be practical to do this since the value of the various qualities of cotton have fairly well defined relationships to each other.
That was what you would bring out. There is no attempt here to get the same price for seven-eighths inch or fifteen-sixteenths as you would get for 1 inch. Those things are already taken care of and they vary from year to year.
The CHAIRMAN. Congressman Mahon, you were here this morning when I said that this was not a committee bill.
Mr. MAHON. Yes, sure.
Mr. MAHON. I think it is commendable to introduce something that we can look at.
Mr. CHAIRMAN. It was not even introduced. It is just before the committee.
Mr. Mahon. I understand that this does not represent, necessarily, the view of anybody. It is just a composite of ideas.
The CHAIRMAN. Composite of ideas based on the hearings we held last fall.
Mr. Mahon. I do not believe you could get many farmers in Louisiana, Mississippi, Texas, or California to advocate going to the 1-inch basis when it will cost them $17 a bale. That is wholly unrealistic. I do not know of one farmer who wants to do that who understands the implications of the proposal. Of course some farmers and others feel that a lower price on cotton should be established to aid in competing with synthetics and in an effort to secure better foreign markets.
It is a way to reduce farm income and we are trying to improve farm income.
The CHAIRMAN. Thank you very much. Mr. Mahon. Thank you very much. I am very grateful to you. The CHAIRMAN. Senator Neuberger is the next witness. Senator THYE. Might I inquire what will be the schedule for this afternoon?
The CHAIRMAN. Senator Neuberger is the next witness. We will then go over until tomorrow.
There were some Senators who cannot be here this morning. I will suggest that they file statements. We set aside this day to hear Congressmen and Senators.
STATEMENT OF HON. RICHARD L. NEUBERGER, A UNITED STATES
SENATOR FROM THE STATE OF OREGON
Senator NEUBERGER. Mr. Chairman and members of the committee, I know that time is of the essence and I will not waste it. I would like to thank you for the courtesy of allowing me to meet with you today and for allowing Senator Morse and myself to sit with you in Oregon.
I have a statement that I will give to the committee. I would like to highlight it very briefly to emphasize a few of the things that I found in my site, a very important agricultural State, when I was out there for 412 months and visited every single part of the State.
My State is unusual in one way, from the standpoint of its farming economy, for this reason, Mr. Chairman: East of the mountains we have mainly wheat, which is a supported commodity; west of the mountains we have largely small diversified farmers, family-sized farms.
Two facts were impressed up on me. One was the fact that the producers of supported commodities have suffered a great deal under the policies that have been adopted by the present administration. But the greater irony was the fact that there are thousands of farmers in this country that are outside virtually all agricultural programs.
I talked to people who raised prunes and cabbages and pullets and eggs, and those people are in great distress. I checked when I returned to Washington, and I found that in many respects the prices received for their commodities have had a greater percentage drop in the past 3 years than those under so-called supports. And yet those people are receiving virtually nothing.
And I should like to emphasize one thing that I feel quite strongly: We have reached a crisis in our agricultural program. There is no doubt about that.
It seems to me that while this is a time of good deal of anxiety among the farm population and among the leaders in the Nation,
such as members of this committee, it also is an opportunity for the Congress to experiment with three different types of agricultural programs.
It is my opinion that any man in political life who poses as having one remedy for agriculture is just as fallacious as the doctor who would say that he has one remedy for the human body whether a drug or a type of surgery or any other type of therapy.
I think that the various crops, the various geographical locations, require a good many different types of programs. I would say, from my talks with hundreds of farmers, that there are three different things that might be considered by this distinguished committee.
First is the soil-bank proposal. That has been emphasized by the President in his message, and I will not go into that any further.
Second is some form of the domestic parity program, the two-price program, if you want to call it that, which was involved in the old McNary-Haugen bill, vetoed twice in the 1920's by the President of the United States, principally for wheat, perhaps for cotton and rice. This
program would guarantee farmers a fixed ratio of parity on some predetermined share of the domestic market for their product.
Third, some form of the Brannan plan or anything else along those lines.
I should like to say this, Mr. Chairman, that I am not afraid to use the term “Brannan plan," even though it has been heavily attacked, because I found that a good many words are being eaten at the present time so far as agricultural policy is concerned.
I was interested to note in the President's message that, in referring to the acreage reserve program, he used the term that it should include wheat already seeded if it is incorporated with the soil."
Whoever devised that term, "incorporated with the soil,” has my admiration as a writer. He has an imagination worthy of the author of Space Cadets, because, as everybody around this table knows, the term “incorporated with the soil” is just a way of saying "plowing crops under,” but not using that phrase because it has aroused political emotions for so many years.
My feeling about the general agricultural program is that you can call it a subsidy--sure, it is a subsidy. I found this in the relative brief time I have been a Senator: If you like something the Government does, it is a service; and if you do not like it, it is a subsidy. If one does not like the public school system, that is a subsidy to children.
I think our farmers need some help. My concern so far as my own State is concerned is this: I do think the domestic parity plan deserves a trial for wheat. I do not belabor that, because you gentlemen have heard testimony at great length to that effect.
I do think that we need some form of direct aid for many small farmers in diversified agriculture. I cannot tell you how many people I talked to who raise prunes, for example, or who raised cabbages. Mrs. Neuberger's family are small diversified farmers. They have some row crops, some cattle, a little bit of corn. They have an orchard. We know a lot of people in that farming community, and we talked to those people a great deal. They are outside of all of the programs.
I think that beyond the soil bank, beyond the support for these basics, we need something for these people whom I have mentioned.