SURPLUS REDUCTION AND SOIL BANK ACT OF 1956 A BILL To provide for the orderly liquidation of Government-owned surplus stocks of agricultural commodities, prevent the wasteful use of the Nation's soil fertility, and help to provide a balanced flow of agricultural commodities in interstate and foreign commerce and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Surplus Reduction and Soil Bank Act of 1956." DECLARATION OF POLICY SEC. 2. It is hereby declared to be the policy of Congress to encourage the orderly liquidation of Government-owned surplus stocks of agricultural commodities; to lessen the depressing effect of such stocks on farm prices and farm income; to encourage the elimination of wasteful production of agricultural commodities; to minimize the adverse effects of diverting production from Grovernment price-supported crops to the production of other commodities; to assist in the marketing of agricultural commodities for domestic consumption and export; to provide for a privately owned "bank" of fertile cropland devoted to soil-building crops and reforestations and, to assist producers and consumers by helping to provide a balanced flow of commodities in interstate and foreign commerce. SEC. 3. (a) The Secretary of Agriculture, hereinafter referred to as the "Secretary," is authorized and directed to enter into agreements with producers of agricultural commodities who are eligible for price support whereby such producers will agree, prior to a date to be established by the Secretary, to assist in bringing about a more rapid adjustment of the production of such commodities to the demand therefor, by underplanting any acreage allotments applicable to such commodities for one or more years, and by withholding such underplanted acreage of cropland, as defined by the Secretary, from production for the same period or periods of time. Such underplanted acreage shall be devoted to soil-conserving crops or practices designated by the Secretary for the area in which the land is situated. Such producers shall also be eligible for payments and grants for carrying out approved soil-building and soil- and water-conserving practices on such underplanted acres. (b) Notwithstanding any other provision of law, the Secretary is authorized and directed to protect, for the period of years covered by the agreements entered into pursuant to section 3 (a) hereof the base histories applicable to the allotments of acreage pursuant to the Agricultural Adjustment Act of 1938, as amended, and the Agricultural Act of 1949, as amended, of those producers who cooperate with the Secretary in carrying out the performance of such agreement relating to the underplanting of such allotments. (c) In further ocnsideration for underplanting, as provided for in such agreements, the Secretary is authorized and directed to make soil-bank payments to such producers based primarily upon the productive value of the land. Such payments shall be made through the use of surplus stocks of commodities owned or controlled by the Commodity Credit Corporation, hereinafter referred to as the "Corporation" in accordance with the provisions of Section 6 hereof at such rates as are estimated by the Secretary to be sufficient to encourage participation adequate to bring such surplus stocks down to a normal carryover as soon as practical and insofar as possible within five years from the date of enactment of this Act. The rates of payment offered under this section shall be graduated to encourage producers to underplant for more than one year. (d) Notwithstanding any other provision of law any acreage underplanted to qualify for a payment under this Act shall not be available for release and reapportionment to any other producer. SEC. 4. The Secretary is further authorized and directed to offer to producers additional opportunities to assist in balancing production of such commodities with demand therefor by entering into agreements to withhold an acreage of cropland from the production of agricultural commodities for periods of not less than three years in return for payments based primarily on the productive value of such cropland. Producers shall be given a choice of participating in any one of any alternative proposals for their particular area. Such alternative proposals adaptable to specified areas shal be formulated by the Secretary, taking into account such factors as (a) quality of the various types of land in the area, (b) suitability of the land for continuous cultivation, (c) suitability of the land for reforestation, (d) necessity for wind or water erosion controlled in the area, and (e) the period of years for which it is practical to continuously devote representa tive land in such area to a particular use. In the development of these alternative proposals rates of payment shall be varied in such a manner as to encourage adequate participation within areas for the representative types of practices that should be performed in such areas. Payments may be made from funds expressly appropriated for such purpose; however, to the maximum extent practical, the Secretary shall first utilize reasonable quantities of surplus commodities from the Corporation's stocks by offering such stocks to producers on terms which will encourage the acceptance of such payments in lieu of payments from appropriated funds. Such withheld acreage must be devoted to such soil-conserving uses as are designated by the Secretary for the area in which the land is situated. Payments for conservation practices under the agricultural-conservation program carried out by the Secretary pursuant to the Soil Conservation and Domestic Allotment Act, approved February 29, 1936, as amended, may also be made for the first year in which such approved practices are performed on such acreage. In unusual cases, payments may be made for additional years, in accordance with regulations to be prescribed by the Secretary. SEC. 5. Notwithstanding any other provision of law, the Secretary is authorized and directed to dispose of any commodities owned or controlled by the Corporation to domestic producers of agricultural commodities at such prices as in his discretion will aid in carrying out the purpose of this act: Provided, That release of stocks into domestic markets in any one year shall be limited to such quantities as the Secretary determines to be a reasonable estimate of what would have been produced for marketing during such marketing year on the acreage withheld from production under the provisions of this Act. Such sales shall be made at such times, in such manner and such quantities as will minimize any adverse effect of such sales upon market prices. SEC. 6. The utilization of the Corporation's stocks of commodities for payments may, in the discretion of the Secretary, be by means of (a) negotiable options for cooperating producers to buy Corporation stocks at a price to be determined at the discretion of the Secretary, (b) negotiable certificates conferring upon a cooperating producer or his assignee the right to acquire a certain quantity of the Corporation's stocks within a defined area within a certain time, (c) negotiable drafts drawn on the Corporation for redemption from funds to be obtained by the Corporation through the sale of surplus stocks of commodities released under the authority of this Act, or (d) other similar procedures: Provided, That cooperating producers shall be compensated only from stocks of commodities, the production of which are being reduced by such producer under the provisions of this Act, except that feed grains, including wheat for feed, shall be interchangeable. However, this is not intended to preclude the Secretary from fulfilling any obligation of the Government to carry out any agreement entered into in good faith pursuant to the other provisions of this Act. Commodities delivered to a producer or his assignee or otherwise released pursuant to this Act shall not be eligible for a commodity loan or other pice support authorized by law. SEC. 7. Any payments authorized herein shall be subject to a determination under regulations issued by the Secretary that the rights of tenants have been equitably protected and that a reasonable division of payments has been agreed to between the parties in interest. SEC. 8. In establishing rates of payment, the Secretary shall make allowance for the fact that the withholding of acreage from production for a considerable number of years probably will make a greater contribution to bringing supplies into line with demand than will a withholding for a fewer number of years, and particularly for a single year. SEC. 9. The Secretary is authorized and directed to make payments to cooperating producers from funds which are hereby authorized to be appropriated, provided such producers are within any acreage allotment issued pursuant to the provisions of the Agricultural Adjustment Act of 1938, as amended; provided further such appropriated funds shall not be available for payments for underplanting acreage allotments, except that appropriated funds may be used for such purpose to fulfill obligations entered into in contemplation of payment being made from the release of stocks and such stocks have been exhausted in advance of the time anticipated. The authorization for expenditure of funds hereunder shall terminate at such time as Corporation stocks of surplus commodities plus stocks held by private owners have been reduced to a normal supply as presently defined by law. SEC. 10. Establish rights of owners or operators to control entry on land withheld from production under this Act shall not be disturbed except that the Secretary or his duly authorized agent at reasonable times and under reasonable circumstances shall have the right of entry to check compliance with agreements entered into pursuant to this Act. SEC. 11. (a) Notwithstanding any other provision of law, corn acreage allotments shall be suspended for 1956. (b) Not later than December 15, 1956 producers of corn in the commercial corn area shall be given an opportunity through a referendum to be conducted by the Secretary to determine by a majority vote whether acreage allotments and price supports as presently required by law shall be reinstated in 1957 and subsequent years, or whether acreage allotments shall be terminated and provisions made for establishing price support at such a level as to assist farmers in marketing corn in the normal channels of trade but not encourage the uneconomic production of corn. SEC. 12. Notwithstanding any other provision of law, the Secretary shall require as a condition of eligibility for price support on any agricultural commodity that the producer agree to devote to soil-conserving crops or practices for a period of not less than one full production year, an average of cropland normally devoted to soil-depleting crops to be determined by the Secretary, without additional compensation other than payments for conservation practices under the agricultural conservation program carried out pursuant to the Soil Conservation and Domestic Allotment Act, approved February 29, 1936, as amended: Provided, That this requirement shall not be applied to any crop as a condition for eligibility for price support in any year which marketing quotas are in effect on such a crop as the result of a referendum conducted prior to the enactment of this Act: Provided further, That a producer shall be eligible for soilbank payments under Section 4 on any acreage that he agrees to devote to soilconserving crops or practices for three or more years. The amount of cropland to be devoted to soil-conserving crops or practices under this section shall be 'determined by applying a percentage factor to the total acreage of cropland being planted to price-supported crops for harvest during the marketing years for which eligibility for price support is being determined. In calculating the total acreage of cropland being devoted to price-supported crops in 1956, there shall be deducted the acreage planted to price-supported crops under marketing quotas and other acreage devoted to price-supported crops seeded prior to enactment of this Act. The percentage factor shall in no event be in excess of 15 per centum of the acreage of cropland being devoted to price-supported crops. The Secretary is authorized to make agricultural conservation payments for approved conservation practices performed on land removed from production for market under this section. Except as the Secretary may otherwise provide by regulation, no producer shall be eligible for any payment under this Act if the acreage of cropland devoted to price-supported crops on any farm controlled by such producer is increased to an acreage greater than the average devoted to such crops in the immediately preceding five years (considering normal rotation practices). SEC. 13. No harvesting or grazing shall be permitted on acreage withheld from production under Section 3, 4, or 12 of this Act. The Secretary shall issue regulations providing for the disposition of any forage standing on such land at the expiration of the period for which it is withheld from production. SEC. 14. The Secretary is authorized and directed to issue regulations for the determination of the productive value of land giving adequate weight to actual production records of the owner or operator which can be objectively substantiated and such other standards as may be reasonable under the circumstances. SEC. 15. The producer shall agree to forfeit all rights to further payments under agreements entered into in accordance with this Act and to refund to the United States all payments received thereunder upon his violation of any agreement at any stage during the time he has control of the farm. Whenever the Secretary of Agriculture has reason to believe there has been a willful violation of a material provision of the agreement, he shall give the producer notice thereof and within thirty days from such notice the producer shall be given an opportunity to show cause why the agreement should not be modified or terminated and his rights to further payments under the agreement forfeited and any payments made thereunder refunded to the United States and a final determination regarding such violation shall be made under rules prescribed by the Secretary: Provided, That whenever the producer feels aggrieved, he may appeal such determination to the United States district court for a determination of the facts in the case and judicial relief with respect thereto. The CHAIRMAN. Now, Mr. Shuman, in connection with the payments on the soil bank proposal, if you recall, sometime ago we asked of you and other leaders of farm organizations, to make a determination, if you could, of the amount that should be paid on these acres, particularly the allotted acres. I presume that you would make a difference in the payment of those acres that would be taken from the allotted acres, and, as far as the acres that are set aside for conservation purposes, I presume you would have a separate yardstick to deal with them. Am I right in that? Mr. SHUMAN. We would suggest-I believe we have written into this act. The CHAIRMAN. But can you tell us in a nutshell Mr. SHUMAN. We have not written into our act any proposed rates of payment, but we do recognize the fact that there is a variation in productive value of land and we would vary the rate of payment in accordance with the productive value of the land. The CHAIRMAN. Do you spell out a method by which that could be done by the act? Mr. WOOLLEY. Yes. Mr. SHUMAN. Yes. Let me see if I can find the section. The CHAIRMAN. Would it be left to the discretion of the Secretary or whoever administers the act? Mr. WOOLLEY. Yes. Mr. SHUMAN. Within certain boundaries. What section is that? The CHAIRMAN. Will both of you give your names in full for the record. Mr. WOOLLEY. Frank K. Woolley, legislative counsel. The CHAIRMAN. All right. You are Mr. SHUMAN. It is necessary, Senator, on some of these questions involving what we have in this act that I have some assistance. The CHAIRMAN. You are like all of those bureaucrats. always accompanied by a bunch of people to testify with you. [Laughter.] Mr. WOOLLEY. The provision of this bill, Senator— Senator YOUNG. No. Mr. WOOLLEY. The provision of the bill, as drafted, is section 8. All that we do there is make a general instruction to the Secretary that in establishing rates of payment the Secretary shall make allowance for the fact that the withholding of acreage from production for a considerable number of years probably will make a greater contribution to bringing supplies into line with demand than will a withholding for a fewer number of years, and particularly for a single year. We also indicate in another place that the rates of payment should be varied so that they would induce the producer who underplants his allotment to put the acreage in the soil bank for a number of years rather than for a single year. The CHAIRMAN. That inducement would have to be fairly right. would it not? Mr. WOOLLEY. The spread between the rates would have to be wide. The rates would have to be varied by the Secretary of Agriculture and we do not know of any way that you could write into a general piece of legislation instructions to the Secretary that would be applicable throughout the country as a whole. It was our thought that it would have to be done on the basis of administrative regulation and would have to be varied from year to year in accordance with the circumstances that obtained throughout the country. It would have to be done with the advice and counsel of a lot of people from local areas. The CHAIRMAN. Mr. Woolley, I presume you are familiar with the yardstick spelled out in that bill? Mr. WOOLLEY. Yes, sir. The CHAIRMAN. Let us take as an example a farmer in Georgia who has allotted acres for cotton, say, of 100. And suppose a plan were devised whereby he would agree to set aside 20 acres of those 100 acres. What inducement would you offer him to perform? Mr. WOOLLEY. With respect to The CHAIRMAN. Use your yardstick there and use Georgia. Let us not make it a part of California. You are familiar with Georgia, are you not? Or take any other State with which you are familiar. Mr. WOOLLEY. Well, I have been in Georgia, California, and also Louisiana. I would be happy to take Louisiana. The CHAIRMAN. All right, take Louisiana, the best of them all. The CHAIRMAN. What I had in mind was, let us try to be specific. Let us try to pin it down as to what you would as an administrator do to carry out the provisions of the proposed legislation that you are submitting to us. Mr. WOOLLEY. May I inquire to be sure I have your example? You wanted to start out with a 100-acre cotton allotment? The CHAIRMAN. Allotted acres, now. Mr. WOOLLEY. He has an allotment of 100 acres? The CHAIRMAN. He has an allotment of 100 acres. Now, you come to him and say, "Listen, Mr. Ellender, we would like you to take 20 acres out of that. We have got a lot of cotton on hand." All right. Mr. Ellender might say, "Now, what is your inducement, Mr. Wooley?" So what would you do to cause me to do that? Mr. WOOLLEY. Two inducements: No. 1, in order to be eligible for price support on that 100 acres of cotton, he would have to agree to set aside a certain percentage of his total acreage of cropland devoted to price-supported crops, among which would be his 100 acres of cotton. The CHAIRMAN. Do you tie in the allotted acres with those that are set aside for conservation? Mr. WOOLLEY. All acreage that is devoted to price-supported crops. would be the basis from which we would begin to calculate. The CHAIRMAN. So you would tie in both the allotted acres as well as any other acres that you devote to supported prices? Mr. WOOLLEY. That is right. And he would have to set aside that acreage or he would not be eligible for price supports. That is the first incentive. Senator YOUNG. What would you do about dairy commodities? Would you tie in the cows, too? Mr. WOOLLEY. Indirectly, you would tie in the cows, in that if someone is on a dairy farm and wants to have price supports on any |