5. Domestic consumers have benefited pricewise from the operation of the Sugar Act and domestic sugar production. For example, I should like to point out that whereas sugar cost 13.5 cents per pound in 1870, we consumers paid only 8 cents per pound in 1953. Relative to other food prices, sugar prices have risen less since 1940. According to the Bureau of Labor Statistics wholesale price index, the combined 1952 price of all food was 254 percent of the 1940 prices; sugar by comparison was only 195 percent of the price prevailing in 1940. Now, Mr. Chairman, I should like to take a minute or two and point out the importance an expanded domestic sugar-beet industry has to western agriculture. As you know, one of the major problems which has served to help pile up the burdensome $7 billion surpluses, which the Commodity Credit Corporation now has on hand, is that a great many farmers lack substantial diversified production opportunities. They continue to produce the same crop regardless of the price received, regardless of supplies already on hand, and regardless of what it does in the way of “ruining" our soil reserves.

In western agriculture, Mr. Chairman, the growing of sugar beets is important in maintaining diversified or rotation farming. This is so because:

1. Sugar beets return everything they take from the soil. They serve to promote soil equilibrium when grown in rotation with hay, grains, and legumes. The extensive root system often reaches 6 or 8 feet deep and, of course, when the beets are dug the bulk of their root system-a ton per acre it is estimated— is left to rebuild the soil resources.

2. As you know, the major agricultural industry of the intermountain area is livestock production. In Utah, farmers derived in 1954 some 70 percent of their income from that source, compared to a national average of 55 percent. The byproducts of beet sugar-"tops", molasses, and pulp-provide a rich and very necessary source of supplemental feed for livestock in an area generally considered to be a deficit feed area. Experiments carried out at our western State experiment stations show that the byproducts from 1 acre of beets, if properly fed, will produce 300 pounds of meat.

I should like to point out, Mr. Chairman, in this connection that per capita beef consumption has increased some 24 pounds since 1950.

The Department of Agriculture estimates that by 1960 we will need 2 billion more pounds of meat each year if our projected population requirements are to be met. This will require more feeder livestock for finishing in the Midwest and on the west coast. As you know, the bulk of cattle in our area is not slaughter cattle. Rather the great ranges of our mountains and desert areas primarily produce feeder cattle. But in order to build larger breeding herds to meet future needs, more feed is going to be required, especially for winter feeding. It is in this respect that the byproducts of sugar beets-tops, pulp, and molasses-play such an important role. Greater amounts will be needed

in the future and this requires obviously a larger acreage allotment for the production of domestic sugar beets.

I should like to point out also that the bulk of the grains, legumes, and hay produced in rotation with sugar beets in the Western States are likewise fed to livestock. They do not find their way to Government warehouses in any appreciable quantity.

The present Sugar Act quota provisions, however, Mr. Chairman, restrict the domestic beet area's production to only 1,800,000 short tons, raw value, based upon an annual estimated need of 8 million short tons, raw value. This domestic production was restricted even though the actual distribution required to meet our needs actually exceeded this statutory estimate of 8 million tons in 1952, 1953, 1954, and 1955, respectively, by 104,000 tons. Unless this quota is adjusted upward-and I am of the opinion that the Bennett amendment to H. R. 7030 is a start in the right direction-the following adverse effects upon western agriculture and the Nation as a whole will readily become more apparent :

1. Decline in farm income, a matter I want to discuss further in a moment. 2. Less, not more, diversified agriculture, with continued loss of flexibility in planting alternatives, and less opportunity for farmers to take advantage of more favorable prices.

3. Continued deterioration of our soil and water resources at the very time when all of us are interested in maintaining soil fertility for future use. 4. Adverse effect upon livestock production for future projected needs. The present law, then, Mr. Chairman, serves to deny domestic beet and cane producers an opportunity to expand, to grow, and to develop. This restriction upon acreage in the beet areas, coupled with techniological progress in beet farming, has served to work real hardships on farmers at a time when every

sector of the economy except agriculture is enjoying unprecedented prosperity and economic growth.

New seed strains, use of fertilizers, better methods of cultivation resulted in an increased yield per acre from 13.6 tons in 1948 to 16.0 tons in 1954. Expressed another way, the average yield, raw value, per planted acre for the 3 years ending in 1950, was 1.92 tons. For the 3-year period ending in 1954, that yield per planted acre increased to 2.2 tons-a 15-percent gain. The effect of technological development for output is easy to see. For example, the acreage of sugar beets in 1954 was 878,000 acres, yet the production was 1,998,000 short tons, raw value-198,000 short tons in excess of its quota.

This has necessitated a decrease in the acreage allotment required to meet the domestic beet areas quota of 180,000 tons raw value. For example, the beet acreage in 1954 was 944,000 acres and for 1955 it was set at 850,000 acres—a 10percent decrease.

Because of acreage restrictions, two adverse situations have resulted:

1. Acreage released from sugar beet production have been diverted to the production of other crops, many of which were already in surplus and were under price support during a period which saw the parity ratio fall from 92 percent in December 1953, to 80 in December 1955.

2. Large numbers of farmers have simply had to stop producing beets because their allotments are so small that it is not economical to produce them. Labor costs are too high if the beets must be hoed, thinned, and topped by hand, and it doesn't pay to buy expensive mechanical equipment to do these jobs unless it can be applied to the optimum-sized land area which can reduce per unit costs of output to the lowest possible point.

Yet, on the other hand, acreage restrictions and low prices for other alternative crops has created a great demand by farmers for an adequate "proportionate share" of the domestic sugar beet quota.

When farmers have alternative crop production alternatives, farmers choices are largely determined, other things being equal (resources, know-how, etc.) by the price relationship between these various alternatives. When one examines these relationships in terms of the farm price as a percentage of the parity price, it is not too difficult to see why farmers in our domestic beet areas are demanding, and I believe rightly so, an opportunity to grow beets.

For example, while the price of sugar for the year 1948-54 has averaged 93 percent of parity as of November 1955, the price of sugar stood at 98 percent of parity. Compare this with the parity prices of other crops grown in rotation with sugar beets:

1. Barley Parity price has declined from 81 to 69 percent of parity 1954 to 1955.

2. Oats: Parity price has declined during the same period from 88 to 74 percent of parity.

3. Grain sorghums: Declined from 87 to 69 percent of parity.

4. Beans: From 93 to 73 percent of parity.

5. Potatoes: Parity price has declined from 70 percent in 1954 to 57 in 1955. Certainly, Mr. Chairman, this committee can recognize the need in light of the sober facts I have presented today to permit American farmers to supply a larger percentage of our domestic sugar needs than that permitted by Sugar Act of 1948. Farmers caught in a cost-price squeeze, as they have been since soon after the end of the Korean war, ought to have the greatest possible freedom and flexibility to produce those commodities in growing demand, which offer the best income alternative. The production of sugar beets, as these figures indicate, is one such bright alternative.

I believe, Mr. Chairman, that the least the Congress can do to assist these farmers is to provide for a modest increase in the domestic quota provided by the Bennett amendment to H. R. 7030 now pending before the Senate Finance Committee. This provides that 55 percent of the amount by which the Secretary of Agriculture's annual estimated needs exceeds 8,350,000 short tons, raw value, shall be added to the basic quota now provided in the Sugar Act of 1948 as follows:

1. Of the first such 165,000 tons, 51.5 percent is to be added to the basic sugar quota of 1,800,000 tons of the beet area, and 48.5 percent to the basis quota of 500,000 tons of the cane area.

2. The next 20,000 tons is to be added to Puerto Rico's basic quota of 1,080,000 tons..

3. The next 3,000 tons to the Virgin Islands basic quota of 12,000 tons.

4. If any remains of the 55 percent of the amount by which the Secretary's estimated needs exceeds 8,350,000 tons, it is to be apportioned on the basis of the basic quotas of the domestic suppliers.

Since I have already taken more time than I should have taken, Mr. Chairman, I shall conclude my remarks at this point.

Thank you for your attention and your courtesy.

EXHIBIT 1

THE LIBRARY OF CONGRESS, LEGISLATIVE REFERENCE SERVICE, Washington 25, D. C., November 18, 1955.

To: Hon. Arthur V. Watkins

(Attention: Dr. Frischnecht.)

From: American Law Division.

Subject: Question whether the Soil Conservation and Domestic Allotment Act of 1936 still forms a legislative basis for congressional appropriations for making soil conservation practice payments for diverting acreage from soildepleting crops.

In the original section 8 (b) of the Soil Conservation and Domestic Allotment Act, added by the act of February 29, 1936, the last sentence provides:

"The Secretary in administering this section shall in every practical way encourage and provide for soil-conserving and soil-rebuilding practices rather than the growing of soil depleting commercial crops" (49 Stat. 1150, ch. 104, sec. 8 (b)).

This provision was repeated in the act of February 16, 1938, which amended and superseded section 8 (b) of the Soil Conservation and Domestic Allotment Act. In addition, the amending act provided that:

"Rules and regulations governing payments or grants under this subsection shall be as simple and direct as possible, and, wherever practicable, they shall be classified on two bases: (a) (Soil-depleting crops and practices, (b) soil-building crops and practices" (52 Stat. 32 ch. 30, sec. 8 (b); U. S. C., 16: 590h (b)). Subsequent appropriation acts from June 29, 1937, through July 22, 1942 (the Department of Agriculture Appropriation Acts, fiscal years 1938 to and including 1942; 50 Stat. 430 to 56 Stat., 691-692) appropriated funds "to enable the Secretary of Agriculture to carry into effect the provisions of sections 7 to 17, inclusive, of the Soil Conservation and Domestic Allotment Act" and each such act authorized certain amounts for compliances under the act of February 29, 1936, pursuant to provisions of the programs for the previous year. In the Department of Agriculture Appropriation Act, 1944, approved on July 12, 1943, the following provisos were inserted:

"Provided, That no part of said appropriation or any other appropriation in this Act shall be used for incentive or production adjustment payments, except for soil conservation and water conservation payments and payment of acreage allotment commitments on commodities as defined in the Agricultural Adjustment Act of 1938, as amended.

*

"Provided further, That such amount shall be available for salaries and other administrative expenses in connection with the formulation and administration of the 1944 programs of soil-building practices and soil and water-conservation practices, under the Act of February 29, 1936 ***" (57 Stat. 417, ch. 215). In the House hearings on this bill (H. R. 2481), 78th Cong.), on February 12, 1943, the Secretary of Agriculture was questioned concerning "incentive payments" to induce farmers to increase production of certain crops needed during the war and for which additional funds had been requested (hearings before the subcommittee of the Committee on Appropriations, House of Representatives, 78th Cong., 1st session, on the Agriculture Department appropriation bill for 1944, pp. 798-847). The members of the committee questioned the Secretary's authority under the Soil Conservation and Domestic Act to make such payments. In an editor's note on pages 847-848 of these hearings, it is stated: "On a subsequent day, February 15, when the subcommittee met to begin hearings on the regular agricultural appropriation bill, Mr. Tarver made the following statement:

"DISAPPROVAL BY COMMITTEE OF ESTIMATE FOR INCENTIVE PAYMENTS TO FARMERS "Mr. TARVER. Mr. Secretary, the subcommittee has directed me to advise you with reference to the estimate contained in House Document 101 for $100 million to carry on the so-called incentive payment program that it has, upon

the basis of reasoning set out in a motion which has been approved and copy of which will be furnished you by the committee, decided to disapprove the esti mates in question.

"The action of the committee of seven was unanimous except for the position of the chairman of the subcommittee, who was not in favor of the adoption of the motion" (Ibid. p. 847-848).

When reported out of committee the bill, H. R. 2481, appropriated $300 million "solely for programs under the Agricultural Adjustment Act of 1938, as amended, and for compliances with soil-building practices and water conservation practices under the Soil Conservation and Domestic Allotment Act, as amended * * *” and added the second proviso concerning availability of funds for salaries, etc., which appeared in the final act, quoted above, but omitted the other proviso.

Mr. Tarver called attention to the incentive payments when he submitted the bill (89 Congressional Record 3354). The House added a proviso (the Cannon amendment), as follows:

"Provided, That no part of said appropriation or any appropriation carried in this bill shall be used for incentive payments" (89 Congressional Record 3609). The bill as reported out by the Senate committee had stricken out all these restrictions. After many conference the bill in its final form was passed.

It would seem that Congress intended to prevent incentive payments to increase the production of certain essential war crops, but by limiting the incentive or production adjustment payments to soil conservation and water conservation payments it also prohibited use of this appropriation for payments for diverting acreage from soil-depleting crops. It does not appear to have been the intention of Congress to prohibit payments for soil-rebuilding practices. Áp parently such payments are included as part of payments for soil-conserving practices.

Similar restrictions appear in the Department of Agriculture Appropriation Act, 1945, approved June 28, 1944 (58 Stat. 449-450, ch. 296), with the following clause added to the second proviso concerning availability of funds for salaries, etc.:

"*** but the payments or grants under such program shall be conditioned upon the utilization of land with respect to which such payments or grants are to be made, in conformity with farming practices which will encourage and provide for soil-building and soil-and-water-conserving practices in the most practical and effective manner and adapted to conditions in the several States, as determined and approved by the State committee of the Agricultural Adjustment Agency for the respective States" (pp. 449–450).

The Department of Agriculture Appropriation Act, 1946, and subsequent appropriation acts no longer contain these restrictions, but continue to make the funds available for salaries and expenses in connection with formulation and administration of programs of soil-building and soil-conserving practices, etc. The temporary restrictions which affected the authority to make payments for diverting acreage from soil-depleting crops are no longer in force and the authority still exists in the basic Soil Conservation and Domestic Allotment Act, section 8 (b), for payments concerning soil-depleting crops and practices, provided Congress appropriates the money therefor (U. S. Code 16: 590h (b)).

To: Hon. Arthur V. Watkins.

EXHIBIT 2

THE LIBRARY OF CONGRESS, LEGISLATIVE REFERENCE SERVICE, Washington 25, D. C., January 17, 1956.

(Attention: Dr. Frischknecht.)

From: American Law Division.

Subject Authority of the Commody Credit Corporation to make payments in kind to farmers for placing lands in the proposed acreage reserve and conservation reserve programs under President's soil-bank plan.

ACREAGE-RESERVE PROGRAM

Under the President's soil-bank plan, the acreage-reserve program provides for voluntary reduction in acreage of certain crops. The farmers are to agree to plant less acres of land and not to graze or harvest any crop on the acreage reserve. In return the cooperating farmers would be allocated certificates for

commodities. The value of the certificates is to be based on the normal yields of the acres held in reserve. These certificates are to be made available to the farmers through their county agricultural stabilization committees at normal harvest time for each crop. They are to be redeemable by the Commodity Credit Corporation in cash, or in kind at specified rates. The program would be financed with surplus commodities already owned by the Government.

CONSERVATION-RESERVE PROGRAM

The second part of the soil-bank plan provides for contracts with farmers voluntarily to shift into forest lands, etc.-cultivated lands needing conservation measures. In return the Government would make annual payments to the farmer for a period of years related to the length of time needed to establish the new use of the land.

AUTHORITY OF THE COMMODITY CREDIT CORPORATION UNDER ITS EXISTING CHARTER

The Federal charter of the Commodity Credit Corporation, under act of June 29, 1948, as amended (62 Stat. 1070-1075 ch. 704, as amended) provides in the General Powers of the corporation that it "May enter into and carry out such contracts or agreements as are necessary in the conduct of its business" (sec. 4 (g)). The borrowing authority of the corporation is limited to an aggregate of $12 billion (sec. 4 (i), as amended by Public Law 344, 84th Cong.).

Under its specific powers it may support the prices of agricultural commodities through payments and other operations (sec. 5 (a)), it may dispose of surplus agricultural commodities (sec. 5 (d)), it may, with the consent of the agency concerned, utilize on a compensated or uncompensated basis, the services of any Federal or any State agency or political subdivision thereof (sec. 11) and may utilize on a contract or fee basis, committees, or associations of producers, etc. (sec. 12).

AUTHORITY OF THE CCC TO MAKE PAYMENTS IN KIND TO FARMERS FOR PLACING LANDS IN PROPOSED ACREAGE RESERVE

The Commodity Credit Corporation would apparently be authorized to make payments to farmers or to dispose of surplus agricultural commodities (make payments in kind) to farmers through their county agricultural stabilization committees (which are composed of farmers, elected by the farmers, paid from Federal funds and supervised by the Secretary of Agriculture), provided the corporation keeps within its borrowing limit (under authority of secs. 4 (g), 4 (i), 5 (a), 5 (d) and 11 of its charter).

AUTHORITY OF THE CCC TO MAKE PAYMENTS IN KIND TO FARMERS FOR PLACING LANDS IN PROPOSED CONSERVATION RESERVE PROGRAM

It is questionable whether payments for taking of agricultural lands out of production in order to convert their use to forest lands, etc., as soil conservation measures, would come within the charter authority of the Commodity Credit Corporation to "support the prices of agricultural commodities through * * * payments," or any other provision in its charter. Besides, the President in his mesage does not recommend payments in kind in connection with these payments. However, the Secretary of Agriculture is authorized under section 8 (b) of the Soil Conservation and Domestic Allotment to carry out the purposes specified in section 7 (a) of that act (including promotion of the economic use and conservation of land) "by making payments or grants or other aid to agricultural producers, *** measured by (1) their treatment or use of their land, or a part thereof, for soil restoration, soil conservation, or the prevention of erosion; (2) changes in the use of their land, etc. (U. S. Code 16: 590 h (b))” provided Congress appropriates the money therefor.

STATEMENT FILED BY LEO V. BODINE, EXECUTIVE VICE PRESIDENT, NATIONAL LUMBER MANUFACTURERS ASSOCIATION

We have read and carefully studied the President's message of January 9, 1956, to the Congress relative to the administration's farm program. Of particular interest to lumber manufacturers is the proposed soil bank, and a number have inquired concerning the conservation reserve part of the soil bank.

The conservation reserve program proposes to divert some 25 million acres from farm crop production to grass, trees, and water. The President states that