that respect that inasmuch as the Secretary of Agriculture has exercised the authority and established a precedent in exempting durum wheat from the penalties of the act, that he can also exercise that authority and do that in rice.

We must bear in mind the longer we prolong the enactment of some method of moving this rice-you see, we are going to lose the time element involved in marketing our commodity.

Now, rice is not milled and marketed over a span of 2 or 3 months; it is a commodity that takes practically from one crop to another, because we attempt to move it in an orderly fashion, not glutting a market with oversupplies, and overburdening it with supplies that may have some effect pricewise.

We prefer to, especially in California here where cooperatives are predominantly dominant and the rise is in long hands, the percentage, of rice is in long hands, it is the policy of these cooperatives to move rice in an orderly fashion, taking advantage of the ups and downs and coming out with an average price at the end of the year. Now, that is not the policy of commercial organizations that they may see a market that may be an incentive for them to move, and at that time they will move a terrific amount of it in there, and will then reflect back on the price of the total commodity.

Now, we feel that the orderly type of marketing and coming out with an average price is in the end and over the years the better way to market our commodity.

I think that has been proven not only in rice but in other commodities of which California has many cooperatives that market the production of her farms.

Senator KUCHEL. Let me interrupt you for just a moment.
Mr. LODI. Yes, Senator.

Senator KUCHEL. My office told me that apparently the legal staff of the Department of Agriculture had raised some question whether or not the Secretary had the right administratively to take into consideration the varieties.

I think you make an excellent point by indicating that it is exactly what he has done with respect to wheat. But it is important on that problem to determine the question of administrative authority today to extent that our good people here in California can be advised by their own council on that subject, and that information be given to your congressional delegations as well as to the Department; I think it is highly important.

Mr. LODI. Well, Senator, we are repeating to you gentlemen who have the context, to use your good offices to urge the Secretary to utilize the means at his disposal to assist us in moving this.

We are not asking for Government appropriations or any monetary assistance. We are asking for the removal of the obstacles that prevent us from marketing.

We are interested in marketing; we are not interested in getting a subsidy payment or an export subsidy because we feel we can compete. We may take a lower price, I will grant that we may take a lower price, in export, but we, as ricegrowers, are prepared and are willing to assume that and accept it.

We feel that we are giving you a fair approach to it. We are not asking any special privileges for, let us say, a geographical area. We are asking that it be based on a historical fact, done on a variety basis,

and it just seems to all of us who were convened at that meeting that morning that it was not discriminating against any area or any geographic location but it was being fair to producers who produced the varieties of rice that they do produce.

Now, the results are a question which rises in our minds so far as the surpluses are concerned, gentlemen, as to how long you are going to keep them in storage without deterioration.

Now, it is my personal feeling that it is not going to be too long before you are going to have some pretty fat bran bugs and weevils, because it has been our experience that the trade, at the end of a marketing year, is somewhat inclined to withhold their orders, and taking what is remaining of the old crop, preferring to wait until the new crop comes in, and they tell us and advise us that there is a case differential even in that short period of time.

The CHAIRMAN. Mr. Lodi, let me ask you this question: Could the suggestion you are now making be done administratively by the Department without further legislation?

Mr. LODI. I am sorry to say, Senator, I am not a lawyer, but it is our opinion, and the legal opinion that has been made available to us, inasmuch as the Secretary of Agriculture has already done it in durum wheat, we see no difference.

The CHAIRMAN. But we had to have legislation in that case.

Mr. LODI. Well, would it require special legislation for rice, then? The CHAIRMAN. I do not know. I am asking you.

Mr. LODI. Well, I am sorry I cannot give it to you, because I had nothing to do with making the legislation.

The CHAIRMAN. But you mentioned awhile ago, I believe, that if acreage allotments were made on the variety basis, that California. would probably plant more acres, am I right in that?

Mr. LODI. Well, they could probably carry more acreage, but we are recommending to you that at least they not be reduced any further than they are for the 1955 allotment.

The CHAIRMAN. Yes. If no reduction were made in California it would mean that you would have to take it off some other ricegrowing area, would it not?

Mr. LODI. Well, you are restricted to 15 percent by law, as I understand it. I am assuming, Senator, that you are assuming it is going to be necessary to have acreage controls, and with supplies that are on hand, based on the overall supplies.

The CHAIRMAN. Yes, I understand.

Mr. LODI. Without recognition of varieties, you are going to penalize, let us be frank and pointblank in the thing, you are going to penalize California then because she can move-she has not given you any problem-but you are going to penalize California in producing a commodity that she can sell without having come to Government for some aid.

Those are the things I am telling you are disturbing to we farmers, we ricegrowers, at least, in California.

The CHAIRMAN. What has made it so? Is it because California is peculiarly situated, located, grows a variety that you say you can dispose of without any difficulty?

Mr. LODI. Senator, I would say that there are a combination of things. I think we have been a little bit more energetic in developing our markets.

I know our industry, my own concern, has spent its own money sending its representatives to the foreign countries, and making its contacts, and speaking with the areas, especially Japan, that has bough our rice, and she has not bought it with FOA money, but has bought it with her own dollars.

You have not had to convert to yen, any Japanese yen, to dollars for a bag of California rice, and it just seems to me that it is an unrealistic approach to it when we ask asking for a cake and wanting to eat it, to want somebody to help us.

Here is an industry that is willing to show some responsibilities itself, take a reduction in support price, if necessary, but at least expecting to get protection in the domestic market, and have our allocation historically again based, historically based, on sales, not on acreage in the domestic market.

Have I made myself clear to you on that, Senator?

The CHAIRMAN. Well, I will see after I read the record.

Congressman Hagen?

Mr. HAGEN. I would like to establish something for the record, and also ask a question.

As I understand it, there is some gimmick in this rice law, although the price can be flexed, it never can go below 90 percent of parity.

However, I understand that your variety of rice enjoys a little lower support price, and you might be qualified there to testify on this question.

There are some people who have suggested that in these votes for quotas, there is really no choice, that is, there is a choice between 50 percent of parity or, we will say, 90 percent, and there is no real choice offered, and it has been suggested that maybe a further choice of, say, 75 percent of parity without any quotas, or substantially less quotas, might help solve the problem in many respects.

I was wondering what your reaction to that proposition would be. Mr. LODI. Congressman, I am glad you raised the question. That was going to be one of my recommendations. I had not quite reached that point yet.

Now, on that point, the group has very definitely opposed the high support policy system, and I might state further, that I do have a written statement to present to you insofar as their further desires, insofar as the rice industry is concerned, that they are favorably interested-they are in favor of a two-price system.

The CHAIRMAN. Have you any preference as to flexible price supports in contrast to rigid.

Mr. LODI. We think that the support should be as it was indicated when the act was written. It was my understanding at that time that we were going to support agriculture from going broke, from going to the banks, from going to the credit agencies and what have you. That was my definition of what the Agricultural Act was of 1938. It was to be supported at a figure somewhere about 50 percent, maybe in the range up to 70 or 75 percent, and I think that I can reflect the thinking so far as this group is concerned, that they would prefer a lower support at a range of somewhere around 70 percent, at least, in the export market.

The CHAIRMAN. Let us talk about the domestic market, because that is the most important, is it not? Let us talk about the domestic market because that is really the one that affects most ricegrowers.

Mr. LODI. All right.

The CHAIRMAN. What is your view on that?

Mr. LODI. They will go along with 70 percent on the domestic.
The CHAIRMAN. California would?

Mr. LODI. Yes.

The CHAIRMAN. You mean for what she produces for export, as well as domestic?

Mr. LODI. There must be flexibility on the acreage?

The CHAIRMAN. You want that?

Mr. LODI. There must not be curtailment, or there must be curtailment of acreage; because, going back to the theory, Senator, where our capital investments are up to this point, if our acres are reduced, our capital investment would not be able to produce, we would not be able to use the capital investment and the equipment.

The CHAIRMAN. În proposing a 70 percent of parity price support, you would not want to be curtailed as to acreage?

Mr. LODI. I would not say that we would not want to be curtailed entirely. There may be some justification, Senator, for some limitation. As I have stated before, we do not want to see this acreage reduced any further than what the 1955 allotment was. On that basis, at least, a semieconomical allocation of history to the State, we should have that, but if it is cut further, then it will put many of these ricegrowers and many of the smaller ones in probably a far worse position than they are in today.

I can say very frankly to you that I do know many ricegrowers that had difficulty in financing themselves even for the production of the 1955 crop on the acreage they had. If they are further cut in acreage allocations, it will be just that much more difficult for them.

The CHAIRMAN. Am I to understand from your testimony that the ricegrowers of California would be willing to accept a 70-percent price support, provided that the acreage allotment of 1955 was reinstated? Mr. LODI. That it would not be any less, sir; if you want to make it a little more, we will take it.

The CHAIRMAN. When you say "not less," that means that you want more. I am asking you the question, would the ricegrowers be willing to accept in the future a support price of not more than 70 percent if their acreage remained at the 1955 level?

Mr. LODI. May I answer that

The CHAIRMAN. You can answer that yes or no.

Mr. LODI (continuing). By asking a question: Are you going to penalize California for expanding its markets? If she were in a position to sell more rice, thereby freezing that acreage at the 1955 level-are you going to curtail her energies and her desire to expand her markets, if she has decided to do that by spending her own money; that is, by the ricegrowers themselves to develop these markets? I will say, Senator, that if it be the desire of government to regiment

The CHAIRMAN. What?

Mr. LODI. To regiment us

The CHAIRMAN. Wait a minute. That does not regiment you, because you voted on it; did you not?

Mr. LODI. That is the point. We did not have the selection. It was either take 90 percent or something else, or no supports.

The CHAIRMAN. But the farmers did not have to vote for 90 percent unless they wanted it.

Mr. LODI. California did not give you a two-thirds majority. It gave you a majority, but not the two-thirds majority. I am confident to say that the California ricegrowers, if they would be given an option, or 2 or 3 options, with a lower support price and more acreage, that the reflection in that voting would have been far different than what it was. I do not think that your support price, the high support price, would have gotten even a majority, even the majority that it' got. It just seems to me that maybe I used the word rather loosely when I said regimenting, but there is a feeling that we cannot make a move one way or the other without that there is some regulation or another affecting us, not only the production, but this and everything that we move into. We are affected by some legal gimmick of some sort at every turn, and when we go to sell our commodity, we have to always ask the guy what he is going to give us for it, but nevertheless we are willing to stand upon investing the money in our cooperatives and building the milling facilities to put us in a realistic position to be competitive, and we would like to be a little freer, so that we can be competitive.

As I say, if we are going to be restricted in developing our markets to freeze this or that-I am at a quandary to know as to how long you want this frozen. Are we speaking of 1 year or how long in the future?

The CHAIRMAN. We would like to have your suggestions on that. That is why we are here.

Mr. LODI. For 1 year-I say, not less than the 1955 acreage allocation, but in the future, I think that again should be open for discussion. It may be that we may want a little further reduction in the future, but at least we should be given an opportunity to express ourselves as to what will meet our conditions.

There was requested an explanation, Senator, as to why we are so dominated by the State Department and by these growers. Sir, I could not give the answer. My reaction this morning is that you do not have the answer to it. Certainly, it is the desire on the part of these growers that all of you gentlemen exercise your good offices and assist us in permitting us to do business with the people that want to do business with us.

We were told that one nation was advised that they would receive hundreds of tons of wheat that wanted surplus rice. And when they were asked why, in a country in which it was preferred, and they did not ask for rice, they were told that the United States did not have any surplus of rice. You might have moved some of the surplus rice there, without having to come back and having to reduce our acreage again to the point where we would be restricted on the domestic market, which will put practically 40 percent, or some of the ricegrowers, out of business.

The CHAIRMAN. Of course, you realize, I am sure, Mr. Lodi, this is a matter for the State Department or something that is in the realm of the executive department, not the legislative department.

In other words, the President, through his Secretary of State, is advocating this method. Do you realize that?

Mr. LODI. I realize it, but I am wondering, have you people whom we elected to represent us, given up all of your control of handling