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some of these things, that is, of handing some of these things over to an administrative basis?

The CHAIRMAN. We in the legislative department pass the laws, and the Executive executes them. We have been urging the President, as we have been urging the Secretary of State, to be more liberal in permitting us to dispose of some of this rice, but so far, we have not been able to prevail. Of course, there would be a way to do it by the Congress. That would be for them to deny them some money, deny the Secretary of State money to operate on, but you would not expect us to do that. The point that I wish to drive home to you is that the legislative department has very little to say in it. It is the executive department that handles that through the Secretary of State.

Mr. LODI. Might I ask a question at this point?

Do you think that a delegation of growers from this industry, let us say, would start out with the Secretary of Agriculture, and if necessary, attempt to get a hearing before the State Department-that that would be of any assistance in probably clearing up some of the fog that exists between not only Government agencies, but also between certain individual growers?

to you.

As I said here, I have expressed the feeling of the growers. We look You are the people that we first of necessity must appeal to. The CHAIRMAN. You would be surprised, though. All we do is legislate. The laws we enact, but it is up to the executive departments to carry them out. No matter what we tell the Executive, he may do what he pleases. If you see anybody, I would advise you to see the President, because he has the last word in this. There is no use going to the Department of Agriculture, because they know the problem as well as the Department of State. The decision is made by them. Of course, it is carried out through the Executive. As a matter of fact, I am sorry that Senator Eastland from Mississippi is not here today. We held hearings for a number of weeks on the matter. Of course, there was a denial on the part of the Secretary of State that anything was done to prevent these exports, that is, any conniving as was alleged by the committee, but the fact remains that this is a matter that should be handled by the Executive Department. We have very little to say about that or any reasonable way to correct it. We have complained about it. I have written many letters about it. I have held hearings about it. But so far nothing has come of it. We are still unable to export to these markets because of, we believe, some interference on the part of the Secretary of State, and they say that if we should export rice or cotton in certain areas, that it would affect our relationship with those areas. Therefore, they said that we had better not try it.

That, in effect, is about what has happened.

Mr. LODI. I hope that you will not get discouraged yet, and not continue to try.

The CHAIRMAN. We are not discouraged, but we are not very hopeful as to what can be done.

Mr. LODI. We sincerely hope that this presentation has been of some benefit to you. There are others that will speak and present their views.

I do have a written statement from this committee as to their position on the high support, and as to the two-price system, which I will leave with you.

The CHAIRMAN. It will be placed in the record at this point in connection with your remarks. Thank you.

(The prepared statement of George Lodi is as follows:)

California ricegrowers are not in favor of 90 percent support and restricted acreage on the whole rice crop. They would like the Congress of the United States to adopt a program for rice which would guarantee 90 percent of parity on that part of the crop which normally is sold in the domestic market. An allotment should be based on the acreage necessary to produce rice for the continental United States, Territories, and Cuba, and no restriction or support should be placed on the acreage raised for export demand except for normal assistance in movement of rice to dollar-short countries.

We believe this plan would have merit in that it takes into account the varying demand in export for different types and grades of rice and would allow such changes to take place freely to meet the demand. Under this plan, growers would have to price rice at the world market level for that quantity sold in the world market. We feel that a request for 90 percent of parity support on the quantity raised for the domestic market would assist in stabilizing the earning power of the farmer and is justified to that entent.

However, the open acreage for export would allow the farmer to display his ability to produce on a competitive market and would relieve those farmers whose land is not suited to raising crops other than rice. This would also tend to relieve the diverted acreage problem which is causing hardship among growers of other crops. This type of program would not tend to build up large surplus stocks in the hands of the Commodity Credit Corporation.

The CHAIRMAN. The next witness is Mr. Alioto. Have you anything new that you would like to add to what has been suggested?

STATEMENT OF JOSEPH L. ALIOTO, SPECIAL COUNSEL, RICE GROWERS ASSOCIATION OF CALIFORNIA, SAN FRANCISCO, CALIF.

Mr. ALIOTO. Mr. Chairman, and members of the committee, I will make it as concise as I can make it. The Rice Growers Association of California is a cooperative composed of approximately 1,000 farmers who produce and mill approximately 50 percent of the California rice crop.

We appreciate the efforts of this committee in connection with the problems we have had, both in the past and at the present time. We also want to say that we believe the Secretary, Mr. Benson, is doing a very creditable and very honest job in connection with the very tough problems that are not easy of solution.

Basically, the Rice Growers Association of California favors the two-price system as an alternative to any plan which seeks to make a very sharp reduction in the production of California rice.

You asked a while ago whether we would accept a plan of 70 percent for the entire crop. The Rice Growers Association of California advocates a two-price system that will put 90 percent of parity on the domestic distribution of rice, and would give us nothing at all on the export distribution of rice, letting us just compete in the world market, so far as that is concerned, but at the same time have no acreage curtailment.

The rice industry, throughout the United States, both in your part of the country and in ours, adapted itself peculiarly, we think, to a two-price system, because historically the domestic supply of rice is pretty well established. It does not make any difference what price we charge. We sell the same amount to Puerto Rico. We sell approximately the same amount to the United States. We sell approxi

mately the same amount in Hawaii. It does not make any difference what the price is.

That domestic supply is approximately one-half of our present crop. What we are asking is as an alternative, to cutting down this acreage and plowing under this production, to give us 90 percent on the domeste side, and just let us compete in the foreign market.

The CHAIRMAN. Then you would not agree with Mr. Lodi to have it all 70 percent?

Mr. ALIOTO. Our organization, as I said, advocates 90 percent of parity, a rigid policy, with respect to the domestic production, and to let us alone without any restraints or restrictions whatsoever, so far as that is concerned.

The CHAIRMAN. In advocating the two-price system then, as I understand it, you would not want any acreage curtailment? Mr. ALIOTO. That is correct.

The CHAIRMAN. You want 90-percent price support on whatever is consumed domestically, that is, in the continental United States?

Mr. ALIOTO. When I say "domestically," I mean the continental United States, Puerto Rico, and Hawaiian Islands, and the historical regions. We might have to include in that market Cuba, which is an export market, which presents a separate problem, but that is not too important a factor.

The CHAIRMAN. Do you think that Cuba would continue to buy rice from us at 90 percent support, when you could take some rice and sell it to Japan, which is a foreign country, at maybe 60 percent? Mr. ALIOTO. I recognize the problem there.

The CHAIRMAN. You get the problem there.

Mr. ALIOTO. But inasmuch as our prices are somewhat keyed to the Sugar Act, and there are correlating circumstances between the Sugar Act and the Rice Act, so far as Cuba is concerned, it may well be that the Cuban Government would not be interested in that rice price. The CHAIRMAN. When you say that the two are keyed together, they are not.

Mr. ALIOTO. They are not keyed. I say as a matter of practical economics. They are not keyed to the matter of legislation.

The CHAIRMAN. As I said, there is nothing in the act referring to it. Mr. ALIOTO. That is correct, Senator, there is not.

The CHAIRMAN. I stated on the Senate floor many times that the Cubans are very desirous of having a free sugar market with us, but when it comes to rice, they want to be able to produce all they can, because we cannot produce all of the sugar that we want. I was told in Cuba that the government there has a subsidy for the farmers equal to one-third of the cost, or some such figure. You do not agree to such a plan as that?

Mr. ALIOTO. No, I certainly do not. I am only suggesting that because of the situation that Cuba wants on their own rice, they may not want to get it too low below the world market. The important thing is our domestic.

Puerto Rico is very big, and Hawaii, also.

So far as the export is concerned, we will be able to compete and compete at the world price.

Mr. Lodi has pointed out that we have had no carryover in California. We have not found, fortunately, the necessity to come to the Government to put rice under supports for many years. There

is a preference for California rice in Japan. Not because we are geniuses, but just that they perhaps prefer California rice. As you know, before it was called Japan-type rice.

The CHAIRMAN. Do they not prefer it because they can get it cheaper than Louisiana rice?

Mr. ALIOTO. Senator, that is not the problem.

The CHAIRMAN. Is that not the fact? Does that not show up in the picture?

Mr. ALIOTO. No, I do not think it does. The best example of that is Puerto Rican market, where they are paying premium for California rice over the southern rice. They paid a premium last year of a dollar a bag sometimes.

The Japanese have indicated a willingness to pay a little better price for California rice than for southern rice, because it is the kind. of rice that their people have been accustomed to.

The CHAIRMAN. When I get to Louisiana and Texas, I surely hope to get the answer to this.

Mr. ALIOTO. I suggest to you that it is a different kind of rice. Some people prefer it. Why they prefer different kinds of rice, as to why they prefer wheat to rice, we do not know. I think that is the situation you will find in Louisiana and other places, that California rice is selling at a premium in Puerto Rico, which is right at your back door.

Senator KUCHEL. I wish you would go into a little bit more detail, your recommendation for price support legislation, at least, so far as your own crop is concerned. You suggested no acreage allotments, 90 percent rigid guaranty on domestic.

Mr. ALIOTO. That is correct.

Senator KUCHEL. Now, assume that you have a certain quantity of rice that is sold here in the domestic market. You have a certain quantity left that would be available for sale overseas. Where would the Commodity Credit Corporation enter that pictureat what point would the Commodity Credit Corporation, under your recommendation, be required to make loans with the continuing possibility of taking title to it? Where would that enter?

Mr. ALIOTO. The only rice that would be eligible for loans would be that domestic portion which is subject to support.

Senator KUCHEL. Who determines what the domestic portion isat what point would you say the domestic consumption has now been exhausted-and what is left is for the Government, if it cannot be sold overseas?

Mr. ALIOTO. I suggest that in rice we have a rather peculiar picture that historically you have a stabilized domestic demand year in and year out that remains the same, and does not make any difference what the price is. You just sell so many to Puerto Rico and so many in the continental United States, et cetera.

We have figures in the Department of Agriculture. The Department of Agriculture would then take that figure on a historical basis, and there would be no dispute about it, because it is constant.

Senator KUCHEL. Is that different than the other basic commodities? Mr. ALIOTO. It is different. It may be different, I cannot speak about the other commodities. I think it is different. I am only suggesting that we know exactly what that domestic distribution has been. And

we are able to set the exact figure on that, and that will be subject to the 90 percent of parity.

Senator KUCHEL. Your recommendation of that legislation is confined to rice, period?

Mr. ALIOTO. That is correct. All I am talking about this morning is rice. We do not know anything about the other commodities. I think there is a basis for this differentiation.

The CHAIRMAN. I presume you know that our committee has studied a two-price system for rice and has had the advantage of certain facts, and the Department of Agriculture itself has studied the matter. As I recall offhand, the conclusion reached was that the administrative difficulties would be practically insurmountable. Notwithstanding that, it is our hope to look into the situation with the evidence that we now have, and with that which we expect to get from you and others. We might be able to work out a two-price system for rice, or maybe two of them.

Those are possibilities.

You may proceed.

Mr. ALIOTO. Thank you very much.

Now, I have detailed in my written statement certain details, so I will not set them out here, that is, the various administrative questions you are talking about, and I have indicated the specific administrative plans that we prefer.

I just want to say in that connection that when we look back over the programs in the Department of Agriculture, the administrative problems are not so intense as some of the programs we have administered.

Without repeating everything that is in my statement, I do want to say in conclusion that taking up the language you used this morning in asking whether or not a particular program was along the lines of our own prediction, I think in connection with manufactured goods, we are doing something like this. The tariffs we have enacted to some extent set a domestic subsidy, and then we let our manufactured goods compete in export trade. Basically that is all we are asking for here, because it utilizes both the principle of assistance as well as the principle of competition which we have written into our basic laws. And we feel that given no discretion we will be able to take care of ourselves in foreign markets.

We will not hurt anybody too badly, because America has only 2 percent of it.

The CHAIRMAN. Thank you.

(The prepared statement of Mr. Alioto is as follows:)

Basically the Rice Growers Association of California strongly favors a twoprice system as an alternative to any plan which seeks to make a sharp reduction in the production of California rice. Historically, the domestic demand for California rice is stabilized. This is not true of export markets which have been and are affected by political changes which have been made in the world. Hence, we believe that a system which divides the market into two parts, domestic and foreign, permitting production of rice to continue without a sharp decrease would serve the advantage of the producer as well as the country at large since it would maintain production levels of a commodity which has strategic political potentiality in the current world picture.

In appraising the type of two-price arrangement that we should recommend, we have kept in mind that the plan must first of all be practical, and administratively workable. Accordingly, it is our recommendation that the plan utilizing market value certificates offers the most practical assurances of successful operation.

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