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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 FÒA 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. Lod. 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. Lod. 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. Lod. 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. Lod. 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. Lod. 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 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?

As I said here, I have expressed the feeling of the growers. We look to you. 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. Lopi. 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. Lod. 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.

rice crop.

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

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

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