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but the taxpayers of the West, Mr. Chairman, I assure you, would much prefer to finance their own futures when they know they can do it if you'll let them.
I strongly doubt, if such cost could be measured, that a few hundred additional acres allotted to Nevada would unbalance any program so as to ruin cottongrowers elsewhere. All we ask is enough to let our farmers have their own cotton ginjust one. I know the cottongrowers of Central Valley would like to see Nevada cottongrowers relieved of baling up their cotton for that long trek across the desert. A slight drop in price, and you can see that the growers would go broke without their own cotton gin. My southern friends in the Senate have been most courteous, always, in these problems, and I am confident, Mr. Chairman, that you will never regret assisting Nevada develop her new-found industry. One of the proudest moments of my life was the opportunity of showing our friends in Washington some small bales of cotton, grown in Nevada, ginned in California, and beautifully put up by our friends here, under the guidance of John Reynolds, your capable representative. They refused to believe Nevada can grow cotton; but we can do it, gentlemen, if you will just let us. Thank you for your courtesy. The CHAIRMAN. Are there any remarks by any of you gentlemen?
Mr. Sisk. As the Congressman from this area, Mr. Chairman, I should like to make a comment. I want to express my appreciation to Senator Ellender and to his staff and to Senator Bible for coming into our area and for coming into California, because, certainly, we feel that we have problems and we want, at this time, to express our appreciation for the fact that you saw fit to set this hearing, to come out and spend this time.
Thank you. Mr. HAGEN. I wish to concur in those remarks. The CHAIRMAN. Thank you. The committee will stand in recess. (The committee adjourned at 5 o'clock.) (Additional statements piled for the record are as follows:)
STATEMENT FILED BY CALVIN E. BREAM, SECRETARY, LOS ANGELES CHAMBER OF
COMMERCE, LOS ANGELES, CALIF. The agricultural committee of the Los Angeles Chamber of Commerce recog. nizing the importance of fruit, vegetable, and field crop industries in California and the urgent need for protecting these industries against pests, is actively concerned with quarantine and pest-control matters. For more than 30 years, the members of this committee which includes 150 farm and agricultural leaders throughout southern California, have worked with Federal, State, and local agencies for necessary pest control and quarantine work to protect valuable crops against outright loss and grade reduction by new pests.
CALIFORNIA'S UNIQUE SITUATION ON QUARANTINE PROTECTION
With mountain, desert, and ocen barriers against natural spread of pests, California farmers have a major advantage in their efforts to avoid higher production costs, loss of crops, and the quality reduction that would result if new pests be came established here.
California farmers have strongly supported State and local agencies in quarantine and control work. Again they have been fortunate in having an alert State department of agriculture which has pioneered in quarantine work, capitalizing on our natural barriers and working tirelessly to intercept the pests which man transports by water, air, or land.
To further indicate the active work here in California on pest protection, note should be made that California alone among the States has an agricultural commissioner in every farm county who acts at local level as a quarantine enforcement and pest-control officer in cooperation with the State department of agriculture.
These local agencies, together with the Federal agencies active here, have saved California farmers many times the cost of their maintenance. As an example, California is still free of cotton boll weevil, a major cotton pest which according to USDA estimates costs the Nation's cottongrowers a 10-percent annual loss.
California's cotton crop last year had a farm value of $288 million which at the national loss rate would have cost growers here more than $28 million plus control costs. At the same time, the total cost of the border quarantine inspection work carried on by our State department of agriculture since 1921 is only slightly more than $10 million including capital costs.
CALIFORNIA INTEREST IN FEDERAL RESEARCH AND CONTROL
Fruit and vegetable industries through their own associations and through civic groups such as ours are actively concerned with the level of research and regulatory work maintained by Federal agencies. California, perhaps more than any other State, has evidenced a willingness to stand on its own feet financially where problems of a purely local nature are involved. We have not hesitated, on the other hand, to encourage the Congress and the United States Department of Agriculture to undertake work which is a proper function of the Federal Government.
Discussion of intergovernmental relations will not be undertaken here, but we would point out that for 1954–55, total governmental expenditures on quarantine and pest-control work in California were in the following amounts: State of California.
$2, 243, 000 Counties in California--
1, 440, 000 Federal agencies ------
314,000 In addition, farm industries made some direct contributions on control, and the University of California spent more than $1 million on entomological research.
NECESSITY OF FEDERAL ACTION In several recent instances where California has made urgent requests for Federal action to keep threatening pests out of this State, many persons elsewhere have not realized that the needed action had to take place outside of California and, therefore, could not be undertaken by State or local agencies.
For example, the Mexican fruitfly, which was discovered nearly 2 years ago in Mexico just a few miles below our border, was and still is a major threat to some of our most important California fruit and vegetable industries. California officials took precautionary action on our side of the border, but eradication efforts could only be undertaken on the Mexican side through cooperative action by our Federal Government and the Mexican Government. Similarly, badly needed research studies on the habits and the controls necessary for this pest bad to be undertaken outside of California in areas where the pest is already established.
For Oriental fruitfly, which built up in alarming numbers in Hawaii after World War II, considerable effort was required to impress on Congress and the United States Department of Agriculture the importance and urgency of steppedup quarantine work and research studies. Little information was available, for example, on control or on treatments which would still permit us to ship our crops if this pest hitchhiked to the mainland and infested citrus or others. Our State department of agriculture and the University of California undertook such study and action as could be pursued here, but again the research and much of the quarantine work necessarily had to be done outside California by Federal agencies.
CONCLUSION With the tremendous increase in air travel from foreign countries to California points, and with the completion of a major west coast highway from Mexico as well as a direct rail connection into California from Mexico, farm and civic groups here are more concerned than ever with the maintenance of a strong, Federal quarantine program. Well-financed and well-executed Federal control and research must supplement local efforts if California is to continue to supply 46 percent of the Nation's commercial fruits and 24 percent of the vegetables.
Groups here are aware of the support which members of the Senate have given both quarantine and research work. Members of the Senate Committee on Agriculture and Forestry have been most helpful in this regard. The careful consideration and the appropriations made have been greatly appreciated by the agricultural people and organizations of the State of California.
OCTOBER 10, 1955. Mr. DONN N. BENT, Secretary, United States Tariff Commission,
Washington, D.C.: This statement is presented at the request and in behalf of the United Hop Growers of California, Inc., a cooperative service organization representing the hop producers of California, with headquarters at Post Office Box 64, Sloughhouse, Calif.
SITUATION CONFRONTING THE HOP GROWERS The hop growers of America, consisting primarily of those located in the States of California, Oregon, Washington, and Idaho, are now facing the very difficult task of adjusting production based upon war-end optimism to postwar reality. Brewers obviously expected a continuation of the rapid expansion of beer production that had occurred during the war and they urged growers to increase hop production to meet this prospective output. It developed however, that consumptive demand was much less than growers had been led to expect. Production of beer hit 91 million barrels in 1946-47 and remained around this level for the next 6 years, in fact to the present date. This unexpected beer production stalemate was partly the result of the general public reaction to the postprohibition variety of beer. It was mostly too mild for the older generations of beer drinkers and too bitter for the younger generation and for most of the increasing numbers of female consumers of beer and ale. The brewers met this situation by trying to make a beer that would appeal as strongly as possible to the expanding numbers of prospective consumers who had been brought up on soft drinks of many varieties. With this objective in mind, the brewers began to experiment with their mild and mellow product, involving the use of decreasing amounts of hops and supported by hopeful publicity to the tune of hundreds of millions of dollars. This effort has not been too successful as is indicated by the fact that beer production in 1952-53 (a better than average postwar production year) was about 500,000 barrels less than in 1946-47.
This miscalculation on the part of the brewers soon showed up in the form of surplus hops, the bane of a hop-growers existence. The presence of growing piles of unsold hops became evident in 1948, when the price of hops dropped from about 75 cents a pound to 30 cents or less. It was then that the growers decided to fall back upon the previously utilized Federal marketing agreement program as a means of balancing supply and demand. While the program was resonably effective, it tended to encourage the expansion of acreage and the gradual accumulation of price-depressing surpluses. So the marketing agreement was abandoned in 1952 and the hop growers are now engaged in trying to balance supply and demand by the painful process of reducing acreage and decreasing domestic production in the face of competition from increasing quantities of foreign hops flowing into this country as a result of the vacuum created by the self-imposed acreage reduction policy of the American hop growers.
HOP GROWERS DISTURBED OVER POSSIBLE TARIFF REDUCTIONS
It is because of the situation briefly outlined above that Pacific coast hop growers are much disturbed over the consideration that is now being given to the possible application of an ad valorem duty upon imported hops purchased at a price requiring a rate of duty of 50 percent or more of the present tariff. Grower opposition to the proposal, which is widespread, is partly due to uncretainty as to just how such a tariff will operate and a fear that the investigation on the part of the Tariff Commission may lead to lower tariff rates and the consequent importation of larger quantities of foreign hops to compete with the present depressing surplus of domestic production.
HOP TARIFF 45 YEARS OLD
Hop growers have enjoyed some degree of protection against heavy imports for the past 45 years. A 16 cents per pound tariff was imposed by the Tariff Act of 1909 and was retained in the act of 1913. In 1922, the duty was increased to 24 cents a pound and this rate has continued, with certain modifications, up to the present time. It is undoubtedly true that a 24-cent tariff afforded much more protection in the past than it does at present but it still
serves a useful purpose. The tariff today is 24 cents a pound on hops costing less than 50 cents a pound and 12 cents for hops selling at more than 50 cents a pound. This tends to discourage the importation of cheap foreign hops but some are doubtless sold to brewers for propaganda purposes. Many American still feel that anything with a foreign label must be superior to the homegrown product.
PRESSURE TO PRODUCE MORE HOPS The American hop industry is passing through a very difficult period of adjustment, the outgrowth of wartime expansion, followed recently by corrective curtailment of production. Before World War II, the area devoted to hops in this country was around 31,000 acres. By the end of the war, the area had increased about one third, to 41,000 acres in the crop year 1946-47. This rapid expansion was partly the result of increasing export demand originating in countries that had previously obtained most of their supplies from European sources. It was also the result of optimistic overestimates on the part of domestic brewers with regard to their future requirements. Fear expressed by many brewers that the hop growers would not be able to meet their increasing need, led to the planting of much additional acreage, financed in part by hop dealers. Some of the brewers were so alarmed over the prospect of a possible shortage during the war that they purchased and operated hop yards of their own to the extent of about 750 acres. Most of these brewers, however, finally decided that it was cheaper to buy hops than to grow them and they have gradually been disposing of their hop farm holdings.
Pressure to produce more hops, plus consequent higher prices, also encouraged more intensive operation of existing acreages through the heavier utilization of fertilizers, the installation of irrigation in localities that had not previously been able to afford such desirable but expensive facilities, the use of costly spraying, harvesting, grading equipment, etc.
DECREASING USE OF HOPS BY BREWERS
Hop growers built up their productive capacity, at the urgent request of the brewers, in order to meet their anticipated future requirements, only to find that the brewers were steadily decreasing their total usage of hops by reducing the amount used in their brews. During the year after the repeal of prohibition, an average of about three fourths of a pound of hops was used to make a 31gallon barrel of beer. Since that time, the hopping ratio has been reduced almost year after year, reaching an average of less than four-tenths of a pound by 1953. The latest figure is about thirty-seven one hundredths of a pound of hops to a barrel of beer. This is the result of an effort on the part of most domestic brewers to produce a mild and mellow beer designed to appeal to the generation that was brought up during the prohibition era on miscellaneous soft drinks. The effect of this policy upon the consumption of hops may be appreciated when you consider the fact that 36,608,000 pounds of hops were used to produce 58,458,000 barrels of beer in the 1936-37 season, whereas a closely similar amount produced about 90 million barrels of beer during the 1953-54 season. Each reduction of one one-hundredth of a pound of hops in the average amount used per barrel of beer, means a decrease of 2,500 200-pound bales in the demand for hops. If hops were still utilized to the extent that they were in 1934, it would requires 85,000 more bales (17 million more pounds) to produce 90 million 31gallon barrels of beer.
PUBLIC INTEREST NOT AT STAKE Public interest is not involved in the supply and consequent price of hops. The cost of the hops used in a barrel of beer at last year's average farm price is about 19 cents or about one-tenth of a cent per 12-ounce bottle. This is doubtless less than the cost of the beer-bottle cap.
MEETING THE BREWERS' NEEDS
American hop growers have done everything in their power fully to meet the needs of the brewers from the standpoint of quantity and quality of domestic hops. Consider, for instance, the matter of seedless hops. Originally and for many decades all American-grown hops were seeded, that is, they contained seeds. Sometimes as high as 20 percent of the weight of the hops consisted of seeds which contributed practically nothing in the way of desirable flavor to the beer.
European hops, on the other hand, contained practically no seeds. This situation was responsible for a decided preference on the part of many brewers for European hops, even at prices decidedly higher than those prevailing in this country. Starting back in about 1935, domestic growers made a determined effort to switch their production over to the seedless type of hops by eliminating the male vines in many communities. This transition was gradual, but fortunately by the outbreak of World War II American hop growers were producing a sufficient quantity of seedless hops to meet the requirements of those brewers in North and South America who prefrred to use this type of hops. By 1955 about 90 percent of the crop was seedless.
Complaints on the part of brewers relative to the high leaf and stem content of most American hops, as compared with those produced in Europe, resulted in the development of increasingly efficient hop picking and cleaning devices that now operate so effectively that the stem and leaf content has been reduced from an average of 10.7 percent in 1945 to a little less than 2 percent in 1955. It is probably safe to say that American hops are the cleanest hops produced anywhere in the world.
PLENTY OF AMERICAN HOPS
The war not only stimulated the production of clean hops and seedless hops, but also demonstrated that American hop growers could produce enough hops to take care of the full requirements of domestic brewers with sufficient left over to meet export demands in many parts of the world. The combined efforts on the part of American hop growers resulted in production increases from an average of about 40 million pounds for 5 years 1939-43 to 50 million pounds average for the next 5 years, 1944–1948, and a big jump to 63 million pounds in 1952.
TOO MANY HOPS LEAD TO TROUBLE The increase in production during the critical years of the war was a source of relief to many brewers but soon after the end of the war it became a source of much apprehension on the part of hop growers, many of whom recalled very vividly the gradual accumulation of unsalable surplus hops during the late 1930's and the painful remedy finally adopted, when about 100,000 bales of these hops were purchased from producers, dealers, and lending agencies at a miserable 312 cents a pound, for diversion into other than brewery utilization. Older growers recalled also that the 3 or 4 millions of dollars in production costs sacrificed in order to accomplish this diversion, still left enough surplus hops to act as such a depressing factor on the market that the Commodity Credit Corporation was finally prevailed upon to put a floor under an additional 20,000 bales of unsold hops, in the form of a nonrecourse loan at prices high enough to support at least the cost of production level.
SURPLUS CONTROL MEASURES Facing a reptition of the 1938 situation, leading hop growers, in 1948, reached the conclusion that the best available means of avoiding the accumulation of another tremendous quantity of unsalable hops would be through the utilization of a surplus control program, involving a Federal marketing agreement, in spite of its objectionable features. Such a program was put into effect in 1949. It provided a procedure whereby the Hop Control Board, with the approval of the Secretary of Agriculture, determined how many hops would be required from each new crop as it matured to meet prospective consumptive demands, domestic and export. This portion of each crop was designated the "salable quantity" and each grower was entitled to sell only his pro rata share of this amount. Under this program, nearly 12 million pounds, or about 23 percent of the crop, were held off the market for the crop year 1949–50; 8 million pounds, or about 14 percent, in 1950–51; 15 million pounds, or about 26 percent, for 1951-52 and 22 million pounds, or about 35 percent, in 1952–53. Most of these hops were unhar. vested but some were baled in anticipation of the eventual termination of the marketing agreement, when they could presumably be disposed of at some price.
HOP MARKETING AGREEMENT TENDED TO INCREASE PRODUCTION
While the marketing agreement was effective as far as it went, it was unsatisfactory from the standpoint of many growers because it tended to stimulate production to offset the curtailment, to build up an unsalable, price-depressing surplus, and to encourage the importation of European hops which, unfortunately,