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were not subject to control under the marketing agreement. The presence of surplus hops in the hands of the growers was a constant source of temptation to dispose of them by hook or crook and lack of prompt enforcement of the control features, following occasional violations, also contributed to grower dissatisfaction. The program was finally voted out of existence by a majority of the growers in the fall of 1952. This action became effective in connection with the 1953 crop.

FOREIGN COMPETITORS HAVE EFFECTIVE PRODUCTION CONTROLS Growers in foreign countries enjoy the benefits of production controls denied our domestic hop growers. England, in particular, has had its "hops marketing scheme” since about 1920. This very effective plan limits the amount of hops that can be sold to the quantity required to meet consumptive demands on the part of the brewers who agree to purchase their seasonal needs at a definite price that is calculated to return to producers the cost of production, plus a reasonable profit. West Germany has a tight production control in that the acreage that may be grown each year is officially authorized and is based upon prospective demands. Czechoslovakia has nationalized its hop industry.

HOPS POSSESS A VERY LIMITED OUTLET Hops are unique from a marketing standpoint in that they possess practically only 1 utilization, 1 outlet. About 99 percent of the hops produced and sold in this country are used in the brewing of beer. They are essential for this purpose and have been so considered for 500 years or more. They have no other important use. Because of this limited utilization, hops are supersensitive to supply and demand factors. When there is any indication of possible shortage, the brewers are inclined to buy more than they need from domestic or foreign sources, as a matter of self-protection and almost regardless of price. Under surplus conditions, brewers frequently purchase only minimum requirements and sometimes delay making purchases in anticipation of lower prices. Such policies, of course, tend to produce a weak market situation and consequent lower prices.

HUNDREDS OF GROWERS FORCED OUT OF BUSINESS It is essential, therefore, to maintain a well stabilized supply situation, enough to meet brewery requirements but insufficient to appear as a surplus above consumptive needs. The important tariff is not essentially a source of governmental income but is designed to serve as a means of protecting our domestic producers against oppressive competition. That they are in need of protection is indicated by the fact that, within the past 2 years, between two and three hundred American bop growers have been forced out of the hop business, temporarily or permanently. Most of these growers have suffered very heavy losses. Hop growing is a longtime business. The vines frequently live for 50 years or more. Under normal conditions, the investment in land suitable for hop growing, plus essential, up-todate equipment, run as high as $2,000 per acre. It is therefore not easy to switch from hop growing to some other crop without heavy losses. The 16,000 acres that have been forced out of business and the curtailment of production on the part of many other growers, involve losses to the owners running into millions of dollars. It is a case of the survival of the fittest. Four or five hundred growers are forced out of business to protect the interests of the four hundred who remain.

Over a thousand growers were engaged in producing hops in 1944. By 1951, the number had dropped to about 865 and by 1955 to 408, many of whom did not produce a full crop that season because of low price prospects. The shrinkage in the number of producers is particularly striking in some localities. In Oregon, for example, there were over 500 hop growers in 1944 and only about 94 active growers in 1955. In the coastal area of California, the shrinkage is from a normal of around 65 growers to about 3 during the present year. This has been due not only to the market situation but to a sharp reduction in yields and consequent low incomes, resulting from infestations of downy mildew, which has been particularly severe in parts of Oregon and California. The resulting curtailment of production aided growers in some localities at the expense of growers in lessfavored areas.

There is no means whereby losses due to production adjustment may be spread over the entire industry, but there should be some assurance that these sacrifices shall not be nullified by a tariff rate that would have the effect of protecting foreign prodrcers at the expense of American hop producers.


Hop parity price, the purchasing power objective established by the Congress, has been between 65 and 70 cents a pound for the past 2 or 3 years. It was 62.6 cents on September 15, 1955. A few growers who held long-term contracts when the marketing agreement was terminated were fortunate enough to receive close to this price. The average farm price actually received by hop growers reflects the supply situation confronting the industry. In the 1947 season, supply and demand were well balanced, and growers received an average of 68.4 cents a pound. The following year the growers began to feel the effects of an accumulating surplus and average prices dropped to 55.4 cents. Then, after the marketing agreement went into effect, prices for the salable quantity rose to an average of 57 cents in 1949; 62.4 cents in 1950; 68.3 cents in 1951. The discontinuation of the marketing agreement after the 1952 season, resulted in a decline to 60.2 cents in 1952 and a sharp drop to 35 cents in 1954. Prices will doubtless be still lower this year because many long-term contracts have run out and current prices for 1955 crop hops are around 35 cents, or about 50 percent of parity. The importation of 4 or 5 million pounds of foreign hops per year is partly responsible for this situation because it adds just that much more to a supply that is already more than sufficient to meet brewing needs.


The production of hops in Europe is apparently a very profitable industry under present conditions, as is indicated by the production trend, particularly in West Germany, which produced 31,439,400 pounds in 1954. This volume, only 4 million pounds less than the short crop produced in the United States during 1955, has made its presence felt all over the world. It is only the existence of a 24-cent tariff that has checked an avalanche of low-priced hops from being dumped into this country. Any reduction in the tariff, whether it is based upon the present fixed rate or an ad valorem duty would be certain to encourage further importations and further reductions in the level of prices in this country.


The effect upon prices of increases in the available supply of hops under surplus conditions has been determined statistically. In a study made by Dr. Sidney Hoos and J. N. Boles, of the University of California, it was determined that the size of the carryover of hops from one season to the next bears a direct relationship to the price of hops during the succeeding season. The formula that was developed by these economists is that “a change of 1 million pounds of hops on hand on September 1, considered by itself, is, one the average, accompanied by a change in the opposite direction of about 1 cent a pound in the United States seasonal average farm price of hops of all marketed grades."

Interpreted in terms of imports, this means that the 5 or 6 million pounds of imports now indicated for the present season, on top of abundant domestic supplies, will reduce the average price of all unsold hops to the extent of 7 or 8 cents per pound. This formula affords a reasonably accurate means of determining the extent of losses suffered by American hopgrowers as the result of a tariff situation that permits the importation of millions of pounds of foreign hops per year, dumped on top of excessive supplies of domestically produced hops. Under these conditions, American hopgrowers are naturally apprehensive of any tariff policy that permits such importations, not to mention a possible reduction in the limited protection that now exists.

HOPGROWERS UNITED IN OPPOSITION TO TARIFF REDUCTIONS This recital of the trials and tribulations of the hopgrowers is presented in some detail to emphasize the adjustment difficulties already confronting this small industry and the basis for their opposition to any decrease in the import tariff which could only have the effect of encouraging further importations and corresponding increases in adjustment problems on top of those already unsolved. As indicated, American hopgrowers are opposed to any reduction in the present tariff and particularly that portion dealing with hops costing less than 50 cents per pound. To the best of our knowledge, the hopgrowers of the United States are united in opposition to any reduction in the import tariff on hops at least until the domestic supply situation is more closely in line with prospective demand.

Most hopgrowers feel that importations of foreign hops into this country should be on a quota basis with a total amount limited to the minimum needs of the brewers. In the absence of a quota restriction, a fixed tariff at a rate designed to limit or eliminate low-price imports seems to be the most practical substitute. The present tariff has the desirable tendency to reduce low-price imports or dumping because of the application of the full tariff rate on hops selling for less than 50 cents a pound. This enables brewers who feel that they require some European hops for blending purposes to do so at a price that is in line with the normal value of similar hops in this country. Respectfully submitted.




Whereas the Secretary of Agriculture has the authority to declare acreage controls on either of several of the major crops in the event there is a heavy carryover in Government storage the prevous year, and nationally we did have a rice surplus and heavy carryover in 1954, for this reason acreage controls were instituted in the ricegrowing regions during 1955, reducing acreages approximately 25 percent from the previous years, and another reduction of 15 percent seems in store again for 1956.

This surplus was not the kind of rice that is grown in California. As far as we can determine California does not have a heavy carryover in Government storage, and the rice grown in this State is practically all sold, and if we continue to limit acreage in California, we stand to lose the big new market in Japan that we have been trying to develop.

It is not acreage reduction that we need.

Therefore, we recommend to this committee that there be no further acreage cuts to ricegrowers in this State of California until such time that it may be proven that all the rice grown in this State cannot be sold, or until it begins to pile up in Government storage.

We recommend a vigorous, well-planned program of development of potential foreign markets, and a practical method of meeting competitive world prices in the sale of our surplus products abroad.


STATE DEPARTMENT OF AGRICULTURE, SACRAMENTO, CALIF. Producers and handlers of 24 agricultural commodities produced in California are participating in 28 self-help marketing programs under California State laws at the present time. These programs directly affect 36,000 producers and over 3,000 handlers of farm products. The farm value of the commodities operating under these marketing programs during the 1954 season was $370 million, computed at the producer level. A total of nearly $8 million was raised by producers and handlers for the purpose of defraying the costs of operation of these marketing programs. Of this amount, more than three-fourths of the funds were expended for market expansion activities, the remainder being used for administration, and to defray the costs of inspection and certification of the products handled.

These State self-help marketing programs in California are carried out pursuant to the provisions of two principal marketing laws, the Agricultural Producers Marketing Act, which became effective in 1933, and the California Marketing Act, which became effective in 1937. The Producers Marketing Act authorizes programs applicable to producers only, but the California Marketing Act, under which practically all present programs operate, authorizes programs applicable to producers or handlers, or to both producers and handlers. The purposes of these two acts, although different in certain details, are essentially the same in that each act is designed to foster orderly and efficient marketing, to authorize plans for expanding markets, to control surpluses, and to bring about more adequate returns to agricultural producers. Thus these State marketing programs are similar in purpose to the Federal marketing agreements: and orders issued by the Secretary of Agriculture pursuant to the provisions of the Federal Agricultural Marketing Agreement Act.

In general, these two California marketing laws authorize the following op tional provisions to be included in marketing programs issued by the State director of agriculture :

1. Provisions for controlling the volume of the product which may be marketed from time to time or for the season by means of volume or quality restrictions, and establishment of surplus, stabilization, diversion or substandard pools. Such programs may also provide methods for purchase and diversion of surpluses with stabilization fund moneys collected from producers and handlers, or received from other agencies. Volume control restrictions may also include regulation of the periods during which an agricultural commodity may be processed; regulation of the movement to market of a commodity in order to prevent overshipment and market gluts, and to develop a more even flow to market. Marginal tree and vine removal programs are also authorized.

2. Establishment of minimum grade, size, quality, condition or maturity specifications for agricultural commodities and provisions for the inspection and certification of all of the commodity in accordance with such requirements.

3. Development of plans for advertising and trade promotion for agricultural commodities produced in California, including measures designed to prevent, modify or eliminate trade barriers.

4. Provisions designed to control or prevent the use of unfair market or trade practices in the processing and handling of agricultural commodities within the State.

5. Provisions for carrying on research in current problems of production, processing and distribution of agricultural commodities.

These marketing order programs in California originate with a request of the producers or handlers of a particular commodity. With the assistance of economists in the bureau of markets of the State department of agriculture, preliminary programs are developed to include those provisions, authorized by the law, which are considered to be suitable for the solution of the particular problems involved. In California the programs most commonly include authorizations for quality control and improvement, for inspection and certification, advertising and trade promotion, and research studies. Only a few marketing control programs under California law include extensive regulations for control of surpluses.

When a proposed marketing program has been developed in preliminary form, the sponsoring group then requests the director of agriculture to call a public hearing or hearings upon the proposal. This development affords an opportunity both for proponents and opponents of the proposed program, or of any particular provision thereof, to submit testimony and evidence to the director of agriculture.

After the public hearing, the director reviews the testimony and evidence presented at the hearing, and other facts available to him. If he determines that the proposed marketing order would be appropriate, and would tend to carry out the purpose of the Marketing Act, he issues the proposed marketing order for the assent of producers or handlers, or both, if both producers and handlers would be directly affected by the program. The proposed marketing order can be made effective only if written assent thereto is given by the required proportion of producers and handlers who would be directly affected. In the case of producers, written assent is required from at least 51 percent by number and 65 percent by volume, or from at least 65 percent by number and 51 percent by volume. In the case of handlers, written assent must be given by 65 percent either by number or by volume, except that in the case of fruits and vegetables for canning, or the processing of dried fruits, 65 percent both by number or by volume is required.

Each marketing program provides for the appointment by the director of agriculture of an advisory board composed of producers or handlers, or both. These advisory boards administer the programs, subject to the approval of the director of agriculture. The board recommends to the director marketing regulations and programs of activities authorized in the marketing order. Upon approval by the director, the regulations become effective, and the activities may be carried out. The administrative functions necessary to carry out the provisions of the program are performed by employees of the advisory board. General supervision of the board's activities, and enforcement and financial controls, are exercised by the director of agriculture through the bureau of markets.

Several of the marketing order programs currently active have been in operation for 15 years or more; others are of more recent origin. There is a widespead interest at the present time in these programs on the part of producers and handlers of agricultural commodities, and several new programs are under consideration.

The programs now in active operation embrace the following commodities : apples, asparagus, bush berries, cantaloupes, dried figs, grapefruit, honey, lemon products, lettuce, lima beans, cling peaches for canning and freezing, fresh peaches, fresh Bartlett pears, canning Bartlett pears, fresh fall and winter pears, canning fall and winter pears, plums, potatoes, poultry and turkeys, prunes, raisins, strawberries, and wine. Some industries have more than one program.

Each program is financed by the industry concerned. Assessments are made on a uniform basis, usually upon the units of the commodities marketed by each producer and handled by each handler. Such assessments are paid to the department of agriculture, and are deposited in special funds in the State treasury to the credit of each program. Expenditures are made by the advisory boards under fiscal rules established by the State. No general tax moneys are used for the formulation, administration, or enforcement of these programs.

The provisions of marketing orders and programs, including the collection of assessments, are enforcible in law, and violators may be subjected to the penalties prescribed in the statutes. If litigation is required in the enforcement of regulations or procedures, such litigation is conducted by the office of the State attorney general.

A copy of each presently effective State program and a concise tabulation of the provisions of all programs accompany this statement.

(The tabulation referred to above is as follows, and the copies of effective State programs are on file with the committee :)

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