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STATEMENT OF JAMES HUMPHREYS, LITCHFIELD PARK, ARIZ. Mr. HUMPHREYS. Mr. Chairman and gentlemen, my name is James Humphreys, and I run a feed yard in Maricopa County, Ariz.

I am opposed to high rigid price-support program or any program that interferes with our free-enterprise system which in the past had so much influence in developing and making this country what it is today.

I feel strongly that this Government should withdraw gradually within the next 3 years from supporting any agricultural products. The time has come to look at this problem in a hard, cold, economic way, and let the laws of supply and demand determine what prices should be. In this way it will eliminate the inefficient and tend to make the other produce quality products.

Today the feeder has to buy one-half of his feed that has a high price support and still market his cattle on a free open market, thus causing an unrealistic imbalance between production cost and price received.

The primary cause of the cost-price squeeze has been not decreasing of farm goods but the increasing of wages, services, machinery, taxes, and such other items over which the farmer has no direct control.

This is something over which Congress has some control, such as minimum-wage laws, taxes, encouraging wage increases by setting the example within Congress and also controlling Government cost.

Any farm program to be successful must not be aimed only at increasing farm prices but primarily aimed at stabilizing the entire

economy.

The CHAIRMAN. What is the size of your farm?

Mr. HUMPHREYS. It is just a feed yard.

The CHAIRMAN. You are a feeder?

Mr. HUMPHREYS. Yes, sir.

The CHAIRMAN. You do not produce agricultural commodities? Mr. HUMPHREYS. Yes; we do. We produce feeds.

The CHAIRMAN. I know; but what I means is, you buy feed to feed to the cattle?

Mr. HUMPHREYS. That is right.

The CHAIRMAN. Therefore you do not want any protection on the feed grower?

Mr. HUMPHREYS. No.

The CHAIRMAN. Thank you. That is all.

Mr. E. A. Malm?

(No response.)

The CHAIRMAN. Is Mr. Glen Malm present?

(No response.)

The CHAIRMAN. Mr. Sim McFarland?

STATEMENT OF SIM MCFARLAND, PRESIDENT, MCFARLAND BROS. BANK, LOGAN, N. MEX.

Mr. MCFARLAND. Mr. Chairman and gentlemen, I am a small banker over in Logan, N. Mex. I am here in the interests of the broomcorn producer. Sometimes I wonder if I am here in the interest of the banker. Anyway, we finance a number of broomcorn producers. I feel that I am a better hand to state conditions than I am to suggest

remedies, but I feel that we have an honorable, capable Congress that can handle this situation, if it is called to their attention.

The CHAIRMAN. I think that the committee is very much informed as to what the conditions are as to the various industries. We are seeking now a solution. If you have that solution, we will appreciate it, or any suggestions from you.

Mr. MCFARLAND. I feel that we have some suggestions to offer.

I note that imports of broomcorn are permitted to come in right at the time our broomcorn is ready for market, making it in direct competition from the cheap labor country on our producers.

It seems to me it would be better if our producers could have time to dispose of that crop before imports were permitted to come in.

I feel also that prices on most everything are regulated by taxes, tariffs, and trade agreements handled by the Government, and rightly should be.

I cannot see where we will benefit by sending our capital abroad to build factories and improve production and allow their commodities to come from the cheap labor countries free of tariff, and in competition to our products.

The CHAIRMAN. I have been fighting that, sir, for 3 years. So far, I have not succeeded, but I think that next year will produce results. Mr. MCFARLAND. For anything further, we have a producer here of broomcorn, Mr. Trent Ham. I would like to introduce him, if you would hear some more from our part of the country.

I also have this table, which I should like to make a part of the record.

The CHAIRMAN. Very well.

(The prepared statement referred to, submitted by Mr. McFarland, is as follows:)

New Mexico being one of the major broomcorn-producing States in the Nation, and Quay County is one of the major broomcorn-producing counties of the State, the economic status of the farmers is of vital importance to the economy of the country, State, and Nation.

There is an estimated 20,000 acres of broomcorn grown annually in Quay County. This represents the total cash income for an estimated one-tenth of all families in Quay County. The weather condition, such as rainfall, wind, etc., are such that often times broomcorn is the only crop a farmer can grow.

The table below gives some information regarding broomcorn, (These figures are estimates from the USDA and County Agent's Office in Quay County.)

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With the above information in mind, the Quay County broomcorn growers are asking for an import duty of $50 per ton be placed on all foreign broomcorn shipped into the United States.

The CHAIRMAN. Is Mr. Trent Ham on the list? If so, I will call his name. I would like to proceed alphabetically, as I have it, Mr. McFarland. If he is not on the list, we will put him on, and we will hear from him, if it is possible.

Thank you ever so much.

Next is Mr. McGee. All right, will you give us your full name and your occupation?

STATEMENT OF FRANK MCGEE, SAN LUIS VALLEY POTATO IMPROVEMENT ASSOCIATION, MONTE VISTA, COLO.

Mr. MCGEE. Mr. Chairman and members of the committee, I am Frank McGee, of Rio Grande County, up in San Luis Valley, of Colorado. I am a farmer and have a farm in which the banker and I together own 320 acres.

The CHAIRMAN. You mean you owe him. I see. I thought that you were partners in production?

Mr. MCGEE. No. [Applause.]

I feel very much the same way, that the man who is depndent upon the land for an income is the man that is going to have to be considered in this program.

The CHAIRMAN. That is right. That is my view.

Mr. MCGEE. I have here in this report, Senator Ellender, and I appreciate the opportunity to appear before you to present this testimony, some background for which I am going to cover very briefly and step into our immediate problem.

You will know here that we are dealing particularly with the commodity which has not been mentioned in the hearings to date, that is, in this meeting. I understand that it has been mentioned briefly in 2 or 3 of the previous hearings that you have held. I am going to get into the potato program.

The CHAIRMAN. I want to assure you that your entire statement will be put in the record as though you had read it, and if you can confine your views to the methods of solution I would appreciate it, because as I have just indicated, we have 43 witnesses to hear from. I do want to give everybody an opportunity if I can.

Mr. McGEE. I appreciate that. If I may be permitted, I will make a very few brief remarks as to the background in which we base our recommendations.

First, I would like to state that our financial situation in the San Luis Valley, which comprises five counties, which is dependent upon agriculture for its economy, is getting to a serious point.

We think any time that our real-estate loans reach a point of 50percent of our assessed valuations of the farmlands, that it is a serious situation, and that according to the records from the county clerks' offices that is a fact.

We also find that our various commodity distributors, oil and machinery distributors, are in the some position.

Our farm program we think has to be considered as an overall program, but I am going to deal here with one commodity, that is, potatoes.

The potato acreage, as you know, in the past-and I wish to set up a background for a recommendation-has been reduced 50 percent in the last 20 years, but still each year we are increasing our production, and producing more potatoes each year than normally in the past. This increased production creates a problem for all of the potato industry, as you know.

As the Government records show, or, the United States Department of Agriculture records show, for each 1 percent increase in production above 350 million bushels, established as normal consumption, it reduces the farmer income 4 percent. So it does create a serious problem.

We feel that the potato producer should receive a living wage return for the management and effort involved in producing this basic crop. He should receive a fair share of the potato dollar.

A study of the price history in potatoes shows it is on a five-year cycle, the previous history, we have 2 years of that 5 when we will be below the cost of production, 2 years approximately the cost of production or slightly above, and then 1 year out of the 5 has usually shown a profit well above the cost of production.

It also shows, from this study, that the years in which we receive an operating margin to pay for the management and so forth were those years when the production was at or below the 350 million bushels, the normal consumption. So we are using that as a basis for our recommendations along this line. We think that this program can be well used on any perishable commodity and with some minor changes, perhaps, on other commodities.

If I may, we would also quote you just a short study on the price of potatoes in the various markups from the producer to the consumer and establish our contention that a reasonable return to the producer does not increase the price of potatoes to the consumer.

We would like to use 3 different years, and in this regard I know that in the Congress last year it established a fund for the study of this price relationship. It so happens that we have a group in the San Luis Valley under our marketing agreement that has been carrying on a study of that sort for some time.

I would like to cite three different studies at different price relationships.

On April 1, 1953-I will not go into detail on these, except to say on that date the price to the grower that he received was $2.60 per hundredweight. The price paid by the retailer in markets in Oklahoma City, Tulsa, and Fort Worth, in Texas, markets which we have been following in this study-the retailer had his price at $8 per hundredweight-8 cents per pound.

This study is made on the basis of using U. S. No. 1 grade, premium sized, Red McClure variety, which we produce in the San Luis Valley. On February 8, 1955, the grower received $1.60 per hundredweight and the retail price still remained at 8 cents per pound.

In order to see what might happen last spring, as you know, potatoes for a very short period, due to a freeze in Alabama and the Southern States, jumped to $4.50 per hundredweight to the grower. That was for a very, very short period. However, on May 1, just after these potatoes reached those markets we had a man in those areas who made the survey of the same markets, the same retailers, wholesalers, and brokers, and he found that the retail price had increased only 1 cent a pound, up to $9 per hundredweight.

So we find and establish here our contention that a price range in potatoes up to around 3 or 32 cents per pound, f. o. b. price to the grower, does not change as a rule the outlying retail markets.

This may fluctuate just a little more to those markets lying in close proximity to the potato-producing areas.

What we think a potato program should provide, it should provide initial regulation at the beginning end of production to curb possibly large oversupply. It should contain an incentive for the production and marketing of a quality product. We think that from past experience that has been one of the difficulties that we have had no

incentive for the quality production, and it should provide the means and money necessary to promote the use of potatoes as a basic and healthful food.

We feel that this potato program should not be under the Department of Agriculture or Congress-that they should be expected to carry it. We think that industry should accept part of the responsibility to carry their own program with the aid and assistance of Congress and the United States Department of Agriculture.

The CHAIRMAN. What kind of assistance would you suggest or have you outlined that?

Mr. MCGEE. I have it outlined in here. I will read that in just a few minutes, if I may.

We would like to have the program under the direction of the National Potato Council, that is, a committee of the National Potato Producers who will formulate and recommend to the United States Secretary of Agriculture such regulations or changes that are necessary to carry out the potato program to meet the needs of industry and to supply the amount of potatoes needed at a fair price to the consumer and a fair income to the producer.

The Secretary will in turn issue the order making such regulations effective and will assist in enforcing such order or orders.

Now to the marketing agreement part which we feel is a very important tool set up at the present time. However, I wish to point out one or two things that we need additionally to that. This procedure follows that provided in our present Federal Marketing Agreement Act.

The marketing agreements should be effective in each State or area embodying a complete marketing area. A marketing agreement is a tool which can be used to set grade and size standards to supply a quality product to the consumer. We think it is the tool that we can use in this program as a quality incentive.

And

These local marketing agreement areas should be under the direction of the National Potato Committee. The committee would be empowered to recommend to the Secretary such minimum grades and size regulations as they deem it necessary on the national basis. then through the order of the Secretary the local marketing agreement area may exceed but not fall below such minimum national grade size regulations.

Marketing agreements then are an effective means of helping the producer in marketing this commodity, but we do not feel they provide all of the means that are needed to regulate the program.

First, they do not provide regulation on the beginning end of production. This must be done through marketing allotments, perhaps transferred to acreage. This regulation is essential to keep the supply in proper relation to demand.

Then marketing agreements may be used to regulate any increase due to favorable growing conditions, such as we had this year. Here is the place where we feel that we need legislation which we are going to propose or ask to be proposed for potatoes under the Agricultural Adjustment Act.

In addition to our marketing agreement we wish to have potatoes considered there, for this reason. Marketing agreements without initial regulation on production are ineffective in getting the producer a

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