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price support or better. We had a short crop and the shellers bought the entire crop. You will be interested to know how we are getting along on the 1953 program which we are still in, although we are in 1954.

To date we have acquired from 13,200 members 60,100 tons of peanuts, all of which except 2,191 tons are in Segregation 1, a high quality peanut. We have advanced these growers a little over $1212 million. In addition to the 60,000 tons of peanuts we have acquired, the shellers of our area have acquired approximately 80,000 tons of peanuts and have paid farmers approximately $15 million.

At the present time we sold or are under obligation to sell approximately 18,000 tons of these peanuts, which is about a third of them. We think we are going to sell over half of them and we know it is possible to sell all of them if we can get the job done and we are trying to do that in order that the Government won't lose any money.

Gentlemen, we think we are right in this thing and we would like for you to review this brief and make your determinations on merit only.

I thank you.
(The documents referred to above are as follows:)

Waco, Tex., January 13, 1954.
To: House Committee on Agriculture.
From: Southwestern Peanut Growers' Association, Gorman, Tex.
Subject: Damage tolerance which exists between runner and Spanish-type pea-

nuts under United States rules which is unfair to growers, shellers, and con

sumers. Hon. CLIFFORD R. HOPE,

Chairman, House Committee on Agriculture, Washington, D. O.: (1) Growers: Runner peanuts taking Spanish market.

(2) Shellers : Runner shellers have approximately $8 per ton advantage over Spanish shellers.

(3) Consumers : Consumers buy peanut butter containing 242 percent damaged runners as compared with 0.75 of 1 percent damage in Spanish. Proof

1. Runner peanuts. Farmers stock: Allowance for damage without penalty under price-support schedule, 1 percent.

No. 1 shelled : Allowance for damage without penalty under United States rules, 242 percent.

Southwest Spanish. Farmers stock: Allowance for damage without penalty under price-support schedule, 1 percent.

No. 1 shelled : Allowance for damage without penalty under United States rules, 0.75 of 1 percent.

Explanation : You will note that No. 1 shelled runners are allowed a damage tolerance of 1.75 percent more than Southwest Spanish whereas the damage allowance on farmers' stock under price-support schedule is the same for both runner and Southwest Spanish. This is not consistent and places the Southwest Spanish grower and sheller at a great disadvantage in trying to compete with the runner sheller. The runner sheller's picking cost is eliminated on the 1.75 percent and he also can sell the 1.75 percent at the No. 1 shelled price. These items amount to at least $8 per ton on farmers' stock which represents the runner sheller's advantage.

2. Runner peanuts have been improved since United States rules were made years ago. Hidden damage to runner peanuts no longer exists.

3. Dothan, Ala., Dothan Eagle, April 15, 1953, by Ed Briggers, farm editor. Heading: "Peanut progress talked at headland substation."

"Concealed damage is not a threat to the industry any more, thanks to Dixie runner seed.

"Peanut yields are getting higher and higher; quality is getting better and better."

4. The Southwestern Peanut Growers' Association and the Southwestern Peanut Shellers' Association have submitted evidence and gone on record giving facts which proves the damage tolerance under United States rules which now exists between runner and Spanish peanuts is unfair.

5. Eastland County Farm Bureau resolution on damage tolerance, October 29, 1953.

6. Texas Farm Bureau resolution on damage tolerance, November 9, 10, 11, 1953.

7. Letter from George L. Prichard, Director, Fats and Oils Branch from Virginia Growers Peanut Cooperative.

8. On many occasions the past year the Southwestern Peanut Growers' Association and the Southwestern Peanut Shellers' Association have presented the unfair damage tolerance which exists between runner and Spanish peanuts to officials of the Bureau of Standards, Inspection Service, and to the Fats and Oils Branch. These officials have recognized the fact, however, no one will take a stand and nothing has been done to correct this situation.

We respectfully submit this brief and earnestly request your consideration on merit alone. Respectfully yours,

SOUTHWESTERN PEANUT GROWERS' ASSOCIATION, By S. E. CLONINGER, Manager.

EASTLAND, TEX., January 6, 1964. Mr. S. E. CLONINGER,

Manager, Southwestern Peanut Growers' Association, Gorman, Tea. DEAR S. E.: Enclosed is the copy of the Eastland County Farm Bureau resolution on damage tolerance of shelled Spanish and shelled runner peanuts that was adopted by the voting body at the county convention October 29, 1953. You may present the resolution to the House Agricultural Committee that meets in Waco, January 13, 1954. Something should be done to correct the damage tolerance on shelled runner and Spanish peanuts. Sincerely yours,

RAY A. NORRIS, Secretary, Eastland County Farm Bureau.

RESOLUTION OF THE EASTLAND COUNTY FARM BUREAU ON DAMAGE TOLERANCE OF

SHELLED SPANISH AND SHELLED RUNNER PEANUTS Whereas shelled runner peanuts with a damage of 212 percent with no penalty are classed as No. 1 peanuts and shelled Spanish peanuts with a damage of three-fourths of 1 percent are classed as No. 1 peanuts, both go into edible trade;

Whereas shelled runner peanuts are underselling shelled Spanish peanuts, due to unfair damage tolerance;

Whereas grading procedures were established on runner peanuts before runner peanuts were improved as now exist;

Whereas shellers in some areas are being allowed picking cost on damaged runner peanuts, which does not exist; and

Whereas the proper correction be made on damage tolerance which will probably equalize prices on shelled runner and shelled Spanish peanuts: Now, therefore be it

Resolved by the voting body of the Eastland County Farm Bureau, this the 29th day of October, 1953, adopt this resolution and direct such resolution to be placed on record with copies to Secretary of Agriculture, Washington, D. C.; Director, Fats and Oils Branch, Washington, D. C.; Director, Bureau of Standards, Washington, D. C.; Texas Farm Bureau, Waco, Tex. Was approved by vote.

A. Z. MYRICK, President. RAY A. NORRIS, Seoretary.

RESOLUTIONS AS ADOPTED BY TEXAS FARM BUREAU STATE CONVENTION, MINERAL WELLS,

TEX., NOVEMBER 9, 10, AND 11, 1953 1. We insist that the proper correction be made on damage tolerance which will properly equalize prices on shelled runner and shelled Spanish peanuts.

2. We insist that the 1954 peanut loan program be announced and all information be published not later than July 1 and each year thereafter.

3. Reaffirm our support on resolutions that have been passed concerning acreage, grading, and general recommendation on peanuts.

UNITED STATES DEPARTMENT OF AGRICULTURE,
PRODUCTION AND MARKETING ADMINISTRATION,

FATS AND OILS BRANCH,

Washington, D. O., August 17, 1953. Mr. MELVIN E. SHELL,

Gorman Peanut Co., Gorman, Tex. DEAR MELVIN: This in reply to your letter of August 5, concerning grading, standards.

At the time we wrote you, we had only received a reply from Ben Birdsong, president of the Virginia-Carolina Peanut Association, opposing the Southwest proposal on damage discounts for runner peanuts. Later, we received a reply from the Growers' Peanut Cooperative giving qualified approval. The cooperative expressed the view that all shelled peanuts should have the same tolerance for damage, or, in other words, that grade standards should be changed. They further stated, however, that if this were not practical they agreed with the recommendation of the Southwestern groups on damage discounts. With kindest regards, Sincerely,

GEORGE L. PRICHARD, Director.

COMPARISON OF GRADING RULES ON RUNNER AND SPANISH PEANUTS-UNITED

STATES RULES ON No. 1 SHELLED AND GOVERNMENT-SUPPORT PRICES ON FARMERS STOCK

Tolerances allowed in grades before penalty

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As shown above, Runners are allowed 272 percent unshelled or damaged in U. S. No. 1 shelled before any penalty.

In Runner farmers stock penalty of $3.30 per ton is assessed for each 1 percent damage over 1 percent and up to 7 percent.

As shown above, Spanish are allowed three-fourths percent unshelled or damaged in U. S. No. 1 shelled before any penalty.

In Spanish farmers stock penalty of $3.30 per ton is assessed for each 1 percent damage over 1 percent and up to 7 percent.

Thus it is noted that Runner peanuts are allowed 134 percent more damage than Spanish in No, 1 shelled, whereas the Runner farmers stock is bought on the same damage basis as Spanish. This creates an advantage to the Runner sheller which amount of advantage is shown by the following example:

Figuring 1 pound of shelled peanuts is in 142 pounds farmers stock (1,333 pounds shelled peanuts is in 2,000 pounds of farmers stock), then 1 percent damaged kernels in farmers stock would be 142-percent damage in shelled peanuts. No. 1 Runner shelled allowed 242-percent damage (pounds per ton of farmers stock) -

33.3 No. 1 Spanish shelled allowed 34 percent damage (pounds per ton of

farmers stock -------

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23.3

Difference, to be sold as No. 1 shelled (pounds) --Price per pound (No. 1 shelled) -

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Price per ton (farmers stock) -----

4. 19 Plus discount (penalty) on price of Runner farmers stock (per ton) *---- 3.86

Total advantage to Runner sheller (per ton of farmers stock)------ 8. 05 11.75 percent damage in shelled peanuts=1.17 percent in farmers stock. 1.17 percent at $3.30.

The above advantage to the Runner sheller of $8.05 per ton of farmers stock is equivalent to 60 cents per pound of shelled peanuts. This advantage will gradually eliminate the Southwest as a producer of Spanish peanuts. The Southwest is unable to produce Runner peanuts as this variety requires more rainfall than is the average in the Southwest. The Southeast is switching from Spanish to Runners, producing three times as many Runners now as Spanish. The quality of Runner peanuts has been improved in the past few years, eliminating any difference that there could have been in damage between Runners and Spanish.

Unless grade is adjusted to equal basis, demand for Spanish will be eliminated. The grade can be adjusted to equal basis by adjusting the tolerance for damage in U. S. No. 1 shelled Runners so that it will be the same as the tolerance for damage in U. S. No. 1 shelled Spanish; or by adjusting the tolerance for damage in the price support schedule for Runner farmers stock so that the penalty for damage will start at 4 percent instead of 2 percent.

The CHAIRMAN. We thank you very much, Mr. Cloninger.

The next witness is Mr. Walter Connell. Before Mr. Connell begins his statement, the Chair notes that there are six witnesses representing the State soil conservation districts. The Chair doesn't know whether they all expect to present the same viewpoint or not, or whether they can combine their statement and take more time or whether they would like to have the time divided.

Mr. Boswell?

Mr. BOSWELL. Mr. Chairman, we have one spokesman with a written statement that we wish to file. One man will speak for the group.

The CHAIRMAN. Can you give us his name now? Will you be the spokesman, Mr. Boswell? Mr. BOSWELL. Yes, sir. The CHAIRMAN. We will hear from you next, following Mr. Connell.

3. CONSTANT CHANGING OF GRADE FACTORS AND TIGHTENING UP ON GRADES

LOWER GROWERS' INCOME The constant changes of grade factors and tightening up of penalty and minimum grades for peanuts eligible for loan has lowered peanut growers' income for the past 5 years, possibly $12 per ton.

(1) The trade, shellers, and end-users talk quality, gig farmers and blame them for poor quality, however, when it comes to buying peanuts they buy on price, not quality.

(2) The damage tolerance which exists between shelled Runner under United States rules allows Runners 212 percent damage and Spanish 0.75 of 1 percent is not consistent with other grade determinations.

(3) We do not want to lower the grade of Spanish but want Runners graded on equal basis.

(4) Runner peanuts are used in over 70 percent of all peanut butter, because of damage tolerance which lowers the price of Runners approximately $8 per ton.

(5) The area which produces Runner peanuts obtains approximately 99 percent of all Government contracts for peanut butter.

(6) Foreign material specifications have been reduced from 15 percent to 10 percent. Damage discounts have been increased from $19.20 per ton to $35.70 per ton. Discounts for loose shelled kernels were added in 1954 for first time and discounts were more than doubled in 1955 for loose shelled kernels.

(7) Some kind of support should be made available for peanuts which can be used for edible trade that are not eligible for loan, because of grade factors.

Each year there are a large volume of peanuts that do not meet loan specific cations, usually because of weather conditions. Growers are forced to accept whatever price they are offered. There is no way to estimate loss to growers on peanuts which do not meet loan specifications.

(8) Electric machines are now in operation which can pick peanuts at a lower cost of operation to shellers.

Results: Peanuts are brought from growers because they do not meet loan specifications at oil or below oil prices.

4. LEGISLATION NEEDED FOR HARDSHIP CASES IN SOUTHWEST AREA, DUE TO CONSTANT

FLUCTATION IN PRODUCTION, BECAUSE OF WEATHER CONDITIONS OVER WHICH MAN HAS NO CONTROL

Types of peanuts and areas which are costing the taxpayer in excess of reasonable amount in those types and areas, allotments should be cut and areas and types which are moving peanuts into edible trade allotments should be increased.

Average yield Southwest area approximately 500 pounds per acre.
Average yield Southeast area approximately 1,000 pounds per acre.
Average yield Virginia-Carolina area approximately 1,500 pounds per acre.

(1) Southwest growers being forced off farms.-In 1952 there were approximately 40,000 peanut growers in the Southwest area. In 1955 there are approxi. mately 30,000 peanut growers in the Southwest area. Average allotment, Southwest area, 13 acres.

The minimum sales price as set by CCC for the 1955 crop is too high to move peanuts out of the loan into the edible trade. (Southwestern Peanut Growers' Association and the Southwestern Shellers Association recommended that a minimum sales policy should be same as the 1953 sales policy, a year of normal production and a year in which Southwestern Peanut Growers' Association moved better than 70 percent of peanuts placed under loan into the edible trade.) The cooperatives should not be tied down with a minimum sales price. Sound realistic diversion program needed

On the desirability of a sound and realistic diversion program for No. 2 shelled peanuts when there is a surplus of peanuts to be diverted by CCC: Such a program will divert peanuts from the edible market at less cost to the Government than will the diversion of farmers stock peanuts. Furthermore, such a program will result in the consuming public receiving a uniformly good quality product of edible peanuts. However, the No. 2 program for 1955 proposed by the Department of Agriculture but not yet put into operation is not a sound and realistic program. The proposed highest price to be paid by CCC for No. 2 Southwest Spanish peanuts is 14.5 cents a pound. The price is graduated downward depending on the quality of the No. 2 peanuts to a low of 11.75 cents a pound. These proposed prices compare with the current market price for No. 2 Southwest Spanish peanuts of approximately 17 cents a pound. It is obvious that the Government cannot hope to acquire very many No. 2 peanuts when they are offering such a very low price for these peanuts. (The current market price for No. 1 Southwest Spanish peanuts is about 19 cents a pound.) Hardship cases of Southwest area not controlled by man

One of the great problems facing both growers, shellsers and end-users in the Southwest area is the tremendous fluctuations in production. For example, in 1954 which was admittedly a very poor year, only about 59,000 tons were produced in the Southwest area, compared with an estimated production of 150,000 tons in 1955.

A substantial portion of our allotted acreage about 25 percent in the Southwest area--is not harvested, and that there is no adjustment in the allotment to the States in the Southwest area to take account of this underharvesting. This underharvesting of allotted acres results from two factors. In the first place, considerable acreage is frozen on farms where it is not now being used. This is particularly true in fringe production areas where it is considered that the reduced acreage allotment that farmers receive today is inadequate to justify planting any peanuts. (It takes at least 3 years for a farmer to lose his allotment through nonuse, and for other farmers who will use it to then get the benefit of it.) The second reason for underharvesting is the fact that although the acreage is planted, as a result of adverse conditions it is sometimes not harvested. In order to better assure an adequate income to peanut growers in the Southwest area, and to better assure an adequate supply of Southwest Spanish peanuts to the users of such peanuts, that the acreage allotment in each individual State, not only in the Southwest area but in all three areas, be increased sufficiently to allow for the estimated underharvesting. In other words, the additional acreage allotment would be increased sufficiently to normally insure that about the initial acreage allotment would be harvested. This correction in the legislation may be made very simply by a one-sentence addition onto section 358 (c) (1) as follows: "In order that each State may harvest acres allotted the Department of Agriculture could estimate the proportion of acreage allotted to the State that will not be harvested for any reason, and increase acreage allotment for each State suffi. cient acres for the estimated harvested acres to equal intended allotted acres."

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