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absorb-in other words, production for the export market which, obviously, must be at world market prices.

This boils down to two prices, one at world market prices, for the portion of the farmers crop produced for the export market and one at 90 to 100 percent of parity, for the portion of the crop produced for the domestic market. Since, as we envision it, the only part of the crop supported would be that for the domestic market we prefer to call it a domestic support program. Generally, all of the various proposed programs which involve dividing markets at different prices, regardless of how or why, are lumped together as two-price systems.

There have been a number of objections raised to such a program but I can't see that any of them are valid enough to prevent giving it a trial-particularly in view of the consequences if we don't.

First, it is agreed, it will be administratively difficult. There seems a general admission that such a program can be established, administration should be no more expensive than the present one and the overall total cost would certainly be less. This argument then becomes a problem of someone having to do a lot of work.

Second, consumers would object to paying more than rice is exported for. Statistics do not show any measurable difference in domestic rice consumption due to price. Certainly United States consumers do not eat less bread or other commodities which are exported at lower prices, even when the exports are subsidized. There is no reason to think they would suddenly stop eating rice, either.

Third, other exporting countries would consider such a program as dumping. Since it would not be dumping I see no reason for us to become alarmed. Every other major rice exporting country of the world that I know of uses a two-price system. Sometime we must meet competition if we are going to have a market. No such accusation has been lodged with reference to the products which we actually are dumping, by subsidy, such as wheat, feed grains, citrus fruits, et cetera.

Rice has some very different characteristics from some other commodities for which such proposals have been made. Our rice is wanted and needed in export markets, it is a finished product, it would not be coming back into our domestic market in some other form to compete, our domestic support program would not affect other cereals or food products, and the rice milling and distributing industry has indicated they favor such a proposal over the only alternative of trying to operate at less than half of normal rates which is probably considerably less than 25 percent of capacity.

To those of us whom I represent here today, it seems that a decision must be made soon on a sound long-range program. We believe the one I have suggested is the best of the many alternatives we have seen proposed. We would like to see it tried and it is my opinion that the majority of rice farmers are willing.

The CHAIRMAN. Do you have much opposition to a two-price system?

Mr. FULLER. Not after the individual farmer understands it and looks at it from the long-range standpoint and realizes the drastic situation that is beginning to exist in our stocks.

The CHAIRMAN. We have other rice farmers to appear and I will get their opinions. Thank you.

I wish to place in the record at this point a statement by Mr. H. F. Chenault, president, Rosedale Rice & Grain Association, Rosedale, Miss., on the rice question.

(Mr. Chenault's prepared statement follows:) My name is H. F. Chenault, of Rosedale, Miss. I am the president of Rosedale Rice & Grain Association, also a ricegrower. I would like to call to the attention of this committee shrinking income of the rice farmer and increasing costs of operation, also I would like to remind you that we have already dipped into our savings to try to make it through until we have a sound program.

It just seems to me that our time is getting mighty short; something must give soon. On my own farm I cannot take many more acreage cuts and price cuts without going out of business.

It seems to me that are bins are about to get full. Something will overflow one of these days. The warehouse acreage is about to catch up with our planted acreage in rice.

We are expected to get another cut of 15 percent for 1956, and I cannot see where one dime can be cut from the overhead or from the cost of necessary materials that go into the overall cost of producing the rice crop. In fact, it looks now as if the cost of labor and material may be up as much as 5 percent. We find ourselves on very uncertain ground. We are forced by the banks and other lending agencies to vote for acreage allotments, and I doubt seriously if any farmer, down deep in his heart, believes that we have anything resembling a sound program.

Therefore I ask this committee to recommend to the Congress a realistic program based on a policy of sales in the world market. We think we deserve some kind of protection from the domestic markets since labor and industry has protection, but we are willing to take our chances with any other part of the world on a competitive basis.

The CHAIRMAN. Mr. Blair, give us your name in full and your occupation, please.

STATEMENT OF GEORGE B. BLAIR, GENERAL MANAGER, AMERICAN

RICE GROWERS COOPERATIVE ASSOCIATION, LAKE CHARLES, LA.

Mr. BLAIR. George B. Blair. I am general manager of the American Rice Growers Cooperative Association with headquarters in Lake Charles, La., and operating in the States of Louisiana and Texas and handling about 25 percent of the total production in the 2 States.

Senator, in lien with your request, if I may I would like to file this statement, which is pretty comprehensive, as my testimony, and only touch on some points in it that have not been covered by the other people and point out some specific figures.

Much of the statement is devoted to four tables which are numbered 1, 2, 3, and 4 at the end and deal with our historical situation as to production, as to distribution and as to markets, and as a projection of the situation we face today.

The CHAIRMAN. The whole statement will be put in the record at this point.

(Mr. Blair's prepared statement follows:) My name is George B. Blair. I am general manager of the American Rice Grower Cooperative Association with headquarters in Lake Charles, La., and with a membership in both Louisiana and Texas, representing about 25 percent of the total production of those 2 States.

I appreciate the opportunity of appearing before you to discuss the very difficult situation facing the United States rice industry and urging the development of legislation which we hope and believe will alleviate some of our problems.

I have prepared some tables, numbered 1, 2, 3, and 4 which I believe will very pertinently point out the problems which face us and the direction in which the solution lies.

Similar tables to these were presented before a subcommittee of your committee at hearings in Washington, D. C., on May 23, 24, 25, and 26, 1955. I have brought these tables up to date but since the hearings before the subcommittee have been printed for the use of your Committee on Agriculture and Forestry. I do not propose to spend much time in detailed discussion of these particular figures.

ACREAGE AND PRODUCTION OF ROUGH RICE IN THE UNITED STATES Table 1 refers to the acreage and production of rough rice in the United States for the period 1935 through 1955 broken down into periods immediately prior to World War II, during World War II, the 5 years immediately following World War II, and the 5 years just ended. We have used averages of these periods as being representative of a general trend.

You will note from this table that the acreage of rice in the United States has increased from 1,018,000 acres for the period prior to World War II to 2,111,540 acres for the immediately preceding 5 years, a little more than double the prewar period. Production has increased from 22,777,160 hundredweight of rough rice to 50,877,000 hundredweight for the 5 years just ended. The average production increase has been 14 percent greater than the average acreage increase. Rice acreage in the United States has shown a fairly steady increase for the past 20 years.

Much of the increase was accomplished under very extreme wartime restrictions and conditions with shortages of equipment, material, fertilizers, and other items needed for agricultural production. Rice has been one of the strategic weapons which our Government has used. During the war the rice industry was required by Government decree to set aside from 40 to 70 percent of the rice milled for use by Government agencies. Even after World War II, adequate supplies of rice were of such strategic importance that the Government continued its restrictions and urgings for additional production. Rice was one of the last commodities to be released from price controls after the end of World War II. It was only after the harvest of the 1953-54 crop that exhort controls were removed from rice,

We could make many suggestions as to the basis or cause of the situation in which we now find ourselves. The fact remains, however, that the rice farmer went all out to try to meet the requirements placed on him and we find ourselves in a very difficult situation. We do not believe that all of the fault can be charged against a rice farmer who went from a period of export controls on a crop in 1953–54 to a 45-percent surplus position in 1954–55.

DISTRIBUTION OF RICE MILLED IN THE UNITED STATES

Table 2 deals with the distribution of milled rice for the period 1935 through 1955 and is broken down into the same periods as is table 1.

We have attempted to show where the rice milled in the United States was distributed to and have broken the distribution down into disappearance within the continental United States, shipments to Territories, and exports, which include all countries other than the United States and its Territories.

You will note that the amount of rice used in the United States for human consumption and industrial uses has increased over the period of years. The percentage of United States rice production which has gone for this purpose, however, has decreased from 57 percent prior to World War II to 32 percent for the period just ending.

The per capital consumption of rice has remained steady or has increased slightly in the United States, ranging from 5.9 to 6.4 pounds over the 20-year period.

Shipments to Territories over the 20-year period have remained steady or shown slight increases in terms of volume but the percentage shipped to the Territories has decreased from 25.2 percent for the period prior to World War II to 12.1 percent for the immediately preceding 5 years.

From the third column you will note that there has been a steady increase in rice exported from the United States for the past 20 years. The percentage of increase in exports has gone from 17.6 percent prior to World War II to 55.7 percent for the 5 years just ended.

I think this table illustrates what a tremendous impact the loss of export markets can have on the United States rice industry with well over one-half of our production going to those markets. Rice production in the United States is highly mechanized and very expensive. The rice farmer has an investment of from $100 to $150 of equipment for each acre of rice farmed and his out-ofpocket cost for production will run around $90 per acre. To cut the acreage back to a point where the industry is supplying only the domestic market means a reduction of about one-half in total acreage and a consequent great increase in per-acre cost of production.

Because of labor shortages during and after the war, the rice industry has gone to combine methods of harvesting and artificial drying and bulk storage of rice. There are tremendous investments in drying and storage facilities as a means of moving a highly perishable crop which must move from the farm to the drier on the day it is harvested if it is not to deteriorate. This is not the whole story. The merchant, the banker, the implement dealer, the gas and oil distributor, the public transportation system, and many other segments of our economy in the rice-producing areas of the United States are vitally or totally dependent on rice production. To reduce rice production to the point of supplying the domestic market means a cut of about half in the incomes from rice of these industries and service institutions with its consequent impact on every individual in the community.

EXPORTS OF RICE BY COUNTRY OF DESTINATION Table 3 deals with exports of milled rice from the United States, by country of destination, for the period 1950 through 1955. The grouping of countries is that used by the United States Department of Agriculture in tabulating rice exports. Using averages, for purposes of more accuracy, you will note that the Western Hemisphere has taken 5,978,000 hundredweight of milled rice representing 43.26 percent of the total United States rice exports. Europe has taken 420,000 hundredweight representing 3.04 percent, Far Eastern countries have taken 7,315,000 hundredweights, representing 52.96 percent and other countries of the world hare taken about three-fourths of 1 percent of United States rice exports. You will note that the large purchaser of rice in the Western Hemisphere has been Cuba, with her purchases representig 36.33 percent of the total United States exports leaving only about 7 percent of United States exports for all other purchasers in the Western Hemisphere. The other large purchaser of United States rice is Japan with purchases representing 24.20 percent of total United States exports. These two countries have accounted for over 60 percent of United States rice exports for the last 5 years.

These figures on exports include all rice milled in the United States. I think you will find that, of the total exports from the United States, approximately 75 percent represents medium- and long-grain varieties produced primarily in the four southern rice producing States, of Texas, Louisiana, Arkansas, and Mississippi.

SUPPLY AND DISTRIBUTION OF ROUGH RICE UNDER ACREAGE ALLOTMENTS Table 4 is a projection of the estimated supply and distribution of rice on the basis of average yields and under the acreage allotments as announced by the Secretary of Agriculture.

You will note that, including stocks left over from the last crop, we have a total of a little over 76 million hundredweights of rough rice available for distribution during the current crop year after deducting seed rice for next year and rough rice which will be exported in that form.

Based on historical performances and being as liberal as possible in order not to overstate our problem, we can expect the distribution of this rice to take about the pattern indicated in table 4 which would leave us with almost a full year's production of rice to dispose of in nontraditional markets or to carryover into the 1956-57 crop year.

Assuming some exports going to these nontraditional markets and that assistance of United States Government program such as Public Law 480, will move additional amounts totaling better than 7 million hundredweights of rough rice, we still find ourselves going into a 1956–57 crop year with some 35 million hundredweights of rough rice, or equivalent, representing production from over 1,400,000 acres and indicating an acreage cut except for limiting legislation, of about 60 percent in addition to the 22 percent cut on this year's crop.

INDUSTRY EFFORTS TO MEET THE PROBLEM The United States rice industry cannot afford to be placed in the position of a residual supplier. Not only can it not afford to be placed in this position from the standpoint of the industry but, we believe, it is to the best interest of the United States to maintain a stable rice-producing economy. In view of the extremely critical situation in the Far East and with rice being the food item which is in demand and which would be extremely critical in event of action similar to that which developed out of the Korean situation, we believe it is in the best interest of the United States Government with respect to its foreign commitments, its foreign economic policy, and its defense activities, to keep a healthy stable producing machine in the United States rice industry.

The industry is aware of the fact that it must continue its effort to expand the consumption of rice in the United tates. Rice producers in the States of Texas and Arkansas are, at the present time, spending about a half million dollars a year of their own money in an effort to increase rice consumption in the United States. Mississippi and Louisiana are organizing promotional campaigns. These are not efforts to advertise brands of rice. They are simply all-out efforts to increase rice consumption. The millers and brand advertisers are spending millions of dollars a year in an effort to promote and increase the consumption of rice and I am sure that you gentlemen of the committee have seen more rice advertising on your television screens in the past 18 months than you have in any much longer period before that time.

The rice industry has been aware of our situation for some time and in 1953 even while export controls were in effect, the rice industry advisory committee strongly urged the Secretary of Agriculture to impose acreage controls on the 1954 crop in order to prevent the surplus situation that we face today. Again, in December of that year the advisory Committee repeated its urgings that acreage controls be imposed on rice production. No such action was taken.

We are thoroughly aware, as rice producers, that, regardless of where the fault may lie, all of us face a most difficult situation and must work to a solution which is sound and satisfactory to everyone and every agency concerned. We pledge you our cooperation to that end.

A DOMESTIC PRICE-SUPPORT PROGRAM FOR RICE

I am sure all of you are familiar with the study printed as House Document No. 100 and entitled "A Study of Various Two-Price Systems of Price Support and Marketing Which Could Be Made Applicable to Rice." The study was made by the Department of Agriculture pursuant to section 315 of Public Law 690, 830 Congress.

This study is one of the most thorough and objective studies it has been my pleasure to see. I think it covers the subject well.

I have a personal objection to designating the programs which have been discussed in connection with rice as "two-price systems." When I think of a twoprice system of marketing, I think of a fixed domestic price and subsidized export price. I believe this is the picture most people see when that descriptive title is applied. I think "domestic price support program" would more accurately de scribe what we were talking about. I have heard very few suggestions to the effect that our problems in the rice industry should be solved by Government subsidization of the rice which we export. I will continue to use the two-price designation for simplicity but, I hope, with all of us having a clear understanding of its meaning.

All of our discussions and suggestions center around some method whereby the rice producer in the United States can retain a measure of price support for the rice which goes into our primary markets and yet be allowed to produce, if he can do so economically, for other export markets where price is one of the principal factors.

Because of the peculiarities of the demand for rice and its heavy dependence on export markets neither a support level at 90 percent of parity with rigid controls nor the so-called flexible support program can solve our problems. If we are priced out of our export markets we have lost an outlet for a large portion of our crop and the loss is sudden and abrupt. Both the "rigid" and the “flexible". programs of price support contemplate reducing acreage and production until the market is able to absorb all of the production at a fixed level of parity. One would maintain the level of parity while the reduction is being made while the other simply reduces the level of parity at the same time the acreage is being

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