TABLE 2.-Distribution of United States milled rice, 1935-36 through 1954-551 PRIOR TO WORLD WAR II

2 Marketing year beginning August 1 in Southern States and October 1 in California.

TABLE 3.-Exports of milled rice from the United States by country of destination [In units of 100 pounds]

TABLE 4.-Supply and distribution of rough rice under acreage allotments announced by Secretary of Agriculture

[Units of 100 pounds]

INDICATED SUPPLY

Beginning stocks, Aug. 1, 1955.

Production of rough rice from 1955 acreage allotment of 1,927,

734 acres-

50, 460, 000

Supply of rough rice, or equivalent, available for milling distribution-- 76, 080, 000

INDICATED DISTRIBUTION

Continental United States and Territories..

Expected exports to traditional markets:

Western Hemisphere.

Europe.

Middle East.

Liberia and other areas..

Total exports.

Indicated distribution to traditional markets..

Estimated excess for sale to nontraditional markets or for carryover..

The estimated excess for sale to nontraditional markets represents 1,747,123 acres or 90.63 percent of the 1955 acreage allotment at average yields of 2,444 pounds per acre.

Estimated distribution to nontraditional markets...

Total estimated distribution....

Estimated carryover, Aug. 1, 1956..

NOTE.-Estimated 1956 carryover represents 1,067,156 acres or 55.36 percent of the 1955 acraege allotment at average yields of 2,444 pounds per acre.

The CHAIRMAN. You may proceed.

Mr. BLAIR. I will touch briefly on these four tables. The first deals with acreage and production, which indicates our production has increased from 1935 to 1955 from a little over a million acres to a little less than 2 million acres. The increase has been pretty steady. We have broken it into 5-year periods for an average and the increase has been steady.

The CHAIRMAN. Is that the country over?

Mr. BLAIR. That is the United States, figures for the United States as taken from USDA.

Rice distributed in the United States on a volume basis on per capita consumption has increased a little as the figures will indicate. Our territorial distribution has increased a little as the figures will indicate. Our Territorial distribution has remained about stable or increased a little bit but the percentage going to these various areas has decreased.

Senator SCHOEPPEL. I would like to ask the gentleman this question: I note you said your acreages have increased in the amount that you have designated. Now, is the productive capacity of your present acreages in rice susceptible of being increased by additional fertilizers and, all of those things, to further expand the production on the acreages you now have and, if so, about what percentage, if you have any figures on it?

Mr. BLAIR. I could not say what percentage the present acreage could be increased. Our per-acre production has been increasing each year for several years. This year is an all-time record. I think one thing that might account for the increase in per-acre yields over the last 4 or 5 years is very favorable weather conditions along with better methods of cultivation and better and more fertilizers.

The CHAIRMAN. Proceed.

Mr. BLAIR. I might point out in connection with both the production and distribution that we have had a great change in the method of handling rice primarily because of labor shortages during the war we have gone to combine harvesting, bulk drying, et cetera. We have a tremendous investment in handling facilities as well as what the farmer has invested in his crop.

Table 3 deals with the exports of rice by country of destination as set up by the United States Department of Agriculture. You will note from that table that a big percentage of our rice has to be to export markets. For the last 4 years better than half of our production, about 55 percent, has gone to export markets.

The last table deals with the projection of the situation which we face now with respect to our supplies on hand. Assuming that we don't get much rice into our nontraditional markets in the Far Eastern exporting markets we have about a year's supply of rice on hand. If we can move with the assistance of Public Law 480, and some other laws, 5 million hundredweight of milled rice, we will still have 70 to 75 percent oversupply, which in the absence of the legisation which was passed this past year, woud have meant an indicated cut of somewhere around 60 percent even from this year's acreage.

Actually of course it is limited to 15 percent because of legislation passed by Congress this year.

I would like to support the preceding witnesses in their suggestion that the committee and Congress should seriously consider the application of what we referred to as a two-price system of marketing for rice to apply to our future crops. I have a personal objection to calling it a two-price system because when I think of a two-price system I think of a maintained domestic price and subsidized export price. That is not what we in the rice industry talk about. We are thinking of a supported domestic price and a free price and additional production which would move at whatever world prices it could move at. The CHAIRMAN. Mr. Blair, you may recall that the committee asked the Department of Agriculture to make a study of this two-price system with respect to rice.

Mr. BLAIR. Yes, sir.

The CHAIRMAN. And the report they made was not too favorable, as you know, and they pointed to quite a lot of administrative difficulties. Would you mind referring briefly to those objections for the record? Mr. BLAIR. I would be glad to touch on them. In fact, in my statement I had remarks about it.

The Department in its summaries or findings, if we can call them that, seemed to not favor a two-price method of marketing for rice, but in the text of their statement and in their figures they gave the strongest arguments that I have ever seen for such a proposal. They provided a table in there which indicated on the basis of parity prices and support rates at that time that with a 90-percent support program

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the rice producers could expect about $190.7 million total returns, with a 75-percent support program, he could expect an increase to $192.3 million, and one of their other suggestions in that study was that perhaps the support level should be lowered enough that we didn't need acreage controls and they suggested 65 percent, which would allow an additional $5.3 million increase in total returns.

In that same table were the figures on a two-price method of marketing which would indicate a total return to producers of some $232.9 million, or an increase of $42.2 million total returns to rice producers.

I think if we put it in terms of an individual farm based on support levels, that it makes more sense. We assume a farm of a hundred acres. It would indicate then that at 75 percent of parity the farmer could expect about an 0.84 percent increase in gross return in return for 20.3 increase in acres, get $17.92 per acre less gross return for the additional 20.3 acres he planted, total for his farm on 120 acres of $87 more.

Senator YOUNG. What is your present support level?

Mr. BLAIR. This year the crop was supported at 85 percent of parity.

Senator YOUNG. What do you expect it will be next year under the present formula they use for determining price supports?

Mr. BLAIR. I don't see how it can be more than 75 or 76 percent based on the supplies we are going into the new crop year with.

Senator EASTLAND. You want 90 percent domestic for next year? Mr. BLAIR. We think that the rice farmer who is producing in this economy, buying products which are high in price, which are supported either directly or indirectly in price, particularly by wages, and make up a big portion of it, and selling to the people who have the income to pay, is entitled to a high level of support, 90 or 100 percent.

Senator EASTLAND. I agree with you.

The CHAIRMAN. Mr. Blair, I wish you would go back to the question I asked you, which you have touched on just now, the reasons that led you to believe that the Department has offered arguments regarding the two-price system. What I want you to discuss with us, if you can, is the difficulties that the Department has pointed out in the administrative field.

Mr. BLAIR. Yes, sir. If I might just precede that with the advantages as set down on page 30 of the statement.

The CHAIRMAN. We have that. That is the point. What we want is to find out your criticism of the reason they say it is not practical. That is what we want in the record.

Mr. BLAIR. Yes, sir. They pointed out, as I remember, 2 principal objections to a 2-price method of marketing. One was the complex administrative procedures, which would be required to insure effective and efficient operation of the program, the second was the fact that the ability of the United States rice producers to compete for a share of the world rice market would probably be regarded as dumping. As to the first one, the United States Government and even the United States Department of Agriculture in my opinion administers many programs that would be much more complex than the administrative difficulties of a two-price method of marketing. Even their present program with its acreage allotments, acreage controls, with its measuring, with its compliance provisions, with having to take