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Ours is a hand-labor proposition; our labor cost is a 50-percent proposition and people any more don't like to work with their hands.
Then, too, there has been keen competition for timber, great demand for pulpwood and sawmill timber; it reached an all time high. This tree that makes gum naval stores is like milking shorthorn; you can get turpentine and now with our present method of operation it doesn't diminish value of the tree. The other sections of the country are not so fortunate in having that valuable tree.
You know there is a large amount of land in the South submarginal which should never have been in cultivation or pastures and when cattle got a little high here 3 or 4 years ago a lot of our forests were bulldozed to put pasture grasses. "That wasn't suitable, but we have the natural habitat for the pine tree and indications are, as I say, for a big demand now.
The paper consumption in this country now is around 400 pounds per capita, alltime high. And I think that is an out especially in the South here, to plant these in trees. I have planted myself already over 5 million trees and I have 2 million ordered for this year.
The CHAIRMAN. On your land?
Mr. LANGDALE. Reasonable size. I have 2 million ordered and will plant a million and a half and give away a half million to smaller farmers provided they will match it. In other words, the small farmer, if he will plant 2,500 I will give him 2,500 more to encourage him, which I think is a wonderful thing for our section. I believe that it is the salvation and we can't compete with my friends in wheat. All I have is a 15-acre wheat allotment.
I grow tobacco, corn, hogs, cattle. They gave me 15 acres of wheat. I don't make flour; I use it for livestock and the birds.
Just plant these diverted acres in pine and make it a permanent proposition because the supply of timber in the South is not going to be sufficient in the future in my opinion.
The CHAIRMAN. Thank you.
Mr. LANGDALE. A lot of people want to know what naval stores is used for. I have a list here I want in the record to see the importance. It will surprise you, the number of things in this country that use naval stores, a very important product.
The CHAIRMAN. Thank you. It will be put in the record. (Statement referred to is as follows:)
I appear before you today representing the gum turpentine producers as president of the American Turpentine Farmers Association Cooperative which was organized in March 1936 and meets the requirements of Capper-Volstead Act and the Georgia Cooperative Act of 1921, as amended. Our association is made up of approximately 3,500 members whose production comprises more than 75 percent of the gum naval stores produced in this country. Its income is derived from two sources: (1) dues paid by producer members, the amount of which is measured by the quantity of gum produced ; and (2) royalties paid by licensed packers of turpentine in small containers for the use of the association's copyrighted symbols, slogans, and devices. Royalties so paid are masured by the quantity of gum turpentine distributed by such licensees in containers bearing all or any such symbols, slogans, and devices. Any producer is eligible for membership upon payment of a nominal entrance fee of $1
which includes their subscription to the ATFA journal, our monthly publication. Nothing in the bylaws, policy, or regulations of the association prevents any producer from becoming a member. To the contrary, the association is constantly striving to increase its membership to embrace 100 percent of the gum production.
Gum naval stores production in this country dates back to early colonial days when the English Government wanted tar and pitch for use in His Majesty's ships.
It has been said that the first ships to leave our shores carried as a part of its cargo pitch and tar to caulk the boards and tar the ropes of the ships. It is indeed interesting to note that the British Government, back in 1610, offered a subsidy to the early settlers to encourage them in the production of gum naval stores and tobacco.
History relates that naval stores and tobacco have been a vital factor in the economic and industrial development of the world for many centuries. It also appears they were the first agricultural crops ever subsidized in the United States. Gum naval stores have been produced from Virginia south to Florida and across the gulf to Texas. However, at the present time production is confined to the States of South Carolina, Georgia, Florida, Alabama, and Mississippi.
The United States production of naval stores includes: (1) gum, made from the living tree by farmers represented by the association; (2) steam distilled, commonly referred to as wood naval stores produced from virgin slash and longleaf pine stumps; and (3) sulfate rosin and turpentine made from the byproducts of the pulp and paper industry. Only gum naval stores are classified as agricultural products.
Naval stores consumption has not greatly fluctuated during the last 50 years. In 1908 all production was from gum naval stores. However, since that time, gum naval stores has gradually decreased and wood naval stores has increased and today steam distilled accounts for approximately 60 percent, gum naval stores 25 percent, and sulfate 15 percent of the production. The wood naval stores production has reached its peak and leaders of that industry predict from now on a steady decline will occur due to the rapid depletion of their source of supply: the virgin slash and longleaf pine stumps. It is estimated the combined sulfate production from all pulp and paper mills will only yield approximately 25 percent of the present demand for naval stores. It is reasonable to assume the future naval stores supply must in an ever-increasing volume come from gum.
The association has been utilized as a primary nongovernmental agency in the administration of gum naval stores price support programs since 1938. The agreement between the association and CCC governs operations of the loan program and provides that no producer who is otherwise eligible for loan may be excluded for membership in the association. The loan agreement with CCC, among other things, makes the association directly responsible for the loans made to its membership.
The record of the gum naval stores CCC price support program is one all producers take pride in relating. As previously stated, all CCC loans have been made through the ATFA to the producer. In 1947 when all CCC turpentine and rosin stocks were liquidated, the Government had recovered the principal in full with interest and charges and in addition made a profit of $1,019,000 on the combined price-support programs since their beginning through the year 1947. In addition, USDA officials in charge of the CCC gum naval stores loan programs have advised us administrative expenses, including the Washington office, is one of the lowest, if not the lowest, of any CCC program. We feel safe in stating that the profit and loss statement is as good or better than any other.
Our members do not regard the Federal Government CCC support price program as a subsidy to them, but as a means of tiding them over the heavy production months and during the period when supply exceeds demand. We produce 75 percent of the year's crop in the 5 months' period, May through September, Producers have looked upon this price-support program as an aid from the Government to enable them to help themselves. Two-thirds to three-fourths of the association's revenue has been used throughout the years on an advertising and educational program to encourage and promote a greater demand and use for turpentine and rosin. The association has made many worthwhile contributions to the promotion and sale of turpentine and rosin. In addition, it has aided in the great advancements in production techniques and forest conservation practices which are in use today. Our gum naval stores loan is a nonrecourse loan in the permissive category. The Secretary of Agriculture determines the support rate on a year-to-year basis.
For the past 5 years, the Secretary of Agriculture has granted the turpentine farmer a price-support loan based upon 90 percent of parity. We have been able to justify the 90 percent of parity based upon supply and demand ratio. This year prices are approximately 8 percent above last year. I am happy to report that even though we have a 1955 CCC loan supported at 90 percent of parity, turpentine farmers have not pledged a single pound of rosin or gallon of turpentine to it.
On the contrary, demand has been sufficient to sell more than 128,000 drums of rosin and 20,000 barrels of turpentine of the stocks held by CCC from former years. In addition, the association sold for and on behalf of its members all turpentine and rosin stocks pledged to the 1954 loan before the 1955 production began. At the present time, CCC has only 543,000 drums of gum rosin and 37,000 barrels of turpentine, which constitute virtually the only stocks in the whole industry. These modest CCC stocks amount to less than 1 month's supply of turpentine and 312 months' supply of rosin compared with the longtime normal reserve of 242 and 5 months, respectively. If all CCC loan stocks could be liquidated at today's market prices more than $142 million in profits would be realized in addition to all interests and charges.
We expect fair prices and good demand for naval stores to continue next year. Our association is striving to encourage farmers to supplement their farm income by placing their trees in production for naval stores.
The reduction in acreage allotments of tobacco, cotton, peanuts could be partly offset by naval stores income in the sections where slash and longleaf pines abound. Many farmers have slash and longleaf pine trees of suitable size to put into production. Of course, most of them only have sufficient forest acreage for small operations, from 1,000 to 5,000 faces, but thousands of farmers could work from 1,000 trees upward and we would welcome them as gum producers.
CCC price support loans are the only financial protection the turpentine farmer has for his investment which is at the present time no small consideration. Turpentine farmers must plan their capital outlay for a minimum of 3 and normally 4 years. The producer realizes the CCC loan is to support current production. ATFA's hopes of obtaining a good CCC price support loan rate depend upon stocks including CCC holdings remaining at a sound carryover level in relationship to supply and disappearance.
We, therefore, realize when our products are pledged to any loan program, they must at some date be redeemed and disposed of, otherwise we could not continue a price-support rate at a satisfactory level or 90 percent of parity. We are thankful that we have been able to maintain our stocks at a reasonably small level compared to the overall yearly production.
Our industry will continue to need the CCC loan programs as long as other agricultural and industrial assistance is granted. We will strive to keep our stocks in a proportional ratio of supply and demand to justify a loan based on sound business principles.
I thank you.
STATEMENT OF PASCHAL MUSE, PERRY, GA. Mr. MUSE. Mr. Chairman, my name is Paschal Muse. I am a farmer from Houston County, Ga., and also chairman of the fruit and vegetable committee of the Georgia Farm Bureau.
We are all very much disturbed by the continued downward trend of prices received by the farmer for that which he produces, while his cost of production is soaring. This thing has reached the critical stage, and the farmer cannot continue to produce under these conditions. In our county alone, we have decreased our farm worksheets almost 50 percent in the last 10 years.
It is serious as shown by the number of new farm mortgages for the first 6 months of 1955, an increase of $300 million over the corresponding period of 1954. The Farm Credit Administration said mortgages also averaged $1,100 more per farm this year. The agency reported the largest number of mortgages since 1951 and the largest total of loan money since statistics were started on such credit extension in 1934.
Strictly small rural towns have been hard hit due to the farmer's condition. Of course, you are all familiar with the statistics showing the falling prices of each commodity.
Under these depressing conditions the farmer cannot replace his machinery which is up 203 percent from 1939, and all other farm costs are up. Farm machinery manufacturers have just increased their prices again. Walter Reuther of UAW-CIO says that their wage increase
and the increase in the price of steel was not enough to warrant such increases. However, the price increase stands.
Thus continues the ever-widening gap between the farmer's production costs and the price he receives for his product. And this is happening at a time when the profits of other industries are at an alltime high. I noticed an article only last week which stated that the profits of one of the Big Three automobile manufacturers for the first 9 months of this year amounted to more than they had made in 21 years prior to World War II.
I believe you will agree that the major factor in both production and distribution cost is labor. Government must accept some of the responsibility for rising labor cost. The recent increase in the maximum wage level from 75 cents to $1 an hour probably had or will have some direct effect on marketing and distributing costs.
The indirect effect on cost all along the line from the farmer to consumer is undeniable. The increase in minimum wages was one of the things that led to the recent round of industrial wage increases. Such increases are reflected in the cost of farm production supplies and in marketing and distribution charges. They double upon us in more ways than one. For instance, with the fruit people, if you have some gum timber on your swampland that can be made into baskets in which we ship our fruit, the first thing the man will tell you is he can't pay you the customary $15 per thousand stumpage. He can only pay you $12.50 because of the increased cost in the minimum wage. Then, on the other hand, when you go to buy your baskets from the manufacturer he will tell you we will have to increase the price of our baskets from 1 to 2 cents to cover the increased cost in the minimum wage. So we catch it in the neck both ways. It is rather a critical condition.
I have always thought that the Department of Agriculture and the Secretary of Agriculture were supposed to be looking after the best interests of the farmers of this Nation. I have had grave suspicions that this was not true in times past, but under Secretary of Agriculture Benson my thinking has passed that point.
By his implications to the American people, the farmers of this Nation are an indolent, inefficient lot, who are capable of doing a great deal more for a great deal less, yet at the same time are asking the Government for a handout to support them in the manner to which they have become accustomed.
I resent such implications, as do other farmers, because the facts show that fewer farmers are producing more than ever before.
I am not surprised at the loss or the demoralization of the markets if they are handled as the oat support price has been handled in our section. Farm stocks of oats were moving at 92 to 94 cents per bushel
be all wrong:
in May, just prior to cutting time, when Commodity Credit sold out at 68 cents which, of course, stopped all sale of farm stocks of old crop oats and demoralized prices on the new crop oats. And all this in an area which had been declared a disaster area due to drought conditions. Farmers would have been glad to have had oats to help winter their cattle at such prices, and even now, due to the railroads "in transit rates” our local mills are getting Canadian oats delivered locally cheaper than our loan on home-grown oats.
How can this be made better?
1. Let the Department of Agriculture give out some favorable publicity about the farm program occasionally. Surely it can't
2. Get freight rates more nearly equalized. We should be able to ship a car of oats from Macon to Chicago as cheaply as from Chicago to Macon.
At this point, as chairman of the fruit and vegetable committee of the Georgia Farm Bureau, I would like to call to your attention bills which I understand are now before you which would limit the authority of ICC to prohibit trip leasing. This means a great deal to fruit and vegetable growers of this State, and particularly to the peachgrowers. We move about half our peach crop by trucks. A great many of our packinghouses are located on the farms and not on the railroads. Therefore, we can load trucks more economically as well as that in many instances it means as much as 1, 2, and sometimes 3 mornings earlier delivery.
It is very easy to see that they would have to charge a great deal more if they had to return empty than if they could lease their truck for the return trip and make it pay.
Let the State Department attend to their job of winning friends and influencing people and remain out of the job of the Department of Agriculture and its sales of farm surpluses.
In a nation with the best sales know-how in the world, built up by the biggest manufacturing industries in the world, we sit here and wait for someone to buy some of our so-called surplus products. Is that the way big industry sells?
We need to have an international sales setup with the best brains in America to sell these products to other nations. A good salesman does not necessarily have to undersell someone else in order to sell; neither does he have to make enemies of those to whom he sells.
I understand such a system is in existence but being held up by the State Department or by other means.
Discontinue the spending of huge sums of the taxpayers' money in developing new lands at a price of $2,000 to $2,800 per acre—at least until we have disposed of our surpluses and our population growth would make it a necessity.
Give the farmers not less than 90 percent support with rigid acre controls until this surplus can be disposed of. Keep in mind that even with the rigid acreage control we must only produce the type of grain or cotton or whatever crop is under consideration, which we need, and will move out in both domestic and international channels.
I would suggest that the extension services in different States would have information on the proper varieties.
I heartily endorse the soil-bank principles of taking these diverted acreages out of production as outlined by Mr. Wingate and Mr. Pace.