we had on cottonseed oil during and right after World War II and the Korean war is a classic example. I remember how hard the oilmilling interests of North Carolina and other States worked to get that embargo lifted. My brother was in Washington and a number of people in this room were trying to get them to lift that export embargo, but they held on and as a result Commodity Credit had probably several billion pounds of oil in a few years after embargo was

won.

The CHAIRMAN. Isn't it true the same thing occurred with respect to cotton?

Mr. UPCHURCH. Yes.

The CHAIRMAN. We had 212 million bales of cotton and because our cotton didn't go on the market, foreign cotton was selling 90 cents a pound and encouraged lots of farmers to go into the cotton business. Mr. UPCHURCH. Yes, sir. In 1950 and 1951 cotton season textile people thought we had, claimed they thought we did not have enough cotton and an embargo was placed on cotton for export and we lost sale of over 2 million bales of cotton. Cotton sold sky-high, foreign grown sold sky-high and many nations expanded cotton and it kept on expanding until today. I don't think 90 percent of parity is too high for controlled crops. I would like to ask the people in this group how many of them think 90 percent is too high.

The CHAIRMAN. We don't have a contest now. I know how they would vote. You don't have to tell me. I have been following Mr. Cooley on that to some extent.

Mr. UPCHURCH. The average cotton allotment in North Carolina is only 5.5 acres. Ninety thousand people this last year, in 1955, grew 515,000 acres of cotton.

Mr. COOLEY. Suppose we had a 5-acre minimum in the cottonacreage law. Would it operate at all in this State?

Mr. UPCHURCH. Yes, it would. I think it would take about, I would hate to say

Mr. COOLEY. Nobody would get over 5 acres?

Mr. UPCHURCH. I don't think you could say 5 acres. You might say the largest planted acres up to 5 acres, because a lot have not been planting 5 acres. A lot have planted 3 acres.

Mr. COOLEY. A straight-out minimum of 5 acres would wreck the program?

Mr. UPCHURCH. It would take the entire allotment for the State and they wouldn't even plant it.

Mr. COOLEY. The man with tenants would have nothing for his

tenants.

Mr. UPCHURCH. That is true. I have spelled this thing out here. We have been asked for specific recommendations today.

The CHAIRMAN. We would like to have something new. I can give assurance your statement will be put in the record as though you

read it.

Mr. UPCHURCH. I don't believe anybody ever advanced it but me. There is one crop we can grow that won't compete with anybody, I think we can grow it successfully from upper Virginia to the Midwest, and all the way through Florida, and that is crotalaria. It is a soilbuilding crop. We would increase fertility of our soil and we can grow up to 5 to 6 tons of dry matter per acre and with a little help

to these paper companies they can make paper out of it. Considerable work has been done along those lines.

If a farmer could plant crotalaria with no fertilization, nothing to do but sow it and harvest and reap $40 or $50 from paper industry and save small trees, we would go a long way toward solving this problem.

The CHAIRMAN. Have they made experiments sufficiently far that you can produce paper from it?

Mr. UPCHURCH. Yes. The so-called Products Co. at Hartsville, S. C., made cones out of it. Considerable work has been done on it. The pulpwood people are worrying about where they will get the pulpwood for the future. It will take twice as much pulpwood in the year 2000 as it does now.

The CHAIRMAN. Maybe we have too many pulpwood mills in North Carolina.

Mr. UPCHURCH. They don't have enough to meet demand. Pulpwood price is going up. Newsprint prices have gone up 2 or 3 times. That is the one thing the little farmer and big farmer and everybody could grow. They can harvest that mechanically and carry it to the pulpwood mill.

The CHAIRMAN. The first thing to be assured of is a sale. You get these people to make paper out of it and you won't have trouble disposing of it.

Mr. UPCHURCH. I think you could give State college a half million dollars and they could work out the details and get the pulpwoodThe CHAIRMAN. We are giving them a lot now. We have four laboratories.

Mr. UPCHURCH. I did a lot of work several years ago on it and ended up like this: The laboratory at Savannah, Ga., I contacted them and they said they would like to experiment on it, and if I would harvest it and pay the freight down there they would run some experiments. I said I didn't have anything to gain by it, so why should I pay it and I dropped it.

I think we have to get away from the thinking that this high nave to think different from what we have done to solve the problems of agriculture. We just simply can't take less with industry getting more. The thing I can't understand is why no manufactured product is regarded as surplus.

In my town they have literally thousands of vehciles and some of them are brand new, made in 1955, out in the weather. They are Army surplus but they are stored there. You don't hear a word about those. The people that manufactured them. got 2 or 3 times the labor involved, got 2 or 3 times what the farmer got for his labor. The CHAIRMAN. You are stating the problem now. Have you got anything else to offer?

Mr. UPCHURCH. Those are the things, I think one thing you could do for these farmers who have been hard hit, especially like the ones in North Carolina due to the hurricanes, and tornadoes and droughts, we could set up a program to loan them commodities rather than money. Let them replace those commodities in 3 years. The Government would be better off because they would be getting new grains that might be going out of condition. The farmer would repay it in 3 years.

The CHAIRMAN. What would he do with it?

Mr. UPCHURCH. Process it and sell it or feed it to cattle or do anything he wanted to, just like he owned it. He would put that grain back in 3 years, he would divide his loss in 3 years, it wouldn't make any more grain because he would have to grow the grain on allotted acres. I think it would save North Carolina farmers in the eastern part of the State a great deal of money right now. If a man lost his cotton crop loan him three-fourths of the number of bales he actually grew.

The CHAIRMAN. That cotton would find itself back in the channels of trade and it wouldn't lessen our burden any, would it?

Mr. UPCHURCH. It would to the extent that that farmer did not make any cotton that year.

The CHAIRMAN. The fact that he doesn't make it, of course it is too bad for him. We have had lots of people to suffer in my area with hurricanes and by the way, of course I don't wish any bad luck to anybody, but you know since 1926 we have been able to shoo most all the storms to the east of us and I hope we can get them farther east. But those are things you can readily understand, that if there is a calamity in one place, the farmer

Mr. UPCHURCH. I am not wanting the Government to give the farmer anything, just loan him something.

The CHAIRMAN. What good would it do if he put it back?

Mr. UPCHURCH. It would save the Government appropriating money to bail him out rather than-loan him commodities they already have.

The CHAIRMAN. To fed his stock?

Mr. UPCHURCH. Yes, or in the case of cotton, loan a man threefourths of his cotton.

The CHAIRMAN. What would he do with the cotton?

Mr. UPCHURCH. Sell it.

The CHAIRMAN. How could you get rid of supplies that way? You take it out of the warehouse, give it to him, and let him sell it to the trade.

Mr. UPCHURCH. Yes, and he would put it back and the Government wouldn't be any worse off. They would save an average of 18 months' storage on the deal.

Mr. COOLEY. Did you explain who you are and your official connection?

Mr. UPCHURCH. I am president of the North Carolina Cotton Growers Association.

The CHAIRMAN. Thank you.

Mr. Sugg, please.

STATEMENT OF JOE S. SUGG, EXECUTIVE SECRETARY, NORTH CAROLINA PEANUT GROWERS ASSOCIATION, INC., ROCKY MOUNT, N. C.

Mr. SUGG. I am Joe S. Sugg.

Mr. Chairman, here is my statement. I think it will require about 7 minutes.

I am here as executive secretary of the North Carolina Peanut Growers Association and as a peanut farmer of Edgecombe County, N. C. The North Carolina Peanut Growers Association is a non

profit, producer-supported organization representing the peanut growers of North Carolina, or approximately 60,000 farm families.

On behalf of these farm families, I wish to express their sincere. appreciation for this opportunity to discuss with you briefly and, I hope, constructively, some modifications which we feel will improve the present peanut program.

Before discussing the proposed modifications, I wish to make it crystal clear that the peanut farmers of North Carolina have believed in, cooperated with, and approved overwhelmingly the peanut programs which have been in effect since 1933. This approval has been evidenced by the very substantial majorities with which all grower referendums have carried. These programs have added stability previously unknown to the peanut farmer. As aware as we are of the benefits which have accrued from the peanut programs, we are cognizant also of the criticisms which have been directed against itparticularly the alleged high cost to the taxpayer.

As a means of strengthening the peanut program, the following modifications and changes with price support and marketing quotas continued in effect as now provided by law are presented for study and consideration.

(a) The definition of "normal supply" would be corrected by changing the allowance for the carryover from 15 to 30 percent of the estimated domestic consumption, plus estimated exports. Such a change would assure consumers of ample supplies in years of abnormally low production and would not, when coupled with other changes proposed herein, create any excessive cost.

(b) The present national minimum allotment provision would be modified so that allotments and quotas for edible purposes would be fixed more closely in line with demand, except that such allotments could be reduced below the present minimum of 1,610,000 acres by more than 5 percent per year.

(c) Under the present program $9 per ton is deducted from the support price of all peanuts marketed by producers to cover the costs of handling and diverting those peanuts not needed to meet edible requirements. For example: With support now at 90 percent of parity or $242 per ton for the 1955 crop, the market level is established by the announced support less $9 per ton or an average advance of $233 per ton for all types.

We suggest for consideration that the full announced support be advanced to producers and a payment of not more than $12 per ton be paid on all peanuts marketed by producers to cover the cost of handling and diverting those peanuts not needed for edible requirements. The payment would not exceed $9 per ton for the 1957 and 1958 crops, or $12 per ton for the 1959 and subsequent crops.

If the fund was inadequate to pay diversion and other costs in any year, Commodity Credit Corporation would pay the deficiency and would be repaid out of the fund in later years.

The amount of payment would be fixed each year to provide estimated funds required to cover handling and diversion costs for the year plus any amounts owed to Commodity Credit Corporation or minus any surplus carried over in the fund from prior years.

(d) In lieu of the present penalty on peanuts marketed in excess of the farm quotas, an amount in addition to (c) above would be paid on all such excess peanuts equivalent to 60 percent of support price

or cost of diversion, whichever is greater. Also, none of the excess producers' peanuts would be eligible for loan. As now provided by law, peanuts harvested in excess of the allotment for any farm in any year would not be considered in the establishment of the allotment for the farm in succeeding years.

(e) Not more than $250,000 annually would be made available by the Secretary of Agriculture from funds derived from (c) and (d) above for use in publicizing peanuts and peanut products and promoting their consumption.

An industry committee would be established by the Secretary of Agriculture, including growers, shellers, brokers, and manufacturers, to advise him on the most constructive use of this fund.

(f) We recommend strongly that peanuts be supported at a level of not less than 90 percent of parity.

To summarize the operation of the peanut program as modified by the above suggestions, the following conditions should prevail:

(a) Commodity Credit Corporation would operate a "sound" program for purchase and diversion of No. 2 peanuts so as to minimize more expensive diversion of farmers' stock peanuts. This should permit reduction of the general payment on all peanuts below the authorized maximum of $12 per ton.

(b) Use of marketing cards would be continued. Buyers would be responsible for payment of the specified amount per ton for each year on all peanuts marketed by farmers and would be authorized to deduct such amount from the price paid. The buyer also would be responsible for payment of the amount determined for excess peanuts and would be authorized to deduct such amount from the price paid to growers. Peanuts placed under loan would not be sold for edible use at less than the support price, plus a markup of 15 percent of the loan.

(c) The $9 per ton which is now deducted from the announced support and penalties collected for excess peanuts are not credited to the total cost of the peanut program. Under these proposals the funds obtained from the general payment of not over $12 per ton would be sufficient to cover the cost of diversion of surplus averaging 10 to 12 percent of the total production. The funds obtained from the payment on excess peanuts would cover the cost of handling and diversion of such peanuts.

(d) We recommend an increase in research and education, on production, marketing and utilization. These suggested modifications will, in our opinion, strengthen the producers position, protect more amply the consumers position with respect to supplies and reduce the costs of the program.

Thank you, gentlemen, and I offer to you our cooperation and assistance in every possible way in connection with solving the problems of the peanut grower which may come before your distinguished committee.

The CHAIRMAN. Thank you.

Mr. COOLEY. Do I understand that you are advocating a price support at 60 percent of parity on excess peanuts?

Mr. SUGG. A penalty. In other words, a man who plants in excess of his allotment would pay the $9 to $12 a ton just like the man in the allotment.