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5. Low volume and inadequate facilities for handling manufactured milk.

6. Wide price differences to grade A producers within and between markets.

7. Lack of confidence on the part of many producers and many distributors in the market, the marketing system, and marketing regulations.

8. Need for more coordinated planning and action among producers, distributors, and Government agency employees on a long-range program for

the dairy industry. Since the report was given, we have made some progress, but the problems enumerated still exist to a very great degree.

STATEMENT ON SPECIFIED ISSUES

This portion of our testimony deals with some of the questions of national concern, most of which directly affect our dairymen. Special school milk program

We commend the Congress for authorizing the special school milk program, under which $50 million was available last year and another $50 million for the current year. The program has certainly been a success in our State, and many schools and hundreds of schoolchildren are now getting milk at school for the first time. We understand that the program has been equally successful throughout the country.

The per capita consumption of milk in this state is far below nutritional standards and below the national average. This is especially true among our urban and rural nonfarm population where the per capita use of fluid milk is about two-thirds the national average.

The special school milk program is helping us to correct this deficiency. We urge the Congress to authorize, on a permanent or continuing basis, the use of Commodity Credit Corporation funds for this program in such amounts as deemed necessary by the Congress. Surplus disposal program

We are certainly in accord with the program of donating Commodity Credit Corporation stocks of dairy products to schools, institutions, and welfare families in this country. Likewise, we believe that the disposition of these stocks to needy families in foreign countries is a most constructive use of these food products. Of the dairy products moved from Government storage last year, 40 percent of the butter, 32 percent of the cheese, and 41 percent of the nonfat dry milk solids were moved through these channels.

This program should be used in every logical way to speed up the disposition of Government-held stocks, and thereby help remove the price-depressing influence of surplus dairy products.

With regard to surplus disposal, dairy farmers throughout the country, represented through the National Milk Producers Federation, of which our association is a part, have urged that a program be set up to increase food consumption, especially dairy products, among low-income famiiles. Such a program has possibilities of increasing milk consumption a great deal and would be very beneficial to dairymen and consumers alike. We urge that the United States Department of Agriculture be authorized to determine, on an experimental basis, the feasibility of some type of family milk program. Increased use of milk by military bases and Veterans' Administration

Since we have several military bases and veterans' establishments in our immediate area, we know firsthand the benefits of the stepped up use of milk by these institutions as a result of the authorization to use Commodity Credit Corporation funds for this purpose.

We commend Congress for making the funds available for this use, and the continuation of the program is urged upon the Congress. Accelerated brucellosis program

North Carolina is proud of the fact that we were the first State to be accredited as having less than one-half per cent brucellosis. Of course, this does not mean that we are absolutely free of the disease; it still raises its ugly head and results in losses to farmers and endangers our consumers.

Reports of the Agricultural Research Service indicate good results under the accelerated brucellosis eradication program authorized by the Congress. We urge that this program be continued until such time as the threat of this disease is eliminated.

Price supports

As indicated earlier in this statement, the dairy industry of North Carolina is primarily in the fluid milk field, and a relatively small volume of butter, cheese, and nonfat dry milk solids is manufactured in this State. However, the support program for dairy products has some effect on our industry.

From 1952 through 1954, the average price received by North Carolina farmers for manufacturing type milk declined about 25 percent, and most of the decline in the price for fluid milk and the price for all milk was a result of the sharp drop in manufacturing milk prices. Some of the price drop was a result of lowering supports from 90 percent of parity to 75 percent, which was effective April 1, 1954.

The leaders of our organization have not discussed the support program very extensively with our members, and to the best of our knowledge it has not been discussed to any length with the manufacturing producers in the State. But, since our farmers are acquainted with the support program on other commodities, it is our opinion that our dairymen would express a desire for dairy sup ports at 90 percent of parity.

The question of higher dairy supports, however, always brings up the question of production controls or marketing quotas, and we are not in position to say what the reaction of our dairymen would be to price supports and controls when they realized the significance of production controls on the dairy industry of North Carolina. As pointed out previously, the total volume of milk produced in this State is relatively small. Production per cow and the number of cows per farm are low, and in order to gain efficiency, our dairymen must milk more cows and produce more milk per cow. Therefore, we do not believe that our dairymen would favor a control program which would, in all probability, prevent or hinder progress in the efficient production of milk in our State.

If production controls on milk and dairy products could be made to work at all, such a program would certainly be very complex and difficult to administer. We do not believe a control program is necessary, and we believe that the support level should be increased somewhat.

Higher dairy supports, in our opinion, can be justified for at least two reasons. First, even without production controls, the dairy surplus has been kept within reasonable bounds and never exceeded 8 percent of a year's production even with 90-percent supports. Second, we believe that higher dairy supports are needed in order to achiere a proper balance between the dairy industry and all of agriculture. Research and education

Because of the many problems of production and marketing of milk and dairy products which confront us, our dairymen are solidly behind programs of research and education.

Our industry set up a foundation a few years ago to help support the dairy industry department at North Carolina State College. A great deal of progress has been made, but much is yet to be done. Therefore, we urge that the exist. ing Federal programs in support of agricultural research and education be continued and expanded.

The CHAIRMAN. Mr. Keller, please.

STATEMENT OF PAUL KELLER, CLAYTON, N. C. Mr. KELLER. I am Paul Keller, Clayton, N. C. I am a cottonseed crusher and ginner. I am treasurer of the North Carolina Cotton Promotion Committee, btu the report which I am about to give is not an official report of that committee. However, I do intend to make certain definite recommendations which I have not heard made today.

The CHAIRMAN. That is what we are looking for. Please do not repeat any suggestions made. If you agree with it, just say so because we have quite a few more witnesses to hear from.

Mr. KELLER. I would like to outline first the objectives that I am trying to reach with this program.

As agricultural surpluses mount in this country it becomes evident that commodities with different usages and competititon require

different methods of support, and should no longer be categorized merely as basic, nonbasic, and unsupported commodities.

Our support program has functioned satisfactorily over the past 2 decades but we cannot deny that what would have been unwieldy surpluses were absorbed once by the unusual demands of a war economy and again by a combination of sharp acreage restrictions, bad weather, and the Korean action. We can only hope that no such disaster will come along to rescue us again. There remains, then, the alternative of developing a program which will solve the basic problems.

THE PROBLEM 1. High level American price supports are establishing a price umbrella which invites rapid expansion of foreign cotton production.

2. High cotton prices encourage increased production and utilization of competitive fibers and nonfibrous materials.

3. Declining domestic acreage leads to increases in per-acre production, which, though desirable from the standpoint of economical production, defeats the purpose of acreage curtailment.

4. Declining acreages reduce to uneconomic size the allotments of small family farms, which are precisely the ones most in need of help.

5. Growing Government holdings lead to governmental price cutting for overseas sales, which intensifies foreign textile competition against domestic mills, thereby jeopardizing one of our largest employers of labor.

6. The continual threat of unusual methods of surplus disposal is as disruptive to the market as the actual disposal. Users are afraid to carry normal working inventories.

The objective: A satisfactory support program for cotton should be geared to the world competitive situation with regard to fibers. It should allow sufficient acreage to permit the economical use of mechanized production practices where these are feasible. It should afford price assurance to the small farmer so that he will have a substantial measure of protection while adapting his methods and program to current needs. It should provide for a method of handling the present surplus in a preplanned manner, so that the great uncertainty now unsettling the markets can be eliminated. It must be handied at a cost which the taxpayers will be willing to accept over a period of years.

The statistical basis for this program comes from certain figures furnished by Cotton Division of the Commodity Stabilization Service.

The Cotton Division, Commodity Stabilization Service, United States Department of Agriculture, has prepared a table for the year 1953 showing the number of farms which produce cotton in each State, subdivided according to acreages planted to cotton. These divisions are from 0.1 to 4.9 acres, from 5 to 14.9, from 15 to 29.9, 30 to 49.9, 50 to 99.9, 100 to 499.9, and 500 up. In each group I have taken the average acreage, multiplied by the average yield per acre in 1953, by States, to determine the approximate part of the 1953 cotton crop which was grown on farms within the various size groupings. This method should produce fairly accurate results in the smaller acreage groupings, with a greater margin of error in the groupings over 100 acres. There is no way of estimating average cotton acreage of the 3,640 farms which planted over 500 acres to cotton in 1953.

These figures reveal the following facts: 16,465,000 bales were produced in 1953 on 768,850 farms, for an average of 21.4 bales per farm; 645,310 or 82.63 percent of the 'cotton-producing farms had under 50 acres of cotton, and they produced 5,797,000 bales or 35.21 percent of the total, at an average rate of 8.98 bales per farm; 712,020 or 92.61 percent of the cotton-producing farms had under 100 acres of cotton, and they produced 8,784,000 bales or 53.35 percent of the total, at an average of 12.34 bales per farm; 56,830 farms, 7.39 percent of the total, had 100 acres of cotton or more, and they produced 7,681,000 bales or 46.65 percent of the total; 20.38 percent of the farms having 0.1 to 4.9 acres of cotton produced 1.47 percent of the crop; 34.04 percent of farms having 5 to 14.9 acres produced 9.93 percent of the crop, and these 2 groups, comprising 54.72 percent of the farms growing cotton, produced only 10.4 percent of the crop.

It is clear from these figures that the major beneficiaries of the present cotton program are the large-scale commercial growers who are best able to stand without it.

Based on that picture, I propose the following thoughts on a solution:

1. Change the basis of allotment from acres to bales of domestic consumption. If domestic consumption is 9 million bales, each farmer's allotment would be based on his acreage allotment converted to bales and reduced proportionately to arrive at a 9-million-bale total.

2. The farmer's support of his allotted amount of cotton would be in the form of a direct payment of the difference between the average market price and the support price for the particular grade and staple produced.

3. A farmer would be permitted to carry over cotton produced in excess of his allotment and sell it on his allotment in the following year, if he chose to do so.

4. No farmer, regardless of the size of allotment, would be eligible for support subsidy on more than a predetermined number of bales. The number of bales eligible for support under any one farm allotment would be determined by Congress after a detailed study of cotton-production patterns had been completed.

5. The entire crop would be handled on a free-market basis, price being determined by world supply and demand.

6. In order to permit this plant to be introduced without a disastrous break in the world cotton price, the entire Government holdings would be insulated from the market for the first year, except that Government cotton could be sold in the free market at or above parity price.

7. After the first year, Government holdings would be sold on the free market at such equal annual rate as might be necessary to exhaust the stocks (less any military stockpile deemed necessary) in a period of 5 to 7 years, depending on the size of the holdings. Here, again, sales could be accelerated only if market prices reached or exceeded parity.

8. The subsidy could be financed—this is not essential to the program but it is a suggestion-by an excise tax on poundage of domestically produced cotton goods. An equal amount of tariff would be levied on imports of cotton goods. Rebates would be made on exports of domestic cotton goods. This tax on goods would avoid the pyramiding effect of a tax paid at a lower level.

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i conclusion, I would say that by being able to sell its cotton petitively in the world market the United States can regain its us as a major, rather than residual, world supplier. By permitting domestic market to fluctuate with the world market, we can avoid

problem of injuring the domestic manufacturer in our effort to p the farmer. By tailoring the support program to help those o need help, we can reduce its cost well below what it would be on ropwide basis. The cost of disposing of the present surplus stocks will not be as eat as it might now appear. Actually, if it were not for the existence

large reserves of cotton it would be advisable for the Government stockpile a considerable amount of cotton as a military precaution. Then this amount has been determined, such cotton should be transerred to the defense stockpile, and the cost of ownership and storage hould be chargeable to the defense program rather than the agriculural program.

In the long run, world population growth, improved standards of iving, improved cotton characteristics and advances in utilization will undoubtedly greatly increase the world consumption of cotton. In the meanwhile, we must find a program which will not lead to production distortion and underutilization. I hope that these proposals may suggest a program of that nature.

The CHAIRMAN. Thank you. We will certainly consider them.
Mr. Hardy? Give your name and occupation, please.
STATEMENT OF WILLIE J. LONG, JR., PRESIDENT, CAROLINA

GINNERS ASSOCIATION, GARYSBURG, N. C. Mr. Long. I am Willie J. Long, Jr., of Garysburg. Clifford Hardy, the secretary of the Ginners Association, originally planned to be here and he is not here so I am serving in his stead.

I am a cotton farmer and cotton ginner, and serve as president of the Carolina Ginners Association, which includes the two Carolinas and Virginia.

I would like to speak for myself as an individual cotton producer and in behalf of the cotton ginners of these three States who are all cotton producers as well as original processors.

This spring I appeared before the subcommittee of this group headed by Senator Eastland. My efforts at that time were on behalf of the Carolina's Ginners Association. We were actively interested in certain changes in Public Law 480 and our suggestions were very specific. Today, after having had the opportunity of appearing before you gentlemen before, and realizing that your knowledge of the entire cotton problem is based on considerable experience and careful study of an extremely complicated involved problem, I wish only to make three points that I would have you gentlemen consider.

The first two are, in my opinion, essential to a solution of the problem confronting those of us in the cotton industry. The third I believe would prevent a great deal of trouble in future years.

First: It is my belief that some form of subsidy program must be instituted, whereby domestic cotton production can be sold at a parity formula that will allow the farmer a reasonable income for efficient production and at the same time allow our production to be sold in the world market at competitive prices. There are precedents in many

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