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Third, let domestic mills búy cotton for goods exported at world prices in order to make them competitive with foreign mills.
The CHAIRMAN. How would you do that? Would you have to pay a differential there?
Mr. BROOKS. You are in this position that if we sell our cotton, for example, if we start on a program of selling our cotton competitively in foreign countries and if we sell it 5 cents per pound lower in foreign countries than we do domestically, then this domestic mill should be permitted to buy the equal quantities of cotton for the goods he exports at the 5 cents per pound less. That makes this domestic mill competitive with foreign mills on export goods.
The CHAIRMAN. In other words, you would apply it only to export goods?
Mr. BROOKS. That is right; only for export goods.
Senator EASTLAND. You would apply that to purchases only from the CCC because I cannot envision your American producer selling it at lower price.
Mr. BROOKS. It would have to come out of present surplus stocks. Senator RUSSELL. Nothing new in that. We have done it before. Mr. BROOKS. That is right.
The CHAIRMAN. The Government would have to stand that difference.
Mr. BROOKS. That is right. The CHAIRMAN. By way of payment or subsidy. Mr. BROOKS. Or permit them to buy an equal amount of cotton. We will be selling this cotton at competitive bids for export so the domestic mill would have the right to bid the same way.
Fourth, stop economic aid for cotton production outside of the United States where this cotton will not be consumed in the country but used for export until world surplus is removed.
Now, the reason for that is this, as you well know, Senator. We and justly so, I think-have had a tremendous interest in the economic well-being of the other countries of this world. We have had a responsibility for their economic well-being, and we have done everything we could to help expand the economies and production of these foreign countries. But we are now in a situation in the case of wheat and cotton to where
The CHAIRMAN. Rice.
Mr. BROOKS. Rice—to the point that it would seem foolish to furnish further economic aid for increased production in those countries for export.
The CHAIRMAN. What about technical aid? Do you want to continue the technical-aid program?
Mr. BROOKS. I think in the case of these fields where we have surpluses that technical aid should be pulled down in that field. That is, where they are producing for export. I think we must put the brakes on that until this situation clears.
Now I think I have been as much interested as anyone in seeing that the economies of these countries move up. I think it has been my privilege to visit most of the countries of the world and quite often and as you well know-I have seen you in some of these foreign countries; our paths have crossed—and I think we ought to do this job of helping. On the other hand, from time to time we are going to have to put on brakes to adjust situations and I think we have reached that point in the case of cotton, wheat, and rice; that we must put on brakes for the time being at least.
Now, fifth, I think this is rather important because of some great research work that has been done, Senator Eastland, in this field, and some of the publications are going to be issued soon. I wish I had authority to give them here, but they have been done by other people at tremendous expense and I don't feel that I have the right or the authority to
Senator EASTLAND. You mentioned Dr. Horne's report.
bale for research. Many very careful studies have shown that $1 invested in research in the long run—and this is cotton specifically—will probably be equal to $25 in price reduction in expanding consumption of cotton.
I think this study that will be available to this committee before too long now will substantiate this statement.
The CHAIRMAN. How would that research money be spent? By 1 of the 4 or the 4 laboratories we now have in the country?
Mr. BROOKS. I think you would have to expand it far beyond that. In other words, you see synthetic producers are spending about $60 million, maybe we can't afford it, maybe we are foolishly not affording it, I don't know. But if the farmers voted $1 a bale we would have $14 million a year to go into research.
Now, actually we have not lost, Senator, some of these research studies that have been made we have not lost too much market domestically because of the fact that cotton has been overpriced in relation to rayon.
There are a few fields where we have and some fields where there is no hope. In the case of tire cords, unless we can come up with something new in the research field in cotton we have very little chance to compete unless we would go down to 20 cents per pound, which is not practical. It is not possible, certainly, with farmers generally in this country.
The CHAIRMAN. What I wanted to find out is how this dollar collected from the farmers would be spent. Is it through existing facilities or through a privately operated concern?
Mr. BROOKS. The farmers should be permitted to set up a board to work out the spending of this money.
The CHAIRMAN. And they could employ a private concern if they desired?
Mr. BROOKS. Yes.
Senator EASTLAND. If the short cottons which I am informed we have a large proportion in surplus, very short cotton produced in west Texas, if the support price on those cottons were reduced, would that aid in correcting where rayon has gone into cotton like in the bag industry?
Mr. BROOKS. It might have some beneficial effects; yes. Actually, Senator, if we reduce, actually the most competitive problem we have at the moment between cotton and rayon is in blending. The price of rayon is slightly under cotton and some of the people, the mills, will take rayon and blend it.
Senator EASTLAND. Because the mill can make more money?
Mr. BROOKS. Yes; make a little more money by doing that. That is to the extent of 3 to 312 cents a pound.
Now, on the research programs that we have been running, if we will reduce the price of cotton about 3 to 312 cents per pound and meet that blending problem we will increase our consumption about 250,000 bales.
Now the question is always from the viewpoint of the farmer—and he must look at it very carefully-if you reduce your price you want to buy something with it. There is no sense in just reducing prices because we are already on the bottom of the economic ladder, and there is no use of us taking one more step down that ladder unless it is something we are going to buy something with.
Senator EASTLAND. 250,000 bales; it would not be worth it.
Mr. BROOKS. That is right. If you put it exactly on a factual basis, exactly dollars and cents, it would not. The only way in which it might be worth it would be that it might-you see, we have not lowered our prices any, but if we lowered them a little it might stop some of the expansion in the rayon facilities and so that from that standpoint you might get some beneficial effects.
But actually on dollars and cents, as it stands now we would not make anything by reducing the price of cotton a penny.
The CHAIRMAN. Proceed.
Mr. BROOKS. Being over here in the mill territory, Senator, I have naturally worked with a great many of these mills as to what our price problem was with reference to rayon and cotton. Actually the most loss, as I recall, that we ever lost in 1 year to synthetics was when synthetics was maybe twice as high as cotton; but they did a lot of things to synthetics that got them in the market. That is the reason why I have put the emphasis that I have on research here: They have researched us out of a lot of business and to give one example you take rugs. We got the rug market pretty well, Senator, some 3 to 5 years ago. Rayon has about gotten it back from us because of the fact that they produced a fiber that is exactly suited for rugs. The cost of a rayon rug is more than the cost of a cotton rug, it is higher, but we have lost that rug market. We must research back in again.
We have lost a great deal out of our market to these synthetics out of research; we have lost some from price, but we haven't lost all from price by any means.
The CHAIRMAN. Mr. Brooks, is there not something these mills could do to help out the situation?' What would become of the mills of Georgia and other parts of the country if the cotton farmers go out of business?
Mr. BROOKS. I think we have had great loyalty from the cotton mills far beyond maybe the call of duty to some extent, because actually there have been times when certain mills could have switched from cotton to rayon profitably.
The CHAIRMAN. Altogether
Mr. BROOKS. Altogether, or partially, and they could have switched, certain mills could have switched and probably made more money. But the mills have stayed in and spent a tremendous amount of money, cotton mills themselves, on research on cotton.
The mills of the Cotton South here, I know, have a feeling of trying to hold this cotton economy and have an intense interest in it. Maybe not as intense as cotton farmers, but they have certainly gone a long way to work with us in these problems.
The CHAIRMAN. Any further questions?
As I understand, you two gentlemen, Mr. Neely and Mr. Estes, agree to what Mr. Brooks has stated ?
STATEMENTS OF R. C. NEELY, WAYNESBORO, GA.; AND W. J. ESTES,
Mr. NEELY. I have one thing. It was brought out here this morning. Reducing the acreage on cotton over the
entire belt. The situation here in the Southeast is such that when we say reduce the Nation this year about 4 or 5 percent, that here in some of the States in the Southeast, here in Georgia, we have a reduction of about 12 percent. When you take that reduction it starts from the base acreage, and another year if the Department would decide not to reduce any acreage whatsoever, if we follow the same formula being followed now, we would automatically be reduced in acreage; and this acreage would be removed from the Southeast and moved into a high-producing area which would not help to lower the surplus which we are faced with today
We think that there is a happy medium in there: That we should establish a base and not let that base keep coming down, and reduce our base before the reduction is done. In other words establish a base during this emergency on the farm for each farm which would stay with it during the emergency.
The CHAIRMAN. Freeze it?
you ever so much.
(Whereupon, at 12 noon, the hearing was recessed, to reconvene at i p. m. the same day.)
The CHAIRMAN. The committee will please come to order.
This morning we heard witnesses on the cotton problem and on the list before me we have peanuts, dairy, tobacco, livestock, poultry, conservation, small grain, naval stores, fruits, vegetables and general subjects. This area is almost as bad as California. We had as many different subjects to deal with there and I am glad to see that.
There is one more witness I understand who desires to be heard in respect to the cotton problem. I wonder if we could do that now?
May I suggest before we start if there are witnesses present or others who desire to file a statement with the committee, I want to give assurance that if the statement is filed with the clerk that the statement will be printed in the record.
Mr. Lawson, do you have anything new to add to what was said this morning with respect to cotton?
Mr. LAWSON. I can add a few new things, I hope.
The CHAIRMAN. I wish you would confine your statements to new things, if you will, because we have a lot of witnesses to hear this afternoon and it is my hope to hear all of them. I want to give as
you put your whole statement in the record and if you can highlight it for us and give us new ideas that have not been brought forth, the committee will appreciate it. STATEMENT OF W. D. LAWSON III, ATLANTA COTTON ASSOCIATION,
GASTONIA, N. C. Mr. Lawson. I will just read a few excerpts from my statement. Nothing in this statement we are presenting can be construed as any design on our part to do anything that would hurt the prosperity of the cotton farmer. To the contrary, what we are recommending will maintain his income. The cotton farmer is our customer—we are dependent on the distribution of his cotton to domestic mills and foreign markets for our livelihood.
I represent the Atlantic Cotton Shippers Association. All of us realize the cotton situation is serious. Regardless of cause we have a large surplus of cotton which we have been unable to decrease but, to the contrary, increased even with acreage controls.
The only observation we will make as to acreage controls is our belief that the small, family-size farms have been adversely affected. Of the 131,000 cotton farms having allotments of 5 acres or less, it is significant that 71,000 of these family-size farms are located in the Southeast.
The family-size-farm-acreage allotments should be increased not decreased.
We must realize, the United States does not have anywhere near a monopoly in producing cotton. The International Cotton Advisory Committee, in its October report, states free world cotton production outside the United States will approximate 17 million bales this year, highest in history. The 1954–55 production was 15.5 million bales.
The report further states that production of cotton is a major industry in countries where cotton was relatively unimportant until a few years ago and, if the present trend continues, in two more seasons foreign free world production may be sufficient to meet all consumption requirements without any imports from the United States. We believe it is significant to point out that increased production per acre and expansion in foreign production is due in no small way to the benevolence of our Government under the point 4 program of sending our agricultural experts to foreign countries to teach them more about producing agricultural products, including cotton. From April 1948 to March 1955 our Government spent $36,650,000 under this program for agricultural technicians and trainees, besides this $300 million for equipment, insect control, and so forth. If we set these countries up to compete we better get out of the business.
The CHAIRMAN. That was all crops?
We cannot continue to set an arbitrary price for cotton and do other than further pile up cotton in Government stocks and Government loan. This is economically unsound. Storage, interest, and insurance is costing the Government or increasing the cost to get cotton out of the loan to a tune of $7.5 million per month, or approximately $90 million per year. These costs will increase as cotton goes into 1955 loan.