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go on to say what the balance was between what was in the storage today and what it was a year ago.
The CHAIRMAN. You give it to us. I didn't try to hide anything. Mr. RUTLEDGE. I haven't given it to you. As well as I can understand it is about 1 percent.
The CHAIRMAN. Of course one of the reasons for that is that they have dumped it and fed it to hogs. That is what the administration did with it. And the total chargeoff on dairy alone up to now is in excess of $700 million. That is why you got less, you know; it is because they sold it.
Mr. RUTLEDGE. Out of the total of all supported things we got 6 percent.
The CHAIRMAN. Of what? Mr. RUTLEDGE. Of wheat, corn, cotton, and anything else you can name.
The CHAIRMAN. Six percent of what, losses? Mr. RUTLEDGE. No, 6 percent of what was paid out in parity. The CHAIRMAN. I don't know what you are talking about now. Mr. RUTLEDGE. A friend of mine was in New Zealand. He arrived there at 2 o'clock in the morning, was met by newspapermen and farm people and before he could sit down they said, "What are you going to do about your 90 percent of parity ?” He said, “Why do you ask?”.
“That is vital to us. Before you put that on we didn't have much market but since you put that on we have doubled our production and we have a market and have to haul it a lot farther than you have."
What we get for our milk products would be enough because it is in line with what we got 10 years ago, but just take, for instance, a tractor that I bought 10 years ago for $1,160. The same machine today is over $3,000. My county and State taxes are over 100 percent higher. My labor is over 100 percent higher. There is the squeeze. We are getting about 15 percent more than we were 10 years ago and everything is one, two, and three hundred percent higher.
The CHAIRMAN. All of us know that. Have you got a key to the solution of this problem? That is what we are waiting for.
Mr. RUTLEDGE. The dairy industry is spending a lot of money in advertising and we are moving. The Government is helping by putting this milk in the schools. I don't know all the problems.
The CHAIRMAN. Do you live in a milkshed where you sell your milk? Mr. RUTLEDGE. Baltimore.
The CHAIRMAN. The dairy farmers I presume in that area are doing pretty well. You are protected.
Mr. RUTLEDGE. They are doing better than probably some parts of the country.
The CHAIRMAN. I know that because I have just returned from Wisconsin and Minnesota.
Mr. RUTLEDGE. The machinery and fertilizer dealers are complaining. They have to borrow money from the banks to get their people paid off. It is a pretty tight squeeze.
The CHAIRMAN. Have you anything else to add ?
The CHAIRMAN. Ladies and gentlemen, the committee will meet this afternoon in the Highway Building at 1:15.
(Whereupon, at 12 o'clock noon, the committee was recessed, to reconvene at 1:15 p. m. the same day.)
The CHAIRMAN. Come to order, please. Mr. Lanier, give your full name, please, and your occupation. STATEMENT OF J. CON LANIER, EXECUTIVE SECRETARY, LEAF
TOBACCO EXPORTERS ASSOCIATION, GREENVILLE, N. C. Mr. LANIER. I am J. Con Lanier from Pitt County, N. C. I am employed as executive secretary of the leaf tobacco dealers, the tobacco merchants, people who sell the tobacco that we farmers grow in all parts of the world. I also am engaged rather extensively in farming in Pitt County. Mr. Chairman, I have no written text.
The CHAIRMAN. Usually those who do not have make the best witnesses.
Mr. LANIER. I do want to talk a little on this record to the members of the committee that are not here to know that maybe the tobacco program and the way we people down here think about it has not been entirely stated in the record this morning. I was interested to learn that we had both a bad tobacco program and a bad Congressman. I don't think either.
For many years we have had a tobacco program, beginning in 1933. At that time I was in Washington in the tobacco section that first originated these tobacco programs and for whatever little part I had in it and have had over a period of 25 years, I am immensely proud because I know this tobacco program we have has meant a degree of prosperity to us tobacco growers and it has resulted, Mr. Chairman, in flue-cured tobacco over a period of 15 years averaging parity price when you lump all the years together and it is the only major commodity that I know that has received parity price. At the present time we are operating under a controlled system-acreage control. We have tried poundage control and while theoretically it might work yet practically it did not work.
While I do not put myself up as an expert, it is my opinion, having studied this thing through the years, that it would be less desirable than the present program of acreage control.
In the first place, it would be practically impossible to divide tobacco poundage to the individual grower without a terrific amount of dissatisfaction. In other words, if you have 1,200 growers in one country you would have 1,199 dissatisfied ones because the other one got more opundage per acre than this one.
The CHAIRMAN. How about the administrative feature? Wouldn't that be complicated ?
Mr. LANIER. It would be terrific to determine how much poundage each one shall have in relation to his neighbor. Furthermore, it would penalize the good grower if you take a level of pounds per acre. It would discourage the good grower and encourage the sloppy grower. To me that would be in the long run a terrible thing for tobacco because someday somehow the future of at least our export tobacco trade will rest upon the production per unit cost. The agricultural colleges are trying to teach us, and they have been successful, to grow more pounds per acre and to me the fact that we have doubled the production per acre in the last 22 years is a good sign because by doing that you lower the per unit cost of a pound of tobacco and with that lower cost of production per pound we can better meet the competition that has developed throughout the world in world markets.
Mr. Chairman, one-third of all our tobacco is exported, the fluecured type. We have tremendous competition from Rhodesia, South Africa, India, Japan, Canada, and some other countries.
If we can lower the cost of production we can meet the competition and increase our markets. Therefore, I say that the fact that we are growing 2 pounds where we grew 1 before is a very healthy sign in reference to those of us who are very much interested in the production of tobacco.
The CHAIRMAN. Would you state specifically that by having it on an acre basis rather than poundage the farmer is more inclined to grow more and be a better farmer than if you permit him to plant the acres he desires and from those acres give him a poundage allotment?
Mr. LANIER. I would say the fact that it has been on an acreage basis has been responsible for the increased growing practices that have resulted in the increased pounds per acre.
The CHAIRMAN. I think that is the consensus of opinion that this committee so far obtained from him, even from those who advocate a poundage or bushel or bale basis on our basics.
Mr. LANIER. I am glad you brought that out because that is my honest, considered judgment.
Now, as to the parity, the support price. I am thoroughly convinced that a flexible parity or support price on flue-cured tobacco would mean an absolute disaster to all of us in the flue-cured area because it would result in not less tobacco if you were to cut the support price down to 75 instead of 90. It would result in a doubling of your acreage in less than 5 years because as your revenue from an acre drops you would plant another acre in order to keep your dollars up to what you had to have to make a living.
Therefore, I say that to cut the support price down to this sliding scale parity would not work in the case of tobacco. It would merely result in a terrific overproduction of tobacco in order to keep gross farm income of tobacco growers up to where he had to have the money.
Now, at the present time I think that we are very well satisfied with this program whereby we control production and we get 90 percent of parity.
Ninety percent is not a profit figure, it is a break-even figure. We are entitled to more than 90 percent and we have gotten that because we have controlled our acreage and our production. At the present time this year, Mr. Chairman, because of ideal weather growing conditions and a new variety of tobacco, we have increased the production per acre 200 pounds per acre over last year and over the best year up to this year.
If we knew that we could have the same weather next year and next year and next year, I would think that this crop should be cut far more than 12 percent.
But using the average of 3 years' production as a basic figure and if Congress will leave the law as it is, I feel that the cut that is now announced will be sufficient to cut down the stocks to some extent and that given 1, 2, or 3 years, that we will cut production down whatever is necessary in order to balance production against consumption.
Therefore, in summing up I would say, first, that we should not be alarmed that we are growing more pounds per acre, that that is a very desirable proposition.
Second, that we certainly are not in favor of doing away with the support program and putting it to a sliding scale, that I think that poundage instead of acreage control is not feasible. And last, I say to you and the members of your distinguished committee that the farmers here, the tobacco farmers, have always done what has been necessary to bring consumption and production in line and that if you leave us alone and leave us our control of acreage and our 90 percent of parity that we will do the rest, we will find the remedy and we will continue to operate this tobacco program without any cost to the tax-. payers as has been the case since its institution in 1933.
Thank you, sir.
I can say that I doubt any change will be made as to tobacco with. respect to the support price because when the sliding scale was adopted for others tobacco was excluded. Tobacco stands in a good way. Mr. LANIER. We hope so.
Mr. COOLEY. What is your view with regard to a minimum acreageallotment?
Mr. LANIER. You mean to say that anybody who has an acreage of a certain amount or less should not be cut?
Mr. COOLEY. That is right.
Mr. LANIER. I think it is a very dangerous proposition. It came near wrecking the burley and it would do the same thing in my judgment to flue-cured because you have in this area, Mr. Chairman, wegrow most of the tobacco by a tenancy system and those tenants, not the farmer, the man who owns the farm, but those tenants are the ones that would bear the burden of this thing. If they cut down theacreage of a farm, if a man has 50 acres and he takes the cut, but he has 10 tenants of 5 acres each, they are going to get the cut but the man who maybe has 5 acres of his own, he doesn't get a cut. To me it doesn't work out at all. The only way, as I see it, is to give it an across-theboard cut.
Feed everybody out of the same spoon and I think it will meet with. the general approval of the people who grow tobacco.
The CHAIRMAN. Any further questions?
The CHAIRMAN. Mr. Meredith. Give us your name in full and your occupation.
STATEMENT OF W. LEE MEREDITH, TRINITY, N. C. Mr. MEREDITH. I am W. Lee Meredith; I am from Randolph County near Old Trinity. I am a dairy farmer exclusively.
I thought about this thing last night and I thought I had a pretty good speech down here, but I didn't get in first and we have been reminded constantly not to repeat, so I don't know whether I am going: to have much to say or not.
The CHAIRMAN. If you can take the views that have been expressed and broaden out and show how those methods will work, that is what we really want because a lot of the witnesses offer suggestions. We would like to know how to carry out those suggestions, how they can be made to work.
It may be that you will give us that little spark necessary to find the way. So proceed, sir.
Mr. MEREDITH. First I would like to say for myself as a dairyman and the dairymen as a whole, I am sure the ones I have talked to and I have been in contact with a lot of dairymen, I am president of the North Carolina Federation of Milk Producers, and I am sure that the dairymen are really ready and willing to carry their part of the work and cost to promote whatever program you as a committee and the Congress decide is feasible.
As to parity, Mr. Lanier on tobacco mentioned 90 percent was the break-even point. Certainly I don't think the milk industry can survive and meet competitive labor on 75 percent and certainly not on flexible. Maybe flexible in the end would control production but the only way that I see it is possible for flexible supports to control production is for it to run on to such time as the farmers get into such chaotic condition until they are at the point of going broke, and a lot of them go broke and maybe that will control production, but the incentive is when your cows are not producing so much pounds per cow is to add another cow or two to try to keep your pay check coming regularly. You never look for it to come down. Certainly with the cost of production the dairymen I know can't afford for it to come down.
I am not particularly in favor of rigid supports, certainly not with out some measure of control. However, dairy industry and particularly production of milk I consider a very complex operation. It would be very difficult, I think possibly I can say very reasonably that it would be the most hard to control milk of any other commodity in our economy.
The CHAIRMAN. Now, the milk that is produced in your area, is it sold to a market under a marketing agreement?
Mr. MEREDITH. No, sir; it is just sold on the open market. However, we do have a market of our own that we sell our milk to. We have advanced to the place where if you have a milk market for your milk you have to keep it because there is nobody else looking for that milk except occasionally seasonally in the fall of the year. Not much room for new producers. As you know, there is quite an outlay capital expense for getting ready to produce milk. It is something when you get into you can't hardly get out without going busted.
The CHAIRMAN. How much of the milk produced in your area is used in the fluid state? Would you say most of it?
Mr. MEREDITH. Most of it. There is very little manufacturing of milk in this State.
The CHAIRMAN. This committee has discovered, I believe, generally speaking, that in those areas where they either had marketing agreements or have a ready-made market they are not so much in trouble, but it is those areas where there is a great overproduction of milk which they have to convert into butter, cheese, and dry milk the trouble exists. You don't have that situation around here, sir?
milk except occasioducers. As you to pro