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or a margin of 662 pounds per acre during this period. Comparing the last 5-year period production of Virginia type with the national average production, less the Virginia type, we have a 1,565 pound per acre average yield in the Virginia-Carolina area as compared to a 726 pound per acre national average yield, less the Virginia-Carolina area, or a margin of 839 pounds per acre. other words, due to abnormal good growing conditions the margin between the 10-year average and the last 5-year average has increased by 177 pounds per acre. We feel it is most conservative to say that any upward adjustment for trends in yields would be more than offset by a like downward adjustment for abnormal conditions affecting production. That is to say, adjustment for trends in yields would have to be upward by more than 177 pounds per acre if such adjustment for trend in yields is not to be entirely offset by a downward adjustment for abnormal conditions affecting production in the amount of 177 pounds per acre.

Being fully aware of and appreciative of the hazards to growers in a surplus production, namely depressed market prices, depressed support level in 1956 and future years and jeopardy to the overall program, we are interested in being extremely conservative in arriving at the amount of any indicated increase. In the interest of being conservative we take the position that the indicated downward adjustment from 1,565 pounds per acre for abnormal conditions affecting production will be entirely offset by an indicated upward adjustment for trends in yields. Hence, we are back to the figure of 1,565 pounds per acre. (c) "At prices at which the CCC might sell for such purposes peanuts owned or controlled by it." This particular phrase of the act is difficult to pinpoint and it is our interpretation this means a minimum of 941⁄2 percent of parity. We submit that the best and most reliable information upon which the Secretary can make this determination is the fact that our crop moved at and above this level in 1954.

(d) "As to the actual increase indicated." In 1953 the Virginia-Carolina area produced 245,755 tons, in 1954 the Virginia-Carolina area produced 235,237 tons, in 1953 less than 0.5 of 1 percent of the Virginia-type production was diverted by CCC for crushing. This was occasioned entirely by faulty CCC storage structures, in which loan peanuts went out of condition and were not usable by the edible trade. In 1954 not the first Virginia-Carolina area peanut was diverted by CCC for crushing. With the foregoing in mind it appears reasonable and conservative to figure a minimum supply of 245,755 tons of Virginia-type peanuts indicated as necessary in order to assure an adequate supply of this type and thus comply with section 358 (c) (2) of the act. This does not take into consideration the fact our population increase is at a rate which indicates the need for approximately 8,000 additional tons of peanuts each year for the edible trade. Of this 8,000 tons for edible purposes, the Virginia-type pro rata part would be approximately 60 percent or 4,800 tons per year, for a period of 3 years (1954-56) nor does it take into consideration the depletion of pipelines in 1955 and the resulting necessity for additional production in 1955, in order to restock the pipelines to a normal level. If we figure 245,755 tons at a 5-year average yield of 1,560 pounds per acre it would indicate an acreage increase of 13.3 percent over the present allotted acreage.

If, on the other hand, we use the 1954 production of 235.237 tons, a supply that we know was inadequate, it would require an indicated minimum increase of 8 percent above our allotted acreage.

Still in the interest of being conservative and taking each figure on the low side we submit that an absolute minimum increase in Virginia-type allotments of 10 percent, based upon an average of the 2 methods above outlined, is the absolute minimum increase we can go into this crop with and do justice to the intent and provisions of section 304 and section 358 (c) (2) of the Agricultural Adjustment Act of 1938 as amended.

We concur with the thoughts expressed in the past by some in the industry, that No. 1 and No. 2 Virginias are or may be reasonably sustitutable for and with No. 1 and No. 2 Runners and Spanish peanuts except in the case of certain candy manufacturers. Their equipment is set up to handle only the small Spanish peanut. In other words a shortage of Runners or a shortage of Spanish can be completely supplied if there are ample Virginias, with the one exception noted. Realizing this is a question where there exists honest differences of opinion, it is our position that even though one or more grades are or may be reasonably substitutable in their end use, the intent and language of section 358 (c) (2) is to the effect the Secretary will allocate sufficient acreage to insure an adequate supply of each type of peanuts; thus avoiding situations

where end users and consumers are forced to use, merchandise and/or consume a type other than their preference merely because there may be an overall adequate supply of peanuts. However, and this is most important, a shortage of Virginias in the grades of mediums, extra large, fancies, and jumbos cannot be supplied by either of the other types regardless of how ample their supply is. These four grades are premium peanuts and found only in the Virginia type.

3. ADDITIONAL

Some skepticism has been indicated about this approach due to the fact we received an increase in Virginia type in 1951 of 81,800 acres and from the 1951 crop approximately 20 percent was diverted by CCC. Three factors contributed and were responsible for any diversion of Virginia-type peanuts from the 1951 crop and these factors should be known and understood by all. First, there was no diversion by CCC of No. 2's in the Virginia-Carolina area from the 1951 crop and this threw approximately 12 percent, farmers stock basis, more Virginia-type peanuts on the market than was anticipated at the time the allotments were made. Second, the 1951 crop was the first big step-up in yield per acre for our area. Our average yield per acre increased 209 pounds in 1951 as compared to 1950. The difference between a 209-pound yield increase per acre and the average of the preceding 3 years accounted for approximately 38,000 tons more peanuts than was reasonably indicated at the time the allotments were issued. The combination of this fact together with the discontinuance of a No. 2 program in the area resulted in approximately 231⁄2 percent more Virginia-type peanuts being available in 1951 than was indicated at the time the allotments were increased. Third, in the price-support schedules for the 1951 crop the differential for Virginia type over other types was increased by This factor also had material effect upon the movement of the 1951 crop.

This minimum request takes no recognition of the fact Virginia-type allotments were reduced approximately 9 percent in 1953 from the 1952 level, despite the fact only 4 percent of the total Virginia-type production from the 1952 crop was diverted by CCC; and in 1954 Virginia-type allotments were reduced approximately 5 percent from the 1953 level, despite the fact less than 0.5 of 1 percent of the total Virginia-type production from the 1953 crop was diverted by CCC (this minute quantity was diverted because of previously referred to faulty CCC warehouses). The reduction of 14 percent in Virgina-type allotments during this period without any type increases exceeds by 10 percent the percentage of the Virginia-type crop diverted during a like period and is further justification for our minimum request.

4. CONCLUSION

Time is of the essence in this matter. The lateness will cause some inconvenience, however, this is completely negligible compared to the ruinous and disastrous consequences of a second year of short supply of peanuts or an inadequate supply of any type or types of peanuts.

It is our request and hope that the Department will give this matter expeditious action and we wish to make it clear that we do not have factual information relating to possible needs for other type increases. We ask, and are confident the USDA will give, careful consideration not only to our factual request, which request is based upon and within the scope of and intent of the provisions of the act before referred to, but to any other factual requests based upon pertinent provisions of the act, which may be made by representatives of other areas. We have to the best of our ability sought to factually present current data, together with the recommendation of all segments directly concerned with the Virginia type in order that the Department might evaluate such data and recommendation in the light of section 304 and section 358 (c) (2) of the Agricultural Adjustment Act of 1938 as amended.

ASSOCIATION OF VIRGINIA PEANUT & HOG GROWERS, INC.,
Franklin, Va., April 14, 1955.

Mr. EARL M. HUGHES,
Administrator, Commodity Stabilization Service,
Department of Agriculture, Washington, D. C.

DEAR MR. HUGHES: We have been informed that the United States Department of Agriculture has decided not to give public notice by publication in the Federal Register of its intent to carefully consider the need for increasing the national

peanut allotment in order to assure an adequate supply of peanuts, or to give like notice of its intent to carefully consider the need for increasing the peanut allotments to certain States in order to assure an adequate supply of all types of peanuts. Virginia peanut producers are quite disappointed at this decision and are fearful it puts producers and the Department of Agriculture in a very vulnerable position.

You will recall our representatives, together with representatives of other producing areas and representatives of all segments of the peanut industry, met with you on Tuesday, April 5, and to the extent of our ability sought to point out to you and other Department of Agriculture officials the extreme seriousness of the situation confronting growers and the industry. Previously like representations had been made to the Oils and Peanut Division. We felt very strongly that the matter at least warranted publication of public notice in order that the Department would then be in a position to act timely in event a thorough investigation warranted either a type increase or an overall increase. Certainly such public notice would not serve to commit the Department of Agriculture to any increase unless the investigation warranted an increase. It is our recollection such public notice has been given in the past and such earlier even though thorough investigation later did not warrant any increase in some years, while in other years increases were justified and were granted.

The position of the Virginia producers has been and still is that first public notice should be given by the Department of Agriculture in order to place the Department in a position to act timely in granting an increase if facts warrant such.

Next, we are convinced it is sounder and in line with the intent of the Congress to proceed under 358 (c) (2) of the Agriculture Adjustment Act, as amended, on a type basis. This section clearly states in part that, "Notwithstanding any other provision of law, if the Secretary of Agriculture determines, on the basis of the average yield per acre of peanuts by types during the preceding 5 years, adjusted for trends in yields and abnormal conditions of production affecting yields in such 5 years, that the supply of any type or types of peanuts for any marketing year, beginning with the 1951-52 marketing year, will be insufficient to meet the estimated demand for cleaning and shelling purposes at prices at which Commodity Credit Corporation may sell for such purposes peanuts owned or controlled by it, the State allotments for those States producing such type or types of peanuts shall be increased to the extent determined by the Secretary to be required to meet such demand but the allotment for any State may not be increased under this provision above the 1947 harvested acreage of peanuts for such State."

It is just not conceivable it would require the same percentage increase for each type in order to assure an adequate supply of each type. On two previous occasions the Department of Agriculture has proceeded to grant type increases under this section, however, the method or formula used in so doing has not been made available to us or our representative in the House of Representatives, despite requests that the method or formula be made available. Bearing in mind we are still completely in the dark as to the method or formula, all we are asking is that current supply, demand, and other pertinent data be incorporated in the established method or formula and the Department of Agriculture act according to the outcome. In other words, if this procedure should result in a 10 percent increase for Spanish, a 2 percent increase for Runners, and no increase for Virginias, we are ready to go with the results. All we ask is an adequate supply of United States of America produced peanuts of each type. On the other hand, if it should show a 10 percent increase for Virginias, a 2 percent increase for Spanish, and no increase for Runners we do not feel other areas or segments of the industry should object, or the Department of Agriculture refuse to allocate sufficient acreage to provide an adequate supply of each type of peanuts in accordance with the provisions of section 358 (c) (2) of the Agriculture Adjustment Act as amended.

We cannot agree with nor do we believe anyone can defend the statement made during our conference on April 5 that peanuts are peanuts and are readily substitutable. The Congress recognized the exact opposite of such a philosophy when section 358 (c) (2) of the Agriculture Adjustment Act as amended was enacted. This section was enacted for the express purpose of giving the Secretary authority and requiring that he act in order to assure a sufficient supply of each type of peanuts. Even if we agree such a philosophy is reasonable, we are confronted with no more than an opinion which is in conflict with section 358 (c) (2) of the Agriculture Adjustment Act as amended and a provision of the law which growers are confident will be adhered to.

You will recall one area recommended to you an approach under section 371 (a) of the Agriculture Adjustment Act as amended. If after getting all of the facts, the decision by the Department of Agriculture is that this is the fair, equitable approach and within the intent of the law as set forth in section 304, section 371 (a), and section 358 (c) (2), we have nothing further to say. However, in fairness to our own conscience we cannot recommend such an approach. We earnestly ask that the Department of Agriculture reconsider its decision not to give public notice and thus provide an apportunity for hearing by interested persons, for the following reasons:

1. The seriousness of the situation is indicated and set forth in the reopening of hearings by the Tariff Commission on April 19 at the request of the Secretary.

2. Failure to reconsider, in our opinion, would not be in harmony with section 304 of the Agriculture Adjustment Act, as amended: "In carrying out the purposes of this act it shall be the duty of the Secretary to give due regard to the maintenance of a continuous and stable supply of agricultural commodities from domestic production adequate to meet consumer demand at prices fair to both producers and consumers."

3. Section 358 (c) (2) was enacted, and we are confident the legislative history supports the conclusion, it was intended to not only authorize the Secretary but require that he consider type requirements in considering allotment increases, in order to assure an adequate supply of each type, and thus avoid situations where end users and consumers are forced to use or consume a type other than their preference merely because there may be an overall adequate supply of peanuts.

If our general understanding of the current peanut legislation is in error, or in conflict with the interpretation by the Department of Agriculture, we would appreciate being so advised, as we understand it is the thinking of many Members of the Congress our current legislation is adequate to permit the Secretary to act and also require that he act to avoid the totally disastrous consequences of 2 successive years of short supply and foreign peanuts. In event it is not adequate we will strongly urge an immediate investigation by the Agriculture Committees to determine appropriate corrective legislation.

If, on the other hand the legislation is generally as we and many Members of the Congress generally understand it, but the Department of Agriculture does not consider the facts brought to their attention by every segment of the industry of sufficient urgency and merit to at least give public notice, and provide an opportunity for interested persons to be heard, then in fairness to all it should be clearly understood by growers, shellers, end users and consumers where the responsibility rests for any resulting disastrous consequences which will result if we are forced into a second consecutive year of short supply and imports or the consequences of a shortage of any type.

We are so concerned over the implication of the present situation and it is so vital to us, we trust you will be tolerant of the length of this letter and our frankness. We merely want to do all in our power to be sure you have the full picture.

Sincerely,

WILLIAM V. RAWLINGS,
Executive Secretary.

MEMORANDUM IN SUPPORT OF REQUEST FOR DISMISSAL OF APPLICATION OF CERTAIN PEANUT END USERS FOR INVESTIGATION AND MODIFICATION OF PEANUT-IMPORT QUOTA IMPOSED UNDER SECTION 22 OF THE AGRICULTURAL ADJUSTMENT ACT OF 1933, AS REENACTED AND AMENDED

By a letter to the Commission dated October 22, 1954, certain end users of peanuts requested an investigation, hearing, review, and modification of the import quota on peanuts heretofore proclaimed by the President pursuant to section 22 of the Agricultural Adjustment Act of 1933, as reenacted and amended. By letter dated October 26, 1954, the Southeastern Peanut Association requested that the Commission deny said application on the ground that the application should have been filed with the Secretary of Agriculture instead of the Tariff Commission and that the Commission is without jurisdiction to institute an investigation and hearing under section 22 on the basis of such application.

SECTION 22 OF THE AGRICULTURAL ADJUSTMENT ACT (OF 1933)

Section 22 authorizes the imposition of restrictions on agricultural imports if the importation of such commodities or their products would render or tend to render ineffective or materially interfere with certain agricultural programs or operations undertaken and administered by the Secretary of Agriculture.

It is clearly the purpose of the statute to protect domestic agricultural producers and agriculture programs developed for their benefit.

As originally enacted section 22 vested all authority of initial investigation with respect to any matter within the scope of section 22 in the President. By Executive Order 7233, the President delegated this function exclusively to the Secretary of Agriculture under which the Secretary was given complete authority to prescribe the manner in which requests for action under section 22 are required to be made by any interested person and to conduct the initial investigation with reference to any matter within the scope of section 22. By the reenactment and amendment of section 22 on June 28, 1950, the Congress, in substance, wrote this delegation into the statute, by substituting the "Secretary of Agriculture" for the "President," in the section specifying the procedure for investigations. It is clear from the legislative history that the Congress intended that the Tariff Commission should have very limited powers and that initiating action should be in the Secretary of Agriculture and the President. Nowhere in section 22 is the United States Tariff Commission given any authority to institute investigations and hearings on its own motion or upon application of interested persons.

Paragraph (d) of section 22 authorizes the President to suspend or terminate proclamations made pursuant to section 22, but only after investigation, report, finding, and declaration made in the same manner as is required for the initial proclamation issued under paragraph (b) of section 22. Since as a condition precedent to the issuance of a proclamation under paragraph (b), there must be an investigation and report of the Tariff Commission, which investigation can only be instituted upon the direction of the President after receipt of advice from the Secretary of Agriculture, similar procedural steps are necessarily required for the modification or suspension of an import restriction.

It is clearly just as important, if not more so, for an application seeking removal of an import quota to be submitted to the Secretary of Agriculture as it is for an application seeking initial imposition of a quota since even a public announcement that an investigation is to be made is likely to result in grave and irreparable injury to domestic agriculture. The present application being filed at the time when domestic crop is just being harvested and marketed seeking what we believe is obviously an unreasonable increase in the import quota, if not made for such purpose, necessarily has the effect of depressing producer prices. It is for this reason that the statute wisely requires applications under section 22 for action to be lodged with the Secretary of Agriculture, who is in the best position to advise the President and the Tariff Commission as to the impact upon agriculture and agricultural programs.

If the Conogress had intended to empower the Tariff Commission with authority to institute investigations and to conduct hearings of the kind and type which would support action under section 22, either with respect to the imposition of a quota or the renewal of a quota, it would have been a simple matter for it to have so provided instead of providing, as it did,;

"After investigation, report, finding, and declaration in the manner provided in the case of a proclamation issued pursuant to subsection (b) of this section, any proclamation or provision of any proclamation may be suspended or terminated by the President."

Subsection (b) refers to investigations authorized to be instituted under subsection (a) which are investigations which can only be made upon direction of the President after receiving advice of the Secretary of Agriculture.

It is important to observe that in other instances when the Congress desired to give the Tariff Commission authority to initiate and conduct investigations on its own motion or on the request of interested parties, it expressly so provided.

Thus, section 7 (a) of the Trade Agreements Extension Act of 1951 gives to the Tariff Commission express authority to act upon its own motion or upon the request of any interested party. If Congress had intended for the Tariff Commission to so act in connection with section 22 matters, it would similarly have so provided.

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