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representative of Stabilizaion Corp. and an inspector from the United States Tobacco Inspection Service is present on each inspection for the purpose of showing the tobacco as well as to protect the interest of Stabilization Corp., and Commodity Credit Corporation.
As the tobacco is sold, the sales proceeds are paid against the loan on the applicable crop. Any proceeds remaining after full repayment of the loan are distributed by the members who delivered tobacco, except such funds as are directed or approved by Commodity Credit Corporation to be set up as a reserve.
(5) A tremendous volume of record keeping is required in carrying out the above procedures and maintaining adequate records for all of the members of Stabilization Corp., as well as records for tobacco received at auction warehouses, redried and stored, and for sales as they are consummated.
All of the above-mentioned phases are executed and supervised by employees of Stabilization Corp., to see that its interest as well as the interest of Commodity Credit Corporation is properly and adequately protected. In the contracts with auction warehouses, redrying plants, and storage warehouses there are provisions which permit a recourse to be taken when compliance with the contract has not been performed.
The directors and management of Stabilization Corp. have concluded that they have a responsibility to its members beyond receiving tobacco which fails to bring the 90 percent of parity support price at the auction warehouse. For this reason, efforts have been made to keep as many members as possible informed of the operations, principles, and policies of this firm. In doing this, there are a number of activities performed each year as follows:
(1) Area membership meetings are held throughout the five-State flue-cured tobacco-producing area. (NOTE.—A small flue-cured acreage is grown in the State of Alabama but is sold on the Georgia-Florida markets.) During February and March 1955, 35 area membership meetings were held for the purpose of giving detailed information concerning the operations of Stabilization Corp. For the most part, attendance at these meetings was satisfactory.
(2) The annual stockholders meeting is held in June of each year at which time full and detailed reports of the operations are given to the members in attendance, the election of members to the board of directors is held and such other business is transacted as is necessary to come before the membership.
(3) An advisory committee, composed of at least 4 or more members from each county in the flue-cured area of each of the 5 States has been set up as it was deemed advisable to make further efforts toward disseminating information among the membership. The advisory committee has been invaluable to the board of directors and the management of Stabilization Corp. Periodic reports and monthly newsletters are sent to members of this committee. They are requested to pass this information on to growers in their area and are requested to forward such information and suggestions to the office of Stabilization Corp. as will be helpful in the operation of the price-support program. Each year at the area membership meetings, the members are either reelected or new members are elected to replace members who for one reason or another can no longer serve in this capacity. Total membership on the advisory committee at the present time is 887.
(4) The newsletter mentioned above contains current factual information pertaining to the overall operations (recent copy is attached). In addition to sending it to members of the advisory committee, it is sent to all county extension agents, both white and Negro, in the flue-cured-tobacco-producing area, State agricultural stabilization and conservation offices in the five States, all State farm organizations (both Farm Bureau and Grange), to newspaper and radio farm editors, and to other interested persons. Total distribution of the newsletter each month is approximately 1,750 copies.
(5) Periodic news releases are made to the press and radio regarding certain phases pertaining to the operation of the corporation.
(6) Members of the staff of Stabilization Corp. attend literally hundreds of meetings of one kind or another during the course of a year, such as State, county and community farm organization meetings, agricultural extension meetings, many civic organization meetings, and some religious lay-workers' meetings in rural churches. Not only is an effort made to inform the membership of Stabilization Corp., but an effort is made to give information to other civic and religious groups which enables the public at large to have first-hand information regarding the efforts of Stabilization Corp.
1 On file with the committee.
Shown on the following pages are several tables giving statistical information regarding the many phases of the operation of Stabilization Corp. which we believe will give a picture of the magnitude of the volume of business handled and the value of this organization and program to the tobacco growers throughout the entire flue-cured-tobacco-producing area :
TABLE I.—Number of members, by years
Members 1946_ 79, 847 1953_
21, 463 1947. 218, 928 1954..
21, 717 1948.
29, 985 1949.
511, 581 1950
21, 722 1955 to Oct. 31, 1955_-- 28, 304 1951.
539, 885 NOTE.—Each year additional tobacco growers become members of Stabilization Corp. by virtue of the fact that young growers begin farming for the first time, people who have not grown tobacco in prior years do so, and a very small percentage of duplicated memberships are purchased.
TABLE II.-Tobacco in inventory at periodic dates
Jan. 1, 1948_
Sold Jan. 1-Oct. 31, 1955_11951-54 crops.
294. 7 352. O 302.5 49.5
TABLE III.—Tobacco in inventory July 1 each year, 1947–55
185.1 1948 82. 5 1953_.
243. 1 1949. 120.0 1954.
285. O 1950 87. 7 1955_
334. 9 1951.
TABLE IV.-Total receipts and sales, 1946–54 crops
Balance on hand, Oct. 31, 1955_-
TABLE V.—Inventory stabilization tobacco, Oct. 31, 1955
1951. 1952 1953 1954_
19. 7 56. 2 128. 5 117.9
322. 3 280. 3
TABLE VI.—Gro88 sales at auction warehouses and stabilization receipts, 1955
TABLE VII.—Money borrowed by crop years from Commodity Credit Corporation,
repaid, due, and net gains distributed, as of Oct. 31, 1955
TABLE VIII.-Analysis, interest costs by crop years on money borrowed from TABLE IX.-Analysis, overhead and administrative costs, by crop years, as of
Commodity Credit Corporation, Oct. 31, 1955
117, 117.78 13,497, 596. 21
$407, 280.06 1, 880, 021.74 3,090, 998. 75 1, 754, 536. 38
$1,034, 276. 43 1,899, 585. 27 1,869, 410.65
829, 381.54 2,197,859.45 3, 146, 698. 22 4,360, 171.02 3,421, 396.40 1,871, 654. 16 20,630, 433.14
7, 132, 836.93
13, 497, 781. 69
21, 289, 298. 52
Oct. 31, 1955
1 Overhead and administrative costs includes all salaries, travel expenses, office and other supplies, equipment rental, utilities, depreciation, etc.
Mr. Hicks. There are 2 or 3 points I would like to make on that as the tobacco issue seems to have been discussed pretty thoroughly this morning. There are 2 or 3 points which should be called to the attention of the committee.
First, this corporation operates in the entire flue-cured growing area. It has at the present time, or as of October 1, 1955, 539,885 stockholders who have paid $5 per share, which entitles them to place under loan through the corporation any tobacco that does not bid above the support price at 90 percent of parity.
Next I would like to call your attention to the inventory, tobacco inventory, at periodic dates, which indicates the holdings of tobacco taken from farmers under loan in these periodic periods: 1948, 249.7 million pounds; January 1, 1955, 350 million pounds; October 31, 1955, 302.5 million pounds.
In order to correct some misstatements that seem to be circulating, from January 1 to October 31, 1955, out of all stocks on hand, Stabilization Corp. has sold only 4972 million pounds. Under table 3tobacco in inventory at July 1 in each year-we offer this specifically for the purpose of showing the continued climb in the total amount of tobacco on hand : Total take, 1947, 631,2 million; 1948, 82.5; 1949, 120; 1950, 87.7; 1951, 86.3; 1952, 185.1; 1953, 243.1; 1954, 285; and 1955, 334.9. Total receipts from 1946 through 1954 have been 1,174.9 million pounds.
We have been successful in selling 850.7 million pounds of that tobacco and we had on hand October 31, 1955, 322.3 million pounds. Inventory as of October 31, 1955, by years: 11951, 19.7; 1952, 56.2; 1953, 128.5; 1954, 117.9; and out of this current crop we have taken 280.3 million pounds, or have on hand today as of October 31, 1955, total of 602.6 million pounds.
To give you a brief picture of the current operations for the current sales period
The CHAIRMAN. That is in the record already?
The CHAIRMAN. I wonder if you could give us information to remedy any situation you complain of. I wish to point out to this audience that of all commodities that have been supported under the
support program, tobacco shows a profit to the Government of $187,844 from October 17, 1933, to June 30, 1955. Not a bad showing.
Mr. Hicks. One other table I would like to refer to, with your permission, and then I will try to make a point or two.
Out of a total sum of $651,953,744 borrowed from Commodity Credit Corporation, we have repaid $372,616,255. There is no money owing on the 1946, 1947, 1948, 1949, and 1950 crops. There is $121,093,749 owing on 1951, 1952, 1953, and 1954 crops. We have borrowed this current year $158 million, and we anticipate the need of at least $15 million more, which in effect will total some $290 million now owing Commodity Credit Corporation.
On the 1946, 1947, 1948, and 1949 crops, after paying all of the amount of money that has been advanced, plus interest, this corporation has netted to growers $13,380,936 from its operations. We have paid $13,497,000 in interest, we owe Commodity Credit in accrued interest $7,791,000, or total of $21,289,298, the interest rate being from 3 to 4 and back to 312 percent.
Net operating cost over the 9-year period, which I respectfully call to your attention and that of the committee, is .2513. We think, I had better say I think, we owe a responsibility to the Government to keep good faith for the amount of money now owing on this tremendous stock of tobacco.
It is my considered judgment that an adequate reduction in acreage of from 20 to 25 percent is essential to the keeping of that faith with the Government in order that we might bring supply in line with demand, as provided by the act, and that no loss shall be sustained by the Commodity Credit Corporation for having operated this loan program. That is one point I want to make.
The CHAIRMAN. Somebody suggested to us the day before yesterday, I think it was in Macon, Ga., that 12 percent cut would do it and suggested that we set the machinery in motion to have a law passed so that the matter could be resubmitted to the farmers.
What is your view on that? You would want to make it 20 instead of 12?
Mr. Hicks. It is my understanding that the farmers have already registered their approval of 12 percent. That figure was based upon an estimated crop of 1,281 million pounds to be produced as of June 1, 1955. On November 1, 1955 the official estimate of this crop was 1,514 million pounds, or 240 million pounds greater than that anticipated at the time the 12 percent was approved.
The CHAIRMAN. That is the reason for resubmission, as I understand it, of the proposal to the growers.
Mr. Hicks. A 15-man committee representing all of the flue-cured States, with the possible exception of Alabama, appeared before the Secretary of Agriculture some few weeks ago and submitted a request requesting that legislation be enacted to permit a recomputing of the acreage quota for the year 1955, and that that quota be submitted to the growers for their approval or disapproval.
The CHAIRMAN. 1955 or 1956?
Mr. Hicks. There was no specific cut recommended because we felt that we should have the actual factual figure of production. It is indicated now there is between 30 and 50 million pounds, the crop