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Mr. COOLEY. You have adjusted price support down but you think it should have been down gradually rather than overnight?

Mr. BLALOCK. I think we should have taken a look at it 6 or 7 years ago and started adjusting instead of waiting until a couple of years ago.

Mr. COOLEY. We had it up to 90 percent for the first 14 months under Mr. Benson and instead of his bringing it down gradually, as President Eisenhower said he wanted it done, he brought it down

all of a sudden.

Mr. BLALOCK. Probably Mr. Benson was wrong in not bringing it down when he first went in and those in authority a few years ago were wrong in not bringing it down at that time.

Senator ScoTT. Did the cheese deal help the farmer much?
Mr. COOLEY. That is the deal on cheese, $2 million.

Mr. BLALOCK. I don't know whether it was the cheese deal that helped but something helped in the program.

The CHAIRMAN. The reason is in 1955 there was sold and given away in butter alone $173 million worth, plus, and in dried milk $117 million worth. A good deal of this dried milk instead of disposing of it, where it could be used for human consumption, it was used for hog feed.

Do you agree that should be done? That is why you have had quite a bit less taken in, got less on hand now because it has been disposed of in that manner.

Mr. BLALOCK. If it saves storage and that was all it was fit for, we better get it out and stop paying storage. I am not sure it was fit for anything else but hog feed at the time it came out. But the question I want to clear up, there is according to the figures that they have given me from the Department, we are not putting as much dairy products in storage as we were for a number of years prior to the adjustment.

The CHAIRMAN. Thank you, sir.

Are there any questions?

All right, Mr. Hicks. Give your full name and your occupation, please.

STATEMENT OF CARL T. HICKS, PRESIDENT, FLUE-CURED TOBACCO COOPERATIVE STABILIZATION CORP., WALTONBURG, N. C.

Mr. HICKS. I am Carl T. Hicks, I am a tobacco grower from Greene County, N. C. I am chairman of the tobacco committee of the North Carolina Farm Bureau, and president of the Flue-Cured Tobacco Stabilization Corp.

I would particularly like to file a factual report with the committee on the operations of the Stabilization Corp. if it is permissible. The CHAIRMAN. You may do that.

(Report submitted by Mr. Hicks follows:)

Flue-Cured Tobacco Cooperative Stabilization Corp. (hereinafter referred to as "Stabilization Corp.") was organized on June 1, 1946, under the Cooperative Marketing Act of North Carolina and subsequently domesticated under similar acts in the States of Virginia, South Carolina, Georgia, and Florida. It began operations on August 12, 1946, and has operated continuously since that time. The fiscal year of Stabilization Corp. ends April 30, and all information contained herein referring to any specific year will be for the fiscal year beginning May 1 and ending April 30.

The purpose of Stabilization Corp. is to stabilize the price of tobacco at 90 percent of parity on the auction-warehouse floor by administering the mandatory price-support program as provided for by Federal legislation. Its activities have been limited to its purpose. Stabilization Corp. has not entered into any other phase of the tobacco industry, such as operating auction warehouses, redrying plants, or storage warehouses. All of these services have been arranged for on a contractual basis with existing facilities within the industry. Any tobacco grower is eligible to participate in the operations of Stabilization Corp. if he purchases a share of common stock in the corporation at $5 per share, which entitles him to all privileges and benefits of Stabilization Corp., provided he has planted within his acreage allotment.

In administering the price-support program, the following duties are performed:

(1) Contractual arrangements are made with all auction-warehouse operators to advise the grower when his tobacco fails to bring as much as one bid above the support price and to insure him of receiving the support price, provided he is within his acreage allotment and is a member of Stabilization Corp. If he is not a member of Stabilization Corp., it is the responsibility of the warehouse operator to arrange for him to become a member if he so desires. The warehouse operator is responsible for full identification of any quantity of tobacco that the member may deliver to Stabilization Corp. He properly executes settlement memorandums fully identifying the landlord and, in the event of a tenant or sharecropper, their identification, and the division of the crop between the landlord and the tenant as well as a full description of the tobacco delivered. The warehouseman under this arrangement also assumes the responsibility of adequately protecting the tobacco until it is received by the redrier, who processes it. The warehouse operator pays the grower for his tobacco according to the 90 percent of parity price-support schedule in the same manner as he does for tobacco purchased by any tobacco company. He then bills Stabilization Corp. for the tobacco on a daily basis, supporting his invoice with settlement memorandums substantiating the fact that the tobacco has been received. Records are verified by Stabilization Corp. to be certain that the tobacco has been received and the grower paid properly before the warehouse is reimbursed.

(2) Contractual arrangements are worked out with the various redrying firms who are independent tobacco dealers to receive such tobacco as is charged to the account of Stabilization Corp., reweigh the tobacco to see that the weights correspond with the quantity of tobacco being billed, examine it for damaged, mixed, or nested tobacco, pull out undesirable bundles and pluck undesirable leaves so that a uniform, merchantable product may be packed. The tobacco is then placed in a redrying machine which conditions it for safekeeping for an indefinite period of time. It is then taken from the redrying machine and packed uniformly in hogsheads and shipped to a storage warehouse where it is held until it is sold. All tobacco is classified by grades and packed by grades. There is no commingling of grades within any one hogshead or otherwise.

(3) When the tobacco is shipped from the redrying plant to the storage warehouse, which is also under contract with Stabilization Corp., the tobacco is stored by types and grades. Each hogshead must be accounted for by the number of the row in a certain bay within the storage warehouse, usually identified by number. A "bay" consists of a four-row grouping of hogsheads in a specified area within the storage warehouse. The storage operator also identifies each hogshead as to location in the storage, the number of the hogshead, type, grade, and crop year of the tobacco within the hogshead, and the gross, tare, and net weights of the hogshead, and issues a receipt for it. Negotiable warehouse receipts are issues for each hogshead and forwarded to the office of Stabilization Corp., and are verified before the redrier is paid for his services. These receipts represent the tobacco pledged to Commodity Credit Corporation as collateral for money borrowed. Each year a physical inventory is taken of all tobacco in all storages for the purpose of determining the actual status of the tobacco stored and also to determine if for any reason any tobacco has been removed from the storage without authorization from Stabilization Corp.

(4) When the tobacco is sold to manufacturers and export dealers, arrangements are made with the storage operator to take certain lots of tobacco out of rows and bays and set it up where adequate light is provided so that the tobacco may be properly inspected by the purchaser. Each hogshead is then opened by removing the casing from around the tobacco. After the tobacco has been inspected, it is recoopered by securely replacing the casing around the tobacco. A

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:

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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.

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TABLE III.-Tobacco in inventory July 1 each year, 1947-55

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TABLE V.—Inventory stabilization tobacco, Oct. 31, 1955

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TABLE VI.-Gross sales at auction warehouses and stabilization receipts, 1955

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TABLE VII.—Money borrowed by crop years from Commodity Credit Corporation, repaid, due, and net gains distributed, as of Oct. 31, 1955

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TABLE VIII.—Analysis, interest costs by crop years on money borrowed from Commodity Credit Corporation, Oct. 31, 1955

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