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TABLE IX.-Analysis, overhead and administrative costs, by crop years, as of Oct. 31, 19551

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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 4912 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, 6312 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: 1951, 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?

Mr. HICKS. That is true.

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 32 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. For 1956. I beg your pardon.

The CHAIRMAN. What was the cut recommended?

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

will be between 30 and 50 million pounds less than anticipated at that time.

The CHAIRMAN. Thank you, sir.

Mr. COOLEY. Mr. Hicks, isn't the thing you are disturbed about this 602 million pounds you now have in stabilization?

Mr. HICKS. I think we all are.

Mr. COOLEY. That was brought about more or less by the 280 million pounds that you are taking out of the 1955 crop?

Mr. HICKS. We had 322 million to begin with.

Mr. COOLEY. This is the thing that really aggravated the situation in connection with the 1955 production?

Mr. HICKS. Yes.

Mr. COOLEY. Tobacco is being preserved and redried and packaged away, and is aging.

Mr. HICKS. Yes, sir.

Mr. COOLEY. I can understand that you are disturbed because of the great amount you still owe the Government, that sum of $279 million. Is that right?

Mr. HICKS. I believe that is correct.

Mr. COOLEY. Even that is a small figure, although it is a lot of money, it is a small figure when related to the enormous tax collected from this crop every year by the Federal Government.

Mr. HICKS. Yes, sir.

Mr. COOLEY. The Federal Government itself has a kind of vested interest in tobacco farmers' prosperity.

Mr. HICKS. I believe they collect about a billion and a quarter out of the tobacco products each year.

Mr. COOLEY. If we take 12 percent or 15 or 20 percent this year you think we are in for continuous reduction over a period of the next 3 or 4 years?

Mr. HICKS. My personal analysis of it is this: If you have a continuing 1,500-pound yield per acre, which is approaching this year's yield as against a normal yield of about 1,243, I believe the figure is, you can grow all of the tobacco that the domestic and foreign markets will consume on 750,000 acres of land. What will you do with the surplus if you continue to grow all that the market will absorb?

Mr. COOLEY. You are going to continue to reduce acreage in years to come, is that right?

Mr. HICKS. Under the formula I believe somewhere between 36 and 40 percent would be necessary if the Secretary followed the formula strictly for the year 1956.

Mr. COOLEY. What was our reduction in 1955?

Mr. HICKS. Five percent.

Mr. COOLEY. That was not sufficient.

Mr. HICKS. No, sir.

The CHAIRMAN. Thank you, Mr. Hicks.

Mrs. Kathleen Devlin. Have a seat, please, and give your name and occupation.

STATEMENT OF MRS. KATHLEEN DEVLIN, ST. MATTHEWS, N. C.

Mrs. DEVLIN. Kathleen Devlin, housewife. I have been under obligation to operate my father's farm since he has been under ill health for 2 years, and our neighborhood allotment that we have in

our township, and my allotment on the farm, doesn't compete. We have cleared acres of 88 in cultivation. We have allotment of 7 acres of tobacco, 14 in cotton, and 6 in wheat. With a family of 11 to operate that farm, plus my family, of 88 cleared acres of cultivation, and I would like to know would there be some way of setting up the farms, that the farms could be equally based, so each individual family could support themselves.

The CHAIRMAN. We are looking for a formula like that. We have found in many places farmers growing basic crops, found it more profitable to go into other crops. I don't say that is true in your case, but you have heard the preceding witness here say that something is going to have to be done to further curtail tobacco land and if we are to get support prices by the Government of any consequence it is going to be necessary for the farmer to agree to take the cut necessary to bring production within the amount necessary for consumption.

Mrs. DEVLIN. The little farmer in my neighborhood of St. Matthews township agree for 90 percent support parity.

The CHAIRMAN. Yes.

Mrs. DEVLIN. We agree for the cut of allotments. But we feel like each individual little farm acreage of tobacco should be based equally as of the big farmer.

The CHAIRMAN. You mean entire acreage?

Mrs. DEVLIN. I don't know how you explain it. I have only been in this stuff 2 years. This morning it was reported from one of the witnesses that they had 56 acres of cleared cultivation land with 131⁄2 acres in tobacco allotments.

Mr. COOLEY. May I interrupt? The whole philosophy of the tobacco marketing quota law would have to be changed to do what you are proposing.

Mrs. DEVLIN. That is why you make these changes and plans, make it so the little farmer can support himself.

Mr. COOLEY. The idea you present now was presented to our committee many years ago by some prominent farm leaders. We had to abandon it because what you would actually do in the tobacco area which is largely cultivated by tenants would be to put a premium on large tenant families if you allotted the acreage based upon number of people in the family, without regard to the historical growth of the tobacco on the land. We would run into all sorts of trouble. The basis of the law now is that you make the acreage allotment on the land, labor, and equipment and the history of growing tobacco on the farm. If you get away from that I would be afraid you would wreck the entire program.

While your acreage is very small, you will find other people with, comparatively speaking, even smaller acreage than you have on an 88-acre farm. If you did not have the program and grew all the tobacco you wanted to grow, 27 acres might not even bring what 7 is bringing now. I sympathize with you. You have a small allotment. I think you better take it up with your local committee and see if they are able to increase it for you.

Mrs. DEVLIN. They say there is nothing you can do.

Mr. COOLEY. Take it up with Horace Godfrey. He is smart enough to do it. He is out at State college.

64440-56-pt. 623

The CHAIRMAN. Do you have any suggestion?

Mrs. DEVLIN. My only suggestion, speaking of the little farmers in our township, we would like to have some consideration of getting our farm equal enough we could support our families on it.

The CHAIRMAN. That is what many others want, and as Congressman Cooley just said, it is a problem.

Thank you, Mrs. Devlin.

Mr. Upchurch? Give your name in full for the record, please, and your occupation.

STATEMENT OF T. B. UPCHURCH, JR., NORTH CAROLINA COTTON GROWERS ASSOCIATION, RAEFORD, N. C.

Mr. UPCHURCH. I am T. B. Upchurch, Jr. I am a farmer from Raeford, N. C. I represent North Carolina Cotton Growers Association. I would like to file this brief and I will try to be as brief as I can.

(Mr. Upchurch's prepared statement follows:)

I realize that the present farm program is far from perfect. I refer to the program which supports basic crops at 90 percent of parity, but had it not been for the support programs I believe the whole farm economy would now be in a state of panic equal to the 1930 to 1932 period.

I believe also that the farm panic would have carried all of the economy of the Nation at least part way back to the 1930's. I believe this because we would have had a price collapse for agricultural products just as soon as the war demand had been met. History will show this is true and the only reason it did not happen after World War II and the Korean war was because the support program for agricultural products protected the economy from a price collapse for farm crops.

I believe that instead of costing the Federal Government money the pricesupport programs have made billions in income taxes, because the general prosperity of the Nation was not undermined by falling farm prices.

I don't believe we have priced ourselves out of the market through the support programs, but that we have lost most of our export markets because of high tariff, which seems necessary to protect industry and labor.

The attitude of the State Department in saying where we can sell and how much has also cost us many outlets for farm crops.

The embargo that we had on edible oils during and after the war cost us thousands of tons of sales of cottonseed and soybean oil. I well remember how hard the oil-mill interests worked to get the embargo for export lifted on cottonseed oil. Several years after the Commodity Credit Corporation had billions of pounds of oil that they finally sold at reduced prices.

In the 1950-51 cotton season certain textile people thought we might not have enough cotton. An embargo was placed on cotton for export and we lost the sale of over 2 million bales at high prices. The lack of American cotton sent world prices sky high and many nations expanded the production of cotton and have been expanding ever since.

I don't think that 90 percent of parity is too high to support basic crops, as long as farmers are willing to control their acreage. I know we have made very high yields and have made more than we need, but we will not continue to make high per-acre yields right on. We have had years of poor yields and if we keep acreage at a reasonable level and export in every way we possibly can, we can bring production in line with consumption in a few years.

We hear a great deal of what agriculture is costing the Nation, but never a word of what the high wage scale is costing nor anything of the thousands of manufactured products such as trucks, draglines, etc., that the military has stored in the open. These manufactured products were paid for at prices that earned industry a tremendous profit and labor a wage scale twice as high as the farmers get.

I am happy that industry can make a profit and that labor gets good wages but it does not please me to have a great many newspapers and news commentators point with scorn at what the farmers are costing the Nation. I especially don't like for newspapers who do not know what they are talking about to

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