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Mr. EDMUNDS. Such inquiry as we have made assures us that our program is supported by many producers in other areas than Maine. Generally speaking, our analysis of the opposition to a type of program such as we propose is by (1) a minority of farmers who in all honesty oppose any type of Government program, agricultural or industrial, whether for reasons of their own proficiency, financial stability, or moral principle; (2) in some instances, by our industry's packaging, shipping, and distributive channels which are protected by an everwidening markup for their services and can often profit greatly by the speculative nature of an uncontrolled potato economy; (3) by some larger producers now profitably growing crops embraced by Government programs who actually risk little else by an unprofitable venture into potatoes than a reduction of their income-tax liability; and (4) by certain areas newly created by Government reclamation projects established in the potato business during the past few years, not only by low-priced land and water, but, in some instances, by Government urging
The CHAIRMAN. Would you mind a question there?
The CHAIRMAN. You read just before this sentence a statement. What was the statement you made there?
Mr. EDMUNDS. “By some larger producers” who are growing basics and who can go at will into potatoes on any acreage they want to.
The CHAIRMAN. How would you stop that-have you got a plan?
Mr. EDMUNDS. I have included in here, in my testimony, that, I think, by going back to the old compliance regulations, which were dropped this past year.
The CHAIRMAN. All right. You may proceed. Mr. EDMUNDS. That are loathe to accept crop history as a basis of production control. Should the Congress enact legislation such as we propose, no program binding upon the potato industry could be instituted unless two-thirds of the growers voting in a nationwide referendum were in favor of the provisions of the program. In effect, we are asking the Congress to offer a program for the potato industry, subject to the industry's approval. This seems to be a fair request.
We feel potato producers are fully entitled to such Government protection as is enjoyed by other segments of our economy, including agriculture, if the potato industry is willing to accept certain responsibilities. The previous unfortunate venture by the Government into a price support program for potatoes should not unduly influence consideration of a more sensible type program. We have paid our penance for our participation in the previous support program by being reduced to our present condition of financial instability approaching disaster proportion. Let us recognize that the previous program was an outgrowth of encouraging wartime production, and suffice by saying it was fitted by neither economic nor mechanical considerations to postwar conditions.
Agriculture today generally operates under Government programs designed to insure economic stability to the efficient grower. We have no quarrel with the rights of others to enjoy security; our concern is that we, as potato growers, do not enjoy any protection while being forced to compete on all sides with those who do. Labor is protected by minimum-wage laws; business, among other ways, by being allowed to create virtual monopolies; transportation, communication and
power services by rate-fixing. If this general pattern of increased costs is working a hardship on the segment of agriculture now included under Government programs and it is a recognized fact that agriculture is lagging far behind the prosperity enjoyed by the rest of the economy, the sorry plight of the potato producer is easily understood. The limited assistance furnished to us over the past 2 years by diversion programs at a total cost to the Government of less than $1,500,000 has substantially failed to return us the cost of production. The program currently in effect, while broader in scope, will still see us operate at a tremendous loss as an industry. We appreciate the help, as you well know, but it does not and cannot satisfactorily solve our problems. Our farms have decreased by over 50 percent in value. New machinery designed to combat rising labor costs is beyond our resources and must be forfeited. Government credit agencies are being forced to abandon some of their more hopeless cases and curtail lending to others hardly more fortunate. Commercial credit institutions are becoming increasingly wary of agricultural loans wherever risk is an appreciable consideration, especially since banks in three towns in our area have been forced into liquidation because of “frozen potato assets." The attrition of the past three crop seasons has become readily apparent since the release of 1954 census figures. There has been a reduction, in 4 years' time, from 3,900 farmers to 3,200 in Aroostook County alone.
Our problem in the potato-producing areas of Maine, and especially in Aroostook County, is principally one of lack of diversification. This may be the panacea for other distressed areas but it does not lend itself in any way to the solution of our difficulties. Our area is ideally suited for the production of large, high-quality crops of potatoes but we cannot shift at will into other crops. Our season is too short for some, too cold for others, too wet for a few, too dry for many. We have tried livestock, but with a conspicuous lack of success. Under our climatic conditions, livestock requires 6 months in the barn for every 6 months on grass. Efficient production of the basic crops has never seemed feasible in our area; consequently, we lack the necessary crop histories to undertake their cultivation. Despite our best efforts at diversification, we are, and must continue to be, a predominantly potato economy.
One of the worst blows the potato industry has suffered in recent years was the cancellation of cross-compliance regulations. It seems eminently unfair to us that farmers fortunate enough to have quotas for production of the basic crops at specified levels of parity should be allowed to indiscriminately exploit less fortunate crops. We can ill afford to be a “stooge” for the basic commodities. The increasing production of potatos on the reclamation projects in the West is equally unfair. Where can we turn if the Government continually restricts the potato acreage of the established centers of production on the one hand while encouraging the development of our competitive areas on the other? How can we successfully compete for our share of the consumers' dollar against odds such as we face?
Profitable potato culture is essential to the economy of this country. Potatoes are a staple in the national diet, primarily because they combine low-cost, high-nutritive value with variety and ease of preparation. The production and distribution of a crop of potatoes provides
employment for thousands of people on an annual basis. Billions of dollars are invested in the tangibles and intangibles that constitute the potato industry from farm to consumer.
A correctly designed potato program is fully as much in the interests of the consumer as the producer. Sensitive as potatoes are to the slightest threat of shortage or surplus, uncontrolled production will alternately create extremely high and low prices in the market. These wide fluctuations serve no other purpose than a speculative profit to the fortunate few who are in a position to capitalize on the situation. The ultimate result is dissatisfaction on the part of the consumer because she must purchase generally inferior merchandise at inflated prices, thus encouraging her to buy substitutes of lower nutritive value. The reaction at the farm level is to increase production to a point of surplus, which is aggravated by the declining consumption occasioned by the shortage.
The potato industry has done an excellent job, where means are available, of putting its own house in order. There is fairly conclusive evidence that our industry is ready to accept, on a nationwide basis, marketing agreement programs whereby potatoes of inferior grades and sizes can be withheld from market. At the present time, nearly 60 percent of the production from the 29 late States is marketed under Federal or State marketing orders, certainly a tremendous improvement over conditions existing 5 years ago.
The industry has indicated a desire to establish a promotional fund, raised on an assessment basis, to increase the annual consumption of fresh and processed potatoes. Growers are ready to raise additional funds to help finance the research so necessary to keep modern industry in a competitive position.
Maine has already taken many of these steps. Last year an overwhelming majority of the growers voted to accept a Federal marketing order to control the quality of their product. Over the past shipping season we voluntarily reduced the supplies available for shipment by 20 percent in the interests of good marketing practices and, despite the poorest quality crop in many seasons, we supplied our markets with superior Maine potatoes. This year, we are operating under the most severe regulations of any area in the country. The combination of quality control and surplus removal in Maine has bolstered the market across the Nation and we have partially averted complete disaster. At our request, the recent session of the Main Legislature increased our self-imposed assessment for advertising purposes from 1 to 2 cents per barrel, giving us far greater funds to pursue an active promotion program. At least one-third of these funds are used for research purposes under the supervision of the University of Maine and the Agricultural Research Administration of the USDA. At the present time all interested agencies are working toward a more orderly marketing program for merchandising the Maine crop. The results of the program are being reflected already in an increased movement of Maine potatoes to market prior to the winter season.
Some authorities on agricultural economics have questioned the adaptability of potatoes to any type of program, since they are a yearto-year crop that cannot be stored” in the sense of the basic commodities. We feel that potatoes are ideally suited to a program and for a number of reasons: (1) The past 3 years of low prices and sharp competition have established as never before the efficient areas of production. A realistic program must maintain production only in the more efficient areas. *(2) Potatoes, because they are not storable in the sense of the basics, cannot create an overhanging, ever-mounting surplus under a correctly designed program. Potato production is and must be geared to a year-to-year basis; consequently, they will not contribute annually to complexities in the following years. Denial of a potato program on this consideration is to say, in effect, that the economy of our country is best served by “frozen assets." By the same token, changing marketing patterns, expansion of processing facilities and the amazing new fields being investigated by irradiation of foodstuffs are making the prospects of a prolonged potato shortage a thing of the past. There is sufficient room within modern marketing patterns to adjust supply to demand on a continuing basis without surplus or shortage. (3) Potatoes are easily “tailored” in terms of supply to demand by the very sensitivity of potatoes to this age-old economic law. A normal amount of potatoes will tend to seek a level of 100 percent of parity much more rapidly than commodities that are continually influenced by storage holdings, either actual or anticipated. Statistics have been thoroughly developed indicating within very narrow limits the estimated annual consumption of potatoes and these statistics undergo constant revision as different factors become dominating influences. This wealth of knowledge would make it possible to continually adjust supply to demand on an area or nationwide basis if marketing quotas and national marketing agreements become a reality. The potato industry is a highly concentrated, highly specialized business involving 30,000 commercial producers. We feel we are ready to accept the additional amount of organization necessary for the common good of industry and consumer alike.
The program for potatoes that we would like to propose here today would be built around strict production control as far as price responsibilities on the part of the Government and industry are concerned. Previous experience indicates that marketing quotas in terms of bushels are the only feasible control if the object of a program is to achieve 100 percent of parity. At the same time acreage control appears to be a very essential adjunct of a quota program; marketing quotas, working in concert with acreage control, are far more practicable than attempting production control by the use of either one alone. Our conception of the role of acreage allotments would be to keep the gross national production on a crop estimate basis within the bounds of reason. Compliance with acreage control features of the program would entitle a producer to market such proportion of his production as his individual marketing quota, in terms of bushels, permitted. We think that marketing orders could effectively "tailor” a farmer's production from harvested volume on eligible acreage to bushel quotas and that a farmer who complies with his acreage allotment should be entitled, at the discretion of the Department of Agriculture, to a diversion program at slightly less than the cost of production on his eligible surplus above his marketing quota. The acreage control would also serve to determine whether or not the farmer became subject to the penalty clauses so essential to a marketing quota system. Should he exceed his acreage allotment he should be subject to a penalty of not less than 75 percent of parity on his acreage excess based on average crop conditions for his area.
The question of compliance with marketing quotas for potatoes could be governed by adopting (1) a stamp plan similar to the so-called Warren Act of 1935; (2) a system similar to the checking account system used in banks, with each shipment debited in a central office against a farmer's individual marketing quota; (3) any other plan that is preferable. Should the potato industry accept marketing orders govering all areas, compulsory inspection could be used to police a marketing quota system as designed above.
Acreage allotments and marketing quotas should be set up on the basis of crop history. Reservation of acreage and bushes quotas, both by individual States and the country as a whole, should be established not to exceed 5 percent per year to continually shift production into the more efficient States or areas and similar reservation should be made for adjusting acreage within individual areas or States. Such a program would be in the interests of the consumer by promoting a quality product at a reasonable price, and in the interests of the efficient producer and the progressive area or State by preserving the initiative so essential to the success of a program.
Production control would create an equity not appreciable at the present time for the family-size farmer. An individual farmer could expand his production by purchasing, at a fair value, land which has a crop history whereas now the farmer forced to abandon his farm, generally speaking, has nothing to show for the years he has worked it.
We feel that enabling legislation establishing a national marketing agreement for potatoes would be most useful in furthering the aims of our program because it would (1) be in the interests of quality control; (2) provide a common meeting ground for the industry to discuss marketing quotas and acreage allotments for each State or area; and (3) could be so written as to provide a vehicle for the assessment of funds for promotional and research work on a national basis. However, we feel final determination of regulations affecting each State or area should be made on a local basis by a local committee. A national committee might possibly establish regulations for areas of small production that did not wish to bear the costs of administrating a local marketing order.
We feel any program should definitely combine industry and Government responsibility in terms of administration and price guaranty. Government would have to have the authority of a final referee, but, at the same time, industry should be instrumental in making all decisions under a program. Industry best knows its own problems on an area basis and such an arrangement would preserve the self-respect and initiative of the industry.
A program similar to what we have recommended above should, theoretically, achieve 100 percent of parity with no financial responsibility on the part of the Government or the industry. At the initiation of the program, however, we feel there should be a responsibility on the part of Government and industry together to achieve 90 percent of parity for the portion of the crop covered by the bushel quotas. As the industry matured in the program, the trade would recognize that bushel quotas, within very narrow limits, could achieve at least 90 percent of parity and price protection would become less essential to its continuing success.