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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 governing 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 bushel 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.

We feel that any price protection should be in the nature of a compensatory payment system because (1) only by compensatory payments can you preserve individual initiative and promote orderly marketing; (2) such a system would help solve one of the fundamental weaknesses of the previous program, í. e., the problem of equating storage potatoes to nonstorage potatoes; (3) compensatory payments do not unduly burden the consumer by forcing her to pay twice, once in cash and once in taxes, for her produce; (4) a program using compensatory payments and marketing quotas would more nearly equate the different areas from marketing considerations so that no area would have to "hold the umbrella" to allow a competitor nearer the market to clean up her crop. The feature of joint Government and industry responsibility for price is somewhat new. Three suggested ways by which it might be achieved are (1) an acre assessment on all potatoes, paid into a common fund to be used for compensatory payments, with the Government's share decreasing as the industry matured in the program to a point where the industry conceivably could finance a program within itself; (2) a fund built by prorating Government compensatory payments, 75 percent to the farmer and 25 percent into a general fund that would eventually be large enough to take over the entire load; (3) by using either of the foregoing suggestions in combination with penalty funds collected as a result of exceeding an acreage allotment to establish a fund. In any event, a prosperous industry, paying taxes, would more than reimburse Government for all funds used both administratively and for compensatory payments. We feel that a suitable program can be worked out as we have indicated above because the potato industry, to be eligible, must accept a mature responsibility in every phase of the program but will still retain enough initiative to make the program successful. Government might well confine their participation in proportion as industry accepts responsibility.

We feel that the potato industry is entitled to a referendum on a program such as we have outlined. We know this much; Maine is ready to do her part. We have held meetings throughout the producing areas with an aggregate attendance of over 750 producers. There has been practically unanimous agreement with the fundamental ideas we have advanced here. We wish to thank the committee for their consideration.

The CHAIRMAN. Mr. Edmunds, how would these quotas be fixedon past production, you say, in each State?

Mr. EDMUNDS. Yes, sir, on the basis

The CHAIRMAN. Over a period of how long?

Mr. EDMUNDS. There are two suggestions I have heard. One is to go back to the good years and attempt to establish a base there. Another one would be

The CHAIRMAN. You mean the good years of high production? Mr. EDMUNDS. The good years, the profitable years for the potato industry, on this theory

The CHAIRMAN. I find the good years from a profitable price standpoint are probably low-production years.

Mr. EDMUNDS. I am going back to the program days immediately after the last war. There was a very good record kept at that time,

which would be very useful in trying to establish production controls on that basis.

The CHAIRMAN. And each State would be allowed to produce so much potatoes?

Mr. EDMUNDS. That is right.

The CHAIRMAN. In order to effectuate that, however, all of the States who would be assigned a quota would be eligible to vote? Mr. EDMUNDS. That is right.

The CHAIRMAN. It would require two-thirds of those voting under your plan to make the plan effective?

Mr. EDMUNDS. That is right, similar to the provision in the old socalled Lucas bill, I believe it is.

The CHAIRMAN. The same as we have for cotton and others, about the same principle-it may be a little different?

Mr. EDMUNDS. I say there is a divided feeling. Other people feel that acreage allotments for an area should be based on the acreage over the past 4 or 5 years. I think I may say that either system would be acceptable to the State of Maine, although we might possibly prefer the latter method.

The CHAIRMAN. I was coming to that. As I understood you, you are proposing a bushelage?

Mr. EDMUNDS. In concert with acreage control, using them both together.

The CHAIRMAN. What is the purpose of doing that? Why do you not do one or the other?

Mr. EDMUNDS. You have my reasoning, Senator. The potato crop is very sensitive to weather conditions. You take in the State of Maine last year, we drew 310 bushels to the acre. This year we are growing 440 bushels to the acre. That is almost a 50 percent increase from one year to the next.

The CHAIRMAN. What is the average production?

Mr. EDMUNDS. The actual production?

The CHAIRMAN. The average-say for the past 5 years?

Mr. EDMUNDS. In the neighborhood of 400 bushels to the acre-very close to it, sir. We had 2 poor crop years—the 2 poorest crop years for a number of years, but it might be slightly less, but not much less. The CHAIRMAN. You would have in this program those who produce a few potatoes for the early markets, more or less used in the nature of tender vegetables-would you put those in there, too?

Mr. EDMUNDS. I think that you should define what a commercial producer is by the size of his unit. Let us say less than 3 acres would be less commercial. Above that it would be very desirable to have all areas included.

The CHAIRMAN. That would be irrespective whether you could store the potatoes for the next year or not?

Mr. EDMUNDS. That is right.

The CHAIRMAN. In some areas you grow potatoes this week and unless you eat them in 2 weeks they are likely to spoil.

Mr. EDMUNDS. Each area very definitely affects the marketing of the adjoining area.

The CHAIRMAN. I understand that. In the State of Maine and in the State of Idaho, you can dig your potatoes in the fall and you can preserve them until the next fall almost without their spoiling, except maybe to sprout.

Mr. EDMUNDS. That is right.

The CHAIRMAN. But in other areas that I know of you produce a potato, say, the latter part of May or earlier, and you cannot store that more than maybe 2 months. If you do, it is out. You are going to put that potato in the same category as the potato in Maine and in Idaho?

Mr. EDMUNDS. I think that it should be.

The CHAIRMAN. All right. I just wanted to get your ideas. How would you work the compensatory payments that you talk about?

Mr. EDMUNDS. As I see it, as I understand it, what I mean when I say compensatory payments

The CHAIRMAN. That is what I would like for you to describe to us. Mr. EDMUNDS. As to what I mean?

The CHAIRMAN. Yes, how would you work it, in other words, you mentioned compensatory payment. That, to me, means some kind of payment coming from somewhere, to get to the farmer the difference between what he gets and what he ought to get.

Mr. EDMUNDS. That is right.

The CHAIRMAN. Where would that come from? You said that you would assess the farmers so much.

Mr. EDMUNDS. I said that the Maine industry is more than willing to enter into a joint

The CHAIRMAN. Let us talk about the country as a whole. If we dealt with the State of Maine only, we might solve your problem in 10 minutes, but you have 48 States to deal with, and not all of them can plant lush potatoes as you do and as California does and as Louisiana did--we do not produce so many now-how would you get the money-would it come from the Treasury, or would you want. to assess somebody for it, or what?

Mr. EDMUNDS. That is one system that I have heard mentioned. It would be a Treasury check that would be the basis of this compensatory payment.

The CHAIRMAN. How would you fix the price at which potatoes would sell to give the farmer a fair return?

Mr. EDMUNDS. We feel, I think, that the potatoes should achieve at least 90 percent of parity, especially since parity is considerably lower than parity was 5 or 6 years ago.

The CHAIRMAN. Suppose that you established a formula whereby you would give this 90 percent of parity and you produce 400 bushels in some places and others they produce maybe 125 bushels. How would you adjust that?

Mr. EDMUNDS. Well, parity is figured differently for each area, each State, for potatoes, which takes those factors into consideration. The CHAIRMAN. You would have a different price then?

Mr. EDMUNDS. That is right. As I visualize it in Maine, parity,

let us say, would be $3.50 a barrel.

The CHAIRMAN. To the farmer?
Mr. EDMUNDS. To the farmer.
The CHAIRMAN. On the farm?

Mr. EDMUNDS. On the farm. I am speaking in terms of barrels, which we use in the State of Maine. It might be $5 a barrel in Florida. It is figured for each area, each month, and for each State.

The CHAIRMAN. Depending upon the time that those potatoes come on the market?

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