Mr. DUDLEY. Yes. The CHAIRMAN. We have a surplus of cotton today, but not of the good kind. What has occurred in this program is that a lot of farmers have produced not for the market, but for Uncle Sam. If we can find a way to curtail that, do you not think it would be a good idea? Mr. DUDLEY. Surely. The CHAIRMAN. That is what we are trying to do. Mr. DUDLEY. All right. The CHAIRMAN. So you would not object to offering a little premium until we get out of the woods, because I do not want any protection, any more than you do, sir. The idea is to get the farmer out of the woods and to get him on his feet. And if we can put a law on the statute books that will encourage that farmer to produce goods that will be absorbed by the market and to discourage the production of those commodities that are a drag on the market, that would be of help. I just mentioned cotton. Of the amount of cotton we have on hand today, 41 percent is under an inch. The market does not want that, therefore let us say that we will not pay you. We will not support the price to you for cotton of that stable, or we will make it so low that you will be discouraged from producing it. Would you not be for a program like that? Mr. DUDLEY. I would like to say that I am heartily in favor of that program, but up until this moment I had not heard any such plans were under way. I am glad that you are doing that. The CHAIRMAN. You are like, with all due respects to others, a lot of other witnesses who testified-not so much here, but in other places where the farmers of this Nation were asked to produce because of a pending war in Korea. They responded patriotically but the great trouble with them is that many produced more or less for Uncle Sam. They did not try to give quality production, and even during the war. It strikes out the benefits intended by the law on the statute books, a program whereby we would have compensated the farmer to produce what the market wanted. If we had done this we would not be in the trouble we are now. That is what some of us are thinking of. Mr. DUDLEY. I am glad to know it. I think if the program had been put into effect right after the war to start gradually lowering price supports, we would not be quite as bad off as we are now. The CHAIRMAN. You mean which war? Mr. DUDLEY. The Korean war. The CHAIRMAN. The Korean skirmish or World War II? The CHAIRMAN. The war ended suddenly. It was thought that it would go on a few more years. The year that it did end many of us thought that the Government should then have put acreage controls on, but it was not done. It should have been done, but it was not done, because of the fact that it was possible that it would continue longer than it did. Just because it ended suddenly, the programs were on and more was produced than was needed. I am satisfied if the law that was on the statute books had been put into effect and we had these decreased acreages and placed marketing quotas on, you would not have had on hand the amount of cotton I am sure that you now have. Mr. DUDLEY. You are talking right along with my program. [Applause.] I want you folks to use your influence. The CHAIRMAN. We may talk in the same language, but you have a different approach. You are blaming it on the 90 percent support program when that is not correct. That is where we differ. Mr. DUDLEY. I think it has been a big factor. The CHAIRMAN. We would not argue it. Mr. DUDLEY. That rigid price-support program was voted in by the House last year and your body did not vote it. So otherwise we would have had it right back going on right now. The CHAIRMAN. You know who stopped it? Mr. DUDLEY. I have an idea. I think you are the gentleman.. The CHAIRMAN. Why, because I want to come back and see the farmers to see whether or not we could not get a better program. We could have probably squeaked it through Congress, but I did not want to do that. I wanted to come back here to the farmers and see from them whether or not we could not get a workable program. If I am to be classified as a politician for that, you are welcome to call me that. Mr. DUDLEY. I hope you folks will use your influence to persuade some of these other folks to vote along the way we want to see. The CHAIRMAN. I will use all of the pressure I have in my power to do that. Mr. DUDLEY. I appreciate that. The CHAIRMAN. I want to get the Government out of business quicker than you, because I have been living with it a long time. I think it is possible if only we could get the farmers to try and cooperate among themselves. You take this Maine man who came here about potatoes. If you could get cooperatives organized in the various States, and those cooperatives will cooperate with each other, you might solve the problem. You try to see how far you go with that. Mr. DUDLEY. I am doing all I can to do just that. The CHAIRMAN. You have the situation here in Vermont, and, in fact, in all of New England, with your dairy prices. I do not mean to say you are sitting high, or that you are eating "high on the hog" all the time I do not mean to say that. You have something you can more or less control. You have a great market to which you can divert your produce. All of the States have a provision in their own law to prevent a little milk coming in from perhaps Wisconsin and maybe other States. I do not mean to say that is not the thing to do, but if you worked all over the country and see what is occurring in other places where their sole revenue is from wheat and they cannot grow anything else in those places, that is their main crop, you might have a little pity for some of those fellows. Mr. DUDLEY. We have a few problems being close to the markets. We have high land costs and high taxes that offset some of that. The CHAIRMAN. Your high taxes may be your trouble. I was surprised to learn that in some of your Northeastern States your taxes were almost as much as 8 percent on your land. You ought to come to Louisiana. Mr. DUDLEY. Thank you. The CHAIRMAN. Our next witness is Mr. Hutton. Will you come forward and give us your name and whom you represent? STATEMENT OF WILLIAM A. HUTTON, PRESIDENT, CONNECTICUTMASSACHUSETTS TOBACCO COOPERATIVE, SOMERS, CONN. Mr. HUTTON. Mr. Chairman and gentlemen, my name is William A. Hutton. I am representing the Connecticut-Massachusetts Co-op and myself as a tobacco and potato farmer. The CHAIRMAN. All right. I wonder if you could confine your remarks to anything that has not been brought up yet. Mr. HUTTON. I own and operate a farm of 250 acres in Somers, Tolland County, Conn. On this farm I raise 100 acres of potatoes, 17 acres of Broadleaf tobacco and keep about 40 head of Hereford cattle. I employ 3 men the year round and may employ as high as 25 during the tobacco and potato harvest season. As a farmer I am concerned about the economic squeeze that farmers are in. For several years now the commodities farmers sell have been declining in price, but labor, machinery, fertilizer, spray materials and other costs have been increasing. Percentagewise, farmers are getting a smaller and smaller part of the total national income each year. Since farmers are among the largest users of steel, rubber, and electricity and petroleum products in the United States, this trend does not seem to be in the best interests of our national economy. Certainly it is not a trend that will encourage the investment of capital into farming or a trend that will enable farmers to maintain a standard of living comparable to that of people in other segments of our economy. Connecticut has special problems as an agricultural State. As you know, our State is highly industrialized. Only 60,000 people out of 2.2 million live or work on farms. This is only 3 percent of our population. And yet Connecticut produces 65 percent of the milk and poultry products it consumes and our production of cigar tobacco, vegetables, potatoes, and fruit is large enough so we are a net exporter of those commodities. Cash farm income in Connecticut is approximately $100 million a year. Dairy and poultry account for about two-thirds of this. Tobacco ranks third with about $25 million and potatoes, fruit, and vegetables make up the balance. In my capacity as president of the Connecticut-Massachusetts Tobacco Cooperative I would like to submit first extracts from a statement that was prepared for this hearing by Samuel J. Orr, who is manager of the Connecticut-Massachusetts Tobacco Cooperative. Senator AIKEN. He will not be here? Mr. HUTTON. He will not be here. The CHAIRMAN. Proceed. Mr. HUTTON. It is as follows: CHAIRMAN, HOLYOKE, MASS., November 14, 1955. United States Senate Committee on Agriculture, State House of Representatives Chamber, DEAR SIR: The Connecticut-Massachusetts Tobacco Cooperative is a nonprofit farmers' organization representing the Havana seed and Broadleaf tobacco growers of Connecticut and Massachusetts. There are approximately 1,400 members, or three-fourths of the cigar binder tobacco growers of the Connecticut Valley. The production of Havana seed and Broadleef tobacco, which is used for cigar binders, is the principal source of livelihood for these farmers. Havana seed tobacco (U. S. Type 52) and Broadleaf (U. S. Type 51) come under the provisions of the Agricultural Adjustment Act with prices supported at 90 percent of parity. This aspect of the Agricultural Adjustment Act has been a godsend to our growers. The nonperishable nature of tobacco has made it ideally suited to achievement of the goals of the price-support program. Operating since 1949 in this area, temporary surpluses of tobacco have successfully been carried over to year when this temporary surplus could be marketed through normal channels, with no loss to the Government as a result of the price-support operations. This cooperative, which administers the price-support program for tobacco in this area, last year liquidated 100 percent of the 1949 crop Commodity Credit Corporation loan and paid a patronage dividend to the participating growers. The CHAIRMAN. That is October 17, 1933, when it was on its way back and efforts were made to help it up to June 30, 1955, it had made a profit for the Government of $187,844, aside from the dollars that were collected on taxes from cigarettes, et cetera. Mr. HUTTON. We are very proud of that record. We are participating in it up here. The CHAIRMAN. What you are really saying there is that you do not want it changed. Mr. HUTTON. I think that is right, but I think that I should go on further and say that although we liquidated the 1949 crop, we paid back the loan to the Commodity Credit Corporation. In other words, we have handled this crop at no loss to the Government and, in addition, we have paid on those two crops $285,000 in interest back to the Government. The CHAIRMAN. And except for the 90 percent support price on that you would not have been able to do that. Mr. HUTTON. I think that is correct. [Reading:] We have recently liquidated 100 percent of the loan on the 1950 crop and will be paying a patronage dividend on this crop in the near future. I have every reason to believe that we will continue to be just as successful in utilizing the price-support provisions of the Agricultural Adjustment Act to remove temporary price depressing surpluses from the market, without cost to the taxpayers. There has recently been developed a synthetic cigar binder which utilizes our low grades of tobacco for binder purposes which were not heretofore used. The impact of this synthetic binder on the economy of the Connecticut Valley is very serious. Our growers are aware that drastic readjustments in their farming programs are necessary which will entail tobacco acreage cutbacks. At a meeting attended by 800 growers they indicated their willingness to reduce tobacco acreage while we are going through this readjustment period by unanimously recommending to the Department of Agriculture that quotas be reduced 25 percent. The directors and membership feel that the present agricultural program which provides for supporting the prices of tobacco at 90 percent of parity is sound and is of major importance in stabilizing the market for our crops. We strongly urge a continuance of this program. Sincerely yours, SAMUEL J. ORR, Manager. By the same token, I may speak for myself as a tobacco and potato farmer. The CHAIRMAN. Have you anything in that statement that is new to add to what you have just said? Mr. HUTTON. I think so. The CHAIRMAN. I wish that you would confine yourself to that. As a tobacco farmer I am also seriously concerned about what is happening to the cigar binder industry of the Connecticut Valley,. both in the Broadleaf area of Connecticut and in the Havana seed areas of Connecticut and Massachusetts. The development of the processed or homogenized binder is creating serious economic problems which much bring about major adjustments in our production. Last year one of the major purchasers of Havana seed failed to buy tobacco in the valley. This year the major purchaser of Broadleaf has announced that his company will drastically curtail their purchases of Broadleaf. This year we expect the purchases will be less than 1,000 acres. The CHAIRMAN. What caused that? Mr. HUTTON. This is the homogenized or processed binder. Are you familiar with that at all? Senator AIKEN. I am not. I was going to ask you about it. The CHAIRMAN. Tell us what that is. Put something in the record about that. Mr. HUTTON. Probably Mr. Newberry is going into that in some detail, but briefly The CHAIRMAN. I knew that there was homogenized milk. Mr. HUTTON. You have a lot to learn, Senator. You should live in the Connecticut Valley. The CHAIRMAN. Will you tell us what that is, for the record? Mr. HUTTON. Briefly, we have always been proud of our binder. To us a binder, which is the covering that goes under the wrapper, we have always assumed that that leaf should be sound and free from holes and damage, because if it had holes in it, it would not draw. It had to be of high quality. Under this new process you can take any tobacco practically, the damaged tobacco, the kind that normally went for stemming, it is ground up stems and all, and a catalytic agent is combined with it and also some fiber-it is mixed up more or less like mortar. The CHAIRMAN. It is still tobacco? Mr. HUTTON. It is still tobacco with a catalytic agent or some agent put in to bring it together and to hold it together and it is turned out in sheets or rolls and has no holes in it. It is a perfect leaf. That poses a certain threat. The CHAIRMAN. What would you suggest we do to stop that? Mr. HUTTON. I do not know. I think that is partly the farmer's problem. And if I can go on I will tell you what we are doing. The CHAIRMAN. Maybe he can produce a tobacco with no holes. Mr. HUTTON. The point is that we are living in an area where we compete with high price industrial labor, and we have always been able to get high prices for our tobacco. And the reason we could survive has been that. This thing can utilize cheap tobacco. And we question whether we can stay in business. The CHAIRMAN. Can they use a tobacco different from what you raise there to do this homogenizing? Mr. HUTTON. We believe that they can. We believe it is being done. It is very difficult to get any concrete information on this. This process is quite secret. The CHAIRMAN. Who is doing that, the manufacturers of cigars? Mr. HUTTON. There are three patents now being used that I know of. One is held by the American Machine & Foundry, one is held by General Cigar & Dexter Paper Co. in Windsor, Lawrence. These |