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processes vary somewhat, but they are all being used to create a processed or manufactured leaf out of cheap tobacco.

The CHAIRMAN. All right. What would you suggest we do about it? Mr. HUTTON. Why do you not let me tell you what we are doing, first?

The CHAIRMAN. It may be that you do not need us.

Mr. HUTTON. That may be. We hope that we do not.

Senator AIKEN. May I ask, have they developed any synthetic wrappers?

Mr. HUTTON. I think that Senator Holland would be very much concerned about that, because they have a shade-grown area down in his part of the country. I will say this, if they can develop a synthetic processed or homogenized binder, call it what you will, it is possible to make a synthetic or homogenized wrapper. I think that you can realize the impact of that on the shade tobacco-growing industry if it becomes a reality.

Senator AIKEN. Do you not think they will get a synthetic filler? Mr. HUTTON. I would not bet against that.

Directly or indirectly, I think we can reasonably assume the homogenized binder has been an important factor in their decision to reduce purchases of natural binder.

The Conn.-Mass. Tobacco Cooperative of Holyoke, Mass., handles Connecticut Valley tobacco under the price-support program. It is the only cushion that the Broadleaf and Havana seedgrowers have to absorb the shock of the adjustment that appears inevitable. As a farmer and as president of the Conn.-Mass. Cooperative, I urge the continuance of the Agricultural Adjustment Act as it now applies to tobacco. Any change at this time in our opinion would definitely be a hardship to the Connecticut Valley grower in the face of the other major adjustments he must make.

Tobacco growers, both Broadleaf and Havana seed, are facing the threat of the homogenized binder with stern reality. At a recent meeting of the Conn.-Mass. Tobacco Cooperative 800 growers in an amazing demonstration of grower unity voted unanimously to endorse a 25-percent cut in acreage recommended by the board of directors. This action was made a matter of public record at a public hearing called by the tobacco branch in Washington on November 10, 1955, to determine quotas. This action points out, I think, that we are not asking for subsidies that will build surpluses, but for a sound farm program that will aid us in our struggle for survival.

We believe so far as tobacco is concerned that the 90-percent program which gives us 90 percent of parity is sound. I think any program is sound if it does not lose money for the Government.

The CHAIRMAN. I do not think you need to change it. Congress will not do a thing about that now or soon.

Mr. HUTTON. We hope not at this time.

The CHAIRMAN. In my humble judgment it would not be done, because the administration is behind it and I do not know of any Senators against it; as a matter of fact, any Congressmen, either. So you can sleep well tonight.

Mr. HUTTON. Thank you.

The CHAIRMAN. We will not change that. I do not think there is a chance.

Mr. HUTTON. If I can divorce myself of the tobacco business for a minute and take over my role as a potato farmer, I shall do so.

As a potato farmer, I feel there is a definite need for some kind of a potato program that will prevent the production and accumulation of surpluses that depress and destroy the market year after year. This is a problem that the farmer as an individual seems unable to cope with. It is a national problem since potatoes move in interstate commerce and a surplus in any major producing area can depress prices all over the country-I had not discussed this with the Maine gentlemen before. I think that we can probably get together with them.

The CHAIRMAN. Listen, let us have your view of it. You may have a better scheme than he has.

Mr. HUTTON. The amazing part of it is, without discussion, we come up with almost the same answer. It varies some in detail.

May I suggest consideration of a farm program for potatoes with or without price support where individual quotas are based on the number of bushels or units of measure that a farmer might sell during the season. This would place the problem of surplus disposal where it belongs-with the farmer. In a good year, when nature intervened favorably, and he had several acres left when he had dug his marketing quota, he would simply fail to dig the remainder.

I realize that such a system would involve compulsory Federal-State inspection of all potatoes but this has proven practical and workable in areas where marketing agreements are now operating. Compulsory inspection to determine grade protects both the producer and the consumer. I would strongly recommend that any potato program be supplemented by marketing agreements in all production areas.

The CHAIRMAN. It is my recollection the witness who proposed that potato program said that he thought there would be no unanimity among the growers in the area, which would include all of the New England States. Do you think that would be possible?

Mr. HUTTON. I think it is very possible.

The CHAIRMAN. We will hear from others.

Mr. HUTTON. I think that we have a common problem and we are searching for a practical solution.

The CHAIRMAN. I believe the other potato growers who want to testify from this area may have something to tell us. We will find out whether or not what you say is correct. Thank you, sir.

Senator HOLLAND. I want to call attention to the fact that we have had three different suggestions about the potato problem solution from this rather limited area of New England here today. One from Maine and one from Connecticut and one from Vermont, which points up the fact that there is not complete unanimity here in thinking, at least up to now. It just intensifies and accentuates the problem which we find in that industry and others.

However, what I wanted to ask about was tobacco. You have been testifying for the producers of the Broadleaf tobacco and the Havana tobacco, both of which are binders.

Mr. HUTTON. That is right.

Senator HOLLAND. You are not testifying for the wrapper leaf tobacco, the shade-grown Sumatra leaf tobacco, are you?

64440-56-pt. 7—7

Mr. HUTTON. No. The shade-grown tobacco currently is not under the price-support program and is not affected by any price-support operations.

Senator HOLLAND. The shade-grown tobacco of the Connecticut Valley, that is, Connecticut and Massachusetts, and certain counties in Florida and Georgia, is not under the price-support program. It is not asking to be under it and does not want to be under it; is that correct?

Mr. HUTTON. That is right.

Senator HOLLAND. The price per acre production there, including the furnishing of the shade and all of the other things to produce a completely perfect wrapper leaf puts that industry in a class by itself for the per acre cost of production, does it not?

Mr. HUTTON. Pretty much. I would say roughly the cost of producing an acre of shade was between 3 and 4 times the cost of producing an acre of binder tobacco.

Senator HOLLAND. The point that you are making about synthesized binders is that they have not yet interfered with the wrapper leaf tobacco?

Mr. HUTTON. That is correct, but these things happen suddenly. I think as recently as 3 months ago you had suggested to the Broadleaf farmers that anything like this could happen to them, they would have said it could not happen here, but it did happen-it happened very suddenly.

We always felt there was a beautiful balance between production and disappearance under use in our Broadleaf area. All of a sudden this thing hit us like that, just about a month ago.

Senator HOLLAND. Do you suggest that Congress pass a law requiring that all cigars made from those cheap synthesized binders be labeled "cheroots" or something like that to clearly identify such cigars?

Mr. HUTTON. Actually, the manufacturers are identifying them. They are using it as a publicity measure. Actually, they are trying to encourage the use of the homogenized binder, pointing out that they feel it has merit.

Senator HOLLAND. Mr. Chairman, if I might just make one short comment off the record.

The CHAIRMAN. Very well.

(Discussion off the record.)

Mr. HUTTON. I would like to make one additional comment that I did not have in my report, if I might. It is a matter of opinion, too. One of the reasons that the tobacco program has operated so successfully is because direct loans are not made. Loans are made through a cooperative. Then the cooperative handles the tobaccoo any way that it sees fit, makes decisions as to how it shall be handled and stored and marketed. The Commodity Credit Corporation in our case simply acts as the financing agent. The board of directors of that cooperative are just as anxious to get the last penny out of that tobacco as they would be if it was their own crop that they were handling. I do not know whether that is significant or not. The CHAIRMAN. Thank you, sir.

Mr. Newberry is next. Have you anything to add to what has been said in relation to tobacco?

STATEMENT OF ELLSWORTH S. NEWBERRY, SOUTH WINDSOR,

CONN.

Mr. NEWBERRY. Mr. Chairman, no, sir; but I am not in entire agreement, may I say.

The CHAIRMAN. I hope that you are not opposing 90-percent price support?

Mr. NEWBERRY. Yes, sir; I am.

By way of introduction I would like to identify myself as a small producer-10 acres of Broadleaf tobacco in the Hartford, Conn., area of the Connecticut Valley. I represent myself individually as the sixth generation of my family which has produced tobacco on the same farm for over 100 years.

I also am a member of a cooperative. I own a share of stock in it. May I be permitted to refer to something that you just spoke of– I beg your pardon, Senator Holland spoke of a few moments ago? The CHAIRMAN. Certainly.

Mr. NEWBERRY. Mention was made of that more or less facetiously so far as Senator Aiken was concerned, and it involved the friendly discussion of 1936. I have been thinking about that for some hours since then and I am curious about getting straight on something.

You again mention it here, you said the fact that tobacco was in a class my itself, apparently was, because of this tax situation. I believe you specified last night that when you said "tax" on that, you referred not to the property taxes that the owners of the farms paid, but the excise and the other types, the stamp taxes, on the package of cigarettes and the cigars. Am I right?

Senator HOLLAND. That is right. On every agricultural commodity the property and business taxes at one time or another, and the excise tax on tobacco, are a major item of public revenue, both Federal and State.

Mr. NEWBERRY. Yes, sir. I know you made the remark that because of that situation you felt that it was proper to regulate it and that probably most of the people in the country had no brief with that and felt that it was proper to regulate it. I just wondered, sir, if I may ask just what relationship the production of tobacco, whether it be below demand or above demand, might conceivably have with the tax take? In my humble opinion, sir, the tax take has reference and goes back only to the consumer, the ultimate consumer sales. You buy the cigars, you buy the cigarettes, all of us buy them, and so forth and so on, and from that is derived this tax income to the Government. Am I correct? In other words, production, be it below or above, has little if any relationship or bearing to that tax take.

(Discussion off the record.)

Senator HOLLAND. If you have a statement to make as to why you think tobacco should not be entitled to 90 percent, we would be very glad to hear it and have it in the record, but my statement on the matter awhile ago was simply for the information of the people here who may feel that their industry is just as important or even vastly more important than tobacco. They might not be familiar with the reasons for the action that has been taken traditionally throughout the years. I did not place it in the record for that reason, and if you have reasons why you think that 90 percent support price for tobacco,

that is, most tobacco, is not desirable, we will be mighty glad to hear those reasons and have them placed in the record.

Mr. NEWBERRY. No, sir; I do not have any.

The CHAIRMAN. What you are saying is whether we have the 90percent support price or not, that would not deter the Government from collecting the tax on the tobacco?

Mr. NEWBERRY. Exactly, sir.

The CHAIRMAN. If you had cheaper tobacco and cheaper cigarettes by virtue of getting production down, you might get more revenue? Mr. NEWBERRY. Yes, sir.

The CHAIRMAN. Whether that is true or not, I am not here to argue, but that is what I understood you meant to say.

Mr. NEWBERRY. Yes, sir.

The CHAIRMAN. One of the chief reasons advanced, as I recall it, to continue this support-price program with respect to the tobacco growers was that it was not a burden on the Government; that the tobacco growers were comparably few in number-tobacco is grown only in small parts of the country, and because of the fact that the tobacco grower was able to control production and not make it burdensome for the country, that was one of the main reasons, or the compelling reason, I would say, that caused it to not suffer the same support that other basic commodities got. In other words, the argument was that the tobacco growers had controlled themselves. The tobacco industry has not lost a penny. Therefore, no reason why we could not continue the supports.

Mr. NEWBERRY. Except, sir, I was going to suggest that high price supports if they tend to keep the price of tobacco up, and if they do not tend to keep the price up, there would seem to be little justification for the high price supports. And if they do keep the prices of tobacco up and as a consequence the ultimate end products are increased in price to the consuming public and they, therefore, buy less the Government will take less money.

The CHAIRMAN. Will you proceed and give us your views on it, please, because we have other witnesses?

Mr. NEWBERRY. Yes; I know.

I have already identified myself. I am also chairman of this special tobacco committee in the Connecticut Valley that was charged with investigating the so-called homogenized, or we prefer to call it manufactured, leaf binder that Mr. Hutton just spoke about. I wish to make it clear that I am speaking as an individual small tobacco grower and as a representative of that group.

May I go on record immediately as being basically and fundamentally opposed to Government programs generally and our tobacco program specifically. We have now been through 3 years of price support at 90 percent of parity coupled with acreage allotment-so my views are based on local practical experience.

That takes into account there was a year when we voted it out. It has just been stated that the tobacco program is self-sustaining. I question whether that or any other similar program is actually self-sustaining if all expenses involved in connection with it were to be added up were it possible to do that-for instance, I know that there are certain expenses in the operation of the Connecticut-Massachusetts tobacco cooperative that are not included. I know furthermore that the expenses of the Tobacco Branch in Washington-and

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