Therefore, we feel that the orderly reduction over a period, or a gradual reduction over a period of years under this bill, 5 percent the first year, and 10 percent the following year will have an order reduction of loan stocks, and we can salvage a program that we have fought very hard for the last 35 years.

In closing, I want to say that I was very gratified this morning in the testimony, and what you will hear this afternoon, that the States of Virginia, North Carolina, Tennessee, and Ohio had representatives that testified that were all in favor of this proposed legislation.

I think all of us realize that there are some features of the bills, different features from the House and Senate side that we hope can be resolved, and I sincerely hope that this committee will favorably consider the two House bills, and that the final legislation that the Senate and the House bills will bring out of the Congress, that all of us that have fought for the tobacco program over the years will be explained to the tobacco growers and we will be able to continue a sound and workable program; because, if we do not bring such legislation out I think we will have no program at all and it will be economical chaos, and a lot of farmers will be on welfare.

Thank you very much.

Mr. STUBBLEFIELD (presiding). Thank you, Mr. Clay. We appreciate having your views on this matter.

Mr. WAMPLER. Mr. Clay, we appreciate your presence here this morning, and the contribution that you have made today and made in past years.

Do you foresee the day that tobacco will be outlawed as a product? Mr. CLAY. I do not, Mr. Wampler.

Mr. WAMPLER. What would be your reaction to writing a limitation into the bill saying in effect that there could be no reduction to exceed 5 percent for the next 3 crop years, commencing 1971, 1972, and 1973?

Mr. CLAY. Mr. Wampler, I am sympathetic with the question you ask, and my answer will have to be an honest and frank one. I put this issue squarely on the basis of whether we can control our supply on some quantitative basis, which I think you earlier have stated you feel the need of.

A man that started out with 10 acres of tobacco, I think, in 1940, if he takes the cut this year that is proposed by the Department of Agriculture, which is, I think, a 30-percent cut, if we do not get legislation, he would be down to 2 acres. He would only have 20 percent of that allotment. I think it was stated this morning that if we continue on the road that you are going, if you have a 0.5 minimum, as you are proposing, that down the road, over the years all of us, everyone will be growing probably enough tobacco with a 0.5 base to provide for all the demand.

So, I think that your question, I would have to say that I do not believe the program would work if you put that minimum attached to it.

Mr. WAMPLER. You understand that a minimum cut, that nobody could be cut poundage-wise broader than 5 percent?

Mr. CLAY. Right, but what you would be doing, instead of establishing an acreage minimum you would have a poundage minimum, and it would be the same.

There would be no difference as far as the mechanics of operating the program is concerned.

Mr. WAMPLER. Well, now, I am not sure whether we are still on the same wavelength or not, but what I am trying to say is that the cut could be no greater than 5 percent in 1971, no greater than 5 percent in 1972, and no greater than 5 percent in 1973, meaning everybody would take the cut, but the cut would not exceed 5 percent of your

base.

Mr. CLAY. Of course, I do not have a computer mind, and I would prefer the Department of Agriculture to answer that question, but I think that probably what you are suggesting is that you are just setting a new minimum.

Mr. WAMPLER. No; the cut would

Mr. CLAY. Say the other growers took a 10-percent cut, then you are suggesting that the minimum growers

Mr. WAMPLER. No, anybody.

Mr. CLAY. Everybody take a cut, but their cut—

Mr. WAMPLER. No greater than 5 percent.

Mr. CLAY. No greater than 5 percent, and if the other growers take 10 percent

Mr. WAMPLER. No, sir; everybody, across the board, if no one could take a cut exceeding 5 percent it would be uniformly cut right across the board.

Mr. CLAY. Oh, I see; you are speaking of this for 3 years?
Mr. WAMPLER. Five percent in 1971, 1972, and 1973.

Mr. CLAY. I would have no objection to that, Congressman Wampler, because I think if this legislation is adopted, and I am sorry that I did not understand your question clearly

Mr. WAMPLER. What we are attempting to do is to find some language that would ease the impact, and frankly, I feel that should poundage be adopted, if we get by the 1971 crop and the 1972 crop, then I think we are over the hump.

Mr. CLAY. Now that I understand your question, I think that if the Department of Agriculture will accept this, I think it would be workable, and I think that once we get to a true quantitative control program where we can really control production, that we will work ourselves out of our surplus situation, and we will be able to have a sound, workable program.

This is why I refer to the Department's testimony this morning, which wanted it much more, a much larger cut, even, than is in the House bill that is now proposed for 1971. Anything to get us on a quantitative control program with all growers working together for a sound workable program I would buy; yes, sir.

Mr. WAMPLER. Thank you.

Mr. STUBBLEFIELD. Thank you, Mr. Clay.

The next witness is Mr. E. B. Hillenmeyer, Jr., president of the Burley Leaf Tobacco Dealers Association.

Mr. Hillenmeyer, we are glad to hear your testimony this afternoon.

STATEMENT OF ERNEST B. HILLENMEYER, JR., PRESIDENT, BURLEY LEAF TOBACCO DEALERS ASSOCIATION

Mr. HILLENMEYER. Thank you, Congressman Stubblefield, Congressman Wampler.

I am Ernest B. Hillenmeyer, Jr., president of the Burley Leaf Tobacco Dealers Association.

This association is composed of 26 independent leaf processing and storage companies which are situated in Kentucky, Tennessee, Virginia, North Carolina and Missouri, five of the important burley producing States.

I probably will be the only spokesman that you will hear today that speaks from the buying side of the industry.

We respectfully recommend to this committee and to the Congress that a poundage control bill be enacted to control production of burley in the 1971 and subsequent crops. The present acreage control program is no longer effective. Poundage control, in our opinion, will guarantee the maintenance of adequate supplies to meet market requirements without the accumulation of burdensome surpluses. I think this is quite important.

It will also assure stable and orderly marketing conditions which are vitally important to our customers overseas.

Now, tobacco production is a process which stocks tobacco 2 or 3 years ahead of time, and the reliability and stability of the market is quite important to these customers.

Tobacco methods of production, processing and utilization are rapidly changing. The world market for burley is expanding and the U.S. share of this market is declining.

If we are to maintain or increase our share of this expanding market, then production costs and sale prices must be stabilized or lowered. Mechanical methods of handling seem to be the only logical way to achieve such a result. Since burley allotments are quite small, only averaging about 0.8 of an acre, we suggest that the committee consider a provision for the sale of allotments within counties and set a limit on leasing within counties of 25,000 pounds.

This we feel would allow the small grower to increase his acreage to efficient size, as well as allow any grower to operate units of such economic size that mechanization would become feasible.

Our foreign customers, who took about 60 million pounds of burley in the 1969 marketing year, are becoming increasingly concerned about the 1971 program. If we wish to maintain this important source of foreign exchange, the Congress should act promptly on this legislation before our customers begin to place orders in other supplying countries. This position, expressed in this statement, is supported by a majority of the members of the Tobacco Association of the United States and the Leaf Tobacco Exporters Association, who all together represent the leading independent exporters and processors and salesmen of American leaf tobacco.

Mr. STUBBLEFIELD. Thank you, Mr. Hillenmeyer. We appreciate having your testimony.

Mr. HILLENMEYER. Thank you, sir.

Mr. STUBBLEFIELD. Is there any other witness who has a time limit that he has to make?

Mr. SLEDGE. Yes, Mr. Chairman, John Sledge.

Mr. STUBBLEFIELD. All right, we will skip down to you, Mr. Sledge. Mr. Sledge is the assistant to the president of the North Carolina Farm Bureau Federation of Raleigh, N.C.

We are glad to have you with us.

STATEMENT OF JOHN SLEDGE, ASSISTANT TO THE PRESIDENT, NORTH CAROLINA FARM BUREAU FEDERATION, RALEIGH, N.C.

Mr. SLEDGE. Thank you, Mr. Chairman, and we appreciate this opportunity to testify before this committee.

I am John Sledge, assistant to President B. C. Mangum, and am appearing in behalf of the North Carolina Farm Bureau to present our position on burley tobacco as it relates to the legislation under consideration.

The situation as concerns burley tobacco growers is similar in many ways to the flue-cured situation prior to the present acreage-poundage program.

There was an all-out effort on the part of the flue-cured growers several years ago to produce every pound possible per acre.

Flue-cured growers have made great strides in supply adjustment with their present, quantitative-type program. The support of the acreage-poundage program for flue-cured tobacco is evidenced by the overwhelming support in each referendum since the inception of the

program.

North Carolina burley producers are fully aware of the situation as concerns the overproduction of their commodity and the surplus stocks in relationship to disappearance. These burley growers realize the importance of a tobacco program that will permit them to produce as near as possible for a reasonable carryover.

They know that excessive surpluses must be avoided and that large financial losses should not be tolerated. This has been attested to by their support in former years. Burley growers know that to have a successful program it must be on a sound basis.

Out of approximately 18,000 growers in North Carolina, over 80 percent had allotments in 1970 of 0.5 acre or less. However, when we look at the total burley situation with the view that if under the present program the remaining growers with allotments over 0.5 acre will have to sustain all future reductions in acreage quotas, then the only reasonable alternative, if supply is to be kept more in line with demand, is to adopt a quantitative poundage program where in the future all growers would share proportionately in increases and decreases.

The policy of the North Carolina Farm Bureau on burley tobacco is for lease and transfer of allotments within the county, the lease not to exceed 5 years.

Farm Bureau's policy states that we favor the sale of burley tobacco allotments whereby one-half of any acreage sold could be sold to the producers in the county, and one-half would be bought by the Government and be permanently taken out of production.

When national figures are examined showing the large number of allotments as compared to the total number of acres for planting, the need is pointed out for legislation to make it possible to combine allotments to make production units more economical.

When figures for North Carolina are compared, we see that 8,400 acres are shared by 17,400 growers, with each having an average allotment of 0.48 acre; and in these figures are 14,500 growers with 0.37 acre as an average.

60-330-71 -5

The size of allotments has caused many to go unplanted, thereby denying our mountain counties over $1.5 million income per year. This they can ill afford.

In a recent series of meetings held by Farm Bureau with burley producers, it was the unanimous opinion of those present that in order to have a sound tobacco program some other means must be provided to alleviate all the foregoing conditions.

Therefore, the North Carolina Farm Bureau, then, does support legislation that would control the supply of tobacco on a poundage basis and lease and transfer of allotments within the county up to 5 years.

Mr. Chairman, we appreciate the time that we had for this testimony.
Mr. STUBBLEFIELD. Mr. Sledge, we appreciate your testimony.
Any questions?

Mr. WAMPER. No; thank you, Mr. Chairman.

Mr. STUBBLEFIELD. Thank you so much.

The next witness is Mr. Paul D. Goddard, secretary-treasurer, Burley Stabilization Corp. of Knoxville, Tenn.

Mr. Goddard, it is nice to have you with us.

STATEMENT OF PAUL D. GODDARD, SECRETARY-TREASURER, BURLEY STABILIZATION CORP., KNOXVILLE, TENN.

Mr. GODDARD. Thank you. It is nice to be here, and I appreciate this opportunity.

I am Paul D. Goddard, a burley tobacco farmer and general manager and secretary-treasurer of the Burley Stabilization Corp., a farmers' cooperative that operates the price support program for burley tobacco on the market in Tennessee and North Carolina, under contract with the Commodity Credit Corporation.

Our membership comprises 104,626 farmers of this area who grow 58,319.99 acres of burley tobacco.

First, I would like to express my appreciation to this committee for holding these hearings to help try to solve some of our problems in burley tobacco, and of the members to express some of our views on the program, and we recognize burley tobacco is in trouble, the burley tobacco program is in trouble today, and that in order to provide for the needs of our growers and to manage a sound program and to entitle us to continued support of Congress, some changes need to be made.

Put simply, our problem is that we are producing too much and selling too little. Per acre yields have increased in the past 6 years more than 500 pounds per acre. Disappearance has decreased by 35 million pounds.

Under present law, the farms subject to reduction have decreased, making cuts less and less effective. We are at a critical crossroads for the burley industry, and it seems a different method of control must be adopted since increased yields per acre seem inevitable for the future; and each acreage cut places more and more acres in the protected category, leaving fewer and fewer acres to share in future cuts.

Ineffectiveness of these cuts and the problem of increasing yield is shown by the fact that a 10-percent cut in the 1970 crop resulted, in