Page images
PDF
EPUB

TOBACCO

THURSDAY, MARCH 3, 1955

JOINT SUBCOMMITTEES ON TOBACCO OF THE
COMMITTEES ON AGRICULTURE OF THE UNITED STATES
SENATE AND HOUSE OF REPRESENTATIVES,

Washington, D. C. The subcommittees met, pursuant to call, at 10 a. m., in room 1310, House Office Building, Hon. Watkins M. Abbitt (chairman of the subcommittee) presiding.

The CHAIRMAN. The committee will come to order.

I want to first express appreciation to Senator Clements and his subcommittee of the Senate Agriculture Committee in coming over and meeting with us jointly. Because of the priority as far as the Senate committee is concerned, we want to abide by your wishes in the matter. We want to welcome the people from the Department of Agriculture. We hope that they will give us their views frankly regarding the tobacco situation generally, and the burley tobacco particularly.

Senator, is there anything you would like to say?

STATEMENT OF HON. EARLE C. CLEMENTS, UNITED STATES SENATOR FROM THE STATE OF KENTUCKY

Senator CLEMENTS. Congressman Abbitt, I would not want to miss the opportunity of thanking you for permitting the Senate subcommittee, which is interested in the same subject as the House subcommittee, to join you in seeking a solution to the problems confronting the burley-tobacco growers of this country. I think it is fine that you let us come in, I would not want to say just as interlopers, but as a group that shares the same interests. It will expedite the decisions that can be made on this subject. Certainly I think it is helpful to the Department and any other witnesses that they can be heard jointly, rather than being brought up before a committee here, and later being brought before a committee of the Senate to testify on the same subject in the same way.

I understand these hearings will go over into next week. I want you to know that we deem it a real privilege to sit with you and hear witnesses with you and we hope reach decisions with you on what is the best course for the Congress to follow.

The CHAIRMAN. Thank you, Senator.

Our practice here has been when someone gets ready to ask questions to just go right ahead. If you will just let us know when you want to ask a question or make a statement, just tell us.

Senator CLEMENTS. Thank you.

1

The CHAIRMAN. We are very fortunate today in having Mr. McConnell, Assistant Secretary of the Department of Agriculture. We will recognize you at this time, or whoever you wish to speak for you.

STATEMENT OF JAMES MCCONNELL, ASSISTANT SECRETARY, UNITED STATES DEPARTMENT OF AGRICULTURE

Mr. MCCONNELL. Thank you. Let me say we join with the Senator in liking the idea of testifying before the joint group.

We have a problem in administration of the burley-tobacco program. We are keenly aware of it. We will express some things here, Ï think, quitely firmly in recommendations and other things we bring up as things to talk about. We are not too sure of them.

For two reasons, that I do not have the best voice in the world to testify, and the fact that Mr. Clarence Miller knows tobacco and I do not, I would like to call on him to present our viewpoints here to get started.

The CHAIRMAN. We will be glad to hear from Mr. Miller at this time.

STATEMENT OF CLARENCE L. MILLER, DIRECTOR, TOBACCO DIVISION, COMMODITY STABILIZATION SERVICE

Mr. MILLER. Thank you, Mr. Chairman. I am Clarence L. Miller, Director of the Tobacco Division of the Commodity Stabilization Service.

The Tobacco Division of the Commodity Stabilization Service is charged under the law with the responsibility on behalf of the Department in determining the acreage allotments of tobacco and maintaining supplies in line with demand, by the two methods of first determining the allotments annually for the various types of tobacco, and allocating to the various types of tobacco buyers the 90 percent of support price according to law.

I have no prepared statement this morning on the status of the burley tobacco. Rather, I shall read, with your permission, sir, from a prepared text for my own use that I think is necessary because of the amount of statistical data that is necessarily contained in a statement I might make relative to burley tobacco and the supply situation thereof.

The Department of Agriculture is confronted with serious difficulty in maintaining the supplies of burley tobacco in line with demand under present legislation, and is confronted with the possibility of substantial losses to the Commodity Credit Corporation on the supportprice program.

The Agricultural Act of 1938, as amended, requires that the amount of the national marketing quota for each kind of tobacco be proclaimed not later than December 1. In order to have the benefit of the latest information, the amount of the national marketing quota for burley tobacco for the 1955-56 marketing year was not proclaimed until November 26, 1954. The 1954 crop was estimated as of November 1, 1954, to be 582 million pounds. At the time that estimate was made, auction warehouses had not begun to receive tobacco for the sales which began on November 30, 1954.

On the basis of the latest available statistics of the Federal Government at the time of the 1955 quota determination and in compliance with the formula contained in the act, a quota in the amount of 478 million pounds was proclaimed. A quota in this amount resulted in a reduction of 10 percent in 1955 farm acreage allotments on those farms having 0.7 of an acre or more.

Sales of the 1954 burley-tobacco crop are now complete and gross sales of approximately 698 million pounds have been reported. If resales amount to 4 percent, as in prior years, it now appears that the 1954 crop will net 670 million pounds. Thus supplies of burley tobacco are approximately 88 million pounds more than was estimated at the time the 1955 quota was determined.

If these data had been available at that time, approximately November 26, farm-acreage allotments for 1955 would have been reduced at least 25 percent, rather than the announced 10 percent.

The carryover of old crop burley tobacco on October 1, 1954, was 1,198 million pounds.

If the 1954 crop nets 670 million pounds, the total supply will be 1,868 million. That, of course, is the carryover at the beginning of the marketing season, plus the 1954 crop. The total disappearance during the marketing year ending September 30, 1954, was 530 million pounds. Thus the total supply equals about 312 years' disappearance, while 2.8 years' disappearance is the desired normal.

If per acre yields of burley tobacco in 1955 are as high as they were in 1954, a crop of 600 million could be reasonably expected. A crop in this amount with disappearance continuing at present levels would necessitate a reduction in excess of anything heretofore invoked.

As of February 1, approximately 210 million pounds of the 1950, 1951, 1952, and 1953 crops remain under loan. An additional 221 million pounds, or 33 percent of that tobacco marketed in 1954, was also. taken under loan. Thus today we have 431 million pounds of tobacco pledged for loan under the support-price program.

Unless the supply of burley tobacco can be reduced in line with demand, then it follows that substantial losses to Commodity Credit Corporation could result since there is no current indication of any increased usage of burley tobacco.

When these facts became known, the Department called a meeting on January 13, 1955, "to obtain views and suggestions as to how to make the marketing quota more effective in adjusting burley-tobacco supplies in line with demand." That was the stated purpose of the meeting.

This meeting, which was held in Lexington, Ky., was attended by approximately 250 people from the 8 principal burley-tobacco States. Representatives of the Department pointed out the facts with respect to the present surplus of burley tobacco, and following this presentation the group elected a chairman and arranged to set up a committee of 2 representatives from each of the 8 producing States to further study and make recommendations to the Department and to the Congress.

Departmental administrative officials from the eight leading burleytobacco States were called into a second meeting at Lexington, Ky., on January 26, 1955, to discuss the burley situation further and to obtain views and suggestions as to how the administration of the pro

gram could be strengthened. Administrative personnel were instructed at that time that all possible steps to strengthen the administration of the program are to be taken.

Representatives of the Department have reviewed present legislation and operating procedures and have initiated revisions to strengthen the operating procedures wherever possible. The Department feels that changes in legislation are necessary to make the program more effective in adjusting the supplies of burley tobacco in line with demand.

We recommend that the following five changes be enacted:

1. That the act be amended to permit redetermination of the 1955 national marketing quota and State and farm allotments for burley tobacco on the basis of the data now available.

2. That the rate of penalty on the marketing of excess tobacco be increased from 50 to 75 percent of the average market price during the previous year.

3. Amend the act to provide that any acreage of tobacco harvested in excess of the allotted acreage for any farm for any year shall not be considered in the establishment of the allotment for the farm in the succeeding years.

4. Amend the act to require a reduction in the acreage allotment next established for a farm if any person connected with the farm causes or acquiesces in filing or causing to be filed any report with respect to the acreage of tobacco grown on the farm which the county committee determines to be false.

5. To amend the act to eliminate the provision under which growers may vote for quotas either for 1 year or for 3 years, and provide for voting for or against quotas for a 3-year period only, with the proviso that where growers have disapproved quotas, that no referendum be held before the expiration of the 3-year period unless at least onethird of the growers request by petition for a referendum during that 3-year period.

Those are the five recommendations that the Department of Agriculture wishes to submit to the committee.

Mr. Chairman, the five preceding recommendations are all the recommendations that the Department wishes to submit this morning. However, the Department wishes to direct attention to another condition which applies only to burley tobacco. That being the socalled minimum-acreage provision of the act, which provides that burley-tobacco acreage allotments cannot be reduced below the smaller of (1) the allotment established for the form of the immediate preceding year, (2) 0.7 of 1 acre, or (3) 25 percent of the cropland of

the farm.

As a result of the application of this rule, there are at present 64 percent of the growers growing 33 percent of all burley on allotments that cannot be reduced under the act. If this provision is retained, all future reductions must be borne by the remaining one-third of the producers.

Mr. Chairman, the statement that I have made has, I hope, certainly introduced the matter to the committee. I have no further formal statement to make at this time.

Senator CLEMENTS. Before I ask any questions on these five recommendations, I would like for you to go over recommendation 4 again

for me. There is no significance to that question except I just didn't get the full recommendation.

Mr. MILLER. 4. To amend the act to require a reduction in the acreage allotment next established for a farm if any person connected with the farm causes, aids, or acquiesces in filing or causing to be filed any report with respect to the acreage of tobacco grown on the farm which the county committee determines to be false.

Senator CLEMENTS. Mr. Miller, on your first recommendation which would permit a redetermination of quotas, is the Department in a position at this time to say what their recommendations would be as to the reduction that you think would be wise to make in marketing quotas and acreage allotments?

Mr. MILLER. If the Department, Senator Clements, were instructed or permitted to redetermine the 1955 allotments with the data now at hand, I think that I would have to refer back to the statement that I made earlier, and say that if the data now available were available on November 25, reduction in excess of 25 percent would be in the offing. However, that is not an actual computation with the available figures that we have at hand. Certainly it would require an additional reduction. That would be a minimum.

Senator CLEMENTS. Are you not in possession of all of the information that you are going to get with reference to the 1954 production? Mr. MILLER. The net figure, sir, has not been exactly computed as yet.

Senator CLEMENTS. Is it not far enough along that your calculations would be very, very close to final figures?

Mr. MILLER. Yes, sir; they would be.

Senator CLEMENTS. Since you are in possession of that information, what would be your recommendations, if you were in a position this morning to make them, and if legislation were passed which permitted you to redetermine the quotas?

Mr. MILLER. What would the recommendation as to the amount of reduction be?

Senator CLEMENTS. Would it be 25 percent, or would it be somewhere between 10 and 25 percent?

Mr. MILLER. It would be between 25 and 30 percent. That includes, Senator, the 10 percent already announced. That would be a figure of 15 to 20 percent in addition.

Senator CLEMENTS. That would be 15 to 20 percent in addition to the 10 percent that was announced last November?

Mr. MILLER. I would say that would be the approximate figure. Senator CLEMENTS. Mr. Miller, is it the Department's judgment that the raising from 50 to 75 percent of the penalty for tobacco would stop the growing of excess tobacco as long as the growth of excess tobacco provided a base for the grower for the following year?

Mr. MILLER. That in itself, sir, I do not think would suffice. The actual adding of penalty would not suffice if the so-called credit for overplanting phraseology was still left in the act. That is the incentive largely for excess production. It is one of the main incentives.

Senator CLEMENTS. I understand your statement, then, that regardless of how high you might establish this penalty, as long as it provided a credit for the following year, it would be ineffective.

Mr. MILLER. It is rather hard for me to say, Senator Clements, that would be true or not. However, I would like to point out that there

« PreviousContinue »