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The CHAIRMAN. I am saying that he is selling one tract, and takes it clean out of production. There will never be any more tobacco planted there. Can he in some way or another transfer it all to the rest of his lands?

Mr. SCHOONOVER. I don't believe so. Would you check me on that, Mr. Todd?

Mr. TODD. Perhaps you better answer that.

Mr. SCHOONOVER. I believe that allotment would have to be reduced to the proportion of the tract of land that he sold.

Mr. JENNINGS. Does that not come under my question this morning, when the statement was made that the allotments were made to farms rather than to individuals?

The CHAIRMAN. Yes.

Mr. JENNINGS. As I understand it, if that farm were sold the allotment would go with the farm and the purchaser would have it.

The CHAIRMAN. Yes, but what if he is taking it out of cultivation? I am talking about when it is taken out of cultivation.

Mr. BRIDGFORTH. May I enlarge on that, Congressman?

Mr. WATTS. Mr. Chairman, I think it has been the practice, if you will permit me to interrupt, that wherever farms are divided, that the base is divided on the basis of the cropland, and you cannot transfer it even though it goes out of production on the ground that the next owner after this fellow might want to put it back in. I certainly can see a difference where the Government gets it, because they very rarely turn it loose.

You could by your regulations, could you not, provide that where the Government took the land, and the base then could be transferred to the former owner in the event he bought another farm? That could be done.

The CHAIRMAN. That is being done now.

Mr. JENNINGS. Let me ask a question. Why do we want to keep that acreage and cut the other people down? Why should we want it back?

The CHAIRMAN. This farmer has a submarginal tract. He has a chance to sell. Now, this farmer is able to buy a better farm. Mr. JENNINGS. Why couldn't he have tobacco?

The CHAIRMAN. Because it was not raised there. He wants to take the submarginal farm out of cultivation and put it in pines and raise it on his good farm, but he has no allotment there.

What I am proposing is when that situation arises, a 100-acre tract being taken out of production, and he buys another 100-acre tract, and he wants to transfer his acreage, what is the objection?

Mr. SCHOONOVER. In that case we say that the lands must go out of agricultural production before we permit a transfer or acquisition by the Government. I have a question of whether putting it into timber would be taking it out of agricultural production."

The CHAIRMAN. Couldn't we change those regulations?

Mr. SCHOONOVER. I certainly think we could. Under the present regulation I don't think it could qualify. As you say, if he has 3 tracts, and he sells 1, the allotment goes with the land, unless it should go out of agricultural production, as we say now.

The CHAIRMAN. Thank you, gentlemen. Mr. Watts wants to ask another question.

Mr. WATTS. Mr. Bridgforth, in the resolution that was adopted by the Eight State Committee and I assume you have seen a copy of itin that resolution, and a number of other resolutions, every one seemed to want to provide a method of identifying red card tobacco on the floor with a red card. I don't believe that has been gone into by the committee this morning.

Who among the Department of Agriculture officials would be in a position to speak on that subject?

Mr. BRIDGFORTH. Mr. Wrather. (Discussion off the record.)

The CHAIRMAN. Mr. Bridgforth, we appreciate your coming over this afternoon.

Mr. BRIDGFORTH. Thank you, Mr. Chairman. I appreciate the opportunity.

us.

The CHAIRMAN. Is Mr. Hughes here?

Mr. MILLER. Mr. Hughes is not here.

The CHAIRMAN. Mr. Wrather. We are glad to have you here with We would like to hear from you at this time anything you would care to tell the committee. You may contemplate what is bothering some of our members in your field.

STATEMENT OF STEPHEN E. WRATHER, DIRECTOR, TOBACCO DIVISION, AGRICULTURAL MARKETING SERVICE

Mr. WRATHER. My name is Stephen E. Wrather. I am Director of the Tobacco Division, Agricultural Marketing Service. We handle in our Division the inspection work on the market, market news work, stock reporting, and regulatory functions.

I think it would be rather presumptuous on my part to discuss the quota situation or try to add anything to what has been said in connection with the quotas on burley tobacco. Therefore, I think if there are any questions you have concerning the work which we do, and how it might correlate with the quota problem, I would entertain those questions and try to discuss them or answer them the best I can. The CHAIRMAN. Thank you, Mr. Watts.

Mr. WATTS. A moment ago Mr. Bridgforth said you were the man for me to talk to about the red-card tobacco being identified on the floor with a red card. I am sure you are mindful of the many resolutions that have been adopted in the various States in regard to identifying tobacco on the floor as red card tobacco. Would you tell me whether that can be done by regulation or whether it will have to be done by law?

Mr. WRATHER. I would have to disagree with my friend, Mr. Bridgforth. Our obligation on the market is to inspect tobacco. Any auction market designated by the Secretary of Agriculture is to receive free and mandatory obligation. It is our obligation and responsibility to inspect tobacco offered for sale on those markets. We do not refuse to inspect tobacco just because it was out of quota.

As far as our work is concerned, I don't think there would be any basis for segregating the red card tobacco.

Continuing in an effort to answer your question, I don't think it would require legislation. I think, and I am getting in the other boy's shop, and I am just going to offer this, and he can develop it

if he cares to, I think your red card tobacco could be identified in connection with the loan program.

We all realize that the loans are available within quota tobacco to what we term cooperators. As a condition of the loan, it seems to me that some requirement could be made in connection with the identification of the tobacco on the floor.

Mr. WATTS. I am assuming you mean by that that when the CCC enters into a loan agreement with the various associations they could put a proviso in the loan agreement covering the situation, and in turn the associations arrange with the various warehouses to handle a loan through the warehouse.

Mr. WRATHER. That is correct, sir.

Mr. WATTS. Then the local association, like the North Carolina Association, the Virginia Association, Kentucky, Tennessee, or whatever they are, in making their various contracts with the different warehouses could put a stipulation in the warehousemen's contract which required that that tobacco be identified. Is that what you mean, Mr. Wrather?

Mr. WRATHER. I think that would be the most direct approach to it, sir.

Mr. WATTS. That would have to come as an action of the CCC.
Mr. WRATHER. That is correct.

Mr. WATTS. Is there a representative of CCC here?

Mr. WRATHER. That program comes under Mr. Miller's jurisdiction. I hate to impose on Mr. Miller.

Mr. WATTS. Is it your opinion, if you have an opinion on the subject, that whereas we have accentuating poundage production in the last few years, that we ought to try to move the emphasis from poundage to a better quality of tobacco?

Mr. WRATHER. I think, Congressman, it has been commented on a time or two this morning, and that there is some evidence with burley that our acreage allotments are encouraging excessive yields per acre. With that it seems we are getting tobaccos that are not as desirable as they should be particularly for our domestic manufacturers.

We had last year on the burley markets the largest volume grade we took under loan was C4F, which we used to think of as a very good cigarette tobacco. You take some of our leaf tobaccos, B-2 and B-36, those tobaccos are getting rather heavy bodied for our cigarette people.

Mr. WATTS. Then I take it that covers the tobacco we have heard so much about having the high nicotine content that the buyers indicated, if you can get any indication out of them, that they didn't want that type of tobacco.

Mr. WRATHER. There has been a lot of emphasis and discussion on the part of the trade people in recent years concerning the nicotine content of tobacco, particularly burley.

Mr. WATTS. You do think it would probably help in the consumption of burley tobacco and more use of it in blends if we could in some manner accentuate quality rather than putting all of our emphasis on poundage.

Mr. WRATHER. Up until this time we don't have any evidence to indicate that there has been any shift in the blends of cigarettes between the amount of burleys used and the amount of flue cured. At the same time based on the buying pattern some of us are rather full that we are approaching the time when if our heavy bodied burleys

do continue to predominate the market, that it will encourage and perhaps force our domestic manufacturers to use a little more flue-cured tobacco, and a little less burley tobacco in their blends.

Mr. WATTS. The point I was trying to get to is this. I know as a farmer myself, and all of them around me, we have tried to do everything we could to stimulate increased poundage per acre. In other words, I am frank to admit as one farmer, and I think most any other farmer that grows burley tobacco ought to be willing to admit it, that we have worked at cross purposes with the program. Every time the Department came along and said your poundage has gone up and you will have to take a 10 percent cut, we looked around some way to put on more fertilizer, and other things, and tried to offset the cut the Department placed on us.

The figures will show that because I think the poundage in the last 10 years has gone up from seven or eight hundred pounds to the acre, to something over 1,500.

Mr. WRATHER. That is correct.

Mr. WATTS. I wonder if it is not time, and I wonder what your thought is, for the long run good of the program, if it is not time for us to put a little emphasis on trying to produce a quality crop, if we know what quality is. I say that advisedly, due to the pattern that some of the companies have adopted. That is, rather than putting all our emphasis on more poundage.

Mr. WRATHER. I think your point is well made. There is another situation with respect to burley that aggravates the heavy-bodied tobacco and that is the falling off in the consumption of smoking tobacco. During the past decade it has gone from about 200 million pounds a year down to 83 or 85 million pounds a year. Smoking tobacco was made primarily out of burley tobacco. We estimate that annually currently we are using about 50 million pounds less burley tobacco annually in smoking tobacco than we were using in smoking tobacco some 10 or 12 years ago. At that time we were using those huge quantities of these heavy tobaccos in smoking tobacco, they were not so noticeable in the market place. But with that 40 or 50 million pounds a year having disappeared from our requirements, the cigarette people not wanting them, it aggravates our situation.

Mr. WATTS. You are speaking of smoking tobacco.

Mr. WRATHER. Pipe tobacco, basically.

Mr. Bass. In line with what you asked of the witness, doesn't that mean that we might sometime go to pounds rather than acreage allotments?

Mr. WATTS. It is certainly worthy of thought.

Is there anything the grading service can do, based on the premise that it is a good idea to shift to quality rather than quantity, in taking another look at the grades that are set up with the idea of shifting that emphasis if it is agreeable that the emphasis should be shifted?

Mr. WRATHER. In connection with the price-support program, we in the grading service work very closely with those boys in determining the loan level per grade. In the final analysis if you are to encourage the production of any grade tobacco, then you will have to reflect it in the price-support program. We have in burley about 108 or 110 grades of tobacco. We feel sometimes we have too many and we do make a rather detailed breakdown qualitywise. Whether or

not there would be any point in further refinement is something that we could look into.

In 1952, we gave our burley graders a rather complete overhaul. Mr. WATTS. I assume then from your statement that your grading service is continually looking at those grades with something in mind? Mr. WRATHER. That is right. The trouble we have had is in your market pattern. Regardless of how you grade tobacco, you can place a graded tobacco in a low grade qualitywise, and you have penalized it with the grade you put on it, but if the grade people come along and bid that grade tobacco substantially below the loan level, you have not accomplished that very much.

Mr. WATTS. I realize that. That is the reason I prefaced my remark if you could figure out any pattern that the buyers have adopted in buying tobacco.

Mr. WRATHER. We are going through a rather trying period in that respect with the development of the filtered cigarette. Of course, with the falling off in the consumption of our so-called standard cigarettes,

too.

Mr. WATTS. That is all I care to ask Mr. Wrather, unless he has samething that he would like to contribute to the overall problem. Mr. WRATHER. I don't know of anything that I can say that would add to what has been said here this morning.

Mr. BASS. I feel just like Congressman Watts, if he has anything else that can prevent us from facing this proposition of cutting the tobacco program by 50 percent in 1956, I would like to hear it. I am interested in something that will make my farmers happy and not unhappy. Certainly cutting their tobacco quota 50 percent is not going to do it. So I wish you gentlemen would give us a program whereby we can prevent that from happening. That is what I am interested in. Did you hear our discussion on this red-card tobacco? Mr. WRATHER. Yes, sir.

Mr. BASS. What is your opinion about it? Let me have your opinion. What do you think it would do to the overall program if we set up a regulation here which would in effect eleminate red-card tobacco?

Mr. WRATHER. I think perhaps some of the discussion that you had here immediately after lunch before you got back into this point which you raise, I think it is pretty generally agreed that we need to do some things in connection with this compliance. I think it is also generally agreed that even though you had good compliance, you would still be a long way from solving your problem. Your yields per acre have practically doubled. In some States they have doubled in the last 10 years. We are getting tremendous yields per acre.

To get your production below disappearance, which is what you are going to have to do to correct the situation, I don't think you can possibly get your production below disappearance, or even approach getting it below disappearance by cleaning house, so to speak, and better compliance and enforcement, and what have you. I am not belittling that. I think it would be quite helpful, and something that should be done. I don't think we should conclude that will solve our problem.

Mr. BASS. If we eliminate this 10,000 acres that were raised last year over and above the quota established by the Department, it would have helped a great deal.

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