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in the early 1930's before they ever held a referendum on these things. It went all through Kentucky and wound up in Columbus, Tenn. I know the burley tobacco growers pretty well. We have met together many, many times over. I have read the statement by the Department and I like it. I think it is good, Mr. Chairman. I think everything in there will add to the welfare and well being of the tobacco program.

Mr. COOLEY. Mr. Shaw, in view of the fact that your committee was not fully aware of the distressing situation that we now have when they took the position on the minimum allotment, I can understand of course that you cannot come here representing the committee because they have not discussed it, but if it is necessary to save this program to reduce this minimum, you as an individual agree that it should be done?

Mr. SHAW. Absolutely as an individual I would agree, provided let them vote on it.

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Mr. COOLEY. Of course.

Mr. SHAW. That is right. I am a great hand for letting the farmers have the facts. I have never seen them fail to do the right thing if they understand it.

Mr. COOLEY. You know what happened in North Carolina when we had the minimum 5 acres of cotton.

Mr. SHAW. Yes.

Mr. COOLEY. Because we have so many little growers in North Carolina, the little growers would have had the cotton-acreage allotment and the landlord with the larger acreage would not have had anything.

Mr. SHAW. That is right.

Mr. COOLEY. If we had a 3-acre minimum in our flue-cured law, we could not administer it.

Mr. SHAW. We could not live with one yet.

Mr. COOLEY. We do not have the minimum in our flue-cured law. Mr. SHAW. No kind of minimum.

Mr. COOLEY. I can see the possibility of ultimately having to do away with the minimum in the burley law. I know that in our State when a man operates 5 or 6 farms, and he is a landlord, he is not a big man because he has 5 or 6 people depending on his allotment.

Mr. SHAW. That is right.

Mr. COOLEY. It seems to me the Department made good recommendations, and I would like to hear what the opposition to these recommendations is. Do you know anybody here who is opposing these recommendations?

Mr. SHAW. I have not found anybody that is. I have not talked with all the people that are here. I got here late. We talked yesterday and we found a wide area of agreement, and we found disagreement on the things to be done. We were together on the principles of trying to save the program and certainly no man that is fair with the program or with the farmers can object to letting them vote on it.

Mr. COOLEY. This suggestion No. 3 seems to be very important because it takes away from the farmer who plants without an allotment the right to acquire an allotment in future years based on acreage that he planted outside of the quota.

Mr. SHAW. I know exactly what it is.

Mr. COOLEY. If you increase his penalty to 75 percent and adopt other recommendations the Department made, it seems to me that it would be a very constructive suggestion.

Mr. SHAW. I think if you gentlemen can make it stick and can pass the law, certainly you will please the farmer and make him happy because we in flue cured are reaching some proportions that are not exactly like we would like to see them at this time.

Mr. COOLEY. You do know that every tobacco bill that has passed Congress in recent years, or for many, many years, has passed by unanimous consent.

Mr. SHAW. I know that.

Mr. COOLEY. That is due to the fact that the men from the tobacco growing areas have settled their differences in the committee room. Mr. SHAW. I pointed that out yesterday.

Mr. COOLEY. That is the way I want it to be done now. I do not want to come out with a tobacco bill that is controversial. I do not think we can afford to do it.

Mr. SHAW. You will never pass it if you do it. My last statement is this. I think this should be made the first order of business. I think we are fortunate in that we have had experience. This situation is not anything as bad as it was in 1940, because we didn't know what we were doing them. We know the facts and we are honest with ourselves and willing to respect the facts, and we know the principles and where the answers are found. I think this committee, with the help of the Department, and the evidence you are going to get here today, can write a tobacco program. I assure you that we through our outfit in North Carolina will do all we can to help sell whatever you decide, along with the evidence you get here, is best for 1955. We will make it the first order of business. We will go to the field with it and we will give the farmers the full benefit of all the knowledge we have about it.

Senator CLEMENTS. All I wanted to say, Mr. Chairman, is that what Mr. Cooley said about the committee, and I am sure he was speaking for the House, I think I can speak for the Senate committee, and I think you will find we are ready to take early action, and they will be in accord when we work out the program.

The CHAIRMAN. Mr. Shaw, Congressman Alexander is here, and is very interested in this matter. Do you have any questions?

Mr. ALEXANDER. Thank you, Mr. Chairman. I do not have any questions to ask Mr. Shaw. I do know his vast experience and understanding of the problem. I want to commend him on his statement. The CHAIRMAN. I might say Congressman Jones was here, but had to go to another meeting.

Mr. Watts.

Mr. WATTS. Mr. Shaw, I gathered from your statement that provided the proposition is sent back to the farmers as indicated by Mr. Taylor in his statement, you think it is fine to proceed along the lines he has outlined?

Mr. SHAW. That is right. Let them decide themselves what they want to do.

Mr. WATTS. That puts it right where the fellow who is affected by it has the final say-so.

Mr. SHAW. That is right. I am for that.

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Mr. JOHNSON. When the farmers vote in the referendum, are they going to have a chance to vote for or against, or will they have two propositions? Is it going to be a matter of voting for something or voting against it, or do they have a chance to choose their own program?

The CHAIRMAN. It will depend on what this committee comes out with.

The next witness we have is Mr. Norman Randall, chairman of the burley committee, North Carolina State Grange.

Mr. Randall, we are glad to have you with us.

STATEMENT OF NORMAN RANDALL, CHAIRMAN, BURLEY
COMMITTEE, NORTH CAROLINA STATE GRANGE

Mr. RANDALL. Mr. Chairman, we do not have a prepared statement. We have gone over the propositions of the Department and we agree in every respect except that our organization in North Carolina is on record to hold a 0.7 minimum. I cannot go further than that.

As to the poundage control, it has not been brought up but frankly we think it unworkable. We hope you can work it out, but so far we have not seen any way of doing that.

We will certainly support this. I think the proposition, if you do reduce the minimum acreage, should go to the grower. North Carolina is, as you know, a small grower. A poundage control would probably hurt us most because I believe we have the highest average poundage of any State in the Union. We certainly endorse a stricter enforcement of the law, and we would like to call attention to multiple signups of farms.

I don't know whether it can be enforced or not. The situation in North Carolina is that 1 man will have 2 or 3 acres and have it signed up under enough allotments that he doesn't have to take a cut due to the minimum allotment. One would take care of the other. But if you don't, we think something should be done about that.

Mr. COOLEY. What is the average acreage in North Carolina on burley?

Mr. RANDALL. I believe it is 0.6, which is rather low. Most of our tobacco is grown by the individual farmer himself with a low income. Each tenth you take off him costs $100. So it is serious. It is one reason we have kept to the minimum allotment. They need that. It is their cash crop.

We appreciate being allowed to appear before this committee. Our organization will do everything it can to get this information out to the farmers if this referendum is held. We would not favor hinging the program on that referendum.

Mr. COOLEY. You would not favor that?

Mr. RANDALL. Hinging the whole program on that referendum as to whether we would have a minimum allotment or not. Did I understand you to say that the program will stand or fall on that?

The CHAIRMAN. He said that if you did not do that, the whole program would fall by its own weight. I could not hear what you said about the referendum.

Mr. RANDALL. We would favor the referendum in case it is put on but I cannot commit the Grange.

Mr. COOLEY. How long has it been since your Grange had a meeting on the problem?

Mr. RANDALL. In December. We did not know the seriousness of the situation at that time, but we did know it was serious.

Mr. COOLEY. You are perfectly willing for the farmers to express their views?

Mr. RANDALL. Yes. I think the Grange will go along on that. The CHAIRMAN. I might say to you, I do not think the Department knew of the seriousness at that time, either.

Mr. RANDALL. I was here in December, and I don't believe they did myself. We do know the seriousness now. I think anything you gentlemen will work out, the Grange will go along with as far as possible.

Mr. CHELF. Mr. Chairman, if I may be permitted to do so, I would like to be excused at the moment. I have another committee that I am a member of that has been in session all morning. They have been sending out an S O S that they do not have a quorum. I want to get out and vote on some of the bills. I beg to be excused from this meeting, although I realize that this is the lifeblood of my people.

The CHAIRMAN. We will be glad to hear you next week.

Mr. CHELF. Thank you.

Senator CLEMENTS. This position that the Grange took was at a time when you did not have possession of all the facts you have today. Mr. RANDALL. I don't think so.

Senator CLEMENTS. As an individual do you not think that this program presented here this morning by Mr. Taylor, concurred in by other witnesses that have followed him-you speak as an individualis a sound program to follow since they recommend that a referendum be held to get the verdict from the growers themselves?

Mr. RANDALL. I think that is sound.

The CHAIRMAN. We deeply appreciate your coming before the committee, Mr. Randall. Thank you so much.

Mr. RANDALL. Thank you.

The CHAIRMAN. We have with us Mr. John Vance, president of Virginia Farmers Union, and I am glad to recognize him at this point. STATEMENT OF JOHN B. VANCE, PRESIDENT, VIRGINIA FARMERS

UNION

Mr. VANCE. Mr. Chairman and members of the committee, for the record my name is John B. Vance, president of the Virginia Farmers Union and a member of the board of directors of the National Farmers Union. I am speaking for Mr. James G. Patton, president of the National Farmers Union, as well as for our State organization, the Virginia Farmers Union.

On behalf of Farmers Union, I wish to express our appreciation for this opportunity to express our views with respect to the tobacco programs of the United States Government. Having been reared on a tobacco farm, and being now actively engaged in growing tobacco, no one appreciates more than I do what our tobacco programs have meant to the tobacco growers as well as to the entire economy of the tobacco-producing areas of this country. We are particularly glad that this committee has been created to review and study the operation of the tobacco program and the problems of the tobacco growers.

As you know, Mr. Chairman, at least one kind of tobacco is in serious trouble now. I have reference to burley tobacco. It would seem probable that what has happened to burley tobacco may be a forerunner of what is in store for the other kinds. I draw this conclusion due to the fact that the primary factors, which, in my opinion, have brought about the present disparity between the supply of burley tobacco and the demand for this kind, also apply to most of the other kinds of tobaccos, especially the cigarette types.

If I might digress for just a moment from the strictly tobacco problem, I would like to make one or two observations which I think bear on this subject. Let me point out that the action of the 83d Congress in adopting the variable price-support theory on all basic commodities excepting tobacco will ultimately spell the doom of the entire pricesupport program for tobacco unless the 84th Congress acts to restore realistic and effective price supports at 90 percent of parity on all basics and devises ways and means of offering comparable price protection to the producers of other commodities.

The excuse offered by the flexible, lower price-support advocates in agreeing to go along with 90-percent supports on tobacco was that the tobacco program had never operated at a loss to the United States Government, but instead had paid its own way. This is true, but my point is this. Farmers are going to produce the commodity from which they can expect to receive the greatest return. Therefore, it follows that with reduced price supports and resulting lower prices for most commodities excepting tobacco, farmers who never produced tobacco in their entire lives are going to turn to that crop simply because they can see a greater return. When this happens, then the investment of the Commodity Credit Corporation in the tobaccosupport program will increase proportionately, stock held by CCC will increase, and the heat which has been turned on the other commodity price support programs will be turned on tobacco. To my way of thinking, this is the greatest danger faced by the tobacco growers today.

Mr. Chairman, I do not propose to discuss the merits or demerits of the overall system of firm price supports. I simply wish to point out that the adoption of the variable price-support program has certainly placed the tobacco growers of this country in a very precarious position. With the penalty rate for overplanting at the present level, farmers can afford to overplant their allotments, pay the penalty, and still have a greater return from their investment and labor than they would have from growing chickens, milking cows, or raising cattle. A good acre of flue-cured or burley tobacco last year grossed about $900. If this were an acre of excess tobacco, the producer would have paid about $450 in penalty. He would have had $450 per acre left. He probably paid out about $100 for fertilizer, insecticides, oil, and other out-of-pocket cost of production, leaving him $350 from this acre to cover his labor and depreciation. Keep in mind that he probably produced this tobacco with family labor. Obviously, if you computed into this figure the value of his family labor, the cost of the number of hours of work which went into the production of that tobacco, there would not have been $350 left. With this situation prevailing, it is not difficult to understand why tobacco may look particularly attractive, even with the present penalty rate, to quite a few farmers.

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