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when this happens, they generally buy new equipment, and these things to improve their agriculture operations.
A number of growers bought diesel tractors. They switched from the gasoline tractors to the diesel tractor, which is more efficient, and also, along with the air pollution problems, it's a better tractor from that standpoint. They bought the new tractor and then couldn't get any diesel to operate it because of not having a previous allotment, and so here the tractor sat, a brand new tractor without diesel. The thing that we're concerned about, Senator, is the fact that although the allocation now says that agriculture is to get 100 percent of its needs, they are still allocating the dealers, as we understand it. In other words, you have to go to the dealer and get your needs. The dealer has to put through his allocations for the month, and from that, he distributes to his customers.
Agriculture cannot function on a monthly allocation program. There's just no way that we can function.
Senator TUNNEY. Can I just stop you there?
As I read the regulations, it says 100 percent of requirements. It doesn't say anything about a month-to-month allocation, but you're saying, as a practical matter, there is a month-to-month allocation because the major companies will only give their suppliers a monthto-month allocation?
Mr. McGHAN. That's as I understand it, sir.
Senator TUNNEY. Their distributors, I mean.
Senator TUNNEY. Their distributors, a month-to-month allocation.
Mr. McGHAN. Yes, sir, and the question becomes what happens if he doesn't have the fuel? Where does he get it or where does the grower go to get it? In other words, you don't shift dealers; if you have a dealer, you don't go over to the neighboring dealer and say, "Well, now, will you supply me?"
I mean, it just isn't in the cards, and this is our concern. We hope that this will be cleared up under this new program, but it has not worked that way to date.
Senator TUNNEY. Well, in about another month, you're going to have, in the central valley-and I would assume that you will have all over California-the most important season insofar as use of fuel because you're preparing your ground and planting your crop. Don't you use more fuel at that point than you do at any other time, including harvesting?
Mr. McGHAN. Yes, I would say that we use more fuel during the preparation of the ground than at any other time. Harvesting, perhaps, would be close in the usage of fuel, and, of course, most important at harvesting time, because you have a short period to harvest, but the thing that happens is that in the valley, starting generally with the first of March, then, as the weather warms up, everybody is in the field preparing their land.
The thing that happened this year, as an example, in 1972, we had a wet November. There was no operation in agriculture in November.
This year we had an open November when the farmers would have liked to have worked, but because of the allocation thing, they couldn't. Tied to the November period, they hadn't used any fuel in November of 1972, so had no allocation for 1973.
Now, we hope this is changed, as we say.
Now, December this year has been a wet December, and so far in January, which also puts a bigger burden on the grower at the time when it does dry up and when the temperature rises so that he can get on the land.
Senator TUNNEY. How does it look for March? Does it look as though there will be available supplies of fuel?
Mr. McGHAN. We haven't been able to determine this, Senator. Nobody seems to know. The fuel companies have not made any statements to the effect whether they will or will not have fuel.
I'm sure that this is another thing that agriculture is very concerned about is the fact that, all right, we get the fuel to operate in March, what about the fuel to harvest in August or September, and we can't afford to go ahead and plant the crop without some type of guarantee that we're going to have the fuel to harvest the crop, because this becomes a very big gamble. It's a big gamble anyway, but this makes it more of a gamble.
Another thing I might just add there, Senator: It has been estimated because of the need for food shortages and the Government's asking agriculture to produce more, that there was planned to be approximately 20 percent additional acreage in the valley going into farm produce this year, which, on a percentage, would mean approximately a 20 percent additional need for fuel at the same time.
Senator TUNNEY. Well, are you familiar with the decisions being made by farmers with respect to the amount of land that they will prepare and that they will plant? Are they cutting back or are they staying the same or are they going to expand? What about the increasing demand for food that would ordinarily necessitate an increase in the amount of land under production-do you have any idea what the farmers' decisions is going to be? Have there been any indications what that decision is going to be?
Mr. McGHAN. I don't have any actual acreage figures. I heard a report just the other day from one of the local cotton cooperatives who said that they have indications that there would be 20 to 30 percent additional cotton planted.
Now, the only thing I would say here, Senator, is that some of this may be new land, but some of it may be land that was in other types of commodities last year. It may go from alfalfa to cotton or they pulled out some vineyards, from a vineyard to cotton, or something of this sort, so it wouldn't be a total increase, the estimates around our valley by what the farmers that I have talked to are planning, I think-a real good estimate would be a 10 to 20 percent additional acreage.
Senator TUNNEY. Additional acreage? And so what they're going to do is gamble that there will be fuel available?
Mr. McGHAN. They're going to gamble, I believe.
Now, the larger growers on the west side, who are in the area of tomatoes and sugar beets and some of these high-cost crops, may decide not to gamble and go into this.
I think they're still on the fence. They don't know what to do, and they're very reluctant to put a lot of money into planting these kind of crops, which are high-cost crops, without knowing that there will be fuel to harvest the crop, or will there be fuel for the trucking industry to haul the crop and will there be fuel for the processor to process the crop, on these we have not heard yet. Maybe you have information, Senator, as to whether or not the processing industry, as an example, are going to get the fuel needed.
These are all tied in together, and even though we can say, "Well, we got enough fuel to produce the crop," if we don't have the fuel for what happens to the crop after it's produced, it doesn't really make that much difference whether we have it or not, and these are concerns that the people in agriculture have, I might add to this, other concerns are, of course, along with this additional acreage and additional crops is whether there will be fuel available for the making of fertilizer, for insecticides, the fuel for electricity, which is a major part-in fact, I brought here a copy of the agricultural supplement in the paper yesterday where some of the dairy farmers are going to alternate types of power supply for their electricity in case electricity is shut off.
The matter that we have had reports from the tractor dealers in the area that their companies are telling them that they can only have 60 to 75 percent of last year's amounts of oils, greases and hydraulic oils, which doesn't make much sense either. You can't operate the machinery without these types of materials along with the actual gasoline and diesel fuels.
I have roughly given you some of the problems, perhaps not many solutions, other than if there could be something done about the fact that there will be the needed fuel for harvesting and processing and getting the crop from the grower to market.
I believe that's all I have unless you have some other questions. Senator TUNNEY. I have some questions, Mr. McGhan.
Let us assume that there is not an adequate supply of fuel made available to the farmers in your region during the next year, and let us assume that you or someone in your organization is going to be in a position where you are attempting to get additional supplies for the farmers. At the present time, as I understand it, you have two choices: One, you can go to the Federal Energy Office's regional office in San Francisco; or, two, you can go directly to the companies themselves and ask them to increase their supplies.
Now, to date, what has been your experience with going to the Federal Energy Office or going to the companies themselves?
You've given us one example in your earlier testimony that back in November or December of last year, there was an incredible maladministration of the program.
Has that improved any?
Mr. McGHAN. Not to my knowledge. In fact, I had people in my office just last week who had called on the telephone who were very, very irate. They said, "We've filled out all the forms because it's been necessary. We've sent the forms, we've heard nothing," and then also they-Federal fuel office-were doing this, the growers
were sending all of the forms to San Francisco, and then theyEnergy Office-changed the procedure and they sent all the forms back to the person who filled them out, saying, "Take these to your local dealer and he's to add these to his allocation of fuel for you." The problem here becomes the fact that many of the local dealers were reluctant to take this person, if the dealer had not been servicing the person before.
Then, it seemed like the problem also was the fact that some of the people are just distributors. I mean, they-they work for a company and then they drive a tank truck and service the dealers and they get their fuel from a wholesaler. These distributors, right at the grassroots level, did not seem to know what to do with the forms. They hadn't gotten the word from their companies as to how to process this type of form, and so, in most cases nothing happened. I don't have all the names of these, Senator, because I didn't try to keep all of them, but we had literally dozens of these problems. In fact, we have two girls in my office and myself, and some days all three phones were ringing constantly from people saying, "Where do we go, what do we do, I'm all out of fuel. I can't get anybody to talk to me," you know, "What am I going to have done,” and it seemed like they got to a point at the Federal office in San Francisco. where they didn't know what to do with the forms so they just returned them back to the grower, saying "You go and deal with your dealer." In the course of time, the dealers got these bundled up, and I know some of the dealers tried hard, and filled out whatever forms they had and hand-carried them to San Francisco to try to get some results, to try to get some releases of fuel. Senator TUNNEY. No results?
Mr. McGHAN. Well, I don't know. There's varying reports on this. I talked to one of the tank wagon drivers the other night and he said for some reason or other where he had-this happens to be a Phillips 66 dealer who had been cut back 50 percent in December on diesel fuels and 25 percent on gasoline from the company said, "All of a sudden now, in January, I seem to be able to get all the fuel I want with no explanation." He didn't know why.
It was just done.
Now, whether this is because of the Energy Office in San Francisco or whether it is just because of a new policy in the company, I don't think I know or they seem to know.
We called the-and the reason I'm using Phillips 66 to some extent is the fact that the Farm Bureau has had a contractual program with Phillips 66 since they took over from Tidewater, and so many of our members are tied into the Phillips 66 program-not all of them, but a lot of them-and so I had more direct contact with the Phillips 66 organization, but they seem to be very confused.
Now, the district office, which is in Fresno, for Phillips 66, after getting to the right person said, "Well, send these people in to us and we'll try to take care of them," but out at the local dealer level, he didn't seem to know this, and so he would turn the people away saying, "I can't help you.'
Senator TUNNEY. Well, let me ask you, has the Energy Office actually sent people down into the field to try to help solve the problem or has it just sat in San Francisco awaiting complaints to be made and bucking the complaints back to the individual farmers, telling them to go to their distributors?
Mr. McGHAN. I do not have any information of anybody actually down in the field. The only thing that I've gotten back from the people who have called me about sending in the forms is they call me and say, "I just got all the form back telling me to take them to my local dealer."
Senator TUNNEY. Is there a need for forms now?
Mr. McGHAN. I wouldn't think so.
Senator TUNNEY. I don't see why there is a need for forms.
Mr. McGHAN. I don't see a need for forms, although there is a new form, as I understand, that you're supposed to be able to get through the ACSC office that has to do with those who are going to use more than 130 percent, I believe that's the figure, of their 1972 usage.
Senator TUNNEY. But the regulations don't require that. The regulations say the farmers are entitled to 100 percent of their current requirements, and so there is no indication that there needs be any forms filled out or a special emergency allocation, because their allocation is established by requirements, right?
Mr. McGHAN. Yes, that's right, but then we go this word, and I don't want to put anybody on the spot, because I know a lot of people are confused.
This came through Congressman Sisk's office that in their briefing in Washington on this, that it's true everybody was to get 100 percent, but if you used 100 or 130 percent or were going to need over 130 percent, you were going to need over 130 percent, you were to file these forms. You would still get your use need, you would still get your 100 percent, but you were to file the form you could pick up the forms through the ASCS office, and they said, "Yes, you'll get your fuel-but you'll still have to file our forms." I don't know why. I don't know what the reason is for this unless it is a check to see that people are on record and if they want to check later to see that they are actually using it for production of agriculture, or something of this sort.
Senator TUNNEY. What about during the period of November 15 to January 15? You've indicated that your farmers did not receive 100 percent of their needs, that there was a short quota of that amount, even though the regulations indicated that they were to receive 100 percent as contrasted to the 1972 base period.
Mr. McGHAN. Yes. Many of the growers actually received letters from their distributors, from their companies that were their distributors-and this was not just Phillips 66; there were other companies saying that your allocation for December will be 15 percent less than what you received in 1972, and other figures. The notices ran from 15- to 20- to 25-percent reduction. It happened to be that