certainly their share every year to support this National Potato Council.

I might add that the State of Florida also in the past has been a major contributor to the council, both in leadership and money.

I think the States which do not have tax programs have made a significant contribution to the financing of the council. I would refer to Florida once more, and also Pennsylvania, Wisconsin, New York, Alabama, and a number of others which, generally, pay their assess

ments.

One State, which has been most delinquent with respect to finances has been the State of Idaho, which was mentioned as being a major supporter this morning.

To the best of my knowledge, they have never supported the National Potato Council financially. I do not say this derogatorily about the State of Idaho because they have certainly furnished far more than their share in terms of leadership and support. But, due to misunderstandings of their tax laws, they have not supported it financially.

We respect every State's right to be a member of the National Potato Council whether their dues are paid or not, and no State has ever been discriminated against because they were not in good standing, so to speak.

Our milling list for our National Potato Council News goes to all the 12,000 potato producers in this country, and it is by no means complete.

There are, perhaps, 20,000 additional growers that should be on that mailing list that should receive copies because their State is paying their assessment, but our finances do not permit us to expand our publication that rapidly.

I would also like to comment with respect to article 6, section (b) of the National Potato Grade Labeling Act, in which it says that, if I might quote:

The provisions of this act shall not be applicable to the following categories of potatoes. The Secretary may prescribe such regulations as he may deem necessary to effectuate the provisions of this section.

(b) Potatoes for animal feed, without further processing, or for manufacturing in nonfood products or in a starch, flour and derivatives thereof.

The intention of this section was not to restrict the utilization of offgrade potatoes in the form of products which do not compete in any way or in any sense with potatoes as such in either their fresh or processed form.

For these particular uses, starch and flour, potatoes undergo a complete change in form and do not, in any way, tend to decrease the market potential available to potatoes as a food.

In addition, both of these uses return only 25 percent of the cost of production, and can only be recognized as outlets for surplus disposal. I might add that without these outlets the potato business would have been in a far sorrier state over the past 3 years than unfortunately it has been.

Last year, in my State alone, the State of Maine, we diverted approximately 15,000 carloads of potatoes to diversion outlets.

This year, we have diverted in excess of 20,000 carloads to these outlets, and I think that has been primarily responsible for maintaining even the meager price we have today.

Another question that was raised with respect to this act on the definition of "commerce" was that it was too broad, overly broad.

I believe that the definition of "commerce" in this act, is much the same as the definition of "commerce" in the marketing orders which we have in a number of States, the Federal marketing orders.

It is not new; it certainly is not overbroad. On this question of interstate and intrastate commerce, I believe that the question is, Does a shipment of potatoes within a State directly burden and obstruct interstate commerce?

I believe that question has been to the Supreme Court of the United States on two or three different occasions, and I believe that the Supreme Court has always upheld that shipments within a State certainly did burden interstate commerce.

As to the commercial grade of potatoes, it was mentioned this morning that this legislation would prevent people from putting up a commercial grade, that they could no longer load their commercials.

For the information of the committee, a commercial grade of potatoes is a higher grade of potatoes than U. S. No. 2 and, therefore, they can still continue to load these commercials.

That completes my statement, sir.

Mr. GRANT. Thank you very much.
Are there any further questions?

If not, thank you for your excellent statement, sir.

The next witness is Mr. George W. Tallman, from Pennsylvania.

STATEMENT OF GEORGE W. TALLMAN, TOWER CITY, PA.; TREASURER, PENNSYLVANIA COOPERATIVE POTATO GROWERS ASSOCIATION, INC., HARRISBURG, PA.

Mr. TALLMAN. Mr. Chairman, Mrs. Knutson, and gentlemen of the committee, Pennsylvania appreciates this opportunity to testify in this hearing.

My name is George Tallman. My address is Tower City, Pa. Potato growing is my occupation. Our family has been growing potatoes on the same farm for four generations.

Today, I am here to speak for Pennsylvania Cooperative Potato Growers Association, Inc., of 5235 North Front Street, Harrisburg, Pa., as well as in the capacity of a potato grower. Pennsylvania Cooperative Potato Growers Association is our only statewide group of potato growers. It was chartered in 1922, and numbers a large majority of our potato growers as members. I am a director and the

treasurer.

I think, for the purpose of the record, and because there has been some philosophizing, theorizing, and conjecture here today by preceding witnesses, I would like to ask your permission to digress for a moment at this point in my written testimony to clear the record on one more part of my personal status. I am the vice president of the potato section of Vegetable Growers Association of America. You heard testimony from that body this morning. And in that capacity, I pay an annual membership fee known as a "Green Thumb" membership fee of $25 per year because I grow more than 50 acres of potatoes.

In that capacity, I voted to favor this legislation. Other members of the Vegetable Growers Association of America voted against the

legislation. Since the VGAA testimony included portions of a letter from one of the members of the board of directors, I am sorry that for the purpose of the record it did not include the letter that I submitted in a mail vote on this subject.

In regard to the National Potato Council, I am a member of that body, also, and serve as chairman of their research committee.

In that organization I pay a membership fee of $25 per year, as do the other members of the National Potato Council from Pennsylvania who grow 50 acres or more. Those who grow less than 50 acres pay a membership fee of $10.

So I think that some of the remarks of preceding witnesses were probably ill founded on fact.

To get back to Pennsylvania's facts, I want to say that Pennsylvania's potato growers have voted to favor the passage of H. R. 5137, a bill to authorize the National Potato Grade Labeling Act.

In our State we have had a grade-labeling statute since 1937. Our law has been very effective in standardizing the quality of our own Pennsylvania potatoes in Pennsylvania markets. Within the borders of the State the consumer is protected against any fraudulent merchandising practices that might be attempted by Pennsylvania growers, shippers, or handlers.

As an example that benefits can accrue to both producers and consumers under a grade-labeling statute, we can quote from our experience in an area where producers' farms and urban markets are closely intermingled in a great agricultural and metropolitan State. Violations have been few and enforcement is successful, as we have proved since 1937.

In the marketing season just ending for us, only 5 violations occurred during 7 months of marketing by our association membership. Consequently, good acceptance of our product made satisfactory sales for producers, at the same time supplying honest value to the consumer.

However, this statute is limited by our State boundaries. Enforcement cannot be executed adequately upon potatoes shipped into our State, because our officers have no jurisdiction over the originator of a misdemeanor if he lives in another State.

Therefore, while we may be doing an honest and a careful job of supplying the consumer with potatoes that are packed to a grade standard, and that standard clearly labeled on the container, other potatoes have been entering our markets in packages that deceive the purchaser. By "purchaser" there, I might add, I mean the ultimate purchaser, the person who buys them to put on a plate to eat.

Thus, our State law does not fully protect the consumer, with the result that potatoes, as a commodity, find ill favor in the market place. Poor quality merchandise can destroy a satisfactory price as well as create sales resistance to any and all potatoes.

No matter how well the majority of growers may be packing potatoes, the general level of the market price is dragged down by the few who fill the market with mislabeled packages. When these potatoes come into Pennsylvania from other States, our State law cannot reach the original violator.

For example, and I digress for a moment, mention was made this morning of potatoes shipped from the early States. Those potatoes coming into Pennsylvania's markets at the time when Pennsylvania

has none of its own potatoes in the market, do not come under the surveillance of the officers delegated with the authority to enforce our own Pennsylvania grade labeling statute, because those officers could not reach back to the originator of a poor package of potatoes, an unlabeled package, or a package that did not live up to its label, from early States.

Therefore, when those potatoes, ofttimes immature or for some other reason not coming up to quality standards that created a good impression on consumers, when they rot or in other ways disappoint the consumer who buys them, all potatoes are maligned by such a practice.

I will return to the written testimony now, to say that at the same time, there also exists the bad practice of shipping cull potatoes from Pennsylvania into other States where grade labeling laws do not exist. We can quote literally a multitude of cases wherein cull potatoes in unmarked containers have been shipped into markets outside of Pennsylvania where they were resold for whatever grade the buyer could be duped into believing the package contained.

There again, I would like to make the addition of an example. We saw a specific lot of potatoes in Pennsylvania just a few months ago, packed in the container that our Potato Growers Association sells only under an inspection certificate. At the time that the Federal-State inspector examined these potatoes prior to their shipment, he rejected them on the basis of a 28 percent grade defect in that package.

The farmer packer who had put up those potatoes into our trade mart, of course, was prohibited under our own rules from selling them. He dumped them over into other bags. He didn't regrade them, simply dumped them into other bags stating "U. S. 1 Pennsylvania Potatoes"; no name, address, or anything else.

He hauled those into the Baltimore market. The same evening that this load of potatoes entered Baltimore's market, two of us who work for better marketing practices happened to be in Baltimore with the intention of calling on one of our large chainstore buyers the next day. We went down to the Baltimore night market, and there saw those very same specific potatoes, and we recognized them due to the grower's truck and the bags he had packed them in. We saw those potatoes being sold there, allegedly U. S. No. 1's, for 90 cents a bag.

The price that we were quoting at that time to our buyers was $1.30 a bag. When the Baltimore market report, market news service report, came out the next day, Pennsylvania U. S. No. 1 potatoes were quoted in a price ranging from 90 cents to $1.30.

The buyer we called on immediately flung that example into our face and said, "How can you ask me for $1.30 when Pennsylvania. U. S. No. 1 potatoes are quoted right here in the United States market news service?"

Of course, we explained the situation, but the seed of doubt had been planted there with him, and we had to arrive at a different price. Three things actually happened there. A preceding witness stated that when a buyer and a seller, meaning a buyer in a terminal market as would have been the example of the merchant who bought the potatoes in this instance, when such a buyer and seller come into agreement on a deal, they go into it with their eyes open, and they know what they are getting.

That might be very true, but the next step that occurred when those potatoes reached retail level-they were still labeled U. S. No. 1, and defrauded some unwitting consumer.

Thereby, I would say, a great majority of consumers could have been maligned.

At the same time, the other shippers from Pennsylvania, people who were putting up an honest, well-labeled package of U. S. No. 1 potatoes, had their price depreciated. So again, this transaction that was perfectly understood by an original packer and a buyer, maligned a great group of potato producers.

Now, it has been quoted here that the PACA Division of the Fruits and Vegetables Division of USDA would have the power to punish such a case. That, of course, is true. Unfortunately, their force of men does not reach out as widely as to catch all of those practices, and if potatoes can be sold in unmarked containers, PACA would have no regulation over them.

In that respect, I would like to read the next paragraph of this written testimony.

The various other States across our country have varying degrees of control or no control at all. For example, New York and Ohio have excellent grade-labeling laws, while Maryland and Virginia have none. On account of the variation in control of quality delivered to the market, some of our cities and States have come to be known as dumping grounds for merchandise of questionable quality. The folks who buy potatoes in these areas are fair game for the cheating potato dealer.

There are practices, for example, where repackers may buy both U. S. No. 1 grade and cull potatoes, mixing the two and selling the resulting lot all as U. S. No. 1. All potato growers, shippers, and handlers are not thieves and cheats. The large majority are honest and fair. Unfortunately, however, the percentage of bad practices in potato marketing is still too high for the good of the consumer or for the good of the potato business.

An example again: Many potatoes are shipped into the State of Virginia, for example. I could also cite West Virginia or Kentucky, Tennessee, States of that kind, where potatoes are shipped in unlabeled containers, containers which say nothing but potatoes on the face of the bag. Those containers most often contain potatoes which have no grade specification at all; and what happens to them when they reach their destination, whether they are repacked to deceive customers or whether they deceive customers in the original container, is entirely a matter of how vigilant a buyer of potatoes might be.

Returning again to my written testimony: We potato growers, nationwide, have been trying to solve our own problems of surplus production and low prices ever since 1950 when we voted to renounce Government price supports of our commodity. Our industry recognizes the need for promotion of its product, especially because consumption of potatoes has dwindled to the point where supplies exceed demand far too much of the time.

However, our industry also knows that before any product can be successfully advertised and sold, it must be made satisfactory to the customer. The National Potato Grade Labeling Act is designed to accomplish this purpose. At the same time, the consumer will be afforded protection against fraud by this same statute.