COTTON EXPORT SUBSIDY PROGRAM TUESDAY, MARCH 8, 1960 HOUSE OF REPRESENTATIVES, COMMODITY SUBCOMMITTEE ON COTTON Washington, D.C. The subcommittee met at 2 p.m., pursuant to notice, in room 1310, New House Office Building, Hon. Ê. C. Gathings (chairman of the subcommittee) presiding. Present: Representatives Gathings, Cooley, Poage, Abernethy, Hagen, Teague of California, and Pirnie. Also present: Representatives Jones of Missouri, Johnson of Wisconsin, McMillan, Thompson, Wilson, Rivers, Saund, Shelley, Miller, and Cohelan. Hyde H. Murray, assistant clerk; John Heimburger, counsel; Francis Le May, consultant. Mr. GATHINGS. The subcommittee will come to order. We hope that we can proceed as rapidly as possible, in view of the fact that we have a very busy schedule this afternoon on the floor of the House and various meetings are being held at the same time. Before we start on this list of witnesses, we would like to hear from Congressman Saund of California. Will you present your statement at this time, please? STATEMENT OF HON. D. S. SAUND, A REPRESENTATIVE IN CONGRESS FROM THE 29TH CONGRESSIONAL DISTRICT OF THE STATE OF CALIFORNIA Mr. SAUND. Mr. Chairman, I sincerely appreciate the opportunity to appear before you and your colleagues today to state my vigorous opposition to the proposal to lower the export subsidy on cotton shipped from west coast ports to possibly 6 cents a pound while the export subsidy on cotton shipped from east coast ports remains at 8 cents a pound. The three desert agricultural valleys of my congressional district in California-Imperial, Coachella, and Palo Verde-have become great cotton-producing areas. In the past 2 days I have received scores of telegrams from cottongrowers in these verdant valleys, expressing their deep concern about this proposal. Such a proposal discriminates against growers in California and other Western States. It would affect the income of growers, proccessors, shippers, and the Pacific coast ports. It would disrupt export cotton markets which western cotton interests have built up over many years. Already, Atlantic coast growers are enjoying an advantage over the growers in the West through the so-called freight differential. They enjoy a Government support price that is 180 points higher than the support price on cotton grown in the West. This makes it possible for Atlantic coast growers to get higher prices for their cotton at the mills on the Atlantic coast and in European markets than do California growers. It appears that, in making this proposal, certain Atlantic coast interests are suggesting that the California export subsidy be cut while they keep their advantage of being closer to the Eastern United States and European mills. At the same time, they want to take from us in the West the small advantage which we have by being closer to the Far Eastern markets. Mr. Chairman, as representative of hundreds of cottongrowers in my district, I wish to express my strong opposition to this proposal, which would injure the entire western cotton industry and the west coast ports. Mr. GATHINGS. Thank you very much. Mr. SAUND. May I ask permission to put the names attached to these telegrams into the record at this point? Mr. GATHINGS. The names appended to the telegrams, without objection, will go into the record. (The names follow:) John P. Benson, president, Western Cotton Grower's Association of California, Rudolph Miller, secretary, Imperial County Grower's Association, El Centro, Calif.; D. W. Frost, executive director, port of Oakland; California Association of Port Authorities, Aaron H. Glickman, executive secretary; Claude M. Finnell, secretary, board of trade; Dessert Seed Co., Inc.; John Arthur Reynolds, secretary, Southwest Five States Cotton Association, Fresno; Si Cary, chairman, Imperial County Board of Supervisors; John Baretta, Calipatria, Calif.; Mike Maraccini, Calipatria, Calif; Andrew Andreotti, 1404 Ross Avenue, El Centro, Calif.; Donald and Emily Wolgaman, W. M. Corn, Calipatria, Calif.; James S. House, Seeley, Calif.; Harold Struges, general manager, Holtville Cotton Products, Holtville, Calif.; Dick Bramer, Brawley, Calif.; Richard L. Kaderly, president, Orange Belt Optometric Society, San Francisco area; World Trade Association; San Francisco Chamber of Commerce; T. K. Beard, president, Central Valley Empire Association, Post Office Box 368, Fresno, Calif.; Elmer House, Seeley, Calif.; Paul Haskel, Seeley, Calif., C. T. Dearborn, Calipatria, Calif., Glenn Haskell, Seeley, Calif., Louis Wiley, Brawley, Calif., Neil Fifield, Brawley, Calif., Ken Reynolds, Calipatrio, Calif., Harry Smith, Brawley, Calif., James C. Simons, Brawley, Calif., R. C. Brown, Brawley, Calif., J. H. Benson, Brawley, Calif., Williams & Quick, Calipatria, Calif., C. W. Sanders, Brawley, Calif., John Volker, Brawley, Calif., Jack Bryant. Calipatria, Calif., Allen Griffin, Brawley, Calif., Joe Anderholt, Holtville, Calif., North End Farmer's, Calipatria, Calif., Cal-Tenn Farming Co., Calipatria, Calif., Russell Bros. Ranches, Calipatria. Calif., W. E. Young, Calipatria, Calif.. Ray Jameson, Brawley, Calif., Harvey Hastain, Brawley, Calif., Mike M. Cline, El Centro, Calif., Paul Elijah, Brawley, Calif., Louis Struikman, Calipatria, Calif., Stafford Hannon, Brawley, Calif., Vic Wuytens, Brawley, Calif., and C. Ben Jones, chairman, agricultural committee, El Centro Chamber of Commerce. Mr. THOMPSON. I have a number of communications here, some of which are in the form of letters, and I should like to ask unanimous consent that they be placed in the record at this point. Mr. GATHINGS. Without objection, that will be done. (The letters and telegrams are as follows:) FRESNO, CALIF., March 5, 1960. Hon. CLARK W. THOMPSON, Understand southeastern interests still pushing adjustment cotton export subsidy. Consider their request unreasonable and dangerous as may lead to demands by western producers to equalize all support levels on cotton thereby jeopardizing entire price support program. Appreciate you giving this your serious consideration. Regards, OTTO GOEDECKE. GALVESTON, TEX., March 4, 1960. Hon. Congressman CLARK W. THOMPSON, Washington, D.C.: Gulf ports in session today. Wired Congressman Cooley, chairman, House Agriculture Committee, as follows: Gulf Ports Association in session today. Opposed the principle of variable subsidy rate on cotton. L. B. BERNDT, Assistant to General Manager, Galveston Wharves. LUBBOCK, TEX., March 8, 1960. CHAIRMAN, HOUSE AGRICULTURE COTTON SUBCOMMITTEE, The board of directors of the Lubbock Cotton Exchange in a meeting today voted vigorous opposition to a variable subsidy as proposed by the Atlantic Cotton Association. Presently cotton in Southeastern States has a 100-point and more advantage in sale and delivery to domestic mills, most of which are concentrated in that area, and we in more distant points have not asked for any equalization of this difference. Under present regulations the subsidy program has worked very successfully and resulted in near-record sales for export. We would like to see a continuation of the present fair and equitable fixed rate. We join with southwestern and western interests in opposing any change. Hon. W. R. POAGE, House Office Building, Washington, D.C.: GEORGE W. LOVELESS, President, Lubbock Cotton Exchange. WACO, TEX., March 7, 1960. We vigorously oppose variable export subsidies for cotton. Such a device would be uneconomic and would impose serious financial losses on the farmers. It would disrupt orderly marketing both for export and domestic consumption, and it would not help dispose of our burdensome cotton surpluses. Please make our position known to House Agriculture Subcommittee at March 8 hearing and actively oppose this wholly unnecessary and impractical scheme. L. T. MURRAY, Texas Cotton Association. H. KEMPNER COTTON Co., Galveston, Tex., March 3, 1960. Hon. CLARK W. THOMPSON, Washington, D.C. DEAR CLARK: My understanding is that there will be a hearing on Tuesday before the Cotton Subcommittee of the Cotton Department Committee regarding two phases of the 1960-61 program, on both of which I would like to express my views. I. RECLASS (a) The classing of cotton is not an exact science; it is an art. (b) Many, if not most, bales of cotton will change their color over a period of time; the length of time and the degree of change depending on many technical factors. 53046-60- -2 (c) Cotton procedures all over the world give buyers of American cotton the right to view the classification of cotton furnished him and to seek appropriate remedies provided in his specific purchase contract if he does not agree that the cotton delivered him is up to the description furnished by the seller. The above are all facts which are not subject to any real dispute. Why then should the U.S. Government be the sole cotton merchant who is relieved of the responsibility for the quality of the cotton delivered to the buyers? Surely the fact that the U.S. Government is acting as the largest cotton merchant in the world is the last reason why it should wish to impose such arbitrary rules on the buyers. It is not only a matter of equity that every buyer should have the right to receive 100 cents worth for cotton for every dolar he pays, but it is in the longrange interest of the Government itself. After all, they want to get rid of this cotton which is eating up the taxpayers' money in storage and when they impose unpalatable terms, they will clearly interfere with the quickest and most advantageous sale of these stocks. I understand that the Department of Agriculture has recognized the validity of arguments along these lines and is ready to allow reclass on cotton bought after August 1 but that there is one Member of Congress who considers this an improper procedure. I hope that such an individual aberration will not be allowed to interfere with the issuance of a reclass provision, which is just, proper, and overdue. II. EXPORT SUBSIDY It is urgent in the extreme that the Department of Agriculture issue promptly regulations for the export subsidy for 1960-61 season, especially should they announce at the earliest possible moment the amount of this subsidy. Opportunities to sell American cotton for shipment after August 1 are present now and sales are being interfered with because no one knows what the subsidy will be. Certainly some of this business will be filled by competitive growths unless a prompt announcement is made. It is my understanding that the Department is ready to make such an announcement but has withhheld it pending an effort of certain eastern seaboard interests to obtain a fluctuating subsidy so that the export subsidy on cotton at eastern ports would be higher than those of the gulf ports, and the subsidy from Pacific ports would be still lower than those from the gulf. There is no possible justification for such a complex system. Even the natural desire of eastern ports to get a larger share of export business should be tempered by the knowledge that an effort to eliminate distances and remake the economic map of the country by fiat sets an authoritarian precedent which should be avoided in a country devoted to the principles of free enterprises. There is no question that a difference of say one-half of a cent in the subsidy between gulf and eastern ports will divert from our area cotton which historically moves through gulf concentration points. Facilities have been built at these areas, organizations set up to handle the cotton, all the complex machinery of the cotton trade is geared to this system. The revolutionary provision sought by the eastern seaboard would bring all sort of chaos to the industry and render even more difficult the Government's efforts to maintain American cotton in its rightful place in the markets of the world. The rejection of any such proposal is a matter of great importance, not only to those who will be immediately hurt by the diversion of cottom from its natural channels, but also to all who have at heart the interest of the American cotton farmers and the distribution of his product throughout the world. I hope, therefore, this matter can be settled and settled quickly so that the logical methods of distribution can be maintained and that a prompt announcement can be made of the details of next season's subsidy without further detrimental delay. With personal regards, I remain, Sincerely yours, HARRIS KEMPNER, |