Mr. HOLLAND, from the Committee on Agriculture and Forestry, submitted the following REPORT [To accompany S. 2214] The Committee on Agriculture and Forestry, to which was referred the bill (S. 2214) to amend section 608 (c) (2) of the Agricultural Marketing Agreement Act of 1937, as amended, having considered the same, reports favorably thereon with amendments and recommends that the bill (as amended) do pass. EXPLANATION OF BILL Potatotes for canning or freezing are now exempt from marketing orders under the Agricultural Adjustment Act, as reenacted by the Agricultural Marketing Agreement Act of 1937. The bill would exempt, in addition, potatoes for "other processing." The term "other processing" is intended to include only that preparation of potatoes for market which involves the application of heat or cold to such an extent that the natural form or stability of the commodity undergoes a substantial change. This occurs in dehydration and in the manufacture of shoestring potatoes and potato chips. The act of peeling, cooling, slicing, or dicing, or the application of material to prevent oxidation does not constitute "other processing." HEARINGS The committee's Subcommittee on Agricultural Production, Marketing, and Stabilization of Prices held hearings on the bill. Some producer groups opposed the bill, while processors generally approved it. The Department of Agriculture favored inclusion of all potatoes under marketing order authority, or exclusion of all potatoes for processing. Inclusion of some and exclusion of others creates com petitive disadvantages. The committee felt that, since potato products are marketed nationally, the competitive disadvantage accorded processors located in order areas and subject to such orders was such as to require enactment of S. 2214 at least for a trial period. COMMITTEE AMENDMENTS The committee amendments would: (1) Make the bill effective for only a 2-year trial period; and (2) Make technical corrections to designate correctly the act and the portions thereof being amended. DEPARTMENTAL VIEWS The report of the Department of Agriculture recommending either exemption or inclusion of all potatoes for processing as follows: DEPARTMENT OF AGRICULTURE, Hon. ALLEN J. ELLENDER, OFFICE OF THE SECRETARY, Chairman, Committee on Agriculture and Forestry, DEAR MR. CHAIRMAN: This is in reply to your letter of May 22 requesting a legislative report by the Department on S. 2214, a bill to amend section 608 (c) (2) of the Agricultural Marketing Agreement Act of 1937, as amended. This bill would exempt potatoes for "other processing" from marketing orders. The purpose of this bill is to place potatoes for dehydration and processing into other potato products on an equal basis with potatoes for canning and freezing which are now exempt under this act. Inasmuch as potato products are in competition with each other in the market, this bill would result in uniform treatment of potatoes for processing regardless of the final use made of the product. On the other hand, the bill would significantly reduce the effectiveness of marketing orders as a means of strengthening returns to producers, in view of the increasing quantities of potatoes going into processing uses. An alternative method of achieving equity among processors, while at the same time maintaining or strengthening the benefits of marketing orders to producers, would be to remove the existing exemptions for canning and freezing thereby including all potatoes under the act. The use of potatoes for food processing has increased sharply during the past decade. Only 14 percent of 1956-crop potatoes used for food were processed. In 1967 about 42 percent were processed. Utilization for freezing was the most important in terms of volume, but large quantities were used for canning, potato chips and shoestrings, and dehydration. Dehydrated potato processing increased sixfold during the 1956 to 1967 period, while the use of potatoes or chipping and shoestring potatoes more than doubled. Continued expansion of sales to all food processing outlets is expected in coming years. Federal potato marketing orders are currently in effect in many of the major potato producing areas in the United States. In 1967, S. Rept. 91-418 these areas produced about 156 million hundredweight of potatoes, which was more than one-half of the U.S. potato crop. Departmental data show that "other processing" in 1967 which the bill would exempt from coverage under the act totaled about 64 million hundredweight of potatoes used for dehydration, chips, shoestrings, starch, and flour. It is estimated that about one-half of this quantity is processed in areas operating under marketing orders. The enactment of this bill would not result in added costs to the Department. In view of the time situation, we have not obtained from the Bureau of the Budget advice regarding the relationship of this proposed legislation to the President's program. Sincerely, J. PHIL CAMPBELL, Acting Secretary. CHANGES IN EXISTING LAW In compliance with subsection (4) of rule XXIX of the Standing Rules of the Senate, changes in existing law made by the bill, as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, existing law in which no change is proposed is shown in roman): SEC. 8c.* * * AGRICULTURAL ADJUSTMENT ACT COMMODITIES TO WHICH APPLICABLE (2) Orders issued pursuant to this section shall be applicable only to (A) the following agricultural commodities and the products thereof (except canned or frozen grapefruit, cherries, apples, or cranberries, the products of naval stores, and the products of honeybees), or to any regional, or market classification of any such commodity or product: Milk, fruits (including filberts, almonds, pecans and walnuts but not including apples, other than apples produced in the States of Washington, Oregon, Idaho, New York, Michigan, Maryland, New Jersey, Indiana, California, Maine, Vermont, New Hampshire, Rhode Island, Massachusetts, and Connecticut, and not including fruits for canning or freezing other than olives, grapefruit, cherries, cranberries, and apples produced in the States named above except Washington, Oregon, and Idaho), tobacco, vegetables (not including vegetables, other than asparagus, for canning or freezing and not including potatoes for canning, freezing, or other processing), hops, honeybees, and naval stores as included in the Naval Stores Act and standards established thereunder (including refined or partially refined oleoresin): Provided, That no order issued pursuant to this section shall be effective as to any grapefruit for canning or freezing unless the Secretary of Agriculture determines, in addition to other findings and determinations required by this Act, that the issuance of such order is approved or favored by the processors who, during a representative period deter S. Rept. 91-418 mined by the Secretary, have been engaged in canning or freezing such commodity for market and have canned or frozen for market more than 50 per centum of the total volume of such commodity canned or frozen for market during such representative period; and (B) any agricultural commodity (except honey, cotton, rice, wheat, corn, grain sorghums, oats, barley, rye, sugarcane, sugarbeets, wool, mohair, livestock, soybeans, cottonseed, flaxseed, poultry (but not excepting turkeys, eggs (but not excepting turkey hatching eggs), fruits and vegetables for canning or freezing including potatoes for canning, freezing, or other processing, and apples), or any regional or market classification thereof, not subject to orders under (A) of this paragraph, but not the products (including canned or frozen commodities or products) thereof. No order issued pursuant to this section shall be effective as to cherries, apples, or cranberries for canning or freezing unless the Secretary of Agriculture determines, in addition to other required findings and determinations, that the issuance of such order is approved or favored by processors who, during a representative period determined by the Secretary, have engaged in canning or freezing such commodity for market and have frozen or canned more than 50 per centum of the total volume of the commodity to be regulated which was canned or frozen within the production area, or marketed within the marketing area, defined in such order, during such representative period. No order issued pursuant to this section shall be applicable to peanuts produced in more than one of the following production areas: the Virginia-Carolina production area, the Southeast production area, and the Southwest production area. If the Secretary determines that the declared policy of the title will be better achieved thereby (i) the commodities of the same general class used wholly or in part for the same purposes may be combined and treated as a single commodity and (ii) the portion of an agricultural commodity devoted to or marketed for a particular use or combination of uses, may be treated as a separate agricultural commodity. All agricultural commodities and products covered hereby shall be deemed specified herein for the purposes of section 8c (6) and (7) of this title. (Note. The changes above are effective only for the 2-year period beginning with the date of enactment of S. 2214.) |