S21 CONTENTS Abbitt, Hon. Watkins M., Member of Congress from Virginia_ Bonner, Hon. Herbert, Member of Congress from North Carolina_ Gilliam, Edward F., Preslow Peanut Co., Inc., Franklin, Va Hardy, Hon. Porter J., Member of Congress from Virginia__ Haskins, John, Southwestern Peanut Shellers Association Johnson, Carl E., Peanut & Nut Salters Association, Chicago, Ill. Kerr, Hon. John H., Member of Congress from North Carolina_ PEANUT MARKETING QUOTA MONDAY, MAY 15, 1950 1 HOUSE OF REPRESENTATIVES, The committee met, pursuant to notice, at 10 a. m., in room 1310 New House Office Building, Hon. Harold D. Cooley (chairman) presiding. The CHAIRMAN. The committee will please be in order. We have H. R. 7044 before the committee this morning, introduced by Mr. Abbitt on January 30, 1950. The Chair will be very glad to recognize the author of the bill at this time, and we will insert in the record at this point the bill and the Department of Agriculture report. (H. R. 7044 and the report referred to follow:) [H. R. 7044, 81st Cong., 2d sess.] A BILL To amend the peanut marketing quota provisions of the Agricultural Adjustment Act of 1938, as amended Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 358 of the Agricultural Adjustment Act of 1938, as amended, be amended (1) by striking out the proviso in the last sentence of subsection (a) and inserting a period in lieu of the colon preceding the proviso; and (2) by striking out the provisos in subsection (c) and inserting a period in lieu of the colon preceding the first proviso. SEC. 2. Subsection (c) of section 359 of the Agricultural Adjustment Act of 1938, as amended, is amended to read as follows: "(c) For purposes of this title and the Agricultural Act of 1949, 'peanuts' means all peanuts produced of each of the types Virginia, Valencia, Spanish, and Runner, excluding any peanuts which it is established by the producer or otherwise, in accordance with regulations of the Secretary, were not picked or threshed either before or after marketing from the farm. The provisions of this title and the Agricultural Act of 1949 shall apply to each of such types of peanuts severally." SEC. 3. This Act shall become effective beginning with the 1951 crop of peanuts. UNITED STATES DEPARTMENT OF AGRICULTURE, Hon. HAROLD D. COOLEY, OFFICE OF THE SECRETARY, Washington 25, D. C., April 26, 1950. House of Representatives. DEAR MR. COOLEY: This is in reply to your request of February 17, 1950, for a report on H. R. 7044, a bill to amend the peanut marketing provisions of the Agricultural Adjustment Act of 1938, as amended. H. R. 7044 defines "peanuts" to mean all peanuts produced of each of the types Virginia, Valencia, Spanish, and Runner, excluding any peanuts which it is established by the producer or otherwise, in accordance with the regulations of the Secretary, were not picked or threshed either before or after marketing from the 1 Under the rules of this committee no member may be quoted from this transcript. farm. The bill further specifies that the provisions of the act shall apply to such types of peanuts severally. Imposing marketing quotas on peanuts by types as provided in this bill presents some difficult problems, chief among which are: (a) It would be necessary to conduct separate referenda of producers growing each type of peanuts. In the event producers disapprove marketing quotas for any type at the same time quotas are approved for other types, the difference in the level of price support for the type disapproved might result in price differentials sufficiently great to completely change the prospective demands on which the quotas for the different types were based. (b) Separate determinations would be required for each type of peanuts in establishing the national marketing quotas and acreage allotments. Also, separate farm allotments would be required for each type of peanuts. There are no available statistics showing either acreage or production of peanuts by types for individual States, counties, and farms. This is particularly important in the case of Runner and Spanish peanuts which are grown on the same farms in southwest Georgia and northwest Florida. (c) The problem of the greater demand for one type of peanuts as compared with another type is not unlike similar problems that exist with respect to wheat and rice. Legislation providing for separate programs for each type of peanuts could lead to requests to extend similar provisions to other commodities which would greatly complicate the administration of marketing quota programs. Although legislation relating to tobacco marketing quotas may be considered as establishing a precedent for the treatment proposed for peanuts, it should be pointed out that the tobacco marketing quota legislation provides for quotas by classes within which the types are generally interchangeable with respect to end use. (d) The demand for Runner-type peanuts for edible uses is relatively small, and if marketing quotas were in effect separately for this type of peanuts, it would result in drastically reduced farm and State acreage allotments for Runner-type peanuts in the southeastern area and particularly in Alabama. Such a drastic reduction in allotments for Runner peanuts would severely affect the economy of certain parts of the States in which Runner peanuts are a major cash crop. the same time, some increase in allotments might be made for Spanish peanuts to States and farms in the same area. At H. R. 7044 recognizes and attempts to alleviate the existing shortage of the premium qualities (extra large and medium grades) of shelled Virginia type peanuts from the 1949 crop. This shortage of premium quality shelled peanuts was due in part to rainy weather during the growing season. The total of the State acreage allotments for North Carolina and Virginia was approximately 384,000 acres, compared with 459,000 acres grown in 1948. Under present legislation, the 1950 allotments for these two States total approximately 367,000 acres, each State having received a minimum allotment equal to its 1941 allotment. On the basis of present indications, the national allotment for 1951 will be reduced still further and the present law provides that the allotment for each State for 1951 would then be reduced in the same proportion that the national allotment for 1951 is reduced below the national allotment for 1950. It is evident, therefore, that if present demand factors remain constant an even greater shortage of Virginiatype peanuts may exist for 1950 and 1951. The various types of peanuts fall into two main classes from the standpoint of edible end use. The Virginia-type peanuts are used principally as roasted "ball park" peanuts, and in salted mixes with other nuts such as almonds, cashews, pecans, and walnuts. These uses are not competitive with other type peanuts. Virginia-type salted peanuts compete to some extent with other types. We estimate that of the total production of Virginia-type peanuts going into edible channels, only a small percentage compete with the Spanish and Runner type peanuts. Valencia-type peanuts are produced on a very small acreage, estimated to be about 3,000 acres, and are used almost entirely as "ball park" peanuts. On the other hand, Runner- and Spanish-type peanuts are competitive in their uses, although it is generally recognized that the Spanish type are somewhat more desirable for edible use. At proper price differentials, these two types would be reasonably interchangeable. We agree with what we understand to be the principal objective of H. R. 7044: namely, to provide for increasing the acreage allotment for any type of peanut where necessary to meet the estimated demand for that particular type. We do not believe we can justify reducing the acreage and production of any type of peanut below the estimated demand where it is evident that the demand will not be filled by production of another type. We suggest, therefore, that the definition of "peanuts" in H. R. 7044 be changed so as to provide for establishing separate quotas and allotments for (a) Virginia- and Valencia-type peanuts, and (b) Spanish- and Runner-type peanuts. This could be done by changing section 2 of the bill to read as follows: "SEC. 2. Subsection (c) of section 359 of the Agricultural Adjustment Act of 1938, as amended, is amended by adding thereto the following sentence: 'The provisions of this title, except subsection (b) of section 358, and the Agricultural Act of 1949 shall apply to each of the following groups of peanuts severally: (1) Virginia and Valencia types; and '(2) Spanish and runner types.' It will be noted that this language would overcome the objection mentioned in item (a), above, by providing for one referendum covering all types of peanuts so that marketing quotas would be in effect on all types if approved by the required majority of all peanut growers. It is suggested that item (2) in the first section of H. R. 7044 be changed to read: "(2) by changing subsection (c) to read as follows: "(c) The national acreage allotment shall be apportioned among the States on the basis of the average acreage of peanuts harvested for nuts in the State in the five years preceding the year in which the national allotment is determined, with adjustments for trends, abnormal conditions of production, and, for the crop produced in the calendar years 1952 and thereafter, the State peanutacreage allotment for the crop immediately preceding the crop for which the allotment hereunder is established: Provided, That, for the second or third year of any 3-year period for which marketing quotas have been approved, the acreage allotment for each State for such year shall be increased above or decreased below the allotment for the State for the immediately preceding year by the same percentage as the national marketing quota for such year is increased above or decreased below the national marketing quota for the preceding year.' Since peanut growers approve quotas for a 3-year period, it is recommended that the above provisions for apportioning the allotment to States be included in the proposed legislation so that allotments will be comparable as between States during such 3-year period. This provision was in the act prior to passage of Public Law 272, Eighty-first Congress. It is estimated that the administrative expenses for peanut-marketing-quota programs separately by the four types would be about 25-percent greater than the cost of administering the present program, or an increase of approximately $650,000. A considerable part of the added cost of administration will be due to the necessity for establishing separate quotas in those areas where both Spanish and runner peanuts are grown in the same counties and on the same farms. If the changes suggested above are made and separate quotas are provided for the two groups of types, it is estimated that the added cost of the administration would be 10 percent greater than the present cost, or an increase of approximately $250,000. Marketing quotas on peanuts either by types or by groups of types should not cause any change in the program costs to Commodity Credit Corporation in connection with the peanut price-support operations. We must point out that the effect of any legislation providing for establishing peanut quotas by types or groups of types based upon present estimates of demand would be to increase the State acreage allotments for North Carolina and Virginia in 1951, at the same time further reducing the allotments for other States in the peanut belt. If the changes suggested above are made in H. R. 7044, the Department recommends that the bill be enacted. In view of the subsequent request, we are submitting this report without awaiting advice from the Bureau of the Budget as to the relationship of the proposed legislation to the program of the President. Sincerely, K. T. HUTCHINSON, Assistant Secretary. |