The CHAIRMAN. Then do I take it all the others are below ceilings? Senator SPARKMAN. You mean they are the only ones under controls. Mr. LAVITT. That is right-operating under ceiling price control. This was the first time in 3 years and 5 months that potatoes had even reached parity. Lacking agricultural background, the OPS staff went ahead with the potato ceiling regulation without even waiting for the report on the supply of potatoes on hand as of January 1, 1952, a report readily available to OPS the latter part of January. The Department of Agriculture, having watched the ups and downs of perishables for many, many years, has evidenced no alarm over the potato supply nor over potatoes creeping 5 percent above parity for the first time in 32 years. Instead the Department of Agriculture views the matter quite calmly in the BAE's Vegetable Situation for January 1952. After noting that ceiling prices had been announced for potatoes, BAE then says: ADEQUATE POTATO STOCK JANUARY 1, 1952 Stocks of 97 million bushels of merchantable potatoes were held on January 1, 1952, by growers and local dealers in or near the areas where produced. While these holdings are 40 percent smaller than the record stocks a year earlier, they are only about 5 million bushels smaller after excluding the 59 millions bushels of merchantable potatoes the Government purchased after January 1, 1951. This relatively small net difference could be offset by possible increases in production this year in early States. You will note that the BAE promptly points out that the net difference in supply could be made up by the early States. This is because the early States can produce a crop of potatoes between the time that report came out and the time we will begin to run out of potatoes that are carried through the winter months in the late States. Given that report, and a chance for a firm price in a free market, the average potato grower in the early States would plant all he could. possibly handle. So would all of his neighbors. Within 100 to 120 days, the markets would be glutted, and consumers would go back to eating cheap potatoes. But OPS has killed that incentive for potato growers. Instead of planting potatoes, they will plant other crops on which they will have a better opportunity to get a fair price. In support of this conclusion, all we need do is to review what happened to potatoes when they were placed under price ceilings during the days of the Office of Price Administration. The acreage planted to potatoes in 1942 was the smallest in about 50 years. Late in 1942, the Secretary of Agriculture declared potatoes a Steagall commodity, guaranteeing prices at no less than 90 percent of parity for the 1943 crop. In addition, a special incentive payment was offered in an effort to increase potato production. Those were war days and we needed all the production we could get. Growers responded to this plea by increasing their acreage by 22 percent, planting 3,355,000 acres. Then, ceilings were imposed by OPA on November 26, 1942, at $1.08 per bushel, or 99 percent of parity. Potato acreage started going down, even though there was a 90percent support price program at that time, and the average return to producers for the five crops from 1943 to 1946 was from 101 to 125 percent of parity. In spite of all this, growers, in the face of restrictive regulations, reduced their acreage so that in 1947 only 63 percent of the 1943 acreage was planted. OPS apparently learned nothing from the experience of the OPA in putting ceilings on potatoes. OPS obviously learned little from the White Potato Industry Advisory Committee, as the committee has been called into only one perfunctory organizational meeting. The CHAIRMAN. Have you any knowledge whether OPS discussed that with the Department of Agriculture? Mr. LAVITT. I understand they did. The CHAIRMAN. Do you know what the Department of Agriculture said? Mr. LAVITT. I believe their position was to deliver to them the price history so they could establish the legal minimum prices. I do not believe they made any recommendation, as far as I know. The CHAIRMAN. Well, I do not know, either. I thought maybe you did. Mr. LAVITT. That meeting was held on November 15, 1951, more than 7 weeks before the ceiling regulation was signed and at a time when potatoes were selling at only 76 percent of parity. From the consumer point of view, it is dangerous for an organization to take the position, as OPS apparently does, that it is concerned only with the price and not the supply of the Nation's food and fiber. A large portion of the 1951 potato crop had already been sold far below parity when the ceiling regulation was signed. The placing of ceilings at parity almost the very minute potatoes reached that point made it a mathematical impossibility for the 1951 crop to average parity. Furthermore, ceilings at parity prohibit growers from recouping any losses incurred on previous crops. For example, the 1950 potato crop was sold at only 50 percent of parity. Under ceilings, there is no way for growers to recover or average out their losses in the bad years. Given a free market, perishable vegetable growers can take care of a shortage, great or small, in a matter of 3 or 4 months. The demoralizing effect of a ceiling order on the production, handling, and marketing of these products runs from a much longer time. So far as the consumer is concerned, the producer can take care of the Nation's needs on these short-season perishable vegetables much faster than can a price regulation. The price ceiling customarily becomes the market price, without regard to the actual supply and, in the long run, the consumer actually pays more than a free market, with its ups and downs, would bring. For these reasons, Mr. Chairman, we respectfully urge this committee and the Congress to exempt perishable vegetables from price ceilings in the extension of the legislation under consideration. The CHAIRMAN. We will have the amendment at the end of your statement printed in the record. Senator SPARKMAN. Are potatoes selling at the ceiling now? Senator SPARKMAN. And are potatoes supported by the farm pricesupport program now? Mr. LAVITT. No, sir; potatoes are the only perishable commodity which cannot be supported because of the law. They have been singled out, that support cannot be put back on potatoes until we have a marketing-quota law, and there has never been that law established. Senator SPARKMAN. That is true with all farm commodities, is it not? Are not price support available only where there are marketing quotas? Mr. LAVITT. I do not believe so, Senator. Potatoes were singled out. The CHAIRMAN. I was going to suggest that that was done by the Congress because of the tremendous amount of potatoes that the Government had to take over some 2 years ago, was it not? Mr. LAVITT. That was because of the support program at that time. The CHAIRMAN. Thank you very much. (The amendment submitted by Mr. Lavitt follows:) AMENDMENT Intended to be proposed by Mr. to the bill S. 2594, to extend the Defense Production Act of 1950, as amended, viz: At the end of the bill insert the following new section: "SEC. 3. Paragraph (3) of section 402 (d) of the Defense Production Act of 1950, as amended, is amended by adding at the end thereof the following: 'No ceiling shall be established or maintained hereunder for any perishable vegetable, including white flesh potatoes, sweetpotatoes, and onions'." AMENDMENT Intended to be proposed by Mr. to the bill S. 2645, to extend the Defense Production Act of 1950, as amended, viz: Page 3, after line 6, insert the following new subsection: "(c) Paragraph (3) of section 402 (d) of the Defense Production Act of 1950, as amended, is amended by adding at the end thereof the following: 'No ceiling shall be established or maintained hereunder for any perishable vegetable, including white flesh potatoes, sweetpotatoes, and onions'." THE NATIONAL POTATO COUNCIL, Hon. BURNET R. MAYBANK, Chairman, Banking and Currncy Committee, United States Senate, (Attention: Mr. A. Lee Parsons, Chief Clerk.) DEAR SENATOR MAYBANK: The National Potato Council and the Vegetable Growers Association of America respectfully request 30 minutes of the time of your committee to present a joint statement in regard to a proposed amendment to the Defense Production Act of 1950, as amended. In accordance with your instructions, two copies of the statement and of the proposed amendment are attached hereto. Potatoes are one of the few crops grown commercially in every State in the Nation. The National Potato Council represents approximately 90 percent of this commercial acreage. Vegetables of some kind are also produced commercially in every State. The Vegetable Growers Association of America represents this large group of producers. As you, of course, know, potatoes are the only perishable vegetable on which the Office of Price Stabilization has placed price ceilings. Potato farmers are the only group in the entire perishable vegetable field who have had experience under ceilings. Their recommendations, therefore, as well as those of farmers producing other perishables, will give the committee first-hand information which we believe will be of vital interest and great importance. We respectfully urge the committee to hear the joint statement of these two important farm organizations and respectfully request that Sol Lavitt, of Elling ton, Conn., be listed as the witness representing both organizations. Mr. Lavitt, a potato farmer, is vice president of the National Potato Council and is chairman of a special OPS committee. Respectfully yours, Approved : THE NATIONAL POTATO COUNCIL, E. J. PETERS, President, National Potato Council. WALTER F. PRETZER, President, Vegetable Growers Association of America. The CHAIRMAN. Mr. Fromer, representing the Cheese Importers Association of America, Inc. We will make your statement a part of the record. We remember you appeared before. We know you differ from some who have been before us before, and are one who does not believe in section 104. STATEMENT OF MARTIN A. FROMER, COUNSEL, CHEESE IMPORTERS ASSOCIATION OF AMERICA, INC. Mr. FROMER. As you know, I represent the Cheese Importers Association, a Nation-wide organization of cheese importers, comprising in its membership the importers of a major portion of the cheese imported into the United States. I want to first thank the committee for he opportunity to appear before you concerning the extension of import controls on cheese. On September 13, 1951, I testified before this committee, and the facts and information submitted at that time are pertinent and valid here, and I request the same be incorporated into this record. The CHAIRMAN. That will be included in the record. Mr. FROMER. This committee has in two reports recommended immediate repeal of section 104. I believe I am the only witness testifying on behalf of the cheese importers with respect to this provision. The CHAIRMAN. Mr. Kline yesterday recommended certain changes or amendments, if you heard him. Mr. FROMER. I do not mean our position, I mean the cheese importers, as such. We have submitted a statement setting forth the reasons why section 104 of the Defense Production Act should not be extended, and I ask that that statement be incorporated into the record. The CHAIRMAN. Did you hear Mr. Kline's testimony? Mr. FROMER. No; I was not here yesterday. I am familiar with his position, however. The CHAIRMAN. I thought there should be some amendment, or something should be done to make certain that it would not break the American market, as I understood him. I may be wrong. Does your organization handle any American cheese? The CHAIRMAN. What kind of cheese do you have, expensive cheese? Mr. FROMER. The foreign-type cheeses, distinctly foreign-type cheeses. The CHAIRMAN. Are they higher in price than the American cheeses? Mr. FROMER. All along the line, and I want to show that to you with specific exhibits. You ask about American types, like Cheddar cheese. The Cheddar imported to this country is imported by producers and manufacturers mostly, and particularly manufacturers of process cheese. National Dairy Products, and its subsidiaries, which includes Kraft Cheese Co., are the main importers of the Cheddar cheese. We are concerned primarily with the foreign types, that are completely different, and for which there is a completely different argument, such as was stated in your report; an incentive to domestic production of new types and varieties of cheese. The CHAIRMAN. An incentive to the American industry? Mr. FROMER. An incentive to the American cheese production industry; yes, Senator. For instance The CHAIRMAN. How would that affect the farmers? Mr. FROMER. By requiring more milk for greater production of cheese. Switzerland Swiss cheese, it has been demonstrated time and again, is an incentive to the production of our own Swiss cheese. Blue cheese was never manufactured in this country until 1937, and we learned from them to make a cheese for which a market was developed in this country. Processed gruyere from Switzerland— The CHAIRMAN. Somebody stated that the Danes came over here to see how we made it. Mr. FROMER. That is misleading, Senator. They came over, perhaps, to see our dairy production, but no one would seriously come before this body and say that they have got to learn from us. The CHAIRMAN. He said they came to study our marketing. Mr. FROMER. They may have come over to examine our marketing, not our way of production. I am sure even our domestic producers will admit we have a lot to learn from the foreign markers of cheese on how to make foreign types of cheese. Senator SCHOEPELL. Mr. Fromer, if we allow these importations of cheese to come into this country, all the foreign makes, will not force down the price of the American cheese industry for their product? Mr. FROMER. No, Senator, and I will show you why it will not. Here is the New York Journal of Commerce, of March 3 and 4, and I would like to show you that every imported variety of the foreign types of cheese are higher than ours. Swiss cheese-pardon me. I would like to go back, first, to indicate the situation when this law was enacted, so that we cannot say that this law had any influence upon the situation. These are the New York Journal of Commerce quotations of August 1951. Domestic Swiss cheese was selling at 45 to 49 cents a pound. Now, this at the wholesale level, and I will leave this with the committee. The CHAIRMAN. Without objection, that will be made a part of the record. Mr. FROMER. Gorgonzola cheese, domestic, 53 to 55 cents; imported, 56 to 59 cents. Romano cheese, which is the Italian variety, domestic, 66 to 68 cents a pound. |