Mr. CARPENTER. Oh, they are below ceiling prices. The figures, Congressman Wolcott, are: Chickens, 6.5 cents per pound under the legal minimum for ceilings.

Eggs, 10.2 cents per dozen under the legal minimum for ceilings. And they have never been above ceilings.

Turkeys, 6 cents a pound under the legal minimum for ceilings. Mr. COLE. What about ducks?

Mr. CARPENTER. Two cents a pound under legal minimum for ceilings.

Mr. BROWN. We are very glad to have your testimony, Mr. Carpenter. You may be excused.

Mr. CARPENTER. Thank you, Congressman Brown.

Mr. BROWN. The committee will adjourn now to meet at 10 o'clock tomorrow.

(Whereupon, at 4:30 p. m., Monday, May 12, 1952, the committee was adjourned to 10 a. m. Tuesday, May 13, 1952.)

DEFENSE PRODUCTION ACT AMENDMENTS OF 1952

TUESDAY, MAY 13, 1952

HOUSE OF REPRESENTATIVES,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C.

The committee met at 10 a. m., Hon. Brent Spence (chairman of the committee) presiding.

Present: Messrs. Spence, Brown, Patman, Rains, Multer, Deane, McKinnon, Addonizio, Dollinger, Burton, Fugate, Wolcott, Talle, Cole, Nicholson, and Betts.

The CHAIRMAN. The committee will be in order and we will resume hearings on the Defense Production Act.

Call the first witness, Mr. Clerk.

The CLERK. The first witness is Mr. Sol Lavitt, representing the National Potato Council and Vegetable Growers Association of America.

STATEMENT OF SOL LAVITT, REPRESENTING THE NATIONAL POTATO COUNCIL AND VEGETABLE GROWERS ASSOCIATION OF AMERICA

Mr. LAVITT. Mr. Chairman, I would like to preface my statement by saying that I am a potato grower and not a vegetable grower. The CHAIRMAN. Perhaps you better identify yourself for the record, first.

Mr. LAVITT. My name is Sol Lavitt, and I would like to preface the reading of my statement, Mr. Chairman, by saying that I am a potato grower and not a vegetable grower, and any questions pertaining to vegetables which your committee might have, I would like permission to answer in a supplemental statement by the Vegetable Growers Association.

The CHAIRMAN. We will try to get the committee to confine itself to potatoes.

Mr. LAVITT. Thank you, sir.

My name is Sol Lavitt. I am a potato grower at Ellington, Conn. I am also vice president of the National Potato Council and chairman of the council's special committee on the Office of Price Stabilization. In addition to speaking for the council, I am also speaking, today, for the Vegetable Growers Association of America and this statement is presented jointly on behalf of these two national farm organizations. 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. Mr. E. J. Peters, of Wasco, Calif., is president of the council.

Vegetables of some kind are also produced commercially in every State. The Vegetable Growers Association of America represents this large group of producers. Mr. Walter F. Pretzer, of Brooklyn Heights, Rural Free Delivery 4, Cleveland, Ohio, is president of this organization.

The National Potato Council and the Vegetable Growers Association of America respectfully propose to this committee that perishable vegetables be exempt from price control.

We fully realize that those who know nothing about vegetable production will immediately label this recommendation as "selfish," without even waiting to learn the facts that will prove that such a change in the law would be of far greater benefit to consumers than it would be to producers.

Some of

The perishable vegetables all have short growing seasons. them, such as radishes, are planted, cultivated, harvested, and sold within a period of 30 to 40 days. Others, such as snap beans, mature within 6 to 7 weeks. Most of them mature within a 90-day period. Even the longest maturing, such as potatoes and onions, require only 120 days from planting until harvesting.

In the United States, we are fortunate in having, somewhere within our borders, some area that is producing perishable vegetables every day in the year, regardless of whether it is winter or summer. In addition to this tremendous climatic advantage, we also have producers who meet special demands from consumers for vegetables by producing them out-of-season in greenhouses similar to those used by florists.

Producers have utilized every natural advantage of soil and climate, and every scientific development in their field, to provide consumers with a sure, plentiful, wholesome supply of vegetables.

They have developed this wonderful production plant to the point where it is not at all unusual, in the South and in some western irrigated areas, for a State to be both planting and harvesting the same vegetable at the same time.

Part of these vegetable crops usually move to market in fresh form. Part of them are processed, depending upon the individual vegetable, with canning and the frozen food industry taking the bulk of those that are processed. A few of them, such as potatoes and onions, can be stored for a few brief months, provided the storage is adequate and the vegetables are given expert care and attention.

All of them are highly perishable unless processed, including those that are storable for a short period. Processing is limited to those vegetables that are especially adapted to processing and is usually confined to heavily concentrated production areas.

Being perishable, these vegetable crops are about the most hazardous things for a grower to try to produce. When they reach their prime, they have to be harvested and they have to be sold for whatever the price may be. There is little chance for the grower to wait on the market, as the cotten farmer or wheat farmer may do. When vegetables are ready, they have to move to market without delay. Weather hazards are a risk that all farmers assume, but the vegetable grower assumes far more than the general run of the weather. His young and tender crops are far more susceptible to damage from heavy rains, drought, hail and frost than are the general run of hardier field crops.

Price fluctuations for vegetables are sharp and often disastrous to producers. When supplies of any vegetable start moving to market in volume, prices shoot downward to the full benefit of consumers. A high-priced item one week, may well be next week's bargain.

For example, when cabbage prices were at their peak last winter, it was common knowledge that the Office of Price Stabilization was on the verge of putting cabbage under ceilings. While OPS hesitated, the cabbage market broke far below the ceiling mark. Had OPS put ceilings on cabbage at that time, there would have been no saving to the consumer when the market did break because, once ceilings are established, the tendency in the trade is to "hold the line" at the ceiling figure.

In a free and open market, when cabbage or any other perishable vegetables begin to move in volume, competition forces prices down and it is the consumer, not the producer, who benefits.

In a free and open market, competition forces sellers to put their best produce on the market and to live up to the grades and standards established in the trade. Under price ceilings, anything goes and the consumer frequently pays higher prices for poorer grades, without even realizing it.

As of this date, potatoes are the only perishable vegetable under ceiling prices. Had the Office of Price Stabilization been as patient with potatoes as it was with cabbage, the chances are excellent that ceilings would not have been imposed on potatoes.

Instead, OPS went ahead with ceilings on potatoes. The regulation was signed on January 5, 1952, within 6 days after the agency officially learned that potatoes had gone 5 per cent over parity as of December 15, 1951. 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.

At about the same time, the Department of Agriculture, having watched the ups and downs of perishables for many, many years, evidenced no alarm over the potato supply nor over potatoes creeping 5 percent above parity for the first time in 31⁄2 years.

Instead the Department of Agriculture viewed the matter quite calmly in the Bureau of Agricultural Economic's "Vegetable Situation" for January, 1952. After noting that ceiling prices had been announced for potatoes, BAE then said:

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 54 million bushels smaller after excluding the 59 million 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 pointed out in that summary 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 comes out and the time we 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 normally would have planted 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 are planting and will plant other crops on which they will have a better opportunity to get a fair price.

Proof of that statement lies in the official Department of Agriculture figures on potato acreage in the 12 early States of North Carolina, South Carolina, Georgia, Florida, Tennessee, Alabama, Mississippi, Arkansas, Louisiana, Oklahoma, Texas, and California.

The average potato acreage planted in these 12 States for the period, 1941-50, was 451,000 acres. These 12 States have planted as high as 616,000 acres to potatoes.

Today, under OPS price ceilings, these same 12 States are planting only 260,000 acres to potatoes. The incentive to produce has been dulled by OPS ceilings to the point where only a small part of the potential potato acreage is being planted to potatoes.

This is true not only of the 12 early States, but of the entire United States and on about the same scale.

In the annual Prospective Plantings Report, issued by the BAE in March 1952, the Department of Agriculture had this to say on potato acreage:

Growers are expected to plant slightly less acreage to potatoes this year than was planted in 1951. Intentions-to-plant reports indicate prospective plantings of 1,373,000 acres in 1952, compared with last year's planted acreage of 1,379,000 acres and the 1941-50 average of 2,457,000 acres. Plantings now in prospect are smaller than for any year since 1867.

OPS has created a situation where the consumer has price ceilings but no potatoes. Acreage that could go-and that historically has gone into potatoes, has been driven into other crops.

This is exactly what happened to potatoes when they were placed under price ceilings during the days of the old Office of Price Administration. Let us review briefly the experience under OPA.

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 not less than 90 percent of parity for the 1943 crop. In addition, the 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 this 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.