[S. - 88th Cong., 2d sess.] A BILL To provide price supports for the 1964 and subsequent crops of upland cotton Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled. That effective with the 1964 crop of cotton, Section 103 of the Agricultural Act of 1949, as amended (7 U.S.C. 1444, 63 Stat. 1051), is amended to read as follows: "Sec. 103 (a) Notwithstanding the provision of Section 101 of this Act, the price support to cooperators for each crop of upland cotton, beginning with the 1964 crop, for which producers have not disapproved marketing quotas, shall be (1) 90 per centum of the average price received by farmers during the three calendar years immediately preceding the calendar year in which the marketing year for such crop begins, or (2) 60 per centum of the parity price therefor, whichever is higher: Provided, That the level of price support for the 1964 crop of upland cotton shall not be less than 30 cents per pound for middling inch. Price supports in the case of non-cooperators and in case marketing quotas are disapproved shall be as provided in Section 101 (d) (3) and (5). "(b) The Secretary of Agriculture is hereby authorized and directed to conduct a special cotton research program designed to reduce the cost of producing upland cotton in the United States at the earliest practicable date. There are hereby authorized to be appropriated such sums, not to exceed $10,000,000 annually, as may be necessary for the Secretary to carry out this special research program. The Secretary shall report annually to the Committee on Agriculture of the House of Representatives and to the Committee on Agriculture and Forestry of the Senate with respect to the results of such research." Hon. ALLEN J. ELLENDER, COTTON PRODUCERS LEGISLATIVE COMMITTEE, Chairman, Committee on Agriculture and Forestry, DEAR SENATOR ELLENDER: Efforts which you and the Senate Committee on Agriculture are making to secure prompt legislation to meet cotton's problems are greatly appreciated by the Cotton Producers Legislative Committee. This letter is submitted in keeping with your announcement that the record concerning cotton legislation would be kept open for a short period to receive views which could not be presented orally. The CPLC is a newly formed federation of 17 cotton producer associations (list attached) from across the entire belt accounting for well over half of the annual crop. Members of these organizations supporting the Cotton Producers Committee represent more than 6.5 million bales of production annually. We recommend that the House-passed bill, H.R. 6196, be used to meet the acute need for legislation applicable to the 1964 crop. The CPLC favors the principles of that bill with certain modifications. The producers committee proposes specifically that H.R. 6196 be modified to include authority for a domestic allotment-choice program that would be applicable to the 1964, 1965, 1966, and 1967 crops. This would provide for a voluntary domestic acreage allotment within the present national acreage allotment. Small growers having allotments of 10 acres or less would receive special protection. The domestic acreage allotment would reflect estimated domestic consumption and would be about two-thirds of the effective farm allotments established under current legislation and under H.R. 6196. Producers who choose to plant within this domestic allotment would receive a higher rate of price support not in excess of 15 percent above the basic support rate on the normal production of the acreage planted to cotton. The higher support would be effected through the use of accumulated Commodity Credit Corporation stocks. Producers who plant on the basis of a domestic allotment would maintain their farm acreage history as under present law. To protect the income of small growers, the domestic allotment for small cotton farms should be established as the smaller of 10 acres or the basic allotment: thus, small producers will receive the higher support without a reduction in acres. As you will note, this proposal is similar to the choice plan provided in the Agricultural Act of 1958 which was in effect for the 1959 and 1960 crop years except that it operates in reverse. Under our recommendation, however, there is every opportunity to reduce the surplus cotton stocks now held by the Commodity Credit Corporation. The basic level of price support would be 30 cents in 1964 for Middling 1-inch, and would be implemented as at present. In future years, the level of price support would be adjusted upward or downward from the preceding year in relation to changes in costs of production. The producers committee urges full equalization of the costs of cotton to domestic and foreign mills at the earliest possible date. Anything less than full equalization will not ward off future increases in textile imports. Anything less than full equalization will not stem cotton's market losses to competing fibers and restore the confidence in cotton so necessary to a high rate of consumption. Full equalization may have to be attained in two stages. Beginning with the date of enactment of such legislation, we suggest that the Secretary of Agriculture be authorized to make payments in kind to persons other than producers at a rate he determines adequate. Beginning August 1 of the first crop year for when the domestic allotment-choice program is in effect, such payments in kind should be in an amount that would make American cotton available to American mills at the same price that it is made available for export to foreign mills. With a basic price support rate at 30 cents, a consumption increase or trade incentive payment in kind at a level of 62 cents would make an effective mill and export price of 231⁄2 cents per pound. The type of program we recommend should increase the total use of cotton and reduce Commodity Credit Corporation stocks to the extent that the Secretary of Agriculture could be authorized to make a small, pilot-scale export market acreage option available to producers if the production from such acreage would not add to domestic stocks. Cotton produced on such export acreage would be sold in world markets without substitution for domestic use, and would be ineligible for price support. It would necessarily be exported without cost to the Government. It would earn needed dollars abroad. Export acreage would not count for purposes of establishing future State, county, and farm cotton allotments. Cotton growers should have an opportunity-an export market choice-to find out if some can produce cotton profitably at world prices. This added choice for U.S. growers could do much to stabilize world levels of cotton production and increase U.S. export volume in the future. Current provisions of law applicable to cotton allotment acreage release and reapportionment would not be changed. Marketing quotas and a grower referendum would be continued. The proposals of the cotton producers legislative committee would provide an economic climate in which growers would obtain reasonable levels of income through the market. These proposals would provide special recognition of the income problems on small farms as in current legislation. These proposals would expand markets for cotton producers through full elimination of the inequities of the two-price system-full equalization of costs of cotton to domestic and foreign mills. The small-scale export market proposal would provide a third choice. It would let the grower test, if he wants to, the profitableness of production at world prices on his farm without cost to the Government and without the cotton being salable in domestic markets. We urge your favorable consideration of these proposals and their early acceptance by the Senate Committee on Agriculture and Forestry. The cotton producers legislative committee, with offices at 1025 Connecticut Avenue NW., Room 511, Washington, D.C., would welcome the opportunity to work with you and your staff in developing sound cotton legislation. Respectfully submitted. C. B. RAY, Chairman. RECOMMENDATIONS OF THE DEPARTMENT OF AGRICULTURE ON COTTON LEGISLATION Hon. ALLEN J. ELLENDER, DEPARTMENT OF AGRICULTURE, Washington, D.C., February 20, 1964. Chairman, Committee on Agriculture and Forestry, DEAR MR. CHAIRMAN: This is in response to your request for a report on the cotton provisions which were agreed to by the Committee on Agriculture and Forestry, U.S. Senate, on February 19, 1964, in the proposed amendment in the nature of a substitute for the text of H.R. 6196. The provisions of the committee amendment relating to cotton may be summarized, as follows: 1. Section 101 would add a new section 348 to the Agricultural Adjustment Act of 1938, as amended, to authorize the Commodity Credit Corporation to make payments through the issuance of payment-in-kind certificates to persons other than producers in such amounts as the Secretary of Agriculture determines will eliminate inequities due to differences in cost of raw upland cotton between domestic and foreign users of such cotton. Such payments would be made beginning with the date of enactment of this section and ending July 31, 1968. Beginning August 1 of the marketing year for the first crop for which price support is made available under section 103 (b) of the Agricultural Act of 1949, as amended, and ending July 31, 1968, the payment to eliminate the inequity would be made in an amount which would make upland cotton produced in the United States available for domestic use at a price not in excess of the price at which such cotton is made available for export. 2. Section 103, would add subsection (c) to section 104 of the Agricultural Act of 1949, as amended, to authorize the Secretary to conduct a special cotton research program designed to reduce the cost of producing cotton and to authorize appropriations not to exceed $10 million annually for such program. 3. Paragraph (6) of section 103 would amend section 103 of the Agricultural Act of 1949, as amended, to provide a basic price-support rate for the 1964 crop of 30 cents, Middling 1-inch. Additional price support for the 1964 through 1967 crops would be made available to cooperators who plant upland cotton for harvest within the farm domestic allotment established under section 350 of the Agricultural Adjustment Act of 1938, as amended. Such additional support would be not in excess of 15 percent of the basic price support level in effect for the crop and would be available on the normal yield of the acreage planted for harvest within the farm domestic allotment. For 1965 and succeeding crops, the basic price-support level would be established at not less than 65 percent and not more than 90 percent of the parity price for cotton, with the Secretary taking into consideration the factors specified in section 401(b) of the Agricultural Act of 1949, as amended. Section 103 (c) of the committee amendment would add the cost of producing cotton to the several factors contained in the aforesaid section 401 (b). 4. Section 104 would amend section 407 of the Agricultural Act of 1949, as amended, to authorize sales of upland cotton from CCC stocks for unrestricted use beginning August 1, 1964, at not less than 105 percent of the current basic loan rate plus reasonable carrying charges. 5. Section 105 would add section 350 to the Agricultural Adjustment Act of 1938, as amended, under which the Secretary would establish a farm domestic allotment for each farm for the 1964 through the 1967 crops of upland cotton. The farm domestic allotment would be the percentage which the national domestic allotment is of the national acreage allotment under section 344(a) applied as a percentage of the smaller of the current farm allotment established under section 344 or the higher planted acreage (including acreage regarded as planted under conservation programs) in the 2 preceding years. For purposes of this provision relating to utilization of the farm allotment in the 2 preceding years, the planting of 90 percent or more of the allotment would be deemed a planting of the entire allotment. A minimum domestic allotment for farms from which no acreage is released for 1965, 1966, or 1967 would be the smaller of 15 acres or the farm acreage allotment for each year. Miminimum domestic allotments would be established for 1964 at the smaller of 15 acres or the farm acreage allotment even though some acreage may have been released from the farm. The national domestic allotment would be the acreage required, on the basis of the national yield per acre for the 4 preceding years, to make available from such crop an amount of cotton equal to the estimated domestic consumption of upland cotton for the marketing year for such crop. The Secretary would be required to proclaim the national domestic acreage allotment for the 1964 crop later than April 1, 1964. For the 1965, 1966, and 1967 crops, the proclamation would be made not later than December 15 preceding the year in which the crop is to be produced. 6. Paragraph (1) of section 106 would add section 349 to the Agricultural Adjustment Act of 1938, as amended. Section 349 (a) would authorize the Secretary to supplement the farm acreage allotment established under section 344 for the 1964 crop of upland cotton by up to 10 percent thereof upon a determination that such export market acreage will not increase carryover at the beginning of the marketing year for the next crop above 1 million bales less than the carryover 1 year earlier, if the carryover on such earlier date was more than 8 million bales. For the 1965, 1966, and 1967 crops, the same requirements as to carryover would be in effect, but the amount of export market acreage made available for planting would be left to the determination of the Secretary. The amount so determined would be approtioned to States on the basis of State acreage allotments for such crop and apportioned under regulations issued by the Secretary to farms taking into consideration applications for such acreage filed with county committees. Export market acreage would be in addition to county, State, and National acreage allotments and the planting of such acreage would not create acreage history for purposes of future allotments. A farm on which additional price support is received on the basis of planting within the farm domestic allotment would not be eligible to plant export market acreage. Regulations would prescribe procedures which would assure the exportation of a quantity of cotton produced on the farm equal to the average yield per acre for the farm multiplied by the export market acreage. The procedures would require the furnishing of a bond or other undertaking providing for the exportation of such cotton without benefit of any Government cotton export subsidy. In case of failure to export such cotton, liquidated damages would be payable to the Commodity Credit Corporation at a rate per pound approximately equal to the marketing penalty on excess cotton under section 346 (a) of the Agricultural Adjustment Act of 1938, as amended. 7. Paragraph (3) of section 106(b) would amend section 344(f) (8) of the Agricultural Adjustment Act of 1938, as amended, to permit a producer who participates in the domestic allotment program to protect his farm cotton allotment base by planting at least 75 percent of the farm domestic allotment. 8. Paragraph (4) of section 106(b) would amend section 377 of the Agricultural Adjustment Act of 1938, as amended, to permit a producer who participates in the domestic allotment program to protect his farm acreage history for upland cotton by planting at least 75 percent of the farm domestic allotment. 9. Paragraphs (5), (6), and (7) of section 106 (b) would delete the definitions of farm and county normal yields from section 301 (b) of the Agricultural Adjustment Act of 1938, as amended, and establish new definitions therefor. The county normal yield would be the average yield per acre, adjusted for abnormal weather conditions and any significant changes in production practices, during the 5 calendar years preceding the year in which the national marketing quota for the crop is proclaimed. The farm normal yield would be the average yield per acre, adjusted for abnormal weather conditions and any significant changes in production practices, during the 3 years preceding the year in which the determination is made. The cotton industry in the United States is faced with many serious problems which cannot be resolved under present legislation. The price of our cotton for domestic use is much higher than its price for export; hence, our cotton mills must pay substantially more for cotton than their foreign competitors. This encourages increased usage by domestic mills of synthetic fibers, particularly rayon. Another serious problem for U.S. mills is the importation of cotton products, which has increased to new high levels in recent years. In 1960, for the first time since cotton manufacturing became a major industry in the United States, imports of cotton products exceeded exports. Our stocks of cotton have risen to burdensome levels in the past 2 years. Domestic mill consumption and exports were at low levels during the 1962-63 marketing year, and about 3 million bales were added to the carryover. Further deterioration in the supply situation has occurred this marketing year, even though total offtake is expected to be well above 1962-63. The record yield per acre from the 1963 crop was largely responsible. This yield was 524 pounds per acre, compared with the highest previous yield of 466 pounds in 1958. Thus, the carryover will be up about 2 million bales on August 1, 1964, above the amount on hand a year earlier. Under current estimates the carryover this coming August 1 will be nearly 13 million bales, of which about 10 million bales will be held by the Commodity Credit Corporation. New legislation is needed in order to (1) eliminate the inequity of the twoprice system under which domestic mills must pay substantially higher prices for cotton than foreign mills, (2) enable cotton to meet the price competition of synthetic fibers, (3) reduce Government expenditures for the cotton program, (4) reduce excessive stocks of cotton, and (5) maintain cotton producer income. The committee amendment would authorize changes in present programs which would bring immediate relief in some problem areas and permit steady progress toward achieving the five objectives set forth above. We believe that this proposal represents the best practical prospect for legislation to meet the problems of the cotton industry, and we recommend its enactment. The provisions of the committee amendment on cotton are generally in accord with the proposal of the Cotton Producers Legislative Committee which the Department supported in its testimony before your committee on February 11, 1964. However, the committee's change from 10 acres to 15 acres in the provisions relating to the minimum acreage for farm domestic allotments will substantially decrease the reduction in expenditures which this proposal will achieve in comparison with the provisions of existing law. There are attached four tables which show basic data for cotton under present law, under H.R. 6196 as approved by the House of Representatives, and under the committee amendment. You will note that under the domestic allotmentchoice plan a substantial reduction in carryover is estimated, the cost of the program is less than other proposals designed to achieve comparable results, including programs under existing law, and net farm income is at a favorable level. According to the Department's projections as reflected in these tables, expenditures for the cotton program under the committee's proposal would be lower than under existing law by the following amounts: In fiscal year 1965, $118 million; in fiscal year 1966, $126 million; in fiscal year 1967, $225 million; and in fiscal year 1968. $327 million. Upland cotton-Basic data for current legislation, H.R. 6196 as passed by the House and as amended by the Senate committee |