GOVERNMENT

Storage

CREASED WHEAT ACREAGE ALLOTMENTS

ft TULELAKE AREA, CALIFORNIA

• A3

W 56 22.

HEARING

BEFORE THE

SUBCOMMITTEE ON WHEAT

OF THE

COMMITTEE ON AGRICULTURE

HOUSE OF REPRESENTATIVES

EIGHTY-EIGHTH CONGRESS

SECOND SESSION

ON

H.R. 10708

MAY 12, 1964

Serial VV

Printed for the use of the Committee on Agriculture

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON: 1964
COMMITTEE ON AGRICULTURE

HAROLD D. COOLEY, North Carolina, Chairman

W. R. POAGE, Texas, Vice Chairman

GEORGE GRANT, Alabama

E. C. GATHINGS, Arkansas

JOHN L. McMILLAN, South Carolina

THOMAS G. ABERNETHY, Mississippi

WATKINS M. ABBITT, Virginia

PAUL C. JONES, Missouri

HARLAN HAGEN, California

LESTER R. JOHNSON, Wisccnsin

D. R. (BILLY) MATTHEWS, Flcrida

FRANK A. STUBBLEFIELD, Kentucky

RALPH R. HARDING, Idaho

G. ELLIOTT HAGAN, Georgia

GRAHAM PURCELL, Texas

JAMES H. MORRISON, Louisiana

BENJAMIN S. ROSENTHAL, New York

ROBERT B. DUNCAN, Oregon

ALEC G. OLSON, Minnesota

ROBERT L. LEGGETT, California

SPARK M. MATSUNAGA, Hawaii

Mrs. CHRISTINE S. GALLAGHER, Clerk

HYDE H. MURRAY, Assistant Clerk

JOHN J. HEIMBURGER, General Counsel

ROBERT C. BRUCE, Assistant Counsel

FRANCIS M. LEMAY, Staff Consultant

CHARLES B. HOEVEN, Iowa

PAUL B. DAGUE, Pennsylvania

PAGE BELCHER, Oklahoma

CLIFFORD G. McINTIRE, Maine

CHARLES M. TEAGUE, California

ALBERT H. QUIE, Minnesota

DON L. SHORT, North Dakota

CATHERINE MAY, Washington

DELBERT L. LATTA, Ohio

RALPH HARVEY, Indiana

PAUL FINDLEY, Illinois

ROBERT DOLE, Kansas

RALPH F. BEERMANN, Nebraska

EDWARD HUTCHINSON, Michigan

RESIDENT COMMISSIONER

A. FERNOS-ISERN, Puerto Rico

SUBCOMMITTEE ON WHEAT

GRAHAM PURCELL, Texas, Chairman

PAUL C. JONES, Missouri

HARLAN HAGEN, Califcrnia

FRANK A. STUBBLEFIELD, Kentucky

RALPH R. HARDING, Idaho

ROBERT B. DUNCAN, Oregon

ALEC G. OLSON, Minnesota

SPARK M. MATSUNAGA, Hawaii

II

PAGE BELCHER, Oklahoma

DON L. SHORT, North Dakota

DELBERT L. LATTA, Ohio

ROBERT DOLE, Kansas

PAUL FINDLEY, Illinois
CONTENTS

H.R. 10708, a bill to provide for increased wheat acreage allotments in Page

the Tulelake area of California 1

Statement of:

Baghott, Kenneth G., Tulelake, California 6

Johnson, Hon. Harold T., a U.S. Representative in Congress from

the State of California 3

Stearns, James G., Tulelake, California 4

Thompson, Arthur T., Director of Grain Policy Staff, ASCS, U.S.

Department of Agriculture.. 21 Communications submitted to the subcommittee:

Freeman, Hon. Orville L., Secretary of Agriculture, letter of May

11, 1964 2

Kenner, Alvin, president, U.S. Durum Growers Association, Leeds,

N. Dak., telegram of May 11, 1964 8

III

INCREASED WHEAT ACREAGE ALLOTMENTS, TULELAKE AREA OF CALIFORNIA

TUESDAY, MAY 12, 1964

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON WHEAT

OF THE COMMITTEE ON AGRICULTURE,

Washington, D.C.

The subcommittee met, pursuant to notice, at 10:10 a.m., in

room 1310, Longworth House Office Building, Hon. Graham Purcell

(chairman of the subcommittee) presiding.

Present: Representatives Purcell (presiding), Hagen of California,

Harding, Olson, Matsunaga, Belcher, Short, and Dole.

Also present: Representative Beermann.

Betty Prezioso, staff; Hyde H. Murray, assistant clerk; John J.

Heimburger, counsel; and Robert Bruce, assistant counsel.

Mr. PURCELL (presiding). The subcommittee will be in order.

We are here this morning in regard to the Tulelake Durum wheat

bill, H.R. 10708.

H.R. 10708 by Mr. Johnson of California together with the Department's report dated May 11, 1964 follow.

(11.1Z. 10708, 88th Cong., 2d sess.1

A BILL To provide for increased wheat acreage allotments in the Tulelake area of California

Be it enacted by the Senate and House of Representatives of the United States of

America in Congress assembled, That subsection (i) of section 334 of the Agricultural

Adjustment Act of 1938, as amended, is amended as follows:

(a) Redesignate the subsection as subsection "(j)";

(b) Insert in the first and second sentences immediately preceding the word

"farms" the words "privately owned";

(c) Strike out in the first sentence the language "1958 through 1963" and insert

in lieu thereof the language "1964 and subsequent";

(d) Strike out in the second sentence the word "twelve" and insert in lieu

thereof the word "fifteen"; and

(e) Change the period at the end of the sentence to a colon and add the following

proviso: "Provided, That if with respect to any crop of Durum wheat (class II)

the Secretary finds that the acreage allotments for privately owned farms producing Durum wheat (class II) in said area, as increased under this subsection,

are inadequate to provide for the production of a sufficient quantity of Durum

wheat (class II) to satisfy the demand therefor in the area of the United States

west of the Rocky Mountains in which such Durum wheat (class II) is normally

marketed and processed, further increases may be made in the farm acreage

allotments in such area by such uniform percentage as he deems necessary to

provide for such quantity."

SEC. 2. Subsection (i) of section 334 of the Agricultural Adjustment Act of

1938, as added by Public Law 87-703 to become effective for the 1964 and subsequent crops of wheat, is amended by inserting in the first sentence thereof, after

the words "type of wheat" the first time such words appear in the language,

"except for Durum wheat (class II) in the irrigable portion of the area known as

the Tulelake division of the Klamath project of California, to which the provisions

of subsection (j) are applicable,".

1.
2 INCREASED WHEAT ACREAGE ALLOTMENTS

Hon. HAROLD D. CoOLEY,

Chairman, Committee on Agriculture,

House of Representatives.

DEAR MR. CHAIRMAN: This is in reply to your request for a report on H.R.

10708, a bill to provide for increased wheat acreage allotments in the Tulelake

area of California.

The Department does not favor enactment of this bill.

Section 1 of H.R. 10708 would amend subsection (i) of section 334 of the

Agricultural Adjustment Act of 1938, as amended, to (1) make permanent the

authority to increase farm wheat acreage allotments in the irrigable part of the

Tulelake area of Modoc and Siskiyou Counties, Calif., (2) restrict such allotments

to privately owned farms, (3) beginning with the 1964 crop increase the total

acreage allotment for each crop from 12,000 to 15,000 acres for the area, and

(4) authorize the Secretary to increase acreage allotments for privately owned

farms in the Tulelake area for any year if he finds that such allotments are

inadequate to provide adequate quantities of Durum wheat to satisfy the demand

in the areas of the United States west of the Rocky Mountains in which such

wheat is normally marketed and processed.

Section 2 of the bill would amend subsection (i) of section 334 of the Agricultural

Adjustment Act of 1938, as added by Public Law 87-703 to become effective for

the 1964 and subsequent crops of wheat, by excluding from the provisions of such

subsection Durum wheat in the irrigable part of the Tulelake area of Modoc and

Siskiyou Counties of California to which the provisions of section 1 of this bill

would be applicable.

Durum wheat is a class of wheat used for the manufacture of macaroni, spaghetti, and similar pasta products. Historically, production of this class of wheat

has been almost entirely in Minnesota, North Dakota, Montana, South Dakota.

Durum wheat production in the Tulelake area on a commercial scale was

started in 1952. At that time, there existed a local market for Durum products

which had been created by crop failures in the traditional Durum producing area.

Durum could be successfully grown in the Tulelake area but most farms in the

area had very little wheat history, when the acreage allotments and marketing

quotas were imposed for the 1954 crop, and their allotments were small. Current

farm wheat acreage allotments in this area would still be small if based upon

accredited acreage history.

The Durum wheat produced in the Tulelake area has reportedly moved into

the west coast market channels for local consumption at good prices to producers.

Present large supplies of Durum wheat in the traditional producing areas are to

some degree isolated from the west coast Durum market by significant freight

rate costs.

The present domestic Durum supply situation is drastically changed from

what it was when this special provision for Tulelake was first enacted. Present

carryover of stocks of Durum wheat at about 45 million bushels, is nearly twice

the annual domestic requirements. The Department's crop report on the planting intentions for 1964 indicates a 1964 Durum production that would further

add to the carryover of stocks of Durum wheat. Currently, market prices for

Durum wheat are below the loan level at Minneapolis and have been below the

loan level during most of the 1963-64 marketing year.

In view of the voluntary wheat program authorized by Public Law 88-297

for the 1964 and 1965 crops, there is no longer the same need, as in the past, for

proposed legislation of this nature. Originally, the temporary legislation pertaining to the production of Durum wheat in the Tulelake area provided additional

acreage allotments so that producers could increase their acreage above their

relatively small allotments, and acreage harvested in excess of their regular

allotments was not subject to marketing penalties, Also, under this special

legislation wheat produced on farms receiving these increased allotments was not

eligible for price support. Under the bill, as proposed, the ineligibility for wheat

price support would continue to apply, but farmers in this area would be eligible

for wheat marketing certificates without making the diversion required of other

wheat producers. The existing subsection (i) contains a provision (which would

be left in effect by the proposed bill) to the effect that: "The land use provisions

of section 339 shall not be applicable to any farm receiving an additional allotment under this subsection." Section 339 requires wheat producers to divert

acreage from production and maintain their normal conserving acreage in order

to be eligible for wheat marketing certificates.

MAY 11, 1964.
INCREASED WHEAT ACREAGE ALLOTMENTS 3

Under the voluntary wheat program in effect for the 1964 and 1965 crops,

the producers in the Tulelake area, as well as all other producers, can produce

all the wheat that they desire, but as in the past, they will not be eligible for price

support or any other program benefits. There will be no marketing penalties

for exceeding the farm wheat allotment in 1964 and 1965 programs. In essence,

therefore, Tulelake producers will not need this special legislation to provide them

the alternative they have had in the past.

The Bureau of Budget advises that there is no objection to the presentation of

this report from the standpoint of the administration's program.

Sincerely yours,

ORVILLE L. FREEMAN.

Mr. PURCELL. We have with us our colleague, Mr. Johnson. We

will be glad to hear from you and whomever you would like to have

sit with you and to have us hear from.

Mr. JOHNSON. Mr. Chairman, if it would be all right with the

subcommittee, I would like to have Mr. Baghott and Mr. Stearns

come up and sit with me, and they can stand for the technical questions. They are from the Tulelake area. They are two of the growers.

They have represented the Tulelake people back here for the last

5 years. And with your permission, I would like to have them come

up and sit here with me.

Mr. PURCELL. All right.

STATEMENT OF HON. HAROLD T. JOHNSON, A U.S. REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Mr. JOHNSON. Mr. Chairman and members of the subcommittee,

may I first express my sincere appreciation to you and this committee

for scheduling these hearings and consideration of H.R. 10708 at this

time.

H.R. 10708 is a bill to provide for increased wheat acreage allotments in the Tulelake area of California. I introduced this legislation shortly after my return from the Easter recess during which I

visited the Tulelake area and found the Durum wheat growers faced a

critical situation.

Legislation is needed to overcome a problem which could wreck a

$2 million agricultural industry which operates in an area already

designated as one of substantial unemployment. The impact can be

further shown when you realize that the total economy of the region

runs to about $12 million per year.

Through the favorable consideration of this committee and the

Congress, the Durum wheat growers of Tulelake have been able to

plant about 12,000 acres each year. As you well know, this has been

done through special legislation adopted each year. Never has support been requested or offered in this period.

This legislation expired with the 1963 crop year. It has not been

extended to 1964 and the time for planting this year's crop is upon us.

Under the provisions of the general wheat-cotton legislation, the crop

would be limited to some 5,000 acres or less. I say less because of

the nature of the individual allotments in the region. Most average

only 4 to 7 acres, which is not sufficient for economic production of

Durum wheat. This means as a practical matter that 75 percent of

the Durum wheat crop this year could not be marketed without special

legislation.
4 INCREASED WHEAT ACREAGE ALLOTMENTS

Durum wheat is the cash crop used on land which also grows

potatoes and onions. Durum is the stable crop which keeps the

farmer going when the bottom falls out of the potato and onion

market. This loss of acreage is a catastrophe to the economic wellbeing of this community.

The extent of the loss will be beyond that of Tulelake for the millers

have agreed to take all the wheat they can produce. There is no other

supply within economic range of these mills which stand to lose about

$2 million in revenue if Durum wheat is not available for milling.

One Los Angeles mill which produces nothing but Durum, requiring

special equipment, will be wiped out.

Mr. Chairman, today on behalf of the Durum wheatgrowers of the

Tulelake area, we appear here not to ask for support or subsidy, but

merely to be permitted to sell on the open market the wheat which we

can grow, letting the market set its own level. This is what our whole

request boils down to. We have a market in west coast millers who,

because of transportation costs, cannot go farther inland for the wheat

they desire to manufacture macaroni products. The mills are on the

west coast. The wheat is on the west coast. We have built out

industry together and would like to preserve it, but we can only do

this by permitting the growers of Tulelake to grow the Durum wheat

for which there is a solid demand.

Mr. Chariman, I appreciate the opportunity of appearing here. I

would like at this point to ask Mr. K. G. Baghott, University of

California extension service specialist on Durum wheat production,

and Mr. James Stearns, a local county government official and representative of the Durum wheatgrowers, to comment further on the

emergency situation in which the Durum wheatgrowers of Tulelake

find themselves.

In addition to this written statement, I would like to say that when

the cotton-wheat bill was being considered on the Senate side, our

growers contacted me to express their concern about the Durum wheat

situation. While I was home I met with these people and they explained the situation to me. Upon my return to Washington I asked

many questions about the wheat bill then pending, prior to passage

in the House. I could learn very little about it. Knowing very little

about the situation, I contacted these two gentlemen again and told

them that if we introduced special legislation I would hope that they

could be here to make their statements before the committee and to

stand for questioning by the committee. Now they are both here

this morning.

Mr. Stearns, would you like to lead off with your brief statement?

STATEMENT OF JAMES G. STEARNS, TULELAKE, CALIF.

Mr. STEARNS. Mr. Chairman and members of the subcommittee,

I think that I will spend a couple of minutes explaining to the members

of the subcommittee, if you are not already acquainted with it, how

small an area we are dealing with here.

The Tulelake Basin we are talking about is an irrigation basin and

the legislation limits the area that we are talking about, so far as wheat

is concerned, to private land inside the district. it is a total of about

45,000 acres of farmable land. The acreage that we are dealing with

in this matter is that acreage. This irrigation district was home-
INCREASED WHEAT ACREAGE ALLOTMENTS 5

steaded by veterans of World Wars I and II, of which I am a member

of the latter group, and we have had the basis of our economy over the

whole period of the .development there a very high grade of malting

barley. Some 10 or 12 years ago it became evident that the malting

barley we had been depending upon these years was not going to last

very much longer because they diverted acres from cotton and wheat

and corn over the Western United States which built up a barley

supply that cut the price of premium malting barley to a place where

it was no longer the basis of our economy that it had been. At that

time there was a very real shortage of Durum wheat on the west

coast, as there always had been, and in casting around for a substitute crop that would get us going again the University of California,

in their experiments, determined that a very high quality milling

Durum wheat could be produced there.

At that time it was the thought that no Durum wheat could be

produced west of the Rocky Mountains that would be consistently

high in quality and it was determined that we could grow it, and we

began to grow it.

However, wheat had not been grown in the valley to any consequence before and so there was no allotment and there was no history

of wheat being raised there, and we began to come to the Congress to

raise this wheat where the demand was so great locally. We have

been doing that and have asked this Congress to go along with us over

a period of years up to this point to produce outside of the support

program wheat for this particular market.

As Mr. Johnson just said, this has now come to an end and we

cannot produce enough Durum wheat under the present provisions

of the wheat-cotton bill to begin to satisfy this market.

The macaroni manufacturers' end of it, that is, from that end of

it, several of them have since we began to produce it, have gone 100

percent to Durum standards for the macaroni products and they have

set up their milling facilities, their advertising programs and so forth,

until they are, certainly, caught short, too.

So we have come back here to ask this Congress that the bill that

Mr. Johnson has introduced on our behalf be passed, to set aside the

provisions of the wheat bill, so far as Tulelake is concerned, and to

substitute instead, this bill, H.R. 10708, which will still provide a

measure of control, so far as the total acreage that we are allowed to

plant is concerned, but in it we ask no support and we will take our

own chances on the marketing of it.

I will say further that in the 9 years that we have been producing

it that none has been put under support, and no loans have been

made on it, and it has all gone into the market channels of the west

coast. In every case it has been sold for cash by Christmas and has

gone into the mills in San Francisco and Portland, Seattle, and a little

bit into Los Angeles.

I think that our request is reasonable and I do not believe that it

was the intent of this Congress to put anybody out of business as a

wheatgrower. I, in fact, think that the intent is just the opposite.

And in this instance we have been, we think, overlooked and we ask

the Congress to give us permission to continue to produce for the

market that we built for ourselves.

I think I will end my statement with that, and I will answer any

questions that the committee has for me.

36-329-04H-2
6 INCREASED WHEAT ACREAGE ALLOTMENTS

Mr. JOHNSON. I would like Mr. Baghott to make a brief statement

now. He has been with this program from the start when the first

experiments were carried on and proved successful.

STATEMENT OF KENNETH G. BAGHOTT, TITLELAKE, CALIF.

Mr. BAGHOTT. Mr. Chairman and members of the subcommittee,

12 years ago when wheat rust hit in the North Dakota producing area

and Durum wheat was in short supply, we carried on experiments in

the Tulelake area to determine whether we could fill the gap that was

needed, and we found that we had no problem with rust. And after

testing several varieties, we came up with a variety that worked very

well in that area under those conditions. It got us started to supply

the need on the west coast. We have never shipped anything east.

It has always been consumed on the west coast. And through the

years it has increased from about 2,500 acres to where last year there

was about 12,000 acres.

It fills a definite gap in the area because of the fact that our malting

barley in the past has been one of our mainstays and now it is not

that, due to the fact that the price which we receive for malting barley

is down around the price of feed barley.

On this organic soil Durum wheat is just a natural crop and it hurts

nobody—no other area in the United States. It fills the need for the

west coast markets.

We think that it is a real fine program for our farmers. We are

quite enthused about it and there is a definite need which we would

like to continue to go ahead with.

I think that is about all I have.

Mr. JOHNSON. I would, also, like to say that in the past we have

always had the support of the other Durum wheat areas, such as

Minnesota, the Dakotas, and Montana. I understand that the

Durum wheat people have been contacted as to their position on this

bill and to the best of my knowledge they have no opposition to it.

However, Mr. Short who comes from that area is here and he knows

more about this program than I. I am sure that he has heard from

his people as to this bill.

Mr. SHORT. Mr. Chairman, in response to Mr. Johnson's statement:

I do have a telegram from the president of the U.S. Durum Growers

Association, who happens to be a North Dakota farmer and a Durum

wheatgrower. Incidentally, a person that I know very well.

The U.S. Durum Growers Association supports the California proposal included in H.R. 10708.

I would like to make this observation, Mr. Chairman, as has already

been said, the Durum wheatgrowers of North Dakota grow the bulk

of the Durum wheat grown in the whole United States. They have

never objected to this proposition of providing some special treatment

for this little area at Tulelake, Calif., because it is in no way competitive with the Durum wheat that is grown in North Dakota because of

the transportation costs involved. This Durum wheat is all used in

the mills, I believe, in San Francisco, or wherever they are on the

west coast in California and have not been under the price support

program or anything of that kind.

Could I ask Mr. Stearns this question? How many farmers are

involved here—and what would be the average size of the farm?
INCREASED WHEAT ACREAGE ALLOTMENTS 7

Mr. STEARNS. Between 400 and 500 farmers.

Mr. SHORT. What would be the average size of their allotment?'

Mr. STEARNS. The average size of their allotment would be slightly

less than 10 acres—someplace around 7 acres.

Mr. SHORT. I think this, Mr. Chairman, that is another good reason

to have no objection. As this project was designed originally it was

a Homestead Reclamation proposition largely confined to a rather

small unit, was it not?

Mr. STEARNS. The size of the units?

Mr. SHORT. Yes.

Mr. STEARNS. An average of about 70 acres—they run from about

60 to 90 acres, and an average of about 70 acres is the size of the

original farm units that were homesteaded.

Mr. SHORT. I think that while we are on this subject, we should

clarify this point. I notice that the Secretary of Agriculture's letter

of May 11, 1964, on this bill, says that it does not favor the enactment

of the bill, and I think that this is important and needs to be clarified.

The Secretary's letter states:

Under the voluntary wheat program in effect for the 1964-65 crops, the producers in the Tulelake area, as well as all other producers can produce all the

wheat that they desire, but as in the past they will not be eligible for price support

or any other program benefits.

And then it continues:

There will be no marketing penalties for exceeding the farm wheat allotment in

1964-65 programs. In essence, therefore, Tulelake producers will not need this

special legislation to provide them the alternative they have had in the past.

This is a little bit contrary to my understanding of the wheat bill

that we recently passed, but this is what the Secretary says in his

letter.

Would you explain what is involved here to cover this special

legislation?

Mr. STEARNS. It is true that there are no direct penalties to the

farmers under the provisions of the wheat bill, but the millers still

have to have certificates to mill the wheat. In our instance 100

percent of the wheat that we produce is milled in those local mills,

and so those certificates will have to be purchased by the millers

before the millers can mill the wheat. As it works out he will simply

deduct the cost of the certificate from what he is able to pay for the

wheat. So that the penalties, when it finally comes back to the

farmer, amount to these. If he overplants—if we overplant our

wheat allotment, which will be necessary if we satisfy the demand

or even a portion of the demand, there will be the loss of price supports, the loss of our domestic and export certificates, the loss of a

percent of the acreage allotment that we have accumulated so hard

over a long period of years.

Mr. SHORT. The Secretary in his letter says this is not true.

Mr. STEARNS. What?

Mr. SHORT. The Secretary in his letter says that you would not

lose any history.

Mr. STEARNS. If we overplant we will. We are told out there that

we will. We will lose about 8 percent, I think.

Mr. SHORT. It says here that there will be no marketing penalties

for exceeding the farm wheat allotment for 1964 and 1965.
INCREASED WHEAT ACREAGE ALLOTMENTS

Mr. STEARNS. The penalty comes on the second bounce.

Mr. SHORT. I misread it.

Mr. STEARNS. Of course, the cross-compliance requirement provision states that there will be a loss of the cash payment for acreage

conservation on the other programs and the cross-compliance requirement would affect us, also. So the loss is not a direct levy against

the farmer but from a practical point of view the miller will reduce the

price that he pays the farmer by the amount that he has to dig up for

the certificate. This brings the price that we get for our wheat down

to about the cost of the production and it is not economically possible

to raise it then.

Probably, the best illustration I can give this is that the farmers

in the Tulelake area, when they voted on the wheat referendum last

spring, which proposed a similar set of circumstances to this certificate

program—the farmers voted against that by about 260 to 10. That

was their opinion how they could raise the market for Durum wheat.

And the bill we have that is now law is substantially that same circumstance, and it simply amounts to this, that we cannot economically

produce under these circumstances and we are asking the committee

to put us back where we were with the old setup with a limit on

acreage, but no other limiting factors, so far as that is concerned.

Mr. SHORT. Before I forget it, Mr. Chairman, I ask unanimous

consent to have this telegram I have received and referred to be made

a part of the record at this point.

Mr. PURCELL. That may be done.

(The telegram dated May 11, 1964, follows:)

DEVILS LAKE, N. DAK., May 11, 1964.

Congressman DON SHORT,

Washington, D.C.:

The U.S. Durum Growers Association supports the Tulelake, Calif., proposal

included in H.R. 10708. These growers need this consideration.

ALVIN KENNER,

President, U.S. Durum Growers Association, Leeds, N. Dak.

Mr. SHORT. Do I understand correctly that this bill would, in

effect, increase the acreage in the Tulelake area from about 12,000

to 15,000 acres?

Mr. STEARNS. It puts a ceiling on of 15,000 rather than 12,000

acres. Perhaps I should say a little bit about it. About 30 million

people on the Pacific coast are now in the area that we market in, the

other side of the Rocky Mountains, and the per capita consumption of

paste products is around 7 pounds per capita per year. And if all of

these 45,000 acres that I mentioned were planted in Durum wheat

at the yields that we have been getting of around 2 tons to the acre,

we would still only be supplying about one-third of the consumer

demand. So it is not possible for us to overplant.

It is a diversified farming area, producing potatoes, onions, and

alfalfa. And in this picture with a 4,000-foot altitude we are limited

to about those crops and it is not possible, even with 15,000 acres, to

overplant Durum wheat. But we are trying to go a little further

toward satisfying the market for quality Durum wheat. This is up

to the judgment of this committee. If the committee in its judgment

thinks that 12,000 acres is a better ceiling than the 15,000 acres, we

will submit to that, but we do have to produce at least 12,000 acres

of Durum wheat if we are going to satisfy the mills that are counting

on us to supply them right now.
INCREASED WHEAT ACREAGE ALLOTMENTS 9

Mr. SHORT. As to the 15,000 acres of Durum wheat, you are not

taking anything away from anyone else?

Mr. STEARNS. No.

Mr. SHORT. There is not anyone else that could supply it?

Mr. STEARNS. No.

Mr. SHORT. SO far as North Dakota is concerned, because of the economics of the situation, of getting the wheat to California, that precludes this wheat being shipped there?

Mr. STEARNS. Yes. It is about $1.35 per hundredweight freight

rate from Minneapolis to the west coast and the millers out there simply cannot pay that plus the Minneapolis market price and afford

to be able to mill it.

Mr. SHORT. Thank you.

Mr. PURCELL. Mr. Belcher.

Mr. BELCHER. In the past compared with the present, about,

what do you get for the wheat on the Pacific coast?

Mr. STEARNS. The price on the Pacific coast follows not too much the Minneapolis market price.

Mr. BELCHER. Around $1.80 a bushel?

Mr. STEARNS. No, the ground price has been higher than that. Durum has been the only wheat that we have been concerned with. And last year our crop brought $3.50 a hundredweight which is the way we talk out there—about $2.10 a bushel.

Mr. BELCHER. Under the price support system, of course, the price of wheat was up around anywhere from $1.80 to $2 per bushel and when you put the certificate in that is going to affect your market, because it is going to mean that the market price of the wheat will drop down to about $1.30, if you are going to have the 70-cent certifi- cate. That is going to cause a drop in your wheat market just the same as it does in other wheat markets; will it not? Mr. STEARNS. I think that the freight rate is still the difference there. Mr. BELCHER. There will still be that difference, of course. The miller, if he has to pay 70 cents for processing tax, cannot pay you the 70 cents which he has been doing in the past, can he? Mr. STEARNS. No.

Mr. BELCHER. Because he has been buying the Durum wheat. That was the total cost of his wheat. Now it will be what he pays you plus 70 cents per bushel.

Mr. STEARNS. That is true.

Mr. BELCHER. That will push your market down on the basis of about 70 cents per bushel?

Mr. STEARNS. That is correct.

Mr. BELCHER. And in the past you did not need price supports because the umbrella Was held over the market that took care of your. price support—your cash markets would have been as high as the price support market out there, approximately.

Mr. STEARNS. Yes.

Mr. BELCHER. Now, it looks to me that with this legislation ex- tended you are still going to get hurt the 70 cents per bushel, are you not—this legislation would not give you the 70 cents.

Mr. STEARNS. We do not think that we will because the .market demands a certain amount of premium Durum. There are manu- facturers on the west coast that would like to say that there is 100 percent Durum standard in the macaroni products that they are-
10 INCREASED WHEAT ACREAGE ALLOTMENTS

putting out. Their people are used to it now. And in order to get

that they will still have to pay that freight from the Dakotas, plus

buying the certificate, and we are pretty sure that they will continue

to do so. We have the verbal assurance from them, at least, that

they will continue to pay us in the neighborhood of what they have

been paying in order to get that premium quality grain. So we are

not the least bit afraid to forgo the price supports at this time. We

are willing to take our chances on that.

That is, on treatment from these people.

Mr. BELCHER. As I see it, the only advantage this legislation has

for you is that you just do not get this cutback in planting. You

could plant the 45,000 acres out there and market every bushel of it

if you sell it on the coast. You would not suffer any penalty at all,

except that if you overplant, the Anfuso would operate and you

would be cut about 7 or 8 or 9 percent in your allotment, in view of

the fact that you have had special legislation, anyway., and there would

be no reason that you could not have special legislation to take care of

the 7, or 8, percent the same as in the past. You now plant 12,000

acres, and have since 1952, because you did not have an acreage in

1952.

Mr. STEARNS. NO, We did not.

Mr. BELCHER. So that by legislation we granted you 12,000 acres,

regardless of the Anfuso amendment of the cutback in wheat production in other parts of the country which has been cut back about 42

percent, as in my particular area. I am not arguing against the legislation, you understand—I am just trying to find out what particular

advantage you will get out of this. As I see it, about the only advantage that you will get if it is raised from 12,000 to 15,000 acres is

that you would escape that much of the Anfuso amendment but in

the past you have escaped the entire operation of every amendment

because it has always been by special legislation that was granted on

the 12,000 acres. And on the expiration of that special program you

will divert back to no acreage.

Mr. STEARNS. The principal thing that we have to gain is the miller's

requirement to buy the 70-cent-per-bushel certificate, because that is

about the margin of profit in the wheat for us.

Mr. BELCHER. You will have to have special legislation for that.

Mr. STEARNS. As we understand it, he has to buy the certificate

if we raise the wheat outside of the program.

Mr. BELCHER. He will have to buy it.

Mr. STEARNS. This would waive the provisions of that, so far as the

wheat originating in this Tulelake Basin is concerned. That would

be the effect of this legislation, Mr. Belcher. This is what we are

requesting here.

Mr. BELCHER. I understand that we have a couple of lawyers here,

but my understanding is that you have to buy the 70-cent certificate

to mill the wheat anywhere else in the United States under any

conditions.

Mr. STEARNS. That is the way as the law stands. That is correct,

and that is our problem.

Mr. BELCHER. And the mere extension of this would not prevent

him from having to buy the 70-cent certificate to mill this wheat,

would it?
INCREASED WHEAT ACREAGE ALLOTMENTS 11

Mr. STEARNS. The way that this law or this bill was presented, as

Mr. Johnson said when he came back from Easter vacation the bill

had not cleared the House yet and neither had the Department begun

to interpret it, and he introduced this bill before we knew all about

what was going to happen here, and we are proposing now that this

bill replace the wheat bill, so far as Tulelake is concerned. And a

slight change would need to be made right at the start of it to substitute this language for the existing language in the law, to apply to the

Tulelake area, so far as Durum wheat production is concerned. We

ask that this replace this program.

Mr. BELCHER. And H.R. 10708 is the law as you want it reported?

Mr. STEARNS. Right at the head of it, notwithstanding any other

provision of the law sort of language would take care of it.

Mr. BELCHER. The report from the Department does not take into

consideration this amendment either, does it?

Mr. STEARNS. No; I do not think it does—no, sir; it does not.

Mr. BELCHER. You will meet tremendous opposition in the Department if you try to take out the processing certificate for one class

of wheat.

Mr. STEARNS. It would be for wheat originating there. We are

proposing that the same controls that we have had on it would still

be there. The county officers would still be issuing the allotments.

They would be dividing up the 15,000-acre allotment among the farmers and certifying as they have before, before that wheat produced

on those farms was within the allotment that they gave to the wheatmarketing certificate which we have selected in our four elevators

and passed on to the millers in the past.

Mr. BELCHER. In other words, this does not come into the wheat

program—you have not been in it in the past and now you are trying

to come into it?

Mr. JOHNSON. No.

Mr. BELCHER. You have not been in the program in the past?

Mr. STEARNS. NO.

Mr. BELCHER. You have had no price support or anything else?

Mr. STEARNS. No. We are trying to stay where we have been.

Mr. JOHNSON. I do not know exactly whether the bill does what

we want it to do. I am trying to find out just what we should put

in a bill to get us back to our status quo of 12,000 acres without any

consideration as to the general program.

Mr. BELCHER. I understand that in the past that has been true.

And I have always gone along with it, from the very first day. I

remember the first day, I think, that Congressman Engle—if I am

not mistaken—introduced the first bill, because I had been before his

committee representing the Osage Indians and he had given me a

very bad time and about 6 months later he came in with this bill of

his and he walked around there about where you are standing and I

asked him, "What are you doing over here?" And he said, "I have

this wheat bill." And I said, "I have been waiting ever since the day

I appeared before your committee for this very opportunity."

However, in the course of the discussion I thought that he had a,

meritorious bill, and I did support it, and I think that I have supported it every time it has been before the committee. All I am doing

now is just trying to find out what you are attempting to do here and
12 INCREASED WHEAT ACREAGE ALLOTMENTS

why the opposition of the Department, because I do not believe that

the Department in the past has opposed this bill, has it?

Mr. JOHNSON. No they have not, since I have been here.

Mr. BELCHER. I know that they have not in the past. I thought

that there might be something as to why they are opposing it now. I

am just trying to find out what this bill really tries to accomplish.

And the bill as it is written looks to me like 

Mr. HARDING. Will you yield?

Mr. BELCHER. Yes.

Mr. HARDING. Let me say this off the record.

(Discussion off the record.)

Mr. PURCELL. Back on the record.

Mr. BELCHER. That does not mean that the Department of Agriculture is trying to punish a Democratic Member of Congress because

he voted against the bill. I do not subscribe to that. I do not think

that it has anything to do with this.

If it takes it out and gives you a 70-cent advantage over all of the

other wheat areas I can see why there would be opposition. Is that,

in effect, what this does?

Mr. HEIMBURGER. May I comment on that a little bit?

Mr. PURCELL. Yes.

Mr. HEIMBURGER. I did have an opportunity yesterday afternoon

to discuss this problem with the gentlemen who are here from California. I think that Mr. Belcher has put his finger exactly on the sore

spot which is that the millers who will use this Durum wheat out on

the west coast will have to get a 70-cent certificate for every bushel of

wheat they use, whereas the people who grow the wheat will only get a

certificate on 45 percent of it. So what they really need, in my

opinion, is what Mr. Belcher said, an exemption for their wheat from

the general provisions of the law that the miller must buy the 70-cent

marketing certificate when he mills their wheat.

Mr. BELCHER. You will find that some of my millers will be going

out there and buying your Durum wheat and bringing it down to

Enid, Okla., and manufacturing it.

Mr. HEIMBURGER. Not at the freight rates they now have.

Mr. BELCHER. They can make 70 cents a bushel more from that

wheat out there, and even with the difference by way of the freight

rates, with the 70 cents they can still break even.

Mr. HEIMBURGER. I do not think it would work that way. That

wheat will not be selling, if the miller does not have to buy the 70-cent

certificate, this Durum wheat that they grow will not be on the market

for $1.30. It will be on the market for $2.10 and nobody will be

able to buy it for $2.10 and haul it to any place and make any money

on it. I think, actually, that the key to their situation is the 70-cent

certificate, and I do not think that your bill quite does it, Mr. Johnson.

I think it takes something else. It will take some very specific

language to waive this 70-cent certificate as to this particular wheat

grown in this area.

Mr. JOHNSON. It was very difficult for us to try to find out what

we should put in the bill. There have been about three different

opinions from the Department—that you did not need anything,.

you go ahead and grow all of the wheat and market it anyway you

want, certificates were not necessary. That was one opinion given.

As late as a week ago the majority leader, who was the chairman of
INCREASED WHEAT ACREAGE ALLOTMENTS 13

this Wheat Subcommittee, said, "You are all right, there is nothing

wrong with this. It has no effect upon Durum wheat growers of

California, go ahead and plant all you want—it is a voluntary program—they can market it without certificates."

Mr. HEIMBURGER. That is right, they can. They will, probably,

get about $1.30 or $1.40.

Mr. JOHNSON. That is right. We will just break even.

Mr. BELCHER. What good is it then? That is all any wheat

farmer in the United States is going to get if he does not have a

certificate. That is all the wheat market will be, $1.30 or $1.35,

probably, at the support price. Of course, if he gets the 70-cent

certificate on the domestic allotment, why that is outside of the price

of the wheat, but my argument on the wheat bill is that you will

recall, if you have to buy a certificate for 70 cents a bushel, that

depresses the price of the wheat. Of course it is going to depress the

price of the wheat, and it will depress the price of all other wheat.

That is why it is not a voluntary program, because the man who is in

the program pays, he is penalized 70 cents a bushel in the sale of

his wheat. That is what you are being penalized.

Mr. JOHNSON. To us out there it was a very disastrous blow. If

it had been a flood or an earthquake or something else like that we

would have been taken care of with some emergency funding and

consideration but where it affected us through legislation and we

were caught in a legislative bind, that kind of wiped us out. We are

a kind of a stepchild in this wheat program. We had built up our

market outside of the general program of wheat. That is the position

we would like to maintain at the present time. There is a market

out there. These people will not buy Durum wheat from the other

areas. They merely will not use it. We think that some consideration

should be given to areas such as this.

We have about 700 farmers who came into the Klamath project

area on veterans' homesteads and when they were first allocated

their land they were 40, 60, and 70 acres, and they finally got up to

where now there are some 90-acre holdings with an average of 70

acres. And they need this particular Durum wheat to make it go.

It is the only thing that they have found that is really a cash crop.

The potato situation is sort of hit or miss. The onion dealer we are

finding out is hit by the Mexicans who are raising onions in Mexicali

Valley. That is cutting off our onion acreage requirements in the

area. Barley is down due to the price. So about all we have is a

good cash crop in Durum wheat and where it does not involve any

other area I should think that the Department and the Congress would

look at those farmers out there and say, "Well, we do not want to put

you out of business," and we hope that the committee can give consideration to this legislation.

I agree that the legislation will have to be changed if we are to

waive the 70-cent certificate provision.

Mr. BELCHER. This system of voluntary programs, so far as you

folks are concerned is not such, because you have been penalized by

the program by that 70-cent-a-bushel certificate. No program at all

is much better for you than this program.

In other words, we will have to pass legislation and then you can

sell your wheat on the open market for whatever the miller would

pay for it and he would not have to pay any processing tax so that

36-329-41-- 3
14 INCREASED WHEAT ACREAGE ALLOTMENTS

your cash price of wheat would be more than it would be if you had to

pay the 70-cent processing tax. I can see that. You are caught in

a real dilemma there. I did anticipate that dilemma, because I

thought just like you did, I did not think it was a good wheat bill and

I voted against it.

Mr. JOHNSON. I, certainly, do not want the record to show that I

think that my vote had anything to do with the position taken by

the Department as to this bill, because I think that the Department

is well above that. And I, certainly, did not vote against the bill

with the idea that I was doing anything against the Department.

I just thought the bill was a bad bill. And the farmers within my

district, in the agricultural industry, were about 5 to 1 opposed to

the wheat bill and the cotton bill before the Congress.

Mr. BELCHER. I do not think that the Department of Agriculture

would punish a farmer for his vote or your vote or would punish anyone else. I could not conceive of that.

Mr. JOHNSON. Me, neither.

Mr. PURCELL. Let me see if I can put in general language what it

is that you are really trying to do here. You want to have the allotment portion of your bill left like it is; that is, like the prior bill and

to have added to that a provision so that you can grow up to 15,000

acres. Really, what you are asking for is some kind of marketing

order or some instrument, some card that would be given legal status

SO that your fanner would be able to go to the elevator certifying that

this grain came off of one of these farms in the Tulelake area. When

this processor got the grain with this marketing order or whatever

you would call it, he would not be required to pay the 70-cent difference. That is really what it is.

Mr. JOHNSON. That is right. And these 12,000 acres, if that is

allowed, the regional office would allocate the acreage within the

12,000 acres, with some sort of certificate to the farmer, and he

would grow this wheat and then he could use this same card when he

sold to the miller, and the miller would give an exemption on the

70-cent certificate, if some such language could be written in.

Mr. BELCHER. Each farmer would get his pro rata share where he

could share the overall acreage which was allotted.

Mr. JOHNSON. Yes.

Mr. BELCHER. Thank you. That is all.

Mr. PURCELL. Mr. Harding.

Mr. HARDING. Mr. Johnson, what privilege, so to speak, have you

enjoyed as a result of this special legislation? Have you built up

a wheat allotment with this? Do you have any allotment? I see

Mr. Cox shaking his head. What is the total allotment that these

people enjoy?

Mr. Cox. A little less than 5,000 total.

Mr. HARDING. A little less than 5,000 acres, total. Does not the

Department have a provision for reclamation projects and other new

lands to adjust wheat allotments on them?

Mr. Cox. Yes, we do. And they have received some benefits from

that.

Mr. HARDING. Is there a possibility that they could receive more

benefits from it?

Mr. Cox. I would have to assume that they have been treated

fairly and as well as the other reclamation areas.
INCREASED WHEAT ACREAGE ALLOTMENTS 15

Mr. HARDING. Would not the better approach be to increase their

wheat allotment rather than to exempt them from requiring certificates on the Durum wheat produced in this area?

. Cox. The Department's record will indicate that they supported this progi am in the past. This is different now.

Mr. JOHNSON. Would the gentleman yield?

MT. HARDING. Yes.

Mr. JOHNSON. To the best of my knowledge and of those who are

here, we have not received any increased allotments under the provisions of the law that pertain to reclamation areas. I think to start

with, it was always by an act of Congress where they authorized the

Secretary of Agriculture to come up with a certain figure. As far

as the acreage allotments were concerned, as it related to Durum

wheat. And then in the discretion of the Secretary he did have

authority to grant additional areas.

Mr. Cox. You are quite right. In the period from 1958 to 1963

I believe it was, the Congress on an annual basis increased the allotment for this area to about 8,000 and then beginninc,in 1963 you

increased it up to about 12,000. I am talking about what we would

have allocated to this area in the absence of such special legislation.

Mr. JOHNSON. So our people are well satisfied with the consideration

given by the Congress and by the Secretary, because the Secretary

has gone along with the program. I think if any measure is passed

now with the cotton-wheat bill as it is now the law, that this would

be the most simple—this would allow us whatever the committee

saw fit to give us, whether it be 8,000, 12,000, or 15,000 acres, and it

would allow us to plant that much, and then, also, give us consideration on waiving the 70-cent certificate that the miller would have to

provide.

In the allocation of the 12,000 acres by the authority that would

allocate the acreage to the individual farmer, he would be given some

sort of a certificate or a permit to grow so much Durum wheat and

at the time of marketing he would have to present this and the miller

who bought the wheat would claim an exemption under the 70-cent

certificate provision, and that would take care of the situation. It

would be a very simple matter. And if the Congress would give us,

say, 1 or 2 years, while we have been operating on a year-to-year

basis, it wou d help us—we have been up against the deadline every

time. This year whatever is planted is planted on the less than 5,000

acres so they are going to take it on the chin.

Mr. HARDING. It would seem to me, Congressman Johnson, that

the simplest way would be just to increase your wheat allotment and

then let you operate under the certificate program the way every other

section of the country will operate. If you got the allotments up

they would comply, and they would receive the 70-cent payment,

then it would eliminate much of the objection.

Mr. HAGEN of California. I think that maybe if you would increase

their allotments, they would grow any kind of wheat, if you did that,

whereas under their program they want to market Durum wheat only.

This is a very special wheat that is used in semolina products and so

forth.

Mr. HARDING. The Secretary's report points out that we have a

2-year supply of Durum wheat on hand. I do not see why Durum

wheat is any different than any other wheat in this respect.
16 INCREASED WHEAT ACREAGE ALLOTMENTS

Let me go off the record.

(Discussion off the record.)

Mr. PURCELL. On the record.

Mr. OLSON. Did you say that there are only 5,000 acres planted

this year?

Mr. JOHNSON. When I was out there they had seed treated enough

to plant 12,000 acres but as these gentlemen tell me now, many

farmers did not want to take a chance with what was going to be the

outcome on the marketing of the wheat, so that they have diversified

and put in other crops and they are taking a chance with these other

crops. They dropped way back and it is less than 5,000 acres planted

at the present time.

Mr. OLSON. In other words, they are in compliance?

Mr. JOHNSON. They did not know what to do. What they told

me when I was there was that they were just going--those who were

in a position to do so--take a chance with another crop and to plant

some other crops until this thing was settled.

Mr. OLSON. It is too late to plant any more now.

Mr. JOHNSON. It is too late. What wheat is planted is up.

Mr. OLSON. How many farmers in this area are in compliance for

this year?

Mr. STEARNS. I cannot answer that exactly. When the wheat bill

passed a portion of the wheat had been planted, and in some of those

instances those people had overplanted. I would make a wild guess

and say that probably 90 percent of the farmers are in compliance

now on the small acreages and, probably, 10 percent are overplanted

in varying degrees. It varies with the individual farmer, because he

had no idea—it was a matter whether he was going to risk being

outside of the program or not—he did not know what to do. So the

situation is very jumbled as between individual farmers. In our own

example, Ken has an allotment of 13.5 acres and he planted his acres

and he is in compliance up to this point. I have a larger farm than

the average out there. I have a 28-acre allotment which I did not

choose to plant, because I simply did not see where I could make any

money out of it under the present program.

Mr. OLSON. You did not plant any?

Mr. STEARNS. I did not plant mine and I stand to lose a portion of

my allotment on the strength of that, so the situation is as varied as

individual farmers. There are some 450 farms, about, who have

participated in the wheat program and no two of them have an

identical situation, I do not believe. I had a 28-acre allotment in

wheat but I did not have anything that I chose to divert it to. The

diversion portion of this program does not fit our situation. It is a

lakebed with organic soil all the way and it does not lend itself at all

to any sort of summer fallowing. We have a wild oats situation

there, and if you summer fallow it and if you do not have a real heavy

crop of some kind on it, it goes to wild oats. And we spend the next,

4 or 5 years fighting that. That part which is designed as a conservation measure works against it.

Mr. OLSON. Increasing the allotment for this particular crop year

is not going to be beneficial?

Mr. STEARNS. We are pretty much past the place where we are

going to be able to do very much about it, like Mr. Johnson said.

We are going to have to market what we have planted this year as
INCREASED WHEAT ACREAGE ALLOTMENTS 17

best we can. And the people whom we have been selling wheat to

are going to have to fill their unfilled needs as best they can.

Mr. OLSON. To those who have complied as of this date, an increase in allotments are not significant unless there would be action

taken which would be made applicable to this crop year, and it would

waive the penalty for those people who have overplanted. You

indicated this figure is about 10 percent.

Mr. JOHNSON. That is right.

Mr. OLSON. Those who have complied will market their wheat and

they will get the 70-cent certificate and the 25-cent export certificate

and the other 10 percent of their crop will be marketed for the going

market price.

Are you trying to remedy the loss of any of those who have not

complied? We probably can get at solving your problem if this is

not the case.

Mr. JOHNSON. I would say, Mr. Olson, that for this year it is pretty

late to try to do anything. And with Congress reconvening in

January, say, the first week of January of next year, for next year's

crop we are up against the deadline again. Every time I have had

anything to do with this we are in here fighting for time. Our people

have to set aside the seed to be treated so as to be in a position to

plant. This year they were in a turmoil and they treated enough seed

to plant the total acreage allowed last year and then they found out

that they were back to approximately 5,000 acres so they only planted

about that much. Some did not go into it at all, as Mr. Stearns said.

Ten percent of them overplanted. They were willing to take a chance.

And the rest of them were in compliance.

We are trying to get this thing worked out now so that the 1965

planting season can be planted and the farmer will know what he is

supposed to do.

Mr. OLSON. For 1965 with the current legislation, which with regard to wheat runs for 2 years

'

it would be proper if you were to do

anything that you should have legislation for 1965?

Mr. JOHNSON. Yes.

Mr. OLSON. Are you further saying that it would be all right for us

to take action on the basis of the 1965 crop and not the 1964 crop?

Mr. JOHNSON. Yes, I believe that that would be acceptable. The

gentlemen are here from that area. They are both farmers in the

program. They have both been with this program from its inception.

Mr. OLSON. If we should take special action on the 1964 crop, then

those who have overplanted, as I understand it, would not be penalized. There is only an overplant of 10 percent of the farmers right

now, but if we, by special action, did something pertaining to the

1964 crop they will have an advantage over those who did not overplant this year and if we took any special action for the 1965 crop it

would put them all back on an equal basis.

Mr. JOHNSON. As I understand it, the present wheat legislation

runs through 1966; does it not?

Mr. OLSON. Through 1965. It is for 1964 and 1965. We are

dealing with that 1 year, then.

Mr. DOLE. Will you yield?

Mr. OLSON. Yes.

Mr. DOLE. The Anfuso•amendment eaters into that.
18 INCREASED WHEAT ACREAGE ALLOTMENTS

Mr. OLSON. We have in the past dealt with it specially and we

would again, I suppose, waive any such requirement. Dealing with

next year, it would be easier than trying to do anything this year, it

is too late for you to make adjustments and those who have overplanted can get into compliance and we cannot aid you by providing

more allotments this year.

Mr. JOHNSON. That is right.

Mr. OLSON. You cannot plant it now.

Mr. JOHNSON. We cannot plant it. It is too late.

Mr. OLSON. 12,000 acres is what you raised in the area last year?

Mr. JOHNSON. Yes.

Mr. OLSON. And it all went into milling?

Mr. JOHNSON. It was marketed prior to Christmas and all went

into the Durum wheat millers.

Mr. OLSON. All for milling purposes?

Mr. JOHNSON. Nothing held back.

Mr. OLSON. If we were to consider what we have done in the past

for this area maybe it would be simpler just to restore the allotment,

and to pay you the 70-cent certificate and let you market all your

wheat. This way we would not exclude any miller from purchasing

the certificate and we do not circumvent anything except that we

follow the precedence of treating this area specially, as we have in the

past. For 1965 this would be the normal average yield times. Your

allotment under special legislation, for that amount of bushels you

would receive the 70-cent certificate.

Mi. SHORT. Would you yield?

Mr. OLSON. Yes.

Mr. SHORT. What you are saying is that the 70-cent certificate

ap-plies to the normal yield on their allotment?

Mi . OLSON. Yes.

Mr. SHORT. Rather than just the 45 percent?

Mr. OLSON. Yes. Every bushel goes to the miller and if we just

enact a provision giving the 70 cents on the acreage allotted, or that

we will allot them under the legislation—let the miller pay the 70

cents and it might be simpler than doing Eomething else.

Mr. SHORT. Almost as good an argument as the gentleman just

raised is applicable to all the wheat, and particularly Durum wheat

that is grown in North Dakota; because until very recently practically

all of the Durum wheat raised was withia the allotment and was used

for domestic consumption.

Mr. PURCELL. Mr. Dole.

M1 . DOLE. I have not been able yet to determine why the nub of

the argument. Are some going to be penalized by the Anfuso amendment for overplanting? Is the basis of your argument the fact that

some have overplanted?

Mr. JOHNSON. No, our concern is with the permission to plant up

to 12,000 acres. The cotton-wheat bill puts us back to about 5,000

axles based upon our history of what we were entitled to. Heretofore

we did not participate in any of the subsidy or the support price programs. We merely marketed this wheat on the open market. We

have built up a market in the area whereby we can dispose of all of

the Durum wheat that we can grow upon these 12,000 to 15,000 acres.

There is a ready market for it. And we need no consideration from

the standpoint of support or anything else, but in this new wheat bill

you put us back to below 5,000 acres.
INCREASED WHEAT ACREAGE ALLOTMENTS 19

Mr. DOLE. Do not use the word "we"—that is an all-inclusive word.

Mr. JOHNSON. The Congress, I should say: I did not vote for it,

either, but we are subject to the millers having to purchase a 70-cent

certificate. We are, certainly, in the program now. Prior to that

time we were not in the program. We were given an exemption here

each year by Congress, since, I think, 1956.

Mr. DOLE. If your farmers had a 12,000-acre allotment would you

mind being in the program?

Mr. JOHNSON. What is that?

Mr. DOLE. If you had a 12,000-acre allotment they would not mind

the program?

Mr. JOHNSON. We do not ask to come under the program.

Mr. DOLE. But if they had a 12,000-acre allotment, they would not

object to the so-called voluntary wheat program.

Mr. STEARNS. Yes. It still does not fit our circumstances because

the millers we sell to mill 100 percent of this wheat and we get our

70-cent certificate on only 45 percent of it.

Mr. DOLE. The type of products made from this are exempt from

certificates. A release from the U.S. Department of Agriculture as of

May ii. USDA 1555-64, indicates that:

This temporary phase of the program is designed to help processors during the

transition from old crop to 1964 crop wheat where the types and quantities used

by processors are not readily available from the 1964 crop.

It does point out that Semolina is a food product but what would

happen if you should exempt it from certificates? In other words,

is this the result you want? Would that prevent Semolina from being

under it? The release further states:

For some kinds of wheat and in some areas the wheat harvest begins after July 1.

The 18-cent certificate value prices old crop wheat on a par with the 1964 crop

wheat (loan rate plus the applicable domestic certificates).

The provision announced today also includes a list of the products processed

from wheat which will be considered food products under the certificate operation.

Food products processed in whole or in part from wheat, subject to the certificate

provisions, include flour, Semolina, farina, bulgur, cereals, beverages and any

other products composed wholly or partly of wheat, which is determined to be a

food product. Certificates will be necessary on food products regardless of

whether the products actually are used for human consumption.

Under the law the acquisition of certificates is not required of processors who

manufacture exclusively nonfood products. After the registration on May 20 in

cases where it has been established that the processor does not process any food

products, he will be informed that regular reports to be made by food processors

will not be required from him, unless his operations change to include processing

of wheat for food products.

In some cases provision for exemption from the use of certificates have been

made. These include wheat processed into a wheat product for use on the farm

where it is grown, wheat grown outside the United States and wheat processed in

bond, and wheat custom processed for USDA.

If this could be accomplished, would it satisfy the objections that

you have to the present program?

Mr. STEARNS. Yes; with the exception of the conservation reserve

provision. And as I say, that does not fit those little 70-acre farms

at all.

Mr. DOLE. What provision of the statute is that?

Mr. STEARNS. The 11 percent of the acreage allotment that has

to be diverted into some conservation process. And in our instance

out there it amounts to disking up some other crop and planting peas

and disking them . under cot summer fallowing the ground or something
20 INCREASED WHEAT ACREAGE ALLOTMENTS

• like that. Those little 70-acre farms are very intensively farmed

and irrigated and have a very bad residual weed problem—it poses a

real problem for those little farms.

Mr. DOLE. There is nothing that can be done now to help you.

When do you harvest your wheat?

Mr. STEARNS. We harvest it from the 20th of August to about the

15th of September.

Mr. DOLE. It is doubtful then anything can be done by legislation

now that would help you with this crop-year 1964.

Mr. STEARNS. Our principal concern, as Mr. Olson pointed out,

is our 1965 crop year, so that we will not get caught like we did this

year. As Mr. Johnson said, we had seed treated for about 12,000

acres. So now we are sitting on about 7,000 acres of seed, enough

seed to seed 7,000 acres. This seed has been treated with mercury

and we have nothing to do with it. We would like to go into the next

year with our elevators knowing how much seed to hold back, how

much farmers could plan to plant and how much the market could

expect to (Yet from the Tulelake area so that we are pretty much over

the hill. ''tVe are going to raise about 5,000 acres of wheat this year

which we will market as well as we are able. That is, those in compliance and those outside of compliance.

So our principal concern is being able to make some plans for next

year, but we do not want to come back to this Congress, as we have

always in the past in January and to pound on the desk and say,

"We have got to know something about the planting today" because

things cannot be processed that fast any more here and we would

like to know ahead of time. And this is why we are asking that this

be straightened out now so that we will know what to do next year.

Mr. DOLE. You understand that the Anfuso amendment is suspended in 1965. You can overplant your allotments without loss

of history. This is already in the law. We still have the problem

of exempting somebody, taking care of the history problem, and so

forth.

Mr. Belcher pointed out awhile ago that certainly we are sympathetic with the problem. It is in many ways the same problem farmers

had in Kansas. I was in Kansas last Saturday and talked with

several farmers. One is plowing up about 340 acres of wheat under

this voluntary program; another indicated he is plowing up 210 acres

to get in compliance under the so-called voluntary program. He is

threatened if he does not with the loss of history, some 6 to 8 percent,

which is a very valuable property right, so far as he is concerned. I

do not favor the taking of property without due process of law. We

have similar problems, but are told there are no penalties. There are

penalties, of course, if you cannot get anything but $1.30 for your

wheat, and if you do not sign up and participate, that will happen.

The Secretary can make certain the price stays around $1.30 unless

you come from a State like Texas, where harvest is early and the farmer

can sell it for $2 now and if within his allotment still get certificates and

net about $2.70 a bushel for wheat.

Mr. PURCELL. IS that all you have?

Mr. DOLE. Yes.

Mr. PURCELL. Let me point out that we do have a representative

from the Department here. I would like for us to hear from him.
INCREASED WHEAT ACREAGE ALLOTMENTS 21

I will let Mr. Hagen ask some questions, and then we can call you back, if desired. And then we will ask the Department to speak. Mr. HAGEN of California. I want to apologize for being unavoid- ably late. Maybe this question has been asked and answered.

As I understand it, you never have had a surplus of Durum wheat in this area—it has not gone into loan, is that correct?

Mr. STEARNS. Yes.

Mr. HAGEN of California. And the other areas growing the Durum wheat, like in North Dakota, have favored this legislation because they thought that it would increase the market for Durum wheat generally, in other words, that it would go into spaghetti and semolina products and the like. And the problem with the west coast manu- facturers of these products has been that Durum wheat has not been available in the quantities that they desired and that they on the west coast would buy additional quantities of Durum wheat from North Dakota and other areas. If there were a larger supply in California more Durum could be used there including Midwest Durum.

Mr. STEA RNS. That is what they feel.

Mr. HAGEN of California. So, actually, the other Durum wheat

areas have gone along with your program?

Mr. STEARN'S. Yes; that is correct.

Mr. HAGEN of California. I would like to ask the Department

some questions later.

Mr. PURCELL. Thank you very much, gentlemen.

Mr. JOHNSON. Thank you.

Mr. PURCELL. We will now hear from the Department witnesses.

STATEMENT OF ARTHUR T. THOMPSON, DIRECTOR OF GRAIN

POLICY STAFF, ACCOMPANIED BY CHARLES M. COX, DEPUTY

ADMINISTRATOR, STATE AND COUNTY OPERATIONS, ASCS,

U.S. DEPARTMENT OF AGRICULTURE

Mr. THOMPSON. Mr. Chairman, and members of the committee,

I am Arthur T. Thompson, Director of Grain Policy Staff, and I have with me Mr. Charles M. Cox, who is Assistant Deputy Administrator

of the State and County Operations, ASCS.

I assume that copies of the letter addressed to Chairman Cooley

from the Secretary are in your hands.

Mr. PURCELL. Yes; it is.

Mr. THOMPSON. Therefore, I would just like to make sure that

our points are underscored and I will read from certain paragraphs

and try to paraphrase a little of the other parts.

I will read from the third paragraph the synopsis of our under- standing of the contents of H.R. 10708 and all the way through we direct ourselves to the language in the bill that is presented to the

Department.

I take it that there may be a little difference of the contents from

that which is in the minds of the previous witnesses.

Point 1:

Section 1 of H.R. 10708 would amend subsection (i) of section 334 of the Agricultural Adjustment Act of 1938, as amended, to (1) make permanent the authority to increase farm wheat acreage allotments in the irrigable part of the Tulelake area of Modoc and Siskiyou Counties, Calif.; (2) restrict such allotments
22 INCREASED WHEAT ACREAGE ALLOTMENTS

to privately owned farms; (3) beginning with the 1964 crop increase the total

acreage allotment for each crop from 12,000 to 15,000 acres for the area; and

(4) authorize the Secretary to increase acreage allotments for privately owned

farms in the Tulelake area for any year if he finds that such allotments are inadequate to provide adequate quantities of Durum wheat to satisfy the demand

in the areas of the United States west of the Rocky Mountains in which such

wheat is normally marketed and processed.

And then it goes on to say:

Section 2 of the bill would amend subsection (i) of section 334 of the Agricultural Adjustment Act of 1938, as added by Public Law 87-703 to become effective

for the 1964 and subsequent crops of wheat, by excluding from the provisions of

such subsection Durum wheat in the irrigable part of the Tulelake area of Modoc

and Siskiyou Counties of California to which the provisions of section 1 of this

bill would be applicable.

We return to the second paragraph of the letter which states:

The Department does not favor enactment of this bill.

Turning to page 2, we outline the two main points on which this

position is based.

First:

The present domestic Durum supply situation is drastically changed from

what it was when this special provision for Tulelake was first enacted. Present

carryover of stocks of Durum wheat at about 45 million bushels, is nearly twice

the annual domestic requirements.

It has been mentioned earlier here that the supply of Durum

wheat today is a good deal larger than it was 3 years ago. As stated,

the present carryover is something on the order of 45 million bushels—

between 40 and 45 million bushels as of today, which is nearly twice

the domestic annual requirements.

The Department's crop report on the planting intentions for 1964 indicates a

1964 Durum pror'uction that would further add to the carryover of stocks of

Durum wheat. Currently, market prices for Durum wheat are below the loan

level at Minneapolis and have been below the loan level during most of the

1963-64 marketing year.

The second point, back to the position stated here is:

In view of the voluntary wheat program authorized by Public Law 88-297 for

the 1964 and 1965 crops, there is no longer the same need, as in the past, for

proposed legislation of this nature.

It is now a voluntary situation in the sense that the producers can

produce all of the wheat that they desire, and as before, there will not

be eligibility for price support or other program benefits.

However, further down in that paragraph it is pointed out that:

Under the bill, as proposed, the ineligibility for wheat price supports would

continue to apply, but farmers in this area would be eligible for wheat marketing

certificates without making the diversion required of other wheat producers.

To further underscore the understanding that the Department

people have of the effect of the bill, your attention is called to the final

two sentences of the same paragraph:

The existing subsection (i) contains a provision (which would be left in effect

by the proposed bill) to the effect that: "The land use provisions of section 339

shall not be applicable to any farm receiving an additional allotment under this

subsection." Section 339 requires wheat producers to divert acreage from production and maintain their normal conserving acreage in order to be eligible for

wheat marketing certificates.

These are the points of equity on which the Department felt that it

could not be favorable to the bill. We feel that they would cause
INCREASED WHEAT ACREAGE ALLOTMENTS 23

considerable criticism in other areas where the special privileges would

not be granted.

I believe that is about the substance of the Department's position

on it.

I will read last the statement that—

The Bureau of Budget advises that there is no objection to the presentation of this report from the standpoint of the administration's programs.

Mr. PURCELL. Let me lead off with this question. I am asking it for information, so that it may be cleared up in my own mind.

Under the present law in effect for the Tulelake area, it is my impression that the law was effective up through 1963.

Mr. THOMPSON. That is correct.

Mr. PURCELL. And if nothing is done now in contrast to what has been said off the record, it looks to me like the acreage allotment would go back from the 12,000 acres authorized to 5,000 acres or whatever the figure is.

Mr. THOMPSON. That is correct.

Mr. PURCELL. Am I correct on that?

Mr. THOMSPON. That is right—that is our understanding and that figure we have as being 4,996 acres.

Mr. PURCELL. So the situation, from the technical standpoint, is not what we have been talking about here this morning as far as the

year 1964 crop is concerned. In the 1964 crop year, of course, they have not planted over 5,000 acres and 10 percent would be out of compliance, but if they had planted 12,000 acres they would be 100

percent out of compliance?

Mr. THOMPSON. Yes.

Mr. PURCELL. Maybe you understood this all of the time, Mr. Johnson, but I got the idea that some of us did not have that same understanding. Probably you folks in California did realize this all of the time. Am I correct in that?

Mr. JOHNSON. That is true. We did not have the exact figure, but we know it was just slightly under 5,000 acres. We could not

get the exact figure. I have never been able to get it. This is the first time I have ever had it.

Mr. PURCELL. That is all I have at this time.

Mr. Hagen, I think you said that you had some questions.

Mr. HAGEN of California. It would be my impression, pursuing this further, that if we had not passed the wheat bill in 1964 you would have been able to overmarket in your particular markets more than the 5,000-acre production, is that correct?

Mr. Cox. If they had not had the special legislation they could still market any amount they grew in. 1964.

Mr. HAGEN of California. Without any penalty?

Mr. Cox. There is no marketing quota penalty under the cottonwheat bill.

Mr. HAGEN of California. Of course, if the referendum had gone

the other way, it would have been in fact the position of requiring

further special legislation.

Mr. Cox. Right.

Mr. HAGEN of California. Without special legislation.

Mr. Cox. Right. This is correct.
24 INCREASED WHEAT ACREAGE ALLOTMENTS

Mr. HAGEN of California. If the referendum had gone the other

way, then you would have needed special legislation and would have

sought it earlier.

Mr. Cox. Correct. In order to avoid marketing quota penalties.

Mr. HAGEN of California. Yes. As I read the report the Department opposes the legislation for very specific reasons. I was wondering

about that. And I am going to ask you this question, if there would

be any legislation—you know the problem, of course—any proposal

that would be acceptable to the Department?

Mr. Cox. I think that we could be sure the Department would

support the kind of legislation that we have supported in this area in

the past, namely, to give these people in this particular area a reasonable increase in their allotments, and then if they comply, like other

farmers comply, they would be entitled to the same benefits that other

wheat farmers receive. If they did not comply then they would be

entitled to the same benefits that noncompliers receive. It is a

matter of equity, as Mr. Thompson pointed out, so far as the Department is concerned.

Mr. HAGEN of California. You would support an increase in the

allotment up to what they had recently planted?

Mr. Cox. Yes.

Mr. HAGEN of California. And, of course, it has to be a part of the

whole package?

Mr. Cox. In other words, if they wanted certificates, they would

have to do like Mr. Belcher's farmers have to do in Oklahoma. They

would have to comply with the allotments and would have to set

aside the required amount of acreage that the law requires for conservation. This would have to be in addition to the normal conserving

acreages on the farm.

Mr. HAGEN of California. Would you support that type of measure

for 1964 where the farmer has overplanted and would have to plow

under that which he had planted?

Mr. Cox. I had the same kind of problem on this, I think, that

Congressman Olson was running into with his questions, namely,

that since the seeding date has passed the only people you would be

doing anything for in 1964 would be the people who are now out of

compliance. I believe the witness said this was about 10 percent of

the farmers. This would give me some concern. In this area the

disposition date for wheat has not passed and you would have a matter

of equity, it seems to me, within the Tulelake area itself of treating

farmers who complied with the allotment less well than those who

have not complied.

Mr. HARDING. Will the gentleman yield?

Mr. HAGEN of California. Yes.

Mr. HARDING. There would be a reward for not complying.

Mr. Cox. Yes, sir, this is right.

Mr. OLSON. As I understand it, we really have no problem here.

Mr. HAGEN of California. They are seeking a decision for 1965.

Mr. Cox. I feel confident, though, Mr. Hagen, in response to your

query, that we could get the support of the Department to increase

the allotment in 1965 to a reasonable extent.

Mr. HARDING. If Congressman Hagen will yield for one further

question, I would like to ask what would be the Department's attitude

toward eliminating the soil conserving acreage requirement part of the

program on farms of less than 100 acres?
INCREASED WHEAT ACREAGE ALLOTMENTS 25

Mr. Cox. Of course, as you realize, this would require legislation,

too

Mr. HARDING. I believe, as the gentleman pointed out, that this

is a real problem. For a man who has an 18-acre wheat allotment to

take less than 2 acres and put it into the soil conserving processes is

not difficult to do efficiently and profitably.

Mr. Cox. This has two sides to it, as you well know. One of the

considerations for the conservation requirement is to be sure that we

do not reduce the acreage of the wheat at the expense of some other

crop, thereby creating a problem for somebody else. This is the

philosophy and the intention of the provision—this is the reason why

I would be hesitant about making a commitment as to what the

Department's attitude would be.

Mr. HAGEN of California. They testified, those from Tulelake, that

they have a problem with wild oats which would make difficult the

idling of land. How do you answer something like that?

Mr. Cox. They can cultivate their fallow land.

Mr. HAGEN of California. They can keep it cultivated but they

cannot grow on it?

Mr. Cox. To destroy the wild oats.

Mr. BELCHER. I do not know whether I understood you correctly

a while ago. I understood you to say that you would support the

type of wheat legislation that we have had in the past, and that

would mean that if they stayed within the 12,000 acres they would

receive the same benefits that other farmers received?

Mr. Cox. Yes.

Mr. BELCHER. That has not been the legislation in the past, has it?

Mr. Cox. No, sir; but we have supported an increase in the acreages

in the past.

Mr. BELCHER. We have permitted them to do so.

Mr. Co—. They have voluntarily requested that they be excluded

from the support provisions of the act and we have raised no objection

to this.

Mr. BELCHER. Really, in the past all we were asked to do was to

say that they could grow 12,000 acres of wheat without paying a

penalty.

Mr. Cox. That is correct.

Mr. BELCHER. In other words, did I understand you to say that the

Department would permit them for 1965 to grow 12,000 acres of wheat

and receive the same benefits that all of the other wheat farmers

receive, in other words, to bring them into the program?

Mr. Cox. Provided they comply.

Mr. BELCHER. With the 12,000-acre allotment?

Mr. Cox. Yes.

Mr. BELCHER. That gives them a certificate of 70 cents on 45

percent and a 25-cent certificate—it brings the 12,000 acres right into

the program?

Mr. Cox. Yes.

Mr. BELCHER. You would support that kind of legislation?

Mr. Cox. I think that we would. I would recommend it. I

believe that the Department would.

Mr. BELCHER. Would you do that for the wheat farmers in Oklahoma, jump them from 5,000 to 12,000 acres? You are increasing

these allotments by about 250 percent—you are going to give them

12,000 instead of 5,000.
26 INCREASED WHEAT ACREAGE ALLOTMENTS

Mr. HARDING. Will you yield for a question?

Mr. BELCHER. Yes.

Mr. HARDING. Is it not true, though, that these people have been

producing 12,000 acres of Durum wheat for the last few years and is it

not also true that the wheat farmers in Oklahoma have the same

allotments now that they have had for the last few years?

Mr. BELCHER. These folks did not have 12,000-acre allotments,

but they had 5,000-acre allotments.

Mr. HARDING. But they have been producing 12,000 acres of Durum

wheat.

Mr. BELCHER. To grow that 7,000 without penalty is what they

ask. There is no penalty on that. We could not do that for Oklahoma. But because of the fact that we did not think that this

Durum wheat was creating a surplus and not going into the loan we

permitted them to raise an extra 7,000 acres without penalty. We

did not do that for your farmers nor for my farmers nor for any other

farmer in the country except the Durum wheat farmers.

Now, if we bring them into the program and say, "Because we gave

you an exemption for 7,000 acres, now we are going to consider you

as having 12,000 acres of allotment." That is increasing their

allotments by about 2.5 times at the very time that we are decreasing

the allotments all over the rest of the entire country.

In the past when we permitted them to raise the 7,000 extra they

were not in the wheat program at all—they were just not penalized

for that.

Mr HARDING. They are not going to be as well off now if we give

them the 12,000-acre allotment as they were in the past when we just

gave them the permission.

Mr. BELCHER. Well, yes; they are.

Mr. HARDING. No; they are not.

Mr. BELCHER. Yes; they are going to get price supports, they are

going to get certificates, they are going to get a lot of things they did

not get before.

Mr. HARDING. They are only going to get a 25-cent certificate on

wheat that is going to be milled for domestic use and on some additional wheat, they will not even get the certificate for it. Without

the program they could sell their entire crop for the full market price.

Mr. BELCHER. But they will get 70 cents on 7,000 acres they did

not have allotments on and the Oklahoma farmers and your farmers

will take a cut before they can get the 70-cent certificates.

Mr. HARDING. My farmers are going to be making or raising the

same amount of wheat that they have been raising the past few years.

So are yours. And these people are not going to get that privilege

unless we act to give it to them. They have become accustomed to a

diet of ice cream and now they are told that they cannot have any

more ice cream unless Congress acts.

Mr. BELCHER. We have waived this because they had a market for

it. Now we have got 45 million bushels in the loan because there was

not a market for it. There is no more reason now for giving them

certificates for raising stuff that has to go into the loan than there is to

do it for any farmer in your area or in my area.

Mr. HARDING. As I understand it, they still have a cash market

for all the Durum wheat produced in Tulelake.

Mr. BELCHER. In Oklahoma, if you will explain that to my farmers,

all right, but I will not try to do that, to explain why it is possible for
INCREASED WHEAT ACREAGE ALLOTMENTS 27

a farmer with a 50-acre allotment out there to get a 120-acre allotment and all of the benefits that my farmers, in order for them to

get that, my farmer with 50 acres has to take a 10-percent cut before

he gets anything else.

Mr. HARDING. I think that I can explain to the farmers in Idaho

who have been producing 120 acres that a farmer in Tulelake who has

been producing 120 acres is entitled to this acreage allotment, that

they will enable both farmers in Idaho and Tulelake to produce 120

acres, whereas if we do not act the farmer in Tulelake will be cut down

to 45 acres. I believe my Idaho farmers will understand fairness in

this matter.

Mr. BELCHER. I do not deny that you can do it, but if you can,

you can sell snowshoes on a sinking ship, too. I think that you are

pretty good as a salesman but I am not that good.

Mr. OLSON. What is the yield out there?

Mr. STEARNS. About 70 bushels.

Mr. OLSON. About 840,000 bushels that you are talking about. We

really cannot relate it to the 45 million bushels of surplus. We have

in the past provided special legislation for this area.

Let me ask Mr. Cox this question?

Is it possible under the present program for a farmer to only raise

that portion of his wheat allotment for which he would get a 70-centa-bushel certificate?

Mr. Cox. He would only have to plant 45 percent of his allotment.

Mr. OLSON. But he would have to do that.

Mr. Cox. He would have to have at least 11.11 percent of his

allotment set aside for conserving uses and this would be in addition

to the normal conserving acreage established for the farm.

Mr. OLSON. What would happen if he did not choose to raise the

45 percent on which he is eligible for an export certificate?

Mr. Cox. If he grew no wheat lie would not be entitled to any

certificates under the law as we understand it.

Mr. OLSON. We are talking about the 11 percent that would preclude him from raising other crops.

Mr. Cox. That is right.

Mr. OLSON. Are you telling me that we have an obvious loophole

in here whereby a wheat farmer in Minnesota can choose not to raise

that upon which he is entitled to an export certificate and could plant

that to corn instead, and that takes only 11 percent of his wheat

acreage allotment out of production and take 45 percent of his wheat

allotment and put it into corn?

Mr. Cox. Yes, sir; if he is not participating in the feed grain

program.

Mr. HAGEN of California. In other words, the wheat farmer could

choose not to plant any of his wheat and get a certificate equivalent?

Mr. Cox. No; he has to grow at least 45 percent of the allotment

in order to be entitled to all of his domestic certificates. If he should

grow another 45 percent he would also be entitled to his export

certificate.

Mr. BELCHER. Is that in the law or is that a Department regulation?

Mr. Cox. I think, if I am not mistaken, that the allocation is left

up to the Secretary, but I believe that all of the testimony of the

Department indicated that it would be in the neighborhood of about

90 percent and equally divided between domestic and export.
28 INCREASED WHEAT ACREAGE ALLOTMENTS

Mr. BELCHER. I did not recall its being in the law.

Mr. Cox. This is correct.

Mr. BELCHER. That is a departmental regulation, like cross compliance.

Mr. OLSON. In other words, if you are in compliance with your

wheat allotment and conserving acreage, the first bushel of wheat

that you produce gets the 70-cent certificate?

Mr. Cox. That is correct.

Mr. OLSON. And if you have produced your entire 

Mr. Cox. 45 percent.

Mr. OLSON (continuing). Part, which is about 45 percent, you say,

this is divided out on the basis of domestic use?

Mr. Cox. Yes.

Mr. OLSON. The first bushel of wheat that you market, you are

entitled to the 70 cents a bushel and each bushel thereafter until you

reach 45 percent of your allotment.

Mr. Cox. This is correct.

Mr. OLSON. If your acreage allotment were increased, that is, to

comply with the law, they could increase that portion of the wheat

for which they are eligible for the 70-cent certificate and the only

thing that they would need to do would be to put 11 percent of their

acreage allotment idle because the other 45 percent would not be

tied up.

Mr. Cox. This is correct, and they would, also, have to maintain

the normal conserving acreage.

Mr. OLSON. That is what I said, 11 percent of the allotment.

Mr. Cox. Yes.

Mr. OLSON. That is all. Thank you.

Mr. SHORT. Is the Durum wheat that is produced in the Tulelake

area all of the Durum wheat that is processed in California?

Mr. THOMPSON. I understand not. I believe the witnesses before

us commented on that. If I understand your question, to put it the

other way around, is the Durum wheat processed in California only

that produced in the Tulelake area is that your question?

Mr. SHORT. The point I am trying to make 

Mr. Cox. It costs quite a bit to transport it from your area. I

was told it is about 62 to 68 cents a bushel.

Mr. HAGEN of California. As I understand it, Durum wheat from

North Dakota is not sent in.

Mr. SHORT. I have a telegram right here from. them.

Mr. HAGEN of California. They thought that it would increase the

general consumption of Durum wheat in California and that the local

supply, even if it were increased, would not be adequate to supply

that need so that there would be more North Dakota wheat sold in

California than under the present situation of large-scale substitution

of inferior grades in semolina products.

Mr. SHORT. I do not think there is any Durum wheat from North

Dakota sold in California. That is, if I understand it correctly.

The freight differential would stop that coming in.

Mr. Cox. It amounts to 62 to 68 cents a bushel, or something,

like that.

Mr. SHORT. What I am getting at is this, there is some, but very

little Durum wheat grown in that general area. Ate we treating the

Tulelake area differently than we might be treating anyone else? We

are considering a special proposition here, as I see it, and I have gone
INCREASED WHEAT ACREAGE ALLOTMENTS 29

along with this any time it ha E been before the committee, as have most

of us, because this is a rathei unique situation.

Mr. Cox. I think that we would all have to confess that Tulelake

legislation is special legislation.

Mr. SHORT. That is right. And for what seemed to me to be

justifiable reasons. Here was a market for a product that no one else

could fill so what was wrong with allowing these farmers in this area

who could raise this Durum wheat that is not grown anywhere else in

that area to fill the needs of the market in California and along the

west coast.

If I understood rightly, Mr. Stearns or somebody, I believe, made the

statement that this was about one-third of the total product produced

out there. Where does the rest of it come from?

Mr. STEARNS. Would you answer the question, or whoever can?

Mr. JOHNSON. This would supply about one-third of the market

for macaroni products used out there. Where they get the balance

to manufacture these products, I do not know, but the 12,000 acres

we were allotted supplied about one-third of the Durum wheat used

in the making of macaroni products. That is, at the present time.

Whether they import materials from other countries, or wherever they

get it, or whether they get Durum from other areas, I do not know.

Mr. OLSON. I think I recall that last year the testimony was that

these mills could not be continued in operation if they had to pay for

bringing in the Durum from other areas, but, obviously, they will

have to do so. There is one thing that should be cleared up a little

bit. I think that we all agree that we are talking about problems

of legislation that were created, that the price of your wheat would

not have been $2.10 that it was last year, and is now, had no legislation been passed. The market has affected your price out there

as I think you have indicated, so that the legislation did not just

discriminate against you—it did seek to raise the price level of wheat

from which you will benefit as well as all wheat farmers will benefit.

M. SHORT. One other question. Am I right, Mr. Johnson, in my

impression that you are not asking for anything in the way of legislation that will affect the 1964 crop—you are not attempting to do

anything about that, is this right?

Mr. JOHNSON. I believe it is too late. The Durum wheat growers

in that area have taken a chance under the new wheat bill and they

have planted. Probably 10 percent of them are overplanted at the

present time and the balance of them are in compliance, but it is

planted on approximately 5,000 acres; 7,000 acres of the Durum that

was planted last year is not planted this year. We are trying to get

straightened out, so that in the 1965 season it will be known to all of

our growers out there. We are asking that we be allowed to plant,

at least, 12,000 acres so that we do not have to participate in the

certificate part of the program. We would like to get out from under

that.

Mr. SHORT. I see your point. Well, now, this does not pose any

greater discrepancy than in other parts as to wheatgrowers. If you

plant within your allotment in 1964, which you, practically, have

done, you will still only be eligible for something corresponding to the

prices you have been getting in the past, 45 percent of the normal

prpthiction on your allotment, is that not true? I do not just understand bow your processors are going to secure the additional supply.

Can you answer that?
30 INCREASED WHEAT ACREAGE ALLOTMENTS

Mr. STEARNS. I can answer part of it, Mr. Short. We have

affected the demand for Durum wheat on the Pacific coast significantly

since we began to grow it. There is a demand now for macaroni

products made from Durum wheat out there that did not exist before

we were in the market. Those millers are going to buy additional

Durum wheat this year. In fact, some was purchased in Montana

in anticipation of this short crop just the other day from the Commodity Credit Corporation stocks, and quite a significant amount of

it, in anticipation of the short crop that we were going to have. It

was made known to them that we were going to have only about

5,000 acres to plant, so they are going to stay with us for this 1 year.

They have a large percentage of their customers conditioned to the

superior macaroni products that Durum wheat makes. They are

going to satisfy that demand and pay a price for the wheat plus the

freight that it takes to get it there for awhile. That is the way the

situation stands now. We are hopeful that we will be able to be

producing in the market again, but for this year they are going to

import Durum unmilled.

Mr. SHORT. You would be forced then on the 45 percent of your

production that is eligible for the export certificates to put that under

loan; also, the additional 10 percent. You would get the certificate

for the 25 cents and you would put that under the loan and it will not

be exported because nobody will buy a few thousand bushels of

wheat for export. There will not be enough for anybody to ship.

But the Commodity Credit Corporation will take possession of it and

they can sell it to the mill to process it.

Mr. STEARNS. These things come a full circle. The farmer is

usually the one that picks up the bill for it. In the ease of the 1964

crop that would be the difference between the 45 percent and the

balance.

Mr. Cox. It is my understanding that this wheat is always sold at

a premium out there and I think it would be selling above our loan rate.

Mr. SHORT. Regardless, it would have to sell at a premium above

the 70 cents the processor would pay for the certificate on each bushel.

This would make this wheat excessively high for the processor.

Mr. Cox. No. The farmers could sell at the market price and get

more than they could by putting it in the loan in California.

Mr. BRUCE. It would not have to go into storage.

Mr. Cox. The national average support price, I do not know what

it is in California, but based on the $1.30—do you know what it is?

Mr. THOMPSON. It is around there.

Mr. Cox. About $1.30. They will get more than that from the

mills.

Mr. SHORT. The miller would actually be 

Mr. Cox. But the miller would be required to pay for the 70-cent

certificate.

Mr. SHORT. Buying from the Commodity Credit Corporation instead of buying it otherwise.

Mr. Cox. The farmer, on the other hand, if he is in compliance

with the program and, as indicated, 90 percent of them are, would

be eligible for his certificates.

Mr. HAGEN of California. These buyers of wheat at a premium

would make a savings on the 70 cents a bushel in the West, would they

not, because of the freight rate differential?
INCREASED WHEAT ACREAGE ALLOTMENTS 31

Mr. Cox. Even last year I believe these gentlemen will tell you that

their wheat has consistently sold above our support level.

Mr. HARDING. Will you yield?

Mr. SHORT. I will yield.

Mr. HARDING. To clarify this in my mind, under the program, on

the Durum wheat that is produced in Tulelake, the farmer sells it to

the miller and the farmer will only receive a 70-cent certificate on.

45 percent, a 25-cent certificate on the next 45 percent, and no certificate on the next 10 percent?

Mr. Cox. Right

Mr. HARDING. But the miller who mills it will pay to the Commodity Credit Corporation the 70-cent certificate on the entire crop?

Mr. Cox. It has to be milled.

Mr. HARDING. But by the same token we have 45 million bushels

surplus and it is very possible that a farmer producing Durum wheat

in the Middlewest somewhere, his entire crop will go into the Commodity Credit Corporation storage and this will balance out nationally;

is that correct?

Mr. Cox. This would be possible, of course, to the extent that

Durum wheat would move from the Dakotas and from Montana into

the west coast markets.

Mr. HARDING. It is very possible that the entire crop of Durum

wheat produced in the Middle West can go into export so that the

entire crop would get the 25-cent export certificate.

Mr. Cox. This is true.

Mr. HARDING. But it Will balance out.

Mr. Cox. Right.

Mr. BELCHER. Just for clarification, do I understand that the

Tulelake area has a little less than 5,000 acres, actually?

Mr. STEARNS. A little less than that.

Mr. BELCHER. Why is it that the man who does not comply on his

proportionate share of that allotment is entitled to the 45-percent

certificate?

Mr. Cox. The only farmers who get certificates are those who

comply with the program; 45 percent of that represents his share of

the domestic market, the other 45 percent represents the export

share.

Mr. BELCHER. Thank you.

Mr. DOLE. I am just wondering how many acres were planted last

year—how many acres were actually planted?

Mr. STEARNS. Just a few acres short of the 12,000-11,900 and some

acres—just a little short of it.

Mr. DOLE. Why was there not more planted this year?

Mr. STEARNS. Why was there not more wheat planted this year?

Mr. DOLE. Yes.

Mr. STEARNS. They held off the planting in anticipation to see

what the Congress did in the wheat-cotton bill and, frankly, they were

afraid of overplanting, because we did not know at that time what the

penalties were going to be. They say it is a voluntary program, but

that concerns itself with the definition of the word and in the opinion

of the people out there it was not voluntary ,and they were afraid to

go on a large overplanting because of that 70-cent certificate that the

miller had to have and he would have to pay correspondingly less to

the farmer because of that.
32 INCREASED WHEAT ACREAGE ALLOTMENTS

Mr. DOLE. What is the price now for this wheat? What is the

cash market for the wheat now? For the wheat now, even with this

drop on July 1?

Mr. STEARNS. So far as we are concerned, we have nothing for

sale now and will not have until this fall. I believe that this whole

certificate thing is pretty much in a state of flux. There is a confusion

in the minds of our elevators and in the minds of the millers out there

that they are not sure what is going to happen.

Mr. DOLE. Will it drop the cash price?

Mr. Cox. The cash price will drop throughout the country; yes, sir.

Mr. DOLE. You mean there will be a difference between the $1.80

and the $1.30?

Mr. Cox. It will seek the support.

Mr. DOLE. If I had wheat and now I would sell it for a top price

including the certificate.

Mr. Cox. I do not understand what you mean.

Mr. DOLE. If I had some new wheat now, this crop year, I could

sell it in the cash market and if in compliance still get certificate and

diversion payments.

Mr. Cox. Yes, you could.

Mr. DOLE. And with the diversion payments, that could be about

$2.70 a bushel.

Mr. Cox. I do not know any place where wheat is selling for $2 in

the market at the present time.

Mr. JOHNSON. Mr. Baghott has an observation that he would like

to make at this time.

Mr. BAGHOTT. The way I understand this, the millers are given a

chance from July 1 to August 15 to put their supply in that they will

need for milling up to that date. They will pay, I believe, 25 cents a

bushel for the milling needs from July 1 to August 15. If that is all

milled up by that time, I can also understand that they automatically

have to pay 70 cents on the surplus that they have, is that correct, I

think it is.

Mr. Cox. There is a special transition procedure on the wheat.

Mr. PURCELL. Mr. Beermann, do you have any questions?

Mr. BEERMANN. I just have one question for Mr. Stearns. You

said you had enough seed wheat for seeding 12,000 acres.

Mr. STEARNS. Yes.

Mr. BEERMANN. If the seed wheat that you still have on hand to

seed the other 7,000 acres

'

and you said this was treated, is it such

that it can be used for next year's planting?

Mr. STEARNS. It will be good seed, but it will be carried on the

inventory for that length of time. It is treated with • to

prevent rust. It could not go into food channels. I , as

seed for next year, but we will have to carry it on ntory fo

next year and it is not salable until it can be used fo "ch.

Mr. BEERMANN. You do not have to retreat it?

Mr. STEA RNS. It is treated now. It will not ave Uw eOral

again.

Mr. PURCELL. Are there any other witnesses he ho want to b

heard at this time? //, 4b

If not, the subcommittee will adjourn to meet at a • it:

nounced.

(Whereupon, at 12:05 p.m., the subcommittee adjourned.)

an0