February 18, 1963
PAGE 2399
POTATO MARKETING BILL
Mr. MUSKIE. Mr. President, I introduce, for appropriate reference, a bill to amend the Agricultural Adjustment Act of 1938, as amended, to provide for supply management of Irish potatoes through establishment of acreage allotments.
I ask unanimous consent that the bill remain at the desk through February 28, to allow other Senators the opportunity to join in cosponsoring this legislation.
The PRESIDING OFFICER. The bill will be received and appropriately referred; and, without objection, will remain at the desk as requested.
The bill (S. 829) to amend the Agricultural Adjustment Act of 1938, as amended, to provide for marketing quotas on Irish potatoes through establishment of acreage allotments, introduced by Mr. MUSKIE, was received, read twice by its title, and referred to the Committee on Agriculture and Forestry.
Mr. MUSKIE. Mr. President, the bill which I am introducing today is the result of recommendations by the National Potato Advisory Committee, a 29-member group drawn from all segments of the potato industry in all areas of the country. Last year this committee recommended similar legislation, which I introduced as S. 3050. Today's bill is a revision of S. 3050.
I want to take this opportunity to commend Secretary of Agriculture Freeman for continuing the committee and the potato industry for its cooperation in working out a proposal for the potato economy. I am proud of the role my State's representatives have played in its deliberations.
Since S. 3050 was introduced last year conditions in the potato industry have not improved. The Department of Agriculture has undertaken a diversion program for the 1962-63 marketing year, and there is ample evidence that a substantial surplus of potatoes exists nationwide. The Potato Advisory Committee's action indicates its continuing concern with the problem of surplus production, and its recognition of the fact that individual areas cannot cope with the problem by themselves. The revisions in the present bill represent their best judgment on improvements in the management of the program.
The advisory committee proposal involves supply management through acreage allotments, if approved by farmers in a referendum.
Two points should be stressed in connection with this program: First, it involves industry self-help; and, second, it does not include price supports.
My concern for the potato industry is quite natural. Potatoes represent a major factor in Maine's agricultural economy, and they are the dominant commodity in Aroostook County, Maine. But the potato industry is a boom-and-bust economy, marked by wide variations in prices paid to farmers from year to year and within a marketing year. The last 2 years have been particularly difficult for Maine farmers and for farmers in other parts of the country.
Two years ago I asked the Department of Agriculture to undertake an economic study of the potato industry. I had been concerned to find that there was no general analysis available of the industry and its problems.
In response to my request, Secretary Freeman directed Agricultural Economics Director Willard W. Cochrane to make such a study. That study has been published. It is most instructive.
During the past 50 years there have been massive changes in the potato industry involving-as the USDA study points out -- "sharply declining per capita consumption, rapidly increasing specialization and concentration of production, greatly improved breeding and cultural methods, and significant changes in utilization and marketing practices."
In the period between 1920 and 1961 yield per acre almost tripled; at the same time acreage declined almost 60 percent.
The result was an almost stable trend in total production. Production increased from 223 million to 274 million hundredweight, or less than one fourth. We might have assumed that with our rapidly expanding population there would have been a corresponding increase in the consumption of potatoes. There was no such increase. In 1910, per capita consumption of potatoes was 198 pounds. By 1950, per capita consumption had dropped to 105 pounds. Total consumption for food dropped from 180 million hundredweight for a population of 92 million in 1910 to 165 million hundredweight for a population of 150 million in 1950.
In the past decade the downward trend in per capita consumption has been halted, and there has been a modest increase in total consumption. But the inelasticity of demand for potatoes has resulted in wide fluctuations in prices.
The Department's economic report pointed out that:
During the last decade a 1-percent change in production of potatoes resulted on the average in a four to 5 percent change in prices to growers. Because of this highly inelastic demand for Potatoes, year-to-year variations in production, although usually moderate, exert tremendous influences on prices and income. These variations in production during the last decade average about 8 percent. About 60 percent of the year-to-year variation in production was due to changes in acreage, and 40 percent was due to variation in yield.
When we compare the price variations in potatoes with other commodities, we can see how serious the problem is.
Again I quote from the departmental study:
During the last decade, year-to-year variations in prices received for potatoes around the general farm price level averaged 47 percent. This was 5 to 8 times the price variation for most field crops, and compared with 16 percent for hogs, and 11 percent for beef cattle. The problem of sharply fluctuating and frequently low prices and income has been more serious as farms have become larger and more highly capitalized.
The large capital investment and operating capital requirements of today's larger farms have greatly increased the risks for individual farmers in years of low prices.
It should be noted that low farm prices do not mean substantially lower consumer prices. The Agriculture Department study indicates that a 10-percent drop in retail prices will result in a 30-percent drop in the price to the grower.
Obviously it is to the advantage of the grower, the processor, the marketer, and the consumer of potatoes to stabilize prices.
One means of price stabilization involves increased demand through quality improvement, processing a variety of potato products, and aggressive marketing techniques. This is being done by the industry, with some success.
The second technique involves the use of marketing agreements to control the quality of table-use potatoes and to introduce a measure of supply management. This is being done by a large segment of the industry. An effort is being made to extend marketing agreements to cover the entire country.
The third approach is the potato acreage allotment bill. This is the legislation I have introduced today.
The bill provides for the appointment by the Secretary of Agriculture of a National Potato Advisory Board, representing commercial potato growers. In addition, the Secretary may appoint State or area advisory committees of commercial potato growers.
Under the terms of the proposal, the Secretary of Agriculture, when he determines that the total supply of potatoes is likely to exceed in the next marketing year the normal supply of potatoes, shall proclaim, prior to January 1, a national marketing quota for the purpose of computing the national acreage allotment. Prior to Fe February 1, the proposed national quota would be submitted to farmers for a secret ballot referendum.
In order for the acreage allotment to take effect, at least two-thirds of the farmers voting, or 50 percent of the farmers voting and representing two-thirds or more of the acreage planted by the farmers voting, must approve the national quota.
The national acreage allotment under this legislation would be determined by dividing the quota by the national average yield per acre in the 2 highest yield years of the 3 crop years preceding the year in which the quota is proclaimed. State and farm acreage allotments would be established on the basis of the 2 highest production years of the 3 preceding crop years. A one-half of 1 percent acreage reserve would be established for new producers. Minimum acreage allotments would be set at 2 acres.
Farmers would be permitted to market all potatoes produced on their acreage allotment, but would be assessed at $2 per hundredweight or 75 percent of the June 1 parity, whichever is higher, penalty on the farm marketing excess. The farm marketing excess would be computed as the average yield per acre for the farm multiplied by the acres planted in excess of the acreage allotment.
Mr. President, this legislation would establish a supply management program based on farmer approval, and geared to the needs and marketing opportunities of the industry. I want to stress the fact that the central feature of this bill is the acreage allotment. The marketing quota referred to in the bill is simply a statistical device designed to set the basis for acreage allotments. Farmers would not be told how much they could market.
I believe this proposal represents a reasonable approach to the potato problem which deserves thoughtful consideration.
I hope that we will be able to hold hearings on the legislation in the near future. I shall welcome the support and assistance of my colleagues who wish to cosponsor the bill with me.
Mr. President, I ask unanimous consent that the bill and a section-by-section analysis be printed in the RECORD at this point.
[BILL TEXT OMITTED]
SECTION-BY-SECTION ANALYSIS OF POTATO MARKETING QUOTA BILL
Section 1 of the bill provides a new part to the Agricultural Adjustment Act of 1938, as amended, to authorize marketing quotas on Irish potatoes.
LEGISLATIVE FINDINGS
Section 360m of such new part contains legislative findings, showing need for the legislation and providing a constitutional basis therefor under the commerce clause.
ADVISORY BOARDS
Section 360n provides for the nomination and appointment by the Secretary of a National Potato Advisory Board consisting of commercial potato growers or their representatives, to advise with and make recommendations to the Secretary with respect to the administration of the potato marketing quota program. If a national advisory board is appointed for use in connection with a national potato marketing order, all or part of the members of such board could be utilized as the National Potato Advisory Board. The Secretary is to also appoint State advisory committees. Such State advisory committees would be mandatory in commercial potato-producing States (i.e., States producing more than 2.5 million hundredweight of potatoes or having one or more counties producing one-half million hundredweight or more of potatoes), permissive in all other States. Board and committee members are not to be paid but are to be reimbursed for travel and subsistence expenses.
NATIONAL MARKETING QUOTA
Subsection (a) of section 360o provides that the Secretary shall, whenever, prior to January 1 of any marketing year, he determines that the total supply of potatoes for the next marketing year will, in the absence of a marketing quota program, be likely to be excessive, proclaim a national marketing quota for potatoes to be applicable to the crop of potatoes produced for market in such next marketing year. Such crop consists of potatoes produced from the six seasonal groups of potatoes known as late summer, fan, winter, early spring, late spring, and early summer.
Subsection (b) of section 360o provides for proclaiming the amount of the national marketing quota as the amount of potatoes which, when added to estimated imports and the estimated production by producers producing 2 acres or less, will make available a supply of potatoes equal to the normal supply.
Subsection (c) of section 360o authorizes the Secretary at the time he proclaims quotas on the 1964-65 crop of potatoes, if he determines it administratively feasible, to proclaim in addition a marketing quota to be applicable to one or more of the seasonal groups, excluding the late summer and fall crops, of the 1963-64 crop. The bill states the dates by which the proclamation for the 1964-65 crop would have to be made and the referendum under section 360p with respect thereto held in order for the Secretary to be able to include a seasonal group in the additional proclamation. In the event such an additional proclamation should be issued, the farm acreage allotments established for the 1964-65 crop would be used for the purposes of the quotas on the 1963-64 crop, modified as required to allot to farms the share of the full year's allotment attributable to plantings of the seasonal groups included in the additional proclamation. Subsection (c) also provides that the referendum to determine whether farmers favor marketing quotas in the 1964-65 crop of potatoes shall be limited to the one question of whether farmers favor quotas for both the, 1964-65 crop and such of the seasonal groups of the 1963-64 crop as are included in the additional proclamation.
REFERENDUM
Section 360p provides for the holding of a referendum, by secret ballot, not later than the February 1 following the proclamation of a marketing quota on potatoes for the next marketing year to determine whether farmers favor or oppose the quota. The Secretary could also submit in any referendum (except the 1964-65 referendum, as stated in section 360o(c) ) the question of whether farmers also approve or disapprove quotas for the 3 marketing years beginning with the year for which a marketing* quota had been announced. A favorable vote of two-thirds or more of those voting or 50 percent of those voting and two-thirds or more of the acreage represented by those voting is required for the quota to become effective. Any farmer would be eligible to vote in a referendum if he was engaged in the production of more than 2 acres of potatoes during at least 1 of the 2 crop years immediately preceding the crop year in which the referendum is held. However, the 1961-62 and 1962-63 crop years in the case of early spring, late spring, and early summer seasonal groups and the 1962--63 and 1963-64 crop years in the case of the other seasonal groups would be excluded from the 2-year period in determining eligibility to vote.
The Secretary would be required to announce the results of any referendum within 30 days after the date of the referendum.
STATE MARKETING QUOTAS AND STATE ACREAGE ALLOTMENTS
Section 360q(a) provides for the apportionment of the national marketing quota, less the national reserve provided for in subsections 360r (c) and (d), among the several States on the basis of the total production in the States during the 2 years of highest production of the immediately preceding 3 crop years (excluding the production of producers having 2 acres or less and excluding the 1961-62 and 1962-63 crop years in the case of early, spring, late spring, and early summer seasonal groups and the 1962-63 and 1963--64 crop years in the case of other seasonal groups), with adjustments for abnormal conditions affecting production.
Section 360q(b) provides for the conversion of the State marketing quota into a State acreage allotment by dividing such quota by the average yield per acre of potatoes in the State during the 2 years of highest yields of the 3 crop years immediately preceding the crop year in which the national quota is proclaimed, with necessary adjustments for trends in yields and abnormal conditions affecting yields.
APPORTIONMENT OF STATE ACREAGE ALLOTMENT
Section 360r(a) provides for the apportionment of the State acreage allotment, less a reserve of not to exceed 11/2 percent of the State allotment in the first year quotas axe in effect, among farms in the State on the basis of the acreages of potatoes planted in the State by producers on the farm during the 2 years of the 3 crop years immediately preceding the crop year in which the national quota is proclaimed in which the highest acreages were planted by them. In order that farmers may not, by increasing their plantings of potatoes before the bill goes into effect, obtain increased acreage allotments for future years, the planted acreages during the 1961-62 and 1962-63 crop years in the case of early spring, late spring, and early summer seasonal groups, and during the 1962-63 and 1963-64 crop years in the case of late summer, fall, and winter seasonal groups are excluded from the 3-year period. Appropriate adjustments in allotments are authorized for such factors as land, labor, and equipment available for the production of potatoes, crop-rotation practices, and other factors determined necessary to assure fair and equitable allotments. In States where potatoes are produced in more than one seasonal group, separate allotments for each seasonal group are authorized.
Subsection (b) of section 360r provides for the establishment of separate production areas in any State if separate statistical data are available and if the Secretary determines such establishment will facilitate effective administration of the act. If so established, each such production area would be deemed to be a State for purposes of the program.
Subsection (c) of section 360r provides that a reserve of not to exceed one-half of 1 percent of the national marketing quota, converted to acreage on the basis of the national average yield of potatoes, shall be made available (1) for allotments to "new" producers, i.e., producers who did not produce potatoes in any of the immediately preceding 3 years (excluding the 1961A2 and 1962-63 crop years in the case of early spring, late spring, and early summer seasonal groups and the 1962-63 and 1963-64 crop years in the case of other seasonal groups from such 3-year period); and (2) to provide additional allotments to producers who receive inequitable allotments because (i) of short history of production, or (ii) of low planted acreages from some cause beyond the control of the producer, or (iii) of the purchase of machinery prior to 1962 which cannot be utilized. Such "new" allotments would be based on one or more factors such as availability of land, labor, and equipment for the production of potatoes, past experience, investment of the producer in equipment prior to 1962, on income derived from farming for his livelihood, and such other factors considered necessary to establish fair and equitable allotments.
Subsection (d) provides that for the first crop year acreage allotments are in effect, an additional reserve of not to exceed one-half of 1 percent of the national marketing quota plus, for use in the State, not to exceed 1% percent of each State's acreage allotment shall be made available for the same purpose as provided in clause (2), subsection (c), above.
Subsection (e) contains several paragraphs which apply to the establishment of potato allotments which in some particulars are in addition to, or differ from, provisions applicable to other commodities. These are:
Paragraph (1) provides that no noncommercial. producer (defined in par. (2) below) shall be considered to have produced potatoes for the purpose of determining eligibility for an allotment under subsection (a) above.
Paragraph (2) defines a noncommercial producer as a producer whose average acreage planted to potatoes during the 2 crop years in which the highest acreages were planted of the 3 crop years used in determining allotments is 2 acres or less.
Paragraph (3) provides that no allotment shall be established for a producer which, if established, would be 2 acres or less.
Paragraph (4) provides that the acreage of potatoes produced by any noncommercial producer on a farm for which an acreage allotment is established shall be counted as potato acreage in determining compliance with the farm acreage allotment.
Paragraph (5) provides that any acreage planted to potatoes on any farm in excess of the farm acreage allotment shall not be considered in establishing future allotments to producers.
Subsection (f) provides that the provisions of section 377 of the Agricultural Adjustment Act of 1038, which provides for automatic preservation of acreage history for any commodity subject to marketing quotas if 75 percent or more of the farm acreage allotment is planted during the current year or either of the 2 preceding years, shall not be applicable to potatoes; and that the potato farm acreage allotment shall be deemed to have been fully planted for the purposes of determining future State and producer acreage allotments if 90 percent or more of the farm acreage allotment for the current year is planted to potatoes.
AMOUNT OF THE FARM MARKETING QUOTA
Section 360s defines the farm marketing quota of potatoes as the actual production of potatoes planted on the farm less the farm marketing excess; and the farm marketing excess as an amount of potatoes equal to the normal yield per acre of potatoes times the number of acres planted in excess of the farm acreage allotment. In computing the farm marketing quota and farm marketing excess, a farm having no allotment shall be considered to have an allotment equal to 2 acres.
It is also provided that if separate farm acreage allotments are determined for any seasonal group of potatoes, as authorized under section 360r(a), such seasonal group shall be considered as a separate crop for the purposes of determining the farm marketing quota.
COMPLIANCE
Subsection (a) of section 360t sets the rate of the marketing penalty on the farm marketing excess at $2 per hundredweight, and for an increase, beginning with the 1964-65 crop, to 78 percent of the parity price for potatoes if 75 percent of such parity price as of June 1 of the crop year exceeds $2.
Subsection (b) provides that penalty shall be computed upon the normal production of the excess acreage.
Subsection (c) provides that each person entitled to share in the crop of potatoes or proceeds thereof shall be jointly and severally liable for the entire amount of penalty incurred on such crop of potatoes.
Subsection (d) provides that until the penalty has been paid, any crop of potatoes subject to marketing quotas in which the producer liable for payment of the penalty has an interest shall be subject to a lien in favor of the United States for the amount of the penalty.
Subsection (e) provides that until the penalty on the farm marketing excess is paid each hundredweight of potatoes sold to any person in the United States shall be subject to penalty and the penalty collected by the buyer, who may deduct the amount of penalty from the price paid the producer. If the buyer fails to collect the penalty, he and all persons entitled to share in the potatoes produced on the farm or proceeds thereof shall be jointly and severally liable for the penalty.
Subsection (f) provides for interest at 6 percent per annum on unpaid penalties,
Subsection (g) provides that the producers on any farm may obtain an exemption from marketing quotas if they make application therefor, market no potatoes from the farm, and use the entire production of potatoes for food for the producers, their families, and households, or for seed or feed for livestock owned by any producer on the farm or by a subsequent owner or operator of the farm. Failure to comply with the conditions governing the exemption will cause the exemption to become null and void unless the failure is due to circumstances beyond the producer's control. Any producer obtaining such an exemption win not be eligible to vote in the referendum held on the next crop of potatoes.
TRANSFER OF ALLOTMENTS AND ACREAGE HISTORY
Subsection (a) of section 360u makes provision for the transfer of allotments from one producer to another. (Section 353(f) of the 1938 Act (Public Law 87-412) permits transfer of rice allotments under certain conditions.)
Paragraph (1) of the subsection provides that a producer cannot transfer all his allotment unless he withdraws from the production of potatoes for the crop year in which the transfer becomes effective, and for one crop year after such transfer.
Paragraph (2) specifies that the production of potatoes on a leased allotment shall be deemed to be the production of the lessor for the purpose of potato acreage history.
Paragraph (3) provides that a transfer by sale or gift shall be accompanied by a transfer of the potato acreage history, and that, with respect to any transfer made under subsection (a), the transferee must be a person with experience in producing potatoes.
Subsection (b) of section 360u provides for a decedent's potato acreage history being apportioned as provided by will or, in the absence of a will, among those heirs who continue the decendant's farming operations.
Subsection (c) of section 360u contains a procedure for the transfer of history acreage upon the dissolution of a partnership.
Subsection (d) of section 360u provides that transfers of allotments and acreage history shall be made at such time and be supported by such information as may be required under regulations issued by the Secretary.
ADJUSTMENT AND TERMINATION
Section 360v authorizes the Secretary, after the proclamation of a national marketing quota, to increase or terminate the quota, if he finds on the basis of an investigation that the amount of potatoes free of marketing restrictions will be less than a normal supply of potatoes. If increased he shall specify the amount of increase in existing quotas on a seasonal group basis or on the entire crop as he finds necessary to make the amount of potatoes free of marketing restrictions equal the normal supply. If an increase is proclaimed, acreage allotments (on a seasonal group or for the entire crop) shall be increased by a uniform percentage.
APPLICABILITY OF THE PART
Section 360w provides that the potato marketing quota program shall apply only to the 48 contiguous States and the District of Columbia.
APPLICABILITY OF DECLARATION OF POLICY TO POTATOES
Section 2 of the bill substitutes the word "potatoes" for "corn" in the declaration of policy provisions of section 2 of the Agricultural Adjustment Act of 1938, as amended, relating to the regulation of interstate and foreign commerce in the agricultural commodities to which the marketing quota provisions of the 1938 act were made applicable. Originally, corn was one of the commodities for which marketing quotas were authorized. The corn provisions of the 1938 act were repealed in 1954, but the reference in section 2 of the act to corn was never specifically repealed. The substitution of "potatoes" for "corn" as provided in section 2 of the bill is a convenient way to make the declaration of policy applicable to potatoes and inapplicable to corn.
DEFINITIONS
Section 3 of the bill amends section 301 (b) of the Agricultural Adjustment Act of 1938, as amended, to define for potatoes the terms "market," "marketing year . . . normal production . . . normal supply," "normal yield" for farm and county, "total supply," "potatoes," "crop year," and the six "seasonal groups" of potatoes. These definitions are similar to the definitions of these terms applicable to other commodities. It should be noted, however, that the definition of "normal supply" includes provision for adjustment of the normal supply to provide a supply calculated to bring prices not in excess of 100 percent of the parity price but as near to such price level as the Secretary determines to be appropriate.
REVIEW PROCEEDINGS
Section 4 amends section 361 of the Agricultural Adjustment Act of 1938, as amended, in order to make the review proceedings which are presently applicable to marketing quotas on the commodities now covered by the act applicable to potatoes.
ADJUSTMENT OF QUOTAS
Section 5 of the bill amends section 371 (b) of the Agricultural Adjustment Act of 1938, as amended, to include potatoes among the other commodities subject to marketing quotas with respect to which the Secretary is authorized to increase or terminate any marketing quota or acreage allotment on account of a material increase in export demand or national emergency or to effect the declared policy of the act. This authority is in addition to that provided in section 360v which is designed to insure the production of a normal supply of potatoes.
PAYMENT AND COLLECTION OF PENALTIES
Section 6 of the bill amends section 372 (a) of the Agricultural Adjustment Act of 1938, as amended, in order to make the provisions of that section, which deal with the payment and collection of penalties, applicable to potatoes.
REPORTS AND RECORDS; MEASUREMENT OF FARMS; REGULATIONS
Section 7 of the bill amends sections 373, 374, and 375 of the Agricultural Adjustment Act of 1938, as amended, in order to make the provisions of those sections, which deal with reports and records, measurements of farms, and authority to issue regulations, applicable to potatoes.