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basic commodity. In fact, section 8 (a) of Public Law 729, chapter 578, provided that “The Commodity Credit Corporation is authorized and directed to make available upon any crop of the commodities cotton, corn, wheat, rice, tobacco, and peanuts harvested after December 31, 1941 *, if producers have not disapproved marketing quotas for such commodity for the marketing year beginning in the calendar year in which such crop is harvested, loans as follows:

In Public Law 662, chapter 497, approved July 9, 1942 (amending the Agricultural Adjustment Act of 1938 with respect to marketing quotas for peanuts), section 359 (d) is amended to read as follows:

“The word 'peanuts' for purposes of this Act shall mean all peanuts produced, excluding any peanuts which it is established by the producer or otherwise in accordance with regulations of the Secretary, were not picked or threshed either before or after marketing from the farm.”

Nothing in the Stabilization Act which withdrew peanuts as such from the purview of the Steagall amendment refers to any possible distinction in varieties, or ultimate uses of peanuts. There is no reason to believe any distinction can be drawn other than after the fact of actual use of peanuts as being either oil or edible peanuts.

In fact, one may question the justification for even classifying peanuts as an "oil" crop on the basis of their utilization. For over a period of years a maximum value accruing to the farmer from the production of peanuts has been as they have been consumed as edible peanuts.

Prices which have prevailed for peanuts as edible peanuts in comparison with the prices of commodities from which our edible oils are produced make it prohibitive to produce edible oil from peanuts. This is illustrated in the following table showing the approximate cost of oil from different products under 1947 prevailing prices of such products:

Approximate cost of oil from different products

Oil yield

Price, 1947

Meal return

Oil cost per

pound

per ton

Cents

Peanuts Soybeans. Cottonseed. Copra.-

Pounds

600
300

310
1, 260

$200
108

85
200

1 $35, 20
1 64.00
1 36.00
2 24. 50

29
19
17
14

1 At 4 cents per pound.
2 At 342 cents per pound.

Standard factors (Bureau of Agricultural Economics, Department of Agriculture):

Peanuts : 100 pound farmer stock yields 29 pounds oil and 44 pounds meal. Soybeans: 1 bushel (60 pounds) yields 9 pounds oil and 48 pounds meal. Cottonseed: 1 ton yields 310 pounds oil and 900 pounds meal.

Copra : 100 pounds yields 63 pounds oil and 35 pounds meal. To establish a theory that the Commodity Credit Corporation should sell peanuts at the current market price when used for oil, but to prohibit the Commodity Credit Corporation from selling peanuts when classed as "edible peanuts” is unjustifiable; it places a burden upon the public who desire to consume this agricultural product directly, and from a practical standpoint grants to the peanut oil consumers a subsidy which in turn must be absorbed by the public, and which in turn forces the public to pay a commensurately higher price for the peanuts consumed as edible peanuts.

SUMMARY

Briefly we recommend that

1. The stated purposes incorporated in the declaration of policy should be reappraised.

2. Even if it is desirable to create legal distinctions of agricultural crops, which we doubt, there is no justification for including peanuts as a basic crop.

3. No distinction should be made between peanuts for oil and edible peanuts.

4. The period 1935-39 be used as a base period for the computation of any parity or support program established for peanuts.

We are deeply appreciative of this privilege of presenting these suggestions to your committee, and are sincerely hopeful that your consideration of them will be helpful in drafting legislation which is helpful to the farmers and to the public, which we in turn must serve and satisfy.

CANDY FACTS

CANDY AND OTHER CONFECTIONERY PRODUCTS

1. Size of industry

1

2

Number of establishments

1, 252 Number of industrial sugar users making candy (estimate of OPA allocations).

7,500 Number of wage earner's

79, 500 Value of products, 1947 3

$930, 000, 000 Volume of products, 1947

--pounds__ 2, 584,000,000 Per capita consumption.

3

--pounds_

18 Comparison with other food manufacturing industries: Fourth largest in terms of employment; eighth largest in terms of dollar sales."

1 Census of Manufactures, Bureau of Census, 1939.
2 U. S. Department of Labor, Washington, D. C.
3 Department of Commerce, Washington, D. C.

II. Ingredients used, 1944 1

Relative importance

By weight
(percent)

By costs (percent)

Sugar.
Corn products
Cocoa products-
Milk and dairy products
Nuts and peanuts
Fats and oils (other)
Fruits
Other..

!!!!

34.4
24. 6
14. 8
13. 6
8.5
1. 0

.6
2. 5

21.8

9.4 26. 3 11. 2 24.0 1.8 1.2 4.3

Total...

100.0

100.0

1 Department of Commerce, Washington, D. C.

Beet-sugar usage: 284,000,000 pounds, at cost $16,470,000; requiring production from over 95,000 acres of United States farmland.

Corn-product usage : 792,000,000 pounds, at cost $27,200,000 ; requiring production from about 95,000 acres.

Peanuts usage: 223,185,000 pounds, at cost $34,114,000 (yearly production about 525,000 acres of southern farmland).

III. Confectionery sales by type of product

1 1945

1 1946

By
weight
(percent)

By value

By
weight
(percent)

By value

53. 7
9.1

$317,000,000

57,000,000

53.3
9.3

Bar goods-
Other 5 and 10-cent specialties..
Package goods:

Retail $1 or more per pound.

Retail less than $1 per pound.
Bulk goods
Penny goods.

3.9
10.3
19.3
3. 7

72,000,000
68,000,000
90,000,000
16,000,000

6.2
8.5
19. 7
3.0

$337,000,000

59,000,000 106,000,000

60,000,000 115, 000, 000 10,000,000

Total.

100.0

620,000,000

100.0

687,000,000

1 Department of Commerce, Washington, D. C.

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PeanutsUnited States acreage, yield, production, average price per pound received

by farmers

[graphic]

Thous. of dol.

14, 449 15, 398 15, 475 16, 053 17, 244 17,809 19, 886 32, 209 69, 478 61, 597 64, 002 33, 053 26. 020 27, 929 36, 653 41, 187 30, 836 33, 382 43, 470 41, 188 33, 533 24, 462 17, 144 14, 587 23, 328 33, 293 36, 181 46, 931 40, 630 42, 126 41, 175 58, 332 68, 797 133, 716 155, 528 169, 587 168, 878 193, 413 227, 415

1 Preliminary.
Source: Agricultural Statistics, U. S. Department of Agriculture.

Senator AIKEN. What are you paying for peanuts in today's market?
Mr. FETTE. Approximately 161/2 cents a pound.
Senator AIKEN. What would you consider a fair price?

Mr. FETTE. As a start, we should try to change the trend of the consumption of peanuts into edible channels. Consumption through edible channels is now declining and at a very rapid rate. A report out this morning shows the consumption through edible channels is off 30 percent this year against last year. We would consider that a

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PERCENTAGE PRICE INCREASES AS OF APRIL 1, 1948, OVER JANUARY 1, 1941: Peanuts 221%

Sugar Eggs 160%

Milk Cocoa Beans 606%

Glucose

80 %
47%
68% .

maximum price such as that established under OPA, 14 cents a pound, is the highest price we could possibly afford to pay, and even that price may not start the trend toward an increase in consumption in edible channels.

Senator AIKEN. Under the bill which we propose, the support price on peanuts last fall would have been 7.4 cents per pound. Do you consider that the support price of peanuts today is the reason that you are having to pay 161/2 cents a pound?

Mr. FETTE. Yes, sir. It is true that the price on oil has to some extent affected the price on peanuts and is at the moment affecting the price on peanuts.

Senator AIKEN. There is no loan on peanuts made above 10 cents today, or approximately 10 cents ? Mr. FETTE. Not on farmers' stock.

Senator AIKEN. Does the price increase rapidly from the time the peanuts leave the farm until you finally get them?

Mr. FETTE. Based on your parity established as of July 15 of $220 per ton and the price to the farmer of approximately 10 cents per pound, the minimum price, or practically the minimum price, at which peanuts were sold from the 1947 crop was 1414 cents.

Senator AIKEN. Five-cent spread between the farmer and the user. Mr. FETTE. I would say about 6-cent spread at the present time.

Senator AIKEN. In other words, the spread amounts to almost twothirds as much as the farmer gets for his peanuts. He gets $220; that is 11 cents.

Mr. FETTE. He has a support price of 10 cents.
Senator AIKEN. He has a support price of 10 cents.
Mr. FETTE. That is right, and our price is 1614 cents.
Senator AIKEN. That is a little over 6 cents spread.
Mr. FETTE. That is right.
Senator AIKEN. Or 60 percent increase.

Mr. FETTE. That is right. Of course, the recovery is only in the neighborhood of 70 to 72 percent.

Senator AIKEN. Yes. That is all. Thank you.

Mr. FETTE. Thank you, Mr. Chairman and members of the committee.

The CHAIRMAN. The next witness is Mr. William H. Fischer, divisional manager of the Jewett & Sherman Co., of Milwaukee, Wis., and president of the Peanut Butter Manufacturers' Association.

STATEMENT OF WILLIAM H. FISCHER, DIVISION MANAGER,

JEWETT & SHERMAN CO., AND PRESIDENT, PEANUT BUTTER MANUFACTURERS' ASSOCIATION, MILWAUKEE, WIS.

The CHAIRMAN. Where are your headquarters, Mr. Fischer ?
Mr. FISCHER. Milwaukee, Wis.
The CHAIRMAN. How much of a membership do you have?

Mr. FISCHER. We have in poundage approximately 70 percent of the total industry as membership.

Senator AIKEN. How many members do you have?

Mr. FISCHER. Sixty-seven, but among those members we include the greater percent of the poundage of the total because there are a great number of smaller manufacturers.

The CHAIRMAN. Your organization has been in existence a good many years?

Mr. FISCHER. This is the twelfth year.
The CHAIRMAN. Has it grown in membership?

Mr. FISCHER. I believe we have acquired 8 members in the last 3 months.

The CHAIRMAN. We will be glad to hear from you.
Mr. FISCHER. Thank you, sir.

Mr. Chairman, gentlemen, my name is William H. Fischer. I am divisional manager of the Jewett & Sherman Co. of Milwaukee, Wis., manufacturers of peanut butter. I am also president of the Peanut

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