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Senator AIKEN. Does the Federal Government support the price of commodities which you process?

Mr. ROSEFIELD. We are a freak; we only make peanut butter, period. We are a freak in the country.

Senator AIKEN. I was wondering if you were in the prune and raisin business.

Mr. ROSEFIELD. No.

Senator AIKEN. I think some of the packers are and are depending on Government to support their price.

Mr. ROSEFIELD. Well, when it is against us, we holler, when it is for us we keep our mouths shut and pat you on the back.

Senator AIKEN. That is the human nature which enters into the picture.

Senator THYE. I am not so sure but what you are hollering right now,

The CHAIRMAN. Are you making any headway?

Mr. ROSEFIELD. Yes, we are making headway but the small fellow is not. As I said before, I am not fighting here for myself. I am fighting for the general industry and fighting for the general public. That is the truth.

The CHAIRMAN. Are you getting anywhere?

Mr. ROSEFIELD. I get awfully discouraged. I do not know. I will tell you more about it next week when I see what

you

folks do. It has taken edible end users of peanuts many years of effort and the expenditure of vast sums of time, research, advertising and money to win public acceptance of their products in sizable volume.

No other segment of the industry can make that statement. It is generally recognized in the food field that the production and sale of peanut butter has been highly competitive, based on extremely low percentage of profit. I refer you to actual studies made by OPA to verify this statement. That study clearly established the fact that manufacturers of peanut butter operated on a percentage of profit that was too low to maintain the industry in a healthy condition.

By reason of excessive cost of shelled peanuts—forced on the industry through operation of the present support program—the desirable volume once in existence is being lost to unrestricted, nonsupported items, such as jam and jellies, margarine, and so forth. It may interest you to know that margarine has taken a 35 to 40 percent increase this year.

The best and latest figures show that the consumption of peanut butter during 1945 was about 350,000,000 pounds. This rate of usage declined for the 1946-47 crop year to about 260,000,000 pounds. It is too early to get figures for the 1947–48 crop year, but we have every reason to feel that the downward trend is continuing.

In any event, common sense tells us that if you have had increasing consumer resistance to steadily mounting prices, we do not care to force peanut-butter prices higher through legislative action or inaction if the industry is to be maintained in a healthy condition.

Peanut butter which accounts for the use of over half the edible crop increased in sales as long as the price thereof was on an equitable basis. It is recognized by all home economists as a high protein food, well adapted to fit into the diet of most children and a food item that contributes in no small manner to the physical and financial well-being of persons in the low- and moderate-income groups.

This fact was so well established that the Department of Agriculture, through the Commodity Credit Corporation, prevented the peanut support program from pricing peanut butter out of the picture during the war by subsidizing this item at the rate of 41/2 cents per pound at the manufacturer's level.

This action made it possible under the OPA for consumers to purchase peanut butter approximately 6 cents a pound cheaper than would have otherwise been possible. When this subsidy was removed and retail cost was readjusted upward to the extent of this 6 cents a pound, sales of peanut butter declined.

The present support program has continued to force up the cost of peanuts so that edible finished products made from peanuts have further declined in public acceptance and usage. The consumers do not realize that these increased costs are the result of congressional action. They blame the manufacturer and they retaliate by refusing to buy his product at the higher price.

May I repeat that the normal growing of peanuts in volume in this country is dependent on consumption of edible end products. If you force this continued trend of lower consumption because of artificial and excessive cost, you not alone deprive the public of a needed food at a reasonable price, but you endanger the eventual well-being of the farmer.

The mere fact that you dispose of the crop by manipulating exports and crushing operations—at the expense of the taxpayers-does not carry out the announced intention of this bill. What such action actually does is to divert peanuts from their normal channels of use by the edible end user. Excessively high prices caused by export or improper legislation will actually undermine the long-range volume growing of peanuts to the detriment of all in the industry.

It is a fact that practically every trade association, trade journal, and thinking leader connected with the peanut industry, with the exception of some grower groups, have voiced in and out of print the same reactions that I am expounding to you now. They all take the attitude that little can be done administrativewise to relieve the situation and seem to fear reprisals in this election year if anything is attempted by legislative action. My opinion and trust in Congress is too profound to accept any such statements.

Peanuts should never have been made a basic agriculture item. The second mistake was made by taking the years 1909–14, as base years on which to figure parity on peanuts and the 90-percent support was too high. At that period, the peanut—the growing of peanuts was largely confined to limited areas of a type of peanut largely used for roasting in the shell and eaten as a tidbit. This type of peanut now represents a very small percentage of the edible usage and the heavy production is in areas and on types that did not figure in the picture during the period of 1909–14.

In other words, every element of the industry, types of peanuts, methods of production, growing areas, and end users bear little or no relationship to these base years on which parity is now erroneously figured.

My statements are not predictions of things to come but are predicated on statistics as to what has already occurred. As the situation becomes worse by reason of unreasonably high prices of edible peanuts, and when oil prices resume their normal range, farmers will be forced

to curtail acreage; some shellers will be forced out of business, others will have curtailed production. Some edible end users have already been put out of business or forced to curtail production. All to the end that the general public is being forced to pay exorbitant prices for commodities when they should be reasonably priced.

Up until now all benefits accruing to the grower of increased acreage and extra profits has been borne entirely by edible end users and the consuming public. If you don't want to change any of the benefits now accruing to the producer, Government should assume the burden and not ask consumers to carry the load.

Growers, crushers, exporters, and shellers have already profited to the extent of hundreds of millions of dollars by reason of the present program at the expense of consumers and edible end users. It is high time that these long-suffering segments of our economy be given a small measure of relief. That is about all we are asking, a small measure of relief.

The best way to handle the problem for the short-range program would be in the same manner I am proposing, for the long range, and that is by removing peanuts from the list of basic commodities and by changing the base period on which peanut parity is based from 1909–14 to 1935–39. These latter methods would not cost the Treasury anything and would solve all our problems.

There is sound reasoning back of this thought of changing the base period used for computation of parity because that period was con: sidered as normal by the Treasury Department as a base for excessprofit tax. Just because the period 1909–14 was chosen does not warrant the continuance of a practice which has proven to be at fault.

I have tried to make my observation factual and have based them on actual business experience. Not alone do I want to tell you how much I appreciate having been allowed to come before you, but I am convinced that you will bring into being remedial legislation that will be fair and equitable.

May I just append one statement. You were talking, Senator Thye, of why the differential when peanuts only went up a few cents a pound from the OPA price to the present time. This is a false analysis, since November 15, 1947. We have had a 10 percent freight increase. We face another freight increase as given by the Interstate Commerce Commission a few days ago. We have had one very radical increase in the cost of glass on April 1, and we have had two increases in the cost of closures or lids to close the jars.

Here is a comparison from March 31, 1943, to November 1947. Our glass has gone up 25.9 percent. It has gone up another 10 percent since then. Our peanuts have gone up 20.4 percent. Our freight has gone up 37.3 percent. Our closures have gone up 52.2 percent. Our labor has gone up 41.25 percent.

Senator THYE. Mr. Rosefield, the increases there would indicate that the farmer had not been the beneficiary of the increases because he only went up 20 percent whereas many of the others, glass, freight, and so forth, have gone up much higher.

I would say to you, Mr. Rosefield, that any time you are interpreted and have questions asked of you, consider that a compliment to you because your statement is so good that it provokes questioning and if you did not have a good statement, you would have read it and been through and nobody would have paid any attention to you.

Mr. ROSEFIELD. Well, I am glad to have made that kind of statement. Thank you very much.

The CHAIRMAN. Thank you for a very interesting statement. You do know something about peanuts.

Mr. ROSEFIELD. Well, Senator, Harold Clay claims I am fairly well informed. He is from the Department of Agriculture and he, too, knows something about peanuts.

I thank you, Mr. Chairman and members of the committee.

The CHAIRMAN. The next witness is Mr. T. Earle Bourne, secretary of the Peanut and Nut Salters Association.

STATEMENT OF T. EARLE BOURNE, PRESIDENT, SCHINDLER'S

PEANUT PRODUCTS, INC., AND SECRETARY, PEANUT AND NUT
SALTERS ASSOCIATION, WASHINGTON, D. C.
The CHAIRMAN. Where are you from, Mr. Bourne!

Mr. BOURNE. I live in University Park, Md., which is over in Prince Georges County, just over the line.

The CHAIRMAN. Where is Schindler's Peanut Products, Inc., located!

Mr. BOURNE. They have plants in Baltimore and Washington, D. C.
The CHAIRMAN. They are wholesalers?
Mr. BOURNE. Manufacturers.
The CHAIRMAN. What do they manufacture?

Mr. BOURNE. Peanut butter, salted peanuts, peanut butter sandwiches; no candy.

The CHAIRMAN. Have they been in business quite a while?

Mr. BOURNE. I have been the head of this business for the past 25 years. The CHAIRMAN. What is your interest in this legislation!

Mr. BOURNE. I am secretary of the Peanut and Nut Salters Association, and as such we are represented on the end users committee. I am also one of the members of the end users committee. You will recall that you asked for a definition of end users. Mr. Rosefield, I think, or Mr. Fischer, gave you that definition at that time.

There was some doubt in your mind as to just what “end users" meant.

The CHAIRMAN. What provisions do you think need amending?

Mr. BOURNE. We claim insofar as the price of peanuts is concerned, that the price has gotten too high and that it is affecting consumption.

The CHAIRMAN. Have you ever appeared before a congressional committee previously?

Mr. BOURNE. I have never, although I have lived in this area all my life. Incidentally, I have seen you many times at the Building Association affairs. I think you are interested in the Building Association in Washington, or at least you show interest.

The CHAIRMAN. Proceed with your statement.
Mr. BOURNE. Thank you, sir.

I am T. Earle Bourne, president of the Schindler's Peanut Products, Inc., and I am appearing today as secretary of the Peanut and Nut Salters Association, a trade association whose members process over 75 percent of the salted nuts and peanuts produced in the United States.

The CHAIRMAN. Are you pretty sure about that?

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Mr. BOURNE. Yes, sir; we are. If you would like to have a list of our membership, I have that with me, if the committee would like to see it. We have taken a survey of that and I have the list here.

The CHAIRMAN. Are you interested mainly in the retailing?

Mr. BOURNE. No, sir; we are interested in the manufacturing end because we in turn sell to the wholesaler trade. We do not sell to the retail trade.

Shall I proceed?
The CHAIRMAN. Yes.

Mr. BOURNE. It is my purpose, first, to indicate the endorsement by our association, in principle, of the brief filed with you by Mr. William Fette, Jr., of the National Confectioners Association and, second, to submit our views on a few specific points. In so doing, I am confining myself to aspects relating to the general welfare of all segments involved in the peanut problem-from grower to consumer.

Peanuts exemplify, in the extreme, the inadequacy or, better yet, the inaccuracy of the 1909-14 base period and the calculation of parity prices in a rigid fashion from that base, as provided under the present law.

We fear that the “modernized” parity feature of this proposed legislation fails utterly to correct the evils of the 1909–14 base. It would be a one-way street-correcting only such inequities as tended to set parity too low for some commodities and leaving unchanged the inequities which have set parity prices too high. Peanuts are, we believe, the prime example of the latter.

The fallacy of the 1909-14 base as applied to peanuts arises from the almost total absence of a peanut-growing industry during those base years, in the geographical areas which today produce the bulk of the peanut crop—the southeastern and southwestern areas. In those areas, the production during 1909–14 was less than 7 percent of current production. Thus, all variables such as yield per acre, fertility, and advance of agricultural science are ignored. The yardstick is therefore no more than a mathematical combination of assumptions.

The rigidity of the present parity concept which we are now trying to improve or modernize is its greatest fault. A sound parity plan must include some means by which in establishing the parity price for any one given commodity specific variables from the general pattern can be compensated for as well as current intercrop price relationships.

Only thus can we have true equity as between the producers of the various crops and assurance against unsound production trends as between two or more crops which are competitive in production. Price ratios between such competing crops must conform with productioncost ratios.

Senator THYE. Mr. Bourne and Mr. Chairman, we have two more witnesses besides Mr. Bourne and we have legislation that will require roll calls this afternoon and it will not be possible for the committee to meet this afternoon. I am wondering if it would be possible for you, Mr. Bourne, to more or less summarize your statement and then your complete satement will be inserted in the record, and the other two gentlemen would be permitted to summarize their statements. If we can do that, we might be able to finish by 12:30.

They have a full calendar scheduled tomorrow and therefore we will not be able to continue with the other two gentlemen who are listed to appear here this morning.

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