program the result might be a curtailment in the acreage of peanuts. Under the circumstances you would not have the needed volume as a processor.

Mr. ROSEFIELD. That would take care of itself automatically because you would have enough carry-over 1 year to take care of you.

Senator THYE. The second year you could not expect to have a carry-over and therefore because of the scarcity of the product, either you would be compelled not to process them or the consumer would not be able to find peanut butter on the grocery shelves. As a result the price would again skyrocket and that would encourage the producer to get back in the crop again.

Mr. ROSEFIELD. You have answered your own question.

Senator THYE. That is exactly it. The whole structure is such that the man who did not have the benefit of a price support would possibly find himself with the market so low that he would take a licking in that particular year. The next year he would be out of it, and not until the price again rose because of the scarcity would he reenter that particular field of production. The support-price program basically is an attempt to level off so that you get a normal production annually and do not have a drastic shortage and then an oversupply that can ruin the producer.

Mr. ROSEFIELD. We are not asking, Senator, that it be eliminated from the support item. We are asking that it be eliminated as a basic item which also automatically throws it into the 90-percent class of support.

Senator THYE. Would you ask the producer to produce a commodity less than 90 percent of parity?

Mr. ROSEFIELD. Yes; when parity is erroneously based. It is predicated on a wrong assumption today on peanuts.

Senator THYE. I am just assuming that a man growing an acre of peanuts, after he has harvested his acre and paid for all the costs in the production and harvesting of an acre of peanuts, if he cannot realize as much out of that crop net as he could out of any other crop, is being discriminated against and he would not long remain în the production of peanuts. He would be diverting to other types of operation. Mr. ROSEFIELD. Senator, you are exactly right if he was only receiving something like he was for other commodities, but we have the highest price which we have ever been asked to pay. I was told by certain shellers in the trade who are the go-betweens for the farmer and the end user-in other words, he takes the peanuts in the shell, he buys them under the Commodity Credit Corporation arrangement, and he shells them and makes them suitable for us to utilize, by taking off the shells and by hand picking to get out the decayed peanuts-I have had at least one sheller tell me that many farmers came to them and told them that the returns they received were as high as $20,000 and $40,000, they were just so much they did not know what to do with the money.

I am not talking about the man who operates 1 acre, but I am talking about the large producer of peanuts. Those fellows are doing fine and next year it looks as though they are going to do still better. That is what we say; it is an unbalanced economy.

We are not against a support program; we are against the 90-percent program that is predicated on an incorrect parity.

Senator AIKEN. Mr. Rosefield, your testimony seems to be based on an assumption of 90-percent support program. The bill which we are considering provides for a normal 75-percent support, allowing for a range running from 60 to 90 percent as a mixamum, but we contemplate that a normal 75 percent will be the figure.

Mr. ROSEFIELD. That is predicated too, on a moving average.

Senator AIKEN. Which would mean on the 1947 crop a support level of 7.4 cents a pound. It does not seem to me that is unreasonable, compared with the prewar prices and the increase in cost.

Mr. ROSEFIELD. I will concede, Senator, that we will get some slight relief under your bill for the first year but you have a moving 10-year average in that bill which means as we go along that it would increase in price on account of the war years, the inflation of the war years, so that your years of 1937, 1938, and 1939 and 1940 and 1941 disappear and you get into these years where the farmer got a higher price, you would have an upward curve there and it would mean you probably would not get rid of that curve and start on a downward trend until sometime in 1955 or 1956.

Senator AIKEN. But the production of peanuts has continued at the same high level since the war.

Mr. ROSEFIELD. No; it has not. That is about what we are complaining; not from the edible end use, that has been a question of manipulation.

Senator AIKEN. Production in 1942 was 2,193,000,000; 1943, 2,176,000,000; 1944, 2,081,000,000; 1945, 2,042,000,000; 1946, 2,038,000,000, and in 1947 there was an all-time record crop, 2,252,000,000 pounds. That is production.

Mr. ROSEFIELD. You are talking about production, but consumption has not equaled that. Your consumption has been on a downward curve from the edible end use, whether you are talking about salted peanuts, confectioners, or peanut butter.

Senator AIKEN. Your carry-over is less this year than it was last year?

Mr. ROSEFIELD. No.

Senator AIKEN. It gives 212,000,000 pounds carry-over for 1946 and 187,000,000 pounds carry-over for 1947.

Mr. ROSEFIELD. In addition, you must remember: These figures just quoted by Mr. Fischer just before I came on, and he has them, actually show that there is a greater carry-over now than there was last year plus the fact that vast amounts have been exported this year by both Commodity Credit Corporation and the Army.

Senator AIKEN. They have gone somewhere.

Mr. ROSEFIELD. They have gone but, Senator, they are not forgotten. It is from this standpoint that we are getting away from, what built the economy of the peanut industry, edible use. This industry cannot be supported by the usage for export of oil. In 1929 you had to save the industry by passing the tariff law placing a duty of 7 cents a pound on shelled peanuts coming into this country. At that time shelled peanuts were selling around 62 cents a pound. The duty was higher than they were selling for in this country. Why was that? Because we could not compete with China, Africa, and India, and so today you are going to be called on to compete with them again at least in world markets for oil production.

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 42 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 considered 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.