Because of the limitations of time, three industry representatives have not asked for time before this committee, but have asked me to file their statements for the record. With your permission, Mr. Chairman, I will file their statements at the conclusion of my testimony. Mr. DENT. Without objection, it is so ordered.

Mr. GRIGGS. I shall also make my oral presentation brief, filing a portion of my statement for the record, also.

At the conclusion of my remarks, there will be brief statements by Mr. Jack Funk, representing ginners, Mr. Henry Nichols, representing the warehousemen, and Mr. Robert Patterson, representing cottonseed crushers.

The position of our industry, Mr. Chairman, on matters covered by H.R. 9824 is stated in a resolution adopted unanimously at the council's annual meeting last January 29. Applicable parts of that position I quote as follows:

That the council recognize that continual efforts to increase the minimum wage and extend coverage under the Fair Labor Standards Act create serious inflationary impacts, which also have the effect of undermining cotton's competitive position in this country and abroad; and

That attempts be continued to secure a realistic definition of "area of production" that will conform to the original intent of Congress and allow exemptions to processors and handlers of cotton located in the cotton-producing areas of the country.

In taking this position, Mr. Chairman, the cotton industry recognizes as the Congress always has recognized that agriculture and industry cannot operate under the same work rules. Farmers can't farm just so many hours a week. They can't subscribe to the same overtime regulations and expect to feed and clothe this Nation. But the differences do not end there.

Briefly, let me contrast the situation in agriculture with that of industry and labor. The latter, as a whole, are enjoying good times. Our gross national product has just passed the $600 billion mark. Corporate earnings last year were up more than 9 percent. Factory payrolls exceeded $100 a week for the first time. Average hourly wages in manufacturing have reached an unprecedented $2.50.

On the other hand, the agricultural economy, is sagging. Net farm income is down from an average of $15.7 billion in the 1947-49 period to an estimated $1214 billion last year. Farmers' share of the consumer food dollar continues to drop and now represents 36 cents, only 2 cents above the 1934 depression level. Whereas, the consumer 15 years ago spent 36 percent of his take-hour pay for food and clothing, today he spends only 26 percent. The average hourly earnings of farm operators and owners-not wage hands or sharecroppers-in many parts of the country are still less than $1.

One all-important fact about cotton is pertinent to any consideration of the bill before this committee: Cotton right now is losing markets because its price is too high. Since the last quarter of 1960, market losses have amounted to about one-fifth of our domestic consumption. With carryover at 7.2 million bales in 1961, our stock situation was considered healthy. With a 13-million bale carryover anticipated for this next August 1, the cost to Government has been increased to nearly $11 billion.

To meet this critical situation, the House passed a bill in December under which the support price for farmers would be reduced about

10 percent in 1964-to a level of 30 cents per pound. As this statement was being prepared, the Senate had a bill before it which would do the same thing. This would be the lowest percentage of parity since 1940. Actually, the price should be lower than 30 cents for cotton to meet its competition, but present costs of production, despite tremendous strides in recent years, do not permit it.

Clearly, the agricultural economy generally and cotton economy in particular is sick during a period of unprecedented prosperity in the economy as a whole.

Now, at such a time when it is obvious our price is too high, our income is too low, we are asked to absorb costs by Government action that further reduce our income and make necessary an increase in our price.

Let us for a moment deal with the specifics of the proposed legislation and their effect on our industry.

Of tremendous importance to cotton is section 13 (a) (10) of the wage-hour law. This section exempts certain agricultural and handling and processing operations in the "area of production." The intent of Congress in adopting 13 (a) (10) was quite clear.

The entire area where a commodity was grown was the area intended to be exempt. Insofar as cotton is concerned, this includes the Southern tier of States from Virginia through California. Despite the record of the hearings, the report and legislative history accompanying passage of the act, however, the Labor Department has used arbitrary and in our opinion completely unfair criteria in defining "area of production." Their criteria has absolutely nothing to do with the determination of where cotton was grown.

Because of the unreasonable definitions of "area of production" by the Department of Labor, 13(a) (10) has limited application to our industry. Despite that, however, it is our view that the section should stay on the books with an amendment which would force the Department to conform to congressional intent.

Another exemption the Labor Department would remove which is very important to cotton farmers is one written into law the last time the Wage and Hour Act was amended. That exemption is clear. It eliminates coverage of gins in areas where cotton is grown in commercial quantities. There is nothing complex about that language, and it also should stay on the books.

Gins are built in the heart of the areas of cotton production because of the expense and difficulty in hauling cotton to the gin. The same is true of warehouses and compresses and cottonseed oil mills. There are no gins or cotton warehouses or cottonseed oil mills in the State of New York or the State of Washington for the simple reason cotton is not grown in those States.

The Department of Labor would also eliminate section 7(c) and change the language in section 7(b) (3) of the act. These are the overtime and seasonal exemptions of the law, respectively. I only want to comment that they are important to farmers in holding down costs. Cotton, like most of agriculture, is seasonal in nature, with peak condition occurring during the season when the crop comes on the market. For a period of several weeks, our gins, our warehouses, and our oil mills are strained to capacity. To eliminate or to lessen the effectiveness of these provisions is to add to the farmer's costs. I want

to emphasize here that it is the farmer that must pay any increases in cost that passage of this bill would make inevitable.

The balance of my statement, Mr. Chairman, in the interest of conserving the committee's time, I request permission to have inserted in the record, along with a statement of Mr. David H. Sloan, Jr., presi、 dent of the South Carolina Farm Bureau, and a producer delegate member of the council, and Mr. Robert Collins, executive vice president of the Arkansas & Missouri Ginners Association, and Mr. Lon Mann. chairman of the Mid-South Cotton Ginners' Council.

Mr. Chairman, our next witness is Mr. Jack Funk, of Lyford, Tex. Now, I don't know whether you prefer to question us individually, or after we have all finished, but Mr. Funk is the next witness.

Mr. DENT. Mr. Martin, do you think it would be proper to finish all the witnesses?

Mr. MARTIN. Let's go ahead.

Mr. DENT. And your request for admission of the testimony of the gentlemen you mentioned is complied with by the Chair.

Mr. GRIGGS. Thank you.

(The balance of Mr. Griggs' statement, and statements of Messrs. Sloan, Collins, Mann, and Heidelberg follow :)

CONTINUATION OF STATEMENT OF WAYNE GRIGGS, HUMBOLDT, TENN., FOR THE NATIONAL COTTON COUNCIL

Passage of H.R. 9824 would increase the cotton farmer's costs in another way, too. The farmer not only competes with warehouses and gins and oil mills for his labor; he also competes within the business community of which he is a part.

The other sections of the bill not directly relating to agriculture affect the farmers' costs in an additional way: By raising the price of the things he has to buy.

It is my understanding that the Secretary of Labor made representations to this committee to the effect that the increased labor costs which would result from the enactment of this bill would have little, if any, effect on employment. Our experience indicates that passage of the bill would have the opposite effect. The last time I was in Washington, upon entering the elevator in my hotel. there was an elevator operator. He no longer is there. I push my own button and get off at my floor without assistance. The operator has been eliminated. Likewise, we can expect elimination of a number of jobs in our industry if wage rates go up any more.

Let us look at what already has happened. Just prior to the enactment of the amendments to the Fair Labor Standards Act in 1955 when the minimum wages were raised from $0.75 an hour to $1 an hour, 2 percent of the cotton crop in my State of Tennessee was mechanically harvested. In 1962 with a minimum wage of $1.25 an hour, 41 percent was mechanically harvested. For the Nation as a whole, slightly over one-fourth of the crop was harvested mechanically when the minimum wage was $0.75 as contrasted with almost three-fourths in 1962. The average person picks about two bales in a season.

We all understand that there would have been substantial increases in use of mechanical pickers regardless of what we did about the minimum wage. Butand I want to emphasize this-the increases in the minimum I have just cited accelerated the trend faster than the economy was ready to absorb the employable workers who were displaced.

Mr. Chairman, I would like to cite an example of the income and expenses from an acre of ground used to produce cotton in west Tennessee. These figures are based on an average yield of 1,785 pounds of seed cotton, or 625 pounds of lint per acre, which is well above the average.

Revenue:

Lint, 625 pounds, at $0.30___.

Seed, 1,160 pounds, at $0.02_-_

Total income..

Expenses:

Seed (20 pounds, at $0.12)_.

Fertilizer (80 pounds, net at $0.12; 75 pounds phosphate at $0.07;

Net return to land, unpaid labor, capital, and management____

$187.50

23.20

210. 70

2.40

19.35

1.60

9.00

2.00

2.25

4.00

44. 62

5.00

18.75

10.00

2.00

120.97

89.73

In the example just cited, there are three items of expense that have had to be mechanized due to the high cost of labor. The expense of controlling grass and weeds with herbicides (preemergence and postemergence) cost $4.25, whereas hired labor would have cost $7.25. The cost of picking the cotton with a machine was $44.62, but if hand labor had been used, the cost of picking would have been $62.48. As the example above points out, a farmer in my area has no choice but to mechanize and replace labor wherever possible, and if the Labor Department's proposed changes are enacted into law, the replacement of labor with machines and chemicals will have to be accelerated faster than is desirable from either the farmer's or the country's point of view.

I think we should learn a bit by experience, and experience tells us that approximately 3 million people have been replaced by mechanical cotton harvesters since the minimum was raised from $0.75. Unfortunately, most of these people fell in the group of unskilled labor who have the most difficult time to find other jobs. Basically, they were elderly people and those so young that job opportunities off the farm were denied them. I want to quote you just two sentences from the last release, dated February 10, from the USDA on farm labor: "The number of persons working on farms in the survey week is estimated at a total of 4.495,000 * * * the smallest total for any month in over 50 years of record * * *." I think this tells the story and refutes the claim of the Labor Department that increased labor costs have little effect on employment.

One further point, Mr. Chairman, when increased costs force farmers to mechanize, resulting in farm unemployment, many of these people go to the cities where they end up on relief. This is not good for them, nor is it good for the country.

Specifically, we urge that section 7(c) relating to overtime, be retained; that language of section 7(b) (3) be left as now written; that section 13 (a) (10) be retained, but amended to provide an exemption for agricultural handlers and processors wherever their services are performed, and that section 13(a) (18) be retained.

This cotton economy is too important to the areas where it is grown and to the Nation for it to deteriorate further. At a time when we're desperately trying to get our costs down to compete any action whatsoever that has the effect of raising our costs can only lead to further deterioration. We most strongly urge that H.R. 9824 not be approved.

We appreciate the time given us by this committee.

STATEMENT OF DAVID H. SLOAN, JR., FOR THE NATIONAL COTTON COUNCIL

Mr. Chairman, my name is David H. Sloan, Jr. I live in Marion, S.C., where I am a general farmer. I am president of the South Carolina Farm Bureau and am a producer delegate of the National Cotton Council. It is for the cotton producer segment of the council that I submit this statement today.

The first cotton industry witness has reviewed the overall impact to the cotton industry of legislation represented in the bill before this committee. Mr. Griggs farms in Tennessee, but the information he has presented applies equally well to South Carolina.

My State, Mr. Chairman, is heavily dependent upon cotton for its economic well-being. We grow approximately 450,000 bales a year on about 37,500 cotton farms. Our average cotton allotment totals only a little more than 10 acres, which means that many of our farmers must supplement their income by outside work. Many are employed in nearby textile mills and these, of course, have a double stake in the survival of cotton.

And, Mr. Chairman, we are talking about survival. Cotton no longer has a monopoly, and therefore no longer can set the price at which it goes to market. Our competitors set our price and we either meet it or we go out of business. And that is what is happening to us today. Our principal competitor is rayon, which now is selling for about 28 cents a pound, compared to cotton's approximately 321⁄2 cents a pound. Rayon producers have been selling their fiber as low as 25 cents and unquestionably will do so again when the need arises. After all, they are selling all they can produce at 28 cents now. We have lost to rayon and other synthetics over 1,800,000 bales of our annual market since 1960, directly attributable to the price disparity that exists today. Couple this with heavy imports of foreign produced manufacturers which saw the equivalent of 650,000 bales brought into this country last year, and you can see what has been happening to us. For some years now our mills have had to pay $42.50 a bale more for cotton than their foreign competitors who already had a tremendous advantage in their much lower wage rates. No wonder then our domestic mills are losing confidence in cotton and we are looking more and more to the synthetics for their fiber supply.

It is under conditions of fighting for its life that the raw cotton industry has sought legislation that would restore confidence and build a bright future for the thousands of farmers, processors, handlers, manufacturers, and millworkers whose livelihoods depend upon cotton.

Therefore, it is with particular concern that we view efforts to extend the coverage of the Fair Labor Standards Act to the processing and handling segments of our industry. The one hope the American cotton farmer has to compete with synthetics and foreign growths is to lower his costs of production. In no other way can he lower his price to the level necessary to compete and survive. And these costs can be lowered, and an all-out effort is underway by the industry to do just that. While I won't take the time of the committee to document the opportunities for cost reduction, I do want to say that our best scientists in Government and in industry conclude that it is reasonable to expect that we can cut 11 cents from our cost with the right kind and size of research program.

It is natural that cotton farmers become alarmed at legislation that would raise our costs, just at the time when it is so terribly important to them that their costs be lowered so that they can sell for less price and at the same time operate profitably.

One of the big elements in a cotton farmer's costs, of course, is labor, and there is no question but that enactment of H.R. 9824 would result in an increase in his labor cost. We already have felt the impact of the $1.25 minimum wage, even though a good part of agriculture is exempt. After all, farmers, ginners, and other farm oriented businesses draw from the same labor market. But by increasing our efficiency, depending more on machinery, eliminating certain jobs, we have coped with it. To go the next step of paying the minimum to everyone means elimination of additional jobs and threatens our ability to reduce costs, despite what we can do in lowering costs through increased yields, savings in costs of chopping our crops, harvesting, etc.

On the average, about 90 man-hours of labor are required to produce a bale of cotton in the Southeast, that is North and South Carolina, Georgia, Alabama, and Florida. Should the farmer be forced to pay $1.25 an hour for this labor—as well he might if the processing and seasonal exemptions now in the law are removedhis labor costs alone would be $112.50 a bale, or $221⁄2 cents a pound. We recog