contains a mandate to the Secretary in regard to regaining our export markets.

It reduces the price to domestic mills-not as much as other proposals, but on a much sounder, long-range basis. It is by far the least costly of the proposals under consideration to the taxpayers. It is the only proposal which would provide farmers the increased volume that is so necessary to reduced unit production cost. S. 1458 reduces the cost to domestic mills and reduces the inequity of the export subsidy these reductions are real, not fanciful or dependent upon the whims of future congressional appropriations. In our opinion, the confidence in the cotton industry cannot be restored if the industry's future depends upon the Federal Treasury for a substantial portion of its income.

We believe that S. 1458 will serve as a bridge to the full implementation of the Agricultural Act of 1958 by demonstrating once again the soundness of the basic philosophy of the act.

By adopting our recommendation, the Congress would be moving in the direction of a one-price system; it would reassure all segments of the cotton industry that we are embanking on a policy of expanded markets for cotton; it would serve notice both at home and abroad that we intend to compete for these markets. At the same time we would save the taxpayers of the United States hundreds of millions of dollars each year.

In reducing the direct subsidies now being made or proposed to be made and more importantly-by restoring the market price system for cotton, such a program would return us to a consumption level that prevailed in 1959-60. It would encourage cotton producers to adopt improved technology in an effort to reduce their unit cost of production in order to be more competitive. In other words, it would restore and revitalize confidence in the total industry.

(The tables attached to Mr. Lovell's statement are as follows:)

1931.

124.0

2,519.6

1932.

124.8

2, 328. 4

TABLE 2.-Carryover and distribution of upland cotton, 1957-63, with comparisons

1 Estimated. Based on 9-month average, plus 3 months at current level.

TABLE 3.-Cotton: Harvested acreage by regions and each region as a percentage of total harvested acreage, United States, 1930 to date

1 Includes California, Arizona, New Mexico, and Nevada.

2 Includes Texas, Oklahoma, and Kansas.

8 Includes Missouri, Arkansas, Tennessee, Mississippi, Louisiana, Illinois, and Kentucky. Includes Virginia, North Carolina, South Carolina, Georgia, Florida, and Alabama. Preliminary, Crop Reporting Board report of Sept. 10, 1962.

Now, Mr. Chairman, I would like for my two associates to introduce themselves and to add anything that they would like to add.

Mr. LANGENEGGER. I am Bill Langenegger, a cottongrower and live in southeastern New Mexico. I have been a cotton producer for over 20 years. I heartily concur in this statement presented by Mr. Lovell. And I believe that in the interest of time that I would invite

like to have clarified in regard to the statement or anything further, and I will be most happy to attempt to answer any questions.

Mr. DEVANEY. I am C. H. DeVaney, president of the Texas Farm Bureau Federation, and I am a livestock and cotton farmer out in the south plains area. We are in agreement with the statement that has been presented here.

Texas is the largest cotton producing State in the Nation and we produce about one-third of, or almost one-third of, the total cotton produced in the United States. We have all types of cotton producing areas from the Rio with low rainfall, a dry area, to the high rainfall area, and then the irrigated areas in various parts of the State.

We believe that this program we are supporting here would be very helpful to the cotton industry in Texas and we certainly are interested in helping that in any way that we can.

Thank you.

The CHAIRMAN. As I understand the bill that I introduced by request it seems, in a measure, to restore the 1958 act; that is, what you really do is to fix the price support at 30 cents and, if necessary, make it as low as 29 cents.

Mr. LOVELL. That is correct.

The CHAIRMAN. For the next 2 years. Is it a fact that under the bill that cotton would be sold at world prices?

Mr. LOVELL. Yes. Senator, if you will turn to table 2 of my

statement

The CHAIRMAN. I am just asking the question.

Mr. LOVELL. Yes; with the export subsidy provisions of the bill this would mean that American cotton would be at 23.5 cents on the world market.

The CHAIRMAN. In other words, by fixing the price of cotton at the world price it is your view that we would regain our trade in the world?

Mr. LOVELL. Yes. That is illustrated in table 2.

The CHAIRMAN. If you will just answer the question, if you please. Mr. LOVELL. All right; OK.

The CHAIRMAN. In 1959 and 1960 when the 1958 program was fully effective, exports were 7.2 million bales, and the next year they went down to 6.6 million bales, and in 1961 they went down to 4.9 million bales. And it is estimated that this coming year there will be 4 million bales. All of that cotton is sold abroad at world prices.

Why is it that sales have decreased, even though cotton was sold at world prices?

Mr. LOVELL. Let me define "world prices" for you, Senator. In 1959 the world price; that is, our price on the world market, was 23.93 Middling 1-inch. In 1960 it was 24.96 Middling 1-inch. In 1961 it was 25.17 Middling 1-inch. This year we still have to estimate what it is, but it will be above 25 cents again.

So what happens is that we increased the world price of our cotton approximately a cent a pound and on the basis of above 1959-60 level when we exported 7 million bales on approximately one-half cent a pound on the basis of 1960-61 when we exported 6.6 million bales and with this increase in price we lost that much market.

The CHAIRMAN. I know, but the object of your bill, and as I understand it in the past, you sought that, but you are proposing

Mr. LOVELL. Right.

The CHAIRMAN. That is what you were then proposing?
Mr. LOVELL. Yes.

The CHAIRMAN. So that we can compete in the world market. And I ask you then, if we did that even though we had the same method then that you now are advocating, why is it that the export of cotton has been decreasing continuously? That is what I cannot understand.

Mr. LOVELL. It would be a definition of what is the world price. My definition of the world price

The CHAIRMAN. We were paying a subsidy, as much as 81⁄2 cents, to be able to obtain that.

Mr. LOVELL. With the 81⁄2 cents

The CHAIRMAN. Do you mean to say that we did not sell at world prices?

Mr. LOVELL. That is correct.

The CHAIRMAN. It was below world prices?

Mr. LOVELL. Yes.

The CHAIRMAN. How would you attain it, then?

Mr. LOVELL. You have an 8-cent subsidy and you have a 321⁄2cent price support, so you have a net effective price of 25.7 or 25.2. I am going to reduce the price support 21⁄2 cents a pound under this bill.

The CHAIRMAN. You mean to the producer?

Mr. LOVELL. Yes.

The CHAIRMAN. That is right.

Mr. LOVELL. I am not going to reduce the export subsidy but 2 cents a pound.

The CHAIRMAN. That means that we will sell at 81⁄2 cents instead or, rather, instead of that it will be 62 cents-from what?

Mr. LOVELL. From 30 cents.

The Chairman. That will make it 231⁄2 cents.

Mr. LOVELL. Right. It will actually be about one-half cent above that, because the price will be above the price support under this law. The price of cotton would be at least one-half cent a pound above the price support, but you are talking about 24 cents export price.

The CHAIRMAN. Is it your contention that the subsidy payment on all cotton shipped abroad was not sufficient to make our cotton competitive on the world market?

Mr. LOVELL. Yes, sir.

The CHAIRMAN. That is your contention?

Mr. LOVELL. Yes, I think the tables will absolutely bear that contention out. At the present time

The CHAIRMAN. With the surplus that you contemplate of 11 million bales, how can you advocate-would the 11 million bales of cotton that you contemplate that would be in surplus come August— how can you advocate that we increase the acreage by about 2 million? Mr. LOVELL. A million and a half, Senator.

The CHAIRMAN. Well, you said

Mr. LOVELL. 17.5 in the bill. We advocate that the Secretary administratively increase 2 million, but in the bill

The CHAIRMAN. You said 16 million-the minimum is 16.3 million,