Adjustment programs that were in effect prior to the Supreme Court decision included programs for United States sugar-beet producers and for sugarcane producers in Louisiana, Florida, the Philippine Islands, Puerto Rico, and Hawaii. In addition, a program was in effect for producers of sugarcane for sirup in the Southern States. II. ADMINISTRATION OF THE SUGAR QUOTAS IN 1936 Although the quota provisions of the sugar program were deemed by the Department of Agriculture to have been unaffected by the decision of the Supreme Court in the Hoosac Mills case, lower prices immediately following the decision reflected uncertainty as to the status of the quotas, but these prices recovered as soon as it became evident that there was no question of the constitutionality of the quota provisions. The quotas for 1936 as established at the end of the year were as follows: Continental United States beet-sugar producing area. Short tons, raw value 1, 550, 000 392, 016 1,032, 812 909, 445 1,000, 829 3, 696 2, 102, 607 29, 103 As a result of increasing consumption the quotas were adjusted and the total consumption estimate was increased on April 10 and again on June 10. The effect of these increases was to make available to the United States, under the 1936 quotas, a total of 6,812,687 tons of sugar. However, these quotas included approximately 127,000 tons which were entered under bond during December 1935 and charged against the 1936 quotas, so that actual supplies available for distribution in 1936 were about 6,685,000 tons, an increase of about 200,000 tons as compared with 1935. Because the continental beet-sugar area, the Philippine Islands, Hawaii, and the Virgin Islands were unable to fill their quotas, their deficiencies were realloted among other areas. III. SUGAR IN THE AGRICULTURAL CONSERVATION PROGRAM In addition to gains through the operation of the quota system, sugar producers received special consideration in the 1936 agricultural conservation program developed under the Soil Conservation and Domestic Allotment Act of 1936. Sugar beets and sugarcane were classified as soil-depleting crops, but because the United States produces less than its total sugar requirements, separate base acreages were established for sugar beets and sugarcane and no payments were made for diverting acreage formerly in sugar beets or sugarcane. Instead, sugar producers were able to earn conservation payments by planting an acreage of soil-conserving crops equal to 25 percent of their acreage in sugar crops. This method enabled sugar-crop producers to conserve their soil without reducing the national production of these crops, and at the same time to earn payments which added to their income from the sale of their crops. Where participating farmers failed to meet the requirements deductions were made from their payments. The conservation payments to sugar-crop producers were computed upon the basis of 121⁄2 cents per 100 pounds of sugar, raw value, commercially recoverable from the normal yield of beets or sugarcane per acre for the farm. The payments were made on the acreage allotments of individual producers, which were worked out within the limits of the national beet-sugar quota of 1,550,000 short tons and the continental cane-sugar quota of 260,000 short tons. The normal yield was in most cases the same as the "representative yield" established for producers under the original sugar-adjustment programs. Because the payments were based on normal, rather than actual yields per acre, they provided a certain measure of crop insurance for growers whose crops failed. The method of establishing separate base acreages for sugar-beets and sugarcane entailed many administrative difficulties, and therefore, in planning the 1937 conservation program, it was decided to consider sugar-beets along with the general soil-depleting crops in order to facilitate administration of the program. It was considered that any acreage diversion by producers would be from normally surplus crops rather than from the sugar crops. IV. THE GENERAL SITUATION IN 1936 The world sugar situation did not improve during 1936, prices again falling to record low levels during the year as a result of world excess supplies. The market of United States producers was protected against this depressed world situation by means of the sugar quotas. Under the sugar-quota system the prices of raw sugar duty-paid in the United States was approximately 2.6 cents per pound above the world price, as compared with a differential of 2.23 cents in 1935. Invalidation of the sugar processing tax presumably did not affect the cost of sugar to consumers, who paid an average price of 5.7 cents a pound for sugar in 1935 and 5.6 cents during 1936. The decision did result, however, in a wide redistribution of income under the quota system; there was a loss to growers, laborers, and taxpayers and a corresponding gain to domestic sugar processors and foreign sugar producers. The loss to sugar beet growers that resulted automatically, under the established grower-processor contracts, from invalidation of the former processing tax and production-adjustment payments, was equal to approximately 50 percent of the former tax. (The decline in the income of growers was offset to some extent by payments under the 1936 agricultural conservation program.) It is estimated that at the same time the profits of beet processors were increased between 40 and 60 percent over their net income from operations during the calendar year 1935 when the processing tax was in effect. Sugar beet growers whose returns had been decreased, although the total income of the sugar beet industry virtually had not been affected, undertook to obtain an appropriate adjustment in their contracts with processors in order to compensate for the reduction in their income, but their efforts met only limited success. 148279°-37-8 Invalidation of production-adjustment payments to producers also destroyed the only practicable means that had been found to assure labor an equitable share in the income from sugar beet and sugarcane production. Consequently, both growers and laborers were denied. assurances of an equitable and reasonable share in the income of the domestic industry under a program in which they, as well as the processors, were intended to be the beneficiaries. CHAPTER 7 LIQUIDATION OF PRODUCTION-ADJUSTMENT PROGRAMS SALIENT FACTS ABOUT LIQUIDATION OF PRODUCTION-ADJUSTMENT PROGRAMS 1. Total estimated number of payments on production-adjustment contracts remaining to be made, on Jan. 6, 1936_ 2. Estimated amount required to complete payments. 3,040, 000 $246, 335, 000 2, 861, 246 $230, 430, 000 At the close of 1935, approximately 8,400,000 production-adjustment contracts had been signed by farmers cooperating in the programs of the Agricultural Adjustment Administration, during the years 1933, 1934, and 1935, when these programs were in operation. These contracts involved about 19,176,000 separate payments to producers. On January 6, 1936, when the so-called Hoosac Mills decision of the United States Supreme Court invalidated the production-adjustment provisions of the Agricultural Adjustment Act, 16,136,000 payments involving $1,082,626,000 had been disbursed by the Agricultural Adjustment Administration. To complete the remaining payments involved in the contracts, estimated to number 3,040,000, approximately $246,335,000 was needed. Table 10 shows the number of payments made and amounts disbursed on the various commodity programs, as of January 6, 1936. TABLE 10.-Payments to producers made and estimated as to be made, by commodities, as of Jan. 6, 1936 1 Includes only programs involving rental and benefit payments to be liquidated under Public, No. 440, 74th Cong. Liquidation of other programs, such as cotton option, cotton pool, and price adjustment payments, is being accomplished with funds from other appropriations and/or sources. 2 Includes territorial tobacco payments. * Includes territorial sugarcane payments. I. FUNDS FOR LIQUIDATION APPROPRIATED BY CONGRESS The Supreme Court decision on January 6, 1936, invalidated the production-control and processing-tax provisions of the Agricultural Adjustment Act and stopped the adjustment programs then in progress. In order to conclude these programs Congress, on February 11, 1936, appropriated (Public, No. 440, 74th Cong.) $296,185,000 to meet unliquidated obligations and commitments in connection with them, made by the Agricultural Adjustment Administration before January 6, 1936. Of this amount, $30,000,000 was transferred to the appropriation Conservation and Use of Agricultural Land Resources as provided by the Act of March 19, 1936; and $453,100 was returned to the Treasury, pursuant to Public Resolution 76, Seventy-fourth Congress (approved Mar. 14, 1936), leaving a net balance of $265,731,900 with which to meet the obligations and commitments referred to above. Before January 6, 1936, the Agricultural Adjustment Administration had made so-called advance payments upon adjustment contracts when the contracts were accepted, and had completed the payments to the producers when they had complied with the terms of the contracts. Under the provisions of Public, No. 440, no advance payments could be made after the farmer had made at least partial compliance with the terms of the contract. For other reasons, such as the necessity of obtaining additional information from the field and adjusting indebtedness of the producer to any Government agency before his payment is completed, the procedure of completing the payments provided for by Public, No. 440, has been slower than the procedure followed in making payments on contracts under the original production-adjustment programs. A final check, now under way, is being made to determine that all payments are in order on each of the approximately 8,400,000 contracts that had been accepted by the Agricultural Adjustment Administration up to January 6, 1936, from the beginning of the production-adjustment programs. II. LIQUIDATION PAYMENTS 94 PERCENT COMPLETED Considerable progress toward liquidation of the production-control programs had been made by the end of 1936. Of the estimated 3,040,000 payments, involving $246,335,000 yet to be made on January 6, 1936, there had been made 2,861,246 payments involving $230,430,000 or 94 percent, on December 31, 1936. Table 11 shows payments by commodities, made from January 7 through December 31, 1936, compared with payments estimated on January 6, 1936, to be made. It is estimated that $15,905,000 will be spent in liquidating the remaining payments. At the close of the year the liquidation work involving rental and benefit payments was nearing completion, although a small number of claims for payments were still being received from time to time. |