below the previous year, but in the fall of 1962 began to strengthen. International tension, reduced carryover stocks, and improved consumer demand in Europe have all contributed to the stronger conditions of the wool industry. Short-term outlook Prices should remain favorable in the primary markets for the remainder of the 1962-63 season. There will be less wool available in the five major producing countries taken as a whole. Demand for wool in major consuming countries has held up well because of the generally more severe winter being experienced in Japan, North America, and Europe. A sharp price rise is not likely because of the availability of substitute manmade fibers. Long-term outlook Competition from synthetic fibers will continue to influence wool demand and prices. The ready availability of wool substitutes may preclude future price booms following political disturbances as in the past. This should help wool to maintain its competitive position and lend stability to the market. The United States will continue to import a large part of its wool requirements. Future markets for wool may be considerably different from the present. Consumption per person in the industrialized nations may be on the decline but markets will probably be developing in underdeveloped parts of the world as living standards gradually rise. Plans for fiscal year 1964 Plans are to continue to collect and disseminate information on production, trade, stocks, and prices of wool on a worldwide basis. World situation HIDES AND SKINS World bovine hide production continued to rise in 1962. In the United States, the world's leading producer, hide production was more than 27 million pieces. Output in Argentina rose moderately because of increased slaughter following widespread drought. Hide production in the Soviet Union also continued to expand in proportion to the growth of its cattle industry. The United States and Argentina account for about 60 percent of world bovine hide trade annually. In 1962 Argentine exports may have exceeded 13 million pieces, while U.S. exports were about 7 million. Short-term outlook World production will continue to rise in 1963. A rise of about 1 million pieces is likely in the United States; however, some drop is likely in Argentina following a year of heavy slaughter. Assuming continued prosperity in Europe and Japan, and no Government-imposed restrictions in the latter country, U.S. export should remain at current levels or even rise slightly. Long-term outlook Continued pressure from manmade substitute is certain. The competition will continue to be felt most strongly in the best markets for leather products. Developing nations offer the most hope for continued growth of the worldwide markets for bovine leather. As people in these areas become more affluent, their ability and desire to purchase leather shoes increases. Plans for fiscal year 1964 It is planned to continue the leather promotion project in Japan; to keep U.S. interests advised of imports and export trends and trading opportunities; and to continue to encourage the export of hides and skins so as to aid the U.S. livestock industry. Plans are underway to promote semiprocessed leather and leather goods in Europe. World situation TOBACCO World tobacco production set a new record in 1962-9.1 billion pounds, compared with 8.7 billion in 1961. Production of Flue-cured-the most important kind entering world trade, also, was at record levels-3.4 billion pounds, compared with 3.3 billion in the previous year. Record crops of Flue-cured were grown in India, New Zealand, and Pakistan. Record plantings occurred in Brazil and the Rhodesias-Nyasaland, but unfavorable weather reduced the final outturn. The U.S. Flue-cured crop in 1962, at 1.4 billion pounds, was up 11 percent from 1961, and the largest since 1956. World consumption of tobacco continued to gain in 1962. Increasing output of tobacco products, particularly cigarettes, is the principal factor resulting in record world tobacco export trade in recent years. In 1962, world cigarette output totaled about 2,400 billion pieces-about 50 percent larger than in 1951-5 Free world tobacco exports in 1962 were close to the record 1.65 billion porzda entering world trade in 1961. But it is likely that exports in 1963 will be below those of the past 2 years-a period when some buildup of stocks occurred, and blue mold damage to crops in several countries in Western Europe necessitated stepped-up tobacco imports. U.S. tobacco exports in 1962 were below those of 1961. Short-term outlook U.S. tobacco exports in fiscal 1963 are likely to be below those of fiscal 192 when 520 million pounds (export weight) moved abroad. The 1962 crop of Flue-cured tobacco contained a larger than normal quantity of low-quality leaf and this already has reduced the level of exports of Flue-cured for the first half of the marketing season. On the other hand, the steady growth in manufacture of American-type blended cigarettes is encouraging burley exports. Exports of the latter type may be at a near record in fiscal 1963. Quality of U.S. leaf offered by exporters will be a most important factor in the level of exports for the next year or so. Trade barriers of various sorts, however, will hamper efforts of U.S. tobacco exporters to improve their position in world trade. Long-term outlook As world tobacco consumption increases further in the longer term periol some gains in U.S. exports should occur. But it is unlikely that U.S. trade wi increase as a percentage of total world trade. Any absolute gains in U.S. exports that may occur will require (1) an improvement in the quality of leaf produced: (2) favorable developments with respect to the presently scheduled Common Market external tariff, and (3) elimination of other trade barriers that currently restrict imports of U.S. leaf. Plans for fiscal year 1964 Continued efforts to obtain more favorable tariff treatment in the Common Market will be made. Elimination of other trade barriers will be vigorously pushed. Marketing and competition specialists will make on-the-spot surveys in areas where competition is important, and where possibilities for increased trade appear promising. New promotional projects will be undertaken wherever possible. Spot news items and special circulars will be published to assist the various segments of the industry in keeping abreast of world developments affecting the outlook for exports. World situation SUGAR World sugar supplies tightened and prices increased in 1962. The 1962-63 world sugar crop, 56 million short tons, is about 3 million tons below consumption. This results in reducing stocks, which had been built up to rather high levels and in increasing prices. Stocks had also been slightly redu following the 1961-62 crop. The tightening world supply situation is primarily the result of a sharp drop in Cuban production and two successive rather poor European beet crops. Cuba continues to market a considerable amount of its sugar under agreements with communistic bloc countries. Yearend stocks of sugar reached a peak of 24 million short tons in 1961. Stocks declined about 1 million tons during 1962 and are expected to decline further to about 19 million short tons by December 31, 1963, well below desirable levels at current world consumption. A substantial part of December 31 stocks in Europe consist of production in the last 3 months of the year. The International Sugar Agreement became largely inoperative on January 1, 1962. because of inability to agree on a quota for Cuba. Considerations will be girer in 1963 to the possible renegotiation of the International Sugar Agreement, as the present one expires at the end of 1963. The United States has introduced a procedure of phasing out the quota premium-difference between world and U.S. prices-for sugar imported under quota. The 1.5 million tons to be imported under the global quota in 1963 will, however, be at world prices. Short-term outlook About two-thirds of the world sugar trade moves under special arrangements. The remaining one-third moving from free world supplies will continue to be tight over the short run. Assuming that world sugar prices during 1963 continue at about the level of January, it is probable that 1963-64 world production will be only slightly below estimated consumption. Thereafter, production may again exceed consumption. In view of the tight supply situation, the United States faces problems in competing for its foreign needs. Long-term outlook As indicated above, production may begin to exceed consumption after 1963-64. There are a number of uncertainties, however, in the world sugar picture, which have been aggravated by Cuban developments. There are a number of factors which could stimulate production over the long run. Some countries may elect to remove or relax production restrictions because of higher prices and make more effective utilization of cane and beets. In many countries acreages will increase. Also it is quite likely that European beet crops, which have been only fair in the last two seasons, will be larger in future years. On the other hand, economic or political crises and other developments in key producing countries could jeopardize world sugar supplies. Plans for fiscal year 1964 The established series of reports on world production, stocks, and trade, in sugar and related products, including molasses and honey, will be expanded. Emphasis will be given to improving the reporting and analysis of supply and consumption on a country-by-country and area-by-area basis. Activity in mill construction and expansion will be summarized for publication as need indicates. Special attention will be given to analysis of the structure and economic position of the sugar industry in foreign countries. Particular emphasis will be devoted to more currently evaluating the actual and potential supply position in exporting countries, including projections of future production and trends in trade. This is urgently needed in the operations and administration of the U.S. sugar program because of the critical position of world sugar, particularly as it related to U.S. import needs. World situation COFFEE The 1962-63 world crop amounts to about 65.5 million bags (132.3 pounds). Consumption will be about 5 million bags less. Supply and demand for the year, however, will be more nearly in balance than for any crop year since 1956-57. The carryover at the end of 1962-63, September 30, 1963, will approximate 85 million bags. Three-fourths of the world stocks will be held by Brazil, but stocks are building up in some other countries. Prices showed little change during 1962, except for some decline in milds. The series of Producer International Coffee Agreements of recent years have been fairly successful in attaining the objectives of price stability and orderly marketing. A long-term producer-consumer agreement was negotiated at the United Nations in the summer of 1962. It will become effective sometime during the 1962-63 (October-September) crop year and is expected to contribute more effectively to stabilizing coffee prices and marketings. The United States imported a record 24 million bags in 1962 valued at about $1 billion. World trade also set a record in 1962. Short-term outlook There will be a world surplus of coffee for the next few years, even though production and consumption are approaching a balanced position. Despite burdensome stocks, however, the International Coffee Agreement should have a stabilizing effect on prices. Long-term outlook The long-term outlook for coffee is somewhat brighter. Some of the producing countries are beginning to curtail production and to diversify their agricultural economies. A rather large percentage of the current stocks are deteriorating in quality and will have to be disposed of in the next few years. Additionally, world consumption will likely increase at a rate of about 3 percent a year. The long-term agreeemnt, if effectively operated, could contribute significantly to solving the world coffee problem. Plans for fiscal year 1964 The collection, analysis, and dissemination of world production, trade, and marketing information will be continued, and further refinement of production estimating techniques will be emphasized. Programs and policies in producing and consuming countries will be studied to determine how they affect patterns and trends in world production and trade. We will continue to work with the International Coffee Agreement on statistical and economic matters. World situation COCOA BEANS The sharp upward trend in world cocoa production appears to be leveling off. The 1962-63 world crop of about 1,180,000 metric tons is only slightly above 1961-62 but below the record 1960-61 outturn of 1,187,000 metric tons. Prices have strengthened somewhat but are still rather low and inventories in consuming countries are large. World consumption has been increasing at a fast rate over the past several years and it will probably be near production this season. The potential demand for cocoa beans is difficult to measure. Increase in consumption would be even greater except for the large use of substitutes. Short-term outlook Cocoa bean stocks are expected to continue at a high level for sometime. World consumption continues to increase. The amount of increase will be determined by price levels. Should prices advance substantially above present levels, users will tend to revert back to substitutes. The United States is the world's largest consumer of cocoa beans, historically taking about one-third of the total quantity entering international trade. Long-term outlook Historically there has been a delicate balance between the world supply and demand for cocoa beans, characterized by sharp fluctuations in prices. Present excess inventories are the result of a succession of large crops. Over the past several years, efforts have been directed by producing and consuming countries to develop an international arrangement aimed at providing ample supplies with only moderate price fluctuations. Over the long run both production and consumption could be considerably higher with reasonable stability for both producer and consumer. Plans for fiscal year 1964 The supply and demand situation of cocoa beans and its products will be analyzed on a continuing basis and pertinent information disseminated as feasible. Additional emphasis will be placed on the factors affecting the changes in the world pattern of trade in this commodity. Material will be furnished international agencies and cooperation will increase in efforts to develop an international commodity arrangement for cocoa. VEGETABLE FIBERS (EXCEPT COTTON) World situation The combined 1962 production of hard fibers for cordage and bagging (sisal, abaca, and henequen) was nearly 8 percent below 1961 but about the same as in previous recent years. Sisal production fell nearly 8 percent and henequen about 1 percent from 1961, but abaca rose slightly from the preceding exceptionally small crop. Of the soft fibers, flax production increased but failed to regain the loss in production in 1959 and 1960. Production in the Soviet Union, the largest producer, remained at a relatively low level compared with 1956-58. Jute fell about 9 percent from the record crop of 1961. Production in 1962 in millions of pounds was: sisal, 1,278; abaca, 222 ; henequen, 357; jute, 5,000; and flax, 1,365. Interest in kenaf continued in many countries with Thailand showing the greatest increase. Ramie production showed little change. Prices of sisal and henequen rose above the 1961 level and neared the 9-year peak of 1960, the price of abaca fell throughout the year and averaged the lowest since 1956. Flax prices changed little in 1962 as supply and demand continued well in balance. The United States imports its entire requirement of these fibers. It takes nearly all of Mexico's henequen and istle fiber and products, nearly a third of the Philippine's abaca exports, and ranks with the United Kingdom and West European countries among the world's largest importers of sisal, jute, and flax fibers and products. Short-term outlook Sisal production is expected to show little change, henequen and abaca will probably increase somewhat. Prices of these fibers will probably not change significantly but may each continue its general trend of 1962. Flax production may increase some but no significant change is expected in either supply or price. Mexican istle is usually produced according to demand, and little change is expected in supply, demand, or price of hemp, istle, or other minor fibers. Long-term outlook Sisal is expected to change gradually from adequate to plentiful supplies with lower prices. Henequen will probably continue its present pattern of gradual increase in supply and demand, but production gains may begin to level off somewhat after the next 5 or 6 years with an attendant stiffening in price. Jute supplies will probably be sufficient for demand with some ups and downs from year to year. The Pakistan Government has requested a United Nations study group on jute to assist in stabilizing production and prices. Flax and hemp are not expected to regain their former position in the fibers field because of competition from synthetics. Kenaf and ramie will remain in the category of minor fibers. Plans for fiscal 1964 Publication and dissemination of information will continue on world production, trade, price, supply, and development of the principal vegetable fibers, other than cotton. Contributions will be continued as requested to international agency studies. We expect further intensification in relation to efforts in this field because of requests to the United Nations for special activity in relation to both jute and hard fibers, and increased developments concerning world trade. The study on U.S. imports (quantity and value) of all these fibers will be brought upto-date and published. Mr. WHITTEN. Mr. Secretary and Mr. Ioanes, we wish to thank you for an informative persentation. We haven't taken up as much time with the detail of personnel and things of that nature. But more and more it becomes apparent that if we are to keep this balance and keep world markets, we are dependent upon your organization. Apparently you folks are getting along, and we may forget about insisting on the sales manager being over at the corporation. But I do wish to thank you for a very fine presentation. Mr. RENNE. Thank you. Mr. IOANES. We wish to thank all of you very much. 95910-63-pt. 3-68 |