Has this approach been tried within the cotton industry, do you know?

Mr. GIRARD. Yes, it has. The Cotton Producers Institute has attempted that approach, and for reasons that I would prefer they would explain themselves, it has not worked.

There is one provision in this bill, I believe section 11, which permits a producer to get a refund if he requests it; so, to that extent, in a sense, it is voluntary, although the collection would be made first, and then he has to make an application to get it back. So, to that extent, it is not voluntary. But he can recoup his money if he exercises the option provided in section 11.

Mr. FINDLEY. That is all. Thank you.

The CHAIRMAN. I would like to point out the fact that we have a tobacco organization which is financed by the farmers called the Tobacco Associates. Each producer is assessed a certain amount per acre and if he does not want to pay, all he has to do is to ask for it to be refunded. I have asked about the constitutionality of such a program. Nobody can attack the tobacco program, because he would not have a cause of action as no one is required to make a contribution. Now, if I understand correctly, in this bill you say that if I make 10 bales of cotton, $10 is deducted from my proceeds and if I am unhappy about it, I can ask for the money back; is that right? Mr. GIRARD. That is right.

The CHAIRMAN. I also want to compliment the cotton growers in North Carolina, because I think that we in North Carolina have the only cotton promotion committee in the whole country that is financed by a contribution made by the farmers, and this organization has done the best that they could do to promote the use of cotton. We are here proposing to do the same thing on a nationwide basis, and it seems to me that no one would be able to justify an objection to the bill simply on that basis, since it is a self-help program and we hope to minimize the losses to the Government and to the taxpayers. That is the main objective of the bill, and to make cotton competitive with manmade fibers.

I do not think it is unfair to the manmade fiber manufacturers for us to look after the No. 1 cash crop in American agriculture. I think that there are more people earning their livelihood out of cotton than any other crop in America. I am sure that this is true; that is, when you take into consideration those in the production, the processing, the shipping, the handling, and the distribution, the wholesale and retail level there is no one other commodity in American agriculture that can compare with the cotton industry as such. Do you not agree with that?

Mr. GIRARD. Well, the figures I have seen recently, Mr. Chairman, with respect to the number of people who are working with cotton from the producer to the consumer, numbers in excess of 9 million. That would be a pretty sizable segment, I would say.

The CHAIRMAN. I think that it is closer to 10 million.

Mr. GIRARD. Over 9 million.

The CHAIRMAN. Over 9 million?

Mr. GIRARD. Yes.

Mr. ABERNETHY. I would like to ask you this question: Is this under

the Federal law?

The CHAIRMAN. No; it is under State law.

Mr. ABERNETHY. I wonder if you and your associates could in a few minutes' time give us some details about the mechanics of the program.

Your statement as to the necessity for it is fine. I think we all agree that there is some need for a program which will enable some segment of the industry to promote research and further consumption of this product. I am familiar with the need, but I think that everybody is familiar with the need, and I think that is fine, and we all are familiar with the need, but I would like to know more about the mechanics of the program.

I wonder if you could have some member of your staff go into that, to give us a rundown on that? That is what I would like to have at this time.

Mr. GIRARD. The details, of course, would have to be worked out in the order itself. In other words, this is enabling legislation, and the order would have to do a lot of the defining and deal with the specifics, but, generally, drawing on our experience with other commodities under marketing agreements and orders we would first have to have a proposal from responsible industry groups which would set up the committee, precisely how the appointments to the committee were to be made, and so on.

Also, then, we would have the Secretary examine that, work with the industry groups on the proposal, and if there was agreement, why, then, we would go to a public hearing which would be a due-process, cross-examination-type of hearing, and witnesses would be sworn. Then, after the hearing, briefs would be filed, and if the Secretary found that the program would effectuate the policy of the act as it was structured, then there would be a recommended decision to which all of the industry could file exceptions.

Following that, the Secretary, if he still found that the program would effectuate the policy of the act, would make the necessary findings and conclusions. Then, he would issue a final decision, and have a referendum among all of the cotton producers.

If two-thirds of the cotton producers approved, why, then, the program would go into effect.

Mr. ABERNETHY. You say that the program would go into effect. Illustrate one program.

Mr. GIRARD. The legislation provides for alternatives. You could have a program which would have promotion only. You could have a different program which would provide for research and development. But, as I understand the proponents, they want one program that will encompass both research and development as well as promotion.

The responsible producer organizations in the various States would nominate members to the Cotton Board, the representation being based upon the marketings of cotton in each State in relation to other States.

Mr. ABERNETHY. How many people would serve on the board?

Mr. GIRARD. It would depend on what the order provided, as to what the representation is. The act says that no State shall be without any representation. In other words, there must be a minimum of one from each State. If the smaller State had two members, why, the larger States would get proportionately greater representation.

Mr. ABERNETHY. Then, what is the authority invested in the board?

Mr. GIRARD. The board would administer the program, collect the funds and expend the funds pursuant to a budget of projects which would be recommended by another organization which consists of representatives of the various cotton organizations in each State. In other words, as I understand it, the way the program would work, this organization would be constituted somewhat similar to the Cotton Producers Institute which has been functioning in this field.

Mr. ABERNETHY. Let me interrupt there, does this board, or will this board, have the exclusive authority to make a determination as to what will be spent, how much will be spent and when it will be spent? Mr. GIRARD. No; the way this is structured

Mr. ABERNETHY. You said "No." Then who has that authority? Mr. GIRARD. It is a combination, sir. The individual project must be recommended by the producer organization which is going to be set up.

Mr. ABERNETHY. All right. What producer organization?

Mr. GIRARD. The bill contemplates that the organization of the producers, certified by the Secretary as representing producers in the various States, will organize an association similar to the Cotton Producers Institute from representatives of these various cotton-producer organizations. This organization, in turn, would prepare a budget of promotion and research projects, and estimate the costs thereof. This, they would recommend to the Cotton Board for its consideration. The Cotton Board, if it approved some of these and disapproved others, would take those that it approved to the Secretary for final approval, and only those projects that have been initiated by the producer organization, approved by the Cotton Board and the Secretary, would become operative.

Mr. ABERNETHY. When this goes to a referendum, the referendum returns may be based upon the number of producers or the quantity, the volume?

Mr. GIRARD. Yes, sir.

Mr. ABERNETHY. Who makes that decision?

Mr. GIRARD. That will have to be determined by the Secretary in regulations that he issues with respect to the referendum. In other words, he would have to issue implementing regulations concerning how the referendum is to be conducted, by mail or by ballot, whether the determination

Mr. ABERNETHY. You have answered it. It would be made by the Secretary. Let us say that the vote is 50 to 50, just say that it is 50 to 50 by numbers, but by volume it would be 80 to 20. When will we know which will prevail, by numbers of producers or by volume?

Mr. GIRARD. Presumably the Secretary would issue the regulations prior to the referendum; he would do that so that the folks would know on what basis the results will be determined. And so, in that case, if it was a number determination, why, then, it would fail. On the other hand, if it were a volume determination, it would carry.

Mr. ABERNETHY. You anticipate that there may be instances when the number of farmers voting in the referendum would be greater in opposition to those voting by volume, but that the quantity in production would be greater?

Mr. GIRARD. That is conceivable, sir. We figured out that 25 percent of the cotton producers would be sufficient to carry a volume vote.

So that if all of the large producers voted one way, it is possible that you could have 75 percent of those voting against it and 25 percent for it, if you restricted your approval to volume alone.

Mr. ABERNETHY. Well, now, if you restricted your approval to volume alone, and this situation happened, as you say it could, when only 25 percent of the producers voted for it, who will protect me when I return to my district from the thousands of my small farmers? Mr. GIRARD. I think that is an area

Mr. ABERNETHY. I am not being facetious.

Mr. GIRARD. No, no. We recognize that it is a very serious problem. As you know, in our cotton quota program, it is numbers. In fact, in most of our quota programs, numbers are the factor. It is on a numbers' basis rather than on a volume basis. So, I think that this is an area that the committee may very well want to consider quite seriously, and the committee, of course, could strike out the alternatives if they thought, in their wisdom, that would be desirable.

Mr. ABERNETHY. I have another question: Let us suppose that I gin my cotton. I have 10 bales. I have 10 bales. Incidentally, I have quite a number of farmers in my district who produce only 10 or 12 or 15 bales of cotton. I pay in my $10. I ask for it back. What then?

Mr. GIRARD. Well

Mr. ABERNETHY. I fill out the form provided by the administrator of the program for the return of the fund I have paid. Then I cannot vote in any subsequent referendum, is that right?

Mr. GIRARD. That is the way that the bill is now written.

Mr. ABERNETHY. What is the objective for excluding those farmers from voting in a subsequent referendum?

Mr. GIRARD. I think that you would have to ask the proponents and the sponsors of the bill on that.

The CHAIRMAN. If you are talking about the little farmer, who does not want to get into this program, he does not have to get into it. This means that the big farmers would be financing the entire program and that the little farmer would benefit from the program.

Mr. ABERNETHY. I am not now quarreling about anything. I am just trying to find out about this bill.

The CHAIRMAN. Why then discuss the voting?

Mr. ABERNETHY. And the next time they will not check him off. Mr. GIRARD. He would have to ask for a refund each time.

The CHAIRMAN. He can ask for the refund. It is just as simple as that; he gets his money back.

Mr. ABERNETHY. It is the same as in the other program. He would be put on the blacklist.

The CHAIRMAN. They cannot put him on a blacklist, and it is beneficial to him as well as to others.

Mr. ABERNETHY. I just want to be sure- -I want to know what will happen. I want to be sure that I know what will happen if this bill becomes law.

The CHAIRMAN. I do not see how the small farmer could possibly suffer.

Mr. ABERNETHY. I do not say now that he will suffer. I just want to know what the mechanics of this will be. Then I can decide whether anyone will suffer.

The CHAIRMAN. Under the volume part of the program, if it is such, 25 percent of those will pay the cost of the program.

Mr. GIRARD. Presumably those who vote for the program are those who are going to support it and not ask for refunds; at least, that is

what we envision.

Mr. ABERNETHY. Suppose that 50 percent of the farmers ask for a refund, then they are, from then on, excluded from participating in the referendums, are they not?

Mr. GIRARD. That is correct.

Mr. ABERNETHY. Then, the next referendum would be imposed by two-thirds of only 50 percent?

Mr. GIRARD. Yes, those who are participating in the referendum. Mr. ABERNETHY. And you could reach the point in the third referendum of the fee being imposed by only two-thirds of one-fourth of the growers.

Mr. Bucy. If you got down to that point, there is a provision in there to the effect that if 10 percent of the producers voting in the original referendum petition the Secretary to hold a referendum to repeal the program, then he has to hold a referendum and conduct it at that time, and then if 50 percent of the producers producing 50 percent of the cotton crop vote in favor of terminating the program, it must be terminated.

Mr. ABERNETHY. The only reason that I am raising this question, Mr. Chairman, is that I am trying to find what happens to the fellow who does get out.

The CHAIRMAN. For example if I pay in $10 on 10 bales of cotton and ask for the money to be refunded, will it be refunded?

Mr. GIRARD. You get it back.

The CHAIRMAN. It does not cost him anything to get out?

Mr. GIRARD. Merely the postage.

The CHAIRMAN. It does not cost him anything to stay out and he gets the benefit of the program.

In our State we have had in operation a tobacco program in Fluecured tobacco, and I do not recall ever having heard of anybody asking for a refund of the little amount of money that he paid in. Perhaps they have in a few instances.

Mr. DOLE. Is that like a section 14-B?

The CHAIRMAN. We are talking about agriculture. I am not getting off on something else. Go ahead.

Mr. STALBAUM. Will you yield?

Mr. ABERNETHY. Yes.

Mr. STALBAUM. In line with this voting on the referendum, I just want to make it clear in the record that this applies only to the referendum under this order; is that right?

Mr. GIRARD. That is correct, sir. This is a separate bill from the marketing agreement act. While it is patterned after the Agricultural Marketing Act, there is no connection between the two, or a tie-in.

Mr. STALBAUM. So that the failure to contribute, or requesting refunds and obtaining them would not preclude him from any other cotton program referendum activity; anything of that kind?

Mr. GIRARD. It only has to do with this particular promotion program and nothing else.