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he would not be assessed? As it is set up now,
he must make a personal demand for the refund.
Mr. CORTRIGHT. No, sir; we think that the producer has all of the protection that he needs or is entitled to under the refund provision of the bill. We think that the uniform collection is necessary if the program is to be operated effectively.
Mr. DOLE. I would point out to you that in Congress now we are talking about compulsion to join a union and not to join a union, as in section 14(b). I cannot see much difference in what you propose and what they propose.
Mr. CORTRIGHT. If you analyze it you can see a great, great amount of difference. We have been following these procedures where people in many, many areas of government, by a simple majority vote, impose the will of the majority upon the minority: I would suggest to you that in my area we have had drainage districts for years where a simple vote of a majority built a drainage district which was a needed improvement in an area without consideration of the other 49 percent. This is much more comparable with this type of thing than it is with your 14(b) thing.
Mr. DOLE. I am in sympathy with what you want to do. It might be the better part of wisdom to appropriate the money, rather than to tell the people that they must pay in, pay tribute.
Mr. CORTRIGHT. They must not pay tribute. They must have the money collected to eliminate the competitive factors; then if they want, they can obtain a refund.
Mr. DOLE. That is the same argument that the unions used.
Mr. HAGEN of California. On page 2 of your statement, item 4, how would you suggest that language on page 12 of the bill be changed to clarify it?
Mr. CORTRIGHT. I filed with the counsel of the committee a statement. Do
Do you have that, Mr. Heimburger? Mr. HEIMBURGER. I do not have it with me, the language that they suggested.
Mr. CORTRIGHT. A package of them. I have simply not had the time to look through them closely.
Mr. HAGEN of California. It refers to two-thirds of the number two-thirds of the production volume necessary to carry a referendum.
Mr. CORTRIGHT. It is to clarify that two-thirds of the volume of the people voting—that is what they are talking about—not two-thirds of the volume of the crop.
Mr. HAGEN of California. Either two-thirds of the number of voters or voters producing two-thirds of the volume of cotton could carry the referendum.
Mr. HEIMBURGER. The volume of the production represented in the referendum.
Mr. Hagen of California. Correct. I do not know whether you can answer this question or not. The wool people have been putting on quite an attractive promotion campaign of late. Do you know whether that is producing any results? Maybe some of the industry people could answer that.
Mr. CORTRIGHT. I think that one of the industry people could answer that. I will call on Mr. Lipscomb.
STATEMENT OF ED LIPSCOMB, DIRECTOR, SALES PROMOTION,
NATIONAL COTTON COUNCIL, MEMPHIS, TENN.
Mr. LIPSCOMB. I would say that it is too early to evaluate the results. They have been putting most of their promotion money on lamb and not wool.
Mr. HAGEN of California. They have got quite a promotional deal with that symbol of theirs.
Mr. LIPSCOMB. It has only been in operation just a few months.
Mr. Hagen of California. So that you have not had time to check it?
Mr. LIPSCOMB. We have had no time, we have had no chance to check it. What they are doing or were doing before was not enough to do more than just cause a little ripple on the surface.
Mr. HAGEN of California. I would like to ask another question. For example, Du Pont which has one of these brand name synthetics, do they have tie-in with, for example, J. B. Stevens, we will say, on fabrics, or maybe with Lord & Taylor on dresses—and do they pay the whole cost of that advertising, or does J. B. Stevens Co. or Lord & Taylor pay for part of it?
Mr. LIPSCOMB. That works every way in the world. You can find as many different arrangements as you can find companies. The normal procedure is for the fiber manufacturer to pay one-half and the manufacturer to pay the other half.
What is hurting us even worse in magazine advertising is that the same thing is applied at the retail level. You see in your papers in Washington that they are full of synthetic fabric advertising
Mr. HAGEN of California. And that will be in a given store?
Mr. LIPSCOMB. A given store, yes; and the chances are 9 to 1 that this is done on a 50-50 basis, with the fabric manufacturer and the retail store paying for it. We have none of that whatsoever in our cotton program.
As to the magazine advertising, it will vary greatly with each manufacturer.
Mr. HAGEN of California. Thank you.
Mr. CALLAN. Why do you give the Secretary of Agriculture the veto power over the actions that might be developed ?
Mr. CORTRIGHT. My understanding is, and this would, of course, have to come from an attorney—this is necessary to provide the lawful expenditure of money that they participated in collecting.
Mr. CALLAN. Thank you. Mr. STALBAUM. Have you seen Mr. Schnittker's statement that he filed with the committee !
Mr. CORTRIGHT. No, sir; I have not seen it.
Mr. STALBAUM. Primarily, on page 5 of that statement, and this is in the record—he points out that the bill as now drafted would provide that the obligation to pay the assessment technically rests with the producer, not with the buyer or the handler, and that there is a problem of collection. Under the present law it would have, in effect, gone to the producer, and he suggests some language here when the burden of collecting it would rest with the buyer, to pay him, and if you got into any legal problems, the collection would have to be made from the buyer. Having worked with marketing orders in other commodi
ties I, personally, feel that this is an improvement. I urge your group to look at it with the thought that you might want to incorporate it to make it easier of enforcement.
Mr. CORTRIGHT. I am not an attorney, but our intent is that the producer pay, that the handler collect, and that the handler remit to the Cotton Board.
Mr. STALBAUM. That is correct, but the technical language now is such that if the producer does not pay then the Cotton Board would have, in fact, to go to each producer, whereas with a slight change in the language the obligation of collecting can be placed on the buyer, and if he does not collect he still has to pay it.
Mr. CORTRIGHT. We will, certainly, listen to the advice of the committee counsel on this.
The CHAIRMAN. Mr. Heimburger, will you make a note of that suggestion ?
Mr. HEIMBURGER. Yes, sir; I am already familiar with it. We will consider it very seriously.
Mr. STALBAUM. One other question. I asked this question earlier, and the chairman said that I should refer it to you. So you know what is coming. That is the question on having two boards made up of representatives, in each instance from the same producer group basically, on a proportionate basis. I have been scratching my head since asking the question and I still cannot understand why you should have two boards.
Mr. CORTRIGHT. I can enlighten you to a degree if I may. The first is a quasi-governmental board. It is appointed by the Secretary from nominations made by the producer groups.
In addition thereto the Secretary, if he finds that a number of producers are not represented by these producer groups, he can make additional appointments. This is the board that represents Government and is responsible to the Secretary and appointed by him.
The other board is the board that initiates and develops and operates the program. It is selected solely by the producer groups themselves. The Secretary has no authority whatsoever in the appointment of the members of this board. This is to insure the tie-in and the enthusiastic belief that producers themselves are operating and initiating the programs to expend the moneys that they have put up.
STALBAUM. Actually, your point is well taken. I do want to point out for you and for the record that the Secretary does have some control in here because he certifies that the cotton producing groups from which this board shall gets its membership, and to that extent he has, basically, something to do with it.
Mr CORTRIGHT. He has criteria to go by written in the statute that he will certify if he finds they meet this criteria.
Mr. STALBAUM. Is this, Mr. Cortright, with the original board, too? Mr. CORTRIGHT. Yes, sir.
Mr. STALBAUM. But you cannot deny that the membership of the original board—the Cotton Board-shall be composed of people coming from groups certified under section 14 of this bill which is, also, true of the second board.
Mr. CORTRIGHT. That is right.
Mr. STALBAUM. I still firmly believe and I throw this into the record at this point, that you will have a much better operating program
if you would consider making this one board. I truly believe this.
Mr. CORTRIGHT. Our point is that the Secretary does have the authority to appoint the first board, the Cotton Board.
The second board he only certifies producer groups, and they themselves then select the membership of this board. The Secretary has no authority other than the certification of the group.
Mr. STALBAUM. Except that it is recognized that both are coming from the same cotton producing groups.
Mr. CORTRIGHT. Yes. And, again, the Secretary has additional authority on the Cotton Board that he does not have in this other board.
Mr. STALBAUM. Thank you very much.
Mr. FINDLEY. This committee has passed legislation intending to improve the income of the producers, and yet this program would take money out of the producers' pockets. It would cost him money. Since the enactment of cotton legislation about a year and a half ago, the cotton textile mills have had rising profits. Their profits have gone up steadily. Have you given consideration to having the mills finance this cost instead of passing it on to the producers?
Mr. CORTRIGHT. In my judgment, if you ask the mills to do this, it would drive them ever more rapidly to the use of substitute fibers, instead of to the use of cotton.
Mr. HAGEN of California. I want to ask you this question. I assume that these assessments are totally income tax deductible; in other words, the farmer can deduct them?
Mr. CORTRIGHT. Here, again, I am not an attorney, but it would be my assumption that they would be a cost of doing business. Advertising would be a legitimate cost of it.
Mr. HAGEN of California. How about requiring gins to participate in this? Have you given any consideration to that—not the textile mills, because your conclusion is quite valid about them, but how about some of these intermediaries in the cotton business, like the gins, who make money off of cotton and, presumably, would be better off with more cotton being sold.
Mr. CORTRIGHT. My feeling is that the producer has the primary interest in this. The producer wants to put up his money and he wants to control the program. If we had intermediary interests represented we would have to share control with them. We are not willing to do that. In addition the money paid by the gin would almost certainly be passed back to the farmer in the form of higher costs of ginning.
The CHAIRMAN. Thank you very much, Mr. Cortright.
Mr. BURTON. I understood you to say, Mr. Horne, that your nonfiber competitors are spending about $100 million a year in promotion.
Mr. HORNE. About $70 million in promotion and $135 million in research.
Mr. BURTON. As opposed to $6 million being spent by these allied groups in cotton.
Mr. HORNE. That is right. Altogether about $4 million on promotion.
Mr. BURTON. Suppose that this bill passed and that you raised another $10 million or $11 million, do you really think that this will solve the problem with those kinds of odds stacked against you? Suppose that added another $10 million to the $6 million, would that really do anything for you?
Mr. HORNE. We cannot tell you the exact amount of response that we will get, but we are completely confident, and we have had all kinds of evidence that the response would be out of proportion to the amount of response that we would get from that much money on synthetics. This provides the opportunity for productive research and promotion which is a very great need and is being neglected now. Relatively small amounts would have bigger leverage effect upon the market for cotton, because cotton sells from such a low base which you do not have in the case of synthetics.
Mr. BURTON. I was trying to figure out in my own mind how better off you would be in relation to your competition by spending maybe $17 million or $18 million as opposed to $6 million.
Mr. HORNE. Experience would be the only answer to that.
Mr. BURTON. Let me say this, we really do not have any assurance, do we, that some of these groups that are now spending money would not come back in if we passed this bill.
Mr. HORNE. The National Cotton Council, which is putting up this promotion money now would continue to do so in my judgment. Mr. Cortright has explained the relationship of the Cotton Producer Institute program to the proposal now before you
Mr. BURTON. The membership in the council and the institute is voluntary.
Mr. HORNE. Yes, sir.
Mr. CORTWRIGHT. Mr. Burton, let me point out one thing to you: We do not know exactly what we could expect in the way of results from this. We know that our competition is doing it, and they are being very successful with it. We feel that we must give it a try. This legislation has within it provisions for amending the order if the direction in which we are pursuing proves to be correct, so that we have complete authority in here to amend the order with further referendums to change the level of assessments. If it looks that more money was indicated and desired.
Mr. BURTON. We have the subject of wool which is in about the same position that you are in. I am sympathetic with your objective. I still have this question in my mind, however. I am just wondering what sort of impact you think that you could accomplish with this and what would stop the competition from raising the ante. According to what I have heard here this morning they are capable of doing that. What is to prevent them from cutting back on what they have to spend and saying, "Now that everybody is in on the act, we do not need to spend this much money," and maybe we would be right back where we are now. These are questions that are in my mind.
Mr. CORTWRIGHT. Obviously, nobody can tell what a voluntary proposal will be in the future.