COTTON RESEARCH AND PROMOTION PROGRAM

WEDNESDAY, FEBRUARY 9, 1966

HOUSE OF REPRESENTATIVES,
COMMITTEE ON AGRICULTURE,

Washington, D.C.

The committee met, pursuant to recess, at 10:10 a.m., in room 1301, Longworth House Office Building, Washington, D.C., the Honorable Harold D. Cooley (chairman) presiding.

Present: Representatives Cooley, Poage, Gathings, McMillan, Abernethy, Jones of Missouri, Hagen of California, Purcell, Olson, O'Neal, Foley, Stalbaum, de la Garza, Vigorito, Redlin, Callan, Dague, Belcher, Teague of California, Findley, Burton of Utah, and Polanco-Abreu.

Also present: Martha Hannah, staff; Hyde H. Murray, assistant clerk; John J. Heimburger, counsel; and Francis LeMay, consultant. The CHAIRMAN. The committee will be in order, please.

We are very glad to have with us Mr. Charles B. Shuman, president of the American Farm Bureau Federation. We welcome you here and we will be glad to hear from you now.

STATEMENT OF CHARLES B. SHUMAN, PRESIDENT, AMERICAN FARM BUREAU FEDERATION

Mr. SHULMAN. Thank you, Mr. Chairman and members of the committee.

On behalf of the American Farm Bureau Federation, which represents 1,677,820 paid-up member families in 49 States and Puerto Rico, I want to express my apreciation for the opportunity to appear before this committee with respect to the provisions of H.R. 12322.

Farm bureau is a voluntary, nongovernmental organization wholly controlled by its members. It is financed by membership dues. It is organized to provide a means through which farmers can work together toward the goals upon which they agree.

It represents farmers from every part of the country, producers of every kind of agricultural commodity. The policy resolutions that guide farm bureau during the year are developed through a program featuring individual member participation and including study, discussion, and development of policy recommendations at local, county, State, and National meetings.

This past December recommendations from the respective State meetings were considered by a national resolutions committee made up of elected representatives of every State farm bureau. Then they were considered, amended, and adopted by the elerted voting

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delegates of the member State farm bureaus at the 47th annual meeting of the American Farm Bureau Federation.

Before I discuss the specific provisions of the legislation currently under consideration, I should like to review brifly our policies in recent years with respect to Government policy as it relates to cotton. We supported the Agricultural Act of 1958. We still support the basic principles of that legislation.

In contrast, we have opposed vigorously the application of the compensatory payment concept to agriculture. We have contended that this road leads inevitably to lower per family farm income and increased dependence by farmers on governmental action. In 1963, when it was proposed that the compensatory payment concept be applied to cotton, we made crystal clear our belief that payments to the textile mills would be temporary and that such payments soon would be transferred to producers instead. What happened in this regard is now a matter of record.

All who care should anticipate the next inexorable step-i.e., limitations on payments-in other words, political rationing on an equitable basis (one share, one vote) of the more limited funds likely to be available in the future.

My point is that the determination to go the payment route-which action was supported by many of the people promoting the checkoff proposal provided in the bill now before your committee-set in motion forces which almost certainly guarantee the transformation of the traditional cotton price support program into what is largely a welfare type program. The fact that many do not as yet fully understand this does not alter the realities of the situation.

I do not review this recent history to stir up the ashes of past controversies. Instead, I do it to remind the committee of our continuing desire to understand-and to help you fully comprehend-the eventual implications of the choices you are called upon to make in precedent-setting legislation.

The bill, H.R. 12322, now before this committee would, if enacted, have far-reaching implications for the future of agriculture.

We shall not review in detail our longstanding interest in, and support of, research. Without exception, farm bureau has been in the thick of every major effort to strengthen agricultural research.

Our member State units have actively supported the State legislative actions that have been necessary to enable the respective States to carry their part of the cooperative Federal-State research programs. Likewise, it is unnecessary I am sure to review in detail farm bureau's longstanding interest in, and support of, the work of the National Cotton Council. In accordance with our general philosophy on research and promotion farm bureau leaders took part in the organization of the National Cotton Council, and have continued to take an active part in this organization throughout its history.

Farm bureau leaders have been among the strongest advocates of increased funds for the council, and were leaders in the movement which established the Cotton Producers Institute a few years ago to raise additional funds from producers for research and promotion in behalf of cotton. In fact, we have often pointed to the work of the National Cotton Council as a splendid example of how an industrywide commodity organization should function.

With respect to the whole matter of promotion of agricultural commodities, Farm Bureau has a long record of experience. At our most recent annual meeting (December 1965) the official voting delegates adopted the following resolution on this subject:

PROMOTION OF AGRICULTURAL COMMODITIES

We urge increased support for voluntary promotion programs.

The American Farm Bureau Federation, through State and county farm bureaus, should stimulate interest among farmers and urge increased support for sound, well-coordinated programs to promote the increased sale and consumption of farm products without duplication of effort.

Where well-established, nationally recognized organizations are carrying out industrywide promotion programs on a well-coordinated national basis with adequate producer representation, we continue to support and help improve them. Promotion programs need periodic review to determine their effectiveness. Participating producers and their organizations should be encouraged to seek an evaluation of these programs and to recommend improvements.

We believe that any funds raised for the purpose of promoting the sale of farm commodities should be collected on a voluntary basis, administered by a nongovernmental organization of producers with handlers and processors included where it is mutually agreed that they should be included-through its board or committee, and used solely for the specific purposes for which collected and not for legislative or political activities.

We define a voluntary checkoff as one which leaves producers free to refuse to contribute or enables them to obtain the refund of any assessments, collected by the voluntary action of market agencies. The procedure for obtaining refunds should not be so burdensome as to have the practical effect of depriving individual producers of the opportunity to obtain refunds.

H.R. 12322 is contrary to this statement of policy in two most important respects:

1. Whereas our policy supports voluntary programs administered by nongovernmental organizations of producers, this bill clearly provides for the creation of what amounts to a governmental organization of producers. This would take the Government into a new area of

control over farmers and their activities.

The amount of authority that would be given to the Secretary of Agriculture by the enactment of H.R. 12322 is unprecedented. I should like to enumerate some of the added authority that would be given to the Secretary if this legislation were to be enacted:

(1) The Secretary would have discretion whether or not to consider establishing an order; that is, the Secretary is not required to call a hearing even if a certified producer organization petitions for one.

(a) If the Secretary decides to issue an order, the order can specify the plans and projects which may be authorized by the newly created Cotton Board.

(b) The Secretary can require that any class of handlers keep and produce to the Cotton Board or to the Secretary books, records, and reports as he may deem necessary.

(c) The plans for advertising, promotion, or research must be submitted for approval to the Secretary.

(d) The budget on a project basis must be submitted to the Secretary for approval.

(e) The contract which the Cotton Board proposes to enter into with the producer organizations is subject to approval by the Secretary.

(2) The initial rate of assessment in an order issued by the Secretary must be $1 per bale, but this assessment can be increased by

amending the order (amendments to the order are subject to referendum).

(a) The Secretary is authorized to sue for assessments.

(b) A producer may obtain a refund of the assessment if he makes such demand personally in accord witth the regulations prescribed and within 30 days of the collection of the assessment. Such demand is made a public record, and the producer would not be permitted to vote in any subsequent referendum.

(3) The Secretary appoints the members of the Cotton Board. Organizations certified by the Secretary are permitted to make nominations, but the Secretary can appoint from outside such nominations if he feels that this is desirable.

(4) The Secretary may terminate the order of any provision of the order without referendum.

A majority of producers cannot terminate an order unless they grow a majority of the cotton produced by those voting in the referendum.

2. The effect of this bill, if enacted, would be to make the program largely compulsory rather than voluntary.

No legislation is needed for a truly voluntary program, and the only purpose of enacting legislation in this field is to compel participation. While refunds would be authorized for producers who request them, handlers would be required to collect the proposed assessment; producers who do not wish to contribute apparently would be required to file separate refund claims each time they sold cotton (or at least for each sale made more than 30 days after the last previous sale); refund requests would be made a matter of public record; and producers requesting refunds could be prevented from voting in any subsequent referendum on the program unless they returned their refunds to the Board. Such provisions obviously are intended to have a coercive effect.

The referendum procedure provided in this bill would enable a minority of the producers to impose a sales tax on raw cotton on all cotton producers. This is made possible by the authorization for the Secretary to determine the outcome on the basis of volume. This has far-reaching implications. Incidentally, there is no requirement that the referendum be conducted by secret ballot.

Many of the proponents of this legislation contend this proposal is voluntary and nongovernmental. In this connection, I would call your attention to the "penalty provision" in H.R. 12322:

Any person who willfully violates any provision of any order issued by the Secretary under this act, or who willfully fails or refuses to pay or remit any assessment or fee duly required of him thereunder, shall be liable to a penalty of not more than $1,000 for each such offense which shall accrue to the United States and may be recovered in a civil suit brought by the United States.

The fundamental questions raised by this legislation are not new. Some of the members of this committee will remember a few years back-1957-when there was a drive on to get a legislated checkoff program for livestock to raise funds to promote red meat. You were fold-and we were told-that there absolutely had to be checkoff legislation, and that the whole promotion program for red meat would be lost if legislation were not passed immediately. As a member of the board of directors and executive committee of the National Livestock

and Meat Board, I know something of what has happened in the interim period. Progress continues to be made in perfecting a comprehensive, voluntary, and nongovernmental promotion program.

There are many advantages to truly voluntary programs. The voluntary approach provides a splendid opportunity for producers who are investing money in promotion to continuously reappraise the value received for the money invested. It encourages producers to feel a sense of responsibility for their program, to take interest in it, and to see that they get their money's worth.

I realize that those who want to find an easy way to raise big money often prefer the compulsory approach. Similar arguments can be made, and are made, in behalf of compulsory unionism. There is a much closer parallel in the rationale on which this legislation is based and the arguments made in favor of the repeal of section 14 (b) of the Taft-Hartley Act than many of the supporters of this legislation probably would want to concede.

The voluntary approach promotes cooperation between farmers and between the producers and handlers of a commodity. The compulsory approach provided in this bill will promote controversy and dissension. Many cotton producers will want to know why no provision has been made for other cotton interest groups to bear a part of the load. The proposed referendum almost certainly would be preceded by a bitter and divisive campaign which would create lasting scars at a time when the cotton industry needs to unite to solve its problems.

The thing that is most needed in the present situation with respect to research and promotion for cotton is for the Congress to make it clear that it does not intend to torpedo present voluntary promotion efforts and supplant them with a Government-directed project financed by means of a largely compulsory checkoff.

When that is done, I am confident that all of the groups interested in the survival of cotton as a healthy and dynamic industry will find ways and means of launching and financing needed research and promotion programs for cotton. In behalf of Farm Bureau members throughout the country, and especially in the Cotton Belt, I want to reassure this committee, and the proponents of this legislation, that we continue to stand ready to lend our full assistance to such an effort. For the reasons stated herein, we respectfully recommend that H.R. 12322 not be approved.

Now, Mr. Chairman, I have with me the vice president of the American Farm Bureau of Federation who will present a brief supplemental statement.

The CHAIRMAN. We will hear Mr. Randolph in due time. We will hear from you first.

Mr. SHUMAN. Thank you.

The CHAIRMAN. You have submitted a very fine statement. You agree with the objectives of what is sought to be accomplished by this proposal, that is, to have the farmers put the money into some fund on a voluntary basis to be used for promotional and research purposes is that not right?

Mr. SHUMAN. We support voluntary research and promotional contributions by farmers and others in the industry. We have supported voluntary programs for a long time.