MARCH 22, 1962

PAGE 4859

AMENDMENT OF AGRICULTURAL ADJUSTMENT ACT OF 1938, RELATING TO MARKETING QUOTAS ON IRISH POTATOES

Mr. MUSKIE. Mr. President, I introduce, for appropriate reference, a bill to amend the Agricultural Adjustment Act of 1938, as amended, to provide for supply management of Irish potatoes through establishment of acreage allotments.

Mr. President, the bill which I am introducing today is part of a two-pronged attack on the very serious economic problems confronting the potato industry. This approach is the result of recommendations by the National Potato Advisory Committee, a 29-member group drawn from all segments of the potato industry in all areas of the country. The fact that the industry has reached substantial agreement on a national potato program is a remarkable achievement in and of itself.

I want to take this opportunity to commend Secretary of Agriculture Freeman for establishing the committee and the potato industry for its cooperation in working out a proposal for the potato economy. I am proud of the role my State's representatives have played in its deliberations.

There are, as I have said, two basic ingredients in the advisory committee's program. The first is the expansion of the marketing agreement program, which helps insure the improvement of the quality of potatoes sold consumers and which helps protect the market from the adverse effects of the dumping of excess, low grade or undersized potatoes. The second part of the program involves supply management through acreage allotments -- if approved by farmers in a referendum. The bill which I have introduced today is the supply management part of the package. Hearings are being held in different parts of the country on the proposed marketing agreements.

Two points should be stressed in connection with this program: First, it involves industry self-help; and second, it does not include price supports.

My concern for the potato industry is quite natural. Potatoes represent a major factor in Maine's agricultural economy; and they are the dominant commodity in Aroostook County, Maine. But the potato industry is a boom and bust economy, marked by wide variations in prices paid to farmers from year to year and within a marketing year. The last 2 years have been particularly difficult for Maine farmers, and for farmers in other parts of the country.

Last June I asked the Department of Agriculture to undertake an economic study of the potato industry. I had been concerned to find that there was no general analysis available of the industry and its problems.

In response to my request, Secretary Freeman directed Agricultural Economics Director Willard W. Cochrane to make such a study. That study has now been published. It is most instructive.

During the past 50 years there have been massive changes in the potato industry, involving, as the USDA study points out, "sharply declining per capita consumption, rapidly increasing specialization and concentration of production, greatly improved breeding and cultural methods, and significant changes in utilization and marketing practices."

In the period between 1920 and 1961-yield per acre almost tripled -- at the same time acreage declined almost 60 percent. The result was an almost stable trend in total production. Production increased from 223 million to 274 million hundredweights, or less than one-fourth.

We might have assumed that with our rapidly expanding population there would have been a corresponding increase in the consumption of potatoes. There was no such increase. In 1910, per capita consumption of potatoes was 198 pounds. By 1950, per capita consumption had dropped to 105 pounds. Total consumption for food dropped from 180 million hundredweights for a population of 92 million in 1910 to 165 million hundredweights for a Population of 150 million in 1950.

In the past decade the downward trend in per capita consumption has been halted, and there has been a modest increase in total consumption. But the inelasticity of demand for potatoes has resulted in wide fluctuations in prices.

The Department's economic report points out, as follows:

During the last decade a one-percent change in production of potatoes resulted on the average, in a 4- to 5-percent change in prices to growers. Because of this highly inelastic demand for potatoes, year-to-year variations in production, although usually moderate, exert tremendous influences on prices and income. These variations in production during the last decade average about 8 percent. About 60 percent of the year-to-year variation in production was due to changes in acreage, and 40 percent was due to variation in yield.

When we compare the price variations in Potatoes with other commodities, we can see how serious the problem is. Again I refer to the departmental study:

During the last decade, year-to-year variations in prices received for potatoes around the general farm price level averaged 47 percent. This was five to eight times the price variation for most field crops, and compared with 16 percent for hogs, and 11 percent for beef cattle. The problem of sharply fluctuating and frequently low prices and income have been more serious as farms have become larger and more highly capitalized.

The large capital investment and operating capital requirements of today's larger farms have greatly increased the risks for individual farmers in years of low prices.

It should be noted that low farm prices do not mean substantially lower consumer prices. The Agriculture Department study indicates that a 10-percent drop in retail prices will result in a 30-percent drop in the price to the grower.

Obviously it is to the advantage of the grower, the processor, the marketer, and the consumer of potatoes to stabilize prices.

One means of price stabilization involves increased demand through quality improvement, processing a variety of potato products, and aggressive marketing techniques. This is being done by the industry, with some success.

The second technique involves the use of marketing agreements to control the quality of table-use potatoes and to introduce a measure of supply-management. This is being done by a large segment of the industry. An effort is being made to extend marketing agreements to cover the entire country.

The third approach is the potato acreage allotment bill. This is the legislation I have introduced today.

The bill provides for the appointment by the Secretary of Agriculture of a National Potato Advisory Board, representing commercial potato growers. In addition, the Secretary may appoint State or area advisory committees of commercial potato growers.

Under the terms of the proposal, the Secretary of Agriculture, when he determines that the total supply of potatoes is likely to exceed in the next marketing year the normal supply of potatoes, shall proclaim, prior to January 1, a national marketing quota for the purpose of computing the national acreage allotment. Prior to February 1, the proposed national quota would be submitted to farmers for a secret ballot referendum.

In order for the acreage allotment to take effect, at least two-thirds of the farmers voting, or 50 percent of the farmers voting and representing two thirds or more of the acreage planted by the farmers voting, must approve the national quota.

The national acreage allotment under this legislation would be determined by dividing the quota by the national average yield per acre in the 2 highest yield years of the 3 crop years preceding the year in which the quota is proclaimed. Area, State, county, and farm acreage allotments would be established on the basis of the 2 highest production years of the 3 preceding crop years. A 1 percent acreage reserve would be established for new producers. Minimum acreage allotments would be set at 2 acres.

Farmers would be permitted to market all potatoes produced on their acreage allotment, but would be assessed a $3 per hundredweight penalty on the farm marketing excess. The farm-marketing excess would be computed as twice the average yield per acre for the farm and would be applied to those acres planted in excess of the acreage allotment.

Mr. President, this legislation would establish a supply-management program based on farmer approval, and geared to the needs and marketing opportunities of the industry. I want to stress the fact that the central feature of this bill is the acreage allotment. The marketing quota referred to in the bill is simply a statistical device designed to set the basis for acreage allotments. Farmers would not be told how much they could market.

I believe this proposal represents a new and reasonable approach to the potato problem which deserves thoughtful consideration. I hope that we will be able to hold hearings on the legislation in the near future. I shall welcome the support and assistance of my colleagues who wish to cosponsor the bill with me.

Mr. President, I ask unanimous consent that the bill be printed in the RECORD.

The PRESIDING OFFICER. The bill will be received and appropriately referred and, without objection, the bill will lie on the desk and be printed in the RECORD, as requested by the Senator from Maine.

The bill (S. 3050) to amend the Agricultural Adjustment Act of 1938, as amended, to provide for marketing quotas on Irish potatoes through establishment of acreage allotments, introduced by Mr. MUSKIE, was received, read twice by its title, referred to the Committee on Agriculture and Forestry, and ordered to be printed in the RECORD, as follows:

[Bill text omitted.]

Mr. MANSFIELD subsequently said: Mr. President, I ask unanimous consent that the bill to amend the Agricultural Adjustment Act of 1938, as amended, relative to Irish potatoes, introduced today by the Senator from Maine [Mr. MUSKIE] be held at the desk through April 2, for additional cosponsors.