Mr. FREEMAN. Well, assuming they get the same price-I can recall the figures for the 1969 wheat program-they will get certificates on 43 percent of their production, valued at $1.52 per bushel. Senator TALMADGE. What would that amount, then? Mr. FREEMAN. About 65 cents, on an average, apply to their production. Senator TALMADGE. About 65 cents, plus $1.69, that would give them Senator CURTIS. About 65 cents on total production? Mr. FREEMAN. It would average that, Senator; yes, sir. Senator TALMADGE. About $2.34 a bushel, then, assuming the price in California would be the same? Mr. FREEMAN. Yes, sir. Senator TALMADGE. And without the special legislation, these farmers will get $1.69? Mr. FREEMAN. If they expand their acreage above their allotment. Senator TALMADGE. So, what they are asking for, in effect, is the additional payment of about 65 cents per bushel that the wheat certificate would be worth; is that it? Mr. FREEMAN. Yes, sir. Yes. Senator TALMADGE. Now, you stated, I believe-Is there a surplus in Durum now? Mr. FREEMAN. There is an adequate supply. I hesitate to get intoSenator TALMADGE. Senator Miller in his interrogation indicated that the carryover was about 69 million bushels a year. Is that correct? Mr. FREEMAN. On April 1, the stocks were about 67.5 million. April 1 of this year. Senator MILLER. That is right. Senator TALMADGE. 67.5. Mr. FREEMAN. Yes, sir. Senator TALMADGE. And what is the utilization? Mr. FREEMAN. Domestically, about 30 to 35 million bushels. And export would vary significantly, but it was a record this last year, 47 million bushels. Senator TALMADGE. The crop is fairly well in balance then on production and utilization at the moment? Mr. FREEMAN. Yes, sir; it is in balance, but tending more toward the very adequate level. Senator TALMADGE. Is you objection, then, to this legislation the fact that it makes an exception in this area, or is it the fear that there will be a surplus of this type wheat, or both? Mr. FREEMAN. Well, it will certainly contribute to increasing the supplies of this, but the Department's main objection to the proposed bill is the exception, the beginning of an exception that, perhaps, can be expanded. Senator TALMADGE. Thank you. I have no further questions. Senator HOLLAND. When we passed the other bill allowing them the acreage in the Tulelake area, it was with the understanding that they would not get the certificates, was it not? Mr. FREEMAN. The program was different, but they did give up program benefits in the form of price support. It was all through loan at that time. Senator HOLLAND. Now, if their allotment were increased under this bill, it would be with the extension of the certificate system to their program benefits? Mr. FREEMAN. Yes, sir. Senator HOLLAND. And it would be particularly the certificate system, to their entire production? Mr. FREEMAN. Yes, sir. Senator HOLLAND. Well, I think the committee understands the situation. Thank you very much. Mr. FREEMAN. Thank you. Senator CURTIS. The price of $1.69; is that an average price? Mr. FREEMAN. It was reported to us as being the season average price. It is not an official Department figure. It came to us through our State office operation out in California. Senator CURTIS. Wheat in western Nebraska yesterday was 97 cents, a dollar, in my home town. Senator TALMADGE. Does the certificate bring it up another 65 cents, like on this Durum wheat? Mr. FREEMAN. Yes, sir; it would. The return to the farmer would be that market price plus the certificate, and if you averaged it and said that this was the value of wheat production Senator HOLLAND. But the certificate would cover only that part of the production that is utilized domestically, would it not? Mr. FREEMAN. Yes, sir; 43 percent, we apply across the board to the production of all classes, all types, of wheat. Senator HOLLAND. Thank you, Mr. Freeman. Mr. FREEMAN. Thank you, sir. Senator HOLLAND. The next witness is Mr. Lyonel L. Nash, chairman, and Mr. Kenneth G. Baghott, grower I take it, of the Tulelake Durum Wheat Committee-a member of the Tulelake Durum Wheat Committee. Is that correct? Mr. NASH. Yes, sir. Senator HOLLAND. You gentlemen have a seat, please. And you may proceed. Mr. NASH. Thank you. STATEMENT OF LYONEL L. NASH, CHAIRMAN, AND KENNETH G. BAGHOTT, TULELAKE DURUM WHEAT COMMITTEE, TULELAKE, CALIF. Mr. NASH. Mr. Chairman, members of the committee. On yesterday, we had the honor of appearing before the House subcommittee of the Committee on Agriculture and received a favorable report from them. We know you all are extremely busy, and we graciously appreciate this hearing which was scheduled while we are here for the House hearing. We appreciate the opportunity to explain our problem to you. Our problem is small to everyone except us. It means a great deal to the Tulelake farmers. For those of you who are not familiar with our area, we are located in the northeast corner of California where Siskiyou and Modoc Counties join the State of Oregon. This is a high-slightly aver 4,000 feet-mountainous desert area surrounded entirely by mountains. Frosts can, and all too often do, occur any month of the year. The soil is highly productive, but due to climatic conditions and distance from markets, only the hardy type of crops such as malting barley, Durum wheat, alfalfa hay, and potatoes can be raised. Prior to the time we started growing Durum wheat, in 1953, the Tulelake basin farmers were famous for growing malting barley which was marketed throughout the United States, England, and South America. But with the advent of acreage allotment controls on cotton, rice, and wheat the acres previously producing these crops in the midwest started raising malting barley on the diverted acres. We lost our midwest malting barley markets. Today, the market for what malting barley we produce is limited exclusively to the West Coast. We are here to try to obtain legislation for the Tulelake basin for a permanent Durum wheat allotment of 12,000 acres. Durum wheat can be raised in other areas of California, but it is not suitable for milling. Mr. Baghott, who is here with me today, is an agronomist with the University of California. He has sent seed to branch experiment stations throughout California and Oregon in an attempt to increase Durum wheat production for milling on the west coast. However, in no instance, has Durum wheat of millable quality been raised. Senator HOLLAND. Does that mean that it is not hard enough? Mr. NASH. Not hard enough, the right color, or the right protein, or anything else. The quality just simply is not there, sir. In 1953, when Durum was first introduced into Tulelake it was determined to be a profitable crop. At that time, we asked the U.S. Department of Agriculture for a special Durum wheat allotment for the Tulelake basin. The Department informed us that first a west coast milling industry must be developed as a market for semoline or Durum flour. This has been done. However, the wheat allotments which have been granted have not been sufficient to take care of either the milling needs or semoline needs of the macaroni manufacturer. To satisfy the west coast potential consumption would require almost 3 million hundredweight of Durum. At the present time, we are producing 240,000 hundredweight of Durum. The entire crop is sold on the west coast; none is shipped east or exported. In fact, one macaroni manufacturer, Golden Grain of San Leandro, Calif., stated in a letter to me dated March 27, 1968, that they could use the entire 12,000-acre production for which we are asking. Another company, General Mills, Inc., in a letter addressed to me, stated: And here I would like to read this letter, if I may. DEAR MR. NASH: In reply to your recent inquiry about a proposed increase in durum acreage in the Tulelake basin, it appears that an increase from the current four to five thousand acres to twelve thousand acres would be highly desirable. California is a deficient state with respect to durum. It is estimated that the potential usage of durum within the state of California is 1,400,000 bushels annually. Competitively, the Tulelake area is in good position to ship either to Portland or to the San Francisco Bay area. Freight rates presently are equal. With specific reference to durum grown in the Tulelake area, we will continue to buy it as we have in the past 10 or 11 years, provided that the quality is suitable for use in the production of durum flour. The production of durum in the Tulelake basin has been an interesting development, and we believe that the continued production of durum will be mutually beneficial to growers and consumers alike. Very truly yours, GENERAL MILLS, INC., In addition to that, I just received a telegram yesterday that says, and I quote: Approval of H.R. 484 and S. 858 will have no overall detrimental effects on Durum consumption nationally. This is signed by Thomas J. Lee, manager, Grain Division SperryWest, General Mills, Inc., Palo Alto, Calif. I would like to submit that. We have received communications from other users of our Durum on the west coast expressing the same opinion. Last year, 1968, approximately 5,000 acres of Durum was raised in the Tulelake basin. There is 40,840 acres of privately owned land in Tulelake owned by 570 farmers. The legislation we propose would increase existing allotments to 12,000 acres. This would double our existing production. Even if we planted the entire Tulelake basin to Durum we could not completely satisfy the west coast market needs. Durum wheat is the only cereal crop that has consistently given the Tulelake farmers a reasonable net profit. In 1967, farmers netted an average of $47.25 per acre on Durum; $19.50 per acre on barley while they lost $5.50 per acre on alfalfa and lost $70.55 per acre on potatoes. Fortunately, 1968 was a better year for potatoes and alfalfa hay. Our request for additional wheat allotment acreage increase will not cost the U.S. Government or the taxpayer a cent. Instead, more money will be taken in by the Government on wheat certificates from our area than is paid out to the farmers. For example, if a farmer has a 20-acre allotment with an average yield of 80 bushels per acre and using the Agriculture Apportionment Base of $1.36 times 80 bushels times 40 percent of his 20-acre allotment, on 8 acres, the Government will pay the farmer $870.40, but the Government is paid by the miller at the rate of 75 cents a bushel. This farmer grew 1,600 bushels Durum wheat. For these 1,600 bushels of Durum wheat, the miller paid the Government $1,200. The Government pays the farmer $870.40; so, the Government is to the good $329.60. The Department of Agriculture has suggested the possibility of planting Durum on the barley substitution program provision. In order to do this, a farmer must leave 20 percent of his barley base idle. With our small farms we cannot afford to do this. Plus the fact the farmers do not get an allotment payment for the substituted acres which in reality is the profit made by the farmer. Tulelake has a unique marketing situation for Durum wheat. The entire crop is always sold by the end of December of the year in which it is produced. No Tulelake Durum has even been put under price support or Government loan. This is another example of not costing the taxpayer any money. John Wright, president of the Durum Growers Association of the United States, in a letter to me dated March 30, 1968, states that the Durum Wheat Growers Association of the United States endorses our request for a permanent allotment of 12,000 acres for the Tulelake basin. This Association is made up of people from Montana, North Dakota, South Dakota, Minnesota, and myself, from California. The Department of Agriculture has stated opposition to this legislation. Their primary concern, as I understand it, is setting a precedent. Precedence has already been established. Congress has given special acreage allotments to the Tulelake basin three different times, on a temporary basis, for the purpose of building acreage allotments for the Tulelake basin farmers. However, this has not been accomplished as Congress intended. As a result, we have allotments for Durum wheat of 4,698.5 acres on privately owned land in the Tuleland basin. We, therefore, ask for your favorable consideration of this bill since other Durum-producing areas approve of this legislation. It will not cost the taxpayer a cent; precedence has previously been established and an existing market is available. Thank you for your time. Senator HOLLAND. Is it your intention to go ahead and try to increase your Durum production to the 48,000 acres which comprise your entire Tulelake basin? Mr. NASH. No, sir. Senator HOLLAND. Well, you just stated that the Tulelake production is more profitable to you than other things that you are doing with your land. Mr. NASH. This is true, sir. But in our case we have to follow Durum behind such things as potatoes. In other words, we cannot plant Durum behind barley or some other crop like that. It will do very poorly. You have to follow behind some low crop such as potatoes, and I think we raise around in the neighborhood of 12,500 to 15,000 acres of potatoes. And we have to follow the potatoes with our Durum. So, our intention is not that, sir. Senator HOLLAND. You stated that the potato production was unprofitable in 1967. Mr. NASH. Yes, sir. Senator HOLLAND. What about 1968? Mr. NASH. It was a good year; we did fairly well with potatoes. Senator HOLLAND. How much per acre did you make out of your potato production? Mr. NASH. Let me ask Mr. Baghott about that, because he knows more about potatoes than I do. Senator HOLLAND. Mr. Baghott? Mr. BAGHOTT. They grossed about $700 an acre, and it cost them in the neighborhood of $450 and $550 an acre to raise potatoes, sir. Senator HOLLAND. Then, in a good year potato production is more profitable than Durum wheat? Mr. BAGHOTT. That is correct; yes. Senator HOLLAND. Now, you said something about Durum following potatoes. Do you mean that Durum cannot be raised every year on the same acreage. |