We have some other concerns in this:

One is the exemptions or exceptions that are made for this type of legislation from the agricultural legislation, but these also are exceptions or exemptions from the basic irrigation laws, which stated, at the time these reclamation projects were authorized, that they were not to be used to grow crops that were under support programs. Now, this is true all the way across the board.

Senator CURTIS. When were these irrigation projects instituted? Mr. GRAHAM. Well, this basic irrigation law goes way back. It is many, many years back.

Senator CURTIS. Most of those provisions were put in the authorization acts for the construction of projects?

Mr. GRAHAM. Well, yes; but there was some of it in the original law. For instance, the 160-acre limitation was way back there. But they were put in after we got into this price-support dealing with agriculture, and, of course, the 1901, I think

Senator CURTIS. They were never put in retroactively?

Mr. GRAHAM. No, that is right.

Senator HOLLAND. Were those provisions applicable to the veterans' groups who were allowed to claim these rather small home steads in the Tulelake reclaimed area?

Mr. GRAHAM. Apparently, they were, or they would have had more acreage than they have.

Senator CURTIS. Mr. Chairman, the 160-acre limitation has always been there, but that applies to an individual. It does not apply to a family. Now, in irrigation projects that have been authorized in the last 10 or 15 years where there has been so much attention given to surpluses and the problems of surpluses, oftentimes in the act that authorizes a specific project there is a limitation that they cannot shift to a production of a crop that is under limitation or control. I do not mean to dispute the word of the witness but I think, as to this area. I would want to inquire about it.

Mr. GRAHAM. Well, this may be true of this area, but what I was trying to say is that we are getting many exceptions to the irrigation law, even the kind that was put in more recently, and certainly there are a great many exceptions to the 160-acre limitation, even after you give the family the extra 160, like in California, and, still, for instance, there would be 220,000 acres owned by one company in the Central Valley that is irrigated by Federal water.

Obviously, there is no need for additional wheat, but I want to ask this question, and I want to pose it to the committee:

If it is too expensive to send Durum wheat from North Dakota to California, then how do we get it from North Dakota to New York? The distance is almost the same. And if you go to Montana, it is less distance to California than it would be to the east coast, which consumes a good share of this. The fact is that we are shipping Durum to the west coast for transshipment to Asia. Now, if we can do it that way, I am not very much impressed with the argument that these people on the west coast cannot buy North Dakota Durum. I think they do buy it.

Senator HOLLAND. Well, I understood the statement, Mr. Graham, to be that they bought the processed product instead because they

could do so to far greater advantage under the transportation system than to buy the raw product at that distance. Maybe I misunderstood the situation.

Mr. GRAHAM. Well, as I understood Mr. Freeman he was using an economic argument but not necessarily quoting what was actually happening. The same thing is happening to the Durum that goes east, on a great deal of flour that goes east, and we have had a great deal of argument between the Buffalo area and the Hutchinson area, and that kind of thing. They mill it first.

Senator HOLLAND. Does the Durum go east as the raw product or as the processed product?

Mr. GRAHAM. A great share of it goes as processed.

And from the stink that the millers in Buffalo were raising a couple of years ago about the processing of flour, the flour getting a transportation break, they could move flour for less freight than they could wheat, and it was putting the millers up in the Buffalo area out of business.

Senator MILLER. In other words, you are saying that the flour is made in the middle west and shipped east rather than the wheat itself? Mr. GRAHAM. Yes, but I think you will find, if anybody will really investigate it, that there is a good deal going to the west coast, too. Senator HOLLAND. Does it move by water transportation when it moves east for most of the distance, or does it move by rail?

Mr. GRAHAM. Well, it could go by water from Duluth, but it certainly does not all go by water, some goes to Seattle for transshipment to the far east. It goes right up over the mountains on the northern U.S. railroads.

Senator MILLER. I think this is for commercial exports you are talking about?

Mr. GRAHAM. Right, and the same is true for PLAD export. We move the wheat up into the Seattle area.

Senator MILLER. Well, I can understand how, for purposes of exporting to Japan, Japan would want it that way. How is Japan going to get the Durum wheat unless it goes out to the west coast?

That is about the only way they could get it.

And then they are going to manufacture it in Japan with very lowpriced labor.

Whereas, for California purposes, if you were a consumer out there, I can see where you might not want it done that way, because it can be done cheaper by having it milled, say in Omaha, and then made into macroni or spaghetti and then the finished product shipped out there. That would be my only reaction to using that export comparison. Mr. GRAHAM. Well, let us go to another argument.

Senator HOLLAND. Well, let me ask you another question, and then you may proceed.

I was interested in your statement that you represent a sizeable number of people among the Tulelake farmers.

Do I understand that your membership in the Tulelake group opposes this legislation?

Mr. GRAHAM. No. But what I said was that the producers in the traditional Durum area, oppose this legislation, which traditional area is North Dakota, South Dakota

Senator HOLLAND. Well, now, I am questioning you about that part

of your statement in which you said that you did also represent and had among your members-let us put it that way-a sizable membership in the Tulelake area.

Do you speak for them in opposing this legislation?

Mr. GRAHAM. Not in terms of this, because I have not had any contact with them on it, and I think we have had some pretty good contact with them on other things, but this has never come up from

that group.

Senator HOLLAND. You have no reason to state that you are representing any opposition on their part?

Mr. GRAHAM. Not in Tulelake, no. I did not mean to imply that. I am not at all persuaded by some of these arguments that all of these products must be produced in the area.

If we would use the same argument for Durum wheat, we could ask for an exemption or an exception and take it into the St. Lawrence Valley, for instance, which is much closer to the great market than North Dakota is. They have the same cold nights; frost gets out on the north side there in about the middle of August or the middle of July and starts again about the middle of August on some of that land, and I am simply saying that this is not quite such an exception as it can be, and I am disturbed about the exceptions that are being made to these laws when we already have enough production. We have got into some problems already on that one. The fact is they can plant outside of the program. There is a great deal of wheat that is planted outside of the program in the United States. Eleven percent of all of the wheat that grows in the United States is grown east of the Mississippi River, with the exception of Arkansas, which is in that same group, and it is grown outside of the programs, and where they have a favorable growing situation like down in the delta, the Mississippi Valley, they are growing wheat in substantial amounts. They figure they can make it without the certificates and, apparently, they are.

Senator MILLER. Could I ask a question on that, though? I tried to bring out that point in my previous questions to the witnesses from Tulelake, and the response was that the acreage of the farms was such that they could not go into that. It is understood that these people that did not go into the program generally have a large enough acreage so that it is profitable for them to grow much more, even though they are going to fail to receive the certificates.

Mr. GRAHAM. Well, that is not true of all in Iowa, Indiana, and to some extent Illinois. They do not have those large allotments, and they do not plant, necessarily, those large crops. The greater share of the producers in Iowa, for instance, are covered by the 15-acre exemption. Senator MILLER. And they are not in the program?

Mr. GRAHAM. No.

Senator HOLLAND. We have something over a hundred small wheat producers in West Raleigh, and my understanding is that they consistently produce on small acreages of wheat, but they produce it mostly for feeding poultry.

Mr. GRAHAM. Bedding, too. The straw.

Senator MILLER. Yes. But what about Durum producers?
Do they produce Durum in Ohio?

Mr. GRAHAM. No. I am talking about the whole wheat production. But, incidentially, these certificates come off of total wheat production, not just with respect to Durum.

Senator MILLER. I understand that. But, you see, I got the point that we are talking about Durum wheat farms which have a relatively small acreage, and if they perhaps had three or four times the acreage on those farms out there, then, perhaps, there would be some of these 325 who would not go in the program and would elect to go ahead and produce as much as they could.

Mr. GRAHAM. I think they have practical limitations on what they can produce out there, and the limitations are imposed by the crop rotation program, and the necessity of planting. It is the same with wheat in a good share of the Midwest where this wheat is produced, not because it is the most profitable crop they can produce, but because it has a place in the rotation systems, and they simply have to have some kind of cover crop. On oats they always lose, but they have to have a cover crop to get into their clover, alfalfa, which is a part of the rotation. It has a value there that it would not have otherwise.

I think the gentlemen from Tulelake pointed out in their testimony, maybe inadvertently, the problem that they have out there, and that is that the crops upon which they are mainly dependent, primarily potatoes and the pastures, have not been a very profitable crop, because of the problems that were explained before this committee in the bill we had before you just recently, and the ability to market them properly. And in this last year, they did have a fairly good income, because they did use the market orders to take those potatoes off of the market. They got some money at that point. I think we ought to be concerned, just as concerned, that in that area they have a good price on potatoes by having proper marketing under legislation available for those people to use, rather than trying to answer it in terms of a little extra wheat out there which is not going to solve the problem anyway. Three or 4 acres, if you double it, you have not made any substantial contribution to the solution of the economic problem on the small farm. The concern I have right now is that we do not try to answer the Tulelake problem on the basis of wheat only, because I think we just cannot possibly answer it out there. Wheat is a part of their rotation system, and they have to use it to get from one crop to another. To go into alfalfa, they would use wheat, too.

So, these are the problems.

The other thing I am trying to say is that we are just not going to look with very much favor on exceptions to the present farm program which, with the increased production in one area of crop for which there is no available market at this point, because we really have not solved any problems at that point.

Senator HOLLAND. Well, I am sure that this committee looks with caution upon any exceptions. The question is whether this particular problem, because of the small acreage and peculiar qualifications and the small number of people, most of them veterans that came in there and homesteaded after World War II whether it deserves exceptional treatment, and I believe that the committee has heard the problem pretty well, had it pretty well explained.

Now, if you have some additional points, we will be glad to hear them.

Mr. GRAHAM. Well, I think, Senator-and I will quit with this— that if there is a situation in which there is some valid reason for exemptions like this, that it would not really dislocate the whole wheat market, but by the same token, if we start making exceptions for Tulelake, then, do we make it for Central Valley in California, do we make it for the Arizona project with $100 million going into the development of that, and where do we quit making exceptions?

The smallest one in the future might be considered larger than the smallest one now. We are just concerned about setting these precedents that bring us in here all of the time trying to solve a little local problem which, in my judgment, we do not solve anyway, and at this point in Tulelake we will solve it by having some better marketing orders.

I think, really, Mr. Chairman, you are familiar with this, and Tulelake would be better served by a market order legislation that placed on potatoes market orders, and there would be a great deal more money in Tulelake than there would be by making this exception to the wheat bill.

Senator HOLLAND. Well, we thank you, Mr. Graham.

Now, are there any further witnesses that wish to be heard?

If not, the committee will rise and, so far as I am concerned, I am willing to have the subcommittee polled on this as soon as the record is completed.

It seems to me that this is a relatively small problem with very special facts, and in view of the attitude of the large group of Durum producers and the small implications of this problem that we would be justified in reporting out the bill. Of course, that is a personal opinion of my own, a personal opinion, and we will see the record when we have it.

Senator MILLER. Well, the Department is going to send you some additional information for the record.

Senator HOLLAND. Yes; they will have to furnish it. And the staff will please get right after them.

Senator MILLER. And could I suggest that we have the staff give us some dollars and cents on this, how much we are talking about?

Senator HOLLAND. All right. We will have the staff give us a little memo. The first thing I want to discover, though, is whether there is any unwillingness to have the committee polled on the matter, a matter

of this size?

Senator CURTIS. No.

Senator HOLLAND. There is no unwillingness on your part?

Senator MILLER. No.

Senator HOLLAND. Well, I am willing to be polled on it, and the staff will furnish us a little memo on this situation.

(Whereupon, 11:45 a.m., the hearing in the above-entitled matter was concluded.)