[H.R. 9736, 91st Cong. 1st sess.]

A BILL to amend sections 2(3) and 8c(6) (I) of the Agricultural Marketing Agreement Act of 1937, as amended, so as to permit marketing orders applicable to apples to provide for paid advertising

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) section 2(3) of the Agricultural Marketing Agreement Act of 1937, as amended, is amended by inserting ", such marketing research and development projects provided in section 8c (6) (I), and" immediately after "section 8c(6) (H)".

(b) The proviso at the end of section 8c(6) (I) of such Act, as amended, is amended by striking out "or avocados" and inserting in lieu thereof ", ", avocados or apples".

Hon. W. R. POAGE,

Chairman, Committee on Agriculture,
House of Representatives.

MARCH 2, 1970.

DEAR MR. CHAIRMAN: This is in reply to your request of April 21, 1969, for a report on H.R. 9736, a bill to amend section 608c (6) (I) of the Agricultural Marketing Agreement Act of 1937, as amended, to permit paid advertising for apples. In addition, the amendment would clarify the authority contained in section 602(3), to regulate in above parity situations, to assure that it applies to the initiation or continuation of marketing research and development projects as authorized in section 608c (6) (I).

The Department favors enactment of H.R. 9736.

The act currently contains authority to permit paid advertising under marketing orders for several commodities. This authority has been incorporated into some of the fruit marketing orders. Advertising projects have been carried out under it for such fruit commodities as Texas oranges and grapefruit, California nectarines, and Tokay grapes grown in San Joaquin County, California. The trend is toward more and more commodity advertising and promotion in agriculture. We anticipate increased effort by fruit and vegetable industries to obtain the means of financing the advertising and promotion of these commodities so as to maintain or advance their position in the market place. The Agricultural Marketing Agreement Act could provide the facility for this purpose. We believe any fruit or vegetable commodity group which actively supports the development of a promotion program by this means should be given the opportunity to do so.

Section 602 of the Act sets forth the policy of Congress to establish and maintain orderly marketing conditions and to achieve parity prices to farmers. The statute now authorizes certain types of regulation when prices are above parity. We favor clarification, as provided in H.R. 9736, to insure that this authority applies to the initiation or continuation of marketing research and development projects, including any form of marketing promotion and paid advertising. Marketing research and development activities must continue on an uninterrupted basis if they are to achieve desired objectives. These projects are aimed at making improvements in marketing and distribution which we believe are worthwhile at any price level. We know of no compelling reason for discontinuing such projects when prices are above parity.

It is estimated that the annual costs to the Department for administering each new marketing order that is issued approximate $25,000.

The Bureau of the Budget advises that there is no objection to the presentation of this report from the standpoint of the Administration's program. Sincerely,

J. PHIL CAMPBELL,
Under Secretary.

H.R. 9737, introduced by Mr. GOODLING for himself, Mr. MILLER of Ohio, Mr. FINDLEY, and Mr. BURTON of Utah, and S. 1455, are similar bills, the text of which follows:

A BILL To amend section 8c(2) (A) of the Agricultural Marketing Agreement Act of 1937, as amended, so as to include Colorado, Utah, New Mexico, Illinois, and Ohio among the specified States which are eligible to participate in marketing agreement and order programs with respect to apples.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the first sentence of section 8c (2) (A) of the Agricultural Marketing Agreement Act of 1937, as amended, is amended by striking out "and Connecticut" and inserting in lieu thereof "Connecticut, Colorado, Utah, New Mexico, Illinois, and Ohio."

Mr. FOLEY. The first witness will be Mr. Floyd E. Hedlund, Director of the Fruit and Vegetable Division of the Consumer and Marketing Service of the U.S. Department of Agriculture, together with any assistants he may wish to have accompany him to the witness table.

We are very glad to welcome you, Mr. Hedlund.

STATEMENT OF FLOYD F. HEDLUND, DIRECTOR, FRUIT AND VEGETABLE DIVISION, CONSUMER AND MARKETING SERVICE, U.S. DEPARTMENT OF AGRICULTURE

Mr. HEDLUND. H.R. 9737 and S. 1455 are identical bills. These bills would amend section 608c (2) of the Agricultural Marketing Agreement Act to authorize marketing orders for apples grown in Colorado, Utah, New Mexico, Illinois, and Ohio, disposed of both for fresh market and for processing uses including canning or freezing.

H.R. 9736 and H.R. 10545 are identical bills. These bills as well as S. 1456 would authorize any form of marketing promotion including paid advertising for apples under marketing orders. In addition, H.R. 9736 and H.R. 10545 would also specifically authorize the operation of marketing research and development projects and any form of marketing promotion including paid advertising under marketing orders in above parity situations.

The Department recommends that H.R. 9736, H.R. 9737, H.R. 10545, and S. 1455 be passed.

The Agricultural Marketing Agreement Act of 1937 authorizes marketing orders for the commodities specified in section 608c (2) of that act. The purpose of a marketing order is to assist agricultural producers in the orderly marketing of their crops. The act authorizes varying types of regulations in order to improve returns to the producers.

Before a marketing order may be issued, a public hearing is required. No order may be issued unless at least two-thirds of the producers by number or volume of production voting in a referendum indicate approval. The act currently authorizes marketing orders for apples, both for fresh market and processing uses including canning and freezing, produced in the States of New York, Michigan, Maryland, New Jersey, Indiana, California, Maine, Vermont, New Hampshire Rhode Island, Massachusetts, and Connecticut. Also marketing orders for apples for fresh market and processing other than canning and freezing now are authorized for apples grown in Washington, Oregon, and Idaho.

H.R. 9737 and S. 1455, if enacted, would make apples produced in Colorado, Utah, New Mexico, Illinois, and Ohio eligible for marketing orders under the act.

The bills H.R. 9736, H.R. 10545, and S. 1456 would amend section 608c(6) (I) to authorize any form of marketing promotion including paid advertising for apples under marketing orders. The Agricultural Marketing Agreement Act currently authorizes paid advertising under marketing orders for several commodities. This authority has been incorporated into some existing marketing orders. Advertising projects have been carried out for such commodities as Texas oranges and

grapefruit, and California olives and nectarines. The trend is toward more and more commodity advertising and promotion in the fruit and vegetable industry. Producers and others are searching for a means of financing advertising and promotion programs so as to maintain or advance their position in the marketplace. The Agricultural Marketing Agreement Act could provide the facility for this purpose. We believe any fruit or vegetable commodity group which actively supports the development of such a program should be given the opportunity to do so.

Section 602 of the act sets forth the policy of Congress to establish and maintain orderly marketing conditions and to achieve parity to farmers. The statute now authorizes certain types of regulation when prices are above parity. We favor clarification, as provided in H.R. 9736 and H.R. 10545, to insure that this authority applies to the initiation or continuation of marketing research and development projects, including any form of marketing promotion and paid advertising. Marketing research and development activities are ongoing programs and should continue on an uninterrupted basis if they are to achieve desired objectives. These projects are aimed at making improvements in marketing and distribution which we believe are worthwhile even though prices may be above parity.

It is estimated that the annual costs to the Department for administering a marketing order average $25,000. Mr. FOLEY. Are there any questions?

Mr. VIGORITO. No questions.

Mr. SISK. No questions.
Mr. JONES. No questions.
Mr. GOODLING. No questions.

Mr. MYERS. No questions.

Mr. FOLEY. Thank you very much, Mr. Hedlund. If you will hold yourself available in the committee room we may recall you. The only thing I was concerned about is that, perhaps after hearing some of the other witnesses on the almond bill, we might want to recall you for technical questions. If you could hold yourself available for a little time this morning, we would appreciate it.

Mr. HEDLUND. I will remain.

Mr. FOLEY. The next witness will be Mr. Ben R. Lacy III, of Front Royal, Va., president of the National Apple Institute, accompanied by Mr. Fred P. Corey.

STATEMENT OF BEN R. LACY, PRESIDENT, NATIONAL APPLE INSTITUTE, ACCOMPANIED BY FRED P. COREY

Mr. LACY. I am Ben Lacy. Good morning, Mr. Chairman, and members of the committee.

Mr. Corey is sitting at my left and he has presented a statement which all of you have. I am not going to presume to read through it and will only just make a brief statement of my own.

I am president of the National Apple Institute. Thank goodness we will be getting off the end of this month. I am also chairman of the Virginia State Apple Commission and I will be getting out of that at the end of this month.

I am speaking really in behalf of both the State of Virginia and the National Apple Institute.

The National Apple Institute would like very much to see the passage of these two bills. As a national organization, it's almost imperative that we have some way of getting some of the smaller States and allowing them to work together. Perhaps some of the larger apple growing States, such as Washington, Pennsylvania, and Virginia, and some of the other larger apple growing States don't need these types of bills, but they are certainly in favor of them.

One of the undercurrents that we run into very strongly in Virginia is the demands or the desires of the growers that we have a strong national program. For this reason, we are merging two of our national apple organizations, the National Apple Institute and the International Apple Association, into one in June. We are moving toward a national program. It's going to be slow, but these are some of the steps that we need in order to move toward that.

That is about all that I have, unless you would like to question. me on anything concerning that, and unless Fred would like to add anything to it.

Mr. FOLEY. Mr. Corey, your statement will be presented in the record in full.

Mr. COREY. Thank you. I think not, unless there are questions in the course of the continuation of the hearing.

Mr. FOLEY. We thank you both for your appearances this morning. Are there any questions of either of these witnesses?

Mr. VIGORITO. No questions.

Mr. SISK. No questions.

Mr. JONES. No questions.
Mr. GOODLING. No questions.

Mr. MYERS. No questions.

Mr. FOLEY. Thank you very much. We hope to see you back in front of the committee in some capacity, Mr. Lacy.

Mr. COREY. We will have him there in one way or another.
(The prepared statement follows:)

STATEMENT OF FRED P. COREY, EXECUTIVE VICE PRESIDENT,
NATIONAL APPLE INSTITUTE

I'm Fred P. Corey, Executive Vice President of the National Apple Institute, a federation of twenty-seven state and regional apple producer associations throughout the United States.

We strongly endorse and respectfully urge enactment of both of these bills, H.R. 9736 and H.R. 9737, amending the Marketing Agreement Act of 1937, as amended, to facilitate its greater applicability to enable apple producers to improve their marketing programs.

H.R. 9737 simply adds the states of Colorado, Utah, New Mexico, Illinois and Ohio to the list of those apple producing states already authorized to utilize the Marketing Agreement Act to enable marketing programs under this Act. Section 608c (2) excludes apples from among the eligible commodities under the Act except for specifically named states. H.R. 9737 adds the aforesaid states to a list of fifteen states in which apple producers may utilize the Act for apple marketing programs.

H.R. 9736 Amends the Act by Amending Section 608c (6) (I) to add apples to a list of some fifteen other fruits and vegetables for which authority is granted to permit market development programs including paid advertising under the Act. H.R. 9736 also amends Section 602 of the Act to clarify and assure that marketing research and development programs, including marketing promotion and paid advertising, may be initiated and continued not withstanding commodity price fluctuations above or below parity. Authority already exists for the continuation of certain types of programs under the Act in above parity situations. This amendment simply provides for assurance of similar eligibility for research and

market development programs, inclusive of those with advertising and promotion projects.

This latter provision is essential in order to obtain greatest good from such programs for the affected producers. Market research and development programs, inclusive of promotion and paid advertising, need to continue on an uninterrupted basis to accomplish their objectives. The value of such programs to producers is fully as important in helping to maintain prices at or above parity level as in helping to achieve parity. Most education and promotion and advertising programs in conjunction with market development are most effective as continuing programs. And market research programs may span a period of time and involve continuity of investment and study which certainly would be weakened or negated if they are subjected to "stop and go" requirements tied to parity.

A number of the larger apple producing states and a few of the smaller volume states have state enabling legislation to provide for equitable producer financed market research and development programs including promotion and paid advertising.

Larger producing states, with state programs already under state enabling authority, never-the-less support this proposed legislation because of their mutual interest in having strong and effective market development programs throughout the industry, not only in each state, but also to better enable all producing states to more effectively cooperate in joint program efforts throughout the industry. For some of the smaller producing states a single state marketing program under state enabling authority is felt to be impractical because of the limited production volume and the disproportionate administrative cost involved with such limited volume. However, under the federal enabling Act producers in two or more of these smaller volume states can develop cooperative programs with greater volume thus achieved to make such programs more effective and more efficiently operated.

The six New England states are a good case in point. Similarly other smaller volume states, where otherwise eligible, are desirous of having such authority under the 1937 federal Act as amended.

Also, while apple producers have not availed themselves of the federal Act for any of such other programs as are authorized under the Act, having authority to combine such programs with market research and development programs, including promotion and paid advertising, there is a far greater opportunity to utilize the federal act to greater advantage to them than has heretofore been deemed practical and worthwhile.

With such programs of promotion and paid advertising, and other projects of market research and development, producers, when such programs are qualified via hearings and approved by majority referendums, assess themselves equitably for their financing. Thus public expense, via government, is only the nominal and reasonable government administrative cost essential to directing the programs in the public interest.

Since amendment of the Marketing Agreement Act in 1965 authorizing the inclusion of promotion and advertising programs for a number of fruit and vegetable commodities, several commodity groups have developed and adopted such programs and have found them most beneficial.

It is in the tradition of the American free enterprise system that when agricultural commodity groups are desirous of actively developing and supporting such programs under the Agricultural Marketing Agreement Act of 1937 as amended, every reasonable and responsible means to enabling them to do so should be provided.

Marketing agreements and orders, both state and federal, have proven to be one of the most valuable industry self-help organizational "tools" yet developed to assist agricultural producers in cooperative collective marketing programs. H.R. 9736 and H.R. 9737 only extend the applicability and value of this organizational "tool" to be of far greater value to apple producers.

We strongly and respectfully urge approval of both bills by the Sub-Committee on Domestic Marketing and urge adoption of the legislation by the 91st Congress. Mr. FOLEY. The next witness is Mr. R. N. Berry, executive vice president of New York & New England Apple Institute, Westfield, Mass., accompanied by Mr. Arthur Bishop of Shelburne Falls, Mass.