AUTHORIZE PRODUCTION RESEARCH UNDER MARKETING AGREEMENT AND ORDER PROGRAMS MONDAY, JULY 28, 1969 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE OF DOMESTIC MARKETING AND CONSUMER RELATIONS OF THE COMMITTEE ON AGRICULTURE, Washington, D.C. The subcommittee met, pursuant to notice, at 10 a.m., in room 1301, Longworth House Office Building, the Honorable Thomas S. Foley (chairman of the subcommittee) presiding. Present: Representatives Foley, Sisk, Jones of Tennessee, Mrs. May, Goodling, and Resident Commissioner Córdova. Also present: Hyde H. Murray, associate counsel; John A. Knebel, assistant counsel, and Christine Gallagher, clerk. Mr. FOLEY. The Subcommittee on Domestic Marketing and Consumer Relations will come to order. The subcommittee meets this morning for consideration of H.R. 8536 by Mr. Sisk and H.R. 11663 by Mr. McFall. These bills would amend section 602 (3) and section 608 (c) (I) of the Agricultural Marketing Agreement Act of 1937 as amended so as to authorize production research under marketing agreement and order programs. (H.R. 8536 and the departmental report follows:) [H.R. 8536, 91st Cong., first sess.] A BILL To amend section 602 (3) and section 608c(6) (I) of the Agricultural Marketing Agreement Act of 1937, as amended, so as to authorize production research under marketing agreement and order programs Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 674; 50 Stat. 249), is further amended as follows: (1) Section 602 (3) of the Act is further amended by inserting the words "such production research, marketing research, and development projects provided in section 608c (6) (I)," immediately after the words "establish and maintain". (2) Subsection (I) of section 608c(6) is further amended by (a) inserting the words "production research," immediately after the phrase "Establishing or providing for the establishment of", and (b) inserting the words "or efficient production” after the word "consumption”. (1) DEPARTMENT OF AGRICULTURE, Hon. W. R. POAGE, Chairman, Committee on Agriculture, House of Representatives. DEAR MR. CHAIRMAN: This is in reply to your request of May 14, 1969, for a report on H.R. 8536, a bill to amend the Agricultural Marketing Agreement Act of 1937, as amended. The effect of this bill is to authorize research relating to the production of commodities essentially on the same basis that authority for marketing research is now provided for in 608c (6) (I) of the act. 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 as well as continuation of marketing research and development projects as authorized in section 608c (6) (I), and would apply to production research on the same basis. The Department favors enactment of H.R. 8536. Authority for marketing research and development projects designed to assist, improve, or promote the marketing, distribution, and consumption of commodities under marketing orders has been available in the act since 1954. Such authority has been incorporated in a number of the fruit and vegetable marketing orders. Such provisions have been used to an advantage. However, a number of problems affecting the quality and marketability of commodities originate in the production process. Because of this, research involving studies of cultural conditions and practices as well as harvesting methods and techniques may be necessary to provide commodities which are most desired by consumers. Hence, research on commodities before they leave the farm gate often is equally as important as that related strictly to marketing. Broadening the research authority of the act as contemplated in the bill would enable growers and handlers to deal with problems associated with production on a more timely basis. Such research would be financed by levying assessments directly upon the commodity under a marketing order and paid by the handlers concerned. Such assessments funds would be under the control of the industry committee administering the marketing order locally and could be made available in a relatively short time to carry out research as needed. It appears reasonable that growers and handlers who wish to engage in research on industry production problems and pay the cost thereof through direct assessment on their commodities in the same manner as they are permitted to do in the case of marketing research should be permitted 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. 8536, to insure that this authority applies to the initiation as well as 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. The initiation and continuation of such research projects relating to production as may be permitted by the act likewise should be authorized when prices are above parity. Such projects, too, must be continued on an uninterrupted basis if they are to be effective. Any projects entered into under the research authority of the act would be aimed at such applicable objectives as increasing the efficiency of production, improving the quality of commodities, or making improvements in marketing and distribution which we believe would be worthwhile at any price level. We know of no compelling reason for discontinuing any 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 cost of promulgation proceedings involving an amendment to an existing order, including a referendum of producers, varies with the size and complexity of the program. On the average, the promulgation costs contemplated by this proposal are estimated to be $7,500 for each amendment proceeding. In view of the time situation, we have not obtained from the Bureau of the Budget advice regarding the relationship of this proposed legislation to the President's program. Sincerely, (S) J. PHIL CAMPBELL, Acting Secretary. Mr. FOLEY. The first witness we will hear this morning is the author of one of the bills being considered this morning, a member of this committee, the Honorable B. F. Sisk, of California. STATEMENT OF HON. B. F. SISK, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA Mr. SISK. Mr. Chairman, I appreciate your scheduling H.R. 8536 for hearing today. This legislation would authorize preharvest research under the Federal marketing orders. I introduced the legislation at the request of the California Olive Growers and Canners Industry Committee in an effort to enable the industry to do more to market its crop. Under the Agricultural Marketing Act of 1937 the industry can provide for research and development projects. However, the Department of Agriculture over the years has interpreted the term "research and development" to mean only those activities occurring after the crop leaves the farm. This interpretation, while it may have been appropriate in the past, is no longer realistic and is far too narrow to meet the needs of today's competitive market. In these days, research can and often does begin before the crop is planted or before the first earth is turned. No realistic agribusinessman would plant a crop and wait until his crop is harvested before he begins researching better marketing and production methods. This legislation would authorize a Federal Marketing Committee, operating under a Federal marketing order, to allocate a portion of its funds to preharvest research. Decisions on the areas of research needed can be made by such committee under the supervision of the Secretary of Agriculture. I would like also to offer an amendment to my bill to make clear that the language in H.R. 8536 in no way preempts the research activities of the many State research programs. I would amend item (2) of the bill to read as follows: (2) Subsection (1) of section 608c (6) is further amended by (a) inserting the words "production research," immediately after the phrase "Establishing or providing for the establishment of"; (b) inserting the words "or efficient production" after the word "consumption"; and (c) striking the period at the end of subsection (1) and adding a second provision reading "Provided further, that the inclusion in a federal marketing order of provisions for research shall not be deemed to preclude, preempt or supersede research provisions in any state program covering the same commodity. In conclusion, I appreciate your cooperation, Mr. Chairman, in setting up these hearings so that this bill can be considered in this session of Congress. Mr. FOLEY. The next witness we will hear this morning is cosponsor of the legislation, sponsor of H.R. 11663, Mr. McFall, of California. STATEMENT OF HON. JOHN J. McFALL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA Mr. McFALL. Thank you, Mr. Chairman and members of the committee. It is a privilege to be here before your committee this morning. There are 47 Federal marketing orders covering fruits, nuts, and vegetables. Fifteen cover California products, having an average farm value of over $450 million, and a heavy investment in orchards, land, and equipment. These California commodity industries favor the passage of H.R. 11663 and similar bills, which would amend section 602 (3) and section 608 c(6) I of the Agricultural Marketing Agreement Act of 1937, as amended, to authorize production research under Federal marketing agreement and order programs. At present, only research in marketing is authorized under the act. The addition of production research authority to this exceedingly fine marketing aid will make this self-help legislation ever more effective and successful in the future. Marketing and production are so closely tied together that one cannot function properly without the other. The marketing system is becoming ever more demanding, insisting on adequate and orderly supplies, standardized products of dependable quality evenly spread as to time of production and delivery. Production and marketing research are both needed in large quantities to meet the American consumer's ever-changing demands. One of the major problems facing agricultural production research is an adequate supply of funds. Currently in California, agricultural research receives 25 percent of its funds from Federal sources, 65 percent from the State and the balance from commodity and related industry groups. Demands for funds for agricultural research are greater than present methods are capable of raising. Both Federal and State legislative bodies are showing increasing resistance to supplying additional needed funds for agricultural research. More and more frequently, it is suggested that agricultural producers and related industries assess themselves to develop funds for research. The proposed amendment will provide a method that will be orderly and equitable for collection of production research funds, a method that will prorate the costs of such research over all segments of any participating industry in a fair and equitable manner. Voluntary methods of collecting funds for research are now being used with some success, but nearly always a few end up carrying the umbrella for the industry. Equitable and adequate collections on this basis are impossible. Using the marketing order method of handling production research will mean that decisions of such research programs will be made by the total industry, not just one segment. Because of the relationship of USDA in marketing orders, such research will also be subject to the consideration, coordination and supervision of professional staff members of USDA. This method of financing production research is favored by both the cooperative and independent segments of California's concerned agriculture. Seven States have marketing order legislation: California, Colorado, Florida, Georgia, Washington, Wisconsin, and New York. In all but New York, such legislation provides for production as well as marketing research. Nearly all marketing order programs in these States contain these research provisions and are using such provisions successfully. |