I am Edwin C. Hadlock, administrative assistant to the Master of the National Grange, with offices at 1616 H Street NW., Washington, D.C.

Although this is my first appearance before this distinguished committee, I am sure that most if not all of you are familiar with the National Grange and our long history of support for self-help farm programs, including marketing orders for fruits and vegetables for all forms of processing.

The Grange is a family-farm, rural-urban organization, representing over 600,000 members located in 40 of our 50 States. It is because of our heterologous membership that we have a wide range of legislative interests and address you today representing both the producers of potatoes as well as the ultimate consumers of this excellent product of our land.

The Grange was instrumental in the passage of the original marketing order legislation and appears before you today adding to a history of 32 years of support for market order legislation without a single exception.

However, today our support for marketing order legislation assumes a negative role, as we are opposed to the enactment of H.R. 11243, to amend section 608 (c) (2) of the Agricultural Marketing Agreement Act of 1937, as amended.

The fact that all potatoes for processing, except those for dehydrating and chipping, are exempt from the provisions of Federal marketing orders is discriminatory against this particular form of processed potatoes. However, we do not agree with the proponents of H.R. 11243, that the way to make all things equal is to exempt all forms of potatoes from processing from Federal marketing orders. This is too strong a cure and will kill the patient. In fact, several marketing orders have been dropped because of their inability to regulate potatoes for processing.

Marketing orders are presently lying dormant in the Red River Valley and in Maine because of the earlier exemptions and the enactment of H.R. 11243 will surely be the death blow to the remaining orders.

As farmers or producers of a commodity, we look at the purpose of a marketing order, first, to control the quality for the protection of the consumer, and second, to allow producers to affect price by the regulation of quality.

The interests of the consumers are well preserved in the market order legislation and the regulations imposed in marketing orders assure the consumer of a much higher quality product at fair and reasonable prices. The use of a market order does not mean the monopolistic manipulation of the market as some people have erroneously concluded. The Grange feels that the consumers' interests will be better served if potatoes for processing are included under Federal marketing orders. The housewife has just as much right to expect that the processed potato products she purchases have been made from the same high-quality potatoes that she would buy for table use.

This is not to say that the present potato products are not made from good potatoes. They are. But the housewife would have more assurance of high quality if the potatoes were supplied to the processor under the regulations of the Federal marketing order.

We also feel that the best interests of the processor are adequately served by the knowledge that there will be an abundant supply of the

product at a high uniform quality available to the processor. And it will be delivered when most desirable from his standpoint; that the problems of purchasing can largely be eliminated by the proper functioning of the Federal marketing order. The Grange would like to state our earlier position, that it is desirable to amend the Marketing Order legislation to include potatoes for all forms of processing and to prevent processors from having any voice in the development of a marketing order, and then to prevent the producers from having any voice in the sale of the product after it has been processed. To do otherwise regarding coverage of marketing orders is like giving a carpenter a hammer and then breaking the hammer.

We are saying that this is what we think is a matter of conscience and justice. Simply stated it is that the farmer should be allowed to regulate his market according to his best interests with a proper regard being paid to the consuming public and that the processor should be free from interference from the producer in the marketing of his finished product.

It appears to us that this is the basis of mutual assignment of responsibility and mutual cooperation. That can build a strong industry regardless of whether it is in potatoes, pears, peaches, cherries, or milk.

At our 1968 annual session the delegate body reaffirmed basic Grange policy of legislation to enable producers, through referenda, to estab lish facilities for orderly marketing of agricultural commodities, thus continuing our strong support for self-help farm programs.

We, therefore, urge this committee to adopt, not H.R. 11243, but legislation that will extend Federal marketing orders to potatoes for all forms of processing, in keeping with the purpose and declared policy of Congress as expressed in the act of 1937.

We appreciate this opportunity to appear before this distinguished congressional committee to once more support legislation to increase the farmer's control over his destiny.

Thank you, Mr. Chairman.

Mr. SISK. Thank you, Mr. Hadlock. And we appreciate very much your making your statement brief, and your full statement, of course, is a part of the record.

The gentleman from Indiana?

Mr. MYERS. No questions.

Mr. SISK. Thank you, Mr. Hadlock. We appreciate your making the position of the National Grange clear to the committee.

(The statement follows:)

STATEMENT BY EDWIN C. HADLOCK, ADMINISTRATIVE ASSISTANT TO The Master of THE NATIONAL GRANGE

Mr. Chairman and Members of the Subcommittee, I am Edwin C. Hadlock, Administrative Assistant to the Master of the National Grange, with offices at 1616 H Street, N.W., Washington, D.C.

Although this is my first appearance before this distinguished Committee, I am sure that most if not all of you are familiar with the National Grange and our long history of support for self-help farm programs, including marketing orders for fruits and vegetables for all forms of processing.

The Grange is a family farm, rural-urban organization, representing over 600,000 members located in 40 of our 50 states. It is because of our heterologous membership that we have a wide range of legislative interests and address you today representing both the producers of potatoes as well as the ultimate consumers of this excellent product of our land.

The Grange was instrumental in the passage of the original marketing order legislation and appears before you today adding to a history of thirty-two years of support for market order legislation without a single exception.

However, today our support for marketing order legislation assumes a negative role, as we are opposed to the enactment of H.R. 11243, to amend section 608 (c) (2) of the Agricultural Marketing Agreement Act of 1937, as amended. The provisions of H.R. 11243 would exempt from Federal marketing orders "potatoes for canning, freezing, or other processing". It is our understanding that the present Agricultural Marketing Agreement Act of 1937, as amended, already exempts potatoes from marketing orders for canning or freezing in both subparagraphs (A) and (B) of section 608 (c) (2). Potatoes for canning were exempt in 1937 and for freezing in 1947; therefore, the only new provision of H.R. 11243 would be to exempt potatoes for “other processing", which would include dehydrating, chipping, etc.

The fact that all potatoes for processing, except those for dehydrating and chipping, are exempt from the provisions of Federal marketing orders is discriminatory against this particular form of processed potatoes. However, we do not agree with the proponents of H.R. 11243, that the way to make all things equal is to exempt all forms of potatoes for processing from Federal marketing orders. This is too strong a cure and will kill the patient-Federal marketing orders for potatoes.

The Grange would be in strong support of legislation to equalize the treatment of potatoes under Federal marketing orders by eliminating the present exemption provided for potatoes for canning or freezing in subparagraphs A and B of the Act. In the Grange view, this would be in keeping with the original intent and purpose of the Agricultural Marketing Agreement Act of 1937, as amended, and would be a far better cure for the patient.

The Federal marketing orders in North Carolina, Oregon, Washington, Idaho and Colorado, represent 52% of the total fall production of potatoes, or 120 million hundredweight. Of this total amount, approximately 10% to 12% are removed from the fresh market and are diverted into processing because of the quality restrictions under the terms of the Federal marketing orders. Therefore, under the provisions of H.R. 11243, this amount of off-grade, sub-standard quality potatoes, would be placed on the fresh market in competition with high quality potatoes, which would have an adverse effect on the price of fresh market potatoes. The other alternative would be the elimination of the marketing order, with even a greater disruption of the fresh market price and orderly marketing, one of the prime objectives of a marketing order.

This increased amount of off-grade potatoes would have the greatest pricedepressing effect in the immediate market area, but it also would have an effect on the entire market structure of table stock potatoes. I fail to see why any grower of potatoes in the marketing area of the Federal orders would want to see off-grade potatoes that had previously been diverted into processing be placed on the fresh market. In our opinion, and in the opinion of our members and others in the affected states, that is just what would take place.

In fact, several marketing orders have been dropped because of their inability to regulate potatoes for processing. Marketing orders are lying dormant in the Red River Valley and in Maine because of the earlier exemptions and the enactment of H.R. 11243, will surely be the death blow to the remaining orders.

We believe it would be well for this Committee, Mr. Chairman, to review the reasons for the enactment of the Agricultural Marketing Agreement Act of 1937 and the purpose and intent of Federal marketing orders.

In section 1 of the Act under “Declaration" it states:

"[It is hereby declared that the disruption of the orderly exchange of commodities in interstate commerce impairs the purchasing power of farmers and destroy the value of agricultural assets which support the national credit structure and that these conditions affect transactions in agricultural commodities with a national public interest, and burden and obstruct the normal channels of interstate commerce. (7 U.S.C. 601).]"

In section 2, relating to Declaration of Policy it states:

"DECLARATION OF POLICY

"[Section 2. It is hereby declared to be the policy of Congress

(1) Through the exercise of the powers conferred upon the Secretary of Agriculture under this title, to establish and maintain such orderly marketing conditions for agricultural commodities in interstate commerce as will establish, as

the prices to farmers, parity prices as defined by section 301(a)(1) of the Agricultural Adjustment Act of 1938.2

(2) To protect the interest of the consumer by (a) approaching the level of prices which it is declared to be the policy of Congress to establish in subsection (1) of this section by gradual correction of the current level at as rapid a rate as the Secretary of Agriculture deems to be in the public interest and feasible in view of the current consumptive demand in domestic and foreign markets, and (b) authorizing no action under this title which has for its purpose the maintenance of prices to farmers above the level which it is declared to be the policy of Congress to establish in subsection (1) of this section.

(3) Through the exercise of the power conferred upon the Secretary of Agriculture under this title, to establish and maintain such container and pack requirements provided in section 8(c) (6) (H)3 such minimum standards of quality and maturity and such grading and inspection requirements for agricultural commodities enumerated in section 8c(2), other than milk and its products, in interstate commerce as will effectuate such orderly marketing of such agricultural commodities as will be in the public interest.

(4) Through the exercise of the power conferred upon the Secretary of Agriculture under this title, to establish and maintain such orderly marketing conditions for any agricultural commodity enumerated in section 8c (2) as will provide, in the interests of producers and consumers, an orderly flow of the supply thereof to market throughout its normal marketing season to avoid unreasonable fluctuations in supplies and prices.*

(5) Through the exercise of the power conferred upon the Secretary of Agriculture under this title, to continue for the remainder of any marketing season or marketing year, such regulation pursuant to any order as will tend to avoid a disruption of the orderly marketing of any commodity and be in the public interest, if the regulation of such commodity under such order has been initiated during such marketing season or marketing year on the basis of its need to effectuate the policy of this title." (7 U.S.C. 602).]"

We suggest that what is being attempted today by the proposed legislation is not in keeping with the declaration of the policy of Congress.

As farmers or producers of a commodity, we look at the purpose of marketing orders to:

First-regulate the market in such a way that the forces within the market will not destroy the market itself. We have applied the principles of this kind of legislation successfully to many crops, primarily to the perishable fruits and milk. In addition, it has been duplicated by state marketing orders many times and in many states.

Second-to provide an abundance of the product for the market at a reasonable price. It has long been held that market orders themselves cannot be used as a means of only raising prices. However, through regulating quality and other terms of sale, farmers can to some extent effectuate price increases above that which would be obtained without the marketing order.

The interests of the consumer are well preserved in the market order legislation and the regulations imposed in marketing orders assures the consumer of a much higher quality product at fair and reasonable prices. The use of market orders does not mean the monopolistic manipulation of the market, as some people have erroneously concluded.

The Grange feels that the consumer's interest will be better served if potatoes for processing are included under Federal marketing orders. The housewife has just as much right to expect that the processed potato products she purchases have been made from the same high quality potatoes as she would buy for table use. This is not to say that present potato products are not made from good potatoes. They are, but the housewife would have more assurance of high quality if the potatoes were supplied to the processor under the regulation of a Federal marketing order.

We also feel that the best interests of the processors is adquately served by the knowledge that there is an abundant supply of the product at a high uniform quality available to the processor, that it will be delivered when most desirable

2 Amended by section 302 of the Agricultural Act of 1948 (July 3, 1948. 62 Stat. 1247) to refer to parity prices as defined in the Agricultural Adjustment Act of 1938.

a The words "such container and pack requirements provided in section 8(e) (6) (H)" were added by Pub. L. 89-330, 79 Stat. 1270, approved Nov. 8. 1965.

Subsection (4) added by section 401 of the Agricultural Act of 1954, 68 Stat. 906.

Subsection (5) added by section 141 of the Agricultural Act of 1961 (Aug. 8, 1961, 75 Stat. 303).

from his standpoint, and that the problems of purchasing can be largely eliminated by the proper functioning of the Federal marketing order. Therefore, from the standpoint of the historical operations of the market order, we do not believe that processors have any reasonable gains to accomplish by adoption of this kind of legislation.

The Grange would like to state our early position that it is desirable to amend the marketing order legislation to include potatoes for all forms of processing and to prevent processors from having any voice in the developing of a market order, and then to prevent the producers from having any voice in the sale of the product after it has been processed. To do otherwise regarding coverage of marketing orders, is like giving a carpenter a hammer to build a house and then breaking the handle.

What we are saying is what we think is a matter of common sense and justice. Stated simply, it is that the farmer should be allowed to regulate his market according to his best interest with proper regard being paid to the consuming public and that processor should be free from interference from the producer in marketing of his finished product. It appears to us that this is the basis of mutual assignment of responsibility and mutual cooperation that can build a strong industry, regardless of whether it is potatoes, pears, peaches, cherries or milk.

The growing need for farmers to develop stronger joint programs in order to maintain a healthy, efficient food marketing system has been stressed by the June, 1966, report of the National Commission on Food Marketing, which pointed out that:

"Farmers as independent operators have not been able to coordinate quality improvement programs or to schedule more even flows of products to the extent demanded by today's food industry . . . Some form of governmental sanction for collective action will be needed, at least for a substantial period of time. Federal and State marketing orders and agreements are long-standing examples of instruments of this kind. . . (As an approach which is often complementary to cooperative organizations) they should be authorized for any agricultural commodity produced in a local area or regional subdivision of the United States. This is even more true today than in 1966.”

In conclusion, Mr. Chairman, please permit me to re-state some basic Grange policy regarding farm marketing.

Our Journal of Proceedings for 1961 stated:

"MARKETING ENABLING LEGISLATION

"The Grange has long advocated the commodity-by-commodity approach in the development of farm programs, and recognized the marketing order as a useful tool in developing such programs. Under existing Federal law, however, this and similar tools are not available to the producers of many commodities. If it becomes apparent that there is a broad desire on the part of the producers of any such commodities now excluded by law to have the opportunity to develop and vote on marketing-order type measures, we will support their efforts to obtain necessary enabling legislation."

In addition, in 1959, Grange policy regarding marketing orders was expressed as follows:

"Increased producer bargaining power.-The Grange believes that farmers are entilted to bargaining power comparable to that enjoyed by labor' and 'business'. Farmers are both. Our programs would, therefore, seek to place responsibility for-and the control of-excess production in the hands of producers themselves. "Provide producer-managed marketing programs.-Through legislation, government has helped develop the bargaining power of organized labor. Other Federal laws often enable 'business' to regulate and control production and marketing of its products and services. Likewise, government should provide the framework for producer-managed commodity marketing programs, where necessary, to enhance producer-bargaining power."

At our 1968 Annual Session, the Delegate Body reaffirmed basic Grange policy of legislation to enable producers, through referenda, to establish facilities for orderly marketing of agricultural commodities, thus continuing our strong support for self-help farm programs.

We, therefore, urge this Committee to adopt, not H.R. 11243, but legislation that will extend Federal marketing orders to potatoes for all forms of processing, in keeping with the purpose and declared policy of Congress as expressed in the Act of 1937.