AMENDING SECTION 359 OF THE AGRICULTURAL ADJUSTMENT ACT OF 1938, AS AMENDED, IN ORDER TO PERMIT THE DELIVERY OF EXCESS PEANUTS TO AGENCIES DESIGNATED BY THE SECRETARY OF AGRICULTURE AND TO DEFINE THE TERM "COOPERATOR" WITH RESPECT TO PRICE SUPPORTS FOR PEANUTS

APRIL 26, 1949.-Committed to the Committee of the Whole House on the State of the Union and ordered to be printed

Mr. COOLEY, from the Committee on Agriculture, submitted the following

REPORT

(To accompany H. R. 4081

The Committee on Agriculture, to whom was referred the bill (H. R. 4081) to amend Section 359 of the Agricultural Adjustment Act of 1938, as amended, in order to permit the delivery of excess peanuts to agencies designated by the Secretary of Agriculture and to define the term "cooperator" with respect to price supports for peanuts, and for other purposes, having considered the same, report favorably thereon without amendment and recommend that the bill do pass.

STATEMENT

The accompanying bill restores the authority for the operation of a two-price program for peanuts, beginning with the 1949 crop, similar to that in effect during 1941 and 1942 under the then existing section 359 (b) of the Agricultural Adjustment Act of 1938. This provision was repealed by the act of August 1. 1947 (Public Law 323. 80th Cong.).

The bill recognizes that the two principal outlets for peanutsnamely, (1) cleaning and shelling for edible purposes, and (2) crushing for oil should be preserved, with due regard for the normal difference in the market value of peanuts for these respective uses. Under the acreage-allotment and marketing-quota provisions of the Agricultural Adjustment Act of 1938, acreage allotments for peanuts are based upon the quantity of peanuts required for the edible trade, and no allowance is made for peanuts grown for oil. While it is not proposed by this bill to change the statutory method of establishing

H. Repts., 81-1, vol. 3

acreage allotments and marketing quotas or to support the price of peanuts for oil, it will reduce the deterrent effect that existing legislation has on the production of peanuts for crushing purposes.

Under existing law the farmer who grows peanuts in excess of his acreage allotment and markets such excess peanuts must pay a penalty equal to 50 percent of the support price of quota peanuts. Under this bill, the payment of the marketing penalty on any excess peanuts will not be required if such peanuts are delivered to an agency or agencies designated by the Secretary of Agriculture, in return for a price to the producer based on the market value of such peanuts for crushing for oil. A producer who thus delivers his excess peanuts to a designated agency will be eligible to receive price support, as a "cooperator," on his within-quota production.

Two new subsections, (g) and (h), would be added by the bill to section 359 of the Agricultural Adjustment Act of 1938, as amended. Subsection (g) is substantially the same as former subsection (b) as it existed from 1942 until repeal in 1947 except that—

(1) The rate of the marketing penalty for peanuts was increased from 3 cents per pound to 50 percent of the basic loan rate by the act of August 1, 1947.

(2) Instead of requiring the oil price paid by a designated agency for excess peanuts to be computed on a day-to-day basis, which proved to be difficult to administer under the former law because of the problem of keeping local peanut receivers informed of daily market changes, the proposed bill permits the oil price to be computed on a "prevailing market" basis. This will permit the market price prevailing over a period of a few days or a week to be used if there is no substantial change in the market during such period.

(3) The provision in the former law for a payment by the producer, in lieu of penalty, in the event that any of his excess peanuts, when marketed, were identified as quota peanuts has been eliminated from this bill since such an erroneous identification of peanuts is unlikely to occur under the present method of collecting the penalty on a percentage of each lot of peanuts marketed from an excess-producing farm.

Nothing in this bill will have the effect of providing or guaranteeing a minimum price for excess peanuts delivered to a designated agency, and the bill should not be construed as having the effect of reinstating peanuts for oil as a Steagall commodity for which price support would be mandatory during 1949 under section 1 (b) of the Agricultural Act of 1948.

Subsection (h), providing that a producer who delivers his excess peanuts to a designated agency shall be a "cooperator" for pricesupport purposes, is necessary under a two-price system for peanuts in view of changes which have been made in the price-support law since 1942. It is intended that the Secretary may, by regulation, authorize a portion of each lot of peanuts marketed from a farm to be treated as excess peanuts and the remainder as within-quota peanuts, according to the relationship between the excess acreage for the farm and the farm acreage allotment. This is in accord with the so-called "percentage excess" method of collecting marketing penalties on peanuts as now authorized by law. Under such regulations, however, the producer may receive price support on that part of each lot which is

treated as within-quota peanuts only if the excess peanuts in the lot are delivered to a designated agency.

In the past the Commodity Credit Corporation has been designated as the agency to which excess peanuts could be delivered or through which such peanuts could be marketed and the Corporation in turn utilized peanut cooperatives as its agents for receiving, handling, and disposing of such peanuts. This method of handling the program has proven quite satisfactory and this bill will permit the continuance of this method of handling the program.

CHANGES IN EXISTING LAW

In compliance with paragraph 2 (a) of rule XIII of the Rules of the House of Representatives, changes in existing law made by the bill are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is in italics, and existing law in which no change is proposed is shown in roman):

"SEC. 359.

AGRICULTURAal Adjustment Act of 1938, AS AMENDED

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"(g) Beginning with the 1949 crop of peanuts, payment of the marketing penalty as provided in subsection (a) will not be required on any exces peanuts which are delivered to or marketed through an agency or agencies designat each year by the Secretary. Any peanuts received under this subsection by such agency shall be sold by such agency (i) for crushing for oil under a sales agreement approved by the Secretary; (ii) for cleaning and shelling at prices not less than those established for quota peanuts under any peanut diversion, peanut loan, or peanut purchase program; or (ii) for seed at prices established by the Secretary. For all peanuts so delivered to a designated agency under this subsection, producers shall be paid for the portion of the lot constituting excess peanuts, the prevailing market value thereof for crushing for oil, less the estimated cost of storing, handling, and selling such peanuts. Any person who, pursuant to the provisions of this subsection, acquires peanuts for crushing for oil and who uses or disposes of such peanuts for any purpose other than that for which acquired shall pay a penalty to the United States, at a rate equal to the marketing penalty prescribed in subsection (a), upon the peanuts so used or disposed of and shall be guilty of a misdemeanor and upon conviction thereof shall be fined not more than $1,000 or imprisoned for not more than one year, or both, for each and every offense. Operations under this subsection shall be carried on under regulations prescribed by the Secretary.

"(h) For the purposes of price support with respect to the 1949 and subsequent crops of peanuts, a 'cooperator' shall be (1) a producer on whose farm the acreage of peanuts picked or threshed does not exceed the farm acreage allotment or (2) a producer on whose farm the acreage of peanuts picked or threshed exceeds the farm acreage allotment provided any peanuts picked or threshed in excess of the farm marketing quota are delivered to or marketed through an agency or agencies designated by the Secretary pursuant to subsection (g) in accordance with regulations prescribed by the Secretary."