In the sale of your equipment. if this bill goes into effect you sir roughly a third of your dealerships would close. But under the present circumstances, what kind of criteria would the dealers use with the farmer in taking paper on the equipment? I don't know how you work it out, whether through a mortgage, a loan at the bank, or you give credit or whatever it might be. But if you were handling the paper-and I'm sure you do what kind of criteria would you use as it relates to loaning him money!

Mr. FULKERS N. Well, of course, tobacco is a big thing with what we get our loans on to buy equipment with and all you have to do here, when tobacco starts selling, is get around a dealer's lot and they'll have all their equipment setting out and you see their activity when this happens. We very much depend on him and we have a third at least of our dealers strictly in tobacco country where their sales are pinpointed.

Senator FORD. So we've got two effects here. One, if we do away with tobacco, we lose a third of our equipment dealers and that has a rippling effect also: but under present circumstances tobacco does generate at least one-third of your equipment sales-the money and the loans and the mortgages and the interest and the taxes and so forth. So there is the plus side and there is the downside. So it seems if you have a downside and you have a plus side, you ought to keep the plus side.

Mr. FULKERSON. Right.

Senator FORD. Thank you very much. I appreciate you coming from Louisville today to testify and we have several more witnesses. Representing the farm organization today is the president of the Kentucky Farm Bureau Federation, a man that resides just south of here, J. Robert Wade. Bob, we are delighted to have you this morning and I see you have your sterling silver pipe with you and it shows you're an affluent farmer and I'm delighted to have you here. STATEMENT OF J. ROBERT WADE, PRESIDENT, KENTUCKY FARM BUREAU FEDERATION, FRANKLIN, KY.

Mr. WADE. Thank you, Senator.

It's good to be with you this morning, Senator Ford and distinguished guests and neighbors, whoever we have here.

As you know, it's not my style to read, but this morning, to get the facts across the way the farmers on our staff have put them together, I'm going to read my testimony, and then we'll ad-lib from there, if that's agreeable.

As you know, I'm a farmer and a tobacco producer from Simpson County. We in Farm Bureau sincerely appreciate the opportunity to testify in behalf of our vital tobacco industry before you today.

Kentucky farmers, I am sure, would like to thank you, Senator Ford, for bringing your subcommittee to Kentucky to hear our views on the economic importance of tobacco. Many times when tobacco matters are considered by Congress, tobacco farmers are the last to be invited. That was certainly not the case today.

I must confess to you that tobacco growers in Kentucky are just a little weary. We're not overly tired from the cutting, housing, or the first day or so of stripping our tobacco, even though those jobs are de

manding. We're weary of the Federal Government's unceasing efforts to destroy our industry, an industry that is vital to Kentucky and important to the Nation as a whole.

Our "Califano Is Dangerous to My Health" bumper stickers are faded from the weather, but the message is clear. Misguided reformers and scaremongers like our fanatical HEW Secretary, and sponsors of such legislation as the "Smoking Deterrence Act," could bring economic ruin to a large portion of the members of Kentucky Farm Bureau. These antitobacco zealots disguise their ultimate intent by attacking such "problems" as health education to smokers, or smoking by the young. But what they're talking about is bit-by-bit annihilation of the industry. Kentucky farmers view this as a fight for our economic life; and against all odds, we do intend to fight.

To document the economic importance of tobacco to Kentucky is certainly no problem, and many of your witnesses here and in Lexington have done that quite well. Since I represent the largest farm organization in the State of Kentucky, with 205 memberships, I will focus specifically on tobacco's impact on the farmers' well-being.

Kentucky agriculture, even though among the most diversified in the Nation, is uniquely vulnerable to antitobacco crusades embodied in Mr. Califano's programs and the original proposals outlined in Senator Kennedy's bill, S. 3118. This is especially true today, following an unprecedented 18-month barrage of hostile propaganda and attempts at bureaucratic and legislative harassment from the Federal Govern

ment.

Symptomatic of the combined effect of these actions is the recent report of the Tobacco Tax Council that cigarette sales in Kentucky for the month of August were 9.8 percent below the sales level of August 1977. If that trend were to continue, and reflect a nationwide cigarette sales slump, it would be only a short time until a large number of Kentucky farmers, and other businesses and individuals in Kentucky communities with close economic ties to tobacco, would be face to face with financial catastrophe.

As an illustration of our financial stake in the golden leaf, income to Kentucky farmers from tobacco amounted to $619 million in 1977, more than half of recepits from crops, and about one-third of total cash receipts from farm marketings. Quotas for tobacco in Kentucky in 1978 are about 407 million pounds for burley, according to the University of Kentucky, and 26,500 acres for dark tobacco, both Air- and Fired-cured. Allotments are held by 143,000 burley growers and nearly 23,000 dark tobacco producers. Since most analysts say that approximately 1.5 families are involved in the production of each allotment, we estimate that more than a quarter of a million Kentucky families share in the financial returns from the State's tobacco crop.

Of course, the tobacco economy does not confine itself to Kentucky's borders. About 1 million farmers nationwide produce tobacco, or onefifth of all farmers. Tobacco rates fifth among cash crops in the United States, and accounts for 2.4 percent of all farm cash receipts. Tax receipts for 1977 by all levels of government totaled $6.2 billion nationwide, which was about one-third the value of all tobacco products marketed. Since the mid-1930's, the Federal Government has realized $68 billion in income through excise taxes, while spending a relatively miniscule $52 million to cover losses from the tobacco price support program.

In Kentucky, tobacco dollars turn up at almost every economic junction. Attacks on tobacco are attacks on every facet of the State's economy, including government-supported services, manufacturing, wholesale and retail business, transportation, recreation, and on and

on.

If tobacco were to suddenly disappear from Kentucky, perhaps the first nonfarm segments to feel the pinch would be the farm supply, warehouse, and cigarette industries. That's not surprising. Perhaps the second, however, would be the schools. And that may be surprising. With the major impact of tobacco on the State's tax base, any significant reduction in tobacco production would have a direct impact on tax revenues. Sales taxes, income taxes, and property taxes, all of which go primarily into the State's general fund, would all be reduced. The smaller amount of revenue would then inevtiably reduce spending in all major spending areas, beginning with education, which takes nearly 40 cents of every State budget dollar and a high proportion of county tax levies.

While the nonfarm impact of an emaciated tobacco industry is great, the primary victims of antitobacco efforts are farmers. Some of today's most prominent Washington-based smoking abolitionists have said that tobacco producers can turn to other crops once the leaf market is destroyed. I assure you that for Kentucky farmers, that possibility does not exist. The notion that alternative forms of agricultural production can magically take up the slack if tobacco is eliminated is an absurd, factless fantasy.

Staff members at Kentucky Farm Bureau have determined that it would take some 3.3 million additional acres of wheat, corn, and soybean crops in Kentucky to replace the income derived from tobacco. That would mean roughly a 70-percent increase from the nearly 4.8 million acres in major crops today.

This 3.3 million estimate is based on several figures, including the following: The approximately 215,000 acres of tobacco in Kentucky in 1977 produced income totaling $619 million. That amounts to approximately $2,880 per acre income from tobacco.

The comparable per acre income figure for corn, according to the Kentucky Crop and Livestock Reporting Service, is $250, based on a vield of 100 bushels per acre, with a price of $2.50 per bushel, which is a little high today.

Senator FORD. I was going to say that.

Mr. WADE. For soybeans-again this is a little bit above the market— priced at $7 per bushel, and a 27-bushel yield, the per acre yield is $189. Wheat, at $3.50 a bushel, 35 bushels per acre, yields $122.50 per

acre.

Using these figures, you can get a per acre income ratio for tobacco with each of the major grain crops, wheat, corn, and soybeans. Those ratios are, approximately, 23 to 1 tobacco to wheat per acre income ratio; 15 to 1 tobacco to soybeans income per acre ratio; and 11.5 to 1 tobacco to corn income per acre ratio.

That means, of course, that it would take 23 acres of wheat, 15 acres of soybeans, or 11.5 acres of corn for a farmer to realize the income that he gets from an acre of tobacco. These three yield per acre ratios average out to 16.5, and reflect the fact that it would take some 3,547,500 acres of the three grain crops in equal amounts to produce the farm income that 215,000 acres of tobacco now bring in. That means

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an increase of around 3.3 million acres of cropland, a reserve that is not now nor will ever be available to the farmers of this State.

In conclusion, tobacco is far more than a "leaf" out of Kentucky's history. Its economic importance to the State has never been greater. All Kentuckians have a stake in the health of the tobacco producing and manufacturing industries, either directly through farms or jobs, or indirectly as recipients of Government services that are partially funded by tobacco-produced tax revenues. If nothing else, I hope you can convince your colleagues not to take antitobacco actions lightly. Tobacco is to Kentucky what the stock market is to Wall Street, autos to Detroit, and tourists to Florida. Take away tobacco, and you've taken away Kentucky's economic soul. I fervently hope that day never

comes.

Senator FORD. Thank you, Bob.

Mr. WADE. I have attached here three articles by Dr. Milton Shuffett and by Bob Miller as additional information, and I realize that the prices of wheat, corn, and soybeans were about 5 to 10 percent above today's prices, but we were taking last year's and a 5-year average on those prices where I gave you those prices.

Senator FORD. Those attachments to your statement will be included in the record so we will have those, and we understand the fluctuation of price, but you have to take the last 5-year average.

Mr. WADE. And, of course, there is a difference in the yield. There's a possibility of increased yields and there's a possibility of 10 years from now these figures can be off a little bit.

Senator FORD. I think you have explained it well, and we have had other testimony that there is no alternate crop. The amount of land use per income is miniscule compared to anything else you could try. Do you have any idea of the total number of acres in Kentucky that would be available for tilling?

Mr. WADE. Something over 4 million acres, I believe.

Senator FORD. How many acres are in production?

Mr. WADE. That's in production now and by using some land that shouldn't be in production, increasing that by another 0.17 million, I believe. I can check that.

[The following information was subsequently received for the record:]

Hon. WENDELL H. FORD,
Dirksen Senate Office Building,
Washington, D.C.

GOVERNOR'S COUNCIL ON AGRICULTURE,
Frankfort, Ky., October 26, 1978.

DEAR SENATOR FORD: At the request of Mr. William Kuegel, Vice-Chairman of the Governor's Council on Agriculture, I am sending you a copy of the latest Agricultural Potentials study done for the Council by the University of Kentucky. In response to your question at the tobacco hearings in Bowling Green on Tuesday, regarding the number of total acres of cropland in Kentucky, you will note on Page 17 that, while the state has a total cropland potential of nearly 15 million acres, it has a potential cultivation base of only 5.9 million acres.

Using estimates supplied by Mr. J. Robert Wade, President of the Kentucky Farm Bureau, that there are currently 4.8 million acres in the state under cultivation in major crops and that an additional 3.3 million acres would be required to produce income equal to that which is now derived from tobacco planted on 215,000 acres, the cropland deficit can easily be seen.

Making up the difference lost from tobacco would necessitate planting row crops on land which is really not suitable for this type of agricultural production, land which should remain in hay and meadow or in permanent pasture. This, of

course, would tend to reduce the yields, and thus the income from farm production, requiring even more acres to make up the income lost from tobacco.

We are sorry we were not able to provide you with this information at the hearing Tuesday, but would appreciate it being included in the record.

Yours very truly,

SUSAN ALEXANDER, Assistant to the Director.

TABLE 2.-Kentucky land-use potentials
[Acreages by land classes]

Acrea

998, 654

Total acres cropland_---
Total acres noncropland_.

Total acres in inventory

Total land area in State___.

TABLE 3.-Cropland use potentials

3,366, 372

931, 605 139, 907 2, 969, 619 884, 636 65, 182

2, 159, 540 202, 407 40, 068 2,876, 154 304, 601

14,938, 762 8, 568, 729 23, 507, 491 25, 510, 881

Senator FORD. So, basically, what you're saying is, if you use soybeans, if you use corn, if you use wheat, you don't have that kind of land to till; the ratio per dollar spent is way down; and, second, would this eliminate, say, the beef market? Are you including the grazing or leaving that in in your 3.3 million acres?

Mr. WADE. You would have to take land out of grazing lands to try to put in this type of production, and again these figures would be off because that land as a rule is not as productive. It will erode fast, and most of the people that are raising tobacco do not have this additional land. They are putting their tobacco on their bad land. So, when you put them in a position of using type 3 or class 3 or class 4 land and maybe class 5, they are not going to meet these production figures that we used even because these are State averages using the best produc tion land we have.

Senator FORD. Bob, do you have the average farm in Kentucky acres?

Mr. WADE. Well, the last figure I had was 139 acres was the average size of farm in Kentucky: and. when you go to the average tillable land, it got down to around 59 acres.

Senator FORD. Per farm?

Mr. WADE. Per farm.