Senator FORD. So those two items will be included in the record. [The articles follow:] [From the Tobacco Leaf, January 1954] A FRANK STATEMENT TO CIGARETTE SMOKERS (A Reprint Prepared By Burley Auction Warehouse Association) Recent reports on experiments with mice have given wide publicity to a theory that cigarette smoking is in some way linked with lung cancer in human beings, Although conducted by doctors of professional standing, these experiments are not regarded as conclusive in the field of cancer research. However, we do not believe that any serious medical research, even though its results are inconclusive should be disregarded or lightly dismissed. At the same time, we feel it is in the public interest to call attention to the fact that eminent doctors and research scientists have publicly questioned the claimed significance of these experiments. Distinguished authorities point out: 1. That medical research of recent years indicates many possible causes of lung cancer. 2. That there is no agreement among the authorities regarding what the cause is. 3. That there is no proof that cigarette smoking is one of the causes. 4. That statistics purporting to link cigarette smoking with the disease could apply with equal force to any one of many other aspects of modern life. Indeed, the validity of the statistics themselves is questioned by numerous scientists. We accept an interest in people's health as a basic responsibility, paramount to every other consideration in our business. We believe the products we make are not injurious to health. We always have and always will cooperate closely with those whose task it is to safeguard the public health. For more than 300 years tobacco has given solace, relaxation and enjoyment to mankind. At one time or another during those years critics have held it responsible for practically every disease of the human body. One by one these charges have been abandoned for lack of evidence. Regardless of the record of the past, the fact that cigarette smoking today should even be suspected as a cause of a serious disease is a matter of deep concern to us. Many people have asked us what we are doing to meet the public's concern aroused by the recent reports. Here is the answer: 1. We are pledging aid and assistance to the research effort into all phases of tobacco use and health. This joint financial aid will of course be in addition to what is already being contributed by individual companies. 2. For this purpose we are establishing a joint industry group consisting initially of the undersigned. This group will be known as TOBACCO INDUSTRY RESEARCH COMMITTEE. 3. In charge of the research activities of the Committee will be a scientist of unimpeachable integrity and national repute. In addition there will be an Advisory Board of scientists disinterested in the cigarette industry. A group of distinguished men from medicine, science and education will be invited to serve on this Board. These scientists will advise the Committee on its research activities. This statement is being issued because we believe the pople are entitled to know where we stand on this matter and what we intend to do about it. SPONSORS The American Tobacco Company, Inc., Paul M. Hahn, President. Benson & Hedges, Joseph F. Cullman, Jr., President. Bright Belt Warehouse Association, F. S. Royster, President. Brown & Williamson Tobacco Corporation, Timothy V. Hartnett, President. Burley Auction Warehouse Association, Albert Clay, President. Burley Tobacco Growers Cooperative Association, John W. Jones, President. Larus & Brother Company, Inc., W. T. Reed, Jr., President. P. Lorillard Company, Herbert A. Kent, Chairman. Maryland Tobacco Growers Association, Samuel C. Linton, General Manager. Philip Morris & Co., Ltd., Inc., O. Parker McComas, President. R. J. Reynolds Tobacco Company, E. A. Darr, President. Stephano Brothers, Inc., C. S. Stephano, D'Sc., Director of Research. Tobacco Associates, Inc., (an organization of flue-cured tobacco growers), J. B. Hutson, President. United States Tobacco Company, J. W. Peterson, President. Burley Tobacco Growers Cooperative Association-summary of operations, 1940 crop through 1975 crop Principal owed (1974 through 1975 crops). Accrued interest and collateral fees (1974 through 1975 crops) – Total owed to CCC (1974 through 1975 crops) – Summary of inventory: Million green pounds received (1940-75 crops). Current inventory million green pounds (1974-75 crop)--Value of inventory at selling price Mar. 31, 1977--- $25, 532, 000 $3, 006, 000 $28, 538, 000 1, 615.9 1,590. 5 25.4 $34, 504,000. 00 Senator FORD. I want to ask you a question or two. You come to us today-I guess I can use this term-wearing many hats in the tobacco industry, and you have a very illustrative career as it relates to the total spectrum, and I'm interested, as I know you are, in the Advisory Committee on Trade Negotiations through Bob Strauss. Could you comment for the record on the export of tobacco and its balance of payments and how that has been affected? Mr. CLAY. Well, as I've pointed out in the meetings that we have held, Senator, in APAC, the tobacco itself is one of the few commodities that makes a favorable trade balance through our trade negotiations. Bob Miller can back me up on this, but I think that probably almost over $1.5 billion net trade balance we contribute to a favorable trade balance in our total end of the year figure. In burley alone, we have now reached over 100 million pounds of export of burley tobacco, which is the largest on record. But counting total products and I think this is very important in the trade associations who are having a meeting tomorrow in Washington in APAC to try to get down to some finality on the bottom line in whether we can reach a trade agreement-but Bob Strauss has made a statement at the beginning and I think he will stick with it, that agriculture is not going to come out the net loser in these trade negotiations because agriculture is one of the commodities in this country that has contributed to a favorable trade balance and tobacco is one of those commodities contributing about $1.5 billion. Senator FORD. I think that's very interesting and we show about $1.5 billion net gain as it relates to the sales on our balance of payments, plus a $6 billion annual income to local, State and Federal Governments from this one crop. So we're talking about not only favorable import/export operations, but a very large contributor to the well-being of communities, States and the Federal Government. Mr. CLAY. About five to six times what tobacco growers receive from their efforts the Federal Government is getting about six times that. Senator FORD. The statement was made this morning quite ironically that the tobacco pays so much into the Federal Government that it gives Joe Califano the opportunity to fight the very crop that pays his large bundle of taxes. From the warehouse area-of course, we all know here that farmers bring their crop to market for auction in the warehouses. Some people are not familiar with tobacco. They don't understand it and that's part of our problem in trying to explain the situation to other Members of the Congress. You state that there are over 200 auction warehouses in Kentucky. Mr. CLAY. In Kentucky, yes. Senator FORD. How many markets are there in Kentucky, including Lexington here? Mr. CLAY. I believe in Kentucky we have about 18 markets at the present time. Of course, some of those markets, like Lexington, have five sets of buyers; mainly three sets of buyers; and I think there are something like 18. Senator FORD. I understood there were about 30. Mr. CLAY. There are 30 markets; yes. I'm sorry. Senator FORD. I didn't want 18 in the record when we had 30, and if it was 18 I wanted to leave it that way; but if it was 30 I wanted to change it. How many people are employed in the warehouse business in Kentucky? You have your minimums and maximums I'm sure. Mr. CLAY. Senator, I don't know. Of course, a lot of us-our season is about 3 months long, you might say, and the various markets-actually from the warehouse standpoint, I'm just judging from my own operation in size, I would have to say that out of the 30 markets you would have at least 50,000 people employed one way or another connected with those operations. Senator FORD. I don't believe I have any other question. You have covered many of my questions in your statement. Mr. CLAY. I have a little pamphlet here that I would like to offer into the record. I only have one. I can get more. This is entitled "There is No Tobacco Subsidy." This is put out by the Tobacco Institute and if the committee does not have that I would like to offer it. Senator FORD. We will include that pamphlet in the record. [The pamphlet follows:] THERE IS NO TOBACCO SUBSIDY! Countless tobacco critics have diagnosed "schizophrenia" in our federal government which, in one department scolds smokers and in another helps farmers who grow the leaf. End the "tobacco sunbsidy," the argument goes, and the image of the split personality will dissolve. In fact, there is no tobacco subsidy. Yes, taxpayers' money is used to guarantee farmers a minimum price for their tobacco crops. And their corn crops and their rice crops and their wheat and their peanuts, and their cotton. Thirteen different commodities, altogether. (See table.) No, the money isn't a gift. It's a loan. Repaid with interest. To be eligible a tobacco farmer must guarantee to limit his tobacco production. How does the program work? What does it really cost? What is its effect in terms of the smoking and health controversy ? Nearly a half-century ago, the Great Depression was more than a business calamity, a stock market crash and an unemployment epidemic. Consumer purchasing power was low. Agricultural prices would not sustain farm families. Permanent federal government "programs" to stablize many aspects of the national economy, including agriculture, emerged from the Franklin Roosevelt administration and the Congress. Tobacco was among the leading farm commodities subjected to price stabilization and production control legislation. Tobacco is cultivated today on some 400,000 American farms. Among major crops, its dollar yield per acre is highest. It is characteristically grown on a plot of land so small that no other crop on the same plot can support a family. Traditionally, tobacco is sold at warehouse auctions after being graded for type and quality by government-employed inspectors. The rapid "chant" of the auctioneer records bids and invites higher ones as buyers from tobacco products and leaf export companies signal their interest. (U.S. tobacco products manufacturing companies purchase all their leaf supplies; none actually grows tobacco.) If leaf offered by a farmer is unsold at a government-pegged minimum price, and if the farmer has not exceeded his government-set production quota, he receives instead a government loan equal to the minimum price. His tobacco is taken as collateral by a cooperative funded by the government. Tobacco is among the most imperishable of farm crops. It can be and is stored, sometimes for many years, until it can be sold under more favorable commercial market conditions. Setting crop quotas in advance of each growing season is an important and sophisticated activity of the U.S. Department of Agriculture. Among the considerations are weather and demand forecasts, as well as inventory factors and the outlook for quality and yield. For 44 years beginning in 1933, stabilization of the tobacco farm economy has been a public policy objective inthe U.S. But at what cost? In those 44 years, the arithmetic comes out this way: Loans advanced to farmers, minus interest paid on the loans, minus sales of the tobacco collateral equals a net loss of $52 million to the taxpayers. That is twelve hundredths of one percent of the cost of all farm commodity price support operations. In a fair appraisal, one must add to this the government's annual administrative costs-for example, $5.6 million in 1977 for tobacco- chiefly for inspection and market news services. This annual expense varies downward, of course, for earlier, pre-inflation years. $52 million, plus administrative expenses, in 44 years. During those 44 years, purchases of tobacco products paid the U.S. Treasury more than $68 billion in excises such as the current federal tax of eight cents on each package of cigarettes. They provided state governments with an additional $46 billion. So there is no tobacco "subsidy." Considering then the price stabilizationproduction control program of the government (to give it its lengthy but proper label), what are its implications for the nation's health? Critics of the program see it as helping to make tobacco products more easily and widely available on the consumer market. In their opinion, tobacco is a detriment to the health of Americans, and therefore the program is, too. But these critics appear to ignore the essential facts: 1. The program is intended to and does keep tobacco leaf prices higher than they would be without it. 2. The program is intended to and does keep tobacco supplies lower than they would be without it. If the Congress were to repeal the program, as these critics have suggested, considerably increased acreage could be devoted to tobacco farming. The restrictive quotas would be gone. They would be a larger tobacco supply entering the commercial market. Senator Form I want to thank porn again for saling to the bearing because I think it's very important for the Cogress to know the im portance of the soo Mr. Cher. We have beari and I have beard the statement by the press which in time that this si desid hearing Well Senator Kennely bell his hearing on all health related and making as i relates to enormie well-being. So I think with the beam have today and tomorrow we might be in a positive to bilince the testimony so at least we will have a bearing and an ecul star of the testimony when this legislation comes-abi no doule it will in the next session of Congress. Senator Form. Think you very much. I introduced two of the staf members this morning and I missed two others. Mary MaAnlife is bere representing the commitee sai She's a Louisville native and. Mary, will you stand up and let these people see you!? And the young lady who is doing all the work bere in front of us. I don't know how she does it, but she is Nancy Gibson. Steve Halloway is the other individual who is here from saf and he's the fellow smoking the pipe with the whiskers. He is from Wisconsin. The next pazel will be the tobacco dealers: T. A. Norre, president. Burley Leaf Dealers Association; and Alex Parker, Parker Istacco Co.. Marysville. Ky. STATEMENT OF T. A. NORVELL PRESIDENT, BURLEY LEAF DEALERS ASSOCIATION, LEXINGTON, KY. Mr. NORVELL. Senator. I am Tom Norvell. I am president of the Burley Leaf Tobacco Dealers Association. I am here representing the 21 leaf tobacco dealer companies that are members of the Burley Leaf Tobacco Dealers Association. |