GENERAL FARM PROGRAM 



1047 



Commodity Credit Corporation which aided the industry materially for several 

 years with support-price programs on tung oil and tung nuts. It should be pointed 

 out also in this connection that during the 3 years that the Commodity Credit 

 Corporation supported the industry with a support price, in only 1 year was the 

 industry forced to avail itself of the support price offered by the Commodity 

 Credit. In the other years the market price on tung oil averaged well above the 

 support level set by the Commodity Credit Corporation. 



During the 1 year (1948) that tung oil was tendered, the cost to the CCC was 

 only $365,000, which was a very minor expenditure for the protection of invest- 

 ments amounting to millions of dollars. These investments, in many cases, 

 represented the life savings of a large number of people and also represented the 

 means of employment to approximately 20,000 to 25,000 people. 



This employment is diversified in its scope since it includes the various phases 

 of tung production, from the farm to the milling process that produces tung oil. 

 This oil is then used in a wide variety of manufactured products. 



We have no criticism of the Government's support program for flax and linseed 

 oil, but we would like to state that during the support program of flax and linseed 

 oil, tung oil's greatest competitor, the United States Government in the last 2 

 years, has purchased 20,500,000 bushels of flax, at a cost of $123,000,000, and 

 205,000,000 pounds of linseed oil, at a cost of $55,350,000, or a total expenditure 

 to date in excess of $178,000,000 for the support of flax and linseed oil, and we do 

 feel that we are fairly entitled to equal consideration. 



At this time we wish to point out that tung oil is the only domestically produced 

 drying oil that does not enjoy a support price. It should also be noted that while 

 other drying oils have an import tariff protection, tung oil is on the free list. 



Since the middle of 1948 when the Commodity Credit's support program on the 

 1947 crop expired, production and marketing conditions, not only in the industry 

 itself, but in many of the tung-oil-consuming industries as well, became such, 

 because of general economic conditions, as to bring about a situation in the Ameri- 

 can, tung industry so unstable as to threaten the future of tung production in 

 America. About that time the market price of tung oil dropped to around the 

 20-cent level, while the level of production costs continued a steady climb upward. 



Coupled with a declining price on oil and rising production costs, was -a severe 

 shortage in the supply of several of the essential fertilizer materials needed by the 

 tung grower to increase his per-acre production in an effort to break even finan- 

 cially. As a result of these conditions that exist in the industry today, the 

 American tung grower is sustaining severe losses. Unless something is done to 

 support the industry upon a basis upon which the grower can meet his costs of 

 production and make a reasonable profit, much of the acreage now planted to 

 tung will go out of existence in the next year or two. The industry today faces 

 conditions so severe that if these conditions are permitted to continue unchecked 

 for much longer, large numbers of growers will be forced to abandon their projects. 



We submit herewith under the headings of Exhibit A and Exhibit B sched- 

 ules showing actual production costs as they pertain to the industry today. 

 To summarize briefly what these cost data mean, we submit that the presently 

 prevailing market price of tung oil is 19 cents per pound f. o. b. southern mills. 

 This price reflects a price to the grower for his nuts of $45.64 per ton at the mill 

 after deducting the customary milling fee. These price figures are based upon 

 tung nuts of 18 percent oil content field run with a mill recovery of 85 percent 

 of laboratory analysis. A comparison of the price ($45.64) which the grower's 

 nuts are worth to him at the mill with the actual cost of producing these nuts 

 today, as set forth in exhibit A and exhibit B, will readily reveal the severe loss 

 which the tung grower is suffering today. 



We herewith submit a brief table summarizing the index of prices for the j'ears 

 1937 through 1948. 



[Index of prices, 1937-41=100] 



1 The Fats and Oils Situation, Bureau of Agricultural Economics, U. S. Department of Agriculture, 

 Nov.-Dec. 1948-Jan. 1949. 



Source: All other items, Agricultural Statistics, 1948. 



