NITROGEN DISTRIBUTION PATTERN

We are attempting to market our nitrogen production in that general area which we feel we should logically serve from the viewpoint of freight rates and conservation of rolling stock. This plan of distribution simulates that designed by the Office of Defense Transportation during the war years to eliminate cross-hauls, and to otherwise utilize transportation facilities to the maximum extent. In other words, we feel that it is only consistent with sound business principles to direct our nitrogen production into that area which we can most economically serve under the highly competitive conditions which have long since characterized the fertilizer industry.

Operating under the aforementioned plan of distribution, the major portion of our nitrogen production is being marketed in the following States: Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, Tennessee, and Texas.

The ultimate destination to which the nitrogen may be routed in the above States, or the final form which it may assume, are matters controlled by our customers. The principles of fair and equitable distribution among our many customers and over the area we serve, however, has always been foremost in mind.

Your attention is invited to exhibit B of the statement in your hands which portrays the progressive increase in the total amount of nitrogen by years which we have routed into agriculture.

On studying the history of our operations, I believe you will agree that we have even exceeded the expressed wishes of the Government that we mobilize all facilities as quickly as possible to alleviate the existing shortage of agricultural nitrogen.

As reflected in the graph, Mr. Chairman, we are currently all-out for agriculture.

(The exhibits accompanying Mr. Reed's statement appear on pp. 118-119.)

Mr. REED. If you will notice in 1946-47, about 30 percent, or 29.67 percent of our total production went into industry; in 1947-48, 2.1 percent of our total production went into industry; in 1948-49, about 0.71 percent, we anticipate, will go into industry.

Mr. ABERNETHY. What percentage do you estimate of the 1949–50 production will go into industry?

Mr. REED. Practically all of it.

Mr. ABERNETHY. Practically all of it will go to agriculture?
Mr. REED. I mean will go to agriculture; yes.

Mr. ABERNETHY. You people down there have taken the position that the farmer is a pretty good fellow to do business with and you are trying to trade with him, are you not?

Mr. REED. That is right, sir.

Mr. ABERNETHY. Mr. Reed, Mr. Washburn directed a portion of his testimony this morning to something which I think has heretofore affected the delivery of nitrogen to your trade. That is, that the exports which you were called on to make have been ordered cut at a time when most needed by our farmers.

Did you people not have an experience like that about a year or more ago?

Mr. REED. I believe we did. However, they changed before much of that had been shipped, as I recollect. They changed the time. We were inconvenienced, of course, because the demand was not so great, and in the territory we serve, just a few tons amounts to a good deal.

Mr. ABERNETHY. Are you now inconvenienced by the untimely requisition of exports?

Mr. REED. No, sir. We are receiving ammonia back from Govern

ment now.

Mr. ABERNETHY. I understand you are receiving a supply of ammonia, but at the same time you are diverting some of your own ammonia or ammonia nitrate to the export program.

Mr. REED. We did last year.

ACTUAL AND PROJECTED DISTRIBUTION OF NITROGEN PRODUCTION
BETWEEN AGRICULTURAL AND OTHER CONSUMERS
LION OIL COMPANY, ELDORADO, ARK.

Mr. ABERNETHY. But none this year?

Mr. REED. A good portion of last year. I think some of it was shipped this year. I mean the fertilizer year.

Mr. ABERNETHY. You are not being inconvenienced now by that program?

Mr. REED. I do not believe we are at this time.
Mr. ABERNETHY. Do you have any questions?
Mr. COTTON. No.

Mr. ABERNETHY. Mr. Heimburger?

Mr. HEIMBURGER. I want to ask you the same question I have asked two or three of the other gentlemen representing specific companies. If you can do so without embarrassment, I would like for you to tell us which of the States in your area you have listed here receive the larger shipments of fertilizer materials from you and which receives the smaller.

Suppose we do this: I do not want to get into your trade secrets, but suppose we divide these nine States into those which receive heavy. medium, and light shipments from you.

Mr. REED. Well, the largest percentage of our nitrogen went into Mississippi.

Mr. ABERNETHY. That is the reason I am here.

Mr. REED. I am sorry Mr. Poage is not here because, at the risk of the wrath of my boss, I must tell him that quite a percentage of our production went into his State. He made the statement this morning that we would not ship anything into his area. Of course, the destinations of our material is controlled by our customers, but I am sure some material goes into his immediate territory.

Mr. HEIMBURGER. How closely could you catalog those for us, the coverage in these different States?

Mr. REED. Mr. Chairman, I could make available to you-I would prefer not to make those percentages public-but I could make that information available to you in a tonnage basis for your information.

Mr. HEIMBURGER. I am trying to work out something we can put on the record that will not embarass you. Could we do it this way: Let us state a hypothetical case. Could we divide these nine States into three categories, those which receive heavy shipments from you, moderate shipments, and light shipments? Would that kind of information be all right for the record?

Mr. REED. If it is any particular value to you, I can give you percentages of our total production in each one of these States. Mr. HEIMBURGER. Is that not what you said you would prefer not to put in the record?

Mr. REED. I would prefer not to, but if it will be of help to you, I will do it.

Mr. ABERNATHY. We will not insist on it.

Mr. REED. If you will ask the question again, I will see if I can answer it.

Mr. HEIMBURGER. If it will not embarass you, can you classify these nine States into, say, three broad types: those which receive heavy shipments from you, those which receive moderate shipments, and those which receive relatively light shipments.

Mr. REED. Outside of Mississippi, there was very little difference in the percentage.

Mr. ABERNETHY. Would you say the Mississippi Delta?
Mr. REED. A lot of our material goes all over the State.

Mr. ABERNETHY. You have been down in that Delta, have you not? Mr. REED. Yes, sir. Outside of Mississippi and Tennessee and Oklahoma, there is very little difference in the percentages of our total production that went into each of the States.

Mr. HEIMBURGER. And those three were heavier?

Mr. REED. NO; Tennessee and Oklahoma were lighter.

Mr. HEIMBURGER. So then if you did group them broadly, you would have Mississippi in the heaviest category, Tennessee and Oklahoma in the lightest category, and all the other six right in between, or about the same?

Mr. REED. That is about right.

Mr. ABERNETHY. What does ammonium nitrate deliver for at your plant in El Dorado?

Mr. REED. We do not make ammonium nitrate at El Dorado. It delivers at $59 a ton.

Mr. ABERNETHY. What is the usual mark-up on it?

Mr. REED. We do not sell any to dealers, or to the farmer. My understanding is from $5 to $8 a ton.

Mr. ABERNETHY. And the freight would run about how much on an average?

Mr. REED. I would say $5 or $6 a ton. I do not know what it is, but I think that would be it.

Mr. ABERNETHY. You do not happen to know where this $115 nitrate comes from they are selling down at Memphis, do you?

Mr. REED. No, sir; I do not.

Mr. ABERNETHY. After these hearings, I wish you would come by and look at this and see if you know the gentleman.

Mr. REED. I think I saw that ad.

Mr. ABERNETHY. Where does he get that nitrate, do you know? Mr. REED. I have no idea.

Mr. ABERNETHY. There is none manufactured around Memphis, is there?

Mr. REED. No, sir.

Mr. ABERNETHY. Do you have any questions?
Mr. COTTON. Do you sell only to the processor?

We ap

Mr. REED. Yes, sir; only to the manufacturer of fertilizers. Mr. ABERNETHY. We thank you very much, Mr. Reed. preciate your coming here and giving us your statement.

STATEMENT OF THOMAS S. NICHOLS, PRESIDENT, MATHIESON CHEMICAL CORP.

Mr. NICHOLS. Mr. Chairman, if you will permit, we are hardly in the fertilizer business yet. We are just getting in the ammonia business. We are new in the field. We are becoming a factor by acquisition. The acquisition of two companies is concerned, one in Baltimore, the Standard Wholesale Lime & Phosphate Works, and another company with a particularly large operation at Houston, Southern Acid & Sulphur.

Those acquisitions will not be final until April 1, so I was here yesterday as an observer. I came down more to listen. I do not think we can contribute very much to your hearing, but as an observer yesterday, after listening yesterday to what I deemed to be a very vicious attack upon the fertilizer industry, I am wondering whether we are wise in getting in it or not, but be that as it may, if you will permit, sir, I would like our representatives here, Mr. Nevins, to be a witness at the hearing.

Mr. ABERNETHY. Is he present now?

Mr. NICHOLS. He is present.

Mr. ABERNETHY. We would be glad to have him. (Additional statement of T. S. Nichols :)

Hon. THOMAS G. ABERNETHY,

Chairman, Subcommittee on Fertilizer,

MARCH 16, 1949.

House of Representatives, Washington, D. C.

DEAR SIR: In order to develop further a point made in the course of our testimony today, I should like to say that the plant we propose to erect in the Houston area is an anhydrous ammonia plant with daily rated capacity of 200 tons.