Storage

uti,PPLEMENTAL APPROPRIATIONS, FOR THE

DEPARTMENT OF AGRICULTURE, 1963

.A? 10/2.•

A3 6/ 963-3

11

KSU LIBRARIES 

HEARINGS

BEFORE THE

COMMITTEE ON APPROPRIATIONS

UNITED STATES SENATE

EIGHTY-EIGHTH CONGRESS

FIRST SESSION

ON

H.J. Res. 284

MAKING SUPPLEMENTAL APPROPRIATIONS FOR THE

DEPARTMENT OF AGRICULTURE FOR THE FISCAL YEAR

ENDING JUNE 30, 1963, AND FOR OTHER PURPOSES

Printed for the use of the Committee on Appropriations

SUPPLEMENTAL APPROPRIATIONS, FOR THE

DEPARTMENT OF AGRICULTURE, 1963

HEARINGS

BEFORE THE

COMMITTEE ON APPROPRIATIONS

-UNITED STATES SENATE

EIGHTY-EIGHTH CONGRESS

FIRST SESSION

ON

H.J. Res. 284

MAKING SUPPLEMENTAL APPROPRIATIONS FOR THE

DEPARTMENT OF AGRICULTURE FOR THE FISCAL YEAR

ENDING JUNE 30, 1963, AND FOR OTHER PURPOSES

Printed for the use of the Committee on Appropriations

U.S. GOVERNMENT PRINTING OFFICE

95217 WASHINGTON : 1963
COMMITTEE ON APPROPRIATIONS

CARL HAYDEN, Arizona, Chairman

RICHARD B. RUSSELL, Georgia

ALLEN J. ELLENDER, Louisiana

LISTER HILL, Alabama

JOHN L. McCLELLAN, Arkansas

A. WILLIS ROBERTSON, Virginia

WARREN G. MAGNUSON, Washington

SPESSARD L. HOLLAND, Florida

JOHN STENNIS, Mississippi

JOHN 0. PASTORE, Rhode Island

ESTES KEFAUVER, Tennessee

A. S. MIKE MONRONEY, Oklahoma

ALAN BIBLE, Nevada

ROBERT C. BYRD, West Virginia

GALE W. McGEE, Wyoming

HUBERT R. HUMPHREY, Minnesota

MIKE MANSFIELD, Montana

E. L. BARTLETT, Alaska

LEVERETT SALTONSTALL, Massachusetts

MILTON R. YOUNG, North Dakota

KARL E. MUNDT, South Dakota

MARGARET CHASE SMITH, Maine

THOMAS H. KUCHEL, California

ROMAN L. HRUSKA, Nebraska

GORDON ALLOTT, Colorado

NORRIS COTTON, New Hampshire

CLIFFORD P. CASE, New Jersey

EVERARD H. SMITH, Clerk

THOMAS J. Scorr, Assistant Clerk
DEPARTMENT OF AGRICULTURE

(SUPPLEMENTAL)

THURSDAY, FEBRUARY 28, 1963

U.S. SENATE,

COMMITTEE ON APPROPRIATIONS,

Washington, D.C.

The committee met at 10 a.m., pursuant to call, in room 1223,

New Senate Office Building, Hon. Carl Hayden, chairman, presiding.

Present: Chairman Hayden, Senators Ellender, Robertson, Holland,

Stennis, Pastore, Kefauver, Monroney, Bible, Byrd of West Virginia,

McGee, Young, Allott, and Case.

DEPARTMENT OF AGRICULTURE

SALE OF SURPLUS AGRICULTURAL COMMODITIES FOR FOREIGN

CURRENCIES (PUBLIC LAW 480)

STATEMENT OF HON. ORVILLE L. FREEMAN, SECRETARY OF

AGRICULTURE ACCOMPANIED BY ROBERT P. BEACH, DEPUTY

ADMINISTRATOR, MANAGEMENT, AGRICULTURAL STABILIZATION AND CONSERVATION SERVICE, AND CHARLES I. GRANT,

DIRECTOR OF FINANCE AND BUDGET OFFICER, DEPARTMENT

OF AGRICULTURE.

SUPPLEMENTAL REQUEST FROM AGRICULTURE

Chairman HAYDEN. The committee will consider the supplemental

budget request carried in House Document 64. This estimate

requests an additional appropriation of $508,172,000 for fiscal 1963

under the head "Public Law 480" to restore the capital structure of

the Commodity Credit Corporation.

A budget amendment revising the estimate for 1964 by a corresponding amount was also included in this document.

JUSTIFICATION

The justification of the estimate will be placed in the record at this

point.

(The justification referred to follows:)
2 SUPPLEMENTAL APPROPRIATIONS—AGRICULTURE

DEPARTMENT OF AGRICULTURE—FOREIGN ASSISTANCE PROGRAMS

(H. Doc. 64)

Justification for supplemental estimate, fiscal year 1963, for "Public Law 480:

Sale of Surplus Agricultural Commodities for Foreign Currencies"

Project Appropriation

to date, 1963

Supplemental

estimate, 1963

Revised total,

1963

Sale of surplus agricultural commodities for foreign

currencies $1,080, 632, 000 +$508, 172, 000 $1, 588, 804, 000

This supplemental estimate is required to enable the Commodity Credit Cor"

poration to carry out its mandatory price support programs in fiscal year 1963.

Congressional action on the 1962 and 1963 appropriations placed financing of

the foreign assistance programs on a current or pay-as-you-go basis, in order to

relieve the Corporation of the burden of financing these programs from its borrowing authority. This has the effect of maintaining the Corporation's capacity to

deal effectively with its major responsibility of domestic price support.

The 1963 appropriation for foreign assistance programs provided $610 million

less for the foreign assistance programs than the budget request. Three hundred

and thirty-four million dollars of the amount appropriated for Public Law 480,

title I, in 1963 was used for unrecovered 1961 and 1962 costs and it is expected that

$508,172,000 will be needed to meet 1963 costs as estimated in the 1964 budget.

Approval of this estimate will make possible the reduction of the fiscal year 1964

budget request for Public Law 480, title I by a like amount, thus having no effect

on the total amount of appropriations for the 2 years. An amendment to the

1964 budget has been submitted to reflect this reduction.

At the time the 1964 budget was prepared, it appeared that the Commodity

Credit Corporation borrowing authority was sufficient to carry out authorized

programs. Since then a combination of circumstances which could not be anticipated has adversely affected the timing of the use of borrowing authority resulting

in unusually heavy demands on the borrowing authority in December, January,

and to date, in February. These include:

(a) Loans on the 1962 crop-corn are being made earlier this year than expected.

(b) Receipts from feed grain sales are coming in slower than anticipated.

• (c) Cotton placed under price-support loans is far exceeding the quantity anticipated, caused primarily by uncertainties in the cotton trade concerning future

prices next year under proposed legislation.

(d) Continued heavy demands on the Corporation's financial resources for

dairy products purchases, export payments, Public Law 480 costs and acreage

diversion payments.

These developments have caused the available CCC borrowing power to decrease to $161.7 million as of February 15. It is now expected that borrowing

authority will be exhausted before the end of February unless supplemental funds

are made available.

Approval of this request will make possible the continuance of essential CCC

operations consistent with current estimates and at the same time avoid the

necessity for appropriating this amount in 1964. This results from the change

in timing of the use of CCC borrowing authority. It is believed that the total

quantity of corn placed under loan will be in line with the budget estimate, that

receipts from feed grain sales as estimated in the budget will be received later

this year or early next fiscal year, and that the larger quantity of cotton placed

under loan will be offset next fiscal year by sales and repayments.

The following tables show (1) a comparison of the transactions for the sale of

surplus agricultural commodities for foreign currencies under the 1963 appropriation act with the proposed supplemental, and (2) the current status of the Corporation's borrowing authority with and without the proposed supplemental

appropriation from June 30, 1962, through June 30, 1963.

Following is a comparison of fiscal year 1963 transactions under Public Law

480: Sale of surplus agricultural commodities for foreign currencies, included in

the 1963 appropriation act with the proposed supplemental appropriation:
Commodity or item Unit of measure

1963 appropriation act Supplemental estimate, 1963 Revised total, 1963

Quantity Value Quantity Value Quantity Value

Arheat Bushel 320, 000, 000 $846, 000,000 -16,000,000 -$10, 600,000 304, 000, 000 $835, 400,000 Dorn do 15, 000,000 34, 650, 000 +5, 000,000 +4,210,000 20, 000,000 38, 860, 000 3arley do 5,000, 000 6, 513,000 +3,500,000 +3, 542,000 8, 500,000 10, 055, 000 leans, dry edible Hundredweight 100,000 500,000 +205,000 100,000 705,000 3orghums, grain Bushel 5, 000 000 7, 660, 000 -1,060,000 5, 000, 000 6, 600, 000 lice, rough Hundredweight 12, 100, 000 61, 200, 000 +1,500,000 +6,800,000 13, 600, 000 68, 000, 000 Dotton, upland Bale 700, 000 119, 000, 000 +550, 000 +84, 125, 000 1,250, 000 203, 125, 000 Dotton, extra long staple do 10, 000 3, 000,000 -5,000 -1,475, 000 5,000 1, 525,000 Pobacco Pound 35, 000, 000 24, 850, 000 -12,300,000 -9, 187, 000 22, 700,000 15, 663, 000 Vlilk, nonfat dry do 70, 000.000 11, 480, 000 -30,000,000 -5, 522,000 40, 000, 000 5, 958, 000 Jegetable oil do 625, 000, 000 75, 000, 000 +350, 000, 000 +61, 500, 000 975, 000, 000 136, 500, 000 3utter do +30,000, 000 +17, 762, 000 30, 000, 000 17, 762, 000 )ther 14, 747, 000 +8,653,000 

,

23, 400, 000

SubtotaL 1, 204, 600, 000 +158,953,000 1, 363, 553, 000 )cean transportation 85,400, 000 +5, 047, 000 90,447, 000

Total expenses of shipments 1, 290, 000, 000 +164, 000, 000 1, 454, 000, 000 nterest expense on unrecovered balance_ 10, 632,000 +10,168,035 20, 800, 035

Total expenses 

lecoveries from sales of currencies, rental receipts and loan repayments (deduct) 1,300, 632, 000 -170,000,000 +174, 168, 035 -92,500,000 1, 474, 800, 035 -262,500,000 Mange in currencies to be sold for dollars in future

years -50,000,000 92, 500, 000 42, 500,000

Net expenses-current year costs recoverable

from appropriation 1, 080, 632, 000 +174, 168,035 1, 254, 800, 035
/

Commodity or item

1963 appropriation act Supplemental estimate, 1963 Revised total, 1963

Quantity Value Quantity Value Quantity Value

Unrecovered prior years' costs included in 1963 and 1964 budget estimates, respectively:

1961 $179,703,017 $179,703,017

1962 32,664,983 +$121,635,965 154,300,948

Total estimates, 1961, 1962, and 1963 costs 1,293,000,000 +295,804,000 1, 588,804,000

Appropriation reduction —212,368,000 +212,368,000 

Appropriation (adjusted) 1, 080,632,000 +508,172,000 1, 588,804,000

F4=,

SUPPLEMENTAL APPROPRIATIONS-AGRICULTURE 
SUPPLEMENTAL APPROPRIATIONS-AGRICULTURE 5

Commodity Credit Corporation-Estimated status of $14.5 billion borrowing

authority-June 30, 1962, through June 30, 1963

[Millions of dollars]

Months

Without proposed supplemental

Proposed

supplemental

Balance

available

with

supplemental

Regular

activities

Special

activities

Total

Balance

available

or deficit (-)

June 1962 (actual) 12, 727 1, 165 13, 892 608 608

FISCAL VEAL 1963

July 1962 (actual) 11, 852 1, 122 12, 974 1, 526 1, 526

August (actual) 10,799 1,176 11,975 2, 525 2,525

September (actual) 11,234 1,192 12, 426 2, 074 2, 074 October (actual) 12, 066 1, 141 13,207 1,293 1, 293

November (actual) 12, 730 691 13, 421 1,079 1, 079 December (actual) 13,322 675 13, 997 503 503

January 1963 (preliminary) 13, 703 587 14,290 210 210

February 13, 988 746 14, 734 -234 508 274

March 13, 886 808 14,694 -194 508 314

April 13,765 957 14, 722 -222 508 286

May 13, 559 1, 145 14, 704 -204 508 304

June 13, 313 1,432 14, 745 -245 508 263

PREPARED STATEMENT

Chairman HAYDEN. The Honorable Orville L. Freeman, Secretary

of Agriculture, is appearing before the committee to support the

supplemental request.

I notice you have a very brief statement, Mr. Secretary, and you

may proceed with it.

Secretary FREEMAN. Thank you very much, Mr. Chairman, and

members of the committee.

I am here today not to request an increase in appropriations, but

rather to ask for a shift in appropriations from fiscal year 1964 to

fiscal year 1963.

REIMBURSEMENT TO CCC UNDER TITLE I, PUBLIC LAW 480

Your authorization of a supplemental appropriation of $508,172,000

to reimburse the CCC for unrecovered 1963 costs for title I, Public

Law 480, will be accompanied by a reduction in our budget request

for 1964 by that identical amount.

Congress has given the CCC the responsibility for financing all

Government price support and commodity purchase programs through

the use of its own funds and a borrowing authorization limited to

$14.5 billion.

Because the nature of CCC operations and expenditures are to a

considerable extent unpredictable-due to factors such as weather,

insect damage, domestic and import demand, trade psychology, and

other intangibles-Congress has seen fit to authorize such borrowing

and to make up for realized losses by later appropriations for restoration of capital impairment.
6 SUPPLEMENTAL APPROPRIATIONS-AGRICULTURE

REASONS FOR PRESENT SITUATION

There are two circumstances that have brought about the present

situation in which the CCC, required by law to carry out price support

programs by purchases or loans for such commodities as wheat,

cotton, dairy products, and feed grains, is faced with resources now

at the perilously low level of $127.6 million.

The first of these circumstances is the fact that the Appropriation

Act for 1963 as approved by Congress last year did not include $831.6

million for reimbursement for past and estimated 1963 expenditures

as requested in the 1963 budget.

The second is the combination of unpredictable factors that has

resulted in: (1) heavier loans on cotton than expected, largely because

mills have postponed buying in anticipation of lower prices; (2) heavier

loans on corn than expected, largely because unusually favorable

weather produced corn of such high quality that larger amounts went

under loan earlier than anticipated; (3) lower sales from CCC stocks

than were estimated a year ago.

FUNDS NECESSARY FOR AUTHORIZED PROGRAMS

Action is therefore necessary at this time to provide the CCC with

enough operating capital to carry out the price support programs that

are mandatory under law, along with its responsibilities for Public

Law 480 operations, during the remainder of fiscal 1963. This action

will have no effect on the total of the appropriations required for the

2 fiscal years of 1963 and 1964.

Might I say, Mr. Chairman, that the Secretary of Agriculture finds

himself on the horns of a cruel dilemma. On the one hand, he is mandated by the Congress to do certain things, such as make loans on

cotton and buy butter and do other things, and on the other hand he

is so severely mandated that he cannot spend money he does not have.

And, that means that the dilemma is a very sharp one.

I come here to ask that I may be removed from the horns of that

dilemma, if you please.

Thank you.

CURRENT SUMMARY OF OBLIGATIONS

Chairman HAYDEN. Mr. Secretary, you stated that only $127.6

million of the $14.5 billion authorization remains. Do you have a

current summary of the present obligations against the $14.5 billion

by major categories, such as loans, inventory stocks, and unreimbursed

costs and losses?

Do you have a summary for the record?

Secretary FREEMAN. May I put such a summary in?
SUPPLEMENTAL APPROPRIATIONS—AGRICULTURE 7

(The summary referred to follows:)

COMMODITY CREDIT CORPORATION

Reconciliation of "borrowing power in use" and investment in price-support and

other program activities as of December 31, 1962

[Millions of dollars]

Borrowing power in use:

Borrowings $12,884.0

Obligations to Lending Agencies 1, 113. 3 $13,997. 3

Investment in price-support:

Outstanding Loans 2, 761. 4

Inventories 

Difference 

5, 270.6 1 8,032. 0

5,965. 3

Items reflected in "Borrowing power in use" not in "Investment in price-support":

Program cost Recoverable through appropriations authorized by specific

statutes:

Public Law 480, title I 

National Wool Act of 1954 

Public Law 84-654—CCC grain for waterfowl_ _

Public Law 87-152—CCC grain for wildlife_ __ _

477.

103.

.

.

1

5

2

2

Subtotal 581.0

Restoration of capital impairment:

Realized loss, fiscal year 1961 (Bal. Inv. Revaluation) 2 1,057.0

Realized loss, fiscal year 1962 2, 799.4

Realized loss, fiscal year 1963 1,486.9

Subtotal 3 5, 343. 3

Investment in:

Accounts and notes receivable (23 percent—

barter and exchange contracts) 279. 3

Fixed assets (98 percent—Storage structures

and related equipment) 102.8

Cash and other 83.8

Storage facility and equipment loans 73.8

Subtotal 539. 7

Total investment in items not in price support 6,464. 0

Less: Financing of assets other than by use of borrowing power:

Capital stock 100.0

Accounts payable and trust and deposit liabilities 194. 5

Other 204. 2 498. 7

Net Total $5,965. 3

1 See table I attached.

2 Balance of inventory revaluation.

3 See table II attached.

95217-63-2
AGRICULTURAL STABILIZATION AND CONSERVATION SERVICE-COMMODITY CREDIT CORPORATION

TABLE I.-Quantity, investment value, and net book value of commodities pledged for outstanding loans and commodities in price-support

inventory as of Dec. 31, 1962

[All figures in thousands]

Commodity

Basic commodities:

Corn 

Cotton, Extra Long Staple 

Cotton, Upland 

Peanuts 

Rice 

Tobacco 

Wheat 

Wheat flour 

Bulgur 

Total basic commodities 

Designated nonbasic commodities:

Milk and butterfat:

Butter 

Butter oil 

Cheese 

Ghee 

Milk, dried 

Barley_ 

Grain Sorghum 

Honey 

Oats 

Rye 

Tung oil 

Total designated nonbasic commodities 

Other nonbasic commodities:

Beans, dry edible 

Cottonseed 

Cottonseed oil, refined 

Flaxseed 

Unit of measure

Pledged for loans In inventory Total

Quantity Investment

value

Quantity Investment

value 1

Quantity Investment

value

Bushels 559, 926 $616, 199 1, 044, 325 $1, 213, 494 1, 604. 251 $1, 829, 693

Bales 9 2,384 *16 4,350 25 6,734

do 4,413 705,928 4,689 810,530 9, 102 1, 516, 458

Pounds 241,412 27, 276 37, 957 6,343 279,369 33,619

Hundredweight 4,355 21, 662 94 844 4,449 22, 506

Pounds 657, 079 461, 219 657, 079 461, 219

Bushels 2.58, 961 526, 874 1, 044, 993 2, 034, 726 1. 303,954 2, 561, 600

Pounds 6,000 345 6,000 345

do 14,722 812 14,722 812

2, 361, 542 4, 071, 444 6, 432, 986

do. 350, 791 207,118 350, 791 207,118

do 48, 340 38, 957 48,340 38, 957

do 111,588 41.788 111,588 41,788

do 737 599 737 599

do 662,459 99,112 662,459 99,112

Bushels 35, 768 29. 229 28, 208 24. 276 63,976 53, 505

do 156, 458 176,833 579, 266 616.722 735, 724 793, 555

Pounds 2,855 352 1,045 131 3,900 483

Bushels 32,851 17. 576 15, 352 9, 219 48, 203 26,795

do 4,705 4,322 984 1,002 5,689 5,324

Pounds 138 33 138 33 _ 228,345 1, 038, 924 1, 267, 269

Hundredweight 1,962 13,954 893 5,998 2,855 19,952

Tons (2) 1 (2) 1

Pounds 8,340 1,015 8,340 1,015

Bushels 3, 648 10, 287 3, 648 10, 287

00
Naval stores:

Rosin Pounds 166,410 17, 153 166,410 17,153

Turpentine Gallons 1,730 907 1,730 907

Soybeans Bushels 58,269 130, 134 36,711 87,433 94, 980 217,567

Vegetable oil products Pounds 145,204 26,638 145, 204 26,638

Total other nonbasic commodities 171,529 121,991 293,520

Exchange commodities: Strategic and critical materials 38, 222 38, 222

Total 2,761,416 5, 270, 581 8, 031, 997 Cl

1 Represents acquisition cost plus cost of any packaging or processing performed

after acquisition,

2 Less than 500. *t1
10 SUPPLEMENTAL APPROPRIATIONS-AGRICULTURE

TABLE IL-Commodity Credit Corporation-Restoration of capital impairment

[In millions]

Commodity or program

Price support, export, supply and related:

Price support:

Basic:

Corn 

Cornmeal 

Cotton:

Extra long staple 

Upland 

Peanuts 

Peanut butter 

Rice 

Tobacco 

Wheat 

Wheat flour 

Bulgur 

Rolled wheat 

Total basic 

Mandatory nonbasic:

Barley 

Honey 

Milk and butterfat:

Butter (including oil) 

Cheese 

Milk, nonfat dry 

Milk, fluid 

Oats 

Rolled oats 

Rye 

Sorghums, grain 

Tung oil 

Total, mandatory nonbasic 

Other nonbasic:

Almonds 

Beans, dry edible 

Cottonseed products 

Flaxseed and linseed oil 

Naval stores:

Rosin 

Turpentine 

Soybeans 

Vegetable oils 

Total, other nonbasic 

Strategic and critical materials

Total, price support 

Commodity export program 

Storage facilities program ,

Supply and foreign purchase program 

Vegetable oils, special program 

Feed grain program 

Wheat stabilization program 

Interest (net) 

Administrative and nonadministrative (net)_

Total, price support, export, supply and

related 

Special milk program 

Total realized losses 

Less: Portion of inventory revaluation received_

Restoration of capital impairment 

Realized loss

Total

Fiscal year

1961

Fiscal year

1962

Fiscal year

1963

(6 months)

$364. 1 $567. 8 $108.9 $1, 040. 8

21.2 9.0 30.2

. 5 1 , g .1 1 . 3

15.3 12.9 11.7 39.9

.6 8.2 2.7 11.5

3.9 2.1 6.0

.7 15.8 4.4 20.9

9,3 1 . 2 9.1

603.1 28.6 33.0 664.7

(2) 101.3 42.8 144. 1

3.4 5.2 8.6

4.5 3.3 7.8

984.3 776.0 223.0 1, 983. 3

13.4 10.0 2.2 25.6

(2) (2)

1.9 80.7 59.5 142.1

.1 50.9 29.8 80.8

2.0 166.8 71.9 240.7

25.9 4.5 30.4

2.6 4.1 2.1 8.8

(2) (2)

1.5 1 . 1 1 , 2 1.2

260.6 127.4 69.8 457.8 (2) 1 . 3 1 . 3

282.1 465.4 239.6 987.1

.5 9.8 9.2 19.5

(2)

(2) (2) (2) Fs))

(2) (2) (2)

.9 3.9 4.8

30.4 16.3 46.7

.5 41.1 29.4 71.0

1.6 1 3. 0 1. 2 1 1. 6

1,268. 5 1, 279. 5 491.8 3, 039. 8

268.1 68.5 336.6

(2) (2) (2)

(2) 1 4.5 .2 1 4. 3

13.9 13.9

803.0 476.3 1, 279. 3

65.1 230.3 295.4

290.7 181.7 472.4

83.6 38.4 122.0

1,268. 5 2, 799. 4 1, 487. 2 5, 555. 1

(2) 1 , 3 1 . 3

1, 268. 5 2, 799. 4 1, 486. 9 5, 554. 8

1 211. 5 1 211. 5

1, 057. 0 2, 799. 4 1, 486. 9 5, 343. 3

1 Denotes gain.

2 Less than $50,000.
SUPPLEMENTAL APPROPRIATIONS—AGRICULTURE 11

Secretary FREEMAN. We have a reconciliation of all the Commodity

Credit Corporation's assets and use of borrowing power, which shows

loans and inventories of about $8 billion, and then the difference

between that and the $14.5 is made up principally of capital impairment for losses which have been incurred, some reaching back

through 1961, not yet reimbursed.

Chairman HAYDEN. You can provide, then, a tabulation showing

the volume of loan and inventory obligations by commodity, and

the amounts involved?

Secretary FREEMAN. Yes, sir.

Chairman HAYDEN. As I recall, the Commodity Credit Corporation

was originally limited in its use as a financing agency. In recent

years it had been authorized to finance the various programs subject

to subsequent reimbursement and appropriation action.

PROGRAMS FINANCED BY CCC BORROWING AUTHORITY

Can you list for the record the various programs now being financed

from the CCC borrowing authorization? At your convenience, will

you do that?

Secretary FREEMAN: Yes, sir.

(The material referred to follows:)

PROGRAMS Now BEING FINANCED BY CCC BORROWING AUTHORITY

Regular activities:

Price support.

Commodity export.

Storage facilities.

Supply and foreign purchase.

Special milk.

Feed grain.

Wheat stabilization.

Operating expenses (administrative, nonadministrative, interest, etc.).

Other special activities (reimbursable programs):

Military housing (barter and exchange).

National Wool Act.

Grain for migratory waterfowl.'

Surplus grain for game birds.

Transfer of long staple cotton from national stockpile for sale by CCC.

Loan to Secretary of Agriculture for conservation purposes.

Foreign assistance: 1

Public Law 480:

• Title I: Sale of surplus agricultural commodities for foreign currencies.

Title II: Emergency famine relief to friendly peoples.

Title IV: Long-term supply contracts.

International Wheat Agreement.

Bartered material for supplemental stockpile.

1 Financed by CCC to the extent that costs exceed appropriations available.

PRIORITY UNDER CURTAILED FUNDS

Chairman HAYDEN. What is the order of priority to be followed

under these legislative authorizations if through lack of funds you had

to curtail or discontinue operations?

Secretary FREEMAN. If we did not have any money, we would

just have to stop. And that would mean that we would stop tomorrow buying butter, taking cotton under loan, taking grain under

loan, and just close the doors.
12 SUPPLEMENTAL APPROPRIATIONS-AGRICULTURE

Senator PASTORE. That is not what the Chairman asked. I think

his point is: What if you do not get it all? What would happen?

Secretary FREEMAN. Our best projection now would be that we

would just get by. We normally expect to have at least a $500 million

operating margin, and consider anything less than that as being

very close, because of some of the fluctuations that are unpredictable.

We are now down to about $100 million, and we are perilously

near the end.

Senator PASTORE. Now, Mr. Secretary, I do not think that is, still,

the question. The question is: In the event that you did not have

enough money to do all these things that are mandated by law to do-,

and the amount of money was not sufficient to do it all, and you only

had part of the money, would you have priorities?

Or, would you then be in a dilemma without priorities?

Secretary FREEMAN. I would be in the same position. This is all

by law.

Senator PASTORE. In other words, there are no priorities. It is a

mandate that you have to meet them all?

Secretary FREEMAN. No, sir, we would have to stop all operations.

I am sorry I am so obtuse in not understanding the question.

CHANGES IN BORROWING AUTHORITY

Chairman HAYDEN. Congress increased the CCC borrowing authorization a number of times. Will you furnish for the record a table

showing the changes in the borrowing authority? You can do that

later.

Secretary FREEMAN. Yes.

(The material referred to follows:)

BORROWING AUTHORITY OF CCC

Borrowing authority of the Commodity Credit Corporation has been increased

by Congress from time to time as the need has arisen. The original capital of

CCC was only $3 million in 1933, and there was no specific borrowing authority.

The act of March 8, 1938, gave CCC its first borrowing authority-$500 millionand this authority has been expanded as the tabulation below shows:

Authorized by act of- Borrowing authority

Mar. 8, 1938 $500,000, 000

Mar. 4, 1939 900,000, 000

Aug. 9, 1940 1, 400,000, 000

July 1, 1941 2, 650,000, 000

July 16, 1943 3, 000,000, 000

Apr. 12, 1945 4, 750,000, 000

June 28, 1950 6, 750,000, 000

Mar. 20, 1954 8, 500,000, 000

Aug. 31, 1954 10, 000,000, 000

Aug. 11, 1955 12, 000,000, 000

Aug. 1, 1956 14, 500,000, 000

CAPITAL STOCK OF CCC

The capital of CCC was established at $3 million in 1933. The act of April 10,

1936, increased the capitalization to $100 million, a level at which it has remained

ever since.

DISPOSITION OF INVENTORY HOLDINGS AND CERTIFICATES

Chairman HAYDEN. The question has been raised as to the possibility of disposition by the Corporation of some of its inventory holdings and certificates to provide funds for additional loans.
SUPPLEMENTAL APPROPRIATIONS—AGRICULTURE 13

What has been done in that regard?

Secretary FREEMAN. We are constantly selling inventory and replacing capital in the process. This is a constant process. And,

as I say, the current amount of loans and inventory is roughly $8

billion which will be reimbursed to the Corporation through loan repayments and sales, or a large part of it, in the normal course of the

Corporation's business.

Chairman HAYDEN. Senator Young, any questions?

Senator YOUNG. Yes, I do have a few.

LIMIT ON BORROWING AUTHORITY

Was not your borrowing authority higher at one time than it is now?

Secretary FREEMAN. No.

Senator YOUNG. What was its limit? $14.5 billion?

Secretary FREEMAN. It was increased, in 1956, from $12 billion to

$14.5 billion, and it has not been increased since.

Senator YOUNG. And, you are nearly up to the $14.5 billion mark?

Secretary FREEMAN. We are within $100 million of this, roughly.

LOANS AND INVENTORIES

Senator YOUNG. What proportion of this is loans on grain?

Secretary FREEMAN. As of December 31, 1962, there was $2,761

million of it represented by outstanding loans as shown by the statement inserted earlier. As of February 22, 1963, loans totaled

$3,502,600,000.

Senator YOUNG. How much in inventories?

Secretary FREEMAN. Total loans and inventories, which are the

property of the Corporation, totaled $8,032 million as of December 31,

1962, and $8,013,800,000 as of February 22, 1963.

Senator YOUNG. You are reimbursed for a large part of this, under

Public Law 480 which is really a foreign aid program. Are these

reimbursements behind schedule?

REIMBURSEMENTS UNDER PUBLIC LAW 480

Secretary FREEMAN. Yes. This is exactly what is behind schedule.

The reimbursements for Public Law 480 for funds expended in the

fiscal year 1963 is what has fallen behind. That is the reason we are

here, and I would repeat that this appropriation, if the committee

and the Senate see fit to act favorably, will decrease the appropriation

we have before this committee for fiscal 1964.

SALES OF CORN

Senator YOUNG. I think some place in your statement you mentioned something about corn, about your sales not having been as

great as you expected.

Secretary FREEMAN. That is correct.

Senator YOUNG. What is the reason for that?

Secretary FREEMAN. We just have not been selling quite as much

corn, because of concern for cattle and hog prices.

Senator YOUNG. You feel if you sold more corn, prices would be

affected adversely?
14 SUPPLEMENTAL APPROPRIATIONS AGRICULTURE

Secretary FREEMAN. Yes, sir. We have been selling more corn in

recent weeks, but we are somewhat behind where we previously were

a year ago. As a matter of fact, in terms of dollars and cents, corn

sales are $205 million short of what they were a year ago.

Senator YOUNG. How do your corn and wheat stocks compare with

a year ago, in inventories?

Secretary FREEMAN. Oh, in inventory? Down 81.8 million bushels

in wheat; down 151.7 million bushels in corn.

SUPPLY MANAGEMENT PROGRAM RESULTS

Secretary FREEMAN. And may I say that we have on hand today

in the Commodity Credit Corporation 1,077 million bushels less than

was the case in 1961 before the supply management programs that

have been in effect went into effect.

This includes both feed grains and wheat. Over a billion bushels

less. The CCC budget, this fiscal year, includes $246 million less for

carrying charges:in the fiscal year 1964 than would have been required

if we had not cut down the surpluses, and $813 million less than would

have been in it if we had not had a program.

And, so there have been very sharp cuts in surplus grains on hand.

CUT IN SURPLUS UNDER PRESENT PROGRAMS

Senator PASTORE. Will the Senator yield for a question at this

point? In other words, are you prepared to say that your proposal of

last year did help the surplus problem?

Secretary FREEMAN. I most definitely am. The programs instituted by this administration have cut the surplus 1,077 million

bushels, and there is $246 million less in the budget for carrying

charges than there would have been had CCC stocks remained at the

1961 peak levels. A8 compared with what would have been necessary

if we had not had a program, we would have in this budget $813

million more for carrying charges on inventories of grain.

Senator PASTORE. And, this is even in spite of the fact that the free

trade is not selling as much this year as last year.

Secretary FREEMAN. The free trade, sir?

Senator PASTORE. When you say, "We are selling less corn," are

you talking about Government stocks, or are you talking about the

whole supply of corn?

Secretary FREEMAN. No, I am talking about Government holdings.

Senator PASTORE. I see.

Secretary FREEMAN. I am talking about Government holdings—the

surpluses that we have to buy, pay storage charges for, interest, handling, and the rest.

Senator PASTORE. These figures you have just cited, on what commodities are they?

Secretary FREEmAN.Wheat and feed grains.

COST OF WHEAT CERTIFICATE PROGRAM

Senator YOUNG. I just had one additional question. Have you

made any studies as to the estimates of costs of the wheat certificate

plan if it were put into effect as against the present program?
SUPPLEMENTAL APPROPRIATIONS—AGRICULTURE 15

Secretary FREEMAN. Yes, we have, Senator. And I would have to

get those figures. But we have them, very definitely. I do not have

them stored away right now.

(The information referred to follows:)

COST OF 1964 WHEAT PROGRAM

Certain tentative decisions have been made regarding the 1964 wheat program

and have been announced in speeches by the Secretary and in material explaining

the program. If these tentative decisions hold which assumed that 925 million

bushels of wheat will be covered by certificates issued to producers and that the

value of such certificates will be 70 cents per bushel ($2 per bushel price support

for certificate wheat and $1.30 per bushel for noncertificate wheat), and further

that acreage diversion payments will be 30 percent of the support price for the

required 10-percent diversion and 50 percent on the acreage diverted voluntarily;

the total cost of the 1964 program will be about $1,152 

million, 

compared with the

estimated cost of $1,429 million for the 1962 program and $1,441 million for the

1963 program. In each of these years a major portion of these costs are associated

with the export program—Public Law 480 and export subsidies.

Senator YOUNG. Since the wheat certificates are paid by the millers,

and they in turn charge the consumers, this will be more of a selffinancing program?

Secretary FREEMAN. This program is designed to phase out; so

cost will be very sharply less than under the current wheat program.

Senator YOUNG. It has some shortcomings, in my opinion, but

I think this is one of the better features of it. And, I think this

would please the Senator from Rhode Island.

It is more along the line of a program you have been suggesting.

Senator PASTORE. If the Senator will permit: I must say at the

outset that I have substantially supported these agricultural programs, even though I do come from a completely consuming State,

and our interest primarily is in prices, and, secondly, in what this

costs the taxpayer.

Naturally, from where we sit, we recognize the fact that you have

to have a system under which you have an adequate supply of food

for the American people not only today but for years to come.

REASON FOR REQUEST

But, now the point I wish to make is this: Primarily, are you asking

for this shift in money because of the vicissitudes, or are you asking

for this shift in money because we underestimated what we needed

last year? In other words, does this prove that the program is a

failure, or could it create the suspicion that this is due to a failure of

the program, or is it because last year you knew that you needed this

extra $500 million, but that you were cut in the amount of money

that was granted to you in the 1963 budget?

Secretary FREEMAN. That is right.

Senator PASTORE. Well now, I would like to get that on the record.

You know the contention is being made now that the reason why you

are coming in and asking for more money is because your proposal

of last year did not work.

And I think you have got to make that record clear. I think you

have got to give the reasons in the record why you are back here

asking for this money.
16 SUPPLEMENTAL APPROPRIATIONS—AGRICULTURE

THE 1963 APPROPRIATION ACTION

Senator YOUNG. It was cut by the House last year.

Senator PASTORE. I think that ought to go in the record, because

I am told that the Republicans in the House were fighting this

program.

Senator YOUNG. No, the actual fact is that the appropriation was

cut in conference with the House by this amount.

Senator PASTORE. I am talking about this new request. Yesterday

you got a little bit of competition in the House.

Senator ELLENDER. More than this amount was asked f r last year,

and it was refused.

Senator HOLLAND. In the first place, this request has to do only

with Public Law 480, the restoration of corporation funds which you

are required to pay out for foreign currencies in carrying on the

national policy of our Government, as set by Public Law 480. Is

that correct?

Secretary FREEMAN. That is correct.

Senator HOLLAND. In the second place, the appropriation you are

requesting now for these general purposes is in part what you asked

for last year, and it was cut out of the appropriation bill, was it not?

Secretary FREEMAN. Yes, sir.

NO RELATION TO RESTORATION OF CAPITAL IMPAIRMENT

Senator HOLLAND. In the third place, this has nothing to do at all

with the restoration of capital impairment that takes place annually

for losses incurred for price support operations, or for other reasons

recognized by law.

This has to do solely with operations under Public Law 480.

Secretary FREEMAN. That is correct.

Senator YOUNG. Would you yield there?

It all comes out of the same fund, though, does it not?

ACTIVITY MANDATORY BY CONGRESSIONAL ACT

Senator HOLLAND. It all comes out of the same fund, but the point

I am trying to make for the record is that here is something the CCC

is required to do not in pursuance of its normal price-support function

at all, but in pursuance of foreign policy set by the Congress as to the

disposal of surplus commodities to foreign nations, under which CCC

is required to accept foreign currencies and to turn them over to the

General Treasury, because they cannot be used here by Commodity

Credit Corporation.

Senator PASTORE. That may be so. But, in paragraph 2 of the

statement we have here, I read:

* * * due to factors such as weather, insect damage, domestic and import

demands, trade psychology, and other intangibles—Congress has seen fit to

authorize such borrowing * * *.

ALTERNATIVE SOLUTIONS

Senator HOLLAND. I am going to bring that up next. In such a

dilemma you can do two things at least, can you not? One is to come

to Congress and ask for the restoration of your impaired capital

occasioned by Public Law 480 operations.

Secretary FREEMAN. Yes.
SUPPLEMENTAL APPROPRIATIONS—AGRICULTURE 17

Senator HOLLAND. The other is to sell more of your surplus commodities which you are holding than you think it is wise to sell at this

time. That would bring cash on which you could operate. And

you choose, instead of dumping surplus commodities on the market,

which to that degree would defeat your whole purpose of sustaining

price-support levels, to come to Congress asking it to fulfill its commitment made to you at the time this Public Law 480 was passed;

is that correct?

Secretary FREEMAN. That is correct.

Senator HOLLAND. It seems to me that it is a matter of choice which

the Secretary has to make, of either dumping these commodities on

the market which could depress the market or he can choose to leave

the market price at a decent level, and come back to Congress for the

restoration of that part of the depletion which comes from the operations under Public Law 480.

SUPPORT OF SECRETARY'S POSITION

And, as far as I am concerned, I commend him on making this

decision, rather than the other. And, I think that if Congress had

acted as he requested last year in making this particular appropriation

for this particular purpose, he would not have to be here.

Is that cQrrect, or not?

Secretary FREEMAN. Yes. Thank you, Senator.

Senator PASTORE. If the Senator will yield:

All I am trying to do here is obviate the argument that is being

made by the opposition, you see, that this request is predicated

because of the failure of the program. And, it is not that.

Senator HOLLAND. Not at all.

Senator PASTORE. And, I am asking the record to be complete in

that respect. In other words, all I am asking the Secretary to show

is that his program has worked, that what we are asking here now is

for money that we asked for in 1963 but was never allowed.

Am I correct?

Secretary FREEMAN. That is correct.

Senator PASTORE. And, therefore, that allowance compels him now

to make the shift from the 1964 budget request in order to put it back

into 1963, where we should have had it in the first place. I am on

your side.

Senator HOLLAND. The Senator is exactly right.

Senator PASTORE. But, I want that record to show it. When

somebody gets up and begins to talk about this program of this

administration being a failure, I want to have the record clear that

it is not.

Senator HOLLAND. The only particular in which I thought the

Senator's questioning might have left an implication that is not exactly correct is this. He indicates that because the testimony indicates that because of prices, weather conditions, and other factors,

he could not release stocks now, there might be some blame attachable in that connection.

As I understand it, there is credit to be attached for his decision,

because he is releasing the grain, in such a way as will still sustain

the price-support objectives which he and the Congress have in mind

and which I think the mandate of Congress requires.

Is that correct?

Secretary FREEMAN. That is very well stated.
18 SUPPLEMENTAL APPROPRIATIONS—AGRICULTURE

REQUEST NOT RELATED TO PRICE SUPPORT

Senator HOLLAND. I want the record to show, and I hope the public

will understand, that this has no relation to ordinary price-support

matters, but is simply a payment to CCC under a program that has

been set up and required in national policy under Public Law 480, for

which the appropriations which were requested last year but were

refused by the Congress.

Chairman HAYDEN. Senator Ellender, have you any questions?

Senator ELLENDER. NO, sir.

Senator PASTORE. May I ask a question, Mr. Chairman?

Chairman HAYDEN. Senator Pastore.

Senator PASTORE. The cotton situation, Mr. Secretary 

Secretary FREEMAN. Senator, in reference to your earlier inquiry, I

have just distributed a statement here, because I am quite aware of

some of the criticisms which are not pertinent, as Senator Holland

has very ably pointed out, but they do exist, and this is complicated.

SUMMARY OF SUPPLY ADJUSTMENT

Therefore, I have set down a summary and then a documentation

to establish clearly the fact that the programs of supply adjustment

have cut back a billion bushels and will save close to a billion dollars

by 1964, and this is all carefully documented in what I have just

handed, and I do not know whether it would be appropriate for that

to go into the record, or not.

Senator PASTORE. I move that it be placed in the record at this

point. I think it ought to go into the record. That is precisely the

point I am making here today.

Secretary FREEMAN. Thank you, sir.

(The material referred to follows:)

SUMMARY OF EFFECT OF WHEAT AND FEED GRAIN PROGRAMS ON CCC COSTS

(A.S.C.S., FEBRUARY 28, 1963)

HIGHLIGHTS INDICATING SUCCESS IN CUTTING SURPLUSES AND REDUCING COSTS

1. CCC holdings of wheat and feed grains were 1.077 billion bushels less on

February 15, 1963, than the peak quantities held in 1961 before the new program

was effective, and total stocks at the end of 1963 marketing year will be 2,509

million bushels less than they would have been in the pre-1961 programs had

been allowed to continue.

2. The fact that the CCC does not now own the 1.077 billion bushels of grain

it formerly owned is now saving the Government $770,000 each day in carrying

charges—$280 million a year.

3. The 1964 budget includes $246 million less for carrying charges on these

grains than was spent in fiscal year 1961, and $813 million—or $2.2 million a

day—less than the annual rate that would have occurred by 1964 if the pre-1961

programs had been allowed to continue.

These and other figures show that the new programs designed to eliminate the

costly and unnecessary surpluses of wheat and feed grains, that had climbed to

rAcord levels in 1961, are working.

The Congress has given the CCC the responsibility to finance all Government

price support and commodity purchase programs through use of its own funds

and a borrowing authorization limited to $14.5 billion. Each year the Corporation's realized losses are met by appropriations by the Congress for restoration of

.capital impairment. The amount of appropriations needed is determined by

CCC's realized losses.
SUPPLEMENTAL APPROPRIATIONS—AGRICULTURE 19

The realized losses of the CCC since 1960 are shown below:

Fiscal year

Realized loss (millions)

Amount

Change from

preceding

year

1961 I $2, 067.0 +$454. 9

1962 2, 799.4 +732.4

1963 (estimated) 2, 753.6 —45.8

1964 (estimated) 2, 646. 9 —106.7

I Does not include inventory revaluation loss of $1,268,500,000 applicable to 1961 and prior years.

(1) Fiscal 1962 losses were higher than the previous year, primarily because of—

(a) an increased loss on commodity sales in the disposal of large quantities

of corn and grain sorghums acquired from the 1960 and prior years' crops;

such grain was acquired at a higher price in the 1950's than market prices

in 1962. Obviously as the grain is moved out of surplus into consumption

realized losses take place.

(b) increased loss on donations, due to the donation of more dairy products,

wheat flour, and corn meal, thus Increasing benefits to millions of people

at home and around the world by a more effective use of our agricultural

abundance.

(c) acreage diversion payments to farmers as the immediate cost of

launching supply adjustment programs enacted by the Congress—programs

that by now have significantly reduced stocks of grain and the costs of both

acquiring and carrying such stocks, while they have brought about substantial increase in farm income.

(2) Estimates indicate that realized losses for fiscal 1963 will be $45.8 million

less than for the previous year, and that this encouraging trend will be stepped up

in 1964 by an estimated decrease of $106.7 million below that for 1963.

(3) Stocks in CCC inventory in excess of needs for an adequate reserve have

been substantially reduced—by a total of 1.077 billion bushels as compared with

peak quantities on hand before programs for supply adjustment began to take

effect. As a result, the 1964 budget estimates before the Congress show $245.6

million less for carrying charges on wheat and feed grains for the fiscal year 1964

than the actual cost in the fiscal year 1961. The fact that the CCC does not now

own the 1.077 billion bushels of grain it formerly owned is now saving the Government $770,000 each day in carrying charges—$280 million a year.

(4) Cumulative savings of $480 million in carrying charges on feed grains and

wheat from the record 1961 level have already resulted or are budgeted as a result

of the decrease in CCC stocks, as follows:

[In millions]

Fiscal year

Total carrying charges—

feed grains

and wheat

Savings from

1961 level

1961 $846 

1962 776 $70

1963 (budget estimate) 682 164

1964 (budget estimate) 600 246

Cumulative savings through June 30, 1964, from 1961 level 480

(5) If the new supply adjustment programs had not replaced the pre-1961

programs it is a conservative estimate that carryover stocks at the end of the

marketing year for the 1963 crop would have amounted to 3.8 billion bushels of

corn and grain sorghums and 1.6 billion bushels of wheat, and the annual carrying

charges on these quantities would have amounted to at least $1.4 billion by 1964

as compared with the current estimate of $587 million for these three grains in the

1964 budget. The difference is equivalent to about $2.2 million per day.

(6) if pre-1961 programs had been allowed to continue and stocks had built up

as indicated through 1963, it is estimated that ultimate carrying costs to the CCC

before disposal of the additional quantities added to stocks would have amounted
•

20 SUPPLEMENTAL APPROPRIATIONS—AGRICULTURE

to approximately $3.3 billion. This would result from the time which would

elapse before these added stocks would be disposed of, based on the annual rate

of disposition which occurred prior to 1961. This would be 10 to 12 years for

feed grains and between 6 and 7 years for wheat.

TWO-PRICE COTTON PROPOSAL

Senator PASTORE. My question is on the matter of cotton. As

you know, a lot of us are interested in this two-price cotton system.

Has that anything to do at all with this reluctance of foreign purchasers to buy this cotton?

Secretary FREEMAN. Well, at the moment purchases by both domestic and foreign mills are low, and inventories are low, because

there has been a question as to whether price of cotton would be lower

than it has been.

And, therefore, inventories, generally, are down.

Senator PASTORE. I realize that this may not be related to the request of $508 million, but it is an important subject. How are we

going to resolve this two-price cotton situation dilemma?

Secretary FREEMAN. Let me say this: We have been working very

hard for the last year to try and develop a program which would both

be workable and which, facing the practical political facts of life,

would stand a chance of passing the Congress of the United States.

COTTON ADVISORY COMMITTEE PROGRAM

A program was recommended by an advisory committee, representing all segments of the cotton industry, which, in brief summary, would

have contained a payment to seek to eliminate the inequity which the.

domestic mills presently face, because they have to pay more for

cotton than their foreign competitors, which would also make available more acreage for producers, who would be willing to produce at

world price.

Now, this combination of objectives has been incorporated in a bill

that has been introduced in the House. Some hearings have been

held in the House committee, and at the moment its future is uncertain. It. would meet the objective the Senator refers to.

PROBLEM OF DOMESTIC MANUFACTURERS

'Senator PASTORE. Well, the thing that concerns me is the fact

that we presently have the very serious problem, as the Secretary

knows, where domestic manufacturers of textile goods—and most of

them are in the southern part of the country—have to buy their cotton

at about 8 cents a pound more than this cotton is sold for abroad to

meet the world price; and then, of course, these foreign purchasers

make it into textile goods, and they send it back here and undercut

us more.

Now, I can understand why this cotton price has to be subsidized

in order to meet the world market. The only dilemma is that when it

comes back in manufactured cloth, it puts the domestic manufacturer in a double jeopardy, because he cannot meet the labor costs

abroad, which is the first dilemma, and, secondly, he cannot now meet

the raw cotton price abroad, which makes it a double-horned dilemma.

I was merely stating my concern about it. And the fact that you

say this is in a bill which is being contested in the House—it strikes f
SUPPLEMENTAL APPROPRIATIONS—AGRICULTURE 21

me that we might have to go through this year again without any

relief.

We tried to adjust the tariff in order to compensate for the differential of 8 cents, and that, of course, was objected to.

Secretary FREEMAN. Yes, sir; the Department strongly supported

that.

BILL PENDING IN HOUSE

Senator PASTORE. Now, is this bill that is pending in the House

the administration bill?

Secretary FREEMAN. The administration is supporting the proposals that were made by the Cotton Advisory Committee; yes.

Senator PASTORE. And this bill is predicated upon those recommendations?

Secretary FREEMAN. That is correct.

Senator PASTORE. Have you appeared in the House on it?

Secretary FREEMAN. Yes.

Senator PASTORE. And supported it?

Secretary FREEMAN. Yes.

Chairman HAYDEN. Senator Monroney?

PRESENT REQUEST REIMBURSEMENT OF LOCAL CURRENCIES

Senator MONRONEY. The entire amount of this is for the reimbursement on local currencies. Is that correct? I mean the money asked

here is to reimburse your funds in dollars for the commodities that

you have sold for local foreign currency under title I of 480?

Secretary FREEMAN. Yes, sir.

Senator MON RONEY. Which actually is a foreign-aid expense, but

it is charged up to you, because it provides for a disposal of large

amounts of your surplus commodities.

Secretary FREEMAN. That is correct.

POSSIBILITY OF LISTING AS FOREIGN-AID FUNDS

Senator MONRONEY. Is there any chance that this will ever be

shown as foreign-aid funds, rather than being charged against Agriculture?

Secretary FREEMAN. I think there is always that possibility,

Senator.

Senator MONRONEY. But, there is no legislation pending to transfer

this obligation to the foreign aid appropriation. What we get back

in foreign currencies is not expendable and is unusable to us to a

large extent.

Secretary FREEMAN. To a large extent, yes.

Senator MONRONEY. In other words, we lend them back more than

half of the foreign currency for their local projects, and then the other

half is frozen, which acts as a stabilization loan, really, on the local

currencies themselves, because it withholds that much currency from

circulation. So, it is heavily involved, I think, in your foreign aid

program, and yet it is charged up to Agriculture in huge amounts

as a part of the agricultural program.

Secretary FREEMAN. I have suggested administratively that the

books might show this as a charge to the foreign aid program, but

this has not been warmly welcomed by the other departments of

government on whose books it would show.
22 SUPPLEMENTAL APPROPRIATIONS-AGRICULTURE

CURRENCIES LOANED BACK AS WORK PROGRAM

Senator YOUNG. Would you yield at that point? I think over 80

percent of the foreign currencies are loaned back under work programs

or programs of various kinds.

Senator MONRONEY. I do not think it runs as high as 80.

Senator ELLENDER. Sixty.

Senator MONRONEY. Sixty, I think. And, the rest of it is frozen,

because we cannot use it for any of our purchases; a few little purchases perhaps in the country.

Senator ELLENDER. Sixty percent in round figures loaned back,

and a good deal of the remainder is used by the State Department

and other agencies abroad.

Senator MONRONEY. It is piling up in tremendous amounts.

Senator ELLENDER. In some countries, like the Congo, where you are

giving a greater amount than you should. But, in the Congo we are

not getting anything back. It is all going for the relief of the people

there.

SALE FOR HARD CURRENCIES

Senator MONRONEY. And, we are not selling any now for the hard

currencies, are we? We did for a while in France on cotton.

Secretary FREEMAN. Oh yes. We are beginning under title IV

of Public Law 480 to move, and we are pushing hard in that direction

for a relatively long-term modest interest sales, and this is growing.

But, of course, it does not approximate the amount under title I.

Senator MONRONEY. But, this would be two hard currency

countries? It is title IV, that you are talking about. No hard currency countries are going to buy it on loan, are they?

Secretary FREEMAN. No.

Senator MONRONEY. The types of countries you are talikng about.

It is still a foreign aid proposition, whether it is loans or local currency,

and either way we do not have anything we can spend.

Secretary FREEMAN. Title IV would be paid back in dollars over a

period of, say, 10 years.

TOTAL SALES IN LOCAL CURRENCIES

Senator MONRONEY. Do you know what the total of these sales

has been in local currencies?

Secretary FREEMAN. $9,068,660,000.

Senator MONRONEY. Over what period of time?

Secretary FREEMAN. Since the commencement of the program,

July 1, 1954, through December 31, 1962.

Senator MONRONEY. And that all represents something for which

you must reimburse the Treasury in cash?

USES OF FOREIGN CURRENCIES

Senator YOUNG. Would you agree to have a table inserted in the

record as to the uses of these foreign currencies? According to this

table, only 17.8 percent was set aside for U.S. uses. The rest are

foreign uses.

Senator MONRONEY. I would like to have that table in the record.

I think it would be very valuable.

(The most recent table appears on p. 24.)
SUPPLEMENTAL APPROPRIATIONS-AGRICULTURE 23

Secretary FREEMAN. The percentages that I have are later than

those Senator Young has and cover the period to be included in the

next semiannual report on Public Law 480. They show the following

breakdown: 45.7 percent loans to local governments, 23 percent U.S.

uses, 18 percent grants, and then some miscellaneous smaller

percentages.

Senator MONRONEY. Even that 23 percent is earmarked, and does

not represent an expenditure, does it? Is there not a great deal of earmarking that has never been withdrawn? I mean they have just set

it up in funds, as I understand it.

Secretary FREEMAN. Some of it would- be represented in funds unexpended in the given countries, yes, sir.

ADJUSTMENT BETWEEN WHEAT PRODUCING AND SMALL GRAIN PRODUCING

STATES

Senator MONRONEY. One further question. I compliment you on

reducing the surp]us stocks and getting the cost of the storage down.

In this reduction, are you giving any attention at all to adjusting this

downward level which should occur more equitably among the wheatproducing States and the small-grain-producing States?

We have a great problem in my State, which you have been kind

enough to consider a number of times, where we have gone down to

practically zero in storage, although we are a big wheat and smallgrain-producing State, while other States around us have held up to

60, 70, or 80 percent of their normal storage capacity.

Secretary FREEMAN. As the Senator knows, we are deeply concerned with this problem, and it is a very difficult adjustment period,

and under the law as it stands in both the charter of the Corporation

and the mandate of the Congress, we are seeking to adjust the storage

space as equitably as we can, consistent with sound business practices.

Senator MONRONEY. That would be among the States?

Secretary FREEMAN. Yes.

Senator MONRONEY. And it would be on the basis, of course, of

not being at a greater expense to the Government than they are under

now?

Secretary FREEMAN. Yes.

Senator MONRONEY. But, any program that would allow some

adjustment, in fairness, in this area, that does not cost the Government anything extra, would be one in which your Department would

be interested?

Secretary FREEMAN. Very definitely.

Senator MONRONEY. Thank you.

LOANS TO FOREIGN GOVERNMENTS

Senator ELLENDER. Awhile ago I stated that the amount of loans

to foreign governments was around 60 percent. As a matter of fact,

it is 57.8 percent. I am just giving the round figures. And, the

amount under the so-called Cooley provision grants for economic

development and loans—that amounts to 10.3 percent; and the

common defense, 14.1 percent.

So we did not miss it very far. So will you put that in the record?

(The table referred to follows:)
24 SUPPLEMENTAL APPROPRIATIONS-AGRICULTURE

Uses of foreign currengy as provided in title I, Public Law 480 agreements signed

July 1, 1954-Dec. 31, 1962 1

[Amounts are in dollar equivalents at the deposit rate of exchange]

[In thousand dollar equivalents]

Country

Total

amount in

agreements

(market

value

including

oversea

transportation)

104(c)

Common

defense

104(e)

Grants for

economic

development

104(e)

Loans to

private

enterprise

8, 250

3,132

104(g)

Loans to

foreign

governments

For U.S.

uses 2

Argentina 

Austria 

Bolivia 

64, 100 

42,940 

24, 559 

36, 500

26,328

17,375

19,350

16, 612

4,052

Brazil 386,420 2,000 34,400 285,247 64,773

Burma 51,370 8,134 32, 525 10,711

Ceylon 30,800 5,280 5,465 12,720 7,335

Chile 71,900 100 850 56,330 14,620

China (Taiwan) 163. 110 85,981 15,800 26, 840 34, 489

Colombia 70,890 80 11,270 41, 180 18,360

Congo 18,750 16,875 1,875

Ecuador 13,190 1,273 8, 785 3, 132

Finland 46,535 3,615 25, 634 17, 286

France 35, 775 7,824 27, 951

Germany 1,200 1,200

Greece 109, 300 5,040 7, 470 9, 171 53,450 34, 169

Guinea 10,670 298 7,811 2,561

Iceland 13,930 198 567 10,119 3,046

India 2,428, 306 788,175 165, 262 1, 164,933 309,936

Indonesia 314,025 25,312 21,086 213, 497 54, 130

Iran 50,971 5, 763 3,253 27.803 14, 152

Israel 291, 069 32,589 46, 891 172, 899 38, 690

Italy 152, 900 6, 250 100,500 46, 150

Japan 150,800 700 600 108, 850 40, 650

Korea 342, 860 290, 583 5,891 46, 386

Mexico 28, 200 7,100 13,600 7, 500

Morocco 21,870 2,130 14,273 5,467

Netherlands 275 275

Pakistan 1, 065, 920 79,366 556,841 51,740 276, 432 101,541

Paraguay 13,200 3,420 1,170 6, 000 2,610

Peru 37, 280 100 3,762 22, 723 10,695

Philippines 36, 150 8, 102 3, 045 6,438 8, 027 10, 538

Poland 425, 700 425,700

Portugal 7, 100 3, 400 3,700

Spain 505, 630 9,910 253,480 242, 240

Sudan 4, 600 1,150 690 1,610 1, 150

Syrian Arab Republic 37,200 6,550 22, 750 7, 900

Thailand 4,600 2, 050 2, 550

Tunisia 33,600 7,700 4,020 16, 665 5,215

Turkey 386, 065 97,750 2,340 42,011 115, 000 128,964

United Arab Republic 782, 940 25,731 77,504 554, 047 125, 658

United Kingdom 48, 150 48, 150

Uruguay 48, 400 12.050 24,300 12,050

Vietnam 71,280 54,930 5, 725 10, 625

Yugoslavia 624, 130 143,092 378,333 102, 705

Total 3 9, 068, 660 640, 405 1,662,352 537, 038 4, 142,016 2, 086, 849

Uses as percent of total 100. 0 7. 1 18.3 5.9 45. 7 23.0

I Many agreements provide for the various currency uses in terms of percentages of the amounts of local

currency accruing pursuant to sales made under each agreement. In such cases, amounts included in this

table for each use are deter.nined by applying the specified percentages to the total dollar amount provided

In each agreement. Amounts shown are subject to adjustment when actual commodity purchases and

currency allocations have been made.

2 Fiscal year 1962 agreements provide that a specific amount of foreign currency proceeds may be used

under various U.S. use categories, including currency uses which are limited to amounts as may be specified

In appropriation acts. Included are uses specified under subsections 104(a), (b), (f), (h), (i), (j), (k), (I),

(m), (n), (o), (p), (q), (r), (s) and sometimes (c) and (d), insofar as specified in agreements.

3 Amounts shown in this column may differ from amounts on table 3, which reflect purchase authorization

transactions.

EFFECT OF FAILURE TO PASS GRAIN PROGRAM

Senator BARTLETT. Mr. Secretary, what would the effect have

been if Congress had not passed the wheat and feed grain program?

Secretary FREEMAN. If the wheat and feed grain programs had
SUPPLEMENTAL APPROPRIATIONS—AGRICULTURE 25

not been passed, we would have on hand about 2.5 billion bushels

more wheat and feed grains at the end of the marketing year 1963

than we will have.

We would have in this budget that goes before the Congress, for

fiscal 1964, $813 million more expenditures for carrying charges than

is in it now.

Senator BARTLETT. Thank you. That is all, Mr. Chairman.

EDITORIAL ON SURPLUS PROGRAM

Senator PASTORE. May I ask another question, Mr. Chairman?

I am reading now, Mr. Secretary—that is the reason I brought

up this subject—an editorial that appeared in the Providence Evening

Bulletin of Monday, February 25, 1963. The caption of it is:

Mr. Freeman's guess goes sour.

Those optimistic forecasts from Agriculture Secretary Freeman already have

begun to turn sour. He is the fellow, you will remember, who was assuring us

only a little while ago that he had a good grip on the farm problem, and that

things were looking rosier all the time. Well, some of the returns now are coming

in. Far from indicating that the Government's mammoth piles of surplus

are being whittled away, as Mr. Freeman forecasts, they indicate just the reverse.

The glut of dairy products has reached the value of $400 million, nearly twice

as much as it was a year ago. The Government's surplus pile of cotton has

reached 10.4 billion bales, which is more than twice as large as it was last

August.

The total value of all the surplus in Government hands has reached $8 billion,

which is about $300 million higher than it was a year ago.

Meanwhile, the Government is running short on money on its price-propping

fund, and the President has asked Congress to please provide an additional

$508 million in the coming budget, so the Government can buy up more of the

surplus that nobody wants.

Here we go again.

Now, what have you got to say to it?

Secretary FREEMAN. The editorial is just simply inaccurate; and

as such I am pleased to have the opportunity to set it straight. And,

perhaps if I write a letter to the editor of that paper, he might correct

it.

That might be a vain hope, because they often don't

Senator PASTORE. I would appreciate hearing this very much

because I think this is precisely what is happening here. I think,

after all, the thing should be understandable, and it should be factual,

and if they are right, they should be told they are right, and if they

are wrong, they, I think, ought to be corrected.

Secretary FREEMAN. I would be happy to do that, Senator, if you

would let me have a copy of the editorial.

Senator PASTORE. Will you give it back to me when you are through

with it?

Secretary FREEMAN. Yes, sir.

Senator PASTORE. All right.

MILK PROGRAM

Senator ELLENDER. In connection with the milk program, the

Secretary can certainly agree with me in saying that we have been

trying, ever since he has been in office, to change that program, but

we have such a big milk lobby here in Washington that we cannot

get the thing through.
26 SUPPLEMENTAL APPROPRIATIONS-AGRICULTURE

And, I am having hearings fixed for the 18th of March 

Secretary FREEMAN. Very good.

Senator ELLENDER. So as to get this matter settled. Because,

unless we change the law, we will continue to accumulate these huge

surpluses and it is certainly not a fault of the Secretary, here, because

Congress is the one that ought to change the law.

Senator PASTORE. I am not fighting the Secretary. He is a very

good friend of mine.

Secretary FREEMAN. With 4.3 million fewer cows than 10 years ago,

we are producing 11.1 billion more pounds of milk a year.

Senator ELLENDER. Within the last 12 months there were 400,000

cows less, but the milk production increased 500 million pounds.

Think of that.

MOTION TO APPROVE BILL

Senator HOLLAND. Mr. Chairman, whenever the Senators are

through questioning, I am perfectly willing to make a motion to approve this resolution because I think we have made a record here

which clearly shows that this item relates solely to the reimbursement

for payments out of the funds by CCC, which is required under Public

Law 480 alone, and does not relate to the price-support program.

I make the motion at this time.

Senator ELLENDER. I second the motion.

Chairman HAYDEN. The motion has been made to favorably report

the bill. All in favor say "aye." [General response, "Aye]

I will ask Senator Holland to do it.

Senator ROBERTSON. May I ask a question of the Secretary of

Agriculture before he leaves the stand?

Chairman HAYDEN. Certainly.

Senator ROBERTSON. Can you sound an encouraging note on the

prospects for poultry in the European foreign market?

Senator HOLLAND. Mr. Chairman, since this matter does not relate

to the bill, can we dispense with its having to be made a part of this

record?

Chairman HAYDEN. All right.

(Discussion off the record.)

Chairman HAYDEN. The committee stands adjourned.

(Whereupon, at 11:10 a.m., Thursday, February 28, 1963, the

committee adjourned.)