Distribution of payments.-The distribution of the Federal payments by States for 1963 and 1964 are shown in the following table:

Fiscal year 1964 State funds to be expended for this program are estimated at $2,097,000.

SCHOOL LUNCH AND SPECIAL MILK PROGRAMS

Mr. SMITH. For these programs, the primary budgetary emphasis is being placed on providing school lunches.

An increase of $9 million is proposed for anticipated growth in the school lunch program. The increase for cash payments is based on maintaining a Federal contribution from the regular appropriation for cash and section 6 commodities averaging 5 cents per lunch. This level of Federal contribution is in accordance with expressions from this committee last year. This program has, of course, the dual objectives of improving nutrition for children and increasing consumption of agricultural commodities.

A new appropriation of $2 million is proposed under section 11 of the National School Lunch Act to provide for initiating special cash assistance to needy schools. Although these funds will be distributed among the States on the basis of the formula in section 11, they will be used to provide free or reduced-price lunches in schools drawing attendance from areas in which poor economic conditions exist.

Our experience clearly indicates that children in these circumstances are not being reached through the regular formula under the school lunch program. This program will therefore reach some additional needy in all States and directly complement the program to attack problems of poverty through providing better nutrition for children. The special milk program would be maintained at the current level of approximately $100 million by transfer from section 32. Within the overall budgetary concepts for 1965, the emphasis is being placed on the school lunch program, including special assistance to needy schools. The lunches, of course, will include milk as one of the prime requisites.

Mr. Howard Davis, Director of our food distribution division, will furnish additional information on these programs and on the basis for the estimates.

REMOVAL OF SURPLUS AGRICULTURAL COMMODITIES AND RELATED

PROGRAMS

The full amount of the section 32 appropriation is budgeted for use, exclusive of the $300 million authorized carryover. The new funds above the carryover for fiscal year 1965, based on 30 percent of customs receipts for calendar year 1963, total $378 million.

Mr. Roy W. Lennartson, Associate Administrator, will present the justifications for changes being proposed under this appropriation. This concludes my opening statement and general testimony.

MANPOWER CEILINGS

Mr. WHITTEN. Thank you, sir.

One of the problems we run into throughout our hearings is the manpower ceiling imposed on the Department. The Department in turn has imposed manpower ceilings on the various bureaus and agencies. What has been the effect of the ceiling imposed upon your Service, Mr. Smith? How many people are you having to cut down for the remainder of this year to reach the level and what will be your manpower situation next year compared with the beginning of this year?

Mr. SMITH. For June 30, 1964, our ceiling as represented by this budget, Mr. Chairman, exclusive of the personnel in the Milk Marketing Orders Administrator's office, is 8,200. Our employment during the year, I should point out, is quite seasonal. At the end of January this year, we had several hundred over that, but by June 30 we expect to get down to the 8,200-personnel level.

Mr. WHITTEN. That would be a reduction, by reason of the Executive order, of how many?

Mr. HOLMAAS. Our end-of-year employment ceiling for June 30, 1965, would be 8,013 compared with 8,200 at the end of this fiscal year.

Mr. WHITTEN. So you have to cut another 187 in the coming year. And of course it would mean the average employment would have to be reduced.

Mr. HOLMAAS. No; these figures are based on yearend employment. Mr. WHITTEN. Next year what would your man-year figure be? Mr. HOLMAAS. Our man-year budget for this fiscal year is 8,477, (including foreign donation), and for fiscal 1965 it is 8,466, so the man-year reduction is not as great as the reduction in yearend employment. This is principally due to the seasonality Mr. Smith talked

about.

Mr. WHITTEN. How do you plan to meet this decrease? Where are you applying it? How will you work it out?

Mr. SMITH. Each of the operating units, Mr. Chairman, has been advised of what its June 30 manpower ceiling is and each operating unit will need to develop ways and means of getting employment down to that level by June 30.

Mr. WHITTEN. Are you planning it across the board or are you eliminating particular units?

Mr. SMITH. The main area which will present a reduction is in the marketing research field. There it will be necessary to reduce employment by a total of 80 before July 1 of this year, 1964. We also have a reduction of 21 to make in our plentiful foods program and 10 in connection with the proposed market news reduction. Additional employment reductions are expected to occur if the legislative proposals are put into effect. There are some other minor reductions of one and two in each of several other programs. Over and above that, we have to also recognize that many of the programs in Agricultural Marketing Service have been increasing, such as poultry inspection and the fee-supported grading programs, but under our present budget, manpower numbers will need to be held to within our overall limitation.

PACKERS AND STOCKYARDS ACT

ADMINISTRATION OF ACT BY A SEPARATE UNIT

Mr. WHITTEN. Mr. Smith, last year the committee had in its report a section which you have personally discussed with me on several occasions. The section is as follows:

In the opinion of the members of the committee, a separate unit should be established from present funds for the administration of the Packers and Stockyards Act.

Also, departmental regulations for this program should be modified and revised, recognizing essential differences in areas as suggested in previous reports of this committee.

Further, the officials of this program should immediately discontinue the practice of publicizing any claim or charges against any individual or stockyard company for violations of regulations where no formal hearings have been held or penalties invoked.

Hearings or penalties should be for actions in violation of the regulations and not for agreements which may have been forced in the first instance.

Now, on reexamining that, I became convinced that we were not as clear as we intended to be. We had no desire for you to have any secret proceedings, as such.. We thought that it was improper to have a charge in a newspaper when the nature of a charge against someone, wasn't sufficiently serious for you to have a formal charge. What action has been taken with regard to a separate unit and with regard to the regulations?

ACT ADMINISTERED BY SEPARATE DIVISION

Mr. SMITH. As to a separate unit, Mr. Chairman, I think all I can do, within my own jurisdiction, has been done. I mean by that, the work of administering the Packers and Stockyard Act is assigned to and set up in a separate Division. The Director of that Division reports directly to the Administrator. I have a Deputy Administrator for regulatory programs, but he has the authority to act for me and we have direct access to the Secretary's office.

Now if the unit were to be set up outside of the Agricultural Marketing Service, I beg, sir, that that is not within my jurisdiction.

Now on the matter of regulations, I would like to have Mr. Girard make a brief statement on that, summarizing what we are doing in that field.

Mr. WHITTEN. We would be glad to have you do so.

Mr. GIRARD. We are in two respects complying, I believe, with the desires of this committee, both with respect to the looking at regulations and their impact on the small operators, and also with respect to the issuance of press releases.

REGULATING SMALL OPERATORS UNDER THE ACT

With respect to the small operators, we are undertaking a voluntary cooperative effort. For example, in the State of Georgia, our investigations indicated a number of questionable practices, and with the cooperation of the State officials and the officials of the auction market association in that State, we held a meeting and discussed these practices, got an agreement on it, and the association, itself, is seeing that those they agreed upon that were not proper should be discontinued.

And, similarly, we are making efforts in that direction in other areas. In other words, rather than going in on a policing measure, per se, we are trying to get the meetings of the local auction operators, particularly the small operators, who are not necessarily organized, and going over the impact of the act upon their operations, and trying to get voluntary cooperation, helping them set up records, minimum records to comply with the requirements. And I think we are making considerable progress in that regard.

ISSUANCE OF PRESS RELEASES

No press release is issued unless a formal complaint is filed with the hearing clerk and thus becomes a matter of public record. The only two releases that are issued are at the time of the filing of the complaint and at the time of the disposition, whether the disposition is favorable to the person charged or unfavorable to the person charged.

We are also trying to make it clear in the press release on complaints that the charges don't constitute proof, that a hearing will be held, and that a final decision will be made by the judicial officer of the Department.

We also point out that these complaints are public documents on file with the hearing clerk and may be there examined.

Mr. WHITTEN. Thank you for your statement on that. It meets the situation which we had in mind. That is certainly where action is needed and we wish you to take the proper action. If action is taken, certainly we have no desire to keep it secret.

It is so easy for the public to get the wrong impression from some types of releases. We should be satisfied that the release is needed for the protection of the public rather than showing that we have been on the job.

Your statement seems to satisfy the complaints I had and the things I thought were probably going a little too far. This committee has tried to follow the same course. We have an investigation going now and have had reports of such a nature that we were asked by the Department, at the instance of the Department of Justice, not to release our information because it might enter into the prosecution of certain individuals and companies.

This has no connection with the Packers and Stockyards Act. We are doing that. But prior to that, we have always tried, when our

investigators came in with reports, if it appeared there was even a likely violation of the law, or it might be so interpreted, we try to keep the name out on the ground that you can do damage without intending to.

The important malpractice of going to a small yard operator and saying "this is not too serious; if you sign this statement you will cease and desist," even though he insisted he wasn't doing anything wrong. many of them signed to keep from having further trouble. The public immediately saw it and there was damage done. But what you are telling me, meets that problem, I believe.

Mr. GIRARD. We do, of course, work with these small operators and when we find practices which should be discontinued, we call that to their attention and request that they discontinue those practices and that is the end of it. There is no publicity.

Mr. WHITTEN. If they insist on continuing, then you take appropriate action?

Mr. GIRARD. That is right. And that will be a formal complaint. Most of them do voluntarily discontinue such practices.

RESPONSIBILITIES OF PACKERS AND STOCKYARDS DIVISION

Mr. LENNARTSON. Mr. Chairman, may I supplement Mr. Smith's remarks, with respect to a separate agency in the spirit of helpfulness to the committee?

Mr. WHITTEN. Yes.

Mr. LENNARTSON. This Division which has been established as Packers and Stockyards Division of AMS is a division comparable to the major commodity divisions of AMS, which are responsible for number of major programs. In terms of the Packers and Stockyards Division, it is responsible only for activities in the packers and stockyards work. It is staffed by a Director and two associates. It has its own set of field offices, it has its own economic staff, all of its employees are responsible only for carrying out P. & S. activities. It has its own national advisory committee to advise with. The committee is representative of producers, market agencies, packers, retailers, and even chainstore organizations.

I thought, in terms of being helpful to the committee, I would express that this is a separate and distinct unit which has just as much stature as the major commodity divisions of the agency.

Mr. WHITTEN. We on this committee frequently complain about disorganization or separate entities and all that but anyone who reads the Packers and Stockyards Act and sees how broad it is, and what a big responsibility it is, and the number of people subject to its jurisdiction, can clearly see that it is a man-sized job.

Then if it is so buried down within layers of supervision it can easily be made inaccessible and slow to the point that it would be hard to resolve the many differences that arise. We have constantly pushed along that line.

I don't know anybody in the organization that has ever expressed any desire for an organization change. We are certainly not trying to make a bigger man out of those who are running it, and they have not sought it. But we do think it has a job and it needs some freedom to meet its responsibilities, without having to clear it with Tom, Dick, and Harry. Anybody that has a problem with this agency certainly