service was initiated on August 1, 1963, and by December 17 was being used by 56 subscribers.

4. In 1963, A.T. & T. announced an increase in tariff rates for this service effective August 1, 1963. An injunction filed by interested parties has delayed the effective date. AMS leased wire costs will be increased by about 15 percent through this action. The tariff adjustment announced also carried a change in length of time a circuit could be used-from 8 hours per day, 5 days a week to 24 hours per day 7 days a week.

C. Commodity reporting improvements

1. Quotations issued by 15 spot cotton quotations committees were improved through larger volume and closer Federal supervision. An additional aid to the committee was a handbook on spot cotton quotations issued by the Department. 2. Poultry market news was strengthened by increased reporting of ready-tocook turkeys in the major markets and more comprehensive egg reporting. cooperation with the Foreign Agricultural Service, reporting of foreign market activity, gate prices, and tariffs was instituted.

In

3. In cooperation with the State of Florida, service was established in Dade County to report miscellaneous fruits and vegetables. A year-round FederalState service on lettuce and cantaloups was initiated at Yuma, Ariz. A seasonal service had previously been operated by the State of Arizona. In cooperation with the States, service was extended in Alabama and Wisconsin.

4. Category I services (Federal financing) were initiated at West Fargo, N. Dak., on livestock and on grain in six Western States with headquarters at Denver, Colo. A category II service (Federal-State financing) was initiated on grain in Illinois with headquarters at Springfield.

D. Federal-State cooperation

Federal-State cooperative agreements in effect in fiscal year 1963 by commodity group

Plans for 1964

1. Continued attention to Federal-State cooperation to meet requirements for expanded service.

2. In cooperation with the State of New York, report Hudson Valley apples and Orange County onions.

3. Develop and implement plans for using leased wire on a 24-hour basis in line with new FCC rules.

4. Tabulate and publish estimates of micronaire readings for cotton classed in the 1963 crop.

Does

1 Includes amounts reimbursed to the appropriation in accordance with cooperative agreements. not include amounts expended by States and by local groups both under cooperative agreements and outside of agreement.

Mr. GRANGE. The first item that we have, as far as budget increases and decreases, is the market news item. This item provides for a net increase of $85,000 with $135,000 increase for the leased wire service and a $50,000 decrease for the reporting service.

LEASED WIRE SERVICE PARTIALLY UPDATED

I will discuss the leased wire item first: $75,000 of this amount is to complete the modernization which was started in 1962.

The western and the central and the northeastern areas are now being served by realined commodity circuits and they are doing a very good job.

Our problem right now is the southeastern and the gulf circuits which badly need to be realined. These two circuits, serving these large areas of the country, cannot adequately handle the present traffic.

We actually have some reports on these circuits that are delayed up to as much as 7 hours in some cases, meaning the following day release, rather than being able to get the information out today as it should be.

We also have a number of requests for additional livestock reports to be fed into the gulf area which we have had to decline because of the excessive operating load. We are spending about $6 million in Federal funds currently to collect and disseminate market news reports and the requested $75,000 is badly needed in order to provide adequate leased wire facilities for the foreseeable future and to service the $6 million item which is the bulk of our total cost, of course.

INCREASED RATES FOR WIRE RENTAL

The other item of increase on market news is $60,000 for increased wire rental. As the budget notes state, the Federal Communications Commission has approved a rate increase that was scheduled to become effective on August 1, 1963. This has been deferred because of the court action that has been brought concerning these increased rates, but as soon as this court action is settled, it is anticipated that the rates

would become effective, which will increase the rental charge per mile. It will decrease slightly the equipment rental, and it works out to approximately $5,000 per month more that we would have to spend for the approximately 19,000 miles of leased wire that we have currently in our market news system.

PRIVATE SUBSCRIBERS ON LEASED WIRE

You mentioned, Mr. Chairman, the arrangement for the private subscriber on the leased wire which we discussed with the committee last year.

This arrangement was inaugurated last August 1. It has received a considerable amount of attention. As the committee suggested last year, we published the proposal in the Federal Register and issued a press release concerning the matter and asked for comments prior to making a decision.

We were very glad that we did this. The comments that we received were very favorable and we received a large number of them. The program is working well currently. We have between 55 and 60 subscribers. They include producer associations, stockyards, and news wire services.

We have a retailer or two. We have a mercantile exchange. We have three or four others of that nature in addition to those who are actively trading in the product.

The subscribers, as you know, are paying the full cost for their connections and there are no additional Federal expenses involved in making this service available to them.

REDUCTION IN LOCAL NEWS SERVICE

In addition to the lease wire portion of the Market News, there is proposed a reduction of $50,000 because under the long-range market news plan that was approved by Congress in 1951, Federal funds are not justified in reporting markets or production areas which are primarily of local significance.

There are 49 livestock markets being reported now on a Federal or Federal-State basis, including the five which are listed in the budget notes for which we propose to terminate the Federal financial support.

These markets are Baltimore, Tulsa, Fort Smith, Memphis, and Nashville. The yearly value of livestock sold on these markets ranges from about $12 million a year in Fort Smith, Ark., to about $35 million a year in Baltimore.

This contrasts with the range of about $40 million to $650 million in the other markets where the market news reporting is conducted in whole or in part with Federal funds.

RELATIONSHIP OF A.T. & T. AND MARKET NEWS SERVICES

Mr. WHITTEN. What is the additional cost to the Department, if any, of screening out information not intended to be received by private subscribers under the new arrangement for Market News Service?

Mr. GRANGE. There is no additional cost to the Department for the private subscriber service. Little material needs to be screened out and the automatic selector does this job at no additional expense.

Mr. WHITTEN. What are the terms of the contract with A.T. & T.? Mr. GRANGE. Any interested party wishing to receive agricultural market news directly may enter into a contract with A.T. & T. or the local telephone company, paying the going rates for the service for his location. We in the Department have no part in such a contract. Mr. WHITTEN. Was any other company asked to provide this service?

Mr. GRANGE. No; because the Department's contract for longdistance lines has been with A.T. & T. since 1917 when the Market News Service began. The Department would have to consider converting the entire system.

Mr. WHITTEN. Are any of your employees placed in the position of being salesmen for A.T. & T.

Mr. GRANGE. No. The private subscribers deal directly with A.T. & T. or their local telephone companies. The relationship of our employees with A.T. & T. and with recipients of the data has not changed from what it was before last August 1.

Mr. WHITTEN. Does the arrangement with A.T. & T. place that organization in the position of being underwritten by the U.S. Government?

Mr. GRANGE. No. The market news leased wire circuit is a very minor part of the long-distance line service provided by A.T. & T. to Government agencies.

Mr. WHITTEN. How were contracts between private subscribers and AMS handled prior to this new system? What do they pay under new arrangement?

Mr. GRANGE. Prior to the new system, we had an agreement with PAM Corp. and PAM News Corp. which provided that they would reimburse us for the cost of the direct line that was installed in their offices. Under the new arrangement PAM deals directly with A.T. & T. in the same manner as do the other subscribers. They all pay at the rate of $1.45 per month per line-mile and $68.60 per month for the

machine.

Mr. WHITTEN. Has this arrangement had any effect on the providing of weather information as requested and encouraged by this committee?

Mr. GRANGE. No. As covered in the 1962 joint Weather BureauUSDA report, AMS leased wire circuits and outlets are not able to contribute to the speedier dissemination of weather news. However, some special weather circuits are now carrying agricultural market news during their off-load periods.

Mr. WHITTEN. What are the contractual arrangements between the Weather Bureau and A.T. & T.? What do private subscribers pay for weather information?

Mr. GRANGE. We are informed that different types of arrangements exist but do not have details concerning such arrangements.

Mr. WHITTEN. Are special summaries which are supplied daily available to all news services?

Mr. GRANGE. Many special local, regional, and national summaries are supplied to newspapers, broadcast stations, and wire services. These are geared to meet the individual needs and capabilities of the news medium cooperating in disseminating market reports. Therefore, they vary to fit the circumstances involved.

Mr. WHITTEN. How are they handled?

Mr. GRANGE. The summaries are supplied by written reports, telephone calls, cutting tapes, voicing broadcasts, Western Union wires, leased wires, and other means of communication dependent on the need of the news medium involved.

Mr. WHITTEN. If there are no further questions this afternoon the committee will stand in recess until 1 o'clock tomorrow.

FRIDAY, MARCH 6, 1964.

Mr. WHITTEN. Mr. Grange, when we recessed yesterday you had begun to discuss the Market News Service. You might pick up where you left off.

Mr. GRANGE. Thank you, Mr. Chairman. I had just finished covering the two increase items connected with the Market News Service, and the one item pertaining to a decrease in Market News Service proposed in the budget for 1965 which finishes the remarks that I would like to make concerning that matter.

POULTRY INSPECTION

Mr. GRANGE. The next item, insofar as increases are concerned, is the poultry inspection project. Under the 1965 budget there is an increase of $1,317,000, of which $652,000 is for expanded workload and $665,000 for reclassification of inspectors.

Mr. WHITTEN. Again, the Congress passed an act which authorized Civil Service to review the grade classification and it leaves you with no alternative except to pay at the increased rate. Is that correct?

Mr. GRANGE. That is our understanding, Mr. Chairman, although the Commission is being somewhat understanding and tolerant at the present time, because of the fact that it recognizes that our present appropriation does not cover the additional expense that would be involved in this reclassification.

Mr. WHITTEN. Mr. Horan, I believe, originally started the idea here with the committee, and I think it is sound, that we better start exploring the possibilities of working with the States and accepting their inspection in the areas where we can. All States don't come up to the standards, but some of them do. Something is going to have to give, when it gets to where the inspection services get up into the $40, $50, or $60 million bracket, particularly when a lot of it is just so the trade can get this "U.S. inspected" label on it. I think the desire for that, from a sales standpoint, is probably far more important than any protection of health, particularly in some parts of the poultry business. Do you know enough about the States to tell us whether that offers much hope?

Mr. GRANGE. I have a few remarks, Mr. Chairman, that I would like to make in connection with our expected expansion for 1965 and then I would like to make a few comments concerning the matter of the possibility of State participation. But I think the factors that are involved insofar as our expansion in workload is concerned have a definite bearing as to the possibilities in regard to the State participation.

Mr. WHITTEN. You might proceed in your own way.