As you have very properly underlined, research in this area has not been adequate, and we believe that there is substantial promise of real improvements in this regard. I certainly share your concern and the emphasis and importance which you have set forth here is such that this area ought properly to command more resources and more attention and we intend to give it such. Mr. NATCHER. Thank you, Mr. Secretary. As we go along on the hearings of agricultural appropriations for fiscal year 1965, of course Dr. Shaw and others from the agricultural research section will appear before our committee and we will take this matter up with them from the standpoint of the different types of research that are underway at this time in tobacco, and get their ideas too, Mr. Secretary, along this line. This is an important matter and I say to you quite frankly that the people in my State believe that if tobacco is harmful to the health of our people, something should be done about it. That is the way my people feel. I do urge that you give this matter serious consideration at this time. If the report of the Surgeon General is correct in any detail concerning certain conclusions that he and the members of the staff have reached, then certainly something should be done about it. I do appreciate your statement in answer to my question and I again want to emphasize the importance of this matter. Mr. Chairman, with your permission, I would like to discuss with you some of the ideas that I have in mind in regard to additional research for tobacco. I believe that we must immediately expand the program of research into the plant breeding, culture, production, and handling of tobacco. We must include studies of the factors which may be detrimental to health and ascertain as soon as possible those quality factors and other characteristics which will preserve the desirable characteristics of tobacco and eliminate any factors which may be detrimental to health. While some good tobacco research has been done, much remains to be done. Our tobacco industry has reached the point where more basic fundamental research needs to be done in production, quality, utilization, and distribution. Perhaps the most urgent need in all types of tobacco is improvement in quality. In this connection, it should be recognized that "quality tobacco" is produced by control of plant material, disease, and environment during growth. Quality is maintained with accurate environmental control in the curing and aging processes. Thus, quality depends on the total of all factors of production, processing, and aging. Essential knowledge for producing high-quality tobacco of all types, with minimum human effort and cost, should be sought through expanded programs in all areas of tobacco research. Research in the chemistry and physiology of tobacco has increased tremendously in recent years. The study of chemical constituents of tobacco of all types must be continued to aid the plant breeder in producing varieties of desirable composition and to provide information that will enable the farmer to put on the market a product desirable to the manufacturer and to the consumer. There is a need for fundamental knowledge in biochemistry, enzyme reactions, and the pathways of synthesis of tobacco constituents. Once the pathways of the synthesis of alkaloids have been elucidated the plant breeder may use this knowledge in his program to develop a more desirable plant or steps may be taken to alter these pathways in order to produce more desirable tobacco. New varieties of tobacco resistant to the major diseases are constantly being developed. These new varieties differ genetically from the established ones. There is evidence that these new varieties respond differently to fertilization and other field management practices. More fundamental information on the physiology of root growth, nutrient uptake, and environmental effects on plant growth is needed before these varieties can be properly evaluated. Fundamental studies of the uptake and utilization of nutrient elements need to be expanded. Knowledge of the mechanisms and pathways involved in ion uptake by root cells will help in an understanding of the basic reason for varietal differences in rates of nutrient uptake. The metabolic role of cations, particularly potassium, and studies of factors affecting the utilization of calcium and other ions will be continued but needs strengthening in the field of personnel and equipment. A thorough knowledge of nutrient uptake and utilization will be extremely valuable in the production of good quality tobacco. The quality of tobacco of all types is dependent to a great extent on the chemical changes that occur during senescence of the plant. These chemical changes that occur are controlled by the catalytic activity of various enzyme systems within the plant cells. Studies need to be carried out to determine what enzymatic changes take place during senescence of the plant and to determine how these enzymatic changes may be controlled in a manner that will result in a more desirable product. This field needs strengthening in the area of pure organic chemistry. Because of the implications to the health of the consumer from the use of tobacco with insecticidal residues, there is a continuing and urgent need for safer and yet more effective methods of control of insect pests of tobacco. Studies on the effect of methods of application of insecticides on time of application before harvest, and of various experimental as well as established curing and processing practices in reducing or eliminating insecticidal residues should be immediately expanded. SMALL WATERSHED PROGRAM Mr. Secretary, I certainly enjoyed that portion of your statement that appeared on page 16 concerning the Mud River watershed which is located in southwest Kentucky. Just to show you how these projects develop and the benefits that are produced, I wasn't at all surprised to hear your remarks concerning this watershed and the benefits that it has brought to this particular section of our country. In your statement, you stated that property values around the lake are rising and construction projects, together with increased jobs from recreation, will bring employment to about 170 persons. Availability of water helped convince one firm to locate a plant in the community and another firm to double its size. Over 700 new jobs have been created. Mr. Secretary, through the years since I have been a member of this subcommittee, our chairman, Mr. Whitten, of Mississippi, and other members of this committee have always taken a great interest in our small watershed program in this country. If you go back and check the records, you will find that Public Law 566 had its beginning in this subcommittee. Speaking of this particular watershed, I remember back in 1955 when your predecessor appeared before our subcommittee, I inquired as to just what the trouble was in regard to the Mud River watershed, and this appears on page 239 of the hearings for fiscal year 1956. I want to read you just a portion to show you the difficulty we have, sometimes, in bring about some of these projects, and I quote from the hearings: Mr. Secretary, next I want to talk to you a little bit about our soil conservation program and especially the watershed end of it. In the State of Kentucky, on January 20 of this year, our State conservationist, sent to your administrator, Mr. Williams, here in Washington, some six designated watershed projects for the State of Kentucky. The first watershed, Mr. Secretary, was the Mud River watershed. This is in my congressional district and in my section of the State. The second was Canoe Creek, the third, Twin Creek, the fourth, Cypress Creek, the fifth, Meadow, the sixth, Big Reddy. Here is the point I have in mind, Mr. Secretary. As I understand, the first watershed project here has been momentarily set aside, the Mud River watershed, due to the fact that the Corps of Engineers filed a memorandum in this case pointing out the fact that as a result of prior authorizations there is a project now pending which would, if constructed, flood this particular area, and also the same would be overflowed from the waters of the Green River. Now, that is the Mud River watershed, Mr. Secretary, and I am just wondering this, in 1938, under the Flood Control Act that was passed in Congress, Mining City Dam was authorized. In addition to the authorization of the Mining City Dam, there were some four smaller flood-control reservoirs authorized. Now, the Mining City Dam will never been constructed, Mr. Secretary, at least not as long as I am the Representative of the Second Congressional District of Kentucky, and as long as it floods thousands of acres in my home county and takes thousands of acres of the lowland in my district. I say that to you advisedly. I am just wondering, Mr. Secretary, as to whether or not a memorandum, such as that, should hold up a watershed project like it has the Mud River watershed project and like it has the Cypress Creek project. As a matter of fact, the Corps of Engineers point out that if those projects were started in the future, there might be some conflict. Do you run into that quite often? Secretary BENSON. May I refer you to Assistant Secretary Peterson? Mr. PETERSON. Congressman I am not personally familiar with the particular project of which you speak. However, the Bureau of the Budget regulations do provide for correlation between various agencies of the Government concerned in the watershed projects. We have just recently started the planning work in connection with the watersheds which have come through, recommended by the appropriate State authorities, either the Governor or his designee. We would be glad to look into that particular matter and give you more detail on it than I am at this particular moment. Mr. Secretary, I do want to commend you on that portion of your statement concerning this Mud River watershed and to say to you, frankly and seriously, under the leadership of our chairman, Mr. Whitten, this committee has been very much interested in this program all down through the years, and every word contained in your statement pertaining to the Mud River watershed is correct. There are some 280,000 acres in this watershed and it has been a great benefit to my section of the country. I want you to know we appreciate this watershed. Mr. Secretary, I want to thank you for your appearance before our committee. Mr. WHITTEN. Mr. Addabbo? TOBACCO RESEARCH Mr. ADDABBO. On the question of tobacco, in the meetings we had in Tokyo, one of the things brought out, was that one of our good money exports is tobacco, and I think that with our own statements coming out against tobacco, it may also hurt this as an export. So, I think here is another reason why we should have this research. LOAN RATE UNDER COMMODITY PROGRAMS With reference to your statement, Mr. Secretary, on page 6, you speak of the benefits of the loan price, et cetera, to the farmer. What concerned me was you have the price at harvest, $1.59, and the loan price, $1.68, approximately 9 cents more than what the market provides. Is this a Government loan? Secretary FREEMAN. Yes. Mr. ADDABBO. Is this the usual practice that the loan given is higher than what the actual present market price is at the time of the loan? Secretary FREEMAN. Well, it will often happen that when a commodity is harvested and it hits the market in substantial quantity, it will have a significant price depressant effect. The loan program, under such circumstances, functions to permit the farmer to be financed and contributes to more orderly marketing as he need not accept the low early season price but can wait until price smooths off. He can then redeem the loan at market and benefit from what is the real price, rather than being subject to the financial pressures and also to the speculation that otherwise takes place. Mr. ADDABBO. Who sets this loan price? Secretary FREEMAN. The loan rate is set by the Secretary on most commodities. Mr. ADDABBо. What is the interest rate on this loan? CREATING NEW JOBS IN RURAL AREAS Mr. ADDABBO. On page 9, where you say "Creating New Jobs" in the last sentence you say: "Last year, the REA helped to launch at least 535 industrial and business enterprises in rural areas." Is there sufficient guarantee and proof that none of these businesses were just displaced businesses or transferred businesses from other areas? Secretary FREEMAN. I recall you you asking this question a year ago, Congressman, and we have instructed all of the REA cooperatives in this regard, and we, in every way, seek to prevent the kind of pirating and underbidding which would lure industry from one place to another. Instead, I have consistently urged that local communities, and I based this on my own experience as a Governor, do much better in developing their own talent, resources and programing, than in spending a lot of time lending assistance and running around the country in what is usually rather fruitless expeditions. I think a great deal of money and, by the same token, a great deal of newspaper attention has been gotten by various people in the political arena; but this is not an appropriate return by way of plant locations. So this is our policy-we recognize this problem and seek to prevent it. Mr. ADDABBO. Would it be possible to obtain a list of the type of businesses which were set up in these rural areas? Secretary FREEMAN. Yes. (The information requested follows:) TYPES OF INDUSTRIES AND BUSINESSES ASSISTED BY REA BORROWERS An REA survey at the end of 1963 showed that the 679 REA borrowers reporting had helped with the development of 535 new industries or businesses or expansions during the year. Of these, 160 involved the processing and marketing of local foods and fibers. Another 68 were commercial recreation and tourism enterprises. Of the remaining 307 projects, 63 were expansions of existing industries and businesses in the area. The remaining 244 enterprises were varied. They included enterprises based on sand, gravel, and other local resources; retail and service businesses and various industries, some not specifically identified as to product. REA provides no technical assistance or credit to its borrowers in the transfer of an industry from one area to another. EFFECT OF CROPLAND CONVERSION Mr. ADDABBO. Further, on page 13, you speak of the "Agricultural Conservation Program," and particularly you state there was a shift of 3,000 acres from corn to grass *** and improved 3,000 existing acres of pasture at the same time in Iowa. Is it felt that this may possibly create problems in other areas? In other words, we have dairy surplus, livestock surpluses. Do you think improving 3,000 existing acres of pasture, creating more grassland, would this be creating greater problems? Secretary FREEMAN. No, it would not. For example, that same land converted to grass, could and probably did grow only one-half as much total feed as it did when it was used to produce corn. Further, we have and project a continuing need for an expanding cattle population. And the present practices also require a given amount of pasture and grazing land. Our problem in this area is really one of some kind of reasonable balance between supply and demand, which tends to go on a cycle basis and causes the price breaks. The adjustments envisaged here-by way of moving from the production of, let us say, feed grains, which stimulates production more directly and quickly, into a more balanced use in terms of grazing— I think, are both economically and productionwise sound. Mr. ADDABBO. In other words, on these conservation programs the person wishing to come under the program cannot decide himself that he wants to go into a different program? He must be in another gram, which will not create additional problems. Secretary FREEMAN. We try to have these factors in mind. pro |