Mr. GRANT. There are proposals to put meat and poultry inspection on a self-financing basis. This would not reduce employment. It would reduce budgetary expenditures.

Mr. WHITTEN. Mr. Robertson is a relative new-comer.

You have

been here a long time, Mr. Grant. How did we come out when we did that before?

Mr. GRANT. It lasted 1 year, sir.

Mr. WHITTEN. Just about as long as John's stay in the Army?
Mr. GRANT. Yes, sir.

Mr. WHITTEN. I doubt this was done on your belief that we could get it through the Congress and make it whole. Did you express any optimism about the chance of getting this through and holding it, personally?

Mr. GRANT. I expressed some doubt that Congress would adopt the proposal.

Mr. WHITTEN. Your word is not controlling? Mine is not either, Mr. Grant.

What is the next item where you have a decrease proposed?

Mr. GRANT. A proposal involving the Agricultural Marketing Service to eliminate four regulatory acts which that agency now administers. This represents a reduction of $113,000.

Mr. WHITTEN. What acts are those?

Mr. GRANT. Standard Containers Act, Naval Stores Act, Tobacco Seed Export Act, and the Wool Standards Act.

Mr. WHITTEN. Have those proven themselves total failures and failed to benefit anybody or anything?

Mr. GRANT. I would not say that they have proven to be total failures. I think the Agricultural Marketing Service felt in these particular instances that they are not now serving the purposes which they did originally. that conditions have changed, and these might well be abolished.

Mr. WHITTEN. Could we have a statement showing when the acts were passed, what duties are performed under those acts, how many people have been engaged in them, and what developments lead you to the statement that it was felt, other things being like they are, you would cut out such enforcement? Could we have that for the record? Mr. GRANT. Yes, sir.

(The information requested follows:)

AGRICULTURAL MARKETING SERVICE

Laws proposed to be repealed in 1965 budget

1. Standard Container Acts of 1916 and 1928 (two laws).-Enacted to prevent deception in the manufacture of certain types of baskets and hampers used in shipping fresh fruits and vegetables. These laws are carried out through development of standard specifications in cooperation with manufacturers and systematic inspection and testing of containers at the factory or in the Washington, D.C. laboratory. Violations are brought to the attention of the manufacturers and usually corrected. In cases of flagrant violations prosecution and/or seizure are authorized. Need for these laws no longer exists since (1) most fresh fruits and vegetables are now sold by weight or count rather than by volume measure and (2) over 90 percent of fresh fruits and vegetables are shipped in new types of containers not covered under these laws.

2. Tobacco Seed and Plant_Exportation Act of 1940.-Enacted to prevent development and expansion of Flue-cured tobacco areas outside the United States Under this act, the Secretary issues permits for exportation of tobacco seed and plants where evidence indicates that consignee is a representative of a government institution or an agency engaged in conducting agricultural experiments in the course of scientific research. No longer needed because tobacco growing areas outside the United States have now been highly developed.

3. Naval Stores Act of 1923.-Enacted to prevent adulteration and misgrading of turpentine and misgrading of rosin. The work performed includes: (1) Preparation of objective standards for rosin and color standards for turpentine involving laboratory work on testing of properties and methods of analysis for many different kinds of naval stores products in cooperation with industry and with the committee on naval stores of the American Society for Testing Materials; (2) inspection and grading of crude pine gum, rosin, and turpentine and supervising the work of licensed inspectors; and (3) regulation of marketing practices including labeling, methods of advertising, inducing the sale of the article, or other illegal activities by collection and inspection of samples at important marketing centers. Establishment of standards under the law has corrected the misgrading problem to a large extent and narrowing of price differential between turpentine and its most common adulterant has reduced adulterative practices. The standardization work would not be discontinued. It would continue under authority of the Agricultural Marketing Act of 1946. The total estimated cost of administering this law in 1965 is $54,000 with 5.4 man-years. Of this amount $19,000 and 2 man-years would be retained for standards work.

4. Wool Standards Act of 1928.-Provides for (1) development of standards for wool; (2) grading_wool; and (3) educational and demonstrational programs on wool standards. The work consists of: (1) The development and promulgation of U.S. standards for grades of wool, wool top, mohair, and mohair top, and quantitative specifications for fineness, length, crimp, color, soundness, and handle for the grades; (2) the approval of suppliers of the practical forms illustrating the standards for wool, wool top, mohair, and mohair top; (3) the standardization of tools, methods, techniques, and procedures for sampling, measuring, and testing lots of grease wool, scoured wool, wool top, mohair, and mohair top for determination of qualities affecting value and utility; and (4) the determination of the feasibility of applying quantitative grade requirements to types and classes of imported wool. The standards are distributed to wool growers, educational institutions, the trade, manufacturers, the wool top exchange, customs officials, and others.

The wool and mohair standards are demonstrated to producer groups, marketing agencies, processors, and others interested in the production and marketing of these products in order to acquaint these groups with the technical aspects of grading and the many direct and indirect benefits that accrue to the industry through the use of these standards in the marketing of wool and mohair.

No wool grading is performed by AMS under this act. Customs officials use the standards as a basis for collection of custom duties when inspecting imported wool. Law no longer needed because present standards are adequate for domestic marketing needs. Agricultural Marketing Act of 1946 has authority needed to change standards as necessary. Of the 6 man-years and $75,000 budgeted for this work in 1965, it is proposed to retain 1 man-year and $15,000 for export standards work. The remaining $60,000 and 5 man-years would be savings.

The following table summarizes the estimated reduction through the proposed repeal of these laws:

GRAIN GRADING ACTIVITIES

Mr. WHITTEN. What other cuts have you proposed?

Mr. GRANT. One is the proposal which has been under consideration for a couple of years in one form or another; and that is to change the Grain Standards Act from the type of program that it was in the past to put it on a voluntary basis in accordance with the Agricultural Marketing Act of 1946 and to charge fees for supervisory costs.

Again, this would not reduce employment but would reduce expenditures from the Treasury by $1.9 million.

Mr. WHITTEN. What does that act call for?

Mr. GRANT. At the present time the inspections are performed by State and commercial employees, who are licensed and supervised by the Department of Agriculture.

If a person who has had grain graded appeals that grade, he pays the Department for the requested regrading. These payments run about $600,000.

If the original grade is upheld, the payment made for regrading goes into the Treasury. If the grade is changed, the payment is refunded. Mr. WHITTEN. What is the volume of activities presently carried on? Mr. GRANT. I would have to put that in the record. Mr. WHITTEN. I would be glad to have it.

(The material requested follows:)

Volume of grain inspection (by licensed inspectors federally supervised) and appeal activities (by Federal inspectors under the U.S. Grain Standards Act) 1

1

1 Users of this service pay a fee to the licensed inspector. No Federal fee is charged except in the case of appeal inspections when licensees' grades are not changed.

2 Not available.

Mr. WHITTEN. As I understand it, the Government licenses these inspectors, which means you pass on the ability and qualifications. You can cancel their approval, is that correct?

Mr. GRANT. Yes, sir.

Mr. WHITTEN. When you say voluntary, as opposed to mandatory inspections now made, do you mean you would inspect only when the warehouseman or other person requested it?

Mr. GRANT. That is right. It would be voluntary, but for all practical purposes it would be necessary for them to obtain a grade if they were involved in a business transaction requiring a U.S. grade. It would be handled in the same manner as all other commodities under the Agricultural Marketing Act of 1946. Exporters would still require grading, if the contract called for a particular grade. The same would be true on domestic sales of course.

Mr. WHITTEN. What do you mean? If they sell it, do they have to have it inspected?

Mr. GRANT. If the contract of sale requires that a specific grade be delivered, it would of course have to be graded to be sure that it met that particular specification.

Mr. WHITTEN. You say we are going to save a million-some-odd dollars because we are going to make it voluntary, where we have had it compulsory. Then you say it remains compulsory if they sell it by grade or class. How much grain have you ever heard of being sold without reference to quality or grade?

Mr. GRANT. I am not familiar with the details of it. I don't think there is very much.

Mr. WHITTEN. Let's go a step further. We have had a little scandal here lately about selling wheat to Austria that was diverted. I recall reading in the press lately a lot of scandal involving the operations of a manipulator in the oil field, I believe, in fats and oils.

Mr. GRANT. Yes, sir.

Mr. WHITTEN. If I understand you, you in the Department are proposing a system where the issuance of warehouse receipts will not be protected by any type of inspection by the Department. So it will just run free and wild, and lend itself, to more scandals.

Let us suppose that I have a big elevator and you quit requiring compulsory inspection. I don't sell it, I sit there and hold grain. Folks store their grain with me. I issue warehouse receipts. But the grain itself doesn't leave there. Nobody comes around to inspect it because it hasn't been sold. I recall when Mr. Brannan was Secretary of Agriculture, they got in that kind of situation. As I recall it, on investigation by this subcommittee we found a world of people who had a lot of warehouse receipts out who didn't have any grain. In fact some of them went to the penitentiary.

Are you inviting that kind of a thing again by not requiring inspection but just leaving it up to voluntary inspection?

Mr. GRANT. As I understand the proposal, Mr. Chairman, where a warehouse receipt or a particular transaction requires it, the specific grades would have to be determined and met.

Mr. WHITTEN. But you said that it would be checked only when it was sold or moved; didn't you? You wouldn't go around periodically to see that the fellow has the kind of grain in his warehouse for which he has issued warehouse receipts for.

Mr. GRANT. The inspection of warehouses is a regulatory activity carried out under the U.S. Warehouse Act, which is different authority. This proposed change deals only with the inspection and grading of the grain per se rather than whether or not it is in the warehouse. We are not proposing a change in the Warehouse Act.

Mr. WHITTEN. If it is in the warehouse, don't receipts specify types and kind? I am not an expert in this field, but I have heard enough testimony here and seen enough trouble in the Department in years past that I am afraid of any change which does away with any degree of inspection. In fact I have become convinced in recent years, if anything, we had too little inspection.

Mr. GRANT. What I said is based on my general understanding of the proposal.

Mr. WHITTEN. Mr. Grant, we realize that you as budget officer sit in on this and have a general knowledge. It is well, since we want to cover all of this, to ask you. I want you to feel free to correct the record to reflect the true facts. We know the best witnesses will be those who deal with it. Feel free to check with the people who deal with it so your answers will be accurate.

Mr. GRANT. I will place a complete statement in the record. I am not yet up to date on the details of some of these proposals. (The material requested follows:)

REPEAL OF THE GRAIN STANDARDS ACT

The Department is proposing legislation to repeal the Grain Standards Act of 1916. This will bring all grain inspection under the Agricultural Marketing Act of 1946 where it would continue to be provided, but on a voluntary and fee basis. When enacted, the Grain Standards Act was needed to eliminate the confusion which resulted from dealers using different sets of standards. Federal standards for grain are now accepted universally in the industry.

Since 1916, however, grain marketing has become increasingly complex and there are today numerous transactions in which the official grade confers no particular benefit upon either the buyer or seller; for example, a sale to a subsidiary company. The grain industry should not be forced to obtain, and pay for, inspection and certification under the official standards unless inspection and certification serve a useful purpose.

CURRENT OPERATIONS

Initial inspection under the act is performed for a fee by a federally licensed inspector. The work of the licensee is under Federal supervision which is financed from appropriated funds. Appeals from licensees' grades are handled by Federal inspectors. A fee is charged for such inspections when the licensee's grade is sustained.

VOLUNTARY INSPECTION PROPOSED

If inspection is provided under the Agricultural Marketing Act, use of U.S. standards would be voluntary and official inspection would be required only when U.S. grades were used in the transaction. That portion of the Federal supervision of licensees which is considered to be of special benefit to the users would thus be financed from fees rather than from appropriations as is now the case. This will put the financing of grain inspection on a basis similar to that for rice, beans, eggs, dairy products, fruits, vegetables, and most other agricultural commodities.

Mr. WHITTEN. These cuts came under duress; didn't they? Mr. GRANT. There was considerable effort to find ways and means of reducing the budget.

SELF-INSURANCE OF CCC COMMODITIES IN STORAGE

Mr. WHITTEN. I think members of this committee have as good a record as anybody I know in trying to hold down expenditures.

My friend and colleague, Walt Horan, called my attention to an article in Nation's Business the other day. It said we were guilty in this committee of fancy bookkeeping, sometimes. May I say that there has never been any action taken by this committee that we