GENERAL ADMINISTRATION

The increase of $92,000 includes $58,000 for additional assistance to the Secretary in coordinating and administering the activities of the Department and $34,000 for the net increased cost of within-grade salary advancements. In five of the items which finance small agencies and offices, provision is made to meet the costs of within-grade salary advancements to the extent that such costs exceed the amounts becoming available by reason of turnover. In addition to the increase of $34,000 for the offices financed from the item "General administration," there are increases for this purpose as follows: Farmer Cooperative Service, $20,000; Commodity Exchange Authority, $19,000; Office of Rural Areas Development, $1,000; and Office of the General Counsel, $69,000.

FOREST SERVICE

The increase of $14,846,000 for Forest Service includes $1,756,000 for forest land management; $3,620,000 for forest research; and $1 million for State and private forestry cooperation. It also includes an increase of $8,750,000 in the appropriation for forest roads and trails.

RURAL ELECTRIFICATION ADMINISTRATION

A decrease of $60 million is proposed in the authorization for rural electrification loans and a decrease of $7 million in the authorization for rural telephone loans. It is estimated that electrification loans made will amount to $300 million in 1964 and in 1965, and the telephone loans will be $90 million in 1964 and $85 million in 1965.

There is also an increase of $127,000 in salaries and expenses reflecting the need for strengthening engineering activities in the electrification program.

FARMERS HOME ADMINISTRATION

There is a decrease of $35 million proposed in the authorization for farmownership loans. These loans are estimated at $10 million in 1965, and it is believed that this decrease is feasible because of the expected availability of private funds for the making of insured loans.

The decrease of $25 million for rural housing loans reflects the elimination of the direct appropriation for this purpose provided in the 1964 Appropriation Act. For the rural renewal program an increase of $990,000 is proposed for loans, technical assistance and administrative expenses under this program to permit continuation of the rural renewal program in 1965 on the full-year basis.

An increase of $1,500,000 is proposed in the revolving fund for rural housing loans for the elderly. Because of the increase of over $1 million from 1963, however, this estimate would provide for an increase of only $500,000 for obligation. Under this program, loans are made to private, nonprofit organizations and agencies to provide rental housing to elderly persons in rural areas.

For salaries and expenses there is an increase of $1,240,100 to provide needed strengthening of the servicing of direct and insured loans.

FEDERAL CROP INSURANCE CORPORATION

A net increase of $39,000 in the administrative and operating expenses of this Corporation is proposed. This consists of a decrease of $2,000 in the direct appropriation and an increase of $41,000 in the authorization to use premium income for these expenses. This increase is needed to provide for an additional workload

under the program.

COMMODITY CREDIT CORPORATION

Mr. GRANT. In the case of the Commodity Credit Corporation, I have a chart, Mr. Chairman, which might be helpful to you in getting a quick view of what is involved.

(The chart referred to follows:)

US DEPARTMENT OF AGRICULTURE

NET REALIZED LOSSES OF COMMODITY CREDIT CORPORATION. FISCAL YEARS 1961 TO 1963, AND APPROPRIATIONS TO RESTORE SUCH LOSSES

Mr. GRANT. The first column indicates the net realized losses by fiscal years. The column to the right reflects the appropriations to restore the losses of the Corporation. Under the procedure of past years, the 1965 estimate would be the same as the 1963 realized losses of $2,654.9 million. However, the appropriation requested for 1965 is $1,724 million, leaving $930.9 million to be restored at a future date. The decision to defer the $930.9 million to a future year is based on the estimate that the $1,724 million is all that will be needed to provide sufficient operating capital for the Corporation to carry out its activities, as we now see them, through the fiscal year 1965.

Mr. WHITTEN. For the record, the Commodity Credit Corporation has $14 billion

Mr. GRANT. $14.5 billion borrowing authority.

Mr. WHITTEN. And the Corporation is authorized to borrow funds up to that amount with which to carry on a myriad of activities, including price support. The Corporation can carry on its operations as long as it is not already invested or committed. It can use any funds it may collect to carry on its operations.

Mr. GRANT. Yes, sir.

Mr. WHITTEN. Plus any funds that Congress might see fit to appropriate.

Mr. GRANT. That is right.

Mr. WHITTEN. There are two ways to approach it. One would be to keep the Corporation fully up to its $14.5 billion level. The other approach would be to restore each year only such portion of the deficit as might be required to discharge its responsibilities under the

law.

You are telling us that in this budget, instead of trying to restore the Corporation to its full $14.5 billion, including what is already

committed or invested, either in prices or loans, you are recommending only funds enough to restore it to the point that you feel would be required to discharge the responsibilities under the law next year?

Mr. GRANT. That is right. And you will notice

Mr. WHITTEN. That lacks how much now of being the full amount that the Corporation would require if you were to make the Corporation whole, so to speak?

Mr. GRANT. For all of its losses? For 1963 losses, it is $930,900,000. For 1962 losses, $100 million that has not been restored, and for inventory revaluation in 1961, there is $1,057 million that has not been restored.

Mr. WHITTEN. There, again, this is an estimate. You recognize the law requires the Corporation to perform certain functions. And also the situation could be improved if you had more sales and received more dollars; is that correct?

Mr. GRANT. That is right. Of course, it is difficult to forecast actual requirements. This is our best estimate at this time.

DISCUSSION OF BUDGET REDUCTIONS IN A NUMBER OF PROGRAMS

Mr. WHITTEN. Mr. Natcher?

Mr. NATCHER. Mr. Grant when I first became a member of this subcommittee, it was an exceedingly easy matter to present this bill on the floor of the House.

I recall, Mr. Chairman, at that time it was more like a parade. They all lined up and we had no difficulty. As you know, that situation has changed somewhat, Mr. Grant.

Mr. GRANT. Yes, sir.

Mr. NATCHER. This bill has become a rather difficult bill to present to the Members of the House of Representatives. I say this to you frankly. We have an able chairman on this committee, and if that were not the situation, we would be in difficulty every year that we present this bill.

Mr. GRANT. 1 agree with you.

Mr. NATCHER. I am very much concerned about some of the reductions and, at the same time, Mr. Grant, the farmers and those interested in agriculture, in the section of the United States that I come from, are in favor of all reductions wherever possible.

I am a little concerned about some of the reductions that you pointed out to the committee, such as payment to the States in the Extension Service where we have a reduction of $2,402,500, and the reduction here that is set forth under Soil Conservation Service, wherein flood prevention receives $2,767,000 reduction.

We have a reduction in ACP and to me, this is one of the programs that benefits the family farmer. Of course, as you know, not only this administration but the prior administration recommended a reduction as far as the future authorization is concerned for ACP on a number of occasions, and this committee has had to restore this money. There are one or two other matters I would like to point out to you, Mr. Grant, that concerned me. One is the reduction in the Rural Electrification Administration, which is $60 million, and the $7 million in the rural telephone loans.

That is the reduction in the budget estimates for 1965 over the amounts authorized for fiscal year 1964.

You have heard me say, Mr. Grant, on more than one occasion that REA is one of the great achievements of our present day government. This program is a long way from final completion. I believe that every dollar necessary for this program should be appropriated.

As I said in the beginning, Mr. Grant, a number of the reductions here, I think can be justified insofar as this bill is concerned. In going through the bill with the witnesses and the heads of the departments, of course we will carefully consider all reductions and increases as you well know.

Mr. Grant, it is always a pleasure to have you appear before the committee, and you always explain your part of the budget in an excellent manner.

Mr. GRANT. Thank you.

Mr. WHITTEN. Mr. Addabbo?

COMPARISON OF 1965 BUDGET WITH 1964

Mr. ADDABBO. Mr. Grant, what is the total requested for the Agriculture Department?

Mr. GRANT. The total budget, in terms of appropriations for 1965, is $6,367,315,600.

Mr. ADDABBO. What was it in 1964?

Mr. GRANT. In 1964, $6,993,341,004.

Mr. ADDABBO. These large reductions, we have in the special milk program $99,834,000. Was this included in the 1964 budget?

Mr. GRANT. In the case of the special milk item this was an appropriation in the 1964 act. The 1965 budget provides that this will be transferred from section 32 funds, therefore, it is a reduction in the appropriation of $99,834,000.

Mr. ADDABBO. It is now going to come out of a different pocket? Mr. GRANT. Yes.

Mr. ADDABBO. So, if we were matching budget to budget items and forget section 32, this $99 million would be added to the $6.3 billion; is that correct? In other words, $6.4 billion is 1965?

Mr. GRANT. Yes; it would have to be added.

Mr. ADDABBO. Would that also apply in reference to the conservation reserve program, where you had $96 million?

Mr. GRANT. No. In this particular case the funds aren't required because the contracts expire, and the land will be coming out of the

reserve.

Mr. ADDABBO. They will start producing and pick up these charges elsewhere?

Mr. GRANT. To the extent the land coming out of the reserve goes back into production, it will have an impact on CCC price support operations.

Mr. ADDABBO. The figure for the reimbursement to Commodity Credit Corporation, $930,900,000-this figure would have also been normally included in the old bookkeeping in the 1964 budget?

Mr. GRANT. $930,900,000; yes. Under the former system of appropriating, this would have been included in the appropriation estimate for 1965.

Mr. ADDABBO. If we actually went according to last year's bookkeeping, we would have to add approximately $1,125 million to this budget, taking the $99 million for the special milk program and

$96 million for the reserve program, and $930 million, we would have to add almost a billion dollars to the 1965 budget.

Mr. GRANT. The $96 million for conservation reserve, would have come out regardless of what system you followed, because this is an actual reduction in the appropriation needed due to the fact that certain contracts on lands in the conservation reserve program expire at the end of this year and further payments will not be required.

Mr. ADDABBO. Could we expect a good portion of the $96 million would be picked up along the line in the other surplus program, or as the Secretary said last week, in programs where we are bringing in grasslands and trees and other programs?

Mr. GRANT. If the proposed cropland conversion program is extended, some of it would be picked up there. But provision has been made for that in the budget totals.

Mr. ADDABBо. It is made?

Mr. GRANT. It is made in the budget; yes. So that it would not be an increase, insofar as 1965 budget estimates are concerned.

Mr. ADDABBO. Under the Foreign Agricultural Service, there was an increase of a million-odd, even though there were certain adverse facts brought out in the last year before the Congress of certain moneys spent on certain programs by Foreign Agricultural Service, and still the Secretary felt that this had higher priority over and above the priority for facilities in transportation and marketing research.

Mr. GRANT. Yes, sir. Primarily, as I understand it, because of the need to increase exports of agricultural commodities in the interest of helping American agriculture as well as our balance of payments. Other segments of the economy are also affected by increased exports.

FOREIGN ASSISTANCE PROGRAM

Mr. ADDABBO. Under the foreign assistance program you show an increase of $441 million. Let me ask, Is this actually American dollars that are going to be paid to someone?

Mr. GRANT. You are referring to title I, Public Law 480?

Mr. ADDABBO. Yes.

Mr. GRANT. This is where we sell commodities for foreign currency. It would mean dollars for reimbursing the exporter if he buys in the open market, or it may mean, if the commodities are shipped from CCC inventory, payments to CCC, thereby reducing the amount of appropriations required for the Commodity Credit Corporation, or it may involve expenditures for ocean transportation if it was shipped in U.S. bottoms.

WHEAT SALE TO RUSSIA

Mr. ADDABBO. In other words, part of this money is going to pay for the current wheat deal with Russia?

Mr. GRANT. No, sir; because that is not sold under Public Law 480. Those are sales for dollars, commercial sales.

Mr. WHITTEN. Will the gentleman yield?

Mr. ADDABBO. Surely.

Mr. WHITTEN. Several folks have asked how much extra cost this will be to the Government by reason of using American ships. Understand, I am not opposing that measure. But if the Government is paying anything extra by reason of using American ships I think the figures should be in the record.