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BUREAU OF INDIAN AFFAIRS

State extension service contracts

Oregon State University

South Dakota State College--

North Carolina State College of the University of North Carolina.

Montana State College----

Washington State University_

University of Wyoming

Utah State University---
Oklahoma State University.

University of Nevada___.
University of Minnesota_-
Colorado State University.
University of Florida__

University of Idaho..

New Mexico State University_

North Dakota State University__.

Total

$23, 960

127, 000

19, 200

102, 440

54, 000

26, 000

18, 300

133, 565

46, 885

19, 500

19, 100

24, 200

35, 000

69, 950

50,000

769, 100

DIFFICULTY IN IDENTIFYING ALL FUNDS FOR PARTICULAR PROGRAMS

Mr. HORAN. Mr. Chairman, those are some other funds that really don't affect us, excepting that it is part and parcel of the program that we are dealing with. Yet, they are not made a part of our justification. Mr. WHITTEN. We saw one of the problems in this transfer of funds when the Forest Service was transferred from this subcommittee to the Interior.

You get this money and this committee doesn't have a chance to examine the other department as to the wisdom of it. But by the same token, the department didn't have any idea of what you may or may not need.

I recall a terrible example of what can happen in this. When Korea broke out, one of these new agencies allocated a tremendous amount of money for the production of rubber from guayule.

The committee dealing with that subject, this committee, had proven that it was wholly unsatisfactory, it had failed.

We, in turn, invited the head of that agency, which had allocated this money to put you back in the guayule business, to come before the committee. We invited and invited and he never came. He called and said, "Congressman, I am not coming unless you summons me!" So we managed to stop it, but only after all of this money had been allocated.

That is what happens when you get the money from one source and use it for another. We don't sit on all the other subcommittees to help coordinate these transfers.

Are there further questions, Mr. Horan ?

Mr. HORAN. No.

Mr. WHITTEN. Doctor, we wish to thank you and your associates for your appearance before us. I think we have developed to a considerable degree the facts that are involved here. We wish to thank you.

Dr. DAVIS. We are very happy to be with you and appreciate the courtesy you have extended to us today.

30-087-64-pt. 2—26

THURSDAY, MARCH 5, 1964.

FARMER COOPERATIVE SERVICE

WITNESSES

JOHN A. BAKER, ASSISTANT SECRETARY OF AGRICULTURE JOSEPH G. KNAPP, ADMINISTRATOR, FARMER COOPERATIVE SERVICE

MARTIN A. ABRAHAMSEN, DEPUTY ADMINISTRATOR, FARMER COOPERATIVE SERVICE

J. KENNETH SAMUELS, DIRECTOR, MARKETING DIVISION, FARMER COOPERATIVE SERVICE

HAROLD D. WALKER, DIRECTOR, ADMINISTRATIVE MANAGEMENT DIVISION, FARMER COOPERATIVE SERVICE

GEORGE WALDMAN, CHIEF, BUDGET BRANCH, OFFICE OF MANAGEMENT SERVICES

CHARLES L. GRANT, DIRECTOR OF FINANCE AND BUDGET OFFICER, DEPARTMENT OF AGRICULTURE

Mr. NATCHER. The committee will come to order.

At this time we take up the Farmer Cooperative Service. We shall insert pages 211-216 of the justifications at this point in the record. (The material referred to follows:)

FARMER COOPERATIVE SERVICE

PURPOSE STATEMENT

The Farmers Cooperative Service was established following the enactment of the Farm Credit Act of 1953 (Public Law 202, Aug 6, 1953), which transferred the research and technical assistance work for farmers' marketing, purchasing and service cooperatives, under the Cooperative Marketing Act of 1926 from the Farm Credit Administration to the Secretary of Agriculture.

The Service conducts research, advisory, and educational work with cooperatives on problems of organization, financing, management policies, merchandising, costs, efficiency, and membership to help farmers who are members of such organizations improve the operations of their businesses. It also conducts research relating to the economic and marketing aspects of farmer cooperatives as authorized by the Agricultural Marketing Act of 1946 (7 U.S.C. 1621–1627). It cooperates with the Extension Service; land-grant colleges; banks for cooperatives; State departments of agriculture; and other Federal, State, and private agencies to bring about better understanding and application of sound cooperative principles and practices. It also advises other Federal agencies on problems relating to agricultural cooperatives.

The Service carries on its work through three program divisions-Marketing, Purchasing, and Management Services.

Available funds and man-years, 1963 and estimated, 1964 and 1965

[blocks in formation]

Appropriation Act, 1964.

Salaries and expenses

Activities transferred in the 1965 estimates to "Salaries and expenses, Office of Management Services"_

$1, 201, 000

Base for 1965_

Budget estimate, 1965

Increase__

-141, 800

1,059, 200

1, 102, 200

+-43,000

SUMMARY OF INCREASES, 1965

For net increased costs of within-grade salary advancements---
For increased pay act costs (Public Law 87-793) ---

+20,000 +23,000

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Farmer Cooperative Service conducts research, educational, and advisory work to improve the 9,000 marketing, purchasing, and related business service cooperatives servicing 3 million farmer members. About four of five farmers are members of these cooperatives.

The Service acquires, analyzes, publishes, and disseminates information on farmer cooperatives to further their sound development and operation. This work is carried on in cooperation with cooperative and general farm organizations, land-grant universities, Federal and State extension services, other USDA agencies and State departments of agriculture.

Research is conducted on operations, costs, efficiency, processing, distribution, pricing, selling, and transportation of farm products by farmer cooperatives. Current activities

Changes in agriculture and related economic conditions are causing serious problems for farmers and their cooperative business organizations. These changes include (1) increasing inequality in bargaining strength between farmers and buyers of their products; (2) growing concentration of economic power in the hands of large processors and retailers; (3) more exacting buyer requirements; (4) increased use of contract farming techniques and business intergra. tion; and (5) a widening gap between farm and nonfarm income, particularly in economically depressed areas.

The Farmer Cooperative Service is responding to these trends through special emphasis in the following types of work.

1. Merger and coordination.-Farmer Cooperative Service is keeping coopera. tive officers informed on basic questions of merger, consolidation, and coordination of operations as methods of strengthening cooperative structures and the bargaining position of farmers through their cooperatives.

2. Increasing operating efficiency and reducing costs.-Through its research, Farmer Cooperative Service is developing operating guides and measures to assist

management to evaluate cooperative operations. Research results assist cooperatives to modernize procedures and reduce costs. Studies of transportation costs are assisting cooperatives to reduce these important costs.

3. Improving cooperative financial structures and member support.—Current studies will furnish basic data on amounts of equity and borrowed capital, distribution of net savings, and income taxes paid by exempt and nonexempt cooperatives. A study of selected cooperatives is also being made to determine effectiveness of such distinctly cooperative problems as communications between the associations and members and thus improve member support.

Selected examples of recent progress

1. Strengthening poultry cooperatives through consolidation.-Poultry cooperatives are finding it necessary to merge or unify operations to improve services and keep pace with changes in poultry production and marketing.

The Service has studied the feasibility of cooperative mergers in California, Utah, and Pennsylvania. Cooperatives in these States are planning to put merger recommendations into effect. Proposed action will enable cooperatives to eliminate duplicating services, reduce costs, increase returns to members, and thus will result in stronger bargaining power for poultry producers.

2. Increasing efficiency of cooperative grain elevators.-Farmer Cooperative Service studied costs of grain handling, storage and sideline services, as related to size and type of facility to develop guides for planning efficient grain elevators. Findings highlight the importance of allocating costs to merchandising and storage functions, selection of type of structure to meet the needs of the operations performed, and significance of interest on investment and other cost factors. Guidelines developed in this study will assist cooperatives in designing new elevators and equipment to achieve lowest possible operating costs.

3. Guidelines for broiler and turkey financing.-Farmers are using an increasing amount of credit for broiler and turkey production. Farmer Cooperative Service studied this type of credit used by selected cooperatives. Results showed cooperatives need to use proven credit procedures and develop more completely integrated operations. Guidelines provided in the study will help cooperatives improve financing methods.

4. Improving cooperative motor truck operations.—To fill an information gap on costs, scope of operations, and economic importance of motor trucks operated by cooperatives, Farmer Cooperative Service made a nationwide study of motor truck transportation. We obtained basic data on number, types, size of trucks, and operating practices of 6,100 cooperatives. Findings showed that local pickup and delivery and movements from field to local concentration points make up the major portion of truck mileage. State exemptions are an important factor in these cooperative transportation operations. Farmer Cooperative Service analyzed these exemptions and issued a report useful to cooperatives in improving operating efficiency of their motor trucks.

5. Increasing efficiency of supply operations.-Changes in farming and distribution of production supplies pose difficult problems for farmer cooperatives. Farmer Cooperative Service studied the organization and operations of a representative regional supply cooperative and its member associations to obtain information applicable to other cooperatives on how services can be improved and costs reduced. Findings emphasized the need for (1) offering a better credit program; (2) updating administrative procedures; (3) establishing a fulltime planning and research department; and (4) improving relationships with local associations. Local cooperatives also could improve operations by: (1) closing uneconomical branches; (2) developing better credit control practices; (3) varying pricing practices to suit needs of farmers; and (4) improving relations with farmer members. Results from the study will be helpful in work with other cooperatives or farm organizations.

6. Trends in growth of farmer cooperatives, 1950-60.-This study was undertaken to determine whether or not cooperatives are growing or declining in their importance in agriculture and the economy. Analysis of data accumulated in the study shows cooperative marketings since 1954 have increased at a faster rate than agricultural marketings of all farmers. In addition, purchases of supplies and equipment through cooperatives by farmers since 1952 have increased at faster rates than expenditures for supplies and equipment for all farmers.

7. Joint sales agency developed.-The Service assisted in the organization of a joint sales agency for 11 cottonseed and 7 soybean cooperative oil mills. The

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