In a county in Florida, we noted that a portion of a farm had been divided into lots for a housing project. According to the ASC records and aerial photographs of the farm, the acreage which had been divided into lots was still considered as farmland for farm program purposes. About 160 acres had been sold as a housing subdivision in 1956, and another 1,280 acres had been sold in 1959. The county office manager had no knowledge of these sales. In addition, the aerial photograph showed, as part of this farm, approximately 200 acres which the owner stated he had never owned or leased. In a county in Ohio, we found that none of the three farms visited was properly constituted. In two cases, acreage which qualified as a single farm was not combined; in the third case, where leased land was combined with another farm, our visit disclosed that the land was no longer leased and therefore the combination was no longer valid. In view of the importance of proper farm constitution in the conduct of the various agricultural programs, and in order to minimize any improper participation in these programs as a result of changed farm conditions, we recommended in a report to the Administrator, Commodity Stabilization Service, that procedures be established providing for systematic review of farm constitutions by ASC county offices. We were advised in reply that action had been initiated to revise current operating instructions to further emphasize the responsibility of county committees in the reconstitution of farms with the aim of achieving a continuing review of farm constitutions. COMMENTS OF THE COMMODITY CREDIT CORPORATION WITH REFERENCE TO A REPORT BY GAO Subject: Packaging dried milk and cheese in tin cans and suggested use of plastic bags and paper containers. The Corporation cannot accept the claim that the CCC incurred "excess" costs by packaging in tin cans. Such a claim does not reflect the problems involved in maintaining quality and related storage costs; it does not take into consideration differences in freight costs; and it does not take into consideration the absolute necessity for tin containers for cheese under some circumstances. Further, the GAO report does not give credit to the concern we have had with this program for a number of years and the real progress that has been made in developing and utilizing cheaper containers. In 1956 milk packed in paper constituted 20.8 percent of all packaged milk donated; in 1959, when GAO cited this item, about 85 percent of the donated milk was moving in paper containers; and for the past year, practically 100 percent of dried milk moving abroad was in paper containers. With regard to packaging processed cheese, the CCC is convinced that there are very few instances where the tin package is not needed to provide the necessary protection for the commodity. In light of the losses that have occurred on cheese, even when packed in tin, we are convinced that paper cartons and plastic bags cannot be used under the conditions existing for shipping, refrigerating, and distributing in the great majority of country programs. Subject: Cotton exports financed at excessive prices. The Corporation has taken several actions with reference to instructions and procedures to strengthen the price review procedure. However, we question the use of estimated gross profit information in the GAO schedules since it tends to be misleading in indicating a basis for claims where a basis may not exist. In connection with individual cases cited by GAO, all but four have been found to be priced within permissible ranges and there is no basis for claims. For the remaining four cases, additional information is being obtained for a necessary basis for determination and negotiation, if any. Subject: Delay in canceling insurance on cotton acquired by CCC. The insurance carriers refuse, and indicate they will continue to refuse in the future, to follow a policy of canceling insurance with tag lists to be supplied subsequent to cancellation. Therefore, the Corporation cannot require warehousemen to negotiate storage contracts which would provide for cancellation of insurance on date of acqusition by CCC. In the 1959 and 1960 programs, delays in canceling insurance were reduced to a minimum by the nature of the operation. For the 1961 program, because our New Orleans commodity office will perform certain custodial functions, the expected time required to cancel insurance on producer loan collateral will be minimized but there will be some time required to furnish tag lists and obtain cancellation on co-op loan collateral. Subject: Settlement on inferior grain storage bins. The services of a metallurgical engineer were obtained, and through field testings, the amounts of possible claims were determined for the four suppliers of the defective bins. One claim has been paid in full; two claims were so small that they did not warrant the costs required to obtain collection; the fourth claim has been merged with an earlier claim against the Corporation by the supplier and final disposition of the merged claim has not been determined at this time. Subject: Export prices for cotton have not been competitive in the world market. The Corporation does not agree that the export prices have not been competitive. The degree of competitiveness is properly measured by the ability to retain a fair share of the world's cotton market for cotton produced in the United States. The total exports for the last 3 years have been as follows: 1958-59 marketing year, 2,800,000 bales; 1959–60 year, 7,200,000 bales; and 1960–61 year, about 6,500,000 bales; an average of approximately 5,500,000 bales per year. The Corporation has recently advised GAO that annual determinations of the "fair share" will be made, and on the basis of such determinations, the Corporation will continue to maintain a competitive position, unless other factors become controlling. Subject: Costs of grain storage at selected commercial warehouses. Neither the Department nor the warehouse industry is desirous of having plant capacity overexpanded or in having too many newcomers attracted by tales of big profits. Increased outlays for storage of CCC-owned commodities have been occasioned principally by the rapid building of its inventories rather than by the rate structure. Studies are made periodically to determine the adequacy of storage space, and also to determine actual operating costs of storing grain commercially. A cost study preceded negotiation of amendments to the uniform grain storage agreement which were made effective July 1, 1960. The amended agreement reduced storage rates about 3 cents per bushel, to a rate of approximately 13.5 cents per bushel for a full year's storage. Subject: Farm reconstitution. The attached extracts from correspondence contain the comments of the CSS. Mr. A. T. SAMUELSON, Director, Civil Accounting and Auditing Division, DEAR MR. SAMUELSON: This replies to your letter of May 13, 1960, coded B-118622, directing our attention to what was considered to be weaknesses in county office operations as revealed by a recent review of the agricultural stabilization and conservation State and county offices in Illinois, Mississippi, Nebraska, Ohio, Oklahoma, South Dakota, and Texas. It is recognized that there is some variation in the application of the "farm" definition; however, a concerted effort has been directed toward correcting this situation through both procedural and administrative guidance to State and county offices. On the basis of earlier discussions with representatives of your organization, action has been initiated to revise current operating instructions to further emphasize the responsibility of county committees in the reconstitution of farms. The amended procedure, when issued, will provide that the county committee, through the county office manager, is responsible for promptly initiating such action as is necessary to properly constitute land units as farms and to reconstitute land units that are not properly constituted. The procedure will also point out that this is a matter that requires a continuing review with a basic review being accomplished each time an allotment is established for a farm and at any other time a land unit is involved in a program administered through the county office for which a farm is the fundamental basis for par ticipation for compliance. Additional emphasis will be placed on this responsibility through supervisory and administrative personnel working with the State and county offices. In this connection it must be recognized, however, that there is no common source of information on which the respective county committees may rely in positively identifying those land units which are to be constituted as farms. The conditions of farm constitution primarily revolve around the "operation" of the land. Since this information, in many instances, is not documented, it is necessary for the county committees to rely on personal knowledge, land transactions carried in local newspapers, information supplied by farm owners and operators of land tracts, transactions and leasing arrangements, and any other sources that may be available to them. Whenever a reporter or a representative of the county committee visits a farm for the purpose of making a program determination, he records on his report any deviation from the farm constitution documented in the county office records. In addition, the notice of allotment mailed to the operator of record in the county office requests that he advise the county office of any change in his farming operations. It would appear that the periodic review, which will be provided by the revised procedure and increased emphasis through supervisory and administrative channels, should substantially contribute to the effectiveness of this phase of the program operations. Mr. A. T. SAMUELSON, DEPARTMENT OF AGRICULTURE, COMMODITY STABILIZATION SERVICE, Washington, D.C., July 28, 1960. Director, Civil Accounting and Auditing Division, DEAR MR. SAMUELSON: This replies to your letter report (B-118622) of a review of selected activities of the ASC State office and the Alachua, Levy, Marion, and Indian River County offices in Florida. Since your Office has transmitted copies of the report direct to Mr. Paul M. Koger, Administrator, ACPS, by a letter dated July 6, 1960, comments on agricultural conservation program matters referred to in the report will be included in a reply from the Administrator, ACPS. It is recognized that increased emphasis must be placed on the importance of proper farm constitution to the equitable operation of programs administered through State and county offices. As pointed out in our letter of June 9, 1960, certain procedural revisions have been implemented to emphasize the responsibility of county committees to constitute land units in accordance with the prescribed farm definition. In addition to the points referred to in that previous letter, we are also providing in the revision for identification of participating farms on the serial photographs. This action is currently required by performance instructions and has proven to be very helpful in the ready verification of farm constitutions. It not only assists the county office personnel in maintaining farm constitutions on a current basis, but also serves as a visually definable area to be verified by the farm reporter at the time he visits the farm for the purpose of making program determinations during the year. Sincerely yours, CLARENCE D. PALMBY, Acting Administrator. Mr. WHITTEN. We turn now to the agricultural conservation program. I ask that pages 1 through 13 of the justifications be included in the record at this point. (The justifications requested are as follows:) AGRICULTURAL CONSERVATION PROGRAM SERVICE PURPOSE STATEMENT The Agricultural Conservation Program Service has the primary responsibility for the administration of the agricultural conservation program authorized by the provisions of section 7 to 16(a), inclusive, and section 17 of the Soil Conservation and Domestic Allotment Act, as amended; and the emergency conservation measures authorized by the Third Supplemental Appropriation Act of 1957 and the Supplemental Appropriation Acts of 1958 and 1959. It determines the conditions under which public sharing of farmers' conservation costs is needed and justified to protect the Nation's interest in preserving agricultural land and water resources. It also determines the extent to which such costsharing should be offered, how, when, and where it will be accomplished, and whether the results are in accord with sound public policy. In making these determinations, State and county ACP development groups are asked for recommendations which are given full consideration. The Service administers the following programs: 1. Agricultural conservation program: To achieve the objectives of this program which include (1) restoring and improving soil fertility, (2) reducing erosion caused by wind and water, and (3) conserving water on land, the Agricultural Conservation Program Service offers cost-sharing assistance to individual farmers and ranchers in the 50 States, Puerto Rico, and the Virgin Islands for carrying out approved soil-building and soil- and water-conserving practices on their farms. This assistance represents only a part of the cost of performing the practice. The farmer bears the balance of the cost and in addition supplies labor and management necessary to carry out the practice. Allocations are made to States based upon conservation needs. Cost-sharing assistance is offered only for the soil, water, and woodland conservation practices considered necessary to meet the most urgently needed conservation problems of the farm, which would not otherwise be carried out to the extent needed. To be eligible for cost-sharing assistance the farmer must make application therefore before beginning the practice. Conservation measures for which cost-sharing assistance is offered, include practices primarily for: (a) Establishment of permanent protective cover. (b) Improvement and protection of established vegetative cover. (c) Conservation and disposal of water. (d) Establishment of temporary protective vegetative cover. 69248-61-pt. 2- 49 |