Mr. HOLMAAS. Over 1,760 that was estimated under the 1965 budget. That would be up 82. Mr. MICHEL. You are now asking for 32 more, which indicates your estimates were really lousy. They were 30 or 40 percent off. How can you be off so far in your estimate? Mr. HOLMAAS. I think there are a number of things involved in this. One is the number of withdrawals from the program. There are plants coming in and coming out. Apparently less plants withdrew than had been estimated. Mr. MICHEL. What would cause a plant to withdraw? Mr. LENNARTSON. They could go bankrupt, they could go out of Mr. SMITH. Some do not like to face up to the rigors of Federal inspection. As long as they can confine their business to intrastate movement, they would not be subject and could withdraw. Mr. MICHEL. Were your original estimates in this field cut back by the Bureau of the Budget; that is, in 1966? Mr. HOLMAAS. If I recall correctly, they were, although this was under ARS at that time. Mr. MICHEL. How many or how much? Would it be the full amount of this supplemental, do you suppose? Mr. SMITH. No; it is not. Mr. MICHEL. Half of it? Mr. SMITH. Cut back about $1,400,000. INDUSTRY EXPANSION Mr. MICHEL. I see on your chart here the curve rises from 1960 to 1965 and then between 1965 and 1966 made a decided upturn. How do we account for this in 1 year's time? Mr. LENNARTSON. These are industry decisions, Mr. Michel. I do not think there is a man in the Department who could have estimated or comprehended the explosion that has occurred just in the State of Iowa in 1 year's time in the number of plants that are being built out there. Every chamber of commerce is wanting a packing plant in the State of Iowa. This is quite similar to the upsurge that occurred in the broiler plants at one time. This has just been a phenomena. It is likely that the industry can become overcapacitated. There is another influence in terms of efficiencies because of the labor situation, old plants being discarded, and new plants being added, and when they are added, they are usually larger than the old ones. These are the impacts. INSPECTION PERSONNEL REQUIREMENTS Mr. MICHEL. We could get by using fewer inspectors if the plants were bigger in volume of production, could we not? Mr. LENNARTSON. Depending upon the layout of the plant. If it is a slaughtering plant, that is one thing; if it is a continuous line operation where the product goes into processing, needs expand. Any time you start processing a new type of food there is a new checkpoint or inspection point established because the meat is being rehandled. Mr. MICHEL. This increase will reflect itself in how many additional people? Mr. LENNARTSON. Overall, 332 man-years in 1966. VETERINARIANS Mr. MICHEL. Of that number of 332, how many of these would be veterinarians? Mr. HOLMAAS. I do not have that exact figure, but this program runs about 800 veterinarians out of about 3,900. The proportion would be very largely nonveterinarians. Mr. MICHEL. Is the table of organization such that you have a vet overseeing the work of X number of inspectors? Mr. LENNARTSON. Yes. Mr. MICHEL. Then that ratio now is 4 to 1. Mr. LENNARTSON. It would be about 4 to 1. Somewhere between 4 and 5 to 1. This would vary depending on the type of plant. You would have many more nonvets in the processing plants. The heavy impact of vets is in slaughtering where the disease element is quite important. Mr. MICHEL. Does this increase for additional inspectors have anything to do at all with equalizing the number of colored inspectors to white inspectors? Mr. LENNARTSON. No. Mr. MICHEL. None whatsoever? Mr. LENNARTSON. The Department has a program of employing minority races but it is not directly associated with this request. Mr. MICHEL. That is all, Mr. Chairman. Mr. WHITTEN. Mr. Langen? Mr. LANGEN. Thank you, Mr. Chairman, just one question or two. JURISDICTION OF DEPARTMENT I do not know that I am completely clear on your area of jurisdiction yet. To begin with, you are responsible for inspection of meats that move in interstate commerce. Mr. SMITH. Interstate and foreign commerce. Mr. MEHREN. And meat products. Mr. LANGEN. So you inspect this meat as it leaves a plant and then moves interstate to some other State or some city. Mr. LENNARTSON. It may move as carcass meat from a plant in Minnesota and go into a processing plant in New Jersey where it would be subject to inspection there in the processing operation. Mr. LANGEN. At what point does your jurisdiction cease in that movement? When it gets to a market, for instance, such as we had a look at during the trip the chairman described so well? Mr. MEHREN. At the moment, our jurisdiction ends at the outgoing dock of the federally inspected establishment, either slaughtered or processed. Unless the slaughter meat as meat then goes into a federally inspected processing plant. Mr. LANGEN. So if it has to be processed again in some form or another, then you would follow it through that processing procedure until it came out at the other end of that plant. Mr. MEHREN. That is right. Mr. LANGEN. Your statement indicates the need for additional inspectors, which I understand are going to go into new plants that have come into being in recent months or the last year. Mr. LENNARTSON. Or to handle greater capacities in existing plants. STRENGTHENING INSPECTION AT EXISTING LOCATIONS Mr. LANGEN. To what degree will this added money improve the inspection process that already exists, which I understand has permitted some meats to have appeared on the market or to have moved interstate that do not comply with the inspection regulations? Mr. LENNARTSON. It will provide the same type of inspection in the new plants that now prevail in the old in terms of slaughtering and processing. But, Mr. Langen, what we are attempting to impress upon you here is that within existing plants, because of the change in the marketing structure and change in food processing, there are boning operations, there are partial fabrications and so on that have increased and increased. It is in this area that we need some of these men to strengthen the service to avoid this illicit meat from getting commingled with it. We want to do the best job we can in the plants we are responsible for. If we do that, we can stop a lot of this illicit meat from entering them as it has done in some cases. Mr. LANGEN. I can fully appreciate that and I can fully appreciate the complexity of enforcing such a broad area. Mr. LENNARTSON. It is a tremendous job, sir. Mr. LANGEN. Because the processing part of the whole meat industry is certainly growing and folks are buying so much more of the Processed meat in various stages. would think the same thing would be true in poultry. Mr. LENNARTSON. The increase in convenience foods is growing by leaps and bounds. Mr. LANGEN. Much meat may have been roasted or cooked. Mr. LANGEN. All of that needs inspection. I gather it would be done in the event that it is delivered to a point where such processing may take place. Mr. LENNARTSON. Once it enters an official plant, we want to be sure it is the right meat that is coming in and we want to be sure that nothing is added to it when it is in there and it is prepared right when it is in there under sanitary conditions. INSPECTION OF INTERSTATE MEAT SHIPMENTS Mr. LANGEN. One other question that is rather minor but because it has been a problem in our area to some degree, do you have any difficulty with small amounts of meat moving across a State line for minor processing and requiring inspection and somebody complains about it because it goes back to the State where it originated from? Mr. LENNARTSON. We have half a dozen complaints a week, but it is a criminal offense under the law and we have no alternative. Mr. LANGEN. I can appreciate the problem. Thank you, Mr. Chairman. Mr. WHITTEN. Thank you, Mr. Smith and gentlemen. We appreciate your presentation. FARMERS HOME ADMINISTRATION WITNESSES HOWARD BERTSCH, ADMINISTRATOR, FARMERS HOME ADMINISTRATION LOUIS D. MALOTKY, DIRECTOR, RURAL HOUSING LOAN DIVISION, FARMERS HOME ADMINISTRATION L. WALLIS ALVES, DEPUTY DIRECTOR, BUDGET DIVISION, FARMERS HOME ADMINISTRATION LaBRUCE KING, ASSISTANT DIRECTOR, FARMERS HOME DIVISION, OFFICE OF THE GENERAL COUNSEL HARRY B. WIRIN, DEPUTY BUDGET OFFICER, DEPARTMENT OF AGRICULTURE RURAL HOUSING INSURANCE FUND Mr. WHITTEN. We turn now to the Farmers Home Administration, where I believe your request is for $100 million for the rural housing insurance fund, and an additional $4 million for salaries and expenses. The justifications should be inserted at this place in the record. (The justification material follows:) Request (for 10 months from Sept. 1, 1965)..... "RURAL HOUSING INSURANCE FUND $100, 000, 000 "For the Rural Housing Insurance Fund, created by section 517(e) of the Housing Act of 1949, as amended, $100,000,000." EXPLANATION OF LANGUAGE The proposed language provides for $100 million to fund the rural housing insurance fund and insured rural housing program authorized by Public Law 89-117, approved August 10, 1965. This amount is contained in the President's budget for 1966 as a proposed supplemental appropriation for 1966. PURPOSE AND NEED FOR SUPPLEMENTAL FUNDS A $350 million level of insured rural housing loans is anticipated if the new insured loan program becomes operative early in 1966. Families in the lower income levels would require an estimated $300 million for modest housing and an estimated $50 million would be needed for other applicants. The rural housing insurance fund also will be used for insuring farm labor housing loans totaling about $10 million and insured rental housing for the elderly loans totaling about $15 million which are presently insured through the agricultural credit insurance fund. It is estimated that in 1966 approximately 36,000 loans for modest houses averaging about $8,300 each_will be made to low-income families in rural areas at a 5-percent interest rate. In addition, 4,000 loans averaging about $12,500 each will be made to other rural applicants at a 534-percent interest rate. This supplemental is urgently needed in order that the Farmers Home Administration can begin to meet the accelerating demand for housing loan funds in rural areas. Justification for supplemental estimate, fiscal year 1966, for rural housing insurance fund The boung credit needs of rini famille parinkarly the in the low- and modernteáncome levejs, are being only parting met by private sconnes. * Manteingly stated in the testimony on the 1995 housing Hill There argens need to implement without delay the mini botsing kan programs at the maximum authorized capacity to help close this vast kopang erect pap exista in rural America. The $100 million initial capital for the loan, iSTY fund is needed to administer the rural housing program in an orderly manner to avoid increasing the large backlog of applications. The insured rural housing program at maximum capacity authorized by Ly is not large when compared to the extensive need that exists in rural areas fir riral housing credit. Nearly half the families who live in substandard brush. are on farma and in the open country and small towns and villages although cuy a third of our population lives there. Of the approximately 15 million families living in rural areas in 1960, almost 3 million lived in deteriorating houses that needed more repair than could be provided in the course of regular maintenance. More than a million were living in houses that were in such a dilapidated condition that they endangered the health and safety of the occupants and the communitie in which they lived. One out of three homes did not have any bath facilities: one out of five did not even have water piped into the house; three out of five were without central heat. The deplorable housing in which millions of rural people live has received considerably less attention than the slums in our cities. Much less has been done give rural families an opportunity to live in a decent home. About a third of the Nation's elderly men and women live on farms and in small towns and villages. A high percentage live in housing lacking such commonly accepted conveniences as central heating, bathrooms, toilet facilities, and running water. Among the poorest housed of our rural families are the 400,000 migrant laborers. Many of these families live in shelters that offer only partial protection from the weather and have such primitive sanitary facilities that they endanger the health of the occupants and the communities. A high percentage of the housing of our other 3 million farmworkers also is inadequate by any reasonable standard. The housing needs of the low-income rural families generally are acute. The major handicap most of them face is the inadequacy of housing credit and the terms at which such credit is available. Studies by State experiment stations in three States show that rural residents fail to have credit readily available from private sources comparable to families in larger towns and cities, generally the repayment terms are less favorable, the interest rates are higher, and the loanvalue ratios are much lower. The spread between appraised values and current prices of rural homes is so large that rural families with limited equity cannot utilize conventional loans even when such credit exists. Immediate implementation of this insured rural housing loan program as authorized by the Housing and Urban Development Act of 1965 is urgently needed to begin inroads on the tremendous amount of substandard housing that now exists in rural areas. The direct rural housing program of the Farmers Home Administration has been highly successful during the past few years, but far too small. As of January 1, 1965, borrowers had received $783 million in loans and repaid $176.4 million in principal plus $97.5 million in interest. Almost 20 percent had repaid their loans in full, many before they became due. Borrowers with payments due had paid 104 percent of the principal and interest that had matured. Foreclosures were less than 1 for each 1,000 loans that had been made since 1949. Losses have been negligible, amounting to two one-hundredths of 1 percent of the amount loaned. |