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Status of Program

Current Activities: The Office of Transportation was established by the Secretary of Agriculture on December 12, 1978, and its primary purpose is to assure a continuing viable transportation system for agricultural and rural areas in the United States.

There are several major areas of responsibility:

Technical research and development activities are performed by a staff of transportation specialists, engineers, and economists. This staff develops better ways of transporting agricultural products by extending the newest technological innovations to the needs of the agriculture and transportation industries.

Rate analyses assure farmers and rural Americans fair representation before various regulatory agencies. These regulatory agencies determine rate charges for the transportation of agricultural commodities and adequate transportation service for non-urban areas of the country.

Economic analyses are performed on alternative transportation systems to enable the Department of Agriculture to develop policy recommendations for addressing current or anticipated problems in agricultural transportation.

Performance of the above duties will help assure that the United States continues to improve the effective use of its transportation resources. It will help assure an orderly and equitable flow of commodities from farm to market, and an adequate transportation system for rural Americans.

Selected Examples of Recent Progress:

Staff leadership and support were provided to the Rural Transportation Advisory Task Force. The work included nationwide public hearings. The final report containing over 30 recommendations of the task force was published in January 1980.

In addition to providing an enormous amount of technical assistance for agricultural shippers, receivers and carriers, the Office of Transportation analyzed 110 rate and service adjustments and over 30 regulatory proposals or decisions affecting agricultural transportation. The Office participated in 14 formal cases before the ICC, and was active in a district court case involving an ICC decision.

Research projects included studies on equipment for shipping perishable agricultural products, more efficient refrigeration systems, and more efficient systems for transporting livestock overseas.

Economic analyses included a Northeast potato marketing study, National Cotton Flow Study and studies on shipping fresh fruits and vegetables from California and Florida. A major function of the Office was providing technical assistance and guidance to U.S. and Mexican government officials, agricultural product exporters and importers and transport companies to expedite U.S. shipments into Mexico.

Obligations by State: Following is a distribution of obligations by State for the Office of Transportation:

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FRIDAY, MARCH 6, 1981.

AGRICULTURAL COOPERATIVE SERVICE

WITNESSES

RANDALL E. TORGERSON, ADMINISTRATOR, AGRICULTURAL COOPERATIVE SERVICE

JACK H. ARMSTRONG, DEPUTY ADMINISTRATOR, AGRICULTURAL COOPERATIVE SERVICE

BENNIE T. COCKFIELD, DEPUTY DIRECTOR, FINANCIAL MANAGEMENT DIVISION, AGRICULTURAL MARKETING SERVICE

STEPHEN B. DEWHURST, BUDGET OFFICER, DEPARTMENT OF AGRICULTURE

C.W. MCMILLAN, ASSISTANT SECRETARY DESIGNATE, MARKETING AND TRANSPORTATION SERVICES

OPENING REMARKS

Mr. NATCHER. The Committee will come to order. We take up at this time the Agricultural Cooperative Service. We have before the Committee Mr. Randall E. Torgerson, the Administrator. Mr. Torgerson who do you have with you?

Mr. TORGERSON. Thank you, Mr. Chairman. We appreciate the opportunity to meet with the distinguished Chairman and Members of this Committee today to present our programs and funding requests for the newly created Agricultural Cooperative Service. With me today are our newly designated Assistant Secretary for Marketing and Transportation Services, C. W. "Bill" McMillan; Bennie Cockfield, Deputy Director, Financial Management Division, Argicultural Marketing Service; Jack Armstrong, Deputy Administrator; and, of course, Steve Dewhurst from the Department's budget office.

Mr. NATCHER. Go right ahead.

OPENING REMARKS OF THE ADMINISTRATOR, AGRICULTURAL

COOPERATIVE SERVICE

Mr. TORGERSON. While we as an agency are not new, being authorized by the Cooperative Marketing Act of 1926 and the Agricultural Marketing Act of 1946, we do have a new name. The Agricultural Cooperative Service was established on September 17, 1980, by Secretary's Memorandum No. 2025. In this memorandum, the Agricultural Cooperative Service was reorganized from the Economics, Statistics, and Cooperatives Service. Prior to the establishment of ESCS in October 1977, our current activities were performed by the Farmer Cooperative Service. Since the Agricultural Cooperative Service is a new agency in the budget process, I would like to briefly outline the Agency's major programs.

INTERNAL ACS ORGANIZATION

We are organized into three operating divisions, which are the Cooperative Marketing and Purchasing Division, the Cooperative Management Division, and the Cooperative Development Division. In the Cooperative Marketing and Purchasing Division we specialize along commodity lines and in international trade. The Cooperative Management Division is basically a functional crosscut, covering such areas as organization and management, finance, history and statistics, policy, member relations. The Cooperative Development Division is involved in assisting various types of producer groups that are in the process of organizing new cooperatives.

LEGISLATIVE AUTHORITY

The Secretary has assigned to the Agricultural Cooperative Service functions under the Cooperative Marketing Act of 1926 and certain functions that relate to the economic and marketing aspects of farmer cooperatives under the Agricultural Marketing Act of 1946.

PROGRAM ACTIVITIES

The Agricultural Cooperative Service is the focal point for providing governmental assistance and policy advice to agricultural cooperatives. We provide assistance to support and improve existing cooperatives and to help farmers organize new cooperatives. Our bottom line purpose is to help farmers help themselves.

Agricultural Cooperative Service's research efforts provide farmers with information on financial, organizational, legal, social, and economic aspects of cooperative activity. Our technical advice is aimed at helping farmer cooperatives keep pace with today's rapidly changing economic environment. Our efforts concentrate on providing immediate response and leadership to bring about more effective and efficient cooperative operations in support of family farmers. These missions are very clearly spelled out in the Cooperative Marketing Act of 1926.

Our main mission is to provide research and analysis on problems facing cooperatives and technical assistance to individual cooperatives on a request basis.

In addition, we also collect history and statistics on farmer cooperatives, acting as the Federal Government's repository for information on farmer cooperatives. Another mission performed by the Cooperative Development Division is providing assistance to newly organizing cooperatives. Finally, the agency does a considerable amount of work in cooperative education and information areas. The two major functions of the agency are to provide technical assistance and to perform research and analysis. These are done in response to requests that may come directly from farmers or through cooperative boards of directors of local cooperatives or other types of cooperative structures which may be composed of several cooperatives, often representing many hundreds, and in some instances, thousands of farmers. Examples of work include providing help in developing new cooperatives, determining the merits of merging cooperatives, and assessing the need for changes in business organization to enhance growth and establish more

effective relationships between cooperatives and other businesses and institutions.

Our cooperative research activities are conducted to give farm operators and policy makers accurate and relevant data on problems relating to cooperatives.

Continual assessments are made to identify major adjustment problems facing cooperatives and to assemble research needed to address them.

Statistical data is gathered to detect changes in market structure, cooperative operations, and growth trends. These statistics help identify and support both our research and technical assistance activities.

The agency also serves as the national focal point for educational information on farmer cooperatives.

CHANGING NATURE OF PROBLEMS FACING COOPERATIVES

The nature and scope of problems facing farmer cooperatives have become increasingly broad and complex due to changes throughout the food production and marketing system. In earlier years farmers' greatest problems were organizing cooperatives to improve competition in purchasing farm supplies and selling raw farm products. Many of these same problems affect farmers today. We are still deeply involved in assisting newly organizing cooperatives. In order to provide this advice more efficiently we have field offices in California, Arkansas, Kentucky, North Carolina, and Maine.

COOPERATIVE DEVELOPMENT TRAINING CENTER

In cooperation with the University of Georgia, we have recently opened a national cooperative development training center. Increasingly farmers are concerned about the financing needs of cooperatives as they become involved in more capital intensive operations, such as further processing, marketing and distribution. Maintaining and strengthening the financial base of cooperatives is particularly important in these times of high interest rates and inflation.

PROBLEMS AND OPPORTUNITIES FOR FARMER COOPERATIVES

During the past decade factors affecting the operation of agricultural cooperatives have included changes in business structure, availability of tranportation services, adjustments to the changing energy situation, financing of cooperative growth, and increasing involvement in the important area of agricultural exports.

INCREASING VERTICAL INTEGRATION AND COORDINATION IN THE FOOD INDUSTRY

Probably the most important of these changes in terms of creating problems and opportunites for agricultural cooperatives is increasing vertical integration and coordination within the food industry.

Agricultural cooperatives have expanded into nearly all sectors of the agricultural marketing system. Within the past year and a

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