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Senator HOLLAND. I wish you would, please, for the record. (The information is as follows:)
Procurement with free dollars by ECA-financed countries of wheat and wheat flour
under the International Wheat Agreement, Aug. 1 through Sept. 15, 1949
WHEAT FLOUR (PROCURED COMMERCIALLY)
(Bushels wheat equivalent]
11, 305 310, 459 307, 900
34, 697 361, 873
1, 026, 234
5, 898, 234
Total.--1 ECA financing had not been requested prior to time of purchase.
Senator JOHNSTON. What about other commodities? How do you handle other commodities?
Dr. FITZGERALD. In connection with the purchases, Senator Johnston?
Senator JOHNSTON. Yes, purchases.
Dr. FITZGERALD. Well, the question being here considered, Senator Johnston, does not come up on other commodities because the international wheat agreement is the only international commodity agreement so far in effect.
In the case of other commodities, if they are purchased from CCC stocks—and we do purchase them from CCC when they advise us they have such stocks—the prices charged us by CCC are in turn charged by us to the participating country,
In some instances where it is considered desirable to assist in the export of commodities that are patently in very long supply and burdensome in this market, the Department has assisted that disposition by making some contribution of section 32 funds as they are authorized to do under the ECA legislation.
Senator HOLLAND. Might we have for the record, please, a breakdown of the purchases with free dollars of ECA countries from the Commodity Credit Corporation in the period since July 1?
Mr. TRIGG. Yes.
Senator Young. Is there any demand on the part of ECA countries for rye?
Dr. FitzGERALD. Germany has rye requirements. Germany and Austria I believe are the only two. Now in the case of Germany, as you know, sir, the grains are financed not by ECA funds.
Senator Young. That is a situation which I have not been able to understand at all. I understand the Army has been trying to buy, through the Commodity Credit Corporation, for a long while. Our production is so small here that probably even a 5,000,000-bushel
purchase, or at least not to exceed 10,000,000 bushels, would bring the price up above support levels and it would relieve the Commodity Credit Corporation entirely of the responsibility of supporting rye. I have contacted the Army many times. In fact North Dakota is the principal rye-producing State.
Rye is below support levels and these countries want to buy rye. Again I am trying to help my farmers and am trying to save money for the Commodity Credit Corporation. Are any rye purchases anticipated by ECA, I mean authorizations to purchase?
Dr. FitzGERALD. As far as ECA countries are concerned, I think we do not have any in prospect, any requirements or authorizations for rye at the present time.
Senator Young. Rye is about half the price of wheat, and I understand they used to eat a lot of rye bread over there, but probably they are used to this white bread and do not like rye any more.
Dr. FitzGERALD. There is still a good demand for rye bread in those countries which have traditionally eaten it.
Senator Young. Have you authorized any purchases of rye in countries back of the iron curtain?
Dr. FitzGERALD. No, sir; we have not.
Dr. FitzGERALD. Austria bought a small quantity of rye from Hungary last year. It was not paid for with ECA dollars, and Germany has bought some small quantities of rye from iron curtain countries paid for with exports from Germany.
Senator Young. That is a question I will never be able to understand. Mr. Trigg, if you can answer that for me, I would be happy.
Mr. TRIGG. Senator, I might say this. Of course we in the case of rye have procured for supply purposes only at such times when we have requests from the Army or ECA to procure it.
Senator Young. The Army tells me they have been asking you to buy rye for them for months, and you do not get it for them.
Mr. Trigg. We are in the market to buy rye in quantities that are offered to us up to the full extent of the Army authorization, but it just is not offered.
I think one of the difficulties, Senator Young, with this rye situation is that the price on rye went down considerably to the producer after such time as the loan date, the closing date for application for loans had closed from last year, and there was not too much of this rye under loan.
I think that was one of the primary difficulties in it, but we have been in there trying to buy rye on the market the same as we buy wheat and take all offers up to, as I say, the extent of the authorizations we have.
Senator Young. At what price do you offer to buy it?
Senator Young. In the case of wheat, do you not raise your bid from day to day if you do not get what you want?
Mr. Trigg. No.“ We are following the market in buying wheat, just the same as anyone else. We are not jacking the market up on it or anything of that nature. We are buying right in the market along with other buyers. We would buy at the market price in the case of rye.
Senator YOUNG. What makes a difference between wheat and rye? You are able to get wheat on the market but you cannot get rye.
Mr. TRIGG. Senator, the only answer that I believe for that would be that the price of wheat in the market place is such that there is wheat moving, there is an ample quantity of it being offered at that price, whereas in the case of rye the price could be depressed to the extent that it is not being offered. Maybe the producer is holding it, maybe it just is not available.
Senator Young. If the Army was allowed to buy their own rye over here independent of the Commodity Credit Corporation, they would be getting their rye, would they not?
Mr. TRIGG. I do not believe they would, Senator. They may have a unique device of squeezing it out some place, but I do not think they would have any better system of getting it than we do. I do not think that it is available to them.
Senator Young. They could contract with commission firms to buy their rye for them. If it costs them 5 cents more than the market price, they would get the rye for them, would they not?
Mr. TRIGG. I do not know if their authority would permit them to pay 5 cents above the market price. We have to pay the market price for it, and that is all we are reimbursed for is the market price, so I do not know whether they have the authority to do that.
Senator Young. Would you not agree that there is something wrong with our purchase program when rye is below support levels, the Government has to support rye, the Army wants to buy it for Germany, and we cannot get it to them?
Mr. TRIGG. I do not believe there is anything basically wrong, Senator, that I know of. There may be something here that is causing this rye to be held off the market and not offered for sale.
That presumably could happen in the case of any commodity if the market is not such that a producer would offer it, but I do not know of anything that is basically wrong. I think it is probably hard to understand why we do not get it when we are in there trying to buy it.
Senator YOUNG. Well, here is a case where the Army wants rye for Germany. It is a far cheaper food. The price is below support levels because there is not demand enough for it, apparently, otherwise the price would go up, and in the meantime we have a low price.
It is costing the Commodity Credit Corporation money, and we are losing a market in Germany and forcing them to buy in iron curtain countries.
Senator HOLLAND. I understood him to say that farmers did apply for loans on rye.
Senator Young. Well, you have several million dollars loaned out to rye producers and you are going to acquire that rye eventually, are you not?
Mr. Trigg. I do not know just what the extent of our loans are on rye, but it is very small in comparison with the crop. As I say, the farmers apparently do not feel the necessity for taking out loans on last year's crop.
Senator Young. Of course, the price has been so low that most farmers are discontinuing raising rye because they cannot afford to
raise it. Apparently something is in the way of a decent rye price, and greater production of rye. It would alleviate some of the wheat acreage. It is something I cannot understand.
Senator HOLLAND. Is there no difference in the storage possibilities?
Senator Young. No, it is exactly the same thing. I have taken up too much time on rye here, but I think it does have a relationship to wheat because it is a bread food and it is costing the Commodity Credit Corporation money to support it. Rye acreage can be substituted for wheat acreage.
Senator JOHNSTON. Proceed, Doctor.
Dr. FitzGERALD. Mr. Chairman, there is one other matter I should like to raise. I regret to say I was a little late getting to your hearing this afternoon, so I do not know whether it came up or not, and that was the desirability of making such action as the Congress may take retroactive to August 1.
The wheat agreement went into effect on August 1, and it is now September 21. During that interim period, so far as the ECA participating countries are concerned who have used ECA funds for the purchase of either wheat or wheat flour, with ECA dollars, they have had to both pay at the market rate and also to deposit counterpart fund at the higher wheat cost.
Now, we are obviously and naturally desirous of the committee and the Congress considering favorably the administration bill which was introduced by Mr. Thomas, but whether or not that bill or some other variation of it is passed by the Congress, it is in our opinion highly desirable that it be made retroactive so that the countries who did ratify the wheat agreement may get such benefits as do accrue to them, starting August 1 rather than at some later date. I believe, I may say that there is a suggestion coming up on the language on that, Mr. Trigg.
Mr. TRIGG. There is. So far as the Department of Agriculture is concerned, they are in agreement with that position, that whatever bill is passed by the Congress, that it be made retroactive to August 1.
Senator Young. Have you prepared language to that effect?
Mr. Trigg. It has been in the process of being cleared by the Bureau of the Budget, and I was advised by telephone just before coming here that it meets the President's program and it can be submitted, and it is being prepared or will be prepared and submitted, Senator Young.
Dr. FITZGERALD. That is all the comment I had, Senator Johnston. I am at your service for questions.
Senator JOHNSTON. Any questions?
Senator HOLLAND. In other words, if I understand the need for that amendment, that part of the 7,000,000 bushels that has been authorized and bought since August 1, should be put in the same position as if they had been bought after the passage of this proposed bill which carries out the provisions of the international wheat agreement.
Dr. FITZGERALD. Yes, sir.
Senator JOHNSTON. We will hear next from Mr. Parel of the American Farm Bureau Federation.
STATEMENT OF DON PAREL, ASSOCIATE DIRECTOR OF THE
WASHINGTON OFFICE, AMERICAN FARM BUREAU FEDERATION, WASHINGTON, D. C.
Mr. PAREL. My name is Don Parel. I am associate director of the Washington office of the American Farm Bureau Federation.
By way of summary of my statement, Senator, it says in effect that the American Farm Bureau Federation asks that obligations accruing under the wheat agreement be handled as a separate appropriation, that the expenditures not be charged to the Commodity Credit Corporation or run through its books to show a loss to the Corporation, or that it be charged to ECA. We would like to have the wheat agreement stand on its own, and any losses be charged to the operation of the wheat agreement and met by a separate appropriation.
That, Senator, is in substance the position of the Farm Bureau.
Senator YOUNG. I think that is a good sound approach, but if you had to depend on appropriations, that would hold up exports for this year, would it not?
Mr. PAREL. I was thinking of that, Senator. It might be handled in this manner; that it be charged to the Commodity Credit Corporation for this year, that the following years there be a separate appropriation and that the first year be carried on its books so that the Corporation is made whole rather than showing a loss for 1 year that it might be carried by the corporation. I do not know
Senator Young. That is better than charging it to the Commodity Credit Corporation.
Senator HOLLAND. Well, I certainly think well of the suggestion that it be carried as a separate fund and not charged to the Commodity Credit Corporation, but I want it to be very clear in this record before we get through with the record and close it, that the Appropriations Committee in the hearings had this specific thing before it, and it did permit ECA to have advantage of the international wheat price, and thereby provided for reduction of the ECA appropriation bill by that amount, whatever it was. It looks like here it would be about $60,000,000.
Senator YOUNG. That is right.
Senator HOLLAND. And I think attention somewhere should be clearly called to that, because that would not have been a real reduction of the ECA budget, but instead just a shifting of that part of the budget to another department of the Government, and I am not clear in the matter as to just what has happened.
Senator Young's statement was the clearest thing on the whole picture, and certainly he understands that that was done, but I think in order to have the thing crystal-clear for the benefit of the Senate when this report comes in, we should have in the record here a specific showing as to how much reduction of the ECA budget was represented by this particular feature, and just how it was handled.