The estimate of total U.S. farm income is incomplete. State statistics of farm income are basic indicators of economic growth, and rural development problems, and are the basis of comparisons of farm and nonfarm income within the respective States. There is a large and increasing demand for detailed farm income statistics by States from the Congress and inability to provide these data for the new States of Hawaii and Alaska 3 years after their admission as States is a serious statistical deficiency.

Adequate plans for rural development must be based on accurate knowledge of population and other trends in the farm areas. Knowledge of the rate of migration, particularly out of low-income areas, is essential in gaging the magnitude of the problem of adjustment over the years ahead. Education and health are two problems which are much more serious for rural than for urban people. Knowledge of deficiencies in education and in health and medical care are essential for the establishment of meaningful program targets for rural areas. This is especially true in the field of education where the curriculums have to be designed both for young people who will remain in the local areas, and those who will migrate to the cities and towns.

Plan of work. With the increase, the Department would assemble basic statistics on production, marketing, and prices of the principal farm products, and such information as is available on major items of farm expenditures in Hawaii and Alaska. It will be necessary to conduct surveys in both States to round out the estimates.

Research will include analysis of detailed data from the 1960 census to determine magnitude of directions of population migration and the extent of the lag in education levels among rural farm youth. Studies will emphasize the relationship between education attainment and occupational status for rural youth, and comparisons of urban and rural levels of educational attainment. Data from the 1961 Consumer Expenditure Survey are to be used for analysis of the medical care expenditures of farm families with particular attention to the older segment of the rural farm population.

3. $93,000 to expand research on Common Market trade in farm products and impacts of changes in trading arrangements on U.S. agricultural exports Need for increase.-American farmers have become increasingly dependent on foreign markets which now provide outlets for one-fifth of our harvested acreage. Continued expansion of agricultural exports is essential to income improvement for U.S. farmers, and to U.S. balance of payments. One-third of our commercial exports of agricultural products now goes to the Common Market and the future volume will be greatly affected by the Common Market trading arrangements that are evolved.

Trade statistics and analyses provide essential information for evaluating expansion opportunities for U.S. agricultural experts. At present, for example, the monthly and annual statistics, analyses, and forecasts of U.S. agricultural exports are used by farm groups, agricultural exporters, public agencies, and others as primary current guides for commercial export operations, export assistance policies, and food-for-peace programs. Regular summaries of agricultural exports are currently limited to U.S. agricultural trade statistics. Information on the agricultural trade of our major competitors with the Common Market is increasingly needed. The foreign agricultural trade reports, prepared by ERS, need to be broadened to include timely analysis of trade with the Common Market with special attention to the agricultural exports of our foreign competitors and the related price and other market factors affecting trade in agricultural products. This information will be appraised in terms of current and potential effects on U.S. exports of farm products. Effective export programs to meet competition in foreign markets will require research on alternative approaches that might be used to increase exports of farm products. An expanded research program directed toward analyses of potential trading arrangements with the Common Market, including effects of relation of restrictions, is needed to guide U.S. agricultural trade policy and development of programs to maximize U.S. exports. Such analyses can only be developed with more intensive research on the implications of the European Common Market for U.S. agriculture and how farm price and protective policies followed by Common Market countries will affect production and consumption in these countries and thus influence U.S. farm exports markets.

Plan of work.-The expanded program of research would include the following segments:

(a) Current summaries and analyses of the trade of foreign competitors to the European market. These summaries would provide up-to-date quantitative information on the nature and extent of our export competition in the Common Market, the changes in prices, and in export levies and in other restrictions on trade. These statistical analyses provide information for use under the new Trade Expansion Act to establish trading arrangements more favorable to farm exports. The results would point out to farm groups, private exporters, and public agencies the export problems presented by these developments and suggest opportunities for overcoming them.

(b) Appraisal of the effects of alternative Common Market arrangements and U.S. export policies that may be developed on: (a) U.S. agricultural export earnings, balance of payments, and farm programs; (b) incomes and living costs in Common Market; and (c) incomes of U.S. farmers. Research would include research on the interrelated effects of alternative Common Market farm support policies and access arrangements on U.S. exports of wheat, feed grains, oilseeds, broilers, and other important farm export products; the possible effects of proposed international agreements on U.S. export potentials and earn. ings; the implications of prospective levels of farm price supports in EEC countries, Common Market consumer living costs, and farm producer incomes. These studies will provide guidance to U.S. farmers, public agencies, and exporters concerning export prospects in the years ahead and an informed basis for deciding how U.S. economic interests can be protected.

4. $110,000 to develop basic information on longer range prospects for foreign supply, demand, and trade in farm products

Need for increase.-Exports of farm products have increased greatly in recent years and now provide an outlet for one-fifth of U.S.-harvested crop acreage. Το provide better assurance of continuation of the increasing trend of exports, research must be carried out to discover new growing points in export outlets. Analysis of the long-range market outlook for farm exports is an essential part of our research to provide longer range outlook information for farmers and for all groups concerned with American agriculture.

Analyses of population and consumption trends in relation to agricultural production, country by country, disclose opportunities for developing new markets and for expanding existing markets for U.S. farm products. For example, the Nigeria study indicates a continuing import demand for wheat and a doubling of demand for dried milk in 3 to 4 years.

The Philippine study anticipates significant shifts in the imports of agricultural commodities over the next several years. The Philippines expect to reach self-sufficiency in milled rice, shelled corn, and tobacco; and to shift imports of wheat from flour to grain, and imports of canned meat and meat products to fresh or frozen meat and live animals for food. They expect imports of dairy products to increase significantly over the next 10 years. A shift from imports of cotton products to raw cotton is expected, with raw cotton imports doubling by 1975.

Foreign supply and demand studies are underway in 19 countries that are important or potential export markets. More country studies are needed and all studies must be kept up to date as major changes occur in the supply and demand conditions in each country.

Plan of work. As the country studies of supply and demand are completed. they need to be analyzed separately and their implications for U.S. agriculture determined. The second step in analysis involves a combination of country studies to assess their total effect on prospective exports of farm products. The third step involves relating prospective exports to domestic market outlets in order to provide consolidated longer range outlook information.

These studies will provide a firmer basis for developing the long-range outlook for U.S. farm exports that can be combined with our domestic outlook analyses into a longer range projection of market outlets for farm products. In this way these analyses will help to provide farmers and public agencies with the information needed for adjusting agriculture to changing market conditions.

(d) A reduction of $8,000 to reflect estimated savings due to the installation of a centralized data processing operation (MODE) for payroll and personnel data. An explanation of this reduction is included in the preface to these explanatory notes. This reduction is distributed between activities as follows:

(2) An increase of $352,000 for pay and postal costs pursuant to Public Law 87-793, consisting of—

(a) An increase of $335,000 consisting of $147,000 to provide for full year costs of the first step of the pay increase pursuant to Public Law 87-793 and $188,000 for fiscal year 1964 cost of the additional increase effective January 5, 1964. (An overall explanation of increases for pay act costs is included in the preface to these explanatory notes in vol. 1.)

(b) An increase of $17,000 for additional postal costs pursuant to Public Law 87-793. (An overall explanation of increases for postal costs is included in the preface to these explanatory notes in vol. 1.)

LAND USE AND WATER RESOURCES STUDIES

Mr. KOFFSKY. The development, utilization, and conservation of the Nation's land and water resources and the problems arising in the rapidly changing rural economy are of growing importance and concern. The Food and Agriculture Act of 1962 has given impetus to the fuller exploration and solution of problems in these areas.

To respond more effectively to the increased demands for economic research in these important programs, a new division-the Resource Development Economics Division-has been established. The function of this division is to conduct the economic research and service work related to the use, development, conservation, and management of rural resources. This includes research on rural economic development, rural renewal, river basin and wateshed programs, and land and water policies and programs.

The new division has absorbed certain functions of the Farm Economics Division. It is organized in three branches-the Land and Water Branch, the River Basin and Watershed Branch, and the Area Economic Development Branch.

The name of the Farm Economics Division has been changed to Farm Production Economics Division. Its organization is as follows: Agricultural Adjustments Branch, Cost, Income, and Efficiency Branch, and Agricultural Finance Branch.

The President last year urged

legislation to encourage a comprehensive survey of land uses, to undertake a research program on the conversion of land to alternative purposes

He stated that:

Economic studies to provide the bases for sound land and water resources policies and optimum land use adjustments will be further intensified.

With over 50 million acres of cropland expected to be surplus for crop production during the next 20 years, and with increasing demands for land for nonfarm uses, there is need for developing information necessary for most effective land-use adjustment.

The increase in funds will be used in two areas of research: (1) for developing estimates of national and regional land requirements to guide land-use adjustments, and (2) for determining the productivity and costs and benefits of land in alternative uses. In the past, research in these areas has been hampered by inadequate methods of analysis and inadequate basic data on productivity of land. But these difficulties are being overcome and a major expansion in research effort is now justified. The increase will make it possible to initiate research in three major areas as a first step toward comprehensive appraisal of land-use needs and possibilities.

Mr. Chairman, I have some charts which explain more specifically our plan of work in this area, and I can discuss them now or at the end of this statement, whichever you prefer.

Mr. WHITTEN. I believe that since the subject matter is up it would be just as well to discuss them now.

ESTIMATING LAND REQUIREMENTS

Mr. KOFFSKY. Thank you, Mr. Chairman. I have a statement and some charts that I request be inserted at this point. (The material referred to follows:)

NATIONAL AND REGIONAL ESTIMATES OF LAND REQUIREMENTS

There is an urgent need to develop estimates of national and regional land requirements to guide land-use adjustments and to determine the productivity and economic returns of land in alternative uses. Chart 1 illustrates some of the factors which must be analyzed to arrive at these estimates of national requirements for land use; namely, population, consumer income and demand, and foreign trade policy.