range in kind and grade of fats and oils materials were found to be used with good results. Supply availability most frequently determines kind and grade of fat used.

3. Market potentials for fats and oils and fatty acids in selected industrial use markets. Technological developments have enabled nonagricultural raw materials to displace agricultural fats and oils and their fatty acid derivatives in some traditional market outlets, and have reduced their use per unit in other applications. New fats and oils products have been developed, and research is under way to determine their potential for improving the competitive position of agricultural fats and oils. Research is also being conducted to determine requirements for a number of end uses as guides for further physical research to development of properties that will permit fats and oils and their derivatives to meet competition from synthetic materials. Fieldwork was completed during the year. The contractor has prepared drafts of reports in each of six market areas. Users of fats and oils surveyed often cited pricing and quality of these materials to be paramount problems. Fluctuation of commodity prices discourages long-term investments in plants and processes to utilize these materials, and the inability to make long-term contracts to supply users of derived materials from these fats and oils puts a strong damper on private research toward new product and process developments.

On quality, the inability to obtain stocks of material on a standardized quality basis at all times in the open market, and variations in quality of material with a single description and price created problems for firms seeking or using these materials.

4. Market potentials of unextracted soybean meal in poultry feeds.—A research has been directed at some of the economic questions relative to whole soybean meal. Findings based on a study of the Arkansas poultry area indicate unextracted soybean meal would offer an alternate outlet for soybeans and at the same time afford feed manufacturers and livestock feeders who mix their own feeds an opportunity to have larger amounts of fat in their feeds, without requirement of special fat-handling equipment. Inedible tallow and grease are the primary fats being added to formula feeds. The price spread between tallow and grease and soybean oil has been narrowing in recent years, making the processing of cooked, unextracted soybean meal more attractive. In some areas of the United States, production of soybeans and consumption of soybean meal are high, but processing facilities are not locally available. Soybeans are shipped out of these areas and meal is shipped back in. Lowered freight costs on this feed ingredient would amount to a substantial saving. For these reasons cooked, unextracted soybeans may find its most attractive economic position in areas away from the main soybean production and processing areas.

5. Market potentials for fats and oils in plasticizers.-A special tabulation of fat-derived materials used in plasticizers in 1958 and 1959 was made by the U.S. Tariff Commission to meet industry requests for current data. Consumption of fats and oils in 1959 was about the same as the 72 million pounds reported previously as used in 1957, but total plasticizer use increased from 442 to 524 million pounds. However, new and improved plasticizers from fats and oils increased in use with the increase in total use of plasticizers. The information was reported in the Fats and Oils Situation, November 1960, and reprinted as the supplement to AMS-382, "The Market Potential for Fats and Oils in Plasticizers."

H. OTHER

1. Market potentials for products from new crops for industrial, feed, food, or pharmaceutical uses.-As part of the Department's new crop research program, market potential evaluations for new crop materials for industrial, feed, food, or pharmaceutical uses are carried out to provide an economic basis for the selection of crops with the greatest potential for further development and field testing.

As a result of findings revealed by this research, commercial firms have become better acquainted with the potential new crops and the future possibilities for processing and marketing them. Particular interest has been shown toward Vernonia anthelmintica, a new oilseed crop that yields epoxy-type oil for plasticizers and other uses. The Department has been urged to seek early commercial development of this new oilseed crop.

2. Market potentials for water soluble gums and mucilage other than starch.— Water-soluble gums and mucilages (other than starch) can be supplied from cereal grains or from new crops. These materials could compete with or replace imported materials. There is a need for and research has been initiated to determine the modifications needed in gums from domestic sources to promote their commercial use in a wide variety of products. Gums are used in adhesives, cosmetics, emulsions, gelatins, bakery and beverage products, pharmaceuticals, textiles, paper, oil-well drilling fluids, detergents, photographic specialities, coatings, and soil conditioners.

3. Market analyses of maple sirup and other maple products.—A cooperative agreement has just been entered into with the Pennsylvania State Agricultural Experiment Station to study some of the problems involved in reducing maple processing costs and expanding markets.

Work was initiated to identify the present and potential market for maple sirup and other maple products; to develop alternative marketing procedures adapted to a central evaporator plant; and to study the economics of supplying a central evaporator system with sap.

4. Market potentials for Hawaii farm products.-Research in cooperation with the Hawaii Agricultural Experiment Station has been initiated to determine the economic feasibility of broadening the base of Hawaiian agriculture by developing new markets for diversified Hawaii products such as Kona coffee, macadamia nuts, and fruits and juices. Market tests will be conducted to introduce Hawaiian products in new markets to ascertain their acceptability and salability and to provide estimates of potential demand to guide market development efforts. Marketing and merchandising practices will be evaluated to determine improvements required for full exploitation of market expansion possibilities. In addition, research was conducted involving the economics of the Hawaiian beef industry in 1962. Preliminary results of this research show that Hawaii's beef industry is confronted with revolutionary developments, which have brought it face to face with a difficult financial situation. These developments are greatly increased imports of both high- and low-quality beef, the latter originating in foreign production areas having low costs; changes in the demand structure for beef; changes in the type of Hawaiian retailers and in their business practices; need to change to higher quality-higher cost beef; and higher costs of labor, land, materials, equipment, taxes, and transportation.

Mr. WHITTEN. In the areas of utilization-and that has become a kind of open sesame around here, everybody would rather utilize instead of giveaway or store our surplus commodities.

The "64-dollar question" is how can we utilize them? Last year I believe it was almost a $5 million increase for utilization research. This year we learned some of the difficulties which follow from large increases.

One was that this happened right after the college graduates had gotten jobs, and it has been quite a slow process to find people to fill the bill that they have.

What, if you have the information, appears to be the area of utilization research that appears more promising, or have you reached any point of such determination?

Mr. KOFFSKY. We have some specific areas to suggest. There are a number of value. One area in which our people have been very much interested has been new forms of and new uses for starch. There is a feeling also that stretch cotton, for example, can provide an important outlet. An important objective, too, is to develop new or improved products to help maintain markets which agricultural products traditionally have had but which may lose further to new synthetics such as detergents, resins and latexes in paints, and manmade fibers. Here is where stretch cotton is important.

Mr. WHITTEN. Let me see if I can understand this thing. Somebody comes up with an idea at the laboratory. Then they come up

with a product and you go out and see whether it will take. Or do you out and see what the country needs and then go down there and give them the idea and they try to come up with what you think will work?

Mr. KOFFSKY. It works both ways. ARS scientists develop a product, for example, and ask us then what is the economic potential for this product.

Secondly, in our work on market potentials, we do find leads for other products that might be developed, or might be reworked, or revised in some way to meet a special need in industry.

I would have to say this, Mr. Whitten, in research frequently you don't know what you are coming up with finally. The main thing is that there are many new products coming forward and it takes quite a bit of analysis and review to determine whether or not they have a commercial market potential. It is often necessary to demonstrate the economic feasibility and potentials of new products in order to get them on the market."

Mr. WHITTEN. What does analysis consist of? Do you and Sherman Johnson, and two or three of your people, get down there in the office and say "What do we think this is going to do?" Do you think about it? Or do you send out people and take a sampling from housewives and others to see what it is that they are buying?

Or, do you assimilate the reports from the various companies which release periodically what sales are, say, by one of the chainstores in regard to food, or maybe one of the larger department stores with regard to clothing? How do you go about this analysis business?

Mr. KOFFSKY. We have a research staff working on these problems and there are various techniques which we use. One is market testing, where a new product is put into an actual marketing situation to determine whether or not consumers will buy it and in what quantities.

Mr. WHITTEN. What did you do? How did you make the analysis? What did it consist of? What was the starting point; what did you do; and when did you reach the analysis and what did you do with it after you got it?

Mr. KOFFSKY. We can cite several of our market tests on new products such as potato flakes, superconcentrated apple juice and a new wheat product. In cooperation with utilization research people and with producer groups a test market site is selected and the new product stocked on the shelves of supermarkets in order to cover as many prospective consumers as possible in the market. The product is introduced through promotion financed by our cooperators outside Government. Sales are audited for a period of time so we can tell how the product is accepted in comparison with already successful products. Consumers are interviewed to ascertain their awareness of the availability of the product, how many times they have purchased it, and what they like and don't like about it. A determination can then be made of how the product is likely to fare on a commercial basis. This information is published and widely distributed to private firms, producers, and other interested parties. The tests furnish positive research findings on sales levels, repeat purchase patterns and consumer acceptance. How a product measures up in these key elements determines its likelihood for commercial success. The con

sumer reactions tell us if further laboratory work is needed on particular characteristics of the product to improve its acceptance. Potato flakes, for example, scored very high, went into commercial production, and the success of this product has been credited with some effect on reversing the long downward trend in potato consumption.

On nonfood commodities generally you deal with the industry that will use that commodity as a material going into the manufacture of finished products. In other words, does the industry like the quality of the commodity, does it like the makeup of it, can it use it in its processes? We also look at the size of the use envisioned, the trends, what the cost limitations are, and what properties agricultural commodities must have better to fit the use. In his way we can evaluate the potential for our products as well as possibly uncover new ideas of promise which further laboratory research may develop into realities.

A great deal of this takes place with respect to new uses for products such as starches and fats and oils derivations, for example, where the consumer isn't directly involved.

OBLIGATIONS UNDER ALLOTMENTS AND OTHER FUNDS

Mr. WHITTEN. On pages 30 and 31 you show certain funds. Discuss with us what you will do with those funds that you get from various agencies. What do you do with funds for flood prevention, watershed protection, area redevelopment program, Agency for International Development, consolidated working funds, and miscellaneous contributed funds? Can we have a listing by projects of what you have done under those various programs?

Mr. KOFFSKY. Yes, sir, I will be glad to provide a brief statement for each of those items with a breakdown of the use of the funds. (The statement requested follows:)

Statement of obligations under allotments and other funds, 1963

Statement of obligations under allotments and other funds, 1963—Continued