EXPLANATION

1. "Additional funds” are from supplemental apropriations in 1940, 1941, and 1942; reapportionments in 1943 and 1947; reimbursements in 1947 ($661,976), 1948 and 1954; and since 1951 carryover balances.

2. "Allotments and transfers" are as follows:

1936: Includes $43 million for cotton price adjustment plan and $32,153,656 for refund of processing taxes.

1937: Transferred $90 million to agricultural conservation program. 1938: Includes $65 million for cotton price adjustment plan.

1939: Includes $57,921,393 for cotton price adjustment plan.

1942: Includes $116,850 transferred to BAE.

1943: Includes $34,500,000 for incentive payments.

1945: Includes $42,500,000 which was made available to ACP in 1947. 1947: Includes $75 million for national school lunch program: $15,286,567 for pay act purposes (First Deficiency Appropriation Act of 1947). 1948: Includes $65 million for national school lunch program. 1949: Includes $75 million for national school lunch program.

1950: Includes $166,735 transferred to Marketing Services for increased travel costs.

1951: Includes transfers of $225,000 to Defense Production Administration and $316,500 to Marketing Services for mandatory cotton classing. 1954: Includes $1,653,857 for penalty mail costs.

1955: Beginning of transfer to Interior (15 U.S.C. 713-3 as amended by Public Law 1024, 84th Cong.).

1956: Includes $38,300 transferred to Marketing Services for increased travel costs.

1959: Beginning of transfers to "National school lunch" appropriation. 1960: Beginning of transfers to FAS by legislative action.

1962: Includes $285,000 transfer to Marketing Research and Service for increased travel costs.

3. "Disposition of balance-Available in subsequent years beginning in 1951:" Amount above $300 million represents recovery in prior-year obligations.

Mr. HOLMAAS. The second column of that table would include additional funds that were made available either by reappropriation acts of the Congress, or in more recent years under the provision that provides for carryover of certain unobligated balances from year to

year.

So the third column would give you the total availability and in the last 2 or 3 years, it has gone over $600 million.

SECTION 32 LANGUAGE PROPOSAL IN 1964 BUDGET

Mr. WHITTEN. Sometimes it appears that, when Congress wants to do something in a hurry, they use the Commodity Credit Corporation as the financing vehicle to go ahead and do it. This leaves the Congress with the problem of refunding the money or repaying the money to the Corporation thereafter and we on this committee have to sponsor the restoration of cash after the cash is gone.

The same thing has happened to a great degree with section 32. Most any time you run into something that you wish to do immediately, if you figure your money is too short, it appears to me that section 32 has been turned to in that way.

What changes have been made in connection with handling section 32 funds by the Department with regard to the appropriating process? Mr. SMITH. Mr. Chairman, there is in our budget proposal this year a proposed change in language, which would incorporate limitations as far as expenditure of section 32 funds are concerned for specified program and administrative purposes.

Mr. WHITTEN. I started to ask you with regard to present difficulties of cotton and textile mills and the possible use of clause 2 of section 32, but that is a matter I presume you would rather we asked the General Counsel about.

Mr. SMITH. Yes. The only observation I would inject is, in the law as set forth there is a limitation of 25 percent of available funds for any one commodity.

ACTIVITIES FINANCED WITH SECTION 32 FUNDS, 1959-62

Mr. WHITTEN. Yes. Now since I said this was kind of a catchall, I would like you, for the last several years to show just how many different programs have been financed from these funds, beginning let's say 2 years under the preceding administration and 2 under this. That should give a fair comparison. Could you tell us now and correct it later for the record how many different things were financed out of section 32, in fiscal years 1959, 1960, 1961, and 1962.

Mr. SMITH. By "things," Mr. Chairman, do you mean administrative or operating programs?

Mr. WHITTEN. Operating programs, transfer of funds to other agencies, including your export programs, trade promotion programs, food for peace type of programs, and direct purchases and all.

I would like to see the list of various activities that have been financed. The committee started recommending that funds be transferred from this source to "School lunch" several years ago. We all have our problems. But I want the record to be complete as to how many different things or operations in each of those years were financed from this source of funds and how much.

Mr. SMITH. Yes. We will provide that for the record. The information we have with us I think will provide the answer for you, but we will be happy to set out a table in detail showing all that, Mr. Chairman.

(The table requested follows:)

Removal of surplus agricultural commodities-Source of funds, obligations, and disposition of balances, fiscal years 1959–62

In these years, administrative expenses for this program are included under surplus removal operating

expenses.

1 Beginning in 1960 transfers to FAS were by legislative action.

3 Transfer pursuant to U.S.C. 572 for increased per diem and mileage rates necessary under Public Law 87-139 of Aug. 14, 1961.

SECTION 32 OPERATIONS IN FISCAL YEAR 1963

Mr. WHITTEN. Now, bringing it down to your operations for the past year, how much money did you have for the year in this section 32 account that was available for your purposes, subject to not more than 25 percent for any one commodity, plus the fact that 51 percent of what was spent had to go for perishables?

Mr. SMITH. The total available, Mr. Chairman, was $225 million. That was budgeted. There was available, in total, $564,880,195, excluding transfers.

Mr. WHITTEN. You say that was budgeted. That is all that you justified before the committee?

Mr. SMITH. That is right.

Mr. WHITTEN. And you have imposed, based on your understandings with the committee, that limitation on yourself, for this year? Mr. SMITH. Right.

Mr. WHITTEN. Now in direct purchases from those funds, how much have you spent and for what, during the current fiscal year? Mr. SMITH. For commodity programs, I will give the total first; we have budgeted $163,984,000. The breakdown-that is, purchases to date, amount to a little over $55 million

Mr. WHITTEN. Could you tell us how much and for what you spent that?

Mr. SMITH. Yes. This covers quite a list of commodities-cranberries, eggs, honey, meat products, orange juice, peaches, peanut butter, Bartlett pears, sweet potatoes, and turkeys.

Mr. WHITTEN. Do you have that in detail?

Mr. SMITH. Yes.

Mr. WHITTEN. Would you insert that in the record at this point? (The material requested follows:)

Section 32 obligations for commodity program payments for programs active in fiscal year 1963, to Mar. 2, 1963

1 Represents obligations through Jan. 31, 1963.

57, 885, 661

2 Does not include obligations of about $740,000 for transportation in fiscal year 1963 on lard and chopped meat purchased in the latter part of fiscal year 1962.

THE 1962-63 CITRUS JUICE PURCHASE CONTRACT AND RELEASE

FROM CONTRACT

Mr. WHITTEN. Now, the attention of this committee has been called to a report that you had used section 32 funds for the purchase of citrus juices, later transferred the juice back to certain processors who made large profits.

Now I have always believed in section 32 funds which enable you to move in quickly to handle the surplus in many instances, thereby preventing a break in markets and by moving in quickly, you would save yourself, the Government, and everybody else, lots of money by being able to move fast. However, the press has indicated, in connection with the citrus situation, that the Government bought up a tremendous amount of citrus juice, at about $4.50 per case, and then when they had a freeze on the following crop which, of course, we regret, instead of the Government using such juice, you turned this tremendous quantity of citrus juice over to certain private groups, enabling them to make an increased profit of over 100 percent on what had been bought for governmental use.

These are the allegations which have been made. I have no personal knowledge; however, I would like to know the full details about this matter, how much you contracted for, if the Government did bind itself, made the purchase and if so where your authority is to cancel a contract beneficial to the Government for the benefit of a few dealers or handlers. Further I would like to know for the record the price at which you bought, the price at which you released it, to whom you released it, and the price at which they sold it. Also, whether you released this citrus to producers or to processors; if to processors, what processors. Was any effort made to pass the benefits on to the consumer? Could we have that information?

Mr. SMITH. We have all of the information, I think, with the exception of the price at which they sold it.

Mr. WHITTEN. Please see if you can get it. As to the situation again, I have no personal knowledge.

Mr. SMITH. Then I would like to start back a step or two. There was in prospect down in Florida, this year, a record crop of citrus fruit. In the case of oranges, concentrated orange juice, for example, there was in the hands of processors, in the form of inventories, something over 34 million gallons, at the commencement of the new marketing season. This was more than twice as great as it was the previous year, which was, we consider, a very ample carryover. Prices to growers were down low compared with what they had been, in the neighborhood of 60 to 75 cents a box. And the oncoming crop was estimated, in the case of oranges, in the neighborhood of 120 million boxes which was a record crop, and substantially above the previous year in what they had been experiencing.

So all indications were that the producer in Florida was confronted with a very big crop depressing his prices and also a very heavy carryover.

Mr. WHITTEN. You describe conditions, but I would like to have the actual prices, where you say that it is a much lower price. Supply the actual figures from the best source available. You may not have it at your fingertips, but for the record be sure you give the actual figures, names, dates, prices, et cetera.

Mr. SMITH. Yes. Faced with that situation, we were petitioned by the representatives of the growers to help relieve the situation by buying concentrated orange juice. The Department responded by offering, announcing to buy concentrated orange juice and pursuant to that announcement, we contracted for a total of 383,485 cases of concentrated orange juice.

Mr. WHITTEN. Could we have, for the record, a copy of the actual contracts with each of the processors or producers, if any, and the names of those with whom you contracted, and copies of each order by the Department, of purchase and sale?

Mr. SMITH. Yes, we would be glad to supply that.

Mr. WHITTEN. Was that contract a binding offer, or was it an offer and acceptance?

Mr. SMITH. It was an offer and acceptance, and I believe having a clause in it which permitted release in the event the contractor was subject to conditions beyond his control.

Mr. WHITTEN. A release clause normally is defined by the contractor or generally accepted to be something that prevented him from