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3. An increase of $1,927,500 to continue the provisions for a contingency reserve of a percent.-The language of the current CCC administrative expense limitation provides for a contingency reserve of not less than 7 percent of the amount authorized. For fiscal year 1964 the funds available to ASCS under the administrative expense limitation are to be transferred to and merged with other funds in "Expenses, Agricultural Stabilization and Conservation Service." It is proposed that provision for a contingency reserve continue to be included in the item "CCC administrative expenses” to be released for_transfer to “Expenses, ASCS” only upon the approval of the Bureau of the Budget.
The administrative expense requirements of CCC programs fluctuate according to the volume of commodities placed under price support, acquired, and disposed of. The volume of loan and inventory operations is unpredictable.
Since the estimated administrative expense requirements for price-support programs are based on tentative program estimates, requirements could change considerably depending upon the volume of loan and inventory operations. The estimated savings due to increased productivity could be materially affected by fluctuations in program volume.
There are many factors contributing to the uncertainty of the program volume estimates upon which estimates of administrative expense requirements are based. Of major importance is the fact that the 1963 crops, from which a large portion of the program volume will occur during the fiscal year 1964 have not as yet been planted.
Factors other than the inability to estimate the volume of future production, such as agricultural production abroad and changes in domestic and world economic conditions, influence the operations of the Corporation. For example, a change of a few cents in the marketing price of a commodity at harvest time would have an immediate impact on the volume of loans made. A change of a few cents during a loan period may have considerable bearing on the volume of redemptions and collateral acquired by the Corporation. Favorable yields in just one or two States can change the storage situation in a matter of days, requiring unexpected movement of commodities to provide for current production so that producers would not be deprived of the benefits of the price-support programs.
Since price support is mandatory for the bulk of commodities, the Corporation cannot control the volume of loans and purchases made. In the interest of the Government, it is extremly important that provision for a full 7 percent contingency reserve be continued, to deal with additional workload in case program volume exceeds current estimates.
(2) An increase of $4,542,775 for pay and postal costs consisting of: (a) An increase of $3,412,166 in direct appropriations composed of:
1. An increase of $3,216,546 consisting of $1,777,520 to provide for full year costs of the first step of the pay increase pursuant to Public Law 87–793 and $1,439,026 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 volume 1.)
2. An increase of $195,620 for additional postal costs pursuant to Public Law 87-793. (An overall explanation of increases for postal costs is in
cluded in the preface to these explanatory notes in volume 1.) (b) An increase of $1,130,609 in funds transferred from Commodity Credit Corporation composed of:
1. An increase of $1,043,979 consisting of $103,747 to provide for full year costs of the first step of the pay increase pursuant to Public Law 87–793 and $940,232 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 volume 1.)
2. An increase of $86,630 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 volume 1.) The following tables relating the Commodity Credit Corporation program volume to work units, shows production rates and resultant manpower data and displays budgetary requirements. This tabulation was formerly carried under the Commodity Credit Corporation administrative expense limitation item but as these funds are now transferred to and merged with “Expenses. ASCS," this table is now included with the explanatory notes for this account.
Conversion of program volume to work units, labor and fund requirements
Bill of lading or delivery receipt.--
6, 696,005 1,618, 428
659, 672 83, 824 16,484
10.2 19.3 11.9
664, 746 86,581 20, 111
11.6 17.0 9.8
2. CCC storage...
Mr. BEACH. That is on various commodities--wheat, cotton, corn, and others. The net was higher in 1963 than 1962 and will be lower in 1964.
Mr. GODFREY. Might I clarify it? This is an administrative expense item. The fact that we are selling-last year we sold 900-and-some-odd million bushels of cornentails the issuing of loading orders to those country elevators; 950 million bushels of corn might involve 200 million warehouse receipts, and the shipment of so many cars of corn. A lot of paperwork.
So the administrative expense did go up a little when we were selling this, over what we had anticipated.
Mr. ADDABBO. When you say "administrative expense,” is this the actual shipping expense, or inan-hours?
Mr. GODFREY. Man-hours.
There is another involvement here. There are several other things involved. Another was additional loans made over and above what we had anticipated.
Mr. BEACH. We are doing $3 to $1 million in loans, and a millionfor example, 1,155,000 bills of lading to be handled, 1,618,000 warehouse receipts on grain, 6,700,000 warehouse receipts on cotton. This is a tremendous mass of paper that has to be moved.
Mr. ÅDDABBO. In volume 3, page 213, what is meant by donations? What are donations?
Mr. BEACH. What it means is simply we give the commodity to a recipient eligible to receive it under the law. Section 416 of the law under which CCC operates, and also Public Law 480 spell out rather specifically the criteria that must be used in establishing who is eligible to receive the donated commodities.
Mr. ADDABBO. We are donating out; not getting? Mr. BEACH. They are on an order of priority. They are actually given away. There is no return to the Corporation for them.
Mr. A DDABBO. I saw a plus sign, so I thought for a change somebody was donating to us.
Mr. BEACH. No, sir.
Mr. ADDABBO. In the chart showing cropland conversion program, in 13 States and 41 counties, about 9 projects are going into Pennsylvania, but none in New York.
Is there any particular reason for this?
Mr. GODFREY. It was just the selection of the States. The other counties were the counties that had submitted projects. Pennsylvania has been very active in submitting projects. I don't know whether New York has submitted any or not. It is still open for them to submit projects.
Mr. ADDABBO. In other words, the State has to institute the request? Mr. GODFREY. That's right, sir.