up a brandnew post where the major activity of the attaché is primarily that of giving us more basic and more current information. Mr. WHITTEN. Based on his own judgment and observation.

Mr. IOANES. On his own judgment and observation and knowledge and also on his communication with those key people in the country who over the months he finds to have good judgment. Unless he does that, too, he really is not reporting from all the sources he can get.

His basic job in that post is that of competition. But he also had a secondary job, because what we found out is that as trade was untied with the mother country, there were opportunities in a limited way to sell some agricultural products to the country. I am not saying that is the major purpose, but that is the secondary purpose in that post. In Nigeria alone, which is the center of his post, our agricultural trade was about $7.5 million.

In contrast to Lagos, a post like Paris, France, encompasses all the activities of our service in the field. We have, in France, the need to report in the same effective way as in Nigeria, with respect to the agricultural developments in France. France is one of the leading agricultural exporting countries of the world and, in many cases, we bump head on with her in our efforts to seek world markets.

However, the attaché in France can rely more on published information than can an attaché in Lagos, Nigeria. He must also know his way around the country and know additional sources of information than governmental reports.

Competition is a key job.

Secondly, France is a market for the United States, a major market. She is a market for a wide variety of our products-cotton, feed grains, particularly corn from year to year, some tobacco-not enough, but some tobacco-soybeans, some fruit, not enough; they ought to take more. One of the big jobs of the attaché in a country like France is to get the governmental restrictions off some products, such as Walt Horan's apples and pears. This he spends a lot of time doing.

Then you also happen to have, Mr. Chairman, in Paris, regional headquarters of organizations. We get involved in the work that the countries do in NATO. The work goes on with respect to joint defense exercises. Other work comes to that attaché because of the presence of the OECD in Paris. They call on us for assistance.

You have, in France, not only the national job of competition and of market access for our products but also the international problem as well.

Shifting to Hong Kong, you have much less of the element of competition. It is essentially a city island with not very much agricultural production in it. It is a processing and trade center. It is a big city factory and is a fairly large market for us, taking about $50 million worth of products a year, the whole range of everything we export going into that area.

But, in addition to that, Hong Kong, for us, is a major source of trade information.

I would call your attention to one point that, as you travel around the world, you will see that our agricultural attachés also are becoming the handlers of tremendous numbers of visitors from agricultural communities in the United States in recent years.

There is one interesting development that we have seen in the last few years, with respect to the countries we have been talking about,. that surprises us in some cases. It seems to us that we perhaps have made a mistake in assuming that in some countries of the world where we had an AID program it was going to go on forever. I don't mean our aid program. I mean the U.S. AID program.

I am thinking here, in particular, of places like Formosa. We do not have an attaché in that country. We are finding out as their economy improves, and as one of these countries in particular finds that it is going to have its AID program reduced, that they are becoming pretty good markets for some of the things they got under the AID program.

We are finding that maybe we have made a mistake, because even in countries where we thought that we just couldn't afford to have a man to represent American agriculture, trade is coming up to $10, $12, $15 million a year, and we are going to have to find a way as time goes on to have some coverage.

AGRICULTURE EXPORT POLICY

Mr. WHITTEN. I have always differed from our policies on foreign aid. I realize that we have had our production built up to such a level that to cut off not only agriculture production but other areas of our industry would be a serious disruption to our economy. I don't know how serious it would be, but I can see it would be really serious and we have got to taper these things off. But I seriously questioned this through the years where the United States has been such a big producer, and as a result has dominated world markets to the point that the U.S. price usually has been identified as the world price. Even where that is not true, we have been the residual supplier in many areas. The other suppliers were too small to meet the need, so they took what they could and we took the rest. In time, it is getting to the point where this clearly cannot be done and, in the process, we have got to get around to the thought that we cannot keep up world markets to high level working alone.

If every dollar's worth of everything that we have given away, if we had sold it for as small a return as we could have gotten, we would have been building up future markets and we would have been making these things available.

Instead we have tried to continue to hold up world markets, to give away instead of selling for what they could pay.

Coming back to what you are saying, I am convinced that our policy has not been sound in that regard. It may have been sound at its origin when we did dominate world markets, but when it gets to where the rest of the world produces to the point of being competitive, you can no longer try to hold the level up by your own muscle, so to speak.

WHEAT EXPORTS TO JAPAN

Mr. IOANES. No. I would say taking an item like wheat, for example, that there is simply no way for us to hold the rest of the world up with respect to our commercial exports of wheat, and right at the moment with respect to Japan, we are working real hard to increase our percentage share of that market, and this year I think we are going to succeed through two factors.

First, because of direct representations made to the Japanese with respect to the way they have been operating their wheat import policy, and secondly, with respect to certain supply and price actions that we have taken in the United States that make it easier for them to buy from us.

I think we will have substantially expanded sales of both Western White wheat and Hard Winter wheat to the Japanese market this year and we will increase our share of the market. I won't say at the expense of any other country, but we will simply make a gain for the United States.

Mr. HORAN. Will there be any charge against CCC in any of those operations?

Mr. IOANES. In all our exports of wheat there is a charge against CCC for the difference between the export selling price and the domestic price, so there will be a charge against CCC of perhaps 50 to 55 cents a bushel.

Mr. HORAN. We are doing that in order to underbid Canada and Australia?

Mr. IOANES. We are doing it to make our price of wheat competitive in the Japanese market.

Mr. HORAN. To get the sale we have to.

Mr. IOANES. Oh, yes. If we did not do this for wheat, in time we would sell very little wheat in the world markets.

AGRICULTURAL ATTACHÉ POSTS

Mr. WHITTEN. Where do you plan to put your three new posts, and could we have in the record a listing of where you have posts at present?

Mr. IOANES. We will be glad to supply that for the record.

(The listing referred to follows:)

Attaché staff authorized by posts as of Jan. 31, 1963 (permanent positions only)

Attaché staff authorized by posts as of Jan. 31, 1963 (permanent positions only)—Con.

Mr. IOANES. I would say this sir, that while the situation changes the three places we had in mind were Oslo, a division of that large African area I showed you on the map so that we could have a man at Dakar, and the third post we were thinking of was either Formosa or Korea. One of these two places where we think there is going to be a transition away from aid to commercial marketing. Those would be the first three posts on our list.

SALES MANAGER OPERATION

Mr. WHITTEN. Now, for the record, how does the sales manager operate? As I said earlier, for several years this committee insisted that the Secretary of Agriculture give him a little stature down there. I remember we resorted to almost giving him everything to try to give the position a pretty strong place.

I notice your own statement of purpose. I am rather proud of this. In fact, some years ago when I became chairman I insisted that the Department, preliminary to its justifications, carry a 1-page purpose statement. We forget ourselves what the purposes are with time. I notice that at the top, and I want to commend you on it, you say:

The primary function of the Foreign Agricultural Service is to help American agriculture in maintaining and expanding foreign markets for its products.

When I started on this committee there was not a single sign that anything of that nature was accepted as the responsibility of the Service. Now, I am proud to see that change come about. I would like to know just where the sales manager fits in and what he does. I would like a full description of his authority and freedom of action. Mr. LEROUX. Mr. Chairman, this is my third year of being here, and being from the West and the outside, I have had a good chance to take a look at the operations, and from the various background I have, it has been very interesting and intriguing to me.

I was told yesterday that I was likely to be asked some questions regarding this office.

Mr. WHITTEN. You are the sales manager of the CCC rather than Foreign Agricultural Service?

Mr. LEROUX. In Foreign Agricultural Service, sir. I anticipated questions, but I can give you a good background of just how we are operating, and I think I might first explain some of the responsibilities in short order.

We have the responsibility for the dollar sales, the CCC credit program and the Public Law 480, title IV program. We also set the price concessions daily on the five different feed grains, and on rice weekly. One of our men participates in setting the wheat concessions and we also have the responsibility for price reviews.

One of the first things I can say in working with Foreign Agricultural Service, and I think that it might be good to defend some of the people I am working with. From the time that I have been here, I have never actually seen such a hardworking group of really dedicated people. I don't think there is a man in this room that probably hasn't averaged 60 to 70 hours a week in his work. They have done a real job. They have a real organization.

ADJUSTMENTS IN ACCOUNTING PROCEDURES

When I first came here we took a real good look as to just what the responsibilities of the sales manager were, and in going into the books, I was quite intrigued at first in seeing the way the books were kept in the Department, and we made some rather major changes in the way we kept them.

For example, we had wheat receipts that were billed us for as high as $4.38 a bushel, commodities listed as total cost to the Corporation as $9,200 million which was not the actual value of these commodities. All of these commodities had to go into export, unless they were about to go out of condition and then they could go into the domestic market. These commodities weren't worth but little over $5 billion net to the United States in the markets in which they had to go. This net was based on putting these commodities in an export position, assuming the necessary price reduction and paying the accumulated costs.

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