The other pillar is, of course, our commodity programs and the adjustments we seek to make in them that relate directly to the farm commodity income which is a part of the duality of income in rural America to which we refer and which the chairman spoke about a moment ago.

And so the target in this statement is initially an evaluation of what we are seeking to do to implement the decisions taken by the Congress in the rural areas development program and how it relates to the commodity programs.

I would like at the outset to present a comprehensive view of the nationwide rural areas development and conservation program covering its aims and goals, and its economic justification.

This presentation refers principally to rural areas development, but this does not minimize the importance of the current, ongoing programs within the Department. This committee in its hearings will review those programs together with the proposals to strengthen their operation. As a matter of fact, the programs carried out by Agricultural Marketing Service, Agricultural Research Service, Foreign Agricultural Service, Economic Research Service, and Agricultural Stabilization and Conservation Service contribute daily to strengthening rural America. I emphasize our efforts under the new policies set down by the Food and Agriculture Act of 1962 to show how we are integrating and coordinating all programs---both present and newwith a specific target in mind.

This is a frugal budget which holds the line hard on expenditures so far as any expansion of programs is concerned. The very modest increases are almost all a part of the new rural areas development and conservation program set out in the Food and Agriculture Act of

1962.

This subcommittee is well aware of the rapid changes in rural America resulting from productivity increases in agriculture which flow from scientific research and technological developments. All America has benefited, but it has not meant equal benefit to farmers. Farm production has surpassed our needs and, in a free market, has brought low prices and a farm income that lags far behind nonfarm income.

As a result, there are fewer farmers today. Many small rural communities have virtually dried up and there is a noticeable decline in educational, religious, and community services in rural America that families have come to expect as a part of modern living.

BETTER BALANCED NATIONAL PATTERN OF LAND USE

In recent years, we have used so much land for the production of crops that we have oversatisfied the Nation's need for food and fiber. That oversatisfaction is now stored in grain bins and warehousesat the taxpayers' expense.

At the same time we know there are many needs for land and water resources that are undersatisfied. We need more land for outdoor recreation, for timber, for grazing, for industry, and other noncrop uses. We have an undersatisfied demand for open space for green areas around cities and metropolitan areas-open spaces to look at and breathe in, to climb on, or walk through or just to meditate in.

The following table indicates our best current estimates of the approximate magnitude of needed land use shifts.

Needed shifts in major land uses, 1959-80

1 Commercial and noncommercial forest land exclusive of 27,000,000 acres of forest land limited primarily to recreation or wildlife use in 1959 and 34,000,000 acres in 1980. Combined forest land acreage is 773,000,000 acres in 1959 and 775,000,000 acres in 1980 or a net overall gain of 2,000,000 acres.

? Urban, roads, military reservations, water supply reservoirs, etc.

MORE JOBS NEEDED FOR RURAL PROSPERITY

The family farm is becoming larger, more highly capitalized, and more specialized. Farming also is becoming in many instances a part-time enterprise in which the farmer or his family depend on off-farm work for much cash income.

But the opportunities for non farm jobs in rural areas are not adequate today. Department economists estimate the present unemployment and underemployment in rural areas is the equivalent of 4 million unemployed annually-1.4 million on farms and between 2 and 3 million among rural nonfarm people. In addition, 4 million new jobs will be needed in the decade ahead for rural youth.

Thus, about 8 million new jobs will be needed in the rural economy if we are to have full employment in rural areas.

One conclusion some might draw is that the exodus from rural areas to the cities should be further expanded. I do not agree. Obviously, some people are going to continue moving from rural to metropolitan areas. But our public purpose is to enable people in rural America to have equal job opportunities in their community or area, rather than allow rural poverty to make their choice for them. An administered poverty, which some groups propose, is no answer at all.

AIMS, ASPIRATIONS, AND GOALS

Rural Areas Development is a major effort to meet the challenge of imbalance in land use and population patterns as great changes take place in rural America.

It is a major new thrust and new direction in national agricultural policy, charted by new laws which Congress enacted and by new emphasis from Executive actions. It blends new programs with present programs to focus all available resources to serve locally initiated and locally determined activities.

It seeks to fulfill several high priority national goals:

1. To give direction, purpose, and hope to rural America as it adjusts to rapid changes;

2. To readjust the rural land use patterns, making more land available for the increasing needs of outdoor recreation and open spaces, while decreasing cropland acres;

3. To fully protect and develop the Nation's renewable resources of soil, water, forests, fish and wildlife, and open spaces;

4. To encourage more rapid rural industrialization and expansion of commercial enterprise in rural areas to provide new employment and other nonfarm economic opportunities;

5. To eliminate the causes of rural poverty;

6. To strengthen the family farm pattern of American agriculture, insuring an efficient and productive source of food and fiber in such a way that increased efficiency does not bring less income to the producer;

7. To establish a reservoir of experience which the developing nations of the world-largely rural and agrarian-can adopt. It will be a constant reminder that democracy and the free enterprise system can solve the problems of rural poverty and provide the techniques for rapid economic growth.

None of these goals will be achieved overnight nor fully accomplished within this decade. But we have begun, and we must accelerate our rate of progress. The budget before your committee provides a modest speedup in the established rural areas development programs combined with a pilot project approach for the newly established

programs.

These goals are set in the framework of two fundamental principles: First, constructively shaping change requires that we move economic opportunity into rural areas instead of moving people forcibly from the country through Government action or planned depression. Second, we must use land, and not idle it. I am, and I believe all people concerned with agriculture are, impatient with such terms as "diverted acres," "cropland reserve," "idle acres," and "soil bank." Resources must be used in ways that conserve, and serve the real needs of all people. Our challenge is to bring those resources and that need together on a sound economic basis.

RURAL RENEWAL PROJECTS

One new approach to rural areas development is found in the rural renewal projects, authorized by section 102 of the Food and Agriculture Act of 1962. These projects could well become in time the major effort by which local rural areas are aided by Federal and State Governments in eliminating the causes of rural poverty where it is the most prevalent.

The areas most resistant to change are those where we find the greatest poverty. Many areas of the Appalachians, the Ozarks, and some northern areas of the country, including the northern part of my own State of Minnesota, are examples. Resources are limited, usually because of past exploitation, and those who live there are older on the average and have skills no longer in great demand. Community facilities are inadequate. There are fewer roads, poor schools, and insufficient hospital facilities.

Similar conditions in our cities produced the impetus for an urban renewal and slum clearance program 20 years ago. This program is based on the premise that with help, local government could clear

away slums and develop new uses for the land. Billions of dollars have been spent in such projects, and urban slums are yielding to progress with increasing speed. Today we can see parks, public and commercial buildings, new industry, and great housing complexes replacing those slums. The success of urban renewal depends upon local leadership, operating through local government with the power to receive money, to tax, to own and sell property, to condemn-in other words, the power and resources necessary to act in partnership with the Federal Government which contributes both technical services and capital through loans and grants.

If we are to erase the causes of rural poverty and shake loose the entrenched barriers to progress in severely distressed areas, we are going to have to think and act as big as we did 20 years ago when we attacked similar problems in the city.

For the first time in the Nation's history, rural renewal projects are now authorized for rural areas. A small initial budget has been requested for next fiscal year to enable us to make a start in up to four pilot projects. In these early projects we frankly expect to be feeling our way to learn the special techniques which will be needed in rural areas. A more detailed description, with specific illustrations, of a rural renewal project is presented in attachment A.

(The attachment follows:)

RURAL RENEWAL

The rural renewal program of technical assistance and loans to simulate long-range economic redevelopment in low-income rural communities is being administered by the Farmers Home Administration, with the cooperation and assistance of other Federal, State, and local agencies.

A rural renewal area can be part of a county or a number of counties, depending on local conditions. To be eligible for assistance, the area must meet 2 criteria: (1) have substantial and chronic underemployment on farms and unemployment in small towns, and (2) depend on agriculture or forestry as a major source of income. In addition, leaders in the area must be willing to initiate, develop, and carry out the rural renewal program.

Local groups, public bodies or development organizations interested in an areawide program of economic redevelopment may request the Secretary of Agriculture for rural renewal assistance, submitting the following information to the county supervisor of the Farmers Home Administration who serves the area: (1) A preliminary overall economic development plan, (2) description of the organization submitting the request, and (3) a map showing the boundaries of the proposed rural renewal area.

If the request is approved by the Secretary of Agriculture, the area will then be designated for planning assistance. This means that Farmers Home Administration will assign a specialist in rural planning and development to assist local agencies, development committees, and other groups in preparing a detailed plan of area wide redevelopment. Appropriate Department technicians conservationists, agronomists, engineers, and economists-will be available to help prepare the plan. Grants for planning assistance also will be available.

Rural renewal loans from Farmers Home Administration under title I, section 102 of the Food and Agriculture Act of 1962 will be utilized to finance projects involving land conservation and development for which no other source of financing is available.

These loans will be made to designated local public agencies in the renewal area. Some examples of projects that may be financed with rural renewal loans include the purchase of small tracks for resale as family farms or for nonfarm use; the purchase of large tracts for subdivision and resale as family farms or for resale for nonfarm use; the development of lakes, greenbelts, grassland areas, and wildlife areas; the development of water and sanitation facilities and service buildings, when such types of development are needed in land con

servation and use; and the carrying out of forestation projects and related services.

Rural renewal loan funds may not be used to establish industrial and commercial facilities.

Rural renewal loans will be made only to public agencies designated by the State legislature or Governor as having authority under State and local laws to borrow, secure, and repay such loans. The rural renewal borrowing agency must have authority under State statutes to buy and sell property; improve, develop, and maintain property; and secure tax or other revenues to repay loans and meet other obligations.

In some rural renewal areas, an existing county government agency or other public agency will be designated to serve as the public agency having the legal authority to carry out rural renewal projects.

In others, it will be necessary to establish an entirely new local public agency. In one State, Arkansas, legislation already has been introduced which authorizes communities in the State to set up "rural development enabling authorities" to receive and administer rural renewal loans.

Rural renewal loans will be made for periods up to 30 years, with repayment of principal and interest deferred up to 5 years, if necessary. The interest rate is the average rate paid by the U.S. Treasury on obligations of similar maturity outstanding at the beginning of the fiscal year in which the loan is made.

The amount a local public agency may borrow is based on its needs and repayment ability. In determining repayment ability all sources of income are considered, such as taxes, fees, assessments, leases, rentals, and the sale of securities and property. Loans larger than $250,000 will be submitted to both the House Committee on Agriculture and the Senate Committee on Agriculture and Forestry for approval.

Loans will be secured in a manner to adequately protect the interest of the Government. Security will usually be notes or bonds repayable from taxes, assessments, or revenues pledged for repayment or liens on property.

Before a loan is made, the rural renewal plan for the area must have been submitted to, and not disapproved within 45 days by, the appropriate State agency or by the Governor, if no such agency exists.

An application for a rural renewal loan will be considered by the Farmers Home Administration only if the applicant is unable to secure the needed credit at reasonable rates and terms from other public or private sources.

Services of the local Rural Areas Development committee and technical action panel will be utilized in all phases of rural renewal; i.e., preparing the overall economic development plan, developing the rural renewal plan, planning individnal projects, securing financial aid, and otherwise carrying out the program.

EXAMPLE: ARKANSAS LOW-INCOME COUNTY

Farmers Home Administration already has received inquiries from areas in several States indicating an interest in obtaining rural renewal assistance. Some of these inquiries were accompanied by an analysis of conditions in the area, and descriptions of specific projects for which capital is required. One such area is a county in southwestern Arkansas where per capita family incomes are well below the national norm, and some basic capital improvements must be made before the county can move to a higher economic level.

The county has not formally applied for rural renewal loan assistance since Farmers Home Administration does not as yet have an appropriation for this aspect of the program. The example is cited for illustrative purposes only, to indicate financing requirements of a typical low income rural area which might qualify for rural renewal loan assistance.

Most farm families in the county do no have sufficient income because their farms are too small and inadequate to provide a minimum level of sales. Insufficient off-farm work is available to supplement farm income. A complete program of rural renewal is necessary if the land, water, and timber resources are to be utilized efficiently. This is a first and essential step in lifting incomes of families living in the county.

Initial planning of the local development council indicates that action will need to be taken along several lines. These include: improving the structure of agriculture and outlets for farm products, developing needed community facilities, establishing new public recreation facilities, and land and water development. Rural renewal loan funds will probably be needed to supplement existing public and private sources of financing for these purposes. It is esti