(1) The increase of $275,200,000 for program purposes is necessary to complete payments to producers participating in the expanded 1958 acreage reserve program. Based on preliminary reports as of May 9, 1958, it is estimated that a total of $697,861,076 will be paid to producers on the 1958 program. The regular 1959 appropriation bill provides $317 million for payments on the 1958 program. It is estimated that $105,661,076 will be paid to producers on the 1958 program from the 1958 appropriation. The balance required is therefore $275,200,000. The amount of $105,661,076 estimated to be paid from .the 1958 appropriation represents an increase over previous estimates. It reflects our judgment that due to noncompliance, cancellations, and adjustments, actual compensation paid will be $11,362,982 less than the maximum compensation under signed agreements for the 1956 program and $3,838,570 less than the maximum compensation under signed agreements for the 1957 program. These amounts may therefore be applied to payments for the 1958 program.

The 1959 budget estimate for this program was based on payments required under a $500 million program for 1958 crops as authorized in the 1958 appropriation act, and reflected an anticipated short fall signup under this program. The Second Supplemental Appropriation Act, 1958, increased the 1958 program authorization to $750 million because of the heavy participation on cotton and corn which materialized. Because this act was passed late in March 1958, it was not possible to provide for the additional requirements in the regular budget.

Under current procedures, program funds are advanced to the Commodity Credit Corporation periodically in amounts estimated to be required to cover negotiable certificates to be issued to producers by ASC county offices. Funds advanced are expenditures under the appropriation "Acreage reserve program." Allocations are issued to ASC offices limiting the issuance of certificates to amounts advanced to the Corporation. For various reasons ASC offices may not be able to issue, before June 30, 1958, certificates equal to allocations. If amounts equal to such unused allocations were withdrawn from the Corporation and returned to the appropriation, this proposed supplemental appropriation would probably be inadequate. In order to keep the amount of the supplemental to the minimum, it is therefore necessary that funds advanced to CCC in the fiscal year 1958 in excess of negotiable certificates issued through June 30, 1958, be retained by the Corporation to cover certificates issued in the fiscal year 1959. Similar procedures will be followed with regard to the conservation reserve program.

Attached is a table summarizing participation in, and payments required under, the 1956, 1957, and 1958 acreage reserve programs.

Commodity Stabilization Service-Acreage reserve program, 1956-58 crops

1958.

Premiums on grains, 1956 crop.

1 Through May 9, 1958, for 1958 crops planted in the spring of 1958.

(2) The increase of $7,600,000 above the $13 million for all operating expenses provided in the budget is proposed for use by ASC county committees. The need arises primarily from the additional performance checking which will be required in the fiscal year 1959 to determine eligibility of the larger number of individual producers participating in and receiving payments under the expanded program, as compared with the number anticipated in the budget. The original estimate provided funds for checking performance on 438,260 farms and making payments to 575,000 farmers in the fiscal year 1959. Current estimates are that 936,500 farms will need to be measured and 975,000 payments made in the fiscal year 1959, or about double the original workload estimated. ASC county offices are being directed to make payments on 1958 agreements promptly on determination of performance.

The Conference Report No. 682, 85th Congress, 1st session, on the 1958 appropriation bill stated the opinion of the conferees that all payments under 1958 acreage reserve contracts should be made on or before September 15, 1958. Since the bulk of performance work will have to be done early in the fiscal year 1959, not only on the acreage reserve program, but also to complete performance work on acreage allotment and marketing quota programs, county committees will be hard pressed to do all the necessary work in the time allotted. It is expected that substantially all of the payments required will be made before September 30. Payments, of course, cannot be made where matters of compliance are not finally determined or are in an appeal stage or where violation proceedings may be involved. Experience to date does not indicate that there

should be many such cases.

With the increased operating funds of $250,000 made available in the Second Supplemental Appropriation Act, 1958, and the funds contained in the regular 1958 appropriation, a special effort is being made by ASC county committees to carry out the maximum amount of work possible in the 1958 program prior to June 30, 1958. Except for winter wheat crops, it is not expected, however, that significant amounts of 1958 crops can be checked or producers' eligibility determined very far in advance of June 30. The late spring has delayed planting in many areas well beyond the normal period for such activity.

Mr. WHITTEN. You may proceed, Mr. McLain.

GENERAL STATEMENT OF THE ASSISTANT SECRETARY OF AGRICULTURE

Mr. MCLAIN. Mr. Chairman and members of the committee, the supplemental budget estimate before you provides an additional $282,800,000 for the 1958 acreage reserve program.

BACKGROUND

Before the signup started for spring crops, it was estimated that the 1958 acreage reserve program payments earned would be $485.6 million against a program authorization of $500 million. This was considered ample in view of the actual winter wheat signup of $80 million. When the signup started on January 13 for spring crops, it was evident that the program for spring crops was going to be accepted with more enthusiasm than the winter wheat program. The acreage offered, particularly for corn and cotton, was unexpectedly heavy, and in order not to exceed the program authorization, signup was temporarily suspended until steps could be taken to assure that we did not exceed the program authorization. When signup activities were resumed, in the States and counties where the acreage offered was within the program allocation, agreements were accepted. In other cases, where acreage offered was in excess of the allocation, agreements were accepted on a first-come, first-served basis up to the amount of the allocation. Those producers who filed agreements after the allocations were exhausted were placed on a register to be given consideration if and when additional authorization became

available. The Second Supplemental Appropriation Act for 1958, approved March 28, increased the program authorization from $500 million to $750 million.

ACREAGE OFFERED

As of March 7, producers offered 18.2 million acres from their allotments for wheat, corn, cotton, rice, and tobacco. The payments on this acreage would have amounted to $740.6 million. The offerings, however, except for winter wheat, were not final. The deadline for filing agreements for corn, cotton, and winter wheat was February 20 and March 7 for tobacco and rice, except that in Texas and California, where rice allotments are made on a producer basis, agreements could be filed through April 30. Producers of corn, cotton, and spring wheat also were given the right to request downward adjustments or cancel the agreements offered through March 28. As soon as the program authorization was increased to $750 million, producers on the waitinglist register were notified that additional program authorization was available and were told that an agreement could be made on the acreage previously offered. In addition, it was possible for certain other producers, who could establish by certification that they made an attempt to participate, to file an application.

As a result of the authority to cancel or reduce downward the acreage previously offered, the offers decreased after March 7 from $740.6 million to about $698 million.

BASIS OF ESTIMATE

The estimate is based on information as of May 9, and is about the same as the latest information in the report of May 16. Based on current data, producers have agreed to take 17.2 million acres from production of acreage-allotment crops and put them in the acreage reserve. This will require payments of $697.9 million, of which $105.7 million will be paid from funds available in the fiscal year 1958, and $317 million from the funds provided in the Department of Agriculture Appropriation Act for the fiscal year 1959. The balance required of $275.2 million is included in this estimate.

The estimate also includes an additional $7.6 million for the ASC county committees, making a total of $16,019,000 available for county operations. The need arises primarily from the additional performance checking which will be required. The original estimate provided funds for checking 438,260 farms and making payments to 575,000 producers in the fiscal year 1959. The current estimates are that 936,500 farms will need to be measured and payments to 975,000 producers during the fiscal year 1959. This is about double the original workload estimated.

Last year's conference report on the 1958 appropriation stated that all payments on the 1958 program should be made before September 15. Payments on the 1958 agreements will be made as promptly as performance can be determined. It has been completed for winter wheat and has started on the spring crops. The bulk of performance work will be done early in the fiscal year 1959, not only for the acreagereserve program, but also for acreage allotments and marketing quota programs. ASC county committees are going to be hard pressed to

do the necessary work in the time allotted. It is expected that the bulk of the payments will be made by the end of August and that substantially all payments will be made before September 30. Payments, of course, cannot be made where matters of compliance are not finally determined or are in an appeal stage or where violation proceedings may be involved.

ADVANCES TO COMMODITY CREDIT CORPORATION

Under current procedures, program funds are advanced to the Commodity Credit Corporation periodically in amounts estimated to be required to cover negotiable certificates to be issued to producers by ASC county offices. Funds advanced are expenditures under the appropriation "Acreage reserve program." Allocations are issued to ASC offices limiting the issuance of certificates to amounts advanced to the Corporation. For various reasons, ASC offices may not be able to issue, before June 30, 1958, certificates equal to allocations. If amounts equal to such unused allocations were withdrawn from the Corporation and returned to the appropriation, this proposed supplemental appropriation would probably be inadequate. In order to keep the amount of the supplemental to the minimum, it is therefore necessary that funds advanced to CCC in the fiscal year 1958 in excess of negotiable certificates issued through June 30, 1958, be retained by the Corporation to cover certificates issued in the fiscal year 1959. Similar procedures will be followed with regard to the conservation reserve program.

Mr. Chairman, that briefly summarizes our request. We will be glad to discuss these matters more fully or answer any questions, to the best of our ability.

PROGRAM PAYMENTS AND FUNDS APPROPRIATED

Mr. WHITTEN. Mr. McLain, the staff of the committee has prepared a table showing the amount of program payments and the money that has been appropriated for 1956, 1957, and 1958, which totals $1,645,858,415, leaving the balance that you request today of $282,800,000. I would like to have that table included in the record just preceding our discussion.

(The material referred to follows:)

Second supplemental 1958 (reimbursements CCC)_.

Second supplemental 1958 (administrative expenses ARP).

1958 regular bill.

1959 regular bill

Total funds to date_-__

510, 808, 415 250,000

522, 000, 000 330, 000, 000

1,363, 058, 415

Balance due___

282, 800, 000