Page images
PDF
EPUB

very much if we had to take fertilizer from our own farmers, or from European farmers, to increase the amount going elsewhere. That would be true also with respect to farm equipment, since there is such an acute shortage of both fertilizer and farm equipment throughout the world.

The third point, under which we would be willing to underwrite a purchase agreement with foreign governments or foreign farmers, to get increased production, seems to me to be the least important of the three. We have had some correspondence, particularly with South American countries who have indicated they might be able to work out an increased agricultural program if we were to do nothing more than underwrite the price. There has been no actual negotiation carried on beyond the tentative stage up to this time.

The CHAIRMAN. The law provides that in any such program as you have mentioned, it would be first submitted to Congress by the Secretary of Agriculture, and if it is not approved by concurrent resolution, it will not take effect.

Mr. DODD. That is one of the problems.

The CHAIRMAN. You have not made any recommendations to this point.

Mr. DODD. That is one of the points which makes it almost impossible to open an agreement with any of these countries, because of the uncertainty attached to it. That it, when you are getting this close to the planting season. It might be possible to use it in succeeding years, but not this year, as we are close to the planting season. We cannot give assurance to any foreign country.

The CHAIRMAN. You do not anticipate that you are going to present any such program to Congress this year?

Mr. DODD. Not at this late date, not for 1948 production, at any rate. The CHAIRMAN. Carrying it one step farther, there is a matter which is covered on page 7 of the Senate committee report at the bottom of the page, with relation to the authorization of $500,000,000 to be held as a reserve for postwar price support to agriculture. I suppose that means agricultural products?

Mr. DODD. That is right.

The CHAIRMAN [reading]:

With the issuance of a Presidential proclamation under 2714, 12 FHCR, declaring the cessation of hostilities on December 1, 1946, the postwar period, for the purposes of this reserve, January 1, 1946.

That was the same proclamation that activated this 2-year period of Steagall commodities?

Mr. DODD. That is correct.

The CHAIRMAN. In the first place, where did you get the $500,000,000?

Mr. DODD. The $500,000,000 was appropriated by Congress for the express purpose of taking care of postwar adjustments necessary because of these large production programs. It was a good deal like some of the deals that were had with industry involving the rebuilding of their plants, the making of changes, and what have you. Agriculture has not been able to make all of the adjustments as quickly as industry, because of the great demand in the world for many items of food. As a matter of fact, there are only a very few commodities as to

74833-48-5

which farmers could let down a little bit as to production. And that fund is sitting on the shelf and will be used to underwrite any lossses incurred in having the farmers make the necessary adjustments.

The CHAIRMAN. Are the figures that you gave us in your chart as to price-support program adjusted?

Mr. DODD. Those were adjusted to all of our losses up to the date of the chart; yes.

The CHAIRMAN. How much of this $500,000,000 is there left?

Mr. DODD. Total charges to the reserve for postwar support, up to June 30, 1947, was $59,930,695.59. In fiscal year 1948, up to February 29, $71,543,557.62. Which leaves us a balance of $368,505,746.79. In other words, we have used approximately $130,000,000 of that $500,000,000 fund.

The CHAIRMAN. Are there any other activities which you are conducting which we have not covered?

Mr. DODD. I believe you have covered all the different programs in which we are engaged, Mr. Chairman.

The CHAIRMAN. I wish you would look at the figures on the last page of the matter which is before you and from which I have been reading, and if you would go over those to see whether they are substantially correct or not.

Mr. DODD. That is a statement of appropriations.
The CHAIRMAN. Yes.

Mr. DODD. They appear substantially correct.

The CHAIRMAN. Without objection, the figures will be placed in the record.

(The document referred to is as follows:)

4. Results

1. The act of March 8, 1938, provides for an annual appraisal of the Corporation's assets by the Secretary of the Treasury. The Secretary of the Treasury is directed to restore the amount of any capital impairment disclosed by the appraisal from appropriations made for that purpose and the Cor, oration is directed to pay into the Treasury the amount of any net worth in excess of $100,000,000.

2. Pursuant to the above, the following table shows results of transfers:

[blocks in formation]

Mr. DODD. I would like to call your attention, Mr. Chairmen, to the cumulative result, deficit, at the end of fiscal year 1948, the anticipated deficit of $1,950,093,503. That is some $200,000,000 less than the cost of the subsidy programs alone. That looks like a pretty big

deficit, $1,900,000,000, but it is actually less than the amount that was authorized for subsidies.

The CHAIRMAN. I might state for the benefit of the members that the matter we have been referring to has been provided to us by our Mr. Fink, of our staff.

Mr. DODD. That was taken from our reports.

The CHAIRMAN. Substantially it is taken from your reports?

Mr. DODD. Yes; we have copies of monthly reports which are available to any member of the committee.

The CHAIRMAN. Are there questions of Mr. Dodd?

Mr. SPENCE. Will the agricultural products, such as wheat, going into the foreign-aid plan be manufactured into flour in this country? Mr. DODD. Yes; part of it.

Mr. SPENCE. Formerly that was always manufactured over there, was it not?

Mr. DODD. Yes.

Mr. SPENCE. They are equipped to do that?

Mr. DODD. Yes, sir. And they use different blends from those which we use in this country.

Mr. SPENCE. The farming industry is highly hazardous, is it not? When a farmer sows he does not know what he is going to reap or what price he can obtain for his product.

Mr. DODD. That is true.

Mr. SPENCE. Through the years what effect do you think the support prices have had on the production of agricultural commodities?

Mr. DODD. I think the record that we attained during the war and since in total production-and one reason we got that production under the handicaps the farmers faced-was largely because of the support program. I and other members of the Department have held many, many meetings with farmers themselves and have asked them what they need to be assured in order to take the risk of putting out a large crop, and I can insert the exact figures in the record, if you like. Mr. SPENCE. I think it would be interesting. It is insurance that the farmers' labor will not be in vain.

Mr. DODD. Yes, sir. You want to remember that during the war we lost about 5,000,000 men off the farms-5,000,000 men who had been working there before. We did not have an adequate supply of fertilizer. We did not have an adequate supply of farm equipment, because steel was being used for other things; we did not have an adequate supply of insecticides, fumigants, and all the other things we needed; and in spite of those handicaps the farmers produced approximately 40 percent more food than we ever produced at any time in our history and they maintained that record for 7 years. I think that in itself is the best answer to your question, Mr. Congressman, because I know that when you go out and talk to a farmer and ask him what support is necessary, what he requires, he generally gives you a figure that is not too far out of line with current prices, perhaps, but he needs to know that if he is going to put highpriced seed in the ground and use high-priced fertilizer and highpriced labor-and these costs of production have gone up very rapidly, as you are well aware-his costs have mounted faster than any other costs perhaps he needs to know that if he is going to take that risk, he is going to have a substantial return.

I think I could point to the flax program as probably the best illustration. We found ourselves, a few years ago, almost cut off from the Argentine as our source of extra flax. We have always been an importer of a substantial amount of flaxseed for crushing into linseed oil. Prices were getting rather high and we were told that we could not buy flaxseed, but we could buy oil. But in order to buy oil, we would have to take some meal as a tie-in sale.

We went to the farmers and asked them what it would take in the way of support prices to produce, in this country, an adequate supply of flaxseed. We were told and we went out with that kind of a support price, and last year we produced enough flaxseed to practically fill all of our requirements. We are self-sufficient as far as flaxseed is concerned.

If we continue the same support price for this coming year, it looks as though we will be sitting easy insofar as linseed oil and meal for the coming year are concerned.

I think the same thing is true of soybeans. Soybeans grew, from a very small erop, to something around 200,000,000-bushel production in this country. We have made ourselves pretty self-sufficient as far as edible oils and livestock feed are concerned, because of those programs. I do not think there is any question but what the assurance you gave the farmer that his commodity would be underwritten has had a good deal to do with it.

I mention the soybeans because our support price, the highest it has ever been, was $2.40 per bushel. Actually, they have sold for more than that since this program has been in effect. But the minute they thought there was a chance that that support price would be reduced, we had the picture of acreage going down. I think it is just as true of other commodities.

Mr. SPENCE. You do everything you can to protect interests of the Corporation by advice and assistance to the farmer to make him. successful in producing to the greatest extent possible, do you not? Mr. DODD. Yes, sir.

Mr. SPENCE. I know you need no defense from me, but I want to say that I do not think anybody who is in a department is subject to criticism and has a practical knowledge of things which he has to meet every day, and upon which he has to make decisions. I think we are fortunate in having men in the Department of Agriculture such as you who have the benefit of experience. I think it is a very good thing, and if you benefit by reason of your decisions, all others similarly will secure like benefits.

Mr. BROWN. I think Mr. Dodd is one of our best men.

Mr. DODD. I do not think, Mr. Brown, that the benefits accrued only to agriculture. When you build that purchasing power for agriculture, you build purchasing power for industry. It takes trains to run this stuff; it takes labor to move it, and I think the benefits of this program have accrued to many other segments of our economy besides agriculture.

Mr. BROWN. I think so.

Mr. NICHOLSON. Mr. Chairman.

The CHAIRMAN. Mr. Nicholson.

Mr. NICHOLSON. We raise a lot of poultry in my country, and we cannot afford to buy the corn. Do you suppose those farmers have been helped out by the price of corn prevailing today? Most of our

crops are shut up, so we do not have eggs and we do not have chickens, and we cannot bring down the price of beef and pork because we do not have those things to trade against it. Somebody is hurting somebody there.

Mr. DODD. Well, the only thing I can say is that our production of poultry, country-wide

Mr. NICHOLSON. Yes; you get plenty of poultry out in the West or Middle West, where they are close to their corn, and where they feed it to them themselves, but we people in the East do not get it, and the farmers in the East cannot raise them, because you are charging $5 or $6 a bag for feed.

Mr. DODD. I agree that feed prices have been very high.

Mr. NICHOLSON. Corn was 75 cents a bushel and the farmer made money on it 10 or 12 years ago. Now you are up to what? What is the price of corn today?

Mr. DODD. Substantially above $1.50, I suppose, up in your country. Mr. NICHOLSON. Well, what about Argentine corn? That is double that, is it not?

Mr. DODD. Yes.

Mr. NICHOLSON. I suppose we are buying that to send it over to Europe.

Mr. DODD. No; we are not.

Mr. NICHOLSON. You are not buying anything from South American countries?

Mr. DODD. No. Commodity credit is not buying anything from the Argentine; that is correct.

Mr. BROWN. I would like to ask a question.

The CHAIRMAN. Mr. Brown.

Mr. BROWN. What general powers will you have in this bill that we do not have in the Delaware charter?

Mr DODD. None. Many of the provisions in these bills actually restrict the powers that we now have.

The CHAIRMAN. Are there further questions of Mr. Dodd?

Mr. BANTA. Mr. Chairman.

The CHAIRMAN. Mr. Banta.

Mr. BANTA. Mr. Dodd, I am not too familiar with the mechanics of your lending operations. I do not know whether you have covered that when I was absent this morning or not.

I would like to know

just what are the mechanics of your lending operations, whereby, say, the farmer reaps the benefits of the operation of Commodity Credit Corporation.

Mr. DODD. Congressman, there is a loan level now for the different commodities. Let us say one commodity, for example.

Mr. BANTA. Perhaps it could be done by giving a typical case, for instance, involving wheat.

Mr. DODD. Let us take a typical case of a farmer who raises wheat. The Department, after the Corporation Board of Directors have decided on what the wheat loans shall be-I might mention, incidentally, that last year the average wheat loan for the United States was $1.84 a bushel. That is changed, of course, according to location and quality. In some localities, it will be above that, and in some cases, it will be below, which follows naturally trade channels.

« PreviousContinue »