Hearings Before Subcommittee of House Committee on Appropriations

nuts, honey, Irish potatoes, milk, butterfat, and the products of milk and butterfat). Price support for nonbasic agricultural commodities, other than the designated commodities, is not mandatory but is authorized under legally prescribed conditions.

SUPPLY PURCHASES

Another important program of the CCC is the procurement of agricultural products to meet the needs of United States Government agencies (principally those administering relief programs abroad), cash-paying foreign governments, and international relief agencies. The CCC also has authority to purchase abroad commodities to meet both domestic and foreign requirements, and to cary out certain exchange operations. Procurement is made during peak marketing seasons and is closely coordinated with the price support progam to provide the maximum benefit to American agriculture. The act of July 16, 1943, requires that the Corporation be fully reimbursed for services performed, losses sustained, and operating costs incurred for commodities purchased or delivered to or on behalf of any other Government agency. Supply program participants are usually required to advance funds in an amount to equal the estimated costs of the commodities to be procured.

The Corporation may, with the consent of the agency concerned, utilize facilities of any other agency of the Federal Government. The Corporation, under this authority, makes extensive use of the personnel and facilities of the Production and Marketing Administration in carrying out Corporation activities.

The costs of CCC price-support activities are financed from its capital funds which are derived from its authorized capital stock of $100,000,000, and its authority to borrow $4,750,000,000 on the credit of the United States. The bulk of these costs result from loans, the purchase of commodities, carrying charges and related expenditures in connection with commodities owned by the Corporation, direct losses, and interest charges. Offsetting these costs are receipts from sale of commodities and interest income.

Administrative expense limitation:

Estimated, 1950___

Budget estimate, 1951---

$15, 420, 000 16, 750, 000

INTRODUCTION

The Commodity Credit Corporation engages in buying, selling, lending, and other activities with respect to agricultural commodities and products thereof, foods, feeds and fibers for the purpose of stabilizing, supporting, and protecting farm income and prices, assisting in the maintenance of balanced and adequate supplies of such commodities and facilitating the orderly distribution thereof. The Corporation operates under the provisions of the Commodity Credit Corporation Charter Act (Public Law 806, Eightieth Congress, approved June 29, 1948), as amended, (Public Law 85, 81st Cong., approved June 7, 1949). This charter confers upon the Corporation necessary authority to carry out its activities. Congress, however, has established the policies under which the Corporation will carry out its price-support programs during the fiscal year 1951, in the Agricultural Act of 1949 (Public Law 439, 81st Cong., approved October 31, 1949). This legislation makes it mandatory that the Corporation support the price of basic commodities (corn, cotton, peanuts, rice, tobacco, and wheat) for which acreage allotments or marketing quotas are in effect at 90 percent of the parity price for the 1950 crops. Acreage allotments or marketing quotas are in effect on these commodities and the support price must, therefore, be established at 90 percent. In addition, this legislation requires the support of prices of certain designated nonbasis commodities (wool, including mohair, tung nuts, honey, Irish potatoes, milk, butterfat, and the products of milk and butterfat). The price of wool must be supported at such level not in excess of 90 percent nor less than 60 percent of the parity prices as is determined necessary in order to encourage the annual production of approximately 360,000,000 pounds of shorn wool. The price of tung nuts, honey, and potatoes must be supported between 60 and 90 percent of parity while whole milk and butterfat and the products of such commodities must be supported at such level not in excess of 90 percent nor less than 75 percent of the parity price as the Secretary determines necessary in order to insure an adequate supply. The Corporation is authorized to support prices through loans and purchases, and utilizes different methods of supporting prices of different commodities based on normal trade practices, the perishability of the commodity concerned and other similar factors. On the basis of the

assumptions outlined below it is not anticipated that prices of any commodity other than those specifically mentioned in the budget document and discussed in the following notes will have to be supported. The Corporation, however, is authorized to support the price of other agricultural commodities. If unfavorable conditions should develop, the Corporation might carry out operations on commodities not now listed in the budget. On the other hand, the strengthening of the position of any commodity could similarly make it unnecessary to carry out budgeted operations for that commodity.

The management of the Corporation is vested in the Board of Directors, consisting of six members in addition to the Secretary of Agriculture. The Secretary is an ex officio Director and serves as Chairman of the Board. Administrative services are performed for the Corporation by the employees of the Production and Marketing Administration and the Corporation assumes its equitable share of the Production and Marketing Administration personnel and other costs. The Corporation also utilizes the services of other agencies when it is advantageous to do so. The Corporation, is fully reimbursed for all administrative services incident to the supply program activities undertaken for Government agencies, foreign governments, private relief agencies, and others.