for other agencies. Commodity Credit Corporation will be To the extent that appropriations are not provided In order to encourage movement of cotton, corn, barley, grain sorghums, oats, rye, rice and nonfat dry milk from free-market supplies into export channels, export payments are made in the form of these commodities from the Corporation's stocks. Cotton held in the Corporation's inventory is also sold for unrestricted use on a competitive price basis. The Corporation conducts a cotton products export program designed to protect the competitive position of the domestic cotton industry in relation to sales of cotton products manufactured abroad from American cotton purchased at export prices. Equalization payments, based on the raw cotton content in the products exported, are made to exporters on cotton products of upland cotton grown and wholly processed in the United States. The Corporation also purchases wheat and other products from processors or processes its own stocks of such commodities for foreign and domestic distribution. In certain cases, payments for such products or processing costs are made in payment-in-kind export certificates. Also, the Corporation furnishes agricultural commodities and products for distribution or exhibition at international trade fairs to aid in the development of foreign markets for such commodities. Storage facilities. This program is carried out under the authority contained in the Corporation's charter, particularly sections 4(h), 4(m), and 5 (a) and (b). The Corporation may (a) purchase and maintain (in storage deficient areas) granaries and equipment for care and storage of grain owned or controlled by the Corporation; (b) make loans for the construction or expansion of farmstorage facilities; (c) provide storage-use guarantees to encourage the construction of commercial storage facilities; and (d) undertake other operations necessary to provide storage adequate to carry out the Corporation's programs. Supply and foreign purchase. This program is carried out under the authority contained in the Corporation's charter, particularly sections 5 (b) and (c) thereof. The Corporation procures foods, agricultural commodities, requirements of Government agencies, foreign governments, and relief and rehabilitation agencies, and to meet domestic requirements. Foods, agricultural commodities and their products are procured or aid is given in their procurement to facilitate distribution or to meet anticipated requirements during periods of short supply. The Corporation may also, through purchases, loans, sales or other means, make available materials and facilities required in connection with the production and marketing of agricultural commodities. Operations involving procurement for other Government agencies are conducted in accordance with section 4 of the act of July 16, 1943 (15 U.S.C. 713a-9), which requires that the Corporation be fully reimbursed for services performed, losses sustained, operating costs incurred, or commodities purchased or delivered to or on behalf of any other Government agency from the appropriate funds of such agency. Operations not subject to section 4 of the act may involve losses if such are necessary to the accomplishment of the objectives of the particular operation. The main activities now carried on are procurement for other Government agencies of specialized commodities not in the Corporation's price-support inventory. Feed grains. Under section 16 (c), (d), and (g) of the Soil Conservation and Domestic Allotment Act, the Secretary of Agriculture utilizes Commodity Credit Corporation funds, facilities, and stocks of feed grains in redeeming or marketing payment-in-kind certificates issued to producers who divert acreage from the production of 1961 crops of corn and grain sorghums and 1962 and 1963 crops of corn, grain sorghums, and barley under this program. The Corporation is also authorized to use its capital funds to pay administrative expenses necessary to carry out this program through June 30, 1963. (See Agricultural Stabilization and Conservation Service.) Wheat stabilization.-Under section 124 of the Agricultural Act of 1961, Public Law 87-128, approved August 8, 1961, and section 307 of the Food and Agriculture Act of 1962 and section 339 (b) of the Agricultural Adjustment Act of 1938, as added by the Food and Agriculture Act of 1962, the Commodity Credit Corporation is authorized to utilize its capital funds and other assets for the purpose of making payments to producers who divert acreage from the production of 1962, 1963, 1964 and 1965 crops of wheat under this program. Payments are made by issuance of Commodity Credit Corporation sight drafts which may be cashed or used for the acquisition of wheat from Commodity Credit Corporation stocks. The Corporation is also authorized to use its capital funds to pay administrative expenses necessary to carry out this program through June 30, 1963. (See Agricultural Stabilization and Conservation Service.) Loan operations.-The following table reflects the loan operations of the Corporation applicable to the preceding programs (in thousands of dollars): Loans outstanding, gross, beginning of year: Commodity Credit Corporation.. Add loans made.. Total, loans outstanding, gross, Loans repaid.... Acquisition of loan collateral. Total, loans outstanding, gross, 2,254,917 2,109,713 loans canceled.... 76,634 90,473 847,809 101,944 894,367 306 Undistributed expenses.-There are a number of expenses which are not allocated to a specific program. These include interest on (a) the capital stock of the Corporation, (b) borrowings from the Treasury, and (c) other obligations evidencing loans made by lending agencies; administrative expenses; and other miscellaneous costs, including expenses of the agricultural stabilization and conservation county committees and Federal Reserve banks in connection with the Corporation's programs. Administrative expenses are for the operating staff, including the services of employees of the Agricultural Stabilization and Conservation Service engaged in the Corporation's activities, services performed by other agencies of the Department, costs of audit, and payments to the General Services Administration for space in the District of Columbia and rent of field office space. Estimates for 1964 include a limitation of $43.9 million for costs of administration including a reserve of not less than 7% for contingencies. The requested authorization excludes administrative expenses in connection with the supply and foreign purchase program, the wool and mohair program under the National Wool Act of 1954, the International Wheat Agreement, and the sale of longstaple cotton transferred from the national stockpile, since it is contemplated that full reimbursement will be received for these expenses. Such reimbursement will be obtained and used in 1964 in the same manner as in previous years. Expenses in connection with the acquisition, operation, maintenance, improvement, or disposition of property which the Corporation owns or in which it has an interest have been treated as program rather than administrative expenses. Such expenses include inspection, classing and grading work performed on a fee basis by Federal employees or Federal or State licensed inspectors and work performed on a contract basis by agricultural stabilization and conservation county committees. Capital funds of the Corporation are transferred to the consolidated appropriation, Expenses, Agricultural Stabilization and Conservation Service as indicated under that appropriation item for operating expenses relating to the Corporation's programs. Also, expenses of other Federal agencies whose services are utilized in the handling of Commodity Credit Corporation property are treated as program expenses. These include the fleet storage operation of the Maritime Administration conducted intermittently since 1949 and the services of the General Services Administration in connection with the strategic, critical, and other materials acquired by the Corporation. Under the special agricultural conservation programs for feed grains and the wheat stabilization program, capital funds of the Corporation are authorized to pay administrative expenses of these programs through June 30, 1963. SPECIAL ACTIVITIES These activities are carried out under authority of section 5(g) of the Corporation's charter and specific statutory authorizations or directives with respect thereto which are currently in effect or which may subsequently be enacted. A summary of current activities will be found on p. 143. The Corporation receives reimbursement for costs of these activities as described under each. Activities currently being carried out are as follows: (See Foreign assistance programs for details of items (1)-(5).) (1) Sale of surplus agricultural commodities for foreign currencies. Under the Agricultural Trade Development and Assistance Act, as amended (7 U.S.C. 1701-1709), surplus agricultural commodities are sold for foreign currencies. These currencies may then be used within certain limitations by the United States Government for agricultural market development, purchase of strategic materials, military equipment, facilities and services for the common defense, payment of U.S. obligations, military family housing, and other specified purposes. (2) Commodities disposed of for emergency famine relief to friendly peoples.-The Commodity Credit Corporation, through December 31, 1964, is directed, under title II of Public Law 480, 83d Congress, as amended (7 U.S.C. 1703, 1721-1724), to make its stocks of agricultural commodities available for emergency assistance to friendly peoples in meeting famine or other urgent relief requirements and to pay ocean freight charges for the shipment of donated commodities. will be paid by the Department of Defense over a long period of years to reimburse the Corporation pursuant to the act of September 1, 1954 (5 U.S.C. 171z-1). (7) National Wool Act.-Under the provisions of the National Wool Act of 1954, as amended, incentive payments are being used to encourage the annual domestic production of approximately 300 million pounds of shorn wool. Support of prices of wool and mohair is mandatory. Incentive payments are made to eligible producers on a percentage basis, reflecting the amount required to bring the national average received by all producers up to the announced incentive level. The incentive level can not exceed 110% of parity. In a referendum conducted in September 1962, wool and lamb producers voted to continue the deduction from their incentive payment of an amount not to exceed 1 cent per pound of wool and 5 cents per hundredweight of unshorn lambs marketed. These funds financed promotional advertising, and related market-development activities by the American Sheep Producers' Council, Inc., under an agreement with the Secretary of Agriculture. In order to simplify program and financing operations, the marketing year under this January 1, 1964. program will be placed on a calendar year basis on COST OF THE NATIONAL WOOL ACT Incentive payments: (3) Long-term supply contracts.-Under title IV of the Agricultural Trade Development and Assistance Act (7 U.S.C., Supp. 1, 1731-1736), the President, in order to stimulate and increase sales for dollars, is authorized to make agreements with friendly nations, including their financial institutions, or with the private trade, under which the United States would deliver surplus agricul- Administrative expenses.. tural commodities over periods of up to 10 years and accept payment in dollars with interest over periods of up to 20 years. (4) International Wheat Agreement (7 U.S.C. 16411642).-This agreement, which was renewed for a period of 3 years effective August 1, 1962, operates to provide an assured market for wheat to exporting countries and assured supplies of wheat to importing countries at stable and equitable prices. Commodity Credit Corporation is directed under title II (5) Bartered materials for supplemental stockpile. The of the Agricultural Act of 1956 (7 U.S.C. 1856) to transfer strategic and other materials acquired as a result of barter and exchange of agricultural commodities, other than those acquired for the national stockpile or for other purposes, to the supplemental stockpile. (6) Military housing (barter and exchange).—During 1957 a contract was completed for the disposition of Commodity Credit Corporation-owned commodities valued at $50 million, for the construction of military housing in France with foreign currencies obtained from this transaction. Proceeds from rental and quarters allowances Interest expense... Total..... (8) Grain for migratory waterfowl feed. The Commodity Credit Corporation is directed to make available to the Secretary of the Interior (7 U.S.C. 442-445), such grain acquired through price-support operations and certified by the Commodity Credit Corporation to be available for such purposes or in such condition as to be undesirable for human consumption, as the Secretary of the Interior shall requisition. This appropriation item is now included under that Department. (9) Surplus grain for game birds.-The Secretary of the Interior (Public Law 87-152, approved August 17, 1961 (75 Stat. 389)), is authorized to requisition Commodity Credit Corporation grain for feeding starving migratory birds. Any State, under Public Law 87-152 cited above, upon the finding of the Secretary of the Interior that resident game birds and other resident wildlife are threatened with starvation, may also requisition grain from Corporation stocks. Appropriations will be requested in a later budget to reimburse the Corporation for this activity. (10) Grading and classing activities.-The Commodity Credit Corporation is authorized to make advances to the Agricultural Marketing Service for classing and grading of agricultural commodities without charge to producers (7 U.S.C. 414a). Such advances used for classing cotton and grading tobacco not placed under price-support loan are financed by appropriations. This appropriation item is now included under the Agricultural Marketing Service. (11) Soil bank program. Pursuant to section 120 of the Agricultural Act of 1956 (7 U.S.C. 1808) the Secretary of Agriculture utilizes the facilities of the Corporation for making payments to farmers under this program. (See Agricultural Stabilization and Conservation Service.) (12) Land use adjustment.-Pursuant to section 101 of the Food and Agriculture Act of 1962, approved Septem ber 27, 1962, Public Law 87-703, the Secretary is authorized to utilize the services, facilities, and authorities of the Commodity Credit Corporation for the purpose of making disbursements to producers under programs formulated pursuant to sections 8 and 16(e) of the Soil Conservation and Domestic Allotment Act, as amended. (13) Transfer of long-staple cotton from national stockpile for sale by Commodity Credit Corporation. The act of July 10, 1957, (71 Stat. 290), authorized the transfer of 50 thousand bales of domestically grown extra long-staple cotton from the national stockpile to the Corporation for sale. Approximately 219,000 bales of extra long-staple cotton, both American-Egyptian and foreign grown, remaining in the stockpile were also made available to Commodity Credit Corporation for disposition pursuant to Public Law 87-548, approved July 25, 1962. Proceeds less costs incurred, including administrative expenses, are covered into the Treasury as miscellaneous receipts. (14) Loans to Secretary of Agriculture for conservation purposes.-Under section 391(c) of the Agricultural Adjustment Act of 1938, as amended (7 U.S.C. 1391), the Corporation advances funds to the Secretary in amounts not to exceed $50 million annually to purchase conservation materials and services. Repayments of the loans plus interest are made as soon as practicable in the succeeding fiscal year from funds appropriated for the agricultural conservation program. (See Agricultural Stabili zation and Conservation Service.) Financing. The programs of the Commodity Credit Corporation are financed by capital stock, borrowings, guarantees to purchase notes or other obligations evidencing loans made by lending agencies, issuance of certificates of interest in loans held by the Corporation, appropriations to reimburse Commodity Credit Corporation for net realized losses, appropriations to reimburse the Corporation for costs of special activities, advances and reimbursements from Foreign Assistance Program appropriations, and receipts from operations. Borrowing authority. The Corporation has an authorized capital stock of $100 million held by the United States and authority to borrow up to $14.5 billion. Funds are borrowed from Treasury and may also be borrowed from private lending agencies. In connection with loan guarantees, the Corporation reserves a sufficient amount of its borrowing authority to purchase at any time all notes and other obligations evidencing loans made by lending agencies or certificates of interest issued in connection with the financing of price-support operations. All bonds, notes, debentures, and similar obligations issued by the Corporation are subject to approval by the Secretary of the Treasury as required by the act of March 8, 1938 (15 U.S.C. 713a-4). Interest on borrowings from the Treasury (and on capital stock) is paid in accordance with a policy of the Treasury that the rate shall be based upon the average interest rate on all outstanding marketable obligations (of comparable maturity date) of the United States as of the preceding month. Interest is also paid on certificates of interest and lending agency obligations for the period the agencies have their funds invested. On the basis of the budgetary assumptions heretofore described, the consequent estimated program requirements currently indicate no need for an increase in borrowing authority. Since there are so many uncontrollable factors affecting the programs of the Corporation involving crops which have not even been planted, it must Realized deficit as of June 30, 1962, price support, export, supply, and related programs and special milk.. 6,227,433 SPECIAL ACTIVITIES 10,024,345 9,319,114 536,518 9,855,632 168,713 Note. This table does not reflect the following charges: accounts payable, accrued liabilities, and obligations outstanding other than obligations to purchase notes and certificates held by banks. These do not become charges against the statutory borrowing authority until they result in borrowings from Treasury or loans or certificates held by banks. Reimbursement for net realized losses.-Pursuant to Public Law 87-155 (75 Stat. 391), annual appropriations are authorized for each fiscal year commencing with fiscal year ending June 30, 1961, to reimburse the Commodity Credit Corporation for net realized losses sustained as reflected in its accounts and shown in its report of financial condition as of the close of each fiscal year. This law repealed sections 1 and 2 of the act of March 8, 1938, as amended (15 U.S.C. 713a-1), which provided for an appraisal by the Secretary of the Treasury of the assets and liabilities of the Corporation and authorized restoration of capital impairment or surplus payments to Treasury based on such appraisal. The realized losses reflected in the accounts of the Corporation and in its report of financial condition as of June 30, 1962, were $2,799.4 million. A 1964 appropriation in this amount is proposed in the estimates. After Inventory revaluation and accounting for carrying charges. It had been the Corporation's practice for a number of years to treat as additions to the book value of commodity inventories the costs incurred for storage, handling, and transportation of such inventories. approval by the General Accounting Office, the Department of the Treasury, the Bureau of the Budget, and applicable Congressional committees, the Corporation, in order to report inventory values on a more realistic basis, revalued its inventory as of June 30, 1961, by removing all accumulated storage, handling, and transportation costs incurred subsequent to acquisition of inventories and recording them as current operating expenses. this connection, reseal loan storage costs are similarly handled. In Net realized losses due to the inventory revaluation. amounted to $1,268.5 million. The 1963 appropriation act included $211.5 million to reimburse the Corporation for approximately one-sixth of these losses. Subsequent Realized losses, 1948 to 1962 inclusive. Total reimbursements... Deficit as of June 30, 1962, special activities.. |