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vent the reentry into the United States of wheat exported with benefit of subsidy under the agreement, and to control the export of wheat only to the extent necessary to assure the movement of enough wheat to those foreign markets for which the United States can have credit applied to its guaranteed sales under the agreement.
The bill would also authorize the issuance of rules and regulations requiring persons engaged in exporting and importing wheat and wheat flour, or selling wheat or wheat flour for export, to keep records of such transactions and to permit the inspection of such records. This authority is needed to assure compliance with regulations issued under the legislation and to obtain the information necessary to compile reports to the Wheat Council which are required by the agreement.
It is urged that enactment of S. 2383 be expedited as much as possible, so that the United States will be in position to realize the maximum benefits under the International Wheat Agreement.
Senator HOLLAND. I note your prepared statement makes no reference to S. 2287.
Mr. Trigg. Senator Holland, we, as pointed out by the chairman, submitted legislation which was a draft of S. 2383, and it was introduced by the chairman of the full committee, and we later sent up an unfavorable report, as pointed out by the chairman in the beginning, on S. 2287. Anyhow, the Department's position is that we support S. 2383 as presently drawn.
Senator JOHNSTON. Senator Young.
Senator Young. Your objection to S. 2287 is against the provision in that bill which requires that ECA absorb the losses only?
Mr. TRIGG. As I understand it, S. 2287 does provide that ECA absorb the subsidy, whereas S. 2383 does provide that the Commodity Credit absorb the subsidy, and the President's program provides for, or is in keeping with, S. 2383, and of course that is the position that the Department takes, and we are supporting that bill.
Senator Young. In effect would you not agree that really increases ECA appropriations some 60 or 80 million dollars this year? They can export this wheat or must sell it now for $1.80 a bushel to these ECA countries, whereas they would have to pay probably $2.25 a bushel now. The ECA countries are benefiting to that extent, are they not?
Mr. TRIGG. Under S. 2383 I think, Senator Young, that that is correct. ECA's appropriation as such is benefiting by the amount that is absorbed by Commodity Credit.
Of course as far as the Government is concerned, it is a subsidy paid by the Government regardless of which agency takes care of it.
Senator Young. Since appropriations have already been made for ECA, I can see where it would be rather difficult to turn around now and charge the ECA with the loss, but I was in hopes that in future years it could be applied in ECA in place of the Commodity Credit Corporation.
Mr. TRIGG. My understanding is, and probably the witnesses who will appear in connection with this agreement from the ECA would be in a better position to discuss this than I, that some discussion took place during the debate of the ECA bill, either on the floor or in committees, which dealt with the specific point on the reduction of ECA appropriations by an amount which was supposed to be estimated or approximated, the amount would be included in the subsidy for the wheat agreement, but as I say, there is probably someone here from ECA who can fill you in much better than I on that.
Senator JOHNSTON. Do you have the figures in regard to the amount of wheat bought from the United States last year by ECA?
Mr. Trigg. I can furnish those, Senator. I do not know whether we have them available. I do not have them available with me at this time, but we can furnish that, as to the amount of wheat bought by all ECA countries, broken down by countries. That is what you would want, I presume.
Senator Johnston. I think we ought to have that for the record.
Senator Johnston. I would like to know where they are buying the wheat. If they are using our money, I would like to know where they buy it.
Senator Young. $175,000,000 from Canada just recently. Senator JOHNSTON. I understood that. Senator Young. May I ask another question there, Mr. Chairman. Under this bill you seek to have complete control of exports all the time, is that correct, over all exports of wheat regardless of what the surplus is in the United States.
Mr. Trigg. My understanding of it is, Senator, that we would simply have the control so far as the wheat agreement is concerned, over 168,000,000 bushels of it.
Senator YOUNG. And over and above that amount United States exporters would enter into any kind of an agreement, business deal that they wished, to dispose of wheat, without first getting permission from the Commodity Credit Corporation?
Mr. TRIGG. Well, of course as you know now the Commodity Credit Corporation is procuring and shipping wheat for all countries at the present time except in the case of the countries in the Western Hemisphere, and in the case of flour throughout the entire world, but for all the wheat that goes now into the ECA countries, and to occupied Germany and so on, it goes through the Commodity Credit Corporation.
Senator YOUNG. Are all United States exports controlled that way? Are the millers and wheat exporters exporting wheat on their own without getting any Government license or getting permission?
Mr. Trigg. Well, the flour is being exported, yes, by the millers, and without any reference to the Commodity Credit Corporation. That is true. Wheat which is going to go to particular countries, to countries outside the Western Hemisphere, is handled by the Commodity Credit Corporation.
Senator JOHNSTON. What is the estimated surplus of wheat in the United States for the forthcoming year?
Mr. Trigg. Senator, I do not know that I can answer that directly. At the end of this year we had right at 300,000,000 bushels carry-over in this country.
If it is assumed that that is the surplus, we might say that the carryover next year will be probably in the same neighborhood, maybe more or less. I think it depends upon what is determined by all the people concerned, what is an adequate carry-over, and maybe that or a portion of that might be said to be surplus.
I do not know that that specifically answers your question, but as of this time I do not know that we can give you an accurate estimate as to what the surplus will be so far as that is concerned. Insofar as the determining of acreage allotments and marketing quotas of wheat is concerned, it is set down by formula of course within the law.
Senator HOLLAND. Mr. Trigg, what did you say was the amount, or did you say what the amount of wheat to be purchased from the United States by ECA would be, or for ECA use?
Mr. Trigg. I do not have that with me at the present time, but probably someone from ECA could give a better example of what their program will include, and be all inclusive. Under the wheat agreement there are 168,000,000 bushels to go to all agreement countries. There will be much more than that shipped out of course under the entire export program for this next year.
Senator HOLLAND. It seems to me that it would make a very material difference whether a subsidy were paid by the ECA or were paid by the Commodity Credit Corporation, because if it were paid by ECA, it would use of course that amount that was required to pay the subsidy out of the ECA appropriation, whereas if it were paid out of the Commodity Credit Corporation, it would not only mark the expenditure of that much money, the same amount out of one Government pocket, but would leave the equivalent amount in ECA to be spent elsewhere, and unless the ECA budget was based upon the acquisition of wheat at the price provided for export under the international wheat agreement, it seems to me that the Congress should insist that the subsidy be paid by ECA.
Senator JOHNSTON. There is a question that I would like to ask. Would the Commodity Credit Corporation charge subsidy as a public debt transaction or would it come to Congress for an appropriation?
Mr. Trigg. It, Senator, would be charged against our borrowing authority, and of course we have to get our borrowing authority restored each year by appearing before committees of Congress and asking for authority, so it would come back to Congress.
Senator Johnston. In effect you would have to come back to Congress to replace your funds, so to speak as you use it up.
Mr. TRIGG. That is correct. As you know, Commodity Credit has the borrowing authority of $4,750,000,000 in the form of a revolving fund. It is restored after such time as the authority is permitted by Congress.
Senator Young. In answer to your question a moment ago, Senator Holland, ECA did in their testimony before the Appropriations Committee indicate that they had cut their budget by some 60 or 80 million dollars, taking into account that the Commodity Credit Corporation would pay this difference between the international wheat price and the price that they would have to pay to acquire that wheat here through the Commodity Credit Corporation, which is about a 45-cent spread in there.
Mr. TRIGG. About 45 to 50, yes, sir.
Senator HOLLAND. That would mean of course that that pretended reduction in the ECA budget was not a reduction at all, that much of it.
Senator Young. Well, it is not a very good deal for the Commodity Credit Corporation or the American wheat farmer either, and this
purchase in Canada, the wheat there purchased at $2 a bushel where under the international wheat agreement there could have been a price of $1.80. On top of that American wheat producers have to reduce their acreage on the average 17 percent.
Canadians have no acreage reduction program whatever, and may increase their acreage next year. Where will we be here? It seems as if we are getting one bad deal after another.
There is nothing to stop them from increasing their acreage next year unless the Department of Agriculture entered into such an agreement, and I doubt if they have. I have not seen any publicity. It is probably a question I should direct to Secretary Brannan himself, but I think he is going to have a hard time explaining that to the American wheat producers.
Mr. Trigg. Did I understand you to mean there that nothing could stop the Canadian wheat grower from increasing his acreage, or our wheat growers?
Senator Young. No, the Canadians. They have no wheat acreage control program, as far as I know, and nothing is contemplated for next year, while we have to reduce our acreage 17 percent on wheat, and maybe a few other products, too.
Mr. Trigg. Well, as you point out, the Department did, according to the law, issue acreage allotments on wheat this year, and there is some reduction in acreage as compared with previous years. That is true.
Senator Young. That is right.
Mr. Trigg. This purchase that you referred to recently will mean that there will be a benefit to some extent of $30,000,000 or thereabouts, which approximates 50,000,000 bushels of wheat, which is a shift from one of the other countries that did not normally get its wheat from the United States. They will purchase that much wheat here, so to some extent there is that gain on this recent purchase transaction you speak of.
Senator Young. Well, supposing the Canadian farmers increase their wheat acreage say 20 percent next year and come up with a 20 percent increase in production. Are we obligated to help them get rid of their surplus again with United States dollars and cut down some more ourselves?
Mr. TRIGG. Well, of course, that is a question, Senator Young, that is really for high Government policy.
Senator YOUNG. Yes, I realize that.
Mr. TRIGG. I could not answer it categorically one way or the other, as far as that is concerned.
Mr. Johnston. The reason I imagine the Senator is asking that question, is because the Congress of the United States must appropriate the money, and they will be held responsible for what is done in that field as much so as probably the administrative body that carries it out.
Senator Young. That is right.
Mr. Trigg. I might add there, as long as we are talking about that wheat purchase that has been referred to, that in the opinion of the Department of Agriculture the wheat exports this year from the United States will not be materially reduced as a result of Great Britain purchasing the amount of wheat that has been approved for purchase in Canada.
In other words, in some respects it is the opinion of the Department that some benefit, if not great deal of benefit, will accrue to the American wheat producer because of the fact if this purchase was not committed in Canada, and Canada had no other place to get rid of this wheat except to dump it at a reduced price on the world markets, it might replace some of the markets that the United States now has and is shipping to, and then too, we have been exporting at a pretty high rate during the past several years wheat and other grains, and it will tax about all the facilities that we have to get out as much as we would get out anyway, so the Department is of the opinion that wheat exports, as a result of this, will not be materially reduced this next year in the United States.
Senator Young. Of course, Britain has always had a protected trade area where they can very effectively cut out imports from other nations, including the United States. If the Canadians next year increase their wheat acreage and come up with another big surplus far above this year's, I am wondering if it would be good Government policy to use hundreds of millions of dollars of United States money to subsidize their exports, leaving us holding the sack here, supporting wheat prices at a large cost to the Government.
Mr. TRIGG. It seems to me, Senator Young, that any position that the Government would take on such a proposition would have to be reexamined rather carefully periodically. As to what time, I do not know exactly, but I do not see how any decision made today on something like that could be indefinite. I think it would have to be reexamined from time to time.
Senator HOLLAND. Is Canada one of the signators to the international wheat agreement?
Mr. Trigg. Yes, she is one of the exporting countries.
Senator HOLLAND. What is her exportable guaranteed amount compared with our 168,000,000 bushels?
Mr. Trigg. 203,000,000 bushels.
Senator HOLLAND. 168,000,000 for this country and 203,000,000 for Canada?
Mr. TRIGG. That is correct.
Senator Young. How do the wheat exports in the United States this year, since July 1, compare with a year ago?
Mr. Trigg. They are less. As a matter of fact we have exported only a little over 7,000,000 bushels this year beginning July 1 to ECA countries, and of course there are quite a few exports to other countries, but it is less than what it was a year ago.
Senator YOUNG. Far less, is it not?
Mr. Trigg. One of the reasons, I frankly feel, is the holdup on the implementing legislation to the wheat agreement. As soon as that is out and it is clear what the Government's policy is insofar as the financing of it is concerned, I feel that these exports will move right on out.
Senator JOHNSTON. What about the other countries that have not entered into the agreement yet? Are they in the same situation we are?
Mr. Trigg. I believe all of the exporting countries have ratified it except Uruguay.