APPROPRIATION REQUESTED FOR 1964

The budget before you proposes an increase of $772,600 for the activities of the Economic Research Service of which 46 percent represents funds needed to defray the cost of the pay and postal legislation approved in fiscal year 1963. This budget also reflects other activities that should be brought to the attention of this committee. First, a transfer of $328,600 from the base for the Economic Research Service to the Farmer Cooperative Service is proposed. For several years funds appropriated to the Economic Research Service and the Agricultural Marketing Service have been earmarked for economic and marketing research for farmer cooperatives and have been transferred to the Farmer Cooperative Service. By agreement, the Farmer Cooperative Service will now request these funds directly, but coordination of the projects will continue through the central project office of the Department.

Second, reduced emphasis on research in marketing functions in the areas farthest removed from farm operations is contemplated. The compilation and dissemination of information on the costs and margins in the marketing system for farm products will not be diminished. But the shift in funds will allow more emphasis to be placed on programs considered to be of a higher priority. For example, initiation of estimates of farm incomes for Hawaii and Alaska is needed so that these States can be incorporated in the regular farm income estimates now maintained for all the other States. Further, there is need for a study of the impact of changes in the farm economy on the rural communities which serve agriculture. In the foreign field, we are moving to develop a sound statistical base, country by country, pointed toward identifying the areas and commodities where the United States can expand its exports of farm products. Here, the longer range supply and demand studies for individual countries prepared under contract with research agencies in foreign countries and financed with foreign currencies arising from Public Law 480 will be most valuable. These studies, properly evaluated and integrated, can provide the keystone for evaluating export prospects over the next 10 years. By fiscal 1964, studies will be completed or underway for 32 countries covering more than 80 percent of our foreign outlets for U.S. farm products.

FACTORS AFFECTING FOREIGN MARKETS

Mr. WHITTEN. I have asked the committee members to refrain from interrupting unless there is something special they feel they need to ask. I hope they will feel free to interrupt where necessary, however. You have just made the statement "These studies properly evaluated and integrated can provide the keystone for evaluating export prospects over the next 10 years." Now in a free world economy that could be. But we are dealing with the Common Market, with foreign nations' tendency to require import licenses, with our own Government's hesitancy on many occasions, as they are now, about offering cotton competitively and where for years they did not offer any of our Surpluses at competitive levels in world trade. If you make a study that fails to take into consideration all these factors, is it worth any

thing? In other words, should we have a political study group which deals with the conflicts and competition of governments, the interior politics of the various countries and whether they would be friendly toward the import?

Is that not the big factor now rather than any information you might get here? Or do you need this in connection with whatever may happen in the political area?

Mr. KOFFSKY. I believe it is the latter, Mr. Chairman. The information on potential demand, supply, and import requirements is needed whatever might happen politically.

First, there is the growth in demand in each of these countries due to population increases. Second, there is the growth in demand for farm products associated with increasing consumer incomes, and this is a measure of the kind of foods and other farm products that they will demand for a higher standard of living in these countries. As against that we need to look at the production potential within each country in terms of supplying those demands from domestic sources and what the remaining requirements might be for the import of farm products to satisfy a higher standard of living.

Now it is true, Mr. Chairman, that governments can take actions which blunt this in one respect or another and which may lead to other countries providing farm products rather than the United States. But at least the United States should know what are the dimensions of this market and what actions it can take to protect its interest in these markets.

Mr. WHITTEN. Perhaps the greatest danger that I see really facing the American people is lack of an awareness on the part of the great majority of Americans as to just how dependent we are upon the relatively few, with the big investment that we have in agriculture. That is on the domestic front. That lack of realization in our Government I am afraid is likely to be reflected in our foreign policy. Whichever kind of attention is going to be given to protecting other segments of our population, there has been a growing concern that American agriculture may go by the board as we are dealing with foreign nations in an effort to get along.

I interrupted here because I do think that this is probably the thing that concerns thinking Americans about the Common Market and the present world situation. We are standing by here and England is trading with Red China and various of our allies are trading with various other nations around the world with which we have no trade or traffic.

By that I do not mean to say that I know the answer. I just meant that we are standing by while they do. And it was most disturbing to me to read in today's paper where General de Gaulle of France was giving serious consideration to whether he was going to take action to strengthen the American dollar as had been requested by the United States of America. It is kind of a sad turn of events when we reach that level in view of what we saw a few years ago.

Unless somebody else wishes to ask questions here you might proceed, Mr. Koffsky.

APPROPRIATION REQUESTED FOR 1964

Mr. KOFFSKY. Finally, a modest saving resulting from installation of a centralized data processing operation for personnel and payroll data (estimated at $8,000) has been reflected in these estimates.

In addition to the changes in emphasis and readjustment of program set forth above, additional funds are requested amounting to $209,800 for land use studies; $125,500 for improving the domestic outlook and situation reports and for analyses of alternative farm programs; and $93,300 for research on Common Market trade in farm products and impacts of such trade on U.S. agricultural exports. There are also included two estimates pursuant to Public Law 87-793, the first in the amount of $17,000 to defray additional postal costs authorized in this law and $335,000 to finance the Pay Act costs.

(The justification of increases and decreases follows:)

(1) A net increase of $420,600, consisting of: (a) An increase of $209,800 for farm economics research for developing estimates of national and regional land requirements to guide land use adjustments, and for determining the productivity and economic returns of land in alternative uses.

Need for increase.-Over 50 million acres of present cropland are expected to be surplus for crop production during the next 20 years. Over the same period there will be an increasing demand for land for nonagricultural uses. Research information is needed to guide programs for shifting land from crops to alternative new uses.

This need for expanded research has been expressed by officials of the executive branch and by Congress. In his message on agriculture, the President stated, "I recommend legislation to encourage a comprehensive survey of land uses, to undertake a research program on the conversion of land to alternative purposes * *"; and in his message on conservation, he said, "Economic studies to provide the bases for sound land and water resources policies and optimum land use adjustments will be further intensified." And the Senate Committee on National Water Resources has emphasized the need for preparing comprehensive development plans for all major river basins by 1970.

The Food and Agriculture Act passed by Congress in 1962 authorizes the Department of Agriculture to undertake a program to promote land use adjustments for the purposes of conserving and developing soil, water, forest, wildlife, and recreation resources; and to conduct surveys and investigations relating to conditions and factors affecting and the methods of accomplishing most effectively the purposes of land conservation and land utilization.

Expanded economic research is needed to provide the information necessary for most effectively formulating and implementing this program of land use adjustment. An improved method of analysis, national in scope, is needed to estimate the land use requirements which will fulfill the continually changing demands of society for the agricultural and nonagricultural products and services of land. The following chart illustrates schematically some of the essential factors to be considered in a national analytical framework for establishing land requirements and guiding land use adjustments. The development of an adequate national framework of analysis would identify: (a) the marginal areas within and among regions where transfer of land from present to new uses, such as crop to range, crop to forest, and range to forest, should be considered; (b) within and among regions, the optimum use of land for particular crops as related to consuming centers and the productive capabilities of land; and (c) the interrelationships between agricultural requirements for land and economic activity in nonagricultural segments of regional and national economies.

Improved basic data are requisite for the meaningful application of highly developed frameworks of analysis. Particularly needed for guiding and appraising land use adjustment programs are data which indicate the productivity

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and economic returns of land in alternative crop and noncrop uses. A program of research is urgently needed that would develop an improved method of analysis, the type of land productivity and economic data necessary for its use, and estimates of national and regional land requirements.

Plan of work.-The Economic Research Service in recent years has responded to resquests by the Senate Select Committee on National Water Resources and the U.S. Department of Agriculture Land and Water Policy Committee for studies of the productive potential of land and water resources in agriculture as related to future requirements for agricultural output. These studies have suffered from inadequate methods of analysis and inadequate basic data on the productivity of land. However, these studies and analyses of development potentials in selected river basins and of agricultural adjustments in major producing areas have led to a modest start on the formulation of a national framework of analysis and the development of economic productivity data for land in selected areas. Research under this proposed project would expand and strengthen these initial efforts. Availability of improved methods of analysis and data on the economic productivity of land would enable a more immediate and adequate response by the Economic Research Service to requests for river basin, area, regional, or national studies of resource development and adjustment. Such analyses would be of particular value in providing an appropriate research base for the preparation of comprehensive river basin development plans and regional studies concerned with stimulating economic growth through resource development.

The development of economic productivity data would be accomplished in close cooperation with agronomists, soils specialists, and conservation technicians in Agricultural Experiment Stations, the Soil Conservation Service, and other Federal and State agencies. Soil surveys, data from the national conservation needs inventory, and estimates of the Statistical Reporting Service would be used with additional economic data to identify the major uses and the amounts and locations of soils of different inherent productivity characteristics. Within principal resource areas, soils would be grouped on the basis of similar crop adaptabilities and equivalent productivity. For a base year under current technology, economic productivity ratings for alternative uses would be determined for each group. This may be visualized for each soil group as follows: land