on petition of the bargelines operating over the rivers, by commercial grain interests which operate private bargelines and by various shipping and receiving interests. Except for a 30-day recess this case has been running continually since January 8, 1962.

Another grain case resulted from adjustments in rates by a number of carriers serving the Great Plains wheat area. The reduction was made to facilitate the sale of wheat to Far Eastern dollar markets, particularly Japan, where an educational program has been conducted on the use of wheat.

The Department also participated in two railroad merger cases. Other rail carrier cases involved such divergent subjects as protective service on frozen commodities, incentive rates on wool, export rates on soybeans, rates on potatoes, melons, cut flowers, and agricultural implements, storage charges on grain at railroad-owned elevators, switching services, and port equalizations.

(b) The following table lists types of action and commodities or rates affected during 1962:

(c) Measures taken to improve operations. To meet changes in patterns of competition between carriers and between producing areas, and to keep pace with technological improvements in transportation and in methods of shipping, plans are being made to realine the staff available for this work for more efficient handling of recurring problems. Current organization is on a "mode of transport" basis. It will be reorganized on a commodity basis to provide more flexibility of operation.

7. Export Grape and Plum Act

Regulations for Emperor grapes under this act became effective on October 9, 1961. Following distribution of the regulations to shippers, exporters, and carriers, surveys for compliance were made in Baltimore, Md., Boston, Mass., Buffalo, N.Y., Chicago, Ill., Detroit, Mich., New York, N.Y., Los Angeles, Calif., Portland, Oreg., Seattle, Wash., and Miami, Fla. Records of shipments, involving 18 exporters and 7 carriers, were checked for compliance with the act and regulations.

An article entitled "A New Step Toward Quality Grape Exports" concerning this act and the regulations issued under it for Emperor grapes was published in the January issue of the departmental publication "Agricultural Marketing.' An informational leaflet for distribution to exporters, carriers, and other interested persons is currently in preparation.

Federal leadership and coordination are provided for the matching fund marketing service programs carried on by States, and financed in part with Federal funds appropriated under the item "Payments to States and Possessions." In carrying out the Federal responsibility in this program, workshops are held in various parts of the country. Each cooperating State receives personal Federal assistance in directing the program. Information on application of research results in other States and research results becoming available from other USDA programs are furnished the State. Projects submitted by the States are analyzed and evaluated. Other activities are performed which are necessary to insure effective use of the matching funds paid to States.

SELECTED EXAMPLES OF RECENT PROGRESS AND TRENDS

During the year, 41 States conducted 121 projects under this program, 1 more State and 4 more projects than in 1961. Agriculture Marketing Service staff members visited 39 of these States to assess progress being made; to counsel with States concerning operating problems; and to apprise them of successful programs and techniques used in other States faced with comparable problems.

A 4-day workshop was held in November 1961 at Atlanta, Ga. Marketing specialists under this project attended the workshop and gave technical assistance to representatives from 37 States and Puerto Rico. Attendance at the meeting totaled 292 and a wide range of subjects was discussed under the theme "Abundant Production Our Greatest Heritage-Efficient Marketing Our Greatest Challenge."

PAYMENTS TO STATES AND POSSESSIONS

Mr. SMITH. An appropriation of $1,425,000 for "Payments to States and possessions" is proposed for 1964-the same amount that was appropriated for this program this year. With the $100,000 increase appropriated this year for this matching fund program, new areas of work have been initiated in several States and some expansion made in going work in a few other States, including Hawaii.

The matching fund program with State departments of agriculture is an outstanding example of the Department's working relationships with State marketing agencies. Some of the specific accomplishments are included in pages 102-105 of the justifications which could be inserted in the record at this point.

This activity enables State marketing agencies to put into practical application improved marketing practices which research work has developed. These methods and practices aid in maintaining quality, expanding outlets, and reducing deterioration and spoilage of farm products. The program also helps move seasonal commodity surpluses to their best market, reduce marketing costs, and increase returns to farmers from the marketing of their products.

The Federal payments, authorized by section 204(b) of the Agricultural Marketing Act of 1946, are made under cooperative agreements between the U.S. Department of Agriculture, State departments of agriculture, bureaus of markets, and similar State agencies for the conduct of eligible marketing services activities on a matching fund basis. The States contribute at least half of the cost and perform the work with State personnel.

The amount of the Federal payment to a State is based upon an evaluation of the relative urgency of the marketing service problem confronting the State, the probable effectiveness of the proposed plan for solving or alleviating the problem, the ability of the State to carry out the program proposed, and the availability of matching funds.

Forty-one States conducted 121 projects under the activity during fiscal year

1962.

SELECTED EXAMPLES OF RECENT PROGRESS

Some examples of the work performed and results accomplished in representative States under the program in 1962 follow:

Reduced costs of operating milk routes

By applying work simplification principles developed by the Department's research program to milk distribution, processing plants in Indiana were able to reduce costs of operating milk routes by at least 10 percent.

Increased sales of raspberries

Washington-Oregon Berry Growers Association was assisted by the Washington Department of Agriculture in a promotion program for frozen red raspberries. Stores cooperating in the test promotion reported increased sales as much as 20 times greater than normal during the first year of the program and growers received from one-half to 1 cent per pound more for their berries during the 1961-62 marketing season.

Quality improvement of fruits and vegetables

The quality improvement work carried on at the Birmingham, Ala. Farmers Market has resulted in substantially increased returns to producers and sparked the interest of large buyers seeking a volume source of uniformly graded and packaged fresh fruits and vegetables. Because of the success of the Birmingham market, similar projects have been initiated at the new farmers markets in Fort Payne, and Dothan, Ala.

Quality maintenance of eggs

In Arkansas, packers and jobbers of eggs were assisted and advised on supply and demand, proper grading, cleaning, transporting, and storage of eggs to maintain quality. In one instance, a large egg producer-packer confronted with a serious problem of yolk mottling and discoloration was helped in finding the feed ingredient responsible for the inferior quality.

Kansas wheat quality survey by counties

Information developed from the Kansas wheat quality survey on test weight, protein content, and sedimentation value of counties, was a significant factor in strengthening demand of buyers for Kansas wheat and for farmers receiving a higher average price for their 1962 wheat crop-up to 26 cents more per bushel from 1961.

Standards developed for coffee

Under the matching fund project initiated by Hawaii last year, preliminary grades and standards have been developed for Kona coffee, one of the State's important crops.

Improvement in quality of lettuce

New Mexico lettuce shipped to terminal markets brought premium prices comparable to those received for lettuce from competitive areas for the first time in the history of the State's lettuce industry, as a result of the fruit and vegetable quality improvement work.

New lamb grading and marketing programs

A newly developed lamb grading and marketing program in Pennsylvania whereby large lots of uniformly graded and sized lambs were brought together in special sales, resulted in participating farmers receiving premiums of $1 to $2 per lamb on the top grades and from $2 to $5 per lamb on the second grade.

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Improved marketing of eggs

As a result of activities under the marketing service egg program in New York, a 22-unit supermarket chain inaugurated a grower-distributor program under which locally produced eggs, handled in accordance with requirements of the Empire State trademark, are bringing premium prices and are the sole source of the chain's egg supply. Egg sales have doubled or tripled in most stores, increasing store traffic and accordingly boosting sales of other products.

State participation by fields of work

This work falls into four general fields; the number of States conducting projects and the distribution of payments under each category is shown below:

Distribution of payments.-The distribution of payments by States for 1962 and 1963 are shown in the following table:

Mr. SMITH. This program is being financed from a direct appropriation for the first time this year. Based on the current estimate of 1963 program needs, the funds required will be less than the $105 million provided in the 1963 appropriation. The estimated balance of $5 million is proposed for transfer to other appropriations in the Department to meet pay act costs this year.

Although the number of outlets participating and the number of half pints of milk reimbursed continue to increase, the rate of growth is leveling off. In 1962 the total program amounted to about $90 million. Assuming that the program growth will average about 6 percent in both 1963 and 1964, a total appropriation of $102 million will be adequate to finance this program in 1964 or $2 million more than was available for 1963. Pages 108-111 of the justifications, for insertion in the record, provide additional information on the scope and activities under this program.

(The pages follows:)

STATUS OF PROGRAM

CURRENT ACTIVITIES

The special milk program is aimed primarily at increasing the consumption of fluid milk by children. Nonprofit schools of high school grade and under, all nonprofit summer camps and child-care institutions devoted to the care and training of children, are eligible to participate in the program. From its inception in fiscal year 1955 through fiscal year 1962, the program was financed through advances from Commodity Credit Corporation funds. The Agricultural Act of 1961 (Public Law 87-128), approved August 8, 1961, changed the financing to a direct appropriation beginning July 1, 1962, and extended the authorization through June 30, 1967.

In 1962, milk consumed under the program, based on the half pints reimbursed, was nearly six times the quantity in 1955—the first year of the program. The volume amounted to more than 2.5 percent of the total nonfarm consumption of fluid milk. This was in addition to the 2.4 billion half pints used in the school lunch type A meals.

Operation of the program is as follows:

1. Assistance is provided, in the form of reimbursement payments, to eligible schools and child-care institutions to help them to inaugurate a milk service or to expand the existing service through reducing prices to children and establishing new times of service.

(a) The maximum rate of reimbursement in schools and institutions where milk is sold as a separately priced item is 3 cents per half pint except for schools which also serve type A lunches in the national school lunch program. The latter may receive up to 4 cents reimbursement per half pint but may not claim reimbursement for milk served as part of the type A lunch under the national school lunch program.

(b) In those schools and child-care institutions that do not sell milk as a separate item, the reimbursement rate is 2 cents per half pint for all milk served to children. In order to qualify for participation in the program such schools, camps, and institutions must submit for approval the specific methods and practices by which they will increase milk consumption under the program.

(c) Special provisions were inaugurated in fiscal 1962 to provide assistance to those schools which, because of poor local economic conditions, had not been able to operate a food or milk service and were in need of special assistance to serve milk without charge to needy children. In 1963 this phase of the program has been made available also to needy schools already in this program but not serving lunches and which have a large number of children unable to pay for their milk.

Such schools must submit an application for such special assistance indicating the specific circumstances which would make them eligible for the program and stating that they will serve such milk without charge to needy children in the school. The level of Federal reimbursement for milk served to needy children without charge may be up to the cost of milk to such schools. The level of Federal reimbursement for milk served to paying children in such schools is in accordance with the regular reimbursement as outlined in (a) above.

2. Procedures have been established to assure that maximum use of the reimbursement payments is made to reduce the price of milk for children, as a means of encouraging increased consumption. Participating schools are permitted to use up to 1 cent to pay the cost of distributing the milk within the school. They may retain up to 11⁄2 cents for this purpose in instances where justified by unusually high labor costs or the rental or purchase of equipment.