In our opinion, the type of agency, auction market, yards, and so forth, that would be getting the leased wire service are the type that would have broad market impacts and would have great influence on the selling and buying of many individual producers.

To us it offers some possibilities for making the wide dissemination of our Market News Service more effective and timely. We are thinking, Mr. Chairman, of issuing this in the near future, as a proposal in the Federal Register and requesting views and comments prior to making any final decision on the matter.

had

Mr. WHITTEN. I might offer the suggestion that if you do, you better indicate what the costs will likely be to those who want it. Otherwise everybody will be writing you, after they write us, to be sure and get them into it. It will be an expense to those that take part in it. It is just as well to say so, to begin with, so they won't be expecting any free service.

OPERATION OF MARKET NEWS SERVICE

Mr. Lennartson, I turn to you on this, because we have dealt with it for many years. Briefly describe for the record and for all of us on the committee just how the Market News Service works. How widespread is it, and what combinations do you have?

Mr. LENNARTSON. Thank you, Mr. Chairman. I might say it is probably one of the oldest services performed by AMS and probably one of the most popular. It has long been a matter of congressional policy that market news collection and dissemination was a very important service to be rendered to producers and marketing agencies, which would enable them to make more intelligent decisions on the buying and selling of their product.

At the present time, we have some 150 market news collecting and disseminating offices throughout the United States. They cover all of the major agricultural commodities.

All of these are year-round offices. In addition to that, during the production and marketing season, we have temporary offices that are established in a number of places. An important element of market news is the matter of dissemination.

In other words, it wouldn't do any good for us to collect a lot of material and not get the material disseminated very promptly, very broadly, and in quite some detail.

FINANCING THE MARKET NEWS SERVICE

Mr. WHITTEN. As to one of these locations you refer to, how_are they financed, is it a cooperative undertaking by the State and Federal Government?

Mr. LENNARTSON. No, the leased wire is primarily financed by Federal funds. And so also are the principal markets. In other words, the keys to the Market News system are the Federal offices and Federal funds. But, although about 65 percent of the field costs are federally financed, we have a very extensive cooperative arrangement with the various States, wherein they not only help in financing, but they, in some cases, have Market News reporters of their own, who are supervised by our Federal employees.

DISSEMINATION OF MARKET NEWS

The great bulk of these Federal offices are staffed by one reporter and one clerk, generally. The keys to the dissemination, in Market News, are three things. One is leased wire system of about 19,000 miles, which is maintained by Federal appropriations. These circuits are open every marketing day of the year, disseminating the information from producing areas to consuming areas, and back and forth.

In addition, wide dissemination, of course, is maintained through the newspapers and radio. In more recent years, the radio has become one of the most important elements of dissemination in the whole. system.

In addition to that, we mail out, currently, a very substantial number of mimeographed Market News reports to producers and marketing agencies. There is no question but what this Nation enjoys the finest Market News system that prevails anywhere in the world.

It is a real tribute to this committee that you have given a lot of attention to this very important service to American farmers. The leased wire system is basic to this service. Significant technical developments have occurred in the wire services-something that we couldn't have visualized 10 years ago-in terms of the ability to disseminate and the speed of dissemination. As a result of that, as Mr. Grange indicated, an increasing amount of attention is being given to the possibility of obtaining this information directly off the wire, in terms of modern day merchandising and marketing.

Mr. WHITTEN. That would be somewhat similar to the ticker on the news service we have here in the House, where, instead of having to wait for it to be reported through the newspaper or put on the radio, they would, in effect, have this information go directly to them. Mr. LENNARTSON. That is correct, and the information contained thereon would be nothing but Market News information; no information of administrative or other official character.

AVAILABILITY AND COST OF PRIVATE ACCESS TO LEASED WIRE SERVICE

Mr. WHITTEN. And as you indicated awhile ago, it would be available to all who follow the rules and regulations?

Mr. LENNARTSON. Yes, and are willing to pay the cost of the service. Mr. WHITTEN. Do you have, at present, any estimate as to what that cost might be? Would distance from points of pickup enter into it? Mr. LENNARTSON. I think, generally, it will run around a hundred dollars a month to the individual subscriber; is that right, Mr. Grange? The subscriber would make his contract directly with the telephone company, so that the Department, or AMS, would not get involved in collections and billing, and administrative details of that

nature.

SECTION 32-BASIC LAW AND HISTORY OF AMENDMENTS

Mr. WHITTEN. Mr. Smith, now we turn to section 32 which has become quite commonly known by that name, actually it is section 32 of the Agricultural Adjustment Act as amended, first enacted in

95910-63-pt. 3-25

1935. Could you provide for the record, section 32 as originally written, and then show the modifications or changes that have been made subsequently, and the dates on which those changes were made? Mr. SMITH. Yes, we would be glad to, Mr. Chairman. We have that information with us. The latter part of your request-there is quite a history to the changes made in section 32.

Mr. WHITTEN. If it is not too voluminous, we might have that for the record.

Mr. SMITH. And here is an extraction from the current code, giving section 32 as it is written now and a compilation showing the changes. I might also add to that document, Mr. Chairman, this covering statement as an introduction to the compilation.

Mr. WHITTEN. We are glad to have that. I think it would be well to put it in here.

(The material requested follows:)

INTRODUCTION TO SECTION 32 COMPILATION

PROVISIONS OF SECTION 32 AND MAJOR ACTIVITIES CONDUCTED WITH FUNDS MADE AVAILABLE UNDER THE SECTION 32 AUTHORITY

Section 32 of the Act of August 24, 1935, as amended (7 U.S.C. 612c), appropriates annually an amount equal to 30 percent of customs receipts collected during the previous calendar year for use by the Secretary of Agriculture for encouraging the exportation and domestic consumption of agricultural commodities. The new money plus unused balances on June 30 of any fiscal year up to $300 million annually, is available in the subsequent fiscal year together with any recoveries of prior year obligations for expanding domestic and foreign market outlets for farm commodities.

The basic act, as amended, and certain other laws specify certain activities for which these funds may be used and prescribe certain limitations. The major provisions of section 32 provide that the funds shall be used:

"to (1) encourage the exortation of agricultural commodities and products thereof by the payment of benefits in connection with the exportation thereof or of indemnities for losses incurred in connection with such exportation or by payments to producers in connection with the production of that part of any agricultural commodity required for domestic consumption; (2) encourage the domestic consumption of such commodities or products by diverting them by the payment of benefits or indemnities or by other means, from the normal channels of trade and commerce or by increasing their utilization through benefits, indemnities, donations or by other means, among persons in low-income groups as determined by the Secretary of Agriculture; and (3) reestablish farmers' purchasing power by making payment in connection with the normal production of any agricultural commodity for domestic consumption. Determination by the Secretary as to what constitutes diversion and what constitutes normal channels of trade and commerce and what constitutes normal production for domestic consumption shall be final."

An amount equal to 30 percent of customs receipts collected on fishery products is transferred annually to the Department of Interior to encourage the distribution of fishery products pursuant to specific statute. Recent appropriation acts have authorized transfers from this fund to the school lunch appropriation for the purchase and distribution of agricultural commodities and other foods pursuant to section 6 of the National School Lunch Act. Section 32 funds are also authorized, as limited by section 392b of the Agricultural Adjustment Act of 1938, for the administration of marketing agreements and orders.

The basic act, as amended, provides that funds devoted during any fiscal year to any one commodity or product thereof must not exceed 25 percent of funds available under setcion 32 during such fiscal year. It has over the years generally been assumed that this provision is for application to the aggregate funds appropriated by section 32, including carryovers and without regard to transfers pursuant to other laws, and that it limits commodity program payments as administrative expenses are limited by section 392b of the act of 1938. The basic statute also provides that the funds must be devoted principally to perishable

nonbasic agricultural commodities other than those receiving price support under title II of the Agriculture Act of 1949, as amended. It has been determined that this provision can be legally satisfied by reserving the principal portion of section 32 funds for the use of perishable nonbasic agricultural commodities when the occasion arises warranting their use for such purpose.

The major activities conducted during recent years under these authorities include (1) programs to encourage the exportation of agricultural commodities through payments to exporters to enable them to purchase on the domestic market and sell on a world market at competitive prices; (2) diversion of agricultural commodities to byproducts or new uses by payments to processors to enable them to purchase surplus commodities on the domestic market and divert them into byproducts or new markets and sell them at prices comparable to competing products thus creating new domestic markets for surplus commodities (The principal program in recent years has been diversion of potatoes to starch, flour and livestock feed); (3) increasing utilization of agricultural commodities through direct purchase of such commodities and donating them to school lunches, charitable institutions, serving needed persons, and persons certified by welfare agencies to be in need; (4) increasing domestic consumption and utilization of agricultural commodities under the food stamp program through issuance of food coupons to persons in low-income groups; (5) production payments to producers in an effort to help reestablish purchasing power in connection with the normal production of an agricultural commodity. (The only program of this type in recent years was the cranberry program in 1960); (6) operating expenses for the administration of purchase, exportation, diversion, food stamp, and production payment programs, and including the distribution of section 32 and CCC commodities to eligible outlets and encouraging increased consumption of foods in abundant supply through current issuances of plentiful food lists and cooperation in food promotional activities with food trades; and (7) Federal administration of marketing agreements and orders under the Marketing Agreement Act of 1937 and the utilization of advisory committees and the conduct of referendums in connection with such agreements and orders as authorized in the Agricultural Act of 1961.

Section 32 of the Act of August 24, 1935, as amended, and as currently contained in 7 United States Code 612c is as follows:

"612c. Appropriation to encourage exportation and domestic consumption of agricultural products.

"There is appropriated for each fiscal year beginning with the fiscal year ending June 30, 1936, an amount equal to 30 per centum of the gross receipts from duties collected under the customs laws during the period January 1 to December 31, both inclusive, preceding the beginning of each such fiscal year. Such sums shall be maintained in a separate fund and shall be used by the Secretary of Agriculture only to (1) encourage the exportation of agricultural commodities and products thereof by the payment of benefits in connection with the exportation thereof or of indemnities for losses incurred in connection with such exportation or by payments to producers in connection with the production of that part of any agricultural commodity required for domestic consumption; (2) encourage the domestic consumption of such commodities or products by diverting them, by the payment of benefits or indemnities or by other means, from the normal channels of trade and commerce or by increasing their utilization through benefits, indemnities, donations or by other means, among persons in low income groups as determined by the Secretary of Agriculture; and (3) reestablish farmers' purchasing power by making payments in connection with the normal production of any agricultural commodity for domestic consumption. Determinations by the Secretary as to what constitutes diversion and what constitutes normal channels of trade and commerce and what constitutes normal production for domestic consumption shall be final.

"The sums appropriated under this section shall be expended for such one or more of the above-specified purposes, and at such times, in such manner, and in such amounts as the Secretary of Agriculture finds will effectuate substantial accomplishment of any one or more of the purposes of this section. Notwithstanding any other provision of this section, the amount that may be devoted, during any fiscal year after June 30, 1939, to any one agricultural commodity or the products thereof in such fiscal year, shall not exceed 25 per centum of the funds available under this section for such fiscal year. The sums appropriated under this section shall be devoted principally to perishable nonbasic agricultural

commodities (other than those receiving price support under section 1446 of this title) and their products. The sums appropriated under this section shall, notwithstanding the provisions of any other law, continue to remain available for the purposes of this section until expended; but any excess of the amount remaining unexpended at the end of any fiscal year over $300,000,000 shall, in the same manner as though it had been appropriated for the service of such fiscal year, be subject to the provisions of sections 712 and 713 of Title 31. (Aug. 24, 1935, ch. 641, § 32, 49 Stat. 774; Feb. 29, 1936, ch. 104, § 2, 49 Stat. 1151; Feb. 16, 1938, 3 p.m. ch. 30, § 203, 52 Stat. 38; June 30, 1939, ch. 253, title I, 53 Stat. 975; July 3, 1948, ch. 827, title III, § 301, 62 Stat. 1257; Oct. 31, 1949, ch. 792, title IV, § 411, 63 Stat. 1057; Jan. 30, 1954, ch. 2, § 5 (b), 68 Stat. 7.)"

HISTORY OF SECTION 32 CHANGES

A number of other laws enacted since 1935 have limited, broadened, restricted or otherwise impinged upon the basic section 32 statute and the use of the funds appropriated thereunder. Some of these laws were applicable for limited periods of time. Others were in the nature of permanent legislation and are currently applicable in the use of section 32 funds.

These laws reflect the continuing interest in and surveillance over section 32 funds and programs by the Congress. This is further reflected in the records of hearings and reports by the Appropriation Committees and the Legislative Committees in both House and Senate.

A brief chronological history of these laws from the original Act in the 74th Congress to the latest action by the 87th Congress follows:

CHRONOLOGICAL LEGISLATIVE HISTORY OF SECTION 32

SECTION 32-ORIGINAL ACT

(Public Law 320, 74th Cong., Aug. 24, 1935, 49 Stat. 774)

Section 32 of an act to amend the Agricultural Adjustment Act, as amended, approved August 24, 1935, was the original authority making available 30 percent of the annual customs receipts "to encourage the exportation and domestic consumption of agricultural commodities."

"There is hereby appropriated for each fiscal year beginning with the fiscal year ending June 30, 1936, an amount equal to 30 per centum of the gross receipts from duties collected under the customs laws during the period January 1 to December 31, both inclusive, preceding the beginning of each such fiscal year. Such sums shall be maintained in a separate fund and shall be used by the Secretary of Agriculture only to (1) encourage the exportation of agricultural commodities and products thereof by the payment of benefits in connection with the exportation thereof or of indemnities for losses incurred in connection with such exportation or by payments to producers in connection with the production of that part of any agricultural commodity required for domestic consumption; (2) encourage the domestic consumption of such commodities or products by diverting them, by the payment of benefits or indemnities or by other means, from the normal channels of trade and commerce; and (3) finance adjustments in the quantity planted or produced for market of agricultural commodities. The amounts appropriated under this section shall be expended for such of the above specified purposes, and at such times. in such manner, and in such amounts as the Secretary of Agriculture finds will tend to increase the exportation of agricultural commodities and products thereof, and increase the domestic consumption of agricultural commodities and products thereof: Provided, That no part of the funds appropriated by this section shall be expended pursuant to clause (3) hereof unless the Secretary of Agriculture determines that the expenditure of such part pursuant to clauses (1) and (2) is not necessary to effectuate the purposes of this section: Provided further. That no part of the funds appropriated by this section shall be used for the payment of benefits in connection with the exportation of unmanufactured cotton."