Mr. NATCHER. And that is the reason why you sold so much on February 11? Mr. GODFREY. I think it is, sir. Mr. NATCHER. Thank you, Mr. Chairman. Mr. GODFREY. I would point out that this is not a normal type of export tobacco that they buy here. They normally buy this type of tobacco in other countries. The normal type that they buy here is a heavier bodied tobacco. This, in my opinion, will replace some of the tobacco they have been buying of a neutral variety from other countries. Mr. NATCHER. That is all I have, Mr. Chairman. AUTHORITY FOR SETTING SALE PRICES Mr. ADDABBO. Mr. Godfrey, on the question of setting the price, from where does that order come, from your office or an office above yours? Mr. GODFREY. No, sir. It was a recommendation that came up from the board of directors of the Flue-Cured Tobacco Stabilization Cooperative. The recommendation was taken before the CCC Board of Directors, and was decided by the CCC Board, and, of course, the Secretary has the final authority over the actions of the CCC Board. Mr. ADDABBO. Did the CCC Board also have anything to do with the sale of the juices and the grapefruit sections in Florida? Mr. GODFREY. A docket was presented to the Board on that, yes, sir. Mr. ADDABBO. In other words, the same group that had the dealings in Florida? Mr. GODFREY. Yes, sir. Mr. ADDABBо. And also in reference to the aforementioned tobacco sale; is that correct? Mr. GODFREY. Yes, sir. Mr. ADDABBO. No further questions, Mr. Chairman. Mr. GODFREY. I might point out for the benefit of the committee that we have adopted a practice on sales prices for tobacco that I have found had not been in existence from 1952 on, and that is that the recommended sales prices that are made by the co-ops now are carried to the Board of CCC. They were not during the previous administration carried to the Board. Mr. WHITTEN. I would have to say this. We sit here for weeks trying to develop all these things, and we really try, and we do not keep up with all the details of it. But it strikes me that the only thing that would keep the co-op on the track, so to speak-and I am talking about their own self-interest-would be that they would wish to do nothing which would jeopardize their public relations. Since there was and is no requirement to export this tobacco, what disturbs me is what effect this first sale of tobacco on the domestic market, at greatly reduced prices, may have upon the tobacco program, including income to producers, losses to the Government, and greatly increased profits to the tobacco trade at the expense of the producers and the Government. Mr. Horan? Mr. HORAN. This will form a pretty good backdrop as to what I regard as our duty, not only to the Congress, but to you gentlemen and the country, as to what should be done with this very difficult subject of the total of these expenditures, particularly the Commodity Credit Corporation. It is my understanding that some changes are being made in the administration of the Commodity Credit Corporation, is that correct? Mr. GODFREY. To what degree? Mr. DUNCAN. I do not know what reference you have. Mr. HORAN. I understand you have an Inspector General now, and I am anxious to find out what you are doing by way of an internal audit? Mr. GODFREY. I have this in some general comments that I would like to make as we go along. Mr. HORAN. It is in that field that I am anxious to ask some questions, but I do not want to breakup the continuity. Mr. WHITTEN. If we are through with this tobacco Mr. DUNCAN. I might say one thing, Mr. Congressman, on tobacco, to kind of wind it up. As you have frequently said, the farmers were probably turning to quantity in yield rather than quality. You being very familiar with cotton, maybe more so than tobacco, we have done the same thing on tobacco for the next crop. CHANGES IN GRADE STANDARDS In changing our grades to reflect quality, there are several things in tobacco that cause a big yield of low-quality such as fertilization, irrigation, varieties, and chemical use, and we have made a complete change for the first time in 10 years to change our grading to try to reflect the true quality of tobacco in the market place. Mr. WHITTEN. They always argue with me, and this is not a new thought on my part or a new expression. I have pointed out through the years most of the losses we have had on wool were the sorrier grades, most of the losses you have had on cotton and all the way through, and there have been periods where there was a good market for sorry grades and a poor market for good grades in a number of commodities, all of which reflects it. Now, they frequently claim that the markets will set these things. Well, now, that might be true if you had free and open markets, but when you start off with the price support level, your markets are all tied to your staring points. I never have been able to follow them when they argue on it. But I just raise the point here. Mr. DUNCAN. With no subsidy on tobacco, this is one commodity that the only thing we have in the world market is quality, because, as Mr. Godfrey said, Rhodesian market averages some 39 cents a pound, where ours was much higher, so the only way we can sell on the world market is to maintain the high quality of American tobacco, because there is no general subsidy export program on all tobacco. Mr. WHITTEN. I have, perhaps, made my statement a little too broad. I do not mean that we do not have quality products, good quality products. But let me express it this way. We have placed a premium on quantity to the point that we have had the price support levels between the inferior and the good so close together that we have had too little premium on quality as compared with other of the same general type. They have been too close together, instead of having a wide enough spread. Mr. GODFREY. One thing I should add to this. You are always a year behind. You cannot tie your price support level to the grade, as you say, and give the spread, because you are always 1 year behind, and this creates a little problem. Mr. WHITTEN. That is the reason insurance companies own just about all the money in the world, you know. They charge us at the rates of life expectancy when we signed up, and every time the Department of Health increases it, they are the beneficiary of it. Of course, I would rather they kept on benefiting from my own policy. Mr. GODFREY. I have one closing statement I would like to make on tobacco. Mr. WHITTEN. You mean one pipeful left? Mr. GODFREY. Yes, one pipeful left. That is this: As most of the members of the committee know, I have been engaged in administering the tobacco program since its inception in 1934, and I am very keenly interested in the tobacco program, not only since I have been engaged in the administration of it, but because 50 percent of the farm income in my home State comes from tobacco. We are aware that we have some problems in tobacco, partly created by, as the chairman has pointed out, the desire to increase production per acre rather than always producing quality. We have done everything so far this year that the Department can think of to do to encourage the production and quality of tobacco. We hope that the actions we have taken will help produce higher quality tobacco and less of the undesirable varieties. We have no assurance that the action we have taken will do this, but we do feel that some of the actions we have taken will prevent us from accumulating further stocks in stabilization corporation or in Government inventories. Mr. WHITTEN. Gentlemen, we wish to thank you. We have tried to complete the record. I cannot see that the producer benefits from this fixed price, only those between. JUSTIFICATION MATERIAL ON 1964 BUDGET FOR ASCS Now, we turn to your general operations of the Agricultural Stabilization and Conservation Service. I would like to have in the record at this point pages 233-237 of the justifications (vol. 2). (The pages follow:) AGRICULTURAL STABILIZATION AND CONSERVATION SERVICE PURPOSE STATEMENT The Agricultural Stabilization and Conservation Service was established by the Secretary of Agriculture on June 5, 1961, under the authority of Reorganization Plan No. 2 of 1953, in accordance with the Reorganization Act of 1949, as amended (5 U.S.C. 132z). The Service carries on the following principal programs: 1. Acreage allotments and marketing quotas and other production adjustment programs.-The Agricultural Adjustment Act of 1938, as amended, authorizes production adjustment for designated basic commodities (tobacco, peanuts, wheat, cotton, and rice) through acreage allotments, and the adjustment of supplies through marketing quotas when supplies reach specified levels in relation to normal demand. Special voluntary acreage reduction programs are in effect for the 1962 and 1963 crops of wheat and feed grains. The chief objectives of these special programs are to (1) increase farm income; (2) prevent further buildup of surplus stocks and to reduce such stocks, and (3) reduce program costs of price-support activities. In addition to its regular programs, ASCS is responsible for part of the continuing activities of the Department in the area of defense preparedness measures relating to food and the domestic distribution of farm equipment and supplies. 2. Sugar Act program.-The chief objective set forth in the Sugar Act of 1948, as amended, is "to protect the welfare of consumers of sugars and of those engaged in the domestic sugar-producing industry." This involves (a) determination of U.S. consumption requirements; (b) administration of quotas to regulate imports of sugar produced in foreign areas, as well as marketing of sugar produced in domestic areas; and (c) payments to domestic producers of sugarbeets and sugarcane, provided producers comply with certain labor, wage, price, and marketing requirements prescribed by law. The Service also carries out the U.S. responsibilities under the International Sugar Agreement which is designed to contribute to stabilization of the world sugar economy. 3. Agricultural conservation program.--This program is authorized by the provisions of sections 7 to 16(a), inclusive, and section 17 of the Soil Conservation and Domestic Allotment Act, as amended. Its objectives include (1) restoring and improving soil fertility; (2) reducing erosion caused by wind and water, and (3) conserving water on land. Cost-sharing assistance is furnished to individual farmers and ranchers in the 50 States, Puerto Rico, and the Virgin Islands for carrying out approved soil-building and soil- and water-conserving practices on their farms. This assistance represents only a part of the cost of performing the practice. The farmer bears the balance of the cost and in addition supplies labor and management necessary to carry out the practice. Allocations are made to States based upon conservation needs. 4. Land use adjustment program.-Section 16 (e) of the Soil Conservation and Domestic Allotment Act, as amended, by section 101 of the Food and Agriculture Act of 1962, provides for long-term agreements under which cropping systems and land uses will be changed (1) to permanently shift to better productive use cropland which is not well suited for crop use, and (2) to temporarily shift to better productive use and utilize for other purposes land which is suitable for crop use but not currently needed for crops. 5. Emergency conservation measures.-The objective of this program, which is authorized by the Third Supplemental Appropriation Act of 1957 and the Supplemental Appropriation Acts of 1958 and 1959, is to restore to normal agricultural use farmlands which have been damaged by wind erosion, hurricanes, floods, or other natural disasters. To this end, farmers are offered cost-sharing assistance for carrying out approved practices. Assistance is given only when new conservation problems are created which (a) If not treated will impair or endanger the land. (b) Materially affect the productive capacity of the land. (c) Represent damage which is unusual in character and except for wind erosion, is not the type which would recur frequently in the same area. (d) Will be so costly to rehabilitate that Federal assistance is or will be required to return the land to productive agricultural use. 6. Conservation reserve program.-The conservation reserve program authorized by the Soil Bank Act is a long-range program under which farmers have voluntarily contracted to take cropland out of production for a specified number of years and devote it to conservation uses. In return the farmer receives (a) an annual rental payment for the contract period, and (b) assistance in either cash or conservation materials and services for carrying out approved conservation practices on the reserved acreage. Farmers are required to apply approved conservation practices to the reserve acreage which include establishing grasses, legumes, or trees, or to devote it to soil-water-forest or wildlife conservation practices. They may not harvest a crop from the reserved acres or graze them, except when authorized in emergencies. 7. Commodity Credit Corporation program activities.-Various price support and related programs have been authorized in numerous legislative enactments since the early 1930's. Operations under these programs are financed through the Commodity Credit Corporation. Personnel and facilities of the Agricultural Stabilization and Conservation Service are utilized in the administration of pro grams of the Commodity Credit Corporation, and the Administrator of the Service is also Executive Vice President of the Corporation. Additional information on the price support and related activities of the Commodity Credit Corporation will be found in another section of these explanatory notes. 8. Foreign assistance programs and other special activities.-Various surplus disposal programs and other special activities are conducted pursuant to specific statutory authorizations and directives. These laws authorize the use of CCC funds and facilities to implement the programs. Appropriations for these programs are transferred or paid to the Corporation for its costs incurred in connection with the following major activities: (a) Foreign assistance programs: (1) Public Law 480: (a) Sales of surplus agricultural commodities for foreign currencies (title I); (b) Commodities disposed of for emergency famine relief to friendly peoples (title II); (c) Long-term supply contracts (title IV). (2) International Wheat Agreement. (3) Bartered materials for supplemental stockpile. (b) Other special activities: (1) Reimbursement for costs of National Wool Act (permanent appropriation). (2) Grain for migratory waterfowl. (3) Surplus grain for game birds. (4) Transfer of long-staple cotton from national stockpile for sale by CCC. (5) Loans to Secretary of Agriculture for conservation purposes. 9. Work performed for others.-The Agricultural Stabilization and Conservation Service performs certain services for other Federal agencies on an advance or reimbursable payment basis. These consist primarily of the following: (a) Great Plains conservation program: The Service assists the Soil Conservation Service in the development and application of policies relating to conservation measures and cost-share rates, including practices or changes in practices for use in the various States, and works with the Soil Conservation Service in correlating the agricultural conservation program and the Great Plains conservation program practices and procedures. (b) Removal of surplus agricultural commodities, and school lunch program: Pursuant to an annual agreement with the Agricultural Marketing Service, funds are received for carrying out purchase and diversion programs authorized under section 32 of the act of August 24, 1935, and for the procurement of commodities for distribution to schools for utilization in the school lunch program. (c) Aerial photographs: The Service enters into cooperative agreements with State and local public agencies for the procurement of aerial photographs. Copies of all photographs, made primarily for use in conservation and production adjustment programs, are available for sale to the public. (d) Agency for International Development: The Service procures or provides commodities for distribution abroad, at the request of the Agency for International Development. The Agricultural Stabilization and Conservation Service carries on its programs in the field through (a) seven commodity offices and a data processing center which are responsible primarily for Commodity Credit Corporation functions, including price support loans and purchases, acquisition, management, storage and disposition of commodities, and related transportation and accounting activities; and (b) the ASCS State and county committees which are responsible for the local administration of a variety of programs dealing directly with the farmer. Through the farmer-elected ASCS county committees, the Service also obtains recommendations and advice in the formulation of program plans and policies. There are ASCS State committees in the 50 States and Puerto Rico, and a total of 3,061 county committees. As of November 30, 1962, the Service had 8,484 full-time employees, 1,308 of whom were in Washington and 7,176 in the field. However, on December 23, 1962, there were transferred from the Agricultural Stabilization and Conservation Service to the Agricultural Marketing Service, pursuant to Secretary's Memorandum No. 1520, dated November 15, 1962, 1,232 full-time employees including 1,121 in the Offices of the Milk Market Administrators. This transfer placed all marketing agreements and orders work in the Agricultural Marketing Service. The ASCS county offices had 28,916 man-years of non-Federal employment in the fiscal year 1962. |