INTERNATIONAL WHEAT AGREEMENT

Mr. WHITTEN. What are the present provisions of the International Wheat Agreement, and how much has been the total that we have put into the cash payments under that program?

Mr. GODFREY. Mr. Lewis served as our delegate last year to the International Wheat Conference, and has worked very closely with this.

Mr. WHITTEN. What are the pertinent provisions of it now? What are our commitments? You might mention the total amounts we have paid out under it.

(Information pertaining to International Wheat Agreement fol

lows:)

INTERNATIONAL WHEAT AGREEMENT

1. Explanation of fiscal year 1962 program.-The International Wheat Agreement of 1959, ratified by 9 exporting and 29 importing countries, encompassed all commercial trade in wheat and wheat flour between member countries. It established maximum and minimum prices at $1.90 and $1.50 a bushel, basis No. 1 Manitoba wheat in bulk in-store Fort William/Port Arthur, Canada. Within the price range, importer members undertook to purchase specified percentages of their total commercial purchases from member exporters. The right of exporting members to supply this demand was augmented by the added benefit they had of undertaking to satisfy importer members' total commercial requirements. At the maximum price, exporter members were obligated to furnish any quantities not already purchased up to a moving average equal to importer members' historical commercial purchases during a 5-year period.

The United States ratified the agreement as an exporting member. Importing members could purchase wheat and wheat flour in the United States from the Commodity Credit Corporation or from commercial exporters. The Corporation, using its funds and stocks of wheat, financed all U.S. exports under the agreement. The net costs of such financings comprised—

1. Cash payments to commercial exporters for the difference between the domestic market price and the agreement sales price of wheat flour exported. 2. Payments in kind transferred from price-support inventories at domestic market price to commercial exporters who have exported commercial wheat. 3. The differential between the domestic market price and the agreement sales price of wheat sold from price-support inventories to commercial exporters for export.

4. The differential between the domestic market price and the agreement sales price of wheat sold from price-support inventories to importer members. 5. The differential between the Corporation's investment and the agreement sales price of wheat and flour sold from Commodity Credit Corporation's supply program inventory to importer members.

6. Operating expenses.

7. Interest expense on unrecovered balance requiring Commodity Credit Corporation financing, if any.

2. Legislative changes for fiscal year 1963.-The International Wheat Agreement Act, as amended (7 U.S.C. 1641-1642), renewed the agreement for a period of 3 years, effective August 1, 1962, to provide an assured market for wheat to exporting countries at stable and equitable prices. The maximum and minimum prices in the 1962 agreement are $2.021⁄2 and $1.621⁄2 per bushel, respectively, for the basic grade of wheat, No. 1, Manitoba Northern, at Fort William/Port Arthur, Canada, in terms of Canadian currency at the parity for the Canadian dollar determined for the purposes of the International Monetary Fund as at March 1949. The total quantity traded under the agreement in the 1961-62 crop year represented about 39 percent of world trade in wheat, yet the 10 exporting member countries export inside and outside the agreement over 97 percent of all wheat moving in world trade.

3. Summary of operations, 1962.-Following is a statement of exports and costs for the fiscal year 1962, by country:

1 These credit items represent adjustments of costs reported for prior years which result from the failure of these countries to ratify the 1959 International Wheat Agreement.

2 Indicates credit item.

* Represents adjustment of prior year's activity.

Mr. LEWIS. The commitment of the United States, as an exporting country, is to make available, at market prices within the price range, wheat equal to a percentage declared by the importing countries of their total purchases, which will, in total for all importing countries, amount to the total percentage weighted of the importing countries. That is, the importing countries declare that they will buy from exporting countries 90 or 80 percent of their total commercial purchases of wheat. The average now, I think, is about 92 or 94 percent of their total purchases.

They, in effect, guarantee that they will buy from the exporting countries as a group that quantity of wheat at not more than the maximum price which was raised to $2.0212 a bushel.

As exporting countries, we agree that we will supply not less than that quantity of wheat at a price which will be at least the minimum price, and that now is $1.6211⁄2 a bushel. Our commercial sales under the agreement last year were about 152 million bushels. This represents a major portion of our dollar sales in wheat.

Mr. WHITTEN. What other exporting countries do we have who are signers of the agreement?

Mr. LEWIS. All the major exporting countries are in the agreement. This includes Canada, Australia, the United States, Argentina, France, the U.S.S.R., and Mexico.

Mr. WHITTEN. What effect does the Common Market have on that? I notice you list France. Does that supersede, at the present time, the International Wheat Agreement; or is the Common Market making an exception or allowance for having already had this outstanding agreement?

Mr. LEWIS. The members of the Common Market are all members participating in the agreement as individual countries, most as importing countries, France as an exporting country.

There is a special provision in this agreement which will permit importing countries to pay prices above the maximum without invoking the maximum price declaration machinery.

Mr. WHITTEN. Isn't it a fact that, if the Common Market countries go ahead with the proposed farm plan, if I interpret the press right, it would, in effect, void the International Wheat Agreement?

Mr. LEWIS. No, it would not; because the wheat agreement does not oblige the importing countries to buy from any one exporting country. So long as they buy from one of the exporting countries. they have satisfied their obligations under the agreement.

Mr. WHITTEN. They would be able to buy all that wheat from France, theoretically?

Mr. LEWIS. Yes.

Mr. WHITTEN. All the other Common Market countries?
Mr. LEWIS. Yes.

Mr. WHITTEN. They would leave us then where the normal exports under the International Wheat Agreement which we could look to on a competitive basis with these Common Market countries, other than France, would leave us out in the cold.

Mr. LEWIS. The effects of the Common Market could operate; yes. Mr. WHITTEN. Theoretically if France were to make an agreement where they got all the exports to these countries, what effect would that have on our exports under the International Wheat Agreement as it has worked in recent years?

AGREEMENTS ENTERED INTO THROUGH FEBRUARY 6, 1963

During fiscal year 1962, a total of nine agreements or amendments to agreements were signed with six countries for commodities representing an export market value of $56.6 million, including ocean transportation. In fiscal year 1963 through February 6, 1963, eight additional agreements or amendments to agreements have been signed for commodities representing an export market value of $67.7 million. Six new countries were added. A tabulation of agreements signed through February 6, 1963, follows: