billion. This is approximately a quarter of all U.S. exports, industrial and agricultural.

Export records were set for several commodities, notably wheat, soybeans, vegetable oils, feed grains, tobacco, fruits and preparations. and poultry. Production from 1 out of 5 harvested acres was exported. For many farm products exports continued to be a major marketing outlet. Wheat is the leading example, with 58 percent of production going abroad.

THE CURRENT EXPORT YEAR

Several factors, some of a positive nature and some of a negative nature, are affecting our export levels during the current fiscal year. On the positive side, economic growth continues at a healthy rate in many of our major markets. This has been important in stimulating export gains so far this season for such products as feed grains, soybeans, protein meal, rice, and canned fruits.

For

The severe winter in Europe has benefited some of our exports already this season and may be an important factor next year. example, our potato sales to Europe this year already total 65,00 metric tons-far above our usual small marketings. Sales of onions and carrots also have been heavy. These exports have helped great y in improving incomes of U.S. vegetable producers.

Representations made with respect to market access, particularly in Common Market countries, plus the effects of vigorous market development efforts, have improved prospects for certain U.S. cor modities. For example, we will export a record volume of feed gra to Italy, and expect the same results in our feed grain shipments to Japan. Our exports of rice to the northern members of the Commo Market should set a new high this season. These members have strongly resisted a change from low fixed-duty rates to unlimited variable import levies.

On the negative side, we lost some exports because of the re tieup of shipping in eastern and southern ports. Inability to delive almost always means lost sales, except in those unusual circumstans where we are virtually the sole supplier or where importers" sto is are adequate.

The second negative factor is lower world import demand for sor • of our major products, especially wheat and cotton. In the case of wheat, our exports are running considerably below last year's eve's because of larger crops in some of our principal markets and incres---* availability of supplies among competing wheat producers, notab y Canada. In the case of cotton, U.S. exports are down because of large supplies of competitive cotton, and the inclination of importers to reduce their existing inventories.

Finally, the variable import levy system of the Common Market has reduced exports of two products to that area-poultry and wher flour. The export losses have resulted primarily from the sharp's increased levels of protection afforded internal suppliers under the new system. Strong representations have been made and are contin ing to be made to obtain relief.

Considering both favorable and unfavorable factors, we believe that U.S. agricultural exports in fiscal year 1963 could well come close last year's record level.

UPCOMING TRADE PROBLEMS

Let us examine some of the specific trade problems we must deal with in coming months.

In addition to efforts we must make to obtain access for poultry and wheat flour, we need to develop trade agreements which will safeguard our marketings of such products as wheat, feed grains, and rice to the Common Market countries. As yet, exports of these items have not suffered from effects of the new Common Market system, but there is great danger that as time goes by the new system will be used to promote self-sufficiency for the Common Market area. We have so-called standstill agreements on these products obtained at the last round of tariff negotiatons in 1961. These standstill agreements will be the takeoff point for us when we again sit down at the bargaining table.

We need to negotiate a reduction in the EEC duty on tobacco. It is too high. If it is not reduced, we will lose markets to other exporting countries. Similarly, we need to negotiate with the Common Market a reduction in the duty on vegetable oils. The Common Market has indicated its willingness to consider tariff reductions for both products at the next round of tariff negotiations.

We must not neglect our trade interests with the rest of the world. Three countres-the United Kingdom, Canada, and Japan-take a total of about $1.4 billion worth of U.S. farm products annually. Each of them, as well as most of our other trading partners outside the Common Market, could gve us valuable concessions in the next round of tariff negotiations.

EMPHASIS ON ACCESS TO MARKETS

The key objective of the Foreign Agriculture Service is to render services that maximize dollar exports of U.S. farm products. Among such services are:

The jointly financed export market development projects carried out by the Department of Agriculture and trade and producer cooperators;

The varied types of trade assistance given by our agricultural attachés at their posts overeas;

The worldwide agricultural intelligence system we operate to keep American agriculture informed of foreign competition, marketing opportunities, and trade problems; and

The continued and strong efforts in the area of trade policy aimed at getting foreign countries to give our farm products fair and reasonable access to their markets.

Each of these services is going forward strongly but we are giving new and expanded emphasis to the problems of trade policy. It has become increasingly obvious that where our farm products are denied access or are given severely limited access or suffer outright discrimination, the work of our trade cooperators, the work of our agricultural attachés, and the benefits of our agricultural intelligence system are frustrated.

The coming fiscal year will probably be one of the most significant periods in the evolution of world agricultural trade and trading rela

tionships. We will be using for the first time the new negotiating tools supplied by the Trade Expansion Act of 1962.

We have had numerous discussions with Mr. Christian H. Herter, who has been appointed special representative for trade negotiations under the Trade Expansion Act. American farm groups may be sure that in Mr. Herter, and in his deputy special representative, Mr. William T. Gossett, we have officials who keenly appreciate the vital place of agriculture in the overall trade picture. Mr. Herter's office has only a small staff and will call on other agencies for necessary assistance. The Department of Agriculture must devote a great deal of time and effort to the task of analyzing the trade situation for literally hundreds of items which will figure in the forthcoming sixth round of negotiations under the General Agreement on Tariffs and Trade. This is expected to begin sometime in the spring of 1964.

We will be negotiating with the European Common Market over serious problems of access to its agricultural markets. We will be prepared to work effectively with other countries-including the United Kingdom and its European Free Trade Association partners. Commonwealth nations, and Japan-on trade problems of mutual concern. We will be participating actively in studies leading toward possible international commodity arrangements which would represent a new approach toward meeting trade problems of temperate zone agricultural products. Working within the framework of the General Agreement on Tariffs and Trade, we will need to present American agriculture's case strongly and effectively at the bargaining table, and will need to give vigorous support to our country's efforts to expand agricultural trade among all Western nations.

In these and related areas, it will be essential that the Foreign Agricultural Service intensify its reporting, analytical, advisory, and general supporting services to U.S. Government, agricultural, and trade interests.

FOREIGN MARKET DEVELOPMENT

Our foreign market development work is being carried out on a wide front, with the active cooperation and participation of important U.S. agricultural commodity groups. This is a jointly financed program; that is, both the Department and cooperators are sharing in the cost. The program is being carried out in over 50 countries in cooperation with more than 40 trade and agricultural groups.

Various techniques have been used successfully in promoting U.S. agricultural exports. These have included distribution of samples for display and testing; translation, printing, and distribution of promotional and educational leaflets; direct advertising; motion pictures. film clips, and slides; cooking demonstrations; direct contacts with the trade; technical services on commodity utilization; and tradesponsored visits of foreign buyers to the United States.

We have had good success in exhibiting the high quality and wide ety of American farm products at international trade fairs. Since American farm products have been promoted at 109 interna..l shows in 28 countries, with total attendance of about 46 million

ors.

e are preparing now to sponsor a large trade exhibit in Western ope this fall. We expect to use the opportunity to dramatize to es consumers the benefits they will gain from libera!

estern

trade policies that would give them ready access to our great variety of food and agricultural products.

AGRICULTURAL ATTACHÉS

The Foreign Agricultural Service depends heavily upon its worldwide agricultural attaché service in gaining access to foreign markets. We also rely upon the attachés for collecting a big volume of foreign agricultural information on marketing opportunities, competition, production, prices, and other factors-which can be made available to U.S. agriculture and trade groups. The attachés have an important part in carrying out export programs, both in the areas of dollar sales and Government export operations. They are the representatives of U.S. agriculture in the countries to which they are assigned.

Currently, 61 agricultural attaché posts are maintained in U.S. Embassies and consulates. In 42 of these posts only 1 man is assigned, and he must carry on this work with limited secretarial and local assistance. Ten posts have one assistant attaché, 7 have 2 assistants, and 2, where U.S. trade centers have been established, have 3 U.S. assistant attachés.

In carrying out their duties these men often must cover widespread geographic areas, in many cases consisting of several countries.

We are requesting funds to establish three new posts to provide more adequate coverage in important areas and to assign additional American assistants or professional local employees in other locations of greatest need.

THE 1964 BUDGET ESTIMATES

The "Salaries and expenses" appropriation request for 1964 represents an increase of $1,891,000 over the 1963 appropriation. Of this amount, $994,000 for market development projects is only an apparent increase, since obligations under the "Special foreign currency" appropriation are being decreased by a like amount.

In both 1963 and 1964 the market development project expenses in foreign countries will be financed from Public Law 480 foreign currencies purchased either in the country where accrued or by conversion to dollar market areas of currencies from other areas. No "Special foreign currency" appropriation is being requested for 1964, since the anticipated $2 million obligations under the program can be financed from funds carried over from prior years.

The 1964 request provides for a market development program at the same level as for 1963.

The major actual increase is $412,000 for three additional attaché posts, one additional marketing specialist, and for assignment of junior assistants and local employees at existing posts.

$108,000 in the "International agricultural affairs" activity is for implementing the new Trade Expansion Act with respect to U.S. agricultural exports, especially with reference to maintaining access to the European Common Market, and to meeting demands of increasing activities with international organizations.

$81,500 is requested to meet increased demands on the commodity divisions in connection with the Common Market and international commodity agreements.

$295,500 will provide for full-year costs in 1964 of the first step of the pay increase authorized by Public Law 87-793 in 1963, and for the 1964 cost of the additional pay increase which is to become effective January 5, 1964.

An increase of $53,000 to strengthen commodity price and quality review and $50,000 to provide for increased pay costs is requested for the general sales manager. Both of these amounts are within the special limitation authorized in the Commodity Credit Corporation administrative expense limitation. There is also a requested increase of $49.000 for barter and stockpiling to provide for increased pay costs. The language for 1964 provides that the total of $1,417,000 to be transferred from the Commodity Credit Corporation be merged with the "Salaries and expenses" appropriation, as is now done for the $3,117,000 transferred from section 32.

The job of marketing U.S. farm products abroad is complex. But it is tremendously important-to U.S. agriculture and to the overall national economy. We are very glad that we can have a part in it. Mr. Chairman, in further support of the program I have discussed. I would like to submit for the record material from the explanatory

notes.

(The material referred to follows:)

STATUS OF PROGRAM

Current activities.-Current information on foreign agricultural production. markets, policies, and competition are gathered, analyzed, interpreted, and disseminated to U.S. farmers, business, and Government. This information is made available, in person and through publications, wherever decisions are made on important foreign economic and other problems so that the interests and problems of the U.S. farmers may be taken into account in making those decisions.

The expansion and stabilization of world trade, particularly in agricultural products, is actively encouraged through the removal of barriers to trade, the study of foreign competition with American products, the analysis of market situations affecting the sale of agricultural commodities throughout the world, and making the information obtained available to the U.S. farmers, processors, exporters, and other interested groups.

U.S. agricultural interests are represented and their position presented in the development of international agreements.

Agricultural attachés are stationed in 61 posts throughout the world to represent U.S. agriculture at those posts. The attachés' work includes a comprehensive system of reporting to meet the needs of U.S. agriculture, to act as the voice of American agriculture at the posts, and to take necessary action in the development of foreign markets for U.S. agricultural products..

A broad program is carried out for the development of markets abroad for U.S. agricultural products in surplus or potential surplus supply. Export programs, including those under the Agricultural Trade Development and Assistance Act, Public Law 480, and related authorizations, as well as import programs and controls are administered by the Service.

The State Department is reimbursed by the Foreign Agricultural Service (FAS) for administrative and other support costs furnished overseas at the attaché posts. It is estimated that such costs will amount to $1,175,000 in 1964. Selected examples of recent progress:

SUMMARY OF EXPORTS

1. U.S. Agricultural exports set value record in fiscal year 1962.-As shown in the following table, U.S. agricultural exports totaled $5,141 million in 1962 (chart No. 1). Export volume equaled the all-time high in 1961. The export picture in 1961-62 was dominated by major shifts in feed grains, wheat, and cotton. Feed grains increased by $163 million and wheat by $133 million while cotton shipments declined by $274 million. Soybeans, fruits, cottonseed and soybean oils, poultry meat, tobacco, and vegetables increased moderately. Rice, variety meats, animal fats, hides and skins, and dairy products showed little or no change.