Field studies are being conducted to determine the probable future demands for livestock products, grain, tobacco, cotton, and fruit and the potential competition which foreign production will offer American products.

Field offices are maintained in London, Paris, Berlin, Belgrade, Buenos Aires, and Shanghai, and several commodity specialists are making special investigations in Europe and Asiatic countries.

Mr. CANNON. Are you prepared to supply all needed statistical information on foreign competition and demand?

Dr. BLACK. No, sir; I do not think we are not all of the needed statistics.

Mr. CANNON. Much of the difficulty in which agriculture finds itself, and from which it has been suffering for years, has been attributable to the decrease in our foreign markets.

Dr. BLACK. That is correct.

Mr. CANNON. Are you in a position to reflect the condition of our foreign markets?

Dr. BLACK. We have offices established at strategic points, where much information can be obtained by our representatives. In order to give the same sort of statistical appraisal of foreign crops that we give in the domestic work would require, of course, something quite different in the way of a foreign agricultural service. With the service we how have, we do feel that we can appraise changes rather well and that we are able to give a rather outstanding service with respect to the more important agricultural commodities in which we are interested.

MARKET INSPECTION OF FARM PRODUCTS

Mr. CANNON. Your next item is for the market inspection of farm products, as follows:

Market inspection of farm products: For enabling the Secretary of Agriculture, independently and in cooperation with other branches of the Government, State agencies, purchasing and consuming organizations, boards of trade, chambers of commerce, or other associations of businessmen or trade organizations, and persons or corporations engaged in the production, transportation, marketing, and distribution of farm and food products, whether operating in one or more jurisdictions, to investigate and certify to shippers and other interested parties the class, quality, and condition of cotton, tobacco, fruits, and vegetables, whether raw, dried, or canned, poultry, butter, hay, and other perishable farm products when offered for interstate shipment or when received at such important central markets as the Secretary of Agriculture may from time to time designate, or at points which may be conveniently reached therefrom, under such rules and regulations as he may prescribe, including payment of such fees as will be reasonable and as nearly as may be to cover the cost for the service rendered: Provided, That certificates issued by the authorized agents of the Department shall be received in all courts of the United States as prima facie evidence of the truth of the statements therein contained, $378,533.

Your current appropriation for this purpose is $431,203, and your estimate for 1937 is $378,533, that being a reduction of $52,670. Dr. BLACK. The following justification is submitted in defense of this estimate:

There is a decrease of $52,670 under this appropriation due to the proposed discontinuance of the project "Inspection and certification of tobacco."-The Tobacco Inspection Act, approved August 23, 1935, provides for inspection of tobacco under certain mandatory provisions. The work under this specific act, estimated for 1937 under that heading, will supersede the service now being rendered on tobacco under the provisions of the appropriation “Market inspection of farm

products." It is proposed, therefore, to decrease this appropriation in 1937 by the amount which is being used for tobacco inspection in 1936.

General. The inspection and grading services of the Bureau cover fruits and vegetables (including canned fruits and vegetables), dairy and poultry products, meats, hay, beans, seeds, rice, peanuts, and other products. This service is permissive in character, the Federal inspector performing the service only at the request of a financially interested party. Certificates are issued which constitute prima facie evidence in the courts of the United States as to the quality and condition of the shipments inspected. These certificates serve as a basis for trading as well as for the settlement of disputes. The work under the entire appropriation has been about 75 percent self-supporting, since fees amounting to $305,818 were returned to the Treasury during the past year.

Inspection and certification of fruits and vegetables.-The work under this project covers the inspection and certification of fresh fruits and vegetables at 48 important receiving markets. A similar inspection service is conducted at shipping points in more than 40 States in cooperation with State agencies. In addition large quantities of products are inspected for the purchasing departments of the Navy and Marine Corps and other Federal agencies.

Shippers use the service extensively in making f. o. b. sales to distant buyers who demand standardized products. During the past year 306,441 cars were inspected at shipping points and 53,443 cars at receiving points. Since the passage of the Perishable Agricultural Commodities Act, the inspection certificates have increased in value on account of being received as prima facie evidence in hearings resulting from complaints filed under that act. A very large amount of business is done with the railroads which use the Federal certificates as the basis for the settlement of claims.

The inspection service plays an important part in marketing American fruits in foreign markets. The Export Apple and Pear Act, approved June 10, 1933, requires that, with certain minor exceptions, all shipments of apples and pears in export must be accompanied by a certificate showing that the shipment meets the minimum quality requirements established by the Secretary of Agriculture for exportation of these commodities. The inspection service conducted under this item serves to enforce the act. The French quarantine, which prohibits the entry into France of apples which are infested with San Jose scale, makes it necessary for shipping-point inspectors to examine 2 percent of the fruit in each lot concerned before it can receive the French sanitary certificate issued by the Bureau of Entomology and Plant Quarantine. Each year the Bureau stations an inspector at Montreal, July 15 to November 10, in order to issue clearance certificates required by the special British Import Act, which forbids the entry of apples not of specified grade.

Branch offices are maintained in the following markets: Albany, N. Y.; Atlanta, Ga.; Baltimore, Md.; Baton Rouge, La.; Boston, Mass.; Buffalo, N. Y.; Chicago, Ill.; Cincinnati, Ohio; Cleveland, Ohio; Columbia, S. C.; Columbus, Ohio; Denver, Colo.; Detroit, Mich.; Fargo, N. Dak.; Fort Worth, Tex.; Great Lakes, Mich.; Harlingen, Tex.; Harrisburg, Pa.; Hartford, Conn.; Houston, Tex.; Indianapolis, Ind.; Jacksonville, Fla.; Kansas City, Mo.; Los Angeles, Calif.; Memphis, Tenn.; Milwaukee, Wis.; Minneapolis, Minn.; Newark, N. J.; New Haven, Conn.; New Orleans, La.; New York, N. Y.; Norfolk, Va.; Omaha, Nebr.; Orlando, Fla.; Philadelphia, Pa.; Pittsburgh, Pa.; Portland, Oreg., Providence, R. I.; Rochester, N. Y.; Sacramento, Calif.; St. Louis, Mo.; Salt Lake City, Utah; San Pedro, Calif.; San Diego, Calif.; San Francisco, Calif.; Seattle, Wash.; Springfield, Mass.; Tulsa, Okla.; Washington, D. C.; Wilkes-Barre, Pa.; Vallejo, Calif.; and Yakima, Wash. In addition, inspections were made at shipping points in cooperation with more than 40 States.

Grading and certification of canned fruits and vegetables. The service is of special value to canners who have need of an official determination of quality. It is also used largely by the purchasing agencies of the Government, especially the Veterans' Administration, and by an increasing number of other State and municipal authorities and by commercial dealers. This project grades samples from all lots of canned fruits and vegetables stored by public warehousemen

licensed under the United States Warehouse Act as a part of the supervision of warehouses licensed under the act. The statement of grade on Federal warehouse receipts is particularly important, since the warehouse receipts are used extensively as collateral for loans by cooperative associations of canners and others. An increasing number of retail stores and others are handling products graded under United States standards.

Grading and certification of dairy and poultry products.-This service consists of the grading of dairy and poultry products in terminal markets and at shipping points for class, grade, quality, and condition; supervision of the inspection of dressed poultry for condition and wholesomeness at canning establishments; and the inspection of live poultry for crop and health condition (cooperative work in New York City). More than 196,000,000 pounds of butter were graded during the past year, as well as large quantities of cheese, eggs, and poultry. In addition, more than 50,000,000 pounds of butter and 6,000,000 pounds of cheese were graded for the Federal Surplus Relief Corporation.

Branch offices are maintained at Boston, Mass.; Chicago, Ill.; Los Angeles, Calif.; Minneapolis, Minn.; New York, N. Y.; Philadelphia, Pa.; Portland Oreg.; San Francisco, Calif.; Seattle, Wash.; and Washington, D. C.

Inspection and certification of hay, beans, soybeans, etc.-This project consists of the maintenance of an inspection and grading service and the supervision of licensed inspectors under cooperative agreements with State and other agencies. The service includes the verification of dealers' records on seed in order that certificates may be issued showing the State of origin. This service makes it possible for farmers to obtain seed which is adapted to their section of the country. Inspection work on beans, soybeans, and dry peas has grown rapidly.

Branch offices are maintained at Atlanta, Ga.; Chicago, Ill.; Denver, Colo.; Kansas City, Mo.; Los Angeles, Calif.; Minneapolis, Minn.; Portland, Oreg.; and San Francisco, Calif.

Grading and certification of meats.-The meat-grading service is available to commercial interests and to purchasing officers for Federal, State, and city institutions at points where graders are maintained. In addition, a specialized type of service is rendered at slaughtering and packing establishments by which beef and lamb carcasses are graded and stamped with a roller stamp in such a manner that the grade appears on the retail cuts.

Through this service national standards for various classes of meats are being developed. The use of these standards as a basis for buying and selling is increasing. Contracts by Federal, State, and municipal institutions are being awarded on the basis of Federal grades. The service prevents the possibility of substitution and insures a reasonably high degree of uniformity in most purchases. The grade stamp on the meat is therefore of value to consumers because it insures delivery of meats of a definite quality. There is a rapidly growing demand on the part of consumers for Federally graded meats.

Branch offices are maintained at Albany, N. Y.; Buffalo, N. Y.; Boston, Mass.; Chicago, Ill.; Cleveland, Ohio; Detroit, Mich.; Kansas City, Mo.; National Stock Yards, Ill., New York, N. Y.; Omaha, Nebr.; Philadelphia, Pa.; Phoenix, Ariz., San Francisco, Calif.; Seattle, Wash.; Sioux City, Iowa; and Wichita, Kans.

Inspection and certification of tobacco. This project is being dropped in 1937. (See new item "Tobacco Inspection Act.")

Inspection and certification of rice.-This work is conducted under joint agreements between this Bureau and State departments of agriculture in California, Texas, and Louisiana, and commercial interests in Arkansas and covers rough, brown, and milled rice. Under these agreements the initial inspections are made by State officials under the supervision of the Bureau. Appeals from initial inspections are handled by the Bureau direct.

The grade certificates covering inspections of rough rice that are issued to the producers at the time they offer their rice for sale on the market give a definite indication of the milling value of the rice, and this makes it possible for the producers to demand and receive the full market price for their rice, based on its utility and market value. The grade certificates covering milled rice are of special importance in connection with export transactions in that the certificates facilitate the exportation of the surplus rice.

Mr. CANNON. It appears that the decrease of $52,670 is due to the proposed discontinuance of the project for the inspection and certification of tobacco. That is done in view of the fact that you are adding another appropriation for tobacco studies.

Mr. KITCHEN. This item deals with the inspection of tobacco. The act of August 23, 1935, provides for the inspection of tobaccoMr. CANNON (interposing). Is that a regulatory measure or a research measure?

Mr. KITCHEN. It is a regulatory and service measure.

It is covered by specific legislation enacted last August and is a specific item in the bill.

Mr. CANNON. Then, this money is merely being transferred.

Mr. KITCHEN. Yes, sir; transferred and to be expended under definite legislation.

TOBACCO INSPECTION ACT

Mr. CANNON. The next item is a new one, covering the Tobacco Inspection Act, as follows:

To enable the Secretary of Agriculture to carry into effect the provisions of an Act entitled "An Act to establish and promote the use of standards of classification for tobacco, to provide and maintain an official tobacco inspection service, and for other purposes", approved August 23, 1935 (49 Stat., pp. 731–735), $250,000. Dr. BLACK. The following statement is submitted for the record in justification of the item:

This new item of $250,000 is requested for the purpose of carrying into effect the provisions of the Tobacco Inspection Act approved August 23, 1935.-The $250,000 is offset to some extent by the discontinuance of somewhat similar work carried in 1936 under other appropriations of the Bureau. An item of $52,670 is being dropped in 1937 from the appropriation "Market Inspection of Farm Products" and $14,435 from "Market News Service." The net result is an actual increase

of $182,895 in funds for the tobacco work.

WORK UNDER THIS APPROPRIATION

The Tobacco Inspection Act was approved August 23, 1935. The first main objective of the act is to furnish tobacco growers with dependable information as to the quality of their tobacco according to uniform standards. The second principal objective is to supply growers with market reports showing prices paid for the different grades. The act authorizes the Secretary of Agriculture to establish standards for tobacco by which its type, grade, size, condition, or other characteristics may be determined, and the standards so established are the official standards of the United States for such purpose.

The act further authorizes the Secretary of Agriculture to designate auction markets upon which the tobacco bought and sold moves in interstate and foreign commerce. After public notice of not less than 30 days, no tobacco shall be offered for sale at auction at a designated market until it shall have been inspected and certified according to the Government standards by an authorized representative of this Department. This feature of the inspection service will be applicable only upon the tobacco offered for sale at auction and is intended to provide growers with an official determination of the grade of their tobacco before it is sold by them. The designation of an auction market for inspection purposes must be preceded by a referendum and favored by two-thirds of the growers voting in such referendum. The act provides that the cost of the inspection at designated markets and the markets news service shall be borne by the Government.

Section 9 of the act provides for a market news service primarily for the benefit of growers, in order that they may be daily informed of the price at which the various qualities of tobacco are being sold. Reliable market reports, based upon actual sales, have been found to be a valuable adjunct to an official inspection service. With the grade of his tobacco, as determined by a financially disinterested representative of this Department, and an official market report showing the prices being paid for the different grades, the grower is in position to decide whether to accept or reject the price offered for his tobacco.

Section 10 of the act provides needed safeguards around the use of the official standards and the inspection service and provides penalties for various abuses.

Mr. CANNON. You are adding this item for the first time, and you are asking for a quarter of a million dollars. This is the item to which you have transferred the $52,670.

Mr. KITCHEN. Yes, sir.

Mr. CANNON. I see we lose money by the trade. It seems that we lose about $200,000 in the transfer. What work are you doing under this new item that you did not do under the old item?

OPERATIONS UNDER TOBACCO INSPECTION ACT OF 1935

Mr. KITCHEN. We are not doing any work under the new item, because the act authorizing this inspection service for tobacco was only passed last August. An item for it was carried in the third deficiency bill, which failed; so that for the present we are not doing anything in the way of administering the new Tobacco Inspection Act.

Mr. CANNON. What was the amount carried in the deficiency bill? Mr. KITCHEN. About $153,000 for the current fiscal year. That bill failed.

Mr. CANNON. That was for a portion of the year.

Mr. KITCHEN. Yes, sir. I might say that the Tobacco Inspection Act passed last August authorizes the Secretary of Agriculture to establish grades for tobacco and to designate auction markets on which tobacco may not lawfully be sold at auction unless it is inspected as to grade by representatives of the Department of Agriculture. The Secretary is not authorized to designate auction markets. for mandatory inspection of tobacco until he has held a referendum among the growers and until two-thirds of those voting in the referendum vote in favor of such designation.

Mr. CANNON. Unless you have the cooperation of the producers, you would not be able to use this money.

Mr. KITCHEN. The Secretary is not permitted to designate tobacco auction markets under the act until two-thirds of the tobacco growers who used the market in question during the preceding season vote in favor of designation in a referendum.

Mr. CANNON. You do not anticipate any lack of cooperation on the part of the tobacco growers in this?

Mr. KITCHEN. There is a great interest among them in this work, particularly in certain tobacco-growing sections.

Mr. CANNON. Is this proposed inspection to be in the interest of the producer, the processor, or the middleman?

Mr. KITCHEN. This inspection service is designed absolutely to be in the interest of the tobacco grower. Tobacco is brought upon the auction floors and sold at auction very rapidly. As a matter of fact, the tobacco warehousemen's code provided for the selling of a lot of tobacco every 10 seconds or at the rate of 360 lots an hour. The farmer has no information as to the grade of his tobacco. The representatives of the manufacturers have grades, but their grades are not public information. The grower has no information as to the prices paid for the different grades of tobacco. The only price information that is published is the average price of all grades on a market. Flue-cured tobacco, for example, might have a range in price from 6 cents to 75 cents a pound during the year, as well as wide price ranges within grade groups. The average price last year was about

27 cents.