We are setting up what we call a town hall meeting in Kansas City, which will be on March 30, and it will probably be a 2-day meeting where anyone who wants to complain about what we have proposed will have the full right to do it with adequate presentation. After we receive those complaints, and I am sure we will have many, the CCC Board will make its final decision on these rates. That is the best explanation I can give and I will answer any other questions. MR. SANTANGELO. These rates apply to the grains and not cotton? MR. MCLAIN. That is right, just grains. THE SPECIAL AGRICULTURE INVESTIGATING SUBCOMMITTEE EXAMINATION OF STORAGE AND HANDLING COSTS UNDER THE UNIFORM GRAIN STORAGE AGREEMENT Honorable Stuart Symington, Chairman Special Agriculture Investigating Subcommittee United States Senate Dear Mr. Chairman: In accordance with your request of April 18, 1960, there is enclosed a report on the over-all results of the examination made by the General Accounting Office of the operating costs at 57 selected commercial warehouses storing grain for the Commodity Credit Corporation (CCC) under the terms of the Uniform Grain Storage Agreement (UGSA). Our examination was made as part of our review of the procedures and practices followed by CCC in its negotiation and administration of the UGSA with the grain storage industry. Because of the limited sample of grain storage warehouses included in our examination, the results of the examination relative to storage and handling costs, and rates of profit and return on acquisition cost of storage facilities, as set forth in the report, may not necessarily be indicative of the pattern prevailing at all the warehouses storing grain for CCC under the Uniform Grain Storage Agreement. However, our findings at the warehouses examined indicate that, based on the average volume of grain stored and the quantity handled during the warehousemen's latest fiscal year completed at the time of our examination, the UGSA rates have provided, in most cases, rates of net profit greatly in excess of the profit allowances that we have noted generally in our audits of fixed-price contracts negotiated by the Government. The results of our examination as they pertain to the costs of grain storage at the 57 commercial warehouses examined are summarized as follows: In 32 of the 57 warehouses where we reviewed warehousing costs, we computed the rates of return on the warehousemen's recorded acquisition cost of storage facilities based on the estimated net profits per bushel provided by the UGSA storage rates. These computations were not feasible for 25 of the warehouses because a significant part or all of the storage facilities were leased or data on acquisition cost were incomplete or unavailable. Following is a summary of our computations of the rates of return on the recorded acquisition costs of storage facilities applicable to the warehousemen's latest fiscal year completed at the time of our examination, It was not feasible in most warehouses examined to compute meaningful per-bushel handling costs primarily because there were substantial differences between the quantity of grain received and the quantity of grain loaded out and the difference between receiving and loading-out costs was not readily determinable. However, for 18 warehouses where we computed per-bushel handling costs (combined receiving and loading out), there were extremely wide variances in these costs resulting in comparable variances in percentages of net profit provided by the uniform rates under the UGSA. Further details relative to our examination are contained in the accompanying report and exhibits attached thereto. We note that on May 5, 1960, while this report was in process, the Department of Agriculture announced storage rates and handling charges under a revised Uniform Grain Storage Agreement, to be effective for the storage year beginning July 1, 1960. The announcement stated that the current storage rates are to be reduced an average of about 3 cents a bushel on an annual basis, representing an average reduction of 19 percent; handling charges have been increased in some cases and decreased in others. Enclosure Sincerely yours, Super Campbell Comptroller General of the United States |