Mr. HEIMBURGER. There are no provisions in there by which they can limit your production?

Mr. JOPLING. That is right. The Army has no right under the contract to direct us in the operation of the plant.

Mr. HEIMBURGER. They have only an option to buy which they may or may not exercise?

Mr. JOPLING. That is right.

Mr. HEIMBURGER. Thank you.

Mr. JOPLING. A matter came up yesterday that I would like to clarify for the committee, and that was the matter of the plants from which the 50 and the 10 percent program is shipped. According to our agreement with the Army, all of the ammonia will be produced and sold from Cactus, but in order to save tank cars and in order to save freight we have an arrangement with the Army whereby we exchange with them. We ship to the Allied Chemical Co. at Buffalo, N. Y. We ship that out of the Morgantown, W. Va., plant and replace it with a car at Cactus. Although the material is shipped from both plants, it is all sold by Phillips under this agreement with the Army.

Our shipments are made from Oakland, Calif., to Buffalo, N. Y. We make these trades to save tank cars and freight, if possible.

Mr. ABERNETHY. As a final question, your lease with the Army was made in anticipation of that plant's output eventually going into the usual channels of trade?

Mr. JOPLING. Precisely. We have no use for it for any other

reason.

There is presently a critical need for fertilizer in the United States. Despite this, domestic and foreign production is increasing rapidly. Export requirements for next year should be much less than last year. We believe the interest of agriculture can best be served by the fertilizer industry without the restrictions and complications of Government supervision and that section 205 of Public Law 793 should be repealed.

(Articles accompanying Mr. Jopling's statement are as follows:)

[From the Congressional Record, February 7, 1949]

REPORT ON NITROGENOUS FERTILIZER

EXTENSION OF REMARKS OF HON. ELMER THOMAS, OF OKLAHOMA, IN THE SENATE OF THE UNITED STATES, MONDAY, FEBRUARY 7, 1949

Mr. THOMAS of Oklahoma. Mr. President, I ask unanimous consent to have printed in the Appendix of the Record a report on the subject of nitrogenous fertilizer, made by John Pillsbury, staff member of the Senate Committee on Appropriations.

(There being no objection, the statement was ordered to be printed in the Record, as follows:)

NITROGENOUS FERTILIZER-LEGISLATION OF THE EIGHTIETH CONGRESS

The Eightieth Congress adopted the following legislation restricting the distribution of nitrogenous fertilizer materials produced by the Army:

In Public Law 606 (continuing the powers of the Second Decontrol Act of 1947 through June 30, 1949) and Public Law 793 (making appropriation for foreign aid in 1949), it was provided that the Department of the Army should furnish from its production 50 percent of the export requirements of nitrogenous fertilizer materials for nonoccupied areas.

In Public Law 793, it was further provided that 10 percent of the total anhydrous ammonia produced in Army plants should be diverted to domestic use. (The pertinent sections of each law are appended.)

The intent of the Congress in these laws was to earmark part of the Army production for use outside of the occupied areas of Germany, Japan, Ryukyus, and Korea. At the time these provisions were enacted, a shortage of nitrogenous fertilizer materials existed both in the United States and in the international situation. The Army was applying its entire production to its occupied areas without regard to domestic and world shortages.

The action of the Congress diverted approximately 30,000 tons (nitrogen content) to domestic use in the 10-percent program and approximately 30,000 tons for export in the 50-percent program.

Since the enactment of the law, two major changes have occurred which may make it advisable to discontinue the provisions of Public Laws 606 and 793. 1. The Army has increased its production.

2. The needs of the Army for its occupied areas will be reduced sharply. The decreased demand will result in major part from the change in status of Korea. Korea will cease to be an occupied territory after January 1, 1949, when the appropriation made to Government and Relief in Occupied Areas will be transferred to the Economic Cooperation Administration.

Because of these two factors, Army production will greatly exceed Army demands for the occupied areas. Without Government regulation, the production of the Army plants which is not required for the occupied areas will move into. normal commercial channels. No new legislation will be required to release a sizeable portion of Army production to relieve domestic-fertilizer shortages or to meet export requirements for the nonoccupied areas.

ARMY PRODUCTION

Ammonia (NH3), basic in the production of nitrogenous fertilizers, is produced for the Army at three plants. Operation of a fourth plant will begin July 1, 1949. Two plants, the Morgantown (Morgantown, W. Va.) and Ohio River (West Henderson, Ky.) ordnance works, are operated directly for the Army.

A third plant, the Cactus ordnance works (Etter, Tex.) is under lease to the Phillips Petroleum Co. with provision that the Army may acquire any or all of its production to meet fertilizer requirements for 4 years.

The fourth plant will operate as the San Jacinto ordnance works. It comes into operation through the removal of two inoperative fertilizer trains removed from the Missouri ordnance works at Louisiana, Mo.

The forecast for production of these plants for 1949, given in terms of NH3, is 360,400 short tons. An increase to 462,800 short tons in 1950 is predicted on the following production schedule:

· Short tons, NHS

147, 700

227, 200

65, 500

22, 400

462, 800

The production and end use of nitrogenous fertilizer material from Army ordnance plants, given both in terms of NH, and contained nitrogen, is estimated for 1949:

DISTRIBUTION TO THE OCCUPIED AREAS

The distribution of nitrogenous fertilizer, in terms of nitrogen content, for the year 1949 will be:

Germany, 40,491 short tons, nitrogen content.

Japan and Ryukyus, 88,577 short tons, contained nitrogen.

Korea, 89,344 short tons, contained nitrogen.

Total, 218,412 short tons, contained nitrogen.

Confidential estimates (to be released with the 1950 budget message) show a demand next year for nitrogenous fertilizer material in Germany that is approximately half of the 1949 requirement. Requirements for Japan will increase by approximately one-third. Korea, however, ceases to be an occupied territory for planning purposes after January 1, 1949. Accordingly, the total demand for the occupied areas in 1950 will require approximately 150,000 short tons of contained nitrogen out of total Army production of approximately 381,000 tons of contained nitrogen.

After the Army meets the needs of the occupied areas in fiscal 1950, the amount of nitrogen remaining for diversion to domestic use or export will be substantially greater than existed this year. No legislation similar to that found in Public Laws 606 and 793 is required to make this surplus available to United States and foreign agriculture.

THE 10-PERCENT PROGRAM

There exists adequate cause for the immediate elimination of the 10-percent program established in Public Law 793. In accordance with the terms of the law, 10 percent of the Army production, or approximately 30,000 tons of NH3, has been allocated to relieve domestic shortages which last spring threatened the shut-down of certain key plants in the Northwest which manufactured fertilizer.

The 30,000 tons of ammonia allocated has proved more than adequate to cover the statutory preferences of the law.

The allocation of ammonia in the 10-percent program was entrusted to the Department of Commerce. The Department reports that allocations have been made with difficulty and have not given the over-all relief intended by the Congress to reduce fertilizer shortages throughout the Nation. Officials of the Department recommend the abandonment of the 10-percent program.

The provisions of Public Law 793 restrict the allocation of the 10-percent program to certain plants which were producing ammonium sulfate during the 6 months preceding enactment of the law or which were facing imminent shutdown. In practice, these restrictions may become a deterrent to full fertilizer production. Already, certain sulfate plants to which allocations of ammonia have been made are unable to handle the full amount of their allocation. resut may be that the production of ammonia for the Army at the Cactus ordnance works will be curtailed for lack of storage space unless some means are found to turn the Cactus production to other plants than those named in Commerce Department orders.

THE 50-PERCENT EXPORT PROGRAM

The

The export program has worked reasonably well but the production and demand relationship is so much improved that abandonment of the 50-percent program would work no harm.

Approximately 30,000 tons of contained nitrogen have been diverted from Army production to meet the requirements of this program. The production in Armycontrolled plants in 1950 and 1951 will be so increased, however, that the Army can meet the full demands of the occupied areas and still supply substantial quantities to move in export without requiring direct legislation.

The cooperating nations of the European recovery plan, which are the largest claimants of United States fertilizer exports, have procured nitrogenous fertilizer through normal commercial channels. If such a program of procurement is continued, the Army best can serve the program by releasing to domestic fertilizer plants the production of anhydrous ammonia not required for the occupied areas. The needs of Korea will be met, it is presumed, by commercial procurement subject to International Emergency Food Committee allocation so long as IEFC control of nitrogen continues in world trade.

GENERAL RECOMMENDATIONS

The ammonia required for the 10-percent and the 50-percent programs has been released by the Army from the Cactus ordnance works. This plant, in accordance with congressional directive, was leased by the Army in the spring of 1948. Since then its production has been increased substantially. The Army holds a 4-year option on Cactus production and has exercised its option in 1949. If the Army can meet its requirements for the occupied areas from the Morgantown and Ohio River ordnance works in 1950, it should permit the production of Cactus to move into normal trade channels to relieve the domestic situation and meet export requirements, in accordance with the terms of the lease. In addition, it is recommended that the fertilizer trains which are in process of transfer to San Jacinto be leased as soon as practicable on terms similar to those made at Cactus. JOHN PILLSBURY, Staff Member.

[From the Congressional Record, March 11, 1948]

PRODUCTION OF FERTILIZERS IN JAPAN

Mr. THOMAS of Oklahoma. Mr. President, I ask unanimous consent to have printed in the body of the Record a letter just received from the State department of agriculture of my State, the letter having to do with the manufacure of ferilizer. Attached to the letter is a short news article clipped from he New York Journal of Commerce. I ask that that be printed also.

There being no objection, the letter and article were ordered to be printed in the Record, as follows:

Hon. ELMER THOMAS,

STATE DEPARTMENT OF AGRICULTURE,
Oklahoma City, March 7, 1949.

Senate Office Building, Washington, D. C.

MY DEAR SENATOR: Enclosed herewith is copy of a news dispatch which appeared in the New York Journal of Commerce on March 1, 1949, which includes the following: "Production of chemical fertilizers in Japan is nearing the 1941 prewar record. The Japanese Government's Ministry of Commerce has estimated 1948 production at 917,000 metric tons ammonium sulfate, 997,000 metric tons superphosphate, 227,000 metric tons calcium cyanamide."

I have copy of your extension of remarks, entitled "Report on Nitrogenous Fertilizer," published in the Congressional Record, February 7, which stated that the Department of the Army will supply to Japan and the Ryukyus 88,577 short tons of nitrogen during this fiscal year. I am not informed as to the cost of supplying this nitrogen, but, based upon current prices and transportation charges, it will probably cost the taxpayers $20,000,000. The report also states that the requirements for Japan will increase by approximately one-third next year.

Before the war Japan was a large exporter of fertilizer. Now that its prewar production is resumed, it is difficult to understand why it is necessary for the Congress to appropriate funds to supply fertilizer to Japan, especially in view of the critical shortage of fertilizers in this country. Our farmers in the Middle Western States who are heavily burdened with taxes, part of which pay the cost of the foreign-relief program, are unable to buy the fertilizer they need.

Knowing your interest in the welfare of the farmers of our Nation, I am calling this situation to your attention.

Cordially yours,

HAROLD HUTTON.

[From the New York Journal of Commerce of March 1, 1949]

JAPAN FERTILIZER IS NEAR PREWAR-JANUARY OUTPUT EXCEEDS GOALS; HIGHER INSECTICIDE PRODUCTION PLANNED

TOKYO, February 28.-Production of chemical fertilizers in Japan is nearing the 1941 prewar record.

The Japanese Government's Ministry of Commerce has estimated 1948 production at 917,000 metric tons of ammonium sulfate, 997,000 tons of superphosphate, and 227,000 tons of calcium cyanamide.

EXCEEDS GOALS

Output in January 1949 far exceeded production schedules for the month. The good records were due to improved delivery of pyrites and coal and to the extra hydroelectric power made available for industry during the unseasonably warm weather which Japan has had this winter.

January production of ammonium sulfate totaled 81,292 metric tons, which was 124 percent of the goal. The output of superphosphate was 98,491 metric tons, or 109 percent of the goal. Calcium cyanamide production was 17,173 metric tons, which was 122 percent of the goal.

DEPARTMENT OF COMMERCE

Distribution Order D-1
As Amended
Sept. 21, 1948

(13 F. R. 5562, Sept. 24, 1948)

BUREAU OF FOREIGN AND DOMESTIC COMMERCE

OFFICE OF DOMESTIC COMMERCE

TITLE 15-COMMERCE

CHAPTER III-BUREAU OF FOREIGN AND DOMESTIC COMMERCE, DEPARTMENT OF

COMMERCE

[Distribution Order D-1]

PART 338-MATERIALS ORDERS

DISTRIBUTION OF ARMY ANHYDROUS AMMONIA

Section 338.60, Distribution Order D-1, is amended to read as follows: § 338.60 Distribution Order D-1-(a) Purpose. This section explains how the Department of Commerce, acting through the Office of Domestic Commerce, will direct the distribution of Army anhydrous ammonia for the balance of the fertilizer year, October 1, 1948 to June 30, 1949. "Army anhydrous ammonia" means anhydrous ammonia made available by the Department of the Army for the commercial production of nitrogenous fertilizer materials for domestic use, pursuant to the following provision in section 205 of Title II of Public Law 793, Eightieth Congress (Foreign Aid Appropriation Act, 1949), approved June 28, 1948:

66* * * In addition, the Department of the Army shall make available, for the commercial production of nitrogenous fertilizer materials for domestic use, 10 per centum of the total anhydrous ammonia produced in the United States in plants operated by or for the Department of the Army, said anhydrous ammonia to be distributed as directed by the Department of Commerce, which shall give preference, in distributing said anhydrous ammonia, to producers of ammonium sulphate who were producing ammonium sulphate during the six months preceding the enactment of this Act or who shall have ceased to produce, or shall be faced with an imminent shutdown in the production of, ammonium sulphate for want of anhydrous ammonia, to the extent necessary to permit such producers to operate

This section does not deal with anhydrous ammonia made available by the Department of the Army for production of nitrogenous fertilizer materials for export, under Public Law 606, 80th Congress. Such distribution is handled under the provisions of Direction 4A to Allocations Regulation 2.

DISTRIBUTION POLICIES

(b) ODC distribution policies. While the expected quantity of Army anhydrous ammonia is substantial, it represents only a small part of the total domestic supply and will meet only a small part of the total demand for use in fertilizer production. ODC distribution of this limited quantity of Army anhydrous ammonia will be based upon the requirements of Public Law 793, as quoted above.

Distribution will be made on a quarterly basis, beginning with the fourth calendar quarter of 1948.