Mr. ABERNETHY. That is not over and above the so-called 50 and 10

percent programs.

Colonel NORVELL. That is the amount including the 10-percent program that would be available, sir.

Mr. ABERNETHY. One hundred fifty thousand tons for Korea and 130,000 tons to Japan. That is 280,000. You will produce at Morgantown, Ohio River, and San Jacinto 253,000 tons, which would be 27,000 tons short of your Korean and Japanese program. If the IEFC program would call for the same amount, 61,000, then 88,000 tons would have to be made up from the Cactus plant. That is the 27,000, plus the 61,000.

So if you produce 121,000 at Cactus, that would leave at least 33,000 over and above your needs for the occupied countries and the export program. When I say "export" I have reference to the unoccupied

areas.

Colonel NORVELL. Thirty-three thousand is roughly what I would end up with.

Mr. ABERNETHY. Over and above all programs?

Colonel NORVELL. Not including the 10 percent. That is taking a full nonoccupied area program for the Army, the 61,000 tons for the nonoccupied area.

Mr. ABERNETHY. Mr. Heimburger.

Mr. HEIMBURGER. Is there not some duplication in the so-called I. E. F. C. or nonoccupied area figures, since some of that did go to the areas in Japan or Korea which you are not now counting as part of the Army program?

Colonel NORVELL. I do not quite understand you.

Mr. HEIMBURGER. As I understand it, Mr. Abernethy has added up the full 61,000 tons of this year's civilian export program and projected that to the next year's tabulation. In fact, would it not statistically be less than that, because part of that 61,000 tons for this year is going to areas in Korea which you are supplying?

Colonel NORVELL. No; that 61,000 tons is going to other than Germany, Japan, the Ryukyus, and Korea.

Mr. HEIMBURGER. So there is no duplication in the figures?
Colonel NORVELL. I do not believe so; no.

Mr. ABERNETHY. Mr. Cotton, do you have any questions?

Mr. COTTON. Not on this point. That 33,000, is it exclusive or inclusive of the 10-percent program?

Colonel NORVELL. That would be inclusive of the 10-percent program, sir.

Mr. ABERNETHY. Colonel, I just have two other things that I want to pursue here. I really do not understand why it has been necessary to increase the Japanesse export program from 87,000 tons to 130,000 tons, which is 43,000 tons above fiscal 1949, and the Korean program from 89,000 tons to 150,000 tons, which is 61,000 tons above fiscal 1949, when you and others testified for the Army last year that those people were within 20 percent of their supply. You have pulled out of Germany completely. That is, I understand you will soon pull out of Germany completely. The reports indicate that Japanese production has practically reached prewar levels.

You now say that the Korean supply is equivalent to prewar levels. I just cannot understand why it is necessary to increase your exports

to the extent you have said they will be increased when the testimony last year showed that they were then within 20 percent of their requirements.

Colonel NORVELL. When you get into a question of requirements you get into something that I think everyone has trouble with. The requirements that we stated-and I think we made a mistake in doing so were the requirements that we had established beyond which we would not go. In other words, we felt that the level established would supply fertilizers for these areas to use under food crops only, not on pasture lands, meadows, industrial crops, and so forth.

Mr. ABERNETHY. I had hoped that in view of last year's testimony, and the information which was supplied to us by the Department of the Army and others, that the entire output of one of these Army plants-of course, that would be Cactus, since it is the only one operated under lease-could be diverted to American agriculture. We had looked forward to that.

I am very much surprised that the Army now reports that instead of decreasing its exports it will actually be increasing them from 253,000 to 280,000 tons over fiscal 1949. That is true even though we are pulling out of Germany entirely.

Colonel NORVELL. If we did not have the requirements of section 205, sir, the production of the plant at Ohio River, for example, could be completely wiped off the Army program.

Mr. ABERNETHY. They gave us a figure here that the requirements of section 205, the 10-percent program, called for 30,000 tons. Of course, you are not supplying any 30,000 tons to the percentage program even though the Department of Commerce changed its figures the other day to so indicate.

Colonel NORVELL. The 10-percent program is 10 percent of ammonia. It is not N, or finished fertilizer. The ammonia that we will give up will be 36,500 tons, if my figures are correct.

Mr. ABERNETHY. But you agree with me that there is nothing unusual in our being surprised that all of the Army's tonnage or production will go to export this year with the exception of the 50 and 10 percent program. That is rather surprising in view of the testimony that we had last year, is it not?

Colonel NORVELL. Yes, sir; but the requirement under section 205, which we all agree is permanent legislation, requires more nitrogen than we sent to Germany this year and about the amount we sent to Germany last year.

Mr. POAGE. We can repeal 205 if we find it desirable. Congress can consider what it ought to change in the way of the law. Do you think that 205 ought to be repealed?

Colonel NORVELL. Portions of 205 put the Army in domestic business, which is undersirable to the Army.

Mr. POAGE. I think it is undesirable to almost everybody.

Colonel NORVELL. We would prefer to release our surplus through a normal trade channel.

Mr. POAGE. And I take it you would have no objection to the repeal of 205 ?

Colonel NORVELL. No, sir; we would have none at all.

Mr. ABERNETHY. Would you have any objection to taking over all international exports?

Colonel NORVELL. No, sir; we would not.

Mr. ABERNETHY. Do you think that you are in a position to do that?

Colonel NORVELL. Yes, sir.

Mr. ABERNETHY. Of course, industry might complain.

Colonel NORVELL. We would have no objection to taking over the Government-sponsored export programs where we would effect a saving for the Government by having the funds, as we are doing this year, on the ammonium nitrate that we are giving to ECA countries. Mr. ABERNETHY. Mr. Cotton, I believe you had something you wanted to cover.

Mr. COTTON. I believe that has been covered.

Colonel NORVELL. I might add that we do not like to get into the business of selling fertilizer even in direct sale to another country. That is still getting into commercial business. That is not the Army's place.

Mr. COTTON. Would it be reasonable for the Army to supply what is necessary for the occupied countries from its own production and apply any balance to the unoccupied countries?

Colonel NORVELL. Yes, sir.

Mr. ABERNETHY. That would still take all your output, would it not?

Colonel NORVELL. I believe we would still have some surplus. Of course, as Mr. Anderson told you the other day, the program for the nonoccupied areas is not established.

Mr. ABERNETHY. That depends on what that program will be. Colonel NORVELL. Yes, sir.

Mr. POAGE. You are going to produce at your own plants a total of 253,000 tons next year of solid fertilizer, as I understand it. Morgantown will be 183,000.

Mr. REYNOLDS. That is not the finished product. That is in ammonia. When you convert ammonia into other nitrogen it is a different amount.

Mr. POAGE. I wonder, then, if we can find out what you are going to produce? Can we not get a common denominator here? I think the chairman has made it very plain several times that we are trying to talk about tons of solid nitrates in the final product. What are you going to produce at Morgantown?

Mr. REYNOLDS. May I go through this from the start again and try to clarify some of the points which seem to be in doubt here? Mr. POAGE. I am willing.

Mr. REYNOLDS. Our production at all four plants, including Cactus, is going to be in the form of ammonia.

Mr. POAGE. Please do not try to confuse us. We are trying to find out how much solid nitrates you are going to produce to be sold in finished products. You differ among yourselves as to how much of that ammonia is going to be lost in conversion, so what is the use of giving us that? Give us what we can use.

Colonel NORVELL. Sir, I do not think we differ among ourselves.

Mr. POAGE. Yes; it is suggested that when you had 380,000 tons you would convert it with a loss of about 30,000 tons.

Colonel NORVELL. 352,000 tons is what we figure.

Mr. POAGE. Mr. Reynolds suggested that that took a loss down to320,000 tons.

Colonel NORVELL. No, sir; I think he misspoke himself. When he said 320,000 tons he was mistaken.

Mr. POAGE. Can no one give me the figures as to how much solid nitrates you are going to produce at Morgantown next year?

Colonel NORVELL. We would have to calculate it. We are not going to produce any solid nitrates at Morgantown.

Mr. POAGE. I know you are not, but you give us all these figures of shipping to the occupied countries on the basis of the nitrate equivalent. You are not figuring that you are only going to ship 150,000 tons of nitrate to Korea, either, but you are giving us the nitrate equivalent when it comes to shipping. Can you not give us the nitrate equivalent when it comes to production?

Colonel NORVELL. I have the total for the whole program. It is 352,000 tons.

Mr. POAGE. Now, then, how much of that comes out of the Cactus plant? I can figure the rest of it if you will tell me that.

Mr. REYNOLDS. Cactus will produce 121,000 tons of nitrogen in the form of ammonia.

Mr. POAGE. Do you mean that is the equivalent of 120,000 tons of solid nitrate?

Mr. REYNOLDS. No, sir; it is not.

Mr. POAGE. Then how much nitrate have you got? You are talking about shipping 150,000 tons to Korea. How many of that kind of tons can you produce in Cactus? Let us call them shipping tons. What you produce at Cactus is not the tons you are going to ship. You are going to pay freight on three times that much. But let us call them shipping tons, fertilizer tons. Maybe that is a better word.

Mr. REYNOLDS. You want to know the amount of nitrogen contained in nitrate that Cactus will make?

Mr. POAGE. You require 280,000 tons of something or other to supply your needs abroad next year.

Mr. REYNOLDS. That is correct.

Mr. POAGE. I want to know how many of those kind of tons, the kind you are going to ship, you are going to produce at Cactus next year. Mr. REYNOLDS. If all the Cactus production were converted into nitrate, we would have about 109,000 tons of nitrogen.

Mr. POAGE. That is 241,000 left, and you say you are going to need 280,000. It needs tying up. The needs you are going to have will mean you must dig up 39,000 of some kind of tons. That will have to come out of Cactus, will it not?

Mr. REYNOLDS. Mr. Poage, I would again like to clarify this. When you convert anhydrous ammonia to nitrate you lose 10 percent of the nitrogen in the process.

Mr. POAGE. Yes; and we have been asking that you use the same equivalent when you are talking about what you are producing and when you talk about what you are shipping. We understand that there is a difference there, but we are just asking you to use on common denominator instead of talking about three or four different things. I know there is a difference between the weight of dressed beef and beef on the hoof, of course, but when you are talking about the pounds of beef you are going to sell, if you are using one type of figure I want you to carry it all the way through. Instead of telling me you have live cattle that weigh so much, and you are going

to sell so much meat in the meat market, and that meat weighs so much, I want you to keep the same common denominator all the way through.

Mr. REYNOLDS. If we supply all of Japan, the Ryukyus, and Korea, that would take a total of 281,000 tons of nitrogen, in the finished product, ammonium nitrate or sulphate. That would leave us available for sale 56,000 tons of nitrogen as ammonia.

If that were all converted to nitrate, you would lose 10 percent of that.

Mr. POAGE. We will say we have 50,000 tons of nitrate that could be used in fertilizer, that can be sold.

Mr. REYNOLDS. That is right.

Mr. POAGE. You only lack approximately 39,000 tons of meeting your requirements from the three plants, leaving out Cactus? Mr. REYNOLDS. No, sir.

Mr. POAGE. You say "No, sir." Will you go above or below?

Mr. REYNOLDS. Mr. Poage, I tried to explain that you are taking the nitrogen obtained in the ammonia. We lose 10 percent of that nitrogen when we convert it.

Mr. POAGE. I know you do.

Mr. REYNOLDS. So the total nitrogen production of the three ammonia plants is not what you will come out with.

Mr. POAGE. I have tried to get it into nitrogen. Can you tell us how the production of the three plants you operate will compare with your needs? I do not care whether you put it in pounds or in gallons or yards, but if you use one common denominator we will arrive at an answer. How is your production going to compare with your needs? Colonel NORVELL. In our total program, according to our calculations, we figure on being able to produce 350,000 tons of "N" in the form of solid fertilizer material. Assuming that the ammonia produced at Cactus will make 109,000 tons of solid fertilizer material, the figure you are trying to arrive at, I believe, will leave us 243,000 tons in the other plants, exclusive of Cactus.

Mr. POAGE. That will leave you with what?

Colonel NORVELL. 243,000 tons of "N." That would leave a shortage of 39,000 tons.

Mr. POAGE. You will lack 38,000 tons if you only have three plants meeting your requirements.

Then would it be unreasonable to ask you people in view of the fact that everybody else has taken a cut, and that you are getting Japan and Korea well above what they have been in the past, to turn over these three plants to the Army to use to supply the export needs, and that we take off all restrictions and controls on everybody else and sell this nitrogen to the public? Would we not just about get an equitable distribution that way?

Colonel NORVELL. That would require a greater cost per unit ton of nitrogen appropriation for this program, since our average costs are figured, including the cost of ammonia produced at Cactus, which is well below the cost of ammonia produced at our other plants.

Mr. POAGE. I understand that. I understand your costs are higher at Morgantown than they are at Cactus. We are trying to talk about how we are going to deal fairly with the American farmers, and with the farmers in Korea.