COMMODITY STABILIZATION SERVICE

Summary of appropriations, 1958 and estimates, 19591

Excludes administrative expense authorization for Commodity Credit Corporation. In addition, in 1958 an appropriation of $824,414,129 was made to repay the Commodity Credit Corporation for costs incurred in fiscal year 1956 for certain special commodity disposal programs, including the International Wheat Agreement, emergency famine relief to friendly peoples, and sales of surplus agricultural commodities for foreign currencies. It is anticipated that a supplemental appropriation of $1,725,549,473 will be provided in 1958 to repay the Corporation for costs incurred in fiscal year 1957 for special commodity disposal programs including: International Wheat Agreement; emergency famine relief to friendly peoples; sales of surplus agricultural commodities for foreign currencies; grain for migratory waterfowl; and transfer of bartered materials to supplemental stockpile.

STATEMENT OF ASSISTANT SECRETARY MARVIN L. MCLAIN

Mr. WHITTEN. We will be glad to have your general statement Mr. McLain.

Mr. McLAIN. Thank you.

Congressman Whitten and members of the committee, I have a very brief statement here.

Mr. Berger also has a short statement, I believe. Then we will be happy to answer any questions the committee may have. We have the budget brains with us here to help us out. So I hope we can answer any questions you may have.

Mr. Chairman and members of the committee, the Commodity Stabilization Service is one of the agencies of the Department reporting to the Assistant Secretary for Agricultural Stabilization. This Service is primarily concerned with the CCC programs and programs relating to production adjustment, including acreage allotments and marketing quotas, the Sugar Act and soil bank.

Before Mr. Berger and his associates present the details of the budget for the Commodity Stabilization Service I would like to make an encouraging observation.

DOWNWARD TREND IN VOLUME OF CCC HOLDINGS

The programs for which this Service is responsible are paying off in an ever-increasing measure. For the 14th consecutive month the investment of CCC in price support has been less than the same month in the previous year. It has averaged $1 billion less than a year before for the past 6 or 7 months; and it is now $1 billion, $700 million less than it was 2 years ago. This downward trend in the holdings of CCC reflects a tremendous effort put forth to arrest the flow of commodities into Government ownership and at the same time reduce Government holdings through every disposal means possible.

During the past 2 years dispositions have averaged $1,100 million more than acquisitions. In the 3-year period preceding, the acquisitions averaged $1,200 million more than we were able to dispose of. Stating it another way, it means that for the past 2 years, for every dollar of commodities entering Government storage we were able to take $1.41 worth of commodities out of Government storage.

In the previous 3 years, for every dollar of commodities entering Government storage only 56 cents worth were taken out.

This stepped-up disposition results from several approaches: Expanded sales activities including competitive bid sales, the impact of exports for foreign currencies under Public Law 480, and barter transactions, as well as donations.

Although much attention has been focused on sales for foreign currency under Public Law 480, it should be pointed out that most of our commodities have been moved by sales for dollars. Since July 1, 1953, 60 percent of our disposals have been for dollars, 12 percent by donations, 12 percent by barter, 11 percent by sales for foreign currencies, and 5 percent by other transfers.

From a budgetary standpoint, however, we are still faced with large-scale problems. Current holdings in inventory and loan stocks are valued in excess of $7 billion. It will require a concerted drive to see that these surpluses are reduced still further.

The appropriation items which this committee is about to consider are aimed at this objective. They involve no new policy considerations and no increases in the level of Federal employment. In fact, for two of the items, acreage allotments and marketing quotas, and the CCC administrative expense limitation, decreases in operating expenses are contemplated. The third item, for the Sugar Act program, provides for operating expenses at the same level as at present.

Now, with your permission, Mr. Chairman, I think Mr. Berger might proceed with his statement and then we will be ready for questions, or, however you want to handle it.

DISPOSITION OF COMMODITIES BY TYPE OF DISPOSITION

Mr. WHITTEN. Mr. Secretary, as you know, I never like to use the words "dispositions" and "acquisitions." I often think of a tobacco grower who came in and told me about how much he had lost and how much he had given away and all those things.

I think it would be well for the record to show a breakdown as to what part of this was sold for dollars. My reason for wanting that is that for many years I think the majority of the members of this subcommittee have felt that a reduction in price is one of the greatest incentives to increases in production which I believe is proven by records of the Department.

It is nothing new to say that I have differed with Secretary Benson and the Department of Agriculture in that view.

I think the record clearly supports the view that as you have reduced prices you have increased production. It is clearly shown that, as the farmer tried to make up in units what he was losing in price, the costs to the Government and to the farmer have been increased, generally speaking.

I am sure that some of the subcommittee members agree with me when I say that I have never felt that getting rid of these commodities as such was any cure for anything though it might give temporary relief.

For many years I have pointed out that we had authority to sell competitively in the world market all the time, which was a way to regain those markets and to prevent the movement of production overseas. But I never have seen that it cures anything to get rid of the commodities just in order to get rid of them.

I am still of that opinion. So I would like to have in the record at this point a table showing what you mean by "dispositions," in which you give the percentages.

I would just like to have that because I do not like the word "dispositions," although I agree that you have free access to such words as you may wish to use.

Mr. McLAIN. We are not wedded to any particular word, Congressman Whitten.

Mr. WHITTEN. Of course, you may use the word if you want to. Mr. MCLAIN. We just describe what goes on in our operations. Do you want a breakdown by years of the different items? Is that what you had in mind?

Mr. WHITTEN. Yes, for the period which your statement attempts

to cover.

I think we would like to have the information showing sales for dollars, exports for foreign currencies under Public Law 480, donations, barter, and all the rest.

Mr. McLAIN. All right. We have a table that we can insert on the program.

Mr. WHITTEN. And include any figures you may have on deterioration.

Mr. MCLAIN. Yes.

(Table referred to follows:)

COMMODITY STABILIZATION SERVICE-COMMODITY CREDIT CORPORATION

Price-support program: Dispositions of commodities by type of disposition, for fiscal years ended June 30, 1953, through 1957 and fiscal year

Total dispositions.

519, 842

12,724, 285 8, 763, 494

461, 926 1,423, 944 1, 006, 2002, 114, 603 1, 339, 829 2, 722, 517 1, 795, 506 4, 207, 844 2, 968, 150 1,735, 535 1, 191, 883

Mr. WHITTEN. I might remark here that one way of disposition, of course, is to let the commodities rot.

Mr. MCLAIN. That is one thing we do not like to see happen.
Mr. WHITTEN. We do not, either.

I might also say that I just cannot believe that some of these other things contribute much to help the program.

But that is a matter of policy, congressional action, and things of

that sort.

We might now have your general statement, Mr. Berger.

GENERAL STATEMENT OF THE ADMINISTRATOR

Mr. BERGER. Gentlemen of the committee, I appreciate this opportunity to discuss the budget for the Commodity Stabilization Service. The Commodity Stabilization Service is concerned primarily with price-support and production-adjustment programs. These include the acreage allotment and marketing quota programs, the Sugar Act, the National Wool Act and various Commodity Credit Corporation programs. In addition to price support, the CCC programs include activities relating to storage facilities, commodity exports, the International Wheat Agreement, sales for foreign currencies and donations for emergency famine relief for friendly peoples under Public Law 480. The Commodity Stabilization Service also administers the major parts of the soil bank programs and has the responsibility for supervision and direction of the ASC State and county offices including the programs administered by them.

CCC HOLDINGS

In connection with these price-support and related programs there is significant progress to report. When we were before you last year we stated that there were indications that we might be passing the peak of our CCC holdings of price-support inventories and loans. We pointed out that holdings were running below those of the previous year and that as of February 28, 1957, they were down $589 million or 62 percent from the previous year. This favorable trend has continued throughout the past year and as earlier reported our holdings are now less than the peak holdings of February 1956 by $1,730 million, a decrease of nearly 20 percent.

The attached chart, No. 1, shows the CCC holdings, by months, since their peak of February 1956 to December 31, 1957, compared with holdings a year earlier.

(The chart referred to is as follows:)