carried this statement from Acting Secretary of Agriculture, True D. Morse:

The action we are announcing today-after long and intensive study of all factors involved-will reverse this trend, returning the primary responsibility for handling wheat exports to the commercial trade where it belongs--and where it can be handled most efficiently.

More important, the increased demand on free supplies to meet export needs will strengthen the market and result in less acquisition of price-support stocks by Commodity Credit Corporation. As the free market strengthens, more loans will be redeemed by farmers.

The value of the wheat export subsidy program can best be evidenced by the fact that terminal elevators that fall began buying wheat from the farmer at harvest time as opposed to the farmer making a sale to Commodity Credit Corporation.

Programs such as the wheat export subsidy program are of great gain for the producers. As a matter of fact, Rodger Kauffman, Administrator of the Commodity Exchange Authority, while commenting in his annual report on the volume of wheat futures traded for the fiscal year ending June 30, 1957, stated that the volume of wheat futures was the largest for any fiscal year since 1947-48. His

reason:

The hedging in the wheat futures markets increased substantially during the year as the emphasis on wheat export was shifted from Government-owned stocks to private trade handling.

As a result of the Department of Agriculture recently extending the export subsidy program to corn and other feed grains, we should see further curtailment of the activities of Commodity Credit Corporation in the grain export business.

H. R. 12555 and H. R. 13268, along with the export subsidy programs for wheat and feed grains, will help to further strengthen the market for the producer, and we suggest that it be given favorable consideration by this committee. I should also like to thank the committee for scheduling hearings on this bill.

Thank you, gentlemen.

Mr. MCMILLAN. Thank you very much.

Mr. HARRISON. May I ask a question? What percentage of the wheat grown today goes into the hands of the Commodity Credit Corporation?

Mr. HOSTY. Mr. Liebenow should answer that.

Mr. MCMILLAN. Mr. Palmby, do you care to answer that question? Mr. PALMBY. The question was

Mr. HARRISON. What percentage of the wheat that is grown today goes into the hands of the Commodity Credit Corporation from the harvest field?

Mr. PALMBY. We are, of course, in a year where we are having again a very bumper crop, particularly in Hard Red. So in answer to your question, how much of it will be into CCC's hands, it would only be a personal opinion of mine, and I would have to say that a substantial chunk of it will, and the reason is that the amount being produced is far in excess of domestic and foreign requirements.

I couldn't even give you a figure at this time. Historically it has been from 20 to 50 percent.

Mr. HARRISON. Well, in the past?

Mr. PALMBY. And I expect that this year it will be on a substantial percentage, the reason being because of the huge crop.

Mr. HARRISON. The reason I asked the question is, what position does it put the free trader in when most of the wheat is going into the Commodity Credit Corporation hands there?

The free trader then must deal with the Commodity Credit Corporation in order to further your export trading facilities, is that right? Mr. HOSTY. That is right, sir.

Mr. HARRISON. And that is the thing that you are opposed to, is dealing with the Commodity Credit Corporation?

Mr. HOSTY. That is right, sir.

Mr. MCMILLAN. Thank you, very much.

Mr. George Wilkens, secretary of the Minneapolis Grain Trade.
Would you care to make your statement, Mr. Wilkens?

STATEMENT OF GEORGE WILKENS, EXECUTIVE VICE PRESIDENT, MINNEAPOLIS GRAIN EXCHANGE

Mr. WILKENS. Mr. Chairman, I am George Wilkens. I work as the executive vice president of the Minneapolis Grain Exchange. Rather than read this statement, I think it might just be introduced into the record, if that is acceptable to you.

Mr. MCMILLAN. Yes, sir.

Without objection, your statement will be included in the record. (The prepared statement of Mr. Wilkens reads in full as follows:) STATEMENT OF GEORGE WILKENS, EXECUTIVE VICE PRESIDENT, MINNEAPOLIS GRAIN EXCHANGE

My name is George Wilkens, executive vice president, Minneapolis Grain Exchange. This association of more than 500 individuals engaged in grain marketing and grain processing, including oil seeds, operates a public grain market at Minneapolis, Minn. For many years, the Minneapolis exchange has been recognized as the world's largest cash grain market, and it is also designated a contract market by the United States Department of Agriculture. Many of the large flour milling companies headquarter in Minneapolis, and they support this bill. However, support for this measure is not confined to the milling industry. The grain trade generally endorses it.

The board of directors of the Minneapolis Grain Exchange at a meeting July 10, 1958, considered H. R. 12555 and H. R. 13268 (authorizing Commodity Credit Corporation to purchase flour and cornmeal and donating same for domestic and foreign purposes), and with the following modifications favors its enactment:

1. The authority to sell equivalent quantities of corn and wheat without regard to provisions of section 407 of the Agricultural Act of 1949 should be exercised at the time purchases are made for certain donation purposes. There should be no accumulative effect of sale privileges.

2. Sales of wheat authorized by this legislation should be made in the same geographical area in which the manufactured flour is purchased for donation purposes.

3. It appeared to the board of directors of the Minneapolis Grain Exchange these modifications should be included in the original bill enacted by Congress. This bill will place effective demand for wheat in commercial grain trade channels which should streng hen farm prices, thus reducing the flow into Government loan and Government storage.

So far as the board of directors of the Minneapolis Grain Exchange can determine, there is no opposition to this bill and the members of the Minneapolis Grain Exchange favor its enactment with these changes.

Mr. WILKENS. I would just like to call special attention to the item No. 3 on the statement that I have here. Most of what has been suggested by the board of directors of the Minneapolis Grain Exchange has been included in the statement which Mr. Palmby presented to this committee earlier.

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I expect that that will answer the concerns that they have. I call your special attention to item No. 3, where they thought it might be desirable to have these changes or amendments such as Mr. Palmby suggested made part of the bill.

Maybe that isn't practical, I don't know, but that was some of the concern they expressed, so that it would be clear and everyone would understand the procedure.

Mr. MCMILLAN. The committee will certainly give your suggestions consideration in executive session.

Mr. WILKENS. The concern for it is perhaps well expressed by looking at a copy of the official market report from the Minneapolis exchange.

It happens to be one from Monday, July 21, where they were trading 17 protein wheat at 58 cents premium. If, as might occur, that was accumulated and the commodity sold a substantial amount of 17 protein wheat, in the market area where a firm had an inventory accumulated of that, and it adversely affected premium in that particular trade area, they would naturally be concerned as to how that is administered, and it is this premium on quality wheat that they are most concerned about.

I would just say that from all we can learn, the trade generally at Minneapolis supports this provision, and they believe that it should be enacted into law, and that it will strengthen the market prices and improve the opportunity farmers have for selling into commercial channels rather than marketing the grain to CCC.

Mr. MCMILLAN. Mr. Harrison.

Mr. HARRISON. Are there any objections to this bill that anyone knows about?

Mr. WILKENS. I have not heard anyone that objected to the bill. The millers will testify later today-there are millers represented on our board-the Millers' National Federation will have a statement, I understand.

Mr. HARRISON. May I ask this question? How do you propose to handle this premium wheat as against the more or less feed wheat, so to speak?

Mr. WILKENS. Well, that, of course, is the problem of the miller. If the Department, as I understand it, requests certain specifications in flour, and the flour miller makes a bid which requires some of this high protein wheat, he would have to go into the market place and make bids to get that wheat to produce the kind of flour the Department is asking bids for.

Mr. HARRISON. As of today, wheat is wheat, regardless of the quality, as far as the Commodity Credit Corporation is concerned. Mr. WILKENS. It is my understanding that there is a slight differentiation on the loan on high protein wheat as against low protein. wheat, but these premiums here have advanced sharply in the last 6 or 8 weeks. We had very modest premiums a few weeks ago, and now it is moving up. The response you get to a supply and demand situation, they are interested in buying high protein wheat, and they have gotten these premiums substantially higher.

Mr. MCMILLAN. Mr. Dague?

Mr. DAGUE. No.

Mr. MCMILLAN. Mr. Jennings.

Mr. JENNINGS. Has the Department commented on Nos. 1 and 2 of your recommendations here? Will you, either of you, take a look at that?

I quite well agree, especially on No. 1, there should be no accumulative effect of sales privileges.

Mr. PALMBY. Yes, sir, Congressman. No. 1 is covered in my

statement.

Mr. JENNINGS. That was the intent?

Mr. PALMBY. Yes, sir.

Mr. JENNINGS. That was my feeling.

Then No. 2 "sales of wheat authorized by this legislation should be made in the same geographical area in which the manufactured flour is purchased for donation purposes."

What is the effect of that?

Mr. PALMBY. Yes, Mr. Congressman. Again in my statement I stated insofar as possible we would do that.

It must be pointed out that in some areas where it is possible, it would be our intention to do so.

Mr. JENNINGS. But in the administration of the program you wouldn't anticipate taking that into consideration on a bid?

For instance, in my section we have no surplus of wheat, at the same time, I want to make sure that the millers located in my section might bid, but because of the fact that they could not replace it from that geographical location, I wouldn't want them to be written off.

Mr. DAHL. The bids would not be dependent on the sale of wheat, these sales would be after the fact.

Mr. MCMILLAN. Thank you, very much, Mr. Wilkens.
Mr. WILKENS. Thank you.

Mr. MCMILLAN. We will certainly give the suggestions you have made very careful consideration when we go into executive session. Mr. Herman Fakler, vice president, Millers' National Federation. Will you give the reporter your full name and title?

STATEMENT OF HERMAN FAKLER, VICE PRESIDENT, MILLERS' NATIONAL FEDERATION

Mr. FAKLER. Yes, sir.

My name is Herman Fakler. I am vice president of the Millers' National Federation which is the national trade association of the wheat flour milling industry in the United States.

Our members are primarily millers of wheat, but many of them also mill corn for the preparation of cornmeal.

My office is in the National Press Building, Washington, D. C. We have taken note of the bills introduced by Representative Quie, H. R. 12555, and Representative Jennings, H. R. 13268, and they have been referred to members of the industry for study and comment. As a result of this study, I am prepared to say it appears to members of the milling industry that the new procedure authorized in these bills for the direct purchase of wheat flour and cornmeal for relief distribution is a distinct improvement over the present method of exchanging CCC wheat and corn for wheat flour and cornmeal, respectively.

In behalf of the members of the Millers' National Federation, therefore, in the interest of improving the mechanics of the relief program, I am pleased to endorse this proposed legislation.

We would be in favor of the direct purchase of wheat flour and cornmeal on a competitive basis for several reasons.

First, it would simplify very materially the manner in which the miller is required to prepare and submit his bid.

Second, it would simplify and make more accurate the evaluation of the bids by the Department of Agriculture and enable the Department to make its awards on a more accurate basis.

Third, in many cases we believe millers are unable to compete or offer bids under the present basis because their location does not permit them to receive wheat or corn from CCC stocks advantageously. Fourth, it would eliminate the necessity of millers making a payment to CCC in those cases in which the value of the byproducts retained by the mill exceeds the actual cost of processing, packaging, and so forth.

As an indication of the difficulties with which both the Government and the milling industry are confronted under the present program, permit me to give an extremely condensed description of what is required.

First, the Department announces that offers have been requested to process CCC-owned wheat into a stated quantity of wheat flour, and to process CCC-owned corn into a stated quantity of cornmeal for domestic and/or foreign donation.

In its request for offers to process, the CCC must describe the grade of wheat or corn to be supplied, and also must set forth the specifications for the flour or cornmeal, to be furnished by the miller. The CCC must state the size of package desired, the destination, the delivery date, and the quantity for each destination.

In some cases there are more than 100 different destinations in a single request for bids.

The miller is then required to calculate the price per hundredweight of processing the wheat or corn by determining the value of the byproducts which will result from the processing, the cost of processing, the cost of the containers, the inbound freight, and the outbound freight to destination.

The miller is permitted to retain the byproducts, but since these cannot be definitely priced until they are manufactured and sold, the miller must estimate their value to him.

The net price per hundredweight for processing can be either a positive or a negative figure. If the figure is a positive one, the CCC pays the miller.

If it is a negative one, the miller pays the CCC.

Under existing regulations, the miller is not required to mill the identical wheat or corn supplied by CCC. He can use his own stocks, and then use the wheat or corn supplied by CCC in any manner he chooses. He may use it for his own commercial production, or he may sell it in the open market.

However, when he submits his bid for processing and uses his own stocks on which to predicate his cost of processing, he is required to speculate on the ultimate value to him of the wheat or corn supplied by CCC, including the cost of transportation. This introduces