In researching for my testimony here, I noted that this statement is also parallel to some language that is in the Shanghai Communique, so we are in complete agreement there.

In summary, I would like to say that the primary thrust of our interest as wheat producers is the need to move our burdensome supplies, alleviating the low-level of prices facing our industry. The PRC has an excellent record of repayment, and constitutes an excellent credit risk, we believe. In our judgment, the United States should move ahead with positive trade initiatives toward the PRC.

[Mr. Pryor's prepared statement on behalf of the Oregon Wheat Growers League and the National Association of Wheat Growers follows:]

STATEMENT OF EARL PRYOR

OREGON WHEAT GROWERS LEAGUE

Before The

Subcommittee on International Trade,
Investment and Monetary Policy
of the

Committee on Banking, Finance & Urban Affairs

Mr. Chairman and Members of the Subcommittee:

My name is Earl Pryor. I am a grains and livestock producer, residing in eastern Oregon at Condon. I am presently first vice president of the Oregon Wheat Growers League (OWGL) and a member of the National Association of Wheat Growers (NAWG) executive board.

The OWGL is a producer organization dedicated to the protection and stabilization of the wheat industry in Oregon. This policy directs our primary activities to the production, utilization, and marketing aspects of our commodity.

The OWGL, through contact with the Oregon Wheat Commission, opened the first market promotion office in Tokyo, Japan, in 1956. It developed into a regional program in 1959 when Western Wheat Associates was formed. A sister organization, Great Plains Wheat, has since been formed, and jointly they promote the sales of U.S. wheat worldwide.

Oregon producers historically export approximately 80 per cent of our soft white (sw) wheat, principally to Pacific Rim countries. In the first six months marketing year June 1977 December 1977, Pacific Northwest wheat exports have totaled 136,892,000 bushels.

Major recipients are:

Hard Red wheats and Durum, principally bread wheats, constitute 56,549,000 or

41% of total export as compared to 80,343,000 or 59% white wheats.

An interesting

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observation is that noodle and flat breads production are based upon white wheat

flour.

Dick Baum, President, Western Wheat Associates, USA, in appraising potential PRC grain requirements, compared them with Taiwan, which began with virtually 100% soft white wheats and now only requires 20% of this variety. End products are 35% noodles, 40% Chinese bread, and 25% specialty items, requiring Durum and Hard Red varieties also.

The average production of all wheat in the Pacific Northwest (PNW) for the period 1974 through 1976 was 214.7 million bushels. Montana grain, principally

hard red winter and springs, are finding an outlet through the port of Portland, in increasing quantities, adding another 160 million bushels, creating a potential marketable supply of approximately 375 bushels, excluding domestic use. PNW wheat carryover has increased over 250% from 1975 through 1977 marketing years. (27 million bu. to 76.2 million bu.) Export movement is currently 22% behind a year It is readily apparent that an additional market for 30 million bushels

ago.

annually would have a dramatic effect on our PNW markets.

Pillsbury Mills

Wheat flour trade may once again flourish with the PRC. operated in Astoria, OR from 1929-1961. miller for Pillsbury during this period. He stated the mill had a grind capacity of 3000 bu/8 hr. shift. Mr. Ostram recalled one Chinese order bagged in 49 lb. cotton sacks taking three months of continuous milling to fill. The mill ran from new crop September 1, until April or May depending on business. He estimated 75% of the production orders went to China. A season run would produce 70.435 million lbs. of flour consuming 1.625 million bushels of grain annually for the China trade during this period.

I recently visited with Mr. George Ostram,

The following table of Chinese wheat imports and exports has been compiled by the Foreign Agriculture Service, USDA.

* Source: Foreign Agricultural Service, U.S. Department of Agriculture ** Estimated

An unofficial estimate by FAS projects future sales to China, assuming some degree of normalization, in the area of 30% of their annual grain import demand. An average demand based on 1971-78 usage would equal 1,465,000 M.T.

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Having examined the potential impact of expanded grain trade with the PRC, I should speak of the problems and possible solutions needed to expedite SinoAmerican grain trade.

The PRC

Agricultural products, primarily wheat, cotton, soybeans, and corn, accounted for over 80% of U.S. exports to China from 1972 through 1974. Reductions in trade since 1974 has largely been the result of lost grain sales opportunity. cancelled orders for 983,000 tons of U.S. wheat in January and February of 1975. Producers on the West Coast were informed that our grain was infested with Tilletia Controversa Kuhn, commonly referred to as TCK, a dwarf bunt smut. Our area lost approximately one-half billion in wheat sales, not counting losses incurred by supporting industries. A joint industry and regional commission cooperative effort has sponsored a 5 year program, spending $539,185 for 11 projects designed to focus on two major aspects of the TCK problem: Control on the farm directed towards control and/or radication of the disease and TCK in the market. Market problems require better spore identification to eliminate confusion with other smut species and the need to search out TCK infested growing areas and contaminated storage

facilities.

A Cooperative Grain Team visit to Peking this summer revealed that TCK is no longer grounds for rejection of cargo, but rather a discount of $3.50 to $4.00/ Ton would be taken for "sterilization".

Another marketing problem arises in final certification of the Weight, Quality and Condition of grains and the arbitration of any disputes in contract. The traditional final certification at point of export is not acceptable to the PRC and weight, specification, and quality conditions as determined by the China Commodity Inspection Bureau and the Animal and Plant Quarantine Service is final. Any compensation of quality damage and/or short weight and/or off specification must be made by Sellers to Buyers based on this Chinese certification.