textiles, the procurement of the equivalent value of cotton from the United States by each textile-processing country and the continuous correlation of textiles furnished Burma and Pakistan with the amount of raw cotton imported from the United States. All of the tripartite authorizations have now been completed with respect to the value of the textiles furnished Burma and Pakistan and the equivalent value of the raw cotton imported from the United States. Cottonseed and/or soybean oil.—

Pakistan: A purchase authorization was issued on June 28, 1957, for $2.4 million worth of cottonseed and/or soybean oil under a sales agreement with Pakistan dated September 7, 1956. The final delivery date was set at July 31, 1957; however, there were four extensions of this date, the final extension being to October 31, 1958. The reasons indicated for the extensions of these dates were infrequent shipping schedules and the fact that the original date contemplated shipment in too short a period.

Lard.

Yugoslavia: On January 31, 1956, a purchase authorization for $10.8 million worth of lard was issued under a sales agreement dated January 19, 1956. The original delivery date of June 30, 1956, was extended to July 31, 1956, because U.S. packers were unable to offer the total quantity desired by June 30, 1956. A second extension of the final delivery date to March 30, 1957, was for the purpose of using residual funds transferred from other purchase authorizations to make an additional purchase of lard.

Nonfat dry milk.

Pakistan: Under the sales agreement dated August 7, 1956, a purchase authorization was issued June 28, 1957, for $100,000 worth of nonfat dry milk to be shipped by October 31, 1957. There were four extensions of the final delivery date with the last being November 29, 1958. The reasons given for the extensions were the complete inactivity by Pakistan during the initial period due to unfamiliarity with grades and inspection procedures and suballocations made to importers who failed to keep purchasing schedules.

Tobacco.

Italy: A purchase authorization was issued on June 17, 1955, for $3.2 million worth of tobacco under a sales agreement dated May 23, 1955. The final delivery date was September 30, 1955, and by extensions the date was changed to March 31, 1956, April 30, 1956, and June 30, 1956. The need for the extensions was the Italian Government's efforts to correlate suballocations with normal imports. Also, the Italian Government had intended to buy a 1954 or earlier crop of tobacco but its preference changed to the 1955 crop during the period September 30, 1955, to March 31, 1956. The final extension was permitted in order to accomplish the shipment of residual purchases. Wheat and/or wheat flour.

Israel: On June 24, 1955, a purchase authorization for $1.6 million worth of wheat was issued to Israel under sales agreement dated June 15, 1955. The final delivery date was first set at September 30, 1955, and was later extended to March 31, 1956, in order to facilitate the use of additional funds transferred to the purchase authorization for

wheat. The deliveries were completed according to the terms of the original authorization and the extension was for the aforementioned

reason.

On September 25, 1956, a purchase authorization for $5.4 million worth of wheat was issued under sales agreement dated September 11, 1956. The delivery date of this purchase authorization was April 30, 1957, which was extended to March 31, 1958, to permit Israel to use refunds obtained from suppliers as a result of contract adjustments following delivery. The transactions initially set out in the purchase authorization were carried out as originally scheduled.

Yugoslavia: Under the sales agreement signed with Yugoslavia on January 19, 1956, a purchase authorization was issued January 24, 1956, for $23.3 million worth of wheat. The final delivery date was originally set at June 30, 1956, but was later extended to August 31, 1956, to October 31, 1956, and finally to March 30, 1957. The purchases under this authorization were completed in the allotted time but the shipping was delayed due to a late schedule of the carriers. The extension of the delivery date to August 31, 1956, covered the circumstance of the late schedule plus the availability of additional funds which reopened the contracting for the wheat. A further increase in funds available accounted for the extensions to October 31, 1956, and March 30, 1957.

Officials of FAS advised that once sales agreements are signed it is the Department's objective to complete the shipment of the commodities as soon as practicable, taking into consideration such factors as port facilities, market conditions, availability of the commodity and the like. In carrying out this objective it is the policy of the Department to be aggressive in terms of contracting and final delivery dates specified in the purchase authorizations. Although it is recognized that the setting of closer final delivery dates results in a considerable volume of purchase authorization extensions, it is believed to serve the primary objective of expediting the movement of commodities.

4. Substitution of commodities under title I

An examination of the purchase authorizations issued to the countries having sales agreements revealed many instances where the authorizations were canceled and the funds used for other commodities or where the unused remainder of purchase authorizations were transferred to other commodities. For example, on May 14, 1956, a purchase authorization for Iran was issued for over 1.2 million pounds of butter having a market value of one-half million dollars. On February 26, 1957, the purchase was canceled on the basis of an exchange of notes and the funds transferred to an authorization for wheat. The substitution was requested by Iran because of an emergency need for wheat.

Another illustration is in the case of the issuance on September 27, 1956, of a purchase authorization for Israel to obtain over 4.3 million pounds of butter with a market value of $1.7 million. This authorization was canceled January 18, 1957, and the funds transferred to an authorization for corn. The reason for this substitution was that Israel had contemplated the purchase would be from CCC stocks; however, it developed that the CCC was out of butter, which meant that Israel's supplier would have had to buy in the free market where the price was about 50 percent higher than the usual CCC price.

URI— ————-----

Other similar commodity substitutions or transfers of unused purchase authorization funds were noted, such as tobacco for lard; barley for corn; lard for wheat, tobacco, and cotton; corn for tallow and oil; wheat for corn, evaporated milk and cheese; cottonseed and/or soybean oil for rice, and so forth.

Mr. Tierney, FAS, commented on the substitution of commodities as follows:

The dollar value of commodities to be financed are contained in title I agreements. As indicated previously the title I agreement sets up the framework within which the participating country may apply to FAS for the issuance of purchase authorizations. If application is made and purchase authorization issued and accepted, the United States is obligated to finance the transaction within the terms and conditions of the agreement and the purchase authorization.

In implementing the agreement, it has been necessary in many cases to change the commodity composition of the original agreement. It usually develops that the need for particular commodities in the importing country may have increased or decreased since the agreement was negotiated, based principally on crop conditions in that country. Therefore, the value of certain commodities may be increased and others decreased to meet this situation. We may also be requested to finance an entirely new commodity in substitution for a commodity originally provided for in the agreement.

The switching of very small quantities of commodities within an agreement (such as the use of amounts remaining unused under several purchase authorizations) is accomplished through the issuance and acceptance of purchase authorizations. Substitutions of larger quantities and the introduction of new commodities is accomplished through an exchange of notes between the United States and the participating country. Thus the agreement is amended through the same formal processes that set up the original agreements.

The U.S. attitude toward commodity substitution will, of course, depend upon the character of the substitution. For the most part, if a country cannot see its way to move particular commodities it is to our advantage to accept substitution so that some other commodity is moved rather than to have the agreement only partly implemented. Although the programing of certain commodities is emphasized because of being in a worse surplus situation, arrange ments to substitute commodities are made so as to permit as large a movement of each surplus commodity as possible.

III. TITLE II, PUBLIC LAW 480

Title II, as amended, authorizes CCC to make surplus agricultural commodities available for (1) transfer to any nation friendly to the United States to meet famine or other urgent or extraordinary relief requirements, and (2), to friendly but needy populations regardless of the friendliness of their government.

The ICA is responsible for administering this program. This is i addition to sales for foreign currencies under sections 550 and 40% of the Mutual Security Act.

Up to $800 million is authorized for reimbursing CCC for its investment in the commodities and other costs, including ocean freight charges from U.S. ports to ports of entry abroad. The title II program of assistance began in fiscal year 1955 and has been extended until December 31, 1959. In addition, title II funds may be used to pay ocean-freight costs on surplus food donated through the U.S. voluntary agencies and intergovernmental organizations under title III of Public Law 480.

The schedule immediately following shows the cost to CCC of commodities authorized for each country from the inception of the program (fiscal year 1955) through December 31, 1958. Following this is another schedule showing the quantities of commodities authorized for each foreign country.