was opened April 1, 1953, and had a peak of 70 employees at one time, was closed May 29, 1958. Through close control of employment based on measured workload, it was possible to curtail the affairs of this office with minimum loss in the high rate of efficiency which characterized its operations throughout the 5 years it existed.

PROGRESS IN CONVERSION TO ELECTRONIC DATA PROCESSING EQUIPMENT

During the past year we have continued to make progress in converting some of our major business-type operations in the commodity offices to electronic data processing equipment. Based on the experience of the Kansas City office in using this equipment for the 1957 grain price support program in the five-State area served by that office, we have utilized the equipment for the 1958 grain loan program throughout the Nation. The Evanston office now processes loans and purchase agreements for the 19-State area which it serves, and the Kansas City office serves at the data processing center for the remainder of the Nation through the Portland, Dallas, and Minneapolis offices. In converting to this system we have eliminated the fees formerly paid to lending agencies for servicing CCC loans and many time-consuming detailed record-keeping functions in the ASC county offices thereby providing them with more time to work directly with producers. We also have more current data upon which to base decisions with respect to take-over, storage and other matters.

In the New Orleans office, which handles the entire nationwide cotton program, an electronic data processing system was installed in December 1957. The 1957 cotton loan program was handled through the system. The use of electronic data processing equipment, made it possible for the office to prepare registers of cotton to be acquired, prepare schedules for reconcentrations and catalog cotton inventories for sales activity with unprecedented speed. The experience gained in handling the 1957 program with electronic data processing equipment has paid special dividends in preparing for 1958 loan activity. It has enabled the office to dispose of difficulties early and to handle an unusually heavy volume of 1958 loan cotton on a current basis while at the same time handling a considerable sales program.

COUNTY OFFICE PAY INCREASE PROPOSED

Effective July 1, 1959, we propose to increase the salaries of the ASC county office employees approximately 10 percent so that they will be in about the same position relative to the salaries of Federal employees as they were prior to the last Federal increase. Under the approved pay adjustment program the increases in ASC county office employees' salaries of the past 2 years did not bring them up to such level. The general pay raise for Federal employees approved June 20, 1958, further increased the disparity between the salaries of the two groups. Federal rates are now from 9 to 27 percent higher than those of county employees doing comparable work.

Funds totaling $8,179,000 are included in the estimates for about a 10 percent increase for each county office grade. Of the total of $8,179,000 required for this purpose, it is proposed that $2,790,000 will be provided by increases in appropriations, $2,686,000 by increases in operating expense limitations, and $2,703,000 by reimburse ments from the Commodity Credit Corporation and other funds.

ACREAGE ALLOTMENTS AND MARKETING QUOTAS

The 1960 estimate of $39,135,000 for acreage allotments and marketing quotas is $580,000 less than the amount currently available for the fiscal year 1959. No funds are included in either this year's appropriation or the 1960 estimates for the increased workload which will result from the new cotton legislation. An accurate forecast of the need for additional funds will not be possible until the latter part of March, when first indications will become available regarding the number of producers electing plan A and those producers electing plan B. The decrease of $580,000 consists of an increase of $2,735,000 to cover this appropriation's share of the 10 percent raise in the salaries of ASC county committee employees and a decrease of $3,315,000 which eliminates all funds for corn acreage allotment work except $100,000 for liquidation purposes. This is in line with the referendum of last November in which farmers voted to discontinue acreage allotments on corn beginning with the 1959 crop.

The estimate assumes that acreage allotments and marketing quotas will continue in effect on the 1959 and 1960 crops of tobacco, peanuts, wheat, cotton, and rice.

When marketing quotas are in effect, compliance with acreage allotments is mandatory. Farmers cannot receive a marketing card until compliance has been checked. They cannot sell their crop (without penalty) until they receive a marketing card. This work must be done as quickly as possible when seasonal development of the crop and weather conditions permit, before the marketing years for the various commodities begin-July 1 for Flue-cured tobacco and wheat, August 1 for cotton, peanuts, and rice and October 1 for the other kinds of quota tobaccos.

During the fiscal year 1958, performance checking was completed on approximately 65 percent of the 1958-crop tobacco allotment farms, 49 percent of peanut farms, 99 percent of wheat farms, 60 percent of cotton farms, and 56 percent of rice farms. It is contemplated that cheeking of the 1959- and 1960-crop farms of these commodities will follow the same pattern as in the fiscal year 1958 except for cotton. With the appropriation for 1959 it is estimated that about 34 percent of the 1959-crop cotton farms will be measured in the fiscal year 1959. In the fiscal year 1960 it will be possible to measure only about 62 percent of the 1959-crop cotton farms with the amount provided in the 1960 estimate. Additional funds for 1959 and 1960 to cover additional work under the new cotton legislation will permit the measuring of the 1959 crop and provide for measuring a substantial portion of the 1960 crop. This appropriation also includes $305,570 for continuing activities of the Department assigned to CSS in the area of preparedness measures relating to food and the domestic distribution of farm equipment and supplies.

SUGAR ACT

The sugar program continues to operate in a manner generally acceptable to producers and processors insuring a fair division of returns between the two groups and yet providing ample supplies of sugar to consumers. Sugar prices, while subject to some localized changes, remained stable in relation to those for other commodities.

The stability of the domestic sugar price is obtained by a flexible management of U.S. sugar supplies under the provisions of the Sugar Act. Also, the quota and production control features of the act have been sufficiently flexible to avoid the problems of sugar surpluses or acquisitions of sugar stocks by the Government. The estimate submitted for the fiscal year 1960 is $71,500,000, which is $4,500,000 less than the appropriation for the fiscal year 1959.

PAYMENTS TO PRODUCERS

On the basis of estimated production from the 1959 crop of 5,340,000 tons, payments of $74,673,865 will be earned on the 1959 crop during the 1960 fiscal year. In addition, there remains $8,959,821 to be paid on the 1958-59 Puerto Rican crop, making total requirements for payments for the 1960 fiscal year $83,633,686. Payments at statutory rates are mandatory, and the amounts required, of course, depend entirely upon production from any given crop. Since only $69,202,574 is provided for payments to producers in this estimate, it will be necessary to defer until the fiscal year 1961, $14,431,112 of the 195960 Puerto Rican payments. This will not jeopardize the program because payments on the 1959-60 Puerto Rican sugar crop would not ordinarily start until the beginning of the succeeding fiscal year.

OPERATING EXPENSES

The estimate of $2,297,426_for_operating expenses is less than 3 percent of the total requested. It contains an increase of $61,000 above the amount available in the current fiscal year to provide for a 10 percent salary increase for county office employees engaged in this program.

All expenses in administering the Sugar Act are offset by tax collections levied on sugar imported or manufactured in this country. From the inception of the sugar program in 1938 through 1958, tax collections have exceeded total expenses under the program by $388 million.

COMMODITY CREDIT CORPORATION

The estimated administrative expense limitation requested for 1960 is $45,300,000. This is an increase of $5,233,000 over our current estimate of 1959 needs. Of this increase, $3,171,000 is requested to reestablish the 7 percent reserve for contingencies as provided by our current appropriation language. The balance of the increase $2,062,000 is earmarked for use in the field commodity offices to meet what now appears to be an unprecedented program volume.

The buildup of agricultural surpluses held by the Government is directly responsible for increased administrative needs. The more commodities the commodity offices have to handle, the more freight bills they have to pay, the more storage bills they pay, the more warehouses they examine, the more loading orders they issue and settle, the more of countless other such daily business-type transactions they have to handle. Since administrative expense requirements fluctuate with the volume of commodities to go under loan, to be acquired or to be managed, it is not possible to be sure how much will be needed a year from now. However, for a given commodity volume, such as is contained in these estimates, it is possible to pinpoint administrative

needs with a high degree of accuracy. Through a work measurement system that has been in effect now for about 7 years, we cost out our requirements on the basis of time required, per employee, for each type of transaction. For example, we know, and this estimate is based on, an employee processing 20.1 freight bills per day, 8.7 storage bills per day, and so on.

We are proud of the increased efficiency of the commodity offices each year which is reflected in lower budget requests. This has been accomplished by continuous effort to find simpler and more effective ways to do the work, and through use of office space and equipment adapted to the type of work performed. In 1953 we were processing only 13.3 freight bills, per employee, per day and 3.6 storage bills per day. In other words, for these two types of work, efficiency has gone up 96 percent and our salary costs for these types of transactions alone, as reflected in the budget before you, are approximately $600,000 less than the same volume would have cost at the 1953 production. rates. This is a general situation throughout our commodity office operations, and in our budget requests for these offices. Our justifications include the complete breakout of the estimated increases in the volume of price support operations as well as some 60-odd types of transactions upon which our budget is based.

The increase of $3,171,000 for the contingency reserve, is a precautionary measure which has been carried in the language of our limitation now for the past 4 years. It recognizes the impossibility of forecasting administrative needs which are directly related to a program volume based upon crops, the bulk of which have not yet been planted. No part of this reserve can be used unless released by the Bureau of the Budget to meet unpredictable fluctuations in program volume. Mr. Chairman, this completes the items in the Commodity Stabilization Service budget pertaining to operations in the fiscal year 1960. The remaining two items provide for restoring the capital impairment of the Commodity Credit Corporation as of June 30, 1958, and for reimbursing CCC for financing the estimated costs in 1959 for special activities authorized by law.

RESTORATION OF CAPITAL IMPAIRMENT

Total realized losses in the fiscal year 1958 amounted to $1,535,424,413. Under the provisions of the act of March 8, 1938, as amended by the act of March 12, 1954, a restoration of capital impairment in this amount will be necessary.

Of the total realized loss, $635 million represented the net loss on price-support sales, $366 million the cost of commodities donated, and $66 million was the cost to increase the consumption of fluid milk in schools. Losses in connection with the commodity export programs were $101 million, net interest expenses amounted to $323 million and all other net costs, including administrative expenses, were $44 million.

REIMBURSEMENTS TO CCC FOR SPECIAL ACTIVITIES

This appropriation provides for reimbursing CCC for its estimated costs during 1959 of financing separately authorized programs. This

represents an acceleration of reimbursement to CCC to minimize the need for additional borrowing authority. These are:

INTERNATIONAL WHEAT AGREEMENT

This agreement operates to provide an assured market for wheat to exporting countries and assured supplies of wheat to importing countries at equitable and stable prices. Public Law 421, 81st Congress, authorizes the President to use the assets and facilities of the Commodity Credit Corporation in fulfilling the obligations of the United States under the agreement and authorizes appropriations to reimburse the Corporation for its costs in carrying out the program. The request of $63,875,000 includes $63,185,000 for payments on 105 million bushels of wheat estimated to be exported during 1959 under the agreement at an average rate of 60 cents per bushel. It also includes $215,000 for administrative expenses and $475,000 for interest costs. It is a reduction of $16,925,000 below the previous year's costs due primarily to a 14-cent lower average payment per bushel.

EMERGENCY FAMINE RELIEF TO FRIENDLY PEOPLES

Title II of Public Law 480 directs the Commodity Credit Corporation to make its stocks of agricultural commodities available for furnishing emergency assistance to friendly peoples in meeting famine or other relief requirements and to pay ocean freight charges for the shipment of donated commodities. Appropriations of not more than $800 million are authorized under the act to reimburse the Corporation for costs incurred in carrying out the program. The proposed appropriation provides for reimbursement of $104,508,000 for estimated operations during fiscal year 1959 consisting of $63,399,500 for the cost of CCC commodities, $40,330,500 for ocean freight costs and $778,000 estimated interest to the date of reimbursement.

SALES OF SURPLUS AGRICULTURAL COMMODITIES FOR FOREIGN CURRENCIES

Title I of Public Law 480 authorizes the sale of surplus agricultural commodities for foreign currencies and also authorizes appropriations up to $6.25 billion to reimburse the Corporation for its costs in carrying out the program. Exports of commodities from CCC and private stocks were financed under this program during the fiscal year 1958. The request of $968,016,000 represents estimated unrecovered costs through June 30, 1959, plus estimated interest to recovery date less estimated receipts of dollars from the sale of foreign currencies or from the use of such currencies by the Defense Department in the construction of military housing abroad. These receipts will be applied against unrecovered costs of the program in subsequent years.

GRAIN FOR MIGRATORY WATERFOWL

Public Law 654, 84th Congress, directs the Commodity Credit Corporation to make available through July 3, 1959, to the Secretary of Interior grains acquired under the price support program to be used as feed to lure migratory waterfowl away from crop depredations. The act authorizes the appropriation of sums to reimburse the Corporation for its investment in the grain. The estimate of $35,000 represents the value of 400 tons of grain to be furnished during fiscal year 1959.