Administrator of the Service is also responsible for the coordination of all statistical work of the Department.

The Agricultural Marketing Service carries on the following principal program:

1. Research and agricultural estimates.-These functions include

(a) Marketing research directed toward the development of practical answers to problems encountered in moving agricultural products from the farm to the consumer, including expanded outlets for new and established products, reduced costs, improved product quality, and improved market equipment and facilities;

(b) Analyses of the economic situation and outlook for farm products, including factors affecting price, supply, and consumption; and statistical studies on farm population, costs, prices and income in their relation to agriculture including causes for variations and trends;

(c) Crop and livestock estimates including acreage, yields, production, stocks, values and utilization of farm crops; numbers, production, value and utilization of livestock and livestock products and such related data on prices received and paid by farmers.

2. Marketing Services.-These activities contribute to the efficient and orderly marketing of agricultural commodities through—

(a) Market news service which provides timely and reliable market reports on all major agricultural commodities to help farmers determine when, where, and at what price to sell their products;

(b) Inspection, grading and classing, and standardization services to develop standards of quality for agricultural commodities and to use them in providing an impartial inspection, classing, and grading service;

(c) Freight rate service to assist in obtaining and maintaining equitable transportation rates and services on farm supplies and products.

(d) Regulatory activities covering administration of laws aimed at protecting farmers and others from financial loss resulting from deceptive, careless, and fraudulent marketing practices.

3. Payments to States.-The Service administers the matched fund program for marketing activities carried out through cooperative arrangements by State departments of agriculture, bureaus of markets, and similar States agencies.

4. School lunch program.—Federal assistance is provided to States and Territories for use in serving nutritious midday meals to children attending schools of high school grades or under in order to improve the health and well-being of the Nation's children, and broaden the market for agricultural food commodities. 5. Removal of surplus agricultural commodities and marketing agreements and orders. These activities directly or indirectly tend to maintain prices received by farmers and establish and maintain orderly marketing conditions through— (a) Removing from the market, surplus agricultural commodities through purchase and donation to eligible recipients, export and diversion payments, and distribution of Commodity Credit Corporation donated commodities to eligible outlets authorized under section 416;

(b) Administration of marketing agreements and orders; and

(c) Cooperation with the food trade and others to encourage greater consumption of abundant foods.

6. Work performed for others.-The Agricultural Marketing Service also performs other services for Federal, State, and private agencies, on a reimbursable or advance payment basis. These include among others the special milk program, food planning for defense emergency conditions, and administration of section 708 of the National Wool Act of 1954 dealing with advertising and sales promotion programs.

The Agricultural Marketing Service maintains its central office in Washington, D. C., but a large part of the program is carried on through State offices on agricultural estimates and functional field branch offices of the several Washington commodity and functional divisions located in over 225 cities and towns in the United States, Hawaii, Puerto Rico, Cuba, and Spain (an inspection office at the United States Naval Base, Rota, Spain).

On November 30, 1957 (excluding the offices of the milk marketing administrators) there were approximately 7,498 full-time employees, distributed about 1,900 in the District of Columbia metropolitan area and the remainder in the field. In addition there were about 989 part-time and intermittent employees primarily in the field. A substantial portion of Agricultural Marketing Service em

ployment is financed through revenue from fees, charges, or other assessments and through joint financing or other arrangements with States and private cooperators.

Mr. Paarlberg, we will be glad to have your general statement.
Mr. PAARLBERG. Thank you.

GENERAL STATEMENT

Mr. Chairman and members of the committee, I am happy with this opportunity of making my initial appearance before this committee to discuss the proposed 1959 budget of the Agricultural Marketing Service. Since this is my first formal appearance in this capacity before your committee, I understand it is appropriate to describe something of my background in agriculture.

I was born at Oak Glen, Ill., and grew up on a general farm near Crown Point, Ind. While at home on the farm, I was active in college extension programs, farm organizations, and rural youth work. I attended Purdue University and was graduated in 1940 with a degree in agriculture and subsequently studied agricultural economics at Cornell University.

Before coming to Washington, I was a member of the staff of the Department of Agricultural Economics at Purdue University for 6 years. In addition to teaching and research work in the general field of agricultural prices, I have served as economic consultant to various firms dealing in agricultural products and as secretary-treasurer of the American Farm Economic Association.

Since January 1953, I have been connected with the United States Department of Agriculture as assistant to the Secretary until August 16, 1957, when my current appointment as Assistant Secretary of Agriculture was approved.

During the relatively short time that I have been responsible for the comprehensive area of activities covered by the programs of this agency, I have been deeply impressed with their importance to the individual farmer-to the marketing system-and to the consuming public. I am equally impressed with the high quality of devoted and competent personnel responsible for the operation of these programs at all levels of responsibility.

The programs which make up the Agricultural Marketing Service form a family of activities which, over the years, have played an exceedingly important part in the development of a food distribution system unmatched throughout the world. Nowhere has a nation been provided with such a variety of foods of such generally high quality, as attractively prepared, as conveniently packaged, and as readily available. And, with each passing month, innovations, new products,

new services, and new techniques are forthcoming-all tending to improve an already fabulous system for marketing the food from American farms.

Naturally our marketing system is a very complex one requiring a vast variety of tools to make it work and, particularly, to keep it efficient. It is a system fed with the products from millions of farms. These products enter the system in a multitude of ways and as they move through the channels of trade are subject to a wide variety of processes before reaching the consumer.

The programs of the Agricultural Marketing Service begin furnishing tools early in the marketing process-in fact, before the process actually begins. Extensive analyses and interpretations are made of economic and statistical data and presented to farmers and others as aids to intelligent planning of their production and marketing programs. A wide variety of reports is prepared from data collected by the widely known Crop Reporting Service, which serves as an agricultural "intelligence" service reflecting producers' intentions, plantings, growth progress, harvestings, and yields.

A nationwide market news system, Federal-State in character, alerts and informs producers and marketing agencies as to spot prices, movements, and qualities in addition to pointing out where, when, and what is available. Current information of this nature is basic to our marketing system. Standards of quality, supplemented by nationwide inspection, grading, and classing services, are available for all major commodities and most minor ones. This system provides a common language between producing area and the market place. The grading and inspection services are increasing in importance with each passing year, as evidenced by their growth. The Agricultural Marketing Service also serves producers by representing them in freight cases before various regulatory agencies.

Rules of fair play in the market place are reflected in the numerous regulatory acts administered by the Agricultural Marketing Service. The Federal Seed Act, Perishable Agricultural Commodities Act, United States Warehouse Act, the Packers and Stockyards Act, and others have come to be widely recognized as essential tools in marketing through their aid in maintaining a healthy environment in the market place.

Marketing agreements and orders have become widely accepted in the fruit and vegetable areas and in the milksheds supplying our principal cities. Producers and dealers alike have come to recognize their value to orderly marketing and as being in the public interest. As of January 1, 1958, 35 orders were in effect for fruits and vegetables. There are now in effect 68 Federal milk orders regulating milk pricing to producers. Over half of the fluid milk and cream consumed by our nonfarm population is annually purchased by handlers under terms of Federal orders.

EXPANDING MARKET OUTLETS

Programs of the Agricultural Marketing Service are having important impacts on expanding consumption of our farm products. The national school lunch program continues to grow. In the 1957-58 school year an average of 10.5 million children are expected to participate in the program, as compared to 9.6 million last year and 8 mil

lion 6 years ago. We now estimate that funds from local sources this year, exclusive of Federal grants, will approximate $618 million. These funds are, of course, used primarily for purchases of food. Within a space of 10 years an entirely new market of this scope has developed. In addition, there are lasting benefits to agriculture and the Nation in terms of healthy citizens properly trained in the value of good nutrition and eating habits.

The plentiful foods program is receiving increasing attention among organized commodity groups, the restaurant trade, wholesalers and retailers, and food trade communications media. We are seeing increased effort being given to well-organized merchandising programs aimed at moving seasonal surpluses through normal channels of trade. There is little question but that this program has substantially reduced the need for surplus-removal programs by the Department, thus keeping these foods flowing through normal channels.

The distribution of surplus food commodities continues at a high rate. It is estimated that 2.5 billion pounds of food will be distributed in 1958, about 800 million pounds domestically to schools, charitable institutions and the needy, and 1.7 billion pounds to the needy in foreign lands. Greater quantities of cereal items, such as corn meal and flour, are being distributed in 1958 than in previous years; however, the volume of protein-type food is less, reflecting reduced supplies.

MARKETING RESEARCH AND STATISTICS

Basic to and underlying the marketing and distribution programs and, in fact, underlying much of the general progress in marketing, are extensive research and statistical activities conducted or sponsored by the Agricultural Marketing Service.

As a basic service to all agriculture, crop and livestock reports are of immediate value to farmers in making production and marketing plans. Further, these essential statistics are widely used by industry and by Government agencies in the development and administration of agricultural programs. The basic facts provided by the crop and livestock estimating service furnish the starting point for much of the research carried on throughout the Department.

Economic and statistical analyses are directed toward supplying farmers, processors, and dealers with reliable economic information and data on the demand-supply-price outlook. These analyses are vital in guiding producers and handlers toward sound production and marketing decisions. They provide the base for much of the economic information and farm outlook work carried forward by the State extension services, the farm press, and farm organizations..

Through the marketing research program, we seek solutions to basic problems in marketing farm products. We assist in finding new markets and enlarging existing ones by learning the current needs of both industrial and household consumers. Through biology, chemistry, engineering, economics, statistics, and other scientific fields, we search out answers on marketing costs, quality maintenance, market outlets, and improvements in methods, practices and facilities. In cooperation with farmers, land-grant colleges, and the agricultural trades, our marketing research staff is thus constantly moving forward in a program that covers all steps in the marketing or handling of farm commodities.

PAYMENTS TO STATES

Marketing Service work through joint funding relationships with State Departments of Agriculture is a valuable extension of the other programs carried on by the Agricultural Marketing Service. This activity, provided for in the Agricultural Marketing Act of 1946, directly aids in maintaining quality and reducing spoilage, expanding outlets for farm products, providing State and local marketing information, and in getting application of improved marketing practices. Currently, this program is being carried on in 43 States and Territories which are conducting about 125 projects under the matchedfund arrangement.

BUDGET ESTIMATES

In developing the budget for the Department, careful attention and high priority were assigned to the Agricultural Marketing Service programs. We need to continue a strong attack on the problems of agricultural marketing.

After taking into consideration other fund requirements and the need for economy in Government, increases under the marketing services are requested for administration of the mandatory Poultry Products Inspection Act, the Grain Standards Act and the Packers and Stockyards Act. Pressing responsibilities in these three areas necessitate our asking for additional funds, with the result that we propose an increase of $5,642,900 under the marketing services appropriation.

For the research and agricultural estimates appropriation, the requested amount is $14,095,000, or the same as being used in the current fiscal year. We need to continue to give more attention to marketing research, economic and statistical analyses, and the improvement of our crop and livestock estimates. However, in view of the overall fund situation, we are asking for the same amount for these services. In the research field we do, of course, have flexibility for adjusting funds and personnel as projects are finished and every effort will be made during the coming year to shift emphasis toward those fields of work which seem most urgent. We propose to continue the current emphasis on the measurement of costs and margins, while we also hope to be able to give increased attention to basic research designed to assist in strengthening or improving our classing, grading, and standardization activities.

MANDATORY INSPECTION OF POULTRY PROVIDED BY NEW LAW

The increase requested under the marketing services appropriation includes $5,390,000 for poultry inspection. The Poultry Products Inspection Act was enacted on August 28, 1957, to assure consumers protection against poultry products which are unwholesome, adulterated, or otherwise unfit for human consumption. The act requires this Department to provide by January 1, 1959, compulsory inspection at Federal expense of all poultry and poultry products moving in interstate or foreign commerce or in designated major consuming areas. This function has been assigned to the Agricultural Market ing Service.