none of these items with the exception of a small amount of fresh cabbage has been furnished this year. Can you tell me about that?

Mr. LENNARTSON. None of the items you mentioned there have been furnished this year except hamburger. This year, we bought and distributed ground beef under section 6 funds. We did not buy hamburger this year with section 32 funds.

There were some of those items you mentioned available, from section 32 programs where it was necessary to get into the market and help stabilize and bolster products last year.

Once these were distributed, and as we were not in the market there would be no more available.

If they imply they only got cabbage this year, of course, that is not correct, because we are giving them all their butter and cheese needs, as well as a number of other commodities.

In addition we made available dried egg solids to them which they had for the first 3 or 4 months of this year as an animal protein. They have had these items available, but main-dish items such as beef, pork, the turkeys, and the shortening are not available and there is no question but what they miss these items. They are extremely important in menu planning and menu cost.

Mr. NATCHER. That is all, thank you, Mr. Chairman.
Mr. WHITTEN. Mr. Santangelo.

Mr. SANTANGELO. Thank you. I note that the donated commodities in 1957 are about $32 million more than the donated commodities in 1956. Were the donated commodities in 1957 used completely? Mr. LENNARTSON. Oh, very definitely.

Mr. SANTANGELO. In 1958, the donated commodities will stand at $55 million less than in 1957, I did not understand the explanation you gave to the chairman, for this dropoff, and I wish you would repeat it so I can understand it-I am not so experienced in this field as Mr. Whitten is.

Mr. LENNARTSON. I appreciate that.

Mr. SANTANGELO. Why is the amount of donated commodities going to be $55 million less than in 1957?

Mr. LENNARTSON. It so happened that in the fiscal years 1956 and 1957, we had a situation develop in the livestock industry, justifying the use of section 32 funds to stabilize prices.

Once we enter a program with section 32 funds and procure commodities, such as canned beef and gravy, pork and gravy, frozen turkeys, and other high priced animal protein items, we have to move them into eligible outlets. We have used the school lunch as our main outlet, and in fact, we give the school-lunch program priority over anyone else.

It was the necessity of going into the market in 1956 and 1957 and purchasing those products and distributing that created this situation in 1957 where the school-lunch programs were pretty well taken care of through these surpluses which were main-dish items.

Now in 1958, it was not necessary to enter those markets. We just did not have the commodities to distribute to the schools, and they miss them.

Mr. SANTANGELO. In other words, there was no obligation?
Mr. LENNARTSON. That is correct.

21494-58-pt. 3—14

Mr. SANTANGELO. And the consumption will have to be that much less?

Mr. LENNARTSON. Yes, insofar as donated commodities are concerned it will have that impact basically unless offset by increased local purchases.

Mr. SANTANGELO. With regard to the $76,385,000 of donated commodities, is that a current market price value or is it a cost value? Mr. LENNARTSON. It is the cost value to CCC, that is, to the Department of Agriculture.

Mr. SANTANGELO. Is it correct to state that it is not the cost to the farmer, but that it is the cost to the CCC?

Mr. LENNARTSON. Yes.

Mr. SANTANGELO. Is the cost to the CCC the same as the housewife and the consumer pays?

Mr. LENNARTSON. Probably less because we buy and ship in large quantities, whereas the consumer usually buys in small quantities which has a higher market value.

Mr. SANTANGELO. If the local communities or the State were given a cash item instead of donated commodities could they not purchase articles which would be of the same protein volume or of the same quality, but at a lesser price; would they not be able to purchase substitutes at a lower price than that which you pay through the CCC.

Mr. LENNARTSON. In other words, if they got the butter money in terms of money, they could probably

Mr. SANTANGELO. They could buy the olemargarine?

Mr. LENNARTSON. Yes.

Mr. SANTANGELO. And they could buy the oleomargarine for about 30 cents a pound, whereas they have to pay about 80 cents for the

butter.

There is quite a disparity between what you pay of more than 21⁄2 times.

As a matter of fact, I asked my wife this morning what she was paying, and that is what she told me. She buys both. It is about 80 cents a pound for butter and about 32 cents a pound for oleomargarine.

AVERAGE REIMBURSEMENT RATES

The chairman asked you to go back to 1950 for the subsidy that was given in the school-lunch program; and I think the highest amount that you gave was in the range of 4 cents or 5 cents.

As I understand it, this program goes back to 1946, and I am informed that at one time the average amount was about 9 cents per pupil. Is that correct?

Mr. LENNARTSON. Nine cents was the maximum rate per meal served, the highest average we have a record of here, and that was in 1947– Mr. SANTANGELO. What is that?

per

meal.

Mr. LENNARTSON. That was 6.8 cents Mr. SANTANGELO. So, between the highest in 1947 until today, you have a drop of about 312 cents per meal?

Mr. DAVIS. I might explain that figure a little bit, Mr. Lennartson. That figure you just quoted was an average for all types of meals, the A and the B and the C-milk only-and so forth. Actually, the maximum, I believe, that you referred to was paid pretty generally

in 1947 for the full meal. We were able to pay up to the maximum limits.

Mr. SANTANGELO. That is 9 cents per pupil?

Mr. DAVIS. Per meal; yes, sir.

Mr. SANTANGELO. Is the 6.7 an average? If so, what average is that?

Mr. LENNARTSON. That shows an average of all of the lunches. There are different types of meals-the full meal with all the necessary proteins. Some schools merely served a glass of milk, but I was saying the 6.8 was an average on both the complete meal and the others.

Mr. DAVIS. The maximum payments ran to 9 cents for a full meal, 7 cents for the type B meal, which is not quite a full meal, and 2 cents for the type C which was milk only, and actually in all three types we were paying in most instances those maximums.

When you average it all together, you come out with the average payment of 6.7. The difference between that and the 1957-58 figures that we gave you a while ago is that about 97 percent of all the meals now are type A, so that the average reimbursement that was given for 1957 more nearly approaches what is paid on a full type A meal now, and, as I mentioned, in 1947 we were generally paying the maximum of 9 cents for that same meal.

Mr. SANTANGELO. Type A meal?

Mr. DAVIS. Yes, sir.

COMPARISON BETWEEN SIZE OF PROGRAM IN 1947 AND 1957

Mr. SANTANGELO. The total amount of contribution in 1947 was greater or less than the total amount of contribution in 1957? Mr. LENNARTSON. Federalwise?

Mr. SANTANGELO. That is correct.

Mr. LENNARTSON. In 1947, the cash payments were $62 million in contrast to the $83.9 million in 1957; and that was distributed among the number of people participating in the program rather than total population of schoolchildren participating in the program.

Mr. SANTANGELO. What were the figures with regard to the number of schoolchildren participating in the program in 1947 as compared to those in 1957?

Mr. LENNARTSON. Just a little over 5 million children in 1947 contrasted to an estimated 10.5 million in 1958.

Mr. SANTANGELO. And so there are about 1011⁄2 million now participating in the school lunch program?

Mr. LENNARTSON. Just about doubled, yes; a little over doubled. Mr. SANTANGELO. So we have actually almost doubled the amount of people participating in the program, and we may be receiving $23.7 million more reimbursement, which amounts to about one-third more reimbursement?

Mr. LENNARTSON. That is right.

Mr. SANTANGELO. Thank you, sir.

Mr. WHITTEN. Mr. Andersen, I understand you have a number of questions.

USE OF SECTION 32 FUNDS

Mr. ANDERSEN. Mr. Chairman, I have a rather extended list of questions to ask, and I would like to ask those, if I may.

Dr. Paarlberg, at one time when we were discussing the Foreign Agricultural Service, it was brought out that in using section 32 money, you pay the cost of overseas market development, especially under the 480 program.

I personnally see nothing wrong with doing this, if the money is used to open up new markets for our surpluses, but here is one point. that bothers me: The Department is willing on the one hand to spend section 32 money to bring about the movement of commodities which are principally Commodity Credit Corporation stocks, and therefore not of any immediate benefit to the producer.

From a long-range viewpoint, of course, it will eventually help producers, if we could use enough of these commodities to have a good effect on the domestic market, but at the moment the benefit is mainly to the Government and through the 480 programing.

I am saying that as differentiating from the basic purpose of section 32. What disturbs me about all of this is the fact that the Department is willing to spend section 32 money for these administrative purposes; but, at the same time, the Department appears to be unwilling to spend these funds, referring to section 32 funds, for the primary purpose for which they were made available, and that is definitely in the interests of the producers.

That is what the law is based upon.

Now, I want to ask you this question: Just how much section 32 money have you spent so far this school year 1958 in a purchase program to help producers and how much had you spent in this period last year?

Mr. PAARLBERG. I will have to ask Mr. Holmaas to answer that.
Mr. ANDERSEN. Whomever you want to answer it. I just want the

answer.

Mr. HOLMAAS. Our total obligation for commodity program costs through December 31 was $7812 million this fiscal year.

I do not have last year's figures here broken down for the first half of the year; however, for the year as a whole-that is, for the fiscal year 1957-for commodity program costs we obligated $137.6 million. Mr. ANDERSEN. You are speaking of the expenditures out of section 32 funds in its entirety?

Mr. HOLMAAS. Yes, for section 32 commodity costs.

Mr. ANDERSEN. What was that figure?

Mr. HOLMAAS. $137.6 million.

Mr. ANDERSEN. You state on page 58 of the justifications that $131,972,000 worth of donated commodities were made through the schoollunch program.

Mr. Ho MAAS. That is correct. That is the value of distribution to the school-lunch programs.

Mr. ANDERSEN. The difference between the two figures-is that the amount you spent abroad in aiding and administrative expense or getting rid of surpluses abroad, or how does that account for that. difference?

Mr. HOLMAAS. The difference in any year between the school-lunch distribution and the current year's procurement is affected by two factors.

The principal factor is the distribution through welfare organization and to institutions and for needy people domestically. The sec

ond factor is that the donated commodities referred to include section 416 distribution. Further, the money figure that I quoted includes other commodity program costs such as diversion payments on potatoes where we did not actually purchase the commodity.

Mr. ANDERSEN. You were just now talking about the fiscal year 1957 in the figures you just gave me?

Mr. HOLMAAS. Yes.

Mr. ANDERSEN. What is the picture in 1958?

Mr. LENNARTSON. We estimate it will be about the same.

Mr. HOLMAAS. For the first half of fiscal year 1958, we have obligated $7812 million for program costs.

Mr. ANDERSEN. What have you obligated that $782 million for? Mr. HOLMAAS. Citrus fruit purchases; dates-a diversion program-a very small amount for eggs which is really carried over under commitments from last year's program; potato diversion and dairy products.

Mr. ANDERSEN. How much dairy?

Mr. HOLMAAS. $71.3 million for dairy purchases and also peanut butter purchases of roughly $868,000.

PURCHASES OF DAIRY PRODUCTS UNDER SECTION 32

Mr. ANDERSEN. Now let us get to your figure on dairying. You are telling the subcommittee that of that 1958 figure you were obligating approximately $72 million for the purchase of dairy products? Mr. HOLMAAS. Yes, that is for the first half of the fiscal year only. Mr. ANDERSEN. Is the first half of the fiscal year-how does that compare with the previous fiscal year on dairy products?

Mr. HOLMAAS. For the previous fiscal year, we obligated under section 32 a grand total of $55.4 million for the full year for dairy products.

Mr. ANDERSEN. You are buying then more this fiscal year, is that it?
Mr. HOLMAAS. Under section 32?

Mr. ANDERSEN. Yes, under section 32 of dairy products.

Mr. HOLMAAS. Yes. But I should repeat, as I pointed out to Mr. Marshall, that dairy products moved in large quantities under section 416 last year, so that when you look at the total distribution figures, they are much closer together than the procurement figures under section 32 would indicate.

Mr. ANDERSEN. Now can you tell me this: on page 59, section 32, butter, you show 18 million pounds distributed to the school-lunch program in 1956.

Fiscal year 1957 you distributed 36 million pounds. How many million pounds do you estimate will be distributed in the school-lunch program in fiscal 1958, and we are speaking about butter?

Mr. DAVIS. It should be about the same when sections 32 and 416 are taken together.

Mr. GARBER. It would be about 55 or 60 million.

Mr. LENNARTSON. It is about 60 million pounds that the schools get each year.

That may come from section 32 funds or section 416. The important point that you want to get at is that schools will get all the butter they require this year from either source, from section 32 or

416.