of product; efforts toward expanding market capacity, as well as the reduction in bearing acreage. "(i) A substantial proportion of the crop should remain to be marketed; programs aimed at tag-end or cleanup supplies will not be undertaken. "(j) It should be demonstrated that the proposed program will result in maximum benefits to producers." The USDA also considers the following factors in determining the nature and extent of assistance to be granted, assuming that the qualifications listed above are met: "(a) The quantity of the commodity or product for which assistance is granted should not under any circumstances exceed the capacity of the outlets available. "(b) Consideration should be given to the type of program which will dispose of the commodity under consideration for the least expenditure of funds. "(c) The commodity or product for which assistance is granted must be of acceptable standard grade and quality. No assistance will be given for substandard products. "(d) No type of assistance will be undertaken which would involve or necessitate the fixing of a minimum price for the entire supply of the commodity. "(e) Total expenditures should not exceed 10 percent of the average farm value of the commodity involved. In those instances where the only practicable assistance involves the purchase of processed products, this limit may be exceeded, but in no event to more than 20 percent of the average farm value. "(f) Diversion and export payment rates should be gradually reduced if such assistance has been extended on a relatively continuous basis. "(g) Purchases should be made on an offer and acceptance basis wherever practicable. In those instances where prices are announced, commercial market prices should be used as a guide, with due regard for current and seasonal market price behavior. “(h) If purchases of any commodity are undertaken there should be a reasonable relationship between nutritive value or other measure of the usefulness of the product and cost. “(i) No assistance will be undertaken which involves direct (benefit) payments to producers, processors, dealers or handlers." 2. OTHER PERTINENT FACTORS FOR CONSIDERATION Section 32 programs as a rule do not seek to support prices at a specific level. Prior to initiating a section 32 program, the Secretary of Agriculture considers the following eight points: "(a) The supply of the commodity in relation to the demand therefor. “(b) The levels at which price assistance is being given to other commodities. "(c) The availability of funds. "(d) The perishability of the commodity. "(e) The importance of the commodity to agriculture and the national economy. (f) The ability to dispose of stocks acquired. "(g) The need for offsetting temporary losses of export markets. "(h) The ability and willingness of producers to keep supplies in line with demand." Mr. WHITTEN. Now, I worked here long before you came here, Dr. Paarlberg, working with other Secretaries of Agriculture. They would use those section 32 funds as I have outlined. I think they used them effectively; I think that they supported farm income, and I think that the Government losses were less. But all of that is in this investigative report, and on those pages you will find information showing that in 1954 that the United States Department of Agriculture added some restrictions on itself as far as the law was concerned. There are on those three pages limitations that are not in the law that were adopted by the United States Department of Agriculture to, if I read it right, tie strings on their own operations in this program. You have clearly surrounded yourself with limitations not required by the law, and that is certainly an indication that your attitude is different from your predecessor's attitude and has resulted in considerably less efficiency. Mr. PAARLBERG. I have not yet had the opportunity to study that report. Mr. WHITTEN. The Department was supplied with a copy of the report some time ago. We have a limited supply here. It will be printed in the record so it will be readily available. However, it should not be surprising to you, since this report is a copy of regulations which you folks prepared and which I am sure that you supplied to the investigators. Mr. MARSHALL. If I can interrupt, it is a little bit like a ditty my grandfather used to sing to us, "Father, may I go out to swim?" "Yes, my darling daughter, you may go out to swim; hang your clothes on a hickory limb, but don't go near the water." Mr. PAARLBERG. Mr. Chairman, may I insert in the record here the figures of direct purchases for removal of surplus agricultural commodities for the years 1948 through 1957? This would give the 5 years preceding the present administration and the 5 years of the present administration. Dr. WHITTEN. Dr. Paarlberg, we will be delighted to have you put those in there. May I say that you doubtless have proven the soundness of my view. You usually do not have to buy many of the commodities where the prices are stabilized. Under your policy you have waited before buying the commodities and you have helped the farmer very little. Mr. PAARLBERG. May I read those figures into the record at this point? Mr. WHITTEN. Yes. Mr. PAARLBERG. For 1948, 1949, 1950, 1951, and 1952, the sums are as follows, and I will round them: 45 million; 26 million; 42 million; 13 million; 33 million. For the 5 years 1953, 1954, 1955, 1956, and 1957 the figures are as follows: 56 million; 186 million; 23 million; 206 million; and 123 million. I am not a good enough mathematician to average the 2 sets of figures but my conjecture would be that the average for the last 5 years is much more than twice the level for the preceding 5 years. Mr. WHITTEN. We are very glad to have those figures, Dr. Paarlberg. May I repeat again that it seems to me those figures do represent the slowness of movement that has resulted. I believe that the record will show that there is a reduction in farm prices which will lead to increased unit production in an effort to make up in volume for the loss in price, which will result in more surplus instead of less. Are there any further questions? SPECIAL MILK PROGRAM LEGISLATION Mr. HORAN. Yes. We have not renewed the Special Milk Act, have we? Mr. LENNARTSON. The Senate has approved their bill and they have had hearings in the House. Mr. HORAN. They have had? Mr. LENNARTSON. Yes; that is my understanding. Mr. HORAN. I assumed that we will include funds for it even though it is not reauthorized by the Congress. Mr. LENNARTSON. The Senate set an authorization for an additional 3 years at the $75 million level. I think the House is the same. Mr. HORAN. Two years. Mr. LENNARTSON. The Department recommended that that action be taken. Mr. HORAN. I notice that all of the sums are up and I notice that they expect to make these payments to the States for $83,600,000. Mr. LENNARTSON. That comes out of the $100 million appropriation. Mr. HORAN. And there is a proviso in the act that says they cannot spend that for other than food? Mr. LENNARTSON. Food uses, yes. Mr. HORAN. How do you police that? Mr. LENNARTSON. I think Mr. Davis will comment on that technical aspect. Mr. DAVIS. We examine very closely the reports that are available to us in the States of their visits to the individual schools. We also review the State's supervisory and administrative activities with the schools, and in addition to that we have audits. Part of this supervision is directed toward seeing that the schools are spending at least an amount equal to what they are getting from the Federal Government for food. There is one safeguard in regard to that particular provision. Since in the meal that they are required to serve, they must include one-half pint of milk, and since in most cases the milk alone costs the school more money than the Federal reimbursement, we are assured by examining the milk records that they are spending at least the quantity of money we are giving them on food. As to the exact amount of our dollar bill or their dollar bill they spend, we cannot tell. Mr. HORAN. In other words, the special milk fund which presently is being made available to approximately 30 percent of our estimated 37 million schoolchildren Mr. LENNARTSON. School milk? Mr. HORAN. Is better than $125 million? Mr. LENNARTSON. The amount of money that we are making available federalwise? Mr. HORAN. No; put it all together. Mr. DAVIS. The money being spent for milk locally as a result of the special milk program; is that the question? Mr. HORAN. What I am getting at, there is a considerable sum of money being spent for the special milk fund. Is there any way of measuring the effect of this on the market for milk? CONSUMPTION OF MILK GREATLY INCREASED Mr. DAVIS. Yes. We know that this program has completely satisfied the purpose for which the program was initiated; that is, that it has increased the consumption of milk by children. We have made a number of studies that have shown increases in consumption from 50 to 80 percent, sometimes much higher than that. We do know this, that the combined school-lunch program, all of the school lunch, all types of meals represented a consumption of about 1,600 million half-pints of milk in the year before we started the special milk program-that was the school year 1953-54—and we also know that last fiscal year, 1957, the school-lunch program had gone to 1,800 million half-pints. In addition to that in fiscal 1957, we reimbursed for an additional 1,800 million half-pints under the school-milk program. So we are sure of a substantial increase in consumption last year as against the year before this program started. Mr. HORAN. Well, you would consider it then a stabilizing factor? Mr. LENNARTSON. Oh, very definitely. It probably doubled the consumption of milk nationwide in the schools. STATE AND LOCAL CONTRIBUTIONS TO SCHOOL LUNCH Mr. HORAN. I notice that the participation of State and local Governments has increased, too. Mr. LENNARTSON. Definitely. Mr. HORAN. But it by no means is as great as the Federal contribution? Mr. DAVIS. The amount of State and local contributions in the national school lunch program has increased each year under the program. Mr. HORAN. But from the standpoint of State and local governments it is not on a matching basis yet-$75 million is what you estimated. Mr. DAVIS. That is appropriated Mr. LENNARTSON. That is just the appropriated funds from the State and local governments. Mr. HORAN. Oh, yes. The payments by children, that is up $40 million-is that estimated or where do you get those figures? Mr. GARBER. We get those figures from the States. Mr. HORAN. Does this figure include schools that have school lunch programs and do not participate in the Federal program? Mr. LENNARTSON. No. This is just the schools in the Federal program. Mr. HORAN. And this $855 million does not encompass the entire amount spent for school lunches then? Mr. LENNARTSON. That is right. Mr. DAVIS. No, sir; there are other school lunch programs. Mr. DAVIS. Yes, sir. We estimate that there are probably some 10,500,000 children in the school lunch program this year and there are about 1 million children in addition who are getting lunches in schools, which are not in the school lunch program. Mr. HORAN. Well, I recall that when my children were at BethesdaChevy Chase they had a very fine school lunch program but they were not participating in the Federal program at that time, so that figure must be at least that much and maybe more. Now, Mr. Chairman, there is something I think important, in all fairness, that ought to be brought out here. How many eggs can you feed as a participating food, assuming that you went into the egg market, you certainly would not want to feed them eggs every day, would you? Mr. LENNARTSON. No. They do not serve them every day, probablly twice a week, and not necessarily as eggs; they may develop custards and so on. Mr. HORAN. How many eggs do the 10 million schoolchildren eat? Mr. LENNARTSON. I cannot recall. Mr. HORAN. Well, apparently you must have fed each of the participating children around 3 pounds each. Mr. LENNARTSON. I will have to check those figures. Mr. GARBER. That is for the entire year. Mr. DAVIS. I think it figured out to 50,000 cases a week, or about 200,000 cases a month. That would be about one-half dozen per child per month. Mr. HORAN. Well, I appreciate what my colleague from Minnesota is talking about, I think there is a limit to this particular market. for foods, I think there is a limit to how many eggs schoolchildren could eat. Mr. LENNARTSON. There definitely is. Mr. HORAN. At one time we had so much cheese in the school lockers that it was getting in the way. Mr. LENNARTSON. Yes. TYPE A LUNCH Mr. HORAN. And at this point will you put in a list of the menu requirements that you have for school lunches? Mr. LENNARTSON. We will be very happy to do that. (The material requested is as follows:) The type A lunch consists of the following foods: 1. One-half pint of whole milk as a beverage. 2. Two ounces of lean meat, poultry, fish, or cheese, or 1 egg, or one-half cup of cooked dry beans or peas, or 4 tablespoons of peanut butter. 3. Three-fourths cup of vegetables or fruit or both. 4. One or more portions of bread or muffins or other bread made of wholegrain cereal or enriched flour. 5. Two teaspoons of butter or fortified margarine. Mr. HORAN. If you go into the purchase of honey, that will have a limited use, I assume in the preparation of meals. Mr. LENNARTSON. Yes. Mr. GARBER. They can put it on the table and let them spread bread with it. Mr. HORAN. Or the preparation of pork and beans. Mr. LENNARTSON. Or some dessert. Mr. HORAN. Well, are the foodstuffs that are available for distribution to our unemployed and for donations overseas, are they being made completely available under the school-lunch program? SCHOOL LUNCH PRIORITIES FOR SURPLUS FOODS Mr. LENNARTSON. The school-lunch program has priority over all other uses as far as section 32 and 416 commodities are concerned. Mr. HORAN. In other words, the commodities that we are getting rid of by virtue of Public Law 480 are available in large quantities to the school lunch? |