corn is just not of the quality that the Government has the right to seal.

I am just pointing that out to show that you are able to show this reduction because of the fact that a big ares of the Midwest had very bad weather conditions and very bad markets this last fall.

Mr. WHITTEN. In that connection, I am sure you will agree, too, Mr. Berger, that the disastrous weather condition in cotton areas in the Southern States will have an impact there also.

Mr. BERGER. That is correct.

Mr. WHITTEN. And I think you will agree that, if the production of corn in one instance and the production of cotton in the other instance had been normal, the South would have shown an improvement. in this figure.

Mr. ANDERSEN. I only want to point that out, Mr. Chairmanrelative to my area- to show that, while these figures really are encouraging in showing a lesser amount of stocks in hand and commitments by the Commodity Credit Corporation, nevertheless, the story in back of it is not too pleasant for the producer who is not able to produce corn to qualify.

As you know also, Mr. Berger, we have a very poor flax and smallgrain crop through that area this year, too.

Mr. BERGER. That is true.

The job ahead is still one of staggering proportions. As of December 31, 1957, CCC inventories were valued at $5.4 billion and CCC loans outstanding amounted to $1.8 billion, making total holdings aggregate $7.2 billion.

Mr. WHITTEN. I would like to ask you, Mr. Berger, to estimate what the holdings would have been if we had had a normal cotton crop, a normal corn crop, and a normal flax crop. I would like to have that included in the record at this point.

Mr. BERGER. Would you like to have me include it in the record? Mr. WHITTEN. Yes.

(The material referred to is as follows:)

Under normal crop conditions it is estimated that CCC holdings as of December 31, 1957, would have been increased by $312 million. This estimate has been computed as follows:

The indicated 1957 crop production of cotton and corn is approximately normal in total. However, the harvest has been delayed so that the loans made through December 31, 1957, are far below the rate of activity experienced in the preceding years. Assuming total loans on these commodities as estimated in the budget, made at the rate per month indicated by previous experience, the loans outstanding would be increased by $243 million for cotton and $47 million for corn. It is probable that a portion of the 1957 crops of cotton and corn which would normally go under price support loans will not qualify for such loans because of the poor quality of the crops. The extent to which this is true is not known. Flaxseed loans under normal crop conditions would have been $22 million more than have been made through December 31, 1957, due to the small 1957 crop.

EFFECT OF ACREAGE RESERVE PROGRAM ON CCC HOLDINGS

Mr. McLAIN. I think that, in order to get the whole picture, with that we ought to give an estimate of the effect of the acreage reserve program. You see, there were some 20 million acres with a fence around them that were not used, since they were in the acreage reserve program; we had made some pretty accurate estimates of what would have been raised on those acres. I think that would have some bearing on it.

21494-58-pt. 3- 29

Mr. WHITTEN. I certainly do not mean to foreclose you from presenting any other facts that you wish to present. Feel free to add anything that you like.

Mr. MCLAIN. In this connection, I think you should realize what was the intake of wheat that we had. The harvest, which was in pretty good shape, is down substantially. And, of course, that was because there was quite a lot of wheat land taken out of production in a good many areas.

Mr. WHITTEN. I do want to make the point here, and I hope you will forgive me for these interruptions. But I do want to say there is a great difference in viewpoint on certain policies between the Department of Agriculture and most members of Congress from agricultural

areas.

I do not think I am giving away any secrets when I say that. In that connection, it is my opinion that it has become pertinent what part of this changed picture might be caused by reason of policies and what part of it might be caused by reason of the weather, disaster, and various other things.

I think in that connection you would be entitled to show what has come out by reason of the acreage reserve program. You might also show the amount of money we have spent in connection with the acre

age reserve.

I say that because I believe that a proper price-support program would cost you much, much less than has the acreage reserve program, and it would bring about a great deal more benefit to business, to agriculture, and the Nation.

But we might just as well have the record complete and then we can take our respective sides of the argument.

(The information referred to is as follows:)

1957 acreage reserve program-Acreage under agreements, estimated production of such acreage, and maximum compensation

Mr. WHITTEN. You may continue with the statement now, sir. Mr. BERGER. In estimating that these holdings will be reduced to $6.8 billion by June 30, 1958, we expect that new price-support loans before that will total $1.1 billion; repayments $500 million; and commodities valued at $1.1 billion will be taken into inventory.

Mr. WHITTEN. Does that anticipate that the Secretary may change the price support to 60 percent? Or is that based on existing law? Mr. BEACH. Existing law.

VOLUME OF ACTIVITY, 1959

Mr. BERGER. Then, to effect the reduction in holdings we must dispose of commodities value at $1.9 billion between now and June 30.

For the fiscal year 1959 it is estimated that there will not be much letup in the volume of activity as indicated by the following:

The CSS budget presented for 1959 contains an item to restore the capital impairment of CCC as of June 30, 1957-$1,760 million-and 3 items which relate to operations to be conducted during the fiscal year 1959. The 1959 budget estimates for these latter three items compared with amounts currently available are as follows: (Material referred to is as follows:)

The total increase of $8 million may be briefly summarized as follows:

Conditional payments to sugar producers.
Contingency reserve for CCC administrative expenses to be used
only upon approval of the Budget Bureau..

-$1,000,000 +8, 337, 500 +702,000

+8,039, 500

+$8, 337, 500

+1, 813, 000

Mr. BERGER. The $8 million increase for payments to sugar producers is for payments which are mandatory by law; the $1.8 million increase for the CCC expense contingency reserve may not be used unless CCC program volume increases beyond current estimates; and the anticipated $2.1 million decrease in operating expenses is largely due to increased efficiency. If legislation is enacted which would make acreage allotments ineffective on corn beginning with the 1959 crop, as is proposed, a further reduction of $2.3 million would be made in these estimates.

ORGANIZATIONAL AND ADMINISTRATIVE CHANGES

at this time.

One significant change in organizational pattern can be indicated The last of the CCC wool inventory has been sold, and the Boston commodity office is in the process of liquidation. The 1959 budget estimates include no funds for this office.

Last year we reported to this committee that a considerable amount of feasibility research had been performed and that plans and proced

ures were being prepared to utilize high-speed electronic data-processing equipment. We indicated that we were proceeding cautiously and deliberately and that delivery of the equipment was still months away. Our plans called for using this type of equipment on a test basis to process the 1957 grain price-support loans in the five-State area serviced by the Kansas City commodity office. Our plans also called for using similar equipment to process cotton loan and inventory operations on a nationwide basis at New Orleans.

The computer delivered to Kansas City in September has been operated successfully in processing about 250,000 grain-loan transactions. The success of this initial operation has led to a decision to broaden the service of the Kansas City unit to include the processing of 1958 grain loan and purchase agreements for the Southeastern States and all of the States west of the Mississippi except Iowa.

A comparable service will be initiated at Chicago enlarging existing equipment to handle grain price-support records from all of the remaining States. After nearly 2 years of advance planning, a computer was delivered in New Orleans in December. Although this computer has not been in use as long as the one in Kansas City, results to date are also successful.

We look for these computers to result in more efficient service for producers, warehouses, transportation services, and banks because of increased accuracy and greater speed. We also expect to achieve overall economies.

Mr. McGregor will be glad to furnish further detail on this matter when you reach it in your discussion.

ACREAGE ALLOTMENTS AND MARKETING QUOTAS

The estimate of $39,715,000 for acreage allotments and marketing quotas, which is $1 million less than the amount available for the current fiscal year, assumes the continuation of acreage allotments and marketing quotas on tobacco, peanuts, wheat, cotton, and rice, and acreage allotments on corn. There is, however, proposed for later transmission, a decrease of $2.3 million in the appropriation in the event legislation is enacted which would make acreage allotments ineffective on corn beginning with the 1959 crop.

Work involved in carrying out acreage-allotment and/or marketingquota programs includes gathering and compiling basic farm data which are used in determining individual farm allotments, establishing allotments, and notifying producers thereof, determining farm measurements and computing acreages, and in administering the marketingquota phase of the program on all commodities, except corn. Work also includes 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.

It is anticipated that as increasing acreages of cropland and more whole farms enter the conservation reserve program, work such as performance checking to be done at the county level, should decrease under the acreage allotment and marketing quota programs. In addition, it is also contemplated that beginning with the 1959 crop only about 42 percent of the corn-allotment farms will be actually measured. Along with the $1 million decrease in funds 2 areas of activity with increasing workload are being absorbed.

The cost of work necessary to carry out the feed-wheat program authorized by Public Law 85-203 will be absorbed within available funds. This law permits farmers whose wheat acreage is less than 30 acres to grow up to 30 acres of wheat for use exclusively on the farm where produced for seed, human food or livestock or poultry feed. Also being absorbed is the additional workload incident to 38 additional counties and 2 new States included in the commercial-cornproducing area for the 1958 crop.

When marketing quotas are in effect, compliance with acreage allotments is mandatory. Farmers cannot receive a marketing card until their performance 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 peanuts, cotton, and rice and October 1 for the other kinds of quota tobacco.

During the 1957 fiscal year, performance checking was completed on approximately 49 percent of the 1957-crop tobacco allotment farms, 47 percent of peanut farms, 97 percent of wheat farms, 58 percent of cotton farms, 38 percent of corn farms-only about 65 percent of corn farms are usually measured-and 24 percent of rice farms. It is contemplated that compliance checking of the 1958 and 1959 crop farms of these commodities in the fiscal year 1958 and 1959 will follow the same pattern as in 1957, except that in the case of corn, actual measurement will be reduced from 65 to 42 percent, since on the basis of past history, this represents the maximum percent of allotment farms which might apply for price support.

SUGAR ACT

The estimate submitted for the fiscal year 1959 for administering the Sugar Act is $76 million, $8,337,500 more than the appropriation for the fiscal year 1958.

Estimated sugar production for the 1958 crop (fiscal year 1959) is 5,160,000 tons involving payments to producers of $71,475,620. The 1958 appropriation was insufficient to cover $2,119,198 of the 1957crop payments in the sugar beet area and $16,600,284 of the 1957-crop payments in Puerto Rico, making it necessary to request funds to cover these items in the 1959 appropriation.

In addition, $2,124,500 will be required for operating expenses in the fiscal year 1959, making total requirements amount to $92,319,602. The estimate submitted totals $76 million, or $16,319,602 less than the currently estimated requirements. Thus it is proposed to defer $16,319,602 of the 1958-59 Puerto Rico crop payments until the fiscal year 1960. This reduction is possible because the payments on the 1958-59 crop of Puerto Rican sugar will not be made until after July 1, 1959.

No increase in operating expenses is requested over the amount appropriated for the fiscal year 1958.

Of the total amount requested in the fiscal year 1959, over 97 percent will be used for making mandatory payments to sugar producers. All expenses in carrying out the Sugar Act are offset by tax collections levied on sugar imported or manufactured in this country.