Land bank bonds which will be of longer term, 5 years to 12 years, get into a market area which is not as easy at the present time and it would probably take in the neighborhood of a 22 percent interest rate to make them attractive in the market. The cost of money has been going down so rapidly in the last 3 months that it is very difficult to be definite on this thing. The thing I have tried to do is to point out, in answer to Congressman Andersen's question, that so much depends on the type of security and a very important thing is whether it would be guaranteed by the Federal Government. Mr. NATCHER. I want to thank you for the fine statement you have made to the committee, and especially that part of your explanation which you made in answer to Mr. Andersen's question concerning REA. Speaking only as one member of the committee, I personally hope that no legislation is passed this session or at any time in the near future which would tend to destroy REA. I am very much interested in that portion of your statement, Governor, in which you point out that farm mortgage indebtedness as of January 1, 1958, amounted to $10,600 million. This compares with the sum of $9,900 million the year before. Further I am very much impressed with your statement in which you point out that non-real-estate debts owed by farmers are estimated at $8,100 million as of January 1, 1958. Your credit outlook for the future has been explained to the committee and that certainly is not good so far as agriculture is concerned. You cite the true picture as it exists today, and, Governor, I want you to know that I agree with you. I think you are right. Neither you, nor I, nor any other member of this committee hopes that this condition will continue into the future. We hope that conditions will certainly improve. Mr. ANDERSEN. Will you yield, Mr. Natcher? Mr. NATCHER. Certainly. Mr. ANDERSEN. I want to join in the statement you just made relative to REA and also to the fact that the continued increase in debt incurred by agriculture should be sort of a red flag to the Congress and serve notice that something is wrong. Mr. NATCHER. I certainly agree with my colleague. Governor, I hope that the credit outlook so far as agriculture is concerned will improve, but I do want you to know that I appreciate your fine statement and I agree with you that those conditions are with us today and every effort should be made to correct this situation if it is possible. Mr. WHITTEN. Thank you again, Governor. I am personally glad to see you here. We could discuss this farm question many more hours if we didn't have so many others waiting to appear. Mr. TOOTELL. We enjoyed being with you on this occasion as we have in the past. Thank you for your support of farm credit. TUESDAY, MARCH 18, 1958. SOIL BANK PROGRAMS WITNESSES MARVIN L. McLAIN, ASSISTANT SECRETARY OF AGRICULTURE WALTER C. BERGER, ADMINISTRATOR, COMMODITY STABILIZATION SERVICE ROBERT P. BEACH, ASSISTANT DEPUTY ADMINISTRATOR, OPERATIONS, COMMODITY STABILIZATION SERVICE DWIGHT W. MEYER, DEPUTY DIRECTOR, ACREAGE RESERVE, SOIL BANK DIVISION, COMMODITY STABILIZATION SERVICE THOMAS E. HAMILTON, DEPUTY DIRECTOR, CONSERVATION RESERVE, SOIL BANK DIVISION, COMMODITY STABILIZATION SERVICE PAUL M. KOGER, ADMINISTRATOR, AGRICULTURAL CONSERVATION PROGRAM SERVICE W. S. SWINGLER, ASSISTANT CHIEF, FOREST SERVICE RAYMOND W. HEINEN, ASSISTANT TO ADMINISTRATOR, SOIL CONSERVATION SERVICE CARL H. DORNY, DIRECTOR, BUDGET AND FINANCE DIVISION, SOIL CONSERVATION SERVICE CLAUDE T. COFFMAN, OFFICE OF GENERAL COUNSEL CHARLES L. GRANT, DIRECTOR OF FINANCE AND BUDGET OFFICER, DEPARTMENT OF AGRICULTURE Mr. WHITTEN. The committee will come to order. We have before us today Mr. Marvin L. McLain, the Assistant Secretary of Agriculture, in connection with the soil bank appropriation request. JUSTIFICATION OF THE ESTIMATES At this point in the record we will insert pages 153 through 156 and 159 through 186 of the justifications. (The pages referred to are as follows:) SOIL BANK PROGRAMS PURPOSE STATEMENT The Soil Bank Act (7 U. S. C. 1801-1837) authorized an acreage reserve program and a conservation reserve program to assist farmers to divert cropland from the production of excessive supplies of agricultural commodities, and to carry out a program of soil, water, forest, and wildlife conservation. The activities are supplementary to the acreage allotments and marketing quota programs authorized and appropriated for under the Agricultural Adjustment Act of 1938, as amended, and together with such programs, constitute an overall program to prevent excessive supplies of agricultural commodities from burdening and obstructing interstate and foreign commerce. In 1957, the programs were financed from funds of the Commodity Credit Corporation pursuant to section 120 of the Soil Bank Act, which authorizes the Secretary to utilize the facilities, services, authorities, and funds of the Corporation in carrying out the act from its enactment through June 30, 1957. After June 30, 1957, no expenditures for soil bank programs may be made by the Corporation unless it has received funds therefor from an appropriation made to carry out the purposes of the Soil Bank Act. Appropriations were provided for the conservation reserve and acreage reserve programs in the 1958 fiscal year from which funds are being advanced to the Corporation to cover payments to farmers and ranchers under the programs. CONSERVATION RESERVE PROGRAM PURPOSE STATEMENT The conservation reserve program is effective for 5 calendar years from 1956 through 1960. The objective for the 1958 crop year is to encourage the shift of 10 million acres of cropland into grass, trees, water storage or other long-range conservation uses. Producers enter into contracts with the Secretary for periods of from 3 to 15 years. In return for removing designated cropland from production and establishing long-range conservation practices, the producer receives cost-sharing assistance for establishment of the practice, and an annual rental payment for the duration of the contract. The Soil Bank Act provides that the Secretary may not enter into contracts with producers which would require payments to producers in excess of $450 million in any calendar year. The 1958 appropriation act changed this limitation to $325 million for the calendar year 1958. The 1959 budget estimate proposes a limitation of $450 million for the calendar year 1959. Producers participating in the program receive up to 80 percent of the cost of establishing permanent conservation practices on the land and an additional annual rental for the land placed in the reserve. The annual payment, of about $10 an acre nationally, is based on the value of the land for producing crops, land rent rates in the locality, and necessary incentive to encourage participation. The payments are made by negotiable sight drafts which are redeemed by the Commodity Credit Corporation. Appropriation: Appropriated, 1958-. Budget estimate, 1959_. $162, 940, 000 350, 000, 000 (a) Conservation reserve program Appropriation act, 1958 and base for 1959. Budget estimate, 1959--- Increase (for additional annual rental and practice payments)-- +187, 060, 000 |