In addition, title III of Public Law 480 authorizes direct distribution of agricultural products by voluntary relief organizations. In the 4 years of operation under Public Law 480, 101 countries have received over $1 billion worth of American farm products. For the most part these have been distributed directly to those in need. To indicate that the United States has not had a program to use food for peace and to feed the hungry of the world is simply to ignore these facts.

The provisions of S. 1711 completely change the nature of the Public Law 480 program. "Trade Development" is struck from the title and removed as an objective, for all practical purposes. As a substitute there is proposed a multiplicity of overlapping programs, most of which constitute elaborate giveaway mechanisms.

Farm Bureau is opposed to this bill.

HISTORY, PURPOSES, AND OPERATION OF PUBLIC LAW 480

It might be helpful to briefly review the history of Public Law 480.
The 1954 policies of Farm Bureau stated:

"Surplus farm products that cannot be sold abroad for dollars should be offered for sale and export through private channels, under limitations determined by the Secretary of Agriculture, in exchange for local currencies."

The committee is familiar with the leading role which Farm Bureau took in developing Public Law 480 and the support which we gave toward its enactment into law in the 83d Congress. The President signed the bill in July 1954. It was designed as a 3-year program and $700 million was authorized for sales for foreign currency. This has grown into a 51⁄2 year program with an authorization for title I of $6,250 million.

Other bills were introduced in the 83d Congress which were designed to donate large amounts of U.S. agricultural production without regard to the long-term benefits of U.S. agriculture and the implications to our allies. In its wisdom, Congress rejected such proposals, recognizing that a healthy agricultural economy was essential to the United States and to the entire free world. dangers of disrupting world agricultural markets were real then-they are even more so now. Nor have American farmers changed their views that they do not want to become totally dependent on U.S. Government to export their production.

The

At its inception, the three main objectives of the Public Law 480 program were (1) to reduce surpluses by making possible sales of farm products in addition to the normal dollar sales; (2) to establish private trade channels for sales of farm products which could be continued with dollar sales after the termination of the program; and (3) to use part of the currency received from such sales to develop new markets or expand existing markets for farm products. In our opinion these original objectives are still sound.

Through the operation of title I of Public Law 480, over $2 billion worth of foreign currency has been generated in foreign countries for use in economic development projects. Used wisely, these funds can provide tremendous benefits to underdeveloped countries. Used unwisely, or accumulated in unreasonable amounts, these same funds can present a threat to the economic and fiscal stability of a country which could do real damage to our foreign relations.

TEMPORARY CHARACTER OF PUBLIC LAW 480 PROGRAM SHOULD BE REEMPHASIZED

The original law establishing Public Law 480 prescribed a temporary program with a 3-year limitation. While it has been necessary to extend the law beyond this period, Farm Bureau has emphasized that it is imperative to recognize that Public Law 480 is a temporary program. Congressional committee reports on these extensions also have emphasized this point.

The report from the Committee on Agriculture of the House of Representa tives (Rept. No. 432 dated May 9, 1957): "This committee would remind those in charge of administering this law that it is not intended as a permanent part of either our agricultural or our foreign trade program. It is an emergency law designed for the sole purpose of making the best of a bad situation by providing for the disposal of agricultural surpluses in a manner which will return some benefit-if possible, a permanent benefit-to the United States." Our 1959 policies state in part:

"We recommend that this law be extended and that adequate funds be provided. However, this program should be terminated as soon as our agricultural

surplus situation will permit. Public Law 480 was designed as a temporary program to help relieve problems caused by unrealistic domestic farm programs. It is not a permanent solution nor a satisfactory substitute for trade for dollars. So long as Public Law 480 is in effect, its administration should continue under the U.S. Department of Agriculture.

"Sales for foreign currency must not replace sales for dollars. Public Law 480 sales effort should be directed toward those countries which lack sufficient dollar exchange to purchase our farm products.

"Agriculture's primary task in the export field is to develop dollar markets for its products on a permanent basis.

"American agriculture must not become permanently dependent on Government export programs. A program must be formulated to replace foreign currency sales with commercial sales for dollars on a gradual basis."

Currently Farm Bureau recommends that Public Law 480 be extended for 2 years and that funds be provided as follows: $1,200 million for fiscal year 1959, $800 million for fiscal year 1960.

Such an action by Congress could have a very healthy effect upon the agricultural export picture. First, it would give promise to other exporting nations that the United States really considered foreign currency sales a temporary measure and not a way of life. Second, recipient nations would be put on notice that they could not expect to obtain indefinitely their food and fiber needs in this manner.

It is essential that we change from foreign currency to dollar sales as quickly as possible, recognizing that this cannot be done abruptly. Congress should give a clear indication of the temporary nature of Public Law 480, and the United States should program foreign currency sales in such a manner that countries would gradually become less dependent on this mechanism.

This would be a positive, constructive program of helping countries to grow into full-fledged trading partners of the United States. This is the road to economic growth and permanently increased standards of living. We are certain that underdeveloped countries would much prefer this to a total indefinite dependence on U.S. Government programing under the provisions of Public Law 480.

SURPLUS DISPOSAL AND CUSTOMER NATIONS

In our statement supporting the beginning of the Public Law 480 program in 1954, Farm Bureau stated in part:

“*** But in so doing, we must always guard against policies that would indicate to our foreign customers that we have in mind some giveaway scheme for agricultural commodities. We believe that if the executive branch of the Government and the Congress should adopt such a large-scale giveaway policy it would impair our firm dollar sale of agricultural commodities."

We must always keep in mind that American farm products, for the most part, compete directly with U.S. industrial export for scarce dollars.

Many countries of the world are engaged in state trading of one form or another. If our foreign customers assume that they can continue to obtain their food and fiber needs with local currencies, they will certainly not be interested in spending scarce dollars for these agricultural commodities. They will undoubtedly direct a substantial portion of these scarce dollars for the purchase of U.S. nonagricultural commodities.

Foreign countries or domestic producers should not come to depend on easy sales through this program.

SURPLUS DISPOSAL AND COMPETITOR NATIONS

Objections from competitor nations whose friendship and cooperation is vital to the United States and the free world have not been infrequent. Some of these nations are very good customers of American farmers and ranchers. However, many have recognized that our serious surplus situation required programs to move substantial portions of U.S. production into the export markets. In 1954 Farm Bureau stated: "To indiscriminately dump or give away these huge commodity credit stocks would be very disruptive to our efforts in developing a coalition of free nations for mutual defense."

These competitor nations have been willing to accept such programs as a temporary means of alleviating our surplus problem. We can expect adverse reactions from them unless we (1) adopt measures to reduce Government stimulus to surplus production, and (2) begin to show our firm intention to prevent

sales for foreign currency from becoming a long-term means of exporting American farm products. The following excerpt from a June 22 press release of the Food and Agriculture Organization illustrates this point:

"The unfavorable terms of trade of agricultural exporting countries, the report says, present 'formidable obstacles to economic development,' and serve as a brake on the expansion of world trade generally. Low or declining prices for agricultural goods were in contrast to the stable or rising cost of nonagricultural goods.

"The committee again laid stress on the need for adjusting national agricultural policies so as to promote a better balance between supply and demand in the international market, and to correct the growing differences in standards of living of different countries. Despite action taken so far, the report indicates that the basic factors responsible for the maladjustment remain."

The steps taken by the President initiating conferences between the exporting countries are certainly necessary at this time. We are not using food for peace when we disrupt the markets of friendly competing nations by U.S. Government programs; we may be promoting disunity among nations.

We must face the facts. The production of our present surpluses was not motivated by real market needs at home or abroad. They were motivated by the continuation of unrealistic government price support programs. Many of those who have consistently advocated programs that have been responsible for the accumulation of such vast amounts of agricultural commodities now look desperately for any avenue of disposing of them, regardless of the longrun consequence to the American farmers, to friendly nations, or to the U.S. Treasury.

U.S. AGRICULTURE BECOMING DEPENDENT ON GOVERNMENT EXPORT PROGRAMS

There is evidence that American agriculture is becoming overdependent on Public Law 480 and similar export programs.

We have been very successful in moving substantial portions of agricultural commodities into export markets, but, at the same time we have not been successful in removing the Government incentives for surplus production. As a consequence, U.S. farmers have continued to produce those commodities having high Government-guaranteed price supports in excess of effective market demand.

Since 1954 approximately $8 billion has been programed under all the titles of Public Law 480. Special Government export programs in this amount carry with them a tremendous responsibility in regard to normal commercial trade.

When Public Law 480 was passed on July 10, 1954, CCC had title or held loans on about $6 billion worth of agricultural commodities. Today, 5 years latereven with this vast movement of food and fiber, under Public Law 480, of over $8 billion, CCC stocks are about $9,500 million.

In fiscal year 1958, 31 percent of our agricultural exports moved under direct Government programs. (See attachment I.) In fiscal year 1952, the United States exported $3,430 million worth of farm products for dollars. In fiscal year 1958, our commercial shipments outside direct Government programs will be $1 billion less, or approximately $2,474 million. 'In fiscal year 1952, 15 percent of farm exports moved under Government programs; in fiscal year 1959, 34 percent.

Attachment II reveals the serious decline in sales for dollars in our export markets. Even this is not the whole story. Many of our exports for dollars are made possible by subsidizing the sales price. We estimate that approximately 70 percent of our agricultural exports were the result of some form of Government assistance. For example, during the past fiscal year all of our wheat and cotton exports were subsidized.

Consider the fact that in addition to subsidizing all of our wheat and cotton exports, in fiscal year 1958, 65 percent of our wheat exports and 34 percent of our cotton exports moved under Public Law 480 or section 402 of the mutual security program.

EXPORT OF AGRICULTURAL PRODUCTS SHOULD BE EXPANDED ON COMMERCIAL BASIS

The answer to this critical situation is not donating U.S. farm products to foreign countries, paying transportation, and financing storage facilities in such countries. The answer is not initiating a program of sales on 50-year credits. The only real answer is a concerted effort to move toward expanded agricultural exports on a commercial basis. This means that we must (1) make some basic

changes in some of our domestic price support programs, (2) extend Public Law 480 on a temporary basis, (3) work hard to develop markets on a more permanent and unsubsidized basis.

We must face up to the basic decision in regard to agricultural exports. Do we go down the road prescribed in S. 1711 and extend Public Law 480 foreign currency sales for 5 years-and thereby encourage the idea of its being a permanent program-and in addition invent new ways to "give away" additional agricultural production, or do we utilize these programs to encourage farmers to work at maintaining and expanding commercial agricultural exports? We favor the latter approach.

It is important to farmers that this Nation maintain and expand export markets for farm products. It is important not only to the producers of the export crops but also to the producers of all agricultural commodities.

If export markets were lost, the 50 million acres of cropland that were used for the production of exports last year could be used to grow commodities for the domestic market. Then all farmers would lost income.

Exports mean dollars for farmers. And agricultural exporting is big business for many other groups in our economy. Shipments of food and fiber for fiscal year 1958 required inland transportation, storage, and ocean shipping for 32 million tons of cargo. That's enough to fill 710,000 freight cars or 3,200 cargo ships. Last year an average of nine ships a day left U.S. ports laden with farm products.

Surpluses will not be eliminated by far-fetched schemes for artificial export programs. They will only be corrected when Congress makes up its mind to try to stop the flow of Government price-supported commodities into Government bins and warehouses. In the meantime, efforts to increase commercial export markets must be greatly expanded.

Farm Bureau intends to dedicate every effort to expanding real markets at home and abroad. An example of this is Farm Bureau's foreign trade office established in Rotterdam, Netherlands last year. This is a direct effort to expand old markets and locate new markets for U.S. farmers throughout Western Europe. We have already had strong indications that an unrealized potential exists for expanded mutually advantageous trade. American farmers ask only that they be given the opportunity to work in this manner to expand their markets on a commercial basis.

We believe that the passage of S. 1711 will hinder those efforts.

RECOMMENDATIONS OF FARM BUREAU

In summary, we recommend that:

(1) The Congress put aside short-time political considerations and lend a helping hand to agriculture to obtain realistic farm programs. Some Govern

ment programs have contributed greatly to the solution to the farm problem and have improved farming conditions. However, efforts to fix prices and control individual plans of farmers to produce have not been successful. On the contrary, they have created a whole series of new problems, among them the vast surpluses of agricultural commodities.

(2) Public Law 480 in its present form be extended for 2 years with an authorization of $2 billion; $1.2 billion for the first 12 months' period and $800 million for the next annual period.

(3) The section authorizing the United States to enter into 10-year commitments to supply countries with food and fiber, whether or not such commodities are in surplus, be deleted. This provision authorized a permanent program of "sales" on the basis of 50-year credits. Such a program would duplicate title I activity and lead inevitably to state trading of U.S. farm products.

(5) The section of the bill authorizing the donation of large quantities of surplus agricultural products to nations desiring to establish in their country national food reserves to be deleted. We believe such a large-scale "giveaway" program would seriously disrupt commercial markets and deter trade.

(6) Emphasis be placed on market development in the use of foreign currency accumulated under title I of Public Law 480. We believe that the provisions of Public Law 480 in its current form are sufficient with regard to uses of foreign currency. According to our information, market development projects currently underway are having to be curtailed due to the lack of foreign currencies for this purpose. To further fragmentize the use of these funds will not serve the bests interests of American farmers.

We vigorously oppose the provision of the bill that would move the administration of the agricultural export program from the Department of Agriculture and place it under a separate agency to be designated as the Peace Food Administration. This change would take the program from those who have been trained in agricultural marketing and who have had experience in the operational and administrative problems connected with the handling of agricultural commodities. This provision attempts to divorce agricultural surpluses from agricultural programs. We believe that Public Law 480 should be administered by the U.S. Department of Agriculture.

ATTACHMENT I.-Agricultural exports, fiscal year 1958
[Millions of dollars estimated]

1 Programs: Public Law 480, all titles, and mutual security program sec. 402. ATTACHMENT II.—Agricultural exports under direct Government programs1

1 Public Law 480, all titles: ECA and mutual security programs including sec. 402, 550; USDA sec. 416 donations; barter.

2 Includes: Short term credit; sales at less than domestic prices; and export payments in cash or kind as well as commercial sales without Government assistance. * 1959 figures estimated.

Senator GREEN. The next witness is from the National Planning Association-Mr. Lauren Soth, chairman of the Agriculture Com

mittee.

Mr. Humphrey has just come in, and I will now turn over the chair to him.

Senator HUMPHREY (presiding). I see that Mr. Harris and Mr. Lynn have already testified.

The next witness will be Mr. Lauren Soth, who is the chairman of the National Planning Association's Agriculture Committee. Mr. Soth, it is good to see you, sir. We are very pleased to have you here. Many of us are familiar with your excellent work and your outstanding contributions to a better understanding of agricultural problem. I thank you for being with us today.

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