"SEC. 702. (a) There is hereby established a Peace Food Policy Committee which shall consist of an Assistant Secretary, or officer of comparable level, of each of the following departments or agencies: Departments of State, Treasury, Agriculture, Commerce, Health, Education, and Welfare, and the International Cooperation Administration.

"(b) It shall be the duty of the Peace Food Policy Committee to advise and. consult with the Peace Food Administrator concerning the administration of this Act. The Committee shall meet from time to time upon request of the Peace Food Administrator and at such other times as it may deem necessary.

"SEC. 703. (a) There is hereby established a Peace Food Advisory Committee which shall consist of representatives of the following and such other groups as the President deems advisable who shall be appointed by the President for terms of two years:

"(1) The major agricultural organizations;

66

"(2) Exporters of food and fiber;

(3) Voluntary agencies such as Cooperative for American Remittances to Europe (CARE) and church groups;

"(4) Educational groups; and

"(5) Voluntary health groups.

"(b) It shall be the duty of the Peace Food Advisory Committee to advise and consult with the Peace Food Administrator, and to make such recommendations as it deems advisable, concerning the administration of this Act. The Committee shall meet from time to time upon request of the Peace Food Administrator and at such other times as it may deem necessary. In earrying out its duties under this Act, the Committee shall invite a representative of the United Nations Food and Agriculture Organization to meet with the Committee in order that, through him, the views of other exporting countries might be heard and their interests taken into account.

"(c) Members of the Advisory Committee shall be entitled, while attending meetings of the Committee, to receive compensation at the rate of $50 per diem, and while away from their homes or regular places of business they may be allowed travel expenses, including per diem in lieu of subsistence, as authorized by law for persons in the Government service employed intermittently.

"SEC. 704. In negotiating agreements under this Act, the President shall give due consideration to the internal and external political and economic conditions of the countries concerned by drawing upon the appropriate title or titles of this Act in such manner as to carry out more effectively the policy set forth in section 2."

The CHAIRMAN. There are many different features in the proposed legislation which the committee will want to examine with great care. Basically, the broad goals of many of the specific provisions of the bill are worthy of our serious study and support.

Congress in recent weeks has produced other examples of this kind of initiative, leadership, and foresight that is exemplified by S. 1711. I can only say to Senator Humphrey, who is to be our first witness, and who is the sponsor of this bill, and to the other cosponsors of this measure, that I hope this bill fares better than the proposal of our Committee on the Development Loan Fund. In the latter case those of us who saw the wisdom of sound financing long-term planning in the execution of our foreign lending program were rebuffed by the administration, which chose the expediencies of the budget rather than the more fundamental needs and requirements of our foreign policy.

I hope that the administration will make some attempt to see the merits of the food for peace bill, because there is great merit in the proposal.

Undoubtedly, some of the details should be modified in the light of the testimony we are about to receive. The witnesses scheduled to appear before the committee include members of Congress, executive agencies, private organizations, and interested and informed individuals speaking for themselves.

I wish to insert in the record at this point the reports from the Department of State and the Department of Agriculture, both of which I may say disapprove of the legislation.

(The letters referred to follow :)

Hon. J. W. FULBRIGHT,

Chairman, Committee on Foreign Relations,
U.S. Senate.

DEPARTMENT OF STATE,
Washington, July 6, 1959.

DEAR SENATOR FULBRIGHT: In compliance with your request the Department of State has reviewed S. 1711, introduced by Senator Humphrey for himself and others to promote the foreign policy of the United States and help to build essential world conditions of peace, by the more effective use of U.S. agricultural commodities for the relief of human hunger, and for promoting economic and social development in less developed countries.

1. This bill would effect several fundamental changes in Public Law 480 of particular interest to the Department of State:

(a) By shifting the emphasis of the act's purposes from surplus disposal to support for foreign economic development;

(b) By extending the authority to 5 years and directing the conclusion, "insofar as feasible," of multiyear sales agreements;

(c) By increasing the obligational authority from $1.5 billion to $2 billion

per year;

(d) By transferring responsibility for administering Cooley amendment loans from the Export-Import Bank to the Development Loan Fund;

(e) By establishing a fixed interest rate of 22 percent on economic development loans under subsection 104 (g);

(f) By providing for additional uses of sales proceeds which would extend the present categories from section 104 (0) through 104 (x);

(g) By adding a new title IV authorizing the conclusion of long-term supply contracts (up to 10 years) involving sales of commodities on a dollar basis, with credit extended at a rate of interest not to exceed 22 percent on 40-year terms;

(h) By adding a new title VII establishing an agency known as the Peace Food Administration, as a part of the President's Executive Office, to administer the act.

2. The Department of State is opposed to this bill for the following reasons: (a) The proposed shift of emphasis in the act's purposes from surplus disposal to foreign economic development assistance would create a misleading impression of the extent of the possibilities of using agricultural surpluses for additional development. It would create among some countries exaggerated expectations of economic aid and among other friendly exporting countries would create apprehension about our policies with respect to surplus disposal. Agricultural surpluses are not capital goods, they are consumption goods, and are useful as aid only in countries suffering from agricultural deficits. They cannot be substituted for capital goods, or for the hard currencies needed to buy them. To attempt to increase the use of agricultural surpluses for economic development, to the extent envisaged in the bill, would tend to discourage or depress domestic agricultural production in aid recipient countries which must depend upon their agricultural resources for economic development. Moreover, reliance on long-term supplies of agricultural commodities from abroad on concessional terms would create serious problems if such supplies were cut off.

(b) The 5-year extension period and directive for multiyear programs implies a degree of permanency which is not in accord with the administration's policy to eliminate gradually the incentives which are responsible for overproduction and surpluses in the first place. Regarding multiyear programs, experience has shown that the theoretical advantages of multiyear programs are illusory. In most cases it simply is not possible to predict commodity requirements more than 1 year in advance with sufficient accuracy to make them meaningful. The signing of a title I agreement for 3 or more years does not necessarily mean We do that the importing country will take all the supplies contracted for. not have this assurance even in 1-year agreements. For example, in 1958 Greece agreed to take about $25 million worth of surplus commodities under title I, of which approximately $20 million was allocated for wheat. However, since it subsequently produced a bumper wheat crop it was unable to take any of

the wheat, which reduced the value of the program to about $5 million. This year Greece is exporting wheat and edible oils and is not able to absorb any Public Law 480 commodities. India provides another instance of this type of situation. It usually has been assumed that India could absorb unlimited quantities of any kind of food; yet we were unable to program 150,000 metric tons of rice for India this year because it had a bumper rice crop which, with its normal purchases from Burma, satisfied its total market requirements. Another illustration of these difficulties is the case of Korea. The Depart ment of State is particularly interested in maximizing title I programs with Korea; between 85 to 90 percent of the sales proceeds resulting from such programs are used for mutual defense. The value of the program in fiscal year 1956 was $47 million, in fiscal year 1957 it was $19.2 million and rose to $50 million in fiscal year 1958. Because of the importance of this program to Korea and the United States we would like to maintain the value at about $50 million. However, Korea cannot absorb more than approximately $33 million worth of title I commodities this year. It has a good rice crop and is looking for customers to which to export rice. This is an example of a situation that could not have been anticipated in advance and illustrates the futility of attempting to plan multiyear agreements with such countries.

However, there are occasional instances where consumption requirements are fairly steady and depend largely on imports. In such cases we have negotiated multiyear agreements, which we can do under present legislative authority. We shall continue to use this type of agreement when warranted.

(c) We believe that an increase in the annual title I authority substantially above the current $1.5 billion could result in the displacement of our own commercial marketings and those of other friendly countries. It is important to note that the latter include countries, such as Burma, Thailand, Vietnam, Pakistan, Spain, Greece, Peru, and Argentina, which are heavily dependent on agricultural exports and to which we are providing assistance under various aid programs. These countries are already highly sensitive concerning our surplus disposals and legislation that envisaged a large increase in such disposals would create serious problems in our foreign relations with them.

(d) We oppose the transfer of administrative responsibility for Cooley amendment loans to the Development Loan Fund. The Export-Import Bank has gained valuable experience in its handling of Cooley loans. It is doing an effective job in promoting U.S. private investment abroad and we can see no justification for making the proposed change.

(e) We do not believe that it is desirable to fix arbitrary interest rates such as the 2 percent for economic development loans under subsection 104 (g) by legislation. The executive branch should have flexibility in determining interest rates on foreign loans in accordance with circumstances existing at any particular time.

(f) Although there might be certain advantages in having authority for some of the suggested new currency uses, in general we believe any additional use categories should be avoided. They tend to reduce the share of the sales proceeds made available to recipient countries in the form of loans or grants. This reduces the interest of such countries in title I agreements.

(g) We do not believe that the proposed title IV which would authorize long-term dollar supply contracts with credit up to 40 years would result in larger disposals. The absorptive capacity of the less developed countries is already being satisfied by present title I programs, together with commercial purchases. In the case of the more developed countries, which are able to purchase their requirements from the United States and other suppliers on a normal commercial basis long-term credit such as proposed would only result in displacement of normal purchases.

(h) The Department is opposed to the new title VII which would establish a Peace Food Administration in the Executive Office of the President. We believe the statutory establishment of an interagency coordinating committee and a public advisory committee is unnecessary and undesirable since the present interagency organization assures that the interest of the Department of State and other agencies are taken fully into account in developing title I programs and adequate means now exist for ascertaining the views of interested private organizations and individuals. Experience shows that this organization operates effectively and we believe, therefore, that it should be continued.

The administration is now preparing specific recommendations involving amendments to Titles I and II of Public Law 480 in furtherance of the President's food for peace program. These will soon be submitted to the Congress.

If we can be of further assistance to you and your committee please do not hesitate to call on us.

The Department has been informed by the Bureau of the Budget that there is no objection to the submission of this report.

Sincerely yours,

WILLIAM B. MACOMBER, Jr.,

Assistant Secretary

(For the Secretary of State).

DEPARTMENT OF AGRICULTURE,
Washington, D.C., July 6, 1959.

Hon. J. W. FULBRIGHT,

Chairman, Committee on Foreign Relations,
U.S. Senate.

DEAR SENATOR FULBRIGHT: This is in response to your letter of April 23, 1959, requesting our comments on S. 1711, an act cited as the "International Food for Peace Act of 1959."

The Department opposes enactment of the bill.

The principal purposes of S. 1711 are to (1) extend title I through June 30, 1964, and authorize foreign currency sales of $2 billion a year at cost to the Commodity Credit Corporation for the 5 fiscal years starting July 1, 1959; amend certain existing uses of foreign currency sales proceeds, provide grants of foreign currencies to certain international organizations, and authorize establishment of binational foundations abroad through the use of loan repayments; (2) extend title II through June 30, 1964, and authorize emergency grants abroad of $250 million annually at cost to the Commodity Credit Corporation; (3) authorize sales of agricultural commodities on a long-term credit basis without limitation as to the time or amount with supply commitments up to 10 years; (4) authorize grants of CCC commodities for establishment of national food reserves abroad; and (5) establish a Peace Food Administrator in the Executive Office of the President to administer Public Law 480 and foreign currency sales authorized under section 402 of the Mutual Security Act of 1954.

Public Law 480, particularly title I, has contributed significantly to maintaining U.S. agricultural exports at a high level. An extension during this session of Congress will permit us to continue programing commodities without interruption since the present authorization does not expire until December 31. We believe there is little to be gained by extension beyond 1 year and it is not essential to efficient operation of the program. Every effort will be made, consistent with the objectives of the food for peace program, to maximize the utilization of our surpluses, however, and any additional authorization needed will be requested of the Congress before the end of the fiscal year 1960.

We have entered into several 2- and 3-year supply commitments under title I for commodities clearly in surplus supply during these periods and where there was room for increased consumption of the commodities without adverse effect on normal commercial trade. With such existing authority, therefore, the proposed amendment of section 101 to seek, insofar as possible, the negotiation of agreements for periods in excess of 1 year is not necessary.

We oppose the transfer of responsibility of private enterprise loans under section 104 (e) from the Export-Import Bank of Washington to the Development Loan Fund. The promotion of economic development with foreign currencies through the private sector is being administered vigorously by the ExportImport Bank. The Bank has the experience, general know-how, and operating responsibilities best suited for this activity which was largely intended for U.S. industry participation.

We oppose the establishment of a maximum interest rate of 22 percent per annum for 104 (g) loans because this requirement would not permit flexibility in loan operations. The amendment to section 104 concerning release for other purposes authorized in section 104 of funds excess to needs for the payment of U.S. obligations is not necessary since the act now gives the President this authority.

New currency uses 104 (q) through (x) would expand an already wide range of authorized uses and would further complicate the administration of foreign currency sales proceeds. In many countries the need for foreign currencies for U.S. programs exceeds the availability of such currencies. Authorized additional uses would increase the competition for currencies and result in less effective

U.S. programs. As to the possible use of loan repayments to establish nonprofit foundations to foster and promote research, education, health, and public welfare as provided in title VI of S. 1711, the use of loan repayments is not yet a real problem because of the limited amounts of foreign currency which accrued this year and are expected to accrue in the fiscal year 1960.

We favor the use of surplus agricultural commodities for the establishment of national food reserves as provided in title V of S. 1711. We believe, however, that it would be preferable to amend title I to permit grants of commodities for establishing reserves in underdeveloped countries, under conditions requiring payment to be made for any quantities of such reserves utilized in commercial channels.

Specific recommendations regarding amendments of title I as well as title II in furtherance of the food for peace program will be submitted to the Congress

soon.

We oppose the changes in administration provided for in title VII of S. 1711. The mere adding of another echelon of administrative machinery would not result in increased movement of commodities abroad. We believe such increases can be attained within the concepts of the food for peace program, through the existing mechanism for interagency coordination which has proved to be effective.

Every effort will be made to increase the utilization of our surpluses under policies and safeguards consistent with the best interests of the United States. We are convinced that the establishment of a new agency is not necessary to effective operation of the program, and that the additional costs incurred would be an unjustified use of public funds.

We oppose the provisions of title IV of S. 1711 for the same reason that we oppose a longer term extension of title I. Moreover, title IV would create additional problems. Supply commitments up to 10 years, without requiring determinations that commodities are surplus, might obligate the United States to finance commodity purchases from the commercial market which might not otherwise be made under the price support program. Long-term supply commitments of this kind will tend to create the unfortunate impression that surpluses will be with us for at least that forward period. We are not aware of advantages to be gained in title IV provisions since it appears they are aimed at the same countries now participating in title I programs. Also, it would be undesirable to establish surplus disposal on a permanent basis since the problem of utilizing our agricultural abundance and appraising the domestic agricultural situation is too important and has too many implications to legislate years ahead.

Although we favor the donation of surplus edible oils and products thereof to needy persons abroad, we oppose the proposal to make such donations mandatory. Current market situations indicate the strong possibility that all surplus edible vegetable oils in the United States may be needed to meet demands of dollar sales or title I agreements. The continued low production of coconut oil, the flood disasters in the Argentine area, and the failure of Communist China to deliver in accordance with earlier indications may develop a tightness in the world market for edible oils which will be more than enough to absorb the indicated surplus in the United States.

The Bureau of the Budget advises that there is no objection to the submission of this report.

Sincerely yours,

TRUE D. MORSE, Acting Secretary.

The CHAIRMAN. The first witness is Senator Hubert Humphrey, the principal sponsor of the legislation.

Senator Humphrey, will you proceed?

Senator HUMPHREY. Thank you, Mr. Chairman.

STATEMENT OF HON. HUBERT H. HUMPHREY, U.S. SENATOR FROM THE STATE OF MINNESOTA

Senator HUMPHREY. As you have probably noted, the bill is not only sponsored by the present witness, but by 15 other Senators.

I introduced the bill on April 16, 1959. At that time I gave a detailed description of the titles, the subsections and features of the