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criticism are that we believe that there should be a general review of this entire situation here as to the place of the cooperators, the amount the cooperators should contribute, and the amount of foreign currency that should be used and the way in which it should be used, all of which we feel has been lacking in the last few years.
I think any of the cooperators would testify that they have a great deal of difficulty in these times cutting through the redtape in the Department as to qualify for foreign currency, and there has been consistent demand that cooperators put up more funds than they have been putting up.
As I pointed out in my statement, the cooperators in the program vary widely as far as their financial ability is concerned and sources of funds. They come from all sorts of arrangements. Some of them do not have available large funds to put into the program. Of course, in the case of some of the cooperators like cotton, now they have succeeded in getting very large contributions to the foreign cooperators and that would be true of tobacco also, not so true in the other commodities.
The thing that we are interested in particularly, I think, is we would like to have a new look at the thing to see just what we can do in the way of expanding the program. We think that the dead hand of bureaucracy here is sort of holding down the possibilities for expanding a new project. It is very difficult in a good many cases to secure proof of new projects.
As far as I am personally concerned, I have been out of this thing now for a couple of years but every one of the cooperators here has some personal experience in that regard and you may want to hear from them so far as particular instances are concerned.
I am sure that that is the case. There has been too much caution, too much inclination not to go into new projects. While we are certainly, none of us, advocating that we go out on a wild program here that does not have some justification, we feel what our competitors are doing in the world market is considerably more than we are. People like the Canadians, they are just playing rings around us in the marketing of wheat. Of course, it is a big item with them. They have to export a lot of wheat to get their foreign exchange. We have not in our opinion done anything like-I am just talking about wheat now-the Canadians have been able to do in selling our wheat in the world market. We have done a job; there has been considerable improvement.
TRANSFER OF PUBLIC LAW 480 FUNDS TO AID Senator HOLLAND. I have a special question. Let me ask you first about this. One of our most respected farm organizations I think animated largely by the feeling that too much cost is being charged to agriculture which is not directed to the aid of agriculture. It was recommended to this subcommittee that the Public Law 480 be transferred out of the USDA to the AID operation. I wondered if you had any comments to make on that recommendation?
Mr. HOPE. Now that would just be, I assume with respect to the sales from foreign currency, that is what they are talking about, the grants!
Senator HOLLAND. The way I understood the recommendation yesterday that was made before the Farm Bureau was that they want to
transfer this whole operation to AID. You heard the recommendation; did you, Senator Young?
Senator Young. I came in when they were half through with it.
Senator HOLLAND. They felt that the State Department was very nearly running it in many respects already and they were particularly anxious, as I gathered it, that the large size of this financially be very clearly in the public mind taken out of the cost of the agricultural operation.
At any rate, that recommendation has come in from this highly respected source. I wondered if you or your committee had any comments you wanted to make on that.
FOOD FOR PEACE PROGRAM
Mr. HOPE. Just off the bat, I would question whether that would be advisable.
Now I agree with you to this extent, that these sales—that is, what they call the "concessional sales of foreign currency"-should not be charged to agriculture. There has been I think quite a shift in the last few years. I mean in the beginning we didn't hear much about "food for peace" and then in 3 or 4 years we began to talk about food for peace and that part of the program has expanded tremendously; and it should not be charged to agriculture. It is part of our foreign policy.
At the same time, it seems to me that the programs could still be conducted through the Department of Agriculture. As these surplus commodities which make up most of the concessional sales are handled through the Commodity Credit Corporation, I would foresee some difficulties if it tried to transfer all of that to AID.
PUBLIC LAW 480 EXPORT PURCHASES
Senator HOLLAND. I think that it would only be fair to say that part of their recommendation also was that the purchases for Public Law 480 export be made in the open market and that the price of selling of the surplus commodities be sizably increased beyond what it is now. I believe they want to increase it up to not less than 25 percent more than the current price support at any time.
In other words, they were trying to divorce this operation as I understood their suggestion as fully as they could from the commercial operations of domestic agriculture.
It is a far-reaching recommendation, yet it has much to be said on both sides. I invite any expression.
Mr. HOPE. I think that there are two sides to it but as long as we have farm programs which are based upon Government price supports and loans or any program whereby Commodity Credit takes over commodities, I would doubt the advisability of transferring any of these functions to AID.
Senator HOLLAND. Does this recommendation not show in an added way that there is room for real reexamination of this whole program besides going and deciding what sort of operation we shall make and how organized it should be?
Mr. HOPE. I think that is true, I would go along. I think the whole thing should be restudied. I am not sure which way it should go or what the decision should be but I did not intend today to go any fur
ther than to cover this subject of the relationship between the cooperators and the foreign agriculture service and the contributions which each group should make to the total program.
Senator HOLLAND. That is good, resist temptation as when we had a group of doctor specialists here to inquire about our special ailments, to see if you had any suggestions to make while you are here.
SHIPPAGE IN AMERICAN BOTTOMS REQUIREMENT
Senator YOUNG. One of the most serious developments that I see is this requirement that 50 percent of this grain be shipped in American bottoms. I am perfectly willing to subsidize the merchant marine, the shipping industry, but this should not be charged as a subsidy to agriculture. Even worse, they add it to the cost of the grain sold to any foreign country. In some cases these prices make sales almost prohibitive. Now if, say, Russia for example, or one of her satellite countries wants to buy wheat, they have to buy for cash, and they have to pay this higher freight rate, so they go to Canada and buy their wheat a lot cheaper. This becomes a serious business. Either our Government has to put up a bigger subsidy for each bushel sold or let Canada take over the sale.
Mr. HOPE. I think that is a serious matter and it ties in, of course, with this to a certain extent. I don't know why the requirement was made in the case of the Russian sales that they would have to be carried in American bottoms. I think possibly President Kennedy was not too well advised on that when he made that requirement, but possibly whoever was handling the matter thought that the Government would pay it just like they pay it in the case of the Public Law 480 shipments, I don't know. It is obvious that we could not compete with the export countries if we had to ship in American bottoms with their higher rates.
Now of course in that connection, the wheat association handling wheat has appeared before the Congress committee and has urged that some change be made in that.
As you know, Senator, in that arrangement further efforts are being made to do something about that. I don't think we need to get into the question of the subsidized merchant marine at all. If we are going to have a merchant marine, we will have to subsidize it but it should be done in some way that does not tie it in to these export programs because that is not doing the merchant marine any good. If the foreigners won't buy it because they can't pay the price, don't get the shipping and we don't sell the wheat.
WHEAT SOLD TO RUSSIAN SATELLITE COUNTRIES
Senator Young. Some of your friends have talked me into signing a letter to the President along with other Senators. We said the order requiring 50 percent of these commodities sold to Russia and her satellite countries be carried in U.S. bottoms ought to be rescinded. I am getting letters now from the longshoremen and shipping interests, indicating that I am about the worst guy around the Capitol. I supé pose all the rest who signed that letter are getting the same type comments.
Mr. HOPE. They probably misunderstand. The purpose of that, they certainly can't think that this thing is operating very well when they don't get cargoes. When they were interested in getting cargoes, it seems to me that if they understood that we are not trying to do anything to affect the subsidy, we know they have to have a subsidy but they don't like this way of doing it because it is not helping the longshoremen and it is not helping the American exporter.
COUNTRIES INVOLVED IN FOREIGN CURRENCY AGREEMENT
Senator Young. That is what I am trying to explain.
Mr. HOPE. I don't know that. Of course what happens now every time we make a contract under this 2-percent provision, every time we make a contract with India or Egypt or any other country that is buying under the foreign currency agreements, they agree to convert to 2 percent and that is converted into the currencies that can be used in the countries where market development operations are being carried on. For instance, if the cotton people are carrying on a program in France, they would need francs so they can convert those into francs.
Of course, in the end it is all washed out because you make the appropriation in dollars just for bookkeeping purposes but that all comes from the foreign currencies; that is, we don't use any dollars here that are the result of the levy of taxes that come into the Treasury in a normal way, it is just a bookkeeping matter. It is made in doilars but it is paid for by the foreign currency.
Senator Young. I know that, but what foreign currencies are being used the most? In some countries we don't have too much of a surplus but in India we have enough to last for a hundred years.
Mr. Hope. That is true. We don't have to convert to Indian, but we presume we are converting some Indian currency to use in the operations in the countries where we are carrying on market development activities. That is in the countries which our dollar markets like Japan and Western Europe and a few countries in South America where we are carrying on operations, then the currency is converted into that. You see, the law gives the Secretary authority to convert this currency into whatever is necessary, whatever is needed in carrying out the program. If he finds the cotton people need so many francs in France or that we need so many yen to sell cotton and wheat or the soybean program in Japan, he makes the conversion into those currencies.
Senator Young. There has been one other development which I perhaps should not even mention here but it has bothered me so much I am going to.
You folks are not responsible for it, but in recent months whenever someone is assigned to go to some foreign country to sell their commodities under this program, the announcement as to who goes there is made through political channels. I find out not from the Department who is representing North Dakota, but through the newspapers, 2 or 3 days late. This is the last program that should be involved in politics. There are enough other ones that could be. I may make a speech on the Senate floor one day.
Senator HOLLAND. Let me know so I can be there.
Mr. HOPE. I was elected in 1926 for the first time. That would be about 39 years ago.
Senator YOUNG. We still miss you.
, back, but I always am glad to get back to Kansas, too. I enjoyed it while I was here, I will say that.
(Discussion off the record.)
Is there anything from the other representatives of the group of cooperators before we adjourn? Our thanks to you for coming.
Mr. HOPE. Mr. Chairman, Mr. Hardy has a statement for Great Plains Wheat and one for Western Wheat Associates also. He would be glad to read the statement or he can submit it for the record.
Senator HOLLAND. I think if it is all right for him to submit it we can just place it in the record. We have a quorum call and we have to get there and terminate rather quickly if we may.
Mr. HARDY. Yes.
Senator HOLLAND. If you file the statements we will be glad to have them. People who are presently at the hearing, just Senator Young and myself, have to read them and the other folks who are not present will read them to find out what happened when they were not here, so everybody will get to see them.
Thank you, gentlemen, all of you.
STATEMENT OF HOWARD W. HARDY, PRESIDENT, GREAT PLAINS WHEAT, Inc.
Mr. Chairman, my name is Howard W. Hardy. I am president of Great Plains Wheat, Inc., a market development association which is supported and controlled by wheat farmers in the major wheatgrowing States of the Great Plains region.
Great Plains Wheat is the regional wheat-market-development organization which represents wheat commissions in the States of Colorado, Kansas, Nebraska, North Dakota, and South Dakota. Oklahoma's legislature has established a wheat commission this year, and this new commission is expected to add its support to our regional program.
Wheatgrower groups in Montana and Texas are associate members of the regional organization since these States do not as yet have a wheat commission to produce a steady and dependable source of operating funds.
In the Pacific Northwest, there is a similar organization, Western Wheat Associates, which is seeking to develop markets on behalf of wheat producers of Oregon, Washington, and Idaho.
Both of these organizations represent the largest commercial wheat-producing regions of the United States where the bulk of the Nation's wheat is raised.
Wheat commissions, or equivalent organizations, are the means by which wheat producers channel their support into a market development program. At the urging of producer groups, legislatures in nine States have passed laws authorizing the establishment of wheat commissions financed by a tax, or "checkoff.” on wheat sales. These levies are paid by the farmer.
The State commissions then organized the two regional associations, Great Plains Wheat, Inc., and Western Wheat Associates, in order to develop a coordinated approach to market development and therefore make most efficient and effective use of limited funds.
The principal office for Great Plains Wheat, Inc., is in Garden City, Kans., while Western Wheat Asociates has its headquarters in Portland, Oreg. Both associations maintain a joint office in Washington, D.C.