Areas under the responsibility of Great Plains Wheat, Inc., include Africa, Europe, Latin America, and the Near East. To service these huge areas, offices are maintained at present at Lima, Peru; Caracas, Venezuela; Bogotá, Colombia; Rotterdam, the Netherlands; and Rio de Janeiro, Brazil.

The Asian program is administered by Western Wheat Associates, and is supported by the two regional organizations under the name of Wheat Associates. The Asian program is conducted through offices at Tokyo, Japan; New Delhi, India; and Manila, the Philippines.

The market development program of both organizations is worldwide, since they are working on every continent except Australia.

Much of the expense for conducting this market-promotion program can be met with foreign currencies generated by Public Law 480 sales. These funds represent a small fraction of the proceeds from sales of farm commodities for foreign currencies under title I, and the allocations to cooperating commodity groups such as Great Plains Wheat are made through the Foreign Agricultural Service.

These funds are being effectively utilized to conduct our market development program abroad. We are working in such areas as market research, promotion projects, technical service, nutrition education, and other informational and service activities designed to develop new markets and to expand existing markets.

The foundation of this entire cooperative program is the grassroots support it is receiving from wheatgrowers who, though badly pressed by the cost-price squeeze, are investing part of their income to strengthen the market for U.S. wheat and wheat products. The benefits of their investment and efforts are flowing to the wheat industry and to the national economy.

These foreign programs are extremely important, but the success of the overall effort depends on the strength and support of the grassroots organization and the work that is being done at home.

Member States contribute to the regional organization on the basis of its wheat production, both past and present. Each State is represented on the association's 18-man board of directors according to its share of the regional budget. During the current fiscal year, the budget for Great Plains Wheat, Inc., is $356,000. The pressures on this relatively limited budget are tremendous.

This dollar budget, contributed by growers, must be used to pay the salaries of certain personnel in foreign offices. These producer funds also pay the salaries, costs, and other expenses necessary to administer and supervise the foreign market-promotion program. Maintenance of financial records and fiscal control must be met from our dollar funds, and we must pay the salaries of information and marketing specialists, consultants, and technicians who service the foreign market-development program.

Our stateside personnel, whose salaries and operating expenses come from our dollar funds, must provide a wide range of services. They must prepare cropquality reports, sample display folders, and other promotional materials; provide photographs for use in trade-fair displays and in foreign publications; manage the trips for visiting foreign wheat missions; supply wheat samples for blending experiments in foreign laboratories; provide our foreign offices with information on market conditions in the United States; relay information to the U.S. grain trade regarding the needs of the foreign market; and provide other services designed to support the overall goal of increasing the U.S. share of the world wheat market.

DOMESTIC PROGRAMS

There are several other specific programs which bear a close relationship to the job of expanding foreign markets. These include:

(1) Elimination of trade barriers.-Great Plains Wheat, Inc., has appointed a trade expansion committee and assigned an economic analyst to work full time with the committee on matters affecting the competitive position of the U.S. wheat industry in the world market. The committee has gathered data and information on U.S. marketing policies and practices, and is using this information to encourage changes which will increase the flow of U.S. wheat into world markets. They have worked on such matters as improving our export credit facilities; removing the U.S.-flag ship requirements on U.S. commercial exports which impede sales abroad; urging stronger representation for U.S. wheat interests at international policy discussions; such as, the International Wheat Agreement (IWA); the General Agreement, on Tariffs and Trade (GATT); the Common Market and other meetings where trade policies are negotiated; and

recommending changes in our marketing practices and export-pricing structure to improve our competitive position in the world market.

(2) Work on transportation problems so that U.S. wheat will be more competitive in all export markets. Because the major wheat-producing areas are far removed from ocean ports, freight rates play an exceedingly strong role in the marketing of wheat, particularly the export market. Transportation rates have too often been designed to restrict the flow of wheat to domestic markets and predetermined locations rather than allowing it to move in a variety of directions, depending upon where the market demand is the strongest at any given moment. Great Plains Wheat, Inc., provided the leadership in calling attention to the potential value of the Japanese market and urging reduced rates for Great Plains wheat moving to export points on the Pacific coast. The first breakthrough came in the Hard Winter wheat area of the southern Great Plains and opened up a cash market now taking about 40 million bushels of Hard wheat annually from Kansas, Nebraska, and Colorado. Railroads in the northern Great Plains have now made similar reductions and this should make it possible to move Hard Red Spring wheat to the Pacific coast for export. With these rates, the United States should broaden its foothold in the growing Asian market; a market that was once dominated by Canada and Australia.

(3) Improving the quality of wheat available to the export market.-The United States has a great potential advantage in world trade because of its ability to produce five different classes of wheat in various quality ranges. Because the foreign market demands all classes and qualities of wheat, there is an opportunity for the United States to meet world demand for the diverse qualities of wheat which the United States can produce.

Great Plains Wheat, Inc., is working with the U.S. Department of Agriculture, universities, plant breeders, and cereal technologists, crop-quality councils, and other segments of the wheat industry to urge the development and production of improved varieties which will meet the needs of the foreign market.

On the basis of cargo-sampling surveys, the association also conducted cargo sampling surveys at various ports of the world in order to compare the quality of U.S. wheat exports with those of other leading wheat-exporting nations. The surveys revealed that U.S. wheat fared poorly in the comparative analysis because of (a) too high a percentage of unsound kernels and admixtures and (b) lack of uniformity from cargo to cargo. On the basis of these findings, Great Plains Wheat, Inc., supported changes in the grain standards which would improve the quality of our wheat exports while making the standards more precise and meaningful to the foreign buyer. The resulting changes, which were made on June 1, 1964, have brought many favorable comments from the foreign trade on the improved quality of our wheat shipments. There is little doubt that the changes have improved the reputation of U.S. wheat in the world market. However, the problem of uniformity remains. Countries like Canada and Australia have developed means of coping with the situation by pooling each year's crop and establishing uniform grades often referred to as "fair average quality." The United States has an opportunity to include a quality measure, such as the sedimentation test, in its grading system which would give the foreign buyer greater assurance as to the end-use value of wheat imported from the United States. The sedimentation test has been used as the basis of loansupport premiums, and is achieving recognition from plant breeders, mill buyers, and cereal technologists as a valuable tool in measuring wheat quality. If such a measure could be added as a quality indication on exports, there is good reason to believe that it would improve the competitive position of the U.S. wheat industry in world trade.

ADDITIONAL CONTRIBUTIONS BY COMMISSIONS

This, however, is only part of the contribution which Great Plains wheatgrowers are making in the interests of increasing U.S. wheat exports. In addition to their share of the $356.000 budget for Great Plains Wheat, Inc., the wheat commissions in our five member States annually spend an estimated additional quarter of a million dollars in the interest of foreign market development. These funds are being used to support crop surveys; to finance plant breeding, quality control work, and other projects designed to upgrade the quality of wheat production; to act as host to visiting foreign wheat missions; to develop utilization studies useful in developing and refining wheat foods and other products which may be adaptable to foreign markets; to support a wheat economics reference

bureau and a wheat abstract literature service for use of the industry; and to provide other services which are necessary to expand the export market.

U.S. wheat exports have reached a new, and higher, plateau. In the 1963-64 marketing year, about 850 million bushels of wheat moved abroad. This amounted to 75 percent of the total crop produced in the United States during the previous year.

The 1963-64 exports set two big records. First, it was a record year in total amount of wheat exports, 130 million bushels bigger than the previous high. Second, it was a record in cash sales. About 355 million bushels, or 41.7 percent of total exports, were sold for dollars-double the average cash sales in recent years.

The gain in wheat exports is reflected in several developments. The foreign market has overtaken the domestic market as the No. 1 outlet for U.S. wheat and wheat products. There also has been a sharp decline in the wheat carryover, down to about 900 million bushels on July 1, 1964. Today, there is little talk about the "burdensome wheat surplus." Instead, concern has shifted to a strategic reserve which would handle the domestic requirements for a year's period, plus meet foreign marketing commitments. This is solid evidence that market development is, at last, beginning to pay off.

As encouraging as these facts are, there is plenty of room for improvement. In the last half of 1964, there was a slump in total wheat exports as well as the area of cash sales, because other wheat-exporting nations were allowed to undercut our prices for an extended period and because the United States still has to develop shipping and credit policies that will meet the competition in world trade.

REVIEW OF MARKET PROMOTION

I would now like to review the current program which is being conducted abroad by Great Plains Wheat, Inc., and Western Wheat Associates.

Europe and Africa.—A sampling program is now being organized to measure improvements under the new U.S. wheat standards and to compare with a previous survey of wheat shipments arriving at European ports from the United States and other wheat-exporting nations. Another study has been completed. showing that U.S. wheat is being unfairly penalized by a system of price and quality in Common Market countries; copies of this report are being made available to appropriate officials in the United States as well as in Europe. Several wheat films have been reproduced and are being placed with film-distribution libraries for circulation to European audiences. In Germany, Great Plains Wheat has joined with an organization of bakers and millers to promote "toastbread," a type of bread new to the German market because it is similar to the American white loaf and is sliced and wrapped; "toastbread" is made from a flour blend containing 50 percent Hard wheat from the United States, and there are indications that the bread has become firmly entrenched in the German market. In Spain, the doughnut appears well established, as a result of a cooperative promotion program with Spanish doughnut firms. A market-development program in Africa is still being organized and now being built around technical service, in addition to efforts to promote bulgur, particularly in Nigeria. Asia. Market development projects recently completed in Japan include a premix wheat flour product promotion, a confectioners' training course, and technical seminars on biscuit and cracker production. Several new projects are being started, including a bakers' training course, a malt wheat flour usage study, advanced bakery technology and engineering course, a special education program on U.S. wheat at the Japan School of Baking, and promotion campaigns for American-type sandwiches and noodles. In addition, a kitchen demonstration bus has been constructed and delivered to Okinawa to tell the nutrition story to the people of the Ryukyu Islands.

Last fall, India was confronted with her worst food crisis since gaining independence. The United States poured 132 million bushels into the country during the last half of 1964, and the New Delhi office received many calls in connection with the distribution, storing, and utilizing the huge amount of American wheat. Special educational efforts were aimed at educating Indian processors on wheat quality as related to India's needs and additional efforts aimed at consumers who were getting their first taste of American Hard Red wheat.

In the Philippines, bulgur introduction, charcoal oven, and school lunch projects feature the program directed out of Manila. A bakery trainee returned from a 6-month course at the American Institute of Baking as part of a general program to improve the quality of bakery products.

South America.-Bakers' training programs are continuing in Colombia and Guatemala, where several hundred bakers have been given new skills in turning out quality baked products utilizing American Hard wheat. In Ecuador, plans have been made to furnish sedimentation and protein testing equipment to the National Wheat Commission's laboratories. In Brazil, a nutrition education program is being conducted in cooperation with the Brazilian Government and food for peace.

This is a brief survey of the work now being carried on by the two wheat organizations abroad. Much more needs to be done, and this is why we urge not only a continuation, but also an expansion, of our efforts to build permanent markets for U.S. wheat and wheat products.

Wheat exports last year produced an estimated $675 million, which helped narrow the deficit in our Nation's balance of payments; at the same time, wheat shipments moving out under the food-for-peace program performed a number of vital tasks which otherwise would have called for an outlay of dollars.

Public Law 480 marked an important turning point in American agricultural history. The bill introduced has two new concepts. First, it recognized that the United States could use its agricultural abundance to raise the world's living standards. Second, it offered a unique opportunity for commodity groups to share in a cooperative effort to build permanent dollar markets for our farm products.

U.S. wheat producers, too, saw the growing world need for their products and recognized that an intensive, well-organized campaign would be necessary to capture a larger share of the international market. With the organization of wheat commissions, they brought new resources, new talent, and new ideas into the job of market development. It is this partnership that is now carrying out the intent of Congress as expressed in Public Law 480 and it deserves continued and expanded support.

In closing, Mr. Chairman, I want to express the appreciation of my association for the consideration which you and all the members of this subcommittee have always given to market development for U.S. agriculture.

STATEMENT OF WESTERN WHEAT ASSOCIATES, U.S.A., INC.

Mr. Chairman, the wheatgrowers of the Pacific Northwest accepted the limitations of geography and turned to active promotion of oversea markets for their product as early as 1952, even before the enactment of Public Law 480.

Over 80 percent of Pacific Northwest wheat production goes into the export market, so there is good reason for grower interest-both in cooperating with Foreign Agricultural Service, USDA foreign market development activities, and in domestic activities designed to make U.S. wheat more competitive in an active, ever-changing world market.

Many domestic activities of the wheat commission of Washington, Oregon, and Idaho contribute to the effective operations of the export market development program. Some of these are:

1. Variety improvement research, and disease and weed control studies. 2. Wheat utilization studies.

3. Transportation studies and wheat quality surveys.

4. Abstract services and utilization aids, which make information readily available to interested persons or groups.

5. Information programs designed to keep every grower informed on the latest developments in his industry.

In addition, the State wheat commissions, representing 40,000 Pacific Northwest wheatgrowers, contribute annually about one-fourth of their total budget to direct foreign market development activities through Western Wheat Associates. This investment is supplemented by similar sums from State wheatgrower organizations, making a total operating budget in fiscal year 1964-65 of $155,885. This regional organization formed in 1959 immediately joined with Great Plains Wheat for the promotion of U.S. wheat sales under the USDA cooperator program in the Far East. In Asia, where they are known as Wheat Associates, U.S.A., administration of the program is the responsibility of Western Wheat Associates.

From the start of the program, the wheatgrower organizations made the maximum contribution to the program in line with their resources. WWA's budget for fiscal year 1964-65 was increased by $15,000 over the previous year; while

for the same period, reimbursement from project funds was reduced from $25,525 to $18,000.

We would also like to point out the difficulty of arriving at an “equitable" sharing of financial responsibility. There are innumerable allied industries and agencies who share in the advantages of increased wheat exports. Not the least of these is the U.S. Government, which is presently committed to a price support policy for U.S. wheat. Any wheat left unmarketed at the end of a year becomes the property, in most instances, of the Commodity Credit Corporation, with attendant carrying and storage charges.

The peoples of Asia today constitute the world's largest export market for U.S. wheat. In this continent, we find the largest customer under Public Law 480 is India; while Japan is the leading dollar buyer of U.S. wheat.

As Japan moved from the postwar period of dependence on Public Law 480 supplies, to the status of an independent purchaser, able to freely choose from the world's wheat market offerings, Wheat Associates was able to influence Japanese purchases.

Studies were made of Japanese consumer product preferences, Japanese milling and baking needs, and the mechanics of the Japanese marketing system. These studies were coordinated with domestic programs to insure U.S. ability to supply the Japanese market at prices competitive with other suppliers. WWA feels there is overwhelming evidence to support the contention that the U.S. share of the Japanese wheat market has been increased by market development activities.

NOTE.-Figures shown are for Japanese fiscal year. 1964 figure is for period from Apr. 1, 1964, to Mar. 31, 1965. 1964 purchases listed here would have a cash value of approximately $85 million.

Foreign market development is, in many ways, "pioneering." It involves an uncertain amount of risk spending. There is no comparable experience for this type of work anywhere in the world. Enough experience has been gained now to make decisions on the effectiveness of certain types of promotional activities. Cooperators are convinced of the benefits of investing funds in promotional market development activities; but often their resources are limited, and cannot be significantly increased even though this be their desire.

India, the largest consumer of U.S. wheat in the world today, presents a situation quite different from that of the present Japanese market. Here Wheat Associates' objectives have been

1. to service the import, storage, and distribution of U.S. wheat so as to minimize the losses through waste, spoilage, or infestation;

2. to improve the image and acceptability of U.S. wheat in India;

3. to assist various local organizations to acquaint the Indian public with the nutritional value of wheat and accept it as part of their daily diet; and 4. to help Indian millers and bakers produce the maximum in quantity and quality products from U.S. wheat.

Such necessary service activities do not increase the volume of U.S. wheat which flows to India; and, indeed, they are not designed to do so. Nevertheless, wheatgrower organizations consider it important to maintain the worldwide reputation of U.S. wheat as a desirable product of high quality. Therefore, they have devoted a portion of their limited resources to such service programs in the Public Law 480, title I, market countries. However, it is the consensus among grower groups that the U.S. Government, through its Public Law 480 generated currencies, should assume an ever greater share of such costs.

Our present activities in India do not seem to quite fit the purposes of title 104(a) of Public Law 480 as it is now interpreted. However, the Public Law 480 market countries offer one of the few outlets in the future for expanded cash exports of U.S. wheat. Wheat Associates is presently investigating possibilities of small cash sales of U.S. wheat to various Public Law 480 counties. The highly successful Japan market development program grew from just small beginnings. Therefore, we believe this practical approach to market development activities should be continued. Foreign currencies generated by Public Law 480 should be more fully utilized in the effort to assure the United States its fair share of the world wheat market-now and in the future.