I wanted to comment only on two or three things about it. No. 1 is that in general we feel that the Grange have asked for a long time for an interresolution asking for a balanced budget and we felt some responsibility for helping balance it.

We have not asked in these budget recommendations that we have made for any increase that has to be with farm income. We feel that we have had to make our adjustments along with everybody else at this point. We think maybe in the wheat bill alone we have made a considerable contribution to the budget. I think that this next year there is only $22 million scheduled for support prices for wheat. This is a tremendous improvement. We are glad that we could have done it. We notice also in passing that agriculture for the $4.5 billion budget took the deficit of $52 million which is, percentagewise, $600 million, basically.

The cost-sharing programs proposed for meat inspection could cost us $77 million. This on top of $429 million in support price cut along with the necessity of the farmers spending another $100 million for the cut off if they continued at the same level would be $606 million off in net farm income.

FEED-GRAIN PROGRAM

I think you will have noted that a part of this reduction came as a result of the feed-grain payments. This in our opinion is kind of figure juggling because the payment would have to come out of the next fiscal year which would increase our problems at that time. These payments are pretty important because they come at the time of the year that people are planting crops. I would hope, if the feed program is continued, that provision would be made for the inclusion of enough money to pay the first payment on the feed-grain program.

Now this is important because at the present time we have got another problem and that is that right here at the beginning of the planting season Farmers Home Administration is at the limit of their lending authority for operating loans in May or June, and this seems to us to be exceedingly important, that something should be done about that; otherwise, the people who depend on that may change for operating loans, have no other place to go. It has been proven they have no other credit and they are going to be out of business if we cannot do something about raising the lending authority of FHA at that time. They have money in FHA but they don't have any authority to spend it.

We, of course, would oppose the transferring of $20 million, the cost of technical service, soil conservation program, because we believe Soil Conservation Service is doing a job not only for agriculture but for the whole country. Instead of adding to the burden of conducting soil conservation programs, it would seem that in the light of what has been happening in the Mississippi Valley we might well be stimulating some additional. In our judgment it is better to spend some money in the small watersheds and water conservation programs than it is to clean up the debris in the Mississippi Valley.

I think you have heard testimony concerning the REA. We don't believe these budget cuts are wise or the limitations are wise. The buildup of requests for the expanded services are just so big, and if we keep cutting this back all the time, we are going to be running this further and further behind.

If the war on poverty is to be very meaningful in the areas where we have the standard living of rural people, we almost have to start with electricity. You don't have bathrooms, you don't have anything else unless you have electricity, so we just about start there. We think that this should be a considerably larger expenditure that it is.

INADEQUACY OF RESEARCH FUNDS

In terms of research, the $2 million increase in funds appeared to us to be inadequate. We think it ought to be around $10 million.

In extension work there has been some shifting of this budget from the research budget over to some other responsibilities to extend only an increase of $700,000 for that work, and it appears to us that it ought to go up to $11.5 million.

Another agency that we are concerned about is the Packers and Stockyards. We are getting enough evidence that there has been some manipulation on the markets, action that has been brought with the packers and stockyards in the Mississippi Valley concerning the poultry listing and blacklisting and assignment of markets and a number of things.

It indicated that this $31-billion industry needs more than 190 people to do the regulating or scales or markets and all of that. We believe that if this is going to do the kind of job that it ought to do to really make the free market function the way it should, it must be free of manipulation and unnecessary controls, that this agency ought to have more money. It will be well spent, not only in terms of farm income— a manipulation of the income hurts the consumer as much as it hurts the farmer.

That is all I want to comment on this.

I would like to say that we have been long-time supporters of Public Law 480. Since this question has arisen previously, if I may suggest the market for the use of soft currencies for market. I don't know how far we have to go on that. I simply think we ought to use what amount we can use properly and efficiently and prudently and we ought to make it available out of those soft currencies to see what we can do in market development. I don't think anyone is going to say increase the market development, but by golly we have had an awful increase in the market since we started using market increasing costs. Senator HOLLAND. Senator Young?

Senator YOUNG. Thank you, Mr. Graham.

FLORIDA GRANGES

Senator HOLLAND. I understand you have one large grange in Florida now.

Mr. GRAHAM. I think there are 16 granges in Florida.

Senator HOLLAND. Is that so? You have been growing fast.
Mr. GRAHAM. The State grange is established in Florida.

Senator HOLLAND. Have you?

Mr. GRAHAM. Yes.

Senator HOLLAND. How long ago did this happen?

Mr. GRAHAM. Two years ago. It has been developing recently. Thank you.

Senator HOLLAND. Thank you, Mr. Graham.

(The prepared statement of Mr. Graham follows:)

Mr. Chairman, members of the committee, my name is Harry L. Graham. I am the legislative representative of the National Grange.

Let me express, first of all, the appreciation and the courtesy that has been afforded to the National Grange to appear before this distinguished committee, to discuss the subject matter which is before you today. I would say first of all, that the National Grange is deeply concerned with the problem of Federal expenditures, and we have passed numerous resolutions in the past, concerning the necessity of balancing the Federal budget. The 98th annual session of the National Grange which met last year in Atlantic City, passed the following resolution.

"Resolved, That the National Grange favor reduction of the Federal expenditures where possible, and that a tax policy should be designed to balance the budget and reduce the national debt."

Another part of the same report was adopted as follows:

"The major expenditures of the Federal Government are in the fields of military costs, servicing the Federal debt, and assistance of veterans. There is little possibility of reducing the cost of debt services and veterans' services. Indeed, the latter will probably increase as the veterans get older. "Agriculture must recognize that continuing efforts must be made to reduce the cost of Government programs for agriculture if we are to approach this problem with clean hands. The Grange position of depending upon the users of a product for the income from the sale of that product instead of depending upon the Federal Treasury is a significant contribution to this effort.

"However, we must recognize that there can be no major cut in Government expenditures until the cost of the preparedness program can be reduced. We, therefore, commend the Department of Defense for its effort to remove the expensive obsolescence of the military establishments and to effect all economies possible consistent with the needs of our national defense."

We would point out to the committee that we did expect Agriculture to take its share of the reductions that were necessary, in order to have a Federal budget within the limits which the President had set. We would point out, however, that although Defense has a budget of $52.2 billion for 1965, it has a budget for 1966 of $51.6 billion, which is down $600 million. Agriculture, on the other hand, has a budget of 4.5 in 1965, 3.7 in 1966, and it is down 600 million. Now a reduction for a $42 billion budget the same amount as that for a $52.2 billion budget doesn't quite seem to be in proper proportion. We are not advocating a reduction in armaments, but we are saying that we believe there still are some areas in which the Defense Department can make some further reductions without endangering the national welfare.

We would also point out that the price support program is down $429 million, the cost-sharing programs proposed for SCS and meat inspection would cost Agriculture another $77 million, the reduction in ACP payments would mean that the necessary work to protect the farms and the countryside in the downstream areas, if it was carried on at current levels, would have to be completely at the farmers' expense for the $100 million that has been cut off. This, then, makes a total of reduced farm income or increased farm expenses, of $606 million.

On the other hand, we notice that there have been no appreciable cuts in some other areas, one of them being the expenditures for subsidies to the merchant marine, and various other expenditures that have to do with the programs that are designed primarily for the benefit of the consumers.

We note that a part of this reduction is the result of a deferral of the feedgrains payments which would ordinarily be made next year at sign-up time, until after the beginning of the next fiscal year. This is not of necessity, the best economy, although it looks like an economizing move on the face of it. What this does is make it necessary for the farmer to turn to other types of financing for the money which would enable him to put in his crops during the spring. This advance payment has been one of the features of the feed-grains program, that has caused it to have as much popularity as it has, and, although we do not believe this is going to endanger the feed-grains program, we don't see that it adds any contribution to it, either.

This last item is especially important in the light of the situation that has developed in the Farmers Home Administration, when, 2 months before the end of the fiscal year, and at the very height of the planting season, the FHA has reached the end of its lending authority for operating loans. It has some money in its account, but it does not have the authority to spend this money for these

operating loans. We would hope, however, that there is someone in the Appropriations Committee who is sufficiently interested in agriculture, and in the welfare of the family owned and operated farm, that these funds, which are so desperately needed by people who have no other means of credit, should be made available during this planting season. This problem is acute, and there is an urgency about answering it that I want to place before you with all the emphasis possible.

Because of the fact that the public interest is well served by the inspection of meat, and in our judgment, the health requirements of 160 million people are as important a consideration as the small monetary amount for some 10 million people, then we are opposed to the assessment of the fees for meat inspection to the processor who simply will pass it on to the farmer. It's an unfair load to be placed upon an already overburdened agriculture, and especially, in the case of poultry inspection, it would be a disaster. The markup for the broiler industry is so extremely small at the present time, that to add another half to three-quarters of a cent per bird for inspection would simply drive the prices down below the present rockbottom prices which farmers receive. The value that the public receives from knowing that they have high quality food products, certainly would make the expenditure for this purpose from the public funds, both defensible and equitable.

The proposals for transferring $20 million worth of the cost of the technical advice in the Soil Conservation Service programs over to the user, on top of the fact that he already has the cost-sharing obligation with the Federal Government and, in addition to the fact that the ACP payments are reduced by $100 million, appears to us to be an unwise move in that it cannot do anything, except reduce the participation of the farmers in the soil conservation program.

We would also point out at this time, that the expenditure of $20 million for technical advice, would appear to us to be a very moderate amount, if it can make any kind of contribution to preventing the kind of problems which have been besetting the Midwest, especially in the Mississippi Valley, for several weeks. The same is true of the conservation practices under ACP. The failure to provide adequate funds for conservation practices simply means that participation in the programs to conserve water and to keep it from "running" off the fields and to allow it to "walk" down the hills and, therefore, to help to prevent the extensive flood damage, will be curtailed.

We are concerned, also, because of our longtime association with and support of the rural electric cooperatives, with the proposed reduction in the budget for this part of the Department of Agriculture, which has probably helped to contribute to the comfort, convenience, and the improvement of the standards of living of rural people than any single thing that has ever been done by the Federal Government. We are properly engaged in an attempt to alleviate the poverty conditions in which many people live in rural areas. Certainly, this must begin with electric service. Without it, there can be neither modern sanitation facilities, nor the opportunity to live in such a way that the individual concerned can become the kind of healthy person who will contribute to the health and welfare of the Nation.

We do not know in detail the extent of the needs of the Rural Electrification Administration, but we are certain from the contacts which we have from out in the rural areas and from conversations with the leaders of the rural electric cooperatives, that there will be an extremely heavy load of applications for extension of power facilities to the rural areas, totaling about $675 million. A good share of this budgetary problem which is being faced by REA, is the result of the fact that last year they asked for $370 million and got $275 million. They had $90 million contingency fund, a carryover of $23 million, plus recessions of $28 million for a total of $416 million. This was not an inadequate amount, except that they were limited to the expenditures of $300 million.

This committee, and the Congress, in their wisdom are going to make the determination, both as to the amount of appropriations and, in the case of REA. the amount that can be placed in a revolving fund, which does not need to be reappropriated every year. The Grange earnestly urges this committee to make provision for funds, either appropriated or in a reserve, and a lending authority that is large enough to begin to bring these REA projects up to date. If they are to be approved on the basis of need, then the continuing rise in costs of production indicates that there is little financial wisdom involved in postponing any needed construction for a later date.

We note that there has been a $2 million increase in the funds for agricultural research. It appears to us that this is totally inadequate and that there needs

to be about that much spent for marketing and utilization research alone. We would recommend that funds in this sector be provided for an additional $10 million, instead of the $2 million in the present budget. The $700,000 increase in the budget of Extension Service as a part of the program of the land-grant colleges, also appears to be completely inadequate in the light of what these important agencies are supposed to contribute to the regular operation of our agricultural economy, to say nothing of the added responsibilities which they have as a result of some budgetary transfers from Agricultural Research Service and, also the assigned responsibilities in the war on poverty. To properly provide for marketing and utilization research, area development extension work, home economics programs with the antipoverty program, and pay increases to bring the county agents salaries up to the level of other Federal employees, is about $11.5 million. We hope that the committee will make provision for the appropriation of this more adequate financing of this important work.

The final area of concern of the National Grange is in the field of the regulative agencies. We, of course, as we have demonstrated in our support of certain types of legislation, believe that in the major export crops which are under support, that measures should be taken beyond what the market can provide, to stabilize and improve farm income. At the same time, we believe very sincerely, that in the food crops such as meat, vegetables, fruits, etc., that the market can and should supply an adequate return to the farmers who are producing these products. A major concern that we have is that there has been increasing evidence of the manipulation of the market, both in terms of dividing up the markets, and blacklisting producers that try to improve their markets and many other devices. The problem of accurate weights and measures is always before us, because this is a way again of reducing the legitimate income of farmers in the marketplace.

We believe that, within the limits of the staff that it has available, that the packers and stockyards division of agricultural marketing service of the USDA has done an excellent job. However, to expect an organization with 190 in their staff to adequately police an industry that sells $31 billion of food products, which is 5 percent of the gross national product, is being completely unrealistic. We believe that the $2.25 million appropriation to this agency is wholly inadequate, and we would like to see provision made for a steady increasing of this staff, until it is approximately twice its present size.

You will notice I am sure, from our testimony, that we have not asked for additional funds for farm income. We have asked that this Congress not add additional burdens to the already heavy burdens which American agriculture is carrying, and we have asked for additional appropriations for those agencies who serve more than farmers in that they serve not only the needs of all rural people, but make a contribution to the welfare of all Americans. We earnestly ask your serious consideration for the agencies which we have specifically called to your attention and will appreciate any favorable consideration that you may give.

RECORD OPEN TO RECEIVE ADDITIONAL STATEMENTS

Senator HOLLAND. This concludes the scheduled hearings of representatives from the general public outside the Department of Agriculture who were scheduled for this week.

The record will remain open for any additional statements from any other organizations who wish to file for this hearing record, as well as to receive statements from Members of the Senate and the House, and also any additional statements we requested from witnesses who have appeared before us.

Except for that, the hearing of outside witnesses is concluded.