an alternative is provided to the unplanned rural migration to the great core cities such as New York, Chicago, and Los Angeles which we have witnessed since 1950.

Finally, as a point of summary, I should like to stress that movement and change within the economy are not to be deplored. They are the ways people and areas respond to changing rates of return. and, in turn, increase their own welfare. Problems of adjustment are always difficult and do not readily yield to solution. The forces at work are extremely complex and include physical, social, cultural, political and psychological as well as economic forces. Attempts to either speed up or slow down the process are dangerous.

The changes taking place in our rural areas are not new. They have been part of a process that started with our country, and attempts to inhibit these changes are almost as old. What compounds the problem is that rural America is synonymous with our agricultural economy. As the economic base declines the whole framework of rural society is affected-and rural poverty becomes a national crisis.

Rather than respond to rural poverty in terms of rural solutions, we should be thinking and I think we are, in terms of providing bridges by which our rural population can take part in expanding national prosperity.

Since 1961, the Nation has been moving toward the building of such bridges. The manpower development and training programs, the programs under the Economic Opportunity Act, and the special educational programs under the Adult Education and the Elementary and Secondary Education Acts are examples of such efforts. Each in its way prepares rural America for the transition to the social and economic mainstream of the Nation. The program of the Economic Development Administration relies to a great extent on the effectiveness of many of these programs to achieve its objectives. By gathering such programs within a network of rural growth centers across America, we believe an effective growth process can be achieved which will provide an effective alternative to the unplanned migration of rural Americans into our great metropolitan cities.

A final word, Mr. Chairman. In a larger perspective, as I suggested, these problems are not to be stated in terms of rural or urban problems. Our objective-that of all Government agencies, we hope is to make the free private enterprise system operate in a most efficient way. This is how we are going to get at the solution of these so-called urban or rural problems.

Thank you very much.

Mr. RESNICK. Thank you very much, Mr. Secretary, for the very excellent statement.

I have no questions.

Mr. Nichols?

Mr. NICHOLS. I have no questions.

Mr. RESNICK. Mr. Goodling?

Mr. GOODLING. Just one question. As I came in, you were reading on page 11. You say that in rural areas, there are 10 boys ready to enter the labor force for every adequate size farm unit becoming available.

You mean there are 10 boys ready to become farm laborers?

Mr. DAVIS. Well, they are on the market for jobs. They have a choice, theoretically, of occupational opportunities. The point we are making is that very few of them will be able to find jobs in agriculture either on the operational level or at the work level.

Mr. GOODLING. Well, how do you arrive at the figure that there are 10 boys available for every farm?

Mr. DAVIS. Well, this is a statistical computation of normal population growth and farm opportunities. As you know, I am sure, the tendency is to consolidate farms into larger areas to perform more efficiently through mechanization. This says, in effect, that this represents a decreased opportunity for people to go into farming.

Mr. GOODLING. Well, I can only speak for my own area, but I know definitely that that is not a fact. You can reverse the thing in my area and say there are 10 jobs available for every boy that is available. Mr. DAVIS. Well, this is comparing the size of the growing work force and opportunities on farm units. Now, perhaps there is something unique about your area that makes this inapplicable, and I would defer to your knowledge of your area, sir.

Mr. GOODLING. That is all, Mr. Chairman.

Mr. RESNICK. Mr. Montgomery?

Mr. MONTGOMERY. I have no questions, Mr. Chairman.
Mr. RESNICK. Mr. Zwach?

Mr. ZwACH. I have one question.

Mr. Davis, what part of your funds actually gets into what you would basically term rural America?

Mr. DAVIS. Well, I think it would be fair to say that our program as presently constituted has its major impact in the rural areas. We did some computations-I do not know how significant they are, but what they say is that if you equate rural area with counties with a population of under 10,000, for example, about 70 percent of our projects and at least about 50 percent of our money—and now I am talking about public works, which is the major part of our money-go into counties with population of under 10,000. This statistic holds pretty consistently throughout our program. By numbers of projects, the range goes between 70 and 80 percent and the range in money by program is between 50 and 80 percent. This tends toward the 50 for public works and climbs toward 80 percent for business loans. So as you can see, we are heavily engaged in putting our resources into rural areas. Mr. ZWACH. You are of the opinion that you are going to have to get sort of industrial centers established in the rural areas, but every little town will not become a rural development, that we are going to get sort of centers?

Mr. DAVIS. I think this is so.

Mr. ZwACH. Are you in your plans sort of laying out your plans on the basis that you are steering this money into what you think will be these centers?

Mr. DAVIS. A typical answer from a bureaucrat-yes and no. Part of our resources and activities are going into encouraging the establishment of these development districts. Now, the ideas of a development district is it is a grouping of counties and an identification of growth centers and then, hopefully, a process of developing plans and expenditures to accelerate the economic growth in these centers

so that all the outlying counties will benefit. This is part of our program.

On the other hand, I must point out that in order to get our agency through a transitional stage, we have adopted a policy which says that the worst areas, as measured by economic statistics, have first call on our funds.

If I tell you more about this than you want to know, please stop me, sir. But previously, our agency has operated in a reactive fashion. By that, I mean it has accepted applications from all eligible areas and has processed these applications and approved loans, or public works or whatever the application is for, on sort of a first come, first served, haphazard basis. This means that areas with, say, 6 percent unemployment, which is at the threshold of our criteria, get the same chance at our funds as areas with 20 percent unemployment or even more.

Now, because we do not have enough money to get around to all the areas, it it seemed to me sensible to set up some kind of priority, and because we wanted to bring about this in our agency a confrontation, if you will, with the problems of the worst areas rather than the best areas within our concept of distress

Mr. ZWACH. Mr. Chairman, for the purpose of conserving time and get on, I will see this individual personally with the other questions I have, sir.

Mr. RESNICK. Thank you, Mr. Zwach.

Thank you, Mr. Secretary, for your very fine testimony.

At this time, without objection, a statement for the record from Mr. Frank H. Murkowski, commissioner of economic development, State of Alaska, will be entered into the record.

(The statement referred to follows:)

STATE OF ALASKA,

DEPARTMENT OF ECONOMIC DEVELOPMENT,

OFFICE OF THE COMMISSIONER,
Juneau, Alaska, June 27, 1967.

HON. JOSEPH Y. RESNICK, Chairman, Subcommittee on Rural Development, Committee on Agrculture, Longworth House Office Building, Washington, D. C.

DEAR MR. CHAIRMAN: In response to your invitation to present testimony on the effectiveness of federal programs in rural areas, I am submitting the enclosed statement covering certain problems the people of Alaska have encountered in attempting to establish industry based on agriculture. I respectfully request that this material be placed in the Record.

Although vast areas of Alaska-indeed, the major portion of our state-are thinly populated, our problems may be classified as rural within the context of present federal programs. Alaska, with a large area and a relatively small group of people, has been unable to utilize many of the federal agricultural aids with the exception, to some extent, of the loan and grant programs of the Farmers Home Administration and the programs of the Soil Conservation Service. Because size and area and other geographic limitations contained in existing programs require us to try to apply so-called rural programs to our problems, in many instances, we and the federal agencies involved find ourselves confronted with numerous conflicts and requirements which have no bearing on the problems at hand. This situation results in a real difficulty in establishing policy and program guides.

We want to be as responsive as possible to your invitation and we are very willing to supply additional information on the operation of federal programs in Alaska if it would be helpful to you. In the meantime, however, consideration of the problems relating solely to the agricultural segment of our economy, as contained in our attached statement, will illustrate the difficulty we in Alaska experience in attempting to mold federal programs to long-held

concepts pertinent to Alaska. What is true of the situation with respect to agriculture in Alaska is similar to other federal programs when a distinction between "urban" and "rural" problems is made.

It is hoped that our prepared statement will be of some benefit to you. Should you require additional copies, I will be happy to make these available. Very truly yours,

FRANK H. MURKOWSKI,

Commissioner of Economic Development, State of Alaska.

AGRICULTURE IN ALASKA

FOREWORD

It is estimated that there are now 200 million people in the United States, and that there will be 340 million by the year 2000. The world population is now about 3.3 billion, and is estimated to be 4.3 billion by 1980, and 7.5 billion by the end of the century. Food shortages are worldwide, and the United States reserves of some foods have reached dangerously low levels. By the start of the 1967 wheat harvest, the wheat stockpile will be about 400 million bushels. It is estimated that 630 million bushels is needed for emergency reserve. Corn and other feed grains will be at level of about 43 million tons before the 1967 harvest, although the emergency reserve should be at 45 million tons. A sizeable acreage of cropland is being paved by our expanding highway system, and many thousand fore acres are being covered by suburban housing developments. Experts tell us that unless a great deal more is done in the next few years to boost food production, famine will be relatively widespread in the world by 1980. The tremendous area of land that is not being used for agriculture in the northern latitudes, such as in Alaska and Canada, will be used in the future. It is clear that the day of the agricultural surplus is gone. It seems reasonable to assum that if Alaska's population is to be well fed in the not too distant future, agriculture in the State must be developed and that we cannot continue to live primarily on imports.

In all of the major segments of agriculture that are explored in this report, there is a great deal of room for expansion. We do not need to look outside of the State in most cases for markets to support a higher level of processed byproducts, or of primary production. It appears that in the future, foreign markets will play an important part in agricultural development, but our own population will support a healthy level of the industry itself. Agriculture can have a bright future in Alaska, and it can contribute much more substantially to the economy of the State than it now does. Soil Conservation Service surveys indicate a minimum of 1.58 million acres of cropland in Alaska at this time. About one percent of this total, or 15,460 arcres, was under cultivation in 1965, and it produced crops to the value of 1.98 million dollars. By simple arithmetic, we can assume that the croplands now known to be available could produce a total product value of approximately 200 million dollars annually. Of course, we must have the population and the market to support such production. The people will come, the experts tell us, and in the meantime, many other people will come to lands all over the world, and the competition for food will be a matter of great concern. If Alaska is to develop the necessary future capability to provide for its people those basic foods that can be produced in northern latitudes, it is vital that the problems be recognized, and steps taken to correct them as soon as possible.

I. HISTORY OF AGRICULTURE IN ALASKA

Traditionally, agriculture has been a stepchild in the State of Alaska. Many of those who reported to the Federal government in regard to agriculture potential following the purchase of Alaska in 1867, were of the opinion that the land could never support agriculturally even a small part if its future population. It is probably true that this picture has never been totally destroyed, even in the minds of many Alaskans. The basic lack of faith in Alaskan agriculture has made the task of the farmer immeasurably more difficult, as it has the job of those dedicated individuals in various Federal and State agencies who have carried on research programs over the years and provided such farm oriented service as they were authorized to perform. The business community has never accepted agriculture as anything but a high risk investment, which it unfor

tunately has been in far too many cases. In spite of this position in the general economy, agriculture has been persistent. A steady decline has been noted in acres of ground under cultivation, number of farms being operated and number of cows being milked, but the areas of egg, poultry, and red meat production are showing slow but steady progress.

In the first and second decades of this century a flourishing, although small, agricultural community existed in the Tanana Valley around Fairbanks. A mill was constructed, and flour and feed were produced from local grains. An agricultural experiment station carried on a significant program of research in the areas of development of hardy strains of grains, root vegetables, and dairy animals. This agricultural community began to decline after the completion of the Alaska Railroad. One of the primary factors in this decline was one which is still valid today, competition with products imported from the southern states. It has been pointed out that agriculture was an infant industry at that time, and is still an infant in most respects. It has therefore been difficult to compete with the production from the highly efficient farms in other states, and during a period of general surpluses and depressed prices. In the limited areas where efficiency has been attained, Alaska agriculture has been competitive.

Farming has been continuous in the Matanuska Valley since 1914, and with additional colonization in 1935, the area has become the largest agricultural community in Alaska. However, it has also been declining in total productivity. This decline has been associated with changes in marketing conditions, lowering costs of transportation, and a lack of adequate capital which would enable the farmer to become more efficient and productive.

Fur farming was a thriving business in the State in the early years of this century. Reindeer were introduced before 1900, and export of meat became of some importance in the 1920's and 1930's. Both of these facets of agriculture have declined to the point where they are no longer of too much significance in the over-all picture. Production of vegetables has always been hampered by lack of facilities to process them for the market. Potatoes have been the strongest part of this type of production, perhaps because the potato lends itself to storage much more readily than other types of vegetables, and to the efficiency of a few large producers. Sheep and cattle were introduced to the islands in the Kodiak and Aleutian area in the early 1920's. This business has been up and down since then, with various operators attempting to build on an individual basis. Agriculture on the Kenai Peninsula has never been strong, although it has existed for many years, to a limited degree.

II. DAIRY FARMING

The number of dairy farms in Alaska as of January 1, 1961 was 80, by January 1, 1964, it had dropped to 62, by January 1, 1966, it was 45 and as of January 1, 1967, it was 51-37 of which are in the Matanuska Valley. The number of dairy cows in the State in 1961 was 2,900, a peak of 3,200 was reached in 1962. By 1964, the number of cows was 2,400, in 1966 it was 2,100 and by the end of 1966, it was 1,900 head. The average number of dairy cows per grade-A farm was thus 36.3 in 1961, 38.7 in 1964, 46.7 in 1966 and 46.3 by the end of 1966. The value of milk produced was $2,393,400 for 23,570,000 pounds in 1961 and is estimated to be $1,950,000 for the estimated 18,870,000 pounds produced in 1966. Actual farm income has averaged in the range of approximately 94% to 97% of the total value of the production. The decline in milk production between 1961 and 1966 is slightly less than 20%. The decline of the total value of production has declined about 18.5% in the same period, due to some slight rise in the price of milk during the period.

In 1966 the estimated milk production in the Anchorage-Matanuska Valley milkshed was 17,500,000-the value approximately $1,750,000. This area therefore, produced slightly less than 93% of the total in the State. The impact of the considerable drop in product value has been felt primarily in the Matanuska Valley, and this fact should be kept in mind when total agricultural output for the State of Alaska is reviewed. It will be noted that the total agricultural product for the State rose sharply in 1956, by about $800,000. It rose again by about $440,000 in 1959 and again in 1960 by about $470.000, then remained fairly constant until 1965, when it dropped about $430.000 per year. These total production figures do not adequately reflect the recent sharp decline in milk production, for the reason that other products such as eggs have experienced a