CONTENTS Duxbury, Robert, South Dakota Secretary of Agriculture, Pierre, Gilbertson, Harlan, county commissioner, Lincoln County, Hendricks, Graba, Jerry, Small Farmer Advisory Committee, Sebeka, Minn Huddleston, Hon. Walter D., a U.S. Senator from Kentucky. Humphrey, Hon. Hubert H., a U.S. Senator from Minnesota_ Knebel, Hon. John A., Under Secretary of Agriculture, accompanied by Dr. James Bostick, Deputy Assistant Secretary, and Victor Senechal, Assistant Administrator, ASCS... Lewis, James, Director, Office of Public Assistance, Federal Disaster Assistance Administration, Department of Housing and Urban Development, accompanied by Hugh Richardson, Individual Assistance Office, HUD, and Craig Annear, Office of the General Counsel, HUD__ McGovern, Hon. George, a U.S. Senator from South Dakota.. Nolan, Hon. Richard M., Representative in Congress from the Sixth Radcliffe, Ben H., president, South Dakota Farmers Union and chair- man, executive committee, National Farmers Union, Huron, S. Dak. Small Farmer Advisory Committee in west central Minnesota. Wefald, Jon M., commissioner of agriculture, State of Minnesota, Wollman, Hon. Harvey, Lieutenant Governor of South Dakota, Miscellaneous documents- Summary of Federal disaster assistance programs. Presidential or agricultural declaration since 1970 of disaster in Min- Declaration, instructions, and memorandum of the U.S. Department 1,66 Reference map indicating precipitation departure from normal in Letter from Senators Nelson and Proxmire, and Congressmen Baldus 77 Miscellaneous documents-Continued Problems and concerns associated with Federal emergency aid Letter from Washington by Senator George McGovern of South "Income Loss From Drought Staggering"-article from Rapid City "Income Down $150 Million-Half of Wheat Crop Lost”—article from Daily Republic, June 23, 1976... "Minnesota, Dakotas Suffer 50-Percent Crop Losses"-article from the Minneapolis Tribune, June 22, 1976.. "U.S. Drought May Push Up Beef Prices"-article from the Chris- Examples of first crop hay harvest and projected needs beyond avail- Page 78 82 84 85 86 87 99 101 DISASTER PROGRAM EVALUATION THURSDAY, JULY 1, 1976 U.S. SENATE, SUBCOMMITTEE ON AGRICULTURAL CREDIT AND RURAL ELECTRIFICATION OF THE The subcommittees met, pursuant to notice, in room 324 of the Russell Senate Office Building, at 9:21 a.m., Hon. Walter D. Huddleston (chairman of the Subcommittee on Agricultural Production, Marketing, and Stabilization of Prices), presiding. Present: Senators Huddleston, McGovern, Humphrey, Clark, Young, and Dole. Also present: Senators Mondale and Abourezk. STATEMENT OF HON. HUBERT H. HUMPHREY, A U.S. SENATOR FROM MINNESOTA Senator HUMPHREY. We will open the hearing. Senator Huddleston will soon be with us to chair the hearing and I am privileged to fill in for him. We have two of our colleagues here this morning, Senator Mondale and Senator Abourezk to testify. I have a brief statement that I want to enter into the record. I just wanted to add that Senator McGovern and I had asked the staff to develop a summary of existing emergency programs and how they are utilized and implemented. This summary should give us a better handle on the situation and a better notion as to what the legislative changes are that should be made in our existing programs. As we deal with an emergency situation, we need to find ways to simplify and improve the operation of the existing programs. Quickly and in a summary manner, just let me say that the impact of the drought on our grain production is extremely serious, with losses for oats, barley, wheat and rye, estimated by our commissioner of agriculture from the State of Minnesota, Mr. Wefald, at 50 percent, and corn losses are estimated at 20 percent. And the losses in forage, particularly as it relates to hay, are even more serious. And rather than taking the time here to go through this entire statement, I will ask that it be made part of the record.* I should note that we do have the summary of Federal disaster assistance programs which will be entered in the testimony as well as my initial statement. *** *See p. 91 for prepared statement of Mr. Wefald. **See p. 66 for prepared statement of Senator Humphrey. Senator HUMPHREY. We will have legislation today that deals with the hay supply situation. The President has issued an order and the Agricultural Stabilization and Conservation Service announced a subsidy on the transportation of hay of two-thirds, up to $27 a ton, of the actual cost to transport a maximum of a 30-day supply. I have introduced legislation, along with Senator Mondale, which would establish a 90-day supply base in terms of determining a producer's eligibility for the transportation subsidy. It is my judgment that the 30-day period is totally inadequate. Also we need to do something further about our supplies of oats for livestock. Senator Mondale, I know that we have a vote, and we will get right on with your testimony. STATEMENT OF HON. WALTER F. MONDALE, A U.S. SENATOR FROM MINNESOTA Senator MONDALE. Thank you, Mr. Chairman and Senator Young, we are very pleased that the Senate Agriculture Committee would hold these hearings as promptly as they have on this tremendous drought situation, which is affecting us in Minnesota, Wisconsin, South Dakota, and in other parts of the upper Midwest. There are several Minnesotans who will be testifying today, and I would like to introduce them. Jon Wefald, our effective and gifted commissioner of agriculture; Cy Carpenter, an old friend of ours and of this committee, president of the Minnesota Farmers Union; State Representative Glen Anderson, farmer, legislator, and member of our House Agriculture Committee; Harlan Gilbertson, who is an old friend of ours, and member of the county commission from southwestern Minnesota; Mr. Bill Higgs and Jerry Graba from Wadena County. Mr. Chairman, the first 5 months of 1976 are the driest in the recorded history of Minnesota. This comes on the heels of drought conditions late last summer and fall. They were serious enough to qualify farmers in 40 Minnesota counties for disaster assistance in the form of the emergency livestock feed program. In mid-May of this year, before the 1976 disaster had really hit, good alfalfa was selling for about $45 a ton. But as conditions steadily worsened, most local farmers held on to their carryover hay. As a result, local markets dried up and farmers were forced to look elsewhere, and prices now are two to three times the normal level. The Government has responded with some assistance. Many farmers are receiving 50-cent oats through the emergency livestock feed program, and emergency livestock loans are now available to some cattlemen. As of today, 53 Minnesota counties have been designated Federal hay emergency areas. And just last Friday, the ICC issued a drought order, and I understand the Farmers Union and others are negotiating railroad rates with Burlington Northern and other western railroads. All of these forms of assistance have helped, but much more is needed. Farmers are beginning to sell off parts of their herds, and in some cases, I am now advised, liquidation has begun. The longer term problem of winter roughages has not been addressed and, in my judgment, must be. And the so-called Presidential declaration has not been adequate to really deal with that problem. The present programs have helped Minnesota cattlemen to survive the summer months because some carryover hay is available, and animals can graze in hayfields, swamps, and along the roadsides. However, once the growing season is over, the only options are the haymows and silos. If they are empty or do not contain sufficient stocks the cattleman liquidates his herd or goes to the marketplace to buy roughages. The cattlemen will benefit from the limited amount of 50-cent oats for which most qualify. He also will benefit from guaranteed livestock and 5-percent emergency loans. But it is not enough. Few, maybe less than 10 percent, will benefit at all from the Presidential order because one is eligible only if he has less than a 30-day supply of feed. Meager pastures and even a modest first cutting of hay will provide that 30-day supply. And even for the 10 percent who qualify, the assistance is limited to two-thirds of the transportation costs not to exceed $27. And the cost of transportation for a ton of hay from Montana, for example, is $57. The Burlington Northern has made some changes in that and they are to be commended for that, but it is still very, very expensive. We propose two bills, Mr. Chairman. One we call the hay emergency bill which you and Senators McGovern, Clark, Abourezk, Burdick, and Proxmire cosponsor. This is designed to pay the full cost of transportation for hay. It will permit farmers, particularly through their organizations, to go around and identify hay, say, in Montana or in Nebraska, Missouri, wherever it is, and then get the hay where it is needed to the areas of Minnesota, South Dakota, Wisconsin, and so on at no transportation cost. Farmers would have to pay the cost of the hay, but |