-obtainable, we expect it will be half again as high as the same kind. of hay was selling for at the peak of the past season.

Senator HUDDLESTON. Right.

Mr. CARPENTER. Now, farmers are trying to help themselves. The Minnesota Farmers Union, along with several of our cooperatives, the CENEX, the GTA, the Marketing and Processing Associationand I might mention the Minnesota AFL-CIO-put together a fund of $100,000 to provide a means of buying this hay and transporting it to make it available for farmers on a revolving basis.

But as we studied the feasibility of conducting such an operation, we soon realized that without some reduction in freight, we could not provide a realistic service to the farmers, because the cost would be completely prohibitive.

Governor Anderson did submit a request for ICC reduction and Burlington Northern has been extremely cooperative, and we finally received approval for that program, which will allow some farmers who see fit to incur that kind of cost to go ahead if this program is finally implemented. We are concerned that it be implemented as quickly as possible, but we are in addition concerned by a number of farmers who may not be able to benefit from it-for example, farmers that could use their own trucks to haul in hay, cannot benefit just from the ICC regulation. And the emergency program that is supposed to be administered by ASCS, the result of the Presidential emergency designation, is, for all practical purposes, useless.

As has been mentioned here earlier today, first-the time span in which the farmer could reasonably participate is ridiculous. About a third of that time had elapsed before he could be invited to participate. And, additionally, to expect him to complete the form, a committee to meet and consider it, and then go out and determine whether or not he could buy hay, within half of a 30-day span of time, is absurd. And the next part of it, the 30-day supply is even more ridiculous in terms of realistic operation. I think if you stopped to consider that the most frugal farmers have been out harvesting the roadsides and the Department of Natural Resources areas, and others where the State agencies and farmers themselves have been making their best effort and that renders them ineligible. A number of our farmers have chopped their oats and barley into silage because that is the only means of salvaging what was left-and that renders them ineligible. And then, ironically, our farmers who are participating in another Government emergency program, that of the livestock feeding program in the past, if they have a supply of oats on hand from that program, that renders them ineligible. And to look at this kind of application of a program

Senator HUMPHREY. Would you excuse me just a minute? I must go for a few minutes with Senator McGovern. We will be back in about 5 or 10 minutes.

Mr. CARPENTER. I want to repeat that that is ridiculous in the application of a realistic program, and I want to underscore what Commissioner Wefald and others have mentioned, that the emergency feed grain program in the long run is at least as important, perhaps more important-but, additionally, we need to be able to implement both, because a producing dairy herd cannot make a profitable operation on hay alone.

Those dealing with this kind of program should have enough understanding of agriculture to appreciate this kind of a situation, and not impose conditions that really are so far from reality as to destroy the credibility of this kind of effort to help. As things now stand-I heard a mention of 7 million-our latest information is that there is less than 5 million bushels of oats available, and that no effort is being made to replenish this supply.

Referring to another comment that was made, there was discus ion on Federal crop insurance as a program that might provide some help. I would like to point out that in Minnesota-and we are the largest subscribers to the Federal crop insurance program by far-that program was drastically reduced in the middle of the season, and terminated for a number of our counties, without any explanation or reason, except that the risk was too high for the Government to take. And it was terminated for a number of our farmers even after it had been made available to others.

To suggest that this kind of a program can meet some of these needs is equally ridiculous.

Now, that doesn't suggest that Federal crop insurance is not a good and necessary program, but its present implementation is far from adequate, to say the least.

Under all these conditions, farmers simply do not have an opportunity to make good, rational management decisions. I think they cannot make decisions when the programs that they must deal with fluctuate worse than the weather. And that is actually what is happening.

The dairy farmer, for example, can't wait until he has used up his hay, even to a 30-day supply, to determine if he is going to continue that operation. He is in business or he is out of it on a continuing basis.

There has been reference to the selling of livestock-and I will make additional reference to that in a moment-but dairy herds normally are at their peak of production in our part of the country in the spring season, because they can utilize the pasture. For a cow that is in the maximum of their lactation season, to go to market now is just not practiced. If the farmer finds it absolutely necessary to liquidate that herd, he will wait until the latter part of the sunimer

season.

So again, to look on this situation now is not realistic.

I feel that another part of this hearing is to provide some perspective on the overall attitudes on the delivery program by the USDA. On June 14, 1976, the Minnesota executive director of the ASCS office, Mr. Sam Peterson, acting as chairman of the Minnesota USDA Emergency Board, corresponded with Mr. Robert Conners, Regional Director of Federal Disaster Assistance Administration. He was writing regarding Minnesota Governor Wendell Anderson's request for an emergency declaration by the President-and the letter said, and I quote:

The USDA state emergency board does not recommend that costs of hay and feed grains, including delivery costs, be provided with Federal funds, as recommended by the Governor. Cattle are not starving and wholesale herd liquidation is not occurring presently. Severe culling is occurring, but the cattle market is reasonably strong, and there are buyers for the cattle being offered for sale.

An analysis of the market condition in south St. Paul, the country's largest terminal livestock market, shows the contrary. During the 4-week period at the end of May and the beginning of June this year, the south St. Paul market saw an increase of 62 percent in livestock sales over an average of the previous 4 years for the same period of time. It is hard for me to believe that that only represents culling. I have spent 10 years in the livestock business myself, and I think a 62-percent increase represents substantial liquidation.

Additionally, as Representative Anderson has pointed out, many of these cattle are being sold through sales barns or private treaty and do not come through the terminal market. Still further, to suggest that production livestock even approach starving to death before action is taken is totally indefensible, in my opinion.

Now, this letter also downplayed the losses that are obvious in all Minnesota crops. The letter said-and again I quote:

Stocks of grain on hand are higher than last year, and ample supplies of feed grain exist and are available at prevailing market prices.

Now, I submit to you that prevailing market prices in a droughtridden area are not very compatible to efficient production of livestock.

A simple drive through the countryside in our States will show you the damage. In addition to destroyed and stunted crops of hay and grain, in many instances the corn plants in our field are a rod apart because of a failure to germinate. I think this letter really just displays a travesty.

I am sorry to say that probably the worst problem is that this is top-down direction, in our opinion, and very little corrective effort is being afforded in many areas that probably would be more inclined to do so.

Another area that is going to be of tremendous concern to droughtridden farmers is that of financing to take care of bills from operation, and these bills will mount as the condition and the season progresses. We feel that, as Senator Mondale's bill provides, there must be some delay in the payment, in the principal and interest, to allow that farmer to again put his farm in operation, to be in business, to carry on the kind of operation that will allow him to have income and an operating capital flow as well, so that in reality then he can repay this loan that he has made. But to simply add annual debt to annual debt is very little help indeed.

In establishing this policy, I think it must be made clear that it is policy that is supported by the Fedreal Government so you don't obligate the rural bank to treating this as a delinquent situation and thereby interfere with their position as well.

Mr. Chairman, and members of the committee, I appreciate the opportunity to present this testimony to you. We don't wish to try and point this as an alarmist situation any more than it really needs. I would truthfully wish that all of you could come and personally see the situation and arrive at your own judgment.

Thank you for the opportunity.

Senator HUDDLESTON. Thank you. You made reference to a copy of a letter from ASCS State Director. Are you including that in

Senator HUDDLESTON. Could you do that?

Mr. CARPENTER. I can provide you a copy and would mail it to you, Mr. Chairman.

Senator HUDDLESTON. All right, thank you, that would be helpful for the subcommittee to have that in the record. *

Do you have any specific comments or recommendations on the two pieces of legislation that we are considering here?

Mr. CARPENTER. Well, I think they are both very necessary. I don't know what I would add to them other than-I am hesitant to leave the amount of discretion that has been demonstrated in the past to a reluctant Department of Agriculture in their implementation. I think they move in the right direction and I think if they were put into effect they would go a great distance to correct the situation.

Senator HUDDLESTON. Senator Humphrey said he would be back. If you gentlemen remain in the hearing room he may have some further questions.

Mr. WEFALD. We have some more people from Minnesota here, too. Senator HUDDLESTON. Right. We will proceed with Mr. Radcliffe and Mr. Johnson.

Mr. Radcliffe, have a seat, and if you will identify yourself for the record.

STATEMENT OF BEN H. RADCLIFFE, PRESIDENT, SOUTH DAKOTA FARMERS UNION, AND CHAIRMAN, EXECUTIVE COMMITTEE, NATIONAL FARMERS UNION, HURON, S. DAK.

Mr. RADCLIFFE. Mr. Chairman, I am Ben Radcliffe, president of the South Dakota Farmers Union. I am pleased for the opportunity to appear here today, and try to tell you, as best I can, of the drought disaster in South Dakota.

Because of the shortage of time, Mr. Chairman, I will submit my full statement and ask that it be included in the record.**

Senator HUDDLESTON. Very well, it will be a part of the record. Mr. RADCLIFFE. And I will attempt, then, to summarize. There is little doubt in my mind but what we are now faced in South Dakota with the most devastating drought since the dust bowl era of the 1930's. Fifty-six counties, comprising the bulk of our State, have already been designated as drought disaster areas by the President, and for some of these counties this is the third year in a row in which farmers' crops and pastures have been parched by drought.

Now, the financial help, especially of our young farmers, is of vital importance to the future of agriculture in the upper Midwest. It is the younger farmer who generally doesn't have the financial reserve needed to see him through. This trend is already evident. One local job service office reports that 10 young farmers just last week were in; they had sold out their cattle and applied for jobs to see them through the coming year. The local employment opportunities are almost nil, construction work is at a standstill, and they will probably have to leave the State to seek a job elsewhere.

One point which I want to make is that the livestock is the life's blood in our State's economy; livestock and livestock products make

*See p. 101.

**See p. 97 for the prepared statement of Mr. Radcliffe.

up roughly 70 percent of our agricultural income. Farmers and ranchers in South Dakota are conditioned to the possibility that they may lose an occasional grain crop, but only once in a generation have we been faced with the lack of our livestock herds. And if we are to survive 1976 without a complete economic catastrophe in South Dakota and other States in our region, we will have to establish both short-term and long-range disaster programs.

I would like to run through them. There are a number of shortrange disaster programs that are already on the books. Our main problem has been in getting the U.S. Department of Agriculture to implement them so as to provide the maximum benefits to the farmers. No. 1, we believe that immediate action should be taken by the Agricultural Stabilization and Conservation Service to expedite and liberalize low- or zero-yield designation on small grain in order to allow emergency grazing or salvage of any hay while the grain still has some feed value. We have been informed of cases where farmers have been penalized on their drought disaster payments for as little as three-fourths bushel yield per acre.

We recommend that any projected yield of 3 bushels per acre or less be considered zero yield for purposes of determining disaster payments. It is very probable that in these cases that the grain is too short to harvest, and, in any event, harvest cost would likely exceed that value.

We also feel that action is needed, if necessary by Congress, to alter eligibility rules for Farmers Home Administration disaster loans. It is crucial that the 5-year crop average used in determining eligibility be based on past normal crop years. Some South Dakota counties have been hit by drought in 3 of the past 5 years, and current Farmers Home Administration rules work to their considerable disadvantage. It is also vital that the USDA emergency hay program, which provides transportation subsidies, be extended for longer than the present 30-day period. Many farmers and ranchers are now faced with the potential of buying hay for up to 10 months until their pasture is green again next spring; an extension of at least 90 days would allow farmers a better plan for the coming months.

We are also concerned that the ASCS emergency feed grains program be made less restrictive in areas where such feed grains are available. We have been distressed that in recent years the ASCS has persecuted some farmers who were approved for purchase of low-cost oats, and then later were forced to pay the full market price.

I want to suggest some long-term solutions. All of these programs are capable of providing some assistance to drought-stricken farmers, but it is clear that present Federal drought programs, while helpful, are only peripheral. They do not begin to deal effectively with the drought disaster in South Dakota and surrounding States.

What farmers must have now in order to save rural communitiesand I am talking about the business, the Main Streets, as well as the farmers save them from economic disaster, is a massive assistance program. The board of directors of the South Dakota Farmers Union has called for enactment of a special Federal disaster loan program. That program should offer long-term loans at a rate of 1 percent interest, and should include at least a $5,000 forgiveness feature. Such a program would not only offer survival to already hard-hit debt