MARKETING FACILITIES FOR PERISHABLES TUESDAY, MARCH 19, 1957 HOUSE OF REPRESENTATIVES, The committee met, pursuant to notice, at 10 a. m., in room 1310, New House Office Building, Hon. T. Ashton Thompson presiding. Present: Representatives Thompson, Cooley, Hagen, Thompson, Abernethy, Gathings, Johnson, Hoeven, Simpson, McIntire, Dixon, Smith, Krueger, Matthews, Teague, Tewes and Burns. Also present: Representative Gerald Ford. Mr. THOMPSON. The committee is meeting this morning for the purpose of giving consideration to a series of bills. H. R. 4504 a bill introduced by the chairman; H. R. 4250, a bill introduced by Mr. Anfuso and H. R. 3623, a bill introduced by Mr. Ford, to encourage the improvement and development of marketing facilities for handling perishable agricultural commodities. (The bills are as follows:) [H. R. 3623, 85th Cong., 1st sess.] A BILL To encourage the improvement and development of marketing facilities for handling perishable agricultural commodities Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Marketing Facilities Improvement Act". DECLARATION OF POLICY SEC. 2. It is found and declared that the marketing of perishable agricultural commodities affects the public welfare and is a matter of grave national concern; that vast quantities of fruits, vegetables, and other perishable agricul.tural commodities shipped from various producing areas located throughout the United States and foreign countries pass through and are handled in public marketing facilities located in large consuming areas which are in most instances inadequate and obsolete; that the handling of perishable agricultural commodities in such facilities is attendant with many uneconomic practices, greatly increasing costs and causing undue losses, excessive waste, spoilage, and deterioration, which result in producers receiving prices far below the reasonable value of their products, in unduly and arbitrarily enhancing costs of operations in such markets, and increasing the price of food to consumers; that the prices of all perishable farm commodities are directly affected by the prices made on these public markets and are adversely affected by the unduly burdensome costs resulting from obsolescent and inadequate facilities; that obsolete and antiquated facilities create such an undue restraint and unjust burden on interstate commerce as to make it imperative that appropriate measures be taken to free such commerce from such burdens and restrains and to protect producers and consumers against oppressive costs resulting from the use of such facilities; that modern facilities would make possible the saving of millions of dollars annually by removing the cause of many of the unnecessary costs and burdens; that in spite of the great need for improved facilities, efforts in the past have failed to bring about a satisfactory solution to the problem; that this failure has been due largely to the inability of farmers, dealers, brokers, commission merchants, and others, individually or collectively, to obtain through regular financial channels the relatively large amounts of capital necessary for the construction of modern facilities. In consequence of the conditions referred to above, it is hereby declared to be the policy of Congress through the powers herein conferred upon the Secretary of Agriculture, to aid in the establishing of such public marketing facilities for the wholesale handling of fresh fruits and vegetables, poultry, eggs, dairy products, other perishable agricultural commodities and sea food as will be conducive to orderly and efficient distribution, increased consumption, and a reduction in the spread between prices paid by consumers and those received by farmers. GENERAL PURPOSE SEC. 3. It is the purpose of this Act to facilitate, encourage, and assist municipalities and political subdivisions of States, public agencies, and instrumentalities of one or more States or municipalities, public corporations and boards, and private enterprise in the creation and development of modern and efficient public wholesale markets for the handling of perishable agricultural commodities in areas where such markets are found to be needed and where Federal assistance is requested and authorized as prescribed in this Act, to the end that unnecessary costs and burdens attendant with the marketing of perishable agricultural commodities caused by inadequate or obsolete facilities may be eliminated and that the spread between the amount received by producers and the amount paid by consumers may be reduced. DEFINITIONS SEC. 4. For the purposes of this Act (a) "Market facility" means all the facilities used in connection with the operation of a public wholesale market, including the land, buildings, fixtures, equipment, and other appurtenances necessary or incidental to the operation of a public wholesale market for perishable agricultural commodities constituting a single integrated market located in a substantially contiguous area, not including facilities for handling livestock but including such land as may be held for sale or lease to those persons or corporations desiring to construct related facilities, utilities and complementary food processing, storage and packaging facilities. (b) "Public wholesale market" means a place which serves as the major source of supply of perishable agricultural commodities consumed in a large consuming area and which is operated primarily for the purpose of selling or otherwise disposing of perishable agricultural commodities at wholesale for resale to others. (c) "Perishable agricultural commodities" means agricultural commodities and products thereof, consisting principally of fresh fruits and vegetables, handled alone or in combination with poultry, eggs, meats, seafood, and dairy products. (d) "Mortgage" means a first mortgage on real estate, in fee simple or on a leasehold under a lease for not less than ninety-nine years; and the term “first mortgage" means such classes of first liens as are commonly given to secure advances on, or the unpaid purchase price of, real estate under the laws of the State in which the real estate is located, together with the credit instruments, if any, secured thereby. (e) "Mortgagee" means the original lender under a mortgage, and his successors and assigns approved by the Secretary. (f) "Mortgagor" means he the original borrower under a mortgage and his successors and assigns approved by the Secretary. (g) “Maturity date" means the date on which the mortgage or loan indebtedness would be extinguished if paid in accordance with periodic payments provided for in the mortgage or credit instrument. (h) "United States" includes the several States of the United States, the District of Columbia, Alaska, Hawaii, and Puerto Rico. (i) "Secretary" means the Secretary of Agriculture. (j) "Eligible borrower" means any municipality or political subdivision of a State, public agency, or instrumentality of one or more States or municipalities, public corporation or board, or private corporation engaging in, or which will engage in, the operation of a public wholesale market facility which meets the eligibility requirements of this Act. MARKET RESEARCH AND ANALYSIS SEC. 5. In order to effectuate the objectives of this Act and assist in the development of proper, adequate, and efficient marketing facilities in the United States, the Secretary under the authority of, and with funds made available pursuant to the Agricultural Marketing Act of 1946, shall undertake, and disseminate the results of, research relating to design, plans, location, methods of operation, materials, use, equipment, and other similar research and analysis, consistent with the needs for the improvement and development of proper, adequate, and efficient marketing facilities for handling perishable agricultural commodities. REVOLVING FUND SEC. 6. (a) There is hereby created a fund to be known as "the marketing facility mortgage insurance fund" (referred to in this Act as the "insurance fund"), which shall be used by the Secretary to make insurance payments under section 9 of this Act and to meet the expenses incurred in connection with the acquisition, operation, and disposal of market facilities acquired pursuan to the except that no part of such fund shall be used for administrative expenses incurred provisions of the insurance contracts in the event of default by the borrower, except that no part of such fund shall be used for administrative expenses incurred in carrying out this Act. There is authorized to be appropriated the sum of $25,000,000 to constitute such fund which sum shall remain available until expended. (b) The money in the fund created under this section not needed for current operations shall be deposited with the Treasurer of the United States to the credit of the fund or invested in direct obligations of the United States or obligations guaranteed as to principal and interest by the United States. (c) The Secretary shall make an annual report which shall include a complete statement with respect to the status of the insurance fund. INSURANCE LIMIT SEC. 7. The amount of any insurance contract which may be made under this Act shall not exceed an amount equivalent to 85 per centum of the total cost of the market facility as determined by the Secretary: Provided, That in no case shall the borrower invest less than $45,000 of the total cost: And provided further, That the investment by the borrower shall always be a claim subordinate to the claim of the United States arising out of an insurance contract under the authority of this Act. INSURANCE OF MORTGAGES SEC. 8. (a) The Secretary is authorized, upon application of a prospective mortgagor or mortgagee under a first mortgage eligible for insurance under this Act on a market facility, to insure such mortgage and to make commitments for the insurance of any such mortgage prior to the date of its execution. (b) The aggregate amount of principal obligations outstanding at any one time on all mortgages insured under this Act, and on all mortgages with respect to which commitments to insure have been made, shall not exceed $100,000,000. (c) In order for mortgage on a market facility to be eligible under this Act— (1) the person obligated to pay thereunder shall be an eligible borrower; (2) the market facility mortgage shall be one which is determined by the Secretary to be eligible for mortgage insurance; (3) the mortgage shall be made to and be held by a mortgagee approved by the Secretary as responsible and able to service the mortgage properly; (4) the principal obligation (and fees and other charges chargeable under subsection (d) of this section) shall be in such amounts not in excess of the amounts specified in section 7 of this Act as may be necessary to enable the borrower to establish the market facility and the mortgage terms may permit the later extension of the mortgage to cover additional sums borrowed under the same mortgage for expansion of the market facility subject to the same limitations and requirements as are applicable under this Act to the initial borrowing; (5) the mortgage shall have a maturity satisfactory to the Secretary but not to exceed forty years from the date the mortgage is insured; (6) the mortgage shall bear interest at not to exceed such rate of interest per annum on the amount of the principal obligation outstanding at any one time as shall be determined by the Secretary; (7) the mortgage instruments shall (A) provide for the repayment of the principal obligation, together with interest thereon, in installments in accordance with amortization schedules prescribed by the Secretary; and (B) contain such provisions with respect to insurance, repairs, alterations, payment of taxes, default reserves, delinquency charges, foreclosure proceedings, anticipation of maturity, additional and secondary liens, and other matters as the Secretary may prescribe. (d) The Secretary shall require the payment by the mortgagor or mortgagee of such initial fees for inspection, appraisal, and other similar charges as he finds necessary and such amounts may be included in the principal obligation of the mortgage. The proceeds of such fees and charges shall be deposited in the insurance fund (created by section 6 (a)). (e) For insurance granted pursuant to this Act the Secretary shall collect from the mortgagee, upon insurance of the mortgage, an initial charge of onehalf of 1 per centum of the principal obligation of the mortgage and annually thereafter a charge of one-half of 1 per centum of the principal obligation remaining unpaid at the time the charge becomes due, without taking into account delinquent payments or prepayments. The proceeds of such charges shall be deposited in the insurance fund. (f) Any contract of insurance executed by the Secretary under this section shall be conclusive evidence of the eligibility of the mortgage for insurance, and the validity of any contract of insurance so executed shall be incontestable in the hands of an approved mortgagee from the date of the execution of such contract, except for fraud or misrepresentation of which such mortgagee has actual knowledge. (g) The mortgagee may, with the approval of the Secretary, assign any mortgage insured under this Act, together with the accompanying note and contract of insurance, and the assignee thereof shall thereupon become entitled to all the benefits of such contract of insurance. PAYMENT OF INSURANCE SEC. 9. (a) If the mortgagor under a mortgage insured under section 8 is in default for more than twelve months and the mortgagee, in accordance with regulations prescribed by the Secretary, (1) forecloses or with the Secretary's consent otherwise acquires the property from the mortgagor after default, (2) conveys title and gives possession of the property to the Secretary, and (3) assigns all his claims against the mortgagor or others arising out of the mortgage transaction or foreclosure proceedings (except claims released with the Secretary's consent) to the Secretary, the Secretary shall pay to the mortgagee, in cash, the value of the mortgage. The Secretary shall make such payments within one year after the date the mortgagee makes the conveyance required in the first sentence or the date he makes the assignments required in the first sentence, whichever is the later date. (b) For the purposes of this section, the value of the mortgage shall be determined, in accordance with rules and regulations prescribed by the Secretary by adding to the amount of the original principal obligation of the mortgage which was unpaid on the date of default, the amount of all unpaid interest; the amount of all payments which have been made by the mortgagee for taxes, special assessments, water rates, and other payments in discharge of liens which are prior to the mortgage, and insurance on the property mortgaged; and a reasonable amount for necessary expenses incurred by the mortgagee in acquiring title to the property and conveying it to the Secretary; and by deducting from such total amount any amount received on account of the mortgage indebtedness after such default. (c) If there should not be sufficient money in the insurance fund to enable the Secretary to make payments to mortgagees as provided in subsection (a) of this section, the Secretary may make and issue notes to the Secretary of the Treasury to obtain funds to make such payments. Such notes shall be signed by the Secretary or by his duly authorized representatives and shall be negotiable. Such notes shall bear interest, payable semiannually, at a rate equal to the average rate of interest, computed to the end of the calendar month next preceding the date of issue, borne by all interest-bearing obligations of the United States then forming a part of the public debt, and shall have such maturities as the Secretary may determine with the approval of the Secretary of the Treasury. (d) The Secretary of the Treasury is authorized and directed to purchase any notes issued by the Secretary pursuant to this section and any renewals thereof and for such purchases may use as a public-debt transaction the proceeds from the sale of any securities issued under the Second Liberty Bond Act, as amended, and the purposes for which such securities may be issued under such Act, as amended, are hereby extended to include any such purchases. All redemptions, purchases, and sales by the Secretary of the Treasury of such notes shall be treated as public-debt transactions of the United States. (e) In any case in which the mortgagor violates any covenant or condition of his mortgage, the Secretary may require the mortgagee to assign such mortgage, together with the incidents thereto, upon payment of the value of the mortgage determined in accordance with this section. ELIGIBILITY REQUIREMENTS SEC. 10. To be eligible for the benefits of this Act, a borrower must show to the satisfaction of the Secretary that the facility is needed and that the location, design, method of financing, method of operation, and such other requirements as the Secretary may determine necessary to effectuate the purposes of this Act, will be met, including the following: (a) That the market facility will reduce the cost of distribution of perishable agricultural commodities and handle a sufficient volume of business to enable the loan to be amortized within the period specified at the time the loan is made. (b) That the market will be so located and designed as to make possible the direct loading and unloading of rail and truck receipts into or from the buildings of handlers receiving substantial quantities of perishable agricultural commodities by such methods of transportation, and that no restrictions will be imposed which will prevent access to the facility of supplies handled by any rail or truck transportation company. (e) That sufficient land is included as a part of the facility to meet the needs of the initial construction, plus a reasonable amount of land for expansion of the market facility, and in no case shall the land available for future expansion be less than one-fourth of the acreage utilized in the initial construction. (d) That not more than one-third of the total cost of the market facility, including the land set aside for future expansion, is to be expended for the acquisition of land, graded and placed in condition for construction. (e) That the market facility will not be operated in a manner which would discriminate against any perishable agricultural commodity on account of geographical origin of such commodity or prevent any producer, seller, or buyer from utilizing the market facility because of his organization, business methods (if not unfair or unlawful), membership or nonmembership in any organization, or on account of the method of transportation of the products. (f) That the rentals and other charges for the use of the market facility will be established at reasonable levels approved by the Secretary and designed to meet the obligations, defray the costs of maintaining and operating the market facility, and provide reasonable reserves. (g) That any substantial alterations of the market facility will be made only with the approval of the Secretary. (h) That reports will be made to the Secretary at such intervals and giving such information concerning the market facility as the Secretary may require, and that the books and records of the market facility will be available for examination by the Secretary at its offices at any time during business hours. (i) That the title to the market facility, or any part thereof, will not be transferred or encumbered, or leased for any purpose not related to the operation of the market, and that any of the vacant land of the market facility will not be leased for a period longer than one year (including the period of any renewals or extensions of such lease), except with the approval of the Secretary. MAXIMUM CHARGES SEC. 11. If mortgage insurance is extended by the Secretary under this Act, to aid in financing the construction of a market facility, the maximum charges which may be received for the use of the market facility shall be subject to the approval of the Secretary during the period between the date the assistance is extended and the maturity date originally specified in the mortgage instruments. The Secretary shall approve such maximum charges if he determines they are reasonable and nondiscriminatory. 90655-57-2 |