4. Exhibits at internationl trade fairs: During 1956, United States tobacco products or tobacco products containing United States leaf were featured at trade fairs in Spain, Japan, and Thailand; participation is currently scheduled for several international fairs, including Japan and Spain, in 1957.

These tobacco exhibits were extremely popular with the millions of visitors attending last year's fairs.

The CHAIRMAN. Mr. John C. Lynn, legislative director, the American Farm Bureau Federation. Mr. Lynn, do you have a statement to submit for the record on behalf of Mr. Charles Schulman, president of the American Farm Bureau Federation?

Mr. LYNN. Yes, sir.

The CHAIRMAN. Would you like permission to insert it in the record? Mr. LYNN. Yes, sir.

(The following statement was submitted for insertion in the record in behalf of the American Farm Bureau Federation:)

STATEMENT BY JOHN C. LYNN, LEGISLATIVE DIRECTOR OF THE AMERICAN FARM BUREAU FEDERATION

The American Farm Bureau Federation appreciates the opportunity to present to this committee its recommendations regarding Public Law 480, the Agricultural Trade Development and Assistance Act.

In June 1954, we urged the enactment of this legislation to turn a part of our surpluses into a form of working capital which could be used to expand permanently foreign markets for farm products. Authorizations for title I sales for foreign currency have been increased twice until now, over $2.9 billion worth of farm products have been sold to 30 countries for their currency. We believe that Public Law 480 has been a successful program and our voting delegates have determined that we should support an extension of this law.

The following is a part of the 1957 policies of the American Farm Bureau which were adopted last December:

"the level of United States farm exports may be most effectively maintained and expanded by *** the following additional measures: Extension for 2 years of Public Law 480, the Agricultural Trade Development and Assistance Act, sponsored by Farm Bureau to permit the exchange of farm products for foreign currencies, with an adequate authorization.

"Public Law 480 was designed as a temporary program to expand the sale of United States agricultural products in surplus supply to countries with dollar shortages. It is not our intention that Public Law 480 or similar programs should become permanent."

We recommend a 2-year extension to make possible effective programing. We further recommend that the authorization be limited to $1 billion with the understanding that this amount should be obligated during fiscal year 1958. However, we hope that our agricultural surplus situation will be such that the program can be tapered off in fiscal 1959. Congress will, of course, wish to take another look at authorizing funds for Public Law 480 for fiscal 1959.

Farm Bureau sponsored the original legislative proposal that developed Public Law 480. We support it today, but believe that emphasis should be placed on the temporary nature of this program. This law was designed to reduce our surpluses to this end some progress has been made but it is imperative that American agriculture does not become dependent upon these types of sales. Our export marketing must be done through commercial channels for dollars wherever possible. We recognize that the law is not without criticism. Nevertheless, without this program farmer's prices would undoubtedly have been further depressed. We hope that effective steps can be taken to adjust our agricultural plant to effective market demand, both domestic and foreign.

Agricultural exports in fiscal year 1956 were $3.5 billion and represented 10 percent increase over the previous year. Approximately 40 percent of these exports were under Government programs, such as Public Law 480. The following represents the percentage under Government programs for various commodities:

This indicates some real dangers for American agriculture and makes clear that we must always keep our ultimate objective in mind that is, the increase of dollar sales in the export market. It is, of course, an unhealthy condition when American agriculture must depend on Government programs for a substantial part of sales in foreign markets.

FOREIGN CURRENCY USE

As attachment I indicates, approximately $2 billion worth of foreign currency has been generated through title I sales. It is, of course, of the utmost importance that this currency be used in a judicious and effective manner. Over $32 million has been set aside for market development work. We believe that this can be one of the most important phases of the entire Public Law 480 program. To the degree that the market development program is a success, Public Law 480 can be considered a success. One of the primary purposes of our original support for the Agricultural Trade Development Act was the development of sound permanent dollar export markets.

It should also be recognized that over 50 percent of the foreign currency generated under Public Law 480 has been earmarked for economic aid to friendly nations. This contribution of Public Law 480 to our Mutual Security Program should be made well known to all American taxpayers and should be taken into consideration by the administration when requests for foreign aid appropriations are made.

This fact should assist the Congress this year in making necessary reductions in foreign economic aid. The sale of surplus United States farm products for local currencies loaned to a foreign country have played an important part in economic development during the past year.

TITLE II, FAMINE, RELIEF AND OTHER ASSISTANCE

Title II of Public Law 480 gives the President the authority to furnish emergency assistance to friendly peoples for meeting famine and other urgent or extraordinary relief requirements. Originally $300 million was authorized for this purpose. The amount was later increased to $500 million. In the 3 years since the enactment of Public Law 480, approximately $300 million worth of farm surpluses have been used under this authority. This indicates that under the trying international conditions, that have existed during the past 3 years, taking into consideration the famine in Pakistan and other countries, donations averaged approximately $100 million per year.

As the committee will note, there is presently about $200 million already authorized and unobligated under title II. We can see no legitimate reason to further increase this authority. It is important that we keep in mind that title II authority is meant to be used only in emergency situations. To quote from the 1957 policies of the American Farm Bureau, we recommend the:

"Avoidance of programs giving away our farm products, except in emergencies. 'Giveaway' programs tend to disrupt commercial markets and prevent the development of sound, long-range programs and permanent marketing facilities."

TRADE WITH COMMUNIST COUNTRIES

It is difficult, if not possible, for any private organization, including the American Farm Bureau Federation to comment with any degree of accuracy regarding the chances for Poland or other countries in the Soviet orbit to come out from under Soviet control.

The State Department has declared Poland a friendly country. Apparently they believe that our surplus agricultural commodities can be used to pull that country away from the U. S. S. R. We do not have all the facts at our disposal (as our President and as members of Congress do) but we urge the Congress to weigh very carefully all facts to make certain that our surplus agricultural commodities are not transshipped or used to replace shipments Poland might be forced to make to the U. S. S. R. Congress must also decide that the strengthening of an admittedly Communist government is in the best interests of our country.

We therefore recommend that in considering this point, we do not act until we are reasonably sure; a few months delay might be justified.

We have consistently supported the barter program; we will continue to support it as long as the transactions tend to increase and enhance the security of the United States. Since section 101 of title I authorizes the President to negotiate agreements for sales for foreign currency only with "friendly nations or organizations of friendly nations," there seems to be no necessity for section 304. Our policy is simply this:

"We recommend that United States farm products be offered for sale in world markets without regard to destination whenever it will advance the welfare and freedoms of the people of the United States."

The following are the specific recommendations of the American Farm Bureau Federation as to amending Public Law 480, the Agricultural Trade Development and Assistance Act:

(1) Sections 109 and 204 should be amended by striking 1957 and substituting in lieu thereof "1959."

(2) Section 103 (b) of such act should be amended by striking $3 billion and nserting in lieu thereof "$4 billion."

(3) Section 304 of such act should be deleted.

We would again point out that since $200 million of authorization remains unobligated under title II, there is no need to amend section 203.

ATTACHMENT I.-Planned uses of foreign currency under title I, Public Law 480 agreements signed from beginning of program through Feb. 28, 1957

Total amount programed (market value including ocean transportation).

Mr. FAKLER. Mr. Chairman, my name is Herman Fakler, National Press Building, Washington, D. C. I represent the Millers' National Federation. I did not ask to appear because I did not know about the hearing, but I would like to file a statement later on behalf of the Millers' National Federation.

The CHAIRMAN. Without objection you may do so.

Mr. Reuben Johnson, representing the National Farmers Union. Mr. JOHNSON. Mr. Chairman, I have a statement with me I would like to file for the record.

The CHAIRMAN. Without objection, you may do so.

What about Mr. Read Dunn, foreign trade director, National Cotton Council?

Mr. DUNN. We will be glad to file a statement. I take it this is adjournment time?

The CHAIRMAN. Off the record.

(Discussion off the record.)

(The following statement was submitted for the record by Mr. Read P. Dunn, Jr., director of foreign trade, National Cotton Council of America:)

STATEMENT OF READ P. DUNN, JR., DIRECTOR OF FOREIGN TRADE, NATIONAL COTTON COUNCIL OF AMERICA

My name is Read P. Dunn, Jr. I am director of the Foreign Trade Division of the National Cotton Council of America. As you know, the National Cotton Council represents the six primary cotton interest groups-the producers, ginners, warehousemen, cottonseed crushers, merchants, and spinners.

The National Cotton Council has supported Public Law 480 providing for the sale of agricultural surpluses for foreign currencies since its inception.

Some 2.5 million bales of cotton have been authorized for export under the program to date. The benefit of the program in moving surplus cotton is obvious. The National Cotton Council recommends that Public Law 480 be continued on a temporary basis as an assistance in disposing of the current surpluses and in aiding those foreign countries which have insufficient dollar exchange in financing their cotton requirements.

Now, Mr. Chairman, I would like to take this opportunity to tell the committee about some of the market development operations under Public Law 480 in which we have been engaged.

Soon after Public Law 480 was enacted, the United States Department of Agriculture asked the National Cotton Council to cooperate in carrying out section 104a, the development of new and expanded markets for cotton.

The principle of the USDA's objective, increasing consumption through research and promotion in the rest of the world, was quickly endorsed by the council. We had been working for a number of years along these lines in the domestic market and had been trying to interest foreign cotton groups in employing the same techniques. There were, however, reservations within the council about using Government funds for this purpose. The council finally agreed to a cooperative program with the Government, using Public Law 480 funds, on the condition that such funds be employed as a pump-priming device to demonstrate the feasibility of promotion under foreign conditions and to give time for the development of sound, long-term financing on a private basis.

These objectives are being realized. Some 14 countries are now engaged in programs to expand cotton consumption. Four more countries are developing or considering programs. The possibilities are being effectively demonstrated. And we are beginning to shape practical outlines for permanent, private financing. The creation of an appropriate and effective apparatus for collecting funds from 8 to 12 producing countries to be spent in 12 to 15 consuming countries is a tedious and complex process. Even in this field, our experience with Public Law 480 financing has been of real value.

Within the next few minutes I hope I can give you a brief but clear picture of how Public Law 480 funds are being used and what they are helping accomplish. The National Cotton Council signed a contract with the Foreign Agricultural Service which provided that the council would explore the possibilities of cotton market development around the world, would help organize market development programs in countries where they were feasible and then to supervise the operation of programs carried out by industry groups in the foreign countries. The council agreed to furnish materials, pay salaries of American personnel involved and most of the other dollar costs. FAS agreed to pay the overseas costs in foreign currencies. In 1956 the council contributed in materials and services about $80,000 on these activities and the FAS contributed a little over $50,000.

Recently the growing size of these operations and the special problems involved in overseas operations led the National Cotton Council to organize a separate corporation called Cotton Council International to carry out these activities.

The contracts between FAS and the National Cotton Council have been transferred over to Cotton Council International.

Under a separate agreement, FAS also agreed to pay up to half the foreign currency costs of the overseas programs out of Public Law 480 sales. The cooperating foreign industry groups pay the other half.

Today, industry groups in France, Germany, Italy, Switzerland, Austria, Spain, Belguim, Holland, England, Japan, Mexico, and Colombia are carrying on programs to expand cotton consumption in their domestic markets. Egypt and the Sudan are contributing to some of these programs in Europe. Only France had any significant program when this activity began. The total budget for all these programs this year is about $3 million. Of this FAS is contributing about one-third from Public Law 480. The other two-thirds is being voluntarily raised by the foreign industry groups. We have formal contracts for cooperative programs with eight major importing countries and hope to have a contract finally processed with a ninth country within a few days. We are cooperating on an informal, but regular basis with the others-without financial contributions.

Generally speaking, we do not contemplate cooperative agreements with those countries which are important producers or exporters.

Now I would like to tell you a little about the programs themselves.

The object is to stimulate a desire in people to be better dressed and to make their homes more comfrotabele and more attractive with cotton.

Populations and incomes are rising all over the world and the opportunity for selling more cotton products is increasing daily.

The per capita consumption of the United States is about 27 pounds; the average for the foreign world is only about 5. If the people in the rest of the world would buy only 2 pounds more cotton a year, the equivalent of 1 bedsheet, or one pair of overalls, the demand for cotton would increase by about 10.5 million bales annually. The would create a tremendous opportunity for United States cotton exports if it is competitive.

We are fully conscious of the fact that realization of such an opportunity_requires that American cotton must also be competitive in price and quality. But that is a problem in another field which we hope will also be resolved.

To accomplish our promotion objectives, we have relied on the same tools and techniques that have been used in this country to add some 3 million bales to consumption-despite some straight price losses in nonpromotable industrial fields totaling scores of thousands of bales.

Fashion is a key approach to creating a desire in people to be better dressed-in their persons and their homes. Fashion is the locomotive which pulls the big volume, mass market train. In other words, one dress in cotton by a Christian Dior can mean 100,000 similar dresses in cotton on the racks of Macy's 90 days later. (This is also sometimes known as the bell cow or Judas goat approach-but it works.) It was largely fashion promotion in this country which increased retail sales of low-prices cotton dresses by more than $750 million annually since

about 1950.

This involves convincing the fashion leaders, those who design clothes, the fashion press which tells the women of the world about them, and the fashionconscious women who wear the designs first, that cotton has real fashion appeal. Fortunately, the colors, weaves, finishes, and so on which cotton makes so abundantly possible permit a firmly based fashion approach. The visible evidence of the educational and selling campaign involved all down the line are fashion shows, fashion publicity photos, newspaper and magazine layouts, advertising, radio, motion picture, and television features.

Another major step involves helping the distributors of cotton-particularly the retailers who are the only real contact with the actual buying public-become better salesmen for cotton products in several areas.

A. Retail sales training materials to make better salesmen.

B. Store promotions.

C. Cotton Week.

Naturally by increasing sales volume with these campaigns, the retailer benefits as much as cotton.

Another special technique is the special events which capture public attention and make people more conscious of the beauty and the serviceability of cotton. The Maid of Cotton is an outstanding example of such events.

Last year the Maid of Cotton was in six foreign countries.

Let me give you an example in another field, improved fabrication and distribution. In this country, mass production and mass fabrication have been