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Materials acquired for other Government agencies' from inception through May 31,
Mr. HEIMBURGER. You folks, of course, would be able to move in this area of materials for foreign countries only to the extent that you were requested by the Defense Department or one of the agencies responsible for those programs to do so; is that correct?
Nr. BERGER. Except for one thing: That is, that the materials that we do put into that program will not replace what we would consider normal cash sales.
Mr. Poage. I thought you said that that was not applicable. That is one of the things that disturbed us about the program, because I understood at the beginning that you said that provision was not applicable.
Mr. BERGER. That is right, but in the new program that will be tied down. I wanted to make it clear that it is tied down on this type of program the same as it is on regular barter for strategic materials.
Mr. Poage. Let us go back to this No. 1 provision where you can trade for anything that might be useful and would take up less storage
and would be less costly to carry. Is it not true that such material as tin would certainly take up less storage cost and be less costly to the Government to carry than it would be to carry cotton or wheat or dried milk or cheese?
Mr. BERGER. I would like to be able to trade the dried milk and cheese for it. For some reason those are the commodities that we cannot move under the barter program. The only way we are getting rid of those is through the donation route.
Mr. Poage. I have always been under the impression that it was sound business to trade our perishable agricultural commodities to anybody any time for some commodity that we can keep with a minimum of storage costs, and which will not deteriorate over the years so that we might be able to use it at a later time. In fact, I would personally even go so far as to say that we might have advantageous trade with the Soviets if we could trade to them something that they would use up in a period of months for something that we would have 15 or 20 vears from now. It just seems to me that that sort of trade always makes sense. I realize again that you folks in the Department of Agriculture cannot determine just what you can trade for but apparently it is not the policy of the Government as such to accept commodities that are storable and lasting for commodities which might suffer a faster depreciation.
Mr. BERGER. If there are any of those commodities on the list that they provide us we will barter for it under the new rules where it is not replacing regular cash sales from countries that have the money to pay for it.
Mr. PoAGE. Mr. Hoeven.
Mr. HOEVEN. I think Public Law 480 is one of the finest pieces of legislation on the statute books today and we are making rapid progress. However, some witness before the committee some days ago said that at the present rate at which we are disposing of our surplus commodities under Public Law 480, it will take approximately 8 years to get rid of our surpluses. If we cannot dispose of our present surpluses over a period of 8 years we are never going to catch up on this thing. I wonder if you have any suggestion as to how we might enhance the operation of Public Law 480 and move this material faster than in the past.
Mr. BERGER. This gets into a matter of policy on which I cannot speak, of course, and neither can any of my assistants.
Mr. HOEVEN. I am asking your personal opinion. You are working with this every day. We are interested in enhancing this program and making it operate to the fullest extent.
Mr. BERGER. That is right.
Mr. BERGER. We recognize that with the present program we will have jobs for quite a while to keep on disposing of it.
Mr. IOANES. Mr. Hoeven, may I offer a personal comment?
Mr. IOANEs. First of all, there has been a good deal of disposal in this area that has cut into the surplus. I think there are three areas in particular where real progress has been made. First is wheat. The wheat surplus will be cut this year about 150 million bushels. This is a sizable cut and it is the first time that we have not gone the other way in a number of years.
Second, the cotton surplus will be cut by 3 million bales and, third, the rice surplus will be cut from about 20 million bags down to 10 million so that the billion-dollar figure you referred to of the estimated decrease in CCC stocks primarily takes account of these three items that I have mentioned.
Now, it is probably unfair to say that at this rate it would take 8 years to move the entire surplus because the billion dollar cut in stock that you mentioned at the previous hearing was related to the $8 billion inventory and loans held by CCC. We all know that everything held by CCC is not surplus. We have taken over the function, Mr. Berger will agree, of stocking some of the things which the trade would hold if we had a better balance between supply and demand. So that I think that real progress has been made this year primarily because of expanded exports and 480 helped in this, and we have cut down the surplus about a billion dollars, but I do not think it is logical conclusion to assume that it would take 8 years to complete the job.
Mr. Poage. Mr. Hoeven said 480 was taking that long. You have moved the wheat and cotton solely on subsidy. You have been moving cotton at a $70 per bale loss and wheat at 90 cents a bushel loss.
Mr. IOANES. The commodities I mentioned were sold at world market prices.
Mr. POAGE. You have lowered the returns under the 480 returns on cotton and wheat because of the subsidized export program. I am not complaining about those subsidized export programs, but I think we have to recognize that they are moving these commodities because we are taking such a tremendous and staggering loss on that. Mr. IOANES. There is no argument about that.
Mr. POAGE. We had hoped under 480 that we would get something in return. We had hoped that under 480 we would get something a little more than these losses that we are sustaining on both cotton and wheat. We had hoped particularly under this barter transaction that there would be something coming in but when we have lowered the price on all of these commodities down to our subsidized export program anyhow, then probably we don't gain anything by barter, do we? If we are going to sell cotton at $70 less than it costs us, what advantage is it to us to take any kind of foreign strategic material when we are paying the world price for the strategic material anyhow? We had in mind, or at least I had in mind, the idea that we would go to somebody who did not have a market for their goods and offer to trade something we had for what they had.
Mr. BERGER. That is where it is going now.
Mr. POAGE. Well, I come back to Bolivia. Bolivia does not have a market for tin. That is why we are dumping $25 million or $30 million a year into the Bolivian treasury. We are dumping money into the Bolivian treasury. That is because she has no market for her tin. The only way we can maintain a government there is to bolster them up. If they could sell the tin, they could use the proceeds of the tin to run their country.
Mr. ALBERT. There is a possibility that we would destroy somebody else's tin market who is a good customer of ours if we overemphasize Bolivia.
Mr. BERGER. You are talking to the wrong group on that. I am not an expert in minerals.
Mr. ALBERT. There are the Malay States.
Mr. POAGE. And Indonesia. They produce all the rest of the tin in the world, or practically so.
Mr. IOANES. Pretty well.
Mr. POAGE. If we want to subsidize them too we of course could do it, but if we would take this tin and simply bring it to the United States and store it, we would not interfere with the Malayan market if we did not sell the tin into the world market. We could certainly store it much cheaper than we could store cheese or cotton or wheat. We know that. It costs a dollar a month to store every bale of cotton you keep. You can store tin a lot cheaper than that pound for pound. Mr. SIMPSON. Will the gentleman yield?
Mr. POAGE. Yes.
Mr. SIMPSON. If Bolivia cannot sell their own tin, how can we sell it? Are we better tin salesmen than they are?
Mr. POAGE. I was not contemplating that we would sell it. I said. to Mr. Albert that we would not sell it, would not be in competition with Malaya but it would be better for us to store tin than wheat. The rats don't eat it as they eat wheat and it does not get spotted as we are told cotton does when you store it.
Mr. SIMPSON. If Bolivia cannot sell their own tin and Indonesia can, evidently the Iron Curtain countries are taking it. Where are you going to sell it?
Mr. POAGE. I would not contemplate selling it. I think we could hold tin better than wheat.
Mr. SIMPSON. I agree to that.
Mr. IOANES. The barter business would not be attractive if we were peddling strategic materials throughout the world. The attraction is that you provide a supplemental outlet for the strategic material so that it cannot go into the commercial stream and therefore you get interest from Bolivia and from Indonesia because you take part of the commercial supply off the market and therefore raise the total world market for tin.
Mr. POAGE. Coming back to Bolivia, is it not true that we are putting $25 million or up into the Bolivian Government every year? I am right, am I not, on the figure?
Mr. IOANES. It is a big figure.
Mr. POAGE. I think it is bigger than that, but I am not sure. we are putting $25 million a year into the Bolivian Government, why would it not be better to let them mine $25 million worth of tin and barter to us for wheat, for cotton, for cheese, for fats, and oils? Why would it not be better? It would do the same thing to their economy, letting those people go to work, as to simply give them $25 million. It would be just as helpful to them. Why would it not be better to have them actually dig $25 million worth of tin out of the ground. to give us in return instead of handing them the money and letting them buy these things?
Mr. BERGER. That is a top policy question that I think somebody else is going to go into. They don't even have tin on the list for us to barter at the present time.
Mr. HOEVEN. You will admit that it makes sense.
Mr. BERGER. Why we don't get the $25 million worth of tin or the $25 million we are putting down there now, Congressman, I don't know.
Mr. POAGE. I believed when we passed this bill that that was one of the things we would do. I don't object to the other kind of barter because I agree with Mr. Albert that you would limit these things greatly by setting that limit but I do not see why we cannot reduce our cost where today we are just putting out money. Why can we not get something in return for it?
Mr. BERGER. I doubt if Bolivia would be able to use $25 million worth of all of our surplus commodities.
Mr. POAGE. Let us not argue that. I know they can use a substantial amount. There are 3 million people in Bolivia who never did have a square meal. It is as poverty-stricken a country as I have ever seen on the face of the earth. Anything you sent there would be helpful.
Mr. BERGER. I presume there are a lot of places in the world like that but now you are getting into policy that is out of my field.
Mr. POAGE. It happens that I know that Bolivia has a commodity that we can store rather easily, that does keep, that does not cost very much to store, and that is lots cheaper than storing these agricultural commodities and it is not produced in the United States. Now, they don't have the commodities Bolivia has in some of the other places.
that are so poverty stricken. For instance, I don't know what Jordan has to send to us or Libya. I don't know what we could get out of Libya except to pay for an airbase there, but I do know that Bolivia can produce the tin and I think it would be better to get our money in there by putting people to work than by just giving the Government a dole. We make the Bolivian Government simply the recipient of a dole and the Government in Bolivia in turn passes it on to their people and they become recipients of a dole. Why would it not be better to have Bolivia give us something and have the people there given some work.
Mr. BERGER. Your theory is that we ought to buy $25 million worth of tin there and it would do the same amount of good or more whether it is agricultural commodities or other things?
Mr. POAGE. Since we have the agricultural commodities and they need a substantial part of it, although I accept your statement that they cannot take $25 million worth, we know they can take $10 million or $15 million. I am saying why not get the maximum good out of this?
Mr. RAWLINGS. I think you are assuming that they would be willing to give up $25 million worth of tin.
Mr. POAGE. Of course they would not be willing as long as we would be willing to give them $25 million instead. But no government can last 60 days in Bolivia unless they sell tin or get an American dollar. They would get very anxious to sell tin if we cut off the dollars.
Mr. BERGER. I wish I could help you in your problem, Congressman, but I am afraid it is a little out of my field.
Mr. POAGE. I think this has been helpful but I wonder if this could be made more helpful if we let Mr. Lynn express some views on this. I think we would like to hear from you right now, Mr. Lynn, while these gentlemen are here.
You may proceed.
STATEMENT OF JOHN C. LYNN, LEGISLATIVE DIRECTOR, AMERICAN FARM BUREAU FEDERATION
Mr. LYNN. I don't have anything profound to add. A lot of the questions, Mr. Poage, that I had in mind have been brought out here most recently. We were somewhat disturbed over the recent announcement with regard to the limitation on the barter program. To be quite frank with you, I think the new regulations that have been issued will dry up the barter transactions. Now, we were not critical of the Department of Agriculture in ceasing the barter operations in order to take a new look at it because it is true that they were getting committed a tremendous sum of CCC capital and I can understand the managers being very concerned about that. However, this goes to a basic and fundamental policy of the United States, not just to the Department of Agriculture. This thing is broader than whether we rid ourselves of these surplus agricultural commodities. It goes to the very essence of whether or not we can survive in case of a major emergency or all-out attack. We have taken the position as so aptly stated here by you and other members of the committee that it is good sense on the part of the United States to store up somewhere, in a desert or some place with a barbed wire fence around it, tin and a