operation; perhaps some changes are in order. We are quite willing to work with your staff; all of our people are quite willing to stand some changes in these programs if they are needed.

Senator CLARK. Do you think that there is perhaps some room for improvement in those programs, in terms of the various

Mr. FRAZIER. I think there is always room for improvement. Senator CLARK. I mean, in your judgment-I don't know what is substantial, really-but in your judgment, should we make substantial changes in those programs, or should we be working in that direction in some later period in the year if we reinstate these? Are you pretty much satisfied with the way they are now? The general thrust?

Mr. FRAZIER. Let me respond this way, sir. I know this REAP program, for example, is run through the elected farmer committees at the local level, and I think they know what they are doing when they allocate this assistance to the various farms. They, with the technical people of SCS, Forestry Service, and others, make up those local programs and set the standards for those programs.

I think it is a good program the way it is. And, by the same token, we need the lower interest rate money for the REA co-ops. If someone has some small changes they want to make, we would try to be receptive, but certainly the main point is to get the programs back in operation.

Senator CLARK. So if you agree that some reforms are needed, you think the right way to proceed in terms of representing our membership and so forth, would be to reinstate these as they are and then spend the rest of the year perhaps debating the validity of the changes that have been suggested in the loan rates?

Mr. FRAZIER. Yes, sir. Let the leadership of the Department of Agriculture come up here and justify the changes they propose to make before the committees in this Congress.

Senator CLARK. I think that sounds pretty logical.

Just one question. As you know, one of the charges on the REAP program, the weakness of that program is that it is often used, or a good part of the money is used in certain areas for increased production purposes and that is not a valid use. Do you agree with that or disagree?"

Mr. FRAZIER. I disagree because if these conservation practices are of value, they naturally will have the side effect of increasing production. That is what this is all about. That is why farmers in this country can produce and supply food at the prices at which they are able to supply consumers today.

Senator CLARK. So you feel it is a valid role for REAP to provide funds for increased production?

Mr. FRAZIER. Not on the increased production aspect alone, but I say that this is an acceptable side effect, if you please. If you are going to stop the soil from washing into the rivers and lakes, if you are going to hold those chemicals from washing off once they are applied, if you are going to get good grass on some of that western rangeland rather than let it go to brush and mesquite, naturally, you are going to improve the productivity of that land. But that is desirable, and, frankly, the whole goal is being able to feed our people.

Senator CLARK. Thank you.

Senator TALMADGE. Senator Helms.

Senator HELMS. Mr. Clary, you certainly have an effective advocate here at the head of the table.

MT. CLARY. Yes, sir.

Senato: HELMS. The notes I have here indicate that you said that your REA co-op would collapse without continuation of 2-percent

money.

Mr. CLARY. No: my local co-op says we are dependent on the 2-pereent money for 80 percent of our loans. He says, this is developed by a formula that is used within the co-ops, and from what I understood him to say, the administrative procedure of the Government determines what percent of the loans they need from 2-percent money. He told me we will be able to survive, but he says we will have to change more to the local farmers for certain services, to be able to provide those services.

He says there are approximately 10 percent of the co-ops through:out America that will not be able to survive without this type of

assistance.

Senator HELMS. Did he give you any specifics on that? Did he specify co-ops that would collapse?

Mr. CLARY. No: he did not specify any of those.

Senator HELMS. Would it be fair, Mr. Chairman, to ask Mr. Clary to provide the committee with a financial statement of his cooperative. including the portfolio of loans and the investment of any reserve funds and at what rates of interest?

Senator TALMADGE. I think it is all right if Mr. Clary can get that information. He is not in the management end of the cooperative now. Senator HELMS. Well. I confess that information has been impounded, as far as I have been abic to attain..

Senator TALMADGE. If the Senator desires, we can write the co-ops themselves and the Department to make available any information he desires about any and all co-ops in the country.

Senator HELMS. The point is that there are a lot of general state

ments ma

Senator TALMADGL. I agree. All Mr. Ciary is saying is what some REA man told him. He can't provide information. Fie has no control

over it.

Senator HILMS. This is right. And, no. sir. I am not cross-examining L'. I want the record to be clear about this.

Senator TALMADGL. We will obtain such information as you desire

about any CG-op.

Senator HELMS. But many statements were made from within and without the farm community, and I come, as you know, from a sult stantial farm State. I know the dire consequences of the difference between 2 and 5 percent. I think we have reached the point. Mr. Chairman, that we ought to depart from general statements and look at the financial statements, specific financial statements.

Senator TALMADGE. I agree fully with the Senator, but I think we are going to have to use the highest and best source of information avainable. The third witness Monday morning will be Mr. Robert D. Partridge, executive vice president, National Rural Electric CooperaLae Association, and at that time you can ask him to provide that

informatiOL.

And at that time, also, we can ask the Department to submit the records. You see, every time they file a request for a loan. they are to

make available all of the assets, the liabilities, the resources, income, that can be made available.

Senator HELMS. This I understand, of course. Frankly, sir, I have examined a few statements, financial statements, that were made available to me from my own State, and I found some contradiction between the dire consequences forecast and the actual appearance of the financial condition of the co-op, as I saw it. And I think I am fairly capable at reading financial statements.

I know that every member of this committee wishes to operate on the basis of sound fact and stay away as far as we possibly can from rhetoric, because too much is at stake. We cannot let the agricultural community suffer; on the other hand we want to examine in fairness the total picture.

Senator TALMADGE. May I suggest this, you get up the information you want and the staff will be directed to write the appropriate official in the Department of Agriculture to submit that for the record. And then when Mr. Partridge comes before us Monday, you can further elaborate and let him provide such information.

Senator HELMS. My line of questioning was prompted by what I understood to be the statement by Mr. Clary. I was wondering if he had any specific details on that.

Thank you, Mr. Chairman. I have no further questions.

Senator TALMADGE. Thank you very much, gentlemen. We appreciate your appearance.

The next witness is Mr. Robert M. Koch, president, National Limestone Institute.

I suggest to the witnesses we proceed as rapidly as we can. There may be portions you want to expand on. The full statement will be in the record.

STATEMENT OF ROBERT M. KOCH, PRESIDENT, NATIONAL LIMESTONE INSTITUTE

Mr. KOCH. I will be glad to do that, Mr. Chairman.

Mr. Chairman, for the record let me state that my name is Robert M. Koch, president of the National Limestone Institute. NLI is an association of some 600 limestone producers scattered across 33 States. I am also representing the National Crushed Stone Institute, a federation formed by NLI and our sister organization, the National Crushed Stone Association, with 200 members.

Thus, I am speaking in behalf of nearly 800 stone producers. Let me further state that some of our members have no interest in agricultural limestone, but that all of them are vitally concerned as citizens for the continuance of this basic conservation program, the rural environmental assistance program.

While I am testifying for the limestone producers I represent, I would also like to point out that it has been my privilege to work closely with NASCOE, that organization which represents over 15,000 ASCS county office employees. Most of you know that I started my career as county office administrator in my home county of Franklin in Massachusetts. These government employees have been quietly going about their business of administering the partnership arrangement

set up by the Congress when they passed the Soil Conservation and Domestic Allotment Act of 1936.

I am also working closely with the National Association of Farmer Elected Committeemen-NAFEC. The members in this association are those farmers-elected by their peers-who are supposed to have the responsibility of deciding what conservation practices are carried out on the farms of our Nation.

I have never advocated to either NASCOE or NAFEC members that they should push the use of agricultural limestone in connection with this program. Rather, I have fought to keep the options open on practices deemed necessary by the farmers in various parts of our country as was intended in the original legislation.

I think the committee should be commended for the expeditious actions you are taking to meet this problem. Certainly you gentlemen recognize the great value of REAP to our Nation's agricultural resources, and realize the necessity of immediate action. For the past several years, there has been a lot of cooperation among the Congress, the USDA, and the American farmer to work out some of the so-called problems connected with this program.

Now, after all the "give and take," and consideration of the "other guy's" view, we find that the efforts have been in vain for we have ended up with nothing. On December 22, it became obvious that way too much had been given when the administration unceremoniously terminated REAP. Two days later I sent a letter to President Nixon, a copy of which is attached in an attempt to have him look at the program in its proper perspective, rather than from the perspective of some unknowing bureaucrat in his Office of Management and Budget.

This is one of several major areas of concern to us today. Why should an anonymous nonelected bureaucrat in the depths of OMB have the responsibility of determining the fate of REAP? It seems to me that Secretary of Agriculture Earl Butz and the Congress should have this prime responsibility. It was my privilege to have lunch with Secretary Butz on December 20, just 2 days before the termination of REAP.

If the Secretary had any indication of the impending fall of OMB's ax, he did not make it known. Later that same day, the Secretary met with Chairman Jamie Whitten of the House Appropriations Agriculture Subcommittee. Again, no mention was made of terminating REAP. How the administration can go back on its word is beyond me. When the program was announced in September, it was the understanding of the American people that the $140 million represented an "initial allocation." Of course, this was a pre-election

announcement.

During our luncheon, Secretary Butz told me of the President's problems in balancing the budget and the pressure he was getting from OMB. Now I will be the first to admit that we have some serious financial problems. In fact, I told the Secretary that our members would back the President's goal of balancing the budget, and that is a true statement. We all recognize the financial problems facing our country. But I maintain, and I think you gentlemen will have to agree, that if every Federal program had been subjected to the same

proportionate cut that ACP has taken since its initial funding at $500 million in 1936, then we would not have a single cent of national debt today.

I know of few Federal programs in which the recipients of Federal funds have to at least match the Federal share with their own money. Moreover, I know of few Federal programs that benefit every segment of our society.

Many would have us believe that only the farmer or rancher receives any benefit from this cost-sharing program. Nothing could be further from the truth. Today's consumer just naturally assumes that the supermarket shelves will be lined with food. There is no guarantee on the availability of food, nor is there a guarantee on the continued productive capacity of our soil.

By conserving our precious soil and water resources, REAP is like an insurance policy. Future generations will be the benefactors. The USDA estimates that 4 billion tons of soil are lost every year as a result of erosion. This soil ends up in our streams, rivers, and reservoirs. There is a public outcry about the sewage load in our Nation's waterways. Yet the fact is that the soil load in our water systems is 700 times greater than the sewage load. Certainly every American benefits from clean water. By the same token, every American benefits by efforts to keep the soil on the farm.

Are there public benefits? Let's consider for a moment the quality of the food on those supermarket shelves. There is a direct relationship between the quality of the soil and the quality of the food produced on this soil. REAP is aimed at conserving and improving the quality of the soil. The use of agricultural limestone in this conservation effort is paramount.

I have attached to this statement one of the most learned treatises ever written about the fundamental value of limestone, and the calcium contained therein, as it relates to the problems of national health. May I add that this was written by Dr. J. B. Peterson, recently retired head of the department of agronomy, from Earl Butz's own Purdue University. I will leave it to you gentlemen, after reading Dr. Peterson's article, to determine whether this program, which was terminated by the proverbial bureaucratic pen, is more of a consumer's subsidy than a farm subsidy.

Mr. Chairman, and members of this committee, we cannot abandon 37 years of work and effort as a result of having this program available. The work must continue. But the farmers can't do it themselves. Contrary to Mr. Butz's statements, the American farmer is a long way from being prosperous. Even during the ideal parity period often referred to, the farmer's record of conservation work is rather dismal. Our Nation was blessed with an abundant wealth of natural resources. For many years, until about 1936 and the start of the old ACP, these resources were exploited at an alarming rate. Congress, in its wisdom. saw fit to reverse this trend and start programs to rebuild our depleted

resources.

Witness now the deplorable conditions in the Nile River Valley, in China, and other areas where the exploitation of soil and water resources has gone unchecked. Even those in the depths of OMB should realize that it is in our best national interest to prevent that situation from occurring in the United States.