At a time when the fight against hunger and malnutrition is assuming great importance, it seems unwise, to say the least, to fail to take any action which would help insure a supply of inexpensive, wholesome, nourishing food. At a time when the country is struggling to keep prices down, it is untenable to allow an artificial situation to develop which will send prices soaring. At a time when unemployment is rising, it is hardly wise to shut down plant operations which rely on a supply of manufacturing beef unobtainable in the United States.

Creating a shortage of manufacturing beef by failing to permit sufficient imports is clearly inflationary, and would cost consumers, particularly those in the lower income brackets, millions of dollars. Benefits to domestic producers would be negligible, since the type of beef now imported is in critically short supply. And any reduction in imports would be a blow to the economies of the exporting countries, many of which need all the help they can get.

For these reasons, and the many others which have been offered by food experts appearing before the House Ways and Means Committee, the Morton Division believes that the situation calls for positive actions. It respectfully submits that a liberalization of beef import quotas is critically necessary in the best interests of the food processing industry and its employees, and, above all, the consuming public.

Mr. BURLESON. May I mention that we have a quorum call and I regret Mr. Schneebeli and I will have to go over and answer it. We will recess. I hope that we can be back in 15 minutes. We are sorry that we have to delay all of you, but this is the way things go around here. We have to stay on the payroll.

(Recess.)

Mr. BURLESON. We will resume our hearings.

Is Mr. Richard J. Goodman present? Will you come around, Mr. Goodman?

Again I regret, sir, that we do not have more members. I don't imagine it is too inspiring to look at one sitting up here. But I think we will have some more. Since we do have a number of other witnesses to follow, if you will proceed. Do you wish to read your statement or summarize it or place it in the record?

STATEMENT OF RICHARD J. GOODMAN, MEMBER, INTERNATIONAL TRADE COMMITTEE, NATIONAL GRAIN & FEED ASSOCIATION

Mr. GOODMAN. Yes, Mr. Chairman. I understand the situation. I have here a final copy of my statements for the record. I will try to brief it down to as short a period of time as I can, with your permission.

Mr. Chairman and members of the committee, I am Richard J. Goodman, vice president of Cook Industries, Inc., of Memphis, Tenn. I am appearing on behalf of the National Grain & Feed Association. I am a member of its International Trade Committee. The association represents more than 1,300 grain and feed firms ranging in size from the smallest country elevators to the largest grain and feed complex and includes exporters and processors of grains and feeds as well. The association also has 52 affiliated State and regional associations representing more than 15,000 local grain and feed firms, plus 100 associate members. Our regular members and those of the affiliated associations engage in one or more of the following operations: collection, conditioning, blending, storing and distribution of raw commodities at country and terminal elevators; exporting grain and grain products; and milling or processing of grain for feed or food.

We much appreciate this opportunity to express our views on trade

legislation pending before this committee, and with greater concern, to focus on agricultural trade policy, particularly the problems, trends, dangers and opportunities associated with our exports to Western Europe.

I should say parenthetically, Mr. Chairman, that my testimony comes under the heading of "Meat" in the list of witnesses here. I am not here at all to talk about meat, but rather on grain exports including soybeans to some extent.

We fully support the proposed Trade Act of 1969. At the same time we are opposed to any legislation that adds new restraints on foreign trade, whether it be quotas on imports into the United States or taxes, embargoes or flag shipping requirements on exports from the United States. We believe that the liberalized "escape clause" provision contained in the proposed Trade Act of 1969 represents procedures far more desirable and superior in dealing with problems arising out of increased imports for all segments of our economy, than would quantitative import restrictions required by legislation.

Also, we wish to express our support for the proposed legislation authorizing the use of Domestic International Sales Corp. (DISC). We believe the DISC proposal would, if authorized, help stimulate U.S. agricultural exports by improving the competitive position of U.S. firms engaged in the farm export business.

On agricultural trade, we would reiterate what several previous witnesses, including Secretary of Agriculture Hardin, have said to the committee. Agriculture is currently our single most important trade policy problem area. Threats to foreign sales of farm products are likely to persist, if not worsen, in the years just ahead. Agricultural trade issues need and deserve the highest priority in consideration of our Government's international economic policy now and through the early 1970's.

A brief review of U.S. farm exports in recent years serves to remind us of both the importance of foreign trade to American agriculture, and the difficulties being faced in major farm export markets, particularly the European Economic Community and the United Kingdom. U.S. agricultural exports reached their historic peak in calendar year 1966 at nearly $6.9 billion. This represented 23 percent of total U.S. exports. While total exports were only 5.8 percent of gross national product, agricultural exports were 15.9 percent of total U.S. farm marketing. Unfortunately, since 1966 farm exports have declined each year to a level only slightly more than $5.9 billion in 1969 and only 16 percent of total exports. Thus, nearly $1 billion of farm exports have been lost in the last 3 years. At the same time, nonfarm exports increased from $23 billion to $31.7 billion. I make this point to demonstrate that major problems in maintaining and expanding farm exports lie ahead. They clearly require a higher priority of attention and action than other segments of the economy.

The cost of declining farm exports is more than simply the loss in value of trade and adverse effects to our balance of payments. There is also a substantial public cost directly connected to the operation of our Federal farm programs. For example, during crop year 1967, after agricultural exports had dramatically increased to record levels, cropland diverted under Government programs was 41 million acres. As exports declined and farm productivity continued to climb, our Gov

ernment was forced to increase acreage diversions to avoid a buildup of costly surpluses. Diversions increased to 48 million acres in 1968, and to 58 million acres in 1969. As you know, cropland acreage diversions are paid for from the Federal agricultural budget under commodity stabilization programs.

When we consider the effects of declining or even stagnant farm exports on the U.S. agricultural economy and the cost of farm programs, we must also recognize that productivity in American agriculture is continuing to increase rapidly. Corn yields have increased regularly all during the 1960's and promise to continue to do so during the 1970's. National average yields per harvested acres of corn increased from 54.7 bushels in 1960 to 81.2 bushels in 1969. Grain sorghum yields increased from 40 bushels to 55 bushels in the same period of years. Compared to feed grains, yields of wheat have increased more slowly but still significantly, from an average of 25 bushels per acre during the early 1960's to nearly 31 bushels in 1969.

Both corn and grain sorghum growers have been exploiting the benefits of hybridization with respect to yields. Wheat is just on the threshold of this process, and when the breakthrough comes-I believe within the next few years-we can expect to see wheat yields increase in proportion similar to corn and grain sorghum during the 1960's.

All of this is simply to say that with our capacity to produce with continually increasing productivity and production efficiency, American agriculture must export, and substantially expand exports, in the years ahead in order to sustain healthy economic growth and minimize the sectorial and human costs of adjustment.

Western Europe has confronted us with our most difficult problem and disappointing experience in expanding agricultural trade, and presents us with our greatest immediate challenge in the trade policy field.

The effects of the European Economic Community's common agricultural policy with its high internal harmonized prices and absolute levels of protection through its variable levy system, began to take its toll on U.S. farm exports beginning in 1967. With the incentives of high guaranteed prices behind the variable levy wall, EEC farmers increased grain production from 38.0 million tons in 1966 to 69.7 million tons in 1969. The results on grain imports from other countries, particularly the United States have been traumatic. Total EEC imports of grains fell from 20.5 million tons during 1965-66 to 14.7 million tons during 1969-70-nearly all feed grains. While EEC imports of wheat declined slightly, their exports of wheat to countries outside of the Community increased from 4.5 million tons during 1966-67 to over 6.6 million tons during 1969-70. Because of EEC policies, the U.S. has lost over 5 million tons of feed grain exports to the EEC since 1966 and at the same time, along with other wheat exporting countries, has lost over 2 million tons of wheat exports in other parts of the world to EEC wheat dumping.

After the EEC, the United Kingdom is our second largest agricultural market in Western Europe, and is an important market for U.S. feed grains and soybeans. As I am sure you know, the United Kingdom, along with Ireland, Denmark, and Norway, has applied for membership in the EEC. Negotiations between the United Kingdom and EEC on entrance will begin next month. If in the

process these countries slip behind the EEC high agricultural pricevariable levy wall, an unmitigated farm export disaster for U.S. agriculture would be in the making. Our exports would quickly shrink in the wake of the higher price incentives for greater agricultural selfsufficiency that the EEC's common agricultural policy would bring. In addition, trading preferences among EEC member countries would mean that French, German, and Dutch wheat and barley surpluses would immediately take up much, if not all, of the grain import needs of these new member countries, and relieve the pressure these surpluses have borne on EEC agricultural financing; thus further prolonging the life of the common agricultural policy, all at the expense of U.S. grain exports.

I am sure you will recall the recent strong efforts necessary by the United States to stop the EEC from extending their protective system to soybeans by way of an internal consumption tax on vegetable oils and protein meals. If the United Kingdom, Ireland, Denmark, and Norway join the EEC with its present common agricultural policy, we would have to expect our soybean exports again to be put in jeopardy by stronger and broader efforts of the larger community to extend protection to oilseeds and products.

The EEC's common agricultural policy has proven to be a trade disaster for the United States. A larger EEC, including the United Kingdom and others, presents the danger of extending this trade disaster to more markets and more commodities. While it would seem that the United Kingdom joining the EEC is totally dangerous to U.S. farm trade interests, if the United Kingdom insists on joining, and EEC desires to increase its membership, the negotiations required to consummate this marriage could present an opportunity to bring about useful changes in the EEC's common agricultural policy, with a more liberal agricultural trade policy emerging for the new, larger community.

What clearly is called for in order to make an agricultural trade policy opportunity out of what otherwise promises to be a farm export disaster is an unmistakable expression by our government of our trade and economic interests involved in the accession of the United Kingdom and others to the EEC. First of all, we should call for the readherence to GATT rules by the EEC not only with respect to enlargement of the community, but also with respect to the EEC's preferential trading arrangements with several Mediterranean countries, including Tunisia, Morocco, Israel, Algeria, Spain, Greece, and Turkey, and the many associated African states and overseas territories.

At the same time, we should reestablish the tariff bindings we have available to us on grains with both the United Kingdom and EEC when these bindings come back into force on July 1, 1971. Then when the EEC and United Kingdom take up the question of the common agricultural policy we should stand ready with suggestions on agricultural trade policy in the interests of all parties concerned, most particularly consumers in Europe and taxpayers on both sides of the Atlantic. All of this should be exercised within the context of United Kingdom-EEC negotiations. We should not be entrapped in the hollow prospect that our trade and economic interests will be satisfactorily dealt with after the United Kingdom and others have joined the Community at the EEC's present common agricultural policy.

46-127 0-70-pt. 13- -9

Generally, we must take the position that any prospective political integration arising from an enlarged European community does not outweigh our agricultural trade and general international economic

interests.

I should say, perhaps parenthetically at this point, that we must also strive for an increasing export market-oriented domestic farm program. I know that Secretary Hardin and Chairman Poage of the House Agriculture Committee have been working hard to get such legislation. When we consider the great dependence American agriculture has on expanding export markets we can see why farm legislation that maximizes export opportunities and exploits general marketing potentials is so important to achieve this year.

We should say something as well about our agricultural trade with Japan, our largest single farm export market in the world.

In contract to the EEC and the United Kingdom our agricultural exports to Japan have grown rapidly and promise to continue to grow through the 1970's as long as we maintain a competitive and aggressive export sales policy. There are opportunities to further improve exports of grains and soybeans to Japan by the reduction of some remaining import barriers and the gaining of greater merchandizing rights within the Japanese economy. A solid basis for optimism exists that substantial progress can be made along these lines with the Japanese; again, as long as we maintain a strong liberal trade policy with them. In this atmosphere there is every reason to believe that our over all trade with Japan will grow even more mutually beneficial in the years ahead.

Finally, some closing remarks about the international grains arrangement of 1968. Negotiated in 1967 toward the end of the Kennedy round, the IGA was a last ditch effort to produce something out of nearly 4 years of near fruitless talks on agricultural trade. Apparently, our top negotiators at the Kennedy round thought it necessary to package up some kind of wheat agreement for the appearance of bringing something home for American agriculture, even if it was known to be worthless. Unfortunately, the IGA proved to be worse than worthless. It set minimum world trading prices at levels substantially higher than the previous International Wheat Agreements, completely out of any realistic relationship with trading values of wheat in a world of increasing productivity. The immediate result for the United States was the loss of competitive position in world wheat markets and sharply reduced export sales from mid-1968 until the spring of 1969, when the pricing provisions finally had to be abandoned altogether. Contrary to some mistaken editorial comment, world wheat prices have been exceedingly stable since IGA pricing was completely abandoned in the spring of 1969. To be sure, world wheat prices have been lower but markets have responded, export sales have increased, and wheat acreage in the industrialized world has begun to recede back to more economic and balanced levels.

In short, the IGA was an uneconomic and harmful experience for both ourselves and Canada, only an illusion to Australia and a misdirection to the EEC. Nevertheless, the International Wheat Council is beginning to talk about renewing or extending the IGA bevond its present expiration date of June 30, 1971. We should heed the hard experience we had with IGA and let them know that we are not interested