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Mr. Dixon. Mr. Chairman, if the gentleman's time is so short, don't you think we should listen to him?
Mr. Poage. I hope all members will listen to him. We are interested in what he has to say.
Mr. JENSEN. I thank you.
Now as you know, most every Member of Congress knows, and many people in America know, Senator Mundt introduced a bill last year, and the year before, which provided that 5 percent alcohol mix should be put in every gallon of motor fuel.
That bill, of course, has not gone through the Congress. Mr. Welsh, who is Chairman of the President's Advisory Commission on New Uses and Industrial Uses for Power Alcohol, sat for months, and a report was issued which turned thumbs down on our bill. That report said that a 10-percent mix in alcohol would be proper and would make the gasoline more efficient, and a 5-percent mix would not be enough alcohol to burn up the moisture that was collected in it. And, that a 10-percent mix would use 2 billion bushels of grain a year, which would be more grain than we would dare use, because it would use up our surpluses too fast.
Now then, I generally like to speak right straight from the shoulder, and I will say that now we learn that the two gentlemen who wrote that report were chemists, or engineers, from the petroleum industry, and as we know, the petroleum industry has fought the use of alcohol in grains ever since it was first mentioned way back in the early thirties.
But they are suffering for it today because of the fact that the farmer is in trouble and his dollar is only worth about 82 cents in buying power so he cannot buy the gasoline and oil that he would be buying if his dollar was worth 100 cents in purchasing power.
So they are cutting off their nose to spite their face. Before the advent of the iron horse, our horses and mules used to eat the production of 43 million acres of our land. Then the iron horse came and we did not continue to feed that iron horse the grain in liquid form, and so it is very simple. If we had planned a farm recession, or depression, we could not have done a better job.
Now we spend billions of dollars a year on this farm program to store all these surplus grains, and when we get all through we are not a bit better off than we were to start with.
Our economy starts from Mother Earth and so we had best start doing something, even at this late date that will help the farmers of America, because we are all in the same economic boat with the farmers in the final analysis—oilmen and all. So I am terribly disgusted with the oil industry, which constantly opposes such legislation.
In Brazil today they are using as much as 35 percent of sugar alcohol in their motor fuel because they have a big surplus of sugar. They have a law down there which requires that a certain amount of sugar alcohol shall be used in all their motor fuel. And they are getting along good.
Now then, the oil industry claims that there is a problem in using that much alcohol in their gasoline, but they admit that a 10-percent mix works very well. However, here the oil industry even fights a 5-percent mix. And I have heard Congressmen from the Southern
States, our oil-producing States tell me that they would have to be opposed to it because they produce oil in their States. They do not realize that they are in the same boat as the rest of us in any economic storm.
So, gentlemen, I hope that this committee will approve this bill, and that the Senate will approve it, and I am sure if they do the President will sign it because certainly this is the only way we can use up this corn which is spoiling. And I do not think there is any one of us who wants to be a party to letting grain spoil beyond the point where it can be used, even though we have a surplus, as long as we have this way of using up the spoiled corn. That is all, Mr. Chairman.
Mr. Poate. Thank you very much, Mr. Jensen. We are always glad to have you appear before this committee. You are always interested in the problems of the farmer and we are glad to hear your views.
Now I do not want to rush this matter, but we must hear from Mr. Smithberger-remembering not to ask him any questions.
We will be glad to hear your statement, Mr. Smithberger.
Mr. HARRISON. I would like to tell you who Mr. Smithberger is. He is from my district. He is an elevator and grain operator, both a farmer and cattle feeder, and he knows some of the problems out there that the farmers are up against, and I think he has some information that will give us the situation out there with respect to need.
Mr. Smithberger is from Stanton, Nebr.
First, as a farmer, I want to clear up one thing. I have some of this corn under seal that just passed 2012 moisture. I will assure you that we can keep that corn until next fall, or possibly later, in the state where it will still be valuable for alcohol; but I will assure you that it will have to be bought at a discount if it is to be used for livestock feed.
Now, there is no question but that this corn--and I say, it has passed and it is under seal to the Government, and will be taken over by them on the 31st day of August. It is going to be their problem from then on. It is true I will have to take some discount on it for damage. What they will do with it then, I do not know, because it will not be fit to ship abroad, that is for sure.
of that comes onto the open market, along with all the rest of my neighbors' corn and that of the surrounding States, it will depress that market much worse than it is today, I will assure you.
Now to dry that, just this kind of corn-it is 24 moisture. It was dried down to 11 so that it would keep. It was corn that could be fed, but it is certainly a poor feed right now in its dried state. Now, that corn cost me $119.38 to dry. I had 108 bushels and 37 pounds shrinkage on 663 bushels. It shrank one-sixth in this drying process. So this corn, going into the dryer at 80 cents a bushel, cost me $1.18 as it appears in that sack in its terrible state. That is why this is an emergency, and that is why we have to do something to get this used up in another form other than feeding.
I feed cattle, I know that we cannot feed it up fast enough. The drought of past years depleted our livestock supply to the place where the average farmer does not have the livestock sufficient to eat up this wet corn before it will go out of condition.
From an elevator standpoint I know that we are going to have to take in milo that went into Government seal in a wet condition. It is going to come to us in a damaged form. I do not know what they are going to do with that, and that was just a month ago. But I am confident that we can store it to the place where it will be of value for alcohol.
But it certainly will not be of value, or much value, for livestock feed.
Mr. HARRISON. Can you make a statement as to what the condition is in Stanton County?
Mr. SMITHBERGER. I can give you the exact figures on Stanton County. I realize you have figures from all over this United States, but maybe I can give you a specific example. This was prepared by our county agent, together with the PMA office.
At the present time we estimate that we have 1,300,000 bushels of corn in Stanton County that is piled in outside rings. This is in outside rings, mind you, exposed to the weather as it is today. This does not include the crib corn in permanent shelter cribs. Approximately 500 cribs have been tested for sealing within the county. Of these 200 have passed, the other being too high in moisture. Of these 200 the moisture content has been about 20.3 moisture. The other 300 averaged 23 percent moisture, and many other cribs have been above 23, running as high as 28 percent.
The average damage in these cribs, and this was when it was tested, was 8 percent. Of those cribs that have passed inspection, many have been tested three times, and sometimes this moisture goes up and sometimes it goes down. Now that depends upon the weather. At the present time we are having a very rainy spell out there, we have had snow and rain, and the moisture is going up constantly on this stored corn. However, in view of the present weather conditions and the high moisture content of the crib corn, it is apparent that much corn will spoil this spring unless it can be processed in some way or used up rapidly. However, there is not enough livestock in the county at the present time to use it up fast enough. Some cribs that have been opened recently are already showing considerable spoilage, and as warm weather approaches much more spoilage will take place in this high moisture corn.
I am bringing this to you just as a specific example. This is our problem out there, and I know it exists over a large territory, not only in the State of Nebraska, but Iowa, Minnesota, and Kansas. I recently made a trip to Texas, the chairman's State, and I found down there that the elevators were filled with milo and wheat, and on the outside of the elevators there were thousands and thousands of bushels of milo piled right out in the open. Now that has to move in the very near future. On top of that, you are only 2 months away from a wheat crop, and if the weather continues anywhere near like it is today, we are going to have some very wet wheat to handle.
So while this is an emergency, and opening this plant is an emergency, I can readily see where we could use this plant to good advantage over a long period of time. Now from an elevator operator's standpoint, I am going to point out that in the 10 years that I have operated, we have had 4 years when we had grain that went out of condition in our county because of high moisture. In other words, out of the 10 there were 4 years where this alcohol plant could have been used to a very great advantage.
I thank you.
Mr. Poage. Thank you very much; we appreciate having your statement as one who knows things firsthand.
Now we have a representative from the Department of Agriculture present. I see several back there.
I wonder, Mr. Berger, if you would care to just get a group with you, and just make any comments you care to? STATEMENT OF WALTER C. BERGER, DIVISION OF COMMODITY
STABILIZATION SERVICE, EXECUTIVE VICE PRESIDENT OF THE COMMODITY CREDIT CORPORATION
Mr. BERGER. Mr. Chairman, we did not hear about this hearing until very late on Friday afternoon, and we really have not had any chance to go over the proposed bill.' I would rather say that I would prefer to answer questions.
We have no opening statement prepared officially. The opening of the alcohol plants, of course, is no new subject to us over in the Department. It has been proposed and discussed a number of times. The long-range program of attempting to use alcohol for motor fuel has been discussed a number of times. Of course, we have had the Commission's report, and there are definitely complications involved.
For the record I will say that as Executive Vice President of the Commodity Credit Corporation, and having been affiliated with the grain and feed business all my life, I have never seen a corn crop, and I do not think anyone else has ever seen one; that is the problem we have staring us in the face this year. However, that does not happen every year. I am not worried about the stocks that we have carrying over from the year before last. The problem that we have staring us in the face for the balance of this year still—we do not know what they are going to be. I do not know that I have ever seen Nebraska, for instance, as my good friend in the grain trade has just testified, go so far into the year with so much moisture in the air as they have so far this year. They just simply do not seem to get around to doing some drying in the cribs, which we have put under loan to the present time. We are not up to the level of our last year loans. I do not have the official figure, but I could put it into the testimony.
There has always been one basic problem which the Commission has studied quite carefully, and are coming up with the suggestion, to the objections that I have had in the past in regard to attempting to make alcohol out of grain. When I was here during World War II, it was my responsibility to see that the distribution of feed supplies and grain supplies were sent around the country where we needed it. I remember the Omaha plant very well. It was one of our jobs to see that that plant had enough grain there every day to keep it running. And the same with the other alcohol plants we had in operation during that time.
But I also remember very well that as we got towards the end of the war, and we began to see that we were going to have enough alcohol to finish the job up, the distillers who were making beverage alcohol and whiskey were in with some quite definite information that you
could take the alcohol out of grain, and then the byproducts that they were saving out of the grain could be thrown back in the feed channels-in reality, you could just about take the alcohol out of the grain and have just as much meat, milk, and eggs left in the country as you had before because the byproducts do aid the assimilation and digestion of other feed commodities—when it is put back in the feed channel. I understand our research people in the Department say that that statement is too strong at the present time. But unless the byproducts, there is something done with them, such as the Commission has suggested, taking the proteins and making human food out of them if it is thrown back in the feed channel, you do not do much about curing the overall grain surplus problem by running a few alcohol plants. Now if the two were brought in combination, then I could see a very definite help there.
As to the attempt to start this plant up in Omaha, or the one in Louisville, Ky., the gentlemen who have testified know more about it than I do, as to how quickly they could get the plant in production. I thought during World War II that that plant up in Omaha was only using something in the neighborhood of a top of 10 million bushels a year during that period. And if we started it up the 1st of June, and the 1st of July, attempting to handle the emergency situation, as it might be right now, we would likely do well if we got a million, a million and a half or 2 million bushels through the plant while this major problem was on our hands. Well whether that is worth it, when we have such a big problem on our hands, that is something you gentlemen have to decide. I would not want to officially make a Department recommendation on it one way or the other. But personally, with the responsibilities I have, in attempting to handle the crops we have on our hands, that we are taking under loan, I know it is severe, but I am wondering if that is going to help very much for a short time duration.
Mr. Poage. Any questions of Mr. Berger?
This ethyl alcohol, it comes out of petroleum and comes out of grain and they are the same product ?
Mr. BERGER. To tell you frankly, I am not that good an expert on the different types of alcohol. As I understand it, the petroleum alcohol is slightly different than that coming from the petroleum production and from the natural gas production. I thought there were 2 different types of alcohol coming out of that, 1 in which graingrain can be made into either 1 of the 2 kinds, but as I understand, as to the petroleum, there is only 1 type of alcohol that comes from that. Now what the technical name is, I would not try to be an expert to say, Congressman.
Mr. HAGEN. One of the big markets where this alcohol is used is the synthetic rubber market.
Mr. BERGER. That was the big reason it was being produced in such tremendous quantities during World War II, was the rubber program. We were cut off from our supply of natural rubber, and, of course, there was large quantities used, as I understand it, in say the smokeless powder and some of the other chemical fields during the war that I am not an expert enough on to try to tell you. But I know it had a very, very high priority in keeping those plants