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Mr. HAGEN. This agricultural material would have to be reasonable to be competitive with petroleum alcohol?
Mr. BERGER. They would require, in my estimation, a very definite subsidy of some kind by the Government in order to make it competitive. How much lower they can go in their price I am not an expert enough on it to tell you, Congressman.
Mr. HARRISON. Just one question. Inasmuch as the support-price program has been developed over the years to protect the producer, and being this corn that we are talking about today is not going to get into Government hands because it does not qualify because of the high moisture content, do you think that the Department would object to opening up this alcohol plant to make it possible for these people who do not qualify for a loan, that they could run it through this plant so that they could derive some benefit from it?
Mr. BERGER. Congressman Harrison, I would have to say that I am not in a position to state what the Department's position would be if that sort of a question came to them directly.
Mr. HARRISON. Because it cannot go into Government loan.
Mr. HARRISON. But they could help this farmer, who is in distress at the present time, by running it through this alcohol plant.
Mr. BERGER. Mr. Congressman, I might say, that I may wish was going August 1st when I have to take over some of it that we have under loan. To tell you frankly, we are going to have to do something with it in a 30- or 60-day period, pretty fast, if I do get it and it is out of condition. Now we do not know at this point, as you folks and some of the other people in the territory out there, as to whether they are going to get some drying winds and this corn is going to dry out. And there is a lot of territory, not only in Nebraska, Iowa, Minnesota, part of Missouri, some in Illinois, northern Illinois, and Wisconsin in which we do have that problem. But I do not know that a million bushels is going to do me much good, a million and a half, that we could take out of the way in a short period of time at that time.
So to answer you officially for the Department, I am not in position I am not at that level in the Department. I am sure that would have to come from the Secretary's office.
Mr. Poage. Thank you very much. I believe that concludes the witnesses, doesn't it, Mr. Harrison ?
Mr. HARRISON. Mr. Thone is here representing the two Senators from our State. I think he has a statement that will take just a minute or two.
STATEMENT OF CHARLES THONE, ADMINISTRATIVE ASSISTANT
TO UNITED STATES SENATOR ROMAN HRUSKA
Mr. THONE, Chairman Poage and members of the committee, our Senators Hruska and Curtis would like to associate themselves with the statements just made by Mr. Johnson and Mr. Welsh, Congressman Jensen, and Mr. Smithberger, on this bill introduced by Congressman Harrison. They want the committee to know that they feel that the Harrison bill makes awfully good agricultural programing sense, both on an emergency and long-range basis. The Harrison bill is of considerable interest to Nebraska, and many other corn-producing areas. This is especially true with the wet corn emergency, Not only is there a lot of soft corn in a potentially serious distressed market, but reactivation of the Omaha plant for production of industrial alcohol would also make good sense in the conversion of surplus deteriorating grain into alcohol.
Early favorable action on the bill is urged by both Senators Hruska and Curtis.
Mr. Chairman, they would be here but they were both committed on other hearings.
Mr. Poage. Thank you very much, we are glad to have that statement.
We have a statement from Mr. Miller, Congressman Miller, that we will insert in the record without objection.
(The document referred to is as follows:)
STATEMENT OF Hon. A. L. MILLER, A REPRESENTATIVE IN CONGRESS FROM THE
STATE OF NEBRASKA Mr. Chairman, I appreciate the opportunity of presenting this statement in support of several bills before your committee that have for their purpose the use of surplus crops for making industrial alcohol and for industrial uses. I have introduced such a bill, H. R. 11508, which calls upon the Secretary of Agriculture to make use of crops held in surplus by the Commodity Credit Corporation in utilization of the wheat or spoiled grains that are suitable for making alcohol. In the State of Nebraska it is estimated we may lose 100 million bushels of grain because of its high moisture content. This is mostly corn. Some of the corn is selling for as low as 60 cents a bushel.
There is in Omaha, Nebr., a so-called Omaha Alcohol Plant that was used extensively during World War II to make synthetic rubber and alcohol.
The scientists have the know-how. We have the plant. We have the corn and wheat, some of it is unfit for human or animal consumption and could be used for industrial alcohol.
It has come to my attention that the military uses huge amounts of alcohol in their jet planes and other equipment, for guided missiles. I believe the record will show that for many years blackstrap molasses has been brought in from Cuba by boat and then transferred by train to the alcohol plant in West Virginia where it is converted into alcohol. Scientists tell me that this is a high-cost operation,
I believe the testimony this morning may well show that if corn can be bought at $1 that it is economically feasible to turn it into alcohol for industrial uses.
It should be remembered that alcohol stores much easier and has an indefinite time of storability. It can be used to make hundreds of industrial items.
It has been estimated that if gasoline used in automobiles contained 5 percent alcohol it would probably take nearly a billion bushels of grain to make the alcohol. I am not advocating that gasoline in cars contain alcohol but I do strongly recommend that grain that is allowed to go out of condition and that held by the Commodity Credit Corporation could very easily be turned into alcohol plants and that alcohol could be used to meet the demands of industry and all the new developments that are coming off the trestleboard as blueprints everyday.
Many countries in Europe for years have utilized their surplus grains in making alcohol. It is my understanding they use it in gasoline.
I cannot too strongly urge that the committee give favorable consideration to the several bills before you that have for their purpose turning surplus crops into industrial uses.
I would also point out that several years ago when the agriculture program was designed and the Secretary of Agriculture was urging favorable price supports, he based it on three things.
1. That surplus crops and storage would be reduced.
Take a good look at these three rules: Surplus crops have increased in storage, not decreased; the regulations on the farmer have been tightened. This is evidenced by the many, many suits filed against Congress for violation of restrictions made by the Department of Agriculture. Certainly the consumer has paid more, not less for the things they buy.
I am sure the committee after careful consideration will come to the conclusion that these surplus crops might well be turned into the industrial channels.
Thank you for letting me give this testimony before your committee.
Mr. Poage. If there is nothing further on this, the committee will stand adjourned, and we will then have an executive session.
(The following statements were submitted to the committee:)
STATEMENT OF SENATOR EDWARD J. THYE OF MINNESOTA
Mr. Chairman, one of the serious problems, among many, that face the farmer today consists of the large stocks of feed grains-corn, wheat, and grain sorghums-overhanging and thus depressing the market. Regardless of whether these stocks are in the hands of the Government or the farmer, the carryover from previous years is so great that it is time action was taken to reauce them and to salvage something out of the old grains that eventually will rot or otherwise be rendered useless.
The proposal which you are considering this morning-that of authorizing the distillation of surplus feed grains into commercial alcohol-is one which I have been interested in for some time. I would like to point out to you that we have a bill pending before our Senate Committee on Agriculture and Forestry, S. 3489, of which I am a cosponsor, which would provide for the conversion of surplus grain owned by the Commodity Credit Corporation into industrial alcohol for stockpiling purposes. You can understand, therefore, that I am most sincere in convictions that careful consideration be given the bills now before you.
By these remarks, I do not wish to be in the position of opposing a prudent reserve of feed grains against the possibility of a bad year caused by drought or other calamity. On this point, I invite your attention to the report of the Acting Secretary of Agriculture on possible methods of improving the feedgrain program contained in Senate Document No. 55 (85th Cong., 1st sess.) being a report made pursuant to Senate Resolution 125. On page 35 you will find this statement on carryover :
“Reserves of fede grain should be at levels which reduce the necessity for sharp year-to-year fluctuations in the liverstock population, such as have been experienced previously. With an expanded livestock population and with better storage facilities, reserve stocks should be higher than they were before the inauguration of Government storage programs. Stocks should be lower than they have been during the last several years.
"Reserve policy should be based relatively more on the need for stocks than in the past, when size of the carryover was determined largely as a result of pricesupport operations.
“For the next 5 years, if the carryover for all feed grains combined should exceed 30 to 40 million tons or should fall much below 10 million tons, this should be a cause for concern. Variations within those limits would probably be manageable."
You are no doubt familiar with the report of the President's Bipartisan Commission on Increased Industrial Use of Agricultural Products (S. Doc. No. 45, 85th Cong., 1st sess.) and the proposed legislation (8. 572, S. 2306) to carry out the proposals for an expanded research program. As one of the coauthors of this legislation, I am most anxious to see this proposed legislation enacted. The program thus suggested is a long-term one designed to provide for agriculture and abundance of research comparable with the research programs in the synthetic fields. But, by its very nature, it is a long-term program.
A CRASH PROGRAM NEEDED
What is needed to reduce our oversupply of feed grains before they become entirely useless is a crash program to channel a portion of our huge stocks of feed grains into the commercial markets, even if this requires a loss on the books of the Commodity Credit Corporation. Such a crash disposal program in addition to returning a portion of the Government investment might, as will be seen, develop permanent markets for grains at regular prices.
Part VI of the above referred to Commission report refers to industrial alcohols and derivatives therefrom, including the making of synthetic rubber. It points out that in the present state of knowledge the utilization of grain for industrial alcohol and related purposes is uneconomic but that (p. 89):
"* * * low-quality grain can be disposed of in these channels and the prices payable may be much less uneconomic than some other methods which have been found necessary in the disposal of surplus grains.”
The Commission's report points out that existing idle industrial alcohol plants in the United States could utilize from 87 to 100 million bushels of grain per year and that the now idle Government butadiene plant at Louisville, Ky., and the privately owned butadiene plant at Kobuta, Pa., could partially utilize the entire production of such industrial alcohol. Butadiene is the principal intermediate product in the manufacture of synthetic rubber.
In an analysis of costs of present disposal programs of the Government and a comparison with a program of disposal for the manufacture of industrial alcohol (synthetic rubber), the Commission states:
"A comparison of the costs of the disposal of surplus grains for foreign currency and the cost of diverting grain for conversion to alcohol, indicates that the latter program might be less costly."
In addition to the disposal of grain for industrial alcohol for the synthetic rubber market and the utilization of the present idle industrial alcohol capacity, there are other plants in the beverage alcohol field that could easily be converted to the making of industrial alcohol. There are plants that can produce butyl alcohol and other chemicals. And, in addition to the manufacture of synthetic rubber the Commission states:
"Alcohol has been described as the most versatile of all chemical compounds. It is a most useful material because of its unique properties as a solvent, a germicide, an antifreeze, a combustible liquid, and especially because of its versatile nature as a building block for other organic chemicals."
In addition to the 100 million or more bushels of grain that could be disposed of through the industrial alcohol-synthetic rubber market, the Commission reports that another 300 million bushels of cereal grains might be channeled into other industrial uses—through present plant facilities operated by private industry. The report states that such encouragement of industrial uses by incentives might well result in the discovery of uses that will provide permanent markets. Of the starch derived from grain the report states :
"Starch is one of the low-cost, abundant raw materials which has not been fully exploited. Because of its polymeric nature, starch may serve as a basic material for new or old chemical products useful in such areas as plastics, textiles, and structural materials.
"Incentives to encourage widespread uses of starch in industries could quite likely develop permanent markets at competitive prices. Among the uses to which starch might be put, at varying incentives, are the metallurgical industries, paper industry, cotton-starch combinations, soil conditioning, and highway construction, and water and sewage treatment."
As to disposal programs to industry such as I have suggested, I invite attention to another of the Commission's important statements :
"Incentives to industry can help to reduce present stocks of cereal grains and cotton, and help to prevent future accumulations. To accomplish this, it will be necessary to sell commodities into channels of industrial use that will enable the buyers to sell their manufactured products in competition with the products of other industrial raw materials. While losses would be thus incurred, the price structure of farm commodities would be strengthened by the removal of surpluses overhanging the markets, and Government would be spared further expense of storage and other costs. Exportation of grain derivatives could also be made possible by incentives enabling domestic manufacturers to compete abroad with foreign processors already benefiting from USDA export subsidies now authorized."
The disposal programs herein suggested have been objected to by some since they do not dispose of the entire portion of the grain processed. From a bushel of corn in the manufacture of industrial alcohol, and I believe the same is true of other industrial uses, there is taken the starch content of about 36 pounds. There is some 3 or 4 pounds loss and a residue of about 16 points of high protein feed. It is undoubtedly a very nutritious animal feed for dairy cattle, steers, and swine. The full operation of the industrial alcohol plants would leave a residue of about 600,000 tons per year of these high protein feeds. This is twice the amount of such feed normally reaching the market, but is under the amount
marketed in 1951. Furthermore such residues are usually marketed in deficit feed areas. Undoubtedly there is a large market abroad for these feeds and since corn is not a good product for ocean transportation might be a method of developing foreign markets for its byproduct.
I mention these facts so that you will understand that by industrial utilization we do not dispose of the entire poundage, but we do thus dispose of over two-thirds and the byproduct is a more storable product.
One more point-the matter of upgrading the protein content for human food. I am told there are prospects of developing processes whereby the proteins are first removed from the grain in advance of fermentation. The proteins might then be marketed, here or abroad, as food ingredients, and certainly would find other outlets of higher value than as fermentation residues. Such a process might favorably modify the alcohol-cost picture. Only large-scale operation can develop this process.
The petroleum industry might have some objection to the utilization of our grains for the manufacture of alcohol for the synthetic-rubber program since the petroleum industry now enjoys almost the entire synthetic-rubber market. But I feel sure their sales of refined-petroleum products to farmers and the need for a sound farm economy is more important to them than the minor part that the gases now used in the synthetic-rubber program play in their overall operations. It is also easy, I am told, to utilize the ethlene now used for the making of butadiene for other chemical processes, such as plastics. In the long run the petroleum industry would benefit from the grain-disposal program herein suggested.
There may be objection from the elevator operators who are now enjoying the collection of fees for storage of Government grain. But, again, as with the petroleum industry, these elevator operators stand to gain more by a sound farming industry, and I am sure will not interpose too strenuous objections.
With all those who might feel that such a grain-disposal program might be harmful, I plead to give it a chance to operate for the greater good of the farming industry and all the people of the Nation.
Mr. Chairman, I would appreciate it very much if my prepared statement be printed as a part of your hearings report. Thank you.
STATEMENT OF Hon. PHIL WEAVER, A REPRESENTATIVE IN CONGRESS OF THE FIRST
DISTRICT OF THE STATE OF NEBRASKA
Mr. Chairman and gentlemen of the committee, I want to join with my colleagues from Nebraska and other citizens of our State who are here today to testify in favor of H. R. 11189 and related bills.
I trust that the committee will act expeditiously upon this measure so that H. R. 11189 can be reported to the House floor for further debate and consideration. The activation of the Omaha plant at an early date for the manufacture of industrial alcohol would mean a market place for millions of bushels of wet corn that are now in storage in Nebraska and the Midwest. In addition, it would mean that we could start immediately on further research and development work to find industrial uses of farm products. There is strong competition today among all the raw materials utilized in industrial production. Increased industrial use of farm products will only occur if through research and development programs it can be demonstrated that farm products are the most economical and the most satisfactory raw materials for specific industrial uses.
In the 84th Congress as well as in this Congress, I introduced legislation which has been referred to this committee, that would provide for the conversion of surplus grain owned by the Commodity Credit Corporation into industrial alcohol for stockpiling purposes.
It is my interest in this field that prompts me to urge the members of this committeee to favorably consider the bill now before you. I am hopeful that H. R. 11189 can be favorably reported to the House. Thank you, Mr. Chairman, and gentlemen of the committee.
(At 12 o'clock noon the committee then adjourned to go into executive session.)