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Mr. WELSH. I suggest Mr. Berger here, in charge of all the surplus grains for the Commodity Credit, can tell us more about the value of grain than any of us could possibly know.

Mr. HARRISON. Mr. Examiner, I think the Congressman is exactly correct, we have to treat this from the standpoint of an emergency. Now rather than starting a business out here with the idea of selling alcohol from this time on the reason that corn today is selling for 71 cents a bushel is that it is distress corn. It is corn that the farmer cannot find any other market for. He needs money. He could not sell it at the regular price if it were dried; or, if it were storable corn, he could get $1.10 a bushel for it. At least that is the support price on noncompliance corn. Now he has corn that is going to go out of condition, and I would like for Mr. Smithberger to develop this, as to what the need is. I think it can be developed here, in commercial corn areas and particularly in those areas that grow corn for market only, that there will be at least 50 percent of the farmers out there who will not have a market for their corn. And if they do have a market, it will be a distressed on

So our problem here is to get this com into alcohol. Maybe we do not have a ready sale for it, but it is a market for this man is going to lose his entire crop—which, as I understand, is about 25 or 30, or maybe 40 percent of the farmers in this commercial corn area. Now that is where we are, rather than trying to develop a market here for this particular product.

Now as far as we have been able to develop, the Defense Department does use about 50 million gallons of alcohol. Now whether or not that is the market for this particular product, I do not know and I do not think anyone else knows.

Mr. Poage. Are you suggesting that we convert this corn into alcohol and maybe keep it?

Mr. HARRISON. That is exactly right.

Mr. Poage. You will agree, actually, if they go to selling this alcohol in today's market, that it will simply reduce the sales of other producers of grain alcohol by exactly the same amount that they sell into the market?

Mr. HARRISON. Maybe we would have to store this for a year, but it is in storable condition

Mr. Poage. I think that is a good suggestion, but I mean, you do agree that it is true that if you put this plant in operation and produce, say 50 percent as much alcohol as we are now using, that it would simply reduce by 50 percent the sales of the existing suppliers ?

Mr. HARRISON. That is exactly right. If the market is full today, why any additional is going to run over. We are doing here with a completely emergency program, and this farmer is all we are trying to take care of.

Now I do not know that this 100-mile radius that someone has mentioned is the area that can be helped in this particular case. I think the area could be much larger. But the need for it, I think, can be developed by Mr. Smithberger, who is in the grain business, a farmer and a cattle feeder, out in that area, and knows pretty much about what the condition is in his particular county. And I think the thing that is true in his county with respect to this corn is true in many counties, and Mr. Simpson's district, Mr. Hoeven's, Mr. Harvey's, and

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the rest of the corn area. I think we need to develop is purely from the standpoint of combining the market for this man who is not going to have a market, or if he does, it is going to be a distressed market. Mr. Poage. I want to correct a statement which I made a few.min

because Mr. Heimburger just called my attention to the fact that he had secured a wrong figure on the price of ethyl alcohol; it is actually selling for 47 cents instead of 20 cents. Apparently the price of grain alcohol and of alcohol made from petroleum is competitive.

Mr. HARRISON. That is the information that came to me the other day in making inquiry of the Defense Department as to

Mr. Poage. I do not know where we got this 20 cents. Anyway, the Department of Agriculture supplied the figure, and says this is the right price, and I am sure it is.

Mr. HOEVEN. May I ask Mr. Welsh a question? May I ask this one more question ?

Mr. WELSH. Yes.

Mr. HOEVEN. Do you know of any other avenue of approach to take care of this so-called wet corn except to convert it into industrial alcohol?

Mr. Johnson. I do not know of any other approach because at the time that we were using this corn, we also had two pilot plants in our plant that we were working on, on other processes, and we could not find any other use for it at that time, and we worked on it for more than 3 years. When we get into the processing of spoiled cornwe spoil the part of the grain that we can use for other purposes. Now the proteins can be separated in No. 2 corn and used for human food before the corn is processed, and for the long-range program that, in my opinion, is what must be done. Because the entire world is short of proteins in their food, and instead of sending large sums of money to help out with food in some of these foreign countries, we could do a great deal better if we would send them a protein to put in, just the same as the K-food that Kellogg is making now. We went into that process and partially developed it. The Department of Agriculture in their laboratories have gone further with it, and in my opinion, that is going to be the final outcome of this whole agricultural program, to separate the proteins from the starches and put the starches into alcohol, that would be a byproduct at that time and can be sold at most any price because the proteins will then pay for the cost of the grain. Of course, that is the long-range program. But we went far enough into it so that we know that program is a sound program.

Mr. HOEVEN. Well the only thing that disturbs me in this entire picture is the time element involved, and what in the world can we do right now to remedy this situation. We cannot get this plant into operation for 90 or 120 days. That is the thing that confronts this committee. I think, as to the long-range program, we would have ample time to work that out.

Mr. Johnson. Of course my estimate on that is based on full operation. Of course, you would probably get it in operation and use some corn, but I am thinking about using 40 bushels a day. And I think it will take that long before you get it up to full production.

Mr. Poage. We are very much obliged to Mr. Welsh and Mr. Johnson for going into this. We only have a few minutes left.

Mr. SMITH. I would like to ask a question, Mr. Chairman?
Mr. PoAGE. I cannot refuse. Go ahead.
I am just trying to move along, but go ahead, Mr. Smith, please.

Mr. Smith. Has anything ever been tried to store this alcohol underground, the same as they store many other commodities now? Do they have to pack

Mr. Johnson. I do not know what the Government is doing about it. We have always stored it in tanks, about the same as oil is stored. At this plant there is storage for more than 2 million gallons of alcohol.

Mr. Poage. That is all. Thank you, gentlemen, very much. We have only a few minutes left, and we must have an executive session before we close.

Congressman Jensen is with us, and he wants to testify and we want to hear from him. We have other expert witnesses from the Department, so I am going to try to enforce a rule that no questions be asked-starting with the chairman and try to limit the witness.

However, we want to hear from you, Mr. Jensen.
Mr. JENSEN. I will finish quickly.
Mr. Poage. Proceed.



Mr. JENSEN. I am pleased, Mr. Chairman, and grateful for this opportunity to come before the committee on this important matter. I am very much in favor of this legislation to open the plant at Omaha. I think it is one of the most important steps that we can take today to finally get started on a program, I hope, that will relieve the farm problem.

Now you have been talking considerably about this wet corn. Of course, we all know that wet corn is in Government storage, it is in the hands of noncompliers, it is in the hands of compliers, and it simply must be used up in some manner rather than just letting it lay and go to pot. Now I am informed by a gentleman who runs an elevator, and he is in this room right now, Mr. Smithberger of Stanton, Nebr., an elevator man, that it cost him 38 cents a bushel to dry corn, and when he gets all through drying it it is worth just about as much as chaff. Here is some of it right here. Mr. Smithberger has a sack full of it.

Now this corn, when it is wet, of course, is worth whatever they can pay for it to feed. After they spend 38 cents a bushel to dry it, it takes most of the oil out of it and the feed value has been reduced. You can see this corn, you can bite into it, like we farmers do, and you will see that it is nothing but chaff. There is not much feed value left in it.

So it is very important that we use this surplus grain that we have, this wet grain, in industrial alcohol. And that alcohol can be used, of course, for many purposes, as the gentlemen have explained.

I have great respect for the two gentlemen who have just testified before you, and they have tried their best to stay on the subject. I think at times they were lead off the subject.

Mr. Dixon. Mr. Chairman, if the gentleman's time is so short, don't you think we should listen to him?

Mr. Poate. 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 tumed 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.
Mr. SMITHBERGER. Mr. Louis Smithberger, of 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.

If 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.

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