Mr. ABERNETHY. I will agree with that. But probably my question is theoretical and we may never reach that situation. But I think we will, the longer this program exists, the time will come when there will be as much demand per capita in one area as there will be in another.

If that day comes, then there will not be any possibility of your holding back any money?

Mr. DAVIS. That is right.

Mr. ABERNETHY. All right. Would the Department then be agreeable to distributing that money on a per capita basis so as to give every State its pro rata share?

Mr. DAVIS. We have discussed this and I am sure we would want to work something out in that direction in that situation.

Mr. ABERNETHY. The reason I ask the question-I think you will understand my reason for asking it-I think the day is coming when the situation I have just suggested will exist. I don't think there is any question about it. I think this program will go on for many years, and I think the time will come when with $75 million it will be consumed and there will be a demand for considerably more. I think the time will also come when every State in the Union will desire to participate to the fullest extent of the school enrollment. That being the case, I just want to know what the attitude of the Department is going to be. I don't think any more should be distributed to the students in State A than is distributed in State B if the demands coming from each State is equivalent to the demands in the other States.

Mr. DAVIS. I am sure we would make every effort to make an equitable distribution to give each State its fair share.

Mr. ABERNETHY. You are telling us now that you would do that? Mr. DAVIS. Yes.

Mr. ABERNETHY. Without an amendment being put in the act? Mr. DAVIS. We could do it under the act.

Mr. ABERNETHY. There is no question that you can do it. But would you do it?

Mr. DAVIS. Yes.

Mr. GARBER. At that particular time, Congressman Abernethy, there could be an amendment to the act in which you could have a formula under which we would distribute this money like we do in the School Lunch Act.

Mr. ABERNETHY. Of course, the only formula that it would be distributed under those conditions would be on a per capita basis with the authority to authorize you to hold back in the event some State did not use all of its money, so you could transfer it to another State.

Mr. GARBER. I agree with the theory under which you are proceeding. All of the children should have the opportunity of participating. Mr. ABERNETHY. In an equitable amount?

Mr. GARBER. In an equitable amount, that is right.

Mr. ABERNETHY. What is the feeling of the Department regarding the bill introduced by Mr. Anfuso and possibly others to make this program available to the Coast Guard and to the Merchant Marine Academy?

Mr. DAVIS. I believe there are some other representatives of the Department here, Mr. Palmby, who might be better qualified to answer that question, Mr. Chairman.

Mr. ABERNETHY. I think this might be a good place to get that into the record if you gentlemen wish to join the others at the table.

Mr. KOENIG. That would relate more nearly to making milk available to the armed services as we do now under separate legislation. Mr. Palmby was going to testify on that proposal anyhow.

Mr. ABERNETHY. Let us see what this bill of Mr. Anfuso's does here that subsection B of section 202 of the Agricultural Act of 1949 is amended by striking out "of the Army, Navy, or Air Force, and as a part of the ration," and inserting in lieu thereof "(1) of the Army, Navy, Air Force, or Coast Guard."

And by inserting before the period at the end of the first sentence the following:

And (3) of cadets and midshipmen at, and other personnel assigned to, the United States Merchant Marine Academy.

You are prepared to testify on that.

Would you give your name to the reporter, please?

STATEMENT OF CLARENCE PALMBY, DEPUTY ADMINISTRATOR, COMMODITY STABILIZATION SERVICE, UNITED STATES DEPARTMENT OF AGRICULTURE

Mr. PALMBY. My name is Clarence Palmby, Deputy Administrator, Commodity Stabilization Service, and the Department has taken a position with regard to this bill.

If you would like, I would like to read the statement to you.
Mr. ABERNETHY. Very well, proceed.

Mr. PALMBY. It is addressed to Congressman Cooley. This is in reply to your requestion for a report on H. R. 9618, a bill to amend the Agricultural Act of 1949, to provide surplus dairy products to the Coast Guard, Coast Guard Academy, and the United States Merchant Marine Academy. The bill would amend section 202 of the Agricul tural Act of 1949, as amended, to make the Coast Guard and the cadets and midshipmen at, and other personnel assigned to United States Merchant Marine Academy eligible to receive dairy products that are made available by CCC to the Secretary of the Army for increased use by military agencies. The Department recommends enactment of the bill. The quantities of dairy products acquired by CCC under the dairy support program have exceeded the quantities that could be sold by CCC in available market outlets. It has been possible to reduce the CCC inventory only by donating substantial quantities by increased use by military hospitals and for domestic and foreign school lunch and welfare uses.

Mr. ABERNETHY. This has to do with the distribution of surplus commodities that have been acquired by the Commodity Credit Corporation that is what this has to do, isn't that right?

Mr. PALMBY. That is right.

Mr. ABERNETHY. This is apart from the school lunch program? Mr. PALMBY. Yes. [Reading:]

By increasing the number of persons eligible to receive and to increase their consumption of milk and its products pursuant to section 202 of the Agricultural Act of 1949, as amended, the proposed bill will aid in increasing total consump tion and in keeping down CCC inventory of dairy products acquired under the milk and butterfat price support program.

That is the report. I now have a paper which I will present: Pursuant to authority provided by the Agricultural Act of 1954, the several military agencies and the Veterans' Administration have cooperated fully with the Department of Agriculture to increase the consumption of milk and its products.

The Agricultural Act of 1947, as originally written, provided for the support of prices to producers for milk and butterfat through loans on, or purchases, of the products of milk and butterfat.

The 1954 act broadened this authority by authorizing the purchase of milk as well as its products. The 1954 act also added section 202 to require Commodity Credit Corporation to donate milk and dairy products, acquired under the support program, to the Administrator of Veterans' Affairs and to the Secretary of the Army (for additional use by the military departments), upon certification by them that they are continuing to buy the usual quantities of milk and its products in the normal channels of trade.

CCC has made its stocks of butter, cheese, and nonfat dry milk available for increased use by the veterans' hospital patients and military personnel (troop feeding) since September 1954. During the 1956-57 fiscal year, CCC donated to them for that purpose 20.7 million pounds of butter, 1.7 million pounds of cheese and 72,000 pounds of nonfat drymilk.

Soon after the 1954 amendments, the Department worked out an arrangement with the military agencies and Veterans' Administration to increase the consumption of fluid milk by the military personnel and veterans' hospital patients.

The program became effective with the several military agencies in October 1954 and with the Veterans' Administration in March 1955. The arrangement provided for use of the established buying organizations of the Military Establishments and veterans' hospitals, thus avoiding the setting up of duplicate CCC milk-buying organizations. Under the arrangements, the military agencies and veterans' hospitals have purchased additional milk in the local markets. CCC has paid part of cost of such additional milk, by reimbursing the participating agencies at a rate of $4.10 per hundred pounds.

The consumption of milk has been greatly increased, especially by military personnel, as a result of the program. During the 1956-57 fiscal year CCC paid to the military agencies and Veterans' Administration $16,356,000 on their increased purchases of 399 million pounds of milk. The total consumption of milk by the military personnel was more than double the normal rate.

The amount of CCC reimbursement has approximated the cost to CCC of buying and removing from the market equivalent quantities. of butter and nonfat dry milk. The remainder of the cost of the additional milk has been borne by the military agencies and veterans' hospitals.

By increasing the consumption of milk and its products, this special program is making an important contribution to the solution of the dairy problem.

In addition to the health values to the participants, the program will have a lasting beneficial effect on the future market demand for milk and its products. Meanwhile it is helping to keep down the CCC purchases and inventories of dairy products.

The Department is recommending that the authority contained in section 202 for CCC to make milk and its products available to the military agencies and Veterans' Administration for their increased use be extended beyond December 31, 1958, which is its present expiration date.

Mr. ABERNETHY. I think that answers it. In other words, the Department favors the inclusion of the Coast Guard and the Merchant Marine Academy.

Mr. PALMBY. I would like to point out what I think we are all aware of this is simply an extension of what we are already doing, it is broadening the base to more military groups.

Mr. ABERNETHY. Are there any other sources that the Department feels that this privilege should be extended to-do you have any in mind?

Mr. PALMBY. We do not have any in mind.

Mr. ABERNETHY. I am just wondering if the inclusion of the Merchant Marine Academy is not going to raise the question of some of these other military institutions, or are they already included? Mr. KOENIG. The Armed Forces are already included.

Mr. ABERNETHY. The military is already included, I see, the Navy and Military and Air Force Academies are already included, is that right?

Mr. PALMBY. Yes.

Mr. ABERNETHY. I believe that is all of the questions I have.
Do you gentlemen have any questions?

Mr. KOENIG. Mr. Chairman, I would like to make one point. I believe that from the standpoint of the Department that the Department would like to see the special milk program as such kept separate and apart from getting mixed up with other forms of milk distribution to other services.

Mr. ABERNETHY. I did not mean to leave the impression that we would incorporate the two in the same function.

Mr. KOENIG. I appreciate that.

Mr. ABERNETHY. There are a multitude of subjects before the committee and we are trying to dispose of all of them at this hearing. Mr. JOHNSON. I have a question with regard to school lunch programs. You said that this year the Department is asking for $100 million for the school lunch program?

Mr. DAVIS. Yes.

Mr. JOHNSON. What did they ask for in the last prior years, do you know?

Mr. DAVIS. Last year, they asked for $100 million, the year before 83 plus. And the year before that I believe it was $67 million. Mr. JOHNSON. What did the Congress give them-the amount they asked for?

Mr. DAVIS. No, sir. The year the Department requested $67 million the Congress gave us $84 million.

The next year when the Department asked for $83 million the Congress gave us $100 million.

Mr. JOHNSON. $100 million?

Mr. DAVIS. Yes.

Mr. JOHNSON. I have been having some complaints from my district in regard to the school lunch program in relation to the surplus

foods that are available now. Are they bought out of this $100 million?

Mr. DAVIS. No, sir. The $100 million is to provide for cash reimbursements to the States on the basic theory of the school lunch program that the States and communities will make their purchases of food locally. However, there is a provision in thhe School Lunch Act, section 6, which allows the Secretary of Agriculture to withhold some of the $100 million for direct purchases of certain foods that the State requests, and would be beneficial to the school lunch program. That has been $15 million for several years.

The schools, also, have been what the Department regards as the very best outlet for any surplus commodities that CCC may have in inventory, or as an outlet for food that it purchases for surplus removal purposes, section 32.

Mr. JOHNSON. The complaints I have had are with regard to meat products that have been provided. For instance, turkeys-I do not know whether, also, poultry, but this year about all in the different communities that I have heard from complained that it is hamburger so far as the surplus meat is concerned.

Mr. DAVIS. The kinds and quantities of commodities that have been donated to the schools this past year out of CCC inventories have been about the same as previous years. The pinch has come as a result of the Department not being required, not finding it necessary, to make as much surplus removal purchases as had been made in previous years. The hamburger, if I might say one more word, the hamburger being distributed this year is a very small amount, about 15 million pounds, I believe. And that was purchased with part of the $100 million as a section 6 school-lunch purchase, so we had no surplus meats this year.

Mr. JOHNSON. Was not there as much reason for going into the turkey markets and buying them as any other years?

Mr. DAVIS. We really do not have any responsibility for that part of the program. The Commodity Credit Corporation Board does review the proposals or requests for the surplus removal programs, and it is my understanding they have not felt that situation warranted a purchase program this year.

Mr. JOHNSON. From the information I have received, I was of the impression there has been a bigger surplus in the turkey market this year than any other year, and I was wondering what was behind it, that there was any available. And according to what you said the CCC felt there was not sufficient surplus to go into the market and buy it.

Mr. DAVIS. They didn't feel a purchase program was warranted. Mr. JOHNSON. That is all.

Mr. ABERNETHY. This program, that is, the school-milk program, is financed by ways of funds made available through the capital assets of the CCC; isn't that correct?

Mr. DAVIS. Yes, sir.

Mr. ABERNETHY. Is the CCC reimbursed by direct appropriation for the funds?

Mr. DAVIS. I believe they are. An appropriation is made sufficient to restore their capital.

Mr. ABERNETHY. I do not recall, I just do not know, that the act provides for restoration of the depletion of the capital.