Слике страница
PDF
ePub

the past, I think they will make some loans in this section but they will be large loans.

Mr. SMITH. I wonder if you would permit me to make a statement now on the insured part of it?

Mr. JONES. I would like to have you do that. I went into that with your counsel down there.

Mr. SMITH. If we understand your bill correctly, the section that has to do with the secured loans, section 3, essentially it would amount to this, that private credit institutions would realize a 2 percent interest on loans that they make and serviced and would take a risk up to 10 percent loss on those loans. The 10 percent risk would mean that even if 95 percent of the advances they made were collected, they still may have a 10 percent loss in the 5 percent leftover. There would have to be 100 percent collection on the loans before the banking institutions would not stand to lose anything. The banking institutions or credit institutions would make and service loans for 2 percent interest rates but they would take the risk over and above the Government's guaranty of 10 percent on the loans. The reason that I merely say here that we doubted that credit institutions would be interested in such loans is that the Farmers' Home Administration now guarantees 100 percent of insured loans, we make and service the loans ourselves.

The banking institution or the credit institution gets 32 percent net for its funds. Even when interest rates are somewhat unfavorable to that type of loan we have not been able to get too many local banks interested in advancing funds for these loans for those kinds of insured loans.

So this is much less favorable to the banking institution than the insured loans we now have available.

Mr. JONES. May I say to you that I visited two Production Credit offices in southeast Missouri, and it just happened that I was there at one of them when they were having their board meeting and they assured me that they would utilize this type of credit, that they would make loans, realizing that they might incur some losses.

The bankers and I talked to not many-but to those that I talked to, they said that they would be willing to make that type of loan even realizing that they would lose the money but they felt that the overall effect in the community would justify them and that they had an obligation along with the Government to try to do it.

The fact of your taking the position that they are not going to use this money, I don't think that that should be the thing that would cause you not to want to cooperate with us, to make the money available. If you have done that, then you have done your part. Then if the bank does not want to do it, why then, that is another thing and they will have to go to the Farmers' Home Administration and the Farmers' Home Administration loan will be a 100-percent-guaranteed loan.

We are trying to relieve you of some of the responsibility and, also, to try to maintain and not have the bank or PCA tell us that we were driving people into the Farmers' Home Administration and not permitting them to share their responsibility. That is what I was trying to do.

Mr. SMITH. Mr. Jones, we were not trying to oppose that section of the bill. We were merely trying to be helpful to you to indicate

to you that it would not likely result in many loans being made because of the character of the risk involved to the private lender. Mr. POAGE. Mr. Jones, do you not think that the answer to that is the rate of interest that the banks can get?

Mr. SMITH. That would certainly help. This bill provides, I think, that the farmer would be paying about 512 percent.

Mr. POAGE. Did you say that the farmer will not pay 8 percent to get the loan and therefore he does not get it? Down in my part of the country they are paying 10 percent now.

Mr. JONES. I would say that there is another feature in this bill. I did not propose to tell this committee that this bill was in perfect form or that I wanted this committee to report the bill out without some changes. And, as I told Mr. Campbell at the time that this bill was drafted, the people would be willing to pay up to 8 percent, if we felt it was necessary to make it that, so we would not get onto the position of the veterans' loan and some of our other housing loans, where loans were ot being made because the interest rate was not high enough to attract the capital, that it is possible that we would be compelled to change the interest rate. What I am trying to find out from you, and I think that Mr. Morse has admitted it in this letter, although he says that they should not make the loans, he has admitted that the need is there.

What I would like for you to tell the committee is where you think this need is going to be met if we do not have some kind of legislation, either this or something similar to it?

Mr. SMITH. Mr. Jones, under your bill, or under the methods that are being employed at the moment, the farmer will still owe the debt. It is a question as to whom he will owe it to.

Mr. JONES. Do you not think that it is better he have his debt consolidated and to know thaat he has a 5-year period in which to pay it rather than have half a dozen creditors over him all of the time and going about as Mr. Poage suggests, trying to feel that he has to duck his head to get around these fellows because he can't pay them and to give him a little more feeling of responsibility, he can say, "I have got these fellows paid off, I have got this one big note to pay." It might be a $500 of $1,000 note, but if he has 5 years or 3 years of a normal crop, he can pay that off.

Mr. SMITH. We do not have any evidence that any farmers are being put out of business because of these unsecured debts that were left over from the 1957 crop year. The Department's loan program plus the loans from private sources are keeping farmers in business.

Mr. POAGE. May I interject right there? Maybe you are not familiar with the way farmers do down in our part of the country. A tenant farmer who gets into this shape where he owes everybody in the community, the classic remedy for that man is to get up and move. That is exactly what he does do in all too many cases.

I think you create more stability when the debt is consolidated and he owes the same lending agency, and I think you will find a whole lot more farmers staying where they are with that stability. But if you just have everybody nagging him, it is just human nature to get up and leave.

Mr. SMITH. The type of loan that the committee has under consideration here, of course, is a far different type of loan than the Farmers Home Administration has ever been making before. The reason our

Mr. ELLIS. Well, the total carryover, we did make an estimate a while back would be, I believe, 17,250,000 hundredweight rough equivalent.

Mr. SATTERFIELD. That is August 1, 1958.

Mr. PALMBY. He wants 1959.

Mr. GATHINGS. For 1959.

Mr. SATTERFIELD. Seventeen million.

Mr. GATHINGS. You figure 17 million?

Mr. SATTERFIELD. Yes.

Mr. GATHINGS. That has not changed from the figures that you had given me earlier?

Mr. ELLIS. No; there would not be any reason to change that.
Mr. SATTERFIELD. No.

Mr. GATHINGS. That is all.

Mr. THOMPSON. This situation in India interests me very much. Apparently, there is a demand in India that would absorb all of our surplus. Apparently, there is an effort being made to give them some wheat which they do not want under any circumstances. Or at least, which they are very reluctant to take.

Mr. PALMBY. I think I disagree with that statement that they do not want it. I did make the statement that on wheat their first preference has been soft wheat. As I understand it, the Indians want that for various reasons. But they are buying hard wheat. And as far as we can determine without any reluctance at all.

Mr. GAITHINGS. That has not changed from the figures that you had So I think it is a fair statement, too, that they would take more cereals than they are presently getting, but there is this overall limi ation of how it can be supplied; in other words, there is always a limit on the allocation that we have. I would like to just make a comment or two again on our total supply percentage of some crops. The sup ply percentages for price support purposes as of normal on wheat was 144.5 percent, as of July 1, 1957, and on corn again, it was 126.3 percent, as of October 1, 1957, on cotton it was 127 percent, and on rice it was 117 percent. These are percentages of normal.

We must take this situation into consideration in allocating commodities for programing to FAS.

Mr. THOMPSON. It is very difficult to accept that in the rice industry when it will have such a disastrous effect on the whole industry next year. As I told you a little while ago, there is no inclination on the part of this committee to criticize anybody who is here. We are only trying to establish the fact. We, naturally, want some kind of relief so that the Department won't use a set of artificial surplus figures, to keep down the acreage on rice, and keep down the support price.

The fact still remains that the world at large needs all the rice that we can produce next year. That is without any question.

Mr. PALMBY. Again, I would like to make the statement, Mr. Thompson, in defense of what we have made available for programing, cer tainly, the same can be said of some classes of wheat, what you said here of the almost unlimited demand, provided the funds are there It does become one of fitting the commodities into this limitation. Mr. THOMPSON. What is the situation in Korea? Have they had some rice under Public Law 480?

Mr. ELLIS. Yes; they have had some. They have had rather substantial quantities in 1956-57. A rather small quantity in the current crop year.

Rice for Korea under 480, during the current year, the quantity is 10,890 tons-it is only about 230,000 bags, roughly.

Mr. ELLIS. They were offered rice at one point under 480 this year and more or less indicated at one time they wanted 50,000 tons, and then they came in finally and said they didn't want any rice.

Mr. THOMPSON. That is Korea?

Mr. ELLIS. Yes.

Mr. DAVIS. Yes.

Mr. THOMPSON. What is the situation in regard to possible barter? Are there any of these nations that could make such arrangements under that 480 program?

Mr. PALMBY. I can answer that in general terms. To my knowledge we have no feelers at the present time of any requests for rice under barter, other than what we are already engaged in. To my knowledge there is not any.

I think it is a fair statement to say that generally the countries that would desire rice would find it very difficult to furnish strategic materials with which to barter.

As you know, we do have a transaction under consideration with India at the present time, but that is primarily for soft white wheat. Mr. JONES. What is the material they have under consideration with which they want to barter, from India?

Mr. PALMBY. Ferromanganese ore.

Mr. JONES. That was just for wheat only?

Mr. PALMBY. Wheat primarily, and possibly some grain sorghums. Mr. JONES. Do you know why rice should not have been included in that?

Mr. PALMBY. There, again, in the negotiations

Mr. THOMPSON. If you want to call in any others, you may do so. Mr. PALMBY. These gentlemen are from the State Department.

STATEMENT OF T. C. M. ROBINSON, BUREAU OF ECONOMICS, THE STATE DEPARTMENT

Mr. ROBINSON. I believe that the reason that the Indians requested wheat rather than rice is they get about twice as much wheat for a given value of barter commodities, in other words, the price of wheat per ton is considerably lower than the price of rice. And in barter that is considerably more important than it is in title I.

Mr. THOMPSON. We hear an interesting story that you may be able to substantiate; it may have a bearing on this conflict or it may not. We hear that India will take wheat and trade it to some other country for rice. Is that true or not?

Mr. ROBINSON. We have heard no such rumors to that effect. The only wheat that has gone to India and that is going somewhere else is going to Nepal which is being replaced by United States wheat. We have heard of no transshipment of any wheat.

Mr. THOMPSON. Have you heard of India taking some of our longgrain rice and trading it to other producing countries for short-grain rice which they seem to like?

Mr. ROBINSON. No, we haven't heard that, either.

Mr. THOMPSON. We have heard that story. It is neither here nor there in this hearing,

Mr. GATHINGS. I have a letter, Mr. Chairman, from Mr. William B. Macomber, Jr., Assistant Secretary of the Department of State, with respect to exports to India, and I would like to ask consent to incorporate it in the record at this point.

Mr. THOMPSON. Without objection it is so ordered.

It is a brief letter and I will read it.

Hon. E. C. GATHINGS,

House of Representatives.

DEAR MR. GATHINGS: In response to your letter of February 20, 1958, I assure you that the United States Government has not sought and is not seeking to persuade the Indian Government to withdraw a request for rice under Public Law 480. On the contrary, every effort has been made to comply with the Indian Government's expressed desires to arrange shipments under that law. The 3-year, title I, agreement signed August 24, 1956, for instance, included provision for the shipment of approximately 200,000 metric tons of rice which India had requested. On February 13, 1958, this agreement was amended, again in accordance with the wishes of the Indian Government, to provide for the sale of about 410,000 tons of wheat in place of the cotton authorized in the original agreement.

In recognition of Indian needs, moreover, we have assured the Government of India that new requests for foodgrains and other agricultural surpluses will be considered if additional funds are authorized by Congress for the purpose. I trust that the foregoing will allay any fears you may have had with regard to the treatment accorded Indian requests for surplus agricultural products. Sincerely yours,

(S) WILLIAM B. MACOMBER, Jr.,

Assistant Secretary

(For the Secretary of State).

Mr. GATHINGS. That letter is in answer to a letter that I had written to Secretary Dulles. I thought that it would be well to make it a part of this record.

Mr. THOMPSON. Is there someone here from the Department of Agriculture who can trace for us the steps that were taken in fixing the price-support level?

Mr. PALMBY. You are thinking there, Mr. Thompson, of the statistics back of the tables that we use to get where we are at the present time.

Mr. THOMPSON. I think that is it.

Mr. PALMBY. I think Mr. Satterfield can cover that. Can you cover that?

Mr. MILLER. This is for 1958, Congressman. You wanted the determination for the level of support for 1958?

Mr. GATHINGS. Yes. The chairman did.

Mr. THOMPSON. Yes.

Mr. SATTERFIELD. The Grain Supply Estimates Committee of the Department is a working committee which is composed of people within the Department who are concerned with program operations and activities on rice and other grains. The committee met on October 3 and after receiving reports on the foreign supply and demand situation came up with an estimate of exports of rice for the 1958-59 marketing year of 19 million hundredweight. The committee felt that exports for 1958-59 would not be any less than for the previous year, based upon inquiries that had been made by foreign countries for rice under the 480 program.

« ПретходнаНастави »