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Mr. POAGE. Do you think there is any purpose of making loans to corporations?

Mr. SMITH. You will find in some of these areas there are families that have incorporated and are conducting farming operations in that manner.

Mr. PoAGE. We know that is true. My idea was that they were not crying for help.

Mr. SMITH. I would suggest that we except them from it.

Mr. GATHINGS. I have another idea. I am of the opinion that irrespective of the fact that there might be a little corporation farm among family interests, that these people are engaged in farming should be given consideration, and we are not talking about the General Motors Corp. and such corporations that is not being considered here.

Mr. POAGE. I never saw a family incorporate unless they had enough money to help them get into a substantial tax bracket. I never saw a fellow who had 80 acres or the fellow who was just the small farmer that we have been talking about this morning incorporate; have you? Mr. GATHINGS. A tenant is not going to incorporate.

Mr. POAGE. I know that.

Mr. GATHINGS. But there are people who started out in a small way. Mr. POAGE. Yes; I know that.

Mr. GATHINGS. They moved up and acquired 1 or 2 pieces of land, and they have a gin corporation and they are farming a piece of land. Mr. POAGE. The King Ranch has the biggest combination of ranches in the United States. It started in a small way. I agree with that. The King Ranch is incorporated today. No one wants to lend any money to the King Ranch.

Mr. GATHINGS. Let us put that in "except the King Ranch."
Mr. POAGE. They started in a small way.

Mr. GATHINGS. That is right.

Mr. POAGE. But they didn't incorporate while they were still small. Mr. GATHINGS. Let me say this disaster hit all alike—all sizes of operations alike.

Mr. SMITH. We have no opinion either way. We would suggest that if one paragraph is taken out that corporations be excepted in the other?

Mr. POAGE. Surely. There ought to be a correction over here on page 2 as well as page 3.

Mr. JONES. As I stated to the committee earlier, that was not in my mind. As I said, this bill was drafted and I think they gave a lot of time to it, and they were trying to anticipate everything that came up, and that was put in. I did not have in mind that. I, certainly, would not want that to be the thing that would hold up getting this bill out.

Mr. McINTIRE. I would like to ask Mr. Smith this question. You have indicated through a couple of references here that this legislation takes us out of the general area of the credit to farm folks that has been laid down somewhat in the general policy. The farm credit unions have the facilities for extending financing for current needs. We also have the facilities for the extending of finance for some capital needs on short term basis, equipment and things of that sort. Within that framework we have, also, the facilities for the refinancing indebtedness or extending credit on a long term basis.

Within the Farmers Home Administration you have virtually the same facilities. You have additional opportunities to use the insured route for refinancing this indebtedness.

In addition to that, under your area of responsibility comes emergency financing, under various legislative acts and by declaration of the appropriate officials.

Has it been a policy within the emergency legislation that you move in to assist in sustaining the farm operation until such time as it can recapture losses and enable the farmer to get back on his own feet? You do that under the feed program which is a program in which the Government substantially participates, and under emergency lending you extend loans for the production of crops. And you are going one step further right here to extend some assistance to those who are involved in the problem of carrying the indebtedness of this farmer over the period in which you are going to be of assistance in the current operations.

Am I correct in assuming that the step to which you referred here is essentially in the emergency area and that we step out of the farm operation aspect and the responsibility to assist and go over into the business community and pick up this farmer's obligation to the businessman? In that respect are we not dealing here outside of the general framework of agricultural credit policy in relation to both aspects?

Mr. SMITH. Yes, sir; that is correct. The Congress recognized that same principle you have talked about when it enacted Public Law 727 in the 83d Congress, 2d session, I believe. This is a loan authorization made available to the Secretary, in areas where he finds that there is an economic need for emergency loans. This particular statute contains a positive prohibition against using the funds for the refinancing of debts, but loans are available merely to continue farmers in business.

That again is an indication of what the public policy has been on this question in the past.

Mr. McINTIRE. The problem confronting this committee in considering this legislation is distinctly one in which we must explore what is the need-and I am not deprecating the need at all-for a different position on public policy. We must assume that within the framework of the emergency legislation dealing with farm folks and their problems, the public policy is one where there is a responsibility to refinance debt in order to sustain the business community thereby relieving the business community of bearing the brunt, so to speak, of the predicament which arises in relation to the emergency.

Mr. SMITH. Yes; that is the question.

Mr. McINTIRE. And it is essentially a decision as to where the load will rest. Will it rest rather substantially on those who are in the business community? Or is there a public responsibility, by virtue of the disaster, to enter into agricultural loaning in the business community and take the risk off of the business element, thus converting it into a loan as between the Government and the farmer?

Mr. SMITH. Yes; I would go one step further and say if it is decided that it is the responsibility of the Federal Government, then there is the additional question as to whether that responsibility should be rested in the Department of Agriculture or in the Small Business Administration because it is essentially a business problem.

table II that you have, an estimated 1957-58 of 650,000 hundredweight there. That is section 416.

Whether the other domestic donations are increasing a similar percentage we could not say.

Mr. GATHINGS. That is an indication of the shortage of food. And the shortage of income on the part of a great number of the American people.

Mr. MILLER. Certainly, I would say that as that demand increases, rice is available, we will be glad to program it under that section, I mean in the domestic programs.

Mr. KRUEGER. Will you yield?

Mr. GATHINGS. Yes, I yield to you gladly.

Mr. KRUEGER. I have several inquiries from school districts concerning school lunch programs, small districts in my State, and there are many of them, the agency that is distributing the food to the schools will not give rice to them because they must have a certain number of pupils in school before they can release a hundred pound bag of rice.

I have inquired whether rice could not be made available in 50pound bags, so that these smaller school districts could be satisfied. Mr. MILLER. If that becomes a problem, certainly, we could look into it, we do not want to deny them because of the quantity, I think we could very well look into it.

Mr. KRUEGER. I want to sell more rice in North Dakota, for instance. Mr. THOMPSON. We want to cooperate with you.

Mr. MILLER. Let us take that under advisement and see what can be done about that. That is a packaging problem that we are faced with.

Mr. THOMPSON. When you reply, will you reply direct to Mr. Krueger and let me have a copy of it?

Mr. MILLER. All right, sir. I do not want to answer for the Agricultural Marketing Service, certainly. We want to help. To me it is a problem that can be well looked into. We will bring it to their attention and have an answer to it.

Mr. KRUEGER. I have written to the superintendent of public instruction of my State, and the agency or the setup that distributes the rice tells me that they are not allowed to distribute rice in smaller units because it would be too much. They might waste it.

Mr. THOMPSON. It is subject to weevils and so forth, and other things. It is understandable.

I would think that could step up the outlet.

Mr. SATTERFIELD. Mr. Chairman, referring to Congressman Gathing's inquiry about the report on his bill, I had a call last week from some gentleman-I have forgotten his name over in GSA who stated that one of their problems in utilizing additional quantities of rice would be that they would have to obtain it in less than carload lots. He also stated that the attorney general's office had advised him that they had not been able to use or obtain any rice under section 210 of the act of 1956, because they would have to take it in carload lots and they could not handle it in that manner.

Mr. THOMPSON. That should be explored.
Mr. GATHINGS. It should be.

Mr. SATTERFIELD. The GSA has certain hospitals under its jurisdiction, and I believe all the Federal penal and correctional institutions come under the jurisdiction of the attorney general. Both would have the same problem on distribution. They could not use a whole carload lot at a time, but could use a substantial amount of additional rice if permitted to obtain it in less than carload lots.

Mr. MILLER. It is a question of which agency will break it down. A lot of these governmental agencies can accept it in carload lots and others cannot.

Mr. SATTERFIELD. They should be able to ship a carload to a certain point and there break it down and distribute it in less than carload lots. Mr. MILLER. Going back to the question that Congressman Krueger has, it seems to me we could in turn package or break down to these domestic donation programs in less than these hundred pound containers.

Mr. SATTERFIELD. I believe there is a provision in the act of 1954 which would permit us to do this.

Mr. MILLER. I think so.

Mr. SATTERFIELD. It would cost the recipient only the cost of packaging. I believe this is in that provision.

Mr. THOMPSON. In this particular instance, I do not see any conflict of interest between wheat and rice, none whatever, because in this country, one is not a substitute for the other. I think we have perhaps a good market for it.

Mr. GATHINGS. I was impressed with the query coming from our colleague from North Dakota, and delighted to know that you are interested in rice in North Dakota. And I would like to ask the Department officials, or anyone of you whether or not there is a larger consumption in any particular part of the country. Do we eat more rice in the Southland, do they eat more rice in California, where rice is produced, or in Texas, or Louisiana, Arkansas, and Mississippi?

I just wondered whether or not there is any difference between consumption of rice in that part of the country where it is produced as against North Dakota, the Midwest, or the northeast or the northwest part of the country?

Mr. THOMPSON. Let me provide the opening remarks here. Where they eat rice at all they eat a lot of it. They either like it very much or they do not know about it. Once they learn about it, they eat it.

Mr. GATHINGS. That is correct. I agree. Here is what I want to know. These gentlemen I expect could enlighten us with respect to the school-lunch program. And we are looking to young Americans to eat this wholesome food and enjoy it, and as they go along through the years they will eat more of it, and their children and their children's children would eat more rice.

I wonder if you do have any information along that line with respect to the school-lunch program, and how it is being received?

Mr. ELLIS. I do not have any information as to the per capita use of rice in the school-lunch program. I am sure it is somewhat similar to the overall per capita consumption because where you have somebody preparing the meals using rice they are going to be more apt to ask for it than where they are not using it.

Of course, the consumption of rice does vary very materially in different parts of the United States. In Louisiana, and South Caro

would cost considerable capitalization, that you would have to increase the capital in order to operate in that field?

Mr. SMITH. For a few months we did advance loans in the Mississippi and Arkansas and Missouri delta areas for the refinancing of secured debts only. We advanced funds for the paying of other creditors up to the value of the farm machinery. He had to release his lien and we took a first mortgage on the farm machinery. And then we would advance him funds for the production of the crop. But our loan was a fully secured loan.

Mr. GATHINGS. I am glad to get that information in the record.

Mr. POAGE. Are there any further questions? Are there any further comments? If not, we are very much obliged to you gentlemen for spending so much time with us and giving us so much help. We appreciate it. The committee will stand adjourned. (Whereupon at 12: 45 p. m., the hearing was adjourned.)

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