6. Our Government is presently buying large quantities of alcohol as fuel for jet planes, rockets, guided missiles, turbojets, and reciprocating engines. Most of this alcohol is now made from imported blackstrap molasses or from petroleum fractions. Government purchases are probably many times the capacity of this plant.

7. If there were no immediate use for alcohol, it could be stored without substantial loss and much cheaper than the present cost of storing our surplus grains.

8. There are hundreds of uses for alcohol but, of course, it can be made cheaper from blackstrap molasses and petroleum than from high-priced grains.

ALCOHOL FOR RUBBER

9. The alcohol from 1 bushel of grain will produce about 6 pounds of butadiene and this in turn will produce about 6 pounds of synthetic rubber. Should all the synthetic rubber used in America be made from grain alcohol, it would consume some 200 million bushels of grain yearly.

ALCOHOL FOR FUEL

10. Research has been carried on in the Government laboratory at Peoria, Ill., on alcohol for fuel, for automobiles, trucks, tractors, and planes.

11. Automobiles in the United States of America consume some 36 billion gallons of gasoline per year. If they were required to use only 5 percent of alcohol blended in gasoline, it would consume some 700 million bushels of grain yearly. Ten percent would consume some 1,400 million bushels. That's far more than our burdensome yearly grain surplus.

12. Of course, the Omaha plant alone could not solve the agricultural problem but it could demonstrate the feasibility of such uses. This plant was originally built for research on farm crops and there are three other such alcohol plants not now in use.

13. The Omaha plant alone could consume some 10 million bushels of grain yearly and produce some 25 million gallons of alcohol that would replace purchases now being made for Government agencies. At the same time, it would produce some 150 million pounds of badly needed, high protein feed that could be consumed immediately in the territory where it is produced.

There are two ways the foregoing results could be accomplished.

1. The plant could be operated by the Department of Agriculture or the Commodity Credit Corporation. The entrance of our Government in this field might cause considerable opposition and I believe it is the policy of the present administration to avoid competition with private industry. I do not favor this procedure. However, if the decision is made to carry out this demonstration by Government operation, I would gladly donate any assistance I might be able to give to the successful completion of such a program.

2. A private corporation could be formed (such as the Farm Crops Processing Corp. which operated the plant during the last war) and with the complete cooperation of the Department of Agriculture and the Commodity Credit Corporation, the plant could be operated without Government finances. Arrangement can be made with the General Services to acquire this plant either by lease, with option to buy, or outright purchase.

The operation of this plant would be a demonstration of our ability to profitably consume our burdensome surpluses of grains for industrial uses here at home. At the same time, it would recover practically the entire value of the original bushel of grain before deterioration had taken place and return to our Government more than 24 gallons of alcohol for each bushel of grain processed and replace purchases that are now being made of alcohol from other sources. It would enable the General Services to lease the idle plant at a satisfactory rental, and result in the final sale of the property to private enterprise. The additional cost to the taxpayer would be nothing.

The paragraph quoted below is a recent appraisal by a present Assistant Secretary of Agriculture of the possibilities of alcohol for fuel.

The proposed alcohol fuel idea eventually could eliminate existing or future corn or wheat surpluses, and also reduce parity costs if adequate legislation were to be effected. The major fuel use is the only known outlet that is large

proclaimed, that is permitted without payment of penalty under the certificate. Each farm operator who sells farm commodities shall obtain, from the county farmer committee, a within-quota or overquota certificate of sale for commodities that he sells, which shall accompany the commodity through channels of trade within the United States. Each such producer shall be issued withinquota certificates of sale by the county farmer committee upon payment to the committee of a farm income improvement fee of not more than 1 per centum of the parity income equivalent price all-commodity, up to the remaining volume for the crop year of sales shown for the commodity group and for the commodity marketing quotas on the face of the marketing quota certificate for such year. Each producer shall also be issued such overquota certificates of sale by the committee as he may apply for and require for the sale of farm commodities over and above the volume shown on the face of the marketing quota certificate of such operator upon payment of a farm income stabilization fee equal to the total of the number of units of each commodity covered in such overquota certificates of sale multiplied by 75 per centum of the parity-income equivalent price of each such commodity. The Secretary shall confiscate all farm commodities and products discovered if ownership cannot be accounted for by presentation of within-quota or overquota certificates of sale in the hands of the owner thereof. SEC. 4. Section 303 of the Agricultural Adjustment Act of 1938, as amended, is amended to read as follows:

"PARITY INCOME DEFICIENCY PAYMENTS

"SEC. 303. In carrying out the provisions of section 1 of this Act, the Federal Farm Income Improvement Board is authorized and directed to make use of the funds collected from sale of within-quota and overquota sales certificates under provisions of section 3 of this Act for administration of the provisions of this Act and to reimburse the Secretary for parity income deficiency payments he is required to make under provisions of section 1 owing to errors in forecasts in connection with determination of the farmwide all-commodity, the commoditygroup, and the individual-commodity marketing quotas, and the Secretary is authorized and directed to make use of funds available to him and any funds appropriated by section 32 of Public Law 320, Seventy-fourth Congress (49 Stat. 774; U. S. C. 612c), as amended, in making parity income deficiency payments required by the excess of the number of unemployment above 3 per centum of the civilian labor force. The Secretary and the Board are authorized and directed to make parity income deficiency payments to producers whose sales of any commodity, whose total sales of commodities within a group, and whose total sales of farm commodities do not exceed the respective marketing quota or quotas in amounts which, with respect to each such commodity sold, together with the proceeds from sale thereof, will provide a return to such producers which is as nearly equal to 80 per centum of the parity income equivalent price as the funds so available will permit. All funds available for such payments shall be apportioned to the several commodities in proportion to the amount by which each fails to reach the parity income. Such payments shall be in addition to and not in substitution for any other payments authorized by law. The Secretary is authorized to make use of funds available to the Federal Farm Income Stabilization Corporation for payment of his share of the parity income deficiency payments. Congress is authorized to appropriate to the Secretary such sums as may be required from time to time to allow him to reimburse the Corporation for sums advanced to the Secretary for making of parity income deficiency payments. The total of parity income deficiency payments made by the Secretary and the Board to any one farm operator in any one year shall not exceed $3,500. It is the intention of this section that in years, or in periods of less than a year, when the number of unemployed is less than 3 per centum of the civilian labor force, the entire cost of the farm income improvement program provided in this Act shall be covered by the farm income improvement fees and penalties paid by farmers, and in years and periods of less than a year when the number of unemployed exceeds 3 per centum of the civilian labor force, additional funds required by the Secretary of Agriculture to carry out the provisions of section 1 and of this section due to the reduced demand resulting from the excess of unemployment over 3 per centum of the civilian labor force."

SEC. 5. Section 703 of the National Wool Act of 1954 is amended by striking out "March 31, 1959" and inserting in lieu thereof "March 31, 1963."

(Statement referred to is as follows:)

REPORT OF THE TASK GROUP ON INDUSTRIAL ALCOHOL FROM GRAIN OF THE PRESIDENTIAL COMMISSION ON INCREASED INDUSTRIAL UTILIZATION OF AGRICULTURAL COMMODITIES, APRIL 25, 1957

Task Group: Reit T. Milner, Chairman; James W. Faucett, L. J. Gunson, Julius Hendel, Cecil A. Johnson, John W. Livingston, Edward S. Monohan, William B. Plummer, James A. Reid, George W. Rigby, Carl E. Rist, Earl D. Unger

LONG-RANGE PROSPECTS

The long-range prospects for developing an agrochemical industry at the expense of the National Government, through the use of agricultural products, including grains, as the basic raw material, appear favorable and in the public interest so long as:

1. Surplus supplies of grains are being produced, some of which find their way into Government ownership.

2. Storage costs and market supports are financed in part and at great cost by the Federal Government.

3. Export demand is declining except through subsidized disposal effort. 4. The Government acts to adjust production of various grain crops to meet long-range conservation, economic, military, or national-defense objectives.

Because developing a long-range agrochemical industry through research and development work seems to offer the most economic means of using agricultural products, including grains, which now find their way into Government ownership, it would appear desirable, during the period of development, to make Government grain available to industry for research purposes at near-zero cost. If it appears necessary to make some charge for agricultural products, the cost should not exceed the basic raw-material cost for other basic "natural" raw materials, such as petroleum and coal. It is believed that research achievements to produce “higher use potentials" for end products will ultimately justify a higher charge for the raw material. Thus the long-range objective for developing an agrochemical industry should be to make it free of subsidy. In the meantime, the program should not be required to sustain itself in competition with today's national or international market.

The prominent place the United States now holds in the field of industrial chemistry was achieved through assistance of the tariff and other long-range governmental means that were considered to be needed with the advent of World War I and thereafter. There now appears to be a like need and opportunity for developing an agrochemical industry through adequate research and development. Such work should begin by utilizing existing knowledge, facilities, and raw materials. To the end that private enterprise can lead the way to such achievement, encouragement of research is needed in the form of: 1. Grants of aid in money to educational, industrial research and consulting organizations for research and development work.

2. Free use of Government-owned raw materials over a period adequate to evaluate the new processes and developments.

3. Use of available governmental facilities at low rental rates. Additional financial assistance through Government loans, accelerated amortization of facilities, and tax chargeoffs. Long-term raw material supply contracts at fixed prices (independent of current grain markets) that would assure processors of enough grain to maintain continuity of manufacture at reasonable cost. (Although this would be difficult to arrange under usual Government contract procedures, it appears that such agencies as Commodity Credit Corporation could be authorized by the Congress to make such longterm contracts.)

Steps should be taken promptly to provide for activation and long-range operation of present Government-owned plants and facilities capable of converting Government owned surplus grains into alcohol. Likewise, a sufficient number of butadiene units should be activated to use the alcohol so produced, since it appears that such production can be undertaken without seriously interfering with present synthetic rubber production and with the prospect of finding improved methods that will increase financial returns. Some of the products can probably be absorbed through Government activities. Operation of these plants and facilities would provide the opportunity to initiate many techniques and to

develop many applications necessary for the beginning of an agrochemical industry.

The long-range cost of the program that is suggested here would be modest in contrast with the present cost of the governmental program for agriculture and the disposal of surplus agricultural products in international trade. Furthermore, it is anticipated that the long-range economic benefits to be derived from this proposal would repay many times the cost to the Government, just as was true in the development of the Nation's general chemical industry.

Mr. WELSH. Now, gentlemen, Mr. Johnson mentioned and I would like to impress upon you that I think that the real problem—Mr. Chairman, you asked about the economics of using grain.

In our plant we recovered this feed for animals and about 18 to 20 pounds for a bushel, and we got 3 cents a pound for the animal feed, which is about 55 cents a gallon

Mr. POAGE. What I was actually asking, and I don't want you to get me wrong, or anybody else to get me wrong, because I am sympathetic with the idea of the whole program of using grains for alcohol and everything else and I think it is a great thing and it is something that we need.

However, as I said before, the meeting this morning of this committee is for the purpose of discussing this immediate emergency situation in soft corn.

Mr. WELSH. Yes, I understand.

Mr. POAGE. And we have had bills introduced here early in the session. We have a bill by Mr. McGovern that was introduced February 4 which was for a long-time operation of this plant.

Now, if it is a permanent thing that you are talking about, that is one matter; but the bill introduced by Mr. Harrison and the other bills similar to that were introduced purely as an emergency proposition although I do see that the bills do provide for the Secretary of Agriculture to buy up corn in any condition and so, therefore, if you do not find enough corn in bad condition, then you could buy the good corn, but I had not understood that that was the proposal in this bill, that is, Mr. McGovern's proposal. That is a long time proposal but the committee is not hearing that this morning.

Mr. WELSH. I see.

Mr. POAGE. This is supposed to be an emergency condition to meet an emergency situation, that is, a situation as of how to take care of this corn crop that we have now, so we cannot go into any details upon the permanent aspects of it.

Mr. WELSH. You would like to know-I believe one of the questions you asked was how long it would take to put the plant in operation.

Mr. POAGE. Yes, certainly, and how much of this corn would be used and how much it would cost per gallon for this alcohol using only the soft corn.

Mr. WELSH. Well, 60 to 90 days, it can be put in operation and going.

Mr. POAGE. All right. Now, how much soft corn will you use, how soon will that soft corn play out?

Mr. WELSH. How soon will it play out?

Mr. POAGE. Yes.

Mr. WELSH. Never. We are going to have a surplus of wet corn

Mr. POAGE. I understand you have one but you cannot keep this soft corn, can you, you cannot keep it?

At about this time, however, World War II began. The demands of wartime caused us to place the accent on maximum food production. Farmers were encouraged to increase production and were given the assurance that they would be protected by a price-support program in the event of a postwar slump.

In 1949, after American agricultural production had helped to stave off a food shortage in Europe, it seemed to many authorities that we needed a new approach to Federal farm programs that would keep production in line with market opportunities and at the same time maintain farm income at a reasonable level. This was the background for a challenging proposal by the then Secretary of Agriculture, Mr. Charles Brannan, for a system of direct production payments to farmers in return for cooperation of farmers in a program designed to reduce the necessity of expensive storage and price-support operations.

I am very grateful, Mr. Chairman, I am gratified that the former Secretary of Agriculture, the distinguished Mr. Brannan is with us this morning and that he has kindly agreed to explain the technical principles of these bills and he will be before the committee in a matter of a very few minutes.

Before Congress could act on this proposal, we were involved in the Korean conflict and once again permanent action was postponed. At the end of the Korean conflict, a new Secretary of Agriculture was in office. The present Secretary I am sure is a devout, religious man who doubtless believes in his programs. The fact remainsand we are not attempting at this point to blame anyone-however, that net farm income has dropped 19 percent since 1952, farm surpluses have tripled and the cost of the farm program to taxpayers has skyrocketed.

Without attempting to lay the blame for this situation on anyone, Congressman Roosevelt and I have devised proposals which we believe are practical.

The proposals which are being suggested to your committee were summarized in a letter which we sent to the Members of the Congress under date of March 10, 1958.

Mr. Chairman, I think in view of the limited time and the fact that we do have a very distinguished witness to present here in a very few minutes, that I will ask you for unanimous consent at this point to file the letter attached to the statement which the members of the committee have which we sent out to the Congress under that date of March 10.

Mr. POAGE. Without objection.

(The letter referred to is as follows:)

FAMILY FARM INCOME IMPROVEMENT ACT OF 1958

We believe that the Congress should move now to develop a more satisfactory program for American agriculture.

There is little to be gained in arguing the question of who is to blame for the current predicament of the farmer. The fact remains that agriculture our largest and most important industry—is in trouble. Falling farm prices, rising costs, the paradox of surplus food in a hungry world-these are the familiar aspects of the problem.

Farm purchasing power is several billion dollars below the level of 5 years ago, or 10 years, or even 15 years. This is a painful experience, not only for farm families; it is equally painful for city dwellers who are unemployed because