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COMMITTEE ON AGRICULTURE AND FORESTRY

HERMAN E. TALMADGE, Georgia, Chairman

JAMES O. EASTLAND, Mississippi
GEORGE MCGOVERN, South Dakota
JAMES B. ALLEN, Alabama

HUBERT H. HUMPHREY, Minnesota
WALTER D. HUDDLESTON, Kentucky
DICK CLARK, Iowa

RICHARD B. STONE, Florida
PATRICK J. LEAHY, Vermont

ROBERT DOLE, Kansas

MILTON R. YOUNG, North Dakota
CARL T. CURTIS, Nebraska
HENRY BELLMON, Oklahoma
JESSE HELMS, North Carolina

MICHAEL R. MCLEOD, General Counsel and Staff Director

SUBCOMMITTEE ON FOREIGN AGRICULTURAL POLICY
HUBERT H. HUMPHREY, Minnesota, Chairman

GEORGE MCGOVERN, South Dakota

WALTER D. HUDDLESTON, Kentucky
DICK CLARK, Iowa

RICHARD B. STONE, Florida

HERMAN E. TALMADGE, Georgia

HENRY BELLMON, Oklahoma
JESSE HELMS, North Carolina
ROBERT DOLE, Kansas

EX OFFICIO MEMBER

SUBCOMMITTEE ON AGRICULTURAL PRODUCTION, MARKETING, AND
STABILIZATION OF PRICES

WALTER D. HUDDLESTON, Kentucky, Chairman

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GRAIN EXPORT POLICY MANAGEMENT

THURSDAY, JUNE 24, 1976

U.S. SENATE,

SUBCOMMITTEE ON FOREIGN AGRICULTURAL POLICY
AND SUBCOMMITTEE ON AGRICULTURAL PRODUCTION,
MARKETING, AND STABILIZATION OF PRICES OF THE
COMMITTEE ON AGRICULTURE AND FORESTRY,
Washington, D.C.

The subcommittees met at 10:15 a.m., in room 324, Russell Senate Office Building, Hon. Walter D. Huddleston (chairman of the Subcommittee on Agricultural Production, Marketing, and Stabilization

Present: Senators Huddleston, Humphrey, Bellmon, and Dole. STATEMENT OF HON. WALTER D. HUDDLESTON, A U.S. SENATOR FROM KENTUCKY

Senator HUDDLESTON. The subcommittees will come to order. We are going to begin, in the interest of trying to save time, even though a vote is in progress at the present time.

Senator Humphrey, who is chairman of the subcommittee on Foreign Agricultural Policy, is voting now and, hopefully, he can be here by the time I will have to go to vote. This way, we can continue the session without interruption. Without objection, I will place the statements of Senator Humphrey and Senator Dole in the record following my opening remarks.1

The 1972 Russian grain purchase was the fork in the road for American agriculture and the American economy.

The entry of, first, the Soviet Union, and then mainland China into the U.S. agriculture market marked the beginning of a true world market for U.S. agricultural products. It also signaled a new day for every sector of American agriculture and the U.S. economy.

That single event and the many associated developments of the past 4 years have stimulated one of the sharpest ongoing debates in the history of this country.

The General Accounting Office has been actively analyzing all of the developments since the original Russian grain deal. They have filed several reports and have been active in following the progress of each of their reports and recommendations. The report we are to receive today is the culmination of this effort and, as I understand, will attempt to answer some of the basic questions we face in our export policy.

1 See p. 2 for the prepared statements of Senators Humphrey and Dole.

STATEMENT OF HON. HUBERT H. HUMPHREY, A U.S. SENATOR FROM MINNESOTA

GAO REVIEW OF U.S. AGRICULTURAL EXPORT POLICY

The review of agricultural export policy by the General Accounting Office could not be more timely and necessary. For the past three years, we have faced concerns each fall over the weather and the availability of agricultural commodities which led to the intervention of the federal government in the sale of agricultural commodities abroad.

It has now been four years since the export sales to the Soviet Union triggered a chain of circumstances resulting in the precipitous depletion of U.S. grain stocks and rising commodity prices.

In retrospect, it is now clear that these events marked the end of an era in the history of American farm policy. We must now carefully review the extent of the changes which have taken place and devise policies which afford full recognition of the new situation we face.

Increased demand for U.S. agricultural commodities worldwide has offered significant benefits to many sectors of the farm community. For example, net farm income more than doubled from $14 billion in 1970 to around $33 billion in 1973.

But the radical change in the U.S. supply situation from one of surplus to one of relative balance between production and demand has led to instability resulting in a series of problems for farm policymakers.

Foremost among these problems is the growing uncertainty surrounding the U.S. and world supply situation. As an ever growing share of U.S. farm output moves into foreign trade, our own producers become increasingly dependent on changes in world markets.

Over the past five years, the portion of American grain output which is exported has increased from one-fifth to about one-third.

In the past, swings in demand for U.S. farm commodities were buffered by sizable stocks of basic farm commodities and reserve acreage. But we no longer are able to count upon such mechanisms to buffer the contingencies in world demand.

The costs of farming have also risen substantially over the past few years. Farm production costs increased by 21 percent in 1973, 18 percent in 1974, and around 7 percent in 1975.

Farm debt has also risen spectacularly over this pericd from about 60 billion dollars in 1970 to nearly $100 billion today.

What all of this suggests is that while producers are less able financially to absorb wide swings in demand, the growing reliance on world markets pose the threat of greater year to year variations in demand.

The response of those charged with the administration of farm and exportpolicy to these changes has been mixed. To some extent, we can forgive those inconsistencies. Policymakers were confronted with new circumstances. And legitimate questions were raised in regard to whether these new circumstances were only transitory or actually signalled a basic change in the structure of agricultural trade. But there should no longer be any doubt that the game has changed-that the international, and consequently domestic supply situation has moved from chronic surplus to chronic uncertainty.

Over the past several years, we have watched this administration experiment with various approaches to deal with supply stabilization in the absence of buffer stocks and reserve acreage.

In 1973, export controls were imposed on soybean shipments abroad. In 1974, a moratorium was placed on grain shipments to the Soviet Union. Similarly, in 1975, moratoria, or more politely voluntary export restraints, were imposed on grain shipments to Poland and the Soviet Union.

The problems of inequities of these actions have been explored in some detail before my subcommittee. But our perspective with regard to these actions has not been to assign blame for the deficiencies of these actions.

Rather, our intention is to use these experiences constructively in building a system which both assures that consumers have adequate supplies of agricultural export policy of the United States.

earned access to world markets for their production.

The General Accounting Office has begun a systematic review of the agricultural export policy of the United States.

The Committee on Agriculture and Forestry recognized the importance of greater vigilance over agricultural exports by including an exporting monitoring

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