I do not know whether you have considered the impact that these Government management decisions make on agriculture, but this proves to be a major disincentive. Mr. FASICK. This is a type of analysis that we think Agriculture should be making or could be making, and there are many different ramifications of that type of analysis that they should be involved in. What it really boils down to is having planned strategies available so that when Government is required and expected to react in some way, that these strategies are available so actions can be taken. Before you came in, I think we were talking about the absence of this type of strategy or these plans in an area as important as agriculture, and compared it to the Joint Chiefs of Staff or the Department of Defense where they indeed have contingency plans for different events or conditions that might occur. Senator BELLMON. But my point is we have this plan. Here are 6, 7, 8 billion bushels of grain in reserve available for people when they are willing to pay for it. We need some of it for livestock. We are certainly not going to quit drinking milk or consuming beef or chicken, but we can consume a lot less and get along very well. Mr. FASICK. Then you really have another point. Is this an option that is in the national interest of the United States and that the public is willing to accept? Will they accept less meat to feed the Chinese? I think it is a good, legitimate question, but it is again one in which more than just the farmers' or maybe just the market's interests need to be brought to bear. Other interests have to be brought to bear. Senator BELLMON. On page 30 you make the statement the Nation has no insurance in case of crop failure. That is next to the last paragraph. Again I disagree. I think we have an immense insurance policy in the fact that we have so much grain that is used in animal agriculture. Well, I do not want to belabor the point, but I would suggest that, as the study goes forward, that consideration be given to other options than just Government owning a large supply of grain and having it available to turn loose in the market when the politicians feel it is time. That scares me to death. Mr. FASICK. Well, I think that is an appropriate alternative that needs to be considered. Senator BELLMON. Could you, for the record, supply the names of the individuals who have worked on this study and their backgrounds with particular stress to any who may be agricultural economists or agriculturists or have experience in that field? Mr. FASICK. We could do this. May I suggest that we also add to the submission some idea of the experts, the people in the Department, and the people in the industry that we have contacted and sought and got their opinions and counsel? Senator BELLMON. That would be helpful. [The following information was subsequently received by the committee:] GAO PROFESSIONAL STAFF ASSIGNED TO REVIEW OF RUSSIAN GRAIN SALES, EXPORT REPORTING AND RELATED EXPORT POLICY ISSUES STAFF PERMANENTLY ASSIGNED John E. Milgate, Associate Director, Trade and Finance Group, International Division, GAO, (in charge of Review of Russian Grain Sales, Export Reporting and Related Export Policy Issues): B.S., Syracuse University, Accounting; GAO experience: extensive experience in auditing Government agricultural export programs; since 1972, Associate Director in charge of commercial grain export reviews and investigations of Russian grain sales. W. Mack Edmondson, Assistant Director, Trade and Finance Group, International Division: BA, East Carolina University, Accounting and Economics; MBA, George Washington University, International Trade and Finance; post graduate program at Foreign Service Institute in international economics; GAO experience; extensive managerial auditing in foreign investment, international monetary affairs, and agricultural assistance to developing countries; 1975Assistant Director in charge of GAO review of Russian Grain Sales, export reporting, and related export policy matters. Phillip J. Thomas, International Affairs Generalist and Project Manager, International Division, GAO: B.A. 1971, California State University, Sacramento, Government (Specialization in Public Policy and International Relations); M.A., 1972, California State University, Sacramento (2 years post graduate Interdisciplinary International Affairs Program); non-GAO experience: investigator and investigative reporter 1966-68 and 1972; GAO since 1962; relevant GAO experience: 1972-program evaluation of USDA's barter export program; 1972-73 analyst in review of 1972 Russian Grain Sales and the Wheat Export Subsidy Program; 1973-74 Project Manager, GAO review of Impact of Exports of Soybeans on Domestic Supply and Prices; 1974-Assistant Project Manager of GAO review of Government's Policy on Commodity Shortages; 1974-76 Project Manager of GAO's review of USDA's implementation of GAO's 1972 Wheat Export Subsidy Recommendations. 1974-Project Coordinator of GAO's review of U.S. Trade Policy Towards Developing Countries (which includes an analysis of U.S. agricultural trade policy towards developing countries); 1974-present Project Manager of GAO's review of Executive Branch Management of Russian Grain Sales, agricultural export reporting and related export policy issues; 1972 to present served as adviser on international projects concerning the Commodities Futures Trading Commission. USDA forecasting capability, U.S. food reserve system and foreign grain marketing systems. STAFF TEMPORARILY ASSIGNED Barry Bedrick, Senior Attorney, Office of General Counsel, GAO; law degree; GAO experience: extensive background in legal analysis of various U.S. Government programs; assisted in drafting proposed GAO revision to section 812 of the Agriculture and Consumer Protection Act of 1973; provided a variety of supervisory legal advisory services involving GAO review of Russian Grain Sales, export reporting, and related supply management issues. James A. Bell, Supervisory Operations Research Analyst, Financial and Gen. eral Management Studies Division, GAO: M.A., Mathematics; extensive post graduate education in Operations Research. GAO experience: extensive systems analysis background; supervised price impact analysis of agricultural export reporting system. Alan Belkin, Attorney Adviser, Office of General Counsel: law degree; GAO experience: miscellaneous legal analysis of Executive Branch Programs; analyzed several legal questions pertaining to 1975 US/USSR long-term grain purchasing agreement and voluntary export restraints. Christopher Doyle, Mathematician, Financial and General Management Studies Division, GAO: M.S., mathematics; currently pursuing a masters degree in statistics; GAO experience: Analyst in agricultural export reporting system price impact analysis and evaluation exporter questionnaire responses. Ron Hammersley. Management Auditor, GAO: B.S., Accounting, University of Rhode Island, 1974; CPA 1975, GAO experience: assisted in review of USDA's forecasting system and former Wheat Export Subsidy Program. David John Hand, Supervisory Auditor, International Division, GÃO: B.E., Civil Engineering, Vanderbilt University, 1972; M.S. degree in public management from Carnegie-Mellon University, Pittsburgh, Pa., in 1974; GAO experience: analyst in projects involving the Attrition at the Federal Service Academies; Veterans Educational Benefits, International Grain Marketing; International Coal Trade. William G. Hedling, Operations Research Analyst, Financial and General Management Studies Division, GAO: B.S. Psychology, M.S. Human Factors Engineering. GAO experience: assisted in the design, implementation and analysis of more than 15 data collection efforts including GAO questionnaire of agricultural exporters; 10 years experience in directing and managing major research studies for private consulting firms; principal accomplishments have been in systems analysis, safety performance studies, technical training, and human factors engineering. Daniel Hernandez, Supervisory Auditor, International Division, GAO: M.A., Thunderbird Graduate School of International Management; B.A., University of Americas, History and International Relations; GAO experience: 1975, analysis of USDA's export reporting system. Gene Kudla, Management Auditor, GAO: B.A. engineering; M.A. Business Administration, Penn State; Past experience: U.S. Naval Officer 9 years; GAO experience: assisted in review of former Wheat Export Subsidy Program. Henry Moy, Management Auditor, GAO: B.S., Accounting, George Washington University; GAO experience: assisted in review of 1975 Russian Grain Sales and Review of former Wheat Export Subsidy Program. Samuel E. Oliver, Jr., Supervisory Systems Analyst, Financial and General Management Studies Division, GAO: B.S. Accounting; C.P.A., District of Columbia; postgraduate work in economics, finance and systems analysis. GAO experience: Supervised numerous technical analyses including price impact analysis of agricultural export reporting system and design and analysis of exporter questionnaire. Richard Price, Sr., Supervisory GAO Auditor, International Division, GAO: B.S., Accounting, Kings College; MBA, George Washington University, Accounting; GAO experience: Supervised 1973 GAO review of Grain Exporter's profits; 1973 temp. assigned to Senate Government Operations Committee, Permanent Subcommittee on Investigations, investigation of 1972 Grain Sales to the Soviet Union; 1974-76, project manager GAO Review of East-West Trade and Commercial Relations (includes agricultural matters); 1974-investigated 1974 U.S. grain sales to the USSR. Yvonne C. Pufahl, Management Auditor, GAO: B.S. in Accounting, University of Delaware, 1974; GAO experience: miscellaneous Congressional audits; assisted in review of USDA's forecasting capability. Susan Usyerowicz, Transportation Specialist, GAO: B.S., Business and Public Administration (Specialization in Transportation), University of Maryland, 1974; GAO experience: assisted in review of USDA's export reporting system. James P. Wright, Supervisory Operations Research Analyst, Financial and General Management Studies Division, GAO: B.S., Accounting, and M.S., Business Administration; GAO experience: foreign assignments involving military, foreign aid, and State Department activities; supervised all export reporting system price impact and questionnaire analyses. Stephen Zwerling, Supervisory Program Analyst, (Faculty Fellow), International Division, GAO: PUD, UC Berkeley, Political Science/Public Administration; M.A. UC Berkeley, Public Administration; MBA, UC, Berkeley, Administration and Policy; 1964-66 Peace Corps (agricultural programs in Nigeria); 1973-75, Asst. Professor of Political Science, University of Connecticut; 1975 to present reviewing agricultural supply management programs and systems for GAO. SOURCES CONTACTED BY GAO DURING COURSE OF REVIEW OF RUSSIAN GRAIN SALES, EXPORT REPORTING AND RELATED EXPORT POLICY ISSUES During the course of our review of Russian grain sales, export reporting and related export policy issues we interviewed numerous public policy experts, agricultural policy specialists, agricultural economists, agricultural commodity analysts and other representatives of the agricultural sector. The officials we contacted are associated with or employed by the following organizations. Government White House Council of Economic Advisers The National Security Council Council on International Economic Policy Commodity Futures Trading Commission Agriculture Department Commerce Department State Department Treasury Department Federal Trade Commission Relevant Committees of Congress Federal Maritime Administration Food and Agriculture Organization of the United Nations Private sector Grain Exporters & Associations Farmer Cooperatives & Agricultural Consultants Commodity Traders Private Commodity Forecasting Organizations Senator BELLMON. Also I would like to ask if you can give us a breakdown as to how the USDA goes about making their crop reports. You may have done this in your earlier study. I am not familiar with it. I think it would be helpful to us to know what kind of inputs they get and how these decisions are made. I get the strong impression that you feel at least that there is some pressure brought to bear down there that might give us a distorted. report. Mr. THOMAS. You mean the estimates of domestic production as well as foreign supply? Senator BELLMON. Yes. [The following was subsequently received by the committee:] GAO RESPONSE FOR THE RECORD CONCERNING SENATOR BELLMON'S QUESTION CONCERNING A DESCRIPTION OF HOW THE DEPARTMENT OF AGRICULTURE MAKES ITS FORECASTS PREFACE Within the past two years GAO has issued two reports describing and analyzing the Department of Agriculture's forecasting capability. On April 29, 1974, GAO issued a report titled "U.S. Actions Needed to Cope With Commodity Shortages," (B-114824) which in part reviewed Agriculture's programs for gathering commodity information and making forecasts. That review was followed by a more recent report which was issued on August 27, 1975 titled, "What The Department of Agriculture Has Done and Needs To Do To Improve Agricultural Commodity Forecasting and Reports," (RED 76–6). In both of the above reports we described the data base and methodology for arriving at Department of Agriculture forecasts. An extract from GAO's most recent report describing Departmental forecasting appears below. INTRODUCTION Department of Agriculture reports, and publications containing forecasts of supplies, demands, and prices of agricultural commodities are important sources of data for agricultural and economic decisionmaking. Government officials use them for formulating, implementing and modifying national agricultural policy and commodity programs. The Congress uses forecast information when considering legislation affecting agriculture. Agricultural specialists analyze forecast information and use the analyses in providing information and advice to farmers and others. The news media and agricultural newsletters often refer to and comment on the Department's published forecasts. One such newsletter is distributed to about 40,000 farmers. Farmers and businessmen plan crop production and make marketing decisions using the forecast information and analyses. RESPONSIBILITY FOR AGRICULTURAL COMMODITY FORECASTS The Economic Research Service (ERS), the Statistical Reporting Service (SRS), and the Foreign Agricultural Service (FAS) are the principal Department agencies that forecast and provide information and reports on supplies, demands, and prices of agricultural commodities. Two types of interagency groups Interagency Commodity Estimates Committees and the Outlook and Situation Board-coordinates the Department's forecasting efforts. An Interagency Commodity Estimates Committee for each major price-supported agricultural commodity appraises and reviews information provided by the agencies and forecasts supplies, demands, and prices. The committees' forecasts are the Department's official estimates and are used for budgeting and for developing, administering, and appraising programs. They are also the basis for published statements and information furnished to the Congress. Each committee is chaired by a representative of the Department's Agricultural Stabilization and Conservation Service (ASCS) and includes commodity specialists from ERS and FAS. ERS provides the committees with basic data and economic analyses relating to supplies, domestic demand, foreign trade, and prices. FAS provides estimates of exports and imports. SRS, which is not represented on the committees, provides information on farmers' planting intentions, acres planted and harvested, yields, production, prices, and stocks on hand. The Outlook and Situation Board is responsible for review and approval of the committees' forecasts and ERS's outlook and situation reports before they are published. The board is chaired by ERS's Outlook and Situation officer; the membership generally consists of specialists from ERS, FAS, SRS, ASCS, and other Department agencies, as appropriate. Board membership changes, depending on the commodity or agricultural situation being analyzed. TIMING OF SHORT-RANGE FORECASTS Short-range forecasts cover the 12-month periods July through June for wheat and October through September for corn. These periods are called marketing years or crop years. The bulk of the wheat crop is harvested and available for marketing in July and August and the bulk of the corn crop, in October and November. The earliest wheat forecast is usually made about 1 year before the marketing year begins, and the earliest corn forecast is usually made in December or January for the marketing year which will begin the following October. These forecasts are based on trend analysis, economic and statistical relationships, and various assumptions about the general economic setting and the variables which affect the components of supply and demand. Forecasts are revised many times as additional information becomes available from SRS and other sources. FACTORS CONSIDERED IN SHORT-RANGE FORECASTING Agricultural policies for wheat and corn focus on insuring adequate supplies in relationship to demand with an adequate yearend stock carryover. Carryover is an important determinant of price. When forecasting the yearend carryover, the Interagency Commodity Estimated Committees use a balance sheet approach. Production-based on yield and acres harvested-and imports are added to the previous marketing year's carryover to estimate total available supplies. Domestic demand and exports are subtracted from supplies to estimate yearend carryover. Early yield forecasts, for which the committees assume normal weather conditions and adequate fertilizer supplies, are based on trend analysis of yields and consider technological advances and changes in farm management practices. Yield forecasts made during the growing season are based on information SRS |