Senator BELLMON. Partially loaded at the elevator?
Mr. Cook. Partially loaded at the elevator, yes.

It was loaded to the tune of about 1,850,000 bushels at the elevator.
Senator HUMPHREY. All right.

Mr. Cook. And it was moved to the river and it took these barges that had never been unloaded. They had been graded upriver. And I have the origin grades and the loading grades on each barge.

They were directly transferred into that ship to a depth of 12 feet with the exception of holds one and two. And I am saying to make a charge that this grain was willfully or falsely misgraded is to charge about 8 or 10 different grading agencies all up and down the river plus New Orleans plus Mr. Loncar, who was examining and inspecting the grade, and his assistant Mr. Bostey, accuse all of these people of doing something improper and being in collusion. And I think it is rather farfetched.

Senator HUMPHREY. Now, the New York Times story of the 23d, today, Friday, says as follows:

The color slides and photographs taken on ship and projected on a ship in Mr. Knebel's office showed piles of corn so broken up that it looked like meal. Otherwise, it showed corn so deteriorated that it was rotting and one slide showed in closeup a section of a pile of dust with grains of corn imbedded in it.

Mr. Cook. Well, I have told you that other people only saw something on the deck but they did not see any sprouting on the ship. You waste a bunch of grain when you load a ship. I am sure that there could well have been caking. And as far as the breaking up of grain is concerned the standards say that anything that can fall through a 14inch sieve is foreign material. And there is cob dust, corn dust, and meal in a ship and it tends to concentrate when the ship is loaded directly under the loading spout in a tanker.

The fact that you found dust-if you ever watched a grain ship loaded, an open ship designed for grain you see dust spout on a calm day 100 feet high.

Senator HUMPHREY. That is true.

Mr. Cook. So what? So I can go on a grain ship anywhere in the world and I do not care who loads or grades it, I can collect for you, in total, probably 2 or 3 percent of dust.

So if we are going to talk about dust and you want to go after it and collect it, under the standards I am allowed 4 percent foreign material on 3 million bushels.

Senator HUMPHREY. 3 million?

Mr. Cook. No.

The total, sir, was 3 million, 368.

So I am allowed under the law and in accordance with the grain standards to have 150,000 bushels of screening and dust just by definition. So I am sure if you wanted to go after it you probably could fill up this room with dust. But what has that got to do with it? It is a kind of an illogical approach.

Senator HUMPHREY. It is your view that the sampling that is derived from the newspaper stories was down the middle of the spout so to speak where the smaller particles tended to gravitate?

Mr. Cook. My contention is this, that the 12 feet of grain is on top and these, this 12 feet of grain came from barges. It came from upriver. It had been graded by about 8 or 10 different agencies at 8 or 10 different locations.

The barges had not been opened.

Senator BELLMON. Graded by your company?

Mr. Cook. Some by our company but most were graded by others. Senator HUMPHREY. When you say that the grain was graded by "others" you mean State inspectors?

Mr. Cook. Yes, sir.

I have some grade certificates from Chillacothe, Ill., McGregor, Ill., Peoria, Iowa, Savage, Minn., Havanna, Ill., Shawneytown. Those are these barges. But the grades are consistent. I mean these inspectors in Louisiana that grade grain from upriver do not know the grade of the origin grain that they are grading. They do not have the certificate, the upriver certificate in front of them when they grade it. It is a blind grade. And the grades are consistent and there is nothing wrong

with it.

This stuff right here, these barges cover 12 feet of that ship and the longest probe you can use is a 12-foot probe and most of them are 6 and 8.

So my point is they went straight down and the only way they can get 12 feet down I think is only from under the big boy. But even if they angled it off and probe this way to the side they obviously went something less than 12. But I do not see how, with exception of holds 1 and 2, how they could get out of the grain that was loaded on the top,

the 12 feet.

Now, if the 12 feet on the top is bad then everybody upriver is bad, too. And I do not believe it. I do not believe, for example, in the case of Iowa that the farmers, the cooperative farmers we bought the two barges from, they went from two yellow corn to four yellow corn on loading. I would not openly fuss about that because it is something that happens every now and then. And it is not that bad. Judgmental factors are involved and on the basis that we do not grade grain that goes on a ship it has been inferred that we have done something crooked. And the Department of Agriculture says it is malfeasance here.

I got a call from my bankers with stocks now down $2 a share. I do not care about that because I am not selling it anyway. But my stockholders care. They say we have done something wrong. Malfeasance. On the same basis I could accuse these people of malfeasance but I know in my heart and guts they did nothing wrong.

Senator HUMPHREY. You are saying the barges were sealed and you loaded those barges in the middle of the river?

Mr. Cook. Yes, sir.

And I have here a complete detailed audit that traces every barge and where it went. I have the logs of three separate companies. I have our own logs. I have a Louisiana stevedoring log, the log of the ship, the tugboat working there for the ship. I have the company log and all of those logs have been cross checked and every barge that went in and out of the elevator has been traced.

All of the details are in here. And if there are not any in here I will get them for you. There have been no screenings substituted in that ship.

We had all kinds of things going on. The first thing is the U.S. Department of Agriculture inspectors came on the ship and said we smell oil, this ship was not cleaned before it was loaded. And one of our guys

said, "For God's sake, it is on a maiden voyage and has not had oil in it." They said "Let's forget that." And then they had a story in the paper about locking some inspectors in the hold.

Senator DOLE. They got out though.

Mr. Cook. Well, they got out. And Bill over there who works for me was down there with them. But you would think somebody had gone out and segregated the inspectors and purposely closed the hatch on them.

I think we had three or four of our people plus a couple of them down there. And it was just something that happened. Nobody is trying to lock anybody up. It is like the fellows out in the West with Indians behind every rock. It is just not that way.

Senator HUMPHREY. Are there any USDA inspectors going to look at this grain when it arrives in Poland?

Mr. Cook. Yes, sir.

The USDA is going to look at it and we are going to look at it and have outside experts to look at it. And I will tell you quite candidly that the foreign material after the handling and breaking up, we expect the foreign material to run 11 to 1112 percent. That is not abnormal in this kind of movement.

Senator DOLE. It is normal?

Mr. Cook. Yes, sir.

When you drop that grain 68 feet from the end of the spout to the bottom.

Senator BELLMON. Would it be normal if it was wheat?

Mr. Cook. No, sir.

Wheat is much harder. Beans are harder.

Senator HUMPHREY. It depends on how wet it is, how dry it is, and the texture.

Mr. Cook. Last year with the horrible corn crop, with 15 percent of foreign material, we put it in the cleaner and would come out 17 percent foreign material.

Senator BELLMON. This so-called foreign material used to be livestock feed. Does it diminish the value of the grain?

Mr. Cook. No. We ship-the first thing you do with the corn is put it in a hammer mill and grind it up. You know. For chickens particularly you do not want big pieces because the chicken picks up the big pieces and leaves the meal alone. So you make it uniform.

And cattle feed—you are from Oklahoma and know probably more about cattle than I do-I do not think a cow can tell the difference. Senator BELLMON. You do not feed corn to cows much, you feed it to steers.

Mr. Cook. Yes, sir.

Senator HUMPHREY. All right.

I know that some of our colleagues might want to ask you some questions on this matter before we go into your other statement. Or did you finish your other statement before?

Mr. BELLMON. The other statement was put into the record, Mr. Chairman. He has spoken extemporaneously.

Senator HUMPHREY. Senator Clark, do you have questions to ask! Senator CLARK. Yes.

Senator HUMPHREY. Henry, did you have some first?

Senator BELLMON. I have only a couple of questions.

Senator CLARK. Go right ahead.

Senator BELLMON. Back to your original statement which had nothing to do with the RYSY II. You mentioned the USSR bought 15 million tons of grain outside the United States during the embargo. Was that grain of all kinds?

Mr. Cook. No, sir. That was beans, wheat, and corn.

Senator BELLMON. Beans, wheat and corn. Fifteen million tons? Mr. Cook. Yes.

Senator BELLMON. How much did they buy here before the embargo! Mr. Cook. Nine point eight.

Senator BELLMON. So they bought twice as much outside this country as here.

In your opinion would they have bought substantially that 15 million tons in this country had the embargo not been put in place! Mr. Cook. It is my opinion that we could have, I believe we could have sold them-I'll give a range of 5 to 7 million tons.

Senator BELLMON. What would have then been the effect of the price on the American producers if we had sold that to the Russians? Mr. Cook. Probably where it was when we put the embargo on. Senator BELLMON. What was that price, say for corn or wheat? Mr. Cook. I do not recall but I would say something like $1 a bushel higher. In the case of wheat 50 to 75 cents a bushel higher. In the case of corn approximately $1 to $1.50 higher.

Senator BELLMON. So this action by the State Department or the USDA has cost the American grain growers a range of 50 cents to a $1 a bushel?

Mr. Cook. We figure the loss of sales that we could have made to Russia-I'm not sure these correlate with the price difference that I gave because I would have to check it-we figure we lost a billion dollars in foreign exchange as a result of this. And the farmers in this country would have received a substantial portion of this extra income.

Senator BELLMON. Now, we had this year the largest wheat crop in history; the largest corn crop in history; and the second largest soybean crop in history. Was there any justification for the embargo? Mr. Cook. In my judgment, no.

Senator BELLMON. One purpose of this committee is to figure out whether or not we need to restrain building into our laws to keepI cannot think of an unkind enough word-the officials we could say in the USDA

Senator HUMPHREY. You have been restraining yourself already, Henry.

Senator BELLMON. Yes; from taking actions like this in the future. Would you have any suggestions as to the kind of restraints or criteria. we might establish?

Mr. Cook. Senator, you know Congress and the administration can set policy but you cannot fine tune on a month-to-month basis something working on an annual cycle. And if you look at what agriculture has done in this country in 2 years, the crop year of 1974 and the crop year of 1975, we have gone from a tight supply situation to a surplus in three out of the four major crops in this country. And it just does not make any sense for a farmer in the case of a bad crop to get half price, and then to grow a big crop and have the market cut off from him and wind up with a big surplus in this country.

Somebody mentioned the New York Times and I remember the New York Times when they were screaming about how much it cost a day to store surpluses.

Senator HUMPHREY. $1 million a day to carry our surplus.

Mr. Cook. I heard the Congressman here talk about how we are going to take this strategic reserve and isolate it from the market. I remember the cotton market when it was insulated from the market and prices started going up. And the next thing they did was to dump that supply on the market at the request of the mills and the farmer got it in the neck.

Senator BELLMON. I have some other questions but let me ask one more and defer to the other members.

Back to the criteria question. Is it possible to write a law that says an embargo cannot be put in place until the price of the commodity, be whatever it is, reaches a certain level. Is price a reasonable yardstick to use here?

Mr. Cook. I would hate to set the price.

Senator BELLMON. Say a percent of the cost of production, say 100 to 200 percent of the cost of production.

Mr. Cook. That cost of production of course depends on yields and if you happen to have a bad weather year and you get half a crop you double your cost based on the normal. Follow me?

Senator BELLMON. Yes, I do. But what criteria would you recommend?

Mr. Cook. I would look at the supply and demand factors.

Senator BELLMON. But that is up to the USDA and we do not trust their vision.

Mr. Cook. They cannot put an embargo on without the consent of Congress.

Senator BELLMON. Congress is run by the consumer.

Senator DOLE. Make it the Egg Committee. That would be close.
Senator HUMPHREY. You would need me then, would you not?
[Laugher.]

Senator DOLE. I do not know what side you would be on.

Senator BELLMON. Mr. Cook, we are very disturbed about what has happened and do not want it to happen again. Do you have any advice on how to cope with this situation? We went to urge our farmers and our customers came here and wanted these commodities that we had in abundance and they were turned away. And the farmers take it in the neck.

What do you suggest we do?

Mr. Cook. I think the best to do is you cannot put an embargo in without the consent of Congress. At least that airs the issue and we will find out what the facts are. The problem with the embargo is, you know, here we embargo the Russians and everytime I get near somebody from the Department of Agriculture and they come over and say "Hey, can you sell the Russians any more wheat?" And in 1974 I got a call saying "Can't you sell the Russians a half million tons of corn because the market is going down."

I said, "I do not think they want any more but I will see what I can do."

The worse thing in the world that can happen to the consumer is to put on export controls. That only helps in the 1 year; 5 years out it