If you look at our population growth through the decades and the projections down the road, it has to become a bigger, bigger issue in the future than has been true in the past.

We have a lot of unused capacity in the country to produce more food, and we think we should crank up our machinery to make the most of these challenges, opportunities that lie ahead. And, in my judgment, speaking as an oldtimer, I think the upgrading of the title of our field people in-it is the overseas USDA field force— would be a good step in the right direction.

Senator STONE. Thank you, Mr. Davis, very much.

I am not supposed to state my opinion this prematurely but, after the hearing, I will.

Mr. DAVIS. Good. Good.

Senator STONE. Thank you, Mr. Davis.

This concludes the hearing, and the subcommittee is adjourned. [Whereupon, at 11:45 a.m., the subcommittee adjourned, subject to call of the Chair.]

SUBMITTED STATEMENTS, ARTICLES, AND LETTERS

STATEMENT OF HON. RICHARD F. STONE, A U.S. SENATOR FROM FLORIDA

It is a pleasure to begin these hearings on how to promote United States agricultural exports. We have before us five bills, all of which try in slightly different ways to achieve that goal. The purpose of these hearings is to investigate what problems our exporters will face in coming years and how we can plan for effective ways to assist them in expanding U.S. agricultural sales abroad.

At the outset, it is important to remember that agricultural exports have increased and become exceedingly important to the United States balance of trade in recent years. Last year, our agricultural exports reached $24 billion, and the surplus of agricultural exports over imports topped $10 billion. In the coming years, we will have to work harder to maintain and to expand markets overseas. This subcommittee is following developments of major significance to U.S. agricultural exports, such as the multilateral trade negotiations underway in Geneva and the negotiation of a new International Wheat Agreement.

Agricultural exports are closely linked to the overall economic policy and economic strength of this country. The value of the dollar-especially in relation to energy imports-has a major impact on exports. You will recall that the devaluation of the dollar in August 1971 and in February 1973 played a major role in boosting agricultural exports. Assuring fair value for the dollar must be part of any long-range exports strategy.

Within this larger economic setting we must take up the special concerns of agricultural exporters. It seems that in recent years export markets have expanded despite the lack of positive efforts by the Congress and the Administration to promote them. The United States has an efficient, ever-improving agriculture industry, and it can be competitive in markets abroad. We in the Congress need to analyze what tools are available to help, and which of these tools should be used more fully in order to increase the attractiveness of United States products to buyers in other countries. We need to examine tax policy, research support, market development, political leverage, and any other possible methods at our disposal. We also must consider how well U.S. exports are treated by other nations that have access to our markets, and determine what impact this should have on U.S. policy.

It is my hope that through these hearings we will formulate preliminary agreement on a legislative approach that will lay the foundation for a stronger effort to promote United States agricultural exports. This is a complex and challenging task, and I welcome the views and recommendations of all our witnesses.

STATEMENT OF HON. BOB DOLE, A U.S. SENATOR FROM KANSAS

The CCC credit program is the best "tool" available to the Secretary of Agriculture to facilitate farm exports. It is one of the few programs that cost the Government little except a limited staff to administer it. In fact, Secretary Bergland has testified that "we make money on the CCC credit program." This comes about because the interest rates charged the foreign users of these credits is higher than the rates that CCC pays Treasury for funds.

Not many months ago virtually every member of this Committee signed a letter to President Carter asking that CCC credit funding for Fiscal Year 1978 be increased from $750 million to $1.5 billion. This is one of the few instances where the White House responded in a positive manner and did increase funds for CCC export credits to the requested level.

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There are four bills that have been introduced by members of this Committee to improve the CCC credit program.

I have a bill that would make credits available to exporters who could better meet competition by making export sales on a deferred payment basis to foreign customers (as the Canadians make sales to the People's Republic of China).

Other Committee members have bills that would extend the credit terms beyond the present three years, up to 10 years.

I will be interested in hearing the various witnesses address these bills and present ideas of their own.

STATEMENT OF HON. ROBERT MORGAN, A U.S. SENATOR FROM NORTH CAROLINA

Mr. Chairman, it is a pleasure for me to be here today to testify on the need to improve this Nation's agricultural export expansion policies.

In recent months Congress has devoted a great amount of time and energy to improve our domestic farm program. To me, it seems inconsistent to improve our domestic agricultural policies without examining our export policies. After all, the economic welfare of the Nation's farmers is being increasingly tied to our success in export markets.

America has made significant strides in our food and fiber exports in recent years. In this decade alone our agricultural exports have tripled to where we now earn over $24 billion annually.

Our food exports are an extremely important segment of our balance of payments picture. Without strong food and fiber exports, this great country of ours would have a totally disastrous balance of payments deficit.

Agricultural exports are very important to my home state of North Carolina. Tobacco is exported to more countries than any other agricultural commodity. We sell tobacco to over 100 countries in virtually every corner of the globe.

North Carolina exports a good number of other commodities as well. We are exporting large volumes of soybeans and corn as well as poultry products. Our farmers are becoming increasingly tied to export markets. It is my obligation to do my best to improve this Nation's agricultural export policies, and I intend to meet that obligation.

Before I begin my comments, the work being done here today and tomorrow cannot be viewed in isolation from other events. Our Nation is currently involved in negotiations for a new Multi-Lateral Trade agreement and for a new International Wheat Agreement. We must improve our trade policies here in the Congress. If we do so, I believe we can increase our chance for success in these vital negotiations.

There are two elements in our credit system. One is the Food for Peace Program. On the lawbooks since 1954, Title I of PL-480 has been used to develop many of today's important overseas markets. As the members of this Subcommittee know, Title I involves sales at concessional rates of interest with terms ranging from 20 to 40 years.

The second element is the Commodity Credit Corporation. The CCC can issue credit to cover agricultural commodities that are deemed in surplus. CCC credits are issued for terms ranging up to three years. CCC credit has been a welcome complement to PL-480 in our Nation's market development effort. The charge before this Subcommittee is to work on the expansion of our export markets. This Subcommittee's efforts are vital to the wellbeing of the Nation. We must examine every opportunity to expand markets. We must not become complacent with our recent success.

In my comments before the Subcommittee, I will discuss various agricultural trade issues, the bills pending before this Subcommittee, and action that I believe should be taken before the end of the 95th Congress.

CCC FINANCING FOR NON-MARKET ECONOMIES

Certainly the most controversial legislation pending before this Subcommittee is Senator Humphrey's S. 2385, the Agricultural Trade Expansion Act. Introduced shortly before his death, this bill enjoys the support of 29 cosponsors, including myself. The section of this bill that has stirred much controversy is that particular portion which authorizes non-market economy

countries the opportunity to participate in programs of the Commodity Credit Corporation. Enactment of that section would modify restrictions incorporated in the Trade Reform Act of 1974 that apply to the CCC.

Modifying such restrictions would enhance this Nation's trading opportunities. Doing so would improve farm income, which has been very depressed, and help reverse our serious balance of payments situation. Modifying restrictive portions of the Trade Reform Act that relate to the CCC would not totally change the general thrust of this body of law. Similar restrictions would remain on Export-Import Bank credits.

In examining this issue we must keep in mind the fact that the CCC is a creature of the U.S. Government and that credit decisions will likely remain political in nature. The CCC credit line is decided by the Office of Management and Budget which really is the President.

It is clear to me that this Nation is not about to extend credit to countries with which we have poor relations. In fact, we have used CCC credit in the past to improve our relations with other Nations.

We must also keep in mind that the CCC has been superbly managed and that it has been very conservative in its financial management of credit. The CCC does not automatically grant credit to every country that applies. The CCC uses strict tests to determine a country's eligibility. Further, I think we should note that the CCC has actually returned a profit, funds that accrue to the Treasury.

The restrictions included in the Trade Reform Act were included because of this Nation's commitment to human rights. Let me state unequivocally that human rights have to be the concern of this Nation. We were founded as a Nation of free men and women and we have fought for liberty time and again during our two centuries of existence. Human rights must be at the top of the list of our priorities. History has demonstrated that America must be diligent in the cause of human freedom. America must address this issue because too often no other Nation has.

There are, of course, other arguments that have been made against providing CCC credit to non-market economies. One argument has been that we should not give the Soviets something for nothing. On this point, it is not clear to me that the Soviets are particularly interested in CCC credit. In fact, extension of CCC credit would be more beneficial to the U.S. Our gain would be increased trade, primarily through increased consumption. The Soviets are clearly interested in improving the lives of their people and one of the ways it is seeking to improve their lives is through a more protein oriented diet. This consumption would come from increased feeding of livestock, dairy and poultry. Such an expansion of the market for our food would be facilitated by CCC credit.

We must not only look at the need for market expansion, but also at the need for gaining a larger share of the market that exists in the Warsaw Pact nations. Too often in the past we have been the residual supplier of these Nations. We must break out of this residual supplier pattern. The Soviets have a purchasing agreement with us, which to some degree has expanded our share of this particular market, but the Soviets, after minimum purchases from us, have first exhausted other suppliers before turning to us. Part of this situation may be due to the fact that one-third of the Soviet purchase must be transported on U.S. flagships.

East Germany, Czechoslavakia and Hungary are also attractive markets for the U.S., particularly for our feed grains and oilseeds such as soybeans. It is a disappointment to me, and a loss to our farmers, that we do not aggressively seek out these promising markets. Poland, Yugoslavia and Romania have used CCC credit and we have made substantial market in-roads into these nations.

Another argument used against extending credit to non-market countries relates to the indebtedness of these countries. While I have heard this issue be brought up, I do not give it much credibility. I am not aware of a single, reputable economist who has proclaimed worry over the external debt of non-market economy countries. The repayment record of non-market countries eligible for CCC program participation has been outstanding. The Soviets, for example, paid-off their CCC indebtedness far ahead of schedule. I think that the record demonstrates that these countries highly value their credit standing. In the final analysis, we must remember that agriculture is a renewable resource and that the marketing dynamics are very unique. Almost 80 per