Amount of such loans are based on the amount of working capital of the business which has been reduced by the drought. Loan money can be used to restore working capital, to replace depleted inventory, to pay financial obligations, to get new crops started, to carry accounts receivable, and, in some cases, to meet anticipated money needs. Economic Injury Loan funds can only be used for replacement of drought depleted working capital and not for growth or expansion funds. It may be significant to note that the entire eastern Oregon area was declared a disaster area in mid May. Through all regularly available media, SBA has publicized this declaration, and the availability of drought relief loans. Through August 3, 1977, only two applications have been received for direct assistance by any eastern Oregon firm for replacement of drought depleted working capital. Deadline for requesting direct loan assistance expires September 30, 1977. The Boise District SBA Office stands ready to make economic injury disaster loans to tide over small operators until their own working capital returns to normal and economic conditions are restored. We welcome inquiry and are anxious to help wherever possible. Senator PACKWOOD. Let me start with Judge Leo Barnett from Gilliam County. I see him sitting out there. Judge BARNETT. Well, Senator, I didn't prepare any formal statement, but I will give a little idea of the conditions in Gilliam County. STATEMENT OF HON. LEO BARNETT, JUDGE, GILLIAM COUNTY, OREG. Judge BARNETT. We had this approximately, well, less than 50 percent grain crop due to the drought. We wouldn't have had anything at all, not even pasture or winter feed for cattle if it hadn't been for the May rain. The first of May wheat was about 4 inches high. But we did get some rain in May. But by the middle of June it was gone. And the wheat, well, it shriveled up to around 57 percent, 57 pounds, you know. So it was a bad crop. And cattle is a number of herds of cattle hauled through the Willamette Valley, hauled through the mountains and, in fact, I have been feeding hay to one bunch of cattle all summer, they are still on hay. And we are getting some of them in stubble fields right now. But everybody in the county is in a bad situation now. I don't think that you'd find, I'd say, the county less than 50 percent wheat crop, and, of course, you know what the price is compared to the cost of production. So I just make this solemn statement, Senator. Senator PACKWOOD. I appreciate the time in coming over. Senator PACKWOOD. OK. Next we will take Charley Otley. STATEMENT OF CHARLES OTLEY, PAST PRESIDENT, OREGON CATTLEMEN'S ASSOCIATION Mr. OTLEY. My name is Charley Otley, and I am past president of the Oregon Cattlemen's Association. What I would like to, Bob, is endorse these things that Bill Ross and some of these other people have said. I don't want to take up your time. We think this is serious. We really are a little bit perplexed with all of the programs as they come out in bold print, but more than that, we are disappointed in the fine print that takes it away. We think that this drought condition is much more widely spread than it has ever been, and we realize the rules and regulations that are already in effect. We are kind of looking for another year possibly, and we would like to see some changes in this drought law so that we could get a little assistance a little earlier to do a little more planning. And maybe it will work a little better for another year. I think one thing that hadn't been mentioned is the loss that people had that have had to sell out or sell yearlings early this spring. They have wintered these cattle on high cost of money and got them over to spring, and we had our drought, and we had to sell them 200, 250 pounds light. Nobody has really talked about the loss that those people took already on the deal. So this is a serious situation, and I do appreciate what you have done for us. But I would like to see some of these things changed for the future, because these solutions just haven't worked out too well this year, and I know you well know. And I think there's a lot of people that want to endorse this. If you don't have time, if you have got a cutoff date, if you had some way that these people could sign and be part of the record as entered Senator PACKWOOD. We will keep this record open for 30 days if people want to send statements. Mr. OTLEY. I know there are some people out there, I think, that haven't signed up that have some personal problems that they would like to air, and I hope that time is so that you could hear them out. Senator PACKWOOD. What I am up against is I have to be up in Bend at 5:30. Mr. OTLEY.Well, thank you. Senator PACKWOOD. Thank you, Charlie. STATEMENT OF JAMES H. SITZ, PRESIDENT, HARNEY COUNTY STOCKGROWERS, DREWSEY, OREG. Mr. SITZ. Well, most of this has already been covered especially by the Oregon Cattlemen's Panel, but I will kind of brief through a few points in this program we would like to see changed. Here's some of the specs here. If a rancher had feed on hand that was counted against him during that 90-day period and he could not qualify for feed assistance. This hay should be used in the winter and not fed during the summer or fall when pasture could be rented at cheaper rates. In addition, the cattle will perform better on pasture. Grazing and winter feed requirements should be separated. In many instances a rancher may have enough hay but not pasture or enough pasture and no hay and will not be eligible for feed assistance until the feed on hand is used up. This does not allow for planning and purchase of feed at the most opportune time. The maximum allowance of feed, 10 pounds of feed grain or 16 pounds of alfalfa hay are not adequate to meet a cow's maintenance requirements in areas such as Harney County where we have long cold winters. This restriction allows for purchase of between 50 to 60 percent of the feed actually needed to winter a cow. These are some suggestions for improvement of the program: Give more flexibility to the local ASC committee in administering the program. They know the situation better in that county and can best serve the needs of the people. Make provisions for water hauling. In some cases the feed is available but water isn't. Water should be treated as any other feedstuff. Separate grazing from winter feed to determine feed need and treat these periods separately in determining eligibility for emergency feed. In areas of long winter feeding periods allow the program to be such that a rancher can plan and buy winter wheat in the summer when it is more available and cheaper. In many cases ranchers are forced to liquidate parts of their breeding herds because of feed conditions and debt loads. In most instances selling some of the breeding is sound management or meadow and range resources. There should be an indemnity payment equal to the emer gency feed payment for that cow. This payment would be made available to repurchase like livestock within a predetermined period from the termination of the disaster program. We would like to call your attention to the general economic condition of the livestock industry. For 3 years our prices have been at near break even or below while all our costs have increased drastically. Labor, insurance, machinery, feed, and taxes have all increased, as have our production costs due to increased Government regulations while the price we received for our livestock has decreased. If this trend continues, we feel many small producers will be put out of business. If this happens, an unhealthy industry will develop that will affect the availability of the price of meat to the consumer in the future. Any assistance you and your colleagues in the Senate could give in reducing regulations that increase the cost of production and/or unfair market competition would be appreciated. I wish to thank you personally, Bob, for all the work, the effort you have put forth in helping us, the cattlemen, before. Senator PACKWOOD. Jim, thank you very much. Thank you for coming up. [The prepared statement of Mr. Sitz follows:] Harney County Stockgrowers Senator Bob Packwood, Acting Chairman Senate Select Committee on Small Business United States Senate Washington, D.C. 20510 Dear Senator Packwood: The drought has caused a severe financial hardship on the livestock producers of Harney County and throughout Eastern Oregon. This hardship is compounded by the fact that this is the third year of depressed cattle prices. The Federal Drought Assistance Program has been of little benefit 1. If a rancher had feed on hand it was counted against him during that 90 day period and he could not qualify for feed assistance. This hay should be used in the winter and not fed during the summer or fall when pasture could be rented at cheaper rates, in addition the cattle will perform better on pasture. 2. In many Grazing and winter feed requirements should be separated. instances a rancher may have enough hay but no pasture or enough pasture and no hay and will not be eligible for feed assistance until the feed on hand is used up. This does not allow for planning and purchase of feed at the most opportune time. 3. The maximum allowance of feed, 10 pounds of feed grain or 16 pounds of alfalfa are not adequate to meet a cows maintance requirements in areas such as Harney County where we have long cold winters. This restriction allows for purchase of between 50%-60% of the feed actually needed to winter a cow. Some suggestions for improvement of the program and changes that would make the program better meet the needs of affected people are: 1. Give more flexibility to the local ASC committee in administrating the program. They know the situation better for that county and can best serve the needs of the people. 2. Make provisions for water hauling. In some cases the feed is available but water isn't. Water should be treated as any other feedstuff. 3. Separate grazing from winter feed to determine "feed needed" and treat these periods as separately in determining eligibility for |