In the event that additional funding is available, our Agency is prepared to expand geographic coverage as well as to add additional crops. PROPOSED DECREASES IN ECONOMIC RESEARCH Question: Among the decreases proposed in the economic research program in FY 78 is the elimination of research on "new measures of the performance of the agricultural sector." Please give examples of what type work this represents and explain why this reduction is proposed. Answer: Work under this research activity is concerned with development of measures of total factor productivity and capital stocks for the food processing and distribution sectors. Other work is being done on measures to assess consumer satisfaction with food products and services. This research activity has not paid off to the extent initially expected and therefore is being discontinued. However, some benefits have accrued and they will be implemented in our applied research activities. ELIMINATION OF STATISTICS ON 32 COMMODITIES Question: You are proposing to eliminate statistical data estimates on 32 commodities in FY 79. Has your Agency received any indication from the industry or the States involved as to their ability and willingness to continue this work? Answer: The Agency has not made direct contact with industry or State agencies in the States involved concerning the proposal to eliminate statistical data for certain commodities. We have, however, had contact from a limited number of industry representatives who have become aware of the proposed elimination of selected crops in which they have an interest. There has been no indication from industry or the States involved as to the ability and willingness to continue this work. We do believe there is considerable interest in continuing many of these items in the particular States concerned. ENERGY RESEARCH PROGRAM Question: I notice your program in energy use and development is heavily oriented towards conservation and not at the potential for energy production from agricultural products. Please outline your efforts on energy with specific emphasis on energy production activities. Answer: The ESCS energy conservation and use research project is just one aspect of our energy research. In our technology assessment program we have been investigating the economic feasibility of converting biomass to fuels. These studies include the economic assessment of generating methane gas from organic matter and the feasibility of other conversion techniques such as pyrolysis and hydrogasification. As part of our commodity research we have been examining the economics of adopting various solar technologies for crop curing, grain drying, and space heating of greenhouses, livestock facilities and rural residences. As an example of this work, we sub mit a copy of ESCS-AER No. 396, "The Performance and Economic Feasibility of Solar Grain Drying.' We have examined the economics of producing ethanol from grain to substitute for or extend gasoline supplies. ESCS No. 11, "Gasohol from Grain--The Economic Issues" identifies and attempts to quantify the costs and problems of producing enough ethanol from grain to replace one-tenth of our Nation's gasoline consumption. Research is underway examining the feasibility of land and other resources for producing biomass in competition with conventional food and fiber production. (The publications referred to above have been incorporated into the Committee files.) FOREIGN TRADE WORK Question: Please discuss your relationship with other agencies of the Department in the conduct of foreign trade work. What do you do that is different from FAS and the Office of the General Sales Manager? Answer: ESCS research on foreign trade is designed to complement and support the foreign trade activities of other agencies. We concentra e on research and analysis and have no direct responsibility for action programs as do the Foreign Agricultural Service and the Office of the General Sales Manager. Our closest working relationships on situation and outlook work on foreign trade are with FAS. Our analysts coordinate with FAS analysts in interpreting attache reports and other information from foreign countries. About half of our analysts have country assignments which requires them to keep up-to-date on major developments affecting the agricultural sectors of specific foreign countries and impacting on their agricultural trade. FAS analysts have mainly commodity responsibilities, so by working together we combine a country and a commodity perspective in assessing the trade impacts of foreign developments. In addition, ESCS shares responsibility with FAS on many trade policy and marketing activities, usually combining our country expertise with the commodity expertise in FAS. Since the establishment of the World Food and Agricultural Outlook and Situation Board, that body has taken an increasing role in situation and outlook on world production and trade, in cooperation mainly with ESCS and FAS. We work with the Office of the General Sales Manager by providing analyses of the external financial position of countries being considered for P.L. 480 programming. Also, we participate on committees and task forces dealing with issues that arise in administration of the Department's credit and other export programs. ESCS has the principal responsibility for assessment of the world food situation and provides analyses on food needs and requirements in developing countries to Congress and the executive branch to support policy and program decisions on food aid. ESCS has the principal responsibility for longer range analysis of world production, utilization and trade and implications for U.S. agricultural exports. We will soon publish a series of reports on 1985 projections developed with our Grains-Oilseeds-Livestock (GOL) Model. Other areas receiving more emphasis in ESCS than in other agencies of the Department are comprehensive trade statistics, development of improved methodologies for forecasting, research on agricultural production resources in the world and economic factors affecting world demand for agricultural products and, in particular, U.S. exports. FORECASTS OF AGRICULTURAL PRODUCTION AND Question: Your FY 1979 budget proposal includes $200,000 for improving forecasts of agricultural production and trade for foreign developed countries--which will allow for the in-depth analysis of a few additional countries. What work has already been completed in this area? Which additional countries will be covered in FY 79? Answer: The $200,000 funding would be used to learn more about the agricultural economies of the countries in Western Europe and, in particular, the European Community. We would examine the potential agricultural development in these countries, the implications of possible modifications in their trade policies and the effects that would have on U.S. agricultural exports. Specific examples would be detailed studies of the European Community's feed-livestock complex and the trade implications of possible enlargement (accession of Spain, Portugal, and Greece to the EC). We would also be looking at how some of these countries might compete with us in third country markets, and generally, try to develop more depth and breadth in our information and analysis which will permit us to develop a national export strategy to promote American farm exports. This effort would tend to supplement detailed country market studies currently underway in ESCS covering developing and centrally planned countries as well as developed countries. The primary objective of these studies is to provide a systematic and consistent basis for evaluating alternative policies and projecting agricultural trade and U.S. market share. Whenever possible, the studies include forecasting models for major U.S. agricultural exports. So far we have completed studies on Australia, Iran and three separate studies on Japan. Scheduled for completion in FY 1978 are studies on Brazil, Sudan, Argentina, United Kingdom, France, South Africa, Republic of Korea and two separate studies on the People's Republic of China. Some limited work is also underway on Mexico. While studies for FY 1979 are still undecided, countries being considered are Poland, West Germany, Venezuela, India, and Benelux (Belgium, Netherlands, and Luxembourg). WORLD FOOD AND AGRICULTURAL OUTLOOK AND SITUATION BOARD STATEMENT OF J. DAWSON AHALT, ACTING CHAIRMAN, WORLD FOOD AND AGRICULTURAL OUTLOOK AND SITUATION BOARD ACCOMPANIED BY: KENNETH R. FARRELL, ACTING ADMINISTRATOR, ECONOM- LARRY F. THOMASSON, ACTING DEPUTY CHAIRMAN, REX F. DALY, SENIOR ANALYST, WORLD FOOD AND AGRI- TERRY N. BARR, MACRO ANALYST, WORLD FOOD AND AG- BRUCE M. GRAHAM, ACTING ASSISTANT DEPUTY ADMINIS- RICHARD E. BALLARD, ACTING ASSISTANT DEPUTY ADMIN- ROBERT SHERMAN, CHIEF, BUDGET DIVISION, OFFICE OF OPENING REMARKS Senator EAGLETON. We now move on to the World Food Board. Mr. Ahalt. PREPARED STATEMENT Mr. АHALT. Thank you, Mr. Chairman. I have a brief statement that I would like to submit for the record. If you would agree, Mr. Chairman, I would just like to highlight a few points in that statement. [The statement follows:] (1671) STATEMENT OF J. DAWSON AHALT I appreciate the opportunity to meet with you today and to review the fiscal year 1979 budget request of the new World Food and Agricultural Outlook and Situation Board (WFAOSB). I would like to give you a brief summary of the history and responsibilities of the Board in addition to explaining our budget request for fiscal year 1979. Background History and Responsibilities The creation of the World Food and Agricultural Outlook and Situation Board is an integral phase of making the Department's information system more effective in responding to the new realities of the world food and agricultural system. The past six years have witnessed a new and increasing interdependency among the world's food and agricultural systems and among the various sectors within each economy. Very few events which occur in the world today have no impact upon the food and agricultural system. This increasing interdependency, complicated by widely fluctuating world food supplies, is the key to understanding the strains that have been put on all information systems, including food and agriculture. Prior to 1972 huge U.S. and world grain stocks largely insulated the U.S. food and agricultural system from the fluctuations in world production and farm programs were internally oriented. As a result, the information systems were strongly oriented toward domestic adjustments. The sustained period of volatility since 1972 forced the strengthening of an international information system in a crisis environment which was to a significant degree independent of the national system developed in previous years. These diffused national and international information systems lacked the necessary linkages for providing an integrated world analysis. Many agencies have dramatically improved their understanding of these new vital linkages in the world, but it has not been a coordinated effort on a Departmentwide basis. As a result, prior to the establishment of the WFAOSB, the operation and responsibilities for the Department's national and world information system had been diffused so widely among agencies in the Department, due to the evolutionary process described above, that serious questions were raised |