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we can get on with the business of flood control where it is so badly needed. In addition, it should be noted that the watershed program assists with water supply, recreation, and water quality as well as flood control.

We think that the Agricultural Conservation Program should emphasize long-term agreements and enduring practices which assist in water quality. We feel that the fiscal year 1979 program should be funded at $210 million.

It is vital to this nation that the Soil Conservation Service and conservation districts begin implementing the Soil and Water Resources Conservation Act of 1977. Since Congress in its wisdom passed the Act, it would be folly indeed if it did not now provide sufficient funding to initiate action. We feel that $10 million is a modest request for this program.

Since soil and water conservation and clean water go together, we feel that the $200 million authorized in PL 95-217 to provide cost sharing for landowners with agricultural runoff problems should be appropriated.

Our final request is that the Resource Conservation and Development Program for next year be funded at $50 million and that 15 new projects be authorized. Resource conservation and development projects in Kansas have been instrumental in bringing people together to plan effectively for their future. This is a process of local people planning local projects to build a better place to live. We believe in this.

Mr. Chairman, these are our highest priority items in the Soil Conservation Service budget for next fiscal year. We appeal to this committee to do as you have done before and give our needs careful consideration.

Thank you again for the opportunity to appear before this committee.

AGRICULTURAL COOPERATOR COUNCIL

STATEMENT OF M. C. BEVIS, HENNING, TENN.

PREPARED STATEMENT

Senator CHILES. We will now hear from the Agricultural Cooperator Council. Mr. Bevis is going to speak for that.

Mr. BEVIS. Thank you, Mr. Chairman. I have Mr. Julian Herrod from Pope, Ballard and Mr. David Hall, chairman of the Agricultural Cooperative Council.

I will be real brief on this, Mr. Chairman. We want our testimony to be entered in the record.

Senator CHILES. Your statement will be entered in the record. [The statement follows:]

STATEMENT OF M. C. BEVIS, AGRICULTURAL COOPERATOR COUNCIL

Mr. Chairman, my name is M. C. Bevis. I am a soybean and cotton farmer from Henning, Tennessee. On behalf of the Agricultural Cooperator Council and its 32 agricultural association members (see attached list), I appreciate the privilege of testifying before this Committee. As you know, member organizations of the Cooperator Council have contractural arrangements with USDA's Foreign Agricultural Service to conduct cooperative market development programs designed to maintain and expand sales of their respective products in foreign markets. With the continuation of an effective and expanded foreign market development program we are confident the future export potential for U.S. agricultural products could be significantly above the 1977 level of $24 billion.

The accomplishments and significance of the Foreign Agricultural Service's Foreign Market Development Program have been largely obscured in concerns about the federal government's relationships with private enterprise. It is our view that this program is outstanding in the significant contributions it makes to the general welfare of this nation as well as to agriculturists specifically. Further, we know of no other federal activity whose benefits are achieved at such low cost.

This program, which became active in 1956, has, in our view, gone through four phases to date. Briefly, I would like to review these four phases (introduction, expansion, consolidation and maturation) in order to make clear to this Committee the amazing development of the program and the importance of the program to the nation today--and in the future. (Refer to Tables I, II, III and IV and Chart A)

Introduction: This phase covers the period 1956 through 1959. Both government and private enterprise were working in an unexplored area and both had much to learn about foreign promotions. And even though federal financial investment in the program, as a percent of total agricultural exports, increased ten times during the period, they never exceeded eleven/one hundredths of one percent in any year.

Expansion: This phase covers the period 1960 through 1966. During this period, the principal lessons learned by the government and private enterprise were that (1) program flexibility in terms of time was needed in order to account for supply changes from initial estimates, (2) foreign receivers of American agricultural products could provide significant support, including financial support, in carrying out foreign promotions and (3) achievements of foreign promotion activities did not appear instantaneously; time and devotion to continuing activity were needed.

During this period federal financing was increased at an average of 9% per year, averaging sixteen/one hundredths of one percent of the value of total agricultural exports.

Consolidation: This phase covers the period 1967 through 1972. Activities became more routine; easier to estimate and evaluate. Federal financial support increased only slightly, averaging nineteen one hundredths of one percent of the value of total exports, but the investment by U.S. and foreign cooperators moved up sharply as promotion benefits became more evident.

Also, the government and private enterprise learned that (1) maintenance of foreign market shares often was as significant to profitability as market expansion, and (2) promotional techniques differed markedly as between "bulk" products (items which in exported form become an ingredient of a final product) and "shelf" products (items ready for consumption as exported).

Maturation: This phase began in 1973 and involved putting into practice all the experience and lessons of the past. Notable in this period has been a decline in the federal share of promotion funding. Such funding for the period 1973 through 1977 averaged only six/one hundredths of one percent of the value of total agricultural exports, but, with increased investment from American and foreign cooperators, total expenditures managed to increase somewhat although as a share of the value of agricultural exports they declined.

Total Program Costs: The foregoing history defines the federal financial Investment in the foreign market development program and mentions cooperator investments, both American and foreign. Total funding is detailed in Table IV, but it is worthwhile, here, to summarize the relationship between federal and

private enterprise investments in the activity in terms of percent of the value of total U.S. exports of agricultural products. The summary is as follows:

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It seems clear here that, having reached maturity, the program is gaining more with less. And it seems appropriate to remind the Committee that, whereas the private enterprise funds come from profits, the federal funds employed come largely from agricultural products delivered mostly to underdeveloped countries.

The by-word in government today seems to be; "What is the cost-benefit ratio?"
It, therefore, now behooves us to look at the benefits derived from the expenditures
for the program.

It also seems appropriate to remind the Committee that federal funding of--or
investment in--foreign market development activities to maintain and expand
U.S. agricultural exports has been at a level of around thirteen million dollars
for many years. And the significant point is that as a result of inflation
here and abroad the thirteen million dollars level, in terms of actual purchasing
power, is currently worth only about half that amount.

Benefits: It is not always possible to evaluate benefits in measurable terms. But unfortunately, men are gifted with judgement and in light of the facts presented, it is possible to reach mature judgements with relation to the benefits derived from these foreign market development activities.

We believe that the benefits accrue to two specific groups. One is the agriculturists whose products are exported with the support of the foreign promotion activity. Second are all of the people of the United States or, more simply, the nation.

Agriculture: It is axiomatic that private entrepreneurs (businessmen and farmers, if you please) will expend sums to further their sales, and thus increase their profits, only if the "botton line" improves (becomes more profitable) as a result of such expenditure. The amazing increases in the share of total program investment by private enterprise over the life of the program demonstrates clearly that the benefit is significant, precisely unmeasurable though it may be. With industry program investment increasing from about one-third of the total in the second phase to two-thirds of the total in the current phase, the benefit to them must be appreciable.

The Nation: The historic U.S. trade balance is an excellent indicator of national benefits. The agricultural trade balance was only occasionally positive when the program started, whereas the non-agricultural balance was always positive (note Table III).

Subsequently, the agricultural trade balance has turned positive and stayed positive. By contrast, the non-agricultural balance has become negative in recent years and the total trade balance is now negative. While it is true that the present negative balance is largely the result of increasing oil imports, the non-agricultural sector has been deteriorating for a number of years; from a time before oil imports were significant.

The export growth achieved by agriculture, supported by the low cost foreign market development program, is an important relief in the nation's trade balance as the only positive contribution to that balance.

As private enterprise continues to take over more and more of the foreign market development burden, the need for federal participation is not lessened. Primarily, the federal role is one of encouragement, stimulation and a demonstration of interest. Equally important is the federal supporting role in bringing into the activity more segments of American agriculture. Additionally, there is the evaluation as to whether an increased federal participation will not further justifiably increase exports.

The major consideration before this Committee today is increasing federal participation in the FAS foreign market development program. We Cooperators hold, in the Tight of the information presented, that the only possible conclusion is "onwards and upwards".

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Fidget Increases: The need for an increased foreign market development budget Tor fiscal year 1979 and the allocation of those increases have been fully set forth by FAS. Simply stated, the needs are (1) to increase the area of the world in which promotion activities will be carried out, (2) to expand the activities to include commodities not heretofore included in the program and (3) to reflect changes in the purchasing power of the dollar.

We believe that the needs are realistic and that the magnitude of the increase, especially in light of the needs, is modest. Additionally, we point out that in the current phase of activities the federal investment in this program has amounted to only six/one hundredths of one percent of the total value of agricultural exports, far below the 16/100 of the expansion phase and the 19/100 of the consolidation phase. If, being conservative, we assume that the total value of agricultural exports in 1979 will be only the same as in 1977, the increase in the federal contribution related to that value of exports will amount to less than 9/1000 of one percent.

Surely, the deteriorating U.S. balance of trade position alone justifies the requested increase, although it is equally clear that benefits to American agriculture also, independently provide adequate justification. We, as private enterprise cooperators with the government in this activity assure you that in no way will such budget increase reduce the input that we and our foreign partners also invest in the program.

For these reasons, it is believed that in addition to the request sought by FAS, the program should be expanded by an additional $5 million annually for foreign market development over the next five years. If this Committee does not feel it can appropriate all of the increase requested, then the cooperators hope the Committee would indicate its intention for the next five years. This will allow for better planning and better market development. The result will be increased agricultural exports resulting in increased foreign exchange earnings by the United States.

The following are a few summary examples of the activities being carried out under the Foreign Market Development Program.

Great Plains Wheat, Inc.: Great Plains Wheat maintains a four-pronged program of market development including, market intelligence, market information, trade servicing and technical assistance. This type of program, conducted on a regional basis, provides a good solid, low cost but effective program for market development while allowing flexibility to change or react immediately to a very fluid world market for wheat.

Great Plains Wheat has expanded and intensified its export promotion for U.S. wheat in Europe, the Middle East, Africa and Latin America. Great Plains Wheat has opened offices in the new growth areas for wheat including in Cairo, Egypt for the Middle East. It has opened a new office in Casablanca, Morocco, for North and West Africa. Increased emphasis is planned for markets of Latin America and the Caribbean and during this fiscal year. Additional funding will enable GPW to plan and implement an even more intensified market development program from its existing offices, and to establish still another regional office for Eastern Europe to maximize the market potential for U.S. wheat in this important area.

The Holstein-Freisian Association of America: This Association occupies a unique position as a foreign market development cooperator having achieved an interesting combination of results. First is the direct sale abroad of breeding livestock, primarily Holstein dairy cattle to some fifty different countries. Exports in 1977 amounted to nearly 54,000 animals valued at over $50 million plus nearly $10 million of deep frozen bull semen. Secondly, these exports have increased demand in the importing countries for feed grains and related products. Thirdly, these exports have assisted in maintaining Holstein dairy cattle values at home as well as increasing the efficiency and raising the genetic level of the breed.

The National Renderers Association: Tallows and greases move in large bulk volumes as import ingredients for food, soaps and cleaners, fatty acids and animal feeds. Exports in 1977 were 23% larger than 1976 by volume and 36% by value for a total in excess of one-half billion dollars. Foods, soap and cleaner needs are fulfilled primarily in the underdeveloped areas while the high technology needs for fatty acids are in the developed areas. Funds used for foreign promotions amount to not more than one-quarter of one percent of the value of exports, but additional financial support is needed to assure proper foreign understanding of

the technical uses of the products, and to develop improvement in foreign distribution and handling of U.S. materials.

American Soybean Association: Although exports have been primarily of "bulk" items, the sales of "identified" or "shelf" soy oil is now taking off in Germany. In the first seven months of 1977 sales of identified soy oil reached four million bottles in Germany as a result of solid expansion efforts; four times the initial goal. The initial ASA-sponsored Iranian poultry production team study in the United States resulted in 1977 sales of over $10 million of soybeans. Peru also is now developing into a significant market for soybean products following intensive promotional activities in its interest. Additional federal support is needed to (1) work on emerging markets in the Middle East, Southeast Asia, Eastern Europe and Latin America, and (2) to expand the use of soy oil in the developed country markets of Western Europe and Japan.

California Almond Growers Exchange: This cooperator is operating under the procedures applicable to "shelf" products although they are developing substantial interest in "bulk" items. Federal support of this organization's export promotions has been minimal but significant. In 1977, 52% of American production of almonds was exported; the fifth rank in agriculture, with soybeans first at 60%. Uniquely in this industry annual supplies are allocated first to domestic needs; only excess supplies are exported.

The Rice Council: A long time cooperator with FAS the Council continues increasing exports. Marketing year 1977 exports of rice were 29% above the previous year while the increase for parboiled long grain rice was 19%. Increased promotion activities are demontrably needed in Europe, the Middle East and Africa.

Sunkist Growers: Exporting mostly "shelf" products along with some "bulk" items, this Cooperator utilizes the FAS "incentive" program to export fresh oranges, lemons and grapefruit and their products. Most significant markets have been the developed areas of Europe and the Far East. With additional federal support, however, it is now time for development in other areas of the world.

U.S. Neat Export Federation: This cooperator is new, having become operational in September 1976. Having laid the groundwork for foreign activity, the Federation is now reaching out primarily to Western Europe and Japan. Best trade at the moment is in variety meats, but red meats offer a real potential.

The U.S. Feed Grains Council: In recent years, more than 50 percent of the net trade balance has resulted from feed grain exports signalling the dramatic expansion taking place in global poultry and animal production.

To maintain economic opportunity for feed grain producers to utilize their investment rescurces toward increased productivity, the Council has developed a 5-year export promotion program to increase feed grain exports by one billion bushels by year-end 1932. The program, which predominantly addresses market development expansion in the identified "market growth" regions of Eastern Europe, Middle East, Africa, Central and South America and South East Asia will necessitate an escalation in the current program of $4.3 million to a level of $10 million annually.

Increased producer and agri-business support from the private sector will generate $3 million and "third party" overseas cooperator participation will reach $4 million annually through the implementation of intensive integrated utilization systems addressing commercialization of animal agriculture and essential development of infrastructure conducive to expanded importation, i.e., port facilities, commercialize compound feed industries, storage and distribution facilities.

The third component of the market expansion objective, $3 million will hopefully be derived from increased federal (appropriated) funding in the recognition that this alternative has much greater economic appeal than the expenditure of $3 billion to set aside--or restrict--the efficient productivity of a major growth resource upon which both trade balance and increased agri-related employment are dependent.

Texas Citrus Exchange: Major product is Ruby Red grapefruit juice but efforts are Indicating successful foreign market development for fresh Texas Ruby Red grapefruit and fresh early oranges. Coupled with federal support in the form of the "incentive" program, the industry is emphasizing (1) consistent high product quality, (2) distribution assistance and (3) complete product information. Demonstrable new markets include the United Kingdom, Czechoslovakia and the Middle East.

Cotton Council International: This is a long-time cooperator which has maintained
Its enthusiasm and inventiveness. Among other things, particular emphasis, proving

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