Master Cong Smith Senator Eagleton Bob Bergland b

Department and tight for the Agriculture Department you can't have it both ways and the president says that public enemy number one is inflation and it is it has gripped onto our economy and infested our economic system with a ferocity and a tenacity that no economist would have predicted 10 years ago and if we don't begin to extricate ourselves from the grip of what is now double-digit inflation then you can have all the agricultural policies and all of the research programs and all of the buildings and all of the International Harvester equipment and we'll all be in a depression because runaway inflation unchecked inflation is an insidious disease that if not controlled ends an economic disaster and every segment of the economy is going to have to participate in this fight if we're going to succeed on it labor is going to have to participate business is going to have to participate and the American farmer is going to have to participate so when we start these hearings next year and various groups will come in and say improve this section of the appropriation put more money in here we're gonna have to hear very patiently but we're gonna have to say no to some very good and worthy ideas we're probably going to have to say no to any capital spending program we will not build one building one lean-to one research center one lab one or anything in my opinion zero dollars for capital investment because we want to save and we're gonna have to say some no to some very fine research grants that will have been presented by land-grant colleges or in the competitive grant program but we're just going to have to say not this year we're trying to fight inflation and thus we all have a common destiny in that ladies and gentlemen and we all have to pay our fair share of the freight and just as there is no free lunch in the world there is going to be no segment of the American government that is going to be immune from the tight pressures of next year's budget as we approach the season of Christmas and think in terms of the new year we always think in terms of hope and anticipation and expectation I think we can make some inroads in inflation if we pull together I think we can make some inroads if we all say okay we've all got to tighten the belt a little bit and that we're all part of this because we'll either all going to prosper together or we're all going to go into what mr. Khan calls a big banana together you can't call it a recession or a depression anymore those are nasty words so I think there's more that unites us and there's more in terms of our future economically that causes to say that this year and perhaps the year after that inflation is public enemy number one and government policy at all levels in all departments has to focus on that as the factor that can bring us all to our economic needs good luck and Godspeed thank you very much friend of the American farmer and a man that has contributed and will continue to crib to contribute much to this great country of ours Secretary of Agriculture Bob Bergland thank you very much thank you very much horn Li members of the National Board delegates fellow members visitors and friends all I have an absolutely superb speech which has been written at my direction by professionals copies of which I've given to the ladies and gentlemen here in the front row and which I shall not read but I want to talk with you about Farm power that means get organized as orally his quite properly said we are in a minority in this country and some say that means that all is lost our problem is not that we're relatively few in number our problem is that we don't speak with one voice we don't have one course of action you have tremendous power in your hands and I submit to you that when you get organized when we get organized when we develop programs and practices which are in the interest of civilized mankind the world over you and I in this whole country will be the better off and I'm proud to say that I am and have been a member of the nfo about since it was organized in my County and I want to pay tribute Warren Lee the chuck Fraser charming and Bornstein to your department heads and others who in whom you have entrusted leadership and positions of authority it is much easier to criticize and condemn and complain and we see lots of that coming to Washington but over the nearly two years I've been in this job I have never seen a time when our Lee came to Washington but what he came with suggestions and ideas and advice stated in clear and unmistakably plain terms that no one can misunderstand you had been well led and well represented and I'm proud to be a member in the last year we tackled the job of overhauling the Farmers Home administration and many of you that had saddened stories to tell about your experiences with the FHA because of the resourcefulness with which our Lee and Chuck Frazier presented your views we now have the best credit program that's ever been written into law clearly understanding of course but credit is a very poor and distant second choice to income and I could go down the list of things in which your national officers and I have cooperated in the last year and a half presented to the Congress and to others in authority I would however like to spend most of this evening responding to your questions I'm sure you have many before we get into that part of the program I'd like to tell you about a trip I just took I've been in a place where they have no flies they have no birds no cats no dogs the place that's uh about the same latitude as the United States a place that has one third as much cropland as we have in the United States a place that feeds one fifth of the world's population 900 million people that places China I was invited by the Chinese government to bring a team of professionals experts that's how they were known when they're away from home to go to China at their invitation to talk about trade we met with the top leadership in the People's Republic of China talking about their plans to modernize their country and they are a poor developing country and they had been around the world on a shopping trip they've been exploring in the United States and France and Germany and in Japan and in many other places and they told me in clear and unmistakable terms of all the places they've been nowhere have they found any agriculture that compares with ours an agricultural system that they told me is the pattern that they would like to copy an agricultural system that we have that sometimes has taken for granted sometimes even we who farm take this country in our system of family farming for granted and so they've decided to modernize their country they have 700 million people working in their fields they want pure bred livestock from us they want canning factories they want flour mills they want bakeries they want pesticide factories they want farm equipment factories they want to change their entire system to diversify their diet they want to buy one pound of chicken and one pound of pork per person per year in China is a hundred million bushels of feed one pound and they talked with me about the programs which have been developed in the United States in the last two years and they were excited by what's going on here they bought some wheat from us in the early part of the 1970s and it was contaminated with smut they stopped buying because they're not about to buy grain contaminated with a disease which they do not have and so they were discussing with me the impact of the new strong federal grain Inspection Act and I'm aware of the programs which have been developed within and by the nfo in providing customers with the quality of grain they bargained for and there were two questions which they raised with me one was quality controls to be sure that the grain is not contaminated with sawdust and seashells or short weighed to be sure that if they put their hard-earned money into the grain markets of the United States that they're not going to get anything less nor anything more than they bargained to buy they remember the anxieties and the devastation that occurred in Japan a few years ago when the United States unwisely embargo the exports of grain for only a few days they're not about to put their trust or their dependency on a country if its supplies are going to be on a hit-and-miss basis they can't afford to start if it isn't going to be followed through and continued and so they were asking me about the farmer owned grain reserve a program which is really not new in a manner of speaking lauren lee talked about the trials and tribulations of a secretary of agriculture I've been reading about my predecessors as far as I can tell the first one was a guy named Joseph he was the secretary of agriculture during the third Pharaoh administration in Egypt 3,300 years ago and his adventures are recorded in many places and among those places as the 41st chapter of Genesis and the Old Testament of the Holy Bible in which even men they recognized that there are good times and there are bad times there is good weather and there's bad weather and they had the good sense to set aside the grain when they had good weather and draw on it when the weather was bad and I'll never forget a little lecture I got by Oren Lee about a year and a half ago and I know he has no means no disrespect for economists but he was in my office and we were talking about economic forecasting and normally said you know if you can't forecast well you should forecast often and I never forgot that and it was about a year and a half ago The Economist's and my department came to me and they wanted me to sign a document now it's about a year ago it was in November I guess the document was supposed to forecast the corn crop for 1978 in November of 1977 they wanted me to do that and I said you've got to be kidding I mean you can't even forecast weather next Sunday and put in Washington let alone what it will be like in Missouri in July and out of that and other discussions we set up the authority for this new program that you have taken seriously that you have used extensively as I told the Russians when I was there in June as I told the Chinese while I was there in November that we have the grain but we have no intention of cutting prices to sell it just to get rid of our carryover we've been through that we have no intention of repeating the policies in 1972 that allowed the Russians to come here and buy 400 million bushels $4 62 not on your life the people who buy grain from the United States will have to pay a fair price now then the bargaining starts but as a matter of fact you know and I know that the weather has more to do with our crop in our country and in every place in the world almost than all these government programs laid into end and you know and I know that the corn crop next year will be somewhere between 5 billion and 7 billion bushels depending on whether we have weather like in 1974 or weather like 1978 and so there's no one can tell but the crop will be we therefore don't expect a set-aside program to do anything more than be the blunt instrument to take land out of production and put it to a conserving use when we know beyond all shadow of a doubt that there is no need for that land to be cropped this fence defense farming nonsense must come to stand still we have to apply we have to apply not only sound economic logic to our policymaking we have to apply sound conservation principles and so we have announced a set-aside program for next year a modest one admittedly we want about 15 million acres of ground taken out of production and put to conserving use we want that ground which is more likely to erode wash down or blow away to be taken out of production because there's no need for that land to be cropped certainly not in the next 12 months but instead we will use the farmer own grain reserve and continue with that program so that if we have a good year like we head to 1978 with an all-time record high 100 bushels of corn per acre all-time record high soybean crop one of the biggest wheat crops in history that if we have another year like that that the excess will not be forced on the market but the excess grain can be stored on your farm under your control to be managed under your farm power campaign so the extra value of that crop will flow to you who worked so hard to produce it not to a foreign government or to an international grain gambler but to you and if we should be so unlucky is to have a poor crop in the United States like 1974 instead of running the risk of embargoes and tearing the life out of the livestock industry grains will be available for a fair price of course and all these were explained to the Chinese we have now sold this year in the last few weeks sold a Chinese six point three million tons of grain and as long as our quality is good and as long as our supplies are dependable they'll buy and interestingly in all the places I've been on trade and market development no one has complained to me about price now I know and we all realized that dealing in a world market as we are we have to be aware of the realities while we are responsible for 40% of the world's wheat exports we're not the world's biggest wheat producer and so we think the way to introduce some business like dependability in these markets is to press for international commodity agreements which set the some limits I have no intention of getting into a knock-down-drag-out Treasury war with Canada hitting their Treasury and their grain growers against our own in a price war for the benefit of the Russians that makes no sense it makes no sense that grain growers in the United States should be the only ones to have a set-aside program it makes no sense for us to finance the storage of the world's grain surpluses or reserves not when grain is a commodity which is exchanged freely in this world it's a common commodity a common currency more common than the dollar as a matter of fact and more easily traded and sold as a matter of fact and so we're pressing for international and we'll get I am now convinced an international agreement on wheat which will establish some rules of the game so that rather than dumping wheat at disastrous prices we as a world store that surplus crop and draw on it when needed and you know the records on exports for this year broke all previous highs one hundred and twenty two million tons you and I used to think of exports in terms of someone else's misfortune we'd say well if the Russians have a bad year or if the monsoons don't come in India or if something happens to Canada or if somebody else as a disaster then we shall cash in that kind of a policy meant that our prosperity would be a sometime thing we would alternate between boom and bust as indeed has taken place mostly since 1970 boom and bust the all-time record high exports this year came at a time when the world produced the best crop in history it has come because the world is at peace no wars to tear things up and because of this peace there has been a rising prosperity the world over people have more money to spend now the Frenchman and the Canadians and the British and the Japanese are eating about as well as they will they make as much money on the average as we do in the United States but China Indonesia Malaysia India Pakistan and places that I sometimes or barely have heard of those places in which three quarters of the world's population lives are on the march they're on the move they're increasing their incomes rising affluence the first thing they want to do is eat better and so we have tremendous market opportunities that won't come by accident in which you acting as responsible members farmers members of the nfo can find an opportunity not only an economic opportunity for ourselves but a chance to satisfy a demand in this world more to eat and in the process make a major and substantial contribution to increasing the prospects of peace hopefully for all time now we're not going to be able to sign a contract with China because we labor under the delusion that somehow they don't exist diplomacy is a strange some say science or art we have no formal political ties with the People's Republic of China it is my hope that we can soon establish such ties so that we can enter into more formal understandings with that the largest country in this world but in the mean time it has been made clear by the Chinese to me and I can made to them our fervent hope and desire that we can exchange goods that they will be buying from us and this will open up opportunities like perhaps we've never really dreamed of it's a slow painstaking process progress comes hard and it's a bumpy road but it's worth the time and effort and with that I'm going to start answering the questions that you've sent up if you have any more of them just bring them up to the front there's some folks around here in the side that'll bring them up here first as what is the future of the country's beef industry some peculiar things are happening you know on Tuesday of this week tanner and cutter grade beef wholesale for a dollar a hundred higher than choice you know that this year three-quarters of the caucuses we slaughter will be good prime and choice grade and half the beef we eat will be utility we have become a nation of hamburger eaters everywhere the Golden Arches we're eating hamburger in our homes and for lots of reasons this is taking place and we're not supplying that demand by a long shot in fact this year beef production will be off 1 billion pounds below last year beef production next year will be a billion pounds below this year according to the latest forecast all of that shortfall will be picked up by an expansion in chickens turkey and pork according to the reports which we get there's an explosion in the poultry industry satisfying that strong consumer demand that is not being provided by the beef industry in the United States now I know what the cow-calf operators and the livestock feeder folks gone through in the last four years that has been an unmitigated financial disaster heavy and sustained losses the culling has been tremendous we have seen sixteen million head of cattle culled out of the beef herd in the United States in the last three years there has never been a time in which we've seen such heavy culling and of course with that heavy culling we found tremendous tonnage put in the marketplace and the prices went from bad to worse and I submit now is the time to examine very carefully the prospects for the future which I happen to believe are very very bright but we're also going to have to look at this exploding hamburger demand which we don't think is a temporary phenomena we think it's probably for real and probably permanent chances are during the next six months that beef prices will continue to climb probably into the low 60 dollar range talking about live cattle good prime choice grades chances are at the same time there will be about a billion pounds more non beef meat produced and sold to pick up the slack we already know from the increase in brief prices that has taken place since last November that there has been a reduction in beef consumption and an increase in the consumption of cheese and butter dairy prices are 50 cents over the support rate I think the future is bright for the beef industry but I think we who are involved in that business have to start thinking seriously about rebuilding our numbers and my play and my hope is that it's not overdone we can't stand boom and bust in that business either not if the boom brings the bust there needs to be some stabilizing at levels which enable producers to turn a profit next question how will the USDA come out in the effort at government reorganization will the department be weakened about a year and a half ago President Carter directed the creation of twenty study teams to look at this whole federal government they found there are 1,200 functions and government which are duplicated and that of course means waste of taxpayers money yours and mine that means many times we have a bloated bureaucracy that is too overweight to be in good trim I mean I could name some we in the Department of Agriculture through the Forest Service run a grassland leasing program we lease lands - Stockman Department of Interior Bureau of Land Management has a grassland leasing program now there is no reason in the world the two departments should run the same program there are five different departments have in this government that have to do with feeding programs there are five or six departments and about 20 agencies that have to do with water policy there is no water policy in the United States it's a mess because the Department of the army doesn't talk to the Bureau of land to the beer reclamation except in official meetings and so we've not been able to forge a cohesive water policy for this country so there is a need for streamlining to cut the waste to cut the inefficiency to cut some of the bureaucratic nitpicking which goes on now the question that is before us at the moment is how far should this streamlining go should we for example abolish the Department of Commerce should the Forest Service be sent to the Department of Interior those and many basic and fundamental questions have not yet been really asked let alone answered the president has not had a chance to focus on the issue yet starting sometime in early January various reorganizing plans will be prepared and more formally and on every case any plan that will affect the Department of Agriculture in any way will be sent to me first upon which I'll have a chance to make my recommendations to the President and in almost every case the reorganization plan will have to go to the Congress where hearings are held opinions taken and votes recorded I'm convinced the Department of Agriculture will come out stronger leaner tougher smarter and more efficient for you me the taxpayers and everybody else indeed I'm convinced now that the entire federal government will come out stronger next question there was a recent report that you were dissatisfied with the USDA study conclusion on the yellow sheet what are your suggestions for proper changes to the yellow sheet about a year ago I directed the director of the Packard stockyards division of the AMS to look into this entire matter of wholesale dress beef pricing and marketing policies I had heard reports of collusion and price fixing in fact there were convictions and federal courts in California and other places where persons were found guilty of conspiring to fix the price of beef to take advantage of producers and consumers and I heard many allegations regarding the manner in which beef is priced and so we set out to find out precisely what is taking place this group provided me with a preliminary report in early November which with which I was not satisfied because it was incomplete in some respects and I asked the Packer and stockyards division to cooperate with our economic study group to provide answers to some additional questions the report was filed on Wednesday afternoon this week we have given been strong and Chuck Frazer and our only copies of this report which will be discussed in detail I presume in a one of the issues of the reporter but I would say this without taking up too much time but I am very uneasy about the present price policies and the price reporting systems we have in this country I'm not prepared and I do not charge anybody with any wrongdoing but I submit when one or two percent of the transactions which take place in this country set the pace for the 98 percent of the business done in this country we are vulnerable to manipulation we're going to hold hearings and several locations across the country after you've had a chance to digest our report hold the hearings and get your ideas as to how this price reporting arrangement can be improved upon so we'll be out getting your suggestions we won't have time tonight we want you to give this matter careful and thoughtful study we intend to present testimony to the Congress of the United States perhaps in March of next year with any recommended changes if any which may come out of the hearings which we will hold next question we've had a number of instances of government intervention in grain markets embargoes and so forth some inflation fighters are using us unfairly what can you do to stop this I think I've spoken to the question of intervention the embargo matter which was a disaster and because our customers overseas weren't sure they could depend on us and we've all had experience with embargoes we have not forgotten what happened when some of the Middle Eastern countries cut off the supply of oil to the United States for a while turned us inside out but oil is important but food is even more so and I think that matter has been tended to the president has said repeatedly there will be no embargoes and there will be none on the second part inflation fighters using us unfairly not exactly sure what that might mean but there's some things that really trouble me about all this business in June of this year for the first time in the history of the United States consumers spent more money on the car than they did on eating tells you something about our values doesn't it 20% of the disposable income in the United States was spent on the automobile and only 19 percent spent on eating both in the grocery store and in the restaurant I just toss that in as an interesting comparison in August of this year for the first time in history the wages and salaries paid to men and women who process and distribute food was greater than the farmers share of the consumer food dollar and that's a fact and I'm not necessarily criticizing that fact I'm simply pointing out that since 1973 three-quarters of the retail food price increase is due to the added cost of convenience and one-fourth of the increase it's a long overdue increase to the farm producers of this country and what bothers me about all this is that whenever the Consumer Price Index is published headlines and the Washington newspapers and other papers food prices increase 1.8 percent they don't bother to point out that three-quarters of that increase is due to the cost of packaging and everything else that goes into this complicated industry I've met with the grocery manufacturers of this country about that very question why I said is there such a tremendous increase in packaging and it shows up in the grocery store as inflation and the farmer gets it in the neck how come and they said well because consumers like to buy frozen pizza they don't want to go home and mix it from scratch consumers like to buy groceries or vegetables and small cans well advertised it seems consumers like to have bread fresh squeezed in the morning baked at night by people paid wages for nighttime work and the list of convenience which has gone on in this country is as long as your arm now I can't stop a consumer who's prepared to pay the price of buying a frozen pizza or buying fresh bread or buying all of the processing that goes into the business these days it's a free market and I wouldn't try to stop them but there are some things we intend to do I have now changed the economic analyses group and our Department of Agriculture so that when that food price increases