B. PROGRAM PROVISIONS 1. National marketing quota.-A national marketing quota would have to be proclaimed for the 1986 crop if the total supply for the 1985-86 marketing year was projected to exceed the "normal" supply. Normal supply is defined as the sum of domestic consumption and exports plus a 30 percent allowance for stocks. Current projections indicate that total supply will exceed normal supply, but estimates are highly tentative at this point in time. The formula for determining the level of the national marketing quota is complex; however, under almost any foreseeable circumstances it would result in the number of bales needed to equate the statutory minimum national acreage allotment of 16.0 million acres. 2. National acreage allotment.—A national acreage allotment must be announced at the same time as the national marketing quota (October 15, 1985). It is likely to be the statutory minimum of 16.0 million acres. If a national marketing quota is not proclaimed, the national acreage allotment is not invoked. 3 Individual farm allotments.-Farm base acreage allotments in effect for the 1977 crop would become effective as preliminary allotments for the 1986 crop. 4. National marketing quota referendum.—İf a national marketing quota were proclaimed, a referendum of all producers who were engaged in the production of upland cotton in 1985 would be conducted on or before December 15, 1985. A twothirds majority of those voting is required to approve the referendum. 5. Price support provisions.-Nonrecourse loans would be made available to producers who plant within their farm allotments. If no marketing quota is proclaimed, the Secretary would have the option of making loans available to all producers. If no marketing quota is proclaimed, or if the marketing quota is proclaimed and approved, the loan rate must be set at not less than 65 percent or more than 90 percent of the August 1986 parity price. In addition, if the marketing quota is proclaimed and approved, penalties on production outside the farm allotment would be applied at a rate equal to 50 percent of the July 1986 parity price. If the marketing quota is disapproved, the price support level is 50 percent of the August 1986 parity price. No penalties would apply. C. EXTRA LONG STAPLE (ELS) COTTON The Extra Long Staple Cotton Act of 1983 has no expiration date; therefore, the current ELS authorities are assumed to continue through 1986 and beyond if no new legislation is enacted. However, the ELS cotton loan rate and target price are set in relation to the upland cotton loan rate. Reverting to basic legislation for upland cotton will have the effect of increasing the ELS loan rate and target price. DAIRY: REVERTING TO BASIC LEGISLATION FOR 1985-86 A. BACKGROUND The Dairy program falls under the Dairy and Tobacco Adjustment Act of 1983, which expires September 30, 1985. Unless new legislation is enacted, the authority for supporting the price of milk to farmers will revert to the Agricultural Act of 1949, as amended. B. PROGRAM PROVISIONS Price support will be between 75 to 90 percent of parity-75 percent of parity is estimated to be about $17.65 per hundredweight, compared with the present support price of $12.60 per hundredweight. The support will be carried out through purchases of dairy products. SUGAR: REVErting to Basic Legislation FOR 1986 CROP A. BACKGROUND Since the expiration of the U.S. Sugar Act on December 31, 1974, a domestic sugar price support program was included in the Food and Agriculture Act of 1977 for the 1977/78 and 1978/79 crops. Also, a similar price support program for the 1979/80 crop was implemented under the Secretary's discretionary authority under Section 301 of the Agricultural Act of 1949, as amended. A loan program was implemented under the Agriculture and Food Act of 1981 for the 1981/82 through 1985/86 crops. If new legislation does not specifically provide for a sugar program, the Secretary would retain authority under Section 301 of the Agricultural Act of 1949, as amended. B. PROGRAM PROVISIONS The sugar program is at the discretion of the Secretary of Agriculture under authority of Title III, Section 301 of the Agricultural Act of 1949. The Secretary is authorized, but not mandated, to make available through loans, purchases or other operations, sugar price support at up to 90 percent of parity. C. Additional authority.-Other legislative authorities available to support the sugar industry to tariffs and quotas: 1. Headnote 2, subpart 10(A), schedule 1, Tariff Schedules of the United States:Grants authority to the President to proclaim duties and quotas. 2. Section 22, Agricultural Adjustment Act of 1933.-Empowers the President, on the basis of an investigation and report by the International Trade Commission (ITC) to regulate commodity imports whenever the President finds that such imports tend to render ineffective or materially interfere with commodity price support or stabilization programs of the U.S. Department of Agriculture. 3. Title II, Trade Act of 1974.-Authorizes the President to provide import relief from injury caused to a domestic industry by imports. WOOL AND MOHAIR: REVERTING TO BASIC LEGISLATION-1986 CROP A. BACKGROUND The Agriculture and Food Act of 1981 expires on December 31, 1985. If no new legislation is enacted, provisions for the 1986 program year will revert to authorities in the Agricultural Act of 1949. The Secretary would have broad authority to establish: 1. price support rates. 2. the method of supporting wool and mohair prices. B. PROGRAM PROVISIONS 1. Price support rates.-Authority in the Agricultural Act of 1949 would allow the Secretary to support wool and mohair prices at a level not to exceed 90 percent of parity. 2. Method of supporting wool and mohair prices.-Authority in the Agricultural Act of 1949 would allow the Secretary to support prices through loans, purchases or other operations. 1983 PIK PROGRAM LITIGATION Mr. WHITTEN. What is the current status of litigation against the 1983 PIK program? Secretary BLOCK. There are currently pending four lawsuits which involve various aspects of the 1983 Payment-In-Kind-PIKProgram. In one of these actions, which was filed in the United States District Court for the Eastern District of California, the plaintiffs contend that compensation provided under this program should be subject to the $50,000 annual limitation with respect to the total amount of payments, excluding disaster payments, which a person may receive under the wheat, feed grain, cotton and rice programs. The second lawsuit was brought by Texas rice producers who contend that under the PIK contract they were to receive long grain rice rather than medium grain rice which was provided to them by the Commodity Credit Corporation. The third action involves the establishment of a farm acreage base for purposes of program participation. The fourth action concerns the establishment of a farm which was a basis for program participation. REIMBURSEMENT OF CCC REALIZED LOSSES Mr. WHITTEN. Mr. Secretary, the President's budget proposes a permanent, indefinite appropriation for the Commodity Credit Corporation for the restoration of losses. Under this proposal you would not have to come to Congress to restore losses to the Corporation, you would merely draw them out of Treasury in whatever sums you needed. However, prior to reimbursing the losses, you would have to have the approval of OMB, would you not? Should OMB not allow you to reimburse losses, what could happen to the programs of the Commodity Credit Corporation and the farm programs? Should Congress enact the President's proposal for a permanent, indefinite appropriation, would that not give OMB or the Administration the authority to terminate the farm programs should they so desire? Secretary BLOCK. Mr. Chairman, the proposed procedures for restoration of CCC losses through a permanent, indefinite appropriation are similar to those procedures currently used to reimburse CCC for expenditures incurred for the wool and mohair program. Under the National Wool Act, CCC annually requests the Department of Treasury to reimburse CCC for prior year wool and mohair expenditures. This is an automatic process governed by legislation and does not require OMB approval. The proposal to provide permanent, indefinite budget authority to reimburse CCC for net realized losses would be handled in a similar manner. As with wool, CCC would request that Treasury reimburse CCC for actual or anticipated losses. Both Congress and OMB would be notified, but OMB approval would not be required. Since automatic reimbursement would be provided for in the appropriation language, OMB would not have the authority to disallow it. The proposed change in the reimbursement process would in no way alter the administering of farm programs. Neither the Administration nor OMB has the authority to terminate the farm programs which are mandated by Congress. However, as is currently the case, the Administration could still modify discretionary programs. PERSONNEL TO BE TERMINATED Mr. WHITTEN. You are proposing to terminate over 10,000 employees of the Department of Agriculture, most of which would be in the Soil Conservation Service and the Farmers Home Administration. These would be almost totally employees in your state and local offices who would be in a position of providing direct assistance to farmers. When these reductions were discussed in Cabinet meetings on the budget, what were some of the trade-offs that were discussed with respect to cutting out over 10,000 people who could provide assistance to farmers, while at the same time providing over 36,000 additional employees, both civilian and military personnel, to the Department of Defense? Secretary BLOCK. The issue of employment levels was not discussed with me in the context of trade-offs between Departments or program activities in the Federal Government. The USDA levels of employment were adjusted to be consistent with the Administration's decisions on the program and budget levels for each activity in the President's budget. The reduction in staff years for the Farmers Home Administration relates to the elimination of the workload associated with making new loans in the rural housing and rural community development programs and the reduced effort for processing farm loans which would result from the shift to a greater portion of guaranteed loans versus direct loans. With regard to the Soil Conservation Service the staff years reflect the proposal to retain minimum technical assistance and soil survey efforts and to phase out the remaining activities of the agency. EMPLOYEE TERMINATION COSTS Mr. WHITTEN. What is included in the budget for termination costs of employees you are planning to terminate during fiscal year 1986? Secretary BLOCK. The Soil Conservation Service is the only agency that has termination costs for personnel reductions proposed in the 1986 Budget. I will be glad to provide a table for the record showing these costs. [The information follows:] |