Mr. Whiteman. We shall supply that information for the record. [The information follows:] PUBLIC LAW 480 PROGRAMS IN CENTRAL AMERICA FISCAL YEAR 1984 AND 1985 [In millers o) Oolttis] Title l/lll Title II Total Com Me* 1984 _ 1985 El Salvador 1984 1985 Guatemala: 1984 1985 Honduras: 1984 1985 Total 1984 1985 Mr. Whitten. How were these additional amounts determined? Mr. Whiteman. The fiscal year 1984 supplemental request is based on our estimate of the additional food import needs for these countries for the remainder of this year. In developing these estimates, we reviewed information submitted by the AID Missions and from other sources on estimated consumption, domestic food production and stocks, if any, and projected commercial imports. We also, factored in their foreign exchange situations, which as you know, is not at all favorable for any of these countries. We undertook a similar exercise in developing the budget amendment for fiscal year 1985, beginning with the current 1984 dollar allocations as the base. GSM-5 PROGRAM Mr. Whitten. Would you please provide for the record a detailed description of the history of the GSM-5 Program? Mr. Whiteman. The CCC established the GSM-5 Program in 1956. This program involves the extension of CCC credit for the purpose of financing U.S. agricultural exports for periods up to 36 months. The program's objectives are to maintain and expand U.S. commercial export sales, allow U.S. exporters to meet competition from other countries, and to substitute commercial credit sales for sales previously made under concessional programs. Unlike the GSM-102 Program, this program involves a direct budgetary outlay. The GSM-5 Program served as the primary commercial export credit program from 1956 to 1979.1 will insert for the record the actual activities in millions of dollars under this program since 1956. [The information follows:] Fiscal year: Millions 1956 $1 1958 12 1959 39 1960 1 1961 18 1962 33 1963 77 1964 118 1965 95 1966 210 1967 339 1968 141 1969 116 1970 211 1971 391 1972 372 1973 1,029 1974 298 1975 249 1976 621 19TQ 336 1977 755 1978 1,583 1979 1,527 1980 718 1981 11 1982 40 1983 137 Total 9,483 The GSM-5 Program is no longer operating as an individual program. It is currently being used in combination with the GSM-102 Program in the Blended Credit Program. Under this program an established percent of the FOB value of a commodity can be financed for export under the GSM-5 and the remaining portion is guaranteed under the GSM-102 Program. COOPERATOR PROGRAMS Mr. Whitten. Please describe for the Committee in some detail the linkage between the Office of the General Sales Manager and the cooperators that are operating offices overseas? Mr. Whiteman. Each year all cooperators are asked to submit to FAS recommendations, relative to their own commodities, on the use of PL-480 and CCC credit. These recommendations, along with any relevant comments, include a country priority ranking; a proposed allocation by quantity, value and country; and export expansion potential by country. The recommendations are used to help FAS in determining how PL-480 and CCC credit funds will be allocated in the following fiscal year. Mr. Whitten. Would you also describe what role the Office of the General Sales Manager plays in relation to our trade offices that we operate overseas? Mr. Whiteman. While the roles of the General Sales Manager and our Agricultural Trade Officers are complementary and they both help to move products into the export market, they are to a large degree, each dealing in very different spheres of work. Our trade officers devote a great deal of effort to promotional activities, particularly for processed, high value and value-added products. And, while they do identify credit needs which are passed along to the General Sales Manager they are not directly involved in the management of the commercial and concessional credit programs, which are the primary responsibility of the Office of the General Sales Manager. PUBLIC LAW 480 QUANTITIES Mr. Whitten. It has been said that the Public Law 480 program tends to deal in large quantities, whereas the EC countries were much more willing to sell in smaller quantities. As a result of this, the EC tends to deal in a number of markets in Africa that we do not participate in. What is the rationale of Public Law 480 for holding only to the larger quantity sales? Mr. Whiteman. After a Title I agreement is signed and purchase authorizations are issued, the importing country issues Invitations for Bids to purchase the commodity. Quantities in the Invitations for Bids are determined by the importing country, with our approval, based on estimated need and are scheduled accordingly. There are some shipments under Public Law 480 which are relatively small—as little as 1,000 tons of wheat or 500 tons of flour, for example. We encourage purchasing patterns which will both meet the needs of importing countries and result in the most effective use of U.S. Government funds. Generally, prices for larger lots of bulk commodities—15,000 metric tons or larger—would be expected to be slightly lower than for smaller lots—less than 5,000 metric tons—and ocean freight rates for larger lots are usually significantly lower than for smaller lots. Thus, in addition to meeting the needs of the importing country, larger lots will also increase the amount of commodity shipped for the funds provided under the Public Law 480, Title I program. Mr. Whitten. To what extent do you attempt to put together ship load quantities that could stop in three or four ports, in say the East Coast of Africa or three or four ports on the West Coast of Africa, rather than attempting to discharge an entire ship load at a single port? Mr. Whiteman. The extent to which quantities can be combined depends mainly upon whether or not one country happens to be in the market at the same time, and with the same loading dates as another importing country. If two or three countries are in the market at the same time and we see that there is an opportunity to combine cargoes, we will attempt to have the importers cooperate to this end. One example of combining cargoes recently occurred in Bangladesh and Pakistan. However, many of the Public Law 480, Title I/III cargoes are shipped in full vessel loads and the opportunities to combine cargoes are relatively few. Also, cargo preference requirements reduce our ability to move Title I commodities in full shipload quantities, since the minimum 50 percent U.S. flag requirement is expected to be met country-by-country, commodity-bycommodity. Mr. Whitten. Mrs. Smith. Mrs. Smith. Thank you, Mr. Chairman. Welcome, Mr. Amstutz, Mr. Smith, Mr. Mayer. We are happy to have you here, Mr. Pope, Mr. Whiteman, Mr. Dewhurst. Let me say before I start that I was at the breakfast this morning of the State Secretaries of Agriculture and I was very proud of the statement that our Chairman made. It was just excellent. Mr. Whitten. Thank you very much. PUBLIC LAW 480 Mrs. Smith. I would like to ask questions about three areas. I note that the budget for the Public Law 480 program includes $118 million to fund the extra cost of cargo preference. Over 10 percent of the Title II funding goes for extra transportation costs. I know that you can't change the law and I know we can't change the law here today, but I think that we should all be aware of just what cargo preference is costing for the Public Law 480 program and how much less food we get to hungry people because of the extra cost of cargo preference. Am I not correct that this is a record amount of extra cost for shipping food to hungry people under Public Law 480? Mr. Richard Smith. The cost has been increasing and the percentage has been increasing. I think the figure now is well over $100 million a year that we are spending on this. Mrs. Smith. I know you can't solve that problem. Your statement speaks very effectively about market development, and of course we do need market development. And we appreciate the increased funds for this program including Public Law 480. But I have had some very discouraging reports about the government people who are supposed to carry on the market development program. In Africa, for example, I have information that some of our agricultural attaches and counsellors don't understand what products were needed, what commodities we have available, who are the right people to visit with, how to build a desire for the products we had to sell. I once read a book which said that the people of Ireland starved during the potato famine while they had corn stored but nobody had taught them about eating corn. AGRICULTURAL TRADE OFFICES How many agricultural trade offices do we have set up? Mr. Richard Smith. We have 12 offices now. We just opened the latest one in Algeria on February 2, 1984, where the man is on board and where we think there is a lot going on right now and has tremendous potential. It bodes very well for American agriculture. Mrs. Smith. How many are authorized? Mr. Richard Smith. Twenty five are authorized. Mrs. Smith. And we have 12 operating? Mr. Richard Smith. Correct. Mrs. Smith. Why don't we have 25 operating? Mr. Richard Smith. Well, we have had to make sure that when we opened offices that it made sense. You know, we also have over 90 agricultural attaches and counsellors stationed around the world so we are covering the whole world with our programs. We are constantly evaluating. We have had teams out to evaluate our trade offices. I think the ones we have got operating are operating very well. I will be glad to provide to the committee the reports. These were joint business and government people who went out to make these surveys to make sure that they are operating correctly. Mr. Richard Smith. As I said, we think there is good potential in Algeria to do some good there with trade offices. We are looking, for example, for the possibility of one in Southern China. We are looking in Latin America. We think there may be some possibilities there. We are even thinking of the possibility of one in Tokyo, for example, that might enhance our operation. We think that we have to do it in a way that makes sense. At least in our judgment until now, it makes sense, but that does not mean that somebody can't have a different opinion. We will be glad to look at any place that someone thinks we have missed, that we should be operating. [clerk's Note: The report appears on pages 421 through 476.] Mrs. Smith. Well, I am glad to know about these countries that you are looking into further. With the Chairman's permission, I would like to ask you to put in the record how the personnel are selected with a brief resume of their qualifications and their experiences which made them particularly well qualified for the job in that place. Mr. Richard Smith. I would be glad to. Mrs. Smith. Thank you very much. [The information follows:] The main criteria we use in the selection of Agricultural Trade Officers are experience in the private trade, contact with the private while in FAS, and foreign language capability. Other factors that impact on the selection of personnel are a person's physical condition, family situation, and educational background. For the record, we have provided biographical sketches on each of our trade officers. |