WAREHOUSE INSURANCE

Mr. WHITTEN. In connection with the warehouse program I have had my attention called to some of the insurance problems. Will you discuss that matter for the benefit of the committee?

Mr. TRIGG. I do not have too much information on that. With your permission I will ask Mr. Brasfield, under whose control that is, to answer the question for you.

Mr. BRASFIELD. Mr. Chairman, I think what you refer to is on owned and pooled cotton. The Corporation returned to the practice that it had followed in previous years of taking that cotton in the warehouses out from under commercial insurance; in other words, to carry the risk itself on the diversified holdings that the warehouses have in the cotton it takes over. In other words, the storage contract, during the period of the loan is under the ordinary commercial in

surance.

The question we have recently been discussing with the warehouses is whether it fits, whether it follows the usual Government policy of not carrying insurance after the Corporation takes over the commodity.

Our practice varies with respect to different commodities. For example, on fungible commodities we are carrying insurance. On the high-risk commodities such as those where there is a considerable concentration of risk at one point, we have been carrying commercial insurance; in the case of cotton, and items such as cotton, the corporation for many years did not carry insurance on its own or pooled commodities.

In accordance with the policy followed in respect to the 1948 program on cotton, we are now discussing the question with the warehousemen whether or not they would be in favor of a system of insurance along that line, and we are studying the problems with them at the present time. Tariffs have been issued by warehousemen for uninsured cotton, and they have informed us that this does not work quite as well, because they do have insured receipts outstanding, and when we sell a commodity in their possession to an individual it makes it almost impossible to keep the insurance straight because it is a rather intricate problem.

Mr. WHITTEN. There is a period of a week or 10 days, or some space of time where neither the warehouse nor the Government insures certain commodities. There have been cases where the purchaser has had reason to believe that the insurance was carried by one or the other and then has found out that is not true?

Mr. BRASFIELD. It is a difficult problem, and it works this way: They discontinue insuring, and the cotton will not be insured with the Government until it is sold. That is the present position that we have taken on it.

Mr. WHITTEN. I hope you can work out a plan where there will be no lapse of insurance between periods, whether by a private insurance or the Government. I do not profess to know too much about it, but I do know from practicing law that there is no reason to have an interim period where nobody at all is responsible. I hope you can work it out so the Government can cover it until the man in the warehouse can protect himself. I understand there have been several rather heavy losses in that period between the time when the insur

ance was carried by the Government, or the warehouse or the individual.

Mr. BRASFIELD. The same problems, of course, were handled back in the early period when such insurance was not carried. We want to study that experience, and we certainly intend to consider thoroughly the whole problem, and we have reason to believe that we can work it out so it will be satisfactory.

Mr. WHITTEN. Mr. Trigg, we have a number of particular subjects that we will want to go into a little more in detail later. We might have any general questions by members of the committee at this time.

LOANS FOR STORAGE FACILITIES

Mr. STIGLER. I would like to ask Mr. Trigg some questions with reference to making further loans for storage facilities, commercial as well as farm. Does the authority expire sometime this year? Mr. TRIGG. No.

Mr. STIGLER. Or next?

Mr. TRIGG. NO. The authority is in the charter of the Corporation; it is administrative policy.

Mr. STIGLER. And it can be extended without further legislation? Mr. TRIGG. We can handle that administratively as we see fit. Mr. STIGLER. Do you propose to contine making loans to farmers? Mr. TRIGG. We would like to. We would like to have as many farmers construct their own storage as we can possibly get. As a matter of fact, the whole subject is being reviewed at the present. time to see just how far we need to go, and we need and want to get as much farm storage as we can; it will be utilized.

Mr. STIGLER. I have had quite a few inquiries from some of our farmers wanting to know whether or not they would be able to obtain loans to provide for the purchase of storage bins.

Mr. TRIGG. We still have the program going, and we are loaning up to 85 percent of the construction cost of the facility for providing farm storage.

Mr. STIGLER. And you do not contemplate any change?

Mr. TRIGG. Not right now, no, because we need that storage, particularly out in your country, Mr. Stigler. We need it out on the farms, Mr. Stigler, and we are anxious in the corn area that this corn be retained on the farms.

Mr. STIGLER. There has been a great improvement in the last 2 years along that line.

Mr. TRIGG. Yes, indeed there has been, Mr. Stigler.

Mr. STIGLER. Mr. Chairman, as I understand it, our questions are to be confined at this time to CCC?

Mr. WHITTEN. Off the record.

(Discussion off the record.)

Mr. WHITTEN. Mr. Andersen.

SUPPORT PRICE FOR EGGS

Mr. ANDERSEN. I have one question which is specific in one way, but general in another, because it has to do with the policy of the administration of the PMA program, Mr. Chairman. Why was the decision made to remove all supports from under eggs?

Mr. TRIGG. Well, Mr. Andersen, the law, as you know, the Agriculture Act, provides that we shall take into consideration eight factors in considering the price-support program on a commodity such as eggs. One of them is the supply in relation to the demand. Now, the egg production in 1951, the early egg production, is expected to about equal that of 1950. The rate of lay is expected to increase the offsetting reductions in the number of hens.

Other points we have to consider include the price-support levels of other commodities, the availability of funds, the perishability of the commodity and the importance of the commodity. All of those things were taken into consideration at the time the egg program was reviewed and the decision was made to discontinue it.

We had a considerable quantity of eggs on hand at that time, as you know, and we still have a considerable quantity of dried eggs on hand. In view of the consideration of all of those points which are enumerated in the law, I do not think we could have made any other decision except the one which was made to discontinue the price support on eggs.

Mr. ANDERSEN. It is rather difficult for people from one section of the country in which one commodity is an important source of income to see why they are not entitled to consideration or to protection by the price-support program for their commodities as well as somebody who might happen to be farming down South, for example.

Mr. WHITTEN. Would you just as soon say in the wheat country, Mr. Andersen?

Mr. ANDERSEN. Or in the wheat country, in Mr. Stigler's territory, or in Mr. Horan's territory. I am not partial at all.

To me the production of eggs is so much a part of the income of such a great segment of our farm population, such an important segment, that I am rather disappointed that the Department saw fit to knock out price support for eggs entirely. Of course, we know that temporary price raises during December and January possibly have eliminated the need for protection, but we also know what can happen on very short notice toward breaking the market.

Personally, I cannot see the viewpoint of the Department in establishing a policy providing that a great big segment of our agricultural economy shall be left entirely on its own as far as price supports are concerned.

Mr. TRIGG. Well, Mr. Andersen, you are very familiar with the difficulties that the Department encountered in carrying out the support program which it did on eggs up through 1950.

Mr. ANDERSEN. Now, you are absolutely right, but let me answer that. I know also of the extreme difficulties with potatoes, but at the same time I hold that we should look for the cure of those difficulties in the handling of those commodities, perhaps with very severe control of production coupled with a lower rate of protection, rather than to discard it entirely. I do not want to see my people become orphan stepchildren as far as the Government is concerned. Mr. TRIGG. Of course, there is no intention on the part of the Department to discriminate against any group of agricultural producers as far as that is concerned.