Mr. AHALT. Sir, a number of people would have to make that decision.

Mr. DENHOLM. Will you name them, please?

Mr. AHALT. Well, I will give you the names of the people that would be concerned with it. I would say that in addition

Mr. DENHOLM. I asked you who makes the decision, please?

Mr. AHALT. In addition to the Director of Cost of Living Council, a member of the Council of Economic Advisers.

Mr. DENHOLM. And who could that be, please?

Mr. AHALT. That would possibly be Mr. Gary Seevers.

Mr. DENHOLM. How many other possibilities can you suggest? Mr. AHALT. Well, there are three members of the Council of Economic Advisers.

Mr. DENHOLM. Is there a possibility of three different people? Mr. AHALT. It is not inconceivable.

Mr. DENHOLM. I am about to concur with my distinguished colleague from Texas, Mr. Price, in that I wonder if I am talking to the right person. I think the chairman is concerned about that too.

Are we getting through to anyone or is this just another exercise in another futile attempt to correct a wrong?

Mr. AHALT. Sir, you are getting through.

Mr. DENHOLM. You are at the policymaking level?

Mr. AHALT. Yes, sir.

Mr. DENHOLM. And can we anticipate any reasonable change in policy as a result of our conversation with you today?

Mr. AHALT. Well, I don't want to be so presumptuous as to answer that question yes or no. What I would assure you, sir, is that it is a top priority item. We are concerned about this problem.

Mr. DENHOLM. How long have you been concerned about it?

Mr. AHALT. We have known about problems in the fertilizer industry since 1971, when the market tightened.

Mr. DENHOLM. But your testimony indicates you are still studying the problem and that you have failed to act.

When will you do something about it?

Mr. AHALT. We have taken action in the past reflecting our concern about this problem.

Mr. DENHOLM. What actions have you taken to alleviate the problem?

Mr. AHALT. There were adjustments in phase 2 for a certain segment of the industry; a modification of the controls to give this industry some additional flexibility.

Mr. DENHOLM. Now, how long have you been so employed in your present position?

Mr. AHALT. I have been the Deputy Associate Director of the Cost of Living Council since January of this year.

Mr. DENHOLM. And what did you do before that?

Mr. AHALT. I was Assistant to the Director in the Cost of Living Council.

Mr. DENHOLM. The evidence would tend to indicate here, that before you began your job, we had a surplus of fertilizer at a much lesser price, didn't we?

Mr. AHALT. Well, that is correct.

Mr. DENHOLM. What does it indicate now?

Mr. AHALT. Well, the market has tightened and the supply situation has tightened considerably.

Mr. DENHOLM. It is a fact that a shortage now exists at an increased price isn't that correct?

Mr. AHALT. Well, that is saying the same thing.

Mr. DENHOLM. Would you say that is a result of your work product in your present position?

Mr. AHALT. No, sir, I would not.

Mr. DENHOLM. When do you expect to change that situation?

Mr. AHALT. We are analyzing this problem.

Mr. DENHOLM. Your testimony indicates that you have been analyzing it, and you have been doing that for 2 years and the situation is worse and we are concerned about it.

Mr. AHALT. We are also.

Mr. DENHOLM. Well, do you think it would improve if you just got out of whatever you are doing now and try something else?

Mr. AHALT. Åre you speaking of me, or the action we have taken with respect to the fertilizer industry? Are you speaking of me personally?

Mr. DENHOLM. In your present capacity, are you familiar with the aborted effort to control the retail market price to consumers on beef, and chickens, and pork?"

Mr. AHALT. Yes, I am.

Mr. DENHOLM. And what happened to the meat prices when you discontinued the effort to control the price thereof?

Mr. AHALT. They declined.

Mr. DENHOLM. And was there more or less meat on the market? Mr. AHALT. Well, there is more on the market now than there was previously.

Mr. DENHOLM. How about chickens and poultry?

Mr. AHALT. Sir, could I ask what you mean by getting out?

Mr. DENHOLM. Well, I am really concerned about your effort to control the economy by selecting certain items to control. I submit that you and your associates have been a total failure in your effort to effect a remedy or solution.

Mr. AHALT. Well, sir, we have the same controls, virtually the same controls, as

Mr. DE LA GARZA. Just a minute, I would add, with all due respect to my colleague, I don't know whether you are asking whether the activities of the Cost of Living Council has brought about this situation as participated in by this gentleman here, but I don't think it would be proper for the committee to question his personal participation or his participation in any individual capacity.

Would the gentleman kindly rephrase his question to this gentleman?

Mr. DENHOLM. I don't understand-the witness has stated that he makes policy and he has admitted the absolute failure of those policies. I want to know what he contemplates for policy changes to reverse errors of the past and when a policy decision will be made in the public interest.

Mr. DE LA GARZA. The only thing the Chair would like to bring out is that I assumed and it appeared that the witness assumed that your question was why didn't he, personally, move on to other endeavors.

Mr. DENHOLM. Oh, no, no.

Mr. DE LA GARZA. Which I don't think is a proper line of questioning. Mr. DENHOLM. Well, I think the witness testified he is at a policymaking level and I am reviewing the testimony that he has given of record. He and his associates have created an upside-down situation; that obviously whatever policy decisions the witness and his associates have made in the past have been wrong and there must be a change in policy in the future.

Since the price freeze on the retail commercial market, the domestic market, there has been an increase in the exports market.

Now, is there an international market for fertilizer and is there a world market price for commercial fertilizer?

Mr. AHALT. Yes, there is. In the appendix, I have some international prices on the fertilizer commodity. (See p. 24.)

Mr. DENHOLM. Is that higher or lower than the domestic retail market price on the same or similar commercial type fertilizer products?

Mr. AHALT. Well, for some products, it is above the domestic price. Mr. DENHOLM. Now, if there is not a profit motive incentive in the fertilizer market, there is no reason for processors to be in business, is there?

Mr. AHALT. I do not understand that question.

Mr. DENHOLM. Is there any reason for people to produce fertilizer at all if there is not a profit motive incentive?

Mr. AHALT. No, sir. I don't believe we have taken away the profit market motive incentive though.

Mr. DENHOLM. Where has the greater profit motive incentive been in the last year or two and during the price freeze policy?

Mr. AHALT. At the present time it is in the international market. Mr. DENHOLM. And as long as you continue a policy with a freeze on. the domestic retail market the producers of commercial fertilizer will be forced into the export market?

Mr. AHALT. I don't believe that is exactly the situation because a lot of firms are concerned about their domestic customers. Their domestic customers come back each year to buy. They buy more and more each year and the firms are not going to sell all of their product abroad because the foreign market may not be there tomorrow.

Mr. DENHOLM. I conclude from all of the facts available and unless you have additional facts to present-that during the price freeze on the domestic retail commercial market that exports increased?

Mr. AHALT. Well, it would be hard to say during the freeze because the freeze was only from June through August.

Mr. DENHOLM. Was that during the period of phase II?

Mr. AHALT. No, phase II was from November of 1971 to January of 1973. Phase II was not a freeze either.

Mr. DENHOLM. What occurred during that time? Did the exports increase or decrease?

Mr. AHALT. There was some increase in exports during that period. Mr. DENHOLM. Is it true that during the overall period of imposed price controls that the results have included higher prices and a short supply for the domestic commercial retail market?

Mr. AHALT. During the period that controls have been in effect, exports have increased but so have domestic use.

Mr. DENHOLM. Well, domestic demand will increase next year because of the multimillion additional acres of production and so there will be more demand for fertilizer.

Congressman Price asked you what you are planning to do nowand not next spring. Do you have any answers to that question?

Mr. AHALT. Well, my testimony, sir, reflects the fact that the wheat acreage is planted. I don't think any move at this stage would help Mr. Price's farmers.

Mr. DENHOLM. That might be true and excuse me for interrupting that might be true of Mr. Price's district. However, it is not true in the upper Midwestern States. Spring wheat isn't planted of course until next spring.

Mr. AHALT. And that is correct, sir, and my testimony reflects that the spring is the critical time with respect to fertilizer application. Mr. DENHOLM. Well, do you have an opinion as to whether or not the present policies of the Cost of Living Council will alleviate the problem or tend to create a worse problem?

Mr. AHALT. Sir, we have this issue under consideration, that is, the exemption requests by the Fertilizer Institute and we will make a decision on that in the near future.

Mr. DENHOLM. Again, I don't know how long you people have to analyze data. That is the same answer we have received from Mr. Dunlop and others. Mr. Dunlop was to analyze, evaluate, and study economics and the results of existing policies while the chickens were then being killed, while the meat prices were increasing and yet nothing has been done.

I am but one member, representing a great many producers that have become very depressed and distressed by such policies of the present bureaucracy.

Thank you, Mr. Chairman. I also thank the witness present.
Mr. DE LA GARZA. Thank you, Mr. Denholm.

Mr. Ahalt, we are going to run short of time here and the House will convene, as you know, at 12 o'clock. I wonder if I might inquire what will be the situation of your returning this afternoon.

Mr. AHALT. I suppose I could, sir. I would like to finish up before noon but I would defer to the chairman's wishes.

Mr. DE LA GARZA. Well, if you would kindly bear with us for a minute?

Dr. Pearlberg, what would be your situation of deferring your testimony to 1:30 this afternoon?

Mr. PEARLBERG. I could come back at 1:30.

[Off the record discussion.]

Mr. DE LA GARZA. The committee will stand in recess until 10 next Wednesday morning.

[Whereupon, at 11:45 a.m. the subcommittee recessed to reconvene at 10 a.m., Wednesday, October 3, 1973.]