acreage is increasing and they have an opportunity for some increase. But I think if we can follow realistic pricing policies and I am first to admit that the current price of soybeans is too high, it violates my definition of realistic pricing policy-if we can follow that, I think we will maintain our dominant position in the world market.

Mr. GIBBONS. The other day I was in a conference dealing with agricultural products and learned some pretty startling comparisons of U.S. prices versus European prices. Have you got any figures on this? I noticed these were not in your statement, but you made some reference to them.

Secretary BUTZ. Are you talking about consumer food prices now? Mr. GIBBONS. Well, I think we were talking about the market price of wheat-the market price of wheat at the terminal. As I recall, the U.S. price is about $86 a long ton. Is that right? Is it roughly in that area?

Secretary BUTZ. I don't have the exact figures.

Mr. GIBBONS. The European price was about $110 or $115 a ton. Secretary BUTZ. It is very substantially higher.

Mr. GIBBONS. Substantially higher?

Secretary BUTZ. Yes. This reflects itself in higher prices for consumer items in Europe than here. I was in Paris 3 weeks ago as I said. The morning before we flew back I went into a supermarket to do some price comparison. Whoever wrote that book on "How to See Europe on $5 a Day" was writing about breakfast.

Mr. GIBBONS. And not a very good one either.

Secretary BUTZ. Well, you would get a fork with it.

Mr. GIBBONS. I wonder if your department could prepare for us some charts showing just how our U.S. domestic prices compare with European prices and perhaps Japanese prices so we can illustrate clearly the advantage we have.

Secretary BUTZ. Yes. We will supply that. Not only is our price lower, but as a percentage of take-home pay they are far lower than anyplace else in the world.

[The charts referred to follow :]

PRICES OF U.S. WHEAT AND CORN TO EUROPEAN BUYERS, MAY 2, 1973

Source: U.S. Department of Agriculture, EMS; Deutsches Getreidekontor e.G.m.b.H., Hamburg, May 2, 1973; Reuter News Service, May 1, 1973.

Grain and Feed Division, FAS, May 18, 1973.

SURVEY OF RETAIL FOOD PRICES IN SELECTED CITIES, AS OF MID-MARCH 1973 [In dollars per pound, converted at current exchange rates, unless otherwise noted]

Oranges:
Navel

Mandarin.

Tomatoes

1.53 Lettuce/head.

1.10 White.

.17-.45

.68-1.70

.21 Potatoes

FOOD EXPENDITURES, SHARE OF CONSUMER EXPENDITURES AND DISPOSABLE INCOME, OECD COUNTRIES, 1960, 1969, 1970, PRELIMINARY 1971

Source: OECD, National Accounts, 1960-70 and supplemental sheets.

Mr. GIBBONS. As I go around and talk to my constituents, people ask me questions about the Soviet grain deal. They say are we selling too much, cutting our reserves too low? What is your answer to that? Secretary BUTZ. It depends on how we define "reserves." Mr. GIBBONS. Suppose we have a bad year.

Secretary BUTZ. We will come out of this market in the year ending June 30, 1973, with a carryout of 400 million bushels plus or minus. The wheat crop is virtually assured. The wet weather we have had has been good. We will come out of this year's market with a carryout between 800 and 900 million bushels of corn.

While that seems like a lot, it is really on the low side. That is about an 8-week supply of domestic utilization of corn and feed grains here. We will come out of this market here in soybeans with a very low carryout. It will be adequate. We will have soybean crushers that will shut down until the new crop comes.

You say are we selling too much abroad? No, we don't think so. We have pushed exports very hard. This is the reason we are putting 43 million acres back into production. We are shooting this year for an increase in the magnitude of 500 million bushels. This is an alltime high increase. We may not quite make it because of the wet weather, but at the moment we are still hopeful.

We are shooting for an increase of wheat between 220 and 230 million bushels. We will make it. We are shooting for an increase in soybeans around 200 to 230 million. This is a quantum jump.

At the moment we still think we will make it.

Mr. GIBBONS. Do you think the world has progressed far enough so that the agricultural nations of the world can get together and establish some type of food reserves? I think we need to do that.

Secretary BUTZ. I made the point at the OECD conference in Paris that the traditional food importing nations must now assume some re

sponsibility for establishing their own reserves. For years they have looked to the United States to carry the reserve supply. They made us a residual supplier in the world market. We are no longer a residual supplier. We are a primary supplier and I want to remain that way. We made the point to the Japanese who set across the conference table in Paris 3 weeks ago that they will always be importers of foodstuffs to their country. We made the point that they have to assume responsibility for their reserves. They are now doing that. They are doing forward buying and storing those reserves in this country, but they are owned by them.

Mr. GIBBONS. Since we are such outstanding producers of agricultural products, is there any reason for applying the DISC tax break to agricultural products?

Secretary BUTZ. We had some controversy about that after the Russian sale, as you know. Frankly I am not equipped to comment on it. It is a legal problem, primarily.

Mr. GIBBONS Let's talk about the legal problem of that particular deal.

Secretary BUTZ. I personally feel that the DISC principle should be applied to the export of agricultural products just as well as the export of any other products.

Mr. GIBBONS. That sort of does violence to my thinking. I don't 'know why we ought to give the people that consume our products overseas a better break than we give our domestic people. That is, in fact, what we are doing through the DISC.

Secretary BUTZ. The only better break we gave people who consume our products are you talking about the export subsidy on wheat?

Mr. GIBBONS. No. The DISC export subsidy. Why shouldn't every agricultural product bear its fair share of export cost? Why should we give the foreigners a better break than we give our domestic consumer? Secretary BUTZ. The primary purpose was to expand export facilities. That is not a subsidy of the foreign consumer necessarily.

Mr. GIBBONS. Have we got any agricultural products that we can sell to those Arabs who have all that oil? How are they fixed agriculturally? That is where we are going to have our big trade problem in the future.

Secretary BUTZ. You put your finger on a big problem, a national security problem, too, and it is receiving the attention of the highest levels of government. We will have to import energy in the form of petroleum as we are now. One of the questions is how we pay for it. I think one of the best ways to pay for it is in the area of another resource, agricultural products where we have a tremendous competitive advantage. It doesn't have to be directly with the Arabs.

It can be multinational trade, as you are aware.

Mr. GIBBONS. Let me ask the panel this question. In years past we have had you gentlemen in here and we always have trouble figuring out who is on top. I realize the President is on top and he controls all of you. But under the President, who is going to settle the differencesand there will be differences come up between the three of you there. Is the special trade representative the man on top, or Mr. Flanigan, or who?

Secretary BUTZ. Obviously the President. Who are you asking here? Mr. GIBBONS. All three of you. I want to get you pinned down now that I have you here.