DEVELOPMENT OF TERMINAL MARKETING FACILITIES

DEFAULT

7

SEC. 14. (a) In the event that the borrower violates any covenant or condition arising in connection with any loan or mortgage insurance obtained under this Act, or defaults in making any payment on any direct loan obtained under the authority of this Act, the Secretary may declare the entire loan due and payable at once and may institute such proceedings as he deems necessary or appropriate to protect the interests of the United States. If the Secretary finds that the mortgagor (1) has made reasonable efforts to meet all defaulted payments and to comply with the other covenants and conditions of the mortgage, and (2) will probably be able to meet such defaulted payments within five years after the maturity dates or date of the defaulted payments, the Secretary may enter into an agreement with the mortgagor providing for the payment of such defaulted payments together with interest thereon, at such times not later than five years after the maturity date or dates as the Secretary may deem to be within the probable future means of the mortgagor. Should any mortgagor with whom the Secretary has entered into such agreement thereafter fail to meet any payments the Secretary may proceed to foreclose the mortgage or institute such other proceedings as he may deem necessary.

ACQUISITION, OPERATION, AND DISPOSAL

SEC. 15. The Secretary in the event of default is authorized and empowered to bid for and purchase at any foreclosure or other sale or otherwise to acquire property pledged or mortgaged or conveyed to secure any loan or other indebtedness owing to the Secretary or arising out of insurance issued by the Secretary under this Act; to accept title to any property so purchased or acquired; to maintain and operate or lease such property for such period as may be necessary to protect the interest of the United States therein and to sell or otherwise dispose of such property at public or private sale to the highest responsible bidder on such terms and on such conditions as the Secretary deems feasible. All net amounts realized from the operation or disposal of any property acquired under this section shall be deposited in the insurance or loan fund whichever is appropriate. The insurance fund and the loan fund, whichever is applicable, shall be available to defray expenditures in connection with the acquisition, maintenance, operation, and disposal of any such properties without regard to the provisions of section 3709 of the Revised Statutes.

FEES AND COMMISSIONS

SEC. 16. No officer or employee of the Department of Agriculture shall directly or indirectly be the beneficiary of or receive any fee, commission, gift, or other consideration for, or in connection with, any transaction or business under this Act other than such salary, fee, or other compensation as he may receive as such officer or employee. Any person violating any provision of this section shall upon conviction thereof be punished by a fine of not more than $2,000 or imprisonment for not more than two years, or both.

ADMINISTRATIVE PROVISIONS

SEC. 17. (a) The Secretary is authorized to promulgate such rules and regulations as may be necessary for the administration of this Act.

(b) The Secretary may delegate his authority to any officer or employee of the Department of Agriculture.

ADMINISTRATIVE EXPENSES

SEC. 18. There is authorized to be appropriated such sums as Congress may from time to time determine to be necessary to enable the Secretary to carry out the provisions of this Act, except that any expenses in connection with marketing facility research, development of plans for market facilities, determination of the need for market facilities, and methods of operation of market facilities shall be financed from funds made available pursuant to the Agricultural Marketing Act of 1946 and the "marketing farm products" item in the Department of Agriculture Appropriation Act.

The CHAIRMAN. The problem involved here is a rather old one, just about as old as some of the old marketing buildings, 150 to 200 years old.

I think this bill, H. R. 8320, certainly has the possibility of going a long way toward solving these problems. I do not believe that any one bill could solve all the problems attendant with the marketing of perishable commodities, because they are many and varied. They are large and small, dependent upon the size of the community and the size of the marketing problems.

I do not have a prepared statement, Mr. Chairman. I am here to offer any assistance that I can, or to answer any questions that might be in the minds of the committee which I can answer. I would prefer, I think, in deference to your time and the time of these other gentlemen who would like to testify, that the committee just ask such questions as it may see fit.

I would like to call this to your attention: That I am inclined to believe that the $45,000 minimum for loans is a little bit high. It might militate against the small markets. I can anticipate the building of markets which would be under the $300,000 mark, and if the $45,000 minimum were to remain in the bill it would mean that those small markets would have to put up more than 15 percent of the money; that is, if my interpretation is correct with respect thereto. The CHAIRMAN. May I ask you a question in connection with a question which was asked by Mr. Hope of Kansas?

Mr. BALLENTINE. Yes, sir.

The CHAIRMAN. This is with regard to the feasibility of States providing these facilities and not calling upon the Federal Government itself to provide financing. What are your views about that suggestion?

Mr. BALLENTINE. Well, of course, none of us have any objection to private interests investing their money in facilities of this kind, and we would like to encourage it.

In our own State, I will say to the Chairman, since we are from the same State, there has been such a lack of knowledge and know-how with respect to the marketing of perishable commodities that the money interests have been slow to put their money into this type of facility. Now, at the tobacco-sales warehouses since, of course, they have the know-how and have an appreciation of the value, and having seen them operate, we have had no trouble in getting sufficient money for that type of marketing facility; but in the marketing of perishable commodities it is an entirely different proposition and it just has not been accomplished under the old system.

Now, we have a marketing authority which was established by legislative enactment back in 1937. No attempt has been made to implement that by appropriations from the State.

It would appear to me that this marketing program is in line with the productive program, and it is of national consequence; and since it deals with the marketing of the commodities which have been produced with Federal aid, this bill would be in keeping with that part of the program.

The CHAIRMAN. I believe your predecessor, who is now the Governor of North Carolina, was at one time chairman of the marketing committee of the organization known as the Southern Commissioners of Agriculture, was he not?

Mr. BALLENTINE. That is right; yes, sir.

The CHAIRMAN. I know that Kerr Scott has been interested in the marketing problem for many years. I am glad to know that you are

likewise interested in it, and I appreciate very much your coming here to give the committee the benefit of your views concerning the bill we now have under consideration.

Mr. BALLENTINE. I would like to say this, Mr. Cooley: This is just a continuation of the marketing program, it seems to me. In 1946 the Congress wisely passed the Research and Marketing Act, and from that legislation today we are beginning to realize some very satisfactory and encouraging results, but the pay-off to the whole program of research and marketing, it seems to me, is going to depend largely upon the facilities which are made available for the marketing of these perishable commodities.

The CHAIRMAN. You do not see any objection to the Federal Government fostering a matter of this importance, do you, especially in view of what we have heretofore done in the field of agriculture?

Mr. BALLENTINE. I do not see any more objection to the participation of the Federal Government in the marketing program than in the soil conservation work or the extension work, or all the other phases that the Federal Government has entered into, which have to do with the production of commodities.

The CHAIRMAN. Actually, considered from an immediate standpoint, there is more justification for this, because obviously the consumer would benefit directly and immediately in the event these facilities are provided; is that not true?

Mr. BALLENTINE. Yes, sir; and I think it might be well to remind the members of the committee, though I know they are more conversant with that idea that I am, that the Federal Government is already in the marketing game. We are today through the support price program and the Commodity Credit Corporation participation directly connected with the marketing of all farm commodities in some way or another. Certainly if we can make the products of the farm available to the consumer in better condition, in a more acceptable condition, and at the same time present those goods to the producer at a reduced price or cost, then we will be aiding the program that we are already responsible for in some other phases of the activity. The CHAIRMAN. I have here a resolution passed by the City Council of the City of Raleigh which I would like very much to include in the record at the conclusion of your testimony. It is a resolution urging the enactment of the bill we have under consideration, H. R. 8320. Mr. BALLENTINE. I would be glad to see you do that.

Some time ago, Mr. Crow's branch of the United States Department of Agriculture made a survey of the marketing requirements in the Raleigh area, and some definite plans have been prepared for the development of that market there in the Raleigh area, but the problem of sufficient funds and finding the available funds is something that has proved to be quite difficult.

The CHAIRMAN. Mr. Crow's study of the situation in Raleigh is just part of his job; in other words, he has done that same work in other cities.

Mr. BALLENTINE. That is right.

The CHAIRMAN. We are spending the Federal taxpayers' money to conduct these investigations and these studies and to make recommendations to local municipalities and governing bodies. This bill just goes one step further, that is, to provide the financial aid to build the facilities which we consider to be needed in the different places.

Mr. BALLENTINE. The only objection that I can see to the bill, and I have read it rather carefully, is the item which I pointed out a while ago, the minimum requirement there of $45,000, and the fact that $50,000,000 may prove to be insufficient.

The CHAIRMAN. Well, I think the $45,000 minimum is in there for the purpose of trying to confine our activities to the larger terminal markets through which most of the produce of the country moves. If we can provide good facilities in the big cities that certainly would be a step in the right direction. I do not think it is contemplated by this bill that we would undertake a program which would deal with the little markets at this time. It is more or less for the large markets, because any advance in the situation for the large markets is calculated to have an impact upon the whole country.

Mr. BALLENTINE. That is correct, but at the same time we are having some congestion in the larger markets due to the fact that products produced in the areas are not going directly to the retail outlets.

We have had experience on that and have proven that point through a research and marketing program this year in the handling of lettuce down in the Wilmington area of North Carolina, where we sold a good portion of the lettuce produced to the stores in North Carolina, whereas for years it has been confined to the merchants in the eastern markets.

In many cases the farmers had been called on to reimburse the market for freight. Not only did they not get anything out of the lettuce, but they had to send reimbursement for the freight.

This year, through the research and marketing program we put on an effort to see what could be done with the marketing of lettuce in North Carolina, with North Carolina outlets such as chain stores and home-owned stores, and we were able to sell all the lettuce that was available to our department through this outlet at a considerable profit to the farmer who produced it.

Therefore, I hope that you will not overlook the small markets too much, because these small problems may grow into large problems, and we might alleviate some of the larger problems by taking care of some of the small ones before they get larger. In other words, if we have to eat California lettuce it may have to come through New York and then down to North Carolina, whereas if we can sell our own lettuce we do not send that to New York and put it in those spots referred to this morning and congest them by virtue of the fact that we are sending lettuce up there and getting California lettuce down in North Carolina.

The CHAIRMAN. Thank you very much, Mr. Ballentine.

Mr. BALLENTINE. Yes, sir.

(The resolution previously referred to is as follows:)

RESOLUTION No. 335

Whereas the officials and the citizens of the city of Raleigh recognize the great need for an improved wholesale produce market; and

Whereas, the benefits which the establishment of such a market would bring to retailers, wholesalers, producers, and consumers are self-evident; and

Whereas there is now pending in the Congress of the United States and before the House Committee on Agriculture H. R. 8320, being a bill "to encourage the improvement and development of marketing facilities for handling perishable agricultural commodities" by providing financial assistance in the form of mortgage

DEVELOPMENT OF TERMINAL MARKETING FACILITIES

11

If he uses the railroad, he pays the railroad freight rate for bringing the commodity, usually to a point 2 or 3 miles away from the market, from which it must be carted into the marketing area. The costs of cartage usually range from $30 to $50 per carload, and it is because of that handicap which the railroads must overcome, and for other reasons that the railroads have lost much of the traffic they would like to haul. The volume of the products moving to the markets throughout the country over the past 10 to 20 years has increased very greatly, but the railroad movement of perishable commodities has not increased. The increase in movement has been taken care of by truck transportation. Until these markets can be placed on the rails, so that railroad cars can deliver directly into the wholesaler's place of business, the railroads are going to continue to operate under that disadvantage.

With so many cities having these inefficient, antiquated markets, and with so many groups interested in the situation, one might wonder why something is not done about it.

There is not very much opposition to improving these conditions under which our perishable foods are handled, so the problem is really one of helping the small-business men who are operating in the markets find a way to do it.

Most of the farmers whose supplies go through the market live so far away that they cannot see these conditions, and they would not know what to do with them if they did live closer to the market, which may lie within the boundaries of some other State or city. So the farmers would not know where to start. The wholesalers and other dealers who operate in these markets often are at a loss to know what to do about it. The retail grocers are too.

We have, in the Department, as a result of legislation that was sponsored by this committee, performed the service of helping localities that are interested in getting improved facilities in developing plans for proper wholesale marketing facilities for the handling of all kinds of perishables.

We have developed plans and designs, determined the cost, developed the lay-out, and furnished a model showing just what the facilities would be like for 30 or more localities.

In some of these places steps have already been taken to build these facilities that we have recommended, but those places, for the most part, that have been able to take action on these plans are the smaller cities where the facilities recommended would not cost much.

There must be 10 or 12 of the 30 that have actually constructed, or are just about to construct new facilities. But in cities of all sizes, from the larger ones on down to the smaller ones interest in this subject is growing rapidly. Besides the 30 cities at whose request we have already developed plans for facilities, we have on file 30 additional requests for this service, most of which we have been unable to comply with because of the lack of trained personnel to do the job.

That backlog of 30 that we have on hand now is interesting in this connection primarily because it shows the growing interest in the subject. About 12 months ago the backlog was 20, and shortly before that it was only 10. We have been turning out these reports on the different localities with increasing rapidity, but we cannot keep up with the increased interest in this subject. People in practically all of the States are concerned about the wholesale markets.