A-67000, NOVEMBER 5, 1935, 15 COMP. GEN. 372

A-67000: Nov 5, 1935

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ARE NOT AVAILABLE FOR ADMINISTRATIVE EXPENSES. ATTACHED HERETO IS A STATEMENT OF THE PROPOSED PLAN. ALSO ATTACHED ARE COPIES OF A PROPOSED OFFER BY THE SECRETARY OF AGRICULTURE WHICH. IT IS PROPOSED THAT FORM POTATO 5. COPIES OF THESE FORMS ARE ATTACHED. - IT IS PROPOSED TO MAKE PAYMENTS TO ANY POTATO GROWER WHO DIVERTS POTATOES OF MARKETABLE GRADES OUT OF NORMAL CHANNELS INTO USE FOR BYPRODUCT MANUFACTURE OR LIVESTOCK FEED. - IT IS ESTIMATED THAT NOT EXCEEDING 15. - IT IS ESTIMATED THAT THIS PLAN WOULD INCREASE GROWERS' RETURNS FROM THE 1935 CROP BY $20. THE AVERAGE PRICE FOR LAST YEAR'S CROP WAS ONLY 58 PERCENT OF PARITY. IT IS PROPOSED THAT FUNDS AVAILABLE UNDER SEC. 32 OF PUBLIC. PROVIDES: THERE IS HEREBY APPROPRIATED FOR EACH FISCAL YEAR BEGINNING WITH THE FISCAL YEAR ENDING JUNE 30.

A-67000, NOVEMBER 5, 1935, 15 COMP. GEN. 372

POTATO DIVERSION PLAN - AGRICULTURAL ADJUSTMENT ADMINISTRATION - ADMINISTRATIVE EXPENSES FUNDS MADE AVAILABLE BY SECTION 32 OF THE ACT APPROVED AUGUST 24, 1935, 49 STAT. 774, FOR PAYMENTS OF BENEFITS AND INDEMNITIES IN CONNECTION WITH THE PROPOSED PLAN FOR DIVERTING POTATOES OF MARKETABLE GRADES OUT OF NORMAL CHANNELS INTO USE FOR BYPRODUCT MANUFACTURE OR LIVESTOCK FEED, ARE NOT AVAILABLE FOR ADMINISTRATIVE EXPENSES.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF AGRICULTURE, NOVEMBER 5, 1935:

THERE HAS BEEN RECEIVED YOUR LETTER OF OCTOBER 29, 1935, AS FOLLOWS:

THE AGRICULTURAL ADJUSTMENT ADMINISTRATION HAS PROPOSED A PLAN WHEREBY FUNDS MADE AVAILABLE BY SECTION 32 OF THE ACT APPROVED AUGUST 24, 1935, ENTITLED "AN ACT TO AMEND THE AGRICULTURAL ADJUSTMENT ACT, AND FOR OTHER PURPOSES" (PUBLIC, NO. 320, 74TH CONGRESS), WOULD, PURSUANT TO CLAUSE (2) OF SUCH SECTION, BE USED TO MAKE PAYMENTS TO POTATO GROWERS WHO, DURING THE PERIOD NOVEMBER 1, 1935, TO JUNE 30, 1936, DIVERT FROM THE NORMAL CHANNELS OF TRADE AND COMMERCE INTO USE FOR THE MANUFACTURE OF POTATO FLOUR, STARCH, OR ALCOHOL, FOR LIVESTOCK FEED, OR FOR SUCH ADDITIONAL USE OR USES AS THE SECRETARY OF AGRICULTURE SHALL PRESCRIBE, POTATOES GROWN AND HARVESTED IN THE YEAR 1935 BY SUCH GROWERS. THE AMOUNT OF THE PAYMENT WOULD BE 25 CENTS FOR EACH 100 POUNDS OF THE QUANTITY OF POTATOES SO DIVERTED, NOT IN EXCESS OF 10 PERCENT OF THE QUANTITY POTATOES GROWN IN 1935 BY THE GROWER. PAYMENTS WOULD NOT BE MADE FOR POTATOES WHICH DO NOT MEET THE SPECIFICATIONS OF THE GRADE KNOWN AS "U.S. NO. 2," OR OF SUCH OTHER GRADE AS THE SECRETARY MAY SPECIFY FOR ANY DISTRICT. TOTAL EXPENDITURES WOULD NOT EXCEED $2,500,000.

ATTACHED HERETO IS A STATEMENT OF THE PROPOSED PLAN. THE STATEMENT HAS BEEN PREPARED BY THE AGRICULTURAL ADJUSTMENT ADMINISTRATION AND OUTLINES THE NATURE AND EXTENT OF THE INCREASE IN THE CONSUMPTION OF POTATOES AND POTATO PRODUCTS WHICH MAY BE EXPECTED TO RESULT FROM THE PLAN. THIS STATEMENT INDICATES THAT THE INCREASED CONSUMPTION OF POTATOES AND POTATO PRODUCTS WOULD NOT CONSTITUTE, IN ANY SUBSTANTIAL DEGREE, A SUBSTITUTION FOR OTHER DOMESTIC AGRICULTURAL COMMODITIES OR PRODUCTS THEREOF, BUT WOULD TEND TO RESULT IN AN INCREASE IN THE TOTAL CONSUMPTION OF AGRICULTURAL COMMODITIES AND PRODUCTS THEREOF.

ALSO ATTACHED ARE COPIES OF A PROPOSED OFFER BY THE SECRETARY OF AGRICULTURE WHICH, IF PUBLISHED, WOULD INITIATE THE PROGRAM. IT IS PROPOSED THAT FORM POTATO 5, ENTITLED "POTATO GROWER'S APPLICATION FOR DIVERSION PAYMENT," AND FORM POTATO 6, ENTITLED "PURCHASER'S AGREEMENT AND RECEIPT FOR POTATOES DELIVERED BY GROWER FOR DIVERSION," BE USED IN MAKING PAYMENTS TO GROWERS. COPIES OF THESE FORMS ARE ATTACHED.

YOUR EARLY CONSIDERATION WOULD BE APPRECIATED OF WHETHER, IN THE EVENT THE SECRETARY OF AGRICULTURE DETERMINES THAT THE PLAN SHOULD BECOME OPERATIVE, THESE FUNDS AND FORMS MAY BE USED AS PROPOSED.

THE STATEMENT OF THE PROPOSED PLAN PREPARED BY THE AGRICULTURAL ADJUSTMENT ADMINISTRATION, REFERRED TO IN YOUR LETTER, SUMMARIZES THE PLAN AS FOLLOWS:

OBJECTIVE.--- TO INCREASE THE DOMESTIC CONSUMPTION OF POTATOES FROM THE 1935 CROP; TO IMPROVE PRICES TO POTATO GROWERS FOR THE 1935 CROP.

METHOD.--- IT IS PROPOSED TO MAKE PAYMENTS TO ANY POTATO GROWER WHO DIVERTS POTATOES OF MARKETABLE GRADES OUT OF NORMAL CHANNELS INTO USE FOR BYPRODUCT MANUFACTURE OR LIVESTOCK FEED. IN ORDER TO BE ELIGIBLE FOR PAYMENT FOR DIVERTING POTATOES OF MARKETABLE GRADES, THE GROWER WOULD BE REQUIRED TO DIVERT, WITHOUT PAYMENT, ALL POTATOES OF GRADES NORMALLY NOT MARKETED FOR HUMAN CONSUMPTION. PAYMENT WOULD NOT BE MADE FOR DIVERTING MORE THAN TEN PERCENT OF ANY GROWER'S CROP.

QUANTITY DIVERTED.--- IT IS ESTIMATED THAT NOT EXCEEDING 15,000,000 BUSHELS WOULD BE DIVERTED UNDER THIS PLAN, NOT INCLUDING THOSE NORMALLY NOT MARKETED FOR HUMAN CONSUMPTION.

EFFECT ON CONSUMPTION.--- THE CONSUMPTION OF POTATOES AS FOOD WOULD BE ABOUT THE SAME WITH OR WITHOUT THIS DIVERSION PLAN. WITH NO DIVERSION PLAN MOST OF THE SURPLUS WOULD BE WASTED IN MARKETING. WITH THE DIVERSION PLAN IT WOULD BE USED FOR BYPRODUCT MANUFACTURE OR LIVESTOCK FEED. THE PLAN WOULD RESULT IN THE INCREASE OF ABOUT 11,000,000 BUSHELS IN THE QUANTITY CONSUMED.

EFFECT ON PRICES.--- IT IS ESTIMATED THAT THIS PLAN WOULD INCREASE GROWERS' RETURNS FROM THE 1935 CROP BY $20,000,000 TO $25,000,000, AND WOULD INCREASE THE FARM PRICE FROM THE PRESENT LEVEL TO ABOUT 60 TO 75 PERCENT OF PARITY. THE AVERAGE PRICE FOR LAST YEAR'S CROP WAS ONLY 58 PERCENT OF PARITY. PRICES TO OCTOBER 1 FOR THE 1935 CROP AVERAGED 24 PERCENT LOWER THAN THOSE FOR THE SAME PERIOD LAST YEAR.

COST OF PROGRAM.--- THE TOTAL COST, INCLUDING ADMINISTRATIVE EXPENSES OF $250,000, WOULD BE $2,500,000. IT IS PROPOSED THAT FUNDS AVAILABLE UNDER SEC. 32 OF PUBLIC, NO. 320, 74TH CONGRESS, BE USED FOR THIS PROGRAM.

SECTION 32 OF THE ACT OF AUGUST 24, 1935 (49 STAT. 774), REFERRED TO IN YOUR LETTER, PROVIDES:

THERE IS HEREBY APPROPRIATED FOR EACH FISCAL YEAR BEGINNING WITH THE FISCAL YEAR ENDING JUNE 30, 1936, AN AMOUNT EQUAL TO 30 PERCENTUM OF THE GROSS RECEIPTS FROM DUTIES COLLECTED UNDER THE CUSTOMS LAWS DURING THE PERIOD JANUARY 1 TO DECEMBER 31, BOTH INCLUSIVE, PRECEDING THE BEGINNING OF EACH SUCH FISCAL YEAR. SUCH SUMS SHALL BE MAINTAINED IN A SEPARATE FUND AND SHALL BE USED BY THE SECRETARY OF AGRICULTURE ONLY TO (1) ENCOURAGE THE EXPORTATION OF AGRICULTURAL COMMODITIES AND PRODUCTS THEREOF BY THE PAYMENT OF BENEFITS IN CONNECTION WITH THE EXPORTATION THEREOF OROF INDEMNITIES FOR LOSSES INCURRED IN CONNECTION WITH SUCH EXPORTATION OR BY PAYMENTS TO PRODUCERS IN CONNECTION WITH THE PRODUCTION OF THAT PART OF ANY AGRICULTURAL COMMODITY REQUIRED FOR DOMESTIC CONSUMPTION; (2) ENCOURAGE THE DOMESTIC CONSUMPTION OF SUCH COMMODITIES OR PRODUCTS BY DIVERTING THEM, BY THE PAYMENT OF BENEFITS OR INDEMNITIES OR BY OTHER MEANS, FROM THE NORMAL CHANNELS OF TRADE AND COMMERCE; AND (3) FINANCE ADJUSTMENTS IN THE QUANTITY PLANTED OR PRODUCED FOR MARKET OF AGRICULTURAL COMMODITIES. THE AMOUNTS APPROPRIATED UNDER THIS SECTION SHALL BE EXPENDED FOR SUCH OF THE ABOVE-SPECIFIED PURPOSES, AND AT SUCH TIMES, IN SUCH MANNER, AND IN SUCH AMOUNTS AS THE SECRETARY OF AGRICULTURE FINDS WILL TEND TO INCREASE THE EXPORTATION OF AGRICULTURAL COMMODITIES AND PRODUCTS THEREOF, AND INCREASE THE DOMESTIC CONSUMPTION OF AGRICULTURAL COMMODITIES AND PRODUCTS THEREOF: PROVIDED, THAT NO PART OF THE FUNDS APPROPRIATED BY THIS SECTION SHALL BE EXPENDED PURSUANT TO CLAUSE (3) HEREOF UNLESS THE SECRETARY OF AGRICULTURE DETERMINES THAT THE EXPENDITURE OF SUCH PART PURSUANT TO CLAUSES (1) AND (2) IS NOT NECESSARY TO EFFECTUATE THE PURPOSES OF THIS SECTION: PROVIDED FURTHER, THAT NO PART OF THE FUNDS APPROPRIATED BY THIS SECTION SHALL BE USED FOR THE PAYMENT OF BENEFITS IN CONNECTION WITH THE EXPORTATION OF UNMANUFACTURED COTTON.

AS ONE OF THE PURPOSES FOR WHICH THE APPROPRIATION IS MADE AVAILABLE IS TO ENCOURAGE DOMESTIC CONSUMPTION OF AGRICULTURAL COMMODITIES OR PRODUCTS BY DIVERTING THEM, BY THE PAYMENT OF BENEFITS, FROM THE NORMAL CHANNELS OF TRADE AND COMMERCE, THIS OFFICE IS NOT REQUIRED TO OBJECT TO THE PROPOSED PLAN EXCEPT AS TO THE PROPOSED USE OF $250,000 OF THE APPROPRIATION TO COVER ADMINISTRATIVE EXPENSES. THE APPROPRIATION IN QUESTION IS NOT AVAILABLE FOR ADMINISTRATIVE EXPENSES BUT MAY BE USED ONLY FOR THE PAYMENTS THEREIN PROVIDED FOR.

LIKEWISE, THIS OFFICE IS NOT REQUIRED TO OBJECT TO THE "OFFER BY SECRETARY OF AGRICULTURE TO MAKE DIVERSION PAYMENTS TO POTATO GROWERS" OR TO "FORM POTATO 6.'

IN THE EVENT YOU DETERMINE THAT THE PLAN SHOULD BECOME OPERATIVE, THE VOUCHER FORM,"FORM POTATO 5," SHOULD BE RESUBMITTED FOR CONSIDERATION AND APPROVAL IN ACCORDANCE WITH THE USUAL PROCEDURE APPLICABLE TO ACCOUNTING FORMS.