Mr. MILLER. We have a study already prepared which shows comparisons of section 22 rates with the prevailing commercial rate on the same commodity in the same territory for approximately the same distance.

Because comparisons sometimes are not entirely possible, simply because the traffic is different, these comparisons are limited to situations in which the comparisons are appropriate. In other words, the study compares like with like. We can submit that study if you so desire.

Mr. NELSEN. The thing that I had in mind, there was a good deal of discussion in the Agriculture Committee about surplus commodity credit grain shipped to feed deficit areas under this section.

I was just wondering how much the advantage was because of the difference in rate. This could, of course, create some very unfair competitive situations.

If that could be supplied for the record, what the difference in rates was in shipments under those terms, that is what I was interested in.

Mr. MILLER. The general conclusion of this study is that section 22 rates are about the same, on about the same level as the commercial commodity rate structure.

Mr. NELSEN. Could we have those figures?

Mr. CONRAD. Yes, sir.

Mr. NELSEN. Thank you.

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

Mr. MACK. Mr. Chairman, I have one further question.

With regard particularly to the grain, you move a lot of the Commodity Credit Corporation grain.

Mr. MILLER. GSA does not.

Mr. MACK. Does not?

Mr. MILLER. No, sir.

Mr. MACK. I am glad to know that. And this is handled by the Department of Agriculture?

Mr. MILLER. Yes, sir.

Mr. MACK. And of course you are not familiar with the arrangements that are made for the movement of that grain?

Mr. MILLER. Not in any detail. I know some facts but not well enough to be able to testify.

Mr. MACK. Would you be in a position to say whether or not this legislation would affect the cost of that grain? Would you be in a position to say whether or not the enactment of this legislation would affect the cost of moving that grain?

Mr. CONRAD. We believe, sir, that with the introduction of increased competition in this area it would have a tendency to lower the transportation costs that would be involved in the movement of the grain.

Mr. MACK. This would apply to the Department of Agriculture as well?

Mr. MILLER. Yes, sir.

Mr. MACK. Thank you very much.

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

Mr. CONRAD. Thank you, sir.

(The following information was submitted in response to questions of the committee:)

Government's rail carload shipments within the exemptions of H.R. 11583— traffic moving on commercial rates during 1960

Government's rail carload shipments within the exemptions of H.R. 11583— Traffic moving on sec. 22 rates during 1960

Source: Railroad way bills covering Government traffic from the ICC's 1-percent sample, summarized by GSA. Data from the sample have been expanded to 100 percent. The number of carloads of commodities which do not always move in bulk was estimated on the basis of examination of copies of waybills on file with GSA.

The CHAIRMAN. Mr. George A. Dice, Director of Special Services Division, Department of Agriculture.

Mr. Dice, I observed you have a statement to present.

STATEMENT OF GEORGE A. DICE, DIRECTOR, SPECIAL SERVICES DIVISION, AGRICULTURAL MARKETING SERVICE, DEPARTMENT OF AGRICULTURE; ACCOMPANIED BY JAMES L. PEASE AND IVON W. ULREY, FREIGHT RATE SERVICE BRANCH, SPECIAL SERVICES DIVISION, AGRICULTURAL MARKETING SERVICE, DEPARTMENT OF AGRICULTURE

Mr. DICE. Yes, sir.

The CHAIRMAN. Off the record.

(Discussion off the record.)

(The prepared statement of Mr. Dice follows:)

STATEMENT OF GEORGE A. DICE, DIRECTOR, SPECIAL SERVICES DIVISION, AGRICULTURAL MARKETING SERVICE, U.S. DEPARTMENT OF AGRICULTURE

Mr. Chairman and members of the committee, my name is George A. Dice. I am Director of the Special Services Division of the Agricultural Marketing Service, U.S. Department of Agriculture. This Division has responsibility, among others, for administration of the provisions of section 201 of the Agricultural Adjustment Act of 1938 and section 203 (j) of the Agricultural Marketing Act of 1946, which authorizes the Secretary of Agriculture to engage, on behalf

of the agricultural community, in matters affecting freight rates and services for agricultural commodities and farm production supplies.

I am here to express the Department's full support of H.R. 11583 and H.R. 11584, and to comment in some detail on the reasons for that support.

The interest of the Department, of course, is primarily in connection with transportation of agricultural commodities and farm production supplies. In the light of this interest, H.R. 11583 is the bill of primary concern to us. While we do endorse and support H.R. 11584, its provisions affect agriculture less directly. Therefore, my comments will be directed to the provisions of H.R. 11583 which are aimed at lessening of regulatory control over rates.

The Department's endorsement reflects our conviction that passage of H.R. 11583 would result in greater emphasis in transportation on the free operation of the forces of competition to set fair and reasonable rates and provide good service.

We believe the time has come when greater reliance on the forces of competition will not only markedly benefit the Nation's common carriers but will also benefit agriculture by extending to the railroads and the regulated highway and waterway carriers many of the same freedoms that some highway carriers, and most water carriers, now enjoy.

As is well known, the Department and producers and shippers of farm products and supplies stand pretty much united in their support of the various arrangements made in the transportation laws many years ago to allow these commodities to move in interstate commerce by highway and waterway at rates and charges and on delivery schedules agreed to exclusively by the shippers and carriers involved. These freedoms, we believe strongly, have benefited agriculture, the processors of these goods, and consumers of them.

While our primary interest is in maximizing net returns to producers, after payment of transportation costs, we are also interested in holding down processors' costs and the prices paid by consumers for these commodities. All of these factors influence the welfare of the Nation's farmers, in terms of prices they receive for what they sell, prices they pay for what they buy, and the size and location of the markets to which they can sell. We believe the arrangements made in the transportation laws in the past for the maximum geographical flexibility and freight charge flexibility in the movement of farm products and supplies have been absolutely essential. These arrangements have encouraged orderly and efficient transportation of these commodities, many of which are highly perishable. Without these arrangements, we are confident that the farmers' incomes, by and large and on the average, would be lower than they are. H.R. 11583 would permit the railroads and the regulated highway and inland waterway carriers to adopt any minimum rates suitable to them as individual carriers of agricultural and bulk commodities. To our way of thinking, this all adds up to greater equality of opportunity for carriers and even better transportation for agriculture.

Representatives of agricultural interests would have been very much disturbed if, instead of moving in the direction of freedom from regulation, proposals had been made to remove from the transportation laws the arrangements for flexibility and efficient transportation I have referred to.

Such a removal would, of course, have been one possible way of reducing the existing competitive inequalities. As indicated in the President's transportation message, a change in the direction of more public regulation would not be the preferable way to eliminate inequalities among carriers.

I would like at this point to provide some statistical evidence as to the importance of transportation to agriculture and also the substantial importance of agriculture to the transportation industry. Both of these factors influence our support of this legislation.

We, in Agriculture, have for many years attempted to determine how much is spent for transporting agricultural products each year. Our latest calculations indicate that expenditures by shippers for transportation of farm food products for civilian consumption by rail and truck, including private trucks, are well over $4 billion annually. This, we calculate, is about four times the amount spent for this transportation service in 1944. To be more precise, our preliminary figure for 1960 is $4.06 billion. For 1944 it was $1.11 billion. The bill has increased every year from 1944 to 1960 except for 1955 and 1960 when the figure fell moderately below the preceding years.

This huge sum of $4 billion reflects the importance of transportation of farm food products to the Nation's carriers. Our estimates show-and we believe they are conservative ones—that the railroads get about 20 percent of all their

tonnage and operating revenue from movements of commodities directly related to agriculture, commodities of the type that would be freed from minimum rate regulation by passage of H.R. 11583. This figure of 20 percent includes movement by railroads of bulk items and items motor carriers are permitted to move now free of rate regulation. It does not include rail traffic that would be affected by these bills that is of indirect interest to agriculture, such as petroleum and building supplies.

Figures for all highway transportation comparable to those I have just cited for railroads are not available but based upon ICC statistics supplied by highway carriers filing commodity statistics to that agency, a comparable percentage for these certificated interstate for-hire highway carriers would run in the neighborhood of 5 percent. We have been unable to develop a comparable figure for water carriers.

When related to tons and dollars involved for these carriers types, these percentages are even more impressive. For example, for railroads the tonnage is approximately 250 million annually. The dollar revenue derived by these carriers from this traffic exceeds $1.6 billion annually.

For the motor carriers I referred to, the tonnage figure is in excess of 7 million and the revenue is at least $80 million.

While these estimates are not precise, it is reasonable to conclude that passage of H.R. 11583 would free from minimum rate regulation by the ICC from one-third to one-half of all the traffic represented by the $4 billion transportation bill I mentioned earlier. This is why we are so vitally interested in this proposed legislation.

Carriers of farm products-and to some extent farm production supplieshave a particular need for freedom from geographical restrictions to function effectively. They need to be able to reach all sources of traffic, to move over all possible routes, to carry all commodities, and to serve destinations everywhere.

Carriers must also be free to adjust service charges to reflect the supply of transportation facilities on the one hand and the shippers' needs for such service on the other.

These transportation needs arise from the influence of the weather, the location of production areas and the location of markets, as well as the degree of perishability of the product itself. All of these factors add up to a set of genuinely peculiar transportation requirements for agriculture.

In addition to geographic flexibility, agriculture needs rate flexibility beyond mere variations in aggregate weight of shipment in a car, truck, or barge. It needs low rates reflecting slow unscheduled service as well as premium rates reflecting fast round-the-clock service with minimum transit time. Variations in service required in agriculture are such that application of the present regulatory process for tariff approval does not adequately meet the needs of agriculture.

Transportation needs of agriculture also vary in terms of types of equipment required. Some foods, like peaches, require in-transit refrigeration; others, like grain, do not. Both peaches and grain require specialized equipment to some extent but peaches require much more expensive equipment and such equipment is not eligible for as many uses by reason of the higher costs of the equipment itself.

Livestock and poultry are also carried in specialized equipment. So are milk and other edible liquids.

In meeting the need for geographic flexibility in transporting agricultural commodities, motor carriers have had a significant advantage. Similarly, in meeting the need for rate flexibility, both motor and water carriers have had advantages over the railroads.

Passage of H.R. 11583 will in no way lessen the ability of motor carriers to provide flexibility as to origins and destinations served, as to rates, and as to the use of specialized equipment designed to serve agriculture's needs. In fact, for the carriers subject to public regulation, their flexibility would be extended and their opportunity to haul bulk items would be expanded both in terms of the number of items and in the way they could be handled. For example, a bulk commodity and an agricultural commodity could be hauled in separate trailers by the same tractor. Nor will this bill, if enacted, in any way limit the ability of water carriers to provide the type of service for which they are so well adapted. As a matter of fact, the provisions of this bill tend to expand opportunities of these carriers to seek traffic at rates not subject to minimum rate regulation. Insofar as the railroads are concerned, however, their opportunities to com