Mr. PURCELL. Thank you, sir, and you have heard my request on the part of the other two witnesses, so we would appreciate your being present for questioning with the other witnesses.

At this time we will call Mr. Cleo A. Duzan of Oakland, Illinois.

STATEMENT OF CLEO A. DUZAN, CHAIRMAN, UNITED GRAIN FARMERS OF AMERICA, OAKLAND, ILL.

Mr. DUZAN. Good day, Mr. Chairman.

As you all know, in 1969 I drove tractors to Washington, D.C., for one reason only: to show that we don't want charity; we want parity. We will rebuild rural America if we can get parity.

I want to say also in these facts I have facts pertaining to the 22d District in Illinois, which composes about one-fifth of the State and I can report from what is being read to rural America.

Now, we do not have the availability of all the facts, but I want to propose to you people what we in rural America feel, that this is good. for us to know the facts of what is going on in Washington. My statement is as follows:

I am Cleo A. Duzan, chairman of the United Grain Farmers of America. Thank you for allowing me the opportunity to testify. I will be as brief as possible. I limit myself to two aspects of this case: first, the results of this Russian grain deal on about one-fifth of the rural counties in Illinois; and, the second, a short list of requests that my farm friends have asked me to put before the committee.

I begin by reciting a quotation in a Chicago Tribune story printed September 10th under the by-line of Arthur Liddon. According to Mr. Liddon, and I quote:

Carroll Brunthaver, Assistant Secretary for Internationl Affairs and Commodity, said the grain sale to Russia has totaled $300 million to date and resulted in a $200 million profit for American farmers.

Now, sir, you and I both know that the American farmers did not get a $200 million profit on this grain sale. Unfortunately, too often the news media accepts the word of a governmental official at face value and without questioning. This has helped to undermine the credibility of Government and in terms of agriculture, at least, this has been a factor regardless of which political party is in power.

It is probably true that someone or some few individuals did get a $200 million profit, but it wasn't the farmers, as earlier testimony here has shown. The truth of the matter is, the American farmers took a heavy beating on this deal. It has been shown here in this committee hearing that farmers had been urged by the USDA to sell wheat and. relying on the USDA forecasts, farmers in the 19 counties in central Illinois did just that. But they sold at a low price, as you know.

If it is true that the exporters are to get over a 40-cent subsidy for each bushel of wheat sold to the Russians, then the loss to the farmers in the 19 counties had to be about $7 million. That is $7 million that did not come into the local economy. I will not get into the projections of what it would have meant to the small businessmen in the 19 counties in terms of generating additional gains, except to say that some economists believe that every dollar added can mean the development of seven more; but that is speculation and we have had enough of that. I submit that the records show that wheat production in this area in 1971 was 14,239,750 bushels. We do have two certain figures-the wheat production and the subsidy to the exporters, money for grain the farmers did not get.

On this basis, from 19 counties the State of Illinois lost about $350,000 in possible revenues from sales taxes and the communities in the 19 counties lost about $75,000 which would have come back to them on a revenue-sharing basis with the State. I have listed in a written. statement a breakdown of what that means for each county in the 19county area.

Now, besides the figure of some 40 cents which we know the exporters got for each bushel of wheat, there is the fact that the Russian grain deal has driven the market up by at least 50 cents a bushel above normal price which is below parity-and it may go higher. But American farmers generally will get none of this gain because they have already sold most of their wheat, again on the advice of the USDA. There are two points here: The first is that if farmers in the 19 counties I have talked about earlier in this testimony had gotten a chance at this extra 50 cents a bushel, it would have meant better than $7 million more for the local economy. Using this added 50 cents, the State of Illinois lost about $700,000 in sales tax moneys alone in the 19 counties, about $150,000 of which would have returned for city and community governments.

The second point is that the increase in the price of wheat means a possible increase in the price of bread. The price increase may very well be a large one. Not only will the farmer end up being cheated out of money that is rightfully his, but he can also expect to be unjustly blamed for higher bread costs. The USDA officials have already set the stage for this with statements like that of Mr. Brunthaver that I quoted at the start of my testimony here today.

In conclusion, I offer these suggestions, put together by actual dirt farmers back home-suggestions and questions that I believe should have consideration.

First is a request for legislation that requires the USDA to make a full public report on all foreign commodity dealings instantly and that all foreign purchases of grain be made a matter of public record. This is vitally important for all American farmers as well as the farmers in the 19 counties involved with this testimony. If the other deals with Russia and the upcoming one with China are to be handled the same as this wheat deal, then the results could be disastrous. If the farmers in the 19 counties were to lose 25 cents a bushel on corn, for example, the direct loss to them and to the communities and governments they support would be more than $40 million in 1 year.

The second request is for legislation that would require the USDA to use Government-owned stocks of commodities first in any dealings with nations that do not permit free enterprise activity. If there is a need for more of any given commodity, then the USDA, after all disclosure, can go into what has been misnamed "the open market” to pick up the amount needed.

Furthermore, this legislation should, if possible, cover the present wheat deal. This would result in a tremendous savings to the American taxpayer who is the person who is underwriting the entire deal-about $750 million. I realize that if such legislation were attempted then the exporters would claim that the Government cost them huge sums of money because they acted in good faith on the Government's advice. So did the American farmer.

The third request is that legislation be passed calling for all commodity sales to be listed and always open to public inspection. The American farmer does his own marketing and he is clearly at a disadvantage because of the USDA manipulations and the close relationship between the major grain buyers and USDA officials. If at least the buying and selling records of the five leading buyers of grain were to be listed publicly, then this subcommittee could tell immediately whether or not the USDA had, in fact, tipped off the exporters so they could make a fat killing on the sweat and blood of the American

farmer.

The fourth request is that this subcommittee subpoena the records of the major grain exporters involved in this Russian grain deal. The records would demonstrate, by the variation in buying and selling and the dates of fluctuations, whether or not the major grain exporters had benefited from the clearly demonstrated unethical behavior of high-ranking USDA employees.

The fifth request is that this subcommittee attempt to pin down the USDA on the exact dimensions of this deal with Russia.

According to the Government, the current administration, the guiding rule of this grain deal was that we would loan the Russians $750 million so they could buy our grain, but no more than $500 million was to be spent in 1 year. At this time we are now talking about a 400 million bushel wheat sale to Russia. That just about covers the extent of the total credit we have agreed to give the Russians.

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What about the corn, soybeans and barley that are supposed to be involved in the deal? How is the American farmer supposed to compete in the open market against the manipulations of a conspiracy composed of USDA officials and the major grain companies? Can you force the USDA to make public the information needed?

The last request is one from me personally.

This subcommittee now meeting is engaged in an effort that is not well understood bythe general public but nevertheless what you gentlemen do here and now is very important to the future well-being of this Nation and the world for several generations to come. I know that the distinguished chairman of this subcommittee is aware that there is now a food crisis in this world that has been long predicted. I believe we are in the first stages of this crisis, a crisis so serious that we see military ideologies become secondary to the need for food. This crisis will grow worse and, ultimately the brunt of feeding much of the world will come down on the shoulders of the American farmer. If he, his wife and his children fail in this historic undertaking, then the whole world will see the four horsemen ride as never before. Make no mistake about it; empty bellies make a mockery of all treaties negotiated by well-fed men.

I think the American farmer understands this challenge perhaps better than the highly paid USDA officials whose greed and grubby political games have helped undermine the faith of the American.

I ask that this subcommittee begin laying the foundations now for legislation based on the fact that the American farmer is going to have to meet this challenge.

I respectfully ask this subcommittee to take action that will prevent the American farmer from being turned into little more than a USDA serf as his reward for attempting to meet the challenge of what we in this room know is coming.

Thank you for your time and know that a great many rural people all across this Nation send their thanks for your efforts on this subcom

mittee.

I want to say here that I have some questions from the dirt farmers. They do not understand what is going on. These are direct questions from farm people. You may not understand them but this is the way they were given to me.

1. Is the $750 million credit figure valid? If so, how many cash sales have been made?

2. Is it true that in any 1 year the credit will not go over $500 million? If so, the 400 million bushel sale figure that is floating around is a lie or we have already violated the contract.

3. Why won't the USDA reveal the sales of all feed grains, so the farmers can make intelligent decisions on marketing their 1972 crops? It would only be logical that since public funds are used to subsidize exporters, complete disclosure of sales and shipping dates by all exporters and the USDA should be demanded and be given to the public.

4. Why didn't the USDA sell the CCC stocks of 352 million bushels of wheat to Russia? A sale of CCC stocks would have saved the taxpayers millions of dollars by limiting the subsidies paid exporters and would have let the market function as a free market.

5. Why did the USDA lead the producers to believe that they should sell at harvest? It is estimated that at least 90 percent of the farmers in the 22d district took this advice and sold at harvest.

6. How much corn has been sold to Russia? Continental Grain has reportedly sold all the corn; they should reveal their records.

7. Does Russia have the right to transship this grain? If they do, they may ship it to our enemies.

8. Why did Butts swear on the 12th of September that he had no knowledge of a sale to China and on Thursday, the 14th of September, the sale was announced? The subsidy applications were approved at least 2 weeks before this, in late August.

9. If the exporters didn't know of the sale to Russia, why would they pay $1.595 for 89 million bushels of CCC wheat sold July 7 ahead of the announcement? It could have been bought at much less on the market.

10. Why was the 47-cent export subsidy made retroactive from August 24, back to July 8, instead of a floating subsidy like is in effect now?

11. Why beginning June 1, 1972, was Peavey Grain Co. in Alton, Ill., paying 2 to 3 cents a bushel more for wheat than the other grain companies on the river? Was Peavey Grain funneling this wheat to Continental to disguise what Palmby had told Continental about the Russian deal?

Now, on the back of this, may I submit complete production in the 19 counties that I am speaking for today?

This is county-by-county breakdown and you will notice the bushels per acre. You will notice also the total production and you will notice on the total, if they were to make 50 cents more per bushel, they would have had $7,119,000 for 14,239,700 bushels.

Now, do you people know that there are more people, in my estimation, on relief in my district than there are farmers?

Do you people know that this represents approximately $233 to every man, woman and child in my district?

Do you people know that if this money had gotten back to my district, we could rebuild our own rural America?

I just want to close and say I appreciate the opportunity to be here, Chairman Purcell, and I hope I have not delayed your hearings by my being here.

Mr. PURCELL. Thank you very much, Mr. Duzan. You will remain at the table. I will ask Mr. Moos to sit at your left, Mr. Frazier to his left, and Dr. Barton to sit at the right end of the table.

(The chart attached to Mr. Duzan's statement follows:)