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UNITED STATESF WHEAT TO THE SOVIETKKIAftfl TO.
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Two ealoa of United States wheat were cade to the Soviet Onion! one0 million bushelsetric tons) bythe Continental Groin Company, and one6 million7 metric tons) by CoxgiU, Inc. These shipments were made6 million bushels, included some overage as allowed in the contracts, end wore therefore somewhat larger than tho erounta shown in the original aniiouncements. Both of these sales were conoercial transactions, for cash, between the exporter ond the Soviet buying agency. The exporters received prompt payment for individual cargovs upon completion of loading and theof the necessary documents. Payment in full. basis2 million, or an average6 perk per bushel). The Export-Import Bank had euthority tococEiorclal credit, but the Soviet buying agency did not oak for credit.
Wheat supplies for these sales, like those for other commercial transactions, came from open market clocks, from the Commodity Credit Corporation (CCC) through redemption of payment-in-hir'd certificates, and from CCC through direct purchases at the statutory rlnlnua price.
nder variousst prolans to support tlie price of certain farm products, the dosestic price. vheat has tended to he higher than the world price, in order toheat to compete in the world market, foreign sales must be assisted by export payments or subsidies. These export payments, whichenuate the differenceorld market prlco end the higher supported domestic prices received. farmers, ere made to tbe exporter in the form of payment-in-kind certificates which representheat held by tho Cerwcdity Credit Corporation. These export payments ccmper.oc.to tbe exporter for the loss he vould otherwise suffer by buying high and selling low. It ia. farmer who actually recoiveB the benefit, because the payment Is part of the program melntelning Ms deictic wheat prices nt levels higher than world prices. . faraer receives the subsidy when he delivers his whent to the Coverrnent,or whether the wheat is exported or not. The export payment applies to all commercial soles and therefore vas applicable to the sales to the Soviet Union, the some as those to any other destination.
Export payment rates are announced daily by. Department of Agriculture for the key classes of vheat on all coasts ofhese rates vary because of changes In the difference between domestic and world market prlcco and also vary by port of export
becausecxlucira areas are ot different distances fromof these export payment rates constitutes an offergovernment to pay the stated amount per bushel for anyfor export duringhour period between dolly subsidy
The total subsidy, or export payment-ln-kird, on6 million bushels sold to the Soviet Union amounted toillion or en average of approximatelycents per bushel. The export payment rates for theee ehivrtcnts ranged froaento per bushel for white wheat,cnt3 per bushel for herd winter wheat,ents per huete! for i'.uiir- wheat.
Tho magnitude of the exportate on dunta wheat raised charges in Congress end elsewhere that the American taxpayer was picking up part of the shipping costs in order to complete the sale. Cac of the conditions. placed on tho sale of its wheat to the Soviet Union was that oce-half of tho wheat be hauled. vessels, la earlyhen the sale was made byGrain Company, freight ratesowned ships were an much
he export payment rate on durum wheat isid basis- basis for determining export payments on durum vas put into in tho suKEer3 to. export prices asas possible to sporadic vorld ,V
igher per rvefcricose charged by foreign ships forto-USSa. run. The Soviet Union had refused to. vheat at prices vhlch included these higher chipping costs. The export payment rateents per buohel authorized to Continental Grain Ocsapany for tho durum wheat (about one-thirdho total wheat salcc) wasents nor bushel higher than tho rete that the USDA had paid on ctlxr recent subsidized sales to ree World countries for thisf wheat. It vasat thia difference (which aitour-tcd to betweenrAper ton)an indirect transportation subsidy. USDA officials denied thet the larger subsidy was in aay way en attempt to offset shipping coots. They cald they vould havecent subsidy at the tine on any trmis act ion in durum wheat as large as tho Russian sale, "retiurdicss of the country of t'estlnstlon." Secretory of Cccxercc Hedges, however, reportedly statedress conference that, "itnderstanding that the price of scce of the vheat vas set so the seller would be able to absorb port of the shipping cost."
Tne sale6 million bushels of wheat.contributed signifi-vto the. experts of wheat under
terms In the tradeL; this aoouot constituted
ercent of tbe record coroercial exports0 million bushels
estimated fcr tho0k.* TV*paid each end did not utilize short-term creditstocks of wheat in.fccillion below thatear earlier andcarryover. Deportnent of
officials have estimated"ear's storego payments on the quantity of wheat cold to tho Gov lot Unionmount 9 million, an annual saving to the taxpayer of about one-fifth of the export subsidy. The net exeunt realized from tho sales to thebout fill? million, has aided. balance of payments position by reducingo'4 deficit significantly.
In the yeart Is expected that the export subsidy seyi-ents onrolal sales of vheat to any country will be considerably ices tlxii tho overage of soseento per bushels paid euring the preceding year. The national evorese domestic support rate for wheat, under the new program which went into effect ins aboutento per bushel lessear ago. Largelyonsequence of lover support- wheat todaya sellinger busliel (no.fi -Kansas CityomparedCO perear ago.
* The' remainder of the exportst,illion bushels, were shipped under the Food-for-Pecco program, largely PL-4S0 sales.
srt payBeotj will coatlsuo to bee when the cerkct price of wheat plus the coat of export certificates raise. export prices'Vorld prices." It Ib expected, however, that the new wheat prcsron vill cecr. substantially reducedfree. Treasury for vheat export pnvcentB.
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Original document.
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