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Farm surpluses : In my book there are no so-called farm surpluses as long as millions of people in this shrunken world go to bed every night hungry. We talk about the good will of other nations. If we were hungry all the time and we heard that just around the bend on the other side of the world only a few hours' ride by plane from us, was a people who had so much food they did not know what to do with it, and in some cases they destroyed it, we could not feel friendly towards them.

Flexible price supports were accepted by the dairy farmers of the Northeast as a step in the right direction, provided they were applied right across the board on all farm commodities.

Subsidies : The average dairy farmer abhors subsidies. The last time they were applied to dairying there were a good many angry farmers in the Northeast.

Back during the war to give the consumer cheaper milk, the dairy farmer was subsidized. It was apparent that the number of consumers at the polls was considered as against the dairymen. We are at a loss to know how to live in an economy so highly subsidized as ours. The greatest subsidy of them all and the one that is causing us the most trouble today is the minimum hourly wage law.

Production controls: Would be a calamity to the dairy industry. It takes a good many years for a farmer to establish himself and build and breed up a good dairy. You cannot go in and out of dairying overnight. When a dairyman has geared up his farm to a certain production level with an overhead to correspond and has production controls applied it will throw his whole operation out of line.

With the weatherman exercising his controls, the old cow having something to say about it, the diseases and breeding problems involved and then government production controls, you will end up with periods of great shortages of dairy products.

Marketing orders have been of great benefit to dairymen all over the country. They have resulted in a stable market and provided each dairyman a share of the fluid market. As time goes on, conditions arise that require order changes to meet the situation. Such is the case now. The so-called deficiency markets, or areas that have to go out into Federal order No. 27 territory for supplies and take only what they need when they need it, and leave the Federal order producers to carry the surpluses in times of heavy supply, create a problem. These supplies in surplus work on the supply demand factor of the formula to lower the class I price. They also lower the percentage sold in class I, thereby affecting the blend in two ways. The biggest offender is northern New Jersey, which is one big city with New York, only the river dividing them. We should have a comprehensive order for New York and northern New Jersey.

Another thing that is unfair to producers under Federal Order 27, is when a determination is made by the Secretary of Agriculture on evidence presented at hearings, and this determination is presented to the producers in the form of an amendment to the order; the instructions given by the dairy branch are to vote for the amendment or lose the whole order. This mandate is unfair. The cooperatives have had to vote under protest on several amendments that did not seem in their opinion to correct existing problems.

Research: Our top scientists have been working feverishly on ways and means to destroy our enemies. They have done a wonderful job, we now know how to destroy the world and ourselves, too. How about a few of these scientists being put to work to see how we can live better. Find new ways to use dairy surpluses. What is in milk that makes it a perfect food. Research on new animal diseases and breeding problems. How atomic power can be put to work for Agriculture.

Foreign markets : I understand England and Russia are ahead of us in the development of atomic power for peaceful purposes. There will be a race to get into undeveloped countries with atomic power. The country that gets there first has won prestige in that country and can open up that country for all the goods they make, including dairy products. It will be a sad day if Russia takes over too many countries economically.

I understand some of the great industrialists of this country are treating lightly, the coming of atomic power. We had better wake up.

Czechoslovakia has just demonstrated how fast she can move to take war materials into Egypt. Let's be first in some of those foreign countries and open up markets for United States products and goods.

The CHAIRMAN. The next witness is Walter J. Perry. Give your full name for the record, please.

STATEMENT OF WALTER J. PERRY, SAVOY, MASS. Mr. PERRY. My name is Walter Perry. I am from Savoy, Mass. . I am a potato grower in Massachusetts and also in Foley, Ala. I think I have a program here that Mr. Albert, from Worthington, Mass., has brought about and I am looking at it from the standpoint of fairness to the South and the Northeast and the West. I think he has come up with something that is beneficial to all.

I have eliminated a few things in his program that have been gone over by other men but in essence in the past 20 years, have received it in only 7 years, the years of 1936, 1942, 1943, 1944, 1945, 1951, and 1952. Six of these were war years. All were years in which crops were inadequate to meet consumer demands. Therefore, when you multiply your short production of those years by the average farm price, the seemingly temporary prosperity was not prosperity for all potato growers.

We have heard talk of 90-percent parity, 60-percent parity, and so forth.

We feel as though the potato grower should not be satisfied with anything less than 90 percent. We have not attained anything like a parity average for our potatoes, mainly because the potato industry as a whole has never presented a united front, never has been in full accord as to what should be done to insure the cost of production plus a fair degree of prosperity.

If we are to attain the status of prosperity for all potato growers, we must agree upon a logical plan, a plan that will assure an adequate supply of potatoes for consumers and still not force the potato growers to exist in dire uncertainty or near poverty. In such a plan we have several alternatives. It has to be acceptable to the growers, and to the Government agencies. It must be sound.

First of all, I would recommend strict acreage controls. Now when I say “strict," I mean strict. Eliminating political pressure by different areas and different States.

Next I would recommend inventory controls. And by inventory controls I mean action so that as to withhold from markets any surplus over and above the quantity of potatoes that can be consumed at satisfactory prices.

This is not farfetched due to the fact that most of your manufacturing companies when they look over their inventory stocks they cut their production accordingly.

In such a plan, when these potatoes come out, you are checking your inventory, and you do have a surplus and the surplus is the thing that will in turn dominate the acreage cuts and the allotments for the following year.

In such a plan there will only be one gamble, and that would be the weather. We cannot legislate or in any other way control the weather, and its attending ravages and diseases.

By inventory control we can offset the effects of the weather in giving us too little or too much with which to serve our customers.

Cold storages have been used to some extent for some periods in storaging potatoes.

During the summertime Idaho stores thousands in cold storages for the late sales.

The speculators frequently have stored potatoes against an expected period of short production.

California has stored potatoes to extend their supplies. Maine has done the same thing to extend the marketing period.

They have in the past few years shipped potatoes as late as July.

In California the growers store in grape warehouses. At the time they are storing, the grapes are not in storage. The potatoes move out before the storages are filled with grapes.

Also, work has been done by the atomic scientists on irradiation of potatoes which can be kept for 2 to 3 years or an extended period of time, which will come into this program as an ever available supply of potatoes in short times.

In the meantime acreage restrictions would serve to reduce the next late crop to the point at which the new crop plus the stored reserve would provide an adequate supply. By holding this supply in cold storage the areas in the South, and other spring and summer areas, would be assured that they would market their potatoes without competition from a large supply of old crop potatoes. The spring and summer crops would be adequately, protected, provided they follow proper acreage limitations in growing their crops. Then the stored potatoes would be moved into consumption prior to the time of the marketing of the new crop of late potatoes. Otherwise, if the potatoes in great surplus were caused by the overproduction of the late States they will be the ones that will be suffering by having to dispose of these potatoes in their next shipping season. But in the meantime they have cut down their acreages to the point that this will actually not be a surplus for the following year. Otherwise, all of the potatoes will be sold that are being grown. There will be nothing that will be diverted or dumped.

Many of you at first think that this could not be possible. It is kind of fantastic for the simple reason that the cost of this program would not be borne by Uncle Sam. It would be an assesed proposition to the growers. The growers at the present time are losing between $300 million and $350 million on the potato industry this year. The participating growers can well afford to finance this program, in fact they cannot afford not to finance it.

Current potato growers have been losing in excess of $1 million daily compared with parity prices. In fact, up to the past few days losses have run at the rate of $1,250,000 daily. For this season alone that would amount to over $300 million, taking into account throw-outs and other potatoes which are diverted to low prices.

The total cost of the program to construct and also to use an offseason cold storaging or irradiation would run between $20 million and $30 million as against a $30 million loss.

This is a small expense to the grower who will have benefited in future years when the surplus has been reduced to a manageable size, when the cost would be even less. The cost per bushel of the program in any year would

be but a few cents against assured income of an additional dollar. The program would avoid dumping of No. 2 potatoes. These, your No. 1 potatoes, serve a distinct need. Under most of the present marketing quotas and agreements, only No. 1 potatoes come out onto the market.

In my growing in Alabama, also in Florida and Texas, I do know that there is a definite need for off-grade potatoes in some of those areas. In fact, out of the Texas operation and in Alabama, we can sell 2 bags of No. 2 potatoes to 1 of No. 1 potatoes.

The CHAIRMAN. Is it cheaper ?

Mr. PERRY. That is right. There is a definite reduction in price usually between one-half to 60 percent of the price of No. 1 potatoes. The low income groups can well afford to eat potatoes.

At the present time they would have to pay the highest price for No. 1 potatoes. But by gearing the supply of No. 1 and No. 2 potatoes, combined to total requirements of all families from the highest income to the lowest would have available suitable potatoes to meet their needs and their pocketbooks.

As in the past, cull potatoes still can go to byproducts plants so as to preserve the valuable outlets for those parts of our crop which are not suitable for market sale.

We recommend that in considering any program, whether it be this one or any other, that the administering of this program would be more or less in the hands of the growers rather than the speculators. We have at the present time in the potato situation a futures market in New York which last year, as we all well know in the potato business, was pretty much of a rigged proposition. And the only one that really suffered from it was the producer. And if any program does go into effect, which I hope it will, I think myself that the speculator will be more or less a thing of the past in the potato business.

The CHAIRMAN. As I stated a while ago, I think that if the potato growers would grow the cooperative way and try to regulate themselves, that may be a way out. You have got to get the farmers to cooperate.

Mr. PERRY. In this type of a program-I have had enough experience with it

The CHAIRMAN. We will consider your program.
Mr. PERRY. I want to thank you.
The CHAIRMAN. Thank you.
We will next hear from Mr. Gude.

STATEMENT OF ARTHUR GUDE, ALSTEAD, N. H.

Mr. GUDE. Mr. Chairman and gentlemen of the committee, this is a little different. It is in the form of a petition. I would like to read it. Some of it has been gone over. Shall I try to confine myself?

The CHAIRMAN. Skip over what has been gone over and give us any new idea you have.

Mr. GUDE. I can perhaps give that to you orally. The idea of the petition is asking that the price of milk be set by milk boards. It could be done under the Federal order as it is now, but that it be placed on a cost of production basis; in short, that milk be priced as a public utility is priced, not because milk is in the same position as a public utility, but because the Government has passed a great deal of social, economic, and labor legislation which, as you said before, leaves us out in the cold and we are the only group of private enterprise that cannot adjust ourselves to that legislation.

The CHAIRMAN. How would you reach that cost of production? That is one thing that sounds beautiful, you see. But how would you do it? Right here in Vermont we visited several farms yesterday. I am sure that what I saw with my own eyes is true, that the cost of production is not the same in the three farms we visited.

any

Mr. GUDE. It is not. You may find two farms occasionally with the same costs. The CHAIRMAN. You would not find

the same. Mr. GUDE. Not exactly the same.

I would have an average cost of production, either done through a. pilot plant or done through national figures, but I would prefer to have it done with the farmers working together, and everything done for them by economists capable of doing it.

For example, the cost of production that some of the universities come out with, the average cost. When we purchase a contract the labor is paid for on that at an average rate. They set a time study. They do not have fastest men in the plant, nor the slowest men in the plant. And they base that rate of cost on an average. We pay that average.

I believe it would not be too difficult to come to an average cost of production for dairy farms in the milkshed.

The CHAIRMAN. Let us apply your program now to potatoes over here in the State of Maine that produces 450 bushels per acre and up in North Dakota they produce about 250.

Mr. Gude. I know very little of field costs, because I feed everything. I never sell anything I grow. I do not think it would apply to field crops. I do think it could apply to broilers, for example. I raise some broilers besides dairying. I think the same principle would be applied. The C'HAIRMAN. To other commodities?

Mr. Gude. I do not know about pork or beef. I am not familiar enough with that.

The CHAIRMAN. Does your program apply only to broilers and not a general proposition?

Mr. GUDE. It would not. I do not think it would go in field crops. There is too much of a variation there. I do think it would apply to dairying and could be applied to that. That is one of the difficulties I think that causes the overproduction, that the price is set so low that we have no way to protect ourselves except to make more milk. That is the only way that is open to us.

The CHAIRMAN. As I have stated during the course of these hearings, some States are able to build a little wall, maybe not too high, but they are able to keep milk produced in Wisconsin from coming in. And also that is true about milk coming in from Minnesota. There they produce it with less expense, I am told, than they can here in Vermont and in Louisiana or Mississippi.

Mr. GUDE. The labor involved takes just as long to milk a cow in Wisconsin as it does here. The advantages they have, perhaps, are in cheaper grain, but they are not overcome by being able to milk cows any more rapidly. The labor is the same. That is something that they are not getting any returns for, their labor, neither are we at the present prices.

Senator HOLLAND. Is it your idea that the milk would be sold to the public at this price?

Mr. GUDE. Yes, it is not a support-price program.

Senator HOLLAND. Suppose the public did not want the milk at that price and have to buy it all, what would happen?

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