Senator HOLLAND. Let us ask a searching question or two. The same Federal authority that approves the Boston milkshed agreement approves the New York milkshed agreement; does it not?

Mr. LENT. Yes, sir.

Senator HOLLAND. Could it be that the milk producers in the area who supply the Boston milkshed have been more aggressive or more effective in fighting for their own interests than has been the case in this milkshed?

Mr. LENT. Well, if I said "Yes" to that, I would not have any job. Senator HOLLAND. I have noticed that good lawyers always are able to temper their answers so that they do not say yes or no, but say maybe. How do you comment on my question?

Mr. LENT. I think we have both done the best we could to get the most money we could, but this change of supplies from one shed to another is something that is not entirely within our control. In some instances it is by the election of the proprietor handlers of the supplies which have changed from one milkshed to another, and in others it is the result of inescapable economic pressures.

It is very hard to get a plant under the Boston order, according to the regulations, written in the order and the way industry operated in Boston it would be hard to get plants under the Boston order, in other words, if we could get some of our surplus under the Boston order, we could get the prices more nearly in line. That is a little hard to do, by election of people in the industry, health departments, provisions of the order, and various other things.

Senator HOLLAND. Is it possible that the representatives of the consumer interests and of the distributor interests in the New York area have been less willing to be fair to the producer than is the case in the Boston area?

Mr. LENT. You have got a lot of interests in there. I am trying to think of each one of them. You put three of them in.

Senator HOLLAND. Let me simplify the question. Is it not true that before the marketing agreement and orders become effective that the representatives of the consuming public and the representatives of the distributing agencies are all given a fair chance to be heard and that customarily they are heard quite at length in the proceedings that come before the issues of the agreement?

Mr. LENT. Yes.

Senator HOLLAND. For the approval or disapproval of the producer? Mr. LENT. Yes, sir: everybody has a fair hearing.

Senator HOLLAND. What I have heard, and I would like you to comment on it, is that the consumer interests and the distributor interests in the New York milkshed have been much more fair and much more drastic in their attitude toward the producer interests than is the case in the Boston milkshed. I would like for you to comment on that, if you care to do so.

Mr. LENT. I would say that we had more consumer opposition. I have observed hearings both in Boston and in New York. We have had more consumer opposition in New York than we have in Boston. I do not see any difference in the attitude of the distributors.

Senator HOLLAND. The fact of the matter is that this whole question of the content of your marketing agreement is one that proposes, first, in the adjustment of interest between your consumers, your distributors, and your producers, and in the second instance requires

such elements of fairness as in the opinion of the Secretary of Agriculture causes him to approve it and allow it to become operative.

Mr. LENT. I think that is a fair summary. If I might add just one comment that I think that the basic economic philosophy of the Secretaries of Agriculture, if you want me to take in both of them, is that reducing price reduces production is absolutely untenable, and we hope we will argue them out of it some day.

Senator HOLLAND. I think that you have made a very interesting statement. One more thing. I notice that the figures that you gave on the milk from this milkshed which come under the head of that which is manufactured, were in each instance, that is for the year 1954 and for the first 9 months of 1955, substantially the same as the national average. As I got it, you said for the first 9 months of 1955 the price was $2.836 as against what figure for the national average?

Mr. LENT. $2.837.

Senator HOLLAND. The national average was 1 mill higher?

Mr. LENT. Yes.

Senator HOLLAND. Whereas for 1954 the figures $2,856 for the national average?

Mr. LENT. That is for the national average.

Senator HOLLAND. Yes; and $2.89 for your milkshed, meaning that you were a little above?

Mr. LENT. That is right.

Senator HOLLAND. Is it your feeling that your producers are entitled to more for their milk that goes into manufactured products than are other producers in the Nation?

Mr. LENT. Oh, no, I was not making any point like that at all. Senator HOLLAND. In other words, you are satisfied with that part of your operation?

Mr. LENT. We are examining it continually to see if we can get any more than the dealers out of that milk for manufacturing without pricing the milk out of competitive international and national markets. We do not want to do that, naturally. And I might say to add a couple more figures that in the year 1953, for which I have the entire 12 months, our price was 3.183, and the national average was 3.155.

Senator HOLLAND. In other words, your figure was better than the national average?

Mr. LENT. Yes. The reason I threw that in here is because there is a kind of a slogan in our milkshed that "Never mind the class 1 price," that is, the price for fluid bottling "Let's price the rest of the milk that is manufactured and the producers will get a fair return that way." And I would rather like to take every opportunity where I have a public audience to try to show the fallacy of that position.

We are trying at all times to study ways of pricing up the price of milk for manufacturing to the highest possible dollar we can get without taking the milk out of the market, but the prices in accordance with the comparison I just gave do not indicate offhand there is any very big bonanza lurking in the class 3 price.

I would like to say also, because this testimony is a public record, I have to put a footnote on that price I gave for our class 3 milk. We have two prices in class 3: one for butter and cheese-that is the lower price and a higher one for all other manufactured products.

The price I gave is the weighted average of the uses under our order at both of those prices. So that it is the real average price for class 3 milk. It is not the order price for class 3, nor is it the price for butter and cheese, which is 14 cents lower, but is the weighted average in accordance with the way the milk was used.

Senator HOLLAND. Your point now is that you think your people give too much emphasis to the price on the milk that goes to manufacturing and too little to the price that they get for milk that is bottled to be sold as fluid milk?

Mr. LENT. No, I do not think my people do. I think the other people do.

Senator HOLLAND. I can see that your people are well advised, I thank you.

The CHAIRMAN. I would like to ask just one question. Is it a fact or not that the producers of milk in the Boston area are getting from 50 to 60 cents more for their milk than the producers in this area and that the consumers of that milk in the Boston area, with a higher price, are getting the milk cheaper than in the New York area here with the producers getting less?

Mr. LENT. I cannot answer "yes" or "no" to that, Senator.

The CHAIRMAN. I heard that yesterday, when we were in Montpelier: That the Boston consumer was paying a little less than is being paid in the New York area, whereas the producers of the product were getting more in the Boston area than those in the New York area. Is that true or not?

Mr. LENT. I said that I could not answer the question "yes" or "no." If you care to have me make a comment on it, I think it might be somewhat enlightening.

The CHAIRMAN. The next question I was going to ask, and I might as well ask both together. Is the cost of distribution here higher than the cost otherwise?

Mr. LENT. I think my comments to a certain extent would be pertinent to both of your questions. In answer to them, when you are comparing retail prices, prices to consumers in various areas, and the cost of distribution in various areas, you have to bear in mind the fact that the milk business has two methods of getting milk to the consumers. One of them is delivered to the doorstep, and the other is to have the consumer pick it up at the store.

In the New York metropolitan area, I think up to 75 percent, pretty nearly 80 percent of the milk that is consumed in the home is picked up at the store. That is a very low price and a very efficient distribution that takes the milk to those stores.

As the store distribution increases, the retail distribution is apt to get less efficient because of lack of volume.

So if you start saying, because the New York consumer pays 26 or 27 cents a bottle for milk delivered on the doorstep, whereas the Boston consumer pays only 25 or 26 cents for milk delivered on the doorstep, you may be comparing things which are not too much alike. And you may not be getting at the bulk of your trade. In New York particularly you would not be, because so much of it is wholesale, as we call it, meaning distributed through the stores.

I do not know the prices in Boston, nor the costs of distribution there.

I have some knowledge of the costs of the efficiency of distribution on milk delivered by milk dealers to stores in New York City, because

one of the cooperatives for which I sometimes do work is engaged in that business as a cooperative, and I would say from my knowledge so acquired that the efficiency in the distribution of milk at wholesale in New York City is very high. I think the public is getting a pretty good break. You can get a quart of milk out of a store in New York City today on an average not slum but not Park Avenue dwelling section-for 25 cents.

The CHAIRMAN. What part do the processors of milk, the distributors, have in keeping these prices down to the producers of the milk, the raw milk.

Mr. LENT. Well, a milk dealer, one of his big assets of his business is the good will of his customers, and his customers are consumers. So it is a perfectly natural and the human thing for a milk dealer to come to a milk hearing and say, and oppose the producers' attempts to put up the price. Occasionally, the milk dealers even recognize that the price may need to go up as they did last spring, when 400 of them signed a voluntary agreement and each one said they would not sign it unless each and every other one signed it. They insisted on 100 percent compliance and voluntarily signed to increase the price above the order price.

It was a very slight increase, 6 cents for 1 month. What was itI gave the figures before-3 months only. In that case the dealerscertainly there was no strike threat or anything-they just asked the dealers to sign it, and they signed it.

The CHAIRMAN. The reason I asked the question is that I think it is an advantage to keep the milk-producing business on a local basis. Do you not agree?

Mr. LENT. Yes. Of course, there is quite a lot of milk around. That is one of the things the Secretary argues the reason for not having these other prices.

Senator AIKEN. Is that not traditional: that the consumer in New York City pays a higher price for milk at retail than the consumer in Boston, sometimes up to as much as 3 cents a quart difference for either delivered or store milk?

Mr. LENT. I do not know, Senator. I think-I know more about Philadelphia, where they have a high percentage of their milk distributed on retail routes-you can get your spread down pretty well on retail. In Boston it may be the same.

Senator AIKEN. I notice that you are representing a bargaining agency.

Mr. LENT. Yes, sir.

Senator AIKEN. Does your organization own any processing plants? Mr. LENT. Some of the members of it do. The bargaining agency is made up of cooperatives, not of farmers. Some of the cooperative members of the bargaining agency own plants.

Senator AIKEN. Are you satisfied that the milk handlers and the distributors are doing all they can in New York State, particularly ir. New York City, to sell as much fluid milk as possible?

Mr. LENT. I think the distributors have been kind of hanging back on promotional projects in New York City.

Senator AIKEN. Is it not a fact that if they sold more fluid milkthat is, for human consumption-the less they would have to keep their processing plants operating?

Mr. LENT. It does not hurt them to have milk in the processing plants if it is priced right. They can process it and sell the products, and, we hope, probably come out even on it.

Senator AIKEN. But I do know that they open their books to you. I believe they claim-privately, at least-that a good share of their record profits today are made from processed dairy commodities. I think they will agree to that. They will tell you that the labor unions take all of the profit away from the fluid milk. I question that a little bit. I question that statement. I think they will admit that they are making a good share of their very large profits from the processing plants. Mr. LENT. All of the testimony I have heard in hearings, and the knowledge I have of processing through some of the cooperators who process, with which I am familiar, would lead me to say that on butter and cheese, which is the last utilization, the lowest utilization, particularly butter, it is almost impossible to come out even under our present formula. Cheese at times varies.

Senator AIKEN. I know that over the mountains in New England we have at least two dairy cooperatives that are in the milk-distribution business in Boston.

Mr. LENT. I know.

Senator AIKEN. I think that it has a healthy effect. I think that it gets the farmer a little better price and also pulls down the price to the consumer.

I was just wondering why that could not be done in New York.
Mr. LENT. We have the Dairymen's League.

Senator AIKEN. They are coming on to testify and I believe they will tell us about it.

Mr. LENT. The president will be here of that organization.

Senator AIKEN. It seems that there is something wrong when we have just State lines between us.

The farmer will get more over the mountains in New England but the consumer pays less than in New York City.

Mr. LENT. As to the consumer deal you are comparing Boston retail with New York retail, which is practically a luxury business in New York retail, that is, house-to-house delivery.

As to the producer price, the reason the Boston producer gets more is because he does not carry the surplus that the New York producer carries. He comes out higher for that reason.

Senator AIKEN. I take a little exception to that. The reason the farmers are getting more in New England is that they have just got behind the milk-promotion program and increased their sales of fluid milk, which has not been done all over New York State. It has in certain areas.

Mr. LENT. That no doubt has had its effect.

Senator AIKEN. It has had a tremendous effect, and that is the reason they are getting high prices, because of increased sales, I think probably 15 percent over the last year. That would be a good average

guess.

The CHAIRMAN. Thank you, Mr. Lent.

Mr. LENT. Thank you.

The CHAIRMAN. Our next witness is Mr. Archie Wright. Give us your name in full and your occupation.

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