Mr. YORK. Those that are sold direct to the consumer the support would only take place on the portion of the milk in the country as a whole that is used for the manufacturer's uses.

The CHAIRMAN. Would any protection be given to the small dairies that sell direct to the consumers, so that they would attain the 100 percent of parity that you propose here?

Mr. YORK. The overall effect would be to lift the level of manufacturing milk prices on a national basis. Consequently, every dairyman would have the benefit of the program. That would occur, of course, through the natural competitive forces that would exist.

The CHAIRMAN. Have you any idea how much this program would cost the Government?

Mr. YORK. We have not figured out precisely that, but we are of the judgment that this program would cost much less than the current program and that the program would be a definite goal toward balancing the supply with the demand.

The CHAIRMAN. What inducement would the farmer have to reduce the supplies there?

Mr. YORK. He would be assured that he would be getting 100 percent of parity and he would have a goal to work for.

The CHAIRMAN. You would expect him to reduce his production almost automatically so as to meet the demand; is that the idea?

Mr. YORK. No; I do not think a farmer would reduce his production automatically. I think it would take a period of time. I do think that the progress in this direction would be achieved much more quickly than any other system that we have used or any of the systems we think have been in operation.

The CHAIRMAN. How long do you think it would take to attain that goal?

Mr. YORK. I would judge that the supply and demand would come into balance more quickly than currently, and I would say that within several years we would have an adjustment.

The CHAIRMAN. You say it would cost less than the present program?

Mr. YORK. I believe it would cost substantially less and work to the advantage of the producers.

The CHAIRMAN. Do you know what the present program has cost up to date?

Mr. YORK. I do not have those figures right before me. I have been acquainted with them from month to month but I do not know them now.

The CHAIRMAN. Just a little over $700 million.

Senator AIKEN. Without this year.

The CHAIRMAN. That is up to June 30 of 1955. We will have to add the losses for this year.

Are there any further questions?

Senator HOLLAND. I would like to ask the witness this question: The quota system that you suggest would be imposed on a national basis; would it?

Mr. YORK. Yes, it would.

Senator HOLLAND. You mean that the dairy farmers in the great areas of the Nation that find an outlet as fluid milk for all of the milk they produce would be expected to take a quota below their present? production?

Mr. YORK. Yes.

Senator HOLLAND. Do you not realize that the problem that you have here does not apply throughout the Nation and that to the contrary dairy farmers in many parts of the Nation are prosperous and have an immediate local milkshed which takes everything they produce and in many cases requires supplies from outside?

Mr. YORK. That is true, but to the extent that the volume we sell in this market for manufacturing purposes competes with the national milk that is used for manufacturing purposes, it is a national program and it has national impact on producers not only in our milkshed but in all milksheds.

Senator HOLLAND. Maybe I have misunderstood you. I understood you to say that the quota system applied to that that was to be sold as fluid milk.

Mr. YORK. That is true, to be sold for fluid milk.

Senator HOLLAND. Let us just get practical about the thing. How do you think the milk producers in such areas as the milkshed of Los Angeles, San Francisco, Houston, Miami, Richmond, or of Washington, D. C., where they are highly prosperous, and many, many other cities are in the same shape-how do you feel they would react to a program which would ask them to sacrifice a part of their production which they now sell at prices satisfactory to them as fluid milk, and when their areas require their complete production and in many instances require the shipment in from other areas of additional fluid milk?

Mr. YORK. I would judge that if those producers were fairly informed of the impact of the dairy products on the national basis that they would not disagree to join in a program that would eventually be of benefit to them, to protect them in the future. They may be prospering momentarily, but if this system continues the way it is they, too, will find themselves in the position that other dairymen are in.

Senator HOLLAND. My dear sir, I think that you may be splendid as an economist for your area, but I think that so far as knowing human nature is concerned you have not learned very much about it, because I do not think we would be able to sell that program at all to a very great part of the dairy industry that is prosperous and finds an immediate outlet for all of their fluid milk.

Mr. YORK. Sir, I would like to say that we do represent a very large section of the dairy industry that is being affected by this program. I think it ought to be weighed in terms of the relative effects in total volume milk produced in one section versus another.

Senator AIKEN. Mr. York, Senator Holland anticipated my first question. I agree that the areas that are not producing enough fluid milk even yet for their own use probably would object somewhat to having their present production reduced. I am wondering how much would the New York milk producer be willing to sacrifice in the way of production in order to get the rest of your program. New York is at present almost a problem child of the Nation as far as dairying goes. I am wondering how much you would be willing to accept in the way of reduction in order to put the price house in order.

Mr. YORK. I might say, Senator Aiken, that we wrote this program in terms of a national dairy program, and we do certainly have many problems in the New York milkshed that we have to tackle.

As to your question directly, it would seem to me that the dairy farmers ought to have an adjustment in their price. Such an adjustment that would more closely relate to the cost of producing milk.

I would think that dairy farmers would need somewhere in the vicinity of 25 cents to 50 cents to a dollar per hundredweight improvement in price in connection with this program.

Senator AIKEN. You mean how much?

Mr. YORK. Fifty cents to a dollar per hundredweight improvement in price.

Senator AIKEN. Would you be willing to reduce production, we will say, 15 percent in order to get that?

Mr. YORK. I would judge that if farmers could get 50 cents to $1 a hundredweight they would be willing to reduce their production 15 percent.

Senator AIKEN. If you reduced production 15 percent, would you not get a pretty good price under your present marketing order?

Mr. YORK. Yes; you probably would, but the question is how can we reduce it 15 percent. How can we get the adjustment of supply and demand?

Senator AIKEN. That is a good question, but the best way is to increase sales 15 percent. I will not go into that any further.

I notice your second point is to support the price of cheese and butter by payment to the processing plants.

Have you figured out any way whereby that payment could be passed back to the farmer?

Mr. YORK. We think that that question has been raised in the deliberations we had when we were preparing and working out this program, and we think that that money will be passed back to the producers, either by competitive forces-I am sure that an agressive, active bargaining co-op, like the organization that I am with, would keep producers alerted to the fact that this money is there and they should have it, and it would be passed back.

Senator Aiken. We did have that program in effect 2 or 3 years ago. In 1953 butter and cheese were supported at 90 percent of parity and payments were made to the processors on that basis. The average price passed back to the farmer was 81 percent. That was the average which means that some of them did not even get 75 percent. The officials of the Department apparently were unable to devise any means which would insure the full amount of the support price being passed back to the farmer.

I make one other point. That was not always the fault of the processor. We have hundreds of plants in this country, I understand, that manufacture possibly 700,000 or 800,000 pounds of cheese a year. They could not possibly pay the farmer the full price and keep in existence, and yet if they went out of existence he would be left without a market.

If you go through northern, western Wisconsin, into Minnesota, you will find plenty of conditions like that.

I would like to know how we could require the fellow who gets the support price to pass the full amount back to the farmer, because we have never been able to do it yet.

I am going to skip over the third point you made and come to your point 4, which would support the price of skim through payments to

feed mixers for any quantities by utilizing them in making animal feed.

Are you having difficulty in selling powder skim milk?

Mr. YORK. Skim milk powder is flowing much faster into the market place than it has.

Senator AIKEN. That is, the price of skim powder is about 25 percent higher than it was before the price of butter was reduced? Mr. YORK. Yes.

Senator AIKEN. The Commodity Credit Corporation, which a year ago last spring owned 600 million pounds of powder, now has somewhere around 20 million pounds on hand which they could sell tomorrow, we will say, if they wanted to sell it at a price.

I would like to point out that at the time that skim powder was sold for feed, soy meal was selling for $115 a ton. It was fortunate we had half a billion pounds of skim powder to sell at that time. Soy meal is now selling, I believe, around $47 a ton.

I come to the last point, to establish a support level for milk and dairy products at 100 percent of parity. The program has to be put on a national scale. Could you tell us what parity for milk is at the present time?

Mr. YORK. We recited that.

Senator AIKEN. So that we know.

Mr. YORK. You mean right here in the New York milkshed? Senator AIKEN. Parity is established on a national basis, too. Mr. YORK. That is true. Our figures show that the parity is 76 percent, I believe.

Senator AIKEN. I mean in dollars and cents-what is the parity price for a hundred pounds of milk?

Mr. YORK. I do not have that figure exactly available.

Senator AIKEN. Would you be surprised if you found it was $4.61? I think I can speak from memory that it is $4.61 for 4-percent milk. Mr. YORK. No; I am not surprised.

Senator AIKEN. That would mean possibly four and a quarter, or $4.30—I do not know what your butterfat differential is-512 cents, is it not?

Mr. YORK. About 512 to 6 cents, about that, in the New York milkshed.

Senator AIKEN. It is a question in my mind whether it would be to the advantage of the New York dairymen to put too strenuous a fight for $4.25 milk. I do not believe many of them could keep in business unless they had a more hopeful, long-range view than that. The parity for United States milk, which is 3.95 percent butterfat is $4.61, according to the figures just submitted to me.

Mr. YORK. I understand that, but I do not get the point of your question.

Senator AIKEN. As of October 15. You want a support price for milk at 100 percent. What I am trying to find out is, are you asking for $4.25 milk?

Mr. YORK. We want 100-percent support price on butter and cheese. Senator AIKEN. If you get 100-percent support price for all milk, that would be 100 percent for the milk products.

Mr. YORK. No.

Senator AIKEN. The price for the milk on the farm--if you got it, you would not be so particular as to whether it went to butter or cheese or was sold to the fluid market afterward, would you?

Mr. YORK. The question, though, is that the amount of milk that goes to butter and cheese is not returning 100 percent of parity. Senator AIKEN. That is true. It does not. Right now I do not know what you are getting for milk. The blend price covers what goes into butter and cheese.

Mr. YORK. That is true.

Senator AIKEN. What did you get in October?

Mr. YORK. What we get for butter and cheese today is in the vicinity of $2.87, less 14 cents.

Senator AIKEN. It is the blend price, I would assume, that interests the farmer which is the price he gets for all milk. What was the October price for milk?

Mr. YORK. The October blend was $4.15, I think.

Senator AIKEN. With no premiums paid?

Mr. YORK. That were premiums paid, in certain sections of the milkshed. Even some people engaged in the handling of milk for manufacturing purposes paid premiums.

Senator AIKEN. What I am trying to point out is that if the New York milk producers' objective is 100 percent of parity on a national basis, he has his sights pretty low. I think they are very low. I would not be surprised if there were a good many dairymen in New York that could not continue in the years ahead to exist at that level. Mr. YORK. That, of course, is true, but that is not the objective of our program.

Senator AIKEN. That is what I have to point out once in a while, when I hear people in our dairy sheds say that they wished they had 90 percent supports. What they are saying is that they wish they had $4 milk.

Senator HOLLAND. I want to ask one more question. I notice the primary statement made by Mr. Benham, your predecessor, speaking as president of the Dairymen's League Cooperative Association, relative to fluid milk was this, and I quote:

Machinery is presently available to the United States Department of Agriculture to bring our prices to dairy farmers for fluid milk without in any way getting into the support question. The machinery we are referring to is the operation of the marketing orders under the Agricultural Marketing Agreement Act of 1937.

Do you agree with that statement?

Mr. YORK. There are some limitations-there are some areas within, for example, the present Federal New York order that could be done which would result in improvement in the fluid prices in the New York order. However, that does not mean that the present New York order of class 1 or fluid price is unduly low. Last year, for example, as I recollect, the New York class 1 price was higher than the class 1 prices in both Boston and Philadelphia markets after adjustment was made for the location and butterfat.

Senator HOLLAND. My understanding of this statement which I have quoted is to the effect that no new legislation is required in that particular field, that the machinery is presently available, that the