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PRICE-SUPPORT PROGRAM

SATURDAY, JANUARY 21, 1956

UNITED STATES SENATE,
COMMITTEE ON AGRICULTURE AND FORESTRY,

Washington, D. C. The committee met, pursuant to recess, at 10:15 a. m., in room 324, Senate Office Building, Senator Allen J. Ellender (chairman of the committee) presiding.

Present: Senators Ellender, Humphrey, Scott, Aiken, Young, Thye, and Schoeppel.

The CHAIRMAN. The committee will please come to order.
Our first witness is Mr. Otie M. Reed.

Will you give us your name in full for the record and your occupation.

STATEMENT OF OTIE M. REED, WASHINGTON REPRESENTATIVE,

JOINT COMMITTEE OF THE AMERICAN BUTTER INSTITUTE AND THE NATIONAL CREAMERY ASSOCIATION

Mr. REED. My name is O. M. Reed. I am Washington representative of the joint committee of the American Butter Institute and the National Creamery Association.

These two organizations are interested primarily in the production and manufacturing and sale of butter and related dairy products.

We produce and manufacture most of the butter that is sold or a large portion of the butter sold in the United States.

I do not have a written statement. I will talk merely from notes.

As far as the soil-bank plan is concerned, as was exemplified in the proposed bills before the Congress, I think the policy of these two organizations which I represent is in favor of the conservation practices and the like that are exemplified in this bill.

However, since the bill proposed to have a great shift in our land utilization from what are more commonly called the soil depleting crops to cover pasturage, feed crops, and water conservation, we believe that the plan should be sure and provide that through its operation dairy products will not be increased at a faster rate than can be absorbed at reasonable prices to dairy producers.

Certainly, the soil-bank plan has much to commend it.

So far as water conservation is concerned I am no water-conservation expert, but the published information shows that we need to conserve our water resources in this country. And, apparently, this would be a step in the right direction.

The same holds true with reforestation.

With our soil-conservation policies it would be further expanded in this bill.

As far as actual relief to the dairy farmer is concerned, we have been unable in the short time available, to fully analyze the effects or how much we might expect the dairy farmer to cooperate in the details of the program.

I think you all know that as a general rule commercial dairy farmers by the very nature of their business follow soil-conservation practices, improvement and development of pasture, cover crops, and the like.

And we have been unable to estimate whether they will be in a position to modify their land-use program so as to cooperate to any great extent in the acreage-diversion program or in the conservation-acreage phase of the program. The CHAIRMAN. Why is that, because of the size of their plants?

Mr. Reen. Well, because in a large number of our commercial areas, Senator, I believe that they are following now on their own initiative practices on farming that this bill seeks to encourage in our crop areas.

Unquestionably, however, in your areas where the row crops and wheat and crops covered in this bill are an important part of the economy, actually in some of the areas dairying is a sideline on these farms to the production of those commodities, they will be able to cooperate. But cooperate from the point of view of being wheat farmers or cotton farmers and the like, rather than as strictly commercial dairy farmers.

Senator AIKEN. Would you say that the dairy farmer now is faced with the necessity for increasing the size of his plant, rather than decreasing it, if he is going to continue in a profitable milk-production business?

Mr. REED. Oh, yes; that is becoming steadily more evident in the last few years with the tremendous strides.

Senator AIKEN. The small farm is not economic any more.

Would you say that, if the soil-bank proposal results in holding the increased production of dairy products on diverted acres to a normal and necessary increase then the dairyman would get valuable indirect benefits?

Mr. Refd. I would say we would see no reason to object. Probably he would get some indirect benefits.

Senator AIKEN. How is the butter situation now?

Mr. REED. Why, our situation in butter this year is much better than the last time I appeared before you gentlemen.

In the recent weeks our price-support purchases, by the Commodity Credit Corporation, has increased somewhat.

The CHAIRMAN. Why is that?

Mr. REED. Well, they are several million pounds in December over what they were in December a year ago.

Senator AIKEN. Has not disappearance also increased ?
Mr. REE). It has increased tremendously.

The CHAIRMAN. That is because of the sales program carried on, almost a gift in many instances.

Mr. REED. That is right.

I have here, Mr. Chairman, a number of tables which I would want to insert in the record, which give you the information on purchases, disposition, and cost.

(These tables are as follows:)

TABLE 1.-Purchases of dairy products under the price-support program, 1947–55

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1 Most of the dry milk purchased was made from milk from which the butterfat was used in making butter.

? Less than 0.05 percent.
3 Based on actual data first 10 months and forecast for last 2 months.

Source: The Dairy Situation, November 1955, Agricultural Marketing Service, U. S. Department of Agriculture.

ABLE 2.-Support levels and actual prices of manufacturing milk and butterfat,

year beginning Apr. 1, 1950–55

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1 Actual prices during year as percentages of parity or parity equivalent just before beginning of marketing year. Actual prices for manufacturing milk during year as percentages of average parity equivalent during year were 85, 93, 95, 84, and 80, respectively. Comparable percentages for butterfat were 89, 96, 95, 88, 76, and 77.

Equivalent computed on basis of fat content. Purchases of nonfat dry milk, which is made from same milk used in making butter, were as follows (in millions of pounds): 1950-51, 260; 1951-52, 53; 1952-53, 210; 1953-54, 666; 1954-55, 523; April-October 1955, 374.

3 Excludes equivalent of 5 million pounds of butter and 87 million pounds of cheese sold in March 1954 under conditions to be bought back in April. 4 April-October 1955.

Source: The Dairy Situation, November 1955, Agricultural Marketing Service, V. S. Department of Agriculture.

TABLE 3.Purchases and dispositions of dairy products under the price-support

program, marketing years beginning Apr. 1, 1952, through Dec. 31, 1955

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1 Butter total includes the following quantities of butter programed for conversion to butter oil for distribution through the 3 following outlets: 124,843,500 pounds for sec. 416, 24,518,500 pounds for noncommercial export, and 2,940,000 pounds for ICA.

Including 2,467,000 pounds of butter sold under title I, Public Law 480 (foreign currency), and 1 million pounds of nonfat dry milk moved under barter.

3 Other uses include butter salvage sale, cocoa butter extender sales, butter sales and donations to the Veterans' Administration, donations of dry milk for research, donations to Foreign Agricultural Service for promotional exhibits abroad, and butter sold for liquid milk recombining.

Source: Reports of the Agricultural Marketing Service, U. S. Department of Agriculture.

TABLE 4.-Butter: Volume and estimated COC loss on sales, donations, and other

dispositions of butter acquired under price-support program, fiscal years 1950-55

(In millions)

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