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I felt that was a mistake. The provision we have in today is to raise the dollars-and-cents level for 1 year, and to do that administratively. It seems to me, with the improved situation that we have in dairy, we can justify that for a year. If our present program continues, we might be able to continue it for even longer than that. It doesn't reflect the range of flexibility.

That is the important objection I had to the provision, as written in the conference report.

The CHAIRMAN. I don't quite understand your reasoning at all in respect to the dairy provision, because your chief complaint was that, by reason of the manufactured price of milk, it would mean that more butter would be produced, that more milk would be produced—that is your chief objection to raising that price.

As I recall, the criticism that you lodged was based on the fact that the milk program in the last 2 or 3 years has cost the taxpayers almost three-quarters of a million dollars. That was the chief criticism, and you said that by raising the manufactured-milk price, and the butterfat, it will aggravate that situation, and I would like to know how you justify it.

Secretary BENSON. The major objection, I repeat, Senator, was to the narrowing of the flexibility for the support level, and making it permanent. That was the major objection.

We had already given some increase to the support level of dairy products, the dollars and cents, by keeping the dollars and cents the same when we could have gone down under the parity formula.

The CHAIRMAN. What is the parity formula now, Senator Thye? Senator THYE. 84 percent.

The CHAIRMAN. It is far in excess of the minimum of the 80 percent that the House provided for, and which we agreed to.

Secretary BENSON. And we are very glad to see it above the minimum. That is one of the reasons why we feel reasonably safe in setting the support level a little higher, because the free market is good. It is strong.

The CHAIRMAN. You criticized it as we had it in the bill.

Secretary BENSON. As a permanent feature, I think it would be bad in a bill. I think this phase of it we can get along with for a year, but I wouldn't want it written in as permanent.

The CHAIRMAN. Well, now, Mr. Secretary, although we have had flexible price supports in effect on dairy products since 1953

Secretary BENSON. In April of 1954 we adjusted the support level. The CHAIRMAN. Since that time, milk production has been at an alltime high. I understand that this year portends the highest milk production that we have ever had—something like 3 or 4 billion pounds above the 1955 level.

Now that, I thought, was what prompted you to state that it was a bad move to increase the price of manufactured milk, as we had in the bill.

Now, we put that in the bill just for 1 year, too, as I remember itthat is, the fixed price.

Secretary BENSON. No.
The CHARMAN. Yes, sir.

Secretary Benson. Yes, but the narrowing of the support level was permanent.

as you

The CHAIRMAN. That is correct. But I am talking about the fixed price for manufactured milk that the President asked for. That was three and a quarter, and butter-you really adopted our figures.

Secretary BENSON. I was not unmindful of that being in the bill. There were several factors that entered into the picture. Cheap grain was one of the things that stimulated increased production of dairy products.

One of the favorable factors is the fact that we are increasing consumption. We are expanding markets. We had these great súrpluses to dispose of that were built up under the high price supports,

know. The CHAIRMAN. I won't agree to that. Secretary BENSON. Maybe you won't.

Senator Young. We had flexible price supports on dairy products for several years. Still, in spite of that, last year saw the greatest production in the history of the country,

Secretary BENSON. But I mentioned that one of the big reasons for that was the fact that we had a lot of cheap grains, and in addition, I think the price strengthened last year, you will find. Consumption certainly increased, and the price increased, too.

The feed-grain ratio was very favorable, most favorable in 14 years.

Senator THYE. If the Senator from North Dakota will yield just 1 second on the price of milk, I don't want the record to stand that the price improved under manufactured

Secretary BENSON. I am speaking of overall.

Senator THYE. It may have in a controlled market, where Federal milk orders exist and the Federal milk control board allowed it, but in the manufacturing price, where the bulk of your surplus milk from the mid-West goes-and it is manufactured into butter, cheese, pow. dered and condensed milk--there was not a rise in price to the producer. You can take the Twin City Milk Producers Association, which is one of the Nation's largest cooperatives in the mid-West; there the price of manufactured No. 1 milk was $2.88, and that was just here this winter.

For that reason, I just want the record to show that the price to the producer did not improve where they were dependent on butter, cheese, and powdered and condensed milk, as an outlet or market.

Secretary BENSON. The overall concept-milk, as a whole, did improve.

Senator AIKEN. You are both right. It did improve overall, but it actually went down in the manufacturing areas, of which Minnesota is a great center.

One of the reasons for that is we have the great State of New York which ought to be increasing consumption, but is not. They have actually a State government there which has wreaked havoc on the dairymen of the State of New York. They have put the consumer's price up to 28 cents or 29 cents a quart in some cities. They bring down the price to the producers and deny competition in the sale of fluid milk in the State of New York,

The legislature has recently passed laws which would permit the use of milk vending machines over the State, which have been closely restricted up to now. The legislature has also passed legislation authorizing the giving of milk to poor families throughout the State.

UC SOUTHERN REGIONAL LIBRARY FACILITY

A 000 065 277 6 They are waiting now to see if the governor is gumy o veto those last two provisions.

They have such intolerable conditions there, and the State administration of New York persists in blaming it on the Federal Government, which isn't in the least bit to blame. It is wholly a situation created and maintained by Albany, and what they are doing in New York affects the price of milk in Minnesota.

Senator YOUNG. Isn't it a fact that wheat was the only major commodity which had a reduction in production last year?

Secretary BENSON. We would have to check that, Senator Young. If you say so, it must be true, because you follow wheat very closely.

The CHAIRMAN. I had one more question to ask you, and it is this: I am quoting now from page 4 of your statement: Making all corn eligible for supports will help stabilize markets for corn and other feed grains. It will stabilize prices and supplies of feed grains for live stock producers.

How do you figure that that is going to happen if one price in the commercial area is $1.25, and the other is $1.50 ?

Secretary BENSON. I think it will give the farmer an opportunity to put his corn under the loan into storage, and thereby will contribute to orderly marketing.

The CHAIRMAN. How about those who produce for the market and not to feed ?

Secretary BENSON. If they produce for the market, it will still have the same effect. The farmer won't have to dump his corn on the market; he will put it under the loan into storage.

The CHAIRMAN. When you tell the farmer you have planted your allotted acreage, therefore we will support you at $1.50, and you tell another fellow who doesn't, we will support you at $1.25, there is a 2-price system.

Secretary BENSON. It makes the program available to all farmers, and I think it will have a stabilizing effect.

Mr. MORSE. We have had 2 price supports; we will have 3 price support levels now.

The CHAIRMAN. I wish to say, Mr. Secretary, we are glad you could come, and the chairman is particularly glad for the two sentences you had in the statement on page 8, and I will read them for the record:

The Chairman of this committee has worked extremely hard. He has obvi. ously done his best to move the legislation forward as rapidly as possible, and for that he deserves high commendation.

Secretary BENSON. I believe that, or I wouldn't have read it.
The CHAIRMAN. We are adjourned.
(Whereupon, at 1:30 p. m., the committee adjourned.)

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