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PETALUMA, CALIF., November 1, 1955. Senator ALLEN ELLENDER,

Chairman, Senate Agriculture Committee, Fresno, Calif.: I am a dairy farmer of Petaluma, Calif., and chairman of the Democratic Farmers Advisory Committee of California. Pressure of farmwork prevents my attendance at this hearing. Our committee, composed of outstanding farmers, fruitgrowers, livestock and poultrymen, anticipated and forecasted the current depressed condition in agriculture 3 years ago. We now reassert our position on the farm price-support program. We favor restoring and maintaining the price-support program on basic crops at a firm level of 90 percent of parity. The farm price-support program should provide for sound, adequate, and equitable treatment for all segments of agriculture and for the authority to the Secretary of Agriculture to utilize parity production payments to farmers in combination with other improved methods of support and production controls. We disapprove of "flexible” price support since fair prices to farmers would accrue only under conditions of scarce supply. Scarce supply is not in the public interest, which is best served by ample supplies of farm commodities backed up by sufficient receivers properly handled.

JOHN S. WATSON. The CHAIRMAN. The first witness representing the dairy industry will be Mr. James N. Fulmor, of Dixon, Calif.

Will you give your name in full for the record and your occupation, please, sir?

STATEMENT OF JAMES N. FULMOR, DIXON, CALIF. Mr. FULMOR. Mr. Chairman, and gentlemen of the committee, my name is James N. Fulmor, a milk producer of Dixon, Calif. I am here as an individual representing the California dairy industry.

In the year and a half that has passed since the lowering of price supports the one word that best describes the dairy industry of California is that it is stabilized. Dairy farmers in California produce two types of milk: Grade A which is used for fluid milk and cream; and grade B which is used for manufactured dairy products. Production of grade A has been on a rather uniform basis, pricewise; the last change statewide was in January of 1954. Grade A production has increased about 5610 percent in this period, while grade B production, or that milk in California which is produced entirely for manufactured dairy products, has increased 100 percent in the like period. These figures illustrate the small range of change in the overall dairy production picture in California. California, as you probably weil know, is still experiencing an upsurge in population, which upsurge during the last year and a half amounts to about one-half million people. This population increase tends to relieve grade A producers of some of the penalty for having increased production.

The penalty of grade A producers for producing above the level or amount that is needed in a given market for fluid purposes is to have their blend price, or the average price received for their entire production, lowered. An ever-expanding market, brought about by increased per capita consumption or by population increase, is one of the most certain ways of increasing returns to grade A producers. We producers here in California have had this population increase as a windfall as our population has increased from 6 to 12 million in the space of about 15 years. Some of the provisions in our California Milk Marketing Act have been helpful along this line; namely, the proviso that milk can only be purchased by contract between producer and distributor. Second, that each contract must state in pounds of milk

or pounds of butterfat the amount required to be delivered by said producer. It should be further noted that our State law does not guarantee to a producer a market for his milk; it is his responsibility to find a market.

To this contract proviso must go some of the credit for keeping supply pretty well in line with production, for during the past year and a half production has only exceeded use by 12 to 14 percent. As for manufactured dairy products, California has been an importer of butter and hard cheese for many years. California does export in some quantities dried milk and condensed milk. Nationally, there is about 1 cow for every 7 people, while in California the ratio is approxmately 1 cow to 14 Californians. However, our supply is much better than the figures indicate as California cows exceed the national average of production by about 50 percent.

Mention has already been made of our population increase as the easiest way of reducing surplus supplies of dairy products. However, the dairy industry in California has for some years past carried on promotional, educational, and research programs, all of which have had as their primary purpose the securing of wider acceptance for all dairy products by all members of the family. During the 9 years of this statewide supervised activity, whose funds are entirely raised by the dairy industry, consumption of fluid milk has shown a steady increase. In addition to this activity, many of the marketing areas in California have raised additional funds to be spent locally in promoting grade A sales. These local spending units are about evenly divided between two groups, one of them raising their own funds under the general supervision of our Milk Control Act whereby all producers contribute equally, and the other groups organized on a purely voluntary contribution basis. These latter groups are supported only by signers of their bylaws. And also operating in California are national producer and distributor groups with programs all promoting greater use of dairy products. The combined efforts of all these local and

national groups no doubt have been contributing factors in making California's dairy industry the stabilizing influence that it has been in the economy of the State.

A new factor affecting California's dairy industry appeared at the national level in 1954. At that time Congress enacted legislation providing money for a special school-milk, program. The rules and regulations set up by the USDA for administering this program during its first year of operation were such that many of our school districts in California failed to avail themselves of this opportunity for increased consumption of fluid milk. Consequently, we in California did not use our entire allotment of funds from the Federal Government during the first year of the program.

However, due to changes in the USDA rules and regulations, we now find over 1,100 school districts participating where last year we had something less than 600 districts under the special milk program. Experience in the Los Angeles city school system illustrates the improvement in participation. Last year Los Angeles schools did not come under the special milk program. This year they are participating with remarkable results. During the first 15 days of this school year they sold well over 2 million bottles of milk to students. This was an increase of 64 percent over last year's sales. At the same time, they changed from half pints to third quarts and this accounts for an additional automatic increase of 3313 percent in volume of milk sold and consumed. California school administrators now face the $2,611,595 allotment from the Federal Government as being one which will be entirely used up by our school districts, and conceivably may be inadequate for covering the needs of the program for the full school year. This is, of course, fulfilling the hopes of those who designed the Federal legislation providing the funds, and a continuation and expansion of this special school-milk program will obviously help to relieve the pressure on accumulating dairy products. Our school administrators trust that the interest of the Congress will continue the program, developing as it does the improved health habits of the school children not only in California but throughout the Nation.

The general public is also using more milk per capita in Californiaduring

the past 25 years consumption per capita has increased from 92.3 quarts per year to 126.4 quarts per year. No one group alone could claim to have caused this increase. Rather, it is the result of good work, of preaching and telling the story of milk by many agencies such as our health departments at State, county, and local levels; dental associations, national, State, and local people; medical associations, national, State, and local levels; home economists such as American Home Economics Association; dietitians, such as the American Dietetics Association; school health groups; especially school nurses; parent-teacher associations; school food service associations; and community health councils. The important nutrition education programs of these professional groups are aided and supplemented by the work of our own agencies such as the California Dairy Industry Advisory Board. To these can be added, also, the good work by individual companies in brand advertising and all the other agencies interested in the welfare of the dairy farmer and the health of our people.

No comprehensive view of the dairy situation in California could overlook the fact that it is generally recognized that grade A producers are faring better than grade B producers—two facts tend to prove this beyond much doubt. One: approximately 4,500 grade A producers holding, grade A shipping permits produce roughly twothirds of all the milk produced from California's 850,000 cows, while approximately 22,000 grade B producers produce the remaining onethird of California's milk supply. The second point is that there is no change back from grade A to grade B where a grade A market is available; the movement is all in one direction-from grade B to grade A.' These two facts stand out as irrefutable evidence of the value of our own California milk laws to the dairy farmers of our State.

No one viewing our industry from a statewide basis could help noticing some of the imbalances that do exist-producers in one section claiming State-fixed minimum prices are too low to maintain them in their dairy business, while at the same time producers in other sections of the State are wanting to come into the grade A market and are willing to spend the $10,000 to $15,000 for facility improvements that such a changeover generally costs.

Two problems in one confront the Congress on dairy products : What to do with accumulated stocks and what plan to adopt to avoid repeating the accumulating process. By now, many people in Government are sure it's much easier for Government to buy a given product that it is to sell or even give away the same product, either domestically or in foreign countries.

The immediate problem, then, is who shall handle the production that from time to time exceeds demand-industry or Government. Historically, this has been a function of industry-regardless of the commodity-food products or manufactured articles, a pound of butter or an automobile. It is my belief that the Government program that disturbs this function—the handling of temporary surpluses the least will, in the long run, be the most useful to our own dairy industry. From the statistical evidence that can be obtained, we dairymen in California are following the national pattern of making our own individual operations more economical by (1) resorting to bulk handling of milk, (2) installing pipeline milking machines, (3) green feed chopping of summer feed, (4) barn driers for making better winter hay, and (5) increasing the size of our herd to reduce the unit labor cost. The above five points may not be a complete list, but that many of them have been adopted is borne out by the fact that in 1955 over a like period in 1954 for which figures are available, production per cow continued to increase.

It is my belief that no one can accurately state whether or not the grade B producers of California would favor high, rigid support for dairy products, generally considered 90 percent of parity, and the price tag that in all probability would quickly follow-namely, production allotments and/or marketing quotas. Grade B producers on a national basis now receive about 83 percent of parity. It could easily be that we dairy farmers in any program of retrenchment would fall back to a given prescribed minimum such as tobacco growers have done, where two-thirds of all the growers grow only the minimum acreage which is six-tenths of an acre per year. It is difficult to magine the personal inconvenience that would apply to a given dairy farm when fractions of a can of milk would be allocated to a farm, or when the dairy farmer had to reduce his production by any given percentage point. The end result from this situation would be a lessened farm income on that particular dairy farm and death to the cow holding the odd number for the given percentage reduction. Neither of these situations, a lessened farm income or a reduced number of dairy cows, is in the public interest.

Surely no dairy farmer ever had all the money that he desired for farm improvement; improvements on our farms are a continuing affair and our farms are always begging for more money. But as a rule a man, to be a successful dairy farmer, must be a hard workerand hard workers are always price-conscious of the things they buy. Whether or not the price tag on supports at 90 percent of parity would help our grade B producers by providing the increased farm income that many desire is questionable. The fact is that in California production has increased slightly, 1.6 percent and that some grade B producers are expanding while at the same time those with less economic units are seeing fit to go into other lines of agricultural production. Economics has a way of its own of regulating production on our own individual farms. During the past year and a half no significant marketing changes-either grade A or B—have occurred, hence with these prices and under these economic conditions our industry has been a relatively stable one.

There is quite a general belief here in California that if the Federal Government would adopt as favorable policy toward promoting the use of butter for our Armed Forces as they have toward making fluid milk available to them, then such a policy on a national basis could materially eat into our butter stocks with the resultant benefits bestowed upon our own people. This is a matter that this committee could well look into and have the facts made available for dairy farmers the country over so that they might be seen and the figures evaluated.

Occasionally, headlines in our daily papers indicate a vast new field for the disposal of some of our surplus dairy products in some foreign country. We dairy farmers wonder if the Federal Government is giving all possible aid in the developing and promoting of every worthwhile project of this type. The development of such projects could be in the national interest as well as aiding and assisting our allies in maintaining a high level of nutrition among their peoples.

No one need be told that the human stomach is relatively inelastic and that a greater use of this food or that means a corresponding decrease in some other food products. However, the 5 to 7 percent of production of dairy products above our current rate of consumption might disappear if all those segments of our society that touch the dairy industry could combine into what might be described as a giant promotional effort to increase dairy products consumption. Who would these people be? Bankers, storekeepers, machinery companies, Government employees, those touching the dairy industry at the county, State, and national level, and last but surely not least the dairy farmer and his entire household. The part the Federal Government could play in this program should be organizational. For if those of us who will receive the main rewards of the program are not willing to put our talents and whatever funds we can spare into such a drive then we should be willing to turn the reins of direction of this great industry of ours over to those who will find the means to justify their ends.

Our cows will keep on giving milk for sure. Ours is a stable industry: What to do about the trying situation of many dairy farmers bothers many people in public life, but the cow not at all.

I want to take this opportunity, Mr. Chairman, to thank you and the members of your committee for coming here and letting me present a statewide picture of the dairy situation in California.

The CHAIRMAN. Mr. Fulmor, I am glad to hear that at least one of your commodities is stable, according to your testimony.

I wonder what effect the price on dairy products for export would be if you did not have price supports of some kind ?

Mr. FULMOR. It would be lower.
The CHAIRMAN. How is that?
Mr. FULMOR. It would be lower.
The CHAIRMAN. Certainly.

So the grade B producers of milk, that is, those who have an excess, would certainly suffer; would they not?

Mr. FULMOR. To that extent.

The CHAIRMAN. What percentage of your milk production do you export from California to other States in the nature of dried milk, canned milk, or products of that kind ?

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