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Mr. FULMOR. I think our production of evaporated and condensed is only a small fraction of our total production, and some of that, of course, is exported, as I stated. It is a small percentage.

The CHAIRMAN. When you say exported Mr. FULMOR. Well, I meant exported and distributed to other parts of the United States.

The CHAIRMAN. Yes.

You do state though that you feel that except for the fact that we do have a price support program for milk and dairy products, your people might suffer more losses than they otherwise would if they did not have a price support program.

Mr. FULMOR. With price supports lower than they are today, that is correct.

The CHAIRMAN. Have you any advice to give us as to whether or not you want to continue the present program as now written or would you like to have it changed in any manner?

Mr. FULMOR. It seems to me the present program as it now is functioning is accomplishing the purposes that it was intended to accomplish, and that is to bring production more in line with our domestic needs.

The CHAIRMAN. That production has increased even under the 75 percent of parity instead of 90 ?

Mr. FULMOR. Yes; our population, of course, has shown some increase at the same time.

The CHAIRMAN. I am speaking nationwide.
Mr. FULMOR. Yes.

The CHAIRMAN. I think California is very fortunate in that its production seems to be in line with consumption requirements. But when you go to the Dakotas or Minnesota and Wisconsin you have a different picture there.

Mr. FULMOR. I think it is entirely necessary to look at our manufactured dairy products on a national basis rather than a local basis.

The CHAIRMAN. Yes; are there any questions? If not, we thank you very much, Mr. Fulmor.

The next witness is Mr. Quist.
Mr. Quist, will you give your name and your occupation, please?

STATEMENT OF ALVIN J. QUIST, FRESNO, CALIF. Mr. Quist. Mr. Chairman and gentlemen of the committee, my name is Alvin J. Quist. I am a dairyman in this Fresno area, operating a dairy in this Fresno district.

My family has been in the dairy business in California since 1906.

I would like to make a few observations on the dairy business in this State and comment briefly on a few things that I think might be of some interest to you gentlemen on the Agriculture and Forestry Committee.

I believe my expressions on supports, the need for Federal funds for dairy research work, diverted acres, and foreign outlets for dairy products will reflect much of the thinking of a great segment of California's dairymen.

I feel this to be so because, as the vice chairman of the California Farm Bureau Federation Dairy Department, I have been in a position to follow and agree with the actions and policies developed by that group which represent so many of the producers.

First, let me say that I think Mr. Fulmor has very adequately summarized the California dairy situation and I think most of the dairy industry would concur in his statements.

The CHAIRMAN. Now, at this point, may I suggest this: You apparently agree with the statements that has been made by Mr. Fulmor?

Mr. Quist. Yes, sir.

The CHAIRMAN. Have you anything new to add that would lead to the probable solution of the problem as you see it? If so, will you

Mr. QuiST. Yes, sir.
The CHAIRMAN. Mr. Fulmor had quite a long statement.
Mr. Quist. Yes, sir.

The CHAIRMAN. If all witnesses here today, 60 in number, were to be allowed that length of time, why, we might be here 2 or 3 days, and we can't give you that much time however much we would like to stay with you.

Mr. Quist. I am certain, sir, that it will take me only 2 or 3 minutes. The CHAIRMAN. Thank you, sir.

Mr. Quist. First I want to say that we who are producers of dairy products in this State is that we recognize our responsibility in marketing our own products—we feel that there must be necessary reserves of dairy products to insure an adequate supply of our healthgiving products, but I believe that governmental efforts to dispose of the surpluses over the reserves should be a temporary rather than a continuing program.

Continuing efforts are being made by dairymen in California, and throughout the United States, to fit their production to consumption needs.

If the incentives of high supports are not used to increase the production of dairy products in California, this State's increasing population will to a large degree use up our normal milk supply.

Members of the Farm Bureau's Dairy Department agreed in 1954 that the lowering of the supports on dairy products from 90 to 80 percent was the proper thing to do to cut down on the superabundances of milk, butter, cheese, and so forth, that would have been produced under a 90 to 100 percent support program.

Their decision to sanction this type reduction has, I believe, proven sound, today dairy products are all above support prices but are being produced in some moderation.

The Milk Stabilization Act in California is operated on a price plan dependent on production of fluid milk and the costs of producing manufacturing milk. We in California know that when a high price is set on milk more people go into the dairy business whether there is an outlet for their milk or not—when there is not a market, the result is surplus and the problem of disposing of same.

I believe that a minimum amount of Government support is ultimately the best solution to the dairy problem, however, it appears that some support program is called for a few years yet and I believe that in this adjustment period, flexible supports are preferable to high rigid supports. This is my conviction and I know that the Farm Bureau's Dairy Department has not changed their position.

64440—56-pt. 4

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In the matter of a program for diverted acres, I feel that some lands are going to have to be taken out of production of the basic crops. A program of diverting acres can be beneficial to the national welfare if the practices are aimed at building the fertility in the soil—creating a soil fertility bank.

What the dairymen in California do not want to see happen (and which could happen if incentives induced new dairy production) is to have these diverted lands go into forage crops for the sole purpose of raising more dairy animals.

California dairymen would urge continued use of Federal funds to carry on and expand research work being done in the dairy field. There is still much work that needs to be done in farm management and animal disease and parasite control. Further development of efficient methods of producing and marketing dairy products will mean a greater net income to producers even though prices for dairy products are not raised to the consumer.

Dairy folks believe there is a limitless opportunity for both Government and private research in the field of developing new uses for animal products and byproducts. Dairymen are in the beef business to the extent of about 35 percent of this State's slaughter, the profitable disposition of tallow, hides, and so forth is important to their economy.

There is still a great opportunity for research in the processing, handling, and merchandising fields of all dairy products. I believe that only a top quality product, handled as economically as possible, and sold with consumer need and appeal in mind will insure the future of the milk, butter, and cheese market.

In a period of national prosperity I believe the Government of this Nation and the producers of animal products have a golden opportunity to improve the eating habits of America's citizens. The nutritive values of meats, milk, eggs, cheese, and so forth are recognized by those people who are in the public health field-now, when the people of this country have incomes that allow for the purchasing of the most beneficial foods, the point of their tending to their dietary needs and requirements should be stressed. The United States Department of Agriculture could well work with all segments of the meat industry to do a real job of selling health through meat products and byproducts.

Government and industry alike must continue to develop new markets and marketing ideas for dairy products. We are convinced that we have a product that, in one form or another, should be used in larger amounts all over the world as well as here at home.

Government assistance should be offered in every way to find and survey new markets for dairy products on the American continent and abroad-private capital and enterprise should be encouraged in these foreign markets and as few obstacles as possible put in the way of our American companies that want to process and sell our domestic raw material abroad.

I believe that America's products should be well represented at foreign trade fairs and expositions and encouragement and assistance should be given by the United States Department of Agriculture and other governmental agencies to private enterprises that might wish to participate in such projects.

I believe the United States Department of Agriculture and many of the other governmental agencies should be highly commended for their encouraging the use of milk products by Americans and the publicity they have given the vending and dispensing media of merchandisingthe dairy industry is grateful for this effort and certainly hopes that it will continue.

Comments on the meat phase of our dairy economy will be made by representatives of the California Farm Bureau Federation Livestock Department and other livestock organizations.

I am sure they will express the feelings of California's dairymen.

I want to thank you for listening to my remarks—the ideas of a dairyman and the expression of the majority of California's dairymen as expressed through the California Farm Bureau Dairy Department.

Once again, we feel that if you gentlemen in the Government will assist the dairy industry in seeing that research is carried on, that the merits of our products are known to all, that as many outlets as possible are available to us, both at home and abroad, that the Federal programs will not make for more production, then Americans will continue to exert every effort to solve their own problems and still retain as much of their independence as possible.

Thank you.
The CHAIRMAN. Thank you, Mr. Quist.
Will Mr. Hardie step forward, please.

Will Mr. W. L. Smith and J. R. Kennedy sit in the front row here? I will call them next.

Won't you give your name in full and your occupation? STATEMENT OF DONALD M. HARDIE, PRESIDENT, MILK PRODUCERS

ASSOCIATION OF CENTRAL CALIFORNIA, MODESTO, CALIF. Mr. HARDIE. My name is Donald M. Hardie, a milk producer from Modesto, Calif. I am also president of the Milk Producers Association of Central California, a cooperative which engages in the manufacture, processing, and sale of evaporated milk, powdered milk, cottage cheese, butter, fresh milk, ice cream, ice cream mix as well as other allied products.

I am also authorized to speak on behalf of a number of other cooperative associations in the State of California, including the Challenge Cream & Butter Association which is by far the largest of its kind in the State.

It is probably well to inform you that in California approximately 70 percent of our milk production is used for grade A purposes while approximately 30 percent is used for manufacturing purposes. California is the third largest dairy State in the United States in terms of cash farm income from milk, has the largest production per cow in the United States, and boasts the first two largest producing counties in the United States with Los Angeles County first and my home county, Stanislaus, second.

We feel that we have a substantial stake in the success of the dairy business and that our voice should be heard in determining an administrative policy.

Particularly over the past 2 years the dairy farmers whom I represent have been greatly concerned over the fact that their prices have dropped approximately 20 percent since 1952. They are also concerned because of the knowledge that a good portion of this was caused by a reduction in parity from 90 percent to 75 percent which was made effective April 1, 1954.

We recognize in part that the price decline was caused by the fact that even under the 90-percent program, the price to dairy farmers was actually less than the announced support level.

When we have asked higher supports for the dairy industry we are constantly reminded of the fact that we can have the same treatment as the basic crops if we will accept production controls. We believe that everyone concerned with the dairy business is aware of the exceedingly complex and difficult number of problems that would arise in administering a production control program.

We also believe that nearly everyone concerned, including the Department of Agriculture, recognizes that even without production controls the difficulties involved in producing milk, including the labor problems, tend to hold production within manageable bounds. It is interesting to note that when we had 90-percent supports, the dairy surplus never exceeded 8 percent of a year's production. In 1952 and 1953 when prices were over 100 percent of parity we experienced a milk shortage.

The real need of the dairy industry is stabilized prices at levels that will not only assure an adequate supply of high-quality milk, but a price that will give dairy farmers the purchasing power equivalent to that consistent with other segments of the national economy.

The CHAIRMAN. That is a very important question, and one for which we are seeking an answer.

Have you a program to offer this committee whereby what you say there can be acomplished?

Mr. HARDIE. I believe I have.
The CHAIRMAN. I wish you would state it to us as soon as you can.

Mr. HARDIE. We believe that the agricultural policy has caused a constant decline in the income to dairy farmers as compared to other agricultural crops while at the same time the things that the dairy farmers buy have continued to increase.

We do not wish to be misunderstood. It is not our desire to have milk prices supported at levels substantially higher than that of other agricultural commodities. We do believe however, that 75 percent of parity does not keep us in that equal position.

To be equal with other agricultural commodities we believe that we should be at the level or slightly above the average level of the basic crops in order to achieve a proper balance between the dairy industry and all agriculture. This can be justified because of the high labor requirements in the production of milk on a 7-day-a-week basis, and the increase in support levels can be made without resulting in an excess production for the same reason.

We think that it is pertinent that we point out that the present parity formula for manufacturing milk has little meaning because it is subject to change by administrative ruling. Under the formula used by the Department of Agriculture, milk prices have remained the same while prices expressed as percent of parity get better and better.

While parity is getting better and better, the dairy farmer gets less and less. This is because the surplus caused by the curtailment of wartime demands will adversely affect the parity equivalent price

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