The Arizona Dairymen's League is an association representing about 75 percent of the grade A milk producers in the State of Arizona. I have a written statement there. I am not going to give any of the contents of that, but there was one point, namely, price supports, on which we could not get a good clear majority of the entire group to agree on. For that reason, I would like permission to just make a brief statement of my own personal observations on that. The CHAIRMAN. Yes, sir; you may proceed, sir. Your entire statement will be put in the record and then you want to say something in addition? Mr. AUSTIN. Yes; I want the entire paper in the record. (The prepared statement of Mr. Austin follows:) ON ADMINISTRATIVE PROCEDURE From time to time, over the past several years, proposals have been advanced for changes in administrative procedures in all types of agency actions. The Hoover Commission and its task force are currently advancing such proposals for changes. Under these proposals the same type of procedure, with minor exceptions, would apply to all the various types of agency actions. Under these proposals administrative proceedings would be made to conform quite closely to the formal procedures of United States district courts. Considerable progress has been made in getting away from the technical, formal, and rigid requirements of the early law and in developing procedures which are less formal and more efficient. We believe that this trend should be continued. A fixed procedure should not be prescribed for all agency actions because the nature and purpose of the actions of the various agencies vary widely. Some are of a strictly business nature and others are more of a legislative process prescribed by Congress. A strictly judicial procedure will not be appropriate and practical in all these various actions. This is most certainly true with respect to Federal milk marketing orders. They are basically legislative in character and a strictly judicial procedure would tend to defeat the very purpose of the hearing. Farmers should be encouraged to participate directly in marketing order hearings, and they should not be made so technical that they must be represented by attorneys. ON FEDERAL ORDERS The marketing agreement and order program currently authorized by the Agricultural Marketing Agreement Act of 1937, as amended, was worked out to alleviate the chaotic conditions of the fluid-milk markets following the collapse in 1929. In most cases the operations of the Federal milk marketing orders have been satisfactory to producers supplying the markets using the program, and they have created a stability throughout the dairy industry. We are opposed to any change in the Agricuultural Marketing Agreement Act. Any change in the legislation would have a far-reaching effect on producers and on the whole dairy economy. Any criticisms made of the order should be investigated in detail to determine their validity. No legislation is perfect nor is the administration always what it should be, but we feel that anything necessary to improve the program can be done within the framework of the present legislation. Federal milk marketing orders are of great economic importance and are very technical and complicated. The milk business in itself is equally technical and complicated. On April 28, 1955, the National Milk Producers Federation presented an educational background statement on Federal orders before the House Agricultural Dairy Subcommittee. We would like this statement to be included in the records of this committee, believing that it will be most helpful in creating a better understanding of milk-marketing problems. In conclusion, our position is this: Let's keep the Agricultural Marketing Agreement Act in its present form and work to improve the position of all dairy farmers rather than tear down a program that has proven to be workable over a period of several years. ON SELF-HELP Dairy farmers, through their cooperatives, have worked out a self-help plan for stabilizing their own prices. These cooperatives are members of the National Milk Producers Federation. There are many reasons for our work in developing and supporting the selfhelp plan, but the following three are the principal ones. 1. We, as dairy farmers, feel and are convinced that 75 percent of parity is too low for the good of the industry and the Nation. To provide an income, equal to only 75 percent of the rest of the Nation, to the people providing the most important food item in the Nation's diet is most ridiculous. The Department of Agriculture has, however, stood fast in its position that it can only support prices at a level that assures an adequate supply of milk. We do not agree that this is the only standard for support levels that is authorized by the Agricultural Act of 1949, although we have been unable to do much about it. 2. Early in 1953 when the Secretary of Agriculture last supported prices at 90 percent of parity he requested the industry to work out its own program for stabilizing prices. We have complied with this request. 3. Unfortunately most of the adverse publicity aimed at descrediting the pricesupport program has been centered on the dairy industry. This has made it difficult to increase the use of dairy products. Under the self-help plan dairy farmers would stabilize their own prices by buying otherwise unmarketable surpluses and disposing of them at home and abroad unhampered by the many restrictions in Government operations. The cost of this program would be borne by the dairy farmers themselves through a stabilization fee collected against all milk sold in commercial channels. The program would be operated by a 15-man stabilization board appointed by the President from nominees selected by milk producers. ON TAXATION OF COOPERATIVES By forming cooperative associations farmers are able to do for themselves many thing which they could not do were they acting alone. For example, they can build and operate a dairy plant and process the milk produced on their farm at cost. In this way the farmer is able to get a large share of the consumer dollar which he so sorely needs. Since these associations operate at cost, they do not have income. Any savings on hand at the end of the year over amounts retained for estimated costs are refunded to the farmers. These refunds are not profits, but merely an increase in the gross income of the individual dairy farmers. The cooperative is not a middleman placed between the farmer and his market. Rather, it is the farmer himself taking one more step in his marketing operation by selling his product in processed rather than in the raw form. Cooperatives also serve an important purpose in keeping the charges and profits of other distributors in line and serve as a yardstick for their costs. Of the four basic kinds of competitive enterprises the individually owned business, the partnership, the cooperative and the ordinary profit type corporation, all but one, the corporation, are taxed once on their profits. Its profits are taxed twice. Competition would not be equalized by extending the double tax to cooperatives. It could be better equalized by extending the double tax to all or by removing it from the corporation. We believe the latter to be the fairest and best solution. A withholding tax on cooperative refunds would not be practical and would be grossly unfair. Since patronage refunds are part of his gross sales and are not net profit, it would be unfair to withhold in such cases unless withholdings were applied to all gross sales of commodities. ON SPECIAL SCHOOL MILK PROGRAM During the summer of 1954 a large accumulation of dairy products by the Commodity Credit Corporation resulted in a drop in income to the dairy farmer and a serious headache to the Members of Congress. It also resulted in a flood of publicity unfavorable to the dairy industry. This led Congress to consider legislative action to relieve the situation. We feel that Congress acted very wisely in authorizing $50 million for last year and a like amount for this year for a special school milk program. We believe that any move that will increase the use of milk by the children of our country will be a long step ahead in the general health of our citizens, and at the same time reduce our surpluses. In 1953 the United States ranked ninth in per capita consumption of dairy products. This may be one of the reasons for the large percent of rejections for physical unfitness in our armed services. Too many of our children are not getting enough of the proper kind of food to build strong and healthy bodies. The school-milk program will, we feel, go a long way toward correcting this situation. It has resulted in thousands of schools and children participating in the program, and a substantial increase in the use of fluid milk this past year. The outlook for the program this year is for participation by more schools and more schoolchildren. We believe this will contribute greatly to the health and physical fitness of the citizens of our country and strongly urge the Congress to authorize, on a permanent basis, the use of Commodity Credit Corporation funds for this program in an amount necessary to reach the objective set by the Congress. ON SURPLUS DISPOSAL PROGRAMS The donation of dairy products from Commodity Credit Corporation's inventory to schools, institutions, and welfare families in this country and the disposition of these products to needy persons in foreign countries is, we believe, one of the most constructive uses that can be made of these highly nutritious food products. The fact that last year these programs were responsible for moving 40.4 percent of the buter, 32.1 percent of the cheese and 41.1 percent of the nonfat dry milk solids in Commodity Credit Corporation's inventory as of July 1, 1954, and purchases during the past fiscal year proves beyond a doubt the success of these programs. Everything possible should be done to step up the pace of this program in order to speed up the disposal of Commodity Credit Corporation stock, thereby hastening the day when the dairy producers of this country will no longer have hanging over them the price-dispersing influence of Government-owned stocks. To further this aim, we the dairy farmers of this country, through the National Milk Producers Federation, have urged the enactment of necessary legislation to permit the operation of a program designed to increase the consumption of foods, particularly dairy products, among low income families, We urge the Congress to authorize experimental programs by the United States Department of Agriculture to determine the feasibility of some type of family milk program. It is estimated that 7 million persons would be eligible for a program of this type. If such a program increased the use of fluid milk 1 quart per person per week, it would use an additional 700 million pounds of fluid whole milk annually. INCREASED CONSUMPTION OF MILK BY MILITARY ESTABLISHMENTS AND VETERANS ADMINISTRATION We very highly commend the Congress for authorizing the use of Commodity Credit Corporation funds in furthering the increased use of fluid milk in our military establishments and the facilities operated by the Veterans' Administration. The value of this program is shown by the fact that a recent report issued by the United States Department of Agriculture shows that from November 1954 through June 1955, military establishments had increased their milk consumption by almost 100 million pints. The Army Quartermaster Corps took delivery of an additional 79 million pounds of butter, 3 million pounds of cheese, and 7 million pounds of nonfat dry milk solids from Commodity Credit Corporation's stocks. The Veterans' Administration increased its milk consumption for the same period by almost 1.2 million pounds. We as dairy producers, aware of the value of our products in the diet of our country, feel this increased use of milk and milk products by our Armed Forces will contribute a great deal to the increased physical fitness and general wellbeing of the boys in service and wish to again express our very sincere approval of this program, and to urge the Congress to continue and enlarge the same. ACCELERATED BRUCELLOSIS PROGRAM The accelerated Brucellosis eradication program as authorized by Congress has made excellent progress in the elimination of this disease among the dairy herds in our State, and also in the herds of the entire country, according to reports from the Agricultural Research Service of the United States Department of Agriculture. We recommend and urge the continuation of this program. IMPORT QUOTAS This country is committed to a high standard of living, to high wage rates, and to an agricultural program under which the prices received by farmers are related to the cost of the things that farmers buy. This means that the price of agricultural products in this country are in many cases much higher than world prices. During the time that these conditions exist import controls will be needed to maintain our standard of living and wage rates. Then, too, some kind of adjustment, such as export subsidies, is needed to permit our production to compete in world markets. Dairy products are a good example of these needs. The support price for butter in New York is 584 cents per pound, and this price is only 75 percent of parity. Under this price the hourly return to dairy farmers and their families is down to almost 50 cents per hour. At the same time the world price for butter is about 39 to 41 cents per pound. In order to protect the dairy farmer and maintain his present small hourly wage of 50 cents, import prices must be raised and export prices adjusted to world levels. If such adjustments are not made, our own agricultural programs will be destroyed. In making price adjustments on our domestic production to meet those in world trade, unfair trade practices should not be used nor should surpluses be dumped abroad. Rather a two-price system, export subsidies, or some other form of price adjustment should be used. In conclusion, I wish to state that the foregoing comments are in line with the position of National Milk Producers Federation. The Arizona Dairymen's League is a member of that organization and has participated with other dairy farmers from other parts of the country in discussing these problems and in developing these policies. Mr. AUSTIN. I would like to make a comment on one or two things on that just to stress it for the benefit of the public hearing. The CHAIRMAN. Proceed, sir. Mr. AUSTIN. On the school-lunch program, we would like to commend the Congress very highly on that program and we urge the continuation and the expansion of the school-lunch program for the following reasons: First, it will teach the youth of the Nation better eating habits. As you know, during the last war and during the drafting, we found a great many of our young people physically unfit, could not pass the physical examination, and we feel that any program that will encourage and improve the diet, will certainly be of benefit to the Nation in supplying soldiers as well as the general health. We feel that the increased use of dairy products in the school will certainly go a long way toward that because everybody will agree that milk and dairy products are one of the most basic and fundamental health foods that can be gotten. So, for that reason, we very highly recommend the continuation and expansion of the school-lunch program. On parity, as I say, we had just about as many ideas about that as we had members of the association, and all we have in the written brief there is almost a complete majority-almost 100-percent thinking of the association-we could not get that on this one question. Several feel as I do and I would like to give my own viewpoint briefly on that. The price-support program, I feel, of any products should be gotten away from as soon as it is possible. However, at the present time, we have price supports and to remove them would wreck the agricultural economy of the country and that would certainly wreck the entire Nation sooner or later, so I feel until a better solution can be worked out, we should continue price supports, and for the dairy industry, we feel that we should have supports equal to the percent of the other commodities. In other words, if the other commodities are supported, at 80, 85, 90 percent of parity, we feel that the dairy industry should have the same percentage of supports; because, after all, we are buying some of those products to feed our dairy cows that are supported, and if our purchases are supported at a higher price than what we are getting for our product, that is giving us an unfair break. We feel though that a plan can be worked out to support prices that can be done away with later, and it will be desirable if support prices can be done away with. We do not know what the answer is. We wish we did. We feel, too, that as long as other industries are supported, that support prices should be continued. We have minimum-wage laws, we have railroad rates set by the Interstate Commerce Commission, we have Import duties to protect the manufacturers in their products. All of those things add to the cost of the dairyman, the cost of the thing the dairyman must buy. So we figure as long as those supports are continued, agriculture, not only dairymen but all agriculture, should be protected by support prices. If we remove support prices, we should remove those other protections and let competition settle the price for all, not just a few. Thank you very much for the opportunity of appearing here. The CHAIRMAN. We are glad to have had you sir. Is Mr. Marshall Leahy here? Mr. Worth Bayless? Is Mr. William R. Fernandes here? It is getting a little late now. Would you mind giving us the high spots, the highlights, of your statement please? We have heard quite a few. You may proceed. STATEMENT OF WILLIAM R. FERNANDES, FIRST VICE PRESIDENT, POULTRY PRODUCERS OF CENTRAL CALIFORNIA, TURLOCK, CALIF. Mr. FERNANDES. I will, Mr. Senator. My name is Bill Fernandes. I reside in Turlock. I have been a dairyman now for 23 years, and a poultryman for the last 12 years. I belong to the Poultry Producers of Central California. Although my appearance before you is primarily as a commercial producer, I wish to say that these views also represent those of my fellow directors on the Board of Poultry Producers of Central California and that these views have been made part of the statement and policy of our board of directors, and on numerous occasions have been submitted to our approximately 11,000 members. 64440-56-pt. 4-8 |