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We met with the State PMA committee the first of the year, and they kept back 10 percent of our allotment; I mean, they kept back 10 percent of the State allotment, which was over 700,000 acres. They kept back about twenty-some-odd-thousand acres of our cotton.
We met with them, and they finally gave us 1,900 acres of our cotton that they kept out of that State reserve.
The CHAIRMAN. They gave it to whom?
Mr. WARD. They gave it to the West-well, just say from here west, but this year they have changed that thing. We are getting 260,000 acres, that is, central Texas, that we did not get last year, and our allotment is a little bigger than last year.
I hope down home they do not hear this, because we have not told them yet what it was. We have gotten a little increase in our cotton allotment in our county. We think that it is going to be all right. The farmers are not against acreage control.
Senator EASTLAND. About what percentage has the acreage been reduced in your county!
Mr. WARD. Well, I believe when we did not have a program in 1950 and 1951 and 1952, we planted 210,000 acres in cotton-and this is not on the record now-our allotment this year is 116,142. So you can see we have been cut not hardly 50 percent, but in our county the thing that causes more static about the program-I know you are not interested in that, is the man that had 100 acres in cotton during the years when there was not any program and he got, we will say, 33-acre allotment on those 100 acres. You see, that cuts him 67 acres, but the man who has not been planting but 30 acres of cotton on his farm, he only took a 3-acre cut.
And, boy, that is where the fun starts, when you mail out the allotments.
That is on the cropland basis. But this year we went history for 1956.
The CHAIRMAN. That was optional, was it not?
We feel like now that is going to be the answer to the thing, with the boys who have been planting the cotton, but am I in trouble up home where we have been planting those 30 acres of cotton on those 100 acres.
The CHAIRMAN. Are you satisfied with the law as it stands, insofar as the distribution of what acres are to be allotted ?
Mr. WARD. You bet. You all did a good job on that. All we want is 90 percent of parity.
The CHAIRMAN. All right, sir. Thank you.
STATEMENT OF HAROLD NELSON, NEW BRAUNFELS, TEX. Mr. NELSON. Mr. Chairman and members of the committee, my name is Harold Nelson. I live on and operate a grade A dairy farm 5 miles south of New Braunfels, Tex.
Senator Ellender, in Albuquerque you stated that you and your committee are seeking a way to dispose of surplus farm products without placing a drain on the taxpayer.
I heartily concur in the object of your search and, after having discussed this problem with dairy farmers throughout the State of Texas, I can assure you that they endorse your motive.
Under the present system dairy farmers find themselves in an economic squeeze that is strangling them to death, and many are on the verge of bankruptcy.
In view of the economic importance of the “dairy dollar,” legislation is urgently needed which will alter the present chaos in which the dairy farmer finds himself.
I should like to urge upon this committee the adoption of a plan which has previously been submitted to both Houses of Congress. These bills embody å self-financing dairy stabilization plan.
The need for support and stabilization of dairy product prices arises from the inherent characteristics of the dairy industry and its products. Prices paid to farmers for milk and butterfat historically have been subject to frequent and wide fluctuations. This is because milk is a bulky and perishable product which must be marketed daily, with the consequence that a small surplus sends prices tumbling. Contrariwise, when market needs are not met a small shortage may cause consumer prices for dairy products to skyrocket. Violent price changes benefit neither farmers nor consumers.
It is an axiom of the dairy business, furthermore, that the needs of the market cannot be met adequately without some excess supply. That extra quart of milk or pound of butter, for example, must always be there when the consumer calls for it. Dairy farmers, there fore, are haunted by surplus milk and low prices most of the time.
But they cannot produce for distress prices and remain good customers for city-produced goods. Nor can consumers be assured of continuing adequate supplies of high quality milk and dairy products unless dairy farmers enjoy a level of prosperity comparable to
. The need for stabilization is self-apparent. The questions are: Who should stabilize and support dairy prices, and how should it be done?
THE HISTORY OF STABILIZATION PROGRAMS For a period prior to World War II, dairy farmers operated their own stabilization program. With the cooperation of the Government, a number of leading dairy farmer cooperatives organized the Dairy Products Marketing Association in 1938.
DPMA was a voluntary nonprofit organization, created specifically for the purpose of stabilizing prices for dairy products. It was financed by Ioans from the Commodity Credit Corporation. During its operation-from June 1938 to April 1942—it purchased 144 million pounds of butter at an administrative cost of less than one-tenth cent per pound. No losses were incurred on the products handled. The organization made money and repaid with interest all CCC loans.
It is of particular significance to note that if DPMA operations had been less favorable—if it had been obliged to dispose of the 144 million pounds of butter it bought at a total loss, its stabilization aims, nevertheless, would have been accomplished at a cost to farmers of less than one-half cent per pound of butterfat, or less than 2 cents per hundred-weight on all milk marketed during the 4-year period.
Wartime conditions ended the need for DPMA's stabilization program. In 1941 the Government stepped in with a general agricultural price support program to encourage production by assuring guaranteed prices against drastic price slumps. Under this program there have been Government price support purchases of dairy products since 1949—ranging from a low of less than 1 percent of total production in 1951 and 1952, to a high of 8.2 percent of total production in 1953.
There are three aspects of the Government price support program which, in particular, have proved unfavorable to the dairy farmers.
1. Únder the Government program, dairy farmers have borne the brunt of all the adverse publicity heaped upon price supports and the criticism against the Government's accumulation of surplus stock of all farm commodities. This complaint against dairy farmers has existed even though the cost of supporting prices for milk and butterfat has been a minor item in price support expenditures. The publicity aimed at discrediting price supports has not helped increase consumption of milk, butter, cheese, or the many other dairy productseven at the moderate prices which have prevailed, and in spite of the promotion efforts of the industry.
2. Dairy farmers have suffered a 20 percent cut in prices received from the sale of milk and butterfat since 1952. Government price supports on dairy products were lowered from 90 to. 75 percent of parity April 1, 1954, for the stated purpose of curtailing production and stimulating consumption of milk and dairy products. However, the lower prices to farmers did not result in a drop of milk production, nor has consumption been measurably improved on a per capita basis.
3. The Government's policy in administering dairy supports is to set minimum prices that will insure adequate supplies, rather than optimum price levels consistent with the national economy. Even though supply and demand for milk and dairy products are now more nearly in balance—as a result of "give away" programs and increased population-one proposal often suggested as the price-tofarmers of higher support levels for dairy products is production controls or marketing quotas. Although production control devices may work well with some commodities, their application to the dairy industry is questionable.
SELF-HELP-THE DAIRY FARMERS' ANSWER
Dairy farmer leaders believe that a producer-financed and controlled program will change this picture. It will eliminate consumer criticism of Government expenditures for dairy price supports. It will make possible better returns to dairy farmers. It will substitute for a policy of minimum levels of price support, a policy of higher levels consistent with the national economy. Moreover, it will accomplish these ends without cost to the taxpayer; without penalizing the consumer.
Dairy farmer spokesmen believe that a self-help program operated by dairymen will be more responsive to trends and factors affecting the dairy farming industry. They feel that operated outside of Government, self-help will be a more efficient merchandiser, a better salesman, and a better exporter.
The CHAIRMAN. Who bears those losses?
The CHAIRMAN. This self-help program that you are now advocating, you say is now before Congress?
Mr. NELSON. There have been bills introduced; yes, sir.
The CHAIRMAN. Do you know that that self-help program that is before Congress envisions the appointment of a committee or a board by the President, that would give it legislative powers?
Mr. NELSON. As I understand it—and what I am suggesting is that the board be appointed; that is, a board of 15 members be appointed, but it might have what you would call quasi-legislative powers, but since the board derives its authority from a congressional act, by the same token if it abused its power, it is felt by us that Congress could take them away.
The CHAIRMAN. I understand that Congress could create it now and destroy you next day, but the question I am asking you is: Is it not a fact that this board would have complete control of every drop of milk produced in the country?
Mr. NELSON. Yes, sir; that is correct.
The CHAIRMAN. Do you also know that this self-help program to which you refer provides for a contribution by way of an advancement from the Federal Treasury of half a billion dollars?
Mr. NELSON. Yes, sir.
The CHAIRMAN. Why do you call it self-help? How can it be selfhelp?
Nr. NELSON. The program envisages a loan from the Commodity Credit Corporation of $500 million to set up the program initially, and also it is anticipated that that $500 million would be paid back.
I do not believe there is any difference in that suggested program and in the present program provided for the Federal land banks and the electrification programs.
The CHAIRMAN. They are different.
You have security there, but you would not give any security. You would just get an advance to a board created by the Government, and if losses are sustained, why, the Government, of course, would have to bear the brunt.
Let me point this out to you: I was just figuring here; since October 17, 1933, through June 30, 1955, the entire program for the support of dairy products has been $707,487,620. That is the entire loss. That is only $200 million more than you want to start your program, which may be a loss.
Mr. Nelson. Frankly, we feel that if this program were established, this self-help program, we could more efficiently merchandise the product, under those losses, yes, sir, for these reasons
The CHAIRMAN. If you could do that, why do you not get it out of the dairy farmers?
Mr. NELSON. That is what we propose to do. The dairy farmers would pay it.
The CHAIRMAN. Why do you not stay clear of the Government then, if you think you are going to recover it all, if you think it will be such a huge success, and since the dairy program is such a huge one in contrast to the others, why can you not finance it yourself and not come to the Government?
Mr. NELSON. Because we are frank to admit that we cannot do it without the help of the Government. The evidence of what we can do with the help of the Government is evidenced by what has been done under the Federal marketing program in market order areas.
In those areas there has been a tendency in the cooperatives, I think you will agree, which have demonstrated their ability and willingness and eagerness to level off the supply of milk and to provide milk during normally deficit periods, and to level off the surplus periods. The CHAIRMAN. You would not want to disturb that; would you? Mr. NELSON. No, sir. The CHAIRMAN. And yet your board would have the right to do that—the board could step in, in all of this whole production and do something about it; could it not?
Mr. NELSON. The board could only do it through announcing a price that it was willing to pay for the product higher than the minimun prices set by the order program.
The CHAIRMAN. That price, if it is low, would have to be accepted, or else you would violate the rule. Mr. NELSON. You mean if the order price was lower? The CHAIRMAN. Yes.
Mr. NELSON. Yes; that it true, but I do not think that we could contemplate that the board members, picked from groups suggested by dairymen, would do that. The CHAIRMAN. I am just speaking of possibilities. Mr. NELSON. Yes.
And I will say this to you in all candor: that we would be willing to accept and endorse any safeguards to avoid the sort of thing that you are suggesting under this program. The CHAIRMAN. Yes. Of course, I am not prepared to say what I will do on the program, but it has been before Congress for quite some time. And whenever you hear of a self-help program, I wish you would change it to something else do not make it self-help, because it is not.
Mr. Nelson. I would be glad to accept anything. The only reason I chose that name is that I knew that was the name that had been suggested to you.
The CHAIRMAN. We have heard it all over the country. It is not self-help. It is a program that is really at its inception financed by the Federal Government; is it not? Mr. Nelson. Yes; there is no question about that. That is right.
The CHAIRMAN, Suppose that the cotton people wanted to do the same thing, or the rice people or the wheat people. We have some suggestions that they would like to have a program of their own.
Suppose we gave it to you. Do you think that we would have a reason to refuse it to others?
Mr. NELSON. No, sir; I do not.
As a matter of fact, I have suggested this self-help program to farmers engaged in other types of farming. I do not pretend to know enough about their business to know whether it would work