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ent farm problems. We do not believe we deserve financial ruin for doing the job we were asked to do.
With the above philosophy in mind we would like to deal specifically with at least two problems facing the milk producer, time permitting. Incidentally, the council has reviewed the statements of the Wichita Milk Producers Association, which will appear just after us, and we find ourselves to be substantially in agreement with their views on the matters covered and we are not duplicating those views.
We would direct your thinking to some of the pitfalls of at least one of the plans now under serious consideration; namely, the soil bank or land rental program, as it might affect the dairyman by interpretation of what might at first appearance seem to be very sound principles.
The dairymen of the Nation under the pressure of the price-cost squeeze of high rigid price-supports on grains and spiraling labor costs was advised by the top advisers that the average sized herd of 15 cows in milk was no longer practical but that he must now milk 30 cows to make the same profit.
More recently the advisers are recommending 40-45 head. The dairy farm is an agricultural unit and more cows call for more land. Profits from dairying come essentially from cheap feed and dairymen cannot long operate if they are forced to buy their feed which involves other costs such as transportation, commissions, and other profits off the farm. Under these conditions our dairymen are desperately short of land as compared to the number of cows he must milk in order to survive. Most dairymen have a limited acreage in a basic or allotted acreage crop. He needs the cash crop and in addition must have the byproduct of straw or stover to bed his cows during the winter months. He almost always uses the land taken out of the basic crop to produce roughage or forage because since he is short of land he knows that it is more economical to buy and transport into his farm grain rather than forage. If, however, under some new plan of taking grain land out of production the land-starved dairyman is forced to give up some of his land of which he already has too little for economical production, he will again be caught in the gears of a machine that was designed to control a commodity of which he has little part.
We believe that each commodity will need to be dealt with to meet the particular needs and adjustments of that commodity. We believe that taking basics out of production ought not to result in a glut on the market of milk and meat. What is to be done with the layout land of the big grain producer and the dairyman ought to be two different things, they are farming in two different ways. The basic grain farmer ought not to be permitted to produce milk or beef out of his surpluses. The dairyman who must import feed almost every year ought to be allowed to produce forage on his limited acreage. This can be handled by setting up certain standards to determine a man's classification, grain producer, dairyman, beef producer, et cetera.
That man and every man can declare his own classification, subject to the approval of the ACP Board. Then each phase of agriculture can operate within a cooperative program designed to meet the problems which are peculiar to it. This would also permit each commodity group to capitalize on any special advantage that it alone might have of solving its own problems. For instance the dairy industry has done much in its advertising and sales program. Our industry can do even more in this way of self-help if it is not too handicapped by having its efficiencies reduced by being crippled by regulations on essentially other commodities.
We would like to mention briefly our concern over the bogging down of the accelerated brucellosis program in Kansas. The program started July 1, 1955, with an annual overhead budget of $80,000. This taken out of proposed prepared budget of $375,000 would have left $295,000 as funds available for fee-basis work to be done by Kansas veterinarians. Our initial grant was $77,000. Finally after every possible pressure was brought an additional $90,000 was granted, still leaving the State short about $200,000 to do an effective job. The program initiated in July was curtailed September 15, and will be completely out of operating funds around January 1, 1956, being forced to hold back the last $40,000 to pay salaries and overhead.
As it now stands, the program in Kansas will spend $167,000 to get $87,000 worth of fee-basis work done. The last half of the fiscal year $40,000 will be spent to get nothing done. This is a ridiculous situation and an awful reflection on Government administration. Unless funds are released or liberated by Congress early in January to get this program going again it will certainly fall by the wayside at a great financial loss.
The brucellosis program in Kansas is one agreed to by all segments of the industry. The continuation of the program is essential from an economic standpoint to the well-being of the dairy and beef industry. It is even more essential from a public health standpoint. Milk consumers are protected by ordinances requiring the blood test. Yet the greatest percentage of infection of brucellosis in humans is found in packinghouse employees who handle diseased carcasses of beef and swine, and veterinarians and farmers who work with diseased animals.
Kansas is about fourth in cattle population among the 48 States. Her program is conservative and economical. No funds are to be spent in indemnities but only where effective work can be done in eradication. Yet out of approximately $22 million allotted for this program we received only a tip. Neighboring States received several times the amount received here and one State with a cattle population of less than Kansas is reported to have received $2 million.
We urgently request that funds be liberated in January for the continuation of this fiscal-year program and that the program be continued to finish the job that must be done here in Kansas, the complete eradication of brucellosis.
The CHAIRMAN. Thank you.
Senator THYE. I would like to ask Mr. Bertholf this question: Did you in the past year increase your milk production in this par
Mr. BERTHOLF. Yes, I believe the answer is "yes" to that.
Senator THYE. And did you suffer a reduction in price as a producer when the support was dropped from 90 to 75 percent?
Mr. BERTHOLF. Yes.
Senator THYE. Was there reflected a reduction in the price per quart of milk to the consumer when the producer suffered a price reduction ?
Mr. BERTHOLF. No.
Senator THYE. The answer is “no”?
Senator THYE. So that from the standpoint of the support drop from 90 to 75 percent, there was no consequent reduction in the cost of fluid milk to the consumer?
Mr. BERTHOLF. No.
Senator THYE. And there was no reduction in the overall production of milk in the calendar months that have passed since reduced supports were effected? That is better than a year and a half ago.
Mr. BERTHOLF. That is right. As a matter of fact, we had a great increase in production on our markets about that time in production.
Senator THYE. So the consumer got no particular benefit from the drop from 90 and 75 percent. It was entirely a producer's loss, and the consumer failed to get any of the benefit that was talked about in connection with a lower price and probable increased consumption.
Mr. BERTHOLF. That is absolutely correct.
The CHAIRMAN. Mr. Winfrey, you may proceed.
MILK PRODUCERS ASSOCIATION, KANSAS CITY, MO. Mr. WINFREY. My name is J. W. Winfrey. I am assistant manager of the Pure Milk Producers Association of Greater Kansas City. This association is a dairy-marketing cooperative with a membership consisting of approximately 2,400 producing dairy farmers residing in some 65 counties of Kansas and Missouri. They produce grade A milk for the Greater Kansas City market. Many of them operate general farms and a great number of them produce milk exclusively. Definitely, milk production is the major enterprise on a very high percentage of the members' farms.
My statement will cover this association's views on several subjects, namely, Federal orders, price supports, self-help program for dairy farmers, and the school milk program.
The marketing agreement and order program which is currently authorized by the Agricultural Marketing Agreement Act of 1937, as amended, was developed to correct the demoralized and chaotic condition of fluid milk markets that came with the economic depression of the early 1930's. We well remember the serious condition that existed in the Kansas City milk market during those times. The operations of the Federal milk-marketing orders have been satisfactory to producers supplying the markets using the program, and the market stability created by the Federal orders has had a good and healthy influence throughout the dairy industry.
The Greater Kansas City milk market has operated under the program since early 1934. We have found the program very satisfactory. The market has grown considerable since the inception of the order, and the order has provided the necessary stabilizing effect to maintain healthy marketing conditions for both producers and processors with consumers benefitting by having an adequate supply of grade A milk at reasonable prices.
There are several order markets operating in Kansas and Missouri. It is our observation that these order markets have caused a higher degree of stability in the fluid milk market not under regulation in both States. The order markets have had the effect of establishing the price levels in the nearby unregulated markets and this has resulted in more orderly marketing throughout.
We oppose any change in the Agricultural Marketing Agreement Act. Any change in the legislation could have far-reaching effects on producers and on the whole dairy economy. We realize that no legislation is perfect and that the administration of no program is perfect. By the same token, the many criticisms which are from time to time aimed at the Federal order program should not be considered to be correct and a proper detailed investigation of the facts and of the consequences that might result from the change.
We are members of the National Milk Producers Federation and in that organization we have known of the criticisms of Federal orders and have worked hard to carefully appraise each one. Any sug. gestions we might have to improve the program as the present time can be worked into the framework of the present legislation. We recognize the fact that all producers do not benefit to the same degree from the Federal order program. We do think, however, that we should work toward improving the position of those producers not receiving the benefits of the program rather than tear down a good program in order that all producers will be at the same disadvantage.
The milk business is highly technical and complicated. Of necessity, Federal milk orders are also highly technical and complicated and they are of tremendous economic importance. For these reasons, we suggest it would be helpful if the educational and background statement on Federal orders that was presented by the National Milk Producers Federation before the House Agricultural Dairy Subcommittee on April 28, 1955, was included in the record of this committee. We believe it would create a better understanding of the problems of milk marketing.
Let me reiterate our position. The Federal order program is beneficial to dairy farmers and the dairy economy. Let's protect and preserve the Agricultural Marketing Agreement Act in its present form, and let's direct our efforts toward improving the position of all dairy farmers rather than tear down a program that has proved its worth conclusively over a great number of years.
Since 1952, dairy farmers have seen their prices drop 20 percent. Much of this drop resulted from the reduction of price supports from 90 percent of parity to 75 percent that was made effective April 1, 1954. A part of the price decline was caused by the fact that even under 90 percent support, prices were actually less than the announced support level. Each time we request higher supports for the dairy industry it is explained that we can have the same supports as the basic crops if we will accept production controls or marketing controls. In this line of reasoning two important facts are not taken into consideration.
In the first place, production controls on milk and dairy products would be very complex and difficult to administer. Secondly, total milk production without production controls is usually held within reasonable and manageable bounds due to the difficulties involved in producing milk which includes the labor problem. While 90 percent dairy supports were effective, the dairy surplus never exceeded 8 percent of a year's production, and in 1952 and 1953 when dairy
prices were over 100 percent of parity, we experienced a milk shortage. The dairy industry needs stabilized prices that will not only assure the production of an adequate amount of high-quality milk for consumers, but will also provide a price to producers that will give them the purchasing power equivalent to, and consistent with, other segments of the national economy.
Dairy farmers should not have prices less than 100 percent of parity. However, we do realize that the price of milk cannot be supported at levels well above that of other agricultural commodities. We are convinced that the present 75 percent support is too low and should be increased somewhat above the average support level of basic crops in order to achieve a better balance between the dairy industry and all agriculture. This can be justified because of the large amount of labor required in the production of milk on a 7-day-a-week basis. Excess production would not result for the same reason.
The many dairy cooperatives which are members of the National Milk Producers Federation have worked out a self-help plan under which American dairy farmers would stabilize their own prices.
The plan was worked out because:
(1) Dairy farmers are convinced that the support level of 75 percent of parity for dairy products is too low for the good of the industry and the Nation.
(2) The Secretary of Agriculture in 1953, when he last supported dairy prices at 90 percent of parity, requested the industry to work out its own program for stabilizing prices.
(3) Most of the adverse publicity aimed at discrediting the pricesupport program has been centered on the dairy industry. This has not made it easy to increase consumption of milk and dairy products.
Under the self-help plan, dairy farmers would stabilize their own prices by buying unmarketable surpluses and disposing of them at home and abroad. The costs would be borne by the dairy farmers themselves through the payment of a stabilization fee collected on all milk sold in commercial channels.
The plan has been submitted to Congress as H. R. 2686 (Westland), H. R. 3400 (Bon), H. R. 3483 (St. George), and S. 930 (Mundt). We believe this legislation merits the support of this committee.
During the summer of 1954, one of the serious concerns to Members of Congress, the dairy farmers, and others interested in the dairy industry, was the accumulation of dairy products by the Commodity Credit Corporation. The Government-owned stocks of dairy products resulted in a price-depressing influence and lower dairy farmers' income. This situation impelled Congress to consider legislative action. The widening of markets and increased consumption of fluid milk by schoolchildren was one of the best ways of accomplishing a decrease in surplus milk production.
We commend the Congress for its foresightedness in authorizing $50,000,000 for last year and $50,000,000 for the current year for the special school milk" program. Substantial increases in milk consumption, with thousands of schools and schoolchildren, has established the success of the program.
In the Greater Kansas City area, a goodly number of schools took advantage of the special milk program last year. This resulted in an increase in fluid-milk consumption by all schoolchildren where the