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.

Any questions?

Senator THYE. I would like to ask Mr. Bertholf this question: Did you in the past year increase your milk production in this particular milkshed?

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"?

Mr. BERTHOLF. Not on fluid milk.

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.

Senator THYE. That is all, thank you.

The CHAIRMAN. Mr. Winfrey, you may proceed.

STATEMENT OF J. W. WINFREY, ASSISTANT MANAGER, PURE 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 suggestions 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

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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

program was in operation. This year additional schools including the Kansas City, Mo., and Kansas City, Kans., school systems, have put the program in operation. This will result in a much larger volume of fluid milk being consumed by schoolchildren in our market. We urge the Congress to authorize on a permanent basis the use of Commodity Credit Corporation funds for this program.

Under the accelerated brucellosis eradication program authorized by the Congress, excellent progress has been made toward the elimination of this disease among the dairy herds of this country. We urge the continuation of this program until such time as the threat of brucellosis has been wiped out.

Since many local and State milk ordinances are now requiring that their milk supply must come from brucellosis-free herds, the financial assistance to the dairy farmer is very beneficial. The brucellosis program also encourages more culling and will tend to improve the health of the Nation's milking herd.

As members of the National Milk Producers Federation we have participated with other dairy farmers from other parts of the country in discussing these problems and in developing these policies.

The CHAIRMAN. Are you familiar with this so-called helf-help program?

Mr. WINFREY. Yes, sir.

The CHAIRMAN. Do you know that it would create a board of directors like in a corporation, that it would have legislative powers? Mr. WINFREY. I didn't know it would have legislative powers. I believe some legislation could be adopted.

The CHAIRMAN. That is what a lot of us don't understand. It does confer on a board of 15 appointed by the President legislative power to control every drop of milk produced all over the United States. Do you also know this so-called self-help program envisions putting from our Treasury of $500 million, or a half billion dollars? Mr. WINFREY. Yes, sir.

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The CHAIRMAN. That is not self-help, is it?

Mr. WINFREY. Well, sir, I think the experience of other appropriations that have been made to other farm groups, they have all been paid off.

The CHAIRMAN. Just a moment. The milk industry for the past, since October 17, 1933, up to June 30, 1955, the whole industry only lost $700 million. You want to start off with $500 million.

Mr. WINFREY. That would only be used for capital, sir.

The CHAIRMAN. But without recourse and I do not think you would have any security for it. It would be turned over to the board and if there is a loss, Uncle Sam would lose it. Let's be careful when we call the program self-help.

Thank you ever so much.

Mr. Elrod, please.

STATEMENT OF LYNN E. ELROD, SECRETARY-MANAGER, WICHITA MILK PRODUCERS ASSOCIATION, WICHITA, KANS.

Mr. ELROD. I am Lynn Elrod, secretary-manager of the Wichita Milk Producers Association.

I have copies of some issues which Mr. Winfrey mentioned and our views on that, which I will leave with the committee. I might make about three points on the farm program that I would like to mention.