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STATEMENT OF BILLY
OF BILLY KIRTON, OKLAHOMA COOPERATIVE
DAIRIES, PLANTS, AND MILK PRODUCERS, ENID, OKLA.

Mr. KIRTON. Mr. Chairman, honorable members of the Senate Committee on Agriculture, my name is Billy Kirton. I am a farmer, a representative of dairymen and a member of the board of directors of the Gold Spot Dairy, Inc., at Enid, Okla.

The CHAIRMAN. We called Mr. Joe Human.

Mr. KIRTON. I have been designated to present the statement relating to some of our problems in the place of Joe Human.

The CHAIRMAN. Who did that? Was that done by Mr. Human himself?

Mr. KIRTON. Yes.

The CHAIRMAN. You may proceed.

Mr. KIRTON. Also listed there, Mr. Charles Young is listed and his statement is also presented with my confirmation.

The CHAIRMAN. All right. We will place it in the record.

Proceed.

Mr. KIRTON. Mr. Joe Human of Stillwater is president of our Oklahoma Association of Cooperative Dairies and Bargaining Association, and has been scheduled as a witness before this committee, but he requested me to present this statement for him.

The CHAIRMAN. You may proceed with your own views.

Mr. KIRTON. Now, then, we have, you gentlemen have discussed the self-help program to some extent. Would you like for me toThe CHAIRMAN. What self-help program are you talking about? Mr. KIRTON. This is the self-help program that has been prepared by the National Milk Federation.

The CHAIRMAN. We have had that program discussed many times, and I would like to ask you this: Are you thoroughly familiar with the program submitted?

Mr. KIRTON. Now you say "thoroughly." I am only a farmer. The CHAIRMAN. But you are familiar with it?

Mr. KIRTON. I have been in their discussions.

The CHAIRMAN. Do you know that this program envisions the creation of a board composed of 15 persons who would have legislative authority?

Mr. KIRTON. Yes, sir; I have that on my list.

The CHAIRMAN. Would you want to withdraw that from Congress? We are the legislative body, are we not?

Mr. KIRTON. I sincerely believe the milk cooperatives of Oklahoma sincerely believe it would provide a great relief to the distress of the dairy industry.

The CHAIRMAN. I understand that. That is the purpose. But I am saying to you, Do you think it would be possible for us to pass a law that would take away from Congress legislative powers and transfer it to this board?

Mr. KIRTON. You know that much better than I.

The CHAIRMAN. Do you think it would be right to do that? Suppose the law does provide for that, would you say it is correct? Mr. KIRTON. These nominees are selected

The CHAIRMAN. By the President.

Mr. KIRTON. No, the nominees are selected by milk producers. The CHAIRMAN. They are finally appointed by the President.

Mr. KIRTON. Yes. That would not taken any legislative powers away from Congress.

The CHAIRMAN. After this board is created it would then have legislative powers. It could control every drop of milk produced in the United States, or say what to do with it in large measure. As you know, we have a lot of programs that are working throughout the Nation in which dairy farmers are thoroughly satisfied. Let me ask you this: You say this is a self-help program?

Mr. KIRTON. Yes, sir.

The CHAIRMAN. Do you know that the program provides that the Commodity Credit Corporation put up a half billion dollars to support it?

Mr. KIRTON. $600 million; yes.

The CHAIRMAN. Why do you call that self-help if you expect the taxpayers to furnish $600 million?

Mr. KIRTON. That was the condition of the milk producer approximately 3 to 4 years ago. He was in that condition. And when the Secretary of Agriculture announced that the dairyman had to solve his own problem, then he began to study as quickly as possible a self-help program.

The CHAIRMAN. Is that a self-help program when you expect the Treasury to put up as much as $600 million?

Mr. KIRTON. All right.

The CHAIRMAN. I am asking you, is that self-help?

Mr. KIRTON. As quickly as the $600 million could be paid back to the Government, which it would be, in order to stabilize milk prices

The CHAIRMAN. You know there is no security given. It would just as an amount put into the hands of this Board and losses would be taken out of that $600 million, or whatever was the amount of money put up.

Mr. KIRTON. No, sir; I understood the losses would be taken out of the production of the farmer.

The CHAIRMAN. There is no security for it; that is what I am talking about.

Mr. KIRTON. Yes.

The CHAIRMAN. And if there are losses and the farmer couldn't pay it back it would be a loss to the Government.

Mr. KIRTON. As I understood it, sir, the $600 million to the National Milk Federation would amount to them in the same degree as it would to me if I went to the bank and borrowed 10 bucks. I still would have to pay that 10 bucks plus interest.

The CHAIRMAN. Proceed.

Mr. KIRTON. All right. In regard to parity, the dairy farmers must receive a reasonable price for their products if they are to continue to provide the United States with the most complete food product known to man and to deliver it in a sanitary, wholesome condition, and assured continuous supply of dairy products is just as important to consumers as it is to the dairyman. With this consideration in mind, Congress has provided for support prices at no less than 75 percent of parity. With the rising increases in cost of production equipment and cleanliness and so forth, the dairy farmer still reposes on no bed of

roses.

An eventual goal of 90 percent of parity as a floor would not be excessive. The dairy cooperatives of Oklahoma are aware, however, of

the obstacles involved, such as production control and expansion of markets. We are aware of that. We feel that Congress needs to take a look at the formula used by the Department of Agriculture in the determining of parity prices of dairy products Farmers do not benefit from increases in prices when expressed as a percentage of parity if such increases are caused by changing the parity, rather than changing the price of milk paid to farmers

The present parity equivalent for manufactured milk, for example, 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 a percent of parity gets better and better.

Senator SCHOEPPEL. I would like to ask the gentleman, with your permission, Mr. Chairman, a question.

The CHAIRMAN. Proceed.

Senator SCHOEPPEL. Do I understand that where you make reference to the Secretary changing these figures at his discretion, he does have the benefit of a group of visitors designated and appointed by the dairy groups in the United States?

Mr. KIRTON. Yes, he does.

Senator SCHOEPPEL. Has he generally followed their recommendations?

Mr. KIRTON. Yes, he has. Now, then, in the written statement you will find Oklahoma dairy producers are thankful for this special school milk program. It has been quite helpful; $50 million last year, $50 million this year, and there will be more school children, more schools using milk this year in Oklahoma than ever before.

Senator THYE. Are there any of your schools that do not avail themselves of the Federal assistance now?

Mr. KIRTON. Yes, sir; last year there was as much as $300,000 that Oklahoma did not use in the special school-milk program.

Senator THYE. Why? Because the local school districts made no plans or did they lack the funds?

Mr. KIRTON. Some perhaps because they didn't want to bother with it. Some because they didn't have the funds.

Senator THYE. You do not have specific information as to the reasons?

Mr. KIRTON. No, sir; I do not and I wish I did. That is a question. I wish I could answer.

Senator THYE. We, in Congress, made the funds available. Now, if the States did not use them, then of course the program was not wholly effective, and the surplus of milk did not go into the channels we had hoped to have it go.

Mr. KIRTON. That I understand and we are thankful for your school milk program, and we hope to keep selling it because it in turn sells our milk.

The CHAIRMAN. We have had quite a lot of testimony on that program. It is a very good one and I am sure Congress will probably keep on augmenting it by making the funds available.

Mr. KIRTON. All right, sir. We urge Congress to authorize on a permanent basis the use of Commodity Credit funds for this program in amounts necessary to reach the objective set by Congress.

Now, then, we commend Congress for authorizing use of Commodity Credit Corporation funds in use of dairy products in our military

establishments and our Veterans' Administration. There is nothing better than your brucellosis program. Let's keep it up and wipe out brucellosis.

With respect to the surplus disposal program, we urge that you exercise caution that any gratuitous shipments of dairy products to foreign countries shall be channeled directly to those people in need and who cannot buy so that such shipments will not in any way compete with legitimate foreign trade. On import quotas it is vitally important to the dairy industry that section 22 of the Agricultural Adjustment Act remain unimpaired, that import controls remain effective. As to administrative procedure, I understand that one of the task forces wishes to convert the present informal milk order hearings into a judicial trial governed by rigid rules. However, realistic results can be obtained under the present system of informal hearings. If the Hoover task force recommendations are adopted, we recommend that they be so modified that they will have no application to milk order hearings.

In regard to taxation of cooperatives, a partnership pays no income. You understand that much better than I do. While a cooperative does. One of our cooperatives pays almost a million dollars a year in income tax to the Federal Government. Take a look at a private corporation taxwise. If a cooperative pays 5 percent dividend on its stock that is deductible as interest. A private corporation income tax on its stock dividend, deferred commodity payments, are excludable from income of the cooperative because it is additional cost of goods delivered by the farmer to the cooperatives.

Under the present law a private dairy corporation could have the same exclusion if it would agree in advance to distribute back to dairy producers any net earnings of the corporation, apportioned on quantity or value of milk delivered by each producer. Any inequity in the application of tax laws to the private corporation and to the cooperatives would be eliminated.

The CHAIRMAN. May I suggest that this committee has no jurisdiction about what you are talking about. It is something left to the Finance Committee. I wonder if we couldn't restrict your testimony to methods to solving the farm problem that we can handle, if you don't mind. We are not the Finance Committee and that is a proposal that should be in their hands rather than the Committee on Agriculture and Forestry.

Have you any other suggestion other than what you have already submitted?

Mr. KIRTON. In other words, I want to understand it clearly now for myself, I have to go back and forth, that the Oklahoma Milk Association, even though we urge this committee to scrutinize carefully any plans which may be submitted to Congress for so-called tax evaluation, that is out of your hands?

The CHAIRMAN. All we can do is vote as individuals, but we do not study it as a committee. I want to make that plain to you. It is handled by the Finance Committee of the Senate headed by Senator Byrd. And another thing, it is a tax measure and it must originate in the House, and not in the Senate. Those are two roadblocks that prevent us from handling it in this committee.

Mr. KIRTON. I want this idea, and you may all have the idea, I hope you do have, farm cooperatives represent the one medium which

eventually may be able to relieve the Government of many of its burdensome marketing and supporting farm products. That is one idea that I would like to be able to get across.

A word as to Federal orders or marketing orders. Many of us feel that some of these orders as promulgated have been refined until they constitute a radical departure from the announced purpose of the act under which they were created. Some of these orders can be corrected without corrective legislation at this time. We urge that no substantive changes be adopted in the basic act pending the efforts of the industry and the Department of Agriculture to iron out their difficulties within the framework of the act.

Gentlemen, we appreciate the opportunity of appearing before you today and hope that some of the things that we may have said will be of benefit to you in your hearings. I know they are difficult indeed. (Mr. Kirton's prepared statement follows:)

My name is Billy Kirton. I am a farmer, dairyman, and member of the board of directors of the Gold Spot Dairy, Inc., at Enid, Okla., and have been designated to present a statement relating to some of our problems, on behalf of the Oklahoma cooperative dairies, plants, and milk producers.

Mr. Joe Human, of Stillwater, is president of our Oklahoma association; and has been scheduled as a witness before this committee today; but has requested me to present this statement for him.

1. Self-help program: Early in 1953 when the Secretary of Agriculture last supported prices of dairy products at 90 percent of parity, he notified the industry to work out its own program for stabilizing prices. We believed he meant it. Our industry through the American Dairy Association immediately inaugurated an extensive and expensive advertising program to increase the consumption of dairy products throughout the United States. This has been very effective. In addition thereto the National Milk Producers Federation of which we are members, developed a self-help plan which we sincerely believe would provide great relief to the distress of the dairy industry. Under this self-help plan dairy farmers would stabilize their own prices by buying otherwise unmarketable surpluses and disposing of them at home and abroad without the restriction inherent in Government operation. The cost would be borne by dairy farmers themselves through the payment of 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. We, the dairy farmers, have already spent $10 million this past year through the American Dairy Association in advertising our products; and we urge Government implementation of our selfhelp plan.

A summary of the self-help plan has been developed by the National Milk Producers Federation which we feel may be helpful to the committee. The plan has been submitted to Congress as H. R. 2686 (Westland), H. R. 3400 (Bow) and H. R. 3483 (St. George) and Senate bill 930 (Mundt). We believe this legislation merits the support of this committee. Its adoption would be a forward step toward bringing about permanent improvement in the economic conditions of dairy farmers outside the influence of partisan politics.

2. Parity: Dairy farmers of course must receive a reasonable price for their products if they are to continue to provide the 160 million people of the United States with the most complete food product known to man, and to deliver it in a sanitary wholesome condition. An assured continuous supply of dairy products is therefore just as important if not more so to the millions of consumers in this country, as it is to the farmer who produces it. With this consideration in mind, Congress has provided for support prices at not less than 75 percent of parity. With the rising increases in the cost of production and in all equipment and supplies which the efficient dairy farmer must purchase, if the dairy farmer and producer where receiving 100 percent of parity, for his product, he would still be reposing on no bed of roses, and certainly no one can seriously contend that an eventual goal of 90 percent of parity as a floor would be excessive. We are conscious however of the practical difficulties and obstacles involved such as production control and expansion of markets.

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