Изображения страниц
PDF
EPUB

Mr. YARBOROUGH. We, the dairy farmers of Louisiana, appreciate the opportunity to appear before this distinguished committee to review problems and programs as they affect the Louisiana dairy farmers.

First, however, we would like to express our sincere appreciation for the cooperation and courtesies which have been extended to us by Senators and Congressmen regarding problems affecting our industry. The progress we have made in the dairy industry of this State would have been severely limited without the aid of our distinguished Congressmen. Some specific legislation that has been beneficial to consumers, dairy farmers and others in the industry, is the national school lunch program. Milk and dairy products compose a large percentage of the food items served through this program which is of inestimable benefit to the physical development of the youth of our Nation.

The CHAIRMAN. May I stop to say this: I fathered that program, I think, before you, Senator Schoeppel, came to the Congress. I have a picture in my office showing President Truman signing the bill I fostered.

Mr. YARBOROUGH. We appreciate it.

A special milk program was initiated in 1954 which provides that each child can receive additional milk at relatively small cost. It has had far-reaching effects on total milk consumption by schoolchildren throughout the country. We also appreciate the attitude of Congress in providing for more milk to the men in the military service of our country. The intelligent manner in which such programs have been initiated and administered has contributed materially to the progress of the dairy industry. We know and appreciate that progress has been made concerning the problems of the dairy industry, nevertheless, the continuous reduction in cash income of dairy farmers is evidence that major problems still plague the industry.

The cash income from farm marketings in Louisiana has been on the decline since 1952. The income from the sale of crops from Louisiana farms in 1952 was $319 million declining to $298 and $250 million in 1953 and 1954 respectively, a decline of $69 million in 2 years.

Senator YOUNG. I noticed you mentioned decline in farm income.
Mr. YARBOROUGH. Yes.

Senator YOUNG. That was a result of decline in farm prices?
Mr. YARBOROUGH. Yes.

Senator YOUNG. When you had the decline in farm prices was there a corresponding drop in farm production?

Mr. YARBOROUGH. No, sir.

Senator YOUNG. Thank you.

Mr. YARBOROUGH. The income from the sale of livestock and products has declined from $117 million in 1952 to $112 million in 1954. The cash income from sales of crops, livestock and products in 1954 was down $74 million from 1952 and $50 million from 1953. The incomes of dairy farmers in Louisiana have followed the same general pattern of crops and livestocks.

The sale of Louisiana farm products to the Government has also declined during this period. În 1952 Louisiana farmers sold $446 million of farm products to the Government, they sold $419 and $373 million respectively during 1953 and 1954.

One of the major factors which has contributed to the decline in income of Louisiana dairy farmers is the policy of the Department of Agriculture with respect to support prices for dairy products. For example, in 1952 and 1953 Louisiana farmers received from 90 to 100 percent of parity for milk and milk products. Since that time supports have been lowered to 75 percent of parity with the resulting effect being low income to farmers for the production of milk and dairy products.

In a recent issue of the Louisiana Weekly Market Bulletin, Dave L. Pearce, Commissioner of Agriculture and Immigration, pointed out that "To make money as a master farmer, or any other kind of farmer, is getting worse and worse as compared to industry wages and prices, acccording to officials of Federal Land Bank, New Orleans. Last year Mississippi farm income was down $145 million; Louisiana's cash income dropped by $50 million, and Alabama's dropped $45 million. Farmers of the three States borrowed a record of $103 million last year in long term farm mortgage notes. Even with a small decline in short-term borrowing, this left a decline of $130 million that farmers had to absorb by digging into their reserve and by reducing their levels of living.

The United States Department of Agriculture is forecasting another 5-percent cut in farm income in 1955. This appears to be a warning signal to those engaged in agricultural production and marketing.

In contrast to the declining incomes in agriculture, the U. S. News & World Report for the week of August 25 indicated that Sinclair Weeks, Secretary of Commerce, called together the members of his Cabinet, to point out that economic activity and the level of prosperity in industry and labor was at an alltime high. Mr. Weeks was concerned at that time about whether or not the monetary and physical policy of the Federal Government was being properly administered. His conclusion was that careful consideration should be given to restrictive devices on credit.

It is not a healthy condition for the national economy, if one segment is undergoing an economic depression, when at the same time other broad segments of the economy are experiencing record levels of prosperity. These are reminiscent of the condition of the late 1920's when agriculture was undergoing a depression at a time when industrial progress was at a peak. The conditions which led to the breaking point in 1929 are reappearing in 1955.

It seems appropriate to point out the conditions which existed in the late 1920's came about as a result of the operation of relatively free economic competition in the agricultural industry. Conditions in agriculture of 1955 are considerably different from those prevailing in the late 1920's primarily because of the regulation imposed by parity and quota restrictions. It is not difficult to visualize how the Secretary of Agriculture, with his vast power to establish parity for agricultural products, is capable of maintaining a stabilized agricultural economy. We think it is a mistake for the Secretary of Agriculture to permit prices and conditions in agriculture to decline to the breaking point. Since 1952 the Secretary of Agriculture has lowered the parity price for milk and dairy products. The implied reason for lowering support prices was to provide milk for consumers at lower prices. This was an admirable objective. However, records of the United States Department of Agriculture show that lowering support prices

farmers has not resulted in lowering milk prices to consumers, as shown in table I.

(Table I follows:)

TABLE 1.-Trend in the price paid by consumers for milk and the distribution of the returns between farmers and marketing agencies, United States, 1950– July 1955

[blocks in formation]

Source: The Marketing and Transportation Situation, USDA, quarterly publication.

Mr. YARBOROUGH. For instance, in 1951 the dairy farmer got around 58 percent of the consumer's milk dollar, in 1952 he got around 59 percent. With a reduction in parity in 1953 the dairy farmer only got about 48 percent, a decline of around 11 percent, the portion of the consumer's fluid milk dollar that the farmer received in 1953 in comparison with 1952.

The CHAIRMAN. Do you have 1954 ?

Mr. YARBOROUGH. Yes.

The CHAIRMAN. What is it?

Mr. YARBOROUGH. In 1954 the dairy farmer is receiving approximately 46 percent of the fluid milk consumer dollar.

The CHAIRMAN. That is low compared to what it was in 1951, when as you say, it was 59 cents?

Mr. YARBOROUGH. It is actually a little lower than 53, even after parity was reduced. Going back to prices of a quart of milk, 1951, price of a quart of milk ranged from 22.3 cents to 21.9 cents. In 1952, the price ranged from 23.6 cents to 22.9 cents. In 1953, this was after prices dropped to the dairy farmer, prices to consumers still ranged from 22.3 to 23.1 cents. And in 1954 the range was from 22.3 cents to 22.7. That is average prices all over.

The CHAIRMAN. While you brought up the subject of what the farmer is getting out of the consumer dollar, in 5 years it has dropped from 52 cents, to as low as 40 cents, and that is as of August 1955. That is an average.

Mr. YARBOROUGH. As a matter of fact, consumers are paying as much for milk today as they paid in 1952, which indicates that the

impact of this program has been at farm level rather than at the retail level. The income to farmers is 15 to 20 percent less than in 1952. An analysis of the spread of fluid milk dealers shows quite clearly that the reduction in prices paid producers was offset by increased incomes to laborers in milk plants and increased cost to milk handlers.

Many have pointed to the dairy industry with the statement, "Look how the dairy industry is solving its problem." By this they mean how the dairy industry has cut prices to remove surplus. It does not take long to disprove this statement when one observes the records of milk production and consumption. It is true that the dairy industry has fewer milk producers than in 1952. However, the production per cow has increased continuously during the last few years and that the volume of milk sold per farm per day has increased.

These are evidences of increased efficiency on the part of dairy farmers. However, when we look at the prices paid by consumers for milk and dairy products we find that consumer prices are not too different from those that existed in 1952. It would cause one to wonder whether the expanded consumption of milk and dairy products was a result of a decrease in support price to farmers or of increased population, advertising and promotional activities by the dairy industry.

A second objective of the reduction of support price was to reduce milk production in the United States. Statistics published by the United States Department of Agriculture indicate that this objective has not been achieved. Total milk production in the United States in 1953 was 121 billion pounds. During the same year price supports were 90 percent of parity. However, milk production in 1954 was 123.5 billion pounds and the estimated production for 1955 is 124 billion pounds with price supports at 75 percent of parity. It is evident that the reduction in the support prices of milk did not decrease the supply. It may be concluded therefore that the reduction in the support of prices for dairy products has effectively reduced the income of dairy farmers but it has not lowered the price of milk to consumers nor has it decreased overall milk production.

I might add during this past year there has been some leveling out of production which I personally think the brucellosis program has had more to do with than anything else.

The CHAIRMAN. And some dry areas, too.

Mr. YARBOROUGH. That is correct.

The CHAIRMAN. And because of the warm season in some places you have had greater use of ice cream and other milk products. Mr. YARBOROUGH. Yes.

Mr. Chairman, one might raise the question then as to what should be the policy of the Department in the future with respect to the price support of milk and dairy products. A brief discussion of some of the characteristics of milk production might be helpful in establishing future price-support programs on dairy products.

It is generally agreed that dairy farmers base their future production program, to a large extent, on the prices received for milk and dairy products at the time their future production plans are being made. For illustration, the price for milk and dairy products was high during 1952; as a result, production programs completed by dairy farmers during that year were generally toward increased production.

Once initiated, a production program of dairy farmers takes from 2 to 3 years to substantially increase milk production from their foundation stock. The increased production during 1953 and 1954 probably resulted in increased emphasis toward high milk production per cow and expectation of relatively high prices for milk. It is evident that once a dairy farmer increases his total investments in livestock and equipment, that he must obtain larger incomes in order to maintain such stock and equipment. Dairy farmers, like other farmers, will continue to produce milk, even at a loss, so long as their cash or out-of-pocket costs are met. Economics, however, demonstrate, that in the long run all costs must be met. If not, farmers must reduce their operations or get out of business.

Dairy farmers have increased their efficiency in milk production. Milk production per cow in the United States during 1945 was 4,787 pounds. During subsequent years there has been a constant increase in production per cow so that by 1955 the rate of production is 5,514 pounds of milk per cow. In addition to increased production per cow, studies made in the various milk-marketing areas throughout the United States indicates that the average volume of milk delivered per producer, per day, has been increased constantly during the last 5

years.

These data indicates that dairy farmers have been increasing their efficiency. The increased efficiency in production, coupled with the increase in size of units, have been a large factor contributing to increased overall production at lower milk prices.

We, as dairy farmers, know that we will be unable to continue expanding production and delivering larger quantities of milk at lower net incomes.

We believe that the consuming public is aware of the fact that costs in the production of milk have not declined substantially during the past several years.

We do not think that the public is aware of the fact that milk producers are actually receiving 15 to 20 percent lower prices for our products while the cost of items used in milk production continue to increase. The cost-price squeeze under which dairy farmers are currently operating must be relieved if they are expected to continue to provide an adequate supply of quality milk commensurate with the needs of consumers.

It is difficult for dairy farmers to comprehend the reasoning of the Department of Agriculture in maintaining support prices on dairy products at a lower parity ration than other segments of agriculture or other segments of the national economy.

The CHAIRMAN. In that connection is it not your view that in order to be able to continue to support milk, let's say at 90 percent, that some ways and means ought to be devised whereby you can control the supply of milk. If you don't, as you can in the case of commodities that you plant on an acreage basis, that problem becomes difficult. In other words, if the Department of Agriculture were to simply announce tomorrow that they would support milk at 90 to 100 percent of parity, everybody might want to go into the milk business and yet you would have to do something to control that output. Do you have any suggestion about that?

Mr. YARBOROUGH. The New Orleans market which we operate in, we reached a point this past winter where we produced approximately

« ПредыдущаяПродолжить »