occurs. It is the feeling of farmer members of the federation that they themselves can do a more effective job of managing surpluses than is possible through Government operations. The stabilization board of farmers would be able to dispose of agricultural surpluses bought and paid for with their own money without the restrictions inherent in the operation of such a program by Government officials who are spending tax dollars. Dairy farmers are familiar with the classified plan of marketing fluid milk-wherein one price is paid for that portion of the milk used for bottling purposes and a lower price for that portion which is in excess of fluid-milk requirements. They know that in fluid-milk marketing it is possible to prevent a total price collapse each time production exceeds the bottled milk requirements. If fluid-milk prices can be prevented from falling into the manufactured milk price level, it is just as logical to conclude that the market for manufactured dairy products can be prevented, through somewhat similar operations, from falling to distress price levels. The self-help plan would be no guaranty that farmers would receive 100 percent of parity, or 90 percent, or any other predetermined level. The level of price support would depend upon the overall conditions of the market and the ability to manage any excess production and utilize it with least loss. The CHAIRMAN. Are you going to discuss your self-help plan? The CHAIRMAN. Very well. It might be well for you to detail it in the record so that we will know what we are talking about. Mr. NORTON. Yes, sir. Had the self-help plan been in effect last year, milk prices could have been supported at 90 percent of parity. This would have increased prices to producers by 65 cents per hundredweight, at a cost to them of 32 cents per hundredweight, if all of the surplus was disposed of at a complete loss. If losses on surpluses were held to 50 percent, which certainly is not unreasonable, then the 65 cents higher price would have cost farmers but 19 cents. The self-help plan would require the enactment by Congress of enabling legislation. By the way, Senator Mundt has introduced the legislation in detail in S. 930. In brief the plan would involve: (1) Creating a dairy stabilization board of 15 members to be appointed by the President from nominees selected by dairy farmers; (2) establishing price support levels at which the board would purchase dairy products not disposable in the regular channels of trade at the support level; and (3) levying assessments on all milk or butterfat sold by individual farmers in commercial channels to cover the cost of surplus handling, and for administering the program. The CHAIRMAN. Now, this method of financing would give you the authority to impose assessments? Mr. NORTON. Yes, sir. The CHAIRMAN. On all of the production? Mr. NORTON. All milk delivered to the first processor. The CHAIRMAN. All milk producers? Mr. NORTON. Yes, sir. The CHAIRMAN. Irrespective of whether they belonged to the association or not? Mr. NORTON. Oh, yes; any milk delivered to the first processor would be assessed. Under the self-help plan dairy farmers, however, would not be held liable for surpluses caused by other Government programs and policies. For instance, the Government could allow the importation of any amount of dairy products that might be consistent with good international relations so long as it compensated dairy farmers for the displacement of their domestic production through the surplus holding pool. Furthermore, it would only be fair for the Government to compensate farmers for milk production resulting from acreage restriction or production quotas on other agricultural commodities. The CHAIRMAN. Under this plan the so-called self-help plan-the entire management would be in the hands of this board? Mr. NORTON. Yes; with certain limitations by the Secretary of Agriculture. The CHAIRMAN. And the Government would not come into the picture at all, even to support the prices? It would all be done through the board? Mr. NORTON. Through the board. The Secretary of Agriculture, however, sir, through the board, has pretty wide latitude to veto an improper price, or one that he thinks is improper, if the board would establish a price that he felt was too high. The CHAIRMAN. How would you handle the surpluses? Mr. NORTON. Much the same way that the Government is doing at the present time domestically. However, we feel that in foreign markets, since they are not tax dollars, that a price, for instance, of half the amount could be negotiated with deficit foreign dairy countries to absorb the surplus. The CHAIRMAN. Although the Government would not come into the picture and provide money from the Treasury, the consumer would pay directly through assessments-that is, indirectly-through assessments placed on the milk by the board, would he not? Mr. NORTON. Well, because the milk would be at a higher price Mr. NORTON. I presume that is correct; yes, sir. Now, that, of course, we say is not unusual, sir, but The CHAIRMAN. Have your attorneys looked into the legality of that? Mr. NORTON. Yes. We think that it is legal; yes, sir. The CHAIRMAN. That amounts to the power of taxation. Mr. NORTON. Yes, sir. The CHAIRMAN. When you speak of an assessment, I make no difference between that and taxation. Mr. NORTON. Yes, sir. The CHAIRMAN. Now, would the board have the power to raise or lower that in order to meet the situation as it may come about? Mr. NORTON. Yes; that is right. The CHAIRMAN. Well Mr. NORTON. In other words, if there was a 2-percent surplus that was bothering the market rather than 7 percent, as there was last year, it would be approximately one-third of the assessment, or, say, 10 cents rather than 32 cents. The CHAIRMAN. Would you anticipate that surplus in advance? 64440-55-pt. 1—19 Mr. NORTON. Yes, sir. The CHAIRMAN. You would set your assessment according to your anticipated surplus? Mr. NORTON. Yes, sir. The CHAIRMAN. Now, how would that surplus be disposed of? The CHAIRMAN. At a lower price? Mr. NORTON. No; in the usual relief channels, school lunch, distribution in this country. The CHAIRMAN. Who would buy it? Would the Government come in? Mr. NORTON. The Government would come in much the same as they do now. Take for instance your section 32 program, your school-lunch program. The CHAIRMAN. You would have, in some way then, to tie in with. all the Government relief programs? Mr. NORTON. Yes; that is right, sir. The CHAIRMAN. That would be essential? Mr. NORTON. Yes, sir. The CHAIRMAN. So that you could dispose of your surpluses? Mr. NORTON. Yes, sir. The CHAIRMAN. And the money you would get from assessments would be used for what? Mr. NORTON. To buy the extra production that was occurring throughout the country if there was a surplus. The CHAIRMAN. And to pay for the losses between what you would sell it for and what the farmer would get ; is that about it? Mr. NORTON. Yes, sir. The CHAIRMAN. Áll right. I think I understand it. Mr. NORTON. The Government's obligation for compensating milk producers for surpluses resulting from other governmental programs needs no comment. The greatest weakness in our present agricultural program is that we are transferring our problems in succession from one agricultural product to another. It is a simple matter to conclude that with a surplus of milk some farmers should produce something else. If that something else is also in surplus, however, the problem is merely aggravated by the diversion in production and little is accomplished. The self-help plan would free consumers from the tax burden now resulting from Government price supports on dairy products. It would assure consumers of adequate supplies of milk and dairy products, and would protect them from unduly high prices which result from an unwarranted shrinking of the supply. The plan would assure producers of year-round stabilized prices without dependence on Government price supports. It would protect farmers from the effect of surpluses resulting from imports or from other Government programs. It would result in improved consumer relations because of the demonstrated willingness of dairy farmers to cut free from dependence on Government. The CHAIRMAN. Now, how would it protect farmers from the effect of surpluses resulting from imports? Would that be entirely eliminated? Mr. NORTON. No. The Government would be free to import any amount of dairy products they felt were desirable in the interests of international relationships. The CHAIRMAN. Now, would not those products compete with products produced here? Mr. NORTON. By all means, yes, sir. The CHAIRMAN. Now, that of course would not affect the price that our dairy farmers would get because they are more or less assured, through the board, of a fixed price; is that not true? Mr. NORTON. That is true. However, it would affect it if these two things were not true, sir, that in the bill we propose, No. 1, to collect upon importation to this country, the same fee on those imports as is collected from the dairy producer in this country. The CHAIRMAN. Now, that would, then, impair the revision of the tariff schedule, would it not? Mr. NORTON. We feel that if this would become law, that would automatically revise the tariff schedule. The CHAIRMAN. Not necessarily. Mr. NORTON. Then we would have to go before the proper committees with a revision. The CHAIRMAN. Whatever assessments were imposed by the Board, if it can be done, would affect only the inhabitants of the United States. Mr. NORTON. That is right. The CHAIRMAN. Insofar as anything coming in, that of course would be something that would have to be dealt with by the Congress through its regular taxing facilities, that is, the imposition of tariffs as we now have it? Mr. NORTON. We operate, as you know now, under a Presidential proclamation restricting imports. The CHAIRMAN. Yes, I understand. Now, in order to carry out your plan, that is the self-help plan, would it be necessary to have this tax or assessment, or what-haveyou, on imports to fluctuate the same as would be the case in the sales and distribution of domestic production? Mr. NORTON. I do not think it would be necessary, sir. I think that the other way to bring the price more nearly in line would be to charge, let us say, the Commodity Credit Corporation-it could be conceivably some other department-the same difference that would be required on the theory that these international relations are desirable; therefore, a fee will go into the pool from this governmental agency, the Commodity Credit Corporation, which would balance off in the same manner as though you collected it upon the import entry. The CHAIRMAN. Now, would the imported milk products be handled through the regular channels of trade? Mr. NORTON. Yes, sir. The CHAIRMAN. The same as your own production? Mr. NORTON. Yes, sir. The CHAIRMAN. And the only thing that would have to be done, then, would be to impose this tax or assessment equal to that which is imposed by the corporation that you propose to create here, under your plan? Mr. NORTON. Yes, sir. The CHAIRMAN. And the collections of those assessments would find their way into this pool that is created by the corporation? Mr. NORTON. That is correct, yes, sir. Senator YOUNG. It is a bit complicated, Mr. Chairman, but I do not think much more so than the Sugar Act. That program was worked out very well. The CHAIRMAN. The only question that would bother me at the moment would be the power of this Corporation to impose assessments or taxes, you see. That is the thing. Senator YOUNG. You would have to vest that power in a Government agency. The CHAIRMAN. How is that? Senator YOUNG. You would probably have to vest that power in a Government agency, the same as the sugar program. The CHAIRMAN. This would be in the nature of a Government agency created by Congress; would it not? Mr. NORTON. Yes, sir. We have it detailed in the bill that the fee would be collected by the Internal Revenue Service through tax collections. The CHAIRMAN. Have you been able to estimate or figure out how much more or less the present duties on milk and their products would be than what is necessary to meet the situation that would arise if your plan were to go through? Mr. NORTON. Well, we can take two situations, a definite figure depending on the surplus, I would guess. But let us take another situation just for a second, where there was no surplus in this countryThe CHAIRMAN. I understand that. You would not need any help from Congress or anybody with no surplus. I realize that. Mr. NORTON. No. In those years, you have no import duties. The CHAIRMAN. But, let us say, last year, you probably would. Mr. NORTON. You would need a 67-cents-per-hundredweight milk collection on imports of dairy products. The CHAIRMAN. That would be 67 cents per hundredweight? The CHAIRMAN. That is, either in cheese or in butter or any milk product, or the raw milk itself? Mr. NORTON. Yes, sir. The CHAIRMAN. Now, percentagewise, what would that mean on the dollar value? Mr. NORTON. That is the one I find it very hard to calculate, because we do not know the percentage of imports coming in under a revised schedule. The CHAIRMAN. All right. I will not pursue that. Senator THYE. Mr. Chairman, one question that I think we ought to try to get enlightenment on would be, How would you govern the possibility of increased production on the part of the dairy producer, and thereby adding to the surplus? Do you think that the price factor would level that off, or would you have any provision to control it? Mr. NORTON. We feel this way: That a dairy farmer or any farmer that has, let us say, $3.15 guaranteed floor, is pretty sure he can get, is not going to be really out there pushing to control production, whereas if he is paying the difference between $3.74 and $3.15, he is going to |