4. Heavy stocks in the hands of the Commodity Credit Corporation have been diminished significantly during the last year. The outlook, therefore, is considerably more favorable this year than last year, and if we can continue to progress in increasing per capita consumption and in liquidating the heavy CCC stocks acquired in 1953 and 1954, the dairy production and demand position should show a reasonably good balance in another year or so. Also, it is our belief that the voluntary programs for the dairy industry, conducted through the American Dairy Association and the National Dairy Council, are showing significant results. Later on in this statement, I shall make recommendations to you as to how these programs can be expanded and improved, with your help. The organizations which I represent believe that at this time we should not launch upon any drastic program for the control of production of milk and butterfat from farms. Neither should we embark upon some plan whereby farmers themselves would finance a program for the continued purchase of dairy surpluses which must be given away, largely abroad. It would seem that under the circumstances which we apparently face that we should, for the time being at least, limit ourselves, as far as any program financed by the dairy farmer is concerned, to improvement and expansion of the current industry programs designed to increase the utilization of milk and butterfat by our population. The dairy price-support program should be left as it is, at least for the time being. Now, when I make that statement, I do not mean that the farmers are satisfied as milk producers, with the level of their income, but a dairy price-support program, we have always held, cannot be disassociated from a disposition program, because dairy products are perishable. In the basics you can store the wheat; you can store the cotton; you can store the tobacco. Senator YOUNG. And you can control the production better. Mr. REED. And you can control the production. But in dairying, we have this perishable commodity. It cannot be held forever. And so if large-scale purchases are going to be made under a price-support program, the Congress should enact some additional programs to move that into consumption in some manner, some way or another. The CHAIRMAN. Of course, I do not expect you to go into this selfhelp plan that we discussed a while ago, but in due time, I am sure that the Congress is going to give attention to it, in our committee, and as far as I am concerned, when we hold our hearings in the field. in October, it will be my purpose to try and get the committee to get the reaction of the people in the areas. Mr. REED. I see. Are you planning on hearings in the field in October, sir? The CHAIRMAN. Yes, indeed. We are going to spend about 21⁄2 months, or 2 months at least, holding hearings throughout the Nation. Mr. REED. Very good. The CHAIRMAN. And as you have just heard, Senator Mundt has introduced a bill, this self-help bill that we discussed a few moments ago, and I am sure this committee will have been glad to have the reaction of all the various segments of the dairy industry. Mr. REED. Very good. The CHAIRMAN. In regard to the disposition of milk and butterfats that you spoke of a while ago, the Secretary of Agriculture, through the President of the Commodity Credit Corporation, filed a report with us indicating that in the fiscal year 1955 through April 30, 1955, the losses sustained by the Corporation on butter were $116,397,893; butter oil, $17,716,674; cheese, $43,835,918; dried milk, $82,848,852; milk fluids, $31,340,280; and whey, $397,841. That has accounted to some extent for the decrease in the stocks that you have just referred to a moment ago. Mr. REED. Surely. The CHAIRMAN. And the total amount is in the neighborhood of $280 million. Mr. REED. And before the inventory is finally liquidated, Senator, it will probably be much larger than that. The CHAIRMAN. I do not doubt that. Mr. REED. I have not had an opportunity recently to examine those figures. The CHAIRMAN. This was filed here recently, and I have placed in the record a copy of this table, which really is an improvement over what we had 2 years ago. Mr. REED. A great improvement. The CHAIRMAN. That is, in the method of presentation. The CHAIRMAN. You will recall when it was first presented, when Mr. Benson came before us, an effort was made to put together all losses, including conservation payments, and what have you, which made it appear that the price-support program, and although it was not so stated, it led some of these reporters out here to use those figures of $16 billion as being the cost of the price-support program. Mr. REED. Oh, yes. The CHAIRMAN. As a matter of fact, we had to spend quite a lot of time on the Senate floor in order to demonstrate what the losses were. Mr. REED. That is right. The CHAIRMAN. I am glad to say that under this last statement that was made by the Commodity Credit Corporation, the losses from October 17, 1933-put that down, if you will-through April 30, 1955, on all basics and nonbasics-that is, for the period of 22 years-has been $1,868,268,619, which includes the losses I have just talked about. Mr. REED. Surely. The CHAIRMAN. That is a far cry from the $16 billion that was implied in the statement presented to us just a little over a year ago. Mr. REED. Yes. Senator YOUNG. We spent more money than that in a lost cause in north Indochina in the last 3 years. The CHAIRMAN. We will throw away this year more than that in those same areas. Senator YoUNG. Yes. The CHAIRMAN. All right, sir. I am sorry. I just thought I should take a little time to improve the record. Mr. REED. Yes, sir. That is very good data. Turning to production control and marketing-quota plans, there have been an increasing number of suggestions in recent years that production or marketings of milk and butterfat from farms be limited. These suggestions were particularly prevalent in 1954 when CCC stocks reached such high levels. The organizations which I represent do not believe it is feasible or in the best long-run interest of the producer or consumer to attempt to limit production or marketings from farms in the United States. It is our opinion that our major problem in the dairy industry is to expand consumption. For example, if per capita consumption of milk and cream had been maintained at the 1945 level, there would be no surplus of manufactured dairy products today. Similarly, the butter industry, through, I submit, no fault of its own, has lost a large share of its market. We are, however, slowly but surely regaining at least part of the lost market. There can be little doubt that, from the viewpoint of improving the health and well-being of our population, expanded consumption of milk and dairy products is a factor of paramount importance. Senator YOUNG. You certainly would not be able to go any further pricewise in trying to meet competition from butter substitutes. Mr. REED. Oh, no. Senator YOUNG. The price support at 75 percent of parity—and that is about what the cash price is to the dairy farmers. The present price is not very profitable. Mr. REED. NO. The labor requirements in producing animal fat, like butterfat, are such that they cannot compete with vegetable oils, pricewise, or with other fats. It is impossible, if farmers are to have any kind of living. From the viewpoint of the dairy farmer, it is questionable whether restriction of production or marketings of milk and butterfat from farms would result in any increase in net income. Reductions in production or marketings usually result in less efficiency. They freeze production patterns, and tend to stultify improvement. Any production control or marketing quota scheme would inevitably be to the disadvantage of the efficient, commercial milk and butterfat producer. This arises because of the nature of the distribution of milk production by size of herd in this country. To illustrate this point, I quote the following figures: 1. In 1950-these are census figures-there were 3,681,627 farms in this country which reported cows kept for milk. 2. The majority of these farms kept very small herds. For example, there were 1,058,457 one cowherds; 646,200 two cow herds: and 603,616 farms reporting herds of 3 to 4 cows. Herds of 4 cows or less accounted for 62.8 percent of the farms reporting cows kept for milk. Herds of 4 cows or less accounted for 20.6 percent of the total number of cows kept for milk on farms of the United States. 3. Sales of milk and the milk equivalent sold from these farms in 1950 accounted for 7.1 percent of total sales from all herds. When it is recalled that total CCC purchases under the price-support programs have usually been quite low in terms of total production and sales of milk and cream from farms, and during the 1954 marketing year, the year of record purchases, represented about 10 percent of total production, it will be readily seen that the production on these very small farms is quite important when related to total CCC purchases of dairy products under the price support program. It would seem to be quite reasonable to believe that administrative difficulties in accomplishing the vast amount of paperwork involved with the large number of small farms might well lead to exempting these farms from any production control or marketing quota plan. ་་་ As a matter of fact, the Secretary had indicated this probability heretofore in regard to this matter. The larger farms tend to be the most efficient, and there can be little doubt that reduction in production and marketings from individual farms would bear heaviest on the more efficient farmers, increase their costs of production, freeze their production patterns, and in general inhibit the development of more efficient production and marketing techniques. Also, loss of volume would increase processing and marketing costs. Marketing quota plans, whereby the farmer would be given a quota representing his share of the national market, based on past sales from his farm and total commercial sales of milk and dairy products in the United States, seem to us to be subject to the same criticism from the administrative point of view as production control plans as such. I shall not describe or attempt to evaluate in detail the many types of production control and marketing quota plans that have been advanced. The United States Department of Agriculture furnished the Congress a comprehensive description of such proposals in its "Study of Alternative Methods for Controlling Farm Milk Production and Supporting Prices to Farmers for Milk and Butterfat," published as House Document No. 57, 84th Congress, 1st session. Suffice it to say in summary regarding control and quota schemes that: 1. We do not think such proposals are administratively feasible, and probably would do far more harm than good to the dairy farmer over a period of time. 2. We do not think that any production control, price support, or marketing quota plan that would be financed by the dairy farmer is fair. By this we mean that the major difficulties now confronting the dairy farmer are due in quite large part to Government dairy programs during the war, and to the approval of Congress in pemitting oleomargarine to copy the major attributes of butter. 3. We think that the dairy situation shows very real signs of righting itself over the next few years. Consumption seems to be on the upgrade, production has apparently leveled off, and the CCC is moving with considerable speed in reducing its inventories of dairy products under the several programs approved last year by the Congress. Now, I gave this testimony which follows before the Eastland committee, but I would like to repeat it here before the major committee. As we have stated The CHAIRMAN. I was just asking the committee clerk to give us for the record—and you may have it, and Mr. Holman may have it here information to show the difference in the purchases made by the CCC during a period, say, of a year from here back to the year before. That might be interesting to have that in the record at this point. Mr. REED. Is this table 3 of the appendix here, Senator Ellender, satisfactory? Now, the first four lines there are purchases during the marketing year of butter, cheese, and nonfat solids, and the total through the 31st of May 1955. Then down below are the uses to which the. vol umes The CHAIRMAN. Now that you have that table before you, suppose you look at it and answer this question. 64440-55-pt. 1-21 How much more or less butter was acquired by the Commodity Credit Corporation during the last year compared to the year previous? Mr. REED. In the marketing year starting April 1, 1952, and ending March 31, 1953, the Commodity Credit Corporation bought 143 million pounds of butter. In the marketing year starting April 1, 1953, and ending May 31, 1954, it bought 380 million pounds of butter. In the marketing year starting April 1, 1954, and ending March 31, 1955, it bought 211 million pounds of butter. The CHAIRMAN. That is the information I want. Now, could you give the same information as to cheese Mr. REED. Yes, sir. We have it right in this table. The CHAIRMAN. And other dairy products. Mr. REED. Yes, sir. Do you want me to read them off, sir? Mr. REED. With regard to cheese, in the marketing year starting April 1, 1952, the Commodity Credit Corporation bought 75 million pounds; the following marketing year, starting April 1, 1953, it bought 456 million pounds; and in the marketing year starting April 1, 1954, it bought 153 million pounds. Now, with respect to nonfat dry milk solids, during the marketing year commencing April 1, 1952, it bought 210 million pounds of nonfat dry milk solids; the following year, starting April 1, 1953, it bought 666 million pounds; the following year, starting April 1, 1954, it bought 523 million pounds. That covers those 3 marketing years. The CHAIRMAN. So in the latter product, you have only about 100 million pounds difference? Mr. REED. That is right; 170 million pounds' difference in this last year. We are down that much. The CHAIRMAN. Now, why should you have more of the nonfat dry milk solids? Mr. REED. Well, nonfat dry milk solids-perhaps the best way to explain that, sir, is that during the war the Government made a serious effort to change the pattern of delivery from delivery of cream from farms to plants to the delivery of whole milk to plants, which can make it into butter and nonfat dry milk solids, because nonfat dry milk solids were badly needed in the war food programs. The Department of Agriculture either financed or helped to finance any number of nonfat dry milk solids plants during the war, and we therefore increased the production very, very greatly above our domestic consumption. The CHAIRMAN. I see. Mr. REED. And we still have that. Once you shift from a pattern of cream delivery to milk delivery, the farmers do not shift back easily to turning the separator and feeding the skim to their hogs. They keep on delivering whole milk. And that is the basic reason we have that tremendous volume of nonfat dry milk solids. It was a war program, and I think it was one that was a very fine one. We shipped an awful lot of nutrients and used very little shipping space to do it. The CHAIRMAN. All right, sir. |