Twenty farmers quit as grade A milk producers in King County alone during June of this year. In May those 20 averaged less than 200 pounds of milk per day while the average of grade A producers for the county was over 700 pounds.

The Federal order assures producers in our area that the prices they receive for grade A milk will be kept in a stable relationship with basic dairy conditions throughout the country. Our order meets the needs of our market and we should hate to see any change in the Federal order program which would adversely affect our order.

We maintain that changes in milk production in our area are explained by the conditions already described and are certainly not attributable to unduly high prices for class I milk under the order.

We have heard criticism of the administration of Federal orders and have heard of proposals to amend procedures and administration of orders. We believe that the suggestions made to date have been in the direction of making procedures more formal, more subject to legalistic manipulation and we feel it to be in the opposite direction from those actually wanted by producers.

We are pleased with the operation of the order in our area and believe that the laws under which the order was issued are adequate to cover any necessary changes.

We think that the basic conditions affecting the general price level of dairy products should be our primary concern. The price support program, of itself, is not the answer. Dairy producers in this area have, for many years, operated their own marketing agencies and feel that they should solve their own problems, including price stabilization, through a self-help plan such as the one provided for in the bill introduced by our Congressman, Jack Westland.

While price stabilization may be the most pressing problem in the early stages of such a self-help development, we believe that sales promotion and efficient marketing will eventually be the answer.

American dairymen, however, would be powerless to effect improvement in the price level of dairy products unless the burden of adjusting world price levels were eliminated through import controls. Export pricing could be effectively handled as a part of the overall self-help marketing program.

Dairymen of the Pacific Northwest are confident of their ability to work out their own price stabilization programs in cooperation with the producers of the rest of the country. We feel that the changes in legislation which are necessary to enable producers to do this would eventually eliminate the necessity for Government price-support programs and we heartily recommend to this committee that course of action.

(The tables referred to follow :)

TABLE I.—Milk production and utilization, Washington, 1936–54

NOTE.-Farm uses shown in the table covers milk fed to calves, consumption of fluid milk and cream on dairy farms and milk used for farm-churned butter. Retail sales by farmers includes production by producer distributors, institutional production and interfarm uses.

The amount of milk used in manufactured products is the summation of whole milk equivalents for the various dairy products produced in Washington. Allowance has been made for duplication of fat. Figures for 1954 are preliminary.

Since 1951, the percentage utilization as fluid milk and cream has declined even though fluid consumption has increased. This had resulted since total production in Washington had been increasing at a faster rate than fluid consumption.

Source: Agricultural Estimates Division, AMS, Seattle, Wash.

TABLE II.-Washington-Prices received by farmers for beef cattle

TABLE III.-Total surplus or deficit of fluid milk and cream and major manufactured products measured as whole milk equivalents (based on average United States per capita consumption) Washington, 1936-54

SURPLUS OR DEFICIT OF FLUID MILK AND CREAM AND MAJOR PRODUCTS

MANUFACTURED

The data contained in table III is based on average United States per capita consumption of fluid milk and manufactured dairy products. The per capita production figures for Washington State were then deducted from the United States per capita consumption data. The residuals resulting from this were expanded to total using the July 1 population estimates published by the Department of Commerce. The data on manufactured products was converted to whole milk equivalents.

Minus figures indicate a deficit-for example, in 1954 Washington would have needed to put an additional 140 million pounds of milk into cheese production in order to produce at the national average consumption level. Plus figures indicate production above the national average consumption level. The last column shows the total surplus or deficit of fluid milk and cream and major manufactured products.

There is some objection to an individual State analysis based upon national per capita consumption data. In States such as Washington with a high level of income the data indicate a minimum situation. Most people will agree that consumption of dairy production in Washington is higher than the national average because of the higher standard of living which has been attained in the State. Thus the total deficit of 40 million pounds indicated for 1954 is probably a minimum figure. Assuming consumption levels above the national average, the total deficit would probably be considerably greater.

The CHAIRMAN. Thank you, Mr. Henning.

Are there any questions? If not, thank you very much.

Senator THYE. I would like to ask just one question of Mr. Henning. You state that the self-help plan will ultimately bring you out of the drop you have suffered in dairy prices in the past year or 18 months, when you dropped 79 cents a pound on that which goes into manufacture, I believe?

Mr. HENNING. That is right.

Senator THYE. You have dropped about $1.69 on that which goes into fluid milk and cream.

What do you visualize-in what manner would you accomplish that? You see, we have got to make a record to help us in enacting legislation that will make your self-help plan administratively workable. Your sales and your sales promotion are steps in the right direction, and they are most commendable, but in themselves they are not lifting the price back up to where you would get somewhere near parity; are they?

Mr. HENNING. That is right.

Senator THYE. They are not lifting it, and you are planning about an $85 million nationwide sales program as an industry-the dairy industry.

This in itself has not proven capable of holding the price. It still is down below what will be anywhere near parity.

So, in your self-help plan, how do you propose that we legislate to make it administratively effective? Have you given that any thought? Mr. HENNING. Yes, sir.

I think, first of all, that as long as we have surplus products in Government hands that are held not only away from us but as a threat that should the price start to move up that they would be put on the market again, ties us down to a spot where as long as we have surpluses, we cannot move much either way. I think that

Senator THYE. We are making every effort to move the surpluses. We could probably increase the amount consumed by the lower-income groups, by a stamp plan or something comparable to that; also by our school lunch program-the Federal Government has appropriated funds and has made them available in school districts, that is, in the States and in their school districts which are availing themselves of this assistance.

Mr. HENNING. Yes.

Senator THYE. So that objective of getting rid of the surpluses we are endeavoring to achieve.

Moreover, we have endeavored to move surpluses, both by international relief channels as well as by diverting as much edible milk powder as possible into animal-feed channels.

But I wondered, inasmuch as you are affiliated with these nationwide and wonderful organizations, whether you have come up with a plan for your self-help program that could be a guide for us in drafting legislation that will make it administratively feasible and a reality.

Just the mere words "self-help" are not bringing us out of the lowprice situation that dairy producers are experiencing, and what you are confronted with is that you cannot get enough producers here to furnish what dairy products you need in the State, you see.

Mr. HENNING. I think this, Senator Thye: The things that you are referring to are spelled out in this self-help bill which has been introduced by Representative Westland, which calls for a dairy stabilization board to take over, if you want to call it that, the support program. I think this, that with all due respect to Government, the people who are in the dairy business can do a better job of merchandising and getting rid of the surpluses which we have than, perhaps Government

can.

Senator THYE. Well, I know that, Mr. Henning. How many years have you been in the dairy business?

Mr. HENNING. Not too many.

Senator THYE. How many?

Mr. HENNING. About 16.

Senator THYE. Well, in that 16 years' time and you have been affiliated with some of the most able men throughout the Nation-I am not critical, I am just trying to bring the thought out and try to develop an idea that might be administratively workable-you have been at it 16 years, you are affiliated with men who have been at it lots longer, and you have done the best job you know how to date. However, you are in this dilemma that you are not getting a price for your product that would act as an incentive to enough dairymen in Oregon so that they would give you milk and dairy products sufficient to avoid importing them. When that happens you are right over here doing something that we are already long in supply on.

So if you have not succeeded in your efforts in 16 years, how do you think you are going to be able to lift yourself up to where you erase the drop that you suffered the minute supports were reduced from 90 to 75 percent, as they were in the spring of 1954?

You see that is the factor that I know both Wisconsin and Minnesota are confronted with.

I think that you are here in the State of Oregon or WashingtonMr. HENNING. I do not think we can divorce ourselves from conditions in the Midwest.

Senator THYE. No.

Mr. HENNING. It is a nationwide problem. What happens in the Midwest affects our prices out here.

Senator THYE. Do you hang all your hopes on sales promotion, selling your products as a direct result of the contribution from the producer which creates a fund to hire publicity-minded individuals to put on advertising campaigns, magazine, radio, and television? Do you think that is the answer?

Mr. HENNING. Not to start with. I think our primary problem right now is one of price stabilization.

Senator THYE. How do you go about price stabilizing?

Mr. HENNING. By a stabilization board set up under self-help that would-pardon?

The CHAIRMAN. Go ahead.

Senator THYE. Excuse me, I am sorry.

Mr. HENNING. That would set up levels under which we feel that we would be better off than we are today.

Senator THYE. What would be embodied in the levels that you have reference to? You see, as Senator Ellender said, we may ask a lot of questions that may sound critical, but it does not do us a bit of good to get a statement unless we try to explore the statement and try to develop what the thinking was that the statement was based

upon.

The board in itself can do nothing unless you give it the mechanics to work with, Mr. Henning.

Mr. HENNING. I would think that they should set levels of support consistent with the rest of the Nation's economy.

Senator THYE. Then you get right back to the question of governmental assistance until we have had the wisdom to work out something that will deal with this question to give the producer parity. However, the Government has got to be in there until that is accomplished. Mr. HENNING. That is right.