tural commodities could have gone down in price like they did in 1929, then what? You know they would have done that very thing if it wasn't for the Government support on these commodities. In fact we have suffered quite a reduction, or recession, in such agricultural commodity prices that were not supported or effected by other things that were supported.

I was a strong supporter of the McNary-Haugan, or two-priced farm bill, at the time it was passed by Congress and vetoed by Mr. Coolidge in 1924. But now in the face of the vast burdensome surpluses of so many things, and by reason of the fact that we already have what could be, as I see the picture, a much better two-price plan for serving the interests of all concerned. This two-price plan would be beneficial to our future farmers of America as well as to all concerned directly or indirectly.

As I see the overall picture now, the success of the whole agricultural program depends on the proper approach, the disposition of our surpluses, and I would say, put every bit possible into people's hungry stomachs, but not back into our own livestock feeding channels, in conjunction there with a proper approach to production controls. (It is absolutely silly to deplete the fertility of our soils, wear out our machinery and manpower, to produce something that we have absolutely no need for, and that when produced becomes an expensive waste.)

In view of all the facts as I see them, we must have production controls to eliminate needless expense and waste; and we must have support prices high enough on all agricultural commodities to give agriculture its rightful share of the national income profit.

As owner and operator of one of the largest diversified farms in the western portion of Oregon, and in the interest of a better agricultural program, I make this appeal to you, honorable Senators and gentlemen, in order to save and have for the whole of the Nation a sound and prosperous economy.

Thanking you all for your cooperation in this matter, if there is anything further I can do to enlighten you in regards to these points and facts, I would be glad to do so any time convenient.

The CHAIRMAN. Our next witness is Mr. Ermil Jerome.

STATEMENT OF ERMIL S. JEROME, IDAHO CO-OP DAIRY
COOPERATIVE COUNCIL, KUNA, IDAHO

Mr. JEROME. Mr. Chairman and members of the committee: My name is Ermil Jerome. I live on and operate a 100-acre irrigated, diversified farm at Kuna, Idaho, and have been a farmer all my life. At the present time I am milking 35 registered and grade Jersey cows. On my farm I raise hay, grain, corn, and some seed crops such as clover.

I have been a director of the Ada County Dairymen's Association. since 1947 and have been its secretary since 1950. The Ada County Dairymen's Association is a producer-owned milk processing organization and is owned by 2,500 farmers.

I am also chairman of the executive committee of the Idaho State Grange and a director of the Idaho Cooperative Dairy Products Council, an organization of five large cooperative creameries in southern Idaho. These 5 creameries have a producer membership of approximately 14,000 farmers. I was recently chosen by this organization to speak for them at this hearing,

Dairying is the leading agricultural pursuit in the State of Idaho. Approximately 21 percent of our total agricultural income is produced by it. At the present time there are approximately 225,000 producing dairy cows in the State. Last year these cows produced approximately 1,400 million pounds of milk. Approximately 200 million pounds was used on the farms; 220 million pounds was used locally in the form of fluid milk. The balance or approximately 980 million pounds went to processing plants and was manufactured into

butter, cheese, ice cream, powered and evaporated milk. Approximately 80 percent of the milk that went to processing plants was marketed through cooperatives.

The dairy farmer in Idaho, as well as throughout the entire Nation, is finding it very difficult to survive under our present economic conditions. Since 1952 his income has gone down over 20 percent. During the same period his costs have gone up tremendously. Today under our present support program the support price is approximately 15 percent above pre-World War II market levels while the farmers' costs have gone up over 100 percent.

The average butterfat produced per cow per year in the State of Idaho is 249 pounds. The Idaho Department of Dairying releases the following average prices per pound butterfat for all milk marketed in Idaho: 1952, $1.07; 1953, $0.93; 1954, $0.856.

This 20-percent reduction in price per pound butterfat since 1952 has resulted in a loss to Idaho dairymen of $12 million plus a loss in value of dairy cows of $28 million or a total of $40 million.

In 1952 at $1.07 per pound butterfat, dairymen could show a small net profit. Now a cow must produce at least 305 pounds of butterfat per year at the average price of 85.6 cents to break even. This is causing a lot of dairymen in our section of the country to dispose of their herds. We are having more dairy sales in our area than ever before.

On April 1, 1954, when the Secretary reduced the support price from 90 percent of parity to 75 percent, it reduced the dairymen's income by 60 cents per 100 pounds of milk. Dairymen in southern Idaho had fixed obligations they were endeavoring to meet. In order to meet them they tried to hold up their gross income by milking more cows. The result being that in our section of the country production went up approximately 20 percent. Milking these marginal cows, of course, was not profitable and the dairyman today has found himself in a price squeeze to the extent that, as previously stated, a large number of them are liquidating their herds and production is now below a year ago.

Prior to the time the Secretary dropped the support price of dairy products from 90 to 75 percent of parity, the United States Department of Agriculture in its releases through radio, television, and the press were continuously telling the public that the warehouses were bulging with surpluses of dairy products. That butter and cheese were spoiling and even went so far as to make statements to the effect that the dairy industry was pricing itself out of the market. This adverse publicity built up resentment in the consumers against the dairy industry to the effect that although the dairymen themselves were supporting an advertising program through the American Dairy Association endeavoring to tell the public the value of dairy products as a food, consumption continued to drop. Immediately after supports were dropped the tune from the Department changed. The releases then commenced coming out to the effect that on a comparative food value basis, dairy products were cheap food. This type of publicity, along with the continued advertising and merchandising efforts of the dairymen themselves through the American Dairy Association, also coupled with a large increase in population last year, increased the consumption of dairy products by the equivalent of approximately 6 billion pounds of milk on a national scale.

This year per capita consumption of milk, butter, cheeese, and ice cream has continued to increase. The increased use of fluid milk is reported at 42 percent, even though the price of fluid milk has gone up approximately 0.3 of 1 cent per quart and the price of all other dairy foods has dropped very little to the consumer. With the present increase in per capita consumption, coupled with our increase in population and the fact that dairymen are being forced out of business, it would appear that it may not be too long before we will have a shortage of dairy products.

Dropping the support of dairy products from 90 to 75 percent of parity was absolutely uncalled for. It has not increased consumption. Last year it did not decrease production. Production went up over 312 billion pounds last year over the previous year. It was the highest point in the history of the country.

The drop did get the United States Department of Agriculture off the backs of the dairy industry and gave the industry an opportunity to make its advertising and promotional work effective. The reduction is driving the medium sized producer out of business. The larger producer is endeavoring to expand his herd with the hopes of building up a more economical operation. Dairy producers are either becoming larger or very small.

Dairymen did not ask for supports. In fact, when they were forced on them in the early stages of World War II, they fought them very strenuously. We do not like supports today but feel that if other segments of agriculture, business, utilities, labor, and industry are going to be operated under a controlled economy that the dairy industry will have to be treated likewise.

When we had 90 percent supports the dairy surpluses never exceeded 8 percent of a year's production. Though the dairy industry from a national standpoint constitutes approximately 20 percent of our total agricultural income; at no time has the Government ever had invested in dairying over 7 percent of the total investment in all agricultural commodities. Today the Government has an investment in dairy products of less than 5 percent. Today we have a surplus of approximately 30 days' supply.

In summary, during a greater part of the past several years the dairy industry has been supported, subsidized, or controlled by various Government programs in an effort to assure producers an adequate price for their products. Today dairy farmers are receiving onethird less for their labor than 2 years ago. A cow that produced 305 pounds of butterfat 2 years ago was showing a fair profit. At prevailing prices that same cow is now breaking even providing the dairy farmer does not charge more than 43 cents per hour for labor. It would seem that there is possibly two answers to the question. 1. Take the Government out of the dairy business and let the American dairy farmer work out his own problems through a selfhelp program such as that proposed by the National Milk Producers Federation of Washington, D. C. A summary of the plan has been developed which we feel may be helpful to the committee. The plan has been presented to the Congress as H. R. 2686, H. R. 3483, H. R. 3400 and Senate bill 930. We believe that this legislation merits the support of this committee. Its adoption would be a forward step toward bringing about a permanent improvement in the

economic conditions of dairy farmers outside the influence of partisan politics.

2. If the Congress of the United States insists on continued controls and supports of the dairy industry, then raise the support prices on dairy products to a level consistent with prevailing economic conditions. Also tie down the definition of the word "parity." Under the present formula prices paid to dairy farmers remain the same while the percent of parity gets better and better.

To sum up the parity-equivalent problem, we want to point out the fact that under present administrative ruling dairy farmers can get less and less. This is because the surplus caused by the curtailment of wartime demand will adversely effect the parity-equivalent price for the next 10 years-unless some adjustment is made to stabilize the meaning of the word as expressed in dollars and cents paid farmers.

(The booklet entitled, "The Why and the How of the Self-Help Program," is on file with the committee.)

The CHAIRMAN. Thank you.

Senator YOUNG. Do you mean that you are opposed to the modernized parity formula?

Mr. JEROME. In a way, yes. Basing under this period of time directly after the war was not a natural condition for the dairy industry. At that time we were asked to produce more and most of that production went overseas and to the Army and the ones who previously bought our dairy products were unable to obtain them at that time, and then after it was over we were left without a consuming market. Senator YOUNG. You do not believe it is a good yardstick for what should be a fair price for dairy products?

Mr. JEROME. According to the other things it really is not. I have had several economists try to give me a definition of a parity, and I get more mixed up every time I do. Maybe I do not understand everything I know about it.

I understand on dairy products this year, instead of 75 percent of parity we have been getting about 80 percent of parity, but no more dollars and cents. Is that right?

Senator YOUNG. That is correct. Despite the rise in costs of dairy operations, I think the parity, that is, 100 percent parity, which is supposed to be a fair price has gone down. So you are right in that your parity ratio shows the increase, while the cash you are actually receiving is lower, is less. Is that not correct?

Mr. JEROME. Yes, that is right. And to sum up the parity-equivalent problem, we want to point out the fact that under present administrative rulings dairy farmers can get less and less. This is because the surplus caused by the curtailment and wartime demand will adversely affect the parity equivalent price for the next 10 years, unless some adjustment is made to stabilize the meaning of the word as expressed in dollars and cents paid to farmers.

Senator THYE. One statement that I believe you made, Mr. Jerome, referred to Government controls. I believe that you made that sort of a reference?

Mr. JEROME. Yes.

Senator THYE. The Government has no control over the dairy industry at the present time?

64440-56-pt. 3-30

Mr. JEROME. No, that is right. Of course, if continued high supports, they would have to have control.

Senator THYE. That might come in the future, if there was an abundance of feed, and that, of course, would come about if you did not have some orderly system of controlling the diverted acres.

But the fact is that you are not receiving parity. I do not know what the situation in Idaho is, but what was your butter production last year? Do you know whether you increased your production? Mr. JEROME. We increased our milk production about 20 percent. Senator THYE. 20 percent in the past year?

Mr. JEROME. Since the time, April 1, 1954.

Senator THYE. Then you did just the contrary to what the theory and philosophy was, that a lowered support would bring about a decrease in production. That was the philosophy.

Mr. JEROME. That was right, but it did not work

Senator THYE. Why did it not work?

Mr. JEROME. Because in our case they found people had certain obligations that they had to meet; they had to milk more cows to meet their obligations.

Senator THYE. And, therefore, you just did the human thing. You kept even the cow that might well have gone to the slaughteryard, because she was not a profitable producer. So it is a question here that when the reduction in the supports came, the need to continue having an income compelled him to keep a cow that he might well have put into the stockyards?

Mr. JEROME. That is right. Many marginal cows have been milked the last year.

Senator THYE. You increased by 20 percent. Therefore, the price factor alone is not going to bring about an orderly reduction in the United States, because you have answered that question with your

own statement.

Well, then, you talk about the self-help plan. It is commendable; however, you could not put in into effect without Government assistance, could you-you do not visualize any way of doing it without the Government; do you?

Mr. JEROME. Well. I think that it is proposed to be supported without the Government help.

Senator THYE. You would have to have what we normally refer to as an advance fund, which could be drawn on to finance the operation of the self-help plan?

Mr. JEROME. There is a possibility that it might have to have some help to get started.

The CHAIRMAN. The proposed law so provides for one-half billion dollars.

Senator THYE. But in the main, if these diverted acres of any other given crop, if other crops grown on them were permitted to flow into the feed-cattle category, the dairy situation would naturally be aggravated.

Mr. JEROME. Yes, sir.

Senator THYE. Thank you.

The CHAIRMAN. I wish just to make this little statement, Mr. Jerome. You did just the same as many other farmers did. When Mr. Benson left the 90-percent support level in effect in April of 1953