that of a Senator who bears the responsibility for framing new legislation to cure our present ills. I am writing in response to your request for suggestions in the matter of farm support legislation. I personally believe, Senator, that we should address ourselves to fundamentals of the problem first, and then consider specific applications later. I will try to stick to basic principles here. Far from debating flexible against 90 percent supports attention first has to be focused on the cause of our present situation. By far the most serious maladjustment in agriculture today is the surplus of Government-held farm commodities, a surplus which threatens the very economic existence of farmers for years to come. This surplus is the result of a basic error in current laws which try to aid farmers by having the Government take title to farm products under the price-support program. The theory was that the farmer could be helped if the Government erected a price roadblock between the farmer and the consumer. It appears that the theory not only does not work out in practice, but it lies behind today's farm crisis. Therefore, it follows that new legislation must repeal this principle, no matter what support level is applied, if such new laws are to be in the best interest of the farmer and the rest of the economy. In shifting to acreage rental, a two-price system, income supports or production payments, or any combination of these, it would appear we would be on the right track. Any of these approaches recognizes the ineffectiveness of placing the Government in the role of acting as the farmer's market. While the Government should not stand between the farmer and the consumer in the market place, it is very proper for the Government to acquire and hold a certain amount of all basic commodities for national security stockpiling purposes, just as we stockpile steel, copper, or any other product we might need in an emergency. Such a program merits special legislation and there should be predetermined limits as to quantities so acquired. Such a program should not be tied to farm aid. It stands on its own merits. A major problem, the liquidation of the present surplus, requires that we consider worldwide conditions of oversupply. To succeed in such a liquidation means some restrictions for a while. To mention a few: 1. Possible licensing of export sales to avoid demoralizing the world market by "dumping." 2. The setting of a high resale price for Government surplus in the domestic market so that current crops can move into marketing channels at a decent price level. 3. Restrictions on any imports of commodities until the domestic surplus situation is corrected. 4. Basic recognition that many years are probably needed to liquidate the surplus. And inherent in a new approach is the certainty that strict Government controls over land usage will be absolutely necessary to get out from under this situation of overproduction. By going to a system which takes the Government out of the market for commodities (except for security stockpiling purposes) you will have a built-in guaranty that the current crisis will never happen again. I can't think of anything that would do as much to promise the farmer a future of growth and prosperity in step with the rest of the Nation. This doesn't pretend to be a complete program, but rather an outline of concepts and possible avenues of approach to the problem. We would all be grateful if you and your fellow Senators could translate such an approach into concrete, practical legislation. Trusting that what I suggest here is of some assistance, and hoping to hear your feelings in this matter, I am, Very truly yours, R. L. SEARLES, President, Minneapolis Grain Exchange Futures Association. STATEMENT FILED BY GORDON W. SPRAGUE, WESTERN CONDENSING Co., APPLETON, WIS. My name is Gordon W. Sprague. I work for the Western Condensing Co., and live in Appleton, Wis. The Western Condensing Co. purchases liquid whey from cheesemakers and manufactures dairy products from this whey. The products manufactured are both for human food and for animal feed. They are condensed whey, dry whey, and include also products like calf feed which are combinations of the products of whey with other feeding ingredients. We also manufacture milk sugar. Whey bears the same relationship to cheese which skim milk bears to cream and butter. It is the byproduct remaining after cheese has been manufactured. It is possible to recover slightly more than 6 pounds of dry solids from each 100 pounds of liquid whey. This represents about half of the dry solids content of the original whole milk. The history of the Western Condensing Co. since World War I has been directly connected with research and development of processes, products, and markets for the solids recovered from whey. Twenty-five years ago there were very few firms in the business of recovering whey solids. Processes and procedures had not been established. The value of the product in the market was not determined. At the present time more than 150 plants operated by more than 75 firms are engaged in this business. There are fewer firms and plants now than 1 year ago because several are no longer operating. The events of the past 2 years have been too rigorous. The products of whey have never received any price support. The products of skim milk, on the other hand, do receive price support. To this extent, therefore, actions in supporting prices for milk have not been equitable to the manufacturer of cheese or the farmer who sells milk to a cheesemaker because the value of the byproduct whey has not been supported through the purchase of the products of whey. We recommend the passage of the amendment to the Agricultural Act embodied in S. 1607. We request the favorable consideration of this or equivalent legislation at the earliest possible time. The language in this bill which we consider most important is as follows: "*** the products of whey shall be considered to be products of milk. Any price-support operations under this program shall be conducted in a manner which will not demoralize or interfere with the production and marketing of the products of whey." A copy of S. 1607 is attached to this statement. We have not asked for price supports. If, however, the Department of Agriculture persists in dumping large quantities of dry skim milk into the feed markets, we believe it is only fair and just, both from the point of view of the manufacturers of cheese and of whey, and the farmers who produce milk for sale to cheesemakers, that the United States Department of Agriculture establish a market for dry whey equal to the market destroyed. We do not believe that Congress intended that one branch of an industry should be destroyed by surpluses accumulating in another branch. DRY WHEY PRICES During the war and postwar years until 1953 the quotations for dry whey at Chicago were never as low as 6 cents per pound delivered. In those years cheesemakers and dairy farmers received payment for liquid whey. In general a price of 6 cents per pound at Chicago with a good volume of sales represented a break-even point. The annual average prices for dry whey since 1947 are shown below. Dry whey: wholesale selling prices, car lots, Chicago By 1953 whey manufacturers working without Government support had problems of their own. Part of their problem was the surplus of dry skim milk powder sold for animal feed. Another part was the rate of accumulation of their own inventories. QUANTITIES OF WHEY PRODUCTS PRODUCED The importance of whey products to the dairy industry is indicated by estimates of whey utilization in 1953. These estimates indicate that 10 percent or more of the milk used for manufacturing dairy products contributed byproduct whey for further utilization. Prior to 1953 this whey also produced farm income. After 1953 prices for products of whey were so low that production was reduced and whey has yielded little or no income for farmers. Estimated utilization of whey (1953) Dried whey production as reported by USDA.. Million pounds 175 10 100 26 Total whey solids_-. 311 Liquid whey required, at 6.3 pounds solids per 100 pounds of liquid whey-Whole milk represented by liquid whey at 85 pounds of whey per 100 pounds of whole milk.. 4, 936 5, 807 56, 850 All whole milk used in manufacturing in 1953 was reported as....... 1 Not reported prior to this date by the United States Department of Agriculture. NOTE: During the war years production of nonfat dried milk solids was stimulated by several means including price guaranties and financing of plants to divert production away from skim milk for animal feed and casein. Price ceilings were used to discourage production of casein. Since the war imports have largely taken over the domestic market for casein and the skim milk previously used has been diverted to other skim-milk products. Whey producers were encouraged to expand plant and equipment for increasing production both of animal feed and milk sugar. The table showing production of products from skim milk and whey is offered because there is need to discuss the reported figures for 1954. Production of dry whey was reported at 175 million pounds; equal to that of 1953. But a large part of that 175 million pounds was manufactured from partially processed whey produced in 1953 and stored for finishing in 1954. When finally dried, it was delivered to the United States Department of Agriculture under the program to purchase dry and condensed whey. Production of dry whey from liquid whey produced in 1954 was, in fact, considerably reduced. Condensed whey production was first reported in 1954. This is also smaller than the production of 1953 because the program for whey as developed by the Secretary of Agriculture was a limited program which enforced restriction in purchases of liquid whey. There is evidence that the problems of stream pollution were more urgent in 1954 than in 1953 and these problems have continued into 1955. A limited program, developed by the Department of Agriculture in 1954, to relieve whey producers while whey markets were being used to dispose of the surplus skim-milk powder was not satisfactory for the following reasons: 1. The support program offered to whey processors was limited in volume and at prices which did not cover manufacturing and storage costs. The market cycle for dry whey is longer than 1 year. Whey must be stored and storage costs are essential. 2. The program did not follow trade practices. New, unusual, and costly operations were required. 3. The limitations in the program forced some processors to reject whey previously purchased and thereby deprived cheesemakers and farmers of their usual markets and sources of cash income. 4. No procedure was included to provide a market for dry whey produced by manufacturers of small volume who customarily sell lots of less than 1 carload. For these reasons we recommend that bill S. 1607 or its legislative equivalent be included in any amendment or revision of the agricultural legislation with reference to the dairy industry. [S. 1607, 84th Cong., 1st sess.] A BILL To amend section 201 (c) of the Agricultural Act of 1949, as amended by the Agricultural Act of 1954 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 201 (c) of the Agricultural Act of 1949, as amended by the Agricultural Act of 1954 (7 U. S. C., sec. 1446 (c)), is amended by adding at the end thereof the following new sentences: "For the purposes of this section, the products of whey shall be considered to be products of milk. Any price-support operations under this program shall be conducted in a manner which will not demoralize or interfere with the production and marketing of the products of whey." STATEMENT FILED BY ARTHUR S. Stenberg, THIEF RIVER Falls, Minn. My name is Arthur S. Sternberg, and I live at Thief River Falls, Minn. I operate a farm of 800 acres and I have always been engaged in milk production. My milk goes direct to Land O' Lakes Creameries at Thief River Falls. My problems are those of the average dairy farmer. I have been a member of Land O' Lakes Creameries for 25 years and have been a director for the past 11 years. I have been a director on the local creamery board for a period of years before I became a director of the Land O' Lakes organization. In my district I represent 25 cooperative creameries that are directly affiliated with Land O' Lakes on the Land O' Lakes board. In the interests of covering the State geographically, five directors plan to submit testimony. In order to avoid duplication we have divided the subject matter, and I should like to speak on the problem of import quotas, tariffs, and export subsidies. This country is committed to a high standard of living, to high-wage rates, and to an agricultural program under which prices received by farmers should be related to the cost of things that farmers buy. Unfortunately, when we are obliged to pay for our products on the basis of more than parity and receive in the sale of our products something like 75 percent of parity we have a difficult time. The whole problem of price is directly related to our foreign-trade policy. This is because, even with our low supports, domestic prices of agricultural products are in many cases substantially above world-price levels. As long as these conditions exist, and we can see no reason that they will not exist indefinitely, effective import controls are needed to prevent foreign production from impairing or destroying our domestic dairy industry. Also, some form of adjustment such as export subsidies will be needed permanently if we are to compete in world markets. Simply stated, if we are on one price level and the world is on another price level, we must have some way to step up the value of imports to the domestic price level to the extent that they are permitted to enter the country, and we must have some method of selling our products on world markets in competition with the world price. Dairy products provide a simple explanation of this need. At 75 percent of parity the price of butter in New York is 584 cents per pound. Hourly returns to dairy farmers and their families as reported by the Department of Agriculture are barely 50 cents per hour at this price. At the same time the world price for butter is in the neighborhood of 39 to 41 cents per pound. Practically no butter has been moved in foreign trade at the export price of 41 cents, as announced by the Commodity Credit Corporation, and very little has moved on the bid basis of 39 cents per pound. With such disparity in price, it is obvious that the dairy industry would be quickly destroyed if effective import controls were not provided. It is equally obvious that a price adjustment in some form of an export subsidy must be made before domestic production can compete in world markets on a business basis. This does not mean that unfair trade practices should be used or that we should dump our surpluses abroad. It does mean that competitive world prices should be met effectively by private business through a two-price system, export subsidies, or some other form of export price adjustment. It is vitally important to the dairy industry of this country and to the dairy farmers in Minnesota that section 22 of the Agricultural Adjustment Act remain unimpaired and that effective import controls be provided. In this regard the present program, though better than none, is not totally effective. Imports of Swiss cheese are coming into this country at increasing volumes. Swiss cheese is not subject to import-control limitations. We make Swiss cheese in Minnesota as good or perhaps better than any that originates in foreign markets. It seems rather inconsistent that our production should be diverted to Cheddar cheese and sold to the Government in order to make way for imports from abroad. We realize full well that the Agriculture Committee is with the dairy farmers on the subject of import controls. We think, however, that there is too little understanding of the problem and what it is doing to the dairy farmer among Senators and Representatives and officials in the executive branch of the Government, particularly the State Department. The foregoing comments are consistent with the position taken by Land O' Lakes creameries and by the National Milk Producers. Land O' Lakes is a member of the National Milk Producers and participates with other dairy farmers from all parts of the country in developing policies to best answer the problem for dairy farmers all over America. STATEMENT FILED BY WILLIS SUNDBY, MENOMONIE, WIS. I do not believe in rigid price supports, because in order that they would be a success there would have to be strong controls. Therefore my solution to the dairyman's problem is to continue the flexible price support and improve foreign trade and to correct the many abuses in Federal marketing orders. Through my experience as a dairyman much could be done by the Federal Government through research to help control and cure diseases in cattle. We as a nation have made great strides in TB and brucellosis control, but we still have many other diseases which harm us more than the price of milk, for example, my herd has contracted viginitis which I have had treated by a veterinarian. He told me they had to be treated often and that there was no cure. I consider this a big loss to me because this disease prevents the cows from breeding, causing many months without milk. Hon. A. J. ELLANDER, CORNUCOPIA, Wis., October 17, 1955. Senate Office Building, Washington, D. C. MY DEAR SENATOR: Due to the seriousness of the present farm situation especially dairy farming, I feel that an emergency action is necessary to save ruination of many more farmers. Personally I believe that the simplest solution would be to cause the buyers of farm produce to pay a fair minimum price direct to the farmer for his products. The price to be high enough to give the farmer an income that would compare favorably with that of labor and small business and to fluctuate in coordina |