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package, however, is purely and simply an attempt to capitalize on the dairy industry and the well-established fact that in the minds of the public, butter is associated very closely with the word “churn" or "freshly churned.”

The Federal Food, Drug, and Cosmetic Act prohibits interstate commerce or trade of any adulterated or misbranded food and contains several sections dealing with dairy products and their substitutes. Milk, butter, and nonfat drymilk solids are clearly defined in section 321. Filled milk is defined in section 61. The labeling and packaging requirements for oleomargarine are covered in section 347.

The competition from substitutes for dairy-products markets has been increasing rapidly during the past two decades and with technical developments and improved equipment it is expected that this competition shall become more severe. It is therefore, most essential that the Federal acts be closely scrutinized from the point of view of providing a background for fair and honest competition. Strict enforcement of our present laws and regulations dealing with this problem is most essential to the welfare of the dairy industry.

Although dairy products have built themselves a reputation as natures best and most nearly perfect foods, the price advantage still lays with the substitute products. Although there is need for further research to provide the full background of knowledge of the value of dairy products as well as the substitute products to national health, it is generally accepted that the health of the Nation's people is best encouraged through the use of real dairy products.

Everyone is more or less familiar with the inroads the oleo industry has made in our butter market. Undoubtedly some unwise legislation focused attention on this substitute product to the extent that it has probably increased more in sales in today's markets than would have otherwise been the case. It appears that the butter industry has lost more than half of its market to oleo as a table spread, based on per capita consumption figures, during and following World War II.

We have seen the increased use of vegetable fats in the production of imitation ice cream. We understand that 11 States now permit the sale of this imitation product and that when coconut oil is used in the manufacture of this imitation product it is rather difficult to distinguish by present tests between butterfat and coconut oil.

We expect to see further developments in the line of substitutes that will threaten the markets for each and every dairy product including fluid milk as the years go by. Chief reliance probably has to be placed on regulations that will insure fair competition and prevent the substitutes from taking advantage of those values that apply to dairy products and dairy products only.

We must maintain a constant vigilance against adulterations, misbranding and dishonest labelling, advertising, and merchandising practices.

The provisions on filled milk need to be carefully maintained and preserved under the Food and Drug Act. The constitutionality of this act appears to be established. It will be noted that under this section, there is prohibition of a compound sold in semblance or imitation of milk. How long we can maintain such a prohibition, only time will tell.

In the field of merchandising we find many substitute products carried in a refrigerator case which is clearly labeled dairy products. It is argued that the consumer is protected by the actual label on the individual package on the product. Nevertheless, this practice encourages dishonest merchandising, and this situation can be found in most any grocery store in the United States today.

The Department of Health, Education, and Welfare which has the responsibility of administering food and drug laws since 1953 does not maintain a staff in each State. They have district offices and the nearest one here in New England is in Boston. Their personnel cannot begin to cover the area they serve and, of course, their problems are much broader than those represented by dairy products and their substitutes. Although we have some rather extensive Federal legislation dealing with this problem, we are short on personnel for the enforcement of these laws and regulations.

The problem is not one so much of legislation as one of enforcement. Adequate funds for effective enforcement are essential to protect the consumer interest and preserve our great dairy industry.

The CHAIRMAN. Our next witness is Mr. Harold J. Smith.
Give us your full name for the record and your occupation.

STATEMENT OF HAROLD J. SMITH, PRESIDENT, BELLOWS FALLS

COOPERATIVE CREAMERY, CUTTINGSVILLE, VT.

Mr. Smith. Mr. Chairman and gentlemen of the committee, my name is Harold J. Smith, a dairy farmer, with a farm in Cuttingsville, Vt. And I am president of the Bellows Falls Cooperative Creamery.

The CHAIRMAN. You have a prepared statement there?
Mr. SMITH. Yes.

The CHAIRMAN. Are you in agreement with the views expressed by the witnesses who preceded you? Mr. SMITH. I am.

The CHAIRMAN. Do you differ in the answers to the questions asked of them? Mr. SMITH. No. The CHAIRMAN. Do you agree with those ? Mr. SMITH. I do.

The CHAIRMAN. Have you anything in your statement that enlarges on what they said or any new thought in the matter?

Mr. SMITH. This original bill called for $20 million in 1950 and 1951. This bill is the Research and Marketing Act of 1946, known as the Jones Enabling Act, the Bankhead Act. We recommend that we have $6 million more as there are only 6 States out of the 12 regional States that are receiving any money to go ahead with this research work.

The CHAIRMAN. Is this research work done on the local level or on the Washington level?

Mr. SMITH. It is done on the local level. Although the experimental stations and the colleges are working on different projects, like the flavor of milk and the pricing of different things.

The CHAIRMAN. I am not familiar with it at the moment, that is, the law. You speak of a total of $20 million. Is that the greatest amount? Mr. SMITH. That is what was called for. The CHAIRMAN. That is the authorization ? Mr. SMITH. Yes.

The CHAIRMAN. And Congress has failed to appropriate that much money? Mr. SMITH. That is right.

The CHAIRMAN. Your suggestion is that the full amount or such amount as may be necessary within that range be appropriated so as to carry on this work? Mr. SMITH. That is right.

The CHAIRMAN, I am happy to be on the Appropriations Committee. Senator Holland is also on it, as is Senator Aiken. That is on the subcommittee—not on the Appropriations Committee-but the subcommittee that provides all of this money. It is my recollection that during this last session of Congress, as well as the preceding session considerable advances have been made, that is, more and more money is being appropriated for research. My recollection is that there was an increase from prior amounts.

Do you have the figures ?
Mr. Smith. In 1955 they increased to $16,800,000.

The CHAIRMAN. What was it before that? Mr. SMITH. In 1950 and 1951 it was five. The CHAIRMAN. We are making a little progress there. Mr. SMITH. You see, what we are asking for is for the 12 States. And only six have done anything in this work in this region.

The CHAIRMAN. Why is it that the other six are not doing any work like this?

Mr. SMITH. As I understand, I do not think they have had the money.

The CHAIRMAN. Is it not on a cooperative basis—must not the State do something, too? Mr. SMITH. The States are to put in a certain amount.

The CHAIRMAN. Have you looked at the question as to whether or not it is due to the States' inability or a lack of interest that causes them not to participate?

Mr. SMITH. I do not know as they have qualified for it. I do not know just what the answer to it is.

Senator AIKEN. I think that I can explain part of the reason. When we stepped up the research program, we stepped it up a little bit faster than the Department could get it ready, as I recall. Certainly, that was the case in 1954. Whether they are ready now to go on further with it, I do not know.

I think Congress has shown a tendency to appropriate whatever is necessary for programs set up in the field of research.

I know there was a lag in the program. I think what is referred to is the Hope-Flannagan act. That is what it was called in 1946. It amended an earlier law.

For some years very little was done with it. The last 2 or 3 years they have tried to step it ahead a little faster than their experts could get the program ready.

The CHAIRMAN. I am glad that Congress is not to blame for that. We got the money for you. The fact that it was raised, as you indicated, from 5 to 1612 million dollars, is quite an increase. I hope that we can urge the Department to go ahead. If you folks get busy in this area and see to it that the States get ready and get whatever is necessary to carry that out, then I think that we will work it out all right.

Mr. SMITH. That is a big field. There is a chance for a lot of work on this subject.

The CHAIRMAN. I think it will depend upon the ability of the States who contribute to this fund to carry it out, such as Vermont and other States are doing. That is something in which we do not have too much jurisdiction. All we can do is pass the laws. It is up to the executive to administer them.

I can give you assurance that the Committee on Agriculture and the Subcommitee on Appropriations that handle all this are pretty alert, I believe, and you can depend upon them to provide the money necessary, in fact all that you may use up for that purpose.

Senator AIKEN. I think you have noticed that the Minnesota station has recently claimed that instead of being vaccinated for smallpox or diphtheria, it is possible to vaccinate the cow and to drink her milk and save the discomfort that you might otherwise have. There is certainly a field for research there.

The CHAIRMAN. Thank you, sir.

Senator HOLLAND. Senator Aiken is trying to make the point that people should drink milk and not water.

(The prepared statement of Harold J. Smith is as follows:)

I am Harold J. Smith, a dairy farmer, with a farm in Cuttingsville, Vt., and president of the Bellows Falls Cooperative Creamery. My milk is shipped to the Boston marketing area. I have been shipping my milk to the Boston market for more than 30 years and have seen the stabilizing effect of the Federal order No. 4 since its inception in 1936, and the period since the first license was issued in November 1933.

Federal funds for research have played an important part in our various New England colleges and various agricultural experiment stations. These Federal funds for dairy research have supplemented State and private grant funds, enabling the State universities and experiment stations to carry on a more complete and well-rounded agricultural research program.

The research which bears on milk products has been conducted in agricultural chemistry, agronomy and its economies, bacteriology, animal husbandry, and agricultural economics.

Research in dairy marketing has played an important part during this period in developing efficiencies in milk collection, milk processing, and milk marketing ; has scrutinized carefully the pricing of milk and milk products; has studied the surplus milk problem and conducted nutrition studies and milk flavor research to aid promotional programs. In 1946 the enactment of the Research and Marketing Act provided increased funds for research by the various State agricultural experiment stations.

Dairy marketing research has been conducted in our various State universities and, here in the Northeast, much of this dairy marketing research work has been coordinated by the several State universities as a regional research project.

A brief summary of the dairy research by the various State universities, agricultural experiment stations, and those conducted as Northeast regional research projects would include:

1. Pricing of milk and milk products : Detailed studies were made of milk markets in Maine. New Hampshire studied milk marketing and surplus pricing. Massachusetts related the class I, class II, and blended prices in the Massachusetts secondary markets to Boston prices and is now studying surplus pricing. Vermont is currently studying local pricing systems and their effect on consumers and the Vermont surplus. Connecticut has a project to determine the effect the various pricing techniques have on production and reserve supplies.

2. Lowering market costs: This includes three phases of study: (a) Milk collection, (b) milk processing, and (c) milk delivery. Under the first phase, studies on new developments in bulk handling were carried out by the experiment stations of Vermont, New Hampshire, and Maryland. Bulk-handling studies are being pursued by Vermont, New Hampshire, and Massachusetts covering changes in cost on the farm, in hauling and in the receiving plants. Vermont is making a bacteriological study of milk handled in bulk tanks on farms. Connecticut has made studies of bulk handling.

Activities on the other two phases have covered processing efficiencies, and detailed cost studies were made in Maine, New York, Pennsylvania, and Virginia. A project in Connecticut is to study marketing margins as affected by capital cost sand price policy. Studies have been conducted of delivery route costs, covering distribution in Maine, Massachusetts, and Connecticut. Our own University of Vermont is working on this project.

3. Milk flavors: Milk flavors are important for increasing consumption of milk as most people drink milk because they like the taste. Research on this project is being conducted in Vermont with some Federal funds supporting State and private funds for this purpose. Massachusetts currently is studying milk flavors relating to (a) pipeline milkers, (6) feed practices, and (c) bulk tank.

4. Production-consumption balance and efficient utilization of milk for nonfluid lyses is one of the current regional projects. The entire industry recognizes the importance of these surplus problems and need for more information as to their solution.

5. Merchandising milk and other dairy products: This is a major phase of the regional dairy marketing research now underway in the Northeast. It was activated July 1 of this year as a result of an increase in Federal funds for an expanded research program. Massachusetts is studying effect on milk consumption of various practices of volume discounts on retail routes and the effect of 64440_56—pt.

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the gallon jug on sales. West Virginia is testing the effect on consumption by use of milk vending machines. Vermont is studying how to increase consumption of milk in urban areas through the use of indoor and outdoor milk dispensers. New Jersey is analyzing the experience in commercial use of milk-vending machines to determine efficiency of operation. Cornell University is conducting an intensive study in stores and on retail routes to determine merchandising practices that will cause customers to buy milk. This involves store displays, alternate container sizes, new types of containers, and multiple pricing. Rhode Island is studying the impact of dried milk on fluidmilk consumption. Pennsylvania is conducting important researt as to the basic appeals that motivate consumers.

6. Sanitation and chemicals and their direct effect at the farm, studies of feeds, irrigation on pasture products, maximum use of roughage, nutritive value of forage, economic efficiency in the combination of forage, brucellosis, mastitis, are all research projects which the many New England State universities are conducting.

7. Need for further increase in research funds: These programs of dairy research, although expanded in recent years through increased Federal support. should be further increased so that the opportunity for more intensive research studies might be made, particularly on milk merchandising and various marketing problems. Much more work is needed on developing new usages and outlets for milk. If additional funds were available it would be possible for more States to concentrate on the problems of merchandising milk. Regional funds for marketing research for the current year were sufficient to include only 6 of the 12 Northeastern States.

We recommend that sufficient Federal funds be available for this important research work which at low cost provides long-range, cumulative benefits to all people, in contrast to the high cost of some price-support programs, which, at best, have only a temporary effect.

The CHAIRMAN. Our next witness is Mr. Marvin Clark. Give us your full name for the record, and your occupation.

STATEMENT OF MARVIN W. CLARK, PRESIDENT, RICHMOND

COOPERATIVE CREAMERY, WILLISTON, VT. Mr. CLARK. Mr. Chairman and gentlemen, my name is Marvin Clark and I am a dairy farmer in Williston, Vt.

The CHAIRMAN. Mr. Clark, have you anything, any suggestions to make to us that we have not heard about so far?

Mr. CLARK. My statement deals primarily with livestock disease control, brucellosis in particular.

The CHAIRMAN. I presume you are asking that more money be appropriated for that purpose ?

Mr. CLARK. Perhaps if I read my statement it will clarify that. The CHAIRMAN. You may proceed.

Mr. CLARK. In Vermont, our major problem is the eradication of brucellosis; both from the economic loss in cattle and the human angle affecting our milk markets.

In October 1954, the Federal Government apparently had unlimited funds available to accelerate the brucellosis program. There was an agreement between the Federal branch and the State that the State try for a branding and indemnity law in the 1955 legislature. As there were not funds available except money appropriated for veterinary hire, it was agreed that the Federal people pay the veterinary services and the State transfer funds to pay indemnity, formerly allocated for veterinary services.

The branding and indemnity law was passed by the 1955 legislature. A transfer of State funds of $40,000 for indemnity purposes was made.

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