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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, (b) feed practices, and (c) bulk tank.

4. Production-consumption balance and efficient utilization of milk for nonfluid uses 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. 7—3

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.

The use of the milk ring test was promoted resulting in 6212 percent of the 9,639 herds tested as negative. From the herds not negative, 2,050 signed for blood test. There were 1,030 herds tested with 2,627 reactors slaughtered.

The CHAIRMAN. I wish to state, if you do not mind an interruption, I remember last year and I think this year we had quite a little difficulty in getting the money some of us thought should be appropriated. It seems that the Department, as I remember it now in that case, thought that more of it should be done by the farmers themselves and by the States, but we took a different view. It is my recollection. Senator Aiken, we increased the amount proposed by the Department. Senator AIKEN. We did. We went by the recommendations of the Department and thought that $15 million a year would be adequate, but some of the States went ahead so much faster than was anticipated with their programs, particularly the States of Wisconsin and Minnesota, that they used up the money faster than was expected, and the $15 million is not going to be enough this year. I do not think that there is any question but what the incoming Congress will appropriate whatever is necessary, because that is what we thought we did last

summer.

The CHAIRMAN. Again, I just want to show that Congress is pretty alert. We hope to get you some more money.

Senator AIKEN. Somebody guessed wrong, but Congress did not. In any event, in all these programs, you had a group that was very anxious to do what you are now suggesting. I do not think you need worry about our doing what you think is necessary to eliminate brucellosis. I know that three or four years ago we had a pretty difficult job in even getting the appropriation that was offered. Somebody wanted to cut it across the board. We stuck to it. Senator Russell at the time was the head of the subcommittee. At least the amount that was recommended we succeeded in retaining in the law. Mr. CLARK. So much progress has been made in this State in particular in eradicating brucellosis we feel that the thing should be carried through and ended.

The CHAIRMAN. I am in thorough agreement with you.

Senator HOLLAND. I am glad to hear that great progress is being And if the witness does not already have it in his statement, I suggest that he file a supplemental statement showing the progress made in the State. It will help us in the Congress by showing that we are getting somewhere and not just walking on a treadmill, if you show the actual facts that we are approaching the elimination of brucellosis in Vermont.

Mr. CLARK. I have the results of the very program in my statement. The CHAIRMAN. As I recall that progress, Senator Holland, as to each State, was put in the record. We would like to have some more recent facts, if you have it. I do not mean at the present time, but if you do have any new evidence indicating the progress made, let us say in the last couple of years, you mail it to the Committee on Agriculture and Forestry and we will put it in the permanent record in connection with your testimony.

You may proceed.

Mr. CLARK. That is about all I have.

The CHAIRMAN. All right, thank you very much. Your statement will be made a part of the record at this point.

(The prepared statement of Mr. Clark is as follows:)

My name is Marvin Clark, and I am a dairy farmer in Williston, Vt., and at the present time president of the Richmond Cooperative Creamery.

In Vermont, our major problem is the eradication of brucellosis; both from the economic loss in cattle and the human angle effecting 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 no 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.

The use of the milk ring test was promoted resulting in 62% percent of the 9,639 herds tested as negative. From the herds not negative, 2,050 signed for blood test. There were 1,030 herds tested with 2,627 reactors slaughtered.

A request was made by Vermont to the Federal Government for $240,000 for the fiscal year 1955 to 1956. In August 1955 the State was advised that only $100,000 would be available, of this $70,000 was allocated for salaries of the personnel of Federal employees within the State. Some of the $30,000 remaining was spent during July 1955, leaving insufficient funds to continue the blood-testing and indemnity program.

The program was halted for 30 days except the vaccination program, which was continued at State expense. Since then an extra $40,000 has been granted. This money is being used for veterinary services on the vaccination program. In view of the progress that has been made in eradicating brucellosis, we urge that Federal funds be made available in amounts necessary to continue the program toward a successful conclusion.

Not only do we recommend this course to prevent the losses to dairymen caused by brucellosis, but also as a means of safeguarding the health of the consumers. In so doing it will help to improve the already high quality of milk and aid us in our efforts to promote the increased use of milk through advertising.

Although this report has dealt primarily with the brucellosis program, we feel that the same procedure holds true for other livestock diseases which may now or at some future time threaten the well-being of dairy farmers and the health of the consumers.

The CHAIRMAN. Our next witness is Mr. Donald L. Smith. Will you give your name in full, please, and your occupation. I know that you are a State senator.

You do not have problems in your State senate as you have all of the money.

STATEMENT OF DONALD L. SMITH, EXECUTIVE SECRETARY, VERMONT COOPERATIVE COUNCIL, BARRE, VT.

Mr. SMITH. Mr. Chairman and gentlemen of the committee, we have our troubles finding money. My name is Donald L. Smith. I am an apple grower in Barre. I am also executive secretary of the Vermont Cooperative Council. I am here in my capacity as secretary of the Vermont Cooperative Council.

The CHAIRMAN. Mr. Smith, you have heard the testimony. Have you got anything that you would like to add to what has been stated? Mr. SMITH. My statement is a general statement about what we feel cooperatives can do about farm problems. In the interest of conserving the committee's time, if you would like, Mr. Chairman, I will skip parts of it which perhaps would be general.

The CHAIRMAN. Any suggestion that you have to make would be certainly appreciated. I want to give you the assurance that your entire statement will be put in the record at this point.

Mr. SMITH. I have two specific suggestions that I will make then, and will leave this statement with the committee.

The CHAIRMAN. Proceed.

(The prepared statement of Mr. Donald L. Smith is as follows.)

My name is Donald L. Smith and I am here in my capacity as executive secretary of the Vermont Cooperative Council. I am engaged in the raising of apples in Barre and have been active in a number of farm organizations for several years. We support the program and policies of the present Secretary of Agriculture and believe that his views will benefit agriculture. It would be tragic for farmers to lose the services of Ezra Benson and we feel that Congress would be well advised to follow his recommendations.

The Vermont Cooperative Council is an organization of the cooperatives operating in Vermont and includes in its membership all but a very few of our cooperative organizations. We do not refuse membership to any cooperative that operates in Vermont and have representatives of all types of cooperative business in our membership. Cooperatives are important to agriculture in Vermont because some 90 percent of the milk sold from our State is either sold or arranged for sale through cooperatives. It has been estimated that some 85 percent of the farmers in Vermont belong to at least one of our cooperatives and we feel that Vermont farmers participate in the activities of their cooperatives to a greater extent than any other farmers in the country.

Based on resolutions adopted at all types of farm gatherings over a period of years, and on personal conversations with hundreds of Vermont farmers, I am confident that Vermonters look to cooperatives as holding the basic solution to any farm problems. They feel that given the right conditions, namely, laws and Government policies to encourage cooperatives these organizations can do more than they are now doing to help solve many of our farm problems.

I would also like to point out that we feel that action toward the solution of farm problems through cooperatives represents a much sounder and more businesslike approach because it is based on the voluntary action of farmers themselves.

We believe these farmers have a better understanding of their difficulties than anyone else, and therefore are more capable of solution of their problems.

We fear that some ideas advanced for the solution of farm problems have not taken the long-range view that we are interested in, since it is our goal to make our farms profitable operations for years to come and not to simply solve the problems of the moment.

To illustrate our point that cooperatives can do a great deal to help with farm problems, I would point out that in Vermont farmers spent some $300,000 during the past year to advertise milk, which is their main product. Almost nothing was done in this field a short time ago, and cooperatives deserve the credit for getting this started and for the favorable results since it is they that were instrumental in getting the work started. As a result of this cooperatives have raised the price of milk to the farmers.

Cooperatives have also decreased the cost of many items purchased on farms, and have pioneered the way to higher quality farm supplies of all types. They have also provided all types of services, which a short time ago were not available to farmers of the country. These include rural electrification, proper farm credit, low-cost insurance of several types, and services in such technical fields as artificial breeding and storage of farm crops.

By way of specific recommendations in the field of cooperatives aimed at solving surplus problems, we feel that the Government ought to develop such programs as would encourage the growth of cooperatives.

We do not think that a cooperative should be taxed on refunds that go to its patrons as a result of products marketed or purchased by those patrons through the cooperatives.

We take this position because money returned to the cooperative patron as a refund does not belong to the cooperative since it represents rather a saving in the farmer's sales or purchases. Cooperatives rightfully object to paying taxes on money that it must return to its members.

We would point out that the position of cooperatives is much like that of mutual life insurance companies, who do not pay taxes on their dividends going back to their policyholders.

We object to any plan for requiring cooperative associations to withhold income taxes for its members from patronage refunds before returning them.

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