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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 made. 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 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.

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.

Vermof the Vermon Mr. Smith, ya like to add to

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 buginesslike 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. The cost of such a plan would be a burden on cooperatives, and since it would thereby hinder them from doing some other work which would be inore valuable to the farmers, we think that such a plan amounts to discrimination against cooperatives.

We have reason to believe that the enemies of cooperatives, who only wish to put our associations out of business as effective competitors with private business, would like to adjust Government agricultural policies with regard to cooperatives in such manners as would discriminate against them.

We feel that this position of our opponents indicates that cooperatives, besides their direct benefits to farmers through increased services, higher incomes, and lower costs, have other values to agriculture. The competition that they bring to farmers markets exerts a worthwhile influence on farm incomes. Without this competition, farmers would be in serious trouble.

In passing, we would also like to point out that besides being in a position to help solve some of our farm problems cooperatives also have a great advantage to the consumer since the cooperatives, by providing competition in fields where competition is often limited, are able to help reduce costs of food supplies to city consumers.

However, we feel that Government activity with regard to cooperatives is not limited to taxes but rather includes such broad fields as technical assistance to electrification programs and credit programs, and includes the educational and research work done by cooperative services divisions in the United States Department of Agriculture. We stand solidly behind the work of the rural electric administration and the farm loan administration because we feel that this work has helped make our farms more profitable.

We believe that such work as can be done through the Government to promote the sale and consumption of farm products, both here and in foreign countries, would be a help to cooperatives and would constitute a big step toward the solution of any farm problems.

In conclusion, we feel that cooperatives can take a large share of the credit for the favorable position of the American farmer in the world today, and in general we feel that the problems facing agriculture in New England can best be solved by voluntary cooperative action, with the proper climate of encouragement from the United States Government.

We believe that the effective operation of our free competitive economy depends on the equality of bargaining power between economic groups. The large size of business corporations and labor organizations place farmers at a disadvantage in the marketplace. We believe farmer-owned and operated cooperatives individually or in federations should be clearly exempted from the restrictions of antitrust laws so that they can function effectively in behalf of our agriculture.

Mr. SMITH. First, we would like to say that we support the program and policies of the present Secretary of Agriculture and believe that his views will benefit agriculture.

We think 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.

That was a very specific suggestion which the committee included in its statement.

We have another suggestion or group of suggestions which we feel would also benefit agriculture having to do with cooperatives.

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 feel that they can help to move surpluses to the benefit of the farmers.

Some of the things which we think Congress could do to protect the strength of cooperatives to solve farm problems are these:

1. We do not think that the cooperatives should be taxed on the refunds that go to patrons as the result of products marketed or purchased by those patrons through cooperatives, and we feel that cooperatives are justified in taking an offensive position to defend their position relative to these taxes. We take that 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 is not returned to its members.

We also do not favor any plan requiring cooperative associations to withhold income taxes for its members from patronage refunds before returning them. We understand, Mr. Chairman, that such funds either have been advanced or may be presented in the future, and we do not favor such plans, because we think the cost would be a burden on cooperatives and thereby hinder them from doing other worthwhile services for farmers. We feel that this position will help farmers to solve some of their financial problems and help surpluses to be moved to the advantage of the consumer through lower prices, at the same time helping farmers to get their justified portion of the consumer's dollar.

In conclusion, we would like to have you know that we believe that the effective operation of our free competitive economy depends on the equality of bargaining power between economic groups.

We think that cooperatives play an important part in providing the competition that is necessary to move farm products, and we feel that the large size of business organizations and labor organizations often place the farmers at a disadvantage in the market places.

Therefore, we believe that farmer-owned and operated cooperatives, either individually or in groups, should be clearly exempt from restrictions of antitrust laws so that they can function effectively in behalf of agriculture and help farmers to increase their income..

That, Mr. Chairman, in brief is the statement which is included in these four pages.

The CHAIRMAN. Are there any questions? Your statement will be made a part of the record.

Senator HOLLAND. That last point that you made with reference to the exemption from the antitrust laws, do you mean that the exemptions already in the books should be increased.

Mr. SMITH. I do not think so, sir.

Senator HOLLAND. You understand, of course, our rather far-reaching exemptions. Mr. SMITH. Already in effect.

Senator HOLLAND. You simply mean that you do not want those diminished ?

Mr. SMITH. That is right. We do not feel that cooperatives are engaging in practices that restrict trade simply by being cooperatives.

Senator HOLLAND. You know, of course, that the banks of cooperatives are set up specifically to aid the cooperative marketing movement. Do you have any suggestion for the enlargement of the field of activity for those banks, or is their financing adequate, insofar as your observation has gone?

Mr. SMITH. Insofar as my observation goes, limited of course to the cooperatives, I think they are adequate, except that we understand that programs are underway for the Government to be rather the banks for cooperatives and the banks to be farmer-owned.

Senator HOLLAND. Of course, all three members of the committee who are here not only know about that, but had an active part in the passage of the law this last session.

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