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one of the cooperatives for which I sometimes do work is engaged in that business as a cooperative, and I would say from my knowledge so acquired that the efficiency in the distribution of milk at wholesale in New York City is very high. I think the public is getting a pretty good break. You can get a quart of milk out of a store in New York City today on an average-not slum but not Park Avenue dwelling section—for 25 cents.

The CHAIRMAN. What part do the processors of milk, the distributors, have in keeping these prices down to the producers of the milk, the raw milk.

Mr. LENT. Well, a milk dealer, one of his big assets of his business is the good will of his customers, and his customers are consumers. So it is a perfectly natural and the human thing for a milk dealer to come to a milk hearing and say, and oppose the producers' attempts to put up the price. Occasionally, the milk dealers even recognize that the price may need to go up as they did last spring, when 400 of them signed a voluntary agreement and each one said they would not sign it unless each and every other one signed it. They insisted on 100 percent compliance and voluntarily signed to increase the price above the order price.

It was a very slight increase, 6 cents for 1 month. What was itI gave the figures before-3 months only. In that case the dealerscertainly there was no strike threat or anything-they just asked the dealers to sign it, and they signed it.

The CHAIRMAN. The reason I asked the question is that I think it is an advantage to keep the milk-producing business on a local basis. Do you not agree?

Mr. LENT. Yes. Of course, there is quite a lot of milk around. That is one of the things the Secretary argues the reason for not having these other prices.

Senator AIKEN. Is that not traditional: that the consumer in New York City pays a higher price for milk at retail than the consumer in Boston, sometimes up to as much as 3 cents a quart difference for either delivered or store milk?

Mr. LENT. I do not know, Senator. I think—I know more about Philadelphia, where they have a high percentage of their milk distributed on retail routes-you can get your spread down pretty well on retail. In Boston it may be the same.

Senator AIKEN. I notice that you are representing a bargaining

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Senator AIKEN. Does your organization own any processing plants? Mr. LENT. Some of the members of it do. The bargaining agency is made up of cooperatives, not of farmers. Some of the cooperative members of the bargaining agency own plants.

Senator AIKEN. Are you satisfied that the milk handlers and the distributors are doing all they can in New York State, particularly ir. New York City, to sell as much fluid milk as possible?

Mr. LENT. I think the distributors have been kind of hanging back on promotional projects in New York City.

Senator AIKEN. Is it not a fact that if they sold more fluid milkthat is, for human consumption-the less they would have to keep their processing plants operating?

Mr. LENT. It does not hurt them to have milk in the processing plants if it is priced right. They can process it and sell the products, and, we hope, probably come out even on it.

Senator AIKEN. But I do know that they open their books to you. I believe they claim-privately, at least that a good share of their record profits today are made from processed dairy commodities. I think they will agree to that. They will tell you that the labor unions take all of the profit away from the fluid milk. I question that a little bit. I question that statement. I think they will admit that they are making a good share of their very large profits from the processing plants. Mr. LENT. All of the testimony I have heard in hearings, and the knowledge I have of processing through some of the cooperators who process, with which I am familiar, would lead me to say that on butter and cheese, which is the last utilization, the lowest utilization, particularly butter, it is almost impossible to come out even under our present formula. Cheese at times varies.

Senator AIKEN. I know that over the mountains in New England we have at least two dairy cooperatives that are in the milk-distribution business in Boston.

Mr. LENT. I know.

Senator AIKEN. I think that it has a healthy effect. I think that it gets the farmer a little better price and also pulls down the price to the consumer.

I was just wondering why that could not be done in New York.
Mr. LENT. We have the Dairymen's League.

Senator AIKEN. They are coming on to testify and I believe they will tell us about it.

Mr. LENT. The president will be here of that organization.

Senator AIKEN. It seems that there is something wrong when we have just State lines between us.

The farmer will get more over the mountains in New England but the consumer pays less than in New York City.

Mr. LENT. As to the consumer deal you are comparing Boston retail with New York retail, which is practically a luxury business in New York retail, that is, house-to-house delivery.

As to the producer price, the reason the Boston producer gets more is because he does not carry the surplus that the New York producer carries. He comes out higher for that reason.

Senator AIKEN. I take a little exception to that. The reason the farmers are getting more in New England is that they have just got behind the milk-promotion program and increased their sales of fluid milk, which has not been done all over New York State. It has in certain areas.

Mr. LENT. That no doubt has had its effect.

Senator AIKEN. It has had a tremendous effect, and that is the reason they are getting high prices, because of increased sales, I think probably 15 percent over the last year. That would be a good average guess.

The CHAIRMAN. Thank you, Mr. Lent.

Mr. LENT. Thank you.

The CHAIRMAN. Our next witness is Mr. Archie Wright. Give us your name in full and your occupation.

64440-56-pt. 7--12

STATEMENT OF ARCHIE WRIGHT, PRESIDENT, FARMERS UNION OF THE NEW YORK MILKSHED, OGDENSBURG, N. Y.

Mr. WRIGHT. Mr. Chairman and gentlemen of the committee, I am president of the Farmers Union of the New York Milkshed. I reside at Ogdensburg, N. Y.

As your committee knows, we have in this general region Federal regulation, order No. 27, covering milk produced for the New York metropolitan market. In this, some 50,000 milk producers are immediately concerned and the amount of milk involved is currently around 8 billion pounds yearly, roughly some 7 percent of the national production. The excess of milk produced, over utilizations for which municipal sanitary inspections are maintained, amounts to 40 to 50 percent of the total. This excess is sometimes referred to as the surplus. It is, however, the cushion for all the fluid markets of the Northeast, and it is not waste. It is used in the manufacture of products, cream, and so forth. The pricing of this so-called surplus milk is a highly important matter to farm people as their return, a base uniform price, is a weighted average of utilizations and prices.

In 1953, October 19 to November 24, in Utica and Albany, we had a hearing on the pricing of this milk. An astonishing feature of this hearing was the vehement insistence by the representatives of many farmer cooperative associations that the farm price for milk for manufacturing purposes had to be reduced by a substantial amount. These were representatives of farm people. They had a plant interest. It was obvious that that plant interest was being hurt, and hurt bad. The smaller proprietary processors were also panicky in their demands for relief. These demands were backed up by the representative of the larger outfits in more dignified and detached manner.

As the evidence developed, a peculiar situation began to unfold. The cooperatives, together with the smaller proprietary handlerprocessors had been unable in the flush season, and beyond, to move their finished foods. They were stuck with their inventories, they couldn't get a handling charge, or even transportation on milk moved to processing facilities. Nobody wanted the stuff, and their producer payroll was hard on their heels. The Commodity Credit Corporation of the United States Department of Agriculture wasn't taking their goods. It had some brand new rules on volume, containers and 30-day manufacturing periods with which they could not comply and besides inspection had become of a closeness out of previous experience in this world. The CCC just wasn't taking on inventory, except on a selective basis, highly selective. The larger manufacturers could comply and their stuff was going into the CCC outlet. These larger operators were, and are, the assemblers and distributors of milk products upon whom the smaller fellows depend normally for outlet of their product.

Note, at this point, that no class price of milk under the order of Federal regulation was, or is, based in the support price but rather on the commodity exchange quotations. Nor are processors of order milk, availing themselves of the CCC outlet at the support price, required to pay producers, or to account for their milk, at the support price level. Thus we had a situation in which a handful of pretty large operators could move their product to the CCC at the support price, say 14 cents for roller dried skim, and buy their milk supplies

at a price based on open market quotations of between 9 and 10 cents, and not only the milk but the goods to supply their trade. Of these, they are taking only enough for their immediate needs, the little fellow was choking on the balance. The bulk of products is made up in the spring and summer for year around use and the inventory is usually carried by the distributors and in late years to a large extent by the CCC. The operation beat down the quotations and forced an increase in margin none of which was reflected to any amazing extent in ultimate consumer prices.

This was a purely artificial windfall, the immediate killing was substantial, and the situation was used to bring down the price return to producers of milk for the New York market by a substantial amount. And, from the cries of pain from the Midwest dating from about that time, the cheap milk situation brought about so artificially in the New York milkshed must have been used to beat down the farm price out there. And from the way other farm commodities acted in this general period, it looks from the outside as if they, too, had had a milk operation performed on them. The farmers as a whole, the most essential producers in society, were thus deliberately and callously victimized, and the victimization was brought about through something approaching connivance on the part of the United States Department of Agriculture.

If our farm people are to be left helpless as opposite the business element handling and processing their products, nailed down for skinning as it were, and if this simply cannot be remedied by setting any reasonable restraint on the business element, then society as a whole would, in our opinion, be wise to provide a supplementary remuneration to farmers, for amends and for pantry shelf insurance, in such amount as will bring farm income up to the nonfarm level. No less will be acceptable to farm people.

Such a program is envisaged in the Brannan farm plan which would provide for production payments on a basis of goods brought into the market place. But, even that is not sufficient. Other features of that plan are even more important for the long run. I refer to soil conservation and limitation of benefits to family-type farming operations. Our surpluses are more apparent than real. There are still ill-fed people in this country. Our protein situation isn't anything to boast about. And what surplus we have comes out of some 16 good growing years. Three or four bad growing years and those surpluses would look as good to us as that 7-year surplus looked to the people in Egypt in the days of Joseph and his brethren. We can have a lot of hungry people in this country in a few short years. It would be far better to go to work on that prospect now than have to rig a crash program of doubtful success in the event. In any case the hand of society cannot be closed tight on the farmer for much longer. That phase of our history grinds to an end.

The CHAIRMAN. Are there any questions?

Senator HOLLAND. Mr. Wright, I notice that you appear to endorse the Brannan farm plan; is that correct?

Mr. WRIGHT. Yes, sir.

Senator HOLLAND. Are you endorsing likewise the plan advanced by the National Farmers Union, which is elementally based on the Brannan farm plan?

Mr. WRIGHT. Our endorsement is confined to the Brannan plan.

Senator HOLLAND. You mean the National Farm Union endorsement is confined to the Brannan plan?

Mr. WRIGHT. No. Ours is.

Senator HOLLAND. Your own organization for which you speak ? Mr. WRIGHT. Yes, sir.

Senator HOLLAND. I notice here that you refer to the limitation of benefits to family-type farming operations. What is your definition of a family-type farming operation?

Mr. WRIGHT. Well, regardless of acreage, that kind of an operation which is ordinarily conducted by a farmer, unpaid family labor and occasionally hired help.

Senator HOLLAND. How much volume-how much production in dollars would such a family-type farm, under your definition, produce?

Mr. WRIGHT. I could not say as to dollars, but we do have operations in the New York milkshed of 60 cows and above which are entirely conducted by the farm family.

Senator HOLLAND. How much annual volume of production would that be?

Mr. WRIGHT. Well, that would probably run a million and a half pounds a year or more, in some instances. I understand there have been very considerable technological advances in farming which permit of a much larger family production than was the case at the time that the Brannan plan was first advanced.

Senator HOLLAND. Under your suggestion then, the payment of production payments should be limited to the production of the family type farm?

Mr. WRIGHT. We believe so. We think it is very essential.

Senator HOLLAND. Anyone who is more efficient or has grown larger or produced more than that would not be entitled, as to the surplusage, to have any production payments?

Mr. WRIGHT. Undoubtedly, it would work a hardship in some few instances, but I think that on the whole it would be eminently fair.

Senator HOLLAND. Would you answer the question? I say, that would mean that as to production beyond the production of a family unit form there would be no production payments?

Mr. WRIGHT. Yes, sir; that is correct.

Senator HOLLAND. Your idea, therefore, is to give support of the Federal Government to what you call the family type farm and withhold it beyond that?

Mr. WRIGHT. Yes, sir.

Senator HOLLAND. In the case of one of the national officers of one organization, when he was testifying before this committee I noticed that in his literature he said that their program was designed to force greater distribution of the land, fairer division of the profits of the land, and I asked him if that was correct-if that was the objective of the program. I am going to ask you the same question.

Mr. WRIGHT. First, I would like to say we are not affiliated with the National Farmers Union.

I think our organization does, that it is highly important for the democratic people of our country, to preserve the family type of farming, and to put rather severe restrictions on large-scale corporate operations.

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