Mr. MARSHALL. In looking at the chart I gave to Mr. Butz, if the farmer gave the wheat away it still does not seem to me it would make a great deal of difference in effect on the price of that bread. Mr. BUTZ. Mr. Marshall, in 1955, in America, the average retail price of a loaf of bread was 17.7 cents. Of that the baker took 9.8 cents; the miller took 1.9 cents; the retailer took 2.9 cents and the farmer got 3.1 cents. The big item of cost in a loaf of bread is the converting of the flour into bread in the baking. That includes more than the labor and the flour; it includes the other ingredients, also. Mr. MARSHALL. In my State or in my district dairying is quite an important enterprise. DAIRYING Mr. Stedman, writing in the St. Paul Pioneer Press-Dispatch, has a headline: Ike's Milk Price Cut by United States in the East. New York Sales Push Dairy Products Into the Midwest. It seems that some of the milk has been going into the manufactured milk in the East. Some of the programs have encouraged an increased production in the East. While we cannot ship milk into the eastern markets they are able to ship their excess production out into the Midwest, which is affecting our market. Secretary BENSON. In manufactured form, you mean? Secretary BENSON. That is an old problem. These milk orders are all involved in it. I believe there have been some conferences just last week. Mr. BUTZ. That is a difficult problem, Mr. Marshall. Every market, when it can, tends to build a fence around itself. I should say that the Minnesota markets do the same thing for the markets farther west, I believe. It is just a case of who wears the shoes. I have heard people in the East say that they will relax restrictions when the people in your hometown relax the restriction against the folks farther west. I think we need to rectify the situation nationally. Mr. MARSHALL. This comes about as a result of a Federal order. What are you folks doing about it? Mr. Burz. It may or may not come about as a result of a Federal order. Mr. MARSHALL. What Mr. Stedman is referring to does. Mr. BUTZ. He is referring to the class 1-C price, I presume, which is set in relation to the class 1 price in the New York market. Currently we have underway preliminary discussions leading up to a hearing in the New York milk market that will work toward a revision of the formula for order 27 in the New York market, and also regulation of northern New Jersey market, which we hope will get at this problem. STATEMENT REGARDING PRICE SUPPORT LEVELS AND PRICES ESTABLISHED UNDER NEW YORK MILK ORDER Mr. MARSHALL. If you have any further comment to make, you might put it in the record. Mr. BUTZ. All right. (The information is as follows:) STATEMENT REGARDING PRICE-SUPPORT LEVELS AND PRICES ESTABLISHED UNDER NEW YORK FEDERAL MILK ORDER FOR MILK USED IN MANUFACTURED DAIRY PRODUCTS Under the dairy price-support program, the United States Department of Agriculture supports the general level of prices to producers for manufacturing milk and butterfat through purchases of manufactured dairy products at announced prices. The prices at which dairy products are purchased are calculated to yield an annual United States average price to farmers of $3.25 per hundredweight for milk of 3.95 percent average butterfat content. The program does not guarantee that each individual farmer will receive the specified support price. There are normally differences among prices received by individual farmers, depending upon such factors as location, use and quality of milk, size and efficiency of processing plants, etc. Many of these same types of differences are involved in determining the level of prices for milk going into manufacturing uses in a particular fluidmilk market. The minimum prices which handlers regulated by a Federal milk order are required to pay producers for milk going into specified uses are established according to pricing formulas which are determined on the basis of testimony received at public hearings relative to marketing conditions in the particular marketing area. The minimum price under the New York order for milk used in butter and American cheese during March was $2.99 per hundredweight of milk testing 3.95 percent butterfat as compared to the $3.15 annual average support level for milk of that test which was effective at that time. However, our information indicates that some handlers were paying premiums above the minimum price under the order. Pricing formulas in Federal milk orders are reappraised from time to time to assure that they are establishing reasonable prices consistent with the public interest. The Department has announced that a public hearing will be scheduled shortly to review the prices established under the New York order for milk used by handlers in manufactured dairy products. SUPPORT OF DAIRY PRODUCTS Mr. WHITTEN. Mr. Marshall, may I interrupt and say that I should like to include in the record at this point the information and facts. with regard to this change in the support of dairy products, which has been the subject of a whole lot of arguments between the House Committee on Government Operations and the Department. It is said by the House Committee on Government Operations that that resulted in tremendous windfall profits to various processors in the dairy field. Secretary BENSON. They are thinking of cheese, I think, only. Mr. WHITTEN. I think both butter and cheese were involved. Mr. Fountain sent to me in the last few days a copy of a letter to you, I believe, in which it is pointed out that the Comptroller General had held that the effect of this was in violation of the law, and the Department of Justice has been sitting on it and has not taken any action. I would like for the information to be included in the record at this point, including your letter of April 27. (The pertinent excerpt from the investigators' supplemental report of January 14, 1956, follows:) PURCHASE AND RESALE OF BUTTER AND CHEESE UNDER DA-112 Announcement Da-112, issued March 9, 1954, advised that CCC would purchase salted creamery butter and American Cheddar cheese for the remainder of March 1954 at the support prices then in effect provided the offerors of such butter and cheese entered into a contract to repurchase from CCC on April 1, 1954, the identical butter and cheese. This announcement indicated that CCC would continue to purchase butter and cheese under announcement Da-99 and Da-100. Paragraphs 12 and 14 of "Terms and Conditions" of Da-112 stated: Paragraph 12: "Commodities offered for sale under the terms of this announcement shall remain in the place and in the form in which they are sampled or graded from the time of the sampling or grading until they are delivered to CCC and finally until title revests in the offerer. Paragraph 14: "Settlement for commodities purchased and resold under the terms of this announcement shall be made after redelivery to offerer on the basis of vouchers or certified invoices submitted by the offerer, in each case claiming the net difference between the sales price to CCC and the sales price from CCC to offerer. "Vouchers or invoices shall contain the statement 'the commodity remained in the place in which it was sampled or graded from the time of sampling or grading until repurchased and redelivered to the offerer,' and shall be supported by USDA grading and inspection certificates. Settlement will be made on the basis of the nearest even net pounds." Mr. Don S. Anderson, Acting Director, Livestock and Dairy Division, who signed Da-112, advised that butter and cheese could have been sold to CCC up to March 31, 1954, under Da-99 and -100, respectively, and could have been purchased from CCC at any time under Da-107, thereby accomplishing what was accomplished under Da-112. Mr. Anderson stated that the difference between Da-112 and the previously mentioned announcement was the method in which settlement was made. He said that under Da-99 and -100 the offerer probably would not have been paid for the butter and cheese sold to CCC for approximately 45 days. If offerer sold butter and cheese to CCC under these announcements late in March 1954 and then early in April repurchased the same amount of butter and cheese from CCC under Da-107, the offerer would have been required to pay CCC for the butter or cheese purchased from CCC before the offerer had received payment for the sale made to CCC. Mr. Anderson said that this would have worked a hardship on small companies and was one of the primary reasons why Da-112 was issued. Mr. Anderson advised that it was the Department's opinion at the time and still is, that Da-112 did not circumvent any existing regulations. He stated that after Da-112 was investigated by a congressional subcommittee the matter was referred to the Department of Justice. Mr. Anderson furnished a list of the firms which sold and repurchased butter and cheese under Da-112. This list, which is being attached to this memorandum as appendix B, indicates that a total of 5,195,112 pounds of butter was sold to CCC and then repurchased from CCC in April 1954. The amount naid to those companies which sold and then bought butter amounted to $281,042.08. This represented a differential between the support price for butter in March 1954 and the lower domestic sales price in effect in April 1954. Appendix B also indicates that 85,514,556 pounds of cheese were sold to CCC in March 1954 and repurchased from CCC in April 1954 pursuant to Da-112. The amount paid to the companies pursuant to Da-112 was $2,096,401.64. This represented the differential between the support price for cheese in March 1954 and the lower domestic sales price for cheese in effect in April 1954. Mr. George E. Cooper, Deputy Solicitor for CCC, advised that this matter was referred to the Department of Justice about September 1955. Mr. Cooper advised that as recently as 3 weeks ago he inquired of the Department of Justice as to the status of this matter and was advised at that time that no opinion had been rendered by the Department of Justice. APPENDIX B.-Total disbursements under announcement Da-112 Firm name and address Contract weight Amount American Community Stores Topco Associates, Inc., 431 South Dearborn American Stores Co., 424 North 19th St., Philadelphia 30, Pa. Armour & Co., Chicago 9, Ill. C. J. Berst & Co., 312 Brady St., Portage, Wis. Bildner Bros., 163 Shaw Ave., Irvington 11, N. J. Blue Moon Foods, Inc., Thorp, Wis. Blue Mounds Cheese Mart, Mount Horeb, Wis. Bongards Co-Op Creamery Association, Bongards, Minn. The Borden Cheese Co., New York, N. Y. Bruder Dairy Products Co., Cleveland 12, Ohio. Calumet Cheese Co., Inc., Hilbert, Wis. Casco Cheese Co., Casco, Wis. H. C. Christians Co., Chicago 8, Ill. 5, 171, 342 904, 910 165, 657 Consolidated Badger Cooperative, 116 North Main, Shawano, Wis. Dairymen's League Cooperative Association, Inc., 100 Park Ave., New 20,680 135, 900 663, 892 23, 066 137,073 117, 177 293, 180 568. 70 3, 737.25 11, 618. 09 634. 31 3,769. 52 3, 222. 36 24,885. 01 4, 555. 57 8,062. 44 2,790.94 1,546. 50 1,753. 12 26, 595.01 11,323.75 4,812. 50 Central Cheese Co., Inc., Marshfield, Wis. Community Creamery, 420 Nora, Missoula, Mont. 63,750 1,013. 65 Denver Milk Producers, Inc., 945 11th St., Denver, Colo. 70.213 1,930. 85 Dilbert Bros., Inc., Cooper Ave. and Dry Harbor Rd., Brooklyn, N. Y 12, 519. 85 2,283.83 621. 16 Fisher Cheese Co., Wapakoneta, Ohio..- S. M. Flickinger Co., Inc., 180 Niagara Food Terminal, Buffalo 6, N. Y Fremont Packaging Co., Inc., Weyanwega, Wis. The Frink Creamery Co., Unit 67, Wazee Market, Denver, Colo Giant Food Shopping Center, Inc., 845 Bladensburg Rd. NE., Washington Golden Rod Creamery Co., Inc., 20 North Wacker Dr., Chicago, Ill.. J. S. Hoffman Co., 179 Franklin St., New York 13, N. Y. H. A. Hovey Co., 35 North Market St., Boston, Mass... Kraft Foods Co., 505 North Sacramento Blvd., Chicago 12. Ill L. D. Schreiber & Co., Inc., 246 North Main Blvd., Green Bay, Wis. Sheboygan Falls Creamery Co., 837 Buffalo St., Sheboygan Falls, Wis. 95,520 412, 293 3, 406, 979 29, 312 904, 210 37,778 724, 404 22, 153 145, 029 31,500 200, 542 21,360 27,336, 804 279,340 10,969, 049 29, 445 57,389 36,952 26.040 1, 764, 292 1,369, 796 103, 511 25, 337 110,128 117,648 1,258, 656 64.789 36.089 30,932 785.73 2,489. 78 749.93 930. 21 632.61 2, 626.80 1,482.88 7,215. 13 550.00 93, 692. 05 806.06 24,865.77 661. 12 19,039 01 387.68 2, 538.00 551.25 3,509.48 587.40 650, 481.45 7,681.85 301, 648. 82 28, 641. 72 515.29 3,219.54 14, 733. 43 1,746.85 1,697.04 108, 693.78 3,897.27 1, 578. 20 646.66 716, 10 48, 518. 02 15,875. 55 752.51 9,879.85 23, 971. 43 2,846, 56 696.77 3,028.51 2, 058.84 34, 613.04 1,781.70 922.45 850.63 APPENDIX B.-Total disbursements under annoucement Da-112-Continued CINCINNATI COMMODITY OFFICE CHEESE-Continued Vlasic Food Co., Detroit, Mich. M. Wildstein & Sons, Delaware Ave. and Vine St., Philadelphia 6, Pa. Wilshire Cheese Co., 217 West Mill St., Springfield, Mo.. Wilson & Co., Inc., 41st and South Ashland Ave., Chicago 9, Ill. Fred Wolferman, Inc., 118 West 47th St., Kansas City, Mo. Total. Contract weight purchased and sold (pounds) 33, 540 PORTLAND COMMODITY OFFICE-CHEESE Amount $992.35 922.64 1,020. 89 Brooklawn Creamery Co., 262 South 1st West, Salt Lake City, Utah. Dairy Cooperative Association, 1313 Southeast 12th Ave., Portland, Oreg. Nelson Ricks Creamery Co., 314 North 3d South St., Salt Lake City, Utah.. 472, 253 1, 528. 57 12,986. 97 Challenge Cream and Butter Association, 2650 18th St., San Francisco, Calif. Kraft Foods Co., 2660 Newhall St., San Francisco, Calif. Consolidated Dairy Products Co., 635 Elliott Ave. West, Seattle 99, Wash.. Fort Worth Poultry & Egg Co., Inc., 715 East 9th St. (Post Office Box 1537), |