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Mr. Paul. That is true. Production per cow has been going up due to better husbandry practices, but due to the decrease in cow numbers, total production has been declining.

Mr. TALLE. I found the same thing to be true in Sweden in 1949– exactly the same thing—because of price control.

Mr. PAUL. That is true.

Mr. TALLE. And the other day I read from the little bulletin called Crop and Livestock News, published by the United States Department of Agriculture, with the aid of the Department of Agriculture for the State of Iowa, and in their April bulletin they say as follows:

Milk production on Iowa farms during Marchand that is 1952is estimated at 434 million pounds. This is the lowest March production in the 20 years of record.

Mr. Paul. That is quite true. I can give you some figures on that, too. As I have pointed out, I am an overseer and director of a large cooperative marketing organization in Mason City. We have some 130 local creameries that market their butter through that organization. Our reception of creamery butter from these local creameries has dropped about 12 percent in the last few months, and I think that is fairly indicative of the situation all over Iowa, because we cover a large section of Iowa.

Milk production has decreased and therefore butter production has decreased even further this year.

Mr. TALLE. That bears out the testimony in this bulletin.
Mr. Paul. That is right.

Mr. TALLE. And it also bears out what the executive secretary of the Iowa Creameries Association says, with offices in Ames, Iowa, and while I referred to that statement in part the other day, I will refer to something else now:

lowa--and I am sure the Midwest area producers--are losing faith in the dairy industry. Unless confidence is restored, the vast reservoir of milk and other dairy commodities which Iowa has supplied for our heavy population centers, will shrink to a serious low.

Mr. Paul. That is true. And it could very well happen that milk could go to 30 cents a quart if this trend is accentuated. Also all other dairy products, in line with that.

Mr. Talle. I am glad you brought that out because I asked a representative of the A. D. A. the other day what effect be thought the removal of section 104 would have on the price of milk, whether milk would rise or fall in price or stay as it was, and he said it would not affect the price of milk at all.

Well now, it is reasonable to conclude exactly what you have said, that the price of milk would go up.

Mr. Paul. If you take away the supply, and if there are more dollars looking for more milk, the only thing that it can possibly do is to go up.

Mr. COLE. You mean more dollars looking for less milk?
Mr. Paul. That is right, more dollars for less milk.

Mr. TALLE. It is true, is it not, Mr. Paul, that it takes quite a little time to develop a dairy herd?

Mr. Paul. It certainly does. It takes about 3 years to bring the milk cow into production from the time the heifer is born, and to double the size of a dairy herd it takes 9 years. If you kept all of your so-called cull heifers it would take 9 years to double the size of your herd, starting from scratch.

Mr. Talle. That is right.

Mr. Paul. So that if these cows are sent to slaughter and virtually taken out of production, and no new heifers are being brought on, it could very soon react into a very serious situation.

Mr. TALLE. And therefore, as the secretary of the Iowa Creamerieg Association has said, if confidence is not restored, there will be no. inducement on the part of the dairy farmer, to develop new herds, perhaps not even retain the herd he has.

Mr. Paul. That is true. Failure to reenact section 104 would have these obvious results. It would immediately discourage farmers from trying in any way, shape, or form, to increase their milk production.

Mr. Talle. There are some people who say that section 22 of the Agricultural Adjustment Act will take care of the dairy industry and that section 104 is not needed for that reason.

You commented on that in your statement. Would you like to, expand on it a bit?

Mr. PAUL. Well, under section 22, the procedure involved would be: so time consuming that it would be like locking the barn after the horse. was stolen.

The market for dairy products is so extremely sensitive that a small supply dumped on the market at any one time, when conditions are not favorable to the reception of that supply, would depress prices instantly and probably quite drastically, and by the time we got around to invoking this section 22 or some of these other acts which I have mentioned in my statement, why, the damage would be done and dairy farmers would have started the dispersal of their herds.

Mr. Talle. That is right. One other point: We have trade agreements with other nations, agreements of various sorts.

You mentioned one way in which foreign nations get around those agreements. so that they do not operate in a bona fide manner.

That is currency depreciation. Would you like to explore that a bit?

Mr. Paul. Do you mean under section 7 of the Trade Agreements: Act?

Mr. TALLE. The method employed by some nations of devaluating their own currency in order to increase their exports.

Mr. PAUL. Well, when a nation devalues its currency, it has the effect of lowering the price of the commodities that they have to export.

Mr. TALLE. That is, it doesn't lower the price in the home country, but it lowers the price to us, when a commodity comes in here.

Mr. Paul. That is right. It lowers the price at which they can offer it to the importing country.

Mr. TALLE. That is right.
Mr. Paul. In this case it would be us.
Mr. TALLE. Which would be unfair competition.

Mr. PAUL. That would certainly be unfair competition. It would render our present tariffs on butter and dairy products ineffectual, just the same as if they didn't exist, because that price would be so low that they could still bring it in bere over the tariff barrier, and undersell the producers in this country and cause the Department of

Agriculture to put the support program into effect, purchase large quantities of domestically produced butter, and sell the foreign butter to our people here in this country.

Now, the taxpayer is the one who would bear the burden of that program, because the taxpayer supplies the money by which Commodity Credit Corporation would purchase this domestic butter, and the Government would also have to go to the expense of storing it.

Mr. Talle. I am happy that you discussed the nature of our foreign exports. I do not want to take time to deal with that because there are other members on this committee that want some time, so I will conclude by asking unanimous consent, Mr. Chairman, that this 1 esolution which I received this morning from the North Carolina Dairy Products Association, Raleigh, N. C., dated May 5, 1952, be inserted in the record.

Mr. BROWN. It may be inserted.

(The resolution referred to is as follows:) RESOLUTION ON PRICE CONTROLS AS ADOPTED BY THE NORTH CAROLINA DAIRI

PRODUCTS ASSOCIATION, INC., April 25, 1952, RALEIGH, N. C. .Whereas milk and dairy products are universally recognized as essential in the human diet; and

Whereas the dairy industry plays a vital role in the economy of North Carolina and the Nation; and

Whereas a program of price controls for dairy foods is the poorest way in which the major food industry, with its important contributions to the health and morale of the Nation, can be prepared for a national emergency in this period of rearmament; and

Whereas the present supply of dairy foods in North Carolina and the Nation is sufficient for current domestic demands so that arguments for price controls based on scarcity are not valid; and

Whereas the lifting of price controls from dairy foods at this time will not result in inflationary price advances, so the arguments for controls based on runaway prices are not valid; and

Whereas the price-control mechanism is operating to diminish production and to weaken the processing and distribution facilities of the industry; and

Whereas cost absorption as forced on the processor, manufacturer, and distributor of dairy foods, both proprietary and farm cooperatives, is injuring dairy products business enterprises, particularly small businesses, and a continuation of price controls will magnify these problems: Therefore, be it

Resolved by the North Carolina Dairy Products Association, Inc., by a unanimous vote of its board of directors on this 25th day of April 1952, That it go on record as officially urging the lifting of price controls on dairy products promptly to restore incentives and to permit flexibility within all branches of the industry, so that production will be expanded and adequate industry facilities maintained to meet the ever increasing nutritive needs of the Nation; and be it further

Resolved, That the executive vice president be instructed to send a copy of this resolution to each Congressman and Senator representing the people of North Carolinas

Mr. BROWN. Mr. Patman.

Mr. PATMAN. I want to ask you about nonfat dry milk solids. I notice exports last year amounted to $9,525,000. That represents about 9 percent of the total exports of dairy products.

How does that particular figure compare with previous years? Do you have any breakdown of that?

Mr. Paul. Our Washington representative, who is an economist, Mr. Reed, is present. Mr. Reed prepared these tables and perhaps he can give you that information.

Mr. ŘEED. What was your question again, sir?

Mr. PATMAN. Your exports on nonfat dry milk solids last year amounted to $9 million.

How much was it, say, 5 years ago?

Mr. REED. Well, the problem in differentiating between the exports is what were commercial exports and what were Government exports. Prior to the war, our exports were small, and they tended to be destined for the Latin-American countries in South America.

During the war, we vastly expanded the dry-milk industry in this country, in order to have that commodity available for our allies and our own forces, and the exports of the commodity, I do not have the exact figures, but would be glad to furnish them to you, covering a period of years, if you wish.

Mr. PATMAN. At any rate, there has been a substantial increase every year?

Mr. REED. Very substantial, which during the war, and following, has been on a government-to-government basis.

Commercial exports of nonfat dry milk solids are not anywhere near comparable to the volume that is exported on a government-togovernment basis, frequently on a giveaway or at very-reduced-prices basis.

Mr. PATMAN. Do you find better acceptance by the consumer of the product in this country now, than it was before the name was permitted to be changed?

Mr. REED. I could not answer that question with any degree of definiteness, Congressman. The facts as to consumption are that the sales of nonfat dry milk powder, in consumer style packages, are growing very, very rapidly in this country.

Mr. Parman. Well, it would not grow that way if you used the old name, would it, denoting an inferior product?

Mr. REED. I think it is probably correct to say, and though I do not claim to know very much about dry skim milk merchandising, that the name was developed by the dry milk industry to get away from the allegation of inferiority due to the fact that it does not have the fat in it.

Mr. PATMAN. I am very much interested. I see Mr. Jones back here and I hope he testifies. I want to ask some questions of him. He is one of the gentlemen who persuaded me to introduce the bill, and we really stirred up a hornets' nest because they did not want to change anything down at the Pure Food and Drug Administration. They claimed it would be ruinous, misleading, double-crossing, and everything else. We finally convinced the committees in the House and Senate to pass a law permitting a change in this name, and I think that it is working out a lot better, from what I hear.

Mr. Paul. Some of the commercial conoerns are putting these so-called nonfat dry milk solids out under their own commercial trade names, which may have taken a little of the onus off of it.

Mr. PaTMAN. I know, but they have to call it some name that is permitted under law, and that name is certainly not "skimmed milk."

Do you recall some of the different names that were used for that commodity?

Mr. Paul. I believe Borden puts out a product called Starlac.

Mr. PATMAN. Yes, but somewhere on that package they have to use the permitted name, do they not?

Mr. Paul. That is right. They have to put on the package what is inside of it.

Mr. PATMAN. Yes, and they do not have to use the obnoxious name that they were required to use before the passage of the law?

Mr. Paul. That is correct.
Mr. Patman. But generally, you think it is working out fine?

Mr. Paul. Yes, indeed, the demand for that type of product has grown by leaps and bounds in the last year, and bids fair to continue.

Mr. Parman. It occurs to me that people who want to reduce their weight would find it to be a mighty fine product.

Mr. PAUL. It is. Not only that, it is one of the cheapest sources of proteins available in this country.

Mr. Patman. I went to a little trouble here a while back to ascertain the cost, as compared to whole milk, and I was surprised to find how much cheaper it was, and also to find that the dry milk has in it all the proteins and everything except the fats and the sugar, that whole milk has.

Mr. Paul. That is correct.

Mr. PATMAN. And of course, in any reducing diet, they would certainly want to use something that did not have fats and sugar in it. In fact, I am not in the milk business and have no interest in it except that I like to see the dairy industry prosper, and I use it myself all the time. I think it is a fine product.

Thank you, Mr. Chairman.
The CHAIRMAN. What has been the decrease in dairy herds in the
United States?

Mr. Paul. Some 4 million bead of cows in the last few years.
The CHAIRMAN. Over what period has that decrease occurred?

Mr. Paul. Milk cow numbers, as of January 1 this year, were 23,040,000 cows and heifers kept for milk on farms—a reduction of 1 percent from the preceding January, and markedly lower than the peak numbers recorded in 1945, of 27,770,000 head.

There is roughly a decrease of 4,300,000 over the period from 1930 to 1945, and the greater part of that has occurred in the last 3 to 4 years.

The CHAIRMAN. Was that decrease taking place before this embargo was placed on the importation of fats and oils?

Mr. Paul. I beg your pardon, sir?

The Chairman. I say was that decrease occurring, and continuing, long before the embargo on fats and oils, as provided in section 104, was imposed?

Mr. Paul. Well, it was under way, but it was quite largely due to the fact that the production of beef cattle was more profitable than the production of dairy products, and the farmer, just like every other businessman, shifts to the more profitable fields whenever he sees that in one particular line of his endeavor he is at a disadvantage as against some other. He has a tendency to shift back and forth, whichever is the most profitable.

The CHAIRMAN. That was largely the reason for the decrease. Well now, with reference to the price of milk, would that have any material effect upon the decrease of dairy herds?

Mr. Paul. Well, it certainly would, because if you bave less cow numbers and less production, it is going to decrease the supply of your milk and therefore the price is certainly apt to increase.

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