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. PATMAN. 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 concerns 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. PATMAN. 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 head 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 have 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.

The CHAIRMAN. Well, you have a parity price on your products, have you not? I mean you have a support price?

Mr. PAUL. Yes.

The CHAIRMAN. To what extent has the importation of fats and oils affected the price of domestic products? I have got a great many dairymen in my district, and I do not want to destroy the prosperity of their industry. I would like to know the facts. What effect does that have upon the domestic price of milk?

Mr. PAUL. If I understood your question correctly, it has not had any effect, because there has been a virtual embargo for the last few

years.

The CHAIRMAN. What effect has the embargo had upon the stabilizing of the price of the domestic production? In other words, what effect has the embargo had on your industry?

Mr. PAUL. It has helped us maintain our prices.

The CHAIRMAN. What are the exporting countries of milk and butterfat?

Mr. PAUL. Denmark, Australia, and the Netherlands are perhaps the main exporting countries-New Zealand, Sweden.

The CHAIRMAN. What percentage of the domestic consumption have they exported to this country?

Mr. PAUL. They have not exported any because it is being embargoed.

The CHAIRMAN. Well, before the embargo. What percentage did. they export before the embargo went on?

Mr. PAUL. That would be very small, because the tariff has protected us on that.

The CHAIRMAN. What tariff have you on butterfat?

Mr. PAUL. The normal tariff is 14 cents per pound, but the first 60 million pounds of butter that would come into this country under the trade agreements act would come in at 7 cents a pound.

The CHAIRMAN. Is that a sufficient protection to stabilize your industry?

Mr. PAUL. It is not at the time because of devalued foreign currencies, which have rendered it ineffectual, and also the low price at which they can produce the product in those countries.

The CHAIRMAN. How long has the embargo on fats and oils been in effect?

Mr. PAUL. Ever since the war.

The CHAIRMAN. There has been an embargo on fats and oils ever since the war?

Mr. PAUL. That is my understanding. There has been an embargo on butter. When I speak of fats and oils, I am only speaking for butter.

The CHAIRMAN. And you say no butter has been imported into this country since the war?

Mr. PAUL. Practically none.

The CHAIRMAN. What was the importation before that, percentagewise?

Mr. PAUL. It was very, very small. Even if it were 1 to 5 percent, however, that might be a fair figure. But I would like to point this out: that it is not the percentage of butter that is imported into this country in relation to our total production that is important, it is the

timing when that butter is permitted to be dumped or imported into this country.

If it were dumped into this country at a time when our production is high and our prices are low, it would have a devastating effect of setting the price for our whole domestic supply.

So it is not the small percentage that would be imported into this country that is important, it is the relationship as to the time and conditions prevailing in this country when it comes in. If we have no control over that, we are sunk.

The CHAIRMAN. Well, have we the capacity to furnish our entire domestic needs by our own producers?

Mr. PAUL. We have been doing that for a great many years now, but we will not have that power if we deplete our cow herds and decrease our production by depending on a foreign source of supply for those needs. .

The CHAIRMAN. It was not the foreign competition that caused the reduction in the herds, was it? It was due to other factors.

Mr. PAUL. That would further aggravate, though, a situation that already exists in this country.

The CHAIRMAN. What is the present status of the dairy industry? Are they now making a fair return on their investments?

Mr. PAUL. I would say that under present conditions, even though their products are not being sold at parity, they are able to get along. However, their costs of production are very high, feed is high, processing costs are high, transportation costs are high, so that the margin that is left to the farmer is a rather small percentage of what they received for their product.

The CHAIRMAN. What is the price they are obtaining with reference to parity?

Mr. PAUL. Well, the support price is guaranteed at 90 percent of parity at the present time. I believe that is 674 cents per pound in the case of butter. The actual market price is a little bit higher than the support price, now, so the support price is not operative. In other words, butter is in short supply enough at the present time so that it is not necessary for the Government to step in and purchase it--and we want to keep it that way. We do not want the Government in our private business.

The CHAIRMAN. How long would it take the dairy industry to be in a position to increase their production, if domestic needs demand it? Mr. PAUL. If the price is right, farmers will go out and even milk some of their stock cows in order to get adequate production. All you have to do is dangle a fair price in front of them, and they will produce the product for you.

The CHAIRMAN. Well if you take off all controls over dairy products what effect would that have on the price? Do you think the price would go to abnormally high levels, and thus make it hard for the consumer?

Mr. PAUL. No, I do not think it would, because farmers are intelligent people. As I said here before, they switch back and forth. If they produce too much of one commodity, like milk, and the price becomes depressed, they are going to adjust that themselves, and they themselves can adjust it better than some Government agency can tell them to adjust it.

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The CHAIRMAN. I agree with Dr. Talle that milk products are the most essential of all probably, for the human race. It is about the first thing they get when they arrive and they continue to drink it until they depart, and it is certainly very essential. Nobody can dispute that.

Mr. Cole.

Mr. COLE. We want to hurry along, so I am only going to ask one or two questions, Mr. Chairman.

In connection with the decrease of the dairy-cow.population, there has been also, simultaneously, an increase in the population of the United States, of course.

Mr. PAUL. That is right.

Mr. COLE. That, as I understand, is about 20 million in the same time?

Mr. PAUL. That is about right. As I understand it we are increasing our population at the rate of about 21⁄2 million people net increase per year.

Mr. COLE. Do you have any judgment as to how many dairy cows. we should have to meet the needs of such an increased population?

Mr. PAUL. I believe it is estimated that to meet the increased population needs of about some 20 million people, it would require about some 20 to 30 billion pounds of production of milk.

If I am wrong in that, I think one of the witnesses who follows me can correct it.

Mr. COLE. You may correct it if you like, but I have a figure of 15 million additional cows needed. Does that sound reasonable; 15 million additional cows?

Mr. PAUL. With roughly 6,000 pounds of production per cow, you could figure it out.

Mr. REED. Of course, in connection with the question as to what we need, Mr. Cole, I think about the best thing we could do would be to just project the maintenance of the current over-all per capita. consumption of dairy products in this country, against a population growth of 21⁄2 million a year and I would be glad to do that and furnish it to you, Mr. Cole.

Mr. COLE. Fine; will you furnish it to the committee?

Mr. REED. Yes, sir.

Mr. COLE. Of course the population is continuing to grow.

Mr. REED. There is no question but what the dairy herds, to maintain the per capita consumption we need, must shortly start to increase, because we are running up against a reasonable limit of increased production per cow.

Mr. COLE. I know. Using one incident does not attempt to show statistically the situation of the dairy industry in the country, but I know a friend of mine in Montgomery County, Md., who has a dairy farm, and who is closing his dairy farm and going into beef, tells me there are 18 dairy farms closing in Montgomery County right now, which is an important milkshed for Washington.

One other thing. I had a letter from home advising me to vote against section 104, with this statement:

That we must, of course, in order to keep our exports at a high level, admit imports. That is No. 1.

No. 2, that the dairy industry is exporting, and therefore should permit imports to come into the country.